Business Wire | Jan 27, 2021 04:28PM EST

Bankwell Financial Group Reports Operating Results for the Fourth Quarter and Full Year 2020; Declares First Quarter Dividend

Jan. 27, 2021

NEW CANAAN, Conn.--(BUSINESS WIRE)--Jan. 27, 2021--Bankwell Financial Group, Inc. (NASDAQ: BWFG) reported GAAP net income of $0.3 million, or $0.04 per share, for the fourth quarter of 2020, versus $3.5 million, or $0.44 per share, for the same period in 2019.

The Company's Board of Directors declared a $0.14 per share cash dividend, payable February 25, 2021 to shareholders of record on February 15, 2021.

We recommend reading this earnings release in conjunction with the Fourth Quarter 2020 Investor Presentation, located at http://investor.mybankwell.com/Presentations and included as an exhibit to our January 27, 2021 Current Report on Form 8-K.

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

"The Company made excellent progress this year despite the adversities presented by the Pandemic. Core deposits increased by 43% year over year and, importantly, non-interest bearing deposits grew by over 41%. COVID-19 deferrals have declined to account for less than 2% of the loan portfolio. After a thorough review of each COVID-impacted loan, the Company has taken swift action to reclassify $25.6 million as non-performing. These loans are collateralized and carry adequate reserves. The Company's outlook for the coming year is increasingly optimistic. Our recently disclosed efficiency initiatives will bolster profitability in 2021 and beyond, and loan originations for the first quarter are tracking to be one our strongest efforts ever."

Fourth Quarter 2020 Highlights:

* Recognized a $3.9 million one-time charge for office consolidation, contract termination and employee severance costs in the fourth quarter of 2020. * The allowance for loan losses was $21.0 million and represents 1.29% of total loans (1.32% excluding Paycheck Protection Program ("PPP") loans) as of December 31, 2020, compared to an allowance for loan losses of $13.5 million, representing 0.84% of total loans as of December 31, 2019. The increase in the allowance for loan losses was primarily due to incremental loan loss reserves for increased credit risk relating to economic disruption and uncertainty caused by the COVID-19 pandemic. * PPP loans totaled $34.8 million at December 31, 2020. * Less than 2% of the loan portfolio remains on COVID-19 deferral. * Total deposits were $1.8 billion at December 31, 2020 compared to $1.5 billion at December 31, 2019, reflecting successful commercial core deposit gathering efforts, as well as a temporary increase in deposits to expand on-balance sheet liquidity during the COVID-19 pandemic. * Noninterest bearing deposits increased 41% to a new high of $270.2 million at December 31, 2020, when compared to December 31, 2019. * The Bank's loan-to-deposit ratio was 87.9% at December 31, 2020, reflecting the above-mentioned increase in deposits. * Total gross loans were $1.6 billion at December 31, 2020. * Investment securities totaled $106.9 million and represent 5% of total assets. * The tangible common equity ratio, as of December 31, 2020, decreased to 7.73% when compared to December 31, 2019. The decrease was primarily driven by mark-to-market activity on long dated interest rate swaps, as well as increased liquidity and corresponding balance sheet growth. * Tangible book value per share as of December 31, 2020 was $22.43.

Earnings and Performance

Revenues (net interest income plus noninterest income) for the quarter ended December 31, 2020 were $14.9 million, versus $13.9 million for the quarter ended December 31, 2019. Revenues for the year ended December 31, 2020 were $57.7 million, versus $59.0 million for the year ended December 31, 2019. For the year ended December 31, 2020, the decrease in revenues was attributable to the absence of SBA loan sales, when compared to the same period in 2019. The decrease in revenues was also driven by lower loan yields as loans are re-priced in the current low interest rate environment. The decrease in revenues was partially offset by a decline in interest expense, driven by lower interest rates on deposits when compared to the same period in 2019. The change in revenues for the quarter ended December 31, 2020 was driven by the same factors except that the decline in interest expense outweighed the absence of SBA loan sales and lower yields on loans.

Net income for the quarter ended December 31, 2020 was $0.3 million, versus $3.5 million for the quarter ended December 31, 2019. Net income for the year ended December 31, 2020 was $5.9 million, versus $18.2 million for the year ended December 31, 2019. The decrease in net income for the quarter and year ended December 31, 2020, when compared to the same periods in 2019, were impacted by a $3.9 million one-time charge for office consolidation, contract termination and employee severance costs in the fourth quarter of 2020. The decrease in net income for the year ended December 31, 2020, when compared to the same period in 2019, was also due to an increase in the provision for loan losses due to the COVID-19 pandemic. The provision for loan losses totaled $7.6 million for the year ended December 31, 2020, consisting of COVID-19 related reserves of $9.0 million, partially offset due to changes in portfolio mix and growth.

Basic and diluted earnings per share were each $0.04 for the quarter ended December 31, 2020 compared to basic and diluted earnings per share of $0.44 each for the quarter ended December 31, 2019. Basic and diluted earnings per share were each $0.75 for the year ended December 31, 2020 compared to basic and diluted earnings per share of $2.32 and $2.31, respectively, for the year ended December 31, 2019.

The net interest margin (fully taxable equivalent basis) for the quarters ended December 31, 2020 and December 31, 2019 was 2.66% and 2.92%, respectively. The net interest margin for the year ended December 31, 2020 and December 31, 2019 was 2.77% and 3.03%, respectively. The decrease in net interest margin for the quarter and year ended December 31, 2020, when compared to the same periods in 2019, was primarily due to excess liquidity resulting from successful commercial core deposit gathering efforts as well as a temporary increase in other deposits to expand on-balance sheet liquidity during the COVID-19 pandemic.

Financial Condition

Assets totaled $2.3 billion at December 31, 2020, compared to assets of $1.9 billion at December 31, 2019. The increase in assets is primarily due to an increase in cash and cash equivalents in part to maintain a higher level of liquidity during the COVID-19 pandemic. Gross loans totaled $1.6 billion at December 31, 2020, an increase of $21.1 million compared to December 31, 2019. Excluding PPP loans, gross loans decreased by $13.7 million at December 31, 2020 when compared to December 31, 2019. Deposits totaled $1.8 billion at December 31, 2020, compared to deposits of $1.5 billion at December 31, 2019. The increase in deposits was a result of successful commercial core deposit gathering efforts and a temporary increase in deposits during the COVID-19 pandemic, as described above.

Capital

Shareholders' equity totaled $176.6 million as of December 31, 2020, a decrease of $5.8 million compared to December 31, 2019, primarily a result of an $8.1 million unfavorable impact to accumulated other comprehensive loss driven by fair value marks related to hedge positions involving interest rate swaps, as well as dividends paid of $4.4 million and common stock repurchases of $1.0 million. The decrease was partially offset by net income for the year ended December 31, 2020 of $5.9 million. The marks on the interest rate swaps are driven by lower long term market interest rates in 2020 when compared to 2019. The Company's interest rate swaps are used to hedge interest rate risk. The Company's current interest rate swap positions will cause a decrease to other comprehensive income in a falling interest rate environment and an increase in a rising interest rate environment.

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, prolonged measures to contain the spread of COVID-19 or premature easing of such containment measures, either of 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 and tangible book value per share are useful to evaluate the relative strength of the Company's 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.

BANKWELL FINANCIAL GROUP, INC.CONSOLIDATED BALANCE SHEETS (unaudited)(Dollars in thousands)

December 31, September 30, June 30, March 31, December 31, 2020 2020 2020 2020 2019

ASSETS

Cash and due $ 405,340 $ 333,103 $ 201,380 $ 203,569 $ 78,051 from banks

Federal funds 4,258 6,380 5,886 6,427 - sold

Cash and cash 409,598 339,483 207,266 209,996 78,051 equivalents



Investment securities

Marketableequity 2,207 2,203 2,195 2,289 2,118 securities,at fair value

Available forsaleinvestment 88,605 90,563 82,220 82,342 82,439 securities,at fair value

Held tomaturityinvestment 16,078 16,138 16,196 16,252 16,308 securities,at amortizedcost

Totalinvestment 106,890 108,904 100,611 100,883 100,865 securities

Loansreceivable(net ofallowance forloan lossesof $21,009,$20,372,$19,662,$16,686, and$13,509 at 1,601,672 1,600,776 1,590,995 1,602,146 1,588,840 December 31,2020,September 30,2020, June30, 2020,March 31,2020, andDecember 31,2019,respectively)

Other real - - 180 - - estate owned

Accruedinterest 6,579 7,294 6,774 5,867 5,959 receivable

Federal HomeLoan Bank 7,860 7,860 7,835 6,507 7,475 stock, atcost

Premises andequipment, 21,762 26,616 27,177 27,835 28,522 net

Bank-ownedlife 42,651 42,409 42,167 41,926 41,683 insurance

Goodwill 2,589 2,589 2,589 2,589 2,589

Otherintangible 76 160 178 196 214 assets

Deferredincome taxes, 11,300 11,149 11,352 10,009 5,788 net

Other assets 42,770 45,782 46,511 45,671 22,196

Total assets $ 2,253,747 $ 2,193,022 $ 2,043,635 $ 2,053,625 $ 1,882,182



LIABILITIESAND SHAREHOLDERS'EQUITY

Liabilities

Deposits

Noninterestbearing $ 270,235 $ 234,848 $ 214,789 $ 168,448 $ 191,518 deposits

Interestbearing 1,557,081 1,532,680 1,405,175 1,512,684 1,300,385 deposits

Total 1,827,316 1,767,528 1,619,964 1,681,132 1,491,903 deposits



Advances fromthe Federal 175,000 175,000 175,000 125,000 150,000 Home LoanBank

Subordinated 25,258 25,245 25,233 25,220 25,207 debentures

Accruedexpenses and 49,571 50,982 53,078 52,059 32,675 otherliabilities

Total 2,077,145 2,018,755 1,873,275 1,883,411 1,699,785 liabilities



Shareholders' equity

Common stock, 121,338 120,854 120,381 119,953 120,589 no par value

Retained 70,839 71,603 69,712 69,595 69,324 earnings

Accumulatedother (15,575) (18,190) (19,733) (19,334) (7,516) comprehensiveloss

Totalshareholders' 176,602 174,267 170,360 170,214 182,397 equity



Totalliabilitiesand $ 2,253,747 $ 2,193,022 $ 2,043,635 $ 2,053,625 $ 1,882,182 shareholders'equity

BANKWELL FINANCIAL GROUP, INC.CONSOLIDATED STATEMENTS OF INCOME (unaudited)(Dollars in thousands, except share data)

For the Quarter Ended

For the Year Ended

December 31,2020

September 30,2020

June 30,2020

March 31,2020

December 31,2019

December 31,2020

December 31,2019

Interest and dividend income

Interest and fees on loans

$

18,194

$

18,027

$

18,459

$

18,985

$

18,648

$

73,665

$

77,339

Interest and dividends on securities

835

799

778

825

858

3,237

3,750

Interest on cash and cash equivalents

117

96

86

286

427

585

1,859

Total interest and dividend income

19,146

18,922

19,323

20,096

19,933

77,487

82,948

Interest expense

Interest expense on deposits

3,557

4,104

4,810

5,709

5,948

18,180

24,698

Interest expense on borrowings

1,285

1,210

876

1,101

1,103

4,472

4,489

Total interest expense

4,842

5,314

5,686

6,810

7,051

22,652

29,187

Net interest income

14,304

13,608

13,637

13,286

12,882

54,835

53,761

Provision for loan losses

709

712

2,999

3,185

310

7,605

437

Net interest income after provision for loan losses

13,595

12,896

10,638

10,101

12,572

47,230

53,324

Noninterest income

Bank owned life insurance

241

242

241

243

250

967

1,008

Service charges and fees

210

190

171

217

247

788

1,023

Gains and fees from sales of loans

16

27

-

-

382

43

1,791

Gain (loss) on sale of other real estate owned, net

-

19

-

-

-

19

(102)

Net gain on sale of available for sale securities

-

-

-

-

-

-

76

Other

154

136

165

612

169

1,067

1,448

Total noninterest income

621

614

577

1,072

1,048

2,884

5,244

Noninterest expense

Salaries and employee benefits

5,453

5,295

5,227

5,380

5,162

21,355

19,434

Occupancy and equipment

4,516

2,266

2,235

1,909

1,928

10,926

7,594

Data processing

1,658

529

493

536

499

3,216

2,067

Professional services

591

374

434

711

402

2,110

1,857

Director fees

331

301

287

295

224

1,214

863

FDIC insurance

262

176

283

70

-

791

74

Marketing

118

151

199

162

220

630

971

Other

774

637

564

596

789

2,571

2,766

Total noninterest expense

13,703

9,729

9,722

9,659

9,224

42,813

35,626

Income before income tax expense

513

3,781

1,493

1,514

4,396

7,301

22,942

Income tax expense

177

790

279

151

924

1,397

4,726

Net income

$

336

$

2,991

$

1,214

$

1,363

$

3,472

$

5,904

$

18,216

Earnings Per Common Share:

Basic

$

0.04

$

0.38

$

0.16

$

0.17

$

0.44

$

0.75

$

2.32

Diluted

$

0.04

$

0.38

$

0.16

$

0.17

$

0.44

$

0.75

$

2.31

Weighted Average Common Shares Outstanding:

Basic

7,726,926

7,721,247

7,715,094

7,750,135

7,745,227

7,728,328

7,757,355

Diluted

7,728,206

7,721,459

7,715,295

7,778,762

7,773,780

7,748,453

7,784,631

Dividends per common share

$

0.14

$

0.14

$

0.14

$

0.14

$

0.13

$

0.56

$

0.52

BANKWELL FINANCIAL GROUP, INC.CONSOLIDATED STATEMENTS OF INCOME (unaudited)(Dollars in thousands, except share data)

For the Quarter Ended For the Year Ended

December September June 30, March 31, December December December 31, 30, 2020 2020 31, 31, 31, 2020 2020 2019 2020 2019

Interest anddividend income

Interest andfees on $ 18,194 $ 18,027 $ 18,459 $ 18,985 $ 18,648 $ 73,665 $ 77,339 loans

Interest anddividends on 835 799 778 825 858 3,237 3,750 securities

Interest oncash and 117 96 86 286 427 585 1,859 cashequivalents

Totalinterest and 19,146 18,922 19,323 20,096 19,933 77,487 82,948 dividendincome



Interest expense

Interestexpense on 3,557 4,104 4,810 5,709 5,948 18,180 24,698 deposits

Interestexpense on 1,285 1,210 876 1,101 1,103 4,472 4,489 borrowings

Totalinterest 4,842 5,314 5,686 6,810 7,051 22,652 29,187 expense



Net interest 14,304 13,608 13,637 13,286 12,882 54,835 53,761 income

Provisionfor loan 709 712 2,999 3,185 310 7,605 437 losses

Net interestincome afterprovision 13,595 12,896 10,638 10,101 12,572 47,230 53,324 for loanlosses



Noninterest income

Bank ownedlife 241 242 241 243 250 967 1,008 insurance

Servicecharges and 210 190 171 217 247 788 1,023 fees

Gains andfees from 16 27 - - 382 43 1,791 sales ofloans

Gain (loss)on sale ofother real - 19 - - - 19 (102) estateowned, net

Net gain onsale ofavailable - - - - - - 76 for salesecurities

Other 154 136 165 612 169 1,067 1,448

Totalnoninterest 621 614 577 1,072 1,048 2,884 5,244 income



Noninterest expense

Salaries andemployee 5,453 5,295 5,227 5,380 5,162 21,355 19,434 benefits

Occupancyand 4,516 2,266 2,235 1,909 1,928 10,926 7,594 equipment

Data 1,658 529 493 536 499 3,216 2,067 processing

Professional 591 374 434 711 402 2,110 1,857 services

Director 331 301 287 295 224 1,214 863 fees

FDIC 262 176 283 70 - 791 74 insurance

Marketing 118 151 199 162 220 630 971

Other 774 637 564 596 789 2,571 2,766

Totalnoninterest 13,703 9,729 9,722 9,659 9,224 42,813 35,626 expense



Incomebefore 513 3,781 1,493 1,514 4,396 7,301 22,942 income taxexpense

Income tax 177 790 279 151 924 1,397 4,726 expense

Net income $ 336 $ 2,991 $ 1,214 $ 1,363 $ 3,472 $ 5,904 $ 18,216



Earnings PerCommon Share:

Basic $ 0.04 $ 0.38 $ 0.16 $ 0.17 $ 0.44 $ 0.75 $ 2.32

Diluted $ 0.04 $ 0.38 $ 0.16 $ 0.17 $ 0.44 $ 0.75 $ 2.31



WeightedAverageCommon SharesOutstanding:

Basic 7,726,926 7,721,247 7,715,094 7,750,135 7,745,227 7,728,328 7,757,355

Diluted 7,728,206 7,721,459 7,715,295 7,778,762 7,773,780 7,748,453 7,784,631

Dividendsper common $ 0.14 $ 0.14 $ 0.14 $ 0.14 $ 0.13 $ 0.56 $ 0.52 share

BANKWELL FINANCIAL GROUP, INC.CONSOLIDATED FINANCIAL HIGHLIGHTS (unaudited)

For the Quarter Ended

For the Year Ended

December 31,2020

September 30,2020

June 30,2020

March 31,2020

December 31,2019

December 31,2020

December 31,2019

Performance ratios:

Return on average assets(1)

0.06

%

0.55

%

0.23

%

0.29

%

0.73

%

0.28

%

0.97

%

Return on average stockholders' equity(1)

0.75

%

6.87

%

2.82

%

3.03

%

7.68

%

3.35

%

10.20

%

Return on average tangible common equity(1)

0.76

%

6.98

%

2.86

%

3.07

%

7.80

%

3.40

%

10.37

%

Net interest margin

2.66

%

2.67

%

2.81

%

2.98

%

2.92

%

2.77

%

3.03

%

Efficiency ratio(2)

91.2

%

68.4

%

68.2

%

67.1

%

66.1

%

73.9

%

60.2

%

Net loan charge-offs as a % of average loans

-

%

-

%

-

%

-

%

-

%

0.01

%

0.15

%

Dividend payout ratio(3)

350.00

%

36.84

%

87.50

%

82.35

%

29.55

%

74.67

%

22.51

%

* 2020 performance ratios are negatively impacted by incremental COVID-19 pandemic related loan loss reserves and the $3.9 million one-time charge related to office consolidation, contract termination and employee severance costs recognized in the fourth quarter of 2020. * 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. * The dividend payout ratio is calculated by dividing dividends per share by earnings per share.BANKWELL FINANCIAL GROUP, INC.CONSOLIDATED FINANCIAL HIGHLIGHTS (unaudited)

For the Quarter Ended For the Year Ended

December September June March December December December 31, 30, 30, 31, 31, 31, 31, 2020 2020 2020 2020 2019 2020 2019

Performance ratios:

Return onaverage 0.06 % 0.55 % 0.23 % 0.29 % 0.73 % 0.28 % 0.97 %assets^(1)

Return onaverage 0.75 % 6.87 % 2.82 % 3.03 % 7.68 % 3.35 % 10.20 %stockholders'equity^(1)

Return onaveragetangible 0.76 % 6.98 % 2.86 % 3.07 % 7.80 % 3.40 % 10.37 %common equity^(1)

Net interest 2.66 % 2.67 % 2.81 % 2.98 % 2.92 % 2.77 % 3.03 %margin

Efficiency 91.2 % 68.4 % 68.2 % 67.1 % 66.1 % 73.9 % 60.2 %ratio^(2)

Net loancharge-offs - % - % - % - % - % 0.01 % 0.15 %as a % ofaverage loans

Dividendpayout ratio^ 350.00 % 36.84 % 87.50 % 82.35 % 29.55 % 74.67 % 22.51 %(3)

* 2020 performance ratios are negatively impacted by incremental COVID-19 pandemic related loan loss reserves and the $3.9 million one-time charge related to office consolidation, contract termination and employee severance costs recognized in the fourth quarter of 2020. * 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. * The dividend payout ratio is calculated by dividing dividends per share by earnings per share. As of

December September June 30, March 31, December 31, 30, 2020 2020 31, 2020 2020 2019

Capital ratios:

Total Common EquityTier 1 Capital to 11.06 % 12.36 % 12.44 % 12.14 % 12.53 %Risk-Weighted Assets^(1)

Total Capital toRisk-Weighted Assets^ 12.28 % 13.57 % 13.63 % 13.13 % 13.35 %(1)

Tier I Capital toRisk-Weighted Assets^ 11.06 % 12.36 % 12.44 % 12.14 % 12.53 %(1)

Tier I Capital to 8.44 % 9.58 % 9.93 % 10.84 % 10.99 %Average Assets^(1)

Tangible commonequity to tangible 7.73 % 7.83 % 8.21 % 8.16 % 9.56 %assets

Tangible book value $ 22.43 $ 22.20 $ 21.70 $ 21.69 $ 23.15 per common share^(2)

* Represents Bank ratios. Current period capital ratios are preliminary subject to finalization of the FDIC Call Report. * Excludes unvested restricted shares of 163,369, 170,083, 165,708, 154,012, and 110,975 as of December 31, 2020, September 30, 2020, June 30, 2020, March 31, 2020, and December 31, 2019, respectively.BANKWELL FINANCIAL GROUP, INC.ASSET QUALITY (unaudited)(Dollars in thousands)

For the Quarter Ended

December September June 30, March 31, December 31, 30, 2020 2020 31, 2020 2020 2019

Allowance for loan losses:

Balance at beginning $ 20,372 $ 19,662 $ 16,686 $ 13,509 $ 13,212 of period

Charge-offs:

Commercial business (75) - - (8) (13)

Consumer (11) (4) (23) (2) (5)

Total charge-offs (86) (4) (23) (10) (18)

Recoveries:

Commercial business 14 - - 1 1

Consumer - 2 - 1 4

Total recoveries 14 2 - 2 5

Net loan charge-offs (72) (2) (23) (8) (13)

Provision for loan 709 712 2,999 3,185 310 losses

Balance at end of $ 21,009 $ 20,372 $ 19,662 $ 16,686 $ 13,509 period

As of

December 31,2020

September 30,2020

June 30,2020

March 31,2020

December 31,2019

Asset quality:

Nonaccrual loans

Residential real estate

$

1,492

$

1,596

$

1,622

$

1,532

$

1,560

Commercial real estate

21,093

4,812

5,172

5,339

5,222

Commercial business

1,834

3,760

3,783

3,783

3,806

Construction

8,997

-

-

-

-

Total nonaccrual loans

33,416

10,168

10,577

10,654

10,588

Other real estate owned

-

-

180

-

-

Total nonperforming assets

$

33,416

$

10,168

$

10,757

$

10,654

$

10,588

Nonperforming loans as a % of total loans

2.06

%

0.63

%

0.66

%

0.66

%

0.66

%

Nonperforming assets as a % of total assets

1.48

%

0.46

%

0.53

%

0.52

%

0.56

%

Allowance for loan losses as a % of total loans

1.29

%

1.25

%

1.22

%

1.03

%

0.84

%

Allowance for loan losses as a % of nonperforming loans

62.87

%

200.35

%

185.89

%

156.62

%

127.59

%

Total nonaccrual loans were $33.4 million as of December 31, 2020, of which $2.6 million are guaranteed by the Small Business Administration (SBA). The Company individually analyzed all existing COVID-19 deferrals and COVID-19 impacted loans for collectability and impairment as of December 31, 2020, resulting in a $25.6 million increase to the nonperforming loan population which are adequately reserved. Nonperforming assets as a percentage of total assets was 1.48% at December 31, 2020, up from 0.56% at December 31, 2019. The allowance for loan losses at December 31, 2020 was $21.0 million, representing 1.29% of total loans. The $7.5 million increase in the allowance for loan losses at December 31, 2020 when compared to December 31, 2019 was primarily due to incremental loan loss reserves for increased credit risk relating to economic disruption and uncertainty caused by the COVID-19 pandemic.

As of

December September June 30, March 31, December 31, 30, 2020 2020 31, 2020 2020 2019

Asset quality:

Nonaccrual loans

Residential real $ 1,492 $ 1,596 $ 1,622 $ 1,532 $ 1,560 estate

Commercial real 21,093 4,812 5,172 5,339 5,222 estate

Commercial 1,834 3,760 3,783 3,783 3,806 business

Construction 8,997 - - - -

Total nonaccrual 33,416 10,168 10,577 10,654 10,588 loans

Other real - - 180 - - estate owned

Totalnonperforming $ 33,416 $ 10,168 $ 10,757 $ 10,654 $ 10,588 assets



Nonperformingloans as a % of 2.06 % 0.63 % 0.66 % 0.66 % 0.66 %total loans

Nonperformingassets as a % of 1.48 % 0.46 % 0.53 % 0.52 % 0.56 %total assets

Allowance forloan losses as a 1.29 % 1.25 % 1.22 % 1.03 % 0.84 %% of total loans

Allowance forloan losses as a% of 62.87 % 200.35 % 185.89 % 156.62 % 127.59 %nonperformingloans

Total nonaccrual loans were $33.4 million as of December 31, 2020, of which $2.6 million are guaranteed by the Small Business Administration (SBA). The Company individually analyzed all existing COVID-19 deferrals and COVID-19 impacted loans for collectability and impairment as of December 31, 2020, resulting in a $25.6 million increase to the nonperforming loan population which are adequately reserved. Nonperforming assets as a percentage of total assets was 1.48% at December 31, 2020, up from 0.56% at December 31, 2019. The allowance for loan losses at December 31, 2020 was $21.0 million, representing 1.29% of total loans. The $7.5 million increase in the allowance for loan losses at December 31, 2020 when compared to December 31, 2019 was primarily due to incremental loan loss reserves for increased credit risk relating to economic disruption and uncertainty caused by the COVID-19 pandemic.

BANKWELL FINANCIAL GROUP, INC.LOAN & DEPOSIT PORTFOLIO (unaudited)(Dollars in thousands)

Period End December 31, September 30, December 31, Current YTD %Loan 2020 2020 2019 QTD % ChangeComposition Change

Residential $ 113,557 $ 120,531 $ 147,109 (5.8) % (22.8) %Real Estate

CommercialReal Estate^ 1,148,383 1,105,862 1,128,614 3.8 1.8 (1)

Construction 87,007 96,508 98,583 (9.8) (11.7)

Total Real 1,348,947 1,322,901 1,374,306 2.0 (1.8) Estate Loans



Commercial 276,601 301,747 230,028 (8.3) 20.2 Business



Consumer 79 78 150 1.3 (47.3)

Total Loans $ 1,625,627 $ 1,624,726 $ 1,604,484 0.1 % 1.3 %

* Includes owner occupied commercial real estate.Period End December 31, September 30, December 31, Current YTD %Deposit 2020 2020 2019 QTD % ChangeComposition Change

Noninterestbearing $ 270,235 $ 234,848 $ 191,518 15.1 % 41.1 %demand

NOW 101,737 90,776 70,020 12.1 45.3

Money 669,364 561,101 419,495 19.3 59.6 Market

Savings 158,750 164,590 183,729 (3.5) (13.6)

Time 627,230 716,213 627,141 (12.4) -

Total $ 1,827,316 $ 1,767,528 $ 1,491,903 3.4 % 22.5 %Deposits

Total deposits were $1.8 billion at December 31, 2020 compared to $1.5 billion at December 31, 2019, an increase of $0.3 billion, or 22.5%. The increase in total deposits was a result of successful commercial core deposit gathering efforts, as well as a temporary increase in deposits to expand on-balance sheet liquidity during the COVID-19 pandemic.

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

For the Quarter Ended

December September December Dec 20 vs. Dec 20 vs.Noninterest income 31, 30, 31, Sep 20 % Dec 19 % 2020 2020 2019 Change Change

Bank owned life $ 241 $ 242 $ 250 (0.4) % (3.6) %insurance

Service charges 210 190 247 10.5 (15.0) and fees

Gains and feesfrom sales of 16 27 382 (40.7) (95.8) loans

Gain on sale ofother real estate - 19 - (100.0) N/Aowned, net

Other 154 136 169 13.2 (8.9)

Total noninterest $ 621 $ 614 $ 1,048 1.1 % (40.7) %income

For the Year Ended

Noninterest income

December 31,2020

December 31,2019

% Change

Bank owned life insurance

$

967

$

1,008

(4.1)

%

Service charges and fees

788

1,023

(23.0)

Gains and fees from sales of loans

43

1,791

(97.6)

Gain (loss) on sale of other real estate owned, net

19

(102)

(118.6)

Net gain on sale of available for sale securities

-

76

(100.0)

Other

1,067

1,448

(26.3)

Total noninterest income

$

2,884

$

5,244

(45.0)

%

Noninterest income decreased by $0.4 million to $0.6 million for the quarter ended December 31, 2020 compared to the quarter ended December 31, 2019. Noninterest income decreased by $2.4 million to $2.9 million for the year ended December 31, 2020, compared to the year ended December 31, 2019.

The decrease in noninterest income was primarily a result of the absence of gains and fees from SBA loan sales for the quarter and year ended December 31, 2020, when compared to the same periods in 2019. In addition, for the year ended December 31, 2020 the decrease in noninterest income was also driven by certain waived service charges and fees on depository accounts as a courtesy to customers during the COVID-19 pandemic. The decrease in other noninterest income for the year ended December 31, 2020 was primarily a result of a decline in loan related interest rate swap fees in 2020, when compared to the same period in 2019.

For the Year Ended

December DecemberNoninterest income 31, 31, % Change 2020 2019

Bank owned life insurance $ 967 $ 1,008 (4.1) %

Service charges and fees 788 1,023 (23.0)

Gains and fees from sales of loans 43 1,791 (97.6)

Gain (loss) on sale of other real estate 19 (102) (118.6) owned, net

Net gain on sale of available for sale - 76 (100.0) securities

Other 1,067 1,448 (26.3)

Total noninterest income $ 2,884 $ 5,244 (45.0) %

Noninterest income decreased by $0.4 million to $0.6 million for the quarter ended December 31, 2020 compared to the quarter ended December 31, 2019. Noninterest income decreased by $2.4 million to $2.9 million for the year ended December 31, 2020, compared to the year ended December 31, 2019.

The decrease in noninterest income was primarily a result of the absence of gains and fees from SBA loan sales for the quarter and year ended December 31, 2020, when compared to the same periods in 2019. In addition, for the year ended December 31, 2020 the decrease in noninterest income was also driven by certain waived service charges and fees on depository accounts as a courtesy to customers during the COVID-19 pandemic. The decrease in other noninterest income for the year ended December 31, 2020 was primarily a result of a decline in loan related interest rate swap fees in 2020, when compared to the same period in 2019.

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

For the Quarter Ended

Noninterest December September December Dec 20 vs. Dec 20 vs.expense 31, 30, 31, Sep 20 % Dec 19 % 2020 2020 2019 Change Change

Salaries andemployee $ 5,453 $ 5,295 $ 5,162 3.0 % 5.6 %benefits

Occupancy and 4,516 2,266 1,928 99.3 134.2 equipment

Data processing 1,658 529 499 213.4 232.3

Professional 591 374 402 58.0 47.0 services

Director fees 331 301 224 10.0 47.8

FDIC insurance 262 176 - 48.9 N/A

Marketing 118 151 220 (21.9) (46.4)

Other 774 637 789 21.5 (1.9)

Totalnoninterest $ 13,703 $ 9,729 $ 9,224 40.8 % 48.6 %expense

For the Year Ended

Noninterest expense

December 31,2020

December 31,2019

% Change

Salaries and employee benefits

$

21,355

$

19,434

9.9

%

Occupancy and equipment

10,926

7,594

43.9

Data processing

3,216

2,067

55.6

Professional services

2,110

1,857

13.6

Director fees

1,214

863

40.7

FDIC insurance

791

74

968.9

Marketing

630

971

(35.1)

Other

2,571

2,766

(7.0)

Total noninterest expense

$

42,813

$

35,626

20.2

%

Noninterest expense increased by $4.5 million, or 48.6%, to $13.7 million for the quarter ended December 31, 2020 compared to the quarter ended December 31, 2019. Noninterest expense increased by $7.2 million, or 20.2%, to $42.8 million for the year ended December 31, 2020 compared to the year ended December 31, 2019. The increase in noninterest expense was primarily driven by $3.9 million in one-time charges recognized during the fourth quarter of 2020. These one-time charges impacted salaries and employee benefits, occupancy and equipment expense and data processing expense.

Salaries and employee benefits totaled $5.5 million for the quarter ended December 31, 2020, an increase of $0.3 million when compared to the same period in 2019. Salaries and employee benefits totaled $21.4 million for the year ended December 31, 2020, an increase of $1.9 million when compared to the same period in 2019. The increase in salaries and employee benefits was primarily driven by a $0.8 million expense for the Voluntary Early Retirement Incentive Plan offered to eligible employees and additional severance charges recognized during the fourth quarter of 2020. The increase in salaries and employee benefits was also driven by normal annual salary increases and key hires in support of growth initiatives, partially offset by a reduction in overall headcount.

Occupancy and equipment expense totaled $4.5 million for the quarter ended December 31, 2020, an increase of $2.6 million when compared to the same period in 2019. Occupancy and equipment expense totaled $10.9 million for the year ended December 31, 2020, an increase of $3.3 million when compared to the same period in 2019. The increase in occupancy and equipment expense was primarily due to a $2.0 million one-time expense related to office and branch consolidation recognized during the fourth quarter of 2020. In addition, the increase in occupancy and equipment expense was due to additional cleaning costs associated with precautions taken to prevent the spread of COVID-19.

Data processing expense totaled $1.7 million for the quarter ended December 31, 2020, an increase of $1.2 million when compared to the same period in 2019. Data processing expense totaled $3.2 million for the year ended December 31, 2020, an increase of $1.1 million when compared to the same period in 2019. The increase in data processing expense was primarily driven by a $1.1 million one-time charge related to early termination fees payable to a legacy technology vendor.

For the Year Ended

Noninterest expense December 31, December 31, % Change 2020 2019

Salaries and employee benefits $ 21,355 $ 19,434 9.9 %

Occupancy and equipment 10,926 7,594 43.9

Data processing 3,216 2,067 55.6

Professional services 2,110 1,857 13.6

Director fees 1,214 863 40.7

FDIC insurance 791 74 968.9

Marketing 630 971 (35.1)

Other 2,571 2,766 (7.0)

Total noninterest expense $ 42,813 $ 35,626 20.2 %

Noninterest expense increased by $4.5 million, or 48.6%, to $13.7 million for the quarter ended December 31, 2020 compared to the quarter ended December 31, 2019. Noninterest expense increased by $7.2 million, or 20.2%, to $42.8 million for the year ended December 31, 2020 compared to the year ended December 31, 2019. The increase in noninterest expense was primarily driven by $3.9 million in one-time charges recognized during the fourth quarter of 2020. These one-time charges impacted salaries and employee benefits, occupancy and equipment expense and data processing expense.

Salaries and employee benefits totaled $5.5 million for the quarter ended December 31, 2020, an increase of $0.3 million when compared to the same period in 2019. Salaries and employee benefits totaled $21.4 million for the year ended December 31, 2020, an increase of $1.9 million when compared to the same period in 2019. The increase in salaries and employee benefits was primarily driven by a $0.8 million expense for the Voluntary Early Retirement Incentive Plan offered to eligible employees and additional severance charges recognized during the fourth quarter of 2020. The increase in salaries and employee benefits was also driven by normal annual salary increases and key hires in support of growth initiatives, partially offset by a reduction in overall headcount.

Occupancy and equipment expense totaled $4.5 million for the quarter ended December 31, 2020, an increase of $2.6 million when compared to the same period in 2019. Occupancy and equipment expense totaled $10.9 million for the year ended December 31, 2020, an increase of $3.3 million when compared to the same period in 2019. The increase in occupancy and equipment expense was primarily due to a $2.0 million one-time expense related to office and branch consolidation recognized during the fourth quarter of 2020. In addition, the increase in occupancy and equipment expense was due to additional cleaning costs associated with precautions taken to prevent the spread of COVID-19.

Data processing expense totaled $1.7 million for the quarter ended December 31, 2020, an increase of $1.2 million when compared to the same period in 2019. Data processing expense totaled $3.2 million for the year ended December 31, 2020, an increase of $1.1 million when compared to the same period in 2019. The increase in data processing expense was primarily driven by a $1.1 million one-time charge related to early termination fees payable to a legacy technology vendor.

BANKWELL FINANCIAL GROUP, INC.RECONCILIATION OF GAAP TO NON-GAAP MEASURES (unaudited)(Dollars in thousands, except share data)

As of

Computationof TangibleCommon December 31, September 30, June 30, March 31, December 31,Equity to 2020 2020 2020 2020 2019TangibleAssets

Total $ 176,602 $ 174,267 $ 170,360 $ 170,214 $ 182,397 Equity

Less:

Goodwill 2,589 2,589 2,589 2,589 2,589

Other 76 160 178 196 214 intangibles

TangibleCommon $ 173,937 $ 171,518 $ 167,593 $ 167,429 $ 179,594 Equity



Total $ 2,253,747 $ 2,193,022 $ 2,043,635 $ 2,053,625 $ 1,882,182 Assets

Less:

Goodwill 2,589 2,589 2,589 2,589 2,589

Other 76 160 178 196 214 intangibles

Tangible $ 2,251,082 $ 2,190,273 $ 2,040,868 $ 2,050,840 $ 1,879,379 Assets



TangibleCommonEquity to 7.73 % 7.83 % 8.21 % 8.16 % 9.56 %TangibleAssets

As of

Computation of Tangible Book Value per Common Share

December 31,2020

September 30,2020

June 30,2020

March 31,2020

December 31,2019

Total shareholders' equity

$

176,602

$

174,267

$

170,360

$

170,214

$

182,397

Less:

Preferred stock

-

-

-

-

-

Common shareholders' equity

$

176,602

$

174,267

$

170,360

$

170,214

$

182,397

Less:

Goodwill

2,589

2,589

2,589

2,589

2,589

Other intangibles

76

160

178

196

214

Tangible common shareholders' equity

$

173,937

$

171,518

$

167,593

$

167,429

$

179,594

Common shares

7,919,278

7,896,503

7,887,503

7,871,419

7,868,803

Less:

Shares of unvested restricted stock

163,369

170,083

165,708

154,012

110,975

Common shares less unvested restricted stock

7,755,909

7,726,420

7,721,795

7,717,407

7,757,828

Book value per share

$

22.77

$

22.55

$

22.06

$

22.06

$

23.51

Less:

Effects of intangible assets

$

0.34

$

0.36

$

0.36

$

0.36

$

0.36

Tangible Book Value per Common Share

$

22.43

$

22.20

$

21.70

$

21.69

$

23.15

As of

Computationof Tangible December September June 30, March 31, DecemberBook Value 31, 30, 2020 2020 31,per Common 2020 2020 2019Share

Totalshareholders' $ 176,602 $ 174,267 $ 170,360 $ 170,214 $ 182,397 equity

Less:

Preferred - - - - - stock

Commonshareholders' $ 176,602 $ 174,267 $ 170,360 $ 170,214 $ 182,397 equity

Less:

Goodwill 2,589 2,589 2,589 2,589 2,589

Other 76 160 178 196 214 intangibles

Tangiblecommon $ 173,937 $ 171,518 $ 167,593 $ 167,429 $ 179,594 shareholders'equity

Common shares 7,919,278 7,896,503 7,887,503 7,871,419 7,868,803

Less:

Shares ofunvested 163,369 170,083 165,708 154,012 110,975 restrictedstock

Common sharesless unvested 7,755,909 7,726,420 7,721,795 7,717,407 7,757,828 restrictedstock

Book value $ 22.77 $ 22.55 $ 22.06 $ 22.06 $ 23.51 per share

Less:

Effects ofintangible $ 0.34 $ 0.36 $ 0.36 $ 0.36 $ 0.36 assets



Tangible BookValue per $ 22.43 $ 22.20 $ 21.70 $ 21.69 $ 23.15 Common Share

BANKWELL FINANCIAL GROUP, INC.RECONCILIATION OF GAAP TO NON-GAAP MEASURES (unaudited) - Continued(Dollars in thousands)

For the Quarter Ended

For the Year Ended

Computation of Efficiency Ratio

December 31,2020

September 30,2020

June 30,2020

March 31,2020

December 31,2019

December 31,2020

December 31,2019

Noninterest expense

$

13,703

$

9,729

$

9,722

$

9,659

$

9,224

$

42,813

$

35,626

Less:

Amortization of intangible assets

84

18

18

18

18

138

75

Other real estate owned expenses

-

-

6

-

-

6

37

Adjusted noninterest expense

$

13,619

$

9,711

$

9,698

$

9,641

$

9,206

$

42,669

$

35,514

Net interest income

$

14,304

$

13,608

$

13,637

$

13,286

$

12,882

$

54,835

$

53,761

Noninterest income

621

614

577

1,072

1,048

2,884

5,244

Less:

Net gain on sale of available for sale securities

-

-

-

-

-

-

76

Gain (loss) on sale of other real estate owned, net

-

19

-

-

-

19

(102)

Operating revenue

$

14,925

$

14,203

$

14,214

$

14,358

$

13,930

$

57,700

$

59,031

Efficiency ratio

91.2

%

68.4

%

68.2

%

67.1

%

66.1

%

73.9

%

60.2

%

BANKWELL FINANCIAL GROUP, INC.RECONCILIATION OF GAAP TO NON-GAAP MEASURES (unaudited) - Continued(Dollars in thousands)

For the Quarter Ended For the Year Ended

Computation December September December December Decemberof 31, 30, June 30, March 31, 31, 31, 31,Efficiency 2020 2020 2020 2020 2019 2020 2019Ratio

Noninterest $ 13,703 $ 9,729 $ 9,722 $ 9,659 $ 9,224 $ 42,813 $ 35,626 expense

Less:

Amortizationof 84 18 18 18 18 138 75 intangibleassets

Other realestate owned - - 6 - - 6 37 expenses

Adjustednoninterest $ 13,619 $ 9,711 $ 9,698 $ 9,641 $ 9,206 $ 42,669 $ 35,514 expense

Net interest $ 14,304 $ 13,608 $ 13,637 $ 13,286 $ 12,882 $ 54,835 $ 53,761 income

Noninterest 621 614 577 1,072 1,048 2,884 5,244 income

Less:

Net gain onsale ofavailable - - - - - - 76 for salesecurities

Gain (loss)on sale ofother real - 19 - - - 19 (102) estateowned, net

Operating $ 14,925 $ 14,203 $ 14,214 $ 14,358 $ 13,930 $ 57,700 $ 59,031 revenue



Efficiency 91.2 % 68.4 % 68.2 % 67.1 % 66.1 % 73.9 % 60.2 %ratio

For the Quarter Ended

For the Year Ended

Computation of Return on Average Tangible Common Equity

December 31,2020

September 30,2020

June 30,2020

March 31,2020

December 31,2019

December 31,2020

December 31,2019

Net Income Attributable to Common Shareholders

$

336

$

2,991

$

1,214

$

1,363

$

3,472

$

5,904

$

18,216

Total average shareholders' equity

$

178,439

$

173,162

$

173,289

$

181,127

$

179,312

$

176,489

$

178,510

Less:

Average Goodwill

2,589

2,589

2,589

2,589

2,589

2,589

2,589

Average Other intangibles

153

172

190

208

226

180

254

Average tangible common equity

$

175,697

$

170,401

$

170,510

$

178,330

$

176,497

$

173,720

$

175,667

Annualized Return on Average Tangible Common Equity

0.76

%

6.98

%

2.86

%

3.07

%

7.80

%

3.40

%

10.37

%

For the Quarter Ended For the Year Ended

Computationof Return on December September June 30, March 31, December December DecemberAverage 31, 30, 2020 2020 31, 31, 31,Tangible 2020 2020 2019 2020 2019Common Equity

Net IncomeAttributable $ 336 $ 2,991 $ 1,214 $ 1,363 $ 3,472 $ 5,904 $ 18,216 to CommonShareholders

Total averageshareholders' $ 178,439 $ 173,162 $ 173,289 $ 181,127 $ 179,312 $ 176,489 $ 178,510 equity

Less:

Average 2,589 2,589 2,589 2,589 2,589 2,589 2,589 Goodwill

Average Other 153 172 190 208 226 180 254 intangibles

Averagetangible $ 175,697 $ 170,401 $ 170,510 $ 178,330 $ 176,497 $ 173,720 $ 175,667 common equity



AnnualizedReturn onAverage 0.76 % 6.98 % 2.86 % 3.07 % 7.80 % 3.40 % 10.37 %TangibleCommon Equity

BANKWELL FINANCIAL GROUP, INC.NET INTEREST MARGIN ANALYSIS ON A FULLY TAX EQUIVALENT BASIS - QTD (unaudited)(Dollars in thousands)

For the Quarter Ended

December 31, 2020

December 31, 2019

AverageBalance

Interest

Yield/

Rate (5)

AverageBalance

Interest

Yield/

Rate (5)

Assets:

Cash and Fed funds sold

$

424,327

$

117

0.11

%

$

90,007

$

427

1.88

%

Securities(1)

105,422

814

3.09

102,696

804

3.13

Loans:

Commercial real estate

1,096,912

12,753

4.55

1,084,311

12,646

4.56

Residential real estate

115,104

1,009

3.51

153,752

1,475

3.84

Construction(2)

93,909

910

3.79

88,864

1,126

4.96

Commercial business

311,995

3,520

4.41

245,822

3,397

5.41

Consumer

96

2

7.41

210

4

7.09

Total loans

1,618,016

18,194

4.40

1,572,959

18,648

4.64

Federal Home Loan Bank stock

7,859

74

3.75

7,474

108

5.73

Total earning assets

2,155,624

$

19,199

3.48

%

1,773,136

$

19,987

4.41

%

Other assets

123,435

102,582

Total assets

$

2,279,059

$

1,875,718

Liabilities and shareholders' equity:

Interest bearing liabilities:

NOW

$

93,126

$

42

0.18

%

$

63,385

$

27

0.17

%

Money market

644,685

858

0.53

418,682

1,571

1.49

Savings

168,307

164

0.39

181,910

717

1.56

Time

686,827

2,493

1.44

633,166

3,633

2.28

Total interest bearing deposits

1,592,945

3,557

0.89

1,297,143

5,948

1.82

Borrowed Money

200,250

1,285

2.51

175,198

1,103

2.46

Total interest bearing liabilities

1,793,195

$

4,842

1.07

%

1,472,341

$

7,051

1.90

%

Noninterest bearing deposits

255,843

187,997

Other liabilities

51,582

36,068

Total liabilities

2,100,620

1,696,406

Shareholders' equity

178,439

179,312

Total liabilities and shareholders' equity

$

2,279,059

$

1,875,718

Net interest income(3)

$

14,357

$

12,936

Interest rate spread

2.41

%

2.51

%

Net interest margin(4)

2.66

%

2.92

%

* Average balances and yields for securities are based on amortized cost. * Includes commercial and residential real estate construction. * The adjustment for securities and loans taxable equivalency amounted to $53 thousand and $54 thousand for the quarters ended December 31, 2020 and 2019, respectively. * Annualized net interest income as a percentage of earning assets. * Yields are calculated using the contractual day count convention for each respective product type.BANKWELL FINANCIAL GROUP, INC.NET INTEREST MARGIN ANALYSIS ON A FULLY TAX EQUIVALENT BASIS - QTD (unaudited)(Dollars in thousands)

For the Quarter Ended

December 31, 2020 December 31, 2019

Yield/ Yield/ Average Interest Average Interest Balance Rate ^ Balance Rate ^ (5) (5)

Assets:

Cash and Fed $ 424,327 $ 117 0.11 % $ 90,007 $ 427 1.88 %funds sold

Securities^ 105,422 814 3.09 102,696 804 3.13 (1)

Loans:

Commercial 1,096,912 12,753 4.55 1,084,311 12,646 4.56 real estate

Residential 115,104 1,009 3.51 153,752 1,475 3.84 real estate

Construction^ 93,909 910 3.79 88,864 1,126 4.96 (2)

Commercial 311,995 3,520 4.41 245,822 3,397 5.41 business

Consumer 96 2 7.41 210 4 7.09

Total loans 1,618,016 18,194 4.40 1,572,959 18,648 4.64

Federal HomeLoan Bank 7,859 74 3.75 7,474 108 5.73 stock

Total earning 2,155,624 $ 19,199 3.48 % 1,773,136 $ 19,987 4.41 %assets

Other assets 123,435 102,582

Total assets $ 2,279,059 $ 1,875,718



Liabilitiesand shareholders'equity:

Interestbearing liabilities:

NOW $ 93,126 $ 42 0.18 % $ 63,385 $ 27 0.17 %

Money market 644,685 858 0.53 418,682 1,571 1.49

Savings 168,307 164 0.39 181,910 717 1.56

Time 686,827 2,493 1.44 633,166 3,633 2.28

Totalinterest 1,592,945 3,557 0.89 1,297,143 5,948 1.82 bearingdeposits

Borrowed 200,250 1,285 2.51 175,198 1,103 2.46 Money

Totalinterest 1,793,195 $ 4,842 1.07 % 1,472,341 $ 7,051 1.90 %bearingliabilities

Noninterestbearing 255,843 187,997 deposits

Other 51,582 36,068 liabilities

Total 2,100,620 1,696,406 liabilities

Shareholders' 178,439 179,312 equity

Totalliabilitiesand $ 2,279,059 $ 1,875,718 shareholders'equity

Net interest $ 14,357 $ 12,936 income^(3)

Interest rate 2.41 % 2.51 %spread

Net interest 2.66 % 2.92 %margin^(4)

* Average balances and yields for securities are based on amortized cost. * Includes commercial and residential real estate construction. * The adjustment for securities and loans taxable equivalency amounted to $53 thousand and $54 thousand for the quarters ended December 31, 2020 and 2019, respectively. * Annualized net interest income as a percentage of earning assets. * Yields are calculated using the contractual day count convention for each respective product type.BANKWELL FINANCIAL GROUP, INC.NET INTEREST MARGIN ANALYSIS ON A FULLY TAX EQUIVALENT BASIS - YTD (unaudited)(Dollars in thousands)

For the Year Ended

December 31, 2020 December 31, 2019

Average Yield/ Average Yield/ Balance Interest Rate ^ Balance Interest Rate ^ (5) (5)

Assets:

Cash and Fed $ 261,689 $ 585 0.22 % $ 85,678 $ 1,859 2.17 %funds sold

Securities^ 98,938 3,103 3.14 112,336 3,526 3.14 (1)

Loans:

Commercial 1,095,367 51,218 4.60 1,067,290 50,818 4.70 real estate

Residential 129,585 4,645 3.58 165,384 6,367 3.85 real estate

Construction^ 97,230 4,262 4.31 85,591 4,538 5.23 (2)

Commercial 295,662 13,530 4.50 255,779 15,599 6.01 business

Consumer 121 10 8.00 258 17 6.70

Total loans 1,617,965 73,665 4.48 1,574,302 77,339 4.85

Federal HomeLoan Bank 7,625 346 4.53 7,502 473 6.31 stock

Total earning 1,986,217 $ 77,699 3.85 % 1,779,818 $ 83,197 4.61 %assets

Other assets 125,261 92,663

Total assets $ 2,111,478 $ 1,872,481



Liabilitiesand shareholders'equity:

Interestbearing liabilities:

NOW $ 80,805 $ 141 0.17 % $ 62,254 $ 128 0.21 %

Money market 516,527 4,071 0.79 439,867 7,139 1.62

Savings 169,763 1,368 0.81 177,854 2,968 1.67

Time 712,461 12,600 1.77 637,515 14,463 2.27

Totalinterest 1,479,556 18,180 1.23 1,317,490 24,698 1.87 bearingdeposits

Borrowed 190,463 4,472 2.31 175,267 4,489 2.53 Money

Totalinterest 1,670,019 $ 22,652 1.36 % 1,492,757 $ 29,187 1.96 %bearingliabilities

Noninterestbearing 215,073 172,192 deposits

Other 49,897 29,022 liabilities

Total 1,934,989 1,693,971 liabilities

Shareholders' 176,489 178,510 equity

Totalliabilitiesand $ 2,111,478 $ 1,872,481 shareholders'equity

Net interest $ 55,047 $ 54,010 income^(3)

Interest rate 2.49 % 2.65 %spread

Net interest 2.77 % 3.03 %margin^(4)

* Average balances and yields for securities are based on amortized cost. * Includes commercial and residential real estate construction. * The adjustment for securities and loans taxable equivalency amounted to $212 thousand and $249 thousand for the years ended December 31, 2020 and 2019, respectively. * Annualized net interest income as a percentage of earning assets. * Yields are calculated using the contractual day count convention for each respective product type. View source version on businesswire.com: https://www.businesswire.com/news/home/20210127005954/en/

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