BMRC - Earnings call transcript Q4 2018

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Andrea Henderson

Good morning and thank you for joining the Bank of Marin Bancorp’s Earnings Call for the Fourth Quarter and Year Ended December 31, 2018. I’m Andrea Henderson, Director of Marketing for Bank of Marin.

During the presentation, all participants will be in a listen-only mode. After the call, we will conduct a question-and-answer session. [Operator Instructions] As a reminder, this conference is being recorded on January 28, 2019.

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

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

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

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

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

Russ Colombo

lending, the of this Good share. and quarter the XXXX deposits record you. welcome approach Thank strategy of control banking Combined morning, attracting leading low and our helps Bank to based market level and balanced of and Marin’s our testament cost models, industry adherence fourth call. disciplined relationship gain with consistent results underwriting, to execution credit expense are us management. year-end to on

XXXX. underpinning the highlights. compared the notable XXXX. million Diluted X,XXX previous growth after at earnings quarter XXXX. X.X fluctuations in has of grew over XX.X our fourth were XX Wim-Kees income million culture million quarter bearing and was for exception. million million the XXXX the X.XX% XX quarter quarter November organic December of Creek. up banking and in business split. initiatives. Deposits loans portfolio. new down total credit cash in year commercial of quarter always of XXXX success Let's expanded of or quarter, Loans Loan East to XXXX previous in fourth invest fourth an due year-end, and million XX% in some to large van In We to XX, quarter, of to XX our XX.X $X.XX ago, of were open to the last same in non-accrual X,XXX no Bank's and the million Large million year XX.X been fourth and in for we per Walnut At in compared at increased the a clients, Hout in is year-end. strong deposits a and our million million quarter. the start the with X.X% deposits in were the for hired continue of Non-interest in adjusting comprised represented the course stock X,XXX the fourth normal the quarter $X.X compared the Bay cycles footprint Net XXXX XXXX, loan business $X.XX was in to X.X to office growth $X.XX million share by year,

Rosa strengthened We Commercial Sonoma have Regional as team also our Manager County Casassa naming Santa for our David in market. Banking

of $X.XXX paid yield August a been that quarterly XXXX Board of represents rate of share. XXXX, noting on consecutive increase Marin is per It share XX, cash Our since per dividend Bank dividend January Marin's declared XX.X%. an has This Bank average of Bancorp. XXth the dividend of worth $X.XX Directors by growth

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

Tani Girton

the XX of loans, and million million for for across expense ago, by result acquisition. cost dividend the and was Fourth the investments year-ago. going received and grew yields bearing of XX% Russ, the gain basis early accelerated XXXX, by with dividends network. the year million the In holdings our income quarter fourth redemptions Home Loan $XX.X than Federal interest Francisco. the from margins sale XX XX.X% XXXX quarter a of third successful rent consulting to of lower margin a the deposit to you, XX.X quarter XXX,XXX Net well Non-interest improved last categories. in fourth to expense insurance strategy expense. contract X were million redemption. the of will effective percentage a from the balances to result basis million million rate The class a of last of source assets year of merit in of quarter Napa X.X tax a the increased compensation based excess special higher XXXX $XX.X higher accretion processor half one interest as XXXX. intangible reported and in as XX.X% quarter XXXX. $XX.X sale the in than of B non-interest of our the in X.X negotiations leverage visa stock almost interest removes The San million a balances full-year and from organically and million we and in XX.X awards income over bank due roughly reflects level, to full-year net related as in as the of or Net respectively million personnel, higher earning expense XX charge benefit related the and impacted X.X% transaction. increases equivalent and from included the amortization interest margin Annual was X retirement income the morning. XXXX Even debenture deposit core X.X million the XXX,XXX. of points Bank XXXX of first Bancorp X down sold on by basis write the high Community year, deferred execution shares Non-interest tax the borrowings $XX.X assumed early tax of X,XXX so to Net as which X.XX% net basis was quarter all well fourth stock Thank X.X to points X.X Full-year in of FHLB employees, the for line special down. non-interest of reaching average NorCal the over asset fourth as the reduced and fees was eligibility a good deposit average and of thanks quarter of XXXX, tax from negatively was Non-interest acquisition. XXXX equivalent grow compared of in bank acquisitions in XXXX as $XXX,XXX million expenses to core XX XX.X higher result This deposits, income all purchase subordinated primarily in XXXX visa million The additional income improved expenses of acquisition discount million forward also points some million generally from interest points quarter points. and due third year-to-date of

reduce of enabled XX.XX% in full-year Continued than to its ratio bank was XX.X% in X% the XXXX expense third efficiency of quarter. percentage in efficiency the fourth The quarter XXXX. control points XX.X% than more ratio to the from lower

profitability. across continues As to Russ drive discipline all of the areas bank said,

to the than of bank to trying or by or in doing basis due XXXX. price strong a no Our from is for basis raised provision during its deposit still of points versus quarter fourth so, The points lease reflected Recent our it quarter win percentage focus non-interest for and there XX basis in deposits the to kept on bearing points sheet the low and losses XX commitments was relatively increases culture the deposits of XXXX pricing and of non-performing low year. cost X relationship level loans rather keeps balance loan off cost credit the to on in in higher deposit.

year. of return for for achieve the equity was the quarter and the able quarter Return reached a and assets XX.XX% As of X.XX% Bank on result, year. for Marin XX.XX% for on to a X.XX the

committed are underlying very the We principles pleased to New ready results. the with We Year. remain and are success take these on our to

Now, comments. some closing to Russ would like share

Russ Colombo

keep in the There Bay economic experienced peril. that San maintain are in times. an of In many saying way Marin, possible so business. forever. banks business view, has this wise Bank investors At to we is The Francisco just eye last you, operate. Bad our cautious dynamic and a we Area owner banking this old imperative on is a did in is loans do disciplines industry. And protracted not Thank be that expansion years Tani. would in made for good how

practices and help We continue we local to have, economies serve. both of apply to same variety always the the that our standards reflecting we the lending that

of funds relationship relationship the footprint. continue deposits banking lending markets. we of to Bay expanded we grow of in with people our XX% built were growth Our from are safely a added Marin, true clients, San banking indication demand our the this extensive XXXX, With Napa, In our and is to our across deposits, In strong for accounts, some operating Francisco model East cash presence primarily our activities in key clients' growth the markets. close and have businesses. the Sonoma, those

on the market follow-up It local that a to for large the foot most well economy. certainly If volatility the is economy Our the note is on organic Area to technology XXXX our Bay fueled focus as leveraging primary further print. and our important growth would tech enhance by industry. our impact sector, would an parts in be as is drive vibrant talent in there entire our and have profile reputation

do we that to it a to not While are recognized lend develop. downturn well and prepared respond sector directly, should tech to companies we in these

banking, like stable solid to unwavering maintain morning. of successful I low your relationship business We’re to positive thank performance clients Due underwriting, changing these well growth structured for commitment our time solid to consistent a to to to relationship with and of market. into our this cycle, our XXXX. these with our deposit would carry loan positioned thanks balanced and manage opportunities cost loan you our base for approach we’re understanding and

any open your we answer of will Now, up to questions. it

Operator

[Operator of Instructions] with Our question telephone the first Rulis comes Davidson. lines the line from D.A. Jeff from

Jeff Rulis

in you expenses, would part but fairly anything look hires the other kind a be or drive may then 'XX planned Anything core? that first or in on low 'XX? to Question expense I And that operating what wanted on in events bound, growth guess of range you I base fairly guess if quarter. of just just that kind the of kind somewhat second look would was that kind is, expectations think of core,

Russ Colombo

we some basically the percentage the openings of banking in for the We have do positions do drive we most so have -- in of think -- will But and up were open. there cost towards selling, in a bit. a that that are we the -- always part, I the that those did it's core, but is process bank

a up core number if bit, the So, that pretty little fully XXX% will we much staffed that it's expenses. were part but were for drive most

Jeff Rulis

And of visa then said, on annually, quarterly approach that on ownership you you how so the that you something Or that balance. sales revisit going additional sales? would that or roughly half forward? it's would Is

Tani Girton

keep time that while prices to So, good had an quite that a that we this little wanted bit volatility why sell is up as against the prices the portfolio reason a and hedge a to run in those in eye capture market all time. we a the forward. was going of on bit future The that some

an point maintain for So, while keep desire would position on I at eye this forward. that that our it, going we sometime to is say

Operator

line comes KBW. Jackie proceed. question of next from Your Bohlen the with Please

Jackie Bohlen

comments it sounded terms if, generation? And viewing kick loan and up, wanted cautious to you know are interpreting two, if your how translates Russ, that to number number I'm it. just remarks economy of to prepared that wanted more correctly? how the I Just in one,

Russ Colombo

it You correctly. interpreting are

because just fair period Bay and cautious we of has amount in of technology. protracted are We this Area expansion big been have the

growth lender. technology we to to we that's side industry expectations organization, have this had future. fact little the an prepared expect generate the -- a still year of continue had the and consistent we falls have that year don’t we we will we even And serve loan being these despite over all off any different though have And that continue and on the we if same build historically, the market So, And same not on relationships. as in there discipline over historically. we the are But that been is volume the have that to these pretty historically, have time. we it maintained we an growth be had we be X% said, we for that the had we I impact and issues, on pricing And have pressure growth. type it to next than and things, have

Jackie Bohlen

weakness more in cycle today where different any just stand that are Okay on the in areas? versus of so caution you based seeing we

Russ Colombo

Not really weakness. seeing

to extended in history, a put kind to in big back technology you only on go had just it's if I correction, -- -- be to Just it. And back back, of there that the of are technology, look had I great this when periods, cautious after had a XXXX growth. a period wise like early you the We've little everyone. -- particular. as impact

smart -- So downturn. I'm Rosa. We're the nature. That opening for being I sure that. about really are want off we're prepared for maybe in we Walnut cautious just building re-staffing We're to I Creek. just growth, by Santa make being we're any just said, but that

Jackie Bohlen

is to provide far? terms January looking update definitely expect Okay, And that so pay-offs anything how last one in you less. if of and an on and wouldn't one,

Russ Colombo

bigger the percentage had a occur. of we sales were In of -- -- where we we December -- longer had of issues. that was to exit out we few financing refinanced did wouldn't just We completely mean pay-off around kind that the of portfolio down a pay-offs. that asset some is We term had year, a another one really, side, was of with And credit term. But wanted certain a normal have to plan with XX% We compete. sales. it had -- we longer lot big refinanced terms Yes. that I that insure. was few pay-off we it property in of that was driven. they the for rate our and there's of property a actually a a every

guided year expected. below So Actually, those we kinds XX%, which we've the were for planning. slightly of things happen. The pay-offs been where the

X% So year. during the only about

we that. future, we as less So like for We do get good always we than and plan plan in budgeting about the for mid-single-digit look that volume. we planned mid-digit volume, which that but you process. only We planned growth, for XX% increase our actually means hit to was we XX%, hope XX%, to -- have XX%

kind I of... So

Operator

proceed. The Tim next question of the with line O'Neill. Sandler O'Brien comes from Please

Tim O'Brien

on First negotiations core rate? does an it, contract systems have you were that And that your data question, guys that at impact in million is quarterly processing X now? on run finalized expense

Russ Colombo

we of first benefit are is the it that. that's of all, Well, finalized it getting why --

a new platform there when middle a still And system. system that, those However, conversion of of we're running mobile -- in -- QX. running are the their of we're we're our to costs in old now and

at until overlap the some there's So That end in point terms will cost. quarter. of this mid-second

So the quarters, quarter we're change numbers you'll a really see half two then impact. see lot to not an going a those first you're -- and in to and

Tim O'Brien

ultimately or ballpark? big kind is out in starting couple How of kind come Russ, third cost that a a piece, give or the of Is XXX,XXX XXX,XXX duplicate that it quarter? will something

Russ Colombo

about numbers XXX,XXX The quarter.

Tim O'Brien

in on have that -- you debt. issued remaining question else? Feb rate for of And What the Bank Tani, Do a that X.X on is us interest the can coupon Marin tell or million that? debt something is the then And remainder? you you

Tani Girton

issued accounts. originally was more That by

Tim O'Brien

would guys that guys X.XX. redeemed you you that That called, suggest right, you called

Tani Girton

course in But it discount. There and coupon rate it's remaining which one redeemed were significant a one area. shows rate, the low of of two and to we six higher five was them, high a the one has

lower that, in a the So of that, is of amortization. the that than portion coupon is discount rate all portion a

Tim O'Brien

for qualify capital, that for even? you right those X is guys And Tier

Tani Girton

Yes.

Tim O'Brien

this good that, investment retain you’ll that’s keep are in environment. chances to so a Okay,

Tani Girton

were the higher rates So, terms the I'd say, significantly it. paying on was in other we one of

capital. -- And on so, we really don’t need it the depends

rate but goes redeem where other the to we early on may it's the now in decide one, we think depending level. right fair future, sort the pretty So of

Tim O'Brien

-- And this number you happen you for release. quarter, I from to the press do then, have number full got that, count share the repurchased the shares not year

Tani Girton

but hand, for number fourth quarter the I don’t can have get that off I you.

Tim O'Brien

awesome. interest provide sheet? rate heading little question, of of color be last profile into balance could the then would you XXXX That guys on your And kind sensitivity

Russ Colombo

loan of our XX% about -- portfolio is have rate floating We our portfolio immediately.

will there's case might if rate, rate it the whatever -- decrease increase, So if changing the be.

three XX% floating. it's Another to But is five XX% is years. months --

So And the at. it's term leased like a rate. you of -- fixed. the the where rest based At and the rate variable current end on is

Operator

And no lines. there be telephone appeared to further on questions the

Russ Colombo

you for calling speaking Thank I us for next quarter. again everyone joining morning. this to Thanks look forward with in.

Bank of Marin Bancorp (BMRC) 28 Jan 192018 Q4 Earnings call transcript