Bridgewater Bancshares, Inc. Announces Second Quarter 2023 Net Income of $9.8 Million, $0.31 Diluted Earnings Per Common Share

7/26/23 4:15:00 PM ET

$BWB

Major Banks

Finance

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Second Quarter 2023 Highlights

Annualized return on average assets (ROA) of 0.88%, compared to 1.07% for the first quarter of 2023.
Annualized return on average shareholders' equity (ROE) of 9.69%, compared to 11.70% for the first quarter of 2023, and annualized return on average tangible common equity (ROATCE)⁽¹⁾ of 10.48%, compared to 12.90% for the first quarter of 2023.
Gross loans increased $51.9 million, or 5.6% annualized, from the first quarter of 2023.
Deposits increased by $166.8 million, or 19.6% annualized, from the first quarter of 2023, including an increase of core deposits⁽²⁾ of $45.3 million, or 7.4% annualized.
Total borrowing capacity of $1.5 billion at June 30, 2023, compared to $783.0 million at December 31, 2022.
Net interest margin (on a fully tax-equivalent basis) of 2.40%, compared to 2.72% in the first quarter of 2023.
Efficiency ratio⁽¹⁾ of 52.7%, compared to 46.2% for the first quarter of 2023.
Noninterest expense increased slightly by $205,000, or 1.4%, from the first quarter of 2023, with annualized noninterest expense to average assets of 1.29%, compared to 1.31% for the first quarter of 2023.
A credit loss provision of $550,000 was recorded to support continued loan growth, with allowance for credit losses to total loans of 1.36% at both June 30, 2023 and March 31, 2023.
Annualized net loan charge-offs (recoveries) as a percentage of average loans of 0.00% for the second quarter of 2023, in-line with the first quarter of 2023.
Nonperforming assets to total assets of 0.02% at June 30, 2023 and March 31, 2023.
Tangible book value per share⁽¹⁾ of $12.15 at June 30, 2023, an increase of $0.20, or 6.7% annualized, compared to $11.95 at March 31, 2023.

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

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

Bridgewater Bancshares, Inc. (NASDAQ:BWB) (the Company), the parent company of Bridgewater Bank (the Bank), today announced net income of $9.8 million for the second quarter of 2023, compared to $11.6 million for the first quarter of 2023, and $12.9 million for the second quarter of 2022. Earnings per diluted common share for the second quarter of 2023 were $0.31, compared to $0.37 per diluted common share for the first quarter of 2023, and $0.41 per diluted common share for the same period in 2022.

"Bridgewater's second quarter results were highlighted by several improving financial trends as we continue to manage the business through a challenging banking environment," said Chairman, Chief Executive Officer, and President, Jerry Baack. "The overall composition of our balance sheet improved with a strong inflow of deposits, including growth in core deposits, and a reduction in overall borrowings. While our net interest margin remained under pressure, we saw the pace of compression slow noticeably on a month-to-month basis during the quarter. In addition, noninterest expense was again well controlled and asset quality remained superb."

"During the quarter, our teams maintained their focus on supporting and growing our client base, both by proactively engaging with our existing clients and cultivating new relationships across the Twin Cities market. In July, we also relocated our downtown Minneapolis branch to an enhanced location with more space to better serve our clients. We believe our proven ability to develop strong client relationships, combined with encouraging financial trends, will continue to drive success moving forward."

Key Financial Measures

	As of and for the Three Months Ended									As of and for the Six Months Ended
	June 30,			March 31,			June 30,			June 30,			June 30,
	2023			2023			2022			2023			2022
Per Common Share Data
Basic Earnings Per Share	$	0.32		$	0.38		$	0.43		$	0.70		$	0.83
Diluted Earnings Per Share		0.31			0.37			0.41			0.69			0.80
Book Value Per Share		12.25			12.05			11.14			12.25			11.14
Tangible Book Value Per Share ⁽¹⁾		12.15			11.95			11.03			12.15			11.03
Basic Weighted Average Shares Outstanding		27,886,425			27,726,894			27,839,260			27,807,100			27,980,749
Diluted Weighted Average Shares Outstanding		28,198,739			28,490,046			28,803,842			28,350,705			28,991,780
Shares Outstanding at Period End		27,973,995			27,845,244			27,677,372			27,973,995			27,677,372

Selected Performance Ratios
Return on Average Assets (Annualized)		0.88	%		1.07	%		1.38	%		0.97	%		1.40	%
Pre-Provision Net Revenue Return on Average Assets (Annualized) ⁽¹⁾		1.16			1.49			2.19			1.32			2.16
Return on Average Shareholders' Equity (Annualized)		9.69			11.70			13.55			10.69			13.27
Return on Average Tangible Common Equity (Annualized)⁽¹⁾		10.48			12.90			15.26			11.68			14.91
Yield on Interest Earning Assets⁽²⁾		5.06			4.91			4.16			4.99			4.15
Yield on Total Loans, Gross⁽²⁾		5.19			5.06			4.45			5.12			4.45
Cost of Total Deposits		2.66			2.01			0.46			2.34			0.44
Cost of Funds		2.91			2.41			0.63			2.66			0.61
Net Interest Margin⁽²⁾		2.40			2.72			3.58			2.55			3.59
Core Net Interest Margin ⁽¹⁾⁽²⁾		2.31			2.62			3.34			2.47			3.34
Efficiency Ratio⁽¹⁾		52.7			46.2			40.2			49.3			41.2
Noninterest Expense to Average Assets (Annualized)		1.29			1.31			1.47			1.30			1.51
Loan to Deposit Ratio		104.4			108.0			100.7
Core Deposits to Total Deposits ⁽³⁾		70.3			72.4			82.9
Tangible Common Equity to Tangible Assets ⁽¹⁾		7.39			7.23			7.87

Capital Ratios (Bank Only) ⁽⁴⁾
Tier 1 Leverage Ratio		10.69	%		10.61	%		11.43	%
Common Equity Tier 1 Risk-based Capital Ratio		11.66			11.37			11.53
Tier 1 Risk-based Capital Ratio		11.66			11.37			11.53
Total Risk-based Capital Ratio		12.91			12.62			12.74

Capital Ratios (Consolidated)⁽⁴⁾
Tier 1 Leverage Ratio		9.47	%		9.41	%		10.33	%
Common Equity Tier 1 Risk-based Capital Ratio		8.72			8.48			8.50
Tier 1 Risk-based Capital Ratio		10.33			10.08			10.29
Total Risk-based Capital Ratio		13.50			13.25			13.98

______________________________

(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

	June 30,		March 31,		December 31,		September 30,		June 30,
(dollars in thousands)	2023		2023		2022		2022		2022
Selected Balance Sheet Data
Total Assets	$	4,603,185	$	4,602,899	$	4,345,662	$	4,128,987	$	3,883,264
Total Loans, Gross		3,736,211		3,684,360		3,569,446		3,380,082		3,225,885
Allowance for Credit Losses		50,701		50,148		47,996		46,491		44,711
Goodwill and Other Intangibles		2,832		2,866		2,914		2,962		3,009

Deposits		3,577,932		3,411,123		3,416,543		3,305,074		3,201,953
Tangible Common Equity⁽¹⁾		339,780		332,626		324,636		312,531		305,360
Total Shareholders' Equity		409,126		402,006		394,064		382,007		374,883
Average Total Assets - Quarter-to-Date		4,483,662		4,405,234		4,251,345		3,948,201		3,743,575
Average Shareholders' Equity - Quarter-to-Date		406,347		403,533		387,589		384,020		381,448

______________________________

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


	For the Three Months Ended									For the Six Months Ended
	June 30,			March 31,			June 30,			June 30,			June 30,
(dollars in thousands)	2023			2023			2022			2023			2022
Selected Income Statement Data
Interest Income	$	55,001		$	51,992		$	37,782		$	106,993		$	72,476
Interest Expense		29,129			23,425			5,252			52,554			9,766
Net Interest Income		25,872			28,567			32,530			54,439			62,710
Provision for Credit Losses		50			625			3,025			675			4,700
Net Interest Income after Provision for Credit Losses		25,822			27,942			29,505			53,764			58,010
Noninterest Income		1,415			1,943			1,650			3,358			3,207
Noninterest Expense		14,388			14,183			13,752			28,571			27,260
Income Before Income Taxes		12,849			15,702			17,403			28,551			33,957
Provision for Income Taxes		3,033			4,060			4,521			7,093			8,813
Net Income		9,816			11,642			12,882			21,458			25,144
Preferred Stock Dividends		(1,014	)		(1,013	)		(1,014	)		(2,027	)		(2,027	)
Net Income Available to Common Shareholders	$	8,802		$	10,629		$	11,868		$	19,431		$	23,117

Income Statement

Net Interest Income

Net interest income was $25.9 million for the second quarter of 2023, a decrease of $2.7 million, from $28.6 million in the first quarter of 2023, and a decrease of $6.7 million, from $32.5 million in the second quarter of 2022. The linked-quarter decrease in net interest income was primarily due to higher rates paid on deposits in the rising interest rate environment. The year-over-year decrease in net interest income was primarily due to higher rates paid on deposits and increased borrowings in the rising interest rate environment. Average interest earning assets were $4.40 billion for the second quarter of 2023, an increase of $71.3 million, or 1.7%, from $4.32 billion for the first quarter of 2023, and an increase of $723.3 million, or 19.7%, from $3.67 billion for the second quarter of 2022. The linked-quarter increase in average interest earning assets was primarily due to continued growth in the loan portfolio. The year-over-year increase in average interest earning assets was primarily due to strong growth in the loan portfolio and purchases of investment securities.

Net interest margin (on a fully tax-equivalent basis) for the second quarter of 2023 was 2.40%, a 32 basis point decrease from 2.72% in the first quarter of 2023, and a 118 basis point decrease from 3.58% in the second quarter of 2022. 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 second quarter of 2023 was 2.31%, a 31 basis point decrease from 2.62% in the first quarter of 2023, and a 103 basis point decrease from 3.34% in the second quarter of 2022. The linked-quarter decline in the margin was primarily due to higher funding costs, offset partially by higher earning asset yields. The year-over-year decline in the margin was primarily due to higher funding costs and increased borrowings in the rising interest rate environment, offset partially by higher earning asset yields.

Interest income was $55.0 million for the second quarter of 2023, an increase of $3.0 million, from $52.0 million in the first quarter of 2023, and an increase of $17.2 million, from $37.8 million in the second quarter of 2022. The yield on interest earning assets (on a fully tax-equivalent basis) was 5.06% in the second quarter of 2023, compared to 4.91% in the first quarter of 2023, and 4.16% in the second quarter of 2022. The linked-quarter increase in the yield on interest earning assets was primarily due to the increase in market interest rates resulting in new loan originations and loans repricing at yields accretive to the existing portfolio. The year-over-year increase in the yield on interest earning assets was primarily due to growth and repricing of the loan and securities portfolios in the rising interest rate environment.

Loan interest income and loan fees remain the primary contributing factors to the changes in the yield on interest earning assets. The aggregate loan yield, excluding PPP loans, increased to 5.19% in the second quarter of 2023, which was 13 basis points higher than 5.06% in the first quarter of 2023, and 76 basis points higher than 4.43% in the second quarter of 2022. While loan fees have historically maintained a relatively stable contribution to the aggregate loan yield, the recent periods saw fewer loan prepayments, which historically has accelerated the recognition of loan fees. Despite the decrease in fee recognition, the Company is encouraged that the core loan yield continues to rise as new loan originations and the existing portfolio reprice in the higher rate environment.

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


	Three Months Ended
	June 30, 2023		March 31, 2023		December 31, 2022		September 30, 2022		June 30, 2022
Interest	5.09	%	4.95	%	4.74	%	4.42	%	4.17	%
Fees	0.10		0.11		0.12		0.17		0.26
Yield on Loans, Excluding PPP Loans	5.19	%	5.06	%	4.86	%	4.59	%	4.43	%

Interest expense was $29.1 million for the second quarter of 2023, an increase of $5.7 million, from $23.4 million in the first quarter of 2023, and an increase of $23.9 million, from $5.3 million in the second quarter of 2022. The cost of interest bearing liabilities increased 56 basis points on a linked-quarter basis from 3.03% in the first quarter of 2023 to 3.59% in the second quarter of 2023, primarily due to higher rates paid on deposits and increased utilization of FHLB advances in the rising interest rate environment. On a year-over-year basis, the cost of interest bearing liabilities increased 273 basis points from 0.86% in the second quarter of 2022 to 3.59% in the second quarter of 2023, primarily due to the rapid increase in market interest rates that occurred between the periods, which impacted all funding sources.

Interest expense on deposits was $23.0 million for the second quarter of 2023, an increase of $6.6 million, from $16.4 million in the first quarter of 2023, and an increase of $19.5 million, from $3.5 million in the second quarter of 2022. The cost of total deposits increased 65 basis points on a linked-quarter basis from 2.01% in the first quarter of 2023, to 2.66% in the second quarter of 2023, primarily due to the rising interest rate environment and increased competition from other market alternatives. On a year-over-year basis, the cost of total deposits increased 220 basis points from 0.46% in the second quarter of 2022, to 2.66% in the second quarter of 2023, primarily due to upward repricing of the deposit portfolio in the higher interest rate environment.

A summary of the Company's average balances, interest yields and rates, and net interest margin for the three months ended June 30, 2023, March 31, 2023, and June 30, 2022 is as follows:


	For the Three Months Ended
	June 30, 2023							March 31, 2023							June 30, 2022
	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	$	59,963	$	587		3.93	%	$	63,253	$	447		2.86	%	$	61,046	$	40		0.26	%
Investment Securities:
Taxable Investment Securities		568,143		6,000		4.24			574,242		5,958		4.21			417,142		2,696		2.59
Tax-Exempt Investment Securities⁽¹⁾		27,081		300		4.44			29,803		330		4.49			74,261		795		4.30
Total Investment Securities		595,224		6,300		4.24			604,045		6,288		4.22			491,403		3,491		2.85
Paycheck Protection Program Loans ⁽²⁾		913		2		1.00			999		2		1.00			8,335		263		12.67
Loans ⁽¹⁾⁽²⁾		3,715,621		48,064		5.19			3,629,447		45,263		5.06			3,099,344		34,205		4.43
Total Loans		3,716,534		48,066		5.19			3,630,446		45,265		5.06			3,107,679		34,468		4.45
Federal Home Loan Bank Stock		23,330		456		7.84			25,962		372		5.81			11,620		59		2.04
Total Interest Earning Assets		4,395,051		55,409		5.06	%		4,323,706		52,372		4.91	%		3,671,748		38,058		4.16	%
Noninterest Earning Assets		88,611							81,528							71,827
Total Assets	$	4,483,662						$	4,405,234						$	3,743,575
Interest Bearing Liabilities:
Deposits:
Interest Bearing Transaction Deposits	$	683,034	$	5,918		3.48	%	$	461,372	$	2,780		2.44	%	$	552,502	$	694		0.50	%
Savings and Money Market Deposits		861,947		7,048		3.28			1,044,794		6,499		2.52			925,354		1,185		0.51
Time Deposits		269,439		1,702		2.53			248,174		1,069		1.75			280,645		665		0.95
Brokered Deposits		896,989		8,330		3.72			743,465		6,026		3.29			403,931		912		0.91
Total Interest Bearing Deposits		2,711,409		22,998		3.40			2,497,805		16,374		2.66			2,162,432		3,456		0.64
Federal Funds Purchased		210,677		2,761		5.26			415,111		4,944		4.83			137,379		410		1.20
Notes Payable		13,750		285		8.33			13,750		263		7.77			—		—		—
FHLB Advances		242,714		2,092		3.46			128,222		861		2.72			47,511		167		1.41
Subordinated Debentures		79,041		993		5.04			78,945		983		5.05			92,396		1,219		5.29
Total Interest Bearing Liabilities		3,257,591		29,129		3.59	%		3,133,833		23,425		3.03	%		2,439,718		5,252		0.86	%
Noninterest Bearing Liabilities:
Noninterest Bearing Transaction Deposits		755,040							813,598							882,477
Other Noninterest Bearing Liabilities		64,684							54,270							39,932
Total Noninterest Bearing Liabilities		819,724							867,868							922,409
Shareholders' Equity		406,347							403,533							381,448
Total Liabilities and Shareholders' Equity	$	4,483,662						$	4,405,234						$	3,743,575
Net Interest Income / Interest Rate Spread				26,280		1.47	%				28,947		1.88	%				32,806		3.30	%
Net Interest Margin ⁽³⁾						2.40	%						2.72	%						3.58	%
Taxable Equivalent Adjustment:
Tax-Exempt Investment Securities and Loans				(408	)						(380	)						(276	)
Net Interest Income			$	25,872						$	28,567						$	32,530

______________________________

(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 Credit Losses

The provision for credit losses on loans was $550,000 for the second quarter of 2023, compared to $1.5 million for the first quarter of 2023 and $3.0 million for the second quarter of 2022. The provision recorded in the second quarter of 2023 was primarily attributable to the growth of the loan portfolio. The allowance for credit losses on loans to total loans was 1.36% at June 30, 2023 and March 31, 2023, compared to 1.39% at June 30, 2022.

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


	Three Months Ended									Six Months Ended
	June 30,			March 31,			June 30,			June 30,			June 30,
(dollars in thousands)	2023			2023			2022			2023			2022
Balance at Beginning of Period	$	50,148		$	47,996		$	41,692		$	47,996		$	40,020
Impact of Adopting CECL		—			650			—			650			—
Provision for Credit Losses		550			1,500			3,025			2,050			4,700
Charge-offs		(3	)		(4	)		(14	)		(7	)		(29	)
Recoveries		6			6			8			12			20
Balance at End of Period	$	50,701		$	50,148		$	44,711		$	50,701		$	44,711

The provision for credit losses for off-balance sheet credit exposures was a negative provision of $500,000 for the second quarter of 2023, compared to a negative $875,000 for the first quarter of 2023 and zero for the second quarter of 2022. The negative provision during the quarter was due to a reduction in outstanding unfunded commitments primarily attributable to the migration to funded loans.

The following table presents a summary of the activity in the provision for credit losses for the periods indicated:


	Three Months Ended								Six Months Ended
	June 30,			March 31,			June 30,		June 30,			June 30,
(dollars in thousands)	2023			2023			2022		2023			2022
Provision for Credit Losses on Loans	$	550		$	1,500		$	3,025	$	2,050		$	4,700
Provision for Credit Losses for Off-Balance Sheet Credit Exposures		(500	)		(875	)		—		(1,375	)		—
Provision for Credit Losses	$	50		$	625		$	3,025	$	675		$	4,700

Noninterest Income

Noninterest income was $1.4 million for the second quarter of 2023, a decrease of $528,000 from $1.9 million for the first quarter of 2023, and a decrease of $235,000 from $1.7 million for the second quarter of 2022. The linked-quarter decrease was primarily due to a decrease in letter of credit fees and FHLB prepayment income. The year-over-year decrease was primarily due to decreased letter of credit fees and other income, offset partially by an increase in customer service fees and bank-owned life insurance income.

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


	Three Months Ended							Six Months Ended
	June 30,		March 31,			June 30,		June 30,			June 30,
(dollars in thousands)	2023		2023			2022		2023			2022
Noninterest Income:
Customer Service Fees	$	368	$	349		$	298	$	717		$	579
Net Gain (Loss) on Sales of Securities		50		(56	)		52		(6	)		52
Letter of Credit Fees		379		634			564		1,013			806
Debit Card Interchange Fees		155		138			152		293			285
Swap Fees		—		—			—		—			557
Bank-Owned Life Insurance		238		234			149		472			297
FHLB Prepayment Income		—		299			—		299			—
Other Income		225		345			435		570			631
Totals	$	1,415	$	1,943		$	1,650	$	3,358		$	3,207

Noninterest Expense

Noninterest expense was $14.4 million for the second quarter of 2023, an increase of $205,000 from $14.2 million for the first quarter of 2023, and an increase of $636,000 from $13.8 million for the second quarter of 2022. The linked-quarter increase was primarily due to industry-wide increases in the FDIC insurance assessment, offset partially by a decrease in salaries and employee benefits resulting from lower discretionary incentive accruals and a decrease in occupancy and equipment. The year-over-year increase was primarily attributable to increases in the FDIC insurance assessment and derivative collateral fees, offset partially by decreases in salaries and employee benefits and marketing and advertising.

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


	Three Months Ended						Six Months Ended
	June 30,		March 31,		June 30,		June 30,		June 30,
(dollars in thousands)	2023		2023		2022		2023		2022
Noninterest Expense:
Salaries and Employee Benefits	$	8,589	$	8,815	$	8,977	$	17,404	$	17,671
Occupancy and Equipment		1,075		1,209		1,042		2,284		2,127
FDIC Insurance Assessment		900		665		330		1,565		690
Data Processing		401		357		356		758		653
Professional and Consulting Fees		829		755		742		1,584		1,436
Derivative Collateral Fees		404		380		27		784		29
Information Technology and Telecommunications		711		683		594		1,394		1,172
Marketing and Advertising		321		262		524		583		1,150
Intangible Asset Amortization		34		48		47		82		95
Amortization of Tax Credit Investments		114		114		63		228		180
Other Expense		1,010		895		1,050		1,905		2,057
Totals	$	14,388	$	14,183	$	13,752	$	28,571	$	27,260

The Company had 253 full-time equivalent employees at June 30, 2023, compared to 246 employees at March 31, 2023, and 236 employees at June 30, 2022. The efficiency ratio, a non-GAAP financial measure, was 52.7% for the second quarter of 2023, compared to 46.2% for the first quarter of 2023, and 40.2% for the second quarter of 2022.

Income Taxes

The effective combined federal and state income tax rate for the second quarter of 2023 was 23.6%, a decrease from 25.9% for the first quarter of 2023, and 26.0% for the second quarter of 2022.

Balance Sheet

Total assets at June 30, 2023 and March 31, 2023 were $4.60 billion, an 18.5% increase from $3.88 billion at June 30, 2022. The year-over-year increase in total assets was primarily due to strong loan growth, purchases of investment securities, and an increase in cash and cash equivalent balances.

Total gross loans at June 30, 2023 were $3.74 billion, an increase of $51.9 million, or 5.6% annualized, over total gross loans of $3.68 billion at March 31, 2023, and an increase of $510.3 million, or 15.8%, over total gross loans of $3.23 billion at June 30, 2022. The increase in the loan portfolio during the second quarter of 2023 was primarily due to the funding of existing construction and land development loans and growth in the 1-4 family mortgage segment, offset partially by a decrease in the 1-4 family construction segment.

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


	June 30, 2023			March 31, 2023			December 31, 2022			September 30, 2022			June 30, 2022
(dollars in thousands)
Commercial	$	459,184		$	454,193		$	435,344		$	412,448		$	403,569
Paycheck Protection Program		877			963			1,049			1,192			4,860
Construction and Land Development		351,069			312,277			295,554			280,380			305,552
1 - 4 Family Construction		69,648			85,797			70,242			55,177			53,639
Real Estate Mortgage:
1 - 4 Family Mortgage		400,708			380,210			355,474			341,102			334,815
Multifamily		1,314,524			1,320,081			1,306,738			1,230,509			1,087,865
CRE Owner Occupied		159,088			158,650			149,905			151,088			142,214
CRE Nonowner Occupied		971,532			962,671			947,008			900,691			886,432
Total Real Estate Mortgage Loans		2,845,852			2,821,612			2,759,125			2,623,390			2,451,326
Consumer and Other		9,581			9,518			8,132			7,495			6,939
Total Loans, Gross		3,736,211			3,684,360			3,569,446			3,380,082			3,225,885
Allowance for Loan Losses		(50,701	)		(50,148	)		(47,996	)		(46,491	)		(44,711	)
Net Deferred Loan Fees		(7,718	)		(8,735	)		(9,293	)		(9,088	)		(9,536	)
Total Loans, Net	$	3,677,792		$	3,625,477		$	3,512,157		$	3,324,503		$	3,171,638

Total deposits at June 30, 2023 were $3.58 billion, an increase of $166.8 million, or 19.6% annualized, over total deposits of $3.41 billion at March 31, 2023, and an increase of $376.0 million, or 11.7%, over total deposits of $3.20 billion at June 30, 2022. Deposits increased in the second quarter of 2023 primarily due to inflows of core deposits, defined as deposits excluding brokered deposits and time deposits greater than $250,000, and brokered deposits. Brokered deposits continue to be used as a supplemental funding source, as needed, to support continued loan portfolio growth. Uninsured deposits as of June 30, 2023 were 22% of total deposits, down from 24% as of March 31, 2023.

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


	June 30, 2023		March 31, 2023		December 31, 2022		September 30, 2022		June 30, 2022
(dollars in thousands)
Noninterest Bearing Transaction Deposits	$	751,217	$	742,198	$	884,272	$	961,084	$	961,998
Interest Bearing Transaction Deposits		719,488		630,037		451,992		510,396		522,151
Savings and Money Market Deposits		860,613		913,013		1,031,873		1,077,333		952,138
Time Deposits		271,783		266,213		272,253		293,052		272,424
Brokered Deposits		974,831		859,662		776,153		463,209		493,242
Total Deposits	$	3,577,932	$	3,411,123	$	3,416,543	$	3,305,074	$	3,201,953

Capital

Total shareholders' equity at June 30, 2023 was $409.1 million, an increase of $7.1 million, or 1.8%, compared to total shareholders' equity of $402.0 million at March 31, 2023, and an increase of $34.2 million, or 9.1%, over total shareholders' equity of $374.9 million at June 30, 2022. The linked-quarter increase was due to net income retained and unrealized gains in the derivatives portfolio, offset partially by an increase in unrealized losses in the securities portfolio and preferred stock dividends. The year-over-year increase was due to net income retained and unrealized gains in the derivatives portfolio, offset partially by an increase in unrealized losses in the securities portfolio, stock repurchases, the adoption of the Current Expected Credit Losses (CECL) accounting methodology and preferred stock dividends. The Company did not purchase any shares of its common stock during the second quarter of 2023.

Tangible book value per share, a non-GAAP financial measure, was $12.15 as of June 30, 2023, an increase of 1.7% from $11.95 as of March 31, 2023, and an increase of 10.1% from $11.03 as of June 30, 2022. The linked-quarter and year-over-year increases occurred despite the market value depreciation of the securities portfolio driven by the rising interest rate environment. Tangible common equity as a percentage of tangible assets, a non-GAAP financial measure, was 7.39% at June 30, 2023, compared to 7.23% at March 31, 2023, and 7.87% at June 30, 2022.

Today, the Company also announced that its Board of Directors has 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 September 1, 2023 to shareholders of record of the Series A Preferred Stock at the close of business on August 15, 2023.

Liquidity

Total on- and off-balance sheet liquidity was $1.96 billion as of June 30, 2023, compared to $1.92 billion at March 31, 2023 and $1.53 billion at June 30, 2022. The Company did not utilize the Bank Term Funding Program (BTFP) or Federal Reserve Discount Window during the second quarter of 2023.


Primary Liquidity—On-Balance Sheet	June 30, 2023				March 31, 2023				December 31, 2022			September 30, 2022			June 30, 2022
(dollars in thousands)
Cash and Cash Equivalents	$	138,618			$	177,116			$	48,090		$	36,332		$	43,168
Securities Available for Sale		538,220				559,430				548,613			542,007			482,583
Less: Pledged Securities		(236,206	)			(234,452	)			—			—			—
Total Primary Liquidity	$	440,632			$	502,094			$	596,703		$	578,339		$	525,751
Ratio of Primary Liquidity to Total Deposits		12.3		%		14.7		%		17.5	%		17.5	%		16.4	%

Secondary Liquidity—Off-Balance Sheet
Borrowing Capacity
Net Secured Borrowing Capacity with the FHLB	$	400,792			$	246,795			$	390,898		$	426,604		$	569,076
Net Secured Borrowing Capacity with the Federal Reserve Bank		986,644				990,685				157,827			156,534			169,766
Unsecured Borrowing Capacity with Correspondent Lenders		108,000				158,000				208,000			208,000			208,000
Secured Borrowing Capacity with Correspondent Lender		26,250				26,250				26,250			40,000			25,000
Total Secondary Liquidity		1,521,686				1,421,730				782,975			831,138			971,842
Total Primary and Secondary Liquidity	$	1,962,318			$	1,923,824			$	1,379,678		$	1,409,477		$	1,497,593
Ratio of Primary and Secondary Liquidity to Total Deposits		54.8		%		56.4		%		40.4	%		42.6	%		46.8	%

Asset Quality

Annualized net charge-offs (recoveries) as a percentage of average loans were 0.00% for the second quarter of 2023, first quarter of 2023 and second quarter of 2022. At June 30, 2023, the Company's nonperforming assets, which include nonaccrual loans, loans past due 90 days and still accruing, and foreclosed assets, were $778,000, or 0.02% of total assets, as compared to $809,000, or 0.02% of total assets at March 31, 2023, and $688,000, or 0.02% of total assets at June 30, 2022.

Loans that have potential weaknesses that warrant a watchlist risk rating at June 30, 2023 totaled $27.2 million, compared to $27.6 million at March 31, 2023, and $34.7 million at June 30, 2022. Loans that warranted a substandard risk rating at June 30, 2023 totaled $33.8 million, compared to $36.3 million at March 31, 2023, and $27.0 million at June 30, 2022. The linked-quarter decrease was primarily due to the upgrade of one loan relationship; however, increased uncertainty in the economic environment may result in future watchlist or adverse classifications in the loan portfolio.

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


	As of and for the Three Months Ended
	June 30,			March 31,			December 31			September 30,				June 30,
(dollars in thousands)	2023			2023			2022			2022				2022
Selected Asset Quality Data
Loans 30-89 Days Past Due	$	—		$	21		$	186		$	38			$	225
Loans 30-89 Days Past Due to Total Loans		0.00	%		0.00	%		0.01	%		0.00		%		0.01	%
Nonperforming Loans	$	662		$	693		$	639		$	663			$	688
Nonperforming Loans to Total Loans		0.02	%		0.02	%		0.02	%		0.02		%		0.02	%
Foreclosed Assets	$	116		$	116		$	—		$	—			$	—
Nonaccrual Loans to Total Loans		0.02	%		0.02	%		0.02	%		0.02		%		0.02	%
Nonaccrual Loans and Loans Past Due 90 Days and Still Accruing to Total Loans		0.02			0.02			0.02			0.02				0.02
Nonperforming Assets ⁽¹⁾	$	778		$	809		$	639		$	663			$	688
Nonperforming Assets to Total Assets ⁽¹⁾		0.02	%		0.02	%		0.01	%		0.02		%		0.02	%
Allowance for Credit Losses to Total Loans		1.36			1.36			1.34			1.38				1.39
Allowance for Credit Losses to Nonaccrual Loans		7,658.76			7,236.36			7,511.11			7,012.22				6,498.69
Net Loan Charge-Offs (Recoveries) (Annualized) to Average Loans		0.00			0.00			0.00			(0.03	)			0.00

______________________________

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

The Company will host a conference call to discuss its second quarter 2023 financial results on Thursday, July 27, 2023 at 8:00 a.m. Central Time. The conference call can be accessed by dialing 844-481-2913 and requesting to join the Bridgewater Bancshares earnings call. To listen to a replay of the conference call via phone, please dial 877-344-7529 and enter access code 5127957. The replay will be available through August 3, 2023. The conference call will also be available via a live webcast on the Investor Relations section of the Company's website, investors.bridgewaterbankmn.com, and archived for replay.

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 successful 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 $4.6 billion and seven branches as of June 30, 2023, 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: interest rate risk, including the effects of recent and anticipated rate increases by the Federal Reserve; fluctuations in the values of the securities held in our securities portfolio, including as the result of rising interest rates, which has resulted in unrealized losses in our portfolio; business and economic conditions generally and in the financial services industry, nationally and within our market area, including rising rates of inflation and possible recession; the effects of recent developments and events in the financial services industry, including the large-scale deposit withdrawals over a short period of time at Silicon Valley Bank and Signature Bank that resulted in the failure of those institutions; loan concentrations in our portfolio; the overall health of the local and national real estate market; our ability to successfully manage credit risk; our ability to maintain an adequate level of allowance for loan losses; new or revised accounting standards, including as a result of the implementation of the Current Expected Credit Loss standard; the concentration of large loans to certain borrowers; the concentration of large deposits from certain clients, who have balances above current FDIC insurance limits and may withdraw deposits to diversify their exposure; our ability to successfully manage liquidity risk, which may increase our dependence on non-core funding sources such as brokered deposits, and negatively impact 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 expected discontinuation of 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 in response to the recent failures of Silicon Valley Bank and Signature Bank; risks related to climate change and the negative impact it may have on our customers and their businesses; 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 including the Russian invasion of Ukraine; potential impairment to the goodwill the Company recorded in connection with our past acquisition; changes to U.S. or state tax laws, regulations and guidance, including the new 1% excise tax on stock buybacks by publicly traded companies; 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. The Company undertakes 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)*

	June 30,			December 31,			June 30,
	2023			2022			2022
	(Unaudited)						(Unaudited)
ASSETS
Cash and Cash Equivalents	$	177,101		$	87,043		$	73,517
Bank-Owned Certificates of Deposit		1,225			1,181			1,138
Securities Available for Sale, at Fair Value		538,220			548,613			482,583
Loans, Net of Allowance for Credit Losses of $50,701 at June 30, 2023 (unaudited), $47,996 at December 31, 2022 and $44,711 at June 30, 2022 (unaudited)		3,677,792			3,512,157			3,171,638
Federal Home Loan Bank (FHLB) Stock, at Cost		21,557			19,606			9,921
Premises and Equipment, Net		49,710			48,445			49,294
Foreclosed Assets		116			—			—
Accrued Interest		13,822			13,479			10,010
Goodwill		2,626			2,626			2,626
Other Intangible Assets, Net		206			288			383
Bank-Owned Life Insurance		33,958			33,485			25,614
Other Assets		86,852			78,739			56,540
Total Assets	$	4,603,185		$	4,345,662		$	3,883,264

LIABILITIES AND EQUITY
LIABILITIES
Deposits:
Noninterest Bearing	$	751,217		$	884,272		$	961,998
Interest Bearing		2,826,715			2,532,271			2,239,955
Total Deposits		3,577,932			3,416,543			3,201,953
Federal Funds Purchased		195,000			287,000			86,000
Notes Payable		13,750			13,750			—
FHLB Advances		262,000			97,000			56,500
Subordinated Debentures, Net of Issuance Costs		79,096			78,905			92,459
Accrued Interest Payable		2,974			2,831			1,393
Other Liabilities		63,307			55,569			70,076
Total Liabilities		4,194,059			3,951,598			3,508,381

SHAREHOLDERS' EQUITY
Preferred Stock- $0.01 par value; Authorized 10,000,000
Preferred Stock - Issued and Outstanding 27,600 Series A shares ($2,500 liquidation preference) at June 30, 2023 (unaudited), December 31, 2022, and June 30, 2022 (unaudited)		66,514			66,514			66,514
Common Stock- $0.01 par value; Authorized 75,000,000
Common Stock - Issued and Outstanding 27,973,995 at June 30, 2023 (unaudited), 27,751,950 at December 31, 2022 and 27,677,372 at June 30, 2022 (unaudited)		280			278			277
Additional Paid-In Capital		99,044			96,529			96,689
Retained Earnings		264,196			248,685			222,464
Accumulated Other Comprehensive Loss		(20,908	)		(17,942	)		(11,061	)
Total Shareholders' Equity		409,126			394,064			374,883
Total Liabilities and Equity	$	4,603,185		$	4,345,662		$	3,883,264


Bridgewater Bancshares, Inc. and Subsidiaries Consolidated Statements of Income *(dollars in thousands, except per share data)* *(Unaudited)*

	Three Months Ended									Six Months Ended
	June 30,			March 31,			June 30,			June 30,			June 30,
	2023			2023			2022			2023			2022
INTEREST INCOME
Loans, Including Fees	$	47,721		$	44,955		$	34,358		$	92,676		$	66,102
Investment Securities		6,237			6,218			3,325			12,455			6,195
Other		1,043			819			99			1,862			179
Total Interest Income		55,001			51,992			37,782			106,993			72,476

INTEREST EXPENSE
Deposits		22,998			16,374			3,456			39,372			6,614
Notes Payable		285			263			—			548			—
FHLB Advances		2,092			861			167			2,953			317
Subordinated Debentures		993			983			1,219			1,976			2,416
Federal Funds Purchased		2,761			4,944			410			7,705			419
Total Interest Expense		29,129			23,425			5,252			52,554			9,766

NET INTEREST INCOME		25,872			28,567			32,530			54,439			62,710
Provision for Credit Losses		50			625			3,025			675			4,700

NET INTEREST INCOME AFTER
PROVISION FOR CREDIT LOSSES		25,822			27,942			29,505			53,764			58,010

NONINTEREST INCOME
Customer Service Fees		368			349			298			717			579
Net Gain (Loss) on Sales of Available for Sale Securities		50			(56	)		52			(6	)		52
Other Income		997			1,650			1,300			2,647			2,576
Total Noninterest Income		1,415			1,943			1,650			3,358			3,207

NONINTEREST EXPENSE
Salaries and Employee Benefits		8,589			8,815			8,977			17,404			17,671
Occupancy and Equipment		1,075			1,209			1,042			2,284			2,127
Other Expense		4,724			4,159			3,733			8,883			7,462
Total Noninterest Expense		14,388			14,183			13,752			28,571			27,260

INCOME BEFORE INCOME TAXES		12,849			15,702			17,403			28,551			33,957
Provision for Income Taxes		3,033			4,060			4,521			7,093			8,813
NET INCOME		9,816			11,642			12,882			21,458			25,144
Preferred Stock Dividends		(1,014	)		(1,013	)		(1,014	)		(2,027	)		(2,027	)
NET INCOME AVAILABLE TO COMMON SHAREHOLDERS	$	8,802		$	10,629		$	11,868		$	19,431		$	23,117

EARNINGS PER SHARE
Basic	$	0.32		$	0.38		$	0.43		$	0.70		$	0.83
Diluted		0.31			0.37			0.41			0.69			0.80


Bridgewater Bancshares, Inc. and Subsidiaries Analysis of Average Balances, Yields and Rates *(dollars in thousands, except per share data)* *(Unaudited)*

	For the Six Months Ended
	June 30, 2023							June 30, 2022
	Average		Interest			Yield/		Average		Interest			Yield/
	Balance		& Fees			Rate		Balance		& Fees			Rate
(dollars in thousands)
Interest Earning Assets:
Cash Investments	$	61,599	$	1,034		3.38	%	$	70,718	$	66		0.19	%
Investment Securities:
Taxable Investment Securities		571,176		11,958		4.22			395,203		4,951		2.53
Tax-Exempt Investment Securities⁽¹⁾		28,435		629		4.46			72,933		1,574		4.35
Total Investment Securities		599,611		12,587		4.23			468,136		6,525		2.81
Paycheck Protection Program Loans ⁽²⁾		956		5		1.00			13,210		826		12.61
Loans ⁽¹⁾⁽²⁾		3,672,772		93,327		5.12			2,991,195		65,480		4.41
Total Loans		3,673,728		93,332		5.12			3,004,405		66,306		4.45
Federal Home Loan Bank Stock		24,639		828		6.77			8,667		113		2.63
Total Interest Earning Assets		4,359,577		107,781		4.99	%		3,551,926		73,010		4.15	%
Noninterest Earning Assets		85,087							77,395
Total Assets	$	4,444,664						$	3,629,321
Interest Bearing Liabilities:
Deposits:
Interest Bearing Transaction Deposits	$	570,964	$	8,698		3.07	%	$	559,352	$	1,291		0.47	%
Savings and Money Market Deposits		952,865		13,547		2.87			901,102		2,103		0.47
Time Deposits		258,865		2,771		2.16			284,757		1,410		1.00
Brokered Deposits		820,651		14,356		3.53			405,282		1,810		0.90
Total Interest Bearing Deposits		2,603,345		39,372		3.05			2,150,493		6,614		0.62
Federal Funds Purchased		312,329		7,705		4.97			74,340		419		1.14
Notes Payable		13,750		548		8.03			—		—		—
FHLB Advances		185,785		2,953		3.21			45,019		317		1.42
Subordinated Debentures		78,994		1,976		5.05			92,341		2,416		5.28
Total Interest Bearing Liabilities		3,194,203		52,554		3.32	%		2,362,193		9,766		0.83	%
Noninterest Bearing Liabilities:
Noninterest Bearing Transaction Deposits		786,009							852,648
Other Noninterest Bearing Liabilities		59,504							32,248
Total Noninterest Bearing Liabilities		845,513							884,896
Shareholders' Equity		404,948							382,232
Total Liabilities and Shareholders' Equity	$	4,444,664						$	3,629,321
Net Interest Income / Interest Rate Spread				55,227		1.67	%				63,244		3.32	%
Net Interest Margin ⁽³⁾						2.55	%						3.59	%
Taxable Equivalent Adjustment:
Tax-Exempt Investment Securities and Loans				(788	)						(534	)
Net Interest Income			$	54,439						$	62,710

______________________________

(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.


Bridgewater Bancshares, Inc. and Subsidiaries Non-GAAP Financial Measures *(dollars in thousands) (unaudited)*

	For the Three Months Ended												For the Six Months Ended
	June 30,				March 31,				June 30,				June 30,				June 30,
	2023				2023				2022				2023				2022
Pre-Provision Net Revenue
Noninterest Income	$	1,415			$	1,943			$	1,650			$	3,358			$	3,207
Less: (Gain) Loss on Sales of Securities		(50	)			56				(52	)			6				(52	)
Less: FHLB Advance Prepayment Income		—				(299	)			—				(299	)			—
Total Operating Noninterest Income		1,365				1,700				1,598				3,065				3,155
Plus: Net Interest Income		25,872				28,567				32,530				54,439				62,710
Net Operating Revenue	$	27,237			$	30,267			$	34,128			$	57,504			$	65,865

Noninterest Expense	$	14,388			$	14,183			$	13,752			$	28,571			$	27,260
Less: Amortization of Tax Credit Investments		(114	)			(114	)			(63	)			(228	)			(180	)
Total Operating Noninterest Expense	$	14,274			$	14,069			$	13,689			$	28,343			$	27,080

Pre-Provision Net Revenue	$	12,963			$	16,198			$	20,439			$	29,161			$	38,785

Plus:
Non-Operating Revenue Adjustments		50				243				52				293				52
Less:
Provision for Credit Losses		50				625				3,025				675				4,700
Non-Operating Expense Adjustments		114				114				63				228				180
Provision for Income Taxes		3,033				4,060				4,521				7,093				8,813
Net Income	$	9,816			$	11,642			$	12,882			$	21,458			$	25,144

Average Assets	$	4,483,662			$	4,405,234			$	3,743,575			$	4,444,664			$	3,629,321
Pre-Provision Net Revenue Return on Average Assets		1.16		%		1.49		%		2.19		%		1.32		%		2.16		%


	As of and for the Three Months Ended												As of and for the Six Months Ended
	June 30,				March 31,				June 30,				June 30,				June 30,
	2023				2023				2022				2023				2022
Core Net Interest Margin
Net Interest Income (Tax-Equivalent Basis)	$	26,280			$	28,947			$	32,806			$	55,227			$	63,244
Less: Loan Fees		(941	)			(998	)			(2,030	)			(1,939	)			(3,773	)
Less: PPP Interest and Fees		(3	)			(2	)			(263	)			(5	)			(826	)
Core Net Interest Income	$	25,336			$	27,947			$	30,513			$	53,283			$	58,645

Average Interest Earning Assets	$	4,395,050			$	4,323,706			$	3,671,748			$	4,359,576			$	3,551,926
Less: Average PPP Loans		(913	)			(999	)			(8,335	)			(956	)			(13,210	)
Core Average Interest Earning Assets	$	4,394,137			$	4,322,707			$	3,663,413			$	4,358,620			$	3,538,716
Core Net Interest Margin		2.31		%		2.62		%		3.34		%		2.47		%		3.34		%


Non-GAAP Financial Measures *(dollars in thousands) (unaudited)*

	For the Three Months Ended												For the Six Months Ended
	June 30,				March 31,				June 30,				June 30,				June 30,
	2023				2023				2022				2023				2022
Efficiency Ratio
Noninterest Expense	$	14,388			$	14,183			$	13,752			$	28,571			$	27,260
Less: Amortization of Intangible Assets		(34	)			(48	)			(47	)			(82	)			(95	)
Adjusted Noninterest Expense	$	14,354			$	14,135			$	13,705			$	28,489			$	27,165
Net Interest Income		25,872				28,567				32,530				54,439				62,710
Noninterest Income		1,415				1,943				1,650				3,358				3,207
Less: (Gain) Loss on Sales of Securities		(50	)			56				(52	)			6				(52	)
Adjusted Operating Revenue	$	27,237			$	30,566			$	34,128			$	57,803			$	65,865
Efficiency Ratio		52.7		%		46.2		%		40.2		%		49.3		%		41.2		%


	As of and for the Three Months Ended												As of and for the Six Months Ended
	June 30,				March 31,				June 30,				June 30,				June 30,
	2023				2023				2022				2023				2022
Tangible Common Equity and Tangible Common Equity/Tangible Assets
Total Shareholders' Equity	$	409,126			$	402,006			$	374,883
Less: Preferred Stock		(66,514	)			(66,514	)			(66,514	)
Total Common Shareholders' Equity		342,612				335,492				308,369
Less: Intangible Assets		(2,832	)			(2,866	)			(3,009	)
Tangible Common Equity	$	339,780			$	332,626			$	305,360

Total Assets	$	4,603,185			$	4,602,899			$	3,883,264
Less: Intangible Assets		(2,832	)			(2,866	)			(3,009	)
Tangible Assets	$	4,600,353			$	4,600,033			$	3,880,255
Tangible Common Equity/Tangible Assets		7.39		%		7.23		%		7.87		%

Tangible Book Value Per Share
Book Value Per Common Share	$	12.25			$	12.05			$	11.14
Less: Effects of Intangible Assets		(0.10	)			(0.10	)			(0.11	)
Tangible Book Value Per Common Share	$	12.15			$	11.95			$	11.03

Return on Average Tangible Common Equity
Net Income Available to Common Shareholders	$	8,802			$	10,629			$	11,868			$	19,431			$	23,117

Average Shareholders' Equity	$	406,347			$	403,533			$	381,448			$	404,948			$	382,232
Less: Average Preferred Stock		(66,514	)			(66,514	)			(66,514	)			(66,514	)			(66,514	)
Average Common Equity		339,833				337,019				314,934				338,434				315,718
Less: Effects of Average Intangible Assets		(2,846	)			(2,894	)			(3,037	)			(2,870	)			(3,060	)
Average Tangible Common Equity	$	336,987			$	334,125			$	311,897			$	335,564			$	312,658
Return on Average Tangible Common Equity		10.48		%		12.90		%		15.26		%		11.68		%		14.91		%


	Three Months Ended
	June 30,			March 31,			December 31,			September 30,			June 30,
	2023			2023			2022			2022			2022
Tangible Common Equity
Total Shareholders' Equity	$	409,126		$	402,006		$	394,064		$	382,007		$	374,883
Less: Preferred Stock		(66,514	)		(66,514	)		(66,514	)		(66,514	)		(66,514	)
Common Shareholders' Equity		342,612			335,492			327,550			315,493			308,369
Less: Intangible Assets		(2,832	)		(2,866	)		(2,914	)		(2,962	)		(3,009	)
Tangible Common Equity	$	339,780		$	332,626		$	324,636		$	312,531		$	305,360

View source version on businesswire.com: https://www.businesswire.com/news/home/20230725009497/en/

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Date	Price Target	Rating	Analyst
3/4/2024		Outperform	Hovde Group
1/17/2024	$15.50	Overweight	Piper Sandler
1/27/2023	$20.00 → $17.00	Overweight → Neutral	Piper Sandler
6/14/2022	$21.00 → $18.00	Buy → Neutral	B. Riley Securities

Bridgewater Bancshares, Inc. Announces Second Quarter 2023 Net Income of $9.8 Million, $0.31 Diluted Earnings Per Common Share

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