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Press Release

Bankwell Financial Group Reports Operating Results for the First Quarter, Reserve Build and Maintains Quarterly Dividend

Company Release - 4/29/2020 6:05 PM ET

NEW CANAAN, Conn.--(BUSINESS WIRE)-- Bankwell Financial Group, Inc. (NASDAQ: BWFG) reported GAAP net income of $1.4 million, or $0.17 per share, for the first quarter of 2020, versus $5.1 million, or $0.65 per share, for the same period in 2019. The decline in net income is largely driven by an increase in the loan loss provision relating to potential exposure to the coronavirus (COVID-19) pandemic.

The Company's Board of Directors declared a $0.14 per share cash dividend, payable May 28, 2020 to shareholders of record on May 18, 2020.

Please reference the First Quarter 2020 Investor Presentation located at http://investor.mybankwell.com/Presentations for further details regarding the impact of the COVID-19 pandemic on our operations and financial results.

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

"While we take this opportunity to announce our quarterly earnings, we are mindful of the COVID-19 plight which is besieging society, leaving no one unaffected. We are thankful for the dedication of health care workers and first responders, as well as the essential workers who are keeping our communities running."

"As a result of our first-rate preparedness, all of our non-branch personnel have been working remotely since mid-March with complete effectiveness. I have been inspired by the efforts and dedication of Bankwell’s team as they have worked tirelessly to service our customers and communities. This was particularly true as they worked around the clock to process approximately $60 million in PPP loans for our small businesses so in need of these funds."

"The economic road ahead will challenge all businesses, but Bankwell’s strong capital base, excellent credit culture, and amazing people put us on excellent footing to overcome adversity."

First Quarter 2020 Highlights:

  • The allowance for loan losses was $16.7 million and represents 1.03% of total loans as of March 31, 2020, compared to an allowance for loan losses of $13.5 million, representing 0.84% of total loans as of December 31, 2019. The increase in the allowance for loan losses is primarily attributable to $3.0 million in incremental loan loss reserves recognized in the first quarter of 2020 relating to potential exposure to the COVID-19 pandemic.
  • Reduced rates on approximately $0.5 billion of non-maturity deposit products by an average of approximately 70 basis points during the quarter ended March 31, 2020. We expect these rate reductions to drive lower deposit costs for the remainder of the year.
  • Tax equivalent net interest margin was 2.98% for the quarter ended March 31, 2020, representing a 6 basis point increase compared to the quarter ended December 31, 2019.
  • The Company repurchased 58,499 shares of common stock at an average price of $17.69 per share, during the quarter ended March 31, 2020.
  • Total deposits were $1.68 billion at March 31, 2020 compared to $1.49 billion at December 31, 2019, primarily reflecting increases in brokered deposits to increase on-balance sheet liquidity.
  • The loan-to-deposit ratio was 96.1% at March 31, 2020, reflecting the above-mentioned increase in brokered deposits.
  • Total gross loans were $1.62 billion at March 31, 2020, and grew by $16.5 million during the quarter.
  • Investment securities totaled $100.9 million and represent 5% of total assets.
  • Total noninterest income was $1.1 million for the quarter ended March 31, 2020, or 7% of total revenue.
  • The tangible common equity ratio and tangible book value per share, as of March 31, 2020, were 8.16% and $21.69, respectively. The tangible book value per share was primarily impacted by a $1.75 mark to market adjustment reflected in other comprehensive income on the Bank's interest rate swaps, which are used for hedging purposes.

Earnings and Performance

Revenues (net interest income plus noninterest income) for the quarter ended March 31, 2020 were $14.4 million, versus $15.6 million for the quarter ended March 31, 2019. The decrease in revenues was attributable to a decline in income from loan prepayments during the quarter ended March 31, 2020 when compared to the same period in 2019. The decrease in revenues was partially offset by a decline in interest expense, driven by lower interest rates on deposits when compared to the same period in 2019.

Net income for the quarter ended March 31, 2020 was $1.4 million, versus $5.1 million for the quarter ended March 31, 2019. Basic and diluted earnings per share were each $0.17 for the quarter ended March 31, 2020 compared to basic and diluted earnings per share of $0.65 each for the quarter ended March 31, 2019. The decrease in net income and earnings per share was largely driven by a $3.0 million, or $0.30 per share, increase in the provision for loan losses, due to the potential exposure as a result of the COVID-19 pandemic, and the absence of approximately $1.0 million, or $0.10 per share, of elevated prepayment fees as compared against the first quarter of 2019.

The net interest margin (fully taxable equivalent basis) for the quarters ended March 31, 2020 and December 31, 2019 was 2.98% and 2.92%, respectively. The increase in the net interest margin for the quarter ended March 31, 2020 when compared to the quarter ended December 31, 2019 was due to a decline in interest expense on deposits. The cost of interest bearing deposits declined 10 basis points for the quarter ended March 31, 2020 when compared to the quarter ended December 31, 2019.

Financial Condition

Assets totaled $2.1 billion at March 31, 2020, compared to assets of $1.9 billion at December 31, 2019. The increase in assets is primarily driven by an increase in cash and cash equivalents in order to maintain a higher level of liquidity during the COVID-19 pandemic. Gross loans totaled $1.62 billion at March 31, 2020, an increase of $16.5 million compared to December 31, 2019, reflecting growth in the commercial business loan portfolio. Deposits totaled $1.7 billion at March 31, 2020, compared to deposits of $1.5 billion at December 31, 2019. The increase in deposits was a result of an increase in brokered deposits to expand on-balance sheet liquidity.

Capital

Shareholders’ equity totaled $170.2 million as of March 31, 2020, a decrease of $12.2 million compared to December 31, 2019, primarily a result of an $11.8 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 $1.1 million and common stock repurchases of $1.0 million. The decrease was partially offset by net income for the quarter ended March 31, 2020 of $1.4 million. The marks on the interest rate swaps are driven by lower long term market interest rates in 2020 when compared to 2019. The Company's interest rate swaps are primarily used to hedge interest rate risk. The Company's current interest rate swap 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 March 31, 2020, the tangible common equity ratio and tangible book value per share were 8.16% and $21.69, 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, but are not limited to, increased competitive pressures, changes in the interest rate environment, general economic conditions or conditions within the securities markets, uncertain impacts of, or additional changes in, monetary, fiscal or tax policy to address the impact of COVID-19, prolonged measures to contain the spread of COVID-19 or premature easing of such containment measures, either of which could further exacerbate the effects on the Company’s business and results of operations, 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)

 

 

March 31,
2020

 

December 31,
2019

 

March 31,
2019

ASSETS

 

 

 

 

 

Cash and due from banks

$

203,569

 

 

$

78,051

 

 

$

88,827

 

Federal funds sold

6,427

 

 

 

 

4,764

 

Cash and cash equivalents

209,996

 

 

78,051

 

 

93,591

 

 

 

 

 

 

 

Investment securities

 

 

 

 

 

Marketable equity securities, at fair value

2,289

 

 

2,118

 

 

2,049

 

Available for sale investment securities, at fair value

82,342

 

 

82,439

 

 

96,423

 

Held to maturity investment securities, at amortized cost

16,252

 

 

16,308

 

 

21,364

 

Total investment securities

100,883

 

 

100,865

 

 

119,836

 

Loans receivable (net of allowance for loan losses of $16,686, $13,509, and $15,430 at March 31, 2020,
December 31, 2019, and March 31, 2019, respectively)

1,602,146

 

 

1,588,840

 

 

1,578,609

 

Accrued interest receivable

5,867

 

 

5,959

 

 

6,534

 

Federal Home Loan Bank stock, at cost

6,507

 

 

7,475

 

 

7,475

 

Premises and equipment, net

27,835

 

 

28,522

 

 

29,629

 

Bank-owned life insurance

41,926

 

 

41,683

 

 

40,925

 

Goodwill

2,589

 

 

2,589

 

 

2,589

 

Other intangible assets

196

 

 

214

 

 

270

 

Deferred income taxes, net

10,009

 

 

5,788

 

 

4,835

 

Other assets

45,671

 

 

22,196

 

 

13,465

 

Total assets

$

2,053,625

 

 

$

1,882,182

 

 

$

1,897,758

 

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

 

 

Liabilities

 

 

 

 

 

Deposits

 

 

 

 

 

Noninterest bearing deposits

$

168,448

 

 

$

191,518

 

 

$

161,844

 

Interest bearing deposits

1,512,684

 

 

1,300,385

 

 

1,359,521

 

Total deposits

1,681,132

 

 

1,491,903

 

 

1,521,365

 

 

 

 

 

 

 

Advances from the Federal Home Loan Bank

125,000

 

 

150,000

 

 

150,000

 

Subordinated debentures

25,220

 

 

25,207

 

 

25,168

 

Accrued expenses and other liabilities

52,059

 

 

32,675

 

 

24,384

 

Total liabilities

1,883,411

 

 

1,699,785

 

 

1,720,917

 

 

 

 

 

 

 

Shareholders’ equity

 

 

 

 

 

Common stock, no par value

119,953

 

 

120,589

 

 

120,750

 

Retained earnings

69,595

 

 

69,324

 

 

59,247

 

Accumulated other comprehensive loss

(19,334

)

 

(7,516

)

 

(3,156

)

Total shareholders’ equity

170,214

 

 

182,397

 

 

176,841

 

 

 

 

 

 

 

Total liabilities and shareholders’ equity

$

2,053,625

 

 

$

1,882,182

 

 

$

1,897,758

 

BANKWELL FINANCIAL GROUP, INC.

CONSOLIDATED STATEMENTS OF INCOME (unaudited)

(Dollars in thousands, except share data)

 

 

For the Quarter Ended

 

March 31,
2020

 

December 31,
2019

 

March 31,
2019

Interest and dividend income

 

 

 

 

 

Interest and fees on loans

$

18,985

 

 

$

18,648

 

 

$

20,096

 

Interest and dividends on securities

825

 

 

858

 

 

997

 

Interest on cash and cash equivalents

286

 

 

427

 

 

383

 

Total interest and dividend income

20,096

 

 

19,933

 

 

21,476

 

 

 

 

 

 

 

Interest expense

 

 

 

 

 

Interest expense on deposits

5,709

 

 

5,948

 

 

6,100

 

Interest expense on borrowings

1,101

 

 

1,103

 

 

1,103

 

Total interest expense

6,810

 

 

7,051

 

 

7,203

 

 

 

 

 

 

 

Net interest income

13,286

 

 

12,882

 

 

14,273

 

Provision for loan losses

3,185

 

 

310

 

 

195

 

Net interest income after provision for loan losses

10,101

 

 

12,572

 

 

14,078

 

 

 

 

 

 

 

Noninterest income

 

 

 

 

 

Bank owned life insurance

243

 

 

250

 

 

249

 

Service charges and fees

217

 

 

247

 

 

249

 

Gains and fees from sales of loans

 

 

382

 

 

89

 

Other

612

 

 

169

 

 

721

 

Total noninterest income

1,072

 

 

1,048

 

 

1,308

 

 

 

 

 

 

 

Noninterest expense

 

 

 

 

 

Salaries and employee benefits

5,380

 

 

5,162

 

 

4,836

 

Occupancy and equipment

1,909

 

 

1,928

 

 

1,887

 

Professional services

711

 

 

402

 

 

590

 

Data processing

536

 

 

499

 

 

512

 

Director fees

295

 

 

224

 

 

189

 

Marketing

162

 

 

220

 

 

193

 

FDIC insurance

70

 

 

 

 

123

 

Amortization of intangibles

18

 

 

18

 

 

19

 

Other

578

 

 

771

 

 

626

 

Total noninterest expense

9,659

 

 

9,224

 

 

8,975

 

 

 

 

 

 

 

Income before income tax expense

1,514

 

 

4,396

 

 

6,411

 

Income tax expense

151

 

 

924

 

 

1,331

 

Net income

$

1,363

 

 

$

3,472

 

 

$

5,080

 

 

 

 

 

 

 

Earnings Per Common Share:

 

 

 

 

 

Basic

$

0.17

 

 

$

0.44

 

 

$

0.65

 

Diluted

$

0.17

 

 

$

0.44

 

 

$

0.65

 

 

 

 

 

 

 

Weighted Average Common Shares Outstanding:

 

 

 

 

 

Basic

7,750,135

 

 

7,745,227

 

 

7,760,460

 

Diluted

7,778,762

 

 

7,773,780

 

 

7,776,378

 

Dividends per common share

$

0.14

 

 

$

0.13

 

 

$

0.13

 

BANKWELL FINANCIAL GROUP, INC.

CONSOLIDATED FINANCIAL HIGHLIGHTS (unaudited)

 

 

For the Quarter Ended

 

March 31,
2020

 

December 31,
2019

 

March 31,
2019

Performance ratios:

 

 

 

 

 

Return on average assets(1)

0.29

%

 

0.73

%

 

1.10

%

Return on average stockholders' equity(1)

3.03

%

 

7.68

%

 

11.60

%

Return on average tangible common equity(1)

3.07

%

 

7.80

%

 

11.80

%

Net interest margin

2.98

%

 

2.92

%

 

3.19

%

Efficiency ratio(2)

67.1

%

 

66.1

%

 

57.5

%

Net loan charge-offs as a % of average loans

%

 

%

 

0.01

%

Dividend payout ratio(3)

82.35

%

 

29.55

%

 

20.00

%

 

(1)

March 31, 2020 performance ratios are negatively impacted by incremental COVID-19 related loan loss reserves totaling approximately $3.0 million. Please refer to the First Quarter 2020 Investor Presentation for more detailed information of the impact of the incremental loan loss reserve related to COVID-19 exposure on the Company’s performance ratios.

(2)

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.

(3)

The dividend payout ratio is calculated by dividing dividends per share by earnings per share.

 

As of

 

March 31,

2020

 

December 31,
2019

 

March 31,

2019

Capital ratios:

 

 

 

 

 

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

12.14

%

 

12.53

%

 

12.00

%

Total Capital to Risk-Weighted Assets(1)

13.13

%

 

13.35

%

 

12.94

%

Tier I Capital to Risk-Weighted Assets(1)

12.14

%

 

12.53

%

 

12.00

%

Tier I Capital to Average Assets(1)

10.84

%

 

10.99

%

 

10.53

%

Tangible common equity to tangible assets

8.16

%

 

9.56

%

 

9.18

%

Tangible book value per common share(2)

$

21.69

 

 

$

23.15

 

 

$

22.38

 

(1)

Represents Bank ratios. Current period capital ratios are preliminary subject to finalization of the FDIC Call Report.

(2)

Excludes unvested restricted shares of 154,012, 110,975, and 99,061 as of March 31, 2020, December 31, 2019, and March 31, 2019, respectively.

BANKWELL FINANCIAL GROUP, INC.

ASSET QUALITY (unaudited)

(Dollars in thousands)

 

 

For the Quarter Ended

 

March 31,
2020

 

December 31,
2019

 

March 31,
2019

Allowance for loan losses:

 

 

 

 

 

Balance at beginning of period

$

13,509

 

 

$

13,212

 

 

$

15,462

 

Charge-offs:

 

 

 

 

 

Residential real estate

 

 

 

 

(233

)

Commercial business

(8

)

 

(13

)

 

(3

)

Consumer

(2

)

 

(5

)

 

(2

)

Total charge-offs

(10

)

 

(18

)

 

(238

)

Recoveries:

 

 

 

 

 

Commercial business

1

 

 

1

 

 

10

 

Consumer

1

 

 

4

 

 

1

 

Total recoveries

2

 

 

5

 

 

11

 

Net loan charge-offs

(8

)

 

(13

)

 

(227

)

Provision for loan losses

3,185

 

 

310

 

 

195

 

Balance at end of period

$

16,686

 

 

$

13,509

 

 

$

15,430

 

 

As of

 

March 31,
2020

 

December 31,
2019

 

March 31,
2019

Asset quality:

 

 

 

 

 

Nonaccrual loans

 

 

 

 

 

Residential real estate

$

1,532

 

 

$

1,560

 

 

$

3,516

 

Commercial real estate

5,339

 

 

5,222

 

 

5,880

 

Commercial business

3,783

 

 

3,806

 

 

3,837

 

Total nonaccrual loans

10,654

 

 

10,588

 

 

13,233

 

Other real estate owned

 

 

 

 

 

Total nonperforming assets

$

10,654

 

 

$

10,588

 

 

$

13,233

 

 

 

 

 

 

 

Nonperforming loans as a % of total loans

0.66

%

 

0.66

%

 

0.83

%

Nonperforming assets as a % of total assets

0.52

%

 

0.56

%

 

0.70

%

Allowance for loan losses as a % of total loans

1.03

%

 

0.84

%

 

0.97

%

Allowance for loan losses as a % of nonperforming loans

156.62

%

 

127.59

%

 

116.60

%

Total nonaccrual loans were $10.7 million as of March 31, 2020, of which $4.6 million is guaranteed by the Small Business Administration (SBA). Nonperforming assets as a percentage of total assets was 0.52% at March 31, 2020, down from 0.56% at December 31, 2019. The allowance for loan losses at March 31, 2020 was $16.7 million, representing 1.03% of total loans. The $3.2 million increase in the allowance for loan losses at March 31, 2020 when compared to December 31, 2019 was primarily due to incremental loan loss reserves for potential COVID-19 exposure.

BANKWELL FINANCIAL GROUP, INC.

LOAN & DEPOSIT PORTFOLIO (unaudited)

(Dollars in thousands)

 

Period End Loan Composition

March 31,
2020

 

December 31,
2019

 

% Change

Residential Real Estate

$

139,353

 

 

$

147,109

 

 

(5.3

)%

Commercial Real Estate(1)

1,131,206

 

 

1,128,614

 

 

0.2

 

Construction

107,594

 

 

98,583

 

 

9.1

 

Total Real Estate Loans

1,378,153

 

 

1,374,306

 

 

0.3

 

 

 

 

 

 

 

Commercial Business

242,705

 

 

230,028

 

 

5.5

 

 

 

 

 

 

 

Consumer

113

 

 

150

 

 

(24.7

)

Total Loans

$

1,620,971

 

 

$

1,604,484

 

 

1.0

%

 

 

 

 

 

 

(1) Includes owner occupied commercial real estate.

Period End Deposit Composition

March 31,
2020

 

December 31,
2019

 

% Change

Noninterest bearing demand

$

168,448

 

 

$

191,518

 

 

(12.0

)%

NOW

69,562

 

 

70,020

 

 

(0.7

)

Money Market

455,634

 

 

419,495

 

 

8.6

 

Savings

164,673

 

 

183,729

 

 

(10.4

)

Time

822,815

 

 

627,141

 

 

31.2

 

Total Deposits

$

1,681,132

 

 

$

1,491,903

 

 

12.7

%

Total deposits were $1.7 billion at March 31, 2020 compared to $1.5 billion at December 31, 2019, an increase of $0.2 billion or 12.7%. The increase in total deposits was primarily a result of an increase in brokered deposits to expand on-balance sheet liquidity.

BANKWELL FINANCIAL GROUP, INC.

NONINTEREST INCOME & EXPENSE - QTD (unaudited)

(Dollars in thousands)

 

 

For the Quarter Ended

 

 

 

 

Noninterest income

March 31,
2020

 

December 31,

2019

 

March 31,
2019

 

Mar 20 vs. Dec 19
% Change

 

Mar 20 vs. Mar 19
% Change

Bank owned life insurance

$

243

 

 

$

250

 

 

$

249

 

 

(2.8

)%

 

(2.4

)%

Service charges and fees

217

 

 

247

 

 

249

 

 

(12.1

)

 

(12.9

)

Gains and fees from sales of loans

 

 

382

 

 

89

 

 

(100.0

)

 

(100.0

)

Other

612

 

 

169

 

 

721

 

 

262.1

 

 

(15.1

)

Total noninterest income

$

1,072

 

 

$

1,048

 

 

$

1,308

 

 

2.3

%

 

(18.0

)%

Noninterest income decreased by $0.2 million, or 18%, to $1.1 million for the quarter ended March 31, 2020 compared to the quarter ended March 31, 2019. The decrease in noninterest income was primarily a result of the absence of gains and fees from the sales of loans and a decrease of $0.2 million in income recognized from interest rate swap fees for the quarter ended March 31, 2020 compared to the same period in 2019.

 

For the Quarter Ended

 

 

 

 

Noninterest expense

March 31,
2020

 

December 31,

2019

 

March 31,
2019

 

Mar 20 vs. Dec 19
% Change

 

Mar 20 vs. Mar 19
% Change

Salaries and employee benefits

$

5,380

 

 

$

5,162

 

 

$

4,836

 

 

4.2

%

 

11.2

%

Occupancy and equipment

1,909

 

 

1,928

 

 

1,887

 

 

(1.0

)

 

1.2

 

Professional services

711

 

 

402

 

 

590

 

 

76.9

 

 

20.5

 

Data processing

536

 

 

499

 

 

512

 

 

7.4

 

 

4.7

 

Director fees

295

 

 

224

 

 

189

 

 

31.7

 

 

56.1

 

Marketing

162

 

 

220

 

 

193

 

 

(26.4

)

 

(16.1

)

FDIC insurance

70

 

 

 

 

123

 

 

N/A

 

(43.1

)

Amortization of intangibles

18

 

 

18

 

 

19

 

 

 

 

(5.3

)

Other

578

 

 

771

 

 

626

 

 

(25.0

)

 

(7.7

)

Total noninterest expense

$

9,659

 

 

$

9,224

 

 

$

8,975

 

 

4.7

%

 

7.6

%

Noninterest expense increased by $0.7 million, or 8%, to $9.7 million for the quarter ended March 31, 2020 compared to the quarter ended March 31, 2019. The increase in noninterest expense was primarily driven by an increase in salaries and employee benefits and professional services. Salaries and employee benefits totaled $5.4 million for the quarter ended March 31, 2020, an increase of $0.5 million when compared to the same period in 2019. The increase in salaries and employee benefits was primarily driven by an increase in full time equivalent employees. Full time equivalent employees totaled 154 at March 31, 2020 compared to 140 at March 31, 2019. Professional services totaled $0.7 million for the quarter ended March 31, 2020, an increase of $0.1 million when compared to the same period in 2019. The increase in professional services was due to one-time consulting and recruiting costs of $0.2 million associated with the transition from our Chief Lending Officer's retirement to the on-boarding of our Chief Banking Officer.

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

March 31,
2020

 

December 31,
2019

 

March 31,

2019

Total Equity

$

170,214

 

 

$

182,397

 

 

$

176,841

 

Less:

 

 

 

 

 

Goodwill

2,589

 

 

2,589

 

 

2,589

 

Other intangibles

196

 

 

214

 

 

270

 

Tangible Common Equity

$

167,429

 

 

$

179,594

 

 

$

173,982

 

 

 

 

 

 

 

Total Assets

$

2,053,625

 

 

$

1,882,182

 

 

$

1,897,758

 

Less:

 

 

 

 

 

Goodwill

2,589

 

 

2,589

 

 

2,589

 

Other intangibles

196

 

 

214

 

 

270

 

Tangible Assets

$

2,050,840

 

 

$

1,879,379

 

 

$

1,894,899

 

 

 

 

 

 

 

Tangible Common Equity to Tangible Assets

8.16

%

 

9.56

%

 

9.18

%

 

As of

Computation of Tangible Book Value per Common Share

March 31,
2020

 

December 31,
2019

 

March 31,

2019

Total shareholders' equity

$

170,214

 

 

$

182,397

 

 

$

176,841

 

Less:

 

 

 

 

 

Preferred stock

 

 

 

 

 

Common shareholders' equity

$

170,214

 

 

$

182,397

 

 

$

176,841

 

Less:

 

 

 

 

 

Goodwill

2,589

 

 

2,589

 

 

2,589

 

Other intangibles

196

 

 

214

 

 

270

 

Tangible common shareholders' equity

$

167,429

 

 

$

179,594

 

 

$

173,982

 

Common shares

7,871,419

 

 

7,868,803

 

 

7,873,471

 

Less:

 

 

 

 

 

Shares of unvested restricted stock

154,012

 

 

110,975

 

 

99,061

 

Common shares less unvested restricted stock

7,717,407

 

 

7,757,828

 

 

7,774,410

 

Book value per share

$

22.06

 

 

$

23.51

 

 

$

22.75

 

Less:

 

 

 

 

 

Effects of intangible assets

$

0.36

 

 

$

0.36

 

 

$

0.37

 

 

 

 

 

 

 

Tangible Book Value per Common Share

$

21.69

 

 

$

23.15

 

 

$

22.38

 

BANKWELL FINANCIAL GROUP, INC.

RECONCILIATION OF GAAP TO NON-GAAP MEASURES (unaudited) -

Continued

(Dollars in thousands)

 

 

For the Quarter Ended

Computation of Efficiency Ratio

March 31,

2020

 

December 31,
2019

 

March 31,

2019

Noninterest expense

$

9,659

 

 

$

9,224

 

 

$

8,975

 

Less:

 

 

 

 

 

Amortization of intangible assets

18

 

 

18

 

 

19

 

Adjusted noninterest expense

$

9,641

 

 

$

9,206

 

 

$

8,956

 

Net interest income

$

13,286

 

 

$

12,882

 

 

$

14,273

 

Noninterest income

1,072

 

 

1,048

 

 

1,308

 

Operating revenue

$

14,358

 

 

$

13,930

 

 

$

15,581

 

 

 

 

 

 

 

Efficiency ratio

67.1

%

 

66.1

%

 

57.5

%

 

For the Quarter Ended

Computation of Return on Average Tangible Common Equity

March 31,

2020

 

December 31,
2019

 

March 31,

2019

Net Income Attributable to Common Shareholders

$

1,363

 

 

$

3,472

 

 

$

5,080

 

Total average shareholders' equity

$

181,127

 

 

$

179,312

 

 

$

177,532

 

Less:

 

 

 

 

 

Average Goodwill

2,589

 

 

2,589

 

 

2,589

 

Average Other intangibles

208

 

 

226

 

 

283

 

Average tangible common equity

$

178,330

 

 

$

176,497

 

 

$

174,660

 

 

 

 

 

 

 

Annualized Return on Average Tangible Common Equity

3.07

%

 

7.80

%

 

11.80

%

BANKWELL FINANCIAL GROUP, INC.

NET INTEREST MARGIN ANALYSIS ON A FULLY TAX EQUIVALENT BASIS - QTD (unaudited)

(Dollars in thousands)

 

 

For the Quarter Ended

 

March 31, 2020

 

March 31, 2019

 

Average

Balance

 

Interest

 

Yield/

Rate (5)

 

Average

Balance

 

Interest

 

Yield/

Rate (5)

Assets:

 

 

 

 

 

 

 

 

 

 

 

Cash and Fed funds sold

$

73,497

 

 

$

286

 

 

1.56

%

 

$

73,128

 

 

$

383

 

 

2.12

%

Securities(1)

98,566

 

 

775

 

 

3.15

 

 

117,575

 

 

932

 

 

3.17

 

Loans:

 

 

 

 

 

 

 

 

 

 

 

Commercial real estate

1,108,709

 

 

13,024

 

 

4.65

 

 

1,065,636

 

 

12,426

 

 

4.66

 

Residential real estate

143,826

 

 

1,357

 

 

3.77

 

 

176,490

 

 

1,703

 

 

3.86

 

Construction(2)

100,437

 

 

1,215

 

 

4.78

 

 

81,136

 

 

1,124

 

 

5.54

 

Commercial business

258,848

 

 

3,386

 

 

5.18

 

 

276,744

 

 

4,838

 

 

6.99

 

Consumer

156

 

 

3

 

 

8.37

 

 

323

 

 

5

 

 

6.42

 

Total loans

1,611,976

 

 

18,985

 

 

4.66

 

 

1,600,329

 

 

20,096

 

 

5.02

 

Federal Home Loan Bank stock

7,325

 

 

103

 

 

5.65

 

 

7,587

 

 

137

 

 

7.30

 

Total earning assets

1,791,364

 

 

$

20,149

 

 

4.45

%

 

1,798,619

 

 

$

21,548

 

 

4.79

%

Other assets

111,585

 

 

 

 

 

 

78,903

 

 

 

 

 

Total assets

$

1,902,949

 

 

 

 

 

 

$

1,877,522

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities and shareholders' equity:

 

 

 

 

 

 

 

 

 

 

 

Interest bearing liabilities:

 

 

 

 

 

 

 

 

 

 

 

NOW

$

67,925

 

 

$

28

 

 

0.17

%

 

$

58,812

 

 

$

47

 

 

0.33

%

Money market

438,588

 

 

1,492

 

 

1.37

 

 

473,084

 

 

1,981

 

 

1.70

 

Savings

185,478

 

 

672

 

 

1.46

 

 

180,367

 

 

769

 

 

1.73

 

Time

640,580

 

 

3,517

 

 

2.21

 

 

627,510

 

 

3,303

 

 

2.13

 

Total interest bearing deposits

1,332,571

 

 

5,709

 

 

1.72

 

 

1,339,773

 

 

6,100

 

 

1.85

 

Borrowed Money

172,464

 

 

1,101

 

 

2.53

 

 

175,515

 

 

1,103

 

 

2.51

 

Total interest bearing liabilities

1,505,035

 

 

$

6,810

 

 

1.82

%

 

1,515,288

 

 

$

7,203

 

 

1.93

%

Noninterest bearing deposits

179,066

 

 

 

 

 

 

163,558

 

 

 

 

 

Other liabilities

37,721

 

 

 

 

 

 

21,144

 

 

 

 

 

Total liabilities

1,721,822

 

 

 

 

 

 

1,699,990

 

 

 

 

 

Shareholders' equity

181,127

 

 

 

 

 

 

177,532

 

 

 

 

 

Total liabilities and shareholders' equity

$

1,902,949

 

 

 

 

 

 

$

1,877,522

 

 

 

 

 

Net interest income(3)

 

 

$

13,339

 

 

 

 

 

 

$

14,345

 

 

 

Interest rate spread

 

 

 

 

2.63

%

 

 

 

 

 

2.86

%

Net interest margin(4)

 

 

 

 

2.98

%

 

 

 

 

 

3.19

%

(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 $53 thousand and $72 thousand for the quarters ended March 31, 2020 and 2019, respectively.

(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.

 

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

Source: Bankwell Financial Group, Inc.