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What changed in Bankwell Financial Group, Inc.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Bankwell Financial Group, Inc.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+280 added−285 removedSource: 10-K (2025-03-05) vs 10-K (2024-03-12)

Top changes in Bankwell Financial Group, Inc.'s 2024 10-K

280 paragraphs added · 285 removed · 238 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

82 edited+20 added−28 removed183 unchanged
Biggest changeIn response to the economic environment in 2023, the Company: • increased and expanded its monitoring of our entire loan portfolio, with added focus on our commercial real estate loan portfolio; • added resources in the Portfolio Management Department; • expanded reporting to Directors' Loan Committee and the Board of Directors which includes: ◦ upcoming commercial real estate maturity schedule, including loan to value, debt service coverage ratio, occupancy, and commentary on expected refinance or payoff status, maturity by property type and owner occupied or non-owner-occupied status; and ◦ individual loan level detail of the performance on our residential care portfolio and our insurance agency portfolio. • expanded the scope of our third-party loan review from 60% of the loan portfolio to include all new and renewed loans originated since September 2022, all residential care loans, all commercial real estate loans secured by office properties where the loan balance is greater than one million dollars, and all loans with addresses in New York City; • enhanced our covenant tracking and reporting to the Directors Loan Committee; • conducted a detailed review of every general office loan in our portfolio.
Biggest changeGiven our concentration of loans secured by commercial real estate and current economic conditions, including factors such as elevated interest rates and changing demand for office space, management has adopted the following: • increased and expanded our monitoring of our entire loan portfolio, with added focus on our commercial real estate loan portfolio, • expanded reporting to Directors' Loan Committee and the Board of Directors which includes: ◦ upcoming commercial real estate maturity schedule, including loan to value, debt service coverage ratio, occupancy, and commentary on expected refinance or payoff status, maturity by property type and owner occupied or non-owner-occupied status; and ◦ individual loan level detail of the performance on our residential care portfolio and our insurance agency portfolio and • enhanced our covenant tracking and reporting to the Directors Loan Committee.
Deposit accounts at the Bank are insured by the Deposit Insurance Fund, generally up to a maximum of $250,000 per separately insured depositor. The FDIC assesses insured depository institutions to maintain the Deposit Insurance Fund. No institution may pay a dividend if in default of its deposit insurance assessment.
Insurance of Deposit Accounts. Deposit accounts at the Bank are insured by the Deposit Insurance Fund, generally up to a maximum of $250,000 per separately insured depositor. The FDIC assesses insured depository institutions to maintain the Deposit Insurance Fund. No institution may pay a dividend if in default of its deposit insurance assessment.
On December 21, 2023, federal and state bank regulators issued an Interagency Statement that states that the Access does not create a new regulatory requirement for banks to access BOI from the CTA registry, create a supervisory expectation that they do so or necessitate changes to BSA/AML compliance programs designed to comply with the existing Customer Due Diligence rule (the “current CDD Rule”) and other existing BSA requirements, such as customer identification program requirements and suspicious activity reporting.
On December 21, 2023, federal and state bank regulators issued an Interagency Statement that states that the Access Rule does not create a new regulatory requirement for banks to access BOI from the CTA registry, create a supervisory expectation that they do so or necessitate changes to BSA/AML compliance programs designed to comply with the existing Customer Due Diligence rule (the “current CDD Rule”) and other existing BSA requirements, such as customer identification program requirements and suspicious activity reporting.
Because our securities are listed on the Nasdaq Global Market (“Nasdaq”), we are subject to Nasdaq's rules for listed companies, including rules relating to corporate governance. Financial Modernization. The Gramm-Leach-Bliley Act, or the GLBA, permits greater affiliation among banks, securities firms, insurance companies, and other companies under a type of financial services company known as a “financial holding company”.
Because our securities are listed on the Nasdaq Global Market (“Nasdaq”), we are subject to Nasdaq's rules for listed companies, including rules relating to corporate governance. 15 Financial Modernization. The Gramm-Leach-Bliley Act, or the GLBA, permits greater affiliation among banks, securities firms, insurance companies, and other companies under a type of financial services company known as a “financial holding company”.
The Basel III Capital Rules also alter the risk weighting for other assets, including marketable equity securities that are risk weighted generally at 300%. The 12 Basel III Capital Rules require certain components of accumulated other comprehensive income (loss) to be included for purposes of calculating regulatory capital requirements unless a one-time opt-out is exercised.
The Basel III Capital Rules also alter the risk weighting for other assets, including marketable equity securities that are risk weighted generally at 300%. The Basel III Capital Rules require certain components of accumulated other comprehensive income (loss) to be included for purposes of calculating regulatory capital requirements unless a one-time opt-out is exercised.
All employees that have the ability to materially affect the risk profile of a financial 15 institution, either individually or as part of a group, are covered by the guidance. The guidance is based upon three core concepts: (1) balanced risk-taking incentives; (2) effective controls and risk management compatibility; and (3) strong corporate governance.
All employees that have the ability to materially affect the risk profile of a financial institution, either individually or as part of a group, are covered by the guidance. The guidance is based upon three core concepts: (1) balanced risk-taking incentives; (2) effective controls and risk management compatibility; and (3) strong corporate governance.
FinCEN plans to issue a third rule, which has not yet been proposed, that is expected to revise the current CDD Rule to bring it into conformity with the CTA as well as reduce any burdens on financial institutions and legal entity customers that are, in light of the CTA, unnecessary or duplicative.
FinCEN stated that it plans to issue a third rule, which has not yet been proposed, that is expected to revise the current CDD Rule to bring it into conformity with the CTA as well as reduce any burdens on financial institutions and legal entity customers that are, in light of the CTA, unnecessary or duplicative.
Alternative Minimum Tax: The Internal Revenue Code of 1986, as amended (the “Code”), imposes an alternative minimum tax (“AMT”) at a rate of 20.0% on a base of regular taxable income plus certain tax preferences which we refer to as “alternative minimum taxable income.” The AMT is payable to the extent such alternative minimum taxable income is in excess of an exemption amount and the AMT exceeds the regular income tax.
Alternative Minimum Tax: The Internal Revenue Code of 1986, as amended (the “Code”), imposes an alternative minimum tax (“AMT”) at a rate of 20.0% on a base of regular taxable income plus certain tax preferences which we refer to as “alternative minimum taxable income.” The AMT is payable to the extent such alternative minimum taxable income is in 17 excess of an exemption amount and the AMT exceeds the regular income tax.
Connecticut law requires the 14 Connecticut Department of Banking to consider, but not be limited to, a bank’s record of performance under the Connecticut CRA in considering any application by the Bank to establish a branch or other deposit-taking facility, to relocate an office or to merge or consolidate with or acquire the assets and assume the liabilities of any other banking institution.
Connecticut law requires the Connecticut Department of Banking to consider, but not be limited to, a bank’s record of performance under the Connecticut CRA in considering any application by the Bank to establish a branch or other deposit-taking facility, to relocate an office or to merge or consolidate with or acquire the assets and assume the liabilities of any other banking institution.
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. Credit Policy an d Procedures General.
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 personal loans to high net worth individuals. Credit Policy an d Procedures General.
The Basel III Capital Rules established a new minimum common equity Tier 1 capital requirement of 4.5% of risk-weighted assets; set the minimum leverage ratio at 4% of total assets; increased the minimum Tier 1 capital to risk-weighted assets requirement from 4% to 6%; and retained the minimum total capital to risk weighted assets requirement at 8.0%.
The Basel III Capital Rules established a minimum common equity Tier 1 capital requirement of 4.5% of risk-weighted assets; set the minimum leverage ratio at 4% of total assets; increased the minimum Tier 1 capital to risk-weighted assets requirement from 4% to 6%; and retained the minimum total capital to risk weighted assets requirement at 8.0%.
Moreover, if, in the opinion of the FDIC, the Bank is engaged in an unsafe or unsound practice (which could include the payment of dividends), the FDIC may require, generally after notice and hearing, it to cease such practice.
Moreover, if, in the opinion of the FDIC, the Bank is engaged in an unsafe or unsound practice (which could include the payment of dividends), the FDIC may require, generally 11 after notice and hearing, it to cease such practice.
The principal exceptions to these prohibitions involve certain non-bank activities which, by statute or by FRB regulation or order, have been identified as activities closely related to the business of banking or managing or controlling banks.
The principal exceptions to these prohibitions involve certain non-bank activities which, by statute or by FRB regulation or order, have been identified as activities closely related to the business of banking or managing or controlling banks. Dividends.
We cannot predict the nature or impact of future changes in monetary and fiscal policies. 17 Taxation Federal Taxation General: We are subject to federal income taxation in the same general manner as other corporations, with limited exceptions.
We cannot predict the nature or impact of future changes in monetary and fiscal policies. Taxation Federal Taxation General: We are subject to federal income taxation in the same general manner as other corporations, with limited exceptions.
State taxes are being recognized for income taxes on income earned in other states. The Company and the Bank are not currently under audit with respect to their state tax returns. 18
State taxes are being recognized for income taxes on income earned in other states. The Company and the Bank are not currently under audit with respect to their state tax returns.
Information on the website is not incorporated by reference and is not a part of this annual report on Form 10-K. Competition The financial services industry is highly competitive. We compete with commercial banks, savings banks, savings associations, money market funds, mortgage brokers, finance companies, credit unions, insurance companies, investment firms and private lenders in various segments of our business.
Information on the website is not incorporated by reference and is not a part of this annual report on Form 10-K. Competition The financial services industry is highly competitive. We compete with commercial banks, savings banks, savings associations, money market funds, mortgage brokers, finance companies, credit unions, insurance companies, investment firms and private lenders in various components of our business.
Under federal law, transactions between depository institutions and their affiliates are governed by Sections 23A and 23B of the Federal Reserve Act, or FRA, and the FRB’s Regulation W.
Transactions with Affiliates. Under federal law, transactions between depository institutions and their affiliates are governed by Sections 23A and 23B of the Federal Reserve Act, or FRA, and the FRB’s Regulation W.
Our cons umer loans, which are underwritten primarily based on the borrower’s financial condition and contain both secured and unsecured credits, subject us to risk based on changes in the borrower’s financial condition, which could be affected by numerous factors, including those discussed above. Rising interest rates may also impact the risk profile of this segment of the portfolio.
Our cons umer loans, which are underwritten primarily based on the borrower’s financial condition and contain both secured and unsecured credits, expose us to risk based on changes in the borrower’s financial condition, which could be affected by numerous factors, including those discussed above. Rising interest rates may also impact the risk profile of this segment of the portfolio.
The FDIC is required, with certain exceptions, to appoint a receiver or conservator for an insured state non-member bank if that bank was “critically under-capitalized” on average during the calendar quarter beginning 270 days after the date on which the institution became “critically under-capitalized.” The FDIC may also appoint itself as conservator or receiver for an insured state non-member institution under specific circumstances on the basis of the institution’s financial condition or upon the occurrence of other events, including: (1) insolvency; (2) substantial dissipation of assets or earnings through violations of law or unsafe or unsound practices; (3) existence of an unsafe or unsound condition to transact business; and (4) insufficient capital, or the incurring of losses that will deplete substantially all of the institution’s capital with no reasonable prospect of replenishment without federal assistance. 13 Insurance of Deposit Accounts.
The FDIC is required, with certain exceptions, to appoint a receiver or conservator for an insured state non-member bank if that bank was “critically under-capitalized” on average during the calendar quarter beginning 270 days after the date on which the institution became “critically under-capitalized.” The FDIC may also appoint itself as conservator or receiver for an insured state non-member institution under specific circumstances on the basis of the institution’s financial condition or upon the occurrence of other events, including: (1) insolvency; (2) substantial dissipation of assets or earnings through violations of law or unsafe or unsound practices; (3) existence of an unsafe or unsound condition to transact business; and (4) insufficient capital, or the incurring of losses that will deplete substantially all of the institution’s capital with no reasonable prospect of replenishment without federal assistance.
Some lack the scale and management expertise to manage the increasing regulatory burden and will likely need to partner with an institution like ours. As we evaluate potential acquisitions, we will continue to seek those that provide meaningful financial benefits, long-term organic growth opportunities and expense reductions, without compromising our risk profile.
Some lack the scale and management expertise to manage the increasing regulatory burden and will likely need to partner with an institution like ours. As we evaluate potential 2 acquisitions, we will seek those that provide meaningful financial benefits, long-term organic growth opportunities and expense reductions, without compromising our risk profile.
The final rule takes effect on April 1, 2024, with staggered compliance dates of January 1, 2026, and January 1, 2027. Consumer Protection and Fair Lending Regulations. We are subject to a variety of federal and Connecticut statutes and regulations that are intended to protect consumers and prohibit discrimination in the granting of credit.
The final rule took effect on April 1, 2024, with staggered compliance dates of January 1, 2026, and January 1, 2027. Consumer Protection and Fair Lending Regulations. We are subject to a variety of federal and Connecticut statutes and regulations that are intended to protect consumers and prohibit discrimination in the granting of credit.
The Bank provides a wide range of services to clients in our market, an area encompassing approximately a 100 mile radius around our branch network. In addition, the Bank pursues certain types of commercial lending opportunities outside our market, particularly where we have strong relationships.
The Bank provides a wide range of services to clients in our market, an area encompassing approximately a 100 mile radius around our branch network. In addition, the Bank pursues certain types of commercial banking opportunities outside our market, particularly where we have strong relationships.
We have also established an internal lending guideline to one relationship of up to 30% of equity capital and allowance for credit losses, if secured by commercial real estate. This limit is inside the regulatory limit of 50%. A relationship in this 6 instance is defined as loans made to different entities but with a shared borrower principal(s).
We have also established an internal lending guideline to one relationship of up to 30% of risk-based capital and allowance for credit losses, if secured by commercial real estate. This limit is inside the regulatory limit of 50%. A relationship in this 6 instance is defined as loans made to different entities but with a shared borrower principal(s).
The Economic Growth Act provides insured depository institutions and their affiliates with less than $10 billion in total consolidated assets and limited trading activities with an exemption from the Dodd-Frank Act’s “Volcker Rule” (which generally restricts certain banking entities such as the Company and the Bank from engaging in proprietary trading activities and entering into certain relationships with hedge funds and private-equity funds).
The Economic Growth Act provides insured depository institutions and their affiliates with less than $10 billion in total consolidated assets and limited trading activities with an exemption from the Dodd-Frank Act’s “Volcker Rule,” which generally restricts certain banking entities such as the Company and the Bank from engaging in proprietary trading activities and entering into certain relationships with hedge funds and private-equity funds.
Our employees’ desire for active community involvement enables us to sponsor numerous local community events and initiatives. The Company is committed to the overall well-being of our team members, offering competitive health and welfare benefits. 3 Company Website and Availability of Securities and Exchange Commission Filings Information regarding the Company is available through the Investor Relations link at www.mybankwell.com.
Our employees’ desire for active community involvement enables us to sponsor numerous local community events and initiatives. The Company is committed to the overall well-being of our team members, offering competitive health and welfare benefits. 3 Company Website and Availability of Securities and Exchange Commission Filings Information regarding the Company is available through the Investor Relations site link at https://investor.mybankwell.com.
It also adapts to changes in the banking industry, including the expanded role of mobile and online banking; provides greater clarity and consistency in the application of CRA regulations; tailors performance standards, data collection, and reporting requirements to account for differences in bank size, business model, and local conditions; promotes transparency and public engagement; confirms that CRA and fair lending responsibilities are mutually reinforcing; and promotes a consistent regulatory approach that applies to banks regulated by all three agencies.
It also adapts to changes in the banking industry, including the expanded role of mobile and online banking; provides greater clarity and consistency in the application of CRA regulations; tailors performance standards, data collection, and reporting requirements to account for differences in bank size, business model, and local conditions; promotes transparency and public engagement; confirms that CRA and fair lending respo nsibilities are mutually reinforcing; and promotes a consistent regulatory approach that applies to banks regulated by all 14 three agencies.
For both 2023 and 2022, the FDIC has exercised that discretion by establishing a 2% designated fund reserve ratio as a long-range minimum target for setting assessment rates. A material increase in FDIC insurance premiums would likely have an adverse effect on the operating expenses and results of operations of the Bank.
For both 2024 and 2023, the FDIC has exercised that discretion by establishing a 2% designated fund reserve ratio as a long-range minimum target for setting assessment rates. 13 A material increase in FDIC insurance premiums would likely have an adverse effect on the operating expenses and results of operations of the Bank.
As of June 30, 2023, the Company no longer met the definition of a Small Bank Holding Company as the Company's assets exceeded $3 billion. Effective March 31, 2024, the Company will be subject to the larger company capital requirements as set forth in the Economic Growth Act.
As of June 30, 2023, the Company no longer met the definition of a Small Bank Holding Company as the Company's assets exceeded $3 billion. Effective March 31, 2024, the Company became subject to the larger company capital requirements as set forth in the Economic Growth Act.
Economic Growth Act The Economic Growth, Regulatory Relief, and Consumer Protection Act (the “Economic Growth Act”), which was enacted in May 2018, repealed or modified several provisions of the Dodd-Frank Act.
Economic Growth Act The Economic Growth, Regulatory Relief, and Consumer Protection Act (the “Economic Growth Act”), enacted in May 2018, repealed or modified several provisions of the Dodd-Frank Act.
The five-year carryback provision of the CARES Act is not available for losses generated in 2021 and subsequent years. At December 31, 2023, w e had $1.6 million of net operating loss carryforwards for federal income tax purposes. The carryovers were transferred to the Company upon the merger with The Wilton Bank in 2014.
The five-year carryback provision of the CARES Act is not available for losses generated in 2021 and subsequent years. At December 31, 2024, w e had $1.4 million of net operating loss carryforwards for federal income tax purposes. The carryovers were transferred to the Company upon the merger with The Wilton Bank in 2014.
We have long been committed to comprehensive and competitive compensation and benefits programs as we recognize that we operate in intensely competitive environments for talent. We invest in our employees’ future by sponsoring and prioritizing continued education throughout the Company’s employee ranks.
We have long been committed to comprehensive and competitive compensation and benefits programs as we recognize that we operate in an intensely competitive environment for talent. We invest in our employees’ future by sponsoring and prioritizing continued education throughout the Company’s employee ranks.
Deposits at the Bank are insured by the FDIC up to statutory limits. We gather deposits through our network of deposit-taking branch offices, online account opening, and have attracted significant transaction account business through our relationship-based approach.
Deposits at the Bank are insured by the FDIC up to statutory limits. We gather deposits through our network of deposit-taking branch offices, online account opening through our Bankwell Direct channel, and have attracted significant transaction account business through our relationship-based approach.
The Economic Growth Act required the federal banking agencies to promulgate regulations permitting insured depository institutions that have less than $5 billion in total consolidated assets (and satisfy other conditions) to use short-form reports of condition (i.e. call reports) for the first and third quarters of each year.
The Economic Growth Act required the federal banking agencies to promulgate regulations permitting insured depository institutions that have less than $5 billion in total consolidated assets (and satisfy other conditions) to use short-form reports of condition (i.e. call reports) for the first and third quarters of each year. Connecticut Banking Laws and Supervision Connecticut Department of Banking.
Prior to these decisions having been made, we offered first lien one-to-four family mortgage loans, as well as home equity lines of credit, in each case primarily on owner-occupied primary residences.
Prior to these decisions, we offered first lien one-to-four family mortgage loans, as well as home equity lines of credit, in each case primarily on owner-occupied primary residences.
The Dodd-Frank Act made many changes to banking regulations including authorizing depository institutions, for the first time, to pay interest on business checking accounts, requiring originators of securitized loans to retain a percentage of the risk for transferred loans, establishing regulatory rate-setting for certain debit card interchange fees, establishing a number of reforms for mortgage originations, requiring bank holding companies and banks to be “well capitalized” and “well managed” in order to acquire banks located outside of their home state, requiring any bank holding company electing to be treated as a financial holding company to be “well capitalized” and “well managed” and authorizing national and state banks to establish de novo branches in any state that would permit a bank chartered in that state to open a branch at that location.
The Dodd-Frank Act made many changes to banking regulations, including authorizing depository institutions to pay interest on business checking accounts, requiring originators of securitized loans to retain a percentage of the risk for transferred loans, establishing regulatory rate-setting for certain debit card interchange fees, requiring bank holding companies and banks to be “well capitalized” and “well managed” in order to acquire banks located outside of their home state, requiring any bank holding company electing to be treated as a financial holding company to be “well capitalized” and “well managed,” and authorizing national and state banks to establish de novo branches in any state that would permit a bank chartered in that state to open a branch at that location.
This notification requirement does not apply to any bank holding company that (i) meets the well capitalized standard for commercial banks, (ii) is “well managed” within the meaning of the FRB regulations and (iii) is not subject to any unresolved supervisory issues.
This notification requirement does not apply to any bank holding company that (i) meets the well capitalized standard for commercial banks, (ii) is “well managed” within the meaning of the FRB regulations and (iii) is not subject to any unresolved supervisory issues. Federal Bank Regulation Safety and Soundness.
Human Capital Resources At December 31, 2023, we employ ed a total of 126 full-time equivalent employees. It is through our team, and their ties to the communities, that we are able to dutifully suppo rt the communities we serve.
Human Capital Resources At December 31, 2024, we employ ed a total of 144 full-time equivalent employees. It is through our team, and their ties to the communities, that we are able to dutifully suppo rt the communities we serve.
The new excise tax is effective as of January 1, 2023 and generally applies to any US corporation whose stock is traded on an established securities market and that repurchases more than $1 million of stock over the course of a tax year. The Company and the Bank are not currently under audit with respect to their federal tax returns.
The excise tax generally applies to any US corporation whose stock is traded on an established securities market and that repurchases more than $1 million of stock over the course of a tax year. The Company and the Bank are not currently under audit with respect to their federal tax returns.
The Bank operates nine branches in New Canaan, Stamford, Fairfield, Westport, Darien, Norwalk, and Hamden, Connecticut. As of December 31, 2023, on a consolidated basis, we had total assets of approximately $3.2 billion, net loans of approximately $2.7 billion, total deposits of approximately $2.7 billion, and shareholders’ equity of approximately $265.8 million.
The Bank operates nine branches in New Canaan, Stamford, Fairfield, Westport, Darien, Norwalk, and Hamden, Connecticut. As of December 31, 2024, on a consolidated basis, we had total assets of approximately $3.3 billion, net loans of approximately $2.7 billion, total deposits of approximately $2.8 billion, and shareholders’ equity of approximately $270.5 million.
Our executive management team is comprised of seasoned professionals with significant banking experience, a history of high performance at financial institutio ns and success in identifying, acquiring and integrating financial institutions. Our executive management team includes Christopher R. Gruseke, President and Chief Executive Officer (since 2015), Steven H.
Our executive management team is comprised of seasoned professionals with significant banking experience, a history of high performance at financial institutio ns and success in identifying, acquiring and integrating financial institutions. Our executive management team includes Christopher R. Gruseke, Chief Executive Officer (since 2015), Matthew McNeill, President (as of January 22, 2025) and Chief Banking Officer (since 2020), Steven H.
For individual loans and loans dependent on the operation of a business, limits are set so as not to exceed the statutory maximum of 15% of equity capital and allowance for credit losses. Our top 20 borrowing relationships range in exposure fro m $43.0 million to $92.0 million and are monitored on an on-going basis. Loan approval process.
For individual loans and loans dependent on the operation of a business, limits are set so as not to exceed the statutory maximum of 15% of equity capital and allowance for credit losses. Our top 20 borrowing relationships range in exposure from $48.1 million to $94.0 million and are monitored on an on-going basis. Loan approval process.
In addition, we perform an annual stress test of our commercial loan portfolio, in which we evaluate the impact on the portfolio of declining property values and lower net operating incomes as a result of economic conditions, including lower rental rates and lower occupancy rates.
In addition, we perform an annual stress test of our commercial loan portfolio, in which we evaluate the impact on the portfolio of declining property values and lower net operating incomes as a result of economic conditions, including lower rental rates and lower occupancy rates. The stress test focuses on the cash flow and valuation of the properties or businesses.
We market our lending products and services to qualified borrowers through conveniently located banking offices, relationship networks and high touch personal service. We target our business development and marketing strategy primarily on small to medium-sized businesses. Our relationship managers actively solicit the business of companies entering our market areas as well as long-standing businesses operating in the communities we serve.
We market our lending products and services to qualified borrowers through conveniently located banking offices, relationship networks and high touch personal service. Our business development and marketing strategy is primarily focused on small to medium-sized businesses. Our relationship managers actively solicit business from companies entering our market areas as well as established businesses operating within the communities we serve.
These asset review procedures provide management with additional information for assessing our asset quality. Response to the current environment on commercial real estate.
These asset review procedures provide management with additional information for assessing our asset quality. Bankwell’s response to the current economic environment’s impact on commercial real estate .
We believe that our ability to attract and generate capital has facilitated our growth and is an integral component to the execution of our business plan. • Scalable Operating Platform.
We believe that our ability to attract and generate capital has facilitated our growth and is an integral component to the execution of our business plan. • Scalable Operating Platform. Our scalable operating platform empowers us to deliver an exceptional banking experience.
A financial holding company must provide notice to the FRB within 30 days after commencing activities previously determined by statute or by the FRB and Department of the Treasury to be permissible. We have not submitted notice to the FRB of intent to be deemed a financial holding company.
A financial holding company must provide notice to the FRB within 30 days after commencing activities previously determined by statute or by the FRB and Department of the Treasury to be permissible. Privacy Requirements.
At December 31, 2023 2022 2021 2020 2019 (In thousands) Real estate loans: Residential $ 50,931 $ 60,588 $ 79,987 $ 113,557 $ 147,109 Commercial 1,947,648 1,921,252 1,356,709 1,148,383 1,128,614 Construction 183,414 155,198 98,341 87,007 98,583 2,181,993 2,137,038 1,535,037 1,348,947 1,374,306 Commercial business 500,569 520,447 350,975 276,601 230,028 Consumer 36,045 17,963 8,869 79 150 Total loans $ 2,718,607 $ 2,675,448 $ 1,894,881 $ 1,625,627 $ 1,604,484 At December 31, Percent of Loan Portfolio 2023 2022 2021 2020 2019 Real estate loans: Residential 1.87 % 2.27 % 4.22 % 6.99 % 9.17 % Commercial 71.64 71.81 71.60 70.64 70.34 Construction 6.75 5.80 5.19 5.35 6.14 80.26 79.88 81.01 82.98 85.65 Commercial business 18.41 19.45 18.52 17.02 14.34 Consumer 1.33 0.67 0.47 — 0.01 Total loans 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % Residential real estate loans.
At December 31, 2024 2023 2022 2021 2020 (In thousands) Real estate loans: Residential $ 42,766 $ 50,931 $ 60,588 $ 79,987 $ 113,557 Commercial 1,899,134 1,947,648 1,921,252 1,356,709 1,148,383 Construction 173,555 183,414 155,198 98,341 87,007 2,115,455 2,181,993 2,137,038 1,535,037 1,348,947 Commercial business 515,125 500,569 520,447 350,975 276,601 Consumer 75,308 36,045 17,963 8,869 79 Total loans $ 2,705,888 $ 2,718,607 $ 2,675,448 $ 1,894,881 $ 1,625,627 At December 31, Percent of Loan Portfolio 2024 2023 2022 2021 2020 Real estate loans: Residential 1.58 % 1.87 % 2.27 % 4.22 % 6.99 % Commercial 70.19 71.64 71.81 71.60 70.64 Construction 6.41 6.75 5.80 5.19 5.35 78.18 80.26 79.88 81.01 82.98 Commercial business 19.04 18.41 19.45 18.52 17.02 Consumer 2.78 1.33 0.67 0.47 — Total loans 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % Residential real estate loans.
Our commercial loan portfolio presents a higher risk than our consumer real estate and consumer loan portfolios. Consumer loans. As of December 31, 2023, our consumer loans represented 1.3% of our total loan portfolio.
Our commercial loan portfolio presents a higher risk than our residential real estate and consumer loan portfolios. Consumer loans. As of December 31, 2024, our consumer loans represented 2.8% of our total loan portfolio.
The 2022 Notes have been structured to qualify for the Company as Tier 2 capital under regulatory guidelines. 8 Risk Management We place significant emphasis on risk mitigation as an integral component of our organizational culture. We believe that our emphasis on risk management is manifested in our historically solid asset quality statistics.
The 2022 Notes have been structured to qualify for the Company as Tier 2 capital under regulatory guidelines. Risk Management We place significant emphasis on risk mitigation as an integral component of our organizational culture.
We seek to attract new lending clients through professional service, relationship networks, competitive pricing and innovative structure, including the utilization of federal and state tax incentives. We pride ourselves on smart, proficient underwriting and timely decision making for new loan requests due to our efficient approval structure and local decision-making.
We attract new lending clients through professional service, relationship networks, competitive pricing and innovative structure, including the utilization of federal and state tax incentives and lending programs such as the SBA loan programs. Our efficient approval structure and local decision-making allow us to provide smart, proficient underwriting and timely decisions on new loan requests.
We believe this gives us a competitive advantage over larger institutions that are not as nimble. 4 Total loans before deferred loan fees and the ACL-Loans were $2.7 billion at December 31, 2023. The following tables summarize the composition of our loan portfolio for the dates indicated.
This agility provides a competitive advantage over larger institutions. 4 Total loans before deferred loan fees and the ACL-Loans were $2.7 billion at December 31, 2024. The following tables summarize the composition of our loan portfolio for the dates indicated.
The approval of the Connecticut Department of Banking is required for, among other things, the establishment of branch offices and business combination transactions. The Connecticut Department of Banking conducts periodic examinations of Connecticut chartered banks.
The Connecticut Department of Banking regulates the internal organization as well as the deposit, lending and investment activities of state-chartered banks, including the Bank. The approval of the Connecticut Department of Banking is required for, among other things, the establishment of branch offices and business combination transactions. The Connecticut Department of Banking conducts periodic examinations of Connecticut chartered banks.
Further, the total amount of all dividends declared by a bank in any year may not exceed the sum of a bank’s net profits for the past two fiscal years, plus the portion of the year in which the dividend is paid. 11 Under federal law, the Bank may not pay any dividend to the holding company if the Bank is under-capitalized or the payment of the dividend would cause it to become under-capitalized.
Further, the total amount of all dividends declared by a bank in any year may not exceed the sum of a bank’s net profits for the past two fiscal years, plus the portion of the year in which the dividend is paid.
At December 31, 2023, we had a 7.26% tangible common equity ratio, and the Bank had a 9.81% tier 1 leverage ratio, a 11.30% tier 1 risk-based ratio, and an 12.32% total capital to risk-weighted assets ratio.
At December 31, 2024, we had a 8.20% tangible common equity ratio, and the Bank had a 10.09% tier 1 leverage ratio, a 11.64% tier 1 risk-based ratio, and an 12.70% total capital to risk-weighted assets ratio.
We maintain a list of loans that receive additional attention if we believe there may be a potential credit risk via our Watch List report. Loans that are upgraded or downgraded are reviewed by our Chief Credit Officer, while Watch List loans undergo a detailed quarterly analysis prepared by the relationship manager or portfolio manager and reviewed by management.
Loans that are upgraded or downgraded are reviewed by our Chief Credit Officer or designee, while Watch List loans undergo a detailed quarterly analysis prepared by the relationship manager or portfolio manager and reviewed by management.
Any change in such laws, rules or regulations, whether by the Connecticut Department of Banking, the FDIC or the Federal Reserve Board ("FRB") could have a material adverse impact on the financial markets in general, and our operations and activities, financial condition, results of operations, growth plans and future prospects specifically.
Any change in such laws, rules or regulations, whether by the Connecticut Department of Banking, the FDIC or the Federal Reserve Board ("FRB") could have a material adverse impact on the financial markets in general, and our operations and activities, financial condition, results of operations, growth plans and future prospects specifically. 9 Dodd-Frank Act The Dodd-Frank Wall Street Reform and Consumer Protection Act (the "Dodd-Frank Act"), enacted in 2010, significantly changed the existing bank regulatory structure, affecting the lending and investment activities and general operations of depository institutions and their holding companies.
Connecticut taxable income is multiplied by the state tax rate (7.5% f or the fiscal years ending December 31, 2023 and 2022) to arrive at Connecticut income tax. We are also subject to state income tax in other states as a result of loan originations made in other states.
Connecticut taxable income is multiplied by the state tax rate (7.5% f or the fiscal years ending December 31, 2024 and 2023) to arrive at Connecticut income tax. In addition to Connecticut state income tax, we are subject to income tax in other states due to business activities conducted therein, including the employment of personnel and the origination of loans.
The Consumer Financial Protection Bureau has examination and enforcement authority over all banks and savings associations with more than $10 billion in assets. Banks and savings associations with $10 billion or less in assets will continue to be examined for compliance with federal consumer protection and 9 fair lending laws by their applicable primary federal bank regulators.
Banks and savings associations with $10 billion or less in assets will be examined for compliance with federal consumer protection and fair lending laws by their applicable primary federal bank regulators. The Dodd-Frank Act also gives state attorneys general certain authority to enforce applicable federal consumer protection laws.
The Basel III Capital Rules limit a banking organization’s capital distributions and certain discretionary bonus payments to executive officers if the banking organization does not hold a “capital conservation buffer” of 2.5% in addition to the minimum risk based capital requirement.
The Basel III Capital Rules limit a banking organization’s capital distributions and certain discretionary bonus payments to executive officers if the banking organization does not hold a “capital conservation buffer” of 2.5% in addition to the minimum risk based capital requirement. 12 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.
Substantially all of our income is derived from, and the principal source of our liquidity is, dividends from the Bank. The ability of the Bank to pay dividends to us is also restricted by federal and state laws, regulations and policies. The Bank may pay cash dividends out of its net profits.
The ability of the Bank to pay dividends to us is also restricted by federal and state laws, regulations and policies. The Bank may pay cash dividends out of its net profits. For purposes of this restriction, “net profits” represents the remainder of all earnings from current operations.
However, we are not precluded from submitting a notice in the future should we wish to engage in activities only permitted to financial holding companies. Privacy Requirements. Under the GLBA, all financial institutions are required to establish policies and procedures to restrict the sharing of non-public client data with non-affiliated parties and to protect client data from unauthorized access.
Under the GLBA, all financial institutions are required to establish policies and procedures to restrict the sharing of non-public client data with non-affiliated parties and to protect client data from unauthorized access.
Our Competitive Strengths We believe that we are especially well-positioned to create value for our shareholders as a result of the following competitive strengths: • Our Market. The Bank provides a wide range of services to client s in our market, an area encompassing approximately a 100 mile radius around our branch network.
Our Competitive Strengths We believe that we are especially well-positioned to create value for our shareholders as a result of the following competitive strengths: • Strategic Market Reach. We serve a diverse client base within a 100-mile radius of our branch network, offering a comprehensive suite of banking services.
The CTA aims to eliminate the use of shell companies that facilitate the laundering of criminal proceeds and, for that 16 purpose, directs FinCEN to establish and maintain a national registry of beneficial ownership information for corporate entities (generally, subject to certain exemptions, any corporation, limited liability company, or other similar entity with 20 or fewer employees and annual gross income of $5 million or less).
The CTA aims to eliminate the use of shell companies that facilitate the laundering of criminal proceeds and, for that purpose, directs FinCEN to establish and maintain a national registry of beneficial ownership information for certain corporate and other business entities.
Brunner, Executive Vice President, Chief Risk and Operations Officer (since January 24, 2024), Christine A. Chivily, Executive Vice President, Chief Credit Officer (since 2013), Ryan Hildebrand, Executive Vice President, Chief Innovation Officer (since July 26, 2023), Matthew McNeill, Executive Vice President, Chief Banking Officer (since 2020), and Courtney E.
Brunner, Executive Vice President, Chief Risk Officer (since 2024), Christine A. Chivily, Executive Vice President, Chief Credit Officer (since 2013), Ryan J. Hildebrand, Executive Vice President, Chief Innovation Officer (since 2023), and Courtney E. Sacchetti, Executive Vice President, Chief Financial Officer (since 2023). • Dedicated Board of Directors.
Business Strategy We are focused on being the banking provider of choice in our highly attractive market area through: • Responsive, Client-Centric Products and Services and a Community Focus. We offer a broad array of customized products and services which allows us to focus on building long-term relationships with our clients through high-quality, responsive and personal service.
Business Strategy We are focused on being the banking provider of choice in our highly attractive market area through: • Client-Focused Growth and Community Engagement. We prioritize building long-term client relationships by offering customized products and services coupled with responsive, personalized service. This focus on the entire client experience fosters trust, leading to long-term partnerships and organic growth.
Many of these competitors have more assets, capital and higher lending limits, and more resources than we do and may be able to conduct more intensive and broader-based promotional efforts to reach both commercial and individual clients.
Many of these competitors have more assets, capital and higher lending limits, and more resources than we do, enabling them to conduct more intensive and broader-based promotional efforts to reach both commercial and individual clients. Competition for deposit products can depend heavily on pricing because of the ease with which clients can transfer deposits from one institution to another.
Reporting companies subject to the CTA are required to provide specific information with respect to beneficial owner(s) - defined as an individual who, directly or indirectly, exercises substantial control over the entity or owns or controls not less than 25% of the ownership interests of the entity - at the time of formation (or by December 31, 2024 for existing entities) and upon a change in ownership.
The CTA required reporting companies subject the CTA to provide specific information with respect to 25% beneficial owner(s) at the time of formation (or by December 31, 2024 for entities existing on January 1, 2024) and upon a change in ownership. Non-compliance with FinCEN regulations promulgated under the CTA may result in civil fines as well as criminal penalties.
On September 29, 2022, FinCEN finalized the first of three proposed rules to implement changes to the beneficial ownership requirements and related amendments set forth in the CTA (the “BOI Reporting Rule”).
On March 2, 2025, the Treasury Department announced that it will not be enforcing the CTA against U.S. citizens or domestic reporting companies and that it would be issuing a proposed rule that will narrow the scope of the CTA filing requirements to foreign reporting companies only. 16 On September 29, 2022, FinCEN finalized the first of three proposed rules to implement changes to the beneficial ownership requirements and related amendments set forth in the CTA (the “BOI Reporting Rule”).
We invest in a variety of high-grade securities, including government agency securities, government guaranteed mortgage-backed securities, highly rated corporate bonds and municipal securities. We regularly evaluate the composition of our portfolio as changes occur with respect to the interest rate yield curve.
Additionally, our investment portfolio may be used to provide adequate collateral for various regulatory or statutory requirements and to manage our interest rate risk. We invest in a variety of high-grade securities, including government agency securities, government guaranteed mortgage-backed securities, highly rated corporate bonds and municipal securities.
The FRB also indicated that it would be inappropriate for a bank holding company experiencing serious financial problems to borrow funds to pay dividends. As discussed above, the FRB’s Small Bank Holding Company Policy Statement includes provisions regulating the payment of dividends by companies subject to that policy statement.
The FRB also indicated that it would be inappropriate for a bank holding company experiencing serious financial problems to borrow funds to pay dividends. Substantially all of our income is derived from, and the principal source of our liquidity is, dividends from the Bank.
From December 31, 2019 through December 31, 2023, our total assets grew from $1.9 billion to $3.2 billion; our gross loans outstanding grew from $1.6 billion to $2.7 billion and our deposits grew from $1.5 billion to $2.7 billion. We believe this growth is attributable to our ability to provide exceptional service to our clients and our financial stability.
Over the four year period from December 31, 2020 through December 31, 2024, we grew total assets from $2.3 billion to $3.3 billion, gross loans outstanding from $1.6 billion to $2.7 billion and deposits from $1.8 billion to $2.8 billion. We attribute this growth to our ongoing commitment to providing exceptional client service as well as prudent financial management.
On October 1, 2014, we acquired Quinnipiac Bank and Trust Company, which was merged into Bankwell Bank. With the efforts of our executive management team, we continued our growth and maintained a strong track record of performance.
On October 1, 2014, we acquired Quinnipiac Bank and Trust Company, which was merged into Bankwell Bank. While 2024 presented certain financial challenges, our executive management team remained steadfast in their efforts, allowing us to maintain a degree of growth and a solid foundation of financial stability.
Supervision and Regulation General The Bank is subject to extensive regulation by the Connecticut Department of Banking, as its chartering agency, and by the FDIC, as its deposit insurer. The Bank’s deposits are insured up to applicable limits by the FDIC through the Deposit Insurance Fund.
The Bank’s deposits are insured up to applicable limits by the FDIC through the Deposit Insurance Fund.
The Company’s existing governance and organizational structure incorporates a substantial risk management component through the following: • The retention of an independent firm (separate from the Company’s auditors) that performs internal audit reviews; • Oversight of various risk components by committees comprised of directors of the Company, including Directors' Loan Committee (credit), ALCO (asset and liability), Audit Committee (regulatory and compliance), and Technology Committee (information security and cybersecurity); • Outsourcing of our asset/liability calculations to a reputable third party, including a quarterly assessment of interest rate risk, reviewed and validated by ALCO; • A Risk Management Steering Committee which is chaired by our Chief Risk and Operations Officer.
The Company’s existing governance and organizational structure incorporates a substantial risk management component through the following: • A Risk Committee comprised of directors of the Company charged with oversight of the Company’s overall enterprise risk management framework, policies, procedures and controls, including operational and information security and cybersecurity risks and compliance programs; • Oversight of various risk components by committees comprised of directors of the Company, including Directors' Loan Committee (credit), ALCO (asset and liability), and Audit Committee (financial); 8 • A Risk Management Committee comprised of senior management, which provides risk management oversight and is chaired by our Chief Risk Officer, who has direct accountability to the Board Risk Committee; • Operational Risk and Compliance Working Groups, comprised of senior management, to identify, assess, manage, and mitigate operational risks across the Company.
The portfolio’s secondary purpose is to generate adequate earnings to provide and contribute to stable income and to generate a profitable return while minimizing risk. Additionally, our investment portfolio may be used to provide adequate collateral for various regulatory or statutory requirements and to manage our interest rate risk.
The majority of these securities are classified as available for sale. The portfolio’s secondary purpose is to generate adequate earnings to provide and contribute to stable income and to generate a 7 profitable return while minimizing risk.
In July 2019, the FDIC, along with several other banking agencies, adopted final rules to implement the exemption contemplated by the Economic Growth Act. The Economic Growth Act increased the consolidated assets threshold from $1 billion to $3 billion for insured depository institutions that qualify for an 18-month on-site exam cycle.
In July 2019, the FDIC, along with several other banking agencies, adopted final rules to implement the exemption contemplated by the Economic Growth Act. The Economic Growth Act has eased certain reporting and debt requirements for banks under $3 billion, as detailed in its Small Bank Holding Company Policy Statement.
The Dodd-Frank Act created the Consumer Financial Protection Bureau with extensive powers to implement and enforce consumer protection laws. The Consumer Financial Protection Bureau has broad rulemaking authority for a wide range of consumer protection laws that apply to all banks and savings associations including, among other things, the authority to prohibit “unfair, deceptive or abusive” acts and practices.
The Dodd-Frank Act also created the Consumer Financial Protection Bureau with extensive powers to implement and enforce consumer protection laws, having examination and enforcement authority over all banks and savings associations with more than $10 billion in assets.
We use robust risk management processes to monitor our existing loan and investment securities portfolios, support operational decision-making and improve our ability to generate earning assets with strong credit quality. To maintain our strong credit quality, we use a comprehensive underwriting process and we seek to maintain a diversified loan portfolio and a conservative investment securities portfolio.
We prioritize disciplined risk management, embedding it in our corporate culture. Our robust processes monitor loan and investment portfolios, inform operational decisions, and support the generation of high-quality earning assets. We employ comprehensive underwriting, portfolio diversification, and a conservative investment strategy.
Nine properties totaling $52.3 million, with an average balance of $5.8 million, are in New York City. Investment Activities Our investment portfolio’s primary purpose is to provide adequate liquidity necessary to meet any reasonable decline in deposits and any anticipated increase in the loan portfolio. The majority of these securities are classified as available for sale.
In addition to the enhancements made to monitoring and reporting, the Company has added resources to its Portfolio Management and Credit Departments. Investment Activities Our investment portfolio’s primary purpose is to provide adequate liquidity necessary to meet any reasonable decline in deposits and any anticipated increase in the loan portfolio.
We do not e xpect to compete with large institutions for the primary banking relationships of large corporations.
We do not seek to compete directly for the primary banking relationships of large corporations, instead concentrating on providing superior service and tailored solutions to our core client base. Lending Activities General.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeAny regulatory action against us could have a material adverse effect on our business, results of operations, financial condition and future prospects.
Biggest changeAny regulatory action against us could have a material adverse effect on our business, results of operations, financial condition and future prospects. The Bank’s FDIC deposit insurance premiums and assessments may increase. The deposits of the Bank are insured by the FDIC up to legal limits and, consequently, subject it to the payment of FDIC deposit insurance assessments.
Unexpected deterioration in the credit quality of our commercial real estate loan, commercial loan or construction loan portfolios would require us to increase our provision for loan losses, which would reduce our profitability and could have a material adverse effect on our business, financial condition, results of operations and future prospects.
Unexpected deterioration in the credit quality of our commercial real estate loan, commercial loan or construction loan portfolios would require us to increase our provision for credit losses, which would reduce our profitability and could have a material adverse effect on our business, financial condition, results of operations and future prospects.
Failure to adapt to or comply with regulatory requirements or investor or stakeholder expectations and standards could negatively impact our reputation, ability to do business with certain partners, and our stock price. New government regulations could also result in new or more stringent forms of ESG oversight and expanding mandatory and voluntary reporting, diligence, and disclosure. 27 Item 1B.
Failure to adapt to or comply with regulatory requirements or investor or stakeholder expectations and standards could negatively impact our reputation, ability to do business with certain partners, and our stock price. New government regulations could also result in new or more stringent forms of ESG oversight and expanding mandatory and voluntary reporting, diligence, and disclosure. Item 1B.
If any one of these borrowers becomes unable to repay a loan obligation(s) for any reason, our nonperforming loans and our ACL-Loans could increase significantly, which could adversely and materially affect our business, financial condition and results of operations. 19 Our commercial real estate loan, commercial loan and construction loan portfolios expose us to potentially elevated risks.
If any one of these borrowers becomes unable to repay a loan obligation(s) for any reason, our nonperforming loans and our ACL-Loans could increase significantly, which could adversely and materially affect our business, financial condition and results of operations. Our commercial real estate loan, commercial loan and construction loan portfolios expose us to potentially elevated risks.
Weak economic conditions are characterized by deflation, fluctuations in debt and equity capital markets, a lack of liquidity and/or depressed prices in the secondary market for mortgage loans, increased delinquencies on mortgage, consumer and commercial loans, residential and commercial real estate price declines and lower home sales and commercial activity.
Weak economic conditions are characterized by deflation, fluctuations in debt and equity capital markets, a lack of liquidity and/or depressed prices in the 18 secondary market for mortgage loans, increased delinquencies on mortgage, consumer and commercial loans, residential and commercial real estate price declines and lower home sales and commercial activity.
Accordingly, charge-offs on non-owner occupied commercial real estate loans may be larger on a per loan basis than those incurred with our residential or consumer loan portfolios. Commercial loans are typically based on the borrowers’ ability to repay the loans from the cash flow of their businesses.
Accordingly, charge- 19 offs on non-owner occupied commercial real estate loans may be larger on a per loan basis than those incurred with our residential or consumer loan portfolios. Commercial loans are typically based on the borrowers’ ability to repay the loans from the cash flow of their businesses.
Any of these results could materially and adversely affect our business, financial condition, results of operations and prospects. General Risk Factors Resources could be expended in considering or evaluating potential acquisitions that are not consummated, which could materially and adversely affect subsequent attempts to locate and acquire or merge with another business.
Any of these results could materially and adversely affect our business, financial condition, results of operations and prospects. 26 General Risk Factors Resources could be expended in considering or evaluating potential acquisitions that are not consummated, which could materially and adversely affect subsequent attempts to locate and acquire or merge with another business.
A decline in real estate values c ould impair the value of our collateral and our ability to sell the 20 collateral upon any foreclosure, which would likely require us to increase our ACL-Loans.
A decline in real estate values c ould impair the value of our collateral and our ability to sell the collateral upon any foreclosure, which would likely require us to increase our ACL-Loans.
Further, any substantial, unexpected, prolonged change in market interest rates could have a material adverse effect on our business, financial condition, results of operations and future prospects. In addition, increased interest rates could also have a negative impact on our results of operations by reducing the ability of borrowers to repay their current loan obligations.
Any substantial, unexpected, or prolonged change in market interest rates could have a material adverse effect on our business, financial condition, results of operations, and future prospects. In addition, increased interest rates could also have a negative impact on our results of operations by reducing the ability of borrowers to repay their current loan obligations.
Numerous commercial banks, savings banks and savings associations maintain offices or are headquartered in or near our market area. Commercial banks, savings banks, savings associations, money market funds, mortgage brokers, finance companies, credit unions, insurance companies, investment firms and private lenders compete with us for various segments of our business.
Numerous commercial banks, savings banks and savings associations maintain offices or are headquartered in or near our market area. Commercial banks, savings banks, savings associations, money market funds, mortgage brokers, finance companies, credit unions, insurance companies, investment firms and private lenders compete with us for various components of our business.
If actual charge-offs in future periods exceed the amounts allocated to our ACL-Loans, we may need additional provision for loan losses to restore the adequacy of our ACL-Loans.
If actual charge-offs in future periods exceed the amounts allocated to our ACL-Loans, we may need additional provision for credit losses to restore the adequacy of our ACL-Loans.
Unauthorized access, cyber-crime, artificial intelligence, and other threats to data security may require significant resources, harm our reputation, and adversely affect our business. We necessarily collect, use and hold personal and financial information concerning individuals and businesses with which we have a banking relationship.
Unauthorized access, cyber-crime, and other threats to data security, including those posed by artificial intelligence, may require significant resources, harm our reputation, and adversely affect our business. We necessarily collect, use and hold personal and financial information concerning individuals and businesses with which we have a banking relationship.
The increasing sophistication of fraudulent activity from possible perpetrators could damage our reputation, result in the loss of business, subject us to increased regulatory scrutiny or to civil litigation and possible financial liability, any of which could have an adverse effect on our results of operation and financial condition.
The increasing sophistication of fraudulent activity could damage our reputation, result in the loss of business, subject us to increased regulatory scrutiny or to civil litigation and possible financial liability. Any of these outcomes could have an adverse effect on our results of operation and financial condition.
As a financial institution, we are inherently exposed to risk in the form of theft and other fraudulent activities by clients, vendors, bad actors, and/or employees targeting the Bank or our clients. Such activity may take many forms, including check fraud, electronic fraud, wire fraud, phishing, social engineering, and other dishonest acts.
As a financial institution, we are inherently exposed to risk in the form of theft and other fraudulent activities by clients, vendors, bad actors, and/or employees targeting the Bank or our clients. These activities can manifest in many forms, including check fraud, electronic fraud, wire fraud, phishing, social engineering, and other dishonest acts.
As of December 31, 2023, our five largest relationships ranged in exposure from approximately $85.0 million to $92.0 million. In addition to other typical risks related to any loan, such as deterioration of the collateral securing the loans, this high concentration of borrowers presents a risk to our lending operations.
As of December 31, 2024, our five largest relationships ranged in exposure from approximat ely $80.0 million to $94.0 million. In addition to other typical risks related to any loan, such as deterioration of the collateral securing the loans, this high concentration of borrowers presents a risk to our lending operations.
Potential failures, interruptions or breaches in system security could result in disruptions or failures in our key systems, such as general ledger, deposit or loan systems as well as online banking.
Potential failures, interruptions or breaches in system security could result in disruptions or failures in our key systems, such as general ledger, deposit or loan systems as well as online banking, including our online account opening channel, Bankwell Direct.
The effort to comply with regulatory requirements relating to internal controls cause us to incur increased expenses and a diversion of management’s time and other internal resources.
The effort to comply with regulatory requirements relating to internal controls causes us to incur increased expenses and diverts management’s time and other internal resources.
Interest rates are highly sensitive to many factors that are beyond our control, including general economic conditions and policies of various governmental and regulatory agencies and, in particular, the FRB.
Interest rates are highly sensitive to numerous factors that are beyond our control, including general economic conditions and policies of various governmental and regulatory agencies, most notably the FRB through the Federal Open Market Committee.
To mitigate this risk, we maintain effective policies and internal controls along with ongoing employee training to identify and prevent such incidents. We may be unsuccessful in identifying and completing the acquisition of whole financial institutions or related lines of business.
To mitigate these risks, we maintain effective policies and internal controls, leverage technology, and provide ongoing employee training focused on identifying and preventing such incidents. We may be unsuccessful in identifying and completing the acquisition of whole financial institutions or related lines of business.
If our policies, procedures and systems are deemed deficient, we would be subject to liability, including fines and regulatory actions, which may include restrictions on our ability to pay dividends and the necessity to obtain regulatory approvals to proceed with certain aspects of our business plan, including our acquisition plans. 26 Failure to maintain and implement adequate programs to combat money laundering and terrorist financing could also have serious reputational consequences for us.
If our policies, procedures and systems are deemed deficient, we would be subject to liability, including fines and regulatory actions, which may include restrictions on our ability to pay dividends and the necessity to obtain regulatory approvals to proceed with certain aspects of our business plan, including our acquisition plans.
The deposits of the Bank are insured by the FDIC up to legal limits and, consequently, subject it to the payment of FDIC deposit insurance assessments. The Bank’s regular assessments are determined by its risk classification, which is based on its regulatory capital levels and the level of supervisory concern that it poses.
The Bank’s regular assessments are determined by its risk classification, which is based on its regulatory capital levels and the level of supervisory concern that it poses.
If the interest rates paid on deposits and other borrowings increase at a faster rate than the interest rates received on loans and other investments, our net interest income, and therefore net income, could be adversely affected. A prolonged period of extremely volatile and unstable market conditions may increase our funding costs and negatively affect market risk mitigation strategies.
If interest rates paid on deposits and other borrowings increase faster than the interest rates we receive on loans and other investments, our net interest income, and consequently our net income, could be adversely affected. Periods of market volatility and instability may increase our funding costs and negatively affect our market risk mitigation strategies.
Changes in monetary policy, including changes in interest rates, influences not only the interest we receive on loans and securities and the interest we pay on deposits and borrowings, but such changes could also affect our ability to originate loans and obtain deposits, the fair value of our financial assets and liabilities, and the average duration of our assets.
Changes in monetary policy, particularly changes in interest rates, influence the interest we earn on loans and securities, the interest we pay on deposits and borrowings, and our ability to originate loans and attract deposits. Furthermore, such changes affect the fair value of our financial assets and liabilities, as well as the average duration of our assets.
Congress, state legislatures and federal and state regulatory agencies continue to propose numerous initiatives to supplement the global effort to combat climate change.
As a result, the global business community has increased its political and social awareness surrounding the issue. Further, U.S. Congress, state legislatures and federal and state regulatory agencies continue to propose numerous initiatives to supplement the global effort to combat climate change.
Removed
During the 2022-2023 cycle, the FRB increased the target range for the federal funds rate 11 times to slow inflation but has held such rates steady at 5.25%-5.50% since July 2023, citing several factors, including reduced inflationary pressure and steady job and wage growth.
Added
Beginning in 2022, the FRB initiated an aggressive monetary tightening cycle to combat rising inflation, resulting in a significant and rapid increase in the federal funds rate. This tightening cycle culminated in the target federal funds rate 20 range reaching a high of 5.25%-5.50%.
Removed
As a result, the global business community has increased its political and social awareness surrounding the issue, and the United States has entered into international agreements in an attempt to reduce global temperatures, such as the Paris Agreement. Further, U.S.
Added
While the FRB subsequently decreased the target range by 100 basis points in 2024, citing factors such as moderating inflationary pressures and continued job and wage growth, the cumulative effect of the prior increases continued to shape the interest rate environment.
Removed
Similar and even more expansive initiatives are expected under the current administration, including potentially increasing supervisory expectations with respect to banks’ risk management practices, accounting for the effects of climate change in stress testing scenarios and systemic risk assessments, revising expectations for credit portfolio concentrations based on climate-related factors and encouraging investment by banks in climate-related initiatives and lending to communities disproportionately impacted by the effects of climate change.
Added
Failure to maintain and implement adequate programs to combat money laundering and terrorist financing could also have serious reputational consequences for us.
Removed
Pursuant to the Economic Relief Act, the Federal Reserve Board raised the asset threshold under its Small Bank Holding Company Policy Statement from $1 billion to $3 billion for bank or savings and loan holding companies are permitted to have debt levels higher than would be permitted for larger holding companies, provided that such companies meet certain other conditions such as not engaging in significant nonbanking activities.
Removed
As of June 30, 2023, the Company no longer met the definition of a Small Bank Holding Company as the Company's assets exceeded $3 billion. Effective March 31, 2024, the Company will be subject to the larger company capital requirements as set forth in the Economic Growth Act. The Bank’s FDIC deposit insurance premiums and assessments may increase.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeOur Risk Management Steering Committee, which includes the Company’s Chief Risk and Operations Officer (Chair), CIO and ISO, assesses and monitors the effectiveness of the Company’s cybersecurity risk management program. The 28 Company’s internal audit function also performs independent reviews and validation of the program, including policies and procedures as determined by their annual risk assessment.
Biggest changeThe Company’s internal audit function also performs independent reviews and validation of the program, including policies and procedures as determined by their annual risk assessment. 28 Both the CIO and CSO regularly report to the Board's Risk Committee on the Company’s identification, prevention, detection, mitigation and remediation of cybersecurity risks and incidents.
The Technology Committee conducts a minimum of one cybersecurity program update per year, including a review of capital spend, budget, and staffing, as well as periodic reports on cybersecurity threats, awareness training, and key risk indicators related to the Company’s progress on risk mitigation activities.
The Risk Committee conducts a minimum of one cybersecurity program update per year, including a review of capital spend, budget, and staffing, as well as periodic reports on cybersecurity threats, awareness training, and key risk indicators related to the Company’s progress on risk mitigation activities.
Annually, the Audit Committee reviews and recommends to the Board approval of management's recommendations on cybersecurity insurance. The Technology Committee reviews the Company’s oversight related to cybersecurity risks, to ensure that Board oversight of such risks remains appropriate and that risks are appropriately managed. The Company’s Chief Information Officer ("CIO") oversees the Company’s information technology programs and investments.
Annually, the Audit Committee reviews and recommends to the Board approval of management's recommendations on cybersecurity insurance. The Risk Committee reviews the Company’s oversight related to cybersecurity risks, to ensure that Board oversight of such risks remains appropriate and that risks are appropriately managed. The Company’s Chief Information Officer ("CIO") oversees the Company’s information technology programs and investments.
For more information on potential risk related to cybersecurity incidents, including intellectual property theft and operational disruption, please see “Item 1A – Risk Factors” of this report. Cybersecurity Governance The Audit Committee and Technology Committee of the Board of Directors provide oversight of Company cybersecurity risks.
For more information on potential risk related to cybersecurity incidents, including intellectual property theft and operational disruption, please see “Item 1A – Risk Factors” of this report. Cybersecurity Governance The Audit Committee and Risk Committee of the Board of Directors provide oversight of Company cybersecurity risks.
With respect to specific incidents, the Company leverages an incident response framework to elevate and evaluate specific incidents to the CIO and ISO, along with the Company’s senior leadership, including the finance, compliance, and legal functions. In the event of a potentially material cybersecurity incident, the Technology Committee and Audit Committee would be immediately notified and briefed.
With respect to specific incidents, the Company leverages an incident response framework to elevate and evaluate specific incidents to the CIO and CSO, along with the Company’s senior leadership, including the finance, compliance, and legal functions. In the event of a potentially material cybersecurity incident, the Risk Committee would be immediately notified and briefed.
The Company’s CIO has over 20 years of information technology experience, including nine years in various information technology leadership roles. Our CIO holds a Bachelor of Science in Information Technology. The Company’s ISO reports to the Chief Risk and Operations Officer and oversees the Company’s information security programs.
The Company’s CIO has over 20 years of information technology experience, including ten years in various information technology leadership roles. Our CIO holds a Bachelor of Science in Information Technology. The Company’s Chief Security Officer ("CSO") reports to the Chief Risk Officer and oversees the Company’s information security programs.
In 2023, the Board reviewed the Company’s cybersecurity program and maturity assessment, while the Technology Committee and Audit Committee provided regular oversight of cybersecurity risks, with cybersecurity discussions and dashboard reviews of key performance indicators and risks during the course of the year.
In 2024, the Risk Committee reviewed the Company’s cybersecurity program and maturity assessment, provided regular oversight of cybersecurity risks, with cybersecurity discussions and dashboard reviews of key performance indicators and risks during the course of the year.
Removed
The Company’s ISO possesses over 20 years of Information Security and Technology experience. The ISO holds a Bachelor of Science in Computer Systems Engineering, an MBA, and a Master of Science in Information Security and Assurance, as well as multiple industry certifications including CISSP, CISM, CISA, CRISC, CDPSE, PMP, among others.
Added
The CSO possesses over 20 years of Information Security and Technology experience. Our Risk Management Committee, which includes the Company’s Chief Risk Officer (Chair), Director of Risk Management and CSO, assesses and monitors the effectiveness of the Company’s cybersecurity risk management program.
Removed
Both the CIO and ISO regularly report to the Technology Committee on the Company’s identification, prevention, detection, mitigation and remediation of cybersecurity risks and incidents.
Added
In January 2025, the Company hired a Chief Technology Officer ("CTO"), who oversees the Company’s information technology programs and investments. The CTO now encompasses the responsibilities previously held by the Chief Information Officer.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeWe also lease office space for each of our branch offices in New Canaan, Stamford, Norwalk, Fairfield, Darien, and Westport, Connecticut. The leases for our facilities have terms expiring at dates rangin g from 2028 to 2033, although certain of the leases contain options to extend beyond these dates. We own the Hamden branch office.
Biggest changeThe leases for our facilities have terms expiring at dates rang ing from 2028 to 2033, althoug h certain of the leases contain options to extend beyond these dates. We own the Hamden branch office. We believe that our current facilities are adequate for our current level of operations.
We believe that our current facilities are adequate for our current level of operations. Each lease is at market rate based on similar properties in the applicable market area. Management continually evaluates its branch and other office locations for opportunities to maximize cost savings while meeting our growth needs and the needs of our clients.
Each lease is at market rate based on similar properties in the applicable market area. Management continually evaluates its branch and other office locations for opportunities to maximize cost savings while meeting our growth needs and the needs of our clients.
Item 2. Properties The Bank’s headquarter building is located at 258 Elm Street in New Canaan, Connecticut. The property is leased by us until 2031. On April 24, 2023, the Bank established a new retail branch located at 300 Atlantic Street, Stamford, CT. This replaced the branch located at 612 Bedford Street, Stamford, CT, which closed on April 21, 2023.
Item 2. Properties The Bank’s headquarter building is located at 258 Elm Street in New Canaan, Connecticut. The property is leased by us until 2031. We also lease office space for each of our branch offices in New Canaan, Stamford, Norwalk, Fairfield, Darien, and Westport, Connecticut.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeThis number does not reflect the number of persons or en tities holding stock in nominee name through banks, brokerage firms or other nominees. The Company’s shareholders are entitled to dividends when and if declared by the Board of Directors, out of funds legally available.
Biggest changeThe Company’s shareholders are entitled to dividends when and if declared by the Board of Directors, out of funds legally available. The ability of the Company to pay dividends depends, in part, on the ability of the Bank to pay dividends to the Company.
Issuer Purchases of Equity Securities Period Total Number of Shares (or Units) Purchased Average Price Paid per Share (or Unit) Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs Maximum Number (or Approximate Dollar Value) of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs (1) October 1, 2023 - October 31, 2023 — $ — — 150,188 November 1, 2023 - November 30, 2023 — — — 150,188 December 1, 2023 - December 31, 2023 — — — 150,188 Total — $ — — 150,188 (1) 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.
Issuer Purchases of Equity Securities Period Total Number of Shares (or Units) Purchased Average Price Paid per Share (or Unit) Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs Maximum Number (or Approximate Dollar Value) of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs (1) October 1, 2024 - October 31, 2024 — $ — — 250,000 November 1, 2024 - November 30, 2024 — — — 250,000 December 1, 2024 - December 31, 2024 — — — 250,000 Total — $ — — 250,000 (1) 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.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities The Company’s Common Stock has traded on the Nasdaq Global Market under the Symbol “BWFG” since the completion of its initial public offering on May 15, 2014. There were approx imately 251 shareholders of record of BWFG Common Stock as of December 31, 2023.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities The Company’s Common Stock has traded on the Nasdaq Global Market under the Symbol “BWFG” since the completion of its initial public offering on May 15, 2014.
Subsequent to December 31, 2023 through March 11, 2024, the Company purchased 17,239 shares of its Common Stock at a weighted average price of $25.12 per share. Item 6. [Reserved] 30
Subsequent to December 31, 2024 through March 4, 2025, the Company purchased 16,920 shares of its Common Stock at a weighted average price of $31.15. Item 6. [Reserved] 30
The ability of the Company to pay dividends depends, in part, on the ability of the Bank to pay dividends to the Company. In accordance with Connecticut statutes, regulatory approval is required for the Bank to pay dividends in excess of the Bank’s profits retained in the current year plus retained profits from the previous two years.
In accordance with Connecticut statutes, regulatory approval is required for the Bank to pay dividends in excess of the Bank’s profits retained in the current year plus retained profits from the previous two years. The Bank is also prohibited from paying dividends that would reduce its capital ratios below minimum regulatory requirements.
The Bank is also prohibited from paying dividends that would reduce its capital ratios below minimum regulatory requirements. Issuer Purchases of Equity Securities The following table includes information with respect to repurchases of the Company’s Common Stock during the three‑month period ended December 31, 2023 under the Company’s share repurchase program.
Issuer Purchases of Equity Securities The following table includes information with respect to repurchases of the Company’s Common Stock during the three‑month period ended December 31, 2024 under the Company’s share repurchase program.
The Company may repurchase shares in open market transactions or by 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 Company intends to accomplish the share repurchases 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 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. On October 27, 2021, the Company's Board of Directors authorized the repurchase of an additional 200,000 shares under its existing share repurchase program.
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.
Added
There were approx im ately 241 shareholders of record of BWFG Common Stock as of December 31, 2024. This number does not reflect the number of persons or entities holding stock in nominee name through banks, brokerage firms or other nominees.
Added
On October 27, 2021, the Company's Board of Directors authorized the repurchase of an additional 200,000 shares under the Prior Plan. To date, the Company has purchased 535,802 shares of the Company’s common stock pursuant to the Prior Plan.
Added
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 purchase 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.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeIn response to the economic environment in 2023, the Company: • increased and expanded its monitoring of our entire loan portfolio, with added focus on our commercial real estate loan portfolio, • added resources in the Portfolio Management Department; • expanded reporting to Directors' Loan Committee and the Board of Directors which includes: ◦ upcoming commercial real estate maturity schedule, including loan to value, debt service coverage ratio, occupancy, and commentary on expected refinance or payoff status, maturity by property type and owner occupied or non-owner-occupied status; ◦ individual loan level detail of the performance on our residential care portfolio and our insurance agency portfolio. • expanded the scope of our third-party loan review from 60% of the loan portfolio to include all new and renewed loans originated since September 2022, all residential care loans, all commercial real estate loans secured by office properties where the loan balance is greater than one million dollars, and all loans with addresses in New York City; and • enhanced our covenant tracking and reporting to the Directors Loan Committee. 45 The following table compares the composition of our commercial real estate loan portfolio by property type, and collateral location as of December 31, 2023 : Commercial Real Estate CT All Other NY NYC NJ FL OH PA All Other Total (1) (Dollars in thousands) Residential care (2) $ — $ 43,072 $ 41,154 $ 22,382 $ 296,976 $ 80,221 $ 23,709 $ 127,901 $ 635,415 Retail 134,215 87,011 7,450 21,594 17,078 3,586 37,792 98,846 407,572 Multifamily 166,926 31,050 52,296 7,203 — — — — 257,475 Office 69,752 22,665 — 38,260 2,293 — — 60,073 193,043 Industrial / warehouse 74,446 14,445 20,048 17,138 2,798 — — 23,201 152,076 Mixed use 46,303 1,157 51,074 10,000 — — — — 108,534 Medical office 48,304 — 1,466 — — 4,919 3,900 20,145 78,734 1-4 family investment 13,967 13,528 1,936 2,809 17,420 — — — 49,660 All other (3) 20,344 20,578 23,475 — — — — — 64,397 $ 574,257 $ 233,506 $ 198,899 $ 119,386 $ 336,565 $ 88,726 $ 65,401 $ 330,166 $ 1,946,906 (1) Excludes the positive fair value effect of the portfolio layer swap of $742 thousand for Commercial Real Estate at December 31, 2023.
Biggest changeIn response to the recent economic environment, the Company adopted expanded monitoring and reporting on our loan portfolio, including: • increased and expanded our monitoring of our entire loan portfolio, with added focus on our commercial real estate loan portfolio, • expanded reporting to Directors' Loan Committee and the Board of Directors which includes: ◦ upcoming commercial real estate maturity schedule, including loan to value, debt service coverage ratio, occupancy, and commentary on expected refinance or payoff status, maturity by property type and owner occupied or non-owner-occupied status; and ◦ individual loan level detail of the performance on our residential care portfolio and our insurance agency portfolio. • expanded the scope of our third-party loan review from 60% of the loan portfolio to include all new and renewed loans originated since September 2022, all residential care loans, all commercial real estate loans secured by office properties where the loan balance is greater than one million dollars, and all loans with addresses in New York City; and • enhanced our covenant tracking and reporting to the Directors Loan Committee.
The ACL-Loans is measured on each loan’s amortized cost basis, excluding interest receivable, and is initially recognized upon origination or purchase of the loan, and subsequently remeasured on a recurring basis. The ACL-Loans is recognized as a contra-asset, and credit loss expense is recorded as a provision for loan losses in the consolidated statements of income.
The ACL-Loans is measured on each loan’s amortized cost basis, excluding interest receivable, and is initially recognized upon origination or purchase of the loan, and subsequently remeasured on a recurring basis. The ACL-Loans is recognized as a contra-asset, and credit loss expense is recorded as a provision for credit losses in the consolidated statements of income.
Qualitative factor adjustments may increase or decrease management’s estimate of expected credit losses. Qualitative loss factors are based on the Company’s judgment of market, changes in loan composition or concentrations, performance trends, regulatory changes, uncertainty of macroeconomic forecasts, and other asset specific risk characteristics. 37 When loans do not share risk characteristics with other financial assets they are evaluated individually.
Qualitative factor adjustments may increase or decrease management’s estimate of expected credit losses. Qualitative loss factors are based on the Company’s judgment of market, changes in loan composition or 37 concentrations, performance trends, regulatory changes, uncertainty of macroeconomic forecasts, and other asset specific risk characteristics. When loans do not share risk characteristics with other financial assets they are evaluated individually.
A decrease in expected cash flows in subsequent periods may indicate that the loan pool is a credit loss, which would require the establishment of an ACL-Loans by a charge to the provision for loan losses. 48 Nonperforming Assets . Nonperforming assets include nonaccrual loans and property acquired through foreclosures or repossession.
A decrease in expected cash flows in subsequent periods may indicate that the loan pool is a credit loss, which would require the establishment of an ACL-Loans by a charge to the provision for credit losses. 48 Nonperforming Assets . Nonperforming assets include nonaccrual loans and property acquired through foreclosures or repossession.
If a quoted market price is not available, fair value is estimated using quoted market prices for similar securities. The Company’s private placement municipal housing authority bonds, classified as held to maturity, have no available quoted market price. The fair value for these securities is estimated using a discounted cash flow model.
If a quoted market price is not available, fair value is estimated using quoted market prices for similar securities. The Company’s private placement municipal housing authority bonds, classified as held to maturity, have no available quoted market price. The 38 fair value for these securities is estimated using a discounted cash flow model.
The provision for loan losses is charged against earnings in order to maintain our ACL-Loans and reflects management’s best estimate of probable losses inherent in our loan portfolio at the balance sheet date.
The provision for credit losses is charged against earnings in order to maintain our ACL-Loans and reflects management’s best estimate of probable losses inherent in our loan portfolio at the balance sheet date.
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.
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 personal loans to high net worth individuals.
We cannot predict the extent to which economic conditions or other factors may impact borrowers and the potential problem loans. Accordingly, there can be no assurance that other loans will not become 90 days or more past due, be placed on nonaccrual, become restructured, or require increased allowance coverage and provision for loan losses.
We cannot predict the extent to which economic conditions or other factors may impact borrowers and the potential problem loans. Accordingly, there can be no assurance that other loans will not become 90 days or more past due, be placed on nonaccrual, become restructured, or require increased allowance coverage and provision for credit losses.
Of our held to maturity securities portfolio, one security’s fair value was less than its amortized cost as of December 31, 2023. 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 December 31, 2023.
Of our held to maturity securities portfolio, one security’s fair value was less than its amortized cost as of December 31, 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 December 31, 2024.
Members are required to own capital stock of the FHLB, and borrowings are collateralized by qualifying assets not otherwise pledged. The maximum amount of credit that the FHLB will extend varies from time to time, depending on its policies and the amount of qualifying collateral the member can pledge. The Bank had satisfied its collateral requirement at December 31, 2023.
Members are required to own capital stock of the FHLB, and borrowings are collateralized by qualifying assets not otherwise pledged. The maximum amount of credit that the FHLB will extend varies from time to time, depending on its policies and the amount of qualifying collateral the member can pledge. The Bank had satisfied its collateral requirement at December 31, 2024.
The Company and the Bank must maintain the capital conservation buffer to avoid restrictions on the ability to pay dividends, pay discretionary bonuses, or to engage in share repurchases. Contractual Obligations The following table summarizes our contractual obligations to make future payments as of December 31, 2023. Payments for borrowings do not include interest.
The Company and the Bank must maintain the capital conservation buffer to avoid restrictions on the ability to pay dividends, pay discretionary bonuses, or to engage in share repurchases. Contractual Obligations The following table summarizes our contractual obligations to make future payments as of December 31, 2024. Payments for borrowings do not include interest.
We believe that the level of the ACL-Loans at December 31, 2023 is appropriate to cover probable losses. Investment Securities We manage our investment securities portfolio to provide a readily available source of liquidity for balance sheet management, to generate interest income and to implement interest rate risk management strategies.
We believe that the level of the ACL-Loans at December 31, 2024 is appropriate to cover probable losses. Investment Securities We manage our investment securities portfolio to provide a readily available source of liquidity for balance sheet management, to generate interest income and to implement interest rate risk management strategies.
We utilize advances from the FHLB as part of our overall funding strategy, to meet short-term liquidity needs and to manage interest rate risk arising from the difference in asset and liability maturities. Total FHLB advances were $90.0 million at December 31, 2023 and $90.0 million at December 31, 2022.
We utilize advances from the FHLB as part of our overall funding strategy, to meet short-term liquidity needs and to manage interest rate risk arising from the difference in asset and liability maturities. Total FHLB advances were $90.0 million at December 31, 2024 and $90.0 million at December 31, 2023.
The selected consolidated balance sheet data as of December 31, 2023 and 2022 and the selected consolidated statement of income data for the years ended December 31, 2023 and 2022 have been derived mainly from our audited consolidated financial statements and related notes that we have included elsewhere in this Annual Report.
The selected consolidated balance sheet data as of December 31, 2024 and 2023 and the selected consolidated statement of income data for the years ended December 31, 2024 and 2023 have been derived mainly from our audited consolidated financial statements and related notes that we have included elsewhere in this Annual Report.
Available for sale securities include U.S. Treasuries, mortgage-backed securities, and corporate bonds. 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 December 31, 2023.
Available for sale securities include U.S. Treasuries, mortgage-backed securities, and corporate bonds. 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 December 31, 2024.
The selected consolidated balance sheet data as of December 31, 2021, 2020, and 2019 and the selected consolidated statement of income data for the years ended December 31, 2021, 2020, and 2019 has been derived mainly from audited consolidated financial statements that are not presented in this Annual Report.
The selected consolidated balance sheet data as of December 31, 2022, 2021, and 2020 and the selected consolidated statement of income data for the years ended December 31, 2022, 2021, and 2020 has been derived mainly from audited consolidated financial statements that are not presented in this Annual Report.
The analysis of the issuers’ performance and the intent of the Company to retain these securities support the determination that there was no expected credit loss, and therefore, no ACL-Securities were recognized on the corporate bond portfolio as of December 31, 2023.
The analysis of the issuers’ performance and the intent of the Company to retain these securities support the determination that there was no expected credit loss, and therefore, no ACL-Securities were recognized on the corporate bond portfolio as of December 31, 2024.
At December 31, 2023 and 2022, there were no commitments to lend additional funds to any borrower on nonaccrual status. Past Due Loans . When a loan is 15 days past due, the Company sends the borrower a late notice.
At December 31, 2024 and 2023, there were no commitments to lend additional funds to any borrower on nonaccrual status. Past Due Loans . When a loan is 15 days past due, the Company sends the borrower a late notice.
Deposit Activities and Other Sources of Funds Our sources of funds include deposits, including brokered deposits, FHLB borrowings, subordinated debt and proceeds from the sales, maturities and payments of loans and investment securities. Total deposits represented 85% of our total assets at December 31, 2023.
Deposit Activities and Other Sources of Funds Our sources of funds include deposits, including brokered deposits, FHLB borrowings, subordinated debt and proceeds from the sales, maturities and payments of loans and investment securities. Total deposits represented 85% of our total assets at December 31, 2024.
(2) Primarily consists of skilled nursing and assisted living facilities. The following table presents an analysis of the maturity of our commercial real estate, commercial construction and commercial business loan portfolios as of December 31, 2023.
(2) Primarily consists of skilled nursing and assisted living facilities. The following table presents an analysis of the maturity of our commercial real estate, commercial construction and commercial business loan portfolios as of December 31, 2024.
At December 31, 2023, the Bank met all capital adequacy requirements to which it was subject and exceeded the regulatory minimum capital levels to be considered well-capitalized under the regulatory framework.
At December 31, 2024, the Bank met all capital adequacy requirements to which it was subject and exceeded the regulatory minimum capital levels to be considered well-capitalized under the regulatory framework.
(2) The adjustment for securities and loans taxable equivalency was $207 thousand and $201 thousand, respectively, for the years ended December 31, 2023 and 2022. Tax exempt income was converted to a fully taxable equivalent basis at a 20 percent tax rate for 2023 and 2022. (3) Net interest inco me as a percentage of total earning assets.
(2) The adjustment for securities and loans taxable equivalency was $383 thousand and $207 thousand, respectively, for the years ended December 31, 2024 and 2023. Tax exempt income was converted to a fully taxable equivalent basis at a 20 percent tax rate for 2024 and 2023. (3) Net interest inco me as a percentage of total earning assets.
Changes in the fair value of these cash flow hedges are initially recorded in accumulated other comprehensive income and subsequently reclassified into earnings when the forecasted transaction affects earnings. 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.
Changes in the fair value of these cash flow hedges are initially recorded in accumulated other comprehensive income and subsequently reclassified into earnings when the forecasted transaction affects earnings. 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.
Due to the judgments and uncertainties involved in the estimation process, the estimates could result in materially different results under different assumptions and conditions. 38 Allowance for Credit Losses - Securities ("ACL-Securities") Effective January 1, 2023, pursuant to ASU No. 2016-13, each quarter the Company individually evaluates the available for sale debt securities and held to maturity securities for impairment credit losses.
Due to the judgments and uncertainties involved in the estimation process, the estimates could result in materially different results under different assumptions and conditions. Allowance for Credit Losses - Securities ("ACL-Securities") Pursuant to ASU No. 2016-13, each quarter the Company individually evaluates the available for sale debt securities and held to maturity securities for impairment credit losses.
Due Within 1 Year Due 1–5 Years Due 5–10 Years Due After 10 Years or No Contractual Maturity At December 31, 2023 Amortized Cost Yield Amortized Cost Yield Amortized Cost Yield Amortized Cost Yield (Dollars in thousands) Marketable equity securities $ — — % $ — — % $ — — % $ 2,202 2.19 % Securities available for sale: U.S.
Due Within 1 Year Due 1–5 Years Due 5–10 Years Due After 10 Years or No Contractual Maturity At December 31, 2024 Amortized Cost Yield Amortized Cost Yield Amortized Cost Yield Amortized Cost Yield (Dollars in thousands) Marketable equity securities $ — — % $ — — % $ — — % $ 2,264 2.19 % Securities available for sale: U.S.
Information about derivative instruments at December 31, 2023 and 2022 was as follows: As of December 31, 2023 Derivative Assets Derivative Liabilities Original Notional Amount Balance Sheet Location Fair Value Original Notional Amount Balance Sheet Location Fair Value (In thousands) Derivatives designated as hedging instruments: Interest rate swaps $ 125,000 Other assets $ 5,240 $ — Accrued expenses and other liabilities $ — Fair value swap $ 150,000 Other assets $ — $ — Accrued expenses and other liabilities $ 917 Derivatives not designated as hedging instruments: Interest rate swaps (1) $ 38,500 Other assets $ 3,579 $ 38,500 Accrued expenses and other liabilities $ 3,579 (1) Represents interest rate swaps with commercial banking clients, which are offset by derivatives with a third party. 57 As of December 31, 2022 Derivative Assets Derivative Liabilities Original Notional Amount Balance Sheet Location Fair Value Original Notional Amount Balance Sheet Location Fair Value (In thousands) Derivatives designated as hedging instruments: Interest rate swaps $ 125,000 Other assets $ 8,292 $ — Accrued expenses and other liabilities $ — Derivatives not designated as hedging instruments: Interest rate swaps (1) $ 38,500 Other assets $ 4,207 $ 38,500 Accrued expenses and other liabilities $ 4,207 (1) Represents interest rate swaps with commercial banking clients, which are offset by derivatives with a third party.
Information about derivative instruments at December 31, 2024 and 2023 was as follows: As of December 31, 2024 Derivative Assets Derivative Liabilities Original Notional Amount Balance Sheet Location Fair Value Original Notional Amount Balance Sheet Location Fair Value (In thousands) Derivatives designated as hedging instruments: Interest rate swaps $ 75,000 Other assets $ 3,259 $ — Accrued expenses and other liabilities $ — Fair value swap $ — Other assets $ — $ 150,000 Accrued expenses and other liabilities $ 259 Derivatives not designated as hedging instruments: Interest rate swaps (1) $ 38,500 Other assets $ 4,213 $ 38,500 Accrued expenses and other liabilities $ 4,213 (1) Represents interest rate swaps with commercial banking clients, which are offset by derivatives with a third party. 57 As of December 31, 2023 Derivative Assets Derivative Liabilities Original Notional Amount Balance Sheet Location Fair Value Original Notional Amount Balance Sheet Location Fair Value (In thousands) Derivatives designated as hedging instruments: 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: Interest rate swaps (1) $ 38,500 Other assets $ 3,579 $ 38,500 Accrued expenses and other liabilities $ 3,579 (1) Represents interest rate swaps with commercial banking clients, which are offset by derivatives with a third party.
The following table compares noninterest income for the years ended December 31, 2023 and 2022.
The following table compares noninterest income for the years ended December 31, 2024 and 2023.
FTE net interest income decreased primarily due to an increase in interest expense partially offset by an increase in interest income attributable to loan growth and higher overall loan yields.
FTE net interest income decreased primarily due to an increase in interest expense partially offset by an increase in interest income attributable to higher loan yields.
The effective tax rates for the years ended December 31, 2023 and 2022, were 23.7% and 22.0%, respectively. O ur net deferred tax asset at December 31, 2023 was $9.4 million, compared to $7.4 million at December 31, 2022. On October 8, 2015, the Bank established a wholly-owned subsidiary, Bankwell Loan Servicing Group, Inc. (a Passive Investment Company “PIC”).
The effective tax rates for the years ended December 31, 2024 and 2023, were 26.7% and 23.7%, respectively. Our net deferred tax asset at December 31, 2024 was $9.7 million, compared to $9.4 million at December 31, 2023. On October 8, 2015, the Bank established a wholly-owned subsidiary, Bankwell Loan Servicing Group, Inc. (a Passive Investment Company “PIC”).
The following table sets forth certain information concerning short-term FHLB advances as of and for the periods indicated: Year Ended December 31, 2023 2022 (Dollars in thousands) Average amount outstanding during the period $ 91,589 $ 71,740 Amount outstanding at end of period 90,000 90,000 Highest month end balance during the period 100,000 130,000 Weighted average interest rate at end of period (1) 3.24 % 2.29 % (1) $50 million of the Company's FHLB borrowings are subject to longer term interest rate swap agreements and the weighted average rate reflects the "all-in" swap rate under these long interest rate term swap agreements.
The following table sets forth certain information concerning short-term FHLB advances as of and for the periods indicated: Year Ended December 31, 2024 2023 (Dollars in thousands) Average amount outstanding during the period $ 90,000 $ 91,589 Amount outstanding at end of period 90,000 90,000 Highest month end balance during the period 90,000 100,000 Weighted average interest rate at end of period (1) 3.91 % 3.24 % (1) In 2023, $50 million of the Company's FHLB borrowings were subject to longer term interest rate swap agreements and the average rate reflects the "all-in" swap costs under these agreements.
Interest expense for the year ended December 31, 2023 increased by $70.8 million, or 305.1%, compared to interest expense for the year ended December 31, 2022 due to an interest expense on deposits, resulting from an increase in rates paid on interest bearing deposits. 40 Distribution of Assets, Liabilities and Stockholders’ Equity; Interest Rates and Interest Differential The following table presents the average balances and yields earned on interest-earning assets and average balances and weighted average rates paid on our funding liabilities for the years ended December 31, 2023 and 2022.
Interest expense for the year ended December 31, 2024 increased by $14.7 million, or 15.7%, compared to interest expense for the year ended December 31, 2023 due to an interest expense on deposits, resulting from an increase in rates paid on interest bearing deposits. 40 Distribution of Assets, Liabilities and Stockholders’ Equity; Interest Rates and Interest Differential The following table presents the average balances and yields earned on interest-earning assets and average balances and weighted average rates paid on our funding liabilities for the years ended December 31, 2024 and 2023.
You should read the following selected statistical and financial data in conjunction with the more detailed information contained in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and the related notes that we have presented elsewhere in this Annual Report. 31 Selected Financial Data At or For the Years Ended December 31, 2023 2022 2021 2020 (g) 2019 (Dollars in thousands, except per share data) Statements of Income: Interest income $ 188,454 $ 117,945 $ 81,376 $ 77,487 $ 82,948 Interest expense 93,986 23,202 13,490 22,652 29,187 Net interest income 94,468 94,743 67,886 54,835 53,761 Provision (credit) for loan losses 866 5,437 (57) 7,605 437 Net interest income after provision for loan losses 93,602 89,306 67,943 47,230 53,324 Noninterest income 4,842 3,040 5,657 2,884 5,244 Noninterest expense 50,401 44,363 39,739 42,813 35,626 Income before income tax 48,043 47,983 33,861 7,301 22,942 Income tax expense 11,380 10,554 7,275 1,397 4,726 Net income 36,663 37,429 26,586 5,904 18,216 Per Share Data: Basic earnings per share $ 4.71 $ 4.84 $ 3.38 $ 0.75 $ 2.32 Diluted earnings per share $ 4.67 $ 4.79 $ 3.36 $ 0.75 $ 2.31 Book value per share (end of period) (a) 34.84 31.73 26.53 22.77 23.51 Tangible book value per share (end of period) (a)(b) 34.50 31.39 26.19 22.43 23.15 Dividend payout ratio (f) 17.13 % 16.70 % 19.05 % 74.67 % 22.51 % Shares outstanding (end of period) (a) 7,628,288 7,516,699 7,612,807 7,755,909 7,757,828 Weighted average shares outstanding–basic 7,587,768 7,563,363 7,706,407 7,728,328 7,757,355 Weighted average shares outstanding–diluted 7,647,411 7,640,218 7,761,811 7,748,453 7,784,631 Performance Ratios: Return on average assets (c) 1.13 % 1.44 % 1.17 % 0.28 % 0.97 % Return on average common shareholders’ equity (b) 14.55 % 16.72 % 13.86 % 3.35 % 10.20 % Average shareholders’ equity to average assets 7.74 % 8.61 % 8.46 % 8.36 % 9.53 % Net interest margin 2.98 % 3.78 % 3.17 % 2.77 % 3.03 % Efficiency ratio (b) 50.8 % 45.4 % 53.9 % 73.9 % 60.2 % Asset Quality Ratios: Total past due loans to total loans (d) 0.78 % 0.60 % 1.72 % 0.93 % 0.77 % Nonperforming loans to total loans (d) 1.81 % 0.61 % 0.88 % 2.06 % 0.66 % Nonperforming assets to total assets (e) 1.53 % 0.51 % 0.68 % 1.48 % 0.56 % ACL-Loans to nonperforming loans 56.79 % 136.43 % 101.90 % 62.87 % 127.59 % ACL-Loans to total loans (d) 1.03 % 0.84 % 0.89 % 1.29 % 0.84 % Net charge-offs (recoveries) to average loans (d) 0.03 % — % 0.23 % 0.01 % 0.15 % Statements of Financial Condition: Total assets $ 3,215,482 $ 3,252,449 $ 2,456,264 $ 2,253,747 $ 1,882,182 Gross portfolio loans (d) 2,718,607 2,675,448 1,894,881 1,625,627 1,604,484 Investment securities 127,623 121,634 108,409 106,890 100,865 Deposits 2,736,757 2,800,818 2,123,998 1,827,316 1,491,903 FHLB borrowings 90,000 90,000 50,000 175,000 150,000 Subordinated debt 69,205 68,959 34,441 25,258 25,207 Total equity 265,752 238,469 201,987 176,602 182,397 Capital Ratios: Tier 1 capital to average assets Bankwell Bank 9.81 % 9.88 % 9.94 % 8.44 % 10.99 % Tier 1 capital to risk-weighted assets Bankwell Bank 11.30 % 10.28 % 11.18 % 11.06 % 12.53 % Total capital to risk-weighted assets Bankwell Bank 12.32 % 11.07 % 12.00 % 12.28 % 13.35 % Total shareholders’ equity to total assets 8.26 % 7.33 % 8.22 % 7.84 % 9.69 % Tangible common equity ratio (b) 8.19 % 7.26 % 8.13 % 7.73 % 9.56 % 32 (a) Excludes unvested restricted stock awards.
You should read the following selected statistical and financial data in conjunction with the more detailed information contained in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and the related notes that we have presented elsewhere in this Annual Report. 31 Selected Financial Data At or For the Years Ended December 31, 2024 2023 2022 2021 2020 (f) (Dollars in thousands, except per share data) Statements of Income: Interest income $ 191,994 $ 188,454 $ 117,945 $ 81,376 $ 77,487 Interest expense 108,712 93,986 23,202 13,490 22,652 Net interest income 83,282 94,468 94,743 67,886 54,835 Provision (credit) for credit losses 22,620 866 5,437 (57) 7,605 Net interest income after provision for credit losses 60,662 93,602 89,306 67,943 47,230 Noninterest income 3,718 4,842 3,040 5,657 2,884 Noninterest expense 51,051 50,401 44,363 39,739 42,813 Income before income tax 13,329 48,043 47,983 33,861 7,301 Income tax expense 3,559 11,380 10,554 7,275 1,397 Net income 9,770 36,663 37,429 26,586 5,904 Per Share Data: Basic earnings per share $ 1.24 $ 4.71 $ 4.84 $ 3.38 $ 0.75 Diluted earnings per share $ 1.23 $ 4.67 $ 4.79 $ 3.36 $ 0.75 Book value per share (end of period) (a) 35.43 34.84 31.73 26.53 22.77 Tangible book value per share (end of period) (a)(b) 35.09 34.50 31.39 26.19 22.43 Dividend payout ratio (b)(e) 65.04 % 17.13 % 16.70 % 19.05 % 74.67 % Shares outstanding (end of period) (a) 7,635,998 7,628,288 7,516,699 7,612,807 7,755,909 Weighted average shares outstanding–basic 7,710,076 7,587,768 7,563,363 7,706,407 7,728,328 Weighted average shares outstanding–diluted 7,737,952 7,647,411 7,640,218 7,761,811 7,748,453 Performance Ratios: Return on average assets (b) 0.31 % 1.13 % 1.44 % 1.17 % 0.28 % Return on average common shareholders’ equity (b) 3.60 % 14.55 % 16.72 % 13.86 % 3.35 % Average shareholders’ equity to average assets 8.48 % 7.74 % 8.61 % 8.46 % 8.36 % Net interest margin (b) 2.70 % 2.98 % 3.78 % 3.17 % 2.77 % Efficiency ratio (b) 57.9 % 50.8 % 45.4 % 53.9 % 73.9 % Asset Quality Ratios: Total past due loans to total loans (c) 1.63 % 0.78 % 0.60 % 1.72 % 0.93 % Nonperforming loans to total loans (c) 1.97 % 1.81 % 0.61 % 0.88 % 2.06 % Nonperforming assets to total assets (d) 1.88 % 1.53 % 0.51 % 0.68 % 1.48 % ACL-Loans to nonperforming loans 54.45 % 56.79 % 136.43 % 101.90 % 62.87 % ACL-Loans to total loans (c) 1.07 % 1.03 % 0.84 % 0.89 % 1.29 % Net charge-offs (recoveries) to average loans (b)(g) 0.81 % 0.03 % — % 0.23 % 0.01 % Statements of Financial Condition: Total assets $ 3,268,476 $ 3,215,482 $ 3,252,449 $ 2,456,264 $ 2,253,747 Gross portfolio loans (c) 2,705,888 2,718,607 2,675,448 1,894,881 1,625,627 Investment securities 146,099 127,623 121,634 108,409 106,890 Deposits 2,787,570 2,736,757 2,800,818 2,123,998 1,827,316 FHLB borrowings 90,000 90,000 90,000 50,000 175,000 Subordinated debt 69,451 69,205 68,959 34,441 25,258 Total equity 270,520 265,752 238,469 201,987 176,602 Capital Ratios: Tier 1 capital to average assets Bankwell Bank 10.09 % 9.81 % 9.88 % 9.94 % 8.44 % Tier 1 capital to risk-weighted assets Bankwell Bank 11.64 % 11.30 % 10.28 % 11.18 % 11.06 % Total capital to risk-weighted assets Bankwell Bank 12.70 % 12.32 % 11.07 % 12.00 % 12.28 % Total shareholders’ equity to total assets 8.28 % 8.26 % 7.33 % 8.22 % 7.84 % Tangible common equity ratio (b) 8.20 % 8.19 % 7.26 % 8.13 % 7.73 % 32 (a) Excludes unvested restricted stock awards.
The increase for the year ended December 31, 2023 was mainly driven by an increase in gains on SBA loan sales and service charges and fees. Noninterest Expense The following table compares noninterest expense for the years ended December 31, 2023 and 2022.
The decrease for the year ended December 31, 2024 was mainly driven by a decrease in gains on SBA loan sales partially offset by an increase in service charges and fees. Noninterest Expense The following table compares noninterest expense for the years ended December 31, 2024 and 2023.
The amortized cost and fair value of investment securities as of the dates indicated are presented in the following table: At December 31, 2023 2022 Amortized Cost Fair Value Amortized Cost Fair Value (In thousands) Marketable equity securities $ 2,202 $ 2,070 $ 2,138 $ 1,988 Securities available for sale: U.S.
The amortized cost and fair value of investment securities as of the dates indicated are presented in the following table: At December 31, 2024 2023 Amortized Cost Fair Value Amortized Cost Fair Value (In thousands) Marketable equity securities $ 2,264 $ 2,118 $ 2,202 $ 2,070 Securities available for sale: U.S.
(g) Performance ratios for the year ended December 31, 2020 were negatively impacted by incremental COVID-19 pandemic related loan loss reserves and a $3.9 million one-time charge related to office consolidation, vendor contract termination and employee severance costs recognized in the fourth quarter of 2020.
(f) Performance ratios for the year ended December 31, 2020 were negatively impacted by incremental COVID-19 pandemic related loan loss reserves and a $3.9 million one-time charge related to office consolidation, vendor contract termination and employee severance costs recognized in the fourth quarter of 2020. (g) Return on average assets is calculated by dividing net income by average assets.
(2) Primarily consists of skilled nursing and assisted living facilities. (3) Includes Special use, self storage, and land. During 2023 , we conducted a detailed review of every general office loan in our portfolio. As of December 31, 2023 , the Bank had $193.0 million of loans collateralized by offices, which represented 7.1% of the total loan portfolio.
(2) Primarily consists of skilled nursing and assisted living facilities. (3) Includes Special use, self storage, and land. During 2024 , we conducted a detailed review of every general office loan in our portfolio. As of December 31, 2024 , the Bank had $160.4 million of loans collateralized by offices, which represented 5.9% of the total loan portfolio.
Premium amortization and discount accretion are included in the res pective interest income and interest expense amounts. FTE net interest income for the years ended December 31, 2023 and 2022 was $94.7 million and $94.9 million, respectively.
Premium amortization and discount accretion are included in the res pective interest income and interest expense amounts. FTE net interest income for the years ended Dece mber 31, 2024 and 2023 was $83.7 million and $94.7 million, respectively.
There were no certificates of deposits from national listing services, one-way buy CDARS or one-way buy ICS at December 31, 2023 or December 31, 2022. Brokered deposits are comprised of Brokered CDs, brokered money market accounts, one-way buy CDARS, and one-way buy ICS. As of December 31, 2023, our FDIC insured deposits were $1,945.9 million, or 71% of total deposits.
There were no certificates of deposits from national listing services, one-way buy CDARS or one-way buy ICS at December 31, 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. As of December 31, 2024, our FDIC insured deposits were $2,008.2 million, or 72% of total deposits.
The Bank minimizes its exposure to loss under these commitments by subjecting them to credit approval and monitoring procedures. Commitments to extend credit t otaled $333.5 million and $561.0 million, respectively at December 31, 2023 and 2022. The following table summarizes our commitments to e xtend credit as of the dates indicated.
The Bank minimizes its exposure to loss under these commitments by subjecting them to credit approval and monitoring procedures. Commitments to extend credit t otaled $453.5 million at December 31, 2024. The following table summarizes our commitments to e xtend credit as of the date indicated.
(d) Calculated using the principal amounts outstanding on loans. (e) Nonperforming assets consist of nonperforming loans and other real estate owned. (f) The dividend payout ratio is the dividends per share divided by diluted earnings per share.
(d) Nonperforming assets consist of nonperforming loans and other real estate owned. (e) The dividend payout ratio is the dividends per share divided by diluted earnings per share.
Brokered certificates of deposits ("Brokered CDs") to taled $860.5 million a nd $976.5 million at December 31, 2023 and December 31, 2022, respectively. Brokered money market accounts totaled $91.4 million and $41.8 million at December 31, 2023 and 2022, respectively.
Brokered certificates of deposits ("Brokered CDs") to taled $651.5 million a nd $860.5 million at December 31, 2024 and December 31, 2023, respectively. Brokered money market accounts totaled $53.5 million and $91.4 million at December 31, 2024 and 2023, respectively.
Diluted earnings per share was $4.67 for the year ended December 31, 2023, compared to diluted earnings per share of $4.79 for the year ended December 31, 2022.
Diluted earnings per share was $1.23 for the year ended December 31, 2024, compared to diluted earnings per share of $4.67 for the year ended December 31, 2023.
Loan Portfolio We originate commercial real estate loans, construction loans, commercial business loans and consumer loans in our market. We also pursue certain types of commercial lending opportunities outside our market, particularly where we have strong business relationships. Our loan portfolio is the largest category of our earnings assets.
The increase was partially offset by dividends paid of $6.3 million. Loan Portfolio We originate commercial real estate loans, construction loans, commercial business loans and consumer loans in our market. We also pursue certain types of commercial lending opportunities outside our market, particularly where we have strong business relationships. Our loan portfolio is the largest category of our earnings assets.
In the fourth quarter of 2017 management made the strategic decision to cease originating residential mortgage loans. In the third quarter of 2019, the Company stopped offering home equity loans or lines of credit. The Company’s policy for residential lending generally required that the amount of the loan may not exceed 80% of the original appraised value of the property.
In the third quarter of 2019, the Company stopped offering home equity loans or lines of credit. The Company’s policy for residential lending generally required that the amount of the loan may not exceed 80% of the original appraised value of the property.
Partially charged-off loans continue to be evaluated on a monthly basis and additional charge-offs or loan loss provisions may be recorded on the remaining loan balance based on the same criteria. 51 The following table presents the activity in our ACL-Loans and related ratios for the dates indicated: At December 31, 2023 2022 (Dollars in thousands) Balance at beginning of period $ 22,431 $ 16,902 Day 1 CECL Adjustment on January 1, 2023 5,079 — Charge-offs: Residential real estate — — Commercial real estate (824) — Construction — — Commercial business (440) — Consumer (83) (22) Total charge-offs (1,347) (22) Recoveries: Residential real estate — — Commercial real estate — 76 Commercial business 531 34 Consumer 39 4 Total recoveries 570 114 Net (charge-offs) recoveries (777) 92 Provision charged to earnings 1,213 5,437 Balance at end of period $ 27,946 $ 22,431 Net recoveries or charge-offs to average loans 0.03 % — % ACL-Loans to total loans 1.03 % 0.84 % At December 31, 2023, our ACL-Loans was $27.9 million and represented 1.03% of total loans, compared to $22.4 million, or 0.84% of total loans at December 31, 2022.
Partially charged-off loans continue to be evaluated on a monthly basis and additional charge-offs or loan loss provisions may be recorded on the remaining loan balance based on the same criteria. 51 The following table presents the activity in our ACL-Loans and related ratios for the dates indicated: At December 31, 2024 2023 (Dollars in thousands) Balance at beginning of period $ 27,946 $ 22,431 Day 1 CECL Adjustment on January 1, 2023 — 5,079 Charge-offs: Residential real estate (141) — Commercial real estate (13,111) (824) Construction (1,771) — Commercial business (7,909) (440) Consumer (84) (83) Total charge-offs (23,016) (1,347) Recoveries: Residential real estate 141 — Commercial real estate 1,126 — Commercial business (3) 531 Consumer 23 39 Total recoveries 1,287 570 Net (charge-offs) recoveries (21,729) (777) Provision charged to earnings 22,790 1,213 Balance at end of period $ 29,007 $ 27,946 Net charge-offs or (recoveries) to average loans 0.81 % 0.03 % ACL-Loans to total loans 1.07 % 1.03 % At December 31, 2024, our ACL-Loans was $29.0 million and represented 1.07% of total loans, compared to $27.9 million, or 1.03% of total loans at December 31, 2023.
Nine properties totaling $52.3 million, with an average balance of $5.8 million, are in New York City. 46 The following table presents an analysis of the commercial real estate portfolio's loan to value at origination and by property type as of December 31, 2023.
Nine properties totaling $51.6 million, with an average balance of $5.7 million, ar e in New York City. 46 The following table presents an analysis of the commercial real estate portfolio's loan to value at origination and by property type as of December 31, 2024.
The net unrealized loss position on our investment portfolio at December 31, 2022 w as $9.2 mill ion and included $0.3 million of gross unrealized gains. 53 The following tables summarize the amortized cost and weighted average yield of securities in our investment securities portfolio as of December 31, 2023 and 2022, based on remaining period to contractual maturity.
The net unrealized loss position on our investment portfolio at December 31, 2023 was $7.5 million and included $0.8 million of gross unrealized gains. 53 The following tables summarize the amortized cost and weighted average yield of securities in our investment securities portfolio as of December 31, 2024 and 2023, based on remaining period to contractual maturity.
Additionally, $110.0 million of deposits are insured by standby letters of credit with the Federal Home Loan Bank of Boston, or 4% of total deposits. 55 At December 31, 2023 and 2022, time deposits, including CDARS and Brokered CDs, with a denomination of $100 thousand or more totaled $1.2 billion and $1.2 billion, re spectively, maturing during the periods indicated in the table below: At December 31, 2023 2022 (In thousands) Maturing: Within 3 months $ 343,084 $ 251,036 After 3 but within 6 months 317,534 252,673 After 6 months but within 1 year 244,472 530,400 After 1 year 294,641 123,130 Total $ 1,199,731 $ 1,157,239 Federal Home Loan Bank Advances and Other Borrowings The Bank is a member of the FHLB, which is part of a twelve district Federal Home Loan Bank System.
Additionally, $117.1 million of deposits are insured by standby letters of credit with the Federal Home Loan Bank of Boston, or 4% of total deposits. 55 At December 31, 2024 and 2023, time deposits, including CDARS and Brokered CDs, with a denomination of $100 thousand or more totaled $1.2 billion and $1.2 billion, re spectively, maturing during the periods indicated in the table below: At December 31, 2024 2023 (In thousands) Maturing: Within 3 months $ 421,808 $ 317,534 After 3 but within 6 months 326,115 244,472 After 6 months but within 1 year 419,098 294,641 After 1 year 19,429 343,084 Total $ 1,186,450 $ 1,199,731 Federal Home Loan Bank Advances and Other Borrowings The Bank is a member of the FHLB, which is part of a twelve district Federal Home Loan Bank System.
Accruing restructured loans are placed into nonaccrual status if and when the borrower fails to comply with the restructured terms and management deems it unlikely that the borrower will return to a status of compliance in the near term. There were no nonaccrual loans modified during the year ended December 31, 2023.
Accruing restructured loans are placed into nonaccrual status if and when the borrower fails to comply with the restructured terms and management deems it unlikely that the borrower will return to a status of compliance in the near term.
The Company executes interest rate swaps with commercial banking clients to facilitate their respective risk management strategies. Those interest rate swaps are simultaneously hedged by offsetting derivatives that the Company executes with a third party, such that the Company minimizes its net risk exposure resulting from such transactions.
Those interest rate swaps are simultaneously hedged by offsetting derivatives that the Company executes with a third party, such that the Company minimizes its net risk exposure resulting from such transactions.
Our returns on average shareholders' equity and average assets for the year ended December 31, 2023, were 14.55% and 1.13%, respectively, compared to 16.72% and 1.44%, respectively for the year ended December 31, 2022.
Our returns on average shareholders' equity and average assets for the year ended December 31, 2024, were 3.60% and 0.31%, respectively, compared to 14.55% and 1.13%, respectively for the year ended December 31, 2023.
The increase in yield was primarily driven by higher yields on loans, as well as higher yields on our cash balances as a result of the overall higher rate environment for 2023.
The increase in earning asset yield was primarily driven by higher yields on loans, as well as higher yields on our cash and securities balances as a result of the overall higher interest rate environment in 2024.
Nonperforming assets as a percentage of total assets was 1.53% at December 31, 2023 , when com pared to 0.51% at December 31, 2022. The ACL-Loans at December 31, 2023 was $27.9 million, representing 1.03% of total loans. Nonaccrual Loans . Loans greater than 90 days past due are generally put on nonaccrual status.
Nonperforming assets as a percentage of total assets was 1.88% at December 31, 2024, when compared to 1.53% at December 31, 2023. The ACL-Loans at December 31, 2024 was $29.0 million, representing 1.07% of total loans. Nonaccrual Loans . Loans greater than 90 days past due are generally put on nonaccrual status.
As of December 31, 2023, the tangible common equity ratio and tangible book value per share were 8.19% and $34.50, respectively. The Bank is subject to various regulatory capital requirements administered by the fed eral banking agencies.
As of December 31, 2024, the tangible common equity ratio and tangible book value per share were 8.20% and $35.09, respectively. The Bank and the Company are subject to various regulatory capital requirements administered by the fed eral banking agencies.
(b) This measure is not a measure recognized under Generally Accepted Accounting Principles ("GAAP") and is therefore considered to be a non-GAAP financial measure. See “Non-GAAP Financial Measures” for a description of this measure and a reconciliation of this measure to its most directly comparable GAAP measure. (c) Calculated based on net income before preferred stock dividend.
(b) This measure is not a measure recognized under Generally Accepted Accounting Principles ("GAAP") and is therefore considered to be a non-GAAP financial measure. See “Non-GAAP Financial Measures” for a description of this measure and a reconciliation of this measure to its most directly comparable GAAP measure. (c) Calculated using the principal amounts outstanding on loans.
Credit risk management involves a partnership between our relationship managers and our credit approval, portfolio management, credit administration and collections staff. Disciplined underwriting, portfolio monitoring and early problem recognition are import ant aspects of maintaining our high credit quality standards and low levels of nonperforming assets since our inception in 2002. Acquired Loans .
Credit risk management involves a partnership between our relationship managers and our credit approval, portfolio management, credit administration and collections staff. Disciplined underwriting, portfolio monitoring and early problem recognition, together with active management of any problem credits, are import ant aspects of maintaining our high credit quality standards. Acquired Loans .
The information provided below presents a reconciliation of each of our non-GAAP financial measures to the most directly comparable GAAP financial measure. 33 Years Ended December 31, 2023 2022 2021 2020 2019 (Dollars in thousands, except per share data) Efficiency Ratio Noninterest expense $ 50,401 $ 44,363 $ 39,739 $ 42,813 $ 35,626 Less: other real estate owned expenses — — — 6 37 Less: Amortization of intangibles — — 76 138 75 Adjusted noninterest expense (numerator) $ 50,401 $ 44,363 $ 39,663 $ 42,669 $ 35,514 Net interest income $ 94,468 $ 94,743 $ 67,886 $ 54,835 $ 53,761 Noninterest income 4,842 3,040 5,657 2,884 5,244 Adjustments for: gains/(losses) on sales of securities — — — — 76 Adjustments for: gains/(losses) on sale of other real estate owned — — — 19 (102) Adjusted operating revenue (denominator) $ 99,310 $ 97,783 $ 73,543 $ 57,700 $ 59,031 Efficiency ratio 50.8 % 45.4 % 53.9 % 73.9 % 60.2 % Tangible Common Equity and Tangible Common Equity/Tangible Assets Total shareholders’ equity $ 265,752 $ 238,469 $ 201,987 $ 176,602 $ 182,397 Less: preferred stock — — — — — Common shareholders’ equity 265,752 238,469 201,987 176,602 182,397 Less: Intangible assets 2,589 2,589 2,589 2,665 2,803 Tangible Common shareholders’ equity $ 263,163 $ 235,880 $ 199,398 $ 173,937 $ 179,594 Total assets $ 3,215,482 $ 3,252,449 $ 2,456,264 $ 2,253,747 $ 1,882,182 Less: Intangible assets 2,589 2,589 2,589 2,665 2,803 Tangible assets $ 3,212,893 $ 3,249,860 $ 2,453,675 $ 2,251,082 $ 1,879,379 Tangible common shareholders’ equity to tangible assets 8.19 % 7.26 % 8.13 % 7.73 % 9.56 % Tangible Book Value per Share Total shareholders’ equity $ 265,752 $ 238,469 $ 201,987 $ 176,602 $ 182,397 Less: preferred stock — — — — — Common shareholders’ equity 265,752 238,469 201,987 176,602 182,397 Less: Intangible assets 2,589 2,589 2,589 2,665 2,803 Tangible common shareholders’ equity $ 263,163 $ 235,880 $ 199,398 $ 173,937 $ 179,594 Common shares issued 7,882,616 7,730,699 7,803,166 7,919,278 7,868,803 Less: shares of unvested restricted stock 254,328 214,000 190,359 163,369 110,975 Common shares outstanding 7,628,288 7,516,699 7,612,807 7,755,909 7,757,828 Book value per share $ 34.84 $ 31.73 $ 26.53 $ 22.77 $ 23.51 Less: effects of intangible assets 0.34 0.34 0.34 0.34 0.36 Tangible Book Value per Common Share $ 34.50 $ 31.39 $ 26.19 $ 22.43 $ 23.15 Total Revenue Net interest income $ 94,468 $ 94,743 $ 67,886 $ 54,835 $ 53,761 Add: noninterest income 4,842 3,040 5,657 2,884 5,244 Total Revenue $ 99,310 $ 97,783 $ 73,543 $ 57,719 $ 59,005 Noninterest income as a percentage of total revenue 4.88 % 3.11 % 7.69 % 5.00 % 8.89 % Return on Average Common Shareholders’ Equity Net Income Attributable to Common Shareholders $ 36,663 $ 37,429 $ 26,586 $ 5,904 $ 18,216 Total average shareholders’ equity $ 252,061 $ 223,874 $ 191,808 $ 176,489 $ 178,510 Less: average preferred stock — — — — — Average Common Shareholders’ Equity $ 252,061 $ 223,874 $ 191,808 $ 176,489 $ 178,510 Return on Average Common Shareholders’ Equity 14.55 % 16.72 % 13.86 % 3.35 % 10.20 % 34 Executive Overview We are focused on being the banking provider of choice and to serve as an alternative to our larger competitors.
Years Ended December 31, 2024 2023 2022 2021 2020 (Dollars in thousands, except per share data) Efficiency Ratio Noninterest expense $ 51,051 $ 50,401 $ 44,363 $ 39,739 $ 42,813 Less: other real estate owned expenses 707 — — — 6 Less: Amortization of intangibles — — — 76 138 Adjusted noninterest expense (numerator) $ 50,344 $ 50,401 $ 44,363 $ 39,663 $ 42,669 Net interest income $ 83,282 $ 94,468 $ 94,743 $ 67,886 $ 54,835 Noninterest income 3,718 4,842 3,040 5,657 2,884 Adjustments for: gains/(losses) on sales of securities — — — — — Adjustments for: gains/(losses) on sale of other real estate owned — — — — 19 Adjusted operating revenue (denominator) $ 87,000 $ 99,310 $ 97,783 $ 73,543 $ 57,700 Efficiency ratio 57.9 % 50.8 % 45.4 % 53.9 % 73.9 % Tangible Common Equity and Tangible Common Equity/Tangible Assets Total shareholders’ equity $ 270,520 $ 265,752 $ 238,469 $ 201,987 $ 176,602 Less: preferred stock — — — — — Common shareholders’ equity 270,520 265,752 238,469 201,987 176,602 Less: Intangible assets 2,589 2,589 2,589 2,589 2,665 Tangible Common shareholders’ equity $ 267,931 $ 263,163 $ 235,880 $ 199,398 $ 173,937 Total assets $ 3,268,476 $ 3,215,482 $ 3,252,449 $ 2,456,264 $ 2,253,747 Less: Intangible assets 2,589 2,589 2,589 2,589 2,665 Tangible assets $ 3,265,887 $ 3,212,893 $ 3,249,860 $ 2,453,675 $ 2,251,082 Tangible common shareholders’ equity to tangible assets 8.20 % 8.19 % 7.26 % 8.13 % 7.73 % Tangible Book Value per Share Total shareholders’ equity $ 270,520 $ 265,752 $ 238,469 $ 201,987 $ 176,602 Less: preferred stock — — — — — Common shareholders’ equity 270,520 265,752 238,469 201,987 176,602 Less: Intangible assets 2,589 2,589 2,589 2,589 2,665 Tangible common shareholders’ equity $ 267,931 $ 263,163 $ 235,880 $ 199,398 $ 173,937 Common shares issued 7,859,873 7,882,616 7,730,699 7,803,166 7,919,278 Less: shares of unvested restricted stock 223,875 254,328 214,000 190,359 163,369 Common shares outstanding 7,635,998 7,628,288 7,516,699 7,612,807 7,755,909 Book value per share $ 35.43 $ 34.84 $ 31.73 $ 26.53 $ 22.77 Less: effects of intangible assets 0.34 0.34 0.34 0.34 0.34 Tangible Book Value per Common Share $ 35.09 $ 34.50 $ 31.39 $ 26.19 $ 22.43 Total Revenue Net interest income $ 83,282 $ 94,468 $ 94,743 $ 67,886 $ 54,835 Add: noninterest income 3,718 4,842 3,040 5,657 2,884 Total Revenue $ 87,000 $ 99,310 $ 97,783 $ 73,543 $ 57,719 Noninterest income as a percentage of total revenue 4.27 % 4.88 % 3.11 % 7.69 % 5.00 % Return on Average Common Shareholders’ Equity Net Income Attributable to Common Shareholders $ 9,770 $ 36,663 $ 37,429 $ 26,586 $ 5,904 Total average shareholders’ equity $ 271,200 $ 252,061 $ 223,874 $ 191,808 $ 176,489 Less: average preferred stock — — — — — Average Common Shareholders’ Equity $ 271,200 $ 252,061 $ 223,874 $ 191,808 $ 176,489 Return on Average Common Shareholders’ Equity 3.60 % 14.55 % 16.72 % 13.86 % 3.35 % 34 Executive Overview We strive to be the preferred banking provider, offering a compelling alternative to larger institutions.
The following table presents nonperforming assets and additional asset quality data for the dates indicated: At December 31, 2023 2022 (Dollars in thousands) Nonaccrual loans: Real estate loans: Residential $ 1,386 $ 2,152 Commercial 23,009 2,781 Commercial business 15,430 2,126 Construction 9,382 9,382 Total nonaccrual loans 49,207 16,441 Property acquired through foreclosure or repossession, net — — Total nonperforming assets $ 49,207 $ 16,441 Nonperforming assets to total assets 1.53 % 0.51 % Nonperforming loans to total loans 1.81 % 0.61 % Total nonaccrual loans were $49.2 million as of December 31, 2023 .
The following table presents nonperforming assets and additional asset quality data for the dates indicated: At December 31, 2024 2023 (Dollars in thousands) Nonaccrual loans: Real estate loans: Residential $ 791 $ 1,386 Commercial 44,814 23,009 Commercial business 7,672 15,430 Construction — 9,382 Total nonaccrual loans 53,277 49,207 Property acquired through foreclosure or repossession, net 8,299 — Total nonperforming assets $ 61,576 $ 49,207 Nonperforming assets to total assets 1.88 % 1.53 % Nonperforming loans to total loans 1.97 % 1.81 % Total nonaccrual loans were $53.3 million as of December 31, 2024.
Earnings and Performance Overview 2023 Earnings Overview Our net income for the year ended December 31, 2023 was $36.7 million, a decrease of $0.8 million, or 2.0%, compared to the year ended December 31, 2022.
Earnings and Performance Overview 2024 Earnings Overview Our net income for the year ended December 31, 2024 was $9.8 million, a decrease of $26.9 million, or 73.4%, compared to the year ended December 31, 2023.
Key Financial Measures (a) At or For the Years Ended December 31, 2023 2022 (Dollars in thousands, except per share data) Selected balance sheet measures: Total assets $ 3,215,482 $ 3,252,449 Gross portfolio loans 2,718,607 2,675,448 Deposits 2,736,757 2,800,818 FHLB borrowings 90,000 90,000 Subordinated debt 69,205 68,959 Total equity 265,752 238,469 Selected statement of income measures: Total revenue (c) 99,310 97,783 Net interest income before provision for loan losses 94,468 94,743 Income before income tax expense 48,043 47,983 Net income 36,663 37,429 Basic earnings per share $ 4.71 $ 4.84 Diluted earnings per share $ 4.67 $ 4.79 Key Financial Measures (a) At or For the Years Ended December 31, 2023 2022 Other financial measures and ratios: Return on average assets 1.13 % 1.44 % Return on average common shareholders’ equity (c) 14.55 % 16.72 % Net interest margin 2.98 % 3.78 % Efficiency ratio (c) 50.8 % 45.4 % Tangible book value per share (end of period) (c)(d) $ 34.50 $ 31.39 Net charge-offs to average loans (b) 0.03 % — % Nonperforming assets to total assets (e) 1.53 % 0.51 % ACL-Loans to nonperforming loans 56.79 % 136.43 % ACL-Loans to total loans (b) 1.03 % 0.84 % 35 (a) We derived the selected balance sheet measures as of December 31, 2023 and 2022 and the selected statement of income measures for the years ended December 31, 2023 and 2022 from our audited consolidated financial statements included elsewhere in this annual report.
Key Financial Measures (a) At or For the Years Ended December 31, 2024 2023 (Dollars in thousands, except per share data) Selected balance sheet measures: Total assets $ 3,268,476 $ 3,215,482 Gross portfolio loans 2,705,888 2,718,607 Deposits 2,787,570 2,736,757 FHLB borrowings 90,000 90,000 Subordinated debt 69,451 69,205 Total equity 270,520 265,752 Selected statement of income measures: Total revenue (c) 87,000 99,310 Net interest income before provision for credit losses 83,282 94,468 Income before income tax expense 13,329 48,043 Net income 9,770 36,663 Basic earnings per share $ 1.24 $ 4.71 Diluted earnings per share $ 1.23 $ 4.67 35 Key Financial Measures (a) At or For the Years Ended December 31, 2024 2023 Other financial measures and ratios: Return on average assets 0.31 % 1.13 % Return on average common shareholders’ equity (c) 3.60 % 14.55 % Net interest margin (c) 2.70 % 2.98 % Efficiency ratio (c) 57.9 % 50.8 % Tangible book value per share (end of period) (c)(d) $ 35.09 $ 34.50 Net charge-offs to average loans (b) 0.81 % 0.03 % Nonperforming assets to total assets (e) 1.88 % 1.53 % ACL-Loans to nonperforming loans 54.45 % 56.79 % ACL-Loans to total loans (b) 1.07 % 1.03 % (a) We derived the selected balance sheet measures as of December 31, 2024 and 2023 and the selected statement of income measures for the years ended December 31, 2024 and 2023 from our audited consolidated financial statements included elsewhere in this annual report.
While we continue to adhere to prudent underwriting standards, our loan portfolio is not immune to potential negative consequences as a result of general economic weakness, such as a prolonged downturn in the real estate market on a national scale. Decreases in real estate values could adversely affect the value of property used as collateral for loans.
While we continue to adhere to prudent underwriting standards, our loan portfolio is not immune to potential negative consequences as a result of general economic weakness, such as a prolonged downturn in the real estate market on a regional or national scale, or extreme climate events.
Net interest income for the year ended December 31, 2023 was $94.5 million, a decrease of $0.3 million compared to the year ended December 31, 2022. Our net interest margin decreased 80 basis points to 2.98% for the year ended December 31, 2023 compared to the year ended December 31, 2022.
Net interest income for the year ended December 31, 2024 was $83.3 million, a decrease of $11.2 million compared to the year ended December 31, 2023. Our net interest margin decreased 28 basis points to 2.70% for the year ended December 31, 2024 compared to the year ended December 31, 2023.
The decrease in net income for the year ended December 31, 2023 was due to an increase in noninterest expense partially offset by the aforementioned increase in revenues and a decrease in the provision for loan losses.
Net income for the year ended December 31, 2024 was $9.8 million, versus $36.7 million for the year ended December 31, 2023. The decrease in net income for the year ended December 31, 2024 was mainly due to an increase in provision for credit losses and the aforementioned decrease in revenues partially offset by a decrease in income tax expense.
The total average balance of securities for the year ended December 31, 2023 increased by $11.2 million, or 9.4%, from the year ended December 31, 2022. The total yield in earnings assets increased to 5.86% at December 31, 2023, compared to 4.64% at December 31, 2022.
The total average balance of securities for the year ended December 31, 2024 increased by $13.0 million, or 10.0, from the year ended December 31, 2023. The total yield in earnings assets increased to 6.09% at December 31, 2024, compared to 5.86% at December 31, 2023.
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. 49 The following table presents past due loans as of December 31, 2023 and 2022: 30–59 Days Past Due 60–89 Days Past Due 90 Days or Greater Past Due Total Past Due (In thousands) As of December 31, 2023 Residential real estate $ — $ 1,220 $ 132 $ 1,352 Commercial real estate 195 282 1,851 2,328 Construction — — 9,382 9,382 Commercial business 6,568 1,648 — 8,216 Consumer — — — — Total loans $ 6,763 $ 3,150 $ 11,365 $ 21,278 As of December 31, 2022 Residential real estate $ 1,969 $ — $ 171 $ 2,140 Commercial real estate 66 — 2,540 2,606 Construction — — 9,382 9,382 Commercial business 23 — 1,910 1,933 Consumer — — — — Total loans $ 2,058 $ — $ 14,003 $ 16,061 Total past due loans totaled $21.3 million and represented 0.78% of total loans as of December 31, 2023, increasing $5.2 million from De cember 31, 2022.
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. 49 The following table presents past due loans as of December 31, 2024 and 2023: 30–59 Days Past Due 60–89 Days Past Due 90 Days or Greater Past Due Total Past Due (In thousands) As of December 31, 2024 Residential real estate $ 130 $ 226 $ 652 $ 1,008 Commercial real estate 359 — 35,585 35,944 Construction — — — — Commercial business 4 11 7,143 7,158 Consumer — — — — Total loans $ 493 $ 237 $ 43,380 $ 44,110 As of December 31, 2023 Residential real estate $ — $ 1,220 $ 132 $ 1,352 Commercial real estate 195 282 1,851 2,328 Construction — — 9,382 9,382 Commercial business 6,568 1,648 — 8,216 Consumer — — — — Total loans $ 6,763 $ 3,150 $ 11,365 $ 21,278 Total pa st due loans totaled $44.1 million and represented 1.63% of total loans as of December 31, 2024, increasing $22.8 million from December 31, 2023.
Construction. Construction loans were $183.4 million at December 31 2023 , an increase of $28.2 million, or 18.2%, from December 31, 2022. Commercial construction loans consist of commercial development projects, such as apartment buildings and condominiums, as well as office buildings, retail and other income producing properties and land loans. Commercial business.
Construction. Construction loans were $173.6 million at December 31 2024, a decrease of $9.9 million, or 5.4%, from December 31, 2023. Commercial construction loans consist of commercial development projects, such as apartment buildings and condominiums, as well as office buildings, retail and other income producing properties and land loans. 44 Commercial business.
The provision for loan losses for the year ended December 31, 2023 was $0.9 million compared to a $5.4 million provision for loan losses for the year ended December 31, 2022. 42 Noninterest Income Noninterest income is a component of our revenue and is comprised primarily of fees generated from loan and deposit relationships with our clients, fees generated from sales and referrals of loans, income earned on bank owned life insurance and gains on sales of investment securities.
The increase in the provision for credit losses during the year was primarily due to net charge offs. 42 Noninterest Income Noninterest income is a component of our revenue and is comprised primarily of fees generated from loan and deposit relationships with our clients, fees generated from sales and referrals of loans, income earned on bank owned life insurance and gains on sales of investment securities.
At December 31, 2023, the Bank’s ratio of total common equity 58 tier 1 capital to risk-weighted assets was 11.30%, total capital to risk-weighted assets was 12.32%, Tier 1 capital to risk-weighted assets was 11.30% and Tier 1 capital to average assets was 9.81%.
At December 31, 2024, the Bank’s ratio of total common equity tier 1 capital to risk-weighted assets was 11.64%, total capital to risk-weighted assets was 12.70%, Tier 1 capital to risk-weighted assets was 11.64% and Tier 1 capital to average assets was 10.09%.
Most of the properties in this portfolio are in suburban locations, including all t he New York State properties, which are all located in Westchester County. 96.9% of this portfolio was pass rated, and there were two relationships totaling $6.0 million on nonaccrual status. We also performed an additional review of our multifamily exposure.
Most of the properties in this portfolio are in suburban locations. 96.6% of this portfolio was pass rated, and there were two relationships totaling $5.5 million on nonaccrual status. W e also performed an additional review of our multifamily exposure.
FTE basis interest income for the year ended December 31, 2023 increased $70.3 million, or 59.5%, to $188.7 million compared to FTE basis interest income for the year ended December 31, 2022 due primarily to an increase in commercial real estate loans and commercial business loans.
FTE basi s interest income for the year ended December 31, 2024 increased $3.7 million, or 2.0%, to $192.4 million compared to FTE basis interest income for the year ended December 31, 2023 due primarily to an increase in commercial real estate loans.
See Note 13 to our Consolidated Financial Statements for further information regarding income taxes. Financial Condition Summary Assets totaled $3.2 billion at December 31, 2023, compared to assets of $3.3 billion at December 31, 2022. The increase in assets was primarily due to loan growth.
See Note 13 to our Consolidated Financial Statements for further information regarding income taxes. 43 Financial Condition Summary Assets totaled $3.3 billion at December 31, 2024, compared to assets of $3.2 billion at December 31, 2023. Gross loans totaled $2.7 billion at December 31, 2024, compared to gross loans of $2.7 billion at December 31, 2023.
Government and agency obligations 100,276 95,226 95,352 88,425 Corporate bonds 17,000 14,510 17,000 15,238 Total securities available for sale $ 117,276 $ 109,736 $ 112,352 $ 103,663 Securities held to maturity: State agency and municipal obligations $ 15,785 $ 15,870 $ 15,947 $ 15,398 Government mortgage-backed securities 32 33 36 37 Total securities held to maturity $ 15,817 $ 15,903 $ 15,983 $ 15,435 At December 31, 2023, the carrying value of our investment securities portfolio totaled $127.6 million and represented 4% of total asse ts, compared to $121.6 million and 4% of total assets at December 31, 2022.
Government and agency obligations 95,443 91,582 100,276 95,226 Corporate bonds 17,000 15,846 17,000 14,510 Total securities available for sale $ 112,443 $ 107,428 $ 117,276 $ 109,736 Securities held to maturity: State agency and municipal obligations 36,525 36,662 $ 15,785 $ 15,870 Government mortgage-backed securities 28 29 32 33 Total securities held to maturity $ 36,553 $ 36,691 $ 15,817 $ 15,903 At December 31, 2024, the carrying value of our investment securities portfolio totaled $146.1 million and represented 4% of total assets, compared to $127.6 million and 4% of total assets at December 31, 2023.
The increase of $6.0 million primarily reflects purchases of treasury bonds. We purchase investment grade securities with a focus on liquidity, earnings and duration exposure. T he net unrealized losses on our investment portfolio at December 31, 2023 was $7.5 million and included $0.8 million of gross unrealized gains.
The increase of $18.5 million primarily reflects purchases of held to maturity securities. We purchase investment grade securities with a focus on liquidity, earnings and duration exposure. The net unrealized losses on our investment portfolio at December 31, 2024 was $4.9 million and included $1.3 million of gross unrealized gains.
At December 31, 2023, the Bank had pled ged $927.1 million of eligible loans as collateral to support borrowing capacity at the FHLB of Boston. As of December 31, 2023, the Bank had immediate availability to borrow an additional $344.4 million based on qualified collateral.
At December 31, 2024, the Bank had pledged $742.6 million of eligible loans as collateral to support borrowing capacity at the FHLB of Boston. As of December 31, 2024, the Bank had immediate availability to borrow an additional $266.1 million ba sed on qualified collateral.
There were seven nonaccrual loans modified totaling $2.5 million during the year ended December 31, 2022. 50 The following table presents information on modified loans: At December 31, 2023 2022 (In thousands) Accruing modified loans: Residential real estate $ 2,325 $ 1,694 Commercial real estate — 15,893 Commercial business 2,060 2,147 Accruing modified loans 4,385 19,734 Nonaccrual modified loans: Residential real estate $ 1,351 $ 2,113 Commercial real estate 10,606 — Commercial business 104 367 Nonaccrual modified loans 12,061 2,480 Total modified loans $ 16,446 $ 22,214 As of December 31, 2023 and 2022, loans classified as modified totaled $16.4 million and $22.2 million, respectively.
There were no nonaccrual loans modified during the years ended December 31, 2024 and 2023 . 50 The following table presents information on modified loans: At December 31, 2024 2023 (In thousands) Accruing modified loans: Residential real estate $ 2,261 $ 2,325 Commercial real estate — — Commercial business — 2,060 Accruing modified loans 2,261 4,385 Nonaccrual modified loans: Residential real estate $ 652 $ 1,351 Commercial real estate 9,217 10,606 Commercial business 54 104 Nonaccrual modified loans 9,923 12,061 Total modified loans $ 12,184 $ 16,446 As of December 31, 2024 and 2023, loans classified as modified totaled $12.2 million and $16.4 million, respectively.
Consumer loans were $36.0 million and represented 1.3% of our total loan portfolio as of December 31, 2023, an increase of $18.1 million, or 100.7%. We do not expect our consumer loans to become a material component of our loan portfolio, as we do not engage in any material amount of consumer lending.
Consumer loans wer e $75.3 million and represented 2.8% of our total loan portfolio as of December 31, 2024, an increase of $39.3 million, or 108.9%. We do not expect our consumer loans to become a material component of our loan portfolio, as we do not engage in any material amount of consumer lending.
The amount of ACL-Loans related to individually evaluated loans was $1.0 million and $0.9 million, respectively, at December 31, 2023 and 2022. 52 The following table presents the allocation of the ACL-Loans, the ACL-Loans percentage, and the related loan segments to total loans percentage: At December 31, 2023 2022 ACL-Loans Amount ACL-Loans Percentage Loan Segment to Total Loans Percentage ACL-Loans Amount ACL-Loans Percentage Loan Segment to Total Loans Percentage (Dollars in thousands) Residential real estate $ 149 0.53 % 1.87 % $ 163 0.73 % 2.27 % Commercial real estate 20,950 74.97 71.64 15,597 69.53 71.81 Construction 1,699 6.08 6.75 311 1.39 5.80 Commercial business 4,562 16.32 18.41 6,214 27.70 19.45 Consumer 586 2.10 1.33 146 0.65 0.67 Total $ 27,946 100.00 % 100.00 % $ 22,431 100.00 % 100.00 % The allocation of the ACL-Loans at December 31, 2023 reflects our assessment of credit risk and probable loss within each portfolio.
This compares to a carrying amount of $105.0 million for total individually evaluated loans at December 31, 2023. 52 The following table presents the allocation of the ACL-Loans, the ACL-Loans percentage, and the related loan segments to total loans percentage: At December 31, 2024 2023 ACL-Loans Amount ACL-Loans Percentage Loan Segment to Total Loans Percentage ACL-Loans Amount ACL-Loans Percentage Loan Segment to Total Loans Percentage (Dollars in thousands) Residential real estate $ 94 0.32 % 1.58 % $ 149 0.53 % 1.87 % Commercial real estate 21,838 75.29 70.19 20,950 74.97 71.64 Construction 2,059 7.10 6.41 1,699 6.08 6.75 Commercial business 4,070 14.03 19.04 4,562 16.32 18.41 Consumer 946 3.26 2.78 586 2.10 1.33 Total $ 29,007 100.00 % 100.00 % $ 27,946 100.00 % 100.00 % The allocation of the ACL-Loans at December 31, 2024 reflects our assessment of credit risk and probable loss within each portfolio.
Average interest earning assets were $3.2 billion for the year ended December 31, 2023, increasing by $663.5 million, or 26.4%, from the year ended December 31, 2022. The average balance of total loans increased $599.6 million, or 27.9%.
Average interest earning assets were $3.1 billion for the year ended December 31, 2024, decreasing by $72.4 million, or 2.3%, from the year ended December 31, 2023. The average balance of total loans decreased $79.2 million, or 2.9%.
Management applies its normal loan review procedures in making these judgments. Individually evaluated loans consist of loans with credit quality indicators which are substandard or doubtful. The Company also individually evaluates all insurance premium loans. While insurance premium loans are considered consumer loans, the third-party Consumer ACL model is designed for unsecured lending, whereas these loans are secured.
Management applies its normal loan review procedures in making these judgments. Individually evaluated loans consist of loans with credit quality indicators which are substandard or doubtful. The Company also individually evaluates all insurance premium loans as well as a cash-secured loan to an individual.
Commercial business loans were $500.6 million and represented 18.4% of our total loan portfolio at December 31, 2023 , a net decrease of $19.9 million, or 3.8%, from December 31, 2022.
Commercial business loans were $515.1 million and represented 19.0% of our total loan portfolio at December 31, 2024, a net increase of $14.6 million, or 2.9%, from December 31, 2023.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeThe following tables set forth the estimated percentage change in our net interest income at risk over one-year simulation periods beginning December 31, 2023 and 2022: Parallel Ramp Estimated Percent Change in Net Interest Income At December 31, Rate Changes (basis points) 2023 2022 (100) 1.70 % 2.20 % 200 (3.20) (4.80) Parallel Shock Estimated Percent Change in Net Interest Income At December 31, Rate Changes (basis points) 2023 2022 (100) 3.60 % 2.20 % 100 (2.70) (2.70) 200 (5.80) (6.00) 300 (8.10) (8.90) The net interest income at risk simulation results indicate that, as of December 31, 2023, we remain liability sensitive.
Biggest changeThe following tables set forth the estimated percentage change in our net interest income at risk over one-year simulation periods beginning December 31, 2024 and 2023: 60 Parallel Ramp Estimated Percent Change in Net Interest Income At December 31, Rate Changes (basis points) 2024 2023 (100) 0.40 % 1.70 % 200 (1.00) (3.20) Parallel Shock Estimated Percent Change in Net Interest Income At December 31, Rate Changes (basis points) 2024 2023 (100) (1.00) % 3.60 % 100 0.60 (2.70) 200 0.80 (5.80) 300 1.40 (8.10) The net interest income at risk simulation results indicate that, as of December 31, 2024, we remain liability sensitive.
Over time, the repricing, maturity and prepayment characteristics of financial instruments 61 and the composition of our balance sheet may change to a different d egree than estimated. ALCO recognizes that deposit balances could shift into higher yielding alternatives as market rates change. ALCO has modeled increased costs of deposits in the rising rate simulation scenarios presented above.
Over time, the repricing, maturity and prepayment characteristics of financial instruments and the composition of our balance sheet may change to a different d egree than estimated. ALCO recognizes that deposit balances could shift into higher yielding alternatives as market rates change. ALCO has modeled increased costs of deposits in the rising rate simulation scenarios presented above.
Internal policy regarding internal rate risk simulations currently specifies that for instantaneous parallel shifts of the yield curve, estimated net interest income at risk for the subsequent one-year period 60 should not decline by more than: 6% for a 100 basis point shift; 12% for a 200 basis point shift; and 18% for a 300 basis point shift.
Internal policy regarding internal rate risk simulations currently specifies that for instantaneous parallel shifts of the yield curve, estimated net interest income at risk for the subsequent one-year period should not decline by more than: 6% for a 100 basis point shift; 12% for a 200 basis point shift; and 18% for a 300 basis point shift.
Income simulation results assume that changes in both core savings deposit rates and balances are related to changes in short-term interest rates. Lastly, mortgage-backed securities and mortgage loans involve a level of risk that unforeseen changes in prepayment speeds may cause related cash flows to vary significantly in differing rate environments.
Income simulation results assume that changes in both core savings deposit rates and balances are related to changes in short-term interest rates. Lastly, mortgage-backed securities and 61 mortgage loans involve a level of risk that unforeseen changes in prepayment speeds may cause related cash flows to vary significantly in differing rate environments.
Per Company policy, the Bank should not be outside these limits for twelve consecutive months unless the Bank's forecasted capital ratios are considered to be "well capitalized". As of December 31, 2023, the Bank has met all minimum regulatory capital requirements to be considered "well capitalized".
Per Company policy, the Bank should not be outside these limits for twelve consecutive months unless the Bank's forecasted capital ratios are considered to be "well capitalized". As of December 31, 2024, the Bank has met all minimum regulatory capital requirements to be considered "well capitalized".
The following table sets forth the estimated percentage change in our economic value of equity at risk, assuming various shifts in interest rates: Parallel Shock Estimated Percent Change in Economic Value of Equity At December 31, Rate Changes (basis points) 2023 2022 (100) 2.70 % 2.30 % 100 (3.80) (3.90) 200 (9.40) (9.30) 300 (12.60) (14.00) While ALCO reviews and updates simulation assumptions and also periodically back-tests the simulation results to ensure that the assumptions are reasonable and current, income simulation may not always prove to be an accurate indicator of interest rate risk or future net interest margin.
The following table sets forth the estimated percentage change in our economic value of equity at risk, assuming various shifts in interest rates: Parallel Shock Estimated Percent Change in Economic Value of Equity At December 31, Rate Changes (basis points) 2024 2023 (100) 0.40 % 2.70 % 100 (1.30) (3.80) 200 (3.60) (9.40) 300 (4.70) (12.60) While ALCO reviews and updates simulation assumptions and also periodically back-tests the simulation results to ensure that the assumptions are reasonable and current, income simulation may not always prove to be an accurate indicator of interest rate risk or future net interest margin.

Other BWFG 10-K year-over-year comparisons