Bankwell Financial Group Reports Record Quarterly Net Income of $5.6 Million or $0.71 Per Share for the Second Quarter and Declares Third Quarter Dividend

Bankwell Financial Group, Inc. (NASDAQ: BWFG) reported GAAP net income of $5.6 million or $0.71 per share for the second quarter of 2019, versus $4.7 million or $0.60 per share for the same period in 2018.

The Company's Board of Directors declared a $0.13 per share cash dividend, payable August 26, 2019 to shareholders of record on August 16, 2019.

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

"The Bankwell team once again delivered strong operating results against the backdrop of a competitive deposit market and a flattening yield curve. Year-to-date loan originations are ahead of 2018’s pace and the loan pipeline is quite robust. Once we begin to experience a more normalized trend in prepayments, these originations should translate to solid organic growth. Our investments in our Treasury Management product suite have also begun to bear fruit, as we see a strong pipeline there as well. Deposit pricing appears to have peaked as competitors’ rates have dropped consistently over the last several weeks. Bankwell’s balance sheet is well-positioned to take advantage of any rate decreases going forward."

Second Quarter 2019 Highlights:

  • Second quarter diluted earnings per share were $0.71, an increase of 18% compared to the second quarter of 2018.
  • Total noninterest income was $1.3 million for the second quarter of 2019, or 9% of total revenue.
  • Return on average assets for the second quarter of 2019 totaled 1.20% compared to 1.02% for the same period in 2018.
  • Return on average tangible common equity for the second quarter of 2019 totaled 12.68% compared to 11.41% for the same period in 2018.
  • Total gross loans were $1.6 billion for the second quarter of 2019.
  • The allowance for loan losses was $13.9 million and represents 0.89% of total loans.
  • Investment securities totaled $116.4 million and represent 6% of total assets.
  • Total deposits were $1.5 billion for the second quarter of 2019.
  • The Company repurchased 34,168 shares of its outstanding common stock at a cost of $1.0 million.
  • The tangible common equity ratio and tangible book value per share was 9.38% and $22.47, respectively.
  • The efficiency ratio was 58.0% for the six months ended June 30, 2019 compared to 60.1% for the same period in 2018.
  • Return on average assets for the six months ended June 30, 2019 totaled 1.15% compared to 1.03% for the same period in 2018.
  • Loan originations totaled $75.2 million, with $59.6 million of loan fundings for the quarter ended June 30, 2019. Loan originations totaled $168.5 million, with $121.4 million of loan fundings for the six months ended June 30, 2019.
  • Tax equivalent net interest margin was 3.07% for the second quarter of 2019 and 3.13% for the six months ended June 30, 2019.

Earnings

Revenues (net interest income plus noninterest income) for the quarter ended June 30, 2019 were $14.9 million, a decrease of 1% compared to the quarter ended June 30, 2018. Net interest income for the quarter ended June 30, 2019 was $13.6 million, a decrease of 2% compared to the quarter ended June 30, 2018. Net income for the quarter ended June 30, 2019 was $5.6 million, an increase of 18% compared to the quarter ended June 30, 2018. Revenues for the six months ended June 30, 2019 were $30.5 million, an increase of 2% compared to the six months ended June 30, 2018. Net interest income for the six months ended June 30, 2019 was $27.9 million, an increase of 1% compared to the six months ended June 30, 2018. Net income for the six months ended June 30, 2019 was $10.7 million, an increase of 14% compared to the six months ended June 30, 2018. The increase in net income for the quarter and six months ended June 30, 2019 was primarily due to a decrease in the allowance for loan losses and by fees recognized from elevated loan pre-payments. The allowance for loan losses declined as a result of a decrease in the general reserve driven by improving historical loss trends. Pre-payment fees totaled $1.0 million for the quarter ended June 30, 2019 compared to $0.3 million for the same period in 2018. Pre-payment fees totaled $2.1 million for the six months ended June 30, 2019 compared to $0.3 million for the same period in 2018.

Basic and diluted earnings per share were each $0.71 for the quarter ended June 30, 2019 compared to $0.60 for the quarter ended June 30, 2018. Basic and diluted earnings per share were $1.36 and $1.35, respectively, for the six months ended June 30, 2019 compared to basic and diluted earnings per share of $1.19 for the six months ended June 30, 2018.

The Company’s efficiency ratios for the quarters ended June 30, 2019 and June 30, 2018 were 58.6% and 58.2%, respectively. The Company's efficiency ratios for the six months ended June 30, 2019 and June 30, 2018 were 58.0% and 60.1%, respectively. The decrease in the efficiency ratio for the six months ended June 30, 2019 was driven by a reduction in noninterest expense and by an increase in net interest income resulting from the aforementioned loan pre-payments.

Noninterest Income and Expense

Noninterest income increased by $0.2 million, or 21%, to $1.3 million for the quarter ended June 30, 2019 compared to the quarter ended June 30, 2018. The increase in noninterest income was primarily a result of a $0.3 million increase in gains and fees from the sales of loans and a $0.1 million gain recognized on the sale of available for sale securities. The increase in noninterest income was partially offset by a decrease in other income totaling $0.1 million.

Noninterest income increased by $0.2 million, or 8%, for the six months ended June 30, 2019 compared to the six months ended June 30, 2018. The increase in noninterest income was primarily a result of a $0.4 million increase in other income, attributable to an interest rate swap fee recognized in the first quarter of 2019. The increase in noninterest income was partially offset by a decrease of $0.1 million in gains recognized on the sale of available for sale securities.

Noninterest expense remained flat, totaling $8.8 million for each of the quarters ended June 30, 2019 and June 30, 2018. Noninterest expense decreased $0.2 million, or 1%, for the six months ended June 30, 2019 compared to the six months ended June 30, 2018. The decrease was primarily driven by a $0.2 million decrease in marketing expense and a $0.2 million decrease in FDIC insurance expense. The decrease in noninterest expense was partially offset by an increase in occupancy and equipment expense related to the prior year's branch expansion and overall investment in technology.

Financial Condition

Assets totaled $1.86 billion at June 30, 2019, an annualized decrease of 1% compared to assets of $1.87 billion at December 31, 2018. Total gross loans were $1.57 billion at June 30, 2019 and $1.60 billion at December 31, 2018. Deposits decreased to $1.48 billion compared to $1.50 billion at December 31, 2018, an annualized decrease of 3% over December 31, 2018.

Asset Quality

Nonperforming assets as a percentage of total assets was 0.69% at June 30, 2019, down from 0.75% at December 31, 2018. Net charge-offs to average loans was 0.04% for the quarter ended June 30, 2019. The allowance for loan losses at June 30, 2019 was $13.9 million, representing 0.89% of total loans. The Company continues to work on the resolution of its previously disclosed nonperforming lending relationship and progress to date has been in line with the Company's estimates.

Capital

Shareholders’ equity totaled $176.9 million as of June 30, 2019, an increase of $2.7 million compared to December 31, 2018, primarily a result of net income for the six months ended June 30, 2019 of $10.7 million, offset by dividends paid of $2.0 million, common stock repurchased of $1.0 million and a $5.9 million unfavorable impact to accumulated other comprehensive income driven by fair value marks related to hedge positions involving interest rate swaps. As of June 30, 2019, the tangible common equity ratio and tangible book value per share were 9.38% and $22.47, respectively.

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 Penko Ivanov, 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.

Non-GAAP Financial Measures

In addition to evaluating the Company's financial performance in accordance with U.S. generally accepted accounting principles ("GAAP"), management may evaluate certain non-GAAP financial measures, such as the efficiency ratio. A computation and reconciliation of certain non-GAAP financial measures used for these purposes is contained in the accompanying Reconciliation of GAAP to Non-GAAP Measures tables. We believe that providing certain non-GAAP financial measures provides investors with information useful in understanding our financial performance, our performance trends and financial position. For example, the Company believes that the efficiency ratio is useful in the assessment of financial performance, including noninterest expense control. The Company believes that tangible common equity and tangible book value per share are useful to evaluate the relative strength of the Company's capital position. We utilize these measures for internal planning and forecasting purposes. These non-GAAP financial measures should not be considered a substitute for GAAP basis measures and results, and we strongly encourage investors to review our consolidated financial statements in their entirety and not to rely on any single financial measure.

BANKWELL FINANCIAL GROUP, INC.
CONSOLIDATED BALANCE SHEETS (unaudited)
(Dollars in thousands, except share data)

June 30,
2019

March 31,
2019

December 31,
2018

June 30,
2018

Assets

Cash and due from banks

$

75,647

$

88,827

$

75,411

$

89,214

Federal funds sold

3,237

4,764

2,701

105

Cash and cash equivalents

78,884

93,591

78,112

89,319

Investment securities

Marketable equity securities, at fair value

2,090

2,049

2,009

Available for sale investment securities, at fair value

93,017

96,423

93,154

92,608

Held to maturity investment securities, at amortized cost

21,318

21,364

21,421

21,505

Total investment securities

116,425

119,836

116,584

114,113

Loans receivable (net of allowance for loan losses of $13,890, $15,430, $15,462 and $19,006 at June 30, 2019, March 31, 2019, December 31, 2018 and June 30, 2018, respectively)

1,551,620

1,578,609

1,586,775

1,572,591

Other real estate owned

1,217

Accrued interest receivable

6,165

6,534

6,375

5,522

Federal Home Loan Bank stock, at cost

7,475

7,475

8,110

9,333

Premises and equipment, net

29,060

29,629

19,771

20,313

Bank-owned life insurance

41,178

40,925

40,675

40,146

Goodwill

2,589

2,589

2,589

2,589

Other intangible assets

251

270

290

334

Deferred income taxes, net

5,596

4,835

4,347

4,683

Other assets

19,205

13,465

10,037

11,859

Total assets

$

1,859,665

$

1,897,758

$

1,873,665

$

1,870,802

Liabilities & Shareholders’ Equity

Liabilities

Deposits

Noninterest bearing deposits

$

161,704

$

161,844

$

173,198

$

168,295

Interest bearing deposits

1,316,027

1,359,521

1,329,046

1,297,343

Total deposits

1,477,731

1,521,365

1,502,244

1,465,638

Advances from the Federal Home Loan Bank

150,000

150,000

160,000

199,000

Subordinated debentures

25,181

25,168

25,155

25,129

Accrued expenses and other liabilities

29,813

24,384

12,070

11,462

Total liabilities

1,682,725

1,720,917

1,699,469

1,701,229

Shareholders’ equity

Common stock, no par value

120,064

120,750

120,527

119,824

Retained earnings

63,801

59,247

54,706

48,470

Accumulated other comprehensive (loss) income

(6,925

)

(3,156

)

(1,037

)

1,279

Total shareholders’ equity

176,940

176,841

174,196

169,573

Total liabilities and shareholders’ equity

$

1,859,665

$

1,897,758

$

1,873,665

$

1,870,802

 

BANKWELL FINANCIAL GROUP, INC.
CONSOLIDATED STATEMENTS OF INCOME (unaudited)
(Dollars in thousands, except share data)

For the Quarter Ended

For the Six Months Ended

June 30,
2019

March 31,
2019

December 31,
2018

June 30,
2018

June 30,
2019

June 30,
2018

Interest and dividend income

Interest and fees on loans

$

19,540

$

20,096

$

20,030

$

18,114

$

39,636

$

35,532

Interest and dividends on securities

992

997

1,009

975

1,989

1,910

Interest on cash and cash equivalents

514

383

504

325

897

579

Total interest and dividend income

21,046

21,476

21,543

19,414

42,522

38,021

Interest expense

Interest expense on deposits

6,319

6,100

5,942

4,309

12,419

7,965

Interest expense on borrowings

1,132

1,103

1,134

1,197

2,235

2,443

Total interest expense

7,451

7,203

7,076

5,506

14,654

10,408

Net interest income

13,595

14,273

14,467

13,908

27,868

27,613

(Credit) provision for loan losses

(841

)

195

2,795

310

(646

)

323

Net interest income after (credit) provision for loan losses

14,436

14,078

11,672

13,598

28,514

27,290

Noninterest income

Gains and fees from sales of loans

617

89

149

315

706

685

Service charges and fees

263

249

284

265

512

521

Bank owned life insurance

254

249

262

265

503

528

Net gain on sale of available for sale securities

76

76

222

Other

126

721

(94

)

262

847

484

Total noninterest income

1,336

1,308

601

1,107

2,644

2,440

Noninterest expense

Salaries and employee benefits

4,555

4,836

4,503

4,539

9,391

9,567

Occupancy and equipment

1,833

1,887

1,671

1,731

3,720

3,348

Data processing

551

512

487

509

1,063

1,034

Professional services

519

590

583

424

1,109

1,199

Marketing

348

193

416

479

541

776

Director fees

215

189

295

274

404

489

FDIC insurance

76

123

159

203

199

417

Amortization of intangibles

19

19

20

24

38

48

Other

639

626

662

581

1,265

1,089

Total noninterest expense

8,755

8,975

8,796

8,764

17,730

17,967

Income before income tax expense

7,017

6,411

3,477

5,941

13,428

11,763

Income tax expense

1,441

1,331

216

1,226

2,772

2,448

Net income

$

5,576

$

5,080

$

3,261

$

4,715

$

10,656

$

9,315

Earnings Per Common Share:

Basic

$

0.71

$

0.65

$

0.42

$

0.60

$

1.36

$

1.19

Diluted

$

0.71

$

0.65

$

0.41

$

0.60

$

1.35

$

1.19

Weighted Average Common Shares Outstanding:

Basic

7,773,466

7,760,460

7,749,616

7,722,892

7,766,999

7,699,977

Diluted

7,790,760

7,776,378

7,781,153

7,761,560

7,791,975

7,747,068

Dividends per common share

$

0.13

$

0.13

$

0.12

$

0.12

$

0.26

$

0.24

 

BANKWELL FINANCIAL GROUP, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (unaudited)
(Dollars in thousands, except share data)

For the Quarter Ended

For the Six Months Ended

June 30,

2019

March 31,

2019

December 31,
2018

June 30,

2018

June 30,

2019

June 30,

2018

Performance ratios:

Return on average assets

1.20

%

1.10

%

0.69

%

1.02

%

1.15

%

1.03

%

Return on average stockholders' equity

12.48

%

11.60

%

7.28

%

11.21

%

12.05

%

11.28

%

Return on average tangible common equity

12.68

%

11.80

%

7.40

%

11.41

%

12.24

%

11.48

%

Net interest margin

3.07

%

3.19

%

3.20

%

3.14

%

3.13

%

3.15

%

Efficiency ratio(1)

58.6

%

57.5

%

58.2

%

58.2

%

58.0

%

60.1

%

Net loan charge-offs as a % of average loans

0.04

%

0.01

%

0.41

%

0.01

%

0.06

%

0.01

%

As of

June 30,

2019

March 31,

2019

December 31,
2018

June 30,
2018

Capital ratios:

Total Common Equity Tier 1 Capital to Risk-Weighted Assets(2)

12.40

%

12.00

%

11.56

%

11.31

%

Total Capital to Risk-Weighted Assets(2)

13.26

%

12.94

%

12.50

%

12.47

%

Tier I Capital to Risk-Weighted Assets(2)

12.40

%

12.00

%

11.56

%

11.31

%

Tier I Capital to Average Assets(2)

10.75

%

10.53

%

10.14

%

10.03

%

Tangible common equity to tangible assets

9.38

%

9.18

%

9.16

%

8.92

%

Tangible book value per common share(3)

$

22.47

$

22.38

$

22.06

$

21.56

Asset quality:

Nonaccrual loans

$

11,688

$

13,233

$

14,082

$

23,325

Other real estate owned

1,217

Total nonperforming assets

$

12,905

$

13,233

$

14,082

$

23,325

Nonperforming loans as a % of total loans

0.75

%

0.83

%

0.88

%

1.46

%

Nonperforming assets as a % of total assets

0.69

%

0.70

%

0.75

%

1.25

%

Allowance for loan losses as a % of total loans

0.89

%

0.97

%

0.96

%

1.19

%

Allowance for loan losses as a % of nonperforming loans

118.84

%

116.60

%

109.80

%

81.48

%

  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. Represents Bank ratios. Current period capital ratios are preliminary subject to finalization of the FDIC Call Report.
  3. Excludes unvested restricted shares of 94,598, 99,061, 77,624, and 112,009 as of June 30, 2019, March 31, 2019, December 31, 2018, and June 30, 2018, respectively.

BANKWELL FINANCIAL GROUP, INC.
LOAN & DEPOSIT PORTFOLIO (unaudited)
(Dollars in thousands)

Period End Loan Composition

June 30,

2019

March 31,

2019

December 31,
2018

Current QTD
% Change

YTD
% Change

Residential Real Estate

$

164,066

$

174,054

$

178,079

(5.7

)%

(7.9

)%

Commercial Real Estate(1)

1,080,846

1,097,354

1,094,066

(1.5

)%

(1.2

)%

Construction

89,236

88,653

73,191

0.7

%

21.9

%

Total Real Estate Loans

1,334,148

1,360,061

1,345,336

(1.9

)%

(0.8

)%

Commercial Business

233,364

236,110

258,978

(1.2

)%

(9.9

)%

Consumer

297

248

412

19.8

%

(27.9

)%

Total Loans

$

1,567,809

$

1,596,419

$

1,604,726

(1.8

)%

(2.3

)%

(1) Includes owner occupied commercial real estate.

Period End Deposit Composition

June 30,

2019

March 31,

2019

December 31,
2018

Current QTD %
Change

YTD
% Change

Noninterest bearing demand

$

161,704

$

161,844

$

173,198

(0.1

)%

(6.6

)%

NOW

67,793

61,719

61,869

9.8

%

9.6

%

Money Market

434,385

469,095

471,968

(7.4

)%

(8.0

)%

Savings

174,319

178,960

180,487

(2.6

)%

(3.4

)%

Time

639,530

649,747

614,722

(1.6

)%

4.0

%

Total Deposits

$

1,477,731

$

1,521,365

$

1,502,244

(2.9

)%

(1.6

)%

 

BANKWELL FINANCIAL GROUP, INC.
NONINTEREST INCOME & EXPENSE - QTD (unaudited)
(Dollars in thousands)

For the Quarter Ended

Noninterest income

June 30,

2019

March 31,
2019

June 30,
2018

June 19 vs. March 19
% Change

June 19 vs. June 18
% Change

Gains and fees from sales of loans

$

617

$

89

$

315

593.3

%

95.9

%

Service charges and fees

263

249

265

5.6

%

(0.8

)%

Bank owned life insurance

254

249

265

2.0

%

(4.2

)%

Net gain on sale of available for sale securities

76

100.0

%

100.0

%

Other

126

721

262

(82.5

)%

(51.9

)%

Total noninterest income

$

1,336

$

1,308

$

1,107

2.1

%

20.7

%

For the Quarter Ended

Noninterest expense

June 30,

2019

March 31,
2019

June 30,
2018

June 19 vs. March 19
% Change

June 19 vs. June 18
% Change

Salaries and employee benefits

$

4,555

$

4,836

$

4,539

(5.8

)%

0.4

%

Occupancy and equipment

1,833

1,887

1,731

(2.9

)%

5.9

%

Data processing

551

512

509

7.6

%

8.3

%

Professional services

519

590

424

(12.0

)%

22.4

%

Marketing

348

193

479

80.3

%

(27.3

)%

Director fees

215

189

274

13.8

%

(21.5

)%

FDIC insurance

76

123

203

(38.2

)%

(62.6

)%

Amortization of intangibles

19

19

24

%

(20.8

)%

Other

639

626

581

2.1

%

10.0

%

Total noninterest expense

$

8,755

$

8,975

$

8,764

(2.5

)%

(0.1

)%

 

BANKWELL FINANCIAL GROUP, INC.
NONINTEREST INCOME & EXPENSE - YTD (unaudited)
(Dollars in thousands)

For the Six Months Ended

Noninterest income

June 30,

2019

June 30,
2018

% Change

Gains and fees from sales of loans

$

706

$

685

3.1

%

Service charges and fees

512

521

(1.7

)%

Bank owned life insurance

503

528

(4.7

)%

Net gain on sale of available for sale securities

76

222

(65.8

)%

Other

847

484

75.0

%

Total noninterest income

$

2,644

$

2,440

8.4

%

For the Six Months Ended

Noninterest expense

June 30,

2019

June 30,
2018

% Change

Salaries and employee benefits

$

9,391

$

9,567

(1.8

)%

Occupancy and equipment

3,720

3,348

11.1

%

Professional services

1,109

1,199

(7.5

)%

Data processing

1,063

1,034

2.8

%

Marketing

541

776

(30.3

)%

Director fees

404

489

(17.4

)%

FDIC insurance

199

417

(52.3

)%

Amortization of intangibles

38

48

(20.8

)%

Other

1,265

1,089

16.2

%

Total noninterest expense

$

17,730

$

17,967

(1.3

)%

 

BANKWELL FINANCIAL GROUP, INC.
RECONCILIATION OF GAAP TO NON-GAAP MEASURES (unaudited)
(Dollars in thousands)

As of

Computation of Tangible Common Equity to Tangible Assets

June 30,

2019

March 31,

2019

December 31,

2018

June 30,

2018

Total Equity

$

176,940

$

176,841

$

174,196

$

169,573

Less:

Goodwill

2,589

2,589

2,589

2,589

Other intangibles

251

270

290

334

Tangible Common Equity

$

174,100

$

173,982

$

171,317

$

166,650

Total Assets

$

1,859,665

$

1,897,758

$

1,873,665

$

1,870,802

Less:

Goodwill

2,589

2,589

2,589

2,589

Other intangibles

251

270

290

334

Tangible Assets

$

1,856,825

$

1,894,899

$

1,870,786

$

1,867,879

Tangible Common Equity to Tangible Assets

9.38

%

9.18

%

9.16

%

8.92

%

As of

Computation of Tangible Book Value per Common Share

June 30,

2019

March 31,

2019

December 31,

2018

June 30,

2018

Total shareholders' equity

$

176,940

$

176,841

$

174,196

$

169,573

Less:

Preferred stock

Common shareholders' equity

176,940

176,841

174,196

169,573

Less:

Goodwill

2,589

2,589

2,589

2,589

Other intangibles

251

270

290

334

Tangible common shareholders' equity

174,100

173,982

171,317

166,650

Common shares issued

7,875,271

7,873,471

7,842,271

7,841,720

Less:

Shares of unvested restricted stock

94,598

99,061

77,624

112,099

Treasury stock

34,168

Common shares outstanding

7,746,505

7,774,410

7,764,647

7,729,621

Book value per share

$

22.84

$

22.75

$

22.43

$

21.94

Less:

Effects of intangible assets

$

0.37

$

0.37

$

0.37

$

0.38

Tangible Book Value per Common Share

$

22.47

$

22.38

$

22.06

$

21.56

 

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 Six Months Ended

Computation of Efficiency Ratio

June 30,

2019

March 31,

2019

December 31,

2018

June 30,

2018

June 30,

2019

June 30,

2018

Noninterest expense

$

8,755

$

8,975

$

8,796

$

8,764

$

17,730

$

17,967

Less:

Amortization of intangible assets

19

19

20

24

38

48

Other real estate owned expenses

24

24

Adjusted noninterest expense

$

8,712

$

8,956

$

8,776

$

8,740

$

17,668

$

17,919

Net interest income

$

13,595

$

14,273

$

14,467

$

13,908

$

27,868

$

27,613

Noninterest income

1,336

1,308

601

1,107

2,644

2,440

Less:

Net gain on sale of available for sale securities

76

76

222

Adjusted operating revenue

$

14,855

$

15,581

$

15,068

$

15,015

$

30,436

$

29,831

Efficiency ratio

58.6

%

57.5

%

58.2

%

58.2

%

58.0

%

60.1

%

For the Quarter Ended

For the Six Months Ended

Computation of Return on Average Tangible Common Equity

June 30,

2019

March 31,

2019

December 31,

2018

June 30,

2018

June 30,

2019

June 30,

2018

Net Income Attributable to Common Shareholders

$

5,576

$

5,080

$

3,261

$

4,715

$

10,656

$

9,315

Total average shareholders' equity

$

179,217

$

177,532

$

177,685

$

168,684

$

178,387

$

166,540

Less:

Average Goodwill

2,589

2,589

2,589

2,589

2,589

2,589

Average Other intangibles

264

283

302

334

273

334

Average tangible common equity

$

176,364

$

174,660

$

174,794

$

165,761

$

175,525

$

163,617

Annualized Return on Average Tangible Common Equity

12.68

%

11.80

%

7.40

%

11.41

%

12.24

%

11.48

%

 

BANKWELL FINANCIAL GROUP, INC.
NET INTEREST MARGIN ANALYSIS ON A FULLY TAX EQUIVALENT BASIS - QTD (unaudited)
(Dollars in thousands)

For the Quarter Ended

June 30, 2019

June 30, 2018

Average

Balance

Interest

Yield/

Rate (5)

Average

Balance

Interest

Yield/

Rate (5)

Assets:

Cash and Fed funds sold

$

92,493

$

514

2.23

%

$

81,879

$

325

1.59

%

Securities(1)

119,999

945

3.15

%

119,893

921

3.07

%

Loans:

Commercial real estate

1,052,936

13,201

4.96

%

996,269

11,400

4.53

%

Residential real estate

170,180

1,630

3.83

%

193,336

1,786

3.69

%

Construction(2)

85,933

1,147

5.28

%

92,945

1,180

5.02

%

Commercial business

252,814

3,558

5.57

%

283,865

3,740

5.21

%

Consumer

270

4

6.54

%

536

8

5.97

%

Total loans

1,562,133

19,540

4.95

%

1,566,951

18,114

4.57

%

Federal Home Loan Bank stock

7,474

116

6.23

%

9,330

125

5.37

%

Total earning assets

1,782,099

$

21,115

4.69

%

1,778,053

$

19,485

4.34

%

Other assets

85,117

68,334

Total assets

$

1,867,216

$

1,846,387

Liabilities and shareholders' equity:

Interest bearing liabilities:

NOW

$

64,316

$

28

0.17

%

$

63,870

$

21

0.13

%

Money market

444,848

1,847

1.67

%

496,548

1,518

1.23

%

Savings

174,626

743

1.71

%

100,893

267

1.06

%

Time

644,723

3,701

2.30

%

619,262

2,503

1.62

%

Total interest bearing deposits

1,328,513

6,319

1.91

%

1,280,573

4,309

1.35

%

Borrowed Money

175,172

1,132

2.56

%

224,120

1,197

2.11

%

Total interest bearing liabilities

1,503,685

$

7,451

1.99

%

1,504,693

$

5,506

1.47

%

Noninterest bearing deposits

159,021

160,275

Other liabilities

25,293

12,735

Total liabilities

1,687,999

1,677,703

Shareholders' equity

179,217

168,684

Total liabilities and shareholders' equity

$

1,867,216

$

1,846,387

Net interest income(3)

$

13,664

$

13,979

Interest rate spread

2.70

%

2.87

%

Net interest margin(4)

3.07

%

3.14

%

  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 $69 thousand and $71 thousand, respectively, for the three months ended June 30, 2019 and 2018.
  4. Annualized net interest income as a percentage of earning assets.
  5. Yields are calculated using the contractual day count convention for each respective product type.

BANKWELL FINANCIAL GROUP, INC.
NET INTEREST MARGIN ANALYSIS ON A FULLY TAX EQUIVALENT BASIS - YTD (unaudited)
(Dollars in thousands)

For the Six Months Ended

June 30, 2019

June 30, 2018

Average

Balance

Interest

Yield/

Rate (5)

Average

Balance

Interest

Yield/

Rate (5)

Assets:

Cash and Fed funds sold

$

82,854

$

897

2.18

%

$

75,634

$

579

1.54

%

Securities(1)

118,792

1,877

3.16

%

118,502

1,809

3.05

%

Loans:

Commercial real estate

1,059,247

25,586

4.80

%

986,204

22,269

4.49

%

Residential real estate

173,353

3,333

3.85

%

195,628

3,585

3.67

%

Construction(2)

83,549

2,271

5.41

%

94,161

2,326

4.91

%

Commercial business

264,648

8,436

6.34

%

282,324

7,336

5.17

%

Consumer

296

10

6.48

%

586

16

5.43

%

Total loans

1,581,093

39,636

4.99

%

1,558,903

35,532

4.53

%

Federal Home Loan Bank stock

7,531

253

6.72

%

9,318

243

5.21

%

Total earning assets

1,790,270

$

42,663

4.74

%

1,762,357

$

38,163

4.31

%

Other assets

82,023

67,571

Total assets

$

1,872,293

$

1,829,928

Liabilities and shareholders' equity:

Interest bearing liabilities:

NOW

$

61,579

$

75

0.25

%

$

61,117

$

39

0.13

%

Money market

458,884

3,829

1.68

%

481,723

2,680

1.12

%

Savings

177,482

1,512

1.72

%

97,429

463

0.96

%

Time

636,156

7,003

2.22

%

622,508

4,783

1.55

%

Total interest bearing deposits

1,334,101

12,419

1.88

%

1,262,777

7,965

1.27

%

Borrowed Money

175,343

2,235

2.54

%

224,114

2,443

2.17

%

Total interest bearing liabilities

1,509,444

$

14,654

1.96

%

1,486,891

$

10,408

1.41

%

Noninterest bearing deposits

161,239

163,256

Other liabilities

23,223

13,241

Total liabilities

1,693,906

1,663,388

Shareholders' equity

178,387

166,540

Total liabilities and shareholders' equity

$

1,872,293

$

1,829,928

Net interest income(3)

$

28,009

$

27,755

Interest rate spread

2.78

%

2.90

%

Net interest margin(4)

3.13

%

3.15

%

  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 $141 thousand and $142 thousand, respectively, for the six months ended June 30, 2019 and 2018.
  4. Annualized net interest income as a percentage of earning assets.
  5. Yields are calculated using the contractual day count convention for each respective product type.

Contacts:

Bankwell Financial Group
Christopher R. Gruseke, 203-652-0166
President and Chief Executive Officer
or
Penko Ivanov, 203-652-0166
Executive Vice President and Chief Financial Officer

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