Business Wire | Jan 27, 2022 07:05AM EST

Bridgewater Bancshares, Inc. Announces Record Fourth Quarter 2021 Net Income of $12.5 Million, $0.39 Diluted Earnings Per Common Share

Jan. 27, 2022

ST. LOUIS PARK, Minn.--(BUSINESS WIRE)--Jan. 27, 2022--Bridgewater Bancshares, Inc. (Nasdaq: BWB) (the Company), the parent company of Bridgewater Bank (the Bank), today announced net income of $12.5 million for the fourth quarter of 2021, an 8.7% increase over net income of $11.5 million for the third quarter of 2021, and a 151.3% increase over net income of $5.0 million for the fourth quarter of 2020. Net income per diluted common share for the fourth quarter of 2021 was $0.39, a 1.2% decrease compared to $0.40 per diluted common share for the third quarter of 2021, and a 126.1% increase compared to $0.17 per diluted common share for the same period in 2020.

"Bridgewater reported a fourth consecutive quarter of record net income driven by the continuation of many of the same trends and momentum we created throughout 2021," said Chairman, Chief Executive Officer, and President, Jerry Baack. "During the quarter, we continued to generate strong loan production and gather high-quality deposits across the Twin Cities market, leading to robust balance sheet growth. This level of consistent growth in today's environment, along with a business model operating with a low 40% adjusted efficiency ratio, stable net interest margin and strong asset quality, remain key differentiators for us. As we look ahead to 2022, we expect to continue to leverage the ongoing M&A-related market disruption and our strengthening brand to drive additional balance sheet and revenue growth; make proactive investments in business scalability, automation and back-office functions; and maintain our highly efficient operating strategy. With a hard-working team of talented professionals supporting our clients every day and a strong capital and liquidity position, we are poised to build on our momentum into 2022 and beyond."

The Company today also announced that its Board of Directors declared a quarterly cash dividend on its 5.875% Non-Cumulative Perpetual Preferred Stock, Series A ("Series A Preferred Stock"). The quarterly cash dividend of $36.72 per share, equivalent to $0.3672 per depositary share, each representing a 1/100th interest in a share of the Series A Preferred Stock (Nasdaq: BWBBP), is payable on March 1, 2022 to shareholders of record of the Series A Preferred Stock at the close of business on February 15, 2022.

Fourth Quarter 2021 Financial Results

Diluted Nonperforming Adjusted

ROA PPNR ROA ROE earnings assets to efficiency ^(1) per share total assets ratio ^(1)

1.46 % 2.11 % 13.27 % $ 0.39 0.02 % 40.3 %

_________________________________(1)

Represents a non-GAAP financial measure. See "Non-GAAP Financial Measures" for further details.

Fourth Quarter 2021 Highlights

* Diluted earnings per common share were $0.39 for the fourth quarter of 2021, compared to $0.40 per common share for the third quarter of 2021.

* Payment of the Company's first quarterly preferred stock dividend negatively impacted diluted earnings per common share by $0.04 in the fourth quarter of 2021, compared to no preferred stock dividend payment in the third quarter of 2021.

* Annualized return on average assets (ROA) and annualized return on average shareholders' equity (ROE) for the fourth quarter of 2021 were 1.46% and 13.27%, compared to ROA and ROE of 1.37% and 13.81%, respectively, for the third quarter of 2021. Annualized return on average tangible common equity, a non-GAAP financial measure, was 14.78% for the fourth quarter of 2021, compared to 15.47% for the third quarter of 2021.

* Pre-provision net revenue (PPNR), a non-GAAP financial measure, was $18.1 million for the fourth quarter of 2021, compared to $17.5 million for the third quarter of 2021. PPNR ROA, a non-GAAP financial measure, was 2.11% for the fourth quarter of 2021, compared to 2.09% for the third quarter of 2021.

* Gross loans increased $107.5 million in the fourth quarter of 2021, or 15.7% annualized, compared to the third quarter of 2021. Gross loans, excluding Paycheck Protection Program (PPP) loans, increased $135.5 million in the fourth quarter of 2021, or 20.2% annualized, compared to the third quarter of 2021.

* Deposits increased $92.1 million in the fourth quarter of 2021, or 12.8% annualized, compared to the third quarter of 2021.

* Net interest margin (on a fully tax-equivalent basis) was 3.51% for the fourth quarter of 2021, compared to 3.54% in the third quarter of 2021. Core net interest margin (on a fully tax-equivalent basis), a non-GAAP financial measure which excludes the impact of loan fees and PPP balances, interest, and fees, expanded 3 basis points from 3.22% in the third quarter of 2021 to 3.25% in the fourth quarter of 2021.

* The adjusted efficiency ratio, a non-GAAP financial measure which excludes the impact of certain non-routine income and expenses from noninterest expense, was 40.3% for the fourth quarter of 2021, compared to 41.5% for the third quarter of 2021.

* A loan loss provision of $1.2 million was recorded in the fourth quarter of 2021 to support strong organic loan growth. The allowance for loan losses to total loans was 1.42% at December 31, 2021, compared to 1.43% at September 30, 2021. The allowance for loan losses to total loans, excluding PPP loans, was 1.43% at December 31, 2021, compared to 1.46% at September 30, 2021.

* Annualized net loan charge-offs as a percentage of average loans were 0.00% for both the fourth quarter of 2021, and the third quarter of 2021.

* Tangible book value per share, a non-GAAP financial measure, increased $0.36, or 13.6% annualized, to $10.98 at December 31, 2021, compared to $10.62 at September 30, 2021.

Annual 2021 Highlights

* Diluted earnings per common share for the year ended December 31, 2021 were $1.54, a 64.8% increase, compared to $0.93 for the year ended December 31, 2020.

* PPNR, a non-GAAP financial measure, was $67.1 million for the year ended December 31, 2021, an increase of 22.7%, compared to $54.7 million for the year ended December 31, 2020. PPNR ROA, a non-GAAP financial measure, was 2.10% for the year ended December 31, 2021, compared to 2.09% for the year ended December 31, 2020.

* Gross loans increased $493.0 million at December 31, 2021, or 21.2%, compared to December 31, 2020. Excluding PPP loans, gross loans increased 27.7%, at December 31, 2021, compared to December 31, 2020.

* Deposits increased $444.6 million at December 31, 2021, or 17.8%, compared to December 31, 2020.

* Net interest margin (on a fully tax-equivalent basis) was 3.54% for the year ended December 31, 2021, compared to 3.46% for the year ended December 31, 2020. Core net interest margin (on a fully tax-equivalent basis), a non-GAAP financial measure, for the year ended December 31, 2021 was 3.28%, compared to 3.25% for the year ended December 31, 2020.

* The adjusted efficiency ratio, a non-GAAP financial measure, was 41.0% for the year ended December 31, 2021, compared to 40.5% for the year ended December 31, 2020.

* Net loan charge-offs as a percentage of average loans were 0.00% for the year ended December 31, 2021, compared to 0.02% for the year ended December 31, 2020.

* The ratio of nonperforming assets to total assets was 0.02% at December 31, 2021, compared to 0.03% at December 31, 2020.

* Tangible book value per share, a non-GAAP financial measure, increased 17.9%, or $1.66, to $10.98 at December 31, 2021, compared to $9.31 at December 31, 2020.

Key Financial Measures

_________________________________(1) Represents a non-GAAP financial measure. See "Non-GAAP Financial Measures" for further details.

Fourth Quarter 2021 Highlights

* Diluted earnings per common share were $0.39 for the fourth quarter of 2021, compared to $0.40 per common share for the third quarter of 2021.

* Payment of the Company's first quarterly preferred stock dividend negatively impacted diluted earnings per common share by $0.04 in the fourth quarter of 2021, compared to no preferred stock dividend payment in the third quarter of 2021.

* Annualized return on average assets (ROA) and annualized return on average shareholders' equity (ROE) for the fourth quarter of 2021 were 1.46% and 13.27%, compared to ROA and ROE of 1.37% and 13.81%, respectively, for the third quarter of 2021. Annualized return on average tangible common equity, a non-GAAP financial measure, was 14.78% for the fourth quarter of 2021, compared to 15.47% for the third quarter of 2021.

* Pre-provision net revenue (PPNR), a non-GAAP financial measure, was $18.1 million for the fourth quarter of 2021, compared to $17.5 million for the third quarter of 2021. PPNR ROA, a non-GAAP financial measure, was 2.11% for the fourth quarter of 2021, compared to 2.09% for the third quarter of 2021.

* Gross loans increased $107.5 million in the fourth quarter of 2021, or 15.7% annualized, compared to the third quarter of 2021. Gross loans, excluding Paycheck Protection Program (PPP) loans, increased $135.5 million in the fourth quarter of 2021, or 20.2% annualized, compared to the third quarter of 2021.

* Deposits increased $92.1 million in the fourth quarter of 2021, or 12.8% annualized, compared to the third quarter of 2021.

* Net interest margin (on a fully tax-equivalent basis) was 3.51% for the fourth quarter of 2021, compared to 3.54% in the third quarter of 2021. Core net interest margin (on a fully tax-equivalent basis), a non-GAAP financial measure which excludes the impact of loan fees and PPP balances, interest, and fees, expanded 3 basis points from 3.22% in the third quarter of 2021 to 3.25% in the fourth quarter of 2021.

* The adjusted efficiency ratio, a non-GAAP financial measure which excludes the impact of certain non-routine income and expenses from noninterest expense, was 40.3% for the fourth quarter of 2021, compared to 41.5% for the third quarter of 2021.

* A loan loss provision of $1.2 million was recorded in the fourth quarter of 2021 to support strong organic loan growth. The allowance for loan losses to total loans was 1.42% at December 31, 2021, compared to 1.43% at September 30, 2021. The allowance for loan losses to total loans, excluding PPP loans, was 1.43% at December 31, 2021, compared to 1.46% at September 30, 2021.

* Annualized net loan charge-offs as a percentage of average loans were 0.00% for both the fourth quarter of 2021, and the third quarter of 2021.

* Tangible book value per share, a non-GAAP financial measure, increased $0.36, or 13.6% annualized, to $10.98 at December 31, 2021, compared to $10.62 at September 30, 2021.

Annual 2021 Highlights

* Diluted earnings per common share for the year ended December 31, 2021 were $1.54, a 64.8% increase, compared to $0.93 for the year ended December 31, 2020.

* PPNR, a non-GAAP financial measure, was $67.1 million for the year ended December 31, 2021, an increase of 22.7%, compared to $54.7 million for the year ended December 31, 2020. PPNR ROA, a non-GAAP financial measure, was 2.10% for the year ended December 31, 2021, compared to 2.09% for the year ended December 31, 2020.

* Gross loans increased $493.0 million at December 31, 2021, or 21.2%, compared to December 31, 2020. Excluding PPP loans, gross loans increased 27.7%, at December 31, 2021, compared to December 31, 2020.

* Deposits increased $444.6 million at December 31, 2021, or 17.8%, compared to December 31, 2020.

* Net interest margin (on a fully tax-equivalent basis) was 3.54% for the year ended December 31, 2021, compared to 3.46% for the year ended December 31, 2020. Core net interest margin (on a fully tax-equivalent basis), a non-GAAP financial measure, for the year ended December 31, 2021 was 3.28%, compared to 3.25% for the year ended December 31, 2020.

* The adjusted efficiency ratio, a non-GAAP financial measure, was 41.0% for the year ended December 31, 2021, compared to 40.5% for the year ended December 31, 2020.

* Net loan charge-offs as a percentage of average loans were 0.00% for the year ended December 31, 2021, compared to 0.02% for the year ended December 31, 2020.

* The ratio of nonperforming assets to total assets was 0.02% at December 31, 2021, compared to 0.03% at December 31, 2020.

* Tangible book value per share, a non-GAAP financial measure, increased 17.9%, or $1.66, to $10.98 at December 31, 2021, compared to $9.31 at December 31, 2020.

Key Financial Measures



As of and for the Three Months Ended As of and for the Year Ended

December 31, September 30, December 31, December 31, December 31,

2021 2021 2020 2021 2020

Per Common Share Data

Basic Earnings $ 0.41 $ 0.41 $ 0.18 $ 1.59 $ 0.95 Per Share

DilutedEarnings Per 0.39 0.40 0.17 1.54 0.93 Share

AdjustedDiluted 0.39 0.41 0.32 1.55 1.12 Earnings PerShare^ (1)

Book Value Per 11.09 10.73 9.43 Share

Tangible BookValue Per 10.98 10.62 9.31 Share ^(1)

Basic WeightedAverage Shares 28,004,334 28,047,280 28,179,768 28,027,454 28,582,064 Outstanding

DilutedWeighted 29,038,785 29,110,547 28,823,384 28,968,286 29,170,220 Average SharesOutstanding

SharesOutstanding at 28,206,566 28,066,822 28,143,493 Period End



SelectedPerformance Ratios

Return onAverage Assets 1.46 % 1.37 % 0.70 % 1.43 % 1.04 %(Annualized)

Pre-ProvisionNet RevenueReturn on 2.11 2.09 2.30 2.10 2.09 Average Assets(Annualized) ^(1)

Return onAverageShareholders' 13.27 13.81 7.45 14.45 10.51 Equity(Annualized)

Return onAverageTangible 14.78 15.47 7.55 15.45 10.65 Common Equity(Annualized)^(1)

Yield onInterest 4.06 4.14 4.46 4.16 4.51 Earning Assets

Yield on Total 4.49 4.65 4.89 4.60 4.90 Loans, Gross

Cost ofInterest 0.86 0.88 1.24 0.93 1.53 BearingLiabilities

Cost of Total 0.45 0.48 0.69 0.51 0.93 Deposits

Net Interest 3.51 3.54 3.61 3.54 3.46 Margin ^(2)

Core NetInterest 3.25 3.22 3.29 3.28 3.25 Margin ^(1)(2)

Efficiency 40.8 43.9 59.0 42.0 49.0 Ratio^ (1)

AdjustedEfficiency 40.3 41.5 36.6 41.0 40.5 Ratio ^(1)

NoninterestExpense to 1.45 1.58 2.16 1.51 1.73 Average Assets(Annualized)

AdjustedNoninterestExpense to 1.43 1.49 1.34 1.47 1.44 Average Assets(Annualized) ^(1)

Loan to 95.7 95.0 93.0 Deposit Ratio

Core Depositsto Total 85.4 83.3 78.1 Deposits ^(3)

TangibleCommon Equity 8.91 8.81 8.96 to TangibleAssets ^(1)



Capital Ratios(Bank Only) ^ (4)

Tier 1 11.09 % 10.96 % 10.89 % Leverage Ratio

Common EquityTier 1 11.69 11.88 12.12 Risk-basedCapital Ratio

Tier 1Risk-based 11.69 11.88 12.12 Capital Ratio

TotalRisk-based 12.94 13.13 13.37 Capital Ratio



Capital Ratios(Consolidated) ^ (4)

Tier 1 10.82 % 10.70 % 9.28 % Leverage Ratio

Common EquityTier 1 9.36 9.47 10.35 Risk-basedCapital Ratio

Tier 1Risk-based 11.43 11.65 10.35 Capital Ratio

TotalRisk-based 15.55 15.93 14.58 Capital Ratio

_________________________________(1)

Represents a non-GAAP financial measure. See "Non-GAAP Financial Measures" for further details.

(2)

Amounts calculated on a tax-equivalent basis using the statutory federal tax rate of 21%.

(3)

Core deposits are defined as total deposits less brokered deposits and certificates of deposit greater than $250,000.

(4)

Preliminary data. Current period subject to change prior to filings with applicable regulatory agencies.

Selected Financial Data

_________________________________(1) Represents a non-GAAP financial measure. See "Non-GAAP Financial Measures" for further details.

(2) Amounts calculated on a tax-equivalent basis using the statutory federal tax rate of 21%.

(3) Core deposits are defined as total deposits less brokered deposits and certificates of deposit greater than $250,000.

(4) Preliminary data. Current period subject to change prior to filings with applicable regulatory agencies.

Selected Financial Data



December 31, September 30, June 30, March 31, December 31,

(dollars in 2021 2021 2021 2021 2020thousands)

SelectedBalance Sheet Data

Total Assets $ 3,477,659 $ 3,389,125 $ 3,162,612 $ 3,072,359 $ 2,927,345

Total Loans, 2,819,472 2,712,012 2,594,186 2,426,123 2,326,428 Gross

Allowance for 40,020 38,901 37,591 35,987 34,841 Loan Losses

Goodwill andOther 3,105 3,153 3,200 3,248 3,296 Intangibles



Deposits 2,946,237 2,854,157 2,720,906 2,638,654 2,501,636

Tangible Common 309,653 298,135 287,630 275,923 262,109 Equity^ (1)

TotalShareholders' 379,272 367,803 290,830 279,171 265,405 Equity

Average TotalAssets - 3,403,270 3,332,301 3,076,712 2,940,262 2,816,032 Quarter-to-Date

AverageShareholders' 374,035 330,604 286,311 272,729 265,716 Equity -Quarter-to-Date

_________________________________(1)

Represents a non-GAAP financial measure. See "Non-GAAP Financial Measures" for further details.

_________________________________(1) Represents a non-GAAP financial measure. See "Non-GAAP Financial Measures" for further details.

For the Three Months Ended

For the Year Ended

December 31,

September 30,

December 31,

December 31,

December 31,

(dollars in thousands)

2021

2021

2020

2021

2020

Selected Income Statement Data

Interest Income

$

33,775

$

33,517

$

30,699

$

128,879

$

114,826

Interest Expense

4,622

4,844

5,858

19,370

26,862

Net Interest Income

29,153

28,673

24,841

109,509

87,964

Provision for Loan Losses

1,150

1,300

3,900

5,150

12,750

Net Interest Income after Provision for Loan Losses

28,003

27,373

20,941

104,359

75,214

Noninterest Income

1,288

1,410

986

5,309

5,839

Noninterest Expense

12,459

13,236

15,258

48,095

45,387

Income Before Income Taxes

16,832

15,547

6,669

61,573

35,666

Provision for Income Taxes

4,318

4,038

1,690

15,886

8,472

Net Income

12,514

11,509

4,979

45,687

27,194

Preferred Stock Dividends

(1,171

)

-

-

(1,171

)

-

Net Income Available to Common Shareholders

$

11,343

$

11,509

$

4,979

$

44,516

$

27,194

Income Statement

Net Interest Income

Net interest income was $29.2 million for the fourth quarter of 2021, an increase of $480,000, or 1.7%, from $28.7 million in the third quarter of 2021, and an increase of $4.3 million, or 17.4%, from $24.8 million in the fourth quarter of 2020. The linked-quarter and year-over-year increases in net interest income were primarily due to growth in average interest earning assets and lower rates paid on deposits, offset partially by declining yields on loans. Average interest earning assets were $3.32 billion for the fourth quarter of 2021, an increase of $86.3 million, or 2.7%, from $3.23 billion for the third quarter of 2021, and an increase of $561.1 million, or 20.3%, from $2.76 billion for the fourth quarter of 2020. The linked-quarter increase in average interest earning assets was primarily due to continued strong organic growth in the loan portfolio, offset partially by the payoff of PPP loans and the reduction of cash balances. The year-over-year increase in average interest earning assets was primarily due to increased cash balances, continued purchases of investment securities, and strong organic growth in the loan portfolio, offset partially by the payoff of PPP loans.

Net interest margin (on a fully tax-equivalent basis) for the fourth quarter of 2021 was 3.51%, a 3 basis point decrease from 3.54% in the third quarter of 2021, and a 10 basis point decrease from 3.61% in the fourth quarter of 2020. Core net interest margin (on a fully tax-equivalent basis), a non-GAAP financial measure which excludes the impact of loan fees and PPP balances, interest, and fees, for the fourth quarter of 2021 was 3.25%, a 3 basis point increase from 3.22% in the third quarter of 2021, and a 4 basis point decline from 3.29% in the fourth quarter of 2020.

As the PPP loan portfolio pays down, the recognition of fees associated with the originations has benefited net interest margin for each of the past four quarters. The SBA has been forgiving PPP loans, which has accelerated the recognition of PPP fees starting in the fourth quarter of 2020 and continuing through the fourth quarter of 2021. The Company recognized $958,000 of PPP origination fees during the fourth quarter of 2021, compared to $1.6 million during the third quarter of 2021. The elevated fee recognition is illustrated in the 10.51% PPP loan yield for the fourth quarter of 2021, compared to 9.15% for the third quarter of 2021. Remaining PPP origination fees to be recognized as of December 31, 2021 were $898,000.

The following table summarizes PPP loan originations and net origination fees as of December 31, 2021:



For the Three Months Ended For the Year Ended

December September December December December 31, 30, 31, 31, 31,

(dollars in 2021 2021 2020 2021 2020thousands)

SelectedIncome StatementData

Interest $ 33,775 $ 33,517 $ 30,699 $ 128,879 $ 114,826Income

Interest 4,622 4,844 5,858 19,370 26,862 Expense

Net Interest 29,153 28,673 24,841 109,509 87,964 Income

Provisionfor Loan 1,150 1,300 3,900 5,150 12,750 Losses

Net InterestIncome afterProvision 28,003 27,373 20,941 104,359 75,214 for LoanLosses

Noninterest 1,288 1,410 986 5,309 5,839 Income

Noninterest 12,459 13,236 15,258 48,095 45,387 Expense

IncomeBefore 16,832 15,547 6,669 61,573 35,666 Income Taxes

Provisionfor Income 4,318 4,038 1,690 15,886 8,472 Taxes

Net Income 12,514 11,509 4,979 45,687 27,194

PreferredStock (1,171 ) - - (1,171 ) - Dividends

Net IncomeAvailable to $ 11,343 $ 11,509 $ 4,979 $ 44,516 $ 27,194 CommonShareholders

Income Statement

Net Interest Income

Net interest income was $29.2 million for the fourth quarter of 2021, an increase of $480,000, or 1.7%, from $28.7 million in the third quarter of 2021, and an increase of $4.3 million, or 17.4%, from $24.8 million in the fourth quarter of 2020. The linked-quarter and year-over-year increases in net interest income were primarily due to growth in average interest earning assets and lower rates paid on deposits, offset partially by declining yields on loans. Average interest earning assets were $3.32 billion for the fourth quarter of 2021, an increase of $86.3 million, or 2.7%, from $3.23 billion for the third quarter of 2021, and an increase of $561.1 million, or 20.3%, from $2.76 billion for the fourth quarter of 2020. The linked-quarter increase in average interest earning assets was primarily due to continued strong organic growth in the loan portfolio, offset partially by the payoff of PPP loans and the reduction of cash balances. The year-over-year increase in average interest earning assets was primarily due to increased cash balances, continued purchases of investment securities, and strong organic growth in the loan portfolio, offset partially by the payoff of PPP loans.

Net interest margin (on a fully tax-equivalent basis) for the fourth quarter of 2021 was 3.51%, a 3 basis point decrease from 3.54% in the third quarter of 2021, and a 10 basis point decrease from 3.61% in the fourth quarter of 2020. Core net interest margin (on a fully tax-equivalent basis), a non-GAAP financial measure which excludes the impact of loan fees and PPP balances, interest, and fees, for the fourth quarter of 2021 was 3.25%, a 3 basis point increase from 3.22% in the third quarter of 2021, and a 4 basis point decline from 3.29% in the fourth quarter of 2020.

As the PPP loan portfolio pays down, the recognition of fees associated with the originations has benefited net interest margin for each of the past four quarters. The SBA has been forgiving PPP loans, which has accelerated the recognition of PPP fees starting in the fourth quarter of 2020 and continuing through the fourth quarter of 2021. The Company recognized $958,000 of PPP origination fees during the fourth quarter of 2021, compared to $1.6 million during the third quarter of 2021. The elevated fee recognition is illustrated in the 10.51% PPP loan yield for the fourth quarter of 2021, compared to 9.15% for the third quarter of 2021. Remaining PPP origination fees to be recognized as of December 31, 2021 were $898,000.

The following table summarizes PPP loan originations and net origination fees as of December 31, 2021:



Originated Outstanding Program Lifetime

Number Principal Number Principal Net Net Origination Origination

(dollars of of Feesin Loans Balance Loans Balance Generated Fees Earnedthousands)

Round One 1,200 $ 181,600 17 $ 1,109 $ 5,706 $ 5,698PPP Loans

Round Two 651 78,386 136 25,053 3,544 2,654PPP Loans

Totals 1,851 $ 259,986 153 $ 26,162 $ 9,250 $ 8,352

Interest income was $33.8 million for the fourth quarter of 2021, an increase of $258,000, or 0.8%, from $33.5 million in the third quarter of 2021, and an increase of $3.1 million, or 10.0%, from $30.7 million in the fourth quarter of 2020. The yield on interest earning assets (on a fully tax-equivalent basis) was 4.06% in the fourth quarter of 2021, compared to 4.14% in the third quarter of 2021, and 4.46% in the fourth quarter of 2020. The linked-quarter decrease in the yield on interest earning assets was primarily due to the historically low interest rate environment resulting in a lower core loan yield, as well as lower PPP origination fees recognized during the period. The year-over-year decline in the yield on interest earning assets was primarily due to excess cash balances and the historically low interest rate environment resulting in lower loan and security yields.

Loan interest income and loan fees remain the primary contributing factors to the changes in yield on interest earning assets. The aggregate loan yield, excluding PPP loans, decreased to 4.41% in the fourth quarter of 2021, which was 10 basis points lower than 4.51% in the third quarter of 2021, and 46 basis points lower than 4.87% in the fourth quarter of 2020. While loan fees have maintained a relatively stable contribution to the aggregate loan yield, the historically low yield curve has resulted in a declining core yield on loans in comparison to both prior periods.

A summary of interest and fees recognized on loans, excluding PPP loans, for the periods indicated is as follows:



Three Months Ended

December September June March December 31, 2021 30, 2021 30, 31, 2021 31, 2020 2021

Interest 4.20 % 4.28 % 4.37 % 4.50 % 4.59 %

Fees 0.21 0.23 0.17 0.22 0.28

Yield on Loans, 4.41 % 4.51 % 4.54 % 4.72 % 4.87 %Excluding PPP Loans

Interest expense was $4.6 million for the fourth quarter of 2021, a decrease of $222,000, or 4.6%, from $4.8 million in the third quarter of 2021, and a decrease of $1.2 million, or 21.1%, from $5.9 million in the fourth quarter of 2020. The cost of interest bearing liabilities declined 2 basis points on a linked-quarter basis from 0.88% in the third quarter of 2021 to 0.86% in the fourth quarter of 2021, primarily due to lower rates paid on deposits. On a year-over-year basis, the cost of interest bearing liabilities decreased 38 basis points from 1.24% in the fourth quarter of 2020 to 0.86% in the fourth quarter of 2021, primarily due to lower rates paid on deposits, the payoff of the Company's notes payable, and the early extinguishment of $94.0 million of longer term FHLB advances, offset partially by strong growth of interest bearing deposits and additional subordinated debentures.

Interest expense on deposits was $3.2 million for the fourth quarter of 2021, a decrease of $176,000, or 5.2%, from $3.4 million in the third quarter of 2021, and a decrease of $838,000, or 20.5%, from $4.1 million in the fourth quarter of 2020. The cost of total deposits declined 3 basis points on a linked-quarter basis from 0.48% in the third quarter of 2021, and declined 24 basis points on a year-over-year basis from 0.69% in the fourth quarter of 2020, to 0.45% in the fourth quarter of 2021, primarily due to deposit rate cuts consistent with a lower rate environment and the continued downward repricing of time deposits.

A summary of the Company's average balances, interest yields and rates, and net interest margin for the three months ended December 31, 2021, September 30, 2021, and December 31, 2020 is as follows:



For the Three Months Ended

December 31, 2021 September 30, 2021 December 31, 2020

Average Interest Yield/ Average Interest Yield/ Average Interest Yield/

Balance & Fees Rate Balance & Fees Rate Balance & Fees Rate

(dollars in thousands)

Interest Earning Assets:

Cash Investments $ 146,744 $ 65 0.18 % $ 187,405 $ 67 0.14 % $ 79,896 $ 32 0.16 %

Investment Securities:

TaxableInvestment 341,325 1,893 2.20 314,367 1,751 2.21 290,093 1,632 2.24 Securities

Tax-ExemptInvestment 71,602 782 4.33 71,801 737 4.07 81,370 888 4.34 Securities^ (1)

Total Investment 412,927 2,675 2.57 386,168 2,488 2.56 371,463 2,520 2.70 Securities

PaycheckProtection 39,900 1,057 10.51 76,006 1,753 9.15 165,099 2,097 5.05 Program Loans ^(2)

Loans ^(1)(2) 2,715,722 30,154 4.41 2,579,021 29,348 4.51 2,136,229 26,168 4.87

Total Loans 2,755,622 31,211 4.49 2,655,027 31,101 4.65 2,301,328 28,265 4.89

Federal Home Loan 5,310 59 4.39 5,701 68 4.65 6,856 92 5.35 Bank Stock

Total Interest 3,320,603 34,010 4.06 % 3,234,301 33,724 4.14 % 2,759,543 30,909 4.46 %Earning Assets

Noninterest 82,667 98,000 56,489 Earning Assets

Total Assets $ 3,403,270 $ 3,332,301 $ 2,816,032

Interest Bearing Liabilities:

Deposits:

Interest BearingTransaction $ 499,475 $ 548 0.43 % $ 479,580 $ 562 0.47 % $ 353,806 $ 420 0.47 %Deposits

Savings and Money 803,848 876 0.43 801,354 904 0.45 538,030 1,003 0.74 Market Deposits

Time Deposits 299,823 830 1.10 318,222 928 1.16 362,469 1,607 1.76

Brokered Deposits 404,438 987 0.97 440,167 1,023 0.92 433,037 1,049 0.96

Total Interest 2,007,584 3,241 0.64 2,039,323 3,417 0.66 1,687,342 4,079 0.96 Bearing Deposits

Federal Funds 10 - 0.67 - - - 4,072 4 0.33 Purchased

Notes Payable - - - - - - 11,000 105 3.77

FHLB Advances 44,185 162 1.46 54,130 213 1.56 99,196 551 2.21

Subordinated 92,189 1,219 5.25 91,337 1,214 5.27 73,696 1,119 6.04 Debentures

Total InterestBearing 2,143,968 4,622 0.86 % 2,184,790 4,844 0.88 % 1,875,306 5,858 1.24 %Liabilities

NoninterestBearing Liabilities:

NoninterestBearing 861,473 784,148 654,299 TransactionDeposits

Other NoninterestBearing 23,794 32,759 20,711 Liabilities

Total NoninterestBearing 885,267 816,907 675,010 Liabilities

Shareholders' 374,035 330,604 265,716 Equity

Total Liabilitiesand Shareholders' $ 3,403,270 $ 3,332,301 $ 2,816,032 Equity

Net InterestIncome / Interest 29,388 3.20 % 28,880 3.26 % 25,051 3.22 %Rate Spread

Net Interest 3.51 % 3.54 % 3.61 %Margin ^(3)

TaxableEquivalent Adjustment:

Tax-ExemptInvestment (235 ) (207 ) (210 ) Securities andLoans

Net Interest $ 29,153 $ 28,673 $ 24,841 Income

_________________________________(1)

Interest income and average rates for tax-exempt investment securities and loans are presented on a tax-equivalent basis, assuming a statutory federal income tax rate of 21%.

(2)

Average loan balances include nonaccrual loans. Interest income on loans includes amortization of deferred loan fees, net of deferred loan costs.

(3)

Net interest margin includes the tax equivalent adjustment and represents the annualized results of: (i) the difference between interest income on interest earning assets and the interest expense on interest bearing liabilities, divided by (ii) average interest earning assets for the period.

Provision for Loan Losses

The provision for loan losses was $1.2 million for the fourth quarter of 2021, a decrease of $150,000 from $1.3 million for the third quarter of 2021, and a decrease of $2.8 million from $3.9 million for the fourth quarter of 2020. The provision recorded in the fourth quarter of 2021 was primarily attributable to growth of the loan portfolio. The allowance for loan losses to total loans was 1.42% at December 31, 2021, compared to 1.43% at September 30, 2021, and 1.50% at December 31, 2020. The allowance for loan losses to total loans, excluding PPP loans, was 1.43% at December 31, 2021, compared to 1.46% at September 30, 2021, and 1.59% at December 31, 2020.

As an emerging growth company, the Company is not subject to Accounting Standards Update No. 2016-13 "Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses of Financial Instruments," or CECL, until January 1, 2023.

The following table presents the activity in the Company's allowance for loan losses for the periods indicated:

_________________________________ Interest income and average rates for tax-exempt investment securities and(1) loans are presented on a tax-equivalent basis, assuming a statutory federal income tax rate of 21%.

(2) Average loan balances include nonaccrual loans. Interest income on loans includes amortization of deferred loan fees, net of deferred loan costs.

Net interest margin includes the tax equivalent adjustment and represents the annualized results of: (i) the difference between interest income on(3) interest earning assets and the interest expense on interest bearing liabilities, divided by (ii) average interest earning assets for the period.

Provision for Loan Losses

The provision for loan losses was $1.2 million for the fourth quarter of 2021, a decrease of $150,000 from $1.3 million for the third quarter of 2021, and a decrease of $2.8 million from $3.9 million for the fourth quarter of 2020. The provision recorded in the fourth quarter of 2021 was primarily attributable to growth of the loan portfolio. The allowance for loan losses to total loans was 1.42% at December 31, 2021, compared to 1.43% at September 30, 2021, and 1.50% at December 31, 2020. The allowance for loan losses to total loans, excluding PPP loans, was 1.43% at December 31, 2021, compared to 1.46% at September 30, 2021, and 1.59% at December 31, 2020.

As an emerging growth company, the Company is not subject to Accounting Standards Update No. 2016-13 "Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses of Financial Instruments," or CECL, until January 1, 2023.

The following table presents the activity in the Company's allowance for loan losses for the periods indicated:



Three Months Ended Year Ended

December September December December December 31, 30, 31, 31, 31,

(dollars in 2021 2021 2020 2021 2020 thousands)

Balance atBeginning of $ 38,901 $ 37,591 $ 31,381 $ 34,841 $ 22,526 Period

Provision for 1,150 1,300 3,900 5,150 12,750 Loan Losses

Charge-offs (37 ) (20 ) (463 ) (74 ) (517 )

Recoveries 6 30 23 103 82

Balance at End $ 40,020 $ 38,901 $ 34,841 $ 40,020 $ 34,841 of Period

Noninterest Income

Noninterest income was $1.3 million for the fourth quarter of 2021, a decrease of $122,000 from $1.4 million for the third quarter of 2021, and an increase of $302,000 from $986,000 for the fourth quarter of 2020. The linked-quarter decrease was primarily due to decreased gains on sales of securities and letter of credit fees. The year-over-year increase was primarily due to increased letter of credit fees and bank-owned life insurance income.

The following table presents the major components of noninterest income for the periods indicated:



Three Months Ended Year Ended

December September December December December 31, 30, 31, 31, 31,

(dollars in 2021 2021 2020 2021 2020 thousands)

Noninterest Income:

Customer Service Fees $ 274 $ 268 $ 251 $ 1,007 $ 826

Net Gain on Sales of - 48 30 750 1,503 Securities

Letter of Credit Fees 541 577 477 1,676 1,503

Debit Card 149 143 118 563 428 Interchange Fees

Swap Fees - - - - 907

Bank-Owned Life 150 166 - 316 - Insurance

Other Income 174 208 110 997 672

Totals $ 1,288 $ 1,410 $ 986 $ 5,309 $ 5,839

Noninterest Expense

Noninterest expense was $12.5 million for the fourth quarter of 2021, a decrease of $777,000 from $13.2 million for the third quarter of 2021, and a decrease of $2.8 million from $15.3 million for the fourth quarter of 2020. The linked-quarter decrease was primarily due to lower salaries and employee benefits related to higher bonus accruals in the third quarter of 2021, and $582,000 of debt prepayment fees associated with a partial early redemption of $11.3 million of subordinated debentures issued in July 2017 that occurred in the third quarter of 2021. The year-over-year decrease was primarily attributable to $5.6 million of debt prepayment fees associated with the early extinguishment of $69.0 million of FHLB term advances incurred in the fourth quarter of 2020, partially offset by an increase in salaries and employee benefits, and marketing and advertising expenses.

The following table presents the major components of noninterest expense for the periods indicated:



Three Months Ended Year Ended

December September December December December 31, 30, 31, 31, 31,

(dollars in 2021 2021 2020 2021 2020 thousands)

Noninterest Expense:

Salaries and $ 7,966 $ 8,309 $ 6,216 $ 30,889 $ 25,568Employee Benefits

Occupancy and 939 942 979 3,916 3,258 Equipment

FDIC Insurance 345 355 270 1,305 788 Assessment

Data Processing 306 325 293 1,222 1,027

Professional and 719 708 566 2,523 1,966 Consulting Fees

InformationTechnology and 554 598 397 2,163 1,374 Telecommunications

Marketing and 469 418 143 1,487 788 Advertising

Intangible Asset 48 48 48 191 191 Amortization

Amortization ofTax Credit 152 152 146 562 738 Investments

Debt Prepayment - 582 5,613 582 7,043 Fees

Other Expense 961 799 587 3,255 2,646

Totals $ 12,459 $ 13,236 $ 15,258 $ 48,095 $ 45,387

The Company continues to add key talent across the organization, reaching 220 full-time equivalent employees at December 31, 2021, compared to 219 employees at September 30, 2021, and 183 employees at December 31, 2020.

The efficiency ratio, a non-GAAP financial measure, was 40.8% for the fourth quarter of 2021, compared to 43.9% for the third quarter of 2021, and 59.0% for the fourth quarter of 2020. Excluding the impact of certain non-routine income and expenses, the adjusted efficiency ratio, a non-GAAP financial measure, was 40.3% for the fourth quarter of 2021, 41.5% for the third quarter of 2021 and 36.6% for the fourth quarter of 2020. The efficiencies of the Company's "branch-light" model have positioned the Company well, and going forward, provide more flexibility for the Company to make significant investments in technology as the industry adapts to evolving client behavior.

Income Taxes

The effective combined federal and state income tax rate for the fourth quarter of 2021 was 25.7%, a decrease from 26.0% for the third quarter of 2021 and an increase from 25.3% for the fourth quarter of 2020. The effective combined federal and state income tax rate for the year ended December 31, 2021 was 25.8%, compared to 23.8% for the year ended December 31, 2020.

Balance Sheet

Total assets at December 31, 2021 were $3.48 billion, a 2.6% increase from $3.39 billion at September 30, 2021, and an 18.8% increase from $2.93 billion at December 31, 2020. The linked-quarter increase in total assets was primarily due to strong organic loan growth, offset partially by a decrease in cash and cash equivalents. The year-over-year increase in total assets was primarily due to robust organic loan growth, as well as the continued purchases of investment securities.

Total gross loans at December 31, 2021 were $2.82 billion, an increase of $107.5 million, or 4.0%, over total gross loans of $2.71 billion at September 30, 2021, and an increase of $493.0 million, or 21.2%, over total gross loans of $2.33 billion at December 31, 2020. The increase in the loan portfolio during the fourth quarter of 2021 was primarily due to growth in the construction and land development, multifamily and CRE nonowner occupied segments, offset partially by the payoff of PPP loans. When excluding PPP loans, gross loans grew $135.5 million during the fourth quarter of 2021, or 20.2% on an annualized basis. The Company's continued strong loan growth has been driven by the expansion of its talented lending teams, PPP-related new client acquisitions, the strong, growing brand of the Bank in the Twin Cities market and the M&A-related market disruption in the Twin Cities resulting in client and banker acquisition opportunities.

The following table presents the dollar composition of the Company's loan portfolio, by category, at the dates indicated:



December 31, September 30, June 30, 2021 March 31, December 31, 2021 2021 2021 2020

(dollars in thousands)

Commercial $ 360,169 $ 350,081 $ 321,474 $ 301,023 $ 304,220

PaycheckProtection 26,162 54,190 99,072 163,258 138,454 Program

Constructionand Land 281,474 257,167 251,573 193,372 170,217 Development

Real Estate Mortgage:

1 - 4 Family 305,317 290,535 277,943 294,964 294,479 Mortgage

Multifamily 910,243 865,172 790,275 665,415 626,465

CRE Owner 111,096 101,834 87,507 79,665 75,604 Occupied

CRE Nonowner 818,569 786,271 758,101 720,396 709,300 Occupied

Total RealEstate 2,145,225 2,043,812 1,913,826 1,760,440 1,705,848 MortgageLoans

Consumer and 6,442 6,762 8,241 8,030 7,689 Other

Total Loans, 2,819,472 2,712,012 2,594,186 2,426,123 2,326,428 Gross

Allowancefor Loan (40,020 ) (38,901 ) (37,591 ) (35,987 ) (34,841 )Losses

Net Deferred (9,535 ) (10,199 ) (11,450 ) (11,273 ) (9,151 )Loan Fees

Total Loans, $ 2,769,917 $ 2,662,912 $ 2,545,145 $ 2,378,863 $ 2,282,436 Net

Total deposits at December 31, 2021 were $2.95 billion, an increase of $92.1 million, or 3.2%, over total deposits of $2.85 billion at September 30, 2021, and an increase of $444.6 million, or 17.8%, over total deposits of $2.50 billion at December 31, 2020. Deposit growth in the fourth quarter of 2021 was primarily due to an increase in noninterest bearing and interest bearing transaction deposits and savings and money market deposits, offset partially by declines in time deposits and brokered deposits. Similar to the loan portfolio, the growth in core deposits has been a result of successful new client and banker acquisition initiatives and the strong, growing brand of the Bank in the Twin Cities market. However, given the prospect for higher interest rates, management believes deposits could experience fluctuations in future periods.

The following table presents the dollar composition of the Company's deposit portfolio, by category, at the dates indicated:



December 31, September 30, June 30, 2021 March 31, December 31, 2021 2021 2021 2020

(dollars in thousands)

NoninterestBearing $ 875,084 $ 846,490 $ 758,023 $ 712,999 $ 671,903TransactionDeposits

InterestBearing 544,789 488,785 432,123 433,344 366,290 TransactionDeposits

Savings andMoney 863,567 791,861 761,485 791,583 657,617 MarketDeposits

Time 293,474 309,824 321,857 344,581 353,543 Deposits

Brokered 369,323 417,197 447,418 356,147 452,283 Deposits

Total $ 2,946,237 $ 2,854,157 $ 2,720,906 $ 2,638,654 $ 2,501,636 Deposits

Capital

Total shareholders' equity at December 31, 2021 was $379.3 million, an increase of $11.5 million, or 3.1%, over total shareholders' equity of $367.8 million at September 30, 2021, and an increase of $113.9 million, or 42.9%, over total shareholders' equity of $265.4 million at December 31, 2020. The linked-quarter increase was due to net income retained. The year-over-year increase was due to net income retained, the issuance of preferred stock and an increase in unrealized gains in the securities and derivatives portfolios.

During the fourth quarter of 2021, the Company repurchased 3,320 shares of its common stock. Shares were repurchased at a weighted average price of $16.36 for a total of $54,000. The Company remains committed to maintaining strong capital levels while enhancing shareholder value as it strategically executes its stock repurchase program in this fluid economic environment.

Tangible book value per share, a non-GAAP financial measure, was $10.98 as of December 31, 2021, an increase of 3.3% from $10.62 as of September 30, 2021, and an increase of 17.9% from $9.31 as of December 31, 2020. Tangible common equity as a percentage of tangible assets, a non-GAAP financial measure, was 8.91% at December 31, 2021, compared to 8.81% at September 30, 2021, and 8.96% at December 31, 2020.

Asset Quality

Annualized net charge-offs as a percent of average loans for both the third and fourth quarters of 2021 were 0.00%, compared to 0.08% for the fourth quarter of 2020. At December 31, 2021, the Company's nonperforming assets, which include nonaccrual loans, loans past due 90 days and still accruing, and foreclosed assets, were $722,000, or 0.02% of total assets, as compared to $734,000, or 0.02% of total assets at September 30, 2021, and $775,000 or 0.03% of total assets at December 31, 2020.

The Company has increased oversight and analysis of all segments of the loan portfolio in response to the COVID-19 pandemic, especially in vulnerable industries such as hospitality and restaurants, to proactively monitor evolving credit risk. Loans that have potential weaknesses that warrant a watchlist risk rating at December 31, 2021 totaled $49.3 million, compared to $67.4 million at September 30, 2021, and $44.8 million at December 31, 2020. As the COVID-19 pandemic continues to evolve, the length and extent of the economic uncertainty may result in further watchlist or adverse classifications in the loan portfolio. Loans that warranted a substandard risk rating at December 31, 2021 totaled $22.6 million, compared to $7.7 million at September 30, 2021, and $15.2 million at December 31, 2020. The linked-quarter increase to substandard loans was primarily due to the migration of two relationships previously listed as watch and both negatively impacted by the pandemic. Management continues to actively work with the borrowers and closely monitor substandard credits.

The following table presents a summary of asset quality measurements at the dates indicated:



As of and for the Three Months Ended

December 31, September June 30, March 31, December 31, 30,

(dollars in 2021 2021 2021 2021 2020 thousands)

SelectedAsset Quality Data

Loans 30-89 $ 49 $ 18 $ - $ - $ 13 Days Past Due

Loans 30-89Days Past Due 0.00 % 0.00 % 0.00 % 0.00 % 0.00 %to TotalLoans

Nonperforming $ 722 $ 734 $ 761 $ 770 $ 775 Loans

NonperformingLoans to 0.03 % 0.03 % 0.03 % 0.03 % 0.03 %Total Loans

Foreclosed $ - $ - $ - $ - $ - Assets

NonaccrualLoans to 0.03 % 0.03 % 0.03 % 0.03 % 0.03 %Total Loans

NonaccrualLoans andLoans PastDue 90 Days 0.03 0.03 0.03 0.03 0.03 and StillAccruing toTotal Loans

Nonperforming $ 722 $ 734 $ 761 $ 770 $ 775 Assets ^(1)

NonperformingAssets to 0.02 % 0.02 % 0.02 % 0.03 % 0.03 %Total Assets^(1)

Allowance forLoan Losses 1.42 1.43 1.45 1.48 1.50 to TotalLoans

Allowance forLoan Lossesto Total 1.43 1.46 1.50 1.59 1.59 Loans,Excluding PPPLoans

Allowance forLoans Losses 5,542.94 5,299.86 4,939.68 4,673.64 4,495.61 to NonaccrualLoans

Net LoanCharge-Offs(Recoveries) 0.00 0.00 0.00 (0.01 ) 0.08 (Annualized)to AverageLoans

_________________________________(1)

Nonperforming assets are defined as nonaccrual loans plus loans 90 days past due plus foreclosed assets.

The Company developed programs for clients who experienced business and personal disruptions due to the COVID-19 pandemic by providing interest-only modifications, loan payment deferrals, and extended amortization modifications. In accordance with interagency regulatory guidance and the CARES Act, qualifying loans modified in response to the COVID-19 pandemic are not considered troubled debt restructurings. The Company had 12 modified loans totaling $35.0 million outstanding as of December 31, 2021, representing 1.3% of the total loan portfolio, excluding PPP loans, which is down slightly from $35.4 million at September 30, 2021.

The following table presents a rollforward of loan modification activity, by modification type, from September 30, 2021 to December 31, 2021:

_________________________________(1) Nonperforming assets are defined as nonaccrual loans plus loans 90 days past due plus foreclosed assets.

The Company developed programs for clients who experienced business and personal disruptions due to the COVID-19 pandemic by providing interest-only modifications, loan payment deferrals, and extended amortization modifications. In accordance with interagency regulatory guidance and the CARES Act, qualifying loans modified in response to the COVID-19 pandemic are not considered troubled debt restructurings. The Company had 12 modified loans totaling $35.0 million outstanding as of December 31, 2021, representing 1.3% of the total loan portfolio, excluding PPP loans, which is down slightly from $35.4 million at September 30, 2021.

The following table presents a rollforward of loan modification activity, by modification type, from September 30, 2021 to December 31, 2021:



(dollars in thousands) Interest-Only Extended Total Amortization

Principal Balance - Beginning $ 30,597 $ 4,764 $ 35,361 of Period

Modification Expired (468 ) - (468 )

Net Principal Advances 120 (24 ) 96 (Payments)

Principal Balance - End of $ 30,249 $ 4,740 $ 34,989 Period

About the Company

Bridgewater Bancshares, Inc. (Nasdaq: BWB) is a St. Louis Park, Minnesota-based financial holding company. Bridgewater's banking subsidiary, Bridgewater Bank, is a premier, full-service Twin Cities bank dedicated to serving the diverse needs of commercial real estate investors, entrepreneurs, business clients and high-net-worth individuals. By pairing a range of deposit, lending and business services solutions with a responsive service model, Bridgewater has seen continuous growth and profitability. With total assets of $3.5 billion and seven branches as of December 31, 2021, Bridgewater is considered one of the largest locally led banks in the State of Minnesota, and has received numerous awards for its growth, banking services and esteemed corporate culture.

Use of Non-GAAP financial measures

In addition to the results presented in accordance with U.S. Generally Accepted Accounting Principles (GAAP), the Company routinely supplements its evaluation with an analysis of certain non-GAAP financial measures. The Company believes these non-GAAP financial measures, in addition to the related GAAP measures, provide meaningful information to investors to help them understand the Company's operating performance and trends, and to facilitate comparisons with the performance of peers. These disclosures should not be viewed as a substitute for operating results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies. Reconciliations of non-GAAP disclosures used in this earnings release to the comparable GAAP measures are provided in the accompanying tables.

Forward-Looking Statements

This earnings release contains "forward-looking statements" within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements include, without limitation, statements concerning plans, estimates, calculations, forecasts and projections with respect to the anticipated future performance of the Company. These statements are often, but not always, identified by words such as "may", "might", "should", "could", "predict", "potential", "believe", "expect", "continue", "will", "anticipate", "seek", "estimate", "intend", "plan", "projection", "would", "annualized", "target" and "outlook", or the negative version of those words or other comparable words of a future or forward-looking nature.

Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based only on our current beliefs, expectations and assumptions regarding our business, future plans and strategies, projections, anticipated events and trends, the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict and many of which are outside of our control. Our actual results and financial condition may differ materially from those indicated in the forward-looking statements. Therefore, you should not rely on any of these forward-looking statements. Important factors that could cause our actual results and financial condition to differ materially from those indicated in the forward-looking statements include, among others, the following: the negative effects of the ongoing COVID-19 pandemic, including its effects on the economic environment, our clients and our operations, including due to supply chain disruptions, as well as any changes to federal, state or local government laws, regulations or orders in connection with the pandemic; loan concentrations in our portfolio; the overall health of the local and national real estate market; our ability to successfully manage credit risk; business and economic conditions generally and in the financial services industry, nationally and within our market area, including rising rates of inflation; our ability to maintain an adequate level of allowance for loan losses; new or revised accounting standards, including as a result of the future implementation of the Current Expected Credit Loss standard; the concentration of large loans to certain borrowers; the concentration of large deposits from certain clients; our ability to successfully manage liquidity risk, especially in light of recent excess liquidity at the Bank; our dependence on non-core funding sources and our cost of funds; our ability to raise additional capital to implement our business plan; our ability to implement our growth strategy and manage costs effectively; developments and uncertainty related to the future use and availability of some reference rates, such as the London Interbank Offered Rate, as well as other alternative reference rates; the composition of our senior leadership team and our ability to attract and retain key personnel; talent and labor shortages and high rates of employee turnover; the occurrence of fraudulent activity, breaches or failures of our information security controls or cybersecurity-related incidents; interruptions involving our information technology and telecommunications systems or third-party servicers; competition in the financial services industry, including from nonbank competitors such as credit unions and "fintech" companies; the effectiveness of our risk management framework; the commencement and outcome of litigation and other legal proceedings and regulatory actions against us; the impact of recent and future legislative and regulatory changes, including changes to federal and state corporate tax rates; interest rate risk, including the effects of anticipated rate increases by the Federal Reserve; fluctuations in the values of the securities held in our securities portfolio; the imposition of tariffs or other governmental policies impacting the value of products produced by our commercial borrowers; severe weather, natural disasters, wide spread disease or pandemics (including the COVID-19 pandemic), acts of war or terrorism or other adverse external events; potential impairment to the goodwill we recorded in connection with our past acquisition; changes to U.S. or state tax laws, regulations and guidance, including recent proposals to increase the federal corporate tax rate; and any other risks described in the "Risk Factors" sections of reports filed by the Company with the Securities and Exchange Commission.

Any forward-looking statement made by us in this press release is based only on information currently available to us and speaks only as of the date on which it is made. We undertake no obligation to publicly update any forward-looking statement, whether written or oral, that may be made from time to time, whether as a result of new information, future developments or otherwise.



Bridgewater Bancshares, Inc. and Subsidiaries

Consolidated Balance Sheets

(dollars in thousands, except share data)



December 31, September 30, December 31,

2021 2021 2020

(Unaudited) (Unaudited)

ASSETS

Cash and Cash Equivalents $ 143,473 $ 189,502 $ 160,675

Bank-Owned Certificates of 1,876 1,877 2,860 Deposit

Securities Available for Sale, 439,362 413,149 390,629 at Fair Value

Loans, Net of Allowance forLoan Losses of $40,020 atDecember 31, 2021 (unaudited), 2,769,917 2,662,912 2,282,436 $38,901 at September 30, 2021(unaudited) and $34,841 atDecember 31, 2020

Federal Home Loan Bank (FHLB) 5,242 5,442 5,027 Stock, at Cost

Premises and Equipment, Net 49,395 49,803 50,987

Accrued Interest 9,186 8,550 9,172

Goodwill 2,626 2,626 2,626

Other Intangible Assets, Net 479 527 670

Other Assets 56,103 54,737 22,263

Total Assets $ 3,477,659 $ 3,389,125 $ 2,927,345



LIABILITIES AND EQUITY

LIABILITIES

Deposits:

Noninterest Bearing $ 875,084 $ 846,490 $ 671,903

Interest Bearing 2,071,153 2,007,667 1,829,733

Total Deposits 2,946,237 2,854,157 2,501,636

Notes Payable - - 11,000

FHLB Advances 42,500 47,500 57,500

Subordinated Debentures, Net of 92,239 92,153 73,739 Issuance Costs

Accrued Interest Payable 1,409 1,656 1,615

Other Liabilities 16,002 25,856 16,450

Total Liabilities 3,098,387 3,021,322 2,661,940



SHAREHOLDERS' EQUITY

Preferred Stock- $0.01 par value; Authorized 10,000,000

Preferred Stock - Issued andOutstanding 2,760,000 Series Ashares ($25 liquidationpreference) at December 31, 66,514 66,515 - 2021 (unaudited), 2,760,000 atSeptember 30, 2021 (unaudited)and -0- at December 31, 2020

Common Stock- $0.01 par value; Authorized 75,000,000

Common Stock - Issued andOutstanding 28,206,566 atDecember 31, 2021 (unaudited), 282 281 281 28,066,822 at September 30,2021 (unaudited) and 28,143,493at December 31, 2020

Additional Paid-In Capital 104,123 103,471 103,714

Retained Earnings 199,347 188,004 154,831

Accumulated Other Comprehensive 9,006 9,532 6,579 Income

Total Shareholders' Equity 379,272 367,803 265,405

Total Liabilities and $ 3,477,659 $ 3,389,125 $ 2,927,345 Shareholders' Equity

Bridgewater Bancshares, Inc. and Subsidiaries

Consolidated Statements of Income

(dollars in thousands, except per share data)

Three Months Ended

Year Ended

December 31,

September 30,

December 31,

December 31,

December 31,

2021

2021

2020

2021

2020

(Unaudited)

(Unaudited)

(Unaudited)

(Unaudited)

INTEREST INCOME

Loans, Including Fees

$

31,140

$

31,049

$

28,242

$

118,845

$

105,492

Investment Securities

2,511

2,333

2,333

9,576

8,720

Other

124

135

124

458

614

Total Interest Income

33,775

33,517

30,699

128,879

114,826

INTEREST EXPENSE

Deposits

3,241

3,417

4,079

13,842

19,813

Notes Payable

-

-

105

61

439

FHLB Advances

162

213

551

831

3,390

Subordinated Debentures

1,219

1,214

1,119

4,630

3,109

Federal Funds Purchased

-

-

4

6

111

Total Interest Expense

4,622

4,844

5,858

19,370

26,862

NET INTEREST INCOME

29,153

28,673

24,841

109,509

87,964

Provision for Loan Losses

1,150

1,300

3,900

5,150

12,750

NET INTEREST INCOME AFTER

PROVISION FOR LOAN LOSSES

28,003

27,373

20,941

104,359

75,214

NONINTEREST INCOME

Customer Service Fees

274

268

251

1,007

826

Net Gain on Sales of Available for Sale Securities

-

48

30

750

1,503

Other Income

1,014

1,094

705

3,552

3,510

Total Noninterest Income

1,288

1,410

986

5,309

5,839

NONINTEREST EXPENSE

Salaries and Employee Benefits

7,966

8,309

6,216

30,889

25,568

Occupancy and Equipment

939

942

979

3,916

3,258

Other Expense

3,554

3,985

8,063

13,290

16,561

Total Noninterest Expense

12,459

13,236

15,258

48,095

45,387

INCOME BEFORE INCOME TAXES

16,832

15,547

6,669

61,573

35,666

Provision for Income Taxes

4,318

4,038

1,690

15,886

8,472

NET INCOME

12,514

11,509

4,979

45,687

27,194

Preferred Stock Dividends

1,171

-

-

1,171

-

NET INCOME TO COMMON SHAREHOLDERS

$

11,343

$

11,509

$

4,979

$

44,516

$

27,194

EARNINGS PER SHARE

Basic

$

0.41

$

0.41

$

0.18

$

1.59

$

0.95

Diluted

0.39

0.40

0.17

1.54

0.93

Dividends Paid Per Common Share

-

-

-

-

-



Bridgewater Bancshares, Inc. and Subsidiaries

Consolidated Statements of Income

(dollars in thousands, except per share data)



Three Months Ended Year Ended

December 31, September December 31, December December 30, 31, 31,

2021 2021 2020 2021 2020

(Unaudited) (Unaudited) (Unaudited) (Unaudited)

INTEREST INCOME

Loans,Including $ 31,140 $ 31,049 $ 28,242 $ 118,845 $ 105,492Fees

Investment 2,511 2,333 2,333 9,576 8,720 Securities

Other 124 135 124 458 614

TotalInterest 33,775 33,517 30,699 128,879 114,826 Income



INTEREST EXPENSE

Deposits 3,241 3,417 4,079 13,842 19,813

Notes - - 105 61 439 Payable

FHLB 162 213 551 831 3,390 Advances

Subordinated 1,219 1,214 1,119 4,630 3,109 Debentures

FederalFunds - - 4 6 111 Purchased

TotalInterest 4,622 4,844 5,858 19,370 26,862 Expense



NET INTEREST 29,153 28,673 24,841 109,509 87,964 INCOME

Provisionfor Loan 1,150 1,300 3,900 5,150 12,750 Losses



NET INTEREST INCOME AFTER

PROVISIONFOR LOAN 28,003 27,373 20,941 104,359 75,214 LOSSES



NONINTEREST INCOME

Customer 274 268 251 1,007 826 Service Fees

Net Gain onSales ofAvailable - 48 30 750 1,503 for SaleSecurities

Other Income 1,014 1,094 705 3,552 3,510

TotalNoninterest 1,288 1,410 986 5,309 5,839 Income



NONINTEREST EXPENSE

Salaries andEmployee 7,966 8,309 6,216 30,889 25,568 Benefits

Occupancyand 939 942 979 3,916 3,258 Equipment

Other 3,554 3,985 8,063 13,290 16,561 Expense

TotalNoninterest 12,459 13,236 15,258 48,095 45,387 Expense



INCOMEBEFORE 16,832 15,547 6,669 61,573 35,666 INCOME TAXES

Provisionfor Income 4,318 4,038 1,690 15,886 8,472 Taxes

NET INCOME 12,514 11,509 4,979 45,687 27,194

PreferredStock 1,171 - - 1,171 - Dividends

NET INCOMETO COMMON $ 11,343 $ 11,509 $ 4,979 $ 44,516 $ 27,194 SHAREHOLDERS



EARNINGS PER SHARE

Basic $ 0.41 $ 0.41 $ 0.18 $ 1.59 $ 0.95

Diluted 0.39 0.40 0.17 1.54 0.93

DividendsPaid Per - - - - - Common Share

Bridgewater Bancshares, Inc. and Subsidiaries

Analysis of Average Balances, Yields and Rates

(dollars in thousands, except per share data)

For the Year Ended

December 31, 2021

December 31, 2020

Average

Interest

Yield/

Average

Interest

Yield/

Balance

& Fees

Rate

Balance

& Fees

Rate

(dollars in thousands)

Interest Earning Assets:

Cash Investments

$

132,188

$

199

0.15

%

$

80,113

$

170

0.21

%

Investment Securities:

Taxable Investment Securities

317,954

7,015

2.21

234,873

5,712

2.43

Tax-Exempt Investment Securities (1)

75,313

3,242

4.30

87,587

3,807

4.35

Total Investment Securities

393,267

10,257

2.61

322,460

9,519

2.95

Paycheck Protection Program Loans (2)

103,151

6,441

6.24

122,240

4,143

3.39

Loans (1)(2)

2,481,706

112,587

4.54

2,032,180

101,469

4.99

Total Loans

2,584,857

119,028

4.60

2,154,420

105,612

4.90

Federal Home Loan Bank Stock

5,571

259

4.65

8,866

444

5.01

Total Interest Earning Assets

3,115,883

129,743

4.16

%

2,565,859

115,745

4.51

%

Noninterest Earning Assets

73,917

51,720

Total Assets

$

3,189,800

$

2,617,579

Interest Bearing Liabilities:

Deposits:

Interest Bearing Transaction Deposits

$

441,528

$

2,052

0.46

%

$

295,036

$

1,626

0.55

%

Savings and Money Market Deposits

773,779

3,729

0.48

523,520

5,341

1.02

Time Deposits

323,638

4,099

1.27

374,195

7,806

2.09

Brokered Deposits

406,863

3,962

0.97

348,126

5,040

1.45

Total Interest Bearing Deposits

1,945,808

13,842

0.71

1,540,877

19,813

1.29

Federal Funds Purchased

2,479

6

0.24

7,239

111

1.53

Notes Payable

1,658

61

3.66

11,749

439

3.73

FHLB Advances

53,294

831

1.56

148,524

3,390

2.28

Subordinated Debentures

82,865

4,630

5.59

50,954

3,109

6.10

Total Interest Bearing Liabilities

2,086,104

19,370

0.93

%

1,759,343

26,862

1.53

%

Noninterest Bearing Liabilities:

Noninterest Bearing Transaction Deposits

764,087

579,595

Other Noninterest Bearing Liabilities

23,372

19,905

Total Noninterest Bearing Liabilities

787,459

599,500

Shareholders' Equity

316,237

258,736

Total Liabilities and Shareholders' Equity

$

3,189,800

$

2,617,579

Net Interest Income / Interest Rate Spread

110,373

3.23

%

88,883

2.98

%

Net Interest Margin (3)

3.54

%

3.46

%

Taxable Equivalent Adjustment:

Tax-Exempt Investment Securities

(864

)

(919

)

Net Interest Income

$

109,509

$

87,964



Bridgewater Bancshares, Inc. and Subsidiaries

Analysis of Average Balances, Yields and Rates

(dollars in thousands, except per share data)



For the Year Ended

December 31, 2021 December 31, 2020

Average Interest Yield/ Average Interest Yield/

Balance & Fees Rate Balance & Fees Rate

(dollars in thousands)

Interest Earning Assets:

Cash $ 132,188 $ 199 0.15 % $ 80,113 $ 170 0.21 %Investments

Investment Securities:

TaxableInvestment 317,954 7,015 2.21 234,873 5,712 2.43 Securities

Tax-ExemptInvestment 75,313 3,242 4.30 87,587 3,807 4.35 Securities^ (1)

TotalInvestment 393,267 10,257 2.61 322,460 9,519 2.95 Securities

PaycheckProtection 103,151 6,441 6.24 122,240 4,143 3.39 Program Loans ^(2)

Loans ^(1)(2) 2,481,706 112,587 4.54 2,032,180 101,469 4.99

Total Loans 2,584,857 119,028 4.60 2,154,420 105,612 4.90

Federal Home 5,571 259 4.65 8,866 444 5.01 Loan Bank Stock

Total Interest 3,115,883 129,743 4.16 % 2,565,859 115,745 4.51 %Earning Assets

Noninterest 73,917 51,720 Earning Assets

Total Assets $ 3,189,800 $ 2,617,579

InterestBearing Liabilities:

Deposits:

InterestBearing $ 441,528 $ 2,052 0.46 % $ 295,036 $ 1,626 0.55 %TransactionDeposits

Savings andMoney Market 773,779 3,729 0.48 523,520 5,341 1.02 Deposits

Time Deposits 323,638 4,099 1.27 374,195 7,806 2.09

Brokered 406,863 3,962 0.97 348,126 5,040 1.45 Deposits

Total InterestBearing 1,945,808 13,842 0.71 1,540,877 19,813 1.29 Deposits

Federal Funds 2,479 6 0.24 7,239 111 1.53 Purchased

Notes Payable 1,658 61 3.66 11,749 439 3.73

FHLB Advances 53,294 831 1.56 148,524 3,390 2.28

Subordinated 82,865 4,630 5.59 50,954 3,109 6.10 Debentures

Total InterestBearing 2,086,104 19,370 0.93 % 1,759,343 26,862 1.53 %Liabilities

NoninterestBearing Liabilities:

NoninterestBearing 764,087 579,595 TransactionDeposits

OtherNoninterest 23,372 19,905 BearingLiabilities

TotalNoninterest 787,459 599,500 BearingLiabilities

Shareholders' 316,237 258,736 Equity

TotalLiabilities and $ 3,189,800 $ 2,617,579 Shareholders'Equity

Net InterestIncome / 110,373 3.23 % 88,883 2.98 %Interest RateSpread

Net Interest 3.54 % 3.46 %Margin ^(3)

TaxableEquivalent Adjustment:

Tax-ExemptInvestment (864 ) (919 ) Securities

Net Interest $ 109,509 $ 87,964 Income

_________________________________(1)

Interest income and average rates for tax-exempt investment securities and loans are presented on a tax-equivalent basis, assuming a statutory federal income tax rate of 21%

(2)

Average loan balances include nonaccrual loans. Interest income on loans includes amortization of deferred loan fees, net of deferred loan costs.

(3)

Net interest margin includes the tax equivalent adjustment and represents the annualized results of: (i) the difference between interest income on interest earning assets and the interest expense on interest bearing liabilities, divided by (ii) average interest earning assets for the period.

_________________________________ Interest income and average rates for tax-exempt investment securities and(1) loans are presented on a tax-equivalent basis, assuming a statutory federal income tax rate of 21%

(2) Average loan balances include nonaccrual loans. Interest income on loans includes amortization of deferred loan fees, net of deferred loan costs.

Net interest margin includes the tax equivalent adjustment and represents the annualized results of: (i) the difference between interest income on(3) interest earning assets and the interest expense on interest bearing liabilities, divided by (ii) average interest earning assets for the period.

Non-GAAP Financial Measures

(dollars in thousands) (unaudited)

For the Three Months Ended

For the Year Ended

December 31,

September 30,

December 31,

December 31,

December 31,

2021

2021

2020

2021

2020

Pre-Provision Net Revenue

Noninterest Income

$

1,288

$

1,410

$

986

$

5,309

$

5,839

Less: Gain on sales of Securities

-

(48

)

(30

)

(750

)

(1,503

)

Total Operating Noninterest Income

1,288

1,362

956

4,559

4,336

Plus: Net Interest Income

29,153

28,673

24,841

109,509

87,964

Net Operating Revenue

$

30,441

$

30,035

$

25,797

$

114,068

$

92,300

Noninterest Expense

$

12,459

$

13,236

$

15,258

$

48,095

$

45,387

Less: Amortization of Tax Credit Investments

(152

)

(152

)

(146

)

(562

)

(738

)

Less: Debt Prepayment Fees

-

(582

)

(5,613

)

(582

)

(7,043

)

Total Operating Noninterest Expense

$

12,307

$

12,502

$

9,499

$

46,951

$

37,606

Pre-Provision Net Revenue

$

18,134

$

17,533

$

16,298

$

67,117

$

54,694

Plus:

Non-Operating Revenue Adjustments

-

48

30

750

1,503

Less:

Provision for Loan Losses

1,150

1,300

3,900

5,150

12,750

Non-Operating Expense Adjustments

152

734

5,759

1,144

7,781

Provision for Income Taxes

4,318

4,038

1,690

15,886

8,472

Net Income

$

12,514

$

11,509

$

4,979

$

45,687

$

27,194

Average Assets

$

3,403,270

$

3,332,301

$

2,816,032

$

3,189,800

$

2,617,579

Pre-Provision Net Revenue Return on Average Assets

2.11

%

2.09

%

2.30

%

2.10

%

2.09

%



Non-GAAP Financial Measures

(dollars in thousands) (unaudited)



For the Three Months Ended For the Year Ended

December 31, September 30, December 31, December 31, December 31,

2021 2021 2020 2021 2020

Pre-Provision Net Revenue

Noninterest $ 1,288 $ 1,410 $ 986 $ 5,309 $ 5,839 Income

Less: Gain onsales of - (48 ) (30 ) (750 ) (1,503 )Securities

TotalOperating 1,288 1,362 956 4,559 4,336 NoninterestIncome

Plus: NetInterest 29,153 28,673 24,841 109,509 87,964 Income

Net Operating $ 30,441 $ 30,035 $ 25,797 $ 114,068 $ 92,300 Revenue



Noninterest $ 12,459 $ 13,236 $ 15,258 $ 48,095 $ 45,387 Expense

Less:Amortization (152 ) (152 ) (146 ) (562 ) (738 )of Tax CreditInvestments

Less: DebtPrepayment - (582 ) (5,613 ) (582 ) (7,043 )Fees

TotalOperating $ 12,307 $ 12,502 $ 9,499 $ 46,951 $ 37,606 NoninterestExpense



Pre-Provision $ 18,134 $ 17,533 $ 16,298 $ 67,117 $ 54,694 Net Revenue



Plus:

Non-OperatingRevenue - 48 30 750 1,503 Adjustments

Less:

Provision for 1,150 1,300 3,900 5,150 12,750 Loan Losses

Non-OperatingExpense 152 734 5,759 1,144 7,781 Adjustments

Provision for 4,318 4,038 1,690 15,886 8,472 Income Taxes

Net Income $ 12,514 $ 11,509 $ 4,979 $ 45,687 $ 27,194



Average $ 3,403,270 $ 3,332,301 $ 2,816,032 $ 3,189,800 $ 2,617,579 Assets

Pre-ProvisionNet RevenueReturn on 2.11 % 2.09 % 2.30 % 2.10 % 2.09 %AverageAssets

As of and for the Three Months Ended

As of and for the Year Ended

December 31,

September 30,

December 31,

December 31,

December 31,

2021

2021

2020

2021

2020

Core Net Interest Margin

Net Interest Income (Tax-Equivalent Basis)

$

29,388

$

28,880

$

25,051

$

110,373

$

88,883

Less: Loan Fees

(1,462

)

(1,487

)

(1,514

)

(5,173

)

(5,283

)

Less: PPP Interest and Fees

(1,057

)

(1,753

)

(2,097

)

(6,441

)

(4,143

)

Core Net Interest Income

$

26,869

$

25,640

$

21,440

$

98,759

$

79,457

Average Interest Earning Assets

3,320,603

3,234,301

2,759,543

3,115,883

2,565,859

Less: Average PPP Loans

(39,900

)

(76,006

)

(165,099

)

(103,151

)

(122,240

)

Core Average Interest Earning Assets

$

3,280,703

$

3,158,295

$

2,594,444

$

3,012,732

$

2,443,619

Core Net Interest Margin

3.25

%

3.22

%

3.29

%

3.28

%

3.25

%



As of and for the Three Months Ended As of and for the Year Ended

December 31, September 30, December 31, December 31, December 31,

2021 2021 2020 2021 2020

Core Net Interest Margin

Net InterestIncome $ 29,388 $ 28,880 $ 25,051 $ 110,373 $ 88,883 (Tax-EquivalentBasis)

Less: Loan Fees (1,462 ) (1,487 ) (1,514 ) (5,173 ) (5,283 )

Less: PPPInterest and (1,057 ) (1,753 ) (2,097 ) (6,441 ) (4,143 )Fees

Core Net $ 26,869 $ 25,640 $ 21,440 $ 98,759 $ 79,457 Interest Income



AverageInterest 3,320,603 3,234,301 2,759,543 3,115,883 2,565,859 Earning Assets

Less: Average (39,900 ) (76,006 ) (165,099 ) (103,151 ) (122,240 )PPP Loans

Core AverageInterest $ 3,280,703 $ 3,158,295 $ 2,594,444 $ 3,012,732 $ 2,443,619 Earning Assets

Core Net 3.25 % 3.22 % 3.29 % 3.28 % 3.25 %Interest Margin

Non-GAAP Financial Measures

(dollars in thousands) (unaudited)

For the Three Months Ended

For the Year Ended

December 31,

September 30,

December 31,

December 31,

December 31,

2021

2021

2020

2021

2020

Efficiency Ratio

Noninterest Expense

$

12,459

$

13,236

$

15,258

$

48,095

$

45,387

Less: Amortization of Intangible Assets

(48

)

(48

)

(48

)

(191

)

(191

)

Adjusted Noninterest Expense

$

12,411

$

13,188

$

15,210

$

47,904

$

45,196

Net Interest Income

$

29,153

$

28,673

$

24,841

$

109,509

$

87,964

Noninterest Income

1,288

1,410

986

5,309

5,839

Less: Gain on Sales of Securities

-

(48

)

(30

)

(750

)

(1,503

)

Adjusted Operating Revenue

$

30,441

$

30,035

$

25,797

$

114,068

$

92,300

Efficiency Ratio

40.8

%

43.9

%

59.0

%

42.0

%

49.0

%

Adjusted Efficiency Ratio

Noninterest Expense

$

12,459

$

13,236

$

15,258

$

48,095

$

45,387

Less: Amortization of Tax Credit Investments

(152

)

(152

)

(146

)

(562

)

(738

)

Less: Debt Prepayment Fees

-

(582

)

(5,613

)

(582

)

(7,043

)

Less: Amortization of Intangible Assets

(48

)

(48

)

(48

)

(191

)

(191

)

Adjusted Noninterest Expense

$

12,259

$

12,454

$

9,451

$

46,760

$

37,415

Net Interest Income

$

29,153

$

28,673

$

24,841

$

109,509

$

87,964

Noninterest Income

1,288

1,410

986

5,309

5,839

Less: Gain on Sales of Securities

-

(48

)

(30

)

(750

)

(1,503

)

Adjusted Operating Revenue

$

30,441

$

30,035

$

25,797

$

114,068

$

92,300

Adjusted Efficiency Ratio

40.3

%

41.5

%

36.6

%

41.0

%

40.5

%



Non-GAAP Financial Measures

(dollars in thousands) (unaudited)



For the Three Months Ended For the Year Ended

December September December December December 31, 30, 31, 31, 31,

2021 2021 2020 2021 2020

Efficiency Ratio

Noninterest $ 12,459 $ 13,236 $ 15,258 $ 48,095 $ 45,387 Expense

Less:Amortization (48 ) (48 ) (48 ) (191 ) (191 )of IntangibleAssets

AdjustedNoninterest $ 12,411 $ 13,188 $ 15,210 $ 47,904 $ 45,196 Expense

Net Interest $ 29,153 $ 28,673 $ 24,841 $ 109,509 $ 87,964 Income

Noninterest 1,288 1,410 986 5,309 5,839 Income

Less: Gain onSales of - (48 ) (30 ) (750 ) (1,503 )Securities

AdjustedOperating $ 30,441 $ 30,035 $ 25,797 $ 114,068 $ 92,300 Revenue

Efficiency 40.8 % 43.9 % 59.0 % 42.0 % 49.0 %Ratio



AdjustedEfficiency Ratio

Noninterest $ 12,459 $ 13,236 $ 15,258 $ 48,095 $ 45,387 Expense

Less:Amortization (152 ) (152 ) (146 ) (562 ) (738 )of Tax CreditInvestments

Less: DebtPrepayment - (582 ) (5,613 ) (582 ) (7,043 )Fees

Less:Amortization (48 ) (48 ) (48 ) (191 ) (191 )of IntangibleAssets

AdjustedNoninterest $ 12,259 $ 12,454 $ 9,451 $ 46,760 $ 37,415 Expense

Net Interest $ 29,153 $ 28,673 $ 24,841 $ 109,509 $ 87,964 Income

Noninterest 1,288 1,410 986 5,309 5,839 Income

Less: Gain onSales of - (48 ) (30 ) (750 ) (1,503 )Securities

AdjustedOperating $ 30,441 $ 30,035 $ 25,797 $ 114,068 $ 92,300 Revenue

AdjustedEfficiency 40.3 % 41.5 % 36.6 % 41.0 % 40.5 %Ratio

For the Three Months Ended

For the Year Ended

December 31,

September 30,

December 31,

December 31,

December 31,

2021

2021

2020

2021

2020

Adjusted Noninterest Expense to Average Assets (Annualized)

Noninterest Expense

$

12,459

$

13,236

$

15,258

$

48,095

$

45,387

Less: Amortization of Tax Credit Investments

(152

)

(152

)

(146

)

(562

)

(738

)

Less: Debt Prepayment Fees

-

(582

)

(5,613

)

(582

)

(7,043

)

Adjusted Noninterest Expense

$

12,307

$

12,502

$

9,499

$

46,951

$

37,606

Average Assets

$

3,403,270

$

3,332,301

$

2,816,032

$

3,189,800

$

2,617,579

Adjusted Noninterest Expense to Average Assets (Annualized)

1.43

%

1.49

%

1.34

%

1.47

%

1.44

%



For the Three Months Ended For the Year Ended

December 31, September 30, December 31, December 31, December 31,

2021 2021 2020 2021 2020

AdjustedNoninterestExpense to AverageAssets(Annualized)

Noninterest $ 12,459 $ 13,236 $ 15,258 $ 48,095 $ 45,387 Expense

Less:Amortizationof Tax (152 ) (152 ) (146 ) (562 ) (738 )CreditInvestments

Less: DebtPrepayment - (582 ) (5,613 ) (582 ) (7,043 )Fees

AdjustedNoninterest $ 12,307 $ 12,502 $ 9,499 $ 46,951 $ 37,606 Expense



Average $ 3,403,270 $ 3,332,301 $ 2,816,032 $ 3,189,800 $ 2,617,579 Assets

AdjustedNoninterestExpense to 1.43 % 1.49 % 1.34 % 1.47 % 1.44 %AverageAssets(Annualized)

Non-GAAP Financial Measures

(dollars in thousands) (unaudited)

As of and for the Three Months Ended

As of and for the Year Ended

December 31,

September 30,

December 31,

December 31,

December 31,

2021

2021

2020

2021

2020

Tangible Common Equity and Tangible Common Equity/Tangible Assets

Total Shareholders' Equity

$

379,272

$

367,803

$

265,405

Less: Preferred Stock

(66,514

)

(66,515

)

-

Total Common Shareholders' Equity

312,758

301,288

265,405

Less: Intangible Assets

(3,105

)

(3,153

)

(3,296

)

Tangible Common Equity

$

309,653

$

298,135

$

262,109

Total Assets

$

3,477,659

$

3,389,125

$

2,927,345

Less: Intangible Assets

(3,105

)

(3,153

)

(3,296

)

Tangible Assets

$

3,474,554

$

3,385,972

$

2,924,049

Tangible Common Equity/Tangible Assets

8.91

%

8.81

%

8.96

%

Tangible Book Value Per Share

Book Value Per Common Share

$

11.09

$

10.73

$

9.43

Less: Effects of Intangible Assets

(0.11

)

(0.11

)

(0.12

)

Tangible Book Value Per Common Share

$

10.98

$

10.62

$

9.31

Return on Average Tangible Common Equity

Net Income Available to Common Shareholders

$

11,343

$

11,509

$

4,979

$

44,516

$

27,194

Average Shareholders' Equity

$

374,035

$

330,604

$

265,716

$

316,237

$

258,736

Less: Average Preferred Stock

(66,515

)

(32,332

)

-

(24,915

)

-

Average Common Equity

307,520

298,272

265,716

291,322

258,736

Less: Effects of Average Intangible Assets

(3,132

)

(3,180

)

(3,323

)

(3,204

)

(3,395

)

Average Tangible Common Equity

$

304,388

$

295,092

$

262,393

$

288,118

$

255,341

Return on Average Tangible Common Equity

14.78

%

15.47

%

7.55

%

15.45

%

10.65

%



Non-GAAP Financial Measures

(dollars in thousands) (unaudited)



As of and for the Three Months Ended As of and for the Year Ended

December 31, September 30, December 31, December December 31, 31,

2021 2021 2020 2021 2020

TangibleCommon Equityand Tangible Common Equity/TangibleAssets

TotalShareholders' $ 379,272 $ 367,803 $ 265,405 Equity

Less:Preferred (66,514 ) (66,515 ) - Stock

Total CommonShareholders' 312,758 301,288 265,405 Equity

Less:Intangible (3,105 ) (3,153 ) (3,296 ) Assets

Tangible $ 309,653 $ 298,135 $ 262,109 Common Equity



Total Assets $ 3,477,659 $ 3,389,125 $ 2,927,345

Less:Intangible (3,105 ) (3,153 ) (3,296 ) Assets

Tangible $ 3,474,554 $ 3,385,972 $ 2,924,049 Assets

TangibleCommon Equity 8.91 % 8.81 % 8.96 % /TangibleAssets



Tangible BookValue Per Share

Book ValuePer Common $ 11.09 $ 10.73 $ 9.43 Share

Less: Effectsof Intangible (0.11 ) (0.11 ) (0.12 ) Assets

Tangible BookValue Per $ 10.98 $ 10.62 $ 9.31 Common Share



Return onAverage TangibleCommon Equity

Net IncomeAvailable to $ 11,343 $ 11,509 $ 4,979 $ 44,516 $ 27,194 CommonShareholders



AverageShareholders' $ 374,035 $ 330,604 $ 265,716 $ 316,237 $ 258,736 Equity

Less: AveragePreferred (66,515 ) (32,332 ) - (24,915 ) - Stock

Average 307,520 298,272 265,716 291,322 258,736 Common Equity

Less: Effectsof Average (3,132 ) (3,180 ) (3,323 ) (3,204 ) (3,395 )IntangibleAssets

AverageTangible $ 304,388 $ 295,092 $ 262,393 $ 288,118 $ 255,341 Common Equity

Return onAverage 14.78 % 15.47 % 7.55 % 15.45 % 10.65 %TangibleCommon Equity

Three Months Ended

December 31,

September 30,

June 30,

March 31,

December 31,

2021

2021

2021

2021

2020

Tangible Common Equity

Total Shareholders' Equity

$

379,272

$

367,803

$

290,830

$

279,171

$

265,405

Less: Preferred Stock

(66,514

)

(66,515

)

-

-

-

Common Shareholders' Equity

312,758

301,288

290,830

279,171

265,405

Less: Intangible Assets

(3,105

)

(3,153

)

(3,200

)

(3,248

)

(3,296

)

Tangible Common Equity

$

309,653

$

298,135

$

287,630

$

275,923

$

262,109



Three Months Ended

December September June 30, March 31, December 31, 30, 31,

2021 2021 2021 2021 2020

Tangible Common Equity

TotalShareholders' $ 379,272 $ 367,803 $ 290,830 $ 279,171 $ 265,405 Equity

Less:Preferred (66,514 ) (66,515 ) - - - Stock

CommonShareholders' 312,758 301,288 290,830 279,171 265,405 Equity

Less:Intangible (3,105 ) (3,153 ) (3,200 ) (3,248 ) (3,296 )Assets

Tangible $ 309,653 $ 298,135 $ 287,630 $ 275,923 $ 262,109 Common Equity

As of and for the Three Months Ended

As of and for the Year Ended

December 31, 2021

September 30, 2021

December 31, 2020

December 31, 2021

December 31, 2020

Adjusted Diluted Earnings Per Common Share

Net Income Available to Common Shareholders

$

11,343

$

11,509

$

4,979

$

44,516

$

27,194

Add: Debt Prepayment Fees

-

582

5,613

582

7,043

Less: Tax Impact

-

(151

)

(1,336

)

(151

)

(1,676

)

Net Income, Excluding Impact of Debt Prepayment Fees

$

11,343

$

11,940

$

9,256

$

44,947

$

32,561

Diluted Weighted Average Shares Outstanding

29,038,785

29,110,547

28,823,384

28,968,286

29,170,220

Adjusted Diluted Earnings Per Common Share

$

0.39

$

0.41

$

0.32

$

1.55

$

1.12

View source version on businesswire.com: https://www.businesswire.com/news/home/20220126005633/en/

CONTACT: Investor Relations Contact: Justin Horstman Director of Investor Relations investorrelations@bwbmn.com 952-542-5169