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What changed in Bankwell Financial Group, Inc.'s 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of Bankwell Financial Group, Inc.'s 2024 and 2025 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 2025 report.

+389 added−442 removedSource: 10-K (2026-03-04) vs 10-K (2025-03-05)

Top changes in Bankwell Financial Group, Inc.'s 2025 10-K

389 paragraphs added · 442 removed · 331 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

113 edited+21 added−43 removed129 unchanged
Biggest changeAt the federal level, these laws include, among others, the following: • Federal Truth-In-Lending Act, governing disclosures of credit terms to consumer borrowers (Connecticut chartered banks are generally exempt from the Federal Truth-in-Lending Act, but are otherwise subject to a substantially similar state Truth-in-Lending Act administered and enforced by the Connecticut Department of Banking); • Home Mortgage Disclosure Act of 1975, requiring financial institutions to provide information to enable the public and public officials to determine whether a financial institution is fulfilling its obligation to help meet the housing needs of the community it serves; • Equal Credit Opportunity Act, prohibiting discrimination on the basis of race, color, religion or other prohibited factors in extending credit; • Fair Credit Reporting Act of 1978, governing the use of consumer credit reports and the provision of information to credit reporting agencies; • Fair Debt Collection Practices Act, governing the manner in which consumer debts may be collected by collection agencies; • Real Estate Settlement Procedures Act, governing closing costs and settlement procedures and disclosures to consumers related thereto; • Service members Civil Relief Act of 2004, governing the repayment terms of, and property rights underlying, secured obligations of persons in military service; and • Rules and regulations of the various federal agencies charged with the responsibility of implementing these federal laws.
Biggest changeAt the federal level, these laws include, but are not limited to the following: • Truth in Savings Act which establishes disclosure requirements so that consumers may make informed decisions about depository accounts; • Expedited Funds Availability Act which specifies availability schedules within which banks must make funds available for withdrawal, sets forth rules concerning responsibilities of paying and returning banks; and contains 14 provisions related to requirements substitute checks must meet to be the legal equivalent of a paper check during check processing; • Electronic Funds Transfer Act which protects consumers engaging in electronic funds transfers and provides an error resolution framework; regulates overdraft fees; and governs consumer remittances from the United States to foreign countries; • Equal Credit Opportunity Act and Fair Housing Act, which prohibits discrimination based on race, color, religion or other prohibited factors in extending credit; • Fair Debt Collection Practices Act, which governs the way consumer debts may be collected by collection agencies; • Flood Disaster Protection Act which prohibits banks from making, increasing, renewing, or extending a loan secured by improved real estate located in a Special Flood Hazard Area unless the property securing the loan is covered by flood insurance; • Service members Civil Relief Act of 2004 and the Military Lending Act, which governs the repayment terms of, and property rights underlying, secured obligations of persons in military service; Although the Bank does not engage in consumer lending, the following regulations are also monitored: Federal Truth in Lending Act; the Home Mortgage Disclosure Act; the Fair Credit Reporting Act; the SAFE Act; and the Real Estate Settlement Procedures Act and rules and regulations of the various federal agencies charged with the responsibility of implementing these federal laws.
Risks associated with construction loans include fluctuations in the value of real estate, project completion risk, leasing risk and change in market trends as well as interest rate risk in a volatile or rising risk environment.
Risks associated with construction loans include fluctuations in the value of real estate, project completion risk, leasing risk and change in market trends as well as interest rate risk in a volatile or rising rate environment.
Important factors that may cause actual results to differ materially from those contemplated by these forward-looking statements include, but are not limited to, those disclosed under “Risk Factors” in Part I Item 1A as well as the following factors: • Disruptions to economic conditions, the financial and labor markets and workplace operating environments; • Local, regional and national business or economic conditions may differ from those expected; • Credit risk and resulting losses in our loan portfolio; • Our Allowance for Credit Losses-Loans (“ACL-Loans”) may not be adequate to absorb loan losses; • Changes in real estate values could also increase our credit risk; • Changes in our executive management team; • Our ability to successfully execute our strategic initiatives; • Volatility and direction of market interest rates; • Increased competition within our market which may limit our growth and profitability; • Economic, market, operational, liquidity, credit and interest rate risks associated with our business; • The effects of and changes in trade, monetary and fiscal policies and laws, including the Federal Reserve Board’s interest rate policies; • Changes in accounting policies and practices, as may be adopted by regulatory agencies, the Public Company Accounting Oversight Board or the Financial Accounting Standards Board; • Changes in law and regulatory requirements (including those concerning taxes, banking, securities and insurance); and • Further government intervention in the U.S. financial system.
Important factors that may cause actual results to differ materially from those contemplated by these forward-looking statements include, but are not limited to, those disclosed under “Risk Factors” in Part I Item 1A as well as the following factors: • Disruptions to economic conditions, the financial and labor markets and workplace operating environments; • Local, regional and national business or economic conditions may differ from those expected; • Credit risk and resulting losses in our loan portfolio; • Our Allowance for Credit Losses-Loans (“ACL-Loans”) may not be adequate to absorb loan losses; • Changes in real estate values could increase our credit risk; • Changes in our executive management team; • Our ability to successfully execute our strategic initiatives; • Volatility and direction of market interest rates; • Increased competition within our market which may limit our growth and profitability; • Economic, market, operational, liquidity, credit and interest rate risks associated with our business; • The effects of changes in trade, monetary and fiscal policies and laws, including the Federal Reserve Board’s interest rate policies; • Changes in accounting policies and practices, as may be adopted by regulatory agencies, the Public Company Accounting Oversight Board or the Financial Accounting Standards Board; • Changes in law and regulatory requirements (including those concerning taxes, banking, securities and insurance); and • Further government intervention in the U.S. financial system.
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”.
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”.
The rising rate environment may also pose a risk in our residential adjustable rate mortgages and home equity lines of credit portfolios as borrowers' rates reset at increased levels. Commercial real estate loans. We offer real estate loans for owner-occupied commercial properties as well as commercial property owned by real estate investors.
A rising rate environment may also pose a risk in our residential adjustable rate mortgages and home equity lines of credit portfolios as borrowers' rates reset at increased levels. Commercial real estate loans. We offer real estate loans for owner-occupied commercial properties as well as commercial property owned by real estate investors.
This review includes an evaluation of the market conditions, the property’s or company’s trends, the borrower and guarantor status, the level of reserves required and loan accrual status. Additionally, we have an independent, third-party loan review performed, which includes the accuracy of our loan risk ratings and our credit administration functions.
This review includes an evaluation of the market conditions, the property’s or company’s trends, the borrower and guarantor status, the level of reserves required and loan accrual status. Additionally, we have an independent, third-party loan review performed, which includes an assessment of the accuracy of our loan risk ratings and our credit administration functions.
Construction and development loans are generally made with a term of one to two years and interest is paid monthly. The ratio of the loan principal to the value of the collateral, as established by independent appraisal, will not exceed industry standards.
Construction 5 and development loans are generally made with a term of one to two years and interest is paid monthly. The ratio of the loan principal to the value of the collateral, as established by independent appraisal, will not exceed industry standards.
The Basel III Capital Rules limit the amount of dividends the Bank can pay to us if its capital ratios are below the full capital conservation buffer of 2.5% (as a percentage of risk-weighted assets). The capital conservation buffer is in addition to the minimum risk-based capital requirement.
Basel III Capital Rules limit the amount of dividends the Bank can pay if its capital ratios are below the full capital conservation buffer of 2.5% (as a percentage of risk-weighted assets). The capital conservation buffer is in addition to the minimum risk-based capital requirement.
The term “covered transaction” includes, among other things, the making of loans or other extensions of credit to an affiliate and the purchase of assets from an affiliate. Section 23A also establishes specific collateral requirements for loans or extensions of credit to an affiliate, or the issuance of guarantees, acceptance, or letter of credit on behalf of an affiliate.
The term “covered transaction” includes, among other things, the making of loans or other extensions of credit to an affiliate and the purchase of assets from an affiliate. Section 23A also establishes specific collateral requirements for loans or extensions of credit to an affiliate, or the issuance of guarantees, 12 acceptance, or letter of credit on behalf of an affiliate.
Loans to Insiders. Further, the FRA places restrictions on extensions of credit that can be made by a depository institution to its directors, executive officers, and principal shareholders (or insiders) and to the insiders of its affiliates. Many of those restrictions also apply to the "related interests" of those insiders.
Loans to Insiders. The FRA places restrictions on extensions of credit that can be made by a depository institution to its directors, executive officers, and principal shareholders (or insiders) and to the insiders of its affiliates. Many of those restrictions also apply to the "related interests" of those insiders.
Among other things, the USA PATRIOT Act requires all financial institutions, including us, to institute and maintain a risk-based anti-money laundering compliance program that includes a client identification program, provides for information sharing with law enforcement and between certain financial institutions by means of an exemption from the privacy provisions of the GLBA, prohibits U.S. banks and broker-dealers from maintaining accounts with foreign “shell” banks, establishes due diligence and enhanced due diligence requirements for certain foreign correspondent banking and foreign private banking accounts and imposes additional record keeping requirements for certain correspondent banking arrangements.
Among other things, the USA PATRIOT Act requires all financial institutions, to institute and maintain a risk-based anti-money laundering compliance program that includes a client identification program, provides for information sharing with law enforcement and between certain financial institutions by means of an exemption from the privacy provisions of the GLBA, prohibits U.S. banks and broker-dealers from maintaining accounts with foreign “shell” banks, establishes due diligence and enhanced due diligence requirements for certain foreign correspondent banking and foreign private banking accounts and imposes additional record keeping requirements for certain correspondent banking arrangements.
The primary goals of the bank regulatory system are to maintain a safe and sound banking system and to facilitate the conduct of sound monetary policy. This system is intended primarily for the protection of the Deposit Insurance Fund and bank depositors, rather than our shareholders and creditors.
The primary goals of the bank regulatory system are to maintain a safe and sound banking system and to facilitate the conduct of sound monetary policy. This system is intended primarily for the protection of the Deposit Insurance Fund and bank depositors, rather than shareholders and creditors.
Our commercial real estate loan portfolio presents a higher risk than our residential real estate and consumer loan portfolios. 5 Construction loans. Our construction portfolio include s loans to small and medium-sized businesses to construct owner-used properties, loans to developers of commercial real estate investment properties and residential developments.
Our commercial real estate loan portfolio presents a higher risk than our residential real estate and consumer loan portfolios. Construction loans. Our construction portfolio include s loans to small and medium-sized businesses to construct owner-used properties, loans to developers of commercial real estate investment properties and residential developments.
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.
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 it to cease such practice, generally after notice and hearing.
(the "Parent Corporation") is a bank holding company, headquartered in New Canaan, Connecticut and offers a broad range of financial services through its banking subsidiary, Bankwell Bank (the "Bank" and, collectively with the Parent Corporation and the Parent Corporation's subsidiaries, "we", "our", "us", or the "Company"), a Connecticut state chartered non-member bank founded in 2002.
(the "Parent Corporation") is a bank holding company, headquartered in New Canaan, Connecticut and offers a broad range of financial services through its banking subsidiary, Bankwell Bank (the "Bank" and, collectively with the Parent Corporation and the Parent Corporation's subsidiaries, "we", "our", "us", or the "Company"), a Connecticut state chartered bank founded in 2002.
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.
If the reserve ratio falls below 1.35 percent or is expected to so fall within 6 months, the FDIC generally must adopt a restoration plan to restore the Deposit Insurance Fund reserve ratio to at least 1.35 percent within 8 years.
If the reserve ratio falls below 1.35 percent or is expected to do so within 6 months, the FDIC generally must adopt a restoration plan to restore the Deposit Insurance Fund reserve ratio to at least 1.35 percent within 8 years.
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%.
The Basel III Capital Rules established a minimum common equity Tier 1 capital requirement of 4.5% of risk-weighted assets; set the minimum Tier 1 capital to average assets 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%.
With the prior approval of the Connecticut Department of Banking, Connecticut banks are also authorized to engage in activities that are closely related to the business of banking, are convenient and useful to the business of banking, are reasonably related to the operation of a Connecticut bank, are financial in nature or that are permitted under the Bank Holding Company Act or the Home Owners’ Loan Act, both federal statutes, or the regulations promulgated as a result of those federal statutes.
With the prior approval of the CT DOB, Connecticut banks are also authorized to engage in activities that are closely related to the business of banking, are convenient and useful to the business of banking, are reasonably related to the operation of a Connecticut bank, are financial in nature or that are permitted under the Bank Holding Company Act or the Home Owners’ Loan Act, both federal statutes, or the regulations promulgated as a result of those federal statutes.
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 attract new lending clients through professional service, relationship networks, competitive pricing and innovative structure, including the use of federal and state tax incentives and lending programs such as the SBA loan programs. Our efficient approval process and local decision-making allow us to provide smart, proficient underwriting and timely decisions on new loan requests.
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.
Connecticut law requires the CT DOB 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 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.
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. 11 Other Federal and State Bank Regulation Safety and Soundness.
In general, these enforcement actions may be initiated for violations of laws and regulations or unsafe or unsound practices. The following discussion is a summary of the material laws, rules and regulations applicable to our operations, but does not purport to be a complete summary of all applicable laws, rules and regulations.
In general, these enforcement actions may be initiated as a consequence of violations of laws and regulations or unsafe or unsound practices. The following discussion is a summary of the material laws, rules and regulations applicable to our operations, but does not purport to be a complete summary of all applicable laws, rules and regulations.
As part of these annual review procedures, we analyze recent financial statements of the collateral property, business and/or borrower to determine the current level of occupancy, revenues and expenses and to investigate any deterioration in the value of the real estate collateral or in the borrower’s or company’s financial condition.
As part of this annual review, we analyze recent financial statements of the collateral property, business and/or borrower to determine the current level of occupancy, revenues and expenses and to investigate any deterioration in the value of the real estate collateral or in the borrower’s or company’s financial condition.
As a public company, we also file reports with the SEC and are subject to its regulatory authority, as well as the disclosure and regulatory requirements of the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended, with respect to our securities, financial reporting and certain governance matters.
As a public company, we also file reports with the Securities and Exchange Commission “SEC” and are subject to its regulatory authority, as well as the disclosure and regulatory requirements of the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended, with respect to our securities, financial reporting and certain governance matters.
Our History and Growth The Bank is a Connecticut state chartered commercial bank, founded in 2002, whose deposits are insured under the Deposit Insurance Fund administered by the Federal Deposit Insurance Corporation (“FDIC”). On November 5, 2013, we acquired The Wilton Bank, which was merged into Bankwell Bank.
Our History and Growth The Bank is a Connecticut state chartered commercial bank, founded in 2002, whose deposits are insured under the Deposit Insurance Fund administered by the FDIC. On November 5, 2013, we acquired The Wilton Bank, which was merged into Bankwell Bank.
The FDIC also regulates many of the areas regulated by the Connecticut Department of Banking, and federal law may limit some of the authority provided to Connecticut chartered banks by Connecticut law. Lending Activities. Connecticut banking laws grant banks broad lending authority.
The FDIC also regulates many of the areas regulated by the CT DOB, and federal law may limit some of the authority provided to Connecticut chartered banks by Connecticut law. Lending Activities. Connecticut banking laws grant banks broad lending authority.
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.
The ability of the Bank to pay dividends is also restricted by federal and state laws, regulations and policies. Under Connecticut law, 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.
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.
This agility provides a competitive advantage over larger institutions. 4 Total loans before deferred loan fees and the ACL-Loans were $2.8 billion at December 31, 2025. The following tables summarize the composition of our loan portfolio for the dates indicated.
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.
The CT DOB regulates the internal organization as well as the deposit, lending and investment activities of state-chartered banks, including the Bank. The approval of the CT DOB is required for, among other things, the establishment of branch offices and business combination transactions. The CT DOB conducts periodic examinations of Connecticut chartered banks.
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.
For 2025, 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.
Under Connecticut banking law, no person may acquire beneficial ownership of more than 10% of any class of voting securities of a Connecticut chartered bank, or any bank holding company of such a bank, without prior notification of, and lack of disapproval by, the Connecticut Department of Banking.
Under Connecticut banking law, no person may acquire beneficial ownership of more than 10% of any class of voting securities of a Connecticut chartered bank, or any bank holding company of such a bank, without prior notification of, and lack of disapproval by, the CT DOB. Enforcement.
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.
Connecticut taxable income is multiplied by the state tax rate (7.5% for the fiscal years ending December 31, 2025 and 2024) 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.
We believe that the Bank has been and will continue to be in compliance with each of the standards as they have been established by the FDICIA. Capital Requirements. The FRB monitors the Company's capital adequacy, on a consolidated basis, and the FDIC and Connecticut Department of Banking monitor the capital adequacy of the Bank.
We believe that the Bank has been and will continue to be in compliance with each of the standards as they have been established by the FDICIA. Capital Requirements. The FRB monitors the Company's capital adequacy, on a consolidated basis, and the FDIC and CT DOB monitor the capital adequacy of the Bank.
The Bank is required to file reports with, and is periodically examined by, the FDIC and the Connecticut Department of Banking concerning its activities and financial condition and must obtain regulatory approvals prior to entering into certain transactions, such as mergers with, or acquisitions of, other financial institutions.
The Bank is required to file reports with, and is periodically examined by, the FDIC and the CT DOB concerning its activities and financial condition and must obtain regulatory approvals prior to entering into certain transactions, such as mergers with, or acquisitions of, other financial institutions.
We leverage deep local market knowledge and established relationships cultivated by our management and board of directors to build strong client connections. Our personalized service, local decision-making, and specialized industry expertise differentiate us from larger institutions and resonate strongly within our target market.
Deep local market knowledge and established relationships cultivated by our management and board of directors support strong client connections. Our personalized service, local decision-making, and specialized industry expertise differentiate us from larger institutions and resonate strongly within our target market.
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.
The Economic Growth Act also requires the federal banking agencies to allow 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.
Income earned by a PIC is determined in accordance with the statutory requirements for a passive investment company and the dividends paid by the PIC to the Bank are not taxable income for Connecticut income tax purposes. As a result of the formation of the PIC, the Bank no longer expects to be subject to Connecticut income taxes.
Income earned by the PIC is determined in accordance with the statutory requirements for a passive investment company 17 and the dividends paid by the PIC to the Bank are not taxable income for Connecticut income tax purposes. As a result of the formation of the PIC, the Bank does not expect to be subject to Connecticut income taxes.
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.
Our commercial loan portfolio presents a higher risk than our residential real estate and consumer loan portfolios. Consumer loans. As of December 31, 2025, our consumer loans represented 2.7% of our total loan portfolio.
These laws, rules and regulations may change from time to time and the regulatory agencies often have broad discretion in interpreting them.
These laws, rules and regulations may change, and the regulatory agencies often have broad discretion in interpreting them.
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 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, third party risk management, cybersecurity risks and regulatory consumer 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); • 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, oversee the identification, assessment, management, and mitigation of operational and compliance risks across the Company.
Effective risk management is a key component of our corporate culture. We employ comprehensive processes to monitor our loan and investment portfolios, inform operational decisions, and drive the generation of high-quality earning assets. Our disciplined approach includes rigorous underwriting, loan portfolio diversification, and a conservative investment strategy. Board-approved policies, reviewed annually, define approval authorities.
We employ comprehensive processes to monitor our loan and investment portfolios, inform operational decisions, and drive the generation of high-quality earning assets. Our disciplined approach includes rigorous underwriting, loan portfolio diversification, and a conservative investment strategy. Board-approved policies, reviewed annually, define approval authorities.
Subject to certain adjustments, the range of assessment rates is now between 1.5 to 30 ba sis points of the assessment base. The Dodd-Frank Act set the required minimum reserve ratio to 1.35 percent.
Subject to certain adjustments, the range of assessment rates is now between 2.5 to 42 ba sis points of the assessment base. The Dodd-Frank Act set the required minimum reserve ratio to 1.35 percent of estimated insured deposits.
The FRB has issued a policy statement on the payment of cash dividends by bank holding companies, which expresses the FRB’s view that a bank holding company should pay cash dividends only to the extent that the Bank Holding Company’s net income for the past year is sufficient to cover both the cash dividends and a rate of earnings retention that is consistent with the Bank Holding Company’s capital needs, asset quality and overall financial condition.
The FRB has issued a policy statement regarding the payment of cash dividends by bank holding companies, which states a bank holding company should distribute cash dividends only when the bank holding company’s net income for the past year is sufficient to cover both the cash dividends and a rate of earnings retention that is consistent with the bank holding company’s capital needs, asset quality and overall financial condition.
The CRA does not establish specific lending requirements or programs for financial institutions nor does it limit an institution’s discretion to develop the types of products and services that it believes are best suited to its particular community.
The CRA does not establish specific lending requirements or programs for banks nor does it limit a bank's discretion to develop the types of products and services that it believes are best suited to its particular community.
Finally, we perform an annual stress test of our commercial loan portfolio, in which we evaluate the impact on the portfolio of declining economic conditions, including lower values and decline in net operating income which may result from lower rental rates, lower occupancy rates and higher interest rates. Management reviews these reports and presents them to our loan committees.
Finally, we perform an annual stress test of our commercial loan portfolio, in which we evaluate the impact on the portfolio of declining economic conditions, including lower property values and decline in net operating income which may result from lower rental rates, lower occupancy rates and higher interest rates.
To complement our organic growth, we focus on strategic acquisitions in or around our existing market that further our objectives. We believe there are banking institutions that continue to face credit challenges, capital constraints and liquidity issues.
To complement our organic growth, we pursue strategic acquisitions in or adjacent to our existing market that further our objectives. We believe there are banking institutions that continue to face credit challenges, capital constraints, and liquidity pressures.
We adhere to what we believe are disciplined underwriting standards, but also remain cognizant of the need to serve the credit needs of our clients by offering flexible loan solutions in a responsive and timely manner. We also seek to maintain a diversified loan portfolio across client, product and industry types.
We adhere to what we believe are disciplined underwriting standards but also remain cognizant of the need to serve the credit needs of our clients by offering flexible loan solutions in a responsive and timely manner.
The revised capital rules aligned the banking agencies’ leverage and risk-based capital requirements and the method for calculating risk weighted assets to make them consistent with agreements that were reached by the Basel Committee on Banking Supervision and certain provisions of the Dodd-Frank Act (the Basel III Capital Rules).
The revised capital rules aligned the banking agencies’ leverage and risk-based capital requirements, including the calculation of risk weighted assets, to align with agreements that were reached by the Basel Committee on Banking Supervision and with certain provisions of the Dodd-Frank Act (the Basel III Capital Rules).
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.
At December 31, 2025 2024 2023 2022 2021 (In thousands) Real estate loans: Residential $ 33,139 $ 42,766 $ 50,931 $ 60,588 $ 79,987 Commercial 1,930,979 1,899,134 1,947,648 1,921,252 1,356,709 Construction 153,778 173,555 183,414 155,198 98,341 2,117,896 2,115,455 2,181,993 2,137,038 1,535,037 Commercial business 645,321 515,125 500,569 520,447 350,975 Consumer 76,855 75,308 36,045 17,963 8,869 Total loans $ 2,840,072 $ 2,705,888 $ 2,718,607 $ 2,675,448 $ 1,894,881 At December 31, Percent of Loan Portfolio 2025 2024 2023 2022 2021 Real estate loans: Residential 1.17 % 1.58 % 1.87 % 2.27 % 4.22 % Commercial 67.99 70.19 71.64 71.81 71.60 Construction 5.41 6.41 6.75 5.80 5.19 74.57 78.18 80.26 79.88 81.01 Commercial business 22.72 19.04 18.41 19.45 18.52 Consumer 2.71 2.78 1.33 0.67 0.47 Total loans 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % Residential real estate loans.
Connecticut banks are also authorized to engage in any activity permitted for certain federally chartered institutions, as well as for certain out-of-state institutions, upon filing a notice with the Connecticut Department of Banking unless the Connecticut Department of Banking disapproves the activity. Assessments.
Connecticut banks are also authorized to engage in any activity permitted for certain federally chartered institutions, as well as for certain out-of-state institutions, upon filing a notice with the CT DOB unless the CT DOB does not approve the activity. 10 Assessments.
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.
Human Capital Resources At December 31, 2025, we employ ed a t otal of 167 fu ll-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.
To further enhance our competitive position, we launched online account opening, via our Bankwell Direct channel, providing a more convenient and accessible way for clients to join our Bank. While many competitors possess greater scale and resources, our strategy focuses on areas where we excel: serving small to medium-sized businesses and professionals.
To enhance our competitive position, we offer online account opening, via our Bankwell Direct channel, providing a convenient and accessible way for clients to join our Bank. Although many competitors have greater scale and resources, our strategy focuses on serving small to medium‑sized businesses and professionals, where we have distinct strengths.
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.
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 efforts are primarily directed toward small to medium-sized businesses. Relationship managers actively pursue opportunities with companies entering our market areas as well as established businesses within the communities we serve.
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.
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.
Commercial lending products include owner-occupied commercial real estate loans, commercial real estate investment loans, commercial loans (such as business term loans, equipment finan cing and lines of credit) to small and medium-sized businesses and real estate construction and development loans.
We offer a wide array of commercial lending products to serve the needs of our clients. Commercial lending products include owner-occupied commercial real estate loans, commercial real estate investment loans, commercial loans (such as business term loans, equipment finan cing and lines of credit) to small and medium-sized businesses and real estate construction and development loans.
The Federal Reserve, the FDIC and the other federal and state bank regulatory agencies establish regulatory capital guidelines for U.S. banking organizations. As of January 1, 2015, the Company and the Bank became subject to new capital rules set forth by the Federal Reserve, the FDIC and the other federal and state bank regulatory agencies.
The FRB, the FDIC and the other federal and state bank regulatory agencies establish regulatory capital guidelines for U.S. banking organizations. Since January 1, 2015, the Company and the Bank have been subject to revised capital rules set forth by the FRB, the FDIC and the other federal and state bank regulatory agencies.
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.
In 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 provides certain reporting and capital relief for bank holding companies with total assets under $3 billion, as outlined in the Small Bank Holding Company Policy Statement.
Under this policy, the FRB may require, and has required in the past, a bank holding company to contribute additional capital to an under-capitalized subsidiary bank.
The FRB may require a bank holding company to contribute additional capital to an under-capitalized subsidiary bank.
We are focused on being the banking provider of choice and to serve as an alternative to our larger competitors. We have a history of building long-term client relationships and attracting new clients through what we believe is our superior service and our ability to deliver a diverse product offering.
We seek to be the banking provider of choice by offering a compelling alternative to larger competitors. We have a history of building long-term client relationships and attracting new clients through what we believe is superior service and a diverse product offering.
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.
In 2017, management made the strategic decision to cease originating residential mortgage loans. In 2019, the Company stopped offering home equity loans or lines of credit. 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 federal banking agencies have released comprehensive guidance on incentive compensation policies focused on ensuring that financial institutions’ incentive compensation policies do not undermine the safety and soundness of those institutions by encouraging excessive risk taking. The incentive compensation guidance sets expectations for financial institutions concerning their incentive compensation arrangements and related risk management, control and governance processes.
The federal banking agencies have issued comprehensive guidance addressing incentive compensation policies designed to prevent compensation arrangements from encouraging excessive risk‑taking that could undermine the safety and soundness of financial institutions. The guidance sets expectations for financial institutions concerning their incentive compensation arrangements and related risk management, control and governance processes.
With certain limited exceptions, loans to any one obligor under this statutory authority may not exceed 15% and fully secured loans may not exceed an additional 10% of a bank’s equity capital and allowance for credit losses. Dividends. The Bank may pay cash dividends out of its net profits.
With certain limited exceptions, loans to any one obligor under this statutory authority may not exceed 15% and fully secured loans may not exceed an additional 10% of a bank’s equity capital and allowance for credit losses. Dividends. Substantially all the Company's income is derived from, and the principal source of our liquidity is, dividends from the Bank.
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.
At December 31, 2025, we had an 8.90% tangible common equity ratio, and the Bank had a 10.56% Tier 1 capital to average assets ratio, a 11.87% Tier 1 capital ratio, and a 12.94% total capital to risk-weighted assets ratio.
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.
A financial holding company 15 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 of Consumer Information. The Bank is subject to a myriad of state and federal regulations governing the privacy of consumer and customer personal information.
Stress tests are conducted quarterly and reported to ALCO but may also be run on an ad-hoc basis when market conditions change. 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.
Liquidity stress testing is conducted quarterly and reported to ALCO, and may also be performed on an ad-hoc basis in response to changing market conditions. Supervision and Regulation General The Bank is subject to extensive regulation by the CT DOB, as its chartering agency and by the FDIC, as its deposit insurer.
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.
Any change in such laws, rules or regulations, whether by the CT DOB, the NY DFS, 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 of 2010 (the "Dodd-Frank Act") implemented significant changes to the regulation and supervision of financial institutions.
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.
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 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.
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”).
However, 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.
Each Federal Home Loan Bank serves as a central credit facility primarily for its member institutions. The Bank, as a member of the FHLB, is required to acquire and hold shares of capital stock in the FHLB. Community Reinvestment Act (CRA).
The Bank, as a member of the FHLB, is required to acquire and hold shares of capital stock in the FHLB. Community Reinvestment Act (CRA).
Method of Accounting: For Federal income tax purposes, we report income and expenses on the accrual method of accounting and use tax year ending December 31 for filing federal income tax returns.
Method of Accounting: For Federal income tax purposes, we report income and expenses on the accrual method of accounting and use tax year ending December 31 for filing federal income tax returns. Net Operating Loss Carryovers: At December 31, 2025, w e had $1.2 million of net operating loss carryforwards for federal income tax purposes.
We monitor borrower and loan product concentrations continuously which are reviewed with senio r management and the Board on at least a quarterly basis. Loan product concentrations are reviewed annually in conjunction with the portfolio’s credit quality and the business plan for the coming year. All concentrations are monitored by our Chief Credit Officer and our Directors' Loan Committee.
Loan product concentrations are also reviewed annually in conjunction with the portfolio’s credit quality and the business plan for the coming year. All concentrations are monitored by our Chief Credit Officer and our Directors' Loan Committee.
We strategically invest in our technology, data processing, risk management, and compliance infrastructure to enhance efficiency, profitability, and scalability. This investment provides a robust operating platform that supports current performance and enables future growth while ensuring we continue to deliver high-quality service and maximize stakeholder returns. • Disciplined Risk Management Framework .
This investment provides a robust operating platform that supports current performance and enables future growth while ensuring we continue to deliver high-quality service and maximize stakeholder returns. • Disciplined Risk Management Framework . Effective risk management is a key component of our corporate culture.
Connecticut banks are required to pay annual assessments to the Connecticut Department of Banking to fund the Connecticut Department of Banking’s operations. The general assessments are paid pro-rata based upon a bank’s asset size. Enforcement. Under Connecticut law, the Connecticut Department of Banking has extensive enforcement authority over Connecticut banks and, under certain circumstances, affiliated parties, insiders, and agents.
Connecticut banks are required to pay annual assessments to the Connecticut Department of Banking to fund the Connecticut Department of Banking’s operations. The general assessments are paid pro-rata based upon a bank’s asset size. Ownership.
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.
Some also lack the scale and management expertise necessary 2 to address an increasingly complex regulatory environment and may ultimately seek to partner with an institution such as ours. As we evaluate potential acquisitions, we seek opportunities that deliver meaningful financial benefits, support long-term organic growth, and generate expense efficiencies, without compromising our risk profile.
Our primary lending focus is to serve commercial and middle-market businesses and not-for-profit organizations with a variety of financial products and services, while maintaining strong and disciplined credit policies and procedures. We offer a wide array of commercial lending products to serve the needs of our clients.
We do not compete for primary banking relationships with large corporations, instead prioritizing tailored solutions and high quality service for our core clients. Lending Activities General. Our primary lending focus is to serve commercial and middle-market businesses and not-for-profit organizations with a variety of financial products and services, while maintaining strong and disciplined credit policies and procedures.
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.
As of June 30, 2023, the Company exceeded this threshold and no longer qualified for this treatment. Beginning March 31, 2024, the Company became subject to the capital requirements applicable to larger bank holding companies, as set forth in the Economic Growth Act.
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.
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.
Additionally, the Company maintains a robust liquidity risk management framework, primarily through our Contingency Funding Plan (“CFP”). The CFP is designed to ensure our ability to meet our financial obligations under both normal and stressed conditions. A critical component of the CFP is liquidity stress testing, which involves simulating various adverse market and idiosyncratic scenarios.
Additionally, the Company maintains a robust liquidity risk management framework, anchored by its Contingency Funding Plan (“CFP”). The CFP is designed to ensure the Company’s ability to meet financial obligations under both normal and stressed conditions.
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.
Additionally, the Bank operates limited-service Domestic Representative Offices in New Canaan, Connecticut and Garden City, New York. As of December 31, 2025, on a consolidated basis, we had total assets of approximately $3.4 billion, net loans of approximately $2.8 billion, total deposits of approximately $2.8 billion, and shareholders’ equity of approximately $301.5 million.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeA breach of our security, or that of any of our third-party providers, which results in unauthorized access to our data could expose us to a disruption or challenges relating to our daily operations as well as to data loss, litigation, damages, fines and penalties, significant increases in compliance costs, and reputational damage, any of which could have a material adverse effect on our business, results of operations, financial condition and future prospects. 22 We are subject to losses due to fraudulent and negligent acts on the part of loan applicants, our clients, vendors, bad actors, and/or our employees.
Biggest changeAny of these consequences could have a material adverse effect on our business, results of operations, financial condition and future prospects. We are subject to losses due to fraudulent and negligent acts on the part of loan applicants, our clients, vendors, bad actors, and/or our employees.
Failure or disruption of the operating systems and technologies we use, including those of third parties, could adversely affect our business. We rely on communication and information systems to conduct business, many of which are provided by third-party providers.
Failure or disruption of the operating systems and technologies we use, including those of third parties, could adversely affect our business. We rely on communication and information systems, many of which are provided by third-party providers, to conduct our business.
Our ability to compete successfully will depend on a number of factors, including, among other things: • Our ability to build and maintain long-term client relationships while ensuring high ethical standards and safe and sound banking practices; • The scope, relevance, and pricing of products and services that we offer; • Client satisfaction with our products and personalized services; • Industry and general economic trends; and • Our ability to keep pace with technological advances and to invest in new technology.
Our ability to compete successfully will depend on a number of factors, including, among other things: • Our ability to build and maintain long-term client relationships while ensuring high ethical standards and safe and sound banking practices; • The scope, relevance, and pricing of products and services that we offer; • Client satisfaction with our products and personalized services; 20 • Industry and general economic trends; and • Our ability to keep pace with technological advances and to invest in new technology.
Any 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.
Any regulatory action against us could have a material adverse effect on our business, results of operations, financial condition and future prospects. 24 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.
If we are required to materially increase our level of ACL-Loans for any reason, such increase could have a material adverse effect on our business, financial condition, results of operations and future prospects. Our concentration of large loans to certain borrowers may increase our credit risk.
If we are required to materially increase our level of ACL-Loans for any reason, such increase could have a material adverse effect on our business, financial condition, results of operations and future prospects. 18 Our concentration of large loans to certain borrowers may increase our credit risk.
If our reputation is negatively affected by the actions of our employees, or otherwise, our business and, therefore, our operating results may be materially adversely affected. 21 We are dependent on our executive management team and other key employees, and we could be adversely affected by the unexpected loss of their services.
If our reputation is negatively affected by the actions of our employees, or otherwise, our business and, therefore, our operating results may be materially adversely affected. We are dependent on our executive management team and other key employees, and we could be adversely affected by the unexpected loss of their services.
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.
Any substantial, unexpected, or prolonged shift in 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.
Adverse economic conditions and government policy responses to such conditions could have a material adverse effect on our business, financial condition, results of operations and prospects. We may not be able to adequately measure and limit our credit risk, which could lead to unexpected losses.
Adverse economic conditions, together with government policy responses to those conditions, could have a material adverse effect on our business, financial condition, results of operations and prospects. We may not be able to adequately measure and limit our credit risk, which could lead to unexpected losses.
Our profitability, like that of most financial institutions, depends to a large extent on our net interest income, which is the difference between our interest income on interest-earning assets, such as loans and investment securities, and our interest expense on interest bearing liabilities, such as deposits and borrowings.
Our profitability, like that of most financial institutions, depends primarily on our net interest income, which is the difference between our interest income on interest-earning assets, such as loans and investment securities, and our interest expense on interest bearing liabilities, such as deposits and borrowings.
Adverse developments affecting the financial services industry, such as bank failures, may adversely affect the Bank’s results of operations and financial condition, including capital and liquidity. Bank failures may have a profound impact on the national, regional, and local business environment in which the Bank operates.
Adverse developments affecting the financial services industry, such as bank failures, may adversely affect the Bank’s results of operations and financial condition, including capital and liquidity. Bank failures may adversely affect the national, regional, and local business environment in which the Bank operates.
Our loan portfolio includes non-owner-occupied commercial real estate loans for individuals and businesses for various purposes, which are secured by commercial properties. These loans typically involve repayment dependent upon income generated, or expected to be generated, by the property securing the loan in amounts sufficient to cover operating expenses and debt service.
Our loan portfolio includes non-owner-occupied commercial real estate loans to individuals and businesses for various purposes, secured by commercial properties. Repayment of these loans typically depends on the income generated, or expected to be generated, by the underlying property in amounts sufficient to cover operating expenses and debt service.
Although we were not directly affected by the bank failures which occurred in 2023, the speed and ability of depositors to withdraw their funds from these and other financial institutions contributed to the broader volatility in the banking sector observed during the year.
Although we were not directly impacted by the bank failures that occurred in 2023, the speed and ability of depositors to withdraw their funds from these and other financial institutions contributed to the broader volatility across the banking sector.
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.
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 collect, use, and maintain personal and financial information relating to individuals and businesses with whom we have banking relationships.
If defaults increase, we could experience an increase in delinquencies and charge-offs and we may be required to increase our ACL-Loans, which could have a material adverse effect on our business, financial condition, results of operations and prospects. Our lending limit may restrict our growth and prevent us from effectively implementing our business strategy.
If credit performance deteriorates as the portfolio seasons, we could experience higher delinquencies and charge-offs and may be required to increase our ACL-Loans, which could have a material adverse effect on our business, financial condition, results of operations and prospects. 19 Our lending limit may restrict our growth and prevent us from effectively implementing our business strategy.
Our businesses and operations, which primarily consist of lending money to clients in the form of loans, borrowing money from clients in the form of deposits and investing in securities, are sensitive to general business and economic conditions in the United States and to a lesser degree secondary effects of global geopolitical events.
Our business, which primarily consist of extending credit to clients through loans, borrowing money from clients in the form of deposits and investing in securities, is sensitive to general business and economic conditions in the United States and, to a lesser extent, to secondary effects of global geopolitical events.
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.
As of December 31, 2025, our five largest relationships ranged in exposure from approximately $91.9 million to $111.5 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.
Finally, many of our loans are made to middle-market businesses that may be less able to withstand competitive, economic and financial pressures than larger borrowers. A failure to effectively measure and limit the credit risk associated with our loan portfolio could have a material adverse effect on our business, financial condition, results of operations and future prospects.
Finally, many of our loans are made to middle-market businesses, which may be more vulnerable to competitive, economic and financial pressures than larger borrowers. A failure to effectively identify, measure and manage credit risk within our loan portfolio could have a material adverse effect on our business, financial condition, results of operations and future prospects.
In general, loans do not begin to show signs of credit deterioration or default until they have been outstanding for some period of time, a process referred to as “seasoning.” As a result, a portfolio of older loans will usually behave more predictably than a newer portfolio.
Loans generally do not exhibit signs of credit deterioration or default until they have been outstanding for a period of time, a process commonly referred to as “seasoning.” Accordingly, a more seasoned loan portfolio of older loans will usually behave more predictably than a newer portfolio.
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 a financial institution, we are also inherently exposed to risks associated with theft, fraud and other dishonest or illegal activities by clients, vendors, bad actors, and/or employees targeting the Bank or our clients. These activities may take many forms, including check fraud, electronic and wire fraud, phishing, social engineering, and other schemes.
In addition, the assets securing the loans have the following characteristics: (a) they depreciate over time, (b) they are difficult to appraise and liquidate, and (c) they fluctuate in value based on the success of the business.
Accordingly, repayment is substantially influenced by the financial performance and ongoing viability of those businesses. The assets securing the loans have the following characteristics: (a) they depreciate over time, (b) they are difficult to appraise and liquidate, and (c) they fluctuate in value based on the success of the business.
Commercial real estate loans may be affected to a greater extent than residential loans by adverse conditions in real estate markets or the economy because commercial real estate borrowers’ ability to repay their loans depends on successful leasing of their properties, in addition to the factors affecting residential real estate borrowers.
As a result, these loans may be more adversely affected by downturns in real estate markets or broader economic conditions than residential real estate loans, as these borrowers’ ability to repay their loans depends on successful leasing of their properties, in addition to the factors affecting residential real estate borrowers.
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.
The increasing sophistication and frequency of fraudulent activity could result in financial losses, reputational harm, loss of business, heightened regulatory scrutiny, civil litigation, or other liabilities. Any of these outcomes could have an adverse effect on our results of operation and financial condition.
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.
Weak economic conditions may be characterized by deflationary pressures; volatility in in debt and equity markets; reduced liquidity; depressed prices in the secondary market for mortgage loans; increased delinquencies on mortgage, consumer and commercial loans; declines in residential and commercial real estate values; and lower levels of home sales and commercial activity.
Any significant environmental liabilities could cause a material adverse effect on our business, financial condition, results of operations and future prospects. 24 Climate change and related legislative and regulatory initiatives may materially affect the Company’s business and results of operations. The effects of climate change continue to create an alarming level of concern for the state of the global environment.
Any significant environmental liabilities could cause a material adverse effect on our business, financial condition, results of operations and future prospects. Climate change and related legislative and regulatory initiatives may materially affect the Company’s business and results of operations. Climate change and related regulatory, political, and market responses may present risks to our business, financial condition, and results of operations.
Furthermore, we may not be able to ensure all our third-party providers have appropriate controls in place to protect themselves and our information in the event of a cyber-attack.
In addition, we may not be able to ensure that all third-party service providers maintain adequate controls to protect their systems and our information in the event of a cyber-attack.
Lack of seasoning of our loan portfolio could increase risk of credit defaults in the future. As a result of our growth in recent years, a large portion of loans in our loan portfolio and of our lending relationships are of relatively recent origin.
As a result of our growth in recent years, a large portion of our loan portfolio and lending relationships are of relatively recent origin.
All of these factors are detrimental to our business, and the interplay between these factors can be complex and unpredictable. Our business is also significantly affected by monetary and related policies of the U.S. federal government and its agencies. Changes in any of these policies are influenced by macroeconomic conditions and other factors that are beyond our control.
These factors, individually or in combination, could adversely affect our business, and their interaction may be complex and difficult to predict. Our business is also significantly affected by monetary and related policies of the U.S. federal government and its agencies. Changes in any of these policies are influenced by macroeconomic conditions and other factors beyond our control.
Any future bank failure events may adversely impact the Bank’s future operating results and financial condition, including capital and liquidity. Risks Applicable to the Regulation of our Industry We operate in a highly regulated environment, which could have a material and adverse impact on our operations and activities, financial condition, results of operations, growth plans and future prospects.
Risks Applicable to the Regulation of our Industry We operate in a highly regulated environment, which could have a material and adverse impact on our operations and activities, financial condition, results of operations, growth plans and future prospects. Banking is highly regulated under federal and state law.
The occurrence of any failures, interruptions, or security breaches, including cyber-attacks of our information systems and those of our third-party providers 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.
Any failure, interruption, or security breach involving our systems or those of our third-party providers could harm our reputation, result in the loss of business, increase regulatory scrutiny, or expose us to civil litigation or financial liability, any of which could have an adverse effect on our results of operation and financial condition.
Banking is highly regulated under federal and state law. We are subject to extensive regulation and supervision that governs almost all aspects of our operations. As a registered bank holding company, we are subject to supervision, regulation and examination by the Federal Reserve.
We are subject to extensive regulation and supervision that governs almost all aspects of our operations. As a registered bank holding company, we are subject to supervision, regulation and examination by the FRB. As a commercial bank chartered under the laws of Connecticut, the Bank is subject to supervision, regulation and examination by the CT DOB and the FDIC.
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.
Unexpected deterioration in the credit quality of these loan portfolios could require increased provisions for credit losses, reduce profitability, and have a material adverse effect on our business, financial condition, results of operations and future prospects. Lack of seasoning of our loan portfolio could increase risk of credit defaults in the future.
We cannot provide assurance that we have detected or will detect all misrepresented information in our loan originations, however, we have controls and processes designed to help us identify misrepresented information in our loan origination operations, including human oversight of AI activity.
While we maintain controls and processes designed to identify misrepresented information in our loan origination activities, including human oversight of AI-supported processes, we cannot provide assurance that all misrepresentations will be detected.
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.
To mitigate these risks, we maintain policies and internal controls, utilize technology-based monitoring tools, and provide ongoing employee training designed to identify, prevent, and respond to fraudulent activity; however, these measures may not be effective in preventing all losses. We may be unsuccessful in identifying and completing the acquisition of whole financial institutions or related lines of 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.
The Company's exposure to such programs is very limited. 25 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.
In addition, economic conditions in foreign countries could affect the stability of global financial markets, which could hinder U.S. economic growth.
In addition, adverse economic conditions in foreign countries could disrupt global financial markets and negatively affect U.S. economic growth.
If the U.S. economy weakens, our growth and profitability from our lending, deposit and investment operations could be constrained. Uncertainty about the federal fiscal policymaking process, the medium-term and long-term fiscal outlook of the federal government, and future tax rates is a concern for businesses, consumers and investors in the United States.
A weakening of the U.S. economy could constrain our growth and profitability across our lending, deposit and investment activities. Businesses, consumers, and investors in the United States face ongoing uncertainty related to federal fiscal policymaking, the medium- and long-term fiscal outlook of the federal government, the impact of tariffs, and future tax rates.
The risk of electronic fraudulent activity within the financial services industry, especially in the commercial banking sector due to cyber criminals targeting bank accounts and other client information is on the rise.
The risk of electronic fraudulent activity within the financial services industry, particularly in the commercial banking sector, continues to increase as cyber criminals target bank systems and client information.
If we are unable to compete effectively for loans from our target clients, we may not be able to effectively implement our business strategy, which could have a material adverse effect on our business, financial condition, results of operations and future prospects. A prolonged downturn in the real estate market could result in losses and adversely affect our profitability.
If we are unable to compete effectively for loans among our target clients due to these constraints, we may be unable to successfully execute our business strategy, which could have a material adverse effect on our business, financial condition, results of operations and future prospects.
As part of our strategic plan, we pursue initiatives focused on the organic development and growth of our franchise. Our initiatives focus on delivering superior service to our clients, coupling technology with our deep client relationships. Our ability to execute these initiatives requires investment in resources as well as hiring and retaining skilled employees.
Our strategic plan includes initiatives designed to support the organic development and growth of our franchise. These initiatives focus on delivering superior service to our clients, coupling technology with our deep client relationships. Execution of this strategy requires investment in resources, systems and human capital.
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.
Fluctuations in interest rates directly influence the rates we earn on loans and securities, the rates we pay on deposits and borrowings, and the fair value and duration of our financial assets and liabilities.
Because a large portion of our portfolio is relatively new, the current level of delinquencies and defaults may not represent the level that may prevail as the portfolio becomes more seasoned and may not serve as a reliable basis for predicting the health and nature of our loan portfolio, including net charge-offs and the ratio of nonperforming assets in the future.
Because a large portion of our portfolio is relatively new, current delinquency and default levels may not be indicative of future credit performance as the portfolio becomes more seasoned. As a result, these metrics may not provide a reliable basis for predicting future trends in asset quality, including net charge-offs and nonperforming assets.
All of these laws and regulations, and the supervisory framework applicable to our industry, could have a material adverse impact on our operations and activities, financial condition, results of operations, growth plans and future prospects. 25 Federal and state regulators periodically examine our business and we may be required to remediate adverse examination findings.
Further, any new laws, rules and regulations, could make compliance more complex or expensive. All of these laws and regulations, and the supervisory framework applicable to our industry, could have a material adverse impact on our operations and activities, financial condition, results of operations, growth plans and future prospects.
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.
Failures, interruptions or security breaches involving these systems could disrupt critical operations, including our general ledger, deposit and loan systems, and digital banking platforms, including our online account opening channel, Bankwell Direct.
Our limited experience with these loans does not provide us with a significant payment history pattern with which to judge future collectability. As a result, it may be difficult to predict the future performance of our loan portfolio.
In addition, our limited operating history with our portfolio reduces the availability of historical payment patterns on which to assess future collectability. As a result, it may be difficult to predict the future performance of our loan portfolio.
As a commercial bank chartered under the laws of Connecticut, the Bank is subject to supervision, regulation and examination by the State of Connecticut Department of Banking and the FDIC. The primary goals of the bank regulatory system are to maintain a safe and sound banking system and to facilitate the conduct of sound monetary policy.
The Bank is also subject to regulation by the NY DFS in connection with its New York operations. The primary goals of the bank regulatory system are to maintain a safe and sound banking system and to facilitate the conduct of sound monetary policy.
Our systems and those of our third-party providers may also become vulnerable to damage or disruption due to circumstances beyond our or their control, such as from catastrophic events, power anomalies or outages, natural disasters, network failures, and viruses and malware.
As a result, client accounts could become vulnerable to account takeover schemes, cyber-fraud, or other unauthorized activity. In addition, our systems and those of our third-party providers may be subject to damage or disruption from events beyond our or their control, including natural disasters, power interruptions, network failures, catastrophic events, or the introduction of viruses or malware.
During the construction phase, a number of factors can result in delays and cost overruns. If estimates of value are inaccurate or if actual construction costs exceed estimates, the value of the property securing the loan may be insufficient to ensure full repayment when completed through a permanent loan or by sale of collateral.
Construction projects are subject to delays, cost overruns, and other risks beyond the borrower’s or our control. If actual costs exceed estimates or projected values are not realized, the value of the property securing the loan may be insufficient to ensure full repayment through refinancing or sale of the property.
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.
If interest rates on deposits and other funding sources rise faster than the rates we earn on loans and investments, our net interest income and overall earnings could decline. Periods of heightened rate volatility or instability may also increase funding costs, pressure our net interest margin, and negatively impact asset‑liability management strategies.
We have developed policies and procedures aimed at preventing and limiting the effect of failure, interruption or security breaches, including cyber-attacks of information systems; however, there can be no assurance that these incidences will not occur, or if they do occur, that they will be appropriately addressed.
While we have implemented policies and procedures designed to prevent and mitigate the effects of system failures, interruptions, and security breaches, including cyber-attacks, there can be no assurance that such events will not occur or that, if they do occur, they will be effectively addressed.
Our success will depend on the ability of our management team to manage multiple, concurrent initiatives designed to improve our operational systems and expand our product offerings. Our inability to execute on these initiatives may negatively impact our ability to attract new client relationships, maintain existing client relationships and may adversely impact our operating results.
Our success depends on management’s ability to effectively manage and execute multiple, concurrent initiatives intended to enhance operational capabilities and expand our product offerings. Any inability to successfully execute these initiatives could negatively impact client acquisition and retention and may adversely impact our operating results.
Further, if we experience difficulties with the integration process, the anticipated benefits of the investment or acquisition transaction may not be realized fully or at all or may take longer to realize than expected. 23 Some institutions we may acquire may have distressed assets and there can be no assurance that we would be able to realize the value we predict from these assets or that we would make sufficient provision for future losses in the value of, or accurately estimate the future write downs taken in respect of, these assets.
If we are unable to successfully manage these risks or realize the expected benefits of an acquisition in a timely manner, our profitability, growth, and shareholder value could be adversely affected, which could have a material adverse effect on our business, financial condition, results of operations, and prospects. 22 Some institutions we may acquire may have distressed assets and there can be no assurance that we would be able to realize the value we predict from these assets or that we would make sufficient provision for future losses in the value of, or accurately estimate the future write downs taken in respect of, these assets.
Risk of loss on a construction loan depends largely upon whether our initial estimate of the property’s value at completion of construction equals or exceeds the cost of the property construction (including interest), the availability of permanent takeout financing, the completion of the project and/or the builder’s ability to ultimately lease or sell the property.
The risk of loss associated with construction loans depends in large part on the accuracy of our initial estimates of a project’s value upon completion, the successful and timely completion of construction, the availability of permanent takeout financing, and the borrower’s ability to lease or sell the property.
Threats to data security, including unauthorized access and cyber-attacks, rapidly emerge and change, exposing us to additional costs for protection or remediation and competing time constraints to secure our data in accordance with client expectations and statutory and regulatory privacy and other requirements.
Threats to data security, such as unauthorized access, cyber-attacks, and other evolving risks, are rapidly changing and may expose us to increased costs for prevention, detection, and remediation, as well as competing demands on our resources to protect data in accordance with client expectations and applicable statutory and regulatory requirements.
These loans also involve greater risk because they generally are not fully amortizing over the loan period, but have a balloon payment due at maturity. A borrower’s ability to make a balloon payment typically will depend on being able to either refinance the loan or sell the underlying property in a timely manner.
These loans also involve greater risk because they generally are not fully amortizing over the loan term and typically require a balloon payment at maturity.
Further, the effects of climate change may negatively impact regional and local economic activity, which could lead to an adverse effect on our clients and impact the communities in which we operate. Overall, climate change, its effects and the resulting, unknown impact could have a material adverse effect on our financial condition and results of operations.
If borrower insurance coverage is insufficient or unavailable to cover climate‑related losses, the value of our collateral may be reduced. In addition, climate change may negatively affect regional and local economic conditions, which could adversely impact our clients and the communities we serve. Collectively, these factors could have a material adverse effect on our financial condition and results of operations.
When we originate loans, we rely heavily upon information supplied by third parties, including the information contained in the loan application, property appraisal, title information and employment and income documentation. Additionally, the current and potential future utilization of AI by the Company in support of loan origination could create additional risk for misrepresented information.
When originating loans, we rely extensively on information provided by third parties, including the loan applications, property appraisals, title reports and income documentation. In addition, our current and potential future use of AI to support loan origination processes may introduce additional risk of inaccurate, incomplete, or misrepresented information.
We are subject to interest rate risk that could negatively impact our profitability.
Any such impact could have a material adverse effect on our business, financial condition, results of operations and prospects. We are subject to interest rate risk that could negatively impact our profitability.
It is difficult or impossible to defend against every risk being posed by changing technologies, including the deployment of artificial intelligence ("AI") as well as criminals intent on committing cyber-crime. The increasing sophistication of cyber-criminals and terrorists make keeping pace with new threats difficult and could result in a breach.
It is difficult, and in some cases impossible, to anticipate or defend against every risk arising from advancing technologies, including the use of artificial intelligence ("AI"), and from increasingly sophisticated cyber-criminals and other 21 malicious actors. The complexity and frequency of cyber threats make it challenging to keep pace with new attack methods and may result in a security breach.
Failure to maintain and implement adequate programs to combat money laundering and terrorist financing could also have serious reputational consequences for us.
Failure to maintain and implement adequate programs to combat money laundering and terrorist financing could also have serious reputational consequences for us. Any of these results could materially and adversely affect our business, financial condition, results of operations and prospects. We face a risk of disruptions and may be impacted by U.S. Government shutdowns.
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.
Non-owner-occupied commercial real estate loans generally involve larger balances to individual borrowers or related groups of borrowers, which may result in higher charge-offs on a per loan basis compared to residential or consumer loan portfolios. The repayment of our commercial loans is primarily dependent on the cash flows generated by borrowers’ business operations.
We accommodate larger loans by selling participations in those loans to other financial institutions, but this strategy may not always be available.
These limitations may discourage potential borrowers with credit needs that exceed our lending limits from doing business with us. We seek to accommodate larger credit needs by selling participations in loans to other financial institutions; however, this strategy may not be available or feasible in all circumstances.
Controls employed by our information technology department and our other employees and third-party providers could prove inadequate. We could also experience a breach due to intentional or negligent conduct on the part of employees or other internal sources, software bugs or other technical malfunctions, or other causes.
The controls implemented by our information technology systems, employees, and third-party service providers may be insufficient or fail. We may also experience security incidents resulting from intentional or negligent acts by employees or other internal parties, software defects or technical failures, or other unforeseen causes.
If, during our diligence process, we fail to identify issues specific to a target institution or the environment in which the target institution operates, we may be forced to later write down or write off assets, restructure our operations, or incur impairment or other charges that could result in our reporting losses.
If such issues are identified after an acquisition, or if we are unable to successfully integrate and manage the acquired operations, we may be required to write down or write off assets, restructure operations, or record impairment or other charges, which could result in reported losses.
The Federal Reserve, the FDIC and the Connecticut Department of Banking periodically examine our business, including our compliance with laws and regulations.
Federal and state regulators periodically examine our business and we may be required to remediate adverse examination findings. The FRB, the FDIC and the CT DOB periodically examine our business, including our compliance with laws and regulations.
In response to these failures and the resulting market reaction, various agencies of the U.S. government took steps to protect depositors and bolster banks’ liquidity, but it is uncertain that these or any other potential future actions will be sufficient to reduce the risk of future bank failures or significant depositor withdrawals.
While U.S. government agencies took actions to support depositor confidence and bank liquidity, it is uncertain whether these or any future measures will be sufficient to prevent future bank failures or significant deposit outflows. Any future bank failures or related market disruptions may adversely impact the Bank’s future operating results and financial condition, including capital and liquidity.
If any of this information is intentionally or negligently misrepresented and such misrepresentation is not detected prior to loan funding, the value of the loan may be significantly lower than expected.
If such information is intentionally or negligently misrepresented and the misstatement is not identified prior to loan funding, the value of the loan may be materially less than anticipated. Regardless of whether a misrepresentation is made by a loan applicant, client, vendor, third-party service provider, bad actor, or employee, we generally bear the associated risk of loss.
Our risk management practices, such as monitoring the concentration of our loans within specific industries and our credit approval practices, may not adequately reduce credit risk, and our credit administrators, policies and procedures may not adequately adapt to changes in economic or any other conditions affecting clients and the quality of the loan portfolio.
While we employ various risk management practices, including credit approval standards and ongoing monitoring of industry and portfolio concentrations, these measures may not be effective in mitigating credit risk under all circumstances. Our credit policies, procedures and administration may not fully adapt to changes in economic conditions or other factors affecting borrower creditworthiness and overall portfolio quality.
In the event of a default with respect to any of these loans, the amounts we receive upon sale of the collateral may be insufficient to recover the outstanding principal and interest on the loan.
In the event of default, proceeds from the sale of the collateral may be insufficient to fully recover the outstanding principal and accrued interest on these loans. In addition, if declining real estate values require us to re-evaluate collateral values or increase our ACL-Loans, our profitability could be adversely affected.
Increasing scrutiny and evolving expectations from clients, regulators, investors, and other stakeholders with respect to our environmental, social and governance practices may impose additional costs on us or expose us to new or additional risks. Companies are facing increasing scrutiny from clients, regulators, investors, and other stakeholders related to their environmental, social and governance (“ESG”) practices and disclosure.
The evolving and often conflicting political and regulatory landscape related to environmental, social, and governance (“ESG”) practices creates uncertainty and compliance challenges that may increase our costs and expose us to new or additional risks.
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.
Interest rates are influenced by a broad range of factors beyond our control, including general economic conditions, inflationary trends, fiscal policy, and actions taken by the FRB through the Federal Open Market Committee (FOMC). Following the significant monetary tightening cycle that began in 2022, the FRB raised the federal funds rate to a peak range of 5.25%–5.50%.
A loan subject to a material misrepresentation is typically unsaleable or subject to repurchase if it is sold prior to detection of the misrepresentation, and the persons and entities involved are often difficult to locate and it is often difficult to collect any monetary losses that we have suffered from them.
Loans subject to material misrepresentations are typically unsalable or may be subject to repurchase obligations if sold prior to the discovery of the misrepresentation. In addition, the individuals or entities responsible for such misrepresentations are often difficult to locate, and recovery of resulting losses may be limited or unsuccessful.
Based upon our current capital levels and our internal limit on loans, the amount we may lend both in the aggregate and to any one borrower is significantly less than that of many of our competitors and may discourage potential borrowers who have credit needs in excess of our lending limit from doing business with us.
Our lending capacity is constrained by our capital levels and applicable lending limits, which restrict the amount we may lend both in the aggregate and to any single borrower. As a result, the maximum loan amounts we can offer may be significantly lower than those available from many of our competitors.
Removed
The business of lending is inherently risky, including risks that the principal of or interest on any loan will not be repaid timely or at all or that the value of any collateral supporting the loan will be insufficient to cover our outstanding exposure.
Added
Lending activities are inherently subject to credit risk, including the risk that borrowers may be unable or unwilling to repay principal or interest when due, or that collateral securing a loan may be insufficient to cover our exposure. These risks may be influenced by conditions affecting borrowers’ industries and by local, regional, and national economic trends.
Removed
These risks may be affected by the strength of the borrower’s business sector and local, regional and national market and economic conditions.
Added
A borrower’s ability to make a balloon payment typically is dependent on the ability to refinance the loan or sell the underlying property in a timely manner, which may be constrained by adverse market or credit conditions. These loans expose a lender to increased credit risk because the collateral securing them is generally less liquid than residential real estate.
Removed
These loans expose a lender to greater credit risk than loans secured by residential real estate because the collateral securing these loans typically cannot be liquidated as easily as residential real estate. Non-owner-occupied commercial real estate loans generally involve relatively large balances to single borrowers or related groups of borrowers.
Added
Although we employ underwriting standards, credit review processes, and ongoing monitoring, these practices cannot eliminate all risks associated with commercial real estate, commercial, and construction lending.
Removed
These loans may involve greater risk because the availability of funds to repay each loan depends substantially on the success of the business itself.
Added
A prolonged downturn in the real estate market could result in losses and adversely affect our profitability. A significant portion of our loan portfolio consists of commercial real estate loans.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeAnnually, 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.
Biggest changeAdditionally, on an annual basis, the Risk Committee reviews and recommends to the Board approval of management's recommendations on cybersecurity insurance. The Company’s Chief Information Officer (“CIO”) oversees the Company’s information technology strategy, operations, and investments, ensuring that technology initiatives support business objectives, resiliency, and risk‑management priorities.
Item 1C. Cybersecurity Cybersecurity Risk Management and Strategy The Company’s risk management program for cybersecurity is integrated into our risk management and general compliance programs and processes. Our cybersecurity program utilizes a layered, defense-in-depth strategy to identify and mitigate cybersecurity threats.
Item 1C. Cybersecurity Cybersecurity Risk Management and Strategy The Company’s risk management program for cybersecurity is integrated into our risk management and general compliance programs and processes. Our cybersecurity program utilizes a layered strategy to identify and mitigate cybersecurity threats.
As part of the Company’s information security program, we leverage both internal and external assessments and partnerships with industry leaders to help approach information security company-wide. Additionally, we maintain a comprehensive program that defines standards for the planning, sourcing, management, and oversight of third-party relationships and third-party access to our system, facilities, and/or confidential or proprietary data.
The Company’s information security program incorporates both internal and independent assessments, as well as partnerships with industry leaders, to support a coordinated, company‑wide approach to information security. Additionally, we maintain a comprehensive program that defines standards for the planning, sourcing, management, and oversight of third-party relationships and third-party access to our system, facilities, and/or confidential or proprietary data.
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.
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 Risk Committee of the Board of Directors provides oversight of the Company’s cybersecurity risks, ensuring that Board oversight of such risks remains appropriate and that risks are appropriately managed.
The 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.
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 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.
The CIO brings more than 25 years of experience in financial‑services technology leadership and holds a Bachelor of Science in Computer Engineering and a Master’s degree in Software Development and Management. The Company’s Chief Security Officer ("CSO") reports to the Chief Risk Officer and oversees the Company’s information security programs.
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.
In 2025, the Risk Committee reviewed the Company’s cybersecurity program and maturity assessment, provided regular oversight of cybersecurity risks, and received updates throughout the year through discussions and dashboard reviews of key performance indicators and emerging risks. 27 With respect to specific incidents, the Company uses an established incident‑response framework to escalate and evaluate incidents with the CIO and CSO, as well as senior leadership from the finance, compliance, and legal functions.
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.
In the event of a potentially material cybersecurity incident, the Risk Committee is immediately notified and briefed.
Removed
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.
Added
The Company’s Risk Management Committee is comprised of the Chief Risk Officer (Chair) and the CSO who assess and monitor the effectiveness of the Company’s cybersecurity risk‑management program. Informed by the annual risk assessment, the Company’s internal audit function performs independent reviews and validation of the program, including assessments of policies and procedures.
Removed
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 changeOur branch office locations are as follows: Branch Address Owned or Leased Cherry Street 156 Cherry Street New Canaan, CT 06840 Lease (expires 2031) Atlantic Street 300 Atlantic Street Stamford, CT 06901 Lease (expires 2033) High Ridge 1095 High Ridge Road Stamford, CT 06905 Lease (expires 2028) Black Rock 2220 Black Rock Turnpike Fairfield, CT 06825 Lease (expires 2029) Sasco Hill One Sasco Hill Road Fairfield, CT 06824 Lease (expires 2031) Norwalk 370 Westport Avenue Norwalk, CT 06851 Lease (expires 2029) Hamden 2704 Dixwell Avenue Hamden, CT 06518 Own Westport 100 Post Road East Westport, CT 06880 Lease (expires 2028) Darien 1065 Post Road Darien, CT 06820 Lease (expires 2028)
Biggest changeOur branch office locations are as follows: Branch Address Owned or Leased Cherry Street 156 Cherry Street New Canaan, CT 06840 Lease (expires 2031) Atlantic Street 300 Atlantic Street Stamford, CT 06901 Lease (expires 2033) High Ridge 1095 High Ridge Road Stamford, CT 06905 Lease (expires 2028) Black Rock 2220 Black Rock Turnpike Fairfield, CT 06825 Lease (expires 2029) Sasco Hill One Sasco Hill Road Fairfield, CT 06824 Lease (expires 2031) Norwalk 370 Westport Avenue Norwalk, CT 06851 Lease (expires 2029) Hamden 2704 Dixwell Avenue Hamden, CT 06518 Own Westport 100 Post Road East Westport, CT 06880 Lease (expires 2028) Darien 1065 Post Road Darien, CT 06820 Lease (expires 2028) Garden City* 1399 Franklin Avenue, Suite 301, Garden City, NY 11580 Lease (expires 2030) Brooklyn** 557 & 559 86 th Street, Brooklyn NY 11209 Lease (expires 2030) * - Limited service Domestic Representative Office, not a full service bank branch. * - Full service branch; anticipated opening in the first quarter of 2026.
The 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.
The leases for our facilities have terms expiring at dates ranging from 2028 to 2033, although 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.
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 2. Properties The Bank’s headquarters building is located at 258 Elm Street in New Canaan, Connecticut. The headquarters building also operates as a limited service Domestic Representative Office. The property is leased by us until 2031.
Added
We also lease office space for each of our branch offices in New Canaan, Stamford, Norwalk, Fairfield, Darien, and Westport, Connecticut as well as locations in Garden City, New York and Brooklyn, New York.
Added
During 2025, the Bank received regulatory approval from the FDIC, the CT DOB, and the NY DFS to establish a new full-service branch in Brooklyn, New York, which opened during the first quarter of 2026.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeItem 4. Mine Safety Disclosures Not applicable. 29 PART II
Biggest changeItem 4. Mine Safety Disclosures Not applicable. 28 PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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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.
Biggest changeThis number does not reflect the number of persons or entities 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.
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.
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, 2025 - October 31, 2025 — $ — — 205,450 November 1, 2025 - November 30, 2025 — — — 205,450 December 1, 2025 - December 31, 2025 — — — 205,450 Total — $ — — 205,450 (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.
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.
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. Item 6. [Reserved] 29
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.
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 approximately 217 shareholders of record of BWFG Common Stock as of December 31, 2025.
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.
On October 27, 2021, the Company's Board of Directors authorized the repurchase of an additional 200,000 shares under the Prior Plan. The Company purchased 535,802 shares of the Company’s common stock pursuant to the Prior Plan. On October 28, 2024, the Company announced that on October 23, 2024, its Board of Directors authorized a share repurchase plan ("New Plan").
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 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.
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 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, 2025 under the Company’s share repurchase program.
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.
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. To date, the Company purchased 44,550 shares of the Company’s common stock under the New Plan.
Removed
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.
Removed
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

Item 7. Management's Discussion & Analysis

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

120 edited+11 added−32 removed102 unchanged
Biggest changeYou 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.
Biggest changeYou 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. 30 Selected Financial Data At or For the Years Ended December 31, 2025 2024 2023 2022 2021 (Dollars in thousands, except per share data) Statements of Income: Interest income $ 198,327 $ 191,994 $ 188,454 $ 117,945 $ 81,376 Interest expense 99,392 108,712 93,986 23,202 13,490 Net interest income 98,935 83,282 94,468 94,743 67,886 Provision (credit) for credit losses 1,040 22,620 866 5,437 (57) Net interest income after provision for credit losses 97,895 60,662 93,602 89,306 67,943 Noninterest income 9,388 3,718 4,842 3,040 5,657 Noninterest expense 58,788 51,051 50,401 44,363 39,739 Income before income tax 48,495 13,329 48,043 47,983 33,861 Income tax expense 13,297 3,559 11,380 10,554 7,275 Net income 35,198 9,770 36,663 37,429 26,586 Per Share Data: Basic earnings per share $ 4.49 $ 1.24 $ 4.71 $ 4.84 $ 3.38 Diluted earnings per share $ 4.45 $ 1.23 $ 4.67 $ 4.79 $ 3.36 Book value per share (end of period) (a) 39.19 35.43 34.84 31.73 26.53 Tangible book value per share (end of period) (a)(b) 38.85 35.09 34.50 31.39 26.19 Dividend payout ratio (b)(e) 17.98 % 65.04 % 17.13 % 16.70 % 19.05 % Shares outstanding (end of period) (a) 7,693,121 7,635,998 7,628,288 7,516,699 7,612,807 Weighted average shares outstanding–basic 7,750,191 7,710,076 7,587,768 7,563,363 7,706,407 Weighted average shares outstanding–diluted 7,826,280 7,737,952 7,647,411 7,640,218 7,761,811 Performance Ratios: Return on average assets (b)(f) 1.09 % 0.31 % 1.13 % 1.44 % 1.17 % Return on average common shareholders’ equity (b)(f) 12.32 % 3.60 % 14.55 % 16.72 % 13.86 % Average shareholders’ equity to average assets (b)(f) 8.82 % 8.48 % 7.74 % 8.61 % 8.46 % Net interest margin (b)(f) 3.16 % 2.70 % 2.98 % 3.78 % 3.17 % Efficiency ratio (b) 54.1 % 57.9 % 50.8 % 45.4 % 53.9 % Asset Quality Ratios: Total past due loans to total loans (c) 0.31 % 1.63 % 0.78 % 0.60 % 1.72 % Nonperforming loans to total loans (c) 0.57 % 1.97 % 1.81 % 0.61 % 0.88 % Nonperforming assets to total assets (d) 0.49 % 1.88 % 1.53 % 0.51 % 0.68 % ACL-Loans to nonperforming loans 188.33 % 54.45 % 56.79 % 136.43 % 101.90 % ACL-Loans to total loans (c) 1.08 % 1.07 % 1.03 % 0.84 % 0.89 % Net (recoveries) charge-offs to average loans (b)(f) (0.01) % 0.81 % 0.03 % — % 0.23 % Statements of Financial Condition: Total assets $ 3,359,859 $ 3,268,476 $ 3,215,482 $ 3,252,449 $ 2,456,264 Gross portfolio loans (c) 2,840,072 2,705,888 2,718,607 2,675,448 1,894,881 Investment securities 192,122 146,099 127,623 121,634 108,409 Deposits 2,829,481 2,787,570 2,736,757 2,800,818 2,123,998 FHLB borrowings 110,000 90,000 90,000 90,000 50,000 Subordinated debt 69,697 69,451 69,205 68,959 34,441 Total equity 301,489 270,520 265,752 238,469 201,987 Capital Ratios: Tier 1 capital to average assets Bankwell Bank 10.56 % 10.09 % 9.81 % 9.88 % 9.94 % Tier 1 capital to risk-weighted assets Bankwell Bank 11.87 % 11.64 % 11.30 % 10.28 % 11.18 % Total capital to risk-weighted assets Bankwell Bank 12.94 % 12.70 % 12.32 % 11.07 % 12.00 % Total shareholders’ equity to total assets 8.97 % 8.28 % 8.26 % 7.33 % 8.22 % Tangible common equity ratio (b) 8.90 % 8.20 % 8.19 % 7.26 % 8.13 % 31 (a) Excludes unvested restricted stock awards.
The fair value of the loans is determined using market participant assumptions to estimate the amount and timing of principal and interest cash flows initially expected to be collected on the loans and discounting those cash flows at an appropriate market rate of interest.
The fair value of the loans is determined by using market participant assumptions to estimate the amount and timing of principal and interest cash flows initially expected to be collected on the loans and discounting those cash flows at an appropriate market rate of interest.
Under the current guidelines, banking organizations must have a minimum total risk-based capital ratio of 8.0%, a minimum Tier 1 risk-based capital ratio of 6.0%, a minimum common equity Tier 1 risk-based capital ratio of 4.5%, and a minimum leverage ratio of 4.0% in order to be "adequately capitalized." In addition to these requirements, banking organizations must maintain a capital conservation buffer consisting of common Tier 1 equity in an amount above the minimum risk-based capital requirements for “adequately capitalized” institutions equal to 2.5% of total risk-weighted assets, resulting in a requirement for the Company and the Bank to effectively maintain common equity Tier 1, Tier 1 and total capital ratios of 7.0%, 8.5% and 10.5%, respectively.
Under the current guidelines, banking organizations must have a minimum total risk-based capital ratio of 8.0%, a minimum Tier 1 risk-based capital ratio of 6.0%, a minimum common equity Tier 1 risk-based capital ratio of 4.5%, and a minimum Tier 1 capital to average assets ratio of 4.0% in order to be "adequately capitalized." In addition to these requirements, banking organizations must maintain a capital conservation buffer consisting of common Tier 1 equity in an amount above the minimum risk-based capital requirements for “adequately capitalized” institutions equal to 2.5% of total risk-weighted assets, resulting in a requirement for the Company and the Bank to effectively maintain common equity Tier 1, Tier 1 and total capital ratios of 7.0%, 8.5% and 10.5%, respectively.
We believe that accounting estimates related to the measurement of the ACL-Loans, the valuation of derivative instruments, investment securities and deferred income taxes, and the evaluation of investment securities are particularly critical and susceptible to significant near-term change.
We believe that accounting estimates related to the measurement of the ACL-Loans, the valuation of derivative instruments, investment securities, and deferred income taxes are particularly critical and susceptible to significant near-term change.
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.
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 modified, or require increased allowance coverage and provision for credit losses.
The Company used the net proceeds from the sale of the 2022 Notes for general corporate purposes. 56 The 2022 Notes bear interest at a fixed rate of 6.0% per year until August 31, 2027. Thereafter, the interest rate will reset quarterly at a variable rate equal to the then current three-month term SOFR plus 326 basis points.
The Company used the net proceeds from the sale of the 2022 Notes for general corporate purposes. 52 The 2022 Notes bear interest at a fixed rate of 6.0% per year until August 31, 2027. Thereafter, the interest rate will reset quarterly at a variable rate equal to the then current three-month term SOFR plus 326 basis points.
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.
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, 2025.
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.
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, 2025. Payments for borrowings do not include interest.
Return on average common shareholders’ equity is defined as net income attributable to common shareholders divided by total average shareholders’ equity less average preferred stock, if any. 33 The information provided below presents a reconciliation of each of our non-GAAP financial measures to the most directly comparable GAAP financial measure.
Return on average common shareholders’ equity is defined as net income attributable to common shareholders divided by total average shareholders’ equity less average preferred stock, if any. 32 The information provided below presents a reconciliation of each of our non-GAAP financial measures to the most directly comparable GAAP financial measure.
A nonaccrual loan is restored to accrual status when it is no longer delinquent and collectability of interest and principal is no longer in doubt.
A nonaccrual loan is restored to accrual status when it is no longer delinquent 45 and collectability of interest and principal is no longer in doubt.
NON-GAAP FINANCIAL MEASURES We identify “efficiency ratio”, “tangible common equity ratio”, “tangible book value per share”, “total revenue” and “return on average common shareholders’ equity” as “non-GAAP financial measures.” In accordance with the SEC’s rules, we classify a financial measure as being a non-GAAP financial measure if that financial measure excludes or includes amounts, or is subject to adjustments that have the effect of excluding or including amounts, that are included or excluded, as the case may be, in the most directly comparable measure calculated and presented in accordance with generally accepted accounting principles as in effect from time to time in the United States in our statements of income, balance sheet or statements of cash flows.
NON-GAAP FINANCIAL MEASURES We identify “efficiency ratio”, “net interest margin”, “tangible common equity ratio”, “tangible book value per share”, “total revenue”, “return on average assets”, and “return on average common shareholders’ equity” as “non-GAAP financial measures.” In accordance with the SEC’s rules, we classify a financial measure as being a non-GAAP financial measure if that financial measure excludes or includes amounts, or is subject to adjustments that have the effect of excluding or including amounts, that are included or excluded, as the case may be, in the most directly comparable measure calculated and presented in accordance with generally accepted accounting principles as in effect from time to time in the United States in our statements of income, balance sheet or statements of cash flows.
(4) Yields are calculated using the contractual day count convention for each respective product type. 41 Effect of changes in interest rates and volume of average earning assets and average interest-bearing liabilities The following table shows the extent to which changes in interest rates and changes in the volume of average earning assets and average interest-bearing liabilities have affected net interest income.
(4) Yields are calculated using the contractual day count convention for each respective product type. 38 Effect of changes in interest rates and volume of average earning assets and average interest-bearing liabilities The following table shows the extent to which changes in interest rates and changes in the volume of average earning assets and average interest-bearing liabilities have affected net interest income.
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.
The selected consolidated balance sheet data as of December 31, 2025 and 2024 and the selected consolidated statement of income data for the years ended December 31, 2025 and 2024 have been derived mainly from our audited consolidated financial statements and related notes that we have included elsewhere in this Annual Report.
(e) Nonperforming assets consist of nonperforming loans and other real estate owned. 36 Critical Accounting Policies and Estimates The discussion and analysis of our results of operations and financial condition are based on our consolidated financial statements, which have been prepared in accordance with GAAP.
(e) Nonperforming assets consist of nonperforming loans and other real estate owned. 35 Critical Accounting Policies and Estimates The discussion and analysis of our results of operations and financial condition are based on our consolidated financial statements, which have been prepared in accordance with GAAP.
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 selected consolidated balance sheet data as of December 31, 2023, 2022, and 2021 and the selected consolidated statement of income data for the years ended December 31, 2023, 2022, and 2021 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, 2024.
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, 2025.
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.
At December 31, 2025 and 2024, 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.
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.
Accruing modified loans are placed into nonaccrual status if and when the borrower fails to comply with the modified terms and management deems it unlikely that the borrower will return to a status of compliance in the near term.
(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.
(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, 2025.
Reciprocal amounts of deposits are received from other participating banks that do the same with their client deposits, and, we also execute one-way buy transactions. CDARS one-way and ICS one-way buy transactions are considered to be brokered deposits for bank regulatory purposes. Time deposits may also be generated through the use of a listing service.
Reciprocal amounts of deposits are received from other participating banks that do the same with their client deposits, and we also execute one-way buy transactions. CDARS one-way and ICS one-way buy transactions are considered to be brokered deposits for bank regulatory purposes. Time deposits may also be generated through the use of listing services.
Modifications . Loans are considered restructured when the borrower is experiencing financial difficulties and the Bank has granted concessions to a borrower due to the borrower’s financial condition that we otherwise would not have considered.
Modifications . Loans are considered modified when the borrower is experiencing financial difficulties and the Bank has granted concessions to a borrower due to the borrower’s financial condition that we otherwise would not have considered.
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 believe that the level of the ACL-Loans at December 31, 2025 is appropriate to cover probable losses. 48 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, 2024 and $90.0 million at December 31, 2023.
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 $110.0 million at December 31, 2025 and $90.0 million at December 31, 2024.
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.
At December 31, 2025, 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.
Loans which are already on nonaccrual status at the time of the restructuring generally remain on nonaccrual status for approximately six months before management considers such loans for return to accruing status.
Loans which are already on nonaccrual status at the time of the modifying generally remain on nonaccrual status for approximately six months before management considers such loans for return to accruing status.
While these loans are considered consumer loans, the third-party Consumer ACL model is designed for unsecured lending, whereas these loans are secured. To account for the fully secured structure of this type of loan, management determined each loan will be individually evaluated, regardless of the credit quality indicators.
While these loans are considered consumer loans, the third-party Consumer ACL model is designed for unsecured lending, whereas these loans are secured. To account for the fully secured structure of these loan types, management determined each loan will be individually evaluated, regardless of the credit quality indicators.
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.
Due Within 1 Year Due 1–5 Years Due 5–10 Years Due After 10 Years or No Contractual Maturity At December 31, 2025 Amortized Cost Yield Amortized Cost Yield Amortized Cost Yield Amortized Cost Yield (Dollars in thousands) Marketable equity securities $ — — % $ — — % $ — — % $ 2,334 2.19 % Securities available for sale: U.S.
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.
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 84% of our total assets at December 31, 2025.
The decision to restructure a loan, rather than aggressively enforcing the collection of the loan, may benefit us by increasing the ultimate probability of collection. Restructured loans are classified as accruing or nonaccruing based on management’s assessment of the collectability of the loan.
The decision to modify a loan, rather than aggressively enforcing the collection of the loan, may benefit us by increasing the ultimate probability of collection. Modified loans are classified as accruing or nonaccruing based on management’s assessment of the collectability of the loan.
The following table compares noninterest income for the years ended December 31, 2024 and 2023.
The following table compares noninterest income for the years ended December 31, 2025 and 2024.
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.
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, 2025.
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.
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 $520.6 million at December 31, 2025. The following table summarizes our commitments to e xtend credit as of the date indicated.
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.
The amortized cost and fair value of investment securities as of the dates indicated are presented in the following table: At December 31, 2025 2024 Amortized Cost Fair Value Amortized Cost Fair Value (In thousands) Marketable equity securities $ 2,334 $ 2,248 $ 2,264 $ 2,118 Securities available for sale: U.S.
(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.
(2) The adjustment for securities and loans taxable equival ency was $539 thous and and $383 thousand, respectively, for the years ended December 31, 2025 and 2024. Tax exempt income was converted to a fully taxable equivalent basis at a 20 percent tax rate for 2025 and 2024. (3) Net interest inco me as a percentage of total earning assets.
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.
The decrease in the provision for credit losses during the year was primarily due to net charge offs taken during the year ended December 31, 2024. 39 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 decrease in the net interest margin was due to an increase in funding costs partially offset by an increase in yields on earning assets. 39 Results of Operations Net Interest Income Net interest income is the difference between interest earned on loans and securities and interest paid on deposits and other borrowings, and is the primary source of our operating income.
The increase in the net interest margin was due to an increase in yields on loans and a decrease in funding costs. Results of Operations Net Interest Income Net interest income is the difference between interest earned on loans and securities and interest paid on deposits and other borrowings, and is the primary source of our operating income.
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.
Diluted earnings per share was $4.45 for the year ended December 31, 2025, compared to diluted earnings per share of $1.23 for the year ended December 31, 2024.
The provision for credit losses for the year ended December 31, 2024 was $22.6 million compared to a $0.9 million provision for credit losses for the year ended December 31, 2023.
The provision for credit losses for the year ended December 31, 2025 was $1.0 million compared to a $22.6 million provision for credit losses for the year ended December 31, 2024.
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.
Information about derivative instruments at December 31, 2025 and 2024 was as follows: As of December 31, 2025 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 swap $ 25,000 Other assets $ 1,925 $ — Accrued expenses and other liabilities $ — Fair value swap $ — Other assets $ — $ 150,000 Accrued expenses and other liabilities $ 156 Derivatives not designated as hedging instruments: Interest rate swaps (1) $ 38,500 Other assets $ 3,045 $ 38,500 Accrued expenses and other liabilities $ 3,045 (1) Represents interest rate swaps with commercial banking clients, which are offset by derivatives with a third party. 53 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.
Average balances have been computed using daily averages. Our historical results may not be indicative of our results for any future period. (b) Calculated using the principal amounts outstanding on loans. (c) This measure is not a measure recognized under GAAP and is therefore considered to be a non-GAAP financial measure.
Average balances have been computed using daily averages. Our historical results may not be indicative of our results for any future period. (b) This measure is not a measure recognized under GAAP and is therefore considered to be a non-GAAP financial measure.
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.
As of December 31, 2025, the tangible common equity ratio and tangible book value per share were 8.90% and $38.85, respectively. The Bank and the Company are subject to various regulatory capital requirements administered by the fed eral banking agencies.
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.
Nonperforming assets as a percentage of total assets was 0.49% at December 31, 2025, when compared to 1.88% at December 31, 2024. The ACL-Loans at December 31, 2025 was $30.7 million, representing 1.08% of total loans. Nonaccrual Loans . Loans greater than 90 days past due are generally put on nonaccrual status.
Loans acqu ired in acquisitions are initially recorded at fair value with no carryover of the related allowance for credit losses. Acquired loans that have evidence of deterioration in credit quality since origination and for which it is probable, at acquisition, that all contractually required payments will not be collected are initially recorded at fair value without recording an ACL-Loans.
Acquired loans that have evidence of deterioration in credit quality since origination and for which it is probable, at acquisition, that all contractually required payments will not be collected are initially recorded at fair value without recording an ACL-Loans.
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.
Years Ended December 31, 2025 2024 2023 2022 2021 (Dollars in thousands, except per share data) Efficiency Ratio Noninterest expense $ 58,788 $ 51,051 $ 50,401 $ 44,363 $ 39,739 Less: other real estate owned expenses 269 707 — — — Less: Amortization of intangibles — — — — 76 Adjusted noninterest expense (numerator) $ 58,519 $ 50,344 $ 50,401 $ 44,363 $ 39,663 Net interest income $ 98,935 $ 83,282 $ 94,468 $ 94,743 $ 67,886 Noninterest income 9,388 3,718 4,842 3,040 5,657 Adjustments for: gains/(losses) on sales of securities — — — — — Adjustments for: gains/(losses) on sale of other real estate owned 238 — — — — Adjusted operating revenue (denominator) $ 108,085 $ 87,000 $ 99,310 $ 97,783 $ 73,543 Efficiency ratio 54.1 % 57.9 % 50.8 % 45.4 % 53.9 % Tangible Common Equity and Tangible Common Equity/Tangible Assets Total shareholders’ equity $ 301,489 $ 270,520 $ 265,752 $ 238,469 $ 201,987 Less: preferred stock — — — — — Common shareholders’ equity 301,489 270,520 265,752 238,469 201,987 Less: Intangible assets 2,589 2,589 2,589 2,589 2,589 Tangible Common shareholders’ equity $ 298,900 $ 267,931 $ 263,163 $ 235,880 $ 199,398 Total assets $ 3,359,859 $ 3,268,476 $ 3,215,482 $ 3,252,449 $ 2,456,264 Less: Intangible assets 2,589 2,589 2,589 2,589 2,589 Tangible assets $ 3,357,270 $ 3,265,887 $ 3,212,893 $ 3,249,860 $ 2,453,675 Tangible common shareholders’ equity to tangible assets 8.90 % 8.20 % 8.19 % 7.26 % 8.13 % Tangible Book Value per Share Total shareholders’ equity $ 301,489 $ 270,520 $ 265,752 $ 238,469 $ 201,987 Less: preferred stock — — — — — Common shareholders’ equity 301,489 270,520 265,752 238,469 201,987 Less: Intangible assets 2,589 2,589 2,589 2,589 2,589 Tangible common shareholders’ equity $ 298,900 $ 267,931 $ 263,163 $ 235,880 $ 199,398 Common shares issued 7,899,943 7,859,873 7,882,616 7,730,699 7,803,166 Less: shares of unvested restricted stock 206,822 223,875 254,328 214,000 190,359 Common shares outstanding 7,693,121 7,635,998 7,628,288 7,516,699 7,612,807 Book value per share $ 39.19 $ 35.43 $ 34.84 $ 31.73 $ 26.53 Less: effects of intangible assets 0.34 0.34 0.34 0.34 0.34 Tangible Book Value per Common Share $ 38.85 $ 35.09 $ 34.50 $ 31.39 $ 26.19 Total Revenue Net interest income $ 98,935 $ 83,282 $ 94,468 $ 94,743 $ 67,886 Add: noninterest income 9,388 3,718 4,842 3,040 5,657 Total Revenue $ 108,323 $ 87,000 $ 99,310 $ 97,783 $ 73,543 Noninterest income as a percentage of total revenue 8.67 % 4.27 % 4.88 % 3.11 % 7.69 % Return on Average Common Shareholders’ Equity Net Income Attributable to Common Shareholders $ 35,198 $ 9,770 $ 36,663 $ 37,429 $ 26,586 Total average shareholders’ equity $ 285,611 $ 271,200 $ 252,061 $ 223,874 $ 191,808 Less: average preferred stock — — — — — Average Common Shareholders’ Equity $ 285,611 $ 271,200 $ 252,061 $ 223,874 $ 191,808 Return on Average Common Shareholders’ Equity 12.32 % 3.60 % 14.55 % 16.72 % 13.86 % 33 Executive Overview We strive to be the preferred banking provider, offering a compelling alternative to larger institutions.
At December 31, 2024, the 58 Company met all capital adequacy requirements to which it was subject and exceeded the regulatory minimum capital levels to be considered well-capitalized under th e regulatory framework for prompt corrective action.
At December 31, 54 2025, the Company met all capital adequacy requirements to which it was subject and exceeded the regulatory minimum capital levels to be considered well-capitalized under th e regulatory framework.
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.
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.
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.
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, 2025 and 2024 was $99.5 million and $83.7 million, respectively.
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.
The net unrealized loss position on our investment portfolio at December 31, 2024 was $4.9 million and included $1.3 million of gross unrealized gains. 49 The following tables summarize the amortized cost and weighted average yield of securities in our investment securities portfolio as of December 31, 2025 and 2024, based on remaining period to contractual maturity.
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.
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. Individually evaluated loans consist of loans with credit quality indicators which are substandard or doubtful.
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.
The following table presents nonperforming assets and additional asset quality data for the dates indicated: At December 31, 2025 2024 (Dollars in thousands) Nonaccrual loans: Real estate loans: Residential $ 557 $ 791 Commercial 14,445 44,814 Commercial business 1,302 7,672 Construction — — Total nonaccrual loans 16,304 53,277 Property acquired through foreclosure or repossession, net — $ 8,299 Total nonperforming assets $ 16,304 $ 61,576 Nonperforming assets to total assets 0.49 % 1.88 % Nonperforming loans to total loans 0.57 % 1.97 % Total nonaccrual loans were $16.3 million as of December 31, 2025.
Capital Resources Shareholders’ equity totaled $270.5 million as of December 31, 2024, an increase of $4.8 million compared to December 31, 2023, primarily a result of (i) net income of $9.8 million for the year ended December 31, 2024. The increase was partially offset by dividends paid of $6.3 million.
Capital Resources Shareholders’ equity totaled $301.5 million as of December 31, 2025, an increase of $31.0 million compared to December 31, 2024, primarily a result of net income of $35.2 million for the year ended December 31, 2025. The increase was partially offset by dividends paid of $6.3 million.
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.
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. 47 The following table presents the activity in our ACL-Loans and related ratios for the dates indicated: At December 31, 2025 2024 (Dollars in thousands) Balance at beginning of period $ 29,007 $ 27,946 Charge-offs: Residential real estate — (141) Commercial real estate (67) (13,111) Construction — (1,771) Commercial business (29) (7,909) Consumer (84) (84) Total charge-offs (180) (23,016) Recoveries: Residential real estate — 141 Commercial real estate 279 1,126 Commercial business 231 (3) Consumer 60 23 Total recoveries 570 1,287 Net (charge-offs) recoveries 390 (21,729) Provision charged to earnings 1,308 22,790 Balance at end of period $ 30,705 $ 29,007 Net (recoveries) or charge-offs to average loans (0.01) % 0.81 % ACL-Loans to total loans 1.08 % 1.07 % At December 31, 2025, our ACL-Loans was $30.7 million and represented 1.08% of total loans, compared to $29.0 million, or 1.07% of total loans at December 31, 2024.
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%.
At December 31, 2025, the Bank’s ratio of total common equity Tier 1 capital to risk-weighted assets was 11.87%, total capital to risk-weighted assets was 12.94%, Tier 1 capital to risk-weighted assets was 11.87% and Tier 1 capital to average assets was 10.56%.
Commercial real estate loans were $1.9 billion and represented 70% of our total loan portfolio at December 31, 2024, a net decrease of $48.5 million, or 2.5%, from December 31, 2023. Commercial real estate loans are secured by a variety of property types, including healthcare facilities, office buildings, retail facilities, commercial mixed use and multi-family dwellings.
Commercial real estate loans were $1.9 billion and represented 68.0% of our total loan portfolio at December 31, 2025, an increase of $31.8 million, or 1.7%, from December 31, 2024. Commercial real estate loans are secured by a variety of property types, including healthcare facilities, office buildings, retail facilities, commercial mixed use and multi-family dwellings.
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.
Construction. Construction loans were $153.8 million at December 31 2025, a decrease of $19.8 million, or 11.4%, from December 31, 2024. 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. 41 Commercial business.
See “Non-GAAP Financial Measures” for a description of this measure and a reconciliation of this measure to its most directly comparable GAAP measure. (d) Excludes unvested restricted stock awards.
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. (d) Excludes unvested restricted stock awards.
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.
At December 31, 2025, the Bank had pledged $847.6 million of eligible loans and investment securities as collateral to support borrowing capacity at the FHLB of Boston. As of December 31, 2025, the Bank had immediate availability to borrow an additional $426.0 million ba sed on qualified collateral.
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.
Key Financial Measures (a) At or For the Years Ended December 31, 2025 2024 (Dollars in thousands, except per share data) Selected balance sheet measures: Total assets $ 3,359,859 $ 3,268,476 Gross portfolio loans 2,840,072 2,705,888 Deposits 2,829,481 2,787,570 FHLB borrowings 110,000 90,000 Subordinated debt 69,697 69,451 Total equity 301,489 270,520 Selected statement of income measures: Total revenue (b) 108,323 87,000 Net interest income before provision for credit losses 98,935 83,282 Income before income tax expense 48,495 13,329 Net income 35,198 9,770 Basic earnings per share $ 4.49 $ 1.24 Diluted earnings per share $ 4.45 $ 1.23 34 Key Financial Measures (a) At or For the Years Ended December 31, 2025 2024 Other financial measures and ratios: Return on average assets 1.09 % 0.31 % Return on average common shareholders’ equity (b) 12.32 % 3.60 % Net interest margin (b) 3.16 % 2.70 % Efficiency ratio (b) 54.1 % 57.9 % Tangible book value per share (end of period) (b)(d) $ 38.85 $ 35.09 Net (recoveries) charge-offs to average loans (c) (0.01) % 0.81 % Nonperforming assets to total assets (e) 0.49 % 1.88 % ACL-Loans to nonperforming loans 188.33 % 54.45 % ACL-Loans to total loans (c) 1.08 % 1.07 % (a) We derived the selected balance sheet measures as of December 31, 2025 and 2024 and the selected statement of income measures for the years ended December 31, 2025 and 2024 from our audited consolidated financial statements included elsewhere in this annual report.
Residential real estate loans decreased by $8.2 million, or 16.0%, at December 31, 2024 compared to December 31, 2023 and amounted to $42.8 million, representing 2% of total loans at December 31, 2024. The Bank ceased originating residential mortgage loans in 2017. Commercial real estate.
Residential real estate loans decreased by $9.6 million, or 22.5%, at December 31, 2025 compared to December 31, 2024 and amounted to $33.1 million, representing 1.2% of total loans at December 31, 2025. The Bank ceased originating residential mortgage loans in 2017. Commercial real estate.
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.
Consumer loans were $76.9 million and represented 2.7% of our total loan portfolio as of December 31, 2025, an increase of $1.5 million, or 2.1%. 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 carrying amount of total individually evaluated loans at December 31, 2024 was $113.9 million.
The carrying amount of total individually evaluated loans at December 31, 2025 was $78.9 million. This compares to a carrying amount of $113.9 million for total individually evaluated loans at December 31, 2024.
(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.
(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. (f) Return on average assets is calculated by dividing net income by average assets. Return on average common shareholders' equity is calculated by dividing net income by average shareholders' equity.
Beginning October 15, 2026, the Company may redeem the 2021 Note, in whole or in part, at its option. The 2021 Note is not redeemable at the option of the holder. The 2021 Note has been structured to qualify for the Company as Tier 2 capital under regulatory guidelines.
The 2021 Note is not redeemable at the option of the holder. The 2021 Note has been structured to qualify for the Company as Tier 2 capital under regulatory guidelines.
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 increase in net income for the year ended December 31, 2025 was primarily due to the aforementioned increase in revenues, a decrease in provision for credit losses, partially offset by an increase in income tax expense.
The 2021 Note bears interest at a fixed rate of 3.25% per year until October 14, 2026. Thereafter, the interest rate will reset quarterly at a variable rate equal to the then current three-month term SOFR plus 233 basis points. The 2021 Note has a stated maturity of October 15, 2031 and is non-callable for five years.
Thereafter, the interest rate will reset quarterly at a variable rate equal to the then current three-month term SOFR plus 233 basis points. The 2021 Note has a stated maturity of October 15, 2031 and is non-callable for five years. Beginning October 15, 2026, the Company may redeem the 2021 Note, in whole or in part, at its option.
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.
Allowance for Credit Losses-Loans ("ACL-Loans") and Allowance for Credit Losses-Unfunded commitments ("ACL-Unfunded commitments") 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.
Return on average shareholders' equity is calculated by dividing net income by average shareholders' equity. Net loan charge-offs as a percentage of average loans is calculated by dividing net loan (charge offs) recoveries by average total loans.
Average shareholders' equity to average assets is calculated by dividing average shareholders' equity by average assets. Net interest margin is calculated by dividing net interest income (interest income minus interest expense) by average earning assets. Net loan charge-offs as a percentage of average loans is calculated by dividing net loan (charge offs) recoveries by average total loans.
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.
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, 2025 2024 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 $ 55 0.18 % 1.17 % $ 94 0.32 % 1.58 % Commercial real estate 20,255 65.97 67.99 21,838 75.29 70.19 Construction 2,251 7.33 5.41 2,059 7.10 6.41 Commercial business 6,635 21.61 22.72 4,070 14.03 19.04 Consumer 1,509 4.91 2.71 946 3.26 2.78 Total $ 30,705 100.00 % 100.00 % $ 29,007 100.00 % 100.00 % The allocation of the ACL-Loans at December 31, 2025 reflects our assessment of credit risk and probable loss within each portfolio.
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.
Government and agency obligations 151,730 149,924 95,443 91,582 Corporate bonds 11,000 10,485 17,000 15,846 Total securities available for sale $ 162,730 $ 160,409 $ 112,443 $ 107,428 Securities held to maturity: State agency and municipal obligations 29,465 31,045 36,525 36,662 Government mortgage-backed securities — — 28 29 Total securities held to maturity $ 29,465 $ 31,045 $ 36,553 $ 36,691 At December 31, 2025, the carrying value of our investment securities portfolio totaled $192.1 million and represented 6% of total assets, compared to $146.1 million and 4% of total assets at December 31, 2024.
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.
At December 31, 2025 and 2024, time deposits, including CDARS and Brokered CDs, with a denomination of $100 thousand or more totaled $1.1 billion and $1.2 billion, re spectively, maturing during the periods indicated in the table below: At December 31, 2025 2024 (In thousands) Maturing: Within 3 months $ 318,803 $ 421,808 After 3 but within 6 months 352,251 326,115 After 6 months but within 1 year 379,021 419,098 After 1 year 3,265 19,429 Total $ 1,053,340 $ 1,186,450 Federal Home Loan Bank Advances and Other Borrowings The Bank is a member of the FHLB, which is part of the Federal Home Loan Bank System.
While collateral provides assurance as a secondary source of repayment, the Company ordinarily requires the primary source of repayment for commercial loans, to be based on the borrower’s ability to generate continuing cash flows. In the fourth quarter of 2017 management made the strategic decision to cease originating residential mortgage loans.
While collateral provides assurance as a secondary source of repayment, the Company ordinarily requires the primary source of repayment for commercial loans, to be based on the borrower’s ability to generate continuing cash flows. Management discontinued residential mortgage loan originations in 2017 and ceased offering home equity loans and lines of credit in 2019.
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.
The increase of $46.0 million primarily reflects purchases of available for sale 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, 2025 was $0.7 million and included $2.0 million of gross unrealized gains.
At December 31, 2024, the Company’s ratio of Common Equity Tier 1 capital to risk-weighted assets was 9.60%, total capital to risk-weighted assets was 13.14%, Tier 1 capital to risk-weighted assets was 9.60% and Tier 1 capital to average assets was 8.34%.
At December 31, 2025, the Company’s ratio of Common Equity Tier 1 capital to risk-wei ghted assets was 10.23%, total capital to risk-weighted assets was 13.69%, Tier 1 capital to risk-weighted assets was 10.23% and Tier 1 capital to average assets was 9.11%.
(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.
(2) Primarily consists of skilled nursing and assisted living facilities. (3) Includes Special use, self storage, and land. As of December 31, 2025, the Bank had $163.0 million of loans collateralized by offices, which represented 8.4% of the total loan portfolio.
The following table compares the composition of our commercial real estate loan portfolio by non-owner occupied and owner occupied loans at December 31, 2024 and December 31, 2023: 2024 2023 Change Total % Total % Total (Dollars in thousands) Commercial real estate loans: Non-owner occupied $ 1,174,712 61.86 % $ 1,228,126 63.08 % $ (53,414) Owner occupied 724,203 38.14 718,780 36.92 5,423 Total commercial real estate loans (1) $ 1,898,915 100.00 % $ 1,946,906 100.00 % $ (47,991) (1) Excludes the positive fair value effect of the portfolio layer swap of $219 thousand and $742 thousand for Commercial Real Estate at December 31, 2024 and 2023, respectively.
The following table compares the composition of our commercial real estate loan portfolio by non-owner occupied and owner occupied loans at December 31, 2025 and December 31, 2024: 2025 2024 Change Total % Total % Total (Dollars in thousands) Commercial real estate loans: Non-owner occupied $ 1,128,993 58.47 % $ 1,174,712 61.86 % $ (45,719) Owner occupied 801,851 41.53 724,203 38.14 77,648 Total commercial real estate loans (1) $ 1,930,844 100.00 % $ 1,898,915 100.00 % $ 31,929 (1) Excludes the positive fair value effect of the portfolio layer swap of $135 thousand and $219 thousand for Commercial Real Estate at December 31, 2025 and 2024, respectively.
Government and agency obligations 24,920 3.39 47,541 2.03 16,038 2.53 6,944 2.10 Corporate bonds — — — 15,500 4.18 1,500 4.50 Total securities available for sale $ 24,920 3.39 % $ 47,541 2.03 % $ 31,538 3.34 % $ 8,444 2.53 % Securities held to maturity: State agency and municipal obligations $ 6,820 7.08 % $ — — % $ 2,808 4.73 % $ 26,897 6.07 % Government mortgage-backed securities — — — — — — 28 5.46 Total securities held to maturity $ 6,820 7.08 % $ — — % $ 2,808 4.73 % $ 26,925 6.07 % 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.
Government and agency obligations 24,920 3.39 47,541 2.03 16,038 2.53 6,944 2.10 Corporate bonds — — — — 15,500 4.18 1,500 4.50 Total securities available for sale $ 24,920 3.39 % $ 47,541 2.03 % $ 31,538 3.34 % $ 8,444 2.53 % Securities held to maturity: State agency and municipal obligations $ 6,820 7.08 % $ — — % $ 2,808 4.73 % $ 26,897 6.07 % Government mortgage-backed securities — — — — — — 28 5.46 Total securities held to maturity $ 6,820 7.08 % $ — — % $ 2,808 4.73 % $ 26,925 6.07 % 50 Bank Owned Life Insurance ("BOLI") BOLI amounted to $54.2 million as of December 31, 2025.
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.
There were no nonaccrual loans modified during the years ended December 31, 2025 and 2024 . 46 The following table presents information on modified loans: At December 31, 2025 2024 (In thousands) Accruing modified loans: Residential real estate $ 2,193 $ 2,261 Commercial real estate — — Commercial business 293 — Accruing modified loans 2,486 2,261 Nonaccrual modified loans: Residential real estate $ 558 $ 652 Commercial real estate 8,543 9,217 Commercial business — 54 Nonaccrual modified loans 9,101 9,923 Total modified loans $ 11,587 $ 12,184 As of December 31, 2025 and 2024, loans classified as modified totaled $11.6 million and $12.2 million, respectively.
The following table sets forth the composition of our deposits for the dates indicated: At December 31, 2024 2023 Amount Percent Weighted Average Rate Amount Percent Weighted Average Rate (Dollars in thousands) Noninterest-bearing demand $ 321,875 11.54 % — % $ 346,172 12.65 % — % NOW 105,090 3.77 0.18 90,829 3.32 0.17 Money market 899,413 32.27 4.08 887,352 32.42 3.63 Savings 90,220 3.24 3.07 97,331 3.56 2.79 Time 1,370,972 49.18 4.76 1,315,073 48.05 3.89 Total deposits $ 2,787,570 100.00 % 4.27 % $ 2,736,757 100.00 % 3.59 % Total deposits were $2.8 billion at December 31, 2024, an increase of $50.8 million, or 2%, from December 31, 2023.
The following table sets forth the composition of our deposits for the dates indicated: At December 31, 2025 2024 Amount Percent Weighted Average Rate Amount Percent Weighted Average Rate (Dollars in thousands) Noninterest-bearing demand $ 403,652 14.27 % — % $ 321,875 11.54 % — % NOW 90,205 3.19 0.37 105,090 3.77 0.18 Money market 1,007,844 35.62 3.76 899,413 32.27 4.08 Savings 97,418 3.44 2.95 90,220 3.24 3.07 Time 1,230,362 43.48 4.30 1,370,972 49.18 4.76 Total deposits $ 2,829,481 100.00 % 3.88 % $ 2,787,570 100.00 % 4.27 % Total deposits were $2.8 billion at December 31, 2025, an increase of $41.9 million, or 1.5%, from December 31, 2024.
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 increase for the year ended December 31, 2025 was mainly driven by higher gains from SBA loan sales. Noninterest Expense The following table compares noninterest expense for the years ended December 31, 2025 and 2024.
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.
Brokered certificates of deposits ("Brokered CDs") totaled $505.0 million and $651.5 million at December 31, 2025 and December 31, 2024, respectively. Brokered money market accounts totaled $53.7 million and $53.5 million at December 31, 2025 and 2024, respectively.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

6 edited+4 added−3 removed16 unchanged
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.
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, 2025 and 2024: 56 Parallel Ramp Estimated Percent Change in Net Interest Income At December 31, Rate Changes (basis points) 2025 2024 Year 1 from Year 1 Base (100) 0.10 % 0.40 % 200 1.00 % (1.00) % Parallel Shock Estimated Percent Change in Net Interest Income At December 31, Rate Changes (basis points) 2025 2024 Year 1 from Year 1 Base (100) (0.60) % (1.00) % 100 2.20 % 0.60 % 200 4.20 % 0.80 % 300 6.40 % 1.40 % The net interest income simulation model attempts to measure the change in net interest income over the next one-year period, and over the next two-year period on a cumulative basis, assuming certain changes in the general level of interest rates.
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.
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.
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".
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, 2025, the Bank has met all minimum regulatory capital requirements to be considered "well capitalized".
Inflation and related increases in interest rates generally decrease the market value of investments and loans held and may adversely affect liquidity, earnings and shareholders’ equity. 62
Inflation and related increases in interest rates generally decrease the market value of investments and loans held and may adversely affect liquidity, earnings and shareholders’ equity. 58
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.
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) 2025 2024 (100) 1.10 % 0.40 % 100 (1.00) % (1.30) % 200 (2.70) % (3.60) % 300 (3.70) % (4.70) % 57 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.
We conduct an economic value of equity at risk simulation in tandem with net interest income simulations, to ascertain a longer-term view of our interest rate risk position by capturing longer-term re-pricing risk and options risk embedded in the balance sheet. It measures the sensitivity of economic value of equity to changes in interest rates.
The change in sensitivity between December 31, 2025 and December 31, 2024 was impacted by an increase in variable-rate loans. We also conduct an economic value of equity at risk simulation in tandem with our net interest income simulations, which measures the sensitivity of economic value of equity to changes in interest rates.
Removed
The liability sensitivity is due to the fact that there are more liabilities than assets subject to repricing as market rates change.
Added
Based on our model, which was run as of December 31, 2025, we estimated that over the next one-year period a 200 basis-point parallel ramp increase of interest rates would increase our net interest income by 1.00%, while a 100 basis-point parallel ramp decrease of interest rates would decrease net interest income by 0.10%.
Removed
Economic value of equity at risk simulation values only the current balance sheet and does not incorporate the growth assumptions used in one of the income simulations. As with the net interest income simulation, this simulation captures product characteristics such as loan resets, repricing terms, maturity dates, rate caps and floors.
Added
As of December 31, 2024, we estimated that over the next one-year period a 200 basis-point parallel ramp increase of interest rates would decrease our net interest income by 1.00%, while a 100 basis-point parallel ramp decrease of interest rates would increase net interest income by 0.40%.
Removed
Key assumptions include loan prepayment speeds, deposit pricing elasticity and non-maturity deposit attrition rates. These assumptions can have significant impacts on valuation results as the assumptions remain in effect for the entire life of each asset and liability. All key assumptions are subject to a periodic review.
Added
Based on our model, which was run as of December 31, 2025, we estimated that over the next two years, on a cumulative basis, a 200 basis-point parallel ramp increase of interest rates would increase our net interest income by 6.00%, while a 100 basis-point parallel ramp decrease in interest rates would increase net interest income by 7.90%.
Added
As of December 31, 2024, we estimated that over the next two years, on a cumulative basis, a 200 basis-point parallel ramp increase of interest rates would decrease our net interest income by 2.90%, while a 100 basis-point parallel ramp decrease in interest rates would increase net interest income by 12.80%.

Other BWFG 10-K year-over-year comparisons