Bankwell Financial Group, Inc. · NASDAQ:BWFG
Bankwell Financial — Q3 2020 Earnings Presentation
34 slides from Bankwell Financial's earnings presentation, Oct 28, 2020
Slide 1: Bankwell Financial Group 3Q20 Investor Presentation
Bankwell Financial Group 3Q20 Investor Presentation
Slide 2: Safe Harbor
Safe Harbor This presentation may contain certain forward-looking statements about Bankwell Financial Group, Inc. (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 cur
Slide 3: Table of Contents
Table of Contents • 3Q20 Performance • COVID-19 Deferrals & PPP Update • Credit • Impact of COVID-19 on 3Q20 Performance • Capital • Bankwell History & Overview 3
Slide 4: 3Q20 Performance
3Q20 Performance
Slide 5: 3Q20 Summary
3Q20 Summary • $2.99 million reported net income, or $0.38 earnings per share ̶ Provision for loan loss reserve build of $0.7 million, or $0.07 earnings per share • $4.49 million pre-tax, pre-provision net revenue (“PPNR”), or $0.57 per share1 ̶ Non-interest expense includes $0.35 million of COVID-1
Slide 6: 3Q20 Results
3Q20 Results Quarter Year to Date • Net Income $3.0 million $5.6 million Profitability 1 • PPNR $4.5 million $13.7 million • Return on Average Assets 0.55% 0.36% • Return on Average Equity 6.87% 4.23% • $1.6 billion of gross loans Balance Sheet • $1.8 billion of deposits • $15 million of assets per
Slide 7: 3Q20 Consolidated Financial Statements
3Q20 Consolidated Financial Statements Linked Quarter Dollars in millions, except per share data Income Statement 3Q20 2Q20 Var1 Balance Sheet 3Q20 2Q20 Var1 Total Interest Income $18.9 $19.3 $(0.4) Cash & Cash Equivalents $339 $207 $132 Total Interest Expense $5.3 $5.7 $0.4 Investment Securities $1
Slide 8: Liquidity
Liquidity • Added ~$185 million temporary liquidity to the balance sheet at onset of the COVID-19 pandemic (various maturities throughout 2020 - 1Q21) • Added $150 million of 3 year fixed rate brokered CDs to enhance Asset/Liability mix • Investments in commercial channels Liquidity Walk continue to
Slide 9: Steadily Improving Deposit Mix
Steadily Improving Deposit Mix Dollars in millions Recent Trends • In 3Q20, added $150 million of 3 year brokered CDs at an average rate of 0.55% as part of Asset/Liability Management (“ALM”) 1 Brokered Deposits Retail CDs Core Deposits Balance $1,502 $1,492 $1,768 ~$1,700 • Through 1Q21, scheduled
Slide 10: Positive Outlook For Cost of Deposits
Positive Outlook For Cost of Deposits Dollars in millions Quarterly Cost of Deposits 1.59% 1.52% Sep-20 – Mar-21 Deposits $1,768 ~$100 ~$1,700 $60 0.45% 0.40% 1.16% <0.70%0.86% <0.70% $264 0.93% 1.56% ~0.80% ~0.70% Sep-20 CD Assumed CD New $ Mar-21 Est 4Q19 1Q20 2Q20 3Q20 4Q20 Est 1Q21 Est Maturitie
Slide 11: Expanding Commercial Relationships
Expanding Commercial Relationships Dollars in millions Commercial Deposits Total Non-Interest Bearing $584 Focus on Commercial deposit relationships $600 $350 $550 yielding positive results $300 $500 $461 Commercial deposits grew ~$176 million $250 $450 $409 $396 $393 YTD, including $41 million (~23
Slide 12: Total Loan Portfolio
Total Loan Portfolio Consumer Loans / Other Commercial 0.51% Const. Residential 5.94% 6.91% 1 C&I 18.57% CRE Owner Occupied 9.51% CRE Investor 58.55% Total Loan Portfolio = $1,625 million 1 no single relationship represents more than 6% of total loans, as of September 30th, 2020 1 includes $57 milli
Slide 13: Loan Portfolio Trends
Loan Portfolio Trends Dollars in millions Loan Portfolio Yields excluding $57 million PPP loans • Robust 4Q20 originations pipeline, with C&I 4.64% 5.00% accounting for ~65% 4.48% 4.58% 1,800 4.25% • Loan prepayments normalized to ~$30 $1,605 $1,604 4.00% million in 3Q20 1,600 $1,543 $1,568 • Limite
Slide 14: Operational Review & Efficiency
Operational Review & Efficiency Ongoing review of the Bank’s operating expenses underway, with goal of achieving 3% - 5% reduction in operating expense run rate by end of 2021 • Review of vendors and applications for streamlining / elimination • Ongoing evaluation of all existing locations and headc
Slide 15: COVID-19 Deferrals & PPP Update
COVID-19 Deferrals & PPP Update
Slide 16: COVID-19 Deferral Update
COVID-19 Deferral Update Dollars in millions COVID-19 Loan Deferral Trend $350 $400 25%• Additional ~$21 million reduction anticipated 22% by year-end: $350 $10 $235 20% $300 • COVID-19 deferral population decrease 15% $250 15% of ~$13 million, including the decrease $17 $200 in construction exposur
Slide 17: PPP update
PPP update • $56.7 million of PPP loans remain as of September 30th: Category $ Balance Count Average Size ≤ $50K $4.1 million 187 $21,903 $50K - $150K $9.7 million 107 $90,447 ≥ $150K $42.9 million 95 $451,843 Total $56.7 million 389 $145,755 • ~$466 thousand of SBA fees recognized as income throug
Slide 18: Credit
Credit
Slide 19: Strong Asset Quality
Strong Asset Quality Dollars in thousands Non Performing Loans / Gross Loans 0.63% 0.88% SBA-guaranteed portion of NPLs ($4.5 million) 0.28% 0.66% 0.63% 0.36% NPL exposure not guaranteed by SBA 0.35% CRE 0.23% Resi 0.10% C&I 0.02% 2017 2018 2019 3Q20 3Q20 Detail NPLs $5,481 $14,082 $10,588 $10,169 S
Slide 20: YTD ALLL Update
YTD ALLL Update YTD Allowance for Loan Loss (“ALLL”) Walk • Bankwell is not subject to CECL; ALLL is calculated General Specific 1.25% in accordance with the incurred loss model $1.0MM 0.09% • PPP loans are guaranteed by the US government $6.9MM 0.84% and therefore carry no reserve 0.03% ̶ Assumed a
Slide 21: 3Q20 Performance Impact of COVID-19
3Q20 Performance Impact of COVID-19
Slide 22: COVID-19 Impact on Year-to-Date Metrics
COVID-19 Impact on Year-to-Date Metrics Dollars in thousands, except per share data Excluding 2 3Q20 YTD Metrics Reported COVID-19 2 Key Drivers Total assets $2,193,022 $2,091,293 Net loans $1,600,776 $1,533,611 • ~$7.9 million ALLL provision for COVID-19 Loan-to-deposit ratio 91.6% 94.1% • Up to ~$
Slide 23: 3Q20 Net Interest Margin
3Q20 Net Interest Margin Net Interest Margin Walk 3.04% 0.23% 2.81% 0.06% • Reported interest expense impacted by 0.05% cost of additional liquidity, temporarily preventing further NIM expansion Reported NIM PPP Income Additional Avg Assets NIM • Earning asset yields improve 27 basis liquidity cost
Slide 24: COVID-19 Adjusted Balance Sheet
COVID-19 Adjusted Balance Sheet Dollars in millions Excl. Balance Sheet Reported COVID-19 Var1 Adjusted balance sheet reflects the following: • ($109) million elimination of additional liquidity Cash & Cash Equivalents $339 $285 $(55) • ($2) million deferred loan fees from PPP loans • $57 PPP loan f
Slide 25: COVID-19 Adjusted Income Statement
COVID-19 Adjusted Income Statement Dollars in millions Excl. QTR Income Statement Reported COVID-19 Var1 Adjusted income statement reflects the following: • ($0.4) interest income & fees associated with PPP loans Total Interest Income $18.9 $18.5 $(0.4) • ($0.0) nominal interest earned on additional
Slide 26: COVID-19 Adjusted Non-Interest Expense
COVID-19 Adjusted Non-Interest Expense Dollars in millions Excl. QTR Non-Interest Expense Reported COVID Var1 Salaries and employee benefits $5.29 $5.22 $(0.07) $0.35 million of additional non-interest expense comprised of: Occupancy and equipment $2.27 $2.00 $(0.26) Professional services $0.37 $0.3
Slide 27: Capital
Capital
Slide 28: Tangible Book Value
Tangible Book Value Tangible Book Value (TBV) Per Share Walk $22.20 $0.41 $0.20 $0.07 $21.69 $0.03 $0.14 $0.38 reported EPS 1 2Q20 NI ex-COVID-19 COVID-19 Dividends OCI All Other 3Q20 • $0.20 increase primarily from mark to market on 15 year interest rate swaps 1 All Other includes items such as, bu
Slide 29: Capital Position
Capital Position Key Capital Ratios • ~$50 million of additional 1 Total Capital above 13.57% ‘adequate’ + buffer 13.63% • This estimate represents the Total Capital Total magnitude of credit costs 1 12.36% BWFG could withstand and CET1 12.44% is NOT an estimate of what Tier 1 Tier / CET1 Tier 1 the
Slide 30: Bankwell History & Overview
Bankwell History & Overview
Slide 31: Bankwell Profile
Bankwell Profile Company Overview NASDAQ: BWFG • Connecticut-based $2 billion bank, with focus on CRE and C&I lending • 12 existing branches in Fairfield & New Haven Counties; 1 branch to be permanently closed on 12/31 • BWFG has $136 million deposits per branch; one of the highest in Fairfield & Ne
Slide 32: Financial Snapshot
Financial Snapshot 1 Dollars in thousands, except per share data 2016 2017 2018 2019 3Q20 YTD Total assets $1,628,919 $1,796,607 $1,873,665 $1,882,182 $2,193,022 Net loans $1,343,895 $1,520,879 $1,586,775 $1,588,840 $1,600,776 Loan-to-deposit ratio 105.6% 110.1% 106.4% 107.1% 91.6% Efficiency ratio2
Slide 33: Experienced Leadership Team
Experienced Leadership Team Years Name Experience Selected Professional Biography Christopher Gruseke 30+ Mr. Gruseke was a founding investor and director of Bankwell Financial Group’s predecessors, BNC Financial President & CEO Group, Inc., and The Bank of New Canaan. He brings more than 30 years o
Slide 34: Thank You & Questions
x Thank You & Questions
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