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Bankwell Financial Group Reports Record Loan Growth for the Fourth Quarter and Full Year 2022; Declares First Quarter Dividend

Business Wire 25-Jan-2023 4:38 PM

Bankwell Financial Group, Inc. (NASDAQ:BWFG) reported GAAP net income of $8.0 million, or $1.04 per share for the fourth quarter of 2022, versus $7.8 million, or $0.99 per share, for the same period in 2021. For the year ended 2022, net income totaled $37.4 million, or $4.79 per share, versus $26.6 million, or $3.36 per share, for the same period in 2021.

The Company's Board of Directors declared a $0.20 per share cash dividend, payable February 23, 2023 to shareholders of record on February 13, 2023.

We recommend reading this earnings release in conjunction with the Fourth Quarter 2022 Investor Presentation, located at http://investor.mybankwell.com/Presentations and included as an exhibit to our January 25, 2023 Current Report on Form 8-K.

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

"I commend my colleagues at Bankwell for truly exceptional performance in 2022. Our Company posted record results, generating a 16.7% Return on Average Equity and a 1.44% Return on Average Assets. Loan balances grew by over 40%, and we continue to diversify our lending book and bring new commercial relationships to the Bank.

"This year's growth has positioned the Company well for the expected continued tightening actions by the Federal Reserve. The average yield of loans originated during 2022 was 6.24% while the average yield on fourth quarter originations was 7.23%.

"The historic actions of the Federal Reserve this year are yet to be played out, but based on a peak Federal Funds rate implied by financial markets, and our planning for no Fed rate cuts in 2023, we re-affirm our expectations for 2023's net interest income to decline by approximately 10% versus 2022.

"Tangible Book Value growth is imperative for value creation to accrue to our shareholders. We are pleased to acknowledge that the Company's Tangible Book Value per share has compounded at a rate of almost 18% since December 31, 2020.

We are proud of the work we have accomplished in transforming our Bank's business model in recent years, and thank our customers and clients who have made this success possible."

Fourth Quarter 2022 Highlights:

  • Total gross loans were $2.7 billion, growing $780.6 million, or 41.2%, compared to December 31, 2021.
  • Average yield on 2022 funded loans was 6.24% compared to 4.56% for 2021.
  • Return on average assets was 1.07% for the quarter ended December 31, 2022 and 1.44% for the year ended December 31, 2022.
  • Return on average shareholders' equity was 13.38% for the quarter ended December 31, 2022 and 16.72% for the year ended December 31, 2022.
  • The net interest margin was 3.70% for the quarter ended December 31, 2022 and 3.78% for the year ended December 31, 2022.
  • The efficiency ratio was 45.6% for the quarter ended December 31, 2022 and 45.4% for the year ended December 31, 2022.
  • Investment securities totaled $121.6 million and represent 3.7% of total assets.
  • Fully diluted tangible book value per share rose to $30.51 compared to $25.55 at December 31, 2021.

Earnings and Performance Revenues (net interest income plus noninterest income) for the quarter ended December 31, 2022 were $27.3 million, versus $19.8 million for the quarter ended December 31, 2021. Revenues for the year ended December 31, 2022 were $97.8 million, versus $73.5 million for the year ended December 31, 2021. The increase in revenues was primarily attributable to an increase in interest and fees on loans due to record loan growth and higher overall loan yields1 for the quarter and year ended December 31, 2022. The increase in revenues was partially offset by the following: an increase in interest expense; a decrease in noninterest income driven by a reduction in loans sales and the absence of rental income in 2022 due to the disposition of the Company's former headquarters building in the fourth quarter of 2021. Revenues in 2021 also included a one-time federal payroll tax credit for COVID-19 of $0.9 million recognized in the quarter ended March 31, 2021 which did not repeat in 2022.

Net income for the quarter ended December 31, 2022 was $8.0 million, versus $7.8 million for the quarter ended December 31, 2021. Net income for the year ended December 31, 2022 was $37.4 million, versus $26.6 million for the year ended December 31, 2021. The increase in net income was a direct result of the aforementioned increases in revenues. In addition, the increase in net income was partially offset by an increase in the provision for loan losses due to loan growth and an increase in noninterest expense for the quarter and year ended December 31, 2022.

Basic and diluted earnings per share were $1.04 and $1.04, respectively, for the quarter ended December 31, 2022 compared to basic and diluted earnings per share of $1.00 and $0.99, respectively, for the quarter ended December 31, 2021. Basic and diluted earnings per share were $4.84 and $4.79, respectively, for the year ended December 31, 2022 compared to basic and diluted earnings per share of $3.38 and $3.36, respectively, for the year ended December 31, 2021.

The net interest margin (fully taxable equivalent basis) for the quarters ended December 31, 2022 and December 31, 2021 was 3.70% and 3.43%, respectively. The net interest margin (fully taxable equivalent basis) for the year ended December 31, 2022 and December 31, 2021 was 3.78% and 3.17%, respectively. The increase in the net interest margin was due to an increase in overall loan yields, aided in part by elevated loan prepayment fees, partially offset by an increase in funding costs.

1 - The increase in overall loan yields were 122 bps and 68 bps, respectively, for the quarter and year ended December 31, 2022.

Provision for Loan Losses

Provision for loan losses was $4.3 million and $5.4 million for the quarter and year ended December 31, 2022, respectively, bringing the total allowance for loan losses to $22.4 million as of December 31, 2022. Provision for loan losses was $0.1 million for the quarter ended December 31, 2021 and a credit for loan losses of $0.1 million for the year ended December 31, 2021. The increase in the Provision for loan losses for both the quarter and year ended December 31, 2022 was attributable to loan growth.

On January 1, 2023, the Company adopted ASC 326 Financial Instruments - Credit Losses ("CECL"). Upon adoption of CECL, the Company will record a one-time cumulative effect, pre-tax adjustment range of $3.4 million to $4.2 million to the Allowance for loan losses and a corresponding net of tax adjustment to beginning retained earnings. This impact will be reflected in the Company's first quarter 2023 financial statements.

Financial Condition

Assets totaled $3.25 billion at December 31, 2022, compared to assets of $2.46 billion at December 31, 2021. The increase in assets was primarily due to loan growth. Gross loans totaled $2.7 billion at December 31, 2022, an increase of $780.6 million or 41.2% compared to December 31, 2021. Deposits totaled $2.8 billion at December 31, 2022, compared to deposits of $2.1 billion at December 31, 2021.

Capital

Shareholders' equity totaled $238.5 million as of December 31, 2022, an increase of $36.5 million compared to December 31, 2021, primarily a result of (i) net income of $37.4 million for the year ended December 31, 2022 and (ii) an $8.4 million favorable impact to accumulated other comprehensive income driven by fair value marks related to hedge positions involving interest rate swaps of $16.8 million, partially offset by fair value marks on the Company's investment portfolio of $8.4 million. The Company's interest rate swaps are used to hedge interest rate risk. The increase in Shareholders' equity was partially offset by dividends paid of $6.2 million and common stock repurchases of $5.5 million.

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 securities markets, and legislative and regulatory changes that could adversely affect the business in which the Company and its subsidiaries are engaged. The COVID-19 pandemic continues to affect Bankwell Financial Group, its customers, counterparties, employees, and third party service providers, and the ultimate extent of the impacts on its business, financial position, results of operations, liquidity, and prospects is unknown.

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 non interest 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)

 

 

December 31, 2022

 

September 30, 2022

 

June 30, 2022

 

March 31, 2022

 

December 31, 2021

ASSETS

 

 

 

 

 

 

 

 

 

Cash and due from banks

$

344,925

 

 

$

212,175

 

 

$

149,522

 

$

280,471

 

 

$

291,598

 

Federal funds sold

 

10,754

 

 

 

10,947

 

 

 

21,505

 

 

19,022

 

 

 

53,084

 

Cash and cash equivalents

 

355,679

 

 

 

223,122

 

 

 

171,027

 

 

299,493

 

 

 

344,682

 

 

 

 

 

 

 

 

 

 

 

Investment securities

 

 

 

 

 

 

 

 

 

Marketable equity securities, at fair value

 

1,988

 

 

 

1,973

 

 

 

2,126

 

 

2,090

 

 

 

2,168

 

Available for sale investment securities, at fair value

 

103,663

 

 

 

95,095

 

 

 

94,907

 

 

98,733

 

 

 

90,198

 

Held to maturity investment securities, at amortized cost

 

15,983

 

 

 

16,027

 

 

 

15,917

 

 

15,979

 

 

 

16,043

 

Total investment securities

 

121,634

 

 

 

113,095

 

 

 

112,950

 

 

116,802

 

 

 

108,409

 

Loans receivable (net of allowance for loan losses of $22,431, $18,167, $15,773, $17,141 and $16,902 at December 31, 2022, September 30, 2022, June 30, 2022, March 31, 2022 and December 31, 2021, respectively)

 

2,646,384

 

 

 

2,263,432

 

 

 

2,036,626

 

 

1,964,567

 

 

 

1,875,167

 

Accrued interest receivable

 

13,070

 

 

 

9,552

 

 

 

8,047

 

 

7,733

 

 

 

7,512

 

Federal Home Loan Bank stock, at cost

 

5,216

 

 

 

5,039

 

 

 

5,064

 

 

2,870

 

 

 

2,814

 

Premises and equipment, net

 

27,199

 

 

 

27,510

 

 

 

27,768

 

 

25,661

 

 

 

25,588

 

Bank-owned life insurance

 

50,243

 

 

 

49,970

 

 

 

49,699

 

 

49,434

 

 

 

49,174

 

Goodwill

 

2,589

 

 

 

2,589

 

 

 

2,589

 

 

2,589

 

 

 

2,589

 

Deferred income taxes, net

 

7,422

 

 

 

5,952

 

 

 

4,768

 

 

6,879

 

 

 

7,621

 

Other assets

 

23,013

 

 

 

22,734

 

 

 

17,014

 

 

20,849

 

 

 

32,708

 

Total assets

$

3,252,449

 

 

$

2,722,995

 

 

$

2,435,552

 

$

2,496,877

 

 

$

2,456,264

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS' EQUITY

 

 

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

 

 

 

Deposits

 

 

 

 

 

 

 

 

 

Noninterest bearing deposits

$

404,559

 

 

$

380,365

 

 

$

372,584

 

$

412,985

 

 

$

398,956

 

Interest bearing deposits

 

2,396,259

 

 

 

1,906,337

 

 

 

1,660,941

 

 

1,753,219

 

 

 

1,725,042

 

Total deposits

 

2,800,818

 

 

 

2,286,702

 

 

 

2,033,525

 

 

2,166,204

 

 

 

2,123,998

 

 

 

 

 

 

 

 

 

 

 

Advances from the Federal Home Loan Bank

 

90,000

 

 

 

90,000

 

 

 

105,000

 

 

50,000

 

 

 

50,000

 

Subordinated debentures

 

68,959

 

 

 

68,897

 

 

 

34,500

 

 

34,471

 

 

 

34,441

 

Accrued expenses and other liabilities

 

54,203

 

 

 

45,896

 

 

 

37,060

 

 

35,982

 

 

 

45,838

 

Total liabilities

 

3,013,980

 

 

 

2,491,495

 

 

 

2,210,085

 

 

2,286,657

 

 

 

2,254,277

 

 

 

 

 

 

 

 

 

 

 

Shareholders' equity

 

 

 

 

 

 

 

 

 

Common stock, no par value

 

115,018

 

 

 

114,548

 

 

 

115,599

 

 

114,882

 

 

 

118,148

 

Retained earnings

 

123,640

 

 

 

117,152

 

 

 

109,523

 

 

99,047

 

 

 

92,400

 

Accumulated other comprehensive (loss) income

 

(189

)

 

 

(200

)

 

 

345

 

 

(3,709

)

 

 

(8,561

)

Total shareholders' equity

 

238,469

 

 

 

231,500

 

 

 

225,467

 

 

210,220

 

 

 

201,987

 

 

 

 

 

 

 

 

 

 

 

Total liabilities and shareholders' equity

$

3,252,449

 

 

$

2,722,995

 

 

$

2,435,552

 

$

2,496,877

 

 

$

2,456,264

 

 

BANKWELL FINANCIAL GROUP, INC.

CONSOLIDATED STATEMENTS OF INCOME (unaudited)

(Dollars in thousands, except share data)

 

 

For the Quarter Ended

 

For the Year Ended

 

December 31, 2022

 

September 30, 2022

 

June 30, 2022

 

March 31, 2022

 

December 31, 2021

 

December 31, 2022

 

December 31, 2021

Interest and dividend income

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest and fees on loans

$

36,545

 

 

$

28,128

 

 

$

25,141

 

 

$

21,428

 

 

$

21,081

 

 

$

111,242

 

 

$

78,042

 

Interest and dividends on securities

 

898

 

 

 

811

 

 

 

774

 

 

 

720

 

 

 

722

 

 

 

3,203

 

 

 

2,958

 

Interest on cash and cash equivalents

 

2,150

 

 

 

747

 

 

 

449

 

 

 

154

 

 

 

90

 

 

 

3,500

 

 

 

376

 

Total interest and dividend income

 

39,593

 

 

 

29,686

 

 

 

26,364

 

 

 

22,302

 

 

 

21,893

 

 

 

117,945

 

 

 

81,376

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense on deposits

 

11,083

 

 

 

4,092

 

 

 

1,983

 

 

 

2,206

 

 

 

2,198

 

 

 

19,364

 

 

 

10,443

 

Interest expense on borrowings

 

1,701

 

 

 

993

 

 

 

558

 

 

 

586

 

 

 

767

 

 

 

3,838

 

 

 

3,047

 

Total interest expense

 

12,784

 

 

 

5,085

 

 

 

2,541

 

 

 

2,792

 

 

 

2,965

 

 

 

23,202

 

 

 

13,490

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income

 

26,809

 

 

 

24,601

 

 

 

23,823

 

 

 

19,510

 

 

 

18,928

 

 

 

94,743

 

 

 

67,886

 

Provision (credit) for loan losses

 

4,272

 

 

 

2,381

 

 

 

(1,445

)

 

 

229

 

 

 

125

 

 

 

5,437

 

 

 

(57

)

Net interest income after provision (credit) for loan losses

 

22,537

 

 

 

22,220

 

 

 

25,268

 

 

 

19,281

 

 

 

18,803

 

 

 

89,306

 

 

 

67,943

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest income

 

 

 

 

 

 

 

 

 

 

 

 

 

Bank owned life insurance

 

273

 

 

 

271

 

 

 

265

 

 

 

260

 

 

 

270

 

 

 

1,069

 

 

 

1,023

 

Service charges and fees

 

343

 

 

 

240

 

 

 

249

 

 

 

240

 

 

 

257

 

 

 

1,072

 

 

 

872

 

Gains (losses) and fees from sales of loans

 

12

 

 

 

(15

)

 

 

608

 

 

 

631

 

 

 

441

 

 

 

1,236

 

 

 

2,692

 

Other

 

(100

)

 

 

(94

)

 

 

30

 

 

 

(173

)

 

 

(143

)

 

 

(337

)

 

 

1,070

 

Total noninterest income

 

528

 

 

 

402

 

 

 

1,152

 

 

 

958

 

 

 

825

 

 

 

3,040

 

 

 

5,657

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest expense

 

 

 

 

 

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

5,988

 

 

 

5,876

 

 

 

5,433

 

 

 

4,940

 

 

 

4,806

 

 

 

22,237

 

 

 

18,317

 

Occupancy and equipment

 

1,919

 

 

 

2,035

 

 

 

2,193

 

 

 

2,150

 

 

 

2,411

 

 

 

8,297

 

 

 

10,682

 

Professional services

 

912

 

 

 

994

 

 

 

1,000

 

 

 

981

 

 

 

628

 

 

 

3,887

 

 

 

2,260

 

Data processing

 

663

 

 

 

626

 

 

 

689

 

 

 

654

 

 

 

432

 

 

 

2,632

 

 

 

2,409

 

Director fees

 

378

 

 

 

325

 

 

 

339

 

 

 

352

 

 

 

335

 

 

 

1,394

 

 

 

1,303

 

FDIC insurance

 

898

 

 

 

255

 

 

 

262

 

 

 

223

 

 

 

231

 

 

 

1,638

 

 

 

1,232

 

Marketing

 

112

 

 

 

102

 

 

 

107

 

 

 

45

 

 

 

87

 

 

 

366

 

 

 

404

 

Other

 

1,601

 

 

 

818

 

 

 

913

 

 

 

580

 

 

 

749

 

 

 

3,912

 

 

 

3,132

 

Total noninterest expense

 

12,471

 

 

 

11,031

 

 

 

10,936

 

 

 

9,925

 

 

 

9,679

 

 

 

44,363

 

 

 

39,739

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income before income tax expense

 

10,594

 

 

 

11,591

 

 

 

15,484

 

 

 

10,314

 

 

 

9,949

 

 

 

47,983

 

 

 

33,861

 

Income tax expense

 

2,573

 

 

 

2,417

 

 

 

3,462

 

 

 

2,102

 

 

 

2,135

 

 

 

10,554

 

 

 

7,275

 

Net income

$

8,021

 

 

$

9,174

 

 

$

12,022

 

 

$

8,212

 

 

$

7,814

 

 

$

37,429

 

 

$

26,586

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings Per Common Share:

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

$

1.04

 

 

$

1.19

 

 

$

1.56

 

 

$

1.05

 

 

$

1.00

 

 

$

4.84

 

 

$

3.38

 

Diluted

$

1.04

 

 

$

1.18

 

 

$

1.55

 

 

$

1.04

 

 

$

0.99

 

 

$

4.79

 

 

$

3.36

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted Average Common Shares Outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

7,507,540

 

 

 

7,553,718

 

 

 

7,556,645

 

 

 

7,637,077

 

 

 

7,660,307

 

 

 

7,563,363

 

 

 

7,706,407

 

Diluted

 

7,563,116

 

 

 

7,612,421

 

 

 

7,614,243

 

 

 

7,719,405

 

 

 

7,726,420

 

 

 

7,640,218

 

 

 

7,761,811

 

Dividends per common share

$

0.20

 

 

$

0.20

 

 

$

0.20

 

 

$

0.20

 

 

$

0.18

 

 

$

0.80

 

 

$

0.64

 

 

BANKWELL FINANCIAL GROUP, INC.

CONSOLIDATED FINANCIAL HIGHLIGHTS (unaudited)

 

 

For the Quarter Ended

 

For the Year Ended

 

December 31,

2022

 

September 30,

2022

 

June 30,

2022

 

March 31,

2022

 

December 31,

2021

 

December 31,

2022

 

December 31,

2021

Performance ratios:

 

 

 

 

 

 

 

 

 

 

 

 

 

Return on average assets

1.07

%

 

1.47

%

 

1.96

%

 

1.35

%

 

1.32

%

 

1.44

%

 

1.17

%

Return on average shareholders' equity

13.38

%

 

15.73

%

 

22.09

%

 

16.05

%

 

15.44

%

 

16.72

%

 

13.86

%

Return on average tangible common equity

13.52

%

 

15.91

%

 

22.36

%

 

16.25

%

 

15.65

%

 

16.91

%

 

14.05

%

Net interest margin

3.70

%

 

4.12

%

 

4.01

%

 

3.30

%

 

3.43

%

 

3.78

%

 

3.17

%

Efficiency ratio(1)

45.6

%

 

44.1

%

 

43.8

%

 

48.5

%

 

48.8

%

 

45.4

%

 

53.9

%

Net loan charge-offs as a % of average loans

%

 

%

 

%

 

%

 

%

 

%

 

0.23

%

Dividend payout ratio(2)

19.23

%

 

16.95

%

 

12.90

%

 

19.23

%

 

18.18

%

 

16.70

%

 

19.05

%

(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

 

December 31, 2022

 

September 30, 2022

 

June 30, 2022

 

March 31, 2022

 

December 31, 2021

Capital ratios:

 

 

 

 

 

 

 

 

 

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

10.28

%

 

11.42

%

 

11.10

%

 

11.20

%

 

11.18

%

Total Capital to Risk-Weighted Assets(1)

11.07

%

 

12.16

%

 

11.80

%

 

12.00

%

 

12.00

%

Tier I Capital to Risk-Weighted Assets(1)

10.28

%

 

11.42

%

 

11.10

%

 

11.20

%

 

11.18

%

Tier I Capital to Average Assets(1)

9.88

%

 

11.31

%

 

10.15

%

 

9.80

%

 

9.94

%

Tangible common equity to tangible assets

7.26

%

 

8.41

%

 

9.16

%

 

8.32

%

 

8.13

%

Fully diluted tangible book value per common share

$ 30.51

 

 

$ 29.68

 

 

$ 28.75

 

 

$ 26.75

 

 

$ 25.55

 

(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

 

December 31, 2022

 

September 30, 2022

 

June 30, 2022

 

March 31, 2022

 

December 31, 2021

Allowance for loan losses:

 

 

 

 

 

 

 

 

 

Balance at beginning of period

$

18,167

 

 

$

15,773

 

 

$

17,141

 

 

$

16,902

 

 

$

16,803

 

Charge-offs:

 

 

 

 

 

 

 

 

 

Commercial business

 

 

 

 

 

 

 

 

 

 

 

 

 

(26

)

Consumer

 

(11

)

 

 

(8

)

 

 

 

 

 

(4

)

 

 

(5

)

Total charge-offs

 

(11

)

 

 

(8

)

 

 

 

 

 

(4

)

 

 

(31

)

Recoveries:

 

 

 

 

 

 

 

 

 

Commercial real estate

 

 

 

 

 

 

 

77

 

 

 

 

 

 

 

Commercial business

 

 

 

 

21

 

 

 

 

 

 

13

 

 

 

2

 

Consumer

 

3

 

 

 

 

 

 

 

 

 

1

 

 

 

3

 

Total recoveries

 

3

 

 

 

21

 

 

 

77

 

 

 

14

 

 

 

5

 

Net loan (charge-offs) recoveries

 

(8

)

 

 

13

 

 

 

77

 

 

 

10

 

 

 

(26

)

Provision (credit) for loan losses

 

4,272

 

 

 

2,381

 

 

 

(1,445

)

 

 

229

 

 

 

125

 

Balance at end of period

$

22,431

 

 

$

18,167

 

 

$

15,773

 

 

$

17,141

 

 

$

16,902

 

 

 

As of

 

December 31, 2022

 

September 30, 2022

 

June 30, 2022

 

March 31, 2022

 

December 31, 2021

Asset quality:

 

 

 

 

 

 

 

 

 

Nonaccrual loans

 

 

 

 

 

 

 

 

 

Residential real estate

$

2,152

 

 

$

2,137

 

 

$

2,161

 

 

$

2,181

 

 

$

2,380

 

Commercial real estate

 

2,781

 

 

 

2,894

 

 

 

2,955

 

 

 

3,365

 

 

 

3,482

 

Commercial business

 

2,126

 

 

 

2,380

 

 

 

787

 

 

 

817

 

 

 

1,728

 

Construction

 

9,382

 

 

 

9,382

 

 

 

9,382

 

 

 

9,382

 

 

 

8,997

 

Total nonaccrual loans

 

16,441

 

 

 

16,793

 

 

 

15,285

 

 

 

15,745

 

 

 

16,587

 

Other real estate owned

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total nonperforming assets

$

16,441

 

 

$

16,793

 

 

$

15,285

 

 

$

15,745

 

 

$

16,587

 

 

 

 

 

 

 

 

 

 

 

Nonperforming loans as a % of total loans

 

0.61

%

 

 

0.73

%

 

 

0.74

%

 

 

0.79

%

 

 

0.88

%

Nonperforming assets as a % of total assets

 

0.51

%

 

 

0.62

%

 

 

0.63

%

 

 

0.63

%

 

 

0.68

%

Allowance for loan losses as a % of total loans

 

0.84

%

 

 

0.79

%

 

 

0.77

%

 

 

0.86

%

 

 

0.89

%

Allowance for loan losses as a % of nonperforming loans

 

136.43

%

 

 

108.18

%

 

 

103.19

%

 

 

108.87

%

 

 

101.90

%

Total past due loans to total loans

 

0.60

%

 

 

0.78

%

 

 

1.40

%

 

 

0.85

%

 

 

1.72

%

 

Total nonaccrual loans decreased $0.1 million to $16.4 million as of December 31, 2022 when compared to December 31, 2021. Nonperforming assets as a percentage of total assets decreased to 0.51% at December 31, 2022, down from 0.68% at December 31, 2021. The allowance for loan losses at December 31, 2022 was $22.4 million, representing 0.84% of total loans.

Past due loans decreased to $16.1 million, or 0.60% of total loans, as of December 31, 2022, compared to $32.6 million, or 1.72% of total loans, as of December 31, 2021.

 

BANKWELL FINANCIAL GROUP, INC.

LOAN & DEPOSIT PORTFOLIO (unaudited)

(Dollars in thousands)

 

Period End Loan Composition

December 31, 2022

 

September 30, 2022

 

December 31, 2021

 

 

Current QTD % Change

 

YTD % Change

Residential Real Estate

$

60,588

 

$

61,664

 

$

79,987

 

(1.7

)%

 

(24.3

)%

Commercial Real Estate(1)

 

1,921,252

 

 

1,647,928

 

 

1,356,709

 

16.6

 

 

41.6

 

Construction

 

155,198

 

 

117,355

 

 

98,341

 

32.2

 

 

57.8

 

Total Real Estate Loans

 

2,137,038

 

 

1,826,947

 

 

1,535,037

 

17.0

 

 

39.2

 

 

 

 

 

 

 

 

 

 

 

Commercial Business

 

520,447

 

 

443,288

 

 

350,975

 

17.4

 

 

48.3

 

 

 

 

 

 

 

 

 

 

 

Consumer

 

17,963

 

 

16,558

 

 

8,869

 

8.5

 

 

102.5

 

Total Loans

$

2,675,448

 

$

2,286,793

 

$

1,894,881

 

17.0

%

 

41.2

%

 

 

 

 

 

 

 

 

 

 

(1) Includes owner occupied commercial real estate.

Gross loans totaled $2.7 billion at December 31, 2022, an increase of $780.6 million or 41.2% compared to December 31, 2021.

 

Period End Deposit Composition

December 31, 2022

 

September 30, 2022

 

December 31, 2021

 

 

Current QTD % Change

 

YTD % Change

Noninterest bearing demand

$

404,559

 

$

380,365

 

$

398,956

 

6.4

%

 

1.4

%

NOW

 

104,057

 

 

115,200

 

 

119,479

 

(9.7

)

 

(12.9

)

Money Market

 

913,868

 

 

836,564

 

 

954,674

 

9.2

 

 

(4.3

)

Savings

 

151,944

 

 

183,576

 

 

193,631

 

(17.2

)

 

(21.5

)

Time

 

1,226,390

 

 

770,997

 

 

457,258

 

59.1

 

 

168.2

 

Total Deposits

$

2,800,818

 

$

2,286,702

 

$

2,123,998

 

22.5

%

 

31.9

%

 

Total deposits were $2.8 billion at December 31, 2022, compared to $2.1 billion at December 31, 2021, an increase of $676.8 million, or 31.9%. The increase in deposits is primarily a result of an increase in brokered time deposits to fund the significant loan growth during the second half of 2022, increasing by $727.1 million compared to December 31, 2021.

 

BANKWELL FINANCIAL GROUP, INC.

NONINTEREST INCOME (unaudited)

(Dollars in thousands)

 

 

For the Quarter Ended

 

 

 

 

Noninterest income

December 31, 2022

 

September 30, 2022

 

December 31, 2021

 

Dec 22 vs. Sep 22 % Change

 

Dec 22 vs. Dec 21 % Change

Bank owned life insurance

$

273

 

 

$

271

 

 

$

270

 

 

0.7

%

 

1.1

%

Service charges and fees

 

343

 

 

 

240

 

 

 

257

 

 

42.9

 

 

33.5

 

Gains (losses) and fees from sales of loans

 

12

 

 

 

(15

)

 

 

441

 

 

180.0

 

 

(97.3

)

Other

 

(100

)

 

 

(94

)

 

 

(143

)

 

6.4

 

 

30.1

 

Total noninterest income

$

528

 

 

$

402

 

 

$

825

 

 

31.3

%

 

(36.0

)%

 

 

For the Year Ended

 

 

Noninterest income

December 31, 2022

 

December 31, 2021

 

% Change

Gains and fees from sales of loans

$

1,236

 

 

$

2,692

 

(54.1

)%

Bank owned life insurance

 

1,069

 

 

 

1,023

 

4.5

 

Service charges and fees

 

1,072

 

 

 

872

 

22.9

 

Other

 

(337

)

 

 

1,070

 

(131.5

)

Total noninterest income

$

3,040

 

 

$

5,657

 

(46.3

)%

 

Noninterest income decreased by $0.3 million to $0.5 million for the quarter ended December 31, 2022 compared to the quarter ended December 31, 2021. Noninterest income decreased by $2.6 million to $3.0 million for the year ended December 31, 2022 compared to the year ended December 31, 2021.

The decrease in noninterest income was driven by a reduction in loan sales for the quarter and year ended December 31, 2022 compared to the same periods in 2021. Noninterest income also declined for the year ended December 31, 2022 due to a one-time federal payroll tax credit for COVID-19 of $0.9 million recognized in the quarter ended March 31, 2021. The decrease in noninterest income was also due to the absence of $0.7 million of rental income in 2022 due to the disposition of the Company's former headquarters building in the fourth quarter of 2021.

 

BANKWELL FINANCIAL GROUP, INC.

NONINTEREST EXPENSE (unaudited)

(Dollars in thousands)

 

 

For the Quarter Ended

 

 

 

 

Noninterest expense

December 31, 2022

 

September 30, 2022

 

December 31, 2021

 

Dec 22 vs. Sep 22 % Change

 

Dec 22 vs. Dec 21 % Change

Salaries and employee benefits

$

5,988

 

$

5,876

 

$

4,806

 

1.9

%

 

24.6

%

Occupancy and equipment

 

1,919

 

 

2,035

 

 

2,411

 

(5.7

)

 

(20.4

)

Professional services

 

912

 

 

994

 

 

628

 

(8.2

)

 

45.2

 

Data processing

 

663

 

 

626

 

 

432

 

5.9

 

 

53.5

 

Director fees

 

378

 

 

325

 

 

335

 

16.3

 

 

12.8

 

FDIC insurance

 

898

 

 

255

 

 

231

 

252.2

 

 

288.7

 

Marketing

 

112

 

 

102

 

 

87

 

9.8

 

 

28.7

 

Other

 

1,601

 

 

818

 

 

749

 

95.7

 

 

113.8

 

Total noninterest expense

$

12,471

 

$

11,031

 

$

9,679

 

13.1

%

 

28.8

%

 

 

For the Year Ended

 

 

Noninterest expense

December 31, 2022

 

December 31, 2021

 

% Change

Salaries and employee benefits

$

22,237

 

$

18,317

 

21.4

%

Occupancy and equipment

 

8,297

 

 

10,682

 

(22.3

)

Professional services

 

3,887

 

 

2,260

 

72.0

 

Data processing

 

2,632

 

 

2,409

 

9.3

 

Director fees

 

1,394

 

 

1,303

 

7.0

 

FDIC insurance

 

1,638

 

 

1,232

 

33.0

 

Marketing

 

366

 

 

404

 

(9.4

)

Other

 

3,912

 

 

3,132

 

24.9

 

Total noninterest expense

$

44,363

 

$

39,739

 

11.6

%

 

Noninterest expense increased by $2.8 million to $12.5 million for the quarter ended December 31, 2022 compared to the quarter ended December 31, 2021. Noninterest expense increased by $4.6 million to $44.4 million for the year ended December 31, 2022 compared to the year ended December 31, 2021. The increase in noninterest expense was primarily driven by an increase in salaries and employee benefits expense, professional services expense, FDIC insurance, and customer fraud reimbursement and deposit account fraud within Other. These increases were partially offset by a decrease in occupancy and equipment expense.

Salaries and employee benefits expense totaled $6.0 million for the quarter ended December 31, 2022, an increase of $1.2 million when compared to the same period in 2021. Salaries and employee benefits expense totaled $22.2 million for the year ended December 31, 2022, an increase of $3.9 million when compared to the same period in 2021. The increase in salaries and employee benefits expense was driven by an increase in full time equivalent employees, as well as an increase in variable compensation as a result of the Bank's overall growth and improved performance. Full time equivalent employees totaled 136 at December 31, 2022 compared to 126 for the same period in 2021. The increase in salaries and employee benefits expense was partially offset by an increase in deferred loan costs due to higher loan originations.

Professional services expense totaled $0.9 million for the quarter ended December 31, 2022, an increase of $0.3 million when compared to the same period in 2021. Professional services expense totaled $3.9 million for the year ended December 31, 2022, an increase of $1.6 million when compared to the same period in 2021. The increase in professional services expense was primarily driven by consulting fees associated with various projects, including our core system conversion.

FDIC insurance expense totaled $0.9 million for the quarter ended December 31, 2022, an increase of $0.7 million when compared to the same period in 2021. FDIC insurance expense totaled $1.6 million for the year ended December 31, 2022, an increase of $0.4 million when compared to the same period in 2021. The higher FDIC insurance expense is attributed to the overall balance sheet growth and increased use of brokered deposits.

Other expense totaled $1.6 million for the quarter ended December 31, 2022, an increase of $0.9 million when compared to the same period in 2021. Other expense totaled $3.9 million for the year ended December 31, 2022, an increase of $0.8 million. The increase was mainly attributable to four events of customer reimbursed fraud and deposit account fraud recognized in the quarter ended December 31 2022, the largest of which was a $189 thousand customer reimbursement.

Occupancy and equipment expense totaled $1.9 million for the quarter ended December 31, 2022, a decrease of $0.5 million when compared to the same period in 2021. Occupancy and equipment expense totaled $8.3 million for the year ended December 31, 2022, a decrease of $2.4 million when compared to the same period in 2021. The decrease in occupancy and equipment expense was primarily driven by the curtailment of additional cleaning costs associated with precautions taken to prevent the spread of COVID-19 during the year ended December 31, 2021. In addition, the decrease in occupancy and equipment expense was impacted by a reduction in lease expense as a result of the branch closure in New Canaan, which occurred during the third quarter of 2021.

 

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

December 31, 2022

 

September 30, 2022

 

June 30, 2022

 

March 31, 2022

 

December 31, 2021

Total Equity

$

238,469

 

 

$

231,500

 

 

$

225,467

 

 

$

210,220

 

 

$

201,987

 

Less:

 

 

 

 

 

 

 

 

 

Goodwill

 

2,589

 

 

 

2,589

 

 

 

2,589

 

 

 

2,589

 

 

 

2,589

 

Other intangibles

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Tangible Common Equity

$

235,880

 

 

$

228,911

 

 

$

222,878

 

 

$

207,631

 

 

$

199,398

 

 

 

 

 

 

 

 

 

 

 

Total Assets

$

3,252,449

 

 

$

2,722,995

 

 

$

2,435,552

 

 

$

2,496,877

 

 

$

2,456,264

 

Less:

 

 

 

 

 

 

 

 

 

Goodwill

 

2,589

 

 

 

2,589

 

 

 

2,589

 

 

 

2,589

 

 

 

2,589

 

Other intangibles

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Tangible Assets

$

3,249,860

 

 

$

2,720,406

 

 

$

2,432,963

 

 

$

2,494,288

 

 

$

2,453,675

 

 

 

 

 

 

 

 

 

 

 

Tangible Common Equity to Tangible Assets

 

7.26

%

 

 

8.41

%

 

 

9.16

%

 

 

8.32

%

 

 

8.13

%

 

 

As of

Computation of Fully Diluted Tangible Book Value per Common Share

December 31, 2022

 

September 30, 2022

 

June 30, 2022

 

March 31, 2022

 

December 31, 2021

Total shareholders' equity

$

238,469

 

$

231,500

 

$

225,467

 

$

210,220

 

$

201,987

Less:

 

 

 

 

 

 

 

 

 

Preferred stock

 

 

 

 

 

 

 

 

 

Common shareholders' equity

$

238,469

 

$

231,500

 

$

225,467

 

$

210,220

 

$

201,987

Less:

 

 

 

 

 

 

 

 

 

Goodwill

 

2,589

 

 

2,589

 

 

2,589

 

 

2,589

 

 

2,589

Other intangibles

 

 

 

 

 

 

 

 

 

Tangible common shareholders' equity

$

235,880

 

$

228,911

 

$

222,878

 

$

207,631

 

$

199,398

 

 

 

 

 

 

 

 

 

 

Common shares issued and outstanding

 

7,730,699

 

 

7,711,843

 

 

7,752,389

 

 

7,761,338

 

 

7,803,166

 

 

 

 

 

 

 

 

 

 

Fully Diluted Tangible Book Value per Common Share

$

30.51

 

$

29.68

 

$

28.75

 

$

26.75

 

$

25.55

 

BANKWELL FINANCIAL GROUP, INC.

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

(Dollars in thousands)

 

 

For the Quarter Ended

 

For the Year Ended

Computation of Efficiency Ratio

December 31, 2022

 

September 30, 2022

 

June 30, 2022

 

March 31, 2022

 

December 31, 2021

 

December 31, 2022

 

December 31, 2021

Noninterest expense

$

12,471

 

 

$

11,031

 

 

$

10,936

 

 

$

9,925

 

 

$

9,679

 

 

$

44,363

 

 

$

39,739

 

Less:

 

 

 

 

 

 

 

 

 

 

 

 

 

Amortization of intangible assets

 

 

 

 

 

 

 

 

 

 

 

 

 

48

 

 

 

 

 

 

76

 

Other real estate owned expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted noninterest expense

$

12,471

 

 

$

11,031

 

 

$

10,936

 

 

$

9,925

 

 

$

9,631

 

 

$

44,363

 

 

$

39,663

 

Net interest income

$

26,809

 

 

$

24,601

 

 

$

23,823

 

 

$

19,510

 

 

$

18,928

 

 

$

94,743

 

 

$

67,886

 

Noninterest income

 

528

 

 

 

402

 

 

 

1,152

 

 

 

958

 

 

 

825

 

 

 

3,040

 

 

 

5,657

 

Less:

 

 

 

 

 

 

 

 

 

 

 

 

 

Net gain on sale of available for sale securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gain on sale of other real estate owned, net

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating revenue

$

27,337

 

 

$

25,003

 

 

$

24,975

 

 

$

20,468

 

 

$

19,753

 

 

$

97,783

 

 

$

73,543

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Efficiency ratio

 

45.6

%

 

 

44.1

%

 

 

43.8

%

 

 

48.5

%

 

 

48.8

%

 

 

45.4

%

 

 

53.9

%

 

 

For the Quarter Ended

 

For the Year Ended

Computation of Return on Average Tangible Common Equity

December 31, 2022

 

September 30, 2022

 

June 30, 2022

 

March 31, 2022

 

December 31, 2021

 

December 31, 2022

 

December 31, 2021

Net Income Attributable to Common Shareholders

$

8,021

 

 

$

9,174

 

 

$

12,022

 

 

$

8,212

 

 

$

7,814

 

 

$

37,429

 

 

$

26,586

 

Total average shareholders' equity

$

237,922

 

 

$

231,378

 

 

$

218,250

 

 

$

207,541

 

 

$

200,752

 

 

$

223,874

 

 

$

191,808

 

Less:

 

 

 

 

 

 

 

 

 

 

 

 

 

Average Goodwill

 

2,589

 

 

 

2,589

 

 

 

2,589

 

 

 

2,589

 

 

 

2,589

 

 

 

2,589

 

 

 

2,589

 

Average Other intangibles

 

 

 

 

 

 

 

 

 

 

 

 

 

45

 

 

 

 

 

 

59

 

Average tangible common equity

$

235,333

 

 

$

228,789

 

 

$

215,661

 

 

$

204,952

 

 

$

198,118

 

 

$

221,285

 

 

$

189,160

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Annualized Return on Average Tangible Common Equity

 

13.52

%

 

 

15.91

%

 

 

22.36

%

 

 

16.25

%

 

 

15.65

%

 

 

16.91

%

 

 

14.05

%

 

BANKWELL FINANCIAL GROUP, INC.

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

(Dollars in thousands)

 

 

For the Quarter Ended

 

December 31, 2022

 

December 31, 2021

 

Average Balance

 

Interest

 

Yield/

Rate (4)

 

Average

Balance

 

Interest

 

Yield/

Rate (4)

Assets:

 

 

 

 

 

 

 

 

 

 

 

Cash and Fed funds sold

$

231,767

 

$

2,150

 

3.68

%

 

$

233,196

 

$

90

 

0.15

%

Securities(1)

 

123,274

 

 

887

 

2.88

 

 

 

104,797

 

 

756

 

2.89

 

Loans:

 

 

 

 

 

 

 

 

 

 

 

Commercial real estate

 

1,828,306

 

 

24,998

 

5.35

 

 

 

1,337,147

 

 

15,104

 

4.42

 

Residential real estate

 

61,057

 

 

599

 

3.92

 

 

 

83,763

 

 

694

 

3.31

 

Construction

 

138,552

 

 

2,185

 

6.17

 

 

 

95,611

 

 

972

 

3.98

 

Commercial business

 

499,030

 

 

8,549

 

6.70

 

 

 

347,394

 

 

4,222

 

4.75

 

Consumer

 

16,875

 

 

214

 

5.05

 

 

 

8,904

 

 

89

 

3.97

 

Total loans

 

2,543,820

 

 

36,545

 

5.62

 

 

 

1,872,819

 

 

21,081

 

4.40

 

Federal Home Loan Bank stock

 

5,371

 

 

64

 

4.72

 

 

 

2,814

 

 

16

 

2.28

 

Total earning assets

 

2,904,232

 

$

39,646

 

5.34

%

 

 

2,213,626

 

$

21,943

 

3.88

%

Other assets

 

76,703

 

 

 

 

 

 

130,512

 

 

 

 

Total assets

$

2,980,935

 

 

 

 

 

$

2,344,138

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities and shareholders' equity:

 

 

 

 

 

 

 

 

 

 

 

Interest bearing liabilities:

 

 

 

 

 

 

 

 

 

 

 

NOW

$

107,118

 

$

45

 

0.17

%

 

$

114,158

 

$

51

 

0.18

%

Money market

 

837,486

 

 

4,158

 

1.97

 

 

 

874,352

 

 

1,097

 

0.50

 

Savings

 

170,903

 

 

581

 

1.35

 

 

 

190,118

 

 

100

 

0.21

 

Time

 

1,002,012

 

 

6,299

 

2.49

 

 

 

438,627

 

 

950

 

0.86

 

Total interest bearing deposits

 

2,117,519

 

 

11,083

 

2.08

 

 

 

1,617,255

 

 

2,198

 

0.54

 

Borrowed Money

 

170,202

 

 

1,701

 

3.91

 

 

 

89,726

 

 

767

 

3.35

 

Total interest bearing liabilities

 

2,287,721

 

$

12,784

 

2.22

%

 

 

1,706,981

 

$

2,965

 

0.69

%

Noninterest bearing deposits

 

407,923

 

 

 

 

 

 

383,557

 

 

 

 

Other liabilities

 

47,369

 

 

 

  <