Bankwell Financial Group Reports Operating Results for the Second Quarter, Declares Third Quarter Dividend

Bankwell Financial Group, Inc. (NASDAQ:BWFG) reported GAAP net income of $9.1 million, or $1.15 per share for the second quarter of 2025, versus $6.9 million, or $0.87 per share, for the first quarter of 2025. The Company's Board of Directors declared a $0.20 per share cash dividend, payable August 22, 2025 to shareholders of record on August 11, 2025.

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

"Our strong second quarter reflects an acceleration of positive trends which have been building over the past year. Notably, our net interest margin increased to 3.10% as a result of our improved funding costs. Loan originations accelerated in the quarter, resulting in $24 million net loan growth, which includes another robust quarter of SBA originations. Having already made the appropriate investments in risk, operations, and technology, the SBA business is on a path to achieve further scale and profitability. Year to date, it has contributed $1.5 million in non-interest income. The combined results of our efforts have increased the Company's return on average assets to 1.14% this quarter and we expect continued improvement in profitability as the year progresses.

As we continue to improve the Company's funding with higher quality deposits, we have now welcomed a total of five new deposit-focused private banking teams the year, and we anticipate their contributions will boost deposit growth later this year, with greater impact in 2026.

In light of this positive momentum, we are updating our 2025 guidance, to grow net interest income to $97 – $98 million. We reiterate our guidance of $7 - $8 million in noninterest income. We are increasing our noninterest expense guidance to $58 - $59 million, primarily a result of our investments in people. Despite the modestly higher run rate in operating expenses, we expect to see continued improvement to the Company's efficiency ratio in the quarters ahead."

Key Points for Second Quarter and Bankwell's Outlook

NIM Expansion on Improved Deposit Costs.

• Reported net interest margin was 3.10%, up 29 basis points from the first quarter of 2025, with reduced deposit costs on both time and non-maturity deposits contributing meaningfully to the linked-quarter expansion. Second quarter cost of deposits of 3.40% improved 20 basis points to linked quarter, with a June 2025 "exit" rate of 3.28%.
• During the first half of 2025, approximately $745 million of time deposits repriced approximately 80 basis points lower. Furthermore, rate cuts on approximately $1.0 billion of non-maturity interest-bearing deposits yielded a 23 basis point reduction in the same time period.

Advancing Key Strategic Priorities.

• SBA loan sale gains increased to $1.1 million for the quarter ended June 30, 2025, compared to $0.4 million in the first quarter of 2025. The SBA lending vertical delivered $11.8 million in originations during the quarter ended June 30, 2025, with continued growth expected for the remainder of 2025.
• The Company continues to invest in its deposit gathering capabilities, with the addition of five deposit teams in the New York Metro area; two teams added in April were previously disclosed, one team added after June 30, 2025.
• For the quarter ended June 30, 2025, the Company realized an efficiency ratio of 56.1%, down from 59.9% for the quarter ended March 31, 2025. Investments in strategic priorities continue to be balanced with revenue generation and improved efficiency.

Improving Credit.

• As of June 30, 2025, nonperforming assets as a percentage of total assets improved to 0.78%, compared to 0.83% as of March 31, 2025. Of the 0.78%, 0.17% is guaranteed by the SBA.
• ACL-loans as a % of nonperforming loans increased to 122.5%, compared to 111.8% as of March 31, 2025.

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

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

PPNR for the second quarter ended June 30, 2025 was $11.4 million, an increase of 20.9% from $9.4 million recognized for the first quarter ended March 31, 2025.

• Revenues (net interest income plus noninterest income) for the quarter ended June 30, 2025 were $25.9 million, versus $23.6 million from the previous quarter. The increase in revenues for the quarter ended June 30, 2025 was mainly attributable to reduced funding costs. Additional favorability for the quarter ended June 30, 2025 is attributed to growth in gains on sale of SBA loans.
  
  
  
  
• The net interest margin (fully taxable equivalent basis) for the quarters ended June 30, 2025 and March 31, 2025 was 3.10% and 2.81%, respectively. The increase in the net interest margin was mainly due to reduced funding costs.
  
  
  
  
• Total non-interest expense of $14.5 million increased 2.9% compared to the first quarter, which was mainly driven by increase in salaries and employee benefits.

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

The ACL-Loans was $29.3 million as of June 30, 2025 compared to $29.5 million as of March 31, 2025. The ACL-Loans as a percentage of total loans was 1.10% as of June 30, 2025 compared to 1.11% as of March 31, 2025.

The credit for credit losses - loans was $0.3 million for the quarter ended June 30, 2025. Total nonperforming loans decreased $2.5 million to $23.9 million as of June 30, 2025 when compared to the previous quarter. Nonperforming assets as a percentage of total assets decreased to 0.78% as of June 30, 2025 compared to the previous quarter's ratio of 0.83%.

Financial Condition & Capital

Assets totaled $3.2 billion at June 30, 2025, a decrease of $31.9 million, or 1.0% compared to December 31, 2024. Gross loans totaled $2.7 billion at June 30, 2025, a decrease of $36.9 million, or 1.4% compared to December 31, 2024. Deposits totaled $2.8 billion at June 30, 2025, a decrease of $28.3 million, or 1.0% compared to December 31, 2024. Brokered deposits have decreased $81.2 million or 11.5%, when compared to December 31, 2024.

Shareholders' equity totaled $283.3 million as of June 30, 2025, an increase of $12.8 million compared to December 31, 2024, primarily a result of year to date net income of $16.0 million. The increase was partially offset by dividends paid of $3.1 million and share repurchases of $1.3 million.

As of June 30, 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 13.28%, 12.20%, and 10.57%, respectively. The Company repurchased 14,626 shares at a weighted average price of $28.86 per share during the quarter ended June 30, 2025.

We recommend reading this earnings release in conjunction with the Second Quarter 2025 Investor Presentation, located at https://investor.mybankwell.com/events-and-presentations/ and included as an exhibit to our July 28, 2025 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 July 28, 2025, 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 common equity, return on average assets, return on average 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, 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.