[10-Q] Bridgewater Bancshares Inc Quarterly Earnings Report

Filing Impact

(Neutral)

Filing Sentiment

(Neutral)

Form Type

10-Q

Rhea-AI Filing Summary

Bridgewater Bancshares (BWB) reported higher Q3 results. Net income rose to $11.6 million from $8.7 million a year ago, and diluted EPS increased to $0.38 from $0.27. Net interest income improved to $34.1 million from $25.6 million as loan interest and securities income grew faster than funding costs. The company recorded a $1.1 million provision for credit losses.

Total assets reached $5.36 billion, up from $5.07 billion at year-end. Loans, net, expanded to $4.15 billion from $3.81 billion, while deposits increased to $4.29 billion from $4.09 billion. Securities available for sale were $826.5 million, and accumulated other comprehensive loss narrowed to $5.6 million. The company issued $80.0 million of 7.625% subordinated notes and redeemed $50 million of 5.25% notes. FHLB advances were $404.5 million. Common shares outstanding were 27,584,732 as of October 28, 2025.

Insights

Solid quarter with loan and deposit growth, margin lift.

Bridgewater Bancshares posted stronger Q3 profitability as net interest income rose to $34.1M from $25.6M, supported by higher loan balances and securities income. Net income reached $11.6M with diluted EPS of $0.38.

Balance sheet growth was broad-based: loans, net, increased to $4.15B; deposits to $4.29B. AOCI improved to a $5.6M loss as market valuations recovered. Funding included $80.0M of 7.625% subordinated notes and FHLB advances of $404.5M.

Key swing factors include credit costs (provision of $1.1M) and interest rate sensitivity across loans and the $826.5M AFS book. Subsequent filings may detail branch optimization following the planned Country Village closure effective December 29, 2025.

10/30/2025 - 07:06 AM

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Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended September 30, 2025

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

For the transition period from ____________ to ________

Commission File Number 001-38412

BRIDGEWATER BANCSHARES, INC.

(Exact name of registrant as specified in its charter)


Minnesota (State or other jurisdiction of incorporation or organization)		26-0113412 (I.R.S. Employer Identification No.)

4450 Excelsior Boulevard, Suite 100 St. Louis Park, Minnesota (Address of principal executive offices)		55416 (Zip Code)

(952) 893-6868

(Registrant’s telephone number, including area code)

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


Title of each class:	Trading Symbol	Name of each exchange on which registered:
Common Stock, $0.01 Par Value	BWB	The Nasdaq Stock Market LLC
Depositary Shares, each representing a 1/100^th interest in a share of 5.875% Non-Cumulative Perpetual Preferred Stock, Series A, par value $0.01 per share	BWBBP	The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☐	Accelerated filer	☒
Non-accelerated filer	☐	Smaller reporting company	☐
	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. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The number of shares of the Common Stock outstanding as of October 28, 2025 was 27,584,732.

Table of Contents

Table of Contents


PART I FINANCIAL INFORMATION	3

Item 1. Consolidated Financial Statements (unaudited)	3
Consolidated Balance Sheets	3
Consolidated Statements of Income	4
Consolidated Statements of Comprehensive Income	5
Consolidated Statements of Shareholders’ Equity	6
Consolidated Statements of Cash Flows	7
Notes to Consolidated Financial Statements	8
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	43
Item 3. Quantitative and Qualitative Disclosures About Market Risk	71
Item 4. Controls and Procedures	72

PART II OTHER INFORMATION	73

Item 1. Legal Proceedings	73
Item 1A. Risk Factors	73
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	73
Item 3. Defaults Upon Senior Securities	74
Item 4. Mine Safety Disclosures	74
Item 5. Other Information	74
Item 6. Exhibits	75

SIGNATURES	76

Table of Contents

PART 1 – FINANCIAL INFORMATION

Item 1. Consolidated Financial Statements

Bridgewater Bancshares, Inc. and Subsidiaries

Consolidated Balance Sheets

(dollars in thousands, except share data)


	September 30,		December 31,
	2025		2024
	(Unaudited)
ASSETS
Cash and Cash Equivalents	$	131,818	$	229,760
Bank-Owned Certificates of Deposit		3,658		4,377
Securities Available for Sale, at Fair Value		826,473		768,247
Loans, Net of Allowance for Credit Losses of $56,390 at September 30, 2025 (unaudited) and $52,277 at December 31, 2024		4,149,882		3,809,436
Federal Home Loan Bank (FHLB) Stock, at Cost		21,373		19,297
Premises and Equipment, Net		50,955		49,533
Accrued Interest		19,244		17,711
Goodwill		11,982		11,982
Other Intangible Assets, Net		7,160		7,850
Bank-Owned Life Insurance		46,121		44,646
Other Assets		91,328		103,403
Total Assets	$	5,359,994	$	5,066,242

LIABILITIES AND EQUITY
LIABILITIES
Deposits:
Noninterest Bearing	$	822,632	$	800,763
Interest Bearing		3,470,132		3,286,004
Total Deposits		4,292,764		4,086,767
Notes Payable		—		13,750
FHLB Advances		404,500		359,500
Subordinated Debentures, Net of Issuance Costs		108,588		79,670
Accrued Interest Payable		5,208		4,008
Other Liabilities		51,471		64,612
Total Liabilities		4,862,531		4,608,307

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 September 30, 2025 (unaudited) and December 31, 2024		66,514		66,514
Common Stock- $0.01 par value; Authorized 75,000,000
Common Stock - Issued and Outstanding 27,584,732 at September 30, 2025 (unaudited) and 27,552,449 at December 31, 2024		276		276
Additional Paid-In Capital		97,101		95,088
Retained Earnings		339,135		309,421
Accumulated Other Comprehensive Loss		(5,563)		(13,364)
Total Shareholders' Equity		497,463		457,935
Total Liabilities and Equity	$	5,359,994	$	5,066,242

See accompanying notes to consolidated financial statements.

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Bridgewater Bancshares, Inc. and Subsidiaries

Consolidated Statements of Income

(dollars in thousands, except per share data)

(Unaudited)


	Three Months Ended				Nine Months Ended
	September 30,		September 30,		September 30,		September 30,
	2025		2024		2025		2024
INTEREST INCOME
Loans, Including Fees	$	60,038	$	51,895	$	171,746	$	152,861
Investment Securities		10,371		8,725		28,968		24,818
Other		3,224		2,407		7,825		4,895
Total Interest Income		73,633		63,027		208,539		182,574

INTEREST EXPENSE
Deposits		34,615		34,187		99,215		95,995
Federal Funds Purchased		—		2		16		1,159
Notes Payable		106		296		624		887
FHLB Advances		2,933		1,942		7,941		6,325
Subordinated Debentures		1,888		1,001		3,992		2,982
Total Interest Expense		39,542		37,428		111,788		107,348

NET INTEREST INCOME		34,091		25,599		96,751		75,226
Provision for Credit Losses		1,100		—		4,600		1,350

NET INTEREST INCOME AFTER
PROVISION FOR CREDIT LOSSES		32,991		25,599		92,151		73,876

NONINTEREST INCOME
Customer Service Fees		501		373		1,492		1,081
Net Gain (Loss) on Sales of Available for Sale Securities		59		(28)		534		385
Letter of Credit Fees		383		424		1,161		1,127
Debit Card Interchange Fees		173		152		462		448
Swap Fees		—		26		980		26
Bank-Owned Life Insurance		440		352		1,206		965
Investment Advisory Fees		208		—		746		—
FHLB Prepayment Income		—		—		301		—
Other Income		297		223		885		803
Total Noninterest Income		2,061		1,522		7,767		4,835

NONINTEREST EXPENSE
Salaries and Employee Benefits		12,229		9,851		34,963		28,959
Occupancy and Equipment		1,266		1,069		3,774		3,218
FDIC Insurance Assessment		775		750		1,975		2,350
Data Processing		637		368		1,881		1,252
Professional and Consulting Fees		1,261		1,149		3,365		2,890
Derivative Collateral Fees		309		381		1,132		1,395
Information Technology and Telecommunications		973		840		2,915		2,448
Marketing and Advertising		658		367		1,420		1,006
Intangible Asset Amortization		230		9		690		26
Other Expense		1,618		976		4,918		2,944
Total Noninterest Expense		19,956		15,760		57,033		46,488

INCOME BEFORE INCOME TAXES		15,096		11,361		42,885		32,223
Provision for Income Taxes		3,495		2,686		10,131		7,602
NET INCOME		11,601		8,675		32,754		24,621
Preferred Stock Dividends		(1,013)		(1,013)		(3,040)		(3,040)
NET INCOME AVAILABLE TO COMMON SHAREHOLDERS	$	10,588	$	7,662	$	29,714	$	21,581

EARNINGS PER SHARE
Basic	$	0.38	$	0.28	$	1.08	$	0.79
Diluted		0.38		0.27		1.06		0.77

See accompanying notes to consolidated financial statements.

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Bridgewater Bancshares, Inc. and Subsidiaries

Consolidated Statements of Comprehensive Income

(dollars in thousands)

(Unaudited)


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2025		2024		2025		2024
Net Income	$	11,601	$	8,675	$	32,754	$	24,621
Other Comprehensive Income (Loss):
Unrealized Gains on Available for Sale Securities		13,860		14,738		21,068		16,141
Unrealized Gains (Losses) on Cash Flow Hedges		(41)		(6,761)		(4,538)		987
Reclassification Adjustment for Gains Realized in Income		(1,659)		(2,498)		(5,583)		(7,543)
Income Tax Impact		(3,495)		(1,575)		(3,146)		(2,755)
Total Other Comprehensive Income, Net of Tax		8,665		3,904		7,801		6,830
Comprehensive Income	$	20,266	$	12,579	$	40,555	$	31,451

See accompanying notes to consolidated financial statements.

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Bridgewater Bancshares, Inc. and Subsidiaries

Consolidated Statements of Shareholders’ Equity

Three and Nine Months Ended September 30, 2025 and 2024

(dollars in thousands, except share data)

(Unaudited)


										Accumulated
						Additional				Other
	Preferred		Common Stock			Paid-In		Retained		Comprehensive
Three Months Ended	Stock		Shares	Amount		Capital		Earnings		Income (Loss)		Total
BALANCE June 30, 2024	$	66,514	27,348,049	$	273	$	93,205	$	294,569	$	(15,320)	$	439,241
Stock-based Compensation		—	8,496		—		923		—		—		923
Comprehensive Income		—	—		—		—		8,675		3,904		12,579
Stock Options Exercised		—	69,856		1		517		—		—		518
Vested Restricted Stock Units		—	3,000		—		—		—		—		—
Restricted Shares Withheld for Taxes		—	(3,711)		—		(48)		—		—		(48)
Preferred Stock Dividend		—	—		—		—		(1,013)		—		(1,013)
BALANCE September 30, 2024	$	66,514	27,425,690	$	274	$	94,597	$	302,231	$	(11,416)	$	452,200

BALANCE June 30, 2025	$	66,514	27,470,283	$	275	$	95,174	$	328,547	$	(14,228)	$	476,282
Stock-based Compensation		—	7,566		—		1,079		—		—		1,079
Comprehensive Income		—	—		—		—		11,601		8,665		20,266
Stock Options Exercised		—	106,563		1		851		—		—		852
Vested Restricted Stock Units		—	500		—		—		—		—		—
Restricted Shares Withheld for Taxes		—	(180)		—		(3)		—		—		(3)
Preferred Stock Dividend		—	—		—		—		(1,013)		—		(1,013)
BALANCE September 30, 2025	$	66,514	27,584,732	$	276	$	97,101	$	339,135	$	(5,563)	$	497,463


										Accumulated
						Additional				Other
	Preferred		Common Stock			Paid-In		Retained		Comprehensive
Nine Months Ended	Stock		Shares	Amount		Capital		Earnings		Income (Loss)		Total
BALANCE December 31, 2023	$	66,514	27,748,965	$	277	$	96,320	$	280,650	$	(18,246)	$	425,515
Stock-based Compensation		—	29,832		—		2,994		—		—		2,994
Comprehensive Income		—	—		—		—		24,621		6,830		31,451
Stock Options Exercised		—	78,356		1		586		—		—		587
Stock Repurchases		—	(446,509)		(4)		(5,173)		—		—		(5,177)
Vested Restricted Stock Units		—	25,665		—		—		—		—		—
Restricted Shares Withheld for Taxes		—	(10,619)		—		(130)		—		—		(130)
Preferred Stock Dividend		—	—		—		—		(3,040)		—		(3,040)
BALANCE September 30, 2024	$	66,514	27,425,690	$	274	$	94,597	$	302,231	$	(11,416)	$	452,200

BALANCE December 31, 2024	$	66,514	27,552,449	$	276	$	95,088	$	309,421	$	(13,364)	$	457,935
Stock-based Compensation		—	23,495		—		3,118		—		—		3,118
Comprehensive Income (Loss)		—	—		—		—		32,754		7,801		40,555
Stock Options Exercised		—	148,738		1		1,246		—		—		1,247
Stock Repurchases		—	(167,709)		(1)		(2,190)		—		—		(2,191)
Vested Restricted Stock Units		—	38,962		—		—		—		—		—
Restricted Shares Withheld for Taxes		—	(11,203)		—		(161)		—		—		(161)
Preferred Stock Dividend		—	—		—		—		(3,040)		—		(3,040)
BALANCE September 30, 2025	$	66,514	27,584,732	$	276	$	97,101	$	339,135	$	(5,563)	$	497,463

See accompanying notes to consolidated financial statements.

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Bridgewater Bancshares, Inc. and Subsidiaries

Consolidated Statements of Cash Flows

(dollars in thousands)

(Unaudited)


	Nine Months Ended
	September 30,
	2025		2024
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income	$	32,754	$	24,621
Adjustments to Reconcile Net Income to Net Cash
Provided by Operating Activities:
Net Amortization on Securities Available for Sale		(2,635)		(1,064)
Net Gain on Sales of Securities Available for Sale		(534)		(385)
Provision for Credit Losses on Loans and Leases		4,400		1,450
Credit for Credit Losses on Off-Balance Sheet Exposures		200		(100)
Depreciation of Premises and Equipment		1,881		1,767
Amortization of Other Intangible Assets		690		26
Amortization of Right-of Use Asset		419		117
Cash Surrender Value of Bank-Owned Life Insurance		(1,206)		(965)
Amortization of Subordinated Debt Issuance Costs		208		286
Stock-based Compensation		3,118		2,994
Deferred Income Taxes		(2,701)		(1,100)
Changes in Operating Assets and Liabilities:
Accrued Interest Receivable and Other Assets		(1,232)		(465)
Accrued Interest Payable and Other Liabilities		(14,527)		(15,383)
Net Cash Provided by Operating Activities		20,835		11,799

CASH FLOWS FROM INVESTING ACTIVITIES
Decrease in Bank-Owned Certificates of Deposit		719		—
Proceeds from Sales of Securities Available for Sale		64,707		101,612
Proceeds from Maturities, Paydowns, Payups and Calls of Securities Available for Sale		108,590		45,219
Purchases of Securities Available for Sale		(204,111)		(189,344)
Net Increase in Loans		(344,846)		36,464
Net Increase in FHLB Stock		(2,076)		(1,529)
Purchases of Premises and Equipment		(3,303)		(658)
Purchase of Bank-owned Life Insurance		(4,630)		—
Redemption of Bank-owned Life Insurance		4,361		—
Net Cash Used in Investing Activities		(380,589)		(8,236)

CASH FLOWS FROM FINANCING ACTIVITIES
Net Increase in Deposits		205,997		37,494
Principal Payments on Notes Payable		(13,750)		—
Proceeds from FHLB Advances		936,500		699,000
Principal Payments on FHLB Advances		(891,500)		(669,000)
Issuance of Subordinated Debt, net of Issuance Costs		78,690		—
Redemption of Subordinated Debt, net of Issuance Costs		(49,980)		—
Preferred Stock Dividends Paid		(3,040)		(3,040)
Stock Options Exercised		1,247		587
Stock Repurchases		(2,191)		(5,177)
Shares Repurchased for Tax Withholdings Upon Vesting of Restricted Stock-Based Awards		(131)		(94)
Shares Repurchased for Tax Withholdings Upon Exercise Stock Options		(30)		(36)
Net Cash Provided by Financing Activities		261,812		59,734

NET CHANGE IN CASH AND CASH EQUIVALENTS		(97,942)		63,297
Cash and Cash Equivalents Beginning		229,760		128,562
Cash and Cash Equivalents Ending	$	131,818	$	191,859

SUPPLEMENTAL CASH FLOW DISCLOSURE
Cash Paid for Interest	$	110,380	$	108,886
Cash Paid for Income Taxes
Federal	$	6,000	$	2,850
Minnesota		4,050		2,516
Other States		158		119
Total Cash Paid for Income Taxes	$	10,208	$	5,485
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES
Loans Transferred to Foreclosed Assets		—		434

See accompanying notes to consolidated financial statements.

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Bridgewater Bancshares, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

(Unaudited)

Note 1: Description of the Business and Summary of Significant Accounting Policies

Organization

Bridgewater Bancshares, Inc. (the “Company”) is a financial holding company whose operations consist of the ownership of its wholly-owned subsidiary, Bridgewater Bank (the “Bank”). The Bank commenced operations in 2005 and provides retail and commercial loan and deposit services, principally to customers within the Minneapolis-St. Paul-Bloomington, MN-WI Metropolitan Statistical Area. In 2008, the Bank formed BWB Holdings, LLC, a wholly-owned subsidiary of the Bank, for the purpose of holding repossessed property. In 2018, the Bank formed Bridgewater Investment Management, Inc., a wholly-owned subsidiary of the Bank, for the purpose of holding certain municipal securities and to engage in municipal lending activities.

Recent Developments

On December 13, 2024, the Bank completed its acquisition of First Minnetonka City Bank (“FMCB”) in an all-cash transaction. On the closing date, FMCB merged with and into the Bank, with the Bank as the surviving entity. The acquisition of FMCB added two full-service branches in Minnetonka, Minnesota to the Bank’s footprint, and added approximately $225.7 million of deposits and $117.1 million of loans as of December 31, 2024.

On June 24, 2025, the Company entered into a Subordinated Note Purchase Agreement with certain institutional accredited investors and qualified institutional buyers pursuant to which the Company sold and issued $80.0 million in aggregate principal amount of its 7.625% Fixed-to-Floating Rate Subordinated Notes due 2035 (the “Notes”). The Notes were issued by the Company to such purchasers at a price equal to 100% of their face amount. The Company used the net proceeds it received from the sale of the Notes to redeem $50 million of outstanding 5.25% Fixed-to-Floating Rate Subordinated Notes due 2030 and for general corporate purposes.

On July 4, 2025, the President signed H.R. 1, the “One Big Beautiful Bill Act,” into law. The legislation includes several changes to federal tax law that generally allow for more favorable deductibility of certain business expenses beginning in 2025, including the restoration of immediate expensing of domestic research and development expenditures, reinstatement of 100% bonus depreciation, and more favorable rules for determining the limitation on business interest expense. The financial impact was immaterial to the financial statements.

On September 30, 2025, the Company announced its plan to close its Country Village branch location, effective December 29, 2025, given the close proximity to its Glen Lake branch in Minnetonka, Minnesota.

Basis of Presentation

The accompanying unaudited consolidated financial statements were prepared in accordance with instructions for Form 10-Q and, therefore, do not include all disclosures necessary for a complete presentation of the consolidated balance sheets, consolidated statements of income, consolidated statements of comprehensive income, consolidated statements of shareholders’ equity and consolidated statements of cash flows in conformity with U.S. generally accepted accounting principles (“GAAP”). However, all normal recurring adjustments which are, in the opinion of management, necessary for the fair presentation of the interim financial statements have been included. The results of operations for the three and nine months ended September 30, 2025 are not necessarily indicative of the results which may be expected for the entire year. For further information, refer to the consolidated financial statements and footnotes included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on March 6, 2025.

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Principles of Consolidation

These consolidated financial statements include the amounts of the Company, the Bank, with locations in Bloomington, Greenwood, Minneapolis (2), Minnetonka (2), Orono, St. Louis Park, and St. Paul, Minnesota, BWB Holdings, LLC, and Bridgewater Investment Management, Inc. All significant intercompany balances and transactions have been eliminated in consolidation.

Use of Estimates in Preparation of Financial Statements

The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. Information available which could affect judgements includes, but is not limited to, changes in interest rates, changes in the performance of the economy, including elevated levels of inflation and possible recession, and changes in the financial condition of borrowers.

Material estimates that are particularly susceptible to significant change in the near term include the determination of the allowance for credit losses (“ACL”).

Segment Reporting

An operating segment is generally defined as a component of a business for which discrete financial information is available and whose operating results are regularly reviewed by the chief operating decision maker (“CODM”). Substantially all of the Company’s operations involve the delivery of loan and deposit products to clients. The Company’s CODM makes operating decisions and assesses performance based on an ongoing review of the banking activities, which constitute the Company’s only operating segment for financial reporting purposes. The Company’s single segment is managed on a consolidated basis by the CODM who is the Chief Executive Officer.

The accounting policies of this segment are the same as those described throughout this Note 1 concerning significant accounting policies. The CODM assesses performance of the segment and determines the appropriate allocation of Company resources based on consolidated net income, which is reported in the Consolidated Statements of Income. Consolidated net income is used in deciding where to deploy capital, and to monitor how budget compares to actual results. It is also used in benchmarking performance measures to Company peers for compensation related analysis. The measure of segment assets is reported on the Consolidated Balance Sheets as total consolidated assets.

Impact of Recently Adopted Accounting Guidance

On January 1, 2025, the Company adopted Accounting Standards Update (“ASU”) 2023-09, Income Taxes (Topic ASC 740) Income Taxes. The ASU improves the transparency of income tax disclosures by requiring (1) consistent categories and greater disaggregation of information in rate reconciliation and (2) disaggregation of income taxes paid by jurisdiction. It also includes certain other amendments to improve the effectiveness of income tax disclosures. The amendments in ASU 2023-09 are effective for fiscal years beginning after December 15, 2024. The Company’s adoption of this standard did not have a material impact on the Company’s consolidated financial statements.

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Impact of Recently Issued Accounting Standards

The following ASU’s have been issued by FASB and may impact the Company’s consolidated financial statements in future reporting periods:

On November 4, 2024, the FASB issued ASU 2024-03, which was updated in ASU 2025-01, Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40). The ASU requires disclosure of additional information about specific expense categories in the notes to the financial statements. This ASU does not change or remove current expense disclosure requirements, but does affect where this information appears in the notes to the financial statements. The amendments are effective for the first fiscal year period beginning after December 15, 2026 and interim reporting periods beginning after December 15, 2027. The amendments should be applied on a prospective or a retrospective basis, with an option to early adopt. The Company is currently evaluating the impact of ASU 2024-03 and ASU 2025-01.

On September 18, 2025, the FASB issued ASU 2025-06, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software. The ASU removes all references to a prescriptive and sequential software development method (referred to as “project stages”) throughout Subtopic 350-40. The amendments require an entity to start capitalizing software costs when management has authorized and committed to funding the software project and it is probable that the project will be completed and the software will be used to perform the function intended. The amendments are effective for annual reporting periods beginning after December 15, 2027 and for interim reporting within those annual reporting periods. Early adoption is permitted as of the beginning of an annual reporting period. The Company is currently evaluating the impact of ASU 2025-06.

Subsequent Events

Subsequent events have been evaluated through October 30, 2025, which is the date the consolidated financial statements were available to be issued.

Note 2: Earnings Per Share

Basic earnings per common share are computed by dividing net income available to common shareholders by the weighted average number of common shares outstanding for the period. Diluted earnings per common share are computed by dividing net income available to common shareholders by the weighted average number of common shares, adjusted for the dilutive effect of stock compensation. For the three and nine months ended September 30, 2025, stock options and restricted stock units totaling 570,500 and 535,450 shares, respectively, were excluded from the calculation because they were deemed to be anti-dilutive. For the three and nine months ended September 30, 2024, stock options and restricted stock units totaling 774,770 and 1,137,208 shares, respectively, were excluded from the calculation because they were deemed to be antidilutive.

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The following table presents the numerators and denominators for basic and diluted earnings per share computations for the three and nine months ended September 30, 2025 and 2024:


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(dollars in thousands, except per share data)	2025		2024		2025		2024
Net Income Available to Common Shareholders	$	10,588	$	7,662	$	29,714	$	21,581
Weighted Average Common Stock Outstanding:
Weighted Average Common Stock Outstanding (Basic)		27,504,840		27,382,798		27,511,297		27,486,590
Dilutive Effect of Stock Compensation		685,566		522,112		578,112		433,194
Weighted Average Common Stock Outstanding (Dilutive)		28,190,406		27,904,910		28,089,409		27,919,784

Basic Earnings per Common Share	$	0.38	$	0.28	$	1.08	$	0.79
Diluted Earnings per Common Share		0.38		0.27		1.06		0.77

Note 3: Securities

The following tables present the amortized cost and estimated fair value of securities with gross unrealized gains and losses at September 30, 2025 and December 31, 2024:


	September 30, 2025
			Gross		Gross
	Amortized		Unrealized		Unrealized
(dollars in thousands)	Cost		Gains		Losses		Fair Value
Securities Available for Sale:
U.S. Treasury Securities	$	155,902	$	—	$	(8,703)	$	147,199
Municipal Bonds		247,471		6,614		(13,538)		240,547
Mortgage-Backed Securities		267,171		2,877		(10,899)		259,149
Corporate Securities		109,613		1,791		(3,421)		107,983
U.S Government Agency Securities		9,803		73		(41)		9,835
Asset-Backed Securities		61,687		92		(19)		61,760
Total Securities Available for Sale	$	851,647	$	11,447	$	(36,621)	$	826,473


	December 31, 2024
			Gross		Gross
	Amortized		Unrealized		Unrealized
(dollars in thousands)	Cost		Gains		Losses		Fair Value
Securities Available for Sale:
U.S. Treasury Securities	$	179,835	$	3	$	(12,090)	$	167,748
Municipal Bonds		139,891		23		(17,649)		122,265
Mortgage-Backed Securities		259,833		882		(15,825)		244,890
Corporate Securities		139,161		1,041		(6,016)		134,186
U.S Government Agency Securities		22,053		85		(56)		22,082
Asset-Backed Securities		76,891		211		(26)		77,076
Total Securities Available for Sale	$	817,664	$	2,245	$	(51,662)	$	768,247

Securities with a carrying value of $264.9 million and $289.9 million were pledged to secure borrowing capacity at the Federal Reserve Discount Window as of September 30, 2025 and December 31, 2024, respectively.

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The following tables present the fair value and gross unrealized losses of securities with unrealized losses, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position at September 30, 2025 and December 31, 2024:


		Less Than 12 Months				12 Months or Greater				Total
	Number of			Unrealized				Unrealized				Unrealized
(dollars in thousands, except number of holdings)	Holdings	Fair Value		Losses		Fair Value		Losses		Fair Value		Losses
September 30, 2025
U.S. Treasury Securities	2	$	—	$	—	$	147,199	$	(8,703)	$	147,199	$	(8,703)
Municipal Bonds	191		19,961		(654)		95,294		(12,884)		115,255		(13,538)
Mortgage-Backed Securities	113		10,653		(47)		115,179		(10,852)		125,832		(10,899)
Corporate Securities	51		5,366		(49)		47,728		(3,372)		53,094		(3,421)
U.S Government Agency Securities	31		1,279		(5)		2,470		(36)		3,749		(41)
Asset-Backed Securities	7		10,035		(13)		6,899		(6)		16,934		(19)
Total Securities Available for Sale	395	$	47,294	$	(768)	$	414,769	$	(35,853)	$	462,063	$	(36,621)


		Less Than 12 Months				12 Months or Greater				Total
	Number of			Unrealized				Unrealized				Unrealized
(dollars in thousands, except number of holdings)	Holdings	Fair Value		Losses		Fair Value		Losses		Fair Value		Losses
December 31, 2024
U.S. Treasury Securities	14	$	157,091	$	(12,090)	$	—	$	—	$	157,091	$	(12,090)
Municipal Bonds	236		21,329		(120)		95,774		(17,529)		117,103		(17,649)
Mortgage-Backed Securities	168		47,636		(391)		118,824		(15,434)		166,460		(15,825)
Corporate Securities	93		6,860		(75)		91,666		(5,941)		98,526		(6,016)
U.S Government Agency Securities	38		5,878		(5)		4,071		(51)		9,949		(56)
Asset-Backed Securities	7		5,735		(5)		10,161		(21)		15,896		(26)
Total Securities Available for Sale	556	$	244,529	$	(12,686)	$	320,496	$	(38,976)	$	565,025	$	(51,662)

At September 30, 2025, 395 debt securities had unrealized losses with aggregate depreciation of approximately 7.3% from the Company’s amortized cost basis. At December 31, 2024, 556 debt securities had unrealized losses with aggregate depreciation of approximately 8.4% from the Company’s amortized cost basis. These unrealized losses have not been recognized into income because management does not intend to sell these securities, and it is not more likely than not it will be required to sell the securities before recovery of its amortized cost basis. Furthermore, the unrealized losses are due to changes in interest rates and other market conditions and were not reflective of credit events. To make this determination, consideration is given to such factors as the credit rating of the issuer, level of credit enhancement, changes in credit ratings, market conditions such as current interest rates, any adverse conditions specific to the security, and delinquency status on contractual payments. As of September 30, 2025 and December 31, 2024, there was no allowance for credit losses carried on the Company’s securities portfolio.

Accrued interest receivable on securities, which is recorded within accrued interest on the balance sheet, totaled $7.0 million and $6.2 million at September 30, 2025 and December 31, 2024, respectively, and was excluded from the estimate of credit losses.

The Company has entered into a fair value hedging transaction to mitigate the impact of changing interest rates on the fair value of U.S. treasury securities and mortgage-backed securities. See Note 7 – Derivative Instruments and Hedging Activities for disclosure of the gains and losses recognized on derivative instruments and the cumulative fair value hedging adjustments to the carrying amount of the hedged securities.

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The following table presents a summary of the amortized cost and estimated fair value of debt securities by the earlier of expected call date or contractual maturity as of September 30, 2025. Call date is used when a call of the debt security is expected, as determined by the Company when the security has a market value above its amortized cost. Contractual maturities will differ from expected maturities for mortgage-backed, U.S. government agency securities and asset-backed securities because borrowers may have the right to call or prepay obligations without penalties.


(dollars in thousands)	Amortized Cost		Fair Value
September 30, 2025
Due in One Year or Less	$	42,029	$	42,814
Due After One Year Through Five Years		130,801		134,703
Due After Five Years Through 10 Years		152,428		142,107
Due After 10 Years		187,728		176,105
Subtotal		512,986		495,729
Mortgage-Backed Securities		267,171		259,149
U.S Government Agency Securities		9,803		9,835
Asset-Backed Securities		61,687		61,760
Totals	$	851,647	$	826,473

The following table presents a summary of the proceeds from sales of securities available for sale, as well as gross gains and losses, for the three and nine months ended September 30, 2025 and 2024:


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(dollars in thousands)	2025		2024		2025		2024
Proceeds From Sales of Securities	$	5,112	$	50,779	$	64,707	$	101,612
Gross Gains on Sales		59		488		543		1,594
Gross Losses on Sales		—		(516)		(9)		(1,209)

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Note 4: Loans and Allowance for Credit Losses

The following table presents the components of the loan portfolio at September 30, 2025 and December 31, 2024:


	September 30,		December 31,
(dollars in thousands)	2025		2024
Commercial	$	533,476	$	497,662
Leases		43,186		44,291
Construction and Land Development		159,991		97,255
1-4 Family Construction		41,739		41,961
Real Estate Mortgage:
1-4 Family Mortgage		487,297		474,383
Multifamily		1,578,223		1,425,610
CRE Owner Occupied		192,966		191,248
CRE Nonowner Occupied		1,158,622		1,083,108
Total Real Estate Mortgage Loans		3,417,108		3,174,349
Consumer and Other		19,054		12,996
Total Loans, Gross		4,214,554		3,868,514
Allowance for Credit Losses		(56,390)		(52,277)
Net Deferred Loan Fees		(8,282)		(6,801)
Total Loans, Net	$	4,149,882	$	3,809,436

The following tables present the aging in past due loans and loans on nonaccrual status, with and without an ACL by loan segment, as of September 30, 2025 and December 31, 2024:


	Accruing Interest
			30-89 Days		90 Days or		Nonaccrual		Nonaccrual
(dollars in thousands)	Current		Past Due		More Past Due		with ACL		without ACL		Total
September 30, 2025
Commercial	$	532,193	$	—	$	—	$	1,250	$	33	$	533,476
Leases		43,167		—		—		—		19		43,186
Construction and Land Development		159,951		—		—		—		40		159,991
1-4 Family Construction		41,739		—		—		—		—		41,739
Real Estate Mortgage:
1-4 Family Mortgage		486,980		317		—		—		—		487,297
Multifamily		1,578,223		—		—		—		—		1,578,223
CRE Owner Occupied		191,218		1,748		—		—		—		192,966
CRE Nonowner Occupied		1,149,973		—		—		8,649		—		1,158,622
Consumer and Other		18,213		841		—		—		—		19,054
Totals	$	4,201,657	$	2,906	$	—	$	9,899	$	92	$	4,214,554

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	Accruing Interest
			30-89 Days		90 Days or		Nonaccrual		Nonaccrual
(dollars in thousands)	Current		Past Due		More Past Due		with ACL		without ACL		Total
December 31, 2024
Commercial	$	497,432	$	59	$	—	$	171	$	—	$	497,662
Leases		44,257		—		—		34		—		44,291
Construction and Land Development		97,197		—		—		—		58		97,255
1-4 Family Construction		41,961		—		—		—		—		41,961
Real Estate Mortgage:
1-4 Family Mortgage		474,185		178		—		—		20		474,383
Multifamily		1,425,610		—		—		—		—		1,425,610
CRE Owner Occupied		190,197		1,051		—		—		—		191,248
CRE Nonowner Occupied		1,083,108		—		—		—		—		1,083,108
Consumer and Other		12,975		3		—		18		—		12,996
Totals	$	3,866,922	$	1,291	$	—	$	223	$	78	$	3,868,514

The Company aggregates loans into credit quality indicators based on relevant information about the ability of borrowers to service their debt by using internal reviews in which management monitors and analyzes the financial condition of borrowers and guarantors, trends in the industries in which the borrowers operate, and the fair values of collateral securing the loans. The Company analyzes all loans individually to assign a risk rating, grouped into six major categories defined as follows:

Pass: A pass loan is a credit with no known or existing potential weaknesses deserving of management’s close attention.

Watch: Loans classified as watch have a credit where the borrower’s financial strength and performance has

been declining and may pose an elevated level of risk. Watch loans have been identified as having minor deterioration in loan quality or other credit weaknesses/circumstances meriting closer attention of management.

Special Mention: Loans classified as special mention have a potential weakness that deserves management’s

close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of the Company’s credit position at some future date. Special mention loans are not adversely classified and do not expose the Company to sufficient risk to warrant adverse classification. This is a transitional rating and loans should not be classified as special mention for more than one year.

Substandard: Loans classified as substandard are not adequately protected by the current net worth and paying capacity of the borrower or of the collateral pledged, if any. Loans classified as substandard have a well-defined weakness or weaknesses that jeopardize the repayment of the debt. Well defined weaknesses include a borrower’s lack of marketability, inadequate cash flow or collateral support, failure to complete construction on time, or the failure to fulfill economic expectations. They are characterized by the distinct possibility that the Company will sustain loss if the deficiencies are not corrected.

Doubtful: Loans classified as doubtful have all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses make collection or repayment in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable.

Loss: Loans classified as loss are considered uncollectible and charged-off immediately.

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The following tables present loan balances classified by credit quality indicators by year of origination as of September 30, 2025 and December 31, 2024:


		September 30, 2025
(dollars in thousands)		2025		2024		2023		2022		2021		Prior		Revolving		Total
Commercial
Pass	$	127,366	$	88,485	$	29,477	$	57,803	$	16,507	$	27,330	$	170,940	$	517,908
Watch/Special Mention		94		—		610		164		—		8		555		1,431
Substandard		110		142		1,306		10,380		9		—		2,190		14,137
Total Commercial		127,570		88,627		31,393		68,347		16,516		27,338		173,685		533,476
Current Period Gross Write-offs		—		—		10		58		186		—		—		254

Leases
Pass		11,963		12,035		9,356		6,292		2,151		1,370		—		43,167
Substandard		—		—		—		19		—		—		—		19
Total Leases		11,963		12,035		9,356		6,311		2,151		1,370		—		43,186
Current Period Gross Write-offs		—		—		—		15		—		—		—		15

Construction and Land Development
Pass		84,744		60,287		1,604		337		434		—		12,545		159,951
Substandard		—		40		—		—		—		—		—		40
Total Construction and Land Development		84,744		60,327		1,604		337		434		—		12,545		159,991
Current Period Gross Write-offs		—		—		—		—		—		—		—		—

1-4 Family Construction
Pass		20,093		9,104		227		201		187		—		11,927		41,739
Total 1-4 Family Construction		20,093		9,104		227		201		187		—		11,927		41,739
Current Period Gross Write-offs		—		—		—		—		—		—		—		—

Real Estate Mortgage:
1-4 Family Mortgage
Pass		71,539		73,348		47,161		90,200		68,477		56,564		78,865		486,154
Substandard		633		—		193		—		—		317		—		1,143
Total 1-4 Family Mortgage		72,172		73,348		47,354		90,200		68,477		56,881		78,865		487,297
Current Period Gross Write-offs		—		—		—		—		—		—		—		—

Multifamily
Pass		285,418		189,795		128,257		428,087		321,394		157,685		9,677		1,520,313
Watch/Special Mention		31,841		—		2,213		—		—		—		—		34,054
Substandard		—		—		—		10,561		—		13,295		—		23,856
Total Multifamily		317,259		189,795		130,470		438,648		321,394		170,980		9,677		1,578,223
Current Period Gross Write-offs		—		—		—		—		—		—		—		—

CRE Owner Occupied
Pass		19,712		21,034		25,716		59,371		29,689		27,775		1,955		185,252
Watch/Special Mention		—		563		—		—		436		2,191		1,832		5,022
Substandard		152		—		792		—		1,748		—		—		2,692
Total CRE Owner Occupied		19,864		21,597		26,508		59,371		31,873		29,966		3,787		192,966
Current Period Gross Write-offs		—		—		—		—		—		—		—		—

CRE Nonowner Occupied
Pass		262,084		316,755		91,792		219,899		127,344		120,235		4,191		1,142,300
Watch/Special Mention		—		—		—		—		—		135		—		135
Substandard		15,283		904		—		—		—		—		—		16,187
Total CRE Nonowner Occupied		277,367		317,659		91,792		219,899		127,344		120,370		4,191		1,158,622
Current Period Gross Write-offs		—		—		—		—		—		—		—		—

Total Real Estate Mortgage Loans		686,662		602,399		296,124		808,118		549,088		378,197		96,520		3,417,108

Consumer and Other
Pass		2,910		234		397		325		59		1,116		14,013		19,054
Total Consumer and Other		2,910		234		397		325		59		1,116		14,013		19,054
Current Period Gross Write-offs		—		—		—		—		—		—		25		25

Total Period Gross Write-offs		—		—		10		73		186		—		25		294
Total Loans	$	933,942	$	772,726	$	339,101	$	883,639	$	568,435	$	408,021	$	308,690	$	4,214,554

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		December 31, 2024
(dollars in thousands)		2024		2023		2022		2021		2020		Prior		Revolving		Total
Commercial
Pass	$	135,665	$	45,089	$	67,579	$	23,353	$	13,349	$	19,794	$	178,293	$	483,122
Watch/Special Mention		—		—		76		96		29		—		1,716		1,917
Substandard		110		44		10,491		—		65		—		1,913		12,623
Total Commercial		135,775		45,133		78,146		23,449		13,443		19,794		181,922		497,662
Current Period Gross Write-offs		—		—		—		—		—		—		—		—

Leases
Pass		15,128		12,684		9,736		4,057		1,504		1,148		—		44,257
Substandard		—		—		34		—		—		—		—		34
Total Leases		15,128		12,684		9,770		4,057		1,504		1,148		—		44,291
Current Period Gross Write-offs		—		—		—		—		11		—		—		11

Construction and Land Development
Pass		74,967		6,027		6,791		585		—		—		8,827		97,197
Substandard		58		—		—		—		—		—		—		58
Total Construction and Land Development		75,025		6,027		6,791		585		—		—		8,827		97,255
Current Period Gross Write-offs		—		—		—		—		—		—		—		—

1-4 Family Construction
Pass		29,378		488		1,164		363		—		—		10,568		41,961
Total 1-4 Family Construction		29,378		488		1,164		363		—		—		10,568		41,961
Current Period Gross Write-offs		—		—		—		—		—		—		—		—

Real Estate Mortgage:
1-4 Family Mortgage
Pass		89,561		58,054		102,627		77,293		55,936		18,289		71,097		472,857
Watch/Special Mention		298		196		—		—		324		—		—		818
Substandard		20		45		—		—		—		643		—		708
Total 1-4 Family Mortgage		89,879		58,295		102,627		77,293		56,260		18,932		71,097		474,383
Current Period Gross Write-offs		—		—		—		—		—		—		—		—

Multifamily
Pass		219,162		133,916		486,854		336,859		161,626		57,679		6,624		1,402,720
Watch/Special Mention		9,953		2,245		10,692		—		—		—		—		22,890
Total Multifamily		229,115		136,161		497,546		336,859		161,626		57,679		6,624		1,425,610
Current Period Gross Write-offs		—		—		—		—		—		—		—		—

CRE Owner Occupied
Pass		22,761		31,402		62,522		34,228		17,801		15,355		2,121		186,190
Watch/Special Mention		—		—		—		1,759		1,739		—		593		4,091
Substandard		—		967		—		—		—		—		—		967
Total CRE Owner Occupied		22,761		32,369		62,522		35,987		19,540		15,355		2,714		191,248
Current Period Gross Write-offs		—		—		—		—		—		—		—		—

CRE Nonowner Occupied
Pass		356,582		113,973		261,827		148,866		73,300		97,350		6,962		1,058,860
Watch/Special Mention		9,622		3,659		—		2,690		—		894		—		16,865
Substandard		7,261		122		—		—		—		—		—		7,383
Total CRE Nonowner Occupied		373,465		117,754		261,827		151,556		73,300		98,244		6,962		1,083,108
Current Period Gross Write-offs		1,236		—		—		—		—		—		—		1,236

Total Real Estate Mortgage Loans		715,220		344,579		924,522		601,695		310,726		190,210		87,397		3,174,349

Consumer and Other
Pass		921		3,061		498		157		1,301		5		7,035		12,978
Substandard		—		18		—		—		—		—		—		18
Total Consumer and Other		921		3,079		498		157		1,301		5		7,035		12,996
Current Period Gross Write-offs		17		—		—		—		—		—		2		19

Total Period Gross Write-offs		1,253		—		—		—		11		—		2		1,266
Total Loans	$	971,447	$	411,990	$	1,020,891	$	630,306	$	326,974	$	211,157	$	295,749	$	3,868,514

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The following tables present the activity in the ACL, by segment, for the three and nine months ended September 30, 2025 and 2024:


			Provision for
			(Recovery of)
			Credit Losses		Loans and		Recoveries		Total Ending
	Beginning		for Loans		Leases		of Loans		Allowance
(dollars in thousands)	Balance		and Leases		Charged-off		and Leases		Balance
Three Months Ended September 30, 2025
Commercial	$	5,935	$	1,112	$	(254)	$	—	$	6,793
Leases		381		52		(15)		—		418
Construction and Land Development		1,104		176		—		—		1,280
1-4 Family Construction		278		16		—		—		294
Real Estate Mortgage:
1-4 Family Mortgage		2,413		19		—		—		2,432
Multifamily		23,921		(691)		—		—		23,230
CRE Owner Occupied		1,137		(25)		—		—		1,112
CRE Nonowner Occupied		20,443		207		—		—		20,650
Total Real Estate Mortgage Loans		47,914		(490)		—		—		47,424
Consumer and Other		153		34		(7)		1		181
Total	$	55,765	$	900	$	(276)	$	1	$	56,390

Nine Months Ended September 30, 2025
Commercial	$	5,630	$	1,416	$	(254)	$	1	$	6,793
Leases		368		65		(15)		—		418
Construction and Land Development		866		414		—		—		1,280
1-4 Family Construction		331		(37)		—		—		294
Real Estate Mortgage:
1-4 Family Mortgage		2,795		(363)		—		—		2,432
Multifamily		23,120		110		—		—		23,230
CRE Owner Occupied		1,290		(178)		—		—		1,112
CRE Nonowner Occupied		17,735		2,915		—		—		20,650
Total Real Estate Mortgage Loans		44,940		2,484		—		—		47,424
Consumer and Other		142		58		(25)		6		181
Total	$	52,277	$	4,400	$	(294)	$	7	$	56,390

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			Provision for
			(Recovery of)
			Credit Losses		Loans and		Recoveries		Total Ending
	Beginning		for Loans		Leases		of Loans		Allowance
(dollars in thousands)	Balance		and Leases		Charged-off		and Leases		Balance
Three Months Ended September 30, 2024
Commercial	$	6,018	$	(350)	$	—	$	5	$	5,673
Construction and Land Development		1,220		(141)		—		—		1,079
1-4 Family Construction		522		(128)		—		—		394
Real Estate Mortgage:
1-4 Family Mortgage		2,774		5		—		—		2,779
Multifamily		22,480		(125)		—		—		22,355
CRE Owner Occupied		1,258		(25)		—		—		1,233
CRE Nonowner Occupied		17,581		730		(935)		—		17,376
Total Real Estate Mortgage Loans		44,093		585		(935)		—		43,743
Consumer and Other		96		34		(2)		1		129
Total	$	51,949	$	—	$	(937)	$	6	$	51,018

Nine Months Ended September 30, 2024
Commercial	$	5,398	$	265	$	—	$	10	$	5,673
Construction and Land Development		2,156		(1,077)		—		—		1,079
1-4 Family Construction		558		(164)		—		—		394
Real Estate Mortgage:
1-4 Family Mortgage		2,651		125		—		3		2,779
Multifamily		22,217		138		—		—		22,355
CRE Owner Occupied		1,184		49		—		—		1,233
CRE Nonowner Occupied		16,225		2,086		(935)		—		17,376
Total Real Estate Mortgage Loans		42,277		2,398		(935)		3		43,743
Consumer and Other		105		28		(14)		10		129
Total	$	50,494	$	1,450	$	(949)	$	23	$	51,018

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The following tables present the balance in the ACL and the recorded investment in loans, by segment, as of September 30, 2025 and December 31, 2024:


	Individually		Collectively
	Evaluated for		Evaluated for
(dollars in thousands)	Credit Loss		Credit Loss		Total
ACL at September 30, 2025
Commercial	$	1,317	$	5,476	$	6,793
Leases		—		418		418
Construction and Land Development		—		1,280		1,280
1-4 Family Construction		—		294		294
Real Estate Mortgage:
1-4 Family Mortgage		—		2,432		2,432
Multifamily		226		23,004		23,230
CRE Owner Occupied		—		1,112		1,112
CRE Nonowner Occupied		2,889		17,761		20,650
Total Real Estate Mortgage Loans		3,115		44,309		47,424
Consumer and Other		—		181		181
Total	$	4,432	$	51,958	$	56,390


	Individually		Collectively
	Evaluated for		Evaluated for
(dollars in thousands)	Credit Loss		Credit Loss		Total
ACL at December 31, 2024
Commercial	$	133	$	5,497	$	5,630
Leases		6		362		368
Construction and Land Development		—		866		866
1-4 Family Construction		—		331		331
Real Estate Mortgage:
1-4 Family Mortgage		—		2,795		2,795
Multifamily		—		23,120		23,120
CRE Owner Occupied		—		1,290		1,290
CRE Nonowner Occupied		—		17,735		17,735
Total Real Estate Mortgage Loans		—		44,940		44,940
Consumer and Other		5		137		142
Total	$	144	$	52,133	$	52,277

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	Individually		Collectively
	Evaluated for		Evaluated for
(dollars in thousands)	Credit Loss		Credit Loss		Total
Loans at September 30, 2025
Commercial	$	14,205	$	519,271	$	533,476
Leases		19		43,167		43,186
Construction and Land Development		40		159,951		159,991
1-4 Family Construction		—		41,739		41,739
Real Estate Mortgage:
1-4 Family Mortgage		1,143		486,154		487,297
Multifamily		23,857		1,554,366		1,578,223
CRE Owner Occupied		4,525		188,441		192,966
CRE Nonowner Occupied		16,187		1,142,435		1,158,622
Total Real Estate Mortgage Loans		45,712		3,371,396		3,417,108
Consumer and Other		—		19,054		19,054
Total	$	59,976	$	4,154,578	$	4,214,554


	Individually		Collectively
	Evaluated for		Evaluated for
(dollars in thousands)	Credit Loss		Credit Loss		Total
Loans at December 31, 2024
Commercial	$	14,045	$	483,617	$	497,662
Leases		34		44,257		44,291
Construction and Land Development		58		97,197		97,255
1-4 Family Construction		—		41,961		41,961
Real Estate Mortgage:
1-4 Family Mortgage		708		473,675		474,383
Multifamily		—		1,425,610		1,425,610
CRE Owner Occupied		1,558		189,690		191,248
CRE Nonowner Occupied		8,278		1,074,830		1,083,108
Total Real Estate Mortgage Loans		10,544		3,163,805		3,174,349
Consumer and Other		18		12,978		12,996
Total	$	24,699	$	3,843,815	$	3,868,514

The following tables present the amortized cost basis of collateral dependent loans by the primary collateral type, which are individually evaluated to determine expected credit losses, and the related ACL allocated to these loans, as of September 30, 2025 and December 31, 2024:


	Primary Type of Collateral
			Business						ACL
(dollars in thousands)	Real Estate		Assets		Other		Total		Allocation
September 30, 2025
Commercial	$	—	$	2,525	$	11,680	$	14,205	$	1,317
Leases		—		—		19		19		—
Construction and Land Development		40		—		—		40		—
Real Estate Mortgage:
1-4 Family Mortgage		1,143		—		—		1,143		—
Multifamily		23,857		—		—		23,857		226
CRE Owner Occupied		4,525		—		—		4,525		—
CRE Nonowner Occupied		16,187		—		—		16,187		2,889
Totals	$	45,752	$	2,525	$	11,699	$	59,976	$	4,432

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	Primary Type of Collateral
			Business						ACL
(dollars in thousands)	Real Estate		Assets		Other		Total		Allocation
December 31, 2024
Commercial	$	—	$	3,688	$	10,357	$	14,045	$	133
Leases		—		—		34		34		6
Construction and Land Development		58		—		—		58		—
Real Estate Mortgage:
1-4 Family Mortgage		708		—		—		708		—
CRE Owner Occupied		1,558		—		—		1,558		—
CRE Nonowner Occupied		8,278		—		—		8,278		—
Consumer and Other		—		—		18		18		5
Totals	$	10,602	$	3,688	$	10,409	$	24,699	$	144

Accrued interest receivable on loans, which is recorded within accrued interest on the balance sheet, totaled $12.1 million and $11.4 million at September 30, 2025 and December 31, 2024, respectively, and was excluded from the estimate of credit losses.

For both the three months ended September 30, 2025 and September 30, 2024, there were no modified loans to borrowers experiencing financial difficulty. For the nine months ended September 30, 2025, the Company modified one commercial real estate (“CRE”), nonowner occupied loan, with an outstanding balance of $8.6 million, for a borrower experiencing financial difficulty by granting a 3-year extension of the loan at a below market rate. For the nine months ended September 30, 2024, there were no modified loans to borrowers experiencing financial difficulty.

Note 5: Goodwill and Other Intangible Assets

Goodwill was $12.0 million at September 30, 2025 and December 31, 2024. Goodwill is not amortized but is subject to, at a minimum, an annual test for impairment. Other intangible assets consist of core deposit relationships and favorable lease terms.

The following table presents a summary of other intangible assets at September 30, 2025 and December 31, 2024:


	September 30,		December 31,
(dollars in thousands)	2025		2024
Core Deposit Intangible	$	8,833	$	8,833
Favorable Lease		445		445
Subtotal		9,278		9,278
Accumulated Amortization		(2,118)		(1,428)
Totals	$	7,160	$	7,850

Amortization expense of other intangible assets was $230,000 for the three months ended September 30, 2025 and $9,000 for the three months ended September 30, 2024. Amortization expense of other intangible assets was $690,000 for the nine months ended September 30, 2025 and $26,000 for the nine months ended September 30, 2024. The core deposit intangible asset is amortized over its estimated useful life of ten years.

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The following table presents the estimated future amortization of the core deposit intangible and favorable lease assets for the next five years and thereafter. The projections of amortization expense are based on existing asset balances as of September 30, 2025.


	Core Deposit		Favorable
(dollars in thousands)	Intangible		Lease
2025	$	221	$	9
2026		871		34
2027		852		34
2028		830		34
2029		803		18
2030		773		—
Thereafter		2,681		—
Totals	$	7,031	$	129

Note 6: Deposits

The following table presents the composition of deposits at September 30, 2025 and December 31, 2024:


	September 30,		December 31,
(dollars in thousands)	2025		2024
Transaction Deposits	$	1,683,406	$	1,663,005
Savings and Money Market Deposits		1,428,726		1,259,503
Time Deposits		346,214		338,506
Brokered Deposits		834,418		825,753
Totals	$	4,292,764	$	4,086,767

Brokered deposits included brokered transaction and money market accounts of $149.4 million and $127.4 million as of September 30, 2025 and December 31, 2024, respectively.

The following table presents the scheduled maturities of brokered and time deposits at September 30, 2025:


	September 30,
(dollars in thousands)	2025
Less than 1 Year	$	663,327
1 to 2 Years		118,836
2 to 3 Years		79,134
3 to 4 Years		72,237
4 to 5 Years		97,733
Totals	$	1,031,267

The aggregate amount of time deposits greater than $250,000 was approximately $179.8 million and $155.0 million at September 30, 2025 and December 31, 2024, respectively.

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Note 7: Derivative Instruments and Hedging Activities

The Company uses derivative financial instruments, which consist of interest rate swaps, interest rate caps, and fair value swaps to assist in its interest rate risk management. The notional amount does not represent amounts exchanged by the parties. The amount exchanged is determined by reference to the notional amount and the other terms of the individual agreements. Derivative financial instruments are reported at fair value in other assets or other liabilities. The accounting for changes in the fair value of a derivative depends on whether it has been designated and qualifies as part of a hedging relationship and classification as either a cash flow hedge or fair value hedge for those derivatives which are designated as part of a hedging relationship. For derivatives not designated as hedges, the gain or loss is recognized in current earnings.

Non-hedge Derivatives

The Company enters into interest rate swaps to facilitate client transactions and meet their financing needs. Upon entering into these instruments to meet client needs, the Company enters into offsetting positions with large U.S. financial institutions in order to minimize the risk to the Company. These swaps are derivatives, but are not designated as hedging instruments.

Interest rate swap contracts involve the risk of dealing with counterparties and their ability to meet contractual terms. When the fair value of a derivative instrument contract is positive, this generally indicates that the counterparty or client owes the Company, and results in credit risk to the Company. When the fair value of a derivative instrument contract is negative, the Company owes the client or counterparty and therefore, the Company has no credit risk.

The following table presents a summary of the Company’s interest rate swaps to facilitate customer transactions as of September 30, 2025 and December 31, 2024:


	September 30, 2025				December 31, 2024
	Notional		Estimated		Notional		Estimated
(dollars in thousands)	Amount		Fair Value		Amount		Fair Value
Interest rate swap agreements:
Assets	$	170,837	$	8,549	$	115,577	$	8,210
Liabilities		170,837		(8,549)		115,577		(8,210)
Total	$	341,674	$	—	$	231,154	$	—

The Company has entered into a risk participation agreement (“RPA”) to share credit exposure with a counterparty related to an interest rate swap agreement associated with a loan participation. Under the RPA, the Company sold a portion of its credit exposure, receiving an up-front fee, and will be required to make a payment if the loan client defaults on its obligations. The notional amount of the RPA reflects the Company’s pro-rata share of the derivative instrument consistent with its share of the related participated loan.

The following table presents a summary of the Company’s RPA as of September 30, 2025 and December 31, 2024:


		September 30, 2025						December 31, 2024
	Location of	Notional		Fair Value				Notional		Fair Value
(dollars in thousands)	Gain (Loss)	Amount		Assets		Liabilities		Amount		Assets		Liabilities
Risk Participation Agreement	Other Income	$	9,944	$	—	$	17	$	—	$	—	$	—

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Any gain or loss related to changes in the fair value of the RPA is recorded to earnings. For the three months ended September 30, 2025, the total net gain recorded to earnings was $2,000. For the nine months ended September, 30, 2025, the total net loss recorded to earnings was $17,000. There was no gain or loss recorded to earnings for the three and nine months ended September 30, 2024

Cash Flow Hedging Derivatives

For derivative instruments that are designated and qualify as a cash flow hedge, the aggregate fair value of the derivative instrument is recorded in other assets or other liabilities with any gain or loss related to changes in fair value recorded in accumulated other comprehensive income, net of tax. The gain or loss is reclassified into earnings in the same period during which the hedged asset or liability affects earnings and is presented in the same income statement line item as the earnings effect of the hedged asset or liability. The Company utilizes cash flow hedges to manage interest rate exposure for the brokered deposit and wholesale borrowing portfolios. During the next 12 months, the Company estimates that $3.7 million will be reclassified to interest expense, as a reduction of the expense.

The following table presents a summary of the Company’s interest rate swaps designated as cash flow hedges as of September 30, 2025 and December 31, 2024:


(dollars in thousands)	September 30, 2025			December 31, 2024
Notional Amount	$	183,000		$	178,000
Weighted Average Pay Rate		2.87	%		2.20	%
Weighted Average Receive Rate		4.30	%		4.80	%
Weighted Average Maturity (Years)		4.42			4.02
Net Unrealized Gain	$	636		$	5,139

The Company purchases interest rate caps, designated as cash flow hedges, of certain liabilities. The interest rate caps require receipt of variable amounts from the counterparties when interest rates rise above the strike price in the contracts. For the three and nine months ended September 30, 2025, the Company recognized amortization expense on the interest rate caps of $200,000 and $593,000, respectively, which was recorded as a component of interest expense on FHLB advances. For the three and nine months ended September 30, 2024, the Company recognized amortization expense on the interest rate caps of $204,000 and $600,000, respectively, which was recorded as a component of interest expense on brokered deposits and FHLB advances.

The following table presents a summary of the Company’s interest rate caps designated as cash flow hedges as of September 30, 2025 and December 31, 2024:


(dollars in thousands)	September 30, 2025			December 31, 2024
Notional Amount	$	125,000		$	125,000
Unamortized Premium Paid		3,688			4,281
Weighted Average Strike Rate		0.96	%		0.96	%
Weighted Average Maturity (Years)		4.59			5.34

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The following table presents the effect of derivative instruments in cash flow hedging relationships on the consolidated statements of income for the three and nine months ended September 30, 2025 and 2024:

Three Months Ended September 30,

Nine Months Ended September 30,

(dollars in thousands)

2025

2024

2025

2024

Derivatives in

Location of Gain

Gain

Cash Flow Hedging

Reclassified

Reclassified from

Relationships

from AOCI into Income

AOCI into Earnings

Interest rate swaps

Interest expense

683

1,478

2,318

4,549

Interest rate caps

Interest expense

917

1,048

2,731

2,609

No amounts were reclassified from accumulated other comprehensive income into net income related to hedge ineffectiveness for these derivatives during the three and nine months ended September 30, 2025 and 2024, and no amounts are expected to be reclassified from accumulated other comprehensive income into net income related to hedge ineffectiveness over the next twelve months.

Fair Value Hedging Derivatives

For derivative instruments that are designated and qualify as a fair value hedge, the gain or loss on the derivative instrument as well as the offsetting gain or loss on the hedged asset or liability attributable to the hedged risk are recognized in current earnings. The gain or loss on the derivative instrument is presented on the same income statement line item as the earnings effect of the hedged item. The Company utilizes fair value hedges to mitigate the effect of changing interest rates on the fair values of fixed rate available for sale securities. The hedging strategy converts the fixed interest rates to variable interest rates based on Secured Overnight Financing Rate (“SOFR”).

The following table presents a summary of the Company’s interest rate swaps designated as fair value hedges as of September 30, 2025 and December 31, 2024:


(dollars in thousands)	September 30, 2025			December 31, 2024
Notional Amount	$	243,569		$	145,850
Weighted Average Pay Rate		3.56	%		3.52	%
Weighted Average Receive Rate		4.32			4.82
Weighted Average Maturity (Years)		14.79			19.47

The effects of the Company’s fair value hedge relationships on the income statement during the three and nine months ended September 30, 2025 and 2024 were as follows:


		Amount of Gain (Loss) Recognized in Income
(dollars in thousands)		Three Months Ended September 30,				Nine Months Ended September 30,
Securities	Location of Gain (Loss)	2025		2024		2025		2024
Interest Rate Swaps	Interest Income	$	(202)		(893)	$	(3,734)		(893)
Securities Available for Sale	Interest Income		202		893		3,734		893

The following table presents amounts that were recorded on the balance sheet related to cumulative basis adjustments for fair value hedges at September 30, 2025 and December 31, 2024:

Cumulative Amount of Fair Value Hedging Adjustment

Included in the Carrying Amount of the Hedged

(dollars in thousands)

Carrying Amount of The Hedged Assets/Liabilities

Assets/Liabilities

Line Item on the Balance Sheet

September 30, 2025

December 31, 2024

September 30, 2025

December 31, 2024

Securities Available for Sale

250,347

156,337

6,778

10,487

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The following table presents a summary of the Company’s interest rate contracts as of September 30, 2025 and December 31, 2024:


	September 30, 2025				December 31, 2024
	Notional		Estimated		Notional		Estimated
(dollars in thousands)	Amount		Fair Value		Amount		Fair Value
Interest Rate Swap Agreements - Borrowings:
Assets	$	45,000	$	1,914	$	178,000	$	5,139
Liabilities		138,000		(1,278)		—		—
Interest Rate Swap Agreements - Securities:
Assets		145,850		7,546		145,850		10,487
Liabilities		97,719		(768)		—		—
Interest Rate Cap Agreements:
Assets		125,000		13,643		125,000		19,319

The Company is party to collateral support agreements with certain derivative counterparties. These agreements require that the Company maintain collateral based on the fair values of derivative transactions. In the event of default by the Company, the counterparty would be entitled to the collateral. As of September 30, 2025 and December 31, 2024, the Company had pledged no cash collateral for the Company’s derivative contracts. As of September 30, 2025 and December 31, 2024, the Company’s counterparties had pledged cash collateral to the Company of $25.2 million and $44.2 million, respectively.

The following table summarizes gross and net information about derivative instruments that are eligible for offset in the balance sheet at September 30, 2025 and December 31, 2024:


							Gross Amounts Not Offset in the Balance Sheet
					Net Amounts of
	Gross Amounts		Gross Amounts		Assets (Liabilities)
	of Recognized		Offset in the		Presented in the		Financial		Cash Collateral		Net Assets
(dollars in thousands)	Assets (Liabilities)		Balance Sheet		Balance Sheet		Instruments		Received		(Liabilities)
September 30, 2025
Assets	$	31,652	$	—	$	31,652	$	—	$	25,243	$	6,409
Liabilities		(10,595)		—		(10,595)		—		—		(10,595)

December 31, 2024
Assets	$	43,155	$	—	$	43,155	$	—	$	44,233	$	(1,078)
Liabilities		(8,210)		—		(8,210)		—		—		(8,210)

Note 8: Federal Home Loan Bank Advances and Other Borrowings

Federal Home Loan Bank Advances. The Company has entered into an Advances, Pledge, and Security Agreement with the FHLB whereby specific mortgage loans of the Bank with aggregate principal balances of $1.64 billion and $1.54 billion at September 30, 2025 and December 31, 2024, respectively, were pledged to the FHLB as collateral. FHLB advances are also secured with FHLB stock owned by the Company. Total remaining available capacity under the agreement was $493.6 million and $483.2 million at September 30, 2025 and December 31, 2024, respectively.

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The following table presents information regarding FHLB advances, by maturity, at September 30, 2025 and December 31, 2024:


	September 30, 2025				December 31, 2024
	Weighted				Weighted
	Average		Total		Average		Total
(dollars in thousands)	Rate		Outstanding		Rate		Outstanding
Less than 1 Year	4.36	%	$	320,500	4.62	%	$	288,000
1 to 2 Years	3.71			31,500	3.45			21,500
2 to 3 Years	4.02			30,000	4.13			27,500
3 to 4 Years	4.10			15,000	4.01			22,500
4 to 5 Years	4.09			7,500	—			—
Totals			$	404,500			$	359,500

Line of Credit. The Company has a Loan and Security Agreement and related revolving note with an unaffiliated financial institution that is secured by 100% of the issued and outstanding stock of the Bank. The note contains customary representations, warranties, and covenants, including certain financial covenants and capital ratio requirements. The Company believes it was in compliance with all covenants as of September 30, 2025 and December 31, 2024.

The following table presents information regarding the revolving line of credit at September 30, 2025 and December 31, 2024:

Total Debt

Outstanding

Interest

Name

Maturity Date

September 30, 2025

December 31, 2024

Rate

Coupon Structure

(dollars in thousands)

Revolving Credit Facility

September 1, 2026

—

13,750

7.50

Variable with Floor ⁽¹⁾

(1)	The variable interest rate is equal to the greater of Wall Street Journal Prime Rate in effect or a floor of 4.50%.

Note 9: Subordinated Debentures

On June 24, 2025, the Company issued $80.0 million of Fixed-to-Floating Rate Subordinated Notes due June 30, 2035. The Notes bear a fixed interest rate of 7.625% from June 24, 2025 to but excluding June 30, 2030, with interest during this period payable semi-annually in arrears. From June 30, 2030 to the stated maturity date or earlier redemption date, the interest rate converts to a variable rate equal to the then current three-month term SOFR, plus 388 basis points, which is payable quarterly. The Company used the net proceeds it received from the sale of the Notes to redeem $50 million of outstanding 5.25% Fixed-to-Floating Rate Subordinated Notes due 2030 and for general corporate purposes. The transaction resulted in debt issuance costs of approximately $1.3 million that is being amortized over 10 years.

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The following table presents a summary of the Company’s subordinated debentures as of September 30, 2025 and December 31, 2024:

Total Debt

Date

First

Maturity

Outstanding

Interest

Name

Established

Redemption Date

Date

September 30, 2025

December 31, 2024

Rate

Coupon Structure

(dollars in thousands)

2030 Notes

June 19, 2020

July 1, 2025

July 1, 2030

—

50,000

5.25

Fixed-to-Floating⁽¹⁾

2031 Notes

July 8, 2021

July 15, 2026

July 15, 2031

30,000

3.25

Fixed-to-Floating⁽²⁾

2035 Notes

June 24, 2025

June 30, 2030

June 30, 2035

80,000

—

7.625

Fixed-to-Floating⁽³⁾

Subordinated Debentures

110,000

80,000

Debt Issuance Costs

(1,412)

(330)

Subordinated Debentures, Net of Issuance Costs

108,588

79,670

(1)	Notes fully redeemed as of June 30, 2025.

(2)	Migrates to three month term SOFR + 2.52% beginning July 15, 2026 until either the maturity date or earlier redemption date.

(3)	Migrates to three month term SOFR + 3.88% beginning June 30, 2030 until either the maturity date or earlier redemption date.

Note 10: Commitments, Contingencies and Credit Risk

Financial Instruments with Off-Balance Sheet Credit Risk

The Company is a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its customers. These instruments involve, to varying degrees, elements of credit risk in excess of the amount recognized in the consolidated balance sheets.

The Company’s exposure to credit loss is represented by the contractual, or notional, amount of these commitments. The Company follows the same credit policies in making commitments as it does for on-balance sheet instruments. Since some of the commitments are expected to expire without being drawn upon and some of the commitments may not be drawn upon to the total extent of the commitment, the notional amount of these commitments does not necessarily represent future cash requirements.

The following table presents information regarding commitments outstanding at September 30, 2025 and December 31, 2024:


	September 30,		December 31,
(dollars in thousands)	2025		2024
Unfunded Commitments Under Lines of Credit	$	794,788	$	679,064
Letters of Credit		133,538		124,397
Totals	$	928,326	$	803,461

The Company had outstanding letters of credit with the FHLB of $135.4 million and $103.2 million at September 30, 2025 and December 31, 2024, respectively, on behalf of customers and to secure public deposits.

The ACL for off-balance sheet credit exposures was $3.8 million and $3.6 million at September 30, 2025 and December 31, 2024, respectively, and is separately classified on the balance sheet within other liabilities.

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The following table presents the balance and activity in the ACL for off-balance sheet credit exposures for the three and nine months ended September 30, 2025 and 2024:


		Three Months Ended				Nine Months Ended
		September 30,				September 30,
(dollars in thousands)		2025		2024		2025		2024
Allowance for Credit Losses:
Beginning Balance	$	3,610	$	2,885	$	3,610	$	2,985
Provision for (Recovery of) Off-Balance Sheet Credit Exposures		200		—		200		(100)
Total Ending Balance	$	3,810	$	2,885	$	3,810	$	2,885

Legal Contingencies

Neither the Company nor any of its subsidiaries is a party, and no property of these entities is subject, to any material pending legal proceedings, other than ordinary routine litigation incidental to the Bank’s business. The Company does not know of any material proceeding contemplated by a governmental authority against the Company or any of its subsidiaries.

Note 11: Stock Options and Restricted Stock

In 2012, the Company adopted the Bridgewater Bancshares, Inc. 2012 Combined Incentive and Non-Statutory Stock Option Plan (the “2012 Plan”) under which the Company was able to grant options to its directors, officers, and employees for up to 750,000 shares of common stock. Both incentive stock options and nonqualified stock options were granted under the 2012 Plan. The exercise price of each option equals the fair market value of the Company’s stock on the date of grant, and the maximum term of each outstanding option is ten years. All outstanding options have been granted with vesting periods of four or five years. The 2012 Plan expired in March 2022, and awards are no longer able to be granted under the 2012 Plan.

In 2017, the Company adopted the Bridgewater Bancshares, Inc. 2017 Combined Incentive and Non-Statutory Stock Option Plan (the “2017 Plan”). Under the 2017 Plan, the Company may grant options to its directors, officers, employees and consultants for up to 1,500,000 shares of common stock. Both incentive stock options and nonqualified stock options may be granted under the 2017 Plan. The exercise price of each option equals the fair market value of the Company’s stock on the date of grant and the maximum term of each outstanding option is ten years. All outstanding options have been granted with vesting periods of four or five years. As of September 30, 2025 and December 31, 2024, there were 10,000 and 30,000 shares, respectively, of the Company’s common stock reserved for future option grants under the 2017 Plan.

In 2019, the Company adopted the Bridgewater Bancshares, Inc. 2019 Equity Incentive Plan (the “2019 EIP”). The types of awards which may be granted under the 2019 EIP include incentive and nonqualified stock options, stock appreciation rights, stock awards, restricted stock units, restricted stock and cash incentive awards. The Company may grant these awards to its directors, officers, employees and certain other service providers for up to 1,000,000 shares of common stock. The exercise price of each option equals the fair market value of the Company’s stock on the date of grant and the maximum term of each award is ten years. All outstanding awards have been granted with a vesting period of four years. As of September 30, 2025 and December 31, 2024, there were 2,192 and 87 shares, respectively, of the Company’s common stock reserved for future grants under the 2019 EIP.

In 2023, the Company adopted the Bridgewater Bancshares, Inc. 2023 Equity Incentive Plan (the “2023 EIP”). Under the 2023 EIP, the Company may grant incentive and nonqualified stock options, stock appreciation rights, stock awards, restricted stock units, restricted stock and cash incentive awards. The Company may grant these awards to its directors, officers, employees and certain other service providers for up to 1,500,000 shares of common stock. The

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exercise price of each option equals the fair market value of the Company’s stock on the date of grant and the maximum term of each award is ten years. All outstanding awards have been granted with a vesting period of four years. As of September 30, 2025 and December 31, 2024, there were 661,403 and 972,460 shares, respectively, of the Company’s common stock reserved for future grants under the 2023 EIP.

Stock Options

The fair value of each option award is estimated on the date of grant using a closed form option valuation (Black-Scholes) model that uses the assumptions noted in the table below. Expected volatilities are based on an industry index as described below. The expected term of options granted is based on historical data and represents the period of time that options granted are expected to be outstanding, which takes into account the fact that the options are not transferable. The risk-free interest rate for the expected term of the option is based on the U.S. Treasury yield curve in effect at the time of grant. Historically, the Company has not paid a dividend on its common stock and does not expect to do so in the near future.

The Company used the S&P 600 CM Bank Index as its historical volatility index. The S&P 600 CM Bank Index is an index of publicly traded small capitalization, regional, commercial banks located throughout the United States. There were 59 banks in the index ranging in market capitalization from $600 million up to $5.0 billion.

The weighted average assumptions used in the model for valuing stock options grants for the nine months ended September 30, 2025 are as follows:


	September 30,
	2025
Dividend Yield	—	%
Expected Life	7	Years
Expected Volatility	30.83	%
Risk-Free Interest Rate	4.42	%

The following table presents a summary of the status of the Company’s outstanding stock options for the nine months ended September 30, 2025:


	September 30, 2025
		Weighted
		Average
	Shares	Exercise Price
Outstanding at Beginning of Year	1,860,609	$	10.69
Granted	275,000		13.77
Exercised	(148,738)		8.39
Forfeitures	(16,500)		12.94
Outstanding at Period End	1,970,371	$	11.28

Options Exercisable at Period End	1,396,745	$	10.52

For the three months ended September 30, 2025 and 2024, the Company recognized compensation expense for stock options of $315,000 and $227,000, respectively. For the nine months ended September 30, 2025 and 2024, the Company recognized compensation expense for stock options of $893,000 and $712,000, respectively.

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The following table presents information pertaining to options outstanding at September 30, 2025:


		Options Outstanding				Options Exercisable
					Weighted Average
		Number of	Weighted Average		Remaining Contractual	Number of	Weighted Average
Range of Exercise Prices		Options	Exercise Price		Life in Years	Options	Exercise Price
$	7.00 - 7.99	714,438	$	7.47	2.0	714,438	$	7.47
	8.00 - 8.99	2,961		8.76	4.5	2,961		8.76
	10.00 - 10.99	204,250		10.62	7.7	96,499		10.59
	11.00 - 11.99	229,125		11.16	6.5	117,000		11.22
	12.00 - 12.99	249,097		12.91	3.8	249,097		12.91
	13.00 - 13.99	285,000		13.75	9.3	2,500		12.91
	17.00 - 17.99	285,500		17.50	6.3	214,250		17.50
	Totals	1,970,371	$	11.28	5.0	1,396,745	$	10.52

As of September 30, 2025, there was $2.4 million of total unrecognized compensation cost related to nonvested stock options that is expected to be recognized over a weighted-average period of 2.3 years.

The following table presents an analysis of nonvested options to purchase shares of the Company’s stock issued and outstanding for the nine months ended September 30, 2025:


		Weighted
	Number of	Average Grant
	Shares	Date Fair Value
Nonvested Options at December 31, 2024	437,501	$	5.18
Granted	275,000		5.83
Vested	(129,000)		5.33
Forfeited	(9,875)		4.85
Nonvested Options at September 30, 2025	573,626	$	5.46

Restricted Stock Awards

There was no restricted stock award activity for the nine months ended September 30, 2025. Compensation expense associated with restricted stock awards is recognized on a straight-line basis over the period that the restrictions associated with the awards lapse based on the total cost of the award at the grant date. For the three months ended September 30, 2025 and 2024, the Company recognized compensation expense associated with restricted stock awards of $-0- and $2,000, respectively. For the nine months ended September 30, 2025 and 2024, the Company recognized compensation expense associated with restricted stock awards of $-0- and $12,000, respectively.

In addition, during the nine months ended September 30, 2025, the Company issued 23,495 shares of unrestricted common stock to non-employee directors as a part of their compensation for their annual services on the Company’s board of directors. The aggregate value of the shares issued to non-employee directors of $369,000 was included in stock based compensation expense in the accompanying consolidated statements of shareholders’ equity.

Restricted Stock Units

The Company has granted restricted stock units out of the 2019 EIP and 2023 EIP. Restricted stock units represent the right to receive one share of Company stock upon vesting and vest in equal annual installments on the first four anniversaries of the date of the grant. Nonvested restricted stock units have no voting or dividend rights and are not considered outstanding until vesting.

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The following table presents an analysis of nonvested restricted stock units outstanding for the nine months ended September 30, 2025:


		Weighted
	Number of	Average Grant
	Units	Date Fair Value
Nonvested at December 31, 2024	415,758	$	14.46
Granted	55,355		13.78
Vested	(38,962)		14.12
Forfeited	(8,398)		14.39
Nonvested at September 30, 2025	423,753	$	14.40

Compensation expense associated with the restricted stock units is recognized on a straight-line basis over the period that the restrictions associated with the units lapse based on the total cost of the unit at the grant date. For the three months ended September 30, 2025 and 2024, the Company recognized compensation expense associated with restricted stock units of $629,000 and $574,000, respectively. For both the nine months ended September 30, 2025 and 2024, the Company recognized compensation expense associated with restricted stock units of $1.9 million.

As of September 30, 2025, there was $4.2 million of total unrecognized compensation cost related to nonvested restricted stock units granted under the 2019 EIP and 2023 EIP that is expected to be recognized over a weighted-average period of 2.3 years.

Note 12: Regulatory Capital

The Company and the Bank are subject to various regulatory requirements administered by federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Company’s financial statements. Under capital adequacy guidelines, the Company and the Bank must meet specific capital guidelines that involve quantitative measures of their assets, liabilities and certain off-balance sheet items as calculated under regulatory accounting practices. The Bank must also meet certain specific capital guidelines under the regulatory framework for prompt corrective action. The capital amounts and classifications are also subject to qualitative judgments by the regulators about components, risk weightings and other factors.

Quantitative measures established by regulation to ensure capital adequacy require the Company and Bank to maintain minimum amounts and ratios of common equity Tier 1 capital, Tier 1 capital and total capital to risk-weighted assets and of Tier 1 capital to average consolidated assets (referred to as the “leverage ratio”), as defined under the applicable regulatory capital rules.

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The following tables present the capital amounts and ratios for the Company, on a consolidated basis, and the Bank as of September 30, 2025 and December 31, 2024:


					Minimum Required				For Capital Adequacy				To be Well Capitalized
					For Capital Adequacy				Purposes Plus Capital				Under Prompt Corrective
	Actual				Purposes				Conservation Buffer				Action Regulations
(dollars in thousands)	Amount		Ratio		Amount		Ratio		Amount		Ratio		Amount		Ratio
September 30, 2025
Company (Consolidated):
Total Risk-based Capital	$	652,426	14.12	%	$	369,556	8.00	%	$	485,042	10.50	%		N/A	N/A
Tier 1 Risk-based Capital		486,065	10.52			277,167	6.00			392,653	8.50			N/A	N/A
Common Equity Tier 1 Capital		419,551	9.08			207,875	4.50			323,361	7.00			N/A	N/A
Tier 1 Leverage Ratio		486,065	9.02			215,446	4.00			215,446	4.00			N/A	N/A
Bank:
Total Risk-based Capital	$	619,058	13.43	%	$	368,824	8.00	%	$	484,082	10.50	%	$	461,030	10.00	%
Tier 1 Risk-based Capital		561,397	12.18			276,618	6.00			391,876	8.50			368,824	8.00
Common Equity Tier 1 Capital		561,397	12.18			207,464	4.50			322,721	7.00			299,670	6.50
Tier 1 Leverage Ratio		561,397	10.43			215,230	4.00			215,230	4.00			269,037	5.00


					Minimum Required				For Capital Adequacy				To be Well Capitalized
					For Capital Adequacy				Purposes Plus Capital				Under Prompt Corrective
	Actual				Purposes				Conservation Buffer				Action Regulations
(dollars in thousands)	Amount		Ratio		Amount		Ratio		Amount		Ratio		Amount		Ratio
December 31, 2024
Company (Consolidated):
Total Risk-based Capital	$	585,966	13.76	%	$	340,581	8.00	%	$	447,013	10.50	%		N/A	N/A
Tier 1 Risk-based Capital		453,049	10.64			255,436	6.00			361,867	8.50			N/A	N/A
Common Equity Tier 1 Capital		386,535	9.08			191,577	4.50			298,008	7.00			N/A	N/A
Tier 1 Leverage Ratio		453,049	9.44			191,878	4.00			191,878	4.00			N/A	N/A
Bank:
Total Risk-based Capital	$	573,158	13.49	%	$	340,003	8.00	%	$	446,254	10.50	%	$	425,004	10.00	%
Tier 1 Risk-based Capital		520,000	12.24			255,002	6.00			361,253	8.50			340,003	8.00
Common Equity Tier 1 Capital		520,000	12.24			191,252	4.50			297,503	7.00			276,253	6.50
Tier 1 Leverage Ratio		520,000	10.86			191,593	4.00			191,593	4.00			239,491	5.00

The Company and the Bank must maintain a capital conservation buffer, as defined by regulatory guidelines, in order to avoid limitations on capital distributions, including dividend payments, stock repurchases and certain discretionary bonus payments to executive officers.

Note 13: Fair Value Measurement

The Company categorizes its assets and liabilities measured at fair value into a three-level hierarchy based on the priority of the inputs to the valuation technique used to determine fair value. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). If the inputs used in the determination of the fair value measurement fall within different levels of the hierarchy, the categorization is based on the lowest level input that is significant to the fair value measurement. Assets and liabilities valued at fair value are categorized based on the inputs to the valuation techniques as follows:

Level 1 – Inputs that utilized quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access.

Level 2 – Inputs that include quoted prices for similar assets and liabilities in active markets and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instruments. Fair values for these instruments are estimated using pricing models, quoted prices of securities with similar characteristics, or discounted cash flows.

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Level 3 – Inputs that are unobservable for the asset or liability, which are typically based on an entity’s own assumptions, as there is little, if any, related market activity.

Subsequent to initial recognition, the Company may re-measure the carrying value of assets and liabilities measured on a nonrecurring basis to fair value. Adjustments to fair value usually result when certain assets are impaired. Such assets are written down from their carrying amounts to their fair value.

Professional standards allow entities the irrevocable option to elect to measure certain financial instruments and other items at fair value for the initial and subsequent measurement on an instrument-by-instrument basis. The Company adopted the policy to value certain financial instruments at fair value. The Company has not elected to measure any existing financial instruments at fair value; however, it may elect to measure newly acquired financial instruments at fair value in the future.

Recurring Basis

The Company uses fair value measurements to record fair value adjustments to certain assets and liabilities and to determine fair value disclosures. There have been no changes in methodologies used as of September 30, 2025. The following tables present the balances of assets and liabilities measured at fair value on a recurring basis as of September 30, 2025 and December 31, 2024:


	September 30, 2025
(dollars in thousands)	Level 1		Level 2		Level 3		Total
Fair Value of Financial Assets:
Securities Available for Sale:
U.S. Treasury Securities	$	147,199	$	—	$	—	$	147,199
Municipal Bonds		—		240,547		—		240,547
Mortgage-Backed Securities		—		259,149		—		259,149
Corporate Securities		—		107,983		—		107,983
U.S. Government Agency Securities		—		9,835		—		9,835
Asset-Backed Securities		—		61,760		—		61,760
Fair Value Swaps		—		7,546		—		7,546
Interest Rate Caps		—		13,643		—		13,643
Interest Rate Swaps		—		10,463		—		10,463
Total Fair Value of Financial Assets	$	147,199	$	710,926	$	—	$	858,125
Fair Value of Financial Liabilities:
Fair Value Swaps	$	—	$	768	$	—	$	768
Interest Rate Swaps		—		9,827		—		9,827
Risk Participation Agreement		—		—		17		17
Total Fair Value of Financial Liabilities	$	—	$	10,595	$	17	$	10,612

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	December 31, 2024
(dollars in thousands)	Level 1		Level 2		Level 3		Total
Fair Value of Financial Assets:
Securities Available for Sale:
U.S. Treasury Securities	$	167,748	$	—	$	—	$	167,748
Municipal Bonds		—		122,265		—		122,265
Mortgage-Backed Securities		—		244,890		—		244,890
Corporate Securities		—		134,186		—		134,186
U.S. Government Agency Securities		—		22,082		—		22,082
Asset-Backed Securities		—		77,076		—		77,076
Fair Value Swaps		—		10,487		—		10,487
Interest Rate Caps		—		19,319		—		19,319
Interest Rate Swaps		—		13,349		—		13,349
Total Fair Value of Financial Assets	$	167,748	$	643,654	$	—	$	811,402
Fair Value of Financial Liabilities:
Interest Rate Swaps	$	—	$	8,210	$	—	$	8,210
Total Fair Value of Financial Liabilities	$	—	$	8,210	$	—	$	8,210

Investment Securities

When available, the Company uses quoted market prices to determine the fair value of investment securities; such items are classified in Level 1 of the fair value hierarchy.

For the Company’s investments, when quoted prices are not available for identical securities in an active market, the Company determines fair value utilizing vendors who apply matrix pricing for similar bonds where no price is observable or may compile prices from various sources. These models are primarily industry-standard models that consider various assumptions, including time value, yield curve, volatility factors, prepayment speeds, default rates, loss severity, current market, and contractual prices for the underlying financial instruments, as well as other relevant economic measures. Substantially, all of these assumptions are observable in the marketplace and can be derived from observable data or are supported by observable levels at which transactions are executed in the marketplace. Fair values from these models are verified, where possible, against quoted market prices for recent trading activity of assets with similar characteristics to the security being valued. Such methods are generally classified as Level 2. However, when prices from independent sources vary, or cannot be obtained or corroborated, a security is generally classified as Level 3.

Fair Value Swaps

Fair value swaps are traded in over-the-counter markets where quoted market prices are not readily available. For such fair value swaps, fair value is determined using internally developed models of a third party that uses primarily market observable inputs, such as yield curves and option volatilities, and accordingly are valued using Level 2 inputs.

Interest Rate Caps

The fair value of the caps is calculated by determining the total expected asset or liability exposure of the derivatives. Total expected exposure incorporates both the current and potential future exposure of the derivative, derived from using observable inputs, such as yield curves and volatilities, and accordingly are valued using Level 2 inputs.

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Interest Rate Swaps

Interest rate swaps are traded in over-the-counter markets where quoted market prices are not readily available. For those interest rate swaps, fair value is determined using internally developed models of a third party that uses primarily market observable inputs, such as yield curves and option volatilities, and accordingly are valued using Level 2 inputs.

Risk Participation Agreements

The fair value of risk participation agreements is calculated by determining the total expected asset or liability exposure using observable inputs, such as yield curves and volatilities, of the derivative to the borrower and applying an unobservable credit default probability to that exposure, and accordingly are valued using level 3 inputs.

Nonrecurring Basis

Certain assets are measured at fair value on a nonrecurring basis. These assets are not measured at fair value on an ongoing basis; however, they are subject to fair value adjustments in certain circumstances, such as when there is evidence of impairment or a change in the amount of previously recognized impairment.

The following tables present net credit losses related to nonrecurring fair value measurements of certain assets at September 30, 2025 and December 31, 2024:


	September 30, 2025
(dollars in thousands)	Level 1		Level 2		Level 3		Loss
Individually Evaluated Loans	$	—	$	—	$	16,222	$	4,457
Totals	$	—	$	—	$	16,222	$	4,457


	December 31, 2024
(dollars in thousands)	Level 1		Level 2		Level 3		Loss
Individually Evaluated Loans	$	—	$	—	$	91	$	44
Totals	$	—	$	—	$	91	$	44

Individually Evaluated Loans

The Company records certain loans at fair value on a non-recurring basis. Individually evaluated loans for which an allowance is established, or a write-down has occurred during the period, based on the fair value of collateral require classification in the fair value hierarchy. The fair value of the loan’s collateral is determined by appraisals, independent valuation and other techniques. When the fair value of the loan’s collateral is based on an observable market price the Company classifies the fair value of the individually evaluated loans within Level 2 of the valuation hierarchy. For loans in which the valuation has unobservable inputs, the Company classifies these within the Level 3 of the valuation hierarchy. As of September 30, 2025, collateral values were estimated using a combination of observable inputs, including recent appraisals, and unobservable inputs, including internally determined values based on cost adjusted for depreciation and customized discounting criteria on appraisals which ranged from 4-25%. Due to the significance of unobservable inputs, fair values of individually evaluated loans have been classified as Level 3.

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Fair Value

Disclosure of fair value information about financial instruments, for which it is practicable to estimate that value, is required whether or not recognized in the consolidated balance sheets. In cases where quoted market prices are not available, fair values are based on estimates using present value of cash flow or other valuation techniques. Those techniques are significantly affected by the assumptions used, including the discount rate and estimate of future cash flows. In that regard, the derived fair value estimates cannot be substantiated by comparison to independent markets and, in many cases could not be realized in immediate settlement of the instruments. Certain financial instruments with a fair value that is not practicable to estimate and all non-financial instruments are excluded from the disclosure requirements. Accordingly, the aggregate fair value amounts presented do not necessarily represent the underlying value of the Company.

Fair value estimates are made at a specific point in time based on relevant market information and information about the financial instrument. These estimates do not reflect any premium or discount that could result from offering for sale at one time the Company’s entire holdings of a particular instrument. Because no market exists for a significant portion of the Company’s financial instruments, fair value estimates are based on judgments regarding future expected loss experience, current economic conditions, risk characteristics of various financial instruments, and other factors. These estimates are subjective in nature and involve uncertainties and matters that could affect the estimates. Fair value estimates are based on existing on and off-balance sheet financial instruments without attempting to estimate the value of anticipated future business. Deposits with no stated maturities are defined as having a fair value equivalent to the amount payable on demand. This prohibits adjusting fair value derived from retaining those deposits for an expected future period of time. This component, commonly referred to as a deposit base intangible, is neither considered in the above amounts nor is it recorded as an intangible asset on the balance sheet. In addition, the tax ramifications related to the realization of the unrealized gains and losses can have a significant effect on fair value estimates and have not been considered in the estimates.

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The following tables present the carrying amounts and estimated fair values of financial instruments at September 30, 2025 and December 31, 2024:


	September 30, 2025
			Fair Value Hierarchy
	Carrying								Estimated
(dollars in thousands)	Amount		Level 1		Level 2		Level 3		Fair Value
Financial Assets:
Cash and Due From Banks	$	131,818	$	131,818	$	—	$	—	$	131,818
Bank-Owned Certificates of Deposit		3,658		—		3,675		—		3,675
Securities Available for Sale		826,473		147,199		679,274		—		826,473
FHLB Stock, at Cost		21,373		—		21,373		—		21,373
Loans, Net		4,149,882		—		4,069,195		16,222		4,085,417
Accrued Interest Receivable		19,244		—		19,244		—		19,244
Fair Value Swaps		7,546		—		7,546		—		7,546
Interest Rate Caps		13,643		—		13,643		—		13,643
Interest Rate Swaps		10,463		—		10,463		—		10,463

Financial Liabilities:
Deposits	$	4,292,764	$	—	$	4,295,375	$	—	$	4,295,375
FHLB Advances		404,500		—		404,710		—		404,710
Subordinated Debentures		108,588		—		104,304		—		104,304
Accrued Interest Payable		5,208		—		5,208		—		5,208
Fair Value Swaps		768		—		768		—		768
Interest Rate Swaps		9,827		—		9,827		—		9,827
Risk Participation Agreement		17		—		—		17		17


	December 31, 2024
			Fair Value Hierarchy
	Carrying								Estimated
(dollars in thousands)	Amount		Level 1		Level 2		Level 3		Fair Value
Financial Assets:
Cash and Due From Banks	$	229,760	$	229,760	$	—	$	—	$	229,760
Bank-Owned Certificates of Deposit		4,377		—		4,370		—		4,370
Securities Available for Sale		768,247		167,748		600,499		—		768,247
FHLB Stock, at Cost		19,297		—		19,297		—		19,297
Loans, Net		3,809,436		—		3,709,775		91		3,709,866
Accrued Interest Receivable		17,711		—		17,711		—		17,711
Fair Value Swaps		10,487		—		10,487		—		10,487
Interest Rate Caps		19,319		—		19,319		—		19,319
Interest Rate Swaps		13,349		—		13,349		—		13,349

Financial Liabilities:
Deposits	$	4,086,767	$	—	$	4,131,298	$	—	$	4,131,298
Notes Payable		13,750		—		13,775		—		13,775
FHLB Advances		359,500		—		358,759		—		358,759
Subordinated Debentures		79,670		—		76,056		—		76,056
Accrued Interest Payable		4,008		—		4,008		—		4,008
Interest Rate Swaps		8,210		—		8,210		—		8,210

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The following methods and assumptions were used by the Company to estimate fair value of financial instruments not previously discussed.

Cash and due from banks – The carrying amount of cash and cash equivalents approximates their fair value.

Bank-owned certificates of deposit – Fair values of bank-owned certificates of deposit are estimated using the discounted cash flow analysis based on current rates for similar types of deposits.

FHLB stock – The carrying amount of FHLB stock approximates its fair value.

Loans, net – Fair values for loans are estimated based on discounted cash flows, using interest rates currently being offered for loans with similar terms to borrowers with similar credit quality.

Accrued interest receivable – The carrying amount of accrued interest receivable approximates its fair value since it is short term in nature and does not present anticipated credit concerns.

Deposits – The fair values disclosed for demand deposits without stated maturities (interest and noninterest transaction, savings, and money market accounts) are equal to the amount payable on demand at the reporting date (their carrying amounts). Fair values for the fixed-rate certificates of deposit are estimated using a discounted cash flow calculation that applies interest rates currently being offered on certificates to a schedule of aggregated expected monthly maturities on time deposits.

Notes payable and subordinated debentures – The fair values of the Company’s notes payable and subordinated debentures are estimated using a discounted cash flow analysis, based on the Company’s current incremental borrowing rate for similar types of borrowing arrangements.

FHLB advances – The fair values of the Company’s FHLB advances are estimated using discounted cash flow analysis based on the Company’s current incremental borrowing rates for similar types of borrowing agreements.

Accrued interest payable – The carrying amount of accrued interest payable approximates its fair value since it is short term in nature.

Off-balance sheet instruments – Fair values of the Company’s off-balance sheet instruments (lending commitments and unused lines of credit) are based on fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements, the counterparties’ credit standing and discounted cash flow analysis. The fair value of these off-balance sheet items approximates the recorded amounts of the related fees and was not material at September 30, 2025 and December 31, 2024.

Limitations – The fair value of a financial instrument is the current amount that would be exchanged between market participants, other than in a forced liquidation. Fair value is best determined based upon quoted market prices. However, in many instances, there are no quoted market prices for the Company’s various financial instruments. In cases where quoted market prices are not available, fair values are based on estimates using present value or other valuation techniques. Those techniques are significantly affected by the assumptions used, including the discount rate and estimates of future cash flows. Accordingly, the fair value estimates may not be realized in an immediate settlement of the instrument. Consequently, the aggregate fair value amounts presented may not necessarily represent the underlying fair value of the Company.

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Note 14: Accumulated Other Comprehensive Income

The following tables present the components of other comprehensive income for the three and nine months ended September 30, 2025 and 2024:


(dollars in thousands)	Before Tax		Tax Effect		Net of Tax
Three Months Ended September 30, 2025
Net Unrealized Gain on Available for Sale Securities	$	13,860	$	(3,984)	$	9,876
Less: Reclassification Adjustment for Net Gains Included in Net Income		(59)		17		(42)
Total Unrealized Gain		13,801		(3,967)		9,834

Net Unrealized Loss on Cash Flow Hedge		(41)		12		(29)
Less: Reclassification Adjustment for Gains Included in Net Income		(1,600)		460		(1,140)
Total Unrealized Loss		(1,641)		472		(1,169)

Other Comprehensive Income	$	12,160	$	(3,495)	$	8,665

Three Months Ended September 30, 2024
Net Unrealized Gain on Available for Sale Securities	$	14,738	$	(4,236)	$	10,502
Less: Reclassification Adjustment for Net Losses Included in Net Income		28		(8)		20
Total Unrealized Gain		14,766		(4,244)		10,522

Net Unrealized Loss on Cash Flow Hedge		(6,761)		1,943		(4,818)
Less: Reclassification Adjustment for Gains Included in Net Income		(2,526)		726		(1,800)
Total Unrealized Loss		(9,287)		2,669		(6,618)

Other Comprehensive Income	$	5,479	$	(1,575)	$	3,904


(dollars in thousands)	Before Tax		Tax Effect		Net of Tax
Nine Months Ended September 30, 2025
Net Unrealized Gain on Available for Sale Securities	$	21,068	$	(6,055)	$	15,013
Less: Reclassification Adjustment for Net Gains Included in Net Income		(534)		154		(380)
Total Unrealized Gain		20,534		(5,901)		14,633

Net Unrealized Loss on Cash Flow Hedge		(4,538)		1,304		(3,234)
Less: Reclassification Adjustment for Gains Included in Net Income		(5,049)		1,451		(3,598)
Total Unrealized Loss		(9,587)		2,755		(6,832)

Other Comprehensive Income	$	10,947	$	(3,146)	$	7,801

Nine Months Ended September 30, 2024
Net Unrealized Gain on Available for Sale Securities	$	16,141	$	(4,639)	$	11,502
Less: Reclassification Adjustment for Net Gains Included in Net Income		(385)		111		(274)
Total Unrealized Gain		15,756		(4,528)		11,228

Net Unrealized Gain on Cash Flow Hedge		987		(284)		703
Less: Reclassification Adjustment for Gains Included in Net Income		(7,158)		2,057		(5,101)
Total Unrealized Loss		(6,171)		1,773		(4,398)

Other Comprehensive Income	$	9,585	$	(2,755)	$	6,830

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The following tables present the changes in each component of accumulated other comprehensive income, net of tax, for the three and nine months ended September 30, 2025 and 2024:


					Accumulated
	Available For				Other Comprehensive
(dollars in thousands)	Sale Securities		Cash Flow Hedge		Income (Loss)
Three Months Ended September 30, 2025
Balance at Beginning of Period	$	(22,944)	$	8,716	$	(14,228)
Other Comprehensive (Loss) Before Reclassifications		9,876		(29)		9,847
Amounts Reclassified from Accumulated Other Comprehensive Income		(42)		(1,140)		(1,182)
Net Other Comprehensive Income (Loss) During Period		9,834		(1,169)		8,665
Balance at End of Period	$	(13,110)	$	7,547	$	(5,563)

Three Months Ended September 30, 2024
Balance at Beginning of Period	$	(31,014)	$	15,694	$	(15,320)
Other Comprehensive Income (Loss) Before Reclassifications		10,502		(4,818)		5,684
Amounts Reclassified from Accumulated Other Comprehensive Income		20		(1,800)		(1,780)
Net Other Comprehensive Income (Loss) During Period		10,522		(6,618)		3,904
Balance at End of Period	$	(20,492)	$	9,076	$	(11,416)


					Accumulated
	Available For				Other Comprehensive
(dollars in thousands)	Sale Securities		Cash Flow Hedge		Income (Loss)
Nine Months Ended September 30, 2025
Balance at Beginning of Period	$	(27,743)	$	14,379	$	(13,364)
Other Comprehensive Income (Loss) Before Reclassifications		15,013		(3,234)		11,779
Amounts Reclassified from Accumulated Other Comprehensive Income		(380)		(3,598)		(3,978)
Net Other Comprehensive Income (Loss) During Period		14,633		(6,832)		7,801
Balance at End of Period	$	(13,110)	$	7,547	$	(5,563)

Nine Months Ended September 30, 2024
Balance at Beginning of Period	$	(31,720)	$	13,474	$	(18,246)
Other Comprehensive Income Before Reclassifications		11,502		703		12,205
Amounts Reclassified from Accumulated Other Comprehensive Income		(274)		(5,101)		(5,375)
Net Other Comprehensive Income During Period		11,228		(4,398)		6,830
Balance at End of Period	$	(20,492)	$	9,076	$	(11,416)

Note 15: Subsequent Events

On October 21, 2025, the Company’s Board of Directors announced a quarterly cash dividend of $36.72 per share ($0.3672 per depositary share) on its 5.875% Non-Cumulative Perpetual Preferred Stock, Series A (“Series A Preferred Stock”), payable on December 1, 2025, to shareholders of record on the Series A Preferred Stock at the close of business on November 14, 2025.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

General

The following discussion explains the Company’s financial condition and results of operations as of and for the three and nine months ended September 30, 2025. Annualized results for these interim periods may not be indicative of results for the full year or future periods. The following discussion and analysis should be read in conjunction with the consolidated financial statements and related notes presented elsewhere in this report and the Company’s Annual Report on Form 10-K for the year ended December 31, 2024, filed with the Securities and Exchange Commission, or the SEC, on March 6, 2025.

Forward-Looking Statements

This Quarterly Report on Form 10-Q 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 changes in interest rates;

●

effects on the U.S. economy resulting from the threat or implementation of new, or changes to, existing policies, regulations, regulatory and governmental agencies and executive orders, including with respect to tariffs, immigration, DEI and ESG initiatives, consumer protection, foreign policy, and tax regulations;

●

fluctuations in the values of the securities held in our securities portfolio, including as the result of changes in interest rates;

●

business and economic conditions generally and in the financial services industry, nationally and within our market area, including the level and impact of inflation, including future monetary policies of the Federal Reserve in response thereto, and possible recession;

●

the effects of developments and events in the financial services industry, including the large-scale deposit withdrawals over a short period of time that resulted in several bank failures;

●

credit risk and risks from concentrations (by type of borrower, geographic area, collateral and industry) within the Company’s loan portfolio or large loans to certain borrowers (including CRE loans);

●

the overall health of the local and national real estate market;

●

our ability to successfully manage credit risk;

●

our ability to maintain an adequate level of allowance for credit losses on loans;

●

new or revised accounting standards as may be adopted by state and federal regulatory agencies, the Financial Accounting Standards Board, SEC or Public Company Accounting Oversight Board;

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●

the concentration of large deposits from certain clients, including those who have balances above current Federal Deposit Insurance Corporation (“FDIC”) insurance limits;

●

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;

●

the composition of our senior leadership team and our ability to attract and retain key personnel;

●

talent and labor shortages and employee turnover;

●

the occurrence of fraudulent activity, breaches or failures of our or our third-party vendors’ information security controls or cybersecurity-related incidents, including as a result of sophisticated attacks using artificial intelligence and similar tools or as a result of insider fraud;

●

interruptions involving our information technology and telecommunications systems or third-party servicers;

●

competition in the financial services industry, including from nonbank competitors such as credit unions, “fintech” companies and digital asset service providers;

●

the effectiveness of our risk management framework;

●

rapid technological changes implemented by us and other parties in the financial services industry, including third-party vendors, which may be more difficult to implement or more expensive than anticipated or which may have unforeseen consequence to us and our customers, including the development and implementation of tools incorporating artificial intelligence;

●

the commencement, cost and outcome of litigation and other legal proceedings and regulatory actions against us;

●

the impact of recent and future legislative and regulatory changes, domestic or foreign;

●

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 global supply chain and the value of products produced by our commercial borrowers;

●

severe weather, natural disasters, wide spread disease or pandemics, acts of war or terrorism or other adverse external events, including ongoing conflicts in the Middle East and the Russian invasion of Ukraine;

●

potential impairment to the goodwill the Company recorded in connection with acquisitions;

●

risks associated with our integration of FMCB, including the possibility that the merger may be more difficult or expensive to integrate than anticipated, and the effect of the merger on the Company’s customer and employee relationships and operating results;

●

changes to U.S. or state tax laws, regulations and governmental policies concerning the Company’s general business, including changes in interpretation or prioritization of such rules and regulations;

●

the impact of bank failures or adverse developments at other banks and related negative publicity about the banking industry in general on investor and depositor sentiment regarding the stability and liquidity of banks;

●

the effects of the current U.S. government shutdown and its impact on our customers; and

●

any other risks described in the “Risk Factors” sections of reports filed by the Company with the SEC.

The foregoing factors should not be construed as exhaustive and should be read together with the other cautionary statements included in this report. In addition, past results of operations are not necessarily indicative of

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future results. Any forward-looking statement made by us in this report is based only on information currently available to us and speaks only as of the date on which it is made. 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.

Overview

The Company is a financial holding company headquartered in St. Louis Park, Minnesota. The principal sources of funds for loans and investments are transaction, savings, time, and other deposits, and short-term and long-term borrowings. The Company’s principal sources of income are interest and fees collected on loans, interest and dividends earned on investment securities and service charges. The Company’s principal expenses are interest paid on deposit accounts and borrowings, employee compensation and other overhead expenses. The Company’s simple, efficient business model of providing responsive support and unconventional experiences to clients continues to be the underlying principle that drives the Company’s profitable growth.

Critical Accounting Policies and Estimates

The consolidated financial statements of the Company are prepared based on the application of certain accounting policies, the most significant of which are described in “Note 1 – Description of the Business and Summary of Significant Accounting Policies” of the notes to the consolidated financial statements included as a part of the Company’s most recent Annual Report on Form 10-K, filed with the SEC on March 6, 2025. There have been no significant changes in the critical accounting policies or the assumptions and judgments utilized in applying these policies since December 31, 2024. Certain policies require numerous estimates and strategic or economic assumptions that may prove inaccurate or subject to variation and may significantly affect the reported results and financial position for the current period or in future periods. Changes in underlying factors, assumptions or estimates in any of these areas could have a material impact on the future financial condition and results of operations. Management has discussed each critical accounting policy and the methodology for the identification and determination of critical accounting policies with the Company’s Audit Committee.

Recent Developments

On December 13, 2024, the Company's wholly-owned banking subsidiary, Bridgewater Bank, completed its

acquisition of FMCB in an all-cash transaction. On the closing date, FMCB merged with and into Bridgewater Bank, with Bridgewater Bank as the surviving entity. The acquisition of FMCB aligns with and accelerates the Company’s strategic priorities, including its focus on continued growth within the Twin Cities market. The acquisition of FMCB added approximately $245.0 million of assets, $225.7 million of deposits, $117.1 million of loans and leases as of December 31, 2024, and two branch locations in Minnetonka, Minnesota. The acquisition also added an investment advisory business that offers nondeposit investment products through a third party arrangement. During the three and nine months ended September 30, 2025, the Company incurred merger-related expenses of $530,000 and $1.6 million, respectively. The acquisition may impact comparability between periods.

On June 24, 2025, the Company entered into a Subordinated Note Purchase Agreement with certain institutional accredited investors and qualified institutional buyers pursuant to which the Company sold and issued $80.0 million of aggregate principal amount of its 7.625% Fixed-to-Floating Rate Subordinated Notes due 2035. The Notes were issued by the Company to such purchasers at a price equal to 100% of their face amount. The Company used the net proceeds it received from the sale of the Notes to redeem $50 million of outstanding 5.25% Fixed-to-Floating Rate Subordinated Notes due 2030 and for general corporate purposes.

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expenditures, reinstatement of 100% bonus depreciation, and more favorable rules for determining the limitation on business interest expense. The financial impact was immaterial to the financial statements.

Operating Results Overview

The following table summarizes certain key financial results as of and for the periods indicated:


	As of and for the Three Months Ended
	September 30,			June 30,			March 31,			December 31,			September 30,
(dollars in thousands, except per share data)	2025			2025			2025			2024			2024
Income Statement
Net Interest Income	$	34,091		$	32,452		$	30,208		$	26,967		$	25,599
Provision for Credit Losses		1,100			2,000			1,500			2,175			—
Noninterest Income		2,061			3,627			2,079			2,533			1,522
Noninterest Expense		19,956			18,941			18,136			16,812			15,760
Net Income		11,601			11,520			9,633			8,204			8,675
Net Income Available to Common Shareholders		10,588			10,506			8,620			7,190			7,662

Per Common Share Data
Basic Earnings Per Share	$	0.38		$	0.38		$	0.31		$	0.26		$	0.28
Diluted Earnings Per Share		0.38			0.38			0.31			0.26			0.27
Adjusted Diluted Earnings Per Share ⁽¹⁾		0.39			0.37			0.32			0.27			0.28
Book Value Per Share		15.62			14.92			14.60			14.21			14.06
Tangible Book Value Per Share ⁽¹⁾		14.93			14.21			13.89			13.49			13.96
Basic Weighted Average Shares Outstanding		27,504,840			27,460,982			27,568,772			27,459,433			27,382,798
Diluted Weighted Average Shares Outstanding		28,190,406			27,998,008			28,036,506			28,055,532			27,904,910
Shares Outstanding at Period End		27,584,732			27,470,283			27,560,150			27,552,449			27,425,690

Selected Performance Ratios
Return on Average Assets ⁽²⁾		0.86	%		0.90	%		0.77	%		0.68	%		0.73	%
Pre-Provision Net Revenue Return on Average Assets ⁽¹⁾⁽²⁾		1.19			1.27			1.13			1.05			0.96
Return on Average Shareholders' Equity ⁽²⁾		9.47			9.80			8.39			7.16			7.79
Return on Average Tangible Common Equity⁽¹⁾⁽²⁾		10.50			10.93			9.22			7.43			8.16
Average Shareholders' Equity to Average Assets		9.04			9.14			9.18			9.52			9.42
Net Interest Margin ⁽³⁾		2.63			2.62			2.51			2.32			2.24
Core Net Interest Margin ⁽¹⁾⁽³⁾		2.52			2.49			2.37			2.24			2.16
Yield on Interest Earning Assets⁽³⁾		5.63			5.56			5.43			5.40			5.48
Yield on Total Loans, Gross⁽³⁾		5.79			5.74			5.61			5.55			5.57
Cost of Interest Bearing Liabilities		3.89			3.83			3.82			4.06			4.27
Cost of Total Deposits		3.19			3.16			3.18			3.40			3.58
Cost of Funds		3.25			3.19			3.17			3.38			3.54
Efficiency Ratio⁽¹⁾		54.7			52.6			55.5			56.8			58.0
Noninterest Expense to Average Assets ⁽²⁾		1.47			1.47			1.45			1.40			1.33

Adjusted Financial Ratios ⁽¹⁾
Adjusted Return on Average Assets		0.88	%		0.88	%		0.80	%		0.71	%		0.75	%
Adjusted Pre-Provision Net Revenue Return on Average Assets ⁽²⁾		1.23			1.31			1.18			1.09			0.98
Adjusted Return on Average Shareholders' Equity		9.77			9.64			8.77			7.49			7.96
Adjusted Return on Average Tangible Common Equity		10.86			10.74			9.68			7.82			8.36
Adjusted Efficiency Ratio		53.2			51.5			53.7			55.2			57.2
Adjusted Noninterest Expense to Average Assets		1.43			1.43			1.41			1.36			1.31

Balance Sheet
Total Assets	$	5,359,994		$	5,296,673		$	5,136,808		$	5,066,242		$	4,691,517
Total Loans, Gross		4,214,554			4,145,799			4,020,076			3,868,514			3,685,590
Deposits		4,292,764			4,236,742			4,162,457			4,086,767			3,747,442
Total Shareholders' Equity		497,463			476,282			468,975			457,935			452,200
Loan to Deposit Ratio		98.2	%		97.9	%		96.6	%		94.7	%		98.3	%
Core Deposits to Total Deposits ⁽⁴⁾		76.4			75.2			76.2			76.0			71.5
Uninsured Deposits to Total Deposits		29.2			30.5			28.7			27.7			25.0

Capital Ratios (Consolidated) ⁽⁵⁾
Tier 1 Leverage Ratio		9.02	%		9.14	%		9.10	%		9.45	%		9.75	%
Common Equity Tier 1 Risk-based Capital Ratio		9.08			9.03			9.03			9.08			9.79
Tier 1 Risk-based Capital Ratio		10.52			10.51			10.55			10.64			11.44
Total Risk-based Capital Ratio		14.12			14.17			13.62			13.76			14.62
Tangible Common Equity to Tangible Assets ⁽¹⁾		7.71			7.40			7.48			7.36			8.17

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	As of and for the Three Months Ended
	September 30,			June 30,			March 31,			December 31,			September 30,
(dollars in thousands)	2025			2025			2025			2024			2024
Selected Asset Quality Data
Loans 30-89 Days Past Due	$	2,906		$	12,492		$	466		$	1,291		$	65
Loans 30-89 Days Past Due to Total Loans		0.07	%		0.30	%		0.01	%		0.03	%		0.00	%
Nonperforming Loans	$	9,991		$	10,134		$	10,290		$	301		$	8,378
Nonperforming Loans to Total Loans		0.24	%		0.24	%		0.26	%		0.01	%		0.23	%
Nonaccrual Loans to Total Loans		0.24			0.24			0.26			0.01			0.23
Nonaccrual Loans and Loans Past Due 90 Days and Still Accruing to Total Loans		0.24			0.24			0.26			0.01			0.23
Foreclosed Assets	$	—		$	185		$	—		$	—		$	434
Nonperforming Assets ⁽⁶⁾		9,991			10,319			10,290			301			8,812
Nonperforming Assets to Total Assets ⁽⁶⁾		0.19	%		0.19	%		0.20	%		0.01	%		0.19	%
Allowance for Credit Losses on Loans to Total Loans		1.34			1.35			1.34			1.35			1.38
Allowance for Credit Losses on Loans to Nonaccrual Loans		564.41			550.28			522.51			17,367.77			608.95
Net Loan Charge-Offs (Annualized) to Average Loans ⁽²⁾		0.03			0.00			0.00			0.03			0.10
Watchlist/Special Mention Risk Rating Loans	$	40,642		$	53,282		$	38,346		$	46,581		$	31,991
Substandard Risk Rating Loans		58,074			44,986			31,587			21,791			31,637

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

(2)	Annualized.

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

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

(5)	Preliminary data. Current period subject to change prior to filing with applicable regulatory filings.

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

Discussion and Analysis of Results of Operations

Net Income

Net income was $11.6 million for the third quarter of 2025, compared to net income of $8.7 million for the third quarter of 2024. Earnings per diluted common share for the third quarter of 2025 were $0.38, compared to $0.27 per diluted common share for the third quarter of 2024. Adjusted net income, a non-GAAP financial measure, was $12.0 million for the third quarter of 2025, compared to $8.9 million for the third quarter of 2024. Adjusted earnings per diluted common share, a non-GAAP financial measure, for the third quarter of 2025 were $0.39, compared to $0.28 per diluted common share for the third quarter of 2024.

Net Interest Income

The Company’s primary source of revenue is net interest income, which is impacted by the level of interest earning assets and related funding sources, as well as changes in interest rates. The difference between the average yield on earning assets and the average rate paid for interest bearing liabilities is the net interest spread. Noninterest bearing sources of funds, such as demand deposits and shareholders’ equity, also support earning assets. The impact of the noninterest bearing sources of funds is captured in the net interest margin, which is calculated as net interest income divided by average earning assets. Both the net interest margin and net interest spread are presented on a tax-equivalent basis, which means that tax-free interest income has been adjusted to pretax-equivalent income, assuming a 21% federal tax rate. Management’s ability to respond to changes in interest rates by using effective asset-liability management techniques is critical to managing net interest margin and the Company’s primary source of earnings.

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Average Balances and Yields

The following tables present, for the three and nine months ended September 30, 2025 and 2024, the average balances of each principal category of assets, liabilities and shareholders’ equity, and an analysis of net interest income. The average balances are principally daily averages and, for loans, include both performing and nonperforming balances. Interest income on loans includes the effects of net deferred loan origination fees and costs accounted for as yield adjustments. These tables are presented on a tax-equivalent basis, if applicable.


	For the Three Months Ended
	September 30, 2025						September 30, 2024
	Average		Interest		Yield/		Average		Interest		Yield/
(dollars in thousands)	Balance		& Fees		Rate		Balance		& Fees		Rate
Interest Earning Assets:
Cash Investments	$	256,174	$	2,732	4.23	%	$	157,114	$	1,971	4.99	%
Investment Securities:
Taxable Investment Securities		730,643		9,448	5.13			668,429		8,406	5.00
Tax-Exempt Investment Securities⁽¹⁾		81,962		1,168	5.66			31,496		402	5.08
Total Investment Securities		812,605		10,616	5.18			699,925		8,808	5.01
Loans ⁽¹⁾⁽²⁾		4,132,987		60,317	5.79			3,721,654		52,118	5.57
Federal Home Loan Bank Stock		21,373		492	9.12			16,828		436	10.31
Total Interest Earning Assets		5,223,139		74,157	5.63	%		4,595,521		63,333	5.48	%
Noninterest Earning Assets		149,304						108,283
Total Assets	$	5,372,443					$	4,703,804
Interest Bearing Liabilities:
Deposits:
Interest Bearing Transaction Deposits	$	843,905	$	8,037	3.78	%	$	804,161	$	9,369	4.63	%
Savings and Money Market Deposits		1,473,465		13,465	3.63			939,665		10,262	4.34
Time Deposits		342,926		3,703	4.28			355,050		3,918	4.39
Brokered Deposits		856,516		9,410	4.36			989,712		10,638	4.28
Total Interest Bearing Deposits		3,516,812		34,615	3.90			3,088,588		34,187	4.40
Federal Funds Purchased		—		—	—			141		2	5.72
Notes Payable		5,679		106	7.40			13,750		296	8.58
FHLB Advances		404,500		2,933	2.88			309,120		1,942	2.50
Subordinated Debentures		108,639		1,888	6.89			79,519		1,001	5.01
Total Interest Bearing Liabilities		4,035,630		39,542	3.89	%		3,491,118		37,428	4.27	%
Noninterest Bearing Liabilities:
Noninterest Bearing Transaction Deposits		793,760						710,192
Other Noninterest Bearing Liabilities		57,184						59,417
Total Noninterest Bearing Liabilities		850,944						769,609
Shareholders' Equity		485,869						443,077
Total Liabilities and Shareholders' Equity	$	5,372,443					$	4,703,804
Net Interest Income / Interest Rate Spread				34,615	1.74	%				25,905	1.21	%
Net Interest Margin ⁽³⁾					2.63	%					2.24	%
Taxable Equivalent Adjustment:
Tax-Exempt Investment Securities and Loans				(524)						(306)
Net Interest Income			$	34,091					$	25,599

(1)	Interest income and average rates for tax-exempt investment securities and loans are presented on a tax-equivalent basis, assuming a 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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	For the Nine Months Ended
	September 30, 2025						September 30, 2024
	Average		Interest		Yield/		Average		Interest		Yield/
(dollars in thousands)	Balance		& Fees		Rate		Balance		& Fees		Rate
Interest Earning Assets:
Cash Investments	$	210,525	$	6,469	4.11	%	$	104,831	$	3,722	4.74	%
Investment Securities:
Taxable Investment Securities		744,605		27,364	4.91			649,538		23,867	4.91
Tax-Exempt Investment Securities⁽¹⁾		49,987		2,030	5.43			31,597		1,203	5.09
Total Investment Securities		794,592		29,394	4.95			681,135		25,070	4.92
Loans ⁽¹⁾⁽²⁾		4,034,656		172,418	5.71			3,740,855		153,568	5.48
Federal Home Loan Bank Stock		20,601		1,356	8.80			18,111		1,173	8.65
Total Interest Earning Assets		5,060,374		209,637	5.54	%		4,544,932		183,533	5.39	%
Noninterest Earning Assets		145,373						102,993
Total Assets	$	5,205,747					$	4,647,925
Interest Bearing Liabilities:
Deposits:
Interest Bearing Transaction Deposits	$	837,504	$	23,995	3.83	%	$	757,409	$	25,332	4.47	%
Savings and Money Market Deposits		1,383,876		38,092	3.68			917,051		28,502	4.15
Time Deposits		333,199		10,280	4.13			344,484		10,935	4.24
Brokered Deposits		841,750		26,848	4.26			993,445		31,226	4.20
Total Interest Bearing Deposits		3,396,329		99,215	3.91			3,012,389		95,995	4.26
Federal Funds Purchased		456		16	4.64			27,605		1,159	5.61
Notes Payable		11,030		624	7.57			13,750		887	8.62
FHLB Advances		388,026		7,941	2.74			311,380		6,325	2.71
Subordinated Debentures		90,853		3,992	5.87			79,424		2,982	5.02
Total Interest Bearing Liabilities		3,886,694		111,788	3.85	%		3,444,548		107,348	4.16	%
Noninterest Bearing Liabilities:
Noninterest Bearing Transaction Deposits		779,897						700,308
Other Noninterest Bearing Liabilities		64,878						67,405
Total Noninterest Bearing Liabilities		844,775						767,713
Shareholders' Equity		474,278						435,664
Total Liabilities and Shareholders' Equity	$	5,205,747					$	4,647,925
Net Interest Income / Interest Rate Spread				97,849	1.69	%				76,185	1.23	%
Net Interest Margin ⁽³⁾					2.59	%					2.24	%
Taxable Equivalent Adjustment:
Tax-Exempt Investment Securities and Loans				(1,098)						(959)
Net Interest Income			$	96,751					$	75,226

(1)	Interest income and average rates for tax-exempt investment securities and loans are presented on a tax-equivalent basis, assuming a 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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Interest Rates and Operating Interest Differential

Increases and decreases in interest income and interest expense result from changes in average balances (volume) of interest earning assets and interest bearing liabilities, as well as changes in average interest rates. The following table presents the effect that these factors had on the interest earned on interest earning assets and the interest incurred on interest bearing liabilities. The effect of changes in volume is determined by multiplying the change in volume by the previous period’s average rate. Similarly, the effect of rate changes is calculated by multiplying the change in average rate by the previous period’s volume. The changes not attributable specifically to either volume or rate have been allocated to the changes due to volume. The following tables present the changes in the volume and rate of interest bearing assets and liabilities for the three months ended September 30, 2025, compared to the three months ended September 30, 2024, and for the nine months ended September 30, 2025, compared to the nine months ended September 30, 2024:


	Three Months Ended September 30, 2025
	Compared with
	Three Months Ended September 30, 2024
	Change Due To:				Interest
(dollars in thousands)	Volume		Rate		Variance
Interest Earning Assets:
Cash Investments	$	1,062	$	(301)	$	761
Investment Securities:
Taxable Investment Securities		828		214		1,042
Tax-Exempt Investment Securities		721		45		766
Total Securities		1,549		259		1,808
Loans		6,149		2,050		8,199
Federal Home Loan Bank Stock		106		(50)		56
Total Interest Earning Assets	$	8,866	$	1,958	$	10,824

Interest Bearing Liabilities:
Interest Bearing Transaction Deposits	$	405	$	(1,736)	$	(1,331)
Savings and Money Market Deposits		4,906		(1,703)		3,203
Time Deposits		(120)		(95)		(215)
Brokered Deposits		(1,435)		206		(1,229)
Total Deposits		3,756		(3,328)		428
Federal Funds Purchased		(2)		—		(2)
Notes Payable		(149)		(41)		(190)
FHLB Advances		697		294		991
Subordinated Debentures		508		379		887
Total Interest Bearing Liabilities		4,810		(2,696)		2,114
Net Interest Income	$	4,056	$	4,654	$	8,710

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		Nine Months Ended September 30, 2025
		Compared with
		Nine Months Ended September 30, 2024
		Change Due To:				Interest
(dollars in thousands)		Volume		Rate		Variance
Interest Earning Assets:
Cash Investments	$	3,244	$	(497)	$	2,747
Investment Securities:
Taxable Investment Securities		3,472		25		3,497
Tax-Exempt Investment Securities		745		82		827
Total Securities		4,217		107		4,324
Loans		12,427		6,423		18,850
Federal Home Loan Bank Stock		163		20		183
Total Interest Earning Assets	$	20,051	$	6,053	$	26,104

Interest Bearing Liabilities:
Interest Bearing Transaction Deposits	$	2,271	$	(3,608)	$	(1,337)
Savings and Money Market Deposits		12,824		(3,234)		9,590
Time Deposits		(358)		(297)		(655)
Brokered Deposits		(4,867)		489		(4,378)
Total Deposits		9,870		(6,650)		3,220
Federal Funds Purchased		(943)		(200)		(1,143)
Notes Payable		(152)		(111)		(263)
FHLB Advances		1,563		53		1,616
Subordinated Debentures		499		511		1,010
Total Interest Bearing Liabilities		10,837		(6,397)		4,440
Net Interest Income	$	9,214	$	12,450	$	21,664

Comparison of Net Interest Margin, Interest Income, and Interest Expense

Third Quarter of 2025 Compared to Third Quarter of 2024

Net interest income was $34.1 million for the third quarter of 2025, an increase of $8.5 million compared to $25.6 million for the third quarter of 2024. The increase in net interest income was primarily due to growth and higher yields in the loan and securities portfolios and purchase accounting accretion, offset partially by higher deposit balances.

Net interest margin (on a fully tax-equivalent basis) for the third quarter of 2025 was 2.63%, a 39 basis point increase from 2.24% in the third quarter of 2024. Core net interest margin (on a fully tax-equivalent basis), a non-GAAP financial measure which excludes the impact of loan fees and purchase accounting accretion, was 2.52% for the third quarter of 2025, a 36 basis point increase from 2.16% in the third quarter of 2024. The increase in the margin was primarily due to higher earning asset yields and purchase accounting accretion, offset partially by the effects of the subordinated debt refinance completed in the second quarter of 2025.

Average interest earning assets were $5.22 billion for the third quarter of 2025, an increase of $627.6 million, or 13.7%, compared to $4.60 billion for the third quarter of 2024. This increase in average interest earning assets was primarily due to growth in the loan and securities portfolios, higher average cash balances, and the FMCB acquisition. Average interest bearing liabilities were $4.04 billion for the third quarter of 2025, an increase of $544.5 million, or 15.6%, compared to $3.49 billion for the third quarter of 2024. The increase in average interest bearing liabilities was primarily due to deposit growth and deposits acquired, offset partially by a decrease in brokered deposits.

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Average interest earning assets produced a tax-equivalent yield of 5.63% for the third quarter of 2025, compared to 5.48% for the third quarter of 2024. The increase in the yield on interest earning assets was primarily due to growth and repricing of the loan and securities portfolios and purchase accounting accretion attributable to the acquisition of FMCB. The average rate paid on interest bearing liabilities was 3.89% for the third quarter of 2025, compared to 4.27% for the third quarter of 2024. The decrease was primarily due to lower rates paid on deposits.

Interest Income. Total interest income, on a tax-equivalent basis, was $74.2 million for the third quarter of 2025, compared to $63.3 million for the third quarter of 2024. The $10.8 million, or 17.1%, increase in total interest income on a tax-equivalent basis was primarily due to growth of the loan and securities portfolios and higher earning asset yields.

Interest income on the investment securities portfolio, on a tax-equivalent basis, increased $1.8 million for the third quarter of 2025, compared to the third quarter of 2024, primarily due to a $112.7 million, or 16.1%, increase in average balances between the two periods primarily attributable to purchases of investment securities, offset partially by securities sales.

Interest income on loans, on a tax-equivalent basis, was $60.3 million for the third quarter of 2025, compared to $52.1 million for the third quarter of 2024. The $8.2 million, or 15.7%, increase was primarily due to growth and repricing of the loan portfolio in the higher interest rate environment.

The aggregate loan yield increased to 5.79% in the third quarter of 2025, which was 22 basis points higher than 5.57% in the third quarter of 2024. Core loan yield, a non-GAAP financial measure, continued to rise as new loans originated at higher yields and the existing portfolio repriced in the higher interest rate environment.

The following table presents a summary of interest, fees and accretion recognized on loans for the periods indicated:


	Three Months Ended
	September 30, 2025		June 30, 2025		March 31, 2025		December 31, 2024		September 30, 2024
Interest	5.66	%	5.59	%	5.50	%	5.47	%	5.47	%
Fees	0.09		0.11		0.07		0.08		0.10
Accretion	0.04		0.04		0.04		—		—
Yield on Loans	5.79	%	5.74	%	5.61	%	5.55	%	5.57	%

Interest Expense. Interest expense on interest bearing liabilities was $39.5 million for the third quarter of 2025, an increase of $2.1 million, from $37.4 million for the third quarter of 2024. The increase was primarily due to growth of the deposit portfolio, increased utilization of FHLB advances, and higher balance and rate of subordinated debentures following the payoff of $50.0 million of outstanding subordinated notes and the issuance of $80.0 million of new subordinated notes at the end of the second quarter, offset partially by a decrease in rates paid on deposits.

Interest expense on deposits was $34.6 million for the third quarter of 2025, an increase of $428,000, from $34.2 million for the third quarter of 2024. The increase in interest expense on deposits was primarily due to higher balances in savings and money market deposits and interest bearing transaction deposits, offset partially by a decrease in rates paid on those deposit account types. The cost of total deposits was 3.19% in the third quarter of 2025, a 39 basis point decrease, compared to 3.58% in the third quarter of 2024. The decrease was primarily due to lower rates paid on deposits following interest rate cuts in 2024 and 2025 and decreases in average brokered deposit balances.

Interest expense on borrowings was $4.9 million for the third quarter of 2025, an increase of $1.7 million, compared to $3.2 million for the third quarter of 2024. The increase was primarily due to an increased utilization of FHLB advances and higher balance and rate of subordinated debentures due to the previously-discussed subordinated debt refinance in the second quarter of 2025.

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Nine Months Ended September 30, 2025 Compared to Nine Months Ended September 30, 2024

Net interest income was $96.8 million for the nine months ended September 30, 2025, an increase of $21.5 million, or 28.6%, compared to $75.2 million for the nine months ended September 30, 2024. The increase in net interest income was primarily due to growth and higher yields in the loan and securities portfolios, offset partially by higher interest bearing liability balances.

Net interest margin (on a fully tax-equivalent basis) for the nine months ended September 30, 2025 was 2.59%, a 35 basis point increase from 2.24% for the nine months ended September 30, 2024. Core net interest margin (on a fully tax equivalent basis), a non-GAAP financial measure which excludes the impact of loan fees and purchase accounting accretion, was 2.46% for the nine months ended September 30, 2025, a 29 basis point increase from 2.17% for the nine months ended September 30, 2024.

Average interest earning assets were $5.06 billion for the nine months ended September 30, 2025, an increase of $515.4 million, or 11.3%, compared to $4.54 billion for the nine months ended September 30, 2024. This increase in average interest earning assets was primarily due to higher average cash balances, growth in the loan and securities portfolios, and the FMCB acquisition. Average interest bearing liabilities were $3.89 billion for the nine months ended September 30, 2025, an increase of $442.1 million, or 12.8%, compared to $3.44 billion for nine months ended September 30, 2024. The increase in average interest bearing liabilities was primarily due to an increase in savings and money market deposits and interest bearing transaction deposits, offset partially by a decrease in brokered deposits.

Average interest earning assets produced a tax-equivalent yield of 5.54% for the nine months ended September 30, 2025, compared to 5.39% for the nine months ended September 30, 2024. The average rate paid on interest bearing liabilities was 3.85% for the nine months ended September 30, 2025, compared to 4.16% for the nine months ended September 30, 2024.

Interest Income. Total interest income on a tax-equivalent basis was $209.6 million for the nine months ended September 30, 2025, compared to $183.5 million for the nine months ended September 30, 2024. The $26.1 million increase in total interest income on a tax-equivalent basis was primarily due to growth in the loan and securities portfolios and higher earning asset yields.

Interest income on the investment securities portfolio, on a tax-equivalent basis, was $29.4 million for the nine months ended September 30, 2025, compared to $25.1 million for the nine months ended September 30, 2024. The $4.3 million increase in total interest income on the investment securities portfolio was primarily due to a $113.5 million, or 16.7%, increase in average balances between the two periods primarily attributable to purchases of investment securities.

Interest income on loans, on a tax-equivalent basis, for the nine months ended September 30, 2025 was $172.4 million, compared to $153.6 million for the nine months ended September 30, 2024. The $18.9 million increase was primarily due to growth and repricing of the loan portfolio in the higher interest rate environment.

Interest Expense. Interest expense on interest bearing liabilities was $111.8 million for the nine months ended September 30, 2025, compared to $107.3 million for the nine months ended September 30, 2024. The $4.4 million increase was primarily due to growth of the deposit portfolio.

Interest expense on deposits increased to $99.2 million for the nine months ended September 30, 2025, compared to $96.0 million for the nine months ended September 30, 2024. The $3.2 million increase in interest expense on deposits was primarily due to higher balances in savings and money market deposits and interest bearing transaction deposits, offset partially by a decrease in brokered deposits and lower rates paid on deposits.

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Interest expense on borrowings was $12.6 million for the nine months ended September 30, 2025, compared to $11.4 million for the nine months ended September 30, 2024. This $1.2 million increase was primarily due to higher average balances of FHLB advances and subordinated debentures, offset partially by lower average balances of federal funds purchased.

Provision for Credit Losses

The provision for credit losses on loans and leases was $900,000 for the third quarter of 2025, compared to $-0- for the third quarter of 2024. The provision for credit losses on loans and leases was $4.4 million for the nine months ended September 30, 2025, compared to $1.5 million for the nine months ended September 30, 2024. The provision for credit losses on loans and leases recorded in the third quarter of 2025 was primarily attributable to growth in the loan portfolio and an increase in specific reserves for loans individually evaluated. The allowance for credit losses on loans and leases to total loans was 1.34% at September 30, 2025, compared to 1.38% at September 30, 2024.

The following table presents a summary of the activity in the allowance for credit losses on loans and leases for the periods indicated:


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(dollars in thousands)	2025		2024		2025		2024
Balance at Beginning of Period	$	55,765	$	51,949	$	52,277	$	50,494
Provision for Credit Losses		900		—		4,400		1,450
Charge-offs		(276)		(937)		(294)		(949)
Recoveries		1		6		7		23
Balance at End of Period	$	56,390	$	51,018	$	56,390	$	51,018

The provision for credit losses for off-balance sheet credit exposures was $200,000 for the third quarter of 2025, compared to $-0- for the third quarter of 2024. The provision recorded during the third quarter of 2025 was primarily due to an increase in the volume of newly originated loans with unfunded commitments in the commercial and construction and land development segments. The provision for credit losses for off-balance sheet credit exposures was $200,000 for the nine months ended September 30, 2025, compared to a negative provision of $100,000 for the nine months ended September 30, 2024. The allowance for credit losses on off-balance sheet credit exposures was $3.8 million as of September 30, 2025, compared to $2.9 million as of September 30, 2024.

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


	Three Months Ended						Nine Months Ended
	September 30,				Increase/		September 30,				Increase/
(dollars in thousands)	2025		2024		(Decrease)		2025		2024		(Decrease)
Provision for Credit Losses on Loans and Leases	$	900	$	—	$	900	$	4,400	$	1,450	$	2,950
Provision for (Recovery of) Credit Losses for Off-Balance Sheet Credit Exposures		200		—		200		200		(100)		300
Provision for Credit Losses	$	1,100	$	—	$	1,100	$	4,600	$	1,350	$	3,250

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Noninterest Income

Noninterest income was $2.1 million for the third quarter of 2025, an increase of $539,000 from $1.5 million for the third quarter of 2024. The increase was primarily due to higher investment advisory fees and customer service fees. Noninterest income was $7.8 million for the nine months ended September 30, 2025, an increase of $2.9 million from $4.8 million for the nine months ended September 30, 2024. The increase was primarily due to higher swap fees, investment advisory fees, and customer service fees.

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


	Three Months Ended						Nine Months Ended
	September 30,				Increase/		September 30,				Increase/
(dollars in thousands)	2025		2024		(Decrease)		2025		2024		(Decrease)
Noninterest Income:
Customer Service Fees	$	501	$	373	$	128	$	1,492	$	1,081	$	411
Net Gain (Loss) on Sales of Securities		59		(28)		87		534		385		149
Letter of Credit Fees		383		424		(41)		1,161		1,127		34
Debit Card Interchange Fees		173		152		21		462		448		14
Swap Fees		—		26		(26)		980		26		954
Bank-Owned Life Insurance		440		352		88		1,206		965		241
Investment Advisory Fees		208		—		208		746		—		746
FHLB Prepayment Income		—		—		—		301		—		301
Other Income		297		223		74		885		803		82
Totals	$	2,061	$	1,522	$	539	$	7,767	$	4,835	$	2,932

Noninterest Expense

Third Quarter of 2025 Compared to Third Quarter of 2024

Noninterest expense was $20.0 million for the third quarter of 2025, an increase of $4.2 million from $15.8 million for the third quarter of 2024. The increase was primarily attributable to increases in salaries and employee benefits, marketing and advertising, operating costs related to the FMCB acquisition, and merger-related expenses.

Nine Months Ended September 30, 2025 Compared to Nine Months Ended September 30, 2024

Noninterest expense was $57.0 million for the nine months ended September 30, 2025, an increase of $10.5 million, from $46.5 million for the nine months ended September 30, 2024. The increase was primarily attributable to increases in salaries and employee benefits, increased operating costs related to the FMCB acquisition, and merger-related expenses.

The Company had 325 full-time equivalent employees at September 30, 2025, compared to 308 at June 30, 2025, and 265 at September 30, 2024. The year-over-year increase was largely driven by the addition of employees from the acquisition of FMCB and the hiring of key talent across the organization.

Efficiency Ratio. The efficiency ratio, a non-GAAP financial measure, reports total noninterest expense, less amortization of intangible assets, as a percentage of net interest income plus total noninterest income, less gains (losses) on sales of securities. Management believes this non-GAAP financial measure provides a meaningful comparison of operational performance and facilitates investors’ assessments of business performance and trends in comparison to peers in the banking industry.

The efficiency ratio was 54.7% for the third quarter of 2025, compared to 58.0% for the third quarter of 2024. The efficiency ratio was 54.2% and 58.3%, respectively for the nine months ended September 30, 2025 and

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September 30, 2024. The Company’s efficiency has remained consistently below the industry median due in part to its “branch-light” model.

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


	Three Months Ended						Nine Months Ended
	September 30,				Increase/		September 30,				Increase/
(dollars in thousands)	2025		2024		(Decrease)		2025		2024		(Decrease)
Noninterest Expense:
Salaries and Employee Benefits	$	12,229	$	9,851	$	2,378	$	34,963	$	28,959	$	6,004
Occupancy and Equipment		1,266		1,069		197		3,774		3,218		556
FDIC Insurance Assessment		775		750		25		1,975		2,350		(375)
Data Processing		637		368		269		1,881		1,252		629
Professional and Consulting Fees		1,261		1,149		112		3,365		2,890		475
Derivative Collateral Fees		309		381		(72)		1,132		1,395		(263)
Information Technology and Telecommunications		973		840		133		2,915		2,448		467
Marketing and Advertising		658		367		291		1,420		1,006		414
Intangible Asset Amortization		230		9		221		690		26		664
Other Expense		1,618		976		642		4,918		2,944		1,974
Totals	$	19,956	$	15,760	$	4,196	$	57,033	$	46,488	$	10,545

Income Tax Expense

The provision for income taxes includes both federal and state taxes. Fluctuations in effective tax rates reflect the differences in the inclusion or deductibility of certain income and expenses for income tax purposes and the recognition of tax credits. The Company’s future effective income tax rate will fluctuate based on the mix of taxable and tax-free investments and loans, the recognition and availability of tax credit investments, and overall taxable income.

Income tax expense was $3.5 million for the third quarter of 2025, compared to $2.7 million for the third quarter of 2024. The effective combined federal and state income tax rate for the third quarter of 2025 was 23.2%, compared to 23.6% for the third quarter of 2024. Income tax expense was $10.1 million for the nine months ended September 30, 2025, compared to $7.6 million for the nine months ended September 30, 2024. The effective combined federal and state income tax rate for both the nine months ended September 30, 2025 and 2024 was 23.6%.

Financial Condition

Assets

Total assets at September 30, 2025 were $5.36 billion, an increase of $293.8 million, or 5.8%, over total assets of $5.07 billion at December 31, 2024, and an increase of $668.5 million, or 14.2%, over total assets of $4.69 billion at September 30, 2024. The year-to-date increase was primarily due to organic growth in the loan portfolio. The year-over-year increase was primarily due to growth in the loan and securities portfolios driven by organic growth and the acquisition of FMCB in the fourth quarter of 2024.

Investment Securities Portfolio

The investment securities portfolio is used to make various term investments and is intended to provide the Company with adequate liquidity, a source of stable income, and at times, serve as collateral for certain types of deposits or borrowings. Investment balances in the investment securities portfolio are subject to change over time based on funding needs and interest rate risk management objectives. The liquidity levels take into account anticipated

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future cash flows and are maintained at levels management believes are appropriate to ensure future flexibility in meeting anticipated funding needs.

The investment securities portfolio consists primarily of U.S. treasury securities, U.S. government agency mortgage backed securities, municipal securities, corporate securities comprised primarily of subordinated debentures of banks and financial holding companies, and asset-backed securities. In addition, the Company also holds other mortgage backed and other debt securities, all with varying contractual maturities. These maturities do not necessarily represent the expected life of the securities as the securities may be called or paid down without penalty prior to their stated maturities. All investment securities are held as available for sale.

Securities available for sale were $826.5 million at September 30, 2025, an increase of $58.2 million, or 7.6%, compared to $768.2 million at December 31, 2024. The increase was primarily due to purchases of investment securities and improvements in the overall securities market.

The following table presents the amortized cost and fair value of securities available for sale, by type, at September 30, 2025 and December 31, 2024:


	September 30, 2025						December 31, 2024
	Amortized		Fair				Amortized		Fair
(dollars in thousands)	Cost		Value		Percent		Cost		Value		Percent
U.S. Treasury Securities	$	155,902	$	147,199	17.8	%	$	179,835	$	167,748	21.8	%
U.S Government Agency Securities		9,803		9,835	1.2			22,053		22,082	2.9
Mortgage-Backed Securities Issued or Guaranteed by U.S. Agencies (MBS):
Residential Pass-Through:
Guaranteed by GNMA		45,040		44,773	5.4			7,726		7,021	0.8
Issued by FNMA and FHLMC		27,949		25,991	3.1			60,532		57,354	7.5
Other Residential Mortgage-Backed Securities		75,620		68,830	8.3			71,301		61,969	8.1
Commercial Mortgage-Backed Securities		7,592		7,388	0.9			11,084		10,583	1.4
All Other Commercial MBS		110,970		112,167	13.6			109,190		107,963	14.1
Total MBS		267,171		259,149	31.3			259,833		244,890	31.9
Municipal Securities		247,471		240,547	29.1			139,891		122,265	15.9
Corporate Securities		109,613		107,983	13.1			139,161		134,186	17.5
Asset-Backed Securities		61,687		61,760	7.5			76,891		77,076	10.0
Total	$	851,647	$	826,473	100.0	%	$	817,664	$	768,247	100.0	%

Loan Portfolio

The Company focuses on lending to borrowers located or investing in the Minneapolis-St. Paul-Bloomington, MN-WI Metropolitan Statistical Area across a diverse range of industries and property types. The Company lends primarily to commercial customers, consisting of loans secured by nonfarm, nonresidential properties, multifamily residential properties, land, and non-real estate business assets. Responsive service, local decision making, and an efficient turnaround time from application to closing have been significant factors in growing the loan portfolio.

The Company manages concentrations of credit exposure through a risk management program which implements formalized processes and procedures specifically for managing and mitigating risk within the loan portfolio. The processes and procedures include board of directors and management oversight, commercial real estate exposure limits, portfolio monitoring tools, management information systems, market reports, underwriting standards, internal and external loan review, and stress testing.

Total gross loans at September 30, 2025 were $4.21 billion, an increase $346.0 million, or 8.9%, over total gross loans of $3.87 billion at December 31, 2024, and an increase of $529.0 million, or 14.4%, over total gross loans of $3.69 billion at September 30, 2024. The year-to-date increase in the loan portfolio was primarily due to increased loan originations and lower loan payoffs. The year-over-year increase was primarily attributable to increased loan originations and the acquisition of FMCB during the fourth quarter of 2024.

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The following table presents the dollar and percentage composition of the loan portfolio by category, at the dates indicated:


	September 30, 2025				June 30, 2025				March 31, 2025				December 31, 2024				September 30, 2024
(dollars in thousands)	Amount		Percent		Amount		Percent		Amount		Percent		Amount		Percent		Amount		Percent
Commercial	$	533,476	12.7	%	$	549,259	13.3	%	$	528,801	13.2	%	$	497,662	12.9	%	$	493,403	13.4	%
Leases		43,186	1.0			44,817	1.1			43,958	1.1			44,291	1.1			—	—
Construction and Land Development		159,991	3.8			136,438	3.3			128,073	3.2			97,255	2.5			118,596	3.2
1-4 Family Construction		41,739	1.0			39,095	0.9			39,438	1.0			41,961	1.1			45,822	1.3
Real Estate Mortgage:
1-4 Family Mortgage		487,297	11.6			474,269	11.4			479,461	11.9			474,383	12.3			421,179	11.4
Multifamily		1,578,223	37.4			1,555,731	37.5			1,534,747	38.2			1,425,610	36.9			1,379,814	37.4
CRE Owner Occupied		192,966	4.6			192,837	4.7			196,080	4.9			191,248	4.9			182,239	5.0
CRE Nonowner Occupied		1,158,622	27.5			1,137,007	27.4			1,055,157	26.1			1,083,108	28.0			1,032,142	28.0
Total Real Estate Mortgage Loans		3,417,108	81.1			3,359,844	81.0			3,265,445	81.1			3,174,349	82.1			3,015,374	81.8
Consumer and Other		19,054	0.4			16,346	0.4			14,361	0.4			12,996	0.3			12,395	0.3
Total Loans, Gross		4,214,554	100.0	%		4,145,799	100.0	%		4,020,076	100.0	%		3,868,514	100.0	%		3,685,590	100.0	%
Allowance for Credit Losses		(56,390)				(55,765)				(53,766)				(52,277)				(51,018)
Net Deferred Loan Fees		(8,282)				(7,629)				(7,218)				(6,801)				(5,705)
Total Loans, Net	$	4,149,882			$	4,082,405			$	3,959,092			$	3,809,436			$	3,628,867

The Company primarily focuses on real estate mortgage lending, which constituted 81.1% of the portfolio at September 30, 2025. The composition of the portfolio has remained relatively consistent with prior periods, and the Company does not expect any significant changes in the composition of the loan portfolio or the emphasis on real estate lending in the foreseeable future.

As of September 30, 2025, investor CRE loans totaled $2.94 billion, consisting of $1.16 billion of loans secured by nonowner occupied CRE, $1.58 billion of loans secured by multifamily residential properties, $41.7 million of 1-4 family construction loans, and $160.0 million of construction and land development loans. Investor CRE loans represented 69.7% of the total gross loan portfolio and 474.7% of the Bank’s total risk-based capital at September 30, 2025, compared to 68.4% and 462.0%, respectively, at December 31, 2024.

The following table provides a breakdown of CRE nonowner occupied loans by collateral types as of September 30, 2025 and December 31, 2024:


	September 30, 2025						December 31, 2024
			Percent of		Percent of				Percent of		Percent of
			CRE Nonowner		Total Loan				CRE Nonowner		Total Loan
(dollars in thousands)	Balance		Occupied Portfolio		Portfolio		Balance		Occupied Portfolio		Portfolio
Collateral Type:
Industrial	$	310,417	26.8	%	7.4	%	$	285,594	26.4	%	7.4	%
Office		210,908	18.2		5.0			191,638	17.7		5.0
Retail		189,452	16.4		4.5			172,530	15.9		4.5
Nursing/Assisted Living		119,633	10.3		2.8			108,452	10.3		2.9
Mini Storage Facility		109,548	9.5		2.6			111,705	10.2		2.9
Medical Office		90,549	7.8		2.1			110,486	10.0		2.8
Other		128,115	11.0		3.1			102,703	9.5		2.5
Total CRE Nonowner Occupied	$	1,158,622	100.0	%	27.5	%	$	1,083,108	100.0	%	28.0	%

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The following tables present time to contractual maturity and sensitivity to interest rate changes for the loan portfolio as of September 30, 2025 and December 31, 2024:


	As of September 30, 2025
	Due in One Year		More Than One		More Than Five		After
(dollars in thousands)	or Less		Year to Five Years		Year to Fifteen Years		Fifteen Years
Commercial	$	227,214	$	233,343	$	70,072	$	2,847
Leases		4,301		38,545		340		—
Construction and Land Development		82,777		70,515		6,699		—
1-4 Family Construction		37,324		4,214		201		—
Real Estate Mortgage:
1-4 Family Mortgage		95,296		299,725		67,256		25,020
Multifamily		228,139		822,792		443,045		84,247
CRE Owner Occupied		10,645		119,673		59,090		3,558
CRE Nonowner Occupied		263,268		697,651		197,277		426
Total Real Estate Mortgage Loans		597,348		1,939,841		766,668		113,251
Consumer and Other		9,687		8,913		161		293
Total Loans, Gross	$	958,651	$	2,295,371	$	844,141	$	116,391
Interest Rate Sensitivity:
Fixed Interest Rates	$	607,379	$	1,776,247	$	419,383	$	25,313
Floating or Adjustable Rates		351,272		519,124		424,758		91,078
Total Loans, Gross	$	958,651	$	2,295,371	$	844,141	$	116,391


	As of December 31, 2024
	Due in One Year		More Than One		More Than Five		After
(dollars in thousands)	or Less		Year to Five Years		Year to Fifteen Years		Fifteen Years
Commercial	$	170,588	$	248,695	$	75,467	$	2,912
Leases		4,998		38,641		652		—
Construction and Land Development		53,373		42,002		1,880		—
1-4 Family Construction		38,996		2,764		201		—
Real Estate Mortgage:
1-4 Family Mortgage		74,914		297,516		76,647		25,306
Multifamily		206,913		637,012		513,194		68,491
CRE Owner Occupied		4,704		112,223		69,742		4,579
CRE Nonowner Occupied		264,947		602,380		214,971		810
Total Real Estate Mortgage Loans		551,478		1,649,131		874,554		99,186
Consumer and Other		8,813		3,776		174		233
Total Loans, Gross	$	828,246	$	1,985,009	$	952,928	$	102,331
Interest Rate Sensitivity:
Fixed Interest Rates	$	580,854	$	1,622,161	$	475,264	$	32,271
Floating or Adjustable Rates		247,392		362,848		477,664		70,060
Total Loans, Gross	$	828,246	$	1,985,009	$	952,928	$	102,331

Asset Quality

The Company emphasizes credit quality in the originating and monitoring of the loan portfolio, and success in underwriting is measured by the levels of classified and nonperforming assets and net charge-offs. Federal regulations and internal policies require the use of an asset classification system as a means of managing and reporting problem and potential problem assets. The Company has incorporated an internal asset classification system, substantially consistent with federal banking regulations, as a part of the credit monitoring system. Federal banking regulations set forth a classification scheme for problem and potential problem assets as “special mention,” “substandard,” “doubtful” or “loss” assets. An asset identified as “special mention” is not adversely classified but has potential weaknesses that deserve management’s close attention. If left uncorrected, these potential weaknesses may result in the deterioration of the payment prospects of the asset. An asset is considered “substandard” if it is inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. A financial institution with assets classified as “special mention” is not expected to sustain losses of principal or interest from these assets and should not classify assets under this category for more than a year. “Substandard” assets include those characterized by the “distinct possibility” that the financial institution will sustain “some loss” if the deficiencies are not corrected.

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Assets classified as “doubtful” have all of the weaknesses inherent in those classified “substandard” with the added characteristic that the weaknesses present make “collection or liquidation in full,” on the basis of currently existing facts, conditions, and values, “highly questionable and improbable.” Assets classified as “loss” are those considered “uncollectible” and of such little value that their continuance as assets without the establishment of a specific loss reserve is not warranted. Assets which do not currently expose the insured institution to sufficient risk to warrant classification in one of the aforementioned categories but possess weaknesses are required to be designated “watch.”

The following table presents information on loan classifications at September 30, 2025. The Company had no assets classified as doubtful or loss at September 30, 2025.


	Risk Category
(dollars in thousands)	Watch/Special Mention		Substandard		Total
Commercial	$	1,431	$	14,137	$	15,568
Leases		—		19		19
Construction and Land Development		—		40		40
Real Estate Mortgage:
1-4 Family Mortgage		—		1,143		1,143
Multifamily		34,054		23,856		57,910
CRE Owner Occupied		5,022		2,692		7,714
CRE Nonowner Occupied		135		16,187		16,322
Total Real Estate Mortgage Loans		39,211		43,878		83,089
Totals	$	40,642	$	58,074	$	98,716

Loans that have potential weaknesses that warranted a watch or special mention risk rating at September 30, 2025 totaled $40.6 million, compared to $46.6 million at December 31, 2024. Loans that warranted a substandard risk rating at September 30, 2025 totaled $58.1 million, compared to $21.8 million at December 31, 2024. Management continues to actively work with these borrowers and closely monitor substandard credits.

Nonperforming Assets

Nonperforming loans include loans accounted for on a nonaccrual basis and loans 90 days past due and still accruing. Nonaccrual loans totaled $10.0 million as of September 30, 2025 and $301,000 as of December 31, 2024. There were no loans 90 days past due and still accruing as of September 30, 2025 or December 31, 2024. There were also no foreclosed assets as of September 30, 2025 and December 31, 2024.

The following table presents a summary of nonperforming assets, by category, at the dates indicated:


	September 30,			December 31,
(dollars in thousands)	2025			2024
Total Nonaccrual Loans	$	9,991		$	301
Total Nonperforming Loans	$	9,991		$	301
Total Nonperforming Assets ⁽¹⁾	$	9,991		$	301
Nonaccrual Loans to Total Loans		0.24	%		0.01	%
Nonperforming Loans to Total Loans		0.24			0.01
Nonperforming Assets to Total Loans Plus Foreclosed Assets ⁽¹⁾		0.24			0.01

(1)	Nonperforming assets are defined as nonaccrual loans and loans greater than 90 days past due still accruing plus foreclosed assets. There were no loans greater than 90 days past due still accruing or modified accruing loans for any period shown.

The balance of nonperforming assets can fluctuate due to changes in economic conditions. The Company has established a policy to discontinue accruing interest on a loan (that is, to place the loan on nonaccrual status) after it

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has become 90 days delinquent as to payment of principal or interest, unless the loan is considered to be well-collateralized and is actively in the process of collection. In addition, a loan will be placed on nonaccrual status before it becomes 90 days delinquent unless management believes that the collection of interest is expected. Interest previously accrued but uncollected on such loans is reversed and charged against current income when the receivable is determined to be uncollectible. If management believes that a loan will not be collected in full, an increase to the allowance for credit losses on loans is recorded to reflect management’s estimate of any potential exposure or loss. Generally, payments received on nonaccrual loans are applied directly to principal. Gross income that would have been recorded on nonaccrual loans for three and nine months ended September 30, 2025 was $56,000 and $398,000, respectively. Gross income that would have been recorded on nonaccrual loans for the three and nine months ended September 30, 2024 was $116,000 and $152,000, respectively.

Allowance for Credit Losses

The allowance for credit losses on loans and leases is a reserve established through charges to earnings in the form of a provision for credit losses. The Company maintains an allowance for credit losses at a level management considers adequate to provide for expected lifetime losses in the portfolio. Although management strives to maintain an allowance it deems adequate, future economic changes, deterioration of borrowers’ creditworthiness, and the impact of examinations by regulatory agencies, among other factors, all could cause changes to the allowance for credit losses on loans and leases.

At September 30, 2025, the allowance for credit losses on loans and leases was $56.4 million, an increase of $4.1 million from $52.3 million at December 31, 2024. Net charge-offs (recoveries) totaled $275,000 during the third quarter of 2025 and $931,000 during the third quarter of 2024. Net charge-offs (recoveries) totaled $287,000 for the nine months ended September 30, 2025, and $926,000 for the nine months ended September 30, 2024. The allowance for credit losses on loans and leases as a percentage of total loans was 1.34% at September 30, 2025 and 1.35% at December 31, 2024.

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The following table presents a summary of net charge-offs for the periods indicated:


	Three Months Ended						Nine Months Ended
	September 30,						September 30,
(dollars in thousands)	2025			2024			2025			2024
Net Charge-offs (Recoveries)
Commercial	$	254		$	(5)		$	253		$	(10)
Leases		15			—			15			—
Real Estate Mortgage:
1-4 Family Mortgage		—			—			—			(3)
CRE Nonowner Occupied		—			935			—			935
Total Real Estate Mortgage Loans		—			935			—			932
Consumer and Other		6			1			19			4
Total Net Charge-offs (Recoveries)	$	275		$	931		$	287		$	926
Net Charge-offs to Average Loans
Commercial		0.20	%		0.00	%		0.07	%		0.00	%
Leases		0.14			0.00			0.05			0.00
Real Estate Mortgage:
CRE Nonowner Occupied		0.00			0.35			0.00			0.12
Total Real Estate Mortgage Loans		0.00			0.12			0.00			0.04
Consumer and Other		0.13			0.04			0.16			0.05
Total Net Charge-offs (Recoveries) (Annualized) to Average Loans		0.03	%		0.10	%		0.01	%		0.03	%
Gross Loans, End of Period	$	4,214,554		$	3,685,590		$	4,214,554		$	3,685,590
Average Loans		4,132,987			3,721,654			4,034,656			3,740,855
Allowance for Credit Losses to Total Gross Loans		1.34	%		1.38	%		1.34	%		1.38	%

The following table presents a summary of the allocation of the allowance for credit losses on loans and leases by loan portfolio segment as of the dates indicated:


	September 30,				December 31,
	2025				2024
(dollars in thousands)	Amount		Percent		Amount		Percent
Commercial	$	6,793	12.1	%	$	5,630	10.8	%
Leases		418	0.7			368	0.7
Construction and Land Development		1,280	2.3			866	1.7
1-4 Family Construction		294	0.5			331	0.6
Real Estate Mortgage:
1 - 4 Family Mortgage		2,432	4.3			2,795	5.3
Multifamily		23,230	41.2			23,120	44.2
CRE Owner Occupied		1,112	2.0			1,290	2.5
CRE Nonowner Occupied		20,650	36.6			17,735	33.9
Total Real Estate Mortgage Loans		47,424	84.1			44,940	85.9
Consumer and Other		181	0.3			142	0.3
Total Allowance for Credit Losses	$	56,390	100.0	%	$	52,277	100.0	%

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Deposits

The principal sources of funds for the Company are deposits, consisting of demand deposits, money market accounts, savings accounts, and certificates of deposit. The following table presents the dollar and percentage composition of the deposit portfolio, by category, at the dates indicated:


	September 30, 2025				June 30, 2025				March 31, 2025				December 31, 2024				September 30, 2024
(dollars in thousands)	Amount		Percent		Amount		Percent		Amount		Percent		Amount		Percent		Amount		Percent
Noninterest Bearing Transaction Deposits	$	822,632	19.1	%	$	787,868	18.6	%	$	791,528	19.0	%	$	800,763	19.6	%	$	713,309	19.0	%
Interest Bearing Transaction Deposits		860,774	20.1			791,748	18.7			840,378	20.2			862,242	21.1			805,756	21.5
Savings and Money Market Deposits		1,428,726	33.3			1,441,694	34.0			1,372,191	33.0			1,259,503	30.8			980,345	26.2
Time Deposits		346,214	8.1			344,882	8.1			326,821	7.8			338,506	8.3			347,080	9.3
Brokered Deposits		834,418	19.4			870,550	20.6			831,539	20.0			825,753	20.2			900,952	24.0
Total Deposits	$	4,292,764	100.0	%	$	4,236,742	100.0	%	$	4,162,457	100.0	%	$	4,086,767	100.0	%	$	3,747,442	100.0	%

Total deposits at September 30, 2025 were $4.29 billion, an increase of $206.0 million, or 5.0%, compared to total deposits of $4.09 billion at December 31, 2024, and an increase of $545.3 million, or 14.6%, over total deposits of $3.75 billion at September 30, 2024. Core deposits, defined as total deposits excluding brokered deposits and time deposits greater than $250,000, increased $172.0 million, or 7.4% annualized, from December 31, 2024. Growth in core deposits was primarily due to both increased balances of existing clients and new client acquisitions. Based on the nature of the Company’s client base, management believes core deposits could fluctuate in future periods as deposit growth is not always linear.

The Company relies on increasing the deposit base to fund loans and other asset growth. The Company is in a highly competitive market and competes for local deposits by offering attractive products with competitive rates. The Company expects to have a higher average cost of funds for local deposits compared to competitor banks due to the lack of an extensive branch network. The Company’s strategy is to offset the higher cost of funding with a lower level of operating expense. When appropriate, the Company utilizes alternative funding sources such as brokered deposits. The brokered deposit market provides flexibility in structure, optionality and efficiency not afforded in traditional retail deposit channels. As of September 30, 2025, total brokered deposits were $834.4 million, an increase of $8.7 million, compared to total brokered deposits of $825.8 million at December 31, 2024. Brokered deposits continue to be used as a supplemental funding source, as needed, to support loan portfolio growth.

The following table presents the average balance and average rate paid on each of the following deposit categories as of and for the three months ended September 30, 2025 and 2024:


	As of and for the				As of and for the
	Three Months Ended				Three Months Ended
	September 30, 2025				September 30, 2024
	Average		Average		Average		Average
(dollars in thousands)	Balance		Rate		Balance		Rate
Noninterest Bearing Transaction Deposits	$	793,760	—	%	$	710,192	—	%
Interest Bearing Transaction Deposits		843,905	3.78			804,161	4.63
Savings and Money Market Deposits		1,473,465	3.63			939,665	4.34
Time Deposits < $250,000		170,163	4.28			184,397	4.01
Time Deposits > $250,000		172,763	4.29			170,653	4.80
Brokered Deposits		856,516	4.36			989,712	4.28
Total Deposits	$	4,310,572	3.19	%	$	3,798,780	3.58	%

The Company’s total uninsured deposits, which are the amounts of deposit accounts that exceed the FDIC insurance limit, currently $250,000, were approximately $1.26 billion, or 29.2% of total deposits, at

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September 30, 2025 and $1.14 billion, or 27.7% of total deposits, at December 31, 2024. These amounts were estimated based on the same methodologies and assumptions used for regulatory reporting purposes.

Borrowed Funds

Other Borrowings

At September 30, 2025, the Company had outstanding FHLB advances of $404.5 million, compared to $359.5 million at December 31, 2024. The Company’s borrowing capacity at the FHLB is determined based on collateral pledged, generally consisting of loans. The Company had additional borrowing capacity under this credit facility of $493.6 million and $483.2 million at September 30, 2025 and December 31, 2024, respectively.

The Company has an outstanding Loan and Security Agreement and revolving note with a third party correspondent lender, which is secured by 100% of the issued and outstanding stock of the Bank. The maximum principal amount of the revolving line of credit is $40.0 million, and the facility matures on September 1, 2026. As of September 30, 2025 the Company had no outstanding balance under the revolving line of credit, compared to $13.8 million as of December 31, 2024. The Company also has two outstanding letters of credit totaling $6.4 million under this facility as of both September 30, 2025 and December 31, 2024.

Additionally, the Company has borrowing capacity from other sources. As of September 30, 2025, the Bank was eligible to use the Federal Reserve discount window for borrowings. Based on assets pledged as collateral as of the applicable date, the Bank’s borrowing availability was approximately $994.0 million and $925.8 million at September 30, 2025 and December 31, 2024, respectively. As of September 30, 2025 and December 31, 2024, the Company had no outstanding advances from the discount window.

Subordinated Debentures

As of September 30, 2025 and December 31, 2024, the Company had subordinated debentures, net of issuance costs, of $108.6 million and $79.7 million, respectively.

For additional information, see “Note 9 – Subordinated Debentures” of the Company’s Consolidated Financial Statements included as part of this report.

Contractual Obligations

The following table presents supplemental information regarding total contractual obligations at September 30, 2025:


	Within		One to		Three to		After
(dollars in thousands)	One Year		Three Years		Five Years		Five Years		Total
Deposits Without a Stated Maturity	$	3,261,497	$	—	$	—	$	—	$	3,261,497
Time Deposits		663,327		197,970		169,970		—		1,031,267
FHLB Advances		320,500		61,500		22,500		—		404,500
Subordinated Debentures		—		—		—		110,000		110,000
Commitment to Fund Tax Credit Investments		2,212		—		—		—		2,212
Operating Lease Obligations		586		754		304		22		1,666
Totals	$	4,248,122	$	260,224	$	192,774	$	110,022	$	4,811,142

The Company believes that it will be able to meet all contractual obligations as they come due through the maintenance of adequate cash levels. The Company expects to maintain adequate cash levels through earnings, loan

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and securities repayments and maturity activity and continued deposit gathering activities. As described above, the Company has in place various borrowing mechanisms for both short-term and long-term liquidity needs.

Capital

Total shareholders’ equity at September 30, 2025 was $497.5 million, an increase of $39.5 million, or 8.6%, compared to total shareholders’ equity of $457.9 million at December 31, 2024. The increase was primarily due to net income retained and a decrease in unrealized losses in the securities portfolio, offset partially by a decrease in unrealized gains in the derivatives portfolio, preferred stock dividends, and stock repurchases.

Tangible book value per share, a non-GAAP financial measure, was $14.93 as of September 30, 2025, an increase of 10.7% from $13.49 as of December 31, 2024. Tangible common equity as a percentage of tangible assets, a non-GAAP financial measure, was 7.71% at September 30, 2025, compared to 7.36% at December 31, 2024.

Stock Repurchase Program. The Company did not repurchase any shares of its common stock pursuant to its existing stock repurchase program during the three months ended September 30, 2025. During the nine months ended September 30, 2025, the Company repurchased 167,709 shares of its common stock, representing 0.61% of the Company’s issued and outstanding shares as of September 30, 2025. Shares were repurchased during this period at a weighted average price of $13.07 per share, for a total of $2.2 million. All shares repurchased under the stock repurchase program were converted to authorized but unissued shares. As of September 30, 2025, the remaining amount that could be used to repurchase shares under the 2022 Stock Repurchase Program was $13.1 million. The Company remains committed to maintaining strong capital levels while enhancing shareholder value as it strategically executes its stock repurchase program based on various factors including valuation, capital levels and other uses of capital.

Regulatory Capital. The Company and the Bank are subject to various regulatory capital requirements administered by federal banking regulators. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by federal banking regulators that, if undertaken, could have a direct material effect on the Company’s and Bank’s business.

Management believes the Company and the Bank met all capital adequacy requirements to which they were subject as of September 30, 2025. The regulatory capital ratios necessary for the Company and the Bank to meet minimum capital adequacy standards, and for the Bank to be considered well capitalized under the prompt corrective action framework, are set forth in the following tables. The Company’s and the Bank’s actual capital amounts and ratios as of the dates indicated are presented in the following tables:


					Minimum Required				For Capital Adequacy				To be Well Capitalized
					For Capital Adequacy				Purposes Plus Capital				Under Prompt Corrective
	Actual				Purposes				Conservation Buffer				Action Regulations
(dollars in thousands)	Amount		Ratio		Amount		Ratio		Amount		Ratio		Amount		Ratio
September 30, 2025
Company (Consolidated):
Total Risk-based Capital	$	652,426	14.12	%	$	369,556	8.00	%	$	485,042	10.50	%		N/A	N/A
Tier 1 Risk-based Capital		486,065	10.52			277,167	6.00			392,653	8.50			N/A	N/A
Common Equity Tier 1 Capital		419,551	9.08			207,875	4.50			323,361	7.00			N/A	N/A
Tier 1 Leverage Ratio		486,065	9.02			215,446	4.00			215,446	4.00			N/A	N/A
Bank:
Total Risk-based Capital	$	619,058	13.43	%	$	368,824	8.00	%	$	484,082	10.50	%	$	461,030	10.00	%
Tier 1 Risk-based Capital		561,397	12.18			276,618	6.00			391,876	8.50			368,824	8.00
Common Equity Tier 1 Capital		561,397	12.18			207,464	4.50			322,721	7.00			299,670	6.50
Tier 1 Leverage Ratio		561,397	10.43			215,230	4.00			215,230	4.00			269,037	5.00

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					Minimum Required				For Capital Adequacy				To be Well Capitalized
					For Capital Adequacy				Purposes Plus Capital				Under Prompt Corrective
	Actual				Purposes				Conservation Buffer				Action Regulations
(dollars in thousands)	Amount		Ratio		Amount		Ratio		Amount		Ratio		Amount		Ratio
December 31, 2024
Company (Consolidated):
Total Risk-based Capital	$	585,966	13.76	%	$	340,581	8.00	%	$	447,013	10.50	%		N/A	N/A
Tier 1 Risk-based Capital		453,049	10.64			255,436	6.00			361,867	8.50			N/A	N/A
Common Equity Tier 1 Capital		386,535	9.08			191,577	4.50			298,008	7.00			N/A	N/A
Tier 1 Leverage Ratio		453,049	9.44			191,878	4.00			191,878	4.00			N/A	N/A
Bank:
Total Risk-based Capital	$	573,158	13.49	%	$	340,003	8.00	%	$	446,254	10.50	%	$	425,004	10.00	%
Tier 1 Risk-based Capital		520,000	12.24			255,002	6.00			361,253	8.50			340,003	8.00
Common Equity Tier 1 Capital		520,000	12.24			191,252	4.50			297,503	7.00			276,253	6.50
Tier 1 Leverage Ratio		520,000	10.86			191,593	4.00			191,593	4.00			239,491	5.00

Regulations include a capital conservation buffer of 2.5% that is added to the minimum requirements for capital adequacy purposes. A banking organization with a conservation buffer of less than the required amount is subject to limitations on capital distributions, including dividend payments, stock repurchases and certain discretionary bonus payments to executive officers. At September 30, 2025, the ratios for the Company and the Bank were sufficient to meet the conservation buffer.

Off-Balance Sheet Arrangements

In the normal course of business, the Company enters into various transactions to meet the financing needs of clients, which, in accordance with GAAP, are not included in the consolidated balance sheets. These transactions include commitments to extend credit, standby letters of credit, and commercial letters of credit, which involve, to varying degrees, elements of credit risk and interest rate risk in excess of the amounts recognized in the consolidated balance sheets. Most of these commitments mature within two years and the standby letters of credit are expected to expire without being drawn upon. All off-balance sheet commitments are included in the determination of the amount of risk-based capital that the Company and the Bank are required to hold.

The Company’s exposure to credit loss in the event of non-performance by the other party to the financial instrument for commitments to extend credit, standby letters of credit, and commercial letters of credit is represented by the contractual or notional amount of those instruments. The Company decreases its exposure to losses under these commitments by subjecting them to credit approval and monitoring procedures. The Company assesses the credit risk associated with certain commitments to extend credit and establishes a liability for probable credit losses.

The following table presents credit arrangements and financial instruments whose contract amounts represented credit risk as of September 30, 2025 and December 31, 2024:


	September 30, 2025				December 31, 2024
	Fixed		Variable		Fixed		Variable
(dollars in thousands)
Unfunded Commitments Under Lines of Credit	$	244,628	$	550,160	$	174,273	$	504,791
Letters of Credit		24,664		108,874		9,012		115,385
Totals	$	269,292	$	659,034	$	183,285	$	620,176

Liquidity

Liquidity is the Company’s capacity to meet cash and collateral obligations at a reasonable cost. Maintaining an adequate level of liquidity depends on the Company’s ability to efficiently meet both expected and unexpected cash

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flow and collateral needs without adversely affecting either daily operations or financial condition. The Bank’s Asset Liability Management, or ALM, Committee, is responsible for managing commitments to meet the needs of customers while achieving the Company’s financial objectives. The ALM Committee meets regularly to review balance sheet composition, funding capacities, and current and forecasted loan demand.

The Company manages liquidity by maintaining adequate levels of cash and other assets from on- and off-balance sheet arrangements. Specifically, on-balance sheet liquidity consists of cash and due from banks and unpledged investment securities available for sale, which are referred to as primary liquidity. In regards to off-balance sheet capacity, the Company maintains available borrowing capacity under secured borrowing lines with the FHLB, the Federal Reserve Bank of Minneapolis, and a correspondent lender, as well as unsecured lines of credit for the purpose of overnight funds with various correspondent banks, which the Company refers to as secondary liquidity.

Total on- and off-balance sheet liquidity was $2.39 billion as of September 30, 2025, compared to $2.30 billion at December 31, 2024.

The following tables present a summary of primary and secondary liquidity levels as of the dates indicated:


Primary Liquidity—On-Balance Sheet	September 30, 2025			December 31, 2024
(dollars in thousands)
Cash and Cash Equivalents	$	109,903		$	188,884
Securities Available for Sale		826,473			768,247
Less: Pledged Securities		(264,901)			(289,903)
Total Primary Liquidity	$	671,475		$	667,228
Ratio of Primary Liquidity to Total Deposits		15.6	%		16.3	%

Secondary Liquidity—Off-Balance Sheet
(dollars in thousands)
Net Secured Borrowing Capacity with the FHLB	$	493,644		$	483,245
Net Secured Borrowing Capacity with the Federal Reserve Bank		994,039			925,798
Unsecured Borrowing Capacity with Correspondent Lenders		200,000			200,000
Secured Borrowing Capacity with Correspondent Lender		33,605			19,855
Total Secondary Liquidity		1,721,288			1,628,898
Total Primary and Secondary Liquidity	$	2,392,763		$	2,296,126
Ratio of Primary and Secondary Liquidity to Total Deposits		55.7	%		56.2	%

During the nine months ended September 30, 2025, primary liquidity increased by $4.2 million due to a $58.2 million increase in securities available for sale and a $25.0 million decrease in pledged securities, offset partially by a $79.0 million decrease in cash and cash equivalents, when compared to December 31, 2024. Secondary liquidity increased by $92.4 million as of September 30, 2025, when compared to December 31, 2024, due to a $68.2 million increase in the borrowing capacity with the Federal Reserve Bank, a $13.8 million increase in the borrowing capacity with correspondent lenders, and a $10.4 million increase in borrowing capacity with the FHLB.

In addition to primary liquidity, the Company generates liquidity from cash flows from the loan and securities portfolios and from the large base of core deposits, defined as noninterest bearing transaction, interest bearing transaction, savings, non-brokered money market accounts and non-brokered time deposits less than $250,000. At September 30, 2025, core deposits totaled approximately $3.28 billion and represented 76.4% of total deposits. These core deposits are normally less volatile, often with customer relationships tied to other products offered by the Company, which promote long-standing relationships and stable funding sources.

The Company uses brokered deposits, the availability of which is uncertain and subject to competitive market forces and regulation, for liquidity and interest rate risk management purposes. At September 30, 2025, brokered deposits totaled $834.4 million, consisting of $685.1 million of brokered time deposits and $149.4 million of non-maturity brokered money market and transaction accounts. At December 31, 2024, brokered deposits totaled $825.8

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million, consisting of $698.3 million of brokered time deposits and $127.4 million of non-maturity brokered money market and transaction accounts.

The Company’s liquidity policy includes guidelines for On-Balance Sheet Liquidity (a measurement of primary liquidity to total deposits plus borrowings), Total On-Balance Sheet Liquidity with Borrowing Capacity (a measurement of primary and secondary liquidity to total deposits plus borrowings), Wholesale Funding Ratio (a measurement of total wholesale funding to total deposits plus borrowings), and other guidelines developed for measuring and maintaining liquidity.

Non-GAAP Financial Measures

In addition to financial measures presented in accordance with 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 report to the comparable GAAP measures are provided in the following tables:


	For the Three Months Ended															For the Nine Months Ended
	September 30,			June 30,			March 31,			December 31,			September 30,			September 30,			September 30,
(dollars in thousands)	2025			2025			2024			2024			2024			2025			2024
Pre-Provision Net Revenue
Noninterest Income	$	2,061		$	3,627		$	2,079		$	2,533		$	1,522		$	7,767		$	4,835
Less: (Gain) Loss on Sales of Securities		(59)			(474)			(1)			—			28			(534)			(385)
Less: FHLB Advance Prepayment Income		—			(301)			—			—			—			(301)			—
Total Operating Noninterest Income		2,002			2,852			2,078			2,533			1,550			6,932			4,450
Plus: Net Interest Income		34,091			32,452			30,208			26,967			25,599			96,751			75,226
Net Operating Revenue	$	36,093		$	35,304		$	32,286		$	29,500		$	27,149		$	103,683		$	79,676

Noninterest Expense	$	19,956		$	18,941		$	18,136		$	16,812		$	15,760		$	57,033		$	46,488
Total Operating Noninterest Expense	$	19,956		$	18,941		$	18,136		$	16,812		$	15,760		$	57,033		$	46,488

Pre-Provision Net Revenue	$	16,137		$	16,363		$	14,150		$	12,688		$	11,389		$	46,650		$	33,188

Plus:
Non-Operating Revenue Adjustments		59			775			1			—			(28)			835			385
Less:
Provision for Credit Losses		1,100			2,000			1,500			2,175			—			4,600			1,350
Provision for Income Taxes		3,495			3,618			3,018			2,309			2,686			10,131			7,602
Net Income	$	11,601		$	11,520		$	9,633		$	8,204		$	8,675		$	32,754		$	24,621

Average Assets	$	5,372,443		$	5,162,182		$	5,071,446		$	4,788,036		$	4,703,804		$	5,205,747		$	4,647,925
Pre-Provision Net Revenue Return on Average Assets		1.19	%		1.27	%		1.13	%		1.05	%		0.96	%		1.20	%		0.95	%

Adjusted Pre-Provision Net Revenue
Net Operating Revenue	$	36,093		$	35,304		$	32,286		$	29,500		$	27,149		$	103,683		$	79,676

Noninterest Expense	$	19,956		$	18,941		$	18,136		$	16,812		$	15,760		$	57,033		$	46,488
Less: Merger-related Expenses		(530)			(540)			(565)			(488)			(224)			(1,635)			(224)
Adjusted Total Operating Noninterest Expense	$	19,426		$	18,401		$	17,571		$	16,324		$	15,536		$	55,398		$	46,264

Adjusted Pre-Provision Net Revenue	$	16,667		$	16,903		$	14,715		$	13,176		$	11,613		$	48,285		$	33,412
Adjusted Pre-Provision Net Revenue Return on Average Assets		1.23	%		1.31	%		1.18	%		1.09	%		0.98	%		1.24	%		0.96	%

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	For the Three Months Ended															For the Nine Months Ended
	September 30,			June 30,			March 31,			December 31,			September 30,			September 30,			September 30,
(dollars in thousands)	2025			2025			2025			2024			2024			2025			2024
Core Net Interest Margin
Net Interest Income (Tax-equivalent Basis)	$	34,614		$	32,770		$	30,464		$	27,254		$	25,905		$	97,848		$	76,185
Less:
Loan Fees		(966)			(1,019)			(719)			(747)			(968)			(2,704)			(2,342)
Purchase Accounting Accretion:
Loan Accretion		(380)			(425)			(342)			—			—			(1,147)			—
Bond Accretion		(89)			(152)			(578)			(91)			—			(819)			—
Bank-Owned Certificates of Deposit Accretion		(6)			(4)			(7)			—			—			(17)			—
Deposit Certificates of Deposit Accretion		(13)			(37)			(38)			—			—			(88)			—
Total Purchase Accounting Accretion		(488)			(618)			(965)			(91)			—			(2,071)			—
Core Net Interest Income (Tax-equivalent Basis)	$	33,160		$	31,133		$	28,780		$	26,416		$	24,937		$	93,073		$	73,843

Average Interest Earning Assets	$	5,223,139		$	5,019,058		$	4,928,283		$	4,682,841		$	4,595,521		$	5,060,374		$	4,544,932
Core Net Interest Margin		2.52	%		2.49	%		2.37	%		2.24	%		2.16	%		2.46	%		2.17	%

Core Loan Yield
Loan Interest Income (Tax-equivalent Basis)	$	60,317		$	58,122		$	53,979		$	52,078		$	52,118		$	172,418		$	153,567
Less:
Loan Fees		(966)			(1,019)			(719)			(747)			(968)			(2,704)			(2,342)
Loan Accretion		(380)			(425)			(342)			—			—			(1,147)			—
Core Loan Interest Income	$	58,971		$	56,678		$	52,918		$	51,331		$	51,150		$	168,567		$	151,225

Average Loans	$	4,132,987		$	4,064,540		$	3,899,258		$	3,730,532		$	3,721,654		$	4,034,656		$	3,740,855
Core Loan Yield		5.66	%		5.59	%		5.50	%		5.47	%		5.47	%		5.59	%		5.40	%

Efficiency Ratio
Noninterest Expense	$	19,956		$	18,941		$	18,136		$	16,812		$	15,760		$	57,033		$	46,488
Less: Amortization of Intangible Assets		(230)			(230)			(230)			(52)			(9)			(690)			(26)
Adjusted Noninterest Expense	$	19,726		$	18,711		$	17,906		$	16,760		$	15,751		$	56,343		$	46,462

Net Interest Income	$	34,091		$	32,452		$	30,208		$	26,967		$	25,599		$	96,751		$	75,226
Noninterest Income		2,061			3,627			2,079			2,533			1,522			7,767			4,835
Less: Gain (Loss) on Sales of Securities		(59)			(474)			(1)			—			28			(534)			(385)
Adjusted Operating Revenue	$	36,093		$	35,605		$	32,286		$	29,500		$	27,149		$	103,984		$	79,676
Efficiency Ratio		54.7	%		52.6	%		55.5	%		56.8	%		58.0	%		54.2	%		58.3	%

Adjusted Efficiency Ratio
Noninterest Expense	$	19,956		$	18,941		$	18,136		$	16,812		$	15,760		$	57,033		$	46,488
Less: Amortization of Intangible Assets		(230)			(230)			(230)			(52)			(9)			(690)			(26)
Less: Merger-related Expenses		(530)			(540)			(565)			(488)			(224)			(1,635)			(224)
Adjusted Noninterest Expense	$	19,196		$	18,171		$	17,341		$	16,272		$	15,527		$	54,708		$	46,238

Net Interest Income	$	34,091		$	32,452		$	30,208		$	26,967		$	25,599			96,751			75,226
Noninterest Income		2,061			3,627			2,079			2,533			1,522			7,767			4,835
Less: FHLB Advance Prepayment Income		—			(301)			—			—			—			(301)			—
Less: (Gain) Loss on Sales of Securities		(59)			(474)			(1)			—			28			(534)			(385)
Adjusted Operating Revenue	$	36,093		$	35,304		$	32,286		$	29,500		$	27,149		$	103,683		$	79,676
Adjusted Efficiency Ratio		53.2	%		51.5	%		53.7	%		55.2	%		57.2	%		52.8	%		58.0	%

Adjusted Noninterest Expense to Average Assets (Annualized)
Noninterest Expense	$	19,956		$	18,941		$	18,136		$	16,812		$	15,760		$	57,033		$	46,488
Less: Merger-related Expenses		(530)			(540)			(565)			(488)			(224)			(1,635)			(224)
Adjusted Noninterest Expense	$	19,426		$	18,401		$	17,571		$	16,324		$	15,536		$	55,398		$	46,264

Average Assets	$	5,372,443		$	5,162,182		$	5,071,446		$	4,788,036		$	4,703,804		$	5,205,747		$	4,647,925
Adjusted Noninterest Expense to Average Assets (Annualized)		1.43	%		1.43	%		1.41	%		1.36	%		1.31	%		1.42	%		1.33	%

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	For the Three Months Ended															For the Nine Months Ended
	September 30,			June 30,			March 31,			December 31,			September 30,			September 30,			September 30,
(dollars in thousands)	2025			2025			2025			2024			2024			2025			2024
Tangible Common Equity and Tangible Common Equity/Tangible Assets
Total Shareholders' Equity	$	497,463		$	476,282		$	468,975		$	457,935		$	452,200
Less: Preferred Stock		(66,514)			(66,514)			(66,514)			(66,514)			(66,514)
Total Common Shareholders' Equity		430,949			409,768			402,461			391,421			385,686
Less: Intangible Assets		(19,142)			(19,372)			(19,602)			(19,832)			(2,789)
Tangible Common Equity	$	411,807		$	390,396		$	382,859		$	371,589		$	382,897

Total Assets	$	5,359,994		$	5,296,673		$	5,136,808		$	5,066,242		$	4,691,517
Less: Intangible Assets		(19,142)			(19,372)			(19,602)			(19,832)			(2,789)
Tangible Assets	$	5,340,852		$	5,277,301		$	5,117,206		$	5,046,410		$	4,688,728
Tangible Common Equity/Tangible Assets		7.71	%		7.40	%		7.48	%		7.36	%		8.17	%

Tangible Book Value Per Share
Book Value Per Common Share	$	15.62		$	14.92		$	14.60		$	14.21		$	14.06
Less: Effects of Intangible Assets		(0.69)			(0.71)			(0.71)			(0.72)			(0.10)
Tangible Book Value Per Common Share	$	14.93		$	14.21		$	13.89		$	13.49		$	13.96

Return on Average Tangible Common Equity
Net Income Available to Common Shareholders	$	10,588		$	10,506		$	8,620		$	7,190		$	7,662		$	29,714		$	21,581

Average Shareholders' Equity	$	485,869		$	471,700		$	465,408		$	455,949		$	443,077		$	474,278		$	435,664
Less: Average Preferred Stock		(66,514)			(66,514)			(66,514)			(66,514)			(66,514)			(66,514)			(66,514)
Average Common Equity		419,355			405,186			398,894			389,435			376,563			407,764			369,150
Less: Effects of Average Intangible Assets		(19,274)			(19,504)			(19,738)			(4,412)			(2,794)			(19,504)			(2,802)
Average Tangible Common Equity	$	400,081		$	385,682		$	379,156		$	385,023		$	373,769		$	388,260		$	366,348
Return on Average Tangible Common Equity		10.50	%		10.93	%		9.22	%		7.43	%		8.16	%		10.23	%		7.87	%

Adjusted Diluted Earnings Per Common Share
Net Income Available to Common Shareholders	$	10,588		$	10,506		$	8,620		$	7,190		$	7,662		$	29,714		$	21,581

Add: Merger-related Expenses		530			540			565			488			224			1,635			224
Less: FHLB Advance Prepayment Income		—			(301)			—			—			—			(301)			—
Less: (Gain) Loss on Sales of Securities		(59)			(474)			(1)			—			28			(534)			(385)
Total Adjustments		471			(235)			564			488			252			800			(161)
Less: Tax Impact of Adjustments		(110)			56			(135)			(107)			(59)			(189)			38
Adjusted Net Income Available to Common Shareholders	$	10,949		$	10,327		$	9,049		$	7,571		$	7,855		$	30,325		$	21,458

Diluted Weighted Average Shares Outstanding		28,190,406			27,998,008			28,036,506			28,055,532			27,904,910			28,089,409			27,919,784
Adjusted Diluted Earnings Per Common Share	$	0.39		$	0.37		$	0.32		$	0.27		$	0.28		$	1.08		$	0.77

Adjusted Return on Average Assets
Net Income	$	11,601		$	11,520		$	9,633		$	8,204		$	8,675		$	32,754		$	24,621
Add: Total Adjustments		471			(235)			564			488			252			800			(161)
Less: Tax Impact		(110)			56			(135)			(107)			(59)			(189)			38
Net Income, Excluding Impact of Merger-related Expenses	$	11,962		$	11,341		$	10,062		$	8,585		$	8,868		$	33,365		$	24,498

Average Assets	$	5,372,443		$	5,162,182		$	5,071,446		$	4,788,036		$	4,703,804		$	5,205,747		$	4,647,925
Adjusted Return on Average Assets		0.88	%		0.88	%		0.80	%		0.71	%		0.75	%		0.86	%		0.70	%

Adjusted Return on Average Shareholders' Equity
Net Income, Excluding Impact of Merger-related Expenses	$	11,962		$	11,341		$	10,062		$	8,585		$	8,868		$	33,365		$	24,498

Average Shareholders' Equity	$	485,869		$	471,700		$	465,408		$	455,949		$	443,077		$	474,278		$	435,664
Adjusted Return on Average Shareholders' Equity		9.77	%		9.64	%		8.77	%		7.49	%		7.96	%		9.41	%		7.51	%

Adjusted Return on Average Tangible Common Equity
Net Income Available to Common Shareholders, Excluding Impact of Merger-related Expenses	$	10,949		$	10,327		$	9,049		$	7,571		$	7,855		$	30,325		$	21,458

Average Tangible Common Equity	$	400,081		$	385,682		$	379,156		$	385,023		$	373,769		$	388,260		$	366,348
Adjusted Return on Average Tangible Common Equity		10.86	%		10.74	%		9.68	%		7.82	%		8.36	%		10.44	%		7.82	%

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Item 3. Quantitative and Qualitative Disclosures about Market Risk

Interest Rate Risk

As a financial institution, the Company’s primary market risk is interest rate risk, which is defined as the risk of loss of net interest income or net interest margin because of changes in interest rates. The Company continually seeks to measure and manage the potential impact of interest rate risk. Interest rate risk occurs when interest earning assets and interest bearing liabilities mature or re-price at different times, on a different basis or in unequal amounts. Interest rate risk also arises when assets and liabilities each respond differently to changes in interest rates.

The Company’s management of interest rate risk is overseen by its ALM Committee, based on a risk management infrastructure approved by the board of directors that outlines reporting and measurement requirements. In particular, this infrastructure sets limits and management targets for various metrics, including net interest income simulation involving parallel shifts in interest rate curves, steepening and flattening yield curves, and various prepayment and deposit duration assumptions. The Company’s risk management infrastructure also requires a periodic review of all key assumptions used, such as identifying appropriate interest rate scenarios, setting loan prepayment rates based on historical analysis and noninterest bearing and interest bearing transaction deposit durations based on historical analysis. The Company does not engage in speculative trading activities relating to interest rates, foreign exchange rates, commodity prices, equities or credit.

The Company manages the interest rate risk associated with interest earning assets by managing the interest rates and terms associated with the investment securities portfolio by purchasing and selling investment securities from time to time. The Company manages the interest rate risk associated with interest bearing liabilities by managing the interest rates and terms associated with wholesale borrowings and deposits from customers which the Company relies on for funding. For example, the Company occasionally uses special offers on deposits to alter the interest rates and terms associated with interest bearing liabilities.

The Company has entered into certain hedging transactions including fair value swaps and interest rate swaps and caps, which are designed to lessen elements of the Company’s interest rate exposure. Cash flow hedge relationships mitigate exposure to the variability of future cash flows or other forecasted transactions. The Company utilizes cash flow hedges to manage interest rate exposure for the brokered deposit and wholesale borrowing portfolios. These cash flow hedges had a total notional amount of $308.0 million and $303.0 million at September 30, 2025 and December 31, 2024, respectively. Fair value hedge relationships mitigate exposure to changes in the fair value of a recognized asset or value. The Company utilizes fair value hedges to manage fair value exposure for the U.S. treasury security, mortgage-backed security, and municipal security portfolios. These fair value hedges had a total notional amount of $243.6 million and $145.9 million at September 30, 2025 and December 31, 2024, respectively. In the event that interest rates do not change in the manner anticipated, such transactions may adversely affect the Company’s results of operations.

Net Interest Income Simulation

The Company uses a net interest income simulation model to measure and evaluate potential changes in net interest income that would result over the next 12 months from immediate and sustained changes in interest rates as of the measurement date. This model has inherent limitations and the results are based on a given set of rate changes and assumptions as of a certain point in time. For purposes of the simulation, the Company assumes no growth in either interest-sensitive assets or liabilities over the next 12 months; therefore, the model’s results reflect an interest rate shock to a static balance sheet. The simulation model also incorporates various other assumptions, which the Company believes are reasonable but which may have a significant impact on results, such as: (1) the timing of changes in interest rates, (2) shifts or rotations in the yield curve, (3) re-pricing characteristics for market-rate-sensitive instruments, (4) differing sensitivities of financial instruments due to differing underlying rate indices, (5) varying loan prepayment speeds for different interest rate scenarios, (6) the effect of interest rate limitations in assets, such as

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floors and caps, and (7) overall growth and repayment rates and product mix of assets and liabilities. Because of the limitations inherent in any approach used to measure interest rate risk, simulation results are not intended as a forecast of the actual effect of a change in market interest rates on the results, but rather as a means to better plan and execute appropriate asset-liability management strategies and to manage interest rate risk.

Potential changes to the Company’s net interest income in hypothetical rising and declining rate scenarios calculated as of September 30, 2025 and December 31, 2024 are presented in the table below. The projections assume an immediate, parallel shift downward of the yield curve of 100, 200, 300, and 400 basis points and immediate, parallel shifts upward of the yield curve of 100, 200, 300 and 400 basis points.


(dollars in thousands)	September 30, 2025				December 31, 2024
Change (basis points)	Forecasted		Percentage		Forecasted		Percentage
in Interest Rates	Net Interest		Change		Net Interest		Change
(12-Month Projection)	Income		from Base		Income		from Base
+400	$	138,605	(10.03)	%	$	130,390	(6.00)	%
+300		142,757	(7.33)			132,605	(4.40)
+200		146,468	(4.92)			134,355	(3.14)
+100		149,883	(2.70)			136,411	(1.66)
0		154,049	—			138,708	—
−100		160,743	4.35			143,038	3.12
−200		170,174	10.47			147,997	6.70
−300		182,264	18.32			153,515	10.67
−400		193,011	25.29			158,778	14.47

The table above indicates that as of September 30, 2025, in the event of an immediate and sustained 400 basis point increase in interest rates, the Company would experience a 10.03% decrease in net interest income. In the event of an immediate 400 basis point decrease in interest rates, the Company would experience an 25.29% increase in net interest income.

The results of this simulation analysis are hypothetical, and a variety of factors might cause actual results to differ substantially from what is depicted. For example, if the timing and magnitude of interest rate changes differ from those projected, net interest income might vary significantly. Non-parallel yield curve shifts such as a flattening or steepening of the yield curve or changes in interest rate spreads would also cause net interest income to be different from that depicted. An increasing interest rate environment could reduce projected net interest income if deposits and other short-term liabilities re-price faster than expected or re-price faster than the Company’s assets. Actual results could differ from those projected if the Company grows assets and liabilities faster or slower than estimated, if the Company experienced a net outflow of deposit liabilities, or if the mix of assets and liabilities otherwise changes. Actual results could also differ from those projected if the Company experienced substantially different repayment speeds in the loan portfolio than those assumed in the simulation model. Finally, these simulation results do not contemplate all the actions that the Company may undertake in response to potential or actual changes in interest rates, such as changes to the Company’s loan, investment, deposit, or funding strategies.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

The Company’s Chief Executive Officer and Chief Financial Officer have evaluated the effectiveness of the design and operation of the Company’s “disclosure controls and procedures” (as that term is defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, or the Exchange Act) as of September 30, 2025, the end of the fiscal quarter covered by this Quarterly Report on Form 10-Q. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that, as of September 30, 2025, the Company’s disclosure controls and

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procedures were effective to ensure that the information required to be disclosed by the Company in the reports it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and is accumulated and communicated to the Company’s management, including the Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

Changes in Internal Control Over Financial Reporting

There has been no change in the Company’s internal control over financial reporting that occurred during the period covered by this Quarterly Report on Form 10-Q that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II – OTHER INFORMATION

Item 1. Legal Proceedings

Neither the Company nor any of its subsidiaries is a party, and no property of these entities is subject, to any material pending legal proceedings, other than ordinary routine litigation incidental to the Bank’s business. The Company does not know of any proceeding contemplated by a governmental authority against the Company or any of its subsidiaries.

Item 1.A. Risk Factors

There have been no material changes to the risk factors disclosed in the Company’s Annual Report on Form 10-K filed with the SEC on March 6, 2025.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Issuer Repurchases of Equity Securities

The following table presents stock purchases made during the third quarter of 2025:


Period	Total Number of Shares Purchased ⁽¹⁾	Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs ⁽²⁾	Maximum Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs
July 1 - 31, 2025	180	$	16.23	—	$	13,089,198
August 1 - 31, 2025	—		—	—		13,089,198
September 1 - 30, 2025	—		—	—		13,089,198
Total	180	$	16.23	—	$	13,089,198

(1)

The total number of shares repurchased during the periods indicated includes shares repurchased as part of the Company’s stock repurchase program and shares withheld for income tax purposes in connection with vesting of restricted stock and stock options. The shares were purchased or otherwise valued at the closing price of the Company’s common stock on the date of purchase and/or withholding.

(2)

On August 17, 2022, the Company’s board of directors approved the 2022 Stock Repurchase Program, which authorizes the Company to repurchase up to $25.0 million of its common stock, subject to certain limitations and conditions. On July 22, 2025, the Company’s board of directors extended the expiration date of the 2022 Stock Repurchase Program from August 20, 2025 to August 26, 2026. The 2022 Stock Repurchase Program does not obligate the Company to repurchase any shares of its common stock, and other than repurchases that have been completed to date, there is no assurance that the Company will do so. Under the 2022 Stock Repurchase Program, the Company may repurchase shares of common stock from time to time in open market or privately negotiated transactions. The extent to which the Company repurchases its shares, and the timing of such repurchases, will depend upon a variety of factors, including general market and economic conditions, regulatory requirements, availability of funds, and other relevant

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considerations, as determined by the Company. The Company may, in its discretion, begin, suspend or terminate repurchases at any time prior to the 2022 Stock Repurchase Program’s expiration, without any prior notice.

Unregistered Sales of Equity Securities

None.

Use of Proceeds from Registered Securities

None.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

Rule 10b5-1 Trading Plans

During the quarter ended September 30, 2025, none of the Company’s directors or executive officers adopted or terminated any contract, instruction or written plan for the purchase or sale of Company securities that was intended to satisfy the affirmative defense conditions of Rule10b5-1(c) or any non-Rule 10b5-1 trading arrangement.

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Item 6. Exhibits


Exhibit Number		Description
3.1		Third Amended and Restated Articles of Incorporation of Bridgewater Bancshares, Inc. (incorporated herein by reference to Exhibit 3.1 on Form 8-K filed on April 27, 2023)
3.2		Second Amended and Restated Bylaws of Bridgewater Bancshares, Inc. (incorporated herein by reference to Exhibit 3.2 on Form 8-K filed on April 27, 2023)
3.3		Statement of Designation of 5.875% Non-Cumulative Perpetual Preferred Stock, Series A (incorporated herein by reference to Exhibit 3.1 on Form 8-K filed on August 17, 2021)
10.1		First Amendment to Employment Agreement among Bridgewater Bancshares, Inc., Bridgewater Bank, and Mary Jane Crocker, dated August 18, 2025 (incorporated herein by reference to Exhibit 10.1 on Form 8-K filed on August 19, 2025)
10.2		First Amendment to Employment Agreement among Bridgewater Bancshares, Inc., Bridgewater Bank, and Jeffrey Shellberg, dated August 18, 2025 (incorporated herein by reference to Exhibit 10.2 on Form 8-K filed on August 19, 2025)
31.1		Certification of the Chief Executive Officer required, by Rule 13a-14(a) of the Securities Exchange Act of 1934, and Section 302 of the Sarbanes-Oxley Act of 2002
31.2		Certification of the Chief Financial Officer required by Rule 13a-14(a) of the Securities Exchange Act of 1934, and Section 302 of the Sarbanes-Oxley Act of 2002
32.1		Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2		Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.1		Financial information from the Company’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2025, formatted in inline XBRL interactive data files pursuant to Rule 405 of Regulation S-T: (i) Consolidated Balance Sheets; (ii) Consolidated Statements of Income; (iii) Consolidated Statements of Comprehensive Income; (iv) Consolidated Statements of Shareholders’ Equity; (v) Consolidated Statements of Cash Flows; and (vi) Notes to Consolidated Financial Statements
104		The cover page for Bridgewater Bancshares, Inc’s Form 10-Q Report for the quarterly period ended September 30, 2025 formatted in inline XBRL and contained in Exhibit 101

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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: October 30, 2025	By:	/s/ Jerry J. Baack
	Name:	Jerry J. Baack
	Title:	Chairman and Chief Executive Officer (Principal Executive Officer)

Date: October 30, 2025	By:	/s/ Joe M. Chybowski
	Name:	Joe M. Chybowski
	Title:	President and Chief Financial Officer (Principal Financial Officer)

Source: View Original Filing on SEC EDGAR

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