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Bankwell Financial Group Reaches Record Asset Levels at $1.1 Billion, Record Core Earnings for the Fourth Quarter of $1.6 Million and Full Year Core Earnings of $5.8 Million

January 29, 2015

NEW CANAAN, Conn.--(BUSINESS WIRE)-- Bankwell Financial Group, Inc. (NASDAQ:BWFG) reported GAAP net income of $0.7 million for the fourth quarter of 2014 and $4.6 million for the year ended 2014. Excluding merger related expenses, net income (defined as core earnings) for the quarter was $1.6 million and for the year ended was $5.8 million. In addition, Bankwell Financial Group, Inc. reached record asset levels at $1.1 billion, driven by the acquisition of Quinnipiac Bank and Trust Company in the fourth quarter of 2014 and strong loan growth.

Blake S. Drexler, Executive Chairman of Bankwell Financial Group, Inc. stated, “This was a record quarter and an outstanding finish to an excellent year for Bankwell. In addition to record core earnings for the quarter and the year, our asset levels surpassed the $1 billion mark for the first time. These results validate our strategy of focusing on steady, reliable earnings while maintaining a strong net interest margin.” He added, “I commend our entire staff for their focus and dedication toward achieving these results, including the successful merger with Quinnipiac Bank. We are excited about the opportunity to take our proven model to New Haven County and expand our presence in that market.”

Earnings

Revenues (net interest income plus non-interest income) for the three months ended December 31, 2014 were $10.6 million, an increase of 25.5% compared to the three months ended December 31, 2013. Revenues (net interest income plus non-interest income) for the year ended December 31, 2014 were $34.7 million, an increase of 15.5% compared to the year ended December 31, 2013. Net interest income for the three months ended December 31, 2014 was $9.8 million, an increase of 48.1% compared to the same period in the prior year. The strong improvement in net interest income was fueled by record earning asset growth, a year ended net interest margin of 3.84%, and a fourth quarter net interest margin of 3.99%. The increased loan loss provision to $1.3 million for the quarter ended December 31, 2014 is a direct result of significant growth in our loan portfolio.

The Company continues to focus on expense control as indicated by our improving efficiency ratios. The Company’s efficiency ratio for the three months ended December 31, 2014 was 65.4% and for the year ended December 31, 2014 was 69.1%. Core earnings for the three months ended December 31, 2014 were $1.6 million, an increase of $1.1 million compared to December 31, 2013. Core earnings for the year ended December 31, 2014 were $5.8 million, an increase of $1.8 million compared to December 31, 2013.

Financial Condition

Assets totaled $1.1 billion at December 31, 2014, a 41.0% increase compared to assets of $779.6 million at December 31, 2013. This increase reflects strong loan growth, IPO proceeds and the Quinnipiac Bank and Trust Company acquisition. Total loans were $931.8 million, a 46.8% increase compared to December 31, 2013. Deposits increased to $835.4 million, a 26.3% increase over December 31, 2013, with core deposits showing a 13.4% increase to $526.6 million over December 31, 2013.

Asset Quality

Asset quality remained exceptionally strong at December 31, 2014. Non-performing assets as a percentage of total assets was 0.39% at December 31, 2014, up from 0.23% at December 31, 2013. The allowance for loan losses as of December 31, 2014 was $10.9 million, representing 1.32% of total loans, excluding acquired loans.

Capital

Shareholders’ equity continued to remain strong at $129.2 million as of December 31, 2014, an increase of $59.7 million compared to December 31, 2013, primarily a result of the approximately net $45 million raised in the IPO and from shares issued as a result of the Quinnipiac acquisition. As of December 31, 2014, the tangible common equity ratio and tangible book value per share were 10.47% and $16.35, respectively.

About Bankwell Financial Group

Bankwell is a commercial bank that serves the banking and lending needs of residents and businesses throughout Fairfield and New Haven Counties, CT. For more information about this press release, interested parties can contact Blake S. Drexler, Executive Chairman or Ernest J. Verrico, Executive Vice President and CFO of Bankwell Financial Group at (203) 972-3838.

For more information, visit www.mybankwell.com.

This press release may contain certain forward-looking statements about the Company. Forward-looking statements include statements regarding anticipated future events and can be identified by the fact that they do not relate strictly to historical or current facts. They often include words such as “believe,” “expect,” “anticipate,” “estimate,” and “intend” or future or conditional verbs such as “will,” “would,” “should,” “could,” or “may.” Forward-looking statements, by their nature, are subject to risks and uncertainties. Certain factors that could cause actual results to differ materially from expected results include increased competitive pressures, changes in the interest rate environment, general economic conditions or conditions within the securities markets, and legislative and regulatory changes that could adversely affect the business in which the Company and its subsidiaries are engaged.

 
BANKWELL FINANCIAL GROUP, INC.
CONSOLIDATED BALANCE SHEETS (unaudited)
(Dollars in thousands, except share data)
     
December 31,September 30,December 31,
201420142013
Assets
Cash and due from banks $ 48,559 $ 35,566 $ 82,013
Held to maturity investment securities, at amortized cost 11,454 11,502 13,816
Available for sale investment securities, at fair value 65,009 67,537 28,597
Loans held for sale 586 - 100
Loans receivable (net of allowance for loan losses of $10,860, $9,552,
$8,382 at December 31, 2014, September 30, 2014 and December 31, 2013
respectively) 915,981 730,148 621,830
Foreclosed real estate 950 829 829
Accrued interest receivable 3,323 2,670 2,360
Federal Home Loan Bank stock, at cost 6,109 4,834 4,834
Premises and equipment, net 11,910 7,787 7,060
Bank-owned life insurance 23,028 22,837 10,031
Goodwill 2,589 - -
Other intangible assets 848 401 481
Deferred income taxes, net 7,156 5,804 5,845
Other assets   2,029   5,600   1,822
Total assets $ 1,099,531 $ 895,515 $ 779,618
 
Liabilities & Shareholders' Equity
Liabilities
Deposits
Noninterest-bearing $ 166,030 $ 151,146 $ 118,618
Interest-bearing   669,409   544,117   542,927
Total deposits 835,439 695,263 661,545
 
Advances from the Federal Home Loan Bank 129,000 77,000 44,000
Accrued expenses and other liabilities   5,882   4,755   4,588
Total liabilities   970,321   777,018   710,133
 
 
Shareholders' equity
Preferred stock, senior noncumulative perpetual, Series C, no par;
10,980 shares issued and outstanding at December 31, 2014,
September 30, 2014 and December 31, 2013 respectively;
liquidation value of $1,000 per share. 10,980 10,980 10,980
Common stock, no par value; 10,000,000 shares authorized,
7,185,482, 6,559,995 and 3,876,393 shares issued at
December 31, 2014, September 30, 2014 and December 31, 2013
respectively. 107,265 97,180 52,105
Retained earnings 10,434 9,735 5,976
Accumulated other comprehensive income   531   602   424
Total shareholders' equity   129,210   118,497   69,485
 
Total liabilities and shareholders' equity $ 1,099,531 $ 895,515 $ 779,618
 
 
BANKWELL FINANCIAL GROUP, INC.
CONSOLIDATED STATEMENTS OF INCOME (unaudited)
(Dollars in thousands, except per share data)
       

Three Months Ended
December 31,

Twelve Months Ended
December 31,

2014   2013   20142013
Interest and dividend income
Interest and fees on loans $ 10,369 $ 6,980 $ 33,409 $ 26,599
Interest and dividends on securities 635 369 2,052 1,409
Interest on cash and cash equivalents   12   45     128   84
Total interest income   11,016   7,394     35,589   28,092
 
Interest expense
Interest expense on deposits 1,038 680 3,295 2,233
Interest on borrowings   207   115     634   532
Total interest expense   1,245   795     3,929   2,765
 
Net interest income 9,771 6,599 31,660 25,327

 

Provision for loan losses   1,305   96     2,152   585
 
Net interest income after provision for loan losses   8,466   6,503     29,508   24,742
 
Noninterest income
Gains and fees from sales of loans 305 283 1,313 2,020
Gain on bargain purchase - 1,333 - 1,333
Service charges and fees 223 119 643 416
Bank owned life insurance 192 31 497 31
Net gain on sale of available for sale securities - - - 648
Gain (loss) on sale of foreclosed real estate, net - 15 - 64
Other   113   70     588   211
Total noninterest income   833   1,851     3,041   4,723
 
Noninterest expense
Salaries and employee benefits 4,122 3,432 13,534 11,578
Merger and acquisition related expenses 1,393 844 1,801 908
Occupancy and equipment 1,260 1,010 4,422 3,420
Data processing 340 562 1,289 1,349
Marketing 211 151 674 927
Director fees 190 (96 ) 650 330
Professional services 159 383 1,194 1,595
FDIC insurance 143 66 488 333
Amortization of intangibles 53 18 133 18
Foreclosed real estate 15 4 36 8
Other   457   704     1,591   1,654
Total noninterest expense   8,343   7,078     25,812   22,120
 
Income before income tax expense 956 1,276 6,737 7,345
 
Income tax expense   229   (86 )   2,169   2,184
 
Net income $ 727 $ 1,362   $ 4,568 $ 5,161
 
 
Net income attributable to common shareholders $ 693 $ 1,301   $ 4,377 $ 4,961
 
Earnings per common share - basic $ 0.10 $ 0.34 $ 0.78 $ 1.46
Earnings per common share - diluted 0.10 0.34 0.78 1.44
 
Weighted average shares outstanding, basic 6,998,188 3,746,340 5,577,942 3,395,779
Weighted average shares outstanding, diluted 7,033,660 3,787,853 5,605,512 3,451,393
 
 
BANKWELL FINANCIAL GROUP, INC.
RECONCILIATION GAAP - NON GAAP (unaudited)
(Dollars in thousands)
         
 
For the three months ended December 31, 2014For the twelve months ended December 31, 2014
Net Income $ 727 Net Income $ 4,568
Merger and Acquisition Related Expenses 1,393 Merger and Acquisition Related Expenses 1,801
Income Tax Expense (benefit)   (474 ) Income Tax Expense (benefit)   (612 )
Net adjustment   919   Net adjustment   1,189  
Core Earnings $ 1,646   Core Earnings $ 5,757  
 
 
For the three months ended December 31, 2013For the twelve months ended December 31, 2013
Net Income $ 1,362 Net Income $ 5,161
Merger and Acquisition Related Expenses 844 Merger and Acquisition Related Expenses 908
Gain on Bargain Purchase (1,333 ) Gain on Bargain Purchase (1,333 )
Income Tax Expense (benefit)   (287 ) Net gain on sale of available for sale securities (648 )
Net adjustment   (776 ) Income Tax Expense (benefit)   (88 )
Core Earnings $ 586   Net adjustment   (1,161 )
Core Earnings $ 4,000  
 
 
BANKWELL FINANCIAL GROUP, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (unaudited)
(Dollars in thousands, except per share data)
     
 

Three Months Ended
December 31,

Twelve Months Ended,
December 31,

   2014   

   2013     2014  

   2013   

Performance ratios:
Return on average assets 0.28 % 0.72 % 0.52 % 0.77 %
Return on average stockholders' equity 2.26 % 7.02 % 4.66 % 8.17 %
Net interest margin 3.99 % 3.82 % 3.84 % 3.94 %
Efficiency ratio (1) 65.4 % 87.7 % 69.1 % 75.7 %
 
As of

December 31,
2014

December 31,
2013

Capital ratios:
Total Capital to Risk-Weighted Assets (2) 13.34 % * 10.74 %
Tier I Capital to Risk-Weighted Assets (2) 12.28 % * 9.49 %
Tier I Capital to Average Assets (2) 11.12 % * 7.91 %
Tangible common equity to tangible assets 10.47 % 7.45 %
 
Tangible book value per common share (3) $ 16.35 $ 15.46
 
Asset quality:
Nonaccrual loans $ 3,362 $ 1,003
Other real estate owned   950     829  

Total non-performing assets

$ 4,312   $ 1,832  
 
Loans past due 90 days and still accruing $ 1,872 $ 3,620
 
Nonperforming loans as a % of total loans 0.36 % 0.16 %

 

Nonperforming assets as a % of total assets 0.39 % 0.23 %
 
Allowance for loan losses as a % of total loans 1.17 % 1.33 %
 
Allowance for loan losses as a % of nonperforming loans 323.02 % 835.69 %
 
Net loan charge-offs as a % of average loans 0.05 % 0.03 %
 
(1) Efficiency ratio is defined as non-interest expenses, less merger and acquisition related expenses and other real estate owned expenses, divided by our operating revenue, which is equal to net interest income plus non-interest income excluding gains and losses on sales of securities, gains and losses on other real estate owned and gain on bargain purchase. In our judgment, the adjustments made to operating revenue allow investors and analysts to better assess our operating expenses in relation to our core operating revenue by removing the volatility that is associated with certain one-time items and other discrete items that are unrelated to our core business.
   
(2) Represents bank ratios.
 
(3) Excludes preferred stock and unvested restricted stock awards of 165,862 and 122,140 as of December 31, 2014 and December 31, 2013, respectively.
 
* Estimated
 
 
BANKWELL FINANCIAL GROUP, INC.
NET INTEREST MARGIN ANALYSIS ON A FULLY TAX EQUIVALENT BASIS
(Dollars in thousands)
           
For the Three Months Ended

December 31, 2014

December 31, 2013

AverageYield/AverageYield/
BalanceInterestRateBalanceInterestRate
Assets:
Cash and Fed funds sold $ 20,518 $ 11 0.22 % $ 57,106 $ 45 0.31 %
Securities (1) 84,676 727 3.43 % 41,422 472 4.55 %
Loans: (2)
Commercial real estate 486,311 5,992 4.82 % 306,229 3,918 5.01 %
Residential real estate 173,841 1,550 3.57 % 157,083 1,363 3.47 %
Construction (3) 57,886 685 4.63 % 42,207 446 4.13 %
Commercial business 139,068 1,791 5.04 % 82,411 1,123 5.33 %
Home equity 17,997 194 4.28 % 11,769 125 4.19 %
Consumer 3,160 38 4.78 % 210 5 10.33 %
Acquired loan portfolio non accrual loans (net of mark)   2,345   120 20.35 %   -   - -  
Total loans 880,608 10,370 4.61 % 599,909 6,980 4.55 %
Federal Home Loan Bank stock   5,808   19 1.32 %   4,710   4 0.35 %
Total earning assets 991,610 $ 11,127 4.39 % 703,147 $ 7,501 4.17 %
Other assets   54,306   43,106
Total assets $ 1,045,916 $ 746,253
 
Liabilities and shareholders' equity:
Interest-bearing liabilities:
NOW $ 54,532 15 0.11 % $ 55,928 16 0.11 %
Money market 211,219 272 0.51 % 129,268 160 0.49 %
Savings 84,238 86 0.41 % 104,500 122 0.46 %
Time   280,329   665 0.94 %   191,436   382 0.79 %
Total interest-bearing deposits 630,318 1,038 0.65 % 481,132 680 0.56 %
Borrowed Money   118,301   207 0.69 %   50,026   114 0.91 %
Total interest bearing liabilities 748,619 $ 1,245 0.66 % 531,158 $ 794 0.59 %
Noninterest-bearing deposits 159,772 110,300
Other liabilities   9,785   27,840
Total liabilities 918,176 669,298
Shareholders' equity   127,740   76,955
Total liabilities and shareholders' equity $ 1,045,916 $ 746,253
Net interest income (4) $ 9,882 $ 6,707
Interest rate spread 3.73 % 3.58 %
Net interest margin (5) 3.99 % 3.82 %
 
(1) Average balances and yields for securities are based on amortized cost.
(2) Average balances and yields for loans exclude nonperforming loans.
(3) Includes commercial and residential real estate construction.
(4) The adjustment for securities and loans taxable equivalency amounted to $111 thousand and $108thousand, respectively for the three months ended December 31, 2014, and 2013.
(5) Net interest income as a percentage of earning assets.
 
 
BANKWELL FINANCIAL GROUP, INC.
NET INTEREST MARGIN ANALYSIS ON A FULLY TAX EQUIVALENT BASIS
(Dollars in thousands)
           
For the Twelve Months Ended
December 31, 2014December 31, 2013
AverageYield/AverageYield/
BalanceInterestRateBalanceInterestRate
Assets:
Cash and Fed funds sold $ 49,152 $ 127 0.26 % $ 35,599 $ 84 0.24 %
Securities (1) 61,398 2,424 3.95 % 40,932 1,766 4.31 %
Loans: (2)
Commercial real estate 378,345 18,515 4.83 % 299,142 15,124 5.06 %
Residential real estate 164,598 5,911 3.59 % 152,498 5,577 3.66 %
Construction (3) 49,212 2,300 4.61 % 38,073 1,763 4.63 %
Commercial business 109,121 5,496 4.97 % 69,252 3,699 5.34 %
Home equity 14,529 564 3.88 % 11,287 423 3.74 %
Consumer 1,270 81 6.35 % 308 18 5.98 %
Acquired loan portfolio non accrual loans (net of mark)   2,707   545 20.14 %   -   - -  
Total loans 719,782 33,412 4.59 % 570,560 26,604 4.66 %
Federal Home Loan Bank stock   5,078   73 1.45 %   4,624   17 0.36 %
Total earning assets 835,410 $ 36,036 4.25 % 651,715 $ 28,471 4.37 %
Other assets   43,535   17,782
Total assets $ 878,945 $ 669,497
 
Liabilities and shareholders' equity:
Interest-bearing liabilities:
NOW $ 53,041 58 0.11 % 40,554 $ 49 0.12 %
Money market 182,676 836 0.46 % 116,323 498 0.45 %
Savings 91,058 302 0.33 % 117,388 543 0.46 %
Time   238,710   2,099 0.88 %   158,996   1,143 0.72 %
Total interest-bearing deposits 565,485 3,295 0.58 % 433,261 2,233 0.43 %
Borrowed Money   65,953   634 0.96 %   69,912   532 0.73 %
Total interest bearing liabilities 631,438 $ 3,929 0.62 % 503,173 $ 2,765 0.47 %
Noninterest-bearing deposits 136,748 96,009
Other liabilities   12,838   7,173
Total liabilities 781,024 606,355
Shareholders' equity   97,921   63,142
Total liabilities and shareholders' equity $ 878,945 $ 669,497
Net interest income (4) $ 32,107 $ 25,706
Interest rate spread 3.63 % 3.90 %
Net interest margin (5) 3.84 % 3.94 %
 
(1) Average balances and yields for securities are based on amortized cost.
(2) Average balances and yields for loans exclude nonperforming loans.
(3) Includes commercial and residential real estate construction.
(4) The adjustment for securities and loans taxable equivalency amounted to $447 thousand and $379 thousand, respectively for the twelve months ended December 31, 2014, and 2013.
(5) Net interest income as a percentage of earning assets.

Bankwell Financial Group
Blake S. Drexler, 203-972-3838
Executive Chairman
or
Ernest J. Verrico, 203-972-3838
Executive Vice President and CFO

Source: Bankwell Financial Group, Inc.

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