(Mark One) ☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2025 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _________to________ Commission File Number: 001-36448 Bankwell Financial Group, Inc. (Exact Name of Registrant as specified in its Charter) UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q 258 Elm Street New ...

Financial Data and Key Metrics Changes - The company reported GAAP fully diluted earnings of $1.15 per share, up 32% from the first quarter, driven by significant net interest margin expansion and increased contributions from SBA loan sales [6][11] - Pre-provision net revenue (PPNR) increased by 21% to $11,400,000 or $1.46 per share, with PPNR return on average assets rising to 143 basis points from 118 basis points in the previous quarter [11] - Net interest margin (NIM) improved to 310 basis points, a 29 basis point increase from the linked quarter, attributed to decreasing funding costs [11][12] Business Line Data and Key Metrics Changes - The SBA business is expected to deliver material growth to noninterest income, with SBA loan originations totaling $12,000,000 for the quarter, bringing year-to-date originations to $22,000,000 [7][13] - Noninterest income increased by 34% to $2,000,000, largely due to $1,100,000 from SBA gain on sale income [13] - Total noninterest expense rose modestly to $14,500,000, primarily due to increased salaries and employee benefits, reflecting ongoing investments in banking teams and risk functions [13][14] Market Data and Key Metrics Changes - Noninterest bearing deposits grew by $48,000,000 during the quarter, with a year-to-date increase of $75,000,000 or 23% since year-end [8][9] - The bank's funding profile improved with a significant reduction in brokered deposits, which have been decreased by over $400,000,000 from their peak [18] Company Strategy and Development Direction - The company is focused on expanding its SBA platform, attracting talented deposit teams, and investing in risk and technology platforms to prepare for technological evolution [16][17] - The strategic initiatives aim to improve asset quality, with nonperforming loans dropping significantly from $65,000,000 to just under $24,000,000 [18] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about credit trends, expecting continued progress in reducing nonperforming assets (NPAs) [9][14] - The company anticipates continued margin expansion into 2026, driven by the contributions of new deposit teams and improved funding costs [9][12] Other Important Information - The company repurchased 14,626 shares at a weighted average price of $28.86 per share during the quarter, with 205,000 shares remaining on the authorization [15] - The consolidated common equity Tier one ratio increased to 10.17% from 10.04% in the prior quarter, indicating a well-capitalized and liquid balance sheet [15] Q&A Session Summary Question: Long-term target for DDAs to deposits - Management does not have a hard target but aims to expand the percentage and reduce the wholesale funding ratio [21][22][23] Question: Future of brokered deposits - Management expects brokered deposits to continue decreasing but acknowledges it will depend on market opportunities [24][25] Question: Update on health care customers - There are no significant concerns regarding new legislation affecting health care customers, and the health care book remains profitable [27] Question: Potential of new deposit teams - The new teams have significant potential based on their previous business volumes, but actual production is yet to materialize [32][33][34] Question: Timeline for resolution of nonperforming loans - One nonperforming loan is expected to resolve in the next couple of quarters, while another may take longer due to its complexity [40] Question: Impact of potential Fed rate cuts on margin - Management anticipates a potential 5 to 10 basis point increase in NIM even without rate cuts, based on current repricing opportunities [41][44] Question: Expense guidance for the back half of the year - Expenses are expected to remain relatively flat at around $15,000,000 per quarter in the second half of the year [49]

Financial Data and Key Metrics Changes - The company reported GAAP fully diluted earnings of $1.15 per share, up 32% from the first quarter, driven by significant net interest margin expansion and increased contributions from SBA loan sales [6][11] - Pre-provision net revenue (PPNR) increased by 21% to $11,400,000 or $1.46 per share, with PPNR return on average assets rising to 143 basis points from 118 basis points in the previous quarter [11] - The net interest margin (NIM) improved to 310 basis points, a 29 basis point increase from the linked quarter, attributed to decreasing funding costs [11][12] Business Line Data and Key Metrics Changes - The SBA business is expected to deliver material growth to noninterest income, with SBA loan originations totaling $12,000,000 for the quarter, bringing year-to-date originations to $22,000,000 [7][13] - Noninterest income increased by 34% to $2,000,000, largely due to $1,100,000 from SBA gain on sale income [13] - Total noninterest expense rose modestly to $14,500,000, primarily due to increased salaries and employee benefits, reflecting ongoing investments in banking teams and risk functions [13][14] Market Data and Key Metrics Changes - Noninterest bearing deposits grew by $48,000,000 during the quarter, with a year-to-date increase of $75,000,000 or 23% since year-end [8] - The bank's funding profile improved with a significant reduction in brokered deposits, which have been decreased by over $400,000,000 from their peak [18] Company Strategy and Development Direction - The company is focused on expanding its SBA platform, attracting talented deposit teams, and investing in risk and technology platforms to prepare for technological evolution [16][19] - The management emphasized the importance of improving asset quality, with nonperforming loans dropping significantly from $65,000,000 to just under $24,000,000 [17] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about continued margin expansion into 2026, driven by the growth of noninterest bearing deposits and improved credit trends [8][12] - The company anticipates continued improvement in profitability and efficiency ratios, despite increasing noninterest expense guidance [14][19] Other Important Information - The company repurchased 14,626 shares at a weighted average price of $28.86 per share during the quarter, with 205,000 shares remaining on its authorization [15] Q&A Session Summary Question: What is the long-term target for DDAs to deposits? - Management indicated there is no hard target but aims to expand the percentage and reduce the wholesale funding ratio [21][23] Question: Should brokered deposits continue to decrease? - Management expects brokered deposits to decrease over time but acknowledges it will depend on market opportunities and deposit gathering efforts [24][25] Question: Update on health care customers? - Management reported that health care borrowers are not significantly impacted by new legislation, maintaining a positive outlook on the health care book [27] Question: Potential of new deposit teams? - Management highlighted the potential of new teams, noting their previous success in generating significant business, but emphasized that actual production will take time to materialize [32][34] Question: Timeline for resolution of nonperforming loans? - Management expects one nonperforming loan to be resolved in the next couple of months, while another may take longer due to its complexity [41] Question: Impact of a potential Fed rate cut on margin? - Management indicated that a 25 basis point cut would likely have a delayed impact on margins, but they remain optimistic about NIM improvements based on current repricing strategies [42][45]

Financial Performance - The company reported a Return on Average Assets of 1.14%, a 28 basis points increase compared to the last quarter[7] - Net Interest Margin was reported at 3.10%, a 29 basis points expansion from the last quarter due to an improved funding profile[7] - Fully diluted Earnings Per Share (EPS) reached $1.15, a 32% increase compared to the last quarter, driven by improved net interest margin and increased non-interest income[8] - Pre-Provision Net Revenue (PPNR) was $11.4 million, or $1.46 per share, a 21% increase compared to the last quarter[8] - Non-interest income grew by $0.5 million, or 34%, compared to the last quarter, driven by $1.1 million gains realized on SBA Loan sales[7] Balance Sheet and Capital - Loan balances increased by $24 million compared to the last quarter, based on $170 million of funded originations[8] - Non-performing assets (NPAs) improved to 0.78% of total assets[7] - Non-interest bearing deposits grew by $48 million from existing channels[7] - Tangible book value was $35.65, up $1.09 compared to the last quarter and up $2.04 compared to the prior year quarter[8] - The Consolidated CET1 ratio was 10.17%, and the Bank Total Capital ratio was 13.28%[8] Deposit and Funding - Deposit costs improved to 3.40%, a 20 basis points decrease compared to the last quarter, with a June 2025 'exit' rate of 3.28%[8] - The company experienced $48 million growth in non-interest bearing deposits compared to the last quarter, and $75 million year-to-date[8]

[Second Quarter 2025 Operating Results and Highlights](index=1&type=section&id=Second_Quarter_2025_Operating_Results_and_Highlights) The company reported strong Q2 2025 results, driven by significant growth in net income, a notable expansion in net interest margin, and an improved efficiency ratio Q2 2025 vs Q1 2025 Performance | Metric | Q2 2025 | Q1 2025 | | :--- | :--- | :--- | | GAAP Net Income | $9.1 million | $6.9 million | | Diluted EPS | $1.15 | $0.87 | - The Board of Directors declared a **$0.20 per share cash dividend**, payable on August 22, 2025, to shareholders of record on August 11, 2025[1](index=1&type=chunk) - The **net interest margin (NIM) increased to 3.10%**, up 29 basis points from the first quarter, primarily due to reduced deposit costs[2](index=2&type=chunk)[7](index=7&type=chunk) - The **efficiency ratio improved to 56.1%** for Q2 2025, down from 59.9% in Q1 2025, indicating better operational leverage[7](index=7&type=chunk) - **Return on average assets (ROA) increased to 1.14%** for the quarter, demonstrating improved profitability[2](index=2&type=chunk) [CEO Commentary and 2025 Outlook](index=1&type=section&id=CEO_Commentary_and_2025_Outlook) The CEO highlighted accelerating positive trends and updated the 2025 guidance, raising the net interest income forecast while increasing expense guidance for personnel investments Updated 2025 Full-Year Guidance | Metric | Updated Guidance | Notes | | :--- | :--- | :--- | | Net Interest Income | $97 – $98 million | Increased | | Noninterest Income | $7 - $8 million | Reiterated | | Noninterest Expense | $58 - $59 million | Increased due to investments in people | - The company has hired **five new deposit-focused private banking teams** during the year to enhance deposit gathering capabilities, with contributions expected to boost deposit growth later in 2025 and more significantly in 2026[3](index=3&type=chunk)[7](index=7&type=chunk) - The SBA lending business is on a path to achieve further scale and profitability, contributing **$1.5 million in non-interest income year-to-date** and **$1.1 million in loan sale gains in Q2 2025**[2](index=2&type=chunk)[7](index=7&type=chunk) [Financial Performance Analysis](index=2&type=section&id=Financial_Performance_Analysis) The company's Q2 2025 financial performance was marked by strong revenue growth and margin expansion, with a substantial increase in pre-tax, pre-provision net revenue Quarterly Revenue and PPNR (in thousands) | Metric | Q2 2025 | Q1 2025 | % Change | | :--- | :--- | :--- | :--- | | Total Revenues | $25,948 | $23,571 | 10.1% | | PPNR | $11,402 | $9,430 | 20.9% | [Key Performance Indicators (KPIs)](index=2&type=section&id=Key_Performance_Indicators_KPIs) Key performance indicators showed broad improvement in Q2 2025, including profitability, net interest margin, and tangible book value per share Key Performance Indicators Trend | KPI | June 30, 2025 | March 31, 2025 | June 30, 2024 | | :--- | :--- | :--- | :--- | | Return on average assets (ROA) | 1.14 % | 0.86 % | 0.14 % | | Return on average equity (ROE) | 12.98 % | 10.16 % | 1.65 % | | Net interest margin (NIM) | 3.10 % | 2.81 % | 2.75 % | | Efficiency Ratio | 56.1 % | 59.9 % | 45.6 % | | Fully diluted tangible book value per share | $35.65 | $34.56 | $33.61 | [Income Statement Analysis](index=8&type=section&id=Income_Statement_Analysis) The Q2 2025 income statement shows a substantial net income increase, driven by higher net interest and noninterest income and a credit for credit losses Consolidated Income Statement Highlights (in thousands) | Line Item | Q2 2025 | Q1 2025 | Q2 2024 | | :--- | :--- | :--- | :--- | | Net Interest Income | $23,936 | $22,066 | $21,219 | | (Credit) Provision for Credit Losses | $(411) | $463 | $8,183 | | Total Noninterest Income | $2,012 | $1,505 | $683 | | Total Noninterest Expense | $14,546 | $14,141 | $12,245 | | Net Income | $9,088 | $6,888 | $1,118 | [Asset Quality and Credit](index=3&type=section&id=Asset_Quality_and_Credit) Asset quality continued to improve in Q2 2025, with lower nonperforming assets and a stronger allowance for credit losses coverage ratio Asset Quality Metrics | Metric | June 30, 2025 | March 31, 2025 | | :--- | :--- | :--- | | Nonperforming assets as a % of total assets | 0.78% | 0.83% | | Nonperforming loans as a % of total loans | 0.89% | 1.00% | | ACL-loans as a % of nonperforming loans | 122.54% | 111.76% | | Total nonperforming loans (in thousands) | $23,875 | $26,383 | - The **Allowance for Credit Losses - Loans (ACL-Loans) stood at $29.3 million** as of June 30, 2025, representing 1.10% of total loans[12](index=12&type=chunk) - The company recorded a **net credit for credit losses of $0.3 million** for the quarter, reflecting the improvement in overall credit quality and a decrease in nonperforming loans[13](index=13&type=chunk)[15](index=15&type=chunk) [Financial Condition and Capital Management](index=5&type=section&id=Financial_Condition_and_Capital_Management) The company maintained a strong balance sheet with total assets of $3.2 billion, an improved deposit mix, and robust 'well capitalized' regulatory capital ratios - The deposit mix improved, with **noninterest-bearing demand deposits increasing by 23.4% year-to-date**, while brokered deposits decreased by 11.5% and time deposits fell by 6.9% since year-end 2024[16](index=16&type=chunk)[18](index=18&type=chunk) Loan Portfolio Composition Change (YTD % Change) | Loan Category | YTD % Change | | :--- | :--- | | Construction | 17.4% | | Commercial Business | 8.6% | | Commercial Real Estate | (5.1)% | | Residential Real Estate | (18.2)% | - The Bank's regulatory capital ratios remain well above 'well capitalized' levels, with a **total risk-based capital ratio of 13.28%** and a **common-equity tier 1 capital ratio of 12.20%**[19](index=19&type=chunk) - The company **repurchased 14,626 shares** at a weighted average price of $28.86 per share during the second quarter[19](index=19&type=chunk) [Reconciliation of GAAP to Non-GAAP Measures](index=9&type=section&id=Reconciliation_of_GAAP_to_Non-GAAP_Measures) This section provides detailed reconciliations for non-GAAP financial measures, including tangible book value and the net interest margin on a fully tax-equivalent basis [Tangible Book Value Reconciliation](index=9&type=section&id=Tangible_Book_Value_Reconciliation) The company's tangible common equity ratio and fully diluted tangible book value per common share both increased during Q2 2025 Tangible Book Value per Share Calculation | Metric | June 30, 2025 | March 31, 2025 | | :--- | :--- | :--- | | Tangible common shareholders' equity (in thousands) | $280,701 | $272,625 | | Common shares issued and outstanding | 7,873,387 | 7,888,013 | | **Fully Diluted Tangible Book Value per Common Share** | **$35.65** | **$34.56** | [Net Interest Margin (NIM) Analysis](index=11&type=section&id=Net_Interest_Margin_NIM_Analysis) The fully tax-equivalent net interest margin expanded to 3.10% in Q2 2025, driven by a significant year-over-year decrease in the cost of interest-bearing liabilities Quarterly Net Interest Margin Analysis (Q2 2025 vs Q2 2024) | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Yield on Earning Assets | 6.22% | 6.11% | | Cost of Interest-Bearing Liabilities | 3.95% | 4.29% | | **Net Interest Spread** | **2.27%** | **1.82%** | | **Net Interest Margin** | **3.10%** | **2.75%** | - The **cost of total interest-bearing deposits decreased to 3.90%** in Q2 2025 from 4.27% in Q2 2024, with a notable reduction in the cost of time deposits[31](index=31&type=chunk)

Group 1 - Bankwell Financial Group, Inc. announced a strategic partnership with Crux Analytics to enhance its business banking services [1] - The partnership aims to provide Bankwell customers with enhanced personalization and proactive service [1] Group 2 - The article emphasizes the belief in the efficiency of financial markets, suggesting that most stocks reflect their real current value [1] - It highlights that the best investment opportunities often arise from stocks that are less widely followed or do not accurately reflect market opportunities [1]

PART I – FINANCIAL INFORMATION [Item 1. Financial Statements (unaudited)](index=4&type=section&id=Item%201.%20Financial%20Statements%20%28unaudited%29) This section presents the unaudited consolidated financial statements for Q1 2025, encompassing balance sheets, income, and cash flow statements, along with detailed notes [Consolidated Balance Sheets](index=4&type=section&id=Consolidated%20Balance%20Sheets) Total assets decreased to **$3.18 billion** as of March 31, 2025, from **$3.27 billion**, primarily due to reduced loans receivable, with liabilities also declining Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Total Assets** | **$3,183,893** | **$3,268,476** | | Loans receivable, net | $2,611,495 | $2,672,959 | | Total investment securities | $135,963 | $146,099 | | Cash and cash equivalents | $304,928 | $307,524 | | **Total Liabilities** | **$2,908,679** | **$2,997,956** | | Total deposits | $2,750,445 | $2,787,570 | | Advances from the FHLB | $40,000 | $90,000 | | **Total Shareholders' Equity** | **$275,214** | **$270,520** | [Consolidated Statements of Income](index=5&type=section&id=Consolidated%20Statements%20of%20Income) Net income for Q1 2025 significantly increased to **$6.89 million** from **$3.76 million**, driven by higher net interest income and a substantial decrease in the provision for credit losses Consolidated Income Statement Highlights (in thousands, except per share data) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net Interest Income | $22,066 | $21,147 | | Provision for credit losses | $463 | $3,683 | | Noninterest Income | $1,505 | $915 | | Noninterest Expense | $14,141 | $13,297 | | **Net Income** | **$6,888** | **$3,763** | | **Diluted EPS** | **$0.87** | **$0.48** | [Notes to Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) This section provides detailed explanations of accounting policies and financial data, covering operations, credit risk, ACL methodology, and portfolio composition - The company operates as a single reportable segment, with the CEO as the Chief Operating Decision Maker (CODM), assessing all activities as a single unit[19](index=19&type=chunk)[20](index=20&type=chunk) - The company has a significant concentration of credit risk in commercial real estate loans located in Connecticut and the New York metro area[22](index=22&type=chunk) - The Allowance for Credit Losses (ACL) is calculated using a third-party software model, which is calibrated using a "peer scalar" to better reflect the Company's specific loan portfolio characteristics and regional concentration in the Northeast[25](index=25&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=47&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management analyzes Q1 2025 financial performance, noting increased net income, decreased total assets, and improved asset quality, while maintaining strong capital and liquidity - Revenues (net interest income plus noninterest income) for Q1 2025 were **$23.6 million**, up from **$22.1 million** in Q1 2024, driven by decreased interest expense and increased fee income[177](index=177&type=chunk) - The provision for credit losses was significantly lower at **$0.5 million** for Q1 2025 compared to **$3.7 million** for Q1 2024[189](index=189&type=chunk) - Total assets decreased by **$84.6 million (2.6%)** to **$3.2 billion** at March 31, 2025, compared to year-end 2024, while gross loans decreased by **$61.0 million (2.3%)**[194](index=194&type=chunk) - Nonperforming assets decreased to **$26.4 million (0.83% of total assets)** at March 31, 2025, from **$61.6 million (1.88% of total assets)** at December 31, 2024, primarily due to the sale of a **$27.1 million** nonperforming commercial real estate loan[210](index=210&type=chunk) [Results of Operations](index=48&type=section&id=Results%20of%20Operations) Net income for Q1 2025 increased to **$6.9 million**, primarily due to higher net interest income and a significant reduction in the provision for credit losses, despite increased noninterest expenses Net Interest Income Analysis (Q1 2025 vs Q1 2024) | Component | Change | Reason | | :--- | :--- | :--- | | **Net Interest Income** | **+$1.0M** | Increased loan yields and lower deposit interest expense | | Interest Income | +$0.3M | Higher overall loan yields | | Interest Expense | -$0.7M | Decrease in rates on interest-bearing deposits | Noninterest Income and Expense Changes (Q1 2025 vs Q1 2024, in thousands) | Category | Q1 2025 | Q1 2024 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | **Noninterest Income** | **$1,505** | **$915** | **$590** | **64.5%** | | Service charges and fees | $602 | $304 | $298 | 98.0% | | **Noninterest Expense** | **$14,141** | **$13,297** | **$844** | **6.3%** | | Salaries and employee benefits | $7,052 | $6,291 | $761 | 12.1% | | Professional services | $1,529 | $1,065 | $464 | 43.6% | [Financial Condition](index=51&type=section&id=Financial%20Condition) Total assets decreased to **$3.2 billion** as of March 31, 2025, with a **2.3%** reduction in the loan portfolio, while asset quality improved and nonaccrual loans dropped significantly Loan Portfolio Composition (in thousands) | Loan Type | March 31, 2025 | Dec 31, 2024 | Change | | :--- | :--- | :--- | :--- | | Commercial Real Estate | $1,810,923 | $1,899,134 | ($88,211) | | Construction | $188,339 | $173,555 | $14,784 | | Commercial Business | $529,000 | $515,125 | $13,875 | | **Total Loans** | **$2,644,903** | **$2,705,888** | **($60,985)** | Asset Quality Metrics | Metric | March 31, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Nonperforming assets to total assets | 0.83% | 1.88% | | Nonaccrual loans to total gross loans | 1.00% | 1.97% | | ACL-Loans as a % of total loans | 1.11% | 1.07% | - The commercial real estate portfolio includes **$160.4 million** in office loans (**8.9% of total loans**) and **$253.6 million** in multifamily loans (**9.6% of total loans**), with **96.6%** of the office portfolio pass-rated[201](index=201&type=chunk) [Liquidity and Capital Resources](index=58&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains strong liquidity, primarily from deposits and FHLB access, and both the Bank and Company exceed all regulatory capital requirements to be considered 'well-capitalized' - As of March 31, 2025, the Bank had immediate availability to borrow an additional **$373.1 million** from the FHLB[224](index=224&type=chunk) Bank Capital Ratios (as of March 31, 2025) | Ratio | Actual | Well-Capitalized Minimum | | :--- | :--- | :--- | | Common Equity Tier 1 Capital Ratio | 12.10% | 6.50% | | Tier 1 Capital Ratio | 12.10% | 8.00% | | Total Capital Ratio | 13.21% | 10.00% | | Tier 1 Leverage Ratio | 10.14% | 5.00% | [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=61&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Interest rate risk is the company's primary market risk, with inflation affecting operating costs but interest rates having a more significant impact on performance - The company's primary market risk is interest rate risk, which is managed through asset/liability strategies[240](index=240&type=chunk) - Inflation affects the company's operating costs and the value of its monetary assets and liabilities, but interest rates are considered to have a more significant impact on performance[242](index=242&type=chunk) [Item 4. Controls and Procedures](index=61&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded disclosure controls and procedures were effective as of March 31, 2025, with no material changes in internal control over financial reporting during the quarter - The CEO and CFO concluded that the company's disclosure controls and procedures are effective as of the end of the reporting period[243](index=243&type=chunk) - No changes in internal control over financial reporting occurred during the quarter that materially affected, or are reasonably likely to affect, these controls[244](index=244&type=chunk) PART II – OTHER INFORMATION [Item 1. Legal Proceedings](index=62&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in various legal proceedings, but management anticipates no material loss from pending lawsuits - In the opinion of management, no material loss is expected from any pending lawsuits[245](index=245&type=chunk) [Item 1A. Risk Factors](index=62&type=section&id=Item%201A.%20Risk%20Factors) No material changes to the risk factors previously disclosed in the Company's Annual Report on Form 10-K for the year ended December 31, 2024 were reported - No material changes in risk factors were reported for the period[246](index=246&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=62&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company repurchased **29,924** shares of common stock during Q1 2025 under a new plan authorized in October 2024 for up to **250,000** shares Issuer Purchases of Equity Securities (Q1 2025) | Period | Shares Purchased | Average Price Paid | | :--- | :--- | :--- | | Jan 2025 | 0 | $ - | | Feb 2025 | 10,628 | $31.15 | | Mar 2025 | 19,296 | $30.08 | | **Total** | **29,924** | **$30.46** | - A new share repurchase plan for up to **250,000 shares** was authorized on October 23, 2024, terminating the prior plan, with **220,076 shares** remaining available for repurchase under the new plan as of March 31, 2025[249](index=249&type=chunk)[248](index=248&type=chunk) - Subsequent to March 31, 2025, the Company purchased an additional **14,626 shares** at a weighted average price of **$28.86 per share**[251](index=251&type=chunk) [Item 3. Defaults Upon Senior Securities](index=62&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) None reported - None[252](index=252&type=chunk) [Item 4. Mine Safety Disclosures](index=63&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) Not applicable - None[253](index=253&type=chunk) [Item 5. Other Information](index=63&type=section&id=Item%205.%20Other%20Information) None reported - None[254](index=254&type=chunk) [Item 6. Exhibits](index=63&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including CEO and CFO certifications and financial statements formatted in Inline XBRL - Exhibits filed include CEO and CFO certifications (**31.1, 31.2, 32**) and financial data in Inline XBRL format (**101, 104**)[255](index=255&type=chunk)

Financial Performance - Fully diluted EPS reached $0.87, an increase of 81% compared to the previous year's quarter, driven by improved net interest margin and lower provision expense[9] - PPNR increased by 11% compared to the last quarter, reaching $9.4 million, or $1.22 per share[9] - Net Interest Income was $22.1 million, benefiting from a 12 bps decrease in deposit costs compared to the last quarter[9] - Non-interest income increased by 56% compared to the last quarter, driven by $442 thousand of SBA gain-on-sale in Q1[9] Balance Sheet & Capital - The NPA ratio decreased by 105 basis points to 0.83% due to dispositions of $27.1 million in CRE Multifamily NPL and $8.3 million in OREO assets[8] - Brokered deposits decreased by $81 million compared to the last quarter, while core deposits increased by $43 million, including $28 million growth in non-interest bearing deposits[8] - Tangible book value increased by $0.47 compared to the last quarter and $0.99 compared to the previous year's quarter, reaching $34.56[9] - Consolidated CET1 ratio was 10.04%, and the Bank Total Capital ratio was 13.22%[9] Loan Portfolio - Loan balances decreased by $61 million compared to the last quarter, negatively impacted by elevated payoffs[9] - Non-performing loans decreased to 1% of total loans[29] - CRE concentration decreased to 362%[27]

Financial Data and Key Metrics Changes - The company reported GAAP fully diluted earnings per share of $0.87, which represents a 135% increase compared to the fourth quarter and an 81% increase year-over-year [6] - Pre-provision net revenue for the first quarter was $9.4 million, or $1.22 per share, an 11% increase from the previous quarter [12] - The net interest margin for the quarter was 281 basis points, a 21 basis point increase from the linked quarter [12] Business Line Data and Key Metrics Changes - SBA originations grew to $10 million in the first quarter, with gain on sale margins exceeding 10% [9] - Noninterest income increased by 56% to $1.5 million, driven largely by SBA gain on sale income [16] - The first quarter provision expense was $463,000, significantly lower than $4.5 million in the prior quarter [18] Market Data and Key Metrics Changes - Core deposits grew by $43 million, including $28 million in noninterest-bearing deposits, while broker deposits declined by $81 million [10] - The company expects low single-digit loan growth for the full year despite a slower first quarter [9] Company Strategy and Development Direction - The company successfully disposed of two nonperforming credits, which reduced nonperforming assets as a percentage of total assets to 83 basis points [7] - The management emphasized the importance of attracting talented professionals and has added two deposit teams in the New York Metro Area [20] - The company plans to continue expanding its net interest margin and reaffirmed its net interest income guidance for the full year 2025 of $93 million to $95 million [16] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the SBA gain on sale activity accelerating in Q2 2025 [9] - The management noted that credit trends were benign and highlighted the company's strong balance sheet and liquidity [19] - The company is cautious about potential changes in the SBA environment that could impact growth [52][54] Other Important Information - The company repurchased 29,924 shares at a weighted average price of $30.46 during the quarter, with 220,000 shares remaining on its authorization [19] - The efficiency ratio for the quarter was 59.9%, with expectations for improvement as net interest margin expands [18] Q&A Session Summary Question: Update on new teams and their focus - The focus of the new teams is primarily on deposits, with some loans mixed in, and both teams have prior books over $100 million [26] Question: Update on loan pipeline and growth outlook - The company still expects low single-digit growth, with a robust pipeline despite some unexpected payoffs in Q1 [30][31] Question: Core loan yield for the quarter - The core loan yield for the quarter was approximately 6.40%, reflecting a 10 basis point expansion over the fourth quarter [38] Question: Thoughts on interest-bearing costs and margin - Timing issues affected the interest-bearing costs, with some callable brokered CDs called in Q1 leading to a one-time drag [41][42] Question: Expectations for SBA originations and fee income - Originations were better than expected, with the strongest quarter anticipated in Q4 2025 [50] Question: Share repurchase strategy - The company aims to balance share repurchases with the need to build consolidated CET1 capital, currently at 11% [72]

Financial Data and Key Metrics Changes - The company reported GAAP fully diluted earnings per share of $0.87, which represents a 135% increase compared to the fourth quarter and an 81% increase year-over-year [5] - Pre-provision net revenue for the first quarter was $9,400,000, or $1.22 per share, reflecting an 11% increase from the previous quarter [9] - The net interest margin for the quarter was 281 basis points, a 21 basis point increase from the linked quarter [9] Business Line Data and Key Metrics Changes - SBA originations grew during the first quarter, with gain on sale margins exceeding 10% [6] - Non-interest income increased by 56% compared to the linked quarter, driven largely by $424,000 of SBA gain on sale income [11] - The efficiency ratio for the quarter was 59.9%, an increase over the prior quarter, but expected to improve as net interest margin expands [12] Market Data and Key Metrics Changes - The company experienced elevated payoff activity of $200,000,000, which offset strong origination activity of $130,000,000 funded during the first quarter [6] - Core deposits grew by $43,000,000, including $28,000,000 in non-interest bearing deposits [7] - Brokered deposits declined by $81,000,000 relative to the fourth quarter, with a total reduction of $207,000,000 over the last twelve months [7] Company Strategy and Development Direction - The company is focused on expanding its SBA business and expects continued growth in SBA gain on sale activity throughout 2025 [6][11] - The addition of new deposit teams in the New York Metro Area is aimed at enhancing customer acquisition and deposit growth [14] - The company plans to selectively add professionals to achieve strategic goals, particularly in technology and banking [15] Management's Comments on Operating Environment and Future Outlook - Management remains optimistic about low single-digit loan growth for the full year despite a slower start [6][22] - The company anticipates continued margin expansion as maturing term deposits reprice to lower current rates [9][10] - Management expressed confidence in the company's ability to navigate changes in the SBA landscape while maintaining growth [37] Other Important Information - The company disposed of two nonperforming credits, which significantly reduced nonperforming assets as a percentage of total assets to 83 basis points [5] - The balance sheet remains well-capitalized and liquid, with total assets of $3,200,000,000 [13] - The company repurchased 29,924 shares at a weighted average price of $30.46 during the quarter [13] Q&A Session Summary Question: Update on new teams and their focus - The new teams are primarily focused on deposits, with both teams having books of business over $100,000,000 [19][20] Question: Loan pipeline and growth outlook - The company still expects low single-digit growth, with a robust pipeline despite some unexpected payoffs in the first quarter [22][23] Question: Core loan yield and margin expectations - The core loan yield for the quarter was approximately $6.40, with expectations for continued margin expansion [27][29] Question: SBA gain on sale and future expectations - Originations were better than expected, with the strongest quarter anticipated in Q4 [35] Question: Professional fees and expense outlook - Some professional fees are one-time investments that may shift into employee expenses, but elevated levels are not expected to continue [41] Question: Updates on remaining nonperforming assets - No material updates on the remaining loans, but management is optimistic about their status [45] Question: Share repurchase strategy - The company aims to balance share repurchases with the need to grow consolidated CET1 capital [52]