2020 Annual Report

Maturity as of December 31, 2019

Due in One Year

More Than One Year to Five Years

More Than Five Years to Ten Years

or Less

Due After Ten Years

Weighted Average

Weighted Average

Weighted Average

Weighted Average

Fair Value

Fair Value

Fair Value

Fair Value

Yield

Yield

Yield

Yield

U.S. Treasury Securities . . . $ 4,998 SBA Securities . . . . . . . . . . . —

2.56 % $

—

— % $

—

— % $

—

— %

— 1,770

3.16 22,550

2.58 25,239 2.83

Mortgage ဩ Backed Securities Issued or Guaranteed by U.S. Agencies (MBS): Residential

Pass ဩ Through: Guaranteed by GNMA. . . . . . . . . . . . . — Issued by FNMA and FHLMC . . . . . . . . — Other Residential Mortgage ဩ Backed Securities . . . . . . . . . . . . — Commercial Mortgage ဩ Backed Securities . . . . . . . . . . . . — All Other Commercial MBS . . . . . . . — Total MBS . . . . . . . . . . . — Municipal Securities . . . . . . 917 Corporate Securities . . . . . . 1,254 Asset-Backed Securities . . . —

—

—

—

—

— 1,215 2.87

—

65

3.19

71

3.23 3,407 2.78

—

85

1.88

149

3.11 46,461 2.58

—

—

— 10,622

2.68 1,591 2.41

— —

—

—

—

— 1,062 3.52

150 2.45 10,842 2.69 53,736 2.61

3.99 8,704 2.37 11,372

4.22 26,911 4.46 36,550

4.20 69,211

4.05 5.25

4.88

1,000

— 2.90 Total . . . . . . . . . . . . . . . . . . . . $ 7,169 2.71 % $ 21,996 4.25 % $ 96,853 3.91 % $ 163,859 3.30 % — — — — 14,673

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 customers, consisting of loans secured by nonfarm, nonresidential properties, multifamily residential properties, land, and non-real estate business assets. Responsive service, local decision making, and an efficient turnaround time from application to closing have been significant factors in growing the loan portfolio. 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 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. The Company originated net loan exposures of $1.45 billion, for the year ended December 31, 2020, compared to $954.7 million for the year ended December 31, 2019. Net loan exposures include principal advances and unfunded commitments on newly originated loans, net of loan participations sold and PPP loan originations. Total gross loans increased $414.4 million, or 21.7%, to $2.33 billion at December 31, 2020, compared to $1.91 billion at December 31, 2019. The increase included $138.5 million of PPP loans. The multifamily and commercial real estate, or CRE, nonowner occupied categories contributed most significantly to the $275.9 million of net loan growth, excluding PPP loans. As of December 31, 2020, multifamily loans increased $111.5 million, or 21.6%, and nonowner occupied CRE loans increased $116.8 million, or 19.7%, when compared to December 31, 2019. The Company’s loan growth for the year ended December 31, 2020, excluding PPP loans, was 14.4%.

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