What changed in this filing

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Item 1. Financial Statements

2022-08-08 compared with 2022-05-06 · 244 added, 144 removed, 921 unchanged (30% of the section changed)

3 unchanged sentences

(In thousands, except share data)

March 31, 2022 December 31, 2021

June 30, 2022 December 31, 2021

Cash and due from banks $ 149,522 $ 291,598

4 unchanged sentences

Available for sale investment securities, at fair value 94,907 90,198

Held to maturity investment securities, at amortized cost (fair values of $ 16,338 and $ 18,445 at March 31, 2022 and December 31, 2021, respectively)

Held to maturity investment securities, at amortized cost (fair values of $ 15,511 and $ 18,445 at June 30, 2022 and December 31, 2021, respectively)

15,917 16,043

Total investment securities 112,950 108,409

Loans receivable (net of allowance for loan losses of $ 17,141 at March 31, 2022 and $ 16,902 at December 31, 2021)

Loans receivable (net of allowance for loan losses of $ 15,773 at June 30, 2022 and $ 16,902 at December 31, 2021)

2,036,626 1,875,167

12 unchanged sentences

Advances from the Federal Home Loan Bank 105,000 50,000

Subordinated debentures (face value of $ 35,000 and $ 35,000 at March 31, 2022 and December 31, 2021, respectively, less unamortized debt issuance costs of $ 529 and $ 559 at March 31, 2022 and December 31, 2021, respectively)

Subordinated debentures (face value of $ 35,000 and $ 35,000 at June 30, 2022 and December 31, 2021, respectively, less unamortized debt issuance costs of $ 500 and $ 559 at June 30, 2022 and December 31, 2021, respectively)

34,500 34,441

4 unchanged sentences

Common stock, no par value;

10,000,000 shares authorized, 7,761,338 and 7,803,166 shares issued and outstanding at March 31, 2022 and December 31, 2021, respectively

10,000,000 shares authorized, 7,752,389 and 7,803,166 shares issued and outstanding at June 30, 2022 and December 31, 2021, respectively

115,599 118,148

Retained earnings 109,523 92,400

Accumulated other comprehensive loss ( 3,709 ) ( 8,561 )

Accumulated other comprehensive income (loss) 345 ( 8,561 )

Total shareholders' equity 225,467 201,987

4 unchanged sentences

(In thousands, except share data)

Three Months Ended March 31,

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

2022 2021 2022 2021

Interest and dividend income

8 unchanged sentences

Net interest income 23,823 16,579 43,333 31,234

Provision (credit) for loan losses 229 ( 296 )

Net interest income after provision (credit) for loan losses 19,281 14,951

Credit for loan losses ( 1,445 ) ( 20 ) ( 1,216 ) ( 316 )

Net interest income after credit for loan losses 25,268 16,599 44,549 31,550

Noninterest income

28 unchanged sentences

(In thousands)

Three Months Ended March 31,

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

2022 2021 2022 2021

Net income $ 12,022 $ 6,228 $ 20,234 $ 11,917

Other comprehensive income:

Unrealized losses on securities:

Unrealized holding losses on available for sale securities ( 4,767 ) ( 1,025 )

Unrealized (losses) gains on securities:

Unrealized holding (losses) gains on available for sale securities ( 1,924 ) 693 ( 6,691 ) ( 332 )

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

Net change in unrealized losses ( 4,767 ) ( 1,025 )

Income tax benefit 1,064 227

Unrealized losses on securities, net of tax ( 3,703 ) ( 798 )

Unrealized gains on interest rate swaps:

Unrealized gains on interest rate swaps 11,016 10,934

Income tax expense ( 2,461 ) ( 2,434 )

Unrealized gains on interest rate swaps, net of tax 8,555 8,500

Total other comprehensive income, net of tax 4,852 7,702

Net change in unrealized (losses) gains ( 1,924 ) 693 ( 6,691 ) ( 332 )

Income tax benefit (expense) 430 ( 157 ) 1,494 70

Unrealized (losses) gains on securities, net of tax ( 1,494 ) 536 ( 5,197 ) ( 262 )

Unrealized gains (losses) on interest rate swaps:

Unrealized gains (losses) on interest rate swaps 7,144 ( 3,699 ) 18,160 7,235

Income tax (expense) benefit ( 1,596 ) 837 ( 4,057 ) ( 1,597 )

Unrealized gains (losses) on interest rate swaps, net of tax 5,548 ( 2,862 ) 14,103 5,638

Total other comprehensive income (loss), net of tax 4,054 ( 2,326 ) 8,906 5,376

Comprehensive income $ 16,076 $ 3,902 $ 29,140 $ 17,293

3 unchanged sentences

(In thousands, except share data)

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

Balance at March 31, 2022 7,761,338 $ 114,882 $ 99,047 $ ( 3,709 ) $ 210,220

Net income — — 12,022 — 12,022

Other comprehensive income, net of tax — — — 4,054 4,054

Cash dividends declared ($ 0.20 per share)

— — ( 1,546 ) — ( 1,546 )

Stock-based compensation expense — 717 — — 717

Forfeitures of restricted stock ( 9,449 ) — — — —

Issuance of restricted stock 500 — — — —

Balance at June 30, 2022 7,752,389 $ 115,599 $ 109,523 $ 345 $ 225,467

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

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) Income Total

Balance at December 31, 2021 7,803,166 $ 118,148 $ 92,400 $ ( 8,561 ) $ 201,987

4 unchanged sentences

Stock-based compensation expense — 1,258 — — 1,258

Forfeitures of restricted stock ( 9,449 ) — — — —

Issuance of restricted stock 69,501 — — — —

1 unchanged sentence

Repurchase of common stock ( 112,829 ) ( 3,837 ) — — ( 3,837 )

Balance at March 31, 2022 7,761,338 $ 114,882 $ 99,047 $ ( 3,709 ) $ 210,220

Balance at June 30, 2022 7,752,389 $ 115,599 $ 109,523 $ 345 $ 225,467

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

9 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

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

2 unchanged sentences

Net amortization of premiums and discounts on investment securities 171 93

Provision (credit) for loan losses 229 ( 296 )

(Credit) provision for deferred income taxes ( 303 ) 185

Credit for loan losses ( 1,216 ) ( 316 )

Provision for deferred income taxes 642 1,566

Change in fair value of marketable equity securities 55 28

1 unchanged sentence

Amortization of debt issuance costs 59 108

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

Increase in cash surrender value of bank-owned life insurance ( 525 ) ( 482 )

2 unchanged sentences

Amortization of intangibles — 18

Loss on sale of premises and equipment — 6

(Gain) loss on sale of premises and equipment ( 51 ) 6

Net change in:

10 unchanged sentences

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

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

Net increase in loans ( 171,810 ) ( 127,267 )

7 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 55,000 ( 100,000 )

Repayment of subordinated debt — ( 10,000 )

Proceeds from exercise of options 30 53

1 unchanged sentence

Repurchase of common stock ( 3,837 ) ( 1,796 )

Net cash provided by (used in) financing activities 36,834 ( 19,990 )

Net cash used in financing activities ( 42,391 ) ( 1,970 )

Net decrease in cash and cash equivalents ( 173,655 ) ( 107,711 )

20 unchanged sentences

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

During the second quarter of 2022, the Company sold its Wilton branch building that was previously classified as held for sale.

On July 8, 2022, the Company announced that it will be closing the Wilton branch effective October 7, 2022.

All regulatory notices have been filed as it relates to the closure of the Wilton branch.

Principles of consolidation

62 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, 2022 were as follows:

March 31, 2022

The amortized cost, gross unrealized gains and losses and fair value of available for sale and held to maturity securities at June 30, 2022 were as follows:

June 30, 2022

Amortized Cost Gross Unrealized Fair Value

38 unchanged sentences

Total held to maturity securities $ 16,043 $ 2,608 $ ( 206 ) $ 18,445

There were no sales of investment securities during the three months ended March 31, 2022 or 2021.

At March 31, 2022 and December 31, 2021, 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, 2022 and December 31, 2021, the actual durations of the Company's available for sale securities were significantly shorter than the stated maturities.

As of March 31, 2022, the Company held marketable equity securities with a fair value of $ 2.1 million and an amortized cost of $ 2.1 million.

There were no sales of investment securities during the six months ended June 30, 2022 or 2021.

At June 30, 2022 and December 31, 2021, 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, 2022 and December 31, 2021, the actual durations of the Company's available for sale securities were significantly shorter than the stated maturities.

As of June 30, 2022, the Company held marketable equity securities with a fair value of $ 2.1 million and an amortized cost of $ 2.1 million.

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

These securities represent an investment in mutual funds that have an objective to make investments for CRA purposes.

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, 2022 and December 31, 2021:

The following tables provide information regarding available for sale securities and held to maturity 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, 2022 and December 31, 2021:

Length of Time in Continuous Unrealized Loss Position

5 unchanged sentences

(Dollars in thousands)

March 31, 2022

June 30, 2022

Government and agency obligations $ 79,955 $ ( 4,016 ) 4.78 % $ — $ — — % $ 79,955 $ ( 4,016 ) 4.78 %

14 unchanged sentences

Total investment securities $ 35,554 $ ( 455 ) 1.27 % $ — $ — — % $ 35,554 $ ( 455 ) 1.27 %

There were twenty-two and seven investment securities as of March 31, 2022 and December 31, 2021, respectively, in which the fair value of the security was less than the amortized cost of the security.

There were thirty-three and seven available for sale securities or held to maturity securities as of June 30, 2022 and December 31, 2021, respectively, 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 corporate bond, 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 March 31, 2022 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 June 30, 2022 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, 2022 and December 31, 2021:

(In thousands) March 31, 2022 December 31, 2021

The following table sets forth a summary of the loan portfolio at June 30, 2022 and December 31, 2021:

(In thousands) June 30, 2022 December 31, 2021

Real estate loans:

10 unchanged sentences

Loans receivable, net $ 2,036,626 $ 1,875,167

(1) The March 31, 2022 and December 31, 2021 balances include $ 0.1 million and $ 0.2 million, respectively, of Paycheck Protection Program ("PPP") loans made under the CARES Act.

(1) The June 30, 2022 and December 31, 2021 balances include $ 39 thousand and $ 0.2 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.

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

In addition, there are loans to finance insurance premiums, secured primarily 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 months ended March 31, 2022 and 2021, 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, 2022 and 2021, by portfolio segment:

Residential Real Estate Commercial Real Estate Construction Commercial Business Consumer Total

(In thousands)

Three Months Ended March 31, 2022

Three Months Ended June 30, 2022

Beginning balance $ 358 $ 13,441 $ 56 $ 3,254 $ 32 $ 17,141

5 unchanged sentences

(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

3 unchanged sentences

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

Loans evaluated for impairment and the related allowance for loan losses as of March 31, 2022 and December 31, 2021 were as follows:

Residential Real Estate Commercial Real Estate Construction Commercial Business Consumer Total

(In thousands)

Six Months Ended June 30, 2022

Beginning balance $ 504 $ 12,751 $ 4 $ 3,590 $ 53 $ 16,902

Charge-offs — — — — ( 4 ) ( 4 )

Recoveries — 77 — 13 1 91

(Credits) provisions ( 173 ) ( 1,348 ) 91 199 15 ( 1,216 )

Ending balance $ 331 $ 11,480 $ 95 $ 3,802 $ 65 $ 15,773

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

Loans evaluated for impairment and the related allowance for loan losses as of June 30, 2022 and December 31, 2021 were as follows:

Portfolio Allowance

(In thousands)

March 31, 2022

June 30, 2022

Loans individually evaluated for impairment:

32 unchanged sentences

This risk rating represents an assessed level of a loan’s risk based on the character and creditworthiness of the borrower/guarantor, the capacity of the borrower to adequately service the debt, any credit enhancements or additional sources of repayment, and the quality, value and coverage of the collateral, if any.

The objectives of the Company’s risk rating system are to provide the Board of Directors and senior management with an objective assessment of the overall quality of the loan portfolio, to promptly and accurately identify loans with well-defined credit weaknesses so that timely action can be taken to minimize a potential credit loss, to identify relevant trends affecting the collectability of the loan portfolio, to isolate potential problem areas and to provide essential information for determining the adequacy of the allowance for loan losses.

credit weaknesses so that timely action can be taken to minimize a potential credit loss, to identify relevant trends affecting the collectability of the loan portfolio, to isolate potential problem areas and to provide essential information for determining the adequacy of the allowance for loan losses.

The Company’s credit risk rating system has nine grades, with each grade corresponding to a progressively greater risk of default.

10 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, 2022 and December 31, 2021:

The following tables present credit risk ratings by loan segment as of June 30, 2022 and December 31, 2021:

Commercial Credit Quality Indicators

March 31, 2022 December 31, 2021

June 30, 2022 December 31, 2021

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, 2022 December 31, 2021

June 30, 2022 December 31, 2021

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, 2022, 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 March 31, 2022 and December 31, 2021:

March 31, 2022

As of June 30, 2022, 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, 2022 and December 31, 2021:

June 30, 2022

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 $ 5,054 $ 11,986 $ 15,588 $ 32,628 $ 1,862,253 $ 1,894,881

There was one loan, totaling $ 0.3 million, delinquent greater than 90 days and still accruing interest as of March 31, 2022.

The delinquency for this particular loan was a result of a closing delay.

There were no loans delinquent greater than 90 days and still accruing interest as of June 30, 2022.

There were two loans, totaling $ 1.1 million, delinquent greater than 90 days and still accruing interest as of December 31, 2021.

The delinquencies for these particular loans was a result of an administrative delay.

The delinquencies for these particular loans were a result of an administrative delay.

Loans on nonaccrual status

The following is a summary of nonaccrual loans by portfolio segment as of March 31, 2022 and December 31, 2021:

March 31, 2022 December 31, 2021

The following is a summary of nonaccrual loans by portfolio segment as of June 30, 2022 and December 31, 2021:

June 30, 2022 December 31, 2021

(In thousands)

4 unchanged sentences

Total $ 15,285 $ 16,587

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, 2022 and 2021 was $ 0.2 million and $ 0.4 million, respectively.

There was no interest income recognized on these loans for the three months ended March 31, 2022 and 2021.

At March 31, 2022 and December 31, 2021, there were no commitments to lend additional funds to any borrower on nonaccrual status.

Nonaccrual loans with no specific reserve totaled $ 13.4 million and $ 14.2 million at March 31, 2022 and December 31, 2021, 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, 2022 and 2021 was $ 0.4 million and $ 0.7 million, respectively.

There was no interest income recognized on these loans for the six months ended June 30, 2022 and 2021.

At June 30, 2022 and December 31, 2021, there were no commitments to lend additional funds to any borrower on nonaccrual status.

Nonaccrual loans with no specific reserve totaled $ 13.4 million and $ 14.2 million at June 30, 2022 and December 31, 2021, 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, 2022 and December 31, 2021:

The following table summarizes impaired loans by portfolio segment as of June 30, 2022 and December 31, 2021:

Carrying Amount Unpaid Principal Balance Associated Allowance

March 31, 2022 December 31, 2021 March 31, 2022 December 31, 2021 March 31, 2022 December 31, 2021

June 30, 2022 December 31, 2021 June 30, 2022 December 31, 2021 June 30, 2022 December 31, 2021

(In thousands)

11 unchanged sentences

Total impaired loans $ 41,795 $ 47,181 $ 42,710 $ 48,415 $ 1,183 $ 2,868

The following tables summarize the average carrying amount of impaired loans and interest income recognized on impaired loans by portfolio segment for the three months ended March 31, 2022 and 2021:

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, 2022 and 2021:

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,

2022 2021 2022 2021

12 unchanged sentences

Total impaired loans $ 41,902 $ 51,685 $ 169 $ 323

Average Carrying Amount Interest Income Recognized

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

2022 2021 2022 2021

(In thousands)

Impaired loans without a valuation allowance:

Residential real estate $ 2,182 $ 4,180 $ — $ 43

Commercial real estate 1,213 11,008 — 362

Commercial business 1,020 4,687 10 67

Construction 9,217 8,997 — —

Total impaired loans without a valuation allowance 13,632 28,872 10 472

Impaired loans with a valuation allowance:

Residential real estate $ 1,737 $ — $ 24 $ —

Commercial real estate 24,450 23,249 278 428

Commercial business 2,139 124 27 3

Total impaired loans with a valuation allowance 28,326 23,373 329 431

Total impaired loans $ 41,958 $ 52,245 $ 339 $ 903

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 $ 25.3 million at March 31, 2022 and $ 25.8 million at December 31, 2021.

Loans classified as TDRs totaled $ 22.3 million at June 30, 2022 and $ 25.8 million at December 31, 2021.

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

There were no loans modified as TDRs during the three months ended March 31, 2022.

Number of Loans Pre-Modification Post-Modification

(Dollars in thousands) 2022 2021 2022 2021 2022 2021

Three Months Ended March 31,

Three Months Ended June 30,

Residential real estate 1 1 $ 703 $ 132 $ 703 $ 132

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

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

Total 1 3 $ 703 $ 5,916 $ 703 $ 5,955

At March 31, 2022 and December 31, 2021, there were five nonaccrual loans identified as TDRs totaling $ 1.9 million and five nonaccrual loans identified as TDRs totaling $ 2.0 million, respectively.

There were no loans modified in a troubled debt restructuring that re-defaulted during the three months ended March 31, 2022 and March 31, 2021.

The following table provides information on how loans were modified as TDRs during the three months ended March 31, 2022 and March 31, 2021.

Three Months Ended March 31,

Number of Loans Pre-Modification Post-Modification

(Dollars in thousands) 2022 2021 2022 2021 2022 2021

Six Months Ended June 30,

Residential real estate 1 2 $ 703 $ 764 $ 703 $ 764

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

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

Total 1 4 $ 703 $ 6,548 $ 703 $ 6,587

At June 30, 2022 and December 31, 2021, there were six nonaccrual loans identified as TDRs totaling $ 2.6 million and five nonaccrual loans identified as TDRs totaling $ 2.0 million, respectively.

There were no loans modified in a troubled debt restructuring that re-defaulted during the six months ended June 30, 2022 and June 30, 2021.

The following table provides information on how loans were modified as TDRs during the three and six months ended June 30, 2022 and June 30, 2021.

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

2022 2021 2022 2021

(In thousands)

Payment concession $ 703 $ 132 $ 703 $ 764

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

Rate concession — 3,168 — 3,168

Total $ 703 $ 5,955 $ 703 $ 6,587

2 unchanged sentences

Shareholders' Equity

The Company has 10,000,000 shares authorized and 7,761,338 shares issued and outstanding at March 31, 2022 and 10,000,000 shares authorized and 7,803,166 shares issued and outstanding at December 31, 2021.

The Company has 10,000,000 shares authorized and 7,752,389 shares issued and outstanding at June 30, 2022 and 10,000,000 shares authorized and 7,803,166 shares issued and outstanding at December 31, 2021.

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, 2022, the Company purchased 112,829 shares of its Common Stock at a weighted average price of $ 34.01 per share.

During the six months ended June 30, 2022, the Company purchased 112,829 shares of its Common Stock at a weighted average price of $ 34.01 per share.

During the year ended December 31, 2021, the Company purchased 190,770 shares of its Common Stock at a weighted average price of $ 26.62 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, 2022 and March 31, 2021 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, 2022 and March 31, 2021:

The Company’s total comprehensive income or loss for the three and six months ended June 30, 2022 and June 30, 2021 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, 2022 and June 30, 2021:

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

(In thousands)

Balance at December 31, 2021 $ 1,651 $ ( 10,212 ) $ ( 8,561 )

Balance at March 31, 2022 $ ( 2,052 ) $ ( 1,657 ) $ ( 3,709 )

Other comprehensive (loss) income before reclassifications, net of tax ( 1,494 ) 5,212 3,718

1 unchanged sentence

Net other comprehensive (loss) income ( 1,494 ) 5,548 4,054

Balance at June 30, 2022 $ ( 3,546 ) $ 3,891 $ 345

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

4 unchanged sentences

Net other comprehensive (loss) income ( 5,197 ) 14,103 8,906

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

Balance at June 30, 2022 $ ( 3,546 ) $ 3,891 $ 345

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 )

Other comprehensive (loss) income before reclassifications, net of tax ( 262 ) 4,177 3,915

Amounts reclassified from accumulated other comprehensive income, net of tax — 1,461 1,461

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

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

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

2022 2021 2022 2021

(In thousands)

11 unchanged sentences

Three Months Ended

June 30, Six Months Ended

2022 2021 2022 2021

(In thousands, except per share data)

19 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, 2022, the Bank and Company met all capital adequacy requirements to which they are subject.

As of June 30, 2022, 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, 2022 and December 31, 2021 were as follows:

The capital amounts and ratios for the Bank and the Company at June 30, 2022 and December 31, 2021 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, 2022

June 30, 2022

Common Equity Tier 1 Capital to Risk-Weighted Assets $ 249,640 11.10 % $ 157,430 7.00 % $ 146,185 6.50 %

3 unchanged sentences

Bankwell Financial Group, Inc.

March 31, 2022

June 30, 2022

Common Equity Tier 1 Capital to Risk-Weighted Assets $ 221,981 9.86 % $ 157,633 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, 2022 or December 31, 2021 as the FRB has waived this requirement due to the COVID-19 pandemic.

At March 31, 2022 and December 31, 2021, deposits consisted of the following:

March 31, 2022 December 31, 2021

The Bank was not required to maintain a minimum reserve balance in the Federal Reserve Bank (FRB) at June 30, 2022 or December 31, 2021 as the FRB has waived this requirement due to the COVID-19 pandemic.

At June 30, 2022 and December 31, 2021, deposits consisted of the following:

June 30, 2022 December 31, 2021

(In thousands)

7 unchanged sentences

Total deposits $ 2,033,525 $ 2,123,998

Maturities of time certificates of deposit as of March 31, 2022 and December 31, 2021 are summarized below:

March 31, 2022 December 31, 2021

Maturities of time certificates of deposit as of June 30, 2022 and December 31, 2021 are summarized below:

June 30, 2022 December 31, 2021

(In thousands)

4 unchanged sentences

Total $ 476,110 $ 457,258

The aggregate amount of individual certificate accounts, including brokered deposits with balances of $250,000 or more, was approximately $ 303.2 million at March 31, 2022 and $ 305.7 million at December 31, 2021.

Brokered certificates of deposits totaled $ 249.4 million at March 31, 2022 and $ 249.4 million at December 31, 2021.

There were no certificates of deposits from national listing services at March 31, 2022 or December 31, 2021.

Brokered money market accounts totaled $ 100.3 million at March 31, 2022 and $ 104.0 million at December 31, 2021.

The following table summarizes interest expense on deposits by account type for the three months ended March 31, 2022 and 2021:

Three Months Ended March 31,

The aggregate amount of individual certificate accounts, including brokered deposits with balances of $250,000 or more, was approximately $ 346.4 million at June 30, 2022 and $ 305.7 million at December 31, 2021.

Brokered certificates of deposits totaled $ 299.4 million at June 30, 2022 and $ 249.4 million at December 31, 2021.

There were no certificates of deposits from national listing services at June 30, 2022 or December 31, 2021.

Brokered money market accounts totaled $ 50.0 million at June 30, 2022 and $ 104.0 million at December 31, 2021.

The following table summarizes interest expense on deposits by account type for the three and six months ended June 30, 2022 and 2021:

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

2022 2021 2022 2021

(In thousands)

6 unchanged sentences

Equity award plans

The Company has stock options or unvested restricted stock outstanding under two equity award plans, which are collectively referred to as the “Plan”.

The current plan under which any future issuances of equity awards will be made is the 2012 BNC Financial Group, Inc.

Stock Plan, or the “2012 Plan,” as amended from time-to-time.

The Company has stock options or unvested restricted stock outstanding under three equity award plans, which are collectively referred to as the “Plan”.

The current plan under which any future issuances of equity awards will be made is the 2022 Bankwell Financial Group, Inc.

Stock Plan, or the “2022 Plan”.

All equity awards made under the 2022 Plan are made by means of an award agreement, which contains the specific terms and conditions of the grant.

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

At March 31, 2022, there were 473,220 shares reserved for future issuance under the 2012 Plan.

At June 30, 2022, there were 482,169 shares reserved for future issuance under the 2022 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, 2022.

A summary of the status of outstanding stock options for the three months ended March 31, 2022 is presented below:

Three Months Ended March 31, 2022

There were no options granted during the six months ended June 30, 2022.

A summary of the status of outstanding stock options for the six months ended June 30, 2022 is presented below:

Six Months Ended June 30, 2022

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, 2022 was $ 39 thousand.

The exercise price for the 9,680 options exercisable at March 31, 2022 was $ 17.86 per share.

The weighted average remaining contractual life for these options was 1.1 years at March 31, 2022.

At March 31, 2022, as all awarded options have vested, all of the outstanding options are exercisable, and the aggregate intrinsic value of these options was $ 155 thousand.

The total intrinsic value of share options exercised during the six months ended June 30, 2022 was $ 39 thousand.

The exercise price for the 9,680 options exercisable at June 30, 2022 was $ 17.86 per share.

The weighted average remaining contractual life for these options was 0.9 years at June 30, 2022.

At June 30, 2022, as all awarded options have vested, all of the outstanding options are exercisable, and the aggregate intrinsic value of these options was $ 128 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, 2022:

Three Months Ended March 31, 2022

The following table presents the activity for restricted stock for the six months ended June 30, 2022:

Six Months Ended June 30, 2022

Number of Shares Weighted Average Grant Date Fair Value

2 unchanged sentences

Vested ( 54,667 ) (3)

Forfeited ( 9,449 ) 29.05

Unvested at end of period 195,744 27.89

2 unchanged sentences

(3) Includes 13,798 shares of performance based restricted stock

The total fair value of restricted stock awards vested during the three months ended March 31, 2022 was $ 1.8 million.

The Company's restricted stock expense for the three months ended March 31, 2022 and March 31, 2021 was $ 0.5 million and $ 0.4 million, respectively.

At March 31, 2022, there was $ 4.9 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 six months ended June 30, 2022 was $ 1.8 million.

The Company's restricted stock expense for the six months ended June 30, 2022 and June 30, 2021 was $ 1.3 million and $ 0.9 million, respectively.

At June 30, 2022, there was $ 4.1 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 36,569 shares of performance based restricted stock outstanding as of March 31, 2022 pursuant to the Company’s 2012 Stock Plan.

The Company has 36,569 shares of performance based restricted stock outstanding as of June 30, 2022 pursuant to the Company’s 2012 BNC Financial Group, Inc.

The awards vest over a three 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, 2022, 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.

As of June 30, 2022, the Company was a party to six 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, 2022, 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 terminated two swaps with a total notional amount of $ 50 million during the three months ended June 30, 2022.

The underlying debt associated with the terminated swaps was kept in place.

The fair value of the terminated swaps totaled $ 161.8 thousand as of June 30, 2022.

The fair value of the terminated swaps will be reclassified from other comprehensive income to interest expense on a straight line basis over the original term of the hedging relationship.

As of June 30, 2022, the Company has 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, 2022 and December 31, 2021 is as follows:

As of March 31, 2022

Information about derivative instruments at June 30, 2022 and December 31, 2021 is as follows:

As of June 30, 2022

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, 2022 totaled $ 0.5 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 $ 2.6 million as of March 31, 2022.

Accrued interest payable related to interest rate swaps as of June 30, 2022 totaled $ 1.9 thousand and is excluded from the fair value presented in the table above.

The fair value of interest rate swaps in a net asset position, including accrued interest, totaled $ 4.8 million as of June 30, 2022.

As of December 31, 2021

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 months ended March 31, 2022 and March 31, 2021:

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, 2022 and June 30, 2021:

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

(In thousands) 2022 2021 2022 2021

Interest rate swaps designated as cash flow hedges:

Unrealized gain recognized in accumulated other comprehensive income before reclassifications $ 10,174 $ 10,011

Unrealized gain (loss) recognized in accumulated other comprehensive income before reclassifications $ 6,711 $ ( 4,652 ) $ 16,885 $ 5,360

Amounts reclassified from accumulated other comprehensive income 433 953 1,275 1,875

Income tax expense on items recognized in accumulated other comprehensive income ( 2,461 ) ( 2,434 )

Other comprehensive income $ 8,555 $ 8,500

Income tax (expense) benefit on items recognized in accumulated other comprehensive income ( 1,596 ) 837 ( 4,057 ) ( 1,597 )

Other comprehensive income (loss) $ 5,548 $ ( 2,862 ) $ 14,103 $ 5,638

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, 2022 and December 31, 2021:

March 31, 2022

The following tables summarize gross and net information about derivative instruments that are offset in the Consolidated Balance Sheets at June 30, 2022 and December 31, 2021:

June 30, 2022

(In thousands)

1 unchanged sentence

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 Offset in the Statement of Financial Position Net Amounts of Assets presented in the Statement of Financial Position Financial Instruments Cash Collateral Received (2)

Derivative Assets $ 7,291 $ — $ 7,291 $ — $ 7,291 $ —

(1) Includes accrued interest payable totaling $ 16 thousand.

March 31, 2022

(2) Actual cash collateral received totaled $ 8.3 million, total cash collateral received in the above table represents the total value to net the derivative assets to $ 0 .

June 30, 2022

(In thousands)

3 unchanged sentences

Derivative Liabilities $ 2,447 $ — $ 2,447 $ — $ — $ 2,447

(1) Includes accrued interest payable totaling $ 417 thousand.

(1) Includes accrued interest receivable totaling $ 14 thousand.

December 31, 2021

28 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, 2022 and December 31, 2021 were as follows:

March 31, 2022

The carrying values, fair values and placement in the fair value hierarchy of the Company's financial instruments at June 30, 2022 and December 31, 2021 were as follows:

June 30, 2022

Carrying Value Fair Value Level 1 Level 2 Level 3

11 unchanged sentences

Derivative asset 7,307 7,307 — 7,307 —

Assets held for sale 2,268 2,268 — — 2,268

Financial Liabilities:

66 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, 2022 and December 31, 2021, 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, 2022 and for the year ended December 31, 2021.

The following table details the financial instruments carried at fair value on a recurring basis at June 30, 2022 and December 31, 2021, 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, 2022 and for the year ended December 31, 2021.

(In thousands) Level 1 Level 2 Level 3

March 31, 2022:

June 30, 2022:

Marketable equity securities $ 2,126 $ — $ —

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, 2022 and December 31, 2021, 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, 2022 and December 31, 2021, 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, 2022:

June 30, 2022:

Impaired loans $ — $ — $ 40,612

4 unchanged sentences

Assets held for sale — — 2,268

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, 2022 and December 31, 2021:

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, 2022 and December 31, 2021:

Fair Value Valuation Methodology Unobservable Input Range

(Dollars in thousands)

March 31, 2022:

June 30, 2022:

Impaired loans $ 15,801 Appraisals Discount to appraised value 8.00 %

34 unchanged sentences

On October 14, 2021, the Company completed a private placement of a $ 35.0 million fixed-to-floating rate subordinated note (the “2021 Note”) to an institutional accredited investor.

The Company used the net proceeds to repay the 2015 Notes and intends to use the remaining proceeds for general corporate purposes.

The Company used the net proceeds to repay the 2015 Notes and for general corporate purposes.

The 2021 Note bears interest at a fixed rate of 3.25 % per year until October 14, 2026.

6 unchanged sentences

The Company capitalized these costs and they have been presented within subordinated debentures on the consolidated balance sheets.

At March 31, 2022 and December 31, 2021, unamortized debt issuance costs were $ 0.5 million and $ 0.6 million, respectively.

At June 30, 2022 and December 31, 2021, unamortized debt issuance costs were $ 0.5 million and $ 0.6 million, respectively.

Debt issuance costs amortize over the expected life of the related debt.

For the three months ended March 31, 2022 and 2021 the amortization expense for debt issuance costs were $ 30 thousand and $ 13 thousand, respectively, and were recognized as an increase to interest expense on borrowings within the consolidated statements of income.

The Company recognized $ 0.3 million and $ 0.4 million in interest expense related to its subordinated debt for the three month periods ended March 31, 2022 and 2021, respectively.

For the three months ended June 30, 2022 and 2021 the amortization expense for debt issuance costs were $ 29 thousand and $ 95 thousand, respectively, and were recognized as an increase to interest expense on borrowings within the consolidated statements of income.

For the six months ended June 30, 2022 and 2021 the amortization expense for debt issuance costs were $ 59 thousand and $ 108 thousand, respectively.

The Company recognized $ 0.3 million and $ 0.3 million in interest expense related to its subordinated debt for the three month periods ended June 30, 2022 and 2021, respectively.

The Company recognized $ 0.6 million and $ 0.7 million in interest expense related to its subordinated debt for the six month periods ended June 30, 2022 and 2021, respectively.

Subsequent Events

On April 27, 2022, the Company’s Board of Directors declared a $ 0.20 per share cash dividend, payable on May 23, 2022 to shareholders of record on May 13, 2022.

On July 27, 2022, the Company’s Board of Directors declared a $ 0.20 per share cash dividend, payable on August 25, 2022 to shareholders of record on August 15, 2022.

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