Market Overview

Bankwell Financial Group Reports Record Second Quarter Net Income of $2.3 Million and Loans Grow to over $1 Billion

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NEW CANAAN, Conn.--(BUSINESS WIRE)--

Bankwell Financial Group, Inc. (NASDAQ: BWFG) reported GAAP net income of $2.3 million for the second quarter of 2015. In addition, Bankwell Financial Group, Inc. reached record loan levels at $1.0 billion, driven by strong organic growth.

"I am very pleased to announce another quarter of outstanding performance at Bankwell. We had strong revenue growth, achieved record earnings that surpassed $2 million for the quarter, and continued to set new records for loan growth, with loans outstanding exceeding $1 billion," noted Bankwell Financial Group President and CEO Christopher R. Gruseke.

He added, "Key metrics for the quarter include a 63.6% efficiency ratio and a 0.80% return on average assets. With a 7.7% return on average tangible common equity, we continue our steady progress toward delivering double digit returns for our shareholders."

Earnings

Revenues (net interest income plus non-interest income) for the quarter ended June 30, 2015 were $11.6 million, an increase of 48.1% compared to the quarter ended June 30, 2014. Revenues for the six months ended June 30, 2015 were $22.1 million, an increase of 40.3% compared to the six months ended June 30, 2014. Net interest income for the quarter ended June 30, 2015 was $10.7 million, an increase of 50.3% compared to the quarter ended June 30, 2014. Our strong net interest income was fueled by record earning asset growth and a net interest margin of 3.97% for the quarter.

The Company continues to focus on expense control as indicated by our improving efficiency ratio. The Company's efficiency ratio for the quarters ended June 30, 2015 and June 30, 2014 were 63.6% and 73.8%, respectively. The Company's efficiency ratio for the six months ended June 30, 2015 and June 30, 2014 were 65.0% and 74.1%, respectively.

Financial Condition

Assets totaled $1.2 billion at June 30, 2015, an annualized increase of 20.9% compared to assets of $1.1 billion at December 31, 2014. This increase reflects strong organic loan growth in the first and second quarter of 2015. Total gross loans were $1.0 billion at June 30, 2015, an annualized increase of 23.1% compared to December 31, 2014. Deposits increased to $951.6 million, an annualized increase of 27.8% over December 31, 2014, with core deposits (total deposits less time deposits) showing an annualized increase of 29.1% over December 31, 2014 to $603.6 million.

Asset Quality

Asset quality remained exceptionally strong at June 30, 2015. Non-performing assets as a percentage of total assets was 0.25% at June 30, 2015, down from 0.39% at December 31, 2014. The allowance for loan losses at June 30, 2015 was $12.2 million, representing 1.30% of total loans, excluding acquired loans.

Capital

Shareholders' equity continued to remain strong at $133.7 million as of June 30, 2015, an increase of $4.5 million compared to December 31, 2014, primarily a result of net income for the six months ended June 30, 2015 of $4.2 million. As of June 30, 2015, the tangible common equity ratio and tangible book value per share were 9.85% and $16.95, respectively.

About Bankwell Financial Group

Bankwell is a commercial bank that serves the banking and lending needs of residents and businesses throughout Fairfield and New Haven Counties, CT. For more information about this press release, interested parties may contact Christopher R. Gruseke, President and Chief Executive Officer or Ernest J. Verrico Sr., 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.

         
BANKWELL FINANCIAL GROUP, INC.
CONSOLIDATED BALANCE SHEETS (unaudited)
(Dollars in thousands, except share data)
 
June 30, March 31, December 31, June 30,
2015 2015 2014 2014
Assets
Cash and due from banks $ 75,550 $ 19,428 $ 48,559 $ 130,535
Held to maturity investment securities, at amortized cost 11,341 11,398 11,454 13,742
Available for sale investment securities, at fair value 46,883 50,736 65,009 49,114
Loans held for sale - - 586 325
Loans receivable (net of allowance for loan losses of $12,230, $11,596,
$10,860, $8,985 at June 30, 2015, March 31, 2015, December 31, 2014
and June 30, 2014, respectively) 1,021,693 964,034 915,981 671,500
Foreclosed real estate 830 830 950 829
Accrued interest receivable 3,575 3,342 3,323 2,464
Federal Home Loan Bank stock, at cost 6,918 6,794 6,109 4,834
Premises and equipment, net 11,868 12,120 11,910 8,078
Bank-owned life insurance 23,395 23,211 23,028 10,202
Goodwill 2,589 2,589 2,589 -
Other intangible assets 745 797 848 427
Deferred income taxes, net 7,869 7,436 7,156 5,479
Other assets   1,418   1,748   2,029   4,258
Total assets $ 1,214,674 $ 1,104,463 $ 1,099,531 $ 901,787
 
Liabilities & Shareholders' Equity
Liabilities
Deposits
Noninterest-bearing $ 162,546 $ 142,920 $ 166,030 $ 146,596
Interest-bearing   789,035   691,783   669,409   583,590
Total deposits 951,581 834,703 835,439 730,186
 
Advances from the Federal Home Loan Bank 124,000 133,000 129,000 47,000
Accrued expenses and other liabilities   5,424   5,352   5,882   7,431
Total liabilities   1,081,005   973,055   970,321   784,617
 
Commitments and Contingencies - - - -
 
Shareholders' equity
Preferred stock, senior noncumulative perpetual, Series C, no par;
10,980 shares issued and outstanding at June 30, 2015,
March 31, 2015, December 31, 2014 and June 30, 2014, respectively;
liquidation value of $1,000 per share. 10,980 10,980 10,980 10,980
Common stock, no par value; 10,000,000 shares authorized,
7,240,704, 7,243,252, 7,185,482 and 6,593,485 shares issued at
June 30, 2015, March 31, 2015, December 31, 2014
and June 30, 2014, respectively. 108,038 107,765 107,265 97,296
Retained earnings 14,538 12,280 10,434 8,271
Accumulated other comprehensive income   113   383   531   623
Total shareholders' equity   133,669   131,408   129,210   117,170
 
Total liabilities and shareholders' equity $ 1,214,674 $ 1,104,463 $ 1,099,531 $ 901,787
 
               
BANKWELL FINANCIAL GROUP, INC.
CONSOLIDATED STATEMENTS OF INCOME (unaudited)
(Dollars in thousands, except per share data)
 
Three Months Ended

June 30,

Six Months Ended

June 30,

2015 2014 2015 2014
Interest and dividend income
Interest and fees on loans $ 11,897 $ 7,558 $ 22,653 $ 14,986
Interest and dividends on securities 474 437 978 848
Interest on cash and cash equivalents   17   49   29   71
Total interest income   12,388   8,044   23,660   15,905
 
Interest expense
Interest expense on deposits 1,231 730 2,269 1,352
Interest on borrowings   416   166   757   259
Total interest expense   1,647   896   3,026   1,611
 
Net interest income 10,741 7,148 20,634 14,294
 
Provision for loan losses   654   70   1,387   282
 
Net interest income after provision for loan losses   10,087   7,078   19,247   14,012
 
Noninterest income
Gains and fees from sales of loans 349 213 438 642
Service charges and fees 233 143 441 267
Bank owned life insurance 185 86 368 171
Gain on sale of foreclosed real estate, net - - 18 -
Other   87   240   187   372
Total noninterest income   854   682   1,452   1,452
 
Noninterest expense
Salaries and employee benefits 4,057 3,284 8,019 6,625
Occupancy and equipment 1,310 1,030 2,659 2,096
Data processing 405 300 741 639
Professional services 369 272 694 641
Marketing 271 218 418 328
FDIC insurance 163 107 321 225
Director fees 141 143 289 282
Amortization of intangibles 51 27 102 54
Foreclosed real estate 6 - 10 12
Merger and acquisition related expenses - 122 - 263
Other   607   394   1,097   774
Total noninterest expense   7,380   5,897   14,350   11,939
 
Income before income tax expense 3,561 1,863 6,349 3,525
 
Income tax expense   1,275   636   2,190   1,175
 
Net income $ 2,286 $ 1,227 $ 4,159 $ 2,350
 
 
Net income attributable to common shareholders $ 2,259 $ 1,200 $ 4,104 $ 2,295
 
Earnings Per Common Share:
Basic $ 0.31 $ 0.23 $ 0.57 $ 0.51
Diluted 0.31 0.23 0.57 0.51
 
Weighted Average Common Shares Outstanding:
Basic 7,042,290 5,022,836 7,035,432 4,395,914
Diluted 7,056,916 5,045,003 7,056,566 4,423,931
 
 
BANKWELL FINANCIAL GROUP, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (unaudited)
(Dollars in thousands, except per share data)
                   
 
Three Months Ended

June 30,

Six Months Ended

June 30,

2015 2014 2015 2014
Performance ratios:
Return on average assets 0.80 % 0.58 % 0.75 % 0.59 %
Return on average stockholders' equity 6.91 % 5.46 % 6.36 % 5.93 %
Return on average tangible common equity 7.65 % 6.12 % 7.05 % 6.76 %
Net interest margin 3.97 % 3.68 % 3.93 % 3.82 %
Efficiency ratio (1) 63.6 % 73.8 % 65.0 % 74.1 %
 
Net loan recoveries (charge-offs) as a % of average loans 0.00 % 0.05 % 0.00 % 0.05 %
 
As of
June 30,

2015

March 31,

2015

  December 31,

2014

June 30,

2014

Capital ratios:
Total Common Equity Tier 1 Capital to Risk-Weighted Assets (2) 11.44 % 12.08 % N/A N/A
Total Capital to Risk-Weighted Assets (2) 12.59 % 13.26 % 13.55 % 16.48 %
Tier I Capital to Risk-Weighted Assets (2) 11.44 % 12.08 % 12.47 % 15.23 %
Tier I Capital to Average Assets (2) 10.71 % 10.99 % 11.12 % 12.49 %
Tangible common equity to tangible assets 9.85 % 10.63 % 10.47 % 11.73 %
 
Tangible book value per common share (3) $ 16.95 $ 16.62 $ 16.35 $ 16.32
 
Asset quality:
Nonaccrual loans $ 2,205 $ 2,451 $ 3,362 $ 1,111
Other real estate owned   830     830     950     829  
Total non-performing assets $ 3,035   $ 3,281   $ 4,312   $ 1,940  
 
Loans past due 90 days and still accruing $ 1,479 $ 1,671 $ 1,872 $ 1,294
 
Nonperforming loans as a % of total loans 0.21 % 0.25 % 0.36 % 0.16 %
 
Nonperforming assets as a % of total assets 0.25 % 0.30 % 0.39 % 0.22 %
 
Allowance for loan losses as a % of total loans 1.18 % 1.18 % 1.17 % 1.32 %
 
Allowance for loan losses as a % of nonperforming loans 554.65 % 473.11 % 323.02 % 808.73 %
 
(1) Efficiency ratio is defined as non-interest expenses, less merger and acquisition related expenses and other real estate owned expenses, divided by our operating revenue, which is equal to net interest income plus non-interest income excluding gains and losses on sales of securities and gains and losses on other real estate owned. In our judgment, the adjustments made to operating revenue allow investors and analysts to better assess our operating expenses in relation to our core operating revenue by removing the volatility that is associated with certain one-time items and other discrete items that are unrelated to our core business.
 
(2) Represents Bank ratios.
 
(3) Excludes preferred stock and unvested restricted stock awards of 198,414, 200,962, 165,862 and 111,324 as of June 30, 2015, March 31, 2015, December 31, 2014 and June 30, 2014, respectively.
 
 
BANKWELL FINANCIAL GROUP, INC.
NET INTEREST MARGIN ANALYSIS ON A FULLY TAX EQUIVALENT BASIS
(Dollars in thousands)
                         
For the Three Months Ended
June 30, 2015 June 30, 2014
Average Yield/ Average Yield/
Balance Interest Rate Balance Interest Rate
Assets:
Cash and Fed funds sold $ 29,339 $ 16 0.22 % $ 78,646 $ 49 0.25 %
Securities (1) 60,049 559 3.68 % 51,755 529 4.05 %
Loans:
Commercial real estate 583,036 7,333 4.98 % 335,263 4,086 4.82 %
Residential real estate 174,021 1,578 3.59 % 160,899 1,467 3.61 %
Construction (2) 68,073 803 4.66 % 42,377 515 4.80 %
Commercial business 149,067 1,935 5.13 % 98,113 1,239 4.99 %
Home equity 18,176 169 3.73 % 13,124 122 3.74 %
Consumer 2,478 30 4.84 % 714 15 8.17 %
Acquired loan portfolio non accrual loans (net of mark)   2,968   50 6.81 %   3,220   116 14.49 %
Total loans 997,819 11,898 4.72 % 653,710 7,560 4.57 %
Federal Home Loan Bank stock   6,859   27 1.57 %   4,881   18 1.47 %
Total earning assets 1,094,066 $ 12,500 4.52 % 788,992 $ 8,156 4.09 %
Other assets   53,120   57,416
Total assets $ 1,147,186 $ 846,408
 
Liabilities and shareholders' equity:
Interest-bearing liabilities:
NOW $ 62,331 17 0.11 % $ 52,605 15 0.11 %
Money market 241,183 324 0.54 % 173,202 167 0.39 %
Savings 101,903 192 0.76 % 92,501 68 0.30 %
Time   315,820   698 0.89 %   233,044   481 0.83 %
Total interest-bearing deposits 721,237 1,231 0.68 % 551,352 731 0.53 %
Borrowed Money   133,744   416 1.25 %   48,089   166 1.39 %
Total interest bearing liabilities 854,981 $ 1,647 0.77 % 599,441 $ 897 0.60 %
Noninterest-bearing deposits 149,418 127,051
Other liabilities   10,049   29,799
Total liabilities 1,014,448 756,291
Shareholders' equity   132,738   90,117
Total liabilities and shareholders' equity $ 1,147,186 $ 846,408
Net interest income (3) $ 10,853 $ 7,259
Interest rate spread 3.75 % 3.49 %
Net interest margin (4) 3.97 % 3.68 %
 
(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 $112 thousand and $111 thousand, respectively for the three months ended June 30, 2015, and 2014.
(4) Net interest income as a percentage of earning assets.
 
 
BANKWELL FINANCIAL GROUP, INC.
NET INTEREST MARGIN ANALYSIS ON A FULLY TAX EQUIVALENT BASIS
(Dollars in thousands)
                         
For the Six Months Ended
June 30, 2015 June 30, 2014
Average Yield/ Average Yield/
Balance Interest Rate Balance Interest Rate
Assets:
Cash and Fed funds sold $ 24,131 $ 28 0.24 % $ 55,672 $ 71 0.26 %
Securities (1) 63,262 1,150 3.64 % 49,751 1,031 4.14 %
Loans:
Commercial real estate 555,277 13,603 4.87 % 329,700 8,051 4.86 %
Residential real estate 173,665 3,158 3.64 % 158,508 2,863 3.61 %
Construction (2) 67,979 1,596 4.67 % 45,854 1,045 4.53 %
Commercial business 147,568 3,791 5.11 % 98,087 2,408 4.88 %
Home equity 18,124 339 3.77 % 13,666 249 3.68 %
Consumer 2,641 64 4.85 % 610 27 8.80 %
Acquired loan portfolio non accrual loans (net of mark)   3,037   104 6.93 %   3,466   344 20.03 %
Total loans 968,291 22,655 4.65 % 649,891 14,987 4.59 %
Federal Home Loan Bank stock   6,651   54 1.61 %   4,834   36 1.49 %
Total earning assets 1,062,335 $ 23,887 4.47 % 760,148 $ 16,125 4.22 %
Other assets   49,358   47,324
Total assets $ 1,111,693 $ 807,472
 
Liabilities and shareholders' equity:
Interest-bearing liabilities:
NOW $ 57,458 32 0.11 % $ 52,668 28 0.11 %
Money market 235,595 605 0.52 % 172,859 346 0.40 %
Savings 91,003 278 0.62 % 100,240 151 0.30 %
Time   310,931   1,353 0.88 %   208,151   827 0.80 %
Total interest-bearing deposits 694,987 2,268 0.66 % 533,918 1,352 0.51 %
Borrowed Money   127,053   757 1.20 %   48,901   259 1.07 %
Total interest bearing liabilities 822,040 $ 3,025 0.74 % 582,819 $ 1,611 0.56 %
Noninterest-bearing deposits 151,516 124,475
Other liabilities   6,355   20,265
Total liabilities 979,911 727,559
Shareholders' equity   131,782   79,913
Total liabilities and shareholders' equity $ 1,111,693 $ 807,472
Net interest income (3) $ 20,862 $ 14,514
Interest rate spread 3.73 % 3.66 %
Net interest margin (4) 3.93 % 3.82 %
 
(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 $228 thousand and $220 thousand, respectively for the six months ended June 30, 2015, and 2014.
(4) Net interest income as a percentage of earning assets.

Bankwell Financial Group, Inc.
Christopher R. Gruseke, 203-652-0166
President and Chief Executive Officer
or
Ernest J. Verrico Sr., 203-652-0166
Executive Vice President and Chief Financial Officer

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