Bankwell Financial Group, Inc 8-K, filed Jan 27, 2021
Bankwell Financial Group, Inc. (BWFG)
8-K
2021-01-27
For: 2021-01-27
View Original
Added on
April 11, 2026
About this 8-K
Bankwell Financial Group, Inc filed this 8-K on January 27, 2021.
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, 2021
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification No.) | ||||||
(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 | ||||||||
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, 2021, Bankwell Financial Group, Inc., the holding company for Bankwell Bank, issued a press release describing its results of operations for the period ended December 31, 2020. 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. | |||||
| 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, 2021, 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, 2020. 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. | |||||
| 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, 2021, 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 25, 2021 to all shareholders of record as of February 15, 2021. | |||||
| 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 | |||||
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) | ||||
| 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, 2021 | 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 FULL YEAR 2020; DECLARES FIRST QUARTER DIVIDEND
New Canaan, CT – January 27, 2021 – Bankwell Financial Group, Inc. (NASDAQ: BWFG) reported GAAP net income of $0.3 million, or $0.04 per share, for the fourth quarter of 2020, versus $3.5 million, or $0.44 per share, for the same period in 2019.
The Company's Board of Directors declared a $0.14 per share cash dividend, payable February 25, 2021 to shareholders of record on February 15, 2021.
We recommend reading this earnings release in conjunction with the Fourth Quarter 2020 Investor Presentation, located at http://investor.mybankwell.com/Presentations and included as an exhibit to our January 27, 2021 Current Report on Form 8-K.
Notes Bankwell Financial Group President and CEO, Christopher R. Gruseke:
"The Company made excellent progress this year despite the adversities presented by the Pandemic. Core deposits increased by 43% year over year and, importantly, non-interest bearing deposits grew by over 41%. COVID-19 deferrals have declined to account for less than 2% of the loan portfolio. After a thorough review of each COVID-impacted loan, the Company has taken swift action to reclassify $25.6 million as non-performing. These loans are collateralized and carry adequate reserves. The Company’s outlook for the coming year is increasingly optimistic. Our recently disclosed efficiency initiatives will bolster profitability in 2021 and beyond, and loan originations for the first quarter are tracking to be one our strongest efforts ever."
Fourth Quarter 2020 Highlights:
•Recognized a $3.9 million one-time charge for office consolidation, contract termination and employee severance costs in the fourth quarter of 2020.
•The allowance for loan losses was $21.0 million and represents 1.29% of total loans (1.32% excluding Paycheck Protection Program (“PPP”) loans) as of December 31, 2020, compared to an allowance for loan losses of $13.5 million, representing 0.84% of total loans as of December 31, 2019. The increase in the allowance for loan losses was primarily due to incremental loan loss reserves for increased credit risk relating to economic disruption and uncertainty caused by the COVID-19 pandemic.
•PPP loans totaled $34.8 million at December 31, 2020.
•Less than 2% of the loan portfolio remains on COVID-19 deferral.
•Total deposits were $1.8 billion at December 31, 2020 compared to $1.5 billion at December 31, 2019, reflecting successful commercial core deposit gathering efforts, as well as a temporary increase in deposits to expand on-balance sheet liquidity during the COVID-19 pandemic.
•Noninterest bearing deposits increased 41% to a new high of $270.2 million at December 31, 2020, when compared to December 31, 2019.
•The Bank's loan-to-deposit ratio was 87.9% at December 31, 2020, reflecting the above-mentioned increase in deposits.
•Total gross loans were $1.6 billion at December 31, 2020.
•Investment securities totaled $106.9 million and represent 5% of total assets.
•The tangible common equity ratio, as of December 31, 2020, decreased to 7.73% when compared to December 31, 2019. The decrease was primarily driven by mark-to-market activity on long dated interest rate swaps, as well as increased liquidity and corresponding balance sheet growth.
•Tangible book value per share as of December 31, 2020 was $22.43.
1
Earnings and Performance
Revenues (net interest income plus noninterest income) for the quarter ended December 31, 2020 were $14.9 million, versus $13.9 million for the quarter ended December 31, 2019. Revenues for the year ended December 31, 2020 were $57.7 million, versus $59.0 million for the year ended December 31, 2019. For the year ended December 31, 2020, the decrease in revenues was attributable to the absence of SBA loan sales, when compared to the same period in 2019. The decrease in revenues was also driven by lower loan yields as loans are re-priced in the current low interest rate environment. The decrease in revenues was partially offset by a decline in interest expense, driven by lower interest rates on deposits when compared to the same period in 2019. The change in revenues for the quarter ended December 31, 2020 was driven by the same factors except that the decline in interest expense outweighed the absence of SBA loan sales and lower yields on loans.
Net income for the quarter ended December 31, 2020 was $0.3 million, versus $3.5 million for the quarter ended December 31, 2019. Net income for the year ended December 31, 2020 was $5.9 million, versus $18.2 million for the year ended December 31, 2019. The decrease in net income for the quarter and year ended December 31, 2020, when compared to the same periods in 2019, were impacted by a $3.9 million one-time charge for office consolidation, contract termination and employee severance costs in the fourth quarter of 2020. The decrease in net income for the year ended December 31, 2020, when compared to the same period in 2019, was also due to an increase in the provision for loan losses due to the COVID-19 pandemic. The provision for loan losses totaled $7.6 million for the year ended December 31, 2020, consisting of COVID-19 related reserves of $9.0 million, partially offset due to changes in portfolio mix and growth.
Basic and diluted earnings per share were each $0.04 for the quarter ended December 31, 2020 compared to basic and diluted earnings per share of $0.44 each for the quarter ended December 31, 2019. Basic and diluted earnings per share were each $0.75 for the year ended December 31, 2020 compared to basic and diluted earnings per share of $2.32 and $2.31, respectively, for the year ended December 31, 2019.
The net interest margin (fully taxable equivalent basis) for the quarters ended December 31, 2020 and December 31, 2019 was 2.66% and 2.92%, respectively. The net interest margin for the year ended December 31, 2020 and December 31, 2019 was 2.77% and 3.03%, respectively. The decrease in net interest margin for the quarter and year ended December 31, 2020, when compared to the same periods in 2019, was primarily due to excess liquidity resulting from successful commercial core deposit gathering efforts as well as a temporary increase in other deposits to expand on-balance sheet liquidity during the COVID-19 pandemic.
Financial Condition
Assets totaled $2.3 billion at December 31, 2020, compared to assets of $1.9 billion at December 31, 2019. The increase in assets is primarily due to an increase in cash and cash equivalents in part to maintain a higher level of liquidity during the COVID-19 pandemic. Gross loans totaled $1.6 billion at December 31, 2020, an increase of $21.1 million compared to December 31, 2019. Excluding PPP loans, gross loans decreased by $13.7 million at December 31, 2020 when compared to December 31, 2019. Deposits totaled $1.8 billion at December 31, 2020, compared to deposits of $1.5 billion at December 31, 2019. The increase in deposits was a result of successful commercial core deposit gathering efforts and a temporary increase in deposits during the COVID-19 pandemic, as described above.
Capital
Shareholders’ equity totaled $176.6 million as of December 31, 2020, a decrease of $5.8 million compared to December 31, 2019, primarily a result of an $8.1 million unfavorable impact to accumulated other comprehensive loss driven by fair value marks related to hedge positions involving interest rate swaps, as well as dividends paid of $4.4 million and common stock repurchases of $1.0 million. The decrease was partially offset by net income for the year ended December 31, 2020 of $5.9 million. The marks on the interest rate swaps are driven by lower long term market interest rates in 2020 when compared to 2019. The Company's interest rate swaps are used to hedge interest rate risk.
2
The Company's current interest rate swap positions will cause a decrease to other comprehensive income in a falling interest rate environment and an increase in a rising interest rate environment.
About Bankwell Financial Group
Bankwell is a commercial bank that serves the banking needs of residents and businesses throughout Fairfield and New Haven Counties, Connecticut. For more information about this press release, interested parties may contact Christopher R. Gruseke, President and Chief Executive Officer or Penko Ivanov, Executive Vice President and Chief Financial Officer of Bankwell Financial Group at (203) 652-0166.
For more information, visit www.mybankwell.com.
This press release may contain certain forward-looking statements about the Company. Forward-looking statements include statements regarding anticipated future events and can be identified by the fact that they do not relate strictly to historical or current facts. They often include words such as “believe,” “expect,” “anticipate,” “estimate,” and “intend” or future or conditional verbs such as “will,” “would,” “should,” “could,” or “may.” Forward-looking statements, by their nature, are subject to risks and uncertainties. Certain factors that could cause actual results to differ materially from expected results include, but are not limited to, increased competitive pressures, changes in the interest rate environment, general economic conditions or conditions within the securities markets, uncertain impacts of, or additional changes in, monetary, fiscal or tax policy to address the impact of COVID-19, prolonged measures to contain the spread of COVID-19 or premature easing of such containment measures, either of which could further exacerbate the effects on the Company’s business and results of operations, and legislative and regulatory changes that could adversely affect the business in which the Company and its subsidiaries are engaged.
Non-GAAP Financial Measures
In addition to evaluating the Company's financial performance in accordance with U.S. generally accepted accounting principles ("GAAP"), management may evaluate certain non-GAAP financial measures, such as the efficiency ratio. A computation and reconciliation of certain non-GAAP financial measures used for these purposes is contained in the accompanying Reconciliation of GAAP to Non-GAAP Measures tables. We believe that providing certain non-GAAP financial measures provides investors with information useful in understanding our financial performance, our performance trends and financial position. For example, the Company believes that the efficiency ratio is useful in the assessment of financial performance, including noninterest expense control. The Company believes that tangible common equity and tangible book value per share are useful to evaluate the relative strength of the Company's capital position. We utilize these measures for internal planning and forecasting purposes. These non-GAAP financial measures should not be considered a substitute for GAAP basis measures and results, and we strongly encourage investors to review our consolidated financial statements in their entirety and not to rely on any single financial measure.
3
BANKWELL FINANCIAL GROUP, INC.
CONSOLIDATED BALANCE SHEETS (unaudited)
(Dollars in thousands)
| December 31, 2020 | September 30, 2020 | June 30, 2020 | March 31, 2020 | December 31, 2019 | |||||||||||||||||||||||||
| ASSETS | |||||||||||||||||||||||||||||
| Cash and due from banks | $ | 405,340 | $ | 333,103 | $ | 201,380 | $ | 203,569 | $ | 78,051 | |||||||||||||||||||
| Federal funds sold | 4,258 | 6,380 | 5,886 | 6,427 | — | ||||||||||||||||||||||||
| Cash and cash equivalents | 409,598 | 339,483 | 207,266 | 209,996 | 78,051 | ||||||||||||||||||||||||
| Investment securities | |||||||||||||||||||||||||||||
| Marketable equity securities, at fair value | 2,207 | 2,203 | 2,195 | 2,289 | 2,118 | ||||||||||||||||||||||||
| Available for sale investment securities, at fair value | 88,605 | 90,563 | 82,220 | 82,342 | 82,439 | ||||||||||||||||||||||||
| Held to maturity investment securities, at amortized cost | 16,078 | 16,138 | 16,196 | 16,252 | 16,308 | ||||||||||||||||||||||||
| Total investment securities | 106,890 | 108,904 | 100,611 | 100,883 | 100,865 | ||||||||||||||||||||||||
| Loans receivable (net of allowance for loan losses of $21,009, $20,372, $19,662, $16,686, and $13,509 at December 31, 2020, September 30, 2020, June 30, 2020, March 31, 2020, and December 31, 2019, respectively) | 1,601,672 | 1,600,776 | 1,590,995 | 1,602,146 | 1,588,840 | ||||||||||||||||||||||||
| Other real estate owned | — | — | 180 | — | — | ||||||||||||||||||||||||
| Accrued interest receivable | 6,579 | 7,294 | 6,774 | 5,867 | 5,959 | ||||||||||||||||||||||||
| Federal Home Loan Bank stock, at cost | 7,860 | 7,860 | 7,835 | 6,507 | 7,475 | ||||||||||||||||||||||||
| Premises and equipment, net | 21,762 | 26,616 | 27,177 | 27,835 | 28,522 | ||||||||||||||||||||||||
| Bank-owned life insurance | 42,651 | 42,409 | 42,167 | 41,926 | 41,683 | ||||||||||||||||||||||||
| Goodwill | 2,589 | 2,589 | 2,589 | 2,589 | 2,589 | ||||||||||||||||||||||||
| Other intangible assets | 76 | 160 | 178 | 196 | 214 | ||||||||||||||||||||||||
| Deferred income taxes, net | 11,300 | 11,149 | 11,352 | 10,009 | 5,788 | ||||||||||||||||||||||||
| Other assets | 42,770 | 45,782 | 46,511 | 45,671 | 22,196 | ||||||||||||||||||||||||
| Total assets | $ | 2,253,747 | $ | 2,193,022 | $ | 2,043,635 | $ | 2,053,625 | $ | 1,882,182 | |||||||||||||||||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||||||||||||||||||||||||||
| Liabilities | |||||||||||||||||||||||||||||
| Deposits | |||||||||||||||||||||||||||||
| Noninterest bearing deposits | $ | 270,235 | $ | 234,848 | $ | 214,789 | $ | 168,448 | $ | 191,518 | |||||||||||||||||||
| Interest bearing deposits | 1,557,081 | 1,532,680 | 1,405,175 | 1,512,684 | 1,300,385 | ||||||||||||||||||||||||
| Total deposits | 1,827,316 | 1,767,528 | 1,619,964 | 1,681,132 | 1,491,903 | ||||||||||||||||||||||||
| Advances from the Federal Home Loan Bank | 175,000 | 175,000 | 175,000 | 125,000 | 150,000 | ||||||||||||||||||||||||
| Subordinated debentures | 25,258 | 25,245 | 25,233 | 25,220 | 25,207 | ||||||||||||||||||||||||
| Accrued expenses and other liabilities | 49,571 | 50,982 | 53,078 | 52,059 | 32,675 | ||||||||||||||||||||||||
| Total liabilities | 2,077,145 | 2,018,755 | 1,873,275 | 1,883,411 | 1,699,785 | ||||||||||||||||||||||||
| Shareholders’ equity | |||||||||||||||||||||||||||||
Common stock, no par value | 121,338 | 120,854 | 120,381 | 119,953 | 120,589 | ||||||||||||||||||||||||
| Retained earnings | 70,839 | 71,603 | 69,712 | 69,595 | 69,324 | ||||||||||||||||||||||||
| Accumulated other comprehensive loss | (15,575) | (18,190) | (19,733) | (19,334) | (7,516) | ||||||||||||||||||||||||
| Total shareholders’ equity | 176,602 | 174,267 | 170,360 | 170,214 | 182,397 | ||||||||||||||||||||||||
| Total liabilities and shareholders’ equity | $ | 2,253,747 | $ | 2,193,022 | $ | 2,043,635 | $ | 2,053,625 | $ | 1,882,182 | |||||||||||||||||||
4
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, 2020 | September 30, 2020 | June 30, 2020 | March 31, 2020 | December 31, 2019 | December 31, 2020 | December 31, 2019 | |||||||||||||||||||||||||||||||||||
| Interest and dividend income | |||||||||||||||||||||||||||||||||||||||||
| Interest and fees on loans | $ | 18,194 | $ | 18,027 | $ | 18,459 | $ | 18,985 | $ | 18,648 | $ | 73,665 | $ | 77,339 | |||||||||||||||||||||||||||
| Interest and dividends on securities | 835 | 799 | 778 | 825 | 858 | 3,237 | 3,750 | ||||||||||||||||||||||||||||||||||
| Interest on cash and cash equivalents | 117 | 96 | 86 | 286 | 427 | 585 | 1,859 | ||||||||||||||||||||||||||||||||||
| Total interest and dividend income | 19,146 | 18,922 | 19,323 | 20,096 | 19,933 | 77,487 | 82,948 | ||||||||||||||||||||||||||||||||||
| Interest expense | |||||||||||||||||||||||||||||||||||||||||
| Interest expense on deposits | 3,557 | 4,104 | 4,810 | 5,709 | 5,948 | 18,180 | 24,698 | ||||||||||||||||||||||||||||||||||
| Interest expense on borrowings | 1,285 | 1,210 | 876 | 1,101 | 1,103 | 4,472 | 4,489 | ||||||||||||||||||||||||||||||||||
| Total interest expense | 4,842 | 5,314 | 5,686 | 6,810 | 7,051 | 22,652 | 29,187 | ||||||||||||||||||||||||||||||||||
| Net interest income | 14,304 | 13,608 | 13,637 | 13,286 | 12,882 | 54,835 | 53,761 | ||||||||||||||||||||||||||||||||||
| Provision for loan losses | 709 | 712 | 2,999 | 3,185 | 310 | 7,605 | 437 | ||||||||||||||||||||||||||||||||||
| Net interest income after provision for loan losses | 13,595 | 12,896 | 10,638 | 10,101 | 12,572 | 47,230 | 53,324 | ||||||||||||||||||||||||||||||||||
| Noninterest income | |||||||||||||||||||||||||||||||||||||||||
| Bank owned life insurance | 241 | 242 | 241 | 243 | 250 | 967 | 1,008 | ||||||||||||||||||||||||||||||||||
| Service charges and fees | 210 | 190 | 171 | 217 | 247 | 788 | 1,023 | ||||||||||||||||||||||||||||||||||
| Gains and fees from sales of loans | 16 | 27 | — | — | 382 | 43 | 1,791 | ||||||||||||||||||||||||||||||||||
| Gain (loss) on sale of other real estate owned, net | — | 19 | — | — | — | 19 | (102) | ||||||||||||||||||||||||||||||||||
| Net gain on sale of available for sale securities | — | — | — | — | — | — | 76 | ||||||||||||||||||||||||||||||||||
| Other | 154 | 136 | 165 | 612 | 169 | 1,067 | 1,448 | ||||||||||||||||||||||||||||||||||
| Total noninterest income | 621 | 614 | 577 | 1,072 | 1,048 | 2,884 | 5,244 | ||||||||||||||||||||||||||||||||||
| Noninterest expense | |||||||||||||||||||||||||||||||||||||||||
| Salaries and employee benefits | 5,453 | 5,295 | 5,227 | 5,380 | 5,162 | 21,355 | 19,434 | ||||||||||||||||||||||||||||||||||
| Occupancy and equipment | 4,516 | 2,266 | 2,235 | 1,909 | 1,928 | 10,926 | 7,594 | ||||||||||||||||||||||||||||||||||
| Data processing | 1,658 | 529 | 493 | 536 | 499 | 3,216 | 2,067 | ||||||||||||||||||||||||||||||||||
| Professional services | 591 | 374 | 434 | 711 | 402 | 2,110 | 1,857 | ||||||||||||||||||||||||||||||||||
| Director fees | 331 | 301 | 287 | 295 | 224 | 1,214 | 863 | ||||||||||||||||||||||||||||||||||
| FDIC insurance | 262 | 176 | 283 | 70 | — | 791 | 74 | ||||||||||||||||||||||||||||||||||
| Marketing | 118 | 151 | 199 | 162 | 220 | 630 | 971 | ||||||||||||||||||||||||||||||||||
| Other | 774 | 637 | 564 | 596 | 789 | 2,571 | 2,766 | ||||||||||||||||||||||||||||||||||
| Total noninterest expense | 13,703 | 9,729 | 9,722 | 9,659 | 9,224 | 42,813 | 35,626 | ||||||||||||||||||||||||||||||||||
| Income before income tax expense | 513 | 3,781 | 1,493 | 1,514 | 4,396 | 7,301 | 22,942 | ||||||||||||||||||||||||||||||||||
| Income tax expense | 177 | 790 | 279 | 151 | 924 | 1,397 | 4,726 | ||||||||||||||||||||||||||||||||||
| Net income | $ | 336 | $ | 2,991 | $ | 1,214 | $ | 1,363 | $ | 3,472 | $ | 5,904 | $ | 18,216 | |||||||||||||||||||||||||||
| Earnings Per Common Share: | |||||||||||||||||||||||||||||||||||||||||
| Basic | $ | 0.04 | $ | 0.38 | $ | 0.16 | $ | 0.17 | $ | 0.44 | $ | 0.75 | $ | 2.32 | |||||||||||||||||||||||||||
| Diluted | $ | 0.04 | $ | 0.38 | $ | 0.16 | $ | 0.17 | $ | 0.44 | $ | 0.75 | $ | 2.31 | |||||||||||||||||||||||||||
| Weighted Average Common Shares Outstanding: | |||||||||||||||||||||||||||||||||||||||||
| Basic | 7,726,926 | 7,721,247 | 7,715,094 | 7,750,135 | 7,745,227 | 7,728,328 | 7,757,355 | ||||||||||||||||||||||||||||||||||
| Diluted | 7,728,206 | 7,721,459 | 7,715,295 | 7,778,762 | 7,773,780 | 7,748,453 | 7,784,631 | ||||||||||||||||||||||||||||||||||
| Dividends per common share | $ | 0.14 | $ | 0.14 | $ | 0.14 | $ | 0.14 | $ | 0.13 | $ | 0.56 | $ | 0.52 | |||||||||||||||||||||||||||
5
BANKWELL FINANCIAL GROUP, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (unaudited)
| For the Quarter Ended | For the Year Ended | ||||||||||||||||||||||||||||||||||||||||
| December 31, 2020 | September 30, 2020 | June 30, 2020 | March 31, 2020 | December 31, 2019 | December 31, 2020 | December 31, 2019 | |||||||||||||||||||||||||||||||||||
| Performance ratios: | |||||||||||||||||||||||||||||||||||||||||
Return on average assets(1) | 0.06 | % | 0.55 | % | 0.23 | % | 0.29 | % | 0.73 | % | 0.28 | % | 0.97 | % | |||||||||||||||||||||||||||
Return on average stockholders' equity(1) | 0.75 | % | 6.87 | % | 2.82 | % | 3.03 | % | 7.68 | % | 3.35 | % | 10.20 | % | |||||||||||||||||||||||||||
Return on average tangible common equity(1) | 0.76 | % | 6.98 | % | 2.86 | % | 3.07 | % | 7.80 | % | 3.40 | % | 10.37 | % | |||||||||||||||||||||||||||
| Net interest margin | 2.66 | % | 2.67 | % | 2.81 | % | 2.98 | % | 2.92 | % | 2.77 | % | 3.03 | % | |||||||||||||||||||||||||||
Efficiency ratio(2) | 91.2 | % | 68.4 | % | 68.2 | % | 67.1 | % | 66.1 | % | 73.9 | % | 60.2 | % | |||||||||||||||||||||||||||
| Net loan charge-offs as a % of average loans | — | % | — | % | — | % | — | % | — | % | 0.01 | % | 0.15 | % | |||||||||||||||||||||||||||
Dividend payout ratio(3) | 350.00 | % | 36.84 | % | 87.50 | % | 82.35 | % | 29.55 | % | 74.67 | % | 22.51 | % | |||||||||||||||||||||||||||
(1)2020 performance ratios are negatively impacted by incremental COVID-19 pandemic related loan loss reserves and the $3.9 million one-time charge related to office consolidation, contract termination and employee severance costs recognized in the fourth quarter of 2020.
(2)Efficiency ratio is defined as noninterest expense, less other real estate owned expenses and amortization of intangible assets, divided by our operating revenue, which is equal to net interest income plus noninterest income excluding gains and losses on sales of securities and gains and losses on other real estate owned. In our judgment, the adjustments made to operating revenue allow investors and analysts to better assess our operating expenses in relation to our core operating revenue by removing the volatility that is associated with certain one-time items and other discrete items that are unrelated to our core business.
(3)The dividend payout ratio is calculated by dividing dividends per share by earnings per share.
| As of | |||||||||||||||||||||||||||||
| December 31, 2020 | September 30, 2020 | June 30, 2020 | March 31, 2020 | December 31, 2019 | |||||||||||||||||||||||||
| Capital ratios: | |||||||||||||||||||||||||||||
Total Common Equity Tier 1 Capital to Risk-Weighted Assets(1) | 11.06 | % | 12.36 | % | 12.44 | % | 12.14 | % | 12.53 | % | |||||||||||||||||||
Total Capital to Risk-Weighted Assets(1) | 12.28 | % | 13.57 | % | 13.63 | % | 13.13 | % | 13.35 | % | |||||||||||||||||||
Tier I Capital to Risk-Weighted Assets(1) | 11.06 | % | 12.36 | % | 12.44 | % | 12.14 | % | 12.53 | % | |||||||||||||||||||
Tier I Capital to Average Assets(1) | 8.44 | % | 9.58 | % | 9.93 | % | 10.84 | % | 10.99 | % | |||||||||||||||||||
| Tangible common equity to tangible assets | 7.73 | % | 7.83 | % | 8.21 | % | 8.16 | % | 9.56 | % | |||||||||||||||||||
Tangible book value per common share(2) | $ | 22.43 | $ | 22.20 | $ | 21.70 | $ | 21.69 | $ | 23.15 | |||||||||||||||||||
(1)Represents Bank ratios. Current period capital ratios are preliminary subject to finalization of the FDIC Call Report.
(2)Excludes unvested restricted shares of 163,369, 170,083, 165,708, 154,012, and 110,975 as of December 31, 2020, September 30, 2020, June 30, 2020, March 31, 2020, and December 31, 2019, respectively.
6
BANKWELL FINANCIAL GROUP, INC.
ASSET QUALITY (unaudited)
(Dollars in thousands)
| For the Quarter Ended | |||||||||||||||||||||||||||||
| December 31, 2020 | September 30, 2020 | June 30, 2020 | March 31, 2020 | December 31, 2019 | |||||||||||||||||||||||||
| Allowance for loan losses: | |||||||||||||||||||||||||||||
| Balance at beginning of period | $ | 20,372 | $ | 19,662 | $ | 16,686 | $ | 13,509 | $ | 13,212 | |||||||||||||||||||
| Charge-offs: | |||||||||||||||||||||||||||||
| Commercial business | (75) | — | — | (8) | (13) | ||||||||||||||||||||||||
| Consumer | (11) | (4) | (23) | (2) | (5) | ||||||||||||||||||||||||
| Total charge-offs | (86) | (4) | (23) | (10) | (18) | ||||||||||||||||||||||||
| Recoveries: | |||||||||||||||||||||||||||||
| Commercial business | 14 | — | — | 1 | 1 | ||||||||||||||||||||||||
| Consumer | — | 2 | — | 1 | 4 | ||||||||||||||||||||||||
| Total recoveries | 14 | 2 | — | 2 | 5 | ||||||||||||||||||||||||
| Net loan charge-offs | (72) | (2) | (23) | (8) | (13) | ||||||||||||||||||||||||
| Provision for loan losses | 709 | 712 | 2,999 | 3,185 | 310 | ||||||||||||||||||||||||
| Balance at end of period | $ | 21,009 | $ | 20,372 | $ | 19,662 | $ | 16,686 | $ | 13,509 | |||||||||||||||||||
| As of | |||||||||||||||||||||||||||||
| December 31, 2020 | September 30, 2020 | June 30, 2020 | March 31, 2020 | December 31, 2019 | |||||||||||||||||||||||||
| Asset quality: | |||||||||||||||||||||||||||||
| Nonaccrual loans | |||||||||||||||||||||||||||||
| Residential real estate | $ | 1,492 | $ | 1,596 | $ | 1,622 | $ | 1,532 | $ | 1,560 | |||||||||||||||||||
| Commercial real estate | 21,093 | 4,812 | 5,172 | 5,339 | 5,222 | ||||||||||||||||||||||||
| Commercial business | 1,834 | 3,760 | 3,783 | 3,783 | 3,806 | ||||||||||||||||||||||||
| Construction | 8,997 | — | — | — | — | ||||||||||||||||||||||||
| Total nonaccrual loans | 33,416 | 10,168 | 10,577 | 10,654 | 10,588 | ||||||||||||||||||||||||
| Other real estate owned | — | — | 180 | — | — | ||||||||||||||||||||||||
| Total nonperforming assets | $ | 33,416 | $ | 10,168 | $ | 10,757 | $ | 10,654 | $ | 10,588 | |||||||||||||||||||
| Nonperforming loans as a % of total loans | 2.06 | % | 0.63 | % | 0.66 | % | 0.66 | % | 0.66 | % | |||||||||||||||||||
| Nonperforming assets as a % of total assets | 1.48 | % | 0.46 | % | 0.53 | % | 0.52 | % | 0.56 | % | |||||||||||||||||||
| Allowance for loan losses as a % of total loans | 1.29 | % | 1.25 | % | 1.22 | % | 1.03 | % | 0.84 | % | |||||||||||||||||||
| Allowance for loan losses as a % of nonperforming loans | 62.87 | % | 200.35 | % | 185.89 | % | 156.62 | % | 127.59 | % | |||||||||||||||||||
Total nonaccrual loans were $33.4 million as of December 31, 2020, of which $2.6 million are guaranteed by the Small Business Administration (SBA). The Company individually analyzed all existing COVID-19 deferrals and COVID-19 impacted loans for collectability and impairment as of December 31, 2020, resulting in a $25.6 million increase to the nonperforming loan population which are adequately reserved. Nonperforming assets as a percentage of total assets was 1.48% at December 31, 2020, up from 0.56% at December 31, 2019. The allowance for loan losses at December 31, 2020 was $21.0 million, representing 1.29% of total loans. The $7.5 million increase in the allowance for loan losses at December 31, 2020 when compared to December 31, 2019 was primarily due to incremental loan loss reserves for increased credit risk relating to economic disruption and uncertainty caused by the COVID-19 pandemic.
7
BANKWELL FINANCIAL GROUP, INC.
LOAN & DEPOSIT PORTFOLIO (unaudited)
(Dollars in thousands)
| Period End Loan Composition | December 31, 2020 | September 30, 2020 | December 31, 2019 | Current QTD % Change | YTD % Change | ||||||||||||||||||||||||
| Residential Real Estate | $ | 113,557 | $ | 120,531 | $ | 147,109 | (5.8) | % | (22.8) | % | |||||||||||||||||||
Commercial Real Estate(1) | 1,148,383 | 1,105,862 | 1,128,614 | 3.8 | 1.8 | ||||||||||||||||||||||||
| Construction | 87,007 | 96,508 | 98,583 | (9.8) | (11.7) | ||||||||||||||||||||||||
| Total Real Estate Loans | 1,348,947 | 1,322,901 | 1,374,306 | 2.0 | (1.8) | ||||||||||||||||||||||||
| Commercial Business | 276,601 | 301,747 | 230,028 | (8.3) | 20.2 | ||||||||||||||||||||||||
| Consumer | 79 | 78 | 150 | 1.3 | (47.3) | ||||||||||||||||||||||||
| Total Loans | $ | 1,625,627 | $ | 1,624,726 | $ | 1,604,484 | 0.1 | % | 1.3 | % | |||||||||||||||||||
| (1) Includes owner occupied commercial real estate. | |||||||||||||||||||||||||||||
| Period End Deposit Composition | December 31, 2020 | September 30, 2020 | December 31, 2019 | Current QTD % Change | YTD % Change | ||||||||||||||||||||||||
| Noninterest bearing demand | $ | 270,235 | $ | 234,848 | $ | 191,518 | 15.1 | % | 41.1 | % | |||||||||||||||||||
| NOW | 101,737 | 90,776 | 70,020 | 12.1 | 45.3 | ||||||||||||||||||||||||
| Money Market | 669,364 | 561,101 | 419,495 | 19.3 | 59.6 | ||||||||||||||||||||||||
| Savings | 158,750 | 164,590 | 183,729 | (3.5) | (13.6) | ||||||||||||||||||||||||
| Time | 627,230 | 716,213 | 627,141 | (12.4) | — | ||||||||||||||||||||||||
| Total Deposits | $ | 1,827,316 | $ | 1,767,528 | $ | 1,491,903 | 3.4 | % | 22.5 | % | |||||||||||||||||||
Total deposits were $1.8 billion at December 31, 2020 compared to $1.5 billion at December 31, 2019, an increase of $0.3 billion, or 22.5%. The increase in total deposits was a result of successful commercial core deposit gathering efforts, as well as a temporary increase in deposits to expand on-balance sheet liquidity during the COVID-19 pandemic.
8
BANKWELL FINANCIAL GROUP, INC.
NONINTEREST INCOME (unaudited)
(Dollars in thousands)
| For the Quarter Ended | |||||||||||||||||||||||||||||
| Noninterest income | December 31, 2020 | September 30, 2020 | December 31, 2019 | Dec 20 vs. Sep 20 % Change | Dec 20 vs. Dec 19 % Change | ||||||||||||||||||||||||
| Bank owned life insurance | $ | 241 | $ | 242 | $ | 250 | (0.4) | % | (3.6) | % | |||||||||||||||||||
| Service charges and fees | 210 | 190 | 247 | 10.5 | (15.0) | ||||||||||||||||||||||||
| Gains and fees from sales of loans | 16 | 27 | 382 | (40.7) | (95.8) | ||||||||||||||||||||||||
| Gain on sale of other real estate owned, net | — | 19 | — | (100.0) | N/A | ||||||||||||||||||||||||
| Other | 154 | 136 | 169 | 13.2 | (8.9) | ||||||||||||||||||||||||
| Total noninterest income | $ | 621 | $ | 614 | $ | 1,048 | 1.1 | % | (40.7) | % | |||||||||||||||||||
| For the Year Ended | |||||||||||||||||
| Noninterest income | December 31, 2020 | December 31, 2019 | % Change | ||||||||||||||
| Bank owned life insurance | $ | 967 | $ | 1,008 | (4.1) | % | |||||||||||
| Service charges and fees | 788 | 1,023 | (23.0) | ||||||||||||||
| Gains and fees from sales of loans | 43 | 1,791 | (97.6) | ||||||||||||||
| Gain (loss) on sale of other real estate owned, net | 19 | (102) | (118.6) | ||||||||||||||
| Net gain on sale of available for sale securities | — | 76 | (100.0) | ||||||||||||||
| Other | 1,067 | 1,448 | (26.3) | ||||||||||||||
| Total noninterest income | $ | 2,884 | $ | 5,244 | (45.0) | % | |||||||||||
Noninterest income decreased by $0.4 million to $0.6 million for the quarter ended December 31, 2020 compared to the quarter ended December 31, 2019. Noninterest income decreased by $2.4 million to $2.9 million for the year ended December 31, 2020, compared to the year ended December 31, 2019.
The decrease in noninterest income was primarily a result of the absence of gains and fees from SBA loan sales for the quarter and year ended December 31, 2020, when compared to the same periods in 2019. In addition, for the year ended December 31, 2020 the decrease in noninterest income was also driven by certain waived service charges and fees on depository accounts as a courtesy to customers during the COVID-19 pandemic. The decrease in other noninterest income for the year ended December 31, 2020 was primarily a result of a decline in loan related interest rate swap fees in 2020, when compared to the same period in 2019.
9
BANKWELL FINANCIAL GROUP, INC.
NONINTEREST EXPENSE (unaudited)
(Dollars in thousands)
| For the Quarter Ended | |||||||||||||||||||||||||||||
| Noninterest expense | December 31, 2020 | September 30, 2020 | December 31, 2019 | Dec 20 vs. Sep 20 % Change | Dec 20 vs. Dec 19 % Change | ||||||||||||||||||||||||
| Salaries and employee benefits | $ | 5,453 | $ | 5,295 | $ | 5,162 | 3.0 | % | 5.6 | % | |||||||||||||||||||
| Occupancy and equipment | 4,516 | 2,266 | 1,928 | 99.3 | 134.2 | ||||||||||||||||||||||||
| Data processing | 1,658 | 529 | 499 | 213.4 | 232.3 | ||||||||||||||||||||||||
| Professional services | 591 | 374 | 402 | 58.0 | 47.0 | ||||||||||||||||||||||||
| Director fees | 331 | 301 | 224 | 10.0 | 47.8 | ||||||||||||||||||||||||
| FDIC insurance | 262 | 176 | — | 48.9 | N/A | ||||||||||||||||||||||||
| Marketing | 118 | 151 | 220 | (21.9) | (46.4) | ||||||||||||||||||||||||
| Other | 774 | 637 | 789 | 21.5 | (1.9) | ||||||||||||||||||||||||
| Total noninterest expense | $ | 13,703 | $ | 9,729 | $ | 9,224 | 40.8 | % | 48.6 | % | |||||||||||||||||||
| For the Year Ended | |||||||||||||||||
| Noninterest expense | December 31, 2020 | December 31, 2019 | % Change | ||||||||||||||
| Salaries and employee benefits | $ | 21,355 | $ | 19,434 | 9.9 | % | |||||||||||
| Occupancy and equipment | 10,926 | 7,594 | 43.9 | ||||||||||||||
| Data processing | 3,216 | 2,067 | 55.6 | ||||||||||||||
| Professional services | 2,110 | 1,857 | 13.6 | ||||||||||||||
| Director fees | 1,214 | 863 | 40.7 | ||||||||||||||
| FDIC insurance | 791 | 74 | 968.9 | ||||||||||||||
| Marketing | 630 | 971 | (35.1) | ||||||||||||||
| Other | 2,571 | 2,766 | (7.0) | ||||||||||||||
| Total noninterest expense | $ | 42,813 | $ | 35,626 | 20.2 | % | |||||||||||
Noninterest expense increased by $4.5 million, or 48.6%, to $13.7 million for the quarter ended December 31, 2020 compared to the quarter ended December 31, 2019. Noninterest expense increased by $7.2 million, or 20.2%, to $42.8 million for the year ended December 31, 2020 compared to the year ended December 31, 2019. The increase in noninterest expense was primarily driven by $3.9 million in one-time charges recognized during the fourth quarter of 2020. These one-time charges impacted salaries and employee benefits, occupancy and equipment expense and data processing expense.
Salaries and employee benefits totaled $5.5 million for the quarter ended December 31, 2020, an increase of $0.3 million when compared to the same period in 2019. Salaries and employee benefits totaled $21.4 million for the year ended December 31, 2020, an increase of $1.9 million when compared to the same period in 2019. The increase in salaries and employee benefits was primarily driven by a $0.8 million expense for the Voluntary Early Retirement Incentive Plan offered to eligible employees and additional severance charges recognized during the fourth quarter of 2020. The increase in salaries and employee benefits was also driven by normal annual salary increases and key hires in support of growth initiatives, partially offset by a reduction in overall headcount.
Occupancy and equipment expense totaled $4.5 million for the quarter ended December 31, 2020, an increase of $2.6 million when compared to the same period in 2019. Occupancy and equipment expense totaled $10.9 million for the year ended December 31, 2020, an increase of $3.3 million when compared to the same period in 2019. The increase in occupancy and equipment expense was primarily due to a $2.0 million one-time expense related to office and branch consolidation recognized during the fourth quarter of 2020. In addition, the increase in occupancy and equipment expense was due to additional cleaning costs associated with precautions taken to prevent the spread of COVID-19.
Data processing expense totaled $1.7 million for the quarter ended December 31, 2020, an increase of $1.2 million when compared to the same period in 2019. Data processing expense totaled $3.2 million for the year ended December 31, 2020, an increase of $1.1 million when compared to the same period in 2019. The increase in data processing expense was primarily driven by a $1.1 million one-time charge related to early termination fees payable to a legacy technology vendor.
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, 2020 | September 30, 2020 | June 30, 2020 | March 31, 2020 | December 31, 2019 | ||||||||||||||||||||||||
| Total Equity | $ | 176,602 | $ | 174,267 | $ | 170,360 | $ | 170,214 | $ | 182,397 | |||||||||||||||||||
| Less: | |||||||||||||||||||||||||||||
| Goodwill | 2,589 | 2,589 | 2,589 | 2,589 | 2,589 | ||||||||||||||||||||||||
| Other intangibles | 76 | 160 | 178 | 196 | 214 | ||||||||||||||||||||||||
| Tangible Common Equity | $ | 173,937 | $ | 171,518 | $ | 167,593 | $ | 167,429 | $ | 179,594 | |||||||||||||||||||
| Total Assets | $ | 2,253,747 | $ | 2,193,022 | $ | 2,043,635 | $ | 2,053,625 | $ | 1,882,182 | |||||||||||||||||||
| Less: | |||||||||||||||||||||||||||||
| Goodwill | 2,589 | 2,589 | 2,589 | 2,589 | 2,589 | ||||||||||||||||||||||||
| Other intangibles | 76 | 160 | 178 | 196 | 214 | ||||||||||||||||||||||||
| Tangible Assets | $ | 2,251,082 | $ | 2,190,273 | $ | 2,040,868 | $ | 2,050,840 | $ | 1,879,379 | |||||||||||||||||||
| Tangible Common Equity to Tangible Assets | 7.73 | % | 7.83 | % | 8.21 | % | 8.16 | % | 9.56 | % | |||||||||||||||||||
| As of | |||||||||||||||||||||||||||||
| Computation of Tangible Book Value per Common Share | December 31, 2020 | September 30, 2020 | June 30, 2020 | March 31, 2020 | December 31, 2019 | ||||||||||||||||||||||||
| Total shareholders' equity | $ | 176,602 | $ | 174,267 | $ | 170,360 | $ | 170,214 | $ | 182,397 | |||||||||||||||||||
| Less: | |||||||||||||||||||||||||||||
| Preferred stock | — | — | — | — | — | ||||||||||||||||||||||||
| Common shareholders' equity | $ | 176,602 | $ | 174,267 | $ | 170,360 | $ | 170,214 | $ | 182,397 | |||||||||||||||||||
| Less: | |||||||||||||||||||||||||||||
| Goodwill | 2,589 | 2,589 | 2,589 | 2,589 | 2,589 | ||||||||||||||||||||||||
| Other intangibles | 76 | 160 | 178 | 196 | 214 | ||||||||||||||||||||||||
| Tangible common shareholders' equity | $ | 173,937 | $ | 171,518 | $ | 167,593 | $ | 167,429 | $ | 179,594 | |||||||||||||||||||
| Common shares | 7,919,278 | 7,896,503 | 7,887,503 | 7,871,419 | 7,868,803 | ||||||||||||||||||||||||
| Less: | |||||||||||||||||||||||||||||
| Shares of unvested restricted stock | 163,369 | 170,083 | 165,708 | 154,012 | 110,975 | ||||||||||||||||||||||||
| Common shares less unvested restricted stock | 7,755,909 | 7,726,420 | 7,721,795 | 7,717,407 | 7,757,828 | ||||||||||||||||||||||||
| Book value per share | $ | 22.77 | $ | 22.55 | $ | 22.06 | $ | 22.06 | $ | 23.51 | |||||||||||||||||||
| Less: | |||||||||||||||||||||||||||||
| Effects of intangible assets | $ | 0.34 | $ | 0.36 | $ | 0.36 | $ | 0.36 | $ | 0.36 | |||||||||||||||||||
| Tangible Book Value per Common Share | $ | 22.43 | $ | 22.20 | $ | 21.70 | $ | 21.69 | $ | 23.15 | |||||||||||||||||||
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, 2020 | September 30, 2020 | June 30, 2020 | March 31, 2020 | December 31, 2019 | December 31, 2020 | December 31, 2019 | ||||||||||||||||||||||||||||||||||
| Noninterest expense | $ | 13,703 | $ | 9,729 | $ | 9,722 | $ | 9,659 | $ | 9,224 | $ | 42,813 | $ | 35,626 | |||||||||||||||||||||||||||
| Less: | |||||||||||||||||||||||||||||||||||||||||
| Amortization of intangible assets | 84 | 18 | 18 | 18 | 18 | 138 | 75 | ||||||||||||||||||||||||||||||||||
| Other real estate owned expenses | — | — | 6 | — | — | 6 | 37 | ||||||||||||||||||||||||||||||||||
| Adjusted noninterest expense | $ | 13,619 | $ | 9,711 | $ | 9,698 | $ | 9,641 | $ | 9,206 | $ | 42,669 | $ | 35,514 | |||||||||||||||||||||||||||
| Net interest income | $ | 14,304 | $ | 13,608 | $ | 13,637 | $ | 13,286 | $ | 12,882 | $ | 54,835 | $ | 53,761 | |||||||||||||||||||||||||||
| Noninterest income | 621 | 614 | 577 | 1,072 | 1,048 | 2,884 | 5,244 | ||||||||||||||||||||||||||||||||||
| Less: | |||||||||||||||||||||||||||||||||||||||||
| Net gain on sale of available for sale securities | — | — | — | — | — | — | 76 | ||||||||||||||||||||||||||||||||||
| Gain (loss) on sale of other real estate owned, net | — | 19 | — | — | — | 19 | (102) | ||||||||||||||||||||||||||||||||||
| Operating revenue | $ | 14,925 | $ | 14,203 | $ | 14,214 | $ | 14,358 | $ | 13,930 | $ | 57,700 | $ | 59,031 | |||||||||||||||||||||||||||
| Efficiency ratio | 91.2 | % | 68.4 | % | 68.2 | % | 67.1 | % | 66.1 | % | 73.9 | % | 60.2 | % | |||||||||||||||||||||||||||
| For the Quarter Ended | For the Year Ended | ||||||||||||||||||||||||||||||||||||||||
| Computation of Return on Average Tangible Common Equity | December 31, 2020 | September 30, 2020 | June 30, 2020 | March 31, 2020 | December 31, 2019 | December 31, 2020 | December 31, 2019 | ||||||||||||||||||||||||||||||||||
| Net Income Attributable to Common Shareholders | $ | 336 | $ | 2,991 | $ | 1,214 | $ | 1,363 | $ | 3,472 | $ | 5,904 | $ | 18,216 | |||||||||||||||||||||||||||
| Total average shareholders' equity | $ | 178,439 | $ | 173,162 | $ | 173,289 | $ | 181,127 | $ | 179,312 | $ | 176,489 | $ | 178,510 | |||||||||||||||||||||||||||
| Less: | |||||||||||||||||||||||||||||||||||||||||
| Average Goodwill | 2,589 | 2,589 | 2,589 | 2,589 | 2,589 | 2,589 | 2,589 | ||||||||||||||||||||||||||||||||||
| Average Other intangibles | 153 | 172 | 190 | 208 | 226 | 180 | 254 | ||||||||||||||||||||||||||||||||||
| Average tangible common equity | $ | 175,697 | $ | 170,401 | $ | 170,510 | $ | 178,330 | $ | 176,497 | $ | 173,720 | $ | 175,667 | |||||||||||||||||||||||||||
| Annualized Return on Average Tangible Common Equity | 0.76 | % | 6.98 | % | 2.86 | % | 3.07 | % | 7.80 | % | 3.40 | % | 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, 2020 | December 31, 2019 | ||||||||||||||||||||||||||||||||||
| Average Balance | Interest | Yield/ Rate (5) | Average Balance | Interest | Yield/ Rate (5) | ||||||||||||||||||||||||||||||
| Assets: | |||||||||||||||||||||||||||||||||||
| Cash and Fed funds sold | $ | 424,327 | $ | 117 | 0.11 | % | $ | 90,007 | $ | 427 | 1.88 | % | |||||||||||||||||||||||
Securities(1) | 105,422 | 814 | 3.09 | 102,696 | 804 | 3.13 | |||||||||||||||||||||||||||||
| Loans: | |||||||||||||||||||||||||||||||||||
| Commercial real estate | 1,096,912 | 12,753 | 4.55 | 1,084,311 | 12,646 | 4.56 | |||||||||||||||||||||||||||||
| Residential real estate | 115,104 | 1,009 | 3.51 | 153,752 | 1,475 | 3.84 | |||||||||||||||||||||||||||||
Construction(2) | 93,909 | 910 | 3.79 | 88,864 | 1,126 | 4.96 | |||||||||||||||||||||||||||||
| Commercial business | 311,995 | 3,520 | 4.41 | 245,822 | 3,397 | 5.41 | |||||||||||||||||||||||||||||
| Consumer | 96 | 2 | 7.41 | 210 | 4 | 7.09 | |||||||||||||||||||||||||||||
| Total loans | 1,618,016 | 18,194 | 4.40 | 1,572,959 | 18,648 | 4.64 | |||||||||||||||||||||||||||||
| Federal Home Loan Bank stock | 7,859 | 74 | 3.75 | 7,474 | 108 | 5.73 | |||||||||||||||||||||||||||||
| Total earning assets | 2,155,624 | $ | 19,199 | 3.48 | % | 1,773,136 | $ | 19,987 | 4.41 | % | |||||||||||||||||||||||||
| Other assets | 123,435 | 102,582 | |||||||||||||||||||||||||||||||||
| Total assets | $ | 2,279,059 | $ | 1,875,718 | |||||||||||||||||||||||||||||||
| Liabilities and shareholders' equity: | |||||||||||||||||||||||||||||||||||
| Interest bearing liabilities: | |||||||||||||||||||||||||||||||||||
| NOW | $ | 93,126 | $ | 42 | 0.18 | % | $ | 63,385 | $ | 27 | 0.17 | % | |||||||||||||||||||||||
| Money market | 644,685 | 858 | 0.53 | 418,682 | 1,571 | 1.49 | |||||||||||||||||||||||||||||
| Savings | 168,307 | 164 | 0.39 | 181,910 | 717 | 1.56 | |||||||||||||||||||||||||||||
| Time | 686,827 | 2,493 | 1.44 | 633,166 | 3,633 | 2.28 | |||||||||||||||||||||||||||||
| Total interest bearing deposits | 1,592,945 | 3,557 | 0.89 | 1,297,143 | 5,948 | 1.82 | |||||||||||||||||||||||||||||
| Borrowed Money | 200,250 | 1,285 | 2.51 | 175,198 | 1,103 | 2.46 | |||||||||||||||||||||||||||||
| Total interest bearing liabilities | 1,793,195 | $ | 4,842 | 1.07 | % | 1,472,341 | $ | 7,051 | 1.90 | % | |||||||||||||||||||||||||
| Noninterest bearing deposits | 255,843 | 187,997 | |||||||||||||||||||||||||||||||||
| Other liabilities | 51,582 | 36,068 | |||||||||||||||||||||||||||||||||
| Total liabilities | 2,100,620 | 1,696,406 | |||||||||||||||||||||||||||||||||
| Shareholders' equity | 178,439 | 179,312 | |||||||||||||||||||||||||||||||||
| Total liabilities and shareholders' equity | $ | 2,279,059 | $ | 1,875,718 | |||||||||||||||||||||||||||||||
Net interest income(3) | $ | 14,357 | $ | 12,936 | |||||||||||||||||||||||||||||||
| Interest rate spread | 2.41 | % | 2.51 | % | |||||||||||||||||||||||||||||||
Net interest margin(4) | 2.66 | % | 2.92 | % | |||||||||||||||||||||||||||||||
(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 $53 thousand and $54 thousand for the quarters ended December 31, 2020 and 2019, 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, 2020 | December 31, 2019 | ||||||||||||||||||||||||||||||||||
| Average Balance | Interest | Yield/ Rate (5) | Average Balance | Interest | Yield/ Rate (5) | ||||||||||||||||||||||||||||||
| Assets: | |||||||||||||||||||||||||||||||||||
| Cash and Fed funds sold | $ | 261,689 | $ | 585 | 0.22 | % | $ | 85,678 | $ | 1,859 | 2.17 | % | |||||||||||||||||||||||
Securities(1) | 98,938 | 3,103 | 3.14 | 112,336 | 3,526 | 3.14 | |||||||||||||||||||||||||||||
| Loans: | |||||||||||||||||||||||||||||||||||
| Commercial real estate | 1,095,367 | 51,218 | 4.60 | 1,067,290 | 50,818 | 4.70 | |||||||||||||||||||||||||||||
| Residential real estate | 129,585 | 4,645 | 3.58 | 165,384 | 6,367 | 3.85 | |||||||||||||||||||||||||||||
Construction(2) | 97,230 | 4,262 | 4.31 | 85,591 | 4,538 | 5.23 | |||||||||||||||||||||||||||||
| Commercial business | 295,662 | 13,530 | 4.50 | 255,779 | 15,599 | 6.01 | |||||||||||||||||||||||||||||
| Consumer | 121 | 10 | 8.00 | 258 | 17 | 6.70 | |||||||||||||||||||||||||||||
| Total loans | 1,617,965 | 73,665 | 4.48 | 1,574,302 | 77,339 | 4.85 | |||||||||||||||||||||||||||||
| Federal Home Loan Bank stock | 7,625 | 346 | 4.53 | 7,502 | 473 | 6.31 | |||||||||||||||||||||||||||||
| Total earning assets | 1,986,217 | $ | 77,699 | 3.85 | % | 1,779,818 | $ | 83,197 | 4.61 | % | |||||||||||||||||||||||||
| Other assets | 125,261 | 92,663 | |||||||||||||||||||||||||||||||||
| Total assets | $ | 2,111,478 | $ | 1,872,481 | |||||||||||||||||||||||||||||||
| Liabilities and shareholders' equity: | |||||||||||||||||||||||||||||||||||
| Interest bearing liabilities: | |||||||||||||||||||||||||||||||||||
| NOW | $ | 80,805 | $ | 141 | 0.17 | % | $ | 62,254 | $ | 128 | 0.21 | % | |||||||||||||||||||||||
| Money market | 516,527 | 4,071 | 0.79 | 439,867 | 7,139 | 1.62 | |||||||||||||||||||||||||||||
| Savings | 169,763 | 1,368 | 0.81 | 177,854 | 2,968 | 1.67 | |||||||||||||||||||||||||||||
| Time | 712,461 | 12,600 | 1.77 | 637,515 | 14,463 | 2.27 | |||||||||||||||||||||||||||||
| Total interest bearing deposits | 1,479,556 | 18,180 | 1.23 | 1,317,490 | 24,698 | 1.87 | |||||||||||||||||||||||||||||
| Borrowed Money | 190,463 | 4,472 | 2.31 | 175,267 | 4,489 | 2.53 | |||||||||||||||||||||||||||||
| Total interest bearing liabilities | 1,670,019 | $ | 22,652 | 1.36 | % | 1,492,757 | $ | 29,187 | 1.96 | % | |||||||||||||||||||||||||
| Noninterest bearing deposits | 215,073 | 172,192 | |||||||||||||||||||||||||||||||||
| Other liabilities | 49,897 | 29,022 | |||||||||||||||||||||||||||||||||
| Total liabilities | 1,934,989 | 1,693,971 | |||||||||||||||||||||||||||||||||
| Shareholders' equity | 176,489 | 178,510 | |||||||||||||||||||||||||||||||||
| Total liabilities and shareholders' equity | $ | 2,111,478 | $ | 1,872,481 | |||||||||||||||||||||||||||||||
Net interest income(3) | $ | 55,047 | $ | 54,010 | |||||||||||||||||||||||||||||||
| Interest rate spread | 2.49 | % | 2.65 | % | |||||||||||||||||||||||||||||||
Net interest margin(4) | 2.77 | % | 3.03 | % | |||||||||||||||||||||||||||||||
(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 $212 thousand and $249 thousand for the years ended December 31, 2020 and 2019, 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.
14
Bankwell Financial Group 4Q20 Investor Presentation
2 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. The COVID-19 pandemic is adversely affecting Bankwell Financial Group, its customers, counterparties, employees, and third party service providers, and the ultimate extent of the impacts on its business, financial position, results of operations, liquidity, and prospects is unknown.
3 Table of Contents • 4Q20 Performance & One-time Charges • 2021 Outlook • COVID-19 Deferral & PPP Updates • ALLL & Non-Performing Loans • Capital • Bankwell History & Overview
4Q20 Performance & One-Time Charges
5 4Q20 Summary 1 Pre-tax, pre-provision net revenue per share is a non-GAAP metric & excludes provision for loan losses and income tax expense • $336 thousand reported net income, or $0.04 earnings per share, versus a core earnings per share of $0.51: ̶ ($0.39) EPS due to one time charges of $3.9 million for office consolidation, contract termination and employee severance costs ̶ ($0.08) EPS net impact from COVID-19, primarily from ALLL reserve build • Less than 2% of loan portfolio on COVID-19 deferral at end of 4Q20 4Q20 Reported vs Core EPS • $35 million PPP loans at end of 4Q20; an additional ~$4 million of loans forgiven through 1/21/21 • Continued success with Core Business deposit generation, enabling further deposit cost reductions and improved deposit mix • Maintained strong capital and liquidity during the quarter • Net Interest Margin (“NIM”) was 2.77% for 2020, negatively impacted by excess liquidity • The Company declared the 1Q21 dividend of $0.14 per share
6 4Q20 Results 1 Ratios presented represent Bank ratios; presented ratios are preliminary, subject to finalization of the FDIC Call Report 2 Bankwell meets Adequate + buffer standard, which exceeds Well Capitalized thresholds Profitability Balance Sheet Capital 4Q20 FY20 • Net Income $336 thousand $5.9 million • PPNR $1.2 million $14.9 million • Return on Average Assets 0.06% 0.28% • Return on Average Equity 0.75% 3.35% • $1.6 billion of gross loans • $1.8 billion of deposits • 1.32% ALLL excluding PPP loans • Dividend of $0.14 per share paid • $22.43 Tangible Book Value • Well Capitalized1,2 Tier 1 Leverage 8.44% Tier1/CET1 / RWA 11.06% Total Capital / RWA 12.28%
7 4Q20 Consolidated Financial Statements Linked Quarter Income Statement 4Q20 3Q20 Var1 Total Interest Income $19.1 $18.9 $0.2 Total Interest Expense $4.8 $5.3 $0.5 Net Interest Income $14.3 $13.6 $0.7 Non-Interest Income $0.6 $0.6 $0.0 Non-Interest Expense $13.7 $9.7 $(4.0) Pre-Tax, Pre-Provision Net Revenue $1.2 $4.5 $(3.3) Provision for Loan Losses $0.7 $0.7 $0.0 Pre-Tax Income $0.5 $3.8 $(3.3) Income Tax Expense $0.2 $0.8 $(0.6) Reported Net Income $0.3 $3.0 $(2.7) EPS $0.04 $0.38 $(0.34) Pre-Tax, Pre-Provision Net Revenue per share2 $0.15 $0.57 $(0.42) 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 4Q20 3Q20 Var1 Cash & Cash Equivalents $410 $339 $70 Investment Securities $107 $109 $(2) Loans Receivable, net $1,602 $1,601 $1 All Other Assets $136 $144 $(8) Total Assets $2,254 $2,193 $61 Total Deposits $1,827 $1,768 $60 Total Borrowings $200 $200 $0 Other Liabilities $50 $51 $(1) Total Liabilities $2,077 $2,019 $59 Equity $177 $174 $2 Total Liabilities & Equity $2,254 $2,193 $61
8 2020 Consolidated Financial Statements Income Statement 2020 2019 Var1 Total Interest Income $77.5 $82.9 $(5.5) Total Interest Expense $22.7 $29.2 $6.5 Net Interest Income $54.8 $53.8 $1.0 Non-Interest Income $2.9 $5.2 $(2.4) Non-Interest Expense $42.8 $35.6 $(7.2) Pre-Tax, Pre-Provision Net Revenue $14.9 $23.4 $(8.5) Provision for Loan Losses $7.6 $0.4 $(7.2) Pre-Tax Income $7.3 $22.9 $(15.6) Income Tax Expense $1.4 $4.7 $(3.3) Reported Net Income $5.9 $18.2 $(12.3) EPS $0.75 $2.31 $(1.56) Pre-Tax, Pre-Provision Net Revenue per share2 $1.89 $3.00 $(1.11) 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 2020 2019 Var1 Cash & Cash Equivalents $410 $78 $332 Investment Securities $107 $101 $6 Loans Receivable, net $1,602 $1,589 $13 All Other Assets $136 $114 $22 Total Assets $2,254 $1,882 $372 Total Deposits $1,827 $1,492 $335 Total Borrowings $200 $175 $25 Other Liabilities $50 $33 $17 Total Liabilities $2,077 $1,700 $378 Equity $177 $182 $(6) Total Liabilities & Equity $2,254 $1,882 $372
9 Summary of One-time Charges • One-time charges taken in December: ̶ Office Consolidation costs (including headcount) $2.0 million ̶ Voluntary Early Retirement Incentive Plan (“VERIP”) and other 4Q reduction in force actions $0.8 million Sub-total $2.8 million ̶ Online Banking contract termination $1.1 million Total $3.9 million • The $2.8 million one-time charge from office consolidation and headcount actions will generate annualized savings of ~$2.3 million • The Online Banking contract termination charge is due to the retirement of a legacy application, which will be replaced with a state of the art application to drive commercial deposit growth
2021 Outlook
11 2021 Outlook • Entering 2021 with a strong balance sheet and 1.29% ALLL reserve • Provision expense in 2021 to be well below 2020 • Expected loan growth excluding PPP of ~5% • Steady loan yields • Continued decrease in funding costs • Full year 2021 NIM expected to be 3.00% - 3.15% • Growth in non-interest income from SBA loan sales • Adjusted for one-time charges, 2021 non-interest expense trending 2% - 3% lower versus 2020 ̶ 2021 exit run rate savings of ~5% once office consolidation cost savings fully realized
12 Positive Outlook For Cost of Deposits Dollars in millions Low yield environment + strategic actions = interest expense savings <0.70% Dec-20 – Jun-21 Deposits Quarterly Cost of Deposits • ~$70 million wholesale deposits maturing, at an average rate of 0.89% • ~$150 million retail CDs maturing, at an average rate of 1.85%; anticipate ~40% retention at ~37 bps • Investments in commercial channels continue to generate quality organic core deposit growth • Runoff of COVID-19 liquidity and other wholesale deposits to help reduce deposit costs 1.59% 1.52% 1.16% 0.93% 0.77% ~0.62% 4Q19 1Q20 2Q20 3Q20 4Q20 2Q21 Est $1,827 ~$1,700 $220 ~$60 $50 Dec-20 CD Maturities Assumed CD Rollover New Deposits Jun-21 Est 0.70% <0.60% 1.54% 0.37% 1 1 $50 million brokered deposits replacing more expensive FHLB borrowings 0.08%
13 Recent Trends Steadily Improving Deposit Mix 0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0% 80.0% 90.0% 100.0% 2018 2019 2020 2Q21 Est 18.5% 16.2% 12.4% 14.7% 28.1% 28.6% 20.7% 16.2% 53.4% 55.3% 66.9% 69.1% Brokered Deposits Retail CDs Core Deposits $1,502 $1,492 Dollars in millions $1,827 ~$1,700 • Through 2Q21, scheduled maturities and continued efforts on commercial relationships will drive further deposit mix & price improvements • In Jan-21, $50MM FHLB borrowing replaced by lower cost brokered deposits; no impact to Wholesale ratio3 • Wholesale ratio expected to be ~18% by 2Q21, lowest since IPO Balance 1 Core Deposits include Business and Consumer checking, savings and money market accounts 2 Percentages exclude COVID-19-related liquidity of $53 million (brokered deposits) 3 Wholesale ratio defined as brokered deposits and FHLB borrowings to total assets 2 Core Business 46% 50% 61% ~61% Core Consumer 54% 50% 39% ~39% 1 24.9% 24.9% 24.9% 23.4% 20.6% 19.8% ~18% 15.0% 20.0% 25.0% 30.0% 2015 2016 2017 2018 2019 2020 2Q21 Est Wholesale Ratio
14 Expanding Commercial Relationships 1 Core deposits exclude all brokered deposits and all time deposits Strategic efforts on Commercial Banking yielding positive results Commercial deposits grew ~$317 million YTD, including $77 million (~43%) in non- interest bearing deposits: • $255 million commercial business relationships ̶ Including $61 million (~24%) in non-interest bearing deposits • $62 million municipal funds ̶ Including $16 million (~27%) in non-interest bearing deposits Dollars in millions 54%46% Dec-18 Consumer Business 1Core Deposit Composition $369 $377 $372 $396 $409 $393 $461 $584 $725 $156 $147 $142 $162 $178 $154 $198 $218 $255 $100 $150 $200 $250 $300 $350 $150 $250 $350 $450 $550 $650 $750 Dec-18 Mar-19 Jun-19 Sep-19 Dec-19 Mar-20 Jun-20 Sep-20 Dec-20 Commercial Deposits Total Non-Interest Bearing 39%61% Dec-20 ~39%~61% 2Q21 Est
15 Liquidity • On-balance sheet liquidity ~22% as of 12/31/20, attributable to: ̶ Temporary liquidity increases due to the COVID-19 pandemic ̶ Investments in commercial channels generating quality organic core deposit growth Liquidity Walk ~22% ~11% ~11% 12/31/20 Time Deposit Runoff End of '21 • Maturing time deposits reduce liquidity to ~11% by year end 2021 • Additional access to $348 million of FHLB borrowing capacity & $42 million of bank lines as of 12/31/20
16 Loan Portfolio Composition Residential 6.52% C&I 17.02% CRE Owner Occupied 10.14% CRE Investor 60.51% Commercial Const. 5.35% Consumer Loans / Other 0.47% Total Loan Portfolio = $1,626 million no single relationship represents more than ~6% of total loans, as of December 31st, 2020 1 1 includes $35 million of PPP loans 1
17 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 Dollars in millions Loan Portfolio Trends 1 • Robust 1Q21 originations pipeline, with C&I accounting for ~75% ̶ Yields on 1Q21 originations ~4.5% • Limited portfolio exposure to future interest rate decreases: ̶ ~12% of portfolio are variable rate loans with either no floor or a floor < 4.00% ̶ ~$56 million of fixed rate loans have rate reset dates in 20212 $1,543 $1,605 $1,604 $1,591 4.48% 4.64% 4.58% 4.25% 0.00% 0.50% 1.00% 1.50% 2.00% 2.50% 3.00% 3.50% 4.00% 4.50% 5.00% 00 00 00 00 00 00 00 00 00 2017 2018 2019 2020 Gross Loan Balance Portfolio Yield Loan Portfolio Yield excluding $35 million PPP loans
18 • Excess liquidity temporarily reducing NIM • NIM expanding throughout 2021 as liquidity runs off ̶ Full year 2021 NIM expected to be 3.00% - 3.15% Net Interest Margin 2.77% ~0.47% NIM 2020 Reported NIM Year-end impact of excess liquidity
COVID-19 Deferral & PPP Updates
20 $218 $340 $51 $29 $17 $10 $9 $1 15% 22% <4% <2% 0% 5% 10% 15% 20% 25% $0 $50 $100 $150 $200 $250 $300 $350 $400 1Q20 2Q20 3Q20 4Q20 COVID-19 Deferral SBA Loans % Total Loans COVID-19 Deferral Update Dollars in millions 1 Excluding PPP loan balances 2 LTVs based on original LTV values, at origination $235 $350 $60 COVID-19 Loan Deferral Trend • Actively working with the customers to find both short and long term solutions • All remaining deferred loans were evaluated for impairment and reflected accordingly in the ALLL • At least $18 million expected to come off deferral in 1Q Loan Type Deferrals SBA Total CRE $27.2 $0.2 $27.5 C&I $1.5 $0.5 $2.0 Residential $0.7 -- $0.7 Construction -- -- -- Total $29.4 $0.8 $30.2 Current Deferral Detail 1 $30 Property Type Total LTV2 Retail $17.1 66.2% Special Use $6.3 66.7% Office $3.5 72.4% Industrial/Warehouse $0.6 50.0% Total $27.5 68.4% CRE Deferrals by Property Type
21 PPP update • $34.8 million of PPP loans remain as of 12/31/20: • ~$1.2 million of PPP fees recognized as income through 4Q20 • Remaining PPP fees to be accreted are ~$1.0 million; ~$183 thousand per quarter until forgiveness or maturity • Forgiveness status as of 1/21/21: ̶ ~$4 million (63 loans) forgiven by SBA subsequent to 12/31/20 ̶ ~$7 million (25 loans) submitted to the SBA & pending their final approval ̶ ~$24 million (175 loans) in forgiveness process with Bankwell Category $ Balance Count Average Size ≤ $50K $2.4 million 136 $17,317 $50K - $150K $11.5 million 93 $124,072 ≥ $150K $20.9 million 34 $615,939 Total $34.8 million 263 $132,455
ALLL & Non-Performing Loans
23 Non Performing Loans 0.88% 0.66% 2.06% 2018 2019 2020 Non Performing Loans / Gross Loans NPLs $14,082 $10,588 $33,416 1.57% 0.32% 0.16% 2020 Detail 2.06% SBA-guaranteed portion of NPLs Dollars in thousands COVID-19 related NPLs All other NPLs The Company performed individual analyses for all existing COVID-19 deferrals and COVID-19 impacted loans for collectability and impairment, resulting in a ~$26 million increase to the Non Performing Loan (“NPL”) population NPL population adequately collateralized or individually reserved in ALLL
24 0.81% 0.98% 0.03% ($1.6MM) $4.6MM 0.31%$4.5MM 2019 Growth / Mix COVID-19 2020 General Specific 2020 ALLL Coverage $9.0 million total reserves (general & specific) related to COVID-19 General ALLL Reserve Detail YTD Allowance for Loan Loss (“ALLL”) Walk 0.84% Dollars in thousands 1.29% CRE C&I Resi & Other Const. Total 4Q19 Balance $10,179 $1,770 $730 $324 $13,003 Portfolio growth/mix ($1,212) $150 ($361) ($185) ($1,608) COVID-19 $2,498 $1,749 $242 $82 $4,570 4Q20 Balance $11,465 $3,668 $611 $221 $15,965 As a % of loan type 1.00% 1.33% 0.54% 0.25% 0.98% • Bankwell not subject to CECL; ALLL calculated in accordance with the incurred loss model • PPP loans guaranteed by the US government and carry no reserve • Excluding PPP loan balances, ALLL % increases from 1.29% to 1.32% • Additional reserve build in 4Q20 of $0.7 million: ̶ General COVID-19 reserves decreased $2.3 million due to improving economic conditions & reduced deferral population ̶ Specific reserves increased $3.5 million ̶ The remaining change in provision driven by shifts in portfolio mix $9.0MM
Capital
26 Tangible Book Value Tangible Book Value (TBV) Per Share Walk 1 All Other includes items such as, but not limited to, changes related to stock grants and share count $0.04 reported EPS 1 • $0.34 increase in OCI primarily from mark-to-market on long-dated interest rate swaps ̶ As of 1/24/21, the mark-to-market adds another ~$0.25 of TBV
27 Capital Position 7.83% 9.58% 12.36% 13.57% 7.73% 8.44% 11.06% 12.28% 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% 14.00% 15.00% TC E Ti er 1 Le ve ra ge Ti er 1 / CE T1 To ta l C ap it al 4Q20 3Q20 ‘Adequate’ + Buffer Min Key Capital Ratios Bankwell’s capital position remains strong 1 Represents Bank ratios; current period capital ratios are estimates 1 1 1 Tier 1CET1 • In 4Q20, Bank up streamed $18 million dividend to parent company to prepare for 2021 capital actions • ~$30 million of additional Total Capital above ‘adequate’ + buffer • Tier 1 Leverage and TCE ratio reductions reflect the impact of carrying additional liquidity on the balance sheet • CRE concentration of 494%1
Bankwell History & Overview
29 + Second 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 • Connecticut-based $2 billion bank, with focus on CRE and C&I lending • 11 existing branches in Fairfield & New Haven Counties (as of 1/1/21) • BWFG has $136 million deposits per branch; one of the highest in Fairfield & New Haven Counties1 • Our core market of Fairfield County (the Bridgeport-Stamford-Norwalk MSA) is the premier Connecticut location, highlighted by: Company Overview NASDAQ: BWFG 1 Source: S&P Global Market Intelligence’s Branch Competitors & Pricing Report as of 6/30/20, excluding global money center banks (tickers BAC, WFC, JPM, TD & C) + Headquarters of 9 Fortune 500 companies4 + Home to the two largest hedge funds in the U.S.5 2 Source: Bureau of Economic Analysis’ Metropolitan Area Table, contained within the Personal Income by County & Metropolitan Area, 2019 news release 11/17/20 3 Source: Bloomberg: 2020 Richest Places 4 Source: Fortune.com: 2020 Fortune 500 5 Source: Business Insider: The 10 Biggest Hedge Funds in the U.S., 5/18/18 Bankwell Profile Existing Branches (11) Fairfield County
30 Financial Snapshot Dollars in thousands, except per share data 2016 2017 2018 2019 2020 Total assets $1,628,919 $1,796,607 $1,873,665 $1,882,182 $2,253,747 Net loans $1,343,895 $1,520,879 $1,586,775 $1,588,840 $1,601,672 Loan-to-deposit ratio 105.6% 110.1% 106.4% 107.1% 87.9% Efficiency ratio2 56.5% 54.9% 59.2% 60.2% 73.9% Non-interest expense / avg. assets 2.03% 1.88% 1.93% 1.90% 2.03% Net interest margin 3.54% 3.30% 3.18% 3.03% 2.77% Total capital to risk weighted assets 12.85% 12.19% 12.50% 13.35% 12.28% Tangible common equity ratio2 8.78% 8.81% 9.16% 9.56% 7.73% Return on average equity 8.94% 8.93% 10.19% 10.20% 3.35% Tangible book value per share2 $18.98 $20.59 $22.06 $23.15 $22.43 Net interest income $49,092 $54,364 $56,326 $53,761 $54,835 Pre-tax, pre-provision net revenue $22,224 $26,470 $24,593 $23,379 $14,907 Net income $12,350 $13,830 $17,433 $18,216 $5,904 EPS (fully diluted) $1.62 $1.78 $2.21 $2.31 $0.75 1 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 2 A non-GAAP metric
31 Experienced Leadership Team Name Years Experience Selected Professional Biography Christopher Gruseke President & CEO (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 30 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. Christine A. Chivily EVP & Chief Risk & Credit Officer (since 2013) 40 Ms. Chivily has 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 5 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. Penko Ivanov EVP & CFO (since 2016) 25+ Mr. Ivanov has more than 28 years of experience in accounting and finance. His more recent roles include CFO of Darien Rowayton Bank, and CFO for the U.S. Operations of Doral Bank, where he created a scalable finance organization to support the rapid growth of several business units from infancy to $3 billion in assets. He began his career with Ernst & Young and held various accounting/finance positions at PepsiCo, GE Capital and Bridgewater Associates. His experience includes building, improving and overseeing all finance areas, including Controllership, SOX, Treasury, FP&A, as well as internal and external reporting functions. Mr. Ivanov holds M.B.A. and bachelor degrees in accounting and finance from the University of South Florida. He is a CPA and is also Six Sigma Black Belt certified. Matthew McNeill EVP & 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. He previously served as Senior Commercial Relationship Manager at HSBC, a Business Banker at Santander and a Managing Partner at American Real Estate Lending. Laura J. Waitz EVP & Chief of Staff (since 2017) 35+ Ms. Waitz has over 35 years of experience for various businesses and previously was Senior Managing Director, Global Head of Human Resources at The Blackstone Group. She also served as Managing Director and Global Head of Compensation at Citi Alternative Investments and as Head of Compensation (Americas) for Deutsche Bank. Prior to that she served as Global Compensation Manager for private equity and investment banks. Ms. Waitz received her B.S. from Penn State University.
Thank You & Questions