BWB US Equity☆

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

General

The following discussion and analysis of the Company’s results of operations and financial condition should be read in conjunction with the Company’s consolidated financial statements and related notes included elsewhere in this report. In addition to historical information, this discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions. Certain risks, uncertainties and other factors, including but not limited to those set forth under “Forward-Looking Statements,” “Risk Factors” and elsewhere in this report, may cause actual results to differ materially from those projected in the forward-looking statements. The Company assumes no obligation to update any of these forward-looking statements. Readers of the Company’s Annual Report on Form 10-K should consider these risks and uncertainties in evaluating forward-looking statements and should not place undue reliance on forward-looking statements.

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The following consolidated selected financial data is derived from the Company’s audited consolidated financial statements as of and for the three years ended December 31, 2024. This information should be read in connection with our audited consolidated financial statements and related notes appearing elsewhere in this report.

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​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

​ ​ As of and for the year ended December 31, ​

(dollars in thousands, except per share data) ​ 2024 ​ 2023 ​ 2022 ​

Income Statement ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Provision for (Recovery of) Credit Losses ​ ​ 3,525 ​ ​ (175) ​ ​ 7,700 ​

Net Income Available to Common Shareholders ​ ​ 28,771 ​ ​ 35,906 ​ ​ 49,338 ​

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Per Common Share Data ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Basic Earnings Per Share ​ $ 1.05 ​ $ 1.29 ​ $ 1.78 ​

Diluted Earnings Per Share ​ ​ 1.03 ​ ​ 1.27 ​ ​ 1.72 ​

Adjusted Diluted Earnings Per Share (1) ​ ​ 1.05 ​ ​ 1.27 ​ ​ 1.72 ​

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Selected Performance Ratios ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Return on Average Assets (ROA) ​ ​ 0.70 % ​ 0.89 % ​ 1.38 %

Return on Average Shareholders' Equity (ROE) ​ ​ 7.45 ​ ​ 9.73 ​ ​ 13.90 ​

Return on Average Tangible Common Equity (1) ​ ​ 7.75 ​ ​ 10.53 ​ ​ 15.69 ​

Net Interest Margin (3) ​ ​ 2.26 ​ ​ 2.42 ​ ​ 3.45 ​

Core Net Interest Margin (1)(3) ​ ​ 2.19 ​ ​ 2.34 ​ ​ 3.27 ​

Yield on Interest Earning Assets ​ ​ 5.40 ​ ​ 5.08 ​ ​ 4.35 ​

Yield on Total Loans, Gross ​ ​ 5.50 ​ ​ 5.21 ​ ​ 4.60 ​

Cost of Interest Bearing Liabilities ​ ​ 4.14 ​ ​ 3.61 ​ ​ 1.34 ​

Cost of Total Deposits ​ ​ 3.44 ​ ​ 2.73 ​ ​ 0.75 ​

Noninterest Expense to Average Assets ​ ​ 1.35 ​ ​ 1.32 ​ ​ 1.46 ​

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Adjusted Financial Ratios (1) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Adjusted Return on Average Assets ​ ​ 0.71 % ​ 0.89 % ​ 1.38 %

Adjusted Return on Average Shareholders' Equity ​ ​ 7.57 ​ ​ 9.73 ​ ​ 13.90 ​

Adjusted Return on Average Tangible Common Equity ​ ​ 7.90 ​ ​ 10.53 ​ ​ 15.69 ​

Adjusted Efficiency Ratio ​ ​ 57.3 ​ ​ 53.0 ​ ​ 41.5 ​

Adjusted Noninterest Expense to Average Assets ​ ​ 1.34 ​ ​ 1.32 ​ ​ 1.46 ​

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Balance Sheet ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Average Shareholders' Equity to Average Assets ​ ​ 9.41 % ​ 9.14 % ​ 9.93 %

Core Deposits to Total Deposits (5) ​ ​ 76.0 ​ ​ 68.7 ​ ​ 74.6 ​

Uninsured Deposits to Total Deposits ​ ​ 27.7 ​ ​ 24.3 ​ ​ 38.5 ​

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​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

​ ​ As of and for the year ended December 31,

(dollars in thousands, except per share data) ​ 2024 ​ 2023 ​ 2022 ​

Capital Ratios (Consolidated) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Common Equity Tier 1 Risk-based Capital Ratio ​ ​ 9.08 ​ ​ 9.16 ​ ​ 8.40 ​

Total Risk-based Capital Ratio ​ ​ 13.76 ​ ​ 13.97 ​ ​ 13.15 ​

Tangible Common Equity to Tangible Assets (1) ​ ​ 7.36 ​ ​ 7.73 ​ ​ 7.48 ​

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Growth Ratios ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Percentage Change in Total Assets ​ ​ 9.8 % ​ 6.1 % ​ 25.0 %

Percentage Change in Total Loans, Gross ​ ​ 3.9 ​ ​ 4.3 ​ ​ 26.6 ​

Percentage Change in Total Deposits ​ ​ 10.2 ​ ​ 8.6 ​ ​ 16.0 ​

Percentage Change in Shareholders' Equity ​ ​ 7.6 ​ ​ 8.0 ​ ​ 3.9 ​

Percentage Change in Net Income ​ ​ (17.9) ​ ​ (25.2) ​ ​ 16.9 ​

Percentage Change in Diluted Earnings Per Share ​ ​ (18.8) ​ ​ (26.3) ​ ​ 12.0 ​

Percentage Change in Tangible Book Value Per Share (1) ​ ​ 5.1 ​ ​ 9.8 ​ ​ 6.5 ​

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Selected Asset Quality Data ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Loans 30-89 Days Past Due to Total Loans ​ ​ 0.03 % ​ 0.41 % ​ 0.01 %

Nonperforming Loans to Total Loans ​ ​ 0.01 % ​ 0.02 % ​ 0.02 %

Nonaccrual Loans to Total Loans ​ ​ 0.01 % ​ 0.02 % ​ 0.02 %

Foreclosed Assets ​ $ — ​ $ — ​ $ — ​

Nonperforming Assets to Total Assets (4) ​ ​ 0.01 % ​ 0.02 % ​ 0.01 %

Net Loan Charge-Offs to Average Loans ​ ​ 0.03 ​ ​ 0.01 ​ ​ (0.01) ​

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Overview

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

Recent Developments

On December 13, 2024, the Company's wholly-owned banking subsidiary, Bridgewater Bank, completed its acquisition of FMCB in an all-cash transaction. At the closing of the transaction on December 13, 2024, FMCB merged with and into Bridgewater Bank, with Bridgewater Bank as the surviving entity. The acquisition of FMCB aligns with and accelerates Bridgewater’s strategic priorities, including its focus on continued growth within the Twin Cities market. The acquisition of FMCB added approximately $245.0 million of assets, $225.7 million of deposits, $117.1 million of loans and leases, and two branch locations in Minnetonka, Minnesota.The acquisition also adds an investment advisory function that offers nondeposit investment products through a third party arrangement.

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Critical Accounting Policies and Estimates

The consolidated financial statements of the Company are prepared based on the application of certain accounting policies, the most significant of which are described in “Note 1 – Description of the Business and Summary of Significant Accounting Policies” of the notes to the consolidated financial statements included as a part of this report. Certain policies require numerous estimates and strategic or economic assumptions that may prove inaccurate or subject to variation and may significantly affect the reported results and financial position for the current period or in future periods. The use of estimates, assumptions, and judgments are necessary when financial assets and liabilities are required to be recorded or adjusted to reflect fair value. Assets carried at fair value inherently result in more financial statement volatility. Fair values and information used to record valuation adjustments for certain assets and liabilities are based on either quoted market prices or are provided by other independent third party sources, when available. When such information is not available, management estimates valuation adjustments. Changes in underlying factors, assumptions or estimates in any of these areas could have a material impact on the future financial condition and results of operations. Management has discussed each critical accounting policy and the methodology for the identification and determination of critical accounting policies with the Company’s Audit Committee.

The following is a discussion of the critical accounting policies and significant estimates that require the Company to make complex and subjective judgments.

Allowance for Credit Losses

In accordance with ASC 326, Financial Instruments - Credit Losses, the allowance for credit losses on loans and leases is a valuation account that is deducted from the amortized cost basis of loans and leases to present the net amount expected to be collected on the loans and leases. Loans and leases are charged against the allowance for credit losses on loans and leases when management determines all or a portion of the loan or lease balance is uncollectible. Subsequent recoveries, if any, are credited to the allowance. The allowance is increased (decreased) by provisions (or recovery of) and reported in the income statement as a component of provisions for credit loss. The allowance for credit losses on off-balance sheet credit exposures is a liability account representing expected credit losses over the contractual period for which the Company is exposed to credit risk resulting from an off-balance sheet exposure.

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The amount of each allowance account represents management's best estimate of current expected credit losses on such financial instruments using relevant available information, from internal and external sources, relating to past events, current conditions and reasonable and supportable forecasts. The allowance for credit losses on loans and leases is measured on a collective basis for portfolios of loans when similar risk characteristics exist. Loans that do not share risk characteristics are evaluated for expected credit losses on an individual basis and excluded from the collective evaluation. For determining the appropriate allowance for credit losses on a collective basis, the loan portfolio is segmented into pools based upon similar risk characteristics and a lifetime loss-rate model is utilized. Management qualitatively adjusts model results for reasonable and supportable forecasts and risk factors that are not considered within the modeling processes but are relevant in assessing the expected credit losses within the loan segment. These qualitative factor adjustments may increase or decrease management's estimate of expected credit losses by a calculated percentage or amount based upon the estimated level of risk. Due to the subjective nature of these estimates the various components of the calculation require significant management judgment and certain assumptions are highly subjective. Volatility in certain credit metrics and variations between expected and actual outcomes are likely.

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Results of Operations

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Net Income

2024 Compared to 2023

Net income was $32.8 million for the year ended December 31, 2024, compared to net income of $40.0 million for the year ended December 31, 2023. Earnings per diluted common share for the year ended December 31, 2024 were $1.03, compared to $1.27 per diluted common share for the year ended December 31, 2023. Adjusted net income (a non-GAAP financial measure) was $33.4 million for the year ended December 31, 2024, compared to $40.0 million for the year ended December 31, 2023. Adjusted earnings per diluted common share (a non-GAAP financial measure) were $1.05 for the year ended December 31, 2024, compared to $1.27 for the year ended December 31, 2023.

Return on average assets (“ROA”) was 0.70% and 0.89% for the years ended December 31, 2024 and 2023, respectively. Return on average shareholder’s equity (“ROE”) was 7.45% and 9.73% for the years ended December 31, 2024 and 2023, respectively. Adjusted ROA (a non-GAAP financial measure) was 0.71% and 0.89% for the years ended December 31, 2024 and 2023, respectively. Adjusted ROE (a non-GAAP financial measure) was 7.57% and 9.73% for the years ended December 31, 2024 and 2023, respectively.

2023 Compared to 2022

Net income was $40.0 million for the year ended December 31, 2023, compared to net income of $53.4 million for the year ended December 31, 2022. Earnings per diluted common share for the year ended December 31, 2023 were $1.27, compared to $1.72 per diluted common share for the year ended December 31, 2022. ROA was 0.89% and 1.38% for the years ended December 31, 2023 and 2022, respectively. ROE was 9.73% and 13.90% for the years ended December 31, 2023 and 2022, respectively.

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Net Interest Income

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

Average Balances and Yields

The following table presents, for the years ended December 31, 2024, 2023 and 2022, 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. This table is presented on a tax-equivalent basis, if applicable.

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​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

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

(dollars in thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Interest Earning Assets: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Investment Securities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Interest Bearing Liabilities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Deposits: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Taxable Equivalent Adjustment: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

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Interest Rates and Operating Interest Differential

Increases and decreases in interest income and interest expense result from changes in average balances (volume) of interest earning assets and interest bearing liabilities, as well as changes in average interest rates. The following table presents the effect that these factors had on the interest earned on interest earning assets and the interest incurred on interest bearing liabilities. The effect of changes in volume is determined by multiplying the change in volume by the previous period’s average rate. Similarly, the effect of rate changes is calculated by multiplying the change in average rate by the previous period’s volume. The changes not attributable specifically to either volume or rate have been allocated to the changes due to volume. The following table presents the changes in the volume and rate of interest bearing assets and liabilities for the year ended December 31, 2024, compared to the year ended December 31, 2023, and for the year ended December 31, 2023, compared to the year ended December 31, 2022:

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

​ ​ ​ Year Ended December 31, 2024 ​ ​ Year Ended December 31, 2023

​ ​ ​ Compared with ​ ​ Compared with

​ ​ ​ Year Ended December 31, 2023 ​ ​ Year Ended December 31, 2022

​ ​ ​ Change Due To: ​ ​ Interest ​ ​ Change Due To: ​ ​ Interest

(dollars in thousands) ​ Volume ​ Rate ​ Variance ​ Volume ​ Rate ​ Variance

Interest Earning Assets: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Investment Securities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Loans: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Paycheck Protection Program Loans ​ ​ — ​ ​ — ​ ​ — ​ ​ (970) ​ ​ — ​ ​ (970)

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Interest Bearing Liabilities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Subordinated Debentures ​ ​ 19 ​ ​ (19) ​ ​ — ​ ​ (528) ​ ​ (177) ​ ​ (705)

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Interest Income, Interest Expense, and Net Interest Margin

2024 Compared to 2023

Net interest income was $102.2 million for the year ended December 31, 2024, a decrease of $3.0 million compared to $105.2 million for the year ended December 31, 2023. The decrease in net interest income was primarily due to growth and higher rates paid on deposits, offset partially by growth and higher earning asset yields in the higher interest rate environment.

Net interest margin (on a fully tax-equivalent basis) for the year ended December 31, 2024 was 2.26%, a 16 basis point decline from 2.42% for the year ended December 31, 2023. Core net interest margin (on a fully tax-equivalent basis), a non-GAAP financial measure which excludes the impact of loan fees, for the year ended

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December 31, 2024 was 2.19%, a 15 basis point decline from 2.34% for the year ended December 31, 2023. The decline in the margin was primarily due to higher funding costs, offset partially by higher earning asset yields.

Average interest earning assets were $4.58 billion for the year ended December 31, 2024, an increase of $175.2 million, or 4.0%, compared to $4.40 billion for the year ended December 31, 2023. The increase in average interest earning assets was primarily due to growth in the loan portfolio, purchases of investment securities and an increase in cash balances. Average interest bearing liabilities were $3.47 billion for the year ended December 31, 2024, an increase of $228.4 million, or 7.0%, compared to $3.25 billion for the year ended December 31, 2023. The increase in average interest bearing liabilities was primarily due to increases in all deposit types and FHLB advances, offset partially by a decrease in federal funds purchased.

Average interest earning assets produced a tax-equivalent yield of 5.40% for the year ended December 31, 2024, compared to 5.08% for the year ended December 31, 2023. The increase in the yield on interest earning assets was primarily due to the purchase of higher yielding securities and the repricing of the loan and securities portfolios in the higher interest rate environment. The cost of interest bearing liabilities was 4.14% for the year ended December 31, 2024, compared to 3.61% for the year ended December 31, 2023. The increase was primarily due to continued deposit repricing in the higher interest rate environment.

Interest Income. Total interest income on a tax-equivalent basis was $247.1 million for the year ended December 31, 2024, compared to $223.9 million for the year ended December 31, 2023. The $23.2 million, or 10.4%, increase in total interest income on a tax-equivalent basis was primarily due to growth and higher yields in the securities and loan portfolios.

Interest income on cash investments increased $2.5 million, or 79.5%, for the year ended December 31, 2024, compared to the year ended December 31, 2023, primarily due to higher balances during the year. Interest income on the investment securities portfolio on a fully-tax equivalent basis increased $7.7 million, or 29.2%, for the year ended December 31, 2024, compared to the year ended December 31, 2023, primarily due to a $92.8 million, or 15.3%, increase in average balances between the two periods and higher rates earned on securities.

Interest income on loans, on a fully-tax equivalent basis, for the year ended December 31, 2024 was $205.6 million, compared to $192.7 million for the year ended December 31, 2023. The $13.0 million, or 6.7%, increase was primarily due to loan growth and the repricing of the loan portfolio in the higher interest rate environment.

Loan interest income and loan fees remained one of the primary contributing factors to the changes in yield on interest earning assets. The aggregate loan yield increased to 5.50% for the year ended December 31, 2024, which was 29 basis points higher than 5.21% for the year ended December 31, 2023. While loan fees have historically maintained a relatively stable contribution to the aggregate loan yield, the recent periods saw fewer loan prepayment fees. Despite the overall decrease in fee recognition, the Company is encouraged that the core loan yield continued to rise as new loans originated at higher yields and the existing portfolio repriced in the higher rate environment.

The following table presents a summary of interest and fees recognized on loans for the years ended December 31, 2024 and 2023, and interest and fees recognized on loans, excluding PPP loans, for the year ended December 31, 2022:

​ ​ ​ ​ ​ ​ ​ ​ ​ ​

​ ​ For the year ended December 31,

Interest Expense. Interest expense on interest bearing liabilities was $143.7 million for the year ended December 31, 2024, compared to $117.2 million for the year ended December 31, 2023. The $26.5 million, or 22.6%, increase was primarily due to growth and upward repricing of the deposit portfolio in the higher interest rate environment.

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Interest expense on deposits was $128.8 million for the year ended December 31, 2024, compared to $96.0 million for the year ended December 31, 2023. The $32.8 million, or 34.1%, increase in interest expense on deposits was primarily due to the upward repricing of the deposit portfolio in the higher interest rate environment and the average balance of interest bearing deposits increasing by $293.7 million, or 10.7%. The cost of total deposits was 3.44% for the year ended December 31, 2024, a 71 basis point increase, compared to 2.73% for the year ended December 31, 2023. The increase was primarily due to the upward repricing of the deposit portfolio in the higher interest rate environment.

Interest expense on borrowings was $14.9 million for the year ended December 31, 2024, compared to $21.1 million for the year ended December 31, 2023. The $6.2 million, or 29.5%, decrease was primarily due to the decreased utilization of federal funds purchased.

2023 Compared to 2022

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Net interest income was $105.2 million for the year ended December 31, 2023, a decrease of $24.5 million compared to $129.7 million for the year ended December 31, 2022. The decrease in net interest income was due to increased volumes and higher rates paid on interest bearing liabilities in the rising interest rate environment, offset partially by higher rates earned on increased volumes of securities and loans.

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Net interest margin (on a fully tax-equivalent basis) for the year ended December 31, 2023 was 2.42%, a 103 basis point decline from 3.45% for the year ended December 31, 2022. Core net interest margin (on a fully tax-equivalent basis), a non-GAAP financial measure which excludes the impact of loan fees, and prior to 2023, PPP balances, interest, and fees, for the year ended December 31, 2023 was 2.34%, a 93 basis point decline from 3.27% for the year ended December 31, 2022. The decline in the margin was primarily due to higher funding costs, offset partially by higher earning asset yields.

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Average interest earning assets were $4.40 billion for the year ended December 31, 2023, an increase of $614.1 million, or 16.2%, compared to $3.79 billion for the year ended December 31, 2022. The increase in average interest earning assets was primarily due to growth in the loan portfolio and purchases of investment securities. Average interest bearing liabilities were $3.25 billion for the year ended December 31, 2023, an increase of $717.8 million, or 28.4%, compared to $2.53 billion for the year ended December 31, 2022. The increase in average interest bearing liabilities was primarily due to an increase in interest bearing transaction deposits, brokered deposits and FHLB advances.

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Average interest earning assets produced a fully tax-equivalent yield of 5.08% for the year ended December 31, 2023, compared to 4.35% for the year ended December 31, 2022. The increase in the yield on interest earning assets was primarily due to growth and repricing of the loan and securities portfolios in the rising interest rate environment. The cost of interest bearing liabilities was 3.61% for the year ended December 31, 2023, compared to 1.34% for the year ended December 31, 2022, primarily due to the rapid increase in market interest rates that occurred between the periods, which impacted all funding sources.

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Interest Income. Total interest income on a tax-equivalent basis was $223.9 million for the year ended December 31, 2023, compared to $164.9 million for the year ended December 31, 2022. The $59 million, or 35.8%, increase in total interest income on a tax-equivalent basis, was primarily due to strong organic growth in the loan portfolio, purchases of investment securities, and higher earning asset yields in the rising interest rate environment.

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Interest income on cash investments increased $2.6 million, or 430.7%, for the year ended December 31, 2023, compared to the year ended December 31, 2022, primarily due to the interest rate increases during the year. Interest

income on the investment securities portfolio on a fully-tax equivalent basis increased $9.5 million, or 55.5%, for the

year ended December 31, 2023, compared to the year ended December 31, 2022, primarily due to an $85.2 million, or 16.4%, increase in average balances between the two periods and higher rates earned on securities.

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Interest income on loans, on a fully-tax equivalent basis, for the year ended December 31, 2023 was $192.7 million, compared to $146.8 million for the year ended December 31, 2022. The $45.9 million, or 31.2%, increase was primarily due to a $508.5 million, or 15.9%, increase in the average balance of loans outstanding from continued organic loan growth and a rising yield in the higher interest rate environment.

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Interest Expense. Interest expense on interest bearing liabilities was $117.2 million, an increase of $83.2 million, or 244.7%, for the year ended December 31, 2023, compared to $34.0 million for the year ended December 31, 2022. The increase was primarily due to growth and upward repricing of the deposit and FHLB advances portfolios in the higher interest rate environment.

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Interest expense on deposits was $96.0 million for the year ended December 31, 2023, compared to $23.4 million for the year ended December 31, 2022. The $72.7 million, or 310.8%, increase in interest expense on deposits was primarily due to the upward repricing of the deposit portfolio in the higher rate environment and the average balance of interest bearing deposits increasing by $523.6 million, or 23.6%. The cost of total deposits was 2.73% for the year ended December 31, 2023, a 198 basis point increase, compared to 0.75% for the year ended December 31, 2022. The increase was primarily due to the upward repricing of the deposit portfolio in the higher interest rate environment.

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Interest expense on borrowings was $21.1 million for the year ended December 31, 2023, an increase of $10.5 million, compared to $10.6 million for the year ended December 31, 2022. This increase was primarily due to the increased utilization of federal funds purchased and FHLB advances in the rising interest rate environment.

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Provision for Credit Losses

2024 Compared to 2023

The allowance for credit losses on loans and leases increased $1.8 million as of December 31, 2024, compared to December 31, 2023, reflecting a $950,000 day 1 provision for non-purchase credit deteriorated (“PCD”) loans acquired in the FMCB transaction, a $114,000 allowance for PCD loans acquired in the FMCB transaction, a provision of $2.0 million and net charge-offs of $1.2 million during 2024. The provision for credit losses on loans and leases was $2.9 million for the year ended December 31, 2024, an increase of $850,000, compared to a provision for credit losses on loans and leases of $2.1 million for the year ended December 31, 2023. The increase in the provision for credit losses on loans and leases was primarily attributable to the acquisition of FMCB and growth in the loan portfolio. The allowance for credit losses on loans and leases to total loans was 1.35% at December 31, 2024, compared to 1.36% at December 31, 2023.

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The provision for credit losses for off-balance sheet credit exposures was $625,000 for the year ended December 31, 2024, compared to a negative provision of $2.2 million for the year ended December 31, 2023. The provision for the year ended December 31, 2024 was due to an increase in the volume of newly originated loans with unfunded commitments in the commercial and construction and land development segments. The allowance for credit losses on off-balance sheet credit exposures was $3.6 million as of December 31, 2024, compared to $3.0 million as of December 31, 2023.

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2023 Compared to 2022

On January 1, 2023, the Company adopted ASU No. 2016-13 “Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses of Financial Instruments,” more commonly referred to as “CECL.” Upon adoptionof CECL, the Company’s allowance for credit losses on loans increased $650,000 and the allowance for off-balancesheet credit exposures increased $4.9 million. The tax-effected impact of these two items totaled $3.9 million and was recorded as an adjustment to retained earnings as of January 1, 2023.

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The allowance for credit losses on loans increased $2.5 million as of December 31, 2023, compared to December 31, 2022, reflecting the impact of adopting CECL of $650,000, a provision for credit losses of $2.1 million and net charge-offs of $202,000 during 2023. The provision for credit losses on loans was $2.1 million for the year ended December 31, 2023, a decrease of $5.7 million, compared to the provision for credit losses on loans of $7.7 million for the year ended December 31, 2022. The decrease in the provision for credit losses on loans was due to continued strong asset quality and a more managed pace of loan growth. The allowance for credit losses on loans to total loans was 1.36% at December 31, 2023, compared to 1.34% at December 31, 2022.

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The provision for credit losses for off-balance sheet credit exposures was a negative provision of $2.2 million for the year ended December 31, 2023, compared to $-0- for the year ended December 31, 2022. The negative provision for the year ended December 31, 2023 was due to a reduction in outstanding unfunded commitments primarily attributable to the migration of unfunded commitments to funded loans, as well as a moderation of volume of newly originated projects with unfunded commitments. The allowance for credit losses on off-balance sheet credit exposures was $3.0 million as of December 31, 2023, compared to $360,000 as of December 31, 2022.

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The following table presents a summary of the activity in the allowance for credit losses on loans and leases for the years ended December 31, 2024, 2023, and 2022:

​ ​ ​ ​ ​ ​ ​ ​ ​ ​

​ ​ Year Ended December 31,

Impact of Adopting CECL ​ ​ — ​ ​ 650 ​ ​ —

Day 1 PCD Allowance ​ ​ 114 ​ ​ — ​ ​ —

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The following table presents a summary of the activity in the provision for credit losses for the years ended December 31, 2024, 2023, and 2022:

​ ​ ​ ​ ​ ​ ​ ​ ​ ​

​ ​ Year Ended December 31,

Provision for Credit Losses on Loans and Leases ​ $ 2,900 ​ $ 2,050 ​ $ 7,700

Provision for (Recovery of) Credit Losses ​ $ 3,525 ​ $ (175) ​ $ 7,700

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Noninterest Income

2024 Compared to 2023

Noninterest income was $7.4 million for the year ended December 31, 2024, compared to $6.5 million for the year ended December 31, 2023, an increase of $875,000, or 13.5%. The increase was primarily due to gains on sales of securities, higher letter of credit fees, higher swap fees and bank-owned life insurance income, offset partially by FHLB prepayment income recognized in the previous year which did not reoccur. There was no material stub period impact from the FMCB transaction in the fourth quarter of 2024.

2023 Compared to 2022

Noninterest income was $6.5 million for the year ended December 31, 2023, compared to $6.3 million for the year ended December 31, 2022, an increase of $161,000, or 2.5%. The increase was primarily due to increases in customer service fees, bank-owned life insurance income and FHLB prepayment income, offset partially by lower swap fees and other income.

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The following table presents the major components of noninterest income for the year ended December 31, 2024, compared to the year ended December 31, 2023, and for the year ended December 31, 2023, compared to the year ended December 31, 2022:

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

​ ​ Year Ended ​ ​ ​ ​ Year Ended ​ ​ ​

​ ​ December 31, ​ Increase/ ​ December 31, ​ Increase/

Noninterest Income: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Net Gain on Sales of Foreclosed Assets ​ ​ 62 ​ ​ — ​ ​ 62 ​ ​ ​ ​ ​ ​ ​ ​ ​

Debit Card Interchange Fees ​ ​ 593 ​ ​ 595 ​ ​ (2) ​ ​ 595 ​ ​ 586 ​ ​ 9

FHLB Prepayment Income ​ ​ — ​ ​ 792 ​ ​ (792) ​ ​ 792 ​ ​ — ​ ​ 792

​

Noninterest Expense

2024 Compared to 2023

Noninterest expense totaled $63.3 million for the year ended December 31, 2024, a $4.0 million, or 6.7%, increase from $59.3 million for the year ended December 31, 2023. The increase was primarily attributable to increases in salaries and employee benefits and merger-related expenses, offset partially by a decrease in the FDIC insurance assessment. Merger-related expenses totaled $712,000 for the year ended December 31, 2024. The stub period impact from the FMCB transaction to noninterest expense, excluding merger-related expenses, was $199,000 for the year ended December 31, 2024.

The Company had 290 full-time equivalent employees at December 31, 2024, compared to 255 employees at December 31, 2023. The increase during the year was largely driven by the addition of 25 new employees from the acquisition of FMCB.

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

The efficiency ratio was 57.9% for the year ended December 31, 2024, compared to 53.0% for the year ended December 31, 2023. The Company’s efficiency ratio has remained consistently below the industry median due in part to its “branch-light” model.

2023 Compared to 2022

Noninterest expense totaled $59.3 million for the year ended December 31, 2023, a $2.7 million, or 4.8%, increase from $56.6 million for the year ended December 31, 2022. The increase was primarily driven by a $2.3 million increase in the FDIC insurance assessment as the result of industry-wide increases, a $1.2 million increase in derivative collateral fees, and a $417,000 increase in professional and consulting fees, offset partially by decreases in salaries and employee benefits, marketing and advertising expenses, and the amortization of tax credit investments due to the early adoption of ASU 2023-02. The Company early adopted ASU 2023-02 applying the modified retrospective method which reclassified noninterest expense to income tax expense effective January 1, 2023, impacting comparability to prior years.

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​

The Company had 255 full-time equivalent employees at December 31, 2023, compared to 246 employees at December 31, 2022.

​

The efficiency ratio was 53.0% for the year ended December 31, 2023, compared to 41.5% for the year ended December 31, 2022.

The following table presents the major components of noninterest expense for the year ended December 31, 2024, compared to the year ended December 31, 2023, and for the year ended December 31, 2023, compared to the year ended December 31, 2022:

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

​ ​ Year Ended ​ ​ ​ ​ Year Ended ​ ​ ​

​ ​ December 31, ​ Increase/ ​ December 31, ​ Increase/

Noninterest Expense: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Intangible Asset Amortization ​ ​ 78 ​ ​ 100 ​ ​ (22) ​ ​ 100 ​ ​ 191 ​ ​ (91)

Amortization of Tax Credit Investments ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 408 ​ ​ (408)

​

Income Tax Expense

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

2024 Compared to 2023

Income tax expense was $9.9 million for the year ended December 31, 2024, compared to $12.6 million for the year ended December 31, 2023. The effective combined federal and state income tax rate for the year ended December 31, 2024 was 23.2%, compared to 23.9% for the year ended December 31, 2023.

2023 Compared to 2022

Income tax expense was $12.6 million for the year ended December 31, 2023, compared to $18.3 million for the year ended December 31, 2022. The effective combined federal and state income tax rate for the year ended December 31, 2023 was 23.9%, compared to 25.5% for the year ended December 31, 2022. The lower effective tax rate was primarily due to an increase in tax credits recognized. The Company early adopted ASU 2023-02 applying the modified retrospective method which reclassified noninterest expense to income tax expense effective January 1, 2023.

​

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Financial Condition

Overview

Total assets at December 31, 2024 were $5.07 billion, an increase of $454.3 million, or 9.8%, compared to $4.61 billion at December 31, 2023. The increase in total assets was primarily due to an increase in cash and cash equivalents, organic loan growth, purchases of investment securities, and the addition of assets purchased in the FMCB transaction. Total gross loans at December 31, 2024 were $3.87 billion, an increase of $144.2 million, or 3.9%, compared to December 31, 2023.

Investment Securities Portfolio

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

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

​

Securities available for sale were $768.2 million at December 31, 2024, an increase of $164.1 million, or 27.2%, compared to $604.1 million at December 31, 2023.

The following table presents the amortized cost and fair value of securities available for sale, by type, at December 31, 2024 and 2023:

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

​ ​ Amortized ​ Fair ​ ​ ​ Amortized ​ Fair ​ ​ ​

(dollars in thousands) Cost Value Percent ​ Cost Value Percent ​

Residential Pass-Through: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

​

Loan Portfolio

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

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

Total gross loans increased $144.2 million, or 3.9%, to $3.87 billion at December 31, 2024, compared to $3.72 billion at December 31, 2023. The total gross loan balances included $117.1 million of loans at amortized cost acquired in the FMCB transaction. Excluding loans acquired in the FMCB transaction, total gross loans increased 0.7% for the year ended December 31, 2024. The Bank’s pace of loan growth moderated in 2024 compared to historical levels as the Company actively managed the balance sheet to better align loan growth with the funding outlook and ultimately the impact of the higher interest rate environment on the number of prospective deals that meet underwriting standards. The 1-4 family and leases growth is primarily attributable to the FMCB transaction.

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

​

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

(dollars in thousands) Amount Percent Amount Percent

Real Estate Mortgage: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Allowance for Credit Losses ​ ​ (52,277) ​ ​ ​ ​ (50,494) ​ ​ ​

Net Deferred Loan Fees ​ ​ (6,801) ​ ​ ​ ​ (6,573) ​ ​ ​

​

The Company primarily focuses on real estate mortgage lending, which constituted 82.1% of the portfolio as of December 31, 2024. The composition of the portfolio has remained relatively consistent with prior periods and the Company does not expect any significant changes in the foreseeable future in the composition of the loan portfolio or in the emphasis on real estate lending.

As of December 31, 2024, investor CRE loans totaled $2.65 billion, consisting of $1.08 billion of loans secured by nonowner occupied CRE, $1.43 billion of loans secured by multifamily residential properties, $42.0 million of 1-4 family construction loans and $97.3 million of construction and land development loans. Investor CRE loans represented 68.4% of the total gross loan portfolio and 462.0% of the Bank’s total risk-based capital at December 31, 2024, compared to 71.8% and 482.4%, respectively, at December 31, 2023.

As of December 31, 2024, over 80% of the Bank’s real estate loan balances were secured by properties located in the Twin Cities MSA.

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The following table provides a breakdown of CRE nonowner occupied loans by collateral types as of December 31, 2024 and 2023:

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

​ ​ ​ ​ ​ Percent of ​ Percent of ​ ​ ​ ​ Percent of ​ Percent of ​

​ ​ ​ ​ ​ CRE Nonowner ​ Total Loan ​ ​ ​ ​ ​ CRE Nonowner ​ Total Loan ​

Collateral Type: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

​

The following tables present time to contractual maturity and sensitivity to interest rate changes for the loan portfolio at December 31, 2024 and 2023:

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

​ Due in One Year More Than One More Than Five ​ After

Real Estate Mortgage: ​ ​ ​ ​ ​ ​ ​ ​

Interest Rate Sensitivity: ​ ​ ​ ​ ​

​

​

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

​ Due in One Year More Than One More Than Five ​ After

Real Estate Mortgage: ​ ​ ​ ​ ​ ​ ​ ​

Interest Rate Sensitivity: ​ ​ ​ ​ ​

​

​

Asset Quality

The Company emphasizes credit quality in the originating and monitoring of the loan portfolio, and success in underwriting is measured by the levels of classified and nonperforming assets and net charge-offs. Federal regulations and internal policies require the use of an asset classification system as a means of managing and reporting problem and potential problem assets. The Company has incorporated an internal asset classification system, substantially consistent

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with federal banking regulations, as a part of the credit monitoring system. Federal banking regulations set forth a classification scheme for problem and potential problem assets as “special mention,” “substandard,” “doubtful” or “loss” assets. An asset identified as “special mention” is not adversely classified but has potential weaknesses that deserve management’s close attention. If left uncorrected, these potential weaknesses may result in the deterioration of the payment prospects of the asset. An asset is considered “substandard” if it is inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. A financial institution with assets classified as “special mention” is not expected to sustain losses of principal or interest from these assets and should not classify assets under this category for more than a year. “Substandard” assets include those characterized by the “distinct possibility” that the financial institution will sustain “some loss” if the deficiencies are not corrected. Assets classified as “doubtful” have all of the weaknesses inherent in those classified “substandard” with the added characteristic that the weaknesses present make “collection or liquidation in full,” on the basis of currently existing facts, conditions, and values, “highly questionable and improbable.” Assets classified as “loss” are those considered “uncollectible” and of such little value that their continuance as assets without the establishment of a specific loss reserve is not warranted. Assets which do not currently expose the insured institution to sufficient risk to warrant classification in one of the aforementioned categories but possess weaknesses are required to be designated “watch.”

The following table presents information on loan classifications at December 31, 2024. The Company had no assets classified as doubtful or loss at December 31, 2024.

​ ​ ​ ​ ​ ​ ​ ​ ​ ​

​ ​ Risk Category ​

(dollars in thousands) ​ Watch/Special Mention ​ Substandard ​ Total

Leases ​ ​ — ​ ​ 34 ​ ​ 34

Construction and Land Development ​ — ​ 58 ​ 58

1-4 Family Construction ​ ​ — ​ ​ — ​ ​ —

Real Estate Mortgage: ​ ​ ​ ​ ​ ​ ​ ​

Consumer and Other ​ ​ — ​ ​ 18 ​ ​ 18

​

Loans that have potential weaknesses that warranted a watch or special mention rating at December 31, 2024 totaled $46.6 million, compared to $26.5 million at December 31, 2023.Loans that warranted a substandard risk rating at December 31, 2024 totaled $21.8 million, compared to $35.9 million at December 31, 2023. Management continues to actively work with these borrowers and closely monitor substandard credits.

Nonperforming Assets

Nonperforming loans include loans accounted for on a nonaccrual basis and loans 90 days past due and still accruing. Nonperforming assets consist of nonperforming loans plus foreclosed assets (i.e., real or personal property acquired through foreclosure). Nonaccrual loans totaled $301,000 at December 31, 2024 and $919,000 at December 31, 2023, a decrease of $618,000. There were no loans 90 days past due and still accruing as of December 31, 2024 and 2023. There were also no foreclosed assets as of December 31, 2024 and 2023.

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

​ ​ ​ ​ ​ ​ ​ ​

​ ​ December 31, ​

Total Nonaccrual Loans ​ $ 301 ​ $ 919 ​

Total Nonperforming Loans ​ $ 301 ​ $ 919 ​

Total Nonperforming Assets (1) ​ $ 301 ​ $ 919 ​

Total Modified Accruing Loans ​ — ​ 9,609 ​

Total Nonperforming Assets and Modified Accruing Loans ​ $ 301 ​ $ 10,528 ​

Nonaccrual Loans to Total Loans ​ 0.01 % 0.02 %

Nonperforming Loans to Total Loans ​ 0.01 ​ 0.02 ​

Nonperforming Assets to Total Loans Plus Foreclosed Assets (1) ​ 0.01 ​ 0.02 ​

​

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, 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 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 and leases 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. Due to the low levels of nonaccrual loans, gross income that would have been recorded on nonaccrual loans during the years ended December 31, 2024 and 2023 was approximately $163,000 and $79,000, respectively.

Allowance for Credit Losses

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

​

At December 31, 2024, the allowance for credit losses on loans and leases was $52.3 million, an increase of $1.8 million from $50.5 million at December 31, 2023. Net charge-offs totaled $1.2 million during the year ended December 31, 2024 and $202,000 during the year ended December 31, 2023. The allowance for credit losses on loans and leases as a percentage of total loans was 1.35% at December 31, 2024, compared to 1.36% at December 31, 2023.

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

​ ​ ​ ​ ​ ​ ​ ​

​ ​ As of and for the year ended December 31, ​

Net Charge-offs (Recoveries) ​ ​ ​ ​ ​ ​ ​

Commercial ​ $ (22) ​ $ 170 ​

Leases ​ ​ 11 ​ ​ — ​

Real Estate Mortgage: ​ ​ ​ ​ ​

1-4 Family Mortgage ​ (3) ​ (5) ​

CRE Nonowner Occupied ​ 1,236 ​ — ​

Total Real Estate Mortgage Loans ​ 1,233 ​ (5) ​

Consumer and Other ​ 9 ​ ​ 37 ​

Total Net Charge-offs ​ $ 1,231 ​ $ 202 ​

Net Charge-offs (Recoveries) to Average Loans ​ ​ ​

Real Estate Mortgage: ​ ​ ​ ​ ​ ​

CRE Nonowner Occupied ​ 0.12 ​ ​ 0.00 ​

Total Real Estate Mortgage Loans ​ 0.04 ​ ​ 0.00 ​

Consumer and Other ​ (0.09) ​ ​ 0.40 ​

Total Net Charge-offs to Average Loans ​ 0.03 % 0.01 %

Allowance to Total Gross Loans ​ 1.35 % 1.36 %

​

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

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

​ ​ December 31, ​ December 31, ​

(dollars in thousands) Amount Percent Amount Percent ​

Leases ​ ​ 368 ​ 0.7 ​ ​ — ​ — ​

Construction and Land Development ​ 866 ​ 1.7 ​ 2,156 ​ 4.3 ​

Real Estate Mortgage: ​ ​ ​ ​ ​ ​ ​ ​ ​

​

Goodwill and Other Intangible Assets

Goodwill was $12.0 million at December 31, 2024, an increase of $9.4 million compared to $2.6 million at December 31, 2023. The increase in goodwill was due to the FMCB acquisition on December 13, 2024. Goodwill is not amortized but is subject to, at a minimum, an annual test for impairment. Other intangible assets consist of core deposit relationships and favorable lease term intangibles. Total other intangible assets at December 31, 2024 and 2023 were $7.9 million and $188,000, respectively. The increase in other intangible assets is attributable to core deposits assumed in the FMCB transaction. Other intangible assets are amortized over their estimated useful life.

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Deposits

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

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

(dollars in thousands) Amount Percent Amount Percent

​

Total deposits at December 31, 2024 were $4.09 billion, an increase of $376.8 million, or 10.2%, compared to total deposits of $3.71 billion at December 31, 2023. The growth in deposits was primarily due to an increase in interest bearing transaction deposits and the addition of $225.7 million deposits from the FMCB transaction, offset partially by a decrease in brokered deposits.

The Company relies on increasing the deposit base to fund loans and other asset growth. The Company is in ahighly competitive market and competes for local deposits by offering attractive products with competitive rates. TheCompany expects to have a higher average cost of funds for local deposits compared to competitor banks due to the lackof an extensive branch network. The Company’s strategy is to offset the higher cost of funding with a lower level ofoperating expense. When appropriate, the Company utilizes alternative funding sources such as brokered deposits. Thebrokered deposit market provides flexibility in structure, optionality and efficiency not afforded in traditional retaildeposit channels. At December 31, 2024, total brokered deposits were $825.8 million, a decrease of $198.7 million, compared to total brokered deposits of $1.02 billion at December 31, 2023.

The following table presents the average balance and average rate paid on each of the following deposit categories for the years ended December 31, 2024, 2023, and 2022:

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

​ ​ As of and for the ​ As of and for the ​ As of and for the ​

​ ​ Year Ended ​ Year Ended ​ Year Ended ​

​ ​ Average ​ Average ​ Average ​ Average ​ Average ​ Average ​

(dollars in thousands) Balance Rate Balance Rate ​ Balance Rate ​

​

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The following table presents time deposits, including brokered time deposits, that are in excess of the FDIC insurance limit, currently $250,000, by time remaining until maturity:

​ ​ ​ ​

​ ​ December 31,

(dollars in thousands) ​ 2024

Three Months or Less ​ $ 69,581

Over Three Months through Six Months ​ ​ 16,566

Over Six Months through 12 Months ​ ​ 26,046

​

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 28% of total deposits, at December 31, 2024 and $900.0 million, or 24% of total deposits, at December 31, 2023. These amounts were estimated based on the same methodologies and assumptions used for regulatory reporting purposes.

Borrowed Funds

Federal Funds Purchased

In addition to deposits, the Company utilizes overnight borrowings to meet the daily liquidity needs as a supplemental funding source for loan growth. The Company had no outstanding federal funds purchased as of each of December 31, 2024 and 2023.

Other Borrowings

At December 31, 2024, the Company had outstanding FHLB advances of $359.5 million, compared to $319.5 million at December 31, 2023. 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 $483.2 million and $498.7 million at December 31, 2024 and 2023, respectively.

The Company has an outstanding Loan and Security Agreement and revolving note with a third party correspondent lender, which is secured by 100% of the issued and outstanding stock of the Bank. The maximum principal amount of the Company’s revolving line of credit is $40.0 million. On September 1, 2024, the Company entered into an amendment to the agreement which extended the maturity date from September 1, 2024 to September 1, 2026. As of December 31, 2024 and 2023, the Company had $13.8 million of outstanding balances under the revolving line of credit. As of December 31, 2024, the Company has two outstanding letters of credit totaling $6.4 million under this facility. There were no outstanding letters of credit as of December 31, 2023.

Additionally, the Company has borrowing capacity from other sources. As of December 31, 2024, 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 $925.8 million and $979.4 million at December 31, 2024 and 2023, respectively. As of December 31, 2024 and 2023, the Company had no outstanding advances from the discount window or the Federal Reserve’s Bank Term Funding Program (“BTFP”). The Federal Reserve ceased making new loans pursuant to the BTFP in March 2024.

Subordinated Debentures

As of December 31, 2024 and 2023, the Company had subordinated debentures, net of issuance costs of $79.7 million and $79.3 million, respectively.

For additional information, see “Note 13 – Subordinated Debentures” of the Company’s Consolidated Financial Statements included as part of this report.

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Contractual Obligations

The following table presents supplemental information regarding total contractual obligations at December 31, 2024:

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

​ ​ Within ​ One to ​ Three to ​ After ​ ​ ​

Deposits Without a Stated Maturity ​ $ 3,049,955 ​ $ — ​ $ — ​ $ — ​ $ 3,049,955

Notes Payable ​ ​ — ​ ​ 13,750 ​ ​ — ​ ​ — ​ ​ 13,750

Subordinated Debentures ​ ​ — ​ ​ — ​ ​ — ​ ​ 80,000 ​ ​ 80,000

Commitment to Fund Tax Credit Investments ​ ​ 2,881 ​ ​ — ​ ​ — ​ ​ — ​ ​ 2,881

Operating Lease Obligations ​ ​ 599 ​ ​ 724 ​ ​ 307 ​ ​ — ​ ​ 1,630

​

Operating lease obligations are in place for facilities and land on which banking branches are located. See “Note 9 – Leases” of the Company’s Consolidated Financial Statements included as part of this report for additional information.

​

The Company believes that it will be able to meet all contractual obligations as they come due through the maintenance of adequate cash levels. The Company expects to maintain adequate cash levels through earnings, loan and securities repayments and maturity activity and continued deposit gathering activities. As described above, the Company has in place various borrowing mechanisms for both short-term and long-term liquidity needs.

Capital

Total shareholders’ equity at December 31, 2024 was $457.9 million, an increase of $32.4 million, or 7.6%, over shareholders’ equity of $425.5 million at December 31, 2023, primarily due to net income retained, a decrease in unrealized losses in the securities portfolio, and an increase in unrealized gains in the derivatives portfolio, offset partially by preferred stock dividends and stock repurchases.

Tangible book value per share, a non-GAAP financial measure, was $13.49 as of December 31, 2024, an increase of 5.1% from $12.84 as of December 31, 2023. Tangible common equity, a non-GAAP financial measure, as a percentage of tangible assets, a non-GAAP financial measure, was 7.36% at December 31, 2024, compared to 7.73% at December 31, 2023.

​

Stock Repurchase Program. During the year ended December 31, 2024, the Company repurchased 446,509 shares of its common stock, representing 1.6% of the Company’s outstanding shares. Shares were repurchased during this period at a weighted average price of $11.60 for a total of $5.2 million. All shares repurchased under the stock repurchase program were converted to authorized but unissued shares. The Company remains committed to maintaining strong capital levels while enhancing shareholder value as it strategically executes its stock repurchase program based on various factors including valuation, capital levels and other uses of capital.

​

On July 23, 2024, the Company’s board of directors extended the expiration date of the 2022 Stock Repurchase Program from August 16, 2024 to August 20, 2025. As of December 31, 2024, the remaining amount that could be used to repurchase shares under the stock repurchase program was $15.3 million. The Company remains committed to maintaining strong capital levels while enhancing shareholder value as it strategically executes its stock repurchase program based on various factors, including valuation, capital levels and other uses of capital.

​

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

Management believes the Company and the Bank met all capital adequacy requirements to which they were subject as of December 31, 2024. The regulatory capital ratios for the Company and the Bank to meet the minimum capital adequacy standards and for the Bank to be considered well capitalized under the prompt corrective action framework are set forth in the following tables. The Company’s and the Bank’s actual capital amounts and ratios are as of the dates indicated.

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

​ ​ ​ ​ ​ ​ ​ Minimum Required ​ For Capital Adequacy ​ To be Well Capitalized ​

​ ​ Actual ​ Purposes ​ Conservation Buffer ​ Action Regulations ​

(dollars in thousands) Amount Ratio Amount Ratio Amount Ratio ​ Amount Ratio ​

December 31, 2024 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Company (Consolidated): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Bank: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

​

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

​ ​ ​ ​ ​ ​ ​ Minimum Required ​ For Capital Adequacy ​ To be Well Capitalized ​

​ ​ Actual ​ Purposes ​ Conservation Buffer ​ Action Regulations ​

(dollars in thousands) Amount Ratio Amount Ratio Amount Ratio ​ Amount Ratio ​

December 31, 2023 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Company (Consolidated): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Bank: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

​

The Company and the Bank are subject to the rules of the Basel III regulatory capital framework and related Dodd-Frank Wall Street Reform and Consumer Protection Act. The rules require a capital conservation buffer of 2.5% that was added to the minimum requirements for capital adequacy purposes. A banking organization with a conservation buffer of less than the required amount is subject to limitations on capital distributions, including dividend payments, stock repurchases and certain discretionary bonus payments to executive officers. At December 31, 2024, the ratios for the Company and the Bank were sufficient to meet the conservation buffer.

Off-Balance Sheet Arrangements

In the normal course of business, the Company enters into various transactions to meet the financing needs of clients, which, in accordance with GAAP, are not included in the consolidated balance sheets. These transactions include commitments to extend credit, standby letters of credit, and commercial letters of credit, which involve, to varying degrees, elements of credit risk and interest rate risk in excess of the amounts recognized in the consolidated balance sheets. Most of these commitments mature within two years and the standby letters of credit are expected to expire

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without being drawn upon. All off-balance sheet commitments are included in the determination of the amount of risk-based capital that the Company and the Bank are required to hold.

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

The following table presents credit arrangements and financial instruments whose contract amounts represent credit risk as of December 31, 2024 and 2023:

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

​ Fixed Variable Fixed Variable

(dollars in thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

​

Commitments to extend credit beyond current funding are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Such commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since many of the commitments may expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. We evaluate each customer’s creditworthiness on a case-by-case basis. The amount of collateral obtained, if deemed necessary by us upon extension of credit, is based on our management’s credit evaluation. Collateral held varies but may include accounts receivable, inventory, property, plant and equipment, and income-producing commercial properties.

​

Standby letters of credit are conditional commitments issued by us to guarantee the performance of a customer to a third party. Those guarantees are primarily issued to support public and private borrowing arrangements, including commercial paper, bond financing, and similar transactions. Commercial letters of credit are issued specifically to facilitate trade or commerce and are paid directly when the underlying transaction is consummated. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loan facilities to customers.

​

The Company had outstanding letters of credit with the FHLB in the amount of $103.2 million and $114.4 million at December 31, 2024 and 2023, respectively, on behalf of customers and to secure public deposits.

​

Liquidity

Liquidity is the Company’s capacity to meet cash and collateral obligations at a reasonable cost. Maintaining an adequate level of liquidity depends on the Company’s ability to efficiently meet both expected and unexpected cash flows and collateral needs without adversely affecting either daily operations or financial condition. The Bank’s ALM Committee, is responsible for managing commitments to meet the needs of customers while achieving the Company’s financial objectives. The ALM Committee meets regularly to review balance sheet composition, funding capacities, and current and forecasted loan demand.

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

Total on- and off-balance sheet liquidity was $2.30 billion as of December 31, 2024, compared to $2.23 billion at December 31, 2023.

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

​ ​ ​ ​ ​ ​ ​ ​

Primary Liquidity—On-Balance Sheet December 31, 2024 December 31, 2023

(dollars in thousands) ​ ​ ​ ​ ​ ​

Ratio of Primary Liquidity to Total Deposits ​ 16.3 % 14.3 %

​ ​ ​ ​ ​ ​ ​ ​

Secondary Liquidity—Off-Balance Sheet Borrowing Capacity ​ ​ ​ ​ ​ ​ ​

Net Secured Borrowing Capacity with the FHLB ​ $ 483,245 ​ $ 498,736 ​

Unsecured Borrowing Capacity with Correspondent Lenders ​ 200,000 ​ 200,000 ​

Secured Borrowing Capacity with Correspondent Lender ​ ​ 19,855 ​ ​ 26,250 ​

Ratio of Primary and Secondary Liquidity to Total Deposits ​ 56.2 % 60.2 %

​

During the year ended December 31, 2024, primary liquidity increased $137.3 million due to an increase in cash and cash equivalents of $92.3 million and an increase in securities available for sale of $164.1 million, offset partially by a $119.2 million increase in pledged securities. Secondary liquidity decreased $75.5 million as of December 31, 2024 due to a $15.5 million decrease in the borrowing capacity with the FHLB, a $53.7 million decrease in the borrowing capacity with the Federal Reserve Bank, and a $6.4 million decrease in the secured borrowing capacity with a correspondent lender.

In addition to primary liquidity, the Company generates liquidity from cash flows from the loan and securities portfolios and from the large base of core customer deposits, defined as noninterest bearing transaction, interest bearing transaction, savings, non-brokered money market accounts and non-brokered time deposits less than $250,000. At December 31, 2024, core deposits totaled approximately $3.11 billion and represented 76.0% of total deposits. These core deposits are normally less volatile, often with customer relationships tied to other products offered by the Company, which promote long-standing relationships and stable funding sources.

The Company uses brokered deposits, the availability of which is uncertain and subject to competitive market forces and regulation, for liquidity and interest rate risk management purposes. At December 31, 2024, brokered deposits totaled $825.8 million, consisting of $698.3 million of brokered time deposits and $127.4 million of non-maturity brokered money market and transaction accounts. At December 31, 2023, brokered deposits totaled $1.02 billion, consisting of $850.5 million of brokered time deposits and $174.0 million of non-maturity brokered money market and transaction accounts.

The Company’s liquidity policy includes guidelines for On-Balance Sheet Liquidity (a measurement of primary liquidity to total deposits plus borrowings), Total On-Balance Sheet Liquidity with Borrowing Capacity (a measurement of primary and secondary liquidity to total deposits plus borrowings), Wholesale Funding Ratio (a measurement of total wholesale funding to total deposits plus borrowings), and other guidelines developed for measuring and maintaining liquidity. As of December 31, 2024, the Company was in compliance with all established liquidity guidelines in the policy.

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GAAP Reconciliation and Management Explanation of Non-GAAP Financial Measures

Some of the financial data included in this report are not measures of financial performance recognized by GAAP. Management uses these non-GAAP financial measures in the analysis of performance:

​

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The Company believes these non-GAAP financial measures provide useful information to management and investors that is supplementary to the financial condition, results of operations and cash flows computed in accordance with GAAP; however, the Company acknowledges that these non-GAAP financial measures have a number of limitations. As such, you should not view these disclosures as a substitute for results determined in accordance with GAAP, and they are not necessarily comparable to non-GAAP financial measures that other companies use. Financial measures computed in accordance with GAAP can be found within the consolidated selected financial data appearing at the beginning of management’s discussion and analysis of financial condition and results of operations within this report. The following reconciliation table provides a more detailed analysis of these non-GAAP financial measures:

​

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

​ ​ As of and for the year ended December 31, ​

Pre-Provision Net Revenue ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Less: (Gain) Loss on Sales of Securities ​ ​ (385) ​ ​ 33 ​ ​ (82) ​

Less: FHLB Advance Prepayment Income ​ ​ — ​ ​ (792) ​ ​ — ​

Total Operating Noninterest Income ​ ​ 6,983 ​ ​ 5,734 ​ ​ 6,250 ​

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Less: Amortization of Tax Credit Investments ​ ​ — ​ ​ — ​ ​ (408) ​

Less: Debt Prepayment Fees ​ ​ — ​ ​ — ​ ​ — ​

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Plus: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Non-Operating Revenue Adjustments ​ ​ 385 ​ ​ 759 ​ ​ 82 ​

Less: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Provision (Recovery of) for Credit Losses ​ ​ 3,525 ​ ​ (175) ​ ​ 7,700 ​

Non-Operating Expense Adjustments ​ ​ — ​ ​ — ​ ​ 408 ​

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Pre-Provision Net Revenue Return on Average Assets ​ ​ 0.98 % ​ 1.15 % ​ 2.06 %

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Adjusted Pre-Provision Net Revenue ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Less: Merger-related Expenses ​ ​ (712) ​ ​ — ​ ​ — ​

Less: Amortization of Tax Credit Investments ​ ​ — ​ ​ — ​ ​ (408) ​

Less: Debt Prepayment Fees ​ ​ — ​ ​ — ​ ​ — ​

Adjusted Total Operating Noninterest Expense ​ $ 62,588 ​ $ 59,320 ​ $ 56,212 ​

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

​

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

​ ​ As of and for the year ended December 31, ​

Core Net Interest Margin ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Less: PPP Interest and Fees ​ ​ NM ​ ​ NM ​ ​ (970) ​

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Less: Average PPP Loans ​ ​ NM ​ ​ NM ​ ​ (7,441) ​

Core Net Interest Margin ​ 2.19 % 2.34 % 3.27 %

​

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​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

​ ​ As of and for the year ended December 31, ​

Efficiency Ratio ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Less: Amortization of Intangible Assets ​ ​ (78) ​ ​ (100) ​ ​ (191) ​

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Less: (Gain) Loss on Sales of Securities ​ ​ (385) ​ ​ 33 ​ ​ (82) ​

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Adjusted Efficiency Ratio ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Less: Amortization of Intangible Assets ​ ​ (78) ​ ​ (100) ​ ​ (191) ​

Less: Amortization of Tax Credit Investments ​ ​ — ​ ​ — ​ ​ (408) ​

Less: Merger-related Expenses ​ ​ (712) ​ ​ — ​ ​ — ​

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Less: (Gain) Loss on Sales of Securities ​ ​ (385) ​ ​ 33 ​ ​ (82) ​

Adjusted Efficiency Ratio ​ 57.3 % 53.0 % 41.2 %

​

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

​ ​ As of and for the year ended December 31, ​

Adjusted Noninterest Expense to Average Assets ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Less: Amortization of Tax Credit Investments ​ ​ — ​ ​ — ​ ​ (408) ​

Less: Merger-related Expenses ​ ​ (712) ​ ​ — ​ ​ — ​

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Adjusted Noninterest Expense to Average Assets ​ ​ 1.34 % ​ 1.32 % ​ 1.45 %

​

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

​ ​ As of and for the year ended December 31, ​

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Tangible Common Equity/Tangible Assets ​ ​ 7.36 % 7.73 % 7.48 %

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Tangible Book Value Per Share ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Less: Effects of Intangible Assets ​ ​ (0.72) ​ ​ (0.10) ​ ​ (0.11) ​

Tangible Book Value Per Common Share ​ $ 13.49 ​ $ 12.84 ​ $ 11.69 ​

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Return on Average Tangible Common Equity ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Net Income Available to Common Shareholders ​ $ 28,771 ​ $ 35,906 ​ $ 49,338 ​

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Less: Effects of Average Intangible Assets ​ ​ (3,207) ​ ​ (2,847) ​ ​ (3,012) ​

Return on Average Tangible Common Equity ​ ​ 7.75 % ​ 10.53 % ​ 15.69 %

​

​

​

​

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​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

​ ​ As of and for the year ended December 31, ​

Adjusted Diluted Earnings Per Common Share ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Net Income Available to Common Shareholders ​ $ 28,771 ​ $ 35,906 ​ $ 49,338 ​

Add: Merger-related Expenses ​ ​ 712 ​ ​ — ​ ​ — ​

Less: Tax Impact ​ ​ (165) ​ ​ — ​ ​ — ​

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Adjusted Diluted Earnings Per Common Share ​ $ 1.05 ​ $ 1.27 ​ $ 1.72 ​

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Adjusted Return on Average Assets ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Add: Merger-related Expenses ​ ​ 712 ​ ​ — ​ ​ — ​

Less: Tax Impact ​ ​ (165) ​ ​ — ​ ​ — ​

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Adjusted Return on Average Assets ​ ​ 0.71 % ​ 0.89 % ​ 1.38 %

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Adjusted Return on Average Shareholders' Equity ​ ​ ​ ​ ​ ​ ​ ​ ​ ​