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

NEW CANAAN, Conn.--(BUSINESS WIRE)--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 [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.

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,
	2016		2016		2016			2016			2015
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 Ended											For 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 Ended															For the Year Ended
	December 31,			September 30,			June 30,			March 31,			December 31,			December 31,		December 31,
	2016			2016			2016			2016			2015			2016		2015
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 Loans		1,148,492		1,115,967		972,925	2.9	%	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	$	1,147,513	3.0	%	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	$	1,046,942	5.9	%	23.1	%

BANKWELL FINANCIAL GROUP, INC. NONINTEREST INCOME & EXPENSE - QTD (unaudited) (Dollars in thousands)
	For the Quarter Ended
Noninterest income	December 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 expense	December 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		$	7,681	1.1	%

BANKWELL FINANCIAL GROUP, INC. NONINTEREST INCOME & EXPENSE - YTD (unaudited) (Dollars in thousands)
	For the Year Ended
Noninterest income	December 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 expense	December 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		$	29,171	1.3	%

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 Assets	12/31/2016			9/30/2016			06/30/2016			03/31/2016			12/31/2015
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 Assets		8.78	%		8.80	%		8.85	%		9.27	%		9.68	%
	As of
Computation of Tangible Book Value per Common Share	12/31/2016			9/30/2016			06/30/2016			03/31/2016			12/31/2015
Total shareholders' equity	$	145,895		$	140,572		$	137,122		$	134,608		$	131,769
Less:
Preferred stock		-			-			-			-			-
Common shareholders' 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 shareholders' equity		142,805			137,451			133,961			131,407			128,528
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 outstanding		7,524,069			7,401,800			7,392,368			7,392,368			7,372,968
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 Ended															For the Year Ended
Computation of Efficiency Ratio	12/31/2016			09/30/2016			06/30/2016			03/31/2016			12/31/2015			12/31/2016			12/31/2015
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 ratio		55.6	%		55.7	%		57.1	%		57.7	%		62.4	%		56.5	%		62.3	%
	For the Quarter Ended															For the Year Ended
Computation of Return on Average Tangible Common Equity	12/31/2016			09/30/2016			06/30/2016			03/31/2016			12/31/2015			12/31/2016			12/31/2015
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 Equity		9.44	%		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, 2016						December 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, 2016						December 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.