Bankwell Financial Group(BWFG) - 2019 Q1 - Quarterly Report

Financial Performance - Net income available to common shareholders for Q1 2019 was $5.1 million, or $0.65 per diluted share, compared to $4.6 million, or $0.59 per diluted share in Q1 2018, reflecting an increase of 10.9%[176] - Net interest income for Q1 2019 was $14.3 million, an increase of $0.6 million, or 4.1%, from $13.7 million in Q1 2018[177] - Total noninterest income was $1.3 million for the three months ended March 31, 2019, a decrease of $25, or 1.9%, compared to the same period in 2018[193] - Noninterest expense decreased by $228,000, or 2.5%, to $8.975 million for the three months ended March 31, 2019, compared to $9.203 million in 2018[194] - The provision for loan losses was $0.2 million for the three months ended March 31, 2019, compared to $13,000 for the same period in 2018[190] Interest Income and Expenses - The net interest margin for Q1 2019 was 3.19%, up from 3.15% in Q1 2018, indicating a 4 basis points improvement[179] - Average interest-earning assets increased by $52.0 million, or 3.0%, to $1.8 billion in Q1 2019 compared to Q1 2018[180] - Interest expense for Q1 2019 rose by $2.3 million, or 46.9%, due to higher average balances and increased rates on interest-bearing deposits[181] - The average yield on interest-earning assets increased from 4.28% in Q1 2018 to 4.79% in Q1 2019, a rise of 51 basis points[180] - Total loans averaged $1.6 billion in Q1 2019, with a total interest income of $20.1 million, compared to $17.4 million in Q1 2018[179] Asset and Equity Changes - Total assets increased by $24.1 million, or 1.3%, to $1.9 billion as of March 31, 2019[197] - Total shareholders' equity increased to $176.8 million at March 31, 2019, compared to $174.2 million at December 31, 2018[197] - Tangible book value per share increased to $22.38 at March 31, 2019, from $22.06 at December 31, 2018[197] - Shareholders' equity totaled $176.8 million as of March 31, 2019, an increase of $2.6 million compared to December 31, 2018, driven by net income of $5.1 million[227] Loan and Deposit Information - Total loans decreased slightly to $1.6 billion at March 31, 2019, compared to $1.6 billion at December 31, 2018, due to elevated loan pre-payments[199] - Total deposits increased by $19.1 million to $1.5 billion at March 31, 2019, primarily due to a $35.0 million increase in time deposits[219] - Time deposits increased by 5.7% from $614.7 million at December 31, 2018, to $649.7 million at March 31, 2019[220] - Brokered deposits increased from $91.8 million at December 31, 2018, to $100.9 million at March 31, 2019[219] Nonperforming Assets and Loan Losses - Nonperforming assets totaled $13.2 million, representing 0.70% of total assets at March 31, 2019, down from $14.1 million and 0.75% at December 31, 2018[206] - The allowance for loan losses was $15.4 million, or 0.97% of total loans at March 31, 2019, compared to $15.5 million, or 0.96% at December 31, 2018[206] - The ratio of net charge-offs to average loans was 0.01% for the period, consistent with the previous quarter[212] Capital Ratios and Dividends - As of March 31, 2019, the Bank's Common Equity Tier 1 capital ratio was 12.00%, total capital ratio was 12.94%, and Tier 1 capital to average assets was 10.53%[228] - The minimum capital ratios established by Basel III rules are 4.5% for Common Equity Tier 1, 6.0% for Tier 1 capital, and 8.0% for total capital to risk-weighted assets[229] - A cash dividend of $0.13 per share was declared on January 30, 2019, payable on February 25, 2019[230] Risk Management and Economic Factors - The Bank remains liability sensitive due to more liabilities than assets subject to repricing as market rates change[235] - Inflation generally increases costs and may adversely affect liquidity, earnings, and shareholders' equity for financial institutions[244] - The Bank's interest rate risk management is a primary market risk, with ongoing simulations to assess net interest income and economic value of equity[242] - Key assumptions in simulations include prepayment projections, new business loan rates, and deposit pricing assumptions, which can significantly impact results[233] - The simulation analysis indicates that for a 100 basis point shift, estimated net interest income at risk should not decline by more than 6%[234] - As of March 31, 2019, the estimated percentage change in net interest income at risk for a -100 basis point change was 3.30%[235] - The economic value of equity at risk simulation shows a -100 basis point change results in a 0.90% increase in economic value of equity[239]