Bankwell Financial Group Reports Operating Results for the Fourth Quarter, Declares First Quarter Dividend

Bankwell Financial Group, Inc. (NASDAQ:BWFG) reported GAAP net income of $9.1 million, or $1.15 per share for the fourth quarter of 2025, versus $10.1 million, or $1.27 per share, for the third quarter of 2025. The Company's Board of Directors declared a $0.20 per share cash dividend, payable February 20, 2026 to shareholders of record on February 10, 2026.

Reported fourth quarter of 2025 GAAP net income reflects $1.5 million of one-time income tax expense related to adjustments to the income tax provision, primarily due to the finalization of state tax filings and changes in estimated tax positions associated with the Company's expanded state-level footprint. These adjustments relate to both current- and prior‑year tax estimates.

Reported GAAP net income of $9.1 million, or $10.7 million on an operating basis⁽¹⁾, for the fourth quarter of 2025.

Reported diluted earnings per share was $1.15, or $1.36 on an operating basis⁽¹⁾, for the fourth quarter of 2025.

Reported return on average assets was 1.11%, or 1.29% on an operating basis⁽¹⁾, for the fourth quarter of 2025.

Reported return on average tangible shareholders' equity was 12.31%, or 14.32% on an operating basis⁽¹⁾, for the fourth quarter of 2025.

Discussion of Outlook; Bankwell Financial Group Chief Executive Officer, Christopher R. Gruseke:

"We finished the year in strong fashion, reporting operating net income of $1.36 per share for the 4th quarter and Pre-tax, pre-provision net revenue return on average assets of 1.80%. GAAP Net Income of $1.15 per share for the quarter includes a one-time adjustment for multiple years' state level tax provisioning outside of our home state of Connecticut.

We entered the year with a clear set of priorities: strengthen credit, improve the funding mix, build non-interest income, generate high‑quality growth, and embrace an innovative mindset as we continue to invest in our people and in technology and I'm pleased to say that we delivered on each of these priorities.

Building on the work accomplished this year we are pleased to provide the following guidance for 2026:

We expect loan growth of 4 to 5 percent. We anticipate net interest income in the range of $111 to $112 million. We also expect non-interest income to increase to approximately $11 to $12 million. Regarding expenses, we estimate total non-interest expense of $64 to $65 million, which incorporates a prudent level of ongoing investment in our people, infrastructure, and operational capabilities. We are confident that our increased investments will continue to provide further operating leverage; our guidance yields an efficiency ratio of approximately 51% to 53%, versus 54.1% in 2025."

Key Points for Fourth Quarter and Bankwell's Outlook

Credit Quality Improves Amid Solid Loan Growth.

• $121.9 million net loan growth during the quarter ended December 31, 2025, resulting in $134.2 million, or 5.0%, growth compared to the year ended December 31, 2024.
• As of December 31, 2025, nonperforming assets as a percentage of total assets improved to 0.49%, compared to 0.56% as of September 30, 2025. Nonperforming assets have declined $1.9 million from the third quarter, mainly driven by the sale of an OREO property for $1.3 million and the collection of $0.4 million on an SBA guarantee.

Net Interest Margin Expands on Lower Deposit Costs and Improved Mix.

• Reported Net Interest Margin was 3.40% for the fourth quarter of 2025, an increase of 6 basis points from the third quarter of 2025. Earning asset yields declined 11 basis points from the third quarter of 2025 to 6.23% while deposit costs decreased 15 basis points to 3.15% over the same period.
• During the quarter ended December 31, 2025, average low-cost deposits increased by $21.6 million compared to the third quarter of 2025 and by $85.9 million compared to the same period in the prior year.

Advancing Key Strategic Priorities.

• SBA loan sale gains increased to $2.2 million in the fourth quarter of 2025, compared to $1.4 million in the third quarter of 2025. The SBA Lending division delivered $24.3 million in originations in the fourth quarter of 2025, bringing the total year originations to $68.3 million.
• As a result of SBA loan sale gains, noninterest income as a percentage of revenue increased to 11.13% in the fourth quarter of 2025, compared to 8.76% in the third quarter of 2025.
• For the fourth quarter of 2025, the Company realized an efficiency ratio⁽¹⁾ of 50.8%, compared to 51.4% for the third quarter of 2025.

Fourth Quarter 2025 Financial Highlights and Key Performance Indicators (KPIs):

Pre-Tax, Pre-Provision Net Revenue⁽¹⁾ ("PPNR")

PPNR for the fourth quarter ended December 31, 2025 was $14.9 million, an increase of 7.2% from $13.9 million recognized for the third quarter ended September 30, 2025.

• Revenues (net interest income plus noninterest income) for the quarter ended December 31, 2025 were $30.3 million, compared with $28.5 million in the previous quarter. The increase in revenues for the quarter ended December 31, 2025 was mainly attributable lower funding costs. Additional favorability for the quarter ended December 31, 2025 resulted from increased gains on SBA loan sales, reflecting higher sales volume.

Net Interest Margin

The Net Interest Margin (fully taxable equivalent basis) for the quarters ended December 31, 2025 and September 30, 2025 was 3.40% and 3.34%, respectively. The increase in the Net Interest Margin is mainly due to lower cost of interest bearing deposits.

Allowance for Credit Losses - Loans ("ACL-Loans")

The ACL-Loans was $30.7 million as of December 31, 2025 compared to $30.0 million as of September 30, 2025. The ACL-Loans as a percentage of total loans was 1.08% as of December 31, 2025 compared to 1.10% as of September 30, 2025.

The provision for credit losses - loans was $0.7 million for the quarter ended December 31, 2025. Total nonperforming loans decreased $0.7 million to $16.3 million as of December 31, 2025, when compared to the previous quarter. Nonperforming assets as a percentage of total assets decreased to 0.49% at December 31, 2025, compared to the previous quarter's ratio of 0.56%.

Financial Condition & Capital

Assets totaled $3.4 billion at December 31, 2025, an increase of $91.4 million, or 2.8% compared to December 31, 2024. Gross loans totaled $2.8 billion at December 31, 2025, an increase of $134.2 million, or 5.0% compared to December 31, 2024. Deposits totaled $2.8 billion at December 31, 2025, an increase of $41.9 million, or 1.5% compared to December 31, 2024. Brokered deposits have decreased $146.3 million or 20.7%, when compared to December 31, 2024.

Shareholders' equity totaled $301.5 million as of December 31, 2025, an increase of $31.0 million compared to December 31, 2024, primarily a result of year to date net income of $35.2 million. The increase was partially offset by dividends paid of $6.3 million.

As of December 31, 2025, the Bank's regulatory capital ratios were all above 'well capitalized' values, with total risk-based capital, common-equity tier 1 capital and leverage ratios at 12.94%, 11.87%, and 10.55%, respectively.

We recommend reading this earnings release in conjunction with the Fourth Quarter 2025 Investor Presentation, located at https://investor.mybankwell.com/events-and-presentations/ and included as an exhibit to our January 29, 2026 Current Report on Form 8-K.

Conference Call

Bankwell will host a conference call to discuss the Company's financial results and business outlook on January 29, 2026, at 11:00 a.m. E.T. The call will be accessible by telephone and webcast using https://investor.mybankwell.com/events-and-presentations/. A supplementary slide presentation will be posted to the website prior to the event, and a replay will be available for 12 months following the event.

About Bankwell Financial Group

Bankwell Financial Group, Inc. is the holding company for Bankwell Bank ("Bankwell"), a full-service commercial bank headquartered in New Canaan, CT. Bankwell offers its customers unmatched accessibility, expertise, and responsiveness through a range of commercial financing products including working capital lines of credit, SBA loans, acquisition loans, and commercial mortgages as well as treasury management and deposit services.

For more information about this press release, interested parties may contact Christopher R. Gruseke, Chief Executive Officer or Courtney E. Sacchetti, Executive Vice President and Chief Financial Officer of Bankwell Financial Group at (203) 652-0166 or at [email protected].

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 increased competitive pressures, changes in the interest rate environment, general economic conditions or conditions within the banking industry or securities markets, 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, tangible assets, tangible common equity to tangible assets, tangible common shareholders' equity, fully diluted tangible book value per common share, operating revenue, efficiency ratio, noninterest expense to average assets, average tangible common equity, annualized return on average tangible shareholders' equity, return on average assets, operating basis return on average assets, return on average shareholders' equity, operating basis return on average tangible shareholders' equity, pre-tax, pre-provision net revenue, net interest margin, net loan charge-offs as a percentage of average loans, pre-tax, pre-provision net revenue on average assets, adjusted average equity, operating basis diluted earnings per share, operating net income, and the dividend payout ratio are useful to evaluate the relative strength of the Company's performance and 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. See "Reconciliation of GAAP to Non-GAAP Measures (unaudited)".