Bankwell Financial Group, Inc. (NASDAQ: BWFG) reported GAAP net income of $4.1 million or $0.52 per share for the third quarter of 2019, versus $4.9 million or $0.62 per share for the same period in 2018.
The Company's Board of Directors declared a $0.13 per share cash dividend, payable November 25, 2019 to shareholders of record on November 15, 2019.
Notes Bankwell Financial Group President and CEO, Christopher R. Gruseke:
“We have succeeded in achieving many significant performance objectives this quarter. We continue to maintain a disciplined approach to loan pricing, thereby protecting the earnings quality of our balance sheet. As a result, we have experienced a modest decrease in loan balances. Importantly, our reliance on wholesale funding has been reduced significantly, and we have also initiated meaningful deposit rate cuts. Our liability sensitive balance sheet has us well positioned to take further advantage of the reduction in rates just announced by the Federal Reserve today.”
Third Quarter 2019 Highlights:
- Third quarter diluted earnings per share were $0.52, a decrease of 16% compared to the third quarter of 2018.
- Total noninterest income was $1.6 million for the third quarter of 2019, or 11% of total revenue.
- Return on average assets for the nine months ended September 30, 2019 totaled 1.05% compared to 1.03% for the same period in 2018.
- Return on average tangible common equity for the third quarter of 2019 totaled 9.26% and totaled 11.24% for the nine months ended September 30, 2019.
- Total gross loans were $1.6 billion for the third quarter of 2019.
- The allowance for loan losses was $13.2 million and represents 0.84% of total loans.
- Investment securities totaled $105.5 million and represent 6% of total assets.
- Total deposits were $1.5 billion for the third quarter of 2019.
- Noninterest bearing deposits totaled $178.7 million for the third quarter of 2019, up 11% when compared to the second quarter of 2019, primarily due to successful treasury management efforts.
- The tangible common equity ratio and tangible book value per share were 9.33% and $22.34, respectively.
- The efficiency ratio was 58.3% for the nine months ended September 30, 2019 compared to 59.6% for the same period in 2018.
- Tax equivalent net interest margin was 2.96% for the third quarter of 2019 and 3.07% for the nine months ended September 30, 2019.
Earnings and Performance
Revenues (net interest income plus noninterest income) for the quarter ended September 30, 2019 were $14.6 million, a decrease of 4% compared to the quarter ended September 30, 2018. Revenues for the nine months ended September 30, 2019 were $45.1 million, versus $45.2 for the nine months ended September 30, 2018. The decrease in revenues for the quarter and nine months ended September 30, 2019 was primarily due to an increase in the cost of interest bearing deposits and lower loan balances, when compared to the same periods in 2018. The decrease in revenues were partially offset by fees recognized from elevated loan prepayments, increases in gains and fees from the sales of loans and fees associated with loan related interest rate swaps. Prepayment fees totaled $0.5 million for the quarter ended September 30, 2019 compared to $40 thousand for the same period in 2018. Prepayment fees totaled $2.6 million for the nine months ended September 30, 2019 compared to $0.3 million for the same period in 2018.
Net income for the quarter ended September 30, 2019 was $4.1 million, versus $4.9 million for the quarter ended September 30, 2018, a decrease of 16%. Net income for the nine months ended September 30, 2019 was $14.7 million, versus $14.2 million for the nine months ended September 30, 2018, an increase of 4%. Net income for the quarter ended September 30, 2019 was negatively impacted by the aforementioned increase in the cost of interest bearing deposits and decreased revenue from lower loan balances. For the nine months ending September 30, 2019, fees recognized from elevated loan prepayments as well as the gains and fees from loans sales and loan related interest rate swaps more than offset the impact of the increase in the cost of interest bearing deposits.
Basic and diluted earnings per share were each $0.52 for the quarter ended September 30, 2019 compared to $0.62 for the quarter ended September 30, 2018. Basic and diluted earnings per share were $1.88 and $1.87, respectively, for the nine months ended September 30, 2019 compared to basic and diluted earnings per share of $1.81 and $1.80, respectively, for the nine months ended September 30, 2018.
The Company’s efficiency ratios for the quarters ended September 30, 2019 and September 30, 2018 were 58.9% and 58.6%, respectively. The Company's efficiency ratios for the nine months ended September 30, 2019 and September 30, 2018 were 58.3% and 59.6%, respectively. In addition to the previously described changes in revenue, the efficiency ratio was also impacted by a reduction in noninterest expense from continued disciplined expense management.
The net interest margin (fully taxable equivalent basis) for the quarter ended September 30, 2019 and 2018 was 2.96% and 3.21%, respectively. The net interest margin for the nine months ended September 30, 2019 and 2018 was 3.07% and 3.17%, respectively. The decrease in the net interest margin for the three and nine months ended September 30, 2019 compared to the same periods in 2018 was due to higher rates on interest bearing deposits, partially offset by incremental fees from loan prepayments.
Financial Condition
Assets totaled $1.86 billion at September 30, 2019, compared to assets of $1.87 billion at December 31, 2018. The decrease in assets is driven by a reduction in gross loans to $1.56 billion at September 30, 2019 versus $1.60 billion at December 31, 2018. Deposits totaled $1.47 billion, compared to $1.50 billion at December 31, 2018. The decrease in deposits was primarily driven by a reduction in wholesale funding.
Capital
Shareholders’ equity totaled $176.0 million as of September 30, 2019, an increase of $1.8 million compared to December 31, 2018, primarily a result of net income for the nine months ended September 30, 2019 of $14.7 million. The increase was partially offset by a $10.2 million unfavorable impact to accumulated other comprehensive income driven by fair value marks related to hedge positions involving interest rate swaps, as well as dividends paid of $3.1 million and common stock repurchases of $1.0 million. The marks on the interest rate swaps are driven by declining market interest rates. The Company's interest rate swaps are primarily used to hedge interest rate risk in relation to its funding sources. The Company's current derivative positions will cause a decrease to other comprehensive income in a falling interest rate environment and an increase in a rising interest rate environment. As of September 30, 2019, the tangible common equity ratio and tangible book value per share were 9.33% and $22.34, 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) | |||||||||||||||||||
September
| June
| March
| December
| September
| |||||||||||||||
ASSETS | |||||||||||||||||||
Cash and due from banks | $ | 83,109 | $ | 75,647 | $ | 88,827 | $ | 75,411 | $ | 84,437 | |||||||||
Federal funds sold | — | 3,237 | 4,764 | 2,701 | 2,664 | ||||||||||||||
Cash and cash equivalents | 83,109 | 78,884 | 93,591 | 78,112 | 87,101 | ||||||||||||||
Investment securities | |||||||||||||||||||
Marketable equity securities, at fair value | 2,120 | 2,090 | 2,049 | 2,009 | — | ||||||||||||||
Available for sale investment securities, at fair value | 86,017 | 93,017 | 96,423 | 93,154 | 94,438 | ||||||||||||||
Held to maturity investment securities, at amortized cost | 17,365 | 21,318 | 21,364 | 21,421 | 21,464 | ||||||||||||||
Total investment securities | 105,502 | 116,425 | 119,836 | 116,584 | 115,902 | ||||||||||||||
Loans receivable (net of allowance for loan losses of $13,212, $13,890, $15,430, $15,462 and $19,311 at September 30, 2019, June 30, 2019, March 31, 2019, December 31, 2018 and September 30, 2018, respectively) | 1,548,988 | 1,551,620 | 1,578,609 | 1,586,775 | 1,585,465 | ||||||||||||||
Other real estate owned | — | 1,217 | — | — | — | ||||||||||||||
Accrued interest receivable | 5,916 | 6,165 | 6,534 | 6,375 | 6,055 | ||||||||||||||
Federal Home Loan Bank stock, at cost | 7,475 | 7,475 | 7,475 | 8,110 | 9,210 | ||||||||||||||
Premises and equipment, net | 28,892 | 29,060 | 29,629 | 19,771 | 20,245 | ||||||||||||||
Bank-owned life insurance | 41,433 | 41,178 | 40,925 | 40,675 | 40,413 | ||||||||||||||
Goodwill | 2,589 | 2,589 | 2,589 | 2,589 | 2,589 | ||||||||||||||
Other intangible assets | 232 | 251 | 270 | 290 | 309 | ||||||||||||||
Deferred income taxes, net | 6,591 | 5,596 | 4,835 | 4,347 | 4,583 | ||||||||||||||
Other assets | 27,815 | 19,205 | 13,465 | 10,037 | 13,164 | ||||||||||||||
Total assets | $ | 1,858,542 | $ | 1,859,665 | $ | 1,897,758 | $ | 1,873,665 | $ | 1,885,036 | |||||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||||||||||||||||
Liabilities | |||||||||||||||||||
Deposits | |||||||||||||||||||
Noninterest bearing deposits | $ | 178,733 | $ | 161,704 | $ | 161,844 | $ | 173,198 | $ | 162,473 | |||||||||
Interest bearing deposits | 1,291,551 | 1,316,027 | 1,359,521 | 1,329,046 | 1,330,696 | ||||||||||||||
Total deposits | 1,470,284 | 1,477,731 | 1,521,365 | 1,502,244 | 1,493,169 | ||||||||||||||
Advances from the Federal Home Loan Bank | 150,000 | 150,000 | 150,000 | 160,000 | 180,000 | ||||||||||||||
Subordinated debentures | 25,194 | 25,181 | 25,168 | 25,155 | 25,142 | ||||||||||||||
Accrued expenses and other liabilities | 37,052 | 29,813 | 24,384 | 12,070 | 11,971 | ||||||||||||||
Total liabilities | 1,682,530 | 1,682,725 | 1,720,917 | 1,699,469 | 1,710,282 | ||||||||||||||
Shareholders’ equity | |||||||||||||||||||
Common stock, no par value | 120,343 | 120,064 | 120,750 | 120,527 | 120,188 | ||||||||||||||
Retained earnings | 66,870 | 63,801 | 59,247 | 54,706 | 52,386 | ||||||||||||||
Accumulated other comprehensive (loss) income | (11,201 | ) | (6,925 | ) | (3,156 | ) | (1,037 | ) | 2,180 | ||||||||||
Total shareholders’ equity | 176,012 | 176,940 | 176,841 | 174,196 | 174,754 | ||||||||||||||
Total liabilities and shareholders’ equity | $ | 1,858,542 | $ | 1,859,665 | $ | 1,897,758 | $ | 1,873,665 | $ | 1,885,036 | |||||||||
BANKWELL FINANCIAL GROUP, INC. | |||||||||||||||||||||||||||
CONSOLIDATED STATEMENTS OF INCOME (unaudited) | |||||||||||||||||||||||||||
(Dollars in thousands, except 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,
| |||||||||||||||||||||
Interest and dividend income | |||||||||||||||||||||||||||
Interest and fees on loans | $ | 19,055 | $ | 19,540 | $ | 20,096 | $ | 20,030 | $ | 19,153 | $ | 58,691 | $ | 54,685 | |||||||||||||
Interest and dividends on securities | 903 | 992 | 997 | 1,009 | 1,002 | 2,892 | 2,912 | ||||||||||||||||||||
Interest on cash and cash equivalents | 535 | 514 | 383 | 504 | 345 | 1,432 | 924 | ||||||||||||||||||||
Total interest and dividend income | 20,493 | 21,046 | 21,476 | 21,543 | 20,500 | 63,015 | 58,521 | ||||||||||||||||||||
Interest expense | |||||||||||||||||||||||||||
Interest expense on deposits | 6,331 | 6,319 | 6,100 | 5,942 | 5,044 | 18,750 | 13,009 | ||||||||||||||||||||
Interest expense on borrowings | 1,151 | 1,132 | 1,103 | 1,134 | 1,210 | 3,386 | 3,653 | ||||||||||||||||||||
Total interest expense | 7,482 | 7,451 | 7,203 | 7,076 | 6,254 | 22,136 | 16,662 | ||||||||||||||||||||
Net interest income | 13,011 | 13,595 | 14,273 | 14,467 | 14,246 | 40,879 | 41,859 | ||||||||||||||||||||
Provision (Credit) for loan losses | 773 | (841 | ) | 195 | 2,795 | 322 | 127 | 645 | |||||||||||||||||||
Net interest income after provision (credit) for loan losses | 12,238 | 14,436 | 14,078 | 11,672 | 13,924 | 40,752 | 41,214 | ||||||||||||||||||||
Noninterest income | |||||||||||||||||||||||||||
Gains and fees from sales of loans | 703 | 617 | 89 | 149 | 150 | 1,409 | 835 | ||||||||||||||||||||
Service charges and fees | 264 | 263 | 249 | 284 | 285 | 776 | 806 | ||||||||||||||||||||
Bank owned life insurance | 255 | 254 | 249 | 262 | 267 | 758 | 795 | ||||||||||||||||||||
Net gain on sale of available for sale securities | — | 76 | — | — | — | 76 | 222 | ||||||||||||||||||||
Loss on sale of other real estate owned, net | (102 | ) | — | — | — | — | (102 | ) | — | ||||||||||||||||||
Other | 432 | 126 | 721 | (94 | ) | 157 | 1,279 | 641 | |||||||||||||||||||
Total noninterest income | 1,552 | 1,336 | 1,308 | 601 | 859 | 4,196 | 3,299 | ||||||||||||||||||||
Noninterest expense | |||||||||||||||||||||||||||
Salaries and employee benefits | 4,881 | 4,555 | 4,836 | 4,503 | 4,903 | 14,272 | 14,470 | ||||||||||||||||||||
Occupancy and equipment | 1,946 | 1,833 | 1,887 | 1,671 | 1,771 | 5,666 | 5,119 | ||||||||||||||||||||
Data processing | 505 | 551 | 512 | 487 | 512 | 1,568 | 1,546 | ||||||||||||||||||||
Professional services | 346 | 519 | 590 | 583 | 321 | 1,455 | 1,520 | ||||||||||||||||||||
Director fees | 235 | 215 | 189 | 295 | 260 | 639 | 749 | ||||||||||||||||||||
Marketing | 210 | 348 | 193 | 416 | 395 | 751 | 1,171 | ||||||||||||||||||||
Amortization of intangibles | 19 | 19 | 19 | 20 | 24 | 57 | 72 | ||||||||||||||||||||
FDIC insurance | (125 | ) | 76 | 123 | 159 | 203 | 74 | 620 | |||||||||||||||||||
Other | 655 | 639 | 626 | 662 | 481 | 1,920 | 1,570 | ||||||||||||||||||||
Total noninterest expense | 8,672 | 8,755 | 8,975 | 8,796 | 8,870 | 26,402 | 26,837 | ||||||||||||||||||||
Income before income tax expense | 5,118 | 7,017 | 6,411 | 3,477 | 5,913 | 18,546 | 17,676 | ||||||||||||||||||||
Income tax expense | 1,030 | 1,441 | 1,331 | 216 | 1,056 | 3,802 | 3,504 | ||||||||||||||||||||
Net income | $ | 4,088 | $ | 5,576 | $ | 5,080 | $ | 3,261 | $ | 4,857 | $ | 14,744 | $ | 14,172 | |||||||||||||
Earnings Per Common Share: | |||||||||||||||||||||||||||
Basic | $ | 0.52 | $ | 0.71 | $ | 0.65 | $ | 0.42 | $ | 0.62 | $ | 1.88 | $ | 1.81 | |||||||||||||
Diluted | $ | 0.52 | $ | 0.71 | $ | 0.65 | $ | 0.41 | $ | 0.62 | $ | 1.87 | $ | 1.80 | |||||||||||||
Weighted Average Common Shares Outstanding: | |||||||||||||||||||||||||||
Basic | 7,750,490 | 7,773,466 | 7,760,460 | 7,749,616 | 7,738,343 | 7,761,441 | 7,712,924 | ||||||||||||||||||||
Diluted | 7,766,485 | 7,790,760 | 7,776,378 | 7,781,153 | 7,763,935 | 7,788,839 | 7,758,762 | ||||||||||||||||||||
Dividends per common share | $ | 0.13 | $ | 0.13 | $ | 0.13 | $ | 0.12 | $ | 0.12 | $ | 0.39 | $ | 0.36 | |||||||||||||
BANKWELL FINANCIAL GROUP, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (unaudited)
For the Quarter Ended | For the Nine Months Ended | |||||||||||||||||||
September 30, 2019 | June 30, 2019 | March 31, 2019 | December 31,
| September 30, 2018 | September 30, 2019 | September 30, 2018 | ||||||||||||||
Performance ratios: | ||||||||||||||||||||
Return on average assets | 0.87 | % | 1.20 | % | 1.10 | % | 0.69 | % | 1.04 | % | 1.05 | % | 1.03 | % | ||||||
Return on average stockholders' equity | 9.12 | % | 12.48 | % | 11.60 | % | 7.28 | % | 11.13 | % | 11.06 | % | 11.23 | % | ||||||
Return on average tangible common equity | 9.26 | % | 12.68 | % | 11.80 | % | 7.40 | % | 11.32 | % | 11.24 | % | 11.43 | % | ||||||
Net interest margin | 2.96 | % | 3.07 | % | 3.19 | % | 3.20 | % | 3.21 | % | 3.07 | % | 3.17 | % | ||||||
Efficiency ratio(1) | 58.9 | % | 58.6 | % | 57.5 | % | 58.2 | % | 58.6 | % | 58.3 | % | 59.6 | % | ||||||
Net loan charge-offs as a % of average loans | 0.09 | % | 0.04 | % | 0.01 | % | 0.41 | % | — | % | 0.15 | % | 0.02 | % | ||||||
Dividend payout ratio | 25.00 | % | 18.31 | % | 20.00 | % | 29.27 | % | 19.35 | % | 20.86 | % | 20.00 | % | ||||||
As of | |||||||||||||||||||
September 30,
| June 30, 2019 | March 31, 2019 | December 31,
| September 30,
| |||||||||||||||
Capital ratios: | |||||||||||||||||||
Total Common Equity Tier 1 Capital to Risk-Weighted Assets(2) | 12.65 | % | 12.40 | % | 12.00 | % | 11.56 | % | 11.43 | % | |||||||||
Total Capital to Risk-Weighted Assets(2) | 13.47 | % | 13.26 | % | 12.94 | % | 12.50 | % | 12.61 | % | |||||||||
Tier I Capital to Risk-Weighted Assets(2) | 12.65 | % | 12.40 | % | 12.00 | % | 11.56 | % | 11.43 | % | |||||||||
Tier I Capital to Average Assets(2) | 10.88 | % | 10.75 | % | 10.53 | % | 10.14 | % | 10.14 | % | |||||||||
Tangible common equity to tangible assets | 9.33 | % | 9.38 | % | 9.18 | % | 9.16 | % | 9.13 | % | |||||||||
Tangible book value per common share(3) | $ | 22.34 | $ | 22.47 | $ | 22.38 | $ | 22.06 | $ | 22.20 | |||||||||
|
BANKWELL FINANCIAL GROUP, INC.
ASSET QUALITY (unaudited)
(Dollars in thousands)
For the Quarter Ended | |||||||||||||||||||
September 30,
| June 30,
| March 31,
| December 31,
| September 30,
| |||||||||||||||
Allowance for loan losses: | |||||||||||||||||||
Balance at beginning of period | $ | 13,890 | $ | 15,430 | $ | 15,462 | $ | 19,311 | $ | 19,006 | |||||||||
Charge-offs: | |||||||||||||||||||
Residential real estate | (78 | ) | (565 | ) | (233 | ) | (348 | ) | (16 | ) | |||||||||
Commercial real estate | (594 | ) | — | — | (5,596 | ) | — | ||||||||||||
Commercial business | (748 | ) | (130 | ) | (3 | ) | (719 | ) | — | ||||||||||
Consumer | (57 | ) | (13 | ) | (2 | ) | (15 | ) | (2 | ) | |||||||||
Total charge-offs | (1,477 | ) | (708 | ) | (238 | ) | (6,678 | ) | (18 | ) | |||||||||
Recoveries: | |||||||||||||||||||
Commercial real estate | — | — | — | 18 | — | ||||||||||||||
Commercial business | 2 | 6 | 10 | 15 | — | ||||||||||||||
Consumer | 24 | 3 | 1 | 1 | 1 | ||||||||||||||
Total recoveries | 26 | 9 | 11 | 34 | 1 | ||||||||||||||
Net loan charge-offs | (1,451 | ) | (699 | ) | (227 | ) | (6,644 | ) | (17 | ) | |||||||||
Provision (Credit) for loan losses | 773 | (841 | ) | 195 | 2,795 | 322 | |||||||||||||
Balance at end of period | $ | 13,212 | $ | 13,890 | $ | 15,430 | $ | 15,462 | $ | 19,311 | |||||||||
As of | |||||||||||||||||||
September 30,
| June 30, 2019 | March 31, 2019 | December 31,
| September 30,
| |||||||||||||||
Asset quality: | |||||||||||||||||||
Nonaccrual loans | |||||||||||||||||||
Residential real estate | $ | 1,583 | $ | 1,716 | $ | 3,516 | $ | 3,812 | $ | 4,725 | |||||||||
Commercial real estate | 5,332 | 4,535 | 5,880 | 5,950 | 12,182 | ||||||||||||||
Commercial business | 2,963 | 5,437 | 3,837 | 4,320 | 5,057 | ||||||||||||||
Total nonaccrual loans | 9,878 | 11,688 | 13,233 | 14,082 | 21,964 | ||||||||||||||
Other real estate owned | — | 1,217 | — | — | — | ||||||||||||||
Total nonperforming assets | $ | 9,878 | $ | 12,905 | $ | 13,233 | $ | 14,082 | $ | 21,964 | |||||||||
Nonperforming loans as a % of total loans | 0.63 | % | 0.75 | % | 0.83 | % | 0.88 | % | 1.37 | % | |||||||||
Nonperforming assets as a % of total assets | 0.53 | % | 0.69 | % | 0.70 | % | 0.75 | % | 1.17 | % | |||||||||
Allowance for loan losses as a % of total loans | 0.84 | % | 0.89 | % | 0.97 | % | 0.96 | % | 1.20 | % | |||||||||
Allowance for loan losses as a % of nonperforming loans | 133.75 | % | 118.84 | % | 116.60 | % | 109.80 | % | 87.92 | % | |||||||||
Nonperforming assets as a percentage of total assets was 0.53% at September 30, 2019, down from 0.75% at December 31, 2018. Net charge-offs to average loans was 0.09% for the quarter ended September 30, 2019. The allowance for loan losses at September 30, 2019 was $13.2 million, representing 0.84% of total loans. The Company continues to work on the resolution of the previously disclosed large nonperforming lending relationship. Progress to date has been in line with the Company's estimates and, subsequent to the end of the third quarter 2019, a claim has been submitted to the Small Business Administration ("SBA") to recover the remaining balance. During the quarter ended September 30, 2019, the Company sold its other real estate owned ("OREO") property for a loss of $0.1 million. The Company does not have any OREO as of September 30, 2019.
BANKWELL FINANCIAL GROUP, INC.
LOAN & DEPOSIT PORTFOLIO (unaudited)
(Dollars in thousands)
Period End Loan Composition | September 30, 2019 | June 30, 2019 | December 31,
| Current QTD
| YTD
| ||||||||||||
Residential Real Estate | $ | 159,193 | $ | 164,066 | $ | 178,079 | (3.0 | )% | (10.6 | )% | |||||||
Commercial Real Estate(1) | 1,096,856 | 1,080,846 | 1,094,066 | 1.5 | % | 0.3 | % | ||||||||||
Construction | 89,878 | 89,236 | 73,191 | 0.7 | % | 22.8 | % | ||||||||||
Total Real Estate Loans | 1,345,927 | 1,334,148 | 1,345,336 | 0.9 | % | — | % | ||||||||||
Commercial Business | 218,145 | 233,364 | 258,978 | (6.5 | )% | (15.8 | )% | ||||||||||
Consumer | 260 | 297 | 412 | (12.5 | )% | (36.9 | )% | ||||||||||
Total Loans | $ | 1,564,332 | $ | 1,567,809 | $ | 1,604,726 | (0.2 | )% | (2.5 | )% | |||||||
(1) Includes owner occupied commercial real estate. | |||||||||||||||||
Period End Deposit Composition | September 30, 2019 | June 30, 2019 | December 31,
| Current QTD
| YTD
| ||||||||||||
Noninterest bearing demand | $ | 178,733 | $ | 161,704 | $ | 173,198 | 10.5 | % | 3.2 | % | |||||||
NOW | 60,645 | 67,793 | 61,869 | (10.5 | )% | (2.0 | )% | ||||||||||
Money Market | 411,248 | 434,385 | 471,968 | (5.3 | )% | (12.9 | )% | ||||||||||
Savings | 176,232 | 174,319 | 180,487 | 1.1 | % | (2.4 | )% | ||||||||||
Time | 643,426 | 639,530 | 614,722 | 0.6 | % | 4.7 | % | ||||||||||
Total Deposits | $ | 1,470,284 | $ | 1,477,731 | $ | 1,502,244 | (0.5 | )% | (2.1 | )% | |||||||
BANKWELL FINANCIAL GROUP, INC.
NONINTEREST INCOME & EXPENSE - QTD (unaudited)
(Dollars in thousands)
For the Quarter Ended | |||||||||||||||||
Noninterest income | September 30, 2019 | June 30, 2019 | September 30,
| Sep 19 vs. June 19
| Sep 19 vs. Sep 18
| ||||||||||||
Gains and fees from sales of loans | $ | 703 | $ | 617 | $ | 150 | 13.9 | % | 368.7 | % | |||||||
Service charges and fees | 264 | 263 | 285 | 0.4 | % | (7.4 | )% | ||||||||||
Bank owned life insurance | 255 | 254 | 267 | 0.4 | % | (4.5 | )% | ||||||||||
Net gain on sale of available for sale securities | — | 76 | — | (100.0 | )% | N/A | |||||||||||
Loss on sale of other real estate owned, net | (102 | ) | — | — | N/A | N/A | |||||||||||
Other | 432 | 126 | 157 | 242.9 | % | 175.2 | % | ||||||||||
Total noninterest income | $ | 1,552 | $ | 1,336 | $ | 859 | 16.2 | % | 80.7 | % | |||||||
Noninterest income increased by $0.7 million, or 81%, to $1.6 million for the quarter ended September 30, 2019 compared to the quarter ended September 30, 2018. The increase in noninterest income was primarily a result of a $0.6 million increase in gains and fees from the sales of loans, driven by a higher volume of loans sold for the quarter ended September 30, 2019 compared to the same period in 2018.
For the Quarter Ended | |||||||||||||||||
Noninterest expense | September 30, 2019 | June 30, 2019 | September 30,
| Sep 19 vs. June 19
| Sep 19 vs. Sep 18
| ||||||||||||
Salaries and employee benefits | $ | 4,881 | $ | 4,555 | $ | 4,903 | 7.2 | % | (0.4 | )% | |||||||
Occupancy and equipment | 1,946 | 1,833 | 1,771 | 6.2 | % | 9.9 | % | ||||||||||
Data processing | 505 | 551 | 512 | (8.3 | )% | (1.4 | )% | ||||||||||
Professional services | 346 | 519 | 321 | (33.3 | )% | 7.8 | % | ||||||||||
Director fees | 235 | 215 | 260 | 9.3 | % | (9.6 | )% | ||||||||||
Marketing | 210 | 348 | 395 | (39.7 | )% | (46.8 | )% | ||||||||||
Amortization of intangibles | 19 | 19 | 24 | — | % | (20.8 | )% | ||||||||||
FDIC insurance | (125 | ) | 76 | 203 | (264.5 | )% | (161.6 | )% | |||||||||
Other | 655 | 639 | 481 | 2.5 | % | 36.2 | % | ||||||||||
Total noninterest expense | $ | 8,672 | $ | 8,755 | $ | 8,870 | (0.9 | )% | (2.2 | )% | |||||||
Noninterest expense decreased by $0.2 million, or 2%, to $8.7 million for the quarter ended September 30, 2019 compared to the quarter ended September 30, 2018. The decrease in noninterest expense was primarily a result of a $0.3 million decrease in FDIC insurance expense driven by a credit received during the quarter ended September 30, 2019 as well as a $0.2 million decrease in marketing expenses. The decrease in noninterest expense was partially offset by a $0.2 million increase in occupancy and equipment expense primarily related to the Company's investment in technology as part of upgrading the branch network applications.
BANKWELL FINANCIAL GROUP, INC.
NONINTEREST INCOME & EXPENSE - YTD (unaudited)
(Dollars in thousands)
For the Nine Months Ended | ||||||||||
Noninterest income | September 30, 2019 | September 30,
| % Change | |||||||
Gains and fees from sales of loans | $ | 1,409 | $ | 835 | 68.7 | % | ||||
Service charges and fees | 776 | 806 | (3.7 | )% | ||||||
Bank owned life insurance | 758 | 795 | (4.7 | )% | ||||||
Net gain on sale of available for sale securities | 76 | 222 | (65.8 | )% | ||||||
Loss on sale of other real estate owned, net | (102 | ) | — | N/A | ||||||
Other | 1,279 | 641 | 99.5 | % | ||||||
Total noninterest income | $ | 4,196 | $ | 3,299 | 27.2 | % | ||||
Noninterest income increased by $0.9 million, or 27%, for the nine months ended September 30, 2019 compared to the nine months ended September 30, 2018. The increase in noninterest income was primarily a result of a $0.6 million increase in gains and fees from sales of loans and a $0.6 million increase in other income. The increase in gains and fees from sales of loans was driven by a higher volume of loans sold for the nine months ended September 30, 2019 compared to the same period in 2018. The increase in other income was mainly attributable to loan related interest rate swap fees.
For the Nine Months Ended | ||||||||||
Noninterest expense | September 30, 2019 | September 30,
| % Change | |||||||
Salaries and employee benefits | $ | 14,272 | $ | 14,470 | (1.4 | )% | ||||
Occupancy and equipment | 5,666 | 5,119 | 10.7 | % | ||||||
Data processing | 1,568 | 1,546 | 1.4 | % | ||||||
Professional services | 1,455 | 1,520 | (4.3 | )% | ||||||
Marketing | 751 | 1,171 | (35.9 | )% | ||||||
Director fees | 639 | 749 | (14.7 | )% | ||||||
FDIC insurance | 74 | 620 | (88.1 | )% | ||||||
Amortization of intangibles | 57 | 72 | (20.8 | )% | ||||||
Other | 1,920 | 1,570 | 22.3 | % | ||||||
Total noninterest expense | $ | 26,402 | $ | 26,837 | (1.6 | )% | ||||
Noninterest expense decreased $0.4 million, or 2%, for the nine months ended September 30, 2019 compared to the nine months ended September 30, 2018. The decrease in noninterest expense was primarily a result of a $0.5 million decrease in FDIC insurance expense driven by a credit received during the quarter ended September 30, 2019, as well as a $0.4 million decrease in marketing expenses. The decrease in noninterest expense was partially offset by an increase of $0.5 million in occupancy and equipment expense associated with a full nine months of expenses from the prior year's branch expansion and a $0.4 million increase in other expenses.
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 | September 30, 2019 | June 30, 2019 | March 31, 2019 | December 31, 2018 | September 30, 2018 | ||||||||||||||
Total Equity | $ | 176,012 | $ | 176,940 | $ | 176,841 | $ | 174,196 | $ | 174,754 | |||||||||
Less: | |||||||||||||||||||
Goodwill | 2,589 | 2,589 | 2,589 | 2,589 | 2,589 | ||||||||||||||
Other intangibles | 232 | 251 | 270 | 290 | 309 | ||||||||||||||
Tangible Common Equity | $ | 173,191 | $ | 174,100 | $ | 173,982 | $ | 171,317 | $ | 171,856 | |||||||||
Total Assets | $ | 1,858,542 | $ | 1,859,665 | $ | 1,897,758 | $ | 1,873,665 | $ | 1,885,036 | |||||||||
Less: | |||||||||||||||||||
Goodwill | 2,589 | 2,589 | 2,589 | 2,589 | 2,589 | ||||||||||||||
Other intangibles | 232 | 251 | 270 | 290 | 309 | ||||||||||||||
Tangible Assets | $ | 1,855,721 | $ | 1,856,825 | $ | 1,894,899 | $ | 1,870,786 | $ | 1,882,138 | |||||||||
Tangible Common Equity to Tangible Assets | 9.33 | % | 9.38 | % | 9.18 | % | 9.16 | % | 9.13 | % | |||||||||
As of | |||||||||||||||||||
Computation of Tangible Book Value per Common Share | September 30, 2019 | June 30, 2019 | March 31, 2019 | December 31, 2018 | September 30, 2018 | ||||||||||||||
Total shareholders' equity | $ | 176,012 | $ | 176,940 | $ | 176,841 | $ | 174,196 | $ | 174,754 | |||||||||
Less: | |||||||||||||||||||
Preferred stock | — | — | — | — | — | ||||||||||||||
Common shareholders' equity | $ | 176,012 | $ | 176,940 | $ | 176,841 | $ | 174,196 | $ | 174,754 | |||||||||
Less: | |||||||||||||||||||
Goodwill | 2,589 | 2,589 | 2,589 | 2,589 | 2,589 | ||||||||||||||
Other intangibles | 232 | 251 | 270 | 290 | 309 | ||||||||||||||
Tangible common shareholders' equity | $ | 173,191 | $ | 174,100 | $ | 173,982 | $ | 171,317 | $ | 171,856 | |||||||||
Common shares | 7,841,103 | 7,841,103 | 7,873,471 | 7,842,271 | 7,842,996 | ||||||||||||||
Less: | |||||||||||||||||||
Shares of unvested restricted stock | 88,473 | 94,598 | 99,061 | 77,624 | 101,759 | ||||||||||||||
Common shares less unvested restricted stock | 7,752,630 | 7,746,505 | 7,774,410 | 7,764,647 | 7,741,237 | ||||||||||||||
Book value per share | $ | 22.70 | $ | 22.84 | $ | 22.75 | $ | 22.43 | $ | 22.57 | |||||||||
Less: | |||||||||||||||||||
Effects of intangible assets | $ | 0.36 | $ | 0.37 | $ | 0.37 | $ | 0.37 | $ | 0.37 | |||||||||
Tangible Book Value per Common Share | $ | 22.34 | $ | 22.47 | $ | 22.38 | $ | 22.06 | $ | 22.20 | |||||||||
BANKWELL FINANCIAL GROUP, INC.
RECONCILIATION OF GAAP TO NON-GAAP MEASURES (unaudited) - Continued
(Dollars in thousands)
For the Quarter Ended | For the Nine Months Ended | ||||||||||||||||||||||||||
Computation of Efficiency Ratio | September 30, 2019 | June 30, 2019 | March 31, 2019 | December 31, 2018 | September 30, 2018 | September 30, 2019 | September 30, 2018 | ||||||||||||||||||||
Noninterest expense | $ | 8,672 | $ | 8,755 | $ | 8,975 | $ | 8,796 | $ | 8,870 | $ | 26,402 | $ | 26,837 | |||||||||||||
Less: | |||||||||||||||||||||||||||
Amortization of intangible assets | 19 | 19 | 19 | 20 | 24 | 57 | 72 | ||||||||||||||||||||
Other real estate owned expenses | 13 | 24 | — | — | — | 37 | — | ||||||||||||||||||||
Adjusted noninterest expense | $ | 8,640 | $ | 8,712 | $ | 8,956 | $ | 8,776 | $ | 8,846 | $ | 26,308 | $ | 26,765 | |||||||||||||
Net interest income | $ | 13,011 | $ | 13,595 | $ | 14,273 | $ | 14,467 | $ | 14,246 | $ | 40,879 | $ | 41,859 | |||||||||||||
Noninterest income | 1,552 | 1,336 | 1,308 | 601 | 859 | 4,196 | 3,299 | ||||||||||||||||||||
Less: | |||||||||||||||||||||||||||
Net gain on sale of available for sale securities | — | 76 | — | — | — | 76 | 222 | ||||||||||||||||||||
Loss on sale of other real estate owned, net | (102 | ) | — | — | — | — | (102 | ) | — | ||||||||||||||||||
Adjusted operating revenue | $ | 14,665 | $ | 14,855 | $ | 15,581 | $ | 15,068 | $ | 15,105 | $ | 45,101 | $ | 44,936 | |||||||||||||
Efficiency ratio | 58.9 | % | 58.6 | % | 57.5 | % | 58.2 | % | 58.6 | % | 58.3 | % | 59.6 | % | |||||||||||||
For the Quarter Ended | For the Nine Months Ended | ||||||||||||||||||||||||||
Computation of Return on Average Tangible Common Equity | September 30, 2019 | June 30, 2019 | March 31, 2019 | December 31, 2018 | September 30, 2018 | September 30, 2019 | September 30, 2018 | ||||||||||||||||||||
Net Income Attributable to Common Shareholders | $ | 4,088 | $ | 5,576 | $ | 5,080 | $ | 3,261 | $ | 4,857 | $ | 14,744 | $ | 14,172 | |||||||||||||
Total average shareholders' equity | $ | 177,916 | $ | 179,217 | $ | 177,532 | $ | 177,685 | $ | 173,199 | $ | 178,237 | $ | 168,780 | |||||||||||||
Less: | |||||||||||||||||||||||||||
Average Goodwill | 2,589 | 2,589 | 2,589 | 2,589 | 2,589 | 2,589 | 2,589 | ||||||||||||||||||||
Average Other intangibles | 244 | 264 | 283 | 302 | 325 | 264 | 349 | ||||||||||||||||||||
Average tangible common equity | $ | 175,083 | $ | 176,364 | $ | 174,660 | $ | 174,794 | $ | 170,285 | $ | 175,384 | $ | 165,842 | |||||||||||||
Annualized Return on Average Tangible Common Equity | 9.26 | % | 12.68 | % | 11.80 | % | 7.40 | % | 11.32 | % | 11.24 | % | 11.43 | % | |||||||||||||
BANKWELL FINANCIAL GROUP, INC.
NET INTEREST MARGIN ANALYSIS ON A FULLY TAX EQUIVALENT BASIS - QTD (unaudited)
(Dollars in thousands)
For the Quarter Ended | |||||||||||||||||||||
September 30, 2019 | September 30, 2018 | ||||||||||||||||||||
Average Balance | Interest | Yield/ Rate (5) | Average Balance | Interest | Yield/ Rate (5) | ||||||||||||||||
Assets: | |||||||||||||||||||||
Cash and Fed funds sold | $ | 86,967 | $ | 535 | 2.44 | % | $ | 70,111 | $ | 345 | 1.95 | % | |||||||||
Securities(1) | 109,247 | 845 | 3.09 | % | 118,311 | 937 | 3.17 | % | |||||||||||||
Loans: | |||||||||||||||||||||
Commercial real estate | 1,066,256 | 12,590 | 4.62 | % | 1,030,336 | 12,445 | 4.73 | % | |||||||||||||
Residential real estate | 161,312 | 1,559 | 3.87 | % | 185,625 | 1,724 | 3.71 | % | |||||||||||||
Construction(2) | 86,342 | 1,141 | 5.17 | % | 92,537 | 1,225 | 5.18 | % | |||||||||||||
Commercial business | 248,116 | 3,761 | 5.93 | % | 279,454 | 3,752 | 5.25 | % | |||||||||||||
Consumer | 229 | 4 | 6.93 | % | 393 | 7 | 6.79 | % | |||||||||||||
Total loans | 1,562,255 | 19,055 | 4.77 | % | 1,588,345 | 19,153 | 4.72 | % | |||||||||||||
Federal Home Loan Bank stock | 7,474 | 113 | 6.02 | % | 9,297 | 137 | 5.88 | % | |||||||||||||
Total earning assets | 1,765,943 | $ | 20,548 | 4.55 | % | 1,786,064 | $ | 20,572 | 4.51 | % | |||||||||||
Other assets | 103,742 | 68,838 | |||||||||||||||||||
Total assets | $ | 1,869,685 | $ | 1,854,902 | |||||||||||||||||
Liabilities and shareholders' equity: | |||||||||||||||||||||
Interest bearing liabilities: | |||||||||||||||||||||
NOW | $ | 62,444 | $ | 26 | 0.17 | % | $ | 59,618 | $ | 54 | 0.36 | % | |||||||||
Money market | 423,638 | 1,739 | 1.63 | % | 483,105 | 1,741 | 1.43 | % | |||||||||||||
Savings | 174,587 | 740 | 1.68 | % | 136,683 | 502 | 1.46 | % | |||||||||||||
Time | 644,536 | 3,826 | 2.36 | % | 607,044 | 2,747 | 1.80 | % | |||||||||||||
Total interest bearing deposits | 1,305,205 | 6,331 | 1.92 | % | 1,286,450 | 5,044 | 1.56 | % | |||||||||||||
Borrowed Money | 175,185 | 1,151 | 2.57 | % | 216,483 | 1,210 | 2.19 | % | |||||||||||||
Total interest bearing liabilities | 1,480,390 | $ | 7,482 | 2.01 | % | 1,502,933 | $ | 6,254 | 1.65 | % | |||||||||||
Noninterest bearing deposits | 177,922 | 167,198 | |||||||||||||||||||
Other liabilities | 33,457 | 11,572 | |||||||||||||||||||
Total liabilities | 1,691,769 | 1,681,703 | |||||||||||||||||||
Shareholders' equity | 177,916 | 173,199 | |||||||||||||||||||
Total liabilities and shareholders' equity | $ | 1,869,685 | $ | 1,854,902 | |||||||||||||||||
Net interest income(3) | $ | 13,066 | $ | 14,318 | |||||||||||||||||
Interest rate spread | 2.54 | % | 2.86 | % | |||||||||||||||||
Net interest margin(4) | 2.96 | % | 3.21 | % | |||||||||||||||||
|
BANKWELL FINANCIAL GROUP, INC.
NET INTEREST MARGIN ANALYSIS ON A FULLY TAX EQUIVALENT BASIS - YTD (unaudited)
(Dollars in thousands)
For the Nine Months Ended | |||||||||||||||||||||
September 30, 2019 | September 30, 2018 | ||||||||||||||||||||
Average Balance | Interest | Yield/ Rate (5) | Average Balance | Interest | Yield/ Rate (5) | ||||||||||||||||
Assets: | |||||||||||||||||||||
Cash and Fed funds sold | $ | 84,212 | $ | 1,432 | 2.27 | % | $ | 73,823 | $ | 924 | 1.67 | % | |||||||||
Securities(1) | 115,586 | 2,722 | 3.14 | % | 118,434 | 2,746 | 3.09 | % | |||||||||||||
Loans: | |||||||||||||||||||||
Commercial real estate | 1,061,536 | 38,176 | 4.74 | % | 1,001,058 | 34,714 | 4.57 | % | |||||||||||||
Residential real estate | 169,297 | 4,892 | 3.85 | % | 192,254 | 5,309 | 3.68 | % | |||||||||||||
Construction(2) | 84,487 | 3,412 | 5.33 | % | 93,617 | 3,551 | 5.00 | % | |||||||||||||
Commercial business | 259,154 | 12,198 | 6.21 | % | 281,348 | 11,088 | 5.20 | % | |||||||||||||
Consumer | 274 | 13 | 6.60 | % | 521 | 23 | 5.77 | % | |||||||||||||
Total loans | 1,574,748 | 58,691 | 4.91 | % | 1,568,798 | 54,685 | 4.60 | % | |||||||||||||
Federal Home Loan Bank stock | 7,512 | 365 | 6.49 | % | 9,311 | 379 | 5.43 | % | |||||||||||||
Total earning assets | 1,782,058 | $ | 63,210 | 4.68 | % | 1,770,366 | $ | 58,734 | 4.38 | % | |||||||||||
Other assets | 89,332 | 68,141 | |||||||||||||||||||
Total assets | $ | 1,871,390 | $ | 1,838,507 | |||||||||||||||||
Liabilities and shareholders' equity: | |||||||||||||||||||||
Interest bearing liabilities: | |||||||||||||||||||||
NOW | $ | 61,872 | $ | 101 | 0.22 | % | $ | 60,616 | $ | 93 | 0.21 | % | |||||||||
Money market | 447,008 | 5,567 | 1.67 | % | 482,204 | 4,422 | 1.23 | % | |||||||||||||
Savings | 176,491 | 2,252 | 1.71 | % | 110,622 | 964 | 1.17 | % | |||||||||||||
Time | 638,978 | 10,830 | 2.27 | % | 617,269 | 7,530 | 1.63 | % | |||||||||||||
Total interest bearing deposits | 1,324,349 | 18,750 | 1.89 | % | 1,270,711 | 13,009 | 1.37 | % | |||||||||||||
Borrowed Money | 175,290 | 3,386 | 2.55 | % | 221,597 | 3,653 | 2.17 | % | |||||||||||||
Total interest bearing liabilities | 1,499,639 | $ | 22,136 | 1.97 | % | 1,492,308 | $ | 16,662 | 1.49 | % | |||||||||||
Noninterest bearing deposits | 166,864 | 164,604 | |||||||||||||||||||
Other liabilities | 26,650 | 12,815 | |||||||||||||||||||
Total liabilities | 1,693,153 | 1,669,727 | |||||||||||||||||||
Shareholders' equity | 178,237 | 168,780 | |||||||||||||||||||
Total liabilities and shareholders' equity | $ | 1,871,390 | $ | 1,838,507 | |||||||||||||||||
Net interest income(3) | $ | 41,074 | $ | 42,072 | |||||||||||||||||
Interest rate spread | 2.71 | % | 2.89 | % | |||||||||||||||||
Net interest margin(4) | 3.07 | % | 3.17 | % | |||||||||||||||||
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20191030006097/en/
Contacts:
or
Penko Ivanov, Executive Vice President and Chief Financial Officer of Bankwell Financial Group
(203) 652-0166
