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BANKWELL FINANCIAL GROUP REPORTS RECORD NET INCOME FOR THE THIRD QUARTER, FUELED BY RECORD LOAN GROWTH

New Canaan, CT – October 30, 2014 – Bankwell Financial Group, Inc. (NASDAQ: BWFG) reported GAAP net income of $1.5 million for the quarter ended September 30, 2014, resulting primarily from record loan growth of $59 million since June 30, 2014.

Blake S. Drexler, Executive Chairman of Bankwell Financial Group, Inc. stated, "Our record performance reflected a continuation of strong momentum as we continue to execute against our strategic plan, which centers on growing the Company, diversifying revenue streams and investing in new and profitable lines of business."  He added, "We have successfully utilized a portion of the capital raised from our IPO with continued loan growth and the acquisition of Quinnipiac Bank & Trust on October 1^st.  This latest acquisition underscores our strategy to grow both organically and through acquisitions."

In a recent report, the U.S. Treasury Department ranked Bankwell Financial Group first in the nation for growth in qualified small business lending in its Small Business Lending Fund at June 30, 2014.

Earnings

Revenues (net interest income plus non-interest income) for the three months ended September 30, 2014 were $8.4 million, an increase of 12% compared to September 30, 2013. Revenues (net interest income plus non-interest income) for the nine months ended September 30, 2014 were $24.1 million, an increase of 12% compared to September 30, 2013. Total net interest income for the three months ended September 30, 2014 was $7.6 million, an increase of 19% 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 3.78%. The increased loan loss provision to $566 thousand for the quarter ended September 30, 2014 is directly a result of growth in our loan portfolio.

Net income for the third quarter of 2014 was $1.5 million, representing a 13% increase compared to the same period in the prior year.  The Company continues to focus on expense control as indicated by our improving efficiency ratios. The Company's efficiency ratio for the three months ended September 30, 2014 was 64.37% and for the nine months ended September 30, 2014 was 70.71%.

Financial Condition

On the balance sheet, assets totaled $896 million at September 30, 2014, a 31% increase over total assets of $684 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 in the fourth quarter of 2013. Total loans were $744 million, a 27% increase compared to September 30, 2013. Deposits increased to $695 million, a 28% increase over September 30, 2013, with core deposits showing a 29% increase to $459 million for the same period.

Asset Quality

Asset quality remained exceptionally strong at September 30, 2014.  Non-performing assets as a percentage of total assets was 0.23% at September 30, 2014, up slightly from 0.21% at September 30, 2013.  The allowance for loan losses as of September 30, 2014 was $9.6 million, representing 1.28% of total loans.

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Capital

Shareholders' equity was strong at $118.5 million as of September 30, 2014, an increase of $49 million compared to December 31, 2013, primarily a result of the approximately $45 million net raised in the IPO.  As of September 30, 2014, the Tangible Common Equity Ratio and Tangible Book Value per share were 11.97% and $16.52, respectively.

About Bankwell Financial Group

Bankwell is a commercial bank that serves the banking and lending needs of residents and businesses throughout Fairfield and New Haven Counties, CT.  For more information about this press release, interested parties can contact Blake S. Drexler, Executive Chairman 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.

 

 

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BANKWELL FINANCIAL GROUP, INC.
CONSOLIDATED BALANCE SHEETS (unaudited)
(Dollars in thousands, except share data)
		September 30,				June 30,				December 31,				September 30,
		2014				2014				2013				2013
Assets
Cash and due from banks		$	35,566			$	130,535			$	82,013			$	51,029
Held to maturity investment securities, at amortized cost			11,502				13,742				13,816				12,831
Available for sale investment securities, at fair value			67,537				49,114				28,597				29,235
Loans held for sale			-				325				100				-
Loans receivable (net of allowance for loan losses of $9,552, $8,985,
$8,382 and $8,277 at September 30, 2014, June 30, 2014, December 31, 2013
and September 30, 2013 respectively)			730,148				671,500				621,830				574,340
Foreclosed real estate			829				829				829				-
Accrued interest receivable			2,670				2,464				2,360				2,165
Federal Home Loan Bank stock, at cost			4,834				4,834				4,834				4,577
Premises and equipment, net			7,787				8,078				7,060				2,528
Bank-owned life insurance			22,837				10,202				10,031				-
Other intangible assets			401				427				481				-
Deferred income taxes, net			5,804				5,479				5,845				5,872
Other assets			5,600				4,258				1,822				946
Total assets		$	895,515			$	901,787			$	779,618			$	683,523
Liabilities & Shareholders' Equity
Liabilities
Deposits
Noninterest-bearing		$	151,146			$	146,596			$	118,618			$	100,878
Interest-bearing			544,117				583,590				542,927				443,246
Total deposits			695,263				730,186				661,545				544,124
Advances from the Federal Home Loan Bank			77,000				47,000				44,000				65,000
Accrued expenses and other liabilities			4,755				7,431				4,588				6,254
Total liabilities			777,018				784,617				710,133				615,378
Shareholders' equity
Preferred stock, senior noncumulative perpetual, Series C, no par;
10,980 shares issued and outstanding at September 30, 2014,
June 30, 2014, December 31, 2013, and September 30, 2013 respectively;
liquidation value of $1,000 per share.			10,980				10,980				10,980				10,980
Common stock, no par value; 10,000,000 shares authorized,
6,559,995, 6,593,485, 3,876,393 and 3,746,253 shares issued at
September 30, 2014, June 30, 2014, December 31, 2013 and
September 30, 2013 respectively.			97,180				97,296				52,105				51,971
Retained earnings			9,735				8,271				5,976				4,641
Accumulated other comprehensive income			602				623				424				553
Total shareholders' equity			118,497				117,170				69,485				68,145
Total liabilities and shareholders' equity		$	895,515			$	901,787			$	779,618			$	683,523

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BANKWELL FINANCIAL GROUP, INC.
CONSOLIDATED STATEMENTS OF INCOME (unaudited)
(Dollars in thousands, except per share data)
		Three Months Ended September 30,								Nine Months Ended September 30,
		2014				2013				2014				2013
Interest and dividend income
Interest and fees on loans		$	8,054			$	6,748			$	23,040			$	19,619
Interest and dividends on securities			569				355				1,417				1,040
Interest on cash and cash equivalents			45				18				116				39
Total interest income			8,668				7,121				24,573				20,698
Interest expense
Interest expense on deposits			905				600				2,257				1,553
Interest on borrowings			168				127				427				417
Total interest expense			1,073				727				2,684				1,970
Net interest income			7,595				6,394				21,889				18,728
Provision for loan losses			566				47				847				489
Net interest income after provision for loan losses			7,029				6,347				21,042				18,239
Noninterest income
Gains and fees from sales of loans			366				972				1,008				1,737
Service charges and fees			153				100				420				297
Bank owned life insurance			135				-				305				-
Net gain on sale of available for sale securities			-				-				-				648
Gain (loss) on sale of foreclosed real estate, net			-				(16	)			-				49
Other			103				27				475				141
Total noninterest income			757				1,083				2,208				2,872
Noninterest expense
Salaries and employee benefits			2,786				2,894				9,412				8,146
Occupancy and equipment			1,066				836				3,162				2,410
Professional services			394				422				1,035				1,212
Data processing			314				280				949				787
Director fees			177				142				460				426
Merger and acquisition related expenses			145				-				408				64
Marketing			135				378				463				776
FDIC insurance			120				36				345				267
Amortization of intangibles			27				-				80				-
Foreclosed real estate			9				1				21				4
Other			357				342				1,134				950
Total noninterest expense			5,530				5,331				17,469				15,042
Income before income tax expense			2,256				2,099				5,781				6,069
Income tax expense			765				780				1,940				2,270
Net income		$	1,491			$	1,319			$	3,841			$	3,799
Net income attributable to common shareholders		$	1,441			$	1,271			$	3,677			$	3,660
Earnings per common share - basic		$	0.22			$	0.38			$	0.72			$	1.12
Earnings per common share - diluted			0.22				0.37				0.72				1.10

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BANKWELL FINANCIAL GROUP, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (unaudited)
(Dollars in thousands, except per share data)
		Three Months Ended September 30,								Nine Months Ended, September 30,
		2014				2013				2014				2013
Performance ratios:
Return on average assets			0.67	%			0.75	%			0.62	%			0.78	%
Return on average stockholders' equity			5.02	%			8.23	%			5.84	%			8.30	%
Net interest margin			3.69	%			4.00	%			3.78	%			4.04	%
Efficiency ratio (1)			64.37	%			71.13	%			70.71	%			71.64	%
						As of
						September 30, 2014				September 30, 2013
Capital ratios:
Total Capital to Risk-Weighted Assets (2)							15.27	%			10.79	%
Tier I Capital to Risk-Weighted Assets (2)							14.02	%			9.54	%
Tier I Capital to Average Assets (2)							11.93	%			7.84	%
Tangible common equity to tangible assets							11.97	%			8.36	%
Tangible book value per common share (3)						$	16.52			$	15.46
Asset quality:
Nonaccrual loans						$	1,246			$	1,423
Other real estate owned							829				-
Total non-performing assets						$	2,075			$	1,423
Loans past due 90 days and still accruing						$	1,309			$	-
Nonperforming loans as a % of total loans							0.17	%			0.24	%
Nonperforming assets as a % of total assets							0.23	%			0.21	%
Allowance for loan losses as a % of total loans							1.28	%			1.42	%
Allowance for loan losses as a % of nonperforming loans							766.51	%			581.47	%
Annualized net loan charge-offs as a % of average loans							0.00	%			0.00	%
(1) Efficiency ratio is defined as non-interest expenses, less merger and acquisition related expenses and other real estate owned 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 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)  Represents bank ratios.
(3) Excludes preferred stock and unvested restricted stock awards of 76,278 and 48,956 as of September 30, 2014 and September 30, 2013, respectively.

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BANKWELL FINANCIAL GROUP, INC.
NET INTEREST MARGIN ANALYSIS ON A FULLY TAX EQUIVALENT BASIS
(Dollars in thousands)
		For the Three Months Ended
		September 30, 2014												September 30, 2013
		Average								Yield/				Average								Yield/
		Balance				Interest				Rate				Balance				Interest				Rate
Assets:
Cash and Fed funds sold		$	64,752			$	45				0.28	%		$	31,569			$	18				0.22	%
Securities (1)			71,536				666				3.73	%			39,993				451				4.51	%
Loans: (2)
Commercial real estate			365,042				4,473				4.79	%			298,085				3,789				4.97	%
Residential real estate			166,123				1,499				3.61	%			156,580				1,429				3.65	%
Construction (3)			47,261				570				4.72	%			38,018				461				4.74	%
Commercial business			101,184				1,296				5.01	%			70,843				968				5.35	%
Home equity			12,786				121				3.75	%			10,511				100				3.80	%
Consumer			698				15				8.75	%			39				2				17.98	%
Acquired loan portfolio non accrual loans (net of mark)			1,327				81				24.15	%			-				-				0.00	%
Total loans			694,421				8,055				4.54	%			574,076				6,749				4.60	%
Federal Home Loan Bank stock			4,834				18				1.49	%			4,587				4				0.37	%
Total earning assets			835,543			$	8,784				4.11	%			650,225			$	7,222				4.35	%
Other assets			47,383												49,160
Total assets		$	882,926											$	699,385
Liabilities and shareholders' equity:
Interest-bearing liabilities:
NOW		$	52,298				15				0.11	%		$	31,933				9				0.12	%
Money market			175,111				218				0.49	%			118,705				138				0.46	%
Savings			79,505				65				0.33	%			110,510				128				0.46	%
Time			257,616				607				0.93	%			170,246				325				0.76	%
Total interest-bearing deposits			564,530				905				0.64	%			431,394				600				0.55	%
Borrowed Money			47,333				168				1.41	%			63,903				127				0.79	%
Total interest bearing liabilities			611,863			$	1,073				0.70	%			495,297			$	727				0.58	%
Noninterest-bearing deposits			138,272												97,574
Other liabilities			14,918												42,915
Total liabilities			765,053												635,786
Shareholders' equity			117,873												63,599
Total liabilities and shareholders'  equity		$	882,926											$	699,385
Net interest income (4)						$	7,711											$	6,495
Interest rate spread											3.41	%											3.77	%
Net interest margin (5)											3.69	%											4.00	%
(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 $116 thousand and $101 thousand, respectively for the three months ended September 30, 2014, and 2013.
(5) Net interest income as a percentage of earning assets.

 

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BANKWELL FINANCIAL GROUP, INC.
NET INTEREST MARGIN ANALYSIS ON A FULLY TAX EQUIVALENT BASIS
(Dollars in thousands)
		For the Nine Months Ended
		September 30, 2014												September 30, 2013
		Average								Yield/				Average								Yield/
		Balance				Interest				Rate				Balance				Interest				Rate
Assets:
Cash and Fed funds sold		$	58,699			$	116				0.26	%		$	23,547			$	39				0.22	%
Securities (1)			53,723				1,697				4.21	%			40,654				1,294				4.25	%
Loans: (2)
Commercial real estate			341,480				12,523				4.84	%			295,752				11,206				5.00	%
Residential real estate			161,049				4,362				3.61	%			150,957				4,214				3.72	%
Construction (3)			46,317				1,615				4.60	%			36,149				1,317				4.80	%
Commercial business			99,113				3,705				4.93	%			64,576				2,576				5.26	%
Home equity			13,373				370				3.70	%			10,624				298				3.75	%
Consumer			640				42				8.88	%			282				13				6.14	%
Acquired loan portfolio non accrual loans (net of mark)			2,753				425				20.64	%			-				-				0.00	%
Total loans			664,725				23,042				4.57	%			558,340				19,624				4.63	%
Federal Home Loan Bank stock			4,834				54				1.48	%			4,516				13				0.37	%
Total earning assets			781,981			$	24,909				4.20	%			627,057			$	20,970				4.41	%
Other assets			39,993												20,134
Total assets		$	821,974											$	647,191
Liabilities and shareholders' equity:
Interest-bearing liabilities:
NOW		$	52,544				43				0.11	%			34,030			$	33				0.13	%
Money market			173,104				564				0.44	%			106,279				338				0.43	%
Savings			93,328				216				0.31	%			121,088				421				0.47	%
Time			224,765				1,434				0.85	%			147,138				761				0.69	%
Total interest-bearing deposits			543,741				2,257				0.55	%			408,535				1,553				0.51	%
Borrowed Money			48,370				427				1.18	%			76,612				418				0.73	%
Total interest bearing liabilities			592,111			$	2,684				0.61	%			485,147			$	1,971				0.54	%
Noninterest-bearing deposits			129,074												87,312
Other liabilities			12,808												13,546
Total liabilities			733,993												586,005
Shareholders' equity			87,981												61,186
Total liabilities and shareholders'  equity		$	821,974											$	647,191
Net interest income (4)						$	22,225											$	18,999
Interest rate spread											3.59	%											3.87	%
Net interest margin (5)											3.78	%											4.04	%
(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 $336 thousand and $271 thousand, respectively for the nine months ended September 30, 2014, and 2013.
(5) Net interest income as a percentage of earning assets.

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