Bankwell Financial Group Reports Operating Results for the Third Quarter With Strong Core Deposit Growth

Bankwell Financial Group, Inc. (NASDAQ:BWFG) reported GAAP net income of $3.0 million, or $0.38 per share, for the third quarter of 2020, versus $4.1 million, or $0.52 per share, for the same period in 2019.

The Company's Board of Directors declared a $0.14 per share cash dividend, payable November 23, 2020 to shareholders of record on November 13, 2020.

We recommend reading this earnings release in conjunction with the Third Quarter 2020 Investor Presentation, located at http://investor.mybankwell.com/Presentations and included as an exhibit to our October 28, 2020 Current Report on Form 8-K.

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

"I am grateful for the commitment and dedication of our team as we have made steady progress in the midst of the ongoing pandemic. Our balance sheet remains strong and credit metrics continue to improve. Loans on COVID-19-related deferrals have decreased from approximately 22% of outstanding loans to under 4% today. On the deposit front, we have increased core business accounts by $176 million year to date, including a 23% increase in non-interest bearing deposits. We have also continued to diversify our loan origination mix as the fourth quarter pipeline is comprised mostly of C&I loans."

"Having begun planning for the year ahead, we are committed to continue expense management with a goal of improving our operating expense run rate by 3-5% by the end of 2021."

Third Quarter 2020 Highlights:

  • The allowance for loan losses was $20.4 million and represents 1.25% of total loans (1.30% excluding Paycheck Protection Program (“PPP”) loans) as of September 30, 2020, compared to an allowance for loan losses of $13.5 million, representing 0.84% of total loans as of December 31, 2019. The increase in the allowance for loan losses was primarily due to incremental loan loss reserves for increased credit risk relating to economic disruption and uncertainty caused by the COVID-19 pandemic.
  • PPP loans totaled $56.7 million at September 30, 2020. As of October 20, 2020 approximately $11.3 million of PPP loans have completed applications for loan forgiveness and a majority of these applications have been submitted to the SBA.
  • Less than 4% of the loan portfolio remains on COVID-19 deferral.
  • Total deposits were $1.8 billion at September 30, 2020 compared to $1.5 billion at December 31, 2019, reflecting successful commercial core deposit gathering efforts, as well as a temporary increase in short term time deposits to expand on-balance sheet liquidity during the COVID-19 pandemic.
  • Noninterest bearing deposits increased 23% when compared to December 31, 2019, totaling $234.8 million, a new high.
  • The loan-to-deposit ratio for the Bank was 91.6% at September 30, 2020, reflecting the above-mentioned increase in deposits.
  • Total gross loans were $1.6 billion at September 30, 2020, increasing slightly when compared to December 31, 2019.
  • Investment securities totaled $108.9 million and represent 5% of total assets.
  • Total noninterest income was $0.6 million for the quarter ended September 30, 2020, or 4% of total revenue.
  • The tangible common equity ratio, as of September 30, 2020, decreased to 7.83%, as capital growth from earnings was more than offset by increased liquidity and corresponding balance sheet growth.
  • Tangible book value per share, as of September 30, 2020, grew to $22.20.
  • Subsequent to the third quarter, as part of the Company's ongoing operational review, the Company has committed to permanently close its North Haven, CT branch as of December 31, 2020 and rolled out a Voluntary Early Retirement Incentive Program.

Earnings and Performance

Revenues (net interest income plus noninterest income) for the quarter ended September 30, 2020 were $14.2 million, versus $14.6 million for the quarter ended September 30, 2019. Revenues for the nine months ended September 30, 2020 were $42.8 million, versus $45.1 million for the nine months ended September 30, 2019. The decrease in revenues was attributable to a decline in income from loan prepayments and the absence of SBA loan sales during the quarter and nine month periods ended September 30, 2020 when compared to the same periods in 2019. The decrease in revenues was also driven by lower loan yields as loans are re-priced in the current low interest rate environment. The decrease in revenues was partially offset by a decline in interest expense, driven by lower interest rates on deposits when compared to the same periods in 2019.

Net income for the quarter ended September 30, 2020 was $3.0 million, versus $4.1 million for the quarter ended September 30, 2019. Net income for the nine months ended September 30, 2020 was $5.6 million, versus $14.7 million for the nine months ended September 30, 2019. The decrease in net income for the quarter ended September 30, 2020 when compared to the same period in 2019 was primarily driven by an increase in noninterest expense. The decrease in net income for the nine month period ended September 30, 2020 when compared to the same period in 2019 was due to an increase in the provision for loan losses due to the COVID-19 pandemic and, to a lesser degree, an increase in noninterest expense. The provision for loan losses related to the COVID-19 pandemic totaled $7.9 million for the nine months ended September 30, 2020.

Basic and diluted earnings per share were each $0.38 for the quarter ended September 30, 2020 compared to basic and diluted earnings per share of $0.52 each for the quarter ended September 30, 2019. Basic and diluted earnings per share were each $0.71 for the nine months ended September 30, 2020 compared to basic and diluted earnings per share of $1.88 and $1.87, respectively, for the nine months ended September 30, 2019.

The net interest margin (fully taxable equivalent basis) for the quarters ended September 30, 2020 and September 30, 2019 was 2.67% and 2.96%, respectively. The net interest margin for the nine months ended September 30, 2020 and September 30, 2019 was 2.81% and 3.07%, respectively. The decrease in net interest margin for the quarter and nine month periods ended September 30, 2020, when compared to the same periods in 2019, was primarily due to excess cash held at low interest rates to maintain a higher level of liquidity during the COVID-19 pandemic. Excluding the impact of additional liquidity and PPP loans, the net interest margin would increase approximately 27 basis points and 23 basis points for the three and nine months ended September 30, 2020, respectively.

Financial Condition

Assets totaled $2.2 billion at September 30, 2020, compared to assets of $1.9 billion at December 31, 2019. The increase in assets is primarily due to an increase in cash and cash equivalents in order to maintain a higher level of liquidity during the COVID-19 pandemic. Gross loans totaled $1.6 billion at September 30, 2020, an increase of $20.2 million compared to December 31, 2019. Excluding PPP loans, gross loans decreased by $36.5 million at September 30, 2020 when compared to December 31, 2019. Deposits totaled $1.8 billion at September 30, 2020, compared to deposits of $1.5 billion at December 31, 2019. The increase in deposits was a result of successful commercial core deposit gathering efforts through Treasury Management, Business Development, and Lending channels, as well as a temporary increase in short term time deposits to expand on-balance sheet liquidity during the COVID-19 pandemic.

Capital

Shareholders’ equity totaled $174.3 million as of September 30, 2020, a decrease of $8.1 million compared to December 31, 2019, primarily a result of a $10.7 million unfavorable impact to accumulated other comprehensive loss driven by fair value marks related to hedge positions involving interest rate swaps, as well as dividends paid of $3.3 million and common stock repurchases of $1.0 million. The decrease was partially offset by net income for the nine months ended September 30, 2020 of $5.6 million. The marks on the interest rate swaps are driven by lower long term market interest rates in 2020 when compared to 2019. The Company's interest rate swaps are used to hedge interest rate risk. The Company's current interest rate swap positions will cause a decrease to other comprehensive income in a falling interest rate environment and an increase in a rising interest rate environment.

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, 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, but are not limited to, increased competitive pressures, changes in the interest rate environment, general economic conditions or conditions within the securities markets, uncertain impacts of, or additional changes in, monetary, fiscal or tax policy to address the impact of COVID-19, prolonged measures to contain the spread of COVID-19 or premature easing of such containment measures, either of which could further exacerbate the effects on the Company’s business and results of operations, 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 and tangible book value per share are useful to evaluate the relative strength of the Company's capital position. We utilize these measures for internal planning and forecasting purposes. These non-GAAP financial measures should not be considered a substitute for GAAP basis measures and results, and we strongly encourage investors to review our consolidated financial statements in their entirety and not to rely on any single financial measure.

BANKWELL FINANCIAL GROUP, INC.

CONSOLIDATED BALANCE SHEETS (unaudited)

(Dollars in thousands)

 

 

September 30,
2020

June 30,
2020

March 31,
2020

December 31,
2019

September 30,
2019

ASSETS

 

Cash and due from banks

 

$

333,103

$

201,380

$

203,569

$

78,051

$

83,109

Federal funds sold

 

6,380

5,886

6,427

Cash and cash equivalents

 

339,483

207,266

209,996

78,051

83,109

 

Investment securities

 

Marketable equity securities, at fair value

 

2,203

2,195

2,289

2,118

2,120

Available for sale investment securities, at fair value

 

90,563

82,220

82,342

82,439

86,017

Held to maturity investment securities, at amortized cost

 

16,138

16,196

16,252

16,308

17,365

Total investment securities

 

108,904

100,611

100,883

100,865

105,502

Loans receivable (net of allowance for loan losses of $20,372, $19,662, $16,686, $13,509, and $13,212 at September 30, 2020, June 30, 2020, March 31, 2020, December 31, 2019, and September 30, 2019, respectively)

 

1,600,776

1,590,995

1,602,146

1,588,840

1,548,988

Other real estate owned

 

180

Accrued interest receivable

 

7,294

6,774

5,867

5,959

5,916

Federal Home Loan Bank stock, at cost

 

7,860

7,835

6,507

7,475

7,475

Premises and equipment, net

 

26,616

27,177

27,835

28,522

28,892

Bank-owned life insurance

 

42,409

42,167

41,926

41,683

41,433

Goodwill

 

2,589

2,589

2,589

2,589

2,589

Other intangible assets

 

160

178

196

214

232

Deferred income taxes, net

 

11,149

11,352

10,009

5,788

6,591

Other assets

 

45,782

46,511

45,671

22,196

27,815

Total assets

 

$

2,193,022

$

2,043,635

$

2,053,625

$

1,882,182

$

1,858,542

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

Liabilities

 

Deposits

 

Noninterest bearing deposits

 

$

234,848

$

214,789

$

168,448

$

191,518

$

178,733

Interest bearing deposits

 

1,532,680

1,405,175

1,512,684

1,300,385

1,291,551

Total deposits

 

1,767,528

1,619,964

1,681,132

1,491,903

1,470,284

 

Advances from the Federal Home Loan Bank

 

175,000

175,000

125,000

150,000

150,000

Subordinated debentures

 

25,245

25,233

25,220

25,207

25,194

Accrued expenses and other liabilities

 

50,982

53,078

52,059

32,675

37,052

Total liabilities

 

2,018,755

1,873,275

1,883,411

1,699,785

1,682,530

 

Shareholders’ equity

 

Common stock, no par value

 

120,854

120,381

119,953

120,589

120,343

Retained earnings

 

71,603

69,712

69,595

69,324

66,870

Accumulated other comprehensive loss

 

(18,190

)

(19,733

)

(19,334

)

(7,516

)

(11,201

)

Total shareholders’ equity

 

174,267

170,360

170,214

182,397

176,012

 

Total liabilities and shareholders’ equity

 

$

2,193,022

$

2,043,635

$

2,053,625

$

1,882,182

$

1,858,542

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,
2020

June 30,
2020

March 31,
2020

December 31,
2019

September 30,
2019

September 30,
2020

September 30,
2019

Interest and dividend income

 

Interest and fees on loans

 

$

18,027

$

18,459

$

18,985

$

18,648

$

19,055

$

55,471

$

58,691

Interest and dividends on securities

 

799

778

825

858

903

2,402

2,892

Interest on cash and cash equivalents

 

96

86

286

427

535

468

1,432

Total interest and dividend income

 

18,922

19,323

20,096

19,933

20,493

58,341

63,015

 

Interest expense

 

Interest expense on deposits

 

4,104

4,810

5,709

5,948

6,331

14,623

18,750

Interest expense on borrowings

 

1,210

876

1,101

1,103

1,151

3,187

3,386

Total interest expense

 

5,314

5,686

6,810

7,051

7,482

17,810

22,136

 

Net interest income

 

13,608

13,637

13,286

12,882

13,011

40,531

40,879

Provision for loan losses

 

712

2,999

3,185

310

773

6,896

127

Net interest income after provision for loan losses

 

12,896

10,638

10,101

12,572

12,238

33,635

40,752

 

Noninterest income

 

Bank owned life insurance

 

242

241

243

250

255

726

758

Service charges and fees

 

190

171

217

247

264

578

776

Gains and fees from sales of loans

 

27

382

703

27

1,409

Gain (loss) on sale of other real estate owned, net

 

19

(102

)

19

(102

)

Net gain on sale of available for sale securities

 

76

Other

 

136

165

612

169

432

913

1,279

Total noninterest income

 

614

577

1,072

1,048

1,552

2,263

4,196

 

Noninterest expense

 

Salaries and employee benefits

 

5,295

5,227

5,380

5,162

4,881

15,902

14,272

Occupancy and equipment

 

2,266

2,235

1,909

1,928

1,946

6,410

5,666

Data processing

 

529

493

536

499

505

1,558

1,568

Professional services

 

374

434

711

402

346

1,519

1,455

Director fees

 

301

287

295

224

235

883

639

FDIC insurance

 

176

283

70

(125

)

529

74

Marketing

 

151

199

162

220

210

512

751

Amortization of intangibles

 

18

18

18

18

19

54

57

Other

 

619

546

578

771

655

1,743

1,920

Total noninterest expense

 

9,729

9,722

9,659

9,224

8,672

29,110

26,402

 

Income before income tax expense

 

3,781

1,493

1,514

4,396

5,118

6,788

18,546

Income tax expense

 

790

279

151

924

1,030

1,220

3,802

Net income

 

$

2,991

$

1,214

$

1,363

$

3,472

$

4,088

$

5,568

$

14,744

 

Earnings Per Common Share:

 

Basic

 

$

0.38

$

0.16

$

0.17

$

0.44

$

0.52

$

0.71

$

1.88

Diluted

 

$

0.38

$

0.16

$

0.17

$

0.44

$

0.52

$

0.71

$

1.87

 

Weighted Average Common Shares Outstanding:

 

Basic

 

7,721,247

7,715,094

7,750,135

7,745,227

7,750,490

7,728,798

7,761,441

Diluted

 

7,721,459

7,715,295

7,778,762

7,773,780

7,766,485

7,749,199

7,788,839

Dividends per common share

 

$

0.14

$

0.14

$

0.14

$

0.13

$

0.13

$

0.42

$

0.39

BANKWELL FINANCIAL GROUP, INC.

CONSOLIDATED FINANCIAL HIGHLIGHTS (unaudited)

 

 

For the Quarter Ended

For the Nine Months Ended

 

September 30,
2020

June 30,
2020

March 31,
2020

December 31,
2019

September 30,
2019

September 30,
2020

September 30,
2019

Performance ratios:

 

Return on average assets(1)

 

0.55

%

0.23

%

0.29

%

0.73

%

0.87

%

0.36

%

1.05

%

Return on average stockholders' equity(1)

 

6.87

%

2.82

%

3.03

%

7.68

%

9.12

%

4.23

%

11.06

%

Return on average tangible common equity(1)

 

6.98

%

2.86

%

3.07

%

7.80

%

9.26

%

4.30

%

11.24

%

Net interest margin

 

2.67

%

2.81

%

2.98

%

2.92

%

2.96

%

2.81

%

3.07

%

Efficiency ratio(2)

 

68.4

%

68.2

%

67.1

%

66.1

%

58.9

%

67.9

%

58.3

%

Net loan charge-offs as a % of average loans

 

%

%

%

%

0.09

%

%

0.15

%

Dividend payout ratio(3)

 

36.84

%

87.50

%

82.35

%

29.55

%

25.00

%

59.15

%

20.86

%

(1) 2020 performance ratios are negatively impacted by incremental COVID-19 pandemic related loan loss reserves, totaling $7.9 million for the nine months ended September 30, 2020.

 

(2) 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.

 

(3) The dividend payout ratio is calculated by dividing dividends per share by earnings per share.

 

As of

 

September 30,
2020

June 30,
2020

March 31,
2020

December 31,
2019

September 30,
2019

Capital ratios:

 

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

 

12.36

%

12.44

%

12.14

%

12.53

%

12.65

%

Total Capital to Risk-Weighted Assets(1)

 

13.57

%

13.63

%

13.13

%

13.35

%

13.47

%

Tier I Capital to Risk-Weighted Assets(1)

 

12.36

%

12.44

%

12.14

%

12.53

%

12.65

%

Tier I Capital to Average Assets(1)

 

9.58

%

9.93

%

10.84

%

10.99

%

10.88

%

Tangible common equity to tangible assets

 

7.83

%

8.21

%

8.16

%

9.56

%

9.33

%

Tangible book value per common share(2)

 

$

22.20

$

21.70

$

21.69

$

23.15

$

22.34

(1) Represents Bank ratios. Current period capital ratios are preliminary subject to finalization of the FDIC Call Report.

 

(2) Excludes unvested restricted shares of 170,083, 165,708, 154,012, 110,975, and 88,473 as of September 30, 2020, June 30, 2020, March 31, 2020, December 31, 2019, and September 30, 2019, respectively.

BANKWELL FINANCIAL GROUP, INC.

ASSET QUALITY (unaudited)

(Dollars in thousands)

  

 

For the Quarter Ended

 

September 30,
2020

June 30,
2020

March 31,
2020

December 31,
2019

September 30,
2019

Allowance for loan losses:

 

Balance at beginning of period

 

$

19,662

$

16,686

$

13,509

$

13,212

$

13,890

Charge-offs:

 

Residential real estate

 

(78

)

Commercial real estate

 

(594

)

Commercial business

 

(8

)

(13

)

(748

)

Consumer

 

(4

)

(23

)

(2

)

(5

)

(57

)

Total charge-offs

 

(4

)

(23

)

(10

)

(18

)

(1,477

)

Recoveries:

 

Commercial business

 

1

1

2

Consumer

 

2

1

4

24

Total recoveries

 

2

2

5

26

Net loan charge-offs

 

(2

)

(23

)

(8

)

(13

)

(1,451

)

Provision for loan losses

 

712

2,999

3,185

310

773

Balance at end of period

 

$

20,372

$

19,662

$

16,686

$

13,509

$

13,212

 

As of

 

September 30,
2020

June 30,
2020

March 31,
2020

December 31,
2019

September 30,
2019

Asset quality:

 

Nonaccrual loans

 

Residential real estate

 

$

1,596

$

1,622

$

1,532

$

1,560

$

1,583

Commercial real estate

 

4,812

5,172

5,339

5,222

5,332

Commercial business

 

3,760

3,783

3,783

3,806

2,963

Total nonaccrual loans

 

10,168

10,577

10,654

10,588

9,878

Other real estate owned

 

180

Total nonperforming assets

 

$

10,168

$

10,757

$

10,654

$

10,588

$

9,878

 

Nonperforming loans as a % of total loans

 

0.63

%

0.66

%

0.66

%

0.66

%

0.63

%

Nonperforming assets as a % of total assets

 

0.46

%

0.53

%

0.52

%

0.56

%

0.53

%

Allowance for loan losses as a % of total loans

 

1.25

%

1.22

%

1.03

%

0.84

%

0.84

%

Allowance for loan losses as a % of nonperforming loans

 

200.35

%

185.89

%

156.62

%

127.59

%

133.75

%

Total nonaccrual loans were $10.2 million as of September 30, 2020, of which $4.5 million are guaranteed by the Small Business Administration (SBA). Nonperforming assets as a percentage of total assets was 0.46% at September 30, 2020, down from 0.56% at December 31, 2019. The allowance for loan losses at September 30, 2020 was $20.4 million, representing 1.25% of total loans. The $6.9 million increase in the allowance for loan losses at September 30, 2020 when compared to December 31, 2019 was primarily due to incremental loan loss reserves for increased credit risk relating to economic disruption and uncertainty caused by the COVID-19 pandemic.

BANKWELL FINANCIAL GROUP, INC.

LOAN & DEPOSIT PORTFOLIO (unaudited)

(Dollars in thousands)

 

Period End Loan Composition

 

September 30,
2020

June 30,
2020

December 31,
2019

Current QTD %
Change

YTD % Change

Residential Real Estate

 

$

120,531

$

128,683

$

147,109

(6.3

)%

(18.1

)%

Commercial Real Estate(1)

 

1,105,862

1,110,562

1,128,614

(0.4

)

(2.0

)

Construction

 

96,508

94,523

98,583

2.1

(2.1

)

Total Real Estate Loans

 

1,322,901

1,333,768

1,374,306

(0.8

)

(3.7

)

 

Commercial Business

 

301,747

280,811

230,028

7.5

31.2

 

Consumer

 

78

87

150

(10.3

)

(48.0

)

Total Loans

 

$

1,624,726

$

1,614,666

$

1,604,484

0.6

%

1.3

%

 

(1) Includes owner occupied commercial real estate.

Period End Deposit Composition

 

September 30,
2020

June 30,
2020

December 31,
2019

Current QTD %
Change

YTD % Change

Noninterest bearing demand

 

$

234,848

$

214,789

$

191,518

9.3

%

22.6

%

NOW

 

90,776

87,239

70,020

4.1

29.6

Money Market

 

561,101

482,462

419,495

16.3

33.8

Savings

 

164,590

162,891

183,729

1.0

(10.4

)

Time

 

716,213

672,583

627,141

6.5

14.2

Total Deposits

 

$

1,767,528

$

1,619,964

$

1,491,903

9.1

%

18.5

%

Total deposits were $1.8 billion at September 30, 2020 compared to $1.5 billion at December 31, 2019, an increase of $0.3 billion, or 18.5%. The increase in total deposits was a result of successful commercial core deposit gathering efforts, as well as a temporary increase in short term time deposits to expand on-balance sheet liquidity during the COVID-19 pandemic.

BANKWELL FINANCIAL GROUP, INC.

NONINTEREST INCOME (unaudited)

(Dollars in thousands)

 

 

For the Quarter Ended

Noninterest income

 

September 30,
2020

June 30,
2020

September 30,
2019

Sep 20 vs. June 20
% Change

Sep 20 vs. Sep 19
% Change

Bank owned life insurance

 

$

242

$

241

$

255

0.4

%

(5.1

)%

Service charges and fees

 

190

171

264

11.1

(28.0

)

Gains and fees from sales of loans

 

27

703

N/A

(96.2

)

Gain (loss) on sale of other real estate owned, net

 

19

(102

)

N/A

(118.6

)

Other

 

136

165

432

(17.6

)

(68.5

)

Total noninterest income

 

$

614

$

577

$

1,552

6.4

%

(60.4

)%

For the Nine Months Ended

Noninterest income

September 30, 2020

September 30, 2019

% Change

Bank owned life insurance

$

726

$

758

(4.2

)%

Service charges and fees

578

776

(25.5

)

Gains and fees from sales of loans

27

1,409

(98.1

)

Gain (loss) on sale of other real estate owned, net

19

(102

)

(118.6

)

Net gain on sale of available for sale securities

76

(100.0

)

Other

913

1,279

(28.6

)

Total noninterest income

$

2,263

$

4,196

(46.1

)%

Noninterest income decreased by $0.9 million to $0.6 million for the quarter ended September 30, 2020 compared to the quarter ended September 30, 2019. Noninterest income decreased by $1.9 million to $2.3 million for the nine months ended September 30, 2020 compared to the nine months ended September 30, 2019.

The decrease in noninterest income was primarily a result of the absence of gains and fees from the sales of SBA loans for the quarter and nine months ended September 30, 2020 compared to the same periods in 2019. To a lesser degree, the decrease in noninterest income was also driven by certain waived service charges and fees on depository accounts as a courtesy to customers during the COVID-19 pandemic. The decrease in other noninterest income was primarily a result of loan related interest rate swap fees recognized in 2019.

BANKWELL FINANCIAL GROUP, INC.

NONINTEREST EXPENSE (unaudited)

(Dollars in thousands)

  

 

For the Quarter Ended

Noninterest expense

 

September 30,
2020

June 30,
2020

September 30,
2019

Sep 20 vs. June 20
% Change

Sep 20 vs. Sep 19
% Change

Salaries and employee benefits

 

$

5,295

$

5,227

$

4,881

1.3

%

8.5

%

Occupancy and equipment

 

2,266

2,235

1,946

1.4

16.4

Data processing

 

529

493

505

7.3

4.8

Professional services

 

374

434

346

(13.8

)

8.1

Director fees

 

301

287

235

4.9

28.1

FDIC insurance

 

176

283

(125

)

(37.8

)

(240.8

)

Marketing

 

151

199

210

(24.1

)

(28.1

)

Amortization of intangibles

 

18

18

19

(5.3

)

Other

 

619

546

655

13.4

(5.5

)

Total noninterest expense

 

$

9,729

$

9,722

$

8,672

0.1

%

12.2

%

For the Nine Months Ended

Noninterest expense

September 30, 2020

September 30, 2019

% Change

Salaries and employee benefits

$

15,902

$

14,272

11.4

%

Occupancy and equipment

6,410

5,666

13.1

Data processing

1,558

1,568

(0.6

)

Professional services

1,519

1,455

4.4

Director fees

883

639

38.2

FDIC insurance

529

74

614.9

Marketing

512

751

(31.8

)

Amortization of intangibles

54

57

(5.3

)

Other

1,743

1,920

(9.2

)

Total noninterest expense

$

29,110

$

26,402

10.3

%

Noninterest expense increased by $1.1 million, or 12.2%, to $9.7 million for the quarter ended September 30, 2020 compared to the quarter ended September 30, 2019. Noninterest expense increased by $2.7 million, or 10.3%, to $29.1 million for the nine months ended September 30, 2020 compared to the nine months ended September 30, 2019. The increase in noninterest expense was primarily driven by an increase in salaries and employee benefits, occupancy and equipment expense and FDIC insurance expense.

Salaries and employee benefits totaled $5.3 million for the quarter ended September 30, 2020, an increase of $0.4 million when compared to the same period in 2019. Salaries and employee benefits totaled $15.9 million for the nine months ended September 30, 2020, an increase of $1.6 million when compared to the same period in 2019. The increase in salaries and employee benefits was primarily driven by normal annual salary increases, additional hires in support of growth initiatives and expanded employee benefits to assist employees impacted by the COVID-19 pandemic.

Occupancy and equipment expense totaled $2.3 million for the quarter ended September 30, 2020, an increase of $0.3 million when compared to the same period in 2019. Occupancy and equipment expense totaled $6.4 million for the nine months ended September 30, 2020, an increase of $0.7 million when compared to the same period in 2019. The increase in occupancy and equipment expense was primarily due to additional cleaning costs associated with precautions taken to prevent the spread of COVID-19.

FDIC insurance expense totaled $0.2 million for the quarter ended September 30, 2020, an increase of $0.3 million when compared to the same period in 2019. FDIC insurance expense totaled $0.5 million for the nine months ended September 30, 2020, an increase of $0.5 million when compared to the same period in 2019. The increase in FDIC insurance expense was primarily driven by a credit received during the quarter ended September 30, 2019.

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,
2020

June 30,
2020

March 31,
2020

December 31,
2019

September 30,
2019

Total Equity

 

$

174,267

$

170,360

$

170,214

$

182,397

$

176,012

Less:

 

Goodwill

 

2,589

2,589

2,589

2,589

2,589

Other intangibles

 

160

178

196

214

232

Tangible Common Equity

 

$

171,518

$

167,593

$

167,429

$

179,594

$

173,191

 

Total Assets

 

$

2,193,022

$

2,043,635

$

2,053,625

$

1,882,182

$

1,858,542

Less:

 

Goodwill

 

2,589

2,589

2,589

2,589

2,589

Other intangibles

 

160

178

196

214

232

Tangible Assets

 

$

2,190,273

$

2,040,868

$

2,050,840

$

1,879,379

$

1,855,721

 

Tangible Common Equity to Tangible Assets

 

7.83

%

8.21

%

8.16

%

9.56

%

9.33

%

As of

Computation of Tangible Book Value per Common Share

September 30,
2020

June 30,
2020

March 31,
2020

December 31,
2019

September 30,
2019

Total shareholders' equity

$

174,267

$

170,360

$

170,214

$

182,397

$

176,012

Less:

Preferred stock

Common shareholders' equity

$

174,267

$

170,360

$

170,214

$

182,397

$

176,012

Less:

Goodwill

2,589

2,589

2,589

2,589

2,589

Other intangibles

160

178

196

214

232

Tangible common shareholders' equity

$

171,518

$

167,593

$

167,429

$

179,594

$

173,191

Common shares

7,896,503

7,887,503

7,871,419

7,868,803

7,841,103

Less:

Shares of unvested restricted stock

170,083

165,708

154,012

110,975

88,473

Common shares less unvested restricted stock

7,726,420

7,721,795

7,717,407

7,757,828

7,752,630

Book value per share

$

22.55

$

22.06

$

22.06

$

23.51

$

22.70

Less:

Effects of intangible assets

$

0.36

$

0.36

$

0.36

$

0.36

$

0.36

Tangible Book Value per Common Share

$

22.20

$

21.70

$

21.69

$

23.15

$

22.34

BANKWELL FINANCIAL GROUP, INC.

RECONCILIATION OF GAAP TO NON-GAAP MEASURES (unaudited) - Continued

(Dollars in thousands)

  

 

For the Quarter Ended

For the Nine Months Ended

Computation of Efficiency Ratio

 

September 30,
2020

June 30,
2020

March 31,
2020

December 31,
2019

September 30,
2019

September 30,
2020

September 30,
2019

Noninterest expense

 

$

9,729

$

9,722

$

9,659

$

9,224

$

8,672

$

29,110

$

26,402

Less:

 

Amortization of intangible assets

 

18

18

18

18

19

54

57

Other real estate owned expenses

 

6

13

6

37

Adjusted noninterest expense

 

$

9,711

$

9,698

$

9,641

$

9,206

$

8,640

$

29,050

$

26,308

Net interest income

 

$

13,608

$

13,637

$

13,286

$

12,882

$

13,011

$

40,531

$

40,879

Noninterest income

 

614

577

1,072

1,048

1,552

2,263

4,196

Less:

 

Net gain on sale of available for sale securities

 

76

Gain (loss) on sale of other real estate owned, net

 

19

(102

)

19

(102

)

Operating revenue

 

$

14,203

$

14,214

$

14,358

$

13,930

$

14,665

$

42,775

$

45,101

 

Efficiency ratio

 

68.4

%

68.2

%

67.1

%

66.1

%

58.9

%

67.9

%

58.3

%

 

For the Quarter Ended

For the Nine Months Ended

Computation of Return on Average Tangible Common Equity

 

September 30,
2020

June 30,
2020

March 31,
2020

December 31,
2019

September 30,
2019

September 30,
2020

September 30,
2019

Net Income Attributable to Common Shareholders

 

$

2,991

$

1,214

$

1,363

$

3,472

$

4,088

$

5,568

$

14,744

Total average shareholders' equity

 

$

173,162

$

173,289

$

181,127

$

179,312

$

177,916

$

175,838

$

178,237

Less:

 

Average Goodwill

 

2,589

2,589

2,589

2,589

2,589

2,589

2,589

Average Other intangibles

 

172

190

208

226

244

190

264

Average tangible common equity

 

$

170,401

$

170,510

$

178,330

$

176,497

$

175,083

$

173,059

$

175,384

 

Annualized Return on Average Tangible Common Equity

 

6.98

%

2.86

%

3.07

%

7.80

%

9.26

%

4.30

%

11.24

%

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, 2020

September 30, 2019

 

Average
Balance

Interest

Yield/
Rate (5)

Average
Balance

Interest

Yield/
Rate (5)

Assets:

 

Cash and Fed funds sold

 

$

312,078

$

96

0.12

%

$

86,967

$

535

2.44

%

Securities(1)

 

96,448

776

3.22

109,247

845

3.09

Loans:

 

Commercial real estate

 

1,087,765

12,570

4.52

1,066,256

12,590

4.62

Residential real estate

 

125,069

1,097

3.51

161,312

1,559

3.87

Construction(2)

 

94,984

1,029

4.24

86,342

1,141

5.17

Commercial business

 

322,066

3,329

4.04

248,116

3,761

5.93

Consumer

 

121

2

7.37

229

4

6.93

Total loans

 

1,630,005

18,027

4.33

1,562,255

19,055

4.77

Federal Home Loan Bank stock

 

7,835

77

3.91

7,474

113

6.02

Total earning assets

 

2,046,366

$

18,976

3.63

%

1,765,943

$

20,548

4.55

%

Other assets

 

132,617

103,742

Total assets

 

$

2,178,983

$

1,869,685

 

Liabilities and shareholders' equity:

 

Interest bearing liabilities:

 

NOW

 

$

87,890

$

40

0.18

%

$

62,444

$

26

0.17

%

Money market

 

517,638

859

0.66

423,638

1,739

1.63

Savings

 

163,135

237

0.58

174,587

740

1.68

Time

 

757,176

2,968

1.56

644,536

3,826

2.36

Total interest bearing deposits

 

1,525,839

4,104

1.07

1,305,205

6,331

1.92

Borrowed Money

 

200,237

1,210

2.36

175,185

1,151

2.57

Total interest bearing liabilities

 

1,726,076

$

5,314

1.22

%

1,480,390

$

7,482

2.01

%

Noninterest bearing deposits

 

226,473

177,922

Other liabilities

 

53,272

33,457

Total liabilities

 

2,005,821

1,691,769

Shareholders' equity

 

173,162

177,916

Total liabilities and shareholders' equity

 

$

2,178,983

$

1,869,685

Net interest income(3)

 

$

13,662

$

13,066

Interest rate spread

 

2.41

%

2.54

%

Net interest margin(4)

 

2.67

%

2.96

%

(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 $54 thousand and $55 thousand for the quarters ended September 30, 2020 and 2019, respectively.

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

(5) 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, 2020

September 30, 2019

 

Average
Balance

Interest

Yield/
Rate (5)

Average
Balance

Interest

Yield/
Rate (5)

Assets:

 

Cash and Fed funds sold

 

$

207,058

$

468

0.30

%

$

84,212

$

1,432

2.27

%

Securities(1)

 

96,761

2,289

3.15

115,586

2,722

3.14

Loans:

 

Commercial real estate

 

1,094,956

38,460

4.61

1,061,536

38,176

4.74

Residential real estate

 

134,369

3,636

3.61

169,297

4,892

3.85

Construction(2)

 

98,539

3,350

4.47

84,487

3,412

5.33

Commercial business

 

289,959

10,017

4.54

259,154

12,198

6.21

Consumer

 

130

8

8.15

274

13

6.60

Total loans

 

1,617,953

55,471

4.50

1,574,748

58,691

4.91

Federal Home Loan Bank stock

 

7,547

272

4.81

7,512

365

6.49

Total earning assets

 

1,929,319

$

58,500

3.98

%

1,782,058

$

63,210

4.68

%

Other assets

 

125,957

89,332

Total assets

 

$

2,055,276

$

1,871,390

 

Liabilities and shareholders' equity:

 

Interest bearing liabilities:

 

NOW

 

$

76,661

$

99

0.17

%

$

61,872

$

101

0.22

%

Money market

 

473,485

3,213

0.91

447,008

5,567

1.67

Savings

 

170,262

1,204

0.94

176,491

2,252

1.71

Time

 

721,051

10,107

1.87

638,978

10,830

2.27

Total interest bearing deposits

 

1,441,459

14,623

1.36

1,324,349

18,750

1.89

Borrowed Money

 

187,177

3,187

2.24

175,290

3,386

2.55

Total interest bearing liabilities

 

1,628,636

$

17,810

1.46

%

1,499,639

$

22,136

1.97

%

Noninterest bearing deposits

 

201,384

166,864

Other liabilities

 

49,418

26,650

Total liabilities

 

1,879,438

1,693,153

Shareholders' equity

 

175,838

178,237

Total liabilities and shareholders' equity

 

$

2,055,276

$

1,871,390

Net interest income(3)

 

$

40,690

$

41,074

Interest rate spread

 

2.52

%

2.71

%

Net interest margin(4)

 

2.81

%

3.07

%

(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 $159 thousand and $195 thousand for the nine months ended September 30, 2020 and 2019, respectively.

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

(5) Yields are calculated using the contractual day count convention for each respective product type.

Contacts:

Bankwell Financial Group
Christopher R. Gruseke, (203) 652-0166
President and Chief Executive Officer

Data & News supplied by www.cloudquote.io
Stock quotes supplied by Barchart
Quotes delayed at least 20 minutes.
By accessing this page, you agree to the following
Privacy Policy and Terms and Conditions.