BANKWELL FINANCIAL GROUP REPORTS OPERATING RESULTS FOR THE FIRST QUARTER, RESERVE BUILD AND MAINTAINS QUARTERLY DIVIDEND
New Canaan, CT – April 29, 2020 – Bankwell Financial Group, Inc. (NASDAQ: BWFG) reported GAAP net income of $1.4 million, or $0.17 per share, for the first quarter of 2020, versus $5.1 million, or $0.65 per share, for the same period in 2019. The decline in net income is largely driven by an increase in the loan loss provision relating to potential exposure to the coronavirus (COVID-19) pandemic.
The Company's Board of Directors declared a $0.14 per share cash dividend, payable May 28, 2020 to shareholders of record on May 18, 2020.
Please reference the First Quarter 2020 Investor Presentation located at http://investor.mybankwell.com/Presentations for further details regarding the impact of the COVID-19 pandemic on our operations and financial results.
Notes Bankwell Financial Group President and CEO, Christopher R. Gruseke:
"While we take this opportunity to announce our quarterly earnings, we are mindful of the COVID-19 plight which is besieging society, leaving no one unaffected. We are thankful for the dedication of health care workers and first responders, as well as the essential workers who are keeping our communities running."
"As a result of our first-rate preparedness, all of our non-branch personnel have been working remotely since mid-March with complete effectiveness. I have been inspired by the efforts and dedication of Bankwell’s team as they have worked tirelessly to service our customers and communities. This was particularly true as they worked around the clock to process approximately $60 million in PPP loans for our small businesses so in need of these funds."
"The economic road ahead will challenge all businesses, but Bankwell’s strong capital base, excellent credit culture, and amazing people put us on excellent footing to overcome adversity."
First Quarter 2020 Highlights:
| |
| • | The allowance for loan losses was $16.7 million and represents 1.03% of total loans as of March 31, 2020, compared to an allowance for loan losses of $13.5 million, representing 0.84% of total loans as of December 31, 2019. The increase in the allowance for loan losses is primarily attributable to $3.0 million in incremental loan loss reserves recognized in the first quarter of 2020 relating to potential exposure to the COVID-19 pandemic. |
| |
| • | Reduced rates on approximately $0.5 billion of non-maturity deposit products by an average of approximately 70 basis points during the quarter ended March 31, 2020. We expect these rate reductions to drive lower deposit costs for the remainder of the year. |
| |
| • | Tax equivalent net interest margin was 2.98% for the quarter ended March 31, 2020, representing a 6 basis point increase compared to the quarter ended December 31, 2019. |
| |
| • | The Company repurchased 58,499 shares of common stock at an average price of $17.69 per share, during the quarter ended March 31, 2020. |
| |
| • | Total deposits were $1.68 billion at March 31, 2020 compared to $1.49 billion at December 31, 2019, primarily reflecting increases in brokered deposits to increase on-balance sheet liquidity. |
| |
| • | The loan-to-deposit ratio was 96.1% at March 31, 2020, reflecting the above-mentioned increase in brokered deposits. |
| |
| • | Total gross loans were $1.62 billion at March 31, 2020, and grew by $16.5 million during the quarter. |
| |
| • | Investment securities totaled $100.9 million and represent 5% of total assets. |
| |
| • | Total noninterest income was $1.1 million for the quarter ended March 31, 2020, or 7% of total revenue. |
| |
| • | The tangible common equity ratio and tangible book value per share, as of March 31, 2020, were 8.16% and $21.69, respectively. The tangible book value per share was primarily impacted by a $1.75 mark to market |
adjustment reflected in other comprehensive income on the Bank's interest rate swaps, which are used for hedging purposes.
Earnings and Performance
Revenues (net interest income plus noninterest income) for the quarter ended March 31, 2020 were $14.4 million, versus $15.6 million for the quarter ended March 31, 2019. The decrease in revenues was attributable to a decline in income from loan prepayments during the quarter ended March 31, 2020 when compared to the same period in 2019. The decrease in revenues was partially offset by a decline in interest expense, driven by lower interest rates on deposits when compared to the same period in 2019.
Net income for the quarter ended March 31, 2020 was $1.4 million, versus $5.1 million for the quarter ended March 31, 2019. Basic and diluted earnings per share were each $0.17 for the quarter ended March 31, 2020 compared to basic and diluted earnings per share of $0.65 each for the quarter ended March 31, 2019. The decrease in net income and earnings per share was largely driven by a $3.0 million, or $0.30 per share, increase in the provision for loan losses, due to the potential exposure as a result of the COVID-19 pandemic, and the absence of approximately $1.0 million, or $0.10 per share, of elevated prepayment fees as compared against the first quarter of 2019.
The net interest margin (fully taxable equivalent basis) for the quarters ended March 31, 2020 and December 31, 2019 was 2.98% and 2.92%, respectively. The increase in the net interest margin for the quarter ended March 31, 2020 when compared to the quarter ended December 31, 2019 was due to a decline in interest expense on deposits. The cost of interest bearing deposits declined 10 basis points for the quarter ended March 31, 2020 when compared to the quarter ended December 31, 2019.
Financial Condition
Assets totaled $2.1 billion at March 31, 2020, compared to assets of $1.9 billion at December 31, 2019. The increase in assets is primarily driven by an increase in cash and cash equivalents in order to maintain a higher level of liquidity during the COVID-19 pandemic. Gross loans totaled $1.62 billion at March 31, 2020, an increase of $16.5 million compared to December 31, 2019, reflecting growth in the commercial business loan portfolio. Deposits totaled $1.7 billion at March 31, 2020, compared to deposits of $1.5 billion at December 31, 2019. The increase in deposits was a result of an increase in brokered deposits to expand on-balance sheet liquidity.
Capital
Shareholders’ equity totaled $170.2 million as of March 31, 2020, a decrease of $12.2 million compared to December 31, 2019, primarily a result of an $11.8 million unfavorable impact to accumulated other comprehensive income driven by fair value marks related to hedge positions involving interest rate swaps, as well as dividends paid of $1.1 million and common stock repurchases of $1.0 million. The decrease was partially offset by net income for the quarter ended March 31, 2020 of $1.4 million. The marks on the interest rate swaps are driven by lower long term market interest rates in 2020 when compared to 2019. The Company's interest rate swaps are primarily used to hedge interest rate risk. The Company's current interest rate swap positions will cause a decrease to other comprehensive income in a falling interest rate environment and an increase in a rising interest rate environment. As of March 31, 2020, the tangible common equity ratio and tangible book value per share were 8.16% and $21.69, respectively.
About Bankwell Financial Group
Bankwell is a commercial bank that serves the banking needs of residents and businesses throughout Fairfield and New Haven Counties, Connecticut. 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.
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, but are not limited to, increased competitive pressures, changes in the interest rate environment, general economic conditions or conditions within the securities markets, uncertain impacts of, or additional changes in, monetary, fiscal or tax policy to address the impact of COVID-19, prolonged measures to contain the spread of COVID-19 or premature easing of such containment measures, either of which could further exacerbate the effects on the Company’s business and results of operations, 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 tables. 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 noninterest expense control. The Company believes that tangible common equity and tangible book value per share are 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)
|
| | | | | | | | | | | |
| | March 31,
2020 | | December 31,
2019 | | March 31,
2019 |
| ASSETS | | | | | |
| Cash and due from banks | $ | 203,569 |
| | $ | 78,051 |
| | $ | 88,827 |
|
| Federal funds sold | 6,427 |
| | — |
| | 4,764 |
|
| Cash and cash equivalents | 209,996 |
| | 78,051 |
| | 93,591 |
|
| | | | | | |
| Investment securities | | | | | |
| Marketable equity securities, at fair value | 2,289 |
| | 2,118 |
| | 2,049 |
|
| Available for sale investment securities, at fair value | 82,342 |
| | 82,439 |
| | 96,423 |
|
| Held to maturity investment securities, at amortized cost | 16,252 |
| | 16,308 |
| | 21,364 |
|
| Total investment securities | 100,883 |
| | 100,865 |
| | 119,836 |
|
| Loans receivable (net of allowance for loan losses of $16,686, $13,509, and $15,430 at March 31, 2020, December 31, 2019, and March 31, 2019, respectively) | 1,602,146 |
| | 1,588,840 |
| | 1,578,609 |
|
| Accrued interest receivable | 5,867 |
| | 5,959 |
| | 6,534 |
|
| Federal Home Loan Bank stock, at cost | 6,507 |
| | 7,475 |
| | 7,475 |
|
| Premises and equipment, net | 27,835 |
| | 28,522 |
| | 29,629 |
|
| Bank-owned life insurance | 41,926 |
| | 41,683 |
| | 40,925 |
|
| Goodwill | 2,589 |
| | 2,589 |
| | 2,589 |
|
| Other intangible assets | 196 |
| | 214 |
| | 270 |
|
| Deferred income taxes, net | 10,009 |
| | 5,788 |
| | 4,835 |
|
| Other assets | 45,671 |
| | 22,196 |
| | 13,465 |
|
| Total assets | $ | 2,053,625 |
| | $ | 1,882,182 |
| | $ | 1,897,758 |
|
| | | | | | |
| LIABILITIES AND SHAREHOLDERS’ EQUITY | | | | | |
| Liabilities | | | | | |
| Deposits | | | | | |
| Noninterest bearing deposits | $ | 168,448 |
| | $ | 191,518 |
| | $ | 161,844 |
|
| Interest bearing deposits | 1,512,684 |
| | 1,300,385 |
| | 1,359,521 |
|
| Total deposits | 1,681,132 |
| | 1,491,903 |
| | 1,521,365 |
|
| | | | | | |
| Advances from the Federal Home Loan Bank | 125,000 |
| | 150,000 |
| | 150,000 |
|
| Subordinated debentures | 25,220 |
| | 25,207 |
| | 25,168 |
|
| Accrued expenses and other liabilities | 52,059 |
| | 32,675 |
| | 24,384 |
|
| Total liabilities | 1,883,411 |
| | 1,699,785 |
| | 1,720,917 |
|
| | | | | | |
| Shareholders’ equity | | | | | |
| Common stock, no par value | 119,953 |
| | 120,589 |
| | 120,750 |
|
| Retained earnings | 69,595 |
| | 69,324 |
| | 59,247 |
|
| Accumulated other comprehensive loss | (19,334 | ) | | (7,516 | ) | | (3,156 | ) |
| Total shareholders’ equity | 170,214 |
| | 182,397 |
| | 176,841 |
|
| | | | | | |
| Total liabilities and shareholders’ equity | $ | 2,053,625 |
| | $ | 1,882,182 |
| | $ | 1,897,758 |
|
BANKWELL FINANCIAL GROUP, INC.
CONSOLIDATED STATEMENTS OF INCOME (unaudited)
(Dollars in thousands, except share data)
|
| | | | | | | | | | | |
| | For the Quarter Ended |
| | March 31,
2020 | | December 31,
2019 | | March 31,
2019 |
| Interest and dividend income | | | | | |
| Interest and fees on loans | $ | 18,985 |
| | $ | 18,648 |
| | $ | 20,096 |
|
| Interest and dividends on securities | 825 |
| | 858 |
| | 997 |
|
| Interest on cash and cash equivalents | 286 |
| | 427 |
| | 383 |
|
| Total interest and dividend income | 20,096 |
| | 19,933 |
| | 21,476 |
|
| | | | | | |
| Interest expense | | | | | |
| Interest expense on deposits | 5,709 |
| | 5,948 |
| | 6,100 |
|
| Interest expense on borrowings | 1,101 |
| | 1,103 |
| | 1,103 |
|
| Total interest expense | 6,810 |
| | 7,051 |
| | 7,203 |
|
| | | | | | |
| Net interest income | 13,286 |
| | 12,882 |
| | 14,273 |
|
| Provision for loan losses | 3,185 |
| | 310 |
| | 195 |
|
| Net interest income after provision for loan losses | 10,101 |
| | 12,572 |
| | 14,078 |
|
| | | | | | |
| Noninterest income | | | | | |
| Bank owned life insurance | 243 |
| | 250 |
| | 249 |
|
| Service charges and fees | 217 |
| | 247 |
| | 249 |
|
| Gains and fees from sales of loans | — |
| | 382 |
| | 89 |
|
| Other | 612 |
| | 169 |
| | 721 |
|
| Total noninterest income | 1,072 |
| | 1,048 |
| | 1,308 |
|
| | | | | | |
| Noninterest expense | | | | | |
| Salaries and employee benefits | 5,380 |
| | 5,162 |
| | 4,836 |
|
| Occupancy and equipment | 1,909 |
| | 1,928 |
| | 1,887 |
|
| Professional services | 711 |
| | 402 |
| | 590 |
|
| Data processing | 536 |
| | 499 |
| | 512 |
|
| Director fees | 295 |
| | 224 |
| | 189 |
|
| Marketing | 162 |
| | 220 |
| | 193 |
|
| FDIC insurance | 70 |
| | — |
| | 123 |
|
| Amortization of intangibles | 18 |
| | 18 |
| | 19 |
|
| Other | 578 |
| | 771 |
| | 626 |
|
| Total noninterest expense | 9,659 |
| | 9,224 |
| | 8,975 |
|
| | | | | | |
| Income before income tax expense | 1,514 |
| | 4,396 |
| | 6,411 |
|
| Income tax expense | 151 |
| | 924 |
| | 1,331 |
|
| Net income | $ | 1,363 |
| | $ | 3,472 |
| | $ | 5,080 |
|
| | | | | | |
| Earnings Per Common Share: | | | | | |
| Basic | $ | 0.17 |
| | $ | 0.44 |
| | $ | 0.65 |
|
| Diluted | $ | 0.17 |
| | $ | 0.44 |
| | $ | 0.65 |
|
| | | | | | |
| Weighted Average Common Shares Outstanding: | | | | | |
| Basic | 7,750,135 |
| | 7,745,227 |
| | 7,760,460 |
|
| Diluted | 7,778,762 |
| | 7,773,780 |
| | 7,776,378 |
|
| Dividends per common share | $ | 0.14 |
| | $ | 0.13 |
| | $ | 0.13 |
|
BANKWELL FINANCIAL GROUP, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (unaudited)
|
| | | | | | | | |
| | For the Quarter Ended |
| | March 31, 2020 | | December 31,
2019 | | March 31, 2019 |
| Performance ratios: | | | | | |
Return on average assets(1) | 0.29 | % | | 0.73 | % | | 1.10 | % |
Return on average stockholders' equity(1) | 3.03 | % | | 7.68 | % | | 11.60 | % |
Return on average tangible common equity(1) | 3.07 | % | | 7.80 | % | | 11.80 | % |
| Net interest margin | 2.98 | % | | 2.92 | % | | 3.19 | % |
Efficiency ratio(2) | 67.1 | % | | 66.1 | % | | 57.5 | % |
| Net loan charge-offs as a % of average loans | — | % | | — | % | | 0.01 | % |
Dividend payout ratio(3) | 82.35 | % | | 29.55 | % | | 20.00 | % |
(1)March 31, 2020 performance ratios are negatively impacted by incremental COVID-19 related loan loss reserves totaling approximately $3.0 million. Please refer to the First Quarter 2020 Investor Presentation for more detailed information of the impact of the incremental loan loss reserve related to COVID-19 exposure on the Company’s performance ratios.
(2)Efficiency ratio is defined as noninterest expense, less other real estate owned expenses and amortization of intangible assets, divided by our operating revenue, which is equal to net interest income plus noninterest 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.
(3)The dividend payout ratio is calculated by dividing dividends per share by earnings per share.
|
| | | | | | | | | | | |
| | As of |
| | March 31, 2020 | | December 31,
2019 | | March 31, 2019 |
| Capital ratios: | | | | | |
Total Common Equity Tier 1 Capital to Risk-Weighted Assets(1) | 12.14 | % | | 12.53 | % | | 12.00 | % |
Total Capital to Risk-Weighted Assets(1) | 13.13 | % | | 13.35 | % | | 12.94 | % |
Tier I Capital to Risk-Weighted Assets(1) | 12.14 | % | | 12.53 | % | | 12.00 | % |
Tier I Capital to Average Assets(1) | 10.84 | % | | 10.99 | % | | 10.53 | % |
| Tangible common equity to tangible assets | 8.16 | % | | 9.56 | % | | 9.18 | % |
Tangible book value per common share(2) | $ | 21.69 |
| | $ | 23.15 |
| | $ | 22.38 |
|
(1)Represents Bank ratios. Current period capital ratios are preliminary subject to finalization of the FDIC Call Report.
(2)Excludes unvested restricted shares of 154,012, 110,975, and 99,061 as of March 31, 2020, December 31, 2019, and March 31, 2019, respectively.
BANKWELL FINANCIAL GROUP, INC.
ASSET QUALITY (unaudited)
(Dollars in thousands)
|
| | | | | | | | | | | |
| | For the Quarter Ended |
| | March 31,
2020 | | December 31,
2019 | | March 31,
2019 |
| Allowance for loan losses: | | | | | |
| Balance at beginning of period | $ | 13,509 |
| | $ | 13,212 |
| | $ | 15,462 |
|
| Charge-offs: | | | | | |
| Residential real estate | — |
| | — |
| | (233 | ) |
| Commercial business | (8 | ) | | (13 | ) | | (3 | ) |
| Consumer | (2 | ) | | (5 | ) | | (2 | ) |
| Total charge-offs | (10 | ) | | (18 | ) | | (238 | ) |
| Recoveries: | | | | | |
| Commercial business | 1 |
| | 1 |
| | 10 |
|
| Consumer | 1 |
| | 4 |
| | 1 |
|
| Total recoveries | 2 |
| | 5 |
| | 11 |
|
| Net loan charge-offs | (8 | ) | | (13 | ) | | (227 | ) |
| Provision for loan losses | 3,185 |
| | 310 |
| | 195 |
|
| Balance at end of period | $ | 16,686 |
| | $ | 13,509 |
| | $ | 15,430 |
|
|
| | | | | | | | | | | |
| | As of |
| | March 31, 2020 | | December 31,
2019 | | March 31, 2019 |
| Asset quality: | | | | | |
| Nonaccrual loans | | | | | |
| Residential real estate | $ | 1,532 |
| | $ | 1,560 |
| | $ | 3,516 |
|
| Commercial real estate | 5,339 |
| | 5,222 |
| | 5,880 |
|
| Commercial business | 3,783 |
| | 3,806 |
| | 3,837 |
|
| Total nonaccrual loans | 10,654 |
| | 10,588 |
| | 13,233 |
|
| Other real estate owned | — |
| | — |
| | — |
|
| Total nonperforming assets | $ | 10,654 |
| | $ | 10,588 |
| | $ | 13,233 |
|
| | | | | | |
| Nonperforming loans as a % of total loans | 0.66 | % | | 0.66 | % | | 0.83 | % |
| Nonperforming assets as a % of total assets | 0.52 | % | | 0.56 | % | | 0.70 | % |
| Allowance for loan losses as a % of total loans | 1.03 | % | | 0.84 | % | | 0.97 | % |
| Allowance for loan losses as a % of nonperforming loans | 156.62 | % | | 127.59 | % | | 116.60 | % |
Total nonaccrual loans were $10.7 million as of March 31, 2020, of which $4.6 million is guaranteed by the Small Business Administration (SBA). Nonperforming assets as a percentage of total assets was 0.52% at March 31, 2020, down from 0.56% at December 31, 2019. The allowance for loan losses at March 31, 2020 was $16.7 million, representing 1.03% of total loans. The $3.2 million increase in the allowance for loan losses at March 31, 2020 when compared to December 31, 2019 was primarily due to incremental loan loss reserves for potential COVID-19 exposure.
BANKWELL FINANCIAL GROUP, INC.
LOAN & DEPOSIT PORTFOLIO (unaudited)
(Dollars in thousands)
|
| | | | | | | | | | |
| Period End Loan Composition | March 31,
2020 | | December 31,
2019 | | % Change |
| Residential Real Estate | $ | 139,353 |
| | $ | 147,109 |
| | (5.3 | )% |
Commercial Real Estate(1) | 1,131,206 |
| | 1,128,614 |
| | 0.2 |
|
| Construction | 107,594 |
| | 98,583 |
| | 9.1 |
|
| Total Real Estate Loans | 1,378,153 |
| | 1,374,306 |
| | 0.3 |
|
| | | | | | |
| Commercial Business | 242,705 |
| | 230,028 |
| | 5.5 |
|
| | | | | | |
| Consumer | 113 |
| | 150 |
| | (24.7 | ) |
| Total Loans | $ | 1,620,971 |
| | $ | 1,604,484 |
| | 1.0 | % |
| | | | | | |
| (1) Includes owner occupied commercial real estate. |
|
| | | | | | | | | | |
| Period End Deposit Composition | March 31,
2020 | | December 31,
2019 | | % Change |
| Noninterest bearing demand | $ | 168,448 |
| | $ | 191,518 |
| | (12.0 | )% |
| NOW | 69,562 |
| | 70,020 |
| | (0.7 | ) |
| Money Market | 455,634 |
| | 419,495 |
| | 8.6 |
|
| Savings | 164,673 |
| | 183,729 |
| | (10.4 | ) |
| Time | 822,815 |
| | 627,141 |
| | 31.2 |
|
| Total Deposits | $ | 1,681,132 |
| | $ | 1,491,903 |
| | 12.7 | % |
Total deposits were $1.7 billion at March 31, 2020 compared to $1.5 billion at December 31, 2019, an increase of $0.2 billion or 12.7%. The increase in total deposits was primarily a result of an increase in brokered deposits to expand on-balance sheet liquidity.
BANKWELL FINANCIAL GROUP, INC.
NONINTEREST INCOME & EXPENSE - QTD (unaudited)
(Dollars in thousands)
|
| | | | | | | | | | | | | | | | | |
| | For the Quarter Ended | | | | |
| Noninterest income | March 31, 2020 | | December 31, 2019 | | March 31, 2019 | | Mar 20 vs. Dec 19 % Change | | Mar 20 vs. Mar 19 % Change |
| Bank owned life insurance | $ | 243 |
| | $ | 250 |
| | $ | 249 |
| | (2.8 | )% | | (2.4 | )% |
| Service charges and fees | 217 |
| | 247 |
| | 249 |
| | (12.1 | ) | | (12.9 | ) |
| Gains and fees from sales of loans | — |
| | 382 |
| | 89 |
| | (100.0 | ) | | (100.0 | ) |
| Other | 612 |
| | 169 |
| | 721 |
| | 262.1 |
| | (15.1 | ) |
| Total noninterest income | $ | 1,072 |
| | $ | 1,048 |
| | $ | 1,308 |
| | 2.3 | % | | (18.0 | )% |
Noninterest income decreased by $0.2 million, or 18%, to $1.1 million for the quarter ended March 31, 2020 compared to the quarter ended March 31, 2019. The decrease in noninterest income was primarily a result of the absence of gains and fees from the sales of loans and a decrease of $0.2 million in income recognized from interest rate swap fees for the quarter ended March 31, 2020 compared to the same period in 2019.
|
| | | | | | | | | | | | | | | | | |
| | For the Quarter Ended | | | | |
| Noninterest expense | March 31, 2020 | | December 31, 2019 | | March 31, 2019 | | Mar 20 vs. Dec 19 % Change | | Mar 20 vs. Mar 19 % Change |
| Salaries and employee benefits | $ | 5,380 |
| | $ | 5,162 |
| | $ | 4,836 |
| | 4.2 | % | | 11.2 | % |
| Occupancy and equipment | 1,909 |
| | 1,928 |
| | 1,887 |
| | (1.0 | ) | | 1.2 |
|
| Professional services | 711 |
| | 402 |
| | 590 |
| | 76.9 |
| | 20.5 |
|
| Data processing | 536 |
| | 499 |
| | 512 |
| | 7.4 |
| | 4.7 |
|
| Director fees | 295 |
| | 224 |
| | 189 |
| | 31.7 |
| | 56.1 |
|
| Marketing | 162 |
| | 220 |
| | 193 |
| | (26.4 | ) | | (16.1 | ) |
| FDIC insurance | 70 |
| | — |
| | 123 |
| | N/A |
| | (43.1 | ) |
| Amortization of intangibles | 18 |
| | 18 |
| | 19 |
| | — |
| | (5.3 | ) |
| Other | 578 |
| | 771 |
| | 626 |
| | (25.0 | ) | | (7.7 | ) |
| Total noninterest expense | $ | 9,659 |
| | $ | 9,224 |
| | $ | 8,975 |
| | 4.7 | % | | 7.6 | % |
Noninterest expense increased by $0.7 million, or 8%, to $9.7 million for the quarter ended March 31, 2020 compared to the quarter ended March 31, 2019. The increase in noninterest expense was primarily driven by an increase in salaries and employee benefits and professional services. Salaries and employee benefits totaled $5.4 million for the quarter ended March 31, 2020, an increase of $0.5 million when compared to the same period in 2019. The increase in salaries and employee benefits was primarily driven by an increase in full time equivalent employees. Full time equivalent employees totaled 154 at March 31, 2020 compared to 140 at March 31, 2019. Professional services totaled $0.7 million for the quarter ended March 31, 2020, an increase of $0.1 million when compared to the same period in 2019. The increase in professional services was due to one-time consulting and recruiting costs of $0.2 million associated with the transition from our Chief Lending Officer's retirement to the on-boarding of our Chief Banking Officer.
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 | March 31, 2020 | | December 31, 2019 | | March 31, 2019 |
| Total Equity | $ | 170,214 |
| | $ | 182,397 |
| | $ | 176,841 |
|
| Less: | | | | | |
| Goodwill | 2,589 |
| | 2,589 |
| | 2,589 |
|
| Other intangibles | 196 |
| | 214 |
| | 270 |
|
| Tangible Common Equity | $ | 167,429 |
| | $ | 179,594 |
| | $ | 173,982 |
|
| | | | | | |
| Total Assets | $ | 2,053,625 |
| | $ | 1,882,182 |
| | $ | 1,897,758 |
|
| Less: | | | | | |
| Goodwill | 2,589 |
| | 2,589 |
| | 2,589 |
|
| Other intangibles | 196 |
| | 214 |
| | 270 |
|
| Tangible Assets | $ | 2,050,840 |
| | $ | 1,879,379 |
| | $ | 1,894,899 |
|
| | | | | | |
| Tangible Common Equity to Tangible Assets | 8.16 | % | | 9.56 | % | | 9.18 | % |
|
| | | | | | | | | | | |
| | As of |
| Computation of Tangible Book Value per Common Share | March 31, 2020 | | December 31, 2019 | | March 31, 2019 |
| Total shareholders' equity | $ | 170,214 |
| | $ | 182,397 |
| | $ | 176,841 |
|
| Less: | | | | | |
| Preferred stock | — |
| | — |
| | — |
|
| Common shareholders' equity | $ | 170,214 |
| | $ | 182,397 |
| | $ | 176,841 |
|
| Less: | | | | | |
| Goodwill | 2,589 |
| | 2,589 |
| | 2,589 |
|
| Other intangibles | 196 |
| | 214 |
| | 270 |
|
| Tangible common shareholders' equity | $ | 167,429 |
| | $ | 179,594 |
| | $ | 173,982 |
|
| Common shares | 7,871,419 |
| | 7,868,803 |
| | 7,873,471 |
|
| Less: | | | | | |
| Shares of unvested restricted stock | 154,012 |
| | 110,975 |
| | 99,061 |
|
| Common shares less unvested restricted stock | 7,717,407 |
| | 7,757,828 |
| | 7,774,410 |
|
| Book value per share | $ | 22.06 |
| | $ | 23.51 |
| | $ | 22.75 |
|
| Less: | | | | | |
| Effects of intangible assets | $ | 0.36 |
| | $ | 0.36 |
| | $ | 0.37 |
|
| | | | | | |
| Tangible Book Value per Common Share | $ | 21.69 |
| | $ | 23.15 |
| | $ | 22.38 |
|
BANKWELL FINANCIAL GROUP, INC.
RECONCILIATION OF GAAP TO NON-GAAP MEASURES (unaudited) - Continued
(Dollars in thousands)
|
| | | | | | | | | | | |
| | For the Quarter Ended |
| Computation of Efficiency Ratio | March 31, 2020 | | December 31, 2019 | | March 31, 2019 |
| Noninterest expense | $ | 9,659 |
| | $ | 9,224 |
| | $ | 8,975 |
|
| Less: | | | | | |
| Amortization of intangible assets | 18 |
| | 18 |
| | 19 |
|
| Adjusted noninterest expense | $ | 9,641 |
| | $ | 9,206 |
| | $ | 8,956 |
|
| Net interest income | $ | 13,286 |
| | $ | 12,882 |
| | $ | 14,273 |
|
| Noninterest income | 1,072 |
| | 1,048 |
| | 1,308 |
|
| Operating revenue | $ | 14,358 |
| | $ | 13,930 |
| | $ | 15,581 |
|
| | | | | | |
| Efficiency ratio | 67.1 | % | | 66.1 | % | | 57.5 | % |
|
| | | | | | | | | | | |
| | For the Quarter Ended |
| Computation of Return on Average Tangible Common Equity | March 31, 2020 | | December 31, 2019 | | March 31, 2019 |
| Net Income Attributable to Common Shareholders | $ | 1,363 |
| | $ | 3,472 |
| | $ | 5,080 |
|
| Total average shareholders' equity | $ | 181,127 |
| | $ | 179,312 |
| | $ | 177,532 |
|
| Less: | | | | | |
| Average Goodwill | 2,589 |
| | 2,589 |
| | 2,589 |
|
| Average Other intangibles | 208 |
| | 226 |
| | 283 |
|
| Average tangible common equity | $ | 178,330 |
| | $ | 176,497 |
| | $ | 174,660 |
|
| | | | | | |
| Annualized Return on Average Tangible Common Equity | 3.07 | % | | 7.80 | % | | 11.80 | % |
BANKWELL FINANCIAL GROUP, INC.
NET INTEREST MARGIN ANALYSIS ON A FULLY TAX EQUIVALENT BASIS - QTD (unaudited)
(Dollars in thousands)
|
| | | | | | | | | | | | | | | | | | | | | |
| | For the Quarter Ended |
| | March 31, 2020 | | March 31, 2019 |
| | Average Balance | | Interest | | Yield/ Rate (5) | | Average Balance | | Interest | | Yield/ Rate (5) |
| Assets: | | | | | | | | | | | |
| Cash and Fed funds sold | $ | 73,497 |
| | $ | 286 |
| | 1.56 | % | | $ | 73,128 |
| | $ | 383 |
| | 2.12 | % |
Securities(1) | 98,566 |
| | 775 |
| | 3.15 |
| | 117,575 |
| | 932 |
| | 3.17 |
|
| Loans: | | | | | | | | | | | |
| Commercial real estate | 1,108,709 |
| | 13,024 |
| | 4.65 |
| | 1,065,636 |
| | 12,426 |
| | 4.66 |
|
| Residential real estate | 143,826 |
| | 1,357 |
| | 3.77 |
| | 176,490 |
| | 1,703 |
| | 3.86 |
|
Construction(2) | 100,437 |
| | 1,215 |
| | 4.78 |
| | 81,136 |
| | 1,124 |
| | 5.54 |
|
| Commercial business | 258,848 |
| | 3,386 |
| | 5.18 |
| | 276,744 |
| | 4,838 |
| | 6.99 |
|
| Consumer | 156 |
| | 3 |
| | 8.37 |
| | 323 |
| | 5 |
| | 6.42 |
|
| Total loans | 1,611,976 |
| | 18,985 |
| | 4.66 |
| | 1,600,329 |
| | 20,096 |
| | 5.02 |
|
| Federal Home Loan Bank stock | 7,325 |
| | 103 |
| | 5.65 |
| | 7,587 |
| | 137 |
| | 7.30 |
|
| Total earning assets | 1,791,364 |
| | $ | 20,149 |
| | 4.45 | % | | 1,798,619 |
| | $ | 21,548 |
| | 4.79 | % |
| Other assets | 111,585 |
| | | | | | 78,903 |
| | | | |
| Total assets | $ | 1,902,949 |
| | | | | | $ | 1,877,522 |
| | | | |
| | | | | | | | | | | | |
| Liabilities and shareholders' equity: | | | | | | | | | | | |
| Interest bearing liabilities: | | | | | | | | | | | |
| NOW | $ | 67,925 |
| | $ | 28 |
| | 0.17 | % | | $ | 58,812 |
| | $ | 47 |
| | 0.33 | % |
| Money market | 438,588 |
| | 1,492 |
| | 1.37 |
| | 473,084 |
| | 1,981 |
| | 1.70 |
|
| Savings | 185,478 |
| | 672 |
| | 1.46 |
| | 180,367 |
| | 769 |
| | 1.73 |
|
| Time | 640,580 |
| | 3,517 |
| | 2.21 |
| | 627,510 |
| | 3,303 |
| | 2.13 |
|
| Total interest bearing deposits | 1,332,571 |
| | 5,709 |
| | 1.72 |
| | 1,339,773 |
| | 6,100 |
| | 1.85 |
|
| Borrowed Money | 172,464 |
| | 1,101 |
| | 2.53 |
| | 175,515 |
| | 1,103 |
| | 2.51 |
|
| Total interest bearing liabilities | 1,505,035 |
| | $ | 6,810 |
|
| 1.82 | % | | 1,515,288 |
| | $ | 7,203 |
| | 1.93 | % |
| Noninterest bearing deposits | 179,066 |
| | | | | | 163,558 |
| | | | |
| Other liabilities | 37,721 |
| | | | | | 21,144 |
| | | | |
| Total liabilities | 1,721,822 |
| | | | | | 1,699,990 |
| | | | |
| Shareholders' equity | 181,127 |
| | | | | | 177,532 |
| | | | |
| Total liabilities and shareholders' equity | $ | 1,902,949 |
| | | | | | $ | 1,877,522 |
| | | | |
Net interest income(3) | | | $ | 13,339 |
| | | | | | $ | 14,345 |
| | |
| Interest rate spread |
| | | | 2.63 | % | | | | | | 2.86 | % |
Net interest margin(4) | | | | | 2.98 | % | | | | | | 3.19 | % |
(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 $53 thousand and $72 thousand for the quarters ended March 31, 2020 and 2019, respectively.
(4)Annualized net interest income as a percentage of earning assets.
(5)Yields are calculated using the contractual day count convention for each respective product type.
