2021 Annual Report

Company’s simple, highly 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. Market Area and Competition The Company operates in the Twin Cities Metropolitan Statistical Area, or MSA, which had total deposits of $222.4 billion as of June 30, 2021, and ranks as the 16th largest metropolitan statistical area in the United States in total deposits, and the third largest metropolitan statistical area in the Midwest in total deposits, based on Federal Deposit Insurance Corporation, or FDIC, data. This area is commonly known as the “Twin Cities” after its two largest cities, Minneapolis, the city with the largest population in the state, and St. Paul, the state capital. The Twin Cities MSA is defined by attractive market demographics, including strong household incomes, dense populations, a resilient employee base and the presence of a diverse group of large and small businesses. As of December 31, 2021, the Company’s market ranked second in median household income in the Midwest and eighth in the nation, when compared to the top 20 MSAs by population size in each area, based on data available on S&P Global Market Intelligence. According to the U.S. Bureau of Labor Statistics, the population in the Twin Cities MSA was approximately 3.7 million as of December 31, 2021, making it the third largest MSA in the Midwest and 16th largest MSA in the United States. The resilient employee base continues to weather the COVID-19 pandemic, as reflected by an unemployment rate of 2.5%, meaningfully lower than the national average at 3.9% as of December 31, 2021. While no market has been immune to the pandemic, the significant presence of national and international businesses across diverse industries operating within the Twin Cities MSA was critical in allowing the market to navigate the fluid environment. The Company operates in a competitive market area and competes with other, often much larger, retail and commercial banks and financial institutions. Two large, national banking chains, Wells Fargo and US Bank, together controlled 64.8% of the deposit market share in the Twin Cities MSA as of June 30, 2021, based on FDIC data and as displayed in the table below. By comparison, as of the same date, the Company had a deposit market share of approximately 1.2%, which ranked the Company ninth in the Twin Cities MSA overall and fourth in the Twin Cities MSA among banks headquartered in Minnesota.

Total

Market Share

State

Branch Count

Deposits ($000)

Rank

Institution

Headquarters

(%)

1 . . . . . . . . . . . . . . . . . . . U.S. Bancorp 2 . . . . . . . . . . . . . . . . . . . Wells Fargo & Co 3 . . . . . . . . . . . . . . . . . . . Ameriprise Financial, Inc. 4 . . . . . . . . . . . . . . . . . . . Bank of Montreal 5 . . . . . . . . . . . . . . . . . . . Huntington Bancshares, Inc. 6 . . . . . . . . . . . . . . . . . . . Otto Bremer Trust 7 . . . . . . . . . . . . . . . . . . . Bank of America Corp. 8 . . . . . . . . . . . . . . . . . . . Old National Bancorp

MN CA MN N/A OH MN NC MN ND IN

84 91 26 77 21 13 29 2

75,920,294 68,134,257 8,673,273 7,848,971 6,544,990 5,705,066 5,134,285 3,885,519 2,748,002 2,558,465

34.13 30.63 3.90 3.53 2.94 2.56 2.31 1.75 1.24 1.15 84.14

Bridgewater Bancshares, Inc.

8 6

9 . . . . . . . . . . . . . . . . . . .

10 . . . . . . . . . . . . . . . . . . State Bankshares, Inc.

Top 10 Institutions

357 187,153,122

Total Bank Deposits 745 222,437,136 The market has experienced disruption in recent years due to acquisitions of local institutions by larger regional banks headquartered outside of the market. The disruption has created significant opportunities for the Company to add both talent and clients. In addition, the Company has developed a local banking advantage in the market with only four of the ten largest banks by deposit market share being headquartered in Minnesota.

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