Bankwell Financial Group Reports Operating Results for the Second Quarter and Declares Third Quarter Dividend

Rhea-AI Summary

Bankwell Financial Group, Inc. (NASDAQ: BWFG) reported GAAP net income of $8.0 million, or $1.02 per share for the second quarter of 2023, versus $12.0 million, or $1.55 per share, for the same period in 2022. The Company's Board of Directors declared a $0.20 per share cash dividend, payable August 24, 2023 to shareholders of record on August 14, 2023.

Positive

• Bankwell Financial Group reported a decrease in net income compared to the same period last year. The company's Board of Directors declared a cash dividend of $0.20 per share.

Negative

• None.

NEW CANAAN, Conn.--(BUSINESS WIRE)-- Bankwell Financial Group, Inc. (NASDAQ: BWFG) reported GAAP net income of $8.0 million, or $1.02 per share for the second quarter of 2023, versus $12.0 million, or $1.55 per share, for the same period in 2022.

The Company's Board of Directors declared a $0.20 per share cash dividend, payable August 24, 2023 to shareholders of record on August 14, 2023.

We recommend reading this earnings release in conjunction with the Second Quarter 2023 Investor Presentation, located at http://investor.mybankwell.com/Presentations and included as an exhibit to our July 26, 2023 Current Report on Form 8-K.

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

"Against the headwinds of an inverted yield curve, the Company generated a 0.99% Return on Average Assets and a 12.91% Return on Average Shareholders' Equity this quarter. As we look to the second half of the year, we can revise our prior guidance upward regarding full year 2023 Net Interest Income (“NII”). Prior guidance had indicated a year-over-year decrease to NII of approximately 10%. We can now guide to a 5-6% decline for 2023 NII versus 2022 performance.

Future margin compression can be expected as the Federal Reserve holds short term rates higher for longer than earlier market consensus, however, our operational efficiency and increasing loan yields will provide a cushion against the uncertain policy backdrop. The Company’s year to date non-interest expense was 1.58% of average assets year for the six-month period ending June 30, 2023, while the average loan yield for the same period stood at 5.95%. The average yield on loans originated thus far in 2023 was 7.38%.

Capital and liquidity positions are strong, and we are confident in the credit quality of the loan book.

Please see the Company's recent Press Release regarding the Company’s newly appointed Executive Vice President and Chief Innovation Officer, Ryan Hildebrand. We are delighted to have Ryan join the management team."

Second Quarter 2023 Highlights:

• Total gross loans were $2.8 billion, growing $98.2 million, or 3.7%, compared to December 31, 2022.
• Deposits of $2.8 billion for the quarter ended June 30, 2023, decreasing $12.0 million, or 0.4% from December 31, 2022.
• Non-brokered deposits were $1.8 billion as of June 30, 2023, up by $48 million, or an increase of 2.7% from March 31, 2023; as of July 25, 2023, non-brokered deposits increased an additional $57 million since June 30, 2023.
• FDIC-insured deposits totaled $2.0 billion and represent 71.2% of total deposits as of June 30, 2023.
• As of June 30, 2023, the Bank has $1.7 billion immediately available liquidity, comprised of cash, AFS securities and borrowing capacity with the FHLB of Boston and FRB.
• Immediately available liquidity provides more than two times coverage of uninsured deposits.
• Average yield on 2023 funded loans was 7.38% as of June 30, 2023.
• Return on average assets was 0.99% for the quarter ended June 30, 2023.
• Return on average shareholders' equity was 12.91% for the quarter ended June 30, 2023.
• The net interest margin was 3.07% for the quarter ended June 30, 2023.
• The efficiency ratio was 49.8% for the quarter ended June 30, 2023.
• Investment securities totaled $117.8 million and represent 3.6% of total assets, with HTM securities totaling $15.9 million, or 0.5% of total assets.

Earnings and Performance

Revenues (net interest income plus noninterest income) for the quarter ended June 30, 2023 were $25.4 million, versus $25.0 million and for the quarter ended June 30, 2022. Revenues for the six months ended June 30, 2023 were $52.5 million, versus $45.4 million for the six months ended June 30, 2022. The increase in revenues for the quarter and six months ended 2023 was primarily attributable to an increase in interest and fees on loans due to loan growth and higher overall loan yields¹ for the quarter ended June 30, 2023. The increase in revenues was partially offset by an increase in interest expense.

1 - The increase in overall loan yields was 111 bps and 123 bps for the quarter and six months ended June 30, 2023, respectively.

Net income for the quarter ended June 30, 2023 was $8.0 million, versus $12.0 million for the quarter ended June 30, 2022. Net income for the six months ended June 30, 2023 was $18.4 million, versus $20.2 million for the six months ended June 30, 2022. The decrease in net income for the quarter and six months ended 2023 was primarily due to an increase in the provision for credit losses and an increase in noninterest expense, primarily due to increased FDIC insurance expense, and an increase in salary and employee benefits expense, mainly due to severance costs. The decrease was partially offset by a direct result of the aforementioned increases in revenues.

Basic and diluted earnings per share were $1.02 and $1.02, respectively, for the quarter ended June 30, 2023 compared to basic and diluted earnings per share of $1.56 and $1.55, respectively, for the quarter ended June 30, 2022. Basic and diluted earnings per share were $2.36 and $2.34, respectively, for the six months ended June 30, 2023 compared to basic and diluted earnings per share of $2.61 and $2.58, respectively, for the six months ended June 30, 2022.

The net interest margin (fully taxable equivalent basis) for the quarters ended June 30, 2023 and June 30, 2022 was 3.07% and 4.01%, respectively. The net interest margin (fully taxable equivalent basis) for the six months ended June 30, 2023 and June 30, 2022 was 3.15% and 3.65%, respectively. The decrease in the net interest margin was due to an increase in funding costs partially offset by an increase in overall loan yields.

Allowance for Credit Losses (ACL)

Provision for credit losses was $2.6 million for the quarter ended June 30, 2023, bringing the ACL-Loans as a percentage of total loans to 1.11%. Provision for credit losses was $0.8 million for the quarter ended March 31, 2023. The increase in the provision for credit losses is mainly attributable to forward looking CECL macroeconomic factors.

Financial Condition

Assets totaled $3.3 billion at June 30, 2023 and remained flat compared to December 31, 2022. Gross loans totaled $2.8 billion at June 30, 2023, an increase of $98.2 million or 3.7% compared to December 31, 2022. Deposits totaled $2.8 billion at June 30, 2023, and remained flat compared to December 31, 2022.

Capital

Shareholders’ equity totaled $248.8 million as of June 30, 2023, an increase of $10.3 million compared to December 31, 2022, primarily a result of net income of $18.4 million for the six months ended June 30, 2023. The increase was partially offset by the Day 1 CECL adoption of $4.9 million, dividends paid of $3.1 million, and a $1.5 million unfavorable impact to accumulated other comprehensive income. The unfavorable impact to accumulated other comprehensive income was driven by fair value marks on the Company's Available for sale investment securities portfolio of $0.9 million and fair value marks related to hedge positions involving interest rate swaps of $0.7 million. The Company's interest rate swaps are used to hedge interest rate risk.

About Bankwell Financial Group

Bankwell is a commercial bank that serves the banking needs of residents and businesses throughout Fairfield and New Haven Counties, Connecticut. For more information about this press release, interested parties may contact Christopher R. Gruseke, President and Chief Executive Officer or Courtney E. Sacchetti, 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 banking industry or 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 tables. 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 noninterest expense control. The Company believes that tangible common equity, tangible assets, tangible common equity to tangible assets, tangible common shareholders' equity, fully diluted tangible book value per common share, adjusted noninterest expense, operating revenue, efficiency ratio, average tangible common equity, annualized return on average tangible common equity, return on average assets, return on average shareholders' equity, and the dividend payout ratio are useful to evaluate the relative strength of the Company's performance and 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 BALANCE SHEETS (unaudited) (Dollars in thousands)
	June 30, 2023				March 31, 2023				December 31, 2022				June 30, 2022
ASSETS
Cash and due from banks	$	207,345			$	249,812			$	344,925			$	149,522
Federal funds sold		54,706				27,370				10,754				21,505
Cash and cash equivalents		262,051				277,182				355,679				171,027
Investment securities
Marketable equity securities, at fair value		2,017				2,028				1,988				2,126
Available for sale investment securities, at fair value		99,938				103,171				103,663				94,907
Held to maturity investment securities, at amortized cost		15,884				15,931				15,983				15,917
Total investment securities		117,839				121,130				121,634				112,950
Loans receivable (net of ACL-Loans of $30,694, $27,998, $22,431, and $15,773 at June 30, 2023, March 31 2023, December 31, 2022, and June 30, 2022, respectively)		2,736,607				2,724,514				2,646,384				2,036,626
Accrued interest receivable		14,208				14,261				13,070				8,047
Federal Home Loan Bank stock, at cost		5,696				5,234				5,216				5,064
Premises and equipment, net		27,658				27,619				27,199				27,768
Bank-owned life insurance		50,816				50,524				50,243				49,699
Goodwill		2,589				2,589				2,589				2,589
Deferred income taxes, net		10,014				8,692				7,422				4,768
Other assets		25,229				20,573				23,013				17,014
Total assets	$	3,252,707			$	3,252,318			$	3,252,449			$	2,435,552
LIABILITIES AND SHAREHOLDERS’ EQUITY
Liabilities
Deposits
Noninterest bearing deposits	$	367,635			$	377,667			$	404,559			$	372,584
Interest bearing deposits		2,421,228				2,420,641				2,396,259				1,660,941
Total deposits		2,788,863				2,798,308				2,800,818				2,033,525
Advances from the Federal Home Loan Bank		90,000				90,000				90,000				105,000
Subordinated debentures		69,082				69,020				68,959				34,500
Accrued expenses and other liabilities		55,949				52,683				54,203				37,060
Total liabilities		3,003,894				3,010,011				3,013,980				2,210,085
Shareholders’ equity
Common stock, no par value		116,541				115,875				115,018				115,599
Retained earnings		133,988				127,566				123,640				109,523
Accumulated other comprehensive (loss) income		(1,716	)			(1,134	)			(189	)			345
Total shareholders’ equity		248,813				242,307				238,469				225,467
Total liabilities and shareholders’ equity	$	3,252,707			$	3,252,318			$	3,252,449			$	2,435,552

BANKWELL FINANCIAL GROUP, INC. CONSOLIDATED STATEMENTS OF INCOME (unaudited) (Dollars in thousands, except share data)
	For the Quarter Ended														For the Six Months Ended
	June 30, 2023			March 31, 2023			December 31, 2022				June 30, 2022				June 30, 2023			June 30, 2022
Interest and dividend income
Interest and fees on loans	$	42,482		$	39,723		$	36,545			$	25,141			$	82,205		$	46,569
Interest and dividends on securities		1,002			1,000			898				774				2,002			1,494
Interest on cash and cash equivalents		3,022			3,568			2,150				449				6,590			603
Total interest and dividend income		46,506			44,291			39,593				26,364				90,797			48,666
Interest expense
Interest expense on deposits		20,777			17,033			11,083				1,983				37,810			4,189
Interest expense on borrowings		1,738			1,717			1,701				558				3,455			1,144
Total interest expense		22,515			18,750			12,784				2,541				41,265			5,333
Net interest income		23,991			25,541			26,809				23,823				49,532			43,333
Provision (credit) for credit losses		2,579			826			4,272				(1,445	)			3,405			(1,216	)
Net interest income after provision for credit losses		21,412			24,715			22,537				25,268				46,127			44,549
Noninterest income
Bank owned life insurance		292			281			273				265				573			525
Service charges and fees		361			286			343				249				647			489
Gains and fees from sales of loans		725			931			12				608				1,656			1,239
Other		23			28			(100	)			30				51			(143	)
Total noninterest income		1,401			1,526			528				1,152				2,927			2,110
Noninterest expense
Salaries and employee benefits		6,390			6,081			5,988				5,433				12,471			10,373
Occupancy and equipment		2,204			2,084			1,919				2,193				4,288			4,343
Professional services		692			1,322			912				1,000				2,014			1,981
Data processing		729			671			663				689				1,400			1,343
Director fees		453			392			378				339				845			691
FDIC insurance		1,050			1,062			898				262				2,112			485
Marketing		177			151			112				107				328			152
Other		946			928			1,601				913				1,874			1,493
Total noninterest expense		12,641			12,691			12,471				10,936				25,332			20,861
Income before income tax expense		10,172			13,550			10,594				15,484				23,722			25,798
Income tax expense		2,189			3,171			2,573				3,462				5,360			5,564
Net income	$	7,983		$	10,379		$	8,021			$	12,022			$	18,362		$	20,234
Earnings Per Common Share:
Basic	$	1.02		$	1.34		$	1.04			$	1.56			$	2.36		$	2.61
Diluted	$	1.02		$	1.33		$	1.04			$	1.55			$	2.34		$	2.58
Weighted Average Common Shares Outstanding:
Basic		7,593,417			7,554,689			7,507,540				7,556,645				7,574,160			7,596,639
Diluted		7,601,562			7,616,671			7,563,116				7,614,243				7,639,828			7,683,305
Dividends per common share	$	0.20		$	0.20		$	0.20			$	0.20			$	0.40		$	0.40

BANKWELL FINANCIAL GROUP, INC. CONSOLIDATED FINANCIAL HIGHLIGHTS (unaudited)
	For the Quarter Ended												For the Six Months Ended
	June 30, 2023			March 31, 2023			December 31, 2022			June 30, 2022			June 30, 2023			June 30, 2022
Performance ratios:
Return on average assets	0.99	%		1.30	%		1.07	%		1.96	%		1.14	%		1.65	%
Return on average shareholders' equity	12.91	%		17.48	%		13.38	%		22.09	%		15.15	%		19.16	%
Return on average tangible common equity	13.05	%		17.67	%		13.52	%		22.36	%		15.31	%		19.40	%
Net interest margin	3.07	%		3.24	%		3.70	%		4.01	%		3.15	%		3.65	%
Efficiency ratio(1)	49.8	%		46.9	%		45.6	%		43.8	%		48.3	%		45.9	%
Net loan charge-offs as a % of average loans	—	%		0.02	%		—	%		—	%		0.02	%		—	%
Dividend payout ratio(2)	19.61	%		15.04	%		19.23	%		12.90	%		17.09	%		15.50	%
(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 noninterest 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) The dividend payout ratio is calculated by dividing dividends per share by earnings per share.

	As of
	June 30, 2023				March 31, 2023				December 31, 2022				June 30, 2022
Capital ratios:
Total Common Equity Tier 1 Capital to Risk-Weighted Assets(1)		10.34	%			10.17	%			10.28	%			11.10	%
Total Capital to Risk-Weighted Assets(1)		11.41	%			11.16	%			11.07	%			11.80	%
Tier I Capital to Risk-Weighted Assets(1)		10.34	%			10.17	%			10.28	%			11.80	%
Tier I Capital to Average Assets(1)		9.41	%			9.22	%			9.88	%			10.15	%
Tangible common equity to tangible assets		7.58	%			7.38	%			7.26	%			9.16	%
Fully diluted tangible book value per common share	$	31.45			$	30.56			$	30.51			$	28.75
(1) Represents Bank ratios. Current period capital ratios are preliminary subject to finalization of the FDIC Call Report.

BANKWELL FINANCIAL GROUP, INC. ASSET QUALITY (unaudited) (Dollars in thousands)
	For the Quarter Ended
	June 30, 2023				March 31, 2023				December 31, 2022				June 30, 2022
ACL-Loans:
Balance at beginning of period	$	27,998			$	22,431			$	18,167			$	17,141
Day 1 CECL Adjustment on January 1, 2023		—				5,079				—				—
Beginning balance January 1, 2023		27,998				27,510				18,167				—
Charge-offs:
Commercial business		—				(440	)			—				—
Consumer		(25	)			(12	)			(11	)			—
Total charge-offs		(25	)			(452	)			(11	)			—
Recoveries:
Commercial real estate		—				—				—				77
Commercial business		32				—				—				—
Consumer		10				6				3				—
Total recoveries		42				6				3				77
Net loan recoveries (charge-offs)		17				(446	)			(8	)			77
Provision for credit losses - loans		2,679				934				4,272				(1,445	)
Balance at end of period	$	30,694			$	27,998			$	22,431			$	15,773

	As of
	June 30, 2023				March 31, 2023				December 31, 2022				June 30, 2022
Asset quality:
Nonaccrual loans
Residential real estate	$	1,429			$	1,443			$	2,152			$	2,161
Commercial real estate		1,905				1,912				2,781				2,955
Commercial business		2,815				1,528				2,126				787
Construction		9,382				9,382				9,382				9,382
Total nonaccrual loans		15,531				14,265				16,441				15,285
Other real estate owned		—				—				—				—
Total nonperforming assets	$	15,531			$	14,265			$	16,441			$	15,285
Nonperforming loans as a % of total loans		0.56	%			0.52	%			0.61	%			0.74	%
Nonperforming assets as a % of total assets		0.48	%			0.44	%			0.51	%			0.63	%
ACL-loans as a % of total loans		1.11	%			1.01	%			0.84	%			0.77	%
ACL-loans as a % of nonperforming loans		197.63	%			196.27	%			136.43	%			103.19	%
Total past due loans to total loans		1.30	%			0.94	%			0.60	%			1.40	%

Total nonaccrual loans decreased $0.9 million to $15.5 million as of June 30, 2023 when compared to December 31, 2022. Nonperforming assets as a percentage of total assets decreased to 0.48% at June 30, 2023, down from 0.51% at December 31, 2022. The ACL-Loans at June 30, 2023 was $30.7 million, representing 1.11% of total loans.

Past due loans increased to $36.0 million, or 1.30% of total loans, as of June 30, 2023, compared to $16.1 million, or 0.60% of total loans, as of December 31, 2022. Of the June 30, 2023 past due loans, $9.3 million of loans were between 31 - 33 days past due and have subsequently become current.

BANKWELL FINANCIAL GROUP, INC. LOAN & DEPOSIT PORTFOLIO (unaudited) (Dollars in thousands)
Period End Loan Composition	June 30, 2023			March 31, 2023			December 31, 2022			Current QTD % Change			YTD % Change
Residential Real Estate	$	54,631		$	58,541		$	60,588		(6.7	)%		(9.8	)%
Commercial Real Estate(1)		1,930,972			1,960,712			1,921,252		(1.5	)		0.5
Construction		219,615			177,115			155,198		24.0			41.5
Total Real Estate Loans		2,205,218			2,196,368			2,137,038		0.4			3.2
Commercial Business		530,913			543,457			520,447		(2.3	)		2.0
Consumer		37,475			19,464			17,963		92.5			108.6
Total Loans	$	2,773,606		$	2,759,289		$	2,675,448		0.5	%		3.7	%
(1) Includes owner occupied commercial real estate.

Gross loans totaled $2.8 billion at June 30, 2023, an increase of $98.2 million or 3.7% compared to December 31, 2022.

Period End Deposit Composition	June 30, 2023			March 31, 2023			December 31, 2022			Current QTD % Change			YTD % Change
Noninterest bearing demand	$	367,635		$	377,667		$	404,559		(2.7	)%		(9.1	)%
NOW		106,189			89,896			104,057		18.1			2.0
Money Market		879,017			874,202			913,868		0.6			(3.8	)
Savings		108,625			117,986			151,944		(7.9	)		(28.5	)
Time		1,327,397			1,338,557			1,226,390		(0.8	)		8.2
Total Deposits	$	2,788,863		$	2,798,308		$	2,800,818		(0.3	)%		(0.4	)%

Total deposits were $2.8 billion at June 30, 2023, a decrease of $12.0 million, or 0.4%, when compared to December 31, 2022.

BANKWELL FINANCIAL GROUP, INC. NONINTEREST INCOME (unaudited) (Dollars in thousands)
	For the Quarter Ended
Noninterest income	June 30, 2023			March 31, 2023			June 30, 2022			June 23 vs. Mar 23 % Change			Jun 23 vs. Jun 22 % Change
Bank owned life insurance	$	292		$	281		$	265		3.9	%		10.2	%
Service charges and fees		361			286			249		26.2			45.0
Gains and fees from sales of loans		725			931			608		(22.1	)		19.2
Other		23			28			30		(17.9	)		(23.3	)
Total noninterest income	$	1,401		$	1,526		$	1,152		(8.2	)%		21.6	%

	For the Six Months Ended
Noninterest income	June 30, 2023			June 30, 2022				% Change
Bank owned life insurance	$	573		$	525			9.1	%
Service charges and fees		647			489			32.3
Gains and fees from sales of loans		1,656			1,239			33.7
Other		51			(143	)		Favorable
Total noninterest income	$	2,927		$	2,110			38.7	%

Noninterest income increased by $0.2 million to $1.4 million for the quarter ended June 30, 2023 compared to the quarter ended June 30, 2022. Noninterest income increased by $0.8 million to $2.9 million for the six months ended June 30, 2023 compared to the six months ended June 30, 2022. The increase in noninterest income was driven by an increase in SBA loan sales and increases in service charges and fees for the quarter and six months ended 2023.

BANKWELL FINANCIAL GROUP, INC. NONINTEREST EXPENSE (unaudited) (Dollars in thousands)
	For the Quarter Ended
Noninterest expense	June 30, 2023			March 31, 2023			June 30, 2022			June 23 vs. Mar 23 % Change			Jun 23 vs. Jun 22 % Change
Salaries and employee benefits	$	6,390		$	6,081		$	5,433		5.1	%		17.6	%
Occupancy and equipment		2,204			2,084			2,193		5.8			0.5
Professional services		692			1,322			1,000		(47.7	)		(30.8	)
Data processing		729			671			689		8.6			5.8
Director fees		453			392			339		15.6			33.6
FDIC insurance		1,050			1,062			262		(1.1	)		300.8
Marketing		177			151			107		17.2			65.4
Other		946			928			913		1.9			3.6
Total noninterest expense	$	12,641		$	12,691		$	10,936		(0.4	)%		15.6	%

	For the Six Months Ended
Noninterest expense	June 30, 2023			June 30, 2022			% Change
Salaries and employee benefits	$	12,471		$	10,373		20.2	%
Occupancy and equipment		4,288			4,343		(1.3	)%
Professional services		2,014			1,981		1.7	%
Data processing		1,400			1,343		4.2	%
Director fees		845			691		22.3	%
FDIC insurance		2,112			485		335.5	%
Marketing		328			152		115.8	%
Other		1,874			1,493		25.5	%
Total noninterest expense		25,332			20,861		21.4	%

Noninterest expense increased by $1.7 million to $12.6 million for the quarter ended June 30, 2023 compared to the quarter ended June 30, 2022. Noninterest expense increased by $4.5 million to $25.3 million for the six months ended June 30, 2023 compared to the six months ended June 30, 2022. The increase in noninterest expense was primarily driven by an increase in salaries and employee benefits expense and FDIC insurance expense.

Salaries and employee benefits expense totaled $6.4 million for the quarter ended June 30, 2023, an increase of $1.0 million when compared to the same period in 2022. Salaries and employee benefits expense totaled $12.5 million for the six months ended June 30, 2023, an increase of $2.1 million when compared to the same period in 2022. The increase in salaries and employee benefits expense was driven by an increase in full time equivalent employees, with full time equivalent employees totaling 141 at June 30, 2023 compared to 132 for the same period in 2022. The increase in salaries and employee benefits expense was also due to one-time severance costs and lower loan originations, which reduces the Bank's ability to defer expenses.

FDIC insurance expense totaled $1.1 million for the quarter ended June 30, 2023, an increase of $0.8 million when compared to the same period in 2022. FDIC insurance expense totaled $2.1 million for the six months ended June 30, 2023, an increase of $1.6 million when compared to the same period in 2022. The increase in FDIC insurance expense is attributed to the overall balance sheet growth, increased use of brokered deposits, and an increase in FDIC insurance rates.

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	June 30, 2023				March 31, 2023				December 31, 2022				June 30, 2022
Total Equity	$	248,813			$	242,307			$	238,469			$	225,467
Less:
Goodwill		2,589				2,589				2,589				2,589
Other intangibles		—				—				—				—
Tangible Common Equity	$	246,224			$	239,718			$	235,880			$	222,878
Total Assets	$	3,252,707			$	3,252,318			$	3,252,449			$	2,435,552
Less:
Goodwill		2,589				2,589				2,589				2,589
Other intangibles		—				—				—				—
Tangible Assets	$	3,250,118			$	3,249,729			$	3,249,860			$	2,432,963
Tangible Common Equity to Tangible Assets		7.58	%			7.38	%			7.26	%			9.16	%

	As of
Computation of Fully Diluted Tangible Book Value per Common Share	June 30, 2023			March 31, 2023			December 31, 2022			June 30, 2022
Total shareholders' equity	$	248,813		$	242,307		$	238,469		$	225,467
Less:
Preferred stock		—			—			—			—
Common shareholders' equity	$	248,813		$	242,307		$	238,469		$	225,467
Less:
Goodwill		2,589			2,589			2,589			2,589
Other intangibles		—			—			—			—
Tangible common shareholders' equity	$	246,224		$	239,718		$	235,880		$	222,878
Common shares issued and outstanding		7,829,950			7,843,438			7,730,699			7,752,389
Fully Diluted Tangible Book Value per Common Share	$	31.45		$	30.56		$	30.51		$	28.75

BANKWELL FINANCIAL GROUP, INC. EARNINGS PER SHARE ("EPS") (unaudited) (Dollars in thousands)
	Three Months Ended June 30,								Six Months Ended June 30,
		2023				2022				2023				2022
	(In thousands, except per share data)
Net income	$	7,983			$	12,022			$	18,362			$	20,234
Dividends to participating securities(1)		(41	)			(33	)			(84	)			(68	)
Undistributed earnings allocated to participating securities(1)		(172	)			(224	)			(403	)			(371	)
Net income for earnings per share calculation	$	7,770			$	11,765			$	17,875			$	19,795
Weighted average shares outstanding, basic		7,593				7,557				7,574				7,597
Effect of dilutive equity-based awards(2)		8				57				66				86
Weighted average shares outstanding, diluted		7,601				7,614				7,640				7,683
Net earnings per common share:
Basic earnings per common share	$	1.02			$	1.56			$	2.36			$	2.61
Diluted earnings per common share	$	1.02			$	1.55			$	2.34			$	2.58

(1)		Represents dividends paid and undistributed earnings allocated to unvested stock-based awards that contain non-forfeitable rights to dividends.
(2)		Represents the effect of the assumed exercise of stock options and the vesting of restricted shares, as applicable, utilizing the treasury stock method.

BANKWELL FINANCIAL GROUP, INC. NET INTEREST MARGIN ANALYSIS ON A FULLY TAX EQUIVALENT BASIS - QTD (unaudited) (Dollars in thousands)
	For the Quarter Ended
	June 30, 2023									June 30, 2022
	Average Balance			Interest			Yield/ Rate (4)			Average Balance			Interest			Yield/ Rate (4)
Assets:
Cash and Fed funds sold	$	227,777		$	3,023		5.32	%		$	247,013		$	449		0.73	%
Securities(1)		128,576			955		2.97				118,534			809		2.73
Loans:
Commercial real estate		1,935,058			27,099		5.54				1,443,239			17,278		4.74
Residential real estate		56,981			643		4.51				66,460			553		3.33
Construction		206,844			3,691		7.06				106,285			1,938		7.21
Commercial business		557,482			10,646		7.55				393,318			5,327		5.36
Consumer		29,326			500		6.84				5,298			45		3.43
Total loans		2,785,691			42,579		6.05				2,014,600			25,141		4.94
Federal Home Loan Bank stock		5,610			98		7.00				3,263			15		1.79
Total earning assets		3,147,654		$	46,655		5.86	%			2,383,410		$	26,414		4.38	%
Other assets		96,603									79,380
Total assets	$	3,244,257								$	2,462,790
Liabilities and shareholders' equity:
Interest bearing liabilities:
NOW	$	98,048		$	42		0.18	%		$	136,414		$	59		0.17	%
Money market		902,225			8,083		3.59				931,101			1,146		0.49
Savings		112,585			860		3.06				198,304			103		0.21
Time		1,298,170			11,792		3.64				451,508			675		0.60
Total interest bearing deposits		2,411,028			20,777		3.46				1,717,327			1,983		0.46
Borrowed Money		163,138			1,738		4.21				85,092			558		2.59
Total interest bearing liabilities		2,574,166		$	22,515		3.51	%			1,802,419		$	2,541		0.57	%
Noninterest bearing deposits		375,514									407,890
Other liabilities		46,565									34,231
Total liabilities		2,996,245									2,244,540
Shareholders' equity		248,012									218,250
Total liabilities and shareholders' equity	$	3,244,257								$	2,462,790
Net interest income(2)				$	24,140								$	23,873
Interest rate spread							2.36	%								3.81	%
Net interest margin(3)							3.07	%								4.01	%

(1)		Average balances and yields for securities are based on amortized cost.
(2)		The adjustment for securities and loans taxable equivalency amounted to $51 thousand and $50 thousand for the quarters ended June 30, 2023 and 2022, respectively.
(3)		Annualized net interest income as a percentage of earning assets.
(4)		Yields are calculated using the contractual day count convention for each respective product type.

BANKWELL FINANCIAL GROUP, INC. NET INTEREST MARGIN ANALYSIS ON A FULLY TAX EQUIVALENT BASIS - YTD (unaudited) (Dollars in thousands)
	For the Six Months Ended
	June 30, 2023									June 30, 2022
	Average Balance			Interest			Yield/ Rate (4)			Average Balance			Interest			Yield/ Rate (4)
Assets:
Cash and Fed funds sold	$	271,328		$	6,590		4.90	%		$	296,239		$	603		0.41	%
Securities(1)		129,225			1,912		2.96	%			115,452			1,563		2.71	%
Loans:
Commercial real estate		1,926,852			52,125		5.38	%			1,393,836			32,273		4.61	%
Residential real estate		58,207			1,286		4.42	%			70,125			1,224		3.49	%
Construction		186,684			6,651		7.09	%			104,176			2,971		5.67	%
Commercial business		549,963			21,394		7.74	%			388,249			9,954		5.10	%
Consumer		23,971			749		6.30	%			5,666			147		5.25	%
Total loans		2,745,677			82,205		5.95	%			1,962,052			46,569		4.72	%
Federal Home Loan Bank stock		5,442			193		7.14	%			3,051			29		1.94	%
Total earning assets		3,151,672		$	90,900		5.74	%			2,376,794		$	48,764		4.08	%
Other assets		90,427									89,866
Total assets	$	3,242,099								$	2,466,660
Liabilities and shareholders' equity:
Interest bearing liabilities:
NOW	$	95,494		$	81		0.17	%		$	124,361		$	106		0.17	%
Money market		905,021			14,468		3.22	%			950,131			2,326		0.49	%
Savings		124,387			1,586		2.57	%			196,400			204		0.21	%
Time		1,275,417			21,675		3.43	%			452,676			1,553		0.69	%
Total interest bearing deposits		2,400,319			37,810		3.18	%			1,723,568			4,189		0.49	%
Borrowed Money		162,215			3,454		4.24	%			84,770			1,144		2.68	%
Total interest bearing liabilities		2,562,534		$	41,264		3.25	%			1,808,338		$	5,333		0.59	%
Noninterest bearing deposits		389,608									406,707
Other liabilities		45,494									38,683
Total liabilities		2,997,636									2,253,728
Shareholders' equity		244,463									212,932
Total liabilities and shareholders' equity	$	3,242,099								$	2,466,660
Net interest income(2)				$	49,636								$	43,431
Interest rate spread							2.49	%								3.49	%
Net interest margin(3)							3.15	%								3.65	%

(1)		Average balances and yields for securities are based on amortized cost.
(2)		The adjustment for securities and loans taxable equivalency amounted to $102 thousand and $98 thousand for the six months ended June 30, 2023 and 2022, respectively.
(3)		Annualized net interest income as a percentage of earning assets.
(4)		Yields are calculated using the contractual day count convention for each respective product type.

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20230726212892/en/

Courtney E. Sacchetti

(203) 652-0166

Source: Bankwell Financial Group, Inc

FAQ

What was Bankwell Financial Group's net income for the second quarter of 2023?

Bankwell Financial Group reported a net income of $8.0 million for the second quarter of 2023.

What is the dividend declared by the company?

The company declared a cash dividend of $0.20 per share.

When will the dividend be payable?

The dividend will be payable on August 24, 2023.

Who is eligible for the dividend?

Shareholders of record on August 14, 2023 are eligible for the dividend.