Bankwell Financial Group, Inc. - FORM 8-K - EX-99.1 - EXHIBIT 99.1 PRESS RELEASE

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8-K - BANKWELL FINANCIAL GROUP, INC. 8-K 7 31 14 - Bankwell Financial Group, Inc.	bankwell8k-73114.htm

BANKWELL FINANCIAL GROUP REACHES RECORD ASSET LEVELS AT $902 MILLION; REPORTS NET INCOME OF $1.2 MILLION; CORE EARNINGS UP 23% YEAR-OVER-YEAR

New Canaan, CT – July 31, 2014 – Bankwell Financial Group, Inc. (NASDAQ: BWFG) reported GAAP net income of $1.2 million for the second quarter of 2014. Excluding merger-related expenses and securities gains, net income (defined as core earnings) for the quarter would have been $1.3 million, representing a 23% year-over-year improvement.

Peyton R. Patterson, President and CEO of Bankwell Financial Group stated, “As a newly public company, we are laser focused on delivering strong balance sheet growth and earnings performance for our shareholders.” She added, “The recently completed initial public offering (IPO) raised approximately $45 million in capital, which allows us to fund our organic growth and to make accretive acquisitions in attractive markets. With the pending closing of the Quinnipiac Bank & Trust acquisition, subject to regulatory and shareholder approval, total assets will exceed $1 billion.”

Earnings

Revenues (net interest income plus non-interest income, excluding security gains) for the three months ended June 30, 2014 were $7.8 million, an increase of 10% compared to June 30, 2013. Revenues (net interest income plus non-interest income, excluding security gains) for the six months ended June 30, 2014 were $15.7 million, an increase of 17% compared to June 30, 2013. Total net interest income for the three months ended June 30, 2014 was $7.1 million, an increase of 14% compared to the same period in the prior year. The strong improvement in net interest income was fueled by record loans outstanding and a year-to-date net interest margin of 3.82%.

Net income for the second quarter of 2014 was $1.2 million, representing a 9% increase over the linked quarter. Contributing to the favorable earnings improvement was the 2% reduction in operating expenses, exclusive of merger related costs. The decrease in operating expenses was coupled with a reduction in the loan loss provision by 67% as a result of favorable credit quality and a second quarter recovery of approximately $400,000. Excluding the CRE loan sale that generated $413,000 in fee income in the first quarter, non-interest income on a linked quarter basis increased from $356,000 to $682,000, a result of depositor service charge income and gains on the sale of SBA loans.

Financial Condition

On the balance sheet, assets totaled a record $902 million at June 30, 2014, a 38% increase over total assets of $654 million for the same period in the prior year. This increase reflects strong loan growth, proceeds from the IPO and, to a lesser extent, The Wilton Bank acquisition. Total loans were $684 million, a 19% increase year-over-year. Deposits increased to $730 million, a 41% increase over June 30, 2013, with core deposits showing a 31% increase to $469 million.

Asset Quality

Asset quality remained exceptionally strong at June 30, 2014. Non-performing assets as a percentage of total assets was 0.22% at June 30, 2014, down from 0.24% at June 30, 2013. The allowance for loan losses as of June 30, 2014 was $9.0 million, representing 1.31% of total loans.

Capital

Shareholders’ equity was strong at $117.2 million as of June 30, 2014, an increase of $47.7 million compared to December 31, 2013, primarily a result of the approximately $45 million raised in the IPO. As of June 30, 2014, the Tangible Common Equity Ratio and Tangible Book Value per share were 11.73% and $16.32, respectively.

About Bankwell Financial Group

Bankwell is a commercial bank that serves the banking and lending needs of residents and businesses throughout Fairfield County, CT. For more information about this press release, interested parties can contact Peyton R. Patterson, President and CEO or Ernest J. Verrico, CFO of Bankwell Financial Group at (203) 972-3838.

For more information, visit www.mybankwell.com.

This press release may contain certain forward-looking statements about the Company. Forward-looking statements include statements regarding anticipated future events and can be identified by the fact that they do not relate strictly to historical or current facts. They often include words such as “believe,” “expect,” “anticipate,” “estimate,” and “intend” or future or conditional verbs such as “will,” “would,” “should,” “could,” or “may.” Forward-looking statements, by their nature, are subject to risks and uncertainties. Certain factors that could cause actual results to differ materially from expected results include increased competitive pressures, changes in the interest rate environment, general economic conditions or conditions within the securities markets, and legislative and regulatory changes that could adversely affect the business in which the Company and its subsidiaries are engaged.

BANKWELL FINANCIAL GROUP, INC.
CONSOLIDATED BALANCE SHEETS (unaudited)
(Dollars in thousands)

	June 30,		December 31,			June 30,
	2014			2013		2013
Assets
Cash and due from banks	$	130,535		$	82,013	$	38,610
Held to maturity investment securities, at amortized cost		13,742			13,816		5,251
Available for sale investment securities, at fair value		49,114			28,597		29,441
Loans held for sale		325			100		-
Loans receivable (net of allowance for loan losses of $8,985, $8,382 and
$8,224 at June 30, 2014, December 31, 2013 and June 30, 2013 respectively)		671,500			621,830		565,488
Foreclosed real estate		829			829		26
Accrued interest receivable		2,464			2,360		2,185
Federal Home Loan Bank stock, at cost		4,834			4,834		4,577
Premises and equipment, net		8,078			7,060		2,334
Bank-owned life insurance		10,202			10,031		-
Other intangible assets		427			481		-
Deferred income taxes, net		5,479			5,845		3,448
Other assets		4,258			1,822		2,892
Total assets	$	901,787		$	779,618	$	654,252

Liabilities & Shareholders' Equity
Liabilities
Deposits
Noninterest-bearing	$	146,487		$	118,618	$	95,244
Interest-bearing		583,700			542,927		424,010
Total deposits		730,187			661,545		519,254

Advances from the Federal Home Loan Bank		47,000			44,000		69,000
Accrued expenses and other liabilities		7,431			4,588		5,439
Total liabilities		784,618			710,133		593,693

Commitments and contingencies

Shareholders' equity
Preferred stock, senior noncumulative perpetual, Series C, no par;
10,980 shares issued and outstanding at June 30, 2014,
December 31, 2013, and June 30, 2013 respectively; liquidation value
of $1,000 per share.		10,980			10,980		10,980
Common stock, no par value; 10,000,000 shares authorized,
6,593,485, 3,876,393 and 3,387,653 shares issued at June 30, 2014,
December 31, 2013 and June 30, 2013 respectively.		97,295			52,105		45,667
Retained earnings		8,271			5,976		3,351
Accumulated other comprehensive income		623			424		561
Total shareholders' equity		117,169			69,485		60,559

Total liabilities and shareholders' equity	$	901,787		$	779,618	$	654,252

BANKWELL FINANCIAL GROUP, INC.

CONSOLIDATED STATEMENTS OF INCOME (unaudited)

(Dollars in thousands, except per share data)

	Three Months Ended June 30,					Six Months Ended June 30,				Three Months Ended March 31,
	2014		2013			2014		2013		2014		2013
Interest and dividend income
Interest and fees on loans	$	7,558	$	6,572		$	14,986	$	12,871	$	7,428	$	6,299
Interest and dividends on securities		437		318			848		685		411		367
Interest on cash and cash equivalents		49		11			71		21		22		10
Total interest income		8,044		6,901			15,905		13,577		7,861		6,676

Interest expense
Interest expense on deposits		730		514			1,352		953		622		439
Interest on borrowings		166		139			259		291		93		152
Total interest expense		896		653			1,611		1,244		715		591

Net interest income		7,148		6,248			14,294		12,333		7,146		6,085

Provision for loan losses		70		252			282		442		211		190

Net interest income after provision for loan losses		7,078		5,996			14,012		11,891		6,935		5,895

Noninterest income
Gains and fees from sales of loans		213		757			642		765		428		8
Net gain on sale of available for sale securities		-		648			-		648		-		-
Service charges and fees		143		101			267		198		124		97
Bank owned life insurance		86		-			171		-		85		-
Gain (loss) on sale of foreclosed real estate, net		-		(5	)		-		66		-		71
Other		240		23			372		131		132		108
Total noninterest income		682		1,524			1,452		1,808		769		284

Noninterest expense
Salaries and employee benefits		3,284		2,752			6,625		5,252		3,341		2,499
Occupancy and equipment		1,030		787			2,096		1,558		1,066		771
Data processing		300		251			639		505		338		255
Professional services		272		421			641		790		369		369
Marketing		218		270			328		398		110		128
Director fees		143		144			282		284		139		139
Merger and acquisition related expenses		122		64			263		64		141		-
FDIC insurance		107		100			225		230		118		130
Amortization of intangibles		27		-			54		-		27		-
Foreclosed real estate		-		4			12		4		14		-
Other		394		338			774		644		378		307
Total noninterest expense		5,897		5,131			11,939		9,729		6,041		4,598

Income before income tax expense		1,863		2,389			3,525		3,970		1,663		1,581

Income tax expense		636		921			1,175		1,490		540		569

Net income	$	1,227	$	1,468		$	2,350	$	2,480	$	1,123	$	1,012


Net income attributable to common shareholders	$	1,173	$	1,420		$	2,235	$	2,388	$	1,095	$	984

Earnings per common share - basic	$	0.23	$	0.43		$	0.51	$	0.74	$	0.28	$	0.31
Earnings per common share - diluted		0.23		0.42			0.51		0.72		0.28		0.30

BANKWELL FINANCIAL GROUP, INC.
RECONCILIATION GAAP - NON GAAP (unaudited)
(Dollars in thousands)


For the three months ended June 30, 2014
Net Income	$	1,227
Merger and Acquisition Related Expenses		122
Income Tax Expense (benefit)		(42	)
Net adjustment		80
Core Earnings	$	1,307



For the three months ended June 30, 2013
Net Income	$	1,468
Gain on sale of Available for Sale Securities		(648	)
Income Tax Expense (benefit)		244
Net adjustment		(404	)
Core Earnings	$	1,064

BANKWELL FINANCIAL GROUP, INC.

CONSOLIDATED FINANCIAL HIGHLIGHTS (unaudited)

(Dollars in thousands, except per share data)

	Three Months Ended
	June 30, 2014			March 31, 2014			June 30, 2013
Performance ratios:
Return on average assets		0.58	%		0.64	%		0.90	%
Return on average stockholders' equity		5.46	%		12.81	%		9.71	%
Net interest margin		3.68	%		3.97	%		3.97	%
Efficiency ratio (1)		73.77	%		74.37	%		71.98	%

	As of
	June 30, 2014			March 31, 2014			June 30, 2013
Capital ratios:
Total Capital to Risk-Weighted Assets (2)		16.48	%		10.74	%		10.81	%
Tier I Capital to Risk-Weighted Assets (2)		15.23	%		9.49	%		9.56	%
Tier I Capital to Average Assets (2)		12.49	%		7.90	%		7.85	%
Tangible common equity to tangible assets		11.73	%		7.35	%		7.58	%

Tangible book value per common share	$	16.32		$	15.79		$	14.85

Asset quality:
Nonaccrual loans	$	1,111		$	2,101		$	1,597
Other real estate owned		829			829			26
Total non-performing assets	$	1,940		$	2,930		$	1,623

Loans past due 90 days and still accruing	$	1,294		$	1,747		$	-

Nonperforming loans as a % of total loans		0.16	%		0.32	%		0.28	%

Nonperforming assets as a % of total assets		0.22	%		0.36	%		0.25	%

Allowance for loan losses as a % of total loans		1.31	%		1.30	%		1.43	%

Allowance for loan losses as a % of nonperforming loans		808.74	%		409.49	%		515.00	%

Annualized net loan charge-offs as a % of average loans		0.00	%		0.00	%		0.00	%

(1) Efficiency ratio is defined as non-interest expenses divided by our operating revenue, which is equal to net interest income plus non-interest income excluding gains and losses on sales of securities. 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) Represents bank ratios.

BANKWELL FINANCIAL GROUP, INC.

NET INTEREST MARGIN ANALYSIS ON A FULLY TAX EQUIVALENT BASIS

(Dollars in thousands)

	For the Three Months Ended
	June 30, 2014							June 30, 2013
	Average				Yield/			Average				Yield/
	Balance		Interest		Rate			Balance		Interest		Rate
Assets:
Cash and Fed funds sold	$	78,646	$	49		0.25	%	$	22,693	$	11		0.19	%
Securities (1)		51,755		529		4.05	%		38,219		392		4.11	%
Loans: (2)
Commercial real estate		335,263		4,086		4.82	%		308,972		3,815		4.89	%
Residential real estate		160,899		1,467		3.61	%		152,353		1,380		3.63	%
Construction (3)		42,377		515		4.80	%		36,924		448		4.80	%
Commercial business		98,113		1,239		4.99	%		62,745		819		5.16	%
Home equity		13,124		122		3.74	%		10,828		102		3.76	%
Consumer		714		15		8.17	%		747		9		5.05	%
Acquired loan portfolio non accrual loans (net of mark)		3,220		116		14.49	%		-		-		0.00	%
Total loans		653,710		7,560		4.57	%		572,569		6,573		4.54	%
Federal Home Loan Bank stock		4,881		18		1.47	%		4,521		4		0.37	%
Total earning assets		788,992	$	8,156		4.09	%		638,002	$	6,980		4.33	%
Other assets		57,416							16,976
Total assets	$	846,408						$	654,978

Liabilities and shareholders' equity:
Deposits:
Noninterest-bearing	$	127,051	$	-		0.00	%	$	85,744		-		0.00	%
NOW		52,605		15		0.11	%		36,614		12		0.13	%
Money market		173,202		167		0.39	%		105,334		110		0.42	%
Savings		92,501		68		0.30	%		120,356		139		0.46	%
Time		233,044		481		0.83	%		148,957		253		0.68	%
Total deposits		678,403		731		0.53	%		497,005		514		0.50	%
Federal Home Loan Bank advances		48,089		166		1.39	%		86,107		138		0.64	%
Total funding liabilities		726,492	$	897		0.60	%		583,112	$	652		0.53	%
Other liabilities		29,799							11,209
Shareholders' equity		90,117							60,657
Total liabilities and shareholders' equity	$	846,408						$	654,978
Net interest income (4)			$	7,259						$	6,328
Interest rate spread						3.49	%						3.80	%
Net interest margin (5)						3.68	%						3.97	%

(1) Average balances and yields for securities are based on amortized cost.
(2) Average balances and yields for loans exclude nonperforming loans.
(3) Includes commercial and residential real estate construction.
(4) The adjustment for securities and loans taxable equivalency amounted to $111 thousand, $80 thousand, respectively for the three months ended June 30, 2014, and 2013.
(5) Net interest income as a percentage of earning assets.

BANKWELL FINANCIAL GROUP, INC.

NET INTEREST MARGIN ANALYSIS ON A FULLY TAX EQUIVALENT BASIS

(Dollars in thousands)


	For the Six Months Ended
	June 30, 2014							June 30, 2013
	Average				Yield/			Average				Yield/
	Balance		Interest		Rate			Balance		Interest		Rate
Assets:
Cash and Fed funds sold	$	55,672	$	71		0.26	%	$	19,493	$	21		0.22	%
Securities (1)		49,751		1,031		4.14	%		40,996		843		4.15	%
Loans: (2)
Commercial real estate		329,700		8,051		4.86	%		294,175		7,415		5.01	%
Residential real estate		158,508		2,863		3.61	%		149,511		2,785		3.76	%
Construction (3)		45,854		1,045		4.53	%		35,201		857		4.84	%
Commercial business		98,087		2,408		4.88	%		62,190		1,609		5.15	%
Home equity		13,666		249		3.68	%		10,681		198		3.73	%
Consumer		610		27		8.80	%		406		11		3.73	%
Acquired loan portfolio non accrual loans (net of mark)		3,466		344		20.03	%		-		-		5.55	%
Total loans		649,891		14,987		4.59	%		552,164		12,875		4.64	%
Federal Home Loan Bank stock		4,834		36		1.49	%		4,517		8		0.37	%
Total earning assets		760,148	$	16,125		4.22	%		617,170	$	13,747		4.43	%
Other assets		47,324							11,164
Total assets	$	807,472						$	628,334

Liabilities and shareholders' equity:
Deposits:
Noninterest-bearing	$	124,475	$	-		0.00	%	$	82,113		-		0.00	%
NOW		52,668		28		0.11	%		35,081		24		0.14	%
Money market		172,859		346		0.40	%		99,974		200		0.40	%
Savings		100,240		151		0.30	%		126,444		294		0.47	%
Time		208,151		827		0.80	%		135,473		435		0.65	%
Total deposits		658,393		1,352		0.51	%		479,085		953		0.40	%
Federal Home Loan Bank advances		48,901		259		1.07	%		83,077		291		0.71	%
Total funding liabilities		707,294	$	1,611		0.56	%		562,162	$	1,244		0.45	%
Other liabilities		20,265							6,195
Shareholders' equity		79,913							59,977
Total liabilities and shareholders' equity	$	807,472						$	628,334
Net interest income (4)			$	14,514						$	12,503
Interest rate spread						3.66	%						3.98	%
Net interest margin (5)						3.82	%						4.03	%

(1) Average balances and yields for securities are based on amortized cost.
(2) Average balances and yields for loans exclude nonperforming loans.
(3) Includes commercial and residential real estate construction.
(4) The adjustment for securities and loans taxable equivalency amounted to $220 thousand, $170 thousand, respectively for the six months ended June 30, 2014, and 2013.
(5) Net interest income as a percentage of earning assets.

Bankwell Financial Group, Inc. - FORM 8-K - EX-99.1 - EXHIBIT 99.1 PRESS RELEASE - August 4, 2014

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Bankwell Financial Group, Inc. Reports