Bankwell Financial Group(BWFG) - 2024 Q2 - Quarterly Report

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]