Bankwell Financial Group, Inc.

Good morning, everyone. Welcome to BankWell's third quarter 2024 earnings conference call. To access the call over the internet and review the presentation materials that we will reference on the call, please visit our website at investor.mybankwell.com and go to the events and presentations tab for supporting materials. Our third quarter earnings release is also available on our website. Our remarks today may contain forward-looking statements and may refer to non-GAAP financial measures. All participants should refer to our SEC filings, including those found on Forms 8K, 10Q, and 10K, for a complete discussion of forward-looking statements and any factors that could cause actual results to differ from those statements. Thank you, and now I will turn the call over to Chris Grisecki, our President and CEO.

Thanks, Courtney. Welcome and thanks to everyone joining Banquo's first earnings conference call. This morning, I'm joined by Courtney Cicchetti, our Chief Financial Officer, Matt McNeil, our Chief Banking Officer, and Ryan Hildebrand, our Chief Innovation Officer. We appreciate your interest in our performance and this opportunity to discuss our results with you. On today's call, we'll provide updates about the financial and operating performance for the third quarter, including a thorough credit update. Before taking questions, we'll also take a few minutes to update you on some strategic initiatives that our team has made significant progress on over the last several quarters. We pride ourselves on our ability to be nimble and efficient, and I believe the team here has made great strides that will differentiate us from peer banks in the quarters and years to come. Our financial results for the third quarter included GAAP fully diluted earnings per share of 24 cents, which were negatively impacted by an 8.2 million charge off against an office loan, reducing the third quarter's EPS by approximately 79 cents. We first reported this loss in an AK file on October 11th. The loan was made against a Class A office space in Florham Park, New Jersey. Having written off 60% of the loan balance and considering the location and quality of the office space, we're confident in our ability to collect the remaining balance. Matt will discuss credit in further detail in just a minute, but I'd like to note that we don't believe our two recent charge-offs are indicative of any negative credit trend on a go-forward basis. On the liability side of the balance sheet, we're pleased with continued strides we've made to improve the quality and diversity of the deposit base. We've made excellent headway with the rollout of BankWell Direct, our online deposit channel, and we're working on technology solutions to enhance our deposit product offerings. These initiatives have helped us pay down broker deposits by $168 million since the beginning of the year. With a liability-sensitive balance sheet, we remain well positioned for future rate cuts by the Fed. Courtney will provide a further look at how lower rates should benefit the company's earnings in the quarters ahead. At this point, I'll hand it over to Matt McNeil to provide some additional details regarding credit quality and the $8.2 million charge-off we've recently disclosed.

Thank you, Chris. We are disappointed that the Florham Park office loan, in which we were a $13.7 million participant in an $84 million club deal, deteriorated to the point of requiring an $8.2 million charge off. Fortunately, this loan is unique to our portfolio in that we have no other exposure to this sponsor and no other office loans in which we are participants. Of additional note, this loan originated prior to the COVID-19 pandemic, thus prior to the bank's amended risk tolerance regarding the office market. Greater detail can be found on slide 12 of our investor presentation. I'd like to highlight several points regarding our remaining office portfolio. We have reduced our office exposure to 166 million or approximately 6% of the portfolio. The majority of the office portfolio has credit enhancements such as personal recourse, owner occupancy, a credit tenant, or a GSA tenant. Only $7 million of the portfolio does not have these enhancements. As of September 30, 2024, our ACL against our office portfolio was approximately 16%. The bank has conducted a granular, lease-by-lease review of the entirety of our $166 million office portfolio and has not identified any loan where we would expect to take a material negative impact. Turning to MPLs, we had one multifamily loan downgraded in the third quarter, which is included in the 250 basis points of non-performing loans. We anticipate a full recovery on the $27 million balance as we have an agreement to sell the loan at par. The sale of this loan would have a 103 basis point positive impact on the non-performing loan ratio, bringing the pro forma to approximately 147 basis points. assuming no other changes. See slide 10. Meanwhile, the credit trends in our residential care portfolio continue to improve. We have had four criticized loans receive risk rating upgrades during the third quarter. Two special mention relationships were upgraded to pass, totaling $14 million. Two substandard relationships were upgraded to special mention, totaling $28 million. Now to discuss our financial results in greater detail, I will turn it over to our Chief Financial Officer, Courtney Sacchetti.