Bankwell Financial Group, Inc 8-K, filed Jan 27, 2020
Bankwell Financial Group, Inc. (BWFG)
8-K
2020-01-27
For: 2020-01-27
View Original
Added on
April 11, 2026
About this 8-K
Bankwell Financial Group, Inc filed this 8-K on January 27, 2020.
Items reported
- Item 2.02: Financial results
- Item 7.01: Regulation FD disclosure
- Item 8.01: Other events
- Item 9.01: Financial statements and exhibits
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): January 27, 2020
Bankwell Financial Group, Inc.
(Exact name of registrant as specified in its charter)
Connecticut | 001-36448 | 20-8251355 |
(State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification No.) |
220 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:
☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
☐ | 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:
Title of Each Class | Trading Symbol(s) | Name of Each Exchange on Which Registered |
Common Stock, no par value per share | BWFG | NASDAQ Global Market |
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).
Emerging growth company | |
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. | |
Item 2.02 | Results of Operations and Financial Condition |
On January 27, 2020, Bankwell Financial Group, Inc., the holding company for Bankwell Bank, issued a press release describing its results of operations for the fourth quarter and year ended December 31, 2019. A copy of the press release is included as Exhibit 99.1 to this current Form 8-K and is incorporated herein by reference. | |
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. | |
Item 7.01 | Regulation FD Disclosure |
On January 27, 2020, 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 December 31, 2019. 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 Form 8-K and is incorporated herein by reference. | |
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. | |
Item 8.01 | Other Events |
On January 27, 2020, 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 $0.14 per share on February 24, 2020 to all shareholders of record as of February 14, 2020. | |
Item 9.01 | Financial Statements and Exhibits |
(a) | Not applicable. |
(b) | Not applicable. |
(c) | Not applicable. |
(d) | Exhibits. |
Exhibit Number | Description |
99.1 | |
99.2 | |
SIGNATURES | |
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. | |
BANKWELL FINANCIAL GROUP, INC. | |
Registrant | |
January 27, 2020 | By: /s/ Penko K. Ivanov |
Penko K. Ivanov | |
Executive Vice President | |
and Chief Financial Officer | |
BANKWELL FINANCIAL GROUP REPORTS OPERATING RESULTS FOR THE FOURTH QUARTER AND DECLARES AN INCREASE TO THE FIRST QUARTER DIVIDEND
New Canaan, CT – January 27, 2020 – Bankwell Financial Group, Inc. (NASDAQ: BWFG) reported GAAP net income of $3.5 million or $0.44 per share for the fourth quarter of 2019, versus $3.3 million or $0.41 per share for the same period in 2018 and GAAP net income of $18.2 million or $2.31 per share for the year ended 2019, versus $17.4 million or $2.21 per share for the year ended 2018.
The Company's Board of Directors declared a $0.14 per share cash dividend, payable February 24, 2020 to shareholders of record on February 14, 2020, representing an 8% increase when compared to the prior quarter’s dividend.
Notes Bankwell Financial Group President and CEO, Christopher R. Gruseke:
"We finished the year with excellent momentum, growing loan balances $40 million during the fourth quarter on originations of $92 million. We are particularly pleased at the results of our investment in Bankwell’s Treasury Management (“TM”) business. New non-interest bearing deposits from TM grew by 31% during 2019. Importantly, we begin 2020 with our cost of deposits down approximately 20 basis points from the peak in Q2, and expect a further 10-15 basis point reduction this year based on currently prevailing interest rates."
Fourth Quarter and Year Ended 2019 Highlights:
• | Fourth quarter diluted earnings per share were $0.44, an increase of 7% compared to the fourth quarter of 2018. |
• | Total gross loans were $1.6 billion at December 31, 2019 and grew at an annualized rate of 10% during the quarter. |
• | Return on average assets for the year ended December 31, 2019 totaled 0.97% compared to 0.94% for the same period in 2018. |
• | Total deposits were $1.5 billion at December 31, 2019 and grew at an annualized rate of 6% during the quarter. |
• | Noninterest bearing deposits totaled $191.5 million for the year ended December 31, 2019, up 7% when compared to the third quarter of 2019. |
• | The allowance for loan losses was $13.5 million and represents 0.84% of total loans. |
• | Investment securities totaled $100.9 million and represent 5% of total assets. |
• | Total noninterest income was $5.2 million for the year ended December 31, 2019, or 9% of total revenue. |
• | The tangible common equity ratio and tangible book value per share, as of December 31, 2019, were 9.56% and $23.15, respectively. |
• | The efficiency ratio was 60.2% for the year ended December 31, 2019. |
• | Tax equivalent net interest margin was 3.03% for the year ended December 31, 2019. |
Earnings and Performance
Revenues (net interest income plus noninterest income) for the quarter ended December 31, 2019 were $13.9 million, versus $15.1 million for the quarter ended December 31, 2018. The decrease in revenues was attributable to a decline in fee income from loan prepayment activity during the quarter ended December 31, 2019 when compared to the same period in 2018. The decrease in revenues was partially offset by an increase in gains and fees from the sales of loans.
Revenues for the year ended December 31, 2019 were $59.0 million, versus $60.2 million for the year ended December 31, 2018. The decrease in revenues was primarily due to an increase in the cost of interest bearing deposits when compared to the same period in 2018. The decrease in revenues was partially offset by fees recognized from elevated loan prepayments, an increase in gains and fees from the sales of loans, and an increase in fees associated with loan related interest rate swaps. Loan prepayment fees totaled $2.7 million for the year ended December 31, 2019 compared to $1.3 million for the same period in 2018.
1
Net income for the quarter ended December 31, 2019 was $3.5 million, versus $3.3 million for the quarter ended December 31, 2018. Net income for the year ended December 31, 2019 was $18.2 million, versus $17.4 million for the year ended December 31, 2018. The increase in net income was largely driven by a decline in loan charge-offs in 2019 when compared to 2018, resulting in a lower loan loss provision.
Basic and diluted earnings per share were each $0.44 for the quarter ended December 31, 2019 compared to basic and diluted earnings per share of $0.42 and $0.41, respectively, for the quarter ended December 31, 2018. Basic and diluted earnings per share were $2.32 and $2.31, respectively, for the year ended December 31, 2019 compared to basic and diluted earnings per share of $2.23 and $2.21, respectively, for the year ended December 31, 2018.
The Company’s efficiency ratio for the quarters ended December 31, 2019 and December 31, 2018 was 66.1% and 58.2%, respectively. The Company's efficiency ratio for the years ended December 31, 2019 and December 31, 2018 was 60.2% and 59.2%, respectively. The increases in the efficiency ratio were primarily a result of decreased revenues when compared to the quarter and year ended December 31, 2018. Additionally, increased noninterest expense for the quarter ended December 31, 2019 when compared to the same period in 2018 also contributed to an increase in the quarter end efficiency ratio.
The net interest margin (fully taxable equivalent basis) for the quarters ended December 31, 2019 and 2018 was 2.92% and 3.20%, respectively. The net interest margin for the years ended December 31, 2019 and 2018 was 3.03% and 3.18%, respectively. The decrease in the net interest margin for the quarter ended December 31, 2019 compared to the same period in 2018 was due to a decline in fee income from loan prepayment activity. The decrease in the net interest margin for the year ended December 31, 2019 compared to the same period in 2018 was due to higher rates on interest bearing deposits. For the year ended December 31, 2019, the decline in the net interest margin was partially offset by incremental fees from loan prepayments.
Financial Condition
Total assets, gross loans and deposits remained relatively flat for the period ended December 31, 2019 when compared to the same period in 2018, totaling $1.9 billion, $1.6 billion and $1.5 billion, respectively. However, gross loans grew at an annualized rate of 10% during the fourth quarter of 2019 when compared to the third quarter of 2019. In addition, deposits grew at an annualized rate of 6% during the fourth quarter of 2019 when compared to the third quarter of 2019, which includes strong growth in noninterest bearing deposits.
Capital
Shareholders’ equity totaled $182.4 million as of December 31, 2019, an increase of $8.2 million compared to December 31, 2018, primarily a result of net income for the year ended December 31, 2019 of $18.2 million. The increase was partially offset by a $6.5 million unfavorable impact to accumulated other comprehensive income driven by fair value marks related to hedge positions involving interest rate swaps, as well as dividends paid of $4.1 million and common stock repurchases of $1.0 million. The marks on the interest rate swaps are driven by lower long term market interest rates in 2019 when compared to 2018. The Company's interest rate swaps are primarily used to hedge interest rate risk in relation to its funding sources. The Company's current derivative positions will cause a decrease to other comprehensive income in a falling interest rate environment and an increase in a rising interest rate environment. As of December 31, 2019, the tangible common equity ratio and tangible book value per share were 9.56% and $23.15, respectively.
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.
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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 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 and tangible book value per share are useful to evaluate the relative strength of the Company's capital position. We utilize these measures for internal planning and forecasting purposes. These non-GAAP financial measures should not be considered a substitute for GAAP basis measures and results, and we strongly encourage investors to review our consolidated financial statements in their entirety and not to rely on any single financial measure.
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BANKWELL FINANCIAL GROUP, INC.
CONSOLIDATED BALANCE SHEETS (unaudited)
(Dollars in thousands)
December 31, 2019 | September 30, 2019 | June 30, 2019 | March 31, 2019 | December 31, 2018 | |||||||||||||||
ASSETS | |||||||||||||||||||
Cash and due from banks | $ | 78,051 | $ | 83,109 | $ | 75,647 | $ | 88,827 | $ | 75,411 | |||||||||
Federal funds sold | — | — | 3,237 | 4,764 | 2,701 | ||||||||||||||
Cash and cash equivalents | 78,051 | 83,109 | 78,884 | 93,591 | 78,112 | ||||||||||||||
Investment securities | |||||||||||||||||||
Marketable equity securities, at fair value | 2,118 | 2,120 | 2,090 | 2,049 | 2,009 | ||||||||||||||
Available for sale investment securities, at fair value | 82,439 | 86,017 | 93,017 | 96,423 | 93,154 | ||||||||||||||
Held to maturity investment securities, at amortized cost | 16,308 | 17,365 | 21,318 | 21,364 | 21,421 | ||||||||||||||
Total investment securities | 100,865 | 105,502 | 116,425 | 119,836 | 116,584 | ||||||||||||||
Loans receivable (net of allowance for loan losses of $13,509, $13,212, $13,890, $15,430, and $15,462 at December 31, 2019, September 30, 2019, June 30, 2019, March 31, 2019, and December 31, 2018, respectively) | 1,588,840 | 1,548,988 | 1,551,620 | 1,578,609 | 1,586,775 | ||||||||||||||
Other real estate owned | — | — | 1,217 | — | — | ||||||||||||||
Accrued interest receivable | 5,959 | 5,916 | 6,165 | 6,534 | 6,375 | ||||||||||||||
Federal Home Loan Bank stock, at cost | 7,475 | 7,475 | 7,475 | 7,475 | 8,110 | ||||||||||||||
Premises and equipment, net | 28,522 | 28,892 | 29,060 | 29,629 | 19,771 | ||||||||||||||
Bank-owned life insurance | 41,683 | 41,433 | 41,178 | 40,925 | 40,675 | ||||||||||||||
Goodwill | 2,589 | 2,589 | 2,589 | 2,589 | 2,589 | ||||||||||||||
Other intangible assets | 214 | 232 | 251 | 270 | 290 | ||||||||||||||
Deferred income taxes, net | 5,788 | 6,591 | 5,596 | 4,835 | 4,347 | ||||||||||||||
Other assets | 22,196 | 27,815 | 19,205 | 13,465 | 10,037 | ||||||||||||||
Total assets | $ | 1,882,182 | $ | 1,858,542 | $ | 1,859,665 | $ | 1,897,758 | $ | 1,873,665 | |||||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||||||||||||||||
Liabilities | |||||||||||||||||||
Deposits | |||||||||||||||||||
Noninterest bearing deposits | $ | 191,518 | $ | 178,733 | $ | 161,704 | $ | 161,844 | $ | 173,198 | |||||||||
Interest bearing deposits | 1,300,385 | 1,291,551 | 1,316,027 | 1,359,521 | 1,329,046 | ||||||||||||||
Total deposits | 1,491,903 | 1,470,284 | 1,477,731 | 1,521,365 | 1,502,244 | ||||||||||||||
Advances from the Federal Home Loan Bank | 150,000 | 150,000 | 150,000 | 150,000 | 160,000 | ||||||||||||||
Subordinated debentures | 25,207 | 25,194 | 25,181 | 25,168 | 25,155 | ||||||||||||||
Accrued expenses and other liabilities | 32,675 | 37,052 | 29,813 | 24,384 | 12,070 | ||||||||||||||
Total liabilities | 1,699,785 | 1,682,530 | 1,682,725 | 1,720,917 | 1,699,469 | ||||||||||||||
Shareholders’ equity | |||||||||||||||||||
Common stock, no par value | 120,589 | 120,343 | 120,064 | 120,750 | 120,527 | ||||||||||||||
Retained earnings | 69,324 | 66,870 | 63,801 | 59,247 | 54,706 | ||||||||||||||
Accumulated other comprehensive loss | (7,516 | ) | (11,201 | ) | (6,925 | ) | (3,156 | ) | (1,037 | ) | |||||||||
Total shareholders’ equity | 182,397 | 176,012 | 176,940 | 176,841 | 174,196 | ||||||||||||||
Total liabilities and shareholders’ equity | $ | 1,882,182 | $ | 1,858,542 | $ | 1,859,665 | $ | 1,897,758 | $ | 1,873,665 | |||||||||
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BANKWELL FINANCIAL GROUP, INC.
CONSOLIDATED STATEMENTS OF INCOME (unaudited)
(Dollars in thousands, except share data)
For the Quarter Ended | For the Year Ended | ||||||||||||||||||||||||||
December 31, 2019 | September 30, 2019 | June 30, 2019 | March 31, 2019 | December 31, 2018 | December 31, 2019 | December 31, 2018 | |||||||||||||||||||||
Interest and dividend income | |||||||||||||||||||||||||||
Interest and fees on loans | $ | 18,648 | $ | 19,055 | $ | 19,540 | $ | 20,096 | $ | 20,030 | $ | 77,339 | $ | 74,715 | |||||||||||||
Interest and dividends on securities | 858 | 903 | 992 | 997 | 1,009 | 3,750 | 3,921 | ||||||||||||||||||||
Interest on cash and cash equivalents | 427 | 535 | 514 | 383 | 504 | 1,859 | 1,428 | ||||||||||||||||||||
Total interest and dividend income | 19,933 | 20,493 | 21,046 | 21,476 | 21,543 | 82,948 | 80,064 | ||||||||||||||||||||
Interest expense | |||||||||||||||||||||||||||
Interest expense on deposits | 5,948 | 6,331 | 6,319 | 6,100 | 5,942 | 24,698 | 18,951 | ||||||||||||||||||||
Interest expense on borrowings | 1,103 | 1,151 | 1,132 | 1,103 | 1,134 | 4,489 | 4,787 | ||||||||||||||||||||
Total interest expense | 7,051 | 7,482 | 7,451 | 7,203 | 7,076 | 29,187 | 23,738 | ||||||||||||||||||||
Net interest income | 12,882 | 13,011 | 13,595 | 14,273 | 14,467 | 53,761 | 56,326 | ||||||||||||||||||||
Provision (Credit) for loan losses | 310 | 773 | (841 | ) | 195 | 2,795 | 437 | 3,440 | |||||||||||||||||||
Net interest income after provision (credit) for loan losses | 12,572 | 12,238 | 14,436 | 14,078 | 11,672 | 53,324 | 52,886 | ||||||||||||||||||||
Noninterest income | |||||||||||||||||||||||||||
Gains and fees from sales of loans | 382 | 703 | 617 | 89 | 149 | 1,791 | 984 | ||||||||||||||||||||
Bank owned life insurance | 250 | 255 | 254 | 249 | 262 | 1,008 | 1,057 | ||||||||||||||||||||
Service charges and fees | 247 | 264 | 263 | 249 | 284 | 1,023 | 1,090 | ||||||||||||||||||||
Net gain on sale of available for sale securities | — | — | 76 | — | — | 76 | 222 | ||||||||||||||||||||
Loss on sale of other real estate owned, net | — | (102 | ) | — | — | — | (102 | ) | — | ||||||||||||||||||
Other | 169 | 432 | 126 | 721 | (94 | ) | 1,448 | 547 | |||||||||||||||||||
Total noninterest income | 1,048 | 1,552 | 1,336 | 1,308 | 601 | 5,244 | 3,900 | ||||||||||||||||||||
Noninterest expense | |||||||||||||||||||||||||||
Salaries and employee benefits | 5,162 | 4,881 | 4,555 | 4,836 | 4,503 | 19,434 | 18,973 | ||||||||||||||||||||
Occupancy and equipment | 1,928 | 1,946 | 1,833 | 1,887 | 1,671 | 7,594 | 6,790 | ||||||||||||||||||||
Data processing | 499 | 505 | 551 | 512 | 487 | 2,067 | 2,033 | ||||||||||||||||||||
Professional services | 402 | 346 | 519 | 590 | 583 | 1,857 | 2,103 | ||||||||||||||||||||
Director fees | 224 | 235 | 215 | 189 | 295 | 863 | 1,044 | ||||||||||||||||||||
Marketing | 220 | 210 | 348 | 193 | 416 | 971 | 1,587 | ||||||||||||||||||||
Amortization of intangibles | 18 | 19 | 19 | 19 | 20 | 75 | 92 | ||||||||||||||||||||
FDIC insurance | — | (125 | ) | 76 | 123 | 159 | 74 | 779 | |||||||||||||||||||
Other | 771 | 655 | 639 | 626 | 662 | 2,691 | 2,232 | ||||||||||||||||||||
Total noninterest expense | 9,224 | 8,672 | 8,755 | 8,975 | 8,796 | 35,626 | 35,633 | ||||||||||||||||||||
Income before income tax expense | 4,396 | 5,118 | 7,017 | 6,411 | 3,477 | 22,942 | 21,153 | ||||||||||||||||||||
Income tax expense | 924 | 1,030 | 1,441 | 1,331 | 216 | 4,726 | 3,720 | ||||||||||||||||||||
Net income | $ | 3,472 | $ | 4,088 | $ | 5,576 | $ | 5,080 | $ | 3,261 | $ | 18,216 | $ | 17,433 | |||||||||||||
Earnings Per Common Share: | |||||||||||||||||||||||||||
Basic | $ | 0.44 | $ | 0.52 | $ | 0.71 | $ | 0.65 | $ | 0.42 | $ | 2.32 | $ | 2.23 | |||||||||||||
Diluted | $ | 0.44 | $ | 0.52 | $ | 0.71 | $ | 0.65 | $ | 0.41 | $ | 2.31 | $ | 2.21 | |||||||||||||
Weighted Average Common Shares Outstanding: | |||||||||||||||||||||||||||
Basic | 7,745,227 | 7,750,490 | 7,773,466 | 7,760,460 | 7,749,616 | 7,757,355 | 7,722,175 | ||||||||||||||||||||
Diluted | 7,773,780 | 7,766,485 | 7,790,760 | 7,776,378 | 7,781,153 | 7,784,631 | 7,775,480 | ||||||||||||||||||||
Dividends per common share | $ | 0.13 | $ | 0.13 | $ | 0.13 | $ | 0.13 | $ | 0.12 | $ | 0.52 | $ | 0.48 | |||||||||||||
5
BANKWELL FINANCIAL GROUP, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (unaudited)
For the Quarter Ended | For the Year Ended | |||||||||||||||||||
December 31, 2019 | September 30, 2019 | June 30, 2019 | March 31, 2019 | December 31, 2018 | December 31, 2019 | December 31, 2018 | ||||||||||||||
Performance ratios: | ||||||||||||||||||||
Return on average assets | 0.73 | % | 0.87 | % | 1.20 | % | 1.10 | % | 0.69 | % | 0.97 | % | 0.94 | % | ||||||
Return on average stockholders' equity | 7.68 | % | 9.12 | % | 12.48 | % | 11.60 | % | 7.28 | % | 10.20 | % | 10.19 | % | ||||||
Return on average tangible common equity | 7.80 | % | 9.26 | % | 12.68 | % | 11.80 | % | 7.40 | % | 10.37 | % | 10.37 | % | ||||||
Net interest margin | 2.92 | % | 2.96 | % | 3.07 | % | 3.19 | % | 3.20 | % | 3.03 | % | 3.18 | % | ||||||
Efficiency ratio(1) | 66.1 | % | 58.9 | % | 58.6 | % | 57.5 | % | 58.2 | % | 60.2 | % | 59.2 | % | ||||||
Net loan charge-offs as a % of average loans | — | % | 0.09 | % | 0.04 | % | 0.01 | % | 0.41 | % | 0.15 | % | 0.44 | % | ||||||
Dividend payout ratio | 29.55 | % | 25.00 | % | 18.31 | % | 20.00 | % | 29.27 | % | 22.51 | % | 21.72 | % | ||||||
As of | |||||||||||||||||||
December 31, 2019 | September 30, 2019 | June 30, 2019 | March 31, 2019 | December 31, 2018 | |||||||||||||||
Capital ratios: | |||||||||||||||||||
Total Common Equity Tier 1 Capital to Risk-Weighted Assets(2) | 12.53 | % | 12.65 | % | 12.40 | % | 12.00 | % | 11.56 | % | |||||||||
Total Capital to Risk-Weighted Assets(2) | 13.35 | % | 13.47 | % | 13.26 | % | 12.94 | % | 12.50 | % | |||||||||
Tier I Capital to Risk-Weighted Assets(2) | 12.53 | % | 12.65 | % | 12.40 | % | 12.00 | % | 11.56 | % | |||||||||
Tier I Capital to Average Assets(2) | 10.99 | % | 10.88 | % | 10.75 | % | 10.53 | % | 10.14 | % | |||||||||
Tangible common equity to tangible assets | 9.56 | % | 9.33 | % | 9.38 | % | 9.18 | % | 9.16 | % | |||||||||
Tangible book value per common share(3) | $ | 23.15 | $ | 22.34 | $ | 22.47 | $ | 22.38 | $ | 22.06 | |||||||||
(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)Represents Bank ratios. Current period capital ratios are preliminary subject to finalization of the FDIC Call Report.
(3)Excludes unvested restricted shares of 110,975, 88,473, 94,598, 99,061, and 77,624 as of December 31, 2019, September 30, 2019, June 30, 2019, March 31, 2019, and December 31, 2018, respectively.
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BANKWELL FINANCIAL GROUP, INC.
ASSET QUALITY (unaudited)
(Dollars in thousands)
For the Quarter Ended | |||||||||||||||||||
December 31, 2019 | September 30, 2019 | June 30, 2019 | March 31, 2019 | December 31, 2018 | |||||||||||||||
Allowance for loan losses: | |||||||||||||||||||
Balance at beginning of period | $ | 13,212 | $ | 13,890 | $ | 15,430 | $ | 15,462 | $ | 19,311 | |||||||||
Charge-offs: | |||||||||||||||||||
Residential real estate | — | (78 | ) | (565 | ) | (233 | ) | (348 | ) | ||||||||||
Commercial real estate | — | (594 | ) | — | — | (5,596 | ) | ||||||||||||
Commercial business | (13 | ) | (748 | ) | (130 | ) | (3 | ) | (719 | ) | |||||||||
Consumer | (5 | ) | (57 | ) | (13 | ) | (2 | ) | (15 | ) | |||||||||
Total charge-offs | (18 | ) | (1,477 | ) | (708 | ) | (238 | ) | (6,678 | ) | |||||||||
Recoveries: | |||||||||||||||||||
Commercial real estate | — | — | — | — | 18 | ||||||||||||||
Commercial business | 1 | 2 | 6 | 10 | 15 | ||||||||||||||
Consumer | 4 | 24 | 3 | 1 | 1 | ||||||||||||||
Total recoveries | 5 | 26 | 9 | 11 | 34 | ||||||||||||||
Net loan charge-offs | (13 | ) | (1,451 | ) | (699 | ) | (227 | ) | (6,644 | ) | |||||||||
Provision (Credit) for loan losses | 310 | 773 | (841 | ) | 195 | 2,795 | |||||||||||||
Balance at end of period | $ | 13,509 | $ | 13,212 | $ | 13,890 | $ | 15,430 | $ | 15,462 | |||||||||
As of | |||||||||||||||||||
December 31, 2019 | September 30, 2019 | June 30, 2019 | March 31, 2019 | December 31, 2018 | |||||||||||||||
Asset quality: | |||||||||||||||||||
Nonaccrual loans | |||||||||||||||||||
Residential real estate | $ | 1,560 | $ | 1,583 | $ | 1,716 | $ | 3,516 | $ | 3,812 | |||||||||
Commercial real estate | 5,222 | 5,332 | 4,535 | 5,880 | 5,950 | ||||||||||||||
Commercial business | 3,806 | 2,963 | 5,437 | 3,837 | 4,320 | ||||||||||||||
Total nonaccrual loans | 10,588 | 9,878 | 11,688 | 13,233 | 14,082 | ||||||||||||||
Other real estate owned | — | — | 1,217 | — | — | ||||||||||||||
Total nonperforming assets | $ | 10,588 | $ | 9,878 | $ | 12,905 | $ | 13,233 | $ | 14,082 | |||||||||
Nonperforming loans as a % of total loans | 0.66 | % | 0.63 | % | 0.75 | % | 0.83 | % | 0.88 | % | |||||||||
Nonperforming assets as a % of total assets | 0.56 | % | 0.53 | % | 0.69 | % | 0.70 | % | 0.75 | % | |||||||||
Allowance for loan losses as a % of total loans | 0.84 | % | 0.84 | % | 0.89 | % | 0.97 | % | 0.96 | % | |||||||||
Allowance for loan losses as a % of nonperforming loans | 127.59 | % | 133.75 | % | 118.84 | % | 116.60 | % | 109.80 | % | |||||||||
Nonperforming assets as a percentage of total assets was 0.56% at December 31, 2019, down from 0.75% at December 31, 2018. The allowance for loan losses at December 31, 2019 was $13.5 million, representing 0.84% of total loans. The Company continues to work on the resolution of the previously disclosed large nonperforming lending relationship. Progress to date has been in line with the Company's estimates and, during the fourth quarter of 2019, a claim has been submitted to the Small Business Administration ("SBA") to recover the remaining balance of $1.9 million, representing 10 basis points of the total nonperforming assets to total assets ratio of 0.56%. During the third quarter of 2019, the Company sold its other real estate owned ("OREO") property for a loss of $0.1 million. The Company does not have any OREO as of December 31, 2019.
7
BANKWELL FINANCIAL GROUP, INC.
LOAN & DEPOSIT PORTFOLIO (unaudited)
(Dollars in thousands)
Period End Loan Composition | December 31, 2019 | September 30, 2019 | December 31, 2018 | Current QTD % Change | YTD % Change | ||||||||||||
Residential Real Estate | $ | 147,109 | $ | 159,193 | $ | 178,079 | (7.6 | )% | (17.4 | )% | |||||||
Commercial Real Estate(1) | 1,128,614 | 1,096,856 | 1,094,066 | 2.9 | % | 3.2 | % | ||||||||||
Construction | 98,583 | 89,878 | 73,191 | 9.7 | % | 34.7 | % | ||||||||||
Total Real Estate Loans | 1,374,306 | 1,345,927 | 1,345,336 | 2.1 | % | 2.2 | % | ||||||||||
Commercial Business | 230,028 | 218,145 | 258,978 | 5.4 | % | (11.2 | )% | ||||||||||
Consumer | 150 | 260 | 412 | (42.3 | )% | (63.6 | )% | ||||||||||
Total Loans | $ | 1,604,484 | $ | 1,564,332 | $ | 1,604,726 | 2.6 | % | — | % | |||||||
(1) Includes owner occupied commercial real estate. | |||||||||||||||||
Period End Deposit Composition | December 31, 2019 | September 30, 2019 | December 31, 2018 | Current QTD % Change | YTD % Change | ||||||||||||
Noninterest bearing demand | $ | 191,518 | $ | 178,733 | $ | 173,198 | 7.2 | % | 10.6 | % | |||||||
NOW | 70,020 | 60,645 | 61,869 | 15.5 | % | 13.2 | % | ||||||||||
Money Market | 419,495 | 411,248 | 471,968 | 2.0 | % | (11.1 | )% | ||||||||||
Savings | 183,729 | 176,232 | 180,487 | 4.3 | % | 1.8 | % | ||||||||||
Time | 627,141 | 643,426 | 614,722 | (2.5 | )% | 2.0 | % | ||||||||||
Total Deposits | $ | 1,491,903 | $ | 1,470,284 | $ | 1,502,244 | 1.5 | % | (0.7 | )% | |||||||
8
BANKWELL FINANCIAL GROUP, INC.
NONINTEREST INCOME & EXPENSE - QTD (unaudited)
(Dollars in thousands)
For the Quarter Ended | |||||||||||||||||
Noninterest income | December 31, 2019 | September 30, 2019 | December 31, 2018 | Dec 19 vs. Sep 19 % Change | Dec 19 vs. Dec 18 % Change | ||||||||||||
Gains and fees from sales of loans | $ | 382 | $ | 703 | $ | 149 | (45.7 | )% | 156.4 | % | |||||||
Bank owned life insurance | 250 | 255 | 262 | (2.0 | )% | (4.6 | )% | ||||||||||
Service charges and fees | 247 | 264 | 284 | (6.4 | )% | (13.0 | )% | ||||||||||
Loss on sale of other real estate owned, net | — | (102 | ) | — | (100.0 | )% | N/A | ||||||||||
Other | 169 | 432 | (94 | ) | (60.9 | )% | 279.8 | % | |||||||||
Total noninterest income | $ | 1,048 | $ | 1,552 | $ | 601 | (32.5 | )% | 74.4 | % | |||||||
Noninterest income increased by $0.4 million, or 74%, to $1.0 million for the quarter ended December 31, 2019 compared to the quarter ended December 31, 2018. The increase in noninterest income was primarily a result of a $0.2 million increase in gains and fees from the sales of loans, driven by a higher volume of loans sold for the quarter ended December 31, 2019 compared to the same period in 2018.
For the Quarter Ended | |||||||||||||||||
Noninterest expense | December 31, 2019 | September 30, 2019 | December 31, 2018 | Dec 19 vs. Sep 19 % Change | Dec 19 vs. Dec 18 % Change | ||||||||||||
Salaries and employee benefits | $ | 5,162 | $ | 4,881 | $ | 4,503 | 5.8 | % | 14.6 | % | |||||||
Occupancy and equipment | 1,928 | 1,946 | 1,671 | (0.9 | )% | 15.4 | % | ||||||||||
Data processing | 499 | 505 | 487 | (1.2 | )% | 2.5 | % | ||||||||||
Professional services | 402 | 346 | 583 | 16.2 | % | (31.0 | )% | ||||||||||
Director fees | 224 | 235 | 295 | (4.7 | )% | (24.1 | )% | ||||||||||
Marketing | 220 | 210 | 416 | 4.8 | % | (47.1 | )% | ||||||||||
Amortization of intangibles | 18 | 19 | 20 | (5.3 | )% | (10.0 | )% | ||||||||||
FDIC insurance | — | (125 | ) | 159 | (100.0 | )% | (100.0 | )% | |||||||||
Other | 771 | 655 | 662 | 17.7 | % | 16.5 | % | ||||||||||
Total noninterest expense | $ | 9,224 | $ | 8,672 | $ | 8,796 | 6.4 | % | 4.9 | % | |||||||
Noninterest expense increased by $0.4 million, or 5%, to $9.2 million for the quarter ended December 31, 2019 compared to the quarter ended December 31, 2018. The increase in noninterest expense was primarily driven by increases in salaries and employee benefits and occupancy and equipment expense. Salaries and employee benefits totaled $5.2 million for the quarter ended December 31, 2019 compared to $4.5 million for the same period in 2018, an increase of $0.7 million. The increase in salaries and employee benefits was primarily driven by an increase in full time equivalent employees and a reduction in deferred loan origination costs. Full time equivalent employees totaled 157 at December 31, 2019 compared to 140 at December 31, 2018. Occupancy and equipment expense increased by $0.3 million for the quarter ended December 31, 2019 compared to the same period in 2018 as a result of the Company's additional investment in technology. The increase in noninterest expense was primarily offset by a $0.2 million decrease in professional services and a $0.2 million decrease in marketing expenses.
9
BANKWELL FINANCIAL GROUP, INC.
NONINTEREST INCOME & EXPENSE - YTD (unaudited)
(Dollars in thousands)
For the Year Ended | ||||||||||
Noninterest income | December 31, 2019 | December 31, 2018 | % Change | |||||||
Gains and fees from sales of loans | $ | 1,791 | $ | 984 | 82.0 | % | ||||
Service charges and fees | 1,023 | 1,090 | (6.1 | )% | ||||||
Bank owned life insurance | 1,008 | 1,057 | (4.6 | )% | ||||||
Net gain on sale of available for sale securities | 76 | 222 | (65.8 | )% | ||||||
Loss on sale of other real estate owned, net | (102 | ) | — | N/A | ||||||
Other | 1,448 | 547 | 164.7 | % | ||||||
Total noninterest income | $ | 5,244 | $ | 3,900 | 34.5 | % | ||||
Noninterest income increased by $1.3 million, or 34%, for the year ended December 31, 2019 compared to the year ended December 31, 2018. The increase in noninterest income was primarily a result of a $0.8 million increase in gains and fees from sales of loans and a $0.9 million increase in other income. The increase in gains and fees from sales of loans was driven by a higher volume of loans sold for the year ended December 31, 2019 compared to the same period in 2018. The increase in other income was mainly attributable to loan related interest rate swap fees.
For the Year Ended | ||||||||||
Noninterest expense | December 31, 2019 | December 31, 2018 | % Change | |||||||
Salaries and employee benefits | $ | 19,434 | $ | 18,973 | 2.4 | % | ||||
Occupancy and equipment | 7,594 | 6,790 | 11.8 | % | ||||||
Data processing | 2,067 | 2,033 | 1.7 | % | ||||||
Professional services | 1,857 | 2,103 | (11.7 | )% | ||||||
Marketing | 971 | 1,587 | (38.8 | )% | ||||||
Director fees | 863 | 1,044 | (17.3 | )% | ||||||
Amortization of intangibles | 75 | 92 | (18.5 | )% | ||||||
FDIC insurance | 74 | 779 | (90.5 | )% | ||||||
Other | 2,691 | 2,232 | 20.6 | % | ||||||
Total noninterest expense | $ | 35,626 | $ | 35,633 | — | % | ||||
Noninterest expense remained flat, totaling $35.6 million for the years ended December 31, 2019 and 2018. Salaries and employee benefits totaled $19.4 million for the year ended December 31, 2019 compared to $19.0 million for the same period in 2018, an increase of $0.5 million. The increase in salaries and employee benefits was primarily driven by an increase in full time equivalent employees and a reduction in deferred loan origination costs. Average full time equivalent employees totaled 150 in 2019 compared to 144 in 2018. Occupancy and equipment expense increased by $0.8 million for the year ended December 31, 2019 compared to the same period in 2018. This increase was primarily associated with a full year of expenses from the prior year's branch expansion and additional investment in technology. FDIC insurance expense decreased by $0.7 million for the year ended December 31, 2019 compared to the same period in 2018 driven by a credit received during the quarter ended September 30, 2019.
10
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 | December 31, 2019 | September 30, 2019 | June 30, 2019 | March 31, 2019 | December 31, 2018 | ||||||||||||||
Total Equity | $ | 182,397 | $ | 176,012 | $ | 176,940 | $ | 176,841 | $ | 174,196 | |||||||||
Less: | |||||||||||||||||||
Goodwill | 2,589 | 2,589 | 2,589 | 2,589 | 2,589 | ||||||||||||||
Other intangibles | 214 | 232 | 251 | 270 | 290 | ||||||||||||||
Tangible Common Equity | $ | 179,594 | $ | 173,191 | $ | 174,100 | $ | 173,982 | $ | 171,317 | |||||||||
Total Assets | $ | 1,882,182 | $ | 1,858,542 | $ | 1,859,665 | $ | 1,897,758 | $ | 1,873,665 | |||||||||
Less: | |||||||||||||||||||
Goodwill | 2,589 | 2,589 | 2,589 | 2,589 | 2,589 | ||||||||||||||
Other intangibles | 214 | 232 | 251 | 270 | 290 | ||||||||||||||
Tangible Assets | $ | 1,879,379 | $ | 1,855,721 | $ | 1,856,825 | $ | 1,894,899 | $ | 1,870,786 | |||||||||
Tangible Common Equity to Tangible Assets | 9.56 | % | 9.33 | % | 9.38 | % | 9.18 | % | 9.16 | % | |||||||||
As of | |||||||||||||||||||
Computation of Tangible Book Value per Common Share | December 31, 2019 | September 30, 2019 | June 30, 2019 | March 31, 2019 | December 31, 2018 | ||||||||||||||
Total shareholders' equity | $ | 182,397 | $ | 176,012 | $ | 176,940 | $ | 176,841 | $ | 174,196 | |||||||||
Less: | |||||||||||||||||||
Preferred stock | — | — | — | — | — | ||||||||||||||
Common shareholders' equity | $ | 182,397 | $ | 176,012 | $ | 176,940 | $ | 176,841 | $ | 174,196 | |||||||||
Less: | |||||||||||||||||||
Goodwill | 2,589 | 2,589 | 2,589 | 2,589 | 2,589 | ||||||||||||||
Other intangibles | 214 | 232 | 251 | 270 | 290 | ||||||||||||||
Tangible common shareholders' equity | $ | 179,594 | $ | 173,191 | $ | 174,100 | $ | 173,982 | $ | 171,317 | |||||||||
Common shares | 7,868,803 | 7,841,103 | 7,841,103 | 7,873,471 | 7,842,271 | ||||||||||||||
Less: | |||||||||||||||||||
Shares of unvested restricted stock | 110,975 | 88,473 | 94,598 | 99,061 | 77,624 | ||||||||||||||
Common shares less unvested restricted stock | 7,757,828 | 7,752,630 | 7,746,505 | 7,774,410 | 7,764,647 | ||||||||||||||
Book value per share | $ | 23.51 | $ | 22.70 | $ | 22.84 | $ | 22.75 | $ | 22.43 | |||||||||
Less: | |||||||||||||||||||
Effects of intangible assets | $ | 0.36 | $ | 0.36 | $ | 0.37 | $ | 0.37 | $ | 0.37 | |||||||||
Tangible Book Value per Common Share | $ | 23.15 | $ | 22.34 | $ | 22.47 | $ | 22.38 | $ | 22.06 | |||||||||
11
BANKWELL FINANCIAL GROUP, INC.
RECONCILIATION OF GAAP TO NON-GAAP MEASURES (unaudited) - Continued
(Dollars in thousands)
For the Quarter Ended | For the Year Ended | ||||||||||||||||||||||||||
Computation of Efficiency Ratio | December 31, 2019 | September 30, 2019 | June 30, 2019 | March 31, 2019 | December 31, 2018 | December 31, 2019 | December 31, 2018 | ||||||||||||||||||||
Noninterest expense | $ | 9,224 | $ | 8,672 | $ | 8,755 | $ | 8,975 | $ | 8,796 | $ | 35,626 | $ | 35,633 | |||||||||||||
Less: | |||||||||||||||||||||||||||
Amortization of intangible assets | 18 | 19 | 19 | 19 | 20 | 75 | 92 | ||||||||||||||||||||
Other real estate owned expenses | — | 13 | 24 | — | — | 37 | — | ||||||||||||||||||||
Adjusted noninterest expense | $ | 9,206 | $ | 8,640 | $ | 8,712 | $ | 8,956 | $ | 8,776 | $ | 35,514 | $ | 35,541 | |||||||||||||
Net interest income | $ | 12,882 | $ | 13,011 | $ | 13,595 | $ | 14,273 | $ | 14,467 | $ | 53,761 | $ | 56,326 | |||||||||||||
Noninterest income | 1,048 | 1,552 | 1,336 | 1,308 | 601 | 5,244 | 3,900 | ||||||||||||||||||||
Less: | |||||||||||||||||||||||||||
Net gain on sale of available for sale securities | — | — | 76 | — | — | 76 | 222 | ||||||||||||||||||||
Loss on sale of other real estate owned, net | — | (102 | ) | — | — | — | (102 | ) | — | ||||||||||||||||||
Adjusted operating revenue | $ | 13,930 | $ | 14,665 | $ | 14,855 | $ | 15,581 | $ | 15,068 | $ | 59,031 | $ | 60,004 | |||||||||||||
Efficiency ratio | 66.1 | % | 58.9 | % | 58.6 | % | 57.5 | % | 58.2 | % | 60.2 | % | 59.2 | % | |||||||||||||
For the Quarter Ended | For the Year Ended | ||||||||||||||||||||||||||
Computation of Return on Average Tangible Common Equity | December 31, 2019 | September 30, 2019 | June 30, 2019 | March 31, 2019 | December 31, 2018 | December 31, 2019 | December 31, 2018 | ||||||||||||||||||||
Net Income Attributable to Common Shareholders | $ | 3,472 | $ | 4,088 | $ | 5,576 | $ | 5,080 | $ | 3,261 | $ | 18,216 | $ | 17,433 | |||||||||||||
Total average shareholders' equity | $ | 179,312 | $ | 177,916 | $ | 179,217 | $ | 177,532 | $ | 177,685 | $ | 178,510 | $ | 171,024 | |||||||||||||
Less: | |||||||||||||||||||||||||||
Average Goodwill | 2,589 | 2,589 | 2,589 | 2,589 | 2,589 | 2,589 | 2,589 | ||||||||||||||||||||
Average Other intangibles | 226 | 244 | 264 | 283 | 302 | 254 | 338 | ||||||||||||||||||||
Average tangible common equity | $ | 176,497 | $ | 175,083 | $ | 176,364 | $ | 174,660 | $ | 174,794 | $ | 175,667 | $ | 168,097 | |||||||||||||
Annualized Return on Average Tangible Common Equity | 7.80 | % | 9.26 | % | 12.68 | % | 11.80 | % | 7.40 | % | 10.37 | % | 10.37 | % | |||||||||||||
12
BANKWELL FINANCIAL GROUP, INC.
NET INTEREST MARGIN ANALYSIS ON A FULLY TAX EQUIVALENT BASIS - QTD (unaudited)
(Dollars in thousands)
For the Quarter Ended | |||||||||||||||||||||
December 31, 2019 | December 31, 2018 | ||||||||||||||||||||
Average Balance | Interest | Yield/ Rate (5) | Average Balance | Interest | Yield/ Rate (5) | ||||||||||||||||
Assets: | |||||||||||||||||||||
Cash and Fed funds sold | $ | 90,007 | $ | 427 | 1.88 | % | $ | 90,131 | $ | 504 | 2.23 | % | |||||||||
Securities(1) | 102,696 | 804 | 3.13 | % | 117,947 | 940 | 3.19 | % | |||||||||||||
Loans: | |||||||||||||||||||||
Commercial real estate | 1,084,311 | 12,646 | 4.56 | % | 1,053,257 | 13,253 | 4.92 | % | |||||||||||||
Residential real estate | 153,752 | 1,475 | 3.84 | % | 179,886 | 1,707 | 3.80 | % | |||||||||||||
Construction(2) | 88,864 | 1,126 | 4.96 | % | 82,323 | 1,115 | 5.30 | % | |||||||||||||
Commercial business | 245,822 | 3,397 | 5.41 | % | 285,676 | 3,949 | 5.41 | % | |||||||||||||
Consumer | 210 | 4 | 7.09 | % | 363 | 6 | 6.33 | % | |||||||||||||
Total loans | 1,572,959 | 18,648 | 4.64 | % | 1,601,505 | 20,030 | 4.89 | % | |||||||||||||
Federal Home Loan Bank stock | 7,474 | 108 | 5.73 | % | 8,782 | 138 | 6.27 | % | |||||||||||||
Total earning assets | 1,773,136 | $ | 19,987 | 4.41 | % | 1,818,365 | $ | 21,612 | 4.65 | % | |||||||||||
Other assets | 102,582 | 67,803 | |||||||||||||||||||
Total assets | $ | 1,875,718 | $ | 1,886,168 | |||||||||||||||||
Liabilities and shareholders' equity: | |||||||||||||||||||||
Interest bearing liabilities: | |||||||||||||||||||||
NOW | $ | 63,385 | $ | 27 | 0.17 | % | $ | 59,781 | $ | 65 | 0.43 | % | |||||||||
Money market | 418,682 | 1,571 | 1.49 | % | 484,932 | 2,009 | 1.64 | % | |||||||||||||
Savings | 181,910 | 717 | 1.56 | % | 164,534 | 684 | 1.65 | % | |||||||||||||
Time | 633,166 | 3,633 | 2.28 | % | 625,874 | 3,184 | 2.02 | % | |||||||||||||
Total interest bearing deposits | 1,297,143 | 5,948 | 1.82 | % | 1,335,121 | 5,942 | 1.77 | % | |||||||||||||
Borrowed Money | 175,198 | 1,103 | 2.46 | % | 189,698 | 1,134 | 2.34 | % | |||||||||||||
Total interest bearing liabilities | 1,472,341 | $ | 7,051 | 1.90 | % | 1,524,819 | $ | 7,076 | 1.84 | % | |||||||||||
Noninterest bearing deposits | 187,997 | 172,390 | |||||||||||||||||||
Other liabilities | 36,068 | 11,274 | |||||||||||||||||||
Total liabilities | 1,696,406 | 1,708,483 | |||||||||||||||||||
Shareholders' equity | 179,312 | 177,685 | |||||||||||||||||||
Total liabilities and shareholders' equity | $ | 1,875,718 | $ | 1,886,168 | |||||||||||||||||
Net interest income(3) | $ | 12,936 | $ | 14,536 | |||||||||||||||||
Interest rate spread | 2.51 | % | 2.81 | % | |||||||||||||||||
Net interest margin(4) | 2.92 | % | 3.20 | % | |||||||||||||||||
(1)Average balances and yields for securities are based on amortized cost.
(2)Includes commercial and residential real estate construction.
(3)The adjustment for securities and loans taxable equivalency amounted to $54 thousand and $69 thousand for the quarters ended December 31, 2019 and 2018, respectively.
(4)Annualized net interest income as a percentage of earning assets.
(5)Yields are calculated using the contractual day count convention for each respective product type.
13
BANKWELL FINANCIAL GROUP, INC.
NET INTEREST MARGIN ANALYSIS ON A FULLY TAX EQUIVALENT BASIS - YTD (unaudited)
(Dollars in thousands)
For the Year Ended | |||||||||||||||||||||
December 31, 2019 | December 31, 2018 | ||||||||||||||||||||
Average Balance | Interest | Yield/ Rate (5) | Average Balance | Interest | Yield/ Rate (5) | ||||||||||||||||
Assets: | |||||||||||||||||||||
Cash and Fed funds sold | $ | 85,678 | $ | 1,859 | 2.17 | % | $ | 77,923 | $ | 1,428 | 1.84 | % | |||||||||
Securities(1) | 112,336 | 3,526 | 3.14 | % | 118,311 | 3,686 | 3.12 | % | |||||||||||||
Loans: | |||||||||||||||||||||
Commercial real estate | 1,067,290 | 50,818 | 4.70 | % | 1,014,255 | 47,967 | 4.66 | % | |||||||||||||
Residential real estate | 165,384 | 6,367 | 3.85 | % | 189,121 | 7,016 | 3.71 | % | |||||||||||||
Construction(2) | 85,591 | 4,538 | 5.23 | % | 90,773 | 4,667 | 5.07 | % | |||||||||||||
Commercial business | 255,779 | 15,599 | 6.01 | % | 282,425 | 15,037 | 5.25 | % | |||||||||||||
Consumer | 258 | 17 | 6.70 | % | 481 | 28 | 5.88 | % | |||||||||||||
Total loans | 1,574,302 | 77,339 | 4.85 | % | 1,577,055 | 74,715 | 4.67 | % | |||||||||||||
Federal Home Loan Bank stock | 7,502 | 473 | 6.31 | % | 9,177 | 517 | 5.63 | % | |||||||||||||
Total earning assets | 1,779,818 | $ | 83,197 | 4.61 | % | 1,782,466 | $ | 80,346 | 4.45 | % | |||||||||||
Other assets | 92,663 | 68,002 | |||||||||||||||||||
Total assets | $ | 1,872,481 | $ | 1,850,468 | |||||||||||||||||
Liabilities and shareholders' equity: | |||||||||||||||||||||
Interest bearing liabilities: | |||||||||||||||||||||
NOW | $ | 62,254 | $ | 128 | 0.21 | % | $ | 60,410 | $ | 157 | 0.26 | % | |||||||||
Money market | 439,867 | 7,139 | 1.62 | % | 482,886 | 6,431 | 1.33 | % | |||||||||||||
Savings | 177,854 | 2,968 | 1.67 | % | 124,214 | 1,649 | 1.33 | % | |||||||||||||
Time | 637,515 | 14,463 | 2.27 | % | 619,448 | 10,714 | 1.73 | % | |||||||||||||
Total interest bearing deposits | 1,317,490 | 24,698 | 1.87 | % | 1,286,958 | 18,951 | 1.47 | % | |||||||||||||
Borrowed Money | 175,267 | 4,489 | 2.53 | % | 213,546 | 4,787 | 2.21 | % | |||||||||||||
Total interest bearing liabilities | 1,492,757 | $ | 29,187 | 1.96 | % | 1,500,504 | $ | 23,738 | 1.58 | % | |||||||||||
Noninterest bearing deposits | 172,192 | 166,566 | |||||||||||||||||||
Other liabilities | 29,022 | 12,374 | |||||||||||||||||||
Total liabilities | 1,693,971 | 1,679,444 | |||||||||||||||||||
Shareholders' equity | 178,510 | 171,024 | |||||||||||||||||||
Total liabilities and shareholders' equity | $ | 1,872,481 | $ | 1,850,468 | |||||||||||||||||
Net interest income(3) | $ | 54,010 | $ | 56,608 | |||||||||||||||||
Interest rate spread | 2.65 | % | 2.87 | % | |||||||||||||||||
Net interest margin(4) | 3.03 | % | 3.18 | % | |||||||||||||||||
(1)Average balances and yields for securities are based on amortized cost.
(2)Includes commercial and residential real estate construction.
(3)The adjustment for securities and loans taxable equivalency amounted to $249 thousand and $282 thousand for the years ended December 31, 2019 and 2018, respectively.
(4)Net interest income as a percentage of earning assets.
(5)Yields are calculated using the contractual day count convention for each respective product type.
14
Bankwell Financial Group 4Q19 Investor Presentation
Safe Harbor 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 securities markets, and legislative and regulatory changes that could adversely affect the business in which the Company and its subsidiaries are engaged. 2
4Q19 & Total Year Highlights
Highlights • Reported 4Q19 Net Income of $3.47 million, or $0.44 earnings per share • Reported 2019 Net Income of $18.22 million, or $2.31 earnings per share • Improved deposit pricing and mix: • Reduced rates on key Consumer and Business deposit products • Continued growth in non-interest bearing accounts from successful Treasury Management efforts • Reduced reliance on wholesale funding to 20.6% of our balance sheet1 • Capitalizing on our Liability-sensitive balance sheet • In 4Q19, loan growth was $40 million, a 10% annualized growth rate • Prepayments continue, although at a slower pace than previous quarters • The orderly resolution of the “Quarry Loans”2 continues according to plan; SBA Guarantee claim submitted; collection pending • The Company declared an increase to the 1Q20 dividend to $0.14 per share 1 Wholesale ratio includes Brokered deposits, National Listing Service CDs (NLS) and FHLB Borrowings; calculated on Bank balances (not consolidated) 2 See BWFG’s 4Q’18 Earnings Release and related Investor Presentation for “Quarry Loans” background 4
4Q19 Performance
4Q19 Results Quarter Year to Date • Net Income $3.5 million $18.2 million Profitability • Return on Average Assets 0.73% 0.97% • Return on Average Equity 7.68% 10.20% • $1.6 billion of gross loans Balance Sheet • $1.5 billion of deposits • $12 million of assets per employee • Dividend of $0.13 per share paid Tier 1 Leverage 10.99% Capital • $23.15 Tangible Book Value CET1 / RWA 12.53% Total Capital / RWA 13.35% • Considered “Well Capitalized”1 1 Ratios presented represent Bank ratios; presented ratios are preliminary, subject to finalization of the FDIC Call Report 6
4Q Consolidated Statement of Income Dollars in millions 2019 2018 QoQ1 Notes Total Interest Income $19.9 $21.5 $(1.6) Net Interest Income 2019 has lower fee income Total Interest Expense $7.1 $7.1 $0.0 associated with loan prepayments Net Interest Income $12.9 $14.5 $(1.6) Provision for Loan Losses 2018 includes impact of Quarry Provision for Loan Losses $0.3 $2.8 $(2.5) Loans charge-off Non Interest Income Net Interest Income after Provision $12.6 $11.7 $0.9 Increased gains on loan sales in 2019, Non Interest Income $1.0 $0.6 $0.4 driven by higher volume of loans sold Non Interest Expense Non Interest Expense $9.2 $8.8 $0.4 Increases in salaries & employee Pre-Tax Income $4.4 $3.5 $0.9 benefits expense (due to increased FTEs) and in occupancy and Income Tax Expense $0.9 $0.2 $0.7 equipment expense (due to increased technology investments) Reported Net Income $3.5 $3.3 $0.2 offset by reduced spend in professional services and marketing EPS $0.44 $0.41 $0.03 expenses 1 Variances are rounded based on actual whole dollar amounts 7
TY Consolidated Statement of Income Dollars in millions 2019 2018 QoQ1 Notes Total Interest Income $82.9 $80.1 $2.9 Net Interest Income 2019 growth in interest income Total Interest Expense $29.2 $23.7 $5.4 driven by fees associated with loan prepayments more than offset by Net Interest Income $53.8 $56.3 $(2.6) increased funding costs Provision for Loan Losses $0.4 $3.4 $(3.0) Provision for Loan Losses 2018 includes impact of Quarry Net Interest Income after Provision $53.3 $52.9 $0.4 Loans charge-off Non Interest Income $5.2 $3.9 $1.3 Non Interest Income 2019 increase driven by increased Non Interest Expense $35.6 $35.6 $0.0 gains on loan sales and fees related to loan-related Swaps Pre-Tax Income $22.9 $21.2 $1.8 Income Tax Expense $4.7 $3.7 $1.0 Reported Net Income $18.2 $17.4 $0.8 EPS $2.31 $2.21 $0.10 1 Variances are rounded based on actual whole dollar amounts 8
4Q Consolidated Balance Sheet 1 Dollars in millions 4Q19 4Q18 V Notes Cash & Cash Equivalents $78 $78 $0 All Other Assets Investment Securities $101 $117 $(16) Change in lease accounting standards now requires on Loans Receivable, net $1,589 $1,587 $2 balance sheet recognition of leases All Other Assets $114 $92 $22 Total Deposits Total Assets $1,882 $1,874 $9 Wholesale deposits down Total Deposits $1,492 $1,502 $(10) $37 million, year to date FHLB Advances & Other Borrowings $175 $185 $(10) Other Liabilities Change in lease accounting Other Liabilities $33 $12 $21 standards now requires on balance sheet recognition Total Liabilities $1,700 $1,699 $1 of leases Equity $182 $174 $8 Total Liabilities & Equity $1,882 $1,874 $9 1 Variances are rounded based on actual whole dollar amounts 9
Financial Performance Trends 1 Net Income Revenue $60.2 $59.0 $59.0 $51.8 $46.3 $34.7 Dollars in millionsin Dollars $18.2 $17.4 $12.4 $13.8 $9.0 $4.6 2014 2015 2016 2017 2018 2019 EPS $0.78 $1.21 $1.62 $1.782 $2.21 $2.31 Efficiency Ratio 68.7% 62.3% 56.5% 54.9% 59.2% 60.2% NIM 3.84% 3.77% 3.54% 3.30% 3.18% 3.03% Non Interest Exp / Assets 2.94% 2.42% 2.03% 1.88% 1.93% 1.90% 1 Revenue is defined as Net Interest Income and Non Interest Income 2 4Q’17 EPS reduced by $0.26 due to the impact of the Tax Cut and Jobs Act passed in December 2017 along with several other smaller items; on a 10 “core” basis, 2017 EPS is $2.03, please refer to BWFG’s 4Q’17 Earnings Release for further detail
Financial Snapshot Dollars in thousands, except per share data 2014 2015 2016 20171 2018 2019 Total assets $1,099,531 $1,330,372 $1,628,919 $1,796,607 $1,873,665 $1,882,182 Net loans $915,981 $1,129,748 $1,343,895 $1,520,879 $1,586,775 $1,588,840 Loans to deposits 110.7% 109.1% 105.6% 110.1% 106.4% 107.1% Efficiency ratio 68.7% 62.3% 56.5% 54.9% 59.2% 60.2% Non interest expense / Avg. assets 2.94% 2.42% 2.03% 1.88% 1.93% 1.90% Net interest margin 3.84% 3.77% 3.54% 3.30% 3.18% 3.03% Total capital to risk weighted assets 13.55% 13.39% 12.85% 12.19% 12.50% 13.35% Return on average equity 5.13% 6.76% 8.94% 8.93% 10.19% 10.20% Tangible book value per share $16.35 $17.43 $18.98 $20.59 $22.06 $23.15 Net interest income $31,660 $42,788 $49,092 $54,364 $56,326 $53,761 Net income $4,568 $9,030 $12,350 $13,830 $17,433 $18,216 EPS (fully diluted) $0.78 $1.21 $1.62 $1.78 $2.21 $2.31 1 Values are based on reported earnings / performance, which were impacted primarily as a result of the Tax Cut and Jobs Act passed in December 2017 along with several other smaller items. Please refer to BWFG’s 4Q’17 Earnings Release for further detail 11
Impact of Hedging on Tangible Book Value • Bankwell actively manages interest rate risk related to its funding sources with interest rate swaps • The interest rate swaps are marked to market each quarter, with the unrealized gains or losses recognized in other comprehensive income • In 2019, falling long term interest rates have increased the unrealized loss positions on Bankwell’s interest rate swaps, negatively impacting TBV by $1.13 / share • In 4Q19, favorable movement in long term interest rates contributed $0.48 to TBV • As long term rates rise, the impact to other comprehensive income is reversed Tangible Book Value (TBV) Per Share Walk $2.31 Bankwell’s interest rate $0.43 $23.15 swaps will cause $0.52 $22.06 decreases to other $1.13 comprehensive income in a falling rate environment and increases in a rising rate environment 2018 Net Income Dividends Int Rate Swaps All Other 1 2019 1 All Other includes items such as, but not limited to, changes in unrealized gain/loss of securities, accounting rule changes (new lease standard) and changes in share count 12
Select Trends and Outlook
Loan Portfolio Trends Dollars in millions Loan Volume $409 Originations • Fueled by strong originations in Fundings 4Q19, loan balances grew $40 $311 $308 $312 million, or +10% annualized growth $211 $216 • The incremental impact of the $40 million loan growth on 2020 core earnings is ~$0.12 EPS • 4Q19’s loan growth contributed '15 - '17 Avg 2018 2019 to a slightly larger provision for loan loss expense, impacting the 2019 by Quarter quarter by ~($0.01) EPS $93 $92 $75 $69 $62 $60 $52 • 2020 net loan growth budgeted $26 to be approximately 5% 1Q 2Q 3Q 4Q 14
Loan Portfolio Trends Dollars in millions Loan Portfolio Yields • Bankwell committed to disciplined loan $1,800 5.00% pricing to defend portfolio yield 4.48% 4.64% 4.58% $1,700 4.38% 4.50% $1,605 $1,604 • 2019 originations at a ~4.90% yield, $1,600 $1,543 4.00% with 4Q19 originations yields of $1,500 ~4.70% 3.50% $1,400 $1,366 3.00%• Minimal impact expected on 2020 $1,300 portfolio yields: 2.50% $1,200 $1,100 2.00% ̶ < 10% variable rate loans $1,000 1.50% ̶ Only ~$50 million of fixed rate 2016 2017 2018 2019 loans have rate reset dates in 1 2 Gross Loan Balance Portfolio Yield 2020 1 Weighted average yield based on active loans as of 12-31 for each of the respective years 2 Some fixed rate loans have a contractual interest rate reset after 3 or 5 years (as examples), prior to maturity 15
Loan Portfolio Trends Dollars in millions Loan Prepayments $184 • 2019 reflects largest prepayment amounts $33 and fees in Bankwell’s history $119 $27 • Prepayment fees vary from loan to loan 4Q $62 $71 and are subject to deal terms and age of loan 3Q $17 • 2020 assumes prepayments and related 2Q $33 $53 1Q $7 fees will revert to 2018 levels 2018 2019 Qtr Average $30 $46 • 4Q19 fees well below quarterly average Prepayment Fees collected ($MMs) for last 2 years, negatively impacting EPS 1Q $0.01 $1.10 ~($0.02) 2Q $0.26 $1.04 3Q $0.04 $0.51 4Q $0.99 $0.10 TY $1.30 $2.75 16
Deposit Mix & Pricing Trends Dollars in millions Deposit Mix Treasury Management Balances1 2018 2019 $108 11.5% 12.8% $83 $70 $71 $53 88.5% 87.2% Non Int Bearing Int Bearing Wholesale Ratio2 23.4% 20.6% 2015 2016 2017 2018 2019 • 2019 core deposits reached $1.25 billion, a record high • Treasury Management balances1 grew to $108 million, or 31% YoY growth • Treasury Management growth enabling retirement of costly wholesale deposits • Ongoing improvement in mix enabling lower 2020 deposit costs Successful Treasury Management program drives favorable deposit mix 1 Non-interest bearing balances only 2 Wholesale ratio includes Brokered deposits, National Listing Service CDs (NLS) and FHLB Borrowings; calculated on Bank balances (not 17 consolidated)
Deposit Mix & Pricing Trends Cost of Deposits • Liability-sensitive balance sheet well 1.66% positioned to capture benefits of 1 ≤ 1.50% lower short-term rates 1.30% 0.93% • Lowered rates on Money Market, Savings and Retail CDs in September 2019 & December 2019 • The carry-through impact of the 2019 pricing changes on 2020 core 2017 A 2018 A 2019 A 2020 E earnings is ~$0.12 EPS 1 Assumes a static-rate environment 18
Net Interest Margin Trends Net Interest Margin Components • 2019 Net interest Margin Expressed as % of total earning assets (“NIM”) contracted primarily due to increased funding costs 2018 A 2019 A 2020 E • 2019 contraction tempered by Income on Earning Assets ~4.51% ~4.67% ~4.50% record-high loan prepayment Interest Expense ~(1.33%) ~(1.64%) ≤(1.50%) fees Net Interest Margin ~3.18% ~3.03% ~3.00% • Adjusting for normalized prepayment fees, 2019’s “core” 2019 Prepayment Fees -- ~ (8 bps) -- adjusted to 2018 levels1 NIM below 3% “Core” Net Interest Margin ~3.18% ~2.95% ~3.00% • 2020 “core” NIM forecasted to expand, given favorable movement in funding costs “Core” NIM anticipated to improve by ~5 basis points in 2020 1 See slide 16 for additional detail on loan prepayments 19
Loan Sale Trends Dollars in millions Gains on SBA Loan Sales • Continued focus on Bankwell’s SBA program driving income $1.7 from loan sales $0.4 • Lower than average gains in 4Q19 impacting the quarter $1.0 by ~($0.01) EPS $0.7 4Q $0.1 3Q $0.2 • Continued growth from SBA program anticipated in 2020 2Q $0.3 $0.6 1Q $0.3 $0.03 2018 A 2019 A 2020 E Successful SBA program drives gains on loan sales 20
Credit Update Dollars in thousands Non Performing Loans / Gross Loans 0.66% 0.88% SBA-guaranteed 0.29% portion of NPLs 0.66% 0.36% 0.37% Core NPL exposure 2017 2018 2019 $000s NPLs $5,481 $14,082 $10,588 Quarry Loans1 $0 $6,943 $1,863 2019 Detail • The Quarry Loans1 credit issue from 2018 is essentially resolved; remaining balance 100% guaranteed by the SBA • An additional $2.8 million of non-performing loan balances are also SBA-guaranteed Receipt of SBA guarantee will reduce NPLs by 29 basis points 1 See BWFG’s 4Q’18 Earnings Release and related Investor Presentation for Quarry Loans background 21
Credit Update Dollars in millions • The allowance for loan loss (“ALLL”) methodology was updated in 2017 to 1 Impact of ALLL Methodology Change include peer group historical loss data, Annual impact on BWFG’s Loan Loss Provision due to increasing reliance on quantitative 2017 methodology change and subsequent application measures, as Bankwell had limited historical losses $4.4 • Broadly, the updated methodology has lowered the general reserve percentage for each of the past 3 years, $2.1 as the roll forward of the lookback period replaces higher post-financial $1.3 ~ $1.0 crisis historical loss periods with current periods containing lower losses • Methodology impact in 2020 expected 2017 A 2018 A 2019 A 2020 E to be approximately half of 2019 EPS Impact2 $0.11 $0.45 $0.21 ~$0.10 • 2020 impact does not account for loan growth, changes in mix, specific reserves or charge offs 1 Amounts represent pre-tax values 2 The corporate tax rate changed from 35% (applied in 2017) to 21% (applied in 2018 onwards) 22
Loan & Deposit Overview
Loans & Deposits Dollars in millions Loans Deposits $1,502 $1,492 $1,600 $1,800 $1,605 $1,604 $1,398 $1,543 $53 $1,289 $1,400 $1,600 $1,366 $177 $1,047 $627 $1,400 $1,148 $170 $1,200 $1,200 $930 $1,000 $835 $1,000 $800 $800 $959 $419 $600 $600 $400 $184 $400 $99 $200 $147 $200 $262 $0 $0 2014 2015 2016 2017 2018 2019 2014 2015 2016 2017 2018 2019 Commercial Lines of Credit Commercial & Industrial Checking Savings Money Market Time Deposits Commercial Mortgage O/O Commercial Mortgage Construction Residential Mortgages/Consumer Strong long-term growth 24
Loan Portfolio Consumer Loans / Other 0.62% Commercial Const. Residential • Portfolio oversight 6.14% 8.55% provided by team of 13 skilled credit analysts and C&I portfolio managers, most 14.34% with > 20 years’ experience • Concentration actively managed, with no single relationship representing CRE Owner more than 5.42% of total Occupied 10.59% loan volume at December 31st, 2019 CRE Investor 59.75% 25
CRE Loan Portfolio 1 Dollars in millions Special Use Industrial 3.13% Warehouse Retail Composition $ % 11.23% Retail2 $188 59.59% Grocery $73 23.26% Mixed Use Retail 9.89% 27.99% Pharmacy $27 8.49% Gas / Auto Services $14 4.56% Restaurant $13 4.10% MultiFamily Total Retail $316 100.00% 11.26% • Average deal size is $2.2MM Residential 2.73% Other Office Composition $ % 3.91% Office (primarily suburban) $240 71.17% Medical $95 28.22% Office 29.86% Condo $2 0.62% • Property Type mix continues to show well diversified exposure Total Office $337 100.00% • Average deal size is $2.4MM • ~ 50% of all CRE loans have recourse3, non recourse loans generally require lower LTV and higher DSC 1 Includes Owner Occupied CRE, does not include Construction 2 Comprised primarily of neighborhood and convenience centers, typically characterized by: size up to 125,000 sq. ft.; convenience and service oriented 26 3 Based on dollar volume
CRE Loan Portfolio 1 Geography Distribution CRE to Risk Based Capital Ratio MS GA 1.54% 480% 1.48% 471% 473% NC All Other 1.61% PA 9.24% 440% 1.75% NY 12.74% CT 71.64% 2016 2017 2018 2019 • Proven track record as CRE Lender with strong risk management practices in place • Continued focus in primary market of the tri-state area • CRE Retail loans have an average LTV of less than (CT/NY/NJ) but maintaining diversification by following 60% and an average DSCR of at least 1.7x strongest customers to growth markets • No significant exposure to any one retailer and no • Of the CT-based loans, 63% are in Fairfield County2 exposure to bankrupt retailers 1 Includes Owner Occupied CRE, does not include Construction 2 Based on dollar volume 27
Bankwell History & Overview
Bankwell’s Milestones $0 $0.2B $1.1B $1.9B Assets Founded The Bank Founded third bank, Bankwell acquired Opened 3 new of New Canaan Stamford First Bank, a Quinnipiac Bank & branches in division of The Bank of Trust Company Fairfield County New Canaan 2002 2010 2014 2018 2008 2013 2016 2019 Founded second The banks merge Named a “Top 100 5 Year anniversary bank, The Bank of into “Bankwell”; Best Performing of BWFG on Fairfield Acquires The Community Bank”1 NASAQ Wilton Bank Bankwell stock price grew 60% since May 2014 IPO2 1 Bankwell was named one of the “Top 100 Best Performing Community Banks of 2016” between $1 billion and $10 billion in assets nationwide based on certain metrics for the year ended December 31, 2016 by S&P Global Market Intelligence 29 2 as of December 31st, 2019
Bankwell Profile Company Overview NASDAQ: BWFG • Connecticut-based $1.9 billion bank, with focus on CRE and C&I lending • 12 existing branches in Fairfield & New Haven Counties • Excluding the 3 branches opened in 2Q18, BWFG has $159 million deposits per branch; highest in Fairfield & New Haven Counties1 • Our core market of Fairfield County (the Bridgeport-Stamford-Norwalk MSA) is the premier Connecticut location, highlighted by: + Second most affluent MSA in the Nation in + Headquarters of 9 Fortune 500 companies4 per capita personal income (PCPI)2 + Home to the two largest hedge funds in the + 4 of the top 25 wealthiest towns in the U.S.3 U.S.5 1 Source: S&P Global Market Intelligence’s Branch Competitors & Pricing Report as of 6/30/19, excluding global money center banks (tickers BAC, WFC, JPM, TD & C) 2 Source: Bureau of Economic Analysis’ Metropolitan Area Table, contained within the Local Area Personal Income, 2018 news release 11/14/19 3 Source: Bloomberg: These Are the Wealthiest Towns in The U.S., 2/13/19 30 4 Source: Fortune.com: 2019 Fortune 500 5 Source: Business Insider: The 10 Biggest Hedge Funds in the U.S., 5/18/18
Why Bankwell? Growth Performance • Proven track record of • Stock price up 60% since quality loan originations May 2014 IPO1 • Tangible Book Value growth • Strong Net Income growth; of 42% since May 2014 quarterly dividends paid IPO1 since 4Q15 • Operates in premiere • Capital ratios put BWFG markets well above “well capitalized” Outperformed KBW • Strong credit culture; Regional Banking • Performance-driven, prudent, conservative highly experienced credit standards Index by 6% since Management Team ‘14 IPO1 • Historically low NPLs / • Strong BOD comprised of NPAs with low charge-offs a broad cross-section of Subject Matter Experts • Diverse product experience • ~16% “Insider Ownership” in CRE, C&I, Residential & of the Bank1,2 Consumer Risk Management Management 1 as of December 31st, 2019 2 Insider Ownership defined as current BWFG Board Members and Executive Management team 31
Management Team Years Name Experience Selected Professional Biography Christopher Gruseke 25+ • Founding investor of Bankwell’s precursor, Bank of New Canaan, member of BoD and ALCO President & CEO Committee 2009 to 2012 (since 2015) • 20 year Investment Banking career focused on financial institutions, securitizations and interest rate risk management • Management positions include Chief Operating Officer of Greenwich Capital Markets Penko Ivanov 25+ • Previous CFO roles with Darien Rowayton Bank & Doral Bank’s US Operations EVP & CFO • Proven track record in building, improving and overseeing all areas of Finance, including (since 2016) Controllership, SOX, Treasury, FP&A, as well as internal and external reporting functions • Prior experience includes 8 years with GE Capital in various finance roles Heidi S. DeWyngaert1 30+ • Previously at Webster Bank, managing the Fairfield County Commercial Real Estate group EVP & Chief Lending Officer • 10 years as Vice President for CRE at First Union National Bank (since 2004) Christine A. Chivily 30+ • Previously a Risk Manager for CRE and C&I at Peoples United Bank EVP & Chief Risk & Credit • SVP/Senior Credit Officer at RBS Greenwich Capital Markets (11 years); Director - Northeast Officer Region, Multifamily at Freddie Mac (5 years); Manager, Loan Servicing - Distressed Assets at M&T (since 2013) Bank Laura J. Waitz 30+ • Previously Senior Managing Director, Global Head of Human Resources at The Blackstone Group (9 EVP & Chief of Staff years) (since 2017) • Also at Citi Alternative Investments as MD & Global Head of Compensation & at Deutsche Bank as Head of Compensation (Americas) & as Global Compensation Mgr. for Private Equity & Investment Bank Experienced management team with a diverse, non-community banking background 1 Ms. DeWyngaert retired on 12-31-19 from Bankwell Financial Group and will remain as an Advisor to assist during the transition 32
Thank You & Questions