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

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8-K - FORM 8-K - Bankwell Financial Group, Inc.	t81258_8k.htm

Exhibit 99.1

BANKWELL FINANCIAL GROUP REACHES RECORD ASSET LEVELS AT $1.1 BILLION, RECORD CORE EARNINGS FOR THE FOURTH QUARTER OF $1.6 MILLION AND FULL YEAR CORE EARNINGS OF $5.8 MILLION

New Canaan, CT – January 29, 2015 – Bankwell Financial Group, Inc. (NASDAQ: BWFG) reported GAAP net income of $0.7 million for the fourth quarter of 2014 and $4.6 million for the year ended 2014. Excluding merger related expenses, net income (defined as core earnings) for the quarter was $1.6 million and for the year ended was $5.8 million. In addition, Bankwell Financial Group, Inc. reached record asset levels at $1.1 billion, driven by the acquisition of Quinnipiac Bank and Trust Company in the fourth quarter of 2014 and strong loan growth.

Blake S. Drexler, Executive Chairman of Bankwell Financial Group, Inc. stated, “This was a record quarter and an outstanding finish to an excellent year for Bankwell. In addition to record core earnings for the quarter and the year, our asset levels surpassed the $1 billion mark for the first time. These results validate our strategy of focusing on steady, reliable earnings while maintaining a strong net interest margin.” He added, “I commend our entire staff for their focus and dedication toward achieving these results, including the successful merger with Quinnipiac Bank. We are excited about the opportunity to take our proven model to New Haven County and expand our presence in that market.”

Earnings

Revenues (net interest income plus non-interest income) for the three months ended December 31, 2014 were $10.6 million, an increase of 25.5% compared to the three months ended December 31, 2013. Revenues (net interest income plus non-interest income) for the year ended December 31, 2014 were $34.7 million, an increase of 15.5% compared to the year ended December 31, 2013. Net interest income for the three months ended December 31, 2014 was $9.8 million, an increase of 48.1% compared to the same period in the prior year. The strong improvement in net interest income was fueled by record earning asset growth, a year ended net interest margin of 3.84%, and a fourth quarter net interest margin of 3.99%. The increased loan loss provision to $1.3 million for the quarter ended December 31, 2014 is a direct result of significant growth in our loan portfolio.

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 December 31, 2014 was 65.4% and for the year ended December 31, 2014 was 69.1%. Core earnings for the three months ended December 31, 2014 were $1.6 million, an increase of $1.1 million compared to December 31, 2013. Core earnings for the year ended December 31, 2014 were $5.8 million, an increase of $1.8 million compared to December 31, 2013.

Financial Condition

Assets totaled $1.1 billion at December 31, 2014, a 41.0% increase compared to assets of $779.6 million at December 31, 2013. This increase reflects strong loan growth, IPO proceeds and the Quinnipiac Bank and Trust Company acquisition. Total loans were $931.8 million, a 46.8% increase compared to December 31, 2013. Deposits increased to $835.4 million, a 26.3% increase over December 31, 2013, with core deposits showing a 13.4% increase to $526.6 million over December 31, 2013.

Asset Quality

Asset quality remained exceptionally strong at December 31, 2014. Non-performing assets as a percentage of total assets was 0.39% at December 31, 2014, up from 0.23% at December 31, 2013. The allowance for loan losses as of December 31, 2014 was $10.9 million, representing 1.32% of total loans, excluding acquired loans.

Capital

Shareholders’ equity continued to remain strong at $129.2 million as of December 31, 2014, an increase of $59.7 million compared to December 31, 2013, primarily a result of the approximately net $45 million raised in the IPO and from shares issued as a result of the Quinnipiac acquisition. As of December 31, 2014, the tangible common equity ratio and tangible book value per share were 10.47% and $16.35, 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, Executive Vice President and 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, except share data)


	December 31,		September 30,		December 31,
	2014		2014		2013
Assets
Cash and due from banks	$	48,559	$	35,566	$	82,013
Held to maturity investment securities, at amortized cost		11,454		11,502		13,816
Available for sale investment securities, at fair value		65,009		67,537		28,597
Loans held for sale		586		-		100
Loans receivable (net of allowance for loan losses of $10,860, $9,552,
$8,382 at December 31, 2014, September 30, 2014 and December 31, 2013
respectively)		915,981		730,148		621,830
Foreclosed real estate		950		829		829
Accrued interest receivable		3,323		2,670		2,360
Federal Home Loan Bank stock, at cost		6,109		4,834		4,834
Premises and equipment, net		11,910		7,787		7,060
Bank-owned life insurance		23,028		22,837		10,031
Goodwill		2,589		-		-
Other intangible assets		848		401		481
Deferred income taxes, net		7,156		5,804		5,845
Other assets		2,029		5,600		1,822
Total assets	$	1,099,531	$	895,515	$	779,618

Liabilities & Shareholders’ Equity
Liabilities
Deposits
Noninterest-bearing	$	166,030	$	151,146	$	118,618
Interest-bearing		669,409		544,117		542,927
Total deposits		835,439		695,263		661,545

Advances from the Federal Home Loan Bank		129,000		77,000		44,000
Accrued expenses and other liabilities		5,882		4,755		4,588
Total liabilities		970,321		777,018		710,133

Shareholders’ equity
Preferred stock, senior noncumulative perpetual, Series C, no par;
10,980 shares issued and outstanding at December 31, 2014,
September 30, 2014 and December 31, 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,
7,185,482, 6,559,995 and 3,876,393 shares issued at
December 31, 2014, September 30, 2014 and December 31, 2013
respectively.		107,265		97,180		52,105
Retained earnings		10,434		9,735		5,976
Accumulated other comprehensive income		531		602		424
Total shareholders’ equity		129,210		118,497		69,485

Total liabilities and shareholders’ equity	$	1,099,531	$	895,515	$	779,618

BANKWELL FINANCIAL GROUP, INC.

CONSOLIDATED STATEMENTS OF INCOME (unaudited)

(Dollars in thousands, except per share data)

	Three Months Ended December 31,					Twelve Months Ended December 31,
	2014		2013			2014		2013
Interest and dividend income
Interest and fees on loans	$	10,369	$	6,980		$	33,409	$	26,599
Interest and dividends on securities		635		369			2,052		1,409
Interest on cash and cash equivalents		12		45			128		84
Total interest income		11,016		7,394			35,589		28,092

Interest expense
Interest expense on deposits		1,038		680			3,295		2,233
Interest on borrowings		207		115			634		532
Total interest expense		1,245		795			3,929		2,765

Net interest income		9,771		6,599			31,660		25,327

Provision for loan losses		1,305		96			2,152		585

Net interest income after provision for loan losses		8,466		6,503			29,508		24,742

Noninterest income
Gains and fees from sales of loans		305		283			1,313		2,020
Gain on bargain purchase		-		1,333			-		1,333
Service charges and fees		223		119			643		416
Bank owned life insurance		192		31			497		31
Net gain on sale of available for sale securities		-		-			-		648
Gain (loss) on sale of foreclosed real estate, net		-		15			-		64
Other		113		70			588		211
Total noninterest income		833		1,851			3,041		4,723

Noninterest expense
Salaries and employee benefits		4,122		3,432			13,534		11,578
Merger and acquisition related expenses		1,393		844			1,801		908
Occupancy and equipment		1,260		1,010			4,422		3,420
Data processing		340		562			1,289		1,349
Marketing		211		151			674		927
Director fees		190		(96	)		650		330
Professional services		159		383			1,194		1,595
FDIC insurance		143		66			488		333
Amortization of intangibles		53		18			133		18
Foreclosed real estate		15		4			36		8
Other		457		704			1,591		1,654
Total noninterest expense		8,343		7,078			25,812		22,120

Income before income tax expense		956		1,276			6,737		7,345

Income tax expense		229		(86	)		2,169		2,184

Net income	$	727	$	1,362		$	4,568	$	5,161

Net income attributable to common shareholders	$	693	$	1,301		$	4,377	$	4,961

Earnings per common share - basic	$	0.10	$	0.34		$	0.78	$	1.46
Earnings per common share - diluted		0.10		0.34			0.78		1.44

Weighted average shares outstanding, basic		6,998,188		3,746,340			5,577,942		3,395,779
Weighted average shares outstanding, diluted		7,033,660		3,787,853			5,605,512		3,451,393

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

For the three months ended December 31, 2014
Net Income	$	727
Merger and Acquisition Related Expenses		1,393
Income Tax Expense (benefit)		(474	)
Net adjustment		919
Core Earnings	$	1,646

For the three months ended December 31, 2013
Net Income	$	1,362
Merger and Acquisition Related Expenses		844
Gain on Bargain Purchase		(1,333	)
Income Tax Expense (benefit)		(287	)
Net adjustment		(776	)
Core Earnings	$	586

For the twelve months ended December 31, 2014
Net Income	$	4,568
Merger and Acquisition Related Expenses		1,801
Income Tax Expense (benefit)		(612	)
Net adjustment		1,189
Core Earnings	$	5,757

For the twelve months ended December 31, 2013
Net Income	$	5,161
Merger and Acquisition Related Expenses		908
Gain on Bargain Purchase		(1,333	)
Net gain on sale of available for sale securities		(648	)
Income Tax Expense (benefit)		(88	)
Net adjustment		(1,161	)
Core Earnings	$	4,000

BANKWELL FINANCIAL GROUP, INC.

CONSOLIDATED FINANCIAL HIGHLIGHTS (unaudited)

(Dollars in thousands, except per share data)

	Three Months Ended December 31,						Twelve Months Ended, December 31,
	2014			2013			2014			2013
Performance ratios:
Return on average assets		0.28	%		0.72	%		0.52	%		0.77	%
Return on average stockholders’ equity		2.26	%		7.02	%		4.66	%		8.17	%
Net interest margin		3.99	%		3.82	%		3.84	%		3.94	%
Efficiency ratio (1)		65.4	%		87.7	%		69.1	%		75.7	%


	As of
	December 31, 2014			December 31, 2013
Capital ratios:
Total Capital to Risk-Weighted Assets (2)		13.34	% *		10.74	%
Tier I Capital to Risk-Weighted Assets (2)		12.28	% *		9.49	%
Tier I Capital to Average Assets (2)		11.12	% *		7.91	%
Tangible common equity to tangible assets		10.47	%		7.45	%

Tangible book value per common share (3)	$	16.35		$	15.46

Asset quality:
Nonaccrual loans	$	3,362		$	1,003
Other real estate owned		950			829
Total non-performing assets	$	4,312		$	1,832

Loans past due 90 days and still accruing	$	1,872		$	3,620

Nonperforming loans as a % of total loans		0.36	%		0.16	%

Nonperforming assets as a % of total assets		0.39	%		0.23	%

Allowance for loan losses as a % of total loans		1.17	%		1.33	%

Allowance for loan losses as a % of nonperforming loans		323.02	%		835.69	%

Net loan charge-offs as a % of average loans		0.05	%		0.03	%

(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, gains and losses on other real estate owned and gain on bargain purchase. 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 165,862 and 122,140 as of December 31, 2014 and December 31, 2013, respectively.

* Estimated

BANKWELL FINANCIAL GROUP, INC.

NET INTEREST MARGIN ANALYSIS ON A FULLY TAX EQUIVALENT BASIS

(Dollars in thousands)

	For the Three Months Ended
	December 31, 2014							December 31, 2013
	Average				Yield/			Average				Yield/
	Balance		Interest		Rate			Balance		Interest		Rate
Assets:
Cash and Fed funds sold	$	20,518	$	11		0.22	%	$	57,106	$	45		0.31	%
Securities (1)		84,676		727		3.43	%		41,422		472		4.55	%
Loans: (2)
Commercial real estate		486,311		5,992		4.82	%		306,229		3,918		5.01	%
Residential real estate		173,841		1,550		3.57	%		157,083		1,363		3.47	%
Construction (3)		57,886		685		4.63	%		42,207		446		4.13	%
Commercial business		139,068		1,791		5.04	%		82,411		1,123		5.33	%
Home equity		17,997		194		4.28	%		11,769		125		4.19	%
Consumer		3,160		38		4.78	%		210		5		10.33	%
Acquired loan portfolio non accrual loans (net of mark)		2,345		120		20.35	%		-		-		-
Total loans		880,608		10,370		4.61	%		599,909		6,980		4.55	%
Federal Home Loan Bank stock		5,808		19		1.32	%		4,710		4		0.35	%
Total earning assets		991,610	$	11,127		4.39	%		703,147	$	7,501		4.17	%
Other assets		54,306							43,106
Total assets	$	1,045,916						$	746,253

Liabilities and shareholders’ equity:
Interest-bearing liabilities:
NOW	$	54,532		15		0.11	%	$	55,928		16		0.11	%
Money market		211,219		272		0.51	%		129,268		160		0.49	%
Savings		84,238		86		0.41	%		104,500		122		0.46	%
Time		280,329		665		0.94	%		191,436		382		0.79	%
Total interest-bearing deposits		630,318		1,038		0.65	%		481,132		680		0.56	%
Borrowed Money		118,301		207		0.69	%		50,026		114		0.91	%
Total interest bearing liabilities		748,619	$	1,245		0.66	%		531,158	$	794		0.59	%
Noninterest-bearing deposits		159,772							110,300
Other liabilities		9,785							27,840
Total liabilities		918,176							669,298
Shareholders’ equity		127,740							76,955
Total liabilities and shareholders’ equity	$	1,045,916						$	746,253
Net interest income (4)			$	9,882						$	6,707
Interest rate spread						3.73	%						3.58	%
Net interest margin (5)						3.99	%						3.82	%

(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 and $108 thousand, respectively for the three months ended December 31, 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 Twelve Months Ended
	December 31, 2014							December 31, 2013
	Average				Yield/			Average				Yield/
	Balance		Interest		Rate			Balance		Interest		Rate
Assets:
Cash and Fed funds sold	$	49,152	$	127		0.26	%	$	35,599	$	84		0.24	%
Securities (1)		61,398		2,424		3.95	%		40,932		1,766		4.31	%
Loans: (2)
Commercial real estate		378,345		18,515		4.83	%		299,142		15,124		5.06	%
Residential real estate		164,598		5,911		3.59	%		152,498		5,577		3.66	%
Construction (3)		49,212		2,300		4.61	%		38,073		1,763		4.63	%
Commercial business		109,121		5,496		4.97	%		69,252		3,699		5.34	%
Home equity		14,529		564		3.88	%		11,287		423		3.74	%
Consumer		1,270		81		6.35	%		308		18		5.98	%
Acquired loan portfolio non accrual loans (net of mark)		2,707		545		20.14	%		-		-		-
Total loans		719,782		33,412		4.59	%		570,560		26,604		4.66	%
Federal Home Loan Bank stock		5,078		73		1.45	%		4,624		17		0.36	%
Total earning assets		835,410	$	36,036		4.25	%		651,715	$	28,471		4.37	%
Other assets		43,535							17,782
Total assets	$	878,945						$	669,497

Liabilities and shareholders’ equity:
Interest-bearing liabilities:
NOW	$	53,041		58		0.11	%		40,554	$	49		0.12	%
Money market		182,676		836		0.46	%		116,323		498		0.45	%
Savings		91,058		302		0.33	%		117,388		543		0.46	%
Time		238,710		2,099		0.88	%		158,996		1,143		0.72	%
Total interest-bearing deposits		565,485		3,295		0.58	%		433,261		2,233		0.43	%
Borrowed Money		65,953		634		0.96	%		69,912		532		0.73	%
Total interest bearing liabilities		631,438	$	3,929		0.62	%		503,173	$	2,765		0.47	%
Noninterest-bearing deposits		136,748							96,009
Other liabilities		12,838							7,173
Total liabilities		781,024							606,355
Shareholders’ equity		97,921							63,142
Total liabilities and shareholders’ equity	$	878,945						$	669,497
Net interest income (4)			$	32,107						$	25,706
Interest rate spread						3.63	%						3.90	%
Net interest margin (5)						3.84	%						3.94	%

(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 $447 thousand and $379 thousand, respectively for the twelve months ended December 31, 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 - January 29, 2015

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