Bridgewater Bancshares Inc

Previous wording

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.

Current wording

The following discussion explains the Company’s financial condition and results of operations as of and for the three months ended March 31, 2026. 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, 2025, filed with the Securities and Exchange Commission, or the SEC, on February 26, 2026.

Previous wording

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:

Current wording

This Quarterly Report on Form 10-Q contains“forward-looking statements” within the meanings of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The Company intends such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the 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 known and unknown uncertainties, risks, changes in circumstances and other factors 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:

Previous wording

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.

Current wording

The foregoing factors should not be construed as exhaustive and should be read together with the other cautionary statements included in this report. In addition, past results of operations are not necessarily indicative of future results. Any forward-looking statement made by us in this report is based only on information currently available to us and speaks only as of the date on which it is made. 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.

Previous wording

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.

Current wording

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 brokered 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 noninterest income, including service charges, letter of credit fees, and swap fees. The Company’s principal expenses are interest paid on deposit accounts and borrowings, employee compensation and other overhead expenses. The Company’s simple, highly efficient business model of providing responsive support and simple solutions to clients continues to be the underlying principle that drives the Company’s profitable growth.

Previous wording

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.

Current wording

Net income was $17.4 million for the first quarter of 2026, compared to net income of $9.6 million for the first quarter of 2025. Earnings per diluted common share for the first quarter of 2026 were $0.58, compared to $0.31 per diluted common share for the first quarter of 2025. Adjusted net income, a non-GAAP financial measure, was $12.6 million for the first quarter of 2026, compared to $10.1 million for the first quarter of 2025. Adjusted earnings per diluted common share, a non-GAAP financial measure, for the first quarter of 2026 were $0.41, compared to $0.32 per diluted common share for the first quarter of 2025.

Previous wording

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.

Current wording

The following table presents, for the three months ended March 31, 2026 and 2025, 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.

Previous wording

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:

Current wording

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 table presents the changes in the volume and rate of interest bearing assets and liabilities for the three months ended March 31, 2026, compared to the three months ended March 31, 2025:

Previous wording

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.

Current wording

Net interest income was $36.6 million for the first quarter of 2026, an increase of $6.4 million compared to net interest income of $30.2 million for the first quarter of 2025. The increase in net interest income was primarily due to lower rates paid on deposits, lower FHLB advance balances at lower yields, and growth in the loan portfolio, offset partially by lower cash and investment securities balances.

Previous wording

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.

Current wording

Net interest margin (on a fully tax-equivalent basis), a non-GAAP financial measure, for the first quarter of 2026 was 2.99%, a 48 basis point increase from 2.51% in the first quarter of 2025. 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 attributable to the acquisition of FMCB, was 2.86% for the first quarter of 2026, a 49 basis point increase from 2.37% in the first quarter of 2025. The increase in net interest margin (on a fully tax-equivalent basis) was

Previous wording

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 primarilydue to lower rates paid on deposits.

Current wording

Average interest earning assets produced a tax-equivalent yield of 5.65% for the first quarter of 2026, compared to 5.43% for the first quarter of 2025. The increase in the yield on interest earning assets was primarily due to growth and repricing of the loan portfolio at accretive yields. The average rate paid on interest bearing liabilities was 3.53% for the first quarter of 2026, compared to 3.82% for the first quarter of 2025. The decrease was primarilydue to lower rates paid on deposits, offset partially by higher balances and rates paid on subordinated debentures and higher rates paid on FHLB advances.

Previous wording

*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.

Current wording

*Interest Income.*Total interest income, on a tax-equivalent basis, was $70.7 million for the first quarter of 2026, compared to $66.0 million for the first quarter of 2025. The $4.7 million, or 7.2%, increase in total interest income, on a tax-equivalent basis, was primarily due to growth and repricing of the loan portfolio.

Previous wording

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.

Current wording

Interest income on the investment securities portfolio, on a tax-equivalent basis, decreased $2.2 million for the first quarter of 2026, compared to the first quarter of 2025, primarily due to a $178.4 million, or 22.2%, decrease in average balances between the two periods. The decrease in securities was due to the Company selling $208.5 million of securites for a pre-tax gain of $7.3 million.

Previous wording

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.

Current wording

Interest income on loans, on a tax-equivalent basis, was $62.1 million for the first quarter of 2026, compared to $54.0 million for the first quarter of 2025. The $8.1 million, or 15.0%, increase was primarily due to growth and repricing of the loan portfolio.

Previous wording

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.

Current wording

The aggregate loan yield, on a tax-equivalent basis, was 5.81% in the first quarter of 2026, a 20 basis point increase, compared to 5.61% in the first quarter of 2025. 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.

Previous wording

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. Theincrease 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.

Current wording

to lower rates paid on deposits and lower average balance in time deposits and brokered deposits. The cost of total deposits was 2.79% in the first quarter of 2026, a 39 basis point decrease, compared to 3.18% in the first quarter of 2025. The decrease was primarily due to lower rates paid on deposits following interest rate cuts in 2025, lower average brokered deposit balances, and an increase in noninterest bearing deposits.

Previous wording

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.

Current wording

Interest expense on borrowings was $4.5 million for the first quarter of 2026, an increase of $1.1 million, compared to $3.4 million for the first quarter of 2025. The increase was primarily due to higher balances and rates on subordinated debentures due to the subordinated debt refinance in the second quarter of 2025 and higher rates paid on FHLB advances.

Previous wording

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.

Current wording

The provision for credit losses on loans and leases was $1.4 million for the first quarter of 2026, compared to $1.5 million for the first quarter of 2025. The provision for credit losses on loans and leases recorded in the first quarter of 2026 was primarily attributable to growth in the loan portfolio. The allowance for credit losses on loans and leases to total loans was 1.31% at March 31, 2026, compared to 1.34% at March 31, 2025.

Previous wording

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 primarilydue 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.

Current wording

The provision for credit losses for off-balance sheet credit exposures was a negative provision of $150,000 for the first quarter of 2026, compared to a provision of $-0- for the first quarter of 2025. A negative provision was recorded during the first quarter of 2026 due to a decrease in unfunded commitments. The allowance for credit losses on off-balance sheet credit exposures was $3.9 million as of March 31, 2026, compared to $4.0 million as of December 31, 2025.

Previous wording

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.

Current wording

Noninterest expense was $22.2 million for the first quarter of 2026, an increase of $4.0 million from $18.1 million for the first quarter of 2025. The increase was primarily attributable to increases in salaries and employee benefits, an FHLB advance prepayment penalty, and marketing and advertising expense.

Previous wording

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.

Current wording

The Company had 337 full-time equivalent employees at the end of the first quarter of 2026, compared to 292 at the end of the first quarter of 2025. The increase was largely driven by the hiring of key talent across the organization.

Previous wording

*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.

Current wording

*Efficiency Ratio.*The efficiency ratio (on a fully tax-equivalent basis), 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.

Previous wording

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

Current wording

The efficiency ratio(on a fully tax-equivalent basis) was 56.3% for the first quarter of 2026, compared to 55.5% for the first quarter of 2025. The Company’s efficiency ratio has remained consistently below the industry median due in part to its “branch-light” model.

Previous wording

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

Current wording

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 future cash flows and are maintained at levels management believes are appropriate to ensure future flexibility in meeting anticipated funding needs. All investment securities are held available for sale.

Previous wording

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.

Current wording

The Company focuses on lending to borrowers located or investing in the Twin Cities MSA across a diverse range of industries and property types. The Company lends primarily to commercial clients, 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.

Previous wording

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.

Current wording

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 oversight by the board of directors and management, commercial real estate exposure limits, portfolio monitoring tools, management information systems, market reports, underwriting standards, internal and external loan review, and stress testing.

Previous wording

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.

Current wording

Total gross loans at March 31, 2026 were $4.37 billion, an increase of $58.5 million, or 5.5% annualized, over total gross loans of $4.31 billion at December 31, 2025, and an increase of $348.0 million, or 8.7%, over total gross loans of $4.02 billion at March 31, 2025. Both theyear-to-date and the year-over-year increases in the loan portfolio were primarily due to increased loan originations and more favorable market conditions.

Previous wording

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.

Current wording

The Company primarily focuses on real estate mortgage lending, which constituted 79.0% of the portfolio at March 31, 2026. 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.

Previous wording

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.

Current wording

As of March 31, 2026, investor CRE loans totaled $3.04 billion, consisting of $1.59 billion of loans secured by multifamily residential properties, $1.19 billion of loans secured by nonowner occupied CRE, $209.4 million of construction and land development loans, and $50.6 million of 1-4 family construction loans. Investor CRE loans represented 69.5% of the total gross loan portfolio and 461.5% of the Bank’s total risk-based capital at March 31, 2026, compared to 69.9% and 473.1%, respectively, at December 31, 2025.

Previous wording

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.

Current wording

Loans that had potential weaknesses that warranted a watch or special mention risk rating at March 31, 2026 totaled $47.7 million, compared to $47.8 million at December 31, 2025. Loans that warranted a substandard risk rating at March 31, 2026 totaled $43.1 million, compared to $53.0 million at December 31, 2025. Management continues to actively work with these borrowers and closely monitor substandard credits.

Previous wording

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.

Current wording

Nonperforming loans include loans accounted for on a nonaccrual basis and loans 90 days past due and still accruing. Nonaccrual loans totaled $11.7 million as of March 31, 2026 and $22.0 million as of December 31, 2025. There were no loans 90 days past due and still accruing as of either March 31, 2026 and December 31, 2025. There were also no foreclosed assets as of either March 31, 2026 and December 31, 2025.

Previous wording

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.

Current wording

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. There are no loans, outside of those included in the tables above, that cause management to have serious doubts as to the ability of borrowers to comply with present repayment terms. Gross income that would have been recorded on nonaccrual loans for the three months ended March 31, 2026 and 2025 was $63,000 and $173,000, respectively.

Previous wording

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.

Current wording

At March 31, 2026, the allowance for credit losses on loans and leases was $57.3 million, an increase of $834,000 from $56.4 million at December 31, 2025. Net charge-offs totaled $516,000 during the first quarter of 2026 and $11,000 during the first quarter of 2025. The allowance for credit losses on loans and leases as a percentage of total loans was 1.31% at both March 31, 2026 and December 31, 2025.

Previous wording

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:

Current wording

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

Previous wording

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.

Current wording

Total deposits at March 31, 2026 were $4.31 billion, a decrease of $14.9 million, or 1.4% annualized, compared to total deposits of $4.32 billion at December 31, 2025, and an increase of $143.1 million, or 3.4%, compared to total deposits of $4.16 billion at March 31, 2025. Core deposits, defined as total deposits excluding brokered deposits and time deposits greater than $250,000, increased $26.2 million, or 3.2% annualized, from December 31, 2025. The slight decrease in deposits was due to a decrease in noninterest bearing deposits and time deposits, offset partially by an increase in savings and money market accounts.

Previous wording

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.

Current wording

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 March 31, 2026, total brokered deposits were $846.3 million, an increase of $35.8 million, compared to total brokered deposits of $810.5 million at December 31, 2025. Brokered deposits continue to be used as a supplemental funding source, as needed, to support loan portfolio growth.

Previous wording

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

Current wording

The Company’s total uninsured deposits, which are the amounts of deposit accounts that exceed the FDIC insurance limit, currently $250,000, were approximately $1.15 billion, or 26.6% of total deposits, at March 31, 2026 and $1.29 billion, or 29.8% of total deposits, at December 31, 2025. These amounts were estimated based on the same methodologies and assumptions used for regulatory reporting purposes.

Previous wording

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.

Current wording

At March 31, 2026, the Company had outstanding FHLB advances of $336.0 million, compared to $399.5 million at December 31, 2025. During the three months ended March 31, 2026, the Company prepaid $97.5 million of fixed rate FHLB term advances with an average cost of 4.08% and incurred a prepayment fee of $982,000. 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 $784.9 million and $611.3 million at March 31, 2026 and December 31, 2025, respectively.

Previous wording

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.

Current wording

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 both March 31, 2026 and December 31, 2025, the Company had no outstanding balances under the revolving line of credit. The Company had two outstanding letters of credit totaling $2.7 million and $6.4 million under this facility as of March 31, 2026 and December 31, 2025, respectively, which reduce the availability under the facility by the amounts of the letters of credit so long as they remain outstanding.

Previous wording

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.

Current wording

Additionally, the Company has borrowing capacity from other sources. As of March 31, 2026, 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 $882.1 million and $1.03 billion at March 31, 2026 and December 31, 2025, respectively. As of March 31, 2026 and December 31, 2025, the Company had no outstanding advances from the discount window.

Previous wording

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.

Current wording

As of March 31, 2026 and December 31, 2025, the Company had subordinated debentures, net of issuance costs, of $108.8 million and $108.7 million, respectively.