Bankwell Financial Group Reports Record First Quarter Net Income of $3.0 Million, $0.40 Earnings Per Common Share, 9.23% Return on Average Tangible Common Equity and Declares Second Quarter Dividend

Bankwell Financial Group, Inc. (NASDAQ: BWFG) reported GAAP net income of $3.0 million for the first quarter of 2016. In addition, Bankwell Financial Group, Inc. reached record loan levels at $1.2 billion, driven by strong organic growth.

The Company's Board of Directors declared a $0.05 per share cash dividend, payable May 26, 2016 to shareholders of record on May 16, 2016.

First Quarter 2016 Highlights:

• Total revenue (net interest income plus non-interest income) reached $12.1 million.
• Diluted earnings per share were $0.40; an increase of 54% compared to the first quarter of 2015.
• Tax equivalent net interest margin was 3.54%, compared to 3.89% in the first quarter of 2015.
• Total non-interest income was $0.7 million, which is 6% of total revenue.
• The efficiency ratio was 57.7%, compared to 66.0% in the first quarter of 2015.
• The tangible common equity ratio and tangible book value per share were 9.26% and $17.76, respectively.
• Total gross loans were $1.2 billion.
• The allowance for loan losses was $14.8 million and represented 1.34% of total loans, excluding acquired loans.
• Investment securities totaled $108.5 million and represented 8% of total assets.
• Total deposits ended the quarter at $1.1 billion.

Notes Bankwell Financial Group CEO, Christopher R. Gruseke:

“Bankwell has begun 2016 with its best financial performance to date. Despite the headwinds of increased volatility in the financial markets, we recorded net income of $3.0 million, or $0.40 per share for the quarter. We also grew our loan book, organically, by $49.0 million or 4.3% percent during that period. This organic growth was achieved without compromising on credit quality or pricing.”

“During the first quarter, we observed competitor pricing at yields which could not possibly generate appropriate returns on capital. We practice a more disciplined approach to loan pricing, and our veteran lending team performed well versus the competition, resulting in a net interest margin of 3.54%. This margin was achieved while maintaining superior asset quality as indicated by our non-performing asset ratio of 0.30% of assets.”

“In this low interest rate environment, only the low cost producers will thrive. We continue to look for efficiencies in every aspect of our business, and Bankwell achieved an efficiency ratio of 57.7% for the quarter, compared to 66.0% for the comparable period last year, a figure which puts us ahead of our own strategic plan. While we are quite pleased with this result, the bank plans to continue to invest in infrastructure and people. We expect several personnel additions during the remainder of the year, which will result in a more normalized rate of non-interest expense. Our 2016 plan for the full year remains intact to deliver an improved efficiency ratio over 2015’s result of 62.4%.”

“Finally, the combination of Bankwell’s ability to generate high quality assets, our focus on cost control, and the strength of our team produced a return on average tangible common equity of 9.23%, versus 6.43% for the same period in 2015, demonstrating again this team’s commitment to deliver value to our shareholders.”

Earnings

Net income for the quarter ended March 31, 2016 was $3.0 million, an increase of 60% compared to the quarter ended March 31, 2015. Revenues (net interest income plus non-interest income) for the quarter ended March 31, 2016 were $12.1 million, an increase of 15% compared to the quarter ended March 31, 2015. Net interest income for the quarter ended March 31, 2016 was $11.4 million, an increase of 15% compared to the quarter ended March 31, 2015. Our strong net income, revenues and net interest income was fueled by record earning asset growth.

Basic and diluted earnings per share for the quarter ended March 31, 2016 was $0.40, compared to $0.26 for the quarter ended March 31, 2015.

The Company continues to focus on expense control as indicated by our improving efficiency ratio. The Company’s efficiency ratio for the quarters ended March 31, 2016 and March 31, 2015 were 57.7% and 66.0%, respectively.

Noninterest Income and Expense

Noninterest income increased $73 thousand to $0.7 million for the three months ended March 31, 2016 compared to the three months ended March 31, 2015. The increase in noninterest income was primarily driven by an increase in service charges and fees on checking accounts, increased ATM and debit card fees, and an increase in other income as a result of income recognized on the early pay-off of purchased credit impaired loans.

Noninterest expense increased only 1.5% for the three months ended March 31, 2016 compared to the three months ended March 31, 2015. The increase was primarily driven by an increase in data processing and foreclosed real estate, offset by a decrease in salaries and employee benefits. Salaries and employee benefits decreased $151 thousand to $3.8 million for the three months ended March 31, 2016 compared to the three months ended March 31, 2015 as a result of an increase in open positions.

Financial Condition

Assets totaled $1.4 billion at March 31, 2016, an annualized increase of 27% compared to assets of $1.3 billion at December 31, 2015. This increase reflects strong organic loan growth. Total gross loans were $1.2 billion at March 31, 2016, an annualized increase of 17% compared to December 31, 2015. Commercial real estate loans have experienced the most significant growth, up by $54.0 million.

Deposits increased to $1.1 billion, an annualized increase of 18% over December 31, 2015, with core deposits (total deposits less time deposits) showing an annualized increase of 6% over December 31, 2015 to $619.0 million primarily reflecting increases in money market and NOW accounts.

Asset Quality

Asset quality remained exceptionally strong at March 31, 2016. Non-performing assets as a percentage of total assets was 0.30% at March 31, 2016, down from 0.38% at December 31, 2015. The allowance for loan losses at March 31, 2016 was $14.8 million, representing 1.34% of total loans, excluding acquired loans.

Capital

Shareholders’ equity totaled $134.5 million as of March 31, 2016, an increase of $2.7 million compared to December 31, 2015, primarily a result of net income for the quarter ended March 31, 2016 of $3.0 million. As of March 31, 2016, the tangible common equity ratio and tangible book value per share were 9.26% and $17.76, respectively.

About Bankwell Financial Group

Bankwell is a commercial bank that serves the banking and lending needs of residents and businesses throughout Fairfield and New Haven Counties, CT. For more information about this press release, interested parties may contact Christopher R. Gruseke, President and Chief Executive Officer or Ernest J. Verrico Sr., Executive Vice President and Chief Financial Officer of Bankwell Financial Group at (203) 652-0166.

For more information, visit www.mybankwell.com.

This press release may contain certain forward-looking statements about the Company. Forward-looking statements include statements regarding anticipated future events and can be identified by the fact that they do not relate strictly to historical or current facts. They often include words such as “believe,” “expect,” “anticipate,” “estimate,” and “intend” or future or conditional verbs such as “will,” “would,” “should,” “could,” or “may.” Forward-looking statements, by their nature, are subject to risks and uncertainties. Certain factors that could cause actual results to differ materially from expected results include increased competitive pressures, changes in the interest rate environment, general economic conditions or conditions within the securities markets, and legislative and regulatory changes that could adversely affect the business in which the Company and its subsidiaries are engaged.

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