Bankwell Financial Group Inc
For the period ended Jun 30, 2024. Filed Aug 7, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2024 · Filed Aug 7, 2024
BWFG$70.12-0.2%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-03-31; filed 2024-05-08.
0001505732-24-000083
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-06-30; filed 2024-08-07.
0001505732-24-000153
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 110 previous paragraphs and 117 current paragraphs.
78 unchanged; 29 reworded; 6 added; 3 removed; 0 previous and 4 current paragraphs rearranged.
Tables are not compared: 17 previous and 20 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (6)
Current report
FTE net interest income for the three months ended June 30, 2024 and 2023 was $21.3 million and $24.1 million, respectively. FTE net interest income for the six months ended June 30, 2024 and 2023 was $42.5 million and $49.6 million, respectively.
Current report
(2)The adjustment for securities and loans taxable equival ency amounted to $118 thousand and $102 thousand for the six months ended June 30, 2024 and 2023, respectively.
Current report
•$6.6 million is related to a specific reserve taken against an $8.7 million commercial business credit. The credit had been previously reported as a non-performing loan as of the fourth quarter of 2023 and had previously carried a $0.4 million specific reserve. The Company's estimated remaining exposure for the commercial business credit is $1.7 million.
Current report
•$0.8 million specific reserve was related to a construction loan.
Current report
(1) Excludes the negative fair value effect of the portfolio layer swap of $779 thousand for Commercial Real Estate at June 30, 2024.
Current report
(1) Excludes the negative fair value effect of the portfolio layer swap of $779 thousand for Commercial Real Estate at June 30, 2024.
Removed paragraphs (3)
Previous report
FTE net interest income for the three months ended March 31, 2024 and 2023 was $21.2 million and $25.6 million, respectively.
Previous report
(1) Excludes thenegative fair value effect of the portfolio layer swap of $616 thousand for Comm ercial Real Estate at March 31, 2024.
Previous report
(1) Excludes the negative fair value effect of the portfolio layer swap of$616 thousand for Commercial Real Estate at March 31, 2024.
Reworded paragraphs (29)
Previous wording
Revenues (net interest income plus noninterest income) for the quarter ended March 31, 2024 were $22.1 million, versus $27.1 million for the quarter ended March 31, 2023. The decrease in revenues for the quarter was attributable to an increase in interest expense and lower gains from loan sales partially offset by an increase in interest on loans, given higher loan yields and prepayment fees.
Current wording
Revenues (net interest income plus noninterest income) for the three months ended June 30, 2024 were $21.9 million, versus $25.4 million for the quarter ended June 30, 2023. Revenues for the six months ended June 30, 2024 were $44.0 million, versus $52.5 million for the six months ended June 30, 2023. The decrease in revenues for the quarter and six months ended June 30, 2024 was attributable to an increase in interest expense on deposits and lower gains from loan sales partially offset by an increase in interest and fees on loans, given higher loan yields and prepayment fees.
Previous wording
Net income available to common shareholders was $3.8 million, or $0.48 per diluted share, and $10.4 million, or $1.33 per diluted share, for the three months ended March 31, 2024 and 2023, respectively. The decrease was primarily due to the aforementioned decrease in revenues and an increase in provision for credit losses.
Current wording
Net income available to common shareholders was $1.1 million, or $0.14 per diluted share, and $8.0 million, or $1.02 per diluted share, for the three months ended June 30, 2024 and 2023, respectively. Net income available to common shareholders was $4.9 million, or $0.62 per diluted share, and $18.4 million, or $2.34 per diluted share, for the six months ended June 30, 2024 and 2023, respectively. The decrease in net income for the quarter and six months ended June 30, 2024 was primarily due to the aforementioned decrease in revenues and an increase in provision for credit losses.
Previous wording
Returns on average shareholders' equity and average assets for the three months ended March 31, 2024 were 5.59% and 0.47%, respectively, compared to 17.48% and 1.30%, respectively, for the three months ended March 31, 2023.
Current wording
Returns on average shareholders' equity and average assets for the three months ended June 30, 2024 were 1.65% and 0.14%, respectively, compared to 12.91% and 0.99%, respectively, for the three months ended June 30, 2023. Returns on average shareholders' equity and average assets for the six months ended June 30, 2024 were 3.61% and 0.31%, respectively, compared to 15.15% and 1.14%, respectively, for the six months ended June 30, 2023.
Previous wording
FTE interest income for the three months ended March 31, 2024 increased by $4.0 million, or 9.0%, to $48.3 million, compared to FTE interest income for the three months ended March 31, 2023. This increase was due to an increase in interest and fees on loans due to higher overall loan yields.
Current wording
FTEinterest income for the three months ended June 30, 2024 increased by $1.1 million, or 2.3%, to $47.7 million, compared to FTE interest income for the three months ended June 30, 2023. FTE interest income for the six months ended June 30, 2024 increased by $5.2 million, or 5.7%, to $96.1 million, compared to FTE interest income for the six months ended June 30, 2023. This increase was due to an increase in interest and fees on loans due to higher overall loan yields.
Previous wording
Interest expense for the three months ended March 31, 2024 increased by $8.4 million compared to interest expense for the three months ended March 31, 2023. The increase in interest expense for the three months ended March 31, 2024 was driven by an increase in interest expense on deposits, resulting from an increase in rates on interest bearing deposits.
Current wording
Interest expense for the three months ended June 30, 2024 increased by $3.9 million compared to interest expense for the three months ended June 30, 2023. Interest expense for the six months ended June 30, 2024 increased by $12.3 million compared to interest expense for the six months ended June 30, 2023. The increase in interest expense for the three and six months ended June 30, 2024 was driven by an increase in interest expense on deposits, resulting from an increase in rates on interest bearing deposits.
Previous wording
The following table presents the average balances and yields earned on interest earning assets and average balances and weighted average rates paid on our funding liabilities for the three months ended March 31, 2024 and 2023.
Current wording
The following tables present the average balances and yields earned on interest earning assets and average balances and weighted average rates paid on our funding liabilities for the three and six months ended June 30, 2024 and 2023.
Previous wording
(2)The adjustment for securities and loans taxable equivalency amounted to $51 thousand and $50 thousand for the three months ended March 31, 2024 and 2023, respectively.
Current wording
(2)The adjustment for securities and loans taxable equivalency amounted to $67 thousand and $51 thousand for the three months ended June 30, 2024 and 2023, respectively.
Previous wording
The provision for credit losses for the three months ended March 31, 2024 was $3.7 million compared to a provision for credit losses of $0.8 million for the three months ended March 31, 2023. The increase in provision for credit losses for the three months ended March 31, 2024 was primarily driven by net charge-offs of $3.7 million.
Current wording
The provision for credit losses for the three months ended June 30, 2024 was $8.2 million compared to a provision for credit losses of $2.6 million for the three months ended June 30, 2023. The provision for credit losses for the for the six months ended June 30, 2024 was $11.9 million compared to a provision for credit losses of $3.4 million for the six months ended June 30, 2023. The increase in the provision for credit losses for the quarter was primarily due to an additional $7.4 million in specific reserve for two loans. Of the $7.4 million:
Previous wording
The following tables compare noninterest income for the three months ended March 31, 2024 and 2023:
Current wording
The following tables compare noninterest income for the three and six months ended June 30, 2024 and 2023:
Previous wording
Noninterest income decreased by $0.6 million for the three months ended March 31, 2024 compared to the three months ended March 31, 2023. The decrease in noninterest income was driven by lower gains from loan sales for the quarter ended March 31, 2024.
Current wording
Noninterest income decreased by $0.7 million for the three months ended June 30, 2024 compared to the three months ended June 30, 2023. Noninterest income decreased by $1.3 million for the six months ended June 30, 2024 compared to the six months ended June 30, 2023. The decrease in noninterest income for the three and six months ended June 30, 2024 was driven by lower gains from loan sales.
Previous wording
The following table compares noninterest expense for the three months ended March 31, 2024 and 2023:
Current wording
The following table compares noninterest expense for the three and six months ended June 30, 2024 and 2023:
Previous wording
Noninterest expense increased by $0.6 million to $13.3 million for the three months ended March 31, 2024 compared to the three months ended March 31, 2023. The increase in noninterest expense was primarily driven by an increase in director fees related to timing of compensation and accelerated vestings in connection with the death of a director.
Current wording
Nonint erest expense decreased by $0.4 million to $12.2 million for the three months ended June 30, 2024 compared to the three months ended June 30, 2023. The decrease in noninterest expense was primarily driven by a decrease in FDIC insurance costs mainly driven by a reduction in the Bank's brokered deposits. Noninterest expense increased by $0.2 million to $25.5 million for the six months ended June 30, 2024 compared to the six months ended June 30, 2023. The increase in noninterest expense was primarily driven by an increase in director fees related to timing of compensation and accelerated vestings in connection with the death of a director. The increase was partially offset by a decrease in FDIC insurance costs mainly attributable by a reduction in the Bank's brokered deposits.
Previous wording
Income tax expense for the three months ended March 31, 2024 and 2023 totaled $1.3 million and $3.2 million, respectively. The effective tax rates for the three months ended March 31, 2024 and 2023 were 26.0% and 23.4%, respectively.
Current wording
Income tax expense for the three months ended June 30, 2024 and 2023 totaled $0.4 million and $2.2 million, respectively. The effective tax rates for the three months ended June 30, 2024 and 2023 were 24.2% and 21.5%, respectively. Income tax expense for the six months ended June 30, 2024 and 2023 totaled $1.7 million and $5.4 million, respectively. The effective tax rates for the six months ended June 30, 2024 and 2023 were 25.5% and 22.6%, respectively.
Previous wording
Assets totaled $3.2 billion at March 31, 2024 a decrease of $60.2 million or 1.9% compared to December 31, 2023. Gross loans totaled $2.7 billion at March 31, 2024, a decrease of $39.0 million or 1.4% compared to December 31, 2023. Deposits totaled $2.7 billion at March 31, 2024, a decrease of $63.2 million, or 2.3% compared to December 31, 2023.
Current wording
Assets totaled $3.1 billion at June 30, 2024 a decrease of $73.8 million or 2.3% compared to December 31, 2023. Gross loans totaled $2.7 billion at June 30, 2024, a decrease of $61.4 million or 2.3% compared to December 31, 2023. Deposits totaled $2.7 billion at June 30, 2024, a decrease of $74.4 million, or 2.7% compared to December 31, 2023.
Previous wording
Shareholders’ equity totaled $268.0 million as of March 31, 2024, an increase of $2.3 million compared to December 31, 2023, primarily a result of net income of $3.8 million for the three months ended March 31, 2024. The increase was partially offset by dividends paid of $1.6 million and share repurchases of$0.9 million.
Current wording
Shareholders’ equity totaled $267.0 million as of June 30, 2024, an increase of $1.2 million compared to December 31, 2023, primarily a result of net income of $4.9 million for the six months ended June 30, 2024. The increase was partially offset by dividends paid of $3.2 million.
Previous wording
Total loans before deferred loan fees and the ACL-Loans were $2.7 billion at March 31, 2024 and $2.7 billion at December 31, 2023. Total gross loans decreased $39.0 million as of March 31, 2024 compared to the year ended December 31, 2023.
Current wording
Total loans before deferred loan fees and the ACL-Loans were $2.7 billion at June 30, 2024 and $2.7 billion at December 31, 2023. Total gross loans decreased $61.4 million as of June 30, 2024 compared to the year ended December 31, 2023.
Previous wording
(1)Excludes the negative fair value effect of the portfolio layer swap of $616 thousand and the positive fair value effective of the portfolio layer swap of $742 thousand for Commercial Real Estate at March 31, 2024 and December 31, 2023, respectively.
Current wording
(1)Excl udes the negative fair value effect of the portfolio layer swap of $779 thousand and the positive fair value effective of the portfolio layer swap of $742 thousand for Commercial Real Estate at June 30, 2024 and December 31, 2023, respectively.
Previous wording
As of March 31, 2024, the Bank had $189.6 million of loans collateralized by offices, which represented 7.1% of the total loan portfolio. Most of the properties in this portfolio are in suburban locations, with no properties located in New York City. 98.4% of this portfolio was pass rated, and there were two relationships totaling $3.1 million on nonaccrual status. As of March 31, 2024, we had $265.0 million of loans collateralized by multifamily properties, which represented 9.9% of the total loan portfolio. 100% of the portfolio is pass rated and current. These properties are all located in Connecticut, New York, or New Jersey, with eight properties, totaling $52.2 million, located in New York City. 78.5% of the New York City exposure is located in Brooklyn, 12.1% in Manhattan and the remaining 9.4% in Queens. $16.3 million of the New York City exposure, or 0.6% of the total loan portfolio, have either rent stabilized or rent controlled units.
Current wording
Asof June 30, 2024, the Bank had $188.6 million of loans collateralized by offices, which represented 9.9% of the total loan portfolio. Most of the properties in this portfolio are in suburban locations, with no properties located in New York City. 91.0% of this portfolio was pass rated, and there were three relationships totaling $16.9 million on nonaccrual status. As of June 30, 2024, we had $284.6 million of loans collateralized by multifamily properties, which represented 14.9% of the total loan portfolio. 100% of this portfolio is pass rated and current. These properties are all located in Connecticut, New York, or New Jersey, with nine properties, totaling $51.8 million, located in New York City. 79.0% of the New York City exposure is located in Brooklyn, 11.6% in Manhattan and the remaining 9.4% in Queens.
Previous wording
Nonaccrual loans totaled $46.5 million at March 31, 2024 and $49.2 million at December 31, 2023.
Current wording
Nonaccrual loans totaled $56.2 million at June 30, 2024 and $49.2 million at December 31, 2023. The increase was primarily due to a $13.9 million commercial real estate non-owner occupied office loan put on nonaccrual during the six months ended June 30, 2024. This loan represents a 16.5% participation in a $84.3 million club transaction. The increase was partially offset by the payoff of two loans totaling $4.4 million and four loans that were partially charged-off for a total of $4.0 million during the six months ended June 30, 2024. Of the $56.2 million total nonaccrual loans, $8.2 million, or 14.6%, are SBA-guaranteed.
Previous wording
At March 31, 2024, our ACL-Loans was $28.0 million and represented 1.04% of total gross loans, compared to $27.9 million or 1.03% of total gross loans, at December 31, 2023.
Current wording
At June 30, 2024, our ACL-Loans was $36.1 million and represented 1.36% of total gross loans, compared to $27.9 million or 1.03% of total gross loans, at December 31, 2023.
Previous wording
At March 31, 2024, the carrying value of our investment securities portfolio totaled $126.2 million and represented 4.0% of total assets, compared to $127.6 million, or 4.0% of total assets, at December 31, 2023.
Current wording
At June 30, 2024, the carrying value of our investment securities portfolio totaled $138.0 million and represented 4.4% of total assets, compared to $127.6 million, or 4.0% of total assets, at December 31, 2023.
Previous wording
The net unrealized loss position on our investment portfolio at March 31, 2024 was $8.0 million and included gross unrealized gains of $0.5 million. The net unrealized loss position on our investment portfolio at December 31, 2023 was $7.5 million and included gross unrealized gains of $0.8 million.
Current wording
The net unrealized loss position on our investment portfolio at June 30, 2024 was $6.7 million and included gross unrealized gains of $1.7 million. The net unrealized loss position on our investment portfolio at December 31, 2023 was $7.5 million and included gross unrealized gains of $0.8 million.
Previous wording
Total deposits were $2.7 billion at March 31, 2024, a decrease of $63.2 million, from the balance at December 31, 2023.
Current wording
Total deposits were $2.7 billion at June 30, 2024, a decrease of $74.4 million, from the balance at December 31, 2023.
Previous wording
Brokered certificates of depo sits totaled $780.5 million at March 31, 2024 and $860.5 million at December 31, 2023, respectively. Brokered money market accounts totaled $51.4 million at March 31, 2024 and $91.4 million at December 31, 2023, respectively. There were no certificates of deposits from national listing services, one-way buy CDARS or one-way buy ICS at March 31, 2024 or December 31, 2023. Brokered deposits are comprised of Brokered CDs, brokered money market accounts, one-way buy CDARS, and one-way buy ICS.
Current wording
Brokered certificates of depo sits totaled$755.5 million at June 30, 2024 and $860.5 million at December 31, 2023, respectively. Brokered money market accounts totaled$52.1 million at June 30, 2024 and $91.4 million at December 31, 2023, respectively. There were no certificates of deposits from national listing services, one-way buy CDARS or one-way buy ICS at June 30, 2024 or December 31, 2023. Brokered deposits are comprised of Brokered CDs, brokered money market accounts, one-way buy CDARS, and one-way buy ICS.
Previous wording
As of March 31, 2024, our FDIC insured deposits were $1,907.6 million, or 71% of total deposits. Additionally, deposits totaling $110.6 million, or 4% of total deposits, are insured by standby letters of credit with the Federal Home Loan Bank of Boston.
Current wording
As of June 30, 2024, our FDIC insured deposits were $1,940.0 million, or 73% of total deposits. Additionally, deposits totaling $89.2 million, or 3% of total deposits, are insured by standby letters of credit with the Federal Home Loan Bank of Boston.
Previous wording
At March 31, 2024 and December 31, 2023, time deposits with a denomination of $100 thousand or more, including CDARS and brokered deposits, totaled$1,164.0 million and $1,199.7 million, respectively, maturing during the periods indicated in the table below:
Current wording
At June 30, 2024 and December 31, 2023, time deposits with a denomination of $100 thousand or more, including CDARS and brokered deposits, totaled $1,161.8 million and $1,199.7 million, respectively, maturing during the periods indicated in the table below:
Previous wording
The Bank has additional borrowing capacity at the FHLB up to a certain percentage of the value of qualified collateral. In accordance with agreements with the FHLB, the qualified collateral must be free and clear of liens, pledges and encumbrances. At March 31, 2024, the Bank had pledged $843.8 million of eligible loans as collateral to support borrowing capacity at the FHLB. As of March 31, 2024, the Bank had immediate availability to borrow an additional $327.8 million from the FHLB based on qualified collateral.
Current wording
The Bank has additional borrowing capacity at the FHLB up to a certain percentage of the value of qualified collateral. In accordance with agreements with the FHLB, the qualified collateral must be free and clear of liens, pledges and encumbrances. At June 30, 2024, the Bank had pledged$815.2 million of eligible loans as collateral to support borrowing capacity at the FHLB. As of June 30, 2024, the Bank had immediate availability to borrow an additional$334.7 million from the FHLB based on qualified collateral.
Previous wording
Shareholders’ equity totaled $268.0 million as of March 31, 2024, an increase of $2.3 million compared to December 31, 2023, primarily a result of net income of $3.8 million for the three months ended March 31, 2024. The increase was partially offset by dividends paid of $1.6 million and share repurchases of$0.9 million.
Current wording
Shareholders’ equity totaled $267.0 million as of June 30, 2024, an increase of $1.2 million compared to December 31, 2023, primarily a result of net income of $4.9 million for the six months ended June 30, 2024. The increase was partially offset by dividends paid of $3.2 million.
Previous wording
The Bank and Company are subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Company’s financial statements. At March 31, 2024, the Bank met all capital adequacy requirements to which it was subject and exceeded the regulatory minimum capital levels to be considered well-capitalized under the regulatory framework for prompt corrective action. At March 31, 2024, the Bank’s ratio of Common Equity Tier 1 capital to risk-weighted assets was 11.60%, total capital to risk-weighted assets was 11.60%, Tier 1 capital to risk-weighted assets was 12.63% and Tier 1 capital to average assets was 10.09%. At March 31, 2024, the Company met all capital adequacy requirements to which it was subject and exceeded the regulatory minimum capital levels to be considered well-capitalized under the regulatory framework for prompt corrective action. At March 31, 2024, the Company’s ratio of Common Equity Tier 1 capital to risk-weighted assets was 9.47%, total capital to risk-weighted assets was 9.47%, Tier 1 capital to risk-weighted assets was 12.96% and Tier 1 capital to average assets was 8.28%.
Current wording
The Bank and Company are subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Company’s financial statements. At June 30, 2024, the Bank met all capital adequacy requirements to which it was subject and exceeded the regulatory minimum capital levels to be considered well-capitalized under the regulatory framework for prompt corrective action. At June 30, 2024, the Bank’s ratio of Common Equity Tier 1 capital to risk-weighted assets was 11.67%, total capital to risk-weighted assets was 11.67%, Tier 1 capital to risk-weighted assets was 12.92% and Tier 1 capital to average assets was 10.17%. At June 30, 2024, the Company met all capital adequacy requirements to which it was subject and exceeded the regulatory minimum capital levels to be considered well-capitalized under the regulatory framework for prompt corrective action. At June 30, 2024, the Company’s ratio of Common Equity Tier 1 capital to risk-weighted assets was 9.56%, total capital to risk-weighted assets was 9.56%, Tier 1 capital to risk-weighted assets was 13.30% and Tier 1 capital to average assets was 8.34%.
Rearranged current paragraphs (4)
Current report — wording carried from elsewhere
(1)Average balances and yields for securities are based on amortized cost.
Current report — wording carried from elsewhere
(3)Annualized net interest income as a percentage of earning assets.
Current report — wording carried from elsewhere
(4)Yields are calculated using the contractual day count convention for each respective product type.
Current report — wording carried from elsewhere
The increase in provision for credit losses for the six months ended June 30, 2024 was primarily driven by aforementioned increase in specific reserves.