What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2022-11-07 compared with 2022-08-08 · 180 added, 168 removed, 997 unchanged (26% of the section changed)

3 unchanged sentences

(In thousands, except share data)

June 30, 2022 December 31, 2021

September 30, 2022 December 31, 2021

Cash and due from banks $ 212,175 $ 291,598

4 unchanged sentences

Available for sale investment securities, at fair value 95,095 90,198

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)

Held to maturity investment securities, at amortized cost (fair values of $ 14,641 and $ 18,445 at September 30, 2022 and December 31, 2021, respectively)

16,027 16,043

Total investment securities 113,095 108,409

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

Loans receivable (net of allowance for loan losses of $ 18,167 at September 30, 2022 and $ 16,902 at December 31, 2021)

2,263,432 1,875,167

12 unchanged sentences

Advances from the Federal Home Loan Bank 90,000 50,000

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)

Subordinated debentures (face value of $ 70,000 and $ 35,000 at September 30, 2022 and December 31, 2021, respectively, less unamortized debt issuance costs of $ 1,103 and $ 559 at September 30, 2022 and December 31, 2021, respectively)

68,897 34,441

4 unchanged sentences

Common stock, no par value;

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

10,000,000 shares authorized, 7,711,843 and 7,803,166 shares issued and outstanding at September 30, 2022 and December 31, 2021, respectively

114,548 118,148

Retained earnings 117,152 92,400

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

Accumulated other comprehensive loss ( 200 ) ( 8,561 )

Total shareholders' equity 231,500 201,987

4 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,

2022 2021 2022 2021

9 unchanged sentences

Net interest income 24,601 17,724 67,934 48,958

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

Provision (credit) for loan losses 2,381 134 1,165 ( 182 )

Net interest income after provision (credit) for loan losses 22,220 17,590 66,769 49,140

Noninterest income

Gains and fees from sales of loans 608 814 1,239 1,327

Bank-owned life insurance 271 271 796 753

Service charges and fees 240 199 729 615

(Losses) gains and fees from sales of loans ( 15 ) 924 1,224 2,251

Other ( 94 ) 43 ( 237 ) 1,213

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,

2022 2021 2022 2021

1 unchanged sentence

Other comprehensive income:

Unrealized (losses) gains on securities:

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

Unrealized losses on securities:

Unrealized holding losses on available for sale securities ( 4,439 ) ( 411 ) ( 11,130 ) ( 743 )

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

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

Net change in unrealized losses ( 4,439 ) ( 411 ) ( 11,130 ) ( 743 )

Income tax benefit 992 92 2,486 162

Unrealized losses on securities, net of tax ( 3,447 ) ( 319 ) ( 8,644 ) ( 581 )

Unrealized gains on interest rate swaps:

Unrealized gains on interest rate swaps 3,737 1,436 21,897 8,671

Income tax expense ( 835 ) ( 321 ) ( 4,892 ) ( 1,918 )

Unrealized gains on interest rate swaps, net of tax 2,902 1,115 17,005 6,753

Total other comprehensive (loss) income, net of tax ( 545 ) 796 8,361 6,172

Comprehensive income $ 8,629 $ 7,651 $ 37,769 $ 24,944

4 unchanged sentences

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

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

Net income — — 9,174 — 9,174

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

Other comprehensive loss, net of tax — — — ( 545 ) ( 545 )

Cash dividends declared ($ 0.20 per share)

1 unchanged sentence

Stock-based compensation expense — 634 — — 634

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

Issuance of restricted stock 12,000 — — — —

Stock options exercised 1,000 18 — — 18

Repurchase of common stock ( 53,546 ) ( 1,703 ) — — ( 1,703 )

Balance at September 30, 2022 7,711,843 $ 114,548 $ 117,152 $ ( 200 ) $ 231,500

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

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

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

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

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

See accompanying notes to consolidated financial statements (unaudited)

13 unchanged sentences

Repurchase of common stock ( 166,375 ) ( 5,540 ) — — ( 5,540 )

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 September 30, 2022 7,711,843 $ 114,548 $ 117,152 $ ( 200 ) $ 231,500

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

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

8 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

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

2 unchanged sentences

Net amortization of premiums and discounts on investment securities 252 162

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

Provision for deferred income taxes 642 1,566

Provision (credit) for loan losses 1,165 ( 182 )

(Credit) provision for deferred income taxes ( 441 ) 1,827

Change in fair value of marketable equity securities 217 40

29 unchanged sentences

(In thousands)

Six Months Ended June 30,

Nine Months Ended September 30,

Cash flows from financing activities

2 unchanged sentences

Net change in FHLB advances 40,000 ( 95,000 )

Issuance of subordinated debt 34,352 —

Repayment of subordinated debt — ( 10,000 )

2 unchanged sentences

Repurchase of common stock ( 5,540 ) ( 3,221 )

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

Net cash provided by (used in) financing activities 226,909 ( 56,280 )

Net decrease in cash and cash equivalents ( 121,560 ) ( 232,084 )

19 unchanged sentences

Such services are also provided to certain industries across several regions of the United States, primarily with borrowers with whom the Company has existing relationships.

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

The Bank operates branches in New Canaan, Stamford, Fairfield, 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.

On October 7, 2022, the Company closed 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 June 30, 2022 were as follows:

June 30, 2022

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

September 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 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.

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

At September 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 September 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 September 30, 2022, the Company held marketable equity securities with a fair value of $ 2.0 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 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)

June 30, 2022

September 30, 2022

Government and agency obligations $ 64,620 $ ( 5,570 ) 7.94 % $ 14,817 $ ( 2,091 ) 12.36 % $ 79,437 $ ( 7,661 ) 8.80 %

14 unchanged sentences

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

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.

There were thirty-five and seven available for sale securities or held to maturity securities as of September 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.

1 unchanged sentence

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

The corporate bonds are investments in subordinated debt of federally insured banks, the majority of which are callable after five years of origination.

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 June 30, 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 September 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 June 30, 2022 and December 31, 2021:

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

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

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

Real estate loans:

10 unchanged sentences

Loans receivable, net $ 2,263,432 $ 1,875,167

(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.

(1) The September 30, 2022 and December 31, 2021 balances include $ 36 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.

41 unchanged sentences

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, 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 nine months ended September 30, 2022 and 2021, by portfolio segment:

Residential Real Estate Commercial Real Estate Construction Commercial Business Consumer Total

(In thousands)

Three Months Ended June 30, 2022

Three Months Ended September 30, 2022

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

5 unchanged sentences

(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)

Six Months Ended June 30, 2022

Nine Months Ended September 30, 2022

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

5 unchanged sentences

(In thousands)

Six Months Ended June 30, 2021

Nine Months Ended September 30, 2021

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

3 unchanged sentences

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

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

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

Portfolio Allowance

(In thousands)

June 30, 2022

September 30, 2022

Loans individually evaluated for impairment:

36 unchanged sentences

Risk ratings of (1) through (5) are "pass" categories and risk ratings of (6) through (9) are criticized asset categories as defined by the regulatory agencies.

A “special mention” (6) credit has a potential weakness which, if uncorrected, may result in a deterioration of the repayment prospects or inadequately protect the Company’s credit position at some time in the future.

“Substandard” (7) loans are credits that have a well-defined weakness or weaknesses that jeopardize the full repayment of the debt.

An asset rated “doubtful” (8) has all the weaknesses inherent in a substandard asset and which, in addition, make collection or liquidation in full highly questionable and improbable when considering existing facts, conditions, and values.

A “special mention” (6) loan has a potential weakness which, if uncorrected, may result in a deterioration of the repayment prospects or inadequately protect the Company’s credit position at some time in the future.

“Substandard” (7) loans have a well-defined weakness or weaknesses that jeopardize the full repayment of the debt.

A loan rated “doubtful” (8) has all the weaknesses inherent in a substandard loan and which, in addition, make collection or liquidation in full highly questionable and improbable when considering existing facts, conditions, and values.

Loans classified as “loss” (9) are considered uncollectible and of such little value that their continuance as bankable assets is not warranted.

5 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, 2022 and December 31, 2021:

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

Commercial Credit Quality Indicators

June 30, 2022 December 31, 2021

September 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

June 30, 2022 December 31, 2021

September 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 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

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

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

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

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

1 unchanged sentence

Loans on nonaccrual status

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

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

September 30, 2022 December 31, 2021

(In thousands)

4 unchanged sentences

Total $ 16,793 $ 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 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.

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, 2022 and 2021 was $ 0.7 million and $ 0.9 million, respectively.

There was $ 0 thousand and $ 49 thousand of interest income recognized on these loans for the nine months ended September 30, 2022 and 2021, respectively.

At September 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 $ 14.9 million and $ 14.2 million at September 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 June 30, 2022 and December 31, 2021:

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

Carrying Amount Unpaid Principal Balance Associated Allowance

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

September 30, 2022 December 31, 2021 September 30, 2022 December 31, 2021 September 30, 2022 December 31, 2021

(In thousands)

11 unchanged sentences

Total impaired loans $ 43,242 $ 47,181 $ 44,055 $ 48,415 $ 915 $ 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 and six months ended June 30, 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 nine months ended September 30, 2022 and 2021:

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,

2022 2021 2022 2021

13 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,

2022 2021 2022 2021

20 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 $ 22.3 million at June 30, 2022 and $ 25.8 million at December 31, 2021.

Loans classified as TDRs totaled $ 22.3 million at September 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.

1 unchanged sentence

(Dollars in thousands) 2022 2021 2022 2021 2022 2021

Three Months Ended June 30,

Residential real estate 1 1 $ 703 $ 132 $ 703 $ 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) 2022 2021 2022 2021 2022 2021

Six Months Ended June 30,

Nine Months Ended September 30,

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

2 unchanged sentences

Total 1 5 $ 703 $ 16,865 $ 703 $ 16,989

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,

At September 30, 2022 and December 31, 2021, there were six nonaccrual loans identified as TDRs totaling $ 2.5 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 nine months ended September 30, 2022 and September 30, 2021.

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

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

2022 2021 2022 2021

7 unchanged sentences

Shareholders' Equity

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 has 10,000,000 shares authorized and 7,711,843 shares issued and outstanding at September 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 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 nine months ended September 30, 2022, the Company purchased 166,375 shares of its Common Stock at a weighted average price of $ 33.30 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.

3 unchanged sentences

Changes in fair value of the Company's derivatives are primarily driven by changes in interest rates and recognized in other comprehensive income.

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, 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:

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

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

(In thousands)

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

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

Other comprehensive (loss) income before reclassifications, net of tax ( 3,447 ) 3,095 ( 352 )

1 unchanged sentence

Net other comprehensive (loss) income ( 3,447 ) 2,902 ( 545 )

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

Balance at September 30, 2022 $ ( 6,993 ) $ 6,793 $ ( 200 )

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

4 unchanged sentences

Net other comprehensive (loss) income ( 8,644 ) 17,005 8,361

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

Balance at September 30, 2022 $ ( 6,993 ) $ 6,793 $ ( 200 )

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 )

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

2022 2021 2022 2021

(In thousands)

Unrealized losses on derivatives $ ( 433 ) $ ( 953 ) $ ( 1,276 ) $ ( 1,875 ) Interest expense on borrowings

Tax benefit 97 216 285 414 Income tax expense

Unrealized gains (losses) on derivatives $ 249 $ ( 921 ) $ ( 1,026 ) $ ( 2,796 ) Interest expense on borrowings

Tax (expense) benefit ( 56 ) 206 229 618 Income tax expense

Net of tax $ 193 $ ( 715 ) $ ( 797 ) $ ( 2,178 )

8 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

20 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, 2022, the Bank and Company met all capital adequacy requirements to which they are subject.

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

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

June 30, 2022

September 30, 2022

Common Equity Tier 1 Capital to Risk-Weighted Assets $ 280,269 11.42 % $ 171,836 7.00 % $ 159,562 6.50 %

3 unchanged sentences

Bankwell Financial Group, Inc.

June 30, 2022

September 30, 2022

Common Equity Tier 1 Capital to Risk-Weighted Assets $ 228,596 9.31 % $ 171,836 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, 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

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

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

September 30, 2022 December 31, 2021

(In thousands)

7 unchanged sentences

Total deposits $ 2,286,702 $ 2,123,998

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

June 30, 2022 December 31, 2021

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

September 30, 2022 December 31, 2021

(In thousands)

4 unchanged sentences

Total $ 770,997 $ 457,258

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,

The aggregate amount of individual certificate accounts, including brokered deposits with balances of $250,000 or more, was approximately $ 610.4 million at September 30, 2022 and $ 305.7 million at December 31, 2021.

Brokered certificates of deposits totaled $ 587.5 million at September 30, 2022 and $ 249.4 million at December 31, 2021.

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

Brokered money market accounts totaled $ 30.2 million at September 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 nine months ended September 30, 2022 and 2021:

Three Months Ended

September 30, Nine Months Ended September 30,

2022 2021 2022 2021

12 unchanged sentences

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

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

At September 30, 2022, there were 470,169 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 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

There were no options granted during the nine months ended September 30, 2022.

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

Nine Months Ended September 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 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.

The total intrinsic value of share options exercised during the nine months ended September 30, 2022 was $ 52 thousand.

The exercise price for the 8,680 options exercisable at September 30, 2022 was $ 17.86 per share.

The weighted average remaining contractual life for these options was 0.6 years at September 30, 2022.

At September 30, 2022, as all awarded options have vested, all of the outstanding options are exercisable, and the aggregate intrinsic value of these options was $ 98 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, 2022:

Six Months Ended June 30, 2022

The following table presents the activity for restricted stock for the nine months ended September 30, 2022:

Nine Months Ended September 30, 2022

Number of Shares Weighted Average Grant Date Fair Value

7 unchanged sentences

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

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.

The total fair value of restricted stock awards vested during the nine months ended September 30, 2022 was $ 1.9 million.

The Company's restricted stock expense for the nine months ended September 30, 2022 and September 30, 2021 was $ 1.9 million and $ 1.4 million, respectively.

At September 30, 2022, there was $ 4.0 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 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 Company has 41,569 shares of performance based restricted stock outstanding as of September 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 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.

As of September 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.

1 unchanged sentence

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 totaled $ 158.1 thousand as of September 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.

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

As of June 30, 2022

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

As of September 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 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.

Accrued interest receivable related to interest rate swaps as of September 30, 2022 totaled $ 271.5 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 $ 8.9 million as of September 30, 2022.

As of December 31, 2021

12 unchanged sentences

Amounts reported in accumulated other comprehensive income related to derivatives will be reclassified to interest expense as interest payments are made on the Company’s variable-rate debt.

The Company expects to reclassify $ 2.0 million to interest expense during the next 12 months.

The Company expects to reclassify $ 3.5 million to reduce interest expense during the next 12 months.

The Company assesses the effectiveness of each hedging relationship by comparing the changes in cash flows of the derivative hedging instrument with the changes in cash flows of the designated hedged item or transaction.

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, 2022 and June 30, 2021:

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, 2022 and September 30, 2021:

Three Months Ended

September 30, Nine Months Ended September 30,

(In thousands) 2022 2021 2022 2021

6 unchanged sentences

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, 2022 and December 31, 2021:

June 30, 2022

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

September 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 (2)

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

Derivative Assets $ 13,187 $ — $ 13,187 $ — $ 12,830 $ 357

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

(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

(1) Includes accrued interest receivable totaling $ 290 thousand.

September 30, 2022

(In thousands)

3 unchanged sentences

Derivative Liabilities $ 4,328 $ — $ 4,328 $ — $ — $ 4,328

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

(1) Includes accrued interest payable totaling $ 18 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 June 30, 2022 and December 31, 2021 were as follows:

June 30, 2022

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

September 30, 2022

Carrying Value Fair Value Level 1 Level 2 Level 3

79 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, 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.

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

(In thousands) Level 1 Level 2 Level 3

June 30, 2022:

September 30, 2022:

Marketable equity securities $ 1,973 $ — $ —

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, 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 September 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

June 30, 2022:

September 30, 2022:

Impaired loans $ — $ — $ 42,327

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 June 30, 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 September 30, 2022 and December 31, 2021:

Fair Value Valuation Methodology Unobservable Input Range

(Dollars in thousands)

June 30, 2022:

September 30, 2022:

Impaired loans $ 17,795 Appraisals Discount to appraised value 8.00 %

41 unchanged sentences

The 2021 Note has been structured to qualify for the Company as Tier 2 capital under regulatory guidelines.

On August 19, 2022, the Company entered into a Subordinated Note Purchase Agreement with certain qualified institutional buyers, pursuant to which the Company issued and sold 6.0 % fixed-to-floating rate subordinated notes due 2032 (the “2022 Notes”) in the aggregate principal amount of $ 35.0 million.

The Company intends to use the net proceeds from the sale of the 2022 Notes for general corporate purposes.

The 2022 Notes will bear interest at a fixed rate of 6.0 % per year, from and including August 19, 2022 to, but excluding, September 1, 2027.

From and including September 1, 2027 to, but excluding the maturity date or early redemption date, the interest rate will reset quarterly at a variable rate equal to the then current three-month term SOFR plus 326 basis points.

The 2022 Notes have a stated maturity of September 1, 2032 and are non-callable for five years .

The Company may redeem the 2022 Notes, in whole or in part, at its option, on the fifth anniversary of the issue date or on any interest payment date thereafter.

Any redemption by the Company would be at a redemption price equal to 100 % of the principal amount of the 2022 Notes being redeemed, together with any accrued and unpaid interest on the 2022 Notes being redeemed to but excluding the date of redemption.

The 2022 Notes are not subject to redemption at the option of the holder.

The 2022 Notes have been structured to qualify for the Company as Tier 2 capital under regulatory guidelines.

The Company incurred certain costs associated with the issuance of its subordinated debt.

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

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

At September 30, 2022 and December 31, 2021, unamortized debt issuance costs were $ 1.1 million and $ 0.6 million, respectively.

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

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.

For the three months ended September 30, 2022 and 2021 the amortization expense for debt issuance costs were $ 45 thousand and $ 8 thousand, respectively, and were recognized as an increase to interest expense on borrowings within the consolidated statements of income.

For the nine months ended September 30, 2022 and 2021 the amortization expense for debt issuance costs were $ 104 thousand and $ 116 thousand, respectively.

The Company recognized $ 0.5 million and $ 0.2 million in interest expense related to its subordinated debt for the three month periods ended September 30, 2022 and 2021, respectively.

The Company recognized $ 1.1 million and $ 0.9 million in interest expense related to its subordinated debt for the nine month periods ended September 30, 2022 and 2021, respectively.

Subsequent Events

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.

On October 26, 2022, the Company’s Board of Directors declared a $ 0.20 per share cash dividend, payable on November 21, 2022 to shareholders of record on November 11, 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