Bankwell Financial Group, Inc 8-K, filed Jul 27, 2022
Bankwell Financial Group, Inc. (BWFG)
8-K
2022-07-27
For: 2022-07-27
View Original
Added on
April 11, 2026
About this 8-K
Bankwell Financial Group, Inc filed this 8-K on July 27, 2022.
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): July 27, 2022
(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 July 27, 2022, Bankwell Financial Group, Inc., the holding company for Bankwell Bank, issued a press release describing its results of operations for the period ended June 30, 2022. 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 July 27, 2022, Bankwell Financial Group, Inc., the holding company for Bankwell Bank, issued slide presentation material, which includes among other things, a review of financial results and trends through the period ended June 30, 2022. 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 July 27, 2022, Bankwell Financial Group, Inc., parent company of Bankwell Bank, announced its Board of Directors has voted to pay a quarterly dividend in the amount of $0.20 per share on August 25, 2022 to all shareholders of record as of August 15, 2022. | |||||
| 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 | |||||
| July 27, 2022 | By: /s/ Penko K. Ivanov | ||||
| Penko K. Ivanov | |||||
| Executive Vice President | |||||
| and Chief Financial Officer | |||||
BANKWELL FINANCIAL GROUP REPORTS RECORD NET INCOME FOR THE SECOND QUARTER; GROSS LOANS SURPASS $2 BILLION; AND DECLARES THIRD QUARTER DIVIDEND
New Canaan, CT – July 27, 2022 – Bankwell Financial Group, Inc. (NASDAQ: BWFG) reported record GAAP net income of $12.0 million, or $1.55 per share, for the second quarter of 2022, versus $6.2 million, or $0.79 per share, for the same period in 2021. During the quarter ended June 30, 2022 the Company experienced several non-recurring items that positively impacted reported earnings. Adjusting for these items, operating earnings per share totaled $1.15 for the second quarter of 2022. Please reference the table below for a reconciliation of reported earnings per share to operating earnings per share.
| Earnings Per Common Share | |||||
| 2Q'22 QTD Reported EPS | $ | 1.55 | |||
Elevated Loan Prepayments(1) | (0.15) | ||||
Release of Specific Reserves(2) | (0.16) | ||||
Historical Loss Update to Peer Group(3) | (0.09) | ||||
2Q'22 QTD Operating EPS(4) | $ | 1.15 | |||
| (1) 2Q'22 loan prepayments exceeded historical quarterly averages and are not reflective of run rate. | |||||
| (2) Specific reserve reduction as impaired loans exhibited improved performance or paid off. | |||||
| (3) Bankwell is not yet subject to CECL; reduction in general reserves due to annual update to historical loss data in our peer group-based, “incurred loss” model. | |||||
| (4) Non-gaap measure. | |||||
The Company's Board of Directors declared a $0.20 per share cash dividend, payable August 25, 2022 to shareholders of record on August 15, 2022.
We recommend reading this earnings release in conjunction with the Second Quarter 2022 Investor Presentation, located at http://investor.mybankwell.com/Presentations and included as an exhibit to our July 27, 2022 Current Report on Form 8-K.
Notes Bankwell Financial Group President and CEO, Christopher R. Gruseke:
"I offer my thanks and congratulations to our entire team for their commitment to excellence. Even after discounting favorable one-time items, our Company has delivered outstanding results, including an operating ROAA of 1.45%, an ROAE of 16.4%, and an efficiency ratio of 46.6%. Several years ago we put forth a strategic plan to diversify and transform our business model. With careful planning and execution, we are now reaping the benefits of investing in that plan.
"As we look ahead, despite the backdrop of macroeconomic uncertainty, our third quarter loan pipeline remains at record levels. It is likely that the economy will experience further volatility in the coming quarters. Nevertheless, we are confident that the business we have built will enable us to continue to deliver above-peer group performance."
1
Second Quarter 2022 Highlights (performance metrics are impacted by the above mentioned one-time items - please refer to the table following the below highlights for adjusted performance metrics):
•Return on average assets was 1.96% and return on average equity was 22.09% for the quarter ended June 30, 2022.
•The net interest margin was 4.01% for the quarter ended June 30, 2022.
•The efficiency ratio was 43.8% for the quarter ended June 30, 2022.
•Total gross loans were $2.1 billion, growing $161.7 million, or 8.5%, compared to December 31, 2021.
•Average yield on 2022 funded loans was 4.88%.
•Gains from loan sales totaled $0.6 million for the quarter ended June 30, 2022.
•Total deposits decreased by 4.3% to $2.0 billion compared to $2.1 billion at December 31, 2021 as a result of seasonal fluctuations in several municipal and commercial deposit relationships.
•Investment securities totaled $113.0 million and represent 4.6% of total assets.
•Fully diluted tangible book value per share rose to $28.75 compared to $25.55 at December 31, 2021.
•Wilton branch closure announced July 8, 2022 (effective October 7, 2022).
•Shares issued and outstanding were 7,752,389 for the quarter ended June 30, 2022.
| Quarter Ended June 30, 2022 | Six Months Ended June 30, 2022 | |||||||||||||||||||||||||||||||||||||
| Key metrics | Reported | Operating(1) | Variance | Reported | Operating(1) | Variance | ||||||||||||||||||||||||||||||||
| Net interest margin | 4.01 | % | 3.75 | % | 0.26 | % | 3.65 | % | 3.53 | % | 0.12 | % | ||||||||||||||||||||||||||
| Efficiency ratio | 43.8 | % | 46.6 | % | (2.8) | % | 45.9 | % | 47.5 | % | (1.6) | % | ||||||||||||||||||||||||||
| Return on average assets | 1.96 | % | 1.45 | % | 0.51 | % | 1.65 | % | 1.40 | % | 0.25 | % | ||||||||||||||||||||||||||
| Return on average stockholders' equity | 22.09 | % | 16.39 | % | 5.70 | % | 19.16 | % | 16.22 | % | 2.94 | % | ||||||||||||||||||||||||||
| (1) Operating metrics are non-gaap measures and have been adjusted for elevated loan prepayments, release of specific reserves, and the historical loss update to the Company's peer group as noted in the above EPS table. | ||||||||||||||||||||||||||||||||||||||
Earnings and Performance
Revenues (net interest income plus noninterest income) for the quarter ended June 30, 2022 were $25.0 million, versus $18.0 million for the quarter ended June 30, 2021. Revenues for the six months ended June 30, 2022 were $45.4 million, versus $34.6 million for the six months ended June 30, 2021. The increase in revenues was primarily attributable to an increase in interest and fees on loans due to loan growth and higher overall loan yields and from lower interest expense on deposits. The increase in loan yields was aided by elevated loan prepayment fees, which totaled $1.8 million for the quarter ended June 30, 2022, compared to $0.8 million for the quarter ended June 30, 2021. The increase in revenues was partially offset by a decrease in noninterest income driven by the absence of rental income recognized during the quarter and six months ended June 30, 2021, as a result of the disposition of the Company's former headquarters building. In addition, the increase in revenues for the six months ended June 30, 2022 was also partially offset by a one-time federal payroll tax credit for COVID-19 of $0.9 million recognized in the quarter ended March 31, 2021.
Net income for the quarter ended June 30, 2022 was $12.0 million, versus $6.2 million for the quarter ended June 30, 2021. Net income for the six months ended June 30, 2022 was $20.2 million, versus $11.9 million for the six months ended June 30, 2021. The increase in net income was primarily impacted by the aforementioned increases in revenues and by a decrease in the provision for loan losses primarily driven by the release of specific reserves on impaired loans that showed improved performance or paid off.
Basic and diluted earnings per share were $1.56 and $1.55, respectively, for the quarter ended June 30, 2022 compared to basic and diluted earnings per share of $0.79 each for the quarter ended June 30, 2021. Basic and diluted earnings per share were $2.61 and $2.58, respectively, for the six months ended June 30, 2022 compared to basic and diluted earnings per share of $1.51 and $1.50, respectively, for the six months ended June 30, 2021.
2
The net interest margin (fully taxable equivalent basis) for the quarters ended June 30, 2022 and June 30, 2021 was 4.01% and 3.12%, respectively. The net interest margin (fully taxable equivalent basis) for the six months ended June 30, 2022 and June 30, 2021 was 3.65% and 2.93%, respectively. The increase in the net interest margin was due to lower interest expense from a decrease in rates on interest bearing deposits, elevated loan prepayment fees, and an increase in overall loan yields.
Financial Condition
Assets totaled $2.44 billion at June 30, 2022, compared to assets of $2.46 billion at December 31, 2021. The decrease in assets was primarily due to a decrease in deposits while excess liquidity funded additional loan growth. Gross loans totaled $2.1 billion at June 30, 2022, an increase of $161.7 million compared to December 31, 2021. Deposits totaled $2.0 billion at June 30, 2022, compared to deposits of $2.1 billion at December 31, 2021.
Capital
Shareholders’ equity totaled $225.5 million as of June 30, 2022, an increase of $23.5 million compared to December 31, 2021, primarily a result of (i) net income of $20.2 million for the six months ended June 30, 2022 and (ii) an $8.9 million favorable impact to accumulated other comprehensive income driven by fair value marks related to hedge positions involving interest rate swaps, partially offset by fair value marks on the Company's investment portfolio. The Company's interest rate swaps are used to hedge interest rate risk. The increase in Shareholders’ equity was partially offset by dividends paid of $3.1 million and common stock repurchases of $3.8 million.
About Bankwell Financial Group
Bankwell is a commercial bank that serves the banking needs of residents and businesses throughout Fairfield and New Haven Counties, Connecticut. For more information about this press release, interested parties may contact Christopher R. Gruseke, President and Chief Executive Officer or Penko Ivanov, Executive Vice President and Chief Financial Officer of Bankwell Financial Group at (203) 652-0166.
For more information, visit www.mybankwell.com.
This press release may contain certain forward-looking statements about the Company. Forward-looking statements include statements regarding anticipated future events and can be identified by the fact that they do not relate strictly to historical or current facts. They often include words such as “believe,” “expect,” “anticipate,” “estimate,” and “intend” or future or conditional verbs such as “will,” “would,” “should,” “could,” or “may.” Forward-looking statements, by their nature, are subject to risks and uncertainties. Certain factors that could cause actual results to differ materially from expected results include, but are not limited to, increased competitive pressures, changes in the interest rate environment, general economic conditions or conditions within the securities markets, uncertain impacts of, or additional changes in, monetary, fiscal or tax policy to address the impact of COVID-19, which could further exacerbate the effects on the Company’s business and results of operations, and legislative and regulatory changes that could adversely affect the business in which the Company and its subsidiaries are engaged.
Non-GAAP Financial Measures
In addition to evaluating the Company's financial performance in accordance with U.S. generally accepted accounting principles ("GAAP"), management may evaluate certain non-GAAP financial measures, such as the efficiency ratio. A computation and reconciliation of certain non-GAAP financial measures used for these purposes is contained in the accompanying Reconciliation of GAAP to Non-GAAP Measures tables. We believe that providing certain non-GAAP financial measures provides investors with information useful in understanding our financial performance, our performance trends and financial position. For example, the Company believes that the efficiency ratio is useful in the assessment of financial performance, including noninterest expense control. The Company believes that tangible common equity, tangible book value per share, and return on average tangible common equity are useful to evaluate the relative strength of the Company's performance and capital position. We utilize these measures for internal planning and forecasting purposes. These non-GAAP financial measures should not be considered a substitute for GAAP basis measures and results, and we strongly encourage investors to review our consolidated financial statements in their entirety and not to rely on any single financial measure.
3
BANKWELL FINANCIAL GROUP, INC.
CONSOLIDATED BALANCE SHEETS (unaudited)
(Dollars in thousands)
| June 30, 2022 | March 31, 2022 | December 31, 2021 | June 30, 2021 | ||||||||||||||||||||||||||||||||
| ASSETS | |||||||||||||||||||||||||||||||||||
| Cash and due from banks | $ | 149,522 | $ | 280,471 | $ | 291,598 | $ | 297,851 | |||||||||||||||||||||||||||
| Federal funds sold | 21,505 | 19,022 | 53,084 | 4,036 | |||||||||||||||||||||||||||||||
| Cash and cash equivalents | 171,027 | 299,493 | 344,682 | 301,887 | |||||||||||||||||||||||||||||||
| Investment securities | |||||||||||||||||||||||||||||||||||
| Marketable equity securities, at fair value | 2,126 | 2,090 | 2,168 | 2,192 | |||||||||||||||||||||||||||||||
| Available for sale investment securities, at fair value | 94,907 | 98,733 | 90,198 | 90,983 | |||||||||||||||||||||||||||||||
| Held to maturity investment securities, at amortized cost | 15,917 | 15,979 | 16,043 | 16,166 | |||||||||||||||||||||||||||||||
| Total investment securities | 112,950 | 116,802 | 108,409 | 109,341 | |||||||||||||||||||||||||||||||
| Loans receivable (net of allowance for loan losses of $15,773, $17,141, $16,902 and $16,672 at June 30, 2022, March 31, 2022, December 31, 2021 and June 30, 2021, respectively) | 2,036,626 | 1,964,567 | 1,875,167 | 1,719,274 | |||||||||||||||||||||||||||||||
| Accrued interest receivable | 8,047 | 7,733 | 7,512 | 6,661 | |||||||||||||||||||||||||||||||
| Federal Home Loan Bank stock, at cost | 5,064 | 2,870 | 2,814 | 3,844 | |||||||||||||||||||||||||||||||
| Premises and equipment, net | 27,768 | 25,661 | 25,588 | 33,916 | |||||||||||||||||||||||||||||||
| Bank-owned life insurance | 49,699 | 49,434 | 49,174 | 48,632 | |||||||||||||||||||||||||||||||
| Goodwill | 2,589 | 2,589 | 2,589 | 2,589 | |||||||||||||||||||||||||||||||
| Other intangible assets | — | — | — | 58 | |||||||||||||||||||||||||||||||
| Deferred income taxes, net | 4,768 | 6,879 | 7,621 | 8,208 | |||||||||||||||||||||||||||||||
| Other assets | 17,014 | 20,849 | 32,708 | 35,415 | |||||||||||||||||||||||||||||||
| Total assets | $ | 2,435,552 | $ | 2,496,877 | $ | 2,456,264 | $ | 2,269,825 | |||||||||||||||||||||||||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||||||||||||||||||||||||||||||||
| Liabilities | |||||||||||||||||||||||||||||||||||
| Deposits | |||||||||||||||||||||||||||||||||||
| Noninterest bearing deposits | $ | 372,584 | $ | 412,985 | $ | 398,956 | $ | 328,473 | |||||||||||||||||||||||||||
| Interest bearing deposits | 1,660,941 | 1,753,219 | 1,725,042 | 1,610,829 | |||||||||||||||||||||||||||||||
| Total deposits | 2,033,525 | 2,166,204 | 2,123,998 | 1,939,302 | |||||||||||||||||||||||||||||||
| Advances from the Federal Home Loan Bank | 105,000 | 50,000 | 50,000 | 75,000 | |||||||||||||||||||||||||||||||
| Subordinated debentures | 34,500 | 34,471 | 34,441 | 15,366 | |||||||||||||||||||||||||||||||
| Accrued expenses and other liabilities | 37,060 | 35,982 | 45,838 | 49,362 | |||||||||||||||||||||||||||||||
| Total liabilities | 2,210,085 | 2,286,657 | 2,254,277 | 2,079,030 | |||||||||||||||||||||||||||||||
| Shareholders’ equity | |||||||||||||||||||||||||||||||||||
| Common stock, no par value | 115,599 | 114,882 | 118,148 | 120,451 | |||||||||||||||||||||||||||||||
| Retained earnings | 109,523 | 99,047 | 92,400 | 80,543 | |||||||||||||||||||||||||||||||
| Accumulated other comprehensive income (loss) | 345 | (3,709) | (8,561) | (10,199) | |||||||||||||||||||||||||||||||
| Total shareholders’ equity | 225,467 | 210,220 | 201,987 | 190,795 | |||||||||||||||||||||||||||||||
| Total liabilities and shareholders’ equity | $ | 2,435,552 | $ | 2,496,877 | $ | 2,456,264 | $ | 2,269,825 | |||||||||||||||||||||||||||
4
BANKWELL FINANCIAL GROUP, INC.
CONSOLIDATED STATEMENTS OF INCOME (unaudited)
(Dollars in thousands, except share data)
| For the Quarter Ended | For the Six Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||
| June 30, 2022 | March 31, 2022 | December 31, 2021 | June 30, 2021 | June 30, 2022 | June 30, 2021 | ||||||||||||||||||||||||||||||||||||||||||
| Interest and dividend income | |||||||||||||||||||||||||||||||||||||||||||||||
| Interest and fees on loans | $ | 25,141 | $ | 21,428 | $ | 21,081 | $ | 19,266 | $ | 46,569 | $ | 37,166 | |||||||||||||||||||||||||||||||||||
| Interest and dividends on securities | 774 | 720 | 722 | 736 | 1,494 | 1,505 | |||||||||||||||||||||||||||||||||||||||||
| Interest on cash and cash equivalents | 449 | 154 | 90 | 90 | 603 | 198 | |||||||||||||||||||||||||||||||||||||||||
| Total interest and dividend income | 26,364 | 22,302 | 21,893 | 20,092 | 48,666 | 38,869 | |||||||||||||||||||||||||||||||||||||||||
| Interest expense | |||||||||||||||||||||||||||||||||||||||||||||||
| Interest expense on deposits | 1,983 | 2,206 | 2,198 | 2,744 | 4,189 | 5,858 | |||||||||||||||||||||||||||||||||||||||||
| Interest expense on borrowings | 558 | 586 | 767 | 769 | 1,144 | 1,777 | |||||||||||||||||||||||||||||||||||||||||
| Total interest expense | 2,541 | 2,792 | 2,965 | 3,513 | 5,333 | 7,635 | |||||||||||||||||||||||||||||||||||||||||
| Net interest income | 23,823 | 19,510 | 18,928 | 16,579 | 43,333 | 31,234 | |||||||||||||||||||||||||||||||||||||||||
| (Credit) provision for loan losses | (1,445) | 229 | 125 | (20) | (1,216) | (316) | |||||||||||||||||||||||||||||||||||||||||
| Net interest income after (credit) provision for loan losses | 25,268 | 19,281 | 18,803 | 16,599 | 44,549 | 31,550 | |||||||||||||||||||||||||||||||||||||||||
| Noninterest income | |||||||||||||||||||||||||||||||||||||||||||||||
| Gains and fees from sales of loans | 608 | 631 | 441 | 814 | 1,239 | 1,327 | |||||||||||||||||||||||||||||||||||||||||
| Bank owned life insurance | 265 | 260 | 270 | 251 | 525 | 482 | |||||||||||||||||||||||||||||||||||||||||
| Service charges and fees | 249 | 240 | 257 | 217 | 489 | 416 | |||||||||||||||||||||||||||||||||||||||||
| Other | 30 | (173) | (143) | 158 | (143) | 1,170 | |||||||||||||||||||||||||||||||||||||||||
| Total noninterest income | 1,152 | 958 | 825 | 1,440 | 2,110 | 3,395 | |||||||||||||||||||||||||||||||||||||||||
| Noninterest expense | |||||||||||||||||||||||||||||||||||||||||||||||
| Salaries and employee benefits | 5,433 | 4,940 | 4,806 | 3,960 | 10,373 | 8,729 | |||||||||||||||||||||||||||||||||||||||||
| Occupancy and equipment | 2,193 | 2,150 | 2,411 | 3,250 | 4,343 | 5,656 | |||||||||||||||||||||||||||||||||||||||||
| Professional services | 1,000 | 981 | 628 | 547 | 1,981 | 1,134 | |||||||||||||||||||||||||||||||||||||||||
| Data processing | 689 | 654 | 432 | 833 | 1,343 | 1,345 | |||||||||||||||||||||||||||||||||||||||||
| Director fees | 339 | 352 | 335 | 327 | 691 | 644 | |||||||||||||||||||||||||||||||||||||||||
| FDIC insurance | 262 | 223 | 231 | 300 | 485 | 703 | |||||||||||||||||||||||||||||||||||||||||
| Marketing | 107 | 45 | 87 | 140 | 152 | 131 | |||||||||||||||||||||||||||||||||||||||||
| Other | 913 | 580 | 749 | 695 | 1,493 | 1,348 | |||||||||||||||||||||||||||||||||||||||||
| Total noninterest expense | 10,936 | 9,925 | 9,679 | 10,052 | 20,861 | 19,690 | |||||||||||||||||||||||||||||||||||||||||
| Income before income tax expense | 15,484 | 10,314 | 9,949 | 7,987 | 25,798 | 15,255 | |||||||||||||||||||||||||||||||||||||||||
| Income tax expense | 3,462 | 2,102 | 2,135 | 1,759 | 5,564 | 3,338 | |||||||||||||||||||||||||||||||||||||||||
| Net income | $ | 12,022 | $ | 8,212 | $ | 7,814 | $ | 6,228 | $ | 20,234 | $ | 11,917 | |||||||||||||||||||||||||||||||||||
| Earnings Per Common Share: | |||||||||||||||||||||||||||||||||||||||||||||||
| Basic | $ | 1.56 | $ | 1.05 | $ | 1.00 | $ | 0.79 | $ | 2.61 | $ | 1.51 | |||||||||||||||||||||||||||||||||||
| Diluted | $ | 1.55 | $ | 1.04 | $ | 0.99 | $ | 0.79 | $ | 2.58 | $ | 1.50 | |||||||||||||||||||||||||||||||||||
| Weighted Average Common Shares Outstanding: | |||||||||||||||||||||||||||||||||||||||||||||||
| Basic | 7,556,645 | 7,637,077 | 7,660,307 | 7,722,481 | 7,596,639 | 7,744,368 | |||||||||||||||||||||||||||||||||||||||||
| Diluted | 7,614,243 | 7,719,405 | 7,726,420 | 7,768,026 | 7,683,305 | 7,792,600 | |||||||||||||||||||||||||||||||||||||||||
| Dividends per common share | $ | 0.20 | $ | 0.20 | $ | 0.18 | $ | 0.14 | $ | 0.40 | $ | 0.28 | |||||||||||||||||||||||||||||||||||
5
BANKWELL FINANCIAL GROUP, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (unaudited)
| For the Quarter Ended | For the Six Months | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| June 30, 2022 | March 31, 2022 | December 31, 2021 | June 30, 2021 | June 30, 2022 | June 30, 2021 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Performance ratios: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Return on average assets | 1.96 | % | 1.35 | % | 1.32 | % | 1.11 | % | 1.65 | % | 1.07 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Return on average stockholders' equity | 22.09 | % | 16.05 | % | 15.44 | % | 13.06 | % | 19.16 | % | 12.87 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Return on average tangible common equity | 22.36 | % | 16.25 | % | 15.65 | % | 13.25 | % | 19.40 | % | 13.06 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net interest margin | 4.01 | % | 3.30 | % | 3.43 | % | 3.12 | % | 3.65 | % | 2.93 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Efficiency ratio(1) | 43.8 | % | 48.5 | % | 48.8 | % | 55.7 | % | 45.9 | % | 56.8 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net loan charge-offs as a % of average loans | — | % | — | % | — | % | 0.23 | % | — | % | 0.24 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Dividend payout ratio(2) | 12.90 | % | 19.23 | % | 18.18 | % | 17.72 | % | 15.50 | % | 18.67 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(1)Efficiency ratio is defined as noninterest expense, less other real estate owned expenses and amortization of intangible assets, divided by our operating revenue, which is equal to net interest income plus noninterest income excluding gains and losses on sales of securities and gains and losses on other real estate owned. In our judgment, the adjustments made to operating revenue allow investors and analysts to better assess our operating expenses in relation to our core operating revenue by removing the volatility that is associated with certain one-time items and other discrete items that are unrelated to our core business.
(2)The dividend payout ratio is calculated by dividing dividends per share by earnings per share.
| As of | |||||||||||||||||||||||||||||||||||
| June 30, 2022 | March 31, 2022 | December 31, 2021 | June 30, 2021 | ||||||||||||||||||||||||||||||||
| Capital ratios: | |||||||||||||||||||||||||||||||||||
Total Common Equity Tier 1 Capital to Risk-Weighted Assets(1) | 11.10 | % | 11.20 | % | 11.18 | % | 10.95 | % | |||||||||||||||||||||||||||
Total Capital to Risk-Weighted Assets(1) | 11.80 | % | 12.00 | % | 12.00 | % | 11.84 | % | |||||||||||||||||||||||||||
Tier I Capital to Risk-Weighted Assets(1) | 11.10 | % | 11.20 | % | 11.18 | % | 10.95 | % | |||||||||||||||||||||||||||
Tier I Capital to Average Assets(1) | 10.15 | % | 9.80 | % | 9.94 | % | 9.19 | % | |||||||||||||||||||||||||||
| Tangible common equity to tangible assets | 9.16 | % | 8.32 | % | 8.13 | % | 8.30 | % | |||||||||||||||||||||||||||
| Fully diluted tangible book value per common share | $ | 28.75 | $ | 26.75 | $ | 25.55 | $ | 23.83 | |||||||||||||||||||||||||||
(1)Represents Bank ratios. Current period capital ratios are preliminary subject to finalization of the FDIC Call Report.
6
BANKWELL FINANCIAL GROUP, INC.
ASSET QUALITY (unaudited)
(Dollars in thousands)
| For the Quarter Ended | |||||||||||||||||||||||||||||||||||
| June 30, 2022 | March 31, 2022 | December 31, 2021 | June 30, 2021 | ||||||||||||||||||||||||||||||||
| Allowance for loan losses: | |||||||||||||||||||||||||||||||||||
| Balance at beginning of period | $ | 17,141 | $ | 16,902 | $ | 16,803 | $ | 20,545 | |||||||||||||||||||||||||||
| Charge-offs: | |||||||||||||||||||||||||||||||||||
| Commercial real estate | — | — | — | (3,814) | |||||||||||||||||||||||||||||||
| Commercial business | — | — | (26) | (51) | |||||||||||||||||||||||||||||||
| Consumer | — | (4) | (5) | (4) | |||||||||||||||||||||||||||||||
| Total charge-offs | — | (4) | (31) | (3,869) | |||||||||||||||||||||||||||||||
| Recoveries: | |||||||||||||||||||||||||||||||||||
| Commercial real estate | 77 | — | — | — | |||||||||||||||||||||||||||||||
| Commercial business | — | 13 | 2 | 16 | |||||||||||||||||||||||||||||||
| Consumer | — | 1 | 3 | — | |||||||||||||||||||||||||||||||
| Total recoveries | 77 | 14 | 5 | 16 | |||||||||||||||||||||||||||||||
| Net loan recoveries (charge-offs) | 77 | 10 | (26) | (3,853) | |||||||||||||||||||||||||||||||
| (Credit) provision for loan losses | (1,445) | 229 | 125 | (20) | |||||||||||||||||||||||||||||||
| Balance at end of period | $ | 15,773 | $ | 17,141 | $ | 16,902 | $ | 16,672 | |||||||||||||||||||||||||||
| As of | |||||||||||||||||||||||||||||||||||
| June 30, 2022 | March 31, 2022 | December 31, 2021 | June 30, 2021 | ||||||||||||||||||||||||||||||||
| Asset quality: | |||||||||||||||||||||||||||||||||||
| Nonaccrual loans | |||||||||||||||||||||||||||||||||||
| Residential real estate | $ | 2,161 | $ | 2,181 | $ | 2,380 | $ | 1,160 | |||||||||||||||||||||||||||
| Commercial real estate | 2,955 | 3,365 | 3,482 | 15,392 | |||||||||||||||||||||||||||||||
| Commercial business | 787 | 817 | 1,728 | 1,780 | |||||||||||||||||||||||||||||||
| Construction | 9,382 | 9,382 | 8,997 | 8,997 | |||||||||||||||||||||||||||||||
| Total nonaccrual loans | 15,285 | 15,745 | 16,587 | 27,329 | |||||||||||||||||||||||||||||||
| Other real estate owned | — | — | — | — | |||||||||||||||||||||||||||||||
| Total nonperforming assets | $ | 15,285 | $ | 15,745 | $ | 16,587 | $ | 27,329 | |||||||||||||||||||||||||||
| Nonperforming loans as a % of total loans | 0.74 | % | 0.79 | % | 0.88 | % | 1.57 | % | |||||||||||||||||||||||||||
| Nonperforming assets as a % of total assets | 0.63 | % | 0.63 | % | 0.68 | % | 1.20 | % | |||||||||||||||||||||||||||
| Allowance for loan losses as a % of total loans | 0.77 | % | 0.86 | % | 0.89 | % | 0.96 | % | |||||||||||||||||||||||||||
| Allowance for loan losses as a % of nonperforming loans | 103.19 | % | 108.87 | % | 101.90 | % | 61.00 | % | |||||||||||||||||||||||||||
| Total past due loans to total loans | 1.40 | % | 0.85 | % | 1.72 | % | 1.65 | % | |||||||||||||||||||||||||||
Total nonaccrual loans declined $1.3 million to $15.3 million as of June 30, 2022 when compared to December 31, 2021. Nonperforming assets as a percentage of total assets was 0.63% at June 30, 2022, down from 0.68% at December 31, 2021. The allowance for loan losses at June 30, 2022 was $15.8 million, representing 0.77% of total loans.
Past due loans decreased to $28.8 million, or 1.40% of total loans, as of June 30, 2022, compared to $32.6 million, or 1.72% of total loans, as of December 31, 2021. As of June 30, 2022, past due loans include one $10.5 million commercial real estate loan, representing 0.51% of total loans, that had reached maturity and is in active negotiations to be refinanced.
7
BANKWELL FINANCIAL GROUP, INC.
LOAN & DEPOSIT PORTFOLIO (unaudited)
(Dollars in thousands)
| Period End Loan Composition | June 30, 2022 | March 31, 2022 | December 31, 2021 | Current QTD % Change | YTD % Change | ||||||||||||||||||||||||
| Residential Real Estate | $ | 64,253 | $ | 68,617 | $ | 79,987 | (6.4) | % | (19.7) | % | |||||||||||||||||||
Commercial Real Estate(1) | 1,499,364 | 1,425,758 | 1,356,709 | 5.2 | 10.5 | ||||||||||||||||||||||||
| Construction | 111,422 | 115,514 | 98,341 | (3.5) | 13.3 | ||||||||||||||||||||||||
| Total Real Estate Loans | 1,675,039 | 1,609,889 | 1,535,037 | 4.0 | 9.1 | ||||||||||||||||||||||||
| Commercial Business | 372,361 | 370,166 | 350,975 | 0.6 | 6.1 | ||||||||||||||||||||||||
| Consumer | 9,196 | 5,275 | 8,869 | 74.3 | 3.7 | ||||||||||||||||||||||||
| Total Loans | $ | 2,056,596 | $ | 1,985,330 | $ | 1,894,881 | 3.6 | % | 8.5 | % | |||||||||||||||||||
| (1) Includes owner occupied commercial real estate. | |||||||||||||||||||||||||||||
Gross loans totaled $2.1 billion at June 30, 2022, an increase of $161.7 million compared to December 31, 2021.
| Period End Deposit Composition | June 30, 2022 | March 31, 2022 | December 31, 2021 | Current QTD % Change | YTD % Change | ||||||||||||||||||||||||
| Noninterest bearing demand | $ | 372,584 | $ | 412,985 | $ | 398,956 | (9.8) | % | (6.6) | % | |||||||||||||||||||
| NOW | 155,026 | 112,567 | 119,479 | 37.7 | 29.8 | ||||||||||||||||||||||||
| Money Market | 833,730 | 996,458 | 954,674 | (16.3) | (12.7) | ||||||||||||||||||||||||
| Savings | 196,075 | 197,961 | 193,631 | (1.0) | 1.3 | ||||||||||||||||||||||||
| Time | 476,110 | 446,233 | 457,258 | 6.7 | 4.1 | ||||||||||||||||||||||||
| Total Deposits | $ | 2,033,525 | $ | 2,166,204 | $ | 2,123,998 | (6.1) | % | (4.3) | % | |||||||||||||||||||
Total deposits were $2.0 billion at June 30, 2022, compared to $2.1 billion at December 31, 2021, a decrease of $90.5 million, or 4.3%. The decrease in deposits is primarily a result of seasonal fluctuations in several municipal and commercial deposit relationships.
8
BANKWELL FINANCIAL GROUP, INC.
NONINTEREST INCOME (unaudited)
(Dollars in thousands)
| For the Quarter Ended | |||||||||||||||||||||||||||||
| Noninterest income | June 30, 2022 | March 31, 2022 | June 30, 2021 | June 22 vs. March 22 % Change | June 22 vs. June 21 % Change | ||||||||||||||||||||||||
| Gains and fees from sales of loans | $ | 608 | $ | 631 | $ | 814 | (3.6) | % | (25.3) | % | |||||||||||||||||||
| Bank owned life insurance | 265 | 260 | 251 | 1.9 | 5.6 | ||||||||||||||||||||||||
| Service charges and fees | 249 | 240 | 217 | 3.8 | 14.7 | ||||||||||||||||||||||||
| Other | 30 | (173) | 158 | (117.3) | (81.0) | ||||||||||||||||||||||||
| Total noninterest income | $ | 1,152 | $ | 958 | $ | 1,440 | 20.3 | % | (20.0) | % | |||||||||||||||||||
| For the Six Months Ended | |||||||||||||||||
| Noninterest income | June 30, 2022 | June 30, 2021 | % Change | ||||||||||||||
| Gains and fees from sales of loans | $ | 1,239 | $ | 1,327 | (6.6) | % | |||||||||||
| Bank owned life insurance | 525 | 482 | 8.9 | ||||||||||||||
| Service charges and fees | 489 | 416 | 17.5 | ||||||||||||||
| Other | (143) | 1,170 | (112.2) | ||||||||||||||
| Total noninterest income | $ | 2,110 | $ | 3,395 | (37.8) | % | |||||||||||
Noninterest income decreased by $0.3 million to $1.2 million for the quarter ended June 30, 2022 compared to the quarter ended June 30, 2021. Noninterest income decreased by $1.3 million to $2.1 million for the six months ended June 30, 2022 compared to the six months ended June 30, 2021.
The decrease in noninterest income was driven by a reduction in loan sales for the quarter and six months ended June 30, 2022 when compared to the same periods in the prior year. Loan sales decreased $0.2 million and $0.1 million for the quarter and six months ended June 30, 2022, respectively. In addition, noninterest income declined due to the absence of rental income recognized during the quarter and six months ended June 30, 2021, as a result of the disposition of the Company's former headquarters building. Noninterest income also declined for the six months ended June 30, 2022 due to a one-time federal payroll tax credit for COVID-19 of $0.9 million recognized in the quarter ended March 31, 2021.
9
BANKWELL FINANCIAL GROUP, INC.
NONINTEREST EXPENSE (unaudited)
(Dollars in thousands)
| For the Quarter Ended | |||||||||||||||||||||||||||||
| Noninterest expense | June 30, 2022 | March 31, 2022 | June 30, 2021 | June 22 vs. March 22 % Change | June 22 vs. June 21 % Change | ||||||||||||||||||||||||
| Salaries and employee benefits | $ | 5,433 | $ | 4,940 | $ | 3,960 | 10.0 | % | 37.2 | % | |||||||||||||||||||
| Occupancy and equipment | 2,193 | 2,150 | 3,250 | 2.0 | (32.5) | ||||||||||||||||||||||||
| Professional services | 1,000 | 981 | 547 | 1.9 | 82.8 | ||||||||||||||||||||||||
| Data processing | 689 | 654 | 833 | 5.4 | (17.3) | ||||||||||||||||||||||||
| Director fees | 339 | 352 | 327 | (3.7) | 3.7 | ||||||||||||||||||||||||
| FDIC insurance | 262 | 223 | 300 | 17.5 | (12.7) | ||||||||||||||||||||||||
| Marketing | 107 | 45 | 140 | 137.8 | (23.6) | ||||||||||||||||||||||||
| Other | 913 | 580 | 695 | 57.4 | 31.4 | ||||||||||||||||||||||||
| Total noninterest expense | $ | 10,936 | $ | 9,925 | $ | 10,052 | 10.2 | % | 8.8 | % | |||||||||||||||||||
| For the Six Months Ended | |||||||||||||||||
| Noninterest expense | June 30, 2022 | June 30, 2021 | % Change | ||||||||||||||
| Salaries and employee benefits | $ | 10,373 | $ | 8,729 | 18.8 | % | |||||||||||
| Occupancy and equipment | 4,343 | 5,656 | (23.2) | ||||||||||||||
| Professional services | 1,981 | 1,134 | 74.7 | ||||||||||||||
| Data processing | 1,343 | 1,345 | (0.1) | ||||||||||||||
| Director fees | 691 | 644 | 7.3 | ||||||||||||||
| FDIC insurance | 485 | 703 | (31.0) | ||||||||||||||
| Marketing | 152 | 131 | 16.0 | ||||||||||||||
| Other | 1,493 | 1,348 | 10.8 | ||||||||||||||
| Total noninterest expense | $ | 20,861 | $ | 19,690 | 5.9 | % | |||||||||||
Noninterest expense increased by $0.9 million to $10.9 million for the quarter ended June 30, 2022 compared to the quarter ended June 30, 2021. Noninterest expense increased by $1.2 million to $20.9 million for the six months ended June 30, 2022 compared to the six months ended June 30, 2021. The increase in noninterest expense was primarily driven by an increase in salaries and employee benefits expense and professional services expense, partially offset by a decrease in occupancy and equipment expense.
Salaries and employee benefits expense totaled $5.4 million for the quarter ended June 30, 2022, an increase of $1.5 million when compared to the same period in 2021. Salaries and employee benefits expense totaled $10.4 million for the six months ended June 30, 2022, an increase of $1.6 million when compared to the same period in 2021. The increase in salaries and employee benefits expense was primarily driven by an increase in full time equivalent employees. Full time equivalent employees totaled 132 at June 30, 2022 compared to 125 for the same period in 2021. Average full time equivalent employees totaled 128 for the six months ended June 30, 2022 compared to 124 for the same period in 2021. The increase in salaries and employee benefits expense was also impacted by an increase in variable compensation accruals as a result of the Bank's overall improved performance. The increase in salaries and employee benefits expense was partially offset by higher loan originations, which enabled the bank to defer a greater amount of expenses.
10
Professional services expense totaled $1.0 million for the quarter ended June 30, 2022, an increase of $0.5 million when compared to the same period in 2021. Professional services expense totaled $2.0 million for the six months ended June 30, 2022, an increase of $0.8 million when compared to the same period in 2021. The increase in professional services expense was primarily driven by consulting fees associated with various projects, including our core system conversion.
Occupancy and equipment expense totaled $2.2 million for the quarter ended June 30, 2022, a decrease of $1.1 million when compared to the same period in 2021. Occupancy and equipment expense totaled $4.3 million for the six months ended June 30, 2022, a decrease of $1.3 million when compared to the same period in 2021. The decrease in occupancy and equipment expense was primarily driven by the curtailment of additional cleaning costs associated with precautions taken to prevent the spread of COVID-19 during the six months ended June 30, 2021.
11
BANKWELL FINANCIAL GROUP, INC.
RECONCILIATION OF GAAP TO NON-GAAP MEASURES (unaudited)
(Dollars in thousands, except share data)
| As of | |||||||||||||||||||||||||||||||||||
| Computation of Tangible Common Equity to Tangible Assets | June 30, 2022 | March 31, 2022 | December 31, 2021 | June 30, 2021 | |||||||||||||||||||||||||||||||
| Total Equity | $ | 225,467 | $ | 210,220 | $ | 201,987 | $ | 190,795 | |||||||||||||||||||||||||||
| Less: | |||||||||||||||||||||||||||||||||||
| Goodwill | 2,589 | 2,589 | 2,589 | 2,589 | |||||||||||||||||||||||||||||||
| Other intangibles | — | — | — | 58 | |||||||||||||||||||||||||||||||
| Tangible Common Equity | $ | 222,878 | $ | 207,631 | $ | 199,398 | $ | 188,148 | |||||||||||||||||||||||||||
| Total Assets | $ | 2,435,552 | $ | 2,496,877 | $ | 2,456,264 | $ | 2,269,825 | |||||||||||||||||||||||||||
| Less: | |||||||||||||||||||||||||||||||||||
| Goodwill | 2,589 | 2,589 | 2,589 | 2,589 | |||||||||||||||||||||||||||||||
| Other intangibles | — | — | — | 58 | |||||||||||||||||||||||||||||||
| Tangible Assets | $ | 2,432,963 | $ | 2,494,288 | $ | 2,453,675 | $ | 2,267,178 | |||||||||||||||||||||||||||
| Tangible Common Equity to Tangible Assets | 9.16 | % | 8.32 | % | 8.13 | % | 8.30 | % | |||||||||||||||||||||||||||
| As of | |||||||||||||||||||||||||||||||||||
| Computation of Fully Diluted Tangible Book Value per Common Share | June 30, 2022 | March 31, 2022 | December 31, 2021 | June 30, 2021 | |||||||||||||||||||||||||||||||
| Total shareholders' equity | $ | 225,467 | $ | 210,220 | $ | 201,987 | $ | 190,795 | |||||||||||||||||||||||||||
| Less: | |||||||||||||||||||||||||||||||||||
| Preferred stock | — | — | — | — | |||||||||||||||||||||||||||||||
| Common shareholders' equity | $ | 225,467 | $ | 210,220 | $ | 201,987 | $ | 190,795 | |||||||||||||||||||||||||||
| Less: | |||||||||||||||||||||||||||||||||||
| Goodwill | 2,589 | 2,589 | 2,589 | 2,589 | |||||||||||||||||||||||||||||||
| Other intangibles | — | — | — | 58 | |||||||||||||||||||||||||||||||
| Tangible common shareholders' equity | $ | 222,878 | $ | 207,631 | $ | 199,398 | $ | 188,148 | |||||||||||||||||||||||||||
| Common shares issued and outstanding | 7,752,389 | 7,761,338 | 7,803,166 | 7,895,101 | |||||||||||||||||||||||||||||||
| Fully Diluted Tangible Book Value per Common Share | $ | 28.75 | $ | 26.75 | $ | 25.55 | $ | 23.83 | |||||||||||||||||||||||||||
12
BANKWELL FINANCIAL GROUP, INC.
RECONCILIATION OF GAAP TO NON-GAAP MEASURES (unaudited) - Continued
(Dollars in thousands)
| For the Quarter Ended | For the Six Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||
| Computation of Efficiency Ratio | June 30, 2022 | March 31, 2022 | December 31, 2021 | June 30, 2021 | June 30, 2022 | June 30, 2021 | |||||||||||||||||||||||||||||||||||||||||
| Noninterest expense | $ | 10,936 | $ | 9,925 | $ | 9,679 | $ | 10,052 | $ | 20,861 | $ | 19,690 | |||||||||||||||||||||||||||||||||||
| Less: | |||||||||||||||||||||||||||||||||||||||||||||||
| Amortization of intangible assets | — | — | 48 | 9 | — | 19 | |||||||||||||||||||||||||||||||||||||||||
| Other real estate owned expenses | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
| Adjusted noninterest expense | $ | 10,936 | $ | 9,925 | $ | 9,631 | $ | 10,043 | $ | 20,861 | $ | 19,671 | |||||||||||||||||||||||||||||||||||
| Net interest income | $ | 23,823 | $ | 19,510 | $ | 18,928 | $ | 16,579 | $ | 43,333 | $ | 31,234 | |||||||||||||||||||||||||||||||||||
| Noninterest income | 1,152 | 958 | 825 | 1,440 | 2,110 | 3,395 | |||||||||||||||||||||||||||||||||||||||||
| Less: | |||||||||||||||||||||||||||||||||||||||||||||||
| Net gain on sale of available for sale securities | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
| Gain on sale of other real estate owned, net | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
| Operating revenue | $ | 24,975 | $ | 20,468 | $ | 19,753 | $ | 18,019 | $ | 45,443 | $ | 34,629 | |||||||||||||||||||||||||||||||||||
| Efficiency ratio | 43.8 | % | 48.5 | % | 48.8 | % | 55.7 | % | 45.9 | % | 56.8 | % | |||||||||||||||||||||||||||||||||||
| For the Quarter Ended | For the Six Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||
| Computation of Return on Average Tangible Common Equity | June 30, 2022 | March 31, 2022 | December 31, 2021 | June 30, 2021 | June 30, 2022 | June 30, 2021 | |||||||||||||||||||||||||||||||||||||||||
| Net Income Attributable to Common Shareholders | $ | 12,022 | $ | 8,212 | $ | 7,814 | $ | 6,228 | $ | 20,234 | $ | 11,917 | |||||||||||||||||||||||||||||||||||
| Total average shareholders' equity | $ | 218,250 | $ | 207,541 | $ | 200,752 | $ | 191,224 | $ | 212,932 | $ | 186,664 | |||||||||||||||||||||||||||||||||||
| Less: | |||||||||||||||||||||||||||||||||||||||||||||||
| Average Goodwill | 2,589 | 2,589 | 2,589 | 2,589 | 2,589 | 2,589 | |||||||||||||||||||||||||||||||||||||||||
| Average Other intangibles | — | — | 45 | 64 | — | 68 | |||||||||||||||||||||||||||||||||||||||||
| Average tangible common equity | $ | 215,661 | $ | 204,952 | $ | 198,118 | $ | 188,571 | $ | 210,343 | $ | 184,007 | |||||||||||||||||||||||||||||||||||
| Annualized Return on Average Tangible Common Equity | 22.36 | % | 16.25 | % | 15.65 | % | 13.25 | % | 19.40 | % | 13.06 | % | |||||||||||||||||||||||||||||||||||
13
BANKWELL FINANCIAL GROUP, INC.
NET INTEREST MARGIN ANALYSIS ON A FULLY TAX EQUIVALENT BASIS - QTD (unaudited)
(Dollars in thousands)
| For the Quarter Ended | |||||||||||||||||||||||||||||||||||
| June 30, 2022 | June 30, 2021 | ||||||||||||||||||||||||||||||||||
| Average Balance | Interest | Yield/ Rate (4) | Average Balance | Interest | Yield/ Rate (4) | ||||||||||||||||||||||||||||||
| Assets: | |||||||||||||||||||||||||||||||||||
| Cash and Fed funds sold | $ | 247,013 | $ | 449 | 0.73 | % | $ | 336,073 | $ | 90 | 0.11 | % | |||||||||||||||||||||||
Securities(1) | 118,534 | 809 | 2.73 | 103,297 | 761 | 2.95 | |||||||||||||||||||||||||||||
| Loans: | |||||||||||||||||||||||||||||||||||
| Commercial real estate | 1,443,239 | 17,278 | 4.74 | 1,163,134 | 13,678 | 4.65 | |||||||||||||||||||||||||||||
| Residential real estate | 66,460 | 553 | 3.33 | 105,975 | 958 | 3.62 | |||||||||||||||||||||||||||||
| Construction | 106,285 | 1,938 | 7.21 | 110,780 | 1,036 | 3.70 | |||||||||||||||||||||||||||||
| Commercial business | 393,318 | 5,327 | 5.36 | 296,613 | 3,506 | 4.68 | |||||||||||||||||||||||||||||
| Consumer | 5,298 | 45 | 3.43 | 8,851 | 88 | 3.98 | |||||||||||||||||||||||||||||
| Total loans | 2,014,600 | 25,141 | 4.94 | 1,685,353 | 19,266 | 4.52 | |||||||||||||||||||||||||||||
| Federal Home Loan Bank stock | 3,263 | 15 | 1.79 | 4,219 | 25 | 2.34 | |||||||||||||||||||||||||||||
| Total earning assets | 2,383,410 | $ | 26,414 | 4.38 | % | 2,128,942 | $ | 20,142 | 3.74 | % | |||||||||||||||||||||||||
| Other assets | 79,380 | 117,334 | |||||||||||||||||||||||||||||||||
| Total assets | $ | 2,462,790 | $ | 2,246,276 | |||||||||||||||||||||||||||||||
| Liabilities and shareholders' equity: | |||||||||||||||||||||||||||||||||||
| Interest bearing liabilities: | |||||||||||||||||||||||||||||||||||
| NOW | $ | 136,414 | $ | 59 | 0.17 | % | $ | 118,806 | $ | 54 | 0.18 | % | |||||||||||||||||||||||
| Money market | 931,101 | 1,146 | 0.49 | 782,079 | 941 | 0.48 | |||||||||||||||||||||||||||||
| Savings | 198,304 | 103 | 0.21 | 168,870 | 92 | 0.22 | |||||||||||||||||||||||||||||
| Time | 451,508 | 675 | 0.60 | 538,915 | 1,657 | 1.23 | |||||||||||||||||||||||||||||
| Total interest bearing deposits | 1,717,327 | 1,983 | 0.46 | 1,608,670 | 2,744 | 0.68 | |||||||||||||||||||||||||||||
| Borrowed Money | 85,092 | 558 | 2.59 | 101,586 | 769 | 3.00 | |||||||||||||||||||||||||||||
| Total interest bearing liabilities | 1,802,419 | $ | 2,541 | 0.57 | % | 1,710,256 | $ | 3,513 | 0.82 | % | |||||||||||||||||||||||||
| Noninterest bearing deposits | 407,890 | 298,467 | |||||||||||||||||||||||||||||||||
| Other liabilities | 34,231 | 46,329 | |||||||||||||||||||||||||||||||||
| Total liabilities | 2,244,540 | 2,055,052 | |||||||||||||||||||||||||||||||||
| Shareholders' equity | 218,250 | 191,224 | |||||||||||||||||||||||||||||||||
| Total liabilities and shareholders' equity | $ | 2,462,790 | $ | 2,246,276 | |||||||||||||||||||||||||||||||
Net interest income(2) | $ | 23,873 | $ | 16,629 | |||||||||||||||||||||||||||||||
| Interest rate spread | 3.81 | % | 2.92 | % | |||||||||||||||||||||||||||||||
Net interest margin(3) | 4.01 | % | 3.12 | % | |||||||||||||||||||||||||||||||
(1)Average balances and yields for securities are based on amortized cost.
(2)The adjustment for securities and loans taxable equivalency amounted to $50 thousand and $50 thousand for the quarters ended June 30, 2022 and 2021, respectively.
(3)Annualized net interest income as a percentage of earning assets.
(4)Yields are calculated using the contractual day count convention for each respective product type.
14
BANKWELL FINANCIAL GROUP, INC.
NET INTEREST MARGIN ANALYSIS ON A FULLY TAX EQUIVALENT BASIS - YTD (unaudited)
(Dollars in thousands)
| For the Six Months Ended | |||||||||||||||||||||||||||||||||||
| June 30, 2022 | June 30, 2021 | ||||||||||||||||||||||||||||||||||
| Average Balance | Interest | Yield/ Rate (4) | Average Balance | Interest | Yield/ Rate (4) | ||||||||||||||||||||||||||||||
| Assets: | |||||||||||||||||||||||||||||||||||
| Cash and Fed funds sold | $ | 296,239 | $ | 603 | 0.41 | % | $ | 368,779 | $ | 198 | 0.11 | % | |||||||||||||||||||||||
Securities(1) | 115,452 | 1,563 | 2.71 | % | 102,252 | 1,549 | 3.03 | % | |||||||||||||||||||||||||||
| Loans: | |||||||||||||||||||||||||||||||||||
| Commercial real estate | 1,393,836 | 32,273 | 4.61 | % | 1,146,258 | 26,354 | 4.57 | % | |||||||||||||||||||||||||||
| Residential real estate | 70,125 | 1,224 | 3.49 | % | 109,003 | 1,996 | 3.66 | % | |||||||||||||||||||||||||||
| Construction | 104,176 | 2,971 | 5.67 | % | 102,459 | 1,916 | 3.72 | % | |||||||||||||||||||||||||||
| Commercial business | 388,249 | 9,954 | 5.10 | % | 295,682 | 6,763 | 4.55 | % | |||||||||||||||||||||||||||
| Consumer | 5,666 | 147 | 5.25 | % | 6,956 | 137 | 3.96 | % | |||||||||||||||||||||||||||
| Total loans | 1,962,052 | 46,569 | 4.72 | % | 1,660,358 | 37,166 | 4.45 | % | |||||||||||||||||||||||||||
| Federal Home Loan Bank stock | 3,051 | 29 | 1.94 | % | 5,356 | 56 | 2.11 | % | |||||||||||||||||||||||||||
| Total earning assets | 2,376,794 | $ | 48,764 | 4.08 | % | 2,136,745 | $ | 38,969 | 3.64 | % | |||||||||||||||||||||||||
| Other assets | 89,866 | 115,718 | |||||||||||||||||||||||||||||||||
| Total assets | $ | 2,466,660 | $ | 2,252,463 | |||||||||||||||||||||||||||||||
| Liabilities and shareholders' equity: | |||||||||||||||||||||||||||||||||||
| Interest bearing liabilities: | |||||||||||||||||||||||||||||||||||
| NOW | $ | 124,361 | $ | 106 | 0.17 | % | $ | 109,990 | $ | 97 | 0.18 | % | |||||||||||||||||||||||
| Money market | 950,131 | 2,326 | 0.49 | % | 759,435 | 1,891 | 0.50 | % | |||||||||||||||||||||||||||
| Savings | 196,400 | 204 | 0.21 | % | 164,630 | 217 | 0.27 | % | |||||||||||||||||||||||||||
| Time | 452,676 | 1,553 | 0.69 | % | 574,876 | 3,653 | 1.28 | % | |||||||||||||||||||||||||||
| Total interest bearing deposits | 1,723,568 | 4,189 | 0.49 | % | 1,608,931 | 5,858 | 0.73 | % | |||||||||||||||||||||||||||
| Borrowed Money | 84,770 | 1,144 | 2.68 | % | 126,886 | 1,777 | 2.79 | % | |||||||||||||||||||||||||||
| Total interest bearing liabilities | 1,808,338 | $ | 5,333 | 0.59 | % | 1,735,817 | $ | 7,635 | 0.89 | % | |||||||||||||||||||||||||
| Noninterest bearing deposits | 406,707 | 284,226 | |||||||||||||||||||||||||||||||||
| Other liabilities | 38,683 | 45,756 | |||||||||||||||||||||||||||||||||
| Total liabilities | 2,253,728 | 2,065,799 | |||||||||||||||||||||||||||||||||
| Shareholders' equity | 212,932 | 186,664 | |||||||||||||||||||||||||||||||||
| Total liabilities and shareholders' equity | $ | 2,466,660 | $ | 2,252,463 | |||||||||||||||||||||||||||||||
Net interest income(2) | $ | 43,431 | $ | 31,334 | |||||||||||||||||||||||||||||||
| Interest rate spread | 3.49 | % | 2.75 | % | |||||||||||||||||||||||||||||||
Net interest margin(3) | 3.65 | % | 2.93 | % | |||||||||||||||||||||||||||||||
(1)Average balances and yields for securities are based on amortized cost.
(2)The adjustment for securities and loans taxable equivalency amounted to $98 thousand and $100 thousand for the six months ended June 30, 2022 and 2021, respectively.
(3)Annualized net interest income as a percentage of earning assets.
(4)Yields are calculated using the contractual day count convention for each respective product type.
15
BWFG | LISTED | NASDAQ 2Q22 Investor Presentation July 27th, 2022
2 BWFG LISTED NASDAQ BWFG LISTED NASDAQ This presentation may contain certain forward-looking statements about Bankwell Financial Group, Inc. (the “Company”). Forward-looking statements include statements regarding anticipated future events and can be identified by the fact that they do not relate strictly to historical or current facts. They often include words such as “believe,” “expect,” “would,” “should,” “could,” or “may.” Forward-looking statements, by their nature, are subject to risks and uncertainties. Certain factors that could cause actual results to differ materially from expected results include increased competitive pressures, changes in the interest rate environment, general economic conditions or conditions within the 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 continues to affect 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. Safe Harbor
3 BWFG LISTED NASDAQ BWFG LISTED NASDAQ Table of Contents • 2Q22 Performance • Trends • Credit Quality & ALLL • Loan Portfolio • Capital • Bankwell History & Overview
BWFG | LISTED | NASDAQ 2Q22 Performance
5 BWFG LISTED NASDAQ BWFG LISTED NASDAQ 2Q22 Summary • Record net income of $12.02 million, or $1.55 earnings per share (EPS) • Operating EPS of $1.15 excludes the following one-time items: ̶ $1.5 million elevated fees associated with loan prepayments ~$0.15 EPS 2Q22 loan prepayments exceeded historical quarterly averages and are not reflective of run rate ̶ $1.6 million ALLL release of specific reserves ~$0.16 EPS Specific reserve reduction as impaired loans exhibited improved performance or paid off ̶ $0.9 million reduction given historical loss update to peer group ~$0.09 EPS Bankwell is not yet subject to CECL; reduction in reserves due to annual update to historical loss data in our peer group-based, “incurred loss” model
6 BWFG LISTED NASDAQ BWFG LISTED NASDAQ 2Q22 Summary (continued) • Return on Average Assets (ROAA) and Return on Average Equity (ROAE) were 1.96% and 22.09%, respectively for the quarter, and 1.65% and 19.16% year-to-date ̶ Excluding the one-time items of $0.40 EPS, ROAA and ROAE were 1.45% and 16.39%, respectively for the quarter, and 1.40% and 16.22% year-to-date • Pre-tax, pre-provision net revenue (“PPNR”)1 of $14.04 million, or 2.29% PPNR ROAA ̶ Excluding the one-time elevated loan prepayment fees, PPNR of $12.54 million, or 2.04% PPNR ROAA • Loan growth of $71 million, or 4%, with year-to-date loan growth of $162 million, or ~17% annualized • Quarterly Net Interest Margin (“NIM”) of 4.01%, year-to-date NIM of 3.65% • Wilton branch closure announced 7/8/2022 (effective 10/7/2022) 1 Pre-tax, pre-provision net revenue per share is a non-GAAP metric & excludes provision for loan losses and income tax expense
7 BWFG LISTED NASDAQ BWFG LISTED NASDAQ Impact of One-time Items $1.55 $1.15 $0.15 $0.16 $0.09 2Q22 Reported EPS Elevated loan prepayments Release of specific reserves Historical loss update to peer group 2Q22 Operating EPS 2Q22 EPS Walk Key Metrics Reported Operating V bps NIM 3.65% 3.53% (13) Efficiency Ratio 45.91% 47.47% (157) Return on Average Assets 1.65% 1.40% (25) Return on Average Equity 19.16% 16.22% (294) Year To Date Reported Operating V bps 4.01% 3.75% (25) 43.79% 46.59% (280) 1.96% 1.45% (51) 22.09% 16.39% (570) 2Q22
8 BWFG LISTED NASDAQ BWFG LISTED NASDAQ 2Q22 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 • $2.1 billion of gross loans • $2.0 billion of deposits • 0.77% ALLL; not yet subject to CECL • Dividend of $0.20 per share paid • $28.75 Fully Diluted Tangible Book Value • Well Capitalized1,2 Tier 1 Leverage 10.15% Tier1/CET1 / RWA 11.10% Total Capital / RWA 11.80% QTR YTD • Net Income $12.0 million $20.2 million • PPNR $14.0 million $24.6 million • Return on Average Assets 1.96% 1.65% • PPNR / Average Assets 2.29% 2.01% • Return on Average Equity 22.09% 19.16%
9 BWFG LISTED NASDAQ BWFG LISTED NASDAQ Income Statement 2Q22 1Q22 Var1 Total Interest Income $26.4 $22.3 $4.1 Total Interest Expense $2.5 $2.8 $0.3 Net Interest Income $23.8 $19.5 $4.3 Non-Interest Income $1.2 $1.0 $0.2 Non-Interest Expense $10.9 $9.9 $(1.0) Pre-Tax, Pre-Provision Net Revenue $14.0 $10.5 $3.5 (Credit)/Provision for Loan Losses $(1.4) $0.2 $1.7 Pre-Tax Income $15.5 $10.3 $5.2 Income Tax Expense $3.5 $2.1 $(1.4) Reported Net Income $12.0 $8.2 $3.8 EPS $1.55 $1.04 $0.51 Pre-Tax, Pre-Provision Net Revenue per share2 $1.84 $1.37 $0.47 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 2Q22 1Q22 Var1 Cash & Cash Equivalents $171 $299 $(128) Investment Securities $113 $117 $(4) Loans Receivable, net $2,037 $1,965 $72 All Other Assets $115 $116 $(1) Total Assets $2,436 $2,497 $(61) Total Deposits $2,034 $2,166 $(133) Total Borrowings $140 $84 $55 Other Liabilities $37 $36 $1 Total Liabilities $2,210 $2,287 $(77) Equity $225 $210 $15 Total Liabilities & Equity $2,436 $2,497 $(61) 2Q22 Consolidated Financial Statements Linked Quarter
10 BWFG LISTED NASDAQ BWFG LISTED NASDAQ Income Statement 2Q 2022 2Q 2021 Var1 Total Interest Income $48.7 $38.9 $9.8 Total Interest Expense $5.3 $7.6 $2.3 Net Interest Income $43.3 $31.2 $12.1 Non-Interest Income2 $2.1 $3.4 $(1.3) Non-Interest Expense $20.9 $19.7 $(1.2) Pre-Tax, Pre-Provision Net Revenue $24.6 $14.9 $9.6 (Credit) for Loan Losses $(1.2) $(0.3) $0.8 Pre-Tax Income $25.8 $15.3 $10.5 Income Tax Expense $5.6 $3.3 $(2.2) Reported Net Income $20.2 $11.9 $8.3 EPS $2.58 $1.50 $1.08 Pre-Tax, Pre-Provision Net Revenue per share3 $3.20 $1.92 $1.28 1 Variances are rounded based on actual whole dollar amounts 2 2021 includes the one-time benefit for the federal payroll tax credit for COVID-19-impacted small businesses 3 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 YTD Consolidated Income Statements Prior Year
BWFG | LISTED | NASDAQ Trends
12 BWFG LISTED NASDAQ BWFG LISTED NASDAQ Performance Trends $1.78 $2.21 $2.31 $0.75 $3.36 $2.58 $2.18 2017 2018 2019 2020 2021 2Q22 YTD Diluted EPS 0.80% 0.94% 0.97% 0.28% 1.17% 1.65% 1.40% 2017 2018 2019 2020 2021 2Q22 YTD Return on Average Assets 8.93% 10.19% 10.20% 3.35% 13.86% 19.16% 16.22% 2017 2018 2019 2020 2021 2Q22 YTD Return on Average Equity $20.39 $21.85 $22.82 $21.96 $25.55 $28.75 2017 2018 2019 2020 2021 2Q22 YTD Fully Diluted Tangible Book Value Operating result Operating result Operating result Positive performance trends reflect successful strategy execution
13 BWFG LISTED NASDAQ BWFG LISTED NASDAQ Net Interest Margin 3.30% 3.18% 3.03% 2.77% 3.17% 3.65% 2017 2018 2019 2020 2021 2Q22 YTD Net Interest Margin 1.08% 1.42% 1.75% 1.20% 0.67% 0.49% 0.93% 1.30% 1.66% 1.07% 0.54% 0.40% 2017 2018 2019 2020 2021 2Q22 YTD Cost of Funds / Deposits Cost of Funds Cost of Deposits 4.51% 4.67% 4.85% 4.48% 4.42% 4.72% 4.23% 4.45% 4.61% 3.85% 3.75% 4.09% 2017 2018 2019 2020 2021 2Q22 YTD Loan & Earning Asset Yields Loan Yield Earning Asset Yield Yields include origination fee amortization Assets repricing with higher rates • Originated in excess of $0.5 billion loans YTD with funded volume exceeding $350 million at 4.88% yield • 3Q22 originations yields expected to exceed 5.00% • ~$450 million loans either floating or set to reprice in the next 12 months ~13 bps lift from prepayment fees / activity
14 BWFG LISTED NASDAQ BWFG LISTED NASDAQ Loan Trends $1,107 $1,168 $1,202 $1,182 $1,235 $1,219 $436 $436 $402 $444 $660 $838 $1,543 $1,605 $1,604 $1,626 $1,895 $2,057 2017 2018 2019 2020 2021 2Q22 Loan Balances All Other C&I + CRE Owner Occupied 2Q22 Loan Mix 2Q22 Portfolio Yield by Vintage1 C&I + CRE Owner Occupied / Total Loans 28% 27% 25% 27% 35% 41% 1 Weighted average yield based on active loans as of 6-30-2022 Dollars in millions Residential 2.89% C&I 18.13% CRE Owner Occupied 22.73% CRE Investor 50.28% Commercial Const. 5.43% Consumer Loans / Other 0.54% 4.27% Pre 2019 4.37% 2019 4.32% 2020 4.78% 2021 4.88% 2022 Reduced reliance on Investor CRE
15 BWFG LISTED NASDAQ BWFG LISTED NASDAQ Deposit Trends 18.5% 16.2% 12.4% 14.1% 15.9% 1 1 Core Deposits include Commercial and Consumer checking, savings and money market accounts 2 Wholesale Funding ratio defined as brokered deposits and FHLB borrowings to total assets 3 Average cost on 2Q22 NOW deposits less than 15 basis points; these accounts not sensitive to Fed Funds rate changes 17.7% 18.5% 16.2% 15.0% 16.7% 17.2% 30.3% 28.1% 28.6% 20.1% 9.7% 8.6% 52.0% 53.4% 55.3% 64.9% 73.6% 74.1% $1,398 $1,502 $1,492 $1,827 $2,124 $2,034 2017 2018 2019 2020 2021 2Q22 Deposit Balances Brokered Deposits Retail CDs Core Deposits $213 $231 $471 $611 $585 $156 $178 $255 $383 $354 $369 $409 $725 $994 $939 4Q18 4Q19 4Q20 4Q21 2Q22 Commercial Deposits Trend Interest Bearing Non-Interest Bearing 24.9% 23.4% 20.6% 19.8% 16.4% 18.7% Wholesale Funding ratio2 FHLB Borrowings Dollars in millions $199 $160 $150 $175 $50 $105 Core deposit mix trending favorably $48 $52 $72 $87 $100 $173 $192 $270 $399 $373 $221 $244 $343 $486 $473 4Q18 4Q19 4Q20 4Q21 2Q22 Checking Deposits Trend NOW Non-Interest Bearing 14.7% 16.3% 18.7% 22.9% 23.2%% Total Deposits 3 Excluding IOLTA accounts
BWFG | LISTED | NASDAQ Credit Quality & ALLL
17 BWFG LISTED NASDAQ BWFG LISTED NASDAQ Credit Quality 0.66% 2.06% 0.88% 0.74% 2019 2020 2021 2Q22 Non Performing Loans / Gross Loans NPLs $10,588 $33,416 $16,587 $15,285 0.46% 0.14% 0.14% 2Q22 Detail 0.74% SBA-guaranteed portion of NPLs All other NPLs Credit quality remains strong COVID-19 related NPL Dollars in thousands • Single loan - 57% LTV • Full recourse • High net worth guarantors • Full repayment expected 1-5 $1,555 96.9% $1,563 96.1% $1,827 96.4% $1,994 97.0% 6 $27 1.7% $15 0.9% $21 1.1% $20 1.0% 7 $19 1.2% $46 2.8% $45 2.4% $41 2.0% 8 $4 0.2% $2 0.1% $2 0.1% $1 0.0% Total $1,604 $1,626 $1,895 $2,057 Ri sk R at in g (R R) Rated Asset Balances – Total Loans Risk Rating Meanings 1 Secured by Cash 2 Superior 3 Desirable 4 Pass 5 Bankable with Care 6 Special Mention 7 Substandard 8 Doubtful 9 Loss NR Not Rated Dollars in millions
18 BWFG LISTED NASDAQ BWFG LISTED NASDAQ 0.72% 0.71% 0.14% ($0.9) million $1.1 million ($1.6) million 0.06% 1Q22 Historical Loss Update to Peer Group Asset Growth / Mix Specifics 2Q22 General Specific 2Q22 ALLL Allowance for Loan Loss (“ALLL”) Walk 0.86% 0.77% $17.1 Million $15.8 Million 1 2 1 Bankwell is not yet subject to CECL; reduction in reserves due to annual update to historical loss data in our peer group-based, “incurred loss” model 2 Specific reserve reduction as impaired loans exhibited improved performance or paid off
BWFG | LISTED | NASDAQ Loan Portfolio
20 BWFG LISTED NASDAQ BWFG LISTED NASDAQ Residential 2.89% C&I 18.13% CRE Owner Occupied 22.73% CRE Investor 50.28% Commercial Const. 5.43% Consumer Loans / Other 0.54% • No single relationship represents more than ~5% of total loans, as of June 30, 2022 • Increasingly diversified commercial loan portfolio mix: Total Loan Portfolio = $2,057 million 4Q19 4Q20 4Q21 1Q22 2Q22 CRE Investor 59.8% 60.5% 55.2% 52.9% 50.3% CRE O/O + C&I 24.9% 27.1% 34.9% 37.5% 40.8% Loan Portfolio Composition Diversifying portfolio, reducing reliance on Investor CRE
21 BWFG LISTED NASDAQ BWFG LISTED NASDAQ Retail 27.21% Office 18.45%Healthcare 24.40% MultiFamily 9.71% Industrial Warehouse 7.76% Mixed Use 6.37% Other 3.41% Special Use 2.70% 1 • Property Type mix continues to show well diversified exposure • Healthcare consists primarily of skilled nursing and/or assisted living facilities located across eastern US • ~ 58% of all CRE loan balances have recourse ̶ Non recourse loans require lower LTV and higher DSCR Total CRE Portfolio by Property Type = $1,499 million 1 Includes Owner Occupied CRE, does not include Construction CRE Loan Portfolio
22 BWFG LISTED NASDAQ BWFG LISTED NASDAQ 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 3 LTVs based on original LTV values, at origination Type Count $ % LTV3 Retail2 80 $232 57% 65.7% Grocery 11 $100 24% 65.0% Restaurant 23 $32 8% 59.7% Pharmacy 7 $21 5% 71.3% Gas / Auto Services 16 $23 6% 65.0% Total Retail 137 $408 100% 65.4% Retail Segment Detail • No significant exposure to any one retailer • No exposure to bankrupt retailers Office Segment Detail • ~72% Office loans located in Bankwell’s primary lending area, mostly in suburban area, not NYC • Out of primary market loans are generally either GSA-leased, credit tenants, owner-occupied or medical office Type Count $ % LTV3 Office (primarily suburban) 72 $196 71% 60.5% Medical 36 $80 29% 66.2% Condo 4 $1 0% 65.1% Total Office 112 $277 100% 62.2% CT 45% NY 15% NJ 12% All Other 28% 1CRE Loan Portfolio Dollars in millions
23 BWFG LISTED NASDAQ BWFG LISTED NASDAQ Geography Distribution 1 Includes Owner Occupied CRE, does not include Construction 2 Based on dollar volume 3 LTVs based on original LTV values, at origination 4 Consists primarily of skilled nursing and/or assisted living facilities 5 Special Use includes Country Clubs, Tennis Facilities, Catering 6 Other includes Hotel, NFP/Social, Mobile Home & Worship CT 36.87% NY 22.93% FL 11.03% NJ 4.39% OH 3.30% TX 2.88% All Other 18.60% Loan To Value Property Type $ LTV3 Retail $408.0 65.4% Healthcare4 $365.8 67.4% Office $276.7 62.2% Multifamily $145.5 60.6% Industrial/Warehouse $116.3 59.2% Mixed Use $95.4 47.6% Special Use5 $40.4 63.8% Other6 $18.9 46.8% 1 - 4 Family Investment $16.4 63.8% Land $15.8 46.3% Self Storage $0.0 55.0% Total $1,499.3 62.7% Vintage Year $ Distribution Pre 2019 $572.8 38% 2019 $137.4 9% 2020 $103.1 7% 2021 $407.5 27% 2022 $278.5 19% Total $1,499.3 100% • Greater geographic diversity attributed to growth in Healthcare / SNF sector • Continued diversification by following strongest customers to growth or stable markets • Of the CT-based loans, 56% are in Fairfield County2 Dollars in millions 1CRE Loan Portfolio
24 BWFG LISTED NASDAQ BWFG LISTED NASDAQ Finance 25% Insurance (Primarily Brokers) 36% Health Care & Social Assistance 20% Arts, Entertainment & Recreation 4% Wholesale 4% Retail Trade 3% Real Estate and Rental/Leasing 3% Information 1% All Other 4% C&I Loan Portfolio Loans by Industry Type Total C&I Portfolio = $372 million • Limited leverage loan exposure of $20 million as of 6/30/22, ~1% of total loans • Majority of the Lines of Credit are uncommitted lines 1 1 Includes luxury auto leasing and financing
25 BWFG LISTED NASDAQ BWFG LISTED NASDAQ Commercial Construction Portfolio • Commercial construction loans comprise ~5% of total loan portfolio (~$111 million) • $141 million of unfunded commitments, committed construction draws are subject to various terms and conditions, including completion of work verified by third party professional inspection Dollars in millions By Property Type Multifamily 69% Mixed Use 14% Medical Office 5% Retail 4% Self Storage 4% Office 3% Residential 1% # Loans $ Committed % Unfunded $ Unfunded 1Q22 Balance 32 $256 56% $142 Closures in 1Q22 (5) ($35) 1Q22 Loans @ 2Q22 27 $221 63% $140 New 2Q22 Loans 4 $22 2Q22 Balance 31 $243 58% $141
26 BWFG LISTED NASDAQ BWFG LISTED NASDAQ Residential Portfolio • $64 million Residential portfolio comprised of: ̶ $59 million residential mortgages, with an average LTV of 67.1%1 and an average size of $494 thousand ̶ $5 million HELOCs • 87% ($51 million) of residential mortgages secured by residences in Fairfield County, CT ̶ Of the Fairfield County mortgages, 66% are secured by residences in New Canaan, Fairfield & Westport Loan Vintage Year $ Millions Distribution Pre 2014 $27.8 43% 2014 $6.2 10% 2015 $10.0 16% 2016 $8.6 13% 2017 $11.4 18% 2018 $0.2 0% Total $64.3 100% 1 LTVs based on original LTV values, at origination Bankwell stopped originating residential mortgages at the end of 2017
BWFG | LISTED | NASDAQ Capital
28 BWFG LISTED NASDAQ BWFG LISTED NASDAQ Tangible Book Value • AOCI: $0.71 favorable change from mark-to-market primarily on long-dated interest rate swaps offset by ($0.19) unfavorable change from AFS investment portfolio • $50 million of $75 million of long-dated interest rate swaps were terminated in June 2022 • Mark-to-market as of July 19th : Swaps $0.01 incremental TBV, offset by ($0.03) reduction in AFS investment portfolio • No shares repurchased in 2Q22 1 Misc includes items such as, but not limited to, changes related to stock grants and share count Fully Diluted Tangible Book Value (TBV) Per Share Walk $26.75 $28.75 $1.55 $0.20 $0.52 $0.13 1Q22 Net Income Dividends AOCI Misc 2Q221
29 BWFG LISTED NASDAQ BWFG LISTED NASDAQ Capital Position 8.32% 9.80% 11.20% 12.00% 9.16% 10.15% 11.10% 11.80% 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 ita l 2Q22 1Q22 ‘Adequate’ + Buffer Min Capital ratios reflect strong earnings and double-digit loan growth 2 Tier 1CET1 CRE concentration of 427%1 1 Current period Bank capital ratios are preliminary, subject to finalization of the FDIC Call Report 2 TCE calculation is a consolidated BWFG ratio Key Bank Capital Ratios1
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31 BWFG LISTED NASDAQ BWFG LISTED NASDAQ Bankwell operates in an attractive core market: • Third 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 • MSA ranked 11th most educated overall, tied for 5th with the highest percentage of bachelors degree holders4 • Headquarters of 9 Fortune 500 companies5 • Home to two of the largest hedge funds in the U.S. • $27 billion total AUM managed by 68 firms with $1 billion or less in AUM6 • 381 thousand housing units with a median value of owner-occupied units of $433 thousand7 ̶ In addition, New Haven County has 371 thousand housing units with a median value of owner-occupied units of $252 thousand7 1 Source: S&P Global Market Intelligence’s Branch Competitors & Pricing Report as of 6/30/21, excluding global money center banks (tickers BAC, WFC, JPM, TD & C) 2 Source: Bureau of Economic Analysis’ Metropolitan Area Table, contained within the Personal Income by County & Metropolitan Area, 2020 news release 11/16/21 3 Source: Bloomberg: 2020 Richest Places 4 Source: WalletHub: Most & Least Educated Cities in America, 7/18/22 5 Source: Fortune.com: 2022 Fortune 500 6 Source: US News and World Report 7 Source: US Census Bureau QuickFacts (2021 data) Branches (9) Branch Closure 4Q22 (1) Fairfield County Profile • Connecticut-based $2.4 billion commercial bank • 9 branches in Fairfield & New Haven Counties ̶ Wilton branch closure announced 7/8/2022 (effective 10/7/2022) • $177 million deposits per branch; one of the highest in Fairfield & New Haven Counties1
32 BWFG LISTED NASDAQ BWFG LISTED NASDAQ Financial Snapshot 2017 2018 2019 2020 2021 2Q22 Total assets $1,796,607 $1,873,665 $1,882,182 $2,253,747 $2,456,264 $2,435,552 Net loans $1,520,879 $1,586,775 $1,588,840 $1,601,672 $1,875,167 $2,036,626 Loan-to-deposit ratio 110.1% 106.4% 107.1% 87.9% 88.8% 100.8% Efficiency ratio2 54.9% 59.2% 60.2% 73.9% 53.9% 45.9% Non-interest expense / avg. assets 1.88% 1.93% 1.90% 2.03% 1.75% 1.71% Net interest margin 3.30% 3.18% 3.03% 2.77% 3.17% 3.65% Total capital to risk weighted assets 12.19% 12.50% 13.35% 12.28% 12.00% 11.80% Tangible common equity ratio2 8.81% 9.16% 9.56% 7.73% 8.13% 9.16% Return on average equity 8.93% 10.19% 10.20% 3.35% 13.86% 19.16% Fully diluted tangible book value per share2 $20.39 $21.85 $22.82 $21.96 $25.55 $28.75 Net interest income $54,364 $56,326 $53,761 $54,835 $67,886 $43,333 Pre-tax, pre-provision net revenue2 $26,470 $24,593 $23,379 $14,907 $33,803 $24,582 Net income $13,830 $17,433 $18,216 $5,904 $26,586 $20,234 EPS (fully diluted) $1.78 $2.21 $2.31 $0.75 $3.36 $2.58 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 Dollars in thousands, except per share data
33 BWFG LISTED NASDAQ BWFG LISTED NASDAQ Name Years Experience Selected Professional Biography Christopher Gruseke Chief Executive Officer Director (since 2015) 30+ Mr. Gruseke was a founding investor and director of Bankwell Financial Group’s predecessors, BNC Financial Group, Inc., and The Bank of New Canaan. He brings more than 25 years of capital markets, operations, sales and finance experience to his role at the Company. Most recently, he was a member of the Executive Committee at CRT Capital, a Stamford, Connecticut-based broker/dealer. He also served as Co-Chief Operating Officer and a member of the Board of Greenwich Capital Markets. Mr. Gruseke earned a B.A. from Williams College and an M.S. from the Stern School of Business at New York University. Christine A. Chivily Chief Risk Officer Chief Credit Officer (since 2013) 40+ Ms. Chivily has over 40 years of experience in banking and real estate finance. She previously served in a risk management role for the CRE and C&I loan portfolios at People's United Bank. Her prior experience also includes five years as Director of Freddie Mac’s New England region for multifamily properties and 11 years as Senior Credit Officer at RBS Greenwich Capital. She also has over 10 years of combined experience in lending, loan administration and workouts at other various banking institutions. Ms. Chivily received her B.A. from Mt. Holyoke College. Penko Ivanov Chief Financial Officer (since 2016) 30+ Mr. Ivanov has over 30 years of experience in accounting and finance. His more recent roles include 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, and as CFO of Darien Rowayton Bank. 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 and is a CPA. He is also Six Sigma Black Belt certified. Matthew McNeill Chief Banking Officer (since 2020) 20+ Mr. McNeill has more than 20 years of experience in Commercial Banking. He most recently served as Head of Commercial Lending at Metropolitan Commercial Bank. During his 8 years at Metropolitan Commercial Bank the bank grew its lending assets from $400 million to over $3 billion. Mr. McNeill has additionally held lending roles at HSBC Bank US and Banco Santander. Mr. McNeill has also served as Managing Partner at American Real Estate Lending; a Commercial Real Estate finance company. Laura J. Waitz Chief Operating Officer (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. Experienced Leadership Team
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