Bankwell Financial Group Reports Record Fourth Quarter and Annual Net Income of $3.3 Million or $0.43 Per Share and $12.4 Million or $1.62 Per Share, Respectively and Declares First Quarter Dividend

Bankwell Financial Group, Inc. (NASDAQ:BWFG) reported GAAP net income of $3.3 million or $0.43 per share for the fourth quarter of 2016, versus $2.6 million or $0.35 per share for the same period in 2015 and GAAP net income of $12.4 million or $1.62 per share for the year ended 2016, versus $9.0 million or $1.21 per share for the year ended 2015.

The Company's Board of Directors declared a $0.07 per share cash dividend, payable February 27, 2017 to shareholders of record on February 17, 2017.

Fourth Quarter and 2016 Highlights:

  • Fourth quarter total revenue (net interest income plus non-interest income) reached $13.7 million versus $12.1 million in the same period last year, a 13% increase.
  • Total revenue for the year ended December 31, 2016 reached $51.8 million versus $46.3 million in 2015, an increase of 12%.
  • Fourth quarter diluted earnings per share were $0.43, an increase of 23% compared to the fourth quarter of 2015.
  • Diluted earnings per share were $1.62 for the year ended December 31, 2016; an increase of 34% compared to the year ended 2015.
  • Tax equivalent net interest margin was 3.55% for the fourth quarter of 2016 and 3.54% for the year ended 2016.
  • Return on average assets reached 0.85% for the year ended December 31, 2016 compared to 0.75% for the year ended December 31, 2015.
  • Return on average tangible common equity reached 9.44% in the fourth quarter of 2016 and was 9.15% for the year ended December 31, 2016 compared to 6.83% for the year ended December 31, 2015.
  • The efficiency ratio reached 55.6% for the fourth quarter of 2016 and was 56.5% for the full year 2016, compared to 62.3% for the year ended 2015.
  • The tangible book value per common share at the end of 2016 was $18.98, a 9% increase over year-end 2015.
  • Total gross loans approached $1.4 billion and grew at an annualized rate of 12% during the fourth quarter of 2016 and grew by 19% for the full year ended 2016.
  • Total assets exceeded $1.6 billion and grew at an annualized rate of 16% during the fourth quarter and 22% for the full year ended 2016.
  • The allowance for loan losses was $18.0 million and represents 1.32% of total loans.
  • Nonperforming assets dropped to 0.20% of total assets as of December 31, 2016 compared to 0.38% as of December 31, 2015.
  • Investment securities totaled $104.6 million and represent 6% of total assets.
  • Total deposits reached $1.3 billion, increasing by $242 million or 23% compared to the year ended 2015.

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

“I am proud to announce 2016’s results as Bankwell continues to improve its financial performance on behalf of its shareholders.”

“We organically originated well over $400 million in loans again this year while maintaining top tier asset quality. Further, we’ve made key executive hires which have positioned us well for the next phase of our successful growth.”

“Looking to 2017, we will be making strategic investments in our deposit franchise. We expect these investments in people and product to bear fruit by the second half of 2017 and beyond. Nonetheless, we are committed to delivering only a modest increase in operating expenses for the full year and, barring exogenous events in the capital markets, our goal is to achieve double digit returns on equity for our shareholders in 2017.”

Earnings

Net income for the quarter ended December 31, 2016 was $3.3 million, an increase of 27% compared to the quarter ended December 31, 2015. Net income for the year ended December 31, 2016 was $12.4 million, an increase of 37% compared to the year ended December 31, 2015. Revenues (net interest income plus non-interest income) for the quarter ended December 31, 2016 were $13.7 million, an increase of 13% compared to the quarter ended December 31, 2015. Revenues for the year ended December 31, 2016 were $51.8 million, an increase of 12% compared to the year ended December 31, 2015. Net interest income for the quarter ended December 31, 2016 was $13.3 million, an increase of 18% compared to the quarter ended December 31, 2015. Net interest income for the year ended December 31, 2016 was $49.1 million, an increase of 15% compared to the year ended December 31, 2015. 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 December 31, 2016 were $0.44 and $0.43, respectively, compared to $0.35 basic and diluted for the quarter ended December 31, 2015. Basic and diluted earnings per share for the year ended December 31, 2016 were $1.64 and $1.62, respectively, compared to $1.23 and $1.21, respectively, for the year ended December 31, 2015.

The Company continues to be disciplined in its spending decisions as indicated by our improving efficiency ratio. The Company’s efficiency ratios for the quarters ended December 31, 2016 and December 31, 2015 were 55.6% and 62.4%, respectively. The Company’s efficiency ratios for the year ended December 31, 2016 and December 31, 2015 were 56.5% and 62.3%, respectively.

Noninterest Income and Expense

Noninterest income decreased $439 thousand or 52% to $0.4 million for the three months ended December 31, 2016 compared to the three months ended December 31, 2015 and decreased $808 thousand or 23% to $2.7 million for the year ended December 31, 2016 compared to the year ended December 31, 2015. The decrease in noninterest income was primarily driven by a reduction in the gains and fees from the sales of loans for the three and twelve months ended December 31, 2016 when compared to the prior periods and a loss on the sale of a Commonwealth of Puerto Rico senior lien sales tax financing corporate bond.

Noninterest expense increased $87 thousand or 1% for the three months ended December 31, 2016 compared to the three months ended December 31, 2015. The increase was primarily driven by an increase in salaries and employee benefits and occupancy and equipment. Salaries and employee benefits increased $171 thousand or 4% for the three months ended December 31, 2016 compared to the three months ended December 31, 2015 as a result of an increase in full time equivalent employees. Occupancy and equipment expense increased $264 thousand or 20% for the three months ended December 31, 2016 compared to the three months ended December 31, 2015 as a result of an increase in IT related expenses to support growth initiatives and deposit operations. These increases were mostly offset with small decreases across various other expense categories.

Noninterest expense increased $373 thousand or 13% for the year ended December 31, 2016 compared to the year ended December 31, 2015. The increase was primarily driven by an increase in occupancy and equipment and professional services. Occupancy and equipment expense increased $470 thousand or 9% for the year ended December 31, 2016 compared to the year ended December 31, 2015 as a result of an increase in IT related expenses to support growth initiatives and rent expense related to the opening of the Norwalk Branch in March of 2015. Professional services increased $207 thousand or 14% for the year ended December 31, 2016 compared to the year ended December 31, 2015 as a result of an increase in fees paid in relation to strategic initiatives.

Financial Condition

Assets totaled $1.6 billion at December 31, 2016, an increase of 22% compared to assets of $1.3 billion at December 31, 2015. This increase reflects strong organic loan growth. Total gross loans were $1.4 billion at December 31, 2016, an increase of 19% compared to December 31, 2015, driven by growth in commercial real estate loans of $147.8 million. Deposits increased to $1.3 billion, an increase of 23% over December 31, 2015.

Asset Quality

Asset quality remained exceptionally strong at December 31, 2016. Non-performing assets as a percentage of total assets was 0.20% at December 31, 2016, down from 0.38% at December 31, 2015. The allowance for loan losses at December 31, 2016 was $18.0 million, representing 1.32% of total loans.

Capital

Shareholders’ equity totaled $145.9 million as of December 31, 2016, an increase of $14.1 million compared to December 31, 2015, primarily a result of net income for the year ended December 31, 2016 of $12.4 million and increases in capital due to stock-based compensation and the exercise of stock options and warrants, offset by cash dividends declared. As of December 31, 2016, the tangible common equity ratio and tangible book value per share were 8.78% and $18.98, 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, and legislative and regulatory changes that could adversely affect the business in which the Company and its subsidiaries are engaged.

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. 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.

BANKWELL FINANCIAL GROUP, INC.
CONSOLIDATED BALANCE SHEETS (unaudited)
(Dollars in thousands, except share data)
December 31,September 30,June 30,March 31,December 31,
20162016201620162015
Assets
Cash and due from banks $ 96,026 $ 94,731 $ 92,745 $ 69,512 $ 49,562
Federal funds sold 329 1,357 1,932 3,194 39,035
Cash and cash equivalents 96,355 96,088 94,677 72,706 88,597
Held to maturity investment securities, at amortized cost 16,859 16,909 16,959 17,010 10,226
Available for sale investment securities, at fair value 87,751 82,752 83,837 91,528 40,581
Loans held for sale 254 400

-    

-    

-    

Loans receivable (net of allowance for loan losses of $17,982, $17,250,
$16,100, $14,810 and $14,169 at December 31, 2016, September 30, 2016,
June 30, 2016, March 31, 2016 and December 31, 2015, respectively) 1,343,895 1,305,065 1,256,949 1,177,905 1,129,748
Foreclosed real estate 272 272 492 878 1,248
Accrued interest receivable 4,958 4,499 4,708 4,370 4,071
Federal Home Loan Bank stock, at cost 7,943 7,943 7,393 7,158 6,554
Premises and equipment, net 17,835 10,314 10,659 10,830 11,163
Bank-owned life insurance 33,448 24,277 24,103 23,929 23,755
Goodwill 2,589 2,589 2,589 2,589 2,589
Other intangible assets 501 532 572 612 652
Deferred income taxes, net 9,085 9,874 9,487 8,814 8,337
Other assets 7,174 4,072 3,695 1,881 2,851
Total assets $ 1,628,919 $ 1,565,586 $ 1,516,120 $ 1,420,210 $ 1,330,372
Liabilities & Shareholders' Equity
Liabilities
Deposits
Noninterest-bearing $ 187,593 $ 176,405 $ 178,917 $ 165,968 $ 164,553
Interest-bearing 1,101,444 1,040,537 1,001,674 927,766 882,389
Total deposits 1,289,037 1,216,942 1,180,591 1,093,734 1,046,942
Advances from the Federal Home Loan Bank 160,000 175,000 165,000 160,000 120,000
Subordinated debentures 25,051 25,038 25,025 25,012 25,000
Accrued expenses and other liabilities 8,936 8,034 8,382 6,856 6,661
Total liabilities 1,483,024 1,425,014 1,378,998 1,285,602 1,198,603
Shareholders' equity
Common stock, no par value; 10,000,000 shares authorized, 7,620,663, 7,562,508,
7,544,458, 7,530,791 and 7,516,291 shares issued at December 31, 2016,
September 30, 2016, June 30, 2016, March 31, 2016 and December 31, 2015, respectively 115,353 113,650 113,309 113,052 112,579
Retained earnings 29,652 26,859 24,097 21,578 18,963
Accumulated other comprehensive income (loss) 890 63 (284 ) (22 ) 227
Total shareholders' equity 145,895 140,572 137,122 134,608 131,769
Total liabilities and shareholders' equity $ 1,628,919 $ 1,565,586 $ 1,516,120 $ 1,420,210 $ 1,330,372
BANKWELL FINANCIAL GROUP, INC.
CONSOLIDATED STATEMENTS OF INCOME (unaudited)
(Dollars in thousands, except per share data)
For the Quarter EndedFor the Year Ended
December 31,
2016
September 30,
2016
June 30,
2016
March 31,
2016
December 31,
2015

December 31,
2016

December 31,
2015
Interest and dividend income
Interest and fees on loans $ 15,910 $ 14,914 $ 13,970 $ 13,283 $ 13,382 $ 58,077 $ 48,692
Interest and dividends on securities 657 688 711 684 490 2,740 1,964
Interest on cash and cash equivalents 75 31 30 37 36 173 98
Total interest income 16,642 15,633 14,711 14,004 13,908 60,990 50,754
Interest expense
Interest expense on deposits 2,438 2,160 1,962 1,740 1,776 8,300 5,681
Interest on borrowings 916 946 870 866 896 3,598 2,285
Total interest expense 3,354 3,106 2,832 2,606 2,672 11,898 7,966
Net interest income 13,288 12,527 11,879 11,398 11,236 49,092 42,788
Provision for loan losses 748 1,219 1,301 646 354 3,914 3,230
Net interest income after provision for loan losses 12,540 11,308 10,578 10,752 10,882 45,178 39,558
Noninterest income
Service charges and fees 242 241 235 245 258 963 933
Bank owned life insurance 171 174 174 174 178 693 727
Gains and fees from sales of loans 79 163 114 110 228 466 1,113
Gain on sale of foreclosed real estate, net

-    

-    

128

-    

-    

128

-    

Net (loss) gain on sale of available for sale securities (207 )

-    

92

-    

-    

(115 )

-    

Other 116 172 110 143 176 541 711

Total noninterest income

401 750 853 672 840 2,676 3,484
Noninterest expense
Salaries and employee benefits 4,419 3,909 3,817 3,811 4,248 15,956 16,065
Occupancy and equipment 1,576 1,435 1,392 1,408 1,312 5,811 5,341
Data processing 402 417 377 407 366 1,603 1,523
Professional services 397 521 370 366 414 1,654 1,447
Marketing 304 242 263 139 278 948 985
FDIC insurance 146 177 168 169 185 660 672
Director fees 135 128 140 155 198 558 622
Amortization of intangibles 32 39 40 40 43 151 196
Foreclosed real estate 8 47 30 72 95 157 168
Merger and acquisition related expenses

-    

-   

-    

-    

2

-    

2
Other 349 566 618 513 540 2,046 2,150
Total noninterest expense 7,768 7,481 7,215 7,080 7,681 29,544 29,171
Income before income tax expense 5,173 4,577 4,216 4,344 4,041 18,310 13,871
Income tax expense 1,850 1,437 1,320 1,353 1,423 5,960 4,841
Net income $ 3,323 $ 3,140 $ 2,896 $ 2,991 $ 2,618 $ 12,350 $ 9,030
Net income attributable to common shareholders $ 3,323 $ 3,140 $ 2,896 $ 2,991 $ 2,575 $ 12,350 $ 8,905
Earnings Per Common Share:
Basic $ 0.44 $ 0.42 $ 0.38 $ 0.40 $ 0.35 $ 1.64 $ 1.23
Diluted 0.43 0.41 0.38 0.40 0.35 1.62 1.21
Weighted Average Common Shares Outstanding:
Basic 7,418,820 7,397,067 7,387,712 7,380,217 7,169,570 7,396,019 7,071,550
Diluted 7,560,319 7,488,752 7,467,954 7,431,747 7,234,431 7,491,052 7,140,558
Dividends per common share $ 0.07 $ 0.05 $ 0.05 $ 0.05 $ 0.05 $ 0.22 $ 0.05
BANKWELL FINANCIAL GROUP, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (unaudited)
(Dollars in thousands, except per share data)
For the Quarter EndedFor the Year Ended
December 31,September 30,June 30,March 31,December 31,December 31,December 31,
2016201620162016201520162015
Performance ratios:
Return on average assets 0.84 % 0.85 % 0.82 % 0.89 % 0.78 % 0.85 % 0.75 %
Return on average stockholders' equity 9.23 % 8.96 % 8.54 % 9.01 % 7.68 % 8.94 % 6.76 %
Return on average tangible common equity 9.44 % 9.16 % 8.74 % 9.23 % 7.74 % 9.15 % 6.83 %
Net interest margin 3.55 % 3.57 % 3.50 % 3.54 % 3.63 % 3.54 % 3.77 %
Efficiency ratio (1) 55.6 % 55.7 % 57.1 % 57.7 % 62.4 % 56.5 % 62.3 %
Net loan charge-offs as a % of average loans 0.00 % 0.01 % 0.00 % 0.00 % 0.01 % 0.01 % 0.01 %
As of

December 31,

2016

September 30,

2016

June 30,

2016

March 31,

2016

December 31,

2015

Capital ratios:
Total Common Equity Tier 1 Capital to Risk-Weighted Assets (2) 11.59 % 11.64 % 11.76 % 12.24 % 12.18 %
Total Capital to Risk-Weighted Assets (2) 12.85 % 12.89 % 13.01 % 13.48 % 13.39 %
Tier I Capital to Risk-Weighted Assets (2) 11.59 % 11.64 % 11.76 % 12.24 % 12.18 %
Tier I Capital to Average Assets (2) 10.10 % 10.45 % 10.59 % 10.85 % 10.84 %
Tangible common equity to tangible assets 8.78 % 8.80 % 8.85 % 9.27 % 9.68 %
Tangible book value per common share (3) $ 18.98 $ 18.57 $ 18.12 $ 17.78 $ 17.43
Asset quality:
Nonaccrual loans $ 2,937 $ 3,644 $ 3,609 $ 3,398 $ 3,791
Other real estate owned 272 272 492 878 1,248
Total non-performing assets $ 3,209 $ 3,916 $ 4,101 $ 4,276 $ 5,039
Loans past due 90 days and still accruing $ - $ - $ 105 $ 89 $ 1,105
Nonperforming loans as a % of total loans 0.22 % 0.27 % 0.28 % 0.28 % 0.33 %
Nonperforming assets as a % of total assets 0.20 % 0.25 % 0.27 % 0.30 % 0.38 %
Allowance for loan losses as a % of total loans 1.32 % 1.30 % 1.26 % 1.24 % 1.23 %
Allowance for loan losses as a % of nonperforming loans 612.26 % 473.38 % 446.11 % 435.84 % 373.76 %
(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.
(3) Excludes unvested restricted stock awards of 96,594 160,708, 152,090, 138,423 and 143,323 as of December 31, 2016, September 30,2016, June 30, 2016, March 31, 2016 and December 31, 2015, respectively.
BANKWELL FINANCIAL GROUP, INC.
LOAN & DEPOSIT PORTFOLIO (unaudited)
(Dollars in thousands)
December 31,
2016
September 30,
2016
December 31,
2015
QTD
% Change
YTD
% Change
Period End Loan Composition
Residential Real Estate $ 181,310 $ 178,996 $ 177,184 1.3 % 2.3 %
Commercial Real Estate 845,322 817,006 697,542 3.5 % 21.2 %
Construction 107,441 104,915 82,273 2.4 % 30.6 %
Home equity 14,419 15,050 15,926 -4.2 % -9.5 %
Total Real Estate Loans1,148,4921,115,967972,9252.9%18.0%
Commercial Business 215,914 208,600 172,853 3.5 % 24.9 %
Consumer 1,533 1,660 1,735 -7.7 % -11.6 %
Total Loans$1,365,939$1,326,227$1,147,5133.0%19.0%
December 31,
2016
September 30,
2016
December 31,
2015
QTD
% Change
YTD
% Change
Period End Deposit Composition
Noninterest-bearing demand $ 187,593 $ 176,405 $ 164,553 6.3 % 14.0 %
NOW 53,851 55,679 51,008 -3.3 % 5.6 %
Money Market 349,131 326,805 296,838 6.8 % 17.6 %
Savings 96,601 63,501 97,846 52.1 % -1.3 %
Time 601,861 594,552 436,697 1.2 % 37.8 %
Total Deposits$1,289,037$1,216,942$1,046,9425.9%23.1%
BANKWELL FINANCIAL GROUP, INC.
NONINTEREST INCOME & EXPENSE - QTD (unaudited)
(Dollars in thousands)
For the Quarter Ended
Noninterest incomeDecember 31,
2016
December 31,
2015
% Change
Service charges and fees $ 242 $ 258 -6.2 %
Bank owned life insurance 171 178 -3.9 %
Gains and fees from sales of loans 79 228 -65.4 %
Net loss on sale of available for sale securities (207 ) - 100.0 %
Other 116 176 -34.1 %
Total noninterest income$401$840-52.3%
For the Quarter Ended
Noninterest expenseDecember 31,
2016
December 31,
2015
% Change
Salaries and employee benefits $ 4,419 $ 4,248 4.0 %
Occupancy and equipment 1,576 1,312 20.1 %
Data processing 402 366 9.8 %
Professional services 397 414 -4.1 %

Marketing 304 278 9.4 %
FDIC insurance 146 185 -21.1 %

Director fees 135 198 -31.8 %

Amortization of intangibles 32 43 -25.6 %

Foreclosed real estate 8 95 -91.6 %

Merger and acquisition related expenses

-    

2 -100.0 %

Other 349 540 -35.4 %

Total noninterest expense$7,768$7,6811.1%
BANKWELL FINANCIAL GROUP, INC.
NONINTEREST INCOME & EXPENSE - YTD (unaudited)
(Dollars in thousands)
For the Year Ended
Noninterest incomeDecember 31,
2016
December 31,
2015
% Change
Service charges and fees $ 963 $ 933 3.2 %
Bank owned life insurance 693 727 -4.7 %
Gains and fees from sales of loans 466 1,113 -58.1 %
Gain on sale of foreclosed real estate, net 128 - 100.0 %
Net loss on sale of available for sale securities (115 ) - 100.0 %
Other 541 711 -23.9 %
Total noninterest income$2,676$3,484-23.2%
For the Year Ended
Noninterest expenseDecember 31,
2016
December 31,
2015
% Change
Salaries and employee benefits $ 15,956 $ 16,065 -0.7 %
Occupancy and equipment 5,811 5,341 8.8 %
Professional services 1,654 1,447 14.3 %
Data processing 1,603 1,523 5.3 %
Marketing 948 985 -3.8 %
FDIC insurance 660 672 -1.8 %
Director fees 558 622 -10.3 %
Foreclosed real estate 157 168 -6.5 %
Amortization of intangibles 151 196 -23.0 %
Merger and acquisition related expenses - 2 -100.0 %
Other 2,046 2,150 -4.8 %
Total noninterest expense$29,544$29,1711.3%
BANKWELL FINANCIAL GROUP, INC.
RECONCILIATION OF GAAP TO NON-GAAP MEASURES (unaudited)
(Dollars in thousands, except share data)
As of
Computation of Tangible Common Equity to Tangible Assets12/31/20169/30/201606/30/201603/31/201612/31/2015
Total Equity $ 145,895 $ 140,572 $ 137,122 $ 134,608 $ 131,769
Less:
Goodwill 2,589 2,589 2,589 2,589 2,589
Other intangibles 501 532 572 612 652
Tangible Common Equity$142,805$137,451$133,961$131,407$128,528
Total Assets $ 1,628,919 $ 1,565,586 $ 1,516,120 $ 1,420,210 $ 1,330,372
Less:
Goodwill 2,589 2,589 2,589 2,589 2,589
Other intangibles 501 532 572 612 652
Tangible Assets$1,625,829$1,562,465$1,512,959$1,417,009$1,327,131
Tangible Common Equity to Tangible Assets8.78%8.80%8.85%9.27%9.68%
As of
Computation of Tangible Book Value per Common Share12/31/20169/30/201606/30/201603/31/201612/31/2015
Total shareholders' equity $ 145,895 $ 140,572 $ 137,122 $ 134,608 $ 131,769
Less:
Preferred stock

-    

-    

-    

-    

-    

Common shareholders' equity145,895140,572137,122134,608131,769
Less:
Goodwill 2,589 2,589 2,589 2,589 2,589
Other intangibles 501 532 572 612 652
Tangible common shareholders' equity142,805137,451133,961131,407128,528
Common shares issued 7,620,663 7,562,508 7,544,458 7,530,791 7,516,291
Less:
Shares of unvested restricted stock 96,594 160,708 152,090 138,423 143,323
Common shares outstanding7,524,0697,401,8007,392,3687,392,3687,372,968
Book value per share $ 19.39 $ 18.99 $ 18.55 $ 18.21 $ 17.87
Less:
Effects of intangible assets $ 0.41 $ 0.42 $ 0.43 $ 0.43 $ 0.44
Tangible Book Value per Common Share$18.98$18.57$18.12$17.78$17.43
For the Quarter EndedFor the Year Ended
Computation of Efficiency Ratio12/31/201609/30/201606/30/201603/31/201612/31/201512/31/201612/31/2015
Noninterest expense $ 7,768 $ 7,481 $ 7,215 $ 7,080 $ 7,681 $ 29,544 $ 29,171
Less:
Amortization of intangible assets 32 39 40 40 43 151 196
Foreclosed real estate expenses 8 47 30 72 95 157 168
Merger and acquisition expense

-    

-    

-    

-    

2

-    

2
Adjusted noninterest expense$7,728$7,395$7,145$6,968$7,541$29,236$28,805
Net interest income $ 13,288 $ 12,527 $ 11,879 $ 11,398 $ 11,236 $ 49,092 $ 42,788
Noninterest income 401 750 853 672 840 2,676 3,484
Less:
Gains (losses) on sales of securities (207 )

-    

92

-    

-    

(115 )

-    

Gains on sale of foreclosed real estate

-    

-    

128

-    

-    

128

-    

Adjusted operating revenue$13,896$13,277$12,512$12,070$12,076$51,755$46,272
Efficiency ratio55.6%55.7%57.1%57.7%62.4%56.5%62.3%
For the Quarter EndedFor the Year Ended
Computation of Return on Average Tangible Common Equity12/31/201609/30/201606/30/201603/31/201612/31/201512/31/201612/31/2015
Net Income Attributable to Common Shareholders $ 3,323 $ 3,140 $ 2,896 $ 2,991 $ 2,575 $ 12,350 $ 8,905
Total average shareholders' equity 143,152 139,449 136,389 133,474 135,311 138,131 133,553
Less:
Goodwill 2,589 2,589 2,589 2,589 2,589 2,589 2,589
Other intangibles 501 532 572 612 652 501 652
Average tangible common equity 140,062 136,328 133,228 130,273 132,070 135,041 130,312
Annualized Return on Average Tangible Common Equity9.44%9.16%8.74%9.23%7.74%9.15%6.83%
BANKWELL FINANCIAL GROUP, INC.
NET INTEREST MARGIN ANALYSIS ON A FULLY TAX EQUIVALENT BASIS
(Dollars in thousands)
For the Quarter Ended
December 31, 2016December 31, 2015
Average
Balance

Interest
Yield/
Rate
Average
Balance

Interest
Yield/
Rate
Assets:
Cash and Fed funds sold $ 70,313 $ 75 0.42 % $ 47,162 $ 36 0.31 %
Securities (1) 93,375 725 3.11 % 52,405 544 4.15 %
Loans:
Commercial real estate 825,522 10,110 4.79 % 687,447 8,358 4.76 %
Residential real estate 180,294 1,603 3.56 % 174,815 1,556 3.56 %
Construction (2) 112,456 1,304 4.54 % 89,338 996 4.36 %
Commercial business 206,587 2,709 5.13 % 170,954 2,224 5.09 %
Home equity 14,193 154 4.31 % 16,011 155 3.83 %
Consumer 1,121 15 5.33 % 1,943 24 4.98 %
Acquired loans (net of mark) 573 15 10.10 % 2,058 70 13.43 %
Total loans 1,340,746 15,910 4.64 % 1,142,566 13,383 4.58 %
Federal Home Loan Bank stock 7,943 70 3.52 % 6,640 57 3.45 %
Total earning assets 1,512,377 $ 16,780 4.34 % 1,248,773 $ 14,020 4.39 %
Other assets 57,850 76,443
Total assets $ 1,570,227 $ 1,325,216
Liabilities and shareholders' equity:
Interest-bearing liabilities:
NOW $ 57,271 22 0.15 % $ 51,778 15 0.11 %
Money market 331,623 504 0.60 % 294,219 404 0.54 %
Savings 77,428 100 0.52 % 101,590 201 0.78 %
Time 589,871 1,809 1.22 % 434,976 1,156 1.05 %
Total interest-bearing deposits 1,056,193 2,435 0.92 % 882,563 1,776 0.80 %
Borrowed Money 182,947 916 1.99 % 145,015 896 2.45 %
Total interest-bearing liabilities 1,239,140 $ 3,351 1.08 % 1,027,578 $ 2,672 1.03 %
Noninterest-bearing deposits 178,106 155,276
Other liabilities 9,829 7,051
Total liabilities 1,427,075 1,189,905
Shareholders' equity 143,152 135,311
Total liabilities and shareholders' equity $ 1,570,227 $ 1,325,216
Net interest income (3) $ 13,429 $ 11,348
Interest rate spread 3.26 % 3.36 %
Net interest margin (4) 3.55 % 3.63 %
(1) Average balances and yields for securities are based on amortized cost.
(2) Includes commercial and residential real estate construction.
(3) The adjustment for securities and loans taxable equivalency amounted to $138 thousand and $112 thousand, respectively for the three months ended December 31, 2016, and 2015.
(4) Net interest income as a percentage of earning assets.
BANKWELL FINANCIAL GROUP, INC.
NET INTEREST MARGIN ANALYSIS ON A FULLY TAX EQUIVALENT BASIS
(Dollars in thousands)
For the Year Ended
December 31, 2016December 31, 2015
Average
Balance

Interest
Yield/
Rate
Average
Balance

Interest
Yield/
Rate
Assets:
Cash and Fed funds sold $ 41,838 $ 173 0.41 % $ 39,632 $ 97 0.25 %
Securities (1) 99,905 3,046 3.05 % 59,009 2,243 3.80 %
Loans:
Commercial real estate 772,100 36,496 4.65 % 611,289 29,835 4.81 %
Residential real estate 179,096 6,410 3.58 % 174,527 6,282 3.60 %
Construction (2) 100,611 4,602 4.50 % 76,292 3,505 4.53 %
Commercial business 185,523 9,791 5.19 % 156,039 8,089 5.11 %
Home equity 14,951 621 4.16 % 17,163 649 3.78 %
Consumer 1,560 81 5.17 % 2,350 115 4.88 %
Acquired loans (net of mark) 790 76 9.57 % 2,672 225 8.42 %
Total loans 1,254,631 58,077 4.55 % 1,040,332 48,700 4.62 %
Federal Home Loan Bank stock 7,366 255 3.46 % 6,715 168 2.50 %
Total earning assets 1,403,740 $ 61,551 4.31 % 1,145,688 $ 51,208 4.41 %
Other assets 54,580 60,191
Total assets $ 1,458,320 $ 1,205,879
Liabilities and shareholders' equity:
Interest-bearing liabilities:
NOW $ 56,123 109 0.19 % $ 55,696 62 0.11 %
Money market 317,210 1,835 0.58 % 263,900 1,411 0.53 %
Savings 72,800 315 0.43 % 96,841 693 0.72 %
Time 524,237 6,039 1.15 % 365,179 3,515 0.96 %
Total interest-bearing deposits 970,370 8,298 0.86 % 781,616 5,681 0.73 %
Borrowed Money 164,450 3,598 2.19 % 129,390 2,285 1.77 %
Total interest-bearing liabilities 1,134,820 $ 11,896 1.05 % 911,006 $ 7,966 0.87 %
Noninterest-bearing deposits 172,098 154,950
Other liabilities 13,271 6,370
Total liabilities 1,320,189 1,072,326
Shareholders' equity 138,131 133,553
Total liabilities and shareholders' equity $ 1,458,320 $ 1,205,879
Net interest income (3) $ 49,655 $ 43,242
Interest rate spread 3.26 % 3.54 %
Net interest margin (4) 3.54 % 3.77 %
(1) Average balances and yields for securities are based on amortized cost.
(2) Includes commercial and residential real estate construction.
(3) The adjustment for securities and loans taxable equivalency amounted to $557 thousand and $454 thousand, respectively for the year ended December 31, 2016, and 2015.
(4) Net interest income as a percentage of earning assets.

Contacts:

Bankwell Financial Group
Christopher R. Gruseke, 203-652-0166
President and Chief Executive Officer
or
Penko Ivanov, 203-652-0166
Executive Vice President and Chief Financial Officer

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