Q1 2026 Bankwell Financial Group Inc Earnings Call

April 23, 2026

Speaker #1: After the speaker's remarks, there will be a question-and-answer session. To ask a question, simply press star 1 on your telephone keypad. To withdraw your question, press star 1 again.

Operator: After the speaker's remarks, there will be a question and answer session. To ask a question, simply press star one on your telephone keypad. To withdraw your question, press star one again. It is now my pleasure to turn the call over to Courtney Sacchetti, Executive Vice President and Chief Financial Officer. You may begin.

Operator: After the speaker's remarks, there will be a question-and-answer session. To ask a question, simply press star one on your telephone keypad. To withdraw your question, press star one again. It is now my pleasure to turn the call over to Courtney Sacchetti, Executive Vice President and Chief Financial Officer. You may begin.

Speaker #1: It is now my pleasure to turn the call over to Courtney Sacchetti, Executive Vice President and Chief Financial Officer. You may begin.

Speaker #2: Thank you. Good morning, everyone. Welcome to Bankwell's first quarter 2026 earnings conference call. To access the call over the Internet and review the presentation materials that we will reference on the call, please visit our website at investor.mybankwell.com and go to the Events and Presentations tab for Supporting Materials.

Courtney Sacchetti: Thank you. Good morning, everyone. Welcome to Bankwell's Q1 2026 Earnings Conference Call. To access the call over the internet and review the presentation materials that we will reference on the call, please visit our website at investor.mybankwell.com and go to the Events and Presentations tab for supporting materials. Our Q1 earnings release is also available on our website. Our remarks today may contain forward-looking statements and may refer to non-GAAP financial measures. All participants should refer to our SEC filings, including those found on forms 8K, 10Q, and 10K, for a complete discussion of forward-looking statements and any factors that could cause actual results to differ from those statements. Now I will turn the call over to Chris Gruseke, Bankwell's Chief Executive Officer.

Speaker #2: Our first quarter earnings release is also available on our website. Our remarks today may contain forward-looking statements and may refer to non-GAAP financial

Speaker #1: Measures , all participants should refer to our SEC filings , including those found on form 8-K , 10-q , and 10-K , for a complete discussion of forward looking statements and any factors that could cause actual results to differ from those statements .

Speaker #1: And now I will turn the call over to Chris Ghriskey , Chief Executive Officer

Speaker #2: Thanks , Courtney Welcome , and thank you to everyone for joining Banquo's quarterly earnings call . This morning . I'm joined by Courtney Sacchetti , our chief financial officer , and Matt , our president and chief banking officer .

Christopher Gruseke: Thanks, Courtney. Welcome, and thank you to everyone for joining Bankwell's quarterly earnings call. This morning, I'm joined by Courtney Sacchetti, our Chief Financial Officer, and Matthew McNeill, our President and Chief Banking Officer. We appreciate your interest in our performance, and I'm excited by this opportunity to discuss our results with you. We've delivered a solid start to 2026 with strong earnings, continued balance sheet improvement, and continued progress on our strategic priorities. For Q1, we reported GAAP net income of $11.3 million, or $1.41 per share. These results were supported by solid loan production, strong fee income from our SBA platform, lower funding costs, meaningful core deposit growth, and ongoing balance sheet optimization, including reduced reliance on wholesale funding and continued progress on building a more interest rate neutral balance sheet.

Chris Gruseke: Thanks, Courtney. Welcome, and thank you to everyone for joining Bankwell's quarterly earnings call. This morning, I'm joined by Courtney Sacchetti, our Chief Financial Officer, and Matthew McNeill, our President and Chief Banking Officer. We appreciate your interest in our performance, and I'm excited by this opportunity to discuss our results with you. We've delivered a solid start to 2026 with strong earnings, continued balance sheet improvement, and continued progress on our strategic priorities. For Q1, we reported GAAP net income of $11.3 million, or $1.41 per share. These results were supported by solid loan production, strong fee income from our SBA platform, lower funding costs, meaningful core deposit growth, and ongoing balance sheet optimization, including reduced reliance on wholesale funding and continued progress on building a more interest rate neutral balance sheet.

Speaker #2: We appreciate your interest in our performance , and I'm excited by this opportunity to discuss our results with you . We've delivered a solid start to 2026 with strong earnings , continued balance sheet improvement , and continued progress on our strategic priorities For the first quarter , we reported GAAP net income of $11.3 million , or $1.41 per share These results were supported by solid loan production , strong fee income from our SBA platform , lower funding costs , meaningful core deposit growth , and ongoing balance sheet optimization , including reduced reliance on wholesale funding and continued progress on building a more interest rate neutral balance sheet .

Speaker #2: Loan growth remained positive during the quarter , with $190 million of originations , including $34 million of SBA production , resulting in net loan growth of $27 million on an annualized basis .

Christopher Gruseke: Loan growth remained positive during the quarter with $190 million of originations, including $34 million of SBA production, resulting in net loan growth of $27 million. On an annualized basis, this level of growth is consistent with our previously communicated guidance of 4% to 5% for the full year, and our pipeline remains strong. Importantly, this growth is supported by strong core deposit inflows. Core deposits increased by $113 million sequentially, with $39 million coming from low-cost deposits. Included in that $39 million is $24 million of growth in analyzed checking balances for an 8% increase on the quarter. In addition to funding our loan growth, we've also reduced broker deposit balances and Federal Home Loan Bank borrowings by a combined $95 million, further improving our funding mix. Since our peak at the end of 2022, we've successfully reduced our broker deposits by $513 million for a 50% decline.

Chris Gruseke: Loan growth remained positive during the quarter with $190 million of originations, including $34 million of SBA production, resulting in net loan growth of $27 million. On an annualized basis, this level of growth is consistent with our previously communicated guidance of 4% to 5% for the full year, and our pipeline remains strong. Importantly, this growth is supported by strong core deposit inflows. Core deposits increased by $113 million sequentially, with $39 million coming from low-cost deposits. Included in that $39 million is $24 million of growth in analyzed checking balances for an 8% increase on the quarter. In addition to funding our loan growth, we've also reduced broker deposit balances and Federal Home Loan Bank borrowings by a combined $95 million, further improving our funding mix. Since our peak at the end of 2022, we've successfully reduced our broker deposits by $513 million for a 50% decline.

Speaker #2: This level of growth is consistent with our previously communicated guidance of 4 to 5% for the full year , and our pipeline remains strong Importantly , this growth is supported by strong core deposit inflows .

Speaker #2: Core deposits increased by $113 million sequentially, with $39 million coming from low-cost deposits. Included in that $39 million is $24 million of growth in analyzed checking balances for an 8% increase on the quarter. In addition to funding our loan growth, we've also reduced brokered deposit balances and Federal Home Loan Bank borrowings by a combined $95 million.

Speaker #2: Further improving our funding mix Since our peak at the end of 2022 . We've successfully reduced our brokered deposits by $513 million for a 50% decline .

Speaker #2: The net interest margin was 328 basis points, reflecting modest pressure from asset repricing as floating rate loans reset lower and an unfavorable discount impact relative to the prior quarter.

Christopher Gruseke: The net interest margin was 328 basis points, reflecting modest pressure from asset repricing as floating rate loans reset lower and an unfavorable day count impact relative to the prior quarter. These factors were partially offset by continued improvement in deposit costs, which declined five basis points sequentially to 310 basis points. Non-interest income remained a meaningful contributor to results totaling $3.3 million, which includes $2.4 million of SBA gain on sale income. Our SBA division continues to be an important part of our diversified revenue strategy and a meaningful source of recurring fee income. Credit quality remains healthy with expectations of further improvement. While non-performing assets increased modestly to 56 basis points of total assets, we have visibility into the resolution of several credits over the coming quarters. Overall asset quality metrics remain well within our internal expectations, and reserve coverage levels remain appropriate.

Chris Gruseke: The net interest margin was 328 basis points, reflecting modest pressure from asset repricing as floating rate loans reset lower and an unfavorable day count impact relative to the prior quarter. These factors were partially offset by continued improvement in deposit costs, which declined five basis points sequentially to 310 basis points. Non-interest income remained a meaningful contributor to results totaling $3.3 million, which includes $2.4 million of SBA gain on sale income. Our SBA division continues to be an important part of our diversified revenue strategy and a meaningful source of recurring fee income. Credit quality remains healthy with expectations of further improvement. While non-performing assets increased modestly to 56 basis points of total assets, we have visibility into the resolution of several credits over the coming quarters. Overall asset quality metrics remain well within our internal expectations, and reserve coverage levels remain appropriate.

Speaker #2: These factors were partially offset by continued improvement in deposit costs , which declined five basis points sequentially to 310 basis points . Non-interest income remained a meaningful contributor to results totaling $3.3 million , which includes $2.4 million of SBA gain on sale income Our SBA division continues to be an important part of our diversified revenue strategy and a meaningful source of recurring fee income Credit quality remains healthy with expectations of further improvement .

Speaker #2: While non-performing assets increased modestly to 56 basis points of total assets . We have visibility into the resolution of several credits over the coming quarters Overall , asset quality metrics remain well within our internal expectations and reserve coverage levels remain appropriate Finally , we are excited to have opened our first full service branch in New York during the quarter .

Christopher Gruseke: Finally, we are excited to have opened our first full-service branch in New York during the quarter, located in Bay Ridge, Brooklyn. The branch is home to an experienced private client banking team that joined Bankwell in 2025. The addition of this location enables the team to deliver Bankwell's full suite of commercial and private client banking services on the ground in New York. I'll now turn the call back to Courtney to walk through the financial results in more detail.

Chris Gruseke: Finally, we are excited to have opened our first full-service branch in New York during the quarter, located in Bay Ridge, Brooklyn. The branch is home to an experienced private client banking team that joined Bankwell in 2025. The addition of this location enables the team to deliver Bankwell's full suite of commercial and private client banking services on the ground in New York. I'll now turn the call back to Courtney to walk through the financial results in more detail.

Speaker #2: Located in Bay Ridge , Brooklyn . The branch is home to an experienced private client banking team that joined Bankwell in 2025 , and the addition of this location enables the team to deliver Benko's full suite of commercial and private client banking services on the ground in New York .

Speaker #2: I'll now turn the call back to Courtney to walk through the financial results in more detail .

Speaker #1: Thanks , Chris Starting with the income statement , net interest income totaled $26.9 million for the first quarter and was largely unchanged compared to the prior quarter .

Courtney Sacchetti: Thanks, Chris. Starting with the income statement, net interest income totaled $26.9 million for Q1 and was largely unchanged compared to the prior quarter. Net interest margin declined modestly to 328 basis points, driven primarily by the repricing of floating rate loans in a lower rate environment and an unfavorable day count impact. On a day count normalized basis, the sequential NIM variance would have been approximately five basis points. These headwinds were partially offset by continued improvement in deposit costs. Total deposit costs declined to 310 basis points, down five basis points from Q4, and the bank exited March with a deposit cost exit rate of approximately 298 basis points. During Q1, we successfully repriced approximately $300 million of time deposits 44 basis points lower, generating an expected annualized benefit of $1.2 million.

Speaker #1: Net interest margin declined modestly to 328 basis points , driven primarily by the repricing of floating rate loans and a lower rate environment , and an unfavorable day impact on a day count .

Speaker #1: Normalized basis . The sequential Nim variance would have been approximately five basis points These headwinds were partially offset by continued improvement in deposit costs .

Speaker #1: Total deposit costs declined to 310 basis points , down five basis points from the fourth quarter . And the bank exited March with a deposit cost exit rate of approximately 290 basis points During the first quarter , we successfully repriced approximately $300 million of time deposits , 44 basis points lower , generating an expected annualized benefit of $1.2 million .

Speaker #1: In addition, over the next 12 months, approximately $1.1 billion of time deposits are expected to reprice favorably, with an average rate reduction of 14 basis points.

Courtney Sacchetti: In addition, over the next 12 months, approximately $1.1 billion of time deposits are expected to reprice favorably with an average rate reduction of 14 basis points. This repricing is anticipated to deliver an incremental annualized benefit of roughly $1.6 million, or about 5 basis points of net interest margin. With respect to rate sensitive assets, we've strategically increased the proportion of variable rate loans from just over 20% at the start of 2025, to approximately 42% at quarter end. Additional detail on asset and liability repricing, as well as rate sensitivity, is provided on page 8 of the investor presentation. Profitability remained solid in the quarter, with return on average assets of 1.35%, and a return on average tangible common equity of 15%.

Speaker #1: This repricing is anticipated to deliver an incremental annualized benefit of roughly $1.6 million , or about five basis points of net interest margin .

Speaker #1: With respect to rate sensitive assets , we strategically increased the proportion of variable rate loans from just over 20% at the start of 2025 to approximately 42% at quarter end Additional detail on asset and liability repricing , as well as rate sensitivity , is provided on page eight of the investor presentation Profitability remains solid in the quarter , with return on average assets of 1.35% and a return on average .

Speaker #1: Tangible common equity of 15% . As deposit repricing continues to flow through the balance sheet and interest rate sensitivity , moderates , we expect incremental margin improvement over the balance of 2026 .

Courtney Sacchetti: As deposit repricing continues to flow through the balance sheet and interest rate sensitivity moderates, we expect incremental margin improvement over the balance of 2026, affirming our full-year net interest income guidance of $111 to $112 million. Non-interest income totaled $3.3 million for the quarter, reflecting $2.4 million of gains on SBA loan sales and continued growth in service fee income driven by an expanding commercial client base. Based on our Q1 results, we are raising our full-year non-interest income guidance to $12 to $13 million. Our pre-provision net revenue for the quarter was $13.3 million, or 1.6% of average assets, compared to 1.8% in the prior quarter. Our PPNR was impacted by approximately $1 million in annual non-interest expense typically incurred in Q1, elevating total non-interest expense to $16.9 million for the quarter.

Speaker #1: Affirming our full year net interest income guidance of 111 to $112 million , non-interest income totaled $3.3 million for the quarter , reflecting $2.4 million of gains on SBA loan sales and continued growth in service fee income , driven by an expanding commercial client base Based on our first quarter results , we are raising our full year non-interest income guidance to 12 to $13 million .

Speaker #1: Our Pre-provision net revenue for the quarter was $13.3 million , or 1.6% of average assets , compared to 1.8% in the prior quarter Our PR was impacted by approximately $1 million in annual non-interest expense , typically incurred in the first quarter , elevating total non-interest expense to $16.9 million for the quarter These annual costs are primarily related to employee compensation and certain professional services Despite these seasonal expenses , our underlying non-interest expense run rate remains consistent with our prior guidance of 64 to $65 million .

Courtney Sacchetti: These annual costs are primarily related to employee compensation and certain professional services. Despite these seasonal expenses, our underlying non-interest expense run rate remains consistent with our prior guidance of $64 to $65 million. The efficiency ratio for the quarter was 55.8%, which reflects the seasonality of Q1 expenses. Our provision for credit losses was a release of $1 million for the quarter, driven by the net impact of loan growth and economic factors embedded in our CECL model. The allowance for credit losses ended the quarter at 1.03% of total loans, with coverage of non-performing loans at approximately 155%. From a capital and liquidity standpoint, the balance sheet remained strong. Total assets ended the quarter at $3.4 billion. Deposits totaled $2.9 billion. Both the bank and holding company remain well capitalized. Tangible common equity was 9.17%, and our consolidated common equity Tier 1 ratio was approximately 10.58%.

Speaker #1: The efficiency ratio for the quarter was 55.8% , which reflects the seasonality of first quarter expenses . Our provision for credit losses was a release of $1 million for the quarter , driven by the net impact of loan growth and economic factors embedded in our Cecil model .

Speaker #1: The allowance for credit losses ended the quarter at 1.03% of total loans , with coverage of nonperforming loans at approximately 155% . From a capital and liquidity standpoint , the balance sheet remains strong .

Speaker #1: Total assets ended the quarter at $3.4 billion . Deposits totaled $2.9 billion in both the bank and holding company remain well capitalized Tangible common equity was 9.17% , and our consolidated common equity tier one ratio was approximately 10.58% .

Courtney Sacchetti: Both the bank and holding company remain well capitalized. Tangible common equity was 9.17%, and our consolidated common equity Tier 1 ratio was approximately 10.58%. We repurchased 3,317 shares during the quarter at an average price of $45.32 per share. Now, I'll turn the call back to Chris for closing remarks.

Speaker #1: We repurchased 3317 shares during the quarter at an average price of $45.32 per share . Now , I'll turn the call back to Chris for closing remarks .

Courtney Sacchetti: We repurchased 3,317 shares during the quarter at an average price of $45.32 per share. Now, I'll turn the call back to Chris for closing remarks.

Speaker #2: Thanks , Courtney In 2024 , we laid out a plan to improve our funding mix , continue to grow our loan book in a disciplined manner , maintain strong credit quality and build diversified sources of revenue We've also committed to continue to invest in our tech forward platform while managing expenses .

Christopher Gruseke: Thanks, Courtney. In 2024, we laid out a plan to improve our funding mix, continue to grow our loan book in a disciplined manner, maintain strong credit quality, and build diversified sources of revenue. We've also committed to continue to invest in our tech-forward platform while managing expenses. We are truly gratified by the results achieved through the planning and hard work done by our team, and we thank them for their dedication. We'll continue to execute on our strategic goals and look forward to sharing the results of our continuous growth and evolution with all of our stakeholders in the quarters ahead. We thank our longtime customers for their continued support and welcome the many new customers who have helped us to grow our business. We also appreciate the continued support and interest from our shareholders and the investment community.

Chris Gruseke: Thanks, Courtney. In 2024, we laid out a plan to improve our funding mix, continue to grow our loan book in a disciplined manner, maintain strong credit quality, and build diversified sources of revenue. We've also committed to continue to invest in our tech-forward platform while managing expenses. We are truly gratified by the results achieved through the planning and hard work done by our team, and we thank them for their dedication. We'll continue to execute on our strategic goals and look forward to sharing the results of our continuous growth and evolution with all of our stakeholders in the quarters ahead. We thank our longtime customers for their continued support and welcome the many new customers who have helped us to grow our business. We also appreciate the continued support and interest from our shareholders and the investment community.

Speaker #2: We are truly gratified by the results achieved through the planning and hard work done by our team , and we thank them for their dedication We'll continue to execute on our strategic goals and look forward to sharing the results of our continuous growth and evolution with all of our stakeholders in the quarters ahead We thank our long time customers for their continued support and welcome the many new customers who have helped us to grow our business .

Speaker #2: We also appreciate the continued support and interest from our shareholders and the investment community . Now , operator , we're ready to open the line for questions

Christopher Gruseke: Now, operator, we're ready to open the line for questions.

Chris Gruseke: Now, operator, we're ready to open the line for questions.

Operator: As a reminder, to ask a question, simply press star one on your telephone keypad. From KBW, our first question comes from the line of Mark Shetley. Please go ahead.

Speaker #3: As a reminder to ask a question , simply press star one on your telephone keypad . And for KBW , our first question comes from the line of Mark Shepley .

Speaker #3: Please go ahead

Mark Shetley: Hey, good morning.

Speaker #4: Hey , good morning Good morning . You appreciate the the detail on the CDs and how much of that's coming due . I think you said that's a five basis point benefit to the margin .

Christopher Gruseke: Good morning.

Chris Gruseke: Good morning.

Mark Shetley: Appreciate the detail on the CDs and how much of that's coming due. I think you said that's a 5 basis point benefit to the margin. I was just curious, in this current rate environment now that it's seemingly more flat, are you seeing more competition on the deposit side? Because I'm just trying to get a sense for how much the overall interest-bearing deposit costs can be worked down. Thanks.

Speaker #4: So I was just curious , you know , in this current rate environment , now that , you know , it's seemingly more flat , are you seeing more competition on the deposit side ?

Speaker #4: Because I'm just trying to get a sense for how much the overall interest bearing deposit costs can be worked out Thanks

Christopher Gruseke: First of all, the first part of that answer is, the numbers that we put in that's expected to roll with CDs is based on market on the day that as of today's market. It implies no further cuts, or any term deposits if they roll to current. That's what the impact would be. That was the first part of your question.

Chris Gruseke: First of all, the first part of that answer is, the numbers that we put in that's expected to roll with CDs is based on market on the day that as of today's market. It implies no further cuts, or any term deposits if they roll to current. That's what the impact would be. That was the first part of your question.

Speaker #5: First of all , the first part of that answer is the numbers that we put in . That's expected to roll with CDs .

Speaker #5: Is based on market on the day that you know , as of today's market . So it implies no further cuts or anything deposits .

Speaker #5: If they roll to current . That's what the impact would be . That was the first part of your question This is as far as the deposit competition .

Matthew McNeill: This is Matt. As far as the deposit competition, it's very competitive out there for deposits. We're focused on bringing in low cost deposits to bring down our funding costs, which is probably the most competitive area. However, we're finding success and have been able to substantially grow core deposits in the quarter.

Matt McNeill: This is Matt. As far as the deposit competition, it's very competitive out there for deposits. We're focused on bringing in low cost deposits to bring down our funding costs, which is probably the most competitive area. However, we're finding success and have been able to substantially grow core deposits in the quarter.

Speaker #5: It is it's , you know , it's very competitive out there for deposits . You know , we're focused on bringing in low cost deposits to to bring down our funding costs , which is probably the most competitive area .

Speaker #5: However , you know , we're finding success and have been able to substantially grow core deposits in the quarter , right ? So , you know , obviously it's competitive and loan growth , net loan growth was approximately 2% quarter over quarter .

Christopher Gruseke: Right. Obviously, it's competitive and net loan growth was approximately 2% quarter-over-quarter, but core loan growth was substantially higher. It was something like 7%, a 100 and Courtney?

Chris Gruseke: Right. Obviously, it's competitive and net loan growth was approximately 2% quarter-over-quarter, but core loan growth was substantially higher. It was something like 7%, a 100 and Courtney?

Speaker #5: But core loan growth was substantially higher . And with the , you know , so something like 7% , 100 and Courtney for deposit growth growth .

Courtney Sacchetti: Core deposit growth.

Christopher Gruseke: Deposit growth was.

Chris Gruseke: Deposit growth was.

Courtney Sacchetti: $113 million.

Speaker #6: Was

Speaker #5: $713 million . About $30 million of that was analyzed . Non-interest bearing or low cost . So almost 30% , 25 , 30% of what we brought in this quarter .

Christopher Gruseke: $113 million. About $30 million of that was non-interest-bearing or low cost. Almost 30%, 25%, 30% of what we brought in this quarter. With the balance that didn't result in growth, we paid down more expensive borrowings. We're happy with the deposit result, despite the competitive environment.

Chris Gruseke: $113 million. About $30 million of that was non-interest-bearing or low cost. Almost 30%, 25%, 30% of what we brought in this quarter. With the balance that didn't result in growth, we paid down more expensive borrowings. We're happy with the deposit result, despite the competitive environment.

Speaker #5: And , you know , with the balance that didn't result in growth , we paid down more expensive borrowings . So we're we're happy with the deposit result .

Speaker #5: And despite the competitive environment .

Courtney Sacchetti: Improved mix in our deposits.

Christopher Gruseke: Yes

Chris Gruseke: Yes

Speaker #6: Mix in our deposit . Yes .

Courtney Sacchetti: Also in the quarter.

Christopher Gruseke: Yes.

Chris Gruseke: Yes.

Speaker #5: Yes

Mark Shetley: Okay, thanks. Appreciate it. Maybe switching gears really quick. SBA was strong in the quarter, and it looks like originations are tracking higher than I think you previously talked about $100 million in originations for the quarter. I'm just trying to get a sense of where you think, if there's any change to that, and where SBA fits into the overall fee guide. Thanks.

Speaker #4: Okay . Thanks . I appreciate it . And then maybe switching gears really quick . So , you know , SBA was strong in the quarter and looks like originations are tracking higher than , you know .

Speaker #4: I think you previously talked about 100 million in originations for the quarter . So I'm just trying to get a sense of where you think if there's any change to that and where SBA fits into the overall fee guide .

Speaker #4: Thanks .

Christopher Gruseke: Yeah, we are having success with the SBA. We have a really strong team. We could definitely originate more SBA loans. We're choosing to keep the volume kind of level where it's at. We're not increasing our $100 million that we put out as how we were thinking about fee income, although other fees are coming in higher as well. That is the reason for the increase in the fee guidance. If we wanted to do more, we could, is the answer. Similarly, as we're two years into this, we're going in a measured.

Chris Gruseke: Yeah, we are having success with the SBA. We have a really strong team. We could definitely originate more SBA loans. We're choosing to keep the volume kind of level where it's at. We're not increasing our $100 million that we put out as how we were thinking about fee income, although other fees are coming in higher as well. That is the reason for the increase in the fee guidance. If we wanted to do more, we could, is the answer. Similarly, as we're two years into this, we're going in a measured.

Speaker #5: Yeah, we are having success with the SBA. We have a really strong team. We could definitely originate more SBA loans.

Speaker #5: We're choosing to keep the the volume kind of level where it's at . We're not increasing our $100 million that we put out as you know , how we were thinking about fee income , although other fees are coming in higher as well .

Speaker #5: So that that is the reason for the increase in the fee guidance . So , so if we wanted to do more , we could is the answer personally , as we're two years into this where we're going in a measured

Mark Shetley: Got it. Appreciate it. That's it for me. That should take my questions.

Speaker #4: Got it . Appreciate it . That's that's it for me . Thanks for taking my questions .

Matthew McNeill: Thank you.

Chris Gruseke: Thank you.

Matthew McNeill: Mark.

Courtney Sacchetti: Mark.

Speaker #5: Thank you .

Speaker #2: Mark

Christopher Gruseke: Operator?

Chris Gruseke: Operator?

Speaker #5: Operator

Matthew McNeill: Operator, we're ready for the next question.

Courtney Sacchetti: Operator, we're ready for the next question.

Speaker #6: Operator . We're ready for the next question

Operator: Apologies. Our next question is from the line of

Operator: Apologies. Our next question is from the line of Go ahead.

Speaker #3: Apologies . Our next question is from the line of Go ahead

Matthew McNeill: Go ahead. Fetty, are you there? Yes. Sorry, I didn't hear the name, so my apologies on that. No.

Courtney Sacchetti: Fetty, are you there?

Speaker #6: Buddy , are you there

Feddie Strickland: Yes. Sorry, I didn't hear the name, so my apologies on that.

Speaker #7: Yes . Sorry . I didn't hear . I didn't hear the name . So my apologies on that . No .

Chris Gruseke: No. Me either. Sorry.

Christopher Gruseke: Me either. Sorry.

Fetty: You're up, Fetty. All right, perfect. No worries. It's all good. I just wanted to start by asking about the Brooklyn office. Does that sort of serve as a home base for some of the deposit gathering teams that are in the city, and I was just curious, how much lending do you think you will do out of that office?

Courtney Sacchetti: You're up, Fetty.

Speaker #5: Sorry about .

Speaker #6: That . You're up . Betty .

Feddie Strickland: All right, perfect. No worries. It's all good. I just wanted to start by asking about the Brooklyn office. Does that sort of serve as a home base for some of the deposit gathering teams that are in the city, and I was just curious, how much lending do you think you will do out of that office?

Speaker #7: All right . Perfect . No worries . It's all good . It's just , you know , wanted to start by asking about the Brooklyn office .

Speaker #7: Just . Is that sort of serve as a home base for some of the deposit gathering teams that are in the city . And I was just curious how much lending do you think you will do out of that office

Christopher Gruseke: I think we'll do a modest amount of lending out of the office, Fetty. It wasn't the primary reason to open the office. It was definitely a deposit play, which has already taken off and been robust just in the 10 months leading up to the branch opening. The team was very active and we've had good success there. Lending isn't a part of the strategy there. However, we do think that some loans will come out of it. We've been lending in and around NYC since the existence of the bank, so it really shouldn't change a whole lot as far as the geography where we're lending. Fetty, I think we've said this before, this is Chris. We don't have a plan to go and try to find branches in particular markets or make sure we have more branches. We hired the people first.

Matt McNeill: I think we'll do a modest amount of lending out of the office, Fetty. It wasn't the primary reason to open the office. It was definitely a deposit play, which has already taken off and been robust just in the 10 months leading up to the branch opening. The team was very active and we've had good success there. Lending isn't a part of the strategy there. However, we do think that some loans will come out of it. We've been lending in and around NYC since the existence of the bank, so it really shouldn't change a whole lot as far as the geography where we're lending.

Speaker #5: I think we'll do a modest amount of lending out of the office . It wasn't the primary reason to open the office . It was definitely a deposit play , which is already , you know , taken off and been , you know , robust just in the , you know , ten month leading up to the branch opening .

Speaker #5: The team was very active and , you know , we've had good , good success there . Lending isn't a part of the strategy there .

Speaker #5: However , we do we do think that some loans will come out of it , but we've been lending in and around NYC for for the since the existence of the bank .

Speaker #5: So it really shouldn't change a whole lot as far as, like, the geography where we're lending. And Betty, I think we've said this before – this is Chris.

Chris Gruseke: Fetty, I think we've said this before, this is Chris. We don't have a plan to go and try to find branches in particular markets or make sure we have more branches. We hired the people first. This is a very experienced private client group that's been together for years, has already had material and significant impact on our organization. If what they needed is a branch to assist in their platform, then we could build a branch. We happen to love Brooklyn. I was born there. We weren't going out of our way to that market. We were following our deposit team and their needs.

Speaker #5: It's we don't have a plan to go and try to find branches in particular markets or make sure we have more branches . We hired the people first .

Christopher Gruseke: This is a very experienced private client group that's been together for years, has already had material and significant impact on our organization. If what they needed is a branch to assist in their platform, then we could build a branch. We happen to love Brooklyn. I was born there. We weren't going out of our way to that market. We were following our deposit team and their needs.

Speaker #5: And this is a very experienced private client group that's been together for years , has already had , you know , material and significant impact on our organization and if what they needed is a branch to assist in their platform , then we could build a branch .

Speaker #5: It wasn't , you know , happened . We happen to love Brooklyn . I was born there , but we weren't going out of our way to enter that market .

Speaker #5: We were following our deposit team and their needs.

Fetty: Got it. That's helpful. Just switching gears to CRE concentration, given the current trend line, is it possible we could see that dip below 300% by year-end or maybe early next year, just based on what's currently in the pipeline and capital build and what have you? Or do you feel like you're kind of in a range where you're pretty comfortable, you're not as worried about crossing that 300% threshold?

Feddie Strickland: Got it. That's helpful. Just switching gears to CRE concentration, given the current trend line, is it possible we could see that dip below 300% by year-end or maybe early next year, just based on what's currently in the pipeline and capital build and what have you? Or do you feel like you're kind of in a range where you're pretty comfortable, you're not as worried about crossing that 300% threshold?

Speaker #7: Got it . That's helpful . And then just , switching gears to CRM concentration , given the trend line , is it possible we could see that dip below 300% by or maybe early next year .

Speaker #7: Just based on what's currently in the pipeline and capital building , what have you , or do you feel like you're kind of in a range where you're pretty comfortable , you're not as worried about crossing that 300 threshold

Christopher Gruseke: I'm sorry, is that the CRE concentration question?

Chris Gruseke: I'm sorry, is that the CRE concentration question?

Speaker #5: I'm sorry, is that the concentration question?

Fetty: Yes.

Feddie Strickland: Yes.

Speaker #7: Yes

Christopher Gruseke: We don't have 300 as a target. We're seeing a more diversified loan mix. It's conceivable, but it's not the plan. You can look at the trend. Over the last year, we've come down 10, no more, 375, 40 basis points. We are happy where it is. I guess we could live with it, but I suspect over time we'll get down there. Whether it's year-end or not, I don't know, but it's been a consistent trend for a while, and we're seeing a better flow of C&I deals, and we haven't done much office, et cetera. I think it'll naturally kind of get there, but it's not a particular goal. I wouldn't be surprised if it came down another 10, 20 basis points over the course of the year.

Chris Gruseke: We don't have 300 as a target. We're seeing a more diversified loan mix. It's conceivable, but it's not the plan. You can look at the trend. Over the last year, we've come down 10, no more, 375, 40 basis points. We are happy where it is. I guess we could live with it, but I suspect over time we'll get down there. Whether it's year-end or not, I don't know, but it's been a consistent trend for a while, and we're seeing a better flow of C&I deals, and we haven't done much office, et cetera. I think it'll naturally kind of get there, but it's not a particular goal. I wouldn't be surprised if it came down another 10, 20 basis points over the course of the year.

Speaker #5: We don't have 300 as a target . We're seeing a more diversified loan mix . It's conceivable , but it's not the plan .

Speaker #5: So you could look at the trend , you know , over the last year we've come down ten no more three 7540 basis points .

Speaker #5: Yeah . We are happy where it is . I guess we could live with it . But I suspect over time we'll get down there .

Speaker #5: It's whether it's year end or not , I don't know . But it's been a consistent trend for a while and we're seeing a better flow of Qi and ideals .

Speaker #5: And you know , we haven't done much office . ET cetera . So I think it'll naturally kind of get there . But it's not a particular goal .

Speaker #5: I wouldn't be surprised if it came down another ten , 20 basis points over the course of the year

Fetty: Just on the credit side, it looked like the modest increase in non-accrual there was CRE driven. I apologize if I missed it in the opening remarks. Can you speak a little bit more on maybe what drove the increase there, and what you might expect on resolution of those?

Feddie Strickland: Just on the credit side, it looked like the modest increase in non-accrual there was CRE driven. I apologize if I missed it in the opening remarks. Can you speak a little bit more on maybe what drove the increase there, and what you might expect on resolution of those?

Speaker #8: Got it .

Speaker #7: And then just on the credit side , it looked like the modest increase in our accruals . There was theory driven . I apologize if I missed it in the opening remarks , but can you speak a little bit more on maybe what drove the increase there and what you might expect on resolution of those

Matthew McNeill: Yeah. The increase was just a tenant left the building, sponsors not able to make the payment. There's equity in the deal. We think that we'll be able to work with them to dispose of the real estate and be paid there. In Chris's comments, you heard that there is some visibility into resolution to several of the credits that are on our NPAs, and we expect those to happen in the next couple of quarters and have some meaningful resolution and a much lower NPA number.

Matt McNeill: Yeah. The increase was just a tenant left the building, sponsors not able to make the payment. There's equity in the deal. We think that we'll be able to work with them to dispose of the real estate and be paid there. In Chris's comments, you heard that there is some visibility into resolution to several of the credits that are on our NPAs, and we expect those to happen in the next couple of quarters and have some meaningful resolution and a much lower NPA number.

Speaker #9: Yeah , the increase was was just a , a tenant left the building sponsors , you know , not able to , to make the payment .

Speaker #9: There's equity in the deal. We think that we'll be able to work with them to dispose of the real estate and be paid their share.

Speaker #9: We , you know , as Chris comments , you heard that , you know , there is some visibility into resolution to several of the credits that are on our NPAs .

Speaker #9: And we expect those to happen in the , you know , next couple of quarters and , you know , have some meaningful resolution in a much lower NPA number

Fetty: Perfect. Thanks for taking my question.

Feddie Strickland: Perfect. Thanks for taking my question.

Speaker #7: Perfect . Thanks for taking my questions

Operator: From Raymond James, your next question comes from the line of Steve Moss. Please go ahead.

Speaker #3: From Raymond James , your next question comes from the line of Steve Moss . Please go ahead .

Chase: Hey, guys. Good morning. It's Chase on for Steve.

[Analyst] (Raymond James): Hey, guys. Good morning. It's Chase on for Steve.

Speaker #10: Hey, guys. Good morning. It's Chase on for Steve.

Christopher Gruseke: Good morning, Chase.

Chris Gruseke: Good morning, Chase.

Chase: Hey, guys. On loan pricing, can you tell me where new origination yields are coming on at these days?

[Analyst] (Raymond James): Hey, guys. On loan pricing, can you tell me where new origination yields are coming on at these days?

Speaker #5: Chase .

Speaker #10: Hey guys . On loan pricing . Can you tell me where new origination yields are coming on at these days

Courtney Sacchetti: For Q1, our average rate was 7.5%.

Speaker #6: For the first quarter , our average rate was 7.5% .

Chase: I appreciate that. Just one more from me. I saw that you guys nibbled at buybacks this quarter. Can you tell us what would bring you more into that market?

[Analyst] (Raymond James): I appreciate that. Just one more from me. I saw that you guys nibbled at buybacks this quarter. Can you tell us what would bring you more into that market?

Speaker #10: I appreciate that . And just one more for me . I thought you guys nibbled at buybacks this quarter . Can you tell us what would bring you more into that market

Christopher Gruseke: I'm sorry, can you repeat that? I heard buybacks and then it cut out.

Chris Gruseke: I'm sorry, can you repeat that? I heard buybacks and then it cut out.

Speaker #5: I'm sorry . Can you repeat that ? I heard buybacks and then cut out .

Chase: Yeah. I saw you nibbled at buybacks. Can you tell us what would bring you more into that market?

[Analyst] (Raymond James): Yeah. I saw you nibbled at buybacks. Can you tell us what would bring you more into that market?

Speaker #10: Yeah I saw you enabled that . Buybacks . Could you tell us what bring you more into that market

Christopher Gruseke: We look at the price quarterly or daily when we're not in blackout. We had a plan in place. I expect the number to grow over the course of the year, but you'd have to look at our consolidated CET1 ratio. We are still trying to grow that. At the levels we have gotten to the last couple of days and the amount of stock that we issued, I wouldn't be surprised to see us over the course of the year nibble some back. Our goal is still to get to 11%, not necessarily by year-end, in the CET1 ratio at holdco.

Chris Gruseke: We look at the price quarterly or daily when we're not in blackout. We had a plan in place. I expect the number to grow over the course of the year, but you'd have to look at our consolidated CET1 ratio. We are still trying to grow that. At the levels we have gotten to the last couple of days and the amount of stock that we issued, I wouldn't be surprised to see us over the course of the year nibble some back. Our goal is still to get to 11%, not necessarily by year-end, in the CET1 ratio at holdco.

Speaker #5: We look at the price quarterly or daily while we're you know , when we're not in blackout , we had a plan in place .

Speaker #5: I expect that number grow over the course of the year . But you'd have to look at our our consolidated city ratio . And we are still trying to grow that .

Speaker #5: If the levels were , you know , have gotten to the last couple of days and the amount of stock that we issue , that wouldn't be surprised to see us over the course of the year , nibble some back .

Speaker #5: But we still we still need to , you know , our goal is still to get to 11% , not necessarily by year end .

Speaker #5: And the CEO , the city one ratio at the whole code

Chase: All right, guys. I appreciate all the color. My other questions have been answered. Thank you, guys.

[Analyst] (Raymond James): All right, guys. I appreciate all the color. My other questions have been answered. Thank you, guys.

Speaker #10: All right , guys , I appreciate all the color . I have a question for been answered . Thank you guys .

Christopher Gruseke: Okay.

Chris Gruseke: Okay.

Speaker #5: Okay

Operator: With no further questions in queue. Thank you. This does conclude today's conference call. You may now disconnect.

Q1 2026 Bankwell Financial Group Inc Earnings Call

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