Bankwell Financial Group, Inc. (NASDAQ: BWFG) reported GAAP net income of $3.8 million, or $0.48 per share for the first quarter of 2024, versus $10.4 million, or $1.33 per share, for the same period in 2023. Pre-tax, pre-provision net revenue ("PPNR") was $8.8 million, or $1.14 per share, for the first quarter of 2024, versus $14.4 million, or $1.89 per share for the same period in 2023.

The Company's Board of Directors declared a $0.20 per share cash dividend, payable May 21, 2024 to shareholders of record on May 10, 2024.

We recommend reading this earnings release in conjunction with the First Quarter 2024 Investor Presentation, located at http://investor.mybankwell.com/Presentations and included as an exhibit to our April 24, 2024 Current Report on Form 8-K.

Notes Bankwell Financial Group President and CEO, Christopher R. Gruseke:

"Our first quarter earnings of $0.48 per share include the impact of $3.7 million in charge offs related to previously disclosed non-performing loans. The main components of the charge offs were approximately $2.8 million, attributable to a suburban Connecticut office building, and approximately $0.7 million, attributable to the non-guaranteed portions of 2 SBA loans. We encourage investors to review the accompanying Investor Presentation for further details regarding the Bank’s loan portfolio.

Absent any action from the Federal Reserve, we expect our net interest margin to trough slightly higher and earlier than previously projected at approximately 255 to 265 basis points during 2Q 2024. This margin, coupled with the Company’s consistently efficient expense structure, provides a solid earnings base during this challenging interest rate environment. We also re-affirm prior guidance regarding non-interest expense of $53 to $54 million for the full year 2024."

First Quarter 2024 Highlights:

• PPNR was $8.8 million for the quarter ended March 31, 2024.
• Net income of $3.8 million reflects the impact of $3.7 million of loan charge offs.
• Total gross loans were $2.7 billion, decreasing $39.0 million, or 1.4%, compared to December 31, 2023.
• Average yield on total loans was 6.37% for the quarter ended March 31, 2024.
• Nonperforming loans as a percentage of total loans was 1.74% as of March 31, 2024, down from 1.81% as of December 31, 2023.
• Deposits were $2.7 billion, decreasing $63.2 million, or 2.3%, compared to December 31, 2023.
• Brokered deposits decreased $120.0 million, when compared to December 31, 2023.
• Noninterest bearing deposits increased 8.7% to $376.2 million, when compared to December 31, 2023.
• FDIC-insured deposits totaled $1.9 billion and represent 71.4% of total deposits as of March 31, 2024.
• Return on average assets was 0.47% for the quarter ended March 31, 2024.
• Return on average tangible common equity was 5.65% for the quarter ended March 31, 2024.
• The net interest margin was 2.71% for the quarter ended March 31, 2024.
• Noninterest expense to average assets was 1.66% for the quarter ended March 31, 2024.
• Investment securities totaled $126.2 million and represent 4.0% of total assets.
• The Company repurchased 45,924 shares at a weighted average price of $25.33 per share through April 11, 2024.

Earnings and Performance

Revenues (net interest income plus noninterest income) for the quarter ended March 31, 2024 were $22.1 million, versus $27.1 million for the quarter ended March 31, 2023. The decrease in revenues for the quarter was attributable to an increase in interest expense and lower gains from loan sales partially offset by an increase in interest on loans, given higher loan yields¹ and prepayment fees.

Net income for the quarter ended March 31, 2024 was $3.8 million, versus $10.4 million for the quarter ended March 31, 2023. The decrease in net income for the quarter ended 2024 was primarily due to the aforementioned decrease in revenues and an increase in provision for credit losses.

Basic and diluted earnings per share were $0.48 and $0.48, respectively, for the quarter ended March 31, 2024 compared to basic and diluted earnings per share of $1.34 and $1.33, respectively, for the quarter ended March 31, 2023.

The net interest margin (fully taxable equivalent basis) for the quarters ended March 31, 2024 and March 31, 2023 was 2.71% and 3.24%, respectively. The decrease in the net interest margin was due to an increase in funding costs partially offset by an increase in interest income on earning assets.

Allowance for Credit Losses - Loans ("ACL-Loans")

The ACL-Loans was $28.0 million as of March 31, 2024 compared to $27.9 million as of December 31, 2023. The ACL-Loans as a percentage of total loans was 1.04% as of March 31, 2024 compared to 1.03% as of December 31, 2023. Provision for credit losses was $3.7 million for the quarter ended March 31, 2024. The provision for credit losses for the quarter was primarily a result of net loan charge offs of $3.7 million.

Financial Condition

Assets totaled $3.2 billion at March 31, 2024, a decrease of $60.2 million or 1.9% compared to December 31, 2023. Gross loans totaled $2.7 billion at March 31, 2024, a decrease of $39.0 million, or 1.4% compared to December 31, 2023. Deposits totaled $2.7 billion at March 31, 2024, a decrease of $63.2 million, or 2.3% compared to December 31, 2023.

Capital

Shareholders’ equity totaled $268.0 million as of March 31, 2024, an increase of $2.3 million compared to December 31, 2023, primarily a result of net income of $3.8 million for the three months ended March 31, 2024. The increase was partially offset by dividends paid of $1.6 million and share repurchases of $0.9 million.

^{1 - The increase in overall loan yields was 50 bps for the quarter ended March 31, 2024.}

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 Courtney E. Sacchetti, Executive Vice President and Chief Financial Officer of Bankwell Financial Group at (203) 652-0166.

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 banking industry or 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 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, tangible assets, tangible common equity to tangible assets, tangible common shareholders' equity, fully diluted tangible book value per common share, adjusted noninterest expense, operating revenue, efficiency ratio, average tangible common equity, annualized return on average tangible common equity, return on average assets, return on average shareholders' equity, pre-tax, pre-provision net revenue, and the dividend payout ratio are useful to evaluate the relative strength of the Company's performance and 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.

Total nonaccrual loans decreased $2.7 million to $46.5 million as of March 31, 2024 when compared to December 31, 2023. The reduction is primarily due to charge-offs taken during the quarter ended March 31, 2024.

Nonperforming assets as a percentage of total assets decreased to 1.48% at March 31, 2024 from 1.53% at December 31, 2023. The ACL-Loans at March 31, 2024 was $28.0 million, representing 1.04% of total loans.

Gross loans totaled $2.7 billion at March 31, 2024, a decrease of $39.0 million or 1.4% compared to December 31, 2023.

Total deposits were $2.7 billion at March 31, 2024, a decrease of $63.2 million, or 2.3%, when compared to December 31, 2023. Brokered deposits have decreased $120.0 million, when compared to December 31, 2023.

Noninterest expense increased by $0.6 million to $13.3 million for the quarter ended March 31, 2024 compared to the quarter ended March 31, 2023. The increase in noninterest expense was primarily driven by an increase in director fees related to timing of compensation and accelerated vestings in connection with the death of a director.

Noninterest income decreased $0.6 million for the quarter ended March 31, 2024 compared to the quarter ended March 31, 2023. The decrease in noninterest income was driven by lower gains as a result of fewer SBA loan sales for the quarter ended March 31, 2024.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240424641573/en/