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| PART I |
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| Item 1. Business | | 4 |
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| Item 1A. Risk Factors | | 23 |
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| Item 1B. Unresolved Staff Comments | | 46 |
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| Item 1C. Cybersecurity | | 46 |
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| Item 2. Properties | | 47 |
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| Item 3. Legal Proceedings | | 48 |
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| Item 4. Mine Safety Disclosures | | 48 |
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| PART II |
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| Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities | | 48 |
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| Item 6. [Reserved] | | 51 |
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| Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations | | 51 |
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| Item 7A. Quantitative and Qualitative Disclosures About Market Risk | | 80 |
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| Item 8. Financial Statements and Supplementary Data | | 82 |
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| Reports of Independent Registered Public Accounting Firm (CliftonLarsonAllen LLP, Auditor Firm ID: 655) | | 82 |
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| Reports of Independent Registered Public Accounting Firm (RSM US LLP, Auditor Firm ID: 49) | | 83 |
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| Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure | | 139 |
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| Item 9A. Controls and Procedures | | 139 |
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| Item 9B. Other Information | | 140 |
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| Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections | | 140 |
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| PART III |
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| Item 10. Directors, Executive Officers and Corporate Governance | | 140 |
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| Item 11. Executive Compensation | | 140 |
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| Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters | | 141 |
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| Item 13. Certain Relationships and Related Transactions, and Director Independence | | 141 |
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| Item 14. Principal Accountant Fees and Services | | 142 |
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| PART IV |
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| Item 15. Exhibits and Financial Statement Schedules | | 142 |
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| Signatures | | 147 |
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Forward-Looking Statements
This Annual Report on Form 10-K 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. The 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 changes in interest rates; |
| ● | effects on the U.S. economy resulting from the implementation of policies proposed by the new presidential administration, including tariffs, mass deportations and tax regulations; |
| ● | fluctuations in the values of the securities held in our securities portfolio, including as the result of changes in interest rates; |
| ● | business and economic conditions generally and in the financial services industry, nationally and within our market area, including the level and impact of inflation and possible recession; |
| ● | the effects of developments and events in the financial service industry, including the large-scale deposit withdrawals over a short period of time that resulted in several bank failures; |
| ● | credit risk and risks from concentrations (by type of borrower, geographic area, collateral and industry) within the Company’s loan portfolio or large loans to certain borrowers (including CRE loans); |
| ● | the overall health of the local and national real estate market; |
| ● | the ability to successfully manage credit risk; |
| ● | the ability to maintain an adequate level of allowance for credit losses on loans and leases; |
| ● | new or revised accounting standards as may be adopted by state and federal regulatory agencies, the Financial Accounting Standards Board (“FASB”) or Public Company Accounting Oversight Board (“PCAOB”); |
| ● | the concentration of large deposits from certain clients, including those who have balances above current Federal Deposit Insurance Corporation (“FDIC”) insurance limits; |
| ● | the ability to successfully manage liquidity risk, which may increase the dependence on non-core funding sources such as brokered deposits, and negatively impact our cost of funds; |
| ● | the ability to raise additional capital to implement our business plan; |
| ● | the ability to implement our growth strategy and manage costs effectively; |
| ● | the composition of the Company’s senior leadership team and the ability to attract and retain key personnel; |
| ● | talent and labor shortages and employee turnover; |
| ● | the occurrence of fraudulent activity, breaches or failures of our or our third party vendors’ information security controls or cybersecurity-related incidents, including as a result of sophisticated attacks using artificial intelligence and similar tools or as a result of insider fraud; |
| ● | 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, “fintech” companies and digital asset service providers; |
| ● | the effectiveness of the risk management framework; |
| ● | the commencement, cost 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 prior bank failures; |
| ● | 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, widespread disease or pandemics, acts of war or terrorism or other adverse external events, including ongoing conflicts in the Middle East and the Russian invasion of Ukraine; |
| ● | potential impairment to the goodwill the Company recorded in connection with acquisitions; |
| ● | the risks associated with our acquisition of FMCB, including the possibility that the merger may be more difficult or expensive to integrate than anticipated, and the effect of the merger on the Company’s customer and employee relationships and operating results; |
| ● | changes to U.S. or state tax laws, regulations and governmental policies concerning the Company’s general business, including changes in interpretation or prioritization and changes in response to prior bank failures, |
| ● | any other risk factors described in the “Risk Factors” section of this report and in other reports filed by Bridgewater Bancshares, Inc. with the Securities and Exchange Commission (“SEC”). |
The foregoing factors should not be construed as exhaustive and should be read together with the other cautionary statements included in this report. In addition, past results of operations are not necessarily indicative of future results. Any forward-looking statement made by us in this report 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.
