Bankwell Financial Group, Inc. (NASDAQ:BWFG) reported record
GAAP net income of $6.2 million, or $0.79 per share, for the second
quarter of 2021, versus $1.2 million, or $0.16 per share, for the
same period in 2020.
The Company's Board of Directors declared a $0.18 per share cash
dividend, payable August 26, 2021 to shareholders of record on
August 16, 2021, representing a 29% increase when compared to the
prior quarter’s dividend.
We recommend reading this earnings release in conjunction with
the Second Quarter 2021 Investor Presentation, located at
http://investor.mybankwell.com/Presentations and included as an
exhibit to our July 28, 2021 Current Report on Form 8-K.
Notes Bankwell Financial Group President and CEO, Christopher R.
Gruseke:
"I’d like to congratulate the entire Bankwell team for an
outstanding job, not just this quarter, but over the last eighteen
months. Not only have we navigated the challenges brought about by
the global health crisis, but we are emerging from, what we hope to
be, the closing stages of the pandemic as a stronger, more robust
bank. Excluding PPP loans, we have grown our loan book 5% for the
quarter and 9% year to date. We continue to improve our deposit
structure and cost, growing non-interest bearing deposits by 17% on
a linked quarter basis, and increasing the quarterly net interest
margin to 3.12%. We expect to see further improvement in the NIM as
2021 progresses. Consistent with the Company’s focus on improving
its deposit base, we’ve just completed the conversion of our online
banking product to offer a more robust and more competitive
solution. We expect this added capability to help us further grow
our business deposit franchise. Credit quality continues to
improve. Any COVID impacted loans carry specific reserves or are
well collateralized, and we expect these loans to return to accrual
status over the coming quarters.
"Confident in our earnings outlook, Bankwell’s Board has just
approved a 29% increase in our quarterly dividend to $0.18 per
share. We look forward to a strong finish to 2021 and are planning
substantial growth and profitability in 2022."
Second Quarter 2021 Highlights:
- Return on average assets was 1.11% and return on average equity
was 13.06% for the quarter ended June 30, 2021.
- The net interest margin improved to 3.12% for the quarter ended
June 30, 2021.
- The efficiency ratio improved to 55.7% for the quarter ended
June 30, 2021.
- Total gross loans were $1.7 billion, growing $139.8 million, or
8.8%, compared to December 31, 2020, excluding Paycheck Protection
Program ("PPP") loans.
- Resumption of SBA loan sales with gains of $0.8 million
compared to no sales for the quarter ended June 30, 2020.
- Total deposits were $1.9 billion compared to $1.8 billion at
December 31, 2020.
- Noninterest bearing deposits increased by $58.2 million, or
21.6% compared to December 31, 2020.
- The cost of interest bearing deposits decreased approximately
64 basis points to 0.68% when compared to the quarter ended June
30, 2020.
- Investment securities totaled $109.3 million and represent 4.8%
of total assets.
- Tangible book value per share rose to $24.40 compared to $22.43
at December 31, 2020.
- Shares issued and outstanding were 7,895,101, reflecting
repurchases of 13,529 shares of common stock at a weighted average
price of $27.44 during the quarter ended June 30, 2021.
- Repaid $10.0 million of subordinated debt on May 15, 2021.
Earnings and Performance
Revenues (net interest income plus noninterest income) for the
quarter ended June 30, 2021 were $18.0 million, versus $14.2
million for the quarter ended June 30, 2020. Revenues for the six
months ended June 30, 2021 were $34.6 million, versus $28.6 million
for the six months ended June 30, 2020. The increase was primarily
attributable to lower interest expense on deposits and from the
resumption of SBA loan sales. Revenues for the six months ended
June 30, 2021 also benefited from a one-time federal payroll tax
credit for COVID-19 of $0.9 million.
Net income for the quarter ended June 30, 2021 was $6.2 million,
versus $1.2 million for the quarter ended June 30, 2020. Net income
for the six months ended June 30, 2021 was $11.9 million, versus
$2.6 million for the six months ended June 30, 2020. The increase
in net income was primarily impacted by the aforementioned
increases in revenues and a decrease in the provision for loan
losses resulting from the absence of elevated reserves recognized
in 2020 due to the impact of the COVID-19 pandemic and improving
economic trends in 2021.
Basic and diluted earnings per share were each $0.79 for the
quarter ended June 30, 2021 compared to basic and diluted earnings
per share of $0.16 each for the quarter ended June 30, 2020. Basic
and diluted earnings per share were $1.51 and $1.50, respectively,
for the six months ended June 30, 2021 compared to basic and
diluted earnings per share of $0.33 each for the six months ended
June 30, 2020.
The net interest margin (fully taxable equivalent basis) for the
quarters ended June 30, 2021 and June 30, 2020 was 3.12% and 2.81%,
respectively. The net interest margin (fully taxable equivalent
basis) for the six months ended June 30, 2021 and June 30, 2020 was
2.93% and 2.89%, respectively. The increase in the net interest
margin was due to a decrease in rates on interest bearing deposits
and a greater percentage of noninterest bearing deposits, partially
offset by excess liquidity.
Financial Condition
Assets totaled $2.27 billion at June 30, 2021, compared to
assets of $2.25 billion at December 31, 2020. The change in assets
remained relatively flat as the increase in loans were offset by a
decrease in excess liquidity. Gross loans totaled $1.7 billion at
June 30, 2021, an increase of $112.9 million compared to December
31, 2020. Excluding PPP loans, gross loans increased by $139.8
million at June 30, 2021 when compared to December 31, 2020.
Deposits totaled $1.9 billion at June 30, 2021, compared to
deposits of $1.8 billion at December 31, 2020.
Capital
Shareholders’ equity totaled $190.8 million as of June 30, 2021,
an increase of $14.2 million compared to December 31, 2020,
primarily a result of (i) net income of $11.9 million for the six
months ended June 30, 2021 and (ii) a $5.4 million favorable impact
to accumulated other comprehensive income driven by fair value
marks related to hedge positions involving interest rate swaps. The
Company's interest rate swaps are used to hedge interest rate risk.
The Company's current interest rate swap positions will cause a
decrease to other comprehensive income in a falling interest rate
environment and an increase in a rising interest rate environment.
The increase in Shareholders’ equity was partially offset by
dividends paid of $2.2 million and common stock repurchases of $1.8
million.
About Bankwell Financial Group
Bankwell is a commercial bank that serves the banking needs of
residents and businesses throughout Fairfield and New Haven
Counties, Connecticut.
For more information, visit www.mybankwell.com.
This press release may contain certain forward-looking
statements about the Company. Forward-looking statements include
statements regarding anticipated future events and can be
identified by the fact that they do not relate strictly to
historical or current facts. They often include words such as
“believe,” “expect,” “anticipate,” “estimate,” and “intend” 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. Certain factors that could
cause actual results to differ materially from expected results
include, but are not limited to, increased competitive pressures,
changes in the interest rate environment, general economic
conditions or conditions within the securities markets, uncertain
impacts of, or additional changes in, monetary, fiscal or tax
policy to address the impact of COVID-19, prolonged measures to
contain the spread of COVID-19 or premature easing of such
containment measures, either of which could further exacerbate the
effects on the Company’s business and results of operations, and
legislative and regulatory changes that could adversely affect the
business in which the Company and its subsidiaries are engaged.
Non-GAAP Financial Measures
In addition to evaluating the Company's financial performance in
accordance with U.S. generally accepted accounting principles
("GAAP"), management may evaluate certain non-GAAP financial
measures, such as the efficiency ratio. A computation and
reconciliation of certain non-GAAP financial measures used for
these purposes is contained in the accompanying Reconciliation of
GAAP to Non-GAAP Measures tables. We believe that providing certain
non-GAAP financial measures provides investors with information
useful in understanding our financial performance, our performance
trends and financial position. For example, the Company believes
that the efficiency ratio is useful in the assessment of financial
performance, including noninterest expense control. The Company
believes that tangible common equity and tangible book value per
share are useful to evaluate the relative strength of the Company's
capital position. We utilize these measures for internal planning
and forecasting purposes. These non-GAAP financial measures should
not be considered a substitute for GAAP basis measures and results,
and we strongly encourage investors to review our consolidated
financial statements in their entirety and not to rely on any
single financial measure.
BANKWELL FINANCIAL GROUP, INC.
CONSOLIDATED BALANCE SHEETS
(unaudited)
(Dollars in thousands)
June 30, 2021
March 31, 2021
December 31,
2020
June 30, 2020
ASSETS
Cash and due from banks
$
297,851
$
351,194
$
405,340
$
201,380
Federal funds sold
4,036
10,811
4,258
5,886
Cash and cash equivalents
301,887
362,005
409,598
207,266
Investment securities
Marketable equity securities, at fair
value
2,192
2,178
2,207
2,195
Available for sale investment securities,
at fair value
90,983
83,218
88,605
82,220
Held to maturity investment securities, at
amortized cost
16,166
16,225
16,078
16,196
Total investment securities
109,341
101,621
106,890
100,611
Loans receivable (net of allowance for
loan losses of $16,672, $20,545, $21,009, and $19,662 at June 30,
2021, March 31, 2021, December 31, 2020, and June 30, 2020,
respectively)
1,719,274
1,650,127
1,601,672
1,590,995
Other real estate owned
—
—
—
180
Accrued interest receivable
6,661
7,306
6,579
6,774
Federal Home Loan Bank stock, at cost
3,844
6,446
7,860
7,835
Premises and equipment, net
33,916
33,386
21,762
27,177
Bank-owned life insurance
48,632
42,881
42,651
42,167
Goodwill
2,589
2,589
2,589
2,589
Other intangible assets
58
67
76
178
Deferred income taxes, net
8,208
8,908
11,300
11,352
Other assets
35,415
29,131
42,770
46,511
Total assets
$
2,269,825
$
2,244,467
$
2,253,747
$
2,043,635
LIABILITIES AND SHAREHOLDERS’
EQUITY
Liabilities
Deposits
Noninterest bearing deposits
$
328,473
$
280,947
$
270,235
$
214,789
Interest bearing deposits
1,610,829
1,578,861
1,557,081
1,405,175
Total deposits
1,939,302
1,859,808
1,827,316
1,619,964
Advances from the Federal Home Loan
Bank
75,000
125,000
175,000
175,000
Subordinated debentures
15,366
25,271
25,258
25,233
Accrued expenses and other liabilities
49,362
46,445
49,571
53,078
Total liabilities
2,079,030
2,056,524
2,077,145
1,873,275
Shareholders’ equity
Common stock, no par value
120,451
120,398
121,338
120,381
Retained earnings
80,543
75,418
70,839
69,712
Accumulated other comprehensive loss
(10,199
)
(7,873
)
(15,575
)
(19,733
)
Total shareholders’ equity
190,795
187,943
176,602
170,360
Total liabilities and shareholders’
equity
$
2,269,825
$
2,244,467
$
2,253,747
$
2,043,635
BANKWELL FINANCIAL GROUP, INC.
CONSOLIDATED STATEMENTS OF INCOME
(unaudited)
(Dollars in thousands, except share
data)
For the Quarter Ended
For the Six Months
Ended
June 30, 2021
March 31, 2021
December 31,
2020
June 30, 2020
June 30, 2021
June 30, 2020
Interest and dividend income
Interest and fees on loans
$
19,266
$
17,900
$
18,194
$
18,459
$
37,166
$
37,444
Interest and dividends on securities
736
769
835
778
1,505
1,603
Interest on cash and cash equivalents
90
108
117
86
198
372
Total interest and dividend income
20,092
18,777
19,146
19,323
38,869
39,419
Interest expense
Interest expense on deposits
2,744
3,114
3,557
4,810
5,858
10,519
Interest expense on borrowings
769
1,008
1,285
876
1,777
1,977
Total interest expense
3,513
4,122
4,842
5,686
7,635
12,496
Net interest income
16,579
14,655
14,304
13,637
31,234
26,923
(Credit) provision for loan
losses
(20
)
(296
)
709
2,999
(316
)
6,184
Net interest income after (credit)
provision for loan losses
16,599
14,951
13,595
10,638
31,550
20,739
Noninterest income
Gains and fees from sales of loans
814
513
16
—
1,327
—
Bank owned life insurance
251
231
241
241
482
484
Service charges and fees
217
199
210
171
416
388
Other
158
1,013
154
165
1,170
777
Total noninterest income
1,440
1,956
621
577
3,395
1,649
Noninterest expense
Salaries and employee benefits
3,960
4,769
5,453
5,227
8,729
10,607
Occupancy and equipment
3,250
2,406
4,516
2,235
5,656
4,144
Data processing
833
512
1,658
493
1,345
1,029
Professional services
547
587
591
434
1,134
1,145
Director fees
327
317
331
287
644
582
FDIC insurance
300
403
262
283
703
353
Marketing
140
(9
)
118
199
131
361
Other
695
653
774
564
1,348
1,160
Total noninterest expense
10,052
9,638
13,703
9,722
19,690
19,381
Income before income tax
expense
7,987
7,269
513
1,493
15,255
3,007
Income tax expense
1,759
1,579
177
279
3,338
430
Net income
$
6,228
$
5,690
$
336
$
1,214
$
11,917
$
2,577
Earnings Per Common Share:
Basic
$
0.79
$
0.72
$
0.04
$
0.16
$
1.51
$
0.33
Diluted
$
0.79
$
0.71
$
0.04
$
0.16
$
1.50
$
0.33
Weighted Average Common Shares
Outstanding:
Basic
7,722,481
7,758,540
7,726,926
7,715,094
7,744,368
7,732,615
Diluted
7,768,026
7,800,777
7,728,206
7,715,295
7,792,600
7,748,104
Dividends per common share
$
0.14
$
0.14
$
0.14
$
0.14
$
0.28
$
0.28
BANKWELL FINANCIAL GROUP, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS
(unaudited)
For the Quarter Ended
For the Six Months
Ended
June 30, 2021
March 31, 2021
December 31, 2020
June 30, 2020
June 30, 2021
June 30, 2020
Performance ratios:
Return on average assets(1)
1.11
%
1.02
%
0.06
%
0.23
%
1.07
%
0.26
%
Return on average stockholders'
equity(1)
13.06
%
12.67
%
0.75
%
2.82
%
12.87
%
2.92
%
Return on average tangible common
equity(1)
13.25
%
12.86
%
0.76
%
2.86
%
13.06
%
2.97
%
Net interest margin
3.12
%
2.74
%
2.66
%
2.81
%
2.93
%
2.89
%
Efficiency ratio(2)
55.7
%
58.0
%
91.2
%
68.2
%
56.8
%
67.7
%
Net loan charge-offs as a % of average
loans
0.23
%
0.01
%
—
%
—
%
0.24
%
—
%
Dividend payout ratio(3)
17.72
%
19.72
%
350.00
%
87.50
%
18.67
%
84.85
%
(1) 2020 performance ratios were
negatively impacted by incremental COVID-19 pandemic related loan
loss reserves and $3.9 million in one-time charges related to
office consolidation, contract termination and employee severance
costs recognized in the fourth quarter of 2020.
(2) Efficiency ratio is defined as
noninterest expense, less other real estate owned expenses and
amortization of intangible assets, divided by our operating
revenue, which is equal to net interest income plus noninterest
income excluding gains and losses on sales of securities and gains
and losses on other real estate owned. In our judgment, the
adjustments made to operating revenue allow investors and analysts
to better assess our operating expenses in relation to our core
operating revenue by removing the volatility that is associated
with certain one-time items and other discrete items that are
unrelated to our core business.
(3) The dividend payout ratio is
calculated by dividing dividends per share by earnings per
share.
As of
June 30, 2021
March 31, 2021
December 31,
2020
June 30, 2020
Capital ratios:
Total Common Equity Tier 1 Capital to
Risk-Weighted Assets(1)
10.95
%
11.02
%
11.06
%
12.44
%
Total Capital to Risk-Weighted
Assets(1)
11.84
%
12.17
%
12.28
%
13.63
%
Tier I Capital to Risk-Weighted
Assets(1)
10.95
%
11.02
%
11.06
%
12.44
%
Tier I Capital to Average Assets(1)
9.19
%
8.82
%
8.44
%
9.93
%
Tangible common equity to tangible
assets
8.30
%
8.27
%
7.73
%
8.21
%
Tangible book value per common
share(2)
$
24.40
$
23.99
$
22.43
$
21.70
(1) Represents Bank ratios. Current period
capital ratios are preliminary subject to finalization of the FDIC
Call Report.
(2) Excludes unvested restricted shares of
184,548, 186,485, 163,369, and 165,708 as of June 30, 2021, March
31, 2021, December 31, 2020, and June 30, 2020, respectively.
BANKWELL FINANCIAL GROUP, INC.
ASSET QUALITY (unaudited)
(Dollars in thousands)
For the Quarter Ended
June 30, 2021
March 31, 2021
December 31, 2020
June 30, 2020
Allowance for loan losses:
Balance at beginning of period
$
20,545
$
21,009
$
20,372
$
16,686
Charge-offs:
Commercial real estate
(3,814
)
(163
)
—
—
Commercial business
(51
)
—
(75
)
—
Consumer
(4
)
(14
)
(11
)
(23
)
Total charge-offs
(3,869
)
(177
)
(86
)
(23
)
Recoveries:
Commercial business
16
—
14
—
Consumer
—
9
—
—
Total recoveries
16
9
14
—
Net loan charge-offs
(3,853
)
(168
)
(72
)
(23
)
(Credit) provision for loan losses
(20
)
(296
)
709
2,999
Balance at end of period
$
16,672
$
20,545
$
21,009
$
19,662
Net loan charge-offs totaled $3.9 million for the quarter ended
June 30, 2021 and primarily consisted of previously reserved
commercial real estate exposure.
As of
June 30, 2021
March 31, 2021
December 31, 2020
June 30, 2020
Asset quality:
Nonaccrual loans
Residential real estate
$
1,160
$
1,289
$
1,492
$
1,622
Commercial real estate
15,392
19,277
21,093
5,172
Commercial business
1,780
1,803
1,834
3,783
Construction
8,997
8,997
8,997
—
Total nonaccrual loans
27,329
31,366
33,416
10,577
Other real estate owned
—
—
—
180
Total nonperforming assets
$
27,329
$
31,366
$
33,416
$
10,757
Nonperforming loans as a % of total
loans
1.57
%
1.87
%
2.06
%
0.66
%
Nonperforming assets as a % of total
assets
1.20
%
1.40
%
1.48
%
0.53
%
Allowance for loan losses as a % of total
loans
0.96
%
1.23
%
1.29
%
1.22
%
Allowance for loan losses as a % of
nonperforming loans
61.00
%
65.50
%
62.87
%
185.89
%
Total nonaccrual loans declined $6.1 million to $27.3 million as
of June 30, 2021 when compared to December 31, 2020 partially a
result of the charge-offs described above. The Bank continues
work-out activity on its nonaccrual loan population. Nonperforming
assets as a percentage of total assets was 1.20% at June 30, 2021,
down from 1.48% at December 31, 2020. The allowance for loan losses
at June 30, 2021 was $16.7 million, representing 0.96% of total
loans.
BANKWELL FINANCIAL GROUP, INC.
LOAN & DEPOSIT PORTFOLIO
(unaudited)
(Dollars in thousands)
Period End Loan Composition
June 30, 2021
March 31, 2021
December 31, 2020
Current QTD % Change
YTD % Change
Residential Real Estate
$
100,260
$
109,752
$
113,557
(8.6
)%
(11.7
)%
Commercial Real Estate(1)
1,266,731
1,183,848
1,148,383
7.0
10.3
Construction
82,805
103,099
87,007
(19.7
)
(4.8
)
Total Real Estate Loans
1,449,796
1,396,699
1,348,947
3.8
7.5
Commercial Business(2)
279,814
267,698
276,601
4.5
1.2
Consumer
8,883
8,818
79
0.7
N/M(3)
Total Loans
$
1,738,493
$
1,673,215
$
1,625,627
3.9
%
6.9
%
(1) Includes owner occupied commercial
real estate.
(2) Includes $7.9 million, $19.2 million,
and $34.8 million of PPP loans at June 30, 2021, March 31, 2021 and
December 31, 2020, respectively.
(3) Metric not meaningful.
Gross loans totaled $1.7 billion at June 30, 2021, an increase
of $112.9 million compared to December 31, 2020. Excluding PPP
loans, gross loans increased by $139.8 million, or 8.8%, at June
30, 2021 when compared to December 31, 2020.
Period End Deposit Composition
June 30, 2021
March 31, 2021
December 31, 2020
Current QTD % Change
YTD % Change
Noninterest bearing demand
$
328,473
$
280,947
$
270,235
16.9
%
21.6
%
NOW
136,558
118,489
101,737
15.2
34.2
Money Market
814,083
751,852
669,364
8.3
21.6
Savings
173,943
164,559
158,750
5.7
9.6
Time
486,245
543,961
627,230
(10.6
)
(22.5
)
Total Deposits
$
1,939,302
$
1,859,808
$
1,827,316
4.3
%
6.1
%
Total deposits were $1.9 billion at June 30, 2021, compared to
$1.8 billion at December 31, 2020, an increase of $112.0 million,
or 6.1%.
BANKWELL FINANCIAL GROUP, INC.
NONINTEREST INCOME (unaudited)
(Dollars in thousands)
For the Quarter Ended
Noninterest income
June 30, 2021
March 31, 2021
June 30, 2020
June 21 vs. March 21 %
Change
June 21 vs. June 20 %
Change
Gains and fees from sales of loans
$
814
$
513
$
—
58.7
%
N/A
Bank owned life insurance
251
231
241
8.7
4.1
Service charges and fees
217
199
171
9.0
26.9
Other
158
1,013
165
(84.4
)
(4.2
)
Total noninterest income
$
1,440
$
1,956
$
577
(26.4
)%
149.6
%
For the Six Months
Ended
Noninterest income
June 30, 2021
June 30, 2020
% Change
Gains and fees from sales of loans
$
1,327
$
—
N/A
Bank owned life insurance
482
484
(0.4
)
Service charges and fees
416
388
7.2
Other
1,170
777
50.6
Total noninterest income
$
3,395
$
1,649
105.9
%
Noninterest income increased by $0.9 million to $1.4 million for
the quarter ended June 30, 2021 compared to the quarter ended June
30, 2020. Noninterest income increased by $1.7 million to $3.4
million for the six months ended June 30, 2021 compared to the six
months ended June 30, 2020.
The increase in noninterest income was driven by resumed SBA
loan sales, totaling $0.8 million and $1.3 million for the quarter
and six months ended June 30, 2021, respectively. In addition, the
increase in noninterest income for the six months ended June 30,
2021 was impacted by a one-time federal payroll tax credit for
COVID-19 of $0.9 million.
BANKWELL FINANCIAL GROUP, INC.
NONINTEREST EXPENSE (unaudited)
(Dollars in thousands)
For the Quarter Ended
Noninterest expense
June 30, 2021
March 31, 2021
June 30, 2020
June 21 vs. March 21 %
Change
June 21 vs. June 20 %
Change
Salaries and employee benefits
$
3,960
$
4,769
$
5,227
(17.0
)%
(24.2
)%
Occupancy and equipment
3,250
2,406
2,235
35.1
45.4
Data processing
833
512
493
62.7
69.0
Professional services
547
587
434
(6.8
)
26.0
Director fees
327
317
287
3.2
13.9
FDIC insurance
300
403
283
(25.6
)
6.0
Marketing
140
(9
)
199
N/M(1)
(29.6
)
Other
695
653
564
6.4
23.2
Total noninterest expense
$
10,052
$
9,638
$
9,722
4.3
%
3.4
%
(1) Metric not meaningful.
For the Six Months
Ended
Noninterest expense
June 30, 2021
June 30, 2020
% Change
Salaries and employee benefits
$
8,729
$
10,607
(17.7
)%
Occupancy and equipment
5,656
4,144
36.5
Data processing
1,345
1,029
30.7
Professional services
1,134
1,145
(1.0
)
FDIC insurance
703
353
99.2
Director fees
644
582
10.7
Marketing
131
361
(63.7
)
Other
1,348
1,160
16.2
Total noninterest expense
$
19,690
$
19,381
1.6
%
Noninterest expense increased by $0.3 million to $10.1 million
for the quarter ended June 30, 2021 compared to the quarter ended
June 30, 2020. The increase in noninterest expense was primarily
driven by an increase in occupancy and equipment expense and data
processing expense, partially offset by a decrease in salaries and
employee benefits expense.
Noninterest expense increased by $0.3 million to $19.7 million
for the six months ended June 30, 2021 compared to the six months
ended June 30, 2020. The increase in noninterest expense was
primarily driven by an increase in occupancy and equipment expense,
FDIC insurance expense, and data processing expense, partially
offset by a decrease in salaries and employee benefits expense.
For the quarter ended June 30, 2021 noninterest expense included
$0.8 million of non-recurring items relating to office
consolidation expenses ($0.4 million), COVID-19 cleaning protocols
($0.3 million) and the implementation of new online banking
software ($0.1 million). See below for more information on what
specific areas of non-interest expense were impacted by these
non-recurring items.
Occupancy and equipment expense totaled $3.3 million for the
quarter ended June 30, 2021, an increase of $1.0 million when
compared to the same period in 2020. Occupancy and equipment
expense totaled $5.7 million for the six months ended June 30,
2021, an increase of $1.5 million when compared to the same period
in 2020. The increase in occupancy and equipment expense was
primarily due to additional one-time charges of $0.4 million
associated with office consolidation activity (previously disclosed
in the fourth quarter of 2020) and an increase in lease expense
resulting from the commencement of the lease on the Company's new
headquarters building. In addition, the increase in occupancy and
equipment expense for the six months ended June 30, 2021 was due to
additional cleaning costs associated with precautions taken to
prevent the spread of COVID-19. The additional cleaning protocols
have been curtailed as of June 30, 2021.
Data processing expense totaled $0.8 million for the quarter
ended June 30, 2021, an increase of $0.3 million when compared to
the same period in 2020. Data processing expense totaled $1.3
million for the six months ended June 30, 2021, an increase of $0.3
million when compared to the same period in 2020. The increase in
data processing expense was primarily due to $0.4 million in costs
associated with the conversion to a new online banking system
implemented in the second quarter of 2021.
FDIC insurance expense totaled $0.7 million for the six months
ended June 30, 2021, an increase of $0.4 million when compared to
the same period in 2020. The increase in FDIC insurance expense was
due to the absence of available FDIC insurance credits recognized
in the first quarter of 2020 and elevated expense due to liquidity
driven balance sheet growth in 2021.
Salaries and employee benefits expense totaled $4.0 million for
the quarter ended June 30, 2021, a decrease of $1.3 million when
compared to the same period in 2020. Salaries and employee benefits
expense totaled $8.7 million for the six months ended June 30,
2021, a decrease of $1.9 million when compared to the same period
in 2020. The decrease in salaries and employee benefits expense was
primarily driven by a decrease in full time equivalent employees as
a direct result of the Voluntary Early Retirement Incentive Plan
offered to eligible employees and other employee actions taken
during the fourth quarter of 2020. Full time equivalent employees
totaled 125 at June 30, 2021 compared to 152 for the same period in
2020. Average full time equivalent employees totaled 124 for the
six months ended June 30, 2021 compared to 154 for the same period
in 2020. Salaries and employee benefits expense was also favorably
impacted as higher loan originations enabled the bank to defer a
greater amount of expenses. Finally, salaries and employee benefits
expense also benefited by a one-time deferral of $0.3 million in
costs associated with a new online banking system implemented in
the second quarter of 2021, partially offsetting the increase in
data processing expenses relating to the same project described
above.
BANKWELL FINANCIAL GROUP, INC.
RECONCILIATION OF GAAP TO NON-GAAP
MEASURES (unaudited)
(Dollars in thousands, except share
data)
As of
Computation of Tangible Common Equity
to Tangible Assets
June 30, 2021
March 31, 2021
December 31, 2020
June 30, 2020
Total Equity
$
190,795
$
187,943
$
176,602
$
170,360
Less:
Goodwill
2,589
2,589
2,589
2,589
Other intangibles
58
67
76
178
Tangible Common Equity
$
188,148
$
185,287
$
173,937
$
167,593
Total Assets
$
2,269,825
$
2,244,467
$
2,253,747
$
2,043,635
Less:
Goodwill
2,589
2,589
2,589
2,589
Other intangibles
58
67
76
178
Tangible Assets
$
2,267,178
$
2,241,811
$
2,251,082
$
2,040,868
Tangible Common Equity to Tangible
Assets
8.30
%
8.27
%
7.73
%
8.21
%
As of
Computation of Tangible Book Value per
Common Share
June 30, 2021
March 31, 2021
December 31, 2020
June 30, 2020
Total shareholders' equity
$
190,795
$
187,943
$
176,602
$
170,360
Less:
Preferred stock
—
—
—
—
Common shareholders' equity
$
190,795
$
187,943
$
176,602
$
170,360
Less:
Goodwill
2,589
2,589
2,589
2,589
Other intangibles
58
67
76
178
Tangible common shareholders'
equity
$
188,148
$
185,287
$
173,937
$
167,593
Common shares
7,895,101
7,908,630
7,919,278
7,887,503
Less:
Shares of unvested restricted stock
184,548
186,485
163,369
165,708
Common shares less unvested restricted
stock
7,710,553
7,722,145
7,755,909
7,721,795
Book value per share
$
24.74
$
24.34
$
22.77
$
22.06
Less:
Effects of intangible assets
$
0.34
$
0.34
$
0.34
$
0.36
Tangible Book Value per Common
Share
$
24.40
$
23.99
$
22.43
$
21.70
BANKWELL FINANCIAL GROUP, INC.
RECONCILIATION OF GAAP TO NON-GAAP
MEASURES (unaudited) - Continued
(Dollars in thousands)
For the Quarter Ended
For the Six Months
Ended
Computation of Efficiency Ratio
June 30, 2021
March 31, 2021
December 31, 2020
June 30, 2020
June 30, 2021
June 30, 2020
Noninterest expense
$
10,052
$
9,638
$
13,703
$
9,722
$
19,690
$
19,381
Less:
Amortization of intangible assets
9
9
84
18
19
36
Other real estate owned expenses
—
—
—
6
—
6
Adjusted noninterest expense
$
10,043
$
9,629
$
13,619
$
9,698
$
19,671
$
19,339
Net interest income
$
16,579
$
14,655
$
14,304
$
13,637
$
31,234
$
26,923
Noninterest income
1,440
1,956
621
577
3,395
1,649
Less:
Net gain on sale of available for sale
securities
—
—
—
—
—
—
Gain (loss) on sale of other real estate
owned, net
—
—
—
—
—
—
Operating revenue
$
18,019
$
16,611
$
14,925
$
14,214
$
34,629
$
28,572
Efficiency ratio
55.7
%
58.0
%
91.2
%
68.2
%
56.8
%
67.7
%
For the Quarter Ended
For the Six Months
Ended
Computation of Return on Average
Tangible Common Equity
June 30, 2021
March 31, 2021
December 31, 2020
June 30, 2020
June 30, 2021
June 30, 2020
Net Income Attributable to Common
Shareholders
$
6,228
$
5,690
$
336
$
1,214
$
11,917
$
2,577
Total average shareholders' equity
$
191,224
$
182,058
$
178,439
$
173,289
$
186,664
$
177,204
Less:
Average Goodwill
2,589
2,589
2,589
2,589
2,589
2,589
Average Other intangibles
64
73
153
190
68
199
Average tangible common equity
$
188,571
$
179,396
$
175,697
$
170,510
$
184,007
$
174,416
Annualized Return on Average Tangible
Common Equity
13.25
%
12.86
%
0.76
%
2.86
%
13.06
%
2.97
%
BANKWELL FINANCIAL GROUP, INC.
NET INTEREST MARGIN ANALYSIS ON A FULLY
TAX EQUIVALENT BASIS - QTD (unaudited)
(Dollars in thousands)
For the Quarter Ended
June 30, 2021
June 30, 2020
Average Balance
Interest
Yield/ Rate (5)
Average Balance
Interest
Yield/ Rate (5)
Assets:
Cash and Fed funds sold
$
336,073
$
90
0.11
%
$
234,979
$
86
0.15
%
Securities(1)
103,297
761
2.95
95,421
738
3.09
Loans:
Commercial real estate
1,163,134
13,678
4.65
1,088,390
12,808
4.66
Residential real estate
105,975
958
3.62
134,295
1,251
3.73
Construction(2)
110,780
1,036
3.70
100,282
1,101
4.34
Commercial business
296,613
3,506
4.68
288,605
3,297
4.52
Consumer
8,851
88
3.98
111
2
8.71
Total loans
1,685,353
19,266
4.52
1,611,683
18,459
4.53
Federal Home Loan Bank stock
4,219
25
2.34
7,472
92
4.93
Total earning assets
2,128,942
$
20,142
3.74
%
1,949,555
$
19,375
3.93
%
Other assets
117,334
129,247
Total assets
$
2,246,276
$
2,078,802
Liabilities and shareholders' equity:
Interest bearing liabilities:
NOW
$
118,806
$
54
0.18
%
$
74,050
$
31
0.17
%
Money market
782,079
941
0.48
464,230
862
0.75
Savings
168,870
92
0.22
162,283
295
0.73
Time
538,915
1,657
1.23
765,103
3,622
1.90
Total interest bearing deposits
1,608,670
2,744
0.68
1,465,666
4,810
1.32
Borrowed Money
101,586
769
3.00
188,557
876
1.84
Total interest bearing liabilities
1,710,256
$
3,513
0.82
%
1,654,223
$
5,686
1.38
%
Noninterest bearing deposits
298,467
198,253
Other liabilities
46,329
53,037
Total liabilities
2,055,052
1,905,513
Shareholders' equity
191,224
173,289
Total liabilities and shareholders'
equity
$
2,246,276
$
2,078,802
Net interest income(3)
$
16,629
$
13,689
Interest rate spread
2.92
%
2.55
%
Net interest margin(4)
3.12
%
2.81
%
(1) Average balances and yields for
securities are based on amortized cost.
(2) Includes commercial and residential
real estate construction.
(3) The adjustment for securities and
loans taxable equivalency amounted to $50 thousand and $52 thousand
for the quarters ended June 30, 2021 and 2020, respectively.
(4) Annualized net interest income as a
percentage of earning assets.
(5) Yields are calculated using the
contractual day count convention for each respective product
type.
BANKWELL FINANCIAL GROUP, INC.
NET INTEREST MARGIN ANALYSIS ON A FULLY
TAX EQUIVALENT BASIS - YTD (unaudited)
(Dollars in thousands)
For the Six Months
Ended
June 30, 2021
June 30, 2020
Average Balance
Interest
Yield/ Rate (5)
Average Balance
Interest
Yield/ Rate (5)
Assets:
Cash and Fed funds sold
$
368,779
$
198
0.11
%
$
154,321
$
372
0.48
%
Securities(1)
102,252
1,549
3.03
96,932
1,513
3.12
Loans:
Commercial real estate
1,146,258
26,354
4.57
1,098,550
25,839
4.65
Residential real estate
109,003
1,996
3.66
139,059
2,607
3.75
Construction(2)
102,459
1,916
3.72
100,338
2,316
4.57
Commercial business
295,682
6,763
4.55
273,767
6,676
4.82
Consumer
6,956
137
3.96
133
6
8.51
Total loans
1,660,358
37,166
4.45
1,611,847
37,444
4.60
Federal Home Loan Bank stock
5,356
56
2.11
7,401
195
5.30
Total earning assets
2,136,745
$
38,969
3.64
%
1,870,501
$
39,524
4.18
%
Other assets
115,718
122,060
Total assets
$
2,252,463
$
1,992,561
Liabilities and shareholders' equity:
Interest bearing liabilities:
NOW
$
109,990
$
97
0.18
%
$
70,990
$
59
0.17
%
Money market
759,435
1,891
0.50
451,388
2,354
1.05
Savings
164,630
217
0.27
173,875
967
1.12
Time
574,876
3,653
1.28
702,853
7,139
2.04
Total interest bearing deposits
1,608,931
5,858
0.73
1,399,106
10,519
1.51
Borrowed Money
126,886
1,777
2.79
180,575
1,977
2.17
Total interest bearing liabilities
1,735,817
$
7,635
0.89
%
1,579,681
$
12,496
1.59
%
Noninterest bearing deposits
284,226
188,722
Other liabilities
45,756
46,954
Total liabilities
2,065,799
1,815,357
Shareholders' equity
186,664
177,204
Total liabilities and shareholders'
equity
$
2,252,463
$
1,992,561
Net interest income(3)
$
31,334
$
27,028
Interest rate spread
2.75
%
2.59
%
Net interest margin(4)
2.93
%
2.89
%
(1) Average balances and yields for
securities are based on amortized cost.
(2) Includes commercial and residential
real estate construction.
(3) The adjustment for securities and
loans taxable equivalency amounted to $100 thousand and $105
thousand for the six months ended June 30, 2021 and 2020,
respectively.
(4) Annualized net interest income as a
percentage of earning assets.
(5) Yields are calculated using the
contractual day count convention for each respective product
type.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210728006034/en/
Bankwell Financial Group Christopher R. Gruseke, President and
Chief Executive Officer Penko Ivanov, Executive Vice President and
Chief Financial Officer (203) 652-0166
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