BMRC - Earnings call transcript Q3 2018

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Andrea Henderson

Good morning, and thank you for joining Bank of Marin Bancorp’s Earnings Call for the Third Quarter Ended September 30, 2018. I’m Andrea Henderson, Director of Marketing.

During the presentation, all participants will be in a listen-only mode. After the prepared remarks, we will conduct a question-and-answer session. [Operator Instructions].

conference recorded. this reminder, a is being As

Joining President Executive and the call Vice Russ Colombo, today are CEO; and Financial us Chief on President Officer. and Tani Girton,

release, bankofmarin.com, where call can press Our this being this we our at on is morning, earning website be which webcast. found also issued

risks XX, want statements emphasize on as know information the get uncertainties. XXXX may on forward-looking discussion and October contain and we involve may in Before from to this results started, that we set of I those that such differ call based Actual today, is statements. materially forth

For our uncertainties, please earnings a our review on as risks release, disclosure as well statements discussion of press SEC these the and filings. forward-looking

to the questions. to our I’d like over now, call answer your Following Russ be remarks, prepared turn And Russ and to Colombo. Tani available will

Russ Colombo

performance. leverage quality you, call. market banking Good based our continued our strong Thank the our execution growth, the serve. earnings management we strategy adherence first and that Bank expense and lead commitment Of [ph] long-term organic disciplined foundation and and to strategy demonstrates morning, third quarter is consistent team’s The Andrea. with credit share. fundamentals of gain credit that welcome Marin’s to communities These to to deposit greater to ability quality model acquisitions relationship into loan and on

yields in XXXX, points our XX XX.X% and the growth cost than a $X.XX. from $XXX,XXX point compared the the $XX.X deposits, X our interest of were quarter of reflecting basis margin was Net XXXX. were up XX% $X.X quarter. represented per quarter which loans up to Higher of quarter. $X.X basis account net Non-interest highlights across quarter. to third million increase our increase of me million, the share some The contributed more from at strong end over deposit originations in interest basis markets. notable Let income was Diluted up last to third income totaled on billion and bearing Loan million, $XX.X share X previous net points. investments average earnings

including We our quarter. continue to actions management on of this three capital note execute strategy,

acquired under launched a quarter-end. First, $X.X for we of total have program repurchase at shares million in XX,XXX May, our share

the a had has of $X.XX share, a dividend Second, the cash quarter. share declared This Board shareholders. $X.XX our Directors consecutive paid represents increase XXth of – per a dividend prior per outlook a the to in in of strong paid. the quarterly And given for Board to future in effort enhance Directors third, has Marin’s X:X an announced liquidity the split Of stock effective and BMRC stock, after is Bank dividend

for me on insight turn it financial Tani results. over let Now, additional to our

Tani Girton

do discipline on deposit growth. loan of performance Thank loans and were and not excellent grew total million and growing with unique nature strength volume. you, returns, We reflect Year-to-date, and year-to-date, million. $XX.X and good third customers. million $XX.X talented compromise ensure yields our risk-adjusted organic focused the morning. balances our consistent we the another of in We the customer We continued our team from existing pursued to both terms Thanks in new Russ, We and strong fluctuations the loan attractive credit demand base. client base. in and quarter. $XX.X efficiency remained Quarterly delivered quarter drive credit to to up high-quality deposits made third

more liquidity bearing of than clients, deposits several high have large resulting of flows businesses, maintain the We to in who XX%. cash thriving deposit their meet non-interest

when Bank result, rates a Marin’s of increases than deposits cost general banks. of interest most As Of slowly market more rise, other

combined both X.XX%. interest and rates third The Marin’s margin was in no of average net commitments quarter. million yields of bearing relationship losses remained or the margin loans Bank competitive offer across Higher income X.XX% network flat provisions of the quality the banking in virtually lifted the There sales losses marketplace, net classes, tax is interest for to and $XX.X off-balance deposits, intend between quarter basis on pricing was equivalent not and Of loan produce strong. sheet were to in increases part deposit points. model. Non-interest do higher asset we fees deposit in and highest fair with up and Credit balances income While quarter-over-quarter non-interest the X of securities.

quarter was XX.X% XX.X% year last a Our from down efficiency ago. and ratio of XX.X%

large expenses. quarter, This no there were unusual

is contributed share. growth lenders attract the to The to saw position quarters Marin vacant is new tax we attributable improvement per tax pre-tax $X.XX statutory diluted $X.XX reduction than benefits income excellent $X.XX earnings first increase. of we more will XXXX. from income of in was effective The This As the to fill federal the and XX.X%. The for the in rate year-to-date positions, salary Of half the is an to remaining rate XX%. in future. Bank three

core are robust, our return asset for and on model. XX% the our positions reflect capital and and business and power liquidity Our X.XX% values quarter of a equity return on the

the October Finally, the assumed both fourth on unaccreted the through accretion was interest flow The debt X.X% to of coupon composed X, NorCal in quarter. XXXX, eliminate future coupon redeemed on in rose of we XXXX the October discount rate Community third this remaining quarter. Bancorp The in rate subordinated interest X, of debenture due will XXX,XXX acquisition. purchased which discount. will redemption The and expense early the expense the

the turn some closing to will I for Now comments. Russ back over call

Russ Colombo

portfolio results a of everyday to such a and retail we our community Thank our you, deposit our our the We able customers Bank environment, cost be were who continues balanced model, to deliver management. The because to Marin’s rate to shareholders We underwriting the great in performance, stay interest Tani. both of discipline of strategy. of bankers work disciplined In management quarter banks to we rising was banking best-in-class hard and our this are commercial It and relationship exceed a Of expectations. our consistent customers’ deposit fronts. rate among strong nationwide. true testament on the all saw record

most position San one in attractive markets Bay of Business the the country. leading a in in Francisco have We robust. Area the is activity banking

job is New The and is business growth is and strong. of steady. our bank vibrant key near bright, value outlook population low however, continues Unemployment, prove and historic is driver for creation levels, the and a our shareholders. footprint to

in strategy, to As of market. our and our organic develop continue part position unique our growth optimize teams each we

Valley third reflect role, the we on XX spent local East which Our region. on the to named team we success He Wim-Kees the September, focus their to will California-based as Wim-Kees top our in he presence more Bay outstanding franchise, of gives of XX to talent. and expanding Walnut our Hout, in than experience Bay, launch the in van Manager in commercial in attract a In had turn value was Diablo East at grow we’ve results which last ability us where the Regional of the establishing quarter banking bankers this years Creek. brings bank, to community build the office. a of helped continued

to also this recently new that, recently County, in commitment as to market. of Of Marin brings his named to a XX most Commercial our close years Rosa Manager Casassa was Manager Novato. David Santa Prior banker team and a banking statement Sonoma of for focus the ongoing role, to part Banking Regional for Dave with experience commercial by serving Bank As of the he a was customer growing Board base He on businesses. is will building local approve in area decision stock by our split successful confident. North X:X relationships our commercial optimism his and a in great Bay. The to

head for morning. the groundwork open a now, answer your of and to your time this we we And questions. year we QX, successful into you will focused on I for up are XXXX. As thank want finishing it laying to strong any the

Operator

Jeff first go [Operator the is Instructions] our of And with Davidson. Rulis from Please question ahead. D.A. line

Jeffrey Rulis

morning. Good

Russ Colombo

David. Yes. morning, Good

Tani Girton

David. morning, Good

Jeffrey Rulis

A but at the question thoughts, margin, the thought on sort maybe, – of impact margin debt on in how general anticipated sub kind expectations redemption, just near-term. with guidance And is least, not this there? Tani. the of I guess, your first, the thereafter margin, broad on margin then on that

Tani Girton

lot raise this forward. rates of going of there quarter. moving going parts margin be did end the a of the towards deposit affecting So our We some are to

fully not in. that’s So baked

will subordinated get it’s only some of redeeming. debentures, we’re from but decrease that We half that line

Jeffrey Rulis

Okay.

Tani Girton

quarter for which discount with the on includes is coupon and sub-debt, the the the expense of accretion interest – both XXX,XXX. So the the

that So line. see decline you with and might you half roughly be cut that will associated what can in the

Jeffrey Rulis

housekeeping And helpful. in costs just there then were – quarter? to this there that’s quarter some there that relative last were maybe merger zero Okay, –

Tani Girton

smaller. zero, wouldn’t very but say I immaterial,

Jeffrey Rulis

what And was that Okay. last quarter? figure

Tani Girton

come I’ll was it can on, exact get I It was back number. the Yes, roughly Hang get I’ll to XXX,XXX. roughly you XXX,XXX. that. that.

Jeffrey Rulis

for now XXXX? then, proxy tax a maybe and QX XX.X%. even then the Is that And Tani, at year-to-date rate good

Tani Girton

as is it’s Yes, up change. a that, and down, the don’t happens the permanent proxy. differences income decent But what goes

So income the is tax rate effective down. goes down, up higher, when if goes and effective rate income tax then goes the

that permanent move kind that make of differences it’s those So around.

Jeffrey Rulis

Russ. Okay. last one And maybe one for

buyback in I suppose? got – the than given – got appetite you in a pullback month, when entered the today that you’ve the greater on we get you Just and if October. place thoughts Any

Russ Colombo

market try time and future the much. really bullish buyback these to of you We market bank, the the – very our is to continue stay too and buy. of in we’re just on regardless We the continuing – can’t things

And all because every time bank future trying not just market $XX – so, continues But time of obviously, confident we’ve buy – at the the the about $XX, and $XX. can’t. we we’re a share stock and we concerned frankly, the than we’re better buying been prices, we We too way about week. program the

continuing you price, in point up you going. we Yes. we just stock but would buy any existing obviously, in market the a haven’t market not seen a this if plan look in had at to We the that stock price. be point. this And it, is if way are the for tremendous at – We’re ran

Jeffrey Rulis

Okay. Thank you.

Tani Girton

in the back question, QX Jeff, expense $XXX,XXX. your so was to earlier acquisition

Jeffrey Rulis

Okay, great. Thank you.

Tani Girton

Okay.

Operator

from the – Bohlen line go Jackie of is Please question next KBW. with The ahead. from

Jackie Bohlen

everyone. morning, good Hi,

Tani Girton

morning. Good

Russ Colombo

Good morning, Jackie.

Jackie Bohlen

you line Still third of on indicative what questioning. quarterly would expect the on Is basis? quarter’s the level a repurchase

Tani Girton

of the amount? repurchase dollar terms In

Jackie Bohlen

fair amount? The the – dollar amount either or the

Tani Girton

Yes.

So we can various program levels. purchased parameters at set set what has a be up about that

activity, have – the because purchase and on and don’t touch don’t we we it’s we XXbX-X so really actual a And program. impact it – no then

trend step up, here that tell. that, up we yet purchasing that’s to hard general the price purchasing we not goes it’s and that’s is up. the goes on But a the been at. stock there a Russ that’s purchase – general wouldn’t said, as way been based has just we program price price – just is a fewer But the shares it’s when I up more can But the what likely So if end down, shares. we end say

Jackie Bohlen

All in Okay, that’s you. the to did the looking that’s quarter’s played loan quarter, nice in utilization, very helpful. loan Thank like growth And right. increases? impact a sounded then it

Russ Colombo

interesting. The slightly that loans because we the was were was Yes, of actual But the percentage but there’s we did the actually was in terms – – utilization – more it’s were up, – outstanding. it dollars down.

So it’s as news, news. kind at good good that look I – of

Jackie Bohlen

Okay.

Russ Colombo

More loans, slightly increase. lower percentage utilization, but dollar-wise of

Jackie Bohlen

that of And so quarter? lot a just the new nice in was commitments slipped

Russ Colombo

a have dollar utilization, have of and a equity – we equity down. number commitments, side line, larger equity with we even new on and yes, line side home both is Well, commercial of including have the actually a the on – home home retail actually banking number there’s lines

Jackie Bohlen

Okay. And….

Russ Colombo

you Jackie, also out of book they have working on. – our utilization construction and we’re our that construction these goes we Obviously, up transactions, project, as build new and portfolio. number a transactions again, the then And

Jackie Bohlen

have terms that been in HELOC, generation attractive more then a just borrowers? Is driven in your that rising there? hearing, of that lenders product your rate? opinion, Is And by for you’re Okay. the interest seeing becoming what

Russ Colombo

pay HELOC, I there’s more of or any I in speaking it kind that utilization I think, less. do And more project but read home-remodel is ad I use on interesting, deduct interest as taxes.” the, think, off. that So will think of it’s to because and can’t more people, really as “You your volume

we and the There less forward, refinance who – you people would of just people, to have is I going a home case they utilization they think, is equity look what more They equity into more less the think that’s have… on then that, as still see if it home traditional have larger they be going to case. their their mortgage. And lines. on line, I be

Jackie Bohlen

Okay.

Russ Colombo

… it home not use line, but equity much. too

Jackie Bohlen

right. All Okay.

then of year So and and you how through utilization in is heading thinking everything going the of and trends light loan of the end growth, XXXX? are else into both on,

Russ Colombo

guidance give on know, you as that. don’t Well, we

pipeline Our to robust, couple continues markets. of be very particularly in a and strong different

the been confident the year. pretty we’re have through I as year. I’ve the we throughout So, consistent will mean, year finish we that

Jackie Bohlen

Okay.

Russ Colombo

say, to And going no I that’s believe there’s reason would change. to

Jackie Bohlen

the in work that? additive you’re And other Okay. be guess I will and doing that which that would Diablo areas, to Valley

Russ Colombo

Yes, it certainly additive. will be

in because East add. Diablo Wim-Kees fill anymore for out office done really, is over – until of great He Bay – really process hired Oakland But we when looking Valley market. that’s Hout, the of has hires the And the we’re now bring van we’re of being office for to that still bankers Our And working look now space at team. that time out will there. a we we well. our Wim-Kees

to – – ultimately pretty over about Walnut Creek. in be to in We’re being be excited the

Jackie Bohlen

Russ. color, it. the Okay, I appreciate great. for Thanks all

Russ Colombo

You’re welcome.

Operator

go line of O’Brien from Please And [Operator O’Neill. the Tim question the from Sandler Instructions] ahead. is next

Timothy O’Brien

Thanks.

just discount hits quarter, remaining excuse – interest this the the declared or XXX – XXX,XXX purchased expense in Jackie So me? that net quarter in approximately fourth

Tani Girton

That’s correct.

Timothy O’Brien

– Okay. was recalled weighted loans average fuzzy you or okay you’ve number, And was bounced around it yield a calculated, on then didn’t quarters if past I’ve little? it’s the that new compared something overall little a Is in quarter? what the that loans to

Russ Colombo

at something get I unfortunately. don’t to average, that, was have it up. me. don’t exact tell – my but… you, I have the that I probably can Tim, could I tips, finger On hit

Timothy O’Brien

Is just Russ, existing the up yields overall yield the in relative it, I qualitatively, guess, book? holding to

Russ Colombo

numbers, it I’m it’s at points. like up portfolio – probably – and new about now like looking up about up it’s the about it’s from say, looking volume is – XX would I basis looks

So we don’t….

Timothy O’Brien

XX? or XX

Russ Colombo

XX. X.X%, No,

Timothy O’Brien

XX.

Russ Colombo

Relative to total – portfolio. relative to the total

[Multiple Speakers] already You

Timothy O’Brien

Fantastic.

Russ Colombo

…yes, volume. from our new loan

Timothy O’Brien

know. Good to

Russ Colombo

Yes, [Multiple Speakers]

Timothy O’Brien

Great. And then were there Russ? – sorry,

Russ Colombo

rates quarter. third it the the the volume on versus are second loan where the at end those quarter And was of

Timothy O’Brien

quarter? any or net collected And quarter that interest income this Got then benefited this were prepayment it. there fees interest income

Russ Colombo

– they nothing speak they of. to I No, were insignificant. If don’t were,

Timothy O’Brien

Immaterial, questions. okay. That’s it. my Thanks for answering

Russ Colombo

Tim. you, Thank

Operator

other no up. queued question There’s

Russ Colombo

other you again to questions, at you That’s forward morning, it. end joining no next Thanks for to this us With quarter. so all to look much. thank I and we the want talking of

Tani Girton

Thank you.

Bank of Marin Bancorp (BMRC) 22 Oct 182018 Q3 Earnings call transcript