Bankwell Financial Group Reports Third Quarter Net Income of $2.3 Million and Declares First Cash Dividend

NEW CANAAN, Conn.--(BUSINESS WIRE)--Bankwell Financial Group, Inc. (NASDAQ:BWFG) reported GAAP net income of $2.3 million for the third quarter of 2015. In addition, Bankwell Financial Group, Inc. reached record loan levels at $1.1 billion, driven by strong organic growth.

The Company's Board of Directors declared a $0.05 per share cash dividend, payable December 21, 2015 to shareholders of record on December 11, 2015.

Notes Bankwell Financial Group CEO, Christopher Gruseke:

“The team at Bankwell has delivered another strong performance this quarter, growing our loan book to record levels while continuing to increase operational efficiencies. The declaration of our first cash dividend is a demonstration of Bankwell’s financial strength and our commitment to our shareholders. Bankwell’s Management and Board of Directors view a regular dividend to be an important component of our overall capital management strategy. Further highlights for the quarter include a successful offering of $25.5 million in subordinated notes, an improved efficiency ratio, and an increase in our return on average tangible common equity to 7.7%, resulting in a tangible book value per common share of $17.25.”

Earnings

Net income for the quarter ended September 30, 2015 was $2.3 million, an increase of 51.1% compared to the quarter ended September 30, 2014. Net income for the nine months ended September 30, 2015 was $6.4 million, an increase of 66.9% compared to the nine months ended September 30, 2014. Revenues (net interest income plus non-interest income) for the quarter ended September 30, 2015 were $12.1 million, an increase of 45.2% compared to the quarter ended September 30, 2014. Revenues for the nine months ended September 30, 2015 were $34.2 million, an increase of 41.9% compared to the nine months ended September 30, 2014. Net interest income for the quarter ended September 30, 2015 was $10.9 million, an increase of 43.7% compared to the quarter ended September 30, 2014. Our strong net interest income was fueled by record earning asset growth.

Basic and diluted earnings per share for the quarter ended September 30, 2015 was $0.31, compared to $0.22 for the quarter ended September 30, 2014, an increase of 40.9%.

The Company continues to focus on expense control as indicated by our improving efficiency ratio. The Company’s efficiency ratio for the quarters ended September 30, 2015 and September 30, 2014 were 58.4% and 64.4%, respectively. The Company’s efficiency ratio for the nine months ended September 30, 2015 and September 30, 2014 were 62.6% and 70.7%, respectively.

Financial Condition

Assets totaled $1.3 billion at September 30, 2015, an annualized increase of 25.9% compared to assets of $1.1 billion at December 31, 2014. This increase reflects strong organic loan growth and capital raised as a result of the issuance of $25.5 million in subordinated notes in the third quarter of 2015. Total gross loans were $1.1 billion at September 30, 2015, an annualized increase of 28.1% compared to December 31, 2014. Deposits increased to $1.0 billion, an annualized increase of 30.4% over December 31, 2014, with core deposits (total deposits less time deposits) showing an annualized increase of 17.8% over December 31, 2014 to $597.3 million.

Asset Quality

Asset quality remained exceptionally strong at September 30, 2015. Non-performing assets as a percentage of total assets was 0.28% at September 30, 2015, down from 0.39% at December 31, 2014. The allowance for loan losses at September 30, 2015 was $13.7 million, representing 1.33% of total loans, excluding acquired loans.

Capital

Shareholders’ equity continued to remain strong at $135.8 million as of September 30, 2015, an increase of $6.6 million compared to December 31, 2014, primarily a result of net income for the nine months ended September 30, 2015 of $6.4 million. As of September 30, 2015, the tangible common equity ratio and tangible book value per share were 9.28% and $17.25, 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 Ernest J. Verrico Sr., Executive Vice President and Chief Financial Officer of Bankwell Financial Group at [phone].

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.

BANKWELL FINANCIAL GROUP, INC.
CONSOLIDATED BALANCE SHEETS (unaudited)
(Dollars in thousands, except share data)
	September 30,			June 30,		March 31,		December 31,		September 30,
	2015			2015		2015		2014		2014
Assets
Cash and due from banks	$	86,830		$	75,550	$	19,428	$	48,559	$	35,566
Held to maturity investment securities, at amortized cost		11,282			11,341		11,398		11,454		11,502
Available for sale investment securities, at fair value		45,023			46,883		50,736		65,009		67,537
Loans held for sale		252			-		-		586		-
Loans receivable (net of allowance for loan losses of $13,720, $12,230,
$11,596, $10,860, $9,552 at September 30, 2015, June 30, 2015,
March 31, 2015, December 31, 2014 and September 30, 2014, respectively)		1,108,439			1,021,693		964,034		915,981		730,148
Foreclosed real estate		1,328			830		830		950		829
Accrued interest receivable		3,831			3,575		3,342		3,323		2,670
Federal Home Loan Bank stock, at cost		6,918			6,918		6,794		6,109		4,834
Premises and equipment, net		11,505			11,868		12,120		11,910		7,787
Bank-owned life insurance		23,578			23,395		23,211		23,028		22,837
Goodwill		2,589			2,589		2,589		2,589		-
Other intangible assets		694			745		797		848		401
Deferred income taxes, net		8,604			7,869		7,436		7,156		5,804
Other assets		2,472			1,418		1,748		2,029		5,600
Total assets	$	1,313,345		$	1,214,674	$	1,104,463	$	1,099,531	$	895,515
Liabilities & Shareholders' Equity
Liabilities
Deposits
Noninterest-bearing	$	148,732		$	162,546	$	142,920	$	166,030	$	151,146
Interest-bearing		876,957			789,035		691,783		669,409		544,117
Total deposits		1,025,689			951,581		834,703		835,439		695,263
Advances from the Federal Home Loan Bank		120,000			124,000		133,000		129,000		77,000
Subordinated debentures		25,037			-		-		-		-
Accrued expenses and other liabilities		6,831			5,424		5,352		5,882		4,755
Total liabilities		1,177,557			1,081,005		973,055		970,321		777,018
Commitments and Contingencies		-			-		-		-		-
Shareholders' equity
Preferred stock, senior noncumulative perpetual, Series C, no par;
10,980 shares issued and outstanding at September 30, 2015, June 30, 2015,
March 31, 2015, December 31, 2014 and September 30, 2014, respectively;
liquidation value of $1,000 per share.		10,980			10,980		10,980		10,980		10,980
Common stock, no par value; 10,000,000 shares authorized,
7,252,429, 7,240,704, 7,243,252, 7,185,482 and 6,559,995 shares issued at
September 30, 2015, June 30, 2015, March 31, 2015, December 31, 2014
and September 30, 2014, respectively.		108,319			108,038		107,765		107,265		97,180
Retained earnings		16,764			14,538		12,280		10,434		9,735
Accumulated other comprehensive income		(275	)		113		383		531		602
Total shareholders' equity		135,788			133,669		131,408		129,210		118,497
Total liabilities and shareholders' equity	$	1,313,345		$	1,214,674	$	1,104,463	$	1,099,531	$	895,515

BANKWELL FINANCIAL GROUP, INC.
CONSOLIDATED STATEMENTS OF INCOME (unaudited)
(Dollars in thousands, except per share data)
	Three Months Ended September 30,				Nine Months Ended September 30,
	2015		2014		2015		2014
Interest and dividend income
Interest and fees on loans	$	12,662	$	8,054	$	35,315	$	23,040
Interest and dividends on securities		491		569		1,469		1,417
Interest on cash and cash equivalents		33		45		62		116
Total interest income		13,186		8,668		36,846		24,573
Interest expense
Interest expense on deposits		1,637		905		3,905		2,257
Interest on borrowings		632		168		1,389		427
Total interest expense		2,269		1,073		5,294		2,684
Net interest income		10,917		7,595		31,552		21,889
Provision for loan losses		1,489		566		2,876		847
Net interest income after provision for loan losses		9,428		7,029		28,676		21,042
Noninterest income
Gains and fees from sales of loans		447		366		885		1,008
Service charges and fees		234		153		675		420
Bank owned life insurance		182		135		549		305
Other		348		103		535		475
Total noninterest income		1,211		757		2,644		2,208
Noninterest expense
Salaries and employee benefits		3,798		2,786		11,817		9,412
Occupancy and equipment		1,370		1,066		4,029		3,162
Data processing		416		314		1,157		949
Professional services		339		394		1,033		1,035
Marketing		288		135		707		463
FDIC insurance		166		120		487		345
Director fees		136		177		424		460
Foreclosed real estate		81		9		73		21
Amortization of intangibles		51		27		153		80
Merger and acquisition related expenses		-		145		-		408
Other		513		357		1,610		1,134
Total noninterest expense		7,158		5,530		21,490		17,469
Income before income tax expense		3,481		2,256		9,830		5,781
Income tax expense		1,228		765		3,418		1,940
Net income	$	2,253	$	1,491	$	6,412	$	3,841
Net income attributable to common shareholders	$	2,226	$	1,464	$	6,330	$	3,759
Earnings Per Common Share:
Basic	$	0.31	$	0.22	$	0.88	$	0.72
Diluted		0.31		0.22		0.87		0.72
Weighted Average Common Shares Outstanding:
Basic		7,044,586		6,483,210		7,038,517		5,099,325
Diluted		7,059,117		6,501,984		7,057,450		5,124,261

BANKWELL FINANCIAL GROUP, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (unaudited)
(Dollars in thousands, except per share data)
					Three Months Ended September 30,						Nine Months Ended September 30,
				2015					2014		2015			2014
Performance ratios:
Return on average assets						0.69	%		0.67	%		0.74	%		0.62	%
Return on average shareholders' equity						6.92	%		5.02	%		6.45	%		5.84	%
Return on average tangible common equity						7.69	%		5.45	%		7.13	%		6.56	%
Net interest margin						3.67	%		3.69	%		3.83	%		3.78	%
Efficiency ratio (1)						58.4	%		64.4	%		62.6	%		70.7	%
Net loan recoveries (charge-offs) as a % of average loans						0.00	%		0.00	%		0.00	%		0.05	%
	As of
	September 30, 2015				June 30, 2015			March 31, 2015			December 31, 2014			September 30, 2014
Capital ratios:
Total Common Equity Tier 1 Capital to Risk-Weighted Assets (2)		10.75	%			11.44	%		12.08	%		N/A			N/A
Total Capital to Risk-Weighted Assets (2)		11.94	%			12.59	%		13.26	%		13.55	%		15.27	%
Tier I Capital to Risk-Weighted Assets (2)		10.75	%			11.44	%		12.08	%		12.47	%		14.02	%
Tier I Capital to Average Assets (2)		9.84	%			10.71	%		10.99	%		11.12	%		11.93	%
Tangible common equity to tangible assets		9.28	%			9.85	%		10.63	%		10.47	%		11.97	%
Tangible book value per common share (3)	$	17.25			$	16.95		$	16.62		$	16.35		$	16.52
Asset quality:
Nonaccrual loans	$	2,367			$	2,205		$	2,451		$	3,362		$	1,246
Other real estate owned		1,328				830			830			950			829
Total non-performing assets	$	3,695			$	3,035		$	3,281		$	4,312		$	2,075
Loans past due 90 days and still accruing	$	1,082			$	1,479		$	1,671		$	1,872		$	1,309
Nonperforming loans as a % of total loans		0.21	%			0.21	%		0.25	%		0.36	%		0.17	%
Nonperforming assets as a % of total assets		0.28	%			0.25	%		0.30	%		0.39	%		0.23	%
Allowance for loan losses as a % of total loans		1.22	%			1.18	%		1.18	%		1.17	%		1.29	%
Allowance for loan losses as a % of nonperforming loans		579.64	%			554.65	%		473.11	%		323.02	%		766.61	%

(1) Efficiency ratio is defined as non-interest expenses, less merger and acquisition related expenses and other real estate owned expenses, 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 preferred stock and unvested restricted stock awards of 206,732, 198,414, 200,962, 165,862 and 76,278 as of September 30, 2015, June 30, 2015, March 31, 2015, December 31, 2014 and September 30, 2014, respectively.

BANKWELL FINANCIAL GROUP, INC.
NET INTEREST MARGIN ANALYSIS ON A FULLY TAX EQUIVALENT BASIS
(Dollars in thousands)
	For the Three Months Ended
	September 30, 2015						September 30, 2014
	Average				Yield/		Average				Yield/
	Balance		Interest		Rate		Balance		Interest		Rate
Assets:
Cash and Fed funds sold	$	62,597	$	33	0.21	%	$	64,752	$	45	0.28	%
Securities (1)		57,234		549	3.84	%		71,536		666	3.73	%
Loans:
Commercial real estate		645,488		7,873	4.77	%		365,042		4,473	4.79	%
Residential real estate		175,908		1,569	3.57	%		166,123		1,499	3.61	%
Construction (2)		79,722		912	4.48	%		47,261		570	4.72	%
Commercial business		157,867		2,075	5.14	%		101,184		1,296	5.01	%
Home equity		16,422		155	3.75	%		12,786		121	3.75	%
Consumer		2,184		27	4.87	%		698		15	8.75	%
Acquired loans (net of mark)		2,558		51	7.91	%		1,327		81	24.15	%
Total loans		1,080,149		12,662	4.59	%		694,421		8,055	4.54	%
Federal Home Loan Bank stock		6,918		47	2.71	%		4,834		18	1.49	%
Total earning assets		1,206,898	$	13,291	4.31	%		835,543	$	8,784	4.11	%
Other assets		89,978						47,383
Total assets	$	1,296,876					$	882,926
Liabilities and shareholders' equity:
Interest-bearing liabilities:
NOW	$	56,104		15	0.11	%	$	52,298		15	0.11	%
Money market		293,150		408	0.55	%		175,111		218	0.49	%
Savings		103,555		214	0.82	%		79,505		65	0.33	%
Time		401,968		1,005	0.99	%		257,616		607	0.93	%
Total interest-bearing deposits		854,777		1,642	0.76	%		564,530		905	0.64	%
Borrowed Money		118,391		583	1.95	%		47,333		168	1.41	%
Total interest bearing liabilities		973,168	$	2,225	0.91	%		611,863	$	1,073	0.70	%
Noninterest-bearing deposits		161,354						138,272
Other liabilities		33,257						14,918
Total liabilities		1,167,779						765,053
Shareholders' equity		129,097						117,873
Total liabilities and shareholders' equity	$	1,296,876					$	882,926
Net interest income (3)			$	11,066					$	7,711
Interest rate spread					3.40	%					3.41	%
Net interest margin (4)					3.67	%					3.69	%

(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 $149 thousand and $116 thousand, respectively for the three months ended September 30, 2015, and 2014.

(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 Nine Months Ended
	September 30, 2015						September 30, 2014
	Average				Yield/		Average				Yield/
	Balance		Interest		Rate		Balance		Interest		Rate
Assets:
Cash and Fed funds sold	$	37,037	$	61	0.22	%	$	58,699	$	116	0.26	%
Securities (1)		61,233		1,699	3.70	%		53,723		1,697	4.21	%
Loans:
Commercial real estate		583,024		21,476	4.86	%		341,480		12,523	4.84	%
Residential real estate		174,389		4,727	3.61	%		161,049		4,362	3.61	%
Construction (2)		71,900		2,509	4.60	%		46,317		1,615	4.60	%
Commercial business		151,017		5,866	5.12	%		99,113		3,705	4.93	%
Home equity		17,551		494	3.77	%		13,373		370	3.70	%
Consumer		2,487		90	4.85	%		640		42	8.88	%
Acquired loans (net of mark)		2,877		155	7.22	%		2,753		425	20.64	%
Total loans		1,003,245		35,317	4.64	%		664,725		23,042	4.57	%
Federal Home Loan Bank stock		6,741		110	2.17	%		4,834		54	1.48	%
Total earning assets		1,108,256	$	37,187	4.42	%		781,981	$	24,909	4.20	%
Other assets		57,388						39,993
Total assets	$	1,165,644					$	821,974
Liabilities and shareholders' equity:
Interest-bearing liabilities:
NOW	$	57,017		48	0.11	%	$	52,544		43	0.11	%
Money market		253,662		1,007	0.53	%		173,104		564	0.44	%
Savings		95,242		492	0.69	%		93,328		216	0.31	%
Time		341,658		2,358	0.92	%		224,765		1,434	0.85	%
Total interest-bearing deposits		747,579		3,905	0.70	%		543,741		2,257	0.55	%
Borrowed Money		124,129		1,389	1.50	%		48,370		427	1.18	%
Total interest bearing liabilities		871,708	$	5,294	0.81	%		592,111	$	2,684	0.61	%
Noninterest-bearing deposits		154,825						129,074
Other liabilities		6,137						12,808
Total liabilities		1,032,670						733,993
Shareholders' equity		132,974						87,981
Total liabilities and shareholders' equity	$	1,165,644					$	821,974
Net interest income (3)			$	31,893					$	22,225
Interest rate spread					3.61	%					3.59	%
Net interest margin (4)					3.83	%					3.78	%

(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 $341 thousand and $336 thousand, respectively for the nine months ended September 30, 2015, and 2014.

(4) Net interest income as a percentage of earning assets.