The following story was condensed from a financial release distributed by Bankwell Financial Group.

Bankwell Financial Group, Inc. (NASDAQ: BWFG) reported GAAP net income of $2.1 million or $0.27 per share for the fourth quarter of 2017, versus $3.3 million or $0.43 per share for the same period in 2016 and GAAP net income of $13.8 million or $1.78 per share for the year ended 2017, versus $12.4 million or $1.62 per share for the year ended 2016.

The company’s Board of Directors declared a $0.12 per share cash dividend, payable March 8, 2018 to shareholders of record on Feb. 26, 2018, representing a 71% increase when compared to the last quarter’s dividend.

The reported GAAP net income for the quarter and the full year was impacted by several one-time, non-recurring items, the most significant of which was the tax reform of 2017.

As result of the tax law changes enacted in late 2017, the company recognized a write-down of its deferred tax asset in the amount of $3.3 million or $0.42 per share. In addition, in late 2017 the company recognized an after tax charge of $0.2 million or $0.02 per share due to a minimal workforce reduction. These charges were partially offset by a reduction in the allowance for loan losses stemming from an update to its methodology and underlying loan loss assumptions, incorporating the most recent industry and product loss trends. This resulted in a non-recurring, after tax $0.9 million or $0.11 per share reduction in the reserve. In addition, the company recognized an after tax benefit of $0.6 million and $0.7 million or $0.07 per share and $0.08 per share, for the quarter ended and year ended 2017, respectively, as a result of refining the model assumptions used in calculating a servicing asset relating to loans in which the company retains the servicing rights and liabilities. Adjusting net income for these items would result in core net income (non-GAAP) of $4.1 million or $0.53 for the quarter ended Dec. 31, 2017 and $15.7 million or $2.03 for the year ended Dec. 31, 2017.

Bankwell Financial Group president and CEO, Christopher R. Gruseke, said 2017 was another record year for the company.

“In an increasingly volatile interest rate environment, we continue to improve our operating efficiencies and we vigilantly adhere to disciplined pricing on both sides of the balance sheet. The 2017 tax reform represents a unique opportunity for the bank and its shareholders. It will allow us to reward our shareholders, invest in the company’s growth initiatives and infrastructure, while giving back to the communities we serve.”

Fourth Quarter and Year Ended 2017 Highlights:
  • Total revenue (net interest income plus non-interest income) reached $59.0 million for the year ended 2017 compared to $51.8 million for the year ended 2016.
  • Tax equivalent net interest margin was 3.30% for the year ended 2017.
  • Total non-interest income was $4.6 million for the year ended 2017, which is 8% of total revenue.
  • The efficiency ratio was 55.1% and 54.9% for the fourth quarter and year ended 2017, respectively, compared to 55.6% and 56.5% for the fourth quarter and year ended 2016, respectively.
  • The tangible common equity ratio and tangible book value per share was 8.81% and $20.59, respectively.
  • Total gross loans exceeded $1.5 billion and total assets reached $1.8 billion.
  • The allowance for loan losses was $18.9 million and represents 1.23% of total loans.
  • Nonperforming assets represented 0.31% of total assets.
  • Investment securities totaled $113.8 million and represent 6% of total assets.
  • Total deposits reached $1.4 billion for the year ended 2017, an increase of $109.4 million or 8.5% compared to the year ended 2016.
Earnings

Net income for the quarter ended Dec. 31, 2017 was $2.1 million, a decrease of 37% compared to the quarter ended Dec. 31, 2016. Net income for the year ended Dec. 31, 2017 was $13.8 million, an increase of 12% compared to the year ended Dec. 31, 2016. The decline in net income was primarily a result of the aforementioned non- recurring items, the greatest component of which was the DTA write down as a result of the 2017 tax reform.

Revenues (net interest income plus non-interest income) for the quarter ended Dec. 31, 2017 were $15.5 million, an increase of 13% compared to the quarter ended Dec. 31, 2016. Revenues for the year ended Dec. 31, 2017 were $59.0 million, an increase of 14% compared to the year ended Dec. 31, 2016. Net interest income for the quarter ended Dec. 31, 2017 was $13.9 million, an increase of 5% compared to the quarter ended Dec. 31, 2016. Net interest income for the year ended Dec. 31, 2017 was $54.4 million, an increase of 11% compared to the year ended Dec. 31, 2016. The growth in revenues and net interest income were driven by continued earning asset growth.

Basic and diluted earnings per share for the quarter ended Dec. 31, 2017 were both $0.27 compared to $0.44 and $0.43 basic and diluted earnings per share for the quarter ended Dec. 31, 2016. Basic and diluted earnings per share for the year ended Dec. 31, 2017 was $1.80 and $1.78, respectively, compared to $1.64 and $1.62 earnings per share, respectively, for the year ended Dec. 31, 2016.

The company’s efficiency ratios for the quarters ended Dec. 31, 2017 and Dec. 31, 2016 were 55.1% and 55.6%, respectively. The company’s efficiency ratios for the year ended Dec. 31, 2017 and Dec. 31, 2016 were 54.9% and 56.5%, respectively.