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 six months ended June 30, 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.

Current 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, 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

Net income was $14.0 million for the second quarter of 2026, compared to net income of $11.5 million for the second quarter of 2025. Earnings per diluted common share for the second quarter of 2026 were $0.45, compared to $0.38 per diluted common share for the second quarter of 2025.

Current wording

Net income was $15.0 million for the third quarter of 2026, compared to net income of $11.6 million for the third quarter of 2025. Earnings per diluted common share for the third quarter of 2026 were $0.49, compared to $0.38 per diluted common share for the third quarter of 2025.

Previous wording

The following table presents, for the three and six months ended June 30, 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.

Current wording

The following table presents, for the three and nine months ended September 30, 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 June 30, 2026, compared to the three months ended June 30, 2025, and for the six months ended June 30, 2026, compared to the six months ended June 30, 2025:

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 tables present the changes in the volume and rate of interest bearing assets and liabilities for the three months ended September 30, 2026, compared to the three months ended September 30, 2025, and for the nine months ended September 30, 2026, compared to the nine months ended September 30, 2025:

Previous wording

Net interest income was $38.6 million for the second quarter of 2026, an increase of $6.1 million compared to net interest income of $32.5 million for the second quarter of 2025. The increase in net interest income was primarily due to growth in the loan portfolio and lower rates paid on deposits, offset partially by lower investment securities balances following the sale of $208.5 million of securities in the first quarter of 2026, and higher balances and rates paid on subordinated debt.

Current wording

Net interest income was $40.7 million for the third quarter of 2026, an increase of $6.6 million compared to net interest income of $34.1 million for the third quarter of 2025. The increase in net interest income was primarily due to growth in the loan portfolio at higher yields and lower rates paid on deposits, offset partially by lower balances and yields in the investment securities portfolio following the sale of $208.5 million of securities in the first quarter of 2026, and lower cash balances.

Previous wording

Net interest margin (on a fully tax-equivalent basis), the second quarter of 2026 was 3.07%, a 45 basis point increase from 2.62% in the second 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 2.94% for the second quarter of 2026, a 45 basis point increase from 2.49% in the second quarter of 2025. The increase in net interest margin (on a fully tax-equivalent basis) was primarily due to growth and repricing of the loan portfolio at higher yields and lower rates paid on deposits.

Current wording

Net interest margin (on a fully tax-equivalent basis), for the third quarter of 2026 was 3.09%, a 46 basis point increase from 2.63% in the third 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 First Minnetonka City Bank (“FMCB”) was 2.98% for the third quarter of 2026, a 46 basis point increase from 2.52% in the third quarter of 2025. The increase in net interest margin (on a fully tax-equivalent basis) was primarily due to growth and repricing of the loan portfolio at higher yields and lower rates paid on deposits.

Previous wording

Average interest earning assets were $5.14 billion for the second quarter of 2026, an increase of $125.7 million, or 2.5%, compared to $5.02 billion for the second quarter of 2025. The increase in average interest earning assets was primarily due to growth in the loan portfolio, offset partially by lower investment securities balances. Average interest bearing liabilities were $3.89 billion for the second quarter of 2026, an increase of $46.0 million, or

Current wording

Average interest earning assets were $5.35 billion for the third quarter of 2026, an increase of $127.4 million, or 2.4%, compared to $5.22 billion for the third quarter of 2025. The increase in average interest earning assets was primarily due to growth in the loan portfolio, offset partially by lower investment securities balances. Average interest bearing liabilities were $4.03 billion for the third quarter of 2026, a decrease of $6.8 million, or 0.2%, compared to

Previous wording

Average interest earning assets produced a tax-equivalent yield of 5.73% for the second quarter of 2026, compared to 5.56% for the second 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 3.51% for the second quarter of 2026, compared to 3.83% for the second quarter of 2025. The decrease was primarilydue to lower rates paid on deposits following interest rate cuts in 2025.

Current wording

Average interest earning assets produced a tax-equivalent yield of 5.76% for the third quarter of 2026, compared to 5.63% for the third 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 3.54% for the third quarter of 2026, compared to 3.89% for the third quarter of 2025. The decrease was primarilydue to lower rates paid on deposits following interest rate cuts in 2025.

Previous wording

*Interest Income.*Total interest income, on a tax-equivalent basis, was $73.5 million for the second quarter of 2026, compared to $69.5 million for the second quarter of 2025. The $4.0 million, or 5.7%, increase in total interest income, on a tax-equivalent basis, was primarily due to growth and repricing of the loan portfolio at higher yields.

Current wording

*Interest Income.*Total interest income, on a tax-equivalent basis, was $77.7 million for the third quarter of 2026, compared to $74.2 million for the third quarter of 2025. The $3.6 million, or 4.8%, increase in total interest income, on a tax-equivalent basis, was primarily due to growth and repricing of the loan portfolio at higher yields.

Previous wording

Interest income on the investment securities portfolio, on a tax-equivalent basis, decreased $1.9 million for the second quarter of 2026, compared to the second quarter of 2025, primarily due to a $162.1 million, or 21.1%, decrease in average balances between the two periods. The decrease in securities was due to the Company selling $208.5 million of securities for a pre-tax gain of $7.3 million in the first quarter of 2026.

Current wording

Interest income on the investment securities portfolio, on a tax-equivalent basis, was $8.3 million for the third quarter of 2026, compared to $10.6 million for the third quarter of 2025. The $2.4 million decrease was primarily due to a $167.3 million, or 20.6%, decrease in average balances between the two periods. The decrease in securities was due to the Company selling $208.5 million of securities for a pre-tax gain of $7.3 million in the first quarter of 2026.

Previous wording

Interest income on loans, on a tax-equivalent basis, was $64.5 million for the second quarter of 2026, compared to $58.1 million for the second quarter of 2025. The $6.4 million, or 11.0%, increase was primarily due to growth and repricing of the loan portfolio.

Current wording

Interest income on loans, on a tax-equivalent basis, was $67.1 million for the third quarter of 2026, compared to $60.3 million for the third quarter of 2025. The $6.8 million, or 11.3%, increase was primarily due to growth and repricing of the loan portfolio.

Previous wording

The aggregate loan yield, on a tax-equivalent basis, was 5.91% in the second quarter of 2026, a 17 basis point increase, compared to 5.74% in the second quarter of 2025. Core loan yield, a non-GAAP financial measure which excludesthe impact of loan fees and purchase accounting accretion attributable to the acquisition of FMCB, 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 5.96% in the third quarter of 2026, a 17 basis point increase, compared to 5.79% in the third quarter of 2025. Core loan yield, a non-GAAP financial measure which excludesthe impact of loan fees and purchase accounting accretion attributable to the acquisition of FMCB, 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.*Interest expense was $34.1 million for the second quarter of 2026, a decrease of $2.7 million, or 7.2%, from $36.7 million for the second quarter of 2025. The decrease was primarily due to lower rates paid on deposits, offset partially by higher balances and rates paid on subordinated debentures.

Current wording

*Interest Expense.*Interest expense was $36.0 million for the third quarter of 2026, a decrease of $3.6 million, or 9.0%, from $39.5 million for the third quarter of 2025. The decrease was primarily due to lower rates paid on interest bearing deposits.

Previous wording

Interest expense on deposits was $29.7 million for the second quarter of 2026, a decrease of $2.8 million, or 8.6%, from $32.5 million for the second quarter of 2025. The decreasein interest expense on deposits was primarily due to lower rates paid on deposits and lower average balances of time deposits. The cost of total deposits was 2.80% in the second quarter of 2026, a 36 basis point decrease, compared to 3.16% in the second quarter of 2025. The decrease was primarily due to lower rates paid on deposits following interest rate cuts in 2025 and an increase in noninterest bearing deposits.

Current wording

Interest expense on deposits was $30.9 million for the third quarter of 2026, a decrease of $3.7 million, or 10.6%, from $34.6 million for the third quarter of 2025. The decreasein interest expense on deposits was primarily due to lower rates paid on deposits. The cost of total deposits was 2.78% in the third quarter of 2026, a 41 basis point decrease, compared to 3.19% in the third quarter of 2025. The decrease was primarily due to lower rates paid on deposits following interest rate cuts in 2025 and an increase in noninterest bearing deposits.

Previous wording

Interest expense on borrowings was $4.4 million for the second quarter of 2026, an increase of $130,000, compared to $4.2 million for the second quarter of 2025. The increase was primarily due to higher balances and rates on subordinated debentures due to the subordinated debt refinancing in the second quarter of 2025.

Current wording

Interest expense on borrowings was $5.0 million for the third quarter of 2026, an increase of $117,000, compared to $4.9 million for the third quarter of 2025. The increase was primarily due to higher rates on subordinated debentures due to the repricing of a portion of the subordinated debt.

Previous wording

Net interest income was $75.2 million for the six months ended June 30, 2026, an increase of $12.6 million, or 20.0%, compared to $62.7 million for the six months ended June 30, 2025. The increase in net interest income was primarily due to growth and higher yields in the loan portfolio and lower rates paid on deposits, offset partially by lower investment securities balances following the sale of $208.5 million of securities in the first quarter of 2026, and lower cash balances.

Current wording

Net interest income was $115.9 million for the nine months ended September 30, 2026, an increase of $19.1 million, or 19.8%, compared to $96.8 million for the nine months ended September 30, 2025. The increase in net interest income was primarily due to growth and higher yields in the loan portfolio and lower rates paid on deposits, offset partially by lower investment securities balances following the sale of $208.5 million of securities in the first quarter of 2026, and lower average cash balances.

Previous wording

Net interest margin (on a fully tax-equivalent basis) for the six months ended June 30, 2026 was 3.03%, a 47 basis point increase from 2.56% for the six months ended June 30, 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, was 2.90% for the six months ended June 30, 2026, a 47 basis point increase from 2.43% for the six months ended June 30, 2025.

Current wording

Net interest margin (on a fully tax-equivalent basis) for the nine months ended September 30, 2026 was 3.05%, a 46 basis point increase from 2.59% for the nine months ended September 30, 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, was 2.93% for the nine months ended September 30, 2026, a 47 basis point increase from 2.46% for the nine months ended September 30, 2025.

Previous wording

Average interest earning assets were $5.11 billion for the six months ended June 30, 2026, an increase of $138.4 million, or 2.8%, compared to $4.97 billion for the six months ended June 30, 2025. The increase in average interest earning assets was primarily due to growth in the loan portfolio, offset partially by lower investment securities and cash balances. Average interest bearing liabilities were $3.86 billion for the six months ended June 30, 2026, an increase of $51.5 million, or 1.4%, compared to $3.81 billion for the six months ended June 30, 2025. The increase in average interest bearing liabilities was primarily due to higher deposit balances, federal funds purchased, and subordinated debentures, offset partially by a decrease in FHLB advances and notes payable.

Current wording

Average interest earning assets were $5.19 billion for the nine months ended September 30, 2026, an increase of $132.2 million, or 2.6%, compared to $5.06 billion for the nine months ended September 30, 2025. The increase in average interest earning assets was primarily due to growth in the loan portfolio, offset partially by lower investment securities and cash balances. Average interest bearing liabilities were $3.92 billion for the nine months ended September 30, 2026, an increase of $30.5 million, or 0.8%, compared to $3.89 billion for the nine months ended September 30,2025. The increase in average interest bearing liabilities was primarily due to higher deposit balances and subordinated debentures, offset partially by a decrease in FHLB advances.

Previous wording

Average interest earning assets produced a tax-equivalent yield of 5.69% for the six months ended June 30, 2026, compared to 5.49% for the six months ended June 30, 2025. The average rate paid on interest bearing liabilities was 3.52% for the six months ended June 30, 2026, compared to 3.82% for the six months ended June 30, 2025.

Current wording

Average interest earning assets produced a tax-equivalent yield of 5.71% for the nine months ended September 30, 2026, compared to 5.54% for the nine months ended September 30, 2025. The average rate paid on interest bearing liabilities was 3.53% for the nine months ended September 30, 2026, compared to 3.85% for the nine months ended September 30, 2025.

Previous wording

Interest Income. Total interest income on a tax-equivalent basis was $144.2 million for the six months ended June 30, 2026, compared to $135.5 million for the six months ended June 30, 2025. The $8.7 million increase in total interest income on a tax-equivalent basis was primarily due to growth and repricing in the loan portfolio.

Current wording

Interest Income. Total interest income on a tax-equivalent basis was $221.9 million for the nine months ended September 30, 2026, compared to $209.6 million for the nine months ended September 30, 2025. The $12.3 million increase in total interest income on a tax-equivalent basis was primarily due to growth and repricing in the loan portfolio.

Previous wording

Interest income on the investment securities portfolio, on a tax-equivalent basis, decreased $4.1 million during the six months ended June 30, 2026, compared to the six months ended June 30, 2025, primarily due to a $170.2 million, or 21.7%, decrease in average balances between the two periods. The decrease was primarily attributable to the sale of $208.5 million of securities for a pre-tax gain of $7.3 million in the first quarter of 2026.

Current wording

Interest income on the investment securities portfolio, on a tax-equivalent basis, was $22.9 million for the nine months ended September 30, 2026, compared to $29.4 million for the nine months ended September 30, 2025. The $6.5 million decrease was primarily due to a $169.2 million, or 21.3%, decrease in average balances between the two periods. The decrease was primarily attributable to the sale of $208.5 million of securities for a pre-tax gain of $7.3 million in the first quarter of 2026.

Previous wording

Interest income on loans, on a tax-equivalent basis, for the six months ended June 30, 2026 was $126.6 million, compared to $112.1 million for the six months ended June 30, 2025. The $14.5 million, or 13.1%, 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, for the nine months ended September 30, 2026 was $193.8 million, compared to $172.4 million for the nine months ended September 30, 2025. The $21.4 million, or 12.4%, increase was primarily due to growth and repricing of the loan portfolio in the higher interest rate environment.

Previous wording

Interest Expense. Interest expense on interest bearing liabilities was $67.4 million for the six months ended June 30, 2026, a decrease of $4.8 million, compared to $72.2 million for the six months ended June 30, 2025. The decrease was primarily due to lower rates paid on deposits, offset partially by higher balances and rates paid on subordinated debentures.

Current wording

Interest Expense. Interest expense on interest bearing liabilities was $103.4 million for the nine months ended September 30, 2026, a decrease of $8.4 million, compared to $111.8 million for the nine months ended September 30, 2025. The decrease was primarily due to lower rates paid on deposits, offset partially by higher balances and rates paid on subordinated debentures.

Previous wording

Interest expense on deposits decreased to $58.5 million for the six months ended June 30, 2026, compared to $64.6 million for the six months ended June 30, 2025. The $6.1 million decrease in interest expense on deposits was

Current wording

Interest expense on deposits decreased to $89.4 million for the nine months ended September 30, 2026, compared to $99.2 million for the nine months ended September 30, 2025. The $9.8 million decrease in interest expense on deposits was primarily due to lower rates paid on deposits, lower time deposit balances, and an increase in noninterest bearing deposits.

Previous wording

Interest expense on borrowings was $8.9 million for the six months ended June 30, 2026, compared to $7.6 million for the six months ended June 30, 2025. The $1.3 million increase was primarily due to higher balances and rates on subordinated debentures due to the subordinated debt refinancing in the second quarter of 2025, offset partially by paying down the notes payable balance.

Current wording

Interest expense on borrowings was $13.9 million for the nine months ended September 30, 2026, compared to $12.6 million for the nine months ended September 30, 2025. The $1.4 million increase was primarily due to higher balances and rates on subordinated debentures due to the subordinated debt refinancing in the second quarter of 2025, offset partially by paying down the notes payable balance.

Previous wording

The provision for credit losses on loans and leases was $550,000 for the second quarter of 2026, compared to $2.0 million for the second quarter of 2025. The provision for credit losses on loans and leases was $1.9 million for the six months ended June 30, 2026, compared to $3.5 million for the six months ended June 30, 2025. The provision for credit losses on loans and leases recorded in the second quarter of 2026 was primarily attributable to growth in the loan portfolio, offset partially by changes to qualitative factors. The allowance for credit losses on loans and leases to total loans was 1.30% at June 30, 2026, compared to 1.35% at June 30, 2025.

Current wording

The provision for credit losses on loans and leases was $2.8 million for the third quarter of 2026, compared to $900,000 for the third quarter of 2025. The provision for credit losses on loans and leases was $4.7 million for the nine months ended September 30, 2026, compared to $4.4 million for the nine months ended September 30, 2025. The provision for credit losses on loans and leases recorded in the third quarter of 2026 was primarily attributable to growth in the loan portfolio and an additional specific reserve. The allowance for credit losses on loans and leases to total loans was 1.28% at September 30, 2026, compared to 1.34% at September 30, 2025.

Previous wording

The provision for credit losses for off-balance sheet credit exposures was $-0- for each of the second quarter of 2026 and 2025. No provision was recorded during the second quarter of 2026 due to unfunded commitments remaining stable as the migration to funded loans was offset by the volume of newly originated loans with unfunded commitments. The provision for credit losses for off-balance sheet credit exposures was a negative provision of $150,000 for the six months ended June 30, 2026, compared to $-0- for the six months ended June 30, 2025. The allowance for credit losses on off-balance sheet credit exposures was $3.9 million as of June 30, 2026, compared to $4.0 million as of December 31, 2025.

Current wording

The provision for credit losses for off-balance sheet credit exposures was $-0- for the third quarter of 2026, compared to $200,000 for the third quarter of 2025. No provision was recorded during the third quarter of 2026 due to unfunded commitments remaining stable as the migration to funded loans was offset by the volume of newly originated loans with unfunded commitments. The provision for credit losses for off-balance sheet credit exposures was a negative provision of $150,000 for the nine months ended September 30, 2026, compared to $200,000 for the nine months ended September 30, 2025. The allowance for credit losses on off-balance sheet credit exposures was $3.9 million as of September 30, 2026, compared to $4.0 million as of December 31, 2025.

Previous wording

Noninterest income was $2.3 million for the second quarter of 2026, a decrease of $1.3 million from $3.6 million for the second quarter of 2025. The decrease was primarily due to lower swap fees, net gain on sale of securities, and FHLB prepayment income. Noninterest income was $11.9 million for the six months ended June 30, 2026, an increase of $6.2 million from $5.7 million for the six months ended June 30, 2025. The increase was primarily due to higher net gain on sale of securities, offset partially by lower swap fees and FHLB prepayment income.

Current wording

Noninterest income was $2.6 million for the third quarter of 2026, an increase of $512,000 from $2.1 million for the third quarter of 2025. The increase was primarily due to higher letter of credit fees and higher swap fees. Noninterest income was $14.5 million for the nine months ended September 30, 2026, an increase of $6.7 million from $7.8 million for the nine months ended September 30, 2025. The increase was primarily due to higher net gain on sale of securities, offset partially by lower swap fees and FHLB prepayment income.

Previous wording

Noninterest expense was $21.9 million for the second quarter of 2026, an increase of $3.0 million from $18.9 million for the second quarter of 2025. The increase was primarily attributable to increases in salaries and employee benefits and information technology expense.

Current wording

Noninterest expense was $21.3 million for the third quarter of 2026, an increase of $1.4 million from $20.0 million for the third quarter of 2025. The increase was primarily attributable to increases in salaries and employee benefits and information technology expenses, offset partially by decreases in marketing and advertising expenses, the FDIC insurance assessment, and other expenses.

Previous wording

Noninterest expense was $44.1 million for the six months ended June 30, 2026, an increase of $7.0 million from $37.1 million for the six months ended June 30, 2025. The increase was primarily attributable to increases in salaries and employee benefits, an FHLB advance prepayment penalty, and marketing and advertising expenses.

Current wording

Noninterest expense was $65.4 million for the nine months ended September 30, 2026, an increase of $8.4 million from $57.0 million for the nine months ended September 30, 2025. The increase was primarily attributable to increases in salaries and employee benefits, an FHLB advance prepayment penalty, and information technology expenses.

Previous wording

The Company had 355 full-time equivalent employees at the end of the second quarter of 2026, compared to 308 at the end of the second quarter of 2025. The increase was largely driven by the hiring of key talent across the organization amidst continued M&A disruption.

Current wording

The Company had 360 full-time equivalent employees at the end of the third quarter of 2026, compared to 325 at the end of the third quarter of 2025. The increase was largely driven by the hiring of key talent across the organization amidst continued M&A disruption.

Previous 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.

Current 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.

Previous wording

The efficiency ratio(on a fully tax-equivalent basis) was 53.0% for the second quarter of 2026, compared to 52.6% for the second quarter of 2025. The efficiency ratio was 54.6% and 53.9%, respectively, for the six months ended June 30, 2026 and June 30, 2025. The Company’s efficiency ratio has remained consistently below the industry median due in part to its “branch-light” model.

Current wording

The efficiency ratio was 48.8% for the third quarter of 2026, compared to 54.7% for the third quarter of 2025. The efficiency ratio was 52.6% and 54.2%, respectively, for the nine months ended September 30, 2026 and September 30, 2025. The Company’s efficiency ratio has remained consistently below the industry median due in part to its “branch-light” model.

Previous wording

Income tax expense was $4.4 million for the second quarter of 2026, compared to $3.6 million for the second quarter of 2025. The effective combined federal and state income tax rate for the second quarter of 2026 was 24.1%, compared to 23.9% for the second quarter of 2025. Income tax expense was $9.9 million for the six months ended June 30, 2026, compared to $6.6 million for the six months ended June 30, 2025. The effective combined federal and state income tax rate for each of the six months ended June 30, 2026 and 2025 was 23.9%. The effective tax rate remained stable across both periods.

Current wording

Income tax expense was $4.1 million for the third quarter of 2026, compared to $3.5 million for the third quarter of 2025. The effective combined federal and state income tax rate for the third quarter of 2026 was 21.5%, compared to 23.2% for the third quarter of 2025. Income tax expense was $14.0 million for the nine months ended September 30, 2026, compared to $10.1 million for the nine months ended September 30, 2025. The effective combined federal and state income tax rate for the nine months ended September 30, 2026 was 23.1%, compared to 23.6% for the nine months ended September 30, 2025. The decrease for both the three months and nine months ended September 30, 2026 and 2025 was primarily due to the increase in tax-exempt interest income following the purchase of tax-exempt municipal securities investments.

Previous wording

Total assets at June 30, 2026 were $5.39 billion, a decrease of $17.3 million, or 0.3%, compared to total assets of $5.41 billion at December 31, 2025, and an increase of $93.1 million, or 1.8%, compared to total assets of $5.30 billion at June 30, 2025. The year-to-date decrease was primarily due to the sale of investment securities and pre-payment of FHLB advances. The Company sold $208.5 million of securities in the first quarter of 2026 as part of a strategic balance sheet repositioning to enhance efficiency and drive future earnings. The year-over-year increase was primarily due to growth in the loan portfolio, offset partially by the sale of investment securities.

Current wording

Total assets at September 30, 2026 were $5.62 billion, an increase of $208.5 million, or 3.9%, compared to total assets of $5.41 billion at December 31, 2025, and an increase of $255.5 million, or 4.8%, compared to total assets of $5.36 billion at September 30, 2025. The year-to-date increase was primarily due to the growth of the loan portfolio and higher balances of cash and cash equivalents, offset partially by the sale of investment securities. The Company sold $208.5 million of securities in the first quarter of 2026 as part of a strategic balance sheet repositioning to enhance efficiency and drive future earnings. The year-over-year increase was primarily due to growth in the loan portfolio, offset partially by the sale of investment securities.

Previous wording

Securities available for sale were $605.4 million at June 30, 2026, a decrease of $171.0 million, or 22.0%, compared to $776.4 million at December 31, 2025. The decrease was primarily due to the sale of investment securities in the first quarter of 2026, a strategic move taken to enhance the Company’s balance sheet efficiency and positioning the Company for improved profitability moving forward.

Current wording

Securities available for sale were $598.7 million at September 30, 2026, a decrease of $177.7 million, or 22.9%, compared to $776.4 million at December 31, 2025. The decrease was primarily due to the sale of investment securities in the first quarter of 2026, a strategic move taken to enhance the Company’s balance sheet efficiency and position the Company for improved profitability moving forward.

Previous wording

Total gross loans at June 30, 2026 were $4.43 billion, an increase of $116.9 million, or 5.5% annualized, over total gross loans of $4.31 billion at December 31, 2025, and an increase of $280.6 million, or 6.8%, over total gross loans of $4.15 billion at June 30, 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.

Current wording

Total gross loans at September 30, 2026 were $4.51 billion, an increase of $197.3 million, or 6.1% annualized, over total gross loans of $4.31 billion at December 31, 2025, and an increase of $292.3 million, or 6.9%, over total gross loans of $4.21 billion at September 30, 2025. Both theyear-to-date and the year-over-year increases in the loan portfolio were primarily due to increased loan originations and loan advances.

Previous wording

The Company primarily focuses on real estate mortgage lending, which constituted 79.9% of the portfolio at June 30, 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.

Current wording

The Company primarily focuses on real estate mortgage lending, which constituted 78.2% of the portfolio at September 30, 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 June 30, 2026, investor CRE loans totaled $3.09 billion, consisting of $1.69 billion of loans secured by multifamily residential properties, $1.17 billion of loans secured by nonowner occupied CRE, $186.2 million of construction and land development loans, and $46.5 million of 1-4 family construction loans. Investor CRE loans represented 69.9% of the total gross loan portfolio and 457.1% of the Bank’s total risk-based capital at June 30, 2026, compared to 69.9% and 473.1%, respectively, at December 31, 2025.

Current wording

As of September 30, 2026, investor CRE loans totaled $3.16 billion, consisting of $1.66 billion of loans secured by multifamily residential properties, $1.21 billion of loans secured by nonowner occupied CRE, $229.5 million of construction and land development loans, and $57.8 million of 1-4 family construction loans. Investor CRE loans represented 70.1% of the total gross loan portfolio and 453.9% of the Bank’s total risk-based capital at September 30, 2026, compared to 69.9% and 473.1%, respectively, at December 31, 2025.

Previous wording

Loans that had potential weaknesses that warranted a watch or special mention risk rating at June 30, 2026 totaled $38.5 million, compared to $47.8 million at December 31, 2025. Loans that warranted a substandard risk rating at June 30, 2026 totaled $43.9 million, compared to $53.0 million at December 31, 2025. 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 September 30, 2026 totaled $23.6 million, compared to $47.8 million at December 31, 2025. Loans that warranted a substandard risk rating at September 30, 2026 totaled $42.9 million, compared to $53.0 million at December 31, 2025. Management continues to actively work with these borrowers and closely monitor substandard credits.