What changed in this filing

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Item 1. Financial Statements

2024-11-06 compared with 2024-08-07 · 227 added, 229 removed, 1133 unchanged (29% of the section changed)

3 unchanged sentences

(In thousands, except share data)

June 30, 2024 December 31, 2023

September 30, 2024 December 31, 2023

Cash and due from banks $ 275,829 $ 267,521

4 unchanged sentences

Available for sale investment securities, at fair value 108,866 109,736

Held to maturity investment securities, at amortized cost (fair values of $ 28,966 and $ 15,903 at June 30, 2024 and December 31, 2023, respectively)

Held to maturity investment securities, at amortized cost (fair values of $ 37,125 and $ 15,903 at September 30, 2024 and December 31, 2023, respectively)

34,886 15,817

Total investment securities 145,900 127,623

Loans receivable (net of ACL-Loans of $ 36,083 at June 30, 2024 and $ 27,946 at December 31, 2023)

Loans receivable (net of ACL-Loans of $ 27,752 at September 30, 2024 and $ 27,946 at December 31, 2023)

2,591,551 2,685,301

12 unchanged sentences

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

Subordinated debentures (face value of $ 70,000 and $ 70,000 at June 30, 2024 and December 31, 2023, respectively, less unamortized debt issuance costs of $ 672 and $ 795 at June 30, 2024 and December 31, 2023, respectively)

Subordinated debentures (face value of $ 70,000 and $ 70,000 at September 30, 2024 and December 31, 2023, respectively, less unamortized debt issuance costs of $ 611 and $ 795 at September 30, 2024 and December 31, 2023, respectively)

69,389 69,205

4 unchanged sentences

Common stock, no par value;

10,000,000 shares authorized, 7,866,499 and 7,882,616 shares issued and outstanding at June 30, 2024 and December 31, 2023, respectively

10,000,000 shares authorized, 7,858,573 and 7,882,616 shares issued and outstanding at September 30, 2024 and December 31, 2023, respectively

118,429 118,247

7 unchanged sentences

(In thousands, except share data)

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

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

2024 2023 2024 2023

9 unchanged sentences

Net interest income 20,717 22,691 63,083 72,223

Provision for credit losses 8,183 2,579 11,866 3,405

Net interest income after provision for credit losses 13,036 21,412 30,500 46,127

Provision (credit) for credit losses 6,296 ( 1,579 ) 18,162 1,826

Net interest income after provision (credit) for credit losses 14,421 24,270 44,921 70,397

Noninterest income

28 unchanged sentences

(In thousands)

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

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

2024 2023 2024 2023

11 unchanged sentences

Unrealized (losses) gains on interest rate swaps, net of tax ( 1,854 ) 771 ( 2,334 ) 105

Total other comprehensive (loss) income, net of tax ( 237 ) ( 582 ) ( 292 ) ( 1,527 )

Total other comprehensive income (loss), net of tax 196 192 ( 96 ) ( 1,335 )

Comprehensive income $ 2,122 $ 9,969 $ 6,711 $ 26,804

4 unchanged sentences

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

Balance at March 31, 2024 7,908,180 $ 118,401 $ 151,350 $ ( 1,719 ) $ 268,032

Balance at June 30, 2024 7,866,499 $ 118,037 $ 150,895 $ ( 1,956 ) $ 266,976

Net income — — 1,926 — 1,926

Other comprehensive (loss), net of tax — — — ( 237 ) ( 237 )

Other comprehensive income, net of tax — — — 196 196

Cash dividends declared ($ 0.20 per share)

3 unchanged sentences

Issuance of restricted stock 3,306 — — — —

Stock options exercised — — — — —

Repurchase of common stock ( 9,670 ) ( 231 ) — — ( 231 )

Balance at June 30, 2024 7,866,499 $ 118,037 $ 150,895 $ ( 1,956 ) $ 266,976

Balance at September 30, 2024 7,858,573 $ 118,429 $ 151,257 $ ( 1,760 ) $ 267,926

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

Balance at March 31, 2023 7,843,438 $ 115,875 $ 127,566 $ ( 1,134 ) $ 242,307

Balance at June 30, 2023 7,829,950 $ 116,541 $ 133,988 $ ( 1,716 ) $ 248,813

Net income — — 9,777 — 9,777

3 unchanged sentences

Stock-based compensation expense — 640 — — 640

Forfeitures of restricted stock ( 13,488 ) — — — —

Issuance of restricted stock 11,666 — — — —

Stock options exercised — — — — —

Repurchase of common stock — — — — —

Balance at June 30, 2023 7,829,950 $ 116,541 $ 133,988 $ ( 1,716 ) $ 248,813

Balance at September 30, 2023 7,841,616 $ 117,181 $ 142,205 $ ( 1,524 ) $ 257,862

See accompanying notes to consolidated financial statements (unaudited)

Bankwell Financial Group, Inc.

Consolidated Statements of Shareholders' Equity - (unaudited)

(In thousands, except share data)

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

9 unchanged sentences

Repurchase of common stock ( 85,990 ) ( 2,137 ) — — ( 2,137 )

Balance at June 30, 2024 7,866,499 $ 118,037 $ 150,895 $ ( 1,956 ) $ 266,976

Balance at September 30, 2024 7,858,573 $ 118,429 $ 151,257 $ ( 1,760 ) $ 267,926

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

2 unchanged sentences

2016-13), net of tax — — ( 4,893 ) — $ ( 4,893 )

Balance as of January 1, 2023 as adjusted for changes in accounting principle 7,730,699 115,018 118,747 ( 189 ) 233,576

Balance as of January 1, 2023 as adjusted

for changes in accounting principle 7,730,699 115,018 118,747 ( 189 ) $ 233,576

Net income — — 28,139 — 28,139

Other comprehensive income, net of tax — — — ( 1,527 ) ( 1,527 )

Other comprehensive (loss), net of tax — — — ( 1,335 ) ( 1,335 )

Cash dividends declared ($ 0.60 per share)

5 unchanged sentences

Repurchase of common stock — — — — —

Balance at June 30, 2023 7,829,950 $ 116,541 $ 133,988 $ ( 1,716 ) $ 248,813

Balance at September 30, 2023 7,841,616 $ 117,181 $ 142,205 $ ( 1,524 ) $ 257,862

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 131 51

(Provision) credit for credit losses 11,866 3,405

Credit for deferred income taxes ( 1,853 ) ( 676 )

Provision for credit losses 18,162 1,826

Provision (credit) for deferred income taxes 132 ( 114 )

Change in fair value of marketable equity securities ( 33 ) 49

4 unchanged sentences

Stock-based compensation 2,319 2,008

Loss (gain) on sale of premises and equipment — 13

Loss on sale of premises and equipment — 13

Net change in:

3 unchanged sentences

Accrued expenses and other liabilities ( 7,973 ) 7,216

Net cash (used in) provided by operating activities 16,178 19,741

Net cash provided by operating activities 15,621 32,454

Cash flows from investing activities

12 unchanged sentences

(In thousands)

Six Months Ended June 30,

Nine Months Ended September 30,

Cash flows from financing activities

4 unchanged sentences

Repurchase of common stock ( 2,137 ) —

Net cash (used in) provided by financing activities ( 79,443 ) ( 14,921 )

Net decrease in cash and cash equivalents ( 17,777 ) ( 93,628 )

Net cash used in financing activities ( 55,443 ) ( 36,718 )

Net increase (decrease) in cash and cash equivalents 22,180 ( 97,584 )

Cash and cash equivalents:

24 unchanged sentences

The accounting and reporting policies of the Company conform to accounting principles generally accepted in the United States of America (“GAAP”) and general practices within the banking industry.

In preparing the consolidated financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosures of contingent assets and liabilities as of the date of the consolidated balance sheet and revenue and expenses for the period.

In preparing the consolidated financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosures of contingent assets and liabilities as of the date of the consolidated balance sheet, and revenue and expenses for the period.

Actual results could differ from those estimates.

Material estimates that are particularly susceptible to significant change in the near-term relate to the Allowance for Credit Losses-Loans ("ACL-Loans"), derivative instrument valuation, investment securities valuation, Allowance for Credit Losses-Securities, and deferred income taxes valuation.

Material estimates that are particularly susceptible to significant change in the near term relate to the allowance for credit losses, the valuation of derivative instruments, investment securities valuation, evaluation of investment securities for other than temporary impairment and deferred income taxes valuation.

The Company has one reportable segment.

18 unchanged sentences

The Company generally does not recognize an allowance for credit losses ("ACL") on accrued interest receivables, consistent with its policy to reverse interest income when interest is 90 days or more past due.

The Company also records an ACL-Unfunded commitments, which is based on the same assumptions as funded loans and also considers the probability of funding.

The ACL is recognized as a liability, and credit loss expense is recorded as a provision for unfunded loan commitments within the provision for credit losses in the Consolidated statements of income.

The Company also records an ACL-Unfunded commitments, which is based on the same assumptions as funded loans and also

considers the probability of funding.

The ACL is recognized as a liability, and credit loss expense is recorded as a provision for

unfunded loan commitments within the provision for credit losses in the Consolidated statements of income.

For collectively evaluated loans and related unfunded commitments, the Company utilizes software provided by a third party, which includes various models for forecasting expected credit losses, to calculate its ACL.

5 unchanged sentences

Based on the disparate regional concentration, management determined that a select group of peer banks is necessary to scale the loss rate models to produce an ACL that is more representative of the Company’s loan portfolio.

This peer-based calibration, called a "peer scalar", utilizes the loss rates of a subset of peer banks to appropriately scale the initial model results.

This peer-based calibration, called a "scalar", utilizes the loss rates of a subset of peer banks to appropriately scale the initial model results.

These peers have been selected by the Company given their similar characteristics, such as loan portfolio composition and location, to better align the models’ results to the Company’s expected losses.

23 unchanged sentences

Treasuries, mortgage-backed securities, and corporate bonds.

and mortgaged-backed securities are guaranteed by the U.S.

Treasuries and mortgaged-backed securities are guaranteed by the U.S.

Government and as a result, management has a zero loss expectation.

No ACL-Securities was recorded for these securities as of June 30, 2024.

No ACL-Securities was recorded for these securities as of September 30, 2024.

For the corporate bond portfolio, the Company developed a metric that includes each issuer’s current credit ratings and key financial performance metrics to assess the underlying performance of each issuer.

The analysis of the issuers’ performance and the intent of the Company to retain these securities support the determination that there is no expected credit loss, and therefore, no ACL-Securities were recognized on the corporate bond portfolio as of June 30, 2024.

Of our held to maturity securities portfolio, one security’s fair value was less than its amortized cost as of June 30, 2024.

The analysis of the issuers’ performance and the intent of the Company to retain these securities support the determination that there is no expected credit loss, and therefore, no ACL-Securities was recognized on the corporate bond portfolio as of September 30, 2024.

Of our held to maturity securities portfolio, one security’s fair value was less than its amortized cost as of September 30, 2024.

Since this is a highly rated state agency and municipal obligation, the Company's expectation of nonpayment of the amortized cost basis is zero.

No allowance for ALC-Securities was recorded for this security as of June 30, 2024.

No allowance for ACL-Securities was recorded for this security as of September 30, 2024.

Common share repurchases

41 unchanged sentences

For all other entities, the amendments will be effective two years later.

The amendments in this update are to be applied prospectively.

The amendments in this Update should be applied prospectively.

For all entities, if by June 30, 2027, the SEC has not removed the applicable requirement from Regulation S-X or Regulation S-K, the pending content of the related amendment will be removed from the Codification and will not become effective for any entity.

1 unchanged sentence

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, 2024 were as follows:

June 30, 2024

The amortized cost, gross unrealized gains and losses and fair value of available for sale and held to maturity securities at September 30, 2024 were as follows:

September 30, 2024

Amortized Cost Gross Unrealized Fair Value

14 unchanged sentences

State agency and municipal obligations

Due from one through five years $ 5,383 $ 49 $ — $ 5,432

Due from five through ten years 2,819 30 — 2,849

25 unchanged sentences

Total held to maturity securities $ 15,817 $ 717 $ ( 631 ) $ 15,903

There were no sales of investment securities during the six months ended June 30, 2024 or 2023.

At June 30, 2024 and December 31, 2023, 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, 2024 and December 31, 2023, the actual durations of the Company's available for sale securities were significantly shorter than the stated maturities.

As of June 30, 2024, the Company held marketable equity securities with a fair value of $ 2.1 million an d an amortized cost of $ 2.2 million .

There were no sales of investment securities during the nine months ended September 30, 2024 or 2023.

At September 30, 2024 and December 31, 2023, 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, 2024 and December 31, 2023, the actual durations of the Company's available for sale securities were significantly shorter than the stated maturities.

As of September 30, 2024, the Company held marketable equity securities with a fair value of $ 2.1 million and an amortized cost of $ 2.2 million.

At December 31, 2023, the Company held marketable equity securities with a fair value of $ 2.1 million and an amortized cost of $ 2.2 million.

These securities represent an investment in mutual funds that have an objective to make investments for Community Reinvestment Act ("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, 2024 and December 31, 2023:

Length of Time in Continuous Unrealized Loss Position

5 unchanged sentences

(Dollars in thousands)

June 30, 2024

September 30, 2024

Government and agency obligations $ — $ — — % $ 83,369 $ ( 3,253 ) 3.75 % $ 83,369 $ ( 3,253 ) 3.75 %

14 unchanged sentences

Total investment securities $ — $ — — % $ 103,829 $ ( 8,294 ) 7.40 % $ 103,829 $ ( 8,294 ) 7.40 %

There were thirty-six and thirty-four available for sale securities or held to maturity securities as of June 30, 2024 and December 31, 2023, respectively, in which the fair value of the security was less than the amortized cost of the security.

There were thirty-five and thirty-four available for sale securities or held to maturity securities as of September 30, 2024 and December 31, 2023, 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.

3 unchanged sentences

The Company monitors its corporate bond, state agency and municipal bond portfolios and considers them to have minimal default risk.

The Company has the intent and ability to retain its investment securities in an unrealized loss position at June 30, 2024 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, 2024 until the decline in value has recovered or the security has matured.

Loans Receivable and ACL-Loans

The following table sets forth a summary of the loan portfolio at June 30, 2024 and December 31, 2023:

(In thousands) June 30, 2024 December 31, 2023

The following table sets forth a summary of the loan portfolio at September 30, 2024 and December 31, 2023:

(In thousands) September 30, 2024 December 31, 2023

Real estate loans:

17 unchanged sentences

Real estate is the primary form of collateral.

Other important forms of collateral are business assets, deposits and marketable securities.

Other important forms of collateral are business assets, time deposits and marketable securities.

While collateral provides assurance as a secondary source of repayment, the Company ordinarily requires the primary source of repayment for commercial loans to be based on the client’s ability to generate continuing cash flows.

The Company does not provide first or second lien residential mortgage loans secured by residential properties but has a small legacy portfolio which continues to amortize, pay off due to the sale of the collateral, or refinance away from the Company.

Credit quality of loans and the ACL-Loans

Credit quality of loans and the Allowance for Credit Losses - Loans (ACL-Loans)

Management segregates the loan portfolio into defined segments, which are used to develop and document a systematic method for determining the Company's ACL-Loans.

20 unchanged sentences

Commercial business loans generally have higher interest rates and shorter terms than other loans, and their repayment generally depends on the successful operation of the client’s business.

This portfolio segment includes loans to finance insurance premiums secured by the cash surrender value of life insurance and marketable securities, overdraft lines of credit, and unsecured personal loans to high net worth individuals.

The following tables set forth the activity in the Company’s ACL-Loans for the three and six months ended June 30, 2024 and 2023, by portfolio segment:

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

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

The following tables set forth the activity in the Company’s ACL-Loans for the three and nine months ended September 30, 2024 and 2023, by portfolio segment:

Residential Real Estate Commercial Real Estate Construction Commercial Business Consumer Total

(In thousands)

Three Months Ended June 30, 2024

Three Months Ended September 30, 2024

Beginning balance $ 123 $ 22,473 $ 2,272 $ 10,647 $ 568 $ 36,083

5 unchanged sentences

(In thousands)

Three Months Ended June 30, 2023

Three Months Ended September 30, 2023

Beginning balance $ 190 $ 19,948 $ 1,798 $ 6,788 $ 1,970 $ 30,694

5 unchanged sentences

(In thousands)

Six Months Ended June 30, 2024

Nine Months Ended September 30, 2024

Beginning balance $ 149 $ 20,950 $ 1,699 $ 4,562 $ 586 $ 27,946

5 unchanged sentences

(In thousands)

Six Months Ended June 30, 2023

Balance as of December 31, 2022 $ 163 $ 15,597 $ 311 $ 6,214 $ 146 $ 22,431

Nine Months Ended September 30, 2023

Beginning balance $ 163 $ 15,597 $ 311 $ 6,214 $ 146 $ 22,431

Day1 effect of CECL 80 4,987 611 ( 1,125 ) 526 5,079

Balance as of January 1, 2023 as adjusted for changes in accounting principle 243 20,584 922 5,089 672 27,510

Balance as of January 1, 2023 as

adjusted for changes in accounting

principle 243 20,584 922 5,089 672 27,510

Charge-offs — — — ( 439 ) ( 69 ) ( 508 )

4 unchanged sentences

Generally, loans up for renewal are subject to a full credit evaluation before the renewal is granted and such loans are considered current period originations for purpose of the tables below.

The following tables present loans by origination and risk designation as of June 30, 2024 and December 31, 2023 (dollars in thousands):

Amortized Cost Balances by Origination Year as of June 30, 2024

The following tables present loans by origination and risk designation as of September 30, 2024 and December 31, 2023 (dollars in thousands):

Amortized Cost Balances by Origination Year as of September 30, 2024

2024 2023 2022 2021 2020 Prior Total

95 unchanged sentences

Current period charge-offs $ 83 $ — $ 213 $ — $ 440 $ 611 $ 1,347

Loans evaluated for impairment and the related ACL-Loans as of June 30, 2024 and December 31, 2023 were as follows:

Loans evaluated for impairment and the related ACL-Loans as of September 30, 2024 and December 31, 2023 were as follows:

Portfolio ACL-Loans

(In thousands)

June 30, 2024

September 30, 2024

Loans individually evaluated for impairment:

42 unchanged sentences

This classification does not mean that the loan has absolutely no recovery or salvage value;

rather, it is not practical or desirable to defer charging off this asset even though partial recovery may be made in the future.

rather, it is not practical or desirable to defer writing-off this asset even though partial recovery may be made in the future.

Risk ratings are assigned as necessary to differentiate risk within the portfolio.

2 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, 2024 and December 31, 2023:

The following tables present credit risk ratings by loan segment as of September 30, 2024 and December 31, 2023:

Commercial Credit Quality Indicators

June 30, 2024 December 31, 2023

September 30, 2024 December 31, 2023

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, 2024 December 31, 2023

September 30, 2024 December 31, 2023

Residential Real Estate Consumer Total Residential Real Estate Consumer Total

15 unchanged sentences

A loan is considered to be no longer delinquent when timely payments are made for a period of at least six months (one year for loans providing for quarterly or semi-annual payments) by the borrower in accordance with the contractual terms.

The following tables set forth certain information with respect to the Company's loan portfolio delinquencies by portfolio segment as of June 30, 2024 and December 31, 2023:

June 30, 2024

The following tables set forth certain information with respect to the Company's loan portfolio delinquencies by portfolio segment as of September 30, 2024 and December 31, 2023:

September 30, 2024

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 $ 6,763 $ 3,150 $ 11,365 $ 21,278 $ 2,697,329 $ 2,718,607

There w ere no lo ans delinquent greater than 90 days and still accruing interest as of June 30, 2024 or December 31, 2023.

There was one loan greater than 90 days delinquent and still accruing interest as of September 30, 2024.

This loan has a balance of $ 2.0 million and is related to a maturity administrative extension.

There were no loans delinquent greater than 90 days and still accruing interest as of December 31, 2023.

Loans on nonaccrual status

The following is a summary of nonaccrual loans by portfolio segment as of June 30, 2024 and December 31, 2023:

June 30, 2024 December 31, 2023

The following is a summary of nonaccrual loans by portfolio segment as of September 30, 2024 and December 31, 2023:

September 30, 2024 December 31, 2023

(In thousands)

4 unchanged sentences

Total $ 65,543 $ 49,207

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, 2024 and 2023 was $ 1.2 million and $ 4.2 million, respectively.

At June 30, 2024 and December 31, 2023, there were no commitments to lend additional funds to any borrower on nonaccrual status.

Nonaccrual loans with no specific reserve totaled $ 38.1 million and $ 48.3 million at June 30, 2024 and December 31, 2023, 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, 2024 and 2023 was $ 3.0 million and $ 5.1 million, respectively.

There was no i nterest income recognized on these loans for the nine months ended September 30, 2024 and 2023.

At September 30, 2024 and December 31, 2023, there were no commitments to lend additional funds to any borrower on nonaccrual status.

Nonaccrual loans with no specific reserve totaled $ 64.9 million and $ 48.3 million at September 30, 2024 and December 31, 2023, respectively, as these loans were deemed to be adequately collateralized.

Individually evaluated 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 Company individually evaluates all insurance premium loans within the Consumer portfolio segment, irrespective of credit risk ratings.

The following table summarizes individually evaluated loans by portfolio segment as of June 30, 2024 and December 31, 2023.

The Company also individually evaluated all insurance premium loans within the Consumer portfolio segment, irrespective of credit risk ratings.

The following table summarizes individually evaluated loans by portfolio segment as of September 30, 2024 and December 31, 2023.

Carrying Amount Unpaid Principal Balance Associated ACL-Loans

June 30, 2024 December 31, 2023 June 30, 2024 December 31, 2023 June 30, 2024 December 31, 2023

September 30, 2024 December 31, 2023 September 30, 2024 December 31, 2023 September 30, 2024 December 31, 2023

(In thousands)

14 unchanged sentences

Total individually evaluated loans $ 95,011 $ 105,005 $ 114,203 $ 107,084 $ 3 $ 955

The following tables summarize the average carrying amount of individually evaluated loans and interest income recognized on individually evaluated loans by portfolio segment for the three and six months ended June 30, 2024 and 2023:

The following table summarizes the average carrying amount of individually evaluated loans and interest income recognized on individually evaluated loans by portfolio segment for the three and nine months ended September 30, 2024 and 2023:

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,

2024 2023 2024 2023

10 unchanged sentences

Commercial real estate — 21,934 — 87

Commercial business 8,516 — 878 —

Construction — — — —

Commercial business 629 3,092 11 —

Consumer — — — —

2 unchanged sentences

Average Carrying Amount Interest Income Recognized

Six Months Ended June 30, Six Months Ended June

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

2024 2023 2024 2023

19 unchanged sentences

Modified terms are dependent upon the financial position and needs of the individual borrower.

There were no new loan modifications reportable under ASU 2022-02 at June 30, 2024 and December 31, 2023.

The following table provides information on loans that were modified during the periods indicated.

Number of Loans Pre-Modification Post-Modification

(Dollars in thousands) 2024 2023 2024 2023 2024 2023

Three Months Ended June 30,

Residential real estate — — $ — $ — $ — $ —

Commercial business — — — — — —

Commercial real estate — — — — — —

Total — — $ — $ — $ — $ —

Number of Loans Pre-Modification Post-Modification

(Dollars in thousands) 2024 2023 2024 2023 2024 2023

Six Months Ended June 30,

Residential real estate — — $ — $ — $ — $ —

Commercial business — — — — — —

Commercial real estate — — — — — —

Total — — $ — $ — $ — $ —

There were no new loan modifications reportable under ASU 2022-02 at September 30, 2024 and December 31, 2023.

Allowance for credit losses (ACL)-Unfunded Commitments

The Company has recorded ACL-Unfunded Commitments in A ccrued expenses and other liabilities .

The provision is recorded within the Provision for credit losses on the Company’s Consolidated Statements of Income.

The following table presents a roll forward of the ACL-Unfunded Commitments for the three and six months ended June 30, 2024 and June 30, 2023:

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

The Company has recorded ACL-Unfunded Commitments in A ccrued expenses and other liabilities, with t he provision recorded within the Provision for credit losses on the Company’s Consolidated Statements of Income.

The following table presents a roll forward of the ACL-Unfunded Commitments for the three and nine months ended September 30, 2024 and September 30, 2023:

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

2024 2023 2024 2023

6 unchanged sentences

Components of Provision for Credit Losses

The following table summarizes the Provision for credit losses for the three and six months ended June 30, 2024 and June 30, 2023:

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

The following table summarizes the Provision for credit losses for the three and nine months ended September 30, 2024 and September 30, 2023:

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

2024 2023 2024 2023

(In thousands)

Provision for credit losses (loans) $ 8,368 $ 2,678 $ 12,066 $ 3,612

Provision (credit) for credit losses (loans) $ 6,516 $ ( 1,433 ) $ 18,582 $ 2,179

Credit for credit losses (unfunded commitments) ( 220 ) ( 146 ) ( 420 ) ( 353 )

Provision for credit losses $ 8,183 $ 2,579 $ 11,866 $ 3,405

Provision (credit) provision for credit losses $ 6,296 $ ( 1,579 ) $ 18,162 $ 1,826

Shareholders' Equity

The Company has 10,000,000 shares authoriz ed and 7,866,499 shares issued and outstanding at June 30, 2024 and 10,000,000 shares authorized and 7,882,616 shares issued and outstanding at December 31, 2023.

The Company has 10,000,000 shares authorized and 7,858,573 shares issued and outstanding at September 30, 2024 and 10,000,000 shares authorized and 7,882,616 shares issued and outstanding at December 31, 2023.

The Company's stock is traded on the Nasdaq Global Market under the ticker symbol BWFG.

4 unchanged sentences

Issuer Purchases of Equity Securities

On December 19, 2018, the Company's Board of Directors authorized a share repurchase program of up to 400,000 shares of the Company's Common Stock and, on October 27, 2021, the Company’ Board of Directors authorized the repurchase of an additional 200,000 shares under its share repurchase program.

The Company intends to accomplish the share repurchases through open market transactions, though the Company could accomplish repurchases through other means, such as privately negotiated transactions.

The timing, price and volume of repurchases will be based on market conditions, relevant securities laws and other factors.

The share repurchase plan does not obligate the Company to acquire any particular amount of Common Stock, and it may be modified or suspended at any time at the Company's discretion.

During the six months ended June 30, 2024, the Company purchased 76,320 shares of its Common Stock at a weighted average price of $ 24.95 per share.

On December 19, 2018, the Company's Board of Directors authorized a share repurchase program ("Prior Plan") of up to 400,000 shares of the Company's common Stock and, on October 27, 2021, the Company’ Board of Directors authorized the repurchase of an additional 200,000 shares under the Prior Plan.

During the nine months ended September 30, 2024, the Company purchased 85,990 shares of its common stock at a weighted average price of $ 24.82 .

During the year ended December 31, 2023, the Company had no purchases of common stock.

To date, the Company has purchased 535,802 shares of the Company’s common stock pursuant to the Prior Plan.

On October 28, 2024, the Company announced that on October 23, 2024, its Board of Directors authorized a share repurchase plan ("New Plan").

Under the terms of the New Plan, the Company is authorized to buy back up to 250,000 shares of its outstanding common stock.

In connection with the authorization of the New Plan, the Company terminated the Prior Plan.

The Company intends to accomplish the share repurchases under the New Plan through open market transactions, although the Company could accomplish repurchases through other means, such as privately negotiated transactions.

The timing, price and volume of repurchases will be based on market conditions, relevant securities laws (such as 10b-18 and 10b5-1 rules under the Securities Exchange Act of 1934) and other factors.

The New 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.

The Company expects to fund any repurchases from cash on hand.

Comprehensive Income

2 unchanged sentences

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

The Company’s total compreh ensive income or loss for the three and six months ended June 30, 2024 and June 30, 2023 is reported in the Consolidated Statements of Comprehensive Income.

The following tables present the changes in accumulated other comprehensive (loss) income by component, net of tax for the three and six months ended June 30, 2024 and June 30, 2023:

The Company’s total compreh ensive income or loss for the three and nine months ended September 30, 2024 and September 30, 2023 is reported in the Consolidated Statements of Comprehensive Income.

The following tables present the changes in accumulated other comprehensive (loss) income by component, net of tax for the three and nine months ended September 30, 2024 and September 30, 2023:

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

(In thousands)

Balance at March 31, 2024 $ ( 5,926 ) $ 4,207 $ ( 1,719 )

Balance at June 30, 2024 $ ( 5,622 ) $ 3,666 $ ( 1,956 )

Other comprehensive income (loss) before reclassifications, net of tax 2,050 ( 1,338 ) 712

Amounts reclassified from accumulated other comprehensive (loss) income, net of tax — ( 961 ) ( 961 )

Amounts reclassified from accumulated other comprehensive income, net of tax — ( 516 ) ( 516 )

Net other comprehensive income (loss) 2,050 ( 1,854 ) 196

Balance at June 30, 2024 $ ( 5,622 ) $ 3,666 $ ( 1,956 )

Balance at September 30, 2024 $ ( 3,572 ) $ 1,812 $ ( 1,760 )

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

(In thousands)

Balance at March 31, 2023 $ ( 6,116 ) $ 4,982 $ ( 1,134 )

Balance at June 30, 2023 $ ( 7,611 ) $ 5,895 $ ( 1,716 )

Other comprehensive (loss) income before reclassifications, net of tax ( 579 ) 1,718 1,139

Amounts reclassified from accumulated other comprehensive (loss) income, net of tax — ( 857 ) ( 857 )

Amounts reclassified from accumulated other comprehensive income, net of tax — ( 947 ) ( 947 )

Net other comprehensive (loss) income ( 579 ) 771 192

Balance at June 30, 2023 $ ( 7,611 ) $ 5,895 $ ( 1,716 )

Balance at September 30, 2023 $ ( 8,190 ) $ 6,666 $ ( 1,524 )

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

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Other comprehensive income (loss) before reclassifications, net of tax 2,238 357 2,595

Amounts reclassified from accumulated other comprehensive (loss) income, net of tax — ( 2,175 ) ( 2,175 )

Amounts reclassified from accumulated other comprehensive income, net of tax — ( 2,691 ) ( 2,691 )

Net other comprehensive income (loss) 2,238 ( 2,334 ) ( 96 )

Balance at June 30, 2024 $ ( 5,622 ) $ 3,666 $ ( 1,956 )

Balance at September 30, 2024 $ ( 3,572 ) $ 1,812 $ ( 1,760 )

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

2 unchanged sentences

Other comprehensive (loss) income before reclassifications, net of tax ( 1,440 ) 1,696 256

Amounts reclassified from accumulated other comprehensive (loss) income, net of tax — ( 1,639 ) ( 1,639 )

Amounts reclassified from accumulated other comprehensive income, net of tax — ( 1,591 ) ( 1,591 )

Net other comprehensive (loss) income ( 1,440 ) 105 ( 1,335 )

Balance at June 30, 2023 $ ( 7,611 ) $ 5,895 $ ( 1,716 )

Balance at September 30, 2023 $ ( 8,190 ) $ 6,666 $ ( 1,524 )

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

2024 2023 2024 2023

(In thousands)

Unrealized gains on derivatives $ 1,257 $ 1,112 $ 2,514 $ 2,094 Interest expense on borrowings

Tax expense ( 296 ) ( 255 ) ( 339 ) ( 455 ) Income tax expense

Unrealized gains (losses) on derivatives $ 1,087 $ 1,229 $ 3,601 $ 3,323 Interest expense on borrowings

Tax (expense) benefit ( 257 ) ( 282 ) ( 908 ) ( 1,732 ) Income tax expense

Net of tax $ 830 $ 947 $ 2,693 $ 1,591

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

Three Months Ended

June 30, Six Months Ended

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

2024 2023 2024 2023

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Effect of dilutive equity-based awards (2)

( 24 ) 9 16 66

Weighted average shares outstanding, diluted 7,721 7,634 7,731 7,647

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Regulatory Matters

The Federal Reserve, the FDIC and other federal and state bank regulatory agencies establish regulatory capital guidelines for U.S.

The Federal Reserve, the FDIC and the other federal and state bank regulatory agencies establish regulatory capital guidelines for U.S.

banking organizations.

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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, 2024, the Bank and Company met all capital adequacy requirements to which they are subject.

As of September 30, 2024, 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, 2024 and December 31, 2023 were as follows:

The capital amounts and ratios for the Bank and the Company at September 30, 2024 and December 31, 2023 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

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Bankwell Bank

June 30, 2024

September 30, 2024

Common Equity Tier 1 Capital to Risk-Weighted Assets $ 323,558 11.80 % $ 192,019 7.00 % $ 178,304 6.50 %

Tier I Capital to Risk-Weighted Assets 324,443 11.67 % 236,287 8.50 % 222,388 8.00 %

Total Capital to Risk-Weighted Assets 351,815 12.83 % 288,029 10.50 % 274,313 10.00 %

Tier I Capital to Risk-Weighted Assets 323,558 11.80 % 233,166 8.50 % 219,451 8.00 %

Tier I Capital to Average Assets 323,558 10.24 % 126,432 4.00 % 158,040 5.00 %

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Bankwell Financial Group, Inc.

June 30, 2024

September 30, 2024

Common Equity Tier 1 Capital to Risk-Weighted Assets $ 266,640 9.70 % $ 123,640 4.50 % $ 178,591 6.50 %

Tier I Capital to Risk-Weighted Assets 265,918 9.56 % 166,972 6.00 % 222,629 8.00 %

Total Capital to Risk-Weighted Assets 364,287 13.26 % 219,804 8.00 % 274,755 10.00 %

Tier I Capital to Risk-Weighted Assets 266,640 9.70 % 164,853 6.00 % 219,804 8.00 %

Tier I Capital to Average Assets 266,640 8.44 % 126,432 4.00 % 158,040 5.00 %

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Common Equity Tier 1 Capital to Risk-Weighted Assets $ 321,432 11.30 % $ 199,047 7.00 % $ 184,829 6.50 %

Tier I Capital to Risk-Weighted Assets 321,432 11.30 % 241,700 8.50 % 227,482 8.00 %

Total Capital to Risk-Weighted Assets 350,303 12.32 % 298,571 10.50 % 284,353 10.00 %

Tier I Capital to Risk-Weighted Assets 321,432 11.30 % 241,700 8.50 % 227,482 8.00 %

Tier I Capital to Average Assets 321,432 9.81 % 131,110 4.00 % 163,888 5.00 %

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Common Equity Tier 1 Capital to Risk-Weighted Assets $ 264,209 9.28 % $ 128,121 4.50 % N/A N/A

Tier I Capital to Risk-Weighted Assets 264,209 9.28 % 170,828 6.00 % N/A N/A

Total Capital to Risk-Weighted Assets 362,285 12.72 % 227,770 8.00 % N/A N/A

Tier I Capital to Risk-Weighted Assets 264,209 9.28 % 170,828 6.00 % N/A N/A

Tier I Capital to Average Assets 264,209 8.05 % 131,232 4.00 % N/A N/A

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Reserve Requirements on Cash

The Bank was not required to maintain a minimum reserve balance in the Federal Reserve Bank (FRB) at June 30, 2024 or December 31, 2023.

At June 30, 2024 and December 31, 2023, deposits consisted of the following:

June 30, 2024 December 31, 2023

The Bank was not required to maintain a minimum reserve balance in the Federal Reserve Bank (FRB) at September 30, 2024 or December 31, 2023.

At September 30, 2024 and December 31, 2023, deposits consisted of the following:

September 30, 2024 December 31, 2023

(In thousands)

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Total deposits $ 2,688,171 $ 2,736,757

Maturities of time certificates of deposit as of June 30, 2024 and December 31, 2023 are summarized below:

June 30, 2024 December 31, 2023

Maturities of time certificates of deposit as of September 30, 2024 and December 31, 2023 are summarized below:

September 30, 2024 December 31, 2023

(In thousands)

4 unchanged sentences

Total $ 1,388,760 $ 1,315,073

The aggregate amount of individual certificate accounts, with balances of $250,000 or more, was approximately $ 179.9 million at June 30, 2024 and $ 151.6 million at December 31, 2023.

Brokered certificates of deposits tot aled $ 755.5 million at June 30, 2024 and $ 860.5 million at December 31, 2023, respectively.

Brokered money market accounts totaled $ 52.1 million at June 30, 2024 and $ 91.4 million at December 31, 2023, respectively.

There were no certificates of deposits from national l isting services, one-way buy Certificate of Deposit Account Registry Service ("CDARS") or one-way buy Insured Cash Sweep Service ("ICS") at June 30, 2024 or December 31, 2023.

Brokered deposits are comprised of Brokered CDs, brokered money market accounts, one-way buy CDARS, and one-way buy ICS.

The following table summarizes interest expense on deposits by account type for the three and six months ended June 30, 2024 and 2023:

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

The aggregate amount of individual certificate accounts, with balances of $250,000 or more, was approximately $ 216.3 million at September 30, 2024 and $ 151.6 million at December 31, 2023.

Brokered deposits include Brokered certificates of deposits, brokered money market accounts, one-way buy Certificate of Deposit Account Registry Service ("CDARS"), and one-way buy Insured Cash Sweep Service ("ICS").

Brokered certificates of deposits totaled $ 730.6 million at September 30, 2024 and $ 860.5 million at December 31, 2023.

Brokered money market accounts totaled $ 52.9 million at September 30, 2024 and $ 91.4 million at December 31, 2023.

There were no certificates of deposits from national listing services, one-way buy CDARS or one-way buy ICS at September 30, 2024 or December 31, 2023.

The following table summarizes interest expense on deposits by account type for the three and nine months ended September 30, 2024 and 2023:

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

2024 2023 2024 2023

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Equity award plans

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

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

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

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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 June 30, 2024, there were 277,333 shares reserved for future issuance under the 2022 Plan.

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

At September 30, 2024, there were 275,588 shares reserved for future issuance under the 2022 Plan.

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, 2024:

Six Months Ended June 30, 2024

The following table presents the activity for restricted stock for the nine months ended September 30, 2024:

Nine Months Ended September 30, 2024

Number of Shares Weighted Average Grant Date Fair Value

4 unchanged sentences

Unvested at end of period 227,603

(1) Inclu des 33,115 shares of performance based restricted stock.

(1) Includes 33,115 shares of performance based restricted stock.

( 2) Includes 18,598 shares of performance based restricted stock.

The total fair value of restricted stock awards vested during the six months ended June 30, 2024 was $ 2.2 million.

The Company's restricted stock expense fo r the six months ended June 30, 2024 and June 30, 2023 was $ 1.7 million and $ 1.4 million, respectively.

At June 30, 2024, there was $ 6.5 million of unrecognized stock compensation expense for restricted stock, expected to be recognized over a weighted average period of 1.2 years.

(3) Includes 16,527 shares of performance based restricted stock.

The total fair value of restricted stock awards vested during the nine months ended September 30, 2024 was $ 2.3 million.

The Company's restricted stock expense for the nine months ended September 30, 2024 and September 30, 2023 was $ 2.3 million and $ 2.0 million, respectively.

At September 30, 2024, there was $ 6.5 million of unrecognized stock compensation expense for restricted stock, expected to be recognized over a weighted average period of 0.9 years.

Performance Based Restricted Stock :

The Compa ny has 36,019 s hares of performance based restricted stock outstanding as of June 30, 2024 pursuant to the Company’s Stock Plans.

The Company has 35,186 shares of performance based restricted stock outstanding as of September 30, 2024 pursuant to the Company’s Stock Plans.

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

The share quantity that ultimately vests can range between 0 % and 200 %, which is dependent on the degree to which the performance metrics are met.

The Company records an expense over the vesting period based on (a) the probability that the performance metrics will be met and (b) the fair market value of the Company’s stock at the date of the grant.

The share quantity that ultimately vests can range between 0 % and 200 %, of the number of performance shares initially granted and is dependent on the degree to which the performance metrics are met.

The Company records an expense over the vesting period based on (a) the probability that the performance metric will be met and (b) the fair market value of the Company’s stock at the date of the grant.

Derivative Instruments

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The Company does not use derivatives for speculative purposes.

As of June 30, 2024, the Company was a party to five cash flow swaps, designated as hedging instruments, to add stability to interest expense and to manage its exposure to the variability of the future cash fl ows 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 cash flow swaps to convert rolling 90 - day Federal Home Loan Bank advances or brokered deposits.

As of September 30, 2024, the Company was a party to three cash flow swaps, designated as hedging instruments, to add stability to interest expense and to manage its exposure to the variability of the future cash fl ows 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 cash flow swaps to convert rolling 90 - day brokered deposits.

Cash flow swaps with a positive fair value are recorded as other assets and cash flow swaps with a negative fair value are recorded as other liabilities on the Consolidated Balance Sheets.

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

The fair value of the terminated swaps totaled $ 134.4 thousand as of June 30, 2024.

The fair value of the terminated swaps totaled $ 131.0 thousand as of September 30, 2024.

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.

The Company has one pay-fixed portfolio layer method fair value swap, designated as a hedging instrument, with a total notional amount of $ 150 million.

The Company entered into one pay-fixed portfolio layer method fair value swap, designated as a hedging instrument, with a total notional amount of $ 150 million in the first quarter of 2023.

The Company designated the fair value swap under the portfolio layer method (“PLM”).

2 unchanged sentences

The carrying value of the fair value swap on the Consolidated Balance Sheets will also be adjusted through interest income, based on changes in fair value attributable to changes in the hedged risk.

The following table represents the carrying value of the portfolio layer method hedged asset and the cumulative fair value hedging adjustment included in the carrying value of the hedged asset as of June 30, 2024 and December 31, 2023:

June 30, 2024 December 31, 2023 June 30, 2024 December 31, 2023

September 30, 2024 December 31, 2023 September 30, 2024 December 31, 2023

Carrying Value of Hedged Asset Hedged Items

3 unchanged sentences

(1) These amounts include the amortized cost basis of closed portfolios of fixed rate loans used to designate hedging relationships in which the hedged item is the stated amount of assets in the closed portfolio anticipated to be outstanding for the designated hedged period.

As of June 30, 2024 and December 31, 2023, the amortized cost basis of the closed portfolio used in this hedging relationship was $ 575.9 million and $ 611.5 million , the cumulative basis adjustments associated with this hedging relationships was $ 1.8 million and $ 1.1 million, respectively.

As of June 30, 2024 and December 31, 2023, t he amount of the designated hedged item was $ 150.0 million, respectively.

As of June 30, 2024, the Company has interest rate swaps not designated as hedging instruments, to minimize interest rate risk exposure with loans to clients.

As of September 30, 2024 , the amortized cost basis of the closed portfolio used in this hedging relationship was $ 548.9 million, the cumulative basis adjustments associated with this hedging relationships was $ 0.7 million, and the amount of the designated hedged item was $ 150.0 million.

As of September 30, 2024, the Company has interest rate swaps not designated as hedging instruments, to minimize interest rate risk exposure with loans to clients.

The Company accounts for all non-client related interest rate swaps as either effective cash flow or fair value swaps.

5 unchanged sentences

As the interest rate derivatives associated with this program do not meet the strict hedge accounting requirements, changes in the fair value of both the client derivatives and the offsetting derivatives are recognized directly in earnings.

Information about derivative instruments at June 30, 2024 and December 31, 2023 is as follows:

As of June 30, 2024

Information about derivative instruments at September 30, 2024 and December 31, 2023 is as follows:

As of September 30, 2024

Derivative Assets Derivative Liabilities

2 unchanged sentences

Derivatives designated as hedging instruments:

Cash flow swaps $ 125,000 Other assets $ 4,663 $ — Accrued expenses and other liabilities $ —

Interest rate swaps $ 75,000 Other assets $ 2,238 $ — Accrued expenses and other liabilities $ —

Fair value swap $ — Other assets $ — $ 150,000 Accrued expenses and other liabilities $ 1,416

Derivatives not designated as hedging instruments:

Cash flow swaps (1)

Interest rate swaps (1)

$ 38,500 Other assets $ 2,877 $ 38,500 Accrued expenses and other liabilities $ 2,877

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

Accru ed interest receivables related to interest rate swaps as of June 30, 2024 totaled $ 0.9 million 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 $ 6.6 million as of June 30, 2024.

Accrued interest receivables related to interest rate swaps as of September 30, 2024 totaled $ 0.7 million and is excluded from the fair value p resented in the table above.

The fair value of interest rate swaps in a net asset position, including accrued interest, totaled $ 1.6 million as of September 30, 2024.

As of December 31, 2023

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Derivatives designated as hedging instruments:

Cash flow swaps $ 125,000 Other assets $ 5,240 $ — Accrued expenses and other liabilities $ —

Interest rate swaps $ 125,000 Other assets $ 5,240 $ — Accrued expenses and other liabilities $ —

Fair value swap $ — Other assets $ — $ 150,000 Accrued expenses and other liabilities $ 917

Derivatives not designated as hedging instruments:

Cash flow swaps (1)

Interest rate swaps (1)

$ 38,500 Other assets $ 3,579 $ 38,500 Accrued expenses and other liabilities $ 3,579

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The Company expects to reclassify $ 1.3 million to reduce interest expense during the next 12 months.

The Company assesses the cash flow swaps hedge 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 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.

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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, 2024 and June 30, 2023:

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, 2024 and September 30, 2023:

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

(In thousands) 2024 2023 2024 2023

Interest rate swaps designated as cash flow hedges:

Unrealized gain (loss) recognized in accumulated other comprehensive income before reclassifications $ 548 $ 2,297 $ 1,931 $ 1,298

Unrealized (loss) gain recognized in accumulated other comprehensive income before reclassifications $ ( 1,342 ) $ 2,230 $ 589 $ 3,528

Amounts reclassified from accumulated other comprehensive income ( 1,087 ) ( 1,229 ) ( 3,601 ) ( 3,323 )

Income tax (expense) benefit on items recognized in accumulated other comprehensive income 168 ( 272 ) 102 130

Other comprehensive income $ ( 541 ) $ 913 $ ( 481 ) $ ( 666 )

Income tax benefit (expense) on items recognized in accumulated other comprehensive income 575 ( 230 ) 678 ( 100 )

Other comprehensive (loss) income $ ( 1,854 ) $ 771 $ ( 2,334 ) $ 105

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 table summarizes the effect of the fair value hedging relationship recognized in the consolidated statements of income for the three and six months ended June 30, 2024 and June 30, 2023:

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

The following table summarizes the effect of the fair value hedging relationship recognized in the consolidated statements of income for the three and nine months ended September 30, 2024 and September 30, 2023:

Three Months Ended

September 30, Nine Months Ended September 30,

(In thousands) 2024 2023 2024 2023

(Loss) gain on fair value hedging relationship:

Gain (loss) on fair value hedging relationship:

Hedged asset $ 2,359 $ ( 1,015 ) $ 499 $ ( 1,696 )

Fair value derivative designated as hedging instrument ( 1,942 ) 1,402 747 2,407

Total gain (loss) recognized in the consolidated statements of income within interest and fees on loans $ 418 $ 274 $ ( 88 ) $ 325

The following tables summarize gross and net information about derivative instruments that are offset in the Consolidated Balance Sheets at June 30, 2024 and December 31, 2023:

June 30, 2024

Total gain recognized in the consolidated statements of income within interest and fees on loans $ 417 $ 387 $ 1,246 $ 711

The following tables summarize gross and net information about derivative instruments that are offset in the Consolidated Balance Sheets at September 30, 2024 and December 31, 2023:

September 30, 2024

(In thousands)

3 unchanged sentences

Derivative assets $ 5,769 $ — $ 5,769 $ 1,343 $ 4,260 $ 166

(1) Includes accru ed interest receivable totaling $ 923 thousand .

June 30, 2024

(1) Includes accrued interest receivable totaling $ 654 thousand.

September 30, 2024

(In thousands)

3 unchanged sentences

Derivative liabilities $ 4,284 $ — $ 4,284 $ 1,343 $ — $ 2,941

(1) Includes ac crued interest payable totaling $ 70 thousand .

(1) Includes net accrued interest receivable totaling $ 9 thousand.

December 31, 2023

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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, 2024 and December 31, 2023 were as follows:

June 30, 2024

The carrying values, fair values and placement in the fair value hierarchy of the Company's financial instruments at September 30, 2024 and December 31, 2023 were as follows:

September 30, 2024

Carrying Value Fair Value Level 1 Level 2 Level 3

19 unchanged sentences

Subordinated debentures 69,389 65,389 — — 65,389

Servicing liability — — — — —

Derivative liability 4,293 4,293 — 4,293 —

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The following methods and assumptions were used by management in estimating the fair value of its financial instruments:

Cash and due from banks, federal funds sold, accrued interest receivable and accrued interest payable:

The carrying amount is a reasonable estimate of fair value.

Marketable equity securities and available for sale securities:

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

The fair value for these securities is estimated using a discounted cash flow model, using discount rates ranging from 5.3 % to 7.1 % as of June 30, 2024 and 4.5 % to 6.9 % as of December 31, 2023.

The fair value for these securities is estimated using a discounted cash flow model, using discount rates ranging from 4.8 % to 6.4 % as of September 30, 2024 and 4.5 % to 6.9 % as of December 31, 2023.

These securities are CRA eligible investments.

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Derivative asset (liability):

The valuation of the Company’s interest rate swaps is obtained from a third-party pricing service and is determined using a discounte d cash flow analysis on the expected cash flows of each derivative.

The pricing analysis is based on observable inputs for the contractual terms of the derivatives, including the period to maturity and interest rate curves.

The valuation of the Company’s interest rate swaps is obtained from a third-party pricing service and is determined using a discounted cash flow analysis on the expected cash flows of each derivative.

The pricing analysis is based on observable inputs for the contractual terms of the derivatives, including the period to maturity and

interest rate curves.

The Company also considers the creditworthiness of each counterparty for assets and the creditworthiness of the Company for liabilities.

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Off-balance-sheet instruments:

Loan commitments on which the committed interest rate is less than the current market rate are insignificant at June 30, 2024 and December 31, 2023 .

Loan commitments on which the committed interest rate is less than the current market rate are insignificant at September 30, 2024 and December 31, 2023.

Fair Value Measurements

13 unchanged sentences

Financial instruments measured at fair value on a recurring basis

The following table details the financial instruments carried at fair value on a recurring basis at June 30, 2024 and December 31, 2023, 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, 2024 and for the year ended December 31, 2023.

The following table details the financial instruments carried at fair value on a recurring basis at September 30, 2024 and December 31, 2023, 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, 2024 and for the year ended December 31, 2023.

(In thousands) Level 1 Level 2 Level 3

June 30, 2024:

September 30, 2024:

Marketable equity securities $ 2,148 $ — $ —

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, 2024 and December 31, 2023, 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, 2024 and December 31, 2023, 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, 2024:

September 30, 2024:

Individually evaluated loans $ — $ — $ 95,008

3 unchanged sentences

Servicing asset, net — — 865

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, 2024 and December 31, 2023:

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, 2024 and December 31, 2023:

Fair Value Valuation Methodology Unobservable Input Range

(Dollars in thousands)

June 30, 2024:

September 30, 2024:

Individually evaluated loans $ 57,794 Appraisals Discount to appraised value 0.04 % - 8.00 %

24 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 outstanding balance of subordinated debt issued in 2015 and for general corporate purposes.

The Company used the net proceeds to repay the $ 15.5 million principal balance of subordinated notes issued in 2015.

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

14 unchanged sentences

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

At June 30, 2024 and December 31, 2023, unamortize d debt issuance costs were $ 0.7 million and $ 0.8 million, respectively.

Debt issuance costs amortize over the exp ected life of the related debt.

For the three months ended June 30, 2024 and 2023 the amortization expense for debt issuance costs were $ 62 thousand and $ 62 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, 2024 and 2023 the amortization expense for debt issuance costs were $ 123 thousand and $ 123 thousand, respectively.

The Company recognized $ 0.8 million and $ 0.8 million in interest expense related to its subordinated debt for the three-month periods ended June 30, 2024 and 2023, respectively.

The Company recognized $ 1.6 million and $ 1.6 million in interest expense related to its subordinated debt for the six-month periods ended June 30, 2024 and 2023, respectively.

At September 30, 2024 and December 31, 2023, unamortized debt issuance costs were $ 0.6 million and $ 0.8 million, respectively.

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

For the three months ended September 30, 2024 and 2023 the amortization expense for debt issuance costs were $ 62 thousand and $ 62 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, 2024 and 2023, the amortization expense for debt issuance costs were $ 185 thousand and $ 185 thousand, respectively.

The Company recognized $ 0.8 million and $ 0.8 million in interest expense related to its subordinated debt for the three-month periods ended September 30, 2024 and 2023, respectively.

The Company recognized $ 2.4 million and $ 2.4 million in interest expense related to its subordinated debt for the nine-month periods ended September 30, 2024 and 2023, respectively.

Subsequent Events

On July 24, 2024, the Company’s Board of Directors declared a $ 0.20 per share cash dividend, payable on August 23, 2024, to shareholders of record on August 12, 2024.

Subsequent to June 30, 2024, through July 11, 2024, the Company purchased 9,670 shares at a weighted average price of $ 23.86 per share.

On July 31, 2024, a $ 3.0 million nonaccrual commercial real estate non-owner occupied loan was sold.

As of July 31, 2024, nonaccrual loans were $ 53.1 million compared to $ 56.2 million as of June 30, 2024.

On October 23, 2024, the Company’s Board of Directors declared a $ 0.20 per share cash dividend, payable on November 22, 2024 to shareholders of record on November 11, 2024.

On October 28, 2024, the Company announced that on October 23, 2024, its Board of Directors authorized a share repurchase plan.

Under the terms of the share repurchase plan, the Company is authorized to buy back up to 250,000 shares of its outstanding common stock.

The timing, price and volume of repurchases will be based on market conditions, relevant securities laws (such as 10b-18 and 10b5-1 rules under the Securities Exchange Act of 1934) and other factors.

The share repurchase plan does not obligate the Company to acquire any particular amount of common stock, and it may be modified or suspended at any time at the Company's discretion.

The Company expects to fund any repurchases from cash on hand.

In connection with the authorization of the new plan, the Company terminated the existing plan (the "Prior Plan"), which was originally approved on December 19, 2018 and authorized the repurchase of 400,000 shares of the Company’s common stock.

On October 27, 2021, the Company's Board of Directors voted to increase the number of shares authorized for repurchase under the Prior Plan by 200,000 shares (for a total of 600,000 shares of the Company's common stock).

To date, the Company has purchased 535,802 shares of the Company’s common stock pursuant to the Prior Plan.

A $ 27.1 million multifamily commercial real estate loan was placed on non-performing status as of September 30, 2024.

As of November 6, 2024, the Company has a signed agreement for the sale of this loan at par value.

As of September 30, 2024, this loan comprises 1.03 % of the 2.50 % nonperforming loans as a percentage of total loans.

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