0001505732FALSE00015057322024-01-242024-01-24
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): January 24, 2024
Bankwell Financial Group, Inc.
(Exact name of registrant as specified in its charter)
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| Connecticut | 001-36448 | 20-8251355 |
| (State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification No.) |
258 Elm Street
New Canaan, Connecticut 06840
(203) 652-0166
(Address of Principal Executive Officers and Telephone Number)
N/A
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
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| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
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| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
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| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
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Title of Each Class
| Trading Symbol(s)
| Name of Each Exchange on Which
Registered
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Common Stock, no par value per share
| BWFG
| NASDAQ Global Market
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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR 230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR 240.12b-2).
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| Emerging growth company | ☐
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| If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. | ☐
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| Item 2.02 | Results of Operations and Financial Condition |
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| | On January 24, 2024, Bankwell Financial Group, Inc., the holding company for Bankwell Bank, issued a press release describing its results of operations for the period ended December 31, 2023. A copy of the press release is included as Exhibit 99.1 to this current report on Form 8-K and is incorporated herein by reference.
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| The information furnished under this Item 2.02, including Exhibit 99.1, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or subject to the liabilities of that section. The information shall not be deemed incorporated by reference into any other filing with the Securities and Exchange Commission made by the Company, regardless of any general incorporation language in such filing.
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| Item 7.01 | Regulation FD Disclosure |
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| | On January 24, 2024, Bankwell Financial Group, Inc., the holding company for Bankwell Bank, issued slide presentation material, which includes among other things, a review of financial results and trends through the period ended December 31, 2023. A copy of the material will also be available on the Company’s website, http://investor.mybankwell.com/CorporateProfile. A copy of the Presentation Material is included as Exhibit 99.2 to this current report on Form 8-K and is incorporated herein by reference. |
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| The information furnished under this Item 7.01, including Exhibit 99.2, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or subject to the liabilities of that section. The information shall not be deemed incorporated by reference into any other filing with the Securities and Exchange Commission made by the Company, regardless of any general incorporation language in such filing.
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| Item 8.01 | Other Events |
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| | On January 24, 2024, Bankwell Financial Group, Inc., parent company of Bankwell Bank, announced its Board of Directors has voted to pay a quarterly dividend in the amount of $0.20 per share on February 23, 2024 to all shareholders of record as of February 13, 2024. |
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| Item 9.01 | Financial Statements and Exhibits |
| (a) | Not applicable. |
| (b) | Not applicable. |
| (c) | Not applicable. |
| (d) | Exhibits. |
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| Exhibit Number | Description |
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| 99.1 | |
| 99.2 | |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
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| SIGNATURES |
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| Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. |
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| | BANKWELL FINANCIAL GROUP, INC. |
| | Registrant |
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January 24, 2024 | By: /s/ Courtney E. Sacchetti |
| | Courtney E. Sacchetti |
| | Executive Vice President |
| | and Chief Financial Officer |
BANKWELL FINANCIAL GROUP REPORTS OPERATING RESULTS FOR THE FOURTH QUARTER AND FULL YEAR 2023; DECLARES FIRST QUARTER DIVIDEND
New Canaan, CT – January 24, 2024 – Bankwell Financial Group, Inc. (NASDAQ: BWFG) reported GAAP net income of $8.5 million, or $1.09 per share for the fourth quarter of 2023, versus $8.0 million, or $1.04 per share, for the same period in 2022. For the year ended 2023, net income totaled $36.7 million, or $4.67 per share, versus $37.4 million, or $4.79 per share, for the same period in 2022.
The Company's Board of Directors declared a $0.20 per share cash dividend, payable February 23, 2024 to shareholders of record on February 13, 2024.
We recommend reading this earnings release in conjunction with the Fourth Quarter 2023 Investor Presentation, located at http://investor.mybankwell.com/Presentations and included as an exhibit to our January 24, 2024 Current Report on Form 8-K.
Notes Bankwell Financial Group President and CEO, Christopher R. Gruseke:
"Thank you to my colleagues who helped the Company generate quality returns for our shareholders amidst a volatile economic backdrop in 2023. We achieved a total year Return on Average Tangible Common Equity (“ROATCE") of 14.70% while generating a 1.13% Return on Average Assets (“ROAA”). Tangible Book Value grew to $33.39 per share, which represents a 15% Compounded Annual Growth Rate since December 31, 2020.
Looking to 2024, we expect low single digit loan growth as we grow capital and implement innovative deposit solutions. The Net Interest Margin is anticipated to trough in 3Q at approximately 250 to 260 basis points. Noninterest expense is estimated at $53 to $54 million, or approximately 1.65% of Average Assets, an amount consistent with our historical efficiency.
The Balance Sheet is well positioned for any future interest rate cuts taken by the Federal Reserve. We estimate that a hypothetical 50 basis point expansion of the Net Interest Margin would generate approximately $1.50 in incremental Earnings Per Share on an annualized basis."
Fourth Quarter 2023 Highlights:
•Noninterest expense to average assets was 1.56% for the quarter ended December 31, 2023 and 1.55% for the year ended December 31, 2023.
•Average yield on 2023 funded loans was 7.70% compared to 6.24% for 2022.
•Total gross loans were $2.7 billion, growing $43.2 million, or 1.6%, compared to December 31, 2022.
•Return on average assets was 1.03% for the quarter ended December 31, 2023 and 1.13% for the year ended December 31, 2023.
•Return on average tangible common equity was 12.95% for the quarter ended December 31, 2023 and 14.70% for the year ended December 31, 2023.
•The net interest margin was 2.81% for the quarter ended December 31, 2023 and 2.98% for the year ended December 31, 2023.
•Investment securities totaled $127.6 million and represent 4.0% of total assets.
•Fully diluted tangible book value per share rose to $33.39 compared to $30.51 at December 31, 2022.
Earnings and Performance
Revenues (net interest income plus noninterest income) for the quarter ended December 31, 2023 were $23.4 million, versus $27.3 million for the quarter ended December 31, 2022. Revenues for the year ended December 31, 2023 were $99.3 million, versus $97.8 million for the year ended December 31, 2022. The decrease in revenues for the quarter was primarily attributable to an increase in interest expense partially offset by an increase in interest on loans due to higher overall loan yields1. The increase in revenues for the year ended 2023 was primarily attributable to an increase in interest and fees on loans due to loan growth and higher overall loan yields1, an increase in gain on sales of loans, and an increase in servicing charges and fees. This increase was partially offset by an increase in interest expense.
1 - The increase in overall loan yields were 71 bps and 100 bps, respectively, for the quarter and year ended December 31, 2023.
Net income for the quarter ended December 31, 2023 was $8.5 million, versus $8.0 million for the quarter ended December 31, 2022. Net income for the year ended December 31, 2023 was $36.7 million, versus $37.4 million for the year ended December 31, 2022. The increase in net income for the quarter ended 2023 was primarily due to the credit for loan losses, partially offset by an increase in noninterest expense, and the aforementioned decrease in revenues. The decrease in net income for the year ended 2023 was due to an increase in noninterest expense partially offset by the aforementioned increase in revenues and a decrease in the provision for loan losses.
Basic and diluted earnings per share were $1.09 and $1.09, respectively, for the quarter ended December 31, 2023 compared to basic and diluted earnings per share of $1.04 and $1.04, respectively, for the quarter ended December 31, 2022. Basic and diluted earnings per share were $4.71 and $4.67, respectively, for the year ended December 31, 2023 compared to basic and diluted earnings per share of $4.84 and $4.79, respectively, for the year ended December 31, 2022.
The net interest margin (fully taxable equivalent basis) for the quarters ended December 31, 2023 and December 31, 2022 was 2.81% and 3.70%, respectively. The net interest margin (fully taxable equivalent basis) for the year ended December 31, 2023 and December 31, 2022 was 2.98% and 3.78%, respectively. The decrease in the net interest margin was due to an increase in funding costs partially offset by an increase in yields on earning assets.
Allowance for Credit Losses ("ACL") - Loans
The ACL-Loans was $27.9 million as of December 31, 2023 compared to $29.3 million as of September 30, 2023, for a reduction of $1.4 million for the quarter ended December 31, 2023. The ACL-Loans as a percentage of total loans was 1.03% as of December 31, 2023 compared to 1.06% as of September 30, 2023. The reduction for the quarter was primarily due to a decrease in loan balances and a release of specific reserves, partially offset by charge-offs.
The ACL-Loans was $27.9 million as of December 31, 2023 compared to $22.4 million as of December 31, 2022, an increase of $5.5 million year to date, of which $5.1 million being the CECL transition adjustment to retained earnings. The ACL-Loans as a percentage of total loans was 1.03% as of December 31, 2023 compared to 0.84% as of December 31, 2022. The increase in the ACL-Loans provision for credit losses was primarily driven by forward looking CECL macroeconomic factors.
Financial Condition
Assets totaled $3.22 billion at December 31, 2023, compared to assets of $3.25 billion at December 31, 2022. Gross loans totaled $2.7 billion at December 31, 2023, an increase of $43.2 million or 1.6% compared to December 31, 2022. Deposits totaled $2.7 billion at December 31, 2023, compared to deposits of $2.8 billion at December 31, 2022, a decrease of $64.1 million.
Capital
Shareholders’ equity totaled $265.8 million as of December 31, 2023, an increase of $27.3 million compared to December 31, 2022, primarily a result of net income of $36.7 million for the year ended December 31, 2023. The increase was partially offset by the Day 1 CECL adoption impact of $4.9 million, dividends paid of $6.2 million, and a $1.5 million unfavorable impact to accumulated other comprehensive income. The unfavorable impact to accumulated other comprehensive income was driven by fair value marks related to hedge positions involving interest rate swaps of $2.4 million partially offset by fair value marks on the Company's available for sale investment securities portfolio of $0.9 million. The Company's interest rate swaps are used to hedge interest rate risk.
About Bankwell Financial Group
Bankwell is a commercial bank that serves the banking needs of residents and businesses throughout Fairfield and New Haven Counties, Connecticut. For more information about this press release, interested parties may contact Christopher R. Gruseke, President and Chief Executive Officer or Courtney E. Sacchetti, Executive Vice President and Chief Financial Officer of Bankwell Financial Group at (203) 652-0166.
For more information, visit www.mybankwell.com.
This press release may contain certain forward-looking statements about the Company. Forward-looking statements include statements regarding anticipated future events and can be identified by the fact that they do not relate strictly to historical or current facts. They often include words such as “believe,” “expect,” “anticipate,” “estimate,” and “intend” or future or conditional verbs such as “will,” “would,” “should,” “could,” or “may.” Forward-looking statements, by their nature, are subject to risks and uncertainties. Certain factors that could cause actual results to differ materially from expected results include increased competitive pressures, changes in the interest rate environment, general economic conditions or conditions within the securities markets, and legislative and regulatory changes that could adversely affect the business in which the Company and its subsidiaries are engaged.
Non-GAAP Financial Measures
In addition to evaluating the Company's financial performance in accordance with U.S. generally accepted accounting principles ("GAAP"), management may evaluate certain non-GAAP financial measures, such as the efficiency ratio. A computation and reconciliation of certain non-GAAP financial measures used for these purposes is contained in the accompanying Reconciliation of GAAP to Non-GAAP Measures tables. We believe that providing certain non-GAAP financial measures provides investors with information useful in understanding our financial performance, our performance trends and financial position. For example, the Company believes that the efficiency ratio is useful in the assessment of financial performance, including noninterest expense control. The Company believes that tangible common equity, tangible assets, tangible common equity to tangible assets, tangible common shareholders' equity, fully diluted tangible book value per common share, adjusted non interest expense, operating revenue, efficiency ratio, average tangible common equity, annualized return on average tangible common equity, return on average assets, return on average shareholders' equity, and the dividend payout ratio are useful to evaluate the relative strength of the Company's performance and capital position. We utilize these measures for internal planning and forecasting purposes. These non-GAAP financial measures should not be considered a substitute for GAAP basis measures and results, and we strongly encourage investors to review our consolidated financial statements in their entirety and not to rely on any single financial measure.
BANKWELL FINANCIAL GROUP, INC.
CONSOLIDATED BALANCE SHEETS (unaudited)
(Dollars in thousands)
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| December 31, 2023 | | September 30, 2023 | | June 30,
2023 | | March 31, 2023 | | December 31, 2022 | | |
| ASSETS | | | | | | | | | | | |
| Cash and due from banks | $ | 267,521 | | | $ | 256,973 | | | $ | 207,345 | | | $ | 249,812 | | | $ | 344,925 | | | |
| Federal funds sold | 1,636 | | | 1,122 | | | 54,706 | | | 27,370 | | | 10,754 | | | |
| Cash and cash equivalents | 269,157 | | | 258,095 | | | 262,051 | | | 277,182 | | | 355,679 | | | |
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| Investment securities | | | | | | | | | | | |
| Marketable equity securities, at fair value | 2,070 | | | 1,975 | | | 2,017 | | | 2,028 | | | 1,988 | | | |
| Available for sale investment securities, at fair value | 109,736 | | | 97,907 | | | 99,938 | | | 103,171 | | | 103,663 | | | |
| Held to maturity investment securities, at amortized cost | 15,817 | | | 15,885 | | | 15,884 | | | 15,931 | | | 15,983 | | | |
| Total investment securities | 127,623 | | | 115,767 | | | 117,839 | | | 121,130 | | | 121,634 | | | |
| Loans receivable (net of allowance for loan losses of $27,946, $29,284, $30,694, $27,998 and $22,431 at December 31, 2023, September 30, 2023, June 30, 2023, March 31, 2023 and December 31, 2022, respectively) | 2,685,301 | | | 2,735,242 | | | 2,736,607 | | | 2,724,514 | | | 2,646,384 | | | |
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| Accrued interest receivable | 14,863 | | | 15,648 | | | 14,208 | | | 14,261 | | | 13,070 | | | |
| Federal Home Loan Bank stock, at cost | 5,696 | | | 5,696 | | | 5,696 | | | 5,234 | | | 5,216 | | | |
| Premises and equipment, net | 27,018 | | | 26,899 | | | 27,658 | | | 27,619 | | | 27,199 | | | |
| Bank-owned life insurance | 51,435 | | | 51,119 | | | 50,816 | | | 50,524 | | | 50,243 | | | |
| Goodwill | 2,589 | | | 2,589 | | | 2,589 | | | 2,589 | | | 2,589 | | | |
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| Deferred income taxes, net | 9,383 | | | 9,395 | | | 10,014 | | | 8,692 | | | 7,422 | | | |
| Other assets | 22,417 | | | 29,326 | | | 25,229 | | | 20,573 | | | 23,013 | | | |
| Total assets | $ | 3,215,482 | | | $ | 3,249,776 | | | $ | 3,252,707 | | | $ | 3,252,318 | | | $ | 3,252,449 | | | |
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| LIABILITIES AND SHAREHOLDERS’ EQUITY | | | | | | | | | | | |
| Liabilities | | | | | | | | | | | |
| Deposits | | | | | | | | | | | |
| Noninterest bearing deposits | $ | 346,172 | | | $ | 345,433 | | | $ | 367,635 | | | $ | 377,667 | | | $ | 404,559 | | | |
| Interest bearing deposits | 2,390,585 | | | 2,423,193 | | | 2,421,228 | | | 2,420,641 | | | 2,396,259 | | | |
| Total deposits | 2,736,757 | | | 2,768,626 | | | 2,788,863 | | | 2,798,308 | | | 2,800,818 | | | |
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| Advances from the Federal Home Loan Bank | 90,000 | | | 90,000 | | | 90,000 | | | 90,000 | | | 90,000 | | | |
| Subordinated debentures | 69,205 | | | 69,143 | | | 69,082 | | | 69,020 | | | 68,959 | | | |
| Accrued expenses and other liabilities | 53,768 | | | 64,145 | | | 55,949 | | | 52,683 | | | 54,203 | | | |
| Total liabilities | 2,949,730 | | | 2,991,914 | | | 3,003,894 | | | 3,010,011 | | | 3,013,980 | | | |
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| Shareholders’ equity | | | | | | | | | | | |
| Common stock, no par value | 118,247 | | | 117,181 | | | 116,541 | | | 115,875 | | | 115,018 | | | |
| Retained earnings | 149,169 | | | 142,205 | | | 133,988 | | | 127,566 | | | 123,640 | | | |
| Accumulated other comprehensive (loss) income | (1,664) | | | (1,524) | | | (1,716) | | | (1,134) | | | (189) | | | |
| Total shareholders’ equity | 265,752 | | | 257,862 | | | 248,813 | | | 242,307 | | | 238,469 | | | |
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| Total liabilities and shareholders’ equity | $ | 3,215,482 | | | $ | 3,249,776 | | | $ | 3,252,707 | | | $ | 3,252,318 | | | $ | 3,252,449 | | | |
BANKWELL FINANCIAL GROUP, INC.
CONSOLIDATED STATEMENTS OF INCOME (unaudited)
(Dollars in thousands, except share data)
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| For the Quarter Ended | | For the Year Ended |
| December 31,
2023 | | September 30,
2023 | | June 30,
2023 | | March 31,
2023 | | December 31,
2022 | | | December 31,
2023 | | December 31,
2022 |
| Interest and dividend income | | | | | | | | | | | | | | |
| Interest and fees on loans | $ | 44,122 | | | $ | 43,854 | | | $ | 42,482 | | | $ | 39,723 | | | $ | 36,545 | | | | $ | 170,181 | | | $ | 111,242 | |
| Interest and dividends on securities | 1,108 | | | 1,016 | | | 1,002 | | | 1,000 | | | 898 | | | | 4,126 | | | 3,203 | |
| Interest on cash and cash equivalents | 4,164 | | | 3,393 | | | 3,022 | | | 3,568 | | | 2,150 | | | | 14,147 | | | 3,500 | |
| Total interest and dividend income | 49,394 | | | 48,263 | | | 46,506 | | | 44,291 | | | 39,593 | | | | 188,454 | | | 117,945 | |
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| Interest expense | | | | | | | | | | | | | | |
| Interest expense on deposits | 25,307 | | | 23,789 | | | 20,777 | | | 17,033 | | | 11,083 | | | | 86,906 | | | 19,364 | |
| Interest expense on borrowings | 1,842 | | | 1,783 | | | 1,738 | | | 1,717 | | | 1,701 | | | | 7,080 | | | 3,838 | |
| Total interest expense | 27,149 | | | 25,572 | | | 22,515 | | | 18,750 | | | 12,784 | | | | 93,986 | | | 23,202 | |
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| Net interest income | 22,245 | | | 22,691 | | | 23,991 | | | 25,541 | | | 26,809 | | | | 94,468 | | | 94,743 | |
| (Credit) provision for loan losses | (960) | | | (1,579) | | | 2,579 | | | 826 | | | 4,272 | | | | 866 | | | 5,437 | |
| Net interest income after (credit) provision for loan losses | 23,205 | | | 24,270 | | | 21,412 | | | 24,715 | | | 22,537 | | | | 93,602 | | | 89,306 | |
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| Noninterest income | | | | | | | | | | | | | | |
| Bank owned life insurance | 316 | | | 303 | | | 292 | | | 281 | | | 273 | | | | 1,192 | | | 1,069 | |
| Service charges and fees | 688 | | | 294 | | | 361 | | | 286 | | | 343 | | | | 1,629 | | | 1,072 | |
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| Gains (losses) and fees from sales of loans | 79 | | | 237 | | | 725 | | | 931 | | | 12 | | | | 1,972 | | | 1,236 | |
| Other | 46 | | | (48) | | | 23 | | | 28 | | | (100) | | | | 49 | | | (337) | |
| Total noninterest income | 1,129 | | | 786 | | | 1,401 | | | 1,526 | | | 528 | | | | 4,842 | | | 3,040 | |
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| Noninterest expense | | | | | | | | | | | | | | |
| Salaries and employee benefits | 6,088 | | | 6,036 | | | 6,390 | | | 6,081 | | | 5,988 | | | | 24,595 | | | 22,237 | |
| Occupancy and equipment | 2,231 | | | 2,146 | | | 2,204 | | | 2,084 | | | 1,919 | | | | 8,665 | | | 8,297 | |
| Professional services | 1,033 | | | 491 | | | 692 | | | 1,322 | | | 912 | | | | 3,538 | | | 3,887 | |
| Data processing | 747 | | | 741 | | | 729 | | | 671 | | | 663 | | | | 2,888 | | | 2,632 | |
| Director fees | 605 | | | 362 | | | 453 | | | 392 | | | 378 | | | | 1,812 | | | 1,394 | |
| FDIC insurance | 1,026 | | | 1,026 | | | 1,050 | | | 1,062 | | | 898 | | | | 4,164 | | | 1,638 | |
| Marketing | 139 | | | 184 | | | 177 | | | 151 | | | 112 | | | | 651 | | | 366 | |
| | | | | | | | | | | | | | |
| Other | 995 | | | 1,219 | | | 946 | | | 928 | | | 1,601 | | | | 4,088 | | | 3,912 | |
| Total noninterest expense | 12,864 | | | 12,205 | | | 12,641 | | | 12,691 | | | 12,471 | | | | 50,401 | | | 44,363 | |
| | | | | | | | | | | | | | |
| Income before income tax expense | 11,470 | | | 12,851 | | | 10,172 | | | 13,550 | | | 10,594 | | | | 48,043 | | | 47,983 | |
| Income tax expense | 2,946 | | | 3,074 | | | 2,189 | | | 3,171 | | | 2,573 | | | | 11,380 | | | 10,554 | |
| Net income | $ | 8,524 | | | $ | 9,777 | | | $ | 7,983 | | | $ | 10,379 | | | $ | 8,021 | | | | $ | 36,663 | | | $ | 37,429 | |
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| Earnings Per Common Share: | | | | | | | | | | | | | | |
| Basic | $ | 1.09 | | | $ | 1.25 | | | $ | 1.02 | | | $ | 1.34 | | | $ | 1.04 | | | | $ | 4.71 | | | $ | 4.84 | |
| Diluted | $ | 1.09 | | | $ | 1.25 | | | $ | 1.02 | | | $ | 1.33 | | | $ | 1.04 | | | | $ | 4.67 | | | $ | 4.79 | |
| | | | | | | | | | | | | | |
| Weighted Average Common Shares Outstanding: | | | | | | | | | | | | | | |
| Basic | 7,603,938 | | | 7,598,230 | | | 7,593,417 | | | 7,554,689 | | | 7,507,540 | | | | 7,587,768 | | | 7,563,363 | |
| Diluted | 7,650,451 | | | 7,633,934 | | | 7,601,562 | | | 7,616,671 | | | 7,563,116 | | | | 7,647,411 | | | 7,640,218 | |
| Dividends per common share | $ | 0.20 | | | $ | 0.20 | | | $ | 0.20 | | | $ | 0.20 | | | $ | 0.20 | | | | $ | 0.80 | | | $ | 0.80 | |
BANKWELL FINANCIAL GROUP, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (unaudited)
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| For the Quarter Ended | | For the Year Ended | | | | | | | | |
| December 31,
2023 | | September 30,
2023 | | June 30,
2023 | | March 31,
2023 | | December 31,
2022 | | | | December 31,
2023 | | December 31,
2022 | | | | | | | | |
| Performance ratios: | | | | | | | | | | | | | | | | | | | | | | | |
| Return on average assets | 1.03 | % | | 1.19 | % | | 0.99 | % | | 1.30 | % | | 1.07 | % | | | | 1.13 | % | | 1.44 | % | | | | | | | | |
| Return on average shareholders' equity | 12.82 | % | | 15.19 | % | | 12.91 | % | | 17.48 | % | | 13.38 | % | | | | 14.55 | % | | 16.72 | % | | | | | | | | |
| Return on average tangible common equity | 12.95 | % | | 15.35 | % | | 13.05 | % | | 17.67 | % | | 13.52 | % | | | | 14.70 | % | | 16.91 | % | | | | | | | | |
| Net interest margin | 2.81 | % | | 2.85 | % | | 3.07 | % | | 3.24 | % | | 3.70 | % | | | | 2.98 | % | | 3.78 | % | | | | | | | | |
Efficiency ratio(1) | 55.0 | % | | 52.0 | % | | 49.8 | % | | 46.9 | % | | 45.6 | % | | | | 50.8 | % | | 45.4 | % | | | | | | | | |
| Net loan charge-offs as a % of average loans | 0.01 | % | | — | % | | — | % | | 0.02 | % | | — | % | | | | 0.03 | % | | — | % | | | | | | | | |
Dividend payout ratio(2) | 18.35 | % | | 16.00 | % | | 19.61 | % | | 15.04 | % | | 19.23 | % | | | | 17.13 | % | | 16.70 | % | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
(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 |
| December 31,
2023 | | September 30,
2023 | | June 30,
2023 | | March 31,
2023 | | December 31,
2022 | | |
| Capital ratios: | | | | | | | | | | | |
Total Common Equity Tier 1 Capital to Risk-Weighted Assets(1) | 11.15 | % | | 10.82 | % | | 10.34 | % | | 10.17 | % | | 10.28 | % | | |
Total Capital to Risk-Weighted Assets(1) | 12.15 | % | | 11.86 | % | | 11.41 | % | | 11.16 | % | | 11.07 | % | | |
Tier I Capital to Risk-Weighted Assets(1) | 11.15 | % | | 10.82 | % | | 10.34 | % | | 10.17 | % | | 10.28 | % | | |
Tier I Capital to Average Assets(1) | 9.81 | % | | 9.60 | % | | 9.41 | % | | 9.22 | % | | 9.88 | % | | |
| Tangible common equity to tangible assets | 8.19 | % | | 7.86 | % | | 7.58 | % | | 7.38 | % | | 7.26 | % | | |
| Fully diluted tangible book value per common share | $ | 33.39 | | | $ | 32.55 | | | $ | 31.45 | | | $ | 30.56 | | | $ | 30.51 | | | |
(1)Represents Bank ratios. Current period capital ratios are preliminary subject to finalization of the FDIC Call Report.
BANKWELL FINANCIAL GROUP, INC.
ASSET QUALITY (unaudited)
(Dollars in thousands)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| For the Quarter Ended |
| December 31,
2023 | | September 30,
2023 | | June 30,
2023 | | March 31,
2023 | | December 31,
2022 | | |
| ACL-Loans: | | | | | | | | | | | |
| Balance at beginning of period | $ | 29,284 | | | $ | 30,694 | | | $ | 27,998 | | | $ | 22,431 | | | $ | 18,167 | | | |
| Day 1 CECL Adjustment on January 1, 2023 | — | | | — | | | — | | | 5,079 | | | — | | | |
| Beginning balance January 1, 2023 | 29,284 | | | 30,694 | | | 27,998 | | | 27,510 | | | 18,167 | | | |
| Charge-offs: | | | | | | | | | | | |
| Residential real estate | — | | | — | | | — | | | — | | | — | | | |
| Commercial real estate | (824) | | | — | | | — | | | — | | | — | | | |
| Commercial business | — | | | — | | | — | | | (440) | | | — | | | |
| Consumer | (15) | | | (31) | | | (25) | | | (12) | | | (11) | | | |
| Total charge-offs | (839) | | | (31) | | | (25) | | | (452) | | | (11) | | | |
| Recoveries: | | | | | | | | | | | |
| Commercial real estate | — | | | — | | | — | | | — | | | — | | | |
| Commercial business | 464 | | | 35 | | | 32 | | | — | | | — | | | |
| Consumer | 3 | | | 19 | | | 10 | | | 6 | | | 3 | | | |
| Total recoveries | 467 | | | 54 | | | 42 | | | 6 | | | 3 | | | |
| Net loan (charge-offs) recoveries | (372) | | | 23 | | | 17 | | | (446) | | | (8) | | | |
| (Credit) provision for loan losses | (966) | | | (1,433) | | | 2,679 | | | 934 | | | 4,272 | | | |
| Balance at end of period | $ | 27,946 | | | $ | 29,284 | | | $ | 30,694 | | | $ | 27,998 | | | $ | 22,431 | | | |
| | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| As of |
| December 31,
2023 | | September 30,
2023 | | June 30,
2023 | | March 31,
2023 | | December 31,
2022 | | |
| Asset quality: | | | | | | | | | | | |
| Nonaccrual loans | | | | | | | | | | | |
| Residential real estate | $ | 1,386 | | | $ | 1,408 | | | $ | 1,429 | | | $ | 1,443 | | | $ | 2,152 | | | |
| Commercial real estate | 23,009 | | | 1,898 | | | 1,905 | | | 1,912 | | | 2,781 | | | |
| Commercial business | 15,430 | | | 7,352 | | | 2,815 | | | 1,528 | | | 2,126 | | | |
| Construction | 9,382 | | | 9,382 | | | 9,382 | | | 9,382 | | | 9,382 | | | |
| Consumer | — | | | 7,917 | | | — | | | — | | | — | | | |
| Total nonaccrual loans | 49,207 | | | 27,957 | | | 15,531 | | | 14,265 | | | 16,441 | | | |
| Other real estate owned | — | | | — | | | — | | | — | | | — | | | |
| Total nonperforming assets | $ | 49,207 | | | $ | 27,957 | | | $ | 15,531 | | | $ | 14,265 | | | $ | 16,441 | | | |
| | | | | | | | | | | |
| Nonperforming loans as a % of total loans | 1.81 | % | | 1.01 | % | | 0.56 | % | | 0.52 | % | | 0.61 | % | | |
| Nonperforming assets as a % of total assets | 1.53 | % | | 0.86 | % | | 0.48 | % | | 0.44 | % | | 0.51 | % | | |
| ACL-loans as a % of total loans | 1.03 | % | | 1.06 | % | | 1.11 | % | | 1.01 | % | | 0.84 | % | | |
| ACL-loans as a % of nonaccrual loans | 56.79 | % | | 104.75 | % | | 197.63 | % | | 196.27 | % | | 136.43 | % | | |
| Total past due loans to total loans | 0.78 | % | | 1.44 | % | | 1.30 | % | | 0.94 | % | | 0.60 | % | | |
Total nonaccrual loans increased $32.8 million to $49.2 million as of December 31, 2023 when compared to December 31, 2022. Nonperforming assets as a percentage of total assets increased to 1.53% at December 31, 2023, when compared to 0.51% at December 31, 2022. The ACL-Loans at December 31, 2023 was $27.9 million, representing 1.03% of total loans.
Past due loans increased to $21.3 million, or 0.78% of total loans, as of December 31, 2023, compared to $16.1 million, or 0.60% of total loans, as of December 31, 2022.
BANKWELL FINANCIAL GROUP, INC.
LOAN & DEPOSIT PORTFOLIO (unaudited)
(Dollars in thousands)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Period End Loan Composition | December 31,
2023 | | September 30,
2023 | | December 31,
2022 | |
Current QTD
% Change | | YTD
% Change |
| Residential Real Estate | $ | 50,931 | | | $ | 52,908 | | | $ | 60,588 | | | (3.7) | % | | (15.9) | % |
Commercial Real Estate(1) | 1,947,648 | | | 1,955,992 | | | 1,921,252 | | | (0.4) | | | 1.4 | |
| Construction | 183,414 | | | 199,972 | | | 155,198 | | | (8.3) | | | 18.2 | |
| Total Real Estate Loans | 2,181,993 | | | 2,208,872 | | | 2,137,038 | | | (1.2) | | | 2.1 | |
| | | | | | | | | |
| Commercial Business | 500,569 | | | 508,626 | | | 520,447 | | | (1.6) | | | (3.8) | |
| | | | | | | | | |
| Consumer | 36,045 | | | 52,612 | | | 17,963 | | | (31.5) | | | 100.7 | |
| Total Loans | $ | 2,718,607 | | | $ | 2,770,110 | | | $ | 2,675,448 | | | (1.9) | % | | 1.6 | % |
| | | | | | | | | |
| (1) Includes owner occupied commercial real estate. |
Gross loans totaled $2.7 billion at December 31, 2023, a increase of $43.2 million or 1.6% compared to December 31, 2022.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Period End Deposit Composition | December 31,
2023 | | September 30,
2023 | | December 31,
2022 | |
Current QTD
% Change | | YTD
% Change |
| Noninterest bearing demand | $ | 346,172 | | | $ | 345,433 | | | $ | 404,559 | | | 0.2 | % | | (14.4) | % |
| NOW | 90,829 | | | 101,719 | | | 104,057 | | | (10.7) | | | (12.7) | |
| Money Market | 887,352 | | | 879,978 | | | 913,868 | | | 0.8 | | | (2.9) | |
| Savings | 97,331 | | | 102,207 | | | 151,944 | | | (4.8) | | | (35.9) | |
| Time | 1,315,073 | | | 1,339,289 | | | 1,226,390 | | | (1.8) | | | 7.2 | |
| Total Deposits | $ | 2,736,757 | | | $ | 2,768,626 | | | $ | 2,800,818 | | | (1.2) | % | | (2.3) | % |
Total deposits were $2.7 billion at December 31, 2023, compared to $2.8 billion at December 31, 2022, a decrease of $64.1 million, or 2.3%. Brokered deposits have decreased $83.0 million, when compared to December 31, 2022.
BANKWELL FINANCIAL GROUP, INC.
NONINTEREST INCOME (unaudited)
(Dollars in thousands)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| For the Quarter Ended | | | | |
| Noninterest income | December 31,
2023 | | September 30,
2023 | | December 31,
2022 | | Dec 23 vs. Sep 23
% Change | | Dec 23 vs. Dec 22
% Change |
| Bank owned life insurance | $ | 316 | | | $ | 303 | | | $ | 273 | | | 4.3 | % | | 15.8 | % |
| Service charges and fees | 688 | | | 294 | | | 343 | | | 134.0 | | | 100.6 | |
| | | | | | | | | |
| | | | | | | | | |
| Gains (losses) and fees from sales of loans | 79 | | | 237 | | | 12 | | | (66.7) | | | 558.3 | |
| Other | 46 | | | (48) | | | (100) | | | Favorable | | Favorable |
| Total noninterest income | $ | 1,129 | | | $ | 786 | | | $ | 528 | | | 43.6 | % | | 113.8 | % |
| | | | | | | | | | | | | | | | | |
| For the Year Ended | | |
| Noninterest income | December 31, 2023 | | December 31, 2022 | | % Change |
| Gains and fees from sales of loans | $ | 1,972 | | | $ | 1,236 | | | 59.5 | % |
| Bank owned life insurance | 1,192 | | | 1,069 | | | 11.5 | |
| Service charges and fees | 1,629 | | | 1,072 | | | 52.0 | |
| | | | | |
| | | | | |
| Other | 49 | | | (337) | | | Favorable |
| Total noninterest income | $ | 4,842 | | | $ | 3,040 | | | 59.3 | % |
Noninterest income increased by $0.6 million to $1.1 million for the quarter ended December 31, 2023 compared to the quarter ended December 31, 2022. Noninterest income increased by $1.8 million to $4.8 million for the year ended December 31, 2023 compared to the year ended December 31, 2022. The increase in noninterest income for the quarter ended December 31, 2023 was mainly driven by an increase in service charges and fees. The increase for the year ended December 31, 2023 was mainly driven by an increase in gains on SBA loan sales and service charges and fees.
BANKWELL FINANCIAL GROUP, INC.
NONINTEREST EXPENSE (unaudited)
(Dollars in thousands)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| For the Quarter Ended | | | | |
| Noninterest expense | December 31,
2023 | | September 30,
2023 | | December 31,
2022 | | Dec 23 vs. Sep 23
% Change | | Dec 23 vs. Dec 22
% Change |
| Salaries and employee benefits | $ | 6,088 | | | $ | 6,036 | | | $ | 5,988 | | | 0.9 | % | | 1.7 | % |
| Occupancy and equipment | 2,231 | | | 2,146 | | | 1,919 | | | 4.0 | | | 16.3 | |
| Professional services | 1,033 | | | 491 | | | 912 | | | 110.4 | | | 13.3 | |
| Data processing | 747 | | | 741 | | | 663 | | | 0.8 | | | 12.7 | |
| Director fees | 605 | | | 362 | | | 378 | | | 67.1 | | | 60.1 | |
| FDIC insurance | 1,026 | | | 1,026 | | | 898 | | | — | | | 14.3 | |
| Marketing | 139 | | | 184 | | | 112 | | | (24.5) | | | 24.1 | |
| Other | 995 | | | 1,219 | | | 1,601 | | | (18.4) | | | (37.9) | |
| Total noninterest expense | $ | 12,864 | | | $ | 12,205 | | | $ | 12,471 | | | 5.4 | % | | 3.2 | % |
|
| | | | | | | | | | | | | | | | | |
| For the Year Ended | | |
| Noninterest expense | December 31, 2023 | | December 31, 2022 | | % Change |
| Salaries and employee benefits | $ | 24,595 | | | $ | 22,237 | | | 10.6 | % |
| Occupancy and equipment | 8,665 | | | 8,297 | | | 4.4 | |
| Professional services | 3,538 | | | 3,887 | | | (9.0) | |
| Data processing | 2,888 | | | 2,632 | | | 9.7 | |
| Director fees | 1,812 | | | 1,394 | | | 30.0 | |
| FDIC insurance | 4,164 | | | 1,638 | | | 154.2 | |
| Marketing | 651 | | | 366 | | | 77.9 | |
| Other | 4,088 | | | 3,912 | | | 4.5 | |
| Total noninterest expense | $ | 50,401 | | | $ | 44,363 | | | 13.6 | % |
Noninterest expense increased by $0.4 million to $12.9 million for the quarter ended December 31, 2023 compared to the quarter ended December 31, 2022. Noninterest expense increased by $6.0 million to $50.4 million for the year ended December 31, 2023 compared to the year ended December 31, 2022. The increase in noninterest expense was primarily driven by an increase in FDIC insurance expense and salaries and employee benefits expense.
FDIC insurance expense totaled $1.0 million for the quarter ended December 31, 2023, an increase of $0.1 million when compared to the same period in 2022. FDIC insurance expense totaled $4.2 million for the year ended December 31, 2023, an increase of $2.5 million when compared to the same period in 2022. The higher FDIC insurance expense is attributed to the overall balance sheet growth and increased use of brokered deposits.
Salaries and employee benefits expense totaled $6.1 million for the quarter ended December 31, 2023, an increase of $0.1 million when compared to the same period in 2022. Salaries and employee benefits expense totaled $24.6 million for the year ended December 31, 2023, an increase of $2.4 million when compared to the same period in 2022. The increase in salaries and employee benefits expense was mainly driven by lower loan originations, which reduces the Bank's ability to defer expenses.
BANKWELL FINANCIAL GROUP, INC.
RECONCILIATION OF GAAP TO NON-GAAP MEASURES (unaudited)
(Dollars in thousands, except share data)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| As of |
| Computation of Tangible Common Equity to Tangible Assets | December 31,
2023 | | September 30,
2023 | | June 30,
2023 | | March 31,
2023 | | December 31,
2022 | | |
| Total Equity | $ | 265,752 | | | $ | 257,862 | | | $ | 248,813 | | | $ | 242,307 | | | $ | 238,469 | | | |
| Less: | | | | | | | | | | | |
| Goodwill | 2,589 | | | 2,589 | | | 2,589 | | | 2,589 | | | 2,589 | | | |
| Other intangibles | — | | | — | | | — | | | — | | | — | | | |
| Tangible Common Equity | $ | 263,163 | | | $ | 255,273 | | | $ | 246,224 | | | $ | 239,718 | | | $ | 235,880 | | | |
| | | | | | | | | | | |
| Total Assets | $ | 3,215,482 | | | $ | 3,249,776 | | | $ | 3,252,707 | | | $ | 3,252,318 | | | $ | 3,252,449 | | | |
| Less: | | | | | | | | | | | |
| Goodwill | 2,589 | | | 2,589 | | | 2,589 | | | 2,589 | | | 2,589 | | | |
| Other intangibles | — | | | — | | | — | | | — | | | — | | | |
| Tangible Assets | $ | 3,212,893 | | | $ | 3,247,187 | | | $ | 3,250,118 | | | $ | 3,249,729 | | | $ | 3,249,860 | | | |
| | | | | | | | | | | |
| Tangible Common Equity to Tangible Assets | 8.19 | % | | 7.86 | % | | 7.58 | % | | 7.38 | % | | 7.26 | % | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| As of |
| Computation of Fully Diluted Tangible Book Value per Common Share | December 31,
2023 | | September 30,
2023 | | June 30,
2023 | | March 31,
2023 | | December 31,
2022 | | |
| Total shareholders' equity | $ | 265,752 | | | $ | 257,862 | | | $ | 248,813 | | | $ | 242,307 | | | $ | 238,469 | | | |
| Less: | | | | | | | | | | | |
| Preferred stock | — | | | — | | | — | | | — | | | — | | | |
| Common shareholders' equity | $ | 265,752 | | | $ | 257,862 | | | $ | 248,813 | | | $ | 242,307 | | | $ | 238,469 | | | |
| Less: | | | | | | | | | | | |
| Goodwill | 2,589 | | | 2,589 | | | 2,589 | | | 2,589 | | | 2,589 | | | |
| Other intangibles | — | | | — | | | — | | | — | | | — | | | |
| Tangible common shareholders' equity | $ | 263,163 | | | $ | 255,273 | | | $ | 246,224 | | | $ | 239,718 | | | $ | 235,880 | | | |
| | | | | | | | | | | |
| Common shares issued and outstanding | 7,882,616 | | | 7,841,616 | | | 7,829,950 | | | 7,843,438 | | | 7,730,699 | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| Fully Diluted Tangible Book Value per Common Share | $ | 33.39 | | | $ | 32.55 | | | $ | 31.45 | | | $ | 30.56 | | | $ | 30.51 | | | |
BANKWELL FINANCIAL GROUP, INC.
EARNINGS PER SHARE ("EPS") (unaudited)
(Dollars in thousands, except share data)
| | | | | | | | | | | | | | | | | | | | | | | |
| For the Quarter Ended
December 31, | | For the Year Ended
December 31, |
| 2023 | | 2022 | | 2023 | | 2022 |
| (In thousands, except per share data) |
| Net income | $ | 8,524 | | | $ | 8,021 | | | $ | 36,663 | | | $ | 37,429 | |
Dividends to participating securities(1) | (40) | | | (32) | | | (164) | | | (133) | |
Undistributed earnings allocated to participating securities(1) | (181) | | | (154) | | | (794) | | | (680) | |
| Net income for earnings per share calculation | $ | 8,303 | | | $ | 7,835 | | | $ | 35,705 | | | $ | 36,616 | |
| | | | | | | |
| Weighted average shares outstanding, basic | 7,604 | | | 7,508 | | | 7,588 | | | 7,563 | |
Effect of dilutive equity-based awards(2) | 46 | | 56 | | 60 | | 77 |
| Weighted average shares outstanding, diluted | 7,650 | | | 7,564 | | | 7,648 | | | 7,640 | |
| Net earnings per common share: | | | | | | | |
| Basic earnings per common share | $ | 1.09 | | | $ | 1.04 | | | $ | 4.71 | | | $ | 4.84 | |
| Diluted earnings per common share | $ | 1.09 | | | $ | 1.04 | | | $ | 4.67 | | | $ | 4.79 | |
| | | | | | | |
| | | | | | | |
(1) Represents dividends paid and undistributed earnings allocated to unvested stock-based awards that contain non-forfeitable rights to dividends.
(2) Represents the effect of the assumed exercise of stock options and the vesting of restricted shares, as applicable, utilizing the treasury stock method.
BANKWELL FINANCIAL GROUP, INC.
NET INTEREST MARGIN ANALYSIS ON A FULLY TAX EQUIVALENT BASIS - QTD (unaudited)
(Dollars in thousands)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| For the Quarter Ended |
| December 31, 2023 | | December 31, 2022 |
| Average
Balance | | Interest | | Yield/ Rate (4) | | Average
Balance | | Interest | | Yield/ Rate (4) |
| Assets: | | | | | | | | | | | |
| Cash and Fed funds sold | $ | 314,950 | | | $ | 4,164 | | | 5.25 | % | | $ | 231,767 | | | $ | 2,150 | | | 3.68 | % |
Securities(1) | 133,440 | | | 989 | | | 2.97 | | | 123,274 | | | 887 | | | 2.88 | |
| Loans: | | | | | | | | | | | |
| Commercial real estate | 1,933,736 | | | 28,546 | | | 5.78 | | | 1,828,306 | | | 24,998 | | | 5.35 | |
| Residential real estate | 52,026 | | | 718 | | | 5.52 | | | 61,057 | | | 599 | | | 3.92 | |
| Construction | 199,541 | | | 3,793 | | | 7.44 | | | 138,552 | | | 2,185 | | | 6.17 | |
| Commercial business | 496,476 | | | 9,944 | | | 7.84 | | | 499,030 | | | 8,549 | | | 6.70 | |
| Consumer | 43,639 | | | 1,120 | | | 10.18 | | | 16,875 | | | 214 | | | 5.05 | |
| Total loans | 2,725,418 | | | 44,121 | | | 6.33 | | | 2,543,820 | | | 36,545 | | | 5.62 | |
| Federal Home Loan Bank stock | 5,696 | | | 119 | | | 8.38 | | | 5,371 | | | 64 | | | 4.72 | |
| Total earning assets | 3,179,504 | | | $ | 49,393 | | | 6.08 | % | | 2,904,232 | | | $ | 39,646 | | | 5.34 | % |
| Other assets | 94,459 | | | | | | | 76,703 | | | | | |
| Total assets | $ | 3,273,963 | | | | | | | $ | 2,980,935 | | | | | |
| | | | | | | | | | | |
| Liabilities and shareholders' equity: | | | | | | | | | | | |
| Interest bearing liabilities: | | | | | | | | | | | |
| NOW | $ | 95,603 | | | $ | 42 | | | 0.17 | % | | $ | 107,118 | | | $ | 45 | | | 0.17 | % |
| Money market | 893,043 | | | 9,369 | | | 4.16 | | | 837,486 | | | 4,158 | | | 1.97 | |
| Savings | 99,242 | | | 759 | | | 3.04 | | | 170,903 | | | 581 | | | 1.35 | |
| Time | 1,341,871 | | | 15,136 | | | 4.48 | | | 1,002,012 | | | 6,299 | | | 2.49 | |
| Total interest bearing deposits | 2,429,759 | | | 25,306 | | | 4.13 | | | 2,117,519 | | | 11,083 | | | 2.08 | |
| Borrowed Money | 159,165 | | | 1,842 | | | 4.53 | | | 170,202 | | | 1,701 | | | 3.91 | |
| Total interest bearing liabilities | 2,588,924 | | | $ | 27,148 | | | 4.16 | % | | 2,287,721 | | | $ | 12,784 | | | 2.22 | % |
| Noninterest bearing deposits | 351,071 | | | | | | | 407,923 | | | | | |
| Other liabilities | 70,181 | | | | | | | 47,369 | | | | | |
| Total liabilities | 3,010,176 | | | | | | | 2,743,013 | | | | | |
| Shareholders' equity | 263,787 | | | | | | | 237,922 | | | | | |
| Total liabilities and shareholders' equity | $ | 3,273,963 | | | | | | | $ | 2,980,935 | | | | | |
Net interest income(2) | | | $ | 22,245 | | | | | | | $ | 26,862 | | | |
| Interest rate spread | | | | | 1.92 | % | | | | | | 3.12 | % |
Net interest margin(3) | | | | | 2.81 | % | | | | | | 3.70 | % |
(1)Average balances and yields for securities are based on amortized cost.
(2)The adjustment for securities and loans taxable equivalency amounted to $52 thousand and $52 thousand for the quarters ended December 31, 2023 and 2022, respectively.
(3)Annualized net interest income as a percentage of earning assets.
(4)Yields are calculated using the contractual day count convention for each respective product type.
BANKWELL FINANCIAL GROUP, INC.
NET INTEREST MARGIN ANALYSIS ON A FULLY TAX EQUIVALENT BASIS - YTD (unaudited)
(Dollars in thousands)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| For the Year Ended |
| December 31, 2023 | | December 31, 2022 |
| Average
Balance | | Interest | | Yield/ Rate (4) | | Average
Balance | | Interest | | Yield/ Rate (4) |
| Assets: | | | | | | | | | | | |
| Cash and Fed funds sold | $ | 289,582 | | | $ | 14,147 | | | 4.89 | % | | $ | 238,233 | | | $ | 3,500 | | | 1.47 | % |
Securities(1) | 129,785 | | | 3,699 | | | 2.85 | | | 118,591 | | | 3,280 | | | 2.77 | |
| Loans: | | | | | | | | | | | |
| Commercial real estate | 1,932,627 | | | 109,110 | | | 5.57 | | | 1,532,971 | | | 76,103 | | | 4.90 | |
| Residential real estate | 55,607 | | | 2,751 | | | 4.95 | | | 66,028 | | | 2,408 | | | 3.65 | |
| Construction | 195,773 | | | 14,268 | | | 7.19 | | | 115,902 | | | 6,666 | | | 5.67 | |
| Commercial business | 533,736 | | | 41,406 | | | 7.65 | | | 427,178 | | | 25,561 | | | 5.90 | |
| Consumer | 34,022 | | | 2,645 | | | 7.77 | | | 10,121 | | | 504 | | | 4.98 | |
| Total loans | 2,751,765 | | | 170,180 | | | 6.10 | | | 2,152,200 | | | 111,242 | | | 5.10 | |
| Federal Home Loan Bank stock | 5,570 | | | 428 | | | 7.68 | | | 4,132 | | | 124 | | | 3.00 | |
| Total earning assets | 3,176,702 | | | $ | 188,454 | | | 5.85 | % | | 2,513,156 | | | $ | 118,146 | | | 4.64 | % |
| Other assets | 79,571 | | | | | | | 86,485 | | | | | |
| Total assets | $ | 3,256,273 | | | | | | | $ | 2,599,641 | | | | | |
| | | | | | | | | | | |
| Liabilities and shareholders' equity: | | | | | | | | | | | |
| Interest bearing liabilities: | | | | | | | | | | | |
| NOW | $ | 97,203 | | | $ | 170 | | | 0.17 | % | | $ | 118,837 | | | $ | 203 | | | 0.17 | % |
| Money market | 906,354 | | | 32,901 | | | 3.63 | | | 891,095 | | | 8,830 | | | 0.99 | |
| Savings | 113,260 | | | 3,163 | | | 2.79 | | | 188,186 | | | 1,259 | | | 0.67 | |
| Time | 1,303,915 | | | 50,672 | | | 3.89 | | | 617,480 | | | 9,072 | | | 1.47 | |
| Total interest bearing deposits | 2,420,732 | | | 86,906 | | | 3.59 | | | 1,815,598 | | | 19,364 | | | 1.07 | |
| Borrowed Money | 160,661 | | | 7,080 | | | 4.35 | | | 118,960 | | | 3,838 | | | 3.18 | |
| Total interest bearing liabilities | 2,581,393 | | | $ | 93,986 | | | 3.64 | % | | 1,934,558 | | | $ | 23,202 | | | 1.20 | % |
| Noninterest bearing deposits | 368,926 | | | | | | | 401,005 | | | | | |
| Other liabilities | 53,893 | | | | | | | 40,204 | | | | | |
| Total liabilities | 3,004,212 | | | | | | | 2,375,767 | | | | | |
| Shareholders' equity | 252,061 | | | | | | | 223,874 | | | | | |
| Total liabilities and shareholders' equity | $ | 3,256,273 | | | | | | | $ | 2,599,641 | | | | | |
Net interest income(2) | | | $ | 94,468 | | | | | | | $ | 94,944 | | | |
| Interest rate spread | | | | | 2.21 | % | | | | | | 3.44 | % |
Net interest margin(3) | | | | | 2.98 | % | | | | | | 3.78 | % |
(1)Average balances and yields for securities are based on amortized cost.
(2)The adjustment for securities and loans taxable equivalency amounted to $206 thousand and $200 thousand for the year ended December 31, 2023 and 2022, respectively.
(3)Yields are calculated using the contractual day count convention for each respective product type.
BWFG | LISTED | NASDAQ 4Q23 Investor Presentation January 24th, 2024
2 BWFG LISTED NASDAQ BWFG LISTED NASDAQ This presentation may contain certain forward-looking statements about Bankwell Financial Group, Inc. (the “Company”). Forward-looking statements include statements regarding anticipated future events and can be identified by the fact that they do not relate strictly to historical or current facts. They often include words such as “believe,” “expect,” “would,” “should,” “could,” or “may.” Forward-looking statements, by their nature, are subject to risks and uncertainties. Certain factors that could cause actual results to differ materially from expected results include increased competitive pressures, changes in the interest rate environment, general economic conditions or conditions within the banking industry or securities markets, and legislative and regulatory changes that could adversely affect the business in which the Company and its subsidiaries are engaged. Safe Harbor
3 BWFG LISTED NASDAQ BWFG LISTED NASDAQ Table of Contents • 4Q23 & 2023 Performance • Deposits & Liquidity • Loans • Credit Quality & Capital • Bankwell History & Overview
BWFG | LISTED | NASDAQ 4Q23 & 2023 Performance
5 BWFG LISTED NASDAQ BWFG LISTED NASDAQ Net Interest Margin (NIM) 2.81% 2.98% Total Risk Based Capital 12.15% Tangible Book Value Per Share $33.39 2023 Overview Net Income $8.5 $36.7 Earnings Per Share (EPS) $1.09 $4.67 Return on Average Assets 1.03% 1.13% Return on Average Equity 12.82% 14.55% Non-Interest Expense / Assets 1.56% 1.55% 4Q23 Dollars in millions, except per share data TY23 Highlights • Balanced loan growth (1.6%) with solid capital build • $33.39 Tangible Book Value generated a 15% 3-year CAGR • $1.6 billion immediately available liquidity providing more than 2X coverage of uninsured deposits • $83 million reduction in brokered deposits in 2023 • Addition of Chief Innovation Officer in 2Q23
6 BWFG LISTED NASDAQ BWFG LISTED NASDAQ Income Statement 4Q23 3Q23 Var1 Total Interest Income $49.4 $48.3 $1.1 Total Interest Expense $27.1 $25.6 $(1.6) Net Interest Income $22.2 $22.7 $(0.5) Non-Interest Income $1.1 $0.8 $0.3 Non-Interest Expense $12.9 $12.2 $(0.7) Pre-Tax, Pre-Provision Net Revenue $10.5 $11.3 $(0.8) (Credit) for Credit Losses2 $(1.0) $(1.6) $(0.6) Pre-Tax Income $11.5 $12.9 $(1.4) Income Tax Expense $2.9 $3.1 $0.2 Reported Net Income $8.5 $9.8 $(1.3) EPS $1.09 $1.25 $(0.16) Pre-Tax, Pre-Provision Net Revenue per share3 $1.37 $1.48 $(0.11) 1 Variances are rounded based on actual whole dollar amounts 2 3Q23 credit given CECL methodology refinement on loan portfolio segmentation; 4Q23 credit given decrease in loan balances and a release of specific reserves, partially offset by net charge-offs 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 4Q23 3Q23 Var1 Cash & Cash Equivalents $269 $258 $11 Investment Securities $128 $116 $12 Loans Receivable, net $2,685 $2,735 $(50) All Other Assets $133 $141 $(7) Total Assets $3,215 $3,250 $(35) Total Deposits $2,737 $2,769 $(32) Total Borrowings $159 $159 $0 Other Liabilities $54 $64 $(10) Total Liabilities $2,950 $2,992 $(42) Equity $265 $258 $7 Total Liabilities & Equity $3,215 $3,250 $(35) 4Q23 Consolidated Financial Statements Linked Quarter
7 BWFG LISTED NASDAQ BWFG LISTED NASDAQ Income Statement 2023 2022 Var1 Total Interest Income $188.4 $117.9 $70.5 Total Interest Expense $94.0 $23.2 $(70.8) Net Interest Income $94.5 $94.7 $(0.2) Non-Interest Income $4.8 $3.0 $1.8 Non-Interest Expense $50.4 $44.4 $(6.0) Pre-Tax, Pre-Provision Net Revenue $48.9 $53.4 $(4.5) Provision for Loan Losses $0.9 $5.4 $4.5 Pre-Tax Income $48.0 $48.0 $0.0 Income Tax Expense $11.4 $10.6 $(0.8) Reported Net Income $36.7 $37.4 $(0.7) EPS $4.67 $4.79 $(0.12) Pre-Tax, Pre-Provision Net Revenue per share2 $6.40 $6.99 $(0.59) 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 YTD Consolidated Income Statement Prior Year
8 BWFG LISTED NASDAQ BWFG LISTED NASDAQ Performance Trends $2.31 $0.75 $3.36 $4.79 $4.67 2019 2020 2021 2022 2023 Diluted EPS 0.97% 0.28% 1.17% 1.44% 1.13% 2019 2020 2021 2022 2023 Return on Average Assets 10.20% 3.35% 13.86% 16.72% 14.55% 2019 2020 2021 2022 2023 Return on Average Equity $23.4 $14.9 $33.8 $53.4 $48.9 2019 2020 2021 2022 2023 Pre Provision Net Revenue 1 Pre-tax, pre-provision net revenue is a non-GAAP metric & excludes provision for loan losses and income tax expense 1 Dollars in millions
9 BWFG LISTED NASDAQ BWFG LISTED NASDAQ Building Book Value $21.96 $25.55 $30.51 $33.39 2020 2021 2022 2023 Consistently building book value Fully Diluted Tangible Book Value
10 BWFG LISTED NASDAQ BWFG LISTED NASDAQ 60.2% 73.9% 53.9% 45.4% 50.8% 1.90% 2.03% 1.75% 1.71% 1.55% 1.00% 1.20% 1.40% 1.60% 1.80% 2.00% 2.20% 2.40% 0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0% 80.0% 2019 2020 2021 2022 2023 Efficiency Ratio Non-interest Expense / Average Assets 1 A non-GAAP metric 1 Efficiency Trends
BWFG | LISTED | NASDAQ Deposits & Liquidity
12 BWFG LISTED NASDAQ BWFG LISTED NASDAQ Deposit Balances 1 1 Core Deposits include Commercial and Consumer checking, savings and money market accounts, and retail CD under $250k 2 Wholesale Funding ratio defined as brokered deposits and FHLB borrowings to total assets Dollars in millions 20.6% 19.8% 16.4% 34.4% 32.4% Wholesale Funding ratio2 FHLB Borrowings $150 $175 $50 $90 $90 $83 million reduction of brokered deposits in 2023 16.2% 15.0% 16.7% 37.0% 34.7% 8.4% 6.1% 2.6% 2.8% 4.8% 75.5% 78.9% 80.6% 60.3% 60.5% $1,492 $1,827 $2,124 $2,801 $2,737 4Q19 4Q20 4Q21 4Q22 4Q23 Core Deposits Retail CDs >$250k Brokered Deposits
13 BWFG LISTED NASDAQ BWFG LISTED NASDAQ • NIM declining with inverted yield curve: • December 2023 NIM of 2.54% • 12/31/2023 ‘exit rates’ of 6.20% on loans & 3.65% on deposits Net Interest Margin 3.03% 2.77% 3.17% 3.78% 2.98% 4.85% 4.48% 4.42% 5.10% 6.10% 1.66% 1.07% 0.54% 0.87% 3.12% 0.00% 0.50% 1.00% 1.50% 2.00% 2.50% 3.00% 3.50% 4.00% 0.00% 1.00% 2.00% 3.00% 4.00% 5.00% 6.00% 7.00% 8.00% 9.00% 10.00% 2019 2020 2021 2022 2023 Net Interest Margin Loan Yield Cost of Deposits 1 Includes origination fee amortization 1 3.30% 3.75% 3.96% 3.70% 3.24% 3.06% 2.85% 2.81% 1Q22 2Q22 3Q22 4Q22 1Q23 2Q23 3Q23 4Q23 Quarterly NIM
14 BWFG LISTED NASDAQ BWFG LISTED NASDAQ FDIC Insured Deposits 71% Uninsured Deposits 25% FHLB SBLOC Insured Deposits 4% Liquidity 1 Bank lines, including FHLB & FRB 2 Cash held with right of offset as collateral against loans Ample coverage of uninsured deposits • $2,056 million total insured deposits, including $1,946 million FDIC-insured deposits • Uninsured deposits include restricted funds held as cash reserves against loans • Over 2X liquidity coverage on $681 million uninsured deposits: • 12% liquidity on balance sheet (Cash & AFS Securities) + Unencumbered Cash $263 + AFS Securities $111 + Borrowing Capacity1 $1,264 Immediately Available Liquidity $1,637 Total Deposits = $2,737 million Deposits Held as Cash Reserves ~1% 2
15 BWFG LISTED NASDAQ BWFG LISTED NASDAQ Deposit Composition • No digital currency deposits • No single depositor greater than 3% of total deposits • Average account size of $86K1 • Long-term mix shift into Business deposits Deposits by Industry 1 Excluding Brokered deposits 1 Well diversified deposit base Consumer 40.0% Finance & Insurance 17.8% Professional, Sci & Tech Services 9.8% Real Estate and Rental/Leasing 11.8% Public Administration 4.8% Health Care & Social Assistance 4.3% Other 11.5% 50% 39% 36% 31% 27% 50% 61% 64% 69% 73% Dec-19 Dec-20 Dec-21 Dec-22 Dec-23 Core Deposit Mix excluding Retail CDs Consumer Business
BWFG | LISTED | NASDAQ Loans
17 BWFG LISTED NASDAQ BWFG LISTED NASDAQ Loan Balance Trends Dollars in millions $1,046 $1,051 $1,032 $1,147 $1,224 $1,225 $1,215 $1,240 $1,228 $310 $375 $467 $501 $697 $736 $716 $716 $720 $351 $370 $372 $443 $522 $543 $531 $509 $501 $98 $116 $111 $117 $155 $177 $220 $200 $183 $89 $73 $74 $79 $77 $78 $92 $106 $87 $1,895 $1,985 $2,057 $2,287 $2,675 $2,759 $2,774 $2,770 $2,719 4Q21 1Q22 2Q22 3Q22 4Q22 1Q23 2Q23 3Q23 4Q23 CRE Investor CRE Owner Occupied C&I Construction Residential / Other C&I + CRE Owner Occupied / Total Loans 34.9% 44.9% 36% CAGR for C&I + CRE Owner Occupied over same period
18 BWFG LISTED NASDAQ BWFG LISTED NASDAQ Loan Yields Steadily Increasing 1 Weighted average yield based on active loans as of each date, an “exit" rate 2 Weighted average yield based on active loans as of 12-31-2023, an “exit" rate 1 Dollars in millions Loan portfolio yields increased 169 bps since December 31, 2021 • 70% of balances are 2021 - 2023 vintages December 2023 Yield2 by Vintage 5.21% Pre 2021 5.81% 2021 6.38% 2022 7.70% 2023 $1,895 $1,985 $2,057 $2,287 $2,675 $2,759 $2,774 $2,770 $2,719 4.30% 4.34% 4.55% 4.99% 5.56% 5.75% 5.88% 5.91% 5.99% 0.00% 1.00% 2.00% 3.00% 4.00% 5.00% 6.00% 7.00% (200) 300 800 1,300 1,800 2,300 2,800 3,300 3,800 4Q21 1Q22 2Q22 3Q22 4Q22 1Q23 2Q23 3Q23 4Q23 Loan Balance Portfolio Loan Yield
19 BWFG LISTED NASDAQ BWFG LISTED NASDAQ Residential 1.7% C&I 18.4% CRE Owner Occupied 26.5% CRE Investor 45.2% Commercial Const. 6.7% Other 1.5% • No single relationship represents more than ~4% of total loans, as of December 31, 2023 • Investor CRE continues to shrink as an overall percentage of the loan portfolio: Total Loan Portfolio = $2,719 million Loan Portfolio Composition 55.2% 45.2% 34.9% 44.9% 4Q21 4Q23 CRE Investor CRE O/O + C&I
20 BWFG LISTED NASDAQ BWFG LISTED NASDAQ Total CRE Portfolio = $1,947 million 1 Includes Owner Occupied CRE, does not include Construction 2 LTVs based on original LTV values, at origination CRE Loan Portfolio • Portfolio weighted average LTV2 of 64.4% • ~67% of all CRE loan balances have recourse; up from ~50% at 1Q21 • $193 million in Office loans (~7% total loan portfolio) ‒ No New York City exposure ‒ ~68% located in Bankwell’s primary market ‒ Out of primary market loans are generally either GSA- leased, credit tenants, or owner-occupied ‒ ~97% of loans have “Pass” rating • CRE loan portfolio mix improving favorably with Owner Occupied growth: Dollars in millions Retail 20.9% Office 9.9% Residential Care 32.6% MultiFamily 13.2% Industrial Warehouse 7.8% Mixed Use 5.6% Medical Office 4.0% Other 4.3% Special Use 1.6% 77.1% 63.1% 22.9% 36.9% 4Q21 4Q23 Investor Owner Occupied 1
21 BWFG LISTED NASDAQ BWFG LISTED NASDAQ 1 Includes Owner Occupied CRE, does not include Construction 2 Consists primarily of skilled nursing and/or assisted living facilities • Greater geographic diversity attributed to growth in Residential Care2 sector • Continued diversification by following strongest customers to attractive markets • Of the CT-based loans, ~46% are in Fairfield County CRE Loan Portfolio Geography CT 29.5% NY 22.2% FL 17.3%NJ 6.1%OH 4.6% PA 3.4% TX 2.9% Other 14.1% 1
22 BWFG LISTED NASDAQ BWFG LISTED NASDAQ C&I Loan Portfolio Loans by Industry Type Total C&I Portfolio = $500 million 1 Does not Include Owner Occupied CRE • 87% of C&I portfolio has recourse • 93% of Health Care loans have recourse - Primarily consists of working capital lines secured by accounts receivable • Insurance lending primarily to brokers of home and auto insurance Finance 15% Insurance (Primarily Brokers) 24% Health Care & Social Assistance 33% Real Estate and Rental/Leasing 9% Admin & Support, Waste Mgmt, Remediation Svcs 4% Retail Trade 3% Construction 3% Manufacturing 2% Other 7% 1
23 BWFG LISTED NASDAQ BWFG LISTED NASDAQ CRE Concentration 1 1 Per regulatory definition for CRE Concentration; current period value is an estimate, pending FDIC call report filing $1,604 $1,626 $1,895 $2,675 $2,719 473% 494% 454% 425% 396% 0% 100% 200% 300% 400% 500% 600% $500 $1,000 $1,500 $2,000 $2,500 $3,000 2019 2020 2021 2022 2023 Gross Loans CRE Concentration CRE Concentration Ratio reduced while growing the balance sheet
24 BWFG LISTED NASDAQ BWFG LISTED NASDAQ Healthcare Portfolio Healthcare Portfolio Composition CRE Skilled Nursing Facility By State • Consists primarily of skilled nursing facilities located across the US • Healthcare lending team has more than 15 years of industry experience • High touch service model attracts desirable ultra-high net worth Healthcare borrowers • 100% of Skilled Nursing Lending has recourse • Focused on originating Healthcare loans in the most desirable states with: – Higher average occupancy – Low denial of payment rates for Medicaid – Strong senior demographic trends 1 Includes CRE and C&I 2 Includes Physicians 2 1 Skilled Nursing Facilities 78% Assisted Living 11% Recovery 5% Other 6% FL 49% OH 13% NY 9% VA 4% PA 4% AL 4% NJ 4% Other 13%
25 BWFG LISTED NASDAQ BWFG LISTED NASDAQ Multifamily 45% Mixed Use 26% Land 18% Self Storage 8% Retail 3% Commercial Construction Portfolio • Commercial construction loans comprise ~7% of total loan portfolio ($183 million) • $97 million of unfunded commitments, committed construction draws are subject to various terms and conditions, including completion of work verified by third party professional inspection Dollars in millions By Property Type # Loans $ Committed % Unfunded $ Unfunded 3Q23 Balance 35 $313 35% $111 Closures in 4Q23 (6) ($29) 3Q23 Loans @ 4Q23 29 $269 35% $94 New 4Q23 Loans 2 $9 4Q23 Balance 31 $278 35% $97
BWFG | LISTED | NASDAQ Credit Quality & Capital
27 BWFG LISTED NASDAQ BWFG LISTED NASDAQ Credit Quality 4Q22 1Q23 2Q23 3Q23 4Q23 Risk Rating Balance % Balance % Balance % Balance % Balance % 1-5 “Pass” $2,632 98.4% $2,714 98.4% $2,710 97.7% $2,694 97.2% $2,622 96.4% 6 “Special Mention” $1 0.0% $1 0.1% $28 1.0% $22 0.8% $15 0.6% 7 “Substandard” $43 1.6% $40 1.4% $36 1.3% $54 2.0% $76 2.8% 8 “Doubtful” $0 0.0% $2 0.1% $0 0.0% $0 0.0% $6 0.2% Total Gross Loans $2,675 $2,757 $2,774 $2,770 $2,719 Non-Accrual Loans $16.4 $14.3 $15.5 $28.0 $49.2 % of Total Gross Loans 0.61% 0.52% 0.56% 1.01% 1.81% Dollars in millions 4Q23 Non- Accrual Breakdown Balance Basis Points (bps) Comments CRE $21.2 78 bps • $10.6 million Retail loan modified during COVID; borrower paying according to terms of restructure • $6.0 million Office loan in suburban CT; carries $1 million specific reserve • $4.2 million Retail loan; borrower paying according to terms of restructure C&I $17.3 64 bps • $8.7 million C&I relationship • $7.0 million balances are SBA-guaranteed (~26 bps) Construction $9.4 35 bps • Single loan – litigation in process; 46% LTV & full recourse; Full payment expected; HNW guarantors Resi / Other $1.4 5 bps 1 1 Includes approximately 108 basis points of loans performing per original terms
28 BWFG LISTED NASDAQ BWFG LISTED NASDAQ Credit Quality • $5.5 million addition to ACL-Loans in 2023 • 0.03% net charge-offs to average loans in 2023 0.84% 1.03% $22.4 million $27.9 million 0.81% 0.99% 0.03% $5.1 million ($0.9 million) $1.3 million 0.04% 2022 1/1 CECL Asset Growth/ Mix Macroeconomic Factors 2023 Allowance for Credit Losses ("ACL") WalkGeneral Specific
29 BWFG LISTED NASDAQ BWFG LISTED NASDAQ $30.51 $33.39 $4.67 $0.80 $0.19 $0.63 $0.17 2022 Net Income Dividends AOCI CECL 1/1 Misc 2023 Fully Diluted Tangible Book Value 1 $4.9 million 1/1/23 CECL adjustment 2 Misc includes items such as, but not limited to, changes related to stock grants and share count Interest rate swaps hedging impact of unrealized losses in AFS Securities portfolio: ‒ AFS Securities $(5.8) million ‒ Interest Rate Swaps $4.1 million 1 2023 TBV / Share Walk 2
30 BWFG LISTED NASDAQ BWFG LISTED NASDAQ Capital Ratios 9.88% 9.22% 9.41% 9.60% 9.81% 5% 4Q22 1Q23 2Q23 3Q23 4Q23 Tier 1 Leverage Ratio Bankwell Bank Well Capitalized 1 Current period ratios are estimates pending FDIC call report filing 2 Consolidated ratio 10.28% 10.17% 10.34% 10.82% 11.15% Tier 1 8% 4.0% 5.0% 6.0% 7.0% 8.0% 9.0% 10.0% 11.0% 0.00% 1.00% 2.00% 3.00% 4.00% 5.00% 6.00% 7.00% 8.00% 9.00% 10.00% 11.00% 12.00% 4Q22 1Q23 2Q23 3Q23 4Q23 Tier 1 / CET 1 Capital Ratio Bankwell Bank Well Capitalized 11.07% 11.16% 11.41% 11.86% 12.15% 10% 3% 4% 5% 6% 7% 8% 9% 10% 11% 12% 13% 0.00% 1.00% 2.00% 3.00% 4.00% 5.00% 6.00% 7.00% 8.00% 9.00% 10.00% 11.00% 12.00% 13.00% 4Q22 1Q23 2Q23 3Q23 4Q23 Total Risk-Based Capital Ratio Bankwell Bank Well Capitalized Additional 4Q23 ratios: • 8.19% TCE Ratio2 • 396% CRE Concentration Ratio • 50% Construction Concentration Ratio 1 CET1 6.5%
BWFG | LISTED | NASDAQ History & Overview
32 BWFG LISTED NASDAQ BWFG LISTED NASDAQ • Connecticut-based $3.2 billion commercial bank • 9 branches in Fairfield & New Haven Counties • $311 million deposits per branch; one of the highest in Fairfield & New Haven Counties1 Bankwell operates in an attractive core market: • 4th most affluent MSA in the Nation in per capita personal income (PCPI)2 • 4 of the top 25 wealthiest towns in the U.S.3 • Headquarters of 9 Fortune 500 companies4 • Home to three of the largest hedge funds in the U.S. • MSA ranked 13th most educated overall, 9th highest percentage of bachelor degree holders5 • Median value of owner-occupied units of $704 thousand6 ̶ In addition, New Haven County median value of owner-occupied units of $237 thousand6 1 Source: S&P Global Market Intelligence’s Branch Competitors & Pricing Report as of 6/30/23, excluding global money center banks (tickers BAC, WFC, JPM, TD & C) 2 Source: Bureau of Economic Analysis’ Metropolitan Area Table, contained within the Personal Income by County & Metropolitan Area, 2022 news release 11/16/23 3 Source: Bloomberg: 2020 Richest Places 4 Source: Fortune.com: 2023 Fortune 500 5 Source: WalletHub: Most & Least Educated Cities in America, 7/17/23 6 Source: US Census Bureau QuickFacts (as of July 1, 2022 data) Profile
33 BWFG LISTED NASDAQ BWFG LISTED NASDAQ Financial Snapshot 2019 2020 2021 2022 2023 Total assets $1,882,182 $2,253,747 $2,456,264 $3,252,449 $3,215,482 Net loans $1,588,840 $1,601,672 $1,875,167 $2,646,384 $2,685,301 Loan-to-deposit ratio 107.1% 87.9% 88.8% 95.2% 98.9% Return on average assets 0.97% 0.28% 1.17% 1.44% 1.13% Efficiency ratio1 60.2% 73.9% 53.9% 45.4% 50.8% Non-interest expense / average assets 1.90% 2.03% 1.75% 1.71% 1.55% Net interest margin 3.03% 2.77% 3.17% 3.78% 2.98% Total capital to risk weighted assets 13.35% 12.28% 12.00% 11.07% 12.15% Tangible common equity ratio1 9.56% 7.73% 8.13% 7.26% 8.19% Return on average equity 10.20% 3.35% 13.86% 16.72% 14.55% Fully diluted tangible book value per share1 $22.82 $21.96 $25.55 $30.51 $33.39 Net interest income $53,761 $54,835 $67,886 $94,743 $94,468 Pre-tax, pre-provision net revenue1 $23,379 $14,907 $33,803 $53,420 $48,909 Net income $18,216 $5,904 $26,586 $37,429 $36,664 EPS (fully diluted) $2.31 $0.75 $3.36 $4.79 $4.67 1 A non-GAAP metric Dollars in thousands, except per share data
34 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 Credit Officer (since 2013) 40+ Ms. Chivily has over 40 years of experience in banking and real estate finance. She previously served in a risk management role for the CRE and C&I loan portfolios at People's United Bank. Her prior experience also includes five years as Director of Freddie Mac’s New England region for multifamily properties and 11 years as Senior Credit Officer at RBS Greenwich Capital. She also has over 10 years of combined experience in lending, loan administration and workouts at other various banking institutions. Ms. Chivily received her B.A. from Mt. Holyoke College. Ryan J. Hildebrand Chief Innovation Officer (since 2023) 20+ Mr. Hildebrand has over 20 years of experience in fintech and banking. He led business units at Cross River Bank and LSBX, driving increased deposits and fee income. He founded Seed, a pioneering challenger bank acquired by Cross River. Previously, he served as Head of Finance and Strategy at Simple, the first consumer challenger bank, and held positions at Umpqua Bank and PricewaterhouseCoopers. Matthew McNeill Chief Banking Officer (since 2020) 20+ Mr. McNeill has more than 20 years of experience in Commercial Banking. He most recently served as Head of Commercial Lending at Metropolitan Commercial Bank. During his 8 years at Metropolitan Commercial Bank the bank grew its lending assets from $400 million to over $3 billion. Mr. McNeill has additionally held lending roles at HSBC Bank US and Banco Santander. Mr. McNeill has also served as Managing Partner at American Real Estate Lending; a Commercial Real Estate finance company. Courtney E. Sacchetti Chief Financial Officer (since 2023) 20+ Ms. Sacchetti has more than 20 years experience in Financial Services. She most recently served as Director of Financial Planning & Analysis for the Company for 6 years. She began her career at GE Capital in the Financial Management Program (FMP) and held various finance and regulatory positions of increasing responsibility over her 18-year career at GE Capital. Ms. Sacchetti earned a B.A. and an M.B.A. from Union College. Experienced Leadership Team
BWFG | LISTED | NASDAQ Thank You & Questions
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