Business Wire | Jul 28, 2021 04:39PM EDT

Bankwell Financial Group Reports Record Operating Results for the Second Quarter; Increases Dividend by 29%

Jul. 28, 2021

NEW CANAAN, Conn.--(BUSINESS WIRE)--Jul. 28, 2021--Bankwell Financial Group, Inc. (NASDAQ:BWFG) reported record GAAP net income of $6.2 million, or $0.79 per share, for the second quarter of 2021, versus $1.2 million, or $0.16 per share, for the same period in 2020.

The Company's Board of Directors declared a $0.18 per share cash dividend, payable August 26, 2021 to shareholders of record on August 16, 2021, representing a 29% increase when compared to the prior quarter's dividend.

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

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

"I'd like to congratulate the entire Bankwell team for an outstanding job, not just this quarter, but over the last eighteen months. Not only have we navigated the challenges brought about by the global health crisis, but we are emerging from, what we hope to be, the closing stages of the pandemic as a stronger, more robust bank. Excluding PPP loans, we have grown our loan book 5% for the quarter and 9% year to date. We continue to improve our deposit structure and cost, growing non-interest bearing deposits by 17% on a linked quarter basis, and increasing the quarterly net interest margin to 3.12%. We expect to see further improvement in the NIM as 2021 progresses. Consistent with the Company's focus on improving its deposit base, we've just completed the conversion of our online banking product to offer a more robust and more competitive solution. We expect this added capability to help us further grow our business deposit franchise. Credit quality continues to improve. Any COVID impacted loans carry specific reserves or are well collateralized, and we expect these loans to return to accrual status over the coming quarters.

"Confident in our earnings outlook, Bankwell's Board has just approved a 29% increase in our quarterly dividend to $0.18 per share. We look forward to a strong finish to 2021 and are planning substantial growth and profitability in 2022."

Second Quarter 2021 Highlights:

* Return on average assets was 1.11% and return on average equity was 13.06% for the quarter ended June 30, 2021. * The net interest margin improved to 3.12% for the quarter ended June 30, 2021. * The efficiency ratio improved to 55.7% for the quarter ended June 30, 2021. * Total gross loans were $1.7 billion, growing $139.8 million, or 8.8%, compared to December 31, 2020, excluding Paycheck Protection Program ("PPP") loans. * Resumption of SBA loan sales with gains of $0.8 million compared to no sales for the quarter ended June 30, 2020. * Total deposits were $1.9 billion compared to $1.8 billion at December 31, 2020. * Noninterest bearing deposits increased by $58.2 million, or 21.6% compared to December 31, 2020. * The cost of interest bearing deposits decreased approximately 64 basis points to 0.68% when compared to the quarter ended June 30, 2020. * Investment securities totaled $109.3 million and represent 4.8% of total assets. * Tangible book value per share rose to $24.40 compared to $22.43 at December 31, 2020. * Shares issued and outstanding were 7,895,101, reflecting repurchases of 13,529 shares of common stock at a weighted average price of $27.44 during the quarter ended June 30, 2021. * Repaid $10.0 million of subordinated debt on May 15, 2021.

Earnings and Performance

Revenues (net interest income plus noninterest income) for the quarter ended June 30, 2021 were $18.0 million, versus $14.2 million for the quarter ended June 30, 2020. Revenues for the six months ended June 30, 2021 were $34.6 million, versus $28.6 million for the six months ended June 30, 2020. The increase was primarily attributable to lower interest expense on deposits and from the resumption of SBA loan sales. Revenues for the six months ended June 30, 2021 also benefited from a one-time federal payroll tax credit for COVID-19 of $0.9 million.

Net income for the quarter ended June 30, 2021 was $6.2 million, versus $1.2 million for the quarter ended June 30, 2020. Net income for the six months ended June 30, 2021 was $11.9 million, versus $2.6 million for the six months ended June 30, 2020. The increase in net income was primarily impacted by the aforementioned increases in revenues and a decrease in the provision for loan losses resulting from the absence of elevated reserves recognized in 2020 due to the impact of the COVID-19 pandemic and improving economic trends in 2021.

Basic and diluted earnings per share were each $0.79 for the quarter ended June 30, 2021 compared to basic and diluted earnings per share of $0.16 each for the quarter ended June 30, 2020. Basic and diluted earnings per share were $1.51 and $1.50, respectively, for the six months ended June 30, 2021 compared to basic and diluted earnings per share of $0.33 each for the six months ended June 30, 2020.

The net interest margin (fully taxable equivalent basis) for the quarters ended June 30, 2021 and June 30, 2020 was 3.12% and 2.81%, respectively. The net interest margin (fully taxable equivalent basis) for the six months ended June 30, 2021 and June 30, 2020 was 2.93% and 2.89%, respectively. The increase in the net interest margin was due to a decrease in rates on interest bearing deposits and a greater percentage of noninterest bearing deposits, partially offset by excess liquidity.

Financial Condition

Assets totaled $2.27 billion at June 30, 2021, compared to assets of $2.25 billion at December 31, 2020. The change in assets remained relatively flat as the increase in loans were offset by a decrease in excess liquidity. Gross loans totaled $1.7 billion at June 30, 2021, an increase of $112.9 million compared to December 31, 2020. Excluding PPP loans, gross loans increased by $139.8 million at June 30, 2021 when compared to December 31, 2020. Deposits totaled $1.9 billion at June 30, 2021, compared to deposits of $1.8 billion at December 31, 2020.

Capital

Shareholders' equity totaled $190.8 million as of June 30, 2021, an increase of $14.2 million compared to December 31, 2020, primarily a result of (i) net income of $11.9 million for the six months ended June 30, 2021 and (ii) a $5.4 million favorable impact to accumulated other comprehensive income driven by fair value marks related to hedge positions involving interest rate swaps. 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 $2.2 million and common stock repurchases of $1.8 million.

About Bankwell Financial Group

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

For more information, 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)

June 30, March 31, December 31, June 30, 2021 2021 2020 2020

ASSETS

Cash and due $ 297,851 $ 351,194 $ 405,340 $ 201,380 from banks

Federal funds 4,036 10,811 4,258 5,886 sold

Cash and cash 301,887 362,005 409,598 207,266 equivalents



Investment securities

Marketableequity 2,192 2,178 2,207 2,195 securities, at fair value

Available forsale investment 90,983 83,218 88,605 82,220 securities, at fair value

Held tomaturityinvestment 16,166 16,225 16,078 16,196 securities, atamortized cost

Totalinvestment 109,341 101,621 106,890 100,611 securities

Loansreceivable (netof allowancefor loan lossesof $16,672,$20,545,$21,009, and 1,719,274 1,650,127 1,601,672 1,590,995 $19,662 at June 30, 2021, March31, 2021,December 31,2020, and June30, 2020,respectively)

Other real - - - 180 estate owned

Accruedinterest 6,661 7,306 6,579 6,774 receivable

Federal HomeLoan Bank 3,844 6,446 7,860 7,835 stock, at cost

Premises and 33,916 33,386 21,762 27,177 equipment, net

Bank-owned life 48,632 42,881 42,651 42,167 insurance

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

Otherintangible 58 67 76 178 assets

Deferred income 8,208 8,908 11,300 11,352 taxes, net

Other assets 35,415 29,131 42,770 46,511

Total assets $ 2,269,825 $ 2,244,467 $ 2,253,747 $ 2,043,635



LIABILITIES ANDSHAREHOLDERS' EQUITY

Liabilities

Deposits

Noninterestbearing $ 328,473 $ 280,947 $ 270,235 $ 214,789 deposits

Interestbearing 1,610,829 1,578,861 1,557,081 1,405,175 deposits

Total deposits 1,939,302 1,859,808 1,827,316 1,619,964



Advances fromthe Federal 75,000 125,000 175,000 175,000 Home Loan Bank

Subordinated 15,366 25,271 25,258 25,233 debentures

Accruedexpenses and 49,362 46,445 49,571 53,078 other liabilities

Total 2,079,030 2,056,524 2,077,145 1,873,275 liabilities



Shareholders' equity

Common stock, 120,451 120,398 121,338 120,381 no par value

Retained 80,543 75,418 70,839 69,712 earnings

Accumulatedother (10,199 ) (7,873 ) (15,575 ) (19,733 )comprehensive loss

Totalshareholders' 190,795 187,943 176,602 170,360 equity



Totalliabilities and $ 2,269,825 $ 2,244,467 $ 2,253,747 $ 2,043,635 shareholders' equity

BANKWELL FINANCIAL GROUP, INC.

CONSOLIDATED STATEMENTS OF INCOME (unaudited)

(Dollars in thousands, except share data)

For the Quarter Ended

For the Six Months Ended

June 30,2021

March 31,2021

December 31,2020

June 30,2020

June 30,2021

June 30,2020

Interest and dividend income

Interest and fees on loans

$

19,266

$

17,900

$

18,194

$

18,459

$

37,166

$

37,444

Interest and dividends on securities

736

769

835

778

1,505

1,603

Interest on cash and cash equivalents

90

108

117

86

198

372

Total interest and dividend income

20,092

18,777

19,146

19,323

38,869

39,419

Interest expense

Interest expense on deposits

2,744

3,114

3,557

4,810

5,858

10,519

Interest expense on borrowings

769

1,008

1,285

876

1,777

1,977

Total interest expense

3,513

4,122

4,842

5,686

7,635

12,496

Net interest income

16,579

14,655

14,304

13,637

31,234

26,923

(Credit) provision for loan losses

(20

)

(296

)

709

2,999

(316

)

6,184

Net interest income after (credit) provision for loan losses

16,599

14,951

13,595

10,638

31,550

20,739

Noninterest income

Gains and fees from sales of loans

814

513

16

-

1,327

-

Bank owned life insurance

251

231

241

241

482

484

Service charges and fees

217

199

210

171

416

388

Other

158

1,013

154

165

1,170

777

Total noninterest income

1,440

1,956

621

577

3,395

1,649

Noninterest expense

Salaries and employee benefits

3,960

4,769

5,453

5,227

8,729

10,607

Occupancy and equipment

3,250

2,406

4,516

2,235

5,656

4,144

Data processing

833

512

1,658

493

1,345

1,029

Professional services

547

587

591

434

1,134

1,145

Director fees

327

317

331

287

644

582

FDIC insurance

300

403

262

283

703

353

Marketing

140

(9

)

118

199

131

361

Other

695

653

774

564

1,348

1,160

Total noninterest expense

10,052

9,638

13,703

9,722

19,690

19,381

Income before income tax expense

7,987

7,269

513

1,493

15,255

3,007

Income tax expense

1,759

1,579

177

279

3,338

430

Net income

$

6,228

$

5,690

$

336

$

1,214

$

11,917

$

2,577

Earnings Per Common Share:

Basic

$

0.79

$

0.72

$

0.04

$

0.16

$

1.51

$

0.33

Diluted

$

0.79

$

0.71

$

0.04

$

0.16

$

1.50

$

0.33

Weighted Average Common Shares Outstanding:

Basic

7,722,481

7,758,540

7,726,926

7,715,094

7,744,368

7,732,615

Diluted

7,768,026

7,800,777

7,728,206

7,715,295

7,792,600

7,748,104

Dividends per common share

$

0.14

$

0.14

$

0.14

$

0.14

$

0.28

$

0.28

BANKWELL FINANCIAL GROUP, INC.

CONSOLIDATED STATEMENTS OF INCOME (unaudited)

(Dollars in thousands, except share data)

For the Quarter Ended For the Six Months Ended

June 30, March 31, December June 30, June 30, June 30, 2021 2021 31, 2020 2021 2020 2020

Interest anddividend income

Interest andfees on $ 19,266 $ 17,900 $ 18,194 $ 18,459 $ 37,166 $ 37,444 loans

Interest anddividends on 736 769 835 778 1,505 1,603 securities

Interest oncash and 90 108 117 86 198 372 cash equivalents

Totalinterest and 20,092 18,777 19,146 19,323 38,869 39,419 dividend income



Interest expense

Interestexpense on 2,744 3,114 3,557 4,810 5,858 10,519 deposits

Interestexpense on 769 1,008 1,285 876 1,777 1,977 borrowings

Totalinterest 3,513 4,122 4,842 5,686 7,635 12,496 expense



Net interest 16,579 14,655 14,304 13,637 31,234 26,923 income

(Credit)provision (20 ) (296 ) 709 2,999 (316 ) 6,184 for loan losses

Net interestincome after(credit) 16,599 14,951 13,595 10,638 31,550 20,739 provision for loanlosses



Noninterest income

Gains andfees from 814 513 16 - 1,327 - sales of loans

Bank ownedlife 251 231 241 241 482 484 insurance

Servicecharges and 217 199 210 171 416 388 fees

Other 158 1,013 154 165 1,170 777

Totalnoninterest 1,440 1,956 621 577 3,395 1,649 income



Noninterest expense

Salaries andemployee 3,960 4,769 5,453 5,227 8,729 10,607 benefits

Occupancyand 3,250 2,406 4,516 2,235 5,656 4,144 equipment

Data 833 512 1,658 493 1,345 1,029 processing

Professional 547 587 591 434 1,134 1,145 services

Director 327 317 331 287 644 582 fees

FDIC 300 403 262 283 703 353 insurance

Marketing 140 (9 ) 118 199 131 361

Other 695 653 774 564 1,348 1,160

Totalnoninterest 10,052 9,638 13,703 9,722 19,690 19,381 expense



Incomebefore 7,987 7,269 513 1,493 15,255 3,007 income tax expense

Income tax 1,759 1,579 177 279 3,338 430 expense

Net income $ 6,228 $ 5,690 $ 336 $ 1,214 $ 11,917 $ 2,577



Earnings PerCommon Share:

Basic $ 0.79 $ 0.72 $ 0.04 $ 0.16 $ 1.51 $ 0.33

Diluted $ 0.79 $ 0.71 $ 0.04 $ 0.16 $ 1.50 $ 0.33



WeightedAverageCommon SharesOutstanding:

Basic 7,722,481 7,758,540 7,726,926 7,715,094 7,744,368 7,732,615

Diluted 7,768,026 7,800,777 7,728,206 7,715,295 7,792,600 7,748,104

Dividendsper common $ 0.14 $ 0.14 $ 0.14 $ 0.14 $ 0.28 $ 0.28 share

BANKWELL FINANCIAL GROUP, INC.

CONSOLIDATED FINANCIAL HIGHLIGHTS (unaudited)

For the Quarter Ended

For the Six Months Ended

June 30, 2021

March 31, 2021

December 31, 2020

June 30,2020

June 30, 2021

June 30,2020

Performance ratios:

Return on average assets(1)

1.11

%

1.02

%

0.06

%

0.23

%

1.07

%

0.26

%

Return on average stockholders' equity(1)

13.06

%

12.67

%

0.75

%

2.82

%

12.87

%

2.92

%

Return on average tangible common equity(1)

13.25

%

12.86

%

0.76

%

2.86

%

13.06

%

2.97

%

Net interest margin

3.12

%

2.74

%

2.66

%

2.81

%

2.93

%

2.89

%

Efficiency ratio(2)

55.7

%

58.0

%

91.2

%

68.2

%

56.8

%

67.7

%

Net loan charge-offs as a % of average loans

0.23

%

0.01

%

-

%

-

%

0.24

%

-

%

Dividend payout ratio(3)

17.72

%

19.72

%

350.00

%

87.50

%

18.67

%

84.85

%

BANKWELL FINANCIAL GROUP, INC.

CONSOLIDATED FINANCIAL HIGHLIGHTS (unaudited)

For the Quarter Ended For the Six Months Ended

June March December June June June 30, 31, 31, 30, 30, 30, 2021 2021 2020 2020 2021 2020

Performance ratios:

Return on average 1.11 % 1.02 % 0.06 % 0.23 % 1.07 % 0.26 %assets^(1)

Return on averagestockholders' 13.06 % 12.67 % 0.75 % 2.82 % 12.87 % 2.92 %equity^(1)

Return on averagetangible common 13.25 % 12.86 % 0.76 % 2.86 % 13.06 % 2.97 %equity^(1)

Net interest 3.12 % 2.74 % 2.66 % 2.81 % 2.93 % 2.89 %margin

Efficiency ratio^ 55.7 % 58.0 % 91.2 % 68.2 % 56.8 % 67.7 %(2)

Net loancharge-offs as a % 0.23 % 0.01 % - % - % 0.24 % - %of average loans

Dividend payout 17.72 % 19.72 % 350.00 % 87.50 % 18.67 % 84.85 %ratio^(3)

(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

June 30,2021

March 31,2021

December 31,2020

June 30,2020

Capital ratios:

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

10.95

%

11.02

%

11.06

%

12.44

%

Total Capital to Risk-Weighted Assets(1)

11.84

%

12.17

%

12.28

%

13.63

%

Tier I Capital to Risk-Weighted Assets(1)

10.95

%

11.02

%

11.06

%

12.44

%

Tier I Capital to Average Assets(1)

9.19

%

8.82

%

8.44

%

9.93

%

Tangible common equity to tangible assets

8.30

%

8.27

%

7.73

%

8.21

%

Tangible book value per common share(2)

$

24.40

$

23.99

$

22.43

$

21.70

As of

June 30, March 31, December June 30, 2021 2021 31, 2020 2020

Capital ratios:

Total Common Equity Tier 1Capital to Risk-Weighted Assets 10.95 % 11.02 % 11.06 % 12.44 %^(1)

Total Capital to Risk-Weighted 11.84 % 12.17 % 12.28 % 13.63 %Assets^(1)

Tier I Capital to Risk-Weighted 10.95 % 11.02 % 11.06 % 12.44 %Assets^(1)

Tier I Capital to Average 9.19 % 8.82 % 8.44 % 9.93 %Assets^(1)

Tangible common equity to 8.30 % 8.27 % 7.73 % 8.21 %tangible assets

Tangible book value per common $ 24.40 $ 23.99 $ 22.43 $ 21.70 share^(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 184,548, 186,485, 163,369, and 165,708 as of June 30, 2021, March 31, 2021, December 31, 2020, and June 30, 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 184,548, 186,485, 163,369, and165,708 as of June 30, 2021, March 31, 2021, December 31, 2020, and June 30,2020, respectively.

BANKWELL FINANCIAL GROUP, INC.

ASSET QUALITY (unaudited)

(Dollars in thousands)

For the Quarter Ended

June 30, 2021

March 31, 2021

December 31, 2020

June 30, 2020

Allowance for loan losses:

Balance at beginning of period

$

20,545

$

21,009

$

20,372

$

16,686

Charge-offs:

Commercial real estate

(3,814

)

(163

)

-

-

Commercial business

(51

)

-

(75

)

-

Consumer

(4

)

(14

)

(11

)

(23

)

Total charge-offs

(3,869

)

(177

)

(86

)

(23

)

Recoveries:

Commercial business

16

-

14

-

Consumer

-

9

-

-

Total recoveries

16

9

14

-

Net loan charge-offs

(3,853

)

(168

)

(72

)

(23

)

(Credit) provision for loan losses

(20

)

(296

)

709

2,999

Balance at end of period

$

16,672

$

20,545

$

21,009

$

19,662

Net loan charge-offs totaled $3.9 million for the quarter ended June 30, 2021 and primarily consisted of previously reserved commercial real estate exposure.

BANKWELL FINANCIAL GROUP, INC.

ASSET QUALITY (unaudited)

(Dollars in thousands)

For the Quarter Ended

June 30, March 31, December June 30, 2021 2021 31, 2020 2020

Allowance for loan losses:

Balance at beginning of $ 20,545 $ 21,009 $ 20,372 $ 16,686 period

Charge-offs:

Commercial real estate (3,814 ) (163 ) - -

Commercial business (51 ) - (75 ) -

Consumer (4 ) (14 ) (11 ) (23 )

Total charge-offs (3,869 ) (177 ) (86 ) (23 )

Recoveries:

Commercial business 16 - 14 -

Consumer - 9 - -

Total recoveries 16 9 14 -

Net loan charge-offs (3,853 ) (168 ) (72 ) (23 )

(Credit) provision for loan (20 ) (296 ) 709 2,999 losses

Balance at end of period $ 16,672 $ 20,545 $ 21,009 $ 19,662

Net loan charge-offs totaled $3.9 million for the quarter ended June 30, 2021 and primarily consisted of previously reserved commercial real estate exposure.

As of

June 30, March 31, December June 30, 2021 2021 31, 2020 2020

Asset quality:

Nonaccrual loans

Residential real estate $ 1,160 $ 1,289 $ 1,492 $ 1,622

Commercial real estate 15,392 19,277 21,093 5,172

Commercial business 1,780 1,803 1,834 3,783

Construction 8,997 8,997 8,997 -

Total nonaccrual loans 27,329 31,366 33,416 10,577

Other real estate owned - - - 180

Total nonperforming assets $ 27,329 $ 31,366 $ 33,416 $ 10,757



Nonperforming loans as a % 1.57 % 1.87 % 2.06 % 0.66 %of total loans

Nonperforming assets as a % 1.20 % 1.40 % 1.48 % 0.53 %of total assets

Allowance for loan losses 0.96 % 1.23 % 1.29 % 1.22 %as a % of total loans

Allowance for loan lossesas a % of nonperforming 61.00 % 65.50 % 62.87 % 185.89 %loans

Total nonaccrual loans declined $6.1 million to $27.3 million as of June 30, 2021 when compared to December 31, 2020 partially a result of the charge-offs described above. The Bank continues work-out activity on its nonaccrual loan population. Nonperforming assets as a percentage of total assets was 1.20% at June 30, 2021, down from 1.48% at December 31, 2020. The allowance for loan losses at June 30, 2021 was $16.7 million, representing 0.96% of total loans.

BANKWELL FINANCIAL GROUP, INC.

LOAN & DEPOSIT PORTFOLIO (unaudited)

(Dollars in thousands)

Period End Current YTDLoan June 30, March 31, December 31, QTD %Composition 2021 2021 2020 % Change Change

Residential $ 100,260 $ 109,752 $ 113,557 (8.6 ) (11.7 )Real Estate % %

CommercialReal Estate^ 1,266,731 1,183,848 1,148,383 7.0 10.3 (1)

Construction 82,805 103,099 87,007 (19.7 ) (4.8 )

Total Real 1,449,796 1,396,699 1,348,947 3.8 7.5 Estate Loans



Commercial 279,814 267,698 276,601 4.5 1.2 Business^(2)



Consumer 8,883 8,818 79 0.7 N/M^(3)

Total Loans $ 1,738,493 $ 1,673,215 $ 1,625,627 3.9 % 6.9 %

(1) Includes owner occupied commercial real estate.

(2) Includes $7.9 million, $19.2 million, and $34.8 million of PPP loans at June 30, 2021, March 31, 2021 and December 31, 2020, respectively.

(3) Metric not meaningful.

Gross loans totaled $1.7 billion at June 30, 2021, an increase of $112.9 million compared to December 31, 2020. Excluding PPP loans, gross loans increased by $139.8 million, or 8.8%, at June 30, 2021 when compared to December 31, 2020.

(1) Includes owner occupied commercial real estate.

(2) Includes $7.9 million, $19.2 million, and $34.8 million of PPP loans atJune 30, 2021, March 31, 2021 and December 31, 2020, respectively.

(3) Metric not meaningful.

Gross loans totaled $1.7 billion at June 30, 2021, an increase of $112.9 million compared to December 31, 2020. Excluding PPP loans, gross loans increased by $139.8 million, or 8.8%, at June 30, 2021 when compared to December 31, 2020.

Period End Current YTDDeposit June 30, March 31, December 31, QTD %Composition 2021 2021 2020 % Change Change

Noninterestbearing $ 328,473 $ 280,947 $ 270,235 16.9 % 21.6 %demand

NOW 136,558 118,489 101,737 15.2 34.2

Money 814,083 751,852 669,364 8.3 21.6 Market

Savings 173,943 164,559 158,750 5.7 9.6

Time 486,245 543,961 627,230 (10.6 ) (22.5 )

Total $ 1,939,302 $ 1,859,808 $ 1,827,316 4.3 % 6.1 %Deposits

Total deposits were $1.9 billion at June 30, 2021, compared to $1.8 billion at December 31, 2020, an increase of $112.0 million, or 6.1%.

BANKWELL FINANCIAL GROUP, INC.

NONINTEREST INCOME (unaudited)

(Dollars in thousands)

For the Quarter Ended

Noninterest June 30, March 31, June June 21 vs. June 21 vs.income 2021 2021 30, March 21 June 20 2020 % Change % Change

Gains and feesfrom sales of $ 814 $ 513 $ - 58.7 % N/Aloans

Bank owned life 251 231 241 8.7 4.1 insurance

Service charges 217 199 171 9.0 26.9 and fees

Other 158 1,013 165 (84.4 ) (4.2 )

Totalnoninterest $ 1,440 $ 1,956 $ 577 (26.4 )% 149.6 %income

For the Six Months Ended

Noninterest income

June 30, 2021

June 30, 2020

% Change

Gains and fees from sales of loans

$

1,327

$

-

N/A

Bank owned life insurance

482

484

(0.4

)

Service charges and fees

416

388

7.2

Other

1,170

777

50.6

Total noninterest income

$

3,395

$

1,649

105.9

%

Noninterest income increased by $0.9 million to $1.4 million for the quarter ended June 30, 2021 compared to the quarter ended June 30, 2020. Noninterest income increased by $1.7 million to $3.4 million for the six months ended June 30, 2021 compared to the six months ended June 30, 2020.

The increase in noninterest income was driven by resumed SBA loan sales, totaling $0.8 million and $1.3 million for the quarter and six months ended June 30, 2021, respectively. In addition, the increase in noninterest income for the six months ended June 30, 2021 was impacted by a one-time federal payroll tax credit for COVID-19 of $0.9 million.

For the Six Months Ended

Noninterest income June 30, June 30, % Change 2021 2020

Gains and fees from sales of loans $ 1,327 $ - N/A

Bank owned life insurance 482 484 (0.4 )

Service charges and fees 416 388 7.2

Other 1,170 777 50.6

Total noninterest income $ 3,395 $ 1,649 105.9 %

Noninterest income increased by $0.9 million to $1.4 million for the quarter ended June 30, 2021 compared to the quarter ended June 30, 2020. Noninterest income increased by $1.7 million to $3.4 million for the six months ended June 30, 2021 compared to the six months ended June 30, 2020.

The increase in noninterest income was driven by resumed SBA loan sales, totaling $0.8 million and $1.3 million for the quarter and six months ended June 30, 2021, respectively. In addition, the increase in noninterest income for the six months ended June 30, 2021 was impacted by a one-time federal payroll tax credit for COVID-19 of $0.9 million.

BANKWELL FINANCIAL GROUP, INC.

NONINTEREST EXPENSE (unaudited)

(Dollars in thousands)

For the Quarter Ended

Noninterest June 30, March 31, June 30, June 21 vs. June 21 vs.expense 2021 2021 2020 March 21 June 20 % Change % Change

Salaries andemployee $ 3,960 $ 4,769 $ 5,227 (17.0 )% (24.2 )%benefits

Occupancyand 3,250 2,406 2,235 35.1 45.4 equipment

Data 833 512 493 62.7 69.0 processing

Professional 547 587 434 (6.8 ) 26.0 services

Director 327 317 287 3.2 13.9 fees

FDIC 300 403 283 (25.6 ) 6.0 insurance

Marketing 140 (9 ) 199 N/M^(1) (29.6 )

Other 695 653 564 6.4 23.2

Totalnoninterest $ 10,052 $ 9,638 $ 9,722 4.3 % 3.4 %expense

(1) Metric not meaningful.

For the Six Months Ended

Noninterest expense

June 30, 2021

June 30, 2020

% Change

Salaries and employee benefits

$

8,729

$

10,607

(17.7

)%

Occupancy and equipment

5,656

4,144

36.5

Data processing

1,345

1,029

30.7

Professional services

1,134

1,145

(1.0

)

FDIC insurance

703

353

99.2

Director fees

644

582

10.7

Marketing

131

361

(63.7

)

Other

1,348

1,160

16.2

Total noninterest expense

$

19,690

$

19,381

1.6

%

Noninterest expense increased by $0.3 million to $10.1 million for the quarter ended June 30, 2021 compared to the quarter ended June 30, 2020. The increase in noninterest expense was primarily driven by an increase in occupancy and equipment expense and data processing expense, partially offset by a decrease in salaries and employee benefits expense.

Noninterest expense increased by $0.3 million to $19.7 million for the six months ended June 30, 2021 compared to the six months ended June 30, 2020. The increase in noninterest expense was primarily driven by an increase in occupancy and equipment expense, FDIC insurance expense, and data processing expense, partially offset by a decrease in salaries and employee benefits expense.

For the quarter ended June 30, 2021 noninterest expense included $0.8 million of non-recurring items relating to office consolidation expenses ($0.4 million), COVID-19 cleaning protocols ($0.3 million) and the implementation of new online banking software ($0.1 million). See below for more information on what specific areas of non-interest expense were impacted by these non-recurring items.

Occupancy and equipment expense totaled $3.3 million for the quarter ended June 30, 2021, an increase of $1.0 million when compared to the same period in 2020. Occupancy and equipment expense totaled $5.7 million for the six months ended June 30, 2021, an increase of $1.5 million when compared to the same period in 2020. The increase in occupancy and equipment expense was primarily due to additional one-time charges of $0.4 million associated with office consolidation activity (previously disclosed in the fourth quarter of 2020) and an increase in lease expense resulting from the commencement of the lease on the Company's new headquarters building. In addition, the increase in occupancy and equipment expense for the six months ended June 30, 2021 was due to additional cleaning costs associated with precautions taken to prevent the spread of COVID-19. The additional cleaning protocols have been curtailed as of June 30, 2021.

Data processing expense totaled $0.8 million for the quarter ended June 30, 2021, an increase of $0.3 million when compared to the same period in 2020. Data processing expense totaled $1.3 million for the six months ended June 30, 2021, an increase of $0.3 million when compared to the same period in 2020. The increase in data processing expense was primarily due to $0.4 million in costs associated with the conversion to a new online banking system implemented in the second quarter of 2021.

FDIC insurance expense totaled $0.7 million for the six months ended June 30, 2021, an increase of $0.4 million when compared to the same period in 2020. The increase in FDIC insurance expense was due to the absence of available FDIC insurance credits recognized in the first quarter of 2020 and elevated expense due to liquidity driven balance sheet growth in 2021.

Salaries and employee benefits expense totaled $4.0 million for the quarter ended June 30, 2021, a decrease of $1.3 million when compared to the same period in 2020. Salaries and employee benefits expense totaled $8.7 million for the six months ended June 30, 2021, a decrease of $1.9 million when compared to the same period in 2020. The decrease in salaries and employee benefits expense 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 125 at June 30, 2021 compared to 152 for the same period in 2020. Average full time equivalent employees totaled 124 for the six months ended June 30, 2021 compared to 154 for the same period in 2020. Salaries and employee benefits expense was also favorably impacted as higher loan originations enabled the bank to defer a greater amount of expenses. Finally, salaries and employee benefits expense also benefited by a one-time deferral of $0.3 million in costs associated with a new online banking system implemented in the second quarter of 2021, partially offsetting the increase in data processing expenses relating to the same project described above.

For the Six Months Ended

Noninterest expense June 30, 2021 June 30, 2020 % Change

Salaries and employee benefits $ 8,729 $ 10,607 (17.7 )%

Occupancy and equipment 5,656 4,144 36.5

Data processing 1,345 1,029 30.7

Professional services 1,134 1,145 (1.0 )

FDIC insurance 703 353 99.2

Director fees 644 582 10.7

Marketing 131 361 (63.7 )

Other 1,348 1,160 16.2

Total noninterest expense $ 19,690 $ 19,381 1.6 %

Noninterest expense increased by $0.3 million to $10.1 million for the quarter ended June 30, 2021 compared to the quarter ended June 30, 2020. The increase in noninterest expense was primarily driven by an increase in occupancy and equipment expense and data processing expense, partially offset by a decrease in salaries and employee benefits expense.

Noninterest expense increased by $0.3 million to $19.7 million for the six months ended June 30, 2021 compared to the six months ended June 30, 2020. The increase in noninterest expense was primarily driven by an increase in occupancy and equipment expense, FDIC insurance expense, and data processing expense, partially offset by a decrease in salaries and employee benefits expense.

For the quarter ended June 30, 2021 noninterest expense included $0.8 million of non-recurring items relating to office consolidation expenses ($0.4 million), COVID-19 cleaning protocols ($0.3 million) and the implementation of new online banking software ($0.1 million). See below for more information on what specific areas of non-interest expense were impacted by these non-recurring items.

Occupancy and equipment expense totaled $3.3 million for the quarter ended June 30, 2021, an increase of $1.0 million when compared to the same period in 2020. Occupancy and equipment expense totaled $5.7 million for the six months ended June 30, 2021, an increase of $1.5 million when compared to the same period in 2020. The increase in occupancy and equipment expense was primarily due to additional one-time charges of $0.4 million associated with office consolidation activity (previously disclosed in the fourth quarter of 2020) and an increase in lease expense resulting from the commencement of the lease on the Company's new headquarters building. In addition, the increase in occupancy and equipment expense for the six months ended June 30, 2021 was due to additional cleaning costs associated with precautions taken to prevent the spread of COVID-19. The additional cleaning protocols have been curtailed as of June 30, 2021.

Data processing expense totaled $0.8 million for the quarter ended June 30, 2021, an increase of $0.3 million when compared to the same period in 2020. Data processing expense totaled $1.3 million for the six months ended June 30, 2021, an increase of $0.3 million when compared to the same period in 2020. The increase in data processing expense was primarily due to $0.4 million in costs associated with the conversion to a new online banking system implemented in the second quarter of 2021.

FDIC insurance expense totaled $0.7 million for the six months ended June 30, 2021, an increase of $0.4 million when compared to the same period in 2020. The increase in FDIC insurance expense was due to the absence of available FDIC insurance credits recognized in the first quarter of 2020 and elevated expense due to liquidity driven balance sheet growth in 2021.

Salaries and employee benefits expense totaled $4.0 million for the quarter ended June 30, 2021, a decrease of $1.3 million when compared to the same period in 2020. Salaries and employee benefits expense totaled $8.7 million for the six months ended June 30, 2021, a decrease of $1.9 million when compared to the same period in 2020. The decrease in salaries and employee benefits expense 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 125 at June 30, 2021 compared to 152 for the same period in 2020. Average full time equivalent employees totaled 124 for the six months ended June 30, 2021 compared to 154 for the same period in 2020. Salaries and employee benefits expense was also favorably impacted as higher loan originations enabled the bank to defer a greater amount of expenses. Finally, salaries and employee benefits expense also benefited by a one-time deferral of $0.3 million in costs associated with a new online banking system implemented in the second quarter of 2021, partially offsetting the increase in data processing expenses relating to the same project described above.

BANKWELL FINANCIAL GROUP, INC.

RECONCILIATION OF GAAP TO NON-GAAP MEASURES (unaudited)

(Dollars in thousands, except share data)

As of

Computation ofTangible Common June 30, March 31, December 31, June 30,Equity to 2021 2021 2020 2020Tangible Assets

Total Equity $ 190,795 $ 187,943 $ 176,602 $ 170,360

Less:

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

Other intangibles 58 67 76 178

Tangible Common $ 188,148 $ 185,287 $ 173,937 $ 167,593 Equity



Total Assets $ 2,269,825 $ 2,244,467 $ 2,253,747 $ 2,043,635

Less:

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

Other intangibles 58 67 76 178

Tangible Assets $ 2,267,178 $ 2,241,811 $ 2,251,082 $ 2,040,868



Tangible CommonEquity to 8.30 % 8.27 % 7.73 % 8.21 %Tangible Assets

As of

Computation of Tangible Book Value per Common Share

June 30, 2021

March 31, 2021

December 31, 2020

June 30, 2020

Total shareholders' equity

$

190,795

$

187,943

$

176,602

$

170,360

Less:

Preferred stock

-

-

-

-

Common shareholders' equity

$

190,795

$

187,943

$

176,602

$

170,360

Less:

Goodwill

2,589

2,589

2,589

2,589

Other intangibles

58

67

76

178

Tangible common shareholders' equity

$

188,148

$

185,287

$

173,937

$

167,593

Common shares

7,895,101

7,908,630

7,919,278

7,887,503

Less:

Shares of unvested restricted stock

184,548

186,485

163,369

165,708

Common shares less unvested restricted stock

7,710,553

7,722,145

7,755,909

7,721,795

Book value per share

$

24.74

$

24.34

$

22.77

$

22.06

Less:

Effects of intangible assets

$

0.34

$

0.34

$

0.34

$

0.36

Tangible Book Value per Common Share

$

24.40

$

23.99

$

22.43

$

21.70

As of

Computation of Tangible June 30, March 31, December June 30,Book Value per Common 2021 2021 31, 2020Share 2020

Total shareholders' $ 190,795 $ 187,943 $ 176,602 $ 170,360 equity

Less:

Preferred stock - - - -

Common shareholders' $ 190,795 $ 187,943 $ 176,602 $ 170,360 equity

Less:

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

Other intangibles 58 67 76 178

Tangible common $ 188,148 $ 185,287 $ 173,937 $ 167,593 shareholders' equity

Common shares 7,895,101 7,908,630 7,919,278 7,887,503

Less:

Shares of unvested 184,548 186,485 163,369 165,708 restricted stock

Common shares lessunvested restricted 7,710,553 7,722,145 7,755,909 7,721,795 stock

Book value per share $ 24.74 $ 24.34 $ 22.77 $ 22.06

Less:

Effects of intangible $ 0.34 $ 0.34 $ 0.34 $ 0.36 assets



Tangible Book Value per $ 24.40 $ 23.99 $ 22.43 $ 21.70 Common Share

BANKWELL FINANCIAL GROUP, INC.

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

(Dollars in thousands)

For the Quarter Ended

For the Six Months Ended

Computation of Efficiency Ratio

June 30, 2021

March 31, 2021

December 31, 2020

June 30, 2020

June 30, 2021

June 30, 2020

Noninterest expense

$

10,052

$

9,638

$

13,703

$

9,722

$

19,690

$

19,381

Less:

Amortization of intangible assets

9

9

84

18

19

36

Other real estate owned expenses

-

-

-

6

-

6

Adjusted noninterest expense

$

10,043

$

9,629

$

13,619

$

9,698

$

19,671

$

19,339

Net interest income

$

16,579

$

14,655

$

14,304

$

13,637

$

31,234

$

26,923

Noninterest income

1,440

1,956

621

577

3,395

1,649

Less:

Net gain on sale of available for sale securities

-

-

-

-

-

-

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

-

-

-

-

-

-

Operating revenue

$

18,019

$

16,611

$

14,925

$

14,214

$

34,629

$

28,572

Efficiency ratio

55.7

%

58.0

%

91.2

%

68.2

%

56.8

%

67.7

%

BANKWELL FINANCIAL GROUP, INC.

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

(Dollars in thousands)

For the Quarter Ended For the Six Months Ended

Computation Decemberof June 30, March 31, 31, June 30, June 30, June 30,Efficiency 2021 2021 2020 2020 2021 2020Ratio

Noninterest $ 10,052 $ 9,638 $ 13,703 $ 9,722 $ 19,690 $ 19,381 expense

Less:

Amortizationof 9 9 84 18 19 36 intangible assets

Other realestate owned - - - 6 - 6 expenses

Adjustednoninterest $ 10,043 $ 9,629 $ 13,619 $ 9,698 $ 19,671 $ 19,339 expense

Net interest $ 16,579 $ 14,655 $ 14,304 $ 13,637 $ 31,234 $ 26,923 income

Noninterest 1,440 1,956 621 577 3,395 1,649 income

Less:

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

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

Operating $ 18,019 $ 16,611 $ 14,925 $ 14,214 $ 34,629 $ 28,572 revenue



Efficiency 55.7 % 58.0 % 91.2 % 68.2 % 56.8 % 67.7 %ratio

For the Quarter Ended

For the Six Months Ended

Computation of Return on Average Tangible Common Equity

June 30, 2021

March 31, 2021

December 31, 2020

June 30, 2020

June 30, 2021

June 30, 2020

Net Income Attributable to Common Shareholders

$

6,228

$

5,690

$

336

$

1,214

$

11,917

$

2,577

Total average shareholders' equity

$

191,224

$

182,058

$

178,439

$

173,289

$

186,664

$

177,204

Less:

Average Goodwill

2,589

2,589

2,589

2,589

2,589

2,589

Average Other intangibles

64

73

153

190

68

199

Average tangible common equity

$

188,571

$

179,396

$

175,697

$

170,510

$

184,007

$

174,416

Annualized Return on Average Tangible Common Equity

13.25

%

12.86

%

0.76

%

2.86

%

13.06

%

2.97

%

For the Quarter Ended For the Six Months Ended

Computationof Return on June 30, March 31, December June 30, June 30, June 30,Average 2021 2021 31, 2020 2021 2020Tangible 2020Common Equity

Net IncomeAttributable $ 6,228 $ 5,690 $ 336 $ 1,214 $ 11,917 $ 2,577 to Common Shareholders

Total averageshareholders' $ 191,224 $ 182,058 $ 178,439 $ 173,289 $ 186,664 $ 177,204 equity

Less:

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

Average Other 64 73 153 190 68 199 intangibles

Averagetangible $ 188,571 $ 179,396 $ 175,697 $ 170,510 $ 184,007 $ 174,416 common equity



AnnualizedReturn onAverage 13.25 % 12.86 % 0.76 % 2.86 % 13.06 % 2.97 %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

June 30, 2021

June 30, 2020

Average Balance

Interest

Yield/ Rate (5)

Average Balance

Interest

Yield/ Rate (5)

Assets:

Cash and Fed funds sold

$

336,073

$

90

0.11

%

$

234,979

$

86

0.15

%

Securities(1)

103,297

761

2.95

95,421

738

3.09

Loans:

Commercial real estate

1,163,134

13,678

4.65

1,088,390

12,808

4.66

Residential real estate

105,975

958

3.62

134,295

1,251

3.73

Construction(2)

110,780

1,036

3.70

100,282

1,101

4.34

Commercial business

296,613

3,506

4.68

288,605

3,297

4.52

Consumer

8,851

88

3.98

111

2

8.71

Total loans

1,685,353

19,266

4.52

1,611,683

18,459

4.53

Federal Home Loan Bank stock

4,219

25

2.34

7,472

92

4.93

Total earning assets

2,128,942

$

20,142

3.74

%

1,949,555

$

19,375

3.93

%

Other assets

117,334

129,247

Total assets

$

2,246,276

$

2,078,802

Liabilities and shareholders' equity:

Interest bearing liabilities:

NOW

$

118,806

$

54

0.18

%

$

74,050

$

31

0.17

%

Money market

782,079

941

0.48

464,230

862

0.75

Savings

168,870

92

0.22

162,283

295

0.73

Time

538,915

1,657

1.23

765,103

3,622

1.90

Total interest bearing deposits

1,608,670

2,744

0.68

1,465,666

4,810

1.32

Borrowed Money

101,586

769

3.00

188,557

876

1.84

Total interest bearing liabilities

1,710,256

$

3,513

0.82

%

1,654,223

$

5,686

1.38

%

Noninterest bearing deposits

298,467

198,253

Other liabilities

46,329

53,037

Total liabilities

2,055,052

1,905,513

Shareholders' equity

191,224

173,289

Total liabilities and shareholders' equity

$

2,246,276

$

2,078,802

Net interest income(3)

$

16,629

$

13,689

Interest rate spread

2.92

%

2.55

%

Net interest margin(4)

3.12

%

2.81

%

BANKWELL FINANCIAL GROUP, INC.

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

(Dollars in thousands)

For the Quarter Ended

June 30, 2021 June 30, 2020

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

Assets:

Cash and Fed $ 336,073 $ 90 0.11 % $ 234,979 $ 86 0.15 %funds sold

Securities^ 103,297 761 2.95 95,421 738 3.09 (1)

Loans:

Commercial 1,163,134 13,678 4.65 1,088,390 12,808 4.66 real estate

Residential 105,975 958 3.62 134,295 1,251 3.73 real estate

Construction^ 110,780 1,036 3.70 100,282 1,101 4.34 (2)

Commercial 296,613 3,506 4.68 288,605 3,297 4.52 business

Consumer 8,851 88 3.98 111 2 8.71

Total loans 1,685,353 19,266 4.52 1,611,683 18,459 4.53

Federal HomeLoan Bank 4,219 25 2.34 7,472 92 4.93 stock

Total earning 2,128,942 $ 20,142 3.74 % 1,949,555 $ 19,375 3.93 %assets

Other assets 117,334 129,247

Total assets $ 2,246,276 $ 2,078,802



Liabilitiesand shareholders' equity:

Interestbearing liabilities:

NOW $ 118,806 $ 54 0.18 % $ 74,050 $ 31 0.17 %

Money market 782,079 941 0.48 464,230 862 0.75

Savings 168,870 92 0.22 162,283 295 0.73

Time 538,915 1,657 1.23 765,103 3,622 1.90

Totalinterest 1,608,670 2,744 0.68 1,465,666 4,810 1.32 bearing deposits

Borrowed 101,586 769 3.00 188,557 876 1.84 Money

Totalinterest 1,710,256 $ 3,513 0.82 % 1,654,223 $ 5,686 1.38 %bearing liabilities

Noninterestbearing 298,467 198,253 deposits

Other 46,329 53,037 liabilities

Total 2,055,052 1,905,513 liabilities

Shareholders' 191,224 173,289 equity

Totalliabilitiesand $ 2,246,276 $ 2,078,802 shareholders'equity

Net interest $ 16,629 $ 13,689 income^(3)

Interest rate 2.92 % 2.55 %spread

Net interest 3.12 % 2.81 %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 $52 thousand for the quarters ended June 30, 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.

(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 $50thousand and $52 thousand for the quarters ended June 30, 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 eachrespective product type.

BANKWELL FINANCIAL GROUP, INC.

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

(Dollars in thousands)

For the Six Months Ended

June 30, 2021

June 30, 2020

Average Balance

Interest

Yield/ Rate (5)

Average Balance

Interest

Yield/ Rate (5)

Assets:

Cash and Fed funds sold

$

368,779

$

198

0.11

%

$

154,321

$

372

0.48

%

Securities(1)

102,252

1,549

3.03

96,932

1,513

3.12

Loans:

Commercial real estate

1,146,258

26,354

4.57

1,098,550

25,839

4.65

Residential real estate

109,003

1,996

3.66

139,059

2,607

3.75

Construction(2)

102,459

1,916

3.72

100,338

2,316

4.57

Commercial business

295,682

6,763

4.55

273,767

6,676

4.82

Consumer

6,956

137

3.96

133

6

8.51

Total loans

1,660,358

37,166

4.45

1,611,847

37,444

4.60

Federal Home Loan Bank stock

5,356

56

2.11

7,401

195

5.30

Total earning assets

2,136,745

$

38,969

3.64

%

1,870,501

$

39,524

4.18

%

Other assets

115,718

122,060

Total assets

$

2,252,463

$

1,992,561

Liabilities and shareholders' equity:

Interest bearing liabilities:

NOW

$

109,990

$

97

0.18

%

$

70,990

$

59

0.17

%

Money market

759,435

1,891

0.50

451,388

2,354

1.05

Savings

164,630

217

0.27

173,875

967

1.12

Time

574,876

3,653

1.28

702,853

7,139

2.04

Total interest bearing deposits

1,608,931

5,858

0.73

1,399,106

10,519

1.51

Borrowed Money

126,886

1,777

2.79

180,575

1,977

2.17

Total interest bearing liabilities

1,735,817

$

7,635

0.89

%

1,579,681

$

12,496

1.59

%

Noninterest bearing deposits

284,226

188,722

Other liabilities

45,756

46,954

Total liabilities

2,065,799

1,815,357

Shareholders' equity

186,664

177,204

Total liabilities and shareholders' equity

$

2,252,463

$

1,992,561

Net interest income(3)

$

31,334

$

27,028

Interest rate spread

2.75

%

2.59

%

Net interest margin(4)

2.93

%

2.89

%

BANKWELL FINANCIAL GROUP, INC.

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

(Dollars in thousands)

For the Six Months Ended

June 30, 2021 June 30, 2020

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

Assets:

Cash and Fed $ 368,779 $ 198 0.11 % $ 154,321 $ 372 0.48 %funds sold

Securities^ 102,252 1,549 3.03 96,932 1,513 3.12 (1)

Loans:

Commercial 1,146,258 26,354 4.57 1,098,550 25,839 4.65 real estate

Residential 109,003 1,996 3.66 139,059 2,607 3.75 real estate

Construction^ 102,459 1,916 3.72 100,338 2,316 4.57 (2)

Commercial 295,682 6,763 4.55 273,767 6,676 4.82 business

Consumer 6,956 137 3.96 133 6 8.51

Total loans 1,660,358 37,166 4.45 1,611,847 37,444 4.60

Federal HomeLoan Bank 5,356 56 2.11 7,401 195 5.30 stock

Total earning 2,136,745 $ 38,969 3.64 % 1,870,501 $ 39,524 4.18 %assets

Other assets 115,718 122,060

Total assets $ 2,252,463 $ 1,992,561



Liabilitiesand shareholders' equity:

Interestbearing liabilities:

NOW $ 109,990 $ 97 0.18 % $ 70,990 $ 59 0.17 %

Money market 759,435 1,891 0.50 451,388 2,354 1.05

Savings 164,630 217 0.27 173,875 967 1.12

Time 574,876 3,653 1.28 702,853 7,139 2.04

Totalinterest 1,608,931 5,858 0.73 1,399,106 10,519 1.51 bearing deposits

Borrowed 126,886 1,777 2.79 180,575 1,977 2.17 Money

Totalinterest 1,735,817 $ 7,635 0.89 % 1,579,681 $ 12,496 1.59 %bearing liabilities

Noninterestbearing 284,226 188,722 deposits

Other 45,756 46,954 liabilities

Total 2,065,799 1,815,357 liabilities

Shareholders' 186,664 177,204 equity

Totalliabilitiesand $ 2,252,463 $ 1,992,561 shareholders'equity

Net interest $ 31,334 $ 27,028 income^(3)

Interest rate 2.75 % 2.59 %spread

Net interest 2.93 % 2.89 %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 $100 thousand and $105 thousand for the six months ended June 30, 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/20210728006034/en/

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