Business Wire | Oct 29, 2020 07:05AM EDT

Bridgewater Bancshares, Inc. Announces Third Quarter 2020 Net Income of $7.2 Million, $0.25 Diluted Earnings Per Share

Oct. 29, 2020

ST. LOUIS PARK, Minn.--(BUSINESS WIRE)--Oct. 29, 2020--Bridgewater Bancshares, Inc. (Nasdaq: BWB) (the Company), the parent company of Bridgewater Bank (the Bank), today announced net income of $7.2 million, or $0.25 per diluted common share, for the third quarter of 2020, compared to net income of $7.6 million, or $0.26 per diluted common share, for the second quarter of 2020, and net income of $7.8 million, or $0.27 per diluted common share, for the third quarter of 2019.

"The third quarter marked the unveiling of our long awaited new corporate headquarters, and we could not be more excited to complete our relocation to this unconventional space in the heart of our market area," commented Chairman, Chief Executive Officer, and President, Jerry Baack. "Not only does our new headquarters create an opportunity for us to safely return to the office, the campus-like atmosphere complements our unique culture. Our third quarter results remained strong, demonstrating our ability to adjust quickly to this historically low interest rate environment and other operating challenges introduced by the pandemic. We remain diligent in the monitoring of our loan portfolio and given the uncertainty of the credit outlook and the current economic environment, we continued to build reserves in the third quarter. The duration of this challenging operating environment is unknown, but we believe our incredibly deep and talented team is ready and capable of handling any challenges that come our way."

Third Quarter 2020 Financial Results

Diluted Nonperforming Adjusted Tangible common equity

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

1.05% 10.84% $ 0.25 0.02% 41.7% 9.46%

__________________________________(1)

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

Linked-Quarter Highlights

* Annualized pre-provision net revenue return on average assets, a non-GAAP financial measure, was 1.94% for the third quarter of 2020, compared to 2.00% for the second quarter of 2020.

* The adjusted efficiency ratio, a non-GAAP financial measure which excludes the impact of certain non-routine income and expenses from noninterest expense, was 41.7% for the third quarter of 2020, compared to 40.4% for the second quarter of 2020. * Cost of total deposits declined 12 basis points to 0.87% in the third quarter of 2020, compared to 0.99% in the second quarter of 2020. * Loans increased $65.5 million, or 11.9% on an annualized basis, to $2.26 billion at September 30, 2020, compared to June 30, 2020.

* Deposits increased $31.0 million, or 5.5% on an annualized basis, to $2.27 billion at September 30, 2020, compared to June 30, 2020. * Annualized net loan charge-offs (recoveries) as a percent of average loans were 0.00% for the third quarter of 2020, compared to (0.01)% for the second quarter of 2020.

* A loan loss provision of $3.8 million was recorded for the third quarter of 2020, primarily due to increased allocations for economic factors associated with the COVID-19 pandemic. The allowance for loan losses to total loans was 1.39% at September 30, 2020, compared to 1.26% at June 30, 2020. The allowance for loan losses to total loans, excluding $181.6 million of Paycheck Protection Program (PPP) loans, was 1.51% at September 30, 2020, compared to 1.37% at June 30, 2020.

* 75 loan modifications totaling $113.7 million, or 38.8% of total loan modifications, returned to regular payment status during the third quarter of 2020. Loan modification balances as a percent of totals loans, excluding PPP loans, decreased from 14.6% at the end of the second quarter of 2020 to 9.2% at the end of the third quarter of 2020.

Year-Over-Year Highlights

* Diluted earnings per common share for the third quarter of 2020 were $0.25, compared to $0.27 for the third quarter of 2019.

* Cost of total deposits declined 55 basis points to 0.87% in the third quarter of 2020, compared to 1.42% in the third quarter of 2019.

* Tangible book value per share, a non-GAAP financial measure, increased 13.0%, or $1.05, to $9.13 at September 30, 2020, compared to $8.08 at September 30, 2019.

* Gross loans increased $413.0 million at September 30, 2020, or 22.4%, compared to September 30, 2019. Year-over-year loan growth was $231.4 million, or 12.5%, excluding $181.6 million of PPP loans.

* Deposits increased $470.8 million at September 30, 2020, or 26.1%, compared to September 30, 2019. Year-over-year growth consisted of $284.1 million in organic deposits, excluding an estimated $30.0 million in growth attributable to remaining PPP loan funds.

* The ratio of nonperforming assets to total assets was 0.02% at September 30, 2020, compared to 0.04% at September 30, 2019.

Year-To-Date Highlights

* Diluted earnings per common share for the nine months ended September 30, 2020 were $0.76, compared to $0.76 for the nine months ended September 30, 2019.

* Year-to-date pre-provision net revenue, a non-GAAP financial measure, was $38.4 million for the nine months ended September 30, 2020, an increase of 19.8%, compared to $32.1 million for the nine months ended September 30, 2019. Year-to-date annualized pre-provision net revenue return on average assets, a non-GAAP financial measure, was 2.01% for the nine months ended September 30, 2020, compared to 2.06% for the nine months ended September 30, 2019.

* The adjusted efficiency ratio, a non-GAAP financial measure which excludes the impact of certain non-routine income and expenses from noninterest expense, was 42.0% for the nine months ended September 30, 2020, compared to 42.9% for the nine months ended September 30, 2019.

* Year-to-date annualized loan growth for 2020, excluding PPP loans, was 11.6% as of September 30, 2020.

* Year-to-date annualized organic deposit growth for 2020, excluding brokered deposits and remaining PPP loan funds, was 21.1% as of September 30, 2020.

Recent Developments

The outbreak of the novel coronavirus, or COVID-19, which was declared a pandemic by the World Health Organization on March 11, 2020, has continued to create uncertainty and extraordinary change for the Company, its clients, its communities and the country as a whole. In response to this pandemic, the Company rapidly deployed its business continuity plan and continues to take steps to protect the health and safety of its employees and clients. During the third quarter of 2020, the Company began returning employees to the office pursuant to new health and safety procedures, including increasing physical space between employees, using face coverings, alternating schedules for employees in the workspace and requiring employees with COVID-19 symptoms or exposure to quarantine away from the office. Given the fluidity of the situation, management cannot estimate the duration and full impact of the COVID-19 pandemic on the economy, financial markets and the Company's financial condition and results of operations. At this point, management does not expect that the Company's financial results in future quarters will track with the Company's historical performance.

During the third quarter of 2020, the Company opened its newly constructed office complex in St. Louis Park, Minnesota. The Company relocated its headquarters from Bloomington, Minnesota and relocated its current branch location in St. Louis Park to the new office complex. Management expects that occupancy and equipment expense will increase in future periods related to the operations and depreciation of the building.

The Company participated in the Small Business Administration's (SBA) PPP, which stemmed from the Coronavirus Aid, Relief and Economic Security, or CARES, Act that was signed into law on March 27, 2020. As of September 30, 2020, PPP principal loan balances totaled $181.6 million, compared to $180.2 million at June 30, 2020. In the third quarter of 2020, the Company began to shift its efforts to principal forgiveness processing; however, there was no forgiveness granted to any borrowers during the third quarter of 2020.

The Company continues to monitor the loan portfolio, working with clients to provide relief when appropriate. The Company has developed programs for clients who are experiencing business and personal disruptions due to the COVID-19 pandemic by providing loan payment deferrals and interest-only modifications. In accordance with interagency regulatory guidance and the CARES Act, qualifying loans modified in response to the COVID-19 pandemic will not be considered troubled debt restructurings. New modification activity has been limited in the third quarter of 2020.

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

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

Linked-Quarter Highlights

* Annualized pre-provision net revenue return on average assets, a non-GAAP financial measure, was 1.94% for the third quarter of 2020, compared to 2.00% for the second quarter of 2020.

* The adjusted efficiency ratio, a non-GAAP financial measure which excludes the impact of certain non-routine income and expenses from noninterest expense, was 41.7% for the third quarter of 2020, compared to 40.4% for the second quarter of 2020. * Cost of total deposits declined 12 basis points to 0.87% in the third quarter of 2020, compared to 0.99% in the second quarter of 2020. * Loans increased $65.5 million, or 11.9% on an annualized basis, to $2.26 billion at September 30, 2020, compared to June 30, 2020.

* Deposits increased $31.0 million, or 5.5% on an annualized basis, to $2.27 billion at September 30, 2020, compared to June 30, 2020. * Annualized net loan charge-offs (recoveries) as a percent of average loans were 0.00% for the third quarter of 2020, compared to (0.01)% for the second quarter of 2020.

* A loan loss provision of $3.8 million was recorded for the third quarter of 2020, primarily due to increased allocations for economic factors associated with the COVID-19 pandemic. The allowance for loan losses to total loans was 1.39% at September 30, 2020, compared to 1.26% at June 30, 2020. The allowance for loan losses to total loans, excluding $181.6 million of Paycheck Protection Program (PPP) loans, was 1.51% at September 30, 2020, compared to 1.37% at June 30, 2020.

* 75 loan modifications totaling $113.7 million, or 38.8% of total loan modifications, returned to regular payment status during the third quarter of 2020. Loan modification balances as a percent of totals loans, excluding PPP loans, decreased from 14.6% at the end of the second quarter of 2020 to 9.2% at the end of the third quarter of 2020.

Year-Over-Year Highlights

* Diluted earnings per common share for the third quarter of 2020 were $0.25, compared to $0.27 for the third quarter of 2019.

* Cost of total deposits declined 55 basis points to 0.87% in the third quarter of 2020, compared to 1.42% in the third quarter of 2019.

* Tangible book value per share, a non-GAAP financial measure, increased 13.0%, or $1.05, to $9.13 at September 30, 2020, compared to $8.08 at September 30, 2019.

* Gross loans increased $413.0 million at September 30, 2020, or 22.4%, compared to September 30, 2019. Year-over-year loan growth was $231.4 million, or 12.5%, excluding $181.6 million of PPP loans.

* Deposits increased $470.8 million at September 30, 2020, or 26.1%, compared to September 30, 2019. Year-over-year growth consisted of $284.1 million in organic deposits, excluding an estimated $30.0 million in growth attributable to remaining PPP loan funds.

* The ratio of nonperforming assets to total assets was 0.02% at September 30, 2020, compared to 0.04% at September 30, 2019.

Year-To-Date Highlights

* Diluted earnings per common share for the nine months ended September 30, 2020 were $0.76, compared to $0.76 for the nine months ended September 30, 2019.

* Year-to-date pre-provision net revenue, a non-GAAP financial measure, was $38.4 million for the nine months ended September 30, 2020, an increase of 19.8%, compared to $32.1 million for the nine months ended September 30, 2019. Year-to-date annualized pre-provision net revenue return on average assets, a non-GAAP financial measure, was 2.01% for the nine months ended September 30, 2020, compared to 2.06% for the nine months ended September 30, 2019.

* The adjusted efficiency ratio, a non-GAAP financial measure which excludes the impact of certain non-routine income and expenses from noninterest expense, was 42.0% for the nine months ended September 30, 2020, compared to 42.9% for the nine months ended September 30, 2019.

* Year-to-date annualized loan growth for 2020, excluding PPP loans, was 11.6% as of September 30, 2020.

* Year-to-date annualized organic deposit growth for 2020, excluding brokered deposits and remaining PPP loan funds, was 21.1% as of September 30, 2020.

Recent Developments

The outbreak of the novel coronavirus, or COVID-19, which was declared a pandemic by the World Health Organization on March 11, 2020, has continued to create uncertainty and extraordinary change for the Company, its clients, its communities and the country as a whole. In response to this pandemic, the Company rapidly deployed its business continuity plan and continues to take steps to protect the health and safety of its employees and clients. During the third quarter of 2020, the Company began returning employees to the office pursuant to new health and safety procedures, including increasing physical space between employees, using face coverings, alternating schedules for employees in the workspace and requiring employees with COVID-19 symptoms or exposure to quarantine away from the office. Given the fluidity of the situation, management cannot estimate the duration and full impact of the COVID-19 pandemic on the economy, financial markets and the Company's financial condition and results of operations. At this point, management does not expect that the Company's financial results in future quarters will track with the Company's historical performance.

During the third quarter of 2020, the Company opened its newly constructed office complex in St. Louis Park, Minnesota. The Company relocated its headquarters from Bloomington, Minnesota and relocated its current branch location in St. Louis Park to the new office complex. Management expects that occupancy and equipment expense will increase in future periods related to the operations and depreciation of the building.

The Company participated in the Small Business Administration's (SBA) PPP, which stemmed from the Coronavirus Aid, Relief and Economic Security, or CARES, Act that was signed into law on March 27, 2020. As of September 30, 2020, PPP principal loan balances totaled $181.6 million, compared to $180.2 million at June 30, 2020. In the third quarter of 2020, the Company began to shift its efforts to principal forgiveness processing; however, there was no forgiveness granted to any borrowers during the third quarter of 2020.

The Company continues to monitor the loan portfolio, working with clients to provide relief when appropriate. The Company has developed programs for clients who are experiencing business and personal disruptions due to the COVID-19 pandemic by providing loan payment deferrals and interest-only modifications. In accordance with interagency regulatory guidance and the CARES Act, qualifying loans modified in response to the COVID-19 pandemic will not be considered troubled debt restructurings. New modification activity has been limited in the third quarter of 2020.

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

Interest-Only Payment Total Deferral

Principal Balance - June 30, $ 175,307 $ 117,703 $ 293,010 2020

Modification Expired (45,392 ) (90,108 ) (135,500 )

Second Modification Granted 18,909 2,909 21,818

New Modifications 10,502 - 10,502

Net Principal Advances 1,559 (8 ) 1,551 (Payments)

Principal Balance - September $ 160,885 $ 30,496 $ 191,381 30, 2020

The following table presents a summary of active loan modifications, by loan segment and modification type, at September 30, 2020:

Interest-Only Payment Deferral Total

Amount # of Amount # of Amount # of Loans Loans Loans

Commercial $ 11,705 21 $ 414 2 $ 12,119 23

Construction and - - - - - -Land Development

Real Estate Mortgage:

1 - 4 Family 5,589 10 - - 5,589 10Mortgage

Multifamily 42,273 6 - - 42,273 6

CRE Owner Occupied 1,646 4 1,502 3 3,148 7

CRE Nonowner 99,672 35 28,580 6 128,252 41Occupied

Consumer and Other - - - - - -

Totals $ 160,885 76 $ 30,496 11 $ 191,381 87

Modifications have been granted on a case-by-case basis based on the specific needs and circumstances affecting each borrower. Interest-only modifications have been primarily granted for three to six month periods, but range up to twelve months. Payment deferral modifications have been granted for three to six month periods. The Company has 52 modified loans totaling $99.8 million set to expire in October 2020. As of October 22, 2020, based on lender and client surveys, the Company estimates that $73.6 million will return to regular payment status, bringing loan modification balances as a percent of total loans, excluding PPP loans, to 5.6%.

Key Financial Measures

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

September 30, June 30, September 30, September September 30, 30,

2020 2020 2019 2020 2019

Per Common Share Data

Basic Earnings $ 0.25 $ 0.26 $ 0.27 $ 0.77 $ 0.77 Per Share

DilutedEarnings Per 0.25 0.26 0.27 0.76 0.76 Share

Book Value Per 9.25 8.92 8.20 9.25 8.20 Share

Tangible BookValue Per 9.13 8.80 8.08 9.13 8.08 Share ^(1)

Basic WeightedAverage Shares 28,683,855 28,676,441 28,820,144 28,717,142 29,535,589 Outstanding

DilutedWeighted 29,174,601 29,165,157 29,497,961 29,300,763 30,181,556 Average Shares Outstanding

SharesOutstanding at 28,710,775 28,837,560 28,781,162 28,710,775 28,781,162 Period End



SelectedPerformance Ratios

Return onAverage Assets 1.05 % 1.17 % 1.43 % 1.16 % 1.46 %(Annualized)

Pre-ProvisionNet RevenueReturn on 1.94 2.00 2.08 2.01 2.06 Average Assets (Annualized) ^(1)

Return onAverage Common 10.84 11.98 13.31 11.57 13.27 Equity (Annualized)

Return onAverageTangible 10.98 12.14 13.52 11.73 13.49 Common Equity (Annualized)^(1)

Yield onInterest 4.30 4.45 4.98 4.53 5.01 Earning Assets

Yield on Total 4.73 4.85 5.32 4.91 5.31 Loans, Gross

Cost ofInterest 1.50 1.58 2.04 1.63 2.06 Bearing Liabilities

Cost of Total 0.87 0.99 1.42 1.03 1.44 Deposits

Net Interest 3.28 3.38 3.56 3.41 3.57 Margin ^(2)

Efficiency 42.3 48.6 45.6 45.1 46.6 Ratio^ (1)

AdjustedEfficiency 41.7 40.4 42.9 42.0 42.9 Ratio ^(1)

NoninterestExpense to 1.42 1.64 1.66 1.58 1.70 Average Assets (Annualized)

AdjustedNoninterestExpense to 1.40 1.37 1.56 1.47 1.56 Average Assets (Annualized) ^(1)

Loan to 99.4 97.8 102.4 Deposit Ratio

Core Depositsto Total 77.1 75.7 79.9 Deposits

TangibleCommon Equity 9.46 9.23 10.43 to Tangible Assets ^(1)



Capital Ratios(Bank Only)^ (3)

Tier 1 11.24 % 11.36 % 10.88 % Leverage Ratio

Tier 1Risk-based 12.60 12.96 11.61 Capital Ratio

TotalRisk-based 13.85 14.21 12.44 Capital Ratio



Capital Ratios(Consolidated) ^ (3)

Tier 1 9.83 % 9.94 % 10.53 % Leverage Ratio

Tier 1Risk-based 11.03 11.39 11.26 Capital Ratio

TotalRisk-based 15.45 15.99 13.31 Capital Ratio

__________________________________(1)

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

(2)

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

(3)

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

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

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

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

Selected Financial Data

September 30,

June 30,

March 31,

December 31,

September 30,

(dollars in thousands)

2020

2020

2020

2019

2019

Selected Balance Sheet Data

Total Assets

$

2,774,564

$

2,754,463

$

2,418,730

$

2,268,830

$

2,232,339

Total Loans, Gross

2,259,228

2,193,778

2,002,817

1,912,038

1,846,218

Allowance for Loan Losses

31,381

27,633

24,585

22,526

22,124

Goodwill and Other Intangibles

3,344

3,391

3,439

3,487

3,535

Deposits

2,273,044

2,242,051

1,900,127

1,823,310

1,802,236

Tangible Common Equity (1)

262,088

253,799

244,704

241,307

232,524

Total Shareholders' Equity

265,432

257,190

248,143

244,794

236,059

Average Total Assets - Quarter-to-Date

2,711,755

2,622,272

2,317,040

2,221,370

2,168,909

Average Common Equity - Quarter-to-Date

263,195

255,109

250,800

240,188

232,590

Selected Financial Data

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

(dollars in 2020 2020 2020 2019 2019thousands)

SelectedBalance Sheet Data

Total Assets $ 2,774,564 $ 2,754,463 $ 2,418,730 $ 2,268,830 $ 2,232,339

Total Loans, 2,259,228 2,193,778 2,002,817 1,912,038 1,846,218Gross

Allowance for 31,381 27,633 24,585 22,526 22,124Loan Losses

Goodwill andOther 3,344 3,391 3,439 3,487 3,535Intangibles



Deposits 2,273,044 2,242,051 1,900,127 1,823,310 1,802,236

Tangible Common 262,088 253,799 244,704 241,307 232,524Equity^ (1)

TotalShareholders' 265,432 257,190 248,143 244,794 236,059Equity

Average TotalAssets - 2,711,755 2,622,272 2,317,040 2,221,370 2,168,909Quarter-to-Date

Average CommonEquity - 263,195 255,109 250,800 240,188 232,590Quarter-to-Date

__________________________________(1)

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

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

For the Three Months Ended

For the Nine Months Ended

September 30,

June 30,

September 30,

September 30,

September 30,

(dollars in thousands)

2020

2020

2019

2020

2019

Selected Income Statement Data

Interest Income

$

28,493

$

28,166

$

26,572

$

84,127

$

76,359

Interest Expense

6,814

6,824

7,637

21,004

22,155

Net Interest Income

21,679

21,342

18,935

63,123

54,204

Provision for Loan Losses

3,750

3,000

900

8,850

2,100

Net Interest Income after Provision for Loan Losses

17,929

18,342

18,035

54,273

52,104

Noninterest Income

1,157

1,977

946

4,853

2,714

Noninterest Expense

9,672

10,711

9,084

30,129

26,443

Income Before Income Taxes

9,414

9,608

9,897

28,997

28,375

Provision for Income Taxes

2,240

2,010

2,092

6,782

5,543

Net Income

$

7,174

$

7,598

$

7,805

$

22,215

$

22,832

Income Statement

Net Interest Income

Net interest income was $21.7 million for the third quarter of 2020, an increase of $337,000, or 1.6%, from $21.3 million in the second quarter of 2020, and an increase of $2.7 million, or 14.5%, from $18.9 million in the third quarter of 2019. The linked-quarter increase in net interest income was primarily due to growth in average interest earning assets and lower rates paid on deposits, offset partially by lower rates on interest earning assets. The year-over-year increase in net interest income was largely attributed to growth in average interest earning assets, which increased by $521.0 million, or 24.4%, to $2.66 billion for the third quarter of 2020, from $2.13 billion for the third quarter of 2019. This increase in average interest earning assets was primarily due to continued organic growth in the loan portfolio and most recently, the funding of PPP loans.

Net interest margin (on a fully tax-equivalent basis) for the third quarter of 2020 was 3.28%, a 10 basis point decrease from 3.38% in the second quarter of 2020, and a 28 basis point decrease from 3.56% in the third quarter of 2019.

While the Company is encouraged by the continued reduction in the cost of interest bearing liabilities during the third quarter of 2020, the linked-quarter decrease in net interest margin was primarily attributed to the historically low and flat yield curve weighing on earning asset yields. Furthermore, the Company's participation in the PPP generated strong loan origination volume during the second quarter of 2020; however, the interest rate of 1.00% earned on these loans is significantly lower than the aggregate loan yield, thus impacting the net interest margin during the quarter. It is worth noting that the core net interest margin, excluding PPP loans and corresponding deposit balances, was 3.33% for the third quarter of 2020. The year-over-year decline in net interest margin largely followed the same themes as the quarter. Despite a significant reduction in interest bearing deposit costs over the year, the historically low interest rate environment coupled with a more liquid balance sheet mix pressured earning asset yields lower and ultimately continued to compress the net interest margin.

Interest income was $28.5 million for the third quarter of 2020, an increase of $327,000, or 1.2%, from $28.2 million in the second quarter of 2020, and an increase of $1.9 million, or 7.2%, from $26.6 million in the third quarter of 2019. The yield on interest earning assets (on a fully tax-equivalent basis) was 4.30% in the third quarter of 2020, compared to 4.45% in the second quarter of 2020, and 4.98% in the third quarter of 2019. The linked-quarter decrease in the yield on interest earning assets was due primarily to lower market rates resulting in lower loan and security yields. The year-over-year decrease in the yield on interest earning assets was due to the falling interest rate environment resulting in lower loan and security yields, the impact of PPP loans originated at a meaningfully lower rate than the aggregate loan portfolio yield, and an increase in cash balances held by the Company due to the uncertain impacts of the COVID-19 pandemic.

Loan interest income and loan fees remain the primary contributing factors to the changes in yield on interest earning assets. The aggregate loan yield, excluding PPP loans, decreased to 4.93% in the third quarter of 2020, which was 8 basis points lower than 5.01% in the second quarter of 2020, and 39 basis points lower than 5.32% in the third quarter of 2019. While loan fees have maintained a stable contribution to the aggregate loan yield, the historically low and flat yield curve has resulted in a declining core yield on loans in comparison to both prior periods.

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

For the Three Months Ended For the Nine Months Ended

September June 30, September September September 30, 30, 30, 30,

(dollars in 2020 2020 2019 2020 2019thousands)

Selected Income Statement Data

Interest Income $ 28,493 $ 28,166 $ 26,572 $ 84,127 $ 76,359

Interest Expense 6,814 6,824 7,637 21,004 22,155

Net Interest Income 21,679 21,342 18,935 63,123 54,204

Provision for Loan 3,750 3,000 900 8,850 2,100Losses

Net Interest Incomeafter Provision for 17,929 18,342 18,035 54,273 52,104Loan Losses

Noninterest Income 1,157 1,977 946 4,853 2,714

Noninterest Expense 9,672 10,711 9,084 30,129 26,443

Income Before Income 9,414 9,608 9,897 28,997 28,375Taxes

Provision for Income 2,240 2,010 2,092 6,782 5,543Taxes

Net Income $ 7,174 $ 7,598 $ 7,805 $ 22,215 $ 22,832

Income Statement

Net Interest Income

Net interest income was $21.7 million for the third quarter of 2020, an increase of $337,000, or 1.6%, from $21.3 million in the second quarter of 2020, and an increase of $2.7 million, or 14.5%, from $18.9 million in the third quarter of 2019. The linked-quarter increase in net interest income was primarily due to growth in average interest earning assets and lower rates paid on deposits, offset partially by lower rates on interest earning assets. The year-over-year increase in net interest income was largely attributed to growth in average interest earning assets, which increased by $521.0 million, or 24.4%, to $2.66 billion for the third quarter of 2020, from $2.13 billion for the third quarter of 2019. This increase in average interest earning assets was primarily due to continued organic growth in the loan portfolio and most recently, the funding of PPP loans.

Net interest margin (on a fully tax-equivalent basis) for the third quarter of 2020 was 3.28%, a 10 basis point decrease from 3.38% in the second quarter of 2020, and a 28 basis point decrease from 3.56% in the third quarter of 2019.

While the Company is encouraged by the continued reduction in the cost of interest bearing liabilities during the third quarter of 2020, the linked-quarter decrease in net interest margin was primarily attributed to the historically low and flat yield curve weighing on earning asset yields. Furthermore, the Company's participation in the PPP generated strong loan origination volume during the second quarter of 2020; however, the interest rate of 1.00% earned on these loans is significantly lower than the aggregate loan yield, thus impacting the net interest margin during the quarter. It is worth noting that the core net interest margin, excluding PPP loans and corresponding deposit balances, was 3.33% for the third quarter of 2020. The year-over-year decline in net interest margin largely followed the same themes as the quarter. Despite a significant reduction in interest bearing deposit costs over the year, the historically low interest rate environment coupled with a more liquid balance sheet mix pressured earning asset yields lower and ultimately continued to compress the net interest margin.

Interest income was $28.5 million for the third quarter of 2020, an increase of $327,000, or 1.2%, from $28.2 million in the second quarter of 2020, and an increase of $1.9 million, or 7.2%, from $26.6 million in the third quarter of 2019. The yield on interest earning assets (on a fully tax-equivalent basis) was 4.30% in the third quarter of 2020, compared to 4.45% in the second quarter of 2020, and 4.98% in the third quarter of 2019. The linked-quarter decrease in the yield on interest earning assets was due primarily to lower market rates resulting in lower loan and security yields. The year-over-year decrease in the yield on interest earning assets was due to the falling interest rate environment resulting in lower loan and security yields, the impact of PPP loans originated at a meaningfully lower rate than the aggregate loan portfolio yield, and an increase in cash balances held by the Company due to the uncertain impacts of the COVID-19 pandemic.

Loan interest income and loan fees remain the primary contributing factors to the changes in yield on interest earning assets. The aggregate loan yield, excluding PPP loans, decreased to 4.93% in the third quarter of 2020, which was 8 basis points lower than 5.01% in the second quarter of 2020, and 39 basis points lower than 5.32% in the third quarter of 2019. While loan fees have maintained a stable contribution to the aggregate loan yield, the historically low and flat yield curve has resulted in a declining core yield on loans in comparison to both prior periods.

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

Three Months Ended

September June March December September 30, 2020 30, 31, 31, 2019 30, 2019 2020 2020

Interest 4.69 % 4.76 % 4.90 % 5.00 % 5.07 %

Fees 0.24 0.25 0.27 0.33 0.25

Yield on Loans,Excluding PPP 4.93 % 5.01 % 5.17 % 5.33 % 5.32 %Loans

Interest expense was $6.8 million for the third quarter of 2020, a decrease of $10,000, or 0.1%, from $6.8 million in the second quarter of 2020, and a decrease of $823,000, or 10.8%, from $7.6 million in the third quarter of 2019. The cost of interest bearing liabilities declined 8 basis points on a linked-quarter basis from 1.58% in the second quarter of 2020 to 1.50% in the third quarter of 2020, primarily due to lower rates paid on deposits. On a year-over-year basis, the cost of interest bearing liabilities decreased 54 basis points from 2.04% in the third quarter of 2019 to 1.50% in the third quarter of 2020.

Interest expense on deposits was $4.8 million for the third quarter of 2020, a decrease of $330,000, or 6.4%, from $5.2 million in the second quarter of 2020, and a decrease of $1.4 million, or 22.0%, from $6.2 million in the third quarter of 2019. The average cost of total deposits declined 12 basis points on a linked-quarter basis from 0.99% in the second quarter of 2020, and declined 55 basis points on a year-over-year basis from 1.42% in the third quarter of 2019, to 0.87% in the third quarter of 2020, primarily due to deposit rate cuts consistent with a lower rate environment and the repricing of time deposits.

Given strong deposit growth and ample time deposit maturities over the next 12 months, the Company anticipates meaningful deposit repricing opportunities in future quarters.

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

For the Three Months Ended

September 30, 2020 June 30, 2020 September 30, 2019

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

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

(dollars in thousands)

Interest Earning Assets:

Cash $ 101,787 $ 42 0.16 % $ 109,073 $ 37 0.14 % $ 73,970 $ 346 1.86 %Investments

Investment Securities:

TaxableInvestment 256,808 1,389 2.15 203,559 1,304 2.58 151,319 1,095 2.87 Securities

Tax-ExemptInvestment 82,579 900 4.33 91,793 996 4.37 95,575 1,031 4.28 Securities^ (1)

TotalInvestment 339,387 2,289 2.68 295,352 2,300 3.13 246,894 2,126 3.42 Securities

PaycheckProtection 181,397 1,173 2.57 139,235 873 2.52 - - - Program Loans ^(2)

Loans ^(1)(2) 2,025,410 25,081 4.93 2,013,163 25,070 5.01 1,805,920 24,220 5.32

Total Loans 2,206,807 26,254 4.73 2,152,398 25,943 4.85 1,805,920 24,220 5.32

Federal Home 7,901 127 6.38 10,469 125 4.81 8,111 96 4.72 Loan Bank Stock

Total Interest 2,655,882 28,712 4.30 % 2,567,292 28,405 4.45 % 2,134,895 26,788 4.98 %Earning Assets

Noninterest 55,873 54,980 34,014 Earning Assets

Total Assets $ 2,711,755 $ 2,622,272 $ 2,168,909

InterestBearing Liabilities:

Deposits:

InterestBearing 306,162 400 0.52 % 272,565 377 0.56 % 250,667 511 0.81 %TransactionDeposits

Savings andMoney Market 501,246 1,106 0.88 521,313 1,327 1.02 453,340 2,080 1.82 Deposits

Time Deposits 369,975 1,899 2.04 388,357 2,122 2.20 359,329 2,229 2.46

Brokered 419,744 1,435 1.36 319,711 1,344 1.69 242,600 1,389 2.27 Deposits

Total InterestBearing 1,597,127 4,840 1.21 1,501,946 5,170 1.38 1,305,936 6,209 1.89 Deposits

Federal Funds 152 - 0.33 9 - 0.72 - - - Purchased

Notes Payable 11,500 108 3.74 12,000 111 3.72 13,500 127 3.73

FHLB Advances 129,457 748 2.30 193,819 1,064 2.21 143,690 908 2.51

Subordinated 73,649 1,118 6.04 31,228 479 6.17 24,699 393 6.31 Debentures

Total InterestBearing 1,811,885 6,814 1.50 % 1,739,002 6,824 1.58 % 1,487,825 7,637 2.04 %Liabilities

NoninterestBearing Liabilities:

NoninterestBearing 615,214 603,456 434,021 TransactionDeposits

OtherNoninterest 21,461 24,705 14,473 BearingLiabilities

TotalNoninterest 636,675 628,161 448,494 BearingLiabilities

Shareholders' 263,195 255,109 232,590 Equity

TotalLiabilities and $ 2,711,755 $ 2,622,272 $ 2,168,909 Shareholders'Equity

Net InterestIncome / 21,898 2.80 % 21,581 2.87 % 19,151 2.94 %Interest RateSpread

Net Interest 3.28 % 3.38 % 3.56 %Margin ^(3)

TaxableEquivalent Adjustment:

Tax-ExemptInvestment (219) (239) (216) Securities

Net Interest $ 21,679 $ 21,342 $ 18,935 Income

__________________________________(1)

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

(2)

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

(3)

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

Provision for Loan Losses

The provision for loan losses was $3.8 million for the third quarter of 2020, an increase of $750,000 from $3.0 million for the second quarter of 2020, and an increase of $2.9 million from $900,000 for the third quarter of 2019. The allowance for loan losses to total loans was 1.39% at September 30, 2020, compared to 1.26% at June 30, 2020, and 1.20% at September 30, 2019. The allowance for loan losses to total loans, excluding $181.6 million of PPP loans, was 1.51% at September 30, 2020. The continued reserve build in the third quarter of 2020 was primarily attributable to growth of the loan portfolio, economic uncertainties and evolving risks driven by the impact of the COVID-19 pandemic.

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

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

__________________________________ Interest income and average rates for tax-exempt investment securities(1) 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.

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

Provision for Loan Losses

The provision for loan losses was $3.8 million for the third quarter of 2020, an increase of $750,000 from $3.0 million for the second quarter of 2020, and an increase of $2.9 million from $900,000 for the third quarter of 2019. The allowance for loan losses to total loans was 1.39% at September 30, 2020, compared to 1.26% at June 30, 2020, and 1.20% at September 30, 2019. The allowance for loan losses to total loans, excluding $181.6 million of PPP loans, was 1.51% at September 30, 2020. The continued reserve build in the third quarter of 2020 was primarily attributable to growth of the loan portfolio, economic uncertainties and evolving risks driven by the impact of the COVID-19 pandemic.

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

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

Three Months Ended Nine Months Ended

September June 30, September September September 30, 30, 30, 30,

(dollars in 2020 2020 2019 2020 2019thousands)

Balance at $ 27,633 $ 24,585 $ 21,362 $ 22,526 $ 20,031Beginning of Period

Provision for Loan 3,750 3,000 900 8,850 2,100Losses

Charge-offs (6 ) (1 ) (144 ) (54 ) (183 )

Recoveries 4 49 6 59 176

Balance at End of $ 31,381 $ 27,633 $ 22,124 $ 31,381 $ 22,124Period

Noninterest Income

Noninterest income was $1.2 million for the third quarter of 2020, a decrease of $820,000 from $2.0 million for the second quarter of 2020, and an increase of $211,000 from $946,000 for the third quarter of 2019. The linked-quarter decrease was primarily due to decreased gains on sales of securities, offset partially by increased letter of credit fees and customer service fees. The year-over-year increase was primarily due to increased letter of credit fees.

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

Three Months Ended Nine Months Ended

September June September September September 30, 30, 30, 30, 30,

(dollars in thousands) 2020 2020 2019 2020 2019

Noninterest Income:

Customer Service Fees $ 200 $ 135 $ 184 $ 575 $ 564

Net Gain on Sales of 109 1,361 58 1,473 516Securities

Net Gain on Sales of - - 69 - 69Foreclosed Assets

Letter of Credit Fees 487 265 331 1,026 790

Debit Card Interchange 119 99 116 310 313Fees

Swap Fees - - - 907 -

Other Income 242 117 188 562 462

Totals $ 1,157 $ 1,977 $ 946 $ 4,853 $ 2,714

Noninterest Expense

Noninterest expense was $9.7 million for the third quarter of 2020, a decrease of $1.0 million from $10.7 million for the second quarter of 2020, and an increase of $588,000 from $9.1 million for the third quarter of 2019. The linked-quarter decrease was primarily due to $1.4 million of FHLB advance prepayment fees incurred in the second quarter of 2020, as well as lower amortization of tax credit investments. The decrease was partially offset by increased salaries and employee benefits and occupancy and equipment expenses related to the new corporate headquarters. The year-over-year increase was attributed to increased salaries and employee benefits and FDIC insurance assessment, offset partially by decreased marketing and advertising and amortization of tax credit investments.

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

Three Months Ended Nine Months Ended

September June 30, September September September 30, 30, 30, 30,

(dollars in 2020 2020 2019 2020 2019thousands)

Noninterest Expense:

Salaries and $ 6,550 $ 6,348 $ 5,915 $ 19,352 $ 15,841Employee Benefits

Occupancy and 894 672 761 2,279 2,202Equipment

FDIC Insurance 160 168 - 518 570Assessment

Data Processing 267 238 182 734 486

Professional and 492 423 414 1,400 1,253Consulting Fees

InformationTechnology and 385 326 233 977 677Telecommunications

Marketing and 94 85 339 645 1,208Advertising

Intangible Asset 48 47 48 143 143Amortization

Amortization of Tax 145 362 530 592 2,097Credit Investments

FHLB Advance - 1,430 - 1,430 -Prepayment Fees

Other Expense 637 612 662 2,059 1,966

Totals $ 9,672 $ 10,711 $ 9,084 $ 30,129 $ 26,443

The Company had 180 full-time equivalent employees at September 30, 2020, compared to 173 employees at June 30, 2020, and 158 employees at September 30, 2019. Despite the uncertainty surrounding the COVID-19 pandemic, the Company continues to attract strategic hires in lending, deposit gathering, technology and risk management roles. The efficiency ratio, a non-GAAP financial measure, was 42.3% for the third quarter of 2020, compared to 48.6% for the second quarter of 2020, and 45.6% for the third quarter of 2019. Excluding the impact of certain non-routine income and expenses, the adjusted efficiency ratio, a non-GAAP financial measure, was 41.7% for the third quarter of 2020, 40.4% for the second quarter of 2020 and 42.9% for the third quarter of 2019. The efficiencies of the Company's "branch-light" model have been evident throughout the pandemic, and going forward, have positioned the Company well to continue making investments in technology as the industry adapts to evolving client behavior.

Income Taxes

The effective combined federal and state income tax rate for the third quarter of 2020 was 23.8%, an increase from 20.9% for the second quarter of 2020 and an increase from 21.1% for the third quarter of 2019. The effective combined federal and state income tax rate for the nine months ended September 30, 2020 was 23.4%.

Balance Sheet

Total assets at September 30, 2020 were $2.77 billion, a 0.7% increase from $2.75 billion at June 30, 2020, and a 24.3% increase from $2.23 billion at September 30, 2019. While the linked-quarter increase was nominal, restored organic loan growth and purchases of investment securities deployed excess liquidity build from the previous quarter. The year-over-year increase in total assets was primarily due to organic loan growth, PPP loan growth and purchases of investment securities.

Total gross loans at September 30, 2020 were $2.26 billion, an increase of $65.5 million, or 3.0%, over total gross loans of $2.19 billion at June 30, 2020, and an increase of $413.0 million, or 22.4%, over total gross loans of $1.85 billion at September 30, 2019. Year-to-date annualized loan growth, excluding $181.6 million of PPP loans, was 11.6% as of September 30, 2020.

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

September June 30, March 31, December September 30, 2020 2020 2020 31, 2019 30, 2019

(dollars in thousands)

Commercial $ 287,254 $ 302,536 $ 299,425 $ 276,035 $ 291,723

PaycheckProtection 181,596 180,228 - - - Program

Constructionand Land 175,882 191,768 183,350 196,776 216,054 Development

Real Estate Mortgage:

1 - 4 Family 286,089 289,456 272,590 260,611 254,782 Mortgage

Multifamily 585,814 522,491 536,380 515,014 456,257

CRE Owner 75,963 73,539 75,207 66,584 71,209 Occupied

CRE Nonowner 660,058 627,651 631,541 592,545 551,992 Occupied

Total RealEstate 1,607,924 1,513,137 1,515,718 1,434,754 1,334,240 MortgageLoans

Consumer and 6,572 6,109 4,324 4,473 4,201 Other

Total Loans, 2,259,228 2,193,778 2,002,817 1,912,038 1,846,218 Gross

Allowancefor Loan (31,381) (27,633) (24,585) (22,526) (22,124) Losses

Net Deferred (10,367) (10,287) (5,336) (5,512) (5,788) Loan Fees

Total Loans, $ 2,217,480 $ 2,155,858 $ 1,972,896 $ 1,884,000 $ 1,818,306 Net

Total deposits at September 30, 2020 were $2.27 billion, an increase of $31.0 million, or 1.4%, over total deposits of $2.24 billion at June 30, 2020, and an increase of $470.8 million, or 26.1%, over total deposits of $1.80 billion at September 30, 2019. Deposit growth in the third quarter of 2020 was primarily due to an increase in noninterest bearing and interest bearing transaction deposits, offset partially by a decline in savings and money market and time deposits. The growth in noninterest bearing and interest bearing transaction deposits is a result of both successful new client acquisition initiatives and pandemic-related accumulation of liquidity by existing clients. Given the fluid environment, management believes deposits could experience fluctuations in future periods.

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

September June 30, March 31, December September 30, 2020 2020 2020 31, 2019 30, 2019

(dollars in thousands)

NoninterestBearing $ 685,773 $ 648,869 $ 476,217 $ 447,509 $ 478,493 TransactionDeposits

InterestBearing 322,253 285,386 255,483 264,627 243,889 TransactionDeposits

Savings andMoney 498,397 516,543 514,113 516,785 470,518 MarketDeposits

Time 363,897 382,187 393,340 360,027 363,308 Deposits

Brokered 402,724 409,066 260,974 234,362 246,028 Deposits

Total $ 2,273,044 $ 2,242,051 $ 1,900,127 $ 1,823,310 $ 1,802,236 Deposits

Total shareholders' equity at September 30, 2020 was $265.4 million, an increase of $8.2 million, or 3.2%, over total shareholders' equity of $257.2 million at June 30, 2020, and an increase of $29.4 million, or 12.4%, over total shareholders' equity of $236.1 million at September 30, 2019. The linked-quarter increase was due to net income retained and an increase in unrealized gains in the securities portfolio, partially offset by stock repurchases made under the Company's stock repurchase program. The year-over-year increase was due to net income retained, partially offset by stock repurchases made in the first and third quarters of 2020 under the Company's stock repurchase program.

Strong earnings and capital growth coupled with better asset quality visibility as loan modifications expired, supported management's decision to resume repurchases under the Company's stock buyback program late in the third quarter of 2020. The Company remains committed to maintaining strong capital levels while enhancing shareholder value as it strategically executes its stock buyback program in this fluid economic environment. During the third quarter of 2020, the Company repurchased 137,984 shares of its common stock. Shares were repurchased at a weighted average price of $9.39 for a total of $1.3 million.

Tangible book value per share, a non-GAAP financial measure, was $9.13 as of September 30, 2020, an increase of 3.7% from $8.80 as of June 30, 2020, and an increase of 13.0% from $8.08 as of September 30, 2019.

Asset Quality

The Company has not yet witnessed direct impacts of the COVID-19 pandemic in the Company's asset quality metrics; however, management believes that the economic uncertainty that exists may begin to negatively impact the portfolio in future quarters. Annualized net charge-offs (recoveries) as a percent of average loans for the third quarter of 2020 were 0.00%, compared to (0.01)% for the second quarter of 2020, and 0.03% for the third quarter of 2019. At September 30, 2020, the Company's nonperforming assets, which include nonaccrual loans, loans past due 90 days and still accruing, and foreclosed assets, were $433,000, or 0.02% of total assets, as compared to $602,000, or 0.02% of total assets at June 30, 2020, and $828,000 or 0.04% of total assets at September 30, 2019.

The Company has increased oversight and analysis of all segments within the loan portfolio in response to the COVID-19 pandemic, especially in vulnerable industries such as hospitality and restaurants, to proactively monitor evolving credit risk. With the change in economic conditions and the uncertain duration of the COVID-19 pandemic, the Company's portfolio is expected to be negatively impacted and management anticipates that delinquencies and charge-offs could rise in future periods. Loans that have potential weaknesses that warrant a watchlist risk rating at September 30, 2020, were $50.9 million, compared to $45.7 million at June 30, 2020. As the COVID-19 pandemic continues to evolve, the length and extent of the economic contraction may result in further watchlist or adverse classifications in the loan portfolio. Loans that warrant a substandard risk rating at September 30, 2020 were $16.1 million, compared to $3.7 million at June 30, 2020.

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

As of and for the Three Months Ended

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

(dollars in 2020 2020 2020 2019 2019 thousands)

SelectedAsset Quality Data

Loans 30-89 $ 458 $ 153 $ 21 $ 403 $ - Days Past Due

Loans 30-89Days Past Due 0.02 % 0.01 % 0.00 % 0.02 % 0.00 %to TotalLoans

Nonperforming $ 433 $ 602 $ 606 $ 461 $ 828 Loans

NonperformingLoans to 0.02 % 0.03 % 0.03 % 0.02 % 0.04 %Total Loans

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

NonaccrualLoans to 0.02 % 0.03 % 0.03 % 0.02 % 0.04 %Total Loans

NonaccrualLoans andLoans PastDue 90 Days 0.02 0.03 0.03 0.02 0.04 and StillAccruing toTotal Loans

Nonperforming $ 433 $ 602 $ 606 $ 461 $ 828 Assets ^(1)

NonperformingAssets to 0.02 % 0.02 % 0.03 % 0.02 % 0.04 %Total Assets^(1)

Allowance forLoan Losses 1.39 1.26 1.23 1.18 1.20 to TotalLoans

Allowance forLoan Lossesto Total 1.51 1.37 N/A N/A N/A Loans,Excluding PPPLoans

Allowance forLoans Lossesto 7,247.34 4,590.20 4,056.93 4,886.33 2,671.98 NonperformingLoans

Net LoanCharge-Offs(Recoveries) 0.00 (0.01) 0.01 0.04 0.03 (Annualized)to AverageLoans

__________________________________(1)

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

About the Company

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

Use of Non-GAAP financial measures

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

Forward-Looking Statements

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

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

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

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

About the Company

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

Use of Non-GAAP financial measures

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

Forward-Looking Statements

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

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

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

Bridgewater Bancshares, Inc. and Subsidiaries

Consolidated Balance Sheets

(dollars in thousands, except share data)

September December September 30, 31, 30,

2020 2019 2019

(Unaudited) (Unaudited)

ASSETS

Cash and Cash Equivalents $ 91,510 $ 31,935 $ 89,619

Bank-Owned Certificates of Deposit 2,862 2,654 2,654

Securities Available for Sale, at 373,955 289,877 263,803Fair Value

Loans, Net of Allowance for LoanLosses of $31,381 at September 30,2020 (unaudited), $22,526 at December 2,217,480 1,884,000 1,818,30631, 2019 and $22,124 at September 30,2019 (unaudited)

Federal Home Loan Bank (FHLB) Stock, 7,817 7,824 8,024at Cost

Premises and Equipment, Net 48,885 27,628 25,764

Accrued Interest 9,647 6,775 6,519

Goodwill 2,626 2,626 2,626

Other Intangible Assets, Net 718 861 909

Other Assets 19,064 14,650 14,115

Total Assets $ 2,774,564 $ 2,268,830 $ 2,232,339



LIABILITIES AND EQUITY

LIABILITIES

Deposits:

Noninterest Bearing $ 685,773 $ 447,509 $ 478,493

Interest Bearing 1,587,271 1,375,801 1,323,743

Total Deposits 2,273,044 1,823,310 1,802,236

Notes Payable 11,500 13,000 13,500

FHLB Advances 127,500 136,500 141,500

Subordinated Debentures, Net of 73,665 24,733 24,707Issuance Costs

Accrued Interest Payable 2,082 1,982 1,763

Other Liabilities 21,341 24,511 12,574

Total Liabilities 2,509,132 2,024,036 1,996,280



SHAREHOLDERS' EQUITY

Preferred Stock- $0.01 par value

Authorized 10,000,000; None Issuedand Outstanding at September 30, 2020 - - -(unaudited), December 31, 2019 andSeptember 30, 2019 (unaudited)

Common Stock- $0.01 par value

Common Stock - Authorized 75,000,000;Issued and Outstanding 28,710,775 atSeptember 30, 2020 (unaudited), 287 290 28828,973,572 at December 31, 2019 and28,781,162 at September 30, 2019(unaudited)

Additional Paid-In Capital 110,010 112,093 111,670

Retained Earnings 149,852 127,637 119,066

Accumulated Other Comprehensive 5,283 4,774 5,035Income

Total Shareholders' Equity 265,432 244,794 236,059

Total Liabilities and Equity $ 2,774,564 $ 2,268,830 $ 2,232,339

Bridgewater Bancshares, Inc. and Subsidiaries

Consolidated Statements of Income

(dollars in thousands, except per share data)

Three Months Ended Nine Months Ended

September June 30, September September September 30, 30, 30, 30,

2020 2020 2019 2020 2019

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

INTEREST INCOME

Loans,Including $ 26,224 $ 25,913 $ 24,220 $ 77,250 $ 69,720Fees

Investment 2,100 2,091 1,910 6,387 5,739Securities

Other 169 162 442 490 900

TotalInterest 28,493 28,166 26,572 84,127 76,359Income



INTEREST EXPENSE

Deposits 4,840 5,170 6,209 15,734 17,932

Notes 108 111 127 334 378Payable

FHLB 748 1,064 908 2,839 2,510Advances

Subordinated 1,118 479 393 1,990 1,163Debentures

FederalFunds - - - 107 172Purchased

TotalInterest 6,814 6,824 7,637 21,004 22,155Expense



NET INTEREST 21,679 21,342 18,935 63,123 54,204INCOME

Provisionfor Loan 3,750 3,000 900 8,850 2,100Losses



NET INTEREST INCOME AFTER

PROVISIONFOR LOAN 17,929 18,342 18,035 54,273 52,104LOSSES



NONINTEREST INCOME

Customer 200 135 184 575 564Service Fees

Net Gain onSales ofAvailable 109 1,361 58 1,473 516for SaleSecurities

Net Gain onSales of - - 69 - 69ForeclosedAssets

Other Income 848 481 635 2,805 1,565

TotalNoninterest 1,157 1,977 946 4,853 2,714Income



NONINTEREST EXPENSE

Salaries andEmployee 6,550 6,348 5,915 19,352 15,841Benefits

Occupancyand 894 672 761 2,279 2,202Equipment

Other 2,228 3,691 2,408 8,498 8,400Expense

TotalNoninterest 9,672 10,711 9,084 30,129 26,443Expense



INCOMEBEFORE 9,414 9,608 9,897 28,997 28,375INCOME TAXES

Provisionfor Income 2,240 2,010 2,092 6,782 5,543Taxes

NET INCOME $ 7,174 $ 7,598 $ 7,805 $ 22,215 $ 22,832



EARNINGS PER SHARE

Basic $ 0.25 $ 0.26 $ 0.27 $ 0.77 $ 0.77

Diluted 0.25 0.26 0.27 0.76 0.76

DividendsPaid Per - - - - -Share

Non-GAAP Financial Measures

(dollars in thousands) (unaudited)

For the Three Months Ended

For the Nine Months Ended

September 30,

June 30,

September 30,

September 30,

September 30,

2020

2020

2019

2020

2019

Efficiency Ratio

Noninterest Expense

$

9,672

$

10,711

$

9,084

$

30,129

$

26,443

Less: Amortization of Intangible Assets

(48)

(47)

(48)

(143)

(143)

Adjusted Noninterest Expense

$

9,624

$

10,664

$

9,036

$

29,986

$

26,300

Net Interest Income

21,679

21,342

18,935

63,123

54,204

Noninterest Income

1,157

1,977

946

4,853

2,714

Less: Gain on Sales of Securities

(109)

(1,361)

(58)

(1,473)

(516)

Adjusted Operating Revenue

$

22,727

$

21,958

$

19,823

$

66,503

$

56,402

Efficiency Ratio

42.3

%

48.6

%

45.6

%

45.1

%

46.6

%

Adjusted Efficiency Ratio

Noninterest Expense

$

9,672

$

10,711

$

9,084

$

30,129

$

26,443

Less: Amortization of Tax Credit Investments

(145)

(362)

(530)

(592)

(2,097)

Less: FHLB Advance Prepayment Fees

-

(1,430)

-

(1,430)

-

Less: Amortization of Intangible Assets

(48)

(47)

(48)

(143)

(143)

Adjusted Noninterest Expense

$

9,479

$

8,872

$

8,506

$

27,964

$

24,203

Net Interest Income

21,679

21,342

18,935

63,123

54,204

Noninterest Income

1,157

1,977

946

4,853

2,714

Less: Gain on Sales of Securities

(109)

(1,361)

(58)

(1,473)

(516)

Adjusted Operating Revenue

$

22,727

$

21,958

$

19,823

$

66,503

$

56,402

Adjusted Efficiency Ratio

41.7

%

40.4

%

42.9

%

42.0

%

42.9

%

Non-GAAP Financial Measures

(dollars in thousands) (unaudited)

For the Three Months Ended For the Nine Months Ended

September June 30, September September September 30, 30, 30, 30,

2020 2020 2019 2020 2019



Efficiency Ratio

Noninterest $ 9,672 $ 10,711 $ 9,084 $ 30,129 $ 26,443 Expense

Less:Amortization of (48) (47) (48) (143) (143) IntangibleAssets

AdjustedNoninterest $ 9,624 $ 10,664 $ 9,036 $ 29,986 $ 26,300 Expense

Net Interest 21,679 21,342 18,935 63,123 54,204 Income

Noninterest 1,157 1,977 946 4,853 2,714 Income

Less: Gain onSales of (109) (1,361) (58) (1,473) (516) Securities

AdjustedOperating $ 22,727 $ 21,958 $ 19,823 $ 66,503 $ 56,402 Revenue

Efficiency 42.3 % 48.6 % 45.6 % 45.1 % 46.6 %Ratio



AdjustedEfficiency Ratio

Noninterest $ 9,672 $ 10,711 $ 9,084 $ 30,129 $ 26,443 Expense

Less:Amortization of (145) (362) (530) (592) (2,097) Tax CreditInvestments

Less: FHLBAdvance - (1,430) - (1,430) - Prepayment Fees

Less:Amortization of (48) (47) (48) (143) (143) IntangibleAssets

AdjustedNoninterest $ 9,479 $ 8,872 $ 8,506 $ 27,964 $ 24,203 Expense

Net Interest 21,679 21,342 18,935 63,123 54,204 Income

Noninterest 1,157 1,977 946 4,853 2,714 Income

Less: Gain onSales of (109) (1,361) (58) (1,473) (516) Securities

AdjustedOperating $ 22,727 $ 21,958 $ 19,823 $ 66,503 $ 56,402 Revenue

AdjustedEfficiency 41.7 % 40.4 % 42.9 % 42.0 % 42.9 %Ratio

For the Three Months Ended

For the Nine Months Ended

September 30,

June 30,

September 30,

September 30,

September 30,

2020

2020

2019

2020

2019

Pre-Provision Net Revenue

Noninterest Income

$

1,157

$

1,977

$

946

$

4,853

$

2,714

Less: Gain on sales of Securities

(109)

(1,361)

(58)

(1,473)

(516)

Total Operating Noninterest Income

1,048

616

888

3,380

2,198

Plus: Net Interest income

21,679

21,342

18,935

63,123

54,204

Net Operating Revenue

$

22,727

$

21,958

$

19,823

$

66,503

$

56,402

Noninterest Expense

$

9,672

$

10,711

$

9,084

$

30,129

$

26,443

Less: Amortization of Tax Credit Investments

(145)

(362)

(530)

(592)

(2,097)

Less: FHLB Advance Prepayment Fees

-

(1,430)

-

(1,430)

-

Total Operating Noninterest Expense

$

9,527

$

8,919

$

8,554

$

28,107

$

24,346

Pre-Provision Net Revenue

$

13,200

$

13,039

$

11,269

$

38,396

$

32,056

Plus:

Non-Operating Revenue Adjustments

109

1,361

58

1,473

516

Less:

Provision for Loan Losses

3,750

3,000

900

8,850

2,100

Non-Operating Expense Adjustments

145

1,792

530

2,022

2,097

Provision for Income Taxes

2,240

2,010

2,092

6,782

5,543

Net Income

$

7,174

$

7,598

$

7,805

$

22,215

$

22,832

Average Assets

$

2,711,755

$

2,622,272

$

2,168,909

$

2,550,945

$

2,083,837

Pre-Provision Net Revenue Return on Average Assets

1.94

%

2.00

%

2.08

%

2.01

%

2.06

%

For the Three Months Ended For the Nine Months Ended

September June 30, September September September 30, 30, 30, 30,

2020 2020 2019 2020 2019

Pre-Provision Net Revenue

Noninterest $ 1,157 $ 1,977 $ 946 $ 4,853 $ 2,714 Income

Less: Gain onsales of (109) (1,361) (58) (1,473) (516) Securities

TotalOperating 1,048 616 888 3,380 2,198 NoninterestIncome

Plus: NetInterest 21,679 21,342 18,935 63,123 54,204 income

Net Operating $ 22,727 $ 21,958 $ 19,823 $ 66,503 $ 56,402 Revenue



Noninterest $ 9,672 $ 10,711 $ 9,084 $ 30,129 $ 26,443 Expense

Less:Amortization (145) (362) (530) (592) (2,097) of Tax CreditInvestments

Less: FHLBAdvance - (1,430) - (1,430) - PrepaymentFees

TotalOperating $ 9,527 $ 8,919 $ 8,554 $ 28,107 $ 24,346 NoninterestExpense



Pre-Provision $ 13,200 $ 13,039 $ 11,269 $ 38,396 $ 32,056 Net Revenue



Plus:

Non-OperatingRevenue 109 1,361 58 1,473 516 Adjustments

Less:

Provision for 3,750 3,000 900 8,850 2,100 Loan Losses

Non-OperatingExpense 145 1,792 530 2,022 2,097 Adjustments

Provision for 2,240 2,010 2,092 6,782 5,543 Income Taxes

Net Income $ 7,174 $ 7,598 $ 7,805 $ 22,215 $ 22,832



Average $ 2,711,755 $ 2,622,272 $ 2,168,909 $ 2,550,945 $ 2,083,837 Assets

Pre-ProvisionNet RevenueReturn on 1.94 % 2.00 % 2.08 % 2.01 % 2.06 %AverageAssets

As of and for the Three Months Ended

As of and for the Nine Months Ended

September 30,

June 30,

September 30,

September 30,

September 30,

2020

2020

2019

2020

2019

Tangible Common Equity and Tangible Common Equity/Tangible Assets

Common Equity

$

265,432

$

257,190

$

236,059

Less: Intangible Assets

(3,344)

(3,391)

(3,535)

Tangible Common Equity

$

262,088

$

253,799

$

232,524

Total Assets

$

2,774,564

$

2,754,463

$

2,232,339

Less: Intangible Assets

(3,344)

(3,391)

(3,535)

Tangible Assets

$

2,771,220

$

2,751,072

$

2,228,804

Tangible Common Equity/Tangible Assets

9.46

%

9.23

%

10.43

%

Tangible Book Value Per Share

Book Value Per Common Share

$

9.25

$

8.92

$

8.20

Less: Effects of Intangible Assets

(0.12)

(0.12)

(0.12)

Tangible Book Value Per Common Share

$

9.13

$

8.80

$

8.08

Average Tangible Common Equity

Average Common Equity

$

263,195

$

255,109

$

232,590

$

256,393

$

229,961

Less: Effects of Average Intangible Assets

(3,371)

(3,419)

(3,558)

(3,418)

(3,605)

Average Tangible Common Equity

$

259,824

$

251,690

$

229,032

$

252,975

$

226,356

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

September June 30, September September September 30, 30, 30, 30,

2020 2020 2019 2020 2019



TangibleCommonEquity andTangible CommonEquity/TangibleAssets

Common $ 265,432 $ 257,190 $ 236,059 Equity

Less:Intangible (3,344) (3,391) (3,535) Assets

TangibleCommon $ 262,088 $ 253,799 $ 232,524 Equity



Total $ 2,774,564 $ 2,754,463 $ 2,232,339 Assets

Less:Intangible (3,344) (3,391) (3,535) Assets

Tangible $ 2,771,220 $ 2,751,072 $ 2,228,804 Assets

TangibleCommonEquity/ 9.46 % 9.23 % 10.43 % TangibleAssets



TangibleBook Value Per Share

Book ValuePer Common $ 9.25 $ 8.92 $ 8.20 Share

Less:Effects of (0.12) (0.12) (0.12) IntangibleAssets

TangibleBook Value $ 9.13 $ 8.80 $ 8.08 Per CommonShare



AverageTangible CommonEquity

AverageCommon $ 263,195 $ 255,109 $ 232,590 $ 256,393 $ 229,961 Equity

Less:Effects ofAverage (3,371) (3,419) (3,558) (3,418) (3,605) IntangibleAssets

AverageTangible $ 259,824 $ 251,690 $ 229,032 $ 252,975 $ 226,356 CommonEquity

Bridgewater Bancshares, Inc. and Subsidiaries

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

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

For the Nine Months Ended

September 30, 2020 September 30, 2019

Average Interest Yield Average Interest Yield / /

Balance & Fees Rate Balance & Fees Rate

(dollars in thousands)

InterestEarning Assets:

Cash $ 80,186 $ 138 0.23 % $ 46,158 $ 604 1.75 %Investments

Investment Securities:

TaxableInvestment 216,332 4,080 2.52 143,583 3,126 2.91 Securities

Tax-ExemptInvestment 89,674 2,920 4.35 103,032 3,307 4.29 Securities^(1)

TotalInvestment 306,006 7,000 3.06 246,615 6,433 3.49 Securities

PaycheckProtection 107,541 2,046 2.54 - - - Program Loans^(2)

Loans ^(1)(2) 1,997,553 75,301 5.04 1,756,855 69,720 5.31

Total Loans 2,105,094 77,347 4.91 1,756,855 69,720 5.31

Federal HomeLoan Bank 9,541 352 4.93 7,906 296 5.00 Stock

TotalInterest 2,500,827 84,837 4.53 % 2,057,534 77,053 5.01 %EarningAssets

NoninterestEarning 50,118 26,303 Assets

Total Assets $ 2,550,945 $ 2,083,837

InterestBearing Liabilities:

Deposits:

InterestBearing 275,303 1,207 0.58 % 211,784 1,130 0.71 %TransactionDeposits

Savings andMoney Market 518,648 4,338 1.12 433,430 5,784 1.78 Deposits

Time Deposits 378,133 6,199 2.19 347,731 6,230 2.40

Brokered 319,615 3,990 1.67 266,976 4,788 2.40 Deposits

TotalInterest 1,491,699 15,734 1.41 1,259,921 17,932 1.90 BearingDeposits

Federal Funds 8,302 107 1.73 8,923 172 2.58 Purchased

Notes Payable 12,000 334 3.72 14,000 378 3.61

FHLB Advances 165,088 2,839 2.30 133,097 2,510 2.52

Subordinated 43,318 1,990 6.14 24,673 1,163 6.30 Debentures

TotalInterest 1,720,407 21,004 1.63 % 1,440,614 22,155 2.06 %BearingLiabilities

NoninterestBearing Liabilities:

NoninterestBearing 554,513 401,973 TransactionDeposits

OtherNoninterest 19,632 11,289 BearingLiabilities

TotalNoninterest 574,145 413,262 BearingLiabilities

Shareholders' 256,393 229,961 Equity

TotalLiabilitiesand $ 2,550,945 $ 2,083,837 Shareholders'Equity

Net InterestIncome / 63,833 2.90 % 54,898 2.95 %Interest RateSpread

Net Interest 3.41 % 3.57 %Margin ^(3)

TaxableEquivalent Adjustment:

Tax-ExemptInvestment (710) (694) Securities

Net Interest $ 63,123 $ 54,204 Income

__________________________________(1)

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

(2)

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

(3)

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

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CONTACT: Investor Relations Contact: Jerry Baack Chief Executive Officer investorrelations@bwbmn.com 952-893-6866