Bankwell Financial Group, Inc. · NASDAQ:BWFG
Bankwell Financial — Q4 2019 Earnings Presentation
33 slides from Bankwell Financial's earnings presentation, Jan 27, 2020
Slide 1: Bankwell Financial Group 4Q19 Investor Presentation
Bankwell Financial Group 4Q19 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: 4Q19 & Total Year Highlights
4Q19 & Total Year Highlights
Slide 4: Highlights
Highlights • Reported 4Q19 Net Income of $3.47 million, or $0.44 earnings per share • Reported 2019 Net Income of $18.22 million, or $2.31 earnings per share • Improved deposit pricing and mix: • Reduced rates on key Consumer and Business deposit products • Continued growth in non-interest bearing a
Slide 5: 4Q19 Performance
4Q19 Performance
Slide 6: 4Q19 Results
4Q19 Results Quarter Year to Date • Net Income $3.5 million $18.2 million Profitability • Return on Average Assets 0.73% 0.97% • Return on Average Equity 7.68% 10.20% • $1.6 billion of gross loans Balance Sheet • $1.5 billion of deposits • $12 million of assets per employee • Dividend of $0.13 per s
Slide 7: 4Q Consolidated Statement of Income
4Q Consolidated Statement of Income Dollars in millions 2019 2018 QoQ1 Notes Total Interest Income $19.9 $21.5 $(1.6) Net Interest Income 2019 has lower fee income Total Interest Expense $7.1 $7.1 $0.0 associated with loan prepayments Net Interest Income $12.9 $14.5 $(1.6) Provision for Loan Losses
Slide 8: TY Consolidated Statement of Income
TY Consolidated Statement of Income Dollars in millions 2019 2018 QoQ1 Notes Total Interest Income $82.9 $80.1 $2.9 Net Interest Income 2019 growth in interest income Total Interest Expense $29.2 $23.7 $5.4 driven by fees associated with loan prepayments more than offset by Net Interest Income $53.8
Slide 9: 4Q Consolidated Balance Sheet
4Q Consolidated Balance Sheet 1 Dollars in millions 4Q19 4Q18 V Notes Cash & Cash Equivalents $78 $78 $0 All Other Assets Investment Securities $101 $117 $(16) Change in lease accounting standards now requires on Loans Receivable, net $1,589 $1,587 $2 balance sheet recognition of leases All Other As
Slide 10: Financial Performance Trends
Financial Performance Trends 1 Net Income Revenue $60.2 $59.0 $59.0 $51.8 $46.3 $34.7 Dollars in millionsin Dollars $18.2 $17.4 $12.4 $13.8 $9.0 $4.6 2014 2015 2016 2017 2018 2019 EPS $0.78 $1.21 $1.62 $1.782 $2.21 $2.31 Efficiency Ratio 68.7% 62.3% 56.5% 54.9% 59.2% 60.2% NIM 3.84% 3.77% 3.54% 3.30
Slide 11: Financial Snapshot
Financial Snapshot Dollars in thousands, except per share data 2014 2015 2016 20171 2018 2019 Total assets $1,099,531 $1,330,372 $1,628,919 $1,796,607 $1,873,665 $1,882,182 Net loans $915,981 $1,129,748 $1,343,895 $1,520,879 $1,586,775 $1,588,840 Loans to deposits 110.7% 109.1% 105.6% 110.1% 106.4%
Slide 12: Impact of Hedging on Tangible Book Value
Impact of Hedging on Tangible Book Value • Bankwell actively manages interest rate risk related to its funding sources with interest rate swaps • The interest rate swaps are marked to market each quarter, with the unrealized gains or losses recognized in other comprehensive income • In 2019, falling
Slide 13: Select Trends and Outlook
Select Trends and Outlook
Slide 14: Loan Portfolio Trends: Loan Volume
Loan Portfolio Trends Dollars in millions Loan Volume $409 Originations • Fueled by strong originations in Fundings 4Q19, loan balances grew $40 $311 $308 $312 million, or +10% annualized growth $211 $216 • The incremental impact of the $40 million loan growth on 2020 core earnings is ~$0.12 EPS • 4
Slide 15: Loan Portfolio Trends: Loan Portfolio Yields
Loan Portfolio Trends Dollars in millions Loan Portfolio Yields • Bankwell committed to disciplined loan $1,800 5.00% pricing to defend portfolio yield 4.48% 4.64% 4.58% $1,700 4.38% 4.50% $1,605 $1,604 • 2019 originations at a ~4.90% yield, $1,600 $1,543 4.00% with 4Q19 originations yields of $1,50
Slide 16: Loan Portfolio Trends: Loan Prepayments
Loan Portfolio Trends Dollars in millions Loan Prepayments $184 • 2019 reflects largest prepayment amounts $33 and fees in Bankwell’s history $119 $27 • Prepayment fees vary from loan to loan 4Q $62 $71 and are subject to deal terms and age of loan 3Q $17 • 2020 assumes prepayments and related 2Q $3
Slide 17: Deposit Mix & Pricing Trends
Deposit Mix & Pricing Trends Dollars in millions Deposit Mix Treasury Management Balances1 2018 2019 $108 11.5% 12.8% $83 $70 $71 $53 88.5% 87.2% Non Int Bearing Int Bearing Wholesale Ratio2 23.4% 20.6% 2015 2016 2017 2018 2019 • 2019 core deposits reached $1.25 billion, a record high • Treasury Man
Slide 18: Deposit Mix & Pricing Trends: Cost of Deposits
Deposit Mix & Pricing Trends Cost of Deposits • Liability-sensitive balance sheet well 1.66% positioned to capture benefits of 1 ≤ 1.50% lower short-term rates 1.30% 0.93% • Lowered rates on Money Market, Savings and Retail CDs in September 2019 & December 2019 • The carry-through impact of the 2019
Slide 19: Net Interest Margin Trends
Net Interest Margin Trends Net Interest Margin Components • 2019 Net interest Margin Expressed as % of total earning assets (“NIM”) contracted primarily due to increased funding costs 2018 A 2019 A 2020 E • 2019 contraction tempered by Income on Earning Assets ~4.51% ~4.67% ~4.50% record-high loan p
Slide 20: Loan Sale Trends
Loan Sale Trends Dollars in millions Gains on SBA Loan Sales • Continued focus on Bankwell’s SBA program driving income $1.7 from loan sales $0.4 • Lower than average gains in 4Q19 impacting the quarter $1.0 by ~($0.01) EPS $0.7 4Q $0.1 3Q $0.2 • Continued growth from SBA program anticipated in 2020
Slide 21: Credit Update
Credit Update Dollars in thousands Non Performing Loans / Gross Loans 0.66% 0.88% SBA-guaranteed 0.29% portion of NPLs 0.66% 0.36% 0.37% Core NPL exposure 2017 2018 2019 $000s NPLs $5,481 $14,082 $10,588 Quarry Loans1 $0 $6,943 $1,863 2019 Detail • The Quarry Loans1 credit issue from 2018 is essenti
Slide 22: Credit Update: ALLL Methodology
Credit Update Dollars in millions • The allowance for loan loss (“ALLL”) methodology was updated in 2017 to 1 Impact of ALLL Methodology Change include peer group historical loss data, Annual impact on BWFG’s Loan Loss Provision due to increasing reliance on quantitative 2017 methodology change and
Slide 23: Loan & Deposit Overview
Loan & Deposit Overview
Slide 24: Loans & Deposits
Loans & Deposits Dollars in millions Loans Deposits $1,502 $1,492 $1,600 $1,800 $1,605 $1,604 $1,398 $1,543 $53 $1,289 $1,400 $1,600 $1,366 $177 $1,047 $627 $1,400 $1,148 $170 $1,200 $1,200 $930 $1,000 $835 $1,000 $800 $800 $959 $419 $600 $600 $400 $184 $400 $99 $200 $147 $200 $262 $0 $0 2014 2015 2
Slide 25: Loan Portfolio
Loan Portfolio Consumer Loans / Other 0.62% Commercial Const. Residential • Portfolio oversight 6.14% 8.55% provided by team of 13 skilled credit analysts and C&I portfolio managers, most 14.34% with > 20 years’ experience • Concentration actively managed, with no single relationship representing CR
Slide 26: CRE Loan Portfolio
CRE Loan Portfolio 1 Dollars in millions Special Use Industrial 3.13% Warehouse Retail Composition $ % 11.23% Retail2 $188 59.59% Grocery $73 23.26% Mixed Use Retail 9.89% 27.99% Pharmacy $27 8.49% Gas / Auto Services $14 4.56% Restaurant $13 4.10% MultiFamily Total Retail $316 100.00% 11.26% • Aver
Slide 27: CRE Loan Portfolio Geography
CRE Loan Portfolio 1 Geography Distribution CRE to Risk Based Capital Ratio MS GA 1.54% 480% 1.48% 471% 473% NC All Other 1.61% PA 9.24% 440% 1.75% NY 12.74% CT 71.64% 2016 2017 2018 2019 • Proven track record as CRE Lender with strong risk management practices in place • Continued focus in primary
Slide 28: Bankwell History & Overview
Bankwell History & Overview
Slide 29: Bankwell's Milestones
Bankwell’s Milestones $0 $0.2B $1.1B $1.9B Assets Founded The Bank Founded third bank, Bankwell acquired Opened 3 new of New Canaan Stamford First Bank, a Quinnipiac Bank & branches in division of The Bank of Trust Company Fairfield County New Canaan 2002 2010 2014 2018 2008 2013 2016 2019 Founded s
Slide 30: Bankwell Profile
Bankwell Profile Company Overview NASDAQ: BWFG • Connecticut-based $1.9 billion bank, with focus on CRE and C&I lending • 12 existing branches in Fairfield & New Haven Counties • Excluding the 3 branches opened in 2Q18, BWFG has $159 million deposits per branch; highest in Fairfield & New Haven Coun
Slide 31: Why Bankwell?
Why Bankwell? Growth Performance • Proven track record of • Stock price up 60% since quality loan originations May 2014 IPO1 • Tangible Book Value growth • Strong Net Income growth; of 42% since May 2014 quarterly dividends paid IPO1 since 4Q15 • Operates in premiere • Capital ratios put BWFG market
Slide 32: Management Team
Management Team Years Name Experience Selected Professional Biography Christopher Gruseke 25+ • Founding investor of Bankwell’s precursor, Bank of New Canaan, member of BoD and ALCO President & CEO Committee 2009 to 2012 (since 2015) • 20 year Investment Banking career focused on financial instituti
Slide 33: Thank You & Questions
me Thank You & Questions
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