Bankwell Financial Group Posts Strong Q3 2025 Earnings, Expands Margins, and Declares Q4 Dividend Amid Continued Operational Momentum
Bankwell Financial Group, has announced another quarter of strong financial results, underscoring its continued growth and operational discipline through 2025. For the third quarter ended September 30, 2025, the Connecticut-based financial holding company reported GAAP net income of $10.1 million, or $1.27 per share, marking a solid improvement over the $9.1 million, or $1.15 per share, reported in the previous quarter.
In conjunction with the earnings announcement, Bankwell’s Board of Directors declared a quarterly cash dividend of $0.20 per share, payable on November 21, 2025, to shareholders of record as of November 10, 2025. The dividend underscores the company’s confidence in its capital position and long-term profitability trajectory.
Strong Core Earnings Growth and Improved Efficiency
Bankwell’s pre-tax, pre-provision net revenue (PPNR) reached $13.9 million, equivalent to 1.70% of average assets, representing a 21.5% increase compared to $11.4 million in the second quarter of 2025. This improvement was driven by a combination of robust lending activity, disciplined cost management, and a favorable shift in balance sheet composition.
The company’s efficiency ratio improved to 51.4% in the third quarter, down from 56.1% in the prior period—reflecting significant gains in operational productivity and cost efficiency. Noninterest income also showed growth, rising to 8.76% of total revenue, compared to 7.76% in Q2, largely due to higher gains from Small Business Administration (SBA) loan sales and other fee-generating activities.
CEO Commentary: Sustained Momentum and Strategic Execution
Christopher R. Gruseke, Chief Executive Officer of Bankwell Financial Group, expressed optimism about the company’s trajectory.
We are proud to announce our third quarter results which demonstrate continued growth and improvement across all aspects of our business,” Gruseke said. “Our Return on Average Assets grew to 1.24% for the quarter while the Net Interest Margin expanded to 3.34%. Funded loan originations have grown to $518 million year-to-date, versus full-year fundings of $328 million in 2024. Our SBA division continues to grow at a disciplined pace, with gains on sale increasing to $1.4 million for the third quarter.
Gruseke also highlighted the firm’s operational progress and balance sheet stability:
As we have expanded our capabilities across the Company, we have improved our efficiency ratio, reducing it to 51.4% this quarter. Balance sheet trends have shown consistent improvement, supported by ongoing capital growth and a reduction in non-performing asset balances. NPAs as a percentage of assets now stand at 0.56%, and our outlook remains positive for the quarters ahead.
He concluded by emphasizing Bankwell’s strategic momentum:
We look forward to closing out 2025 with continued momentum and will provide guidance for 2026 performance with our year-end earnings release.
Balance Sheet Strength and Improved Asset Quality
Bankwell continues to demonstrate strong credit discipline and balance sheet health. As of September 30, 2025, nonperforming assets (NPAs) as a percentage of total assets improved to 0.56%, compared to 0.78% as of June 30, 2025. This improvement reflects proactive management and successful resolution of problem loans.
The $6.9 million decline in NPAs during the third quarter was largely attributed to $5 million in collections on three SBA guarantees and the sale of one commercial real estate loan for approximately $1.6 million.
Additionally, Special Mention loan balances decreased by $30 million during the quarter, further illustrating the positive trajectory of credit trends. The Allowance for Credit Losses (ACL) on loans as a percentage of nonperforming loans increased sharply to 176.7%, compared to 122.5% in the previous quarter—highlighting the company’s strengthened credit coverage position.
Net Interest Margin Expansion Reflects Strong Lending and Lower Deposit Costs
Bankwell’s Net Interest Margin (NIM) rose to 3.34% in Q3 2025, an increase of 24 basis points from the prior quarter. This expansion reflects a combination of higher loan yields and a decline in deposit costs.
Loan yields improved to 6.71%, up 13 basis points sequentially, while deposit costs declined to 3.30%, down 10 basis points from the second quarter. The improvement was driven by the repricing of time deposits and a more favorable deposit mix that reduced funding costs.
Notably, the company’s third-quarter results do not yet reflect the potential positive effects of the Federal Reserve’s September 2025 interest rate cut, suggesting that further margin benefits may emerge in the coming quarters as deposit repricing continues.
SBA Lending and Noninterest Income Growth
Bankwell’s Small Business Administration (SBA) lending division continued to deliver strong results in the third quarter, achieving $21.8 million in originations. The company realized SBA loan sale gains of $1.4 million, up from $1.1 million in the prior quarter, with average sales premiums of 10%, underscoring strong demand and pricing in the secondary market.
This performance helped lift noninterest income as a percentage of total revenue, contributing to the overall earnings strength. As Bankwell continues to expand its SBA capabilities and deepen relationships with small business clients, the division is expected to remain a key growth driver heading into 2026.
Operational Highlights and Strategic Progress
Bankwell’s Q3 2025 performance reflects the successful execution of its strategic priorities—focused on sustainable growth, efficient capital deployment, and prudent risk management. Year-to-date funded loan originations reached $518 million, a substantial increase over the $328 million originated during all of 2024.
This robust loan production reflects the company’s expanding commercial and consumer lending platforms, particularly in its home market of Connecticut, where it continues to strengthen relationships with local businesses and communities.
The company’s improved efficiency ratio of 51.4% underscores management’s commitment to cost discipline and technology-driven efficiency improvements. Through targeted investments in digital banking, credit automation, and operational streamlining, Bankwell has reduced overhead while maintaining a high level of customer service and engagement.
Positioned for Continued Growth
Looking ahead, Bankwell Financial Group remains confident in its ability to sustain earnings growth and deliver strong shareholder returns. The company’s balance sheet is well-capitalized, asset quality metrics continue to trend positively, and its diversified business model provides multiple avenues for revenue expansion.
The combination of rising loan yields, stable credit conditions, and disciplined cost management positions Bankwell for continued profitability in the quarters ahead. Management expects to provide a comprehensive 2026 outlook with its year-end results, including guidance on loan growth, margin trends, and capital priorities.
