EX-99.1 2 ex991q22022earningsrelease.htm EX-99.1 Document






BANKWELL FINANCIAL GROUP REPORTS RECORD NET INCOME FOR THE SECOND QUARTER; GROSS LOANS SURPASS $2 BILLION; AND DECLARES THIRD QUARTER DIVIDEND
New Canaan, CT – July 27, 2022 – Bankwell Financial Group, Inc. (NASDAQ: BWFG) reported record GAAP net income of $12.0 million, or $1.55 per share, for the second quarter of 2022, versus $6.2 million, or $0.79 per share, for the same period in 2021. During the quarter ended June 30, 2022 the Company experienced several non-recurring items that positively impacted reported earnings. Adjusting for these items, operating earnings per share totaled $1.15 for the second quarter of 2022. Please reference the table below for a reconciliation of reported earnings per share to operating earnings per share.
Earnings Per Common Share
2Q'22 QTD Reported EPS$1.55 
Elevated Loan Prepayments(1)
(0.15)
Release of Specific Reserves(2)
(0.16)
Historical Loss Update to Peer Group(3)
(0.09)
2Q'22 QTD Operating EPS(4)
$1.15 
(1) 2Q'22 loan prepayments exceeded historical quarterly averages and are not reflective of run rate.
(2) Specific reserve reduction as impaired loans exhibited improved performance or paid off.
(3) Bankwell is not yet subject to CECL; reduction in general reserves due to annual update to historical loss data in our peer group-based, “incurred loss” model.
(4) Non-gaap measure.
The Company's Board of Directors declared a $0.20 per share cash dividend, payable August 25, 2022 to shareholders of record on August 15, 2022.
We recommend reading this earnings release in conjunction with the Second Quarter 2022 Investor Presentation, located at http://investor.mybankwell.com/Presentations and included as an exhibit to our July 27, 2022 Current Report on Form 8-K.
Notes Bankwell Financial Group President and CEO, Christopher R. Gruseke:
"I offer my thanks and congratulations to our entire team for their commitment to excellence. Even after discounting favorable one-time items, our Company has delivered outstanding results, including an operating ROAA of 1.45%, an ROAE of 16.4%, and an efficiency ratio of 46.6%. Several years ago we put forth a strategic plan to diversify and transform our business model. With careful planning and execution, we are now reaping the benefits of investing in that plan.
"As we look ahead, despite the backdrop of macroeconomic uncertainty, our third quarter loan pipeline remains at record levels. It is likely that the economy will experience further volatility in the coming quarters. Nevertheless, we are confident that the business we have built will enable us to continue to deliver above-peer group performance."

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Second Quarter 2022 Highlights (performance metrics are impacted by the above mentioned one-time items - please refer to the table following the below highlights for adjusted performance metrics):
•Return on average assets was 1.96% and return on average equity was 22.09% for the quarter ended June 30, 2022.
•The net interest margin was 4.01% for the quarter ended June 30, 2022.
•The efficiency ratio was 43.8% for the quarter ended June 30, 2022.
•Total gross loans were $2.1 billion, growing $161.7 million, or 8.5%, compared to December 31, 2021.
•Average yield on 2022 funded loans was 4.88%.
•Gains from loan sales totaled $0.6 million for the quarter ended June 30, 2022.
•Total deposits decreased by 4.3% to $2.0 billion compared to $2.1 billion at December 31, 2021 as a result of seasonal fluctuations in several municipal and commercial deposit relationships.
•Investment securities totaled $113.0 million and represent 4.6% of total assets.
•Fully diluted tangible book value per share rose to $28.75 compared to $25.55 at December 31, 2021.
•Wilton branch closure announced July 8, 2022 (effective October 7, 2022).
•Shares issued and outstanding were 7,752,389 for the quarter ended June 30, 2022.

Quarter Ended June 30, 2022Six Months Ended June 30, 2022
Key metricsReported
Operating(1)
VarianceReported
Operating(1)
Variance
Net interest margin4.01 %3.75 %0.26 %3.65 %3.53 %0.12 %
Efficiency ratio43.8 %46.6 %(2.8)%45.9 %47.5 %(1.6)%
Return on average assets1.96 %1.45 %0.51 %1.65 %1.40 %0.25 %
Return on average stockholders' equity22.09 %16.39 %5.70 %19.16 %16.22 %2.94 %
(1) Operating metrics are non-gaap measures and have been adjusted for elevated loan prepayments, release of specific reserves, and the historical loss update to the Company's peer group as noted in the above EPS table.

Earnings and Performance
Revenues (net interest income plus noninterest income) for the quarter ended June 30, 2022 were $25.0 million, versus $18.0 million for the quarter ended June 30, 2021. Revenues for the six months ended June 30, 2022 were $45.4 million, versus $34.6 million for the six months ended June 30, 2021. The increase in revenues was primarily attributable to an increase in interest and fees on loans due to loan growth and higher overall loan yields and from lower interest expense on deposits. The increase in loan yields was aided by elevated loan prepayment fees, which totaled $1.8 million for the quarter ended June 30, 2022, compared to $0.8 million for the quarter ended June 30, 2021. The increase in revenues was partially offset by a decrease in noninterest income driven by the absence of rental income recognized during the quarter and six months ended June 30, 2021, as a result of the disposition of the Company's former headquarters building. In addition, the increase in revenues for the six months ended June 30, 2022 was also partially offset by a one-time federal payroll tax credit for COVID-19 of $0.9 million recognized in the quarter ended March 31, 2021.
Net income for the quarter ended June 30, 2022 was $12.0 million, versus $6.2 million for the quarter ended June 30, 2021. Net income for the six months ended June 30, 2022 was $20.2 million, versus $11.9 million for the six months ended June 30, 2021. The increase in net income was primarily impacted by the aforementioned increases in revenues and by a decrease in the provision for loan losses primarily driven by the release of specific reserves on impaired loans that showed improved performance or paid off.
Basic and diluted earnings per share were $1.56 and $1.55, respectively, for the quarter ended June 30, 2022 compared to basic and diluted earnings per share of $0.79 each for the quarter ended June 30, 2021. Basic and diluted earnings per share were $2.61 and $2.58, respectively, for the six months ended June 30, 2022 compared to basic and diluted earnings per share of $1.51 and $1.50, respectively, for the six months ended June 30, 2021.
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The net interest margin (fully taxable equivalent basis) for the quarters ended June 30, 2022 and June 30, 2021 was 4.01% and 3.12%, respectively. The net interest margin (fully taxable equivalent basis) for the six months ended June 30, 2022 and June 30, 2021 was 3.65% and 2.93%, respectively. The increase in the net interest margin was due to lower interest expense from a decrease in rates on interest bearing deposits, elevated loan prepayment fees, and an increase in overall loan yields.
Financial Condition
Assets totaled $2.44 billion at June 30, 2022, compared to assets of $2.46 billion at December 31, 2021. The decrease in assets was primarily due to a decrease in deposits while excess liquidity funded additional loan growth. Gross loans totaled $2.1 billion at June 30, 2022, an increase of $161.7 million compared to December 31, 2021. Deposits totaled $2.0 billion at June 30, 2022, compared to deposits of $2.1 billion at December 31, 2021.
Capital
Shareholders’ equity totaled $225.5 million as of June 30, 2022, an increase of $23.5 million compared to December 31, 2021, primarily a result of (i) net income of $20.2 million for the six months ended June 30, 2022 and (ii) an $8.9 million favorable impact to accumulated other comprehensive income driven by fair value marks related to hedge positions involving interest rate swaps, partially offset by fair value marks on the Company's investment portfolio. The Company's interest rate swaps are used to hedge interest rate risk. The increase in Shareholders’ equity was partially offset by dividends paid of $3.1 million and common stock repurchases of $3.8 million.

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.
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, 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, 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, tangible book value per share, and return on average tangible common equity 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.
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BANKWELL FINANCIAL GROUP, INC.
CONSOLIDATED BALANCE SHEETS (unaudited)
(Dollars in thousands)
June 30,
2022		March 31,
2022		December 31,
2021		June 30,
2021
ASSETS
Cash and due from banks$149,522 $280,471 $291,598 $297,851 
Federal funds sold21,505 19,022 53,084 4,036 
Cash and cash equivalents171,027 299,493 344,682 301,887 
Investment securities
Marketable equity securities, at fair value2,126 2,090 2,168 2,192 
Available for sale investment securities, at fair value94,907 98,733 90,198 90,983 
Held to maturity investment securities, at amortized cost15,917 15,979 16,043 16,166 
Total investment securities112,950 116,802 108,409 109,341 
Loans receivable (net of allowance for loan losses of $15,773, $17,141, $16,902 and $16,672 at June 30, 2022, March 31, 2022, December 31, 2021 and June 30, 2021, respectively)2,036,626 1,964,567 1,875,167 1,719,274 
Accrued interest receivable8,047 7,733 7,512 6,661 
Federal Home Loan Bank stock, at cost5,064 2,870 2,814 3,844 
Premises and equipment, net27,768 25,661 25,588 33,916 
Bank-owned life insurance49,699 49,434 49,174 48,632 
Goodwill2,589 2,589 2,589 2,589 
Other intangible assets— — — 58 
Deferred income taxes, net4,768 6,879 7,621 8,208 
Other assets17,014 20,849 32,708 35,415 
Total assets$2,435,552 $2,496,877 $2,456,264 $2,269,825 
LIABILITIES AND SHAREHOLDERS’ EQUITY
Liabilities
Deposits
Noninterest bearing deposits$372,584 $412,985 $398,956 $328,473 
Interest bearing deposits1,660,941 1,753,219 1,725,042 1,610,829 
Total deposits2,033,525 2,166,204 2,123,998 1,939,302 
Advances from the Federal Home Loan Bank105,000 50,000 50,000 75,000 
Subordinated debentures34,500 34,471 34,441 15,366 
Accrued expenses and other liabilities37,060 35,982 45,838 49,362 
Total liabilities2,210,085 2,286,657 2,254,277 2,079,030 
Shareholders’ equity
Common stock, no par value115,599 114,882 118,148 120,451 
Retained earnings109,523 99,047 92,400 80,543 
Accumulated other comprehensive income (loss)345 (3,709)(8,561)(10,199)
Total shareholders’ equity225,467 210,220 201,987 190,795 
Total liabilities and shareholders’ equity$2,435,552 $2,496,877 $2,456,264 $2,269,825 
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BANKWELL FINANCIAL GROUP, INC.
CONSOLIDATED STATEMENTS OF INCOME (unaudited)
(Dollars in thousands, except share data)
For the Quarter EndedFor the Six Months Ended
June 30,
2022		March 31,
2022		December 31,
2021		June 30,
2021		June 30,
2022		June 30,
2021
Interest and dividend income
Interest and fees on loans$25,141 $21,428 $21,081 $19,266 $46,569 $37,166 
Interest and dividends on securities774 720 722 736 1,494 1,505 
Interest on cash and cash equivalents449 154 90 90 603 198 
Total interest and dividend income26,364 22,302 21,893 20,092 48,666 38,869 
Interest expense
Interest expense on deposits1,983 2,206 2,198 2,744 4,189 5,858 
Interest expense on borrowings558 586 767 769 1,144 1,777 
Total interest expense2,541 2,792 2,965 3,513 5,333 7,635 
Net interest income23,823 19,510 18,928 16,579 43,333 31,234 
(Credit) provision for loan losses(1,445)229 125 (20)(1,216)(316)
Net interest income after (credit) provision for loan losses25,268 19,281 18,803 16,599 44,549 31,550 
Noninterest income
Gains and fees from sales of loans608 631 441 814 1,239 1,327 
Bank owned life insurance265 260 270 251 525 482 
Service charges and fees249 240 257 217 489 416 
Other30 (173)(143)158 (143)1,170 
Total noninterest income1,152 958 825 1,440 2,110 3,395 
Noninterest expense
Salaries and employee benefits5,433 4,940 4,806 3,960 10,373 8,729 
Occupancy and equipment2,193 2,150 2,411 3,250 4,343 5,656 
Professional services1,000 981 628 547 1,981 1,134 
Data processing689 654 432 833 1,343 1,345 
Director fees339 352 335 327 691 644 
FDIC insurance262 223 231 300 485 703 
Marketing107 45 87 140 152 131 
Other913 580 749 695 1,493 1,348 
Total noninterest expense10,936 9,925 9,679 10,052 20,861 19,690 
Income before income tax expense15,484 10,314 9,949 7,987 25,798 15,255 
Income tax expense3,462 2,102 2,135 1,759 5,564 3,338 
Net income$12,022 $8,212 $7,814 $6,228 $20,234 $11,917 
Earnings Per Common Share:
Basic$1.56 $1.05 $1.00 $0.79 $2.61 $1.51 
Diluted$1.55 $1.04 $0.99 $0.79 $2.58 $1.50 
Weighted Average Common Shares Outstanding:
Basic7,556,645 7,637,077 7,660,307 7,722,481 7,596,639 7,744,368 
Diluted7,614,243 7,719,405 7,726,420 7,768,026 7,683,305 7,792,600 
Dividends per common share$0.20 $0.20 $0.18 $0.14 $0.40 $0.28 
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BANKWELL FINANCIAL GROUP, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (unaudited)

For the Quarter EndedFor the Six Months
June 30,
2022		March 31,
2022		December 31,
2021		June 30,
2021		June 30,
2022		June 30,
2021
Performance ratios:
Return on average assets1.96 %1.35 %1.32 %1.11 %1.65 %1.07 %
Return on average stockholders' equity22.09 %16.05 %15.44 %13.06 %19.16 %12.87 %
Return on average tangible common equity22.36 %16.25 %15.65 %13.25 %19.40 %13.06 %
Net interest margin4.01 %3.30 %3.43 %3.12 %3.65 %2.93 %
Efficiency ratio(1)
43.8 %48.5 %48.8 %55.7 %45.9 %56.8 %
Net loan charge-offs as a % of average loans— %— %— %0.23 %— %0.24 %
Dividend payout ratio(2)
12.90 %19.23 %18.18 %17.72 %15.50 %18.67 %
(1)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.
(2)The dividend payout ratio is calculated by dividing dividends per share by earnings per share.

As of
June 30,
2022		March 31,
2022		December 31,
2021		June 30,
2021
Capital ratios:
Total Common Equity Tier 1 Capital to Risk-Weighted Assets(1)
11.10 %11.20 %11.18 %10.95 %
Total Capital to Risk-Weighted Assets(1)
11.80 %12.00 %12.00 %11.84 %
Tier I Capital to Risk-Weighted Assets(1)
11.10 %11.20 %11.18 %10.95 %
Tier I Capital to Average Assets(1)
10.15 %9.80 %9.94 %9.19 %
Tangible common equity to tangible assets9.16 %8.32 %8.13 %8.30 %
Fully diluted tangible book value per common share$28.75 $26.75 $25.55 $23.83 
(1)Represents Bank ratios. Current period capital ratios are preliminary subject to finalization of the FDIC Call Report.

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BANKWELL FINANCIAL GROUP, INC.
ASSET QUALITY (unaudited)
(Dollars in thousands)
For the Quarter Ended
June 30,
2022		March 31,
2022		December 31,
2021		June 30,
2021
Allowance for loan losses:
Balance at beginning of period$17,141 $16,902 $16,803 $20,545 
Charge-offs:
Commercial real estate— — — (3,814)
Commercial business— — (26)(51)
Consumer— (4)(5)(4)
Total charge-offs— (4)(31)(3,869)
Recoveries:
Commercial real estate77 — — — 
Commercial business— 13 2 16 
Consumer— 1 3 — 
Total recoveries77 14 5 16 
Net loan recoveries (charge-offs)77 10 (26)(3,853)
(Credit) provision for loan losses(1,445)229 125 (20)
Balance at end of period$15,773 $17,141 $16,902 $16,672 


As of
June 30,
2022		March 31,
2022		December 31,
2021		June 30,
2021
Asset quality:
Nonaccrual loans
Residential real estate$2,161 $2,181 $2,380 $1,160 
Commercial real estate2,955 3,365 3,482 15,392 
Commercial business787 817 1,728 1,780 
Construction9,382 9,382 8,997 8,997 
Total nonaccrual loans15,285 15,745 16,587 27,329 
Other real estate owned— — — — 
Total nonperforming assets$15,285 $15,745 $16,587 $27,329 
Nonperforming loans as a % of total loans0.74 %0.79 %0.88 %1.57 %
Nonperforming assets as a % of total assets0.63 %0.63 %0.68 %1.20 %
Allowance for loan losses as a % of total loans0.77 %0.86 %0.89 %0.96 %
Allowance for loan losses as a % of nonperforming loans103.19 %108.87 %101.90 %61.00 %
Total past due loans to total loans1.40 %0.85 %1.72 %1.65 %

Total nonaccrual loans declined $1.3 million to $15.3 million as of June 30, 2022 when compared to December 31, 2021. Nonperforming assets as a percentage of total assets was 0.63% at June 30, 2022, down from 0.68% at December 31, 2021. The allowance for loan losses at June 30, 2022 was $15.8 million, representing 0.77% of total loans.

Past due loans decreased to $28.8 million, or 1.40% of total loans, as of June 30, 2022, compared to $32.6 million, or 1.72% of total loans, as of December 31, 2021. As of June 30, 2022, past due loans include one $10.5 million commercial real estate loan, representing 0.51% of total loans, that had reached maturity and is in active negotiations to be refinanced.
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BANKWELL FINANCIAL GROUP, INC.
LOAN & DEPOSIT PORTFOLIO (unaudited)
(Dollars in thousands)
Period End Loan CompositionJune 30,
2022		March 31,
2022		December 31,
2021		 
Current QTD
% Change		YTD
% Change
Residential Real Estate$64,253 $68,617 $79,987 (6.4)%(19.7)%
Commercial Real Estate(1)
1,499,364 1,425,758 1,356,709 5.2 10.5 
Construction111,422 115,514 98,341 (3.5)13.3 
Total Real Estate Loans1,675,039 1,609,889 1,535,037 4.0 9.1 
Commercial Business372,361 370,166 350,975 0.6 6.1 
Consumer9,196 5,275 8,869 74.3 3.7 
Total Loans$2,056,596 $1,985,330 $1,894,881 3.6 %8.5 %
(1) Includes owner occupied commercial real estate.
Gross loans totaled $2.1 billion at June 30, 2022, an increase of $161.7 million compared to December 31, 2021.
Period End Deposit CompositionJune 30,
2022		March 31,
2022		December 31,
2021		 
Current QTD
% Change		YTD
% Change
Noninterest bearing demand$372,584 $412,985 $398,956 (9.8)%(6.6)%
NOW155,026 112,567 119,479 37.7 29.8 
Money Market833,730 996,458 954,674 (16.3)(12.7)
Savings196,075 197,961 193,631 (1.0)1.3 
Time476,110 446,233 457,258 6.7 4.1 
Total Deposits$2,033,525 $2,166,204 $2,123,998 (6.1)%(4.3)%

Total deposits were $2.0 billion at June 30, 2022, compared to $2.1 billion at December 31, 2021, a decrease of $90.5 million, or 4.3%. The decrease in deposits is primarily a result of seasonal fluctuations in several municipal and commercial deposit relationships.
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BANKWELL FINANCIAL GROUP, INC.
NONINTEREST INCOME (unaudited)
(Dollars in thousands)
For the Quarter Ended
Noninterest incomeJune 30,
2022		March 31,
2022		June 30,
2021		June 22 vs. March 22
% Change		June 22 vs. June 21
% Change
Gains and fees from sales of loans$608 $631 $814 (3.6)%(25.3)%
Bank owned life insurance265 260 251 1.9 5.6 
Service charges and fees249 240 217 3.8 14.7 
Other30 (173)158 (117.3)(81.0)
Total noninterest income$1,152 $958 $1,440 20.3 %(20.0)%

For the Six Months Ended
Noninterest incomeJune 30, 2022June 30, 2021% Change
Gains and fees from sales of loans$1,239 $1,327 (6.6)%
Bank owned life insurance525 482 8.9 
Service charges and fees489 416 17.5 
Other(143)1,170 (112.2)
Total noninterest income$2,110 $3,395 (37.8)%
Noninterest income decreased by $0.3 million to $1.2 million for the quarter ended June 30, 2022 compared to the quarter ended June 30, 2021. Noninterest income decreased by $1.3 million to $2.1 million for the six months ended June 30, 2022 compared to the six months ended June 30, 2021.
The decrease in noninterest income was driven by a reduction in loan sales for the quarter and six months ended June 30, 2022 when compared to the same periods in the prior year. Loan sales decreased $0.2 million and $0.1 million for the quarter and six months ended June 30, 2022, respectively. In addition, noninterest income declined due to the absence of rental income recognized during the quarter and six months ended June 30, 2021, as a result of the disposition of the Company's former headquarters building. Noninterest income also declined for the six months ended June 30, 2022 due to a one-time federal payroll tax credit for COVID-19 of $0.9 million recognized in the quarter ended March 31, 2021.
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BANKWELL FINANCIAL GROUP, INC.
NONINTEREST EXPENSE (unaudited)
(Dollars in thousands)

For the Quarter Ended
Noninterest expenseJune 30,
2022		March 31,
2022		June 30,
2021		June 22 vs. March 22
% Change		June 22 vs. June 21
% Change
Salaries and employee benefits$5,433 $4,940 $3,960 10.0 %37.2 %
Occupancy and equipment2,193 2,150 3,250 2.0 (32.5)
Professional services1,000 981 547 1.9 82.8 
Data processing689 654 833 5.4 (17.3)
Director fees339 352 327 (3.7)3.7 
FDIC insurance262 223 300 17.5 (12.7)
Marketing107 45 140 137.8 (23.6)
Other913 580 695 57.4 31.4 
Total noninterest expense$10,936 $9,925 $10,052 10.2 %8.8 %

For the Six Months Ended
Noninterest expenseJune 30, 2022June 30, 2021% Change
Salaries and employee benefits$10,373 $8,729 18.8 %
Occupancy and equipment4,343 5,656 (23.2)
Professional services1,981 1,134 74.7 
Data processing1,343 1,345 (0.1)
Director fees691 644 7.3 
FDIC insurance485 703 (31.0)
Marketing152 131 16.0 
Other1,493 1,348 10.8 
Total noninterest expense$20,861 $19,690 5.9 %
Noninterest expense increased by $0.9 million to $10.9 million for the quarter ended June 30, 2022 compared to the quarter ended June 30, 2021. Noninterest expense increased by $1.2 million to $20.9 million for the six months ended June 30, 2022 compared to the six months ended June 30, 2021. The increase in noninterest expense was primarily driven by an increase in salaries and employee benefits expense and professional services expense, partially offset by a decrease in occupancy and equipment expense.
Salaries and employee benefits expense totaled $5.4 million for the quarter ended June 30, 2022, an increase of $1.5 million when compared to the same period in 2021. Salaries and employee benefits expense totaled $10.4 million for the six months ended June 30, 2022, an increase of $1.6 million when compared to the same period in 2021. The increase in salaries and employee benefits expense was primarily driven by an increase in full time equivalent employees. Full time equivalent employees totaled 132 at June 30, 2022 compared to 125 for the same period in 2021. Average full time equivalent employees totaled 128 for the six months ended June 30, 2022 compared to 124 for the same period in 2021. The increase in salaries and employee benefits expense was also impacted by an increase in variable compensation accruals as a result of the Bank's overall improved performance. The increase in salaries and employee benefits expense was partially offset by higher loan originations, which enabled the bank to defer a greater amount of expenses.
10






Professional services expense totaled $1.0 million for the quarter ended June 30, 2022, an increase of $0.5 million when compared to the same period in 2021. Professional services expense totaled $2.0 million for the six months ended June 30, 2022, an increase of $0.8 million when compared to the same period in 2021. The increase in professional services expense was primarily driven by consulting fees associated with various projects, including our core system conversion.
Occupancy and equipment expense totaled $2.2 million for the quarter ended June 30, 2022, a decrease of $1.1 million when compared to the same period in 2021. Occupancy and equipment expense totaled $4.3 million for the six months ended June 30, 2022, a decrease of $1.3 million when compared to the same period in 2021. The decrease in occupancy and equipment expense was primarily driven by the curtailment of additional cleaning costs associated with precautions taken to prevent the spread of COVID-19 during the six months ended June 30, 2021.
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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 AssetsJune 30,
2022		March 31,
2022		December 31,
2021		June 30,
2021
Total Equity$225,467 $210,220 $201,987 $190,795 
Less:
Goodwill2,589 2,589 2,589 2,589 
Other intangibles— — — 58 
Tangible Common Equity$222,878 $207,631 $199,398 $188,148 
Total Assets$2,435,552 $2,496,877 $2,456,264 $2,269,825 
Less:
Goodwill2,589 2,589 2,589 2,589 
Other intangibles— — — 58 
Tangible Assets$2,432,963 $2,494,288 $2,453,675 $2,267,178 
Tangible Common Equity to Tangible Assets9.16 %8.32 %8.13 %8.30 %

As of
Computation of Fully Diluted Tangible Book Value per Common ShareJune 30,
2022		March 31,
2022		December 31,
2021		June 30,
2021
Total shareholders' equity$225,467 $210,220 $201,987 $190,795 
Less:
Preferred stock— — — — 
Common shareholders' equity$225,467 $210,220 $201,987 $190,795 
Less:
Goodwill2,589 2,589 2,589 2,589 
Other intangibles— — — 58 
Tangible common shareholders' equity$222,878 $207,631 $199,398 $188,148 
Common shares issued and outstanding7,752,389 7,761,338 7,803,166 7,895,101 
Fully Diluted Tangible Book Value per Common Share$28.75 $26.75 $25.55 $23.83 
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BANKWELL FINANCIAL GROUP, INC.
RECONCILIATION OF GAAP TO NON-GAAP MEASURES (unaudited) - Continued
(Dollars in thousands)
For the Quarter EndedFor the Six Months Ended
Computation of Efficiency RatioJune 30,
2022		March 31,
2022		December 31,
2021		June 30,
2021		June 30,
2022		June 30,
2021
Noninterest expense$10,936 $9,925 $9,679 $10,052 $20,861 $19,690 
Less:
Amortization of intangible assets— — 48 9 — 19 
Other real estate owned expenses— — — — — — 
Adjusted noninterest expense$10,936 $9,925 $9,631 $10,043 $20,861 $19,671 
Net interest income$23,823 $19,510 $18,928 $16,579 $43,333 $31,234 
Noninterest income1,152 958 825 1,440 2,110 3,395 
Less:
Net gain on sale of available for sale securities— — — — — — 
Gain on sale of other real estate owned, net— — — — — — 
Operating revenue$24,975 $20,468 $19,753 $18,019 $45,443 $34,629 
Efficiency ratio43.8 %48.5 %48.8 %55.7 %45.9 %56.8 %

For the Quarter EndedFor the Six Months Ended
Computation of Return on Average Tangible Common EquityJune 30,
2022		March 31,
2022		December 31,
2021		June 30,
2021		June 30,
2022		June 30,
2021
Net Income Attributable to Common Shareholders$12,022 $8,212 $7,814 $6,228 $20,234 $11,917 
Total average shareholders' equity$218,250 $207,541 $200,752 $191,224 $212,932 $186,664 
Less:
Average Goodwill2,589 2,589 2,589 2,589 2,589 2,589 
Average Other intangibles— — 45 64 — 68 
Average tangible common equity$215,661 $204,952 $198,118 $188,571 $210,343 $184,007 
Annualized Return on Average Tangible Common Equity22.36 %16.25 %15.65 %13.25 %19.40 %13.06 %
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BANKWELL FINANCIAL GROUP, INC.
NET INTEREST MARGIN ANALYSIS ON A FULLY TAX EQUIVALENT BASIS - QTD (unaudited)
(Dollars in thousands)
For the Quarter Ended
June 30, 2022June 30, 2021
Average
Balance		Interest
Yield/
Rate (4)
Average
Balance		Interest
Yield/
Rate (4)
Assets:
Cash and Fed funds sold$247,013 $449 0.73 %$336,073 $90 0.11 %
Securities(1)
118,534 809 2.73 103,297 761 2.95 
Loans:
Commercial real estate1,443,239 17,278 4.74 1,163,134 13,678 4.65 
Residential real estate66,460 553 3.33 105,975 958 3.62 
Construction106,285 1,938 7.21 110,780 1,036 3.70 
Commercial business393,318 5,327 5.36 296,613 3,506 4.68 
Consumer5,298 45 3.43 8,851 88 3.98 
Total loans2,014,600 25,141 4.94 1,685,353 19,266 4.52 
Federal Home Loan Bank stock3,263 15 1.79 4,219 25 2.34 
Total earning assets2,383,410 $26,414 4.38 %2,128,942 $20,142 3.74 %
Other assets79,380 117,334 
Total assets$2,462,790 $2,246,276 
Liabilities and shareholders' equity:
Interest bearing liabilities:
NOW$136,414 $59 0.17 %$118,806 $54 0.18 %
Money market931,101 1,146 0.49 782,079 941 0.48 
Savings198,304 103 0.21 168,870 92 0.22 
Time451,508 675 0.60 538,915 1,657 1.23 
Total interest bearing deposits1,717,327 1,983 0.46 1,608,670 2,744 0.68 
Borrowed Money85,092 558 2.59 101,586 769 3.00 
Total interest bearing liabilities1,802,419 $2,541 0.57 %1,710,256 $3,513 0.82 %
Noninterest bearing deposits407,890 298,467 
Other liabilities34,231 46,329 
Total liabilities2,244,540 2,055,052 
Shareholders' equity218,250 191,224 
Total liabilities and shareholders' equity$2,462,790 $2,246,276 
Net interest income(2)
$23,873 $16,629 
Interest rate spread3.81 %2.92 %
Net interest margin(3)
4.01 %3.12 %
(1)Average balances and yields for securities are based on amortized cost.
(2)The adjustment for securities and loans taxable equivalency amounted to $50 thousand and $50 thousand for the quarters ended June 30, 2022 and 2021, respectively.
(3)Annualized net interest income as a percentage of earning assets.
(4)Yields are calculated using the contractual day count convention for each respective product type.

14






BANKWELL FINANCIAL GROUP, INC.
NET INTEREST MARGIN ANALYSIS ON A FULLY TAX EQUIVALENT BASIS - YTD (unaudited)
(Dollars in thousands)
For the Six Months Ended
June 30, 2022June 30, 2021
Average
Balance		Interest
Yield/
Rate (4)
Average
Balance		Interest
Yield/
Rate (4)
Assets:
Cash and Fed funds sold$296,239 $603 0.41 %$368,779 $198 0.11 %
Securities(1)
115,452 1,563 2.71 %102,252 1,549 3.03 %
Loans:
Commercial real estate1,393,836 32,273 4.61 %1,146,258 26,354 4.57 %
Residential real estate70,125 1,224 3.49 %109,003 1,996 3.66 %
Construction104,176 2,971 5.67 %102,459 1,916 3.72 %
Commercial business388,249 9,954 5.10 %295,682 6,763 4.55 %
Consumer5,666 147 5.25 %6,956 137 3.96 %
Total loans1,962,052 46,569 4.72 %1,660,358 37,166 4.45 %
Federal Home Loan Bank stock3,051 29 1.94 %5,356 56 2.11 %
Total earning assets2,376,794 $48,764 4.08 %2,136,745 $38,969 3.64 %
Other assets89,866 115,718 
Total assets$2,466,660 $2,252,463 
Liabilities and shareholders' equity:
Interest bearing liabilities:
NOW$124,361 $106 0.17 %$109,990 $97 0.18 %
Money market950,131 2,326 0.49 %759,435 1,891 0.50 %
Savings196,400 204 0.21 %164,630 217 0.27 %
Time452,676 1,553 0.69 %574,876 3,653 1.28 %
Total interest bearing deposits1,723,568 4,189 0.49 %1,608,931 5,858 0.73 %
Borrowed Money84,770 1,144 2.68 %126,886 1,777 2.79 %
Total interest bearing liabilities1,808,338 $5,333 0.59 %1,735,817 $7,635 0.89 %
Noninterest bearing deposits406,707 284,226 
Other liabilities38,683 45,756 
Total liabilities2,253,728 2,065,799 
Shareholders' equity212,932 186,664 
Total liabilities and shareholders' equity$2,466,660 $2,252,463 
Net interest income(2)
$43,431 $31,334 
Interest rate spread3.49 %2.75 %
Net interest margin(3)
3.65 %2.93 %
(1)Average balances and yields for securities are based on amortized cost.
(2)The adjustment for securities and loans taxable equivalency amounted to $98 thousand and $100 thousand for the six months ended June 30, 2022 and 2021, respectively.
(3)Annualized net interest income as a percentage of earning assets.
(4)Yields are calculated using the contractual day count convention for each respective product type.

15