Item 5. Market for Registrant’s Common Equity
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
The Company’s Common Stock has traded on the NASDAQ Global Market under the Symbol “BWFG” since the completion of its initial public offering on May 15, 2014.
There were approximately 266 shareholders of record of BWFG Common Stock as of December 31, 2020. This number does not reflect the number of persons or entities holding stock in nominee name through banks, brokerage firms or other nominees.
The Company’s shareholders are entitled to dividends when and if declared by the Board of Directors, out of funds legally available. The ability of the Company to pay dividends depends, in part, on the ability of the Bank to pay dividends to the Company. In accordance with Connecticut statutes, regulatory approval is required for the Bank to pay dividends in excess of the Bank’s profits retained in the current year plus retained profits from the previous two years. The Bank is also prohibited from paying dividends that would reduce its capital ratios below minimum regulatory requirements.
Issuer Purchases of Equity Securities
The following table includes information with respect to repurchases of the Company’s Common Stock during the three‑month period ended December 31, 2020 under the Company’s share repurchase program.
Issuer Purchases of Equity Securities
Period Total Number of Shares (or Units) Purchased Average Price Paid per Share (or Unit) Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs Maximum Number (or Approximate Dollar Value) of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs (1)
October 1, 2020 - October 31, 2020 — $ — — 307,333
November 1, 2020 - November 30, 2020 — — — 307,333
December 1, 2020 - December 31, 2020 — — — 307,333
Total — $ — — 307,333
(1) On December 19, 2018, the Company’s Board of Directors authorized a share repurchase program of up to 400,000 shares of the Company’s Common Stock. The Company may repurchase shares in open market transactions or by other means, such as privately negotiated transactions. The timing, price and volume of repurchases will be based on market conditions, relevant securities laws and other factors. The share repurchase plan does not obligate the Company to acquire any particular amount of Common Stock, and it may be modified or suspended at any time at the Company's discretion.
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Item 6. Selected Financial Data
The following table sets forth selected consolidated financial data as of the dates and for the periods presented. The selected consolidated balance sheet data as of December 31, 2020 and 2019 and the selected consolidated statement of income data for the years ended December 31, 2020, 2019 and 2018 have been derived mainly from our audited consolidated financial statements and related notes that we have included elsewhere in this Annual Report. The selected consolidated balance sheet data as of December 31, 2018, 2017 and 2016 and the selected consolidated statement of income data for the years ended December 31, 2017 and 2016 has been derived mainly from audited consolidated financial statements that are not presented in this Annual Report.
The selected historical consolidated financial data as of any date and for any period are not necessarily indicative of the results that may be achieved as of any future date or for any future period. You should read the following selected statistical and financial data in conjunction with the more detailed information contained in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and the related notes that we have presented elsewhere in this Annual Report.
Performance ratios for the year ended December 31, 2020 were negatively impacted by incremental COVID-19 pandemic related loan loss reserves and a $3.9 million one-time charge related to office consolidation, vendor contract termination and employee severance costs recognized in the fourth quarter of 2020.
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Selected Financial Data
At or For the Years Ended December 31,
2020 2019 2018 2017 2016
(Dollars in thousands, except per share data)
Statements of Income:
Interest income $ 77,487 $ 82,948 $ 80,064 $ 71,201 $ 60,990
Interest expense 22,652 29,187 23,738 16,837 11,898
Net interest income 54,835 53,761 56,326 54,364 49,092
Provision for loan losses 7,605 437 3,440 1,341 3,914
Net interest income after provision for loan losses 47,230 53,324 52,886 53,023 45,178
Noninterest income 2,884 5,244 3,900 4,629 2,676
Noninterest expense 42,813 35,626 35,633 32,523 29,544
Income before income tax 7,301 22,942 21,153 25,129 18,310
Income tax expense 1,397 4,726 3,720 11,299 5,960
Net income 5,904 18,216 17,433 13,830 12,350
Per Share Data:
Basic earnings per share $ 0.75 $ 2.32 $ 2.23 $ 1.80 $ 1.64
Diluted earnings per share $ 0.75 $ 2.31 $ 2.21 $ 1.78 $ 1.62
Book value per share (end of period) (a)
22.77 23.51 22.43 20.98 19.39
Tangible book value per share (end of period) (a)(b)
22.43 23.15 22.06 20.59 18.98
Dividend payout ratio (f)
74.67 % 22.51 % 21.72 % 15.73 % 13.58 %
Shares outstanding (end of period) (a)
7,755,909 7,757,828 7,764,647 7,676,238 7,524,069
Weighted average shares outstanding–basic 7,728,328 7,757,355 7,722,175 7,572,409 7,396,019
Weighted average shares outstanding–diluted 7,748,453 7,784,631 7,775,480 7,670,413 7,491,052
Performance Ratios:
Return on average assets (c)
0.28 % 0.97 % 0.94 % 0.80 % 0.85 %
Return on average common shareholders’ equity 3.35 % 10.20 % 10.19 % 8.93 % 8.94 %
Average shareholders’ equity to average assets 8.36 % 9.53 % 9.24 % 8.97 % 9.47 %
Net interest margin 2.77 % 3.03 % 3.18 % 3.30 % 3.54 %
Efficiency ratio (b)
73.9 % 60.2 % 59.2 % 54.9 % 56.5 %
Asset Quality Ratios:
Total past due loans to total loans (d)
0.93 % 0.77 % 0.78 % 1.67 % 0.47 %
Nonperforming loans to total loans (d)
2.06 % 0.66 % 0.88 % 0.36 % 0.22 %
Nonperforming assets to total assets (e)
1.48 % 0.56 % 0.75 % 0.31 % 0.20 %
Allowance for loan losses to nonperforming loans 62.87 % 127.59 % 109.80 % 344.90 % 612.26 %
Allowance for loan losses to total loans (d)
1.29 % 0.84 % 0.96 % 1.23 % 1.32 %
Net charge-offs (recoveries) to average loans (d)
0.01 % 0.15 % 0.44 % 0.03 % 0.01 %
Statements of Financial Condition:
Total assets $ 2,253,747 $ 1,882,182 $ 1,873,665 $ 1,796,607 $ 1,628,919
Gross portfolio loans (d)
1,625,627 1,604,484 1,604,726 1,543,016 1,365,939
Investment securities 106,890 100,865 116,584 113,767 104,610
Deposits 1,827,316 1,491,903 1,502,244 1,398,405 1,289,037
FHLB borrowings 175,000 150,000 160,000 199,000 160,000
Subordinated debt 25,258 25,207 25,155 25,103 25,051
Total equity 176,602 182,397 174,196 161,027 145,895
Capital Ratios:
Tier 1 capital to average assets
Bankwell Bank 8.44 % 10.99 % 10.14 % 9.61 % 10.10 %
Tier 1 capital to risk-weighted assets
Bankwell Bank 11.06 % 12.53 % 11.56 % 10.99 % 11.59 %
Total capital to risk-weighted assets
Bankwell Bank 12.28 % 13.35 % 12.50 % 12.19 % 12.85 %
Total shareholders’ equity to total assets 7.84 % 9.69 % 9.30 % 8.96 % 8.96 %
Tangible common equity ratio (b)
7.73 % 9.56 % 9.16 % 8.81 % 8.78 %
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(a) Excludes preferred stock and unvested restricted stock awards.
(b) This measure is not a measure recognized under GAAP and is therefore considered to be a non-GAAP financial measure. See “Non-GAAP Financial Measures” for a description of this measure and a reconciliation of this measure to its most directly comparable GAAP measure.
(c) Calculated based on net income before preferred stock dividend.
(d) Calculated using the principal amounts outstanding on loans.
(e) Nonperforming assets consist of nonperforming loans and other real estate owned.
(f) The dividend payout ratio is the dividends per share divided by diluted earnings per share.
NON-GAAP FINANCIAL MEASURES
We identify “efficiency ratio”, “tangible common equity ratio”, “tangible book value per share”, “total revenue” and “return on average common shareholders’ equity” as “non-GAAP financial measures.” In accordance with the SEC’s rules, we classify a financial measure as being a non-GAAP financial measure if that financial measure excludes or includes amounts, or is subject to adjustments that have the effect of excluding or including amounts, that are included or excluded, as the case may be, in the most directly comparable measure calculated and presented in accordance with generally accepted accounting principles as in effect from time to time in the United States in our statements of income, balance sheet or statements of cash flows. Non-GAAP financial measures do not include operating and other statistical measures or ratios or statistical measures calculated using exclusively either financial measures calculated in accordance with GAAP, operating measures or other measures that are not non-GAAP financial measures or both.
The non-GAAP financial measures that we discuss in this annual report should not be considered in isolation or as a substitute for the most directly comparable or other financial measures calculated in accordance with GAAP. Moreover, the manner in which we calculate the non-GAAP financial measures that we discuss in this annual report may differ from that of other companies reporting measures with similar names. You should understand how such other banking organizations calculate their financial measures similar or with names similar to the non-GAAP financial measures we have discussed in this annual report when comparing such non-GAAP financial measures.
Efficiency ratio is defined as non-interest expenses, less merger and acquisition related expenses, other real estate owned expenses and amortization of intangible assets, divided by our operating revenue, which is equal to net interest income plus non-interest income excluding gains and losses on sales of securities and gains and losses on other real estate owned. In our judgment, the adjustments made to operating revenue allow investors and analysts to better assess our operating expenses in relation to our core operating revenue by removing the volatility that is associated with certain one-time items and other discrete items that are unrelated to our core business.
Tangible common equity is defined as total shareholders’ equity, excluding preferred stock, less goodwill and other intangible assets. We believe that this measure is important to many investors in the marketplace who are interested in changes from period to period in common shareholders’ equity exclusive of changes in intangible assets. Goodwill, an intangible asset that is recorded in a purchase business combination, has the effect of increasing both common equity and assets while not increasing our tangible common equity or tangible assets.
Tangible common equity ratio is defined as the ratio of tangible common equity divided by total assets less goodwill and other intangible assets. We believe that this measure is important to many investors in the marketplace who are interested in relative changes from period to period in common equity and total assets, each exclusive of changes in intangible assets. We believe that the most directly comparable GAAP financial measure is total shareholders’ equity to total assets.
Tangible book value per share is defined as book value, excluding the impact of goodwill and other intangible assets, if any, divided by shares of our common stock outstanding.
Total revenue is defined as the sum of net interest income before provision of loan losses and noninterest income.
Return on average common shareholders’ equity is defined as net income attributable to common shareholders divided by total average shareholders’ equity less average preferred stock, if any.
The information provided below presents a reconciliation of each of our non-GAAP financial measures to the most directly comparable GAAP financial measure.
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Years Ended December 31,
2020 2019 2018 2017 2016
(Dollars in thousands, except per share data)
Efficiency Ratio
Noninterest expense $ 42,813 $ 35,626 $ 35,633 $ 32,523 $ 29,544
Less: other real estate owned expenses 6 37 — 70 157
Less: Amortization of intangibles 138 75 92 118 151
Adjusted noninterest expense (numerator) $ 42,669 $ 35,514 $ 35,541 $ 32,335 $ 29,236
Net interest income $ 54,835 $ 53,761 $ 56,326 $ 54,364 $ 49,092
Noninterest income 2,884 5,244 3,900 4,629 2,676
Adjustments for: gains/(losses) on sales of securities — 76 222 165 (115)
Adjustments for: gains (losses) on sale of other real estate owned 19 (102) — (78) 128
Adjusted operating revenue (denominator) $ 57,700 $ 59,031 $ 60,004 $ 58,906 $ 51,755
Efficiency ratio 73.9 % 60.2 % 59.2 % 54.9 % 56.5 %
Tangible Common Equity and
Tangible Common Equity/Tangible Assets
Total shareholders’ equity $ 176,602 $ 182,397 $ 174,196 $ 161,027 $ 145,895
Less: preferred stock — — — — —
Common shareholders’ equity 176,602 182,397 174,196 161,027 145,895
Less: Intangible assets 2,665 2,803 2,879 2,971 3,090
Tangible Common shareholders’ equity $ 173,937 $ 179,594 $ 171,317 $ 158,056 $ 142,805
Total assets $ 2,253,747 $ 1,882,182 $ 1,873,665 $ 1,796,607 $ 1,628,919
Less: Intangible assets 2,665 2,803 2,879 2,971 3,090
Tangible assets $ 2,251,082 $ 1,879,379 $ 1,870,786 $ 1,793,636 $ 1,625,829
Tangible common shareholders’ equity to tangible assets 7.73 % 9.56 % 9.16 % 8.81 % 8.78 %
Tangible Book Value per Share
Total shareholders’ equity $ 176,602 $ 182,397 $ 174,196 $ 161,027 $ 145,895
Less: preferred stock — — — — —
Common shareholders’ equity 176,602 182,397 174,196 161,027 145,895
Less: Intangible assets 2,665 2,803 2,879 2,971 3,090
Tangible common shareholders’ equity $ 173,937 $ 179,594 $ 171,317 $ 158,056 $ 142,805
Common shares issued 7,919,278 7,868,803 7,842,271 7,751,424 7,620,663
Less: shares of unvested restricted stock 163,369 110,975 77,624 75,186 96,594
Common shares outstanding 7,755,909 7,757,828 7,764,647 7,676,238 7,524,069
Book value per share $ 22.77 $ 23.51 $ 22.43 $ 20.98 $ 19.39
Less: effects of intangible assets 0.34 0.36 0.37 0.39 0.41
Tangible Book Value per Common Share $ 22.43 $ 23.15 $ 22.06 $ 20.59 $ 18.98
Total Revenue
Net interest income $ 54,835 $ 53,761 $ 56,326 $ 54,364 $ 49,092
Add: noninterest income 2,884 5,244 3,900 4,629 2,676
Total Revenue $ 57,719 $ 59,005 $ 60,226 $ 58,993 $ 51,768
Noninterest income as a percentage of total revenue 5.00 % 8.89 % 6.48 % 7.85 % 5.17 %
Return on Average Common Shareholders’ Equity
Net Income Attributable to Common Shareholders $ 5,904 $ 18,216 $ 17,433 $ 13,830 $ 12,350
Total average shareholders’ equity $ 176,489 $ 178,510 $ 171,024 $ 154,929 $ 138,131
Less: average preferred stock — — — — —
Average Common Shareholders’ Equity 176,489 178,510 171,024 154,929 138,131
Return on Average Common Shareholders’ Equity 3.35 % 10.20 % 10.19 % 8.93 % 8.94 %
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