Bankwell Financial Group(US:BWFG)2021-11-07 16:00Financial Performance - For the three months ended September 30, 2021, net interest income was $17.7 million, an increase of $4.1 million or 30.2% compared to the same period in 2020[193]. - Noninterest income for the three months ended September 30, 2021 increased by $0.8 million to $1.4 million compared to the same period in 2020[194]. - Net income available to common shareholders for the three months ended September 30, 2021 was $6.9 million, or $0.87 per diluted share, compared to $3.0 million, or $0.38 per diluted share for the same period in 2020[196]. - The return on average stockholders' equity for the three months ended September 30, 2021 was 14.09%, up from 6.87% for the same period in 2020[197]. - The net interest margin increased by 72 basis points to 3.39% for the three months ended September 30, 2021 compared to the same period in 2020[203]. - Interest expense for the three months ended September 30, 2021 decreased by $2.4 million, or 45.6%, compared to the same period in 2020[202]. - FTE net interest income for the three months ended September 30, 2021 was $17.8 million, compared to $13.7 million for the same period in 2020[199]. - The increase in net interest income for the nine months ended September 30, 2021 was $8.4 million, or 20.8% compared to the same period in 2020[193]. - Total noninterest income for the nine months ended September 30, 2021 was $4.8 million, an increase of 113.5% compared to the same period in 2020[217]. Asset and Liability Management - Total assets increased to $2,226,890 thousand in September 2021, up from $2,178,983 thousand in September 2020, representing a growth of 2.2%[206]. - Total loans reached $1,777,557 thousand with a net interest income of $17,775 thousand, resulting in a net interest margin of 3.39% for the three months ended September 30, 2021[206]. - Interest-bearing liabilities totaled $1,640,042 thousand, with a net interest income of $2,890 thousand, reflecting a decrease in the interest rate to 0.70%[206]. - The total interest-bearing deposits increased to $1,567,082 thousand, with an interest expense of $2,387 thousand, resulting in an average interest rate of 0.60%[206]. - The company reported a total shareholders' equity of $192,993 thousand as of September 30, 2021, up from $173,162 thousand in the previous year[206]. - The total liabilities increased to $2,033,897 thousand, reflecting a growth in noninterest-bearing deposits to $341,303 thousand[206]. - Total deposits increased to $1.9 billion at September 30, 2021, compared to $1.8 billion at December 31, 2020[230]. - The carrying value of the investment securities portfolio was $105.9 million, representing 4.8% of total assets as of September 30, 2021, compared to 4.7% at December 31, 2020[247]. - The net unrealized gain on the investment portfolio decreased to $5.0 million as of September 30, 2021, down from $7.5 million at December 31, 2020[248]. - Total advances from the Federal Home Loan Bank decreased by $95.0 million, or 54.3%, to $80.0 million as of September 30, 2021[251]. Loan and Credit Quality - Provision for loan losses decreased to $0.1 million for the three months ended September 30, 2021 compared to $0.7 million for the same period in 2020[214]. - Nonperforming assets totaled $28.9 million, representing 1.30% of total assets at September 30, 2021, down from $33.4 million and 1.48% at December 31, 2020[238]. - The allowance for loan losses was $16.8 million, or 0.92% of total gross loans, at September 30, 2021, compared to $21.0 million, or 1.29%, at December 31, 2020[243]. - Total nonaccrual loans decreased to $28.9 million at September 30, 2021, from $33.4 million at December 31, 2020[238]. - The company actively manages asset quality through disciplined underwriting and portfolio monitoring[236]. Operational Expenses - Noninterest expense increased by $0.6 million to $10.4 million for the three months ended September 30, 2021 compared to the same period in 2020, primarily due to occupancy and equipment expenses[220]. - Salaries and employee benefits decreased by 9.7% to $4.8 million for the three months ended September 30, 2021 compared to the same period in 2020[221]. - FDIC insurance expense increased by 69.3% to $0.3 million for the three months ended September 30, 2021 compared to the same period in 2020[221]. - Data processing expense increased by $0.4 million to $2.0 million for the nine months ended September 30, 2021 compared to the same period in 2020, due to costs associated with a new online banking system[225]. Market and Economic Conditions - The impact of COVID-19 continues to create uncertainty regarding future business operations and economic conditions[190]. - Inflation generally increases the costs of funds and operating overhead, which may adversely affect liquidity, earnings, and shareholders' equity[273]. - The company acknowledges that deposit balances may shift into higher yielding alternatives as market rates change, impacting the overall interest rate risk[268]. Risk Management - Interest rate risk management is identified as the primary market risk for the company, with ongoing discussions on asset/liability management strategies[270]. - The estimated percentage change in net interest income at risk for a 200 basis point increase in rates was -3.40% as of September 30, 2021[265]. - The estimated percentage change in Economic Value of Equity (EVE) at risk shows a decrease of (25.20)% under a -100 basis points scenario as of September 30, 2021, compared to (47.30)% as of December 31, 2020[268]. - In a +100 basis points scenario, the EVE is projected to increase by 2.40% as of September 30, 2021, up from 9.30% as of December 31, 2020[268]. - The company has modeled increased costs of deposits in rising rate scenarios, indicating proactive risk management[268]. - The static balance sheet assumption does not reflect future growth expectations, which depend on the business environment and customer behavior[269]. - The company remains well-capitalized despite the significant change in EVE under the -100 basis points scenario, indicating resilience in the current interest rate environment[268].