Bankwell Financial Group, Inc. · NASDAQ:BWFG
Bankwell Financial — Q2 2020 Earnings Presentation
42 slides from Bankwell Financial's earnings presentation, Jul 28, 2020
Slide 1: Bankwell Financial Group 2Q20 Investor Presentation
Bankwell Financial Group 2Q20 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 • 2Q20 Performance • COVID-19 Deferrals Update • Credit & Capital • Portfolio Overview • Bankwell History & Overview 3
Slide 4: 2Q20 Performance
2Q20 Performance
Slide 5: 2Q20 Summary
2Q20 Summary • $1.21 million reported net income, or $0.16 earnings per share ̶ $0.49 reduction in EPS due to incremental COVID-19 provision for loan loss • $4.49 million pre-tax, pre-provision net revenue (“PPNR”), or $0.57 per share1 ̶ Non interest expense includes $0.5 million of COVID-19-related
Slide 6: 2Q20 Results
2Q20 Results Quarter Year to Date • Net Income $1.2 million $2.6 million Profitability 1 • PPNR $4.5 million $9.2 million • Return on Average Assets 0.23% 0.26% • Return on Average Equity 2.82% 2.92% • $1.6 billion of gross loans Balance Sheet • $1.6 billion of deposits • $13 million of assets per F
Slide 7: 2Q20 Consolidated Financial Statements
2Q20 Consolidated Financial Statements Linked Quarter Dollars in millions, except per share data Income Statement 2Q20 1Q20 Var1 Balance Sheet 2Q20 1Q20 Var1 Total Interest Income $19.3 $20.1 $(0.8) Cash & Cash Equivalents $207 $210 $(3) Total Interest Expense $5.7 $6.8 $1.1 Investment Securities $1
Slide 8: Deposit & Borrowing Trends
Deposit & Borrowing Trends Dollars in millions Deposit Balances • Liability-sensitive balance sheet well Checking positioned for 2021 to capture benefits of Savings lower deposit rates Money Market Time Deposits $1,681 $1,620 • 2H’20 Wholesale runoff of $158 million at an $1,800 $1,502 average rate
Slide 9: Expanding Commercial Relationships
Expanding Commercial Relationships Since 2018, Bankwell has: Analyzed Checking Balances Dollars in millions Rolling 6 Month Average • On boarded 200+ new commercial relationships $110 • Grown Analyzed Checking balances 32%1 $100 ̶ Excludes PPP deposits • Expanded Core Business deposits to > 50% Core
Slide 10: Managing Funding Costs
Managing Funding Costs Dollars in millions • Locked in low-cost long term funding, replacing high-cost funds runoff through the 1Q 2021 • Maintaining additional on-balance sheet liquidity through the 1Q 2021 for increased risk relating to economic disruption and uncertainty caused by the COVID-19 pa
Slide 11: Loan Portfolio Trends
Loan Portfolio Trends Dollars in millions • Outlook for originations and prepayments remain uncertain Loan Portfolio Yields $1,800 5.00%• Loans decreased $6 million in 2Q20, despite $45 4.48% 4.64% 4.58% 4.45% million of core business funding and $56million PPP 4.50% $1,700 4.16% loans (net) $1,605
Slide 12: COVID-19 Deferrals Update
COVID-19 Deferrals Update
Slide 13: COVID-19 Deferrals
COVID-19 Deferrals Dollars in millions Initial Deferral Requests Status of Initial Deferral Requests Loan $ Assoc. Total % of • Received that 86 loans, Loan Type Count w/Requests Outstanding1 Total preliminary verbal indications CRE 139 $308 $1,111 28% representing $228 million, are expected to be c
Slide 14: COVID-19 Deferrals CRE Detail
COVID-19 Deferrals CRE Detail Dollars in millions Initial Deferral Requests Remaining Population Deferral Type x SBA P&I P/O I/O Total $ P&I P/O I/O Total $ Retail $85 $74 $5 $164 $31 A $15 B -- $46 Office $42 $0 $8 $50 $5 $0 -- $5 Mixed Use $24 $24 $0 $48 $11 $4 -- $15 Special Use $7 $7 $0 $14 $7 $
Slide 15: COVID-19 Deferrals CRE Detail Rent / Tenant analysis
COVID-19 Deferrals CRE Detail Rent / Tenant analysis • Relationship Managers and Portfolio Managers reached out the 1st week of July to all clients who received a deferral to collect information, including tenant information • Of the total $304 million deferred CRE loans, $201 million of loans / bor
Slide 16: 2Q20 Performance Impact of COVID-19
2Q20 Performance Impact of COVID-19
Slide 17: COVID-19 Response
COVID-19 Response Customers • Funded 381 Paycheck Protection Program (“PPP”) loans for a total of $60.4 million • Collected $2.1 million in fees from SBA for PPP loans; deferred over 24 month term • Granted deferrals on 159 loans with $340 million in balances; approximately ~22% of total loan portfo
Slide 18: 2Q20 YTD Performance Metrics
2Q20 YTD Performance Metrics Dollars in thousands, except per share data Excluding 2 2Q20 YTD Metrics Reported COVID-19 2 Key Drivers Total assets $2,043,635 $1,899,056 • $7.9 million ALLL provision for COVID-19 Net loans $1,590,995 $1,544,364 • Up to ~$185 million additional liquidity during 1st 6
Slide 19: 2Q20 Net Interest Margin
2Q20 Net Interest Margin Net Interest Margin Walk 0.19% 3.10% 2.89% 0.05% • Excluding impact of additional liquidity 0.03% (invested in cash) and PPP loans, NIM would be ~21 basis points higher, at 3.10% Reported NIM PPP Income Additional Avg Assets (no NIM excl. COVID- • Reported interest expense i
Slide 20: 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: • Normalized liquidity, net of PPP loan fundings and other Cash & Cash Equivalents $207 $109 $(98) balance sheet adjustments Investment Securities $101 $101 $
Slide 21: COVID-19 Adjusted Income Statement
COVID-19 Adjusted Income Statement Dollars in millions Excl. QTD Income Statement Reported COVID-19 Var1 Adjusted income statement reflects the following: • ($0.3) interest income & fees associated with PPP loans Total Interest Income $19.3 $19.0 $(0.3) • ($0.0) nominal interest earned on additional
Slide 22: COVID-19 Adjusted Non Interest Expense
COVID-19 Adjusted Non Interest Expense Dollars in millions Excl. QTD Non Interest Expense Reported COVID Var1 Adjusted interest expense reflects the following: Salaries and employee benefits $5.23 $5.05 $(0.18) Salaries and employee benefits • Employee support costs, such as Occupancy and equipment
Slide 23: Credit & Capital
Credit & Capital
Slide 24: Strong Asset Quality
Strong Asset Quality Dollars in thousands Non Performing Loans / Gross Loans 0.66% 0.88% SBA-guaranteed portion 0.29% of NPLs ($4.6MM) 0.66% 0.66% 0.36% Unguaranteed NPL exposure CRE 0.25% 0.37% Resi 0.10% C&I 0.02% 2017 2018 2019 2Q20 2Q20 Detail NPLs $5,481 $14,082 $10,588 $10,577 SBA guarantee re
Slide 25: ALLL Update
ALLL Update Allowance for Loan Loss (“ALLL”) Walk • Bankwell is not subject to CECL; ALLL is General calculated in accordance with the incurred $7.9MM 1.22% Specific 0.04% loss model 0.84% • PPP loans are guaranteed by the US 0.03% government and therefore carry no reserve ($1.8MM) 1.18% ̶ Assumed a
Slide 26: Tangible Book Value
Tangible Book Value • Despite a $4.9 million reserve for increased credit risk relating to economic disruption and uncertainty caused by the COVID-19 pandemic, TBV remained flat compared to 1Q • TBV has potential for upside, as long term rates rise, the impact to Other Comprehensive Income (“OCI”) i
Slide 27: Capital Position
Capital Position Key Capital Ratios • ~$60 million of additional 1 Total Capital above ‘well 13.63% capitalized’ 13.13% • This estimate represents the Total Capital Total magnitude of credit costs 1 12.44% BWFG could withstand and CET1 12.14% is NOT an estimate of what Tier 1 Tier / CET1 Tier 1 the
Slide 28: Portfolio Overview
Portfolio Overview
Slide 29: Total Loan Portfolio
Total Loan Portfolio Consumer Loans / Other Commercial 0.56% Const. Residential 5.85% 7.42% C&I 17.40% CRE Owner Occupied 9.87% CRE Investor 58.91% Total Loan Portfolio = $1,615 million no single relationship represents more than 5.5% of total loans, as of June 30th, 2020 29
Slide 30: CRE Loan Portfolio
CRE Loan Portfolio 1 Total CRE Portfolio = Special Use Industrial COVID-19 Deferral Population $1,111 million 3.16% Warehouse CRE Loans 10.49% Mixed Use Special UseIndustrial Warehouse 5% 2% 9.20% Mixed Use Retail 16% 29.87% MultiFamily MultiFamily 9.41% 4% 1-4 Family Investment 2.17% Office Other R
Slide 31: CRE Loan Portfolio: Retail Segment Detail
CRE Loan Portfolio 1 Dollars in millions Total CRE: Retail Segment Detail COVID-19 Deferral Population CRE Retail Loans Type Count $ % LTV3 Type Count $ % LTV3 Retail2 82 $204 61.4% 64.6% Retail2 39 $132 79.6% 65.0% Grocery 10 $73 22.1% 62.9% Grocery 1 $18 11.1% 67.1% Pharmacy 8 $27 8.0% 64.1% Pharm
Slide 32: CRE Loan Portfolio: Office Segment Detail
CRE Loan Portfolio 1 Dollars in millions COVID-19 Deferral Population Total CRE: Office Segment Detail CRE Office Loans Type Count $ % LTV3 Type Count $ % LTV3 Office (primarily suburban) 16 $27 53.8% 71.5% Office (primarily suburban) 97 $245 72.9% 65.7% Medical 10 $23 45.7% 66.3% Medical 38 $89 26.
Slide 33: CRE Loan Portfolio: Geography and Loan To Value
CRE Loan Portfolio 1 Dollars in millions Geography Distribution Loan To Value Total COVID-19 GA Property Type $ LTV3 $ LTV3 MS 1.48% Office $336.7 66.1% $50.4 69.1% 1.55% NC All Other Retail $331.8 63.8% $165.8 64.5% 1.62% 9.90% Industrial/Warehouse $116.5 60.7% $6.5 64.9% NJ Multifamily $104.5 68.2
Slide 34: C&I Loan Portfolio
C&I Loan Portfolio Loans by Industry Type Total C&I Portfolio = $281 million COVID-19 Deferral Population C&I Loans Information 3% All Other All Other Arts, Entertainment & 5% Admin & Support, Waste 17% Finance Recreation 4% Management, 27% Health Care & Remediation Services Social Assistance 4% 5%
Slide 35: PPP Loans
PPP Loans • Funded 381 loans for $60.4 million as PPP Loans by Industry Type th of June 30 , 2020 Based on June 30th, 2020 loan balances ̶ $3.9 million paid back w/in window Admin & Support, Waste Management, • Primary focus on providing service to Remediation Services 12% existing Bankwell customer
Slide 36: Commercial Construction Portfolio
Commercial Construction Portfolio By Property Type • Commercial construction loans Medical Office General Condo 2% 1-4 Family Inv. Special Use 2% comprise < 6% of total loan 2% 4% COVID-19 Deferral Population portfolio (~$95 million) Land Construction Loans 5% • 5 construction loans are in the • $93
Slide 37: Residential Portfolio
Residential Portfolio • $129 million Residential portfolio comprised of: COVID-19 Deferral Population ̶ $120 million residential mortgages, with an average Residential Mortgage Loans LTV of 66.6%1 and an average size of $624 thousand ̶ $9 million HELOCs • 19 loans are in the COVID-19 deferral popula
Slide 38: Bankwell History & Overview
Bankwell History & Overview
Slide 39: 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 • Excluding the 3 branches opened in 2018, BWFG has $159 million deposits per branch; highest in Fairfield & New Haven Counti
Slide 40: Financial Snapshot
Financial Snapshot 1 Dollars in thousands, except per share data 2016 2017 2018 2019 2Q20 YTD Total assets $1,628,919 $1,796,607 $1,873,665 $1,882,182 $2,043,635 Net loans $1,343,895 $1,520,879 $1,586,775 $1,588,840 $1,590,995 Loan-to-deposit ratio 105.6% 110.1% 106.4% 107.1% 99.2% Efficiency ratio2
Slide 41: 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 42: Thank You & Questions
x Thank You & Questions
Bankwell Financial Group — Q2 2020 Earnings Presentation on 6ix