EX-99.1 2 ex991q32022earningsrelease.htm EX-99.1 Document






BANKWELL FINANCIAL GROUP REPORTS STRONG OPERATING RESULTS ON RECORD LOAN GROWTH FOR THE THIRD QUARTER; DECLARES FOURTH QUARTER DIVIDEND
New Canaan, CT – October 26, 2022 – Bankwell Financial Group, Inc. (NASDAQ: BWFG) reported GAAP net income of $9.2 million, or $1.18 per share, for the third quarter of 2022, versus $6.9 million, or $0.87 per share, for the same period in 2021. During the quarter ended September 30, 2022 the Company experienced another quarter of elevated loan prepayments that positively impacted reported earnings. Adjusting for this, operating earnings per share totaled $1.08 for the third 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
3Q'22 QTD Reported Diluted EPS$1.18 
Elevated Loan Prepayments(1)
(0.10)
3Q'22 QTD Operating EPS(2)
$1.08 
(1) 3Q'22 loan prepayments exceeded historical quarterly averages and are not reflective of run rate.
(2) Non-gaap measure.
The Company's Board of Directors declared a $0.20 per share cash dividend, payable November 21, 2022 to shareholders of record on November 11, 2022.
We recommend reading this earnings release in conjunction with the Third Quarter 2022 Investor Presentation, located at http://investor.mybankwell.com/Presentations and included as an exhibit to our October 26, 2022 Current Report on Form 8-K.
Notes Bankwell Financial Group President and CEO, Christopher R. Gruseke:
"The Company had another very strong quarter, growing loans by $230 million. This represents an 11% increase over the prior quarter, and a year to date increase of 21%. Profitability remains strong, with a 1.47% Return on Average Assets and a 15.73% Return on Average Equity.
"The Company’s growth in 2021 and 2022 has created an exceptionally strong foundation to grow top line Interest Income in the coming year. We anticipate Interest Income to increase by more than 25% in 2023. The current cycle of tightening by the Federal Reserve will increase our cost of deposits in the quarters ahead. Based on forward market pricing we could expect Net Interest Income to decrease by 10% in 2023 versus 2022.
"We continue to build Book Value for our shareholders. Fully Diluted Book Value per share has increased by 3.2% this quarter and by 16.2% year to date. Importantly, all credit metrics remain benign.
"We thank our employees and clients who have made our success possible, and are confident that we have a great team in place to perform in an increasingly volatile economic environment."
Third Quarter 2022 Highlights (performance metrics are impacted by certain one-time items - please refer to the table following the below highlights for adjusted performance metrics):
•Return on average assets was 1.47% and return on average equity was 15.73% for the quarter ended September 30, 2022.
•The net interest margin was 4.12% for the quarter ended September 30, 2022.
•The efficiency ratio was 44.1% for the quarter ended September 30, 2022.
•Total gross loans were $2.3 billion, growing $391.9 million, or 20.7%, compared to December 31, 2021.
•Average yield on 2022 funded loans was 5.36%.
•Investment securities totaled $113.1 million and represent 4.2% of total assets.
•Fully diluted tangible book value per share rose to $29.68 compared to $25.55 at December 31, 2021.
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•The Wilton branch closed, effective October 7, 2022.
•Shares issued and outstanding were 7,711,843, reflecting repurchases of 53,546 shares of common stock at a weighted average price of $31.81 during the quarter ended September 30, 2022.
•The Company issued 6.00% fixed-to-floating rate subordinated notes due 2032 in the principal amount of $35.0 million.

Quarter Ended September 30, 2022Nine Months Ended September 30, 2022
Key metricsReported
Operating(1)
VarianceReported
Operating(1)
Variance
Net interest margin4.12 %3.96 %0.16 %3.81 %3.67 %0.14 %
Efficiency ratio44.1 %46.0 %(1.9)%45.3 %46.9 %(1.6)%
Return on average assets1.47 %1.34 %0.13 %1.59 %1.38 %0.21 %
Return on average stockholders' equity15.73 %14.40 %1.33 %17.94 %15.57 %2.37 %
(1) Operating metrics are non-GAAP measures and have been adjusted for elevated loan prepayments for the quarter and nine months ended September 30, 2022, as noted in the above table. Adjustments also include the release of specific reserves and the historical loss update to the Company's peer group for the nine months ended September 30, 2022. Please reference the second quarter 2022 earnings release for more details on these adjustments.

Earnings and Performance
Revenues (net interest income plus noninterest income) for the quarter ended September 30, 2022 were $25.0 million, versus $19.2 million for the quarter ended September 30, 2021. Revenues for the nine months ended September 30, 2022 were $70.4 million, versus $53.8 million for the nine months ended September 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. The increase in loan yields was aided by elevated loan prepayment fees, which totaled $1.3 million for the quarter ended September 30, 2022, compared to $0.1 million for the quarter ended September 30, 2021. The increase in revenues was partially offset by a decrease in noninterest income driven by a decrease in loans sales and the absence of rental income recognized during the quarter and nine months ended September 30, 2021, as a result of the disposition of the Company's former headquarters building. In addition, the increase in revenues for the nine months ended September 30, 2022 was muted as a result of a one-time federal payroll tax credit for COVID-19 of $0.9 million recognized in the quarter ended March 31, 2021. Finally, the increase in revenues for the quarter ended September 30, 2022 was also partially offset by an increase in interest expense on deposits, resulting from an increase in rates necessary to remain competitive in the current economic environment.
Net income for the quarter ended September 30, 2022 was $9.2 million, versus $6.9 million for the quarter ended September 30, 2021. Net income for the nine months ended September 30, 2022 was $29.4 million, versus $18.8 million for the nine months ended September 30, 2021. The increase in net income was primarily impacted by the aforementioned increases in revenues. In addition, the increase in net income was partially offset by an increase in the provision for loan losses primarily driven by loan growth and an increase in noninterest expense for the quarter and nine months ended September 30, 2022.
Basic and diluted earnings per share were $1.19 and $1.18, respectively, for the quarter ended September 30, 2022 compared to basic and diluted earnings per share of $0.88 and $0.87, respectively, for the quarter ended September 30, 2021. Basic and diluted earnings per share were $3.80 and $3.75, respectively, for the nine months ended September 30, 2022 compared to basic and diluted earnings per share of $2.38 and $2.37, respectively, for the nine months ended September 30, 2021.
The net interest margin (fully taxable equivalent basis) for the quarters ended September 30, 2022 and September 30, 2021 was 4.12% and 3.39%, respectively. The net interest margin (fully taxable equivalent basis) for the nine months ended September 30, 2022 and September 30, 2021 was 3.81% and 3.08%, respectively. The increase in the net interest margin was due    to elevated loan prepayment fees and an increase in overall loan yields.

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Financial Condition
Assets totaled $2.72 billion at September 30, 2022, compared to assets of $2.46 billion at December 31, 2021. The increase in assets was primarily due to loan growth and a corresponding increase in deposits and borrowings. Gross loans totaled $2.3 billion at September 30, 2022, an increase of $391.9 million compared to December 31, 2021. Deposits totaled $2.3 billion at September 30, 2022, compared to deposits of $2.1 billion at December 31, 2021.
Capital
Shareholders’ equity totaled $231.5 million as of September 30, 2022, an increase of $29.5 million compared to December 31, 2021, primarily a result of (i) net income of $29.4 million for the nine months ended September 30, 2022 and (ii) an $8.4 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 $4.7 million and common stock repurchases of $5.5 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)
September 30,
2022		June 30,
2022		March 31,
2022		December 31,
2021		September 30,
2021
ASSETS
Cash and due from banks$212,175 $149,522 $280,471 $291,598 $169,417 
Federal funds sold10,947 21,505 19,022 53,084 8,097 
Cash and cash equivalents223,122 171,027 299,493 344,682 177,514 
Investment securities
Marketable equity securities, at fair value1,973 2,126 2,090 2,168 2,185 
Available for sale investment securities, at fair value95,095 94,907 98,733 90,198 87,565 
Held to maturity investment securities, at amortized cost16,027 15,917 15,979 16,043 16,107 
Total investment securities113,095 112,950 116,802 108,409 105,857 
Loans receivable (net of allowance for loan losses of $18,167, $15,773, $17,141, $16,902 and $16,803 at September 30, 2022, June 30, 2022, March 31, 2022, December 31, 2021 and September 30, 2021, respectively)2,263,432 2,036,626 1,964,567 1,875,167 1,805,217 
Accrued interest receivable9,552 8,047 7,733 7,512 6,911 
Federal Home Loan Bank stock, at cost5,039 5,064 2,870 2,814 3,632 
Premises and equipment, net27,510 27,768 25,661 25,588 35,118 
Bank-owned life insurance49,970 49,699 49,434 49,174 48,903 
Goodwill2,589 2,589 2,589 2,589 2,589 
Other intangible assets— — — — 48 
Deferred income taxes, net5,952 4,768 6,879 7,621 7,718 
Other assets22,734 17,014 20,849 32,708 33,181 
Total assets$2,722,995 $2,435,552 $2,496,877 $2,456,264 $2,226,688 
LIABILITIES AND SHAREHOLDERS’ EQUITY
Liabilities
Deposits
Noninterest bearing deposits$380,365 $372,584 $412,985 $398,956 $338,705 
Interest bearing deposits1,906,337 1,660,941 1,753,219 1,725,042 1,544,118 
Total deposits2,286,702 2,033,525 2,166,204 2,123,998 1,882,823 
Advances from the Federal Home Loan Bank90,000 105,000 50,000 50,000 80,000 
Subordinated debentures68,897 34,500 34,471 34,441 15,374 
Accrued expenses and other liabilities45,896 37,060 35,982 45,838 52,314 
Total liabilities2,491,495 2,210,085 2,286,657 2,254,277 2,030,511 
Shareholders’ equity
Common stock, no par value114,548 115,599 114,882 118,148 119,588 
Retained earnings117,152 109,523 99,047 92,400 85,992 
Accumulated other comprehensive (loss) income(200)345 (3,709)(8,561)(9,403)
Total shareholders’ equity231,500 225,467 210,220 201,987 196,177 
Total liabilities and shareholders’ equity$2,722,995 $2,435,552 $2,496,877 $2,456,264 $2,226,688 
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BANKWELL FINANCIAL GROUP, INC.
CONSOLIDATED STATEMENTS OF INCOME (unaudited)
(Dollars in thousands, except share data)
For the Quarter EndedFor the Nine Months Ended
September 30,
2022		June 30,
2022		March 31,
2022		December 31,
2021		September 30,
2021		September 30,
2022		September 30,
2021
Interest and dividend income
Interest and fees on loans$28,128 $25,141 $21,428 $21,081 $19,795 $74,697 $56,961 
Interest and dividends on securities811 774 720 722 731 2,305 2,236 
Interest on cash and cash equivalents747 449 154 90 88 1,350 286 
Total interest and dividend income29,686 26,364 22,302 21,893 20,614 78,352 59,483 
Interest expense
Interest expense on deposits4,092 1,983 2,206 2,198 2,387 8,281 8,245 
Interest expense on borrowings993 558 586 767 503 2,137 2,280 
Total interest expense5,085 2,541 2,792 2,965 2,890 10,418 10,525 
Net interest income24,601 23,823 19,510 18,928 17,724 67,934 48,958 
Provision (credit) for loan losses2,381 (1,445)229 125 134 1,165 (182)
Net interest income after provision (credit) for loan losses22,220 25,268 19,281 18,803 17,590 66,769 49,140 
Noninterest income
Bank owned life insurance271 265 260 270 271 796 753 
Service charges and fees240 249 240 257 199 729 615 
(Losses) gains and fees from sales of loans(15)608 631 441 924 1,224 2,251 
Other(94)30 (173)(143)43 (237)1,213 
Total noninterest income402 1,152 958 825 1,437 2,512 4,832 
Noninterest expense
Salaries and employee benefits5,876 5,433 4,940 4,806 4,782 16,249 13,511 
Occupancy and equipment2,035 2,193 2,150 2,411 2,615 6,378 8,271 
Professional services994 1,000 981 628 498 2,975 1,632 
Data processing626 689 654 432 632 1,969 1,977 
Director fees325 339 352 335 324 1,016 968 
FDIC insurance255 262 223 231 298 740 1,001 
Marketing102 107 45 87 186 254 317 
Other818 913 580 749 1,035 2,311 2,383 
Total noninterest expense11,031 10,936 9,925 9,679 10,370 31,892 30,060 
Income before income tax expense11,591 15,484 10,314 9,949 8,657 37,389 23,912 
Income tax expense2,417 3,462 2,102 2,135 1,802 7,981 5,140 
Net income$9,174 $12,022 $8,212 $7,814 $6,855 $29,408 $18,772 
Earnings Per Common Share:
Basic$1.19 $1.56 $1.05 $1.00 $0.88 $3.80 $2.38 
Diluted$1.18 $1.55 $1.04 $0.99 $0.87 $3.75 $2.37 
Weighted Average Common Shares Outstanding:
Basic7,553,718 7,556,645 7,637,077 7,660,307 7,677,822 7,582,175 7,721,943 
Diluted7,612,421 7,614,243 7,719,405 7,726,420 7,738,758 7,664,123 7,779,632 
Dividends per common share$0.20 $0.20 $0.20 $0.18 $0.18 $0.60 $0.46 
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BANKWELL FINANCIAL GROUP, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (unaudited)

For the Quarter EndedFor the Nine Months
September 30,
2022		June 30,
2022		March 31,
2022		December 31,
2021		September 30,
2021		September 30,
2022		September 30,
2021
Performance ratios:
Return on average assets1.47 %1.96 %1.35 %1.32 %1.22 %1.59 %1.12 %
Return on average shareholders' equity15.73 %22.09 %16.05 %15.44 %14.09 %17.94 %13.29 %
Return on average tangible common equity15.91 %22.36 %16.25 %15.65 %14.29 %18.16 %13.48 %
Net interest margin4.12 %4.01 %3.30 %3.43 %3.39 %3.81 %3.08 %
Efficiency ratio(1)
44.1 %43.8 %48.5 %48.8 %54.1 %45.3 %55.8 %
Net loan charge-offs as a % of average loans— %— %— %— %— %— %0.24 %
Dividend payout ratio(2)
16.95 %12.90 %19.23 %18.18 %20.69 %16.00 %19.41 %
(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
September 30,
2022		June 30,
2022		March 31,
2022		December 31,
2021		September 30,
2021
Capital ratios:
Total Common Equity Tier 1 Capital to Risk-Weighted Assets(1)
11.42 %11.10 %11.20 %11.18 %10.59 %
Total Capital to Risk-Weighted Assets(1)
12.16 %11.80 %12.00 %12.00 %11.44 %
Tier I Capital to Risk-Weighted Assets(1)
11.42 %11.10 %11.20 %11.18 %10.59 %
Tier I Capital to Average Assets(1)
11.31 %10.15 %9.80 %9.94 %9.61 %
Tangible common equity to tangible assets8.41 %9.16 %8.32 %8.13 %8.70 %
Fully diluted tangible book value per common share$29.68 $28.75 $26.75 $25.55 $24.68 
(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
September 30,
2022		June 30,
2022		March 31,
2022		December 31,
2021		September 30,
2021
Allowance for loan losses:
Balance at beginning of period$15,773 $17,141 $16,902 $16,803 $16,672 
Charge-offs:
Commercial business— — — (26)— 
Consumer(8)— (4)(5)(15)
Total charge-offs(8)— (4)(31)(15)
Recoveries:
Commercial real estate— 77 — — — 
Commercial business21 — 13 2 11 
Consumer— — 1 3 1 
Total recoveries21 77 14 5 12 
Net loan recoveries (charge-offs)13 77 10 (26)(3)
Provision (Credit) for loan losses2,381 (1,445)229 125 134 
Balance at end of period$18,167 $15,773 $17,141 $16,902 $16,803 


As of
September 30,
2022		June 30,
2022		March 31,
2022		December 31,
2021		September 30,
2021
Asset quality:
Nonaccrual loans
Residential real estate$2,137 $2,161 $2,181 $2,380 $1,849 
Commercial real estate2,894 2,955 3,365 3,482 16,314 
Commercial business2,380 787 817 1,728 1,754 
Construction9,382 9,382 9,382 8,997 8,997 
Total nonaccrual loans16,793 15,285 15,745 16,587 28,914 
Other real estate owned— — — — — 
Total nonperforming assets$16,793 $15,285 $15,745 $16,587 $28,914 
Nonperforming loans as a % of total loans0.73 %0.74 %0.79 %0.88 %1.58 %
Nonperforming assets as a % of total assets0.62 %0.63 %0.63 %0.68 %1.30 %
Allowance for loan losses as a % of total loans0.79 %0.77 %0.86 %0.89 %0.92 %
Allowance for loan losses as a % of nonperforming loans108.18 %103.19 %108.87 %101.90 %58.11 %
Total past due loans to total loans0.78 %1.40 %0.85 %1.72 %1.69 %

Total nonaccrual loans increased $0.2 million to $16.8 million as of September 30, 2022 when compared to December 31, 2021. Nonperforming assets as a percentage of total assets decreased to 0.62% at September 30, 2022, down from 0.68% at December 31, 2021. The allowance for loan losses at September 30, 2022 was $18.2 million, representing 0.79% of total loans.

Past due loans decreased to $17.8 million, or 0.78% of total loans, as of September 30, 2022, compared to $32.6 million, or 1.72% of total loans, as of December 31, 2021.
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BANKWELL FINANCIAL GROUP, INC.
LOAN & DEPOSIT PORTFOLIO (unaudited)
(Dollars in thousands)
Period End Loan CompositionSeptember 30,
2022		June 30,
2022		December 31,
2021		 
Current QTD
% Change		YTD
% Change
Residential Real Estate$61,664 $64,253 $79,987 (4.0)%(22.9)%
Commercial Real Estate(1)
1,647,928 1,499,364 1,356,709 9.9 21.5 
Construction117,355 111,422 98,341 5.3 19.3 
Total Real Estate Loans1,826,947 1,675,039 1,535,037 9.1 19.0 
Commercial Business443,288 372,361 350,975 19.0 26.3 
Consumer16,558 9,196 8,869 80.1 86.7 
Total Loans$2,286,793 $2,056,596 $1,894,881 11.2 %20.7 %
(1) Includes owner occupied commercial real estate.
Gross loans totaled $2.3 billion at September 30, 2022, an increase of $391.9 million compared to December 31, 2021.
Period End Deposit CompositionSeptember 30,
2022		June 30,
2022		December 31,
2021		 
Current QTD
% Change		YTD
% Change
Noninterest bearing demand$380,365 $372,584 $398,956 2.1 %(4.7)%
NOW115,200 155,026 119,479 (25.7)(3.6)
Money Market836,564 833,730 954,674 0.3 (12.4)
Savings183,576 196,075 193,631 (6.4)(5.2)
Time770,997 476,110 457,258 61.9 68.6 
Total Deposits$2,286,702 $2,033,525 $2,123,998 12.5 %7.7 %

Total deposits were $2.3 billion at September 30, 2022, compared to $2.1 billion at December 31, 2021, an increase of $162.7 million, or 7.7%. The increase in deposits is primarily a result of an increase in brokered time deposits to fund the significant loan growth during the third quarter of 2022, increasing $338.1 million compared to December 31, 2021.
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BANKWELL FINANCIAL GROUP, INC.
NONINTEREST INCOME (unaudited)
(Dollars in thousands)
For the Quarter Ended
Noninterest incomeSeptember 30,
2022		June 30,
2022		September 30,
2021		Sep 22 vs. June 22
% Change		Sep 22 vs. Sep 21
% Change
Bank owned life insurance$271 $265 $271 2.3 %— %
Service charges and fees240 249 199 (3.6)20.6 
(Losses) gains and fees from sales of loans(15)608 924 (102.5)(101.6)
Other(94)30 43 (413.3)(318.6)
Total noninterest income$402 $1,152 $1,437 (65.1)%(72.0)%

For the Nine Months Ended
Noninterest incomeSeptember 30, 2022September 30, 2021% Change
Gains and fees from sales of loans$1,224 $2,251 (45.6)%
Bank owned life insurance796 753 5.7 
Service charges and fees729 615 18.5 
Other(237)1,213 (119.5)
Total noninterest income$2,512 $4,832 (48.0)%
Noninterest income decreased by $1.0 million to $0.4 million for the quarter ended September 30, 2022 compared to the quarter ended September 30, 2021. Noninterest income decreased by $2.3 million to $2.5 million for the nine months ended September 30, 2022 compared to the nine months ended September 30, 2021.
The decrease in noninterest income was driven by a reduction in loan sales for the quarter and nine months ended September 30, 2022 when compared to the same periods in 2021. Loan sales decreased $0.9 million and $1.0 million for the quarter and nine months ended September 30, 2022, respectively. In addition, noninterest income declined due to the absence of rental income recognized during the quarter and nine months ended September 30, 2021, as a result of the disposition of the Company's former headquarters building. Noninterest income also declined for the nine months ended September 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.
9







BANKWELL FINANCIAL GROUP, INC.
NONINTEREST EXPENSE (unaudited)
(Dollars in thousands)

For the Quarter Ended
Noninterest expenseSeptember 30,
2022		June 30,
2022		September 30,
2021		Sep 22 vs. June 22
% Change		Sep 22 vs. Sep 21
% Change
Salaries and employee benefits$5,876 $5,433 $4,782 8.2 %22.9 %
Occupancy and equipment2,035 2,193 2,615 (7.2)(22.2)
Professional services994 1,000 498 (0.6)99.6 
Data processing626 689 632 (9.1)(0.9)
Director fees325 339 324 (4.1)0.3 
FDIC insurance255 262 298 (2.7)(14.4)
Marketing102 107 186 (4.7)(45.2)
Other818 913 1,035 (10.4)(21.0)
Total noninterest expense$11,031 $10,936 $10,370 0.9 %6.4 %

For the Nine Months Ended
Noninterest expenseSeptember 30, 2022September 30, 2021% Change
Salaries and employee benefits$16,249 $13,511 20.3 %
Occupancy and equipment6,378 8,271 (22.9)
Professional services2,975 1,632 82.3 
Data processing1,969 1,977 (0.4)
Director fees1,016 968 5.0 
FDIC insurance740 1,001 (26.1)
Marketing254 317 (19.9)
Other2,311 2,383 (3.0)
Total noninterest expense$31,892 $30,060 6.1 %
Noninterest expense increased by $0.7 million to $11.0 million for the quarter ended September 30, 2022 compared to the quarter ended September 30, 2021. Noninterest expense increased by $1.8 million to $31.9 million for the nine months ended September 30, 2022 compared to the nine months ended September 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 $5.9 million for the quarter ended September 30, 2022, an increase of $1.1 million when compared to the same period in 2021. Salaries and employee benefits expense totaled $16.2 million for the nine months ended September 30, 2022, an increase of $2.7 million when compared to the same period in 2021. The increase in salaries and employee benefits expense was driven by an increase in full time equivalent employees, as well as an increase in variable compensation as a result of the Bank's overall growth and improved performance. Full time equivalent employees totaled 140 at September 30, 2022 compared to 134 for the same period in 2021. Average full time equivalent employees totaled 131 for the nine months ended September 30, 2022 compared to 127 for the same period in 2021. 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.
Professional services expense totaled $1.0 million for the quarter ended September 30, 2022, an increase of $0.5 million when compared to the same period in 2021. Professional services expense totaled $3.0 million for the nine
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months ended September 30, 2022, an increase of $1.3 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 $2.0 million for the quarter ended September 30, 2022, a decrease of $0.6 million when compared to the same period in 2021. Occupancy and equipment expense totaled $6.4 million for the nine months ended September 30, 2022, a decrease of $1.9 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 nine months ended September 30, 2021. In addition, the decrease in occupancy and equipment expense was impacted by a reduction in lease expense as a result of the branch closure in New Canaan, which occurred during the third quarter of 2021.
11






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 AssetsSeptember 30,
2022		June 30,
2022		March 31,
2022		December 31,
2021		September 30,
2021
Total Equity$231,500 $225,467 $210,220 $201,987 $196,177 
Less:
Goodwill2,589 2,589 2,589 2,589 2,589 
Other intangibles— — — — 58 
Tangible Common Equity$228,911 $222,878 $207,631 $199,398 $193,530 
Total Assets$2,722,995 $2,435,552 $2,496,877 $2,456,264 $2,226,688 
Less:
Goodwill2,589 2,589 2,589 2,589 2,589 
Other intangibles— — — — 58 
Tangible Assets$2,720,406 $2,432,963 $2,494,288 $2,453,675 $2,224,041 
Tangible Common Equity to Tangible Assets8.41 %9.16 %8.32 %8.13 %8.70 %

As of
Computation of Fully Diluted Tangible Book Value per Common ShareSeptember 30,
2022		June 30,
2022		March 31,
2022		December 31,
2021		September 30,
2021
Total shareholders' equity$231,500 $225,467 $210,220 $201,987 $196,177 
Less:
Preferred stock— — — — — 
Common shareholders' equity$231,500 $225,467 $210,220 $201,987 $196,177 
Less:
Goodwill2,589 2,589 2,589 2,589 2,589 
Other intangibles— — — — 48 
Tangible common shareholders' equity$228,911 $222,878 $207,631 $199,398 $193,540 
Common shares issued and outstanding7,711,843 7,752,389 7,761,338 7,803,166 7,842,824 
Fully Diluted Tangible Book Value per Common Share$29.68 $28.75 $26.75 $25.55 $24.68 
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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 Nine Months Ended
Computation of Efficiency RatioSeptember 30,
2022		June 30,
2022		March 31,
2022		December 31,
2021		September 30,
2021		September 30,
2022		September 30,
2021
Noninterest expense$11,031 $10,936 $9,925 $9,679 $10,370 $31,892 $30,060 
Less:
Amortization of intangible assets— — — 48 9 — 28 
Other real estate owned expenses— — — — — — — 
Adjusted noninterest expense$11,031 $10,936 $9,925 $9,631 $10,361 $31,892 $30,032 
Net interest income$24,601 $23,823 $19,510 $18,928 $17,724 $67,934 $48,958 
Noninterest income402 1,152 958 825 1,437 2,512 4,832 
Less:
Net gain on sale of available for sale securities— — — — — — — 
Gain on sale of other real estate owned, net— — — — — — — 
Operating revenue$25,003 $24,975 $20,468 $19,753 $19,161 $70,446 $53,790 
Efficiency ratio44.1 %43.8 %48.5 %48.8 %54.1 %45.3 %55.8 %

For the Quarter EndedFor the Nine Months Ended
Computation of Return on Average Tangible Common EquitySeptember 30,
2022		June 30,
2022		March 31,
2022		December 31,
2021		September 30,
2021		September 30,
2022		September 30,
2021
Net Income Attributable to Common Shareholders$9,174 $12,022 $8,212 $7,814 $6,855 $29,408 $18,772 
Total average shareholders' equity$231,378 $218,250 $207,541 $200,752 $192,993 $219,138 $188,794 
Less:
Average Goodwill2,589 2,589 2,589 2,589 2,589 2,589 2,589 
Average Other intangibles— — — 45 54 — 64 
Average tangible common equity$228,789 $215,661 $204,952 $198,118 $190,350 $216,549 $186,141 
Annualized Return on Average Tangible Common Equity15.91 %22.36 %16.25 %15.65 %14.29 %18.16 %13.48 %
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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
September 30, 2022September 30, 2021
Average
Balance		Interest
Yield/
Rate (4)
Average
Balance		Interest
Yield/
Rate (4)
Assets:
Cash and Fed funds sold$130,440 $747 2.27 %$209,500 $88 0.17 %
Securities(1)
120,092 829 2.76 105,030 766 2.92 
Loans:
Commercial real estate1,512,381 18,830 4.87 1,270,375 14,345 4.42 
Residential real estate62,915 586 3.72 95,100 809 3.40 
Construction116,256 1,512 5.09 88,728 845 3.73 
Commercial business431,917 7,058 6.39 314,484 3,707 4.61 
Consumer12,145 142 4.65 8,870 89 3.99 
Total loans2,135,614 28,128 5.15 1,777,557 19,795 4.36 
Federal Home Loan Bank stock5,021 31 2.51 3,133 16 2.04 
Total earning assets2,391,167 $29,735 4.87 %2,095,220 $20,665 3.86 %
Other assets89,173 131,670 
Total assets$2,480,340 $2,226,890 
Liabilities and shareholders' equity:
Interest bearing liabilities:
NOW$119,593 $52 0.17 %$111,813 $51 0.18 %
Money market828,541 2,346 1.12 824,203 1,053 0.51 
Savings189,279 474 0.99 182,848 96 0.21 
Time557,243 1,220 0.87 448,218 1,187 1.05 
Total interest bearing deposits1,694,656 4,092 0.96 1,567,082 2,387 0.60 
Borrowed Money135,221 993 2.87 72,960 503 2.70 
Total interest bearing liabilities1,829,877 $5,085 1.10 %1,640,042 $2,890 0.70 %
Noninterest bearing deposits383,048 341,303 
Other liabilities36,037 52,552 
Total liabilities2,248,962 2,033,897 
Shareholders' equity231,378 192,993 
Total liabilities and shareholders' equity$2,480,340 $2,226,890 
Net interest income(2)
$24,650 $17,775 
Interest rate spread3.77 %3.16 %
Net interest margin(3)
4.12 %3.39 %
(1)Average balances and yields for securities are based on amortized cost.
(2)The adjustment for securities and loans taxable equivalency amounted to $49 thousand and $51 thousand for the quarters ended September 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 Nine Months Ended
September 30, 2022September 30, 2021
Average
Balance		Interest
Yield/
Rate (4)
Average
Balance		Interest
Yield/
Rate (4)
Assets:
Cash and Fed funds sold$240,252 $1,350 0.75 %$315,102 $286 0.12 %
Securities(1)
117,008 2,392 2.73 103,192 2,315 2.99 
Loans:
Commercial real estate1,433,642 51,104 4.70 1,188,049 40,802 4.53 
Residential real estate67,705 1,810 3.56 104,320 2,669 3.41 
Construction108,249 4,482 5.46 97,828 2,769 3.73 
Commercial business402,876 17,011 5.57 302,019 10,495 4.58 
Consumer7,844 290 4.94 7,601 226 3.97 
Total loans2,020,316 74,697 4.88 1,699,817 56,961 4.42 
Federal Home Loan Bank stock3,715 61 2.19 4,608 72 2.09 
Total earning assets2,381,291 $78,500 4.35 %2,122,719 $59,634 3.70 %
Other assets89,747 119,098 
Total assets$2,471,038 $2,241,817 
Liabilities and shareholders' equity:
Interest bearing liabilities:
NOW$122,792 $158 0.17 %$110,637 $148 0.18 %
Money market909,106 4,672 0.69 781,178 2,944 0.50 
Savings194,013 678 0.47 170,749 313 0.24 
Time487,792 2,773 0.76 532,278 4,840 1.22 
Total interest bearing deposits1,713,703 8,281 0.65 1,594,842 8,245 0.69 
Borrowed Money101,685 2,137 2.77 108,737 2,280 2.77 
Total interest bearing liabilities1,815,388 $10,418 0.77 %1,703,579 $10,525 0.83 %
Noninterest bearing deposits398,728 303,421 
Other liabilities37,784 46,023 
Total liabilities2,251,900 2,053,023 
Shareholders' equity219,138 188,794 
Total liabilities and shareholders' equity$2,471,038 $2,241,817 
Net interest income(2)
$68,082 $49,109 
Interest rate spread3.58 %2.87 %
Net interest margin(3)
3.81 %3.08 %
(1)Average balances and yields for securities are based on amortized cost.
(2)The adjustment for securities and loans taxable equivalency amounted to $148 thousand and $151 thousand for the nine months ended September 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