8-K - BWB - Equibles

UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 8-K CURRENT REPORT

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

April 26, 2023

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)	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<br><br>Depositary Shares, each representing a 1/100th interest in a share of 5.875% Non-Cumulative Perpetual Preferred Stock, Series A	BWB<br><br>BWBBP	The NASDAQ Stock Market LLC<br><br>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 R esults of Operations and Financial Condition.

On April 26, 2023, Bridgewater Bancshares, Inc. (the “Company”) issued a press release announcing its financial results for the three months ended March 31, 2023. A copy of the press release is attached as Exhibit 99.1 to this Current Report on 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 R egulation 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 8.01 Other Events .

On April 26, 2023, in its 2023 first quarter earnings release, the Company announced that its Board of Directors had declared a quarterly cash dividend on its 5.875% Non-Cumulative Perpetual Preferred Stock, Series A (“Series A Preferred Stock”). The quarterly cash dividend of $36.72 per share, equivalent to $0.3672 per depository share, each representing a 1/100^th^ interest in a share of the Series A Preferred Stock (Nasdaq: BWBBP), is payable on June 1, 2023, to shareholders of record of the Series A Preferred Stock at the close of business on May 15, 2023.

Item 9.01 Financial Statements and Exhibits.

(d)****Exhibits

Exhibit 99.1	Press Release of Bridgewater Bancshares, Inc., dated April 26, 2023, regarding first quarter 2023 financial results
Exhibit 99.2	Earnings Presentation dated April 26, 2023
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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: April 26, 2023
	By: /s/ Jerry Baack
	Name: Jerry Baack
	Title: Chairman, Chief Executive Officer and President

Exhibit 99.1


Media Contact: Jessica Stejskal	SVP Marketing<br>Jessica.stejskal@bwbmn.com	952.893.6860	Investor Contact: Justin Horstman	Director of Investor Relations<br>Justin.Horstman@bwbmn.com	952.542.5169

April 26, 2023

Bridgewater Bancshares, Inc. Announces First Quarter 2023 Net Income of $11.6 Million, $0.37 Diluted Earnings Per Common Share

Bridgewater Bancshares, Inc. (Nasdaq: BWB) (the Company), the parent company of Bridgewater Bank (the Bank), today announced net income of $11.6 million for the first quarter of 2023, compared to $13.7 million for the fourth quarter of 2022, and $12.3 million for the first quarter of 2022. Earnings per diluted common share for the first quarter of 2023 were $0.37, compared to $0.45 per diluted common share for the fourth quarter of 2022, and $0.39 per diluted common share for the same period in 2022.

“While first quarter results included well-controlled expenses, superb asset quality, moderated loan growth, and expected net interest margin pressure, our focus was on supporting our clients and demonstrating the resiliency of our balance sheet and business model,” said Chairman, Chief Executive Officer, and President, Jerry Baack. “Bridgewater is a relationship-focused bank supporting a local real estate and small business client base. With a strong balance sheet, including a diversified loan portfolio, high level of insured deposits, and ample liquidity and borrowing capacity, we feel well-positioned to continue executing on our proven and successful business model.”

First Quarter 2023 Financial Results


			****			****	Diluted				Nonperforming
ROA		PPNR ROA ^(1)^	****	ROE		****	earnings per share		Efficiency ratio ^(1)^		assets to total assets
1.07	%	1.49	%	11.70	%		$	0.37	46.2	%	0.02	%

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

First Quarter 2023 Highlights

●

Annualized return on average assets (ROA) and annualized return on average shareholders’ equity (ROE) for the first quarter of 2023 were 1.07% and 11.70%, compared to ROA and ROE of 1.28% and 14.06%, respectively, for the fourth quarter of 2022. Annualized return on average tangible common equity, a non-GAAP financial measure, was 12.90% for the first quarter of 2023, compared to 15.86% for the fourth quarter of 2022.

●	Gross loans increased $114.9 million, or 13.1% annualized, from the fourth quarter of 2022.

●	Deposits decreased slightly by $5.4 million, or 0.6% annualized, from the fourth quarter of 2022.

●	Net interest margin (on a fully tax-equivalent basis) was 2.72%, compared to 3.16% in the fourth quarter of 2022.

●	Efficiency ratio, a non-GAAP financial measure, was 46.2%, compared to 43.8% for the fourth quarter of 2022.

●	Noninterest expense declined $1.0 million, or 6.7%, from the fourth quarter of 2022. Annualized noninterest expense to average assets was 1.31%, compared to 1.42% for the fourth quarter of 2022.

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●	A credit loss provision of $1.5 million was recorded to support continued loan growth in the first quarter of 2023. The allowance for credit losses to total loans was 1.36% at March 31, 2023, compared to 1.34% at December 31, 2022.

●	Annualized net loan charge-offs (recoveries) as a percentage of average loans were 0.00% for the first quarter of 2023 and for the fourth quarter of 2022.

●	Tangible book value per share, a non-GAAP financial measure, increased $0.26, or 8.9% annualized, to $11.95 at March 31, 2023 compared to $11.69 at December 31, 2022.

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Key Financial Measures


		As of and for the Three Months Ended
		March 31,			December 31,			March 31,
	****	2023			2022			2022
Per Common Share Data
Basic Earnings Per Share		$	0.38		$	0.46		$	0.40
Diluted Earnings Per Share			0.37			0.45			0.39
Book Value Per Share			12.05			11.80			11.12
Tangible Book Value Per Share ^(1)^			11.95			11.69			11.01
Basic Weighted Average Shares Outstanding			27,726,894			27,558,983			28,123,809
Diluted Weighted Average Shares Outstanding			28,490,046			28,527,306			29,156,085
Shares Outstanding at Period End			27,845,244			27,751,950			28,150,389

Selected Performance Ratios
Return on Average Assets (Annualized)			1.07	%		1.28	%		1.42	%
Pre-Provision Net Revenue Return on Average Assets (Annualized) ^(1)^			1.49			1.82			2.12
Return on Average Shareholders' Equity (Annualized)			11.70			14.06			12.98
Return on Average Tangible Common Equity (Annualized)^(1)^			12.90			15.86			14.56
Yield on Interest Earning Assets^(2)^			4.91			4.67			4.13
Yield on Total Loans, Gross^(2)^			5.06			4.87			4.45
Cost of Total Deposits			2.01			1.31			0.43
Cost of Funds			2.41			1.67			0.59
Net Interest Margin^(2)^			2.72			3.16			3.60
Core Net Interest Margin ^(1)(2)^			2.62			3.05			3.34
Efficiency Ratio^(1)^			46.2			43.8			42.4
Noninterest Expense to Average Assets (Annualized)			1.31			1.42			1.56
Loan to Deposit Ratio			108.0			104.5			98.4
Core Deposits to Total Deposits ^(3)^			72.4			74.6			84.3
Tangible Common Equity to Tangible Assets ^(1)^			7.23			7.48			8.60

Capital Ratios (Bank Only) ^(4)^
Tier 1 Leverage Ratio			10.61	%		10.76	%		11.13	%
Common Equity Tier 1 Risk-based Capital Ratio			11.37			11.29			11.42
Tier 1 Risk-based Capital Ratio			11.37			11.29			11.42
Total Risk-based Capital Ratio			12.62			12.47			12.65

Capital Ratios (Consolidated)^(4)^
Tier 1 Leverage Ratio			9.41	%		9.55	%		10.78	%
Common Equity Tier 1 Risk-based Capital Ratio			8.48			8.40			9.13
Tier 1 Risk-based Capital Ratio			10.08			10.03			11.08
Total Risk-based Capital Ratio			13.25			13.15			15.02

(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)	Core deposits are defined as total deposits less brokered deposits and certificates of deposit greater than $250,000.
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(4)	Preliminary data. Current period subject to change prior to filings with applicable regulatory agencies.
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Selected Financial Data


		March 31,			December 31,		September 30,		June 30,		March 31,
(dollars in thousands)	****	2023		****	2022		2022		2022		2022
Selected Balance Sheet Data
Total Assets		$	4,602,899		$	4,345,662	$	4,128,987	$	3,883,264	$	3,607,920
Total Loans, Gross			3,684,360			3,569,446		3,380,082		3,225,885		2,987,967
Allowance for Credit Losses			50,148			47,996		46,491		44,711		41,692
Goodwill and Other Intangibles			2,866			2,914		2,962		3,009		3,057

Deposits			3,411,123			3,416,543		3,305,074		3,201,953		3,035,611
Tangible Common Equity^(1)^			332,626			324,636		312,531		305,360		309,870
Total Shareholders' Equity			402,006			394,064		382,007		374,883		379,441
Average Total Assets - Quarter-to-Date			4,405,234			4,251,345		3,948,201		3,743,575		3,513,798
Average Shareholders' Equity - Quarter-to-Date			403,533			387,589		384,020		381,448		383,024

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


	For the Three Months Ended
	March 31,		December 31,			March 31,
(dollars in thousands)	2023		2022		****	2022
Selected Income Statement Data
Interest Income	$	51,992	$	48,860		$	34,694
Interest Expense		23,425		15,967			4,514
Net Interest Income		28,567		32,893			30,180
Provision for Credit Losses		625		1,500			1,675
Net Interest Income after Provision for Credit Losses		27,942		31,393			28,505
Noninterest Income		1,943		1,738			1,557
Noninterest Expense		14,183		15,203			13,508
Income Before Income Taxes		15,702		17,928			16,554
Provision for Income Taxes		4,060		4,193			4,292
Net Income		11,642		13,735			12,262
Preferred Stock Dividends		(1,013)		(1,014)			(1,013)
Net Income Available to Common Shareholders	$	10,629	$	12,721		$	11,249

Income Statement

Net Interest Income

Net interest income was $28.6 million for the first quarter of 2023, a decrease of $4.3 million, or 13.2%, from $32.9 million in the fourth quarter of 2022, and a decrease of $1.6 million, or 5.3%, from $30.2 million in the first quarter of 2022. The linked-quarter and year-over-year decrease in net interest income was primarily due to higher rates paid on deposits and increased borrowings in the rising interest rate environment. Average interest earning assets were $4.32 billion for the first quarter of 2023, an increase of $146.1 million, or 3.5%, from $4.18 billion for the fourth quarter of 2022, and an increase of $892.9 million, or 26.0%, from $3.43 billion for the first quarter of 2022. The linked-quarter increase in average interest earning assets was primarily due to continued growth in the loan portfolio. The year-over-year increase in average interest earning assets was primarily due to strong growth in the loan portfolio and purchases of investment securities, offset partially by the forgiveness of PPP loans and the reduction of cash balances.

Net interest margin (on a fully tax-equivalent basis) for the first quarter of 2023 was 2.72%, a 44 basis point decrease from 3.16% in the fourth quarter of 2022, and an 88 basis point decrease from 3.60% in the first quarter of 2022. Core net interest margin (on a fully tax-equivalent basis), a non-GAAP financial measure which excludes the impact of loan fees and PPP balances, interest, and fees, for the first quarter of 2023 was 2.62%, a 43 basis point decrease from 3.05% in the fourth quarter of 2022, and a 72 basis point decrease from 3.34% in the first quarter of 2022. The decline in the margin when compared to both prior periods was primarily due to higher funding costs and increased borrowings in the rising interest rate environment, offset partially by higher earning asset yields.

Interest income was $52.0 million for the first quarter of 2023, an increase of $3.1 million, or 6.4%, from $48.9 million in the fourth quarter of 2022, and an increase of $17.3 million, or 49.9%, from $34.7 million in the first quarter of 2022. The yield on interest earning assets (on a fully tax-equivalent basis) was 4.91% in the first quarter of 2023, compared to 4.67% in the fourth quarter of 2022, and 4.13% in the first quarter of 2022. The linked-quarter increase in the yield on interest earning assets was primarily due to the increase in market

Page 4 of 17

interest rates resulting in new loan originations, loans repricing, and investment purchases to be at yields accretive to the existing portfolios. The year-over-year increase in the yield on interest earning assets was primarily due to growth and repricing of the loan and securities portfolios in the rising interest rate environment, offset partially by the lower recognition of PPP origination fees.

Loan interest income and loan fees remain the primary contributing factors to the changes in the yield on interest earning assets. The aggregate loan yield, excluding PPP loans, increased to 5.06% in the first quarter of 2023, which was 20 basis points higher than 4.86% in the fourth quarter of 2022, and 66 basis points higher than 4.40% in the first quarter of 2022. While loan fees have historically maintained a relatively stable contribution to the aggregate loan yield, the recent periods saw fewer loan prepayments, which historically has accelerated the recognition of loan fees. Despite the decrease in fee recognition, the Company is encouraged that the core loan yield continues to rise as new loan originations and the existing portfolio reprice in the higher rate environment.

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


	Three Months Ended
	March 31, 2023		December 31, 2022		September 30, 2022		June 30, 2022		March 31, 2022	****
Interest	4.95	%	4.74	%	4.42	%	4.17	%	4.15	%
Fees	0.11		0.12		0.17		0.26		0.25
Yield on Loans, Excluding PPP Loans	5.06	%	4.86	%	4.59	%	4.43	%	4.40	%

Interest expense was $23.4 million for the first quarter of 2023, an increase of $7.5 million, or 46.7%, from $16.0 million in the fourth quarter of 2022, and an increase of $18.9 million, or 418.9%, from $4.5 million in the first quarter of 2022. The cost of interest bearing liabilities increased 81 basis points on a linked-quarter basis from 2.22% in the fourth quarter of 2022 to 3.03% in the first quarter of 2023, primarily due to higher rates paid on deposits and the increased utilization of federal funds purchased and FHLB advances in the rising interest rate environment. On a year-over-year basis, the cost of interest bearing liabilities increased 223 basis points from 0.80% in the first quarter of 2022 to 3.03% in the first quarter of 2023, primarily due to the rapid increase in market interest rates that occurred between the periods, which impacted all funding sources.

Interest expense on deposits was $16.4 million for the first quarter of 2023, an increase of $5.6 million, or 51.9%, from $10.8 million in the fourth quarter of 2022, and an increase of $13.2 million, or 418.4%, from $3.2 million in the first quarter of 2022. The cost of total deposits increased 70 basis points on a linked-quarter basis from 1.31% in the fourth quarter of 2022, to 2.01% in the first quarter of 2023, primarily due to the rising interest rate environment and increased competition from other market alternatives. On a year-over-year basis, the cost of total deposits increased 158 basis points from 0.43% in the first quarter of 2022, to 2.01% in the first quarter of 2023, primarily due to the upward repricing of the deposit portfolio in the higher interest rate environment.

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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 March 31, 2023, December 31, 2022, and March 31, 2022 is as follows:


		For the Three Months Ended																							****
		March 31, 2023								December 31, 2022							****	March 31, 2022							****
		Average			Interest			Yield/		Average			Interest			Yield/	****	Average			Interest			Yield/	****
	****	Balance		****	& Fees		****	Rate	****	Balance		****	& Fees		****	Rate	****	Balance		****	& Fees		****	Rate	****
(dollars in thousands)
Interest Earning Assets:
Cash Investments		$	63,253		$	447		2.86	%	$	65,393		$	366		2.22	%	$	80,497		$	26		0.13	%
Investment Securities:
Taxable Investment Securities			574,242			5,958		4.21			540,601			5,268		3.87			373,021			2,255		2.45
Tax-Exempt Investment Securities^(1)^			29,803			330		4.49			67,867			728		4.26			71,591			779		4.41
Total Investment Securities			604,045			6,288		4.22			608,468			5,996		3.91			444,612			3,034		2.77
Paycheck Protection Program Loans ^(2)^			999			2		1.00			1,109			48		17.06			18,140			563		12.58
Loans ^(1)(2)^			3,629,447			45,263		5.06			3,481,041			42,654		4.86			2,881,845			31,275		4.40
Total Loans			3,630,446			45,265		5.06			3,482,150			42,702		4.87			2,899,985			31,838		4.45
Federal Home Loan Bank Stock			25,962			372		5.81			21,633			163		2.99			5,680			54		3.84
Total Interest Earning Assets			4,323,706			52,372		4.91	%		4,177,644			49,227		4.67	%		3,430,774			34,952		4.13	%
Noninterest Earning Assets			81,528								73,701								83,024
Total Assets		$	4,405,234							$	4,251,345							$	3,513,798
Interest Bearing Liabilities:
Deposits:
Interest Bearing Transaction Deposits		$	461,372		$	2,780		2.44	%	$	464,631		$	2,013		1.72	%	$	566,279		$	597		0.43	%
Savings and Money Market Deposits			1,044,794			6,499		2.52			1,048,227			4,533		1.72			876,580			918		0.42
Time Deposits			248,174			1,069		1.75			281,334			1,007		1.42			288,914			745		1.05
Brokered Deposits			743,465			6,026		3.29			537,351			3,228		2.38			406,648			898		0.90
Total Interest Bearing Deposits			2,497,805			16,374		2.66			2,331,543			10,781		1.83			2,138,421			3,158		0.60
Federal Funds Purchased			415,111			4,944		4.83			340,471			3,379		3.94			10,600			9		0.35
Notes Payable			13,750			263		7.77			11,359			202		7.04			—			—		—
FHLB Advances			128,222			861		2.72			94,103			575		2.42			42,500			150		1.43
Subordinated Debentures			78,945			983		5.05			81,242			1,030		5.03			92,286			1,197		5.26
Total Interest Bearing Liabilities			3,133,833			23,425		3.03	%		2,858,718			15,967		2.22	%		2,283,807			4,514		0.80	%
Noninterest Bearing Liabilities:
Noninterest Bearing Transaction Deposits			813,598								943,232								822,488
Other Noninterest Bearing Liabilities			54,270								61,806								24,479
Total Noninterest Bearing Liabilities			867,868								1,005,038								846,967
Shareholders' Equity			403,533								387,589								383,024
Total Liabilities and Shareholders' Equity		$	4,405,234							$	4,251,345							$	3,513,798
Net Interest Income / Interest Rate Spread						28,947		1.88	%					33,260		2.45	%					30,438		3.33	%
Net Interest Margin ^(3)^								2.72	%							3.16	%							3.60	%
Taxable Equivalent Adjustment:
Tax-Exempt Investment Securities and Loans						(380)								(367)								(258)
Net Interest Income					$	28,567							$	32,893							$	30,180

(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.
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(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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Provision for Credit Losses

On January 1, 2023, the Company adopted Accounting Standards Update No. 2016-13 “Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses of Financial Instruments,” more commonly referred to as “CECL.” Upon adoption of CECL, the Company’s allowance for credit losses on loans increased $650,000 and the allowance on unfunded commitments increased $4.9 million. The tax-effected impact of these two items totaled $3.9 million and was recorded as an adjustment to retained earnings as of January 1, 2023.

The provision for credit losses was $1.5 million for both the first quarter of 2023 and the fourth quarter of 2022, compared to $1.7 million in the first quarter of 2022. The provision recorded in the first quarter of 2023 was primarily attributable to the more moderated growth of the loan portfolio. The allowance for credit losses to total loans was 1.36% at March 31, 2023, compared to 1.34% at December 31, 2022, and 1.40% at March 31, 2022.

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


		Three Months Ended
		March 31,			December 31,			March 31,
(dollars in thousands)	****	2023		****	2022		****	2022
Balance at Beginning of Period		$	47,996		$	46,491		$	40,020
Impact of Adopting CECL			650			—			—
Provision for Credit Losses			1,500			1,500			1,675
Charge-offs			(4)			(3)			(15)
Recoveries			6			8			12
Balance at End of Period		$	50,148		$	47,996		$	41,692

The provision for unfunded commitments was a negative provision of ($875,000) for the first quarter of 2023 and zero for both the fourth quarter of 2022 and first quarter of 2022. The negative provision during the quarter was due to a reduction in outstanding unfunded commitments primarily attributable to the migration to funded loans.

Noninterest Income

Noninterest income was $1.9 million for the first quarter of 2023, an increase of $205,000 from $1.74 million for the fourth quarter of 2022, and an increase of $386,000 from $1.6 million for the first quarter of 2022. The linked-quarter increase was primarily due to an increase in letter of credit fees and FHLB prepayment income, offset partially by a decrease in other income. The year-over-year increase was primarily due to increased letter of credit fees and FHLB prepayment income, offset partially by no recorded swap fees.

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


	Three Months Ended
	March 31,			December 31,			March 31,
(dollars in thousands)	2023		****	2022		****	2022
Noninterest Income:
Customer Service Fees	$	349		$	344		$	281
Net Gain (Loss) on Sales of Securities		(56)			30			—
Letter of Credit Fees		634			358			242
Debit Card Interchange Fees		138			148			133
Swap Fees		—			—			557
Bank-Owned Life Insurance		234			238			148
FHLB Prepayment Income		299			—			—
Other Income		345			620			196
Totals	$	1,943		$	1,738		$	1,557

Noninterest Expense

Noninterest expense was $14.2 million for the first quarter of 2023, a decrease of $1.0 million from $15.2 million for the fourth quarter of 2022, and an increase of $675,000 from $13.5 million for the first quarter of 2022. The linked-quarter decrease was primarily due to decreases in salaries and employee benefits resulting from lower discretionary incentive accruals. The year-over-year increase was primarily attributable to increases in the FDIC insurance assessment and derivative collateral fees, offset partially by declines in marketing and advertising and other expense.

Page 7 of 17

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


	Three Months Ended
	March 31,			December 31,			March 31,
(dollars in thousands)	2023		****	2023		****	2022
Noninterest Expense:
Salaries and Employee Benefits	$	8,815		$	9,821		$	8,694
Occupancy and Equipment		1,209			1,177			1,085
FDIC Insurance Assessment		665			360			360
Data Processing		357			371			297
Professional and Consulting Fees		755			635			696
Derivative Collateral Fees		380			535			2
Information Technology and Telecommunications		683			673			578
Marketing and Advertising		262			403			626
Intangible Asset Amortization		48			48			48
Amortization of Tax Credit Investments		114			114			117
Other Expense		895			1,066			1,005
Totals	$	14,183		$	15,203		$	13,508

The Company had 246 full-time equivalent employees at both March 31, 2023 and December 31, 2022, and 229 employees at March 31, 2022. The efficiency ratio, a non-GAAP financial measure, was 46.2% for the first quarter of 2023, compared to 43.8% for the fourth quarter of 2022, and 42.4% for the first quarter of 2022.

Income Taxes

The effective combined federal and state income tax rate for the first quarter of 2023 was 25.9%, an increase from 23.4% for the fourth quarter of 2022 and consistent with 25.9% for the first quarter of 2022.

Balance Sheet

Total assets at March 31, 2023 were $4.60 billion, a 5.9% increase from $4.35 billion at December 31, 2022, and a 27.6% increase from $3.61 billion at March 31, 2022. The linked-quarter increase in total assets was primarily due to continued loan growth and an increase in cash and cash equivalent balances. The year-over-year increase in total assets was primarily due to strong loan growth, purchases of investment securities and an increase in cash and cash equivalent balances.

Total gross loans at March 31, 2023 were $3.68 billion, an increase of $114.9 million, or 3.2%, over total gross loans of $3.57 billion at December 31, 2022, and an increase of $696.4 million, or 23.3%, over total gross loans of $2.99 billion at March 31, 2022. The increase in the loan portfolio during the first quarter of 2023 was primarily due to growth across all segments.

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


	March 31, 2023		December 31, 2022		September 30, 2022		June 30, 2022		March 31, 2022
(dollars in thousands)
Commercial	$	454,193	$	435,344	$	412,448	$	403,569	$	363,290
Paycheck Protection Program		963		1,049		1,192		4,860		12,309
Construction and Land Development		312,277		295,554		280,380		305,552		272,333
1-4 Family Construction		85,797		70,242		55,177		53,639		48,798
Real Estate Mortgage:
1 - 4 Family Mortgage		380,210		355,474		341,102		334,815		312,201
Multifamily		1,320,081		1,306,738		1,230,509		1,087,865		1,012,623
CRE Owner Occupied		158,650		149,905		151,088		142,214		117,969
CRE Nonowner Occupied		962,671		947,008		900,691		886,432		840,463
Total Real Estate Mortgage Loans		2,821,612		2,759,125		2,623,390		2,451,326		2,283,256
Consumer and Other		9,518		8,132		7,495		6,939		7,981
Total Loans, Gross		3,684,360		3,569,446		3,380,082		3,225,885		2,987,967
Allowance for Loan Losses		(50,148)		(47,996)		(46,491)		(44,711)		(41,692)
Net Deferred Loan Fees		(8,735)		(9,293)		(9,088)		(9,536)		(9,065)
Total Loans, Net	$	3,625,477	$	3,512,157	$	3,324,503	$	3,171,638	$	2,937,210

Page 8 of 17

Total deposits at March 31, 2023 were $3.41 billion, a decrease of $5.4 million, or 0.2%, over total deposits of $3.42 billion at December 31, 2022, and an increase of $375.5 million, or 12.4%, over total deposits of $3.04 billion at March 31, 2022. Deposits decreased slightly in the first quarter of 2023 primarily due to a decrease in noninterest bearing deposits and savings and money market deposits, offset by an increase in interest bearing deposits and brokered deposits. Brokered deposits were being used as a supplemental funding source, as needed, to support the loan portfolio growth. Uninsured deposits as of March 31, 2023 were 24% of total deposits, down from 38% as of December 31, 2022.

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


		March 31, 2023		December 31, 2022		September 30, 2022		June 30, 2022		March 31, 2022
(dollars in thousands)	****
Noninterest Bearing Transaction Deposits		$	742,198	$	884,272	$	961,084	$	961,998	$	835,482
Interest Bearing Transaction Deposits			630,037		451,992		510,396		522,151		598,402
Savings and Money Market Deposits			913,013		1,031,873		1,077,333		952,138		890,926
Time Deposits			266,213		272,253		293,052		272,424		286,674
Brokered Deposits			859,662		776,153		463,209		493,242		424,127
Total Deposits		$	3,411,123	$	3,416,543	$	3,305,074	$	3,201,953	$	3,035,611

Capital

Total shareholders’ equity at March 31, 2023 was $402.0 million, an increase of $7.9 million, or 2.0%, compared to total shareholders’ equity of $394.1 million at December 31, 2022, and an increase of $22.6 million, or 5.9%, over total shareholders’ equity of $379.4 million at March 31, 2022. The linked-quarter increase was due to net income retained, offset partially by the adoption of CECL and preferred stock dividends. The year-over-year increase was due to net income retained and unrealized gains in the derivatives portfolio, offset partially by an increase in unrealized losses in the securities portfolio, stock repurchases, the adoption of CECL and preferred stock dividends. The Company did not purchase any shares of its common stock during the first quarter of 2023.

Tangible book value per share, a non-GAAP financial measure, was $11.95 as of March 31, 2023, an increase of 2.2% from $11.69 as of December 31, 2022, and an increase of 8.5% from $11.01 as of March 31, 2022. The linked-quarter and year-over-year increases occurred despite the market value depreciation of the securities portfolio driven by the rapidly rising interest rate environment. Tangible common equity as a percentage of tangible assets, a non-GAAP financial measure, was 7.23% at March 31, 2023, compared to 7.48% at December 31, 2022, and 8.60% at March 31, 2022.

Today, the Company also announced that its Board of Directors declared a quarterly cash dividend on its 5.875% Non-Cumulative Perpetual Preferred Stock, Series A (Series A Preferred Stock). The quarterly cash dividend of $36.72 per share, equivalent to $0.3672 per depositary share, each representing a 1/100th interest in a share of the Series A Preferred Stock (Nasdaq: BWBBP), is payable on June 1, 2023 to shareholders of record of the Series A Preferred Stock at the close of business on May 15, 2023.

Page 9 of 17

Liquidity

Total on- and off-balance sheet liquidity was $1.92 billion as of March 31, 2023, compared to $1.38 billion at December 31, 2022 and $1.44 billion at March 31, 2022. During the first quarter of 2023, the Company took a number of actions to increase its total liquidity by more than $500 million, including pledging loans and securities to create additional borrowing capacity at the Federal Reserve Bank and increasing its cash on the balance sheet. The Company did not utilize the Bank Term Funding Program (BTFP) or Federal Reserve Discount Window during the first quarter of 2023.


Primary Liquidity—On-Balance Sheet	****	March 31, 2023		****	December 31, 2022		****	September 30, 2022			June 30, 2022			March 31, 2022
(dollars in thousands)							****
Cash and Cash Equivalents		$	177,116		$	48,090		$	36,332		$	43,168		$	50,312
Securities Available for Sale			559,430			548,613			542,007			482,583			459,090
Less: Pledged Securities			(234,452)			—			—			—			—
Total Primary Liquidity		$	502,094		$	596,703		$	578,339		$	525,751		$	509,402
Ratio of Primary Liquidity to Total Deposits			14.7	%		17.5	%		17.5	%		16.4	%		16.8	%

Secondary Liquidity—Off-Balance Sheet							****
Borrowing Capacity	****						****
Net Secured Borrowing Capacity with the FHLB		$	246,795		$	390,898		$	426,604		$	569,076		$	542,489
Net Secured Borrowing Capacity with the Federal Reserve Bank			990,685			157,827			156,534			169,766			159,328
Unsecured Borrowing Capacity with Correspondent Lenders			158,000			208,000			208,000			208,000			208,000
Secured Borrowing Capacity with Correspondent Lender			26,250			26,250			40,000			25,000			25,000
Total Secondary Liquidity			1,421,730			782,975			831,138			971,842			934,817
Total Primary and Secondary Liquidity		$	1,923,824		$	1,379,678		$	1,409,477		$	1,497,593		$	1,444,219
Ratio of Primary and Secondary Liquidity to Total Deposits			56.4	%		40.4	%		42.6	%		46.8	%		47.6	%

Asset Quality

Annualized net charge-offs (recoveries) as a percentage of average loans were 0.00% for the first quarter of 2023, fourth quarter of 2022 and first quarter of 2022. At March 31, 2023, the Company’s nonperforming assets, which include nonaccrual loans, loans past due 90 days and still accruing, and foreclosed assets, were $809,000, or 0.02% of total assets, as compared to $639,000, or 0.01% of total assets at December 31, 2022, and $706,000, or 0.02% of total assets at March 31, 2022.

Loans that have potential weaknesses that warrant a watchlist risk rating at March 31, 2023 totaled $27.6 million, compared to $32.3 million at December 31, 2022, and $46.8 million at March 31, 2022. The increased uncertainty in the economic environment may result in future watchlist or adverse classifications in the loan portfolio. Loans that warranted a substandard risk rating at March 31, 2023 totaled $36.3 million, compared to $28.0 million at December 31, 2022, and $18.6 million at March 31, 2022. The linked-quarter increase was primarily due to the downgrade of one loan relationship.

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


		As of and for the Three Months Ended
		March 31,			December 31,			September 30,			June 30,			March 31,
(dollars in thousands)	****	2023		****	2022		****	2022		****	2022		****	2022		****
Selected Asset Quality Data
Loans 30-89 Days Past Due		$	21		$	186		$	38		$	225		$	13
Loans 30-89 Days Past Due to Total Loans			0.00	%		0.01	%		0.00	%		0.01	%		0.00	%
Nonperforming Loans		$	693		$	639		$	663		$	688		$	706
Nonperforming Loans to Total Loans			0.02	%		0.02	%		0.02	%		0.02	%		0.02	%
Foreclosed Assets		$	116		$	—		$	—		$	—		$	—
Nonaccrual Loans to Total Loans			0.02	%		0.02	%		0.02	%		0.02	%		0.02	%
Nonaccrual Loans and Loans Past Due 90 Days and Still Accruing to Total Loans			0.02			0.02			0.02			0.02			0.02
Nonperforming Assets ^(1)^		$	809		$	639		$	663		$	688		$	706
Nonperforming Assets to Total Assets ^(1)^			0.02	%		0.01	%		0.02	%		0.02	%		0.02	%
Allowance for Credit Losses to Total Loans			1.36			1.34			1.38			1.39			1.40
Allowance for Credit Losses to Nonaccrual Loans			7,236.36			7,511.11			7,012.22			6,498.69			5,905.38
Net Loan Charge-Offs (Recoveries) (Annualized) to Average Loans			0.00			0.00			(0.03)			0.00			0.00

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

Page 10 of 17

The Company will host a conference call to discuss its first quarter 2023 financial results on Thursday, April 27, 2023 at 8:00 a.m. Central Time. The conference call can be accessed by dialing 877-270-2148 and requesting to join the Bridgewater Bancshares earnings call. To listen to a replay of the conference call via phone, please dial 877-344-7529 and enter access code 7417750. The replay will be available through May 4, 2023. The conference call will also be available via a live webcast on the Investor Relations section of the Company’s website, investors.bridgewaterbankmn.com, and archived for replay.

About the Company

Bridgewater Bancshares, Inc. (Nasdaq: BWB) is a St. Louis Park, Minnesota-based financial holding company. Bridgewater's banking subsidiary, Bridgewater Bank, is a premier, full-service Twin Cities bank dedicated to serving the diverse needs of commercial real estate investors, entrepreneurs, business clients and successful individuals. By pairing a range of deposit, lending, and business services solutions with a responsive service model, Bridgewater has seen continuous growth and profitability. With total assets of $4.6 billion and seven branches as of March 31, 2023, Bridgewater is considered one of the largest locally led banks in the State of Minnesota, and has received numerous awards for its growth, banking services, and esteemed corporate culture.

Use of Non-GAAP financial measures

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

Forward-Looking Statements

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

Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based only on our current beliefs, expectations and assumptions regarding our business, future plans and strategies, projections, anticipated events and trends, the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict and many of which are outside of our control. Our actual results and financial condition may differ materially from those indicated in the forward-looking statements. Therefore, you should not rely on any of these forward-looking statements. Important factors that could cause our actual results and financial condition to differ materially from those indicated in the forward-looking statements include, among others, the following: interest rate risk, including the effects of recent and anticipated rate increases by the Federal Reserve; fluctuations in the values of the securities held in our securities portfolio, including as the result of rising interest rates, which has resulted in unrealized losses in our portfolio; business and economic conditions generally and in the financial services industry, nationally and within our market area, including rising rates of inflation; the effects of recent developments and events in the financial services industry, including the large-scale deposit withdrawals over a short period of time at Silicon Valley Bank and Signature Bank that resulted in the failure of those institutions; loan concentrations in our portfolio; the overall health of the local and national real estate market; our ability to successfully manage credit risk; our ability to maintain an adequate level of allowance for loan losses; new or revised accounting standards, including as a result of the implementation of the Current Expected Credit Loss standard; the concentration of large loans to certain borrowers; the concentration of large deposits from certain clients, who have balances above current FDIC insurance limits and may withdraw deposits to diversify their exposure; our ability to successfully manage liquidity risk, which may increase our dependence on non-core funding sources such as brokered deposits, and negatively impact our cost of funds; our ability to raise additional capital to implement our business plan; our ability to implement our growth strategy and manage costs effectively; developments and uncertainty related to the future use and availability of some reference rates, such as the expected discontinuation of the London Interbank Offered Rate, as well as other alternative reference rates; the composition of our senior leadership team and our ability to attract and retain key personnel; talent and labor shortages and high rates of employee turnover; the occurrence of fraudulent activity, breaches or failures of our information security controls or cybersecurity-related incidents; interruptions involving our information technology and telecommunications systems or third-party servicers; competition in the financial services industry, including from nonbank competitors such as credit unions and “fintech” companies; the effectiveness of our risk management framework; the commencement and outcome of litigation and other legal proceedings and regulatory actions against us; the impact of

Page 11 of 17

recent and future legislative and regulatory changes, including in response to the recent failures of Silicon Valley Bank and Signature Bank; risks related to climate change and the negative impact it may have on our customers and their businesses; the imposition of tariffs or other governmental policies impacting the value of products produced by our commercial borrowers; severe weather, natural disasters, wide spread disease or pandemics (including the COVID-19 pandemic), acts of war or terrorism or other adverse external events including the Russian invasion of Ukraine; potential impairment to the goodwill the Company recorded in connection with our past acquisition; changes to U.S. or state tax laws, regulations and guidance, including the new 1% excise tax on stock buybacks by publicly traded companies; and any other risks described in the “Risk Factors” sections of reports filed by the Company with the Securities and Exchange Commission.

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

Page 12 of 17

Bridgewater Bancshares, Inc. and Subsidiaries Consolidated Balance Sheets

(dollars in thousands, except share data)


		March 31,			December 31,			March 31,
	****	2023		****	2022		****	2022
		(Unaudited)						(Unaudited)
ASSETS
Cash and Cash Equivalents		$	209,192		$	87,043		$	71,887
Bank-Owned Certificates of Deposit			1,225			1,181			1,139
Securities Available for Sale, at Fair Value			559,430			548,613			459,090
Loans, Net of Allowance for Credit Losses of $50,148 at March 31, 2023 (unaudited), $47,996 at December 31, 2022 and $41,692 at March 31, 2022 (unaudited)			3,625,477			3,512,157			2,937,210
Federal Home Loan Bank (FHLB) Stock, at Cost			28,632			19,606			6,846
Premises and Equipment, Net			47,801			48,445			49,044
Foreclosed Assets			116			—			—
Accrued Interest			13,377			13,479			9,596
Goodwill			2,626			2,626			2,626
Other Intangible Assets, Net			240			288			431
Bank-Owned Life Insurance			33,719			33,485			25,464
Other Assets			81,064			78,739			44,587
Total Assets		$	4,602,899		$	4,345,662		$	3,607,920

LIABILITIES AND EQUITY
LIABILITIES
Deposits:
Noninterest Bearing		$	742,198		$	884,272		$	835,482
Interest Bearing			2,668,925			2,532,271			2,200,129
Total Deposits			3,411,123			3,416,543			3,035,611
Federal Funds Purchased			437,000			287,000			23,000
Notes Payable			13,750			13,750			—
FHLB Advances			197,000			97,000			42,500
Subordinated Debentures, Net of Issuance Costs			79,001			78,905			92,349
Accrued Interest Payable			3,257			2,831			1,576
Other Liabilities			59,762			55,569			33,443
Total Liabilities			4,200,893			3,951,598			3,228,479

SHAREHOLDERS' EQUITY
Preferred Stock- $0.01 par value; Authorized 10,000,000
Preferred Stock - Issued and Outstanding 27,600 Series A shares ($2,500 liquidation preference) at March 31, 2023 (unaudited), December 31, 2022, and March 31, 2022 (unaudited)			66,514			66,514			66,514
Common Stock- $0.01 par value; Authorized 75,000,000
Common Stock - Issued and Outstanding 27,845,244 at March 31, 2023 (unaudited), 27,751,950 at December 31, 2022 and 28,150,389 at March 31, 2022 (unaudited)			278			278			282
Additional Paid-In Capital			97,716			96,529			103,756
Retained Earnings			255,394			248,685			210,596
Accumulated Other Comprehensive Income (Loss)			(17,896)			(17,942)			(1,707)
Total Shareholders' Equity			402,006			394,064			379,441
Total Liabilities and Equity		$	4,602,899		$	4,345,662		$	3,607,920

Page 13 of 17

Bridgewater Bancshares, Inc. and Subsidiaries Consolidated Statements of Income

(dollars in thousands, except per share data)

(Unaudited)


		Three Months Ended
		March 31,			December 31,			March 31,
	****	2023		****	2022		****	2022
INTEREST INCOME
Loans, Including Fees		$	44,955		$	42,488		$	31,744
Investment Securities			6,218			5,843			2,870
Other			819			529			80
Total Interest Income			51,992			48,860			34,694

INTEREST EXPENSE
Deposits			16,374			10,781			3,158
Notes Payable			263			202			—
FHLB Advances			861			575			150
Subordinated Debentures			983			1,030			1,197
Federal Funds Purchased			4,944			3,379			9
Total Interest Expense			23,425			15,967			4,514

NET INTEREST INCOME			28,567			32,893			30,180
Provision for Credit Losses			625			1,500			1,675

NET INTEREST INCOME AFTER
PROVISION FOR CREDIT LOSSES			27,942			31,393			28,505

NONINTEREST INCOME
Customer Service Fees			349			344			281
Net Gain (Loss) on Sales of Available for Sale Securities			(56)			30			—
Other Income			1,650			1,364			1,276
Total Noninterest Income			1,943			1,738			1,557

NONINTEREST EXPENSE
Salaries and Employee Benefits			8,815			9,821			8,694
Occupancy and Equipment			1,209			1,177			1,085
Other Expense			4,159			4,205			3,729
Total Noninterest Expense			14,183			15,203			13,508

INCOME BEFORE INCOME TAXES			15,702			17,928			16,554
Provision for Income Taxes			4,060			4,193			4,292
NET INCOME			11,642			13,735			12,262
Preferred Stock Dividends			(1,013)			(1,014)			(1,013)
NET INCOME AVAILABLE TO COMMON SHAREHOLDERS		$	10,629		$	12,721		$	11,249

EARNINGS PER SHARE
Basic		$	0.38		$	0.46		$	0.40
Diluted			0.37			0.45			0.39

Page 14 of 17

Bridgewater Bancshares, Inc. and Subsidiaries Non-GAAP Financial Measures

(dollars in thousands) (unaudited)


		For the Three Months Ended
		March 31,			December 31,			March 31,
	****	2023		****	2022			2022		****
Pre-Provision Net Revenue
Noninterest Income		$	1,943		$	1,738		$	1,557
Less: (Gain) Loss on Sales of Securities			56			(30)			—
Less: FHLB Advance Prepayment Income			(299)			—			—
Total Operating Noninterest Income			1,700			1,708			1,557
Plus: Net Interest Income			28,567			32,893			30,180
Net Operating Revenue		$	30,267		$	34,601		$	31,737

Noninterest Expense		$	14,183		$	15,203		$	13,508
Less: Amortization of Tax Credit Investments			(114)			(114)			(117)
Total Operating Noninterest Expense		$	14,069		$	15,089		$	13,391

Pre-Provision Net Revenue		$	16,198		$	19,512		$	18,346

Plus:
Non-Operating Revenue Adjustments			243			30			—
Less:
Provision for Credit Losses			625			1,500			1,675
Non-Operating Expense Adjustments			114			114			117
Provision for Income Taxes			4,060			4,193			4,292
Net Income		$	11,642		$	13,735		$	12,262

Average Assets		$	4,405,234		$	4,251,345		$	3,513,798
Pre-Provision Net Revenue Return on Average Assets			1.49	%		1.82	%		2.12	%


		As of and for the Three Months Ended
		March 31,			December 31,			March 31,
	****	2023		****	2022		****	2022		****
Core Net Interest Margin
Net Interest Income (Tax-Equivalent Basis)		$	28,947		$	33,260		$	30,438
Less: Loan Fees			(998)			(1,100)			(1,743)
Less: PPP Interest and Fees			(2)			(48)			(563)
Core Net Interest Income		$	27,947		$	32,112		$	28,132

Average Interest Earning Assets		$	4,323,706		$	4,177,644		$	3,430,774
Less: Average PPP Loans			(999)			(1,109)			(18,140)
Core Average Interest Earning Assets		$	4,322,707		$	4,176,535		$	3,412,634
Core Net Interest Margin			2.62	%		3.05	%		3.34	%

Page 15 of 17

Non-GAAP Financial Measures

(dollars in thousands) (unaudited)


		For the Three Months Ended
		March 31,			December 31,			March 31,
	****	2023		****	2022		****	2022		****
Efficiency Ratio
Noninterest Expense		$	14,183		$	15,203		$	13,508
Less: Amortization of Intangible Assets			(48)			(48)			(48)
Adjusted Noninterest Expense		$	14,135		$	15,155		$	13,460
Net Interest Income			28,567			32,893			30,180
Noninterest Income			1,943			1,738			1,557
Less: (Gain) Loss on Sales of Securities			56			(30)			—
Adjusted Operating Revenue		$	30,566		$	34,601		$	31,737
Efficiency Ratio			46.2	%		43.8	%		42.4	%

Adjusted Efficiency Ratio
Noninterest Expense		$	14,183		$	15,203		$	13,508
Less: Amortization of Tax Credit Investments			(114)			(114)			(117)
Less: Amortization of Intangible Assets			(48)			(48)			(48)
Adjusted Noninterest Expense		$	14,021		$	15,041		$	13,343
Net Interest Income			28,567			32,893			30,180
Noninterest Income			1,943			1,738			1,557
Less: FHLB Advance Prepayment Income			(299)			—			—
Less: (Gain) Loss on Sales of Securities			56			(30)			—
Adjusted Operating Revenue		$	30,267		$	34,601		$	31,737
Adjusted Efficiency Ratio			46.3	%		43.5	%		42.0	%

Page 16 of 17

Non-GAAP Financial Measures

(dollars in thousands) (unaudited)


	As of and for the Three Months Ended
	March 31,			December 31,			March 31,
	2023			2022			2022
Tangible Common Equity and Tangible Common Equity/Tangible Assets
Total Shareholders' Equity	$	402,006		$	394,064		$	379,441
Less: Preferred Stock		(66,514)			(66,514)			(66,514)
Total Common Shareholders' Equity		335,492			327,550			312,927
Less: Intangible Assets		(2,866)			(2,914)			(3,057)
Tangible Common Equity	$	332,626		$	324,636		$	309,870

Total Assets	$	4,602,899		$	4,345,662		$	3,607,920
Less: Intangible Assets		(2,866)			(2,914)			(3,057)
Tangible Assets	$	4,600,033		$	4,342,748		$	3,604,863
Tangible Common Equity/Tangible Assets		7.23	%		7.48	%		8.60	%

Tangible Book Value Per Share
Book Value Per Common Share	$	12.05		$	11.80		$	11.12
Less: Effects of Intangible Assets		(0.10)			(0.11)			(0.11)
Tangible Book Value Per Common Share	$	11.95		$	11.69		$	11.01

Return on Average Tangible Common Equity
Net Income Available to Common Shareholders	$	10,629		$	12,721		$	11,249

Average Shareholders' Equity	$	403,533		$	387,589		$	383,024
Less: Average Preferred Stock		(66,514)			(66,514)			(66,514)
Average Common Equity		337,019			321,075			316,510
Less: Effects of Average Intangible Assets		(2,894)			(2,941)			(3,084)
Average Tangible Common Equity	$	334,125		$	318,134		$	313,426
Return on Average Tangible Common Equity		12.90	%		15.86	%		14.56	%


	Three Months Ended
	March 31,		December 31,		September 30,		June 30,		March 31,
	2023		2022		2022		2022		2022
Tangible Common Equity
Total Shareholders' Equity	$	402,006	$	394,064	$	382,007	$	374,883	$	379,441
Less: Preferred Stock		(66,514)		(66,514)		(66,514)		(66,514)		(66,514)
Common Shareholders' Equity		335,492		327,550		315,493		308,369		312,927
Less: Intangible Assets		(2,866)		(2,914)		(2,962)		(3,009)		(3,057)
Tangible Common Equity	$	332,626	$	324,636	$	312,531	$	305,360	$	309,870

Page 17 of 17

Exhibit 99.2

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 statements include, without limitation, statements<br>concerning plans, estimates, calculations, forecasts and projections with respect to the anticipated future performance of the Company. These statements are often, but not always, identified by words such as “may”, “might”, “should”,<br>“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<br>words of a future or forward-looking nature.<br>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,<br>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<br>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<br>forward-looking statements. Important factors that could cause our actual results and financial condition to differ materially from those indicated in the forward-looking statements include, among others, the following: interest rate<br>risk, including the effects of recent and anticipated rate increases by the Federal Reserve; fluctuations in the values of the securities held in our securities portfolio or the values of derivative instruments held in our derivatives portfolio,<br>including as a result of rising interest rates, which has resulted in unrealized losses in our portfolio; business and economic conditions generally and in the financial services industry, nationally and within our market area, including rising<br>rates of inflation; the effects of recent developments and events in the financial services industry, including the large-scale deposit withdrawals over a short period of time at Silicon Valley Bank and Signature Bank that resulted in the<br>failure of those institutions; loan concentrations in our portfolio; the overall health of the local and national real estate market; our ability to successfully manage credit risk; our ability to maintain an adequate level of allowance for loan<br>losses; new or revised accounting standards, including as a result of the implementation of the Current Expected Credit Loss standard; the concentration of large loans to certain borrowers; the concentration of large deposits from<br>certain clients, who have balances above the current FDIC insurance limits and may withdraw deposits to diversify their exposure; our ability to successfully manage liquidity risk, which may increase our dependence on non-core funding<br>sources such as brokered deposits, and negative impact of 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;<br>developments and uncertainty related to the future use and availability of some reference rates, such as the expected discontinuation of the London Interbank Offered Rate, as well as other alternative reference rates; the composition<br>of our senior leadership team and our ability to attract and retain key personnel; talent and labor shortages an high rates of employment turnover; the occurrence of fraudulent activity, breaches or failures of our information security<br>controls or cybersecurity-related incidents; interruptions involving our information technology and telecommunications systems or third-party servicers; competition in the financial services industry, including from nonbank competitors<br>such as credit unions and “fintech” companies; the effectiveness of our risk management framework; the commencement and outcome of litigation and other legal proceedings and regulatory actions against us; the impact of recent and<br>future legislative and regulatory changes, including in response to the recent failures of Silicon Valley Bank and Signature Bank; risks related to climate change and the negatively impact it may have on our customers and their<br>businesses; the imposition of 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<br>of war or terrorism, civil unrest or other adverse external events, including the Russian invasion of Ukraine; potential impairment to the goodwill we recorded in connection with our past acquisition; changes to U.S. or state tax laws,<br>regulations and guidance, including the new 1% excise tax on stock buybacks by publicly traded companies; the success at managing the risks involved in the foregoing items; and any other risks described in the “Risk Factors” sections of<br>reports filed by the Company with the Securities and Exchange Commission.<br>Any forward-looking statement made by us in this press release is based only on information currently available to us and speaks only as of the date on which it is made. The Company undertake no obligation to publicly update any<br>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. Certain of the information contained in this presentation is derived<br>from information provided by industry sources. Although the Company believe that such information is accurate and that the sources from which it has been obtained are reliable, the Company cannot guarantee the accuracy of, and<br>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 non-GAAP financial measures. The Company<br>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<br>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<br>that may be presented by other companies. Reconciliations of non-GAAP disclosures to the comparable GAAP measures are provided in this presentation.<br>2
A Local, Relationship-Focused Bank<br>3<br>• Local bank with local clients<br>• Focus on commercial real estate and small<br>business clients<br>• No cryptocurrency exposure<br>Simple and Consistent<br>Business Model<br>Strong Deposit<br>Relationships<br>Ample Liquidity and<br>Borrowing Capacity<br>• Recent and ongoing investments in ERM<br>program<br>• Effective interest rate risk management,<br>including derivatives portfolio to mitigate<br>unrealized losses on securities<br>• Superb asset quality track record<br>Enhanced Enterprise<br>Risk Management<br>Program<br>High Quality<br>Securities Portfolio<br>Strong<br>Capital Position<br>• Positive client response from proactive<br>outreach<br>• Leveraged the IntraFi network to provide<br>insurance on larger client deposits<br>• 24% of deposits uninsured<br>• $1.9B of on- and off-balance sheet<br>liquidity, including significant borrowing<br>capacity<br>• Recent actions to increase overall<br>borrowing capacity<br>• Have not utilized the Bank Term Funding<br>Program (BTFP)<br>• No held-to-maturity (HTM) securities<br>• Well-diversified available-for-sale (AFS)<br>securities portfolio<br>• Average yield on AFS securities portfolio of<br>4.22%<br>• All regulatory capital ratios well in excess<br>of “well-capitalized” requirements<br>• Prudent capital management in the current<br>environment<br>Data as of March 31, 2023
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0.02%<br>1Q23 Earnings Highlights<br>4<br>• Moderating loan growth with gross loan balances up $114.9 million, or 13.1% annualized, from 4Q22<br>• Deposit balances down $5.4 million, or 0.6% annualized, from 4Q22<br>• Net interest margin of 2.72%, down 44 bps from 4Q22<br>• Yield on interest-earning assets of 4.91%, up 24 bps from 4Q22<br>• Cost of deposits of 2.01%, up 70 bps from 4Q22<br>• Noninterest expense down $1.0 million, or 6.7%, from 4Q22<br>• Efficiency ratio1 of 46.2%, up from 43.8% in 4Q22<br>• Noninterest expense to average assets of 1.31% annualized, down 11 bps from 4Q22<br>• Annualized net charge-offs to average loans of 0.00%<br>• Nonperforming assets to total assets of 0.02% vs. 0.01% in 4Q22<br>• Growth-driven provision of $1.5 million; allowance to total loans of 1.36%<br>• CECL adoption on January 1, 2023 with modest Day 1 impact on allowance for credit losses of $650K<br>Moderated Balance<br>Sheet Growth<br>Net Interest<br>Margin Pressure<br>Well-Controlled<br>Expenses<br>Superb<br>Asset Quality<br>$0.37<br>Diluted<br>EPS<br>Nonperforming Assets<br>to Total Assets<br>Efficiency<br>Ratio1<br>Return on<br>Average Assets<br>Return on Avg. Tangible<br>Common Equity1<br>1.07% 12.90% 46.2%<br>1 Represents a Non-GAAP financial measure. See Appendix for Non-GAAP reconciliation
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Net Interest Income Impacted by<br>Additional Margin Pressure<br>5<br>$27,874 $30,237 $32,599 $31,745<br>$27,567<br>$563<br>$263<br>$96 $48<br>$2<br>$1,743<br>$2,030<br>$1,400 $1,100<br>$998<br>$30,180<br>$32,530<br>$34,095 $32,893<br>$28,567<br>3.60% 3.58% 3.53%<br>3.16%<br>2.72%<br>3.34% 3.34% 3.38%<br>3.05%<br>2.62%<br>1Q22 2Q22 3Q22 4Q22 1Q23<br>Core Net Interest Margin1,2<br>Net Interest Margin1<br>Net Interest Income (ex. interest income<br>on loan fees and PPP loans)<br>Interest Income and fees on PPP loans<br>Loan fees<br>Net Interest Income and Margin Trends Net Interest Margin Drivers<br>Core NIM2 down 43 bps<br>Net Interest Margin:<br>• Deposit mix shift from noninterest-bearing to interest-bearing<br>• Paid higher rates on deposits to retain and attract clients in the current<br>environment<br>• Leveraged wholesale deposits and borrowings to support continued<br>loan growth<br>• Fixed-rate nature of the loan portfolio (66%) results in slower repricing<br>compared to deposits<br>Net Interest Income:<br>• NIM pressure and more moderated pace of loan growth<br>• Reduced loan fees due to fewer payoffs in the current environment<br>1Q23 Net Interest Income / NIM Drivers<br>1 Amounts calculated on a tax-equivalent basis using statutory federal tax rate of 21%<br>2 Excludes loan fees and PPP loan balances, interest and fees; represents a Non-GAAP financial measure,<br>see Appendix for Non-GAAP reconciliation<br>Dollars in thousands
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Funding Costs Outpacing Asset Yields<br>6<br>$2,138 $2,162 $2,253 $2,332 $2,498<br>$822 $882<br>$145 $992 $943 $814 $277 $272<br>$3,105 $527 $636 $3,321 $3,517 $3,802 $3,948<br>0.59% 0.63% 0.93%<br>1.67%<br>2.41%<br>1Q22 2Q22 3Q22 4Q22 1Q23<br>$2,900 $3,108 $3,266 $3,482 $3,630<br>4.45% 4.45% 4.59%<br>4.87%<br>5.06%<br>4.15% 4.17%<br>4.42%<br>4.74%<br>4.95%<br>1Q22 2Q22 3Q22 4Q22 1Q23<br>$2,961 $3,045<br>$3,245 $3,275 $3,311<br>0.43% 0.46%<br>0.73%<br>1.31%<br>2.01%<br>1Q22 2Q22 3Q22 4Q22 1Q23<br>Loan Yield (ex. Loan Fees and PPP)2<br>Loan Portfolio Steadily Repricing Higher High-Yielding Securities<br>Deposit Costs Continue to Rise Overall Funding Costs Continue to Rise<br>$445 $491 $537<br>$608 $604<br>2.77% 2.85%<br>3.35%<br>3.91% 4.22%<br>1Q22 2Q22 3Q22 4Q22 1Q23<br>Average Interest-Bearing Deposits Average Noninterest-Bearing Deposits<br>Average Borrowings Cost of Liability Funding<br>Average Loans Loan Yield1 Average Investments Investment Yield1<br>Average Total Deposits Cost of Total Deposits<br>1 Amounts calculated on a tax-equivalent basis using statutory federal tax rate of 21%<br>2 Represents a Non-GAAP financial measure. See Appendix for Non-GAAP reconciliation<br>Dollars in millions
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Revenue Growth Impacted by<br>Current Environment<br>7<br>PPNR ROA1<br>Highly Profitable Franchise Spread-Based Revenue Model<br>$30,180<br>$32,530 $34,095 $32,893<br>$28,567<br>$1,557<br>$1,650<br>$1,387 $1,738<br>$1,943<br>$31,737<br>$34,180<br>$35,482 $34,631<br>$30,510<br>1Q22 2Q22 3Q22 4Q22 1Q23<br>$18,346<br>$20,439<br>$21,439<br>$19,512<br>$16,198<br>$12,262 $12,882<br>$14,513 $13,735<br>$11,642<br>2.12% 2.19% 2.15%<br>1.82%<br>1.49% 1.42% 1.38% 1.46%<br>1.28%<br>1.07%<br>1Q22 2Q22 3Q22 4Q22 1Q23<br>PPNR Net Income 1 ROA Net Interest Income Noninterest Income<br>1 Represents a Non-GAAP financial measure. See Appendix for Non-GAAP reconciliation<br>Dollars in thousands
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Well-Controlled Expenses<br>8<br>$8,694 $8,977 $9,449 $9,821 $8,815<br>$1,085 $1,042 $1,086 $1,177<br>$1,209<br>$875 $950 $1,022 $1,044<br>$1,040<br>$2,854 $2,783 $2,600<br>$3,161<br>$3,119<br>$13,508 $13,752 $14,157<br>$15,203<br>$14,183<br>1Q22 2Q22 3Q22 4Q22 1Q23<br>1.56%<br>1.47%<br>1.42% 1.42%<br>1.31%<br>42.4%<br>40.2% 39.8%<br>43.8%<br>46.2%<br>1Q22 2Q22 3Q22 4Q22 1Q23<br>NIE / Avg. Assets2 Efficiency Ratio2<br>Consistently Efficient Business Model Well-Controlled Expense Base<br>in the Current Environment<br>Industry median efficiency ratio of 55%1<br>1Q23 decrease primarily due to reduced discretionary compensation<br>Personnel Occupancy<br>Technology Other<br>1 4Q22 median efficiency ratio for publicly-traded banks with total assets between $3 billion and $10 billion (Source: S&P Capital IQ)<br>2 Represents a Non-GAAP financial measure. See Appendix for Non-GAAP reconciliation<br>Dollars in thousands
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Deposit Mix Shift in a More<br>Challenging Environment<br>9<br>28% 30% 29% 26% 22%<br>20%<br>16% 15%<br>13% 18%<br>29%<br>30% 33%<br>30% 27%<br>9%<br>9%<br>9%<br>8%<br>8%<br>14%<br>15%<br>14% 23% 25%<br>$3,036<br>$3,202<br>$3,305<br>$3,417 $3,411<br>1Q22 2Q22 3Q22 4Q22 1Q23<br>Noninterest-Bearing Transaction Interest-Bearing Transaction<br>Savings & Money Market Time<br>Brokered<br>• Core deposit growth remained challenging amid recent bank<br>failures, heightened competition and rising interest rate<br>environment<br>• Primary focus shifted toward deposit retention initiatives<br>• Mix shift from noninterest-bearing into interest-bearing<br>deposits<br>• Continued to supplement core deposits with wholesale<br>funding to support loan growth<br>• Treasuries were still a primary competitor for core deposits<br>• Remain focused on better aligning loan growth with core<br>deposit growth over the course of 2023<br>1Q23 Deposit Growth Factors<br>Dollars in millions
---
• $53M of core deposit outflows in March 2023<br>• Flows primarily impacted by normal seasonality,<br>including tax season, client profit distributions,<br>industry cyclicality, as well as continued moves toward<br>higher rate alternatives<br>• Similar trajectory of core deposit flows in March 2022<br>and March 2023<br>• Core deposit balances began building in late March for<br>both years<br>A Deeper Look at the Deposit Base<br>10<br>30% 35%<br>8%<br>16%<br>23%<br>25%<br>38%<br>24%<br>$3,417 $3,411<br>4Q22 1Q23<br>Other Insured IntraFi<br>Brokered Uninsured<br>Decreased Levels of Uninsured Deposits as Balances Move to IntraFi Product<br>Uninsured<br>Brokered<br>IntraFi<br>Other<br>Insured<br>$818M of uninsured deposits at<br>March 31, 2023<br>Fully insured; not eligible for early<br>withdrawal<br>Balances increased $266M in 1Q23<br>Core deposit balances typically<br>below $250K<br>24%<br>Uninsured<br>38%<br>Uninsured<br>1 Calculated as the change in ending deposit rate over the change in ending Fed Funds rate from February 2022<br>Dollars in millions<br>($100)<br>($75)<br>($50)<br>($25)<br>$0<br>$25<br>$50<br>$75<br>1 3 5 7 9 11 13 15 17 19 21 23<br>2023 2022<br>March Core Deposit Inflows (Outflows)<br>March Business Days<br>Cumulative Total Deposit Beta1<br>12%<br>20%<br>34%<br>40%<br>6/30/2022 9/30/2022 12/31/2022 3/31/2023
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Moderated Pace of Loan Growth<br>11<br>$2,988<br>$3,226<br>$3,380<br>$3,569 $3,684<br>1Q22 2Q22 3Q22 4Q22 1Q23<br>Gross Loans<br>Dollars in millions<br>• 1Q23 loan growth of $114.9 million, or 13.1% annualized<br>• Strong brand presence and relationships in the market<br>allow us to get in front of high-quality clients and deals<br>• Overall loan demand has declined as fewer deals are<br>making financial sense due to the higher interest rate<br>environment<br>• Actively managing the balance sheet to better align with<br>funding outlook<br>• Leveraging sales of participations on new originations<br>• Being more disciplined on loan pricing to manage growth<br>and the net interest margin<br>• Being more selective by focusing on high quality<br>transactions with seasoned clients<br>Managing Loan Growth
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Loan Originations and Payoffs Are Slowing<br>12<br>New Loan Originations and Advances<br>$241 $268<br>$169 $186<br>$75<br>$123<br>$125<br>$139 $127<br>$145<br>$364 $393<br>$308 $313<br>$220<br>1Q22 2Q22 3Q22 4Q22 1Q23<br>New Originations Advances<br>Loan Payoffs and Amortization/Paydowns<br>$148 $163<br>$117 $99<br>$69<br>$33<br>$31<br>$36<br>$42<br>$42<br>$181 $194<br>$153 $141<br>$111<br>1Q22 2Q22 3Q22 4Q22 1Q23<br>Payoffs Amortization/Paydowns<br>$273 $311 $373 $427<br>$508<br>1Q22 2Q22 3Q22 4Q22 1Q23<br>Selling Participations on Larger Loans to Manage Growth<br>Loan Participation Portfolio Balance<br>Sold $80M of participations in 1Q23<br>Dollars in millions
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Well-Diversified Loan Portfolio<br>13 1 Excludes medical office<br>Dollars in millions<br>CRE NOO<br>26.2%<br>Multifamily<br>35.8%<br>C&D<br>10.8%<br>1-4 Family<br>Mortgage<br>10.3%<br>CRE OO<br>4.3%<br>C&I<br>12.3<br>%<br>Consumer<br>& Other<br>0.3%<br>Loan Mix<br>by Type<br>$3.7<br>Billion<br>1Q23 Loan Growth by Type (vs. 4Q22)<br>$1<br>$9<br>$13<br>$16<br>$19<br>$25<br>$32<br>Multifamily<br>1-4 Family Mortgage<br>Construction & Development<br>C&I<br>CRE Owner Occupied<br>CRE Nonowner Occupied<br>Consumer & Other<br>Addressing CRE NOO Repricing Risk<br>• 77% of the CRE NOO portfolio is fixed-rate, which<br>helps mitigate the repricing risk<br>• $95M of fixed-rate CRE NOO loans maturing in the<br>next 12 months<br>• CRE loans primarily located in the Twin Cities market<br>• Current weighted average LTV: 61%<br>Well-Managed CRE Nonowner Occupied Office Exposure1<br>• $195M of CRE NOO office loans, or 5.3% of total loans<br>• Only 3 loans totaling $26M in central business districts of<br>Minneapolis/St. Paul<br>• Average loan size: $2.2M<br>• Current weighted average LTV: 62%
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¹ Nonaccrual loans plus loans 90 days past due and still accruing and foreclosed assets<br>Dollars in thousands<br>Superb Asset Quality Continues<br>14<br>$18,611<br>$26,991<br>$30,767 $28,049<br>$36,258<br>4.32% 5.70% 6.26% 5.52% 6.95%<br>1Q22 2Q22 3Q22 4Q22 1Q23<br>$3 $6<br>$(280)<br>$(5) $(2)<br>0.00% 0.00% (0.03)% 0.00% 0.00%<br>1Q22 2Q22 3Q22 4Q22 1Q23<br>$706 $688 $663 $639<br>$809<br>0.02% 0.02% 0.02% 0.01% 0.02%<br>1Q22 2Q22 3Q22 4Q22 1Q23<br>Classified Assets Nonperforming Assets1<br>Allowance for Credit Losses Net Charge-Offs<br>Continue to closely monitor credits Consistently low NPA levels<br>Modest CECL Day 1 impact of $650K on January 1, 2023 Cumulative NCOs of $379K since 2017<br>Classified Assets % of Total Bank Capital NPAs % of Assets<br>Net Charge-offs (recoveries) % of Average Loans (annualized)<br>ALLL % of Gross Loans<br>1.40% 1.39% 1.38% 1.34% 1.36%
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Watch and Classified Assets<br>15<br>C&I<br>18.3%<br>C&D<br>2.6%<br>Multifamily<br>11.8%<br>CRE NOO<br>Senior Housing<br>37.7%<br>CRE NOO<br>Retail<br>21.5%<br>CRE NOO<br>Office<br>5.6%<br>1-4 Family<br>2.5%<br>$28<br>Million<br>Watch List by Loan Type Classified List by Loan Type<br>C&I<br>50.9%<br>CRE NOO<br>Office<br>27.0%<br>CRE NOO<br>Hotels<br>9.2%<br>CRE NOO<br>Retail<br>7.5%<br>CRE OO<br>4.4%<br>C&D<br>0.3%<br>1-4<br>Family<br>0.7%<br>$36<br>Million<br>Watch List Characteristics<br>Loan Balances Outstanding $27,574<br>% of Total Loans, Gross 0.8%<br>Number of Loans 20<br>Average Loan Size ($000s) $1,379<br>Classified List Characteristics<br>Loan Balances Outstanding $36,258<br>% of Total Loans, Gross 1.0%<br>Number of Loans 23<br>Average Loan Size ($000s) $1,576<br>% of Total Bank Capital 6.95%
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High Quality Securities Portfolio<br>16<br>27% 30% 35% 43% 41%<br>36% 35%<br>31% 24% 23%<br>18%<br>21%<br>19% 20% 20% 21%<br>14%<br>$459 13% 13% 15% $483<br>$542 $549 $559<br>1Q22 2Q22 3Q22 4Q22 1Q23<br>Mortgage-Backed Securities Municipal Bonds<br>Corporate Securities Other<br>Securities Available for Sale Portfolio<br>AAA,<br>19%<br>AA,<br>50%<br>A,<br>2%<br>BBB,<br>13%<br>NR,<br>16%<br>Rating Mix<br>Derivatives Portfolio Offsetting AOCI Impact<br>$(47,884)<br>$(42,584)<br>$28,581<br>$23,148<br>$(17,942) $(17,896)<br>4Q22 1Q23<br>MTM Securities MTM Derivatives Net Impact on AOCI1<br>• No held-to-maturity securities<br>• Securities portfolio average duration of 5.3 years<br>• Average securities portfolio yield of 4.22%<br>• Unrealized losses on AFS securities were 10.6% of<br>stockholders’ equity<br>• AOCI / capital of 3.4% vs. peer bank median of 10.5%2<br>1 Includes the tax-effected impact of $7,232 in 4Q22 and $7,215 in 1Q23<br>2 4Q22 median for publicly-traded banks with total assets between $3 billion and $10 billion (Source: S&P Capital IQ)<br>Dollars in thousands
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Ample Liquidity and Borrowing Capacity<br>17 1 Excludes $234M of pledged securities at March 31, 2023<br>Dollars in millions<br>14.1% 13.5% 14.0% 13.7%<br>10.9%<br>25.9% 25.0% 20.1% 17.0%<br>30.9%<br>$1,444 $1,498<br>$1,409 $1,380<br>$1,924<br>1Q22 2Q22 3Q22 4Q22 1Q23<br>Off-Balance Sheet Liquidity as a % of Assets<br>On-Balance Sheet Liquidity as a % of Assets<br>1Q23 Liquidity More Than 2X Coverage of Uninsured Deposits Diverse Liquidity Mix<br>Recent Liquidity Actions<br>• Added $544M of on- and off-balance sheet liquidity in 1Q23<br>• $833M increase in borrowing capacity with the FRB following<br>additional loan and securities pledging<br>• $129M increase to cash and cash equivalents<br>• Did not utilize any borrowings from the Discount Window or the Bank<br>Term Funding Program (BTFP) in 1Q23<br>Funding Source 3/31/2023 12/31/2022 Change<br>Cash $ 177 $ 48 $ 129<br>Unpledged Securities1<br> 325 549 (224)<br>FHLB Capacity 247 391 (144)<br>FRB Discount Window 991 158 833<br>Unsecured Lines of Credit 158 208 (50)<br>Secured Line of Credit 26 26 -<br> Total $ 1,924 $ 1,380 $ 544<br>Available Balance
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Well-Capitalized with Tangible Book Value<br>Per Share Growth<br>18<br>10.78%<br>10.33%<br>9.98%<br>9.55% 9.41% 9.13%<br>8.50% 8.47% 8.40% 8.48%<br>15.02%<br>13.98% 13.78%<br>13.15% 13.25%<br>8.60%<br>7.87%<br>7.57% 7.48% 7.23%<br>1Q22 2Q22 3Q22 4Q22 1Q23<br>Total Risk-Based Capital Ratio Common Equity Tier 1 Capital Ratio<br>Tier 1 Leverage Ratio<br>Consolidated Capital Ratios<br>Tangible Common Equity Ratio<br>$4.52<br>$5.40<br>$7.22<br>$8.33<br>$9.31<br>$10.98<br>$11.69 $11.95<br>2016 2017 2018 2019 2020 2021 2022 1Q23<br>Tangible Book Value Per Share1 Growth<br>1 Represents a Non-GAAP financial measure. See Appendix for Non-GAAP reconciliation<br>Dollars in millions, except per share data
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Near-Term Expectations<br>19<br>• Balance sheet growth to slow from 2022 levels<br>• High single-digit to low double-digit loan growth in 2023 – focus on aligning loan growth more closely with core<br>deposit growth over the course of the year<br>• Target loan-to-deposit ratio between 95% and 105%<br>Balance Sheet<br>Growth<br>• Net interest margin outlook dependent on the path of interest rates, shape of the yield curve and pace of core deposit growth<br>• More modest pace of net interest margin compression expected in 2Q23 relative to 1Q23<br>• Current assumption is Fed Funds rate holds steady near 5% throughout 2023<br>Net Interest<br>Margin<br>• Efficiency ratio in the mid-to-high 40% range, impacted by lower net interest margin<br>• Slower noninterest expense growth in-line with slower asset growth<br>Efficiency<br>Ratio<br>• Build tangible common equity and CET1 ratios throughout 2023, aided by retained earnings and slower pace of loan growth<br>• Share repurchases unlikely in the near-term<br>Capital<br>Levels
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2023 Strategic Priorities –<br>Positioning for Long-Term Success<br>20<br>Manage High Quality<br>Balance Sheet Growth 1<br>2<br>3<br>4<br>Maintain High Efficiency<br>While Investing in the<br>Business<br>Continue Scalability of<br>ERM Function, Including<br>Proactive Assessment of<br>Asset Quality Risks<br>Implement Longer Term<br>Strategic Readiness<br>Initiatives<br>• Slower pace of balance sheet growth in the current environment<br>• Manage the balance sheet to optimize net interest income<br>• Increase emphasis on generating core deposit growth to support loan<br>growth over the course of 2023<br>• Identify opportunities to better manage the discretionary spend to align<br>expense growth with a slower pace of asset growth<br>• Continue to invest in people and technology<br>• Make proactive investments to scale the business and position for<br>longer-term growth<br>• Continued build-out of the enterprise risk management function, including<br>enhanced stress testing capabilities<br>• Ongoing monitoring of the loan portfolio for signs of credit weakness given<br>the economic uncertainty heading into 2023<br>• Expand covenant testing and assess repricing risk on maturing loans<br>• Complete CECL adoption in early 2023<br>• Expand C&I function to support further diversification of the loan portfolio<br>and new deposit growth channels over time<br>• Continue evaluating potential M&A opportunities and be ready to act as<br>the right opportunity becomes available<br>YTD Progress<br>Annualized loan growth of 13.1%<br>Efficiency ratio1 of 46.2%<br>Adopted CECL on January 1, 2023<br>Purchased land in the east metro for<br>a potential de novo branch<br>1 Represents a Non-GAAP financial measure. See Appendix for Non-GAAP reconciliation
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APPENDIX<br>21
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Interest Rate Sensitivity<br>22<br>Estimated Change in NII From<br>Immediate Interest Rate Shocks<br>+200 bps<br>+100 bps<br>-100 bps<br>(3.6)%<br>(1.7)%<br>+3.1%<br>• Change in rate sensitivity position impacted by rising interest rate<br>environment, deposit mix shift and leveraging wholesale deposits and<br>borrowings and<br>• Better positioned for a steeper yield curve and potential future rate cuts<br>Loan Portfolio Considerations<br>• Loan portfolio most sensitive to changes in the 3- to 5-year portion of the<br>yield curve<br>• Fixed-rate nature of the loan portfolio (66%) results in slower repricing<br>compared to deposits<br>• Leveraging prepayment penalties on new loan originations to help<br>maintain benefit of higher rates over time<br>Deposit Considerations<br>• Increased focus on funding loan growth with core deposits over the course<br>of 2023<br>• Core deposit growth more challenging amid recent bank failures and rising<br>interest rate environment<br>• Continued to supplement core deposits with wholesale funding to support<br>loan growth<br>• Deposit base is more sensitive to rising interest rates<br>• Cumulative deposit beta of 40%1<br>(0.7)%<br>(0.4)%<br>+0.5%<br>2Q22 3Q22<br>-200 bps (2.0)% +2.4%<br>(2.3)%<br>(1.2)%<br>+1.0%<br>4Q22<br>+1.3%<br>(9.3)%<br>(4.6)%<br>+6.2%<br>1Q23<br>+12.2%<br>1 Calculated as the change in ending deposit rate over the change in ending Fed Funds rate from February 2022 to March 2023
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14% 12% 13%<br>20% 19% 22%<br>$83 $76 $83<br>$123 $115 $136<br>Less<br>Than<br>1 Year<br>1 to 2<br>Years<br>2 to 3<br>Years<br>3 to 4<br>Years<br>4 to 5<br>Years<br>5+<br>Years<br>13% 14% 13% 12% 13%<br>$326 $332 $314 $298 $320 35%<br>$836<br>Less<br>Than<br>1 Year<br>1 to 2<br>Years<br>2 to 3<br>Years<br>3 to 4<br>Years<br>4 to 5<br>Years<br>5+<br>Years<br>Loan Portfolio Repricing<br>23<br>Fixed,<br>65.8%<br>Variable,<br>17.5%<br>Adjustable,<br>16.7%<br>Loan Portfolio Mix<br>Fixed-Rate Portfolio<br>($2.4B)<br>Variable-Rate Portfolio<br>($643M)<br>Adjustable-Rate Portfolio<br>($616M)<br>Years to Maturity<br>Stronger loan growth results in<br>relatively quick turn of the loan<br>portfolio and accelerated repricing:<br>• 23% year-over-year total loan<br>growth<br>• $1.2B of total loan originations<br>and advances over prior 12<br>months<br>Variable-Rate Loan Floors<br>100% 100% 100% 100% 100%<br>$548 $548 $548 $548 $548<br>At or<br>Above<br>Floor<br>(3/31/23)<br>Up<br>25 bps<br>Up<br>50 bps<br>Up<br>75 bps<br>Up<br>100+ bps<br>Cumulative Percent of balances<br>at or above floor as rates rise<br>• 85% of variable-rate portfolio<br>have floors, all of which are at or<br>above their floors<br>• 91% of variable-rate loans are<br>currently tied to SOFR or Prime<br>Adjustable-Rate<br>Repricing Schedule<br>• Over 98% of the adjustable-rate<br>loans are at or above their floors<br>• Implies immediate repricing as<br>rates rise, depending on the<br>repricing schedule<br>Dollars in millions<br>Larger fixed-rate portfolio helps to<br>mitigate repricing risk
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Reconciliation of Non-GAAP Financial<br>Measures – Annual<br>24 Dollars in thousands<br>Tangible Common Equity &<br>Tangible Common Equity/Tangible<br>Assets 2016 2017 2018 2019 2020 2021 2022<br>Common Equity $ 115,366 $ 137,162 $ 220,998 $ 244,794 $ 265,405 $ 379,272 $ 394,064<br>Less: Preferred Stock - - - - - (66,514) (66,514)<br>Less: Intangible Assets (4,060) (3,869) (3,678) (3,487) (3,296) (3,105) (2,914)<br>Tangible Common Equity $ 111,306 $ 133,293 $ 217,320 $ 241,307 $ 262,109 $ 309,653 $ 324,636<br>Total Assets $ 1,260,394 $ 1,616,612 $ 1,973,741 $ 2,268,830 $ 2,927,345 $ 3,477,659 $ 4,345,662<br>Less: Intangible Assets (4,060) (3,869) (3,678) (3,487) (3,296) (3,105) (2,914)<br>Tangible Assets $ 1,256,334 $ 1,612,743 $ 1,970,063 $ 2,265,343 $ 2,924,049 $ 3,474,554 $ 4,342,748<br>Tangible Common Equity/Tangible Assets 8.86% 8.26% 11.03% 10.65% 8.96% 8.91% 7.48%<br>Tangible Book Value Per Share 2016 2017 2018 2019 2020 2021 2022<br>Book Value Per Common Share $ 4.69 $ 5.56 $ 7.34 $ 8.45 $ 9.43 $ 11.09 $ 11.80<br>Less: Effects of Intangible Assets (0.17) (0.16) (0.12) (0.12) (0.12) (0.11) (0.11)<br>Tangible Book Value Per Common Share $ 4.52 $ 5.40 $ 7.22 $ 8.33 $ 9.31 $ 10.98 $ 11.69<br>Total Common Shares 24,589,861 24,679,861 30,097,274 28,973,572 28,143,493 28,206,566 27,751,950<br>As of and for the year ended December 31,
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Reconciliation of Non-GAAP Financial<br>Measures – Profitability, TCE and TBV<br>25 * Efficiency Ratio is adjusted to exclude the historic tax credit amortization<br>Dollars in thousands<br>Efficiency Ratio<br>March 31,<br>2022<br>March 31,<br>2022<br>June 30,<br>2022<br>June 30,<br>2022<br>September 30,<br>2022<br>September 30,<br>2022<br>December 31,<br>2022<br>December 31,<br>2022<br>March 31,<br>2023<br>March 31,<br>2023*<br>Noninterest Expense $ 13,508 $ 13,508 $ 13,752 $ 13,752 $ 14,157 $ 14,157 $ 15,203 $ 15,203 $ 14,183 $ 14,183<br>Less: Amortization of Tax Credit Investments - (117) - (63) - (114) - (114) - (114)<br>Less: Amortization Intangible Assets (48) (48) (47) (47) (48) (48) (48) (48) (48) (48)<br>Adjusted Noninterest Expense $ 13,460 $ 13,343 $ 13,705 $ 13,642 $ 14,109 $ 13,995 $ 15,155 $ 15,041 $ 14,135 $ 14,021<br>Net Interest Income $ 30,180 $ 30,180 $ 32,530 $ 32,530 $ 34,095 $ 34,095 $ 32,893 $ 32,893 $ 28,567 $ 28,567<br>Noninterest Income 1,557 1,557 1,650 1,650 1,387 1,387 1,738 1,738 1,943 1,943<br>Less: (Gain) Loss on Sales of Securities - - (52) (52) - - (30) (30) 56 56<br>Less: FHLB Advance Prepayment Income - - - - - - - - - (299)<br>Adjusted Operating Revenue $ 31,737 $ 31,737 $ 34,128 $ 34,128 $ 35,482 $ 35,482 $ 34,601 $ 34,601 $ 30,566 $ 30,267<br>Efficiency Ratio 42.4% 42.0% 40.2% 40.0% 39.8% 39.4% 43.8% 43.5% 46.2% 46.3%<br>Tangible Common Equity &<br>Tangible Common Equity/Tangible Assets<br>March 31,<br>2022<br>June 30,<br>2022<br>September 30,<br>2022<br>December 31,<br>2022<br>March 31,<br>2023<br>Total Shareholders' Equity $ 379,441 $ 374,883 $ 382,007 $ 394,064 $ 402,006 Net Income Available to Common Shareholders<br>Less: Preferred Stock (66,514) (66,514) (66,514) (66,514) (66,514)<br>Total Common Shareholders' Equity 312,927 308,369 315,493 327,550 335,492 Average Total Shareholders' Equity<br>Less: Intangible Assets (3,057) (3,009) (2,962) (2,914) (2,866) Less: Average Preferred Stock<br>Tangible Common Equity $ 309,870 $ 305,360 $ 312,531 $ 324,636 $ 332,626 Average Total Common Shareholders' Equity<br>Less: Effects of Average Intangible Assets<br>Total Assets $ 3,607,920 $ 3,883,264 $ 4,128,987 $ 4,345,662 $ 4,602,899 Average Tangible Common Equity<br>Less: Intangible Assets (3,057) (3,009) (2,962) (2,914) (2,866)<br>Tangible Assets $ 3,604,863 $ 3,880,255 $ 4,126,025 $ 4,342,748 $ 4,600,033 Annualized Return on Average Tangible Common Equity<br>Tangible Common Equity/Tangible Assets 8.60% 7.87% 7.57% 7.48% 7.23%<br>Tangible Book Value Per Share<br>March 31,<br>2022<br>June 30,<br>2022<br>September 30,<br>2022<br>December 31,<br>2022<br>March 31,<br>2023<br>Book Value Per Common Share $ 11.12 $ 11.14 $ 11.44 $ 11.80 $ 12.05<br>Less: Effects of Intangible Assets (0.11) (0.11) (0.11) (0.11) (0.10)<br>Tangible Book Value Per Common Share $ 11.01 $ 11.03 $ 11.33 $ 11.69 $ 11.95<br>Total Common Shares 28,150,389 27,677,372 27,587,978 27,751,950 27,845,244<br>As of and for the quarter ended,<br>As of and for the quarter ended,<br>As of and for the quarter ended, As of and for the quarter ended,<br>ROATCE March 31, 2022<br>$ 10,629<br>$ 403,533<br>$ 337,019<br> (66,514)<br> (2,894)<br>12.90%<br>$ 334,125
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Reconciliation of Non-GAAP Financial<br>Measures – PPNR<br>26 Dollars in thousands<br>Pre-Provision Net Revenue<br>March 31,<br>2022<br>June 30,<br>2022<br>September 30,<br>2022<br>December 31,<br>2022<br>March 31,<br>2023<br>Noninterest Income $ 1,557 $ 1,650 $ 1,387 $ 1,738 $ 1,943<br>Less: (Gain) Loss on Sales on Securities - (52) - (30) 5 6<br>Less: FHLB Advance Prepayment Income - - - - (299)<br>Total Operating Noninterest Income 1,557 1,598 1,387 1,708 1,700<br>Plus: Net Interest Income 30,180 32,530 34,095 32,893 28,567<br> Net Operating Revenue 31,737 34,128 35,482 34,601 30,267<br>Noninterest Expense $ 13,508 $ 13,752 $ 14,157 $ 15,203 $ 14,183<br>Less: Amortization of Tax Credit Investments (117) (63) (114) (114) (114)<br> Total Operating Noninterest Expense 13,391 13,689 14,043 15,089 14,069<br>Pre-Provision Net Revenue $ 18,346 $ 20,439 $ 21,439 $ 19,512 $ 16,198<br> Plus:<br>Non-Operating Revenue Adjustments - 5 2 - 30 243<br> Less:<br>Provision for Loan Losses 1,675 3,025 1,500 1,500 625<br>Non-Operating Expense Adjustments 117 63 114 114 114<br>Provision for Income Taxes 4,292 4,521 5,312 4,193 4,060<br>Net Income $ 12,262 $ 12,882 $ 14,513 $ 13,735 $ 11,642<br>Average Assets $ 3,513,798 $ 3,743,575 $ 3,948,201 $ 4,251,345 $ 4,405,234<br>Pre-Provision Net Revenue Return on Average Assets 2.12% 2.19% 2.15% 1.82% 1.49%<br>As of and for the quarter ended,
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Reconciliation of Non-GAAP Financial<br>Measures – Core NIM<br>27 Dollars in thousands<br>Core Net Interest Margin<br>March 31,<br>2022<br>June 30,<br>2022<br>September 30,<br>2022<br>December 31,<br>2022<br>March 31,<br>2023<br>Net Interest Income (Tax-Equivalent Basis) $ 30,438 $ 32,806 $ 34,418 $ 33,260 $ 28,947<br>Less: Loan Fees (1,743) (2,030) (1,400) (1,100) (998)<br>Less: PPP Interest and Fees (563) (263) (96) (48) (2)<br> Core Net Interest Margin $ 28,132 $ 30,513 $ 32,922 $ 32,112 $ 27,947<br>Average Interest Earning Assets $ 3,430,774 $ 3,671,748 $ 3,871,896 $ 4,177,644 $ 4,323,706<br>Less: Average PPP Loans (18,140) (8,335) (2,424) (1,109) (999)<br> Core Average Interest Earning Assets $ 3,412,634 $ 3,663,413 $ 3,869,472 $ 4,176,535 $ 4,322,707<br>Core Net Interest Margin 3.34% 3.34% 3.38% 3.05% 2.62%<br>Loan Interest Income (Tax-Equivalent Basis) $ 31,838 $ 34,468 $ 37,820 $ 42,702 $ 45,265<br>Less: Loan Fees (1,743) (2,030) (1,400) (1,100) (998)<br>Less: PPP Interest and Fees (563) (263) (96) (48) (2)<br> Core Loan Interest Income $ 29,532 $ 32,175 $ 36,324 $ 41,554 $ 44,265<br>Average Loans $ 2,899,985 $ 3,107,679 $ 3,265,814 $ 3,482,150 $ 3,630,446<br>Less: Average PPP Loans (18,140) (8,335) (2,424) (1,109) (999)<br> Core Average Loans $ 2,881,845 $ 3,099,344 $ 3,263,390 $ 3,481,041 $ 3,629,447<br>Core Loan Yield 4.15% 4.17% 4.42% 4.74% 4.95%<br>As of and for the quarter ended,
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