Bankwell Financial Group, Inc. (NASDAQ: BWFG) reported GAAP net
income of $9.2 million, or $1.18 per share, for the third quarter
of 2022, versus $6.9 million, or $0.87 per share, for the same
period in 2021. During the quarter ended September 30, 2022 the
Company experienced another quarter of elevated loan prepayments
that positively impacted reported earnings. Adjusting for this,
operating earnings per share totaled $1.08 for the third quarter of
2022. Please reference the table below for a reconciliation of
reported earnings per share to operating earnings per share.
Earnings Per Common Share
3Q'22 QTD Reported Diluted EPS
$
1.18
Elevated Loan Prepayments(1)
(0.10
)
3Q'22 QTD Operating EPS(2)
$
1.08
(1) 3Q'22 loan prepayments exceeded
historical quarterly averages and are not reflective of run
rate.
(2) Non-gaap measure.
The Company's Board of Directors declared a $0.20 per share cash
dividend, payable November 21, 2022 to shareholders of record on
November 11, 2022.
We recommend reading this earnings release in conjunction
with the Third Quarter 2022 Investor Presentation, located at
http://investor.mybankwell.com/Presentations and included as an
exhibit to our October 26, 2022 Current Report on Form 8-K.
Notes Bankwell Financial Group President and CEO, Christopher R.
Gruseke:
"The Company had another very strong quarter, growing loans by
$230 million. This represents an 11% increase over the prior
quarter, and a year to date increase of 21%. Profitability remains
strong, with a 1.47% Return on Average Assets and a 15.73% Return
on Average Equity.
"The Company’s growth in 2021 and 2022 has created an
exceptionally strong foundation to grow top line Interest Income in
the coming year. We anticipate Interest Income to increase by more
than 25% in 2023. The current cycle of tightening by the Federal
Reserve will increase our cost of deposits in the quarters ahead.
Based on forward market pricing we could expect Net Interest Income
to decrease by 10% in 2023 versus 2022.
"We continue to build Book Value for our shareholders. Fully
Diluted Book Value per share has increased by 3.2% this quarter and
by 16.2% year to date. Importantly, all credit metrics remain
benign.
"We thank our employees and clients who have made our success
possible, and are confident that we have a great team in place to
perform in an increasingly volatile economic environment."
Third Quarter 2022 Highlights (performance metrics are
impacted by certain one-time items - please refer to the table
following the below highlights for adjusted performance
metrics):
- Return on average assets was 1.47% and return on average equity
was 15.73% for the quarter ended September 30, 2022.
- The net interest margin was 4.12% for the quarter ended
September 30, 2022.
- The efficiency ratio was 44.1% for the quarter ended September
30, 2022.
- Total gross loans were $2.3 billion, growing $391.9 million, or
20.7%, compared to December 31, 2021.
- Average yield on 2022 funded loans was 5.36%.
- Investment securities totaled $113.1 million and represent 4.2%
of total assets.
- Fully diluted tangible book value per share rose to $29.68
compared to $25.55 at December 31, 2021.
- The Wilton branch closed, effective October 7, 2022.
- Shares issued and outstanding were 7,711,843, reflecting
repurchases of 53,546 shares of common stock at a weighted average
price of $31.81 during the quarter ended September 30, 2022.
- The Company issued 6.00% fixed-to-floating rate subordinated
notes due 2032 in the principal amount of $35.0 million.
Quarter Ended September 30,
2022
Nine Months Ended September 30,
2022
Key metrics
Reported
Operating(1)
Variance
Reported
Operating(1)
Variance
Net interest margin
4.12
%
3.96
%
0.16
%
3.81
%
3.67
%
0.14
%
Efficiency ratio
44.1
%
46.0
%
(1.9
) %
45.3
%
46.9
%
(1.6
) %
Return on average assets
1.47
%
1.34
%
0.13
%
1.59
%
1.38
%
0.21
%
Return on average stockholders' equity
15.73
%
14.40
%
1.33
%
17.94
%
15.57
%
2.37
%
(1) Operating metrics are non-GAAP
measures and have been adjusted for elevated loan prepayments for
the quarter and nine months ended September 30, 2022, as noted in
the above table. Adjustments also include the release of specific
reserves and the historical loss update to the Company's peer group
for the nine months ended September 30, 2022. Please reference the
second quarter 2022 earnings release for more details on these
adjustments.
Earnings and Performance
Revenues (net interest income plus noninterest income) for the
quarter ended September 30, 2022 were $25.0 million, versus $19.2
million for the quarter ended September 30, 2021. Revenues for the
nine months ended September 30, 2022 were $70.4 million, versus
$53.8 million for the nine months ended September 30, 2021. The
increase in revenues was primarily attributable to an increase in
interest and fees on loans due to loan growth and higher overall
loan yields. The increase in loan yields was aided by elevated loan
prepayment fees, which totaled $1.3 million for the quarter ended
September 30, 2022, compared to $0.1 million for the quarter ended
September 30, 2021. The increase in revenues was partially offset
by a decrease in noninterest income driven by a decrease in loans
sales and the absence of rental income recognized during the
quarter and nine months ended September 30, 2021, as a result of
the disposition of the Company's former headquarters building. In
addition, the increase in revenues for the nine months ended
September 30, 2022 was muted as a result of a one-time federal
payroll tax credit for COVID-19 of $0.9 million recognized in the
quarter ended March 31, 2021. Finally, the increase in revenues for
the quarter ended September 30, 2022 was also partially offset by
an increase in interest expense on deposits, resulting from an
increase in rates necessary to remain competitive in the current
economic environment.
Net income for the quarter ended September 30, 2022 was $9.2
million, versus $6.9 million for the quarter ended September 30,
2021. Net income for the nine months ended September 30, 2022 was
$29.4 million, versus $18.8 million for the nine months ended
September 30, 2021. The increase in net income was primarily
impacted by the aforementioned increases in revenues. In addition,
the increase in net income was partially offset by an increase in
the provision for loan losses primarily driven by loan growth and
an increase in noninterest expense for the quarter and nine months
ended September 30, 2022.
Basic and diluted earnings per share were $1.19 and $1.18,
respectively, for the quarter ended September 30, 2022 compared to
basic and diluted earnings per share of $0.88 and $0.87,
respectively, for the quarter ended September 30, 2021. Basic and
diluted earnings per share were $3.80 and $3.75, respectively, for
the nine months ended September 30, 2022 compared to basic and
diluted earnings per share of $2.38 and $2.37, respectively, for
the nine months ended September 30, 2021.
The net interest margin (fully taxable equivalent basis) for the
quarters ended September 30, 2022 and September 30, 2021 was 4.12%
and 3.39%, respectively. The net interest margin (fully taxable
equivalent basis) for the nine months ended September 30, 2022 and
September 30, 2021 was 3.81% and 3.08%, respectively. The increase
in the net interest margin was due to elevated loan prepayment fees
and an increase in overall loan yields.
Financial Condition
Assets totaled $2.72 billion at September 30, 2022, compared to
assets of $2.46 billion at December 31, 2021. The increase in
assets was primarily due to loan growth and a corresponding
increase in deposits and borrowings. Gross loans totaled $2.3
billion at September 30, 2022, an increase of $391.9 million
compared to December 31, 2021. Deposits totaled $2.3 billion at
September 30, 2022, compared to deposits of $2.1 billion at
December 31, 2021.
Capital
Shareholders’ equity totaled $231.5 million as of September 30,
2022, an increase of $29.5 million compared to December 31, 2021,
primarily a result of (i) net income of $29.4 million for the nine
months ended September 30, 2022 and (ii) an $8.4 million favorable
impact to accumulated other comprehensive income driven by fair
value marks related to hedge positions involving interest rate
swaps, partially offset by fair value marks on the Company's
investment portfolio. The Company's interest rate swaps are used to
hedge interest rate risk. The increase in Shareholders’ equity was
partially offset by dividends paid of $4.7 million and common stock
repurchases of $5.5 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 about this press
release, interested parties may contact Christopher R. Gruseke,
President and Chief Executive Officer or Penko Ivanov, Executive
Vice President and Chief Financial Officer of Bankwell Financial
Group at (203) 652-0166.
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, 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, tangible book value per
share, and return on average tangible common equity are useful to
evaluate the relative strength of the Company's performance and
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)
September 30,
2022
June 30, 2022
March 31, 2022
December 31,
2021
September 30,
2021
ASSETS
Cash and due from banks
$
212,175
$
149,522
$
280,471
$
291,598
$
169,417
Federal funds sold
10,947
21,505
19,022
53,084
8,097
Cash and cash equivalents
223,122
171,027
299,493
344,682
177,514
Investment securities
Marketable equity securities, at fair
value
1,973
2,126
2,090
2,168
2,185
Available for sale investment securities,
at fair value
95,095
94,907
98,733
90,198
87,565
Held to maturity investment securities, at
amortized cost
16,027
15,917
15,979
16,043
16,107
Total investment securities
113,095
112,950
116,802
108,409
105,857
Loans receivable (net of allowance for
loan losses of $18,167, $15,773, $17,141, $16,902 and $16,803 at
September 30, 2022, June 30, 2022, March 31, 2022, December 31,
2021 and September 30, 2021, respectively)
2,263,432
2,036,626
1,964,567
1,875,167
1,805,217
Accrued interest receivable
9,552
8,047
7,733
7,512
6,911
Federal Home Loan Bank stock, at cost
5,039
5,064
2,870
2,814
3,632
Premises and equipment, net
27,510
27,768
25,661
25,588
35,118
Bank-owned life insurance
49,970
49,699
49,434
49,174
48,903
Goodwill
2,589
2,589
2,589
2,589
2,589
Other intangible assets
—
—
—
—
48
Deferred income taxes, net
5,952
4,768
6,879
7,621
7,718
Other assets
22,734
17,014
20,849
32,708
33,181
Total assets
$
2,722,995
$
2,435,552
$
2,496,877
$
2,456,264
$
2,226,688
LIABILITIES AND SHAREHOLDERS’
EQUITY
Liabilities
Deposits
Noninterest bearing deposits
$
380,365
$
372,584
$
412,985
$
398,956
$
338,705
Interest bearing deposits
1,906,337
1,660,941
1,753,219
1,725,042
1,544,118
Total deposits
2,286,702
2,033,525
2,166,204
2,123,998
1,882,823
Advances from the Federal Home Loan
Bank
90,000
105,000
50,000
50,000
80,000
Subordinated debentures
68,897
34,500
34,471
34,441
15,374
Accrued expenses and other liabilities
45,896
37,060
35,982
45,838
52,314
Total liabilities
2,491,495
2,210,085
2,286,657
2,254,277
2,030,511
Shareholders’ equity
Common stock, no par value
114,548
115,599
114,882
118,148
119,588
Retained earnings
117,152
109,523
99,047
92,400
85,992
Accumulated other comprehensive (loss)
income
(200
)
345
(3,709
)
(8,561
)
(9,403
)
Total shareholders’ equity
231,500
225,467
210,220
201,987
196,177
Total liabilities and shareholders’
equity
$
2,722,995
$
2,435,552
$
2,496,877
$
2,456,264
$
2,226,688
BANKWELL FINANCIAL GROUP, INC.
CONSOLIDATED STATEMENTS OF INCOME (unaudited) (Dollars in
thousands, except share data)
For the Quarter Ended
For the Nine Months
Ended
September 30,
2022
June 30, 2022
March 31, 2022
December 31,
2021
September 30,
2021
September 30,
2022
September 30,
2021
Interest and dividend income
Interest and fees on loans
$
28,128
$
25,141
$
21,428
$
21,081
$
19,795
$
74,697
$
56,961
Interest and dividends on securities
811
774
720
722
731
2,305
2,236
Interest on cash and cash equivalents
747
449
154
90
88
1,350
286
Total interest and dividend income
29,686
26,364
22,302
21,893
20,614
78,352
59,483
Interest expense
Interest expense on deposits
4,092
1,983
2,206
2,198
2,387
8,281
8,245
Interest expense on borrowings
993
558
586
767
503
2,137
2,280
Total interest expense
5,085
2,541
2,792
2,965
2,890
10,418
10,525
Net interest income
24,601
23,823
19,510
18,928
17,724
67,934
48,958
Provision (credit) for loan
losses
2,381
(1,445
)
229
125
134
1,165
(182
)
Net interest income after provision
(credit) for loan losses
22,220
25,268
19,281
18,803
17,590
66,769
49,140
Noninterest income
Bank owned life insurance
271
265
260
270
271
796
753
Service charges and fees
240
249
240
257
199
729
615
(Losses) gains and fees from sales of
loans
(15
)
608
631
441
924
1,224
2,251
Other
(94
)
30
(173
)
(143
)
43
(237
)
1,213
Total noninterest income
402
1,152
958
825
1,437
2,512
4,832
Noninterest expense
Salaries and employee benefits
5,876
5,433
4,940
4,806
4,782
16,249
13,511
Occupancy and equipment
2,035
2,193
2,150
2,411
2,615
6,378
8,271
Professional services
994
1,000
981
628
498
2,975
1,632
Data processing
626
689
654
432
632
1,969
1,977
Director fees
325
339
352
335
324
1,016
968
FDIC insurance
255
262
223
231
298
740
1,001
Marketing
102
107
45
87
186
254
317
Other
818
913
580
749
1,035
2,311
2,383
Total noninterest expense
11,031
10,936
9,925
9,679
10,370
31,892
30,060
Income before income tax
expense
11,591
15,484
10,314
9,949
8,657
37,389
23,912
Income tax expense
2,417
3,462
2,102
2,135
1,802
7,981
5,140
Net income
$
9,174
$
12,022
$
8,212
$
7,814
$
6,855
$
29,408
$
18,772
Earnings Per Common Share:
Basic
$
1.19
$
1.56
$
1.05
$
1.00
$
0.88
$
3.80
$
2.38
Diluted
$
1.18
$
1.55
$
1.04
$
0.99
$
0.87
$
3.75
$
2.37
Weighted Average Common Shares
Outstanding:
Basic
7,553,718
7,556,645
7,637,077
7,660,307
7,677,822
7,582,175
7,721,943
Diluted
7,612,421
7,614,243
7,719,405
7,726,420
7,738,758
7,664,123
7,779,632
Dividends per common share
$
0.20
$
0.20
$
0.20
$
0.18
$
0.18
$
0.60
$
0.46
BANKWELL FINANCIAL GROUP, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (unaudited)
For the Quarter Ended
For the Nine Months
September 30,
2022
June 30, 2022
March 31, 2022
December 31,
2021
September 30,
2021
September 30,
2022
September 30,
2021
Performance ratios:
Return on average assets
1.47
%
1.96
%
1.35
%
1.32
%
1.22
%
1.59
%
1.12
%
Return on average shareholders' equity
15.73
%
22.09
%
16.05
%
15.44
%
14.09
%
17.94
%
13.29
%
Return on average tangible common
equity
15.91
%
22.36
%
16.25
%
15.65
%
14.29
%
18.16
%
13.48
%
Net interest margin
4.12
%
4.01
%
3.30
%
3.43
%
3.39
%
3.81
%
3.08
%
Efficiency ratio(1)
44.1
%
43.8
%
48.5
%
48.8
%
54.1
%
45.3
%
55.8
%
Net loan charge-offs as a % of average
loans
—
%
—
%
—
%
—
%
—
%
—
%
0.24
%
Dividend payout ratio(2)
16.95
%
12.90
%
19.23
%
18.18
%
20.69
%
16.00
%
19.41
%
(1) 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.
(2) The dividend payout ratio is calculated by dividing
dividends per share by earnings per share.
As of
September 30,
2022
June 30, 2022
March 31, 2022
December 31,
2021
September 30,
2021
Capital ratios:
Total Common Equity Tier 1 Capital to
Risk-Weighted Assets(1)
11.42
%
11.10
%
11.20
%
11.18
%
10.59
%
Total Capital to Risk-Weighted
Assets(1)
12.16
%
11.80
%
12.00
%
12.00
%
11.44
%
Tier I Capital to Risk-Weighted
Assets(1)
11.42
%
11.10
%
11.20
%
11.18
%
10.59
%
Tier I Capital to Average Assets(1)
11.31
%
10.15
%
9.80
%
9.94
%
9.61
%
Tangible common equity to tangible
assets
8.41
%
9.16
%
8.32
%
8.13
%
8.70
%
Fully diluted tangible book value per
common share
$
29.68
$
28.75
$
26.75
$
25.55
$
24.68
(1) Represents Bank ratios. Current period capital ratios are
preliminary subject to finalization of the FDIC Call Report.
BANKWELL FINANCIAL GROUP, INC.
ASSET QUALITY (unaudited) (Dollars in thousands)
For the Quarter Ended
September 30,
2022
June 30, 2022
March 31, 2022
December 31,
2021
September 30,
2021
Allowance for loan losses:
Balance at beginning of period
$
15,773
$
17,141
$
16,902
$
16,803
$
16,672
Charge-offs:
Commercial business
—
—
—
(26
)
—
Consumer
(8
)
—
(4
)
(5
)
(15
)
Total charge-offs
(8
)
—
(4
)
(31
)
(15
)
Recoveries:
Commercial real estate
—
77
—
—
—
Commercial business
21
—
13
2
11
Consumer
—
—
1
3
1
Total recoveries
21
77
14
5
12
Net loan recoveries (charge-offs)
13
77
10
(26
)
(3
)
Provision (Credit) for loan losses
2,381
(1,445
)
229
125
134
Balance at end of period
$
18,167
$
15,773
$
17,141
$
16,902
$
16,803
As of
September 30,
2022
June 30, 2022
March 31, 2022
December 31,
2021
September 30,
2021
Asset quality:
Nonaccrual loans
Residential real estate
$
2,137
$
2,161
$
2,181
$
2,380
$
1,849
Commercial real estate
2,894
2,955
3,365
3,482
16,314
Commercial business
2,380
787
817
1,728
1,754
Construction
9,382
9,382
9,382
8,997
8,997
Total nonaccrual loans
16,793
15,285
15,745
16,587
28,914
Other real estate owned
—
—
—
—
—
Total nonperforming assets
$
16,793
$
15,285
$
15,745
$
16,587
$
28,914
Nonperforming loans as a % of total
loans
0.73
%
0.74
%
0.79
%
0.88
%
1.58
%
Nonperforming assets as a % of total
assets
0.62
%
0.63
%
0.63
%
0.68
%
1.30
%
Allowance for loan losses as a % of total
loans
0.79
%
0.77
%
0.86
%
0.89
%
0.92
%
Allowance for loan losses as a % of
nonperforming loans
108.18
%
103.19
%
108.87
%
101.90
%
58.11
%
Total past due loans to total loans
0.78
%
1.40
%
0.85
%
1.72
%
1.69
%
Total nonaccrual loans increased $0.2 million to $16.8 million
as of September 30, 2022 when compared to December 31, 2021.
Nonperforming assets as a percentage of total assets decreased to
0.62% at September 30, 2022, down from 0.68% at December 31, 2021.
The allowance for loan losses at September 30, 2022 was $18.2
million, representing 0.79% of total loans.
Past due loans decreased to $17.8 million, or 0.78% of total
loans, as of September 30, 2022, compared to $32.6 million, or
1.72% of total loans, as of December 31, 2021.
BANKWELL FINANCIAL GROUP, INC.
LOAN & DEPOSIT PORTFOLIO (unaudited) (Dollars in
thousands)
Period End Loan Composition
September 30,
2022
June 30, 2022
December 31,
2021
Current QTD %
Change
YTD % Change
Residential Real Estate
$
61,664
$
64,253
$
79,987
(4.0
) %
(22.9
) %
Commercial Real Estate(1)
1,647,928
1,499,364
1,356,709
9.9
21.5
Construction
117,355
111,422
98,341
5.3
19.3
Total Real Estate Loans
1,826,947
1,675,039
1,535,037
9.1
19.0
Commercial Business
443,288
372,361
350,975
19.0
26.3
Consumer
16,558
9,196
8,869
80.1
86.7
Total Loans
$
2,286,793
$
2,056,596
$
1,894,881
11.2
%
20.7
%
(1) Includes owner occupied commercial
real estate.
Gross loans totaled $2.3 billion at September 30, 2022, an
increase of $391.9 million compared to December 31, 2021.
Period End Deposit Composition
September 30,
2022
June 30, 2022
December 31,
2021
Current QTD %
Change
YTD % Change
Noninterest bearing demand
$
380,365
$
372,584
$
398,956
2.1
%
(4.7
) %
NOW
115,200
155,026
119,479
(25.7
)
(3.6
)
Money Market
836,564
833,730
954,674
0.3
(12.4
)
Savings
183,576
196,075
193,631
(6.4
)
(5.2
)
Time
770,997
476,110
457,258
61.9
68.6
Total Deposits
$
2,286,702
$
2,033,525
$
2,123,998
12.5
%
7.7
%
Total deposits were $2.3 billion at September 30, 2022, compared
to $2.1 billion at December 31, 2021, an increase of $162.7
million, or 7.7%. The increase in deposits is primarily a result of
an increase in brokered time deposits to fund the significant loan
growth during the third quarter of 2022, increasing $338.1 million
compared to December 31, 2021.
BANKWELL FINANCIAL GROUP, INC.
NONINTEREST INCOME (unaudited) (Dollars in
thousands)
For the Quarter Ended
Noninterest income
September 30,
2022
June 30, 2022
September 30,
2021
Sep 22 vs. June 22 %
Change
Sep 22 vs. Sep 21 %
Change
Bank owned life insurance
$
271
$
265
$
271
2.3
%
—
%
Service charges and fees
240
249
199
(3.6
)
20.6
(Losses) gains and fees from sales of
loans
(15
)
608
924
(102.5
)
(101.6
)
Other
(94
)
30
43
(413.3
)
(318.6
)
Total noninterest income
$
402
$
1,152
$
1,437
(65.1
) %
(72.0
) %
For the Nine Months
Ended
Noninterest income
September 30, 2022
September 30, 2021
% Change
Gains and fees from sales of loans
$
1,224
$
2,251
(45.6
) %
Bank owned life insurance
796
753
5.7
Service charges and fees
729
615
18.5
Other
(237
)
1,213
(119.5
)
Total noninterest income
$
2,512
$
4,832
(48.0
) %
Noninterest income decreased by $1.0 million to $0.4 million for
the quarter ended September 30, 2022 compared to the quarter ended
September 30, 2021. Noninterest income decreased by $2.3 million to
$2.5 million for the nine months ended September 30, 2022 compared
to the nine months ended September 30, 2021.
The decrease in noninterest income was driven by a reduction in
loan sales for the quarter and nine months ended September 30, 2022
when compared to the same periods in 2021. Loan sales decreased
$0.9 million and $1.0 million for the quarter and nine months ended
September 30, 2022, respectively. In addition, noninterest income
declined due to the absence of rental income recognized during the
quarter and nine months ended September 30, 2021, as a result of
the disposition of the Company's former headquarters building.
Noninterest income also declined for the nine months ended
September 30, 2022 due to a one-time federal payroll tax credit for
COVID-19 of $0.9 million recognized in the quarter ended March 31,
2021.
BANKWELL FINANCIAL GROUP, INC.
NONINTEREST EXPENSE (unaudited) (Dollars in
thousands)
For the Quarter Ended
Noninterest expense
September 30,
2022
June 30, 2022
September 30,
2021
Sep 22 vs. June 22 %
Change
Sep 22 vs. Sep 21 %
Change
Salaries and employee benefits
$
5,876
$
5,433
$
4,782
8.2
%
22.9
%
Occupancy and equipment
2,035
2,193
2,615
(7.2
)
(22.2
)
Professional services
994
1,000
498
(0.6
)
99.6
Data processing
626
689
632
(9.1
)
(0.9
)
Director fees
325
339
324
(4.1
)
0.3
FDIC insurance
255
262
298
(2.7
)
(14.4
)
Marketing
102
107
186
(4.7
)
(45.2
)
Other
818
913
1,035
(10.4
)
(21.0
)
Total noninterest expense
$
11,031
$
10,936
$
10,370
0.9
%
6.4
%
For the Nine Months
Ended
Noninterest expense
September 30, 2022
September 30, 2021
% Change
Salaries and employee benefits
$
16,249
$
13,511
20.3
%
Occupancy and equipment
6,378
8,271
(22.9
)
Professional services
2,975
1,632
82.3
Data processing
1,969
1,977
(0.4
)
Director fees
1,016
968
5.0
FDIC insurance
740
1,001
(26.1
)
Marketing
254
317
(19.9
)
Other
2,311
2,383
(3.0
)
Total noninterest expense
$
31,892
$
30,060
6.1
%
Noninterest expense increased by $0.7 million to $11.0 million
for the quarter ended September 30, 2022 compared to the quarter
ended September 30, 2021. Noninterest expense increased by $1.8
million to $31.9 million for the nine months ended September 30,
2022 compared to the nine months ended September 30, 2021. The
increase in noninterest expense was primarily driven by an increase
in salaries and employee benefits expense and professional services
expense, partially offset by a decrease in occupancy and equipment
expense.
Salaries and employee benefits expense totaled $5.9 million for
the quarter ended September 30, 2022, an increase of $1.1 million
when compared to the same period in 2021. Salaries and employee
benefits expense totaled $16.2 million for the nine months ended
September 30, 2022, an increase of $2.7 million when compared to
the same period in 2021. The increase in salaries and employee
benefits expense was driven by an increase in full time equivalent
employees, as well as an increase in variable compensation as a
result of the Bank's overall growth and improved performance. Full
time equivalent employees totaled 140 at September 30, 2022
compared to 134 for the same period in 2021. Average full time
equivalent employees totaled 131 for the nine months ended
September 30, 2022 compared to 127 for the same period in 2021. The
increase in salaries and employee benefits expense was partially
offset by higher loan originations, which enabled the bank to defer
a greater amount of expenses.
Professional services expense totaled $1.0 million for the
quarter ended September 30, 2022, an increase of $0.5 million when
compared to the same period in 2021. Professional services expense
totaled $3.0 million for the nine months ended September 30, 2022,
an increase of $1.3 million when compared to the same period in
2021. The increase in professional services expense was primarily
driven by consulting fees associated with various projects,
including our core system conversion.
Occupancy and equipment expense totaled $2.0 million for the
quarter ended September 30, 2022, a decrease of $0.6 million when
compared to the same period in 2021. Occupancy and equipment
expense totaled $6.4 million for the nine months ended September
30, 2022, a decrease of $1.9 million when compared to the same
period in 2021. The decrease in occupancy and equipment expense was
primarily driven by the curtailment of additional cleaning costs
associated with precautions taken to prevent the spread of COVID-19
during the nine months ended September 30, 2021. In addition, the
decrease in occupancy and equipment expense was impacted by a
reduction in lease expense as a result of the branch closure in New
Canaan, which occurred during the third quarter of 2021.
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
September 30,
2022
June 30, 2022
March 31, 2022
December 31,
2021
September 30,
2021
Total Equity
$
231,500
$
225,467
$
210,220
$
201,987
$
196,177
Less:
Goodwill
2,589
2,589
2,589
2,589
2,589
Other intangibles
—
—
—
—
58
Tangible Common Equity
$
228,911
$
222,878
$
207,631
$
199,398
$
193,530
Total Assets
$
2,722,995
$
2,435,552
$
2,496,877
$
2,456,264
$
2,226,688
Less:
Goodwill
2,589
2,589
2,589
2,589
2,589
Other intangibles
—
—
—
—
58
Tangible Assets
$
2,720,406
$
2,432,963
$
2,494,288
$
2,453,675
$
2,224,041
Tangible Common Equity to Tangible
Assets
8.41
%
9.16
%
8.32
%
8.13
%
8.70
%
As of
Computation of Fully Diluted Tangible
Book Value per Common Share
September 30,
2022
June 30, 2022
March 31, 2022
December 31,
2021
September 30,
2021
Total shareholders' equity
$
231,500
$
225,467
$
210,220
$
201,987
$
196,177
Less:
Preferred stock
—
—
—
—
—
Common shareholders' equity
$
231,500
$
225,467
$
210,220
$
201,987
$
196,177
Less:
Goodwill
2,589
2,589
2,589
2,589
2,589
Other intangibles
—
—
—
—
48
Tangible common shareholders'
equity
$
228,911
$
222,878
$
207,631
$
199,398
$
193,540
Common shares issued and outstanding
7,711,843
7,752,389
7,761,338
7,803,166
7,842,824
Fully Diluted Tangible Book Value per
Common Share
$
29.68
$
28.75
$
26.75
$
25.55
$
24.68
BANKWELL FINANCIAL GROUP, INC.
RECONCILIATION OF GAAP TO NON-GAAP MEASURES (unaudited) -
Continued (Dollars in thousands)
For the Quarter Ended
For the Nine Months
Ended
Computation of Efficiency Ratio
September 30,
2022
June 30, 2022
March 31, 2022
December 31,
2021
September 30,
2021
September 30,
2022
September 30,
2021
Noninterest expense
$
11,031
$
10,936
$
9,925
$
9,679
$
10,370
$
31,892
$
30,060
Less:
Amortization of intangible assets
—
—
—
48
9
—
28
Other real estate owned expenses
—
—
—
—
—
—
—
Adjusted noninterest expense
$
11,031
$
10,936
$
9,925
$
9,631
$
10,361
$
31,892
$
30,032
Net interest income
$
24,601
$
23,823
$
19,510
$
18,928
$
17,724
$
67,934
$
48,958
Noninterest income
402
1,152
958
825
1,437
2,512
4,832
Less:
Net gain on sale of available for sale
securities
—
—
—
—
—
—
—
Gain on sale of other real estate owned,
net
—
—
—
—
—
—
—
Operating revenue
$
25,003
$
24,975
$
20,468
$
19,753
$
19,161
$
70,446
$
53,790
Efficiency ratio
44.1
%
43.8
%
48.5
%
48.8
%
54.1
%
45.3
%
55.8
%
For the Quarter Ended
For the Nine Months
Ended
Computation of Return on Average
Tangible Common Equity
September 30,
2022
June 30, 2022
March 31, 2022
December 31,
2021
September 30,
2021
September 30,
2022
September 30,
2021
Net Income Attributable to Common
Shareholders
$
9,174
$
12,022
$
8,212
$
7,814
$
6,855
$
29,408
$
18,772
Total average shareholders' equity
$
231,378
$
218,250
$
207,541
$
200,752
$
192,993
$
219,138
$
188,794
Less:
Average Goodwill
2,589
2,589
2,589
2,589
2,589
2,589
2,589
Average Other intangibles
—
—
—
45
54
—
64
Average tangible common equity
$
228,789
$
215,661
$
204,952
$
198,118
$
190,350
$
216,549
$
186,141
Annualized Return on Average Tangible
Common Equity
15.91
%
22.36
%
16.25
%
15.65
%
14.29
%
18.16
%
13.48
%
BANKWELL FINANCIAL GROUP, INC.
NET INTEREST MARGIN ANALYSIS ON A FULLY TAX EQUIVALENT BASIS -
QTD (unaudited) (Dollars in thousands)
For the Quarter Ended
September 30, 2022
September 30, 2021
Average Balance
Interest
Yield/ Rate (4)
Average Balance
Interest
Yield/ Rate (4)
Assets:
Cash and Fed funds sold
$
130,440
$
747
2.27
%
$
209,500
$
88
0.17
%
Securities(1)
120,092
829
2.76
105,030
766
2.92
Loans:
Commercial real estate
1,512,381
18,830
4.87
1,270,375
14,345
4.42
Residential real estate
62,915
586
3.72
95,100
809
3.40
Construction
116,256
1,512
5.09
88,728
845
3.73
Commercial business
431,917
7,058
6.39
314,484
3,707
4.61
Consumer
12,145
142
4.65
8,870
89
3.99
Total loans
2,135,614
28,128
5.15
1,777,557
19,795
4.36
Federal Home Loan Bank stock
5,021
31
2.51
3,133
16
2.04
Total earning assets
2,391,167
$
29,735
4.87
%
2,095,220
$
20,665
3.86
%
Other assets
89,173
131,670
Total assets
$
2,480,340
$
2,226,890
Liabilities and shareholders' equity:
Interest bearing liabilities:
NOW
$
119,593
$
52
0.17
%
$
111,813
$
51
0.18
%
Money market
828,541
2,346
1.12
824,203
1,053
0.51
Savings
189,279
474
0.99
182,848
96
0.21
Time
557,243
1,220
0.87
448,218
1,187
1.05
Total interest bearing deposits
1,694,656
4,092
0.96
1,567,082
2,387
0.60
Borrowed Money
135,221
993
2.87
72,960
503
2.70
Total interest bearing liabilities
1,829,877
$
5,085
1.10
%
1,640,042
$
2,890
0.70
%
Noninterest bearing deposits
383,048
341,303
Other liabilities
36,037
52,552
Total liabilities
2,248,962
2,033,897
Shareholders' equity
231,378
192,993
Total liabilities and shareholders'
equity
$
2,480,340
$
2,226,890
Net interest income(2)
$
24,650
$
17,775
Interest rate spread
3.77
%
3.16
%
Net interest margin(3)
4.12
%
3.39
%
(1) Average balances and yields for securities are based on
amortized cost. (2) The adjustment for securities and loans taxable
equivalency amounted to $49 thousand and $51 thousand for the
quarters ended September 30, 2022 and 2021, respectively. (3)
Annualized net interest income as a percentage of earning assets.
(4) 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 Nine Months
Ended
September 30, 2022
September 30, 2021
Average Balance
Interest
Yield/ Rate (4)
Average Balance
Interest
Yield/ Rate (4)
Assets:
Cash and Fed funds sold
$
240,252
$
1,350
0.75
%
$
315,102
$
286
0.12
%
Securities(1)
117,008
2,392
2.73
103,192
2,315
2.99
Loans:
Commercial real estate
1,433,642
51,104
4.70
1,188,049
40,802
4.53
Residential real estate
67,705
1,810
3.56
104,320
2,669
3.41
Construction
108,249
4,482
5.46
97,828
2,769
3.73
Commercial business
402,876
17,011
5.57
302,019
10,495
4.58
Consumer
7,844
290
4.94
7,601
226
3.97
Total loans
2,020,316
74,697
4.88
1,699,817
56,961
4.42
Federal Home Loan Bank stock
3,715
61
2.19
4,608
72
2.09
Total earning assets
2,381,291
$
78,500
4.35
%
2,122,719
$
59,634
3.70
%
Other assets
89,747
119,098
Total assets
$
2,471,038
$
2,241,817
Liabilities and shareholders' equity:
Interest bearing liabilities:
NOW
$
122,792
$
158
0.17
%
$
110,637
$
148
0.18
%
Money market
909,106
4,672
0.69
781,178
2,944
0.50
Savings
194,013
678
0.47
170,749
313
0.24
Time
487,792
2,773
0.76
532,278
4,840
1.22
Total interest bearing deposits
1,713,703
8,281
0.65
1,594,842
8,245
0.69
Borrowed Money
101,685
2,137
2.77
108,737
2,280
2.77
Total interest bearing liabilities
1,815,388
$
10,418
0.77
%
1,703,579
$
10,525
0.83
%
Noninterest bearing deposits
398,728
303,421
Other liabilities
37,784
46,023
Total liabilities
2,251,900
2,053,023
Shareholders' equity
219,138
188,794
Total liabilities and shareholders'
equity
$
2,471,038
$
2,241,817
Net interest income(2)
$
68,082
$
49,109
Interest rate spread
3.58
%
2.87
%
Net interest margin(3)
3.81
%
3.08
%
(1) Average balances and yields for securities are based on
amortized cost. (2) The adjustment for securities and loans taxable
equivalency amounted to $148 thousand and $151 thousand for the
nine months ended September 30, 2022 and 2021, respectively. (3)
Annualized net interest income as a percentage of earning assets.
(4) 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/20221026005991/en/
Christopher R. Gruseke, President and Chief Executive Officer or
Penko Ivanov, Executive Vice President and Chief Financial Officer
Bankwell Financial Group (203) 652-0166
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