Business Wire | Apr 28, 2021 04:18PM EDT

Bankwell Financial Group Reports Strong Operating Results for the First Quarter; Declares Second Quarter Dividend

Apr. 28, 2021

NEW CANAAN, Conn.--(BUSINESS WIRE)--Apr. 28, 2021--Bankwell Financial Group, Inc. (NASDAQ:BWFG) reported GAAP net income of $5.7 million, or $0.71 per share, for the first quarter of 2021, versus $1.4 million, or $0.17 per share, for the same period in 2020. Pre-tax, pre-provision net revenue ("PPNR")1 grew 48% to $7.0 million compared to the same period in 2020. Results include a $0.9 million one-time federal payroll tax credit for small businesses impacted by COVID-192.

The Company's Board of Directors declared a $0.14 per share cash dividend, payable May 24, 2021 to shareholders of record on May 14, 2021.

We recommend reading this earnings release in conjunction with the First Quarter 2021 Investor Presentation, located at http://investor.mybankwell.com/Presentations and included as an exhibit to our April 28, 2021 Current Report on Form 8-K.

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

"I am pleased to announce Bankwell's financial results for the first quarter of 2021. Our team made meaningful progress in virtually all aspects of our business. Loans grew by 4% on originations of $158 million and we continue to generate quality C&I business. Core commercial deposits grew by 8.6%, or $63 million as we steadily improve both the mix and the cost of our deposits. We have also successfully implemented many of our previously announced expense reduction initiatives. The cumulative impact of the multiple successes we've experienced was to grow pre-tax, pre-provision net revenue by 48% versus the previous year's first quarter and to deliver a return on average equity of 12.67%. Importantly, we look to further improving profitability as the year proceeds.

"I'd like to thank all of my colleagues who have worked tirelessly to achieve these results amidst such challenging circumstances. On behalf of everyone at Bankwell, I also wish to acknowledge our gratitude for all of our health care workers and scientists who have persevered in an effort to bring our health crisis to an end."

First Quarter 2021 Highlights:

* PPNR of $7.0 million ($6.1 million excluding the one-time payroll tax credit), a 48% increase compared to the same period in 2020. * Return on average assets was 1.02% and return on average equity was 12.67%. * Resumption of SBA loan sales with gains of $0.5 million compared to no sales for the quarter ended March 31, 2020. * Total gross loans were $1.7 billion, growing $63.2 million, or 4%, compared to December 31, 2020, excluding PPP loans. * Total deposits were $1.9 billion compared to $1.8 billion at December 31, 2020. * Noninterest bearing deposits increased by $112.5 million to 15% of total deposits compared to 10% at March 31, 2020. * The cost of deposits decreased approximately 10 basis points to 0.67% when compared to the quarter ended December 31, 2020. * The Bank's loan-to-deposit ratio was 89.0%, reflecting the above-mentioned increase in deposits. * Investment securities totaled $101.6 million and represent 5% of total assets. * Tangible book value per share rose to $23.99 compared to $22.43 at December 31, 2020, benefiting from strong operating performance and favorable marks on interest rate swaps used to hedge interest rate risk. * Shares issued and outstanding were 7,908,630, reflecting repurchases of 65,626 shares of common stock at a weighted average price of $21.66 during the quarter ended March 31, 2021. * Subsequent to March 31, 2021, the Company committed to retire $10 million of existing subordinated debt on May 15, 2021.

Earnings and Performance

Revenues (net interest income plus noninterest income) for the quarter ended March 31, 2021 were $16.6 million, versus $14.4 million for the quarter ended March 31, 2020. The increase was primarily attributable to lower interest expense on deposits, partially offset by a decrease in interest and fees on loans. Revenues also benefited from the aforementioned one-time federal payroll tax credit for COVID-19 and from the resumption of SBA loan sales.

Net income for the quarter ended March 31, 2021 was $5.7 million, versus $1.4 million for the quarter ended March 31, 2020. The increase in net income was impacted by the aforementioned increases in revenues.

Basic and diluted earnings per share were $0.72 and $0.71, respectively, for the quarter ended March 31, 2021 compared to basic and diluted earnings per share of $0.17 each for the quarter ended March 31, 2020.

The net interest margin (fully taxable equivalent basis) for the quarters ended March 31, 2021 and March 31, 2020 was 2.74% and 2.98%, respectively. The decrease in net interest margin was primarily due to excess liquidity.

Financial Condition

Assets totaled $2.2 billion at March 31, 2021, compared to assets of $2.3 billion at December 31, 2020. The decrease in assets is primarily due to a decrease in excess liquidity, partially offset by an increase in loans. Gross loans totaled $1.7 billion at March 31, 2021, an increase of $47.6 million compared to December 31, 2020. Excluding PPP loans, gross loans increased by $63.2 million at March 31, 2021 when compared to December 31, 2020. Deposits totaled $1.9 billion at March 31, 2021, compared to deposits of $1.8 billion at December 31, 2020.

Capital

Shareholders' equity totaled $187.9 million as of March 31, 2021, an increase of $11.3 million compared to December 31, 2020, primarily a result of (i) a $7.7 million favorable impact to accumulated other comprehensive income driven by fair value marks related to hedge positions involving interest rate swaps and (ii) net income for the quarter ended March 31, 2021 of $5.7 million. 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. The increase in Shareholders' equity was partially offset by dividends paid of $1.1 million and common stock repurchases of $1.4 million.

About Bankwell Financial Group

Bankwell is a commercial bank that serves the banking needs of residents and businesses throughout Fairfield and New Haven Counties, Connecticut.

For more information, 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.

_____________________ 1 Pre-tax, pre-provision net revenue is a non-GAAP metric and excludes provision for loan losses and income tax expense. 2 The payroll tax credit is part of the Employee Retention Credit ("ERC") program under the Coronavirus Aid, Relief and Economic Security Act ("CARES Act").

BANKWELL FINANCIAL GROUP, INC.

CONSOLIDATED BALANCE SHEETS(unaudited)

(Dollars in thousands)

March 31, December 31, March 31,

2021 2020 2020

ASSETS

Cash and due from banks $ 351,194 $ 405,340 $ 203,569

Federal funds sold 10,811 4,258 6,427

Cash and cash equivalents 362,005 409,598 209,996



Investment securities

Marketable equity securities, 2,178 2,207 2,289 at fair value

Available for sale investment 83,218 88,605 82,342 securities, at fair value

Held to maturity investment 16,225 16,078 16,252 securities, at amortized cost

Total investment securities 101,621 106,890 100,883

Loans receivable (net ofallowance for loan losses of$20,545, $21,009, and $16,686 1,650,127 1,601,672 1,602,146 at March 31, 2021, December 31, 2020, and March 31, 2020,respectively)

Accrued interest receivable 7,306 6,579 5,867

Federal Home Loan Bank stock, 6,446 7,860 6,507 at cost

Premises and equipment, net 33,386 21,762 27,835

Bank-owned life insurance 42,881 42,651 41,926

Goodwill 2,589 2,589 2,589

Other intangible assets 67 76 196

Deferred income taxes, net 8,908 11,300 10,009

Other assets 29,131 42,770 45,671

Total assets $ 2,244,467 $ 2,253,747 $ 2,053,625



LIABILITIES AND SHAREHOLDERS' EQUITY

Liabilities

Deposits

Noninterest bearing deposits $ 280,947 $ 270,235 $ 168,448

Interest bearing deposits 1,578,861 1,557,081 1,512,684

Total deposits 1,859,808 1,827,316 1,681,132



Advances from the Federal Home 125,000 175,000 125,000 Loan Bank

Subordinated debentures 25,271 25,258 25,220

Accrued expenses and other 46,445 49,571 52,059 liabilities

Total liabilities 2,056,524 2,077,145 1,883,411



Shareholders' equity

Common stock, no par value 120,398 121,338 119,953

Retained earnings 75,418 70,839 69,595

Accumulated other comprehensive (7,873 ) (15,575 ) (19,334 )loss

Total shareholders' equity 187,943 176,602 170,214



Total liabilities and $ 2,244,467 $ 2,253,747 $ 2,053,625 shareholders' equity

BANKWELL FINANCIAL GROUP, INC.

CONSOLIDATED STATEMENTS OF INCOME (unaudited)

(Dollars in thousands, except share data)

For the Quarter Ended

March 31,

December 31,

March 31,

2021

2020

2020

Interest and dividend income

Interest and fees on loans

$

17,900

$

18,194

$

18,985

Interest and dividends on securities

769

835

825

Interest on cash and cash equivalents

108

117

286

Total interest and dividend income

18,777

19,146

20,096

Interest expense

Interest expense on deposits

3,114

3,557

5,709

Interest expense on borrowings

1,008

1,285

1,101

Total interest expense

4,122

4,842

6,810

Net interest income

14,655

14,304

13,286

(Credit) provision for loan losses

(296

)

709

3,185

Net interest income after provision for loan losses

14,951

13,595

10,101

Noninterest income

Gains and fees from sales of loans

513

16

-

Bank owned life insurance

231

241

243

Service charges and fees

199

210

217

Other

1,013

154

612

Total noninterest income

1,956

621

1,072

Noninterest expense

Salaries and employee benefits

4,769

5,453

5,380

Occupancy and equipment

2,406

4,516

1,909

Professional services

587

591

711

Data processing

512

1,658

536

FDIC insurance

403

262

70

Director fees

317

331

295

Marketing

(9

)

118

162

Other

653

774

596

Total noninterest expense

9,638

13,703

9,659

Income before income tax expense

7,269

513

1,514

Income tax expense

1,579

177

151

Net income

$

5,690

$

336

$

1,363

Earnings Per Common Share:

Basic

$

0.72

$

0.04

$

0.17

Diluted

$

0.71

$

0.04

$

0.17

Weighted Average Common Shares Outstanding:

Basic

7,758,540

7,726,926

7,750,135

Diluted

7,800,777

7,728,206

7,778,762

Dividends per common share

$

0.14

$

0.14

$

0.14

BANKWELL FINANCIAL GROUP, INC.

CONSOLIDATED STATEMENTS OF INCOME (unaudited)

(Dollars in thousands, except share data)

For the Quarter Ended

March 31, December March 31, 31,

2021 2020 2020

Interest and dividend income

Interest and fees on loans $ 17,900 $ 18,194 $ 18,985

Interest and dividends on securities 769 835 825

Interest on cash and cash equivalents 108 117 286

Total interest and dividend income 18,777 19,146 20,096



Interest expense

Interest expense on deposits 3,114 3,557 5,709

Interest expense on borrowings 1,008 1,285 1,101

Total interest expense 4,122 4,842 6,810



Net interest income 14,655 14,304 13,286

(Credit) provision for loan losses (296 ) 709 3,185

Net interest income after provision 14,951 13,595 10,101 for loan losses



Noninterest income

Gains and fees from sales of loans 513 16 -

Bank owned life insurance 231 241 243

Service charges and fees 199 210 217

Other 1,013 154 612

Total noninterest income 1,956 621 1,072



Noninterest expense

Salaries and employee benefits 4,769 5,453 5,380

Occupancy and equipment 2,406 4,516 1,909

Professional services 587 591 711

Data processing 512 1,658 536

FDIC insurance 403 262 70

Director fees 317 331 295

Marketing (9 ) 118 162

Other 653 774 596

Total noninterest expense 9,638 13,703 9,659



Income before income tax expense 7,269 513 1,514

Income tax expense 1,579 177 151

Net income $ 5,690 $ 336 $ 1,363



Earnings Per Common Share:

Basic $ 0.72 $ 0.04 $ 0.17

Diluted $ 0.71 $ 0.04 $ 0.17



Weighted Average Common Shares Outstanding:

Basic 7,758,540 7,726,926 7,750,135

Diluted 7,800,777 7,728,206 7,778,762

Dividends per common share $ 0.14 $ 0.14 $ 0.14

BANKWELL FINANCIAL GROUP, INC.

CONSOLIDATED FINANCIAL HIGHLIGHTS (unaudited)

For the Quarter Ended

March 31,

December 31,

March 31,

2021

2020

2020

Performance ratios:

Return on average assets(1)

1.02

%

0.06

%

0.29

%

Return on average stockholders' equity(1)

12.67

%

0.75

%

3.03

%

Return on average tangible common equity(1)

12.86

%

0.76

%

3.07

%

Net interest margin

2.74

%

2.66

%

2.98

%

Efficiency ratio(2)

58.0

%

91.2

%

67.1

%

Net loan charge-offs as a % of average loans

0.01

%

-

%

-

%

Dividend payout ratio(3)

19.72

%

350.00

%

82.35

%

BANKWELL FINANCIAL GROUP, INC.

CONSOLIDATED FINANCIAL HIGHLIGHTS (unaudited)

For the Quarter Ended

March December 31, March 31, 31,

2021 2020 2020

Performance ratios:

Return on average assets^(1) 1.02 % 0.06 % 0.29 %

Return on average stockholders' equity^(1) 12.67 % 0.75 % 3.03 %

Return on average tangible common equity^ 12.86 % 0.76 % 3.07 %(1)

Net interest margin 2.74 % 2.66 % 2.98 %

Efficiency ratio^(2) 58.0 % 91.2 % 67.1 %

Net loan charge-offs as a % of average 0.01 % - % - %loans

Dividend payout ratio^(3) 19.72 % 350.00 % 82.35 %

(1) 2020 performance ratios were negatively impacted by incremental COVID-19 pandemic related loan loss reserves and $3.9 million in one-time charges related to office consolidation, contract termination and employee severance costs recognized in the fourth quarter of 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 were negatively impacted by incremental COVID-19pandemic related loan loss reserves and $3.9 million in one-time chargesrelated to office consolidation, contract termination and employee severancecosts recognized in the fourth quarter of 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

March 31,

December 31,

March 31,

2021

2020

2020

Capital ratios:

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

11.02

%

11.06

%

12.14

%

Total Capital to Risk-Weighted Assets(1)

12.17

%

12.28

%

13.13

%

Tier I Capital to Risk-Weighted Assets(1)

11.02

%

11.06

%

12.14

%

Tier I Capital to Average Assets(1)

8.82

%

8.44

%

10.84

%

Tangible common equity to tangible assets

8.27

%

7.73

%

8.16

%

Tangible book value per common share(2)

$

23.99

$

22.43

$

21.69

As of

March 31, December March 31, 31,

2021 2020 2020

Capital ratios:

Total Common Equity Tier 1 Capital to 11.02 % 11.06 % 12.14 %Risk-Weighted Assets^(1)

Total Capital to Risk-Weighted Assets^(1) 12.17 % 12.28 % 13.13 %

Tier I Capital to Risk-Weighted Assets^(1) 11.02 % 11.06 % 12.14 %

Tier I Capital to Average Assets^(1) 8.82 % 8.44 % 10.84 %

Tangible common equity to tangible assets 8.27 % 7.73 % 8.16 %

Tangible book value per common share^(2) $ 23.99 $ 22.43 $ 21.69

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

(2) Excludes unvested restricted shares of 186,485, 163,369, and 154,012 as of March 31, 2021, December 31, 2020, and March 31, 2020, respectively.

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

(2) Excludes unvested restricted shares of 186,485, 163,369, and 154,012 as ofMarch 31, 2021, December 31, 2020, and March 31, 2020, respectively.

BANKWELL FINANCIAL GROUP, INC.

ASSET QUALITY (unaudited)

(Dollars in thousands)

For the Quarter Ended

March 31,

December 31,

March 31,

2021

2020

2020

Allowance for loan losses:

Balance at beginning of period

$

21,009

$

20,372

$

13,509

Charge-offs:

Commercial real estate

(163

)

-

-

Commercial business

-

(75

)

(8

)

Consumer

(14

)

(11

)

(2

)

Total charge-offs

(177

)

(86

)

(10

)

Recoveries:

Commercial business

-

14

1

Consumer

9

-

1

Total recoveries

9

14

2

Net loan charge-offs

(168

)

(72

)

(8

)

(Credit) provision for loan losses

(296

)

709

3,185

Balance at end of period

$

20,545

$

21,009

$

16,686

As of

March 31,

December 31,

March 31,

2021

2020

2020

Asset quality:

Nonaccrual loans

Residential real estate

$

1,289

$

1,492

$

1,532

Commercial real estate

19,277

21,093

5,339

Commercial business

1,803

1,834

3,783

Construction

8,997

8,997

-

Total nonaccrual loans

31,366

33,416

10,654

Other real estate owned

-

-

-

Total nonperforming assets

$

31,366

$

33,416

$

10,654

Nonperforming loans as a % of total loans

1.87

%

2.06

%

0.66

%

Nonperforming assets as a % of total assets

1.40

%

1.48

%

0.52

%

Allowance for loan losses as a % of total loans

1.23

%

1.29

%

1.03

%

Allowance for loan losses as a % of nonperforming loans

65.50

%

62.87

%

156.62

%

Total nonaccrual loans declined $2.1 million to $31.4 million as of March 31, 2021 when compared to December 31, 2020. The Company individually analyzed all existing COVID-19 deferrals and COVID-19 impacted loans for collectability and impairment as of March 31, 2021. Nonperforming assets as a percentage of total assets was 1.40% at March 31, 2021, down from 1.48% at December 31, 2020. The allowance for loan losses at March 31, 2021 was $20.5 million, representing 1.23% of total loans.

BANKWELL FINANCIAL GROUP, INC.

ASSET QUALITY (unaudited)

(Dollars in thousands)

For the Quarter Ended

March 31, December March 31, 31,

2021 2020 2020

Allowance for loan losses:

Balance at beginning of period $ 21,009 $ 20,372 $ 13,509

Charge-offs:

Commercial real estate (163 ) - -

Commercial business - (75 ) (8 )

Consumer (14 ) (11 ) (2 )

Total charge-offs (177 ) (86 ) (10 )

Recoveries:

Commercial business - 14 1

Consumer 9 - 1

Total recoveries 9 14 2

Net loan charge-offs (168 ) (72 ) (8 )

(Credit) provision for loan losses (296 ) 709 3,185

Balance at end of period $ 20,545 $ 21,009 $ 16,686

As of

March 31, December March 31, 31,

2021 2020 2020

Asset quality:

Nonaccrual loans

Residential real estate $ 1,289 $ 1,492 $ 1,532

Commercial real estate 19,277 21,093 5,339

Commercial business 1,803 1,834 3,783

Construction 8,997 8,997 -

Total nonaccrual loans 31,366 33,416 10,654

Other real estate owned - - -

Total nonperforming assets $ 31,366 $ 33,416 $ 10,654



Nonperforming loans as a % of total loans 1.87 % 2.06 % 0.66 %

Nonperforming assets as a % of total 1.40 % 1.48 % 0.52 %assets

Allowance for loan losses as a % of total 1.23 % 1.29 % 1.03 %loans

Allowance for loan losses as a % of 65.50 % 62.87 % 156.62 %nonperforming loans

Total nonaccrual loans declined $2.1 million to $31.4 million as of March 31, 2021 when compared to December 31, 2020. The Company individually analyzed all existing COVID-19 deferrals and COVID-19 impacted loans for collectability and impairment as of March 31, 2021. Nonperforming assets as a percentage of total assets was 1.40% at March 31, 2021, down from 1.48% at December 31, 2020. The allowance for loan losses at March 31, 2021 was $20.5 million, representing 1.23% of total loans.

BANKWELL FINANCIAL GROUP, INC.

LOAN & DEPOSIT PORTFOLIO (unaudited)

(Dollars in thousands)

March 31, December 31,

Period End Loan Composition 2021 2020 % Change

Residential Real Estate $ 109,752 $ 113,557 (3.4 )%

Commercial Real Estate^(1) 1,183,848 1,148,383 3.1

Construction 103,099 87,007 18.5

Total Real Estate Loans 1,396,699 1,348,947 3.5



Commercial Business^(2) 267,698 276,601 (3.2 )



Consumer 8,818 79 N/M^(3)

Total Loans $ 1,673,215 $ 1,625,627 2.9 %

(1) Includes owner occupied commercial real estate.

(2) Includes $19.2 million and $34.8 million of PPP loans at March 31, 2021 and December 31, 2020, respectively.

(3) Metric not meaningful.

Gross loans totaled $1.7 billion at March 31, 2021, an increase of $47.6 million compared to December 31, 2020. Excluding PPP loans, gross loans increased by $63.2 million, or 4%, at March 31, 2021 when compared to December 31, 2020.

(1) Includes owner occupied commercial real estate.

(2) Includes $19.2 million and $34.8 million of PPP loans at March 31, 2021 andDecember 31, 2020, respectively.

(3) Metric not meaningful.

Gross loans totaled $1.7 billion at March 31, 2021, an increase of $47.6 million compared to December 31, 2020. Excluding PPP loans, gross loans increased by $63.2 million, or 4%, at March 31, 2021 when compared to December 31, 2020.

March 31, December 31,

Period End Deposit Composition 2021 2020 % Change

Noninterest bearing demand $ 280,947 $ 270,235 4.0 %

NOW 118,489 101,737 16.5

Money Market 751,852 669,364 12.3

Savings 164,559 158,750 3.7

Time 543,961 627,230 (13.3 )

Total Deposits $ 1,859,808 $ 1,827,316 1.8 %

Total deposits were $1.9 billion at March 31, 2021, compared to $1.8 billion at December 31, 2020, an increase of $32.5 million, or 1.8%.

BANKWELL FINANCIAL GROUP, INC.

NONINTEREST INCOME AND EXPENSE (unaudited)

(Dollars in thousands)

For the Quarter Ended

March 31, December March 31, Mar 21 vs. Mar 21 vs.Noninterest 31, Dec 20 % Mar 20 %income 2021 2020 2020 Change Change

Gains and feesfrom sales of $ 513 $ 16 $ - N/M^(1) N/Aloans

Bank owned life 231 241 243 (4.1 ) (4.9 )insurance

Service charges 199 210 217 (5.2 ) (8.3 )and fees

Other 1,013 154 612 557.8 65.5

Totalnoninterest $ 1,956 $ 621 $ 1,072 215.0 % 82.5 %income

(1) Metric not meaningful.

Noninterest income increased by $0.9 million to $2.0 million for the quarter ended March 31, 2021 compared to the quarter ended March 31, 2020.

The increase in noninterest income was driven by resumed SBA loan sales, totaling $0.5 million for the quarter ended March 31, 2021. In addition, the increase was impacted by a one-time federal payroll tax credit for COVID-19 of $0.9 million, partially offset by $0.4 million of non-recurring interest rate swap fees recognized in the quarter ended March 31, 2020.

For the Quarter Ended

March 31, December March 31, Mar 21 vs. Mar 21 vs.Noninterest 31, Dec 20 % Mar 20 %expense 2021 2020 2020 Change Change

Salaries andemployee $ 4,769 $ 5,453 $ 5,380 (12.5 )% (11.4 )%benefits

Occupancy and 2,406 4,516 1,909 (46.7 ) 26.0 equipment

Professional 587 591 711 (0.7 ) (17.4 )services

Data 512 1,658 536 (69.1 ) (4.5 )processing

FDIC insurance 403 262 70 53.8 475.7

Director fees 317 331 295 (4.2 ) 7.5

Marketing (9 ) 118 162 (107.6 ) (105.6 )

Other 653 774 596 (15.6 ) 9.6

Totalnoninterest $ 9,638 $ 13,703 $ 9,659 (29.7 )% (0.2 )%expense

Noninterest expense declined slightly, from $9.7 million for the quarter ended March 31, 2020, to $9.6 million for the quarter ended March 31, 2021. The decrease in noninterest expense was primarily driven by a decline in salaries and employee benefits and marketing expense, partially offset by an increase in occupancy and equipment expense and FDIC insurance expense. The decrease in noninterest expense for the quarter ended March 31, 2021 when compared to the quarter ended December 31, 2020 was primarily due to $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 $4.8 million for the quarter ended March 31, 2021, a decrease of $0.6 million when compared to the same period in 2020. The decrease in salaries and employee benefits was primarily driven by a decrease in full time equivalent employees as a direct result of the Voluntary Early Retirement Incentive Plan offered to eligible employees and other employee actions taken during the fourth quarter of 2020. Full time equivalent employees totaled 123 at March 31, 2021 compared to 154 for the same period in 2020. Salaries and employee benefits were also favorably impacted as higher loan originations enabled the bank to defer a greater amount of expenses.

Occupancy and equipment expense totaled $2.4 million for the quarter ended March 31, 2021, an increase of $0.5 million when compared to the same period in 2020. 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 $0.4 million for the quarter ended March 31, 2021, an increase of $0.3 million when compared to the same period in 2020. The increase in FDIC insurance expense was due to the application of available FDIC insurance credits in the first quarter of 2020.

BANKWELL FINANCIAL GROUP, INC.

RECONCILIATION OF GAAP TO NON-GAAP MEASURES (unaudited)

(Dollars in thousands, except share data)

As of

March 31, December 31, March 31,

Computation of Tangible Common 2021 2020 2020Equity to Tangible Assets

Total Equity $ 187,943 $ 176,602 $ 170,214

Less:

Goodwill 2,589 2,589 2,589

Other intangibles 67 76 196

Tangible Common Equity $ 185,287 $ 173,937 $ 167,429



Total Assets $ 2,244,467 $ 2,253,747 $ 2,053,625

Less:

Goodwill 2,589 2,589 2,589

Other intangibles 67 76 196

Tangible Assets $ 2,241,811 $ 2,251,082 $ 2,050,840



Tangible Common Equity to 8.27 % 7.73 % 8.16 %Tangible Assets

As of

March 31, December 31, March 31,

Computation of Tangible Book 2021 2020 2020Value per Common Share

Total shareholders' equity $ 187,943 $ 176,602 $ 170,214

Less:

Preferred stock - - -

Common shareholders' equity $ 187,943 $ 176,602 $ 170,214

Less:

Goodwill 2,589 2,589 2,589

Other intangibles 67 76 196

Tangible common shareholders' $ 185,287 $ 173,937 $ 167,429 equity

Common shares 7,908,630 7,919,278 7,871,419

Less:

Shares of unvested restricted 186,485 163,369 154,012 stock

Common shares less unvested 7,722,145 7,755,909 7,717,407 restricted stock

Book value per share $ 24.34 $ 22.77 $ 22.06

Less:

Effects of intangible assets $ 0.34 $ 0.34 $ 0.36



Tangible Book Value per Common $ 23.99 $ 22.43 $ 21.69 Share

BANKWELL FINANCIAL GROUP, INC.

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

(Dollars in thousands)

For the Quarter Ended

March 31,

December 31,

March 31,

Computation of Efficiency Ratio

2021

2020

2020

Noninterest expense

$

9,638

$

13,703

$

9,659

Less:

Amortization of intangible assets

9

84

18

Other real estate owned expenses

-

-

-

Adjusted noninterest expense

$

9,629

$

13,619

$

9,641

Net interest income

$

14,655

$

14,304

$

13,286

Noninterest income

1,956

621

1,072

Less:

Net gain on sale of available for sale securities

-

-

-

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

-

-

-

Operating revenue

$

16,611

$

14,925

$

14,358

Efficiency ratio

58.0

%

91.2

%

67.1

%

For the Quarter Ended

March 31,

December 31,

March 31,

Computation of Return on Average Tangible Common Equity

2021

2020

2020

Net Income Attributable to Common Shareholders

$

5,690

$

336

$

1,363

Total average shareholders' equity

$

182,058

$

178,439

$

181,127

Less:

Average Goodwill

2,589

2,589

2,589

Average Other intangibles

73

153

208

Average tangible common equity

$

179,396

$

175,697

$

178,330

Annualized Return on Average Tangible Common Equity

12.86

%

0.76

%

3.07

%

BANKWELL FINANCIAL GROUP, INC.

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

(Dollars in thousands)

For the Quarter Ended

March 31, December March 31, 31,

Computation of Efficiency Ratio 2021 2020 2020

Noninterest expense $ 9,638 $ 13,703 $ 9,659

Less:

Amortization of intangible assets 9 84 18

Other real estate owned expenses - - -

Adjusted noninterest expense $ 9,629 $ 13,619 $ 9,641

Net interest income $ 14,655 $ 14,304 $ 13,286

Noninterest income 1,956 621 1,072

Less:

Net gain on sale of available for sale - - - securities

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

Operating revenue $ 16,611 $ 14,925 $ 14,358



Efficiency ratio 58.0 % 91.2 % 67.1 %

For the Quarter Ended

March 31, December March 31, 31,

Computation of Return on Average 2021 2020 2020Tangible Common Equity

Net Income Attributable to Common $ 5,690 $ 336 $ 1,363 Shareholders

Total average shareholders' equity $ 182,058 $ 178,439 $ 181,127

Less:

Average Goodwill 2,589 2,589 2,589

Average Other intangibles 73 153 208

Average tangible common equity $ 179,396 $ 175,697 $ 178,330



Annualized Return on Average Tangible 12.86 % 0.76 % 3.07 %Common Equity

BANKWELL FINANCIAL GROUP, INC.

NET INTEREST MARGIN ANALYSIS ON A FULLY TAX EQUIVALENT BASIS - QTD (unaudited)

(Dollars in thousands)

For the Quarter Ended

March 31, 2021

March 31, 2020

Average

Yield/

Average

Yield/

Balance

Interest

Rate (5)

Balance

Interest

Rate (5)

Assets:

Cash and Fed funds sold

$

401,900

$

108

0.11

%

$

73,497

$

286

1.56

%

Securities(1)

101,176

788

3.11

98,566

775

3.15

Loans:

Commercial real estate

1,129,224

12,731

4.51

1,108,709

13,024

4.65

Residential real estate

112,053

964

3.44

143,826

1,357

3.77

Construction(2)

94,075

885

3.76

100,437

1,215

4.78

Commercial business

294,756

3,271

4.44

258,848

3,386

5.18

Consumer

5,039

49

3.94

156

3

8.37

Total loans

1,635,147

17,900

4.38

1,611,976

18,985

4.66

Federal Home Loan Bank stock

6,508

31

1.96

7,325

103

5.65

Total earning assets

2,144,731

$

18,827

3.51

%

1,791,364

$

20,149

4.45

%

Other assets

113,561

111,585

Total assets

$

2,258,292

$

1,902,949

Liabilities and shareholders' equity:

Interest bearing liabilities:

NOW

$

101,057

$

43

0.17

%

$

67,925

$

28

0.17

%

Money market

736,659

950

0.52

438,588

1,492

1.37

Savings

160,347

125

0.32

185,478

672

1.46

Time

611,153

1,996

1.32

640,580

3,517

2.21

Total interest bearing deposits

1,609,216

3,114

0.78

1,332,571

5,709

1.72

Borrowed Money

152,485

1,008

2.64

172,464

1,101

2.53

Total interest bearing liabilities

1,761,701

$

4,122

0.95

%

1,505,035

$

6,810

1.82

%

Noninterest bearing deposits

269,863

179,066

Other liabilities

44,670

37,721

Total liabilities

2,076,234

1,721,822

Shareholders' equity

182,058

181,127

Total liabilities and shareholders' equity

$

2,258,292

$

1,902,949

Net interest income(3)

$

14,705

$

13,339

Interest rate spread

2.56

%

2.63

%

Net interest margin(4)

2.74

%

2.98

%

BANKWELL FINANCIAL GROUP, INC.

NET INTEREST MARGIN ANALYSIS ON A FULLY TAX EQUIVALENT BASIS - QTD (unaudited)

(Dollars in thousands)

For the Quarter Ended

March 31, 2021 March 31, 2020

Average Yield/ Average Yield/

Balance Interest Rate ^ Balance Interest Rate ^ (5) (5)

Assets:

Cash and Fed $ 401,900 $ 108 0.11 % $ 73,497 $ 286 1.56 %funds sold

Securities^ 101,176 788 3.11 98,566 775 3.15 (1)

Loans:

Commercial 1,129,224 12,731 4.51 1,108,709 13,024 4.65 real estate

Residential 112,053 964 3.44 143,826 1,357 3.77 real estate

Construction^ 94,075 885 3.76 100,437 1,215 4.78 (2)

Commercial 294,756 3,271 4.44 258,848 3,386 5.18 business

Consumer 5,039 49 3.94 156 3 8.37

Total loans 1,635,147 17,900 4.38 1,611,976 18,985 4.66

Federal HomeLoan Bank 6,508 31 1.96 7,325 103 5.65 stock

Total earning 2,144,731 $ 18,827 3.51 % 1,791,364 $ 20,149 4.45 %assets

Other assets 113,561 111,585

Total assets $ 2,258,292 $ 1,902,949



Liabilitiesand shareholders' equity:

Interestbearing liabilities:

NOW $ 101,057 $ 43 0.17 % $ 67,925 $ 28 0.17 %

Money market 736,659 950 0.52 438,588 1,492 1.37

Savings 160,347 125 0.32 185,478 672 1.46

Time 611,153 1,996 1.32 640,580 3,517 2.21

Totalinterest 1,609,216 3,114 0.78 1,332,571 5,709 1.72 bearing deposits

Borrowed 152,485 1,008 2.64 172,464 1,101 2.53 Money

Totalinterest 1,761,701 $ 4,122 0.95 % 1,505,035 $ 6,810 1.82 %bearing liabilities

Noninterestbearing 269,863 179,066 deposits

Other 44,670 37,721 liabilities

Total 2,076,234 1,721,822 liabilities

Shareholders' 182,058 181,127 equity

Totalliabilitiesand $ 2,258,292 $ 1,902,949 shareholders'equity

Net interest $ 14,705 $ 13,339 income^(3)

Interest rate 2.56 % 2.63 %spread

Net interest 2.74 % 2.98 %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 $50 thousand and $53 thousand for the quarters ended March 31, 2021 and 2020, 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/20210428006115/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