Baylake Corp. Reports Financial Results for the Quarter ended March 31, 2001.

Business Editors

STURGEON BAY, Wis.--(BUSINESS WIRE)--May 7, 2001

Baylake Corp. (OTC BB: BYLK), a bank holding company with $795.3 million in assets, reported net income of $1.6 million or $.22 per share for the quarter ended March 31, 2001, the same as a year earlier. Diluted earnings per share were $.21 for the first quarter of 2001 compared to $.20 a year earlier. Return on assets (ROA) and return on equity (ROE) declined for the quarter, to .84% and 12.09%, respectively, from .99% and 13.72%, respectively, from the same quarter one year ago.

During the quarter ended March 31, 2001, net interest income increased $497,000 to $6.3 million when compared to the first quarter of 2000 due primarily to average interest-earning assets increasing by $118.8 million. The increase in average interest-earning assets was primarily attributable to substantial growth in loan originations during the quarter. Net interest margin decreased 36 basis points to 3.73% for the first quarter of 2001 when compared to the first quarter of 2000, the result of higher cost of funding from deposits and other wholesale funding such as federal funds purchased and loans from the Federal Home Loan Bank.

Non-interest income was $1.1 million during the first quarter of 2001, an increase of $148,000 when compared to the same quarter last year. The increase was primarily attributable to increases on fees charged on various services provided to customers totaling $51,000, on gains on sales of loans totaling $89,000, loan servicing fees totaling $35,000, offset by a decrease in other income totaling $40,000.

For the quarter ended March 31, 2001, non-interest expense increased $456,000 over the same quarter last year. Personnel and benefit expense increased approximately $333,000 due to additional staffing and normal salary increases. Occupancy and equipment expense increased $92,000 due to expansion in existing markets and costs related to the modernization of various facilities. Data processing expenses increased $13,000, a result of expansion efforts and increased customer volume. Loan and collection expense increased $39,000, a result of various legal actions on several non-performing loans.

Income tax expense increased $36,000 for the quarter ended March 31, 2001 when compared to the same quarter last year, the result of increased taxable income.

While earnings results for the first quarter of 2000 and 2001 were the same, Baylake Corp. expects earnings per share for the year 2001 to be in the range of $0.98 to $1.03. This compares to earnings per share of $0.90 in 2000.

Total assets for Baylake Corp. increased 3.0% during the first quarter of 2001 to $795.3 million at March 31, 2001 when compared to total assets of $772.3 million at December 31, 2000. Total loans increased 4.7% during the first quarter of 2001 to $581.7 million at March 31, 2001, while deposits during the quarter increased 3.7% to $573.9 million. Total shareholders' equity increased 4.7% for the first quarter 2001 to $55.6 million at March 31, 2001 as compared with $53.1 million at December 31, 2000.

Baylake Corp. recorded provisions for loan losses totaling $202,000 during the first quarter of 2001, and the allowance for loan losses increased $233,000 to $7.2 million during the quarter. During the first quarter of 2001, Baylake Corp. had net recoveries on charged off loans totaling $31,000. The ratio of allowance for loan losses to total loans was 1.24% at March 31, 2001, as compared to 1.26% at December 31, 2000. Non-performing loans totaled $14.5 million and $13.0 million at March 31, 2001 and December 31, 2000, respectively. The ratio of allowance for loan losses to non-performing loans was 49.8% and 53.7% at March 31, 2001 and December 31, 2000, respectively.

The increase in non-performing loans was due primarily to eight commercial real estate credits which became non-performing during the quarter. Baylake Corp. believes that these credits do not present a significant risk of loss to the company based on the value of the collateral securing the loans, the loan-to-value ratio and the specific reserve applied to such loans. However, two of these commercial credits (totaling $1.0 million) are currently in the process of liquidation, and it is not anticipated that the specific reserve applied to these loans (approximately $368,000) will be sufficient to cover the entire amount of potential loss. Foreclosed assets, net, at March 31, 2001 increased $354,000 from December 31, 2000 primarily as the result of the acquisition from one borrower of three commercial rental properties totaling $330,000 by deed in lieu of foreclosure.

Despite the increase in non-performing loans during the quarter, Baylake Corp. believes the balance of the allowance for loan loss at March 31, 2001 is presently sufficient to absorb loan losses inherent in the portfolio, although future adjustments to the allowance may be necessary based on changes in economic conditions and the impact that these changes, if any, may have on the ability of borrowers to continue to service or repay outstanding credits and on the value of the underlying collateral securing these credits.

Capital resources for the three-month period ended March 31, 2001 remained relatively unchanged except for improvement in the total risk-based capital ratio due to the issuance of $16.1 million in trust preferred securities during the quarter. Although liquidity resources tightened in the first quarter, Baylake Corp. anticipates that it will have sufficient funds available to meet the commitments outstanding at March 31, 2001. At March 31, 2001, Baylake Corp. had $60.4 million of established lines of credit with nonaffiliated banks, of which $22.0 million was outstanding at March 31, 2001.

Baylake Corp., headquartered in Sturgeon Bay, Wisconsin, is the bank holding company for Baylake Bank. Through Baylake Bank, the Company provides a variety of banking and financial services from 25 financial centers located throughout Northeast and Central Wisconsin, in Brown, Door, Green Lake, Kewaunee, Manitowoc, Outagamie, Waupaca, and Waushara Counties.

The following appears in accordance with the Private Securities Litigation Reform Act of 1995:

This news release may contain forward-looking statements about the financial condition, results of operations and business of Baylake Corp. Forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts. They often include the words "believe," "expect," "anticipate," "intend," "plan," "estimate" or words of similar meaning, or future or conditional verbs such as "will," "would," "should," "could" or "may."

Forward-looking statements, by their nature, are subject to risks and uncertainties. A number of factors, many of which are beyond the control of Baylake Corp., could cause actual conditions, events or results to differ significantly from those indicated by the forward-looking statements, including, among others: (1) increased competitive pressure among financial services companies; (2) changes in interest rate environment reducing loan demand, interest margins or increasing interest rate risk; (3) deterioration in general economic conditions, internationally, nationally or in the State of Wisconsin; (4) legislative or regulatory changes adversely affecting the business in which Baylake Corp. engages; and (5) other risks detailed in reports filed by Baylake Corp. with the Securities and Exchange Commission.

Forward-looking statements speak only as of the date they are made, and Baylake Corp. does not undertake to update forward-looking statements to reflect circumstances or events that occur after the date the forward-looking statements are made.

Baylake Corp. and Subsidiaries
SUMMARY FINANCIAL DATA

The following tables set forth selected consolidated financial and
other data for Baylake Corp. at the dates and for the periods
indicated. The selected consolidated financial and other data at March
31, 2001 has not been audited but in the opinion of management of
Baylake Corp. reflects all necessary adjustments for a fair
presentation of results as of the dates and for the periods covered.

                               At              At              At
                            March 31,      December 31,     March 31,
                              2001            2000            2000
                           -----------    --------------   -----------
                                      (dollars in thousands)

Selected Financial Condition
 Data (at end of period):
Total assets               $   795,255    $      772,268   $   667,541
Investment securities(1)       162,168           159,466       150,704
Total loans                    581,696           555,831       472,177
Total deposits                 573,882           553,254       510,015
Borrowings(2)                  142,042           150,289       101,911
Notes payable and
 subordinated debt                 158             7,911         2,211
Trust preferred securities      16,100                 0             0
Total shareholders' equity      55,638            53,127        46,962
Non-performing loans, net
 of discount(3)(4)              14,540            13,048        12,337
Non-performing assets, net
 of discount(3)(4)              15,770            13,924        12,722

                                        As of and for the
                                           Three Months
                                          Ended March 31,
                                        2001          2000
                                        ----          ----
                                      (dollars in thousands,
                                       except per share data)

Selected Income Data:
Total interest income                $15,301       $12,567
Total interest expense                 9,016         6,779
                                       -----         -----
Net interest income                    6,285         5,788
Provision for loan losses                202            60
                                         ---            --
Net interest income after
 provision for loan losses             6,083         5,728
Total non-interest income              1,132           984
Total non-interest expense             4,894         4,438
                                       -----         -----
Income before income tax               2,321         2,274
Income tax provision                     709           673
                                         ---           ---
Net income                            $1,612       $ 1,601
                                      ======       =======

Per Share Data:(5)
Net income per share (basic)         $  0.22       $  0.22
Net income per share (diluted)          0.21          0.20
Cash dividends per common share         0.11          0.10
Book value per share                    7.45          6.31

Performance Ratios:(6)
Return on average total assets          0.84%         0.99%
Return on average total
 shareholders' equity                  12.09         13.72
Net interest margin(7)                  3.73          4.09
Net interest spread(7)                  3.07          3.64
Non-interest income to average assets   0.59          0.61
Non-interest expense to average assets  2.55          2.73
Net overhead ratio(8)                   1.96          2.12
Efficiency ratio                       63.14         62.49
Average loan-to-average deposit ratio 103.09         90.20
Average interest-earning assets to
 average interest-bearing liabilities 109.06        109.92

Asset Quality Ratios:(3)(4)(6)
Non-performing loans to total loans     2.50%         2.61%
Allowance for loan losses to:
     Total loans                        1.24          1.67
     Non-performing loans              49.79         63.98
Net charge-offs to average loans      - 0.01        - 0.05
Non-performing assets to total assets   1.98          1.91


Capital Ratios:(6)(9)
Shareholders' equity to assets          7.00%         7.04%
Tier 1 risk-based capital               7.63          8.53
Total risk-based capital               11.32          9.79
Leverage ratio                          6.23          6.76

Ratio of Earnings to Fixed Charges:(10)
Including deposit interest              1.26x         1.34x
Excluding deposit interest              1.91          2.65

Other Data at End of Period:
Number of bank subsidiaries                1             1
Number of banking facilities              25            23
Number of full-time equivalent employees 272           258

(1) Includes securities classified as held-to-maturity and

available for sale.

(2) Consists of Federal Home Loan Bank advances, federal funds

purchased and collateralized borrowings.

(3) Non-performing loans consist of non-accrual loans, guaranteed

loans 90 days or more past due but still accruing interest and

restructured loans. Non-performing assets consist of

non-performing loans and other real estate owned.

(4) The increase in non-performing assets during the three months

ended March 31, 2001 was due, in part, to an increase in

various foreclosed properties taken into other real estate for

purposes of liquidation and an increase in non-accrual loans,

a result of several commercial real estate loans experiencing

cashflow problems.

(5) Earnings and dividends per share are based on the weighted

average number of shares outstanding for the period.

(6) With the exception of end of period ratios, all ratios are

based on average monthly balances and are annualized where

appropriate.

(7) Net interest margin represents net interest income as a

percentage of average interest-earning assets, and net

interest rate spread represents the difference between the

weighted average yield on interest-earning assets and the

weighted average cost of interest-bearing liabilities.

(8) Net overhead ratio represents the difference between

noninterest expense and noninterest income, divided by average

assets.

(9) The capital ratios are presented on a consolidated basis

(10) For purposes of calculating the ratio of earnings to fixed

charges, earnings consist of income before taxes plus interest

and rent expense. Fixed charges consist of interest and rent

expense.