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

Bankwell Financial Group, Inc. (NASDAQ: BWFG) reported GAAP net income of $9.8 million, or $1.25 per share for the third quarter of 2023, versus $9.2 million, or $1.18 per share, for the same period in 2022.

The Company's Board of Directors declared a $0.20 per share cash dividend, payable November 20, 2023 to shareholders of record on November 10, 2023.

We recommend reading this earnings release in conjunction with the Third Quarter 2023 Investor Presentation, located at http://investor.mybankwell.com/Presentations and included as an exhibit to our October 25, 2023 Current Report on Form 8-K.

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

"We continue to generate quality returns for our shareholders in a complex interest rate environment. Despite the compression of our Net Interest Margin during the current tightening cycle, our team has delivered a 1.16% Return on Average Assets and a 15.16% Return on Average Equity thus far this year. Our commitment to rigorous expense management lays a solid foundation for our financial success. Non-Interest Expense as a percentage Average Assets stands at 1.54% year-to date, putting Bankwell well ahead of industry peers on this key metric. I applaud the efforts and hard work of our team who enable the Company to perform at this level of efficiency."

Third Quarter 2023 Highlights:

  • Total gross loans were $2.8 billion, growing $94.7 million, or 3.5%, compared to December 31, 2022.
  • Deposits were $2.8 billion, decreasing $32.2 million, or 1.1%, compared to December 31, 2022.
  • Brokered deposits decreased $75.3 million, when compared to December 31, 2022.
  • FDIC-insured deposits totaled $2.0 billion and represent 71.2% of total deposits as of September 30, 2023.
  • As of September 30, 2023, the Bank has $1.7 billion immediately available liquidity, more than two times coverage of uninsured deposits.
  • Average yield on 2023 funded loans was 7.23% as of September 30, 2023.
  • Return on average assets was 1.19% for the quarter ended September 30, 2023.
  • Return on average shareholders' equity was 15.19% for the quarter ended September 30, 2023.
  • The net interest margin was 2.85% for the quarter ended September 30, 2023.
  • Noninterest expense to average assets was 1.48% for the quarter ended September 30, 2023.
  • Investment securities totaled $115.8 million and represent 3.6% of total assets, with HTM securities totaling $15.9 million, or 0.5% of total assets.
  • Allowance for credit losses (ACL)-Loans to total loans was 1.06% as of September 30, 2023.

Earnings and Performance

Revenues (net interest income plus noninterest income) for the quarter ended September 30, 2023 were $23.5 million, versus $25.0 million for the quarter ended September 30, 2022. Revenues for the nine months ended September 30, 2023 were $75.9 million, versus $70.4 million for the nine months ended September 30, 2022. The decrease in revenues for the quarter was primarily attributable to an increase in interest expense partially offset by an increase in interest on loans due to higher overall loan yields1. The increase in revenues for the nine months ended 2023 was primarily attributable to an increase in interest and fees on loans due to loan growth and higher overall loan yields1 partially offset by an increase in interest expense.

1 - The increase in overall loan yields was 100 bps and 114 bps for the quarter and nine months ended September 30, 2023, respectively.

Net income for the quarter ended September 30, 2023 was $9.8 million, versus $9.2 million for the quarter ended September 30, 2022. Net income for the nine months ended September 30, 2023 was $28.1 million, versus $29.4 million for the nine months ended September 30, 2022. The increase in net income for the quarter ended 2023 was primarily due to the credit for credit losses, partially offset by an increase in noninterest expense, and the aforementioned decrease in revenues. The decrease in net income for nine months ended 2023 was due to an increase in noninterest expense partially offset by the aforementioned increase in revenues.

Basic and diluted earnings per share were $1.25 and $1.25, respectively, for the quarter ended September 30, 2023 compared to basic and diluted earnings per share of $1.19 and $1.18, respectively, for the quarter ended September 30, 2022. Basic and diluted earnings per share were $3.61 and $3.58, respectively, for the nine months ended September 30, 2023 compared to basic and diluted earnings per share of $3.80 and $3.75, respectively, for the nine months ended September 30, 2022.

The net interest margin (fully taxable equivalent basis) for the quarters ended September 30, 2023 and September 30, 2022 was 2.85% and 4.12%, respectively. The net interest margin (fully taxable equivalent basis) for the nine months ended September 30, 2023 and September 30, 2022 was 3.04% and 3.81%, respectively. The decrease in the net interest margin was due to an increase in funding costs partially offset by an increase in earning assets.

ACL-Loans

The ACL-Loans was $29.3 million as of September 30, 2023 compared to $30.7 million as of June 30, 2023, for a release of $1.4 million for the quarter ended September 30, 2023. The ACL-Loans as a percentage of total loans was 1.06% as of September 30, 2023 compared to 1.11% as of June 30, 2023. The reduction for the quarter was primarily due to a revision in the CECL methodology given further refinement of the Company's loan portfolio segmentation.

The ACL-Loans was $29.3 million as of September 30, 2023 compared to $22.4 million as of December 31, 2022, an increase of $6.9 million year to date, of which $5.1 million being the CECL transition adjustment to retained earnings. The ACL-Loans as a percentage of total loans was 1.06% as of September 30, 2023 compared to 0.84% as of December 31, 2022. The increase in the ACL-Loans provision for credit losses was primarily driven by loan growth and forward looking CECL macroeconomic factors.

Financial Condition

Assets totaled $3.2 billion at September 30, 2023, a decrease of $2.7 million or 0.1% compared to December 31, 2022. Gross loans totaled $2.8 billion at September 30, 2023, an increase of $94.7 million, or 3.5% compared to December 31, 2022. Deposits totaled $2.8 billion at September 30, 2023, a decrease of $32.2 million, or 1.1% compared to December 31, 2022.

Capital

Shareholders’ equity totaled $257.9 million as of September 30, 2023, an increase of $19.4 million compared to December 31, 2022, primarily a result of net income of $28.1 million for the nine months ended September 30, 2023. The increase was partially offset by the Day 1 CECL adoption of $4.9 million, dividends paid of $4.7 million, and a $1.3 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 $1.4 million partially offset by fair value marks related to hedge positions involving interest rate swaps of $0.1 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)

 

 

September 30,

2023

 

June 30,

2023

 

March 31,

2023

 

December 31,

2022

 

September 30,

2022

ASSETS

 

 

 

 

 

 

 

 

 

Cash and due from banks

$

256,973

 

 

$

207,345

 

 

$

249,812

 

 

$

344,925

 

 

$

212,175

 

Federal funds sold

 

1,122

 

 

 

54,706

 

 

 

27,370

 

 

 

10,754

 

 

 

10,947

 

Cash and cash equivalents

 

258,095

 

 

 

262,051

 

 

 

277,182

 

 

 

355,679

 

 

 

223,122

 

 

 

 

 

 

 

 

 

 

 

Investment securities

 

 

 

 

 

 

 

 

 

Marketable equity securities, at fair value

 

1,975

 

 

 

2,017

 

 

 

2,028

 

 

 

1,988

 

 

 

1,973

 

Available for sale investment securities, at fair value

 

97,907

 

 

 

99,938

 

 

 

103,171

 

 

 

103,663

 

 

 

95,095

 

Held to maturity investment securities, at amortized cost

 

15,885

 

 

 

15,884

 

 

 

15,931

 

 

 

15,983

 

 

 

16,027

 

Total investment securities

 

115,767

 

 

 

117,839

 

 

 

121,130

 

 

 

121,634

 

 

 

113,095

 

Loans receivable (net of ACL-Loans of $29,284, $30,694, $27,998, $22,431, and $18,167 at September 30, 2023, June 30, 2023, March 31, 2023, December 31, 2022, and September 30, 2022, respectively)

 

2,735,242

 

 

 

2,736,607

 

 

 

2,724,514

 

 

 

2,646,384

 

 

 

2,263,432

 

Accrued interest receivable

 

15,648

 

 

 

14,208

 

 

 

14,261

 

 

 

13,070

 

 

 

9,552

 

Federal Home Loan Bank stock, at cost

 

5,696

 

 

 

5,696

 

 

 

5,234

 

 

 

5,216

 

 

 

5,039

 

Premises and equipment, net

 

26,899

 

 

 

27,658

 

 

 

27,619

 

 

 

27,199

 

 

 

27,510

 

Bank-owned life insurance

 

51,119

 

 

 

50,816

 

 

 

50,524

 

 

 

50,243

 

 

 

49,970

 

Goodwill

 

2,589

 

 

 

2,589

 

 

 

2,589

 

 

 

2,589

 

 

 

2,589

 

Deferred income taxes, net

 

9,395

 

 

 

10,014

 

 

 

8,692

 

 

 

7,422

 

 

 

5,952

 

Other assets

 

29,326

 

 

 

25,229

 

 

 

20,573

 

 

 

23,013

 

 

 

22,734

 

Total assets

$

3,249,776

 

 

$

3,252,707

 

 

$

3,252,318

 

 

$

3,252,449

 

 

$

2,722,995

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

 

 

 

Deposits

 

 

 

 

 

 

 

 

 

Noninterest bearing deposits

$

345,433

 

 

$

367,635

 

 

$

377,667

 

 

$

404,559

 

 

$

380,365

 

Interest bearing deposits

 

2,423,193

 

 

 

2,421,228

 

 

 

2,420,641

 

 

 

2,396,259

 

 

 

1,906,337

 

Total deposits

 

2,768,626

 

 

 

2,788,863

 

 

 

2,798,308

 

 

 

2,800,818

 

 

 

2,286,702

 

 

 

 

 

 

 

 

 

 

 

Advances from the Federal Home Loan Bank

 

90,000

 

 

 

90,000

 

 

 

90,000

 

 

 

90,000

 

 

 

90,000

 

Subordinated debentures

 

69,143

 

 

 

69,082

 

 

 

69,020

 

 

 

68,959

 

 

 

68,897

 

Accrued expenses and other liabilities

 

64,145

 

 

 

55,949

 

 

 

52,683

 

 

 

54,203

 

 

 

45,896

 

Total liabilities

 

2,991,914

 

 

 

3,003,894

 

 

 

3,010,011

 

 

 

3,013,980

 

 

 

2,491,495

 

 

 

 

 

 

 

 

 

 

 

Shareholders’ equity

 

 

 

 

 

 

 

 

 

Common stock, no par value

 

117,181

 

 

 

116,541

 

 

 

115,875

 

 

 

115,018

 

 

 

114,548

 

Retained earnings

 

142,205

 

 

 

133,988

 

 

 

127,566

 

 

 

123,640

 

 

 

117,152

 

Accumulated other comprehensive (loss)

 

(1,524

)

 

 

(1,716

)

 

 

(1,134

)

 

 

(189

)

 

 

(200

)

Total shareholders’ equity

 

257,862

 

 

 

248,813

 

 

 

242,307

 

 

 

238,469

 

 

 

231,500

 

 

 

 

 

 

 

 

 

 

 

Total liabilities and shareholders’ equity

$

3,249,776

 

 

$

3,252,707

 

 

$

3,252,318

 

 

$

3,252,449

 

 

$

2,722,995

 

 

BANKWELL FINANCIAL GROUP, INC.

CONSOLIDATED STATEMENTS OF INCOME (unaudited)

(Dollars in thousands, except share data)

 
 

 

For the Quarter Ended

For the Nine Months Ended

 

September 30,

2023

 

June 30,

2023

 

March 31,

2023

 

December 31,

2022

 

September 30,

2022

 

September 30,

2023

 

September 30,

2022

Interest and dividend income

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest and fees on loans

$

43,854

 

 

$

42,482

 

$

39,723

 

$

36,545

 

 

$

28,128

 

 

$

126,059

 

$

74,697

 

Interest and dividends on securities

 

1,016

 

 

 

1,002

 

 

1,000

 

 

898

 

 

 

811

 

 

 

3,018

 

 

2,305

 

Interest on cash and cash equivalents

 

3,393

 

 

 

3,022

 

 

3,568

 

 

2,150

 

 

 

747

 

 

 

9,983

 

 

1,350

 

Total interest and dividend income

 

48,263

 

 

 

46,506

 

 

44,291

 

 

39,593

 

 

 

29,686

 

 

 

139,060

 

 

78,352

 

Interest expense

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense on deposits

 

23,789

 

 

 

20,777

 

 

17,033

 

 

11,083

 

 

 

4,092

 

 

 

61,599

 

 

8,281

 

Interest expense on borrowings

 

1,783

 

 

 

1,738

 

 

1,717

 

 

1,701

 

 

 

993

 

 

 

5,238

 

 

2,137

 

Total interest expense

 

25,572

 

 

 

22,515

 

 

18,750

 

 

12,784

 

 

 

5,085

 

 

 

66,837

 

 

10,418

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income

 

22,691

 

 

 

23,991

 

 

25,541

 

 

26,809

 

 

 

24,601

 

 

 

72,223

 

 

67,934

 

(Credit) provision for credit losses

 

(1,579

)

 

 

2,579

 

 

826

 

 

4,272

 

 

 

2,381

 

 

 

1,826

 

 

1,165

 

Net interest income after provision for credit losses

 

24,270

 

 

 

21,412

 

 

24,715

 

 

22,537

 

 

 

22,220

 

 

 

70,397

 

 

66,769

 

Noninterest income

 

 

 

 

 

 

 

 

 

 

 

 

 

Bank owned life insurance

 

303

 

 

 

292

 

 

281

 

 

273

 

 

 

271

 

 

 

876

 

 

796

 

Service charges and fees

 

294

 

 

 

361

 

 

286

 

 

343

 

 

 

240

 

 

 

941

 

 

729

 

Gains and fees from sales of loans

 

237

 

 

 

725

 

 

931

 

 

12

 

 

 

(15

)

 

 

1,893

 

 

1,224

 

Other

 

(48

)

 

 

23

 

 

28

 

 

(100

)

 

 

(94

)

 

 

3

 

 

(237

)

Total noninterest income

 

786

 

 

 

1,401

 

 

1,526

 

 

528

 

 

 

402

 

 

 

3,713

 

 

2,512

 

Noninterest expense

 

 

 

 

 

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

6,036

 

 

 

6,390

 

 

6,081

 

 

5,988

 

 

 

5,876

 

 

 

18,507

 

 

16,249

 

Occupancy and equipment

 

2,146

 

 

 

2,204

 

 

2,084

 

 

1,919

 

 

 

2,035

 

 

 

6,434

 

 

6,378

 

Professional services

 

491

 

 

 

692

 

 

1,322

 

 

912

 

 

 

994

 

 

 

2,505

 

 

2,975

 

Data processing

 

741

 

 

 

729

 

 

671

 

 

663

 

 

 

626

 

 

 

2,141

 

 

1,969

 

Director fees

 

362

 

 

 

453

 

 

392

 

 

378

 

 

 

325

 

 

 

1,207

 

 

1,016

 

FDIC insurance

 

1,026

 

 

 

1,050

 

 

1,062

 

 

898

 

 

 

255

 

 

 

3,138

 

 

740

 

Marketing

 

184

 

 

 

177

 

 

151

 

 

112

 

 

 

102

 

 

 

512

 

 

254

 

Other

 

1,219

 

 

 

946

 

 

928

 

 

1,601

 

 

 

818

 

 

 

3,093

 

 

2,311

 

Total noninterest expense

 

12,205

 

 

 

12,641

 

 

12,691

 

 

12,471

 

 

 

11,031

 

 

 

37,537

 

 

31,892

 

Income before income tax expense

 

12,851

 

 

 

10,172

 

 

13,550

 

 

10,594

 

 

 

11,591

 

 

 

36,573

 

 

37,389

 

Income tax expense

 

3,074

 

 

 

2,189

 

 

3,171

 

 

2,573

 

 

 

2,417

 

 

 

8,434

 

 

7,981

 

Net income

$

9,777

 

 

$

7,983

 

$

10,379

 

$

8,021

 

 

$

9,174

 

 

$

28,139

 

$

29,408

 

Earnings Per Common Share:

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

$

1.25

 

 

$

1.02

 

$

1.34

 

$

1.04

 

 

$

1.19

 

 

$

3.61

 

$

3.80

 

Diluted

$

1.25

 

 

$

1.02

 

$

1.33

 

$

1.04

 

 

$

1.18

 

 

$

3.58

 

$

3.75

 

Weighted Average Common Shares Outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

7,598,230

 

 

 

7,593,417

 

 

7,554,689

 

 

7,507,540

 

 

 

7,553,718

 

 

 

7,582,272

 

 

7,582,175

 

Diluted

 

7,633,934

 

 

 

7,601,562

 

 

7,616,671

 

 

7,563,116

 

 

 

7,612,421

 

 

 

7,646,837

 

 

7,664,123

 

Dividends per common share

$

0.20

 

 

$

0.20

 

$

0.20

 

$

0.20

 

 

$

0.20

 

 

$

0.60

 

$

0.60

 

 

BANKWELL FINANCIAL GROUP, INC.

CONSOLIDATED FINANCIAL HIGHLIGHTS (unaudited)

 

 

For the Quarter Ended

 

For the Nine Months Ended

 

September 30,

2023

 

June 30,

2023

 

March 31,

2023

 

December 31,

2022

 

September 30,

2022

 

September 30,

2023

 

September 30,

2022

Performance ratios:

 

 

 

 

 

 

 

 

 

 

 

 

 

Return on average assets

1.19

%

 

0.99

%

 

1.30

%

 

1.07

%

 

1.47

%

 

1.16

%

 

1.59

%

Return on average shareholders' equity

15.19

%

 

12.91

%

 

17.48

%

 

13.38

%

 

15.73

%

 

15.16

%

 

17.94

%

Return on average tangible common equity

15.35

%

 

13.05

%

 

17.67

%

 

13.52

%

 

15.91

%

 

15.32

%

 

18.16

%

Net interest margin

2.85

%

 

3.07

%

 

3.24

%

 

3.70

%

 

4.12

%

 

3.04

%

 

3.81

%

Efficiency ratio(1)

52.0

%

 

49.8

%

 

46.9

%

 

45.6

%

 

44.1

%

 

49.4

%

 

45.3

%

Net loan charge-offs as a % of average loans

%

 

%

 

0.02

%

 

%

 

%

 

0.01

%

 

%

Dividend payout ratio(2)

16.00

%

 

19.61

%

 

15.04

%

 

19.23

%

 

16.95

%

 

16.76

%

 

16.00

%

(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

 

September 30,

2023

 

June 30,

2023

 

March 31,

2023

 

December 31,

2022

 

September 30,

2022

Capital ratios:

 

 

 

 

 

 

 

 

 

Total Common Equity Tier 1 Capital to Risk-Weighted Assets(1)

 

10.82

%

 

 

10.34

%

 

 

10.17

%

 

 

10.28

%

 

 

11.42

%

Total Capital to Risk-Weighted Assets(1)

 

11.86

%

 

 

11.41

%

 

 

11.16

%

 

 

11.07

%

 

 

12.16

%

Tier I Capital to Risk-Weighted Assets(1)

 

10.82

%

 

 

10.34

%

 

 

10.17

%

 

 

10.28

%

 

 

11.42

%

Tier I Capital to Average Assets(1)

 

9.60

%

 

 

9.41

%

 

 

9.22

%

 

 

9.88

%

 

 

11.31

%

Tangible common equity to tangible assets

 

7.86

%

 

 

7.58

%

 

 

7.38

%

 

 

7.26

%

 

 

8.41

%

Fully diluted tangible book value per common share

$

32.55

 

 

$

31.45

 

 

$

30.56

 

 

$

30.51

 

 

$

29.68

 

(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

 

September 30,

2023

 

June 30,

2023

 

March 31,

2023

 

December 31,

2022

 

September 30,

2022

ACL-Loans:

 

 

 

 

 

 

 

 

 

Balance at beginning of period

$

30,694

 

 

$

27,998

 

 

$

22,431

 

 

$

18,167

 

 

$

15,773

 

Day 1 CECL Adjustment on January 1, 2023

 

 

 

 

 

 

 

5,079

 

 

 

 

 

 

 

Beginning balance January 1, 2023

 

30,694

 

 

 

27,998

 

 

 

27,510

 

 

 

18,167

 

 

 

 

Charge-offs:

 

 

 

 

 

 

 

 

 

Commercial business

 

 

 

 

 

 

 

(440

)

 

 

 

 

 

 

Consumer

 

(31

)

 

 

(25

)

 

 

(12

)

 

 

(11

)

 

 

(8

)

Total charge-offs

 

(31

)

 

 

(25

)

 

 

(452

)

 

 

(11

)

 

 

(8

)

Recoveries:

 

 

 

 

 

 

 

 

 

Commercial real estate

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial business

 

35

 

 

 

32

 

 

 

 

 

 

 

 

 

21

 

Consumer

 

19

 

 

 

10

 

 

 

6

 

 

 

3

 

 

 

 

Total recoveries

 

54

 

 

 

42

 

 

 

6

 

 

 

3

 

 

 

21

 

Net loan recoveries (charge-offs)

 

23

 

 

 

17

 

 

 

(446

)

 

 

(8

)

 

 

13

 

(Credit) provision for credit losses - loans

 

(1,433

)

 

 

2,679

 

 

 

934

 

 

 

4,272

 

 

 

2,381

 

Balance at end of period

$

29,284

 

 

$

30,694

 

 

$

27,998

 

 

$

22,431

 

 

$

18,167

 

 

As of

 

September 30,

2023

 

June 30,

2023

 

March 31,

2023

 

December 31,

2022

 

September 30,

2022

Asset quality:

 

 

 

 

 

 

 

 

 

Nonaccrual loans

 

 

 

 

 

 

 

 

 

Residential real estate

$

1,408

 

 

$

1,429

 

 

$

1,443

 

 

$

2,152

 

 

$

2,137

 

Commercial real estate

 

1,898

 

 

 

1,905

 

 

 

1,912

 

 

 

2,781

 

 

 

2,894

 

Commercial business

 

7,352

 

 

 

2,815

 

 

 

1,528

 

 

 

2,126

 

 

 

2,380

 

Construction

 

9,382

 

 

 

9,382

 

 

 

9,382

 

 

 

9,382

 

 

 

9,382

 

Consumer

 

7,917

 

 

 

 

 

 

 

 

 

 

 

 

 

Total nonaccrual loans

 

27,957

 

 

 

15,531

 

 

 

14,265

 

 

 

16,441

 

 

 

16,793

 

Other real estate owned

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total nonperforming assets

$

27,957

 

 

$

15,531

 

 

$

14,265

 

 

$

16,441

 

 

$

16,793

 

 

 

 

 

 

 

 

 

 

 

Nonperforming loans as a % of total loans

 

1.01

%

 

 

0.56

%

 

 

0.52

%

 

 

0.61

%

 

 

0.73

%

Nonperforming assets as a % of total assets

 

0.86

%

 

 

0.48

%

 

 

0.44

%

 

 

0.51

%

 

 

0.62

%

ACL-loans as a % of total loans

 

1.06

%

 

 

1.11

%

 

 

1.01

%

 

 

0.84

%

 

 

0.79

%

ACL-loans as a % of nonperforming loans

 

104.75

%

 

 

197.63

%

 

 

196.27

%

 

 

136.43

%

 

 

108.18

%

Total past due loans to total loans

 

1.44

%

 

 

1.30

%

 

 

0.94

%

 

 

0.60

%

 

 

0.78

%

Total nonaccrual loans increased $11.5 million to $28.0 million as of September 30, 2023 when compared to December 31, 2022. Nonaccrual loans increased primarily due to three distinct loans:

  • One Consumer (insurance premium) loan of $7.9 million. As of October 4, 2023, the loan balance has been reduced to $3.9 million. The Bank holds collateral for the remaining balance, worth approximately two times the outstanding amount.
  • Two Commercial business loans totaling $5.5 million, of which approximately 82% is guaranteed by the U.S. Government (SBA).

Nonperforming assets as a percentage of total assets increased to 0.86% at September 30, 2023 from 0.51% at December 31, 2022. The ACL-Loans at September 30, 2023 was $29.3 million, representing 1.06% of total loans.

 

BANKWELL FINANCIAL GROUP, INC.

LOAN & DEPOSIT PORTFOLIO (unaudited)

(Dollars in thousands)

 

Period End Loan Composition

September 30,

2023

 

June 30,

2023

 

December 31,

2022

 

 

Current QTD

% Change

 

YTD

% Change

Residential Real Estate

$

52,908

 

$

54,631

 

$

60,588

 

(3.2

)%

 

(12.7

)%

Commercial Real Estate(1)

 

1,955,992

 

 

1,930,972

 

 

1,921,252

 

1.3

 

 

1.8

 

Construction

 

199,972

 

 

219,615

 

 

155,198

 

(8.9

)

 

28.8

 

Total Real Estate Loans

 

2,208,872

 

 

2,205,218

 

 

2,137,038

 

0.2

 

 

3.4

 

Commercial Business

 

508,626

 

 

530,913

 

 

520,447

 

(4.2

)

 

(2.3

)

Consumer

 

52,612

 

 

37,475

 

 

17,963

 

40.4

 

 

192.9

 

Total Loans

$

2,770,110

 

$

2,773,606

 

$

2,675,448

 

(0.1

)%

 

3.5

%

(1) Includes owner occupied commercial real estate.

Gross loans totaled $2.8 billion at September 30, 2023, an increase of $94.7 million or 3.5% compared to December 31, 2022.

Period End Deposit Composition

September 30,

2023

 

June 30,

2023

 

December 31,

2022

 

 

Current QTD

% Change

 

YTD

% Change

Noninterest bearing demand

$

345,433

 

$

367,635

 

$

404,559

 

(6.0

)%

 

(14.6

)%

NOW

 

101,719

 

 

106,189

 

 

104,057

 

(4.2

)

 

(2.2

)

Money Market

 

879,978

 

 

879,017

 

 

913,868

 

0.1

 

 

(3.7

)

Savings

 

102,207

 

 

108,625

 

 

151,944

 

(5.9

)

 

(32.7

)

Time

 

1,339,289

 

 

1,327,397

 

 

1,226,390

 

0.9

 

 

9.2

 

Total Deposits

$

2,768,626

 

$

2,788,863

 

$

2,800,818

 

(0.7

)%

 

(1.1

)%

Total deposits were $2.8 billion at September 30, 2023, a decrease of $32.2 million, or 1.1%, when compared to December 31, 2022. Brokered deposits have decreased $75.3 million, when compared to December 31, 2022.

 

BANKWELL FINANCIAL GROUP, INC.

NONINTEREST EXPENSE (unaudited)

(Dollars in thousands)

 

 

For the Quarter Ended

 

 

 

 

Noninterest expense

September 30,

2023

 

June 30,

2023

 

September 30,

2022

 

Sep 23 vs. June 23

% Change

 

Sep 23 vs. Sep 22

% Change

Salaries and employee benefits

$

6,036

 

$

6,390

 

$

5,876

 

(5.5

)%

 

2.7

%

Occupancy and equipment

 

2,146

 

 

2,204

 

 

2,035

 

(2.6

)

 

5.5

 

Professional services

 

491

 

 

692

 

 

994

 

(29.0

)

 

(50.6

)

Data processing

 

741

 

 

729

 

 

626

 

1.6

 

 

18.4

 

Director fees

 

362

 

 

453

 

 

325

 

(20.1

)

 

11.4

 

FDIC insurance

 

1,026

 

 

1,050

 

 

255

 

(2.3

)

 

302.4

 

Marketing

 

184

 

 

177

 

 

102

 

4.0

 

 

80.4

 

Other

 

1,219

 

 

946

 

 

818

 

28.9

 

 

49.0

 

Total noninterest expense

$

12,205

 

$

12,641

 

$

11,031

 

(3.4

)%

 

10.6

%

 

For the Nine Months Ended

 

 

Noninterest expense

September 30, 2023

 

September 30, 2022

 

% Change

Salaries and employee benefits

$

18,507

 

$

16,249

 

13.9

%

Occupancy and equipment

 

6,434

 

 

6,378

 

0.9

%

Professional services

 

2,505

 

 

2,975

 

(15.8

)%

Data processing

 

2,141

 

 

1,969

 

8.7

%

Director fees

 

1,207

 

 

1,016

 

18.8

%

FDIC insurance

 

3,138

 

 

740

 

324.1

%

Marketing

 

512

 

 

254

 

101.6

%

Other

 

3,093

 

 

2,311

 

33.8

%

Total noninterest expense

$

37,537

 

$

31,892

 

17.7

%

Noninterest expense increased by $1.2 million to $12.2 million for the quarter ended September 30, 2023 compared to the quarter ended September 30, 2022. Noninterest expense increased by $5.6 million to $37.5 million for the nine months ended September 30, 2023 compared to the nine months ended September 30, 2022. The increase in noninterest expense was primarily driven by an increase in FDIC insurance expense and salaries and employee benefits expense.

FDIC insurance expense totaled $1.0 million for the quarter ended September 30, 2023, an increase of $0.8 million when compared to the same period in 2022. FDIC insurance expense totaled $3.1 million for the nine months ended September 30, 2023, an increase of $2.4 million when compared to the same period in 2022. The increase in FDIC insurance expense is attributed to balance sheet growth and composition, as well as an increase in FDIC insurance rates.

Salaries and employee benefits expense totaled $18.5 million for the nine months ended September 30, 2023, an increase of $2.3 million when compared to the same period in 2022. The increase in salaries and employee benefits expense was driven by an increase in average full time equivalent employees from 139 at September 30, 2023 compared to 131 for the same period in 2022. In addition, salaries and employee benefits expense increased due to one-time severance costs.

 

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

September 30,

2023

 

June 30,

2023

 

March 31,

2023

 

December 31,

2022

 

September 30,

2022

Total Equity

$

257,862

 

 

$

248,813

 

 

$

242,307

 

 

$

238,469

 

 

$

231,500

 

Less:

 

 

 

 

 

 

 

 

 

Goodwill

 

2,589

 

 

 

2,589

 

 

 

2,589

 

 

 

2,589

 

 

 

2,589

 

Other intangibles

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Tangible Common Equity

$

255,273

 

 

$

246,224

 

 

$

239,718

 

 

$

235,880

 

 

$

228,911

 

 

 

 

 

 

 

 

 

 

 

Total Assets

$

3,249,776

 

 

$

3,252,707

 

 

$

3,252,318

 

 

$

3,252,449

 

 

$

2,722,995

 

Less:

 

 

 

 

 

 

 

 

 

Goodwill

 

2,589

 

 

 

2,589

 

 

 

2,589

 

 

 

2,589

 

 

 

2,589

 

Other intangibles

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Tangible Assets

$

3,247,187

 

 

$

3,250,118

 

 

$

3,249,729

 

 

$

3,249,860

 

 

$

2,720,406

 

 

 

 

 

 

 

 

 

 

 

Tangible Common Equity to Tangible Assets

 

7.86

%

 

 

7.58

%

 

 

7.38

%

 

 

7.26

%

 

 

8.41

%

 

As of

Computation of Fully Diluted Tangible Book Value per Common Share

September 30,

2023

 

June 30,

2023

 

March 31,

2023

 

December 31,

2022

 

September 30,

2022

Total shareholders' equity

$

257,862

 

$

248,813

 

$

242,307

 

$

238,469

 

$

231,500

Less:

 

 

 

 

 

 

 

 

 

Preferred stock

 

 

 

 

 

 

 

 

 

Common shareholders' equity

$

257,862

 

$

248,813

 

$

242,307

 

$

238,469

 

$

231,500

Less:

 

 

 

 

 

 

 

 

 

Goodwill

 

2,589

 

 

2,589

 

 

2,589

 

 

2,589

 

 

2,589

Other intangibles

 

 

 

 

 

 

 

 

 

Tangible common shareholders' equity

$

255,273

 

$

246,224

 

$

239,718

 

$

235,880

 

$

228,911

 

 

 

 

 

 

 

 

 

 

Common shares issued and outstanding

 

7,841,616

 

 

7,829,950

 

 

7,843,438

 

 

7,730,699

 

 

7,711,843

 

 

 

 

 

 

 

 

 

 

Fully Diluted Tangible Book Value per Common Share

$

32.55

 

$

31.45

 

$

30.56

 

$

30.51

 

$

29.68

 

BANKWELL FINANCIAL GROUP, INC.

EARNINGS PER SHARE ("EPS") (unaudited)

(Dollars in thousands, except share data)

 

 

Three Months Ended

September 30,

 

Nine Months Ended

September 30,

 

 

2023

 

 

 

2022

 

 

 

2023

 

 

 

2022

 

 

(In thousands, except per share data)

Net income

$

9,777

 

 

$

9,174

 

 

$

28,140

 

 

$

29,408

 

Dividends to participating securities(1)

 

(41

)

 

 

(33

)

 

 

(125

)

 

 

(101

)

Undistributed earnings allocated to participating securities(1)

 

(209

)

 

 

(159

)

 

 

(613

)

 

 

(529

)

Net income for earnings per share calculation

$

9,527

 

 

$

8,982

 

 

$

27,402

 

 

$

28,778

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding, basic

 

7,598

 

 

 

7,554

 

 

 

7,582

 

 

 

7,582

 

Effect of dilutive equity-based awards(2)

 

36

 

 

 

58

 

 

 

65

 

 

 

82

 

Weighted average shares outstanding, diluted

 

7,634

 

 

 

7,612

 

 

 

7,647

 

 

 

7,664

 

Net earnings per common share:

 

 

 

 

 

 

 

Basic earnings per common share

$

1.25

 

 

$

1.19

 

 

$

3.61

 

 

$

3.80

 

Diluted earnings per common share

$

1.25

 

 

$

1.18

 

 

$

3.58

 

 

$

3.75

 

(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.

NONINTEREST INCOME (unaudited)

(Dollars in thousands)

 

 

For the Quarter Ended

 

 

 

 

Noninterest income

September 30,

2023

 

June 30,

2023

 

September 30,

2022

 

Sep 23 vs. June 23

% Change

 

Sep 23 vs. Sep 22

% Change

Bank owned life insurance

$

303

 

 

$

292

 

$

271

 

 

3.8

%

 

11.8

%

Service charges and fees

 

294

 

 

 

361

 

 

240

 

 

(18.6

)

 

22.5

 

Gains and fees from sales of loans

 

237

 

 

 

725

 

 

(15

)

 

(67.3

)

 

Favorable

Other

 

(48

)

 

 

23

 

 

(94

)

 

Unfavorable

 

Favorable

Total noninterest income

$

786

 

 

$

1,401

 

$

402

 

 

(43.9

)%

 

95.5

%

 

For the Nine Months Ended

 

 

Noninterest income

September 30, 2023

 

September 30, 2022

 

% Change

Bank owned life insurance

$

876

 

$

796

 

 

10.1

%

Service charges and fees

 

941

 

 

729

 

 

29.1

 

Gains and fees from sales of loans

 

1,893

 

 

1,224

 

 

54.7

 

Other

 

3

 

 

(237

)

 

Favorable

Total noninterest income

$

3,713

 

$

2,512

 

 

47.8

%

Noninterest income increased by $0.4 million to $0.8 million for the quarter ended September 30, 2023 compared to the quarter ended September 30, 2022. Noninterest income increased by $1.2 million to $3.7 million for the nine months ended September 30, 2023 compared to the nine months ended September 30, 2022. The increase in noninterest income was driven by an increase in gains on SBA loan sales and service charges and fees for the quarter and nine months ended 2023.

 

BANKWELL FINANCIAL GROUP, INC.

NET INTEREST MARGIN ANALYSIS ON A FULLY TAX EQUIVALENT BASIS - QTD (unaudited)

(Dollars in thousands)

 

 

For the Quarter Ended

 

September 30, 2023

 

September 30, 2022

 

Average

Balance

 

Interest

 

Yield/

Rate (4)

 

Average

Balance

 

Interest

 

Yield/

Rate (4)

Assets:

 

 

 

 

 

 

 

 

 

 

 

Cash and Fed funds sold

$

265,115

 

$

3,393

 

5.08

%

 

$

130,440

 

$

747

 

2.27

%

Securities(1)

 

127,229

 

 

953

 

3.00

 

 

 

120,092

 

 

829

 

2.76

 

Loans:

 

 

 

 

 

 

 

 

 

 

 

Commercial real estate

 

1,943,725

 

 

28,140

 

5.67

 

 

 

1,512,381

 

 

18,830

 

4.87

 

Residential real estate

 

53,966

 

 

671

 

4.97

 

 

 

62,915

 

 

586

 

3.72

 

Construction

 

209,154

 

 

3,908

 

7.31

 

 

 

116,256

 

 

1,512

 

5.09

 

Commercial business

 

539,185

 

 

10,394

 

7.54

 

 

 

431,917

 

 

7,058

 

6.39

 

Consumer

 

44,020

 

 

740

 

6.66

 

 

 

12,145

 

 

142

 

4.65

 

Total loans

 

2,790,050

 

 

43,853

 

6.15

 

 

 

2,135,614

 

 

28,128

 

5.15

 

Federal Home Loan Bank stock

 

5,696

 

 

116

 

8.13

 

 

 

5,021

 

 

31

 

2.51

 

Total earning assets

 

3,188,090

 

$

48,315

 

5.93

%

 

 

2,391,167

 

$

29,735

 

4.87

%

Other assets

 

78,089

 

 

 

 

 

 

89,173

 

 

 

 

Total assets

$

3,266,179

 

 

 

 

 

$

2,480,340

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities and shareholders' equity:

 

 

 

 

 

 

 

 

 

 

 

Interest bearing liabilities:

 

 

 

 

 

 

 

 

 

 

 

NOW

$

102,149

 

$

47

 

0.18

%

 

$

119,593

 

$

52

 

0.17

%

Money market

 

922,036

 

 

9,064

 

3.90

 

 

 

828,541

 

 

2,346

 

1.12

 

Savings

 

105,366

 

 

817

 

3.08

 

 

 

189,279

 

 

474

 

0.99

 

Time

 

1,322,074

 

 

13,860

 

4.16

 

 

 

557,243

 

 

1,220

 

0.87

 

Total interest bearing deposits

 

2,451,625

 

 

23,788

 

3.85

 

 

 

1,694,656

 

 

4,092

 

0.96

 

Borrowed Money

 

159,103

 

 

1,784

 

4.39

 

 

 

135,221

 

 

993

 

2.87

 

Total interest bearing liabilities

 

2,610,728

 

$

25,572

 

3.89

%

 

 

1,829,877

 

$

5,085

 

1.10

%

Noninterest bearing deposits

 

345,988

 

 

 

 

 

 

383,048

 

 

 

 

Other liabilities

 

54,136

 

 

 

 

 

 

36,037

 

 

 

 

Total liabilities

 

3,010,852

 

 

 

 

 

 

2,248,962

 

 

 

 

Shareholders' equity

 

255,327

 

 

 

 

 

 

231,378

 

 

 

 

Total liabilities and shareholders' equity

$

3,266,179

 

 

 

 

 

$

2,480,340

 

 

 

 

Net interest income(2)

 

 

$

22,743

 

 

 

 

 

$

24,650

 

 

Interest rate spread

 

 

 

 

2.04

%

 

 

 

 

 

3.77

%

Net interest margin(3)

 

 

 

 

2.85

%

 

 

 

 

 

4.12

%

(1)

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

(2)

The adjustment for securities and loans taxable equivalency amounted to $52 thousand and $49 thousand for the quarters ended September 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 Nine Months Ended

 

September 30, 2023

 

September 30, 2022

 

Average

Balance

 

Interest

 

Yield/

Rate (4)

 

Average

Balance

 

Interest

 

Yield/

Rate (4)

Assets:

 

 

 

 

 

 

 

 

 

 

 

Cash and Fed funds sold

$

281,033

 

$

9,983

 

4.75

%

 

$

240,252

 

$

1,350

 

0.75

%

Securities(1)

 

128,554

 

 

2,864

 

2.97

%

 

 

117,008

 

 

2,392

 

2.73

%

Loans:

 

 

 

 

 

 

 

 

 

 

 

Commercial real estate

 

1,932,549

 

 

79,958

 

5.46

%

 

 

1,433,642

 

 

51,104

 

4.70

%

Residential real estate

 

56,798

 

 

1,957

 

4.59

%

 

 

67,705

 

 

1,810

 

3.56

%

Construction

 

194,396

 

 

10,582

 

7.18

%

 

 

108,249

 

 

4,482

 

5.46

%

Commercial business

 

546,329

 

 

32,073

 

7.74

%

 

 

402,876

 

 

17,011

 

5.57

%

Consumer

 

30,571

 

 

1,489

 

6.51

%

 

 

7,844

 

 

290

 

4.94

%

Total loans

 

2,760,643

 

 

126,059

 

6.02

%

 

 

2,020,316

 

 

74,697

 

4.88

%

Federal Home Loan Bank stock

 

5,527

 

 

308

 

7.46

%

 

 

3,715

 

 

61

 

2.19

%

Total earning assets

 

3,175,757

 

$

139,214

 

5.78

%

 

 

2,381,291

 

$

78,500

 

4.35

%

Other assets

 

66,342

 

 

 

 

 

 

89,747

 

 

 

 

Total assets

$

3,242,099

 

 

 

 

 

$

2,471,038

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities and shareholders' equity:

 

 

 

 

 

 

 

 

 

 

 

Interest bearing liabilities:

 

 

 

 

 

 

 

 

 

 

 

NOW

$

97,741

 

$

127

 

0.17

%

 

$

122,792

 

$

158

 

0.17

%

Money market

 

910,840

 

 

23,532

 

3.45

%

 

 

909,106

 

 

4,672

 

0.69

%

Savings

 

117,984

 

 

2,404

 

2.72

%

 

 

194,013

 

 

678

 

0.47

%

Time

 

1,291,124

 

 

35,536

 

3.68

%

 

 

487,792

 

 

2,773

 

0.76

%

Total interest bearing deposits

 

2,417,689

 

 

61,599

 

3.41

%

 

 

1,713,703

 

 

8,281

 

0.65

%

Borrowed Money

 

161,166

 

 

5,238

 

4.29

%

 

 

101,685

 

 

2,137

 

2.77

%

Total interest bearing liabilities

 

2,578,855

 

$

66,837

 

3.47

%

 

 

1,815,388

 

$

10,418

 

0.77

%

Noninterest bearing deposits

 

374,943

 

 

 

 

 

 

398,728

 

 

 

 

Other liabilities

 

40,192

 

 

 

 

 

 

37,784

 

 

 

 

Total liabilities

 

2,993,990

 

 

 

 

 

 

2,251,900

 

 

 

 

Shareholders' equity

 

248,109

 

 

 

 

 

 

219,138

 

 

 

 

Total liabilities and shareholders' equity

$

3,242,099

 

 

 

 

 

$

2,471,038

 

 

 

 

Net interest income(2)

 

 

$

72,377

 

 

 

 

 

$

68,082

 

 

Interest rate spread

 

 

 

 

2.31

%

 

 

 

 

 

3.58

%

Net interest margin(3)

 

 

 

 

3.04

%

 

 

 

 

 

3.81

%

(1)

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

(2)

The adjustment for securities and loans taxable equivalency amounted to $154 thousand and $148 thousand for the nine months ended September 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.

 

Contacts

Christopher R. Gruseke, President and Chief Executive Officer

or

Courtney E. Sacchetti, Executive Vice President and Chief Financial Officer

(203) 652-0166

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