Bankwell Financial Group Q4 Earnings Call Highlights

Core Viewpoint - Bankwell Financial Group reported a strong fourth-quarter performance with net income of $9.1 million, driven by net interest margin expansion and a rebound in non-interest income, particularly from the SBA division [4][6][9]. Financial Performance - The company achieved a net interest margin of 3.40%, an increase of 6 basis points from the previous quarter, attributed to a reduction in deposit costs [3][6]. - GAAP net income for Q4 was $9.1 million, or $1.15 per share, which included a one-time tax adjustment of $1.5 million; adjusted operating income was $10.7 million, or $1.36 per share [4][6]. - Non-interest income rose to $3.4 million, a 35% increase from the prior quarter, largely due to $2.2 million in SBA gain-on-sale income [9][10]. Loan Growth and Portfolio Management - The company funded $240 million in loans during Q4, resulting in a 5% annual loan growth, with total funded originations for the year reaching $758 million [5][7]. - Floating-rate loans increased to 38% of the portfolio, up from 23% at the end of 2024, reflecting a strategic shift towards higher-yielding assets [7]. Deposit Repricing and Cost Management - Management indicated that $1.2 billion in time deposits are expected to reprice favorably over the next 12 months, potentially providing an annualized benefit of approximately $4 million [1][6]. - The total deposit cost at the end of 2025 was reported at 3.08%, following a 50 basis point reduction in offered time deposit rates [2][6]. Credit Quality and Capital Position - Non-performing assets decreased to 49 basis points of total assets, down from 56 basis points in the prior quarter, indicating improved credit quality [12]. - The allowance for credit losses was reported at 108 basis points of total loans, with coverage of non-performing loans increasing to 188% [13]. 2026 Outlook - Management provided guidance for 2026, projecting loan growth of 4% to 5%, net interest income between $111 million and $112 million, and non-interest income of approximately $11 million to $12 million [17]. - The company expects to maintain profitability growth alongside investments in personnel and technology, with a headcount increase of over 10% in 2025 [16].