News Column

Bankwell Financial Group Reaches Record Asset Levels of $812 Million; Core Earnings up 20% Year-over-Year

May 1, 2014

NEW CANAAN, Conn.--(BUSINESS WIRE)-- Bankwell Financial Group (OTCBB:BWFG) reported GAAP net income of $1.1 million for the first quarter of 2014, up 11% from the quarter ended March 31, 2013. Excluding $141,000 of merger-related expenses, net income (defined as core net income) for the quarter would have been $1.2 million, representing a 20% year-over-year improvement.

Peyton R. Patterson, President and CEO of Bankwell Financial Group, stated, “Our continued strong balance sheet growth and earnings performance reflect our commitment to shareholders and to the clients we serve throughout Fairfield County, Connecticut.” She added, “Our recently announced definitive agreement to acquire Quinnipiac Bank & Trust Company is a further example of our ability to make smart acquisitions in attractive markets.” At closing, which is expected to take place in the third quarter of 2014, subject to regulatory and shareholder approvals, total assets will exceed $900 million.

Earnings

Revenue (net interest income and non-interest income) for the three months ended March 31, 2014 was $7.9 million, an increase of 24% compared to the same period in the prior year, propelled by a $1.1 million increase in net interest income. Net interest income hit record levels in the first quarter of 2014 at $7.1 million, representing a 17% increase year-over-year. This is attributable to a favorable increase in the net interest margin to 3.97% from the December 31, 2013 year-to-date margin of 3.94%. Non-interest income increased 171% year-over-year to $769 thousand. Contributing to the significant improvement are gains on sales of commercial real estate loans and increases in deposit service charge income, investment services, and BOLI.

Financial Condition

Assets totaled a record $812.1 million at March 31, 2014, a 29% increase over the previous year at March 31. Total loans were $657.2 million, an 18% increase year-over-year, and deposits increased $199.2 million, a 41% increase over March 31, 2013. On a linked quarter basis, loans outstanding increased $25.2 million, up 4% from year end. Deposits showed strong momentum, increasing $17.7 million, up 3% from year end.

Asset Quality

Asset quality remained exceptionally strong at March 31, 2014. Nonperforming assets as a percent of total assets were 0.36% at March 31, 2014, compared to 0.23% at December 31, 2013 and 0.19% at March 31, 2013. The allowance for loan losses as of March 31, 2014 was $8.6 million, representing 1.31% of total loans.

Capital

Stockholders’ equity totaled $71.1 million as of March 31, 2014, an increase of $1.6 million compared to December 31, 2013. As of March 31, 2014, the Tangible Common Equity Ratio and Tangible Book Value per share were 7.35% and $15.79, respectively. As of December 31, 2013, the Company’s Tangible Common Equity Ratio and Tangible Book Value per share were 7.45% and $15.46, respectively.

Bankwell Financial Group filed an S-1 Registration Statement with the Securities and Exchange Commission for an initial public offering (IPO) on April 4, 2014. Added Patterson, “Bankwell expects the IPO to be completed during the second quarter of 2014, and the process will result in approximately $50 million or more in new capital to support our organic growth and acquisition strategies.”This press release shall not constitute an offer to sell or the solicitation of an offer to buy the IPO stock, nor shall there be any sale of these securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to the registration or qualification under the securities laws of any such jurisdiction. An offer or solicitation to buy IPO stock may only be made through a prospectus that will be available after the SEC has declared our Registration Statement to be effective.

About Bankwell Financial Group

Bankwell is a commercial bank that serves the banking and lending needs of residents and businesses throughout Fairfield County, CT. For more information about this press release, interested parties may contact Peyton R. Patterson, President and CEO or Ernest J. Verrico, CFO of Bankwell Financial Group at (203) 972-3838.

For more information, visit www.mybankwell.com.

This press release may contain certain forward-looking statements about the Company. Forward-looking statements include statements regarding anticipated future events and can be identified by the fact that they do not relate strictly to historical or current facts. They often include words such as “believe,” “expect,” “anticipate,” “estimate,” and “intend” or future or conditional verbs such as “will,” “would,” “should,” “could,” or “may.” Forward-looking statements, by their nature, are subject to risks and uncertainties. Certain factors that could cause actual results to differ materially from expected results include increased competitive pressures, changes in the interest rate environment, general economic conditions or conditions within the securities markets, and legislative and regulatory changes that could adversely affect the business in which the Company and its subsidiaries are engaged.

 
BANKWELL FINANCIAL GROUP, INC.
CONSOLIDATED BALANCE SHEETS (unaudited)
(dollars in thousands)
   
March 31,December 31,
20142013
Assets
Cash and due from banks $ 82,246 $ 82,013
Held to maturity investment securities, at amortized cost 13,780 13,816
Available for sale investment securities, at fair value 35,557 28,597
Loans held for sale - 100

Loans receivable (net of allowance for loan losses of $8,603 and $8,382

at March 31, 2014 and December 31, 2013, respectively) 646,583 621,830
Foreclosed real estate 829 829
Accrued interest receivable 2,344 2,360
Federal Home Loan Bank stock, at cost 4,834 4,834
Premises and equipment, net 8,060 7,060
Bank-owned life insurance 10,116 10,031
Other intangible assets 454 481
Deferred income taxes, net 5,514 5,845
Other assets   1,738   1,822
Total assets $ 812,055 $ 779,618
 
Liabilities
Deposits
Noninterest-bearing $ 119,656 $ 118,618
Interest-bearing   559,567   542,927
Total deposits 679,223 661,545
 
Advances from the Federal Home Loan Bank 59,000 44,000
Accrued expenses and other liabilities   2,726   4,588
Total liabilities   740,949   710,133
 
Stockholders' Equity
Preferred stock, senior noncumulative perpetual, Series C, no par;
10,980 shares issued and outstanding at March 31, 2014 and
December 31, 2013, respectively; liquidation value of $1,000 per share. 10,980 10,980
Common stock, no par value; 10,000,000 shares authorized,
3,891,690 and 3,876,393 shares issued, and 3,754,253 and
2,758,200 shares outstanding at March 31, 2014 and
December 31, 2013, respectively. 52,446 52,105
Retained earnings 7,072 5,976
Accumulated other comprehensive income - net unrealized
gains on available for sale securities, net of taxes   608   424
Total stockholders' equity   71,106   69,485
 
Total liabilities and stockholders' equity $ 812,055 $ 779,618
 
 
BANKWELL FINANCIAL GROUP, INC.
CONSOLIDATED STATEMENTS OF INCOME (unaudited)
(dollars in thousands, except per share data)
   

Three Months Ended

March 31,

20142013
Interest income
Interest and fees on loans $ 7,428 $ 6,299
Interest and dividends on securities 411 367
Interest on cash and cash equivalents   22     10  
Total interest income 7,861 6,676
 
Interest expense
Interest expense on deposits 622 439
Interest on Federal Home Loan Bank advances   93     152  
Total interest expense 715 591
 
Net interest income 7,146 6,085
 
Provision for loan losses   211     190  
 
Net interest income after provision for loan losses   6,935     5,895  
 
Noninterest income
Gains and fees from sales and referrals of loans 428 8
Service charges and fees 132 101
Income from bank owned life insurance 85 -
Gain on sale of foreclosed real estate, net - 71
Other   124     104  
Total noninterest income   769     284  
 
Noninterest expense
Salaries and employee benefits 3,337 2,492
Occupancy and equipment 1,068 772
Professional services 369 369
Data processing 337 256
Marketing 110 128
Director fees 138 139
FDIC insurance 118 130
Foreclosed real estate 14 -
Amortization of intangibles 27 -
Merger and acquisition related expenses 141 -
Other   382     312  
Total noninterest expense   6,041     4,598  
 
Income before income tax expense 1,663 1,581
 
Income tax expense   540     569  
 
Net income $ 1,123 $ 1,012
 
Preferred stock dividends   (28 )   (28 )
 
Net income attributable to common stockholders $ 1,095   $ 984  
 
Earnings per common share - basic $ 0.28 $ 0.31
Earnings per common share - diluted 0.28 0.30
 
 
BANKWELL FINANCIAL GROUP, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (unaudited)
(dollars in thousands, except per share data)
     
At or For the Three Months Ended

March 31,

2014

December 31,

2013

March 31,

2013

Performance ratios:
Return on average assets 0.64 % 0.73 % 0.67 %
Return on average stockholders' equity 12.81 % 8.46 % 6.83 %
Net interest margin 3.97 % 3.64 % 4.16 %
Efficiency ratio (1) 74.37 % 87.60 % 72.19 %
 
Capital ratios:
Total Capital to Risk-Weighted Assets (2) 10.74 % 10.74 % 10.45 %
Tier I Capital to Risk-Weighted Assets (2) 9.49 % 9.49 % 9.20 %
Tier I Capital to Average Assets (2) 7.90 % 7.91 % 8.06 %
Tangible common equity to tangible assets 7.35 % 7.45 % 7.73 %
 
Tangible book value per common share $ 15.79 $ 15.46 $ 14.68
 
Asset quality:
Nonaccrual loans $ 2,101 $ 1,003 $ 1,145
Other real estate owned   829     829     52  
Total non-performing assets $ 2,930   $ 1,832   $ 1,197  
 
Loans past due 90 days and still accruing $ 2,914 $ 3,620 $ -
 
Nonperforming loans as a % of total loans 0.32 % 0.16 % 0.20 %
 
Nonperforming assets as a % of total assets 0.36 % 0.23 % 0.19 %
 
Allowance for loan losses as a % of total loans 1.31 % 1.33 % 1.46 %
 
Allowance for loan losses as a % of nonperforming loans 409.48 % 835.69 % 710.39 %
Annualized net loan charge-offs as a % of average loans 0.00 % 0.00 % 0.00 %
 
 
(1) Efficiency ratio is defined as non-interest expenses divided by our operating revenue, which is equal to net interest income plus non-interest income excluding gains and losses on sales of securities. 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.
 
 
BANKWELL FINANCIAL GROUP, INC.
NET INTEREST MARGIN ANALYSIS ON A FULLY TAX EQUIVALENT BASIS
(dollars in thousands)
           
For the Three Months Ended
March 31, 2014March 31, 2013
AverageYield/AverageYield/
BalanceInterestRateBalanceInterestRate
Assets:
Cash and Fed funds sold $ 32,699 $ 22 0.27 % $ 16,986 $ 10 0.25 %
Securities (1) 47,782 501 4.20 % 43,815 451 4.12 %
Loans: (2)
Commercial real estate 327,512 4,193 5.12 % 280,043 3,600 5.14 %
Residential real estate 156,069 1,395 3.58 % 143,814 1,405 3.91 %
Construction (3) 49,318 531 4.30 % 33,443 409 4.89 %
Commercial business 98,061 1,170 4.77 % 60,103 791 5.26 %
Home equity 14,207 127 3.62 % 10,531 96 3.70 %
Consumer   545   13 9.32 %   66   2 10.78 %
Total loans 645,712 7,429 4.60 % 528,000 6,303 4.77 %
Federal Home Loan Bank stock   4,834   18 1.50 %   4,450   4 0.36 %
Total earning assets 731,027   7,970 4.36 % 593,251   6,768 4.56 %
Other assets   38,273   13,590
Total assets   769,300   606,841
 
Liabilities and shareholders' equity:
Deposits:
Noninterest-bearing 123,232 - 0.00 % 78,457 - 0.00 %
NOW 52,596 13 0.10 % 33,542 12 0.14 %
Money market 170,901 180 0.43 % 95,315 91 0.39 %
Savings 107,971 82 0.31 % 132,599 154 0.47 %
Time   183,664   347 0.77 %   121,821   182 0.61 %
Total deposits 638,364 622 0.49 % 461,734 439 0.46 %
Federal Home Loan Bank advances   49,733   93 0.76 %   79,989   152 0.77 %
Total funding liabilities 688,097   715 0.51 % 541,723   591 0.52 %
Other liabilities 10,887 5,831
Shareholders' equity   70,316   59,287
Total liabilities and shareholders' equity   769,300   606,841
Net interest income (4)   7,255   6,177
Interest rate spread 3.85 % 4.04 %
Net interest margin (5) 3.97 % 4.16 %
 
 
(1) Average balances and yields for securities are based on amortized cost.
(2) Average balances and yields for loans exclude nonperforming loans.
(3) Includes commercial and residential real estate construction.
(4) The adjustment for securities and loans taxable equivalency amounted to $109 thousand, $91 thousand, respectively for the three months ended March 31, 2014, and 2013.
(5) Net interest income as a percentage of earning assets.
 





Bankwell Financial Group

Peyton R. Patterson, 203-972-3838

President and CEO

or

Ernest J. Verrico, 203-972-3838

CFO

Source: Bankwell Financial Group


For more stories on investments and markets, please see HispanicBusiness' Finance Channel



Source: Business Wire