What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2021-11-08 compared with 2021-08-06 · 171 added, 158 removed, 1024 unchanged (24% of the section changed)

3 unchanged sentences

(In thousands, except share data)

June 30, 2021 December 31, 2020

September 30, 2021 December 31, 2020

Cash and due from banks $ 169,417 $ 405,340

4 unchanged sentences

Available for sale investment securities, at fair value 87,565 88,605

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)

Held to maturity investment securities, at amortized cost (fair values of $ 18,360 and $ 20,032 at September 30, 2021 and December 31, 2020, respectively)

16,107 16,078

Total investment securities 105,857 106,890

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

Loans receivable (net of allowance for loan losses of $ 16,803 at September 30, 2021 and $ 21,009 at December 31, 2020)

1,805,217 1,601,672

13 unchanged sentences

Advances from the Federal Home Loan Bank 80,000 175,000

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)

Subordinated debentures (face value of $ 15,500 and $ 25,500 at September 30, 2021 and December 31, 2020, respectively, less unamortized debt issuance costs of $ 126 and $ 242 at September 30, 2021 and December 31, 2020, respectively)

15,374 25,258

4 unchanged sentences

Common stock, no par value;

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

10,000,000 shares authorized, 7,842,824 and 7,919,278 shares issued and outstanding at September 30, 2021 and December 31, 2020, respectively

119,588 121,338

7 unchanged sentences

(In thousands, except share data)

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

Three Months Ended September 30, Nine Months Ended September 30,

2021 2020 2021 2020

9 unchanged sentences

Net interest income 17,724 13,608 48,958 40,531

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

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

Provision (credit) for loan losses 134 712 ( 182 ) 6,896

Net interest income after provision (credit) for loan losses 17,590 12,896 49,140 33,635

Noninterest income

2 unchanged sentences

Service charges and fees 199 190 615 578

Gain on sale of other real estate owned, net — 19 — 19

Other 43 136 1,213 913

24 unchanged sentences

(In thousands)

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

Three Months Ended September 30, Nine Months Ended September 30,

2021 2020 2021 2020

1 unchanged sentence

Other comprehensive income (loss):

Unrealized gains (losses) on securities:

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

Unrealized (losses) gains on securities:

Unrealized holding (losses) gains on available for sale securities ( 411 ) ( 97 ) ( 743 ) 2,661

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

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

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

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 )

Net change in unrealized (losses) gains ( 411 ) ( 97 ) ( 743 ) 2,661

Income tax benefit (expense) 92 21 162 ( 589 )

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 )

Unrealized (losses) gains on securities, net of tax ( 319 ) ( 76 ) ( 581 ) 2,072

Unrealized gains (losses) on interest rate swaps:

Unrealized gains (losses) on interest rate swaps 1,436 2,070 8,671 ( 16,400 )

Income tax (expense) benefit ( 321 ) ( 451 ) ( 1,918 ) 3,654

Unrealized gains (losses) on interest rate swaps, net of tax 1,115 1,619 6,753 ( 12,746 )

Total other comprehensive income (loss), net of tax 796 1,543 6,172 ( 10,674 )

Comprehensive income (loss) $ 7,651 $ 4,534 $ 24,944 $ ( 5,106 )

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

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

Net income — — 6,855 — 6,855

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

Other comprehensive income, net of tax — — — 796 796

Cash dividends declared ($ 0.18 per share)

2 unchanged sentences

Repurchase of common stock ( 52,277 ) ( 1,425 ) — — ( 1,425 )

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

Balance at September 30, 2021 7,842,824 $ 119,588 $ 85,992 $ ( 9,403 ) $ 196,177

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

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

Net income — — 2,991 — 2,991

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

Other comprehensive income, net of tax — — — 1,543 1,543

Cash dividends declared ($ 0.14 per share)

1 unchanged sentence

Stock-based compensation expense — 473 — — 473

Forfeitures of restricted stock ( 75 ) — — — —

Issuance of restricted stock 9,000 — — — —

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

Balance at September 30, 2020 7,896,503 $ 120,854 $ 71,603 $ ( 18,190 ) $ 174,267

See accompanying notes to consolidated financial statements (unaudited)

13 unchanged sentences

Repurchase of common stock ( 131,432 ) ( 3,221 ) — — ( 3,221 )

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

Balance at September 30, 2021 7,842,824 $ 119,588 $ 85,992 $ ( 9,403 ) $ 196,177

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

Balance at September 30, 2020 7,896,503 $ 120,854 $ 71,603 $ ( 18,190 ) $ 174,267

See accompanying notes to consolidated financial statements (unaudited)

2 unchanged sentences

(In thousands)

Six Months Ended June 30,

Nine Months Ended September 30,

Cash flows from operating activities

13 unchanged sentences

Loss on sale of premises and equipment 195 —

Gain on sale of other real estate owned, net — ( 19 )

Net change in:

17 unchanged sentences

Reduction (purchase) of Federal Home Loan Bank stock 4,228 ( 385 )

Proceeds from the sale of other real estate owned — 199

Net cash used in investing activities ( 205,956 ) ( 26,388 )

3 unchanged sentences

(In thousands)

Six Months Ended June 30,

Nine Months Ended September 30,

Cash flows from financing activities

48 unchanged sentences

Significant concentrations of credit risk

Many of the Company's activities are with customers located in Connecticut, with the majority of the Company's loans in Fairfield and New Haven Counties and some New York metro area counties, and declines in property values in these areas could significantly impact the Company.

The Company has significant concentrations in commercial real estate loans.

Many of the Company's activities are with customers located in Connecticut and New York, with the majority of the Company's loans in Connecticut and some New York metro area counties.

Declines in property values in these areas could significantly impact the Company.

The Company has a significant concentration in commercial real estate loans.

Common Share Repurchases

53 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 June 30, 2021 were as follows:

June 30, 2021

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

September 30, 2021

Amortized Cost Gross Unrealized Fair Value

41 unchanged sentences

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

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.

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

At September 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 September 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 September 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 June 30, 2021:

Length of Time in Continuous Unrealized Loss Position

5 unchanged sentences

(Dollars in thousands)

June 30, 2021

September 30, 2021

Government and agency obligations $ 18,519 $ ( 94 ) 0.50 % $ — $ — — % $ 18,519 $ ( 94 ) 0.50 %

1 unchanged sentence

Total investment securities $ 22,911 $ ( 367 ) 1.58 % $ — $ — — % $ 22,911 $ ( 367 ) 1.58 %

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.

There were three investment securities as of September 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.

2 unchanged sentences

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.

The Company has the intent and ability to retain its investment securities in an unrealized loss position at September 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 June 30, 2021 and December 31, 2020:

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

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

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

Real estate loans:

10 unchanged sentences

Loans receivable, net $ 1,805,217 $ 1,601,672

(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.

(1) The September 30, 2021 and December 31, 2020 balance includes $ 1.6 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.

39 unchanged sentences

This portfolio segment includes loans secured by savings or certificate accounts, automobiles, as well as unsecured personal loans and overdraft lines of credit.

This type of loan entails greater risk than residential mortgage loans, particularly in the case of loans that are unsecured or secured by assets that depreciate rapidly.

In addition, there are loans to finance insurance premiums, secured by the cash surrender value of life insurance and marketable securities.

Allowance for loan losses

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:

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

Residential Real Estate Commercial Real Estate Construction Commercial Business Consumer Total

(In thousands)

Three Months Ended June 30, 2021

Three Months Ended September 30, 2021

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

1 unchanged sentence

Recoveries — — — 11 1 12

(Credits) provisions ( 183 ) 764 ( 164 ) ( 441 ) 4 ( 20 )

Provisions (credits) 158 37 9 ( 84 ) 14 134

Ending balance $ 476 $ 13,246 $ 142 $ 2,903 $ 36 $ 16,803

1 unchanged sentence

(In thousands)

Three Months Ended June 30, 2020

Three Months Ended September 30, 2020

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

1 unchanged sentence

Recoveries — — — — 2 2

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

(Credits) provisions ( 95 ) 491 ( 7 ) 321 2 712

Ending balance $ 714 $ 14,900 $ 434 $ 4,324 $ — $ 20,372

1 unchanged sentence

(In thousands)

Six Months Ended June 30, 2021

Nine Months Ended September 30, 2021

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

5 unchanged sentences

(In thousands)

Six Months Ended June 30, 2020

Nine Months Ended September 30, 2020

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

1 unchanged sentence

Recoveries — — — 1 2 3

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

(Credits) provisions ( 16 ) 4,349 110 2,427 26 6,896

Ending balance $ 714 $ 14,900 $ 434 $ 4,324 $ — $ 20,372

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

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

Portfolio Allowance

(In thousands)

June 30, 2021

September 30, 2021

Loans individually evaluated for impairment:

12 unchanged sentences

Total $ 1,824,546 $ 16,803

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 June 30, 2021 and December 31, 2020:

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

Commercial Credit Quality Indicators

June 30, 2021 December 31, 2020

September 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

June 30, 2021 December 31, 2020

September 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 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

As of September 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 September 30, 2021 and December 31, 2020:

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

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

Loans on nonaccrual status

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

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

September 30, 2021 December 31, 2020

(In thousands)

4 unchanged sentences

Total $ 28,914 $ 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 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.

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 nine months ended September 30, 2021 and 2020 was $ 0.9 million and $ 0.6 million, respectively.

There was $ 49 thousand and no interest income recognized on these loans for the nine months ended September 30, 2021 and 2020, respectively.

At September 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 $ 16.1 million and $ 17.5 million at September 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 June 30, 2021 and December 31, 2020:

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

Carrying Amount Unpaid Principal Balance Associated Allowance

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

September 30, 2021 December 31, 2020 September 30, 2021 December 31, 2020 September 30, 2021 December 31, 2020

(In thousands)

6 unchanged sentences

Impaired loans with a valuation allowance:

Residential real estate $ 1,769 $ — $ 1,769 $ — $ 189 $ —

Commercial real estate 21,352 21,035 21,394 21,049 2,618 4,960

2 unchanged sentences

Total impaired loans $ 50,034 $ 47,706 $ 51,242 $ 48,870 $ 2,872 $ 5,045

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:

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 nine months ended September 30, 2021 and 2020:

Average Carrying Amount Interest Income Recognized

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

Three Months Ended September 30, Three Months Ended September 30,

2021 2020 2021 2020

7 unchanged sentences

Impaired loans with a valuation allowance:

Residential real estate $ 1,775 $ — $ 12 $ —

Commercial real estate 20,301 6,259 62 78

3 unchanged sentences

Average Carrying Amount Interest Income Recognized

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

Nine Months Ended

September 30, Nine Months Ended

September 30,

2021 2020 2021 2020

7 unchanged sentences

Impaired loans with a valuation allowance:

Residential real estate $ 1,791 $ — $ 40 $ —

Commercial real estate 22,386 6,278 490 204

10 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 $ 16.0 million at June 30, 2021 and $ 9.1 million at December 31, 2020.

Loans classified as TDRs totaled $ 26.9 million at September 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.

1 unchanged sentence

(Dollars in thousands) 2021 2020 2021 2020 2021 2020

Three Months Ended June 30,

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

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

Three Months Ended September 30,

Commercial real estate 1 — $ 10,317 $ — $ 10,402 $ —

2 unchanged sentences

(Dollars in thousands) 2021 2020 2021 2020 2021 2020

Six Months Ended June 30,

Nine Months Ended September 30,

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

2 unchanged sentences

Total 5 — $ 16,865 $ — $ 16,989 $ —

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,

At September 30, 2021 and December 31, 2020, there were five nonaccrual loans identified as TDRs totaling $ 12.4 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 nine months ended September 30, 2021 and September 30, 2020.

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

Three Months Ended September 30, Nine Months Ended September 30,

2021 2020 2021 2020

7 unchanged sentences

Shareholders' Equity

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 has 10,000,000 shares authorized and 7,842,824 shares issued and outstanding at September 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 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 nine months ended September 30, 2021, the Company purchased 131,432 shares of its Common Stock at a weighted average price of $ 24.50 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 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:

The Company’s total comprehensive income or loss for the three and nine months ended September 30, 2021 and September 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 nine months ended September 30, 2021 and September 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 )

Other comprehensive (loss) income before reclassifications, net of tax ( 319 ) 400 81

Amounts reclassified from accumulated other comprehensive income, net of tax — 715 715

Net other comprehensive (loss) income ( 319 ) 1,115 796

Balance at September 30, 2021 $ 2,163 $ ( 11,566 ) $ ( 9,403 )

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 )

Other comprehensive (loss) income before reclassifications, net of tax ( 76 ) 977 901

Amounts reclassified from accumulated other comprehensive income, net of tax — 642 642

Net other comprehensive (loss) income ( 76 ) 1,619 1,543

Balance at September 30, 2020 $ 3,000 $ ( 21,190 ) $ ( 18,190 )

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

4 unchanged sentences

Net other comprehensive (loss) income ( 581 ) 6,753 6,172

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

Balance at September 30, 2021 $ 2,163 $ ( 11,566 ) $ ( 9,403 )

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) 2,072 ( 12,746 ) ( 10,674 )

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

Balance at September 30, 2020 $ 3,000 $ ( 21,190 ) $ ( 18,190 )

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

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

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

2021 2020 2021 2020

11 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 June 30, Six Months Ended June 30,

Three Months Ended

September 30, Nine Months Ended

September 30,

2021 2020 2021 2020

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

As of September 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 June 30, 2021 and December 31, 2020 were as follows:

The capital amounts and ratios for the Bank and the Company at September 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

June 30, 2021

September 30, 2021

Common Equity Tier 1 Capital to Risk-Weighted Assets $ 213,091 10.59 % $ 140,789 7.00 % $ 130,733 6.50 %

3 unchanged sentences

Bankwell Financial Group, Inc.

June 30, 2021

September 30, 2021

Common Equity Tier 1 Capital to Risk-Weighted Assets $ 202,394 10.02 % $ 141,344 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 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

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

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

September 30, 2021 December 31, 2020

(In thousands)

7 unchanged sentences

Total deposits $ 1,882,823 $ 1,827,316

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

June 30, 2021 December 31, 2020

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

September 30, 2021 December 31, 2020

(In thousands)

4 unchanged sentences

Total $ 417,147 $ 627,230

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,

The aggregate amount of individual certificate accounts, including brokered deposits with balances of $250,000 or more, was approximately $ 262.8 million at September 30, 2021 and $ 353.7 million at December 31, 2020.

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

There were no certificates of deposits from national listing services at September 30, 2021.

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

Brokered money market accounts totaled $ 104.0 million at September 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 nine months ended September 30, 2021 and 2020:

Three Months Ended September 30, Nine Months Ended September 30,

2021 2020 2021 2020

12 unchanged sentences

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

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

At September 30, 2021, there were 561,901 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 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

There were no options granted during the nine months ended September 30, 2021.

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

Nine Months Ended September 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 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.

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

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

The weighted average remaining contractual life for these options was 1.4 years at September 30, 2021.

At September 30, 2021, as all awarded options have vested, all of the outstanding options are exercisable, and the aggregate intrinsic value of these options was $ 138 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 six months ended June 30, 2021:

Six Months Ended June 30, 2021

The following table presents the activity for restricted stock for the nine months ended September 30, 2021:

Nine Months Ended September 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 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.

The total fair value of restricted stock awards vested during the nine months ended September 30, 2021 was $ 0.8 million.

The Company's restricted stock expense for the nine months ended September 30, 2021 and September 30, 2020 was $ 1.4 million and $ 1.3 million, respectively.

At September 30, 2021, there was $ 3.0 million of unrecognized stock compensation expense for restricted stock, expected to be recognized over a weighted average period of 1.7 years.

Performance Based Restricted Stock :

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 Company has 32,662 shares of performance based restricted stock outstanding as of September 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 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.

As of September 30, 2021, the Company was a party to eight 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 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.

As of September 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 June 30, 2021 and December 31, 2020 is as follows:

As of June 30, 2021

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

As of September 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 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.

Accrued interest payable related to interest rate swaps as of September 30, 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 $ 15.5 million as of September 30, 2021.

As of December 31, 2020

15 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 and six months ended June 30, 2021 and June 30, 2020:

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

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 nine months ended September 30, 2021 and September 30, 2020:

Three Months Ended September 30, Nine Months Ended September 30,

(In thousands) 2021 2020 2021 2020

Interest rate swaps designated as cash flow hedges:

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

Unrealized gain (loss) recognized in accumulated other comprehensive income before reclassifications $ 515 $ 1,249 $ 5,875 $ ( 17,554 )

Amounts reclassified from accumulated other comprehensive income 921 821 2,796 1,154

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 )

Income tax (expense) benefit on items recognized in accumulated other comprehensive income ( 321 ) ( 451 ) ( 1,918 ) 3,654

Other comprehensive income (loss) $ 1,115 $ 1,619 $ 6,753 $ ( 12,746 )

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 June 30, 2021 and December 31, 2020:

June 30, 2021

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

September 30, 2021

(In thousands)

4 unchanged sentences

(1) Includes accrued interest payable totaling $ 24 thousand.

June 30, 2021

September 30, 2021

(In thousands)

34 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 June 30, 2021 and December 31, 2020 were as follows:

June 30, 2021

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

September 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 3.2 % to 4.6 % as of June 30, 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 3.3 % to 4.7 % as of September 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 June 30, 2021 and December 31, 2020.

Loan commitments on which the committed interest rate is less than the current market rate are insignificant at September 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 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.

The following table details the financial instruments carried at fair value on a recurring basis at September 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 nine months ended September 30, 2021 and for the year ended December 31, 2020.

(In thousands) Level 1 Level 2 Level 3

June 30, 2021:

September 30, 2021:

Marketable equity securities $ 2,185 $ — $ —

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 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 following table details the financial instruments measured at fair value on a nonrecurring basis at September 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

June 30, 2021:

September 30, 2021:

Impaired loans $ — $ — $ 47,162

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 June 30, 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 September 30, 2021 and December 31, 2020:

Fair Value Valuation Methodology Unobservable Input Range

(Dollars in thousands)

June 30, 2021:

September 30, 2021:

Impaired loans $ 21,602 Appraisals Discount to appraised value 8.00 %

36 unchanged sentences

The net proceeds were used for general corporate purposes, which included maintaining liquidity at the holding company, providing equity capital to the Bank to fund balance sheet growth and the Company's working capital needs.

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

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.

In the third quarter of 2021, the 2015 Notes investment grade rating of BBB- was reaffirmed by Kroll Bond Rating Agency.

The Company recognized $ 0.2 million and $ 0.4 million in interest expense related to its subordinated debt for the three month periods ended September 30, 2021 and 2020, respectively.

The Company recognized $ 0.9 million and $ 1.1 million in interest expense related to its subordinated debt for the nine month periods ended September 30, 2021 and 2020, respectively.

Subsequent Events

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.

On October 14, 2021, the Company entered into a Subordinated Note Purchase Agreement with an institutional accredited investor, pursuant to which the Company issued and sold 3.25 % fixed-to-floating rate subordinated notes due 2031 (the “2021 Notes”) in the principal amount of $ 35.0 million.

The Company intends to use the net proceeds from the sale of the 2021 Notes for general corporate purposes, including, but not limited to, the repayment of $ 15.5 million of outstanding subordinated notes.

On October 14, 2021, the Company issued a notice of redemption of the outstanding 2015 Notes.

The notice calls for the redemption of the remaining $ 15.5 million aggregate principal amount of the 2015 Notes on November 15, 2021.

The redemption price for the 2015 Notes is 100 % of the principal amount redeemed, plus accrued and unpaid interest to, but not including, the redemption date.

On October 27, 2021, the Company’s Board of Directors declared an $ 0.18 per share cash dividend, payable on November 22, 2021 to shareholders of record on November 12, 2021.

In addition, the Company's Board of Directors authorized the repurchase of an additional 200,000 shares under its existing 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