Financial Performance - For the three months ended September 30, 2024, net interest income was $20.7 million, a decrease of $2.0 million or 8.7% compared to the same period in 2023[209]. - Net income available to common shareholders for the three months ended September 30, 2024 was $1.9 million, or $0.24 per diluted share, down from $9.8 million, or $1.25 per diluted share in 2023[210]. - Returns on average shareholders' equity for the three months ended September 30, 2024 were 2.83%, significantly lower than 15.19% for the same period in 2023[211]. - FTE net interest income for the nine months ended September 30, 2024 was $63.3 million, down from $72.4 million in 2023, reflecting a decrease of 12.7%[213]. - Noninterest income for the three months ended September 30, 2024, increased by $370 thousand to $1,156 million compared to $786 million in the same period of 2023[226]. - Noninterest income decreased by $959 thousand to $2,754 million for the nine months ended September 30, 2024, compared to $3,713 million in the same period of 2023[227]. Interest and Loan Metrics - Interest expense for the three months ended September 30, 2024 increased by $1.9 million compared to the same period in 2023, driven by higher rates on interest-bearing deposits[215]. - Total loans averaged $2.66 billion for the three months ended September 30, 2024, with a yield of 6.40%[217]. - The interest rate spread for the three months ended September 30, 2024 was 1.83%, down from 2.04% in the same period in 2023[217]. - Total loans averaged $2,676,449 million with a yield of 6.38% for the nine months ended September 30, 2024, compared to $2,760,643 million and a yield of 6.02% for the same period in 2023[1]. - The interest rate spread for the nine months ended September 30, 2024, was 1.83%, down from 2.31% in the same period of 2023[1]. Asset and Liability Management - Total assets as of September 30, 2024 were $3.16 billion, a decrease from $3.27 billion as of September 30, 2023[217]. - Total assets decreased to $3,187,377 million as of September 30, 2024, from $3,242,099 million a year earlier[1]. - Total interest-bearing liabilities averaged $2,517,284 million with an interest expense of $81,068 million for the nine months ended September 30, 2024, compared to $2,578,855 million and $66,837 million in the same period of 2023[1]. - Total deposits decreased by $48.6 million or 1.8% to $2.7 billion as of September 30, 2024, compared to December 31, 2023[232]. - Brokered certificates of deposits totaled $730.6 million at September 30, 2024, down from $860.5 million at December 31, 2023[260]. - FDIC insured deposits were $2.0 billion, representing 75% of total deposits as of September 30, 2024[260]. Credit Quality and Loss Provisions - Provision for credit losses increased to $6.3 million for the three months ended September 30, 2024, compared to a credit of $1.6 million for the same period in 2023[224]. - Nonperforming assets totaled $65.5 million, representing 2.07% of total assets, an increase from $49.2 million and 1.53% at December 31, 2023[246]. - Nonaccrual loans reached $65.5 million at September 30, 2024, compared to $49.2 million at December 31, 2023, primarily due to a $27.1 million commercial real estate multi-family loan placed on nonaccrual[246]. - The Allowance for Credit Losses (ACL) on loans was $27.8 million, or 1.06% of total gross loans, as of September 30, 2024, compared to $27.9 million, or 1.03% at December 31, 2023[253]. - The allocation of ACL-Loans at September 30, 2024, included $21,978 thousand for commercial real estate, representing 79.19% of total ACL-Loans[254]. Strategic Initiatives and Market Position - The company aims for organic growth and strategic acquisitions to enhance its market position[206]. - The company actively manages asset quality through disciplined underwriting and portfolio monitoring, with a focus on early problem recognition[243]. - The Directors Loan Committee oversees credit risk management, ensuring adherence to prudent underwriting standards[243]. Economic and Regulatory Environment - The Bank's Common Equity Tier 1 capital ratio was 11.80% as of September 30, 2024, exceeding the regulatory minimum requirements[268]. - The estimated percentage change in net interest income at risk for a +200 basis point shift in rates was -2.20% as of September 30, 2024[275]. - The economic value of equity at risk showed a -10.80% change for a +300 basis point shift in rates as of September 30, 2024[278]. - Interest rate risk management is identified as the primary market risk for the company[280]. - Financial statements are prepared in accordance with GAAP, not accounting for inflation's impact on purchasing power[281]. - Inflation increases costs of funds and operating overhead, significantly affecting financial institutions compared to industrial companies[282]. - Rising inflation and interest rates generally decrease the market value of investments and loans, adversely affecting liquidity and earnings[282].

Financial Data and Key Metrics Changes - The company reported GAAP fully diluted earnings per share (EPS) of $0.24, negatively impacted by an $8.2 million charge-off against an office loan, which reduced the EPS by approximately $0.79 [6][18] - Pre-provision net revenue (PPNR) was $9 million, down slightly quarter-over-quarter, representing 113 basis points of PPNR return on average assets [14] - Reported net interest margin (NIM) for the third quarter was 272 basis points, a 3 basis point reduction relative to the linked quarter [14] Business Line Data and Key Metrics Changes - The office portfolio exposure was reduced to $166 million, approximately 6% of the total portfolio, with the majority having credit enhancements [11] - Non-interest income was $1.2 million, benefiting slightly from higher SBA gain on sale revenue and improved trends in service charges [16] - The company anticipates $500 million in loans to reprice or mature over the next 12 months, which could benefit NIM by an additional 15 to 20 basis points [15] Market Data and Key Metrics Changes - The company has made significant strides in improving the quality and diversity of its deposit base, reducing broker deposits by $168 million since the beginning of the year [8] - The average deposit for the Bankwell Direct pilot was $60,000, costing just 11 basis points in marketing costs [41] Company Strategy and Development Direction - The company aims to embrace innovation and foster an entrepreneurial culture, focusing on technology and talent as keys to differentiation [20][22] - Strategic initiatives include the launch of Bankwell Direct, a national consumer digital bank, and a small business growth loan program to support local businesses [41][42] - The company is focused on providing an elite customer experience and has initiated a new customer experience program [25] Management's Comments on Operating Environment and Future Outlook - Management remains optimistic about future earnings growth due to balance sheet positioning and potential further rate cuts by the Fed [20] - The company expects meaningful margin expansion into 2025 as short-term rates move lower, largely due to significant CD maturities [49] - Management emphasized the importance of maintaining a stable asset base while improving profitability and reducing broker deposits [48] Other Important Information - The company repurchased 9,670 shares of Bankwell stock at an average price of $23.86 during the third quarter [18] - The board has authorized a new 250,000 share repurchase program [18] Q&A Session Summary Question: What are the average rates for loans repricing over the next year? - The average rates for loans repricing are approximately in the mid-6s [53] Question: What is the spot margin for September? - The spot margin for September is skewed due to unusual items, but the estimated NIM for the fourth quarter is around 2.70 [54] Question: What are the expectations for loan growth from new initiatives? - The company expects relatively flat balance sheet growth, with modest growth not necessarily attributable to SBA loans [61] Question: What is the long-term target for the CET1 ratio? - The long-term target for the consolidated CET1 position is to be north of 11% by the end of 2026 [65] Question: What is the expected tax rate going forward? - The company is striving for a tax rate of around 24.5% under a more normal income profile [79]

Financial Performance - Bankwell Financial Group reported GAAP net income of $1.9 million, or $0.24 per share for Q3 2024, up from $1.1 million, or $0.14 per share in Q2 2024[1]. - Total revenues for Q3 2024 were $21.9 million, down from $23.5 million in Q3 2023, primarily due to increased interest expense on deposits[10]. - Net income for Q3 2024 was $1,926,000, compared to $1,118,000 in Q2 2024, indicating a growth of 72.5%[33]. - Basic earnings per share for Q3 2024 was $0.24, up from $0.14 in Q2 2024, representing a growth of 71.4%[33]. Revenue and Income Analysis - Pre-tax, pre-provision net revenue (PPNR) for Q3 2024 was $9.0 million, a decrease of 7% from $9.7 million in Q2 2024[2]. - Total interest and dividend income for Q3 2024 was $48,191,000, an increase from $47,679,000 in Q2 2024, representing a growth of 1.1%[33]. - Net interest income after provision for credit losses was $14,421,000 for Q3 2024, compared to $13,036,000 in Q2 2024, reflecting an increase of 10.6%[33]. - Noninterest income totaled $1,156,000 in Q3 2024, up from $683,000 in Q2 2024, marking a significant increase of 69.2%[33]. Loan and Asset Management - The allowance for credit losses on loans was $27.8 million as of September 30, 2024, representing 1.06% of total loans[13]. - Total loans decreased to $2.623 billion at September 30, 2024, a decline of $33.98 million, or 1.3%, compared to the previous quarter[19]. - Nonperforming loans as a percentage of total loans increased to 2.50% at September 30, 2024, from 2.12% at June 30, 2024[17]. - Total past due loans to total loans ratio increased to 2.48% at September 30, 2024, compared to 0.84% at June 30, 2024[17]. Deposit and Funding Trends - Brokered deposits decreased by $24.2 million in Q3 2024, totaling a decline of $168.5 million since December 31, 2023[5]. - Deposits totaled $2.7 billion at September 30, 2024, a decrease of $48.6 million, or 1.8%, compared to December 31, 2023, with brokered deposits decreasing by $168.5 million, or 17.7%[18]. - Interest expense on deposits rose to $25,579,000 in Q3 2024 from $24,677,000 in Q2 2024, an increase of 3.6%[33]. Capital and Equity Position - Shareholders' equity increased to $267.9 million as of September 30, 2024, up by $2.2 million compared to December 31, 2023, primarily due to net income of $6.8 million for the nine months ended September 30, 2024[20]. - The capital position remained stable with total risk-based capital at 12.83% and common-equity tier 1 capital at 11.80% as of September 30, 2024[21]. - The Company announced a new share repurchase plan authorizing the buyback of up to 250,000 shares of common stock[3]. Expense Management - Total noninterest expense increased to $12,865,000 in Q3 2024 from $12,245,000 in Q2 2024, which is an increase of 5.1%[33]. - Provision for credit losses was $6,296,000 in Q3 2024, down from $8,183,000 in Q2 2024, indicating a decrease of 23.0%[33]. Asset Overview - Assets totaled $3.2 billion at September 30, 2024, a decrease of $54.4 million, or 1.7%, compared to December 31, 2023, while gross loans decreased by $95.4 million, or 3.5%[18]. - The total investment securities increased to $145,900 thousand, up from $138,000 thousand, representing a growth of 5.2%[30]. - The total earning assets for the quarter were $3,070,362,000, with a yield of 6.16%, up from $3,188,090,000 and a yield of 5.93% in the previous year[37].

Financial Performance - Revenues for Q2 2024 were $21.9 million, a decrease of 13.8% from $25.4 million in Q2 2023[189] - Net income available to common shareholders for Q2 2024 was $1.1 million, or $0.14 per diluted share, down from $8.0 million, or $1.02 per diluted share in Q2 2023[190] - Return on average shareholders' equity for Q2 2024 was 1.65%, significantly lower than 12.91% in Q2 2023[191] - FTE net interest income for Q2 2024 was $21.3 million, down from $24.1 million in Q2 2023[193] - Noninterest income for the three months ended June 30, 2024, totaled $683 thousand, a decrease of 51.2% compared to $1,401 thousand in 2023[204] - Noninterest income decreased by $1.3 million or 45.4% for the six months ended June 30, 2024, primarily due to lower gains from loan sales[205] - Total noninterest expense decreased by $0.4 million or 3.1% for the three months ended June 30, 2024, mainly driven by a reduction in FDIC insurance costs[207] Interest Income and Expenses - FTE interest income for Q2 2024 increased by $1.1 million, or 2.3%, to $47.7 million compared to Q2 2023[193] - Interest expense for Q2 2024 increased by $3.9 million compared to Q2 2023, driven by higher rates on interest-bearing deposits[194] - The interest rate spread for Q2 2024 was 1.82%, down from 2.36% in Q2 2023[196] - The interest rate spread for the six months ended June 30, 2024, was 1.83%, down from 2.49% in the same period in 2023[198] - The total change in interest and dividend income for the three months ended June 30, 2024, was $1,091 thousand, compared to $5,177 thousand in 2023[200] Loan and Asset Management - Total loans averaged $2.675 billion in Q2 2024, with a yield of 6.37%, compared to $2.786 billion and a yield of 6.05% in Q2 2023[196] - Total loans for the six months ended June 30, 2024, were $2,682,938 thousand, with a net interest income of $42,484 thousand, compared to $2,745,677 thousand and $49,636 thousand for the same period in 2023[198] - The total assets as of June 30, 2024, were $3,200,825 thousand, compared to $3,242,099 thousand in 2023[198] - Total loans decreased by $61.4 million to $2.7 billion as of June 30, 2024, compared to December 31, 2023[212] - The average balance of commercial real estate loans was $1,911,896 thousand, with an interest income of $56,295 thousand, yielding 5.82% for the six months ended June 30, 2024[198] - The average balance of consumer loans increased to $41,150 thousand, generating an interest income of $1,442 thousand, yielding 7.05% for the six months ended June 30, 2024[198] Credit Quality and Loss Provisions - The provision for credit losses for the three months ended June 30, 2024, was $8.2 million, an increase from $2.6 million in the same period in 2023[202] - The allowance for credit losses on loans (ACL-Loans) was $36.1 million, representing 1.36% of total gross loans, up from 1.03% at December 31, 2023[226] - The provision for credit losses on loans was $8.37 million for the period, compared to $2.68 million in the previous period[226] - Nonaccrual loans totaled $56.2 million as of June 30, 2024, an increase from $49.2 million at December 31, 2023, primarily due to a $13.9 million commercial real estate loan[221] - The total past due loans to total gross loans ratio was 0.84% as of June 30, 2024, compared to 0.78% at December 31, 2023[221] Capital and Equity - Shareholders' equity increased by $1.2 million to $267.0 million as of June 30, 2024, primarily due to net income of $4.9 million for the six months ended June 30, 2024[211] - The Bank's Common Equity Tier 1 capital ratio was 11.67% as of June 30, 2024, exceeding the regulatory minimum requirements[239] Deposits and Funding - Total deposits decreased by $74.4 million to $2.66 billion as of June 30, 2024, compared to $2.74 billion at December 31, 2023[230] - FDIC insured deposits amounted to $1.94 billion, representing 73% of total deposits as of June 30, 2024[231] - Time deposits of $100 thousand or more totaled $1.16 billion as of June 30, 2024, down from $1.20 billion at December 31, 2023[232] - Brokered certificates of deposits totaled $755.5 million as of June 30, 2024, down from $860.5 million at December 31, 2023[231] Risk Management and Economic Factors - Interest rate risk management is identified as the primary market risk for the company[249] - The company anticipates that inflation and rising interest rates may decrease the market value of investments and loans held[251] - Inflation affects costs related to salaries, benefits, and occupancy expenses, which can adversely impact liquidity and earnings[251] - The company’s management discusses interest rate risk in detail in the financial condition and results of operations section[249] - The sensitivity of core deposits to interest rate fluctuations is a significant factor in income simulation results[248] - The economic value of equity at risk is estimated to decline by 7.50% with a 200 basis point increase in rates as of June 30, 2024[247] - Estimated net interest income at risk for a 200 basis point increase in rates is projected to decline by 4.00% as of June 30, 2024[244] Strategic Goals - The company aims for organic growth and strategic acquisitions to enhance its market position[186] - The company actively manages asset quality through disciplined underwriting and portfolio monitoring, with the Board of Directors overseeing credit risk management[219]

Financial Performance - Bankwell Financial Group reported GAAP net income of $1.1 million, or $0.14 per share for Q2 2024, a decrease from $8.0 million, or $1.02 per share in Q2 2023[1]. - Total revenues for Q2 2024 were $21.9 million, compared to $25.4 million in Q2 2023, primarily due to increased interest expenses and lower gains from loan sales[14]. - The company reported a net income of $1,118 million for the quarter ended June 30, 2024, a significant drop from $3,763 million in the previous quarter[59]. - Net income for the quarter ended June 30, 2024, was $1,118 million, a decrease from $7,983 million in the same quarter last year[71]. - Basic earnings per common share for the quarter ended June 30, 2024, was $0.14, down from $0.48 in the previous quarter, indicating lower earnings per share[59]. Revenue and Income Analysis - Pre-tax, pre-provision net revenue (PPNR) was $9.7 million for Q2 2024, down from $12.8 million in Q2 2023[1]. - Total noninterest income for the quarter ended June 30, 2024, was $683 million, a decrease of 25.4% compared to the previous quarter and a 51.2% decrease year-over-year[53]. - For the six months ended June 30, 2024, total noninterest income was $1.598 billion, down 45.4% from $2.927 billion in the same period last year[53]. - Noninterest income decreased by $0.7 million for the quarter ended June 30, 2024, compared to the same quarter in 2023, primarily due to lower gains from fewer SBA loan sales[73]. Loan and Credit Quality - The provision for credit losses was $8.2 million for Q2 2024, with $6.6 million related to a specific reserve on an $8.7 million commercial business credit[29]. - Nonaccrual loans increased by $7.0 million to $56.2 million as of June 30, 2024, primarily due to a $13.9 million commercial real estate loan[41]. - Nonperforming loans as a percentage of total loans increased to 2.12% as of June 30, 2024, from 1.74% in the previous quarter, signaling potential asset quality concerns[62]. - The company reported total nonaccrual loans of $56,205 million as of June 30, 2024, an increase from $46,543 million in the previous quarter, raising concerns about loan performance[62]. - Provision for credit losses was $8,183 million for the quarter ended June 30, 2024, compared to a credit of $960 million in the same quarter last year[71]. Asset and Liability Management - Total assets decreased to $3.14 billion as of June 30, 2024, down from $3.22 billion at December 31, 2023, representing a decline of 3.5%[37]. - Total gross loans decreased by $61.4 million, or 2.3%, to $2.7 billion compared to December 31, 2023[29]. - Deposits totaled $2.7 billion, a decrease of $74.4 million, or 2.7%, compared to December 31, 2023[34]. - Total loans amounted to $2.66 billion, a decrease of $61.4 million, or 2.3%, compared to December 31, 2023[42]. - Total deposits were $2.66 billion at June 30, 2024, a decrease of $74.4 million, or 2.7%, from December 31, 2023[43]. Cost Management and Efficiency - Noninterest expense for the quarter ended June 30, 2024, decreased by $0.4 million to $12.2 million compared to the same quarter in 2023[45]. - Total noninterest expense for the quarter ended June 30, 2024, was $12,245 million, a decrease from $13,297 million in the previous quarter, reflecting cost-cutting measures[59]. - The efficiency ratio improved to 55.9% for the quarter ended June 30, 2024, compared to 60.3% in the previous quarter, indicating better cost management[60]. - The efficiency ratio was adjusted to better reflect operating expenses in relation to core operating revenue, excluding certain one-time items[39]. Dividends and Shareholder Returns - The company declared a cash dividend of $0.20 per share, payable on August 23, 2024[11]. - The dividend payout ratio increased to 142.86% for the quarter ended June 30, 2024, compared to 41.67% in the previous quarter, suggesting a higher distribution of earnings[60]. Future Outlook - The company anticipates continued competitive pressures and economic uncertainties affecting future performance[36].

Emerging growth company ☐ If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨ 2 | --- | --- | |-----------------------------------------------------------------------------------------------------------------------------------------|-------| | | | | PART I – FINANCIAL INFORMATION | | | | | | Item 1. Financial ...

New Canaan, CT – April 24, 2024 – Bankwell Financial Group, Inc. (NASDAQ: BWFG) reported GAAP net income of $3.8 million, or $0.48 per share for the first quarter of 2024, versus $10.4 million, or $1.33 per share, for the same period in 2023. Pre-tax, pre-provision net revenue ("PPNR") was $8.8 million, or $1.14 per share, for the first quarter of 2024, versus $14.4 million, or $1.89 per share for the same period in 2023. Notes Bankwell Financial Group President and CEO, Christopher R. Gruseke: • PPNR was $ ...

Financial Performance - Total assets as of December 31, 2023, were $3,215,482, a decrease from $3,252,449 in 2022[336] - Net interest income for the year ended December 31, 2023, was $94.5 million, a decrease of $0.3 million compared to 2022[347] - The net interest margin decreased by 80 basis points to 2.98% for the year ended December 31, 2023[347] - Total revenue for the year ended December 31, 2023, was $99,310, compared to $97,783 in 2022[336] - Net income for the year ended December 31, 2023, was $36,663, a decrease from $37,429 in 2022[336] - The Bank's net income for the year ended December 31, 2023, was $36.663 million, a decrease of 2.05% from $37.429 million in 2022[501] - The Bank's total other comprehensive income for the year ended December 31, 2023, was $(1.475) million, compared to $8.372 million in 2022[501] Equity and Assets - Total equity increased to $265,752 as of December 31, 2023, compared to $238,469 in 2022[336] - Commitments to extend credit totaled $333.5 million as of December 31, 2023, down from $561.0 million in 2022[506] - The Bank's loan commitments as of December 31, 2023, amounted to $236.878 million, with $169.358 million due in less than one year[507] Risk Management and Strategy - The company aims for organic growth and strategic acquisitions to enhance its market position[335] - The company has a disciplined focus on risk management as part of its operational strategy[335] - The allowance for credit losses is determined using multiple economic scenarios, incorporating variables such as GDP and interest rates[493] - The Bank's liquidity position is monitored daily, with a detailed liquidity funding policy and contingency funding plan in place[503] - The economic value of equity at risk simulation indicates a sensitivity to interest rate changes, with key assumptions subject to periodic review[512] Interest Rates and Economic Impact - The average yield on total earning assets was 5.86% for the year ended December 31, 2023, compared to 4.64% in 2022[349] - The estimated percent change in net interest income at December 31, 2023, under a 100 basis point rate change is 3.60%[482] - The estimated percent change in economic value at December 31, 2023, under a 200 basis point rate change is (9.40)%[483] - Inflation increases costs of funds and operating overhead, impacting financial performance[515] - Interest rates have a significant effect on the performance of financial institutions compared to general inflation levels[515] - Rising interest rates may decrease the market value of investments and loans held[515] - Increased inflation and interest rates can adversely affect liquidity, earnings, and shareholders' equity[515] - Inflation affects costs related to goods, services, salaries, and occupancy expenses[515]

Risk management | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | |-------------------------------------------------------------|-------|-------|-------|--------|-------|-------|-------|-------|-------|-------|-------|--------| | Three Months Ended September 30, 2022 \nBeginning balance | $ | 331 | $ | 11,480 | $ | 95 | $ | 3,802 | $ | 65 | $ | 15,773 | | Charge-offs | | — | | — | | — | | — | | (8) | | (8) | | Recoveries | | — | | — | | — | | 21 | | — | | 21 | | (Credit) provis ...

| --- | --- | --- | --- | --- | --- | --- | |--------------------------------------------------------------------------------------------------------------------------------------------|--------------------------|----------------------------------------------|--------------|-------------------------------------------------------------------|-------|---------| | | Net (Loss) on Sale | Unrealized Gain Available for Securities | Net (Loss) | Unrealized Gain on Interest Rate Swaps \n(In thousands) | | Total | | ...