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Bankwell Financial Group Reports Record First Quarter Net Income of $1.9 Million

April 30, 2015

NEW CANAAN, Conn.--(BUSINESS WIRE)-- Bankwell Financial Group, Inc. (NASDAQ:BWFG) reported GAAP net income of $1.9 million for the first quarter of 2015.

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

“These first quarter results put us on track to deliver another strong year, as we continue to execute key elements of our Strategic Plan. At the end of the first quarter, gross loans totaled $978.6 million, up 5.2% over year-end 2014, while we maintained excellent credit quality. We continued to focus on expense control, resulting in an improved efficiency ratio of 66.5% and, in spite of an increasingly challenging interest rate environment, our net interest margin was an outstanding 3.89%.

Additionally, March 31, 2015 marked the first full quarter of realizing the cost savings from our merger with Quinnipiac Bank and Trust Company. With greater lending resources and an experienced team, we continue to expand our presence in that market. In March, we also opened our first branch in Norwalk, CT, a market we know well, and one that we believe holds high potential.”

Earnings

Revenues (net interest income plus non-interest income) for the quarter ended March 31, 2015 were $10.5 million, an increase of 32.6% compared to the quarter ended March 31, 2014. Net interest income for the quarter ended March 31, 2015 was $9.9 million, an increase of 38.5% compared to the quarter ended March 31, 2014. Our strong net interest income was fueled by record earning asset growth and a net interest margin of 3.89% for the quarter end. The increased loan loss provision of $0.7 million for the quarter ended March 31, 2015 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 ratio. The Company’s efficiency ratio for the quarters ended March 31, 2015 and March 31, 2014 were 66.5% and 74.4%, respectively.

Financial Condition

Assets totaled $1.1 billion at March 31, 2015, a 36.0% increase compared to assets of $812.1 million at March 31, 2014. This increase reflects strong loan growth, IPO proceeds and the Quinnipiac Bank and Trust Company acquisition in 2014. Total gross loans were $978.6 million, a 48.9% increase compared to March 31, 2014. Deposits increased to $834.7 million, a 22.9% increase over March 31, 2014, with core deposits (total deposits less time deposits) showing a 13.8% increase over March 31, 2014 to $532.8 million.

Asset Quality

Asset quality remained exceptionally strong at March 31, 2015. Non-performing assets as a percentage of total assets was 0.30% at March 31, 2015, down from 0.36% at March 31, 2014. The allowance for loan losses as of March 31, 2015 was $11.6 million, representing 1.32% of total loans, excluding acquired loans.

Capital

Shareholders’ equity continued to remain strong at $131.4 million as of March 31, 2015, an increase of $2.2 million compared to December 31, 2014, primarily a result of Q1’15 net income of $1.9 million. As of March 31, 2015, the tangible common equity ratio and tangible book value per share were 10.63% and $16.62, 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 may contact Christopher R. Gruseke, President and Chief Executive Officer or Ernest J. Verrico Sr., 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.

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

  March 31,  

December 31,  

  March 31,  

201520142014
Assets
Cash and due from banks $ 19,428 $ 48,559 $ 82,246
Held to maturity investment securities, at amortized cost 11,398 11,454 13,780
Available for sale investment securities, at fair value 50,736 65,009 35,557
Loans held for sale - 586 -
Loans receivable (net of allowance for loan losses of $11,596, $10,860,

$8,603 at March 31, 2015, December 31, 2014 and March 31, 2014

respectively) 964,034 915,981 646,583
Foreclosed real estate 830 950 829
Accrued interest receivable 3,342 3,323 2,344
Federal Home Loan Bank stock, at cost 6,794 6,109 4,834
Premises and equipment, net 12,120 11,910 8,060
Bank-owned life insurance 23,211 23,028 10,116
Goodwill 2,589 2,589 -
Other intangible assets 797 848 454
Deferred income taxes, net 7,436 7,156 5,514
Other assets   1,748   2,029   1,738
Total assets $ 1,104,463 $ 1,099,531 $ 812,055
 
Liabilities & Shareholders' Equity
Liabilities
Deposits
Noninterest-bearing $ 142,920 $ 166,030 $ 119,700
Interest-bearing   691,783   669,409   559,523
Total deposits 834,703 835,439 679,223
 
Advances from the Federal Home Loan Bank 133,000 129,000 59,000
Accrued expenses and other liabilities   5,352   5,882   2,726
Total liabilities   973,055   970,321   740,949
 
 
Shareholders' equity
Preferred stock, senior noncumulative perpetual, Series C, no par;
10,980 shares issued and outstanding at March 31, 2015,
December 31, 2014 and March 31, 2014 respectively;
liquidation value of $1,000 per share. 10,980 10,980 10,980
Common stock, no par value; 10,000,000 shares authorized,
7,243,252, 7,185,482 and 3,891,690 shares issued at
March 31, 2015, December 31, 2014 and March 31, 2014
respectively. 107,765 107,265 52,446
Retained earnings 12,280 10,434 7,072
Accumulated other comprehensive income   383   531   608
Total shareholders' equity   131,408   129,210   71,106
 
Total liabilities and shareholders' equity $ 1,104,463 $ 1,099,531 $ 812,055
 
 
               
BANKWELL FINANCIAL GROUP, INC.
CONSOLIDATED STATEMENTS OF INCOME (unaudited)
(Dollars in thousands, except per share data)
     

Three Months Ended
March 31,

 

20152014
Interest and dividend income
Interest and fees on loans $ 10,757 $ 7,428
Interest and dividends on securities 504 411
Interest on cash and cash equivalents   12   22

Total interest income

  11,273   7,861
 
Interest expense
Interest expense on deposits 1,038 622
Interest on borrowings   341   93
Total interest expense   1,379   715
 
Net interest income 9,894 7,146
 
Provision for loan losses   733   211
 
Net interest income after provision for loan losses   9,161   6,935
 
Noninterest income
Service charges and fees 208 124
Bank owned life insurance 183 85
Gains and fees from sales of loans 89 428
Gain on sale of foreclosed real estate, net 18 -
Other   101   132
Total noninterest income   599   769
 
Noninterest expense
Salaries and employee benefits 3,962 3,342
Occupancy and equipment 1,349 1,065
Data processing 336 335
Professional services 325 369
FDIC insurance 158 118
Director fees 148 139
Marketing 148 110
Amortization of intangibles 51 27
Foreclosed real estate 5 14
Merger and acquisition related expenses - 141
Other   490   381
Total noninterest expense   6,972   6,041
 
Income before income tax expense 2,788 1,663
 
Income tax expense   915   540
 
Net income $ 1,873 $ 1,123
 
 
Net income attributable to common shareholders $ 1,846 $ 1,096
 
Earnings Per Common Share:
Basic $ 0.26 $ 0.28
Diluted 0.26 0.28
 
Weighted Average Common Shares Outstanding:
Basic 7,028,499 3,762,080
Diluted 7,056,141 3,795,946
 
 
             
BANKWELL FINANCIAL GROUP, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (unaudited)
(Dollars in thousands, except per share data)
       
 

Three Months Ended
March 31,

 

20152014
Performance ratios:
Return on average assets 0.70 % 0.59 %
Return on average stockholders' equity 5.81 % 6.48 %
Net interest margin 3.89 % 3.97 %
Efficiency ratio (1) 66.5 % 74.4 %
 
Net loan charge-offs as a % of average loans 0.00 % 0.00 %
 
As of
March 31,

2015

December 31,

2014

March 31,

2014

Capital ratios:
Total Common Equity Tier 1 Capital to Risk-Weighted Assets (2) 12.08 % N/A N/A
Total Capital to Risk-Weighted Assets (2) 13.26 % 13.55 % 10.74 %
Tier I Capital to Risk-Weighted Assets (2) 12.08 % 12.47 % 9.49 %
Tier I Capital to Average Assets (2) 10.99 % 11.12 % 7.90 %
Tangible common equity to tangible assets 10.63 % 10.47 % 7.35 %
 
Tangible book value per common share (3) $ 16.62 $ 16.35 $ 15.81
 
Asset quality:
Nonaccrual loans $ 2,451 $ 3,362 $ 2,101
Other real estate owned   830     950     829  
Total non-performing assets $ 3,281   $ 4,312   $ 2,930  
 
Loans past due 90 days and still accruing $ 1,671 $ 1,872 $ 2,914
 
Nonperforming loans as a % of total loans 0.25 % 0.36 % 0.32 %
 
Nonperforming assets as a % of total assets 0.30 % 0.39 % 0.36 %
 
Allowance for loan losses as a % of total loans 1.18 % 1.17 % 1.31 %
 
Allowance for loan losses as a % of nonperforming loans 473.11 % 323.02 % 409.47 %
 

(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 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.
 

(3) Excludes preferred stock and unvested restricted stock awards of 200,962, 165,862 and 118,532 as of March 31, 2015, December 31, 2014 and
March 31, 2014, respectively.

 
 
                                 
BANKWELL FINANCIAL GROUP, INC.
NET INTEREST MARGIN ANALYSIS ON A FULLY TAX EQUIVALENT BASIS
(Dollars in thousands)
     
For the Three Months Ended
March 31, 2015March 31, 2014
AverageYield/AverageYield/
BalanceInterestRateBalanceInterestRate
Assets:
Cash and Fed funds sold $ 18,868 $ 12 0.25 % $ 32,699 $ 22 0.27 %
Securities (1) 66,508 592 3.56 % 47,782 501 4.20 %
Loans:
Commercial real estate 524,215 6,270 4.78 % 324,137 3,965 4.89 %
Residential real estate 173,304 1,579 3.65 % 156,069 1,395 3.58 %
Construction (2) 67,885 794 4.68 % 49,318 531 4.30 %
Commercial business 146,056 1,856 5.08 % 98,061 1,170 4.77 %
Home equity 18,067 170 3.82 % 14,207 127 3.62 %
Consumer 2,806 34 4.85 % 545 13 9.32 %
Acquired loan portfolio non accrual loans (net of mark)   3,106   54 7.06 %   3,375   228 27.39 %

Total loans

935,439 10,757 4.60 % 645,712 7,429 4.60 %
Federal Home Loan Bank stock   6,440   26 1.59 %   4,834   18 1.50 %
Total earning assets 1,027,255 $ 11,387 4.43 % 731,027 $ 7,970 4.36 %
Other assets   52,634   38,273
Total assets $ 1,079,889 $ 769,300
 
Liabilities and shareholders' equity:
Interest-bearing liabilities:
NOW $ 52,568 15 0.11 % $ 52,596 13 0.10 %
Money market 229,984 281 0.50 % 170,901 180 0.43 %
Savings 79,958 86 0.44 % 107,971 82 0.31 %
Time   306,072   656 0.87 %   183,664   347 0.77 %

Total interest-bearing deposits

668,582 1,038 0.63 % 515,132 622 0.40 %
Borrowed Money   120,217   341 1.15 %   49,733   93 0.76 %
Total interest bearing liabilities 788,799 $ 1,379 0.71 % 564,865 $ 715 0.42 %
Noninterest-bearing deposits 153,674 123,232
Other liabilities   6,604   10,887
Total liabilities 949,077 698,984
Shareholders' equity   130,812   70,316
Total liabilities and shareholders' equity $ 1,079,889 $ 769,300
Net interest income (3) $ 10,008 $ 7,255
Interest rate spread 3.72 % 3.94 %
Net interest margin (4) 3.89 % 3.97 %
 
(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 $114 thousand and $109thousand, respectively for the three months
ended March 31, 2015, and 2014.

(4) Net interest income as a percentage of earning assets.
 

Bankwell Financial Group
Christopher R. Gruseke, 203-652-0166
President & Chief Executive Officer
or
Ernest J. Verrico Sr., 203-652-0166
Executive Vice President & Chief Financial Officer

Source: Bankwell Financial Group, Inc.

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