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BANKWELL FINANCIAL GROUP REPORTS RECORD FOURTH QUARTER AND ANNUAL NET INCOME OF $3.3 MILLION OR $0.43 PER SHARE AND $12.4 MILLION OR $1.62 PER SHARE, RESPECTIVELY AND DECLARES FIRST QUARTER DIVIDEND

New Canaan, CT – January 25, 2017 – Bankwell Financial Group, Inc. (NASDAQ: BWFG) reported GAAP net income of $3.3 million or $0.43 per share for the fourth quarter of 2016, versus $2.6 million or $0.35 per share for the same period in 2015 and GAAP net income of $12.4 million or $1.62 per share for the year ended 2016, versus $9.0 million or $1.21 per share for the year ended 2015.

The Company's Board of Directors declared a $0.07 per share cash dividend, payable February 27, 2017 to shareholders of record on February 17, 2017.

Fourth Quarter and 2016 Highlights:

·	Fourth quarter total revenue (net interest income plus non-interest income) reached $13.7 million versus $12.1 million in the same period last year, a 13% increase.

·	Total revenue for the year ended December 31, 2016 reached $51.8 million versus $46.3 million in 2015, an increase of 12%.

·	Fourth quarter diluted earnings per share were $0.43, an increase of 23% compared to the fourth quarter of 2015.

·	Diluted earnings per share were $1.62 for the year ended December 31, 2016; an increase of 34% compared to the year ended 2015.

·	Tax equivalent net interest margin was 3.55% for the fourth quarter of 2016 and 3.54% for the year ended 2016.

·	Return on average assets reached 0.85% for the year ended December 31, 2016 compared to 0.75% for the year ended December 31, 2015.

·	Return on average tangible common equity reached 9.44% in the fourth quarter of 2016 and was 9.15% for the year ended December 31, 2016 compared to 6.83% for the year ended December 31, 2015.

·	The efficiency ratio reached 55.6% for the fourth quarter of 2016 and was 56.5% for the full year 2016, compared to 62.3% for the year ended 2015.

·	The tangible book value per common share at the end of 2016 was $18.98, a 9% increase over year-end 2015.

·	Total gross loans approached $1.4 billion and grew at an annualized rate of 12% during the fourth quarter of 2016 and grew by 19% for the full year ended 2016.

·	Total assets exceeded $1.6 billion and grew at an annualized rate of 16% during the fourth quarter and 22% for the full year ended 2016.

·	The allowance for loan losses was $18.0 million and represents 1.32% of total loans.

·	Nonperforming assets dropped to 0.20% of total assets as of December 31, 2016 compared to 0.38% as of December 31, 2015.

·	Investment securities totaled $104.6 million and represent 6% of total assets.

·	Total deposits reached $1.3 billion, increasing by $242 million or 23% compared to the year ended 2015.

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

"I am proud to announce 2016's results as Bankwell continues to improve its financial performance on behalf of its shareholders."

"We organically originated well over $400 million in loans again this year while maintaining top tier asset quality.  Further, we've made key executive hires which have positioned us well for the next phase of our successful growth."

"Looking to 2017, we will be making strategic investments in our deposit franchise. We expect these investments in people and product to bear fruit by the second half of 2017 and beyond. Nonetheless, we are committed to delivering only a modest increase in operating expenses for the full year and, barring exogenous events in the capital markets, our goal is to achieve double digit returns on equity for our shareholders in 2017."

Earnings

Net income for the quarter ended December 31, 2016 was $3.3 million, an increase of 27% compared to the quarter ended December 31, 2015. Net income for the year ended December 31, 2016 was $12.4 million, an increase of 37% compared to the year ended December 31, 2015. Revenues (net interest income plus non-interest income) for the quarter ended December 31, 2016 were $13.7 million, an increase of 13% compared to the quarter ended December 31, 2015. Revenues for the year ended December 31, 2016 were $51.8 million, an increase of 12% compared to the year ended December 31, 2015. Net interest income for the quarter ended December 31, 2016 was $13.3 million, an increase of 18% compared to the quarter ended December 31, 2015. Net interest income for the year ended December 31, 2016 was $49.1 million, an increase of 15% compared to the year ended December 31, 2015. Our strong net income, revenues and net interest income growth were fueled by continued earning asset growth.

Basic and diluted earnings per share for the quarter ended December 31, 2016 were $0.44 and $0.43, respectively, compared to $0.35 basic and diluted for the quarter ended December 31, 2015. Basic and diluted earnings per share for the year ended December 31, 2016 were $1.64 and $1.62, respectively, compared to $1.23 and $1.21, respectively, for the year ended December 31, 2015.

The Company continues to be disciplined in its spending decisions as indicated by our improving efficiency ratio. The Company's efficiency ratios for the quarters ended December 31, 2016 and December 31, 2015 were 55.6% and 62.4%, respectively. The Company's efficiency ratios for the year ended December 31, 2016 and December 31, 2015 were 56.5% and 62.3%, respectively.

Noninterest Income and Expense

Noninterest income decreased $439 thousand or 52% to $0.4 million for the three months ended December 31, 2016 compared to the three months ended December 31, 2015 and decreased $808 thousand or 23% to $2.7 million for the year ended December 31, 2016 compared to the year ended December 31, 2015. The decrease in noninterest income was primarily driven by a reduction in the gains and fees from the sales of loans for the three and twelve months ended December 31, 2016 when compared to the prior periods and a loss on the sale of a Commonwealth of Puerto Rico senior lien sales tax financing corporate bond.

Noninterest expense increased $87 thousand or 1% for the three months ended December 31, 2016 compared to the three months ended December 31, 2015. The increase was primarily driven by an increase in salaries and employee benefits and occupancy and equipment. Salaries and employee benefits increased $171 thousand or 4% for the three months ended December 31, 2016 compared to the three months ended December 31, 2015 as a result of an increase in full time equivalent employees. Occupancy and equipment expense increased $264 thousand or 20% for the three months ended December 31, 2016 compared to the three months ended December 31, 2015 as a result of an increase in IT related expenses to support growth initiatives and deposit operations. These increases were mostly offset with small decreases across various other expense categories.

Noninterest expense increased $373 thousand or 13% for the year ended December 31, 2016 compared to the year ended December 31, 2015. The increase was primarily driven by an increase in occupancy and equipment and professional services. Occupancy and equipment expense increased $470 thousand or 9% for the year ended December 31, 2016 compared to the year ended December 31, 2015 as a result of an increase in IT related expenses to support growth initiatives and rent expense related to the opening of the Norwalk Branch in March of 2015. Professional services increased $207 thousand or 14% for the year ended December 31, 2016 compared to the year ended December 31, 2015 as a result of an increase in fees paid in relation to strategic initiatives.

Financial Condition

Assets totaled $1.6 billion at December 31, 2016, an increase of 22% compared to assets of $1.3 billion at December 31, 2015. This increase reflects strong organic loan growth. Total gross loans were $1.4 billion at December 31, 2016, an increase of 19% compared to December 31, 2015, driven by growth in commercial real estate loans of $147.8 million. Deposits increased to $1.3 billion, an increase of 23% over December 31, 2015.

Asset Quality

Asset quality remained exceptionally strong at December 31, 2016.  Non-performing assets as a percentage of total assets was 0.20% at December 31, 2016, down from 0.38% at December 31, 2015.  The allowance for loan losses at December 31, 2016 was $18.0 million, representing 1.32% of total loans.

Capital

Shareholders' equity totaled $145.9 million as of December 31, 2016, an increase of $14.1 million compared to December 31, 2015, primarily a result of net income for the year ended December 31, 2016 of $12.4 million and increases in capital due to stock-based compensation and the exercise of stock options and warrants, offset by cash dividends declared. As of December 31, 2016, the tangible common equity ratio and tangible book value per share were 8.78% and $18.98, 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 may contact Christopher R. Gruseke, President and Chief Executive Officer or Penko Ivanov, 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 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 table. 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 non-interest expense control. The Company believes that tangible common equity and tangible book value per share is useful to evaluate the relative strength of the Company's 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 STATEMENTS OF INCOME (unaudited)
(Dollars in thousands, except per share data)
		For the Quarter Ended										For the Year Ended
		December 31,		September 30,		June 30,		March 31,		December 31,		December 31,		December 31,
		2016		2016		2016		2016		2015		2016		2015
Interest and dividend income
Interest and fees on loans		$           15,910		$           14,914		$         13,970		$         13,283		$          13,382		$           58,077		$           48,692
Interest and dividends on securities		657		688		711		684		490		2,740		1,964
Interest on cash and cash equivalents		75		31		30		37		36		173		98
Total interest income		16,642		15,633		14,711		14,004		13,908		60,990		50,754
Interest expense
Interest expense on deposits		2,438		2,160		1,962		1,740		1,776		8,300		5,681
Interest on borrowings		916		946		870		866		896		3,598		2,285
Total interest expense		3,354		3,106		2,832		2,606		2,672		11,898		7,966
Net interest income		13,288		12,527		11,879		11,398		11,236		49,092		42,788
Provision for loan losses		748		1,219		1,301		646		354		3,914		3,230
Net interest income after provision for loan losses		12,540		11,308		10,578		10,752		10,882		45,178		39,558
Noninterest income
Service charges and fees		242		241		235		245		258		963		933
Bank owned life insurance		171		174		174		174		178		693		727
Gains and fees from sales of loans		79		163		114		110		228		466		1,113
Gain on sale of foreclosed real estate, net		-		-		128		-		-		128		-
Net (loss) gain on sale of available for sale securities		(207)		-		92		-		-		(115)		-
Other		116		172		110		143		176		541		711
Total noninterest income		401		750		853		672		840		2,676		3,484
Noninterest expense
Salaries and employee benefits		4,419		3,909		3,817		3,811		4,248		15,956		16,065
Occupancy and equipment		1,576		1,435		1,392		1,408		1,312		5,811		5,341
Data processing		402		417		377		407		366		1,603		1,523
Professional services		397		521		370		366		414		1,654		1,447
Marketing		304		242		263		139		278		948		985
FDIC insurance		146		177		168		169		185		660		672
Director fees		135		128		140		155		198		558		622
Amortization of intangibles		32		39		40		40		43		151		196
Foreclosed real estate		8		47		30		72		95		157		168
Merger and acquisition related expenses		-		-		-		-		2		-		2
Other		349		566		618		513		540		2,046		2,150
Total noninterest expense		7,768		7,481		7,215		7,080		7,681		29,544		29,171
Income before income tax expense		5,173		4,577		4,216		4,344		4,041		18,310		13,871
Income tax expense		1,850		1,437		1,320		1,353		1,423		5,960		4,841
Net income		$             3,323		$             3,140		$           2,896		$           2,991		$            2,618		$           12,350		$             9,030
Net income attributable to common shareholders		$             3,323		$             3,140		$           2,896		$           2,991		$            2,575		$           12,350		$             8,905
Earnings Per Common Share:
Basic		$               0.44		$               0.42		$             0.38		$             0.40		$              0.35		$               1.64		$               1.23
Diluted		0.43		0.41		0.38		0.40		0.35		1.62		1.21
Weighted Average Common Shares Outstanding:
Basic		7,418,820		7,397,067		7,387,712		7,380,217		7,169,570		7,396,019		7,071,550
Diluted		7,560,319		7,488,752		7,467,954		7,431,747		7,234,431		7,491,052		7,140,558
Dividends per common share		$               0.07		$               0.05		$             0.05		$             0.05		$              0.05		$               0.22		$               0.05

 

BANKWELL FINANCIAL GROUP, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (unaudited)
(Dollars in thousands, except per share data)
			For the Quarter Ended										For the Year Ended
			December 31,		September 30,		June 30,		March 31,		December 31,		December 31,		December 31,
			2016		2016		2016		2016		2015		2016		2015
Performance ratios:
Return on average assets			0.84%		0.85%		0.82%		0.89%		0.78%		0.85%		0.75%
Return on average stockholders' equity			9.23%		8.96%		8.54%		9.01%		7.68%		8.94%		6.76%
Return on average tangible common equity			9.44%		9.16%		8.74%		9.23%		7.74%		9.15%		6.83%
Net interest margin			3.55%		3.57%		3.50%		3.54%		3.63%		3.54%		3.77%
Efficiency ratio (1)			55.6%		55.7%		57.1%		57.7%		62.4%		56.5%		62.3%
Net loan charge-offs as a % of average loans			0.00%		0.01%		0.00%		0.00%		0.01%		0.01%		0.01%
			As of
			December 31, 2016		September 30, 2016		June 30, 2016		March 31, 2016		December 31, 2015
Capital ratios:
Total Common Equity Tier 1 Capital to Risk-Weighted Assets (2)			11.59%		11.64%		11.76%		12.24%		12.18%
Total Capital to Risk-Weighted Assets (2)			12.85%		12.89%		13.01%		13.48%		13.39%
Tier I Capital to Risk-Weighted Assets (2)			11.59%		11.64%		11.76%		12.24%		12.18%
Tier I Capital to Average Assets (2)			10.10%		10.45%		10.59%		10.85%		10.84%
Tangible common equity to tangible assets			8.78%		8.80%		8.85%		9.27%		9.68%
Tangible book value per common share (3)			$               18.98		$               18.57		$               18.12		$               17.78		$               17.43
Asset quality:
Nonaccrual loans			$               2,937		$               3,644		$               3,609		$               3,398		$               3,791
Other real estate owned			272		272		492		878		1,248
Total non-performing assets			$               3,209		$               3,916		$               4,101		$               4,276		$               5,039
Loans past due 90 days and still accruing			$                      -		$                      -		$                  105		$                    89		$               1,105
Nonperforming loans as a % of total loans			0.22%		0.27%		0.28%		0.28%		0.33%
Nonperforming assets as a % of total assets			0.20%		0.25%		0.27%		0.30%		0.38%
Allowance for loan losses as a % of total loans			1.32%		1.30%		1.26%		1.24%		1.23%
Allowance for loan losses as a % of nonperforming loans			612.26%		473.38%		446.11%		435.84%		373.76%

 

 

BANKWELL FINANCIAL GROUP, INC.
LOAN & DEPOSIT PORTFOLIO (unaudited)
(Dollars in thousands)
		December 31,		September 30,		December 31,		QTD		YTD
Period End Loan Composition		2016		2016		2015		% Change		% Change
Residential Real Estate		$         181,310		$         178,996		$         177,184		1.3%		2.3%
Commercial Real Estate		845,322		817,006		697,542		3.5%		21.2%
Construction		107,441		104,915		82,273		2.4%		30.6%
Home equity		14,419		15,050		15,926		-4.2%		-9.5%
Total Real Estate Loans		1,148,492		1,115,967		972,925		2.9%		18.0%
Commercial Business		215,914		208,600		172,853		3.5%		24.9%
Consumer		1,533		1,660		1,735		-7.7%		-11.6%
Total Loans		$    1,365,939		$    1,326,227		$    1,147,513		3.0%		19.0%
		December 31,		September 30,		December 31,		QTD		YTD
Period End Deposit Composition		2016		2016		2015		% Change		% Change
Noninterest-bearing demand		$         187,593		$         176,405		$         164,553		6.3%		14.0%
NOW		53,851		55,679		51,008		-3.3%		5.6%
Money Market		349,131		326,805		296,838		6.8%		17.6%
Savings		96,601		63,501		97,846		52.1%		-1.3%
Time		601,861		594,552		436,697		1.2%		37.8%
Total Deposits		$    1,289,037		$    1,216,942		$    1,046,942		5.9%		23.1%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

(2)	Includes commercial and residential real estate construction.

(3)	The adjustment for securities and loans taxable equivalency amounted to $557 thousand and $454 thousand, respectively for the year ended December 31, 2016, and 2015.

(4)	Net interest income as a percentage of earning assets.