NEW CANAAN, Conn. – Bankwell Financial Group, Inc. (NASDAQ: NASDAQ:), a commercial bank with a focus on digital expansion, disclosed a rise in net income for the third quarter of 2024, reaching $1.9 million, or $0.24 per share. This represents an increase from $1.1 million, or $0.14 per share, in the previous quarter.
The company’s board declared a cash dividend of $0.20 per share, payable on November 22, 2024, to shareholders on record as of November 11, 2024. The third quarter’s earnings were impacted by an $8.2 million charge-off against a $13.7 million office loan participation, which resulted in a $0.79 per share drag on earnings.
Bankwell also reported a pre-tax, pre-provision net revenue (PPNR) of $9.0 million, or $1.17 per share, a 7% decline from $9.7 million, or $1.25 per share, in the second quarter of 2024.
On October 23, 2024, Bankwell’s board authorized a new share repurchase plan, allowing the company to buy back up to 250,000 shares of its outstanding common stock. The new plan replaces the previous one, established in 2018 and amended in 2021, under which Bankwell repurchased 532,802 shares.
Despite a significant charge-off in the third quarter, President and CEO Christopher R. Gruseke remains optimistic about the company’s future, citing a liability-sensitive balance sheet and strategic investments in the commercial lending platform as reasons for an expected margin expansion and improved profitability.
Brokered deposits decreased by $24.2 million in the third quarter and are down $168.5 million since December 31, 2023. The reported net interest margin stood at 2.72%, including the impact of non-performing loan charges and fees from called brokered CDs.
Additionally, Bankwell anticipates a reduction in funding costs and potential benefits to the net interest margin from maturing loans in the coming year.
A $27.1 million multifamily commercial real estate loan was placed on nonperforming status as of September 30, 2024, but the company has secured an agreement for the sale of this loan at par value as of October 28, 2024.
Bankwell continues to invest in growth, with recent initiatives including a lending partnership with Lendio, the launch of Bankwell Direct, a new Small Business Administration division, and the addition of key leadership personnel.
The information provided is based on a press release statement from Bankwell Financial Group.
In other recent news, Bankwell Financial Group is set to record an $8.2 million charge off related to a non-performing commercial real estate loan, according to a recent SEC filing. This charge off is tied to a $13.7 million loan for a Class A office park in suburban New Jersey. The borrower defaulted on payments as of September 30, 2024, leading to foreclosure proceedings and a revaluation of the property’s estimated worth to $36.2 million. Post charge off, Bankwell’s remaining exposure is projected at about $5.5 million.
In addition to the charge off, Bankwell Financial Group has made significant amendments to its bylaws. Changes approved by the company’s Board of Directors include altering the month for the annual shareholders’ meeting from June to May and adjusting the requirement for the number of inspectors of elections at these meetings. Revisions to titles and membership requirements of various Board committees were also made, modernizing the company’s approach to share documentation.
These recent developments underscore Bankwell Financial Group’s ongoing efforts to ensure its governance practices are up-to-date and compliant with legal standards. Further details will be provided during its third-quarter earnings call. Please note, the company’s future results are subject to various risks and uncertainties as stated in the SEC filing.
InvestingPro Insights
Complementing Bankwell Financial Group’s (NASDAQ: BWFG) recent earnings report, InvestingPro data provides additional context to the company’s financial position. Despite the challenges faced in the third quarter, including the significant charge-off, Bankwell maintains a relatively attractive valuation with a P/E ratio of 9.8 and a price-to-book ratio of 0.83 as of the last twelve months ending Q2 2024. These metrics suggest the stock may be undervalued compared to its peers in the banking sector.
An InvestingPro Tip highlights that Bankwell has maintained dividend payments for 10 consecutive years, which aligns with the company’s recent declaration of a $0.20 per share dividend. This consistent dividend history may appeal to income-focused investors, especially considering the current dividend yield of 2.85%.
However, another InvestingPro Tip indicates that net income is expected to drop this year, which is consistent with the challenges mentioned in the earnings report, including the impact of the large charge-off. Despite this, analysts predict the company will remain profitable this year, suggesting resilience in Bankwell’s business model.
For investors seeking a more comprehensive analysis, InvestingPro offers 15 additional tips for Bankwell Financial Group, providing a deeper understanding of the company’s financial health and prospects.
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