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

Bankwell Financial Group, Inc. (NASDAQ:BWFG) reported GAAP net income of $10.1 million, or $1.27 per share for the third quarter of 2025, versus $9.1 million, or $1.15 per share, for the second quarter of 2025. The Company's Board of Directors declared a $0.20 per share cash dividend, payable November 21, 2025 to shareholders of record on November 10, 2025.

Pre-tax, pre-provision net revenue ("PPNR") of $13.9 million or 1.70% of average assets. PPNR increased 21.5% relative to the second quarter of 2025's PPNR of $11.4 million.

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

"We are proud to announce our third quarter results which demonstrate continued growth and improvement across all aspects of our business. Our Return on Average Assets grew to 1.24% for the quarter while the Net Interest Margin expanded to 3.34%. Funded loan originations have grown to $518 million year-to-date, versus full year fundings of $328 million in 2024. Our SBA division continues to grow at a disciplined pace, with gains on sale increasing to $1.4 million for the third quarter. Notably, as we have expanded our capabilities across the Company, we have improved our efficiency ratio, reducing it to 51.4% this quarter.

Balance sheet trends have shown consistent improvement, supported by ongoing capital growth and a reduction in non-performing asset balances. NPAs as a percentage of assets now stand 0.56%, and our outlook remains positive for the quarters ahead. We look forward to closing out 2025 with continued momentum and we will provide guidance for 2026 performance with our year end earnings release."

Key Points for Third Quarter and Bankwell's Outlook

Continued Positive Credit Trends.

• As of September 30, 2025, nonperforming assets as a percentage of total assets improved to 0.56%, compared to 0.78% as of June 30, 2025. Nonperforming assets have declined $6.9 million from the second quarter mainly due to the collection of $5.0 million on three SBA guarantees and the sale of one commercial real estate non-owner occupied loan for $1.6 million.
• Special Mention loan balances have decreased $30 million in the third quarter of 2025.
• ACL-loans as a % of nonperforming loans increased to 176.7%, compared to 122.5% as of June 30, 2025.

Net Interest Margin Expands on Favorable Loan Yields and Lower Deposit Costs.

• Reported Net Interest Margin was 3.34% for the third quarter of 2025, up 24 basis points from the second quarter of 2025.
• Deposit costs of 3.30% for the third quarter of 2025 have declined by 10 bps from the second quarter of 2025. The deposit cost improvement is driven by the repricing of time deposits and improved deposit mix, with current quarter results not reflective of the Company's response to the September rate cut made by the Federal Reserve.
• Loan yields were 6.71% for the third quarter of 2025, expanding by 13 basis points from the second quarter of 2025.

Advancing Key Strategic Priorities.

• SBA loan sale gains increased to $1.4 million in the third quarter of 2025, compared to $1.1 million in the second quarter of 2025. Pricing remains strong, with third quarter sales premiums averaging 10%. The SBA Lending division delivered $21.8 million in originations in the third quarter of 2025.
• Noninterest income as a percentage of revenue increased to 8.76% in the third quarter of 2025, compared to 7.76% in the second quarter of 2025.
• For the third quarter of 2025, the Company realized an efficiency ratio of 51.4%, improved from 56.1% in the second quarter of 2025.

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

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

PPNR for the third quarter ended September 30, 2025 was $13.9 million, an increase of 21.5% from $11.4 million recognized for the second quarter ended June 30, 2025.

• Revenues (net interest income plus noninterest income) for the quarter ended September 30, 2025 were $28.5 million, versus $25.9 million from the previous quarter. The increase in revenues for the quarter ended September 30, 2025 was mainly attributable to increased earning asset yields and increased loan balances. Additional favorability for the quarter ended September 30, 2025 is attributed to growth in gains on sale of SBA loans, which yielded an approximate 10% premium, on average.
• The Net Interest Margin (fully taxable equivalent basis) for the quarters ended September 30, 2025 and June 30, 2025 was 3.34% and 3.10%, respectively. The increase in the Net Interest Margin is mainly due to increased earning asset yields. Additionally, Net Interest Margin for the third quarter 2025 benefited by 3 basis points due to non-recurring interest income recognized from the resolution of certain non-performing SBA loans.

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

The ACL-Loans was $30.0 million as of September 30, 2025 compared to $29.3 million as of June 30 2025. The ACL-Loans as a percentage of total loans was 1.10% as of September 30, 2025 compared to 1.10% as of June 30, 2025.

The provision for credit losses - loans was $0.4 million for the quarter ended September 30, 2025. Total nonperforming loans decreased $6.9 million to $17.0 million as of September 30, 2025 when compared to the previous quarter. Nonperforming assets as a percentage of total assets decreased to 0.56% at September 30, 2025 compared to the previous quarter's ratio of 0.78%.

Financial Condition & Capital

Assets totaled $3.2 billion at September 30, 2025, a decrease of $24.5 million, or 0.7% compared to December 31, 2024. Gross loans totaled $2.7 billion at September 30, 2025, an increase of $12.3 million, or 0.5% compared to December 31, 2024. Deposits totaled $2.8 billion at September 30, 2025, a decrease of $30.2 million, or 1.1% compared to December 31, 2024. Brokered deposits have decreased $96.3 million or 13.7%, when compared to December 31, 2024.

Shareholders' equity totaled $292.8 million as of September 30, 2025, an increase of $22.3 million compared to December 31, 2024, primarily a result of year to date net income of $26.1 million. The increase was partially offset by dividends paid of $4.7 million.

As of September 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 13.47%, 12.38%, and 10.70%, respectively.

We recommend reading this earnings release in conjunction with the Third Quarter 2025 Investor Presentation, located at https://investor.mybankwell.com/events-and-presentations/ and included as an exhibit to our October 23, 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 October 23, 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.