Bankwell Financial Group, Inc 8-K, filed Apr 28, 2021
Bankwell Financial Group, Inc. (BWFG)
8-K
2021-04-28
For: 2021-04-28
View Original
Added on
April 11, 2026
About this 8-K
Bankwell Financial Group, Inc filed this 8-K on April 28, 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): April 28, 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 April 28, 2021, Bankwell Financial Group, Inc., the holding company for Bankwell Bank, issued a press release describing its results of operations for the period ended March 31, 2021. 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 April 28, 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 March 31, 2021. 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 April 28, 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 May 24, 2021 to all shareholders of record as of May 14, 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 | |||||
| April 28, 2021 | By: /s/ Penko K. Ivanov | ||||
| Penko K. Ivanov | |||||
| Executive Vice President | |||||
| and Chief Financial Officer | |||||
BANKWELL FINANCIAL GROUP REPORTS STRONG OPERATING RESULTS FOR THE FIRST QUARTER; DECLARES SECOND QUARTER DIVIDEND
New Canaan, CT – April 28, 2021 – Bankwell Financial Group, Inc. (NASDAQ: BWFG) reported GAAP net income of $5.7 million, or $0.71 per share, for the first quarter of 2021, versus $1.4 million, or $0.17 per share, for the same period in 2020. Pre-tax, pre-provision net revenue ("PPNR")1 grew 48% to $7.0 million compared to the same period in 2020. Results include a $0.9 million one-time federal payroll tax credit for small businesses impacted by COVID-192.
The Company's Board of Directors declared a $0.14 per share cash dividend, payable May 24, 2021 to shareholders of record on May 14, 2021.
We recommend reading this earnings release in conjunction with the First Quarter 2021 Investor Presentation, located at http://investor.mybankwell.com/Presentations and included as an exhibit to our April 28, 2021 Current Report on Form 8-K.
Notes Bankwell Financial Group President and CEO, Christopher R. Gruseke:
"I am pleased to announce Bankwell’s financial results for the first quarter of 2021. Our team made meaningful progress in virtually all aspects of our business. Loans grew by 4% on originations of $158 million and we continue to generate quality C&I business. Core commercial deposits grew by 8.6%, or $63 million as we steadily improve both the mix and the cost of our deposits. We have also successfully implemented many of our previously announced expense reduction initiatives. The cumulative impact of the multiple successes we’ve experienced was to grow pre-tax, pre-provision net revenue by 48% versus the previous year’s first quarter and to deliver a return on average equity of 12.67%. Importantly, we look to further improving profitability as the year proceeds.
"I’d like to thank all of my colleagues who have worked tirelessly to achieve these results amidst such challenging circumstances. On behalf of everyone at Bankwell, I also wish to acknowledge our gratitude for all of our health care workers and scientists who have persevered in an effort to bring our health crisis to an end."
First Quarter 2021 Highlights:
•PPNR of $7.0 million ($6.1 million excluding the one-time payroll tax credit), a 48% increase compared to the same period in 2020.
•Return on average assets was 1.02% and return on average equity was 12.67%.
•Resumption of SBA loan sales with gains of $0.5 million compared to no sales for the quarter ended March 31, 2020.
•Total gross loans were $1.7 billion, growing $63.2 million, or 4%, compared to December 31, 2020, excluding PPP loans.
•Total deposits were $1.9 billion compared to $1.8 billion at December 31, 2020.
•Noninterest bearing deposits increased by $112.5 million to 15% of total deposits compared to 10% at March 31, 2020.
•The cost of deposits decreased approximately 10 basis points to 0.67% when compared to the quarter ended December 31, 2020.
•The Bank's loan-to-deposit ratio was 89.0%, reflecting the above-mentioned increase in deposits.
•Investment securities totaled $101.6 million and represent 5% of total assets.
•Tangible book value per share rose to $23.99 compared to $22.43 at December 31, 2020, benefiting from strong operating performance and favorable marks on interest rate swaps used to hedge interest rate risk.
1 Pre-tax, pre-provision net revenue is a non-GAAP metric and excludes provision for loan losses and income tax expense.
2 The payroll tax credit is part of the Employee Retention Credit (“ERC”) program under the Coronavirus Aid, Relief and Economic Security Act (“CARES Act”).
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•Shares issued and outstanding were 7,908,630, reflecting repurchases of 65,626 shares of common stock at a weighted average price of $21.66 during the quarter ended March 31, 2021.
•Subsequent to March 31, 2021, the Company committed to retire $10 million of existing subordinated debt on May 15, 2021.
Earnings and Performance
Revenues (net interest income plus noninterest income) for the quarter ended March 31, 2021 were $16.6 million, versus $14.4 million for the quarter ended March 31, 2020. The increase was primarily attributable to lower interest expense on deposits, partially offset by a decrease in interest and fees on loans. Revenues also benefited from the aforementioned one-time federal payroll tax credit for COVID-19 and from the resumption of SBA loan sales.
Net income for the quarter ended March 31, 2021 was $5.7 million, versus $1.4 million for the quarter ended March 31, 2020. The increase in net income was impacted by the aforementioned increases in revenues.
Basic and diluted earnings per share were $0.72 and $0.71, respectively, for the quarter ended March 31, 2021 compared to basic and diluted earnings per share of $0.17 each for the quarter ended March 31, 2020.
The net interest margin (fully taxable equivalent basis) for the quarters ended March 31, 2021 and March 31, 2020 was 2.74% and 2.98%, respectively. The decrease in net interest margin was primarily due to excess liquidity.
Financial Condition
Assets totaled $2.2 billion at March 31, 2021, compared to assets of $2.3 billion at December 31, 2020. The decrease in assets is primarily due to a decrease in excess liquidity, partially offset by an increase in loans. Gross loans totaled $1.7 billion at March 31, 2021, an increase of $47.6 million compared to December 31, 2020. Excluding PPP loans, gross loans increased by $63.2 million at March 31, 2021 when compared to December 31, 2020. Deposits totaled $1.9 billion at March 31, 2021, compared to deposits of $1.8 billion at December 31, 2020.
Capital
Shareholders’ equity totaled $187.9 million as of March 31, 2021, an increase of $11.3 million compared to December 31, 2020, primarily a result of (i) a $7.7 million favorable impact to accumulated other comprehensive income driven by fair value marks related to hedge positions involving interest rate swaps and (ii) net income for the quarter ended March 31, 2021 of $5.7 million. The Company's interest rate swaps are used to hedge interest rate risk. 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. The increase in Shareholders’ equity was partially offset by dividends paid of $1.1 million and common stock repurchases of $1.4 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
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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.
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BANKWELL FINANCIAL GROUP, INC.
CONSOLIDATED BALANCE SHEETS (unaudited)
(Dollars in thousands)
| March 31, 2021 | December 31, 2020 | March 31, 2020 | |||||||||||||||||||||||||||
| ASSETS | |||||||||||||||||||||||||||||
| Cash and due from banks | $ | 351,194 | $ | 405,340 | $ | 203,569 | |||||||||||||||||||||||
| Federal funds sold | 10,811 | 4,258 | 6,427 | ||||||||||||||||||||||||||
| Cash and cash equivalents | 362,005 | 409,598 | 209,996 | ||||||||||||||||||||||||||
| Investment securities | |||||||||||||||||||||||||||||
| Marketable equity securities, at fair value | 2,178 | 2,207 | 2,289 | ||||||||||||||||||||||||||
| Available for sale investment securities, at fair value | 83,218 | 88,605 | 82,342 | ||||||||||||||||||||||||||
| Held to maturity investment securities, at amortized cost | 16,225 | 16,078 | 16,252 | ||||||||||||||||||||||||||
| Total investment securities | 101,621 | 106,890 | 100,883 | ||||||||||||||||||||||||||
| Loans receivable (net of allowance for loan losses of $20,545, $21,009, and $16,686 at March 31, 2021, December 31, 2020, and March 31, 2020, respectively) | 1,650,127 | 1,601,672 | 1,602,146 | ||||||||||||||||||||||||||
| Accrued interest receivable | 7,306 | 6,579 | 5,867 | ||||||||||||||||||||||||||
| Federal Home Loan Bank stock, at cost | 6,446 | 7,860 | 6,507 | ||||||||||||||||||||||||||
| Premises and equipment, net | 33,386 | 21,762 | 27,835 | ||||||||||||||||||||||||||
| Bank-owned life insurance | 42,881 | 42,651 | 41,926 | ||||||||||||||||||||||||||
| Goodwill | 2,589 | 2,589 | 2,589 | ||||||||||||||||||||||||||
| Other intangible assets | 67 | 76 | 196 | ||||||||||||||||||||||||||
| Deferred income taxes, net | 8,908 | 11,300 | 10,009 | ||||||||||||||||||||||||||
| Other assets | 29,131 | 42,770 | 45,671 | ||||||||||||||||||||||||||
| Total assets | $ | 2,244,467 | $ | 2,253,747 | $ | 2,053,625 | |||||||||||||||||||||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||||||||||||||||||||||||||
| Liabilities | |||||||||||||||||||||||||||||
| Deposits | |||||||||||||||||||||||||||||
| Noninterest bearing deposits | $ | 280,947 | $ | 270,235 | $ | 168,448 | |||||||||||||||||||||||
| Interest bearing deposits | 1,578,861 | 1,557,081 | 1,512,684 | ||||||||||||||||||||||||||
| Total deposits | 1,859,808 | 1,827,316 | 1,681,132 | ||||||||||||||||||||||||||
| Advances from the Federal Home Loan Bank | 125,000 | 175,000 | 125,000 | ||||||||||||||||||||||||||
| Subordinated debentures | 25,271 | 25,258 | 25,220 | ||||||||||||||||||||||||||
| Accrued expenses and other liabilities | 46,445 | 49,571 | 52,059 | ||||||||||||||||||||||||||
| Total liabilities | 2,056,524 | 2,077,145 | 1,883,411 | ||||||||||||||||||||||||||
| Shareholders’ equity | |||||||||||||||||||||||||||||
Common stock, no par value | 120,398 | 121,338 | 119,953 | ||||||||||||||||||||||||||
| Retained earnings | 75,418 | 70,839 | 69,595 | ||||||||||||||||||||||||||
| Accumulated other comprehensive loss | (7,873) | (15,575) | (19,334) | ||||||||||||||||||||||||||
| Total shareholders’ equity | 187,943 | 176,602 | 170,214 | ||||||||||||||||||||||||||
| Total liabilities and shareholders’ equity | $ | 2,244,467 | $ | 2,253,747 | $ | 2,053,625 | |||||||||||||||||||||||
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BANKWELL FINANCIAL GROUP, INC.
CONSOLIDATED STATEMENTS OF INCOME (unaudited)
(Dollars in thousands, except share data)
| For the Quarter Ended | |||||||||||||||||||||||||||||||||||||||||
| March 31, 2021 | December 31, 2020 | March 31, 2020 | |||||||||||||||||||||||||||||||||||||||
| Interest and dividend income | |||||||||||||||||||||||||||||||||||||||||
| Interest and fees on loans | $ | 17,900 | $ | 18,194 | $ | 18,985 | |||||||||||||||||||||||||||||||||||
| Interest and dividends on securities | 769 | 835 | 825 | ||||||||||||||||||||||||||||||||||||||
| Interest on cash and cash equivalents | 108 | 117 | 286 | ||||||||||||||||||||||||||||||||||||||
| Total interest and dividend income | 18,777 | 19,146 | 20,096 | ||||||||||||||||||||||||||||||||||||||
| Interest expense | |||||||||||||||||||||||||||||||||||||||||
| Interest expense on deposits | 3,114 | 3,557 | 5,709 | ||||||||||||||||||||||||||||||||||||||
| Interest expense on borrowings | 1,008 | 1,285 | 1,101 | ||||||||||||||||||||||||||||||||||||||
| Total interest expense | 4,122 | 4,842 | 6,810 | ||||||||||||||||||||||||||||||||||||||
| Net interest income | 14,655 | 14,304 | 13,286 | ||||||||||||||||||||||||||||||||||||||
| (Credit) provision for loan losses | (296) | 709 | 3,185 | ||||||||||||||||||||||||||||||||||||||
| Net interest income after provision for loan losses | 14,951 | 13,595 | 10,101 | ||||||||||||||||||||||||||||||||||||||
| Noninterest income | |||||||||||||||||||||||||||||||||||||||||
| Gains and fees from sales of loans | 513 | 16 | — | ||||||||||||||||||||||||||||||||||||||
| Bank owned life insurance | 231 | 241 | 243 | ||||||||||||||||||||||||||||||||||||||
| Service charges and fees | 199 | 210 | 217 | ||||||||||||||||||||||||||||||||||||||
| Other | 1,013 | 154 | 612 | ||||||||||||||||||||||||||||||||||||||
| Total noninterest income | 1,956 | 621 | 1,072 | ||||||||||||||||||||||||||||||||||||||
| Noninterest expense | |||||||||||||||||||||||||||||||||||||||||
| Salaries and employee benefits | 4,769 | 5,453 | 5,380 | ||||||||||||||||||||||||||||||||||||||
| Occupancy and equipment | 2,406 | 4,516 | 1,909 | ||||||||||||||||||||||||||||||||||||||
| Professional services | 587 | 591 | 711 | ||||||||||||||||||||||||||||||||||||||
| Data processing | 512 | 1,658 | 536 | ||||||||||||||||||||||||||||||||||||||
| FDIC insurance | 403 | 262 | 70 | ||||||||||||||||||||||||||||||||||||||
| Director fees | 317 | 331 | 295 | ||||||||||||||||||||||||||||||||||||||
| Marketing | (9) | 118 | 162 | ||||||||||||||||||||||||||||||||||||||
| Other | 653 | 774 | 596 | ||||||||||||||||||||||||||||||||||||||
| Total noninterest expense | 9,638 | 13,703 | 9,659 | ||||||||||||||||||||||||||||||||||||||
| Income before income tax expense | 7,269 | 513 | 1,514 | ||||||||||||||||||||||||||||||||||||||
| Income tax expense | 1,579 | 177 | 151 | ||||||||||||||||||||||||||||||||||||||
| Net income | $ | 5,690 | $ | 336 | $ | 1,363 | |||||||||||||||||||||||||||||||||||
| Earnings Per Common Share: | |||||||||||||||||||||||||||||||||||||||||
| Basic | $ | 0.72 | $ | 0.04 | $ | 0.17 | |||||||||||||||||||||||||||||||||||
| Diluted | $ | 0.71 | $ | 0.04 | $ | 0.17 | |||||||||||||||||||||||||||||||||||
| Weighted Average Common Shares Outstanding: | |||||||||||||||||||||||||||||||||||||||||
| Basic | 7,758,540 | 7,726,926 | 7,750,135 | ||||||||||||||||||||||||||||||||||||||
| Diluted | 7,800,777 | 7,728,206 | 7,778,762 | ||||||||||||||||||||||||||||||||||||||
| Dividends per common share | $ | 0.14 | $ | 0.14 | $ | 0.14 | |||||||||||||||||||||||||||||||||||
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BANKWELL FINANCIAL GROUP, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (unaudited)
| For the Quarter Ended | |||||||||||||||||||||||||||||||||||||||||
| March 31, 2021 | December 31, 2020 | March 31, 2020 | |||||||||||||||||||||||||||||||||||||||
| Performance ratios: | |||||||||||||||||||||||||||||||||||||||||
Return on average assets(1) | 1.02 | % | 0.06 | % | 0.29 | % | |||||||||||||||||||||||||||||||||||
Return on average stockholders' equity(1) | 12.67 | % | 0.75 | % | 3.03 | % | |||||||||||||||||||||||||||||||||||
Return on average tangible common equity(1) | 12.86 | % | 0.76 | % | 3.07 | % | |||||||||||||||||||||||||||||||||||
| Net interest margin | 2.74 | % | 2.66 | % | 2.98 | % | |||||||||||||||||||||||||||||||||||
Efficiency ratio(2) | 58.0 | % | 91.2 | % | 67.1 | % | |||||||||||||||||||||||||||||||||||
| Net loan charge-offs as a % of average loans | 0.01 | % | — | % | — | % | |||||||||||||||||||||||||||||||||||
Dividend payout ratio(3) | 19.72 | % | 350.00 | % | 82.35 | % | |||||||||||||||||||||||||||||||||||
(1)2020 performance ratios were negatively impacted by incremental COVID-19 pandemic related loan loss reserves and $3.9 million in one-time charges 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 | |||||||||||||||||||||||||||||
| March 31, 2021 | December 31, 2020 | March 31, 2020 | |||||||||||||||||||||||||||
| Capital ratios: | |||||||||||||||||||||||||||||
Total Common Equity Tier 1 Capital to Risk-Weighted Assets(1) | 11.02 | % | 11.06 | % | 12.14 | % | |||||||||||||||||||||||
Total Capital to Risk-Weighted Assets(1) | 12.17 | % | 12.28 | % | 13.13 | % | |||||||||||||||||||||||
Tier I Capital to Risk-Weighted Assets(1) | 11.02 | % | 11.06 | % | 12.14 | % | |||||||||||||||||||||||
Tier I Capital to Average Assets(1) | 8.82 | % | 8.44 | % | 10.84 | % | |||||||||||||||||||||||
| Tangible common equity to tangible assets | 8.27 | % | 7.73 | % | 8.16 | % | |||||||||||||||||||||||
Tangible book value per common share(2) | $ | 23.99 | $ | 22.43 | $ | 21.69 | |||||||||||||||||||||||
(1)Represents Bank ratios. Current period capital ratios are preliminary subject to finalization of the FDIC Call Report.
(2)Excludes unvested restricted shares of 186,485, 163,369, and 154,012 as of March 31, 2021, December 31, 2020, and March 31, 2020, respectively.
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BANKWELL FINANCIAL GROUP, INC.
ASSET QUALITY (unaudited)
(Dollars in thousands)
| For the Quarter Ended | |||||||||||||||||||||||||||||
| March 31, 2021 | December 31, 2020 | March 31, 2020 | |||||||||||||||||||||||||||
| Allowance for loan losses: | |||||||||||||||||||||||||||||
| Balance at beginning of period | $ | 21,009 | $ | 20,372 | $ | 13,509 | |||||||||||||||||||||||
| Charge-offs: | |||||||||||||||||||||||||||||
| Commercial real estate | (163) | — | — | ||||||||||||||||||||||||||
| Commercial business | — | (75) | (8) | ||||||||||||||||||||||||||
| Consumer | (14) | (11) | (2) | ||||||||||||||||||||||||||
| Total charge-offs | (177) | (86) | (10) | ||||||||||||||||||||||||||
| Recoveries: | |||||||||||||||||||||||||||||
| Commercial business | — | 14 | 1 | ||||||||||||||||||||||||||
| Consumer | 9 | — | 1 | ||||||||||||||||||||||||||
| Total recoveries | 9 | 14 | 2 | ||||||||||||||||||||||||||
| Net loan charge-offs | (168) | (72) | (8) | ||||||||||||||||||||||||||
| (Credit) provision for loan losses | (296) | 709 | 3,185 | ||||||||||||||||||||||||||
| Balance at end of period | $ | 20,545 | $ | 21,009 | $ | 16,686 | |||||||||||||||||||||||
| As of | |||||||||||||||||||||||||||||
| March 31, 2021 | December 31, 2020 | March 31, 2020 | |||||||||||||||||||||||||||
| Asset quality: | |||||||||||||||||||||||||||||
| Nonaccrual loans | |||||||||||||||||||||||||||||
| Residential real estate | $ | 1,289 | $ | 1,492 | $ | 1,532 | |||||||||||||||||||||||
| Commercial real estate | 19,277 | 21,093 | 5,339 | ||||||||||||||||||||||||||
| Commercial business | 1,803 | 1,834 | 3,783 | ||||||||||||||||||||||||||
| Construction | 8,997 | 8,997 | — | ||||||||||||||||||||||||||
| Total nonaccrual loans | 31,366 | 33,416 | 10,654 | ||||||||||||||||||||||||||
| Other real estate owned | — | — | — | ||||||||||||||||||||||||||
| Total nonperforming assets | $ | 31,366 | $ | 33,416 | $ | 10,654 | |||||||||||||||||||||||
| Nonperforming loans as a % of total loans | 1.87 | % | 2.06 | % | 0.66 | % | |||||||||||||||||||||||
| Nonperforming assets as a % of total assets | 1.40 | % | 1.48 | % | 0.52 | % | |||||||||||||||||||||||
| Allowance for loan losses as a % of total loans | 1.23 | % | 1.29 | % | 1.03 | % | |||||||||||||||||||||||
| Allowance for loan losses as a % of nonperforming loans | 65.50 | % | 62.87 | % | 156.62 | % | |||||||||||||||||||||||
Total nonaccrual loans declined $2.1 million to $31.4 million as of March 31, 2021 when compared to December 31, 2020. The Company individually analyzed all existing COVID-19 deferrals and COVID-19 impacted loans for collectability and impairment as of March 31, 2021. Nonperforming assets as a percentage of total assets was 1.40% at March 31, 2021, down from 1.48% at December 31, 2020. The allowance for loan losses at March 31, 2021 was $20.5 million, representing 1.23% of total loans.
7
BANKWELL FINANCIAL GROUP, INC.
LOAN & DEPOSIT PORTFOLIO (unaudited)
(Dollars in thousands)
| Period End Loan Composition | March 31, 2021 | December 31, 2020 | % Change | ||||||||||||||||||||||||||
| Residential Real Estate | $ | 109,752 | $ | 113,557 | (3.4) | % | |||||||||||||||||||||||
Commercial Real Estate(1) | 1,183,848 | 1,148,383 | 3.1 | ||||||||||||||||||||||||||
| Construction | 103,099 | 87,007 | 18.5 | ||||||||||||||||||||||||||
| Total Real Estate Loans | 1,396,699 | 1,348,947 | 3.5 | ||||||||||||||||||||||||||
Commercial Business(2) | 267,698 | 276,601 | (3.2) | ||||||||||||||||||||||||||
| Consumer | 8,818 | 79 | N/M(3) | ||||||||||||||||||||||||||
| Total Loans | $ | 1,673,215 | $ | 1,625,627 | 2.9 | % | |||||||||||||||||||||||
| (1) Includes owner occupied commercial real estate. (2) Includes $19.2 million and $34.8 million of PPP loans at March 31, 2021 and December 31, 2020, respectively. (3) Metric not meaningful. | |||||||||||||||||||||||||||||
Gross loans totaled $1.7 billion at March 31, 2021, an increase of $47.6 million compared to December 31, 2020. Excluding PPP loans, gross loans increased by $63.2 million, or 4%, at March 31, 2021 when compared to December 31, 2020.
| Period End Deposit Composition | March 31, 2021 | December 31, 2020 | % Change | ||||||||||||||||||||||||||
| Noninterest bearing demand | $ | 280,947 | $ | 270,235 | 4.0 | % | |||||||||||||||||||||||
| NOW | 118,489 | 101,737 | 16.5 | ||||||||||||||||||||||||||
| Money Market | 751,852 | 669,364 | 12.3 | ||||||||||||||||||||||||||
| Savings | 164,559 | 158,750 | 3.7 | ||||||||||||||||||||||||||
| Time | 543,961 | 627,230 | (13.3) | ||||||||||||||||||||||||||
| Total Deposits | $ | 1,859,808 | $ | 1,827,316 | 1.8 | % | |||||||||||||||||||||||
Total deposits were $1.9 billion at March 31, 2021, compared to $1.8 billion at December 31, 2020, an increase of $32.5 million, or 1.8%.
8
BANKWELL FINANCIAL GROUP, INC.
NONINTEREST INCOME AND EXPENSE (unaudited)
(Dollars in thousands)
| For the Quarter Ended | |||||||||||||||||||||||||||||
| Noninterest income | March 31, 2021 | December 31, 2020 | March 31, 2020 | Mar 21 vs. Dec 20 % Change | Mar 21 vs. Mar 20 % Change | ||||||||||||||||||||||||
| Gains and fees from sales of loans | $ | 513 | $ | 16 | $ | — | N/M(1) | N/A | |||||||||||||||||||||
| Bank owned life insurance | 231 | 241 | 243 | (4.1) | (4.9) | ||||||||||||||||||||||||
| Service charges and fees | 199 | 210 | 217 | (5.2) | (8.3) | ||||||||||||||||||||||||
| Other | 1,013 | 154 | 612 | 557.8 | 65.5 | ||||||||||||||||||||||||
| Total noninterest income | $ | 1,956 | $ | 621 | $ | 1,072 | 215.0 | % | 82.5 | % | |||||||||||||||||||
| (1) Metric not meaningful. | |||||||||||||||||||||||||||||
Noninterest income increased by $0.9 million to $2.0 million for the quarter ended March 31, 2021 compared to the quarter ended March 31, 2020.
The increase in noninterest income was driven by resumed SBA loan sales, totaling $0.5 million for the quarter ended March 31, 2021. In addition, the increase was impacted by a one-time federal payroll tax credit for COVID-19 of $0.9 million, partially offset by $0.4 million of non-recurring interest rate swap fees recognized in the quarter ended March 31, 2020.
| For the Quarter Ended | |||||||||||||||||||||||||||||
| Noninterest expense | March 31, 2021 | December 31, 2020 | March 31, 2020 | Mar 21 vs. Dec 20 % Change | Mar 21 vs. Mar 20 % Change | ||||||||||||||||||||||||
| Salaries and employee benefits | $ | 4,769 | $ | 5,453 | $ | 5,380 | (12.5) | % | (11.4) | % | |||||||||||||||||||
| Occupancy and equipment | 2,406 | 4,516 | 1,909 | (46.7) | 26.0 | ||||||||||||||||||||||||
| Professional services | 587 | 591 | 711 | (0.7) | (17.4) | ||||||||||||||||||||||||
| Data processing | 512 | 1,658 | 536 | (69.1) | (4.5) | ||||||||||||||||||||||||
| FDIC insurance | 403 | 262 | 70 | 53.8 | 475.7 | ||||||||||||||||||||||||
| Director fees | 317 | 331 | 295 | (4.2) | 7.5 | ||||||||||||||||||||||||
| Marketing | (9) | 118 | 162 | (107.6) | (105.6) | ||||||||||||||||||||||||
| Other | 653 | 774 | 596 | (15.6) | 9.6 | ||||||||||||||||||||||||
| Total noninterest expense | $ | 9,638 | $ | 13,703 | $ | 9,659 | (29.7) | % | (0.2) | % | |||||||||||||||||||
Noninterest expense declined slightly, from $9.7 million for the quarter ended March 31, 2020, to $9.6 million for the quarter ended March 31, 2021. The decrease in noninterest expense was primarily driven by a decline in salaries and employee benefits and marketing expense, partially offset by an increase in occupancy and equipment expense and FDIC insurance expense. The decrease in noninterest expense for the quarter ended March 31, 2021 when compared to the quarter ended December 31, 2020 was primarily due to $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 $4.8 million for the quarter ended March 31, 2021, a decrease of $0.6 million when compared to the same period in 2020. The decrease in salaries and employee benefits was primarily driven by a decrease in full time equivalent employees as a direct result of the Voluntary Early Retirement Incentive Plan offered to eligible employees and other employee actions taken during the fourth quarter of 2020. Full time equivalent employees totaled 123 at March 31, 2021 compared to 154 for the same period in 2020. Salaries and employee benefits were also favorably impacted as higher loan originations enabled the bank to defer a greater amount of expenses.
9
Occupancy and equipment expense totaled $2.4 million for the quarter ended March 31, 2021, an increase of $0.5 million when compared to the same period in 2020. The increase in occupancy and equipment expense was primarily due to additional cleaning costs associated with precautions taken to prevent the spread of COVID-19.
FDIC insurance expense totaled $0.4 million for the quarter ended March 31, 2021, an increase of $0.3 million when compared to the same period in 2020. The increase in FDIC insurance expense was due to the application of available FDIC insurance credits in the first quarter of 2020.
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 | March 31, 2021 | December 31, 2020 | March 31, 2020 | ||||||||||||||||||||||||||
| Total Equity | $ | 187,943 | $ | 176,602 | $ | 170,214 | |||||||||||||||||||||||
| Less: | |||||||||||||||||||||||||||||
| Goodwill | 2,589 | 2,589 | 2,589 | ||||||||||||||||||||||||||
| Other intangibles | 67 | 76 | 196 | ||||||||||||||||||||||||||
| Tangible Common Equity | $ | 185,287 | $ | 173,937 | $ | 167,429 | |||||||||||||||||||||||
| Total Assets | $ | 2,244,467 | $ | 2,253,747 | $ | 2,053,625 | |||||||||||||||||||||||
| Less: | |||||||||||||||||||||||||||||
| Goodwill | 2,589 | 2,589 | 2,589 | ||||||||||||||||||||||||||
| Other intangibles | 67 | 76 | 196 | ||||||||||||||||||||||||||
| Tangible Assets | $ | 2,241,811 | $ | 2,251,082 | $ | 2,050,840 | |||||||||||||||||||||||
| Tangible Common Equity to Tangible Assets | 8.27 | % | 7.73 | % | 8.16 | % | |||||||||||||||||||||||
| As of | |||||||||||||||||||||||||||||
| Computation of Tangible Book Value per Common Share | March 31, 2021 | December 31, 2020 | March 31, 2020 | ||||||||||||||||||||||||||
| Total shareholders' equity | $ | 187,943 | $ | 176,602 | $ | 170,214 | |||||||||||||||||||||||
| Less: | |||||||||||||||||||||||||||||
| Preferred stock | — | — | — | ||||||||||||||||||||||||||
| Common shareholders' equity | $ | 187,943 | $ | 176,602 | $ | 170,214 | |||||||||||||||||||||||
| Less: | |||||||||||||||||||||||||||||
| Goodwill | 2,589 | 2,589 | 2,589 | ||||||||||||||||||||||||||
| Other intangibles | 67 | 76 | 196 | ||||||||||||||||||||||||||
| Tangible common shareholders' equity | $ | 185,287 | $ | 173,937 | $ | 167,429 | |||||||||||||||||||||||
| Common shares | 7,908,630 | 7,919,278 | 7,871,419 | ||||||||||||||||||||||||||
| Less: | |||||||||||||||||||||||||||||
| Shares of unvested restricted stock | 186,485 | 163,369 | 154,012 | ||||||||||||||||||||||||||
| Common shares less unvested restricted stock | 7,722,145 | 7,755,909 | 7,717,407 | ||||||||||||||||||||||||||
| Book value per share | $ | 24.34 | $ | 22.77 | $ | 22.06 | |||||||||||||||||||||||
| Less: | |||||||||||||||||||||||||||||
| Effects of intangible assets | $ | 0.34 | $ | 0.34 | $ | 0.36 | |||||||||||||||||||||||
| Tangible Book Value per Common Share | $ | 23.99 | $ | 22.43 | $ | 21.69 | |||||||||||||||||||||||
11
BANKWELL FINANCIAL GROUP, INC.
RECONCILIATION OF GAAP TO NON-GAAP MEASURES (unaudited) - Continued
(Dollars in thousands)
| For the Quarter Ended | |||||||||||||||||||||||||||||||||||||||||
| Computation of Efficiency Ratio | March 31, 2021 | December 31, 2020 | March 31, 2020 | ||||||||||||||||||||||||||||||||||||||
| Noninterest expense | $ | 9,638 | $ | 13,703 | $ | 9,659 | |||||||||||||||||||||||||||||||||||
| Less: | |||||||||||||||||||||||||||||||||||||||||
| Amortization of intangible assets | 9 | 84 | 18 | ||||||||||||||||||||||||||||||||||||||
| Other real estate owned expenses | — | — | — | ||||||||||||||||||||||||||||||||||||||
| Adjusted noninterest expense | $ | 9,629 | $ | 13,619 | $ | 9,641 | |||||||||||||||||||||||||||||||||||
| Net interest income | $ | 14,655 | $ | 14,304 | $ | 13,286 | |||||||||||||||||||||||||||||||||||
| Noninterest income | 1,956 | 621 | 1,072 | ||||||||||||||||||||||||||||||||||||||
| Less: | |||||||||||||||||||||||||||||||||||||||||
| Net gain on sale of available for sale securities | — | — | — | ||||||||||||||||||||||||||||||||||||||
| Gain (loss) on sale of other real estate owned, net | — | — | — | ||||||||||||||||||||||||||||||||||||||
| Operating revenue | $ | 16,611 | $ | 14,925 | $ | 14,358 | |||||||||||||||||||||||||||||||||||
| Efficiency ratio | 58.0 | % | 91.2 | % | 67.1 | % | |||||||||||||||||||||||||||||||||||
| For the Quarter Ended | |||||||||||||||||||||||||||||||||||||||||
| Computation of Return on Average Tangible Common Equity | March 31, 2021 | December 31, 2020 | March 31, 2020 | ||||||||||||||||||||||||||||||||||||||
| Net Income Attributable to Common Shareholders | $ | 5,690 | $ | 336 | $ | 1,363 | |||||||||||||||||||||||||||||||||||
| Total average shareholders' equity | $ | 182,058 | $ | 178,439 | $ | 181,127 | |||||||||||||||||||||||||||||||||||
| Less: | |||||||||||||||||||||||||||||||||||||||||
| Average Goodwill | 2,589 | 2,589 | 2,589 | ||||||||||||||||||||||||||||||||||||||
| Average Other intangibles | 73 | 153 | 208 | ||||||||||||||||||||||||||||||||||||||
| Average tangible common equity | $ | 179,396 | $ | 175,697 | $ | 178,330 | |||||||||||||||||||||||||||||||||||
| Annualized Return on Average Tangible Common Equity | 12.86 | % | 0.76 | % | 3.07 | % | |||||||||||||||||||||||||||||||||||
12
BANKWELL FINANCIAL GROUP, INC.
NET INTEREST MARGIN ANALYSIS ON A FULLY TAX EQUIVALENT BASIS - QTD (unaudited)
(Dollars in thousands)
| For the Quarter Ended | |||||||||||||||||||||||||||||||||||
| March 31, 2021 | March 31, 2020 | ||||||||||||||||||||||||||||||||||
| Average Balance | Interest | Yield/ Rate (5) | Average Balance | Interest | Yield/ Rate (5) | ||||||||||||||||||||||||||||||
| Assets: | |||||||||||||||||||||||||||||||||||
| Cash and Fed funds sold | $ | 401,900 | $ | 108 | 0.11 | % | $ | 73,497 | $ | 286 | 1.56 | % | |||||||||||||||||||||||
Securities(1) | 101,176 | 788 | 3.11 | 98,566 | 775 | 3.15 | |||||||||||||||||||||||||||||
| Loans: | |||||||||||||||||||||||||||||||||||
| Commercial real estate | 1,129,224 | 12,731 | 4.51 | 1,108,709 | 13,024 | 4.65 | |||||||||||||||||||||||||||||
| Residential real estate | 112,053 | 964 | 3.44 | 143,826 | 1,357 | 3.77 | |||||||||||||||||||||||||||||
Construction(2) | 94,075 | 885 | 3.76 | 100,437 | 1,215 | 4.78 | |||||||||||||||||||||||||||||
| Commercial business | 294,756 | 3,271 | 4.44 | 258,848 | 3,386 | 5.18 | |||||||||||||||||||||||||||||
| Consumer | 5,039 | 49 | 3.94 | 156 | 3 | 8.37 | |||||||||||||||||||||||||||||
| Total loans | 1,635,147 | 17,900 | 4.38 | 1,611,976 | 18,985 | 4.66 | |||||||||||||||||||||||||||||
| Federal Home Loan Bank stock | 6,508 | 31 | 1.96 | 7,325 | 103 | 5.65 | |||||||||||||||||||||||||||||
| Total earning assets | 2,144,731 | $ | 18,827 | 3.51 | % | 1,791,364 | $ | 20,149 | 4.45 | % | |||||||||||||||||||||||||
| Other assets | 113,561 | 111,585 | |||||||||||||||||||||||||||||||||
| Total assets | $ | 2,258,292 | $ | 1,902,949 | |||||||||||||||||||||||||||||||
| Liabilities and shareholders' equity: | |||||||||||||||||||||||||||||||||||
| Interest bearing liabilities: | |||||||||||||||||||||||||||||||||||
| NOW | $ | 101,057 | $ | 43 | 0.17 | % | $ | 67,925 | $ | 28 | 0.17 | % | |||||||||||||||||||||||
| Money market | 736,659 | 950 | 0.52 | 438,588 | 1,492 | 1.37 | |||||||||||||||||||||||||||||
| Savings | 160,347 | 125 | 0.32 | 185,478 | 672 | 1.46 | |||||||||||||||||||||||||||||
| Time | 611,153 | 1,996 | 1.32 | 640,580 | 3,517 | 2.21 | |||||||||||||||||||||||||||||
| Total interest bearing deposits | 1,609,216 | 3,114 | 0.78 | 1,332,571 | 5,709 | 1.72 | |||||||||||||||||||||||||||||
| Borrowed Money | 152,485 | 1,008 | 2.64 | 172,464 | 1,101 | 2.53 | |||||||||||||||||||||||||||||
| Total interest bearing liabilities | 1,761,701 | $ | 4,122 | 0.95 | % | 1,505,035 | $ | 6,810 | 1.82 | % | |||||||||||||||||||||||||
| Noninterest bearing deposits | 269,863 | 179,066 | |||||||||||||||||||||||||||||||||
| Other liabilities | 44,670 | 37,721 | |||||||||||||||||||||||||||||||||
| Total liabilities | 2,076,234 | 1,721,822 | |||||||||||||||||||||||||||||||||
| Shareholders' equity | 182,058 | 181,127 | |||||||||||||||||||||||||||||||||
| Total liabilities and shareholders' equity | $ | 2,258,292 | $ | 1,902,949 | |||||||||||||||||||||||||||||||
Net interest income(3) | $ | 14,705 | $ | 13,339 | |||||||||||||||||||||||||||||||
| Interest rate spread | 2.56 | % | 2.63 | % | |||||||||||||||||||||||||||||||
Net interest margin(4) | 2.74 | % | 2.98 | % | |||||||||||||||||||||||||||||||
(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 $50 thousand and $53 thousand for the quarters ended March 31, 2021 and 2020, 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 1Q21 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 • 1Q21 Performance • 2021 Outlook • ALLL & Non-Performing Loans • Capital • Bankwell History & Overview
1Q21 Performance
5 1Q21 Summary • $5.69 million reported net income, or $0.71 earnings per share, including a one-time benefit of $0.09 EPS due to a federal payroll tax credit1 for COVID-19-impacted small businesses, available as part of the Employee Retention Credit (“ERC”) program under the Coronavirus Aid, Relief and Economic Security Act (“CARES Act”) • Pre-tax, pre-provision net revenue (“PPNR”)2 of $6.97 million; 48% year-over-year increase • Solid quarterly loan growth of $63 million, or 4%, excluding PPP loans ̶ $19 million PPP loans remain at end of 1Q21, with an additional ~$3 million of loans forgiven through 4/22/21 • Continued success with Core Business deposit generation, enabling further deposit cost reductions and improved deposit mix • 10 basis point linked quarter deposit cost reduction • Maintained strong capital and liquidity during the quarter • Net Interest Margin (“NIM”) of 2.74%, negatively impacted by ~35 basis points due to excess liquidity • Repurchased 65,626 shares at an average price of $21.66 per share • The Company declared a 2Q21 dividend of $0.14 per share 1 Subject to IRS review & approval 2 Pre-tax, pre-provision net revenue per share is a non-GAAP metric & excludes provision for loan losses and income tax expense
6 1Q21 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 • Net Income / EPS $5.7 million / $0.71 EPS • PPNR $7.0 million • Return on Average Assets 1.02% • Return on Average Equity 12.67% • $1.7 billion of gross loans • $1.9 billion of deposits • 1.24% ALLL excluding PPP loans • Dividend of $0.14 per share paid • $23.99 Tangible Book Value • Well Capitalized1,2 Tier 1 Leverage 8.82% Tier1/CET1 / RWA 11.02% Total Capital / RWA 12.17%
7 1Q21 Consolidated Financial Statements Linked Quarter Income Statement 1Q21 4Q20 Var1 Total Interest Income $18.8 $19.1 $(0.4) Total Interest Expense $4.1 $4.8 $0.7 Net Interest Income $14.7 $14.3 $0.4 Non-Interest Income2 $2.0 $0.6 $1.3 Non-Interest Expense $9.6 $13.7 $4.1 Pre-Tax, Pre-Provision Net Revenue $7.0 $1.2 $5.7 Credit/Provision for Loan Losses $(0.3) $0.7 $1.0 Pre-Tax Income $7.3 $0.5 $6.8 Income Tax Expense $1.6 $0.2 $(1.4) Reported Net Income $5.7 $0.3 $5.4 EPS $0.71 $0.04 $0.67 Pre-Tax, Pre-Provision Net Revenue per share3 $0.89 $0.16 $0.73 1 Variances are rounded based on actual whole dollar amounts 2 1Q21 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 Balance Sheet 1Q21 4Q20 Var1 Cash & Cash Equivalents $362 $410 $(48) Investment Securities $102 $107 $(5) Loans Receivable, net $1,650 $1,602 $48 All Other Assets $131 $136 $(5) Total Assets $2,244 $2,254 $(9) Total Deposits $1,860 $1,827 $32 Total Borrowings $150 $200 $(50) Other Liabilities $46 $50 $(3) Total Liabilities $2,057 $2,077 $(21) Equity $188 $177 $11 Total Liabilities & Equity $2,244 $2,254 $(9)
8 Income Statement 1Q21 1Q20 Var1 Total Interest Income $18.8 $20.1 $(1.3) Total Interest Expense $4.1 $6.8 $2.7 Net Interest Income $14.7 $13.3 $1.4 Non-Interest Income2 $2.0 $1.1 $0.9 Non-Interest Expense $9.6 $9.7 $0.1 Pre-Tax, Pre-Provision Net Revenue $7.0 $4.7 $2.3 Credit/Provision for Loan Losses $(0.3) $3.2 $3.5 Pre-Tax Income $7.3 $1.5 $5.8 Income Tax Expense $1.6 $0.2 $(1.4) Reported Net Income $5.7 $1.4 $4.3 EPS $0.71 $0.17 $0.54 Pre-Tax, Pre-Provision Net Revenue per share3 $0.89 $0.60 $0.29 Dollars in millions, except per share data Balance Sheet 1Q21 1Q20 Var1 Cash & Cash Equivalents $362 $210 $152 Investment Securities $102 $101 $1 Loans Receivable, net $1,650 $1,602 $48 All Other Assets $131 $141 $(10) Total Assets $2,244 $2,054 $191 Total Deposits $1,860 $1,681 $179 Total Borrowings $150 $150 $0 Other Liabilities $46 $52 $(6) Total Liabilities $2,057 $1,883 $173 Equity $188 $170 $18 Total Liabilities & Equity $2,244 $2,054 $191 1Q21 Consolidated Financial Statements Prior Year 1 Variances are rounded based on actual whole dollar amounts 2 1Q21 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
2021 Outlook
10 2021 Outlook Reiterating 2021 outlook: • Provision expense in 2021 to be well below 2020 • Expected loan growth (excluding PPP) of ~5%, with upside potential • 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 • The Company will retire $10 million of existing subordinated debt on May 15th,resulting in a quarterly run rate pre-tax savings of ~$150 thousand
11 Positive Outlook For Cost of Deposits • Lowered deposit pricing across all products as of March 1st, 2021; on track to deliver or beat prior guidance • Increased noninterest-bearing deposits by $112 million since 1Q20, representing 15% of total deposits compared to 10% at 1Q20 • 2H’21 favorable outlook given current market conditions ̶ ~$160 million retail CDs maturing in 2H’21, at an average rate of 1.60% ̶ Runoff of excess liquidity will help reduce deposit costs Quarterly Cost of Deposits 1.59% 1.52% 1.16% 0.93% 0.77% ~0.69% ~0.62% 0.67% ~0.56% 4Q19 1Q20 2Q20 3Q20 4Q20 1Q21 2Q21 Est 4Q Investor Presentation Current Estimate (actual)
12 Recent Trends Steadily Improving Deposit Mix 2018 2019 2020 1Q21 2Q21 Est Brokered Deposits Retail CDs Core Deposits $1,502 $1,492 Dollars in millions $1,827 ~$1,850 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 Commercial 46% 50% 61% 63% ~63% Core Consumer 54% 50% 39% 37% ~37% 1 $1,860 • Through 2H’21, scheduled maturities and continued efforts on commercial relationships will drive further deposit mix & price improvements • $100 million FHLB borrowings replaced by lower cost brokered deposits ($50 million in 1Q, $50 million in 2Q); no impact to Wholesale ratio3 • Wholesale ratio expected to be less than 18% throughout 2021, lowest since 2014 IPO 24.9% 24.9% 24.9% 23.4% 20.6% 19.8% 17.1% 15.0% 20.0% 25.0% 30.0% 2015 2016 2017 2018 2019 2020 1Q21 4Q21 Est Wholesale Ratio 53.4% 55.3% 66.9% 67.9% 68.4% 28.1% 28.6% 20.7% 18.1% 15.2% 18.5% 16.2% 12.4% 14.4% 16.4%
13 Core Deposit Composition Expanding Commercial Relationships 1 Core deposits exclude all brokered deposits and all time deposits Dollars in millions 1 39%61% Dec-20 37%63% 1Q21 54% 46% Dec-18Consumer Commercial $369 $377 $372 $396 $409 $393 $461 $584 $725 $788 $156 $147 $142 $162 $178 $154 $198 $218 $255 $263 $100 $150 $200 $250 $300 $350 $150 $250 $350 $450 $550 $650 $750 $850 Dec-18 Mar-19 Jun-19 Sep-19 Dec-19 Mar-20 Jun-20 Sep-20 Dec-20 Mar-21 Commercial Deposits Total Non-Interest Bearing Commercial deposits grew $63 million in 1Q21: ̶ $22 million commercial business relationships ̶ $41 million municipal deposits
14 1 Weighted average yield based on active loans as of 12-31 for each of the respective years & 3-31 for 1Q21 Dollars in millions Loan Portfolio Trends Loan Portfolio Yields excluding PPP loans $1,605 $1,604 $1,591 $1,654 4.64% 4.58% 4.25% 4.26% 0.00% 0.50% 1.00% 1.50% 2.00% 2.50% 3.00% 3.50% 4.00% 4.50% $1,100 $1,200 $1,300 $1,400 $1,500 $1,600 $1,700 $1,800 2018 2019 2020 1Q21 Gross Loan Balance Portfolio Yield 1 • 2Q21 pipeline strong • $63 million growth in 1Q21, excluding PPP loans (~4% growth) • Optimistic on full year loan growth target • $19 million PPP loans at end of 1Q21 with an additional ~$3 million of loans forgiven through 4/22
15 Loan Portfolio Composition Residential 6.15% C&I 16.00% CRE Owner Occupied 12.26%CRE Investor 58.50% Commercial Const. 6.16% Consumer Loans / Other 0.93% • No single relationship represents more than ~6% of total loans, as of March 31st, 2021 • Improving commercial loan portfolio mix: Total Loan Portfolio = $1,673 million1 1 includes $19 million of PPP loans 1 4Q19 4Q20 1Q21 CRE Investor 59.8% 60.5% 58.5% CRE O/O + C&I 24.9% 27.1% 28.3%
16 Industrial Warehouse 9.64% Mixed Use 8.86% MultiFamily 8.93% Office 28.48% Other 9.11% 1-4 Family Investment 1.64% Retail 30.50% Special Use 2.83% CRE Portfolio Composition1 • Property Type mix continues to show well diversified exposure • ~ 50% of all CRE loan balances have recourse ̶ Non recourse loans require lower LTV and higher DSCR Total CRE Portfolio = $1,184 million Type Count $MM % LTV 3 Retail2 81 $226 62% 64.8% Grocery 11 $85 24% 63.2% Pharmacy 7 $22 6% 65.8% Gas / Auto Services 15 $16 4% 64.7% Restaurant 26 $13 3% 55.8% Total Retail 140 $361 100% 64.1% Retail Segment Detail • No significant exposure to any one retailer • No exposure to bankrupt retailers 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 Office Segment Detail • 80% Office loans located in Bankwell’s primary lending area • Out of primary market loans are generally either GSA-leased, credit tenants, owner-occupied or medical office Type Count $MM % LTV3 Office (primarily suburban) 85 $240 71% 65.2% Medical 39 $95 28% 67.5% Condo 8 $2 1% 67.0% Total Office 132 $337 100% 65.8% CT 57%NY 17% NJ 5% All Other 21%
ALLL & Non-Performing Loans
18 Non Performing Loans Dollars in thousands NPL population adequately collateralized or individually reserved in ALLL 0.88% 0.66% 2.06% 1.87% 2018 2019 2020 1Q21 Non Performing Loans / Gross Loans NPLs $14,082 $10,588 $33,416 $31,366 1.53% 0.19% 0.16% 1Q21 Detail 1.87% SBA-guaranteed portion of NPLs All other NPLs COVID-19 related NPLs • COVID-19 deferrals are de minimus and fully reflected in 1Q21 non-performing loan population • As of 1Q21, all remaining COVID-19 deferral loans were evaluated for impairment and reflected accordingly in the ALLL • Actively engaged with non-performing borrowers to restructure loans to performing status
19 0.98% 0.89% 0.31% ($1.4) million $0.4 million $0.6 million 0.34% 2020 Improving Economic Factors Asset Growth / Mix Specifics 1Q21 General Specific 2021 ALLL Coverage Allowance for Loan Loss (“ALLL”) Walk 1.29% 1.23% • Bankwell not subject to CECL; ALLL calculated in accordance with the incurred loss model • Lower General Reserve ratio reflects improving macro-economic conditions • PPP loans guaranteed by the US government carry no reserve • Excluding PPP loan balances, 1Q21 ALLL is 1.24% $21.0 Million $20.5 Million
Capital
21 Tangible Book Value Tangible Book Value (TBV) Per Share Walk • Repurchased 65,626 shares at an average price of $21.66 per share • $0.99 increase in OCI primarily from mark-to-market on long-dated interest rate swaps $22.43 $23.99 $0.71 $0.14 $0.99 $0.02 2020 Net Income Dividends AOCI Share Buyback 1Q21
22 Capital Position 7.73% 8.44% 11.06% 12.28% 8.27% 8.82% 11.02% 12.17% 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 1Q21 4Q20 ‘Adequate’ + Buffer Min Bankwell’s capital position remains strong 2 Tier 1CET1 • In 4Q20, Bank up streamed $18 million dividend to parent company to prepare for 2021 capital actions ̶ $10 million subordinated debt retirement scheduled for 2Q21 • ~$35 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 487%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
Bankwell History & Overview
24 + 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 • 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
25 Financial Snapshot Dollars in thousands, except per share data 2016 2017 2018 2019 2020 1Q21 Total assets $1,628,919 $1,796,607 $1,873,665 $1,882,182 $2,253,747 $2,244,467 Net loans $1,343,895 $1,520,879 $1,586,775 $1,588,840 $1,601,672 $1,650,127 Loan-to-deposit ratio 105.6% 110.1% 106.4% 107.1% 87.9% 89.0% Efficiency ratio2 56.5% 54.9% 59.2% 60.2% 73.9% 58.0% Non-interest expense / avg. assets 2.03% 1.88% 1.93% 1.90% 2.03% 1.73% Net interest margin 3.54% 3.30% 3.18% 3.03% 2.77% 2.74% Total capital to risk weighted assets 12.85% 12.19% 12.50% 13.35% 12.28% 12.28% Tangible common equity ratio2 8.78% 8.81% 9.16% 9.56% 7.73% 8.27% Return on average equity 8.94% 8.93% 10.19% 10.20% 3.35% 12.67% Tangible book value per share2 $18.98 $20.59 $22.06 $23.15 $22.43 $23.99 Net interest income $49,092 $54,364 $56,326 $53,761 $54,835 $14,655 Pre-tax, pre-provision net revenue $22,224 $26,470 $24,593 $23,379 $14,907 $6,972 Net income $12,350 $13,830 $17,433 $18,216 $5,904 $5,690 EPS (fully diluted) $1.62 $1.78 $2.21 $2.31 $0.75 $0.71 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
26 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 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 EVP & Chief Risk & 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 EVP & CFO (since 2016) 25+ Mr. Ivanov has more than 29 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 certified public accountant. He 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 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.
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