0001505732FALSE00015057322024-07-242024-07-24
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): July 24, 2024
Bankwell Financial Group, Inc.
(Exact name of registrant as specified in its charter)
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| Connecticut | 001-36448 | 20-8251355 |
| (State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification No.) |
258 Elm Street
New Canaan, Connecticut 06840
(203) 652-0166
(Address of Principal Executive Officers and Telephone Number)
N/A
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
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| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
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| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
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| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
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Title of Each Class
| Trading Symbol(s)
| Name of Each Exchange on Which
Registered
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Common Stock, no par value per share
| BWFG
| NASDAQ Global Market
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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR 230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR 240.12b-2).
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| Emerging growth company | ☐
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| If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. | ☐
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| Item 2.02 | Results of Operations and Financial Condition |
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| | On July 24, 2024, Bankwell Financial Group, Inc., the holding company for Bankwell Bank, issued a press release describing its results of operations for the period ended June 30, 2024. A copy of the press release is included as Exhibit 99.1 to this current report on Form 8-K and is incorporated herein by reference.
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| The information furnished under this Item 2.02, including Exhibit 99.1, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or subject to the liabilities of that section. The information shall not be deemed incorporated by reference into any other filing with the Securities and Exchange Commission made by the Company, regardless of any general incorporation language in such filing.
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| Item 7.01 | Regulation FD Disclosure |
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| | On July 24, 2024, Bankwell Financial Group, Inc., the holding company for Bankwell Bank, issued slide presentation material, which includes among other things, a review of financial results and trends through the period ended June 30, 2024. A copy of the material will also be available on the Company’s website, http://investor.mybankwell.com/CorporateProfile. A copy of the Presentation Material is included as Exhibit 99.2 to this current report on Form 8-K and is incorporated herein by reference. |
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| The information furnished under this Item 7.01, including Exhibit 99.2, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or subject to the liabilities of that section. The information shall not be deemed incorporated by reference into any other filing with the Securities and Exchange Commission made by the Company, regardless of any general incorporation language in such filing.
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| Item 8.01 | Other Events |
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| | On July 24, 2024, Bankwell Financial Group, Inc., parent company of Bankwell Bank, announced its Board of Directors has voted to pay a quarterly dividend in the amount of $0.20 per share on August 23, 2024 to all shareholders of record as of August 12, 2024. |
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| Item 9.01 | Financial Statements and Exhibits |
| (a) | Not applicable. |
| (b) | Not applicable. |
| (c) | Not applicable. |
| (d) | Exhibits. |
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| Exhibit Number | Description |
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| 99.1 | |
| 99.2 | |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
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| SIGNATURES |
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| Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. |
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| | BANKWELL FINANCIAL GROUP, INC. |
| | Registrant |
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July 24, 2024 | By: /s/ Courtney E. Sacchetti |
| | Courtney E. Sacchetti |
| | Executive Vice President |
| | and Chief Financial Officer |
BANKWELL FINANCIAL GROUP REPORTS OPERATING RESULTS FOR THE SECOND QUARTER AND DECLARES THIRD QUARTER DIVIDEND
New Canaan, CT – July 24, 2024 – Bankwell Financial Group, Inc. (NASDAQ: BWFG) reported GAAP net income of $1.1 million, or $0.14 per share for the second quarter of 2024, versus $8.0 million, or $1.02 per share, for the same period in 2023. Pre-tax, pre-provision net revenue ("PPNR") was $9.7 million, or $1.25 per share, for the second quarter of 2024, versus $12.8 million, or $1.68 per share for the same period in 2023.
The Company's Board of Directors declared a $0.20 per share cash dividend, payable August 23, 2024 to shareholders of record on August 12, 2024.
We recommend reading this earnings release in conjunction with the Second Quarter 2024 Investor Presentation, located at http://investor.mybankwell.com/Presentations and included as an exhibit to our July 24, 2024 Current Report on Form 8-K.
Notes Bankwell Financial Group President and CEO, Christopher R. Gruseke:
"The Company’s core profitability has begun to expand; PPNR Return on Average Assets grew to 1.22% for the quarter, while the Net interest margin (“NIM”) has expanded to 2.75%. We continue to achieve peer-leading operational efficiency with a Noninterest Expense to Average Assets ratio of 1.55% for the quarter. Going forward, the Company’s liability sensitive balance sheet is well positioned for any potential Federal Reserve rate cuts.
Earnings per share for the second quarter were reduced by approximately $0.66 due to a specific reserve taken on a non-real estate related commercial credit. The Company announced this addition to its Allowance for Credit Losses in its 8-K filed on July 2, 2024. Notwithstanding this idiosyncratic credit event, other areas of the loan portfolio have experienced improving credit trends. A significant portion of criticized and classified loans have demonstrated improved operating results and may be subject to future credit upgrades if these trends continue. Additional details regarding the specific reserve as well as other credit metrics can be found in the accompanying Investor Presentation.
We are also pleased to announce that the Company will host its first earnings call after third quarter financial results are released in October 2024. The date and time of that call will be announced in the coming weeks."
Second Quarter 2024 Highlights:
•PPNR was $9.7 million and PPNR return on average assets was 1.22% for the quarter ended June 30, 2024.
•Net income of $1.1 million for the quarter reflects the impact of an $8.2 million provision for credit losses.
◦$6.6 million of the provision for credit losses is related to a specific reserve taken against an $8.7 million commercial business credit1.
•The net interest margin was 2.75% and 2.73% for the quarter and six months ended June 30, 2024, respectively.
•Noninterest expense to average assets was 1.55% and 1.60% for the quarter and six months ended June 30, 2024, respectively.
•Total gross loans were $2.7 billion, decreasing $61.4 million, or 2.3%, compared to December 31, 2023.
•Average yield on total loans was 6.37% for the six months ended June 30, 2024.
•Deposits were $2.7 billion, decreasing $74.4 million, or 2.7%, compared to December 31, 2023.
•Brokered deposits decreased $144.2 million compared to December 31, 2023.
•FDIC-insured deposits totaled $1.9 billion and represent 72.9% of total deposits as of June 30, 2024.
•Return on average assets was 0.14% and 0.31% for the quarter and six months ended June 30, 2024, respectively.
•Return on average tangible common equity was 1.67% and 3.65% for the quarter and six months ended June 30, 2024, respectively.
•Investment securities totaled $138.0 million and represent 4.4% of total assets.
•The Company repurchased 40,140 shares and 76,320 at the weighted average prices of $24.55 and $24.94 per share for the quarter and six months ended June 30, 2024, respectively.
1 - 8-K was filed on July 2, 2024.
Earnings and Performance
Revenues (net interest income plus noninterest income) for the quarter ended June 30, 2024 were $21.9 million, versus $25.4 million for the quarter ended June 30, 2023. Revenues for the six months ended June 30, 2024 were $44.0 million, versus $52.5 million for the six months ended June 30, 2023. The decrease in revenues for the quarter and six months ended June 30, 2024 was attributable to an increase in interest expense on deposits and lower gains from loan sales partially offset by an increase in interest and fees on loans, given higher loan yields2 and prepayment fees.
Net income for the quarter ended June 30, 2024 was $1.1 million, versus $8.0 million for the quarter ended June 30, 2023. Net income for the six months ended June 30, 2024 was $4.9 million, versus $18.4 million for the six months ended June 30, 2023. The decrease in net income for the quarter and six months ended 2024 was primarily due to the aforementioned decrease in revenues and an increase in provision for credit losses.
Basic and diluted earnings per share were $0.14 and $0.14, respectively, for the quarter ended June 30, 2024 compared to basic and diluted earnings per share of $1.02 and $1.02, respectively, for the quarter ended June 30, 2023. Basic and diluted earnings per share were $0.62 and $0.62, respectively, for the six months ended June 30, 2024 compared to basic and diluted earnings per share of $2.36 and $2.34, respectively, for the six months ended June 30, 2023.
The net interest margin (fully taxable equivalent basis) for the quarters ended June 30, 2024 and June 30, 2023 was 2.75% and 3.07%, respectively. The net interest margin (fully taxable equivalent basis) for the six months ended June 30, 2024 and June 30, 2023 was 2.73% and 3.15%, respectively. The decrease in the net interest margin was due to an increase in funding costs partially offset by an increase in interest income on earning assets.
2 - The increase in overall loan yields was 28 bps and 38 bps for the quarter and six months ended June 30, 2024, respectively.
Allowance for Credit Losses - Loans ("ACL-Loans")
The ACL-Loans was $36.1 million as of June 30, 2024 compared to $27.9 million as of December 31, 2023. The ACL-Loans as a percentage of total loans was 1.36% as of June 30, 2024 compared to 1.03% as of December 31, 2023. Provision for credit losses was $8.2 million for the quarter ended June 30, 2024. The increase in the provision for credit losses for the quarter was primarily due to an additional $7.4 million for two loans. Of the $7.4 million, $6.6 million is related to a specific reserve taken against an $8.7 million commercial business credit. The credit had been previously reported as a non-performing loan as of the fourth quarter of 2023 and had previously carried a $0.4 million specific reserve. The Company's estimated remaining exposure for the commercial business credit is $1.7 million. The additional $0.8 million specific reserve was related to a construction loan.
Financial Condition
Assets totaled $3.1 billion at June 30, 2024, a decrease of $73.8 million, or 2.3% compared to December 31, 2023. Gross loans totaled $2.7 billion at June 30, 2024, a decrease of $61.4 million, or 2.3% compared to December 31, 2023. Deposits totaled $2.7 billion at June 30, 2024, a decrease of $74.4 million, or 2.7% compared to December 31, 2023.
Capital
Shareholders’ equity totaled $267.0 million as of June 30, 2024, an increase of $1.2 million compared to December 31, 2023, primarily a result of net income of $4.9 million for the six months ended June 30, 2024. The increase was partially offset by dividends paid of $3.2 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 Courtney E. Sacchetti, 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 increased competitive pressures, changes in the interest rate environment, general economic conditions or conditions within the banking industry or securities markets, 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 assets, tangible common equity to tangible assets, tangible common shareholders' equity, fully diluted tangible book value per common share, adjusted noninterest expense, operating revenue, efficiency ratio, average tangible common equity, annualized return on average tangible common equity, return on average assets, return on average shareholders' equity, pre-tax, pre-provision net revenue, pre-tax, pre-provision net revenue on average assets, and the dividend payout ratio 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)
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| | | | | June 30,
2024 | | March 31,
2024 | | December 31,
2023 | | June 30,
2023 |
| ASSETS | | | | | | | | | | | |
| Cash and due from banks | | | | | $ | 234,277 | | | $ | 245,043 | | | $ | 267,521 | | | $ | 207,345 | |
| Federal funds sold | | | | | 17,103 | | | 2,584 | | | 1,636 | | | 54,706 | |
| Cash and cash equivalents | | | | | 251,380 | | | 247,627 | | | 269,157 | | | 262,051 | |
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| Investment securities | | | | | | | | | | | |
| Marketable equity securities, at fair value | | | | | 2,079 | | | 2,069 | | | 2,070 | | | 2,017 | |
| Available for sale investment securities, at fair value | | | | | 107,635 | | | 108,417 | | | 109,736 | | | 99,938 | |
| Held to maturity investment securities, at amortized cost | | | | | 28,286 | | | 15,739 | | | 15,817 | | | 15,884 | |
| Total investment securities | | | | | 138,000 | | | 126,225 | | | 127,623 | | | 117,839 | |
Loans receivable (net of ACL-Loans of $36,083, $27,991, $27,946, and $30,694 at June 30, 2024, March 31, 2024, December 31, 2023, and June 30, 2023, respectively) | | | | | 2,616,691 | | | 2,646,686 | | | 2,685,301 | | | 2,736,607 | |
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| Accrued interest receivable | | | | | 14,675 | | | 15,104 | | | 14,863 | | | 14,208 | |
| Federal Home Loan Bank stock, at cost | | | | | 5,655 | | | 5,655 | | | 5,696 | | | 5,696 | |
| Premises and equipment, net | | | | | 25,599 | | | 26,161 | | | 27,018 | | | 27,658 | |
| Bank-owned life insurance | | | | | 52,097 | | | 51,764 | | | 51,435 | | | 50,816 | |
| Goodwill | | | | | 2,589 | | | 2,589 | | | 2,589 | | | 2,589 | |
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| Deferred income taxes, net | | | | | 11,345 | | | 9,137 | | | 9,383 | | | 10,014 | |
| Other assets | | | | | 23,623 | | | 24,326 | | | 22,417 | | | 25,229 | |
| Total assets | | | | | $ | 3,141,654 | | | $ | 3,155,274 | | | $ | 3,215,482 | | | $ | 3,252,707 | |
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| LIABILITIES AND SHAREHOLDERS’ EQUITY | | | | | | | | | | | |
| Liabilities | | | | | | | | | | | |
| Deposits | | | | | | | | | | | |
| Noninterest bearing deposits | | | | | $ | 328,475 | | | $ | 376,248 | | | $ | 346,172 | | | $ | 367,635 | |
| Interest bearing deposits | | | | | 2,333,900 | | | 2,297,274 | | | 2,390,585 | | | 2,421,228 | |
| Total deposits | | | | | 2,662,375 | | | 2,673,522 | | | 2,736,757 | | | 2,788,863 | |
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| Advances from the Federal Home Loan Bank | | | | | 90,000 | | | 90,000 | | | 90,000 | | | 90,000 | |
| Subordinated debentures | | | | | 69,328 | | | 69,266 | | | 69,205 | | | 69,082 | |
| Accrued expenses and other liabilities | | | | | 52,975 | | | 54,454 | | | 53,768 | | | 55,949 | |
| Total liabilities | | | | | 2,874,678 | | | 2,887,242 | | | 2,949,730 | | | 3,003,894 | |
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| Shareholders’ equity | | | | | | | | | | | |
| Common stock, no par value | | | | | 118,037 | | | 118,401 | | | 118,247 | | | 116,541 | |
| Retained earnings | | | | | 150,895 | | | 151,350 | | | 149,169 | | | 133,988 | |
| Accumulated other comprehensive (loss) | | | | | (1,956) | | | (1,719) | | | (1,664) | | | (1,716) | |
| Total shareholders’ equity | | | | | 266,976 | | | 268,032 | | | 265,752 | | | 248,813 | |
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| Total liabilities and shareholders’ equity | | | | | $ | 3,141,654 | | | $ | 3,155,274 | | | $ | 3,215,482 | | | $ | 3,252,707 | |
BANKWELL FINANCIAL GROUP, INC.
CONSOLIDATED STATEMENTS OF INCOME (unaudited)
(Dollars in thousands, except share data)
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| | | | | For the Quarter Ended | For the Six Months Ended |
| | | | | June 30,
2024 | | March 31,
2024 | | December 31,
2023 | | June 30,
2023 | | June 30,
2024 | | June 30,
2023 |
| Interest and dividend income | | | | | | | | | | | | | | | |
| Interest and fees on loans | | | | | $ | 43,060 | | | $ | 43,325 | | | $ | 44,122 | | | $ | 42,482 | | | $ | 86,385 | | | $ | 82,205 | |
| Interest and dividends on securities | | | | | 1,190 | | | 1,130 | | | 1,108 | | | 1,002 | | | 2,320 | | | 2,002 | |
| Interest on cash and cash equivalents | | | | | 3,429 | | | 3,826 | | | 4,164 | | | 3,022 | | | 7,255 | | | 6,590 | |
| Total interest and dividend income | | | | | 47,679 | | | 48,281 | | | 49,394 | | | 46,506 | | | 95,960 | | | 90,797 | |
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| Interest expense | | | | | | | | | | | | | | | |
| Interest expense on deposits | | | | | 24,677 | | | 25,362 | | | 25,307 | | | 20,777 | | | 50,039 | | | 37,810 | |
| Interest expense on borrowings | | | | | 1,783 | | | 1,772 | | | 1,842 | | | 1,738 | | | 3,555 | | | 3,455 | |
| Total interest expense | | | | | 26,460 | | | 27,134 | | | 27,149 | | | 22,515 | | | 53,594 | | | 41,265 | |
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| Net interest income | | | | | 21,219 | | | 21,147 | | | 22,245 | | | 23,991 | | | 42,366 | | | 49,532 | |
| Provision (credit) for credit losses | | | | | 8,183 | | | 3,683 | | | (960) | | | 2,579 | | | 11,866 | | | 3,405 | |
| Net interest income after provision for credit losses | | | | | 13,036 | | | 17,464 | | | 23,205 | | | 21,412 | | | 30,500 | | | 46,127 | |
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| Noninterest income | | | | | | | | | | | | | | | |
| Bank owned life insurance | | | | | 333 | | | 329 | | | 316 | | | 292 | | | 662 | | | 573 | |
| Service charges and fees | | | | | 495 | | | 304 | | | 688 | | | 361 | | | 799 | | | 647 | |
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| Gains and fees from sales of loans | | | | | 45 | | | 321 | | | 79 | | | 725 | | | 366 | | | 1,656 | |
| Other | | | | | (190) | | | (39) | | | 46 | | | 23 | | | (229) | | | 51 | |
| Total noninterest income | | | | | 683 | | | 915 | | | 1,129 | | | 1,401 | | | 1,598 | | | 2,927 | |
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| Noninterest expense | | | | | | | | | | | | | | | |
| Salaries and employee benefits | | | | | 6,176 | | | 6,291 | | | 6,088 | | | 6,390 | | | 12,467 | | | 12,471 | |
| Occupancy and equipment | | | | | 2,238 | | | 2,322 | | | 2,231 | | | 2,204 | | | 4,561 | | | 4,288 | |
| Professional services | | | | | 989 | | | 1,065 | | | 1,033 | | | 692 | | | 2,054 | | | 2,014 | |
| Data processing | | | | | 755 | | | 740 | | | 747 | | | 729 | | | 1,495 | | | 1,400 | |
| Director fees | | | | | 306 | | | 900 | | | 605 | | | 453 | | | 1,206 | | | 845 | |
| FDIC insurance | | | | | 705 | | | 930 | | | 1,026 | | | 1,050 | | | 1,635 | | | 2,112 | |
| Marketing | | | | | 90 | | | 114 | | | 139 | | | 177 | | | 203 | | | 328 | |
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| Other | | | | | 986 | | | 935 | | | 995 | | | 946 | | | 1,921 | | | 1,874 | |
| Total noninterest expense | | | | | 12,245 | | | 13,297 | | | 12,864 | | | 12,641 | | | 25,542 | | | 25,332 | |
| | | | | | | | | | | | | | | |
| Income before income tax expense | | | | | 1,474 | | | 5,082 | | | 11,470 | | | 10,172 | | | 6,556 | | | 23,722 | |
| Income tax expense | | | | | 356 | | | 1,319 | | | 2,946 | | | 2,189 | | | 1,675 | | | 5,360 | |
| Net income | | | | | $ | 1,118 | | | $ | 3,763 | | | $ | 8,524 | | | $ | 7,983 | | | $ | 4,881 | | | $ | 18,362 | |
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| Earnings Per Common Share: | | | | | | | | | | | | | | | |
| Basic | | | | | $ | 0.14 | | | $ | 0.48 | | | $ | 1.09 | | | $ | 1.02 | | | $ | 0.62 | | | $ | 2.36 | |
| Diluted | | | | | $ | 0.14 | | | $ | 0.48 | | | $ | 1.09 | | | $ | 1.02 | | | $ | 0.62 | | | $ | 2.34 | |
| | | | | | | | | | | | | | | |
| Weighted Average Common Shares Outstanding: | | | | | | | | | | | | | | | |
| Basic | | | | | 7,747,675 | | | 7,663,521 | | | 7,603,938 | | | 7,593,417 | | | 7,705,598 | | | 7,574,160 | |
| Diluted | | | | | 7,723,888 | | | 7,687,679 | | | 7,650,451 | | | 7,601,562 | | | 7,721,880 | | | 7,639,828 | |
| Dividends per common share | | | | | $ | 0.20 | | | $ | 0.20 | | | $ | 0.20 | | | $ | 0.20 | | | $ | 0.40 | | | $ | 0.40 | |
BANKWELL FINANCIAL GROUP, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (unaudited)
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| | | | | For the Quarter Ended | | For the Six Months Ended |
| | | | | June 30,
2024 | | March 31,
2024 | | December 31,
2023 | | June 30,
2023 | | June 30,
2024 | | June 30,
2023 |
| Performance ratios: | | | | | | | | | | | | | | | |
| Return on average assets | | | | | 0.14 | % | | 0.47 | % | | 1.03 | % | | 0.99 | % | | 0.31 | % | | 1.14 | % |
| Return on average shareholders' equity | | | | | 1.65 | % | | 5.59 | % | | 12.82 | % | | 12.91 | % | | 3.61 | % | | 15.15 | % |
| Return on average tangible common equity | | | | | 1.67 | % | | 5.65 | % | | 12.95 | % | | 13.05 | % | | 3.65 | % | | 15.31 | % |
| Net interest margin | | | | | 2.75 | % | | 2.71 | % | | 2.81 | % | | 3.07 | % | | 2.73 | % | | 3.15 | % |
Efficiency ratio(1) | | | | | 55.9 | % | | 60.3 | % | | 55.0 | % | | 49.8 | % | | 58.1 | % | | 48.3 | % |
| Net loan charge-offs as a % of average loans | | | | | 0.01 | % | | 0.11 | % | | 0.01 | % | | — | % | | 0.13 | % | | 0.02 | % |
Dividend payout ratio(2) | | | | | 142.86 | % | | 41.67 | % | | 18.35 | % | | 19.61 | % | | 64.52 | % | | 17.09 | % |
| | | | | | | | | | | | | | | |
(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 |
| | | | | June 30,
2024 | | March 31,
2024 | | December 31,
2023 | | June 30,
2023 |
| Capital ratios: | | | | | | | | | | | |
Total Common Equity Tier 1 Capital to Risk-Weighted Assets(1) | | | | | 11.73 | % | | 11.60 | % | | 11.30 | % | | 10.34 | % |
Total Capital to Risk-Weighted Assets(1) | | | | | 12.98 | % | | 12.63 | % | | 12.32 | % | | 11.41 | % |
Tier I Capital to Risk-Weighted Assets(1) | | | | | 11.73 | % | | 11.60 | % | | 11.30 | % | | 10.34 | % |
Tier I Capital to Average Assets(1) | | | | | 10.17 | % | | 10.09 | % | | 9.81 | % | | 9.41 | % |
| Tangible common equity to tangible assets | | | | | 8.42 | % | | 8.42 | % | | 8.19 | % | | 7.58 | % |
| Fully diluted tangible book value per common share | | | | | $ | 33.61 | | | $ | 33.57 | | | $ | 33.39 | | | $ | 31.45 | |
(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 |
| | | | | June 30,
2024 | | March 31,
2024 | | December 31,
2023 | | June 30,
2023 |
| ACL-Loans: | | | | | | | | | | | |
| Balance at beginning of period | | | | | $ | 27,991 | | | $ | 27,946 | | | $ | 29,284 | | | $ | 27,998 | |
| Charge-offs: | | | | | | | | | | | |
| Residential real estate | | | | | (9) | | | (132) | | | — | | | — | |
| Commercial real estate | | | | | (522) | | | (3,306) | | | (824) | | | — | |
| Commercial business | | | | | — | | | (197) | | | — | | | — | |
| Consumer | | | | | (12) | | | (49) | | | (15) | | | (25) | |
| Total charge-offs | | | | | (543) | | | (3,684) | | | (839) | | | (25) | |
| Recoveries: | | | | | | | | | | | |
| Residential real estate | | | | | 141 | | | — | | | — | | | — | |
| Commercial real estate | | | | | 113 | | | — | | | — | | | — | |
| Commercial business | | | | | — | | | 27 | | | 464 | | | 32 | |
| Consumer | | | | | 13 | | | 4 | | | 3 | | | 10 | |
| Total recoveries | | | | | 267 | | | 31 | | | 467 | | | 42 | |
| Net loan (charge-offs) recoveries | | | | | (276) | | | (3,653) | | | (372) | | | 17 | |
| Provision (credit) for credit losses - loans | | | | | 8,368 | | | 3,698 | | | (966) | | | 2,679 | |
| Balance at end of period | | | | | $ | 36,083 | | | $ | 27,991 | | | $ | 27,946 | | | $ | 30,694 | |
| | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | As of |
| | | | | June 30,
2024 | | March 31,
2024 | | December 31,
2023 | | June 30,
2023 |
| Asset quality: | | | | | | | | | | | |
| Nonaccrual loans | | | | | | | | | | | |
| Residential real estate | | | | | $ | 1,339 | | | $ | 1,237 | | | $ | 1,386 | | | $ | 1,429 | |
| Commercial real estate | | | | | 28,088 | | | 19,083 | | | 23,009 | | | 1,905 | |
| Commercial business | | | | | 17,396 | | | 16,841 | | | 15,430 | | | 2,815 | |
| Construction | | | | | 9,382 | | | 9,382 | | | 9,382 | | | 9,382 | |
| Consumer | | | | | — | | | — | | | — | | | — | |
| Total nonaccrual loans | | | | | 56,205 | | | 46,543 | | | 49,207 | | | 15,531 | |
| Other real estate owned | | | | | — | | | — | | | — | | | — | |
| Total nonperforming assets | | | | | $ | 56,205 | | | $ | 46,543 | | | $ | 49,207 | | | $ | 15,531 | |
| | | | | | | | | | | |
| Nonperforming loans as a % of total loans | | | | | 2.12 | % | | 1.74 | % | | 1.81 | % | | 0.56 | % |
| Nonperforming assets as a % of total assets | | | | | 1.79 | % | | 1.48 | % | | 1.53 | % | | 0.48 | % |
| ACL-loans as a % of total loans | | | | | 1.36 | % | | 1.04 | % | | 1.03 | % | | 1.11 | % |
| ACL-loans as a % of nonperforming loans | | | | | 64.20 | % | | 60.14 | % | | 56.79 | % | | 197.63 | % |
| Total past due loans to total loans | | | | | 0.84 | % | | 1.44 | % | | 0.78 | % | | 1.30 | % |
Total nonaccrual loans increased $7.0 million to $56.2 million as of June 30, 2024 when compared to December 31, 2023. The increase was primarily due to a $13.9 million commercial real estate non-owner occupied office loan put on nonaccrual during the six months ended June 30, 2024. This loan represents a 16.5% participation in a $84.3 million club transaction. The increase was partially offset by the payoff of two loans totaling $4.4 million and four loans that were partially charged-off for a total of $4.0 million during the six months ended June 30, 2024.
Nonperforming assets as a percentage of total assets increased to 1.79% at June 30, 2024 from 1.53% at December 31, 2023. The ACL-Loans at June 30, 2024 was $36.1 million, representing 1.36% of total loans.
BANKWELL FINANCIAL GROUP, INC.
LOAN & DEPOSIT PORTFOLIO (unaudited)
(Dollars in thousands)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Period End Loan Composition | June 30,
2024 | | March 31,
2024 | | December 31, 2023 | |
Current QTD
% Change | | YTD
% Change |
| Residential Real Estate | $ | 47,875 | | | $ | 49,098 | | | $ | 50,931 | | | (2.5) | % | | (6.0) | % |
Commercial Real Estate(1) | 1,912,701 | | | 1,927,636 | | | 1,947,648 | | | (0.8) | | | (1.8) | |
| Construction | 150,259 | | | 151,967 | | | 183,414 | | | (1.1) | | | (18.1) | |
| Total Real Estate Loans | 2,110,835 | | | 2,128,701 | | | 2,181,993 | | | (0.8) | | | (3.3) | |
| | | | | | | | | |
| Commercial Business | 503,444 | | | 508,912 | | | 500,569 | | | (1.1) | | | 0.6 | |
| | | | | | | | | |
| Consumer | 42,906 | | | 41,946 | | | 36,045 | | | 2.3 | | | 19.0 | |
| Total Loans | $ | 2,657,185 | | | $ | 2,679,559 | | | $ | 2,718,607 | | | (0.8) | % | | (2.3) | % |
| | | | | | | | | |
| (1) Includes owner occupied commercial real estate of $0.7 billion at June 30, 2024, March 31, 2024, and December 31, 2023, respectively. |
Gross loans totaled $2.7 billion at June 30, 2024, a decrease of $61.4 million or 2.3% compared to December 31, 2023.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Period End Deposit Composition | June 30,
2024 | | March 31,
2024 | | December 31, 2023 | |
Current QTD
% Change | | YTD
% Change |
| Noninterest bearing demand | $ | 328,475 | | | $ | 376,248 | | | $ | 346,172 | | | (12.7) | % | | (5.1) | % |
| NOW | 122,112 | | | 95,227 | | | 90,829 | | | 28.2 | | | 34.4 | |
| Money Market | 825,599 | | | 818,408 | | | 887,352 | | | 0.9 | | | (7.0) | |
| Savings | 91,870 | | | 92,188 | | | 97,331 | | | (0.3) | | | (5.6) | |
| Time | 1,294,319 | | | 1,291,451 | | | 1,315,073 | | | 0.2 | | | (1.6) | |
| Total Deposits | $ | 2,662,375 | | | $ | 2,673,522 | | | $ | 2,736,757 | | | (0.4) | % | | (2.7) | % |
Total deposits were $2.7 billion at June 30, 2024, a decrease of $74.4 million, or 2.7%, when compared to December 31, 2023. Brokered deposits have decreased $144.2 million, when compared to December 31, 2023.
BANKWELL FINANCIAL GROUP, INC.
NONINTEREST EXPENSE (unaudited)
(Dollars in thousands)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| For the Quarter Ended | | | | |
| Noninterest expense | June 30,
2024 | | March 31,
2024 | | June 30,
2023 | | June 24 vs. Mar 24
% Change | | Jun 24 vs. Jun 23
% Change |
| Salaries and employee benefits | $ | 6,176 | | | $ | 6,291 | | | $ | 6,390 | | | (1.8) | % | | (3.3) | % |
| Occupancy and equipment | 2,238 | | | 2,322 | | | 2,204 | | | (3.6) | | | 1.5 | |
| Professional services | 989 | | | 1,065 | | | 692 | | | (7.1) | | | 42.9 | |
| Data processing | 755 | | | 740 | | | 729 | | | 2.0 | | | 3.6 | |
| Director fees | 306 | | | 900 | | | 453 | | | (66.0) | | | (32.5) | |
| FDIC insurance | 705 | | | 930 | | | 1,050 | | | (24.2) | | | (32.9) | |
| Marketing | 90 | | | 114 | | | 177 | | | (21.1) | | | (49.2) | |
| Other | 986 | | | 935 | | | 946 | | | 5.5 | | | 4.2 | |
| Total noninterest expense | $ | 12,245 | | | $ | 13,297 | | | $ | 12,641 | | | (7.9) | % | | (3.1) | % |
|
Noninterest expense decreased by $0.4 million to $12.2 million for the quarter ended June 30, 2024 compared to the quarter ended June 30, 2023. The decrease in noninterest expense was primarily driven by a decrease in FDIC insurance costs, mainly driven by a reduction in the Bank's brokered deposits.
| | | | | | | | | | | | | | | | | |
| For the Six Months Ended | |
| Noninterest expense | June 30,
2024 | | June 30,
2023 | | Jun 24 vs. Jun 23
% Change |
| Salaries and employee benefits | $ | 12,467 | | | $ | 12,471 | | | — | % |
| Occupancy and equipment | 4,561 | | | 4,288 | | | 6.4 | |
| Professional services | 2,054 | | | 2,014 | | | 2.0 | |
| Data processing | 1,495 | | | 1,400 | | | 6.8 | |
| Director fees | 1,206 | | | 845 | | | 42.7 | |
| FDIC insurance | 1,635 | | | 2,112 | | | (22.6) | |
| Marketing | 203 | | | 328 | | | (38.1) | |
| Other | 1,921 | | | 1,874 | | | 2.5 | |
| Total noninterest expense | $ | 25,542 | | | $ | 25,332 | | | 0.8 | % |
Noninterest expense increased by $0.2 million to $25.5 million for the six months ended June 30, 2024 compared to the six months ended June 30, 2023. The increase in noninterest expense was primarily driven by an increase in director fees related to timing of compensation and accelerated vestings in connection with the death of a director. The increase was partially offset by a decrease in FDIC insurance costs, mainly attributable by a reduction in the Bank's brokered deposits.
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,
2024 | | March 31,
2024 | | December 31,
2023 | | June 30,
2023 |
| Total Equity | | | | | $ | 266,976 | | | $ | 268,032 | | | $ | 265,752 | | | $ | 248,813 | |
| Less: | | | | | | | | | | | |
| Goodwill | | | | | 2,589 | | | 2,589 | | | 2,589 | | | 2,589 | |
| Other intangibles | | | | | — | | | — | | | — | | | — | |
| Tangible Common Equity | | | | | $ | 264,387 | | | $ | 265,443 | | | $ | 263,163 | | | $ | 246,224 | |
| | | | | | | | | | | |
| Total Assets | | | | | $ | 3,141,654 | | | $ | 3,155,274 | | | $ | 3,215,482 | | | $ | 3,252,707 | |
| Less: | | | | | | | | | | | |
| Goodwill | | | | | 2,589 | | | 2,589 | | | 2,589 | | | 2,589 | |
| Other intangibles | | | | | — | | | — | | | — | | | — | |
| Tangible Assets | | | | | $ | 3,139,065 | | | $ | 3,152,685 | | | $ | 3,212,893 | | | $ | 3,250,118 | |
| | | | | | | | | | | |
| Tangible Common Equity to Tangible Assets | | | | | 8.42 | % | | 8.42 | % | | 8.19 | % | | 7.58 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | As of |
| Computation of Fully Diluted Tangible Book Value per Common Share | | | | | June 30,
2024 | | March 31,
2024 | | December 31, 2023 | | June 30,
2023 |
| Total shareholders' equity | | | | | $ | 266,976 | | | $ | 268,032 | | | $ | 265,752 | | | $ | 248,813 | |
| Less: | | | | | | | | | | | |
| Preferred stock | | | | | — | | | — | | | — | | | — | |
| Common shareholders' equity | | | | | $ | 266,976 | | | $ | 268,032 | | | $ | 265,752 | | | $ | 248,813 | |
| Less: | | | | | | | | | | | |
| Goodwill | | | | | 2,589 | | | 2,589 | | | 2,589 | | | 2,589 | |
| Other intangibles | | | | | — | | | — | | | — | | | — | |
| Tangible common shareholders' equity | | | | | $ | 264,387 | | | $ | 265,443 | | | $ | 263,163 | | | $ | 246,224 | |
| | | | | | | | | | | |
| Common shares issued and outstanding | | | | | 7,866,499 | | | 7,908,180 | | | 7,882,616 | | | 7,829,950 | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| Fully Diluted Tangible Book Value per Common Share | | | | | $ | 33.61 | | | $ | 33.57 | | | $ | 33.39 | | | $ | 31.45 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | For the Quarter Ended | | For the Six Months Ended |
| Computation of PPNR | | | | | June 30,
2024 | | March 31,
2024 | | December 31, 2023 | | June 30,
2023 | | June 30,
2024 | | June 30,
2023 |
| Income before income tax expense | | | | | $ | 1,474 | | | $ | 5,082 | | | $ | 11,470 | | | $ | 10,172 | | | $ | 6,556 | | | $ | 23,722 | |
| Add: | | | | | | | | | | | | | | | |
| Provision (credit) for credit losses | | | | | 8,183 | | | 3,683 | | | (960) | | | 2,579 | | | 11,866 | | | 3,405 | |
| PPNR | | | | | $ | 9,657 | | | $ | 8,765 | | | $ | 10,510 | | | $ | 12,751 | | | $ | 18,422 | | | $ | 27,127 | |
| | | | | | | | | | | | | | | |
| PPNR return on average assets | | | | | 1.22 | % | | 1.10 | % | | 1.27 | % | | 1.58 | % | | 1.16 | % | | 1.69 | % |
BANKWELL FINANCIAL GROUP, INC.
EARNINGS PER SHARE ("EPS") (unaudited)
(Dollars in thousands, except share data)
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended
June 30, | | Six Months Ended
June 30, |
| 2024 | | 2023 | | 2024 | | 2023 |
| (In thousands, except per share data) |
| Net income | $ | 1,118 | | | $ | 7,983 | | | $ | 4,881 | | | $ | 18,362 | |
Dividends to participating securities(1) | (40) | | | (41) | | | (79) | | | (84) | |
Undistributed earnings allocated to participating securities(1) | 14 | | | (172) | | | (52) | | | (403) | |
| Net income for earnings per share calculation | $ | 1,092 | | | $ | 7,770 | | | $ | 4,750 | | | $ | 17,875 | |
| | | | | | | |
| Weighted average shares outstanding, basic | 7,748 | | | 7,593 | | | 7,706 | | | 7,574 | |
Effect of dilutive equity-based awards(2) | (24) | | | 8 | | | 16 | | | 66 | |
| Weighted average shares outstanding, diluted | 7,724 | | | 7,601 | | | 7,722 | | | 7,640 | |
| Net earnings per common share: | | | | | | | |
| Basic earnings per common share | $ | 0.14 | | | $ | 1.02 | | | $ | 0.62 | | | $ | 2.36 | |
| Diluted earnings per common share | $ | 0.14 | | | $ | 1.02 | | | $ | 0.62 | | | $ | 2.34 | |
| | | | | | | |
| | | | | | | |
(1) Represents dividends paid and undistributed earnings allocated to unvested stock-based awards that contain non-forfeitable rights to dividends.
(2) Represents the effect of the assumed exercise of stock options and the vesting of restricted shares, as applicable, utilizing the treasury stock method.
BANKWELL FINANCIAL GROUP, INC.
NONINTEREST INCOME (unaudited)
(Dollars in thousands)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| For the Quarter Ended | | | | |
| Noninterest income | June 30,
2024 | | March 31,
2024 | | June 30,
2023 | | Jun 24 vs. Mar 24
% Change | | Jun 24 vs. Jun 23
% Change |
| Bank owned life insurance | $ | 333 | | | $ | 329 | | | $ | 292 | | | 1.2 | % | | 14.0 | % |
| Service charges and fees | 495 | | | 304 | | | 361 | | | 62.8 | | | 37.1 | |
| | | | | | | | | |
| | | | | | | | | |
| Gains and fees from sales of loans | 45 | | | 321 | | | 725 | | | (86.0) | | | (93.8) | |
| Other | (190) | | | (39) | | | 23 | | | Unfavorable | | Unfavorable |
| Total noninterest income | $ | 683 | | | $ | 915 | | | $ | 1,401 | | | (25.4) | % | | (51.2) | % |
Noninterest income decreased $0.7 million for the quarter ended June 30, 2024 compared to the quarter ended June 30, 2023. The decrease in noninterest income was driven by lower gains as a result of fewer SBA loan sales for the quarter ended June 30, 2024.
| | | | | | | | | | | | | | | | | |
| For the Six Months Ended | | |
| Noninterest income | June 30,
2024 | | June 30,
2023 | | Jun 24 vs. Jun 23
% Change |
| Bank owned life insurance | $ | 662 | | | $ | 573 | | | 15.5 | % |
| Service charges and fees | 799 | | | 647 | | | 23.5 | % |
| | | | | |
| | | | | |
| Gains and fees from sales of loans | 366 | | | 1,656 | | | (77.9) | % |
| Other | (229) | | | 51 | | | Unfavorable |
| Total noninterest income | $ | 1,598 | | | $ | 2,927 | | | (45.4) | % |
Noninterest income decreased $1.3 million for the six months ended June 30, 2024 compared to the six months ended June 30, 2023. The decrease in noninterest income was driven by lower gains as a result of fewer SBA loan sales for the six months ended June 30, 2024.
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, 2024 | | June 30, 2023 |
| Average
Balance | | Interest | | Yield/ Rate (4) | | Average
Balance | | Interest | | Yield/ Rate (4) |
| Assets: | | | | | | | | | | | |
| Cash and Fed funds sold | $ | 273,301 | | | $ | 3,429 | | | 5.05 | % | | $ | 227,777 | | | $ | 3,023 | | | 5.32 | % |
Securities(1) | 137,360 | | | 1,139 | | | 3.32 | | | 128,576 | | | 955 | | | 2.97 | |
| Loans: | | | | | | | | | | | |
| Commercial real estate | 1,901,189 | | | 27,654 | | | 5.75 | | | 1,935,058 | | | 27,099 | | | 5.54 | |
| Residential real estate | 49,046 | | | 772 | | | 6.30 | | | 56,981 | | | 643 | | | 4.51 | |
| Construction | 159,184 | | | 2,871 | | | 7.14 | | | 206,844 | | | 3,691 | | | 7.06 | |
| Commercial business | 523,382 | | | 11,028 | | | 8.34 | | | 557,482 | | | 10,646 | | | 7.55 | |
| Consumer | 42,335 | | | 735 | | | 6.98 | | | 29,326 | | | 500 | | | 6.84 | |
| Total loans | 2,675,136 | | | 43,060 | | | 6.37 | | | 2,785,691 | | | 42,579 | | | 6.05 | |
| Federal Home Loan Bank stock | 5,655 | | | 118 | | | 8.42 | | | 5,610 | | | 98 | | | 7.00 | |
| Total earning assets | 3,091,452 | | | $ | 47,746 | | | 6.11 | % | | 3,147,654 | | | $ | 46,655 | | | 5.86 | % |
| Other assets | 95,453 | | | | | | | 96,603 | | | | | |
| Total assets | $ | 3,186,905 | | | | | | | $ | 3,244,257 | | | | | |
| | | | | | | | | | | |
| Liabilities and shareholders' equity: | | | | | | | | | | | |
| Interest bearing liabilities: | | | | | | | | | | | |
| NOW | $ | 107,310 | | | $ | 49 | | | 0.18 | % | | $ | 98,048 | | | $ | 42 | | | 0.18 | % |
| Money market | 833,489 | | | 8,552 | | | 4.13 | | | 902,225 | | | 8,083 | | | 3.59 | |
| Savings | 90,987 | | | 688 | | | 3.04 | | | 112,585 | | | 860 | | | 3.06 | |
| Time | 1,291,595 | | | 15,388 | | | 4.79 | | | 1,298,170 | | | 11,792 | | | 3.64 | |
| Total interest bearing deposits | 2,323,381 | | | 24,677 | | | 4.27 | | | 2,411,028 | | | 20,777 | | | 3.46 | |
| Borrowed Money | 159,288 | | | 1,783 | | | 4.43 | | | 163,138 | | | 1,738 | | | 4.21 | |
| Total interest bearing liabilities | 2,482,669 | | | $ | 26,460 | | | 4.29 | % | | 2,574,166 | | | $ | 22,515 | | | 3.51 | % |
| Noninterest bearing deposits | 368,516 | | | | | | | 375,514 | | | | | |
| Other liabilities | 63,177 | | | | | | | 46,565 | | | | | |
| Total liabilities | 2,914,362 | | | | | | | 2,996,245 | | | | | |
| Shareholders' equity | 272,543 | | | | | | | 248,012 | | | | | |
| Total liabilities and shareholders' equity | $ | 3,186,905 | | | | | | | $ | 3,244,257 | | | | | |
Net interest income(2) | | | $ | 21,286 | | | | | | | $ | 24,140 | | | |
| Interest rate spread | | | | | 1.82 | % | | | | | | 2.36 | % |
Net interest margin(3) | | | | | 2.75 | % | | | | | | 3.07 | % |
(1)Average balances and yields for securities are based on amortized cost.
(2)The adjustment for securities and loans taxable equivalency amounted to $67 thousand and $51 thousand for the quarters
ended June 30, 2024 and 2023, 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 Six Months Ended |
| June 30, 2024 | | June 30, 2023 |
| Average
Balance | | Interest | | Yield/ Rate (4) | | Average
Balance | | Interest | | Yield/ Rate (4) |
| Assets: | | | | | | | | | | | |
| Cash and Fed funds sold | $ | 282,981 | | | $ | 7,255 | | | 5.16 | % | | $ | 271,328 | | | $ | 6,590 | | | 4.90 | % |
Securities(1) | 136,049 | | | 2,199 | | | 3.23 | | | 129,225 | | | 1,912 | | | 2.96 | |
| Loans: | | | | | | | | | | | |
| Commercial real estate | 1,911,896 | | | 56,295 | | | 5.82 | | | 1,926,852 | | | 52,125 | | | 5.38 | |
| Residential real estate | 49,624 | | | 1,490 | | | 6.01 | | | 58,207 | | | 1,286 | | | 4.42 | |
| Construction | 160,080 | | | 5,844 | | | 7.22 | | | 186,684 | | | 6,651 | | | 7.09 | |
| Commercial business | 520,188 | | | 21,314 | | | 8.10 | | | 549,963 | | | 21,394 | | | 7.74 | |
| Consumer | 41,150 | | | 1,442 | | | 7.05 | | | 23,971 | | | 749 | | | 6.30 | |
| Total loans | 2,682,938 | | | 86,385 | | | 6.37 | | | 2,745,677 | | | 82,205 | | | 5.95 | |
| Federal Home Loan Bank stock | 5,678 | | | 239 | | | 8.44 | | | 5,442 | | | 193 | | | 7.14 | |
| Total earning assets | 3,107,646 | | | $ | 96,078 | | | 6.12 | % | | 3,151,672 | | | $ | 90,900 | | | 5.74 | % |
| Other assets | 93,179 | | | | | | | 90,427 | | | | | |
| Total assets | $ | 3,200,825 | | | | | | | $ | 3,242,099 | | | | | |
| | | | | | | | | | | |
| Liabilities and shareholders' equity: | | | | | | | | | | | |
| Interest bearing liabilities: | | | | | | | | | | | |
| NOW | $ | 99,493 | | | $ | 88 | | | 0.18 | % | | $ | 95,494 | | | $ | 81 | | | 0.17 | % |
| Money market | 858,670 | | | 17,698 | | | 4.14 | | | 905,021 | | | 14,468 | | | 3.22 | |
| Savings | 91,979 | | | 1,402 | | | 3.06 | | | 124,387 | | | 1,586 | | | 2.57 | |
| Time | 1,304,332 | | | 30,851 | | | 4.76 | | | 1,275,417 | | | 21,675 | | | 3.43 | |
| Total interest bearing deposits | 2,354,474 | | | 50,039 | | | 4.27 | | | 2,400,319 | | | 37,810 | | | 3.18 | |
| Borrowed Money | 159,257 | | | 3,555 | | | 4.42 | | | 162,215 | | | 3,454 | | | 4.24 | |
| Total interest bearing liabilities | 2,513,731 | | | $ | 53,594 | | | 4.29 | % | | 2,562,534 | | | $ | 41,264 | | | 3.25 | % |
| Noninterest bearing deposits | 352,768 | | | | | | | 389,608 | | | | | |
| Other liabilities | 62,775 | | | | | | | 45,494 | | | | | |
| Total liabilities | 2,929,274 | | | | | | | 2,997,636 | | | | | |
| Shareholders' equity | 271,551 | | | | | | | 244,463 | | | | | |
| Total liabilities and shareholders' equity | $ | 3,200,825 | | | | | | | $ | 3,242,099 | | | | | |
Net interest income(2) | | | $ | 42,484 | | | | | | | $ | 49,636 | | | |
| Interest rate spread | | | | | 1.83 | % | | | | | | 2.49 | % |
Net interest margin(3) | | | | | 2.73 | % | | | | | | 3.15 | % |
(1)Average balances and yields for securities are based on amortized cost.
(2)The adjustment for securities and loans taxable equivalency amounted to $118 thousand and $102 thousand for the six months ended June 30, 2024 and 2023, 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.
BWFG | LISTED | NASDAQ 2Q24 Investor Presentation July 24, 2024
2 BWFG LISTED NASDAQ BWFG LISTED NASDAQ This presentation may contain certain forward-looking statements about Bankwell Financial Group, Inc. (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,” “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 increased competitive pressures, changes in the interest rate environment, general economic conditions or conditions within the banking industry or securities markets, and legislative and regulatory changes that could adversely affect the business in which the Company and its subsidiaries are engaged. Safe Harbor
3 BWFG LISTED NASDAQ BWFG LISTED NASDAQ Table of Contents • 2Q24 Results • Credit Quality • Loans • Bankwell History & Overview
BWFG | LISTED | NASDAQ 2Q24 Results
5 BWFG LISTED NASDAQ BWFG LISTED NASDAQ Return on Average Tangible Common Equity 1.67% 3.65% Total Risk Based Capital (Bank)3 12.98% Tangible Book Value Per Share $33.61 2Q24 Results Net Income $1.1 $4.9 Earnings Per Share (EPS) $0.14 $0.62 PPNR1 Return on Average Assets 1.22% 1.16% Return on Average Assets 0.14% 0.31% Non-Interest Expense / Assets 1.55% 1.60% Dollars in millions, except per share data YTD Quarter Commentary • $9.7 million PPNR1; 10% growth from PQ • 2.75% NIM; 4 bps expansion from PQ ─ 6 bps reduction in Cost of Deposits due to favorable NIB deposit mix (average balances) • 2.5X liquidity coverage of uninsured deposits; continued stability • $8.2 million provision for credit losses ─ $6.6 million of the provision is related to a specific reserve taken against an $8.7 million commercial business credit2 • $4.1 million payoff of non-performing loan (CRE Retail loan in suburban CT) • 40,140 shares repurchased in the quarter at average price of $24.55; 76,320 repurchased year-to-date at average price of $24.94 1 Pre-tax, pre-provision net revenue (“PPNR”) is a non-GAAP metric & excludes provision for loan losses and income tax expense 2 8-K was filed on July 2, 2024 3 Estimate, pending FDIC call report filing QTR
6 BWFG LISTED NASDAQ BWFG LISTED NASDAQ Income Statement 2Q24 1Q24 Var1 Total Interest Income $47.7 $ 48.3 $(0.6) Total Interest Expense $26.5 $ 27.1 $0.7 Net Interest Income $21.2 $ 21.1 $0.1 Non-Interest Income $0.7 $ 0.9 $(0.2) Non-Interest Expense $12.2 $ 13.3 $1.1 Pre-Tax, Pre-Provision Net Revenue $9.7 $ 8.8 $0.9 Provision for Credit Losses $8.2 $3.7 $(4.5) Pre-Tax Income $1.5 $ 5.1 $(3.6) Income Tax Expense $0.4 $ 1.3 $1.0 Reported Net Income $1.1 $ 3.8 $(2.6) EPS $0.14 $ 0.48 $(0.34) Pre-Tax, Pre-Provision Net Revenue per share2 $1.25 $ 1.14 $0.11 1 Variances are rounded based on actual whole dollar amounts 2 Pre-tax, pre-provision net revenue per share is a non-GAAP metric & excludes provision for loan losses and income tax expense Dollars in millions, except per share data Balance Sheet 2Q24 1Q24 Var1 Cash & Cash Equivalents $251 $ 248 $4 Investment Securities $138 $ 126 $12 Loans Receivable, net $ 2,617 $ 2,647 $(30) All Other Assets $136 $ 135 $1 Total Assets $ 3,142 $ 3,155 $(14) Total Deposits $ 2,662 $ 2,674 $(11) Total Borrowings $159 $159 $0 Other Liabilities $53 $54 $(1) Total Liabilities $ 2,875 $ 2,887 $(13) Equity $267 $ 268 $(1) Total Liabilities & Equity $ 3,142 $ 3,155 $(14) 2Q24 Consolidated Financial Statements Linked Quarter
7 BWFG LISTED NASDAQ BWFG LISTED NASDAQ $24.0 $22.7 $22.2 $21.1 $21.2 6.05% 6.15% 6.33% 6.37% 6.37% 2.99% 3.37% 3.61% 3.75% 3.69% $5.0 $7.0 $9.0 $11.0 $13.0 $15.0 $17.0 $19.0 $21.0 $23.0 $25.0 2.00% 3.00% 4.00% 5.00% 6.00% 7.00% 8.00% 2Q23 3Q23 4Q23 1Q24 2Q24 Net Interest Income Loan Yield Cost of Deposits Net Interest Margin Stabilized 1 Includes origination fee amortization 1 NIM 3.07% 2.85% 2.81% 2.71% 2.75% 2Q24 NIM expansion on reduced deposit costs and continued strong loan yields Dollars in millions
8 BWFG LISTED NASDAQ BWFG LISTED NASDAQ $2,411 $2,452 $2,430 $2,386 $2,323 $376 $346 $351 $337 $368 $2,787 $2,798 $2,781 $2,723 $2,692 2Q23 3Q23 4Q23 1Q24 2Q24 2.99% 3.37% 3.61% 3.75% 3.69% 3.46% 3.85% 4.13% 4.28% 4.27% Total Deposit Cost IB Deposit Cost Average Deposits • 2Q24 total deposit costs 6 bps lower than PQ given average non-interest bearing deposits • ~$0.5 billion deposits remaining to mature in 2H’24, at average rate of ~4.80% NIB End of QTR % 13.2% 12.5% 12.6% 14.1% 12.3% Non-Interest Bearing (NIB) Interest Bearing (IB)
9 BWFG LISTED NASDAQ BWFG LISTED NASDAQ Liquidity Coverage of 2.5X $1,221 $251 $110 Liquidity Uninsured Deposits 2Q24 Liquidity Coverage = 2.5X $1,582 $633 Borrowing Capacity1 Unencumbered Cash Unencumbered Securities 1 Bank lines, including FHLB & FRB 71% 71% 71% 73% 4% 4% 4% 3% 2.4X 2.4X 2.3X 2.5X 0.0X 0.5X 1.0X 1.5X 2.0X 2.5X 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 3Q23 4Q23 1Q24 2Q24 FDIC Insured FHLB LOC Liquidity Coverage • $2,029 million total insured deposits includes: ‒ $1,940 million FDIC-insured deposits ‒ $89 million deposits secured by FHLB LOCs (municipal deposits) • 11.5% liquidity on balance sheet (Cash & Securities) • Stable insured deposit base: Dollars in millions
10 BWFG LISTED NASDAQ BWFG LISTED NASDAQ 49.8% 52.0% 55.0% 60.3% 55.9% 1.56% 1.48% 1.56% 1.66% 1.55% 1.00% 1.20% 1.40% 1.60% 1.80% 2.00% 2.20% 2.40% 0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0% 2Q23 3Q23 4Q23 1Q24 2Q24 Efficiency Ratio Non-interest Expense / Average Assets 1 A non-GAAP metric 2 Source: S&P Global Market Intelligence; data as of 3-31-2024 & peers include major-exchange traded banks in the Northeast and Mid-Atlantic between $2 and $5 billion in assets 1 History of Efficiency • 1Q24 had one-time 1Q expenses • Reduced FDIC assessment, as brokered deposit balances are reduced Quarterly Efficiency Trends $ in millions 2Q24 1Q24 V Salaries & Employee Benefits $6.2 $6.3 $(0.1) All Other $6.1 $7.0 $(0.9) Total Non-interest Expense $12.2 $13.3 $(1.1) CQ vs PQ Non-interest Expense Last 12 Month comparison2 Peers BWFG Efficiency Ratio 67.3% 54.0% Non-interest Expense/Avg. Assets 2.25% 1.57%
11 BWFG LISTED NASDAQ BWFG LISTED NASDAQ Bank is Well Capitalized 9.41% 9.60% 9.81% 10.09% 10.17% 5% 2Q23 3Q23 4Q23 1Q24 2Q24 Tier 1 Leverage Ratio Bankwell Bank Well Capitalized 1 Current period ratios are estimates, pending FDIC call report filing 2 Consolidated ratio 10.18% 10.65% 11.30% 11.60% 11.73% Tier 1 8% 4.0% 5.0% 6.0% 7.0% 8.0% 9.0% 10.0% 11.0% 0.00% 1.00% 2.00% 3.00% 4.00% 5.00% 6.00% 7.00% 8.00% 9.00% 10.00% 11.00% 12.00% 2Q23 3Q23 4Q23 1Q24 2Q24 Tier 1 / CET 1 Capital Ratio Bankwell Bank Well Capitalized • Additional 2Q24 ratios: ‒ 8.42% TCE Ratio2 ‒ 379% CRE Concentration Ratio ‒ 42% Construction Concentration Ratio • 76,320 shares repurchased year to date at an average price of $24.94 1 CET1 6.5% 11.24% 11.68% 12.32% 12.63% 12.98% 10% 3% 4% 5% 6% 7% 8% 9% 10% 11% 12% 13% 0.00% 1.00% 2.00% 3.00% 4.00% 5.00% 6.00% 7.00% 8.00% 9.00% 10.00% 11.00% 12.00% 13.00% 2Q23 3Q23 4Q23 1Q24 2Q24 Total Risk-Based Capital Ratio Bankwell Bank Well Capitalized
BWFG | LISTED | NASDAQ Credit Quality
13 BWFG LISTED NASDAQ BWFG LISTED NASDAQ Credit Quality Trends 2Q23 3Q23 4Q23 1Q24 2Q24 Risk Rating Balance % Balance % Balance % Balance % Balance % 1-5 “Pass” $2,710 97.7% $2,694 97.2% $2,570 94.5% $2,527 94.3% $2,497 94.0% 6 “Special Mention” $28 1.0% $22 0.8% $67 2.5% $72 2.7% $71 2.7% 7 “Substandard” $36 1.3% $54 2.0% $76 2.8% $68 2.5% $80 3.0% 8 “Doubtful” $0 0.0% $0 0.0% $6 0.2% $13 0.5% $8 0.3% Total Gross Loans $2,774 $2,770 $2,719 $2,680 $2,657 Non-performing Loans $15.5 $28.0 $49.2 $46.5 $56.2 % of Total Loans 0.56% 1.01% 1.81% 1.74% 2.12% Dollars in millions $30,694 $29,284 $27,946 $27,991 $36,083 1.11% 1.06% 1.03% 1.04% 1.36% 0.00% 0.50% 1.00% 1.50% 2.00% 2.50% $0 $5,000 $10,000 $15,000 $20,000 $25,000 $30,000 $35,000 2Q23 3Q23 4Q23 1Q24 2Q24 Allowance for credit losses ACL / Loans Allowance for Credit Losses (“ACL”) Dollars in thousands ($0.02) ($0.02) $0.4 $3.7 $0.3 2Q23 3Q23 4Q23 1Q24 2Q24 Net Charge Offs (Recoveries) 2Q24 net charge offs include: • $0.5 million charge off on CRE Retail loan (“Loan 2”) • $(0.3) million net recoveries, including $(0.1) million on sale of CRE Retail loan (previously reported as $4.1 million non-performing loan)
14 BWFG LISTED NASDAQ BWFG LISTED NASDAQ 2Q24 Criticized & Classified Loans Risk Rating Performing CRE C&I Construction 1-4 Family Residential Total 6 Yes $62 $8 $0 $0 $71 7 Yes $27 $3 $0 $2 $32 7 No $22 $16 $9 $1 $48 8 No $6 $2 $0 $0 $8 Total $117 $29 $9 $4 $160 • $103 million of criticized and classified loans are performing; 99% current • Of those performing loans, $97 million are to 8 Residential Care borrowers who have personal guarantees; Average guarantor profile consists of: ‒ $617 million net worth; $65 million liquidity; $17 million personal cash flow • Record inflation in 2022 and 2023 caused costs (which labor is the largest component) to rise outpacing state increases in Medicaid reimbursement rates. The borrowers were moved to special mention after missing EBITDA projections due to these increased expenses • States have now adjusted their Medicaid reimbursement rates and the cost of labor has stabilized, leading to positive cashflow trends Dollars in millions
15 BWFG LISTED NASDAQ BWFG LISTED NASDAQ 2Q24 Non-Performing Loans Segment Balance % Total Loans 2Q24 Actions (See next slide for additional details) Loan 1 CRE - Office $13.9 0.52% • Downgraded to non-performing status Loan 2 CRE - Retail $9.8 0.37% • $0.5 million charged off (life to date charged off $4.5 million) Loan 3 Construction $9.4 0.35% • $0.8 million specific reserve Loan 4 C&I $8.7 0.33% • 8k filed July 2nd, 2024 • $6.6 million specific reserve (total reserve $7.0 million) Loan 5 CRE - Office $3.0 0.11% • Working towards refinance takeout Subtotal $44.8 1.68% SBA Loans $9.4 0.35% • $8.2 million (31 basis points) are SBA-guaranteed balances All Other $2.0 0.08% • 5 loans; ~66% balances are residential mortgages Total $56.2 2.12% Dollars in millions • All non-performing loans individually evaluated for impairment • Balances charged off or specifically reserved, as appropriate 2Q24 Activity • $4.1 million CRE – Retail loan in suburban CT paid off; $0.1 million recovery ($0.6 million charged off in 4Q23) • Remaining NPLs comprised of:
16 BWFG LISTED NASDAQ BWFG LISTED NASDAQ Non-Performing Loan Details • Class A suburban NJ office park • 80% occupied • Bankwell 17% participant in $84 million multi-bank club deal • 40% recourse • April 2024 appraised value of $105 million ‒ Bankwell continue to monitor collateral on a quarterly basis Loan 1 $13.9 million Loan 2 $9.8 million Dollars in millions • Suburban retail loan modified during COVID • Borrower paying according to terms of restructure • $4.5 million charged off, life-to-date ‒ $3.8 million in 2Q21 ‒ $0.2 million in 4Q23 ‒ $0.5 million in 2Q24 Loan 3 $9.4 million Loan 4 $8.7 million • Construction loan in Williamsburg, Brooklyn • 70% completed; multi-family / mixed use • Borrower, a single-asset LLC, in bankruptcy • Full recourse to 3 high-net-worth guarantors ‒ Guarantor litigation in process • $0.8 million specific reserve taken in 2Q24 • C&I loan; senior secured tranche of a $28 million financing to support a sponsor-owned pediatric dental practice • Sponsor and seller are engaged in ongoing litigation • Medicaid fraud alleged and investigated with no wrongdoing found • 90% revenue lost due to loss of managed Medicaid insurance contracts • Insurance contracts have not been reinstated • $6.6 million specific reserve taken in 2Q24; total reserve of $7.0 million
BWFG | LISTED | NASDAQ Loans
18 BWFG LISTED NASDAQ BWFG LISTED NASDAQ $1,046 $1,224 $1,228 $1,231 $1,237 $310 $697 $720 $696 $676$351 $522 $501 $509 $503 $98 $155 $183 $152 $150 $89 $77 $87 $91 $91 $1,895 $2,675 $2,719 $2,680 $2,657 4Q21 4Q22 4Q23 1Q24 2Q24 CRE Investor CRE Owner Occupied C&I Construction Residential / Other Loan Balance Trends Dollars in millions Declining CRE Concentration Ratio reflective of favorable improvement in mix 454% 425% 396% 386% 379% CRE Concentration Ratio
19 BWFG LISTED NASDAQ BWFG LISTED NASDAQ $1,626 $1,895 $2,675 $2,719 $2,657 4.18% 4.30% 5.56% 5.99% 6.05% 0.00% 1.00% 2.00% 3.00% 4.00% 5.00% 6.00% 7.00% - 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 4Q20 4Q21 4Q22 4Q23 2Q24 Loan Balance Portfolio Loan Yield Loan Yields Steadily Increasing 1 Weighted average yield based on active loans as of each date, an “exit" rate 2 Weighted average yield based on active loans as of 6-30-2024, an “exit" rate 1 Dollars in millions Loan portfolio yields increased 187 bps since 2020 72% of balances are 2021-24 vintages Yields by Vintage2 Loan Maturities & Contractual Repricing Year Maturity Contract Reprice Total % Total Loans 2024 $206 $12 $218 8% 2025 $628 $59 $687 26% 2026 $227 $48 $274 10% 2027+ $812 $97 $909 34% Total $1,872 $216 $2,088 Excluding floating rate loans 5.22% Pre 2021 5.54% 2021 6.36% 2022 7.78% 2023 8.45% 2024
20 BWFG LISTED NASDAQ BWFG LISTED NASDAQ • No single relationship represents more than ~4% of total loans, as of June 30, 2024 • Favorable trend in Investor CRE: Total Loan Portfolio = $2,657 million Loan Portfolio Composition Residential 1.7% C&I 18.9% CRE Owner Occupied 25.4% CRE Investor 46.5% Commercial Const. 5.7% Other 1.8% 60.4% 55.2% 45.8% 45.2% 46.5% 27.3% 34.9% 45.5% 44.9% 44.3% 4Q20 4Q21 4Q22 4Q23 2Q24 CRE Investor CRE O/O + C&I
21 BWFG LISTED NASDAQ BWFG LISTED NASDAQ Total CRE Portfolio = $1,913 million 1 Includes Owner Occupied CRE, does not include Construction 2 LTVs based on original LTV values, at origination 3 Loans subject to repricing generally have a floor of not less than the original rate CRE Loan Portfolio • 65% Non-Owner Occupied • 61% weighted average LTV2 • 67% of loan balances have recourse Dollars in millions 1 Property Type Investor Owner Occupied Total Residential Care $55 $375 $430 Retail $117 $5 $122 Office $83 $10 $93 Multifamily $50 $0 $50 All Other $103 $17 $120 Total $409 $406 $815 By Property Type Loans Maturing or Repricing in 2024 – 2025 3 Excluding floating rate loans Residential Care 32% Retail 20% MultiFamily 15% Office 10%Industrial Warehouse 8% Mixed Use 5% Medical Office 4% Other 4% Special Use 2%
22 BWFG LISTED NASDAQ BWFG LISTED NASDAQ $189 million Office exposure 7% of total loan portfolio Composition • No New York City exposure • 67% located in Bankwell’s primary market • Out of primary market loans are generally either GSA- leased, credit tenants, or owner-occupied • $3.9 million average size; 65% weighted average LTV2 • 98% of loans are current • $93 million repricing or maturing in 2024-2025 Recourse 65% Non-recourse 35% CRE: Office 1 1 Includes Owner Occupied CRE 2 LTVs based on original LTV values, at origination Geography Recourse Owner Occupied 12% GSA 8% Credit Tenant 3% Year Loan Count Balance Wtd Avg LTV2 2024 9 $62 67% 2025 7 $31 65% Total 16 $93 66% CT - Fairfield County $49.2 CT - All Other $16.8 NY - Westchester County $22.8 NJ $38.1 TX $28.7 MS $17.8 GA $12.2 FL $2.3 CA $0.9
23 BWFG LISTED NASDAQ BWFG LISTED NASDAQ C&I Loan Portfolio Loans by Industry Type Total C&I Portfolio = $503 million 1 Does not Include Owner Occupied CRE 1 • 98% of C&I portfolio has recourse • 93% of Healthcare loans have recourse - Primarily consists of working capital lines secured by government accounts receivable • Insurance lending primarily to brokers of home and auto insurance Health Care & Social Assistance 39% Insurance (Primarily Brokers) 22% Finance 13% Real Estate and Rental/Leasing 9% Admin & Support, Waste Mgmt, Remediation Svcs 4% Retail Trade 3% Arts, Entertainment & Recreation 2% Manufacturing 2% Other 6%
24 BWFG LISTED NASDAQ BWFG LISTED NASDAQ Skilled Nursing Facilities 76% Assisted Living 14% Recovery 5% Other 5% Healthcare Portfolio Composition CRE Skilled Nursing Facility By State 1 Includes Physicians 1 $789 million combined Healthcare portfolio • Consists primarily of skilled nursing facilities located across the US • Healthcare lending team has more than 15 years of industry experience • High touch service model attracts desirable ultra-high net worth Healthcare borrowers • 100% of Skilled Nursing Lending has recourse • Focused on originating Healthcare loans in the most desirable states with: – Higher average occupancy – Low denial of payment rates for Medicaid – Strong senior demographic trends – Certificate of need programs FL 47% OH 13% NY 12% AL 4% PA 4% NJ 4% IA 2% Other 13% Combined Healthcare Exposure (CRE and C&I)
25 BWFG LISTED NASDAQ BWFG LISTED NASDAQ Commercial Construction Portfolio • Commercial construction loans comprise ~6% of total loan portfolio ($150 million) • $56 million of unfunded commitments, committed construction draws are subject to various terms and conditions, including completion of work verified by third party professional inspection Dollars in millions By Property Type # Loans $ Committed % Unfunded $ Unfunded 1Q24 Balance 24 $239 36% $87 Closures in 2Q24 (2) ($21) 1Q24 Loans @ 2Q24 22 $218 26% $56 New 2Q24 Loans 0 $0 2Q24 Balance 22 $218 26% $56 Mixed Use 41% Multifamily 34% Land 22% Retail 3%
BWFG | LISTED | NASDAQ History & Overview
27 BWFG LISTED NASDAQ BWFG LISTED NASDAQ • Connecticut-based $3.1 billion commercial bank • 9 branches in Fairfield & New Haven Counties • $311 million deposits per branch; one of the highest in Fairfield & New Haven Counties1 Bankwell operates in an attractive core market: • 4th most affluent MSA in the Nation in per capita personal income (PCPI)2 • 4 of the top 25 wealthiest towns in the U.S.3 • Headquarters of 10 Fortune 500 companies4 • Home to three of the largest hedge funds in the U.S. • MSA ranked 17th most educated overall, 9th highest percentage of bachelor degree holders5 • Median value of owner-occupied units of $704 thousand6 ̶ In addition, New Haven County median value of owner-occupied units of $237 thousand6 1 Source: S&P Global Market Intelligence’s Branch Competitors & Pricing Report as of 6/30/23, excluding global money center banks (tickers BAC, WFC, JPM, TD & C) 2 Source: Bureau of Economic Analysis’ Metropolitan Area Table, contained within the Personal Income by County & Metropolitan Area, 2022 news release 11/16/23 3 Source: Bloomberg: 2020 Richest Places 4 Source: Fortune.com: 2024 Fortune 500 5 Source: WalletHub: Most & Least Educated Cities in America, 7/17/24 6 Source: US Census Bureau QuickFacts (as of July 1, 2022 data) Profile
28 BWFG LISTED NASDAQ BWFG LISTED NASDAQ 0.70% 1.49% 2.05% 1.50% 1.16% 2020 2021 2022 2023 2Q24 YTD PPNR Return on Average Assets Performance Trends $0.75 $3.36 $4.79 $4.67 $0.62 2020 2021 2022 2023 2Q24 YTD Diluted EPS 0.28% 1.17% 1.44% 1.13% 0.31% 2020 2021 2022 2023 2Q24 YTD Return on Average Assets 3.40% 14.05% 16.91% 14.70% 3.65% 2020 2021 2022 2023 2Q24 YTD Return on Average Tangible Common Equity 1 Pre-tax, pre-provision net revenue is a non-GAAP metric & excludes provision for loan losses and income tax expense 1
29 BWFG LISTED NASDAQ BWFG LISTED NASDAQ Financial Snapshot 2020 2021 2022 2023 2Q24 YTD Total assets $2,253,747 $2,456,264 $3,252,449 $3,215,482 $3,141,654 Net loans $1,601,672 $1,875,167 $2,646,384 $2,685,301 $2,657,185 Loan-to-deposit ratio 87.9% 88.8% 95.2% 98.9% 99.4% Return on average assets 0.28% 1.17% 1.44% 1.13% 0.31% Efficiency ratio1 73.9% 53.9% 45.4% 50.8% 58.1% Non-interest expense / average assets 2.03% 1.75% 1.71% 1.55% 1.60% Net interest margin 2.77% 3.17% 3.78% 2.98% 2.73% Total capital to risk weighted assets 12.28% 12.00% 11.07% 12.32% 12.98% Tangible common equity ratio1 7.73% 8.13% 7.26% 8.19% 8.42% Return on average tangible common equity 3.40% 14.05% 16.91% 14.70% 3.65% Fully diluted tangible book value per share1 $21.96 $25.55 $30.51 $33.39 $33.61 Net interest income $54,835 $67,886 $94,743 $94,468 $42,366 Pre-tax, pre-provision net revenue1 $14,907 $33,803 $53,420 $48,909 $18,422 Net income $5,904 $26,586 $37,429 $36,664 $4,881 EPS (fully diluted) $0.75 $3.36 $4.79 $4.67 $0.62 1 A non-GAAP metric Dollars in thousands, except per share data
30 BWFG LISTED NASDAQ BWFG LISTED NASDAQ Name Years Experience Selected Professional Biography Christopher Gruseke Chief Executive Officer Director (since 2015) 30+ Mr. Gruseke was a founding investor and director of Bankwell Financial Group’s predecessors, BNC Financial Group, Inc., and The Bank of New Canaan. He brings more than 25 years of capital markets, operations, sales and finance experience to his role at the Company. Most recently, he was a member of the Executive Committee at CRT Capital, a Stamford, Connecticut-based broker/dealer. He also served as Co-Chief Operating Officer and a member of the Board of Greenwich Capital Markets. Mr. Gruseke earned a B.A. from Williams College and an M.S. from the Stern School of Business at New York University. Steven H. Brunner Chief Risk & Operations Officer (since 2024) 20+ Mr. Brunner has over 20 years of experience in Commercial Banking. He previously served as Global Head of Financial Crimes at Wex, Inc. a global financial technology payments company. His prior experience also includes nine years at Sterling National Bank, holding multiple compliance and risk management positions, serving as BSA/AML/OFAC Compliance & Security Officer from 2017 until the bank’s merger with Webster Bank. During his 9 years at Sterling National Bank, the bank grew its assets from $3 billion to over $30 billion. Prior thereto, he held similar risk management roles at Ally Financial, Inc. and AXA Equitable. Mr. Brunner earned his B.S. in Economic Crime Investigation, with a concentration in Computer Security from Utica University. Christine A. Chivily Chief Credit Officer (since 2013) 40+ Ms. Chivily has over 40 years of experience in banking and real estate finance. She previously served in a risk management role for the CRE and C&I loan portfolios at People's United Bank. Her prior experience also includes five years as Director of Freddie Mac’s New England region for multifamily properties and 11 years as Senior Credit Officer at RBS Greenwich Capital. She also has over 10 years of combined experience in lending, loan administration and workouts at other various banking institutions. Ms. Chivily received her B.A. from Mt. Holyoke College. Ryan J. Hildebrand Chief Innovation Officer (since 2023) 20+ Mr. Hildebrand has over 20 years of experience in fintech and banking. He led business units at Cross River Bank and LSBX, driving increased deposits and fee income. He founded Seed, a pioneering challenger bank acquired by Cross River. Previously, he served as Head of Finance and Strategy at Simple, the first consumer challenger bank, and held positions at Umpqua Bank and PricewaterhouseCoopers. Mr. Hildebrand received his B.A. in Accounting from Oregon State University. Matthew McNeill Chief Banking Officer (since 2020) 20+ Mr. McNeill has more than 20 years of experience in Commercial Banking. He most recently served as Head of Commercial Lending at Metropolitan Commercial Bank. During his 8 years at Metropolitan Commercial Bank the bank grew its lending assets from $400 million to over $3 billion. Mr. McNeill has additionally held lending roles at HSBC Bank US and Banco Santander. Mr. McNeill has also served as Managing Partner at American Real Estate Lending; a Commercial Real Estate finance company. Courtney E. Sacchetti Chief Financial Officer (since 2023) 25+ Ms. Sacchetti has more than 25 years experience in Financial Services. She most recently served as Director of Financial Planning & Analysis for the Company for 6 years. She began her career at GE Capital in the Financial Management Program (FMP) and held various finance and regulatory positions of increasing responsibility over her 18-year career at GE Capital. Ms. Sacchetti earned a B.A. and an M.B.A. from Union College. Experienced Leadership Team
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Bankwell Financial (NASDAQ:BWFG)
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