Bankwell Financial Group Q4 Earnings Call Highlights

Bankwell Financial Group (NASDAQ:BWFG) reported fourth-quarter 2025 GAAP net income of $9.1 million, or $1.15 per share, management said on the company’s earnings call. Results included a $1.5 million one-time adjustment to the income tax provision tied to state tax filings and changes in estimated tax positions. Excluding that item, operating income for the quarter was $10.7 million, or $1.36 per share.

Margin expansion and revenue mix

Chief Executive Officer Chris Gruseke said pre-provision net revenue return on average assets was 180 basis points, up 10 basis points from the prior quarter and 75 basis points from the fourth quarter of 2024. He attributed the improvement to net interest margin expansion and higher non-interest income, “driven primarily by our SBA division.”

Chief Financial Officer Courtney Sacchetti said net interest margin expanded to 3.40% in the quarter, up 6 basis points sequentially. The increase was driven by a 15 basis point reduction in deposit costs to 3.15%, which more than offset an 11 basis point decline in asset yields to 6.23% as certain rate-sensitive assets reset lower.

Sacchetti said the company adjusted deposit pricing in response to 75 basis points of Federal Reserve rate cuts since late September. Actions included lowering offered time deposit rates by 50 basis points, repricing about $250 million of indexed deposits at 100% beta, and reducing rates on roughly $700 million of non-maturity deposits by an average of 22 basis points. The company exited 2025 with a total deposit cost of 3.08%.

Management also flagged expected benefits from upcoming repricing. Sacchetti said $1.2 billion in time deposits are expected to reprice favorably over the next 12 months with an average rate reduction of 32 basis points, which the company estimates could provide roughly $4 million of annualized incremental benefit, or about 12 basis points of net interest margin. She noted the estimate does not include the impact of any other future rate changes.

Loan growth, pipeline mix, and floating-rate exposure

Bankwell said loan production remained strong. The company funded $240 million of new loans in the fourth quarter, bringing total funded originations for the year to $758 million. Net loan growth was $122 million in the quarter and $134 million for the full year, representing 5% annual loan growth, according to management.

Gruseke said the pace of net interest margin expansion has moderated, which he attributed to the company’s “intentional increased exposure to floating-rate loans.” Bankwell ended 2025 with floating-rate loans representing 38% of total loans, up from 23% at the end of 2024.

During the Q&A, management discussed how 2025 payoffs affected growth and expectations for 2026. Executives described payoffs as “lumpy” during 2025—particularly early in the year—and said the company is now planning around that “new normal” by building pipeline earlier. When asked about the current pipeline mix, management said it is “C&I heavy,” estimating a 60/40 mix skewed toward C&I, while noting the company has “steadily brought down investor CRE to capital over the past several years.”

On loan pricing, management said it has not seen recent spread compression, though it acknowledged customers have shown lower credit-spread offers from other financial institutions. Executives added that on floating-rate loans, coupons decline as indices fall, and fixed-rate pricing is tied primarily to Treasuries, which also affects coupons as rates move.

SBA-driven fee income rebounds after government shutdown

Non-interest income increased to $3.4 million in the fourth quarter, up 35% from the prior quarter, driven largely by $2.2 million of SBA gain-on-sale income, Sacchetti said. She added that non-interest income represented 11.4% of total revenue, compared with 4.6% in the fourth quarter of 2024.

Management said SBA activity resumed after the government shutdown ended and the SBA reopened in November, allowing the SBA division to restart both originations and sales. SBA originations were $24 million in the fourth quarter and $68 million for the year, with full-year realized SBA gains of $5.1 million.

When asked about seasonality, management said it expects “smooth production throughout the year unless there’s a government shutdown.” In a separate question on 2026 SBA expectations, management indicated that reaching its non-interest income guidance would imply “about 100” in SBA originations, compared with approximately $60 million in 2025, which it described as the first full year with the SBA division functional.

Credit quality improves; capital and book value grow

Management reported improved credit trends. Non-performing assets fell to 49 basis points of total assets from 56 basis points in the prior quarter. Gruseke attributed the improvement to the sale of a $1.3 million OREO property and the collection of $400,000 on an SBA guarantee. Sacchetti said non-performing assets declined by $1.9 million during the quarter.

The company recorded “modest net recoveries” and a provision for credit losses of approximately $600,000, Sacchetti said. The allowance for credit losses stood at 108 basis points of total loans, while coverage of non-performing loans increased to 188%.

Sacchetti said total assets were $3.4 billion, up 3.6% from the linked quarter. Bankwell’s estimated consolidated Common Equity Tier 1 ratio was 10.2%, and the bank’s total capital ratio was 12.9%. Tangible book value per share increased to $37.84, representing 11% growth over 2024.

Tax adjustment, expenses, and 2026 outlook

Management detailed the quarter’s one-time tax expense. Sacchetti said the approximately $1.5 million non-recurring income tax expense included an $855,000 true-up of prior-year state tax estimates based on final return filings and a $692,000 impact from adding to the FIN 48 reserve for uncertain tax positions due to a change in estimate and the company’s expanded state footprint. She said the company expects an effective tax rate of about 25% going forward, after a full-year 2025 effective tax rate of 27.4% reflecting the one-time expense.

Gruseke said the company’s efficiency ratio improved to 50.8% from 51.4% in the prior quarter, reflecting revenue growth outpacing expenses.

Looking to 2026, management provided guidance that included:

• Loan growth: 4% to 5%
• Net interest income: $111 million to $112 million
• Non-interest income: approximately $11 million to $12 million
• Non-interest expense: $64 million to $65 million

In discussing expense expectations, management said “people and processes” would be key drivers, citing investments across client-facing and operational roles as well as technology. Executives said headcount increased by more than 10% in 2025, from about 145 to 170 full-time equivalents, and indicated the 2026 expense outlook incorporates further growth. Management emphasized it expects profitability to grow alongside those investments.

About Bankwell Financial Group (NASDAQ:BWFG)

Bankwell Financial Group, Inc is a bank holding company headquartered in Westchester, Illinois, and serves as the parent of Bankwell Bank. Through its subsidiary, the company provides a full suite of banking products and services designed for both individual consumers and small‐ to mid‐sized businesses. Bankwell Bank operates multiple branches across suburban Cook and Lake counties, focusing on personalized service and local decision‐making.

The company’s deposit offerings include checking, savings and money market accounts, as well as certificates of deposit, all supported by an online and mobile banking platform for convenient account access.