Matthew Erdner: Got it. Thank you. And then should we expect things like this going forward? Or is this just a onetime opportunity that you guys felt like you could capitalize on and provide some value add there?
John Villano: No, this is a good question. So bear with me on this answer. It is a onetime project. It is a project brought to us by our Urbane group. We bought them a year ago. They go out and they’ll look for projects that are accretive to us, and they search this out, they’re involved. We’re wrapping up a project with them now in Westport, which is the sale of a 12-unit condo building on the river right downtown. So they’ve identified this property. The same team is going to develop the building, also do the permitting for the residential.
Matthew Erdner: Got it. Thank you.
Operator: Thank you. [Operator Instructions] Next question will be from Chris Muller of JMP Securities. Please go ahead.
Chris Muller: Yeah. Thanks for taking the question and congrats on a nice quarter. So John, you talked about in the past doing larger loans given the lower levels of competition out there. So I guess are new loans continuing to trend larger? And what is your outlook for that into 2024 as more of the regular way competition returns to the market?
John Villano: Well, the smaller loans don’t have the margins in terms of profits to the developer that they used to. Properties are fairly priced. And when you factor in, whether it be permitting cost, renovation or even our debt service, the smaller project just can’t get done here anymore. So we’re focusing on larger deals where, should the developer slip a bit, he has room to succeed. So we’re looking for deals that have better margins, which most often will take you to a little bit of a larger deal, better quality sponsor, better capital light sponsor. And we’ve had better success with that. Very few of these projects go off without a hitch.
Chris Muller: Got it. That’s helpful. And then I guess on the CECL recovery, is that driven more from the macro picture changing from the last quarter? Or is it more behind like the NPL reduction and asset-specific improvements?
John Villano: For this question, Chris, Nick Marcello, is on the call here. He is our Vice President of Finance and Accounting. Nick, would you mind helping me with this one?
Nick Marcello: Yeah, absolutely. Hey, Chris. So that CECL — the recovery of CECL is a result of the mortgage portfolio shrinking a bit during the quarter. Our CECL reserve is down on a portfolio basis. So you’ll see quarter-over-quarter, you saw a little bit of shrinkage in the mortgage balance as a whole as a result of that large payoff that John referenced on the call.
Chris Muller: Got it. Very helpful. Thanks for taking questions.
Operator: Thank you. That concludes our question-and-answer session. Now I’d like to turn the call back over to Mr. John Villano for closing remarks.
John Villano: Thank you, everyone, for joining us today. We look forward to updating you again next quarter. Thank you.
Operator: Conference has now concluded. Thank you for attending today’s presentation. You may now disconnect.
