Bankwell Financial Group, Inc. - Quarter Report: 2025 September (Form 10-Q)

Other() ()Total noninterest income Noninterest expenseSalaries and employee benefits Occupancy and equipment Professional services Data processing Director fees FDIC insurance Marketing Other Total noninterest expense Income before income tax expense Income tax expense Net income$ $ $ $ Earnings Per Common Share:Basic$ $ $ $ Diluted$ $ $ $ Weighted Average Common Shares Outstanding:Basic Diluted Dividends per common share$ $ $ $

See accompanying notes to consolidated financial statements (unaudited)

Bankwell Financial Group, Inc.

Consolidated Statements of Comprehensive Income (Loss) – (unaudited)

(In thousands)


	Three Months Ended September 30,		Nine Months Ended September 30,
	2025	2024	2025	2024
Net income	$	$	$	$
Other comprehensive income:
Unrealized gains (losses) on securities:
Unrealized holding gains on available for sale securities
Reclassification adjustment for gains realized in net income
Net change in unrealized gains
Income tax expense	()	()	()	()
Unrealized gains on securities, net of tax
Unrealized losses on interest rate swaps:
Unrealized losses on interest rate swaps	()	()	()	()
Income tax benefit
Unrealized losses on interest rate swaps, net of tax	()	()	()	()
Total other comprehensive income (loss), net of tax				()
Comprehensive income	$	$	$	$

See accompanying notes to consolidated financial statements (unaudited)

Bankwell Financial Group, Inc.

Consolidated Statements of Shareholders' Equity - (unaudited)

(In thousands, except share data)

Number of Outstanding Shares

Common Stock

Retained Earnings

Accumulated Other Comprehensive (Loss) Income

Total

Balance at June 30, 2025

()

Net income

—

Other comprehensive income, net of tax

—

Cash dividends declared ($ per share)

—

()

—

()

Stock-based compensation expense

—

Forfeitures of restricted stock

()

—

Issuance of restricted stock

—

Balance at September 30, 2025

()

Number of Outstanding Shares

Common Stock

Retained Earnings

Accumulated Other Comprehensive (Loss) Income

Total

Balance at June 30, 2024

()

Net income

—

Other comprehensive income, net of tax

—

Cash dividends declared ($ per share)

—

()

—

()

Stock-based compensation expense

—

Forfeitures of restricted stock

()

—

Issuance of restricted stock

—

Repurchase of common stock

()

—

()

Balance at September 30, 2024

()

See accompanying notes to consolidated financial statements (unaudited)

Bankwell Financial Group, Inc.

Consolidated Statements of Shareholders' Equity - (unaudited)

(In thousands, except share data)

Number of Outstanding Shares

Common Stock

Retained Earnings

Accumulated Other Comprehensive (Loss) Income

Total

Balance at December 31, 2024

()

Net income

—

Other comprehensive income, net of tax

—

Cash dividends declared ($ per share)

—

()

—

()

Stock-based compensation expense

—

Forfeitures of restricted stock

()

—

Issuance of restricted stock

—

Repurchase of common stock

()

—

()

Balance at September 30, 2025

()

Number of Outstanding Shares

Common Stock

Retained Earnings

Accumulated Other Comprehensive (Loss) Income

Total

Balance at December 31, 2023

()

Net income

—

Other comprehensive (loss), net of tax

—

()

Cash dividends declared ($ per share)

—

()

—

()

Stock-based compensation expense

—

Forfeitures of restricted stock

()

—

Issuance of restricted stock

—

Gains and fees from sales of loans

()

Stock-based compensation

Loss on sale of other real estate owned, net

Change in other real estate owned

()

Net change in:

Deferred tax assets

Deferred loan fees

()

Accrued interest receivable

()

Other assets

()

Accrued expenses and other liabilities

()

Net cash provided by operating activities

Cash flows from investing activities

Proceeds from principal repayments on available for sale securities

Proceeds from principal repayments on held to maturity securities

Net proceeds from sales and calls of available for sale securities

Net proceeds from calls of held to maturity securities

Purchases of marketable equity securities

()

Purchases of available for sale securities

()

Purchases of held to maturity securities

()

Net (increase) decrease in loans

()

Proceeds from sales of loans

Purchases of premises and equipment, net

()

Reduction of Federal Home Loan Bank stock

Proceeds from the sale of other real estate owned

Net cash provided by investing activities

See accompanying notes to consolidated financial statements (unaudited)

Bankwell Financial Group, Inc.

Consolidated Statements of Cash Flows - (unaudited) (Continued)

(In thousands)


	Nine Months Ended September 30,
	2025		2024
Cash flows from financing activities
Net change in time certificates of deposit	$	()	$
Net change in other deposits			()
Payments on FHLB advances	()
Proceeds on FHLB advances
Dividends paid on common stock	()		()
Repurchase of common stock	()		()
Net cash used in financing activities	()		()
Net (decrease) increase in cash and cash equivalents	()
Cash and cash equivalents:
Beginning of year
End of period	$		$
Supplemental disclosures of cash flows information:
Cash paid for:
Interest	$		$
Income taxes
Noncash investing and financing activities:
Loans transferred to other real estate owned	$		$
Net change in unrealized gains or losses on available for sale securities
Net change in unrealized gains or losses on interest rate swaps	()		()
Transfer of loans from held-for-investment to held-for-sale

See accompanying notes to consolidated financial statements (unaudited)

mile radius around our branch network. In addition, the Bank pursues certain types of commercial lending opportunities outside our market, particularly where we have strong business relationships. The Bank operates branches in New Canaan, Stamford, Fairfield, Westport, Darien, Norwalk, and Hamden, Connecticut.

reportable segment. All of the Company’s activities are interrelated, and each activity is dependent and assessed based on how each of the activities of the Company supports the others. For example, lending is dependent upon the ability of the Company to fund itself with deposits and borrowings while managing the interest rate and credit risk. Accordingly, all significant operating decisions are based upon analysis of the Company as segment or unit.

The Chief Executive Officer (CEO), acting as the Chief Operating Decision Maker (CODM), determines the Company's reportable segment. This determination is based on information about the Company's banking operations, its primary business, and the level of detail provided to the CODM for performance review. Similar operating performance, products and services, and customer bases allow for aggregation of business components into this segment. The CODM evaluates financial performance by reviewing the consolidated financial results of the Company, analyzing factors such as revenue streams, significant expenses, and capital levels, as well as budget-to-actual results. Consolidated net income and related performance metrics are also used to benchmark the Company’s performance against competitors. The analysis of the Company’s results, including benchmarking, informs performance assessment and compensation decisions. The banking operations generate revenue through loans, investments, and deposits, while significant expenses include interest expense, the provision for credit losses, and salaries and employee benefits. All operations are domestic.

$ $()$ Due from one through five years () Due from five through ten years () Due after ten years () Total U.S. Government and agency obligations () Corporate bondsDue from one through five years () Due from five through ten years () Due after ten years Total corporate bonds () Total available for sale securities$ $ $()$ Held to maturity securities:State agency and municipal obligationsLess than one year$ $ $ $ Due from five through ten years Due after ten years () Government-sponsored mortgage backed securitiesNo contractual maturity Total held to maturity securities$ $ $()$

$ $()$ Due from one through five years () Due from five through ten years () Due after ten years () Total U.S. Government and agency obligations () Corporate bondsDue from five through ten years () Due after ten years () Total corporate bonds () Total available for sale securities$ $ $()$ Held to maturity securities:State agency and municipal obligationsLess than one year$ $ $ $ Due from one through five years () Due after ten years () Total state and municipal obligations () Government-sponsored mortgage backed securitiesNo contractual maturity Total held to maturity securities$ $ $()$

There was one sale and sales of investment securities during the nine months ended September 30, 2025 or 2024, respectively.

At September 30, 2025 and December 31, 2024, none of the Company's securities were pledged as collateral with the Federal Home Loan Bank ("FHLB") or any other institution.

As of September 30, 2025 and December 31, 2024, the actual durations of the Company's available for sale securities were significantly shorter than the stated maturities.

As of September 30, 2025, the Company held marketable equity securities with a fair value of $ million and an amortized cost of $ million. At December 31, 2024, the Company held marketable equity securities with a fair value of $ million and an amortized cost of $ million. These securities represent an investment in mutual funds that have an objective to make investments for Community Reinvestment Act ("CRA") purposes.

$ %$ $() %$ $() %Corporate bonds () () State agency and municipal obligations () () Total investment securities$ $ %$ $() %$ $() %

Length of Time in Continuous Unrealized Loss Position

Less Than 12 Months

12 Months or More

Total

Fair Value

Unrealized
Loss

Percent
Decline from
Amortized Cost

Fair Value

Unrealized
Loss

Percent
Decline from
Amortized Cost

Fair Value

Unrealized
Loss

Percent
Decline from
Amortized Cost

(Dollars in thousands)

December 31, 2024

U.S. Government and agency obligations

()

Corporate bonds

()

State agency and municipal obligations

()

Total investment securities

()

There were and available for sale securities or held to maturity securities as of September 30, 2025 and December 31, 2024, respectively, in which the fair value of the security was less than the amortized cost of the security.

The U.S. Government and agency obligations owned are either direct obligations of the U.S. Government or guaranteed by the U.S. Government. Therefore, the contractual cash flows are guaranteed and as a result the unrealized losses in this portfolio are considered to be only temporarily impaired.

The corporate bonds are investments in subordinated debt of federally insured banks, the majority of which are callable after five years of origination. The Company monitors its corporate bond, state agency and municipal bond portfolios and considers them to have minimal default risk.

The Company has the intent and ability to retain its investment securities in an unrealized loss position at September 30, 2025 until the decline in value has recovered or the security has matured.

$ Commercial Construction Commercial business Consumer Total loans ACL-Loans()()Deferred loan origination fees, net()()Loans receivable, net$ $

Lending activities primarily consist of commercial real estate loans, commercial business loans and, to a lesser degree, consumer loans. Loans may also be granted for the construction of commercial properties. The majority of commercial mortgage loans are collateralized by first or second mortgages on real estate.

Risk management

The Company has established credit policies applicable to each type of lending activity in which it engages. The Company evaluates the creditworthiness of each client and extends credit of up to % of the market value of the collateral, (% maximum for owner occupied commercial real estate), depending on the client's creditworthiness and the type of collateral. The client’s ability to service the debt is monitored on an ongoing basis. Real estate is the primary form of collateral. Other important forms of collateral are business assets, deposits and marketable securities. While collateral provides assurance as a secondary source of repayment, the Company ordinarily requires the primary source of repayment for commercial loans to be based on the client’s ability to generate continuing cash flows. The Company does not provide first or second lien residential mortgage loans secured by residential properties but has a small legacy portfolio which continues to amortize, pay off due to the sale of the collateral, or refinance away from the Company.

Credit quality of loans and the ACL-Loans

Management segregates the loan portfolio into defined segments, which are used to develop and document a systematic method for determining the Company's ACL-Loans. The portfolio segments are segregated based on loan types and the underlying risk factors present in each loan type. Such risk factors are periodically reviewed by management and revised as deemed appropriate.

% of the appraised value of the property and the Company requires a first or second lien position on the property. These loans can be affected by economic conditions and the values of the underlying properties.

Commercial Real Estate: This portfolio segment includes loans secured by commercial real estate, multi-family dwellings, owner-occupied commercial real estate and investor-owned one-to-four family dwellings. Loans secured by commercial real estate generally have larger loan balances and more credit risk than owner occupied one-to-four family mortgage loans.

Construction: This portfolio segment includes commercial construction loans for commercial development projects, including apartment buildings and condominiums, as well as office buildings, retail and other income producing properties and land loans, which are loans made with land as collateral. Construction and land development financing generally involves greater credit risk than long-term financing on improved, owner-occupied or leased real estate. Risk of loss on a construction loan depends largely upon the accuracy of the initial estimate of the value of the property at completion of construction compared to the estimated cost (including interest) of construction and other assumptions. If the estimate of construction cost proves to be inaccurate, the Company may be required to advance additional funds beyond the amount originally committed in order to protect the value of the property. Moreover, if the estimated value of the completed project proves to be inaccurate, the client may hold a property with a value that is insufficient to assure full repayment through sale or refinance. Construction loans also expose the Company to the risks that improvements will not be completed on time in accordance with specifications and projected costs and that repayment will depend on the successful operation or sale of the properties, which may cause some clients to be unable to continue paying debt service, which exposes the Company to greater risk of non-payment and loss.

Commercial Business: This portfolio segment includes commercial business loans secured by assignments of corporate assets and personal guarantees of the business owners. Commercial business loans generally have higher interest rates and shorter terms than other loans, and their repayment generally depends on the successful operation of the client’s business.

Consumer: This portfolio segment includes loans to finance insurance premiums secured by the cash surrender value of life insurance and marketable securities, overdraft lines of credit, and unsecured personal loans to high net worth individuals.

$ $ $ $ $ Charge-offs ()()()Recoveries (Credit) provision for credit losses() () () Ending balance$ $ $ $ $ $

Residential Real Estate

Commercial Real Estate

Construction

Commercial Business

Consumer

Total

(In thousands)

Three Months Ended September 30, 2024

Beginning balance

Charge-offs

()

Recoveries

()

(Credit) provision for credit losses

()

Ending balance

$ $ $ $ $ Charge-offs () ()()()Recoveries (Credit) provision for credit losses()() Ending balance$ $ $ $ $ $

Residential Real Estate

Commercial Real Estate

Construction

Commercial Business

Consumer

Total

(In thousands)

Nine Months Ended September 30, 2024

Beginning balance

Charge-offs

()

Recoveries

()

(Credit) provision for credit losses

()

Ending balance

We evaluate whether a modification, extension or renewal of a loan is a current period origination in accordance with GAAP. Generally, loans up for renewal are subject to a full credit evaluation before the renewal is granted and such loans are considered current period originations for purpose of the tables below.

$ $ $ $ $ $ Special Mention Substandard Doubtful Total Residential Real Estate Loans$ $ $ $ $ $ $ Residential Real Estate charge-off Current period charge-offs$ $ $ $ $ $ $ Commercial Real Estate LoansPass$ $ $ $ $ $ $ Special Mention Substandard Doubtful Total Commercial Real Estate Loans$ $ $ $ $ $ $ Commercial Real Estate charge-offCurrent period charge-offs$ $ $ $ $ $ $ Construction LoansPass$ $ $ $ $ $ $ Special Mention Substandard Doubtful Total Construction Loans$ $ $ $ $ $ $ Construction charge-offCurrent period charge-offs$ $ $ $ $ $ $ Commercial Business LoansPass$ $ $ $ $ $ $ Special Mention Substandard Doubtful Total Commercial Business Loans$ $ $ $ $ $ $ Commercial Business charge-offCurrent period charge-offs$ $ $ $ $ $ $ Consumer LoansPass$ $ $ $ $ $ $ Special Mention Substandard Doubtful Total Consumer Loans$ $ $ $ $ $ $ Consumer charge-offCurrent period charge-offs$ $ $ $ $ $ $ Total LoansPass$ $ $ $ $ $ $ Special Mention Substandard Doubtful Total Loans$ $ $ $ $ $ $ Total charge-offCurrent period charge-offs$ $ $ $ $ $ $

$ $ $ $ $ $ Special Mention Substandard Doubtful Total Residential Real Estate Loans$ $ $ $ $ $ $ Residential Real Estate charge-offCurrent period charge-offs$ $ $ $ $ $ $ Commercial Real Estate LoansPass$ $ $ $ $ $ $ Special Mention Substandard Doubtful Total Commercial Real Estate Loans$ $ $ $ $ $ $ Commercial Real Estate charge-offCurrent period charge-offs$ $ $ $ $ $ $ Construction LoansPass$ $ $ $ $ $ $ Special Mention Substandard Doubtful Total Construction Loans$ $ $ $ $ $ $ Construction charge-offCurrent period charge-offs$ $ $ $ $ $ $ Commercial Business LoansPass$ $ $ $ $ $ $ Special Mention Substandard Doubtful Total Commercial Business Loans$ $ $ $ $ $ $ Commercial Business charge-offCurrent period charge-offs$ $ $ $ $ $ $ Consumer LoansPass$ $ $ $ $ $ $ Special Mention Substandard Doubtful Total Consumer Loans$ $ $ $ $ $ $ Consumer charge-offCurrent period charge-offs$ $ $ $ $ $ $ Total LoansPass$ $ $ $ $ $ $ Special Mention Substandard Doubtful Total Loans$ $ $ $ $ $ $ Total charge-offCurrent period charge-offs$ $ $ $ $ $ $

$ Commercial real estate Construction Commercial business Consumer Subtotal Loans collectively evaluated for impairment:Residential real estate Commercial real estate Construction Commercial business Consumer Subtotal Total$ $


	Portfolio	ACL-Loans
	(In thousands)
December 31, 2024
Loans individually evaluated for impairment:
Residential real estate	$	$
Commercial real estate
Construction
Commercial business
Consumer
Subtotal
Loans collectively evaluated for impairment:
Residential real estate
Commercial real estate
Construction
Commercial business
Consumer
Subtotal

Total	$	$

Credit quality indicators

To measure credit risk for the loan portfolios, the Company employs a credit risk rating system. This risk rating represents an assessed level of a loan’s risk based on the character and creditworthiness of the borrower/guarantor, the capacity of the borrower to adequately service the debt, any credit enhancements or additional sources of repayment, and the quality, value and coverage of the collateral, if any.

$ $ $ $ $ $ $ Special Mention Substandard Doubtful Loss Total loans$ $ $ $ $ $ $ $

Residential and Consumer Credit Quality Indicators

September 30, 2025

December 31, 2024

Residential Real Estate

Consumer

Total

Residential Real Estate

Consumer

Total

(In thousands)

Pass

Special Mention

Substandard

Doubtful

Loss

Total loans

$ $ $ $ $ Commercial real estate Construction Commercial business Consumer Total loans$ $ $ $ $ $

December 31, 2024

30-59 Days Past Due

60-89 Days Past Due

90 Days or Greater Past Due

Total Past Due

Current

Total Loans

(In thousands)

Real estate loans:

Residential real estate

Commercial real estate

Construction

Commercial business

Consumer

Total loans

There were loans delinquent greater than 90 days and still accruing interest as of September 30, 2025 or December 31, 2024.

$ Commercial real estate Commercial business Construction Consumer Total$ $

Interest income on loans that would have been recognized if loans on nonaccrual status had been current in accordance with their original terms for the nine months ended September 30, 2025 and 2024 was $ million and $ million, respectively.

At September 30, 2025 and December 31, 2024, there were no commitments to lend additional funds to any borrower on nonaccrual status. Nonaccrual loans with no specific reserve totaled $ million and $ million at September 30, 2025 and December 31, 2024, respectively, as these loans were deemed to be adequately collateralized.

Individually evaluated loans

An individually evaluated loan is generally one for which it is probable, based on current information, that the Company will not collect all the amounts due in accordance with the contractual terms of the loan. Individually evaluated loans are individually evaluated for credit losses.

The Company also individually evaluates all insurance premium loans within the Consumer portfolio segment, irrespective of credit risk ratings.

$ $ $ $— $— Commercial real estate — — Construction — — Commercial business — — Consumer — — Total individually evaluated loans without a valuation allowance — — Individually evaluated loans with a valuation allowance:Residential real estate$ $ $ $ $ $ Commercial real estate Construction Commercial business Consumer Total individually evaluated loans with a valuation allowance Total individually evaluated loans$ $ $ $ $ $

$ $ $ Commercial real estate Commercial business Construction Consumer Total individually evaluated loans without a valuation allowance Individually evaluated loans with a valuation allowance:Residential real estate$ $ $ $ Commercial real estate Commercial business Construction Consumer Total individually evaluated loans with a valuation allowance Total individually evaluated loans$ $ $ $

Loan Modifications

A loan will be considered modified as defined by ASC 326 when both of the following conditions are met: 1) the borrower is experiencing financial difficulties and 2) the modification constitutes a direct change in contractual cash flows for a significant period of time. Modified terms are dependent upon the financial position and needs of the individual borrower.

There were new loan modifications reportable under ASC 326 for $ million at September 30, 2025. There was new loan modification reportable under ASC 326 for $ million at December 31, 2024. There were nonaccrual modified loans at September 30, 2025. There was nonaccrual modified loan at December 31, 2024. There were loans modified that re-defaulted at September 30, 2025 and December 31, 2024.

$ $ $ (Credit) for credit losses (unfunded commitments)()()()()Balance at end of period$ $ $ $

Components of Provision for Credit Losses

$ $ $ (Credit) for credit losses (unfunded commitments)()()()()Provision for credit losses$ $ $ $

shares authorized and shares issued and outstanding at September 30, 2025 and shares authorized and shares issued and outstanding at December 31, 2024. The Company's stock is traded on the Nasdaq Global Market under the ticker symbol BWFG.

Dividends

The Company’s shareholders are entitled to dividends when and if declared by the Board of Directors out of funds legally available. The ability of the Company to pay dividends depends, in part, on the ability of the Bank to pay dividends to the Parent Corporation. In accordance with Connecticut statutes, regulatory approval is required to pay dividends in excess of the Bank’s profits retained in the current year plus retained profits from the previous two years. The Bank is also prohibited from paying dividends that would reduce its capital ratios below minimum regulatory requirements.

Issuer Purchases of Equity Securities

On December 19, 2018, the Company's Board of Directors authorized a share repurchase program of up to shares of the Company's Common Stock ("Prior Plan") and, on October 27, 2021, the Company’s Board of Directors authorized the repurchase of an additional shares under the Prior Plan. During the year ended December 31, 2024, the Company purchased shares of its Common Stock at a weighted average of $ per share. The Company purchased shares of the Company's common stock pursuant to the Prior Plan.

On October 28, 2024, the Company announced that on October 23, 2024, its Board of Directors authorized a share repurchase plan ("New Plan"). Under the terms of the New Plan, the Company is authorized to buy back up to shares of its outstanding common stock. In connection with the authorization of the New Plan, the Company terminated the Prior Plan. During the year ended December 31, 2024, the Company purchased shares under the New Plan.

shares of its Common Stock at a weighted average price of $ per share.

)$ $()Other comprehensive income (loss) before reclassifications, net of tax () Amounts reclassified from accumulated other comprehensive (loss) income, net of tax ()()Net other comprehensive income (loss) () Balance at September 30, 2025$()$ $()

Net Unrealized Gain (Loss) on Available for Sale Securities

Net Unrealized Gain (Loss) on Interest Rate Swaps

Total

(In thousands)

Balance at June 30, 2024

()

Other comprehensive income (loss) before reclassifications, net of tax

()

Amounts reclassified from accumulated other comprehensive (loss) income, net of tax

()

Net other comprehensive income (loss)

()

Balance at September 30, 2024

()

Net Unrealized Gain (Loss) on Available for Sale Securities

Net Unrealized Gain (Loss) on Interest Rate Swaps

Total

(In thousands)

Balance at December 31, 2024

()

Other comprehensive income (loss) before reclassifications, net of tax

()

Amounts reclassified from accumulated other comprehensive (loss) income, net of tax

()

Net other comprehensive income (loss)

()

Balance at September 30, 2025

()

Net Unrealized Gain (Loss) on Available for Sale Securities

Net Unrealized Gain (Loss) on Interest Rate Swaps

Total

(In thousands)

Balance at December 31, 2023

()

Other comprehensive income (loss) before reclassifications, net of tax

Amounts reclassified from accumulated other comprehensive (loss) income, net of tax

()

Net other comprehensive income (loss)

()

Balance at September 30, 2024

()

$ $ $ Interest expense on borrowingsTax expense()()()()Income tax expenseNet of tax$ $ $ $

$ $ $

Dividends to participating securities(1)

() ()

Undistributed earnings allocated to participating securities(1)

()()()()Net income for earnings per share calculation$ $ $ $ Weighted average shares outstanding, basic

Effect of dilutive equity-based awards(2)

Weighted average shares outstanding, diluted Net earnings per common share:Basic earnings per common share$ $ $ $ Diluted earnings per common share$ $ $ $

(1) Represents dividends paid and undistributed earnings allocated to unvested stock-based awards that contain non-forfeitable rights to dividends.

(2) Represents the effect of the assumed exercise of stock options and the vesting of restricted shares, as applicable, utilizing the treasury stock method.

%, a minimum Tier 1 risk-based capital ratio of %, a minimum Common Equity Tier 1 risk-based capital ratio of %, and a minimum leverage ratio of % in order to be "adequately capitalized." In addition to these requirements, banking organizations must maintain a capital conservation buffer consisting of common equity in an amount above the minimum risk-based capital requirements for “adequately capitalized” institutions equal to % of total risk-weighted assets, resulting in a requirement for the Bank to effectively maintain Common Equity Tier 1, Tier 1 and total capital ratios of %, % and %, respectively. The Bank must maintain the capital conservation buffer to avoid restrictions on the ability to pay dividends, pay discretionary bonuses, or to engage in share repurchases.

As of June 30, 2023, the Company no longer met the definition of a Small Bank Holding Company as the Company's assets exceeded $3 billion. Effective March 31, 2024, the Company became subject to the larger company capital requirements as set forth in the Economic Growth Act.

Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Company’s consolidated financial statements.

As of September 30, 2025, the Bank and Company met all capital adequacy requirements to which they are subject. There are no conditions or events since then that management believes have changed this conclusion.

%$ %$ %Tier I Capital to Risk-Weighted Assets % % %Total Capital to Risk-Weighted Assets % % %Tier I Capital to Average Assets % % %Minimum Regulatory Capital Required for Capital Adequacy Minimum Regulatory Capital to be Well Capitalized Under Prompt Corrective Action ProvisionsActual CapitalAmountRatioAmountRatioAmountRatioBankwell Financial Group, Inc.September 30, 2025Common Equity Tier 1 Capital to Risk-Weighted Assets$ %$ %$ %Tier I Capital to Risk-Weighted Assets % % %Total Capital to Risk-Weighted Assets % % %Tier I Capital to Average Assets % % %

%$ %$ %Tier I Capital to Risk-Weighted Assets % % %Total Capital to Risk-Weighted Assets % % %Tier I Capital to Average Assets % % %Minimum Regulatory Capital Required for Capital AdequacyMinimum Regulatory Capital to be Well Capitalized Under Prompt Corrective Action ProvisionsActual CapitalAmountRatioAmountRatioAmountRatioBankwell Financial Group, Inc.December 31, 2024Common Equity Tier 1 Capital to Risk-Weighted Assets$ %$ %$ %Tier I Capital to Risk-Weighted Assets % % %Total Capital to Risk-Weighted Assets % % %Tier I Capital to Average Assets % % %

Regulatory Restrictions on Dividends

The ability of the Company to pay dividends depends, in part, on the ability of the Bank to pay dividends to the Parent Corporation. In accordance with Connecticut statutes, regulatory approval is required to pay dividends in excess of the Bank’s profits retained in the current year plus retained profits from the previous two years. The Bank is also prohibited from paying dividends that would reduce its capital ratios below minimum regulatory requirements.

Reserve Requirements on Cash

The Bank was not required to maintain a minimum reserve balance in the Federal Reserve Bank (FRB) at September 30, 2025 or December 31, 2024.

$ Interest bearing accounts:NOW Money market Savings Time certificates of deposit Total interest bearing accounts Total deposits$ $

$ 2026 2027 2028 2029 and thereafter Total$ $

The aggregate amount of individual certificate accounts with balances of $250,000 or more was approximately $ million at September 30, 2025 and $ million at December 31, 2024.

Brokered certificates of deposits totaled $ million at September 30, 2025 and $ million at December 31, 2024, respectively. Brokered money market accounts totaled $ million at September 30, 2025 and $ million at December 31, 2024, respectively. Certificates of deposits from national listing services were $ million and $ million as of September 30, 2025 and December 31, 2024, respectively. There were no one-way buy Certificate of Deposit Account Registry Service ("CDARS") or one-way buy Insured Cash Sweep Service ("ICS") at September 30, 2025 or December 31, 2024. Brokered deposits are comprised of Brokered CDs, brokered money market accounts, one-way buy CDARS, and one-way buy ICS.

$ $ $ Money market Savings Time certificates of deposits Total interest expense on deposits$ $ $ $

equity award plans, which are collectively referred to as the “Stock Plans”. The current plan under which any future issuances of equity awards will be made is the 2022 Bankwell Financial Group, Inc. Stock Plan, or the “2022 Plan”. All equity awards made under the 2022 Plan are made by means of an award agreement, which contains the specific terms and conditions of the grant. To date, all equity awards have been in the form of restricted stock. At September 30, 2025, there were shares reserved for future issuance under the 2022 Plan.

Restricted Stock: Restricted stock provides grantees with rights to shares of common stock upon completion of a service period. Shares of unvested restricted stock are considered participating securities. Restricted stock awards generally vest over one to .

(1)

$ Granted

(2)

Vested()

(3)

Forfeited()

Unvested at end of period

(1) Includes shares of performance based restricted stock.

(2) Includes shares of performance based restricted stock.

(3) Includes shares of performance based restricted stock.

The total fair value of restricted stock awards vested during the nine months ended September 30, 2025 was $ million.

The Company's restricted stock expense for the nine months ended September 30, 2025 and September 30, 2024 was $ million and $ million, respectively. At September 30, 2025, there was $ million of unrecognized stock compensation expense for restricted stock, expected to be recognized over a weighted average period of years.

Performance Based Restricted Stock: The Company has shares of performance based restricted stock outstanding as of September 30, 2025 pursuant to the Company’s Stock Plans. The awards generally vest over a service period, provided certain performance metrics are met. The share quantity that ultimately vests can range between % and %, which is dependent on the degree to which the performance metrics are met. The Company records an expense over the vesting period based on (a) the probability that the performance metrics will be met and (b) the fair market value of the Company’s stock at the date of the grant.

10.

cash flow swap, designated as a hedging instrument, to add stability to interest expense and to manage its exposure to the variability of the future cash flows attributable to the contractually specified interest rate. The notional amount for the swap is $ million and the Company has entered into a pay-fixed cash flow swap to convert either rolling -day Federal Home Loan Bank advances or brokered deposits. Cash flow swaps with a positive fair value are recorded as other assets and cash flow swaps with a negative fair value are recorded as other liabilities on the Consolidated Balance Sheets.

pay-fixed portfolio layer method fair value swap, designated as a hedging instrument, with a total notional amount of $ million. The Company designated the fair value swap under the portfolio layer method (“PLM”). Under this method, the hedged item is designated as a hedged layer of a closed portfolio of financial loans that is anticipated to remain outstanding for the designated hedged period. Adjustments will be made to record the swap at fair value on the Consolidated Balance Sheets, with changes in fair value recognized in interest income. The carrying value of the fair value swap on the Consolidated Balance Sheets will also be adjusted through interest income, based on changes in fair value attributable to changes in the hedged risk.

$ $()$()

(1) These amounts include the amortized cost basis of closed portfolios of fixed rate loans used to designate hedging relationships in which the hedged item is the stated amount of assets in the closed portfolio anticipated to be outstanding for the designated hedged period. As of September 30, 2025 and December 31, 2024, the amortized cost basis of the closed portfolio used in this hedging relationship was $ million and $ million, the cumulative basis adjustments associated with this hedging relationships was $ million and $ million, respectively. As of September 30, 2025 and December 31, 2024, the amount of the designated hedged item was $ million, respectively.

As of September 30, 2025, the Company has interest rate swaps not designated as hedging instruments, to minimize interest rate risk exposure with loans to clients.

The Company accounts for all non-client related interest rate swaps as either effective cash flow or fair value swaps. None of the interest rate swap agreements contain any credit risk related contingent features. A hedging instrument is expected at inception to be highly effective at offsetting changes in the hedged transactions attributable to the changes in the hedged risk.

Derivatives not designated as hedges are not speculative and result from a service the Company provides to certain loan clients. The Company executes interest rate swaps with commercial banking clients to facilitate their respective risk management strategies. Those interest rate swaps are simultaneously hedged by offsetting derivatives that the Company executes with a third party, such that the Company minimizes its net risk exposure resulting from such transactions. As the interest rate derivatives associated with this program do not meet the strict hedge accounting requirements, changes in the fair value of both the client derivatives and the offsetting derivatives are recognized directly in earnings.

Other assets$ $— Accrued expenses and other liabilities$— Fair value swap$— Other assets$— $ Accrued expenses and other liabilities$ Derivatives not designated as hedging instruments:

Interest rate swaps(1)

$ Other assets$ $ Accrued expenses and other liabilities$

(1) Represents interest rate swaps with commercial banking clients, which are offset by derivatives with a third party.

Accrued interest receivables related to interest rate swaps as of September 30, 2025 totaled $ million and is excluded from the fair value presented in the table above. The fair value of interest rate swaps in a net asset position, including accrued interest, totaled $ million as of September 30, 2025.

Other assets$ $— Accrued expenses and other liabilities$— Fair value swap$— Other assets$— $ Accrued expenses and other liabilities$ Derivatives not designated as hedging instruments:

Interest rate swaps(1)

$ Other assets$ $ Accrued expenses and other liabilities$

(1) Represents interest rate swaps with commercial banking clients, which are offset by derivatives with a third party.

Accrued interest receivables related to interest rate swaps as of December 31, 2024 totaled $ million and is excluded from the fair value presented in the table above. The fair value of interest rate swaps in a net asset position, including accrued interest, totaled $ million as of December 31, 2024.

The effective portion of changes in the fair value of derivatives designated as cash flow hedges is recorded in accumulated other comprehensive income and is subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. Amounts reported in accumulated other comprehensive income related to derivatives will be reclassified to interest expense as interest payments are made on the Company’s variable-rate debt. The Company expects to reclassify $ million to reduce interest expense during the next 12 months.

The Company assesses the cash flow swaps hedge effectiveness of each hedging relationship by comparing the changes in cash flows of the derivative hedging instrument with the changes in cash flows of the designated hedged item or transaction. The Company does not offset derivative assets and derivative liabilities for financial statement presentation purposes.

The Company assesses the effectiveness of the fair value swap hedge with a regression analysis that compares the changes in forward curves to determine the value. The effective portion of changes in the fair value of derivatives designated as fair value hedges is recorded through interest income. The Company does not offset derivative assets and derivative liabilities for financial statement presentation purposes.

)$()$()$ Amounts reclassified from accumulated other comprehensive income()()()()Income tax (expense) benefit on items recognized in accumulated other comprehensive income Other comprehensive income$()$()$()$()

The above unrealized gains and losses are reflective of market interest rates as of the respective balance sheet dates. Generally, a lower interest rate environment will result in a negative impact to comprehensive income whereas a higher interest rate environment will result in a positive impact to comprehensive income.

$ $()$ Fair value derivative designated as hedging instrument () Total gain (loss) recognized in the consolidated statements of income within interest and fees on loans$ $ $ $

$ $ $ $ $

(1) Includes accrued interest receivable totaling $ thousand.

$ $ $ $ $

(1) Includes accrued interest payable totaling $ thousand.

December 31, 2024

(In thousands)

Gross Amounts Not Offset in the Consolidated Balance Sheets

Gross Amounts of Recognized Assets(1)

Gross Amounts Offset in the Statement of Financial Position

Net Amounts of Assets presented in the Statement of Financial Position

Financial Instruments

Cash Collateral Received

Net Amount

Derivative assets

(1) Includes accrued interest receivable totaling $ thousand.

December 31, 2024

(In thousands)

Gross Amounts Not Offset in the Consolidated Balance Sheets

Gross Amounts of Recognized Liabilities(1)

Gross Amounts Offset in the Statement of Financial Position

Net Amounts of Liabilities presented in the Statement of Financial Position

Financial Instruments

Cash Collateral Posted

Net Amount

Derivative liabilities

(1) Includes net interest payable totaling $ thousand.

11.

$ $ Available for sale investment securities:U.S. Government and agency obligations Corporate bonds Derivative asset Derivative liability December 31, 2024:Marketable equity securities$ $ $ Available for sale investment securities:U.S. Government and agency obligations Corporate bonds Derivative asset Derivative liability

Marketable equity securities and available for sale investment securities: The fair value of the Company’s investment securities is estimated by using pricing models or quoted prices of securities with similar characteristics (i.e., matrix pricing) and is classified within Level 1 or Level 2 of the valuation hierarchy. The pricing is primarily sourced from third-party pricing services overseen by management.

Derivative assets and liabilities: The Company’s derivative assets and liabilities consist of transactions as part of management’s strategy to manage interest rate risk. The valuation of the Company’s interest rate swaps is obtained from a third-party pricing service and is determined using a discounted cash flow analysis on the expected cash flows of each derivative. The pricing analysis is based on observable inputs for the contractual terms of the derivatives, including the period to maturity and interest rate curves. The Company has determined that the majority of the inputs used to value its interest rate derivatives fall within Level 2 of the fair value hierarchy.

Financial instruments measured at fair value on a nonrecurring basis

Certain assets and liabilities are measured at fair value on a non-recurring basis in accordance with GAAP. These include assets that are measured at the lower-of-cost-or-market that were recognized at fair value below cost at the end of the period as well as assets that are not measured at fair value on an ongoing basis but are subject to fair value adjustments in certain circumstances, such as when there is evidence of impairment.

$ $ Servicing asset, net December 31, 2024:Individually evaluated loans$ $ $ Servicing asset, net

12.

$ $ $ $ Federal funds sold Marketable equity securities Available for sale securities Held to maturity securities Loans receivable, net Accrued interest receivable FHLB stock Servicing asset, net of valuation allowance Derivative asset Other real estate owned Financial Liabilities:Noninterest bearing deposits$ $ $ $ $ NOW and money market Savings Time deposits Accrued interest payable Advances from the FHLB Subordinated debentures Servicing liability Derivative liability

The following methods and assumptions were used by management in estimating the fair value of its financial instruments:

Cash and due from banks, federal funds sold, accrued interest receivable and accrued interest payable: The carrying amount is a reasonable estimate of fair value.

Marketable equity securities, available for sale securities, and held to maturities: Fair values are based on quoted market prices or dealer quotes, if available. If a quoted market price is not available, fair value is estimated using quoted market prices for similar securities. The majority of the available for sale securities are considered to be Level 2 as other observable inputs are utilized, such as quoted prices for similar securities. Level 1 investment securities include investments in U.S. Treasury notes and in marketable equity securities for which a quoted price is readily available in the market. Level 3 held to maturity securities represent private placement municipal housing authority bonds for which no quoted market price is available. The fair value of these securities is estimated using a discounted cash flow model, using discount rates ranging from % to % as of September 30, 2025 and % to % as of December 31, 2024. These securities are CRA eligible investments.

FHLB stock: The carrying value of FHLB stock approximates fair value based on the most recent redemption provisions of the FHLB.

Loans receivable: For variable rate loans which reprice frequently and have no significant change in credit risk, fair values are based on carrying values. The fair value of fixed rate loans are estimated by discounting the future cash flows using the rates at which similar loans would be made to borrowers with similar credit ratings and for the same remaining maturities. The fair value methodology includes prepayment, default and loss severity assumptions applied by type of loan. The fair value estimate of the loans includes an expected credit loss.

million and $ million respectively.

13.

million fixed-to-floating rate subordinated note (the “2021 Note”) to an institutional accredited investor. The Company used the net proceeds to repay the outstanding balance of subordinated debt issued in 2015 and for general corporate purposes.

The 2021 Note bears interest at a fixed rate of % per year until October 14, 2026. Thereafter, the interest rate will reset quarterly at a variable rate equal to the then current three-month term SOFR plus basis points. The 2021 Note has a stated maturity of October 15, 2031 and is non-callable for . Beginning October 15, 2026, the Company may redeem the 2021 Note, in whole or in part, at its option. The 2021 Note is not redeemable at the option of the holder. The 2021 Note has been structured to qualify for the Company as Tier 2 capital under regulatory guidelines.

On August 19, 2022, the Company entered into a Subordinated Note Purchase Agreement with certain qualified institutional buyers, pursuant to which the Company issued and sold % fixed-to-floating rate subordinated notes due 2032 (the “2022 Notes”) in the aggregate principal amount of $ million. The Company used the net proceeds from the sale of the 2022 Notes for general corporate purposes.

The 2022 Notes bear interest at a fixed rate of % per year until August 31, 2027. Thereafter, the interest rate will reset quarterly at a variable rate equal to the then current three-month term SOFR plus basis points. The 2022 Notes have a stated maturity of September 1, 2032 and are non-callable for . Beginning August 19, 2027, the Company may redeem the 2022 Notes, in whole or in part, at its option. The 2022 Notes are not subject to redemption at the option of the holder. The 2022 Notes have been structured to qualify for the Company as Tier 2 capital under regulatory guidelines.

The Company incurred certain costs associated with the issuance of its subordinated debt. The Company capitalized these costs and they have been presented within subordinated debentures on the consolidated balance sheets. At September 30, 2025 and December 31, 2024, unamortized debt issuance costs were $ million and $ million, respectively. Debt issuance costs amortize over the expected life of the related debt. For the three months ended September 30, 2025 and 2024 the amortization

thousand and $ thousand, respectively, and were recognized as an increase to interest expense on borrowings within the Consolidated Statements of Income. For the nine months ended September 30, 2025 and 2024 the amortization expense for debt issuance costs were $ thousand and $ thousand, respectively.

The Company recognized $ million and $ million in interest expense related to its subordinated debt for the three-month periods ended September 30, 2025 and 2024, respectively. The Company recognized $ million and $ million in interest expense related to its subordinated debt for the nine-month periods ended September 30, 2025 and 2024, respectively.

14.

per share cash dividend, payable on November 21, 2025, to shareholders of record on November 10, 2025.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

This section presents management’s perspective on our financial condition and results of operations. The following discussion and analysis should be read in conjunction with the unaudited interim consolidated financial statements and related notes contained elsewhere in this report on Form 10-Q. To the extent that this discussion describes prior performance, the descriptions relate only to the periods listed, which may not be indicative of future financial outcomes. In addition to historical information, this discussion contains forward-looking statements that involve risks, uncertainties and assumptions that could cause results to differ materially from management’s expectations. Factors that could cause such differences are discussed in the Company’s Form 10-K filed for the year ended December 31, 2024 in the sections titled “Cautionary Note Regarding Forward-Looking Statements” and “Risk Factors.” We assume no obligation to update any of these forward-looking statements.

General

Bankwell Financial Group, Inc. is a bank holding company headquartered in New Canaan, Connecticut. Through our wholly-owned subsidiary, Bankwell Bank, or the Bank, we serve small and medium-sized businesses and retail clients. We have a history of building long-term client relationships and attracting new clients through what we believe is out superior service and our ability to deliver a diverse product offering.

The following discussion and analysis presents our results of operations and financial condition on a consolidated basis. However, because we conduct all of our material business operations through the Bank, the discussion and analysis relates to activities primarily conducted at the Bank.

We generate most of our revenue from interest on loans and investments and fee-based revenues. Our primary source of funding for our loans is deposits. Our largest expenses are interest on deposits and salaries and related employee benefits. We measure our performance primarily through our net interest margin, efficiency ratio, ratio of ACL-Loans to total loans, return on average assets and return on average equity, among other metrics, while maintaining appropriate regulatory leverage and risk-based capital ratios.

Executive Overview

We are focused on being the banking provider of choice and serving as an alternative to our larger competitors. We aim to do this through:

•Responsive, client-centric products and services;

•Organic growth and strategic acquisitions when market opportunities present themselves;

•Utilization of efficient and scalable infrastructure; and

•Disciplined focus on risk management.

Critical Accounting Policies and Estimates

The discussion and analysis of our results of operations and financial condition are based on our consolidated financial statements, which have been prepared in accordance with GAAP. The preparation of financial statements in conformity with GAAP requires us to make significant estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, and expenses. Actual results could differ from our current estimates, as a result of changing conditions and future events. We believe that accounting estimates related to the measurement of the ACL-Loans, the valuation of derivative instruments, investment securities and deferred income taxes, and the evaluation of ACL-Securities are particularly critical and susceptible to significant near-term change.

Earnings and Performance Overview

Revenues (net interest income plus noninterest income) for the three months ended September 30, 2025 were $28.5 million, versus $21.9 million for the quarter ended September 30, 2024. Revenues for the nine months ended September 30, 2025 were $78.0 million, versus $65.8 million for the nine months ended September 30, 2024. The increase in revenues for the quarter and nines months ended September 30, 2025 was attributable to increased earning asset yields, a decrease in interest expense on deposits, and higher gains from loan sales.

Net income available to common shareholders was $10.1 million, or $1.27 per diluted share, and $1.9 million, or $0.24 per diluted share, for the three months ended September 30, 2025 and 2024, respectively. Net income available to common shareholders was $26.1 million, or $3.29 per diluted share, and $6.8 million, or $0.86 per diluted share, for the nine months ended September 30, 2025 and 2024, respectively. The increase in net income for the quarter and nine months ended September 30, 2025 was primarily due to the aforementioned increase in revenues and a decrease in provision for credit losses.

Returns on average shareholders' equity and average assets for the three months ended September 30, 2025 were 13.84% and 1.24%, respectively, compared to 2.83% and 0.24%, respectively, for the three months ended September 30, 2024. Returns on average shareholders' equity and average assets for the nine months ended September 30, 2025 were 12.37% and 1.08%, respectively, compared to 3.35% and 0.29%, respectively, for the nine months ended September 30, 2024.

Results of Operations

Net Interest Income

Net interest income is the difference between interest earned on loans and securities and interest paid on deposits and other borrowings, and is the primary source of our operating income. Net interest income is affected by the level of interest rates, changes in interest rates and changes in the amount and composition of interest earning assets and interest bearing liabilities. Included in interest income are certain loan fees, such as deferred origination fees and late charges. We convert tax-exempt income to a fully taxable equivalent ("FTE") basis using the statutory federal income tax rate adjusted for applicable state income taxes net of the related federal tax benefit. The average balances are principally daily averages. Interest income on loans includes the effect of deferred loan fees and costs accounted for as yield adjustments. Premium amortization and discount accretion are included in the respective interest income and interest expense amounts.

FTE net interest income for the three months ended September 30, 2025 and 2024 was $26.1 million and $20.8 million, respectively. FTE net interest income for the nine months ended September 30, 2025 and 2024 was $72.4 million and $63.3 million, respectively.

FTE interest income for the three months ended September 30, 2025 increased by $2.4 million, or 5.0%, to $50.7 million, compared to FTE interest income for the three months ended September 30, 2024. FTE interest income for the nine months ended September 30, 2025 increased by $3.8 million, or 2.6%, to $148.1 million, compared to FTE interest income for the nine months ended September 30, 2024. This increase was due to an increase in interest and fees on loans due to higher overall loan yields.

Interest expense for the three months ended September 30, 2025 decreased by $2.9 million compared to interest expense for the three months ended September 30, 2024. Interest expense for the nine months ended September 30, 2025 decreased by $5.3 million compared to interest expense for the nine months ended September 30, 2024. The decrease in interest expense for the three and nine months ended September 30, 2025 was driven by a decrease in interest expense on deposits, resulting from a decrease in rates on interest bearing deposits and improved deposit mix.

Distribution of Assets, Liabilities and Shareholders’ Equity; Interest Rates and Interest Differential

The following tables present the average balances and yields earned on interest earning assets and average balances and weighted average rates paid on our funding liabilities for the three and nine months ended September 30, 2025 and 2024.


	For the Quarter Ended
	September 30, 2025						September 30, 2024
	Average Balance		Interest		Yield/ Rate (4)		Average Balance		Interest		Yield/ Rate (4)
Assets:
Cash and Fed funds sold	$	278,698	$	2,853	4.06	%	$	253,664	$	3,205	5.03	%
Securities(1)	142,677		1,463		4.10		147,431		1,390		3.78
Loans:
Commercial real estate	1,856,645		29,662		6.25		1,905,506		28,288		5.81
Residential real estate	34,518		510		5.91		47,481		736		6.20
Construction	173,380		3,536		7.98		156,273		3,070		7.69
Commercial business	572,187		11,634		7.96		512,507		10,783		8.23
Consumer	63,627		986		6.15		41,845		719		6.84
Total loans	2,700,357		46,328		6.71		2,663,612		43,596		6.40
Federal Home Loan Bank stock	6,942		89		5.11		5,655		122		8.32
Total earning assets	3,128,674		$	50,733	6.34	%	3,070,362		$	48,313	6.16	%
Other assets	98,547						90,410
Total assets	$	3,227,221					$	3,160,772

Liabilities and shareholders' equity:
Interest bearing liabilities:
NOW	$	99,087	$	124	0.50	%	$	94,958	$	44	0.18	%
Money market	883,440		8,479		3.81		832,430		8,597		4.11
Savings	94,290		700		2.95		89,463		692		3.07
Time	1,253,878		13,282		4.20		1,347,857		16,246		4.79
Total interest bearing deposits	2,330,695		22,585		3.84		2,364,708		25,579		4.30
Borrowed Money	169,867		2,020		4.72		159,349		1,895		4.73
Total interest bearing liabilities	2,500,562		$	24,605	3.90	%	2,524,057		$	27,474	4.33	%
Noninterest bearing deposits	383,153						303,213
Other liabilities	54,507						62,602
Total liabilities	2,938,222						2,889,872
Shareholders' equity	288,999						270,900
Total liabilities and shareholders' equity	$	3,227,221					$	3,160,772
Net interest income(2)			$	26,128					$	20,839
Interest rate spread					2.44	%					1.83	%
Net interest margin(3)					3.34	%					2.72	%

(1)Average balances and yields for securities are based on amortized cost.

(2)The adjustment for securities and loans taxable equivalency amounted to $141 thousand and $122 thousand for the three months ended September 30, 2025 and 2024, respectively.

(3)Annualized net interest income as a percentage of earning assets.

(4)Yields are calculated using the contractual day count convention for each respective product type.


	For the Nine Months Ended
	September 30, 2025						September 30, 2024
	Average Balance		Interest		Yield/ Rate (4)		Average Balance		Interest		Yield/ Rate (4)
Assets:
Cash and Fed funds sold	$	307,737	$	9,453	4.11	%	$	273,138	$	10,460	5.12	%
Securities(1)	147,571		4,474		4.04		139,871		3,592		3.42
Loans:
Commercial real estate	1,830,934		85,371		6.15		1,909,390		84,582		5.82
Residential real estate	37,838		1,740		6.13		48,912		2,226		6.07
Construction	182,857		10,856		7.83		158,884		8,913		7.37
Commercial business	546,700		32,839		7.92		517,880		32,097		8.14
Consumer	72,350		3,125		5.78		41,383		2,163		6.98
Total loans	2,670,679		133,931		6.61		2,676,449		129,981		6.38
Federal Home Loan Bank stock	5,522		286		6.90		5,670		357		8.43
Total earning assets	3,131,509		$	148,144	6.24	%	3,095,128		$	144,390	6.13	%
Other assets	92,451						92,249
Total assets	$	3,223,960					$	3,187,377

Liabilities and shareholders' equity:
Interest bearing liabilities:
NOW	$	102,129	$	311	0.41	%	$	97,970	$	133	0.18	%
Money market	891,823		25,579		3.83		849,860		26,294		4.13
Savings	91,313		2,025		2.97		91,135		2,093		3.07
Time	1,301,450		42,525		4.37		1,319,031		47,098		4.77
Total interest bearing deposits	2,386,715		70,440		3.95		2,357,996		75,618		4.28
Borrowed Money	147,519		5,288		4.79		159,288		5,450		4.57
Total interest bearing liabilities	2,534,234		$	75,728	4.00	%	2,517,284		$	81,068	4.30	%
Noninterest bearing deposits	356,705						336,129
Other liabilities	51,354						62,631
Total liabilities	2,942,293						2,916,044
Shareholders' equity	281,667						271,333
Total liabilities and shareholders' equity	$	3,223,960					$	3,187,377
Net interest income(2)			$	72,416					$	63,322
Interest rate spread					2.24	%					1.83	%
Net interest margin(3)					3.08	%					2.73	%

(1)Average balances and yields for securities are based on amortized cost.

(2)The adjustment for securities and loans taxable equivalency amounted to $427 thousand and $239 thousand for the nine months ended September 30, 2025 and 2024, respectively.

(3)Annualized net interest income as a percentage of earning assets.

(4)Yields are calculated using the contractual day count convention for each respective product type.

Effect of changes in interest rates and volume of average earning assets and average interest bearing liabilities

The following table shows the extent to which changes in interest rates and changes in the volume of average earning assets and average interest bearing liabilities have affected net interest income. For each category of earning assets and interest bearing liabilities, information is provided relating to: changes in volume (changes in average balances multiplied by the prior year’s average interest rates); changes in rates (changes in average interest rates multiplied by the prior year’s average balances); and the total change. Changes attributable to both volume and rate have been allocated proportionately based on the relationship of the absolute dollar amount of change in each.


	Three Months Ended September 30, 2025 vs 2024 Increase (Decrease)						Nine Months Ended September 30, 2025 vs 2024 Increase (Decrease)
(In thousands)	Volume		Rate		Total		Volume		Rate		Total
Interest and dividend income:
Cash and Fed funds sold	$	297	$	(649)	$	(352)	$	1,227	$	(2,234)	$	(1,007)
Securities	(46)		117		71		206		677		883
Loans:
Commercial real estate	(739)		2,113		1,374		(3,558)		4,347		789
Residential real estate	(193)		(33)		(226)		(509)		23		(486)
Construction	345		121		466		1,403		539		1,942
Commercial business	1,223		(372)		851		1,754		(1,012)		742
Consumer	345		(77)		268		1,399		(434)		965
Total loans	981		1,752		2,733		489		3,463		3,952
Federal Home Loan Bank stock	23		(52)		(29)		(9)		(64)		(73)
Total change in interest and dividend income	1,255		1,168		2,423		1,913		1,842		3,755
Interest expense:
Deposits:
NOW	2		79		81		6		173		179
Money market	511		(628)		(117)		1,264		(1,980)		(716)
Savings	36		(27)		9		4		(72)		(68)
Time	(1,088)		(1,876)		(2,964)		(622)		(3,950)		(4,572)
Total deposits	(539)		(2,452)		(2,991)		652		(5,829)		(5,177)
Borrowed money	125		—		125		(417)		255		(162)
Total change in interest expense	(414)		(2,452)		(2,866)		235		(5,574)		(5,339)
Change in net interest income	$	1,669	$	3,620	$	5,289	$	1,678	$	7,416	$	9,094

Provision for Credit Losses

The provision for credit losses is based on management’s periodic assessment of the adequacy of our ACL-Loans and ACL-Unfunded Commitments which, in turn, is based on interrelated factors such as the composition of our loan portfolio and its inherent risk characteristics, the level of nonperforming loans and net charge-offs, both current and historic, local economic and credit conditions, the direction of real estate values, and regulatory guidelines. The provision for credit losses is charged against earnings in order to maintain our ACL-Loans and ACL-Unfunded Commitments and reflects management’s best estimate of probable losses inherent in our loan portfolio as of the balance sheet date.

The credit for credit losses for the three months ended September 30, 2025 was $0.4 million compared to a provision for credit losses of $6.3 million for the three months ended September 30, 2024. The provision for credit losses for the nine months ended September 30, 2025 was $0.4 million compared to a provision for credit losses of $18.2 million for the nine months ended September 30, 2024. The reduction in the credit for credit losses was primarily driven by charge-offs recorded during the three- and nine-month periods of the prior year.

Noninterest Income

Noninterest income is a component of our revenue and is comprised primarily of fees generated from deposit relationships with our clients, fees generated from sales and referrals of loans, and income earned on bank-owned life insurance.

The following tables compare noninterest income for the three and nine months ended September 30, 2025 and 2024:


	Three Months Ended September 30,				Change
(Dollars in thousands)	2025		2024		$		%
Gains and fees from sales of loans	$	1,372	$	133	$	1,239	Favorable
Bank-owned life insurance	359		346		13		3.8
Service charges and fees	779		575		204		35.5
Other	(15)		102		(117)		Unfavorable
Total noninterest income	$	2,495	$	1,156	$	1,339	Favorable


	Nine Months Ended September 30,				Change
(Dollars in thousands)	2025		2024		$		%
Gains and fees from sales of loans	$	2,894	$	499	$	2,395	Favorable
Bank-owned life insurance	1,055		1,008		47		4.7
Service charges and fees	2,055		1,374		681		49.6
Other	8		(127)		135		Favorable
Total noninterest income	$	6,012	$	2,754	$	3,258	Favorable

Noninterest income increased by $1.3 million for the three months ended September 30, 2025 compared to the three months ended September 30, 2024. Noninterest income increased by $3.3 million for the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024. The increase in noninterest income for the three and nine months ended September 30, 2025 was driven by higher gains from SBA loan sales.

Noninterest Expense

The following tables compare noninterest expense for the three and nine months ended September 30, 2025 and 2024:


	Three Months Ended September 30,				Change
(Dollars in thousands)	2025		2024		$		%
Salaries and employee benefits	$	7,995	$	6,223	$	1,772	28.5	%
Occupancy and equipment	2,469		2,334		135		5.8
Professional services	1,412		1,142		270		23.6
Data processing	633		851		(218)		(25.6)
Director fees	333		292		41		14.0
FDIC insurance	610		853		(243)		(28.5)
Marketing	140		73		67		91.8
Other	1,039		1,097		(58)		(5.3)
Total noninterest expense	$	14,631	$	12,865	$	1,766	13.7	%


	Nine Months Ended September 30,				Change
(Dollars in thousands)	2025		2024		$		%
Salaries and employee benefits	$	22,568	$	18,690	$	3,878	20.7	%
Occupancy and equipment	7,549		6,894		655		9.5
Professional services	4,573		3,196		1,377		43.1
Data processing	2,230		2,346		(116)		(4.9)
Director fees	1,014		1,498		(484)		(32.3)
FDIC insurance	2,073		2,488		(415)		(16.7)
Marketing	500		277		223		80.5
Other	2,811		3,018		(207)		(6.9)
Total noninterest expense	$	43,318	$	38,407	$	4,911	12.8	%

Noninterest expense increased by $1.8 million to $14.6 million for the three months ended September 30, 2025 compared to the three months ended September 30, 2024. Noninterest expense increased by $4.9 million to $43.3 million for the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024. The increase in noninterest expense was primarily driven by an increase in salaries and employee benefits mainly related to incremental new hires aligned with strategic initiatives. Additionally, professional services increased as a result of increased recruiting costs aligned with strategic initiatives.

Income Taxes

Income tax expense for the three months ended September 30, 2025 and 2024 totaled $3.4 million and $0.8 million, respectively. The effective tax rates for the three months ended September 30, 2025 and 2024 were 25.2% and 29.0%, respectively. Income tax expense for the nine months ended September 30, 2025 and 2024 totaled $8.2 million and $2.5 million, respectively. The effective tax rates for the nine months ended September 30, 2025 and 2024 were 23.9% and 26.6%, respectively.

Financial Condition

Summary

Assets totaled $3.2 billion at September 30, 2025 a decrease of $24.5 million or 0.7% compared to December 31, 2024. Gross loans totaled $2.7 billion at September 30, 2025, an increase of $12.3 million or 0.5% compared to December 31, 2024. Deposits totaled $2.8 billion at September 30, 2025, a decrease of $30.2 million, or 1.1% compared to December 31, 2024.

Shareholders’ equity totaled $292.8 million as of September 30, 2025, an increase of $22.3 million compared to December 31, 2024, primarily a result of net income of $26.1 million for the nine months ended September 30, 2025. The increase was partially offset by dividends paid of $4.7 million.

Loan Portfolio

We originate commercial real estate loans, construction loans, commercial business loans and consumer loans in our market. We also pursue certain types of commercial lending opportunities outside our market, particularly where we have strong business relationships. Our loan portfolio is the largest category of our earning assets.

Total loans before deferred loan fees and the ACL-Loans were $2.7 billion at September 30, 2025 and $2.7 billion at December 31, 2024. Total gross loans increased $12.3 million as of September 30, 2025 compared to the year ended December 31, 2024.

The following table compares the composition of our loan portfolio for the dates indicated:


(In thousands)	At September 30, 2025		At December 31, 2024		Change
Real estate loans:
Residential	$	33,625	$	42,766	$	(9,141)
Commercial	1,897,896		1,899,134		(1,238)
Construction	170,888		173,555		(2,667)
	2,102,409		2,115,455		(13,046)
Commercial business	552,682		515,125		37,557
Consumer	63,098		75,308		(12,210)
Total loans	$	2,718,189	$	2,705,888	$	12,301

The following table compares the composition of our commercial real estate loan portfolio by non-owner occupied and owner occupied loans at September 30, 2025 and December 31, 2024:


	At September 30, 2025				At December 31, 2024				Change
	Total		%		Total		%		Total
	(Dollars in thousands)
Commercial real estate loans:
Non-owner occupied	$	1,123,192	59.19	%	$	1,174,712	61.86	%	$	(51,520)
Owner occupied	774,484		40.81		724,203		38.14		50,281
Total commercial real estate loans(1)	$	1,897,676	100.00	%	$	1,898,915	100.00	%	$	(1,239)

(1) Excludes the positive fair value effect of the portfolio layer swap of $220 thousand and the positive fair value effective of the portfolio layer swap of $219 thousand for Commercial Real Estate at September 30, 2025 and December 31, 2024, respectively.

The following table compares the composition of our commercial real estate loan portfolio by property type, and collateral location as of September 30, 2025:


Commercial Real Estate	CT		All Other NY		NYC		NJ		FL		OH		PA		All Other		Total(1)
	(Dollars in thousands)
Residential care(2)	$	—	$	48,440	$	57,779	$	4,800	$	246,319	$	96,273	$	22,356	$	260,534	$	736,501
Retail	94,891		72,612		7,269		15,486		8,399		3,344		33,300		90,057		325,358
Multifamily	164,085		22,571		49,937		7,046		—		—		20,645		—		264,284
Office	41,930		10,080		2,956		29,109		2,189		—		—		58,215		144,479
Industrial / warehouse	63,964		19,233		18,818		16,827		2,654		—		—		10,832		132,328
Mixed use	53,083		20,398		45,384		—		—		—		—		—		118,865
Medical office	32,844		12,065		1,367		—		—		4,705		3,900		18,746		73,627
1-4 family investment	11,020		1,580		1,847		2,101		16,963		—		—		—		33,511
All other(3)	19,576		26,345		22,802		—		—		—		—		—		68,723
	$	481,393	$	233,324	$	208,159	$	75,369	$	276,524	$	104,322	$	80,201	$	438,384	$	1,897,676

(1) Excludes the positive fair value effect of the portfolio layer swap of $220 thousand for Commercial Real Estate at September 30, 2025.

(2) Primarily consists of skilled nursing and assisted living facilities.

(3) Includes Special use, self storage, and land.

As of September 30, 2025, the Bank had $144.5 million of loans collateralized by offices, which represented 7.6% of the total loan portfolio. Most of the properties in this portfolio are in suburban locations. 95.1% of this portfolio was pass rated, and there was one relationship totaling $5.4 million on nonaccrual status. As of September 30, 2025, the Bank had $264.3 million of loans collateralized by multifamily properties, which represented 9.7% of the total loan portfolio. 89.5% of this portfolio is pass rated and current; these properties are all located in Connecticut, New York, or New Jersey, with eight properties, totaling $49.9 million, located in New York City. 78.3% of the New York City exposure is located in Brooklyn, 11.9% in Manhattan and the remaining 9.8% in Queens.

The following table presents an analysis of the commercial real estate portfolio's loan to value at origination and by property type as of September 30, 2025.


Commercial Real Estate	Total CRE Portfolio(1)		Percentage of Total CRE Portfolio		Original Loan to Value %
	(Dollars in thousands)
Property Type
Residential care(2)	$	736,501	38.8	%	63.0	%
Retail	325,358		13.9		62.9
Multifamily	264,284		13.9		62.3
Office	144,479		7.6		63.9
Industrial / warehouse	132,328		7.0		64.1
Mixed use	118,865		6.3		58.2
Medical office	73,627		3.9		62.1
1-4 family investment	33,511		1.8		61.1
All other	68,723		3.6		53.4
Total	$	1,897,676	100.0	%	62.3	%

(1) Excludes the positive fair value effect of the portfolio layer swap of $220 thousand for Commercial Real Estate at September 30, 2025.

(2) Primarily consists of skilled nursing and assisted living facilities.

Asset Quality

We actively manage asset quality through our underwriting practices and collection operations. Our Board of Directors monitors credit risk management. The Directors Loan Committee ("DLC") has primary oversight responsibility for the credit-granting function including approval authority for credit-granting policies, review of management’s credit-granting activities and approval of large exposure credit requests, as well as loan review and problem loan management and resolution. The committee reports the results of its respective oversight functions to our Board of Directors. In addition, our Board of Directors receives information concerning asset quality measurements and trends on a monthly basis. While we continue to adhere to prudent underwriting standards, our loan portfolio is not immune to potential negative consequences as a result of general economic weakness, such as a prolonged downturn in the housing market or commercial real estate market on a national scale. Decreases in real estate values could adversely affect the value of property used as collateral for loans. In addition, adverse changes in the economy could have a negative effect on the ability of borrowers to make scheduled loan payments, which would likely have an adverse impact on earnings.

The Company has established credit policies applicable to each type of lending activity in which it engages. The Company evaluates the creditworthiness of each client and extends credit of up to 80% of the market value of the collateral, (85% maximum for owner occupied commercial real estate), depending on the client's creditworthiness and the type of collateral. The client’s ability to service the debt is monitored on an ongoing basis. Real estate is the primary form of collateral. Other important forms of collateral are business assets, time deposits and marketable securities. While collateral provides assurance as a secondary source of repayment, the Company ordinarily requires the primary source of repayment for commercial loans to be based on the client’s ability to generate continuing cash flows. The Company does not provide first or second consumer mortgage loans secured by residential properties but has a small legacy portfolio which continues to amortize, pay off due to the sale of the collateral, or refinance away from the Company.

Credit quality indicators. To measure credit risk for the loan portfolios, the Company employs a credit risk rating system. This risk rating represents an assessed level of a loan’s risk based on the character and creditworthiness of the borrower/guarantor, the capacity of the borrower to adequately service the debt, any credit enhancements or additional sources of repayment, and the quality, value and coverage of the collateral, if any. The following table presents credit risk ratings as of September 30, 2025 and December 31, 2024:


	Credit Risk Ratings
	September 30, 2025		December 31, 2024
	(In thousands)
Pass	$	2,609,200	$	2,557,136
Special Mention(1)	89,630		93,214
Substandard	19,359		54,083
Doubtful	—		1,455
Loss	—		—
Total loans	$	2,718,189	$	2,705,888

(1) 99.9% and 99.6% of Risk Rated 6 loans are current on payments, 97.7% and 93.0% are guaranteed by ultra-high net worth sponsors as of September 30, 2025 and December 31, 2024, respectively.

Credit risk management involves a partnership between our relationship managers and our credit approval, portfolio management, credit administration and collections teams. Disciplined underwriting, portfolio monitoring and early problem recognition are important aspects of maintaining our high credit quality standards.

Nonperforming assets. Nonperforming assets include nonaccrual loans and property acquired through foreclosures or repossession. The following table presents nonperforming assets and additional asset quality data for the dates indicated:


(In thousands)	At September 30, 2025			At December 31, 2024
Nonaccrual loans:
Real estate loans:
Residential	$	570		$	791
Commercial	14,667			44,814
Commercial business	1,729			7,672
Construction	—			—
Consumer	—			—
Total nonaccrual loans	16,966			53,277
Other real estate owned	1,284			8,299
Total nonperforming assets	$	18,250		$	61,576

Nonperforming assets to total assets	0.56		%	1.88		%
Nonaccrual loans to total loans	0.62		%	1.97		%
ACL-loans as a % of total loans	1.10		%	1.07		%
ACL-loans as a % of nonperforming loans	176.73		%	54.45		%
Total past due loans to total loans	0.76		%	1.63		%

Nonaccrual loans totaled $17.0 million at September 30, 2025 and $53.3 million at December 31, 2024. In the first quarter of 2025, the Company sold a $27.1 million multifamily commercial real estate loan on nonperforming status at par value.

There was $1.3 million Other Real Estate Owned ("OREO") at September 30, 2025 and $8.3 million of OREO at December 31, 2024. During the first quarter of 2025, the Company sold a property that it had acquired during the fourth quarter of 2024 and held as an OREO asset. The OREO asset had previously secured a non-performing construction loan. The Company received net proceeds from the sale of such OREO in the amount of $8.3 million. In the second quarter of 2025, the Company took title to an industrial property, resulting in an OREO asset of $1.3 million. Efforts to market the property for sale are ongoing.

Allowance for Credit Losses - Loans ("ACL-Loans")

Our Board of Directors has adopted an Allowance for Credit Losses policy designed to provide management with a methodology for determining and documenting the allowance for credit losses for each reporting period. We evaluate the adequacy of the ACL-Loans at least quarterly, and in determining our ACL-Loans, we estimate losses on specific loans, or groups of loans, where the probable loss can be identified and reasonably determined. The balance of our ACL-Loans is based on internally assigned risk classifications of loans, the Bank’s and peer banks’ historical loss experience, changes in the nature of the loan portfolio, overall portfolio quality, industry concentrations, delinquency trends, current economic factors and the estimated impact of current economic conditions on certain historical loan loss rates.

Our general practice is to identify problem credits early and recognize full or partial charge-offs as promptly as practicable when it is determined that it is probable that the loan will not be repaid according to its original contractual terms, including principal and interest. Full or partial charge-offs on collateral dependent loans are recognized when the collateral is deemed to be insufficient to support the carrying value of the loan. We do not recognize a recovery when an updated appraisal indicates a subsequent increase in value of the collateral.

Our charge-off policies, which comply with standards established by our banking regulators, are consistently applied from period to period. Charge-offs are recorded on a monthly basis, as incurred. Partially charged-off loans continue to be evaluated on a monthly basis and additional charge-offs or provisions for credit losses may be recorded on the remaining loan balance based on the same criteria.

The following table presents the activity in our ACL-Loans and related ratios for the dates indicated:


	Three Months Ended September 30,						Nine Months Ended September 30,
(Dollars in thousands)	2025			2024			2025			2024
Balance at beginning of period	$	29,256		$	36,083		$	29,007		$	27,946
Charge-offs:
Residential real estate	—			—			—			(141)
Commercial real estate	—			(8,184)			(67)			(12,012)
Commercial business	(14)			(7,010)			(29)			(7,207)
Consumer	(46)			(17)			(84)			(78)
Construction	—			(616)			—			(616)
Total charge-offs	(60)			(15,827)			(180)			(20,054)
Recoveries:
Residential real estate	—			—			—			141
Commercial real estate	270			1,013			270			1,126
Commercial business	86			(34)			202			(7)
Consumer	12			1			58			18
Construction	—			—			—			—
Total recoveries	368			980			530			1,278
Net recoveries (charge-offs)	308			(14,847)			350			(18,776)
(Credit) provision for credit losses - loans	420			6,516			627			18,582
Balance at end of period	$	29,984		$	27,752		$	29,984		$	27,752
Net (recoveries) charge-offs to average loans	(0.01)		%	0.56		%	(0.01)		%	0.70		%
ACL-Loans to total loans	1.10		%	1.06		%	1.10		%	1.06		%

At September 30, 2025, our ACL-Loans was $30.0 million and represented 1.10% of total gross loans, compared to $29.0 million or 1.07% of total gross loans, at December 31, 2024.

The following table presents the allocation of the ACL-Loans balance and the related allocation percentage of these loans across the total loan portfolio:


	September 30, 2025						December 31, 2024
(Dollars in thousands)	ACL-Loans Amount		ACL-Loans Percentage		Loan Segment to Total Loans Percentage		ACL-Loans Amount		ACL-Loans Percentage		Loan Segment to Total Loans Percentage
Residential real estate	$	58	0.2	%	1.3	%	$	94	0.3	%	1.6	%
Commercial real estate	20,338		67.8		69.8		21,838		75.3		70.2
Construction	2,548		8.5		6.3		2,059		7.1		6.4
Commercial business	5,772		19.3		20.3		4,070		14.0		19.0
Consumer	1,268		4.2		2.3		946		3.3		2.8
Total ACL-Loans	$	29,984	100.0	%	100.0	%	$	29,007	100.0	%	100.0	%

The allocation of the ACL-Loans at September 30, 2025 reflects our assessment of credit risk and probable loss within each portfolio. We believe that the level of the ACL-Loans at September 30, 2025 is appropriate to cover probable losses.

ACL- Unfunded Commitments

The ACL-Unfunded Commitments provision is based on "forward looking" losses inherent with funding the unused portion of legal commitments to lend. The reserve for unfunded credit commitments is included within other liabilities in the accompanying Consolidated Balance Sheets. Changes in the ACL-Unfunded Commitments are reported as a component of the Provision for credit losses in the accompanying Consolidated Statements of Income.

Investment Securities

At September 30, 2025, the carrying value of our investment securities portfolio totaled $128.2 million and represented 4.0% of total assets, compared to $146.1 million, or 4.5% of total assets, at December 31, 2024.

The net unrealized loss position on our investment portfolio at September 30, 2025 was $1.3 million and included gross unrealized gains of $1.7 million. The net unrealized loss position on our investment portfolio at December 31, 2024 was $4.9 million and included gross unrealized gains of $1.3 million.

Deposit Activities and Other Sources of Funds


	September 30, 2025				December 31, 2024
(Dollars in thousands)	Amount		Percent		Amount		Percent
Noninterest bearing demand	$	397,408	14.4	%	$	321,875	11.5	%
NOW	84,736		3.1		105,090		3.8
Money market	897,387		32.5		899,413		32.3
Savings	95,242		3.5		90,220		3.2
Time	1,282,642		46.5		1,370,972		49.2
Total deposits	$	2,757,415	100.0	%	$	2,787,570	100.0	%

Total deposits were $2.8 billion at September 30, 2025, a decrease of $30.2 million, from the balance at December 31, 2024.

Brokered certificates of deposits totaled $555.0 million at September 30, 2025 and $651.5 million at December 31, 2024, respectively. Brokered money market accounts totaled $53.7 million at September 30, 2025 and $53.5 million at December 31, 2024, respectively. Certificates of deposits from national listing services were $54.6 million and $109.1 million as of September 30, 2025 and December 31, 2024, respectively. There were no one-way buy CDARS or one-way buy ICS at September 30, 2025 or December 31, 2024. Brokered deposits are comprised of Brokered CDs, brokered money market accounts, one-way buy CDARS, and one-way buy ICS.

As of September 30, 2025, our FDIC insured deposits were $1,974.7 million, or 72% of total deposits. Additionally, deposits totaling $78.3 million, or 3% of total deposits, are secured by standby letters of credit with the Federal Home Loan Bank of Boston.

At September 30, 2025 and December 31, 2024, time deposits with a denomination of $100 thousand or more, including CDARS and brokered deposits, totaled $1.1 billion and $1.2 billion, respectively, maturing during the periods indicated in the table below:


(Dollars in thousands)	September 30, 2025		December 31, 2024
Maturing:
Within 3 months	$	303,528	$	421,808
After 3 but within 6 months	293,393		326,115
After 6 months but within 1 year	502,320		419,098
After 1 year	3,804		19,429
Total	$	1,103,045	$	1,186,450

We utilize advances from the Federal Home Loan Bank of Boston, or FHLB, as part of our overall funding strategy and to meet short-term liquidity needs, and to a lesser degree, manage interest rate risk arising from the difference in asset and liability maturities. Total FHLB advances were $75.0 million and $90.0 million at September 30, 2025 and December 31, 2024, respectively.

The Bank has additional borrowing capacity at the FHLB up to a certain percentage of the value of qualified collateral. In accordance with agreements with the FHLB, the qualified collateral must be free and clear of liens, pledges and encumbrances. At September 30, 2025, the Bank had pledged $716.6 million of eligible loans as collateral to support borrowing capacity at the FHLB. As of September 30, 2025, the Bank had immediate availability to borrow an additional $312.5 million from the FHLB based on qualified collateral.

At September 30, 2025, the Bank had a secured borrowing line with the FRB, a letter of credit with the FHLB, and unsecured lines of credit with Zions Bank, Pacific Coast Bankers Bank ("PCBB"), and Atlantic Community Bankers Bank ("ACBB"). The total borrowing line, letter, or line of credit and the amount outstanding at September 30, 2025 is summarized below:


	September 30, 2025
	Total Letter or Line of Credit		Total Outstanding
	(Dollars in thousands)
FRB	$	670,606	$	—
FHLB	458,254		145,726
Zions Bank	45,000		—
PCBB	38,000		—
ACBB	12,000		—
Total	$	1,223,860	$	145,726

Liquidity and Capital Resources

Liquidity Management

Liquidity is defined as the ability to generate sufficient cash flows to meet all present and future funding requirements at reasonable costs. Our primary source of liquidity is deposits. While our generally preferred funding strategy is to attract and retain low cost deposits, our ability to do so is affected by competitive interest rates and terms in the marketplace. Other sources of funding include discretionary use of purchased liabilities (e.g., FHLB term advances and other borrowings), cash flows from our investment securities portfolios, loan sales, loan repayments and earnings. Investment securities designated as Available for sale may also be sold in response to short-term or long-term liquidity needs.

The Bank’s liquidity positions are monitored daily by management. The Asset Liability Committee ("ALCO") establishes guidelines to ensure maintenance of prudent levels of liquidity. ALCO reports to the Company’s Board of Directors.

The Bank has a detailed liquidity funding policy and a contingency funding plan that provide for the prompt and comprehensive response to unexpected demands for liquidity. We employ a stress testing methodology to estimate needs for contingent funding that could result from unexpected outflows of funds in excess of “business as usual” cash flows. The Bank has established unsecured borrowing capacity with Zions Bank, PCBB, and ACBB. The Bank also maintains additional collateralized borrowing capacity with the FRB and the FHLB in excess of levels used in the ordinary course of business. Our sources of liquidity include cash, unpledged investment securities, borrowings from the FRB, FHLB, lines of credit from Zions Bank, PCBB, and ACBB, the brokered deposit market and national CD listing services.

Capital Resources

The Bank and Company are subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Company’s financial statements. At September 30,

2025, the Bank met all capital adequacy requirements to which it was subject and exceeded the regulatory minimum capital levels to be considered well-capitalized under the regulatory framework for prompt corrective action. At September 30, 2025, the Bank’s ratio of Common Equity Tier 1 capital to risk-weighted assets was 12.39%, total capital to risk-weighted assets was 12.39%, Tier 1 capital to risk-weighted assets was 13.48% and Tier 1 capital to average assets was 10.71%. At September 30, 2025, the Company met all capital adequacy requirements to which it was subject and exceeded the regulatory minimum capital levels to be considered well-capitalized under the regulatory framework for prompt corrective action. At September 30, 2025, the Company’s ratio of Common Equity Tier 1 capital to risk-weighted assets was 10.39%, total capital to risk-weighted assets was 10.39%, Tier 1 capital to risk-weighted assets was 13.98% and Tier 1 capital to average assets was 8.99%.

Under the current guidelines, banking organizations must have a minimum total risk-based capital ratio of 8.0%, a minimum Tier 1 risk-based capital ratio of 6.0%, a minimum common equity Tier 1 risk-based capital ratio of 4.5%, and a minimum leverage ratio of 4.0% in order to be "adequately capitalized." In addition to these requirements, banking organizations must maintain a capital conservation buffer consisting of common Tier 1 equity in an amount above the minimum risk-based capital requirements for “adequately capitalized” institutions equal to 2.5% of total risk-weighted assets, resulting in a requirement for the Company and the Bank to effectively maintain common equity Tier 1, Tier 1 and total capital ratios of 7.0%, 8.5% and 10.5%, respectively. The Company and the Bank must maintain the capital conservation buffer to avoid restrictions on the ability to pay dividends, pay discretionary bonuses, or to engage in share repurchases.

Asset/Liability Management and Interest Rate Risk

We measure interest rate risk using simulation analysis to calculate earnings and equity at risk. These risk measures are quantified using simulation software from one of the leading firms in the field of asset/liability modeling. Key assumptions relate to the behavior of interest rates and spreads, prepayment speeds and the run-off of deposits. From such simulations, interest rate risk, or IRR, is quantified and appropriate strategies are formulated and implemented. We model IRR by using two primary risk measurement techniques: simulation of net interest income and simulation of economic value of equity. These two measurements are complementary and provide both short-term and long-term risk profiles for the Company. Because both baseline simulations assume that our balance sheet will remain static over the simulation horizon, the results do not reflect adjustments in strategy that ALCO could implement in response to rate shifts. The simulation analyses are updated quarterly.

We use a net interest income at risk simulation to measure the sensitivity of net interest income to changes in market rates. This simulation captures underlying product behaviors, such as asset and liability repricing dates, balloon dates, interest rate indices and spreads, rate caps and floors, as well as other behavioral attributes. The simulation of net interest income also requires a number of key assumptions such as: (i) prepayment projections for loans and securities that are projected under each interest rate scenario using internal and external mortgage analytics; (ii) new business loan rates that are based on recent new business origination experience; and (iii) deposit pricing assumptions for non-maturity deposits reflecting the Bank’s history, management judgment and core deposit studies. Combined, these assumptions can be inherently uncertain, and as a result, actual results may differ from simulation forecasts due to the timing, magnitude and frequency of interest rate changes, future business conditions, as well as unanticipated changes in management strategies.

We use two sets of standard scenarios to measure net interest income at risk. For the Parallel Ramp Scenarios, rate changes are ramped over a twelve-month horizon based upon a parallel yield curve shift and then maintained at those levels over the remainder of the simulation horizon. Parallel Shock Scenarios assume instantaneous parallel movements in the yield curve compared to a flat yield curve scenario. Simulation analysis involves projecting a future balance sheet structure and interest income and expense under the various rate scenarios. Internal policy regarding internal rate risk simulations currently specifies that for instantaneous parallel shifts of the yield curve, estimated net interest income at risk for the subsequent one-year period should not decline by more than: 6% for a 100 basis point shift; 12% for a 200 basis point shift; and 18% for a 300 basis point shift. Per Company policy, the Bank should not be outside these limits for twelve consecutive months unless the Bank's forecasted capital ratios are considered to be "well capitalized". As of September 30, 2025, the Bank has met all minimum regulatory capital requirements to be considered "well capitalized".

The following tables set forth the estimated percentage change in our net interest income at risk over one-year simulation periods beginning September 30, 2025 and December 31, 2024:


Parallel Ramp	Estimated Percent Change in Net Interest Income

Rate Changes (basis points)	September 30, 2025		December 31, 2024
Year 1 from Year 1 Base
-100	(0.70)	%	0.40	%
+200	1.40	%	(1.00)	%


Parallel Shock	Estimated Percent Change in Net Interest Income

Rate Changes (basis points)	September 30, 2025		December 31, 2024
Year 1 from Year 1 Base
-100	(3.20)	%	(1.00)	%
+100	3.40	%	0.60	%
+200	6.60	%	0.80	%
+300	10.10	%	1.40	%

The net interest income simulation model attempts to measure the change in net interest income over the next one-year period, and over the next two year period on a cumulative basis, assuming certain changes in the general level of interest rates.

Based on our model, which was run as of September 30, 2025, we estimated that over the next one-year period a 200 basis-point parallel ramp increase of interest rates would increase our net interest income by 1.40%, while a 100 basis-point parallel ramp decrease of interest rates would decrease net interest income by 0.70%. As of December 31, 2024, we estimated that over the next one-year period a 200 basis-point parallel ramp increase of interest rates would decrease our net interest income by 1.00%, while a 100 basis-point parallel ramp decrease of interest rates would increase net interest income by 0.40%. Based on our model, which was run as of September 30, 2025, we estimated that over the next two years, on a cumulative basis, a 200 basis-point parallel ramp increase of interest rates would increase our net interest income by 5.50%, while a 100 basis-point parallel ramp decrease in interest rates would increase net interest income by 7.60%. As of December 31, 2024, we estimated that over the next two years, on a cumulative basis, a 200 basis-point parallel ramp increase of interest rates would decrease our net interest income by 2.90%, while a 100 basis-point parallel ramp decrease in interest rates would increase net interest income by 12.80%. The change in sensitivity between September 30, 2025 and December 31, 2024 was impacted by an increase in variable-rate loans.

We conduct an economic value of equity at risk simulation in tandem with net interest income simulations, to ascertain a longer term view of our interest rate risk position by capturing longer-term repricing risk and options risk embedded in the balance sheet. It measures the sensitivity of economic value of equity to changes in interest rates. The economic value of equity at risk simulation values only the current balance sheet and does not incorporate the growth assumptions used in one of the income simulations. As with the net interest income simulation, this simulation captures product characteristics such as loan resets, repricing terms, maturity dates, rate caps and floors. Key assumptions include loan prepayment speeds, deposit pricing elasticity and non-maturity deposit attrition rates. These assumptions can have significant impacts on valuation results as the assumptions remain in effect for the entire life of each asset and liability. All key assumptions are subject to a periodic review.

Base case economic value of equity at risk is calculated by estimating the net present value of all future cash flows from existing assets and liabilities using current interest rates. The base case scenario assumes that future interest rates remain unchanged.

The following table sets forth the estimated percentage change in our economic value of equity at risk, assuming various shifts in interest rates:


	Estimated Percent Change in Economic Value of Equity ("EVE")
Rate Changes (basis points)	September 30, 2025		December 31, 2024
-100	(0.10)	%	0.40	%
+100	(0.50)	%	(1.30)	%
+200	(1.70)	%	(3.60)	%
+300	(2.30)	%	(4.70)	%

While ALCO reviews and updates simulation assumptions and also periodically back-tests the simulation results to ensure that the assumptions are reasonable and current, income simulation may not always prove to be an accurate indicator of interest rate risk or future net interest margin. Over time, the repricing, maturity and prepayment characteristics of financial instruments and the composition of our balance sheet may change to a different degree than estimated. ALCO recognizes that deposit balances could shift into higher yielding alternatives as market rates change. ALCO has modeled increased costs of deposits in the rising rate simulation scenarios presented above.

It should be noted that the static balance sheet assumption does not necessarily reflect our expectation for future balance sheet growth, which is a function of the business environment and client behavior. Another significant simulation assumption is the sensitivity of core deposits to fluctuations in interest rates. Income simulation results assume that changes in both core savings deposit rates and balances are related to changes in short-term interest rates. Lastly, mortgage-backed securities and mortgage loans involve a level of risk that unforeseen changes in prepayment speeds may cause related cash flows to vary significantly in differing rate environments. Such changes could affect the level of reinvestment risk associated with cash flow from these instruments, as well as their market value. Changes in prepayment speeds could also increase or decrease the amortization of premium or accretion of discounts related to such instruments, thereby affecting interest income. Accordingly, although the above measurements provide an indication of the Company’s interest rate risk exposure at a particular point in time, such measurements are not intended to provide a precise forecast of the effect of changes in market interest rates.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Interest Rate Risk Management

Interest rate risk management is our primary market risk. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Asset/Liability Management and Interest Rate Risk” herein for a discussion of our management of our interest rate risk.

Impact of Inflation

Our financial statements and related data contained in this quarterly report have been prepared in accordance with GAAP, which requires the measure of financial position and operating results in terms of historic dollars, without considering changes in the relative purchasing power of money over time due to inflation.

Inflation generally increases the costs of funds and operating overhead, and to the extent loans and other assets bear variable rates, the yields on such assets. Unlike the assets and liabilities of most industrial companies, virtually all of the assets and liabilities of a financial institution are monetary in nature. As a result, interest rates generally have a more significant effect on the performance of a financial institution than the effects of general levels of inflation. In addition, inflation affects a financial institution’s cost of goods and services purchased, the cost of salaries and benefits, occupancy expense and similar items. Inflation and related increases in interest rates generally decrease the market value of investments and loans held and may adversely affect liquidity, earnings and shareholders’ equity.

Item 4. Controls and Procedures

(a) Evaluation of disclosure controls and procedures:

The Company carried out an evaluation, under the supervision and with the participation of the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures pursuant to Exchange Act Rule 13a-15. Based upon that evaluation, the

Chief Executive Officer and Chief Financial Officer concluded that as of the end of the period reported on in this report, the Company’s disclosure controls and procedures are effective in timely alerting them to material information relating to the Company (including its consolidated subsidiary) required to be included in the Company’s periodic SEC filings.

(b) Change in internal controls:

There has been no change in the Company’s internal control over financial reporting during the quarter ended September 30, 2025 that has materially affected, or is reasonably likely to affect, the Company’s internal control over financial reporting.

PART II – OTHER INFORMATION

Item 1. Legal Proceedings

The Company and the Bank are periodically involved in various legal proceedings as normal incident to their businesses. In the opinion of management, no material loss is expected from any such pending lawsuit.

Item 1A. Risk Factors

There were no material changes in risk factors previously disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024, filed with the SEC other than as follows:

Potential Impact of U.S. Government Shutdown

A U.S. government shutdown may materially disrupt our operations that rely on programs administered by the U.S. Small Business Administration (“SBA”). During such shutdowns, the SBA suspends non-essential activities, including the administrative support associated with our origination of new 7(a) loans. Even lenders with delegated authority are unable to process new applications or finalize disbursements during this period. These disruptions may adversely affect our ability to originate, service, and sell SBA-guaranteed loans, and may also impact the processing of guarantee payment requests.

Furthermore, upon the resumption of government operations, the SBA will likely experience a significant backlog of applications, which may lead to extended processing times and further delays. These delays could impair our financial performance, increase credit risk exposure, and negatively affect our relationships with borrowers and lending partners.

Suspension of other federally-funded programs, such as Section 8 housing vouchers and contracts, may have an impact on borrower cash flows, which could, in turn, affect the Company's loan payments. The Company's exposure to such programs is very limited.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Issuer Purchases of Equity Securities

The following table includes information with respect to repurchases of the Company’s Common Stock during the three-month period ended September 30, 2025 under the Company’s share repurchase program.


	Issuer Purchases of Equity Securities
Period	(a) Total Number of Shares (or Units) Purchased	(b) Average Price Paid per Share (or Unit)		(c) Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs	(d) Maximum Number (or Approximate Dollar Value) of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs(1)
July 1, 2025 - July 31, 2025	—	$	—	—	205,450
August 1, 2025 - August 31, 2025	—	—		—	205,450
September 1, 2025 - September 30, 2025	—	—		—	205,450
Total	—	$	—	—

(1) On December 19, 2018, the Company’s Board of Directors authorized a share repurchase program of up to 400,000 shares of the Company’s Common Stock (the "Prior Plan"). On October 27, 2021, the Company's Board of Directors authorized the repurchase of an additional 200,000 shares under the Prior Plan. To date, the Company has purchased 535,802 shares of the Company’s common stock pursuant to the Prior Plan.

On October 28, 2024, the Company announced that on October 23, 2024, its Board of Directors authorized a share repurchase plan ("New Plan"). Under the terms of the New Plan, the Company is authorized to purchase up to 250,000 shares of its outstanding common stock. In connection with the authorization of the New Plan, the Company terminated the Prior Plan.

The Company intends to accomplish the share repurchases through open market transactions, although the Company could accomplish repurchases through other means, such as privately negotiated transactions. The timing, price and volume of repurchases will be based on market conditions, relevant securities laws (such as 10b-18 and 10b5-1 rules under the Securities Exchange Act of 1934) and other factors. The New Plan does not obligate the Company to acquire any particular amount of common stock, and it may be modified or suspended at any time at the Company's discretion. The Company expects to fund any repurchases from cash on hand.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

None.

Item 5. Other Information

Item 6. Exhibits

The following exhibits are filed herewith:


31.1			Certification of Christopher R. Gruseke pursuant to Rule 13a-14(a)

31.2			Certification of Courtney E. Sacchetti pursuant to Rule 13a-14(a)

32			Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101			The following materials from Bankwell Financial Group, Inc.’s Quarterly Report on Form 10-Q for the period ended September 30, 2025, formatted in Inline eXtensible Business Reporting Language (XBRL): (i) Consolidated Balance Sheets; (ii) Consolidated Statements of Income; (iii) Consolidated Statements of Comprehensive Income (Loss); (iv) Consolidated Statements of Shareholders’ Equity; (v) Consolidated Statements of Cash Flows; and (vi) Notes to Consolidated Financial Statements.

104			Cover Page Interactive Data File (formatting in Inline XBRL and contained in Exhibit 101)

55/20255Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


			Bankwell Financial Group, Inc.
Date: November 5, 2025			/s/ Christopher R. Gruseke
			Christopher R. Gruseke
			Chief Executive Officer

Date: November 5, 2025			/s/ Courtney E. Sacchetti
			Courtney E. Sacchetti
			Executive Vice President and Chief
			Financial Officer
			(Principal Financial Officer)

Bankwell Financial Group, Inc. - Quarter Report: 2025 September (Form 10-Q)

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