Market Overview

Bankwell Financial Group Reports Record Third Quarter Net Income of $3.1 Million or $0.41 Per Share and Declares a 40% Increase to the Quarterly Dividend

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

Bankwell Financial Group, Inc. (NASDAQ: BWFG) reported GAAP net income of $3.1 million or $0.41 per share for the third quarter of 2016, versus $2.3 million or $0.31 per share for the same period last year.

The Company's Board of Directors declared a $0.07 per share cash dividend, payable November 28, 2016 to shareholders of record on November 18, 2016, representing a 40% increase when compared to the last quarter.

Third Quarter 2016 Highlights:

  • Total revenue (net interest income plus non-interest income) reached $13.3 million.
  • Diluted earnings per share were $0.41; an increase of 32% compared to the third quarter of 2015.
  • Tax equivalent net interest margin was 3.57% for the third quarter of 2016.
  • Total non-interest income was $0.8 million, which is 6% of total revenue.
  • The efficiency ratio was 55.7%, compared to 57.9% in the third quarter of 2015.
  • The tangible common equity ratio and tangible book value per share were 8.80% and $18.57, respectively.
  • Total gross loans exceeded $1.3 billion and total assets approached $1.6 billion.
  • The allowance for loan losses was $17.3 million and represents 1.30% of total loans.
  • Nonperforming assets dropped to 0.25% of total assets.
  • Investment securities totaled $99.7 million and represents 6% of total assets.
  • Total deposits exceeded $1.2 billion.

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

"Bankwell has delivered another record quarter. We continue to experience strong organic growth; our loan portfolio increased at an annualized rate of 15% during the third quarter. Our balance sheet, meanwhile, remains unblemished with non-performing assets as a percentage of total assets of only 0.25%. We continue to extract operational efficiencies wherever we can and have improved our efficiency ratio to an outstanding 55.7% for the quarter."

"Finally, I am pleased to announce that, as a result of our continued strong financial performance, and as part of our commitment to deliver returns for our shareholders, we are increasing our quarterly dividend by 40%."

Earnings

Net income for the quarter ended September 30, 2016 was $3.1 million, an increase of 39% compared to the quarter ended September 30, 2015. Net income for the nine months ended September 30, 2016 was $9.0 million, an increase of 41% compared to the nine months ended September 30, 2015. Revenues (net interest income plus non-interest income) for the quarter ended September 30, 2016 were $13.3 million, an increase of 10% compared to the quarter ended September 30, 2015. Revenues for the nine months ended September 30, 2016 were $38.1 million, an increase of 11% compared to the nine months ended September 30, 2015. Net interest income for the quarter ended September 30, 2016 was $12.5 million, an increase of 15% compared to the quarter ended September 30, 2015. Our strong net income, revenues and net interest income growth were fueled by continued earning asset growth.

Basic and diluted earnings per share for the quarter ended September 30, 2016 was $0.42 and $0.41, respectively, compared to $0.31 for the quarter ended September 30, 2015.

The Company continues to focus on expense control as indicated by our improving efficiency ratio. The Company's efficiency ratio for the quarters ended September 30, 2016 and September 30, 2015 were 55.7% and 57.9%, respectively. The Company's efficiency ratio for the nine months ended September 30, 2016 and September 30, 2015 were 56.8% and 62.2%, respectively.

Noninterest Income and Expense

Noninterest income decreased $461 thousand or 38% to $0.8 million for the three months ended September 30, 2016 compared to the three months ended September 30, 2015 and decreased $369 thousand or 14% to $2.3 million for the nine months ended September 30, 2016 compared to the nine months ended September 30, 2015. The decrease in noninterest income was primarily driven by a reduction in the gains and fees from the sales of loans for the three and nine months ended September 30, 2016 when compared to the prior periods.

Noninterest expense increased $323 thousand or 5% for the three months ended September 30, 2016 compared to the three months ended September 30, 2015. The increase was primarily driven by an increase in professional services and salaries and employee benefits. Salaries and employee benefits increased $111 thousand or 3% for the three months ended September 30, 2016 compared to the three months ended September 30, 2015 as a result of an increase in full time equivalent employees. Professional services increased $182 thousand or 54% for the three months ended September 30, 2016 compared to the three months ended September 30, 2015 as a result of an increase in fees paid in relation to strategic initiatives.

Noninterest expense increased $286 thousand or 1% for the nine months ended September 30, 2016 compared to the nine months ended September 30, 2015. The increase was primarily driven by an increase in professional services and occupancy and equipment expense. Professional services increased $224 thousand or 22% for the nine months ended September 30, 2016 compared to the nine months ended September 30, 2015 as a result of an increase in fees paid in relation to strategic initiatives. Occupancy and equipment expense increased $206 thousand or 5% for the nine months ended September 30, 2016 compared to the nine months ended September 30, 2015 as a result of an increase in IT related expenses to support growth initiatives and rent expense related to the opening of the Norwalk Branch in March of 2015.

Financial Condition

Assets totaled $1.6 billion at September 30, 2016, an annualized increase of 24% compared to assets of $1.3 billion at December 31, 2015. This increase reflects strong organic loan growth. Total gross loans were $1.3 billion at September 30, 2016, an annualized increase of 21% compared to December 31, 2015. Commercial real estate loans have experienced the most significant growth, up by $119.5 million. Deposits increased to over $1.2 billion, an annualized increase of 22% over December 31, 2015.

Asset Quality

Asset quality remained exceptionally strong at September 30, 2016. Non-performing assets as a percentage of total assets was 0.25% at September 30, 2016, down from 0.38% at December 31, 2015. The allowance for loan losses at September 30, 2016 was $17.3 million, representing 1.30% of total loans.

Capital

Shareholders' equity totaled $140.6 million as of September 30, 2016, an increase of $8.8 million compared to December 31, 2015, primarily a result of net income for the nine months ended September 30, 2016 of $9.0 million. As of September 30, 2016, the tangible common equity ratio and tangible book value per share were 8.80% and $18.57, 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)
         
September 30, June 30, March 31, December 31, September 30,
2016 2016 2016 2015 2015
Assets
Cash and due from banks $ 94,731 $ 92,745 $ 69,512 $ 49,562 $ 86,830
Federal funds sold   1,357   1,932     3,194     39,035   -  
Cash and cash equivalents 96,088 94,677 72,706 88,597 86,830
 
Held to maturity investment securities, at amortized cost 16,909 16,959 17,010 10,226 11,282
Available for sale investment securities, at fair value 82,752 83,837 91,528 40,581 45,023
Loans held for sale 400 - - - 252

Loans receivable (net of allowance for loan losses of $17,250, $16,100, $14,810, $14,169 and $13,720 at September 30, 2016, June 30, 2016, March 31, 2016, December 31, 2015 and September 30, 2015, respectively)

1,305,065 1,256,949 1,177,905 1,129,748 1,108,439
Foreclosed real estate 272 492 878 1,248 1,328
Accrued interest receivable 4,499 4,708 4,370 4,071 3,831
Federal Home Loan Bank stock, at cost 7,943 7,393 7,158 6,554 6,918
Premises and equipment, net 10,314 10,659 10,830 11,163 11,505
Bank-owned life insurance 24,277 24,103 23,929 23,755 23,578
Goodwill 2,589 2,589 2,589 2,589 2,589
Other intangible assets 532 572 612 652 694
Deferred income taxes, net 9,874 9,487 8,814 8,337 8,604
Other assets   4,072   3,695     1,881     2,851   2,472  
Total assets $ 1,565,586 $ 1,516,120   $ 1,420,210   $ 1,330,372 $ 1,313,345  
 
Liabilities & Shareholders' Equity
Liabilities
Deposits
Noninterest-bearing $ 176,405 $ 178,917 $ 165,968 $ 164,553 $ 148,732
Interest-bearing   1,040,537   1,001,674     927,766     882,389   876,957  
Total deposits 1,216,942 1,180,591 1,093,734 1,046,942 1,025,689
 
Advances from the Federal Home Loan Bank 175,000 165,000 160,000 120,000 120,000
Subordinated debentures 25,038 25,025 25,012 25,000 25,037
Accrued expenses and other liabilities   8,034   8,382     6,856     6,661   6,831  
Total liabilities   1,425,014   1,378,998     1,285,602     1,198,603   1,177,557  
 
Shareholders' equity

Preferred stock, senior noncumulative perpetual, Series C, no par; 10,980 shares issued and outstanding at September 30, 2015 liquidation value of $1,000 per share.

- - - - 10,980

Common stock, no par value; 10,000,000 shares authorized, 7,562,508, 7,544,458, 7,530,791, 7,516,291 and 7,252,429 shares issued at September 30, 2016, June 30, 2016, March 31, 2016, December 31, 2015 and September 30, 2015, respectively

113,650 113,309 113,052 112,579 108,319
Retained earnings 26,859 24,097 21,578 18,963 16,764
Accumulated other comprehensive income (loss)   63   (284 )   (22 )   227   (275 )
Total shareholders' equity   140,572   137,122     134,608     131,769   135,788  
 
Total liabilities and shareholders' equity $ 1,565,586 $ 1,516,120   $ 1,420,210   $ 1,330,372 $ 1,313,345  
 
BANKWELL FINANCIAL GROUP, INC.
CONSOLIDATED STATEMENTS OF INCOME (unaudited)
(Dollars in thousands, except per share data)
             
For the Quarter Ended For the Nine Months Ended
September 30, June 30, March 31, December 31, September 30, September 30, September 30,
2016 2016 2016 2015 2015 2016 2015
Interest and dividend income
Interest and fees on loans $ 14,914 $ 13,970 $ 13,283 $ 13,382 $ 12,660 $ 42,167 $ 35,310
Interest and dividends on securities 688 711 684 490 493 2,083 1,474
Interest on cash and cash equivalents   31   30   37   36   33   98   62
Total interest income   15,633   14,711   14,004   13,908   13,186   44,348   36,846
 
Interest expense
Interest expense on deposits 2,160 1,962 1,740 1,776 1,637 5,862 3,905
Interest on borrowings   946   870   866   896   632   2,682   1,389
Total interest expense   3,106   2,832   2,606   2,672   2,269   8,544   5,294
 
Net interest income 12,527 11,879 11,398 11,236 10,917 35,804 31,552
 
Provision for loan losses   1,219   1,301   646   354   1,489   3,166   2,876
 
Net interest income after provision for loan losses   11,308   10,578   10,752   10,882   9,428   32,638   28,676
 
Noninterest income
Service charges and fees 241 235 245 258 234 721 675
Bank owned life insurance 174 174 174 178 182 522 549
Gains and fees from sales of loans 163 114 110 228 447 387 885
Gain on sale of foreclosed real estate, net - 128 - - - 128 -
Net gain on sale of available for sale securities - 92 - - - 92 -
Other   172   110   143   176   348   425   535
Total noninterest income   750   853   672   840   1,211   2,275   2,644
 
Noninterest expense
Salaries and employee benefits 3,909 3,817 3,811 4,248 3,798 11,537 11,817
Occupancy and equipment 1,435 1,392 1,408 1,312 1,370 4,235 4,029
Professional services 521 370 366 414 339 1,257 1,033
Data processing 417 377 407 366 416 1,201 1,157
Marketing 242 263 139 278 288 644 707
FDIC insurance 177 168 169 185 166 514 487
Director fees 128 140 155 198 136 423 424
Foreclosed real estate 47 30 72 95 81 149 73
Amortization of intangibles 39 40 40 43 51 119 153
Merger and acquisition related expenses - - - 2 - - -
Other   566   618   513   540   513   1,697   1,610
Total noninterest expense   7,481   7,215   7,080   7,681   7,158   21,776   21,490
 
Income before income tax expense 4,577 4,216 4,344 4,041 3,481 13,137 9,830
 
Income tax expense   1,437   1,320   1,353   1,423   1,228   4,110   3,418
 
Net income $ 3,140 $ 2,896 $ 2,991 $ 2,618 $ 2,253 $ 9,027 $ 6,412
 
 
Net income attributable to common shareholders $ 3,140 $ 2,896 $ 2,991 $ 2,575 $ 2,226 $ 9,027 $ 6,330
 
Earnings Per Common Share:
Basic $ 0.42 $ 0.38 $ 0.40 $ 0.35 $ 0.31 $ 1.20 $ 0.88
Diluted 0.41 0.38 0.40 0.35 0.31 1.19 0.87
 
Weighted Average Common Shares Outstanding:
Basic 7,397,067 7,387,712 7,380,217 7,169,570 7,044,586 7,388,364 7,038,517
Diluted 7,488,752 7,467,954 7,431,747 7,234,431 7,059,117 7,459,283 7,057,450
Dividends per common share $ 0.05 $ 0.05 $ 0.05 $ 0.05 $ - $ 0.15 $ -
 
BANKWELL FINANCIAL GROUP, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (unaudited)
(Dollars in thousands, except per share data)
             
For the Quarter Ended For the Nine Months Ended
September 30, June 30, March 31, December 31, September 30, September 30, September 30,
2016 2016 2016 2015 2015 2016 2015
Performance ratios:
Return on average assets 0.85 % 0.82 % 0.89 % 0.78 % 0.69 % 0.85 % 0.74 %
Return on average stockholders' equity 8.96 % 8.54 % 9.01 % 7.68 % 6.92 % 8.84 % 6.45 %
Return on average tangible common equity 9.16 % 8.74 % 9.23 % 7.74 % 7.69 % 9.04 % 7.13 %
Net interest margin 3.57 % 3.50 % 3.54 % 3.63 % 3.67 % 3.54 % 3.83 %
Efficiency ratio (1) 55.7 % 57.1 % 57.7 % 62.4 % 57.9 % 56.8 % 62.2 %
 
Net loan charge-offs as a % of average loans 0.01 % 0.00 % 0.00 % 0.01 % 0.00 % 0.01 % 0.00 %
 
As of
September 30,

2016

June 30,

2016

March 31,

2016

December 31,

2015

September 30,

2015

Capital ratios:
Total Common Equity Tier 1 Capital to Risk-Weighted Assets (2) 11.64 % 11.76 % 12.24 % 12.18 % 10.75 %
Total Capital to Risk-Weighted Assets (2) 12.89 % 13.01 % 13.48 % 13.39 % 11.94 %
Tier I Capital to Risk-Weighted Assets (2) 11.64 % 11.76 % 12.24 % 12.18 % 10.75 %
Tier I Capital to Average Assets (2) 10.45 % 10.59 % 10.85 % 10.84 % 9.84 %
Tangible common equity to tangible assets 8.80 % 8.85 % 9.27 % 9.68 % 9.28 %
 
Tangible book value per common share (3) $ 18.57 $ 18.12 $ 17.78 $ 17.43 $ 17.25
 
Asset quality:
Nonaccrual loans $ 3,644 $ 3,609 $ 3,398 $ 3,791 $ 2,367
Other real estate owned   272     492     878     1,248     1,328  
Total non-performing assets $ 3,916   $ 4,101   $ 4,276   $ 5,039   $ 3,695  
 
Loans past due 90 days and still accruing $ - $ 105 $ 89 $ 1,105 $ 1,082
 
Nonperforming loans as a % of total loans 0.27 % 0.28 % 0.28 % 0.33 % 0.21 %
 
Nonperforming assets as a % of total assets 0.25 % 0.27 % 0.30 % 0.38 % 0.28 %
 
Allowance for loan losses as a % of total loans 1.30 % 1.26 % 1.24 % 1.23 % 1.22 %
 
Allowance for loan losses as a % of nonperforming loans 473.38 % 446.11 % 435.84 % 373.76 % 579.64 %
 
(1) Efficiency ratio is defined as noninterest expense, less merger and acquisition related expenses, other real estate owned expenses and amortization of intangible assets, 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 160,708, 152,090, 138,423, 143,323 and 206,732 as of September 30,2016, June 30, 2016, March 31, 2016, December 31, 2015 and September 30, 2015, respectively.
 
BANKWELL FINANCIAL GROUP, INC.
LOAN & DEPOSIT PORTFOLIO (unaudited)
(Dollars in thousands)
         
 
September 30, June 30, December 31, QTD YTD
Period End Loan Composition 2016 2016 2015 % Change % Change
Residential Real Estate $ 178,996 $ 181,035 $ 177,184 -1.1 % 1.0 %
Commercial Real Estate 817,006 785,041 697,542 4.1 % 17.1 %
Construction 104,915 98,266 82,273 6.8 % 27.5 %
Home equity   15,050   15,987   15,926 -5.9 % -5.5 %
Total Real Estate Loans 1,115,967 1,080,329 972,925 3.3 % 14.7 %
 
Commercial Business 208,600 194,067 172,853 7.5 % 20.7 %
 
Consumer   1,660   2,553   1,735 -35.0 % -4.3 %
Total Loans $ 1,326,227 $ 1,276,949 $ 1,147,513 3.9 % 15.6 %
 
September 30, June 30, December 31, QTD YTD
Period End Deposit Composition 2016 2016 2015 % Change % Change
Noninterest-bearing demand $ 176,405 $ 178,917 $ 164,553 -1.4 % 7.2 %
NOW 55,679 61,411 51,008 -9.3 % 9.2 %
Money Market 326,805 331,148 296,838 -1.3 % 10.1 %
Savings 63,501 65,444 97,846 -3.0 % -35.1 %
Time   594,552   543,671   436,697 9.4 % 36.1 %
Total Deposits $ 1,216,942 $ 1,180,591 $ 1,046,942 3.1 % 16.2 %
 
BANKWELL FINANCIAL GROUP, INC.
NONINTEREST INCOME & EXPENSE - QTD (unaudited)
(Dollars in thousands)
         
For the Quarter Ended
Noninterest income September 30, December 31, September 30, Sep 16 vs. Dec 15 Sep 16 vs. Sep 15
2016 2015 2015 % Change % Change
Service charges and fees $ 241 $ 258 $ 234 -6.6 % 3.0 %
Bank owned life insurance 174 178 182 -2.2 % -4.4 %
Gains and fees from sales of loans 163 228 447 -28.5 % -63.5 %
Other   172   176   348 -2.3 % -50.6 %
Total noninterest income $ 750 $ 840 $ 1,211 -10.7 % -38.1 %
 
For the Quarter Ended
Noninterest expense September 30, December 31, September 30, Sep 16 vs. Dec 15 Sep 16 vs. Sep 15
2016 2015 2015 % Change % Change
Salaries and employee benefits $ 3,909 $ 4,248 $ 3,798 -8.0 % 2.9 %
Occupancy and equipment 1,435 1,312 1,370 9.4 % 4.7 %
Professional services 521 414 339 25.8 % 53.7 %
Data processing 417 366 416 13.9 % 0.2 %
Marketing 242 278 288 -12.9 % -16.0 %
FDIC insurance 177 185 166 -4.3 % 6.6 %
Director fees 128 198 136 -35.4 % -5.9 %
Foreclosed real estate 47 95 81 -50.5 % -42.0 %
Amortization of intangibles 39 43 51 -9.3 % -23.5 %
Merger and acquisition related expenses - 2 - -100.0 % 0.0 %
Other   566   540   513 4.8 % 10.3 %
Total noninterest expense $ 7,481 $ 7,681 $ 7,158 -2.6 % 4.5 %
 
BANKWELL FINANCIAL GROUP, INC.
NONINTEREST INCOME & EXPENSE - YTD (unaudited)
(Dollars in thousands)
     
For the Nine Months Ended
Noninterest income September 30, September 30, Sep 16 vs. Sep 15
2016 2015 % Change
Service charges and fees $ 721 $ 675 6.8 %
Bank owned life insurance 522 549 -4.9 %
Gains and fees from sales of loans 387 885 -56.3 %
Gain on sale of foreclosed real estate, net 128 - 100.0 %
Net gain on sale of available for sale securities 92 - 100.0 %
Other   425   535 -20.6 %
Total noninterest income $ 2,275 $ 2,644 -14.0 %
 
For the Nine Months Ended
Noninterest expense September 30, September 30, Sep 16 vs. Sep 15
2016 2015 % Change
Salaries and employee benefits $ 11,537 $ 11,817 -2.4 %
Occupancy and equipment 4,235 4,029 5.1 %
Professional services 1,257 1,033 21.7 %
Data processing 1,201 1,157 3.8 %
Marketing 644 707 -8.9 %
FDIC insurance 514 487 5.5 %
Director fees 423 424 -0.2 %
Foreclosed real estate 149 73 104.1 %
Amortization of intangibles 119 153 -22.2 %
Other   1,697   1,610 5.4 %
Total noninterest expense $ 21,776 $ 21,490 1.3 %
 
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 9/30/2016 06/30/2016 03/31/2016 12/31/2015 9/30/2015
Total Equity $ 140,572 $ 137,122 $ 134,608 $ 131,769 $ 135,788
Less:
Preferred stock - - - - 10,980
Goodwill 2,589 2,589 2,589 2,589 2,589
Other intangibles   532     572     612     652     694  
Tangible Common Equity $ 137,451   $ 133,961   $ 131,407   $ 128,528   $ 121,525  
 
Total Assets $ 1,565,586 $ 1,516,120 $ 1,420,210 $ 1,330,372 $ 1,313,345
Less:
Goodwill 2,589 2,589 2,589 2,589 2,589
Other intangibles   532     572     612     652     694  
Tangible Assets $ 1,562,465   $ 1,512,959   $ 1,417,009   $ 1,327,131   $ 1,310,062  
 
Tangible Common Equity to Tangible Assets 8.80 % 8.85 % 9.27 % 9.68 % 9.28 %
 
As of
Computation of Tangible Book Value per Common Share 9/30/2016 06/30/2016 03/31/2016 12/31/2015 09/30/2015
Total shareholders' equity $ 140,572 $ 137,122 $ 134,608 $ 131,769 $ 135,788
Less:
Preferred stock   -     -     -     -     10,980  
Common shareholders' equity 140,572 137,122 134,608 131,769 124,808
Less:
Goodwill 2,589 2,589 2,589 2,589 2,589
Other intangibles   532     572     612     652     694  
Tangible common shareholders' equity 137,451 133,961 131,407 128,528 121,525
Common shares issued 7,562,508 7,544,458 7,530,791 7,516,291 7,252,429
Less:
Shares of unvested restricted stock   160,708     152,090     138,423     143,323     206,732  
Common shares outstanding 7,401,800 7,392,368 7,392,368 7,372,968 7,045,697
Book value per share $ 18.99 $ 18.55 $ 18.21 $ 17.87 $ 17.71
Less:
Effects of intangible assets $ 0.42 $ 0.43 $ 0.43 $ 0.44 $ 0.47
 
Tangible Book Value per Common Share $ 18.57 $ 18.12 $ 17.78 $ 17.43 $ 17.25
 
BANKWELL FINANCIAL GROUP, INC.
RECONCILIATION OF GAAP TO NON-GAAP MEASURES (unaudited) - Continued
(Dollars in thousands, except share data)
             
For the Quarter Ended For the Nine Months Ended
Computation of Efficiency Ratio 09/30/2016 06/30/2016 03/31/2016 12/31/2015 09/30/2015 09/30/2016 09/30/2015
Noninterest expense $ 7,481 $ 7,215 $ 7,080 $ 7,681 $ 7,158 $ 21,776 $ 21,490
Less:
Amortization of intangible assets 39 40 40 43 51 119 153
Foreclosed real estate expenses 47 30 72 95 81 149 73
Merger and acquisition expense   -     -     -     2     -     -     -  
Adjusted noninterest expense $ 7,395   $ 7,145   $ 6,968   $ 7,541   $ 7,026   $ 21,508   $ 21,264  
Net interest income $ 12,527 $ 11,879 $ 11,398 $ 11,236 $ 10,917 $ 35,804 $ 31,552
Noninterest income 750 853 672 840 1,211 2,275 2,644
Less:
Gains (losses) on sales of securities - 92 - - - 92 -
Gains on sale of foreclosed real estate   -     128     -     -     -     128     -  
Adjusted operating revenue $ 13,277   $ 12,512   $ 12,070   $ 12,076   $ 12,128   $ 37,859   $ 34,196  
 
Efficiency ratio 55.7 % 57.1 % 57.7 % 62.4 % 57.9 % 56.8 % 62.2 %
 
For the Quarter Ended For the Nine Months Ended
Computation of Return on Average Tangible Common Equity 09/30/2016 06/30/2016 03/31/2016 12/31/2015 09/30/2015 09/30/2016 09/30/2015
Net Income Attributable to Common Shareholders $ 3,140   $ 2,896   $ 2,991   $ 2,575   $ 2,226   $ 9,027   $ 6,330  
Total average shareholders' equity 139,449 136,389 133,474 135,311 129,097 136,445 132,974
Less:
Preferred stock - - - - 10,980 - 10,980
Goodwill 2,589 2,589 2,589 2,589 2,589 2,589 2,589
Other intangibles   532     572     612     652     694     532     694  
Average tangible common equity   136,328     133,228     130,273     132,070     114,834     133,324     118,711  
 
Annualized Return on Average Tangible Common Equity 9.16 % 8.74 % 9.23 % 7.74 % 7.69 % 9.04 % 7.13 %
 
BANKWELL FINANCIAL GROUP, INC.
NET INTEREST MARGIN ANALYSIS ON A FULLY TAX EQUIVALENT BASIS
(Dollars in thousands)
           
For the Quarter Ended
September 30, 2016 September 30, 2015
Average Yield/ Average Yield/
Balance Interest Rate Balance Interest Rate
Assets:
Cash and Fed funds sold $ 28,305 $ 29 0.41 % $ 62,597 $ 33 0.21 %
Securities (1) 98,480 762 3.09 % 57,234 549 3.84 %
Loans:
Commercial real estate 788,429 9,305 4.62 % 645,488 7,873 4.77 %
Residential real estate 178,106 1,600 3.59 % 175,908 1,569 3.57 %
Construction (2) 107,197 1,230 4.49 % 79,722 912 4.48 %
Commercial business 195,881 2,584 5.16 % 157,867 2,075 5.14 %
Home equity 14,706 156 4.23 % 16,422 155 3.75 %
Consumer 1,467 20 5.51 % 2,184 27 4.87 %
Acquired loans (net of mark)   482   19 15.60 %   2,558   51 7.91 %
Total loans 1,286,268 14,914 4.54 % 1,080,149 12,662 4.59 %
Federal Home Loan Bank stock   7,400   65 3.51 %   6,918   47 2.71 %
Total earning assets 1,420,453 $ 15,770 4.34 % 1,206,898 $ 13,291 4.31 %
Other assets   56,762   89,978
Total assets $ 1,477,215 $ 1,296,876
 
Liabilities and shareholders' equity:
Interest-bearing liabilities:
NOW $ 53,515 16 0.12 % $ 56,104 15 0.11 %
Money market 330,263 484 0.58 % 293,150 408 0.55 %
Savings 62,689 64 0.40 % 103,555 214 0.82 %
Time   540,823   1,597 1.17 %   401,968   1,005 0.99 %
Total interest-bearing deposits 987,290 2,161 0.87 % 854,777 1,642 0.76 %
Borrowed Money   171,385   946 2.20 %   118,391   583 1.95 %
Total interest-bearing liabilities 1,158,675 $ 3,107 1.07 % 973,168 $ 2,225 0.91 %
Noninterest-bearing deposits 170,500 161,354
Other liabilities   8,591   33,257
Total liabilities 1,337,766 1,167,779
Shareholders' equity   139,449   129,097
Total liabilities and shareholders' equity $ 1,477,215 $ 1,296,876
Net interest income (3) $ 12,663 $ 11,066
Interest rate spread 3.27 % 3.40 %
Net interest margin (4) 3.57 % 3.67 %
 
(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 $136 thousand and $149 thousand, respectively for the three months ended September 30, 2016, and 2015.
(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 Nine Months Ended
September 30, 2016 September 30, 2015
Average Yield/ Average Yield/
Balance Interest Rate Balance Interest Rate
Assets:
Cash and Fed funds sold $ 30,559 $ 94 0.41 % $ 37,037 $ 61 0.22 %
Securities (1) 102,107 2,321 3.03 % 61,233 1,699 3.70 %
Loans:
Commercial real estate 754,163 26,385 4.60 % 583,024 21,476 4.86 %
Residential real estate 178,699 4,807 3.59 % 174,389 4,727 3.61 %
Construction (2) 96,635 3,298 4.48 % 71,900 2,509 4.60 %
Commercial business 178,453 7,082 5.21 % 151,017 5,866 5.12 %
Home equity 15,206 468 4.11 % 17,551 494 3.77 %
Consumer 1,707 66 5.14 % 2,487 90 4.85 %
Acquired loans (net of mark)   863   61 9.46 %   2,877   155 7.22 %
Total loans 1,225,726 42,167 4.52 % 1,003,245 35,317 4.64 %
Federal Home Loan Bank stock   7,173   184 3.43 %   6,741   110 2.17 %
Total earning assets 1,365,565 $ 44,766 4.31 % 1,108,256 $ 37,187 4.42 %
Other assets   55,145   57,388
Total assets $ 1,420,710 $ 1,165,644
 
Liabilities and shareholders' equity:
Interest-bearing liabilities:
NOW $ 55,742 87 0.21 % $ 57,017 48 0.11 %
Money market 319,289 1,331 0.56 % 253,662 1,007 0.53 %
Savings 71,243 215 0.40 % 95,242 492 0.69 %
Time   502,177   4,230 1.13 %   341,658   2,358 0.92 %
Total interest-bearing deposits 948,451 5,863 0.83 % 747,579 3,905 0.70 %
Borrowed Money   158,247   2,682 2.26 %   124,129   1,389 1.50 %
Total interest-bearing liabilities 1,106,698 $ 8,545 1.03 % 871,708 $ 5,294 0.81 %
Noninterest-bearing deposits 170,088 154,825
Other liabilities   7,479   6,137
Total liabilities 1,284,265 1,032,670
Shareholders' equity   136,445   132,974
Total liabilities and shareholders' equity $ 1,420,710 $ 1,165,644
Net interest income (3) $ 36,221 $ 31,893
Interest rate spread 3.28 % 3.61 %
Net interest margin (4) 3.54 % 3.83 %
 
(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 $417 thousand and $341 thousand, respectively for the nine months ended September 30, 2016, and 2015.
(4) Net interest income as a percentage of earning assets.

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

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