New Canaan-based Bankwell Financial Group saw its earnings increase year-over-year by 34 percent, driven in part by loan prepayments that exceeded typical quarterly activity.
Bankwell had third quarter net income of $9.2 million, or $1.18 per share, compared to $6.9 million, or $0.87 per share, in the third quarter of 2021.
The bank said in its third quarter earnings statement that it had elevated levels of loan prepayments during the quarter, increasing its net income. Adjusting for the elevated loan prepayments, Bankwell said its operating earnings per share would have been $1.08. The bank also had nonrecurring items, including loan prepayments, in the second quarter of 2022, when net income totaled $12 million.
Bankwell did see loan growth during the quarter. The bank’s total loans were $2.3 billion at the end of the third quarter, up $391.9 million, or 20.7 percent, from the end of 2021 and up 11 percent from the end of the second quarter.
The bank’s total assets were $2.72 billion at the end of the third quarter, up from $2.46 billion at the end of 2021. The bank attributed the increase primarily to loan growth and a corresponding increase in deposits and borrowings. Deposits totaled $2.3 billion on Sept. 30, up from $2.1 billion on Dec. 31.
“The Company’s growth in 2021 and 2022 has created an exceptionally strong foundation to grow top line Interest Income in the coming year,” Bankwell President and CEO Christopher R. Gruseke said in the earnings statement. He added: “We thank our employees and clients who have made our success possible, and are confident that we have a great team in place to perform in an increasingly volatile economic environment.”
Bankwell had third quarter net interest income of $24.6 million compared to $17.7 million in the same quarter last year. The bank’s third quarter net interest margin was 4.12 percent compared to 3.39 percent a year ago.
Grueske said while the bank expects interest income to increase by more than 25 percent in 2023, the current cycle of tightening by the Federal Reserve will increase the cost of deposits. He said that based on forward market pricing, Bankwell could see net interest income decrease year-over-year by 10 percent in 2023.
Bankwell, which has nine branches, closed its Wilton location in early October.
