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

Bankwell Financial Group, Inc. (NASDAQ: BWFG) reported GAAP net income of $8.0 million, or $1.02 per share for the second quarter of 2023, versus $12.0 million, or $1.55 per share, for the same period in 2022.

The Company's Board of Directors declared a $0.20 per share cash dividend, payable August 24, 2023 to shareholders of record on August 14, 2023.

We recommend reading this earnings release in conjunction with the Second Quarter 2023 Investor Presentation, located at http://investor.mybankwell.com/Presentations and included as an exhibit to our July 26, 2023 Current Report on Form 8-K.

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

"Against the headwinds of an inverted yield curve, the Company generated a 0.99% Return on Average Assets and a 12.91% Return on Average Shareholders' Equity this quarter. As we look to the second half of the year, we can revise our prior guidance upward regarding full year 2023 Net Interest Income (“NII”). Prior guidance had indicated a year-over-year decrease to NII of approximately 10%. We can now guide to a 5-6% decline for 2023 NII versus 2022 performance.

Future margin compression can be expected as the Federal Reserve holds short term rates higher for longer than earlier market consensus, however, our operational efficiency and increasing loan yields will provide a cushion against the uncertain policy backdrop. The Company’s year to date non-interest expense was 1.58% of average assets year for the six-month period ending June 30, 2023, while the average loan yield for the same period stood at 5.95%. The average yield on loans originated thus far in 2023 was 7.38%.

Capital and liquidity positions are strong, and we are confident in the credit quality of the loan book.

Please see the Company's recent Press Release regarding the Company’s newly appointed Executive Vice President and Chief Innovation Officer, Ryan Hildebrand. We are delighted to have Ryan join the management team."

Second Quarter 2023 Highlights:

  • Total gross loans were $2.8 billion, growing $98.2 million, or 3.7%, compared to December 31, 2022.
  • Deposits of $2.8 billion for the quarter ended June 30, 2023, decreasing $12.0 million, or 0.4% from December 31, 2022.
  • Non-brokered deposits were $1.8 billion as of June 30, 2023, up by $48 million, or an increase of 2.7% from March 31, 2023; as of July 25, 2023, non-brokered deposits increased an additional $57 million since June 30, 2023.
  • FDIC-insured deposits totaled $2.0 billion and represent 71.2% of total deposits as of June 30, 2023.
  • As of June 30, 2023, the Bank has $1.7 billion immediately available liquidity, comprised of cash, AFS securities and borrowing capacity with the FHLB of Boston and FRB.
  • Immediately available liquidity provides more than two times coverage of uninsured deposits.
  • Average yield on 2023 funded loans was 7.38% as of June 30, 2023.
  • Return on average assets was 0.99% for the quarter ended June 30, 2023.
  • Return on average shareholders' equity was 12.91% for the quarter ended June 30, 2023.
  • The net interest margin was 3.07% for the quarter ended June 30, 2023.
  • The efficiency ratio was 49.8% for the quarter ended June 30, 2023.
  • Investment securities totaled $117.8 million and represent 3.6% of total assets, with HTM securities totaling $15.9 million, or 0.5% of total assets.

Earnings and Performance

Revenues (net interest income plus noninterest income) for the quarter ended June 30, 2023 were $25.4 million, versus $25.0 million and for the quarter ended June 30, 2022. Revenues for the six months ended June 30, 2023 were $52.5 million, versus $45.4 million for the six months ended June 30, 2022. The increase in revenues for the quarter and six months ended 2023 was primarily attributable to an increase in interest and fees on loans due to loan growth and higher overall loan yields1 for the quarter ended June 30, 2023. The increase in revenues was partially offset by an increase in interest expense.

1 - The increase in overall loan yields was 111 bps and 123 bps for the quarter and six months ended June 30, 2023, respectively.

Net income for the quarter ended June 30, 2023 was $8.0 million, versus $12.0 million for the quarter ended June 30, 2022. Net income for the six months ended June 30, 2023 was $18.4 million, versus $20.2 million for the six months ended June 30, 2022. The decrease in net income for the quarter and six months ended 2023 was primarily due to an increase in the provision for credit losses and an increase in noninterest expense, primarily due to increased FDIC insurance expense, and an increase in salary and employee benefits expense, mainly due to severance costs. The decrease was partially offset by a direct result of the aforementioned increases in revenues.

Basic and diluted earnings per share were $1.02 and $1.02, respectively, for the quarter ended June 30, 2023 compared to basic and diluted earnings per share of $1.56 and $1.55, respectively, for the quarter ended June 30, 2022. Basic and diluted earnings per share were $2.36 and $2.34, respectively, for the six months ended June 30, 2023 compared to basic and diluted earnings per share of $2.61 and $2.58, respectively, for the six months ended June 30, 2022.

The net interest margin (fully taxable equivalent basis) for the quarters ended June 30, 2023 and June 30, 2022 was 3.07% and 4.01%, respectively. The net interest margin (fully taxable equivalent basis) for the six months ended June 30, 2023 and June 30, 2022 was 3.15% and 3.65%, respectively. The decrease in the net interest margin was due to an increase in funding costs partially offset by an increase in overall loan yields.

Allowance for Credit Losses (ACL)

Provision for credit losses was $2.6 million for the quarter ended June 30, 2023, bringing the ACL-Loans as a percentage of total loans to 1.11%. Provision for credit losses was $0.8 million for the quarter ended March 31, 2023. The increase in the provision for credit losses is mainly attributable to forward looking CECL macroeconomic factors.

Financial Condition

Assets totaled $3.3 billion at June 30, 2023 and remained flat compared to December 31, 2022. Gross loans totaled $2.8 billion at June 30, 2023, an increase of $98.2 million or 3.7% compared to December 31, 2022. Deposits totaled $2.8 billion at June 30, 2023, and remained flat compared to December 31, 2022.

Capital

Shareholders’ equity totaled $248.8 million as of June 30, 2023, an increase of $10.3 million compared to December 31, 2022, primarily a result of net income of $18.4 million for the six months ended June 30, 2023. The increase was partially offset by the Day 1 CECL adoption of $4.9 million, dividends paid of $3.1 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 on the Company's Available for sale investment securities portfolio of $0.9 million and fair value marks related to hedge positions involving interest rate swaps of $0.7 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)

 

 

June 30,

2023

 

March 31,

2023

 

December 31,

2022

 

June 30,

2022

ASSETS

 

 

 

 

 

 

 

Cash and due from banks

$

207,345

 

 

$

249,812

 

 

$

344,925

 

 

$

149,522

Federal funds sold

 

54,706

 

 

 

27,370

 

 

 

10,754

 

 

 

21,505

Cash and cash equivalents

 

262,051

 

 

 

277,182

 

 

 

355,679

 

 

 

171,027

 

 

 

 

 

 

 

 

Investment securities

 

 

 

 

 

 

 

Marketable equity securities, at fair value

 

2,017

 

 

 

2,028

 

 

 

1,988

 

 

 

2,126

Available for sale investment securities, at fair value

 

99,938

 

 

 

103,171

 

 

 

103,663

 

 

 

94,907

Held to maturity investment securities, at amortized cost

 

15,884

 

 

 

15,931

 

 

 

15,983

 

 

 

15,917

Total investment securities

 

117,839

 

 

 

121,130

 

 

 

121,634

 

 

 

112,950

Loans receivable (net of ACL-Loans of $30,694, $27,998, $22,431, and $15,773 at June 30, 2023, March 31 2023, December 31, 2022, and June 30, 2022, respectively)

 

2,736,607

 

 

 

2,724,514

 

 

 

2,646,384

 

 

 

2,036,626

Accrued interest receivable

 

14,208

 

 

 

14,261

 

 

 

13,070

 

 

 

8,047

Federal Home Loan Bank stock, at cost

 

5,696

 

 

 

5,234

 

 

 

5,216

 

 

 

5,064

Premises and equipment, net

 

27,658

 

 

 

27,619

 

 

 

27,199

 

 

 

27,768

Bank-owned life insurance

 

50,816

 

 

 

50,524

 

 

 

50,243

 

 

 

49,699

Goodwill

 

2,589

 

 

 

2,589

 

 

 

2,589

 

 

 

2,589

Deferred income taxes, net

 

10,014

 

 

 

8,692

 

 

 

7,422

 

 

 

4,768

Other assets

 

25,229

 

 

 

20,573

 

 

 

23,013

 

 

 

17,014

Total assets

$

3,252,707

 

 

$

3,252,318

 

 

$

3,252,449

 

 

$

2,435,552

 

 

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

 

Deposits

 

 

 

 

 

 

 

Noninterest bearing deposits

$

367,635

 

 

$

377,667

 

 

$

404,559

 

 

$

372,584

Interest bearing deposits

 

2,421,228

 

 

 

2,420,641

 

 

 

2,396,259

 

 

 

1,660,941

Total deposits

 

2,788,863

 

 

 

2,798,308

 

 

 

2,800,818

 

 

 

2,033,525

 

 

 

 

 

 

 

 

Advances from the Federal Home Loan Bank

 

90,000

 

 

 

90,000

 

 

 

90,000

 

 

 

105,000

Subordinated debentures

 

69,082

 

 

 

69,020

 

 

 

68,959

 

 

 

34,500

Accrued expenses and other liabilities

 

55,949

 

 

 

52,683

 

 

 

54,203

 

 

 

37,060

Total liabilities

 

3,003,894

 

 

 

3,010,011

 

 

 

3,013,980

 

 

 

2,210,085

 

 

 

 

 

 

 

 

Shareholders’ equity

 

 

 

 

 

 

 

Common stock, no par value

 

116,541

 

 

 

115,875

 

 

 

115,018

 

 

 

115,599

Retained earnings

 

133,988

 

 

 

127,566

 

 

 

123,640

 

 

 

109,523

Accumulated other comprehensive (loss) income

 

(1,716

)

 

 

(1,134

)

 

 

(189

)

 

 

345

Total shareholders’ equity

 

248,813

 

 

 

242,307

 

 

 

238,469

 

 

 

225,467

 

 

 

 

 

 

 

 

Total liabilities and shareholders’ equity

$

3,252,707

 

 

$

3,252,318

 

 

$

3,252,449

 

 

$

2,435,552

   

BANKWELL FINANCIAL GROUP, INC.

CONSOLIDATED STATEMENTS OF INCOME (unaudited)

(Dollars in thousands, except share data)

   

 

For the Quarter Ended

 

For the Six Months Ended

 

June 30,

2023

 

March 31,

2023

 

December 31,

2022

 

June 30,

2022

 

June 30,

2023

 

June 30,

2022

Interest and dividend income

 

 

 

 

 

 

 

 

 

 

 

Interest and fees on loans

$

42,482

 

$

39,723

 

$

36,545

 

 

$

25,141

 

 

$

82,205

 

$

46,569

 

Interest and dividends on securities

 

1,002

 

 

1,000

 

 

898

 

 

 

774

 

 

 

2,002

 

 

1,494

 

Interest on cash and cash equivalents

 

3,022

 

 

3,568

 

 

2,150

 

 

 

449

 

 

 

6,590

 

 

603

 

Total interest and dividend income

 

46,506

 

 

44,291

 

 

39,593

 

 

 

26,364

 

 

 

90,797

 

 

48,666

 

Interest expense

 

 

 

 

 

 

 

 

 

 

 

Interest expense on deposits

 

20,777

 

 

17,033

 

 

11,083

 

 

 

1,983

 

 

 

37,810

 

 

4,189

 

Interest expense on borrowings

 

1,738

 

 

1,717

 

 

1,701

 

 

 

558

 

 

 

3,455

 

 

1,144

 

Total interest expense

 

22,515

 

 

18,750

 

 

12,784

 

 

 

2,541

 

 

 

41,265

 

 

5,333

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income

 

23,991

 

 

25,541

 

 

26,809

 

 

 

23,823

 

 

 

49,532

 

 

43,333

 

Provision (credit) for credit losses

 

2,579

 

 

826

 

 

4,272

 

 

 

(1,445

)

 

 

3,405

 

 

(1,216

)

Net interest income after provision for credit losses

 

21,412

 

 

24,715

 

 

22,537

 

 

 

25,268

 

 

 

46,127

 

 

44,549

 

Noninterest income

 

 

 

 

 

 

 

 

 

 

 

Bank owned life insurance

 

292

 

 

281

 

 

273

 

 

 

265

 

 

 

573

 

 

525

 

Service charges and fees

 

361

 

 

286

 

 

343

 

 

 

249

 

 

 

647

 

 

489

 

Gains and fees from sales of loans

 

725

 

 

931

 

 

12

 

 

 

608

 

 

 

1,656

 

 

1,239

 

Other

 

23

 

 

28

 

 

(100

)

 

 

30

 

 

 

51

 

 

(143

)

Total noninterest income

 

1,401

 

 

1,526

 

 

528

 

 

 

1,152

 

 

 

2,927

 

 

2,110

 

Noninterest expense

 

 

 

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

6,390

 

 

6,081

 

 

5,988

 

 

 

5,433

 

 

 

12,471

 

 

10,373

 

Occupancy and equipment

 

2,204

 

 

2,084

 

 

1,919

 

 

 

2,193

 

 

 

4,288

 

 

4,343

 

Professional services

 

692

 

 

1,322

 

 

912

 

 

 

1,000

 

 

 

2,014

 

 

1,981

 

Data processing

 

729

 

 

671

 

 

663

 

 

 

689

 

 

 

1,400

 

 

1,343

 

Director fees

 

453

 

 

392

 

 

378

 

 

 

339

 

 

 

845

 

 

691

 

FDIC insurance

 

1,050

 

 

1,062

 

 

898

 

 

 

262

 

 

 

2,112

 

 

485

 

Marketing

 

177

 

 

151

 

 

112

 

 

 

107

 

 

 

328

 

 

152

 

Other

 

946

 

 

928

 

 

1,601

 

 

 

913

 

 

 

1,874

 

 

1,493

 

Total noninterest expense

 

12,641

 

 

12,691

 

 

12,471

 

 

 

10,936

 

 

 

25,332

 

 

20,861

 

Income before income tax expense

 

10,172

 

 

13,550

 

 

10,594

 

 

 

15,484

 

 

 

23,722

 

 

25,798

 

Income tax expense

 

2,189

 

 

3,171

 

 

2,573

 

 

 

3,462

 

 

 

5,360

 

 

5,564

 

Net income

$

7,983

 

$

10,379

 

$

8,021

 

 

$

12,022

 

 

$

18,362

 

$

20,234

 

Earnings Per Common Share:

 

 

 

 

 

 

 

 

 

 

 

Basic

$

1.02

 

$

1.34

 

$

1.04

 

 

$

1.56

 

 

$

2.36

 

$

2.61

 

Diluted

$

1.02

 

$

1.33

 

$

1.04

 

 

$

1.55

 

 

$

2.34

 

$

2.58

 

Weighted Average Common Shares Outstanding:

 

 

 

 

 

 

 

 

 

 

 

Basic

 

7,593,417

 

 

7,554,689

 

 

7,507,540

 

 

 

7,556,645

 

 

 

7,574,160

 

 

7,596,639

 

Diluted

 

7,601,562

 

 

7,616,671

 

 

7,563,116

 

 

 

7,614,243

 

 

 

7,639,828

 

 

7,683,305

 

Dividends per common share

$

0.20

 

$

0.20

 

$

0.20

 

 

$

0.20

 

 

$

0.40

 

$

0.40

 

 

BANKWELL FINANCIAL GROUP, INC.

CONSOLIDATED FINANCIAL HIGHLIGHTS (unaudited)

 

 

For the Quarter Ended

 

For the Six Months Ended

 

June 30,

2023

 

March 31,

2023

 

December 31,

2022

 

June 30,

2022

 

June 30,

2023

 

June 30,

2022

Performance ratios:

 

 

 

 

 

 

 

 

 

 

 

Return on average assets

0.99

%

 

1.30

%

 

1.07

%

 

1.96

%

 

1.14

%

 

1.65

%

Return on average shareholders' equity

12.91

%

 

17.48

%

 

13.38

%

 

22.09

%

 

15.15

%

 

19.16

%

Return on average tangible common equity

13.05

%

 

17.67

%

 

13.52

%

 

22.36

%

 

15.31

%

 

19.40

%

Net interest margin

3.07

%

 

3.24

%

 

3.70

%

 

4.01

%

 

3.15

%

 

3.65

%

Efficiency ratio(1)

49.8

%

 

46.9

%

 

45.6

%

 

43.8

%

 

48.3

%

 

45.9

%

Net loan charge-offs as a % of average loans

%

 

0.02

%

 

%

 

%

 

0.02

%

 

%

Dividend payout ratio(2)

19.61

%

 

15.04

%

 

19.23

%

 

12.90

%

 

17.09

%

 

15.50

%

 

(1) Efficiency ratio is defined as noninterest expense, less other real estate owned expenses and amortization of intangible assets, divided by our operating revenue, which is equal to net interest income plus noninterest income excluding gains and losses on sales of securities and gains and losses on other real estate owned. In our judgment, the adjustments made to operating revenue allow investors and analysts to better assess our operating expenses in relation to our core operating revenue by removing the volatility that is associated with certain one-time items and other discrete items that are unrelated to our core business.

(2) The dividend payout ratio is calculated by dividing dividends per share by earnings per share.

 

As of

 

June 30,

2023

 

March 31,

2023

 

December 31,

2022

 

June 30,

2022

Capital ratios:

 

 

 

 

 

 

 

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

 

10.34

%

 

 

10.17

%

 

 

10.28

%

 

 

11.10

%

Total Capital to Risk-Weighted Assets(1)

 

11.41

%

 

 

11.16

%

 

 

11.07

%

 

 

11.80

%

Tier I Capital to Risk-Weighted Assets(1)

 

10.34

%

 

 

10.17

%

 

 

10.28

%

 

 

11.80

%

Tier I Capital to Average Assets(1)

 

9.41

%

 

 

9.22

%

 

 

9.88

%

 

 

10.15

%

Tangible common equity to tangible assets

 

7.58

%

 

 

7.38

%

 

 

7.26

%

 

 

9.16

%

Fully diluted tangible book value per common share

$

31.45

 

 

$

30.56

 

 

$

30.51

 

 

$

28.75

 

(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

 

June 30,

2023

 

March 31,

2023

 

December 31,

2022

 

June 30,

2022

ACL-Loans:

 

 

 

 

 

 

 

Balance at beginning of period

$

27,998

 

 

$

22,431

 

 

$

18,167

 

 

$

17,141

 

Day 1 CECL Adjustment on January 1, 2023

 

 

 

 

5,079

 

 

 

 

 

 

 

Beginning balance January 1, 2023

 

27,998

 

 

 

27,510

 

 

 

18,167

 

 

 

 

Charge-offs:

 

 

 

 

 

 

 

Commercial business

 

 

 

 

(440

)

 

 

 

 

 

 

Consumer

 

(25

)

 

 

(12

)

 

 

(11

)

 

 

 

Total charge-offs

 

(25

)

 

 

(452

)

 

 

(11

)

 

 

 

Recoveries:

 

 

 

 

 

 

 

Commercial real estate

 

 

 

 

 

 

 

 

 

 

77

 

Commercial business

 

32

 

 

 

 

 

 

 

 

 

 

Consumer

 

10

 

 

 

6

 

 

 

3

 

 

 

 

Total recoveries

 

42

 

 

 

6

 

 

 

3

 

 

 

77

 

Net loan recoveries (charge-offs)

 

17

 

 

 

(446

)

 

 

(8

)

 

 

77

 

Provision for credit losses - loans

 

2,679

 

 

 

934

 

 

 

4,272

 

 

 

(1,445

)

Balance at end of period

$

30,694

 

 

$

27,998

 

 

$

22,431

 

 

$

15,773

 

 

As of

 

June 30,

2023

 

March 31,

2023

 

December 31,

2022

 

June 30,

2022

Asset quality:

 

 

 

 

 

 

 

Nonaccrual loans

 

 

 

 

 

 

 

Residential real estate

$

1,429

 

 

$

1,443

 

 

$

2,152

 

 

$

2,161

 

Commercial real estate

 

1,905

 

 

 

1,912

 

 

 

2,781

 

 

 

2,955

 

Commercial business

 

2,815

 

 

 

1,528

 

 

 

2,126

 

 

 

787

 

Construction

 

9,382

 

 

 

9,382

 

 

 

9,382

 

 

 

9,382

 

Total nonaccrual loans

 

15,531

 

 

 

14,265

 

 

 

16,441

 

 

 

15,285

 

Other real estate owned

 

 

 

 

 

 

 

 

 

 

 

Total nonperforming assets

$

15,531

 

 

$

14,265

 

 

$

16,441

 

 

$

15,285

 

 

 

 

 

 

 

 

 

Nonperforming loans as a % of total loans

 

0.56

%

 

 

0.52

%

 

 

0.61

%

 

 

0.74

%

Nonperforming assets as a % of total assets

 

0.48

%

 

 

0.44

%

 

 

0.51

%

 

 

0.63

%

ACL-loans as a % of total loans

 

1.11

%

 

 

1.01

%

 

 

0.84

%

 

 

0.77

%

ACL-loans as a % of nonperforming loans

 

197.63

%

 

 

196.27

%

 

 

136.43

%

 

 

103.19

%

Total past due loans to total loans

 

1.30

%

 

 

0.94

%

 

 

0.60

%

 

 

1.40

%

Total nonaccrual loans decreased $0.9 million to $15.5 million as of June 30, 2023 when compared to December 31, 2022. Nonperforming assets as a percentage of total assets decreased to 0.48% at June 30, 2023, down from 0.51% at December 31, 2022. The ACL-Loans at June 30, 2023 was $30.7 million, representing 1.11% of total loans.

Past due loans increased to $36.0 million, or 1.30% of total loans, as of June 30, 2023, compared to $16.1 million, or 0.60% of total loans, as of December 31, 2022. Of the June 30, 2023 past due loans, $9.3 million of loans were between 31 - 33 days past due and have subsequently become current.

 

BANKWELL FINANCIAL GROUP, INC.

LOAN & DEPOSIT PORTFOLIO (unaudited)

(Dollars in thousands)

 

Period End Loan Composition

June 30,

2023

 

March 31,

2023

 

December 31,

2022

 

 

Current QTD

% Change

 

YTD

% Change

Residential Real Estate

$

54,631

 

$

58,541

 

$

60,588

 

(6.7

)%

 

(9.8

)%

Commercial Real Estate(1)

 

1,930,972

 

 

1,960,712

 

 

1,921,252

 

(1.5

)

 

0.5

 

Construction

 

219,615

 

 

177,115

 

 

155,198

 

24.0

 

 

41.5

 

Total Real Estate Loans

 

2,205,218

 

 

2,196,368

 

 

2,137,038

 

0.4

 

 

3.2

 

Commercial Business

 

530,913

 

 

543,457

 

 

520,447

 

(2.3

)

 

2.0

 

Consumer

 

37,475

 

 

19,464

 

 

17,963

 

92.5

 

 

108.6

 

Total Loans

$

2,773,606

 

$

2,759,289

 

$

2,675,448

 

0.5

%

 

3.7

%

(1) Includes owner occupied commercial real estate.

Gross loans totaled $2.8 billion at June 30, 2023, an increase of $98.2 million or 3.7% compared to December 31, 2022.

Period End Deposit Composition

June 30,

2023

 

March 31,

2023

 

December 31,

2022

 

 

Current QTD

% Change

 

YTD

% Change

Noninterest bearing demand

$

367,635

 

$

377,667

 

$

404,559

 

(2.7

)%

 

(9.1

)%

NOW

 

106,189

 

 

89,896

 

 

104,057

 

18.1

 

 

2.0

 

Money Market

 

879,017

 

 

874,202

 

 

913,868

 

0.6

 

 

(3.8

)

Savings

 

108,625

 

 

117,986

 

 

151,944

 

(7.9

)

 

(28.5

)

Time

 

1,327,397

 

 

1,338,557

 

 

1,226,390

 

(0.8

)

 

8.2

 

Total Deposits

$

2,788,863

 

$

2,798,308

 

$

2,800,818

 

(0.3

)%

 

(0.4

)%

Total deposits were $2.8 billion at June 30, 2023, a decrease of $12.0 million, or 0.4%, when compared to December 31, 2022.

 

BANKWELL FINANCIAL GROUP, INC.

NONINTEREST INCOME (unaudited)

(Dollars in thousands)

 

 

For the Quarter Ended

 

 

 

 

Noninterest income

June 30,

2023

 

March 31,

2023

 

June 30,

2022

 

June 23 vs. Mar 23

% Change

 

Jun 23 vs. Jun 22

% Change

Bank owned life insurance

$

292

 

$

281

 

$

265

 

3.9

%

 

10.2

%

Service charges and fees

 

361

 

 

286

 

 

249

 

26.2

 

 

45.0

 

Gains and fees from sales of loans

 

725

 

 

931

 

 

608

 

(22.1

)

 

19.2

 

Other

 

23

 

 

28

 

 

30

 

(17.9

)

 

(23.3

)

Total noninterest income

$

1,401

 

$

1,526

 

$

1,152

 

(8.2

)%

 

21.6

%

 

For the Six Months Ended

 

 

Noninterest income

June 30, 2023

 

June 30, 2022

 

% Change

Bank owned life insurance

$

573

 

$

525

 

 

9.1

%

Service charges and fees

 

647

 

 

489

 

 

32.3

 

Gains and fees from sales of loans

 

1,656

 

 

1,239

 

 

33.7

 

Other

 

51

 

 

(143

)

 

Favorable

Total noninterest income

$

2,927

 

$

2,110

 

 

38.7

%

Noninterest income increased by $0.2 million to $1.4 million for the quarter ended June 30, 2023 compared to the quarter ended June 30, 2022. Noninterest income increased by $0.8 million to $2.9 million for the six months ended June 30, 2023 compared to the six months ended June 30, 2022. The increase in noninterest income was driven by an increase in SBA loan sales and increases in service charges and fees for the quarter and six months ended 2023.

 

BANKWELL FINANCIAL GROUP, INC.

NONINTEREST EXPENSE (unaudited)

(Dollars in thousands)

 

 

For the Quarter Ended

 

 

 

 

Noninterest expense

June 30,

2023

 

March 31,

2023

 

June 30,

2022

 

June 23 vs. Mar 23

% Change

 

Jun 23 vs. Jun 22

% Change

Salaries and employee benefits

$

6,390

 

$

6,081

 

$

5,433

 

5.1

%

 

17.6

%

Occupancy and equipment

 

2,204

 

 

2,084

 

 

2,193

 

5.8

 

 

0.5

 

Professional services

 

692

 

 

1,322

 

 

1,000

 

(47.7

)

 

(30.8

)

Data processing

 

729

 

 

671

 

 

689

 

8.6

 

 

5.8

 

Director fees

 

453

 

 

392

 

 

339

 

15.6

 

 

33.6

 

FDIC insurance

 

1,050

 

 

1,062

 

 

262

 

(1.1

)

 

300.8

 

Marketing

 

177

 

 

151

 

 

107

 

17.2

 

 

65.4

 

Other

 

946

 

 

928

 

 

913

 

1.9

 

 

3.6

 

Total noninterest expense

$

12,641

 

$

12,691

 

$

10,936

 

(0.4

)%

 

15.6

%

 

For the Six Months Ended

 

 

Noninterest expense

June 30, 2023

 

June 30, 2022

 

% Change

Salaries and employee benefits

$

12,471

 

$

10,373

 

20.2

%

Occupancy and equipment

 

4,288

 

 

4,343

 

(1.3

)%

Professional services

 

2,014

 

 

1,981

 

1.7

%

Data processing

 

1,400

 

 

1,343

 

4.2

%

Director fees

 

845

 

 

691

 

22.3

%

FDIC insurance

 

2,112

 

 

485

 

335.5

%

Marketing

 

328

 

 

152

 

115.8

%

Other

 

1,874

 

 

1,493

 

25.5

%

Total noninterest expense

 

25,332

 

 

20,861

 

21.4

%

Noninterest expense increased by $1.7 million to $12.6 million for the quarter ended June 30, 2023 compared to the quarter ended June 30, 2022. Noninterest expense increased by $4.5 million to $25.3 million for the six months ended June 30, 2023 compared to the six months ended June 30, 2022. The increase in noninterest expense was primarily driven by an increase in salaries and employee benefits expense and FDIC insurance expense.

Salaries and employee benefits expense totaled $6.4 million for the quarter ended June 30, 2023, an increase of $1.0 million when compared to the same period in 2022. Salaries and employee benefits expense totaled $12.5 million for the six months ended June 30, 2023, an increase of $2.1 million when compared to the same period in 2022. The increase in salaries and employee benefits expense was driven by an increase in full time equivalent employees, with full time equivalent employees totaling 141 at June 30, 2023 compared to 132 for the same period in 2022. The increase in salaries and employee benefits expense was also due to one-time severance costs and lower loan originations, which reduces the Bank's ability to defer expenses.

FDIC insurance expense totaled $1.1 million for the quarter ended June 30, 2023, an increase of $0.8 million when compared to the same period in 2022. FDIC insurance expense totaled $2.1 million for the six months ended June 30, 2023, an increase of $1.6 million when compared to the same period in 2022. The increase in FDIC insurance expense is attributed to the overall balance sheet growth, increased use of brokered deposits, and an increase in FDIC insurance rates.

 

BANKWELL FINANCIAL GROUP, INC.

RECONCILIATION OF GAAP TO NON-GAAP MEASURES (unaudited)

(Dollars in thousands, except share data)

 

 

As of

Computation of Tangible Common Equity to Tangible Assets

June 30,

2023

 

March 31,

2023

 

December 31,

2022

 

June 30,

2022

Total Equity

$

248,813

 

 

$

242,307

 

 

$

238,469

 

 

$

225,467

 

Less:

 

 

 

 

 

 

 

Goodwill

 

2,589

 

 

 

2,589

 

 

 

2,589

 

 

 

2,589

 

Other intangibles

 

 

 

 

 

 

 

 

 

 

 

Tangible Common Equity

$

246,224

 

 

$

239,718

 

 

$

235,880

 

 

$

222,878

 

 

 

 

 

 

 

 

 

Total Assets

$

3,252,707

 

 

$

3,252,318

 

 

$

3,252,449

 

 

$

2,435,552

 

Less:

 

 

 

 

 

 

 

Goodwill

 

2,589

 

 

 

2,589

 

 

 

2,589

 

 

 

2,589

 

Other intangibles

 

 

 

 

 

 

 

 

 

 

 

Tangible Assets

$

3,250,118

 

 

$

3,249,729

 

 

$

3,249,860

 

 

$

2,432,963

 

 

 

 

 

 

 

 

 

Tangible Common Equity to Tangible Assets

 

7.58

%

 

 

7.38

%

 

 

7.26

%

 

 

9.16

%

 

As of

Computation of Fully Diluted Tangible Book Value per Common Share

June 30,

2023

 

March 31,

2023

 

December 31,

2022

 

June 30,

2022

Total shareholders' equity

$

248,813

 

$

242,307

 

$

238,469

 

$

225,467

Less:

 

 

 

 

 

 

 

Preferred stock

 

 

 

 

 

 

 

Common shareholders' equity

$

248,813

 

$

242,307

 

$

238,469

 

$

225,467

Less:

 

 

 

 

 

 

 

Goodwill

 

2,589

 

 

2,589

 

 

2,589

 

 

2,589

Other intangibles

 

 

 

 

 

 

 

Tangible common shareholders' equity

$

246,224

 

$

239,718

 

$

235,880

 

$

222,878

 

 

 

 

 

 

 

 

Common shares issued and outstanding

 

7,829,950

 

 

7,843,438

 

 

7,730,699

 

 

7,752,389

 

 

 

 

 

 

 

 

Fully Diluted Tangible Book Value per Common Share

$

31.45

 

$

30.56

 

$

30.51

 

$

28.75

 

BANKWELL FINANCIAL GROUP, INC.

EARNINGS PER SHARE ("EPS") (unaudited)

(Dollars in thousands)

 

 

Three Months Ended

June 30,

 

Six Months Ended

June 30,

 

 

2023

 

 

 

2022

 

 

 

2023

 

 

 

2022

 

 

(In thousands, except per share data)

Net income

$

7,983

 

 

$

12,022

 

 

$

18,362

 

 

$

20,234

 

Dividends to participating securities(1)

 

(41

)

 

 

(33

)

 

 

(84

)

 

 

(68

)

Undistributed earnings allocated to participating securities(1)

 

(172

)

 

 

(224

)

 

 

(403

)

 

 

(371

)

Net income for earnings per share calculation

$

7,770

 

 

$

11,765

 

 

$

17,875

 

 

$

19,795

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding, basic

 

7,593

 

 

 

7,557

 

 

 

7,574

 

 

 

7,597

 

Effect of dilutive equity-based awards(2)

 

8

 

 

 

57

 

 

 

66

 

 

 

86

 

Weighted average shares outstanding, diluted

 

7,601

 

 

 

7,614

 

 

 

7,640

 

 

 

7,683

 

Net earnings per common share:

 

 

 

 

 

 

 

Basic earnings per common share

$

1.02

 

 

$

1.56

 

 

$

2.36

 

 

$

2.61

 

Diluted earnings per common share

$

1.02

 

 

$

1.55

 

 

$

2.34

 

 

$

2.58

 

(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

 

June 30, 2023

 

June 30, 2022

 

Average

Balance

 

Interest

 

Yield/

Rate (4)

 

Average

Balance

 

Interest

 

Yield/

Rate (4)

Assets:

 

 

 

 

 

 

 

 

 

 

 

Cash and Fed funds sold

$

227,777

 

$

3,023

 

5.32

%

 

$

247,013

 

$

449

 

0.73

%

Securities(1)

 

128,576

 

 

955

 

2.97

 

 

 

118,534

 

 

809

 

2.73

 

Loans:

 

 

 

 

 

 

 

 

 

 

 

Commercial real estate

 

1,935,058

 

 

27,099

 

5.54

 

 

 

1,443,239

 

 

17,278

 

4.74

 

Residential real estate

 

56,981

 

 

643

 

4.51

 

 

 

66,460

 

 

553

 

3.33

 

Construction

 

206,844

 

 

3,691

 

7.06

 

 

 

106,285

 

 

1,938

 

7.21

 

Commercial business

 

557,482

 

 

10,646

 

7.55

 

 

 

393,318

 

 

5,327

 

5.36

 

Consumer

 

29,326

 

 

500

 

6.84

 

 

 

5,298

 

 

45

 

3.43

 

Total loans

 

2,785,691

 

 

42,579

 

6.05

 

 

 

2,014,600

 

 

25,141

 

4.94

 

Federal Home Loan Bank stock

 

5,610

 

 

98

 

7.00

 

 

 

3,263

 

 

15

 

1.79

 

Total earning assets

 

3,147,654

 

$

46,655

 

5.86

%

 

 

2,383,410

 

$

26,414

 

4.38

%

Other assets

 

96,603

 

 

 

 

 

 

79,380

 

 

 

 

Total assets

$

3,244,257

 

 

 

 

 

$

2,462,790

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities and shareholders' equity:

 

 

 

 

 

 

 

 

 

 

 

Interest bearing liabilities:

 

 

 

 

 

 

 

 

 

 

 

NOW

$

98,048

 

$

42

 

0.18

%

 

$

136,414

 

$

59

 

0.17

%

Money market

 

902,225

 

 

8,083

 

3.59

 

 

 

931,101

 

 

1,146

 

0.49

 

Savings

 

112,585

 

 

860

 

3.06

 

 

 

198,304

 

 

103

 

0.21

 

Time

 

1,298,170

 

 

11,792

 

3.64

 

 

 

451,508

 

 

675

 

0.60

 

Total interest bearing deposits

 

2,411,028

 

 

20,777

 

3.46

 

 

 

1,717,327

 

 

1,983

 

0.46

 

Borrowed Money

 

163,138

 

 

1,738

 

4.21

 

 

 

85,092

 

 

558

 

2.59

 

Total interest bearing liabilities

 

2,574,166

 

$

22,515

 

3.51

%

 

 

1,802,419

 

$

2,541

 

0.57

%

Noninterest bearing deposits

 

375,514

 

 

 

 

 

 

407,890

 

 

 

 

Other liabilities

 

46,565

 

 

 

 

 

 

34,231

 

 

 

 

Total liabilities

 

2,996,245

 

 

 

 

 

 

2,244,540

 

 

 

 

Shareholders' equity

 

248,012

 

 

 

 

 

 

218,250

 

 

 

 

Total liabilities and shareholders' equity

$

3,244,257

 

 

 

 

 

$

2,462,790

 

 

 

 

Net interest income(2)

 

 

$

24,140

 

 

 

 

 

$

23,873

 

 

Interest rate spread

 

 

 

 

2.36

%

 

 

 

 

 

3.81

%

Net interest margin(3)

 

 

 

 

3.07

%

 

 

 

 

 

4.01

%

(1)

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

(2)

  The adjustment for securities and loans taxable equivalency amounted to $51 thousand and $50 thousand for the quarters ended June 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 Six Months Ended

 

June 30, 2023

 

June 30, 2022

 

Average

Balance

 

Interest

 

Yield/

Rate (4)

 

Average

Balance

 

Interest

 

Yield/

Rate (4)

Assets:

 

 

 

 

 

 

 

 

 

 

 

Cash and Fed funds sold

$

271,328

 

$

6,590

 

4.90

%

 

$

296,239

 

$

603

 

0.41

%

Securities(1)

 

129,225

 

 

1,912

 

2.96

%

 

 

115,452

 

 

1,563

 

2.71

%

Loans:

 

 

 

 

 

 

 

 

 

 

 

Commercial real estate

 

1,926,852

 

 

52,125

 

5.38

%

 

 

1,393,836

 

 

32,273

 

4.61

%

Residential real estate

 

58,207

 

 

1,286

 

4.42

%

 

 

70,125

 

 

1,224

 

3.49

%

Construction

 

186,684

 

 

6,651

 

7.09

%

 

 

104,176

 

 

2,971

 

5.67

%

Commercial business

 

549,963

 

 

21,394

 

7.74

%

 

 

388,249

 

 

9,954

 

5.10

%

Consumer

 

23,971

 

 

749

 

6.30

%

 

 

5,666

 

 

147

 

5.25

%

Total loans

 

2,745,677

 

 

82,205

 

5.95

%

 

 

1,962,052

 

 

46,569

 

4.72

%

Federal Home Loan Bank stock

 

5,442

 

 

193

 

7.14

%

 

 

3,051

 

 

29

 

1.94

%

Total earning assets

 

3,151,672

 

$

90,900

 

5.74

%

 

 

2,376,794

 

$

48,764

 

4.08

%

Other assets

 

90,427

 

 

 

 

 

 

89,866

 

 

 

 

Total assets

$

3,242,099

 

 

 

 

 

$

2,466,660

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities and shareholders' equity:

 

 

 

 

 

 

 

 

 

 

 

Interest bearing liabilities:

 

 

 

 

 

 

 

 

 

 

 

NOW

$

95,494

 

$

81

 

0.17

%

 

$

124,361

 

$

106

 

0.17

%

Money market

 

905,021

 

 

14,468

 

3.22

%

 

 

950,131

 

 

2,326

 

0.49

%

Savings

 

124,387

 

 

1,586

 

2.57

%

 

 

196,400

 

 

204

 

0.21

%

Time

 

1,275,417

 

 

21,675

 

3.43

%

 

 

452,676

 

 

1,553

 

0.69

%

Total interest bearing deposits

 

2,400,319

 

 

37,810

 

3.18

%

 

 

1,723,568

 

 

4,189

 

0.49

%

Borrowed Money

 

162,215

 

 

3,454

 

4.24

%

 

 

84,770

 

 

1,144

 

2.68

%

Total interest bearing liabilities

 

2,562,534

 

$

41,264

 

3.25

%

 

 

1,808,338

 

$

5,333

 

0.59

%

Noninterest bearing deposits

 

389,608

 

 

 

 

 

 

406,707

 

 

 

 

Other liabilities

 

45,494

 

 

 

 

 

 

38,683

 

 

 

 

Total liabilities

 

2,997,636

 

 

 

 

 

 

2,253,728

 

 

 

 

Shareholders' equity

 

244,463

 

 

 

 

 

 

212,932

 

 

 

 

Total liabilities and shareholders' equity

$

3,242,099

 

 

 

 

 

$

2,466,660

 

 

 

 

Net interest income(2)

 

 

$

49,636

 

 

 

 

 

$

43,431

 

 

Interest rate spread

 

 

 

 

2.49

%

 

 

 

 

 

3.49

%

Net interest margin(3)

 

 

 

 

3.15

%

 

 

 

 

 

3.65

%

(1)

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

(2)

  The adjustment for securities and loans taxable equivalency amounted to $102 thousand and $98 thousand for the six months ended June 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. 

 

Contacts

Courtney E. Sacchetti

(203) 652-0166

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