Bankwell Financial Group, Inc. - FORM 8-K - EX-99.1 - EXHIBIT 99.1 - PRESS RELEASE - October 31, 2018

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EX-99.2 - EXHIBIT 99.2 - PRESENTATION - Bankwell Financial Group, Inc.ex99-2.htm
8-K - BANKWELL FINANCIAL GROUP, INC. 8-K 10 30 18 - Bankwell Financial Group, Inc.bwfg8k-103018.htm

BANKWELL FINANCIAL GROUP REPORTS RECORD QUARTERLY NET INCOME OF $4.9 MILLION OR $0.62 PER SHARE FOR THE THIRD QUARTER AND DECLARES FOURTH QUARTER DIVIDEND
New Canaan, CT – October 30, 2018 – Bankwell Financial Group, Inc. (NASDAQ: BWFG) reported GAAP net income of $4.9 million or $0.62 per share for the third quarter of 2018, versus $4.3 million or $0.55 per share for the same period in 2017.
The Company's Board of Directors declared a $0.12 per share cash dividend, payable November 26, 2018 to shareholders of record on November 16, 2018.
Notes Bankwell Financial Group President and CEO, Christopher R. Gruseke:
"Thanks to the Bankwell team for another strong performance. Our third quarter ROAA and ROATCE were 1.04% and 11.32%, respectively.  Loan growth for the third quarter was somewhat muted by payoffs and pre-payments, still, loans have grown year-to-date at an annualized rate of approximately 6%.  We look forward to a solid finish to the year."
Third Quarter 2018 Highlights:

·
Third quarter diluted earnings per share were $0.62, an increase of 13% compared to the third quarter of 2017.
 
·
Return on average assets reached 1.04% for the quarter ended September 30, 2018 compared to 0.96% for the quarter ended September 30, 2017.
 
·
Return on average tangible common equity reached 11.32% in the third quarter of 2018 compared to 10.99% for the quarter ended September 30, 2017.
 
·
The tangible book value per common share at September 30, 2018 was $22.20, a 9% increase over September 30, 2017.
 
·
Third quarter total revenue (net interest income plus non-interest income) was $15.1 million versus $14.7 million in the same period last year, a 3% increase.
 
·
The third quarter efficiency ratio totaled 58.6%.
 
·
The third quarter noninterest income totaled $0.9 million compared to $0.8 million for the third quarter of 2017.
 
·
Tax equivalent net interest margin was 3.21% for the third quarter of 2018.
 
·
Total gross loans exceeded $1.6 billion for the third quarter of 2018.
 
·
Total assets approached $1.9 billion.
 
·
Total deposits approached $1.5 billion and grew at an annualized rate of 8% during the third quarter of 2018.
 
·
The allowance for loan losses was $19.3 million and represents 1.20% of total loans.
 
·
Investment securities totaled $115.9 million and represent 6% of total assets.

Earnings
Net income for the quarter ended September 30, 2018 was $4.9 million, an increase of 14% compared to the quarter ended September 30, 2017. Net income for the nine months ended September 30, 2018 was $14.2 million, an increase of 21% compared to the nine months ended September 30, 2017. Revenues (net interest income plus non-interest income) for the quarter ended September 30, 2018 were $15.1 million, an increase of 3% compared to the quarter ended September 30, 2017. Revenues for the nine months ended September 30, 2018 were $45.2 million, an increase of 4% compared to the nine months ended September 30, 2017. Net interest income for the quarter ended September 30, 2018 was $14.2 million, an increase of 3% compared to the quarter ended September 30, 2017. Net interest income for the nine months ended September 30, 2018 was $41.9 million, an increase of 3% compared to the nine months ended September 30, 2017. The increase in net income was driven by an increase in interest and fees on loans and from a reduction in the corporate tax rate from 35% to 21% resulting from the 2017 tax reform, offset by increases in interest expense and noninterest expense. The increase in interest and fees on loans was a result of commercial real estate and commercial business loan growth as compared to September 30, 2017.
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Basic and diluted earnings per share were each $0.62 for the quarter ended September 30, 2018 compared to $0.55 for the quarter ended September 30, 2017. Basic and diluted earnings per share were $1.81 and $1.80, respectively, for the nine months ended September 30, 2018 compared to $1.53 and $1.51, respectively, for the nine months ended September 30, 2017.
The Company's efficiency ratio for the quarters ended September 30, 2018 and September 30, 2017 was 58.6% and 55.1%, respectively. The Company's efficiency ratio for the nine months ended September 30, 2018 and September 30, 2017 was 59.6% and 54.8%, respectively.  The increase in the efficiency ratio was driven by an increase in noninterest expense associated with the opening of three new branches during the second quarter of 2018 as well as a number of non-recurring expenses previously disclosed in the first quarter 2018 earnings release.
Noninterest Income and Expense
Noninterest income increased $35 thousand or 4% to $0.9 million for the three months ended September 30, 2018 compared to the three months ended September 30, 2017. Noninterest income increased $211 thousand or 7% to $3.3 million for the nine months ended September 30, 2018 compared to the nine months ended September 30, 2017.  The increase in noninterest income was primarily driven by an increase in gains and fees from the sales of loans. Gains and fees from the sales of loans totaled $150 thousand for the quarter ended September 30, 2018 compared to $36 thousand for the same period in 2017, an increase of $114 thousand. Gains and fees from the sales of loans totaled $835 thousand for the nine months ended September 30, 2018 compared to $559 thousand for the same period in 2017, an increase of $276 thousand.
Noninterest expense increased $0.7 million or 9% for the three months ended September 30, 2018 compared to the three months ended September 30, 2017. Noninterest expense increased $2.9 million or 12% for the nine months ended September 30, 2018 compared to the nine months ended September 30, 2017. The increase was primarily driven by an increase in salaries and employee benefits and an increase in occupancy and equipment expense. Salaries and employee benefits totaled $4.9 million for the quarter ended September 30, 2018 compared to $4.0 million for the same period in 2017, an increase of $0.9 million. Salaries and employee benefits totaled $14.5 million for the nine months ended September 30, 2018 compared to $11.7 million for the same period in 2017, an increase of $2.8 million. The increase in salaries and employee benefits was primarily driven by an increase in full time equivalent employees and a reduction in deferred loan origination costs as a result of lower loan volume. The increase in full time equivalent employees is in line with year over year business growth and driven by staffing for the three new branch locations, opened during the second quarter of 2018. Average full time equivalent employees totaled 144 at September 30, 2018 compared to 132 at September 30, 2017. Occupancy and equipment expense totaled $1.8 million for the quarter ended September 30, 2018 compared to $1.4 million for the same period in 2017, an increase of $0.4 million. Occupancy and equipment expense totaled $5.1 million for the nine months ended September 30, 2018 compared to $4.6 million for the same period in 2017, an increase of $0.5 million. The increase in occupancy and equipment expense was primarily driven by expenditures associated with the opening of the new branch locations and improvements of existing infrastructure.
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Financial Condition
Assets totaled $1.9 billion at September 30, 2018, an annualized increase of 7% compared to assets of $1.8 billion at December 31, 2017. Total gross loans were $1.6 billion at September 30, 2018, an increase of $64.6 million compared to December 31, 2017, driven by disciplined growth in commercial loans. Deposits increased to $1.5 billion, an annualized increase of 9% over December 31, 2017.
Asset Quality
Non-performing assets as a percentage of total assets was 1.17% at September 30, 2018, up from 0.31% at December 31, 2017. The increase in non-performing assets is primarily driven by one impaired commercial loan relationship, previously discussed in the second quarter 2018 Earnings Release. The allowance for loan losses was $19.3 million, representing 1.20% of total loans and $18.9 million, representing 1.23% of total loans at September 30, 2018 and December 31, 2017, respectively. The Bank's general allowance for loan losses provides a 288% coverage of non-performing assets for which there is no specific reserve as of September 30, 2018.
Capital
Shareholders' equity totaled $174.8 million as of September 30, 2018, an increase of $13.7 million compared to December 31, 2017, primarily a result of net income for the nine months ended September 30, 2018 of $14.2 million and equity from stock transactions totaling $1.9 million, offset by dividends paid of $2.8 million. As of September 30, 2018, the tangible common equity ratio and tangible book value per share were 9.13% and $22.20, 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.
 
 
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BANKWELL FINANCIAL GROUP, INC.
                    
CONSOLIDATED BALANCE SHEETS (unaudited)
                  
(Dollars in thousands, except share data)
                    
                     
   
September 30,
June 30,
  
March 31,
  
December 31,
September 30,
   
2018
  
2018
  
2018
  
2017
  
2017
Assets
                    
Cash and due from banks
  
 $           84,437
  
 $      89,214
  
 $          81,249
  
 $             70,545
  
 $             85,329
Federal funds sold
  
                2,664
  
              105
  
               2,121
  
                     186
  
                11,117
Cash and cash equivalents
  
              87,101
  
         89,319
  
                83,370
  
                70,731
  
                96,446
                     
Available for sale investment securities, at fair value
  
              94,438
  
         92,608
  
             99,050
  
                92,188
  
                86,272
Held to maturity investment securities, at amortized cost
  
              21,464
  
         21,505
  
             21,546
  
                21,579
  
                23,573
Loans held for sale
  
                      -
  
                 -
  
                        -
  
                        -
  
                     785
Loans receivable (net of allowance for loan losses of $19,311, $19,006,
 		                
$18,801, $18,904 and $19,564 at September 30, 2018, June 30, 2018,
                  
March 31, 2018, December 31, 2017 and September 30, 2017, respectively)
         1,585,465
  
    1,572,591
  
        1,534,565
  
           1,520,879
  
           1,500,574
Foreclosed real estate
  
                      -
  
                 -
  
                  487
  
                        -
  
                     222
Accrued interest receivable
  
                6,055
  
           5,522
  
               5,331
  
                  5,910
  
                  5,344
Federal Home Loan Bank stock, at cost
  
                9,210
  
           9,333
  
               9,310
  
                  9,183
  
                  9,351
Premises and equipment, net
  
              20,245
  
         20,313
  
             19,207
  
                18,196
  
                17,509
Bank-owned life insurance
  
              40,413
  
         40,146
  
             39,880
  
                39,618
  
                39,329
Goodwill
  
                2,589
  
           2,589
  
               2,589
  
                  2,589
  
                  2,589
Other intangible assets
  
                   309
  
              334
  
                  358
  
                     382
  
                     407
Deferred income taxes, net
  
                4,583
  
           4,683
  
               4,716
  
                  4,904
  
                  8,834
Other assets
  
              13,164
  
         11,859
  
                10,834
  
                10,448
  
                13,703
Total assets
  
 $      1,885,036
  
 $ 1,870,802
  
 $        1,831,243
  
 $        1,796,607
  
 $        1,804,938
                     
Liabilities & Shareholders' Equity
                    
Liabilities
                    
Deposits
                    
Noninterest-bearing deposits
  
 $         162,473
  
 $    168,295
  
 $           161,641
  
 $           172,638
  
 $           162,790
Interest-bearing deposits
  
         1,330,696
  
    1,297,343
  
           1,264,886
  
           1,225,767
  
           1,247,001
Total deposits
  
         1,493,169
  
    1,465,638
  
           1,426,527
  
           1,398,405
  
           1,409,791
                     
Advances from the Federal Home Loan Bank
  
            180,000
  
       199,000
  
              199,000
  
              199,000
  
              195,000
Subordinated debentures
  
              25,142
  
         25,129
  
                25,116
  
                25,103
  
                25,090
Accrued expenses and other liabilities
  
              11,971
  
         11,462
  
                14,653
  
                13,072
  
                16,740
Total liabilities
  
         1,710,282
  
    1,701,229
  
           1,665,296
  
           1,635,580
  
           1,646,621
                     
                     
Shareholders' equity
                    
Common stock, no par value; 10,000,000 shares authorized, 7,842,996, 7,841,720,
                
7,831,804, 7,751,424 and 7,705,975 shares issued and outstanding at
                
September 30, 2018, June 30, 2018, March 31, 2018,
                    
December 31, 2017 and September 30, 2017, respectively
  
            120,188
  
       119,824
  
              119,363
  
              118,301
  
              117,289
Retained earnings
  
              52,386
  
         48,470
  
                44,695
  
                41,032
  
                39,777
Accumulated other comprehensive income
  
                2,180
  
           1,279
  
                  1,889
  
                  1,694
  
                  1,251
Total shareholders' equity
  
            174,754
  
       169,573
  
              165,947
  
              161,027
  
              158,317
 
                    
Total liabilities and shareholders' equity
  
 $      1,885,036
  
 $ 1,870,802
  
 $        1,831,243
  
 $        1,796,607
  
 $        1,804,938

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BANKWELL FINANCIAL GROUP, INC.
                            
CONSOLIDATED STATEMENTS OF INCOME (unaudited)
                        
(Dollars in thousands, except per share data)
                            
                             
   
For the Quarter Ended
  
For the Nine Months Ended
   
September 30,
June 30,
March 31,
December 31,
September 30,
September 30,
September 30,
   
2018
  
2018
  
2018
  
2017
  
2017
  
2018
  
2017
Interest and dividend income
                            
Interest and fees on loans
  
 $           19,153
  
 $    18,114
  
 $    17,418
  
 $          17,493
  
 $           17,175
  
 $           54,685
  
 $           49,348
Interest and dividends on securities
  
                1,002
  
            975
  
            935
  
                  947
  
                   934
  
                2,912
  
                2,623
Interest on cash and cash equivalents
  
                   345
  
            325
  
            254
  
                  289
  
                   239
  
                   924
  
                   501
Total interest income
  
              20,500
  
       19,414
  
       18,607
  
             18,729
  
              18,348
  
              58,521
  
              52,472
                             
Interest expense
                            
Interest expense on deposits
  
                5,044
  
         4,309
  
         3,656
  
               3,602
  
                3,416
  
              13,009
  
                9,092
Interest on borrowings
  
                1,210
  
         1,197
  
         1,246
  
               1,213
  
                1,071
  
                3,653
  
                2,930
Total interest expense
  
                6,254
  
         5,506
  
         4,902
  
               4,815
  
                4,487
  
              16,662
  
              12,022
                             
Net interest income
  
              14,246
  
       13,908
  
       13,705
  
             13,914
  
              13,861
  
              41,859
  
              40,450
                             
Provision (Credit) for loan losses
  
                   322
  
            310
  
              13
  
                 (495)
  
                   398
  
                   645
  
                1,836
                             
Net interest income after provision (credit) for loan losses
              13,924
  
       13,598
  
       13,692
  
             14,409
  
              13,463
  
              41,214
  
              38,614
                             
Noninterest income
                            
Service charges and fees
  
                   285
  
            265
  
            256
  
                  252
  
                   254
  
                   806
  
                   755
Bank owned life insurance
  
                   267
  
            265
  
            263
  
                  289
  
                   295
  
                   795
  
                   881
Gains and fees from sales of loans
  
                   150
  
            315
  
            370
  
                  868
  
                     36
  
                   835
  
                   559
Net gain on sale of available for sale securities
  
                      -
  
               -
  
            222
  
                     -
  
                      -
  
                   222
  
                   165
Other
  
                   157
  
            262
  
            222
  
                  210
  
                   239
  
                   641
  
                   728
Total noninterest income
  
                   859
  
         1,107
  
         1,333
  
               1,541
  
                   824
  
                3,299
  
                3,088
                             
Noninterest expense
                            
Salaries and employee benefits
  
                4,903
  
         4,539
  
         5,028
  
               4,603
  
                3,952
  
              14,470
  
              11,681
Occupancy and equipment
  
                1,771
  
         1,731
  
         1,617
  
               1,585
  
                1,449
  
                5,119
  
                4,580
Data processing
  
                   512
  
            509
  
            525
  
                  399
  
                   621
  
                1,546
  
                1,467
Marketing
  
                   395
  
            479
  
            297
  
                  321
  
                   295
  
                1,171
  
                   872
Professional services
  
                   321
  
            424
  
            775
  
                  457
  
                   680
  
                1,520
  
                1,615
Director fees
  
                   260
  
            274
  
            215
  
                  229
  
                   207
  
                   749
  
                   683
FDIC insurance
  
                   203
  
            203
  
            214
  
                  225
  
                   265
  
                   620
  
                   891
Amortization of intangibles
  
                     24
  
              24
  
              24
  
                    25
  
                     31
  
                     72
  
                     93
Other
  
                   481
  
            581
  
            508
  
                  735
  
                   629
  
                1,570
  
                2,062
Total noninterest expense
  
                8,870
  
         8,764
  
         9,203
  
               8,579
  
                8,129
  
              26,837
  
              23,944
                             
Income before income tax expense
  
                5,913
  
         5,941
  
         5,822
  
               7,371
  
                6,158
  
              17,676
  
              17,758
                             
Income tax expense
  
                1,056
  
         1,226
  
         1,222
  
               5,275
  
                1,895
  
                3,504
  
                6,024
                             
Net income
  
 $             4,857
  
 $      4,715
  
 $      4,600
  
 $            2,096
  
 $             4,263
  
 $           14,172
  
 $           11,734
                             
                             
Earnings Per Common Share:
                            
Basic
  
 $               0.62
  
 $        0.60
  
 $        0.59
  
 $              0.27
  
 $               0.55
  
 $               1.81
  
 $               1.53
Diluted
  
                  0.62
  
           0.60
  
           0.59
  
                 0.27
  
                  0.55
  
                  1.80
  
                  1.51
                             
Weighted Average Common Shares Outstanding:
                            
Basic
  
         7,738,343
  
  7,722,892
  
  7,676,813
  
        7,624,931
  
         7,587,471
  
         7,712,924
  
         7,554,739
Diluted
  
         7,763,935
  
  7,761,560
  
  7,722,120
  
        7,702,770
  
         7,670,258
  
         7,758,762
  
         7,652,355
Dividends per common share
  
 $               0.12
  
 $        0.12
  
 $        0.12
  
 $              0.07
  
 $               0.07
  
 $               0.36
  
 $               0.21
 
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BANKWELL FINANCIAL GROUP, INC.
                          
CONSOLIDATED FINANCIAL HIGHLIGHTS (unaudited)
                      
(Dollars in thousands, except per share data)
                          
                               
                               
       
For the Quarter Ended
    
For the Nine Months Ended
   
September 30,
June 30,
March 31,
December 31,
September 30,
September 30,
September 30,
   
2018
  
2018
  
2018
  
2017
  
2017
  
2018
  
2017
  
Performance ratios:
                              
Return on average assets*
  
1.04%
  
1.02%
  
1.03%
  
0.46%
  
0.96%
  
1.03%
  
0.92%
  
Return on average stockholders' equity*
  
11.13%
  
11.21%
  
11.35%
  
5.15%
  
10.78%
  
11.23%
  
10.27%
  
Return on average tangible common equity*
11.32%
  
11.41%
  
11.56%
  
5.25%
  
10.99%
  
11.43%
  
10.48%
  
Net interest margin
  
3.21%
  
3.14%
  
3.15%
  
3.23%
  
3.30%
  
3.17%
  
3.32%
  
Efficiency ratio (1)
  
58.6%
  
58.2%
  
62.0%
  
55.1%
  
55.1%
  
59.6%
  
54.8%
  
                               
Net loan charge-offs as a % of average loans
0.00%
 
0.01%
 
0.01%
 
0.01%
 
0.02%
 
0.02%
 
0.02%
 
                               
*All metrics, as of December 31, 2017, measuring return were impacted primarily as a result of the Tax Cut and Jobs Act passed in December 2017 along with several other smaller items.  Please refer to the Q4'17 Earnings Release for further detail.
 
   
As of         
  
   
September 30,
2018
June 30,
2018
March 31,
2018
December 31,
2017
September 30,
2017
  
Capital ratios:
                      
Total Common Equity Tier 1 Capital to Risk-Weighted Assets (2)
11.43%
  
11.31%
  
11.18%
  
10.99%
  
10.95%
  
Total Capital to Risk-Weighted Assets (2)
  
12.61%
  
12.47%
  
12.35%
  
12.19%
  
12.19%
  
Tier I Capital to Risk-Weighted Assets (2)
  
11.43%
  
11.31%
  
11.18%
  
10.99%
  
10.95%
  
Tier I Capital to Average Assets (2)
  
10.14%
  
10.03%
  
9.90%
  
9.61%
  
9.78%
  
Tangible common equity to tangible assets
9.13%
  
8.92%
  
8.92%
  
8.81%
  
8.62%
  
                       
Tangible book value per common share (3)
  
 $             22.20
  
 $   21.56
  
 $      21.12
  
 $            20.59
  
 $             20.41
  
                       
Asset quality:
                      
Nonaccrual loans
  
 $           21,964
  
 $ 23,325
  
 $    20,374
  
 $            5,481
  
 $             4,241
  
Other real estate owned
  
                      -
  
            -
  
            487
  
                     -
  
                   222
  
Total non-performing assets (4)
  
 $           21,964
  
 $ 23,325
  
 $    20,861
  
 $            5,481
  
 $             4,463
  
                       
                       
Nonperforming loans as a % of total loans
  
1.37%
  
1.46%
  
1.31%
  
0.36%
  
0.28%
  
                       
Nonperforming assets as a % of total assets
1.17%
  
1.25%
  
1.14%
  
0.31%
  
0.25%
  
                       
Allowance for loan losses as a % of total loans
1.20%
  
1.19%
  
1.21%
  
1.23%
  
1.28%
  
                       
Allowance for loan losses as a % of nonperforming loans (5)
87.92%
  
81.48%
  
92.28%
  
344.90%
  
461.31%
  
                       
(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 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. Current period capital ratios are preliminary subject to finalization of the FDIC Call Report.
(3)
Excludes unvested restricted shares of 101,759, 112,099, 114,336, 75,186 and 96,488 as of September 30, 2018, June 30, 2018, March 31, 2018, December 31, 2017 and September 30, 2017, respectively.
(4)
The Bank's General ALLL provides a 288% coverage of NPAs that are not already covered by a specific reserve as of September 30, 2018.
 
6
BANKWELL FINANCIAL GROUP, INC.
                    
LOAN & DEPOSIT PORTFOLIO (unaudited)
                    
(Dollars in thousands)
                    
                     
                     
   
September 30,
  
June 30,
  
December 31,
  
Current QTD
  
YTD
Period End Loan Composition
  
2018
  
2018
  
2017
  
% Change
  
% Change
Residential Real Estate
  
 $         182,740
  
 $         188,546
  
 $         193,524
  
(3.1%)
  
(5.6%)
Commercial Real Estate
  
         1,057,484
  
         1,042,689
  
            987,242
  
1.4%
  
7.1%
Construction
  
              93,941
  
            100,147
  
            101,636
  
(6.2%)
  
(7.6%)
Total Real Estate Loans
  
       1,334,165
  
       1,331,382
  
       1,282,402
  
0.2%
  
4.0%
                     
Commercial Business
  
            273,065
  
            262,625
  
            259,995
  
4.0%
  
5.0%
                     
Consumer
  
                  389
  
                  406
  
                  619
  
(4.2%)
  
(37.2%)
Total Loans
  
 $    1,607,619
  
 $    1,594,413
  
 $    1,543,016
  
0.8%
  
4.2%
                     
                     
                     
   
September 30,
  
June 30,
  
December 31,
  
Current QTD
  
YTD
Period End Deposit Composition
  
2018
  
2018
  
2017
  
% Change
  
% Change
Noninterest-bearing demand
  
 $         162,473
  
 $         168,295
  
 $         172,638
  
(3.5%)
  
(5.9%)
NOW
  
              56,270
  
              66,207
  
              58,942
  
(15.0%)
  
(4.5%)
Money Market
  
            484,048
  
            497,760
  
            451,804
  
(2.8%)
  
7.1%
Savings
  
            147,940
  
            113,496
  
              83,758
  
30.3%
  
76.6%
Time
  
            642,438
  
            619,880
  
            631,263
  
3.6%
  
1.8%
Total Deposits
  
 $    1,493,169
  
 $    1,465,638
  
 $    1,398,405
  
1.9%
  
6.8%
 
 
7
BANKWELL FINANCIAL GROUP, INC.
                  
NONINTEREST INCOME & EXPENSE - QTD (unaudited)
                
(Dollars in thousands)
                  
                   
 
For the Quarter Ended  
        
Noninterest income
September 30,
  
June 30,
  
September 30,
  
Sep 18 vs. June 18
  
Sep 18 vs. Sep 17
 
2018
  
2018
  
2017
  
% Change
  
% Change
Service charges and fees
 $               285
  
 $               265
  
 $               254
  
7.5%
  
12.2%
Bank owned life insurance
                  267
  
                  265
  
                  295
  
0.8%
  
(9.5%)
Gains and fees from sales of loans
                  150
  
                  315
  
                    36
  
(52.4%)
  
316.7%
Other
                  157
  
                  262
  
                  239
  
(40.1%)
  
(34.3%)
Total noninterest income
 $              859
  
 $           1,107
  
 $              824
  
(22.4%)
  
4.2%
                   
                   
 
 
For the Quarter Ended  
        
Noninterest expense
September 30,
  
June 30,
  
September 30,
  
Sep 18 vs. June 18
  
Sep 18 vs. Sep 17
 
2018
  
2018
  
2017
  
% Change
  
% Change
Salaries and employee benefits
 $             4,903
  
 $             4,539
  
 $             3,952
  
8.0%
  
24.1%
Occupancy and equipment
               1,771
  
               1,731
  
               1,449
  
2.3%
  
22.2%
Data processing
                  512
  
                  509
  
                  621
  
0.6%
  
(17.6%)
Marketing
                  395
  
                  479
  
                  295
  
(17.5%)
  
33.9%
Professional services
                  321
  
                  424
  
                  680
  
(24.3%)
  
(52.8%)
Director fees
                  260
  
                  274
  
                  207
  
(5.1%)
  
25.6%
FDIC insurance
                  203
  
                  203
  
                  265
  
0.0%
  
(23.4%)
Amortization of intangibles
                    24
  
                    24
  
                    31
  
0.0%
  
(22.6%)
Other
                  481
  
                  581
  
                  629
  
(17.2%)
  
(23.5%)
Total noninterest expense
 $           8,870
  
 $           8,764
  
 $           8,129
  
1.2%
  
9.1%
                   
 
 
8
BANKWELL FINANCIAL GROUP, INC.
            
NONINTEREST INCOME & EXPENSE - YTD (unaudited)
            
(Dollars in thousands)
            
             
 
For the Nine Months Ended
      
Noninterest income
September 30,
  
September 30,
  
Sep 18 vs. Sep 17
  
 
2018
  
2017
  
% Change
  
Gains and fees from sales of loans
 $               835
  
 $               559
  
49.4%
  
Service charges and fees
                  806
  
                  755
  
6.8%
  
Bank owned life insurance
                  795
  
                  881
  
(9.8%)
  
Net gain on sale of available for sale securities
                  222
  
                  165
  
34.5%
  
Other
                  641
  
                  728
  
(12.0%)
  
Total noninterest income
 $           3,299
  
 $           3,088
  
6.8%
  
             
             
             
 
For the Nine Months Ended
      
Noninterest expense
September 30,
  
September 30,
  
Sep 18 vs. Sep 17
  
 
2018
  
2017
  
% Change
  
Salaries and employee benefits
 $           14,470
  
 $           11,681
  
23.9%
  
Occupancy and equipment
               5,119
  
               4,580
  
11.8%
  
Data processing
               1,546
  
               1,467
  
5.4%
  
Professional services
               1,520
  
               1,615
  
(5.9%)
  
Marketing
               1,171
  
                  872
  
34.3%
  
Director fees
                  749
  
                  683
  
9.7%
  
FDIC insurance
                  620
  
                  891
  
(30.4%)
  
Amortization of intangibles
                    72
  
                    93
  
(22.6%)
  
Other
               1,570
  
               2,062
  
(23.9%)
  
Total noninterest expense
 $         26,837
  
 $         23,944
  
12.1%
  
             
 
 
9
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
9/30/2018
  
6/30/2018
  
3/31/2018
  
12/31/2017
  
9/30/2017
Total Equity
 $         174,754
  
 $         169,573
  
 $         165,947
  
 $         161,027
  
 $         158,317
Less:
                  
Goodwill
               2,589
  
               2,589
  
               2,589
  
               2,589
  
               2,589
Other intangibles
                  309
  
                  334
  
                  358
  
                  382
  
                  407
Tangible Common Equity
 $       171,856
  
 $       166,650
  
 $       163,000
  
 $       158,056
  
 $       155,321
                   
Total Assets
 $       1,885,036
  
 $       1,870,802
  
 $       1,831,243
  
 $       1,796,607
  
 $       1,804,938
Less:
                  
Goodwill
               2,589
  
               2,589
  
               2,589
  
               2,589
  
               2,589
Other intangibles
                  309
  
                  334
  
                  358
  
                  382
  
                  407
Tangible Assets
 $    1,882,138
  
 $    1,867,879
  
 $    1,828,296
  
 $    1,793,636
  
 $    1,801,942
                   
Tangible Common Equity to Tangible Assets
9.13%
  
8.92%
  
8.92%
  
8.81%
  
8.62%
                   
 
                   
 
As of        
Computation of Tangible Book Value per Common Share
9/30/2018
  
6/30/2018
  
3/31/2018
  
12/31/2017
  
9/30/2017
Total shareholders' equity
 $         174,754
  
 $         169,573
  
 $         165,947
  
 $         161,027
  
 $         158,317
Less:
                  
Preferred stock
                    -
  
                    -
  
                    -
  
                    -
  
                    -
Common shareholders' equity
 $       174,754
  
 $       169,573
  
 $       165,947
  
 $       161,027
  
 $       158,317
Less:
                  
Goodwill
               2,589
  
               2,589
  
               2,589
  
               2,589
  
               2,589
Other intangibles
                  309
  
                  334
  
                  358
  
                  382
  
                  407
Tangible common shareholders' equity
 $       171,856
  
 $       166,650
  
 $       163,000
  
 $       158,056
  
 $       155,321
Common shares issued
         7,842,996
  
         7,841,720
  
         7,831,804
  
         7,751,424
  
         7,705,975
Less:
                  
Shares of unvested restricted stock
            101,759
  
            112,099
  
            114,336
  
              75,186
  
              96,488
Common shares outstanding
       7,741,237
  
       7,729,621
  
       7,717,468
  
       7,676,238
  
       7,609,487
Book value per share
 $            22.57
  
 $            21.94
  
 $            21.50
  
 $            20.98
  
 $            20.81
Less:
                  
Effects of intangible assets
 $              0.37
  
 $              0.38
  
 $              0.38
  
 $              0.39
  
 $              0.39
                   
Tangible Book Value per Common Share
 $           22.20
  
 $           21.56
  
 $           21.12
  
 $           20.59
  
 $           20.41
 
10
BANKWELL FINANCIAL GROUP, INC.
                          
RECONCILIATION OF GAAP TO NON-GAAP MEASURES (unaudited) - Continued
            
(Dollars in thousands, except share data)
                          
                           
                           
 
For the Quarter Ended   
  
For the Nine Months Ended
Computation of Efficiency Ratio
9/30/2018
  
6/30/2018
  
3/31/2018
  
12/31/2017
  
9/30/2017
9/30/2018
  
9/30/2017
Noninterest expense
 $             8,870
  
 $             8,764
  
 $             9,203
  
 $             8,579
  
 $             8,129
  
 $         26,837
  
 $         23,944
Less:
                          
Amortization of intangible assets
                    24
  
                    24
  
                    24
  
                    25
  
                    31
  
                  72
  
                  93
Foreclosed real estate expenses
                    -
  
                    -
  
                    -
  
                    -
  
                     3
  
                  -
  
                  70
Adjusted noninterest expense
 $           8,846
  
 $           8,740
  
 $           9,179
  
 $           8,554
  
 $           8,095
  
 $       26,765
  
 $       23,781
Net interest income
 $           14,246
  
 $           13,908
  
 $           13,705
  
 $           13,914
  
 $           13,861
  
 $         41,859
  
 $         40,450
Noninterest income
                  859
  
               1,107
  
               1,333
  
               1,541
  
                  824
  
             3,299
  
             3,088
Less:
                          
Gain on sales of securities
                    -
  
                    -
  
                  222
  
                    -
  
                    -
  
                222
  
                165
Loss on sale of foreclosed real estate
                    -
  
                    -
  
                    -
  
                  (78)
  
                    -
  
                  -
  
                  -
Adjusted operating revenue
 $         15,105
  
 $         15,015
  
 $         14,816
  
 $         15,533
  
 $         14,685
  
 $       44,936
  
 $       43,373
                           
Efficiency ratio
58.6%
  
58.2%
  
62.0%
  
55.1%
  
55.1%
  
59.6%
  
54.8%
                           
 
      For the Quarter Ended  
For the Nine Months Ended
Computation of Return on Average Tangible Common Equity
9/30/2018
  
6/30/2018
  
3/31/2018
  
12/31/2017
  
9/30/2017
9/30/2018
  
9/30/2017
Net Income Attributable to Common Shareholders
 $             4,857
  
 $             4,715
  
 $             4,600
  
 $             2,096
  
 $             4,263
  
 $         14,172
  
 $         11,734
Total average shareholders' equity
 $         173,199
  
 $         168,684
  
 $         164,369
  
 $         161,477
  
 $         156,852
  
 $       168,780
  
 $       152,721
Less:
                          
Average Goodwill
               2,589
  
               2,589
  
               2,589
  
               2,589
  
               2,589
  
             2,589
  
             2,589
Average Other intangibles
                  325
  
                  350
  
                  374
  
                  398
  
                  428
  
                349
  
                458
Average tangible common equity
 $         170,285
  
 $         165,745
  
 $         161,406
  
 $         158,490
  
 $         153,835
  
 $       165,842
  
 $       149,674
                           
Annualized Return on Average Tangible Common Equity
11.32%
  
11.41%
  
11.56%
  
5.25%
  
10.99%
  
11.43%
  
10.48%
 
 
11
BANKWELL FINANCIAL GROUP, INC.
                        
NET INTEREST MARGIN ANALYSIS ON A FULLY TAX EQUIVALENT BASIS
                        
(Dollars in thousands)
                        
                         
   
For the Quarter Ended        
   
September 30, 2018 
  
September 30, 2017  
   
Average
      
Yield/
  
Average
      
Yield/
   
Balance
  
Interest
  
Rate (5)
  
Balance
  
Interest
  
Rate (5)
Assets:
                        
Cash and Fed funds sold
  
 $          70,111
  
 $           345
  
1.95%
  
 $        83,086
  
 $           239
  
1.14%
Securities (1)
  
           118,311
  
              937
  
3.17%
  
         112,066
  
           1,014
  
3.62%
Loans:
                        
Commercial real estate
  
        1,030,336
  
         12,445
  
4.73%
  
         927,114
  
         10,614
  
4.48%
Residential real estate
  
           185,625
  
           1,724
  
3.71%
  
         193,578
  
           1,770
  
3.66%
Construction (2)
  
             92,537
  
           1,225
  
5.18%
  
         106,373
  
           1,305
  
4.80%
Commercial business
  
           279,454
  
           3,752
  
5.25%
  
         268,408
  
           3,476
  
5.07%
Consumer
  
                  393
  
                  7
  
6.79%
  
             1,149
  
                10
  
3.53%
Total loans
  
        1,588,345
  
         19,153
  
4.72%
  
      1,496,622
  
         17,175
  
4.49%
Federal Home Loan Bank stock
  
               9,297
  
              137
  
5.88%
  
             8,544
  
                85
  
3.96%
Total earning assets
  
        1,786,064
  
         20,572
  
4.51%
  
      1,700,318
  
         18,513
  
4.26%
Other assets
  
             68,838
          
           69,253
        
Total assets
  
 $     1,854,902
          
 $   1,769,571
        
                         
Liabilities and shareholders' equity:
                        
Interest-bearing liabilities:
                        
NOW
  
 $          59,618
  
 $             54
  
0.36%
  
 $        58,625
  
 $             19
  
0.13%
Money market
  
           483,105
  
           1,741
  
1.43%
  
         432,753
  
              993
  
0.91%
Savings
  
           136,683
  
              502
  
1.46%
  
         100,197
  
              189
  
0.75%
Time
  
           607,044
  
           2,747
  
1.80%
  
         645,317
  
           2,215
  
1.36%
Total interest-bearing deposits
  
        1,286,450
  
           5,044
  
1.56%
  
      1,236,892
  
           3,416
  
1.10%
Borrowed money
  
           216,483
  
           1,210
  
2.19%
  
         193,734
  
           1,071
  
2.16%
Total interest-bearing liabilities
  
        1,502,933
  
 $        6,254
  
1.65%
  
      1,430,626
  
 $        4,487
  
1.24%
Noninterest-bearing deposits
  
           167,198
          
         164,565
        
Other liabilities
  
             11,572
          
           17,528
        
Total liabilities
  
        1,681,703
          
      1,612,719
        
Shareholders' equity
  
           173,199
          
         156,852
        
Total liabilities and shareholders'  equity
  
 $     1,854,902
          
 $   1,769,571
        
Net interest income (3)
      
 $      14,318
          
 $      14,026
    
Interest rate spread
          
2.86%
          
3.02%
Net interest margin (4)
          
3.21%
          
3.30%
                         
(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 $72 thousand and $165 thousand, respectively for the three months ended September 30, 2018 and 2017.
(4)
Net interest income as a percentage of earning assets.
(5)
Yields are calculated using the contractual day count convention for each respective product type.
 
12
BANKWELL FINANCIAL GROUP, INC.
                        
NET INTEREST MARGIN ANALYSIS ON A FULLY TAX EQUIVALENT BASIS
                      
(Dollars in thousands)
                        
   
For the Nine Months Ended      
   
September 30, 2018 
  
September 30, 2017  
   
Average
      
Yield/
  
Average
      
Yield/
   
Balance
  
Interest
  
Rate (5)
  
Balance
  
Interest
  
Rate (5)
Assets:
                        
Cash and Fed funds sold
  
 $          73,823
  
 $             924
  
1.67%
  
 $        79,333
  
 $           501
  
0.85%
Securities (1)
  
           118,434
  
             2,746
  
3.09%
  
         106,622
  
           2,822
  
3.53%
Loans:
                        
Commercial real estate
  
        1,001,058
  
           34,714
  
4.57%
  
         893,962
  
         30,528
  
4.50%
Residential real estate
  
           192,254
  
             5,309
  
3.68%
  
         194,503
  
           5,325
  
3.65%
Construction (2)
  
             93,617
  
             3,551
  
5.00%
  
         107,136
  
           3,853
  
4.74%
Commercial business
  
           281,348
  
           11,088
  
5.20%
  
         249,718
  
           9,607
  
5.07%
Consumer
  
                  521
  
                  23
  
5.77%
  
             1,387
  
                35
  
3.40%
Total loans
  
        1,568,798
  
           54,685
  
4.60%
  
      1,446,706
  
         49,348
  
4.50%
Federal Home Loan Bank stock
  
               9,311
  
                379
  
5.43%
  
             8,198
  
              244
  
3.97%
Total earning assets
  
        1,770,366
  
           58,734
  
4.38%
  
      1,640,859
  
         52,915
  
4.25%
Other assets
  
             68,141
          
           63,527
        
Total assets
  
 $     1,838,507
          
 $   1,704,386
        
                         
Liabilities and shareholders' equity:
                        
Interest-bearing liabilities:
                        
NOW
  
 $          60,616
  
 $               93
  
0.21%
  
 $        58,096
  
 $             65
  
0.15%
Money market
  
           482,204
  
             4,422
  
1.23%
  
         387,162
  
           2,329
  
0.80%
Savings
  
           110,622
  
                964
  
1.17%
  
         108,304
  
              591
  
0.73%
Time
  
           617,269
  
             7,530
  
1.63%
  
         628,521
  
           6,107
  
1.30%
Total interest-bearing deposits
  
        1,270,711
  
           13,009
  
1.37%
  
      1,182,083
  
           9,092
  
1.03%
Borrowed money
  
           221,597
  
             3,653
  
2.17%
  
         186,844
  
           2,930
  
2.07%
Total interest-bearing liabilities
  
        1,492,308
  
 $        16,662
  
1.49%
  
      1,368,927
  
 $      12,022
  
1.17%
Noninterest-bearing deposits
  
           164,604
          
         168,778
        
Other liabilities
  
             12,815
          
           13,960
        
Total liabilities
  
        1,669,727
          
      1,551,665
        
Shareholders' equity
  
           168,780
          
         152,721
        
Total liabilities and shareholders'  equity
  
 $     1,838,507
          
 $   1,704,386
        
Net interest income (3)
      
 $        42,072
          
 $      40,893
    
Interest rate spread
          
2.89%
          
3.08%
Net interest margin (4)
          
3.17%
          
3.32%
                         
(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 $213 thousand and $443 thousand, respectively for the nine months ended September 30, 2018 and 2017.
(4)
Net interest income as a percentage of earning assets.
(5)
Yields are calculated using the contractual day count convention for each respective product type.
13

Bankwell Financial Group, Inc. Reports