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BANKWELL FINANCIAL GROUP REPORTS RECORD SECOND QUARTER NET INCOME OF $3.8 MILLION OR $0.49 PER SHARE AND DECLARES THIRD QUARTER DIVIDEND

New Canaan, CT – July 26, 2017 – Bankwell Financial Group, Inc. (NASDAQ: BWFG) reported GAAP net income of $3.8 million or $0.49 per share for the second quarter of 2017, versus $2.9 million or $0.38 per share for the same period in 2016.

The Company's Board of Directors declared a $0.07 per share cash dividend, payable August 25, 2017 to shareholders of record on August 15, 2017.

Notes Bankwell Financial Group President and CEO, Christopher R. Gruseke:

"Bankwell has sustained steady momentum in all aspects of our business as we achieved a fourth consecutive quarter of record earnings. Loan demand remains robust, with gross loan fundings of $83 million for the second quarter. Meanwhile, our credit quality continues to be exceptional as nonperforming assets stood at just 0.31% of total assets.

On the deposit front, our investments in our franchise have borne fruit, as evidenced by retail deposit growth of more than 5% quarter over quarter. We have identified several promising locations within our footprint, with one branch application underway and one to two additional branch applications being contemplated.

As always, we remain steadfast in our focus on expense control and our commitment to deliver value to our shareholders. The combined efforts of our dedicated team have produced a year to date annualized ROAA of 0.90% and a year to date annualized ROAE of 10%. I thank all of my colleagues for their commitment to excellence and our loyal customers for choosing to 'Bankwell Instead'."

Second Quarter 2017 Highlights:

 

·	Return on average assets reached 0.88% for the quarter ended June 30, 2017 compared to 0.82% for the quarter ended June 30, 2016.

·	Return on average tangible common equity reached 10.09 % in the second quarter of 2017 compared to 8.74% for the quarter ended June 30, 2016.

·	The tangible book value per common share at June 30, 2017 was $19.89, a 10% increase over June 30, 2016.

·	Tax equivalent net interest margin was 3.32% for the second quarter of 2017.

·	The efficiency ratio was 51.2% for the second quarter of 2017 and 54.7% for the six months ended June 30, 2017.

·	Total gross loans approached $1.5 billion and grew at an annualized rate of 16% during the second quarter of 2017 and 18% for the six months ended June 30, 2017.

·	Total assets approached $1.8 billion and grew at an annualized rate of 20% during the second quarter of 2017 and 16% for the six months ended June 30, 2017.

·	Total deposits exceeded $1.4 billion and grew at an annualized rate of 26% during the second quarter of 2017 and 19% for the six months ended June 30, 2017.

·	The allowance for loan losses was $19.5 million and represents 1.31% of total loans.

·	Nonperforming assets represented 0.31% of total assets as of June 30, 2017.

·	Investment securities totaled $114.6 million and represent 7% of total assets.

Earnings

Net income for the quarter ended June 30, 2017 was $3.8 million, an increase of 30% compared to the quarter ended June 30, 2016. Net income for the six months ended June 30, 2017 was $7.5 million, an increase of 27% compared to the six months ended June 30, 2016. Second quarter earnings included two adjustments that collectively reduced EPS by $0.01. The adjustments related to additional income tax expense resulting from treatment of acquisition related items on prior years' tax returns, which was partially offset by income recognized for the net effect of recording servicing assets and liabilities and related deferred fee income for various loan sales and participations sold for which servicing was retained by the Bank. The additional income tax expense of $0.3 million is reflected in the income tax expense line on the income statement and the additional net servicing income related to prior year loan sales is reflected in interest income in the pre-tax amount of $0.1 million and noninterest income in the pre-tax amount of $0.1 million on the income statement.

Revenues (net interest income plus non-interest income) for the quarter ended June 30, 2017 were $14.6 million, an increase of 15% compared to the quarter ended June 30, 2016. Revenues for the six months ended June 30, 2017 were $28.9 million, an increase of 16% compared to the six months ended June 30, 2016. Net interest income for the quarter ended June 30, 2017 was $13.6 million, an increase of 15% compared to the quarter ended June 30, 2016. Net interest income for the six months ended June 30, 2017 was $26.6 million, an increase of 14% compared to the six months ended June 30, 2016. Our strong net income, revenues and net interest income growth were fueled by continued earning asset growth.

Basic and diluted earnings per share for the quarter ended June 30, 2017 were $0.49 compared to $0.38 basic and diluted for the quarter ended June 30, 2016.

The Company's efficiency ratios for the quarters ended June 30, 2017 and June 30, 2016 were 51.2% and 57.1%, respectively. The Company's efficiency ratios for the six months ended June 30, 2017 and June 30, 2016 were 54.7% and 57.4%, respectively.

Noninterest Income and Expense

Noninterest income increased $145 thousand or 17% to $998 thousand for the three months ended June 30, 2017 compared to the three months ended June 30, 2016. Noninterest income increased $739 thousand or 48% to $2.3 million for the six months ended June 30, 2017 compared to the six months ended June 30, 2016. The increase in noninterest income was primarily driven by income earned from our additional purchases of Bank Owned Life Insurance, an increase in the gains and fees from the sales of loans and rental income earned from the tenants occupying the additional space in the executive headquarters building recently acquired in the fourth quarter of 2016.

Noninterest expense increased $366 thousand or 5% for the three months ended June 30, 2017 compared to the three months ended June 30, 2016. The increase was primarily driven by an increase in professional services due to an increase in fees paid in relation to strategic initiatives.

Noninterest expense increased $1.5 million or 11% for the six months ended June 30, 2017 compared to the six months ended June 30, 2016. The increase was primarily driven by an increase in occupancy and equipment expenses, salaries and employee benefits and professional services. The increase in occupancy and equipment expenses was driven by increases in IT related expenses, one time charges relating to back office consolidation activity and maintenance costs for our recently acquired headquarters building. The increase in salaries and employee benefits was driven by an increase in full time equivalent employees. Average full time equivalent employees totaled 129 at June 30, 2017 compared to 122 at June 30, 2016. The increase in professional services was driven by an increase in fees paid in relation to strategic initiatives.

Financial Condition

Assets approached $1.8 billion at June 30, 2017, an annualized increase of 16% compared to assets of $1.6 billion at December 31, 2016. This increase reflects strong organic loan growth. Total gross loans were $1.5 billion at June 30, 2017, an annualized increase of 18% compared to December 31, 2016, driven by growth in commercial real estate loans of $57.8 million and commercial business loans of $53.4 million. Deposits increased to $1.4 billion, an annualized increase of 19% over December 31, 2016.

Asset Quality

Asset quality remained exceptionally strong at June 30, 2017.  Non-performing assets as a percentage of total assets was 0.31% at June 30, 2017, up from 0.20% at December 31, 2016.  The allowance for loan losses at March 31, 2017 was $19.5 million, representing 1.31% of total loans.

Capital

Shareholders' equity totaled $153.6 million as of June 30, 2017, an increase of $7.7 million compared to December 31, 2016, primarily a result of net income for the six months ended June 30, 2017 of $7.5 million. As of June 30, 2017, the tangible common equity ratio and tangible book value per share were 8.59% and $19.89, respectively.

About Bankwell Financial Group

Bankwell is a commercial bank that serves the banking and lending needs of residents and businesses throughout Fairfield and New Haven Counties, CT.  For more information about this press release, interested parties may contact Christopher R. Gruseke, President and Chief Executive Officer or Penko Ivanov, Executive Vice President and Chief Financial Officer of Bankwell Financial Group at (203) 652-0166.

For more information, visit www.mybankwell.com.

This press release may contain certain forward-looking statements about the Company. Forward-looking statements include statements regarding anticipated future events and can be identified by the fact that they do not relate strictly to historical or current facts. They often include words such as "believe," "expect," "anticipate," "estimate," and "intend" or future or conditional verbs such as "will," "would," "should," "could," or "may." Forward-looking statements, by their nature, are subject to risks and uncertainties. Certain factors that could cause actual results to differ materially from expected results include increased competitive pressures, changes in the interest rate environment, general economic conditions or conditions within the securities markets, legislative and regulatory changes that could adversely affect the business in which the Company and its subsidiaries are engaged and other risks and uncertainties disclosed from time to time in Bankwell's Annual Report on Form 10-K for the year ended December 31, 2016, as updated by other filings with the Securities and Exchange Commission ("SEC"). Bankwell does not have any obligation to update forward-looking statements.

Non-GAAP Financial Measures

In addition to evaluating the Company's financial performance in accordance with U.S. generally accepted accounting principles ("GAAP"), management may evaluate certain non-GAAP financial measures, such as the efficiency ratio, tangible common equity and tangible book value per share. A computation and reconciliation of certain non-GAAP financial measures used for these purposes is contained in the accompanying Reconciliation of GAAP to Non-GAAP Measures table. We believe that providing certain non-GAAP financial measures provides investors with information useful in understanding our financial performance, our performance trends and financial position. For example, the Company believes that the efficiency ratio is useful in the assessment of financial performance, including non-interest expense control. The Company believes that tangible common equity and tangible book value per share is useful to evaluate the relative strength of the Company's capital position. We utilize these measures for internal planning and forecasting purposes. These non-GAAP financial measures should not be considered a substitute for GAAP basis measures and results, and we strongly encourage investors to review our consolidated financial statements in their entirety and not to rely on any single financial measure.

Annualized Data

Certain returns, yields and performance ratios are presented on an "annualized" basis. This is done for analytical and decision-making purposes to better discern underlying performance trends when compared to full-year or year-over year amounts.

 

 

(1)

Efficiency ratio is defined as noninterest expense, less merger and acquisition related expenses, other real estate owned expenses and amortization of intangible assets, divided by our operating revenue, which is equal to net interest income plus non-interest income excluding gains and losses on sales of securities and gains and losses on other real estate owned. In our judgment, the adjustments made to operating revenue allow investors and analysts to better assess our operating expenses in relation to our core operating revenue by removing the volatility that is associated with certain one-time items and other discrete items that are unrelated to our core business.

(2)	Represents Bank ratios. Current period capital ratios are preliminary subject to finalization of the FDIC Call Report.

(3)	Excludes unvested restricted shares of 103,220, 98,176, 96,594 and 152,090 as of June 30, 2017, March 31, 2017, December 31, 2016 and June 30, 2016, respectively.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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