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Bankwell Financial Group Reports Strong Operating Results for the First Quarter; Declares Second Quarter Dividend

Bankwell Financial Group, Inc. (NASDAQ:BWFG) reported GAAP net income of $5.7 million, or $0.71 per share, for the first quarter of 2021, versus $1.4 million, or $0.17 per share, for the same period in 2020. Pre-tax, pre-provision net revenue ("PPNR")1 grew 48% to $7.0 million compared to the same period in 2020. Results include a $0.9 million one-time federal payroll tax credit for small businesses impacted by COVID-192.

The Company's Board of Directors declared a $0.14 per share cash dividend, payable May 24, 2021 to shareholders of record on May 14, 2021.

We recommend reading this earnings release in conjunction with the First Quarter 2021 Investor Presentation, located at http://investor.mybankwell.com/Presentations and included as an exhibit to our April 28, 2021 Current Report on Form 8-K.

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

"I am pleased to announce Bankwell’s financial results for the first quarter of 2021. Our team made meaningful progress in virtually all aspects of our business. Loans grew by 4% on originations of $158 million and we continue to generate quality C&I business. Core commercial deposits grew by 8.6%, or $63 million as we steadily improve both the mix and the cost of our deposits. We have also successfully implemented many of our previously announced expense reduction initiatives. The cumulative impact of the multiple successes we’ve experienced was to grow pre-tax, pre-provision net revenue by 48% versus the previous year’s first quarter and to deliver a return on average equity of 12.67%. Importantly, we look to further improving profitability as the year proceeds.

"I’d like to thank all of my colleagues who have worked tirelessly to achieve these results amidst such challenging circumstances. On behalf of everyone at Bankwell, I also wish to acknowledge our gratitude for all of our health care workers and scientists who have persevered in an effort to bring our health crisis to an end."

First Quarter 2021 Highlights:

  • PPNR of $7.0 million ($6.1 million excluding the one-time payroll tax credit), a 48% increase compared to the same period in 2020.
  • Return on average assets was 1.02% and return on average equity was 12.67%.
  • Resumption of SBA loan sales with gains of $0.5 million compared to no sales for the quarter ended March 31, 2020.
  • Total gross loans were $1.7 billion, growing $63.2 million, or 4%, compared to December 31, 2020, excluding PPP loans.
  • Total deposits were $1.9 billion compared to $1.8 billion at December 31, 2020.
  • Noninterest bearing deposits increased by $112.5 million to 15% of total deposits compared to 10% at March 31, 2020.
  • The cost of deposits decreased approximately 10 basis points to 0.67% when compared to the quarter ended December 31, 2020.
  • The Bank's loan-to-deposit ratio was 89.0%, reflecting the above-mentioned increase in deposits.
  • Investment securities totaled $101.6 million and represent 5% of total assets.
  • Tangible book value per share rose to $23.99 compared to $22.43 at December 31, 2020, benefiting from strong operating performance and favorable marks on interest rate swaps used to hedge interest rate risk.
  • Shares issued and outstanding were 7,908,630, reflecting repurchases of 65,626 shares of common stock at a weighted average price of $21.66 during the quarter ended March 31, 2021.
  • Subsequent to March 31, 2021, the Company committed to retire $10 million of existing subordinated debt on May 15, 2021.

Earnings and Performance

Revenues (net interest income plus noninterest income) for the quarter ended March 31, 2021 were $16.6 million, versus $14.4 million for the quarter ended March 31, 2020. The increase was primarily attributable to lower interest expense on deposits, partially offset by a decrease in interest and fees on loans. Revenues also benefited from the aforementioned one-time federal payroll tax credit for COVID-19 and from the resumption of SBA loan sales.

Net income for the quarter ended March 31, 2021 was $5.7 million, versus $1.4 million for the quarter ended March 31, 2020. The increase in net income was impacted by the aforementioned increases in revenues.

Basic and diluted earnings per share were $0.72 and $0.71, respectively, for the quarter ended March 31, 2021 compared to basic and diluted earnings per share of $0.17 each for the quarter ended March 31, 2020.

The net interest margin (fully taxable equivalent basis) for the quarters ended March 31, 2021 and March 31, 2020 was 2.74% and 2.98%, respectively. The decrease in net interest margin was primarily due to excess liquidity.

Financial Condition

Assets totaled $2.2 billion at March 31, 2021, compared to assets of $2.3 billion at December 31, 2020. The decrease in assets is primarily due to a decrease in excess liquidity, partially offset by an increase in loans. Gross loans totaled $1.7 billion at March 31, 2021, an increase of $47.6 million compared to December 31, 2020. Excluding PPP loans, gross loans increased by $63.2 million at March 31, 2021 when compared to December 31, 2020. Deposits totaled $1.9 billion at March 31, 2021, compared to deposits of $1.8 billion at December 31, 2020.

Capital

Shareholders’ equity totaled $187.9 million as of March 31, 2021, an increase of $11.3 million compared to December 31, 2020, primarily a result of (i) a $7.7 million favorable impact to accumulated other comprehensive income driven by fair value marks related to hedge positions involving interest rate swaps and (ii) net income for the quarter ended March 31, 2021 of $5.7 million. The Company's interest rate swaps are 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. The increase in Shareholders’ equity was partially offset by dividends paid of $1.1 million and common stock repurchases of $1.4 million.

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, 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.

_____________________

1 Pre-tax, pre-provision net revenue is a non-GAAP metric and excludes provision for loan losses and income tax expense.

2 The payroll tax credit is part of the Employee Retention Credit (“ERC”) program under the Coronavirus Aid, Relief and Economic Security Act (“CARES Act”).

BANKWELL FINANCIAL GROUP, INC.

       

CONSOLIDATED BALANCE SHEETS (unaudited)

     

(Dollars in thousands)

     

 

 

March 31,

 

December 31,

 

March 31,

 

2021

 

2020

 

2020

ASSETS

 

 

 

 

 

 

Cash and due from banks

 

$

351,194

 

 

$

405,340

 

 

$

203,569

 

Federal funds sold

 

10,811

 

 

4,258

 

 

6,427

 

Cash and cash equivalents

 

362,005

 

 

409,598

 

 

209,996

 

 

 

 

 

 

 

 

Investment securities

 

 

 

 

 

 

Marketable equity securities, at fair value

 

2,178

 

 

2,207

 

 

2,289

 

Available for sale investment securities, at fair value

 

83,218

 

 

88,605

 

 

82,342

 

Held to maturity investment securities, at amortized cost

 

16,225

 

 

16,078

 

 

16,252

 

Total investment securities

 

101,621

 

 

106,890

 

 

100,883

 

Loans receivable (net of allowance for loan losses of $20,545, $21,009, and $16,686 at March 31, 2021, December 31, 2020, and March 31, 2020, respectively)

 

1,650,127

 

 

1,601,672

 

 

1,602,146

 

Accrued interest receivable

 

7,306

 

 

6,579

 

 

5,867

 

Federal Home Loan Bank stock, at cost

 

6,446

 

 

7,860

 

 

6,507

 

Premises and equipment, net

 

33,386

 

 

21,762

 

 

27,835

 

Bank-owned life insurance

 

42,881

 

 

42,651

 

 

41,926

 

Goodwill

 

2,589

 

 

2,589

 

 

2,589

 

Other intangible assets

 

67

 

 

76

 

 

196

 

Deferred income taxes, net

 

8,908

 

 

11,300

 

 

10,009

 

Other assets

 

29,131

 

 

42,770

 

 

45,671

 

Total assets

 

$

2,244,467

 

 

$

2,253,747

 

 

$

2,053,625

 

 

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

Deposits

 

 

 

 

 

 

Noninterest bearing deposits

 

$

280,947

 

 

$

270,235

 

 

$

168,448

 

Interest bearing deposits

 

1,578,861

 

 

1,557,081

 

 

1,512,684

 

Total deposits

 

1,859,808

 

 

1,827,316

 

 

1,681,132

 

 

 

 

 

 

 

 

Advances from the Federal Home Loan Bank

 

125,000

 

 

175,000

 

 

125,000

 

Subordinated debentures

 

25,271

 

 

25,258

 

 

25,220

 

Accrued expenses and other liabilities

 

46,445

 

 

49,571

 

 

52,059

 

Total liabilities

 

2,056,524

 

 

2,077,145

 

 

1,883,411

 

 

 

 

 

 

 

 

Shareholders’ equity

 

 

 

 

 

 

Common stock, no par value

 

120,398

 

 

121,338

 

 

119,953

 

Retained earnings

 

75,418

 

 

70,839

 

 

69,595

 

Accumulated other comprehensive loss

 

(7,873

)

 

(15,575

)

 

(19,334

)

Total shareholders’ equity

 

187,943

 

 

176,602

 

 

170,214

 

 

 

 

 

 

 

 

Total liabilities and shareholders’ equity

 

$

2,244,467

 

 

$

2,253,747

 

 

$

2,053,625

 

BANKWELL FINANCIAL GROUP, INC.

CONSOLIDATED STATEMENTS OF INCOME (unaudited)

(Dollars in thousands, except share data)

 

 

For the Quarter Ended

 

 

March 31,

 

December 31,

 

March 31,

 

2021

2020

2020

Interest and dividend income

 

 

 

 

 

 

Interest and fees on loans

 

$

17,900

 

 

$

18,194

 

 

$

18,985

 

Interest and dividends on securities

 

769

 

 

835

 

 

825

 

Interest on cash and cash equivalents

 

108

 

 

117

 

 

286

 

Total interest and dividend income

 

18,777

 

 

19,146

 

 

20,096

 

 

 

 

 

 

 

 

Interest expense

 

 

 

 

 

 

Interest expense on deposits

 

3,114

 

 

3,557

 

 

5,709

 

Interest expense on borrowings

 

1,008

 

 

1,285

 

 

1,101

 

Total interest expense

 

4,122

 

 

4,842

 

 

6,810

 

 

 

 

 

 

 

 

Net interest income

 

14,655

 

 

14,304

 

 

13,286

 

(Credit) provision for loan losses

 

(296

)

 

709

 

 

3,185

 

Net interest income after provision for loan losses

 

14,951

 

 

13,595

 

 

10,101

 

 

 

 

 

 

 

 

Noninterest income

 

 

 

 

 

 

Gains and fees from sales of loans

 

513

 

 

16

 

 

 

Bank owned life insurance

 

231

 

 

241

 

 

243

 

Service charges and fees

 

199

 

 

210

 

 

217

 

Other

 

1,013

 

 

154

 

 

612

 

Total noninterest income

 

1,956

 

 

621

 

 

1,072

 

 

 

 

 

 

 

 

Noninterest expense

 

 

 

 

 

 

Salaries and employee benefits

 

4,769

 

 

5,453

 

 

5,380

 

Occupancy and equipment

 

2,406

 

 

4,516

 

 

1,909

 

Professional services

 

587

 

 

591

 

 

711

 

Data processing

 

512

 

 

1,658

 

 

536

 

FDIC insurance

 

403

 

 

262

 

 

70

 

Director fees

 

317

 

 

331

 

 

295

 

Marketing

 

(9

)

 

118

 

 

162

 

Other

 

653

 

 

774

 

 

596

 

Total noninterest expense

 

9,638

 

 

13,703

 

 

9,659

 

 

 

 

 

 

 

 

Income before income tax expense

 

7,269

 

 

513

 

 

1,514

 

Income tax expense

 

1,579

 

 

177

 

 

151

 

Net income

 

$

5,690

 

 

$

336

 

 

$

1,363

 

 

 

 

 

 

 

 

Earnings Per Common Share:

 

 

 

 

 

 

Basic

 

$

0.72

 

 

$

0.04

 

 

$

0.17

 

Diluted

 

$

0.71

 

 

$

0.04

 

 

$

0.17

 

 

 

 

 

 

 

 

Weighted Average Common Shares Outstanding:

 

 

 

 

 

 

Basic

 

7,758,540

 

 

7,726,926

 

 

7,750,135

 

Diluted

 

7,800,777

 

 

7,728,206

 

 

7,778,762

 

Dividends per common share

 

$

0.14

 

 

$

0.14

 

 

$

0.14

 

BANKWELL FINANCIAL GROUP, INC.

CONSOLIDATED FINANCIAL HIGHLIGHTS (unaudited)

 

 

For the Quarter Ended

 

 

March 31,

 

December 31,

 

March 31,

 

2021

2020

2020

Performance ratios:

 

 

 

 

 

 

Return on average assets(1)

 

1.02

%

 

0.06

%

 

0.29

%

Return on average stockholders' equity(1)

 

12.67

%

 

0.75

%

 

3.03

%

Return on average tangible common equity(1)

 

12.86

%

 

0.76

%

 

3.07

%

Net interest margin

 

2.74

%

 

2.66

%

 

2.98

%

Efficiency ratio(2)

 

58.0

%

 

91.2

%

 

67.1

%

Net loan charge-offs as a % of average loans

 

0.01

%

 

%

 

%

Dividend payout ratio(3)

 

19.72

%

 

350.00

%

 

82.35

%

(1) 2020 performance ratios were negatively impacted by incremental COVID-19 pandemic related loan loss reserves and $3.9 million in one-time charges related to office consolidation, contract termination and employee severance costs recognized in the fourth quarter of 2020.

(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,

 

December 31,

 

March 31,

2021

2020

2020

Capital ratios:

 

 

 

 

 

 

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

 

11.02

%

 

11.06

%

 

12.14

%

Total Capital to Risk-Weighted Assets(1)

 

12.17

%

 

12.28

%

 

13.13

%

Tier I Capital to Risk-Weighted Assets(1)

 

11.02

%

 

11.06

%

 

12.14

%

Tier I Capital to Average Assets(1)

 

8.82

%

 

8.44

%

 

10.84

%

Tangible common equity to tangible assets

 

8.27

%

 

7.73

%

 

8.16

%

Tangible book value per common share(2)

 

$

23.99

 

 

$

22.43

 

 

$

21.69

 

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

(2) Excludes unvested restricted shares of 186,485, 163,369, and 154,012 as of March 31, 2021, December 31, 2020, and March 31, 2020, respectively.

BANKWELL FINANCIAL GROUP, INC.

ASSET QUALITY (unaudited)

(Dollars in thousands)

 

 

For the Quarter Ended

 

 

March 31,

 

December 31,

 

March 31,

 

2021

 

2020

 

2020

Allowance for loan losses:

   

 

 

Balance at beginning of period

 

$

21,009

 

 

$

20,372

 

 

$

13,509

 

Charge-offs:

 

 

 

 

 

 

Commercial real estate

 

 

(163

)

 

 

 

 

 

 

Commercial business

 

 

 

 

 

(75

)

 

 

(8

)

Consumer

 

 

(14

)

 

 

(11

)

 

 

(2

)

Total charge-offs

 

 

(177

)

 

 

(86

)

 

 

(10

)

Recoveries:

 

 

 

 

 

 

Commercial business

 

 

 

 

 

14

 

 

 

1

 

Consumer

 

 

9

 

 

 

 

 

 

1

 

Total recoveries

 

 

9

 

 

 

14

 

 

 

2

 

Net loan charge-offs

 

 

(168

)

 

 

(72

)

 

 

(8

)

(Credit) provision for loan losses

 

 

(296

)

 

 

709

 

 

 

3,185

 

Balance at end of period

 

$

20,545

 

 

$

21,009

 

 

$

16,686

 

       
       

 

 

As of

 

 

March 31,

 

December 31,

 

March 31,

 

2021

 

2020

 

2020

Asset quality:

 

 

 

 

 

 

Nonaccrual loans

 

 

 

 

 

 

Residential real estate

 

$

1,289

 

 

$

1,492

 

 

$

1,532

 

Commercial real estate

 

 

19,277

 

 

 

21,093

 

 

 

5,339

 

Commercial business

 

 

1,803

 

 

 

1,834

 

 

 

3,783

 

Construction

 

 

8,997

 

 

 

8,997

 

 

 

 

Total nonaccrual loans

 

 

31,366

 

 

 

33,416

 

 

 

10,654

 

Other real estate owned

 

 

 

 

 

 

 

 

 

Total nonperforming assets

 

$

31,366

 

 

$

33,416

 

 

$

10,654

 

 

 

 

 

 

 

 

Nonperforming loans as a % of total loans

 

 

1.87

%

 

 

2.06

%

 

 

0.66

%

Nonperforming assets as a % of total assets

 

 

1.40

%

 

 

1.48

%

 

 

0.52

%

Allowance for loan losses as a % of total loans

 

 

1.23

%

 

 

1.29

%

 

 

1.03

%

Allowance for loan losses as a % of nonperforming loans

 

 

65.50

%

 

 

62.87

%

 

 

156.62

%

Total nonaccrual loans declined $2.1 million to $31.4 million as of March 31, 2021 when compared to December 31, 2020. The Company individually analyzed all existing COVID-19 deferrals and COVID-19 impacted loans for collectability and impairment as of March 31, 2021. Nonperforming assets as a percentage of total assets was 1.40% at March 31, 2021, down from 1.48% at December 31, 2020. The allowance for loan losses at March 31, 2021 was $20.5 million, representing 1.23% of total loans.

BANKWELL FINANCIAL GROUP, INC.

LOAN & DEPOSIT PORTFOLIO (unaudited)

(Dollars in thousands)

 

March 31,

 

December 31,

 

Period End Loan Composition

 

2021

2020

% Change

Residential Real Estate

 

$

109,752

 

 

$

113,557

 

 

(3.4

)%

Commercial Real Estate(1)

 

1,183,848

 

 

1,148,383

 

 

3.1

 

Construction

 

103,099

 

 

87,007

 

 

18.5

 

Total Real Estate Loans

 

1,396,699

 

 

1,348,947

 

 

3.5

 

 

 

 

 

 

 

 

Commercial Business(2)

 

267,698

 

 

276,601

 

 

(3.2

)

 

 

 

 

 

 

 

Consumer

 

8,818

 

 

79

 

 

N/M(3)

Total Loans

 

$

1,673,215

 

 

$

1,625,627

 

 

2.9

%

(1) Includes owner occupied commercial real estate.

(2) Includes $19.2 million and $34.8 million of PPP loans at March 31, 2021 and December 31, 2020, respectively.

(3) Metric not meaningful.

Gross loans totaled $1.7 billion at March 31, 2021, an increase of $47.6 million compared to December 31, 2020. Excluding PPP loans, gross loans increased by $63.2 million, or 4%, at March 31, 2021 when compared to December 31, 2020.

 

March 31,

 

December 31,

 

Period End Deposit Composition

 

2021

2020

% Change

Noninterest bearing demand

 

$

280,947

 

 

$

270,235

 

 

4.0

%

NOW

 

118,489

 

 

101,737

 

 

16.5

 

Money Market

 

751,852

 

 

669,364

 

 

12.3

 

Savings

 

164,559

 

 

158,750

 

 

3.7

 

Time

 

543,961

 

 

627,230

 

 

(13.3

)

Total Deposits

 

$

1,859,808

 

 

$

1,827,316

 

 

1.8

%

Total deposits were $1.9 billion at March 31, 2021, compared to $1.8 billion at December 31, 2020, an increase of $32.5 million, or 1.8%.

BANKWELL FINANCIAL GROUP, INC.

NONINTEREST INCOME AND EXPENSE (unaudited)

(Dollars in thousands)

 

 

For the Quarter Ended

 

 

 

 

Noninterest income

 

March 31,

 

December 31,

 

March 31,

 

Mar 21 vs. Dec 20 %

 

Mar 21 vs. Mar 20 %

2021

 

2020

 

2020

 

Change

 

Change

Gains and fees from sales of loans

 

$

513

 

 

$

16

 

 

$

 

 

N/M(1)

 

N/A

Bank owned life insurance

 

231

 

 

241

 

 

243

 

 

(4.1

)

 

(4.9

)

Service charges and fees

 

199

 

 

210

 

 

217

 

 

(5.2

)

 

(8.3

)

Other

 

1,013

 

 

154

 

 

612

 

 

557.8

 

 

65.5

 

Total noninterest income

 

$

1,956

 

 

$

621

 

 

$

1,072

 

 

215.0

%

 

82.5

%

 

(1) Metric not meaningful.

Noninterest income increased by $0.9 million to $2.0 million for the quarter ended March 31, 2021 compared to the quarter ended March 31, 2020.

The increase in noninterest income was driven by resumed SBA loan sales, totaling $0.5 million for the quarter ended March 31, 2021. In addition, the increase was impacted by a one-time federal payroll tax credit for COVID-19 of $0.9 million, partially offset by $0.4 million of non-recurring interest rate swap fees recognized in the quarter ended March 31, 2020.

 

 

For the Quarter Ended

 

 

 

 

Noninterest expense

 

March 31,

 

December 31,

 

March 31,

 

Mar 21 vs. Dec 20 %

 

Mar 21 vs. Mar 20 %

 

2021

 

2020

 

2020

 

Change

 

Change

Salaries and employee benefits

 

$

4,769

 

 

$

5,453

 

 

$

5,380

 

 

(12.5

)%

 

(11.4

)%

Occupancy and equipment

 

2,406

 

 

4,516

 

 

1,909

 

 

(46.7

)

 

26.0

 

Professional services

 

587

 

 

591

 

 

711

 

 

(0.7

)

 

(17.4

)

Data processing

 

512

 

 

1,658

 

 

536

 

 

(69.1

)

 

(4.5

)

FDIC insurance

 

403

 

 

262

 

 

70

 

 

53.8

 

 

475.7

 

Director fees

 

317

 

 

331

 

 

295

 

 

(4.2

)

 

7.5

 

Marketing

 

(9

)

 

118

 

 

162

 

 

(107.6

)

 

(105.6

)

Other

 

653

 

 

774

 

 

596

 

 

(15.6

)

 

9.6

 

Total noninterest expense

 

$

9,638

 

 

$

13,703

 

 

$

9,659

 

 

(29.7

)%

 

(0.2

)%

Noninterest expense declined slightly, from $9.7 million for the quarter ended March 31, 2020, to $9.6 million for the quarter ended March 31, 2021. The decrease in noninterest expense was primarily driven by a decline in salaries and employee benefits and marketing expense, partially offset by an increase in occupancy and equipment expense and FDIC insurance expense. The decrease in noninterest expense for the quarter ended March 31, 2021 when compared to the quarter ended December 31, 2020 was primarily due to $3.9 million in one-time charges recognized during the fourth quarter of 2020. These one-time charges impacted salaries and employee benefits, occupancy and equipment expense and data processing expense.

Salaries and employee benefits totaled $4.8 million for the quarter ended March 31, 2021, a decrease of $0.6 million when compared to the same period in 2020. The decrease in salaries and employee benefits was primarily driven by a decrease in full time equivalent employees as a direct result of the Voluntary Early Retirement Incentive Plan offered to eligible employees and other employee actions taken during the fourth quarter of 2020. Full time equivalent employees totaled 123 at March 31, 2021 compared to 154 for the same period in 2020. Salaries and employee benefits were also favorably impacted as higher loan originations enabled the bank to defer a greater amount of expenses.

Occupancy and equipment expense totaled $2.4 million for the quarter ended March 31, 2021, an increase of $0.5 million when compared to the same period in 2020. The increase in occupancy and equipment expense was primarily due to additional cleaning costs associated with precautions taken to prevent the spread of COVID-19.

FDIC insurance expense totaled $0.4 million for the quarter ended March 31, 2021, an increase of $0.3 million when compared to the same period in 2020. The increase in FDIC insurance expense was due to the application of available FDIC insurance credits in the first quarter of 2020.

BANKWELL FINANCIAL GROUP, INC.

RECONCILIATION OF GAAP TO NON-GAAP MEASURES (unaudited)

(Dollars in thousands, except share data)

 

 

As of

 

 

March 31,

 

December 31,

 

March 31,

Computation of Tangible Common Equity to Tangible Assets

 

2021

 

2020

 

2020

Total Equity

 

$

187,943

 

 

$

176,602

 

 

$

170,214

 

Less:

 

 

 

 

 

 

Goodwill

 

 

2,589

 

 

 

2,589

 

 

 

2,589

 

Other intangibles

 

 

67

 

 

 

76

 

 

 

196

 

Tangible Common Equity

 

$

185,287

 

 

$

173,937

 

 

$

167,429

 

 

 

 

 

 

 

 

Total Assets

 

$

2,244,467

 

 

$

2,253,747

 

 

$

2,053,625

 

Less:

 

 

 

 

 

 

Goodwill

 

 

2,589

 

 

 

2,589

 

 

 

2,589

 

Other intangibles

 

 

67

 

 

 

76

 

 

 

196

 

Tangible Assets

 

$

2,241,811

 

 

$

2,251,082

 

 

$

2,050,840

 

 

 

 

 

 

 

 

Tangible Common Equity to Tangible Assets

 

 

8.27

%

 

 

7.73

%

 

 

8.16

%

   
   

 

 

As of

 

March 31,

 

December 31,

 

 March 31,

Computation of Tangible Book Value per Common Share

 

2021

 

2020

 

2020

Total shareholders' equity

 

$

187,943

 

 

$

176,602

 

 

$

170,214

 

Less:

 

 

 

 

 

 

Preferred stock

 

 

 

 

 

 

 

 

 

Common shareholders' equity

 

$

187,943

 

 

$

176,602

 

 

$

170,214

 

Less:

 

 

 

 

 

 

Goodwill

 

 

2,589

 

 

 

2,589

 

 

 

2,589

 

Other intangibles

 

 

67

 

 

 

76

 

 

 

196

 

Tangible common shareholders' equity

 

$

185,287

 

 

$

173,937

 

 

$

167,429

 

Common shares

 

 

7,908,630

 

 

 

7,919,278

 

 

 

7,871,419

 

Less:

 

 

 

 

 

 

Shares of unvested restricted stock

 

 

186,485

 

 

 

163,369

 

 

 

154,012

 

Common shares less unvested restricted stock

 

 

7,722,145

 

 

 

7,755,909

 

 

 

7,717,407

 

Book value per share

 

$

24.34

 

 

$

22.77

 

 

$

22.06

 

Less:

 

 

 

 

 

 

Effects of intangible assets

 

$

0.34

 

 

$

0.34

 

 

$

0.36

 

 

 

 

 

 

 

 

Tangible Book Value per Common Share

 

$

23.99

 

 

$

22.43

 

 

$

21.69

 

BANKWELL FINANCIAL GROUP, INC.

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

(Dollars in thousands)

 

 

For the Quarter Ended

 

March 31,

 

December 31,

 

March 31,

Computation of Efficiency Ratio

 

2021

 

2020

 

2020

Noninterest expense

 

$

9,638

 

 

$

13,703

 

 

$

9,659

 

Less:

 

 

 

 

 

 

Amortization of intangible assets

 

 

9

 

 

 

84

 

 

 

18

 

Other real estate owned expenses

 

 

 

 

 

 

 

 

 

Adjusted noninterest expense

 

$

9,629

 

 

$

13,619

 

 

$

9,641

 

Net interest income

 

$

14,655

 

 

$

14,304

 

 

$

13,286

 

Noninterest income

 

 

1,956

 

 

 

621

 

 

 

1,072

 

Less:

 

 

 

 

 

 

Net gain on sale of available for sale securities

 

 

 

 

 

 

 

 

 

Gain (loss) on sale of other real estate owned, net

 

 

 

 

 

 

 

 

 

Operating revenue

 

$

16,611

 

 

$

14,925

 

 

$

14,358

 

 

 

 

 

 

 

 

Efficiency ratio

 

 

58.0

%

 

 

91.2

%

 

 

67.1

%

       
       

 

 

For the Quarter Ended

 

March 31,

 

December 31,

 

March 31,

Computation of Return on Average Tangible Common Equity

 

2021

 

2020

 

2020

Net Income Attributable to Common Shareholders

 

$

5,690

 

 

$

336

 

 

$

1,363

 

Total average shareholders' equity

 

$

182,058

 

 

$

178,439

 

 

$

181,127

 

Less:

 

 

 

 

 

 

Average Goodwill

 

 

2,589

 

 

 

2,589

 

 

 

2,589

 

Average Other intangibles

 

 

73

 

 

 

153

 

 

 

208

 

Average tangible common equity

 

$

179,396

 

 

$

175,697

 

 

$

178,330

 

 

 

 

 

 

 

 

Annualized Return on Average Tangible Common Equity

 

 

12.86

%

 

 

0.76

%

 

 

3.07

%

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, 2021

 

March 31, 2020

 

 

Average

 

 

 

Yield/

 

Average

 

 

 

Yield/

Balance

 

Interest

 

Rate (5)

 

Balance

 

Interest

 

Rate (5)

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

Cash and Fed funds sold

 

$

401,900

 

 

$

108

 

 

0.11

%

 

$

73,497

 

 

$

286

 

 

1.56

%

Securities(1)

 

101,176

 

 

788

 

 

3.11

 

 

98,566

 

 

775

 

 

3.15

 

Loans:

 

 

 

 

 

 

 

 

 

 

 

 

Commercial real estate

 

1,129,224

 

 

12,731

 

 

4.51

 

 

1,108,709

 

 

13,024

 

 

4.65

 

Residential real estate

 

112,053

 

 

964

 

 

3.44

 

 

143,826

 

 

1,357

 

 

3.77

 

Construction(2)

 

94,075

 

 

885

 

 

3.76

 

 

100,437

 

 

1,215

 

 

4.78

 

Commercial business

 

294,756

 

 

3,271

 

 

4.44

 

 

258,848

 

 

3,386

 

 

5.18

 

Consumer

 

5,039

 

 

49

 

 

3.94

 

 

156

 

 

3

 

 

8.37

 

Total loans

 

1,635,147

 

 

17,900

 

 

4.38

 

 

1,611,976

 

 

18,985

 

 

4.66

 

Federal Home Loan Bank stock

 

6,508

 

 

31

 

 

1.96

 

 

7,325

 

 

103

 

 

5.65

 

Total earning assets

 

2,144,731

 

 

$

18,827

 

 

3.51

%

 

1,791,364

 

 

$

20,149

 

 

4.45

%

Other assets

 

113,561

 

 

 

 

 

 

111,585

 

 

 

 

 

Total assets

 

$

2,258,292

 

 

 

 

 

 

$

1,902,949

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities and shareholders' equity:

 

 

 

 

 

 

 

 

 

 

 

 

Interest bearing liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

NOW

 

$

101,057

 

 

$

43

 

 

0.17

%

 

$

67,925

 

 

$

28

 

 

0.17

%

Money market

 

736,659

 

 

950

 

 

0.52

 

 

438,588

 

 

1,492

 

 

1.37

 

Savings

 

160,347

 

 

125

 

 

0.32

 

 

185,478

 

 

672

 

 

1.46

 

Time

 

611,153

 

 

1,996

 

 

1.32

 

 

640,580

 

 

3,517

 

 

2.21

 

Total interest bearing deposits

 

1,609,216

 

 

3,114

 

 

0.78

 

 

1,332,571

 

 

5,709

 

 

1.72

 

Borrowed Money

 

152,485

 

 

1,008

 

 

2.64

 

 

172,464

 

 

1,101

 

 

2.53

 

Total interest bearing liabilities

 

1,761,701

 

 

$

4,122

 

 

0.95

%

 

1,505,035

 

 

$

6,810

 

 

1.82

%

Noninterest bearing deposits

 

269,863

 

 

 

 

 

 

179,066

 

 

 

 

 

Other liabilities

 

44,670

 

 

 

 

 

 

37,721

 

 

 

 

 

Total liabilities

 

2,076,234

 

 

 

 

 

 

1,721,822

 

 

 

 

 

Shareholders' equity

 

182,058

 

 

 

 

 

 

181,127

 

 

 

 

 

Total liabilities and shareholders' equity

 

$

2,258,292

 

 

 

 

 

 

$

1,902,949

 

 

 

 

 

Net interest income(3)

 

 

 

$

14,705

 

 

 

 

 

 

$

13,339

 

 

 

Interest rate spread

 

 

 

 

 

2.56

%

 

 

 

 

 

2.63

%

Net interest margin(4)

 

 

 

 

 

2.74

%

 

 

 

 

 

2.98

%

(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 $50 thousand and $53 thousand for the quarters ended March 31, 2021 and 2020, 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.

 

Contacts

Bankwell Financial Group

Christopher R. Gruseke, (203) 652-0166

President and Chief Executive Officer

Penko Ivanov, (203) 652-0166

Executive Vice President and Chief Financial Officer

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