OREANDA-NEWS. January 29, 2016. Bankwell Financial Group, Inc. (NASDAQ:BWFG) reported GAAP net income of \\$2.6 million for the fourth quarter of 2015, a 260.1% increase over the same period for 2014, and \\$9.0 million for the year ended 2015, an increase of 97.7% compared to the year ended 2014.

The Company reported basic and diluted earnings per common share of \\$0.35 for the quarter ended December 31, 2015 compared to \\$0.10 for the quarter ended December 2014. Basic and diluted earnings per common share for the year ended December 31, 2015 were \\$1.23 and \\$1.21, respectively, compared to \\$0.78 for the year ended December 31, 2014.

The Company's Board of Directors declared a \\$0.05 per share cash dividend, payable February 22, 2016 to shareholders of record on February 12, 2016 and redeemed \\$10.98 million (10,980 shares) of preferred stock issued pursuant to the United States Department of Treasury under the Small Business Lending Fund Program (the “SBLF”).

Notes Bankwell Financial Group CEO, Christopher Gruseke:

“This was a record quarter and a strong finish to an outstanding year for Bankwell. In addition to fourth quarter net income of \\$2.6 million, our loan portfolio surpassed \\$1.1 billion as our lending team continues to generate high quality assets for the Bank. At 0.38%, our non-performing asset ratio is a testament to our disciplined growth strategy, as is our improved efficiency ratio of 62.7% for the year ended December 31, 2015, compared to 69.1% for the year ended December 31, 2014. This year, as part of our capital management strategy, which included issuance of \\$25.5 million in subordinated notes, Bankwell’s Board approved and paid our first cash dividend. Looking ahead to 2016, we are enthusiastic about the opportunities to build on our performance and to continue to deliver outstanding value to our shareholders, customers, employees and the communities we serve.”

Earnings

Net income for the quarter ended December 31, 2015 was \\$2.6 million, an increase of 260.1% compared to the quarter ended December 31, 2014. Net income for the year ended December 31, 2015 was \\$9.0 million, an increase of 97.7% compared to the year ended December 31, 2014. Revenues (net interest income plus non-interest income) for the quarter ended December 31, 2015 were \\$12.1 million, an increase of 13.9% compared to the quarter ended December 31, 2014. Revenues for the year ended December 31, 2015 were \\$46.3 million, an increase of 33.3% compared to the year ended December 31, 2014. Net interest income for the quarter ended December 31, 2015 was \\$11.2 million, an increase of 15.0% compared to the quarter ended December 31, 2014. Our strong net interest income was fueled by record earning asset growth.

The Company continues to focus on expense control as indicated by our improving efficiency ratio. The Company’s efficiency ratio for the quarters ended December 31, 2015 and December 31, 2014 were 62.8% and 65.4%, respectively. The Company’s efficiency ratio for the year ended December 31, 2015 and December 31, 2014 were 62.7% and 69.1%, respectively.

Financial Condition

Assets totaled \\$1.3 billion at December 31, 2015, an increase of 21.0% compared to assets of \\$1.1 billion at December 31, 2014. This increase reflects strong organic loan growth and capital raised as a result of the issuance of \\$25.5 million in subordinated notes in the third quarter of 2015. Total gross loans were \\$1.1 billion at December 31, 2015, an increase of 23.4% compared to December 31, 2014. Deposits increased to \\$1.0 billion, an increase of 25.3% over December 31, 2014, with core deposits (total deposits less time deposits) showing an increase of 15.8% over December 31, 2014 to \\$610.2 million.

Asset Quality

Asset quality remained exceptionally strong at December 31, 2015. Non-performing assets as a percentage of total assets was 0.38% at December 31, 2015, down from 0.39% at December 31, 2014. The allowance for loan losses at December 31, 2015 was \\$14.2 million, representing 1.33% of total loans, excluding acquired loans.

Capital

Shareholders’ equity continued to remain strong at \\$131.8 million as of December 31, 2015, an increase of \\$2.6 million compared to December 31, 2014, primarily a result of net income for the year ended December 31, 2015 of \\$9.0 million and capital raised from the exercise of warrants in the fourth quarter of 2015 of \\$3.8 million, offset by the redemption of the SBLF preferred stock of \\$11.0 million. As of December 31, 2015, the tangible common equity ratio and tangible book value per share were 9.68% and \\$17.43, 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.

BANKWELL FINANCIAL GROUP, INC.
CONSOLIDATED BALANCE SHEETS (unaudited)
(Dollars in thousands, except share data)

December 31, September 30, June 30, March 31, December 31,
2015 2015 2015 2015 2014
Assets
Cash and due from banks \\$ 49,562 \\$ 86,830 \\$ 75,550 \\$ 19,428 \\$ 48,559
Federal funds sold 39,035 - - - -
Cash and cash equivalents 88,597 86,830 75,550 19,428 48,559
Held to maturity investment securities, at amortized cost 10,226 11,282 11,341 11,398 11,454
Available for sale investment securities, at fair value 40,581 45,023 46,883 50,736 65,009
Loans held for sale - 252 - - 586

Loans receivable (net of allowance for loan losses of \\$14,169, \\$13,720,

\\$12,230, \\$11,596, \\$10,860 at December 31, 2015, September 30, 2015,
June 30, 2015, March 31, 2015 and December 31, 2014, respectively) 1,129,748 1,108,439 1,021,693 964,034 915,981
Foreclosed real estate 1,248 1,328 830 830 950
Accrued interest receivable 4,071 3,831 3,575 3,342 3,323
Federal Home Loan Bank stock, at cost 6,554 6,918 6,918 6,794 6,109
Premises and equipment, net 11,163 11,505 11,868 12,120 11,910
Bank-owned life insurance 23,755 23,578 23,395 23,211 23,028
Goodwill 2,589 2,589 2,589 2,589 2,589
Other intangible assets 652 694 745 797 848
Deferred income taxes, net 8,337 8,604 7,869 7,436 7,156
Other assets 2,851 2,472 1,418 1,748 2,029
Total assets \\$ 1,330,372 \\$ 1,313,345 \\$ 1,214,674 \\$ 1,104,463 \\$ 1,099,531
Liabilities & Shareholders' Equity
Liabilities
Deposits
Noninterest-bearing \\$ 164,553 \\$ 148,732 \\$ 162,546 \\$ 142,920 \\$ 166,030
Interest-bearing 882,389 876,957 789,035 691,783 669,409
Total deposits 1,046,942 1,025,689 951,581 834,703 835,439
Advances from the Federal Home Loan Bank 120,000 120,000 124,000 133,000 129,000
Subordinated debentures 25,000 25,037 - - -
Accrued expenses and other liabilities 6,661 6,831 5,424 5,352 5,882
Total liabilities 1,198,603 1,177,557 1,081,005 973,055 970,321
Commitments and Contingencies - - - - -
Shareholders' equity
Preferred stock, senior noncumulative perpetual, Series C, no par;
10,980 shares issued and outstanding at September 30, 2015, June 30, 2015,
March 31, 2015 and December 31, 2014, respectively; liquidation value of \\$1,000 per share.
- 10,980 10,980 10,980 10,980
Common stock, no par value; 10,000,000 shares authorized,
7,516,291, 7,252,429, 7,240,704, 7,243,252 and 7,185,482 shares issued at
December 31, 2015, September 30, 2015, June 30, 2015, March 31, 2015
and December 31, 2014, respectively. 112,579 108,319 108,038 107,765 107,265
Retained earnings 18,963 16,764 14,538 12,280 10,434
Accumulated other comprehensive income 227 (275 ) 113 383 531
Total shareholders' equity 131,769 135,788 133,669 131,408 129,210
Total liabilities and shareholders' equity \\$ 1,330,372 \\$ 1,313,345 \\$ 1,214,674 \\$ 1,104,463 \\$ 1,099,531

BANKWELL FINANCIAL GROUP, INC.
CONSOLIDATED STATEMENTS OF INCOME (unaudited)
(Dollars in thousands, except per share data)

Three Months Ended

December 31,

Twelve Months Ended

December 31,

2015 2014 2015 2014
Interest and dividend income
Interest and fees on loans \\$ 13,383 \\$ 10,369 \\$ 48,698 \\$ 33,409
Interest and dividends on securities 489 635 1,958 2,052
Interest on cash and cash equivalents 36 12 98 128
Total interest income 13,908 11,016 50,754 35,589
Interest expense
Interest expense on deposits 1,776 1,038 5,681 3,295
Interest on borrowings 896 207 2,285 634
Total interest expense 2,672 1,245 7,966 3,929
Net interest income 11,236 9,771 42,788 31,660
Provision for loan losses 354 1,305 3,230 2,152
Net interest income after provision for loan losses 10,882 8,466 39,558 29,508
Noninterest income
Service charges and fees 258 223 933 643
Gains and fees from sales of loans 228 305 1,113 1,313
Bank owned life insurance 178 192 727 497
Other 176 113 711 588
Total noninterest income 840 833 3,484 3,041
Noninterest expense
Salaries and employee benefits 4,248 4,122 16,065 13,534
Occupancy and equipment 1,312 1,260 5,341 4,422
Professional services 414 159 1,447 1,194
Data processing 366 340 1,523 1,289
Marketing 278 211 985 674
Director fees 198 190 622 650
FDIC insurance 185 143 672 488
Foreclosed real estate 95 15 168 36
Amortization of intangibles 43 53 196 133
Merger and acquisition related expenses 2 1,393 2 1,801
Other 540 457 2,150 1,591
Total noninterest expense 7,681 8,343 29,171 25,812
Income before income tax expense 4,041 956 13,871 6,737
Income tax expense 1,423 229 4,841 2,169
Net income \\$ 2,618 \\$ 727 \\$ 9,030 \\$ 4,568
Net income attributable to common shareholders \\$ 2,575 \\$ 700 \\$ 8,905 \\$ 4,458
Earnings Per Common Share:
Basic \\$ 0.35 \\$ 0.10 \\$ 1.23 \\$ 0.78
Diluted 0.35 0.10 1.21 0.78
Weighted Average Common Shares Outstanding:
Basic 7,169,570 6,998,188 7,071,550 5,577,942
Diluted 7,234,431 7,033,660 7,140,558 5,605,512
Dividends per common share \\$ 0.05 \\$ - \\$ 0.05 \\$ -

BANKWELL FINANCIAL GROUP, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (unaudited)
(Dollars in thousands, except per share data)

Three Months Ended

December 31,

Twelve Months Ended

December 31,

2015 2014 2015 2014
Performance ratios:
Return on average assets 0.78 % 0.28 % 0.75 % 0.52 %
Return on average shareholders' equity 7.68 % 2.26 % 6.76 % 4.66 %
Return on average tangible common equity 7.74 % 2.45 % 6.83 % 5.34 %
Net interest margin 3.63 % 3.99 % 3.77 % 3.84 %
Efficiency ratio (1) 62.8 % 65.4 % 62.7 % 69.1 %
Net loan recoveries (charge-offs) as a % of average loans 0.01 % 0.00 % 0.01 % 0.05 %
As of
December 31,

2015

September 30,

2015

June 30,

2015

March 31,

2015

December 31,

2014

Capital ratios:
Total Common Equity Tier 1 Capital to Risk-Weighted Assets (2) 12.18 % 10.75 % 11.44 % 12.08 % N/A
Total Capital to Risk-Weighted Assets (2) 13.39 % 11.94 % 12.59 % 13.26 % 13.55 %
Tier I Capital to Risk-Weighted Assets (2) 12.18 % 10.75 % 11.44 % 12.08 % 12.47 %
Tier I Capital to Average Assets (2) 10.84 % 9.84 % 10.71 % 10.99 % 11.12 %
Tangible common equity to tangible assets 9.68 % 9.28 % 9.85 % 10.63 % 10.47 %
Tangible book value per common share (3) \\$ 17.43 \\$ 17.25 \\$ 16.95 \\$ 16.62 \\$ 16.35
Asset quality:
Nonaccrual loans \\$ 3,791 \\$ 2,367 \\$ 2,205 \\$ 2,451 \\$ 3,362
Other real estate owned 1,248 1,328 830 830 950
Total non-performing assets \\$ 5,039 \\$ 3,695 \\$ 3,035 \\$ 3,281 \\$ 4,312
Loans past due 90 days and still accruing \\$ 1,105 \\$ 1,082 \\$ 1,479 \\$ 1,671 \\$ 1,872
Nonperforming loans as a % of total loans 0.33 % 0.21 % 0.21 % 0.25 % 0.36 %
Nonperforming assets as a % of total assets 0.38 % 0.28 % 0.25 % 0.30 % 0.39 %
Allowance for loan losses as a % of total loans 1.23 % 1.22 % 1.18 % 1.18 % 1.17 %
Allowance for loan losses as a % of nonperforming loans 373.76 % 579.64 % 554.65 % 473.11 % 323.02 %

(1) Efficiency ratio is defined as non-interest expenses, less merger and acquisition related expenses and other real estate owned expenses, divided by our operating revenue, which is equal to net interest income plus non-interest income excluding gains and losses on sales of securities and gains and losses on other real estate owned. In our judgment, the adjustments made to operating revenue allow investors and analysts to better assess our operating expenses in relation to our core operating revenue by removing the volatility that is associated with certain one-time items and other discrete items that are unrelated to our core business.
(2) Represents Bank ratios.
(3) Excludes preferred stock and unvested restricted stock awards of 143,323, 206,732, 198,414, 200,962, and 165,862 as of December 31, 2015, September 30, 2015, June 30, 2015, March 31, 2015 and December 31, 2014, respectively.

BANKWELL FINANCIAL GROUP, INC.
NET INTEREST MARGIN ANALYSIS ON A FULLY TAX EQUIVALENT BASIS
(Dollars in thousands)

For the Three Months Ended
December 31, 2015 December 31, 2014
Average Yield/ Average Yield/
Balance Interest Rate Balance Interest Rate
Assets:
Cash and Fed funds sold \\$ 47,162 \\$ 36 0.31 % \\$ 20,518 \\$ 11 0.22 %
Securities (1) 52,405 544 4.15 % 84,676 727 3.43 %
Loans:
Commercial real estate 687,447 8,358 4.76 % 486,311 5,992 4.82 %
Residential real estate 174,815 1,556 3.56 % 173,841 1,550 3.57 %
Construction (2) 89,338 996 4.36 % 57,886 685 4.63 %
Commercial business 170,954 2,224 5.09 % 139,068 1,791 5.04 %
Home equity 16,011 155 3.83 % 17,997 194 4.28 %
Consumer 1,943 24 4.98 % 3,160 38 4.78 %
Acquired loans (net of mark) 2,058 70 13.43 % 2,345 120 20.35 %
Total loans 1,142,566 13,383 4.58 % 880,608 10,370 4.61 %
Federal Home Loan Bank stock 6,640 57 3.45 % 5,808 19 1.32 %
Total earning assets 1,248,773 \\$ 14,020 4.39 % 991,610 \\$ 11,127 4.39 %
Other assets 76,443 54,306
Total assets \\$ 1,325,216 \\$ 1,045,916
Liabilities and shareholders' equity:
Interest-bearing liabilities:
NOW \\$ 51,778 15 0.11 % \\$ 54,532 15 0.11 %
Money market 294,219 404 0.54 % 211,219 272 0.51 %
Savings 101,590 201 0.78 % 84,238 86 0.41 %
Time 434,976 1,156 1.05 % 280,329 665 0.94 %
Total interest-bearing deposits 882,563 1,776 0.80 % 630,318 1,038 0.65 %
Borrowed Money 145,015 896 2.45 % 118,301 207 0.69 %
Total interest bearing liabilities 1,027,578 \\$ 2,672 1.03 % 748,619 \\$ 1,245 0.66 %
Noninterest-bearing deposits 155,276 159,772
Other liabilities 7,051 9,785
Total liabilities 1,189,905 918,176
Shareholders' equity 135,311 127,740
Total liabilities and shareholders' equity \\$ 1,325,216 \\$ 1,045,916
Net interest income (3) \\$ 11,348 \\$ 9,882
Interest rate spread 3.36 % 3.73 %
Net interest margin (4) 3.63 % 3.99 %

(1) Average balances and yields for securities are based on amortized cost.
(2) Includes commercial and residential real estate construction.
(3) The adjustment for securities and loans taxable equivalency amounted to \\$112 thousand and \\$111 thousand, respectively for the three months ended December 31, 2015, and 2014.
(4) Net interest income as a percentage of earning assets.

BANKWELL FINANCIAL GROUP, INC.
NET INTEREST MARGIN ANALYSIS ON A FULLY TAX EQUIVALENT BASIS
(Dollars in thousands)

For the Twelve Months Ended
December 31, 2015 December 31, 2014
Average Yield/ Average Yield/
Balance Interest Rate Balance Interest Rate
Assets:
Cash and Fed funds sold \\$ 39,632 \\$ 97 0.25 % \\$ 49,152 \\$ 127 0.26 %
Securities (1) 59,009 2,243 3.80 % 61,398 2,424 3.95 %
Loans:
Commercial real estate 611,289 29,835 4.81 % 378,345 18,515 4.83 %
Residential real estate 174,527 6,282 3.60 % 164,598 5,911 3.59 %
Construction (2) 76,292 3,505 4.53 % 49,212 2,300 4.61 %
Commercial business 156,039 8,089 5.11 % 109,121 5,496 4.97 %
Home equity 17,163 649 3.78 % 14,529 564 3.88 %
Consumer 2,350 115 4.88 % 1,270 81 6.35 %
Acquired loans (net of mark) 2,672 225 8.42 % 2,707 545 20.14 %
Total loans 1,040,332 48,700 4.62 % 719,782 33,412 4.59 %
Federal Home Loan Bank stock 6,715 168 2.50 % 5,078 73 1.45 %
Total earning assets 1,145,688 \\$ 51,208 4.41 % 835,410 \\$ 36,036 4.25 %
Other assets 60,191 43,535
Total assets \\$ 1,205,879 \\$ 878,945
Liabilities and shareholders' equity:
Interest-bearing liabilities:
NOW \\$ 55,696 62 0.11 % \\$ 53,041 58 0.11 %
Money market 263,900 1,411 0.53 % 182,676 836 0.46 %
Savings 96,841 693 0.72 % 91,058 302 0.33 %
Time 365,179 3,515 0.96 % 238,710 2,099 0.88 %
Total interest-bearing deposits 781,616 5,681 0.73 % 565,485 3,295 0.58 %
Borrowed Money 129,390 2,285 1.77 % 65,953 634 0.96 %
Total interest bearing liabilities 911,006 \\$ 7,966 0.87 % 631,438 \\$ 3,929 0.62 %
Noninterest-bearing deposits 154,950 136,748
Other liabilities 6,370 12,838
Total liabilities 1,072,326 781,024
Shareholders' equity 133,553 97,921
Total liabilities and shareholders' equity \\$ 1,205,879 \\$ 878,945
Net interest income (3) \\$ 43,242 \\$ 32,107
Interest rate spread 3.54 % 3.63 %
Net interest margin (4) 3.77 % 3.84 %

(1) Average balances and yields for securities are based on amortized cost.
(2) Includes commercial and residential real estate construction.
(3) The adjustment for securities and loans taxable equivalency amounted to \\$454 thousand and \\$447 thousand, respectively for the twelve months ended December 31, 2015, and 2014.
(4) Net interest income as a percentage of earning assets.