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 $1.1 million, or $0.14 per share for the second quarter of 2024, versus $8.0 million, or $1.02 per share, for the same period in 2023. Pre-tax, pre-provision net revenue ("PPNR") was $9.7 million, or $1.25 per share, for the second quarter of 2024, versus $12.8 million, or $1.68 per share for the same period in 2023.

The Company's Board of Directors declared a $0.20 per share cash dividend, payable August 23, 2024 to shareholders of record on August 12, 2024.

We recommend reading this earnings release in conjunction with the Second Quarter 2024 Investor Presentation, located at http://investor.mybankwell.com/Presentations and included as an exhibit to our July 24, 2024 Current Report on Form 8-K.

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

"The Company’s core profitability has begun to expand; PPNR Return on Average Assets grew to 1.22% for the quarter, while the Net interest margin (“NIM”) has expanded to 2.75%. We continue to achieve peer-leading operational efficiency with a Noninterest Expense to Average Assets ratio of 1.55% for the quarter. Going forward, the Company’s liability sensitive balance sheet is well positioned for any potential Federal Reserve rate cuts.

Earnings per share for the second quarter were reduced by approximately $0.66 due to a specific reserve taken on a non-real estate related commercial credit. The Company announced this addition to its Allowance for Credit Losses in its 8-K filed on July 2, 2024. Notwithstanding this idiosyncratic credit event, other areas of the loan portfolio have experienced improving credit trends. A significant portion of criticized and classified loans have demonstrated improved operating results and may be subject to future credit upgrades if these trends continue. Additional details regarding the specific reserve as well as other credit metrics can be found in the accompanying Investor Presentation.

We are also pleased to announce that the Company will host its first earnings call after third quarter financial results are released in October 2024. The date and time of that call will be announced in the coming weeks."

Second Quarter 2024 Highlights:

  • PPNR was $9.7 million and PPNR return on average assets was 1.22% for the quarter ended June 30, 2024.
  • Net income of $1.1 million for the quarter reflects the impact of an $8.2 million provision for credit losses.
    • $6.6 million of the provision for credit losses is related to a specific reserve taken against an $8.7 million commercial business credit1.
  • The net interest margin was 2.75% and 2.73% for the quarter and six months ended June 30, 2024, respectively.
  • Noninterest expense to average assets was 1.55% and 1.60% for the quarter and six months ended June 30, 2024, respectively.
  • Total gross loans were $2.7 billion, decreasing $61.4 million, or 2.3%, compared to December 31, 2023.
  • Average yield on total loans was 6.37% for the six months ended June 30, 2024.
  • Deposits were $2.7 billion, decreasing $74.4 million, or 2.7%, compared to December 31, 2023.
  • Brokered deposits decreased $144.2 million compared to December 31, 2023.
  • FDIC-insured deposits totaled $1.9 billion and represent 72.9% of total deposits as of June 30, 2024.
  • Return on average assets was 0.14% and 0.31% for the quarter and six months ended June 30, 2024, respectively.
  • Return on average tangible common equity was 1.67% and 3.65% for the quarter and six months ended June 30, 2024, respectively.
  • Investment securities totaled $138.0 million and represent 4.4% of total assets.
  • The Company repurchased 40,140 shares and 76,320 at the weighted average prices of $24.55 and $24.94 per share for the quarter and six months ended June 30, 2024, respectively.

1 - 8-K was filed on July 2, 2024.

Earnings and Performance

Revenues (net interest income plus noninterest income) for the quarter ended June 30, 2024 were $21.9 million, versus $25.4 million for the quarter ended June 30, 2023. Revenues for the six months ended June 30, 2024 were $44.0 million, versus $52.5 million for the six months ended June 30, 2023. The decrease in revenues for the quarter and six months ended June 30, 2024 was attributable to an increase in interest expense on deposits and lower gains from loan sales partially offset by an increase in interest and fees on loans, given higher loan yields2 and prepayment fees.

Net income for the quarter ended June 30, 2024 was $1.1 million, versus $8.0 million for the quarter ended June 30, 2023. Net income for the six months ended June 30, 2024 was $4.9 million, versus $18.4 million for the six months ended June 30, 2023. The decrease in net income for the quarter and six months ended 2024 was primarily due to the aforementioned decrease in revenues and an increase in provision for credit losses.

Basic and diluted earnings per share were $0.14 and $0.14, respectively, for the quarter ended June 30, 2024 compared to basic and diluted earnings per share of $1.02 and $1.02, respectively, for the quarter ended June 30, 2023. Basic and diluted earnings per share were $0.62 and $0.62, respectively, for the six months ended June 30, 2024 compared to basic and diluted earnings per share of $2.36 and $2.34, respectively, for the six months ended June 30, 2023.

The net interest margin (fully taxable equivalent basis) for the quarters ended June 30, 2024 and June 30, 2023 was 2.75% and 3.07%, respectively. The net interest margin (fully taxable equivalent basis) for the six months ended June 30, 2024 and June 30, 2023 was 2.73% and 3.15%, respectively. The decrease in the net interest margin was due to an increase in funding costs partially offset by an increase in interest income on earning assets.

2 - The increase in overall loan yields was 28 bps and 38 bps for the quarter and six months ended June 30, 2024, respectively.

Allowance for Credit Losses - Loans ("ACL-Loans")

The ACL-Loans was $36.1 million as of June 30, 2024 compared to $27.9 million as of December 31, 2023. The ACL-Loans as a percentage of total loans was 1.36% as of June 30, 2024 compared to 1.03% as of December 31, 2023. Provision for credit losses was $8.2 million for the quarter ended June 30, 2024. The increase in the provision for credit losses for the quarter was primarily due to an additional $7.4 million for two loans. Of the $7.4 million, $6.6 million is related to a specific reserve taken against an $8.7 million commercial business credit. The credit had been previously reported as a non-performing loan as of the fourth quarter of 2023 and had previously carried a $0.4 million specific reserve. The Company's estimated remaining exposure for the commercial business credit is $1.7 million. The additional $0.8 million specific reserve was related to a construction loan.

Financial Condition

Assets totaled $3.1 billion at June 30, 2024, a decrease of $73.8 million, or 2.3% compared to December 31, 2023. Gross loans totaled $2.7 billion at June 30, 2024, a decrease of $61.4 million, or 2.3% compared to December 31, 2023. Deposits totaled $2.7 billion at June 30, 2024, a decrease of $74.4 million, or 2.7% compared to December 31, 2023.

Capital

Shareholders’ equity totaled $267.0 million as of June 30, 2024, an increase of $1.2 million compared to December 31, 2023, primarily a result of net income of $4.9 million for the six months ended June 30, 2024. The increase was partially offset by dividends paid of $3.2 million.

About Bankwell Financial Group

Bankwell is a commercial bank that serves the banking needs of residents and businesses throughout Fairfield and New Haven Counties, Connecticut. For more information about this press release, interested parties may contact Christopher R. Gruseke, President and Chief Executive Officer or 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, pre-tax, pre-provision net revenue, pre-tax, pre-provision net revenue on average assets, 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,

2024

 

March 31,

2024

 

December 31,

2023

 

June 30,

2023

ASSETS

 

 

 

 

 

 

 

Cash and due from banks

$

234,277

 

 

$

245,043

 

 

$

267,521

 

 

$

207,345

 

Federal funds sold

 

17,103

 

 

 

2,584

 

 

 

1,636

 

 

 

54,706

 

Cash and cash equivalents

 

251,380

 

 

 

247,627

 

 

 

269,157

 

 

 

262,051

 

 

 

 

 

 

 

 

 

Investment securities

 

 

 

 

 

 

 

Marketable equity securities, at fair value

 

2,079

 

 

 

2,069

 

 

 

2,070

 

 

 

2,017

 

Available for sale investment securities, at fair value

 

107,635

 

 

 

108,417

 

 

 

109,736

 

 

 

99,938

 

Held to maturity investment securities, at amortized cost

 

28,286

 

 

 

15,739

 

 

 

15,817

 

 

 

15,884

 

Total investment securities

 

138,000

 

 

 

126,225

 

 

 

127,623

 

 

 

117,839

 

Loans receivable (net of ACL-Loans of $36,083, $27,991, $27,946, and $30,694 at June 30, 2024, March 31, 2024, December 31, 2023, and June 30, 2023, respectively)

 

2,616,691

 

 

 

2,646,686

 

 

 

2,685,301

 

 

 

2,736,607

 

Accrued interest receivable

 

14,675

 

 

 

15,104

 

 

 

14,863

 

 

 

14,208

 

Federal Home Loan Bank stock, at cost

 

5,655

 

 

 

5,655

 

 

 

5,696

 

 

 

5,696

 

Premises and equipment, net

 

25,599

 

 

 

26,161

 

 

 

27,018

 

 

 

27,658

 

Bank-owned life insurance

 

52,097

 

 

 

51,764

 

 

 

51,435

 

 

 

50,816

 

Goodwill

 

2,589

 

 

 

2,589

 

 

 

2,589

 

 

 

2,589

 

Deferred income taxes, net

 

11,345

 

 

 

9,137

 

 

 

9,383

 

 

 

10,014

 

Other assets

 

23,623

 

 

 

24,326

 

 

 

22,417

 

 

 

25,229

 

Total assets

$

3,141,654

 

 

$

3,155,274

 

 

$

3,215,482

 

 

$

3,252,707

 

 

 

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

 

Deposits

 

 

 

 

 

 

 

Noninterest bearing deposits

$

328,475

 

 

$

376,248

 

 

$

346,172

 

 

$

367,635

 

Interest bearing deposits

 

2,333,900

 

 

 

2,297,274

 

 

 

2,390,585

 

 

 

2,421,228

 

Total deposits

 

2,662,375

 

 

 

2,673,522

 

 

 

2,736,757

 

 

 

2,788,863

 

 

 

 

 

 

 

 

 

Advances from the Federal Home Loan Bank

 

90,000

 

 

 

90,000

 

 

 

90,000

 

 

 

90,000

 

Subordinated debentures

 

69,328

 

 

 

69,266

 

 

 

69,205

 

 

 

69,082

 

Accrued expenses and other liabilities

 

52,975

 

 

 

54,454

 

 

 

53,768

 

 

 

55,949

 

Total liabilities

 

2,874,678

 

 

 

2,887,242

 

 

 

2,949,730

 

 

 

3,003,894

 

 

 

 

 

 

 

 

 

Shareholders’ equity

 

 

 

 

 

 

 

Common stock, no par value

 

118,037

 

 

 

118,401

 

 

 

118,247

 

 

 

116,541

 

Retained earnings

 

150,895

 

 

 

151,350

 

 

 

149,169

 

 

 

133,988

 

Accumulated other comprehensive (loss)

 

(1,956

)

 

 

(1,719

)

 

 

(1,664

)

 

 

(1,716

)

Total shareholders’ equity

 

266,976

 

 

 

268,032

 

 

 

265,752

 

 

 

248,813

 

 

 

 

 

 

 

 

 

Total liabilities and shareholders’ equity

$

3,141,654

 

 

$

3,155,274

 

 

$

3,215,482

 

 

$

3,252,707

 

 

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,

2024

 

March 31,

2024

 

December 31,

2023

 

June 30,

2023

 

June 30,

2024

 

June 30,

2023

Interest and dividend income

 

 

 

 

 

 

 

 

 

 

 

Interest and fees on loans

$

43,060

 

 

$

43,325

 

 

$

44,122

 

 

$

42,482

 

$

86,385

 

 

$

82,205

Interest and dividends on securities

 

1,190

 

 

 

1,130

 

 

 

1,108

 

 

 

1,002

 

 

2,320

 

 

 

2,002

Interest on cash and cash equivalents

 

3,429

 

 

 

3,826

 

 

 

4,164

 

 

 

3,022

 

 

7,255

 

 

 

6,590

Total interest and dividend income

 

47,679

 

 

 

48,281

 

 

 

49,394

 

 

 

46,506

 

 

95,960

 

 

 

90,797

Interest expense

 

 

 

 

 

 

 

 

 

 

 

Interest expense on deposits

 

24,677

 

 

 

25,362

 

 

 

25,307

 

 

 

20,777

 

 

50,039

 

 

 

37,810

Interest expense on borrowings

 

1,783

 

 

 

1,772

 

 

 

1,842

 

 

 

1,738

 

 

3,555

 

 

 

3,455

Total interest expense

 

26,460

 

 

 

27,134

 

 

 

27,149

 

 

 

22,515

 

 

53,594

 

 

 

41,265

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income

 

21,219

 

 

 

21,147

 

 

 

22,245

 

 

 

23,991

 

 

42,366

 

 

 

49,532

Provision (credit) for credit losses

 

8,183

 

 

 

3,683

 

 

 

(960

)

 

 

2,579

 

 

11,866

 

 

 

3,405

Net interest income after provision for credit losses

 

13,036

 

 

 

17,464

 

 

 

23,205

 

 

 

21,412

 

 

30,500

 

 

 

46,127

Noninterest income

 

 

 

 

 

 

 

 

 

 

 

Bank owned life insurance

 

333

 

 

 

329

 

 

 

316

 

 

 

292

 

 

662

 

 

 

573

Service charges and fees

 

495

 

 

 

304

 

 

 

688

 

 

 

361

 

 

799

 

 

 

647

Gains and fees from sales of loans

 

45

 

 

 

321

 

 

 

79

 

 

 

725

 

 

366

 

 

 

1,656

Other

 

(190

)

 

 

(39

)

 

 

46

 

 

 

23

 

 

(229

)

 

 

51

Total noninterest income

 

683

 

 

 

915

 

 

 

1,129

 

 

 

1,401

 

 

1,598

 

 

 

2,927

Noninterest expense

 

 

 

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

6,176

 

 

 

6,291

 

 

 

6,088

 

 

 

6,390

 

 

12,467

 

 

 

12,471

Occupancy and equipment

 

2,238

 

 

 

2,322

 

 

 

2,231

 

 

 

2,204

 

 

4,561

 

 

 

4,288

Professional services

 

989

 

 

 

1,065

 

 

 

1,033

 

 

 

692

 

 

2,054

 

 

 

2,014

Data processing

 

755

 

 

 

740

 

 

 

747

 

 

 

729

 

 

1,495

 

 

 

1,400

Director fees

 

306

 

 

 

900

 

 

 

605

 

 

 

453

 

 

1,206

 

 

 

845

FDIC insurance

 

705

 

 

 

930

 

 

 

1,026

 

 

 

1,050

 

 

1,635

 

 

 

2,112

Marketing

 

90

 

 

 

114

 

 

 

139

 

 

 

177

 

 

203

 

 

 

328

Other

 

986

 

 

 

935

 

 

 

995

 

 

 

946

 

 

1,921

 

 

 

1,874

Total noninterest expense

 

12,245

 

 

 

13,297

 

 

 

12,864

 

 

 

12,641

 

 

25,542

 

 

 

25,332

Income before income tax expense

 

1,474

 

 

 

5,082

 

 

 

11,470

 

 

 

10,172

 

 

6,556

 

 

 

23,722

Income tax expense

 

356

 

 

 

1,319

 

 

 

2,946

 

 

 

2,189

 

 

1,675

 

 

 

5,360

Net income

$

1,118

 

 

$

3,763

 

 

$

8,524

 

 

$

7,983

 

$

4,881

 

 

$

18,362

Earnings Per Common Share:

 

 

 

 

 

 

 

 

 

 

 

Basic

$

0.14

 

 

$

0.48

 

 

$

1.09

 

 

$

1.02

 

$

0.62

 

 

$

2.36

Diluted

$

0.14

 

 

$

0.48

 

 

$

1.09

 

 

$

1.02

 

$

0.62

 

 

$

2.34

Weighted Average Common Shares Outstanding:

 

 

 

 

 

 

 

 

 

 

 

Basic

 

7,747,675

 

 

 

7,663,521

 

 

 

7,603,938

 

 

 

7,593,417

 

 

7,705,598

 

 

 

7,574,160

Diluted

 

7,723,888

 

 

 

7,687,679

 

 

 

7,650,451

 

 

 

7,601,562

 

 

7,721,880

 

 

 

7,639,828

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,

2024

 

March 31,

2024

 

December 31,

2023

 

June 30,

2023

 

June 30,

2024

 

June 30,

2023

Performance ratios:

 

 

 

 

 

 

 

 

 

 

 

Return on average assets

0.14

%

 

0.47

%

 

1.03

%

 

0.99

%

 

0.31

%

 

1.14

%

Return on average shareholders' equity

1.65

%

 

5.59

%

 

12.82

%

 

12.91

%

 

3.61

%

 

15.15

%

Return on average tangible common equity

1.67

%

 

5.65

%

 

12.95

%

 

13.05

%

 

3.65

%

 

15.31

%

Net interest margin

2.75

%

 

2.71

%

 

2.81

%

 

3.07

%

 

2.73

%

 

3.15

%

Efficiency ratio(1)

55.9

%

 

60.3

%

 

55.0

%

 

49.8

%

 

58.1

%

 

48.3

%

Net loan charge-offs as a % of average loans

0.01

%

 

0.11

%

 

0.01

%

 

%

 

0.13

%

 

0.02

%

Dividend payout ratio(2)

142.86

%

 

41.67

%

 

18.35

%

 

19.61

%

 

64.52

%

 

17.09

%

(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,

2024

 

March 31,

2024

 

December 31,

2023

 

June 30,

2023

Capital ratios:

 

 

 

 

 

 

 

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

 

11.73

%

 

 

11.60

%

 

 

11.30

%

 

 

10.34

%

Total Capital to Risk-Weighted Assets(1)

 

12.98

%

 

 

12.63

%

 

 

12.32

%

 

 

11.41

%

Tier I Capital to Risk-Weighted Assets(1)

 

11.73

%

 

 

11.60

%

 

 

11.30

%

 

 

10.34

%

Tier I Capital to Average Assets(1)

 

10.17

%

 

 

10.09

%

 

 

9.81

%

 

 

9.41

%

Tangible common equity to tangible assets

 

8.42

%

 

 

8.42

%

 

 

8.19

%

 

 

7.58

%

Fully diluted tangible book value per common share

$

33.61

 

 

$

33.57

 

 

$

33.39

 

 

$

31.45

 

(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,

2024

 

March 31,

2024

 

December 31,

2023

 

June 30,

2023

ACL-Loans:

 

 

 

 

 

 

 

Balance at beginning of period

$

27,991

 

 

$

27,946

 

 

$

29,284

 

 

$

27,998

 

Charge-offs:

 

 

 

 

 

 

 

Residential real estate

 

(9

)

 

 

(132

)

 

 

 

 

 

 

Commercial real estate

 

(522

)

 

 

(3,306

)

 

 

(824

)

 

 

 

Commercial business

 

 

 

 

(197

)

 

 

 

 

 

 

Consumer

 

(12

)

 

 

(49

)

 

 

(15

)

 

 

(25

)

Total charge-offs

 

(543

)

 

 

(3,684

)

 

 

(839

)

 

 

(25

)

Recoveries:

 

 

 

 

 

 

 

Residential real estate

 

141

 

 

 

 

 

 

 

 

 

 

Commercial real estate

 

113

 

 

 

 

 

 

 

 

 

 

Commercial business

 

 

 

 

27

 

 

 

464

 

 

 

32

 

Consumer

 

13

 

 

 

4

 

 

 

3

 

 

 

10

 

Total recoveries

 

267

 

 

 

31

 

 

 

467

 

 

 

42

 

Net loan (charge-offs) recoveries

 

(276

)

 

 

(3,653

)

 

 

(372

)

 

 

17

 

Provision (credit) for credit losses - loans

 

8,368

 

 

 

3,698

 

 

 

(966

)

 

 

2,679

 

Balance at end of period

$

36,083

 

 

$

27,991

 

 

$

27,946

 

 

$

30,694

 

 

As of

 

June 30,

2024

 

March 31,

2024

 

December 31,

2023

 

June 30,

2023

Asset quality:

 

 

 

 

 

 

 

Nonaccrual loans

 

 

 

 

 

 

 

Residential real estate

$

1,339

 

 

$

1,237

 

 

$

1,386

 

 

$

1,429

 

Commercial real estate

 

28,088

 

 

 

19,083

 

 

 

23,009

 

 

 

1,905

 

Commercial business

 

17,396

 

 

 

16,841

 

 

 

15,430

 

 

 

2,815

 

Construction

 

9,382

 

 

 

9,382

 

 

 

9,382

 

 

 

9,382

 

Consumer

 

 

 

 

 

 

 

 

 

 

 

Total nonaccrual loans

 

56,205

 

 

 

46,543

 

 

 

49,207

 

 

 

15,531

 

Other real estate owned

 

 

 

 

 

 

 

 

 

 

 

Total nonperforming assets

$

56,205

 

 

$

46,543

 

 

$

49,207

 

 

$

15,531

 

 

 

 

 

 

 

 

 

Nonperforming loans as a % of total loans

 

2.12

%

 

 

1.74

%

 

 

1.81

%

 

 

0.56

%

Nonperforming assets as a % of total assets

 

1.79

%

 

 

1.48

%

 

 

1.53

%

 

 

0.48

%

ACL-loans as a % of total loans

 

1.36

%

 

 

1.04

%

 

 

1.03

%

 

 

1.11

%

ACL-loans as a % of nonperforming loans

 

64.20

%

 

 

60.14

%

 

 

56.79

%

 

 

197.63

%

Total past due loans to total loans

 

0.84

%

 

 

1.44

%

 

 

0.78

%

 

 

1.30

%

Total nonaccrual loans increased $7.0 million to $56.2 million as of June 30, 2024 when compared to December 31, 2023. The increase was primarily due to a $13.9 million commercial real estate non-owner occupied office loan put on nonaccrual during the six months ended June 30, 2024. This loan represents a 16.5% participation in a $84.3 million club transaction. The increase was partially offset by the payoff of two loans totaling $4.4 million and four loans that were partially charged-off for a total of $4.0 million during the six months ended June 30, 2024.

Nonperforming assets as a percentage of total assets increased to 1.79% at June 30, 2024 from 1.53% at December 31, 2023. The ACL-Loans at June 30, 2024 was $36.1 million, representing 1.36% of total loans.

 

BANKWELL FINANCIAL GROUP, INC.

LOAN & DEPOSIT PORTFOLIO (unaudited)

(Dollars in thousands)

 

Period End Loan Composition

June 30,

2024

 

March 31,

2024

 

December 31,

2023

 

Current QTD

% Change

 

YTD

% Change

Residential Real Estate

$

47,875

 

$

49,098

 

$

50,931

 

(2.5

)%

 

(6.0

)%

Commercial Real Estate(1)

 

1,912,701

 

 

1,927,636

 

 

1,947,648

 

(0.8

)

 

(1.8

)

Construction

 

150,259

 

 

151,967

 

 

183,414

 

(1.1

)

 

(18.1

)

Total Real Estate Loans

 

2,110,835

 

 

2,128,701

 

 

2,181,993

 

(0.8

)

 

(3.3

)

Commercial Business

 

503,444

 

 

508,912

 

 

500,569

 

(1.1

)

 

0.6

 

Consumer

 

42,906

 

 

41,946

 

 

36,045

 

2.3

 

 

19.0

 

Total Loans

$

2,657,185

 

$

2,679,559

 

$

2,718,607

 

(0.8

)%

 

(2.3

)%

(1) Includes owner occupied commercial real estate of $0.7 billion at June 30, 2024, March 31, 2024, and December 31, 2023, respectively.

Gross loans totaled $2.7 billion at June 30, 2024, a decrease of $61.4 million or 2.3% compared to December 31, 2023.

Period End Deposit Composition

June 30,

2024

 

March 31,

2024

 

December 31,

2023

 

Current QTD

% Change

 

YTD

% Change

Noninterest bearing demand

$

328,475

 

$

376,248

 

$

346,172

 

(12.7

)%

 

(5.1

)%

NOW

 

122,112

 

 

95,227

 

 

90,829

 

28.2

 

 

34.4

 

Money Market

 

825,599

 

 

818,408

 

 

887,352

 

0.9

 

 

(7.0

)

Savings

 

91,870

 

 

92,188

 

 

97,331

 

(0.3

)

 

(5.6

)

Time

 

1,294,319

 

 

1,291,451

 

 

1,315,073

 

0.2

 

 

(1.6

)

Total Deposits

$

2,662,375

 

$

2,673,522

 

$

2,736,757

 

(0.4

)%

 

(2.7

)%

Total deposits were $2.7 billion at June 30, 2024, a decrease of $74.4 million, or 2.7%, when compared to December 31, 2023. Brokered deposits have decreased $144.2 million, when compared to December 31, 2023.

 

BANKWELL FINANCIAL GROUP, INC.

NONINTEREST EXPENSE (unaudited)

(Dollars in thousands)

 

 

For the Quarter Ended

 

 

 

 

Noninterest expense

June 30,

2024

 

March 31,

2024

 

June 30,

2023

 

June 24 vs. Mar 24

% Change

 

Jun 24 vs. Jun 23

% Change

Salaries and employee benefits

$

6,176

 

$

6,291

 

$

6,390

 

(1.8

)%

 

(3.3

)%

Occupancy and equipment

 

2,238

 

 

2,322

 

 

2,204

 

(3.6

)

 

1.5

 

Professional services

 

989

 

 

1,065

 

 

692

 

(7.1

)

 

42.9

 

Data processing

 

755

 

 

740

 

 

729

 

2.0

 

 

3.6

 

Director fees

 

306

 

 

900

 

 

453

 

(66.0

)

 

(32.5

)

FDIC insurance

 

705

 

 

930

 

 

1,050

 

(24.2

)

 

(32.9

)

Marketing

 

90

 

 

114

 

 

177

 

(21.1

)

 

(49.2

)

Other

 

986

 

 

935

 

 

946

 

5.5

 

 

4.2

 

Total noninterest expense

$

12,245

 

$

13,297

 

$

12,641

 

(7.9

)%

 

(3.1

)%

Noninterest expense decreased by $0.4 million to $12.2 million for the quarter ended June 30, 2024 compared to the quarter ended June 30, 2023. The decrease in noninterest expense was primarily driven by a decrease in FDIC insurance costs, mainly driven by a reduction in the Bank's brokered deposits.

 

For the Six Months Ended

 

Noninterest expense

June 30,

2024

 

June 30,

2023

 

Jun 24 vs. Jun 23

% Change

Salaries and employee benefits

$

12,467

 

$

12,471

 

%

Occupancy and equipment

 

4,561

 

 

4,288

 

6.4

Professional services

 

2,054

 

 

2,014

 

2.0

Data processing

 

1,495

 

 

1,400

 

6.8

Director fees

 

1,206

 

 

845

 

42.7

FDIC insurance

 

1,635

 

 

2,112

 

(22.6

)

Marketing

 

203

 

 

328

 

(38.1

)

Other

 

1,921

 

 

1,874

 

2.5

Total noninterest expense

$

25,542

 

$

25,332

 

0.8

%

Noninterest expense increased by $0.2 million to $25.5 million for the six months ended June 30, 2024 compared to the six months ended June 30, 2023. The increase in noninterest expense was primarily driven by an increase in director fees related to timing of compensation and accelerated vestings in connection with the death of a director. The increase was partially offset by a decrease in FDIC insurance costs, mainly attributable by a reduction in the Bank's brokered deposits.

 

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,

2024

 

March 31,

2024

 

December 31,

2023

 

June 30,

2023

Total Equity

$

266,976

 

 

$

268,032

 

 

$

265,752

 

 

$

248,813

 

Less:

 

 

 

 

 

 

 

Goodwill

 

2,589

 

 

 

2,589

 

 

 

2,589

 

 

 

2,589

 

Other intangibles

 

 

 

 

 

 

 

 

 

 

 

Tangible Common Equity

$

264,387

 

 

$

265,443

 

 

$

263,163

 

 

$

246,224

 

 

 

 

 

 

 

 

 

Total Assets

$

3,141,654

 

 

$

3,155,274

 

 

$

3,215,482

 

 

$

3,252,707

 

Less:

 

 

 

 

 

 

 

Goodwill

 

2,589

 

 

 

2,589

 

 

 

2,589

 

 

 

2,589

 

Other intangibles

 

 

 

 

 

 

 

 

 

 

 

Tangible Assets

$

3,139,065

 

 

$

3,152,685

 

 

$

3,212,893

 

 

$

3,250,118

 

 

 

 

 

 

 

 

 

Tangible Common Equity to Tangible Assets

 

8.42

%

 

 

8.42

%

 

 

8.19

%

 

 

7.58

%

 

As of

Computation of Fully Diluted Tangible Book Value per Common Share

June 30,

2024

 

March 31,

2024

 

December 31,

2023

 

June 30,

2023

Total shareholders' equity

$

266,976

 

$

268,032

 

$

265,752

 

$

248,813

Less:

 

 

 

 

 

 

 

Preferred stock

 

 

 

 

 

 

 

Common shareholders' equity

$

266,976

 

$

268,032

 

$

265,752

 

$

248,813

Less:

 

 

 

 

 

 

 

Goodwill

 

2,589

 

 

2,589

 

 

2,589

 

 

2,589

Other intangibles

 

 

 

 

 

 

 

Tangible common shareholders' equity

$

264,387

 

$

265,443

 

$

263,163

 

$

246,224

 

 

 

 

 

 

 

 

Common shares issued and outstanding

 

7,866,499

 

 

7,908,180

 

 

7,882,616

 

 

7,829,950

 

 

 

 

 

 

 

 

Fully Diluted Tangible Book Value per Common Share

$

33.61

 

$

33.57

 

$

33.39

 

$

31.45

 

 

For the Quarter Ended

 

For the Six Months Ended

Computation of PPNR

June 30,

2024

 

March 31,

2024

 

December 31,

2023

 

June 30,

2023

 

June 30,

2024

 

June 30,

2023

Income before income tax expense

$ 1,474

 

$ 5,082

 

$ 11,470

 

$ 10,172

 

$ 6,556

 

$ 23,722

Add:

 

 

 

 

 

 

 

 

 

 

 

Provision (credit) for credit losses

8,183

 

3,683

 

(960)

 

2,579

 

11,866

 

3,405

PPNR

$ 9,657

 

$ 8,765

 

$ 10,510

 

$ 12,751

 

$ 18,422

 

$ 27,127

 

 

 

 

 

 

 

 

 

 

 

 

PPNR return on average assets

1.22 %

 

1.10 %

 

1.27 %

 

1.58 %

 

1.16 %

 

1.69 %

 

BANKWELL FINANCIAL GROUP, INC.

EARNINGS PER SHARE ("EPS") (unaudited)

(Dollars in thousands, except share data)

 

 

Three Months Ended

June 30,

 

Six Months Ended

June 30,

 

 

2024

 

 

 

2023

 

 

 

2024

 

 

 

2023

 

 

(In thousands, except per share data)

Net income

$

1,118

 

 

$

7,983

 

 

$

4,881

 

 

$

18,362

 

Dividends to participating securities(1)

 

(40

)

 

 

(41

)

 

 

(79

)

 

 

(84

)

Undistributed earnings allocated to participating securities(1)

 

14

 

 

 

(172

)

 

 

(52

)

 

 

(403

)

Net income for earnings per share calculation

$

1,092

 

 

$

7,770

 

 

$

4,750

 

 

$

17,875

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding, basic

 

7,748

 

 

 

7,593

 

 

 

7,706

 

 

 

7,574

 

Effect of dilutive equity-based awards(2)

 

(24

)

 

 

8

 

 

 

16

 

 

 

66

 

Weighted average shares outstanding, diluted

 

7,724

 

 

 

7,601

 

 

 

7,722

 

 

 

7,640

 

Net earnings per common share:

 

 

 

 

 

 

 

Basic earnings per common share

$

0.14

 

 

$

1.02

 

 

$

0.62

 

 

$

2.36

 

Diluted earnings per common share

$

0.14

 

 

$

1.02

 

 

$

0.62

 

 

$

2.34

 

(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

June 30,

2024

 

March 31,

2024

 

June 30,

2023

 

Jun 24 vs. Mar 24

% Change

 

Jun 24 vs. Jun 23

% Change

Bank owned life insurance

$

333

 

 

$

329

 

 

$

292

 

1.2

%

 

14.0

%

Service charges and fees

 

495

 

 

 

304

 

 

 

361

 

62.8

 

 

37.1

 

Gains and fees from sales of loans

 

45

 

 

 

321

 

 

 

725

 

(86.0

)

 

(93.8

)

Other

 

(190

)

 

 

(39

)

 

 

23

 

Unfavorable

 

Unfavorable

Total noninterest income

$

683

 

 

$

915

 

 

$

1,401

 

(25.4

)%

 

(51.2

)%

Noninterest income decreased $0.7 million for the quarter ended June 30, 2024 compared to the quarter ended June 30, 2023. The decrease in noninterest income was driven by lower gains as a result of fewer SBA loan sales for the quarter ended June 30, 2024.

 

For the Six Months Ended

 

 

Noninterest income

June 30,

2024

 

June 30,

2023

 

Jun 24 vs. Jun 23

% Change

Bank owned life insurance

$

662

 

 

$

573

 

15.5

%

Service charges and fees

 

799

 

 

 

647

 

23.5

%

Gains and fees from sales of loans

 

366

 

 

 

1,656

 

(77.9

)%

Other

 

(229

)

 

 

51

 

Unfavorable

Total noninterest income

$

1,598

 

 

$

2,927

 

(45.4

)%

Noninterest income decreased $1.3 million for the six months ended June 30, 2024 compared to the six months ended June 30, 2023. The decrease in noninterest income was driven by lower gains as a result of fewer SBA loan sales for the six months ended June 30, 2024.

 

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, 2024

 

June 30, 2023

 

Average

Balance

 

Interest

 

Yield/

Rate (4)

 

Average

Balance

 

Interest

 

Yield/

Rate (4)

Assets:

 

 

 

 

 

 

 

 

 

 

 

Cash and Fed funds sold

$

273,301

 

$

3,429

 

5.05

%

 

$

227,777

 

$

3,023

 

5.32

%

Securities(1)

 

137,360

 

 

1,139

 

3.32

 

 

 

128,576

 

 

955

 

2.97

 

Loans:

 

 

 

 

 

 

 

 

 

 

 

Commercial real estate

 

1,901,189

 

 

27,654

 

5.75

 

 

 

1,935,058

 

 

27,099

 

5.54

 

Residential real estate

 

49,046

 

 

772

 

6.30

 

 

 

56,981

 

 

643

 

4.51

 

Construction

 

159,184

 

 

2,871

 

7.14

 

 

 

206,844

 

 

3,691

 

7.06

 

Commercial business

 

523,382

 

 

11,028

 

8.34

 

 

 

557,482

 

 

10,646

 

7.55

 

Consumer

 

42,335

 

 

735

 

6.98

 

 

 

29,326

 

 

500

 

6.84

 

Total loans

 

2,675,136

 

 

43,060

 

6.37

 

 

 

2,785,691

 

 

42,579

 

6.05

 

Federal Home Loan Bank stock

 

5,655

 

 

118

 

8.42

 

 

 

5,610

 

 

98

 

7.00

 

Total earning assets

 

3,091,452

 

$

47,746

 

6.11

%

 

 

3,147,654

 

$

46,655

 

5.86

%

Other assets

 

95,453

 

 

 

 

 

 

96,603

 

 

 

 

Total assets

$

3,186,905

 

 

 

 

 

$

3,244,257

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities and shareholders' equity:

 

 

 

 

 

 

 

 

 

 

 

Interest bearing liabilities:

 

 

 

 

 

 

 

 

 

 

 

NOW

$

107,310

 

$

49

 

0.18

%

 

$

98,048

 

$

42

 

0.18

%

Money market

 

833,489

 

 

8,552

 

4.13

 

 

 

902,225

 

 

8,083

 

3.59

 

Savings

 

90,987

 

 

688

 

3.04

 

 

 

112,585

 

 

860

 

3.06

 

Time

 

1,291,595

 

 

15,388

 

4.79

 

 

 

1,298,170

 

 

11,792

 

3.64

 

Total interest bearing deposits

 

2,323,381

 

 

24,677

 

4.27

 

 

 

2,411,028

 

 

20,777

 

3.46

 

Borrowed Money

 

159,288

 

 

1,783

 

4.43

 

 

 

163,138

 

 

1,738

 

4.21

 

Total interest bearing liabilities

 

2,482,669

 

$

26,460

 

4.29

%

 

 

2,574,166

 

$

22,515

 

3.51

%

Noninterest bearing deposits

 

368,516

 

 

 

 

 

 

375,514

 

 

 

 

Other liabilities

 

63,177

 

 

 

 

 

 

46,565

 

 

 

 

Total liabilities

 

2,914,362

 

 

 

 

 

 

2,996,245

 

 

 

 

Shareholders' equity

 

272,543

 

 

 

 

 

 

248,012

 

 

 

 

Total liabilities and shareholders' equity

$

3,186,905

 

 

 

 

 

$

3,244,257

 

 

 

 

Net interest income(2)

 

 

$

21,286

 

 

 

 

 

$

24,140

 

 

Interest rate spread

 

 

 

 

1.82

%

 

 

 

 

 

2.36

%

Net interest margin(3)

 

 

 

 

2.75

%

 

 

 

 

 

3.07

%

(1)

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

(2)

The adjustment for securities and loans taxable equivalency amounted to $67 thousand and $51 thousand for the quarters ended June 30, 2024 and 2023, 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, 2024

 

June 30, 2023

 

Average

Balance

 

Interest

 

Yield/

Rate (4)

 

Average

Balance

 

Interest

 

Yield/

Rate (4)

Assets:

 

 

 

 

 

 

 

 

 

 

 

Cash and Fed funds sold

$

282,981

 

$

7,255

 

5.16

%

 

$

271,328

 

$

6,590

 

4.90

%

Securities(1)

 

136,049

 

 

2,199

 

3.23

 

 

 

129,225

 

 

1,912

 

2.96

 

Loans:

 

 

 

 

 

 

 

 

 

 

 

Commercial real estate

 

1,911,896

 

 

56,295

 

5.82

 

 

 

1,926,852

 

 

52,125

 

5.38

 

Residential real estate

 

49,624

 

 

1,490

 

6.01

 

 

 

58,207

 

 

1,286

 

4.42

 

Construction

 

160,080

 

 

5,844

 

7.22

 

 

 

186,684

 

 

6,651

 

7.09

 

Commercial business

 

520,188

 

 

21,314

 

8.10

 

 

 

549,963

 

 

21,394

 

7.74

 

Consumer

 

41,150

 

 

1,442

 

7.05

 

 

 

23,971

 

 

749

 

6.30

 

Total loans

 

2,682,938

 

 

86,385

 

6.37

 

 

 

2,745,677

 

 

82,205

 

5.95

 

Federal Home Loan Bank stock

 

5,678

 

 

239

 

8.44

 

 

 

5,442

 

 

193

 

7.14

 

Total earning assets

 

3,107,646

 

$

96,078

 

6.12

%

 

 

3,151,672

 

$

90,900

 

5.74

%

Other assets

 

93,179

 

 

 

 

 

 

90,427

 

 

 

 

Total assets

$

3,200,825

 

 

 

 

 

$

3,242,099

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities and shareholders' equity:

 

 

 

 

 

 

 

 

 

 

 

Interest bearing liabilities:

 

 

 

 

 

 

 

 

 

 

 

NOW

$

99,493

 

$

88

 

0.18

%

 

$

95,494

 

$

81

 

0.17

%

Money market

 

858,670

 

 

17,698

 

4.14

 

 

 

905,021

 

 

14,468

 

3.22

 

Savings

 

91,979

 

 

1,402

 

3.06

 

 

 

124,387

 

 

1,586

 

2.57

 

Time

 

1,304,332

 

 

30,851

 

4.76

 

 

 

1,275,417

 

 

21,675

 

3.43

 

Total interest bearing deposits

 

2,354,474

 

 

50,039

 

4.27

 

 

 

2,400,319

 

 

37,810

 

3.18

 

Borrowed Money

 

159,257

 

 

3,555

 

4.42

 

 

 

162,215

 

 

3,454

 

4.24

 

Total interest bearing liabilities

 

2,513,731

 

$

53,594

 

4.29

%

 

 

2,562,534

 

$

41,264

 

3.25

%

Noninterest bearing deposits

 

352,768

 

 

 

 

 

 

389,608

 

 

 

 

Other liabilities

 

62,775

 

 

 

 

 

 

45,494

 

 

 

 

Total liabilities

 

2,929,274

 

 

 

 

 

 

2,997,636

 

 

 

 

Shareholders' equity

 

271,551

 

 

 

 

 

 

244,463

 

 

 

 

Total liabilities and shareholders' equity

$

3,200,825

 

 

 

 

 

$

3,242,099

 

 

 

 

Net interest income(2)

 

 

$

42,484

 

 

 

 

 

$

49,636

 

 

Interest rate spread

 

 

 

 

1.83

%

 

 

 

 

 

2.49

%

Net interest margin(3)

 

 

 

 

2.73

%

 

 

 

 

 

3.15

%

(1)

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

(2)

The adjustment for securities and loans taxable equivalency amounted to $118 thousand and $102 thousand for the six months ended June 30, 2024 and 2023, 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

Christopher R. Gruseke

President and Chief Executive Officer

(203) 652-0166

or

Courtney E. Sacchetti

Executive Vice President and Chief Financial Officer of Bankwell Financial Group

(203) 652-0166

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