Bridgewater Bancshares reports $15.03M net income for Q3 2026

Cover page 2 changes

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For the quarterly period ended June September 30, 2026

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The number of shares of the Common Stock outstanding as of July 28, October 27, 2026 was 27,883,823 28,014,252 .

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Financial statements 28 changes

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Loans, Net of Allowance for Credit Losses of $ 57,418 57,819 at June September 30, 2026 (unaudited) and $ 56,443 at December 31, 2025

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Preferred Stock - Issued and Outstanding 27,600 Series A shares ( $ 2,500 liquidation preference) at June September 30, 2026 (unaudited) and December 31, 2025

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Common Stock - Issued and Outstanding 27,880,830 27,960,252 at June September 30, 2026 (unaudited) and 27,759,970 at December 31, 2025

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Comprehensive Income (Loss)

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Three and Six Nine Months Ended June September 30, 2026 and 2025

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BALANCE March 31, 2025

BALANCE June 30, 2025

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Comprehensive Income (Loss)

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BALANCE March 31, 2026

BALANCE September 30, 2025

BALANCE June 30, 2025 2026

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Comprehensive Income (Loss)

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Restricted Shares Withheld for Taxes

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BALANCE June 30, 2026

BALANCE September 30, 2026

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Comprehensive Income (Loss)

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BALANCE June 30, 2025

BALANCE September 30, 2025

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BALANCE June 30, 2026

BALANCE September 30, 2026

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Provision (Recovery) of Off-Balance Sheet Exposures

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Purchase of Bank-owned Life Insurance

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Net Cash Provided Used by Investing Activities

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Principal Payments on Notes Payable

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Shares Repurchased for Tax Withholdings Upon Exercise of Stock Options ( 100 837 )

Net Cash Provided (Used) by Financing Activities

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SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES

Loans Transferred to Foreclosed Assets

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Note 1: Description of the Business and Summary of Significant Accounting Policies 5 changes

Bridgewater Bancshares, Inc. (the Company ) is a financial holding company headquartered in St. Louis Park, Minnesota, 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 Twins Twin Cities MSA. 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.

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On August 25, 2026, the Company's board of directors extended the expiration date of the Company s previously announced stock repurchase program (the 2022 Stock Repurchase Program ) from August 26, 2026 to August 25, 2027. As of August 25, 2026, the 2022 Stock Repurchase Program had $ 12.4 million remaining under its stock repurchase authorization.

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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 six nine months ended June September 30, 2026 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 February 26, 2026.

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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 judgments 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.

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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. Significant segment expenses and other segment items regularly provided to the CODM are those on the face of the income statement. The Company s single segment is managed on a consolidated basis by the CODM who is the Chief Executive Officer.

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Note 2: Earnings Per Share 2 changes

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 six nine months ended June September 30, 2026, stock options, restricted stock units, and performance stock units totaling 81,703 141,652 and 117,241 99,753 , respectively, were excluded from the calculation because they were deemed to be anti-dilutive. For the three and six nine months ended June September 30, 2025, stock options and restricted stock units totaling 576,788 570,500 and 585,885 535,450 , respectively, were excluded from the calculation because they were deemed to be anti-dilutive.

The following table presents the numerators and denominators for basic and diluted earnings per share computations for the three and six nine months ended June September 30, 2026 and 2025:

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Note 3: Securities 8 changes

The following tables present the amortized cost and estimated fair value of securities with gross unrealized gains and losses at June September 30, 2026 and December 31, 2025:

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Securities with a carrying value of $ 104.1 96.2 million and $ 254.3 million were pledged to secure borrowing capacity at the Federal Reserve Discount Window as of June September 30, 2026 and December 31, 2025, respectively.

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 June September 30, 2026 and December 31, 2025:

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At June September 30, 2026 and December 31, 2025, 346 523 and 372 debt securities had unrealized losses with aggregate depreciation of approximately 7.3 10.3 % and 7.2 % , respectively, from the Company s amortized cost. 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 primarily 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 June September 30, 2026 and December 31, 2025, 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 $ 4.7 3.8 million and $ 6.2 million at June September 30, 2026 and December 31, 2025, respectively, and was excluded from the estimate of credit losses.

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There were no net realized gains or losses as a result of sales from the securities portfolio for the three months ended June September 30, 2026. There was a $ 7.3 million net realized gain as a result of sales from the securities portfolio for the six nine months ended June September 30, 2026, which included a net gain of $ 10.4 million recorded on the termination of fair value hedges on treasury and municipal securities.

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 June September 30, 2026. 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.

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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 six nine months ended June September 30, 2026 and 2025:

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Note 4: Loans and Allowance for Credit Losses 16 changes

The following table presents the components of the loan portfolio at June September 30, 2026 and December 31, 2025:

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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 June September 30, 2026 and December 31, 2025:

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The following tables present loan balances classified by credit quality indicator by year of origination as of June September 30, 2026 and December 31, 2025:

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Watch/Special Mention

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Watch/Special Mention

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The following tables present the activity in the ACL, by segment, for the three and six nine months ended June September 30, 2026 and 2025:

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Three Months Ended June September 30, 2026

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Six Months Ended June 30, 2026

Nine Months Ended September 30, 2026

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Three Months Ended June September 30, 2025

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Six Months Ended June 30, 2025

Nine Months Ended September 30, 2025

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The following tables present the balance in the ACL and the recorded investment in loans, by segment, as of June September 30, 2026 and December 31, 2025:

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ACL at June September 30, 2026

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Loans at June September 30, 2026

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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 June September 30, 2026 and December 31, 2025:

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Business 119 changes

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Accrued interest receivable on loans, which is recorded within accrued interest on the balance sheet, totaled $ 12.2 million and $ 12.7 million at June both September 30, 2026 and December 31, 2025, respectively, and was excluded from the estimate of credit losses.

For both the three and six nine months ended June September 30, 2026, there were no loans modified to borrowers experiencing financial difficulty. For both the three and six nine months ended June September 30, 2025, the Company modified one commercial real estate or ( 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.

The following table presents the composition of deposits at June September 30, 2026 and December 31, 2025:

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Brokered deposits included brokered transaction and money market accounts of $ 145.2 136.3 million and $ 145.5 million as of June September 30, 2026 and December 31, 2025, respectively.

The following table presents the scheduled maturities of brokered and time deposits at June September 30, 2026:

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The aggregate amount of time deposits greater than $250,000 was approximately $ 107.1 165.1 million and $ 158.7 million at June September 30, 2026 and December 31, 2025, respectively.

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During the six nine months ended June September 30, 2026, the Company terminated certain fair value interest rate swaps with an aggregate notional amount of $ 195.9 million, resulting in a net gain of $ 10.4 million. The net gain was recognized in earnings and included in net gains on sales of available for sale securities.

The following table presents a summary of the Company s interest rate swaps designated as fair value hedges as of June September 30, 2026 and December 31, 2025:

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Cash flow hedges : 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 $ 5.1 6.9 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 June September 30, 2026 and December 31, 2025:

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The Company purchases interest rate caps, designated as cash flow hedges, of certain funding liabilities. The interest rate caps require receipt of variable amounts from the counterparties when interest rates rise above the strike price specified in the contracts. For both the three and six nine months ended June September 30, 2026 and 2025, the Company recognized amortization expense on the interest rate caps of $ 198,000 200,000 and $ 393,000 593,000 , 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 June September 30, 2026 and December 31, 2025:

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The following table presents the total notional amounts and gross fair values of the Company s derivatives as of June September 30, 2026 and December 31, 2025:

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The Company is party to collateral support agreements with certain derivative counterparties. These agreements require the Company to 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 both June September 30, 2026 and December 31, 2025, the Company had pledged no cash collateral for its derivative contracts. As of June September 30, 2026 and December 31, 2025, the Company s counterparties had pledged cash collateral to the Company of $ 22.8 45.5 million and $ 26.2 million, respectively.

The following table presents the effect of derivative instruments in cash flow hedging relationships on the consolidated statements of income for the three and six nine months ended June September 30, 2026 and 2025:

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Three Months Ended June September 30, 2026

Three Months Ended June September 30, 2025

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Six Months Ended June 30, 2026

Six Months Ended June 30, 2025

Nine Months Ended September 30, 2026

Nine Months Ended September 30, 2025

No amounts were reclassified from accumulated other comprehensive income into net income related to hedge ineffectiveness for these derivatives during the three and six nine months ended June September 30, 2026 and 2025, 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.

The effects of the Company s hedging relationships on the income statement during the three and six nine months ended June September 30, 2026 and 2025 are presented in the table below:

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Three Months Ended June September 30, 2026

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Three Months Ended June September 30, 2025

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Six Months Ended June 30, 2026

Nine Months Ended September 30, 2026

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Six Months Ended June 30, 2025

Nine Months Ended September 30, 2025

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The following table presents amounts that were recorded on the balance sheet related to cumulative basis adjustments for fair value hedges at June September 30, 2026 and December 31, 2025:

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The gain recognized on derivatives not designated as hedging relationships for the three and six nine months ended June September 30, 2026 and 2025 was as follows:

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Six Months Ended June 30,

Three Months Ended June September 30,

Nine Months Ended September 30,

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The following table summarizes gross and net information about derivative instruments that were eligible for offset on the balance sheet at June September 30, 2026 and December 31, 2025:

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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 $ 1.68 1.71 billion and $ 1.62 billion at June September 30, 2026 and December 31, 2025, 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 $ 745.8 637.8 million and $ 611.3 million at June September 30, 2026 and December 31, 2025, respectively.

The following table presents information regarding FHLB advances, by maturity, at June September 30, 2026 and December 31, 2025:

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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. On September 1, 2026, the maximum principal amount Company entered into a fifth amendment to the agreement which extended the maturity date of the Company s revolving existing line of credit is from September 1, 2026 to September 1, 2028 and increased the maximum principal amount from $ 40 40.0 million to $ 50.0 million . As of June September 30, 2026 and December 31, 2025, the Company had two outstanding letters of credit totaling $ 2.7 million and $ 6.4 million, respectively, under this facility. 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 June September 30, 2026 and December 31, 2025.

The following table presents information regarding the revolving line of credit at June September 30, 2026 and December 31, 2025:

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September 1, 2028 (1)

Variable with Floor (1) (2)

(1) The LOC was renewed on September 1, 2026 for an additional two year term.

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

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The following table presents information regarding commitments outstanding at June September 30, 2026 and December 31, 2025:

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The Company had outstanding letters of credit with the FHLB of $ 69.6 129.6 million and $ 109.0 million at June September 30, 2026 and December 31, 2025, respectively, on behalf of customers and to secure public deposits.

The ACL for off-balance sheet credit exposures was $ 3.9 million and $ 4.0 million at June September 30, 2026 and December 31, 2025, respectively, and is separately classified on the balance sheet within other liabilities.

The following table presents the balance and activity in the ACL for off-balance sheet credit exposures for the three and six nine months ended June September 30, 2026 and 2025:

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Provision for (Recovery of) Off-Balance Sheet Credit Exposures ( 150 )

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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 both June September 30, 2026 and December 31, 2025, there were 10,000 shares 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 June September 30, 2026 and December 31, 2025, there were 6,222 7,132 and 2,192 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, performance 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 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 . Restricted stock units and restricted stock awards have been granted with a vesting period of four years . Performance stock units have been granted with a contingent vesting provision based on the achievement of specified performance goals over a three-year performance period. Performance stock units cliff vest with actual payouts ranging from 0 % to 200 % of the target award, depending on the level of performance achieved against the pre-established performance goals . As of June September 30, 2026 and December 31, 2025, there were 266,131 10,080 and 464,751 shares, respectively, of the Company s common stock reserved for future grants under the 2023 EIP.

In 2026, the Company adopted the Bridgewater Bancshares, Inc. 2026 Equity Incentive Plan (the 2026 EIP ). Under the 2026 EIP, the Company may grant incentive and nonqualified stock options, stock appreciation rights, stock awards, restricted stock units, performance 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 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 . Restricted stock units and restricted stock awards have been granted with a vesting period of four years . Performance stock units have been granted with a contingent vesting provision based on the achievement of specified performance goals over a three-year performance period. Performance stock units cliff vest with actual payouts ranging from 0 % to 200 % of the target award, depending on the level of performance achieved against the pre-established performance goals . As of June September 30, 2026, there were 1,500,000 shares of the Company s common stock reserved for future grants under the 2026 EIP.

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The weighted average assumptions used in the model for valuing stock options grants for the six nine months ended June September 30, 2026 are as follows:

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The following table presents a summary of the status of the Company s outstanding stock options for the six nine months ended June September 30, 2026:

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For the three months ended June September 30, 2026 and 2025, the Company recognized compensation expense for stock options of $ 220,000 261,000 and $ 313,000 315,000 , respectively. For the six nine months ended June September 30, 2026 and 2025, the Company recognized compensation expense for stock options of $ 502,000 764,000 and $ 578,000 893,000 , respectively.

The following table presents information pertaining to options outstanding at June September 30, 2026:

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As of June September 30, 2026, there was $ 2.0 4.2 million of total unrecognized compensation cost related to nonvested stock options that is expected to be recognized over a weighted-average period of 2.2 2.8 years .

The following table presents an analysis of nonvested options to purchase shares of the Company s stock issued and outstanding for the six nine months ended June September 30, 2026:

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Nonvested Options at June September 30, 2026

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The Company has granted restricted stock units out of the 2019 EIP and 2023 EIP. The Company has not yet granted restricted stock units out of the 2026 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 vested and settled.

The following table presents an analysis of nonvested restricted stock units outstanding for the six nine months ended June September 30, 2026:

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Nonvested at June September 30, 2026

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 June September 30, 2026 and 2025, the Company recognized compensation expense associated with restricted stock units of $ 639,000 735,000 and $ 623,000 629,000 , respectively. For the six nine months ended June September 30, 2026 and 2025, the Company recognized compensation expense associated with restricted stock units of $ 1.5 2.2 million and $ 1.2 1.9 million, respectively.

As of June September 30, 2026, there was $ 5.6 4.7 million of total unrecognized compensation cost related to nonvested restricted stock units granted under the 2019 EIP, 2023 EIP, and 2026 EIP that is expected to be recognized over a weighted-average period of 2.6 2.3 years.

During the six nine months ended June September 30, 2026, the Company issued 15,493 22,759 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 $ 298,000 445,000 was included in stock based compensation expense in the accompanying consolidated statements of shareholders equity.

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In 2026, the Company granted performance stock units under the 2023 EIP. Each performance stock unit represents the right to receive one share of Company common stock upon vesting. Vesting of the performance stock units is contingent upon achievement of specified performance metrics measured over a three-year performance period. Participants may earn 50 % , 100 % , or 200 % of the target award based on the achievement of metrics at the end of the performance period, with payouts interpolated for performance between the specified achievement levels. No payout will be earned for a performance metric if the applicable threshold level is not achieved. Final payouts are determined based on the level of achievement of both performance metrics at the conclusion of the three-year performance period.

All performance stock units are granted at the fair value of the Company s common stock on the grant date. Because the number of shares ultimately earned is contingent upon achievement of specified performance conditions, an estimate is made of the number of shares expected to vest based on the probability that the performance criteria will be achieved to determine the amount of compensation expense to be recognized. This estimate is re-evaluated quarterly, and total compensation expense is adjusted for any change in the current period. For the three and six nine months ended June September 30, 2026, the Company recognized compensation expense associated with performance stock units of $ 146,000 218,000 and $ 364,000 , respectively. There was no compensation expense associated with performance stock units recognized for the three and six nine months ended June September 30, 2025.

The following table presents an analysis of nonvested performance stock units outstanding for the six nine months ended June September 30, 2026:

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Nonvested at June September 30, 2026

As of June September 30, 2026, there was $ 2.1 2.0 million of total unrecognized compensation cost related to performance stock units granted under the 2023 EIP that is expected to be recognized over a weighted-average period of 2.5 2.3 years.

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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 June September 30, 2026 and December 31, 2025:

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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 June September 30, 2026. The following tables present the balances of assets and liabilities measured at fair value on a recurring basis as of June September 30, 2026 and December 31, 2025:

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Risk Participation Agreements

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The following tables present net credit losses related to nonrecurring fair value measurements of certain assets at June September 30, 2026 and December 31, 2025:

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The Company records certain loans at fair value on a non-recurring basis. Individually evaluated loans for which an allowance is established, or for which 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 such loans within Level 3 of the valuation hierarchy. As of June September 30, 2026, 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. Due to the significance of unobservable inputs, fair values of individually evaluated loans have been classified as Level 3.

The valuation techniques and significant unobservable inputs used to measure Level 3 estimated fair value as of June September 30, 2026 and December 31, 2025 were as follows:

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Collateral Dependent Loans

Discounted Cash Flows

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The following tables present the carrying amounts and estimated fair values of financial instruments at June September 30, 2026 and December 31, 2025:

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Risk Participation Agreements

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and 39 more changes in the filing

MD&A 1 change

The following discussion explains the Company s financial condition and results of operations as of and for the three and six nine months ended June 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.

Forward-looking statements 93 changes

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interest rate risk, including the effects of changes in interest rates;

interest rate risk, including the effects of the recent increase in the benchmark federal funds rate by the Federal Reserve;

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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 consequences to us and our customers, including the development and implementation of tools incorporating artificial intelligence;

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severe weather, natural disasters, wide spread widespread disease or pandemics, acts of war, military conflicts, or terrorism, changes in foreign relations, or other adverse external events, including the wars in Iran and Ukraine, ongoing conflicts in the Middle East, and other international military conflicts that can increase levels of political and economic unpredictability, contribute to rising energy and commodity prices, affect global supply chains, increase the volatility of financial markets, and other matters beyond our control;

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risks associated with our integration of First Minnetonka City Bank ( FMCB ), and the effect of the merger on the Company s customer and employee relationships and operating results;

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On August 25, 2026, the Company's board of directors extended the expiration date of the Company s previously announced stock repurchase program (the 2022 Stock Repurchase Program ) from August 26, 2026 to August 25, 2027. As of August 25, 2026, the 2022 Stock Repurchase Program had $12.4 million remaining under its stock repurchase authorization.

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

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Net income was $14.0 $15.0 million for the second third quarter of 2026, compared to net income of $11.5 $11.6 million for the second third quarter of 2025. Earnings per diluted common share for the second third quarter of 2026 were $0.45, $0.49, compared to $0.38 per diluted common share for the second third quarter of 2025.

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

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For the Six Nine Months Ended

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

Three Months Ended June September 30, 2026

Three Months Ended June September 30, 2025

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Six Months Ended June 30, 2026

Six Months Ended June 30, 2025

Nine Months Ended September 30, 2026

Nine Months Ended September 30, 2025

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Second Third Quarter of 2026 Compared to Second Third Quarter of 2025

Net interest income was $38.6 $40.7 million for the second third quarter of 2026, an increase of $6.1 $6.6 million compared to net interest income of $32.5 $34.1 million for the second 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 balances portfolio following the sale of $208.5 million of securities in the first quarter of 2026, and higher lower cash balances. and rates paid on subordinated debt.

Net interest margin (on a fully tax-equivalent basis), for the second third quarter of 2026 was 3.07%, 3.09%, a 45 46 basis point increase from 2.62% 2.63% in the second 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 2.94% 2.98% for the second third quarter of 2026, a 45 46 basis point increase from 2.49% 2.52% in the second 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.

Average interest earning assets were $5.14 $5.35 billion for the second third quarter of 2026, an increase of $125.7 $127.4 million, or 2.5%, 2.4%, compared to $5.02 $5.22 billion for the second 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 $3.89 $4.03 billion for the second third quarter of 2026, an increase a decrease of $46.0 $6.8 million, or 0.2%, compared to

1.2%, compared to $3.85 $4.04 billion for the second third quarter of 2025. The increase decrease in average interest bearing liabilities was primarily due to higher deposit lower balances of FHLB advances and notes payable, offset partially by a decrease an increase in FHLB advances. deposit balances.

Average interest earning assets produced a tax-equivalent yield of 5.73% 5.76% for the second third quarter of 2026, compared to 5.56% 5.63% for the second 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 3.51% 3.54% for the second third quarter of 2026, compared to 3.83% 3.89% for the second third quarter of 2025. The decrease was primarily due to lower rates paid on deposits following interest rate cuts in 2025.

Interest Income. Total interest income, on a tax-equivalent basis, was $73.5 $77.7 million for the second third quarter of 2026, compared to $69.5 $74.2 million for the second third quarter of 2025. The $4.0 $3.6 million, or 5.7%, 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.

Interest income on the investment securities portfolio, on a tax-equivalent basis, decreased $1.9 was $8.3 million for the second third quarter of 2026, compared to $10.6 million for the second third quarter of 2025. The $2.4 million decrease was primarily due to a $162.1 $167.3 million, or 21.1%, 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.

Interest income on loans, on a tax-equivalent basis, was $64.5 $67.1 million for the second third quarter of 2026, compared to $58.1 $60.3 million for the second third quarter of 2025. The $6.4 $6.8 million, or 11.0%, 11.3%, increase was primarily due to growth and repricing of the loan portfolio.

The aggregate loan yield, on a tax-equivalent basis, was 5.91% 5.96% in the second third quarter of 2026 , a 17 basis point increase, compared to 5.74% 5.79% in the second third quarter of 2025 . Core loan yield, a non-GAAP financial measure which excludes the 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.

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Interest Expense. Interest expense was $34.1 $36.0 million for the second third quarter of 2026, a decrease of $2.7 $3.6 million, or 7.2%, 9.0%, from $36.7 $39.5 million for the second third quarter of 2025. The decrease was primarily due to lower rates paid on interest bearing deposits. offset partially by higher balances and rates paid on subordinated debentures.

Interest expense on deposits was $29.7 $30.9 million for the second third quarter of 2026, a decrease of $2.8 $3.7 million, or 8.6%, 10.6%, from $32.5 $34.6 million for the second third quarter of 2025. The decrease in 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% 2.78% in the second third quarter of 2026, a 36 41 basis point decrease, compared to 3.16% 3.19% in the second 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.

Interest expense on borrowings was $4.4 $5.0 million for the second third quarter of 2026, an increase of $130,000, $117,000, compared to $4.2 $4.9 million for the second third quarter of 2025. The increase was primarily due to higher balances and rates on subordinated debentures due to the repricing of a portion of the subordinated debt. refinancing in the second quarter of 2025.

Six Nine Months Ended June September 30, 2026 Compared to Six Nine Months Ended June September 30, 2025

Net interest income was $75.2 $115.9 million for the six nine months ended June September 30, 2026, an increase of $12.6 $19.1 million, or 20.0%, 19.8%, compared to $62.7 $96.8 million for the six nine months ended June 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.

Net interest margin (on a fully tax-equivalent basis) for the six nine months ended June September 30, 2026 was 3.03%, 3.05%, a 47 46 basis point increase from 2.56% 2.59% for the six nine months ended June 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 2.90% 2.93% for the six nine months ended June September 30, 2026, a 47 basis point increase from 2.43% 2.46% for the six nine months ended June September 30, 2025.

Average interest earning assets were $5.11 $5.19 billion for the six nine months ended June September 30, 2026, an increase of $138.4 $132.2 million, or 2.8%, 2.6%, compared to $4.97 $5.06 billion for the six nine months ended June 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 $3.86 $3.92 billion for the six nine months ended June September 30, 2026, an increase of $51.5 $30.5 million, or 1.4%, 0.8%, compared to $3.81 $3.89 billion for the six nine months ended June September 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.

Average interest earning assets produced a tax-equivalent yield of 5.69% 5.71% for the six nine months ended June September 30, 2026, compared to 5.49% 5.54% for the six nine months ended June September 30, 2025. The average rate paid on interest bearing liabilities was 3.52% 3.53% for the six nine months ended June September 30, 2026, compared to 3.82% 3.85% for the six nine months ended June September 30, 2025.

Interest Income . Total interest income on a tax-equivalent basis was $144.2 $221.9 million for the six nine months ended June September 30, 2026, compared to $135.5 $209.6 million for the six nine months ended June September 30, 2025. The $8.7 $12.3 million increase in total interest income on a tax-equivalent basis was primarily due to growth and repricing in the loan portfolio.

Interest income on the investment securities portfolio, on a tax-equivalent basis, decreased $4.1 was $22.9 million during for the six nine months ended June September 30, 2026, compared to $29.4 million for the six nine months ended June September 30, 2025. The $6.5 million decrease was primarily due to a $170.2 $169.2 million, or 21.7%, 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.

Interest income on loans, on a tax-equivalent basis, for the six nine months ended June September 30, 2026 was $126.6 $193.8 million, compared to $112.1 $172.4 million for the six nine months ended June September 30, 2025. The $14.5 $21.4 million, or 13.1%, 12.4%, 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 $67.4 $103.4 million for the six nine months ended June September 30, 2026, a decrease of $4.8 $8.4 million, compared to $72.2 $111.8 million for the six nine months ended June 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.

Interest expense on deposits decreased to $58.5 $89.4 million for the six nine months ended June September 30, 2026, compared to $64.6 $99.2 million for the six nine months ended June September 30, 2025. The $6.1 $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.

Interest expense on borrowings was $8.9 $13.9 million for the six nine months ended June September 30, 2026, compared to $7.6 $12.6 million for the six nine months ended June September 30, 2025. The $1.3 $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.

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The provision for credit losses on loans and leases was $550,000 $2.8 million for the second third quarter of 2026, compared to $2.0 million $900,000 for the second third quarter of 2025 . The provision for credit losses on loans and leases was $1.9 $4.7 million for the six nine months ended June September 30, 2026, compared to $3.5 $4.4 million for the six nine months ended June September 30, 2025. The provision for credit losses on loans and leases recorded in the second third quarter of 2026 was primarily attributable to growth in the loan portfolio offset partially by changes to qualitative factors. and an additional specific reserve. The allowance for credit losses on loans and leases to total loans was 1.30% 1.28% at June September 30, 2026, compared to 1.35% 1.34% at June September 30, 2025.

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The provision for credit losses for off-balance sheet credit exposures was $-0- for each of the second third quarter of 2026, and compared to $200,000 for the third quarter of 2025. No provision was recorded during the second 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 six nine months ended June September 30, 2026, compared to $-0- $200,000 for the six nine months ended June September 30, 2025. The allowance for credit losses on off-balance sheet credit exposures was $3.9 million as of June September 30, 2026, compared to $4.0 million as of December 31, 2025.

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Provision for (Recovery of) Credit Losses for Off-Balance Sheet Credit Exposures (150) (200)

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Noninterest income was $2.3 $2.6 million for the second third quarter of 2026, a decrease an increase of $1.3 million $512,000 from $3.6 $2.1 million for the second third quarter of 2025. The decrease increase was primarily due to lower swap fees, net gain on sale higher letter of securities, credit fees and FHLB prepayment income. higher swap fees. Noninterest income was $11.9 $14.5 million for the six nine months ended June September 30, 2026, an increase of $6.2 $6.7 million from $5.7 $7.8 million for the six nine months ended June 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.

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Second Third Quarter of 2026 Compared to Second Third Quarter of 2025

Noninterest expense was $21.9 $21.3 million for the second third quarter of 2026, an increase of $3.0 $1.4 million from $18.9 $20.0 million for the second third quarter of 2025. The increase was primarily attributable to increases in salaries and employee benefits and information technology expense. expenses, offset partially by decreases in marketing and advertising expenses, the FDIC insurance assessment, and other expenses.

Six Nine Months Ended June September 30, 2026 Compared to Six Nine Months Ended June September 30, 2025

Noninterest expense was $44.1 $65.4 million for the six nine months ended June September 30, 2026, an increase of $7.0 $8.4 million from $37.1 $57.0 million for the six nine months ended June September 30, 2025. The increase was primarily attributable to increases in salaries and employee benefits, an FHLB advance prepayment penalty, and marketing and advertising information technology expenses .

The Company had 355 360 full-time equivalent employees at the end of the second third quarter of 2026, compared to 308 325 at the end of the second third quarter of 2025. The increase was largely driven by the hiring of key talent across the organization amidst continued M&A disruption.

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.

The efficiency ratio (on a fully tax-equivalent basis) was 53.0% 48.8% for the second third quarter of 2026, compared to 52.6% 54.7% for the second third quarter of 2025. The efficiency ratio was 54.6% 52.6% and 53.9%, 54.2%, respectively, for the six nine months ended June September 30, 2026 and June September 30, 2025. The Company s efficiency ratio has remained consistently below the industry median due in part to its branch-light model.

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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.

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.

Total assets at June September 30, 2026 were $5.39 $5.62 billion, a decrease an increase of $17.3 $208.5 million, or 0.3%, 3.9%, compared to total assets of $5.41 billion at December 31, 2025, and an increase of $93.1 $255.5 million, or 1.8%, 4.8%, compared to total assets of $5.30 $5.36 billion at June September 30, 2025. The year-to-date decrease 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. 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.

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Securities available for sale were $605.4 $598.7 million at June September 30, 2026, a decrease of $171.0 $177.7 million, or 22.0%, 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 positioning position the Company for improved profitability moving forward.

The following table presents the amortized cost and fair value of securities available for sale, by type, at June September 30, 2026 and December 31, 2025:

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Total gross loans at June September 30, 2026 were $4.43 $4.51 billion, an increase of $116.9 $197.3 million, or 5.5% 6.1% annualized, over total gross loans of $4.31 billion at December 31, 2025, and an increase of $280.6 $292.3 million, or 6.8%, 6.9%, over total gross loans of $4.15 $4.21 billion at June September 30, 2025. Both the year-to-date and the year-over-year increases in the loan portfolio were primarily due to increased loan originations and more favorable market conditions. loan advances.

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The Company primarily focuses on real estate mortgage lending, which constituted 79.9% 78.2% of the portfolio at June 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.

As of June September 30, 2026, investor CRE loans totaled $3.09 $3.16 billion, consisting of $1.69 $1.66 billion of loans secured by multifamily residential properties, $1.17 $1.21 billion of loans secured by nonowner occupied CRE, $186.2 $229.5 million of construction and land development loans, and $46.5 $57.8 million of 1-4 family construction loans. Investor CRE loans represented 69.9% 70.1% of the total gross loan portfolio and 457.1% 453.9% of the Bank s total risk-based capital at June September 30, 2026, compared to 69.9% and 473.1%, respectively, at December 31, 2025 .

The following table provides a breakdown of CRE nonowner occupied loans by collateral types as of June September 30, 2026 and December 31, 2025:

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The following tables present time to contractual maturity and sensitivity to interest rate changes for the loan portfolio as of June September 30, 2026 and December 31, 2025:

As of September 30, 2026

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The following table presents information on loan classifications at June September 30, 2026. The Company had no assets classified as doubtful or loss at June September 30, 2026.

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Loans that had potential weaknesses that warranted a watch or special mention risk rating at June September 30, 2026 totaled $38.5 $23.6 million, compared to $47.8 million at December 31, 2025. Loans that warranted a substandard risk rating at June September 30, 2026 totaled $43.9 $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.

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Nonperforming loans include loans accounted for on a nonaccrual basis and loans 90 days past due and still accruing. Nonaccrual loans totaled $21.6 $20.9 million as of June September 30, 2026 and $22.0 million as of December 31, 2025. There were no loans 90 days past due and still accruing as of either June September 30, 2026 and December 31, 2025. There were also no foreclosed assets as of either June September 30, 2026 and December 31, 2025.

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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 has become 90 days delinquent as to payment of principal or interest, unless the loan is considered to be well-collateralized 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 and six nine months ended June September 30, 2026 was $166,000 $194,000 and $229,000, $423,000, respectively. Gross income that would have been recorded on nonaccrual loans for the three and six nine months ended June September 30, 2025 was $169,000 $56,000 and $342,000, $398,000, respectively.

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At June September 30, 2026, the allowance for credit losses on loans and leases was $57.4 $57.8 million, an increase of $975,000 $1.4 million from $56.4 million at December 31, 2025. Net charge-offs totaled $409,000 $2.3 million during the second third quarter of 2026 and $1,000 $275,000 during the second third quarter of 2025. Net charge-offs totaled $925,000 $3.3 million for the six nine months ended June September 30, 2026, and $12,000 $287,000 for the six nine months ended June September 30, 2025. The allowance for credit losses on loans and leases as a percentage of total loans was 1.30% 1.28% at June September 30, 2026 and 1.31% at December 31, 2025.

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Total deposits at June September 30, 2026 were $4.35 $4.47 billion, an increase of $25.8 $152.7 million, or 0.6%, 4.7% annualized, compared to total deposits of $4.32 billion at December 31, 2025, and an increase of $109.5 $180.3 million, or 2.6%, 4.2%, compared to total deposits of $4.24 $4.29 billion at June September 30, 2025. Core deposits, defined as total deposits excluding brokered deposits and time deposits greater than $250,000, decreased $3.6 increased $161.7 million, or 0.2% 6.4% annualized, from December 31, 2025. Based on the nature of the Company s client base, management believes core deposits will fluctuate over 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 June September 30, 2026, total brokered deposits were $891.5 $795.1 million, an increase a decrease of $81.0 $15.4 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.

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 June September 30, 2026 and 2025:

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The Company s total uninsured deposits, which are the amounts of deposit accounts that exceed the FDIC insurance limit, currently $250,000, were approximately $1.14 billion, or 26.2% of total deposits, at June 30, 2026 and $1.29 $1.36 billion, or 29.8% 30.3% of total deposits, at December 31, 2025. These amounts were estimated based on the same methodologies and assumptions used for regulatory reporting purposes.

September 30, 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.

At June September 30, 2026, the Company had outstanding FHLB advances of $326.0 $396.0 million, compared to $399.5 million at December 31, 2025. During the six nine months ended June September 30, 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 $745.8 $637.8 million and $611.3 million at June September 30, 2026 and December 31, 2025, 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. On September 1, 2026, the maximum principal amount Company entered into a fifth amendment to the agreement which extended the maturity date of the revolving Company s existing line of credit is $40.0 million, and the facility matures on from September 1, 2026 to September 1, 2028 and increased the maximum principal amount from $40.0 million to $50.0 million . As of both June September 30, 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 June September 30, 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.

Additionally, the Company has borrowing capacity from other sources. As of June September 30, 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 $1.08 billion and $1.03 billion at June both September 30, 2026 and December 31, 2025. respectively. As of June September 30, 2026 and December 31, 2025, the Company had no outstanding advances from the discount window.

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As of June September 30, 2026 and December 31, 2025, the Company had subordinated debentures, net of issuance costs, of $108.9 $109.0 million and $108.7 million, respectively. On July 15, 2026, $30 million of subordinated debentures repriced from a fixed interest rate of 3.25% to a variable interest rate equal to the three month term SOFR plus 2.52%.

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The following table presents supplemental information regarding total contractual obligations at June September 30, 2026:

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Total shareholders equity at June September 30, 2026 was $547.9 $541.4 million, an increase of $30.8 $24.3 million, or 6.0%, 4.7%, compared to total shareholders equity of $517.1 million at December 31, 2025. The increase was primarily due to net income retained and an increase in unrealized gains in the derivatives portfolio, offset partially by an increase in unrealized losses in the securities portfolio and preferred stock dividends.

Tangible book value per share, a non-GAAP financial measure, was $16.61 $16.33 as of June September 30, 2026, an increase of 6.8% 5.0% from $15.55 as of December 31, 2025. Tangible common equity as a percentage of tangible assets, a non-GAAP financial measure, was 8.62% 8.16% at June September 30, 2026, compared to 8.01% at December 31, 2025.

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and 13 more changes in the filing

Market risk 3 changes

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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 $403.0 $443.0 million at June September 30, 2026 and $388.0 million at December 31, 2025, respectively. Fair value hedge relationships mitigate the effects of changing interest rates on the fair values of fixed rate available for sale securities. 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 $43.7 $116.5 million and $242.3 million at June September 30, 2026 and December 31, 2025, 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.

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Potential changes to the Company s net interest income in hypothetical rising and declining rate scenarios calculated as of June September 30, 2026 and December 31, 2025 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.

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The table above indicates that as of June September 30, 2026, in the event of an immediate and sustained 400 basis point increase in interest rates, the Company would experience a 5.46% 5.86% decrease in net interest income. In the event of an immediate 400 basis point decrease in interest rates, the Company would experience a 29.89% 31.04% increase in net interest income.

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Controls and procedures 1 change

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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 Exchange Act) as of June September 30, 2026, 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 June September 30, 2026, the Company s disclosure controls and 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.

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Unregistered sales of stock 3 changes

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The following table presents stock purchases made during the second third quarter of 2026:

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September 1 - 30, 2026

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(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, August 25, 2026, the Company s board of directors extended the expiration date of the 2022 Stock Repurchase Program from August 20, 2025 to August 26, 2026 to August 25, 2027. 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.

Other information 1 change

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During the quarter ended June September 30, 2026, 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 Rule 10 b5-1(c) or any non-Rule 10 b5-1 trading arrangement.

Exhibits 14 changes

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Form of Performance-Based Restricted Stock Unit Award Agreement under the Bridgewater Bancshares, Inc. 2023 Equity Incentive Plan ( incorporated by reference to Exhibit 10.2 on Form 10-Q filed on April 30, 2026)

Bridgewater Bancshares, Inc. 2026 Equity Incentive Plan (incorporated herein by reference to Appendix A to the definitive proxy statement filed on March 16, 2026)

Form of Restricted Stock Award Agreement under the Bridgewater Bancshares, Inc. 2026 Equity Incentive Plan (incorporated herein by reference to Exhibit 4.4 on Form S-8 filed on May 1, 2026)

Form of Restricted Stock Unit Award Agreement under the Bridgewater Bancshares, Inc. 2026 Equity Incentive Plan (incorporated herein by reference to Exhibit 4.5 on Form S-8 filed on May 1, 2026)

Form of Nonqualified Stock Option Award Agreement under the Bridgewater Bancshares, Inc. 2026 Equity Incentive Plan (incorporated herein by reference to Exhibit 4.6 on Form S-8 filed on May 1, 2026)

Form of Incentive Stock Option Award Agreement under the Bridgewater Bancshares, Inc. 2026 Equity Incentive Plan (incorporated herein by reference to Exhibit 4.7 on Form S-8 filed on May 1, 2026)

Form of Performance Based Restricted Stock Unit Award Agreement under the Bridgewater Bancshares, Inc. 2026 Equity Incentive Plan (incorporated herein by reference to Exhibit 4.8 on Form S-8 filed on May 1, 2026)

Fifth Amendment to Loan and Security Agreement, dated as of September 1, 2026, by and between Bridgewater Bancshares, Inc., as Borrower, and ServisFirst Bank, as Lender.

Amended and Restated Revolving Note, dated as of September 1, 2026, made by Bridgewater Bancshares, Inc., as Borrower, to and in favor of ServisFirst Bank, as Lender.

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Indicates a management contract or compensatory plan.

Financial information from the Company s Quarterly Report on Form 10-Q for the quarterly period ended June September 30, 2026, 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

The cover page for Bridgewater Bancshares, Inc. s Form 10-Q Report for the quarterly period ended June September 30, 2026 formatted in inline XBRL and contained in Exhibit 101

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Date: October 29, 2026

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Date: October 29, 2026

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