Business Wire | Oct 28, 2020 04:34PM EDT

Bankwell Financial Group Reports Operating Results for the Third Quarter With Strong Core Deposit Growth

Oct. 28, 2020

NEW CANAAN, Conn.--(BUSINESS WIRE)--Oct. 28, 2020--Bankwell Financial Group, Inc. (NASDAQ:BWFG) reported GAAP net income of $3.0 million, or $0.38 per share, for the third quarter of 2020, versus $4.1 million, or $0.52 per share, for the same period in 2019.

The Company's Board of Directors declared a $0.14 per share cash dividend, payable November 23, 2020 to shareholders of record on November 13, 2020.

We recommend reading this earnings release in conjunction with the Third Quarter 2020 Investor Presentation, located at http://investor.mybankwell.com/Presentations and included as an exhibit to our October 28, 2020 Current Report on Form 8-K.

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

"I am grateful for the commitment and dedication of our team as we have made steady progress in the midst of the ongoing pandemic. Our balance sheet remains strong and credit metrics continue to improve. Loans on COVID-19-related deferrals have decreased from approximately 22% of outstanding loans to under 4% today. On the deposit front, we have increased core business accounts by $176 million year to date, including a 23% increase in non-interest bearing deposits. We have also continued to diversify our loan origination mix as the fourth quarter pipeline is comprised mostly of C&I loans."

"Having begun planning for the year ahead, we are committed to continue expense management with a goal of improving our operating expense run rate by 3-5% by the end of 2021."

Third Quarter 2020 Highlights:

* The allowance for loan losses was $20.4 million and represents 1.25% of total loans (1.30% excluding Paycheck Protection Program ("PPP") loans) as of September 30, 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 $56.7 million at September 30, 2020. As of October 20, 2020 approximately $11.3 million of PPP loans have completed applications for loan forgiveness and a majority of these applications have been submitted to the SBA. * Less than 4% of the loan portfolio remains on COVID-19 deferral. * Total deposits were $1.8 billion at September 30, 2020 compared to $1.5 billion at December 31, 2019, reflecting successful commercial core deposit gathering efforts, as well as a temporary increase in short term time deposits to expand on-balance sheet liquidity during the COVID-19 pandemic. * Noninterest bearing deposits increased 23% when compared to December 31, 2019, totaling $234.8 million, a new high. * The loan-to-deposit ratio for the Bank was 91.6% at September 30, 2020, reflecting the above-mentioned increase in deposits. * Total gross loans were $1.6 billion at September 30, 2020, increasing slightly when compared to December 31, 2019. * Investment securities totaled $108.9 million and represent 5% of total assets. * Total noninterest income was $0.6 million for the quarter ended September 30, 2020, or 4% of total revenue. * The tangible common equity ratio, as of September 30, 2020, decreased to 7.83%, as capital growth from earnings was more than offset by increased liquidity and corresponding balance sheet growth. * Tangible book value per share, as of September 30, 2020, grew to $22.20. * Subsequent to the third quarter, as part of the Company's ongoing operational review, the Company has committed to permanently close its North Haven, CT branch as of December 31, 2020 and rolled out a Voluntary Early Retirement Incentive Program.

Earnings and Performance

Revenues (net interest income plus noninterest income) for the quarter ended September 30, 2020 were $14.2 million, versus $14.6 million for the quarter ended September 30, 2019. Revenues for the nine months ended September 30, 2020 were $42.8 million, versus $45.1 million for the nine months ended September 30, 2019. The decrease in revenues was attributable to a decline in income from loan prepayments and the absence of SBA loan sales during the quarter and nine month periods ended September 30, 2020 when compared to the same periods 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 periods in 2019.

Net income for the quarter ended September 30, 2020 was $3.0 million, versus $4.1 million for the quarter ended September 30, 2019. Net income for the nine months ended September 30, 2020 was $5.6 million, versus $14.7 million for the nine months ended September 30, 2019. The decrease in net income for the quarter ended September 30, 2020 when compared to the same period in 2019 was primarily driven by an increase in noninterest expense. The decrease in net income for the nine month period ended September 30, 2020 when compared to the same period in 2019 was due to an increase in the provision for loan losses due to the COVID-19 pandemic and, to a lesser degree, an increase in noninterest expense. The provision for loan losses related to the COVID-19 pandemic totaled $7.9 million for the nine months ended September 30, 2020.

Basic and diluted earnings per share were each $0.38 for the quarter ended September 30, 2020 compared to basic and diluted earnings per share of $0.52 each for the quarter ended September 30, 2019. Basic and diluted earnings per share were each $0.71 for the nine months ended September 30, 2020 compared to basic and diluted earnings per share of $1.88 and $1.87, respectively, for the nine months ended September 30, 2019.

The net interest margin (fully taxable equivalent basis) for the quarters ended September 30, 2020 and September 30, 2019 was 2.67% and 2.96%, respectively. The net interest margin for the nine months ended September 30, 2020 and September 30, 2019 was 2.81% and 3.07%, respectively. The decrease in net interest margin for the quarter and nine month periods ended September 30, 2020, when compared to the same periods in 2019, was primarily due to excess cash held at low interest rates to maintain a higher level of liquidity during the COVID-19 pandemic. Excluding the impact of additional liquidity and PPP loans, the net interest margin would increase approximately 27 basis points and 23 basis points for the three and nine months ended September 30, 2020, respectively.

Financial Condition

Assets totaled $2.2 billion at September 30, 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 order to maintain a higher level of liquidity during the COVID-19 pandemic. Gross loans totaled $1.6 billion at September 30, 2020, an increase of $20.2 million compared to December 31, 2019. Excluding PPP loans, gross loans decreased by $36.5 million at September 30, 2020 when compared to December 31, 2019. Deposits totaled $1.8 billion at September 30, 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 through Treasury Management, Business Development, and Lending channels, as well as a temporary increase in short term time deposits to expand on-balance sheet liquidity during the COVID-19 pandemic.

Capital

Shareholders' equity totaled $174.3 million as of September 30, 2020, a decrease of $8.1 million compared to December 31, 2019, primarily a result of a $10.7 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 $3.3 million and common stock repurchases of $1.0 million. The decrease was partially offset by net income for the nine months ended September 30, 2020 of $5.6 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, 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)

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

ASSETS

Cash and due $ 333,103 $ 201,380 $ 203,569 $ 78,051 $ 83,109 from banks

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

Cash and cash 339,483 207,266 209,996 78,051 83,109 equivalents



Investment securities

Marketableequity 2,203 2,195 2,289 2,118 2,120 securities, at fair value

Available forsaleinvestment 90,563 82,220 82,342 82,439 86,017 securities,at fair value

Held tomaturityinvestment 16,138 16,196 16,252 16,308 17,365 securities, at amortizedcost

Totalinvestment 108,904 100,611 100,883 100,865 105,502 securities

Loansreceivable(net ofallowance forloan lossesof $20,372,$19,662,$16,686,$13,509, and$13,212 at 1,600,776 1,590,995 1,602,146 1,588,840 1,548,988 September 30, 2020, June30, 2020,March 31,2020,December 31,2019, andSeptember 30,2019,respectively)

Other real - 180 - - - estate owned

Accruedinterest 7,294 6,774 5,867 5,959 5,916 receivable

Federal HomeLoan Bank 7,860 7,835 6,507 7,475 7,475 stock, at cost

Premises andequipment, 26,616 27,177 27,835 28,522 28,892 net

Bank-ownedlife 42,409 42,167 41,926 41,683 41,433 insurance

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

Otherintangible 160 178 196 214 232 assets

Deferredincome taxes, 11,149 11,352 10,009 5,788 6,591 net

Other assets 45,782 46,511 45,671 22,196 27,815

Total assets $ 2,193,022 $ 2,043,635 $ 2,053,625 $ 1,882,182 $ 1,858,542



LIABILITIESAND SHAREHOLDERS' EQUITY

Liabilities

Deposits

Noninterestbearing $ 234,848 $ 214,789 $ 168,448 $ 191,518 $ 178,733 deposits

Interestbearing 1,532,680 1,405,175 1,512,684 1,300,385 1,291,551 deposits

Total 1,767,528 1,619,964 1,681,132 1,491,903 1,470,284 deposits



Advances fromthe Federal 175,000 175,000 125,000 150,000 150,000 Home Loan Bank

Subordinated 25,245 25,233 25,220 25,207 25,194 debentures

Accruedexpenses and 50,982 53,078 52,059 32,675 37,052 other liabilities

Total 2,018,755 1,873,275 1,883,411 1,699,785 1,682,530 liabilities



Shareholders' equity

Common stock, 120,854 120,381 119,953 120,589 120,343 no par value

Retained 71,603 69,712 69,595 69,324 66,870 earnings

Accumulatedother (18,190 ) (19,733 ) (19,334 ) (7,516 ) (11,201 )comprehensive loss

Totalshareholders' 174,267 170,360 170,214 182,397 176,012 equity



Totalliabilitiesand $ 2,193,022 $ 2,043,635 $ 2,053,625 $ 1,882,182 $ 1,858,542 shareholders'equity

BANKWELL FINANCIAL GROUP, INC.

CONSOLIDATED STATEMENTS OF INCOME (unaudited)

(Dollars in thousands, except share data)

For the Quarter Ended

For the Nine Months Ended

September 30,2020

June 30,2020

March 31,2020

December 31,2019

September 30,2019

September 30,2020

September 30,2019

Interest and dividend income

Interest and fees on loans

$

18,027

$

18,459

$

18,985

$

18,648

$

19,055

$

55,471

$

58,691

Interest and dividends on securities

799

778

825

858

903

2,402

2,892

Interest on cash and cash equivalents

96

86

286

427

535

468

1,432

Total interest and dividend income

18,922

19,323

20,096

19,933

20,493

58,341

63,015

Interest expense

Interest expense on deposits

4,104

4,810

5,709

5,948

6,331

14,623

18,750

Interest expense on borrowings

1,210

876

1,101

1,103

1,151

3,187

3,386

Total interest expense

5,314

5,686

6,810

7,051

7,482

17,810

22,136

Net interest income

13,608

13,637

13,286

12,882

13,011

40,531

40,879

Provision for loan losses

712

2,999

3,185

310

773

6,896

127

Net interest income after provision for loan losses

12,896

10,638

10,101

12,572

12,238

33,635

40,752

Noninterest income

Bank owned life insurance

242

241

243

250

255

726

758

Service charges and fees

190

171

217

247

264

578

776

Gains and fees from sales of loans

27

-

-

382

703

27

1,409

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

19

-

-

-

(102

)

19

(102

)

Net gain on sale of available for sale securities

-

-

-

-

-

-

76

Other

136

165

612

169

432

913

1,279

Total noninterest income

614

577

1,072

1,048

1,552

2,263

4,196

Noninterest expense

Salaries and employee benefits

5,295

5,227

5,380

5,162

4,881

15,902

14,272

Occupancy and equipment

2,266

2,235

1,909

1,928

1,946

6,410

5,666

Data processing

529

493

536

499

505

1,558

1,568

Professional services

374

434

711

402

346

1,519

1,455

Director fees

301

287

295

224

235

883

639

FDIC insurance

176

283

70

-

(125

)

529

74

Marketing

151

199

162

220

210

512

751

Amortization of intangibles

18

18

18

18

19

54

57

Other

619

546

578

771

655

1,743

1,920

Total noninterest expense

9,729

9,722

9,659

9,224

8,672

29,110

26,402

Income before income tax expense

3,781

1,493

1,514

4,396

5,118

6,788

18,546

Income tax expense

790

279

151

924

1,030

1,220

3,802

Net income

$

2,991

$

1,214

$

1,363

$

3,472

$

4,088

$

5,568

$

14,744

Earnings Per Common Share:

Basic

$

0.38

$

0.16

$

0.17

$

0.44

$

0.52

$

0.71

$

1.88

Diluted

$

0.38

$

0.16

$

0.17

$

0.44

$

0.52

$

0.71

$

1.87

Weighted Average Common Shares Outstanding:

Basic

7,721,247

7,715,094

7,750,135

7,745,227

7,750,490

7,728,798

7,761,441

Diluted

7,721,459

7,715,295

7,778,762

7,773,780

7,766,485

7,749,199

7,788,839

Dividends per common share

$

0.14

$

0.14

$

0.14

$

0.13

$

0.13

$

0.42

$

0.39

BANKWELL FINANCIAL GROUP, INC.

CONSOLIDATED STATEMENTS OF INCOME (unaudited)

(Dollars in thousands, except share data)

For the Quarter Ended For the Nine Months Ended

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

Interest anddividend income

Interest andfees on $ 18,027 $ 18,459 $ 18,985 $ 18,648 $ 19,055 $ 55,471 $ 58,691 loans

Interest anddividends on 799 778 825 858 903 2,402 2,892 securities

Interest oncash and 96 86 286 427 535 468 1,432 cash equivalents

Totalinterest and 18,922 19,323 20,096 19,933 20,493 58,341 63,015 dividend income



Interest expense

Interestexpense on 4,104 4,810 5,709 5,948 6,331 14,623 18,750 deposits

Interestexpense on 1,210 876 1,101 1,103 1,151 3,187 3,386 borrowings

Totalinterest 5,314 5,686 6,810 7,051 7,482 17,810 22,136 expense



Net interest 13,608 13,637 13,286 12,882 13,011 40,531 40,879 income

Provisionfor loan 712 2,999 3,185 310 773 6,896 127 losses

Net interestincome afterprovision 12,896 10,638 10,101 12,572 12,238 33,635 40,752 for loanlosses



Noninterest income

Bank ownedlife 242 241 243 250 255 726 758 insurance

Servicecharges and 190 171 217 247 264 578 776 fees

Gains andfees from 27 - - 382 703 27 1,409 sales of loans

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

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

Other 136 165 612 169 432 913 1,279

Totalnoninterest 614 577 1,072 1,048 1,552 2,263 4,196 income



Noninterest expense

Salaries andemployee 5,295 5,227 5,380 5,162 4,881 15,902 14,272 benefits

Occupancyand 2,266 2,235 1,909 1,928 1,946 6,410 5,666 equipment

Data 529 493 536 499 505 1,558 1,568 processing

Professional 374 434 711 402 346 1,519 1,455 services

Director 301 287 295 224 235 883 639 fees

FDIC 176 283 70 - (125 ) 529 74 insurance

Marketing 151 199 162 220 210 512 751

Amortizationof 18 18 18 18 19 54 57 intangibles

Other 619 546 578 771 655 1,743 1,920

Totalnoninterest 9,729 9,722 9,659 9,224 8,672 29,110 26,402 expense



Incomebefore 3,781 1,493 1,514 4,396 5,118 6,788 18,546 income tax expense

Income tax 790 279 151 924 1,030 1,220 3,802 expense

Net income $ 2,991 $ 1,214 $ 1,363 $ 3,472 $ 4,088 $ 5,568 $ 14,744



Earnings PerCommon Share:

Basic $ 0.38 $ 0.16 $ 0.17 $ 0.44 $ 0.52 $ 0.71 $ 1.88

Diluted $ 0.38 $ 0.16 $ 0.17 $ 0.44 $ 0.52 $ 0.71 $ 1.87



WeightedAverageCommon SharesOutstanding:

Basic 7,721,247 7,715,094 7,750,135 7,745,227 7,750,490 7,728,798 7,761,441

Diluted 7,721,459 7,715,295 7,778,762 7,773,780 7,766,485 7,749,199 7,788,839

Dividendsper common $ 0.14 $ 0.14 $ 0.14 $ 0.13 $ 0.13 $ 0.42 $ 0.39 share

BANKWELL FINANCIAL GROUP, INC.

CONSOLIDATED FINANCIAL HIGHLIGHTS (unaudited)

For the Quarter Ended

For the Nine Months Ended

September 30,2020

June 30,2020

March 31,2020

December 31,2019

September 30,2019

September 30,2020

September 30,2019

Performance ratios:

Return on average assets(1)

0.55

%

0.23

%

0.29

%

0.73

%

0.87

%

0.36

%

1.05

%

Return on average stockholders' equity(1)

6.87

%

2.82

%

3.03

%

7.68

%

9.12

%

4.23

%

11.06

%

Return on average tangible common equity(1)

6.98

%

2.86

%

3.07

%

7.80

%

9.26

%

4.30

%

11.24

%

Net interest margin

2.67

%

2.81

%

2.98

%

2.92

%

2.96

%

2.81

%

3.07

%

Efficiency ratio(2)

68.4

%

68.2

%

67.1

%

66.1

%

58.9

%

67.9

%

58.3

%

Net loan charge-offs as a % of average loans

-

%

-

%

-

%

-

%

0.09

%

-

%

0.15

%

Dividend payout ratio(3)

36.84

%

87.50

%

82.35

%

29.55

%

25.00

%

59.15

%

20.86

%

BANKWELL FINANCIAL GROUP, INC.

CONSOLIDATED FINANCIAL HIGHLIGHTS (unaudited)

For the Quarter Ended For the Nine Months Ended

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

Performance ratios:

Return onaverage 0.55 % 0.23 % 0.29 % 0.73 % 0.87 % 0.36 % 1.05 %assets^(1)

Return onaverage 6.87 % 2.82 % 3.03 % 7.68 % 9.12 % 4.23 % 11.06 %stockholders' equity^(1)

Return onaveragetangible 6.98 % 2.86 % 3.07 % 7.80 % 9.26 % 4.30 % 11.24 %common equity^(1)

Net interest 2.67 % 2.81 % 2.98 % 2.92 % 2.96 % 2.81 % 3.07 %margin

Efficiency 68.4 % 68.2 % 67.1 % 66.1 % 58.9 % 67.9 % 58.3 %ratio^(2)

Net loancharge-offs - % - % - % - % 0.09 % - % 0.15 %as a % of average loans

Dividendpayout ratio^ 36.84 % 87.50 % 82.35 % 29.55 % 25.00 % 59.15 % 20.86 %(3)

(1) 2020 performance ratios are negatively impacted by incremental COVID-19 pandemic related loan loss reserves, totaling $7.9 million for the nine months ended September 30, 2020.

(2) 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.

(3) The dividend payout ratio is calculated by dividing dividends per share by earnings per share.

(1) 2020 performance ratios are negatively impacted by incremental COVID-19pandemic related loan loss reserves, totaling $7.9 million for the nine monthsended September 30, 2020.

(2) Efficiency ratio is defined as noninterest expense, less other real estateowned expenses and amortization of intangible assets, divided by our operatingrevenue, which is equal to net interest income plus noninterest incomeexcluding gains and losses on sales of securities and gains and losses on otherreal estate owned. In our judgment, the adjustments made to operating revenueallow investors and analysts to better assess our operating expenses inrelation to our core operating revenue by removing the volatility that isassociated with certain one-time items and other discrete items that areunrelated to our core business.

(3) The dividend payout ratio is calculated by dividing dividends per share byearnings per share.

As of

September 30,2020

June 30,2020

March 31,2020

December 31,2019

September 30,2019

Capital ratios:

Total Common Equity Tier 1 Capital to Risk-Weighted Assets(1)

12.36

%

12.44

%

12.14

%

12.53

%

12.65

%

Total Capital to Risk-Weighted Assets(1)

13.57

%

13.63

%

13.13

%

13.35

%

13.47

%

Tier I Capital to Risk-Weighted Assets(1)

12.36

%

12.44

%

12.14

%

12.53

%

12.65

%

Tier I Capital to Average Assets(1)

9.58

%

9.93

%

10.84

%

10.99

%

10.88

%

Tangible common equity to tangible assets

7.83

%

8.21

%

8.16

%

9.56

%

9.33

%

Tangible book value per common share(2)

$

22.20

$

21.70

$

21.69

$

23.15

$

22.34

As of

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

Capital ratios:

Total Common EquityTier 1 Capital to 12.36 % 12.44 % 12.14 % 12.53 % 12.65 %Risk-Weighted Assets^(1)

Total Capital toRisk-Weighted 13.57 % 13.63 % 13.13 % 13.35 % 13.47 %Assets^(1)

Tier I Capital toRisk-Weighted 12.36 % 12.44 % 12.14 % 12.53 % 12.65 %Assets^(1)

Tier I Capital to 9.58 % 9.93 % 10.84 % 10.99 % 10.88 %Average Assets^(1)

Tangible commonequity to tangible 7.83 % 8.21 % 8.16 % 9.56 % 9.33 %assets

Tangible book valueper common share^ $ 22.20 $ 21.70 $ 21.69 $ 23.15 $ 22.34 (2)

(1) Represents Bank ratios. Current period capital ratios are preliminary subject to finalization of the FDIC Call Report.

(2) Excludes unvested restricted shares of 170,083, 165,708, 154,012, 110,975, and 88,473 as of September 30, 2020, June 30, 2020, March 31, 2020, December 31, 2019, and September 30, 2019, respectively.

(1) Represents Bank ratios. Current period capital ratios are preliminarysubject to finalization of the FDIC Call Report.

(2) Excludes unvested restricted shares of 170,083, 165,708, 154,012, 110,975,and 88,473 as of September 30, 2020, June 30, 2020, March 31, 2020, December31, 2019, and September 30, 2019, respectively.

BANKWELL FINANCIAL GROUP, INC.

ASSET QUALITY (unaudited)

(Dollars in thousands)

For the Quarter Ended

September 30,2020

June 30,2020

March 31,2020

December 31,2019

September 30,2019

Allowance for loan losses:

Balance at beginning of period

$

19,662

$

16,686

$

13,509

$

13,212

$

13,890

Charge-offs:

Residential real estate

-

-

-

-

(78

)

Commercial real estate

-

-

-

-

(594

)

Commercial business

-

-

(8

)

(13

)

(748

)

Consumer

(4

)

(23

)

(2

)

(5

)

(57

)

Total charge-offs

(4

)

(23

)

(10

)

(18

)

(1,477

)

Recoveries:

Commercial business

-

-

1

1

2

Consumer

2

-

1

4

24

Total recoveries

2

-

2

5

26

Net loan charge-offs

(2

)

(23

)

(8

)

(13

)

(1,451

)

Provision for loan losses

712

2,999

3,185

310

773

Balance at end of period

$

20,372

$

19,662

$

16,686

$

13,509

$

13,212

BANKWELL FINANCIAL GROUP, INC.

ASSET QUALITY (unaudited)

(Dollars in thousands)

For the Quarter Ended

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

Allowance for loan losses:

Balance at beginning $ 19,662 $ 16,686 $ 13,509 $ 13,212 $ 13,890 of period

Charge-offs:

Residential real - - - - (78 )estate

Commercial real - - - - (594 )estate

Commercial business - - (8 ) (13 ) (748 )

Consumer (4 ) (23 ) (2 ) (5 ) (57 )

Total charge-offs (4 ) (23 ) (10 ) (18 ) (1,477 )

Recoveries:

Commercial business - - 1 1 2

Consumer 2 - 1 4 24

Total recoveries 2 - 2 5 26

Net loan charge-offs (2 ) (23 ) (8 ) (13 ) (1,451 )

Provision for loan 712 2,999 3,185 310 773 losses

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

As of

September 30,2020

June 30,2020

March 31,2020

December 31,2019

September 30,2019

Asset quality:

Nonaccrual loans

Residential real estate

$

1,596

$

1,622

$

1,532

$

1,560

$

1,583

Commercial real estate

4,812

5,172

5,339

5,222

5,332

Commercial business

3,760

3,783

3,783

3,806

2,963

Total nonaccrual loans

10,168

10,577

10,654

10,588

9,878

Other real estate owned

-

180

-

-

-

Total nonperforming assets

$

10,168

$

10,757

$

10,654

$

10,588

$

9,878

Nonperforming loans as a % of total loans

0.63

%

0.66

%

0.66

%

0.66

%

0.63

%

Nonperforming assets as a % of total assets

0.46

%

0.53

%

0.52

%

0.56

%

0.53

%

Allowance for loan losses as a % of total loans

1.25

%

1.22

%

1.03

%

0.84

%

0.84

%

Allowance for loan losses as a % of nonperforming loans

200.35

%

185.89

%

156.62

%

127.59

%

133.75

%

Total nonaccrual loans were $10.2 million as of September 30, 2020, of which $4.5 million are guaranteed by the Small Business Administration (SBA). Nonperforming assets as a percentage of total assets was 0.46% at September 30, 2020, down from 0.56% at December 31, 2019. The allowance for loan losses at September 30, 2020 was $20.4 million, representing 1.25% of total loans. The $6.9 million increase in the allowance for loan losses at September 30, 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

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

Asset quality:

Nonaccrual loans

Residential $ 1,596 $ 1,622 $ 1,532 $ 1,560 $ 1,583 real estate

Commercial real 4,812 5,172 5,339 5,222 5,332 estate

Commercial 3,760 3,783 3,783 3,806 2,963 business

Totalnonaccrual 10,168 10,577 10,654 10,588 9,878 loans

Other real - 180 - - - estate owned

Totalnonperforming $ 10,168 $ 10,757 $ 10,654 $ 10,588 $ 9,878 assets



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

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

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

Allowance forloan losses asa % of 200.35 % 185.89 % 156.62 % 127.59 % 133.75 %nonperformingloans

Total nonaccrual loans were $10.2 million as of September 30, 2020, of which $4.5 million are guaranteed by the Small Business Administration (SBA). Nonperforming assets as a percentage of total assets was 0.46% at September 30, 2020, down from 0.56% at December 31, 2019. The allowance for loan losses at September 30, 2020 was $20.4 million, representing 1.25% of total loans. The $6.9 million increase in the allowance for loan losses at September 30, 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 September 30, June 30, December 31, Current YTD %Loan 2020 2020 2019 QTD % ChangeComposition Change

Residential $ 120,531 $ 128,683 $ 147,109 (6.3 ) (18.1 )Real Estate % %

CommercialReal Estate^ 1,105,862 1,110,562 1,128,614 (0.4 ) (2.0 )(1)

Construction 96,508 94,523 98,583 2.1 (2.1 )

Total Real 1,322,901 1,333,768 1,374,306 (0.8 ) (3.7 )Estate Loans



Commercial 301,747 280,811 230,028 7.5 31.2 Business



Consumer 78 87 150 (10.3 ) (48.0 )

Total Loans $ 1,624,726 $ 1,614,666 $ 1,604,484 0.6 % 1.3 %



(1) Includes owner occupied commercial real estate.

Period End Deposit Composition

September 30,2020

June 30,2020

December 31,2019

Current QTD % Change

YTD % Change

Noninterest bearing demand

$

234,848

$

214,789

$

191,518

9.3

%

22.6

%

NOW

90,776

87,239

70,020

4.1

29.6

Money Market

561,101

482,462

419,495

16.3

33.8

Savings

164,590

162,891

183,729

1.0

(10.4

)

Time

716,213

672,583

627,141

6.5

14.2

Total Deposits

$

1,767,528

$

1,619,964

$

1,491,903

9.1

%

18.5

%

Total deposits were $1.8 billion at September 30, 2020 compared to $1.5 billion at December 31, 2019, an increase of $0.3 billion, or 18.5%. The increase in total deposits was a result of successful commercial core deposit gathering efforts, as well as a temporary increase in short term time deposits to expand on-balance sheet liquidity during the COVID-19 pandemic.

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

Noninterestbearing $ 234,848 $ 214,789 $ 191,518 9.3 % 22.6 %demand

NOW 90,776 87,239 70,020 4.1 29.6

Money 561,101 482,462 419,495 16.3 33.8 Market

Savings 164,590 162,891 183,729 1.0 (10.4 )

Time 716,213 672,583 627,141 6.5 14.2

Total $ 1,767,528 $ 1,619,964 $ 1,491,903 9.1 % 18.5 %Deposits

Total deposits were $1.8 billion at September 30, 2020 compared to $1.5 billion at December 31, 2019, an increase of $0.3 billion, or 18.5%. The increase in total deposits was a result of successful commercial core deposit gathering efforts, as well as a temporary increase in short term time 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

September June September Sep 20 Sep 20Noninterest income 30, 30, 30, vs. June vs. Sep 2020 2020 2019 20 19 % Change % Change

Bank owned life $ 242 $ 241 $ 255 0.4 % (5.1 )insurance %

Service charges and 190 171 264 11.1 (28.0 )fees

Gains and fees from 27 - 703 N/A (96.2 )sales of loans

Gain (loss) on sale ofother real estate 19 - (102 ) N/A (118.6 )owned, net

Other 136 165 432 (17.6 ) (68.5 )

Total noninterest $ 614 $ 577 $ 1,552 6.4 % (60.4 )income %

For the Nine Months Ended

Noninterest income

September 30, 2020

September 30, 2019

% Change

Bank owned life insurance

$

726

$

758

(4.2

)%

Service charges and fees

578

776

(25.5

)

Gains and fees from sales of loans

27

1,409

(98.1

)

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

913

1,279

(28.6

)

Total noninterest income

$

2,263

$

4,196

(46.1

)%

Noninterest income decreased by $0.9 million to $0.6 million for the quarter ended September 30, 2020 compared to the quarter ended September 30, 2019. Noninterest income decreased by $1.9 million to $2.3 million for the nine months ended September 30, 2020 compared to the nine months ended September 30, 2019.

The decrease in noninterest income was primarily a result of the absence of gains and fees from the sales of SBA loans for the quarter and nine months ended September 30, 2020 compared to the same periods in 2019. To a lesser degree, 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 was primarily a result of loan related interest rate swap fees recognized in 2019.

For the Nine Months Ended

Noninterest income September September % Change 30, 2020 30, 2019

Bank owned life insurance $ 726 $ 758 (4.2 ) %

Service charges and fees 578 776 (25.5 )

Gains and fees from sales of loans 27 1,409 (98.1 )

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 913 1,279 (28.6 )

Total noninterest income $ 2,263 $ 4,196 (46.1 ) %

Noninterest income decreased by $0.9 million to $0.6 million for the quarter ended September 30, 2020 compared to the quarter ended September 30, 2019. Noninterest income decreased by $1.9 million to $2.3 million for the nine months ended September 30, 2020 compared to the nine months ended September 30, 2019.

The decrease in noninterest income was primarily a result of the absence of gains and fees from the sales of SBA loans for the quarter and nine months ended September 30, 2020 compared to the same periods in 2019. To a lesser degree, 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 was primarily a result of loan related interest rate swap fees recognized in 2019.

BANKWELL FINANCIAL GROUP, INC.

NONINTEREST EXPENSE (unaudited)

(Dollars in thousands)

For the Quarter Ended

Noninterest September June 30, September Sep 20 vs. Sep 20 vs.expense 30, 2020 30, June 20 Sep 19 2020 2019 % Change % Change

Salaries and $ 5,295 $ 5,227 $ 4,881 1.3 % 8.5 %employee benefits

Occupancy and 2,266 2,235 1,946 1.4 16.4 equipment

Data processing 529 493 505 7.3 4.8

Professional 374 434 346 (13.8 ) 8.1 services

Director fees 301 287 235 4.9 28.1

FDIC insurance 176 283 (125 ) (37.8 ) (240.8 )

Marketing 151 199 210 (24.1 ) (28.1 )

Amortization of 18 18 19 - (5.3 )intangibles

Other 619 546 655 13.4 (5.5 )

Total noninterest $ 9,729 $ 9,722 $ 8,672 0.1 % 12.2 %expense

For the Nine Months Ended

Noninterest expense

September 30, 2020

September 30, 2019

% Change

Salaries and employee benefits

$

15,902

$

14,272

11.4

%

Occupancy and equipment

6,410

5,666

13.1

Data processing

1,558

1,568

(0.6

)

Professional services

1,519

1,455

4.4

Director fees

883

639

38.2

FDIC insurance

529

74

614.9

Marketing

512

751

(31.8

)

Amortization of intangibles

54

57

(5.3

)

Other

1,743

1,920

(9.2

)

Total noninterest expense

$

29,110

$

26,402

10.3

%

Noninterest expense increased by $1.1 million, or 12.2%, to $9.7 million for the quarter ended September 30, 2020 compared to the quarter ended September 30, 2019. Noninterest expense increased by $2.7 million, or 10.3%, to $29.1 million for the nine months ended September 30, 2020 compared to the nine months ended September 30, 2019. The increase in noninterest expense was primarily driven by an increase in salaries and employee benefits, occupancy and equipment expense and FDIC insurance expense.

Salaries and employee benefits totaled $5.3 million for the quarter ended September 30, 2020, an increase of $0.4 million when compared to the same period in 2019. Salaries and employee benefits totaled $15.9 million for the nine months ended September 30, 2020, an increase of $1.6 million when compared to the same period in 2019. The increase in salaries and employee benefits was primarily driven by normal annual salary increases, additional hires in support of growth initiatives and expanded employee benefits to assist employees impacted by the COVID-19 pandemic.

Occupancy and equipment expense totaled $2.3 million for the quarter ended September 30, 2020, an increase of $0.3 million when compared to the same period in 2019. Occupancy and equipment expense totaled $6.4 million for the nine months ended September 30, 2020, an increase of $0.7 million when compared to the same period in 2019. The increase in occupancy and equipment expense was primarily due to additional cleaning costs associated with precautions taken to prevent the spread of COVID-19.

FDIC insurance expense totaled $0.2 million for the quarter ended September 30, 2020, an increase of $0.3 million when compared to the same period in 2019. FDIC insurance expense totaled $0.5 million for the nine months ended September 30, 2020, an increase of $0.5 million when compared to the same period in 2019. The increase in FDIC insurance expense was primarily driven by a credit received during the quarter ended September 30, 2019.

For the Nine Months Ended

Noninterest expense September 30, September 30, % Change 2020 2019

Salaries and employee benefits $ 15,902 $ 14,272 11.4 %

Occupancy and equipment 6,410 5,666 13.1

Data processing 1,558 1,568 (0.6 )

Professional services 1,519 1,455 4.4

Director fees 883 639 38.2

FDIC insurance 529 74 614.9

Marketing 512 751 (31.8 )

Amortization of intangibles 54 57 (5.3 )

Other 1,743 1,920 (9.2 )

Total noninterest expense $ 29,110 $ 26,402 10.3 %

Noninterest expense increased by $1.1 million, or 12.2%, to $9.7 million for the quarter ended September 30, 2020 compared to the quarter ended September 30, 2019. Noninterest expense increased by $2.7 million, or 10.3%, to $29.1 million for the nine months ended September 30, 2020 compared to the nine months ended September 30, 2019. The increase in noninterest expense was primarily driven by an increase in salaries and employee benefits, occupancy and equipment expense and FDIC insurance expense.

Salaries and employee benefits totaled $5.3 million for the quarter ended September 30, 2020, an increase of $0.4 million when compared to the same period in 2019. Salaries and employee benefits totaled $15.9 million for the nine months ended September 30, 2020, an increase of $1.6 million when compared to the same period in 2019. The increase in salaries and employee benefits was primarily driven by normal annual salary increases, additional hires in support of growth initiatives and expanded employee benefits to assist employees impacted by the COVID-19 pandemic.

Occupancy and equipment expense totaled $2.3 million for the quarter ended September 30, 2020, an increase of $0.3 million when compared to the same period in 2019. Occupancy and equipment expense totaled $6.4 million for the nine months ended September 30, 2020, an increase of $0.7 million when compared to the same period in 2019. The increase in occupancy and equipment expense was primarily due to additional cleaning costs associated with precautions taken to prevent the spread of COVID-19.

FDIC insurance expense totaled $0.2 million for the quarter ended September 30, 2020, an increase of $0.3 million when compared to the same period in 2019. FDIC insurance expense totaled $0.5 million for the nine months ended September 30, 2020, an increase of $0.5 million when compared to the same period in 2019. The increase in FDIC insurance expense was primarily driven by a credit received during the quarter ended September 30, 2019.

BANKWELL FINANCIAL GROUP, INC.

RECONCILIATION OF GAAP TO NON-GAAP MEASURES (unaudited)

(Dollars in thousands, except share data)

As of

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

Total $ 174,267 $ 170,360 $ 170,214 $ 182,397 $ 176,012 Equity

Less:

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

Other 160 178 196 214 232 intangibles

TangibleCommon $ 171,518 $ 167,593 $ 167,429 $ 179,594 $ 173,191 Equity



Total $ 2,193,022 $ 2,043,635 $ 2,053,625 $ 1,882,182 $ 1,858,542 Assets

Less:

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

Other 160 178 196 214 232 intangibles

Tangible $ 2,190,273 $ 2,040,868 $ 2,050,840 $ 1,879,379 $ 1,855,721 Assets



TangibleCommonEquity to 7.83 % 8.21 % 8.16 % 9.56 % 9.33 %TangibleAssets

As of

Computation of Tangible Book Value per Common Share

September 30,2020

June 30,2020

March 31,2020

December 31,2019

September 30,2019

Total shareholders' equity

$

174,267

$

170,360

$

170,214

$

182,397

$

176,012

Less:

Preferred stock

-

-

-

-

-

Common shareholders' equity

$

174,267

$

170,360

$

170,214

$

182,397

$

176,012

Less:

Goodwill

2,589

2,589

2,589

2,589

2,589

Other intangibles

160

178

196

214

232

Tangible common shareholders' equity

$

171,518

$

167,593

$

167,429

$

179,594

$

173,191

Common shares

7,896,503

7,887,503

7,871,419

7,868,803

7,841,103

Less:

Shares of unvested restricted stock

170,083

165,708

154,012

110,975

88,473

Common shares less unvested restricted stock

7,726,420

7,721,795

7,717,407

7,757,828

7,752,630

Book value per share

$

22.55

$

22.06

$

22.06

$

23.51

$

22.70

Less:

Effects of intangible assets

$

0.36

$

0.36

$

0.36

$

0.36

$

0.36

Tangible Book Value per Common Share

$

22.20

$

21.70

$

21.69

$

23.15

$

22.34

As of

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

Totalshareholders' $ 174,267 $ 170,360 $ 170,214 $ 182,397 $ 176,012 equity

Less:

Preferred - - - - - stock

Commonshareholders' $ 174,267 $ 170,360 $ 170,214 $ 182,397 $ 176,012 equity

Less:

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

Other 160 178 196 214 232 intangibles

Tangiblecommon $ 171,518 $ 167,593 $ 167,429 $ 179,594 $ 173,191 shareholders'equity

Common shares 7,896,503 7,887,503 7,871,419 7,868,803 7,841,103

Less:

Shares ofunvested 170,083 165,708 154,012 110,975 88,473 restrictedstock

Common sharesless unvested 7,726,420 7,721,795 7,717,407 7,757,828 7,752,630 restrictedstock

Book value $ 22.55 $ 22.06 $ 22.06 $ 23.51 $ 22.70 per share

Less:

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



Tangible BookValue per $ 22.20 $ 21.70 $ 21.69 $ 23.15 $ 22.34 Common Share

BANKWELL FINANCIAL GROUP, INC.

RECONCILIATION OF GAAP TO NON-GAAP MEASURES (unaudited) - Continued

(Dollars in thousands)

For the Quarter Ended

For the Nine Months Ended

Computation of Efficiency Ratio

September 30,2020

June 30,2020

March 31,2020

December 31,2019

September 30,2019

September 30,2020

September 30,2019

Noninterest expense

$

9,729

$

9,722

$

9,659

$

9,224

$

8,672

$

29,110

$

26,402

Less:

Amortization of intangible assets

18

18

18

18

19

54

57

Other real estate owned expenses

-

6

-

-

13

6

37

Adjusted noninterest expense

$

9,711

$

9,698

$

9,641

$

9,206

$

8,640

$

29,050

$

26,308

Net interest income

$

13,608

$

13,637

$

13,286

$

12,882

$

13,011

$

40,531

$

40,879

Noninterest income

614

577

1,072

1,048

1,552

2,263

4,196

Less:

Net gain on sale of available for sale securities

-

-

-

-

-

-

76

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

19

-

-

-

(102

)

19

(102

)

Operating revenue

$

14,203

$

14,214

$

14,358

$

13,930

$

14,665

$

42,775

$

45,101

Efficiency ratio

68.4

%

68.2

%

67.1

%

66.1

%

58.9

%

67.9

%

58.3

%

BANKWELL FINANCIAL GROUP, INC.

RECONCILIATION OF GAAP TO NON-GAAP MEASURES (unaudited) - Continued

(Dollars in thousands)

For the Quarter Ended For the Nine Months Ended

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

Noninterest $ 9,729 $ 9,722 $ 9,659 $ 9,224 $ 8,672 $ 29,110 $ 26,402 expense

Less:

Amortizationof 18 18 18 18 19 54 57 intangible assets

Other realestate owned - 6 - - 13 6 37 expenses

Adjustednoninterest $ 9,711 $ 9,698 $ 9,641 $ 9,206 $ 8,640 $ 29,050 $ 26,308 expense

Net interest $ 13,608 $ 13,637 $ 13,286 $ 12,882 $ 13,011 $ 40,531 $ 40,879 income

Noninterest 614 577 1,072 1,048 1,552 2,263 4,196 income

Less:

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

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

Operating $ 14,203 $ 14,214 $ 14,358 $ 13,930 $ 14,665 $ 42,775 $ 45,101 revenue



Efficiency 68.4 % 68.2 % 67.1 % 66.1 % 58.9 % 67.9 % 58.3 %ratio

For the Quarter Ended

For the Nine Months Ended

Computation of Return on Average Tangible Common Equity

September 30,2020

June 30,2020

March 31,2020

December 31,2019

September 30,2019

September 30,2020

September 30,2019

Net Income Attributable to Common Shareholders

$

2,991

$

1,214

$

1,363

$

3,472

$

4,088

$

5,568

$

14,744

Total average shareholders' equity

$

173,162

$

173,289

$

181,127

$

179,312

$

177,916

$

175,838

$

178,237

Less:

Average Goodwill

2,589

2,589

2,589

2,589

2,589

2,589

2,589

Average Other intangibles

172

190

208

226

244

190

264

Average tangible common equity

$

170,401

$

170,510

$

178,330

$

176,497

$

175,083

$

173,059

$

175,384

Annualized Return on Average Tangible Common Equity

6.98

%

2.86

%

3.07

%

7.80

%

9.26

%

4.30

%

11.24

%

For the Quarter Ended For the Nine Months Ended

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

Net IncomeAttributable $ 2,991 $ 1,214 $ 1,363 $ 3,472 $ 4,088 $ 5,568 $ 14,744 to Common Shareholders

Total averageshareholders' $ 173,162 $ 173,289 $ 181,127 $ 179,312 $ 177,916 $ 175,838 $ 178,237 equity

Less:

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

Average Other 172 190 208 226 244 190 264 intangibles

Averagetangible $ 170,401 $ 170,510 $ 178,330 $ 176,497 $ 175,083 $ 173,059 $ 175,384 common equity



AnnualizedReturn onAverage 6.98 % 2.86 % 3.07 % 7.80 % 9.26 % 4.30 % 11.24 %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

September 30, 2020

September 30, 2019

AverageBalance

Interest

Yield/ Rate (5)

AverageBalance

Interest

Yield/ Rate (5)

Assets:

Cash and Fed funds sold

$

312,078

$

96

0.12

%

$

86,967

$

535

2.44

%

Securities(1)

96,448

776

3.22

109,247

845

3.09

Loans:

Commercial real estate

1,087,765

12,570

4.52

1,066,256

12,590

4.62

Residential real estate

125,069

1,097

3.51

161,312

1,559

3.87

Construction(2)

94,984

1,029

4.24

86,342

1,141

5.17

Commercial business

322,066

3,329

4.04

248,116

3,761

5.93

Consumer

121

2

7.37

229

4

6.93

Total loans

1,630,005

18,027

4.33

1,562,255

19,055

4.77

Federal Home Loan Bank stock

7,835

77

3.91

7,474

113

6.02

Total earning assets

2,046,366

$

18,976

3.63

%

1,765,943

$

20,548

4.55

%

Other assets

132,617

103,742

Total assets

$

2,178,983

$

1,869,685

Liabilities and shareholders' equity:

Interest bearing liabilities:

NOW

$

87,890

$

40

0.18

%

$

62,444

$

26

0.17

%

Money market

517,638

859

0.66

423,638

1,739

1.63

Savings

163,135

237

0.58

174,587

740

1.68

Time

757,176

2,968

1.56

644,536

3,826

2.36

Total interest bearing deposits

1,525,839

4,104

1.07

1,305,205

6,331

1.92

Borrowed Money

200,237

1,210

2.36

175,185

1,151

2.57

Total interest bearing liabilities

1,726,076

$

5,314

1.22

%

1,480,390

$

7,482

2.01

%

Noninterest bearing deposits

226,473

177,922

Other liabilities

53,272

33,457

Total liabilities

2,005,821

1,691,769

Shareholders' equity

173,162

177,916

Total liabilities and shareholders' equity

$

2,178,983

$

1,869,685

Net interest income(3)

$

13,662

$

13,066

Interest rate spread

2.41

%

2.54

%

Net interest margin(4)

2.67

%

2.96

%

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, 2020 September 30, 2019

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

Assets:

Cash and Fed $ 312,078 $ 96 0.12 % $ 86,967 $ 535 2.44 %funds sold

Securities^ 96,448 776 3.22 109,247 845 3.09 (1)

Loans:

Commercial 1,087,765 12,570 4.52 1,066,256 12,590 4.62 real estate

Residential 125,069 1,097 3.51 161,312 1,559 3.87 real estate

Construction^ 94,984 1,029 4.24 86,342 1,141 5.17 (2)

Commercial 322,066 3,329 4.04 248,116 3,761 5.93 business

Consumer 121 2 7.37 229 4 6.93

Total loans 1,630,005 18,027 4.33 1,562,255 19,055 4.77

Federal HomeLoan Bank 7,835 77 3.91 7,474 113 6.02 stock

Total earning 2,046,366 $ 18,976 3.63 % 1,765,943 $ 20,548 4.55 %assets

Other assets 132,617 103,742

Total assets $ 2,178,983 $ 1,869,685



Liabilitiesand shareholders' equity:

Interestbearing liabilities:

NOW $ 87,890 $ 40 0.18 % $ 62,444 $ 26 0.17 %

Money market 517,638 859 0.66 423,638 1,739 1.63

Savings 163,135 237 0.58 174,587 740 1.68

Time 757,176 2,968 1.56 644,536 3,826 2.36

Totalinterest 1,525,839 4,104 1.07 1,305,205 6,331 1.92 bearing deposits

Borrowed 200,237 1,210 2.36 175,185 1,151 2.57 Money

Totalinterest 1,726,076 $ 5,314 1.22 % 1,480,390 $ 7,482 2.01 %bearing liabilities

Noninterestbearing 226,473 177,922 deposits

Other 53,272 33,457 liabilities

Total 2,005,821 1,691,769 liabilities

Shareholders' 173,162 177,916 equity

Totalliabilitiesand $ 2,178,983 $ 1,869,685 shareholders'equity

Net interest $ 13,662 $ 13,066 income^(3)

Interest rate 2.41 % 2.54 %spread

Net interest 2.67 % 2.96 %margin^(4)

(1) Average balances and yields for securities are based on amortized cost.

(2) Includes commercial and residential real estate construction.

(3) The adjustment for securities and loans taxable equivalency amounted to $54 thousand and $55 thousand for the quarters ended September 30, 2020 and 2019, respectively.

(4) Annualized net interest income as a percentage of earning assets.

(5) Yields are calculated using the contractual day count convention for each respective product type.

(1) Average balances and yields for securities are based on amortized cost.

(2) Includes commercial and residential real estate construction.

(3) The adjustment for securities and loans taxable equivalency amounted to $54thousand and $55 thousand for the quarters ended September 30, 2020 and 2019,respectively.

(4) Annualized net interest income as a percentage of earning assets.

(5) Yields are calculated using the contractual day count convention for eachrespective product type.

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, 2020

September 30, 2019

Average Balance

Interest

Yield/ Rate (5)

Average Balance

Interest

Yield/ Rate (5)

Assets:

Cash and Fed funds sold

$

207,058

$

468

0.30

%

$

84,212

$

1,432

2.27

%

Securities(1)

96,761

2,289

3.15

115,586

2,722

3.14

Loans:

Commercial real estate

1,094,956

38,460

4.61

1,061,536

38,176

4.74

Residential real estate

134,369

3,636

3.61

169,297

4,892

3.85

Construction(2)

98,539

3,350

4.47

84,487

3,412

5.33

Commercial business

289,959

10,017

4.54

259,154

12,198

6.21

Consumer

130

8

8.15

274

13

6.60

Total loans

1,617,953

55,471

4.50

1,574,748

58,691

4.91

Federal Home Loan Bank stock

7,547

272

4.81

7,512

365

6.49

Total earning assets

1,929,319

$

58,500

3.98

%

1,782,058

$

63,210

4.68

%

Other assets

125,957

89,332

Total assets

$

2,055,276

$

1,871,390

Liabilities and shareholders' equity:

Interest bearing liabilities:

NOW

$

76,661

$

99

0.17

%

$

61,872

$

101

0.22

%

Money market

473,485

3,213

0.91

447,008

5,567

1.67

Savings

170,262

1,204

0.94

176,491

2,252

1.71

Time

721,051

10,107

1.87

638,978

10,830

2.27

Total interest bearing deposits

1,441,459

14,623

1.36

1,324,349

18,750

1.89

Borrowed Money

187,177

3,187

2.24

175,290

3,386

2.55

Total interest bearing liabilities

1,628,636

$

17,810

1.46

%

1,499,639

$

22,136

1.97

%

Noninterest bearing deposits

201,384

166,864

Other liabilities

49,418

26,650

Total liabilities

1,879,438

1,693,153

Shareholders' equity

175,838

178,237

Total liabilities and shareholders' equity

$

2,055,276

$

1,871,390

Net interest income(3)

$

40,690

$

41,074

Interest rate spread

2.52

%

2.71

%

Net interest margin(4)

2.81

%

3.07

%

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, 2020 September 30, 2019

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

Assets:

Cash and Fed $ 207,058 $ 468 0.30 % $ 84,212 $ 1,432 2.27 %funds sold

Securities^ 96,761 2,289 3.15 115,586 2,722 3.14 (1)

Loans:

Commercial 1,094,956 38,460 4.61 1,061,536 38,176 4.74 real estate

Residential 134,369 3,636 3.61 169,297 4,892 3.85 real estate

Construction^ 98,539 3,350 4.47 84,487 3,412 5.33 (2)

Commercial 289,959 10,017 4.54 259,154 12,198 6.21 business

Consumer 130 8 8.15 274 13 6.60

Total loans 1,617,953 55,471 4.50 1,574,748 58,691 4.91

Federal HomeLoan Bank 7,547 272 4.81 7,512 365 6.49 stock

Total earning 1,929,319 $ 58,500 3.98 % 1,782,058 $ 63,210 4.68 %assets

Other assets 125,957 89,332

Total assets $ 2,055,276 $ 1,871,390



Liabilitiesand shareholders' equity:

Interestbearing liabilities:

NOW $ 76,661 $ 99 0.17 % $ 61,872 $ 101 0.22 %

Money market 473,485 3,213 0.91 447,008 5,567 1.67

Savings 170,262 1,204 0.94 176,491 2,252 1.71

Time 721,051 10,107 1.87 638,978 10,830 2.27

Totalinterest 1,441,459 14,623 1.36 1,324,349 18,750 1.89 bearing deposits

Borrowed 187,177 3,187 2.24 175,290 3,386 2.55 Money

Totalinterest 1,628,636 $ 17,810 1.46 % 1,499,639 $ 22,136 1.97 %bearing liabilities

Noninterestbearing 201,384 166,864 deposits

Other 49,418 26,650 liabilities

Total 1,879,438 1,693,153 liabilities

Shareholders' 175,838 178,237 equity

Totalliabilitiesand $ 2,055,276 $ 1,871,390 shareholders'equity

Net interest $ 40,690 $ 41,074 income^(3)

Interest rate 2.52 % 2.71 %spread

Net interest 2.81 % 3.07 %margin^(4)

(1) Average balances and yields for securities are based on amortized cost.

(2) Includes commercial and residential real estate construction.

(3) The adjustment for securities and loans taxable equivalency amounted to $159 thousand and $195 thousand for the nine months ended September 30, 2020 and 2019, respectively.

(4) Annualized net interest income as a percentage of earning assets.

(5) 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/20201028006189/en/

CONTACT: Bankwell Financial Group Christopher R. Gruseke, (203) 652-0166 President and Chief Executive Officer

CONTACT: Penko Ivanov, (203) 652-0166 Executive Vice President and Chief Financial Officer