Bankwell Financial Group, Inc. (NASDAQ: BWFG) reported GAAP net income of $12.7 million, or $1.58 per share for the third quarter of 2026, versus $12.4 million, or $1.52 per share, for the second quarter of 2026. The Company's Board of Directors declared a $0.20 per share cash dividend, payable November 20, 2026 to shareholders of record on November 9, 2026.

The Company’s reported results include $3.0 million of non-interest expense attributed to core conversion costs incurred during the third quarter of 2026. For the third quarter of 2026, the Company reported GAAP net income of $12.7 million and operating net income⁽¹⁾ of $15.0 million. Operating results are non-GAAP financial measures that exclude certain nonrecurring or transaction-related expenses. Management believes these measures provide additional insight into underlying operating performance; however, they should be considered in addition to, and not as a substitute for, results prepared in accordance with GAAP.

(1) Non-GAAP Financial Measure, refer to the "Non-GAAP Financial Measures" section of this document for additional detail.

Discussion of Outlook; Bankwell Financial Group Chief Executive Officer, Christopher R. Gruseke:

"We delivered record earnings for the third quarter, with GAAP net income of $12.7 million, or $1.58 per share, despite absorbing $3.0 million of costs related to our core conversion. Excluding these costs, operating net income was $15.0 million, or $1.86 per share, and our operating efficiency ratio was 47.5%. These results reflect continued improvement across the Company, as Net Interest Margin expanded to 3.71%, nonperforming assets declined to 0.20% of total assets, and our SBA business continued to make a meaningful contribution to non-interest income.

Our third-quarter results demonstrate the benefit of the investments and strategic initiatives we have pursued over the past several years. We continue to grow the balance sheet, diversify revenue, strengthen asset quality and invest in the people and technology necessary to support the Company’s future growth. The core conversion is an important part of that investment and will provide enhanced capabilities and greater scalability to support our strategic priorities and future growth.

Given our year-to-date performance, we are updating our full-year 2026 guidance. We now expect net interest income of $119 to $121 million and non-interest income of $14 to $15 million, reflecting continued strength in our SBA platform. We maintain our outlook for loan growth of 5% to 7% and non-interest expense of $65 to $67 million, excluding conversion costs.

Finally, I want to recognize the tremendous efforts of our team. The results we are reporting are the product of a great deal of hard work, an unwavering commitment to our clients, and disciplined execution of the strategy we have put in place. I’m proud of what our people have accomplished together and excited about the opportunities ahead."

Key Points for Third Quarter and Bankwell’s Outlook

Asset Quality Strengthens; Capital Remains Strong

• Nonperforming loans decreased $8.7 million to $7.1 million in the third-quarter of 2026, primarily reflecting the note sale of a suburban retail CRE loan in Westchester County, NY, that had been modified during the COVID-19 pandemic.
• Nonperforming assets declined to 0.20% of total assets at September 30, 2026, compared with 0.46% at June 30, 2026.
• Net recoveries totaled $1.4 million for the quarter ended September 30, 2026. The ACL-Loans provided 430.65% coverage of total nonperforming loans at September 30, 2026 compared to 193.14% at June 30, 2026.
• Tangible common equity to tangible assets increased to 9.33%, and fully diluted tangible book value per common share increased to $41.59.

Balance Sheet Growth and Continued Net Interest Margin Expansion

• Gross loans increased $22.9 million during the quarter and $142.6 million, or 5.0% year-to-date.
• Net interest margin expanded 13 basis points to 3.71% for the third quarter of 2026, compared to 3.58% for the second quarter of 2026, reflecting higher earning-asset yields and flat funding costs.
• Net interest income increased to $31.4 million, compared with $29.5 million in the linked quarter.
• Earning asset yields expanded 8 basis points to 6.34% for the quarter ended September 30, 2026, compared to the linked quarter.

Strong SBA Performance Drives Noninterest Income Growth

• SBA loan sale gains contributed $2.8 million of the Company's $4.0 million in total noninterest income for the quarter ended September 30, 2026, bringing 2026 year-to-date gains to $7.6 million, compared to $2.9 million 2025 year-to-date gains.
• Noninterest income as a percentage of revenue for the quarter ended September 30, 2026 was 11.20%, compared to 8.76% for the quarter ended September 30, 2025.
• The SBA Lending division delivered $30.1 million in originations in the third quarter of 2026, bringing the total year-to-date originations to $90.2 million.

Investment in Technology and Operating Infrastructure

• The Company is undertaking a core conversion initiative as part of its broader investment in technology and operating infrastructure to expand capabilities, improve efficiency and scalability, and support future growth.
• Third-quarter results included $3.0 million of core conversion costs, primarily consisting of termination fees.
• Excluding these costs, operating net income was $15.0 million⁽¹⁾, operating diluted EPS was $1.86⁽¹⁾ and the operating efficiency ratio was 47.5%⁽¹⁾, demonstrating the strength of the Company's underlying operating performance.
• The Company expects to incur additional core conversion-related costs in future quarters as implementation activities progress; however, third-quarter costs were elevated by termination-related costs that are not expected to recur in future periods.

(1) Non-GAAP Financial Measure, refer to the "Non-GAAP Financial Measures" section of this document for additional detail.

Third Quarter 2026 Financial Highlights and Key Performance Indicators (KPIs):

Pre-Tax, Pre-Provision Net Revenue⁽¹⁾ ("PPNR")

PPNR for the quarter ended September 30, 2026 was $15.5 million, a decrease of 11.6% from $17.5 million recognized for the quarter ended June 30, 2026.

(1) Non-GAAP Financial Measure, refer to the "Non-GAAP Financial Measures" section of this document for additional detail.

• Revenues (net interest income plus noninterest income) for the quarter ended September 30, 2026 were $35.3 million, compared with $32.8 million in the previous quarter. The increase in revenues was primarily driven by higher interest income resulting from increased earning-asset yields and higher average earning-asset balances.
• Noninterest expense for the quarter ended September 30, 2026 was $19.8 million, compared with $15.3 million in the previous quarter. The increase in noninterest expense was attributed to $3.0 million of core conversion related costs, primarily contract termination fees, as well as an increase in salaries and employee benefits due to ongoing investments in talent to support growth.

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

The ACL-Loans was $30.7 million as of September 30, 2026 compared to $30.6 million as of June 30, 2026. The ACL-Loans as a percentage of total loans was 1.03% as of September 30, 2026 compared to 1.03% as of June 30, 2026. The credit for credit losses - loans was $1.4 million for the quarter ended September 30, 2026.

Total nonperforming loans decreased $8.7 million to $7.1 million as of September 30, 2026, when compared to the previous quarter, primarily reflecting the note sale of a suburban retail CRE loan in Westchester County, NY, that had been modified during the COVID-19 pandemic. Nonperforming assets as a percentage of total assets decreased to 0.20% at September 30, 2026, compared to the previous quarter's ratio of 0.46%. As of September 30, 2026, the ACL-Loans provided 430.65% coverage of total nonperforming loans.

Financial Condition & Capital

Assets totaled $3.6 billion at September 30, 2026, an increase of $195.4 million, or 5.8% compared to December 31, 2025. Gross loans totaled $3.0 billion at September 30, 2026, an increase of $142.6 million, or 5.0% compared to December 31, 2025. Deposits totaled $3.0 billion at September 30, 2026, an increase of $138.2 million, or 4.9% compared to December 31, 2025. Brokered deposits decreased $52.1 million or 9.3%, when compared to December 31, 2025.

Shareholders’ equity totaled $334.1 million as of September 30, 2026, an increase of $32.6 million compared to December 31, 2025, primarily a result of year-to-date net income of $36.4 million. The increase was partially offset by dividends paid of $4.7 million.

As of September 30, 2026, the Bank's regulatory capital ratios were all above the regulatory thresholds for 'well capitalized' institutions, with total risk-based capital, common-equity tier 1 capital and leverage ratios at 12.67%, 11.64%, and 10.25%, respectively.

We recommend reading this earnings release in conjunction with the Third Quarter 2026 Investor Presentation, located at https://investor.mybankwell.com/events-and-presentations/ and included as an exhibit to our October 29, 2026 Current Report on Form 8-K.

Conference Call

Bankwell will host a conference call to discuss the Company’s financial results and business outlook on October 29, 2026, at 11:00 a.m. E.T. The call will be accessible by telephone and webcast using https://investor.mybankwell.com/events-and-presentations/. A supplementary slide presentation will be posted to the website prior to the event, and a replay will be available for 12 months following the event.

About Bankwell Financial Group

Bankwell Financial Group, Inc. is the holding company for Bankwell Bank ("Bankwell"), a full-service commercial bank headquartered in New Canaan, CT. Bankwell provides businesses and professionals with a range of commercial financing solutions, including working capital lines of credit, SBA loans, acquisition financing, and commercial mortgages, along with treasury management and deposit services. Bankwell emphasizes accessibility, expertise, and responsiveness through experienced local banking teams serving its markets.

For more information about this press release, interested parties may contact Christopher R. Gruseke, Chief Executive Officer or Courtney E. Sacchetti, Executive Vice President and Chief Financial Officer of Bankwell Financial Group, Inc. at (203) 652-0166 or at ir@mybankwell.com.

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, efficiency ratio, noninterest expense to average assets, return on average shareholders' equity, return on average tangible shareholders' equity, pre-tax, pre-provision net revenue, net interest margin, net loan (recoveries) charge-offs as a percentage of average loans, pre-tax, pre-provision net revenue on average assets, the dividend payout ratio, operating net income, operating return on average assets, operating return on average tangible shareholders' equity, operating efficiency ratio, operating earnings per common share-diluted, operating pre-tax, pre-provision net revenue return on average assets, and operating pre-tax, pre-provision net revenue return 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. See "Reconciliation of GAAP to Non-GAAP Measures (unaudited)".