Bankwell Financial Group (OTCBB:BWFG) reported GAAP net income of $1.1 million for the first quarter of 2014, up 11% from the quarter ended March 31, 2013. Excluding $141,000 of merger-related expenses, net income (defined as core net income) for the quarter would have been $1.2 million, representing a 20% year-over-year improvement.
Peyton R. Patterson, President and CEO of Bankwell Financial Group, stated, “Our continued strong balance sheet growth and earnings performance reflect our commitment to shareholders and to the clients we serve throughout Fairfield County, Connecticut.” She added, “Our recently announced definitive agreement to acquire Quinnipiac Bank & Trust Company is a further example of our ability to make smart acquisitions in attractive markets.” At closing, which is expected to take place in the third quarter of 2014, subject to regulatory and shareholder approvals, total assets will exceed $900 million.
Earnings
Revenue (net interest income and non-interest income) for the three months ended March 31, 2014 was $7.9 million, an increase of 24% compared to the same period in the prior year, propelled by a $1.1 million increase in net interest income. Net interest income hit record levels in the first quarter of 2014 at $7.1 million, representing a 17% increase year-over-year. This is attributable to a favorable increase in the net interest margin to 3.97% from the December 31, 2013 year-to-date margin of 3.94%. Non-interest income increased 171% year-over-year to $769 thousand. Contributing to the significant improvement are gains on sales of commercial real estate loans and increases in deposit service charge income, investment services, and BOLI.
Financial Condition
Assets totaled a record $812.1 million at March 31, 2014, a 29% increase over the previous year at March 31. Total loans were $657.2 million, an 18% increase year-over-year, and deposits increased $199.2 million, a 41% increase over March 31, 2013. On a linked quarter basis, loans outstanding increased $25.2 million, up 4% from year end. Deposits showed strong momentum, increasing $17.7 million, up 3% from year end.
Asset Quality
Asset quality remained exceptionally strong at March 31, 2014. Nonperforming assets as a percent of total assets were 0.36% at March 31, 2014, compared to 0.23% at December 31, 2013 and 0.19% at March 31, 2013. The allowance for loan losses as of March 31, 2014 was $8.6 million, representing 1.31% of total loans.
Capital
Stockholders’ equity totaled $71.1 million as of March 31, 2014, an increase of $1.6 million compared to December 31, 2013. As of March 31, 2014, the Tangible Common Equity Ratio and Tangible Book Value per share were 7.35% and $15.79, respectively. As of December 31, 2013, the Company’s Tangible Common Equity Ratio and Tangible Book Value per share were 7.45% and $15.46, respectively.
Bankwell Financial Group filed an S-1 Registration Statement with the Securities and Exchange Commission for an initial public offering (IPO) on April 4, 2014. Added Patterson, “Bankwell expects the IPO to be completed during the second quarter of 2014, and the process will result in approximately $50 million or more in new capital to support our organic growth and acquisition strategies.” This press release shall not constitute an offer to sell or the solicitation of an offer to buy the IPO stock, nor shall there be any sale of these securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to the registration or qualification under the securities laws of any such jurisdiction. An offer or solicitation to buy IPO stock may only be made through a prospectus that will be available after the SEC has declared our Registration Statement to be effective.
About Bankwell Financial Group
Bankwell is a commercial bank that serves the banking and lending needs of residents and businesses throughout Fairfield County, CT. For more information about this press release, interested parties may contact Peyton R. Patterson, President and CEO or Ernest J. Verrico, CFO of Bankwell Financial Group at (203) 972-3838.
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) | ||||||
| March 31, | December 31, | |||||
| 2014 | 2013 | |||||
| Assets | ||||||
| Cash and due from banks | $ | 82,246 | $ | 82,013 | ||
| Held to maturity investment securities, at amortized cost | 13,780 | 13,816 | ||||
| Available for sale investment securities, at fair value | 35,557 | 28,597 | ||||
| Loans held for sale | - | 100 | ||||
Loans receivable (net of allowance for loan losses of $8,603 and $8,382 | ||||||
| at March 31, 2014 and December 31, 2013, respectively) | 646,583 | 621,830 | ||||
| Foreclosed real estate | 829 | 829 | ||||
| Accrued interest receivable | 2,344 | 2,360 | ||||
| Federal Home Loan Bank stock, at cost | 4,834 | 4,834 | ||||
| Premises and equipment, net | 8,060 | 7,060 | ||||
| Bank-owned life insurance | 10,116 | 10,031 | ||||
| Other intangible assets | 454 | 481 | ||||
| Deferred income taxes, net | 5,514 | 5,845 | ||||
| Other assets | 1,738 | 1,822 | ||||
| Total assets | $ | 812,055 | $ | 779,618 | ||
| Liabilities | ||||||
| Deposits | ||||||
| Noninterest-bearing | $ | 119,656 | $ | 118,618 | ||
| Interest-bearing | 559,567 | 542,927 | ||||
| Total deposits | 679,223 | 661,545 | ||||
| Advances from the Federal Home Loan Bank | 59,000 | 44,000 | ||||
| Accrued expenses and other liabilities | 2,726 | 4,588 | ||||
| Total liabilities | 740,949 | 710,133 | ||||
| Stockholders' Equity | ||||||
| Preferred stock, senior noncumulative perpetual, Series C, no par; | ||||||
| 10,980 shares issued and outstanding at March 31, 2014 and | ||||||
| December 31, 2013, respectively; liquidation value of $1,000 per share. | 10,980 | 10,980 | ||||
| Common stock, no par value; 10,000,000 shares authorized, | ||||||
| 3,891,690 and 3,876,393 shares issued, and 3,754,253 and | ||||||
| 2,758,200 shares outstanding at March 31, 2014 and | ||||||
| December 31, 2013, respectively. | 52,446 | 52,105 | ||||
| Retained earnings | 7,072 | 5,976 | ||||
| Accumulated other comprehensive income - net unrealized | ||||||
| gains on available for sale securities, net of taxes | 608 | 424 | ||||
| Total stockholders' equity | 71,106 | 69,485 | ||||
| Total liabilities and stockholders' equity | $ | 812,055 | $ | 779,618 | ||
| BANKWELL FINANCIAL GROUP, INC. | ||||||||
| CONSOLIDATED STATEMENTS OF INCOME (unaudited) | ||||||||
| (dollars in thousands, except per share data) | ||||||||
Three Months Ended | ||||||||
| 2014 | 2013 | |||||||
| Interest income | ||||||||
| Interest and fees on loans | $ | 7,428 | $ | 6,299 | ||||
| Interest and dividends on securities | 411 | 367 | ||||||
| Interest on cash and cash equivalents | 22 | 10 | ||||||
| Total interest income | 7,861 | 6,676 | ||||||
| Interest expense | ||||||||
| Interest expense on deposits | 622 | 439 | ||||||
| Interest on Federal Home Loan Bank advances | 93 | 152 | ||||||
| Total interest expense | 715 | 591 | ||||||
| Net interest income | 7,146 | 6,085 | ||||||
| Provision for loan losses | 211 | 190 | ||||||
| Net interest income after provision for loan losses | 6,935 | 5,895 | ||||||
| Noninterest income | ||||||||
| Gains and fees from sales and referrals of loans | 428 | 8 | ||||||
| Service charges and fees | 132 | 101 | ||||||
| Income from bank owned life insurance | 85 | - | ||||||
| Gain on sale of foreclosed real estate, net | - | 71 | ||||||
| Other | 124 | 104 | ||||||
| Total noninterest income | 769 | 284 | ||||||
| Noninterest expense | ||||||||
| Salaries and employee benefits | 3,337 | 2,492 | ||||||
| Occupancy and equipment | 1,068 | 772 | ||||||
| Professional services | 369 | 369 | ||||||
| Data processing | 337 | 256 | ||||||
| Marketing | 110 | 128 | ||||||
| Director fees | 138 | 139 | ||||||
| FDIC insurance | 118 | 130 | ||||||
| Foreclosed real estate | 14 | - | ||||||
| Amortization of intangibles | 27 | - | ||||||
| Merger and acquisition related expenses | 141 | - | ||||||
| Other | 382 | 312 | ||||||
| Total noninterest expense | 6,041 | 4,598 | ||||||
| Income before income tax expense | 1,663 | 1,581 | ||||||
| Income tax expense | 540 | 569 | ||||||
| Net income | $ | 1,123 | $ | 1,012 | ||||
| Preferred stock dividends | (28 | ) | (28 | ) | ||||
| Net income attributable to common stockholders | $ | 1,095 | $ | 984 | ||||
| Earnings per common share - basic | $ | 0.28 | $ | 0.31 | ||||
| Earnings per common share - diluted | 0.28 | 0.30 | ||||||
| BANKWELL FINANCIAL GROUP, INC. | ||||||||||||
| CONSOLIDATED FINANCIAL HIGHLIGHTS (unaudited) | ||||||||||||
| (dollars in thousands, except per share data) | ||||||||||||
| At or For the Three Months Ended | ||||||||||||
March 31, | December 31, | March 31, | ||||||||||
| Performance ratios: | ||||||||||||
| Return on average assets | 0.64 | % | 0.73 | % | 0.67 | % | ||||||
| Return on average stockholders' equity | 12.81 | % | 8.46 | % | 6.83 | % | ||||||
| Net interest margin | 3.97 | % | 3.64 | % | 4.16 | % | ||||||
| Efficiency ratio (1) | 74.37 | % | 87.60 | % | 72.19 | % | ||||||
| Capital ratios: | ||||||||||||
| Total Capital to Risk-Weighted Assets (2) | 10.74 | % | 10.74 | % | 10.45 | % | ||||||
| Tier I Capital to Risk-Weighted Assets (2) | 9.49 | % | 9.49 | % | 9.20 | % | ||||||
| Tier I Capital to Average Assets (2) | 7.90 | % | 7.91 | % | 8.06 | % | ||||||
| Tangible common equity to tangible assets | 7.35 | % | 7.45 | % | 7.73 | % | ||||||
| Tangible book value per common share | $ | 15.79 | $ | 15.46 | $ | 14.68 | ||||||
| Asset quality: | ||||||||||||
| Nonaccrual loans | $ | 2,101 | $ | 1,003 | $ | 1,145 | ||||||
| Other real estate owned | 829 | 829 | 52 | |||||||||
| Total non-performing assets | $ | 2,930 | $ | 1,832 | $ | 1,197 | ||||||
| Loans past due 90 days and still accruing | $ | 2,914 | $ | 3,620 | $ | - | ||||||
| Nonperforming loans as a % of total loans | 0.32 | % | 0.16 | % | 0.20 | % | ||||||
| Nonperforming assets as a % of total assets | 0.36 | % | 0.23 | % | 0.19 | % | ||||||
| Allowance for loan losses as a % of total loans | 1.31 | % | 1.33 | % | 1.46 | % | ||||||
| Allowance for loan losses as a % of nonperforming loans | 409.48 | % | 835.69 | % | 710.39 | % | ||||||
| Annualized net loan charge-offs as a % of average loans | 0.00 | % | 0.00 | % | 0.00 | % | ||||||
| (1) Efficiency ratio is defined as non-interest 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. 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. |
| BANKWELL FINANCIAL GROUP, INC. | ||||||||||||||||||
| NET INTEREST MARGIN ANALYSIS ON A FULLY TAX EQUIVALENT BASIS | ||||||||||||||||||
| (dollars in thousands) | ||||||||||||||||||
| For the Three Months Ended | ||||||||||||||||||
| March 31, 2014 | March 31, 2013 | |||||||||||||||||
| Average | Yield/ | Average | Yield/ | |||||||||||||||
| Balance | Interest | Rate | Balance | Interest | Rate | |||||||||||||
| Assets: | ||||||||||||||||||
| Cash and Fed funds sold | $ | 32,699 | $ | 22 | 0.27 | % | $ | 16,986 | $ | 10 | 0.25 | % | ||||||
| Securities (1) | 47,782 | 501 | 4.20 | % | 43,815 | 451 | 4.12 | % | ||||||||||
| Loans: (2) | ||||||||||||||||||
| Commercial real estate | 327,512 | 4,193 | 5.12 | % | 280,043 | 3,600 | 5.14 | % | ||||||||||
| Residential real estate | 156,069 | 1,395 | 3.58 | % | 143,814 | 1,405 | 3.91 | % | ||||||||||
| Construction (3) | 49,318 | 531 | 4.30 | % | 33,443 | 409 | 4.89 | % | ||||||||||
| Commercial business | 98,061 | 1,170 | 4.77 | % | 60,103 | 791 | 5.26 | % | ||||||||||
| Home equity | 14,207 | 127 | 3.62 | % | 10,531 | 96 | 3.70 | % | ||||||||||
| Consumer | 545 | 13 | 9.32 | % | 66 | 2 | 10.78 | % | ||||||||||
| Total loans | 645,712 | 7,429 | 4.60 | % | 528,000 | 6,303 | 4.77 | % | ||||||||||
| Federal Home Loan Bank stock | 4,834 | 18 | 1.50 | % | 4,450 | 4 | 0.36 | % | ||||||||||
| Total earning assets | 731,027 | 7,970 | 4.36 | % | 593,251 | 6,768 | 4.56 | % | ||||||||||
| Other assets | 38,273 | 13,590 | ||||||||||||||||
| Total assets | 769,300 | 606,841 | ||||||||||||||||
| Liabilities and shareholders' equity: | ||||||||||||||||||
| Deposits: | ||||||||||||||||||
| Noninterest-bearing | 123,232 | - | 0.00 | % | 78,457 | - | 0.00 | % | ||||||||||
| NOW | 52,596 | 13 | 0.10 | % | 33,542 | 12 | 0.14 | % | ||||||||||
| Money market | 170,901 | 180 | 0.43 | % | 95,315 | 91 | 0.39 | % | ||||||||||
| Savings | 107,971 | 82 | 0.31 | % | 132,599 | 154 | 0.47 | % | ||||||||||
| Time | 183,664 | 347 | 0.77 | % | 121,821 | 182 | 0.61 | % | ||||||||||
| Total deposits | 638,364 | 622 | 0.49 | % | 461,734 | 439 | 0.46 | % | ||||||||||
| Federal Home Loan Bank advances | 49,733 | 93 | 0.76 | % | 79,989 | 152 | 0.77 | % | ||||||||||
| Total funding liabilities | 688,097 | 715 | 0.51 | % | 541,723 | 591 | 0.52 | % | ||||||||||
| Other liabilities | 10,887 | 5,831 | ||||||||||||||||
| Shareholders' equity | 70,316 | 59,287 | ||||||||||||||||
| Total liabilities and shareholders' equity | 769,300 | 606,841 | ||||||||||||||||
| Net interest income (4) | 7,255 | 6,177 | ||||||||||||||||
| Interest rate spread | 3.85 | % | 4.04 | % | ||||||||||||||
| Net interest margin (5) | 3.97 | % | 4.16 | % | ||||||||||||||
| (1) Average balances and yields for securities are based on amortized cost. |
| (2) Average balances and yields for loans exclude nonperforming loans. |
| (3) Includes commercial and residential real estate construction. |
| (4) The adjustment for securities and loans taxable equivalency amounted to $109 thousand, $91 thousand, respectively for the three months ended March 31, 2014, and 2013. |
| (5) Net interest income as a percentage of earning assets. |
Contacts:
Peyton R. Patterson, 203-972-3838
President
and CEO
or
Ernest J. Verrico, 203-972-3838
CFO
