Bankwell Financial Group, Inc. · NASDAQ:BWFG
Bankwell Financial — Q3 2024 Earnings Presentation
34 slides from Bankwell Financial's earnings presentation, Oct 29, 2024
Slide 1: Third Quarter 2024 Investor Presentation
Third Quarter 2024 Investor Presentation October 28, 2024
Slide 2: Forward Looking Statement
Forward Looking Statement Important note regarding forward-looking statements: Statements made in this presentation which are not purely historical are forward-looking statements, as defined in the Private Securities Litigation Reform Act of 1995. This includes any statements regarding management’s
Slide 3: Third Quarter 2024 Results
Third Quarter 2024 Results Reduced brokered deposit balances by $24.2 million LQ Reported net interest margin of 2.72%, down -3 bps LQ, future margin expansion still expected Continued progress on strategic initiatives in pipeline Strong growth in Bankwell Direct deposit channel, up $85 million LQ $
Slide 4: Third Quarter 2024 Financial Summary
Third Quarter 2024 Financial Summary • Fully diluted EPS of $0.24 includes $0.79 from $8.2 million charge off EPS • Lower EPS versus PYQ a function of higher provision and lower margin • PPNR of $9.0 million, or $1.17 per share, declined -7% LQ PPNR • Net interest income of $20.7 adversely impacted
Slide 5: Third Quarter 2024 GAAP Results
Third Quarter 2024 GAAP Results Bankwell Financial Group, Inc. ($ in millions, except per share data) Q3 2024 Q2 2024 Q1 2024 Q4 2023 Q3 2023 Q2 2023 Q1 2023 Q4 2022 Q3 2022 Net Interest Income $ 20.7 $ 21.2 $ 21.1 $ 22.2 $ 22.7 $ 24.0 $ 25.5 $ 26.8 $ 24.6 Provision for Credit Losses 6.3 8.2 3.7 (1.
Slide 6: Maintaining our Strong Balance Sheet
Maintaining our Strong Balance Sheet Dollars in millions 2.7X Liquidity Coverage Abundant Excess Liquidity $1,517 Unencumbered Securities $111 • $2,122 million total insured deposits includes: Unencumbered $291 Cash ‒ $2,006 million FDIC-insured deposits ‒ $116 million deposits secured by FHLB LOCs
Slide 7: Reduced Reliance on Brokered Deposits
Reduced Reliance on Brokered Deposits Dollars in millions • Brokered deposit balances have fallen $168 million in 2024, with total deposits stable between approximately $2.7 and $2.8 billion • Notable growth in Bankwell Direct deposits (3Q24 launch); up $85 million LQ, to $97 million Brokered Deposi
Slide 8: Well Positioned Balance Sheet For Lower Rates
Well Positioned Balance Sheet For Lower Rates Dollars in millions • Liability sensitive, with $1.3 billion of time deposits maturing in next twelve months: ‒ $656 million Retail time repricing an average ~29 basis points lower based on current rates; annualized savings of $1.85 million of interest e
Slide 9: Managing CRE Concentration Lower
Managing CRE Concentration Lower Dollars in millions • No single relationship greater than 4% • Expansion into Residential Care diversifying loan portfolio CRE Investor CRE Owner Occupied C&I $2,675 $2,719 500% $2,623 Construction $77 $87 Residential / Other $183 $84 2,500 $155 480% CRE Concentratio
Slide 10: Credit Trends
Credit Trends Dollars in millions 3Q23 4Q23 1Q24 2Q24 3Q24 Risk Rating Balance % Balance % Balance % Balance % Balance % 1-5 “Pass” $2,694 97.2% $2,570 94.5% $2,527 94.3% $2,497 94.0% $2,458 93.7% 6 “Special Mention” $22 0.8% $67 2.5% $72 2.7% $71 2.7% $97 3.7% 7 “Substandard” $54 2.0% $76 2.8% $68
Slide 11: Criticized and Classified Loans
Criticized and Classified Loans Dollars in millions • $95 million of Performing Criticized and Classified Loans down $8 million LQ, with improved performance in Residential Care borrowers Residential Care Criticized & Classified ‒ 2 Special Mention (“6”) relationships upgraded to Risk Rating Perform
Slide 12: CRE Office Portfolio
CRE Office Portfolio1 Dollars in millions Composition Geography $166 million Office exposure 6% of total loan portfolio • 48 loans with $3.5 million average balance CT - Fairfield CT - All CA Other • County $5.5 million loan on a Class A suburban NJ office $0.9 $49.3 $12.2 park with $8.2 million cha
Slide 13: Strategic Update
Bankwell Strategic Update 13
Slide 14: Strategic Themes
Strategic Themes Embrace Innovation Invest in Risk Management Elite Customer Experience Specialized Lending Verticals 14
Slide 15: How Residential Care Lending Works
How Residential Care Lending Works HNW, Experienced Sponsor Bankwell Refinance Bridge Finds Skilled Nursing Facility (SNF) to Purchase Approves Loan to HUD Loan Sends Bankwell Sponsor improves Bridge to HUD underwriting details, SNF performance mortgage and HUD bank issues term over 12-36 mont
Slide 16: Residential Care Lending
Residential Care Lending A highly efficient, differentiated platform with off-balance sheet growth opportunities Loan Balances $ in millions $800 $717 10.00% $693 $700 $657 9.00% 8.00% $600 7.00% $500 5.08% 7.15% 7.19% 6.66% 6.00% $400 5.00% $230 4.00% $300 3.00% $200 2.00% $100 1.00% $0 0.00% 2021
Slide 17: Small Business; Last Unclaimed Segment
Small Business; Last Unclaimed Segment Bankwell has been originating SBA 7(a) loans 10+ years Preferred lender program (“PLP”) member Recently appointed new leadership, with plans to add additional BDOs Liquid secondary market, balance sheet light Utilizing technology and partnerships to c
Slide 18: Utilizing Innovation + Talent to Differentiate
Utilizing Innovation + Talent to Differentiate Pivotal moment for technology and banking Embrace innovation and technology Talent is key differentiator Risk Management culture Be nimble, be flexible Pilots Prioritize the Client Do more with less 18
Slide 19: Bankwell is On the Move…
Bankwell is On the Move… Bankwell Brand Refresh Launched September 2024 19
Slide 20: Bankwell Direct Pilot; Case Study
Bankwell Direct Pilot; Case Study Bankwell Direct Digital Pilot Successfully Launched in Third Quarter1 11 bps marketing costs 3 bps technology costs $126 million CD deposits2 2 bps support $60K average CD Balance costs 1 Interest rates on October 28, 2024. 2As of October 25, 2024 . 20
Slide 21: Small Business Pilots; New Products with Broad Audiences
Small Business Pilots; New Products with Broad Audiences Connecticut Growth Loan Product; five-minute application, closes-up to same day. Launched in August 2024 Lendio Partnership (Launched - September 2024) Spire, Business Banking Digital Product Suite (Launched – October 2024 21
Slide 22: Financial Outlook
Financial Outlook Stable total assets near-term Continued NIM expansion Dedicated to Improved credit outlook making a Additional reductions in difference. brokered deposits Growing regulatory capital Unchanged focus on efficiency 22
Slide 23: Questions?
Questions? <> Bankwell
Slide 24: Appendix
Appendix Bankwell
Slide 25: Average Deposits & NIM; Recent Trends
Average Deposits & NIM; Recent Trends Dollars in millions Average Interest Bearing Average Non-Interest Bearing IB Deposit Cost Total Deposit Cost NIM $3,000 6.00% $2,798 $2,781 $2,723 $2,692 $2,668 $346 $351 $337 $368 5.50% $303 $2,500 $2,452 $2,430 $2,386 $2,365 5.00% $2,323 $2,000 4.50% 4.28% 4.2
Slide 26: Loan Composition
Loan Composition Dollars in millions Other Total Loan Portfolio = $2,623 million Commercial 1.5% Const. Residential Favorable long-term trends in Investor CRE 6.1% 1.7% CRE Investor CRE O/O + C&I C&I 18.7% 27.3% 34.9% 45.5% 44.9% 44.8% CRE Investor 45.9% CRE Owner Occupied 60.4% 55.2% 26.1% 45.8% 45
Slide 27: Loan Yields
Loan Yields Dollars in millions Loan portfolio yields increased 190 bps since 2020 September 2024 Yield2 by Vintage 73% of balances are 2021-2024 vintages 4,000 7.00% 8.07% 5.99% 6.08% 2024 3,500 6.00% 7.64% 5.26% 5.56% 2023 Pre 2021 3,000 $2,675 $2,719 5.00% $2,623 4.30% 6.40% 5.81% 2,500 4.18% 202
Slide 28: CRE Loan Portfolio
CRE Loan Portfolio1 Dollars in millions Loans Maturing or Repricing in 2024 – Total CRE Portfolio = $1,887 2025 3 million By Property Type Excluding floating rate loans Owner Property Type Investor Occupied Total Residential Care All 33% Residential Care $31 $365 $396 Other 3% Retail $112 $5 $117 1-
Slide 29: C&I Loan Portfolio
C&I Loan Portfolio By Industry Type Total Portfolio = $492 million Insurance • 98% of C&I portfolio has recourse (Primarily Brokers) 22% • 97% of Healthcare loans have recourse Health Care & Social Assistance Finance – Primarily consists of working capital lines 39% 13% secured by government account
Slide 30: Combined Healthcare
Combined Healthcare Dollars in millions CRE Skilled Nursing Facility By State $791 million combined Healthcare portfolio IA TN IL 2% 2% 2% All Other • Consists primarily of skilled nursing facilities located across AL 11% the US 2% NJ FL • Healthcare lending team has more than 15 years of industry 4
Slide 31: 3Q24 Non-Performing Loans
3Q24 Non-Performing Loans Dollars in millions 3Q24 Activity • $3.0 million CRE – Office loan in suburban CT paid off; $1.0 million recovery ($2.8 million charged off in 1Q24) • Remaining NPLs comprised of: Segment Balance % Total Loans 3Q24 Activity (See next slide for additional details) • Downgrad
Slide 32: 3Q24 Non-Performing Loans Details
3Q24 Non-Performing Loans Details % Total Segment Balance Loans • CRE Multifamily property in Hartford County, CT Loan 1 CRE - Multifamily $27.1 1.03% • As of October 28, 2024, signed agreement for sale at par value • Suburban retail loan in Westchester County, NY modified during COVID • Borrower pa
Slide 33: Bankwell Financial Group (Nasdaq: BWFG)
Bankwell Financial Group (Nasdaq: BWFG) $3.2B $2.6B Total Assets Loans $0.27B $2.7B Equity Deposits Deposits Loans 1.62% ~140 Non-interest Exp / Assets Employees All Other Brokered 9% 29% C&I & CREOO 1 Time > $250k Core CRE Inv 45% 8.40% 9.71% 63% 46% 8% TCE Ratio CET1 Ratio 1 Estimate, pending FDIC
Slide 34: “TEA EEREEEGY
“TEA EEREEEGY
Bankwell Financial Group — Q3 2024 Earnings Presentation on 6ix