Bankwell Financial Group Reports Operating Results for the Third Quarter and Declares Fourth Quarter Dividend

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NEW CANAAN, Conn., October 25, 2023--(BUSINESS WIRE)--Bankwell Financial Group, Inc. (NASDAQ: BWFG) reported GAAP net income of $9.8 million, or $1.25 per share for the third quarter of 2023, versus $9.2 million, or $1.18 per share, for the same period in 2022.

The Company's Board of Directors declared a $0.20 per share cash dividend, payable November 20, 2023 to shareholders of record on November 10, 2023.

We recommend reading this earnings release in conjunction with the Third Quarter 2023 Investor Presentation, located at http://investor.mybankwell.com/Presentations and included as an exhibit to our October 25, 2023 Current Report on Form 8-K.

Notes Bankwell Financial Group President and CEO, Christopher R. Gruseke:

"We continue to generate quality returns for our shareholders in a complex interest rate environment. Despite the compression of our Net Interest Margin during the current tightening cycle, our team has delivered a 1.16% Return on Average Assets and a 15.16% Return on Average Equity thus far this year. Our commitment to rigorous expense management lays a solid foundation for our financial success. Non-Interest Expense as a percentage Average Assets stands at 1.54% year-to date, putting Bankwell well ahead of industry peers on this key metric. I applaud the efforts and hard work of our team who enable the Company to perform at this level of efficiency."

Third Quarter 2023 Highlights:

  • Total gross loans were $2.8 billion, growing $94.7 million, or 3.5%, compared to December 31, 2022.

  • Deposits were $2.8 billion, decreasing $32.2 million, or 1.1%, compared to December 31, 2022.

  • Brokered deposits decreased $75.3 million, when compared to December 31, 2022.

  • FDIC-insured deposits totaled $2.0 billion and represent 71.2% of total deposits as of September 30, 2023.

  • As of September 30, 2023, the Bank has $1.7 billion immediately available liquidity, more than two times coverage of uninsured deposits.

  • Average yield on 2023 funded loans was 7.23% as of September 30, 2023.

  • Return on average assets was 1.19% for the quarter ended September 30, 2023.

  • Return on average shareholders' equity was 15.19% for the quarter ended September 30, 2023.

  • The net interest margin was 2.85% for the quarter ended September 30, 2023.

  • Noninterest expense to average assets was 1.48% for the quarter ended September 30, 2023.

  • Investment securities totaled $115.8 million and represent 3.6% of total assets, with HTM securities totaling $15.9 million, or 0.5% of total assets.

  • Allowance for credit losses (ACL)-Loans to total loans was 1.06% as of September 30, 2023.

Earnings and Performance

Revenues (net interest income plus noninterest income) for the quarter ended September 30, 2023 were $23.5 million, versus $25.0 million for the quarter ended September 30, 2022. Revenues for the nine months ended September 30, 2023 were $75.9 million, versus $70.4 million for the nine months ended September 30, 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 nine months ended 2023 was primarily attributable to an increase in interest and fees on loans due to loan growth and higher overall loan yields1 partially offset by an increase in interest expense.

1 - The increase in overall loan yields was 100 bps and 114 bps for the quarter and nine months ended September 30, 2023, respectively.

Net income for the quarter ended September 30, 2023 was $9.8 million, versus $9.2 million for the quarter ended September 30, 2022. Net income for the nine months ended September 30, 2023 was $28.1 million, versus $29.4 million for the nine months ended September 30, 2022. The increase in net income for the quarter ended 2023 was primarily due to the credit for credit losses, partially offset by an increase in noninterest expense, and the aforementioned decrease in revenues. The decrease in net income for nine months ended 2023 was due to an increase in noninterest expense partially offset by the aforementioned increase in revenues.

Basic and diluted earnings per share were $1.25 and $1.25, respectively, for the quarter ended September 30, 2023 compared to basic and diluted earnings per share of $1.19 and $1.18, respectively, for the quarter ended September 30, 2022. Basic and diluted earnings per share were $3.61 and $3.58, respectively, for the nine months ended September 30, 2023 compared to basic and diluted earnings per share of $3.80 and $3.75, respectively, for the nine months ended September 30, 2022.

The net interest margin (fully taxable equivalent basis) for the quarters ended September 30, 2023 and September 30, 2022 was 2.85% and 4.12%, respectively. The net interest margin (fully taxable equivalent basis) for the nine months ended September 30, 2023 and September 30, 2022 was 3.04% and 3.81%, respectively. The decrease in the net interest margin was due to an increase in funding costs partially offset by an increase in earning assets.

ACL-Loans

The ACL-Loans was $29.3 million as of September 30, 2023 compared to $30.7 million as of June 30, 2023, for a release of $1.4 million for the quarter ended September 30, 2023. The ACL-Loans as a percentage of total loans was 1.06% as of September 30, 2023 compared to 1.11% as of June 30, 2023. The reduction for the quarter was primarily due to a revision in the CECL methodology given further refinement of the Company's loan portfolio segmentation.

The ACL-Loans was $29.3 million as of September 30, 2023 compared to $22.4 million as of December 31, 2022, an increase of $6.9 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 1.06% as of September 30, 2023 compared to 0.84% as of December 31, 2022. The increase in the ACL-Loans provision for credit losses was primarily driven by loan growth and forward looking CECL macroeconomic factors.

Financial Condition

Assets totaled $3.2 billion at September 30, 2023, a decrease of $2.7 million or 0.1% compared to December 31, 2022. Gross loans totaled $2.8 billion at September 30, 2023, an increase of $94.7 million, or 3.5% compared to December 31, 2022. Deposits totaled $2.8 billion at September 30, 2023, a decrease of $32.2 million, or 1.1% compared to December 31, 2022.

Capital

Shareholders’ equity totaled $257.9 million as of September 30, 2023, an increase of $19.4 million compared to December 31, 2022, primarily a result of net income of $28.1 million for the nine months ended September 30, 2023. The increase was partially offset by the Day 1 CECL adoption of $4.9 million, dividends paid of $4.7 million, and a $1.3 million unfavorable impact to accumulated other comprehensive income. The unfavorable impact to accumulated other comprehensive income was driven by fair value marks on the Company's available for sale investment securities portfolio of $1.4 million partially offset by fair value marks related to hedge positions involving interest rate swaps of $0.1 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 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.

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 noninterest 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)

September 30,
2023

June 30,
2023

March 31,
2023

December 31,
2022

September 30,
2022

ASSETS

Cash and due from banks

$

256,973

$

207,345

$

249,812

$

344,925

$

212,175

Federal funds sold

1,122

54,706

27,370

10,754

10,947

Cash and cash equivalents

258,095

262,051

277,182

355,679

223,122

Investment securities

Marketable equity securities, at fair value

1,975

2,017

2,028

1,988

1,973

Available for sale investment securities, at fair value

97,907

99,938

103,171

103,663

95,095

Held to maturity investment securities, at amortized cost

15,885

15,884

15,931

15,983

16,027

Total investment securities

115,767

117,839

121,130

121,634

113,095

Loans receivable (net of ACL-Loans of $29,284, $30,694, $27,998, $22,431, and $18,167 at September 30, 2023, June 30, 2023, March 31, 2023, December 31, 2022, and September 30, 2022, respectively)

2,735,242

2,736,607

2,724,514

2,646,384

2,263,432

Accrued interest receivable

15,648

14,208

14,261

13,070

9,552

Federal Home Loan Bank stock, at cost

5,696

5,696

5,234

5,216

5,039

Premises and equipment, net

26,899

27,658

27,619

27,199

27,510

Bank-owned life insurance

51,119

50,816

50,524

50,243

49,970

Goodwill

2,589

2,589

2,589

2,589

2,589

Deferred income taxes, net

9,395

10,014

8,692

7,422

5,952

Other assets

29,326

25,229

20,573

23,013

22,734

Total assets

$

3,249,776

$

3,252,707

$

3,252,318

$

3,252,449

$

2,722,995

LIABILITIES AND SHAREHOLDERS’ EQUITY

Liabilities

Deposits

Noninterest bearing deposits

$

345,433

$

367,635

$

377,667

$

404,559

$

380,365

Interest bearing deposits

2,423,193

2,421,228

2,420,641

2,396,259

1,906,337

Total deposits

2,768,626

2,788,863

2,798,308

2,800,818

2,286,702

Advances from the Federal Home Loan Bank

90,000

90,000

90,000

90,000

90,000

Subordinated debentures

69,143

69,082

69,020

68,959

68,897

Accrued expenses and other liabilities

64,145

55,949

52,683

54,203

45,896

Total liabilities

2,991,914

3,003,894

3,010,011

3,013,980

2,491,495

Shareholders’ equity

Common stock, no par value

117,181

116,541

115,875

115,018

114,548

Retained earnings

142,205

133,988

127,566

123,640

117,152

Accumulated other comprehensive (loss)

(1,524

)

(1,716

)

(1,134

)

(189

)

(200

)

Total shareholders’ equity

257,862

248,813

242,307

238,469

231,500

Total liabilities and shareholders’ equity

$

3,249,776

$

3,252,707

$

3,252,318

$

3,252,449

$

2,722,995

BANKWELL FINANCIAL GROUP, INC.

CONSOLIDATED STATEMENTS OF INCOME (unaudited)

(Dollars in thousands, except share data)

For the Quarter Ended

For the Nine Months Ended

September 30,
2023

June 30,
2023

March 31,
2023

December 31,
2022

September 30,
2022

September 30,
2023

September 30,
2022

Interest and dividend income

Interest and fees on loans

$

43,854

$

42,482

$

39,723

$

36,545

$

28,128

$

126,059

$

74,697

Interest and dividends on securities

1,016

1,002

1,000

898

811

3,018

2,305

Interest on cash and cash equivalents

3,393

3,022

3,568

2,150

747

9,983

1,350

Total interest and dividend income

48,263

46,506

44,291

39,593

29,686

139,060

78,352

Interest expense

Interest expense on deposits

23,789

20,777

17,033

11,083

4,092

61,599

8,281

Interest expense on borrowings

1,783

1,738

1,717

1,701

993

5,238

2,137

Total interest expense

25,572

22,515

18,750

12,784

5,085

66,837

10,418

Net interest income

22,691

23,991

25,541

26,809

24,601

72,223

67,934

(Credit) provision for credit losses

(1,579

)

2,579

826

4,272

2,381

1,826

1,165

Net interest income after provision for credit losses

24,270

21,412

24,715

22,537

22,220

70,397

66,769

Noninterest income

Bank owned life insurance

303

292

281

273

271

876

796

Service charges and fees

294

361

286

343

240

941

729

Gains and fees from sales of loans

237

725

931

12

(15

)

1,893

1,224

Other

(48

)

23

28

(100

)

(94

)

3

(237

)

Total noninterest income

786

1,401

1,526

528

402

3,713

2,512

Noninterest expense

Salaries and employee benefits

6,036

6,390

6,081

5,988

5,876

18,507

16,249

Occupancy and equipment

2,146

2,204

2,084

1,919

2,035

6,434

6,378

Professional services

491

692

1,322

912

994

2,505

2,975

Data processing

741

729

671

663

626

2,141

1,969

Director fees

362

453

392

378

325

1,207

1,016

FDIC insurance

1,026

1,050

1,062

898

255

3,138

740

Marketing

184

177

151

112

102

512

254

Other

1,219

946

928

1,601

818

3,093

2,311

Total noninterest expense

12,205

12,641

12,691

12,471

11,031

37,537

31,892

Income before income tax expense

12,851

10,172

13,550

10,594

11,591

36,573

37,389

Income tax expense

3,074

2,189

3,171

2,573

2,417

8,434

7,981

Net income

$

9,777

$

7,983

$

10,379

$

8,021

$

9,174

$

28,139

$

29,408

Earnings Per Common Share:

Basic

$

1.25

$

1.02

$

1.34

$

1.04

$

1.19

$

3.61

$

3.80

Diluted

$

1.25

$

1.02

$

1.33

$

1.04

$

1.18

$

3.58

$

3.75

Weighted Average Common Shares Outstanding:

Basic

7,598,230

7,593,417

7,554,689

7,507,540

7,553,718

7,582,272

7,582,175

Diluted

7,633,934

7,601,562

7,616,671

7,563,116

7,612,421

7,646,837

7,664,123

Dividends per common share

$

0.20

$

0.20

$

0.20

$

0.20

$

0.20

$

0.60

$

0.60

BANKWELL FINANCIAL GROUP, INC.

CONSOLIDATED FINANCIAL HIGHLIGHTS (unaudited)

For the Quarter Ended

For the Nine Months Ended

September 30,

2023

June 30,

2023

March 31,

2023

December 31,

2022

September 30,
2022

September 30,

2023

September 30,

2022

Performance ratios:

Return on average assets

1.19

%

0.99

%

1.30

%

1.07

%

1.47

%

1.16

%

1.59

%

Return on average shareholders' equity

15.19

%

12.91

%

17.48

%

13.38

%

15.73

%

15.16

%

17.94

%

Return on average tangible common equity

15.35

%

13.05

%

17.67

%

13.52

%

15.91

%

15.32

%

18.16

%

Net interest margin

2.85

%

3.07

%

3.24

%

3.70

%

4.12

%

3.04

%

3.81

%

Efficiency ratio(1)

52.0

%

49.8

%

46.9

%

45.6

%

44.1

%

49.4

%

45.3

%

Net loan charge-offs as a % of average loans

—

%

—

%

0.02

%

—

%

—

%

0.01

%

—

%

Dividend payout ratio(2)

16.00

%

19.61

%

15.04

%

19.23

%

16.95

%

16.76

%

16.00

%

(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

September 30,

2023

June 30,

2023

March 31,

2023

December 31,

2022

September 30,

2022

Capital ratios:

Total Common Equity Tier 1 Capital to Risk-Weighted Assets(1)

10.82

%

10.34

%

10.17

%

10.28

%

11.42

%

Total Capital to Risk-Weighted Assets(1)

11.86

%

11.41

%

11.16

%

11.07

%

12.16

%

Tier I Capital to Risk-Weighted Assets(1)

10.82

%

10.34

%

10.17

%

10.28

%

11.42

%

Tier I Capital to Average Assets(1)

9.60

%

9.41

%

9.22

%

9.88

%

11.31

%

Tangible common equity to tangible assets

7.86

%

7.58

%

7.38

%

7.26

%

8.41

%

Fully diluted tangible book value per common share

$

32.55

$

31.45

$

30.56

$

30.51

$

29.68

(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

September 30,

2023

June 30,

2023

March 31,

2023

December 31,

2022

September 30,

2022

ACL-Loans:

Balance at beginning of period

$

30,694

$

27,998

$

22,431

$

18,167

$

15,773

Day 1 CECL Adjustment on January 1, 2023

—

—

5,079

—

—

Beginning balance January 1, 2023

30,694

27,998

27,510

18,167

—

Charge-offs:

Commercial business

—

—

(440

)

—

—

Consumer

(31

)

(25

)

(12

)

(11

)

(8

)

Total charge-offs

(31

)

(25

)

(452

)

(11

)

(8

)

Recoveries:

Commercial real estate

—

—

—

—

—

Commercial business

35

32

—

—

21

Consumer

19

10

6

3

—

Total recoveries

54

42

6

3

21

Net loan recoveries (charge-offs)

23

17

(446

)

(8

)

13

(Credit) provision for credit losses - loans

(1,433

)

2,679

934

4,272

2,381

Balance at end of period

$

29,284

$

30,694

$

27,998

$

22,431

$

18,167

As of

September 30,

2023

June 30,

2023

March 31,

2023

December 31,

2022

September 30,

2022

Asset quality:

Nonaccrual loans

Residential real estate

$

1,408

$

1,429

$

1,443

$

2,152

$

2,137

Commercial real estate

1,898

1,905

1,912

2,781

2,894

Commercial business

7,352

2,815

1,528

2,126

2,380

Construction

9,382

9,382

9,382

9,382

9,382

Consumer

7,917

—

—

—

—

Total nonaccrual loans

27,957

15,531

14,265

16,441

16,793

Other real estate owned

—

—

—

—

—

Total nonperforming assets

$

27,957

$

15,531

$

14,265

$

16,441

$

16,793

Nonperforming loans as a % of total loans

1.01

%

0.56

%

0.52

%

0.61

%

0.73

%

Nonperforming assets as a % of total assets

0.86

%

0.48

%

0.44

%

0.51

%

0.62

%

ACL-loans as a % of total loans

1.06

%

1.11

%

1.01

%

0.84

%

0.79

%

ACL-loans as a % of nonperforming loans

104.75

%

197.63

%

196.27

%

136.43

%

108.18

%

Total past due loans to total loans

1.44

%

1.30

%

0.94

%

0.60

%

0.78

%

Total nonaccrual loans increased $11.5 million to $28.0 million as of September 30, 2023 when compared to December 31, 2022. Nonaccrual loans increased primarily due to three distinct loans:

  • One Consumer (insurance premium) loan of $7.9 million. As of October 4, 2023, the loan balance has been reduced to $3.9 million. The Bank holds collateral for the remaining balance, worth approximately two times the outstanding amount.

  • Two Commercial business loans totaling $5.5 million, of which approximately 82% is guaranteed by the U.S. Government (SBA).

Nonperforming assets as a percentage of total assets increased to 0.86% at September 30, 2023 from 0.51% at December 31, 2022. The ACL-Loans at September 30, 2023 was $29.3 million, representing 1.06% of total loans.

BANKWELL FINANCIAL GROUP, INC.

LOAN & DEPOSIT PORTFOLIO (unaudited)

(Dollars in thousands)

Period End Loan Composition

September 30,

2023

June 30,

2023

December 31,

2022

Current QTD

% Change

YTD

% Change

Residential Real Estate

$

52,908

$

54,631

$

60,588

(3.2

)%

(12.7

)%

Commercial Real Estate(1)

1,955,992

1,930,972

1,921,252

1.3

1.8

Construction

199,972

219,615

155,198

(8.9

)

28.8

Total Real Estate Loans

2,208,872

2,205,218

2,137,038

0.2

3.4

Commercial Business

508,626

530,913

520,447

(4.2

)

(2.3

)

Consumer

52,612

37,475

17,963

40.4

192.9

Total Loans

$

2,770,110

$

2,773,606

$

2,675,448

(0.1

)%

3.5

%

(1) Includes owner occupied commercial real estate.

Gross loans totaled $2.8 billion at September 30, 2023, an increase of $94.7 million or 3.5% compared to December 31, 2022.

Period End Deposit Composition

September 30,

2023

June 30,

2023

December 31,

2022

Current QTD

% Change

YTD

% Change

Noninterest bearing demand

$

345,433

$

367,635

$

404,559

(6.0

)%

(14.6

)%

NOW

101,719

106,189

104,057

(4.2

)

(2.2

)

Money Market

879,978

879,017

913,868

0.1

(3.7

)

Savings

102,207

108,625

151,944

(5.9

)

(32.7

)

Time

1,339,289

1,327,397

1,226,390

0.9

9.2

Total Deposits

$

2,768,626

$

2,788,863

$

2,800,818

(0.7

)%

(1.1

)%

Total deposits were $2.8 billion at September 30, 2023, a decrease of $32.2 million, or 1.1%, when compared to December 31, 2022. Brokered deposits have decreased $75.3 million, when compared to December 31, 2022.

BANKWELL FINANCIAL GROUP, INC.

NONINTEREST EXPENSE (unaudited)

(Dollars in thousands)

For the Quarter Ended

Noninterest expense

September 30,

2023

June 30,

2023

September 30,

2022

Sep 23 vs. June 23

% Change

Sep 23 vs. Sep 22

% Change

Salaries and employee benefits

$

6,036

$

6,390

$

5,876

(5.5

)%

2.7

%

Occupancy and equipment

2,146

2,204

2,035

(2.6

)

5.5

Professional services

491

692

994

(29.0

)

(50.6

)

Data processing

741

729

626

1.6

18.4

Director fees

362

453

325

(20.1

)

11.4

FDIC insurance

1,026

1,050

255

(2.3

)

302.4

Marketing

184

177

102

4.0

80.4

Other

1,219

946

818

28.9

49.0

Total noninterest expense

$

12,205

$

12,641

$

11,031

(3.4

)%

10.6

%

For the Nine Months Ended

Noninterest expense

September 30, 2023

September 30, 2022

% Change

Salaries and employee benefits

$

18,507

$

16,249

13.9

%

Occupancy and equipment

6,434

6,378

0.9

%

Professional services

2,505

2,975

(15.8

)%

Data processing

2,141

1,969

8.7

%

Director fees

1,207

1,016

18.8

%

FDIC insurance

3,138

740

324.1

%

Marketing

512

254

101.6

%

Other

3,093

2,311

33.8

%

Total noninterest expense

$

37,537

$

31,892

17.7

%

Noninterest expense increased by $1.2 million to $12.2 million for the quarter ended September 30, 2023 compared to the quarter ended September 30, 2022. Noninterest expense increased by $5.6 million to $37.5 million for the nine months ended September 30, 2023 compared to the nine months ended September 30, 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 September 30, 2023, an increase of $0.8 million when compared to the same period in 2022. FDIC insurance expense totaled $3.1 million for the nine months ended September 30, 2023, an increase of $2.4 million when compared to the same period in 2022. The increase in FDIC insurance expense is attributed to balance sheet growth and composition, as well as an increase in FDIC insurance rates.

Salaries and employee benefits expense totaled $18.5 million for the nine months ended September 30, 2023, an increase of $2.3 million when compared to the same period in 2022. The increase in salaries and employee benefits expense was driven by an increase in average full time equivalent employees from 139 at September 30, 2023 compared to 131 for the same period in 2022. In addition, salaries and employee benefits expense increased due to one-time severance costs.

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

September 30,

2023

June 30,

2023

March 31,

2023

December 31,

2022

September 30,

2022

Total Equity

$

257,862

$

248,813

$

242,307

$

238,469

$

231,500

Less:

Goodwill

2,589

2,589

2,589

2,589

2,589

Other intangibles

—

—

—

—

—

Tangible Common Equity

$

255,273

$

246,224

$

239,718

$

235,880

$

228,911

Total Assets

$

3,249,776

$

3,252,707

$

3,252,318

$

3,252,449

$

2,722,995

Less:

Goodwill

2,589

2,589

2,589

2,589

2,589

Other intangibles

—

—

—

—

—

Tangible Assets

$

3,247,187

$

3,250,118

$

3,249,729

$

3,249,860

$

2,720,406

Tangible Common Equity to Tangible Assets

7.86

%

7.58

%

7.38

%

7.26

%

8.41

%

As of

Computation of Fully Diluted Tangible Book Value per Common Share

September 30,

2023

June 30,

2023

March 31,

2023

December 31,

2022

September 30,

2022

Total shareholders' equity

$

257,862

$

248,813

$

242,307

$

238,469

$

231,500

Less:

Preferred stock

—

—

—

—

—

Common shareholders' equity

$

257,862

$

248,813

$

242,307

$

238,469

$

231,500

Less:

Goodwill

2,589

2,589

2,589

2,589

2,589

Other intangibles

—

—

—

—

—

Tangible common shareholders' equity

$

255,273

$

246,224

$

239,718

$

235,880

$

228,911

Common shares issued and outstanding

7,841,616

7,829,950

7,843,438

7,730,699

7,711,843

Fully Diluted Tangible Book Value per Common Share

$

32.55

$

31.45

$

30.56

$

30.51

$

29.68

BANKWELL FINANCIAL GROUP, INC.

EARNINGS PER SHARE ("EPS") (unaudited)

(Dollars in thousands, except share data)

Three Months Ended

September 30,

Nine Months Ended

September 30,

2023

2022

2023

2022

(In thousands, except per share data)

Net income

$

9,777

$

9,174

$

28,140

$

29,408

Dividends to participating securities(1)

(41

)

(33

)

(125

)

(101

)

Undistributed earnings allocated to participating securities(1)

(209

)

(159

)

(613

)

(529

)

Net income for earnings per share calculation

$

9,527

$

8,982

$

27,402

$

28,778

Weighted average shares outstanding, basic

7,598

7,554

7,582

7,582

Effect of dilutive equity-based awards(2)

36

58

65

82

Weighted average shares outstanding, diluted

7,634

7,612

7,647

7,664

Net earnings per common share:

Basic earnings per common share

$

1.25

$

1.19

$

3.61

$

3.80

Diluted earnings per common share

$

1.25

$

1.18

$

3.58

$

3.75

(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.

NONINTEREST INCOME (unaudited)

(Dollars in thousands)

For the Quarter Ended

Noninterest income

September 30,

2023

June 30,

2023

September 30,

2022

Sep 23 vs. June 23

% Change

Sep 23 vs. Sep 22

% Change

Bank owned life insurance

$

303

$

292

$

271

3.8

%

11.8

%

Service charges and fees

294

361

240

(18.6

)

22.5

Gains and fees from sales of loans

237

725

(15

)

(67.3

)

Favorable

Other

(48

)

23

(94

)

Unfavorable

Favorable

Total noninterest income

$

786

$

1,401

$

402

(43.9

)%

95.5

%

For the Nine Months Ended

Noninterest income

September 30, 2023

September 30, 2022

% Change

Bank owned life insurance

$

876

$

796

10.1

%

Service charges and fees

941

729

29.1

Gains and fees from sales of loans

1,893

1,224

54.7

Other

3

(237

)

Favorable

Total noninterest income

$

3,713

$

2,512

47.8

%

Noninterest income increased by $0.4 million to $0.8 million for the quarter ended September 30, 2023 compared to the quarter ended September 30, 2022. Noninterest income increased by $1.2 million to $3.7 million for the nine months ended September 30, 2023 compared to the nine months ended September 30, 2022. The increase in noninterest income was driven by an increase in gains on SBA loan sales and service charges and fees for the quarter and nine months ended 2023.

BANKWELL FINANCIAL GROUP, INC.

NET INTEREST MARGIN ANALYSIS ON A FULLY TAX EQUIVALENT BASIS - QTD (unaudited)

(Dollars in thousands)

For the Quarter Ended

September 30, 2023

September 30, 2022

Average

Balance

Interest

Yield/

Rate (4)

Average

Balance

Interest

Yield/

Rate (4)

Assets:

Cash and Fed funds sold

$

265,115

$

3,393

5.08

%

$

130,440

$

747

2.27

%

Securities(1)

127,229

953

3.00

120,092

829

2.76

Loans:

Commercial real estate

1,943,725

28,140

5.67

1,512,381

18,830

4.87

Residential real estate

53,966

671

4.97

62,915

586

3.72

Construction

209,154

3,908

7.31

116,256

1,512

5.09

Commercial business

539,185

10,394

7.54

431,917

7,058

6.39

Consumer

44,020

740

6.66

12,145

142

4.65

Total loans

2,790,050

43,853

6.15

2,135,614

28,128

5.15

Federal Home Loan Bank stock

5,696

116

8.13

5,021

31

2.51

Total earning assets

3,188,090

$

48,315

5.93

%

2,391,167

$

29,735

4.87

%

Other assets

78,089

89,173

Total assets

$

3,266,179

$

2,480,340

Liabilities and shareholders' equity:

Interest bearing liabilities:

NOW

$

102,149

$

47

0.18

%

$

119,593

$

52

0.17

%

Money market

922,036

9,064

3.90

828,541

2,346

1.12

Savings

105,366

817

3.08

189,279

474

0.99

Time

1,322,074

13,860

4.16

557,243

1,220

0.87

Total interest bearing deposits

2,451,625

23,788

3.85

1,694,656

4,092

0.96

Borrowed Money

159,103

1,784

4.39

135,221

993

2.87

Total interest bearing liabilities

2,610,728

$

25,572

3.89

%

1,829,877

$

5,085

1.10

%

Noninterest bearing deposits

345,988

383,048

Other liabilities

54,136

36,037

Total liabilities

3,010,852

2,248,962

Shareholders' equity

255,327

231,378

Total liabilities and shareholders' equity

$

3,266,179

$

2,480,340

Net interest income(2)

$

22,743

$

24,650

Interest rate spread

2.04

%

3.77

%

Net interest margin(3)

2.85

%

4.12

%

(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 $49 thousand for the quarters ended September 30, 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 Nine Months Ended

September 30, 2023

September 30, 2022

Average

Balance

Interest

Yield/

Rate (4)

Average

Balance

Interest

Yield/

Rate (4)

Assets:

Cash and Fed funds sold

$

281,033

$

9,983

4.75

%

$

240,252

$

1,350

0.75

%

Securities(1)

128,554

2,864

2.97

%

117,008

2,392

2.73

%

Loans:

Commercial real estate

1,932,549

79,958

5.46

%

1,433,642

51,104

4.70

%

Residential real estate

56,798

1,957

4.59

%

67,705

1,810

3.56

%

Construction

194,396

10,582

7.18

%

108,249

4,482

5.46

%

Commercial business

546,329

32,073

7.74

%

402,876

17,011

5.57

%

Consumer

30,571

1,489

6.51

%

7,844

290

4.94

%

Total loans

2,760,643

126,059

6.02

%

2,020,316

74,697

4.88

%

Federal Home Loan Bank stock

5,527

308

7.46

%

3,715

61

2.19

%

Total earning assets

3,175,757

$

139,214

5.78

%

2,381,291

$

78,500

4.35

%

Other assets

66,342

89,747

Total assets

$

3,242,099

$

2,471,038

Liabilities and shareholders' equity:

Interest bearing liabilities:

NOW

$

97,741

$

127

0.17

%

$

122,792

$

158

0.17

%

Money market

910,840

23,532

3.45

%

909,106

4,672

0.69

%

Savings

117,984

2,404

2.72

%

194,013

678

0.47

%

Time

1,291,124

35,536

3.68

%

487,792

2,773

0.76

%

Total interest bearing deposits

2,417,689

61,599

3.41

%

1,713,703

8,281

0.65

%

Borrowed Money

161,166

5,238

4.29

%

101,685

2,137

2.77

%

Total interest bearing liabilities

2,578,855

$

66,837

3.47

%

1,815,388

$

10,418

0.77

%

Noninterest bearing deposits

374,943

398,728

Other liabilities

40,192

37,784

Total liabilities

2,993,990

2,251,900

Shareholders' equity

248,109

219,138

Total liabilities and shareholders' equity

$

3,242,099

$

2,471,038

Net interest income(2)

$

72,377

$

68,082

Interest rate spread

2.31

%

3.58

%

Net interest margin(3)

3.04

%

3.81

%

(1)

Average balances and yields for securities are based on amortized cost.

(2)

The adjustment for securities and loans taxable equivalency amounted to $154 thousand and $148 thousand for the nine months ended September 30, 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.

View source version on businesswire.com: https://www.businesswire.com/news/home/20231025644768/en/

Contacts

Christopher R. Gruseke, President and Chief Executive Officer
or
Courtney E. Sacchetti, Executive Vice President and Chief Financial Officer
(203) 652-0166

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