What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2021-08-06 compared with 2021-05-07 · 252 added, 159 removed, 930 unchanged (31% of the section changed)

3 unchanged sentences

(In thousands, except share data)

March 31, 2021 December 31, 2020

June 30, 2021 December 31, 2020

Cash and due from banks $ 297,851 $ 405,340

4 unchanged sentences

Available for sale investment securities, at fair value 90,983 88,605

Held to maturity investment securities, at amortized cost (fair values of $ 18,550 and $ 20,032 at March 31, 2021 and December 31, 2020, respectively)

Held to maturity investment securities, at amortized cost (fair values of $ 18,634 and $ 20,032 at June 30, 2021 and December 31, 2020, respectively)

16,166 16,078

Total investment securities 109,341 106,890

Loans receivable (net of allowance for loan losses of $ 20,545 at March 31, 2021 and $ 21,009 at December 31, 2020)

Loans receivable (net of allowance for loan losses of $ 16,672 at June 30, 2021 and $ 21,009 at December 31, 2020)

1,719,274 1,601,672

13 unchanged sentences

Advances from the Federal Home Loan Bank 75,000 175,000

Subordinated debentures ($ 25,500 face, less unamortized debt issuance costs of $ 229 and $ 242 at March 31, 2021 and December 31, 2020, respectively)

Subordinated debentures (face value of $ 15,500 and $ 25,500 at June 30, 2021 and December 31, 2020, respectively, less unamortized debt issuance costs of $ 134 and $ 242 at June 30, 2021 and December 31, 2020, respectively)

15,366 25,258

4 unchanged sentences

Common stock, no par value;

10,000,000 shares authorized, 7,908,630 and 7,919,278 shares issued and outstanding at March 31, 2021 and December 31, 2020, respectively

10,000,000 shares authorized, 7,895,101 and 7,919,278 shares issued and outstanding at June 30, 2021 and December 31, 2020, respectively

120,451 121,338

7 unchanged sentences

(In thousands, except share data)

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2021 2020 2021 2020

Interest and dividend income

9 unchanged sentences

(Credit) provision for loan losses ( 20 ) 2,999 ( 316 ) 6,184

Net interest income after provision for loan losses 14,951 10,101

Net interest income after (credit) provision for loan losses 16,599 10,638 31,550 20,739

Noninterest income

7 unchanged sentences

Occupancy and equipment 3,250 2,235 5,656 4,144

Professional services 587 711

Data processing 833 493 1,345 1,029

FDIC insurance 403 70

Professional services 547 434 1,134 1,145

Director fees 327 287 644 582

FDIC insurance 300 283 703 353

Marketing 140 199 131 361

15 unchanged sentences

(In thousands)

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2021 2020 2021 2020

Net income $ 6,228 $ 1,214 $ 11,917 $ 2,577

Other comprehensive income (loss):

Unrealized (losses) gains on securities:

Unrealized holding (losses) gains on available for sale securities ( 1,025 ) 2,224

Unrealized gains (losses) on securities:

Unrealized holding gains (losses) on available for sale securities 693 534 ( 332 ) 2,758

Reclassification adjustment for gain realized in net income — — — —

Net change in unrealized (losses) gains ( 1,025 ) 2,224

Income tax benefit (expense) 227 ( 494 )

Unrealized (losses) gains on securities, net of tax ( 798 ) 1,730

Unrealized gains (losses) on interest rate swaps:

Unrealized gains (losses) on interest rate swaps 10,934 ( 17,426 )

Net change in unrealized gains (losses) 693 534 ( 332 ) 2,758

Income tax (expense) benefit ( 157 ) ( 116 ) 70 ( 610 )

Unrealized gains (losses) on interest rate swaps, net of tax 8,500 ( 13,548 )

Total other comprehensive income (loss), net of tax 7,702 ( 11,818 )

Unrealized gains (losses) on securities, net of tax 536 418 ( 262 ) 2,148

Unrealized (losses) gains on interest rate swaps:

Unrealized (losses) gains on interest rate swaps ( 3,699 ) ( 1,044 ) 7,235 ( 18,470 )

Income tax benefit (expense) 837 227 ( 1,597 ) 4,105

Unrealized (losses) gains on interest rate swaps, net of tax ( 2,862 ) ( 817 ) 5,638 ( 14,365 )

Total other comprehensive (loss) income, net of tax ( 2,326 ) ( 399 ) 5,376 ( 12,217 )

Comprehensive income (loss) $ 3,902 $ 815 $ 17,293 $ ( 9,640 )

4 unchanged sentences

Number of Outstanding Shares Common Stock Retained Earnings Accumulated Other Comprehensive Loss Total

Balance at March 31, 2021 7,908,630 $ 120,398 $ 75,418 $ ( 7,873 ) $ 187,943

Net income — — 6,228 — 6,228

Other comprehensive loss, net of tax — — — ( 2,326 ) ( 2,326 )

Cash dividends declared ($ 0.14 per share)

— — ( 1,103 ) — ( 1,103 )

Stock-based compensation expense — 424 — — 424

Repurchase of common stock ( 13,529 ) ( 371 ) — — ( 371 )

Balance at June 30, 2021 7,895,101 $ 120,451 $ 80,543 $ ( 10,199 ) $ 190,795

Number of Outstanding Shares Common Stock Retained Earnings Accumulated Other Comprehensive Loss Total

Balance at March 31, 2020 7,871,419 $ 119,953 $ 69,595 $ ( 19,334 ) $ 170,214

Net income — — 1,214 — 1,214

Other comprehensive loss, net of tax — — — ( 399 ) ( 399 )

Cash dividends declared ($ 0.14 per share)

— — ( 1,097 ) — ( 1,097 )

Stock-based compensation expense — 428 — — 428

Forfeitures of restricted stock ( 75 ) — — — —

Issuance of restricted stock 16,159 — — — —

Balance at June 30, 2020 7,887,503 $ 120,381 $ 69,712 $ ( 19,733 ) $ 170,360

See accompanying notes to consolidated financial statements (unaudited)

Bankwell Financial Group, Inc.

Consolidated Statements of Shareholders' Equity – (continued)

(In thousands, except share data)

Number of Outstanding Shares Common Stock Retained Earnings Accumulated Other Comprehensive Loss Total

Balance at December 31, 2020 7,919,278 $ 121,338 $ 70,839 $ ( 15,575 ) $ 176,602

8 unchanged sentences

Repurchase of common stock ( 79,155 ) ( 1,796 ) — — ( 1,796 )

Balance at March 31, 2021 7,908,630 $ 120,398 $ 75,418 $ ( 7,873 ) $ 187,943

Balance at June 30, 2021 7,895,101 $ 120,451 $ 80,543 $ ( 10,199 ) $ 190,795

Number of Outstanding Shares Common Stock Retained Earnings Accumulated Other Comprehensive Loss Total

9 unchanged sentences

Repurchase of common stock ( 58,499 ) ( 1,037 ) — — ( 1,037 )

Balance at March 31, 2020 7,871,419 $ 119,953 $ 69,595 $ ( 19,334 ) $ 170,214

Balance at June 30, 2020 7,887,503 $ 120,381 $ 69,712 $ ( 19,733 ) $ 170,360

See accompanying notes to consolidated financial statements (unaudited)

2 unchanged sentences

(In thousands)

Three Months Ended March 31,

Six Months Ended June 30,

Cash flows from operating activities

7 unchanged sentences

Amortization of debt issuance costs 108 26

Change in valuation allowance of right-of-use asset ( 29 ) —

Increase in cash surrender value of bank-owned life insurance ( 482 ) ( 484 )

12 unchanged sentences

Proceeds from principal repayments on held to maturity securities 4,653 116

Net proceeds from sales and calls of available for sale securities — 1,100

Purchases of marketable equity securities ( 13 ) ( 19 )

Purchase of held to maturity securities ( 4,736 ) —

Purchases of available for sale securities ( 11,648 ) ( 4,000 )

Purchases of held to maturity securities ( 4,736 ) —

Purchases of bank-owned life insurance ( 5,500 ) —

Net increase in loans ( 116,887 ) ( 10,391 )

2 unchanged sentences

Purchases of premises and equipment, net ( 4,127 ) ( 230 )

Reduction of Federal Home Loan Bank stock 1,414 968

Reduction (purchase) of Federal Home Loan Bank stock 4,016 ( 360 )

Net cash used in investing activities ( 124,075 ) ( 7,940 )

3 unchanged sentences

(In thousands)

Three Months Ended March 31,

Six Months Ended June 30,

Cash flows from financing activities

2 unchanged sentences

Net change in FHLB advances ( 100,000 ) 25,000

Repayment of subordinated debt ( 10,000 ) —

Proceeds from exercise of options 53 16

11 unchanged sentences

Noncash investing and financing activities:

Loans transferred to other real estate owned $ — $ 180

Net change in unrealized gains or losses on available for sale securities ( 332 ) 2,758

7 unchanged sentences

The Bank is a Connecticut state chartered commercial bank, founded in 2002, whose deposits are insured under the Deposit Insurance Fund administered by the Federal Deposit Insurance Corporation (“FDIC”).

The Bank provides a range of services to customers primarily concentrated in Connecticut, with the majority of the Company's loans in Fairfield and New Haven Counties and some New York metro area counties.

In addition, the Bank pursues certain types of commercial lending opportunities in other markets outside our primary market, particularly where we have strong existing relationships.

The Bank provides a wide range of services to customers in our primary market, an area encompassing approximately a 100 mile radius around our branch network.

In addition, the Bank pursues certain types of commercial lending opportunities outside our primary market, particularly where we have strong relationships.

The Bank operates branches in New Canaan, Stamford, Fairfield, Wilton, Westport, Darien, Norwalk, and Hamden Connecticut.

8 unchanged sentences

The COVID-19 pandemic has resulted in significant economic disruption affecting our business and the clients we serve.

As vaccination efforts have rapidly expanded, restrictions on businesses are being lifted and a return to more normal economic activity is expected.

However, a significant degree of uncertainty still exists concerning the ultimate duration and magnitude of the COVID-19 pandemic.

As vaccination efforts continue, restrictions on businesses have been lifted and a return to more normal economic activity has begun.

However, a significant degree of uncertainty still exists concerning the ultimate duration and magnitude of the COVID-19 pandemic and subsequent outbreaks, including whether restrictions that have been lifted will need to be imposed again or tightened in the future.

Given the ongoing and dynamic nature of the circumstances, it is still difficult to predict the full impact of the COVID-19 pandemic on our business.

8 unchanged sentences

The Company has significant concentrations in commercial real estate loans.

The Company does not have any significant concentrations in any one industry or customer.

Common Share Repurchases

6 unchanged sentences

These reclassifications only change the reporting categories and do not affect the consolidated results of operations or consolidated financial position of the Company.

Recent Events Concerning the Company’s Financial Position

Under the provisions of the Coronavirus Aid, Relief and Economic Security Act ("CARES Act"), the Company is eligible for an employee retention credit subject to certain criteria.

In connection with the CARES Act, the Company adopted a policy to recognize the employee retention credit when earned and to recognize the credit as other noninterest income in the consolidated statements of income.

Accordingly, the Company recorded a $ 0.9 million employee retention credit during the three months ended March 31, 2021.

Recent accounting pronouncements

31 unchanged sentences

The amendments in this update apply only to contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform.

The amendments in this update are effective for all entities as of March 12, 2020

through December 31, 2022.

Optional expedients include that modifications of contracts should be accounted for by prospectively adjusting the effective interest rate and modifications of leases should be accounted for as a continuation of the existing contract with no reassessments of lease classification and discount rate or remeasurements of lease payments.

The amendments in this update are effective for all entities as of March 12, 2020 through December 31, 2022.

existing contract with no reassessments of lease classification and discount rate or remeasurements of lease payments.

This ASU also provides many practical expedients for derivative accounting.

9 unchanged sentences

Investment Securities

The amortized cost, gross unrealized gains and losses and fair value of available for sale and held to maturity securities at March 31, 2021 were as follows:

March 31, 2021

The amortized cost, gross unrealized gains and losses and fair value of available for sale and held to maturity securities at June 30, 2021 were as follows:

June 30, 2021

Amortized Cost Gross Unrealized Fair Value

3 unchanged sentences

Less than one year $ 9,989 $ 81 $ — $ 10,070

Due from one through five years 10,629 — ( 19 ) 10,610

Due from five through ten years 7,949 713 — 8,662

2 unchanged sentences

Corporate bonds

Due from one through five years 1,000 8 — 1,008

Due from five through ten years 10,000 464 — 10,464

30 unchanged sentences

Total held to maturity securities $ 16,078 $ 3,954 $ — $ 20,032

There were no sales of investment securities during the three months ended March 31, 2021 or 2020.

At March 31, 2021 and December 31, 2020, none of the Company's securities were pledged as collateral with the Federal Home Loan Bank ("FHLB") or any other institution.

As of March 31, 2021 and December 31, 2020, the actual durations of the Company's available for sale securities were significantly shorter than the stated maturities.

As of March 31, 2021, the Company held marketable equity securities with a fair value of $ 2.2 million and an amortized cost of $ 2.1 million.

There were no sales of investment securities during the three or six months ended June 30, 2021 or 2020.

At June 30, 2021 and December 31, 2020, none of the Company's securities were pledged as collateral with the Federal Home Loan Bank ("FHLB") or any other institution.

As of June 30, 2021 and December 31, 2020, the actual durations of the Company's available for sale securities were significantly shorter than the stated maturities.

As of June 30, 2021, the Company held marketable equity securities with a fair value of $ 2.2 million and an amortized cost of $ 2.1 million.

At December 31, 2020, the Company held marketable equity securities with a fair value of $ 2.2 million and an amortized cost of $ 2.1 million.

1 unchanged sentence

There were no investment securities as of December 31, 2020, in which the fair value of the security was less than the amortized cost of the security.

The following table provides information regarding investment securities with unrealized losses, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position at March 31, 2021:

Length of Time in Continuous Unrealized Loss Position

5 unchanged sentences

(Dollars in thousands)

March 31, 2021

June 30, 2021

Government and agency obligations $ 18,761 $ ( 43 ) 0.23 % $ — $ — — % $ 18,761 $ ( 43 ) 0.23 %

Corporate bonds 5,959 ( 41 ) 0.68 — — — 5,959 ( 41 ) 0.68

State agency and municipal obligations 4,457 ( 223 ) 4.76 — — — 4,457 ( 223 ) 4.76

Total investment securities $ 23,218 $ ( 266 ) 1.13 % $ — $ — — % $ 23,218 $ ( 266 ) 1.13 %

There were six investment securities as of March 31, 2021, in which the fair value of the security was less than the amortized cost of the security.

There were three investment securities as of June 30, 2021, in which the fair value of the security was less than the amortized cost of the security.

Government and agency obligations owned are either direct obligations of the U.S.

1 unchanged sentence

Government, therefore the contractual cash flows are guaranteed and as a result the unrealized losses in this portfolio are considered to be only temporarily impaired.

The Company continually monitors its state agency, municipal and corporate bond portfolios and at this time these portfolios have minimal default risk because state agency, municipal and corporate bonds are all rated investment grade or deemed to be of investment grade quality.

The Company has the intent and ability to retain its investment securities in an unrealized loss position at March 31, 2021 until the decline in value has recovered or the security has matured.

The Company continually monitors its state agency and municipal bond portfolios and at this time these portfolios have minimal default risk because state agency and municipal bonds are all rated investment grade or deemed to be of investment grade quality.

The Company has the intent and ability to retain its investment securities in an unrealized loss position at June 30, 2021 until the decline in value has recovered or the security has matured.

Loans Receivable and Allowance for Loan Losses

The following table sets forth a summary of the loan portfolio at March 31, 2021 and December 31, 2020:

(In thousands) March 31, 2021 December 31, 2020

The following table sets forth a summary of the loan portfolio at June 30, 2021 and December 31, 2020:

(In thousands) June 30, 2021 December 31, 2020

Real estate loans:

10 unchanged sentences

Loans receivable, net $ 1,719,274 $ 1,601,672

(1) The March 31, 2021 and December 31, 2020 balance includes $ 19.2 million and $ 34.8 million, respectively, of Paycheck Protection Program ("PPP") loans made under the CARES Act.

(1) The June 30, 2021 and December 31, 2020 balance includes $ 7.9 million and $ 34.8 million, respectively, of Paycheck Protection Program ("PPP") loans made under the CARES Act.

Lending activities consist of commercial real estate loans, commercial business loans and, to a lesser degree, a variety of consumer loans.

23 unchanged sentences

Commercial Real Estate:

This portfolio segment includes loans secured by commercial real estate, multi-family dwellings and investor-owned one-to-four family dwellings.

This portfolio segment includes loans secured by commercial real estate, multi-family dwellings, owner-occupied commercial real estate and investor-owned one-to-four family dwellings.

Loans secured by commercial real estate generally have larger loan balances and more credit risk than owner occupied one-to-four family mortgage loans.

15 unchanged sentences

Allowance for loan losses

The following tables set forth the activity in the Company’s allowance for loan losses for the three months ended March 31, 2021 and 2020, by portfolio segment:

The following tables set forth the activity in the Company’s allowance for loan losses for the three and six months ended June 30, 2021 and 2020, by portfolio segment:

Residential Real Estate Commercial Real Estate Construction Commercial Business Consumer Total

(In thousands)

Three Months Ended March 31, 2021

Three Months Ended June 30, 2021

Beginning balance $ 501 $ 16,259 $ 297 $ 3,452 $ 36 $ 20,545

5 unchanged sentences

(In thousands)

Three Months Ended March 31, 2020

Three Months Ended June 30, 2020

Beginning balance $ 785 $ 13,134 $ 466 $ 2,301 $ — $ 16,686

1 unchanged sentence

Recoveries — — — — — —

Provisions (credits) 24 1,275 ( 25 ) 1,702 23 2,999

Ending balance $ 809 $ 14,409 $ 441 $ 4,003 $ — $ 19,662

Residential Real Estate Commercial Real Estate Construction Commercial Business Consumer Total

(In thousands)

Six Months Ended June 30, 2021

Beginning balance $ 610 $ 16,425 $ 221 $ 3,753 $ — $ 21,009

Charge-offs — ( 3,977 ) — ( 51 ) ( 18 ) ( 4,046 )

Recoveries — — — 16 9 25

(Credits) provisions ( 292 ) 761 ( 88 ) ( 742 ) 45 ( 316 )

Ending balance $ 318 $ 13,209 $ 133 $ 2,976 $ 36 $ 16,672

Residential Real Estate Commercial Real Estate Construction Commercial Business Consumer Total

(In thousands)

Six Months Ended June 30, 2020

Beginning balance $ 730 $ 10,551 $ 324 $ 1,903 $ 1 $ 13,509

Charge-offs — — — ( 8 ) ( 25 ) ( 33 )

Recoveries — — — 1 1 2

Provisions 79 3,858 117 2,107 23 6,184

Ending balance $ 809 $ 14,409 $ 441 $ 4,003 $ — $ 19,662

Loans evaluated for impairment and the related allowance for loan losses as of March 31, 2021 and December 31, 2020 were as follows:

Loans evaluated for impairment and the related allowance for loan losses as of June 30, 2021 and December 31, 2020 were as follows:

Portfolio Allowance

(In thousands)

March 31, 2021

June 30, 2021

Loans individually evaluated for impairment:

12 unchanged sentences

Total $ 1,738,493 $ 16,672

As of March 31, 2021, $ 59.3 million of loans were individually evaluated for impairment and $ 3.2 million of these loans were determined not impaired.

As of June 30, 2021, $ 49.2 million of loans were individually evaluated for impairment and $ 0.3 million of these loans were determined not impaired.

Portfolio Allowance

32 unchanged sentences

In addition to internal review at multiple points, outsourced loan review opines on risk ratings with regard to the sample of loans their review covers.

The following tables present credit risk ratings by loan segment as of March 31, 2021 and December 31, 2020:

The following tables present credit risk ratings by loan segment as of June 30, 2021 and December 31, 2020:

Commercial Credit Quality Indicators

March 31, 2021 December 31, 2020

June 30, 2021 December 31, 2020

Commercial Real Estate Construction Commercial Business Total Commercial Real Estate Construction Commercial Business Total

7 unchanged sentences

Residential and Consumer Credit Quality Indicators

March 31, 2021 December 31, 2020

June 30, 2021 December 31, 2020

Residential Real Estate Consumer Total Residential Real Estate Consumer Total

16 unchanged sentences

Loans that are granted payment deferrals under the CARES Act are not required to be reported as past due or placed on non-accrual status if the criteria under section 4013 of the CARES Act is met.

As of March 31, 2021, $ 0.3 million of loans remained on active deferral under the CARES Act.

The following tables set forth certain information with respect to the Company's loan portfolio delinquencies by portfolio segment as of March 31, 2021 and December 31, 2020:

March 31, 2021

As of June 30, 2021, no loans remained on active deferral under the CARES Act.

The following tables set forth certain information with respect to the Company's loan portfolio delinquencies by portfolio segment as of June 30, 2021 and December 31, 2020:

June 30, 2021

30-59 Days Past Due 60-89 Days Past Due 90 Days or Greater Past Due Total Past Due Current Total Loans

17 unchanged sentences

Total loans $ 10,592 $ 248 $ 4,244 $ 15,084 $ 1,610,543 $ 1,625,627

There was one loan, totaling $ 2.7 million, delinquent greater than 90 days and still accruing interest as of March 31, 2021.

The delinquency for this particular loan is a result of an administrative delay in processing a loan modification.

There were no loans delinquent greater than 90 days and still accruing interest as of December 31, 2020.

There were no loans delinquent greater than 90 days and still accruing interest as of June 30, 2021 and December 31, 2020.

Loans on nonaccrual status

The following is a summary of nonaccrual loans by portfolio segment as of March 31, 2021 and December 31, 2020:

March 31, 2021 December 31, 2020

The following is a summary of nonaccrual loans by portfolio segment as of June 30, 2021 and December 31, 2020:

June 30, 2021 December 31, 2020

(In thousands)

4 unchanged sentences

Total $ 27,329 $ 33,416

Interest income on loans that would have been recognized if loans on nonaccrual status had been current in accordance with their original terms for the three months ended March 31, 2021 and 2020 was $ 0.4 million and $ 0.2 million, respectively.

There was no interest income recognized on these loans for the three months ended March 31, 2021 and 2020.

At March 31, 2021 and December 31, 2020, there were no commitments to lend additional funds to any borrower on nonaccrual status.

Nonaccrual loans with no specific reserve totaled $ 16.3 million and $ 17.5 million at March 31, 2021 and December 31, 2020, respectively, as these loans were deemed to be adequately collateralized.

Interest income on loans that would have been recognized if loans on nonaccrual status had been current in accordance with their original terms for the six months ended June 30, 2021 and 2020 was $ 0.7 million and $ 0.4 million, respectively.

There was no interest income recognized on these loans for the six months ended June 30, 2021 and 2020.

At June 30, 2021 and December 31, 2020, there were no commitments to lend additional funds to any borrower on nonaccrual status.

Nonaccrual loans with no specific reserve totaled $ 16.4 million and $ 17.5 million at June 30, 2021 and December 31, 2020, respectively, as these loans were deemed to be adequately collateralized.

Impaired loans

2 unchanged sentences

When the Company classifies a problem loan as impaired, it evaluates whether a specific valuation allowance is required for that portion of the asset that is estimated to be impaired.

The following table summarizes impaired loans by portfolio segment as of March 31, 2021 and December 31, 2020:

The following table summarizes impaired loans by portfolio segment as of June 30, 2021 and December 31, 2020:

Carrying Amount Unpaid Principal Balance Associated Allowance

March 31, 2021 December 31, 2020 March 31, 2021 December 31, 2020 March 31, 2021 December 31, 2020

June 30, 2021 December 31, 2020 June 30, 2021 December 31, 2020 June 30, 2021 December 31, 2020

(In thousands)

10 unchanged sentences

Total impaired loans $ 48,924 $ 47,706 $ 53,919 $ 48,870 $ 2,788 $ 5,045

The following table summarizes the average carrying amount of impaired loans and interest income recognized on impaired loans by portfolio segment for the three months ended March 31, 2021 and 2020:

The following tables summarize the average carrying amount of impaired loans and interest income recognized on impaired loans by portfolio segment for the three and six months ended June 30, 2021 and 2020:

Average Carrying Amount Interest Income Recognized

Three Months Ended March 31, Three Months Ended March 31,

Three Months Ended June 30, Three Months Ended June 30,

2021 2020 2021 2020

11 unchanged sentences

Total impaired loans $ 51,685 $ 22,443 $ 323 $ 130

Average Carrying Amount Interest Income Recognized

Six Months Ended June 30, Six Months Ended June 30,

2021 2020 2021 2020

(In thousands)

Impaired loans without a valuation allowance:

Residential real estate $ 4,180 $ 4,106 $ 43 $ 55

Commercial real estate 11,008 7,961 362 76

Commercial business 4,687 3,682 67 6

Construction 8,997 — — —

Total impaired loans without a valuation allowance 28,872 15,749 472 137

Impaired loans with a valuation allowance:

Commercial real estate $ 23,249 $ 6,288 $ 428 $ 126

Commercial business 124 531 3 4

Total impaired loans with a valuation allowance 23,373 6,819 431 130

Total impaired loans $ 52,245 $ 22,568 $ 903 $ 267

Troubled debt restructurings ("TDRs")

6 unchanged sentences

Nonaccrual classification may be removed if the borrower demonstrates compliance with the modified terms for a minimum of six months.

Loans classified as TDRs totaled $ 9.6 million at March 31, 2021 and $ 9.1 million at December 31, 2020.

The following table provides information on loans that were modified as TDRs during the three months ended March 31, 2021 and 2020.

There were no loans modified as TDRs during the three months ended March 31, 2020.

Loans classified as TDRs totaled $ 16.0 million at June 30, 2021 and $ 9.1 million at December 31, 2020.

The following tables provide information on loans that were modified as TDRs during the periods indicated.

Number of Loans Pre-Modification Post-Modification

(Dollars in thousands) 2021 2020 2021 2020 2021 2020

Three Months Ended March 31,

Three Months Ended June 30,

Residential real estate 1 — $ 132 $ — $ 132 $ —

Commercial business 1 — 2,567 — 2,655 —

Commercial real estate 1 — 3,217 — 3,168 —

Total 3 — $ 5,916 $ — $ 5,955 $ —

At March 31, 2021 and December 31, 2020, there were three nonaccrual loans identified as TDRs totaling $ 1.4 million and three nonaccrual loans identified as TDRs totaling $ 1.4 million, respectively.

There were no loans modified in a troubled debt restructuring that re-defaulted during the three months ended March 31, 2021 and March 31, 2020.

The following table provides information on how loans were modified as TDRs during the three months ended March 31, 2021 and March 31, 2020.

There were no loans modified as TDRs during the three months ended March 31, 2020.

Three Months Ended March 31,

Number of Loans Pre-Modification Post-Modification

(Dollars in thousands) 2021 2020 2021 2020 2021 2020

Six Months Ended June 30,

Residential real estate 2 — $ 764 $ — $ 764 $ —

Commercial business 1 — 2,567 — 2,655 —

Commercial real estate 1 — 3,217 — 3,168 —

Total 4 — $ 6,548 $ — $ 6,587 $ —

At June 30, 2021 and December 31, 2020, there were four nonaccrual loans identified as TDRs totaling $ 1.5 million and three nonaccrual loans identified as TDRs totaling $ 1.4 million, respectively.

There were no loans modified in a troubled debt restructuring that re-defaulted during the six months ended June 30, 2021 and June 30, 2020.

The following table provides information on how loans were modified as TDRs during the three and six months ended June 30, 2021 and June 30, 2020.

Three Months Ended June 30, Six Months Ended June 30,

2021 2020 2021 2020

(In thousands)

Payment concession $ 132 $ — $ 764 $ —

Maturity, rate and payment concession 2,655 — 2,655 —

Rate concession 3,168 — 3,168 —

Total $ 5,955 $ — $ 6,587 $ —

2 unchanged sentences

Shareholders' Equity

The Company has 10,000,000 shares authorized and 7,908,630 shares issued and outstanding at March 31, 2021 and 10,000,000 shares authorized and 7,919,278 shares issued and outstanding at December 31, 2020.

The Company has 10,000,000 shares authorized and 7,895,101 shares issued and outstanding at June 30, 2021 and 10,000,000 shares authorized and 7,919,278 shares issued and outstanding at December 31, 2020.

The Company's stock is traded on the NASDAQ stock market under the ticker symbol BWFG.

8 unchanged sentences

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.

During the three months ended March 31, 2021, the Company purchased 65,626 shares of its Common Stock at a weighted average price of $ 21.66 per share.

During the six months ended June 30, 2021, the Company purchased 79,155 shares of its Common Stock at a weighted average price of $ 22.68 per share.

During the year ended December 31, 2020, the Company purchased 58,499 shares of its Common Stock at a weighted average price of $ 17.69 per share.

4 unchanged sentences

The Company's current derivative positions will cause a decrease to other comprehensive income in a falling interest rate environment and an increase in a rising interest rate environment.

The Company’s total comprehensive income or loss for the three months ended March 31, 2021 and March 31, 2020 is reported in the Consolidated Statements of Comprehensive Income.

The following tables present the changes in accumulated other comprehensive income (loss) by component, net of tax for the three months ended March 31, 2021 and March 31, 2020:

The Company’s total comprehensive income or loss for the three and six months ended June 30, 2021 and June 30, 2020 is reported in the Consolidated Statements of Comprehensive Income.

The following tables present the changes in accumulated other comprehensive income (loss) by component, net of tax for the three and six months ended June 30, 2021 and June 30, 2020:

Net Unrealized Gain (Loss) on Available for Sale Securities Net Unrealized Gain (Loss) on Interest Rate Swaps Total

(In thousands)

Balance at March 31, 2021 $ 1,946 $ ( 9,819 ) $ ( 7,873 )

Other comprehensive income (loss) before reclassifications, net of tax 536 ( 3,599 ) ( 3,063 )

Amounts reclassified from accumulated other comprehensive income, net of tax — 737 737

Net other comprehensive income (loss) 536 ( 2,862 ) ( 2,326 )

Balance at June 30, 2021 $ 2,482 $ ( 12,681 ) $ ( 10,199 )

Net Unrealized Gain (Loss) on Available for Sale Securities Net Unrealized Gain (Loss) on Interest Rate Swaps Total

(In thousands)

Balance at March 31, 2020 $ 2,658 $ ( 21,992 ) $ ( 19,334 )

Other comprehensive income (loss) before reclassifications, net of tax 418 ( 1,028 ) ( 610 )

Amounts reclassified from accumulated other comprehensive income, net of tax — 211 211

Net other comprehensive income (loss) 418 ( 817 ) ( 399 )

Balance at June 30, 2020 $ 3,076 $ ( 22,809 ) $ ( 19,733 )

Net Unrealized Gain (Loss) on Available for Sale Securities Net Unrealized Gain (Loss) on Interest Rate Swaps Total

(In thousands)

Balance at December 31, 2020 $ 2,744 $ ( 18,319 ) $ ( 15,575 )

2 unchanged sentences

Net other comprehensive (loss) income ( 262 ) 5,638 5,376

Balance at March 31, 2021 $ 1,946 $ ( 9,819 ) $ ( 7,873 )

Balance at June 30, 2021 $ 2,482 $ ( 12,681 ) $ ( 10,199 )

Net Unrealized Gain (Loss) on Available for Sale Securities Net Unrealized Gain (Loss) on Interest Rate Swaps Total

4 unchanged sentences

Net other comprehensive income (loss) 2,148 ( 14,365 ) ( 12,217 )

Balance at March 31, 2020 $ 2,658 $ ( 21,992 ) $ ( 19,334 )

Balance at June 30, 2020 $ 3,076 $ ( 22,809 ) $ ( 19,733 )

The following table provides information for the items reclassified from accumulated other comprehensive income or loss:

Accumulated Other Comprehensive Income Components Three Months Ended March 31, Associated Line Item in the Consolidated Statements of Income

Accumulated Other Comprehensive Income Components Three Months Ended June 30, Six Months Ended June 30, Associated Line Item in the Consolidated Statements of Income

2021 2020 2021 2020

(In thousands)

Unrealized (losses) gains on derivatives $ ( 922 ) $ ( 62 ) Interest expense on borrowings

Tax benefit (expense) 205 13 Income tax expense

Unrealized losses on derivatives $ ( 953 ) $ ( 270 ) $ ( 1,875 ) $ ( 333 ) Interest expense on borrowings

Tax benefit 216 59 414 74 Income tax expense

Net of tax $ ( 737 ) $ ( 211 ) $ ( 1,461 ) $ ( 259 )

7 unchanged sentences

The following table is a reconciliation of earnings available to common shareholders and basic weighted average common shares outstanding to diluted weighted average common shares outstanding, reflecting the application of the two-class method:

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2021 2020 2021 2020

(In thousands, except per share data)

3 unchanged sentences

Undistributed earnings allocated to participating securities (1)

( 99 ) ( 2 ) ( 189 ) ( 5 )

Net income for earnings per share calculation $ 6,107 $ 1,196 $ 11,684 $ 2,539

5 unchanged sentences

Diluted earnings per common share $ 0.79 $ 0.16 $ 1.50 $ 0.33

Awards excluded from the calculation of diluted EPS (3) :

Stock options — 10 — —

(1) Represents dividends paid and undistributed earnings allocated to unvested stock-based awards that contain non-forfeitable rights to dividends.

(2) Represents the effect of the assumed exercise of stock options and the vesting of restricted shares, as applicable, utilizing the treasury stock method.

(3) Represents stock-based awards not included in the computation of potential common shares for purposes of calculating diluted EPS as the exercise prices were greater than the average market price of the Company's common stock, and, therefore, are considered anti-dilutive.

Regulatory Matters

15 unchanged sentences

Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Company’s consolidated financial statements.

As of March 31, 2021, the Bank and Company met all capital adequacy requirements to which they are subject.

As of June 30, 2021, the Bank and Company met all capital adequacy requirements to which they are subject.

There are no conditions or events since then that management believes have changed this conclusion.

The capital amounts and ratios for the Bank and the Company at March 31, 2021 and December 31, 2020 were as follows:

The capital amounts and ratios for the Bank and the Company at June 30, 2021 and December 31, 2020 were as follows:

Minimum Regulatory Capital Required for Capital Adequacy plus Capital Conservation Buffer Minimum Regulatory Capital to be Well Capitalized Under Prompt Corrective Action Provisions

2 unchanged sentences

Bankwell Bank

March 31, 2021

June 30, 2021

Common Equity Tier 1 Capital to Risk-Weighted Assets $ 205,649 10.95 % $ 131,522 7.00 % $ 122,128 6.50 %

3 unchanged sentences

Bankwell Financial Group, Inc.

March 31, 2021

June 30, 2021

Common Equity Tier 1 Capital to Risk-Weighted Assets $ 198,360 10.54 % $ 131,737 7.00 % N/A N/A

22 unchanged sentences

Reserve Requirements on Cash

The Bank was not required to maintain a minimum reserve balance in the Federal Reserve Bank (FRB) at March 31, 2021 or December 31, 2020 as the FRB has waived this requirement due to the COVID-19 pandemic.

At March 31, 2021 and December 31, 2020, deposits consisted of the following:

2021 December 31, 2020

The Bank was not required to maintain a minimum reserve balance in the Federal Reserve Bank (FRB) at June 30, 2021 or December 31, 2020 as the FRB has waived this requirement due to the COVID-19 pandemic.

At June 30, 2021 and December 31, 2020, deposits consisted of the following:

June 30, 2021 December 31, 2020

(In thousands)

7 unchanged sentences

Total deposits $ 1,939,302 $ 1,827,316

Maturities of time certificates of deposit as of March 31, 2021 and December 31, 2020 are summarized below:

2021 December 31, 2020

Maturities of time certificates of deposit as of June 30, 2021 and December 31, 2020 are summarized below:

June 30, 2021 December 31, 2020

(In thousands)

4 unchanged sentences

Total $ 486,245 $ 627,230

The aggregate amount of individual certificate accounts, including brokered deposits with balances of $250,000 or more, was approximately $ 299.8 million at March 31, 2021 and $ 353.7 million at December 31, 2020.

Brokered certificates of deposits totaled $ 200.1 million at March 31, 2021 and $ 238.9 million at December 31, 2020.

Certificates of deposits from national listing services totaled $ 4.9 million at March 31, 2021 and $ 18.4 million at December 31, 2020.

Brokered money market accounts totaled $ 53.8 million at March 31, 2021 and $ 13.5 million at December 31, 2020.

The following table summarizes interest expense by account type for the three ended March 31, 2021 and 2020:

Three Months Ended March 31,

The aggregate amount of individual certificate accounts, including brokered deposits with balances of $250,000 or more, was approximately $ 284.8 million at June 30, 2021 and $ 353.7 million at December 31, 2020.

Brokered certificates of deposits totaled $ 200.1 million at June 30, 2021 and $ 238.9 million at December 31, 2020.

Certificates of deposits from national listing services totaled $ 1.1 million at June 30, 2021 and $ 18.4 million at December 31, 2020.

Brokered money market accounts totaled $ 104.0 million at June 30, 2021 and $ 13.5 million at December 31, 2020.

The following table summarizes interest expense on deposits by account type for the three and six months ended June 30, 2021 and 2020:

Three Months Ended June 30, Six Months Ended June 30,

2021 2020 2021 2020

(In thousands)

11 unchanged sentences

To date, all equity awards have been in the form of stock options or restricted stock.

At March 31, 2021, there were 627,527 shares reserved for future issuance under the 2012 Plan.

At June 30, 2021, there were 641,056 shares reserved for future issuance under the 2012 Plan.

Stock Options :

The Company accounts for stock options based on the fair value at the date of grant and records an expense over the vesting period of such awards on a straight line basis.

There were no options granted during the three months ended March 31, 2021.

A summary of the status of outstanding stock options for the three months ended March 31, 2021 is presented below:

Three Months Ended March 31, 2021

There were no options granted during the six months ended June 30, 2021.

A summary of the status of outstanding stock options for the six months ended June 30, 2021 is presented below:

Six Months Ended June 30, 2021

Number of Shares Weighted Average Exercise Price

4 unchanged sentences

Intrinsic value is the amount by which the fair value of the underlying stock exceeds the exercise price of an option on the exercise date.

The total intrinsic value of share options exercised during the three months ended March 31, 2021 was $ 19 thousand.

The range of exercise prices for the 11,680 options exercisable at March 31, 2021 was $ 15.00 to $ 17.86 per share.

The weighted average remaining contractual life for these options was 1.9 years at March 31, 2021.

At March 31, 2021, as all awarded options have vested, all of the outstanding options are exercisable, and the aggregate intrinsic value of these options was $ 112 thousand.

The total intrinsic value of share options exercised during the six months ended June 30, 2021 was $ 19 thousand.

The range of exercise prices for the 11,680 options exercisable at June 30, 2021 was $ 15.00 to $ 17.86 per share.

The weighted average remaining contractual life for these options was 1.7 years at June 30, 2021.

At June 30, 2021, as all awarded options have vested, all of the outstanding options are exercisable, and the aggregate intrinsic value of these options was $ 120 thousand.

Restricted Stock :

2 unchanged sentences

Restricted stock awards generally vest over one to five years .

The following table presents the activity for restricted stock for the three months ended March 31, 2021:

Three Months Ended March 31, 2021

The following table presents the activity for restricted stock for the six months ended June 30, 2021:

Six Months Ended June 30, 2021

Number of Shares Weighted Average Grant Date Fair Value

6 unchanged sentences

(2) Includes 17,563 shares of performance based restricted stock

The total fair value of restricted stock awards vested during the three months ended March 31, 2021 was $ 0.6 million.

The Company's restricted stock expense for the three months ended March 31, 2021 and March 31, 2020 was $ 0.4 million and $ 0.4 million, respectively.

At March 31, 2021, there was $ 3.9 million of unrecognized stock compensation expense for restricted stock, expected to be recognized over a weighted average period of 1.9 years.

The total fair value of restricted stock awards vested during the six months ended June 30, 2021 was $ 0.7 million.

The Company's restricted stock expense for the six months ended June 30, 2021 and June 30, 2020 was $ 0.9 million and $ 0.8 million, respectively.

At June 30, 2021, there was $ 3.4 million of unrecognized stock compensation expense for restricted stock, expected to be recognized over a weighted average period of 1.8 years.

Performance Based Restricted Stock :

The Company has 32,662 shares of performance based restricted stock outstanding as of March 31, 2021 pursuant to the Company’s 2012 Stock Plan.

The Company has 32,662 shares of performance based restricted stock outstanding as of June 30, 2021 pursuant to the Company’s 2012 Stock Plan.

The awards vest over a three to four year service period, provided certain performance metrics are met.

4 unchanged sentences

The Company does not use derivatives for speculative purposes.

As of March 31, 2021, the Company was a party to nine interest rate swaps, designated as hedging instruments, to add stability to interest expense and to manage its exposure to the variability of the future cash flows attributable to the contractually specified interest rates.

As of June 30, 2021, the Company was a party to nine interest rate swaps, designated as hedging instruments, to add stability to interest expense and to manage its exposure to the variability of the future cash flows attributable to the contractually specified interest rates.

The notional amount for each swap is $ 25 million and in each case, the Company has entered into pay-fixed interest rate swaps to convert rolling 90 days Federal Home Loan Bank advances or brokered deposits.

As of March 31, 2021, the Company entered into four interest rate swaps not designated as hedging instruments, to minimize interest rate risk exposure with loans to customers.

As of June 30, 2021, the Company entered into four interest rate swaps not designated as hedging instruments, to minimize interest rate risk exposure with loans to customers.

The Company accounts for all non-borrower related interest rate swaps as effective cash flow hedges.

6 unchanged sentences

Interest rate swaps with a positive fair value are recorded as other assets and interest rate swaps with a negative fair value are recorded as other liabilities on the Consolidated Balance Sheets.

Information about derivative instruments at March 31, 2021 and December 31, 2020 is as follows:

As of March 31, 2021

Information about derivative instruments at June 30, 2021 and December 31, 2020 is as follows:

As of June 30, 2021

Derivative Assets Derivative Liabilities

7 unchanged sentences

(1) Represents interest rate swaps with commercial banking customers, which are offset by derivatives with a third party.

Accrued interest payable related to interest rate swaps as of March 31, 2021 totaled $ 0.6 million and is excluded from the fair value presented in the table above.

The fair value of interest rate swaps in a net liability position, including accrued interest, totaled $ 13.2 million as of March 31, 2021.

Accrued interest payable related to interest rate swaps as of June 30, 2021 totaled $ 0.7 million and is excluded from the fair value presented in the table above.

The fair value of interest rate swaps in a net liability position, including accrued interest, totaled $ 17.0 million as of June 30, 2021.

As of December 31, 2020

8 unchanged sentences

(1) Represents interest rate swaps with commercial banking customers, which are offset by derivatives with a third party.

Accrued interest receivable related to interest rate swaps as of December 31, 2020 totaled $ 0.6 million and is excluded from the fair value presented in the table above.

Accrued interest payable related to interest rate swaps as of December 31, 2020 totaled $ 0.6 million and is excluded from the fair value presented in the table above.

The fair value of interest rate swaps in a net liability position, including accrued interest, totaled $ 24.2 million as of December 31, 2020.

4 unchanged sentences

The Company does not offset derivative assets and derivative liabilities for financial statement presentation purposes.

Changes in the consolidated statements of comprehensive income (loss) related to interest rate derivatives designated as hedges of cash flows were as follows for the three months ended March 31, 2021 and March 31, 2020:

Three Months Ended March 31,

Changes in the consolidated statements of comprehensive income (loss) related to interest rate derivatives designated as hedges of cash flows were as follows for the three and six months ended June 30, 2021 and June 30, 2020:

Three Months Ended June 30, Six Months Ended June 30,

(In thousands) 2021 2020 2021 2020

Interest rate swaps designated as cash flow hedges:

Unrealized gain (loss) recognized in accumulated other comprehensive income before reclassifications $ 10,011 $ ( 17,488 )

Unrealized (loss) gain recognized in accumulated other comprehensive income before reclassifications $ ( 4,652 ) $ ( 1,314 ) $ 5,360 $ ( 18,803 )

Amounts reclassified from accumulated other comprehensive income 953 270 1,875 333

Income tax (expense) benefit on items recognized in accumulated other comprehensive income ( 2,434 ) 3,878

Other comprehensive income (loss) $ 8,500 $ ( 13,548 )

Income tax benefit (expense) on items recognized in accumulated other comprehensive income 837 227 ( 1,597 ) 4,105

Other comprehensive (loss) income $ ( 2,862 ) $ ( 817 ) $ 5,638 $ ( 14,365 )

The above unrealized gains and losses are reflective of market interest rates as of the respective balance sheet dates.

Generally, a lower interest rate environment will result in a negative impact to comprehensive income whereas a higher interest rate environment will result in a positive impact to comprehensive income.

The following tables summarize gross and net information about derivative instruments that are offset in the Consolidated Balance Sheets at March 31, 2021 and December 31, 2020:

March 31, 2021

The following tables summarize gross and net information about derivative instruments that are offset in the Consolidated Balance Sheets at June 30, 2021 and December 31, 2020:

June 30, 2021

(In thousands)

Gross Amounts Not Offset in the Consolidated Balance Sheets

Gross Amounts of Recognized Assets(1) Gross Amounts Offset in the Statement of Financial Position Net Amounts of Assets presented in the Statement of Financial Position Financial Instruments Cash Collateral Received Net Amount

Gross Amounts of Recognized Assets (1)

Gross Amounts Offset in the Statement of Financial Position Net Amounts of Assets presented in the Statement of Financial Position Financial Instruments Cash Collateral Received Net Amount

Derivative Assets $ 2,951 $ — $ 2,951 $ — $ — $ 2,951

(1) Includes accrued interest payable totaling $ 47.0 thousand.

March 31, 2021

June 30, 2021

(In thousands)

Gross Amounts Not Offset in the Consolidated Balance Sheets

Gross Amounts of Recognized Liabilities(1) Gross Amounts Offset in the Statement of Financial Position Net Amounts of Liabilities presented in the Statement of Financial Position Financial Instruments Cash Collateral Posted(2) Net Amount

Gross Amounts of Recognized Liabilities (1)

Gross Amounts Offset in the Statement of Financial Position Net Amounts of Liabilities presented in the Statement of Financial Position Financial Instruments Cash Collateral Posted Net Amount

Derivative Liabilities $ 19,954 $ — $ 19,954 $ — $ 19,415 $ 539

3 unchanged sentences

Gross Amounts Not Offset in the Consolidated Balance Sheets

Gross Amounts of Recognized Assets (1)

Gross Amounts Offset in the Statement of Financial Position Net Amounts of Assets presented in the Statement of Financial Position Financial Instruments Cash Collateral Received Net Amount

Derivative Assets $ 4,484 $ — $ 4,484 $ — $ — $ 4,484

3 unchanged sentences

Gross Amounts Not Offset in the Consolidated Balance Sheets

Gross Amounts of Recognized Liabilities (1)

Gross Amounts Offset in the Statement of Financial Position Net Amounts of Liabilities presented in the Statement of Financial Position Financial Instruments Cash Collateral Posted Net Amount

Derivative Liabilities $ 28,673 $ — $ 28,673 $ — $ 28,205 $ 468

16 unchanged sentences

Management monitors rates and maturities of assets and liabilities and attempts to minimize interest rate risk.

The carrying values, fair values and placement in the fair value hierarchy of the Company's financial instruments at March 31, 2021 and December 31, 2020 were as follows:

March 31, 2021

The carrying values, fair values and placement in the fair value hierarchy of the Company's financial instruments at June 30, 2021 and December 31, 2020 were as follows:

June 30, 2021

Carrying Value Fair Value Level 1 Level 2 Level 3

57 unchanged sentences

Level 3 held to maturity securities represent private placement municipal housing authority bonds for which no quoted market price is available.

The fair value for these securities is estimated using a discounted cash flow model, using discount rates ranging from 3.3 % to 4.7 % as of March 31, 2021 and 2.9 % to 3.3 % as of December 31, 2020.

The fair value for these securities is estimated using a discounted cash flow model, using discount rates ranging from 3.2 % to 4.6 % as of June 30, 2021 and 2.9 % to 3.3 % as of December 31, 2020.

These securities are CRA eligible investments.

23 unchanged sentences

Off-balance-sheet instruments:

Loan commitments on which the committed interest rate is less than the current market rate are insignificant at March 31, 2021 and December 31, 2020.

Loan commitments on which the committed interest rate is less than the current market rate are insignificant at June 30, 2021 and December 31, 2020.

Fair Value Measurements

13 unchanged sentences

Financial instruments measured at fair value on a recurring basis

The following table details the financial instruments carried at fair value on a recurring basis at March 31, 2021 and December 31, 2020, and indicates the fair value hierarchy of the valuation techniques utilized by the Company to determine the fair value.

The Company had no transfers into or out of Levels 1, 2 or 3 during the three months ended March 31, 2021 and for the year ended December 31, 2020.

The following table details the financial instruments carried at fair value on a recurring basis at June 30, 2021 and December 31, 2020, and indicates the fair value hierarchy of the valuation techniques utilized by the Company to determine the fair value.

The Company had no transfers into or out of Levels 1, 2 or 3 during the six months ended June 30, 2021 and for the year ended December 31, 2020.

(In thousands) Level 1 Level 2 Level 3

March 31, 2021:

June 30, 2021:

Marketable equity securities $ 2,192 $ — $ —

22 unchanged sentences

These include assets that are measured at the lower-of-cost-or-market that were recognized at fair value below cost at the end of the period as well as assets that are not measured at fair value on an ongoing basis but are subject to fair value adjustments in certain circumstances, such as when there is evidence of impairment.

The following table details the financial instruments measured at fair value on a nonrecurring basis at March 31, 2021 and December 31, 2020, and indicates the fair value hierarchy of the valuation techniques utilized by the Company to determine the fair value:

The following table details the financial instruments measured at fair value on a nonrecurring basis at June 30, 2021 and December 31, 2020, and indicates the fair value hierarchy of the valuation techniques utilized by the Company to determine the fair value:

(In thousands) Level 1 Level 2 Level 3

March 31, 2021:

June 30, 2021:

Impaired loans $ — $ — $ 46,136

4 unchanged sentences

Assets held for sale — — 2,613

The following table presents information about quantitative inputs and assumptions for Level 3 financial instruments carried at fair value on a nonrecurring basis at March 31, 2021 and December 31, 2020:

The following table presents information about quantitative inputs and assumptions for Level 3 financial instruments carried at fair value on a nonrecurring basis at June 30, 2021 and December 31, 2020:

Fair Value Valuation Methodology Unobservable Input Range

(Dollars in thousands)

March 31, 2021:

June 30, 2021:

Impaired loans $ 19,898 Appraisals Discount to appraised value 8.00 %

33 unchanged sentences

The Notes became callable, in part or in whole, beginning August 2020.

On May 15, 2021, the Company repaid $ 10.0 million of the Notes.

The Notes have been structured to qualify for the Company as Tier 2 capital under regulatory guidelines.

1 unchanged sentence

In the third quarter of 2020, the Notes were assigned an investment grade of BBB- by Kroll Bond Rating Agency.

The Company recognized $ 0.4 million in interest expense related to its subordinated debt for each of the three month periods ended March 31, 2021 and 2020.

The Company recognized $ 0.3 million and $ 0.4 million in interest expense related to its subordinated debt for the three month periods ended June 30, 2021 and 2020, respectively.

The Company recognized $ 0.7 million in interest expense related to its subordinated debt for each of the six month periods ended June 30, 2021 and 2020.

Subsequent Events

On April 28, 2021, the Company’s Board of Directors declared a $ 0.14 per share cash dividend, payable on May 24, 2021 to shareholders of record on May 14, 2021.

Subsequent to March 31, 2021, the Company committed to retire $ 10.0 million of existing subordinated debt on May 15, 2021.

On July 28, 2021, the Company’s Board of Directors declared a $ 0.18 per share cash dividend, payable on August 26, 2021 to shareholders of record on August 16, 2021, representing a 29 % increase when compared to the prior quarter’s dividend.

Subsequent to June 30, 2021 and through July 31, 2021 the Company repurchased 52,277 shares at a weighted average price of $ 27.26 under the Company’s share repurchase program.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements