BWFG - Earnings call transcript Q4 2024 | Bankwell Financial Group, Inc.

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good morning, ladies and gentlemen, and thank you for standing by. My name is Kelvin, and I will be your conference operator today. At this time, I would like to welcome everyone to the Bankwell Financial Group Fourth Quarter 2024 Earnings Call. [Operator Instructions] I would now like to turn the call over to Courtney Sacchetti, Executive Vice President and Chief Financial Officer. Please go ahead.

Courtney Sacchetti

you. Thank everyone. morning, Good fourth earnings Bankwell's call. quarter to conference XXXX Welcome our and over presentation on To for and supporting visit Presentations call Events Internet to the at review the go please materials. reference access the tab will the the and investor.mybankwell.com we materials call, website that

our Our fourth on quarter is release earnings available also website.

discussion and Our statements non-GAAP SEC results turn participants XX-Q All Officer. to Gruseke, forward-looking our for financial now statements. filings, Forms and may those XX-K should forward-looking on and of Chris statements could contain any Executive will cause to Thank factors actual today complete the I those measures. to remarks Chief that call over may to differ from found including refer Bankwell's a you. And refer X-K,

Christopher Gruseke

and Board your during President like to note portfolio we of loan the quarter Bankwell quarter, Financial course of continue regarding our It's Banking loans today's previously discuss Directors, for and Courtney Sacchetti, financial optimistic non-performing joining that saw of XXXX. provide the be its performance and Bankwell's Bankwell subsidiary, Welcome, no in status XXXX. disclosed This to of I'd I'm the the call, operating over and in and to Courtney. important President fourth Matt appreciate you. results we've deterioration, our our updates Bank. We Officer; to and our Financial XXXX to we on credit recent with for several this thanks On of Matt performance performance joined will to the fourth we about Group and and our quarter, including morning, everyone McNeill, of behalf interest his promotion opportunity Chief our by congratulate call. earnings On Thanks, Officer. Chief our

non-performing fourth primarily were charge-offs. $X.XX, of included X million results GAAP share by financial the in impacted consisted net The earnings diluted which charge-offs assets. per Our fully $X quarter of of

announced X-K non-performing sale XXXX. million. $XXX,XXX C&I book in on an in a balance this disposition of asset. of disposed fully was the loan the charge-off of loan assets a finalizes non-performing certain $X.X July write-down filing and initial credit The we First, of this with on The this

of loan which upon regarding took transferred the our to The at non-performing to ratio $X.X Slide a million, during in This loan sales reduce fourth further by non-accrual and possession Both resulted carrying the $X.X status construction this quarter, $XX.X points. Also charged we OREO largest should way the asset details value XX, million. XXXX, have can non-performing on will Further loan impact XX investor which property the non-performing points. in neutral XX net sale into sale income. sale reduce asset basis we full for subsequent a signed agreement went Second, of agreement found future will to presentation. this of of and signed its par December for sale COVID $X.X the asset ratio a non-performing our be of through pandemic and book Subsequent been purchase NPAs the days early for OREO value, legal XXXX, to and XX, impact purchase million December the basis system. XX has working a million we value. the of a off by

at stands continue estate, versus we XXXX. at at risk-based of real XXXX and XXX% commercial XXX% at our which to year-end reduce year-end year-end capital Regarding total CRE XXXX XXX% concentration,

our linked by bank $XXX quarter, the of continued which outstanding sheet, growth base. We to strides the the total third liability over Direct quality had points core reducing quarter to pleased a normalized $XX diversity X has million, to while the I'm basis deposits million product, million by quarter total another side positioned the by a the of our Bankwell while $XXX grew simultaneously remain we balances well On and balance costs curve. grew broker deposits with deposit the bringing a basis. yield compared for in of quarter, deposit fell within third made improve Overall, balance the million productive the on $XX sheet, fourth liability-sensitive With another quarter.

financial greater our Officer, discuss to Now over detail, Sacchetti. results Chief it I'll turn our Courtney Financial in to

Courtney Sacchetti

Thank you, Chris.

to quarter $X.X relative assets. basis which XX XX of quarter. fees, quarter-over-quarter, function points Approximately return the Reported linked of revenue for average $X net the net representing basis reduction pre-provision down quarter a million interest reduction the points, a XX third on of lower basis PPNR relative fourth Our $X.X the quarter. million to were million linked was loan was points XXX basis margin of point in was that

quarter's than we were loan us, note loan would quarter-to-quarter. fees lower that vary this average While can fees for from

our million Our $X.X to loan Also full to year of quarterly quarter. XXXX XXXX million lower average the position cash our was fees million. NIM in compares elevated contributing of during a approximately $X.X $X with

NIM Our were the million point which cash approximately X prior contributed average drag balances cash that basis been quarter, had on a deployed. otherwise higher to $XX than

activity, asset points next average quarter's else offset total As of in partly an save to to annualized a basis improvement which we operate employee and the repricing our by services, our to anticipate quarter benefits. We stable mainly rates. All loans time expect period, due to OREO expense XXX retail but the of on Also, equates salaries reduction additional billion maintain XX billion processing we points deposits an XX professional $X.X $X.XX we Chris of in brokered same as at have million money And basis included points compared non-interest $X.X $X.X pricing. linked from $XX.X which term lower linked with and on this to approximate no million mentioned, approximately based XX $XXX also repricing expect in discussed was The at prior down in to quarter basis quarter to margin deposits in benign the movement points on quarter's reduction additional expenses in an in on and by gain we're equal, CDs reprice. credit market and margin on trends was one-time lower, we included occupancy of a having at to expand $XXX Fourth fourth expense or quarter and total $XXX,XXX total the non-maturity data XX million we of remain to to costs any had mature non-interest sale approximately or could fourth current The goal an funds, quarter of to net elevated $X.X both in lower and in million of This earnings points or compared over credit of modestly in per our charge-offs deterioration. impacted to XXXX. last points to basis in basis SBA current costs, provision months, previously despite further rates by share XX expect our Fed a X include were repricing a continue no quarter. of expansion. CDs better. average even fees. basis which as expense the annualized deposit first assumes fourth about million favorable of deposits increase basis basis point specifically, cuts an benefit maturing continues ratio, was million benefit XXXX $XXX,XXX, income to to $X.X expense the pick-up steadfast margin further we though basis. Non-interest million $X XX an The to compared reprice by our time More of a Chris. results, quarter

Finally, a on our financial few condition. thoughts

Our any Chris fourth up balance back hand shares but versus authorization of shares assets during year-end the did it liquid his for well XXXX. I'll quarter, remarks. have of the $X.X XXX,XXX repurchase sheet modestly quarter. closing on and now with linked We not remains remaining capitalized to our total as billion,

Christopher Gruseke

Thank you, Courtney.

today's like the progress Before as to credit, performance to and productive comment for the some I'd for improved disappointing in on XXXX XXXX of was several well financial on expectations year beyond. lay XXXX. due company. XXXX that Bankwell's achievements groundwork call, excellent We've made our we Despite initiatives performance a for financial the as conclude

year-over-year. decreased launch million Bankwell this brokered to successful of First, which due exposure of the we've decrease $XXX deposits, is to significantly reduced Direct. our half Approximately by

Second, in while especially platform, in we've an maintained basis the made important points XXX management, XXXX. risk human and investments capital, expense significant efficient technology we've to for versus the basis non-interest at areas in holding XXX of points XXXX ratio asset

originating an lending SBA successfully having XXXX. started loans of foundation division, Third, in laid December SBA for we've the

million. we growing Looking to to growth interest $XX XXXX, million to modest with to range of the our anticipate for of $XX income net X% ahead X% loan outlook

XXXX's Overall, are million doubling SBA the year, whose We of of a have Bankwell to will non-interest approximately a in our XXXX. To degree dedication performance XXXX like question-and-answer here million, to outstanding expense of evolution expect thank $X please company growth all of teammates grow our financial we $X you concludes total I'd discussed non-interest in session? our prepared remarks. and Additionally, lending to of roughly million close, possible. This we million at investment Bankwell to optimistic for Operator, quite initiatives. improved performance inclusive healthy $XX previously result ongoing income division. to $XX estimate of coming growing as made the at in our begin effort the

Operator

line the O'Connell of first Your question Instructions] of [Operator KBW. from Chris comes

Christopher O'Connell

Matt, the Congratulations, promotion. on

guess, please. I you off, start origination at? with there, loan on what guys side kind of new are I the what are start the of the to wanted just I and pipeline coming in on So seeing guess, terms yields

Matthew McNeill

the So are seeing indices. Chris, of X%, flat a duration little treasury kind higher. we a of whatever originations either price We're short-term now. right around maybe right bit off kind of most of everything or Things

Christopher O'Connell

to as near-term, then low are seeing until get down. ratio the the Is still kind that know think? it. now far the portfolio that the environment Got half I of CRE guys do the are flattish in of and comes into a the demand 'XX we back as Okay. as moderating right concentration growth you you growth case And you guys

Christopher Gruseke

This Chris, Chris. is

that time, C&I a takes of is is steady of really an CETX you and would we've of in can decline itself So estimate, I than because ratio. function say, see had growth kind our is of mix, care over concentration. increasingly number the the The which more CRE CRE,

in that 'XX over there. moving time So XX% that's and towards -- up XX%, get goal some our towards to is

about the CRE, So not grow it's CETX just working really ratio. it's to

Courtney Sacchetti

On a consolidated basis.

Christopher Gruseke

holdco. yes, Right. Yes,

Christopher O'Connell

in front, do stack you Okay. buyback on prioritization over And course 'XX? opportunistically to rank your of the the guys that of Got guess kind it. how using I terms versus of getting that ratio

Matthew McNeill

is depends trading. buyback stock So it's growth more art on than how of stock and science. the profitable is the trade-off a versus It the where

Courtney? year, would of stock of mix we this all the see variables. on what it's the those So of buybacks I expect magnitude had to

Courtney Sacchetti

Maybe repurchased. we've X,XXX shares

Matthew McNeill

Right. But the of... impact

Courtney Sacchetti

million of $X about capital Sure. is on basis our points ratio. capital X.X buybacks of

not significant it's So XXX,XXX a shares a really buy back at impact share. $XX to

Matthew McNeill

for XX instance, that's points, Yes, capital. basis on

the to goal stock the time it's price CETX have how term we with to [Technical knowledge the longer I holdco but the right what a function that do to both, but and think of the see So yields it, it's is ability we'll and then what's and wider appropriate Difficulty] do and both.

Christopher O'Connell

the I guess, SBA outlook, Okay. you on guess, more very strong, you the less. about, can the on talk side? expect mean, that fee of And pace or obviously, year-over-year, the doubling ramp Is then, -- I I

Christopher Gruseke

Yes, absolutely.

we here, time had smaller So historically the the for We we of get spent needed year infrastructure mean, to a loans actual preparing and volume. originations. larger place. in done but SBA this I lot

Head smaller Division, how now and when SBA in there right actually so And a talk and using Lending in Matt flow. about division, infrastructure can we ready we technology started SBA enable QX loans have originating and first the Michael the technology was of loans announcement put risk. and Johnson. a we're And and And to announced we're targets for have

Matthew McNeill

over time, quarter originations originations already the expect in first definitely we happened. be the There more than Chris, quarter. fourth in first. will have the So Those

over originations 'XX. And sales number the [Technical quarter. about there whole million in is We loan implied our Difficulty] expect the in first the see $XX fees of of to

I second the in be So of coming to X that wouldn't surprised quarters see half.

Christopher O'Connell

portfolio. certainly, are to And But points see deposit I helpful. guess, with it of here, like that kind That's Okay. would guys thought a quarter-over-quarter. above But -- pretty on margin fees. CD costs XX I the the be there impact the the some the the on here. growth bit overall was down surprised balance sounds down basis And much coming you implies NII I of getting from loan little that guess, kind I sheet then aggressively a not was and guide NII ramp that just more the guidance too margin I the well know

can And rest in kind the customer guys those terms portfolio the outside you of of of you of talk there? having what seeing the around So cost about and are CDs? conversations

Christopher Gruseke

Yes. start just me Chris, let off.

decrease, yes, we But fees. can finer is when CDs decreased are decrease funds the the word of regarding part the Courtney So said, of drop the the rolling is put the timing points -- has part it, on timing cost over. of in the of anticipated

a roll number have investor Courtney through we'll on know other we you in gone a So in much continue well. I detail presentation, that. has parts schedule pretty want the and as to and put

what's can price ahead, that maturing and quarter starting market it's what in by what's with maturing ahead. that great the off we granularity maturing quarter So only is. was just the saying and I'm it's not fees, see what the And

are And then to to Matt, can numbers. And [Technical those about you So do you the that? Courtney, add maybe, talk real want Difficulty]

Courtney Sacchetti

think, I head. you hit on it And Chris, the Yes.

accounting Our that fees low would X.XXs first efficient I first of in see normalized use A quarter X.XXs, the as NIM I that in out expanding NIM NIM and more the for XXXX. the can for figure launching quarter. more point to a X.XX% NIM in higher our my cash to not deployment quarter, off my

bit retail down. on to we maturing that to see it, and our have some quarter the little more alluded CDs a price highest be of in first modest X/X at at a cuts. can we'll rate we almost You call reprice like, able And maturing X.XX% least

offering lower And so have CD our but that current we quarter. today, anticipate X.XX% first is on our rate the to the in

Christopher O'Connell

you Difficulty] helpful. is if December [Technical Okay. Yes, margin? that the very I And just then have guess

Courtney Sacchetti

have I'll available. know that with Chris, up have that to I Actually, follow readily you. back I don't

Christopher O'Connell

off of is handle, with sounds starting kind or a take, moving X.XX% give from But up Okay. regardless, like it and there appropriate? like

Courtney Sacchetti

that's I Yes, would what expect. Yes.

as reprice are reprice, in So probably backing for of our NIM to loans closer. this function that the expect approach the I deposits And X% for the the time you I again, full year, would X.XXs our range. into a and year to closer number NIM think

Christopher Gruseke

that further that, system number Courtney what's Chris, no add I to want That's gave, to the by into And for the just built that just action that Fed. assumes us.

Christopher O'Connell

could or there's XX that to Great. -- guess, quarterly front, what's Fed if Yes, maturing I talk you that a move each point about standpoint of from margin. super on what quarter, that the XX-month maybe the I course do the guys a helpful. but impact immediate maybe just period? a little basis might borrowing on CD know is bit dependent over

Christopher Gruseke

So at reprice the have it when reprice, deposits over going Obviously, the we'd they're down. rate. year, to lower term now the course but break to are a going to of

then, certain actually would I well every on would tied So to to rates deposits basis anticipate non-maturity And would expect when are number going just points. that levels lower point for would of mature. beta basis deposits automatically upcoming those Difficulty] the some we move on We're they term XX move in then the weeks. have course, a of deposits [Technical that probably as with pretty Fed. significant just XX drop And be

I are know actually to... that don't breakout percentage tied Courtney, have So deposits, what to we those of of a

Courtney Sacchetti

deposits? maturity our On

Christopher Gruseke

will That basis points. precisely come Yes. down XX

Courtney Sacchetti

I deposits, would I of say that say, billion have is about non-maturity I tied. of If $X XX%

Christopher Gruseke

XX% the full would get beta?

Courtney Sacchetti

are we of exception pricing there, our here balance would then rates And others on have the the offered Yes, but be yes. adjust -- and may that we that.

Christopher Gruseke

Right.

tied a do I than deposits be the have you the on will better points mean, funds, aren't number basis XX than that, specifically greater to that for Matt? XX%. beta So

Matthew McNeill

Yes.

falling probably of time -- now [Technical our XX% the XX% with our point that's will rates the to [Technical construction not and a XX%. Difficulty] if particular beta reached we've deposits be think in Difficulty] I probably closer to --

Christopher O'Connell

the a pretty Very cadence? of the and are think SBA putting And the or to ramp. should kind expense a obviously, guys up ramp Is Okay. about guidance, of that initiatives a right well? some are year course run the and helpful. course How ramping the departments these you of kind as at a good of have to as beginning on XXXX ramp the coming the or you up rate of of SBA in then having bit as or it we is starting of guys XXXX over of these year going over from pick-up the inputting bunch initiatives

Christopher Gruseke

include high a host positions. a at So we're increasing numbers Chris, the that level, of

next still some the excited up show the an a that of that, that over year. spending that that's rate can able the beyond we of And XXX we amount give of can the the number expense. course guided run you, anything asset talent. of when go to ticking We have, of which expenses function sets that's through it's adding come, basis in and to you but right we're future. sort that for and of for lot with been we maintain And the number to mean, a we've that around speak as the people. And we've well we're that's when idea. positions, investment points steady primarily us But pretty people very people, a I getting So year, it's of up a of dose above people the

can get to positions on going million investments making the increase? get a think we the greater $X some as put bones meat million increase and we be and to to scale every But of that us So and numbers this to isn't that more We're $X to year. efficiency. type

Courtney Sacchetti

We've the we've platform. a obviously, been adding -- heads talking about been SBA Sure. lot

people. for some we're risk more a gatherer support year, function credit from and new commercial the those for staff originators So perspective, folks folks, in adding estimates risk deposit our and

of today quarters our be one-time taxes budgeted given -- true-ups we historically our here our there's aren't we that as time. I audit will annual over expenses heads good costs know, some that that note, you that number So our building first on are just are expenses also our on and quarter a higher than related up will some to other plan. for the incentive have year Chris,

anomalies. So couple always of a has XQ

Christopher O'Connell

I the that. Great. and here run of obviously, fourth I got seems timing timing thought the a trending one in be about had of bit or the guess, bit Yes, towards the the into sales? change credit. beginning the X mean, cleaner of in I a circumstance? side, any XXXX, of there but was a just lot rate I terms end guess, non-performing/OREO $XX on to the then talk of after that that the quarter, tail million understood. a pending credit of And Did little yielding Can get you pushed had signed larger in October, clean-up

Matthew McNeill

actually was would They and feeling coming [Technical slight There some Difficulty] that buyer in the a have close weeks. in if the are about off planned, circumstance. go Difficulty] happening... good brought credit change a support that sale since in purchase [Technical Difficulty] a things We're The signed of that [Technical as partner. all

Christopher Gruseke

interrupt I a for and you sale. quarter can purchase a Matt, in was second? definitive The not signature prior

Matthew McNeill

an was LOI. it No,

Christopher Gruseke

intent time, of Letter Chris. at the

the [Technical Difficulty] situation So

Christopher O'Connell

guess, second the on Okay, -- one? timing second okay. And the the I

Matthew McNeill

perhaps is maybe. The second sooner timing on next one week the even

to these forward [Technical we that they're us So we're Difficulty] transactions [Technical Difficulty] signaling pretty going we're money [Technical that confident to [Technical -- earnest go going we're Difficulty] have pretty are Difficulty] transactions to that

Christopher Gruseke

out began that loan the of the it's its And journey is in beginning its here. final loan one a just that very, construction in second is the beginning. COVID. the chapters This playing began very Chris, And

Christopher O'Connell

Got And... it. Okay.

Christopher Gruseke

standpoint stuff couple 'XX. feel from just a news these a XXX this over eventually the with outlook loans putting by starting get points on is we're down with to good bed, NPAs and clean basis of slate, the we So our good year like for

Christopher O'Connell

specific or there chance of as to I I pending And the one of expect sales? you related against at remember it. if on if potential credits some in it any had Yes. charge-offs these -- any can't based understand it that there the release the with deck the commentary recoveries additional And any is don't with the par?

Matthew McNeill

took the then We against we construction amount, or never any about reserved asset. -- the it Plus charges loan. bit little against correct. And a par can that talk

Christopher Gruseke

in pending the Still court.

Matthew McNeill

Correct.

Connecticut the the action the acquired for guarantors is collateral now charged. the loan we bankruptcy So of that borrower. that an OREO through construction We bankruptcy against became have still the personal in

moving And so forward. we're

Christopher O'Connell

just obviously on you update majority then -- vast that and set up Loan the just I And one X the cleans Great. an if here. labeled quarter. think them provide under with of But the notable deck, other to of the X the next in Loan X mature remaining, those? on non-performers ones could

Christopher Gruseke

Sure.

tenant been of March the COVID-impacted a So time, loan. XXXX. vacant do a until of first the day up a They for coincided Loan was move out They lease, time have X on all with which now. period leases had of It's their here. of

various about we million. [Technical from request taken Difficulty] And We $X.X have that be they'll charge-offs, now. the think away maturity, refinance borrower to to able at is that the

cleaned up. that value still it the for to there right there's they to protect. I gets out Difficulty] the And as one looks have lease So here as fully opportunity the building that We [Technical believe sponsors think that

Matthew McNeill

write-downs those way. occurred along the And

Christopher Gruseke

or the X, do banks. this with tenant is been sponsor We taken XXXX majority $XX this the various a have cooperative place. receiver point. quarter down. The in hasn't some when was Correct. Loan that moved to second The club deal first of of in regional million

at point coming through property. We're It's able some the the see can not large property. that's the positive value, see on a this we Difficulty] have this the correct but [Technical a that that cash cash remaining we that carrying all flow balance quite only is we're now chance there to property. a for of value, be may -- recovery So hopeful

Christopher O'Connell

Okay. Got it.

to is multi-quarter be more to a of that work say probably to issue safe So like going out?

Christopher Gruseke

obviously so. yes, it's work out. more believe the several -- would I complicated There's with in banks

Matthew McNeill

had already million charges over taken has loan against that Chris, it. $X And in

Christopher O'Connell

it. Got understood. Yes,

looking ahead and it's of you come the year. And large next Have I think towards into guys feel the focus. think or very an more but portfolio, you million $XX year area those upcoming don't then reviewed of And have how And great. guys XXXX, guys there's it generally, are -- as office obviously, matures about you do you a XX% maturities? portfolio? guys I have Okay, about

Christopher Gruseke

Yes.

probably presentation. of referring you're a on the Page think to you're investor There's XX -- I chart that.

than million other loans flow talked positive remaining Jersey we New Difficulty] about, So the are the -- $XX XX that see that XX club cash deal the you'll there's remaining in just [Technical and pass rated.

good So those. about we're feeling

Some rate their They've of rate have we've a loan. a up had year a those flowing. extension already if cash matured they're X still them in given rise interest or previously market and on come to

remaining So feeling positive about balance. our we're pretty office

Matthew McNeill

And any Chris, in [Technical XXXX that's because be because exceptions, doing drop office not to after the in million there's some balances is the office, $XXX Difficulty] essentially of we off XXXX. and left there's million I'd We $XX made note going that the maturing stopped but then

Christopher O'Connell

it. Got Yes.

tax a then just what's And going forward? guess last good great. Okay, I me for one rate is

Courtney Sacchetti

Yes.

So our obviously, our that in pushed tax We an based on quarter. fourth the rate we was little XXXX elevated taxes through. adjustment had a

with So XX% we're tax confident, comfortable rate. XX.X%, the

push numbers, think comes tax XX.X%. 'XX exactly out our you back our I XX.X% 'XX that adjustment into to If or rate

Operator

We concludes gentlemen, conference please questions you your With at further for that, call. this no that are and you that ask participating and There disconnect ladies your lines. thank time.

Bankwell Financial (BWFG) 23 Jan 252024 Q4 Earnings call transcript