Bankwell Financial Group, Inc.

Good morning, ladies and gentlemen, and thank you for standing by. My name is Kelvin, and I will be your conference operator today. At this time, I would like to welcome everyone to the Bankwell Financial Group fourth quarter 2024 earnings call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, press star one again. Thank you. I would now like to turn the call over to Courtney Sacchetti, Executive Vice President and Chief Financial Officer. Please go ahead.

Thank you. Good morning, everyone. Welcome to Bankwell's fourth 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 fourth 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 8-K, 10-Q, and 10-K, for a complete discussion of forward-looking statements and any factors that could cause actual results to differ from those statements. Thank you. And now I will turn the call over to Chris Grisecki, Bankwell's Chief Executive Officer.

Thanks, Courtney. Welcome, and thanks to everyone for joining Bankwell's fourth quarter earnings call. This morning, I'm joined by Courtney Cicchetti, our Chief Financial Officer, and Matt McNeil, our President and Chief Banking Officer. On behalf of our Board of Directors, I'd like to congratulate Matt on his recent promotion to President of Bankwell Financial Group and its subsidiary, Bankwell Bank. 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 our financial and operating performance for the fourth quarter, including the status of several nonperforming loans we've previously disclosed over the course of 2024 and 2023. It's important to note that during the quarter we saw no credit deterioration and we continue to be optimistic regarding the performance of our loan portfolio in 2025. Our financial results in the fourth quarter included GAAP fully diluted earnings per share of 32 cents, which were impacted by $3 million of net charge-offs. The charge-offs primarily consisted of two non-performing assets. First, we fully disposed of a non-performing CNI loan with a book balance of $1.7 million. The initial write-down on this credit was announced in an 8K filing in July 2024. The $700,000 charge off on this loan and the sale of certain assets finalizes the disposition of this non-performing asset. Second, we took possession of a non-performing construction loan during the fourth quarter, transferred the property to OREO, and charged off $1.2 million, which resulted in a carrying value of $8.3 million. This loan went into non-accrual status in the early days of the COVID pandemic and has been working its way through the legal system. Subsequent to December 31st, 2024, we signed a purchase and sale agreement for this Oreo asset for the full $8.3 million book value. The impact of this sale will reduce the non-performing asset ratio by 25 basis points. Also subsequent to December 31st, 2024, we signed a purchase and sale agreement for our largest non-performing loan of $27.1 million at par value, which upon sale will further reduce the non-performing asset ratio by 83 basis points. Both sales should have a neutral impact to future net income. Further details regarding MPAs can be found on slide 11 of our investor presentation. Regarding commercial real estate, we continue to reduce our CRE concentration, which stands at 375% of total risk-based capital at year-end 2024 versus 397% at year-end 2023 and 425% at year-end 2022. On the liability side of the balance sheet, I'm pleased with the continued strides the bank has made to improve the quality and diversity of the deposit base. We had another productive quarter of growth within our BankWell Direct product, which grew by $39 million over the third quarter, bringing total outstanding balances to $136 million, while broker deposits fell another $78 million on a linked quarter basis. Overall, core deposits grew by $169 million in the fourth quarter, while simultaneously reducing our total deposit costs by nine basis points compared to the third quarter. With a liability-sensitive balance sheet, we remain well positioned for a normalized yield curve. Now, to discuss our financial results in greater detail, I'll turn it over to our Chief Financial Officer, Courtney Sicchetti.