Baylake Corp. Reports Financial Results for the Three and Six months Ended June 30, 2001.

Business Editors

STURGEON BAY, Wis.--(BUSINESS WIRE)--July 23, 2001

Baylake Corp. (OTC BB: BYLK), a bank holding company with $810.7 million in assets, reported net income of $3.4 million or $.45 per share for the six months ended June 30, 2001, as compared to $3.3 million or $.44 per share for the six months ended June 30, 2000. The increase in net income was primarily due to increased net interest income and other non-interest income offset to a lesser amount by increased other non-interest expense and provision for loan loss expense. Diluted earnings per share were $.44 for the first six months of 2001 compared to $.43 a year earlier. Return on assets (ROA) and return on equity (ROE) declined for the six months ended June 30, 2001, to .86% and 12.37%, respectively, from .98% and 14.01%, respectively, from the same period one year ago.

While earnings results for the first six months of 2000 and 2001 were approximately 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.

For the six months ended June 30, 2001, net interest income increased $1.2 million to $13.0 million due primarily to average interest-earning assets increasing by $111.4 million. The increase in average interest-earning assets primarily reflected substantial growth in loan originations during the year. Net interest margin decreased by 27 basis points to 3.77% for the first six months of 2001, the result of higher cost of funding from deposits.

For the six months ended June 30, 2001, non-interest income increased by $582,000 to $2.7 million. The increase was primarily attributable to increased fees on various services to customers totaling $125,000, increased gains from sales of loans totaling $285,000 and increased loan servicing fees totaling $122,000.

For the six months ended June 30, 2001, non-interest expense increased $1.3 million over the preceding year. Personnel and benefit expense increased approximately $740,000 due to additional staffing and normal salary increases. Occupancy and equipment expense increased $125,000 due to expansion in existing markets and costs related to the modernization of various facilities. Data processing expenses increased $24,000 and other real estate owned expenses increased $221,000.

For the six months ended June 30, 2001, income tax expense increased $3,000, the result of increased taxable income.

Baylake Corp. reported net income of $1.7 million for the three months ended June 30, 2001, an increase of $52,000 for the same period in the prior year. The increase in net income resulted primarily from increased net interest income and non-interest income offset to a lesser degree by an increase in non-interest expense and provision for loan loss expense.

Net interest income for the three months ended June 30, 2001 was $6.7 million compared to $6.0 million for the same period a year earlier. Net interest income increased as a result of average earning assets increasing $103.8 million, offset by a decrease in net interest margin by 18 basis points to 3.81%.

Non-interest income for the three months ended June 30, 2001 increased by $434,000 to $1.6 million primarily due to increased loan servicing fees of $87,000 and increased gains on sales of loans amounting to $196,000.

For the three months ended June 30, 2001, non-interest expense increased $827,000 from the three months ended June 30, 2000 to $5.4 million. Personnel and benefit expense increased approximately $411,000 due to additional staffing and normal salary increases. Expenses from the operation of other real estate owned increased $230,000. Other operating expense increased $142,000, a result of increased advertising, supplies, community reinvestment expenses and other miscellaneous expenses stemming from our expansion efforts.

For the three months ended June 30, 2001, income tax expense decreased $33,000 to $722,000, the result of decreased taxable income.

Total assets for Baylake Corp. increased 5.0% to $810.7 million at June 30, 2001 when compared to total assets of $772.3 million at December 31, 2000. Total loans increased 6.6% during the first six months of 2001 to $591.8 million at June 30, 2001, while deposits during the first six months increased 13.6% to $628.4 million. Total shareholders' equity increased 6.7% during the first six months of 2001 to $56.7 million at June 30, 2001 as compared with $53.1 million at December 31, 2000.

Baylake Corp. recorded provisions for loan losses totaling $650,000 for the first six months of 2001, an increase of $440,000, as compared to the prior year. The allowance increased $130,000 to $7.1 million during the period. During the first six months of 2001, Baylake Corp. had net charge-offs of approximately $520,000. The ratio of allowance for loan losses to total loans was 1.21% at June 30, 2001 compared to 1.26% at December 31, 2000. Non-performing loans totaled $13.5 million and $13.0 million at June 30, 2001 and December 31, 2000, respectively. The ratio of allowance for loan losses to non-performing loans was 52.7% and 53.7% at June 30, 2001 and December 31, 2000, respectively.

The provision for loan losses for the three months ended June 30, 2001 and 2000 was $448,000 and $150,000, respectively. Non-performing loans at June 30, 2001 declined $1.0 million from March 31, 2001 primarily resulting from one commercial real estate and four residential real estate credits totaling $816,000 that were transferred to other real estate owned during the quarter. Foreclosed assets, net, at June 30, 2001 increased $880,000 from December 31, 2000, primarily the result of asset transfers during the quarter from loans on non-accrual status.

During the second quarter, Baylake Corp. charged off net loans of $550,000 as a result of further collateral evaluation. These charged-off loans had previously been identified as loans having an assessment of loss potential, but an updated consideration of collateral at June 30, 2001 prompted the action resulting in additional charge-offs for the second quarter. Despite the charge-offs taken during the second quarter of 2001 and the increase in non-performing assets, Baylake Corp. believes the balance of the allowance for loan loss at June 30, 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 six-month period ended June 30, 2001 remained relatively unchanged from the three-month period ended March 31, 2001. During the quarter ended June 30, 2001, Baylake Corp. acquired additional liquidity through the purchase of brokered deposits. As a result, Baylake Corp. anticipates that it will have sufficient funds available to meet the commitments outstanding at June 30, 2001. At June 30, 2001, Baylake Corp. had available and outstanding, established lines of credit totaling $60.4 million with nonaffiliated banks.

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. The most recent annual and quarterly reports filed by Baylake Corp. with the Securities and Exchange Commission, including its Form 10-Q for the quarter ended March 31, 2001, as amended, and Form 10-K for the year ended December 31, 2000, describe some factors, including certain credit, market, operational, liquidity and interest rate risks associated with the company's business and operations. Other factors include changes in business and economic conditions, competition, fiscal and monetary policies and legislation.

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 June
30, 2001 and at and for the three and six months ended June 30, 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
                                        June     December     June
                                         30,        31,        30,
                                        2001       2000       2000
                                     ---------- ---------- ----------
                                         (dollars in thousands)
Selected Financial Condition Data
(at end of period):

Total assets                          $ 810,708  $ 772,268  $ 719,908
Investment securities(1)                162,757    159,466    151,569
Federal funds sold                        1,027          0          0
Total loans                             593,037    555,831    514,775
Total deposits                          628,368    553,254    518,405
Borrowings(2)                           102,636    150,289    142,531
Notes payable and subordinated debt         158      7,911      5,111
Trust preferred securities               16,100          0          0
Total shareholders' equity               56,677     53,127     48,031
Non-performing loans, net of
 discount(3)(4)                          13,531     13,048     13,384
Non-performing assets, net of
 discount(3)(4)                          15,287     13,924     13,790

                            As of and for the     As of and for the
                               Three Months          Six Months
                              Ended June 30,       Ended June 30,
                          --------------------- ---------------------
                             2001       2000       2001       2000
                          ---------- ---------- ---------- ----------
                         (dollars in thousands, except per share data)

Selected Income Data:
Total interest income        $15,165    $13,729   $ 30,466    $26,296
Total interest expense         8,452      7,726     17,468     14,505
                          ---------- ---------- ---------- ----------
Net interest income            6,713      6,003     12,998     11,791
Provision for loan losses        448        150        650        210
                          ---------- ---------- ---------- ----------
Net interest income after
 provision for loan losses     6,265      5,853     12,348     11,581
Total non-interest income      1,584      1,150      2,716      2,134
Total non-interest expense     5,378      4,551     10,272      8,989
                          ---------- ---------- ---------- ----------
Income before income tax       2,471      2,452      4,792      4,726
Income tax provision             722        755      1,431      1,428
                          ---------- ---------- ---------- ----------
Net income                   $ 1,749    $ 1,697    $ 3,361    $ 3,298
                          ========== ========== ========== ==========

Per Share Data:(5)
Net income per share
 (basic)                     $  0.23    $  0.22    $  0.45    $  0.44
Net income per share
 (diluted)                      0.23       0.22       0.44       0.43
Cash dividends per common
 share                          0.11       0.10       0.22       0.20
Book value per share            7.59       6.45       7.59       6.45

Performance Ratios:(6)

Return on average total
 assets                         0.88%      0.99%      0.86%      0.98%
Return on average total
 shareholders' equity          12.63      14.29      12.37      14.01
Net interest margin(7)          3.81       3.99       3.77       4.04
Net interest spread(7)          3.44       3.51       3.33       3.57
Non-interest income to
 average assets                 0.79       0.67       0.69       0.64
Non-interest expense to
 average assets                 2.69       2.64       2.62       2.68
Net overhead ratio(8)           1.90       1.97       1.93       2.04
Average loan-to-average
 deposit ratio                 97.93      97.35     100.39      93.77
Average interest-earning
 assets to average
 interest-bearing
 liabilities                   108.04     109.77    108.54     109.84

Asset Quality Ratios:(3)(4)(6)

Non-performing loans to
 total loans                    2.28%      2.60%      2.28%      2.60%
Allowance for loan losses to:
 Total loans                    1.21       1.54       1.21       1.54
 Non-performing loans          52.74      59.46      52.74      59.46
Net charge-offs to average
 loans                          0.37       0.07       0.18      -0.06
Non-performing assets to
 total assets                   1.89       1.92       1.89       1.92


Capital Ratios:(6)(9)

Shareholders' equity to
 assets                         6.99%      6.67%      6.99%      6.67%
Tier 1 risk-based capital      10.14       8.04      10.14       8.04
Total risk-based capital       11.25       9.29      11.25       9.29
Leverage ratio                  8.21       6.47       8.21       6.47

Ratio of Earnings to Fixed Charges:(10)

Including deposit interest      1.29x      1.32x      1.27x      1.33x
Excluding deposit interest      2.25       2.15       2.06       2.35

Other Data at End of Period:

Number of bank subsidiaries        1          1          1          1
Number of banking facilities      25         23         25         23

(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 and six
    months ended June 30, 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.