8-K - BWB - Equibles

UNITED STATESSECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 8-K CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OFTHE SECURITIES EXCHANGE ACT OF 1934

January 28, 2021

Date of Report

(Date of earliest event reported)

BRIDGEWATER BANCSHARES, INC.

(Exact name of registrant as specified in its charter)

<br><br><br><br>	<br><br>	<br><br><br><br>
Minnesota<br><br>(State or other jurisdiction of<br><br>incorporation)<br><br>	001-38412<br><br>(Commission File Number)	26-0113412<br><br>(I.R.S. Employer<br><br>Identification No.)
	4450 Excelsior Boulevard, Suite 100<br><br>St. Louis Park , Minnesota<br><br>(Address of principal executive offices)	55416<br><br>(Zip Code)

Registrant’s telephone number, including area code: (952) 893-6868

Not Applicable(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class:	Trading Symbol	Name of each exchange on which registered:
Common Stock, $0.01 Par Value	BWB	The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Item 2.02 Results of Operations and Financial Condition .

On January 28, 2021, Bridgewater Bancshares, Inc. (the “Company”) issued a press release announcing its financial results for the three and twelve months ended December 31, 2020. A copy of the press release is attached as Exhibit 99.1 to this Form 8-K and is incorporated herein by reference.

The information furnished in this item of this Form 8-K, and the related exhibits, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as may be expressly set forth by specific reference in such filing.

Item 7.01 Regulation FD Disclosure .

The Company hereby furnishes the Investor Presentation attached hereto as Exhibit 99.2.

The information furnished in this item of this Form 8-K, and the related exhibits, shall not be deemed “filed” for purposes of Section 18 of the Exchange Act, or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as may be expressly set forth by specific reference in such filing.

Item 9.01 Financial Statements and Exhibits.

(d)****Exhibits

Exhibit 99.1	Press release of Bridgewater Bancshares, Inc., dated January 28, 2021, regarding fourth quarter 2020 financial results
Exhibit 99.2	Investor Presentation dated January 28, 2021
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Exhibit 104	Cover Page Interactive Data File (embedded within the Inline XBRL document)
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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


	Bridgewater Bancshares, Inc.


Date: January 28, 2021
	By: /s/ Jerry Baack
	Name: Jerry Baack
	Title: Chairman, Chief Executive Officer and President

Exhibit 99.1

Bridgewater Bancshares, Inc. Announces Fourth Quarter 2020 Financial Results

Bridgewater Bancshares, Inc. (Nasdaq: BWB) (the Company), the parent company of Bridgewater Bank (the Bank), today announced net income of $5.0 million, or $0.17 per diluted common share, for the fourth quarter of 2020, compared to net income of $7.2 million, or $0.25 per diluted common share, for the third quarter of 2020, and net income of $8.6 million, or $0.29 per diluted common share, for the fourth quarter of 2019. The net income decline in the fourth quarter of 2020 was primarily attributable to FHLB prepayment fees of $5.6 million.

“2020 has been an unprecedented year on many levels but despite the challenges faced, the Company excelled through adversity. With the team’s steadfast commitment, we grew BWB’s client base, fast tracked technology initiatives, meaningfully lowered our cost of funds, and delivered double-digit growth. We are extremely proud of the team’s unwavering dedication to serve our clients, our shareholders, and our communities in this volatile environment,” commented Chairman, Chief Executive Officer, and President, Jerry Baack. “This quarter’s results include a significant non-recurring charge of $5.6 million related to prepayment penalties on the early retirement of FHLB advances. Given the historically low interest rate environment and extraordinary deposit inflows during the year, the Company took the opportunity to remove inefficient, longer term FHLB advances from the balance sheet. While this non-recurring charge overshadows strong, near-term operating results, this strategic action better orients the balance sheet, improves the net interest margin outlook and future earnings power of the Company. As we look to 2021, we remain nimble and well positioned to perform in the current environment with strong core earnings, capital levels well in excess of regulatory thresholds, adequate loan loss reserves, and solid credit quality.”

Fourth Quarter 2020 Financial Results


		****		****	Diluted		****	Nonperforming	****	Adjusted
ROA	PPNR ROA^(1)^	****	ROE	****	earnings per share		****	assets to total assets	****	efficiency ratio ^(1)^
0.70%	2.30%		7.45%		$	0.17		0.03%		36.6%

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

Linked-Quarter Highlights

●	The fourth quarter results included $5.6 million of prepayment fees related to the early extinguishment of $69.0 million of FHLB term advances, which had a weighted average rate of 2.85%.

●	Net income for the fourth quarter of 2020 totaled $9.3 million, or $0.32 per diluted common share, when excluding the FHLB prepayment fees and tax-adjusting at an effective rate of 23.8%.

●	Annualized return on average assets (ROA) and annualized return on average common equity (ROE) for the fourth quarter of 2020 were 1.31% and 13.86%, respectively, when excluding the FHLB prepayment fees and tax-adjusting at an effective rate of 23.8%.

●	Annualized pre-provision net revenue return on average assets (PPNR ROA), a non-GAAP financial measure, was 2.30% for the fourth quarter of 2020, compared to 1.94% for the third quarter of 2020.

●	Net interest margin increased 33 basis points from 3.28% for the third quarter of 2020 to 3.61% for the fourth quarter of 2020, primarily due to the accelerated recognition of Paycheck Protection Program (PPP) loan fees and continued reduction in the cost of interest bearing liabilities.

●	Cost of interest bearing deposits declined 25 basis points to 0.96% in the fourth quarter of 2020, compared to 1.21% in the third quarter of 2020.

●	The adjusted efficiency ratio, a non-GAAP financial measure which excludes the impact of certain non-routine income and expenses from noninterest expense, was 36.6% for the fourth quarter of 2020, compared to 41.7% for the third quarter of 2020.<br>
●	A loan loss provision of $3.9 million was recorded for the fourth quarter of 2020, primarily due to increased allocations for economic factors associated with the COVID-19 pandemic and strong organic loan growth. The allowance for loan losses to total loans was 1.50% at December 31, 2020, compared to 1.39% at September 30, 2020. The allowance for loan losses to total loans, excluding $138.5 million of PPP loans, was 1.59% at December 31, 2020, compared to 1.51% at September 30, 2020.
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●

The adjusted efficiency ratio, a non-GAAP financial measure which excludes the impact of certain non-routine income and expenses from noninterest expense, was 36.6% for the fourth quarter of 2020, compared to 41.7% for the third quarter of 2020.<br>

●

A loan loss provision of $3.9 million was recorded for the fourth quarter of 2020, primarily due to increased allocations for economic factors associated with the COVID-19 pandemic and strong organic loan growth. The allowance for loan losses to total loans was 1.50% at December 31, 2020, compared to 1.39% at September 30, 2020. The allowance for loan losses to total loans, excluding $138.5 million of PPP loans, was 1.59% at December 31, 2020, compared to 1.51% at September 30, 2020.

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●	Loan modification balances as a percent of totals loans, excluding PPP loans, decreased from 9.2% at the end of the third quarter of 2020 to 3.0% at the end of the fourth quarter of 2020.

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●	The Company repurchased 624,933 shares of common stock at a weighted average price of $11.18 for a total of $7.0 million during the fourth quarter of 2020.

Annual 2020 Highlights

●	Diluted earnings per common share for the year ended December 31, 2020 were $0.93, compared to $1.05 for the year ended December 31, 2019. Diluted earnings per common share for the year ended December 31, 2020 were $1.12, when excluding the $7.0 million of FHLB prepayment fees and tax-adjusting at an effective tax rate of 23.8%.

●	Pre-provision net revenue, a non-GAAP financial measure, was $54.7 million for the year ended December 31, 2020, an increase of 25.1%, compared to $43.7 million for the year ended December 31, 2019. PPNR ROA, a non-GAAP financial measure, was 2.09% for the year ended December 31, 2020, compared to 2.07% for the year ended December 31, 2019.

●	The adjusted efficiency ratio, a non-GAAP financial measure which excludes the impact of certain non-routine income and expenses from noninterest expense, was 40.5% for the year ended December 31, 2020, compared to 43.3% for the year ended December 31, 2019.

●	Extinguished $94.0 million of FHLB term advances with a weighted average rate of 2.83%, incurring $7.0 million of prepayment fees.

●	Gross loans increased $414.4 million at December 31, 2020, or 21.7%, compared to December 31, 2019. Excluding $138.5 million of PPP loans, gross loans increased 14.4%, at December 31, 2020, compared to December 31, 2019.

●	Deposits increased $678.3 million at December 31, 2020, or 37.2%, compared to December 31, 2019. Excluding brokered deposits and remaining PPP loan funds, deposits increased 27.8% at December 31, 2020, compared to December 31, 2019.

●	Tangible book value per share, a non-GAAP financial measure, increased 11.8%, or $0.98, to $9.31 at December 31, 2020, compared to $8.33 at December 31, 2019.

●	Net loan charge-offs as a percentage of average loans were 0.02% for the year ended December 31, 2020, compared to 0.01% for the year ended December 31, 2019.

●	The ratio of nonperforming assets to total assets was 0.03% at December 31, 2020, compared to 0.02% at December 31, 2019.

Recent Developments

The outbreak of the novel coronavirus, or COVID-19, which was declared a pandemic by the World Health Organization on March 11, 2020, has continued to create uncertainty and extraordinary change for the Company, its clients, its communities and the country as a whole. In response to this pandemic, the Company rapidly deployed its business continuity plan and continues to take steps to protect the health and safety of its employees and clients. Given the fluidity of the situation, management cannot estimate the duration and full impact of the COVID-19 pandemic on the economy, financial markets and the Company’s financial condition and results of operations.

The Company’s primary banking market area is in the Minneapolis-St.Paul-Bloomington, MN-WI Metropolitan Statistical Area. In November 2020, Minnesota’s Governor issued a number of new restrictions impacting business and gatherings due to a significant increase in positive COVID-19 cases within the state. The new restrictions closed gyms and entertainment spaces and limited restaurants to take-out operations only. In January 2021, the November restrictions were eased on restaurants, gyms and entertainment spaces to allow the businesses to operate with limited capacity. The Company’s branch operations, including openings and any restrictions, continue to operate in compliance with fluid statewide mandates, maintaining the safety of employees and clients as the utmost priority, all the while attempting to ensure clients' diverse banking needs are met.

The Company participated in the Small Business Administration’s (SBA) PPP, which stemmed from the Coronavirus Aid, Relief and Economic Security, or CARES, Act that was signed into law on March 27, 2020. As of December 31, 2020, PPP principal loan balances totaled $138.5 million, compared to $181.6 million at September 30, 2020. Beginning in October 2020, the SBA began forgiving PPP loans. During the fourth quarter of 2020, the Company recognized $1.7 million in PPP deferred origination fees, including approximately $1.1 million from the forgiveness of $43.1 million of loans.

The SBA reopened the PPP loan program as authorized by the Economic Aid to Hard-Hit Small Businesses, Non-Profits, and Venues Act, which was signed into law on December 27, 2020 (Economic Aid Act). The Company intends to participate in originating additional PPP loans under the Economic Aid Act through the new application deadline of March 31, 2021. As of January 25, 2021, the Company has submitted 203 loans totaling $29.8 million to the SBA under the reopened program.

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The Company continues to monitor the loan portfolio and work with clients to provide relief when appropriate. The Company has developed programs for clients who are experiencing business and personal disruptions due to the COVID-19 pandemic by providing loan payment deferrals, interest-only, and extended amortization modifications. In accordance with interagency regulatory guidance and the CARES Act, qualifying loans modified in response to the COVID-19 pandemic will not be considered troubled debt restructurings. New modification activity was limited in the fourth quarter of 2020. The Company had 26 modified loans totaling $66.6 million outstanding as of December 31, 2020, representing 3.0% of the total loan portfolio, excluding PPP loans.

The following table presents a rollforward of loan modification activity, by modification type, from September 30, 2020 to December 31, 2020:


(dollars in thousands)	Interest-Only		Payment Deferral		Extended Amortization		Total
Principal Balance - September 30, 2020	$	160,885	$	30,496	$	—	$	191,381
Modification Expired		(112,150)		(30,496)		—		(142,646)
Multiple Modifications Granted		21,362		597		4,834		26,793
New Modifications		1,545		16		—		1,561
Net Principal Advances (Payments)		(10,537)		—		—		(10,537)
Principal Balance - December 31, 2020	$	61,105	$	613	$	4,834	$	66,552

The following table presents a summary of active loan modifications, by loan segment and modification type, at December 31, 2020:


		Interest-Only					Payment Deferral					Extended Amortization					Total
(dollars in thousands)	****	Amount		****	# of Loans	****	Amount		****	# of Loans	****	Amount		****	# of Loans	****	Amount		****	# of Loans
Commercial		$	5,212		9		$	—		—		$	4,834		1		$	10,046		10
Real Estate Mortgage:
1 - 4 Family Mortgage			48		1			—		—			—		—			48		1
Multifamily			23,636		1			—		—			—		—			23,636		1
CRE Owner Occupied			—		—			613		3			—		—			613		3
CRE Nonowner Occupied			32,209		11			—		—			—		—			32,209		11
Totals		$	61,105		22		$	613		3		$	4,834		1		$	66,552		26

Modifications have been granted on a case-by-case basis based on the specific needs and circumstances affecting each borrower. Interest-only modifications have been primarily granted for three to six-month periods, but range up to twelve months. Payment deferral modifications have been granted for three to six-month periods. Page 3 of 17

Key Financial Measures

I'
		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,
	****	2020		****	2020		****	2019			2020		****	2019
Per Common Share Data
Basic Earnings Per Share		$	0.18		$	0.25		$	0.30		$	0.95		$	1.07
Diluted Earnings Per Share			0.17			0.25			0.29			0.93			1.05
Book Value Per Share			9.43			9.25			8.45
Tangible Book Value Per Share ^(1)^			9.31			9.13			8.33
Basic Weighted Average Shares Outstanding			28,179,768			28,683,855			28,833,576			28,582,064			29,358,644
Diluted Weighted Average Shares Outstanding			28,823,384			29,174,601			29,561,103			29,170,220			29,996,776
Shares Outstanding at Period End			28,143,493			28,710,775			28,973,572

Selected Performance Ratios
Return on Average Assets (Annualized)			0.70	%		1.05	%		1.53	%		1.04	%		1.49	%
Pre-Provision Net Revenue Return on Average Assets (Annualized) ^(1)^			2.30			1.94			2.09			2.09			2.07
Return on Average Common Equity (Annualized)			7.45			10.84			14.16			10.51			13.50
Return on Average Tangible Common Equity (Annualized)^(1)^			7.55			10.98			14.37			10.65			13.72
Yield on Interest Earning Assets			4.46			4.30			5.01			4.51			5.01
Yield on Total Loans, Gross			4.89			4.73			5.33			4.90			5.31
Cost of Interest Bearing Liabilities			1.24			1.50			1.96			1.53			2.03
Cost of Total Deposits			0.69			0.87			1.34			0.93			1.42
Net Interest Margin ^(2)^			3.61			3.28			3.65			3.46			3.59
Efficiency Ratio^(1)^			59.0			42.3			49.6			49.0			47.4
Adjusted Efficiency Ratio ^(1)^			36.6			41.7			44.3			40.5			43.3
Noninterest Expense to Average Assets (Annualized)			2.16			1.42			1.87			1.73			1.75
Adjusted Noninterest Expense to Average Assets (Annualized) ^(1)^			1.34			1.40			1.67			1.44			1.59
Loan to Deposit Ratio			93.0			99.4			104.9
Core Deposits to Total Deposits			78.1			77.1			80.7
Tangible Common Equity to Tangible Assets ^(1)^			8.96			9.46			10.65

Capital Ratios (Bank Only) ^(3)^
Tier 1 Leverage Ratio			10.89	%		11.24	%		11.01	%
Tier 1 Risk-based Capital Ratio			12.12			12.60			11.72
Total Risk-based Capital Ratio			13.37			13.85			12.16

Capital Ratios (Consolidated)^(3)^
Tier 1 Leverage Ratio			9.28	%		9.83	%		10.69	%
Tier 1 Risk-based Capital Ratio			10.35			11.03			11.39
Total Risk-based Capital Ratio			14.58			15.45			12.98

(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%.
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(3)	Preliminary data. Current period subject to change prior to filings with applicable regulatory agencies.
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Selected Financial Data


	December 31,			September 30,			June 30,		March 31,		December 31,
(dollars in thousands)	2020		****	2020		****	2020		2020		2019
Selected Balance Sheet Data
Total Assets	$	2,927,345		$	2,774,564		$	2,754,463	$	2,418,730	$	2,268,830
Total Loans, Gross		2,326,428			2,259,228			2,193,778		2,002,817		1,912,038
Allowance for Loan Losses		34,841			31,381			27,633		24,585		22,526
Goodwill and Other Intangibles		3,296			3,344			3,391		3,439		3,487

Deposits		2,501,636			2,273,044			2,242,051		1,900,127		1,823,310
Tangible Common Equity^(1)^		262,109			262,088			253,799		244,704		241,307
Total Shareholders' Equity		265,405			265,432			257,190		248,143		244,794
Average Total Assets - Quarter-to-Date		2,816,032			2,711,755			2,622,272		2,317,040		2,221,370
Average Common Equity - Quarter-to-Date		265,716			263,195			255,109		250,800		240,188

(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)	2020		2020		2019		2020		2019
Selected Income Statement Data
Interest Income	$	30,699	$	28,493	$	27,419	$	114,826	$	103,778
Interest Expense		5,858		6,814		7,491		26,862		29,646
Net Interest Income		24,841		21,679		19,928		87,964		74,132
Provision for Loan Losses		3,900		3,750		600		12,750		2,700
Net Interest Income after Provision for Loan Losses		20,941		17,929		19,328		75,214		71,432
Noninterest Income		986		1,157		1,112		5,839		3,826
Noninterest Expense		15,258		9,672		10,489		45,387		36,932
Income Before Income Taxes		6,669		9,414		9,951		35,666		38,326
Provision for Income Taxes		1,690		2,240		1,380		8,472		6,923
Net Income	$	4,979	$	7,174	$	8,571	$	27,194	$	31,403

Income Statement

Net Interest Income

Net interest income was $24.8 million for the fourth quarter of 2020, an increase of $3.2 million, or 14.6%, from $21.7 million in the third quarter of 2020, and an increase of $4.9 million, or 24.7%, from $19.9 million in the fourth quarter of 2019. The linked-quarter and year-over-year increases in net interest income were primarily due to growth in average interest earning assets, lower rates paid on deposits, and the recognition of PPP loan origination fees, offset partially by declining yields on loans. Average interest earning assets were $2.76 billion for the fourth quarter of 2020, an increase of $103.7 million, or 3.9%, from $2.66 billion for the third quarter of 2020, and an increase of $570.5 million, or 26.1%, from $2.19 billion for the fourth quarter of 2019. This increase in average interest earning assets during both periods was primarily due to continued organic growth in the loan portfolio, as well as the funding of PPP loans.

Net interest margin (on a fully tax-equivalent basis) for the fourth quarter of 2020 was 3.61%, a 33 basis point increase from 3.28% in the third quarter of 2020, and a 4 basis point decrease from 3.65% in the fourth quarter of 2019.

While the origination volume of PPP loans earning 1.00% negatively impacted net interest margin, the recognition of fees associated with the originations benefited net interest margin in the fourth quarter. The SBA began forgiving PPP loans in October of 2020, which accelerated the recognition of PPP fees in the fourth quarter of 2020. The Company recognized $1.7 million of PPP origination fees during the fourth quarter of 2020, compared to $716,000 during the third quarter of 2020. The elevated fee recognition is illustrated in the 5.05% PPP loan yield for the fourth quarter of 2020 compared to 2.57% for the third quarter of 2020. Even with headwinds surrounding earning asset yields, the Company was encouraged by another quarter of meaningful deposit repricing that ultimately translated to net interest margin expansion. The cost of total deposits declined 18 basis points to 0.69% in the fourth quarter of 2020, compared to 0.87% in the third quarter of 2020.

Given the volatility of 2020 and competing dynamics on both sides of the balance sheet, the Company was pleased to report only a 4 basis point decline in the net interest margin on a year-over-year basis. Despite a significant reduction in interest bearing deposit costs over the year, the historically low interest rate environment coupled with a more liquid balance sheet mix pressured earning asset yields lower and ultimately compressed the net interest margin. Furthermore, the Company’s subordinated debenture issuance and the PPP loan origination volumes, both occurring during the second quarter of 2020, had a negative impact on the net interest margin during the year. Page 5 of 17

Interest income was $30.7 million for the fourth quarter of 2020, an increase of $2.2 million, or 7.7%, from $28.5 million in the third quarter of 2020, and an increase of $3.3 million, or 12.0%, from $27.4 million in the fourth quarter of 2019. The yield on interest earning assets (on a fully tax-equivalent basis) was 4.46% in the fourth quarter of 2020, compared to 4.30% in the third quarter of 2020, and 5.01% in the fourth quarter of 2019. The linked-quarter increase in the yield on interest earning assets was due primarily to the recognition of $1.7 million of PPP loan origination fees, offset partially by lower market rates resulting in lower loan and security yields. The year-over-year decrease in the yield on interest earning assets was primarily due to the falling interest rate environment resulting in lower loan and security yields, the impact of PPP loans originated at a meaningfully lower rate than the aggregate loan portfolio yield, and an increase in cash balances due to extraordinary deposit inflows.

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 4.87% in the fourth quarter of 2020, which was 6 basis points lower than 4.93% in the third quarter of 2020, and 46 basis points lower than 5.33% in the fourth quarter of 2019. While loan fees have maintained a 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 31, 2020		September 30, 2020		June 30, 2020		March 31, 2020		December 31, 2019
Interest	4.59	%	4.69	%	4.76	%	4.90	%	5.00	%
Fees	0.28		0.24		0.25		0.27		0.33
Yield on Loans, Excluding PPP Loans	4.87	%	4.93	%	5.01	%	5.17	%	5.33	%

Interest expense was $5.9 million for the fourth quarter of 2020, a decrease of $956,000, or 14.0%, from $6.8 million in the third quarter of 2020, and a decrease of $1.6 million, or 21.8%, from $7.5 million in the fourth quarter of 2019. The cost of interest bearing liabilities declined 26 basis points on a linked-quarter basis from 1.50% in the third quarter of 2020 to 1.24% in the fourth quarter of 2020, primarily due to lower rates paid on deposits. On a year-over-year basis, the cost of interest bearing liabilities decreased 72 basis points from 1.96% in the fourth quarter of 2019 to 1.24% in the fourth quarter of 2020 primarily due to lower rates paid on deposits, offset partially by strong growth of interest bearing deposits and additional subordinated debentures.

Interest expense on deposits was $4.1 million for the fourth quarter of 2020, a decrease of $761,000, or 15.7%, from $4.8 million in the third quarter of 2020, and a decrease of $2.0 million, or 32.7%, from $6.1 million in the fourth quarter of 2019. The cost of total deposits declined 18 basis points on a linked-quarter basis from 0.87% in the third quarter of 2020, and declined 65 basis points on a year-over-year basis from 1.34% in the fourth quarter of 2019, to 0.69% in the fourth quarter of 2020, primarily due to deposit rate cuts consistent with a lower rate environment and the repricing of time deposits.

Given strong deposit growth and ample time deposit maturities over the next 12 months, the Company anticipates continued deposit repricing opportunities in the future. Moreover, the significant FHLB de-leveraging strategy executed in the fourth quarter of 2020 will begin to manifest lower interest bearing liability costs in subsequent quarters.

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A summary of the Company’s average balances, interest yields and rates, and net interest margin for the three months ended December 31, 2020, September 30, 2020, and December 31, 2019 is as follows:


		For the Three Months Ended																							****
		December 31, 2020								September 30, 2020							****	December 31, 2019							****
		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		$	79,896		$	32		0.16	%	$	101,787		$	42		0.16	%	$	45,818		$	150		1.30	%
Investment Securities:
Taxable Investment Securities			290,093			1,632		2.24			256,808			1,389		2.15			168,911			1,228		2.88
Tax-Exempt Investment Securities^(1)^			81,370			888		4.34			82,579			900		4.33			95,015			1,019		4.26
Total Investment Securities			371,463			2,520		2.70			339,387			2,289		2.68			263,926			2,247		3.38
Paycheck Protection Program Loans ^(2)^			165,099			2,097		5.05			181,397			1,173		2.57			—			—		—
Loans ^(1)(2)^			2,136,229			26,168		4.87			2,025,410			25,081		4.93			1,872,234			25,132		5.33
Total Loans			2,301,328			28,265		4.89			2,206,807			26,254		4.73			1,872,234			25,132		5.33
Federal Home Loan Bank Stock			6,856			92		5.35			7,901			127		6.38			7,947			103		5.13
Total Interest Earning Assets			2,759,543			30,909		4.46	%		2,655,882			28,712		4.30	%		2,189,925			27,632		5.01	%
Noninterest Earning Assets			56,489								55,873								31,445
Total Assets		$	2,816,032							$	2,711,755							$	2,221,370
Interest Bearing Liabilities:
Deposits:
Interest Bearing Transaction Deposits			353,806			420		0.47	%		306,162			400		0.52	%		257,777			503		0.77	%
Savings and Money Market Deposits			538,030			1,003		0.74			501,246			1,106		0.88			487,424			1,963		1.60
Time Deposits			362,469			1,607		1.76			369,975			1,899		2.04			353,351			2,151		2.41
Brokered Deposits			433,037			1,049		0.96			419,744			1,435		1.36			243,358			1,447		2.36
Total Interest Bearing Deposits			1,687,342			4,079		0.96			1,597,127			4,840		1.21			1,341,910			6,064		1.79
Federal Funds Purchased			4,072			4		0.33			152			—		0.33			3,011			14		1.82
Notes Payable			11,000			105		3.77			11,500			108		3.74			13,000			123		3.75
FHLB Advances			99,196			551		2.21			129,457			748		2.30			136,554			897		2.61
Subordinated Debentures			73,696			1,119		6.04			73,649			1,118		6.04			24,725			393		6.31
Total Interest Bearing Liabilities			1,875,306			5,858		1.24	%		1,811,885			6,814		1.50	%		1,519,200			7,491		1.96	%
Noninterest Bearing Liabilities:
Noninterest Bearing Transaction Deposits			654,299								615,214								451,265
Other Noninterest Bearing Liabilities			20,711								21,461								10,717
Total Noninterest Bearing Liabilities			675,010								636,675								461,982
Shareholders' Equity			265,716								263,195								240,188
Total Liabilities and Shareholders' Equity		$	2,816,032							$	2,711,755							$	2,221,370
Net Interest Income / Interest Rate Spread						25,051		3.22	%					21,898		2.80	%					20,141		3.05	%
Net Interest Margin ^(3)^								3.61	%							3.28	%							3.65	%
Taxable Equivalent Adjustment:
Tax-Exempt Investment Securities						(210)								(219)								(213)
Net Interest Income					$	24,841							$	21,679							$	19,928

(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.
---	---

Page 7 of 17

Provision for Loan Losses

The provision for loan losses was $3.9 million for the fourth quarter of 2020, an increase of $150,000 from $3.8 million for the third quarter of 2020, and an increase of $3.3 million from $600,000 for the fourth quarter of 2019. The allowance for loan losses to total loans was 1.50% at December 31, 2020, compared to 1.39% at September 30, 2020, and 1.18% at December 31, 2019. The allowance for loan losses to total loans, excluding $138.5 million of PPP loans, was 1.59% at December 31, 2020. The continued reserve build in the fourth quarter of 2020 was primarily attributable to growth of the loan portfolio, economic uncertainties, and evolving risks driven by the impacts of the COVID-19 pandemic.

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 31,			September 30,			December 31,		December 31,			December 31,
(dollars in thousands)	****	2020		****	2020		****	2019		2020		****	2019
Balance at Beginning of Period		$	31,381		$	27,633		$	22,124	$	22,526		$	20,031
Provision for Loan Losses			3,900			3,750			600		12,750			2,700
Charge-offs			(463)			(6)			(205)		(517)			(388)
Recoveries			23			4			7		82			183
Balance at End of Period		$	34,841		$	31,381		$	22,526	$	34,841		$	22,526

Noninterest Income

Noninterest income was $986,000 for the fourth quarter of 2020, a decrease of $171,000 from $1.2 million for the third quarter of 2020, and a decrease of $126,000 from $1.1 million for the fourth quarter of 2019. The linked-quarter decrease was primarily due to decreased gains on sales of securities, offset partially by increased customer service fees. The year-over-year decrease was primarily due to decreased swap fees, partially offset by increased letter of credit fees and customer service fees.

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


	Three Months Ended									Year Ended
	December 31,			September 30,			December 31,			December 31,			December 31,
(dollars in thousands)	2020		****	2020		****	2019		****	2020		****	2019		****
Noninterest Income:
Customer Service Fees	$	251		$	200		$	196		$	826		$	760
Net Gain on Sales of Securities		30			109			—			1,503			516
Net Gain on Sales of Foreclosed Assets		—			—			—			—			69
Letter of Credit Fees		477			487			394			1,503			1,184
Debit Card Interchange Fees		118			119			105			428			418
Swap Fees		—			—			255			907			255
Other Income		110			242			162			672			624
Totals	$	986		$	1,157		$	1,112		$	5,839		$	3,826

Noninterest Expense

Noninterest expense was $15.3 million for the fourth quarter of 2020, an increase of $5.6 million from $9.7 million for the third quarter of 2020, and an increase of $4.8 million from $10.5 million for the fourth quarter of 2019. The linked-quarter increase was primarily due to $5.6 million of prepayment fees associated with the extinguishment of $69.0 million of FHLB term advances, as well as increases in FDIC insurance assessment and occupancy and equipment expenses, partially offset by a decrease in salaries and employee benefits. The year-over-year increase was primarily attributable to increased data processing, professional and consulting fees and FHLB advance prepayment fees, offset partially by decreased marketing and advertising expenses and lower amortization of tax credit investments.

Page 8 of 17

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


	Three Months Ended									Year Ended
	December 31,			September 30,			December 31,			December 31,			December 31,
(dollars in thousands)	2020		****	2020		****	2019		****	2020		****	2019
Noninterest Expense:
Salaries and Employee Benefits	$	6,216		$	6,550		$	6,235		$	25,568		$	22,076
Occupancy and Equipment		979			894			883			3,258			3,085
FDIC Insurance Assessment		270			160			165			788			735
Data Processing		293			267			161			1,027			647
Professional and Consulting Fees		566			492			437			1,966			1,690
Information Technology and Telecommunications		397			385			319			1,374			996
Marketing and Advertising		143			94			299			788			1,507
Intangible Asset Amortization		48			48			48			191			191
Amortization of Tax Credit Investments		146			145			1,128			738			3,225
FHLB Advance Prepayment Fees		5,613			—			—			7,043			—
Other Expense		587			637			814			2,646			2,780
Totals	$	15,258		$	9,672		$	10,489		$	45,387		$	36,932

The Company had 183 full-time equivalent employees at December 31, 2020, compared to 180 employees at September 30, 2020, and 160 employees at December 31, 2019. Despite the uncertainty surrounding the COVID-19 pandemic, the Company continues to attract strategic hires in lending, deposit gathering, technology and risk management roles. The efficiency ratio, a non-GAAP financial measure, was 59.0% for the fourth quarter of 2020, compared to 42.3% for the third quarter of 2020, and 49.6% for the fourth quarter of 2019. Excluding the impact of certain non-routine income and expenses, the adjusted efficiency ratio, a non-GAAP financial measure, was 36.6% for the fourth quarter of 2020, 41.7% for the third quarter of 2020 and 44.3% for the fourth quarter of 2019. The efficiencies of the Company’s “branch-light” model have been evident throughout the pandemic, and going forward, have positioned the Company well to continue making 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 2020 was 25.3%, an increase from 23.8% for the third quarter of 2020, and an increase from 13.9% for the fourth quarter of 2019. The higher effective combined rate in the fourth quarter of 2020 compared to the fourth quarter of 2019 was primarily due to fewer tax credits being recognized. The effective combined federal and state income tax rate was 23.8% for the year ended December 31, 2020, compared to 18.1% for the year ended December 31, 2019.

Balance Sheet

Total assets at December 31, 2020 were $2.93 billion, a 5.5% increase from $2.77 billion at September 30, 2020, and a 29.0% increase from $2.27 billion at December 31, 2019. The linked-quarter increase in total assets was primarily due to organic loan growth, purchases of investment securities, and excess cash balances linked to extraordinary deposit growth at year-end. The year-over-year increase in total assets was primarily due to organic loan growth, PPP loan growth, purchases of investment securities, and excess cash balances.

Total gross loans at December 31, 2020 were $2.33 billion, an increase of $67.2 million, or 3.0%, over total gross loans of $2.26 billion at September 30, 2020, and an increase of $414.4 million, or 21.7%, over total gross loans of $1.91 billion at December 31, 2019. The linked-quarter increase of $67.2 million was net of $43.1 million in PPP forgiven loans during the quarter. When excluding the PPP loans altogether, gross loans grew $110.3 million, or 21.2% on an annualized basis.

Page 9 of 17

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


	December 31, 2020		September 30, 2020		June 30, 2020		March 31, 2020		December 31, 2019
(dollars in thousands)
Commercial	$	304,220	$	287,254	$	302,536	$	299,425	$	276,035
Paycheck Protection Program		138,454		181,596		180,228		—		—
Construction and Land Development		170,217		175,882		191,768		183,350		196,776
Real Estate Mortgage:
1 - 4 Family Mortgage		294,479		286,089		289,456		272,590		260,611
Multifamily		626,465		585,814		522,491		536,380		515,014
CRE Owner Occupied		75,604		75,963		73,539		75,207		66,584
CRE Nonowner Occupied		709,300		660,058		627,651		631,541		592,545
Total Real Estate Mortgage Loans		1,705,848		1,607,924		1,513,137		1,515,718		1,434,754
Consumer and Other		7,689		6,572		6,109		4,324		4,473
Total Loans, Gross		2,326,428		2,259,228		2,193,778		2,002,817		1,912,038
Allowance for Loan Losses		(34,841)		(31,381)		(27,633)		(24,585)		(22,526)
Net Deferred Loan Fees		(9,151)		(10,367)		(10,287)		(5,336)		(5,512)
Total Loans, Net	$	2,282,436	$	2,217,480	$	2,155,858	$	1,972,896	$	1,884,000

Total deposits at December 31, 2020 were $2.50 billion, an increase of $228.6 million, or 10.1%, over total deposits of $2.27 billion at September 30, 2020, and an increase of $678.3 million, or 37.2%, over total deposits of $1.82 billion at December 31, 2019. Deposit growth in the fourth quarter of 2020 was primarily due to an increase in savings and money market deposits, offset partially by a decline in noninterest bearing and time deposits. The growth in savings and money market deposits is a result of both successful new client acquisition initiatives and pandemic-related accumulation of liquidity by existing clients. Given the fluid environment, 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, 2020		September 30, 2020		June 30, 2020		March 31, 2020		December 31, 2019
(dollars in thousands)	****
Noninterest Bearing Transaction Deposits		$	671,903	$	685,773	$	648,869	$	476,217	$	447,509
Interest Bearing Transaction Deposits			366,290		322,253		285,386		255,483		264,627
Savings and Money Market Deposits			657,617		498,397		516,543		514,113		516,785
Time Deposits			353,543		363,897		382,187		393,340		360,027
Brokered Deposits			452,283		402,724		409,066		260,974		234,362
Total Deposits		$	2,501,636	$	2,273,044	$	2,242,051	$	1,900,127	$	1,823,310

Total shareholders’ equity at December 31, 2020 and September 30, 2020 was $265.4 million, an increase of $20.6 million, or 8.4%, over total shareholders’ equity of $244.8 million at December 31, 2019. The linked-quarter balances remained the same due to stock repurchases made under the Company’s stock repurchase program offset by net income retained and an increase in unrealized gains in the securities portfolio. The year-over-year increase was due to net income retained, partially offset by stock repurchases made throughout 2020 under the Company’s stock repurchase program.

Strong earnings and capital growth coupled with better asset quality visibility as loan modifications expired, supported management’s decision to resume repurchases under the Company’s stock repurchase program late in the third quarter of 2020. On October 27, 2020, the Company’s Board of Directors approved a $15.0 million increase to the Company’s previously announced stock repurchase program, increasing the amount of common stock that may be repurchased from $25.0 million to up to $40.0 million for the duration of the program, which is approved to run through October 27, 2022. 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. During the fourth quarter of 2020, the Company repurchased 624,933 shares of its common stock, or approximately 2% of the basic weighted average shares outstanding during the quarter. Shares were repurchased at a weighted average price of $11.18 for a total of $7.0 million. At December 31, 2020, the remaining amount that could be used to repurchase shares under the stock repurchase program was $14.7 million.

Tangible book value per share, a non-GAAP financial measure, was $9.31 as of December 31, 2020, an increase of 2.0% from $9.13 as of September 30, 2020, and an increase of 11.8% from $8.33 as of December 31, 2019.

Asset Quality

Annualized net charge-offs as a percent of average loans for the fourth quarter of 2020 were 0.08%, compared to 0.00% for the third quarter of 2020, and 0.04% for the fourth quarter of 2019. At December 31, 2020, the Company’s nonperforming assets, which include nonaccrual loans, loans past due 90 days and still accruing, and foreclosed assets, were $775,000, or 0.03% of total assets, as compared to Page 10 of 17

$433,000, or 0.02% of total assets at September 30, 2020, and $461,000 or 0.02% of total assets at December 31, 2019.

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. With the change in economic conditions and the uncertain duration of the COVID-19 pandemic, the Company’s portfolio is expected to be negatively impacted and management anticipates that delinquencies and charge-offs could rise in future periods. Loans that have potential weaknesses that warrant a watchlist risk rating at December 31, 2020, were $44.8 million, compared to $50.9 million at September 30, 2020. As the COVID-19 pandemic continues to evolve, the length and extent of the economic contraction may result in further watchlist or adverse classifications in the loan portfolio. Loans that warranted a substandard risk rating at December 31, 2020 were $15.2 million, compared to $16.1 million at September 30, 2020.

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 30,			June 30,			March 31,			December 31,
(dollars in thousands)	****	2020		****	2020		****	2020		****	2020		****	2019		****
Selected Asset Quality Data
Loans 30-89 Days Past Due		$	13		$	458		$	153		$	21		$	403
Loans 30-89 Days Past Due to Total Loans			0.00	%		0.02	%		0.01	%		0.00	%		0.02	%
Nonperforming Loans		$	775		$	433		$	602		$	606		$	461
Nonperforming Loans to Total Loans			0.03	%		0.02	%		0.03	%		0.03	%		0.02	%
Foreclosed Assets		$	—		$	—		$	—		$	—		$	—
Nonaccrual Loans to Total Loans			0.03	%		0.02	%		0.03	%		0.03	%		0.02	%
Nonaccrual Loans and Loans Past Due 90 Days and Still Accruing to Total Loans			0.03			0.02			0.03			0.03			0.02
Nonperforming Assets ^(1)^		$	775		$	433		$	602		$	606		$	461
Nonperforming Assets to Total Assets ^(1)^			0.03	%		0.02	%		0.02	%		0.03	%		0.02	%
Allowance for Loan Losses to Total Loans			1.50			1.39			1.26			1.23			1.18
Allowance for Loan Losses to Total Loans, Excluding PPP Loans			1.59			1.51			1.37			N/A			N/A
Allowance for Loans Losses to Nonperforming Loans			4,495.61			7,247.34			4,590.20			4,056.93			4,886.33
Net Loan Charge-Offs (Recoveries) (Annualized) to Average Loans			0.08			0.00			(0.01)			0.01			0.04

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

About the Company

Bridgewater Bancshares, Inc. is a financial holding company headquartered in St. Louis Park, Minnesota. The Company has two wholly owned subsidiaries, Bridgewater Bank, a Minnesota-chartered commercial bank founded in November 2005, and Bridgewater Risk Management, Inc., a captive insurance company founded in December 2016. Bridgewater Bank has two wholly owned subsidiaries, Bridgewater Investment Management, Inc. and BWB Holdings, LLC. Bridgewater Bank currently operates through 7 branches in Bloomington, Greenwood, Minneapolis (2), St. Louis Park, Orono, and St. Paul, all located within the Minneapolis-St. Paul-Bloomington metropolitan statistical area.

Investor Relations Contact:

Jerry Baack

Chief Executive Officer

investorrelations@bwbmn.com

952-893-6866

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, Page 11 of 17

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 COVID-19 pandemic, including its effects on the economic environment, our clients and our operations, 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; 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; 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; 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; 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; interest rate risk; 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; 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.

Page 12 of 17

Bridgewater Bancshares, Inc. and Subsidiaries Consolidated Balance Sheets

(dollars in thousands, except share data)


		December 31,			September 30,			December 31,
	****	2020		****	2020		****	2019
		(Unaudited)			(Unaudited)
ASSETS
Cash and Cash Equivalents		$	160,675		$	91,510		$	31,935
Bank-Owned Certificates of Deposit			2,860			2,862			2,654
Securities Available for Sale, at Fair Value			390,629			373,955			289,877
Loans, Net of Allowance for Loan Losses of $34,841 at December 31, 2020 (unaudited), $31,381 at September 30, 2020 (unaudited) and $22,526 at December 31, 2019			2,282,436			2,217,480			1,884,000
Federal Home Loan Bank (FHLB) Stock, at Cost			5,027			7,817			7,824
Premises and Equipment, Net			50,987			48,885			27,628
Accrued Interest			9,172			9,647			6,775
Goodwill			2,626			2,626			2,626
Other Intangible Assets, Net			670			718			861
Other Assets			22,263			19,064			14,650
Total Assets		$	2,927,345		$	2,774,564		$	2,268,830

LIABILITIES AND EQUITY
LIABILITIES
Deposits:
Noninterest Bearing		$	671,903		$	685,773		$	447,509
Interest Bearing			1,829,733			1,587,271			1,375,801
Total Deposits			2,501,636			2,273,044			1,823,310
Notes Payable			11,000			11,500			13,000
FHLB Advances			57,500			127,500			136,500
Subordinated Debentures, Net of Issuance Costs			73,739			73,665			24,733
Accrued Interest Payable			1,615			2,082			1,982
Other Liabilities			16,450			21,341			24,511
Total Liabilities			2,661,940			2,509,132			2,024,036

SHAREHOLDERS' EQUITY
Preferred Stock- $0.01 par value
Authorized 10,000,000; None Issued and Outstanding at December 31, 2020 and December 31, 2019			—			—			—
Common Stock- $0.01 par value
Common Stock - Authorized 75,000,000; Issued and Outstanding 28,143,493 at December 31, 2020 (unaudited), 28,710,775 at September 30, 2020 (unaudited) and 28,973,572 at December 31, 2019			281			287			290
Additional Paid-In Capital			103,714			110,010			112,093
Retained Earnings			154,831			149,852			127,637
Accumulated Other Comprehensive Income			6,579			5,283			4,774
Total Shareholders' Equity			265,405			265,432			244,794
Total Liabilities and Shareholders' Equity		$	2,927,345		$	2,774,564		$	2,268,830

Page 13 of 17

Bridgewater Bancshares, Inc. and SubsidiariesConsolidated 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,
	****	2020		****	2020		****	2019		****	2020		****	2019
		(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)
INTEREST INCOME
Loans, Including Fees		$	28,242		$	26,224		$	25,132		$	105,492		$	94,852
Investment Securities			2,333			2,100			2,034			8,720			7,773
Other			124			169			253			614			1,153
Total Interest Income			30,699			28,493			27,419			114,826			103,778

INTEREST EXPENSE
Deposits			4,079			4,840			6,064			19,813			23,996
Notes Payable			105			108			123			439			501
FHLB Advances			551			748			897			3,390			3,407
Subordinated Debentures			1,119			1,118			393			3,109			1,556
Federal Funds Purchased			4			—			14			111			186
Total Interest Expense			5,858			6,814			7,491			26,862			29,646

NET INTEREST INCOME			24,841			21,679			19,928			87,964			74,132
Provision for Loan Losses			3,900			3,750			600			12,750			2,700

NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES			20,941			17,929			19,328			75,214			71,432

NONINTEREST INCOME
Customer Service Fees			251			200			196			826			760
Net Gain on Sales of Available for Sale Securities			30			109			—			1,503			516
Net Gain on Sales of Foreclosed Assets			—			—			—			—			69
Other Income			705			848			916			3,510			2,481
Total Noninterest Income			986			1,157			1,112			5,839			3,826

NONINTEREST EXPENSE
Salaries and Employee Benefits			6,216			6,550			6,235			25,568			22,076
Occupancy and Equipment			979			894			883			3,258			3,085
Other Expense			8,063			2,228			3,371			16,561			11,771
Total Noninterest Expense			15,258			9,672			10,489			45,387			36,932

INCOME BEFORE INCOME TAXES			6,669			9,414			9,951			35,666			38,326
Provision for Income Taxes			1,690			2,240			1,380			8,472			6,923
NET INCOME		$	4,979		$	7,174		$	8,571		$	27,194		$	31,403

EARNINGS PER SHARE
Basic		$	0.18		$	0.25		$	0.30		$	0.95		$	1.07
Diluted			0.17			0.25			0.29			0.93			1.05
Dividends Paid Per Share			—			—			—			—			—

Page 14 of 17

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,
	2020			2020			2019			2020			2019

Efficiency Ratio
Noninterest Expense	$	15,258		$	9,672		$	10,489		$	45,387		$	36,932
Less: Amortization of Intangible Assets		(48)			(48)			(48)			(191)			(191)
Adjusted Noninterest Expense	$	15,210		$	9,624		$	10,441		$	45,196		$	36,741
Net Interest Income	$	24,841		$	21,679		$	19,928		$	87,964		$	74,132
Noninterest Income		986			1,157			1,112			5,839			3,826
Less: Gain on Sales of Securities		(30)			(109)			—			(1,503)			(516)
Adjusted Operating Revenue	$	25,797		$	22,727		$	21,040		$	92,300		$	77,442
Efficiency Ratio		59.0	%		42.3	%		49.6	%		49.0	%		47.4	%

Adjusted Efficiency Ratio
Noninterest Expense	$	15,258		$	9,672		$	10,489		$	45,387		$	36,932
Less: Amortization of Tax Credit Investments		(146)			(145)			(1,128)			(738)			(3,225)
Less: FHLB Advance Prepayment Fees		(5,613)			—			—			(7,043)			—
Less: Amortization of Intangible Assets		(48)			(48)			(48)			(191)			(191)
Adjusted Noninterest Expense	$	9,451		$	9,479		$	9,313		$	37,415		$	33,516
Net Interest Income	$	24,841		$	21,679		$	19,928		$	87,964		$	74,132
Noninterest Income		986			1,157			1,112			5,839			3,826
Less: Gain on Sales of Securities		(30)			(109)			—			(1,503)			(516)
Adjusted Operating Revenue	$	25,797		$	22,727		$	21,040		$	92,300		$	77,442
Adjusted Efficiency Ratio		36.6	%		41.7	%		44.3	%		40.5	%		43.3	%


		For the Three Months Ended									For the Year Ended
		December 31,			September 30,			December 31,			December 31,			December 31,
	****	2020		****	2020			2019			2020		****	2019		****
Pre-Provision Net Revenue
Noninterest Income		$	986		$	1,157		$	1,112		$	5,839		$	3,826
Less: Gain on sales of Securities			(30)			(109)			—			(1,503)			(516)
Total Operating Noninterest Income			956			1,048			1,112			4,336			3,310
Plus: Net Interest income			24,841			21,679			19,928			87,964			74,132
Net Operating Revenue		$	25,797		$	22,727		$	21,040		$	92,300		$	77,442

Noninterest Expense		$	15,258		$	9,672		$	10,489		$	45,387		$	36,932
Less: Amortization of Tax Credit Investments			(146)			(145)			(1,128)			(738)			(3,225)
Less: FHLB Advance Prepayment Fees			(5,613)			—			—			(7,043)			—
Total Operating Noninterest Expense		$	9,499		$	9,527		$	9,361		$	37,606		$	33,707

Pre-Provision Net Revenue		$	16,298		$	13,200		$	11,679		$	54,694		$	43,735

Plus:
Non-Operating Revenue Adjustments			30			109			—			1,503			516
Less:
Provision for Loan Losses			3,900			3,750			600			12,750			2,700
Non-Operating Expense Adjustments			5,759			145			1,128			7,781			3,225
Provision for Income Taxes			1,690			2,240			1,380			8,472			6,923
Net Income		$	4,979		$	7,174		$	8,571		$	27,194		$	31,403

Average Assets		$	2,816,032		$	2,711,755		$	2,221,370		$	2,617,579		$	2,114,211
Pre-Provision Net Revenue Return on Average Assets			2.30	%		1.94	%		2.09	%		2.09	%		2.07	%

Page 15 of 17


	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,
	2020			2020			2019			2020		2019

Tangible Common Equity and Tangible Common Equity/Tangible Assets
Common Equity	$	265,405		$	265,432		$	244,794
Less: Intangible Assets		(3,296)			(3,344)			(3,487)
Tangible Common Equity		262,109			262,088			241,307

Total Assets		2,927,345			2,774,564			2,268,830
Less: Intangible Assets		(3,296)			(3,344)			(3,487)
Tangible Assets	$	2,924,049		$	2,771,220		$	2,265,343
Tangible Common Equity/Tangible Assets		8.96	%		9.46	%		10.65	%

Tangible Book Value Per Share
Book Value Per Common Share	$	9.43		$	9.25		$	8.45
Less: Effects of Intangible Assets		(0.12)			(0.12)			(0.12)
Tangible Book Value Per Common Share	$	9.31		$	9.13		$	8.33

Average Tangible Common Equity
Average Common Equity	$	265,716		$	263,195		$	240,188		$	258,736	$	232,539
Less: Effects of Average Intangible Assets		(3,323)			(3,371)			(3,510)			(3,395)		(3,582)
Average Tangible Common Equity	$	262,393		$	259,824		$	236,678		$	255,341	$	228,957

Page 16 of 17

Bridgewater Bancshares, Inc. and Subsidiaries

Analysis of Average Balances, Yields and Rates (year-to-date)

(dollars in thousands, except per share data) (Unaudited)

<br><br>
		December 31, 2020								December 31, 2019							****
		Average			Interest			Yield/		Average			Interest			Yield/	****
	****	Balance		****	& Fees		****	Rate	****	Balance		****	& Fees		****	Rate	****
(dollars in thousands)
Interest Earning Assets:
Cash Investments		$	80,113		$	170		0.21	%	$	46,366		$	755		1.63	%
Investment Securities:
Taxable Investment Securities			234,873			5,712		2.43			149,967			4,354		2.90
Tax-Exempt Investment Securities^(1)^			87,587			3,807		4.35			101,012			4,327		4.28
Total Investment Securities			322,460			9,519		2.95			250,979			8,681		3.46
Paycheck Protection Program Loans ^(2)^			122,240			4,143		3.39			—			—		—
Loans ^(1)(2)^			2,032,180			101,469		4.99			1,785,937			94,852		5.31
Total Loans			2,154,420			105,612		4.90			1,785,937			94,852
Federal Home Loan Bank Stock			8,866			444		5.01			7,916			398		5.03
Total Interest Earning Assets			2,565,859			115,745		4.51	%		2,091,198			104,686		5.01	%
Noninterest Earning Assets			51,720								23,013
Total Assets		$	2,617,579							$	2,114,211
Interest Bearing Liabilities:
Deposits:
Interest Bearing Transaction Deposits			295,036			1,626		0.55	%		223,376			1,634		0.73	%
Savings and Money Market Deposits			523,520			5,341		1.02			447,040			7,747		1.73
Time Deposits			374,195			7,806		2.09			349,148			8,379		2.40
Brokered Deposits			348,126			5,040		1.45			261,023			6,236		2.39
Total Interest Bearing Deposits			1,540,877			19,813		1.29			1,280,587			23,996		1.87
Federal Funds Purchased			7,239			111		1.53			7,433			186		2.50
Notes Payable			11,749			439		3.73			13,750			501		3.64
FHLB Advances			148,524			3,390		2.28			133,968			3,407		2.54
Subordinated Debentures			50,954			3,109		6.10			24,686			1,556		6.30
Total Interest Bearing Liabilities			1,759,343			26,862		1.53	%		1,460,424			29,646		2.03	%
Noninterest Bearing Liabilities:
Noninterest Bearing Transaction Deposits			579,595								414,377
Other Noninterest Bearing Liabilities			19,905								6,871
Total Noninterest Bearing Liabilities			599,500								421,248
Shareholders' Equity			258,736								232,539
Total Liabilities and Shareholders' Equity		$	2,617,579							$	2,114,211
Net Interest Income / Interest Rate Spread						88,883		2.98	%					75,040		2.98	%
Net Interest Margin ^(3)^								3.46	%							3.59	%
Taxable Equivalent Adjustment:
Tax-Exempt Investment Securities						(919)								(908)
Net Interest Income					$	87,964							$	74,132

(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.
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Page 17 of 17

Exhibit 99.2

Investor Presentation<br>Fourth Quarter 2019
2<br>Why Bridgewater Bank?<br>Disclaimer<br>Forward-Looking Statements<br>This presentation 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<br>statements include, without limitation, statements concerning plans, estimates, calculations, forecasts and projections with respect to the anticipated future performance of Bridgewater<br>Bancshares, Inc. (the “Company”). These statements are often, but not always, identified by words such as “may”, “might”, “should”, “could”, “predict”, “potential”, “believe”, “expect”,<br>“continue”, “will”, “anticipate”, “seek”, “estimate”, “intend”, “plan”, “projection”, “would”, “annualized”, “target” and “outlook”, or the negative version of those words or other<br>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<br>our current beliefs, expectations and assumptions regarding our business, future plans and strategies, projections, anticipated events and trends, the economy and other future conditions.<br>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<br>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<br>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<br>include, among others, the following: the negative effects of the COVID-19 pandemic, including its effects on the economic environment, our clients and our operations, as well as any<br>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<br>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;<br>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<br>Credit Loss Standard; our high concentration of large loans to certain borrowers; our concentration of large deposits from certain clients; our ability to successfully manage liquidity risk;<br>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<br>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<br>alternative reference rates; the composition of our senior leadership team and our ability to attract and retain key personnel; the occurrence of fraudulent activity, breaches or failures of<br>our information security controls or cybersecurity-related incidents; interruptions involving our information technology and telecommunications systems or third-party servicers;<br>competition in the financial services industry; the effectiveness of our risk management framework; the commencement and outcome of litigation and other legal proceedings and<br>regulatory actions against us; the impact of recent and future legislative and regulatory changes; interest rate risk; fluctuations in the values of the securities held in our securities portfolio;<br>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<br>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<br>acquisition; and any other risks described in the “Risk Factors” sections of reports and other documents filed by the Company with the Securities and Exchange Commission.<br>Any forward-looking statement made by us in this presentation is based only on information currently available to us and speaks only as of the date on which it is made. We undertake no<br>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<br>or otherwise. Certain of the information contained in this presentation is derived from information provided by industry sources. Although we believe that such information is accurate<br>and that the sources from which it has been obtained are reliable, we cannot guarantee the accuracy of, and have not independently verified, such information.<br>Use of Non-GAAP financial measures<br>In addition to the results presented in accordance with U.S. General Accepted Accounting Principles (“GAAP”), the Company routinely supplements its evaluation with an analysis of certain<br>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<br>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<br>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.<br>Reconciliations of non-GAAP disclosures to the comparable GAAP measures are provided in this presentation.
---
1 Adjusted to exclude tax-adjusted FHLB prepayment fees.<br>2 Represents a Non-GAAP financial measure. See Appendix for Non-GAAP reconciliation.<br>3<br>Why Bridgewater Bank?<br>Q4 2020 Highlights<br>$0.17<br>Reported<br>$0.32<br>Adjusted1<br>• Net income of $5.0 million, which included a non-recurring charge of $5.6 million attributed to prepayment fees on longer<br>term FHLB advances<br>• Pre-provision net revenue2 (“PPNR”) of $16.3 million, which translates to PPNR ROA of 2.30%<br>• Net interest margin of 3.61%; core net interest margin, excluding PPP, of 3.52% compared to Q3 2020 net interest<br>margin of 3.28% and core net interest margin of 3.33%<br>• $1.7 million in PPP deferred origination fees recognized, including approximately $1.1 million associated with the<br>forgiveness of $43.1 million PPP loans, which contributed 16 bps to the net interest margin<br>Diluted<br>EPS<br>Efficiency<br>Ratio2<br>Return on Average<br>Common Equity<br>Return on Average<br>Assets<br>0.70%<br>Reported<br>1.31%<br>Adjusted1<br>7.45%<br>Reported<br>13.86%<br>Adjusted1<br>59.0%<br>Reported<br>36.6%<br>Adjusted<br>Earnings<br>Deposits • Deposits reached $2.50 billion, an increase of $228.6 million, or 10.1% growth over the prior quarter due to new client<br>acquisition initiatives and pandemic-related accumulation of liquidity by existing clients<br>• Noninterest bearing deposits grew 46% YoY to $671.9 million and account for 27% of total deposits<br>• Cost of interest bearing deposits declined 25 basis points to 0.96% compared to 1.21% in Q3 2020<br>Loans and<br>Asset Quality • Gross loans reached $2.19 billion, excluding PPP loans, an increase of $110.3 million, or 21.2% annualized growth over<br>the prior quarter<br>• Nonperforming assets to total assets was 0.03% compared to 0.02% in Q3 2020<br>• Provision of $3.9 million was recorded bringing the allowance to total loans to 1.50% or 1.59% when excluding PPP loans<br>• Net charge-offs to average loans of 0.08% compared to 0.00% in Q3 2020
---
1 Represents a Non-GAAP financial measure. See Appendix for Non-GAAP reconciliation.<br>* Change in basis points for profitability metrics 4<br>Q4 2020 Financial Results<br>(dollars in thousands) Q4 2020 Q3 2020 % Change Q4 2019 % Change<br>Income Statement Summary<br>Interest Income 30,699 $ 28,493 $ 7.7% 27,419 $ 12.0%<br>Interest Expense 5,858 6,814 (14.0) 7,491 (21.8)<br>Net Interest Income 24,841 21,679 14.6 19,928 24.7<br>Provision for Loan Losses 3,900 3,750 4.0 600 550.0<br>Net Interest Income after Provision 20,941 17,929 16.8 19,328 8.3<br>Noninterest Income 986 1,157 (14.8) 1,112 (11.3)<br>Noninterest Expense 15,258 9,672 57.8 10,489 45.5<br>Pretax Income 6,669 9,414 (29.2) 9,951 (33.0)<br>Provision for Income Taxes 1,690 2,240 (24.6) 1,380 22.5<br>Net Income 4,979 $ 7,174 $ (30.6) 9,951 $ (50.0)<br>Diluted EPS 0.17 $ 0.25 $ (32.0) 0.29 $ (41.4)<br>Balance Sheet Summary<br>Total Assets 2,927,345 $ 2,774,564 $ 5.5% 2,268,830 $ 29.0%<br>Loans, Gross 2,326,428 2,259,228 3.0 1,912,038 21.7<br>Deposits 2,501,636 2,273,044 10.1 1,823,310 37.2<br>Tangible Common Equity1 262,109 262,088 0.0 241,307 8.6<br>Profitability Metrics* Q4 2020 Q3 2020 Net Change Q4 2019 Net Change<br>Return on Average Assets (ROA) 0.70% 1.05% (0.35) 1.53% (0.83)<br>Pre-Provision Net Revenue ROA1 2.30 1.94 0.36 2.09 0.21<br>Return on Average Equity (ROE) 7.45 10.84 (3.39) 14.16 (6.71)<br>Net Interest Margin 3.61 3.28 0.33 3.65 (0.04)<br>Adjusted Efficiency Ratio1 36.6 41.7 (5.10) 44.3 (7.70)<br>QoQ Comparison YoY Comparison
---
5 Dollars in thousands<br>Core Earnings Capital Generation Strong Core Earnings Generation<br>Pre-Provision Net Revenue¹, Net Income, and ROA<br>$11,679 $12,157 $13,039 $13,200<br>$16,298<br>$8,571 $7,443 $7,598 $7,174<br>$4,979<br>2.09% 2.11%<br>2.00% 1.94%<br>2.30%<br>1.53%<br>1.29%<br>1.17%<br>1.05%<br>0.70%<br>Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020<br>PPNR¹ Net Income PPNR ROA¹ ROA<br>1 Represents a Non-GAAP financial measure. See Appendix for Non-GAAP reconciliation
---
6 Dollars in thousands<br>Solid Capital and Liquidity<br>Consolidated Capital Ratios On & Off-Balance Sheet Liquidity as % of Total Assets<br>14.2%<br>15.2%<br>18.3% 16.8%<br>18.4%<br>18.9% 14.0%<br>16.1%<br>15.5%<br>19.8%<br>$749,816<br>$706,323<br>$948,234<br>$894,373<br>$1,121,145<br>Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020<br>On-Balance Sheet Liquidity as a % of Assets Off-Balance Sheet Liquidity as a % of Assets<br>10.69% 10.51% 9.94% 9.83% 9.28%<br>11.39% 11.10% 11.39% 11.03%<br>10.35%<br>12.98% 13.38%<br>15.99%<br>15.45%<br>14.58%<br>Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020<br>Tier 1 Leverage Ratio Common Equity Tier 1 Capital Ratio<br>Total Risk-Based Capital Ratio
---
$241,307 $244,704 $253,799 $262,088 $262,109<br>10.65%<br>10.13%<br>9.23% 9.46%<br>8.96%<br>Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020<br>Tangible Common Equity ($000)¹<br>Tangible Common Equity to Tangible Assets¹<br>$4.53<br>$5.40<br>$7.22<br>$8.33<br>$9.31<br>2016 2017 2018 2019 2020<br>Tangible Book Value Per Share¹<br>7<br>Compound Tangible Book Value<br>Strong Capital and Liquidity Compound Tangible Book Value<br>Tangible Book Value Tangible Common Equity<br>1 Represents a Non-GAAP financial measure. See Appendix for Non-GAAP reconciliation<br>Dollars in thousands
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Twin Cities<br>Minnesota<br>8 Source: S&P Global Market Intelligence<br>Efficient Branch Footprint<br>Efficient Branch Footprint
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9 Source: S&P Global Market Intelligence; deposit market share data as of 6/30/2020.<br>Twin Cities Deposit Landscape<br>Growing Market Share<br>2006 Total Market 2020 Total Market<br>Top 10 Institutions Deposits ($000) Share Top 10 Institutions Deposits ($000) Share<br>Wells Fargo & Co. 16,308,234 $ 27.59% U.S. Bancorp 83,341,943 $ 38.23%<br>U.S. Bancorp 15,535,660 $ 26.28% Wells Fargo & Co. 65,154,088 $ 29.88%<br>TCF Financial Corp. 3,686,508 $ 6.24% TCF Financial Corp. 8,226,068 $ 3.77%<br>Marshall & Iisley Corp. 1,729,917 $ 2.93% Bank of Montreal 5,928,722 $ 2.72%<br>Bremer Financial Corp. 1,720,239 $ 2.91% Bremer Financial Corp. 5,801,429 $ 2.66%<br>Associated Banc-Corp 1,162,530 $ 1.97% Ameriprise Bank, fsb 5,300,381 $ 2.43%<br>Klein Financial Inc. 880,289 $ 1.49% Bank of America Corp. 4,634,383 $ 2.13%<br>Inter Savings Bank, fsb 558,660 $ 0.94% Old National Bancorp 3,585,042 $ 1.64%<br>Excel Bank Corp. 505,614 $ 0.86% Bridgewater Bancshares 2,289,454 $ 1.05%<br>American Bancorp 457,414 $ 0.77% Associated Banc-Corp 2,277,702 $ 1.04%<br>Total Deposits 42,545,065 $ 71.98% Total Deposits 186,539,212 $ 85.55%<br>Total Bank Deposits 59,119,026 $ 197 Total Bank Deposits 218,026,091 $ 144<br>% of Twin Cities MSA Deposits 71.98% % of Twin Cities MSA Deposits 85.55%<br>Total Bank Deposits - Minneapolis-St.Paul-Bloomington, MN-WI MSA
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10<br>Stable Core Operating Efficiency<br>Efficiency Ratio Operating Expense Composition<br>1.67 1.68<br>1.37 1.40 1.34<br>0.20 0.01<br>0.27 0.02<br>0.82<br>44.3 44.1<br>40.4 41.7<br>36.6<br>49.6<br>44.4<br>48.6<br>42.3<br>59.0<br>Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020<br>Adjustment Factors¹ / Avg. Assets Adj. NIE / Avg. Assets<br>Adjusted Efficiency Ratio¹ Efficiency Ratio¹<br>$6,235 $6,454 $6,348 $6,550 $6,216<br>$883 $713 $672 $894 $979<br>$480 $495 $564<br>$652 $690<br>$1,763 $1,999<br>$1,335<br>$1,431 $1,614<br>$1,128<br>$85<br>$362<br>$145 $146<br>$1,430<br>$5,613<br>$10,489<br>$9,746<br>$10,711<br>$9,672<br>$15,258<br>Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020<br>Personnel Occupancy<br>Technology Other<br>Historic Tax Credit Amortization FHLB Advance Prepayment Fees<br>1 Represents a Non-GAAP financial measure. See Appendix for Non-GAAP reconciliation<br>Dollars in thousands
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$0<br>$20,000<br>$40,000<br>$60,000<br>$80,000<br>$100,000<br>$120,000<br>$140,000<br>$160,000<br>Weekly Average Cash FHLB Term Advances 11<br>Given the low interest rate environment and extraordinary deposit inflows during the year, the Company took<br>action to remove inefficient, longer term FHLB advances from its balance sheet. By extinguishing the debt early<br>and incurring $5.6 million of prepayment penalties in the fourth quarter, the Company accelerated the future<br>interest expense of these advances into the current period. Ultimately, the strategy better orients the balance<br>sheet, improves the net interest margin outlook and future earnings power of the Company.<br>FHLB Prepayment Strategy<br>Dollars in thousands<br>In November, the<br>Company prepaid<br>$44.0 million of<br>advances with a<br>weighted average rate<br>of 2.65% In December, the<br>Company prepaid<br>$25.0 million of<br>advances with a<br>weighted average rate<br>of 3.20%
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12<br>¹Excludes PPP loan yield impact<br>Amounts calculated on a tax-equivalent basis using statutory federal tax rate of 21%<br>Dollars in thousands<br>Net Interest Margin<br>• 24.7% YoY growth in net interest<br>income<br>• Q4 2020 net interest income<br>includes the accelerated recognition<br>of $1.1 million of PPP loan<br>origination fees, which contributed<br>16 bps to NIM<br>• Q4 2020 NIM was 3.52% when<br>excluding PPP loans and<br>corresponding deposits<br>• Loan yields¹ only declined 6 bps<br>while total interest bearing deposit<br>costs decreased 25 bps when<br>compared to the linked-quarter<br>Net Interest Margin<br>$19,928 $20,102<br>$21,342 $21,679<br>$24,841<br>3.65% 3.59%<br>3.38%<br>3.28%<br>3.61%<br>Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020<br>Net Interest Income Net Interest Margin
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$1,872,234 $1,954,959<br>$2,152,398 $2,206,807<br>$2,301,328<br>5.33%<br>5.17%<br>5.01% 4.93% 4.87%<br>5.00% 4.90%<br>4.76% 4.69% 4.59%<br>Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020<br>Average Loans Loan Yield Loan Yield Excluding Fees<br>13 Yield is adjusted to exclude PPP loans<br>Dollars in thousands<br>Spot<br>Rate<br>2.58%<br>Spot<br>Rate<br>4.45%<br>Spot<br>Rate<br>0.74%<br>Spot<br>Rate<br>0.71%<br>Net Interest Drivers<br>*<br>$263,926<br>$282,914 $295,352<br>$339,387<br>$371,463<br>3.38% 3.43%<br>3.13%<br>2.68% 2.70%<br>Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020<br>Average Investments Investment Yield<br>$1,341,910 $1,374,864<br>$1,501,946<br>$1,597,127<br>$1,687,342<br>1.79% 1.67%<br>1.38%<br>1.21%<br>0.96%<br>Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020<br>Average Interest Bearing Deposits Cost of Int. Bearing Deposits<br>$1,341,910 $1,374,864 $1,501,946 $1,597,127 $1,687,342<br>$451,265 $444,201<br>$603,456 $615,214 $654,299<br>$177,290 $234,463<br>$237,056 $214,758 $187,964<br>1.51% 1.44%<br>1.17% 1.12%<br>0.92%<br>Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020<br>Avg. Interest Bearing Deposits Avg. Noninterest Bearing Deposits<br>Avg. Borrowings Cost of Liability Funding<br>Average Investments and Yield Average Loans and Yield<br>Cost of Interest Bearing Deposits Cost of Liability Funding
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14<br>Dollars in thousands<br>Loan Portfolio Repricing<br>Loan Portfolio – Repricing Composition<br>18.2%,<br>Adjustable<br>24.6%, Variable<br>57.1%, Fixed<br>Variable/Adjustable Loans vs. Rate Floors<br>Fixed/Adjustable Years to Maturity/Repricing<br>88%<br>77%<br>63%<br>61%<br>80%<br>80%<br>12%<br>23%<br>37%<br>39%<br>20%<br>20%<br>$250,439<br>$341,938<br>$272,698<br>$195,156<br>$278,671<br>$419,743<br>Less Than 1<br>Year<br>1 to 2 Years 2 to 3 Years 3 to 4 Years 4 to 5 Years > 5 Years<br>Fixed Adjustable<br>Index Rate At Floor 0 to -25 bps -26 to -50 bps -51 to -75 bps -76 to -100 bps > -100 bps Total<br>PRIME 310,260 $ 22,349 $ 4,430 $ 31 $ 115 $ 194 $ 337,379 $<br>Libor 145,579 11,465 - - 13,669 - 170,714<br>2 Yr FHLB 4,299 - - - - - 4,299<br>3 Yr FHLB 47,198 - - - - - 47,198<br>5 Yr FHLB 41,823 - - - - - 41,823<br>1 Yr CMT 3,780 - - - - - 3,780<br>2 Yr CMT 6,085 - 8,551 - - 1,732 16,368<br>3 Yr CMT 60,554 3,706 2,358 7,411 10,108 1,259 85,395<br>5 Yr CMT 163,547 18,517 2,333 6,415 1,923 1,710 194,445<br>10 Yr CMT 534 - - - - - 534<br>Total 783,659 $ 56,038 $ 17,671 $ 13,857 $ 25,816 $ 4,895 $ 901,935 $
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$47,666<br>$37,678<br>$31,661<br>$22,447<br>$5,266<br>$24,984<br>$34,464<br>$10,171 $29,189<br>$11,469<br>$72,650 $72,142<br>$41,832<br>$51,636<br>$16,735<br>Q1 2021 Q2 2021 Q3 2021 Q4 2021 Q1 2022<br>Retail Time Deposit Maturities Wholesale Time Deposit Maturities<br>15<br>Excludes rolling short term brokered funding balances related to interest rate hedges<br>1 Rate indicated assumes renewal into like term at market rates as of January 22, 2021<br>Dollars in thousands<br>• $255 million in time deposits<br>maturing in the next 5 quarters at<br>a blended cost of 1.75%<br>Deposit Repricing Opportunities<br>Time Deposit Maturities<br>Maturity Dates Balance*<br>Weighted<br>Avg. Yield<br>Implied<br>Repricing<br>Rate1<br>% of Total<br>Portfolio<br>Jan-21 27,606 $ 1.91% 0.38% 4.27%<br>Feb-21 22,694 2.00% 0.40% 3.51%<br>Mar-21 22,350 2.06% 0.32% 3.46%<br>Apr-21 24,141 1.33% 0.36% 3.73%<br>May-21 25,538 1.91% 0.44% 3.95%<br>Jun-21 22,463 1.78% 0.46% 3.48%<br>Jul-21 12,147 1.61% 0.42% 1.88%<br>Aug-21 15,930 1.75% 0.44% 2.46%<br>Sep-21 13,755 1.21% 0.38% 2.13%<br>Oct-21 26,882 1.52% 0.48% 4.16%<br>Nov-21 10,262 1.42% 0.42% 1.59%<br>Dec-21 14,492 1.63% 0.42% 2.24%<br>Jan-22 5,878 2.27% 0.46% 0.91%<br>Feb-22 8,339 2.16% 0.54% 1.29%<br>Mar-22 2,518 2.54% 0.41% 0.39%<br>Total 254,995 $ 1.75% 0.41% 39.45%<br>Time Deposit Repricing
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$60,000 $30,000<br>$18,500<br>$1,823,310<br>$1,900,127<br>$2,242,051 $2,273,044<br>$2,501,636<br>Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020<br>Total Deposits ($000's) PPP Loan Deposits ($000's)<br>16<br>• 46% YoY growth¹ in noninterest<br>bearing deposits<br>• Internal deposit growth plan<br>momentum<br>• Capitalizing on unique opportunity to<br>migrate numerous new client<br>relationships neglected or<br>underserved by their primary bank<br>during the multiple rounds of PPP<br>• Robust deposit inflows reflect both<br>successful new client acquisition<br>initiatives and pandemic-related<br>accumulation of liquidity by existing<br>clients. The Company expects balance<br>fluctuations in future periods.<br>Deposit Growth<br>¹ Excludes $18.5 million of noninterest bearing deposit growth associated with remaining PPP loan funds<br>Dollars in thousands
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23.3% 21.9% 23.6% 24.5%<br>26.9% 13.0% 13.2%<br>11.5%<br>14.5%<br>14.6%<br>23.4%<br>27.6%<br>25.8%<br>28.3%<br>26.3%<br>26.6%<br>21.8%<br>20.4%<br>19.8%<br>14.1%<br>13.7%<br>15.5%<br>18.7%<br>12.9%<br>18.1%<br>$1,023,508<br>$1,339,350<br>$1,560,934<br>$1,823,310<br>$2,501,636<br>2016 2017 2018 2019 2020<br>Noninterest Bearing Transaction Deposits Interest Bearing Transaction Deposits Savings & Money Market Deposits Time Deposits Brokered Deposits<br>17<br>Dollars in thousands<br>Historical Deposit Composition<br>Historical Deposit Composition<br>• Continue to attract in-market lenders and deposit gatherers with<br>loyal client bases from institutions disrupted by M&A<br>• Average core deposits per branch surpassed $275 million<br>• Growth in brokered deposits linked to balance sheet swaps and<br>utilized given their flexible structures, optionality and efficiency<br>not afforded in traditional, retail deposit channels
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$180,228<br>$181,596<br>$138,454<br>$1,912,038<br>$2,002,817<br>$2,193,778<br>$2,259,228 $2,326,428<br>Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020<br>Total Gross Loans ($000's) PPP Loans ($000's)<br>18<br>Loan Growth<br>• 14.4% YoY loan growth, excluding<br>PPP loans<br>• Q4 2020 gross loans grew $110.3<br>million, or 21.2% annualized,<br>excluding PPP loans<br>• Continued focus on profitable loan<br>growth and disciplined pricing<br>• Meaningful new and diverse client<br>acquisition opportunities generated<br>through PPP<br>Loan Growth<br>Dollars in thousands
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10.6% 9.7% 12.6% 10.3% 7.3%<br>17.9% 14.5%<br>13.6% 13.6% 12.7% 0.4% 0.3%<br>0.2% 0.2% 0.3%<br>20.5%<br>23.6%<br>24.5%<br>26.9%<br>26.9%<br>6.2%<br>4.9%<br>3.9%<br>3.5%<br>3.2%<br>31.2%<br>30.8%<br>29.5%<br>31.0%<br>30.5%<br>13.2%<br>16.2%<br>15.7%<br>14.5%<br>13.1%<br>6.0%<br>$1,000,739<br>$1,347,113<br>$1,664,931<br>$1,912,038<br>$2,326,428<br>2016 2017 2018 2019 2020<br>Construction & Development 1-4 Family Consumer & Other Multifamily<br>Owner-Occupied CRE Non Owner-Occupied CRE Commercial & Industrial Paycheck Protection Program<br>19 Dollars in thousands<br>Historical Loan Composition<br>Historical Loan Composition<br>• Strong organic growth<br>• Well diversified portfolio among asset classes<br>• Multifamily niche mitigates concentrations and portfolio risk<br>• Geographic focus on Twin Cities MSA
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20<br>Investor Real Estate Secured: CRE Nonowner Occupied (“NOO”)<br>Full<br>Payment Interest<br>Only 16%<br>7-12<br>Month<br>1-3<br>Month<br>4-6<br>Month<br>4-6<br>Month<br>1Excludes PPP Loans<br>Modifications as of December 31, 2020<br>Dollars in thousands<br>Expiration of Modifications as of December 31, 2020<br>Loan Type CRE Nonowner<br>Occupied Multifamily<br>Construction<br>and<br>Development<br>1-4 Family<br>Mortgage<br>CRE Owner<br>Occupied<br>Commercial<br>and Industrial<br>Consumer and<br>Other Total<br>Balance September 30, 2020 $ 128,252 $ 42,273 $ - $ 5,589 $ 3,148 $ 12,119 $ - $ 191,381<br> Modification Expired (114,042) (18,637) - (5,170) (3,148) (1,649) - (142,646)<br> 2nd Modification Granted 21,362 - - - 597 4,834 - 26,793<br> New Modifications 1,477 - - - 16 68 - 1,561<br> Net Principal Change (4,840) - - (371) - (5,326) - (10,537)<br>Balance December 31, 2020 $ 32,209 $ 23,636 $ - $ 48 $ 613 $ 10,046 $ - $ 66,552<br>Total Portfolio Principal Balance1 $ 709,300 $ 626,465 $ 170,217 $ 294,479 $ 75,604 $ 304,220 $ 7,689 $ 2,187,974<br>% of Total Gross Loans 4.5% 3.8% 0.0% 0.0% 0.8% 3.3% 0.0% 3.0%<br>% on Watchlist 68.1% 0.0% 0.0% 0.0% 0.0% 75.7% 0.0% 44.4%<br>% Classified as Substandard 0.0% 0.0% 0.0% 0.0% 100.0% 0.0% 0.0% 0.9%<br>Linked Quarter % Decline -74.9% -44.1% 0.0% -99.1% -80.5% -17.1% 0.0% -65.2%<br>$1,735<br>$32,782<br>$7,926<br>$24,110<br>Q1 2021 Q2 2021 Q3 2021 Q4 2021<br>Modification Expiration
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21 Dollars in thousands<br>Loan Portfolio Composition<br>Loans by<br>Type<br>Loan Portfolio Composition<br>CRE NOO<br>30.5%<br>Multifamily<br>26.9%<br>C&D<br>7.3%<br>1-4 Family<br>12.7%<br>CRE OO<br>3.2%<br>C&I<br>13.1%<br>PPP<br>6.0%<br>Consumer<br>& Other<br>0.3%<br>$2.33<br>Billion<br>$191,381<br>$66,552<br>$0<br>$50,000<br>$100,000<br>$150,000<br>$200,000<br>$250,000<br>9/30/20 12/31/20<br>Modifications<br>Modification Summary<br>% of<br>Balance Total<br>Investor Real Estate Secured<br>CRE Nonowner Occupied (CRE NOO) 709,300 $ 30.5%<br>Multifamily 626,465 26.9%<br>Construction and Development (C&D) 170,217 7.3%<br>Total Investor Real Estate Secured 1,505,982 64.7%<br>1-4 Family Residential 294,479 12.7%<br>CRE Owner Occupied (CRE OO) 75,604 3.2%<br>Commercial and Industrial (C&I) 304,220 13.1%<br>SBA Paycheck Protection Program (PPP) 138,454 6.0%<br>Consumer and Other 7,689 0.3%<br>Total Loans, Gross 2,326,428 100.0%
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Dollars in thousands 22<br>Investor Real Estate Secured: CRE Nonowner Occupied (“NOO”)<br>By<br>Property<br>Type<br>Portfolio Characteristics – CRE NOO<br>Loan Balance Outstanding $709,300<br>% of Total Loans, Gross 30.5%<br>Number of Loans 364<br>Average Loan Size $1,949<br>Loan-to-Value (Weighted Average) 58.8%<br>5 Year Net Charge-Offs (%) 0.05%<br>Modification Summary<br>Office<br>26.9%<br>Retail 22.4% Industrial<br>22.0%<br>Nursing/<br>Assisted<br>Living<br>10.3%<br>Hotels<br>4.4%<br>Restaurant<br>3.0%<br>Other 11.0%<br>Investor Real Estate Secured:<br>CRE Nonowner Occupied (“NOO”)<br>$709<br>Million<br>Full<br>Payment<br>Interest<br>Only<br>23%<br>77%<br>7-12<br>Month<br>1-3<br>Month<br>4-6<br>Month<br>4-6<br>Month<br>$128,252<br>$32,209<br>$0<br>$25,000<br>$50,000<br>$75,000<br>$100,000<br>$125,000<br>$150,000<br>$175,000<br>9/30/20 12/31/20<br>Modifications<br>Risk Rating Number of Loans 12/31/20 Total<br>Pass 351 $ 667,336<br>Watch 9 29,576<br>Substandard 4 12,388<br>Total 364 $ 709,300
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Dollars in thousands<br>Modification Summary<br>$18,489<br>$3,839<br>$0<br>$10,000<br>$20,000<br>$30,000<br>9/30/20 12/31/20<br>Modifications<br>23<br>By Property<br>Square<br>Footage<br>Portfolio Characteristics – CRE NOO Office<br>Loan Balance Outstanding $191,142<br>% of Total Loans, Gross 8.2%<br>Number of Loans 100<br>Average Loan Size $1,911<br>Loan-to-Value (Weighted Average) 59.1%<br>Investor Real Estate Secured: CRE NOO Retail Investor Real Estate Secured:<br>CRE NOO Office<br>0-50k<br>Sq Ft,<br>42.0%<br>50k - 125k<br>Sq Ft,<br>18.3%<br>125k - 200k<br>Sq Ft, 13.0%<br>200k+ Sq Ft,<br>26.7%<br>$191<br>Million<br>Risk Rating Number of Loans 12/31/20 Total<br>Pass 99 $ 190,856<br>Watch --<br>Substandard 1 286<br>Total 100 $ 191,142
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Dollars in thousands<br>Modification Summary<br>$61,858<br>$6,199 $0<br>$15,000<br>$30,000<br>$45,000<br>$60,000<br>$75,000<br>9/30/20 12/31/20<br>Modifications<br>24<br>By Property<br>Square<br>Footage<br>Portfolio Characteristics – CRE NOO Retail<br>Loan Balance Outstanding $164,840<br>% of Total Loans, Gross 7.1%<br>Number of Loans 105<br>Average Loan Size $1,570<br>Loan-to-Value (Weighted Average) 61.3%<br>Investor Real Estate Secured: CRE NOO Retail Investor Real Estate Secured:<br>CRE NOO Retail<br>0-25k<br>Sq Ft,<br>50.1%<br>25k - 75k<br>Sq Ft,<br>30.0%<br>75k - 125k Sq<br>Ft, 12.0%<br>125k+ Sq Ft,<br>7.9%<br>$165<br>Million<br>Risk Rating Number of Loans 12/31/20 Total<br>Pass 99 $ 152,522<br>Watch 4 9,216<br>Substandard 2 3,102<br>Total 105 $ 164,840
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Dollars in thousands<br>Modification Summary<br>$6,684<br>$1,565<br>$0<br>$2,000<br>$4,000<br>$6,000<br>$8,000<br>$10,000<br>9/30/20 12/31/20<br>Modifications<br>25<br>By Property<br>Square<br>Footage<br>Portfolio Characteristics – CRE NOO Industrial<br>Loan Balance Outstanding $156,151<br>% of Total Loans, Gross 6.7%<br>Number of Loans 67<br>Average Loan Size $2,331<br>Loan-to-Value (Weighted Average) 54.6%<br>Investor Real Estate Secured: CRE NOO Retail Investor Real Estate Secured:<br>CRE NOO Industrial<br>0-50k<br>Sq Ft,<br>25.1%<br>50k - 125k<br>Sq Ft,<br>29.0%<br>125k+<br>Sq Ft,<br>45.9% $156<br>Million<br>Risk Rating Number of Loans 12/31/20 Total<br>Pass 67 $ 156,151<br>Watch --<br>Substandard --<br>Total 67 $ 156,151
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26 Based on state of primary real property collateral if available, otherwise borrower address is used.<br>Investor Real Estate Secured: CRE NOO Hotels<br>By<br>Geography <br>Portfolio Characteristics – CRE NOO Hotels<br>Loan Balance Outstanding $31,528<br>% of Total Loans, Gross 1.4%<br>Number of Loans 6<br>Average Loan Size $5,255<br>Loan-to-Value (Weighted Average) 63.3% Twin Cities MSA<br>88.6%<br>MN<br>11.4%<br>$32<br>Million<br>Investor Real Estate Secured:<br>CRE NOO Hotels<br>4-6<br>Month<br>Full<br>Payment<br>100%<br>Modification Summary<br>$19,269 $15,720<br>-$2,000<br>$2,000<br>$6,000<br>$10,000<br>$14,000<br>$18,000<br>$22,000<br>$26,000<br>$30,000<br>9/30/20 12/31/20<br>Modifications<br>Risk Rating Number of Loans 12/31/20 Total<br>Pass 3 $ 15,808<br>Watch 3 15,720<br>Substandard --<br>Total 6 $ 31,528<br>Dollars in thousands
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27<br>By<br>Restaurant<br>Type<br>Portfolio Characteristics – CRE NOO Restaurant<br>Loan Balance Outstanding $21,291<br>% of Total Loans, Gross 0.9%<br>Number of Loans 17<br>Average Loan Size $1,252<br>Loan-to-Value (Weighted Average) 58.7%<br>Investor Real Estate Secured: CRE NOO Restaurant Investor Real Estate Secured:<br>CRE NOO Restaurant<br>Full-Service<br>34.9%<br>Quick-Service<br>39.8%<br>Tap Rooms<br>11.1%<br>Coffee<br>Shops &<br>Bakeries<br>14.2%<br>$21<br>Million<br>Interest<br>Only<br>96%<br>4%<br>4-6<br>Month<br>7-12<br>Month<br>Modification Summary Risk Rating Number of Loans 12/31/20 Total<br>Pass 17 $ 21,291<br>Watch --<br>Substandard --<br>Total 17 $ 29,291<br>$12,501<br>$4,549<br>$0<br>$2,500<br>$5,000<br>$7,500<br>$10,000<br>$12,500<br>$15,000<br>$17,500<br>$20,000<br>9/30/20 12/31/20<br>Modifications<br>Dollars in thousands
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5-19<br>Units<br>15.2%<br>20-49<br>Units<br>24.2%<br>50-99<br>Units<br>27.8%<br>100+<br>Units<br>32.9%<br>$626<br>Million<br>28<br>By<br>Unit Type<br>Portfolio Characteristics – Multifamily<br>Loan Balance Outstanding $626,465<br>% of Total Loans, Gross 26.9%<br>Number of Loans 316<br>Average Loan Size $1,982<br>Loan-to-Value (Weighted Average) 62.3%<br>5 Year Net Charge-Offs (%) 0.00%<br>Investor Real Estate Secured: CRE NOO Restaurant Investor Real Estate Secured:<br>Multifamily<br>Interest<br>Only<br>44%<br>56%<br>7-12<br>Month<br>100%<br>Risk Rating Number of Loans 12/31/20 Total<br>Pass 316 $ 626,465<br>Watch --<br>Substandard --<br>Total 316 $ 626,465<br>Modification Summary<br>$42,273<br>$23,636<br>$0<br>$10,000<br>$20,000<br>$30,000<br>$40,000<br>$50,000<br>$60,000<br>$70,000<br>9/30/20 12/31/20<br>Modifications<br>Dollars in thousands
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Residential<br>34.9%<br>Multifamily<br>37.9%<br>CRE Other<br>7.8%<br>Land<br>19.4%<br>$170<br>Million<br>29<br>By<br>Property<br>Type<br>By<br>Geography<br>Land Portfolio Composition<br>Investor Real Estate Secured: CRE NOO Restaurant Investor Real Estate Secured:<br>Construction and Development<br>Portfolio Characteristics – C&D<br>Loan Balance Outstanding $170,217<br>% of Total Loans, Gross 7.3%<br>% Utilization of Commitments 35.9%<br>Number of Loans 283<br>Average Loan Size $601<br>Loan-to-Value (Weighted Average) 63.6%<br>5 Year Net Charge-Offs (%) 0.05%<br>Twin Cities MSA<br>88.2%<br>MN<br>0.4%<br>Other<br>States<br>11.2%<br>Finished<br>Lots,<br>32.1%<br>Developed<br>Land, 48.7%<br>Undeveloped<br>Land, 19.2%<br>$34<br>Million<br>Dollars in thousands<br>Based on state of primary real property collateral if available, otherwise borrower address is used.
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30<br>Investor Real Estate Secured: CRE Nonowner Occupied (“NOO”)<br>By<br>Property<br>Type<br>Portfolio Characteristics – CRE OO<br>Loan Balance Outstanding $75,604<br>% of Total Loans, Gross 3.2%<br>Number of Loans 123<br>Average Loan Size $615<br>Loan-to-Value (Weighted Average) 58.4%<br>5 Year Net Charge-Offs (%) 0.04%<br>Office<br>25.4%<br>Retail<br>12.8% Industrial<br>50.3%<br>Restaurant<br>3.8% Other<br>7.8%<br>$76<br>Million<br>Real Estate Secured:<br>CRE Owner Occupied<br>4-6<br>Month<br>4-6<br>Month<br>Modification Summary<br>$3,148<br>$613 $0<br>$1,500<br>$3,000<br>$4,500<br>$6,000<br>$7,500<br>9/30/20 12/31/20<br>Modifications<br>Risk Rating Number of Loans 12/31/20 Total<br>Pass 119 $ 74,734<br>Watch --<br>Substandard 4 870<br>Total 123 $ 75,604<br>Dollars in thousands
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Dollars in thousands<br>Real Estate<br>and Rental<br>and Leasing,<br>34.7%<br>Construction,<br>20.4%<br>Manufacturing,<br>11.4%<br>Finance &<br>Insurance,<br>10.3%<br>Other, 9.3%<br>Professional<br>Services, 5.4%<br>Wholesale/Retai<br>l Trade, 4.9%<br>Accomodation &<br>Food Services,<br>3.6%<br>$304<br>Million<br>31 Distribution by North American Industry Classification System (NAICS). Any industries included in Other category are individually < 3% of total portfolio.<br>By<br>Industry <br>Portfolio Characteristics – C&I<br>Loan Balance Outstanding $304,220<br>% of Total Loans, Gross 13.1%<br>Number of Loans 707<br>Average Loan Size $430<br>Number of Relationships 447<br>5 Year Net Charge-Offs (%) 0.03%<br>Commercial and Industrial<br>Full<br>Payment<br>Interest<br>Only<br>43% 57% 4-6<br>Month<br>1-3<br>Month<br>Modification Summary<br>$12,119 $10,046<br>$0<br>$2,000<br>$4,000<br>$6,000<br>$8,000<br>$10,000<br>$12,000<br>$14,000<br>$16,000<br>$18,000<br>9/30/20 12/31/20<br>Modifications<br>Risk Rating Number of Loans 12/31/20 Total<br>Pass 690 $ 289,465<br>Watch 11 14,516<br>Substandard 6 239<br>Total 707 $ 304,220
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32<br>Investor Real Estate Secured: CRE Nonowner Occupied (“NOO”)<br>Watch List<br>By<br>Loan Type<br>Substandard<br>List By<br>Loan Type<br>C&I<br>32.3%<br>CRE NOO<br>Retail 20.6%<br>CRE NOO<br>Hotels<br>35.1%<br>1-4 Family<br>1.6%<br>CRE Other<br>10.4%<br>$45<br>Million<br>Asset Quality<br>Dollars in thousands<br>Watch List Characteristics<br>Loan Balance Outstanding $44,795<br>% of Total Loans, Gross 1.9%<br>Number of Loans 21<br>Average Loan Size $2,133<br>Substandard List Characteristics<br>Loan Balance Outstanding $15,164<br>% of Total Loans, Gross 0.7%<br>Number of Loans 22<br>Average Loan Size $689<br>% of Bank Tier 1 Capital + ALLL 4.5%<br>CRE Other<br>59.3%<br>CRE NOO Retail<br>20.5%<br>1-4 Family<br>9.9%<br>CRE OO<br>5.7%<br>CRE NOO Office<br>1.9%<br>C&I 1.6% C&D 1.0%<br>Consumer & Other<br>0.1%<br>$15<br>Million
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Dollars in thousands 33<br>Asset Quality<br>Asset Quality<br>$6,506<br>$1,720<br>$581 $461 $775<br>0.52%<br>0.11%<br>0.03% 0.02% 0.03%<br>0.00%<br>0.20%<br>0.40%<br>0.60%<br>0.80%<br>1.00%<br> $-<br> $1,000<br> $2,000<br> $3,000<br> $4,000<br> $5,000<br> $6,000<br> $7,000<br> $8,000<br>2016 2017 2018 2019 2020<br>NPAs ($000s)<br>% of Assets<br>$12,333<br>$16,502<br>$20,031<br>$22,526<br>$34,841<br>1.23% 1.22% 1.20% 1.18%<br>1.50%<br>0.00%<br>0.50%<br>1.00%<br>1.50%<br>2.00%<br>2.50%<br>3.00%<br>3.50%<br>4.00%<br> $-<br> $5,000<br> $10,000<br> $15,000<br> $20,000<br> $25,000<br> $30,000<br> $35,000<br> $40,000<br>2016 2017 2018 2019 2020<br>ALLL ($000s)<br>% of Gross Loans $969<br>$6 $46<br>$205<br>$435<br>0.11%<br>0.00% 0.00%<br>0.01%<br>0.02%<br>-0.05%<br>-0.03%<br>0.00%<br>0.03%<br>0.05%<br>0.08%<br>0.10%<br>0.13%<br> $(150)<br> $100<br> $350<br> $600<br> $850<br> $1,100<br> $1,350<br> $1,600<br>2016 2017 2018 2019 2020<br>NCOs ($000s)<br>% of Avg. Loans<br>Classified Assets Nonperforming Assets<br>Allowance for Loan Losses Net Charge-Offs<br>$12,194<br>$5,888<br>$4,184<br>$2,695<br>$15,164<br>9.73%<br>3.43%<br>1.82%<br>1.01%<br>4.54%<br>0.00%<br>5.00%<br>10.00%<br>15.00%<br>20.00%<br>25.00%<br> $-<br> $2,000<br> $4,000<br> $6,000<br> $8,000<br> $10,000<br> $12,000<br> $14,000<br> $16,000<br> $18,000<br> $20,000<br>2016 2017 2018 2019 2020<br>Classified Assets ($000s)<br>% of Bank Tier 1 Capital + ALLL
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34<br>Investor Highlights<br>Investor Highlights
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36 Note: data set includes selected Minnesota bank and thrift M&A transactions in recent years<br>Source: S&P Global Market Intelligence; public filings<br>Core<br>Target Deal Deposit<br>Announcement Total Assets Value Premium In Market /<br>Buyer State Seller State Date ($mm) ($mm) (%) Market Entry<br>MN MN 6/28/2019 $129 NA NA In Market<br>SD MN 5/29/2019 $347 NA NA Market Entry<br>MN MN 4/22/2019 $206 NA NA In Market<br>IN MN 6/21/2018 $1,972 $433.8 14.9 In Market<br>ND MN 2/19/2018 $729 NA NA Market Entry<br>IA MN 11/13/2017 $390 $53.4 10.9 In Market<br>IN MN 8/8/2017 $2,056 $303.3 8.6 Market Entry<br>SD MN 8/3/2017 $409 NA NA Market Entry<br>NE MN 6/28/2016 $209 NA NA In Market<br>MN MN 1/7/2016 $76 $12.0 8.2 In Market<br>ND MN 9/22/2015 $352 $46.0 8.2 In Market<br>MN MN 7/24/2014 $670 $80.0 NA Market Entry<br>IA MN 11/21/2014 $1,172 $133.6 6.0 Market Entry<br>NE MN 7/25/2012 $401 NA NA Market Entry<br>Recent Minnesota M&A Transactions
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37<br>Source: S&P Global Market Intelligence; most recent quarter data<br>Dollars in thousands<br>267 •Commercial Banks located in Minnesota<br>234<br>•Commercial Banks located in Minnesota, and<br>with less than $500 million in assets<br>50<br>•Commercial Banks located in the Twin Cities<br>MSA, and with less than $500 million in assets<br>30<br>•Commercial Banks located in the Twin Cities<br>MSA, with less than $500 million in assets,<br>and a loan to deposits ratio of less than 80%<br>➢Total Assets (Median) = $181,678<br>➢Cost of Funds (Median) = 0.41%<br>Potential Acquisition Targets
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38 1 Non-GAAP financial measures; for further information, see page 39<br>Consolidated Summary<br>Financial Information - Historical<br>Dollar Values in Millions<br>2016Y 2017Y 2018Y 2019Y 2020Y<br>Balance Sheet<br>Total Assets 1,260 $ 1,617 $ 1,974 $ 2,269 $ 2,927 $<br>Gross Loans 1,001 1,347 1,665 1,912 2,326<br>Deposits 1,024 1,339 1,561 1,823 2,502<br>Gross Loan/Deposits 97.8% 100.6% 106.7% 104.9% 93.0% <br>Capital<br>Total Equity 115 $ 137 $ 221 $ 245 $ 265 $<br>Tangible Common Equity1 111 133 217 241 262<br>Tangible Common Equity/Tangible Assets1 8.86% 8.26% 11.03% 10.65% 8.96%<br>Tier 1 Leverage Ratio 9.44% 8.38% 11.23% 10.69% 9.28%<br>Tier 1 Risk-based Capital Ratio 11.49% 9.49% 12.07% 11.39% 10.35%<br>Total Risk-based Capital Ratio 12.74% 12.46% 14.55% 12.98% 14.58%<br>Earnings & Profitability<br>Net Income 13.2 $ 16.9 $ 26.9 $ 31.4 $ 27.2 $<br>ROAA 1.20% 1.16% 1.51% 1.49% 1.04%<br>ROAE 12.88% 13.18% 13.87% 13.50% 10.51%<br>Net Interest Margin 4.00% 3.92% 3.72% 3.59% 3.46%<br>Non-Int Inc./Avg. Assets 0.23% 0.17% 0.14% 0.18% 0.22%<br>Adjusted Non-Int Exp./Avg. Assets N/A 1.62% 1.59% 1.59% 1.44%<br>Adjusted Efficiency Ratio1 N/A 41.1% 41.7% 43.3% 40.5%<br>Asset Quality<br>NPAs/Assets 0.52% 0.11% 0.03% 0.02% 0.03%<br>Reserves/NPLs 530.91% 1,448.81% 3,447.68% 4,886.33% 4,495.61%<br>Reserves/Loans 1.23% 1.22% 1.20% 1.18% 1.50%<br>NCOs/Average Loans 0.11% 0.00% 0.00% 0.01% 0.02%<br>For the Fiscal Year Ended,
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39<br>This presentation includes certain non-GAAP financial measures intended to supplement, not substitute for, comparable GAAP measures. Reconciliations of these<br>non-GAAP financial measures are provided below. The Company believes these non-GAAP financial measures provide useful information to both management and<br>investors to analyze and evaluate the Company’s financial performance. Because not all companies use the same calculations for these measures, the information<br>in this presentation may not be comparable to other similarly titled measures as calculated by other companies.<br>Efficiency Ratio is adjusted to exclude the historic tax credit amortization and FHLB prepayment fees.<br>Dollars in thousands<br>Reconciliation of Annual<br>Non-GAAP Measures<br>Efficiency Ratio 2016 2017 2017 2018 2018* 2019 2019* 2020 2020*<br>Noninterest Expense 20,168 $ 25,496 $ 25,496 $ 31,562 $ 31,562 $ 36,932 $ 36,932 $ 45,387 $ 45,387 $<br>Less: Amortization of Tax Credit Investments - - (1,916) - (3,293) - (3,225) - (738)<br>Less: FHLB Advances Prepayment Fee - - - - - - - - (7,043)<br>Less: Amortization Intangible Assets (104) (191) (191) (191) (191) (191) (191) (191) (191)<br>Adjusted Noninterest Expense 20,064 $ 25,305 $ 23,389 $ 31,371 $ 28,078 $ 36,741 $ 33,516 $ 45,196 $ 37,415 $<br>Net Interest Income 42,118 $ 54,173 $ 54,173 $ 64,738 $ 64,738 $ 74,132 $ 74,132 $ 87,964 $ 87,964 $<br>Noninterest Income 2,567 2,536 2,536 2,543 2,543 3,826 3,826 5,839 5,839<br>Less: (Gain) Loss on Sales of Securities (830) 250 250 125 125 (516) (516) (1,503) (1,503)<br>Adjusted Operating Revenue 43,855 $ 56,959 $ 56,959 $ 67,406 $ 67,406 $ 77,442 $ 77,442 $ 92,300 $ 92,300 $<br>Efficiency Ratio 45.8% 44.4% 41.1% 46.5% 41.7% 47.4% 43.3% 49.0% 40.5%<br>Tangible Common Equity &<br>Tangible Common Equity/Tangible<br>Assets 2016 2017 2018 2019 2020<br>Common Equity 115,366 $ 137,162 $ 220,998 $ 244,794 $ 265,405 $<br>Less: Intangible Assets (4,060) (3,869) (3,678) (3,487) (3,296)<br>Tangible Common Equity 111,306 $ 133,293 $ 217,320 $ 241,307 $ 262,109 $<br>Total Assets 1,260,394 $ 1,616,612 $ 1,973,741 $ 2,268,830 $ 2,927,345 $<br>Less: Intangible Assets (4,060) (3,869) (3,678) (3,487) (3,296)<br>Tangible Assets 1,256,334 $ 1,612,743 $ 1,970,063 $ 2,265,343 $ 2,924,049 $<br>Tangible Common Equity/Tangible Assets 8.86% 8.26% 11.03% 10.65% 8.96%<br>Tangible Book Value Per Share 2016 2017 2018 2019 2020<br>Book Value Per Common Share 4.69 $ 5.56 $ 7.34 $ 8.45 $ 9.43 $<br>Less: Effects of Intangible Assets (0.17) (0.16) (0.12) (0.12) (0.12)<br>Tangible Book Value Per Common Share 4.52 $ 5.40 $ 7.22 $ 8.33 $ 9.31 $<br>Total Common Shares 24,589,861 24,679,861 30,097,274 28,973,572 28,143,493<br>As of and for the year ended December 31 for year end data,<br>As of and for the year ended December 31 for year end data,
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40<br>This presentation includes certain non-GAAP financial measures intended to supplement, not substitute for, comparable GAAP measures. Reconciliations of these<br>non-GAAP financial measures are provided below. The Company believes these non-GAAP financial measures provide useful information to both management and<br>investors to analyze and evaluate the Company’s financial performance. Because not all companies use the same calculations for these measures, the information<br>in this presentation may not be comparable to other similarly titled measures as calculated by other companies.<br>Efficiency Ratio is adjusted to exclude the historic tax credit amortization and FHLB prepayment fees.<br>Dollars in thousands<br>Reconciliation of Quarterly<br>Non-GAAP Measures<br>Efficiency Ratio<br>December 31,<br>2019<br>December 31,<br>2019 <br>March 31,<br>2020<br>March 31,<br>2020<br>June 30,<br>2020<br>June 30,<br>2020<br>September 30,<br>2020<br>September 30,<br>2020<br>December 31,<br>2020<br>December 31,<br>2020<br>Noninterest Expense 10,489 $ 10,489 $ 9,746 $ 9,746 $ 10,711 $ 10,711 $ 9,672 $ 9,672 $ 15,258 $ 15,258 $<br>Less: Amortization of Tax Credit Investments - (1,128) - (85) - (362) - (145) - (146)<br>Less: FHLB Advances Prepayment Fee - - - - - (1,430) - - - (5,613)<br>Less: Amortization Intangible Assets (48) (48) (48) (48) (47) (47) (48) (48) (48) (48)<br>Adjusted Noninterest Expense 10,441 $ 9,313 $ 9,698 $ 9,613 $ 10,664 $ 8,872 $ 9,624 $ 9,479 $ 15,210 $ 9,451 $<br>Net Interest Income 19,928 $ 19,928 $ 20,102 $ 20,102 $ 21,342 $ 21,342 $ 21,679 $ 21,679 $ 24,841 $ 24,841 $<br>Noninterest Income 1,112 1,112 1,719 1,719 1,977 1,977 1,157 1,157 986 986<br>Less: Gain on Sales of Securities - - (3) (3) (1,361) (1,361) (109) (109) (30) (30)<br>Adjusted Operating Revenue 21,040 $ 21,040 $ 21,818 $ 21,818 $ 21,958 $ 21,958 $ 22,727 $ 22,727 $ 25,797 $ 25,797 $<br>Efficiency Ratio 49.6% 44.3% 44.4% 44.1% 48.6% 40.4% 42.3% 41.7% 59.0% 36.6%<br>Tangible Common Equity &<br>Tangible Common Equity/Tangible<br>Assets<br>December 31,<br>2019<br>March 31,<br>2020<br>June 30,<br>2020<br>September 30,<br>2020<br>December 31,<br>2020<br>Common Equity 244,794 $ 248,143 $ 257,190 $ 265,432 $ 265,405 $<br>Less: Intangible Assets (3,487) (3,439) (3,391) (3,344) (3,296)<br>Tangible Common Equity 241,307 $ 244,704 $ 253,799 $ 262,088 $ 262,109 $<br>Total Assets 2,268,830 $ 2,418,730 $ 2,754,463 $ 2,774,564 $ 2,927,345 $<br>Less: Intangible Assets (3,487) (3,439) (3,391) (3,344) (3,296)<br>Tangible Assets 2,265,343 $ 2,415,291 $ 2,751,072 $ 2,771,220 $ 2,924,049 $<br>Tangible Common Equity/Tangible Assets 10.65% 10.13% 9.23% 9.46% 8.96%<br>Tangible Book Value Per Share<br>December 31,<br>2019<br>March 31,<br>2020<br>June 30,<br>2020<br>September 30,<br>2020<br>December 31,<br>2020<br>Book Value Per Common Share 8.45 $ 8.61 $ 8.92 $ 9.25 $ 9.43 $<br>Less: Effects of Intangible Assets (0.12) (0.12) (0.12) (0.12) (0.12)<br>Tangible Book Value Per Common Share 8.33 $ 8.49 $ 8.80 $ 9.13 $ 9.31 $<br>Total Common Shares 28,973,572 28,807,375 28,837,560 28,710,775 28,143,493<br>As of and for the quarter ended,<br>As of and for the quarter ended,
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41<br>This presentation includes certain non-GAAP financial measures intended to supplement, not substitute for, comparable GAAP measures. Reconciliations of these<br>non-GAAP financial measures are provided below. The Company believes these non-GAAP financial measures provide useful information to both management and<br>investors to analyze and evaluate the Company’s financial performance. Because not all companies use the same calculations for these measures, the information<br>in this presentation may not be comparable to other similarly titled measures as calculated by other companies.<br>Dollars in thousands<br>Reconciliation of Quarterly<br>Non-GAAP Measures – Pre-Provision<br>Pre-Provision Net Revenue<br>December 31,<br>2019<br>March 31,<br>2020<br>June 30,<br>2020<br>September 30,<br>2020<br>December 31,<br>2020<br>Noninterest Income 1,112 $ 1,719 $ 1,977 $ 1,157 $ 986 $<br>Less: Gain on sales on Securities - (3) (1,361) (109) (30)<br>Total Operating Noninterest Income 1,112 1,716 616 1,048 956<br>Plus: Net Interest Income 19,928 20,102 21,342 21,679 24,841<br> Net Operating Revenue 21,040 21,818 21,958 22,727 25,797<br>Noninterest Expense 10,489 9,746 10,711 9,672 15,258<br>Less: Amortization of Tax Credit Investments (1,128) (85) (362) (145) (146)<br>Less: FHLB Advances Prepayment Fees - - (1,430) - (5,613)<br> Total Operating Noninterest Expense 9,361 9,661 8,919 9,527 9,499<br>Pre-Provision Net Revenue 11,679 $ 12,157 $ 13,039 $ 13,200 $ 16,298 $<br> Plus:<br>Non-Operating Revenue Adjustments - 3 1,361 109 30<br> Less:<br>Provision for Loan Losses 600 2,100 3,000 3,750 3,900<br>Non-Operating Expense Adjustments 1,128 85 1,792 145 5,759<br>Provision for Income Taxes 1,380 2,532 2,010 2,240 1,690<br>Net Income 8,571 $ 7,443 $ 7,598 $ 7,174 $ 4,979 $<br>Average Assets 2,221,370 $ 2,317,040 $ 2,622,272 $ 2,711,755 $ 2,816,032 $<br>Pre-Provision Net Revenue Return on Average Assets 2.09% 2.11% 2.00% 1.94% 2.30%<br>As of and for the quarter end,
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