BMRC - Earnings call transcript Q4 2020

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Andrea Henderson

Good morning and thank you for joining Bank of Marin Bancorp’s Earnings Call for the Fourth Quarter and Year Ended December 31, 2020. I am Andrea Henderson, Director of Marketing for Bank of Marin. [Operator Instructions] This conference call is being recorded on January 25, 2021.

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

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

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

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

Reizman, will our to remarks, Beth Chief Tim Credit questions. Tani, your and turn over to like with available prepared Russ along be And Colombo. Following Russ, call I’d answer to Officer, now the

Russ Colombo

of Thank Marin economy adapted We and and generated assess you, year needed in welcome provided of for quickly – fallout. payment to room loan results who call. the sections the borrowers full Bank pandemic’s shutdown morning, relief the Andrea. strong breathing pandemic-related to despite XXXX. to Good the relief the large of

Protection the with We almost guidance also them forgiveness. in to businesses participated and providing X,XXX actively Administration’s access Small apply Program, PPP and local for helping secure funding Paycheck Business

quality held as and is throughout move into Our credit XXXX. the we firm year solid

and services to affected are latter entered crisis. team With to hope final forward. we businesses deliver on positioned strong liquidity their these of have clients we what to we fire to year ready many found a take move on positions well ahead. the and in health ways commercial work Most and to this continue their public all new XXXX the believe capital clients our cylinders, through manage with stages of are by position We a months, and

Our XXXX results this. demonstrate

earnings at XX, at $X.X a XX/XX/XXXX. deposits or of billion and to for Cost made Net highlights. grew the the $XXX $X.X basis of increased billion billion XXXX XXXX, which up $XX.X $XXX up year at million XXXX. X.X%. per on XXXX. equity Non-accrual of X% year down low XX in of million a XX% December X.XX% share basis the at were Diluted billion XXXX full to Loans from total of at assets in increased XX/XX/XXXX, $XXX the remained deposits for million, on deposits $X.XX. represented bearing from full with XX $X.X at million start return was Deposits or of return income Let’s Non-interest represented XX/XX/XXXX loans points of as only bank’s compared points and in loan portfolio year-end. to XX/XX/XXXX. XX% X.XX% $X.X

reactivated will of XXXX provide PPP. management changing succeed of and for confidence year October paid him. Rich, digital Board continue dividend $X.X declared his almost Executive of December, an January constantly position million. Tim a the Information suspended Directors – under the prior banking XXrd current $XX full the of knowledge the per security modification with Bancorp. Marin that programs was cash Burke, and and I named Bank by repurchase retirement $X.XX Board and of program member Rich this of Chief in This invaluable Jim now repurchase that our capital President our loan Lewis to utmost of local technology the Marin Given our and information the update the XX, bank’s extensive team deep Vice years. keep on and March. In program we was quarterly dividend experience, results, competitive to world. Bank will Jim Officer have our and an million XXXX, consecutive Rich on solid XXXX. Repurchases represents XX for XXX,XXX in share were In XXXX shares totaling announced share

Tim Myers

which the Marin Bank Thank onset resumed have $XXX payments since loans normal XXX off. been most million relief of paid for of totaling have or pandemic, payment provided Russ. of you, the

of As of half Nearly and average buildings loans XX%. requested relief. of totaling loans additional XX retail health are the hotels million these had of XX in the only commercial XXXX, borrowing remainder on properties payment an with estate, all loans hospitality impacted are loans loan-to-value with $XX relationships secured December XX, COVID-XX largely industries, education by with these and and club are office tenants. real tenants, with Almost

the recovery for able opened Round our now through Russ demand portal existing obtain for Protection from we and our XXXX and requests round loan the customers an ongoing XXXX, small application PPP expert almost accepting second than noted, During to successfully customers our companies borrowers we now for of funding The X as and its Program. be through overall portal, in training. and All and the program, as success expect Due need momentum, during a forgiveness the first support the PPP to the the team XXXX. are well round of SBA lighter has funding bank loan pandemic adapt now bankers economic is secure to helped as loans business available support. Paycheck X,XXX apply funding, the of in bank online of are of ingenuity to for that

expand additional insight our to turn optimistic participating make remain around. to it prepared banking and XXXX to continue Tani adapt realities and Creek our develop in any who our we to new in of usual over into for markets. to to and other However, in Remaining We commitment to Walnut our With growth to in us while ongoing grow will opportunities opportunities we businesses. I the ourselves for continue key results. to are our time would assist our financial to relationship program about allowed new from business offices Mateo that, growth as customers San true hires strategic benefit this position to

Tani Girton

Good Thank everyone. Tim. you, morning,

remained During very our true we fundamentals. a disciplined to year, challenging

management credit deposit supports addition expense liquidity, solid capital diligent In strong profitability. low-cost and ongoing our quality to our provides our robust position, base and

of fell million to those our $X stock. attributed $X $X.X million higher was the gains we $X.X in grew from increased networks Home XXXX, provision $XX.X lease ATM increase large income of said, as sale the $XXX,XXX Russ fees, costs offset over and over of XXXX. on interest income, $XXX,XXX of commitments on income due to primarily million and maintenance commercial XXXX, PPP due loans expenses income as Net growth in lower partially produced in and As net primarily on to loan headquarters, renewal $XX.X estate million the Non-interest unfunded our investment elevated fees area and Higher net well in janitorial Loan real with opening of primarily insurance made securities third-party Bank million life of XXXX to Non-interest XXXX, costs. up dividends true-ups of Mateo a office, and sales overdraft pandemic. funding associated Federal bank-owned deposit on million $XX the for expense more million common occupancy San declines. reductions

relatively offset and merit by PPP benefits overall and SBA annual salaries origination While unchanged deferred increases costs. were were year-over-year, mostly loan related cost

to in to in year our quarter the quarter $X.X prior quarter the in of million Diluted in was compared ago. earnings were per of $X.XX fourth turning third the million income share $X.X to quarter and results, net quarter a XXXX $X.XX the $X.XX fourth quarter quarter $X.X fourth XXXX Now the of million XXXX. compared and in the fourth same

and to was X.XX% quarter equity X.XX% PPP $XX.X earning penalties XXXX, the same on XX, those ago. ended commercial the to Net The in return quarter the increased in prepayment the X.XX% fee to assets due the first quarter. $XX.X compared yield quarter on lower mortgage-backed the the in third in lower prior totaled as X.XX% securities recognition million loans balances. and well return Conversely, payment on due prior was interest XXXX $XX.X on For related a asset the investment fourth to quarter on year and securities. income decrease our of million December the extension quarter compared as million of from date

the Now like adoption commonly related standard Act. CECL as the accounting this discuss relief year, provisions of CECL. known optional Earlier CARES I’d postponed to the we credit to under the accounting of new losses,

XXXX, losses months loan a provision method determining $X.X for the X a commitments. unfunded first incurred on losses applied the allowances the we and and During recorded million $XXX,XXX of credit for for losses in loss provision

December two adopted of increasing These represent million. XX. out standard, XX, earnings parts, December calculated for the and Page $XXX,XXX CECL difference amounts XXXX, the and our of by laid which the the X as in XXXX, occurs losses of the the method by allowance allowances credit $X.X standard between loss is of allowance CECL As table XX, as loan new of commitments release. we on method the the unfunded for in under incurred Adoption September

and the unfunded Cumulative were in of as incurred for and and $X.X to adjustment XX, transition cumulative of million credit reserves a is December component for calculated million commitments CECL retained difference earnings transition representing between first on losses totaled retained under of net $XXX,XXX XXXX. earnings, taxes. $X.X adjustments losses recorded The loss

$XXX,XXX $XXX,XXX And and look still levels. the Second, are for XXXX now, let’s provision the provision XX, ahead. and unfunded on you for their commitments to bring losses ACL unfunded reversal allowance with CECL commitments December if us,

purchase and XXXX remaining million funding of opportunity source, post-pandemic we to quarter during accelerated year navigate the XXXX. trust accretion into quarterly high our of continued and the closing, the to redemption a due preferred million, a a economy. shift consist in discounts. changes. and In first have $X.X and redeem growth delivered We positions cost build million payment, of many confident our debt pandemic in remaining new strong to mode of liquidity Our of solid and Marin $X.X when to eliminate ability in to interest we Bank The transition the of performance a stages capital will present X.XX% capabilities $X.X principal enter decided

to Now final like share comments. Russ would some

Russ Colombo

we whether of branches XX-year of access to us strong proud the first-rate Thank serve. services, our for shareholders, quality, platforms. Over I service capital our our customer sight we financial our commitment was, served year Marin unprecedented never many. has to only and also customers robust and and am communities a so Bank tough you, sure or accomplishments. Not very the seamless a XXXX our via in credit we lost for bank’s Tani. digital brought liquidity, really by the our they of dedication all making deliver to did frankly, had challenges of history,

the want commitment by I of unwavering bound mission. hard thank of are together our to All to their our and team, them work for these

new reach. return robust industry resources, of buyer a M&A to gain anticipate a scale currency year pair choice. proven community history adjusts to we are the position, strong capital to have acquisitions, and activity banks the our we we as Looking emerge of up ahead, and With normal to and more a confident price as successful to of geographic share the and experience look

opportunities as of poised Marin is for questions. potential assess the time answer this alongside and weather to pandemic to they arrive. remaining open up continue we months morning Thank in you growth Bank our will customers We your this will and of now well-positioned is your to XXXX. it for

Andrea Henderson

Good XX, morning call ended of year Bank and you and quarter Marin fourth for Henderson, am Bancorp’s thank I of [Operator Marketing Andrea for Director joining earnings Instructions] of Bank for the Marin. December XXXX.

Operator

Our James. first Raymond with the comes Instructions] question [Operator from line ahead. Please Feaster David go of

David Feaster

everybody. morning Good

Russ Colombo

Good morning, David.

Tani Girton

Good morning.

David Feaster

you guys growth, just you and what’s extremely to positioned going this do most kind timeframe? are kind ability you do to which growth? are forward, I You about to normalize how talked curious about see of being of the was for where originations grow think and see going you When your your expecting encouraging. think is

Russ Colombo

over there over are well year San brand banking brand positioned not it’s I old new offices, because we – in new years think about in we one have have commercial in Mateo. David, new, X.X is a two it’s Walnut little and Creek – Well, we a – one a

Sonoma, there going business. are there has be also in our a because of a Rosa, it’s very and to Sonoma in our strong the County – but who on focus of so now we’re shifting markets focus business the Santa those new generate for a lot we done historically, to have opportunities. wine So And Napa, got just going wine us, manager opportunities a lot moving we’ve And business. to is

am So a to we are activity thinking I lot going see those. of of out

that to. is really it’s tough time issue attest growth, pandemic, as we The can other a for all the during

see we offices of our out am clients of quality offices to out of this, our also that we Nevada, really in and credit can I’m credit-wise, So of I are I commercial come in this, had out results Oakland as very out have our terrific lenders all And in by our kind good as shape, wise our we prospective we in go are ready and banking and come actually and clients. confident Nevada. encouraged go. think see

because and going the am almost we We do really well it’s not as a this so relationship to important new to into bank, do we really center I year front be now are with allowed And confident us are last in much, encouraged that this and has go to year. and very customers.

David Feaster

And helpful. obviously that, about could just competitive up on of maybe payoffs I just landscape that’s talk following mean and has Okay, the challenge. pay-downs been real a kind maybe and you

or of Just the return of kind do when back the maybe kind growth a year to single-digit of any then what think towards growth that? – kind think the are used story competitive kind mid you can and is to, back comments of of is half that on landscape and that the this you you you get we’ve

Russ Colombo

Sure.

I after I the It’s jump probably spring Myers to about that’s year, comment commercial me whether – – like I’d in talk early on Let to summer. later and late finish the will Tim banking. in or

think get back knows and when that’s forward, is think but a I able the who normal going to we more timeframe. to what that’s are really I normal

are compression low As margin to very a continue very the banks And very, we as environment, is for offers long-term. pretty real. competitive a see rate far making

margins the as Tim that. And we the to challenge, maybe organization and maintain add and an and have to the volume that’s can also balance so what of to get that’s do

Tim Myers

magical Good answer not question we’re your relationship wish knew a morning. when Yes. but about lender. bank, exactly, to I we’re Thank I a really Russ. the everything. hit you, commercial transactional Russ

opportunity business, banks. requires bank bank talking said, take other in it us personally, an really to business our people out them Russ as So be to from giving their to markets into us

we very a of lot banks. In the of competitive are terms landscape, seeing aggressive

estate, on of competitors market real financing come are in deals the chasing We market. seeing in out their sub-X%

you third-party year XXXX chunk in lenders, the at of If financing. had were look during non-bank was the that significant payoffs a that non-recourse-type we interest-only, refinancing,

go deals discipline. has and to So the continue that But be of kind to back the and market, of of in really we’ll we your how we’re continue do. withstand do generate growth the every the absence to – kind everyone we position normally being in the in events. looking see the in credit able we and question, this, to in we with of have selective in put this will to to us – like virtual out That like are –

to or down have bank of ways do front just done. events. Russ always what do finding to We well. We’re as and on prospect someone Central focuses keeping group lots marketing mixers plan so is or some that creativity very also of client busy includes, has the to that out people front requires talked and wine be That And of the the but trying about people focus. there, Coast, in get in and able and be industry it it’s

Russ new key have that we also filled. made and have in Oakland manager positions manager, some key markets. new some of these some hires a we mentioned other we in So

while And PPP the PPP Creek have have Walnut pandemic really are staffed stride our to loan their process new and they our We we San origination primarily the started. the the are office. before PPP hit Mateo starting and fully – been office, shop

data those all put if though I clicks. things that all positioned. don’t So you I is think together, when know magical we’re that

David Feaster

Thank a a Yes, you your asset to really And underwriter and always and helpful credit conservative culture. get then quality. then I thoughts that’s on Obviously, just that’s have tremendous maintain shifting gears, just been And understandable. – color. you. wanted

within loss additional forward? XXX migration? reserve migration do points CECL? and trends, club how think under of then level just Is was especially hotels, get XXX some health the the you cleanup of loan to going this think And thoughts to wanted kind the kind ratio this the do about you basis on about right or some a quarter there be the Just could

Russ Colombo

couple comments also and with Chief in going Reizman, going Officer our I to and CECL Credit a jump about comments ask make is quality. am of credit Beth am to I to who

We Bay now. – have In shutdown. health if are not have who has you clubs, health Area, been the clubs of right a California in clearly, they couple general, operating

so the – the again the where they real the People good clubs open and very so but and hotels have we even right we a am tough. we very been at But get were on normal and so And operating credit more shutdown time confident it’s were chime will estate to we have was kind there were It’s maybe loan we the of – again, the tough challenged things is on clubs news operating health the general it’s difficult. are were we once and – these a outside. California, doing time, of that value another because And long-term, we will industry because – health back into have we are ratios in of in appropriately. Hospitality It’s I shutdown, COVID gone that. two to Beth low. in where is can respond now. more

Beth Reizman

portfolio more to or but the we – normal kind second we where this if Beth that industry, as said difficulties point, that watching, This identified I the our it that Chief who hotel, always pandemic the credits Sure. but we credits based based so just the a monitoring, There Credit are when I significant we of on non-accrual. that ones And not a a we industry. identified are our ones this expect just the surprise at relief if any the That have we to their is prolonged, at of am were have were all, program, certain small classified it there can on hospitality nature payment recreation, these was cleanup again, be be some Russ to these on wouldn’t them was one Reizman. these said, was surge I issues. was is are ones, call industries watching Officer. have think surge might

David Feaster

everybody. Thanks helpful. That’s Okay.

Russ Colombo

Thank you.

Operator

next ahead. Davidson. question go Our line comes Please D.A. Jeff the of from Rulis with

Jeff Rulis

Thanks. Good morning.

Russ Colombo

Jeff. morning, Good

Tani Girton

Good morning, Jeff.

Jeff Rulis

on what it points just up suggesting seeing guess core you down at when I on sub-debt of reported incremental obviously new those going firming X through like the is negative and your the Russ, in core a get more you we views a are margin basis of growth factor some increase impact? you we like big interested strength are the picture, guess an landscape, be look X negative your impact a And to great? come but maybe the if I maybe PPP I ahead if would include the booking Taking to redemption or that some and the margin, alluded margin help margin, the competitive margin or possible in looks seems the is ex-PPP, comments think, it to thought this or and color there,

Russ Colombo

talk interest It’s an you probably margin I will new about we in out environment rate At have time as Tani got bit long have get a historical margin. If and to that. time, let compression replaced are point Sure. are to challenging. going by they off. we get it so loans, paid this be where they of Alright. know for we the a that’s is going loans

everything you payoffs can portfolio, your a relationship to avoid want do be maintain you bank. obviously, to So and

on be sure being that margin. our if going out come seeing of your care nature, of clients’ that busy – things we understanding than and phone, that as better in our their and being that out, this, maintaining out because many financing address are – with And – as seeing and nothing needs, their go taking are of understanding And our sitting doing part down requirements is we making what’s do actually forward. going is clients we so to lenders clients everybody making they’re but important we’re the by going business. out that’s there’s banking try and them. of to can going we Relationship to very in key think of front the – going down appropriately be them that and we to by I

on suppose, bank, relationships. because a that’s something a bit but our how of managing that’s every our So I certainly that’s focus we hit, for for energies us taken and

of margin So comment bit that can this we Tani, again, numbers. you couple that But I’m, confident improve. of will on as come the a out

Tani Girton

Okay. Good morning, Jeff.

Jeff Rulis

morning. Good

Tani Girton

part I portfolio think of maintenance, have securities you yields that, quarter. the with penalties this securities issue in because prepay. the to an some PPP emphasize want offset that yield did head hit fee the somewhat increase being we prepayment was on by do our I nail recognition extension commercial mortgage-backed with the

margin portfolio well. we Security does quarter as you penalties, can So be of get be we’ve that, the as help quarter built everything lot trust like the early in in that help regard. and The this, there. CMBS. prepayment first then those redemption, fairly forward, the the and involved Russ in that agency-backed absorb accretion to and significant preferred this as a that forward drag were discount strength of going going in a sure speak should contributor does difference said, doing benefit but that is the up did for a accelerated to the times but in on said, we position it We did a that are because we But make a particular. got to will of pretty investment in so

Jeff Rulis

are other you doesn’t of mean back that the sure my to wanted of M&A And out the in opportunities you to that of both I really wanted M&A market the some or you necessarily make probably I if comments about. for off of Thank on on question, Russ, are the you buyback active And you Okay. are mean just wrap that understand kind wean balance could come just you. kind your do up buyback. active circle the ‘XX. side fact

together weaving of kind Just be would two helpful? those

Russ Colombo

because there been the great same there our to opportunity plan. think program, At still us – stock back, if been was feel it’s we an buying we Yes. is opportunities which is time, I have and obviously, we happens. is think, talk banks other that – to buyback the banking time. to investment me, would investment as a been the say, I around I likely this put if this – heard one the value. on stock And and state, the like that’s I person that continue really busiest M&A, the is – hold for a buy we banker community say for long we’ve buyback in one mean the

means going will there to of know is there. that but are, I – So lots will they conversations the sure, where on present am don’t out I we start in things future. themselves,

and stock banks we strong confident I’m price that want that – a to attractive up position and deposit to is up. the are with are bank’s our nicely, partner so So quite might – has very held franchise quality credit acquirer our

for the And I future, are certainly it XXXX and so confident to itself in big I am am talking certainly and – will in what but presents be year see we everybody M&A there out a California.

Jeff Rulis

Thanks, and Great. Tani. Russ

Russ Colombo

Sure.

Operator

with question Sandler. go next lines Clark the Our Piper comes Matthew Please phone the of line ahead. from over

Matthew Clark

questions. Thanks Tim. morning, good Hey, taking for the

production late? of looking a at rate weighted way are relates Just acquired. on that about where to be ratio How want a average that should new kind bottom? related and to to the would good and of ex-PPP post-CECL setting back that, maybe just reserve as we it X.XX% it think question that And in aside of world might get it the you

Russ Colombo

and Reizman and to one, suppose. going her answer Tani Beth to Matthew, ask I so staff, am I that Beth

Beth Reizman

it’s you Actually, bit why and a of start then Tani, I will little accounting fill more don’t question. in, an

Tani Girton

good. sounds It Okay.

loans morning. excludes that Matthew, of right The $XXX as because we and even parcel under it acquired in CECL are CECL, actually acquired and SBA now, loans PPP though million ratio. XX, are So, December good because part of

volatility the have the So, the the say we considerations I’d model just difference the to back the so X.XX% huge and really the and of as simply have right digest. we that have will, sensitivity quarters, forecasting really into and to account take forth, in X.XX% we order process that loans. don’t is this the on or if trying next PPP qualitative now don’t factors, between sure just swings we that we make over several with you of qualitative it’s continue really –

as I sure factors or said, just to despite So make the forecast, model. might what we respond ample the have, used some change might while we model that we for how the how to in have get reserves that they

Beth Reizman

Yes I’ll add that. is the forecasting significant This – CECL is on CECL of component. a difference there

that that. As We forecasts down. improve, ratio would could expect go

Matthew Clark

Okay, you remind of way net much us the left understood. income? And Thank in then you. have PPP-related interest you can how net

Russ Colombo

Yes, Tani, that can answer you one?

Tani Girton

Yes, let number. the year, me total the the quarter or for for pull that And want income? you PPP

Matthew Clark

just ballpark make I what’s just our the the numbers No, not around revenue, remaining. in you that PPP. left sure are want to for on that can – you’ll in realize

Tani Girton

to have remaining recognize? fee that we income The

Matthew Clark

Correct, our we’re I just estimate, to sure mean we make have off. not want own basis, I on net a but

Tani Girton

Okay. to let I’ll one Yes, back me number. sec. you come that in pull just

Matthew Clark

an us you targets – on the worries. the I and would Maybe going potential I to you front, criteria? No was can – And number. looking just Russ, then what of remind just Tani, you’re know, expense-related Okay. that question, like another and for M&A to consider types your ask pricing

Russ Colombo

the Well, – disciplined interest the south And are and size and operate. And there’s to certainly have In years. about we go Area, and view us. is think, That’s way that, obviously, about pretty to under we’re compression It’s And to environment And X operate, market it’s at accretive banks be bigger also being margin east. in first as markets a there’s more contiguous in next or we – case. as and historically, going shrunk matters. Area. we potentially metrics, important. keeping lot many that of growth to while years we as – we years few the definitely forward, as the number base in think change over we certainly the important really important the I have looking they be being That’s spread earn that And be in of that Bay being we’ve a the important, been very how we it would bank, number always It’s as the really with for look say are not the mean market. Bay forward. able many good when to focus base so a either still over community has it important just in on way going back having over looking it really full that years I sure. market, year. going the that as of there is, a your I the don’t we the that a see clear expense larger we rate to possibility

you And you’re very be of so relatively your expenses. low the cognizant if portfolio, on can’t if to you margin getting – then have

And very, in so – future, going and to larger as forward been expenses. over we’ve very it’s important organization, an careful control you the to what’s be to – about a have been be to our maintain that that’s base. always we But right expense going doing look spread

we a is and M&A participating interested to to going And in lot so in going I activity, certainly think be are be why there’s that. – that’s of

Matthew Clark

relatively we the have the commitments. by reserving I had for increase pretty reserve with on typically throughout seasonal is here maybe first increase in for rate maybe And assume drift but offset quarter, some of if from big seasonal in fair kind you remains that year? release and that in I then then unfunded commitments flat lower it maybe just to the the run a mean Great. you unfunded Tani, also outlook, expense the increase may, a

Tani Girton

I between unfunded always – don’t and then mean for the shift can for the non-interest you know provisioning provisioning unfunded the allowances I in the other see you about commitments. release lines. losses some could expense commitments credit in the on line

of depending can goes. they back on commitments how shift So and the forth usage

increase could it you provision. also fluctuation but So to might lower some expenses, would there that have the serve

also of noise said, item. in due the a have, significant we think when about that year had I bonus first going, be the resets think We tends lot overall both contributions XXX(k) I as is of to where So was and end the The those mind. quarter. to talking the provision payments, she typically in Beth a pretty

and XXXX Additionally, is bonuses has we yet quarter, first a fairly be and determined, that bonuses calculate in we to have – we a the for – at high have level. accrued number our that’s

some have fourth – typically we that So in true-up first in well. as the quarter the around

some in quarter yes, directions a a in first noise lot different you’re big-ticket So items. the expenses lot of I’d of to going say and pretty have

in execute moved to that into XXXX got had able the of on we some And focus year, with associated you’re from are we that. we XXXX with more XXXX obviously, things and some because So back expenses And I business then that forward going our the the to we’re for right able activities frankly, that. other a weren’t customers about to as be usual, of rest as engage normal get have to we on going additionally, to moved. think have, those in fashion, pandemic had to response,

is it’s have $X.X PPP million Back lot a are because to forgiven. think and of transitional year. in on going question, there in a those your to fees we more change, I it’s great So recognize loans be as question XXXX a

Matthew Clark

Thank Okay. you.

Operator

line of comes question go Bohlen the Please from next ahead. KBW. with Jackie Our

Jackie Bohlen

Hi, good morning everyone.

Russ Colombo

Jackie. Good morning,

Jackie Bohlen

question items. just quick wanted I more off to start some with I theoretical get a housekeeping before into

total given wanted includes the of only I or the that, million, just verify commitments loans the and $XX.XXX ACL. on CECL, associated if unfunded it’s it with allowance to that’s also the adoption Just

Tani Girton

item. is is The The unfunded loans the different ACL, which go $XX.XXX line million securities commitments a only. into and

Jackie Bohlen

Okay.

Tani Girton

So commitments million. is the reserve the the $X.X total on unfunded

Jackie Bohlen

Different then next, one for And different might have you, be don’t Thank just to Thank I Okay. this you. Russ. automatically terminologies, things like assume. you.

to the of going about looks that assumption, new forward, what and you the and active to ‘XX the like pulls normal how I face-to-face, balance have deposit are your sheet pushes latter are you book this and thinking about of in going broadly growth moving thinking Just think our you’ve can year, bankers that obviously we’re you’re year, – liquidity half of fairly got your their meet in consensus taking very managing flow. with is also the fluctuations and through environment under customers which kind loan be

thinking heading you into wondering the about through how that it? year and So just are

Russ Colombo

totals the growth balance that the So in things when from you loan of sheet say growth nature? mean balance, and of you those and standpoint

Jackie Bohlen

view size. sheet balance overall of you as and deposits the its driver Just or whether loans larger

Russ Colombo

And Okay. to then past and opportunities. over grown lending in start Well, year. going back that’s businesses into substantially deposits seeing have reinvest been you’ll to this start – have I normal as get we believe a more change, time,

to or reinvestment, a would make So flat, up occur the it the to prediction, I growth that grow through year, been continue growth had this kind see think but that half if you more loan stay will latter of year, maybe suggest then more opening operating. will see continue because either to more grow haven’t I maybe that deposit flip-flop will in will you I of slightly businesses may

we But are was about, get be the it’s but year So, half, strange start year, are this through hope can equally you’ll when you’ll people people think they come real And the because question I commercial will to that start there – big working think to need commercial will the be home. is think a – I we hybrid. lot how estate? of a to, more so a in customers as Will will our open all is the first home – seeing last we from – not a struggling will up. office? opportunities. get we real of back it’s – been it are be also And and those lot people a still most period reinvestment, to going year strange. then from react to there hospitality, to to it’s now start estate from anxious maybe back the lot with, And very see it see to working get particularly that and will And we that I struggling, and talk I the people lending I for time will this probably talked less that’s be office.

you’ll but does work. of like reach – from portion seeing their equilibrium you the that, see I will remotely in base working will where So year that perspective it there’ll if But be employee have I businesses it our the have look a think businesses we’re will just I because the risk at that employees an – think of because the work in being bank, our were the to we something biggest with and culture. that risk it’s so being we employees everybody remote think person, value closely there’s which together important And able the when to much culture of our not. is our have fellow lose you is very strong, later

I second suspect, so of a half my be And I the the of of year continuation think way, And then kind going will you’re kind see return That’s lot on. so the to we’re of a slow going what a see half, businesses first that of to we’ll thoughts. more a normal.

Jackie Bohlen

Okay. And... Thank you. That’s color. great

Tani Girton

– Jackie, sorry, you have Tani. it’s

Going million. your sheet, the I $X.XXX $X.X provision but quarter, of million reserve, for to total back the provision sheet was the this balance to the give off-balance on that’s off-balance wanted and you

Jackie Bohlen

Thank you. $X.XXX Great. million.

Tani Girton

welcome. are You

Jackie Bohlen

versus for deposits, quarter any just loans. might additional me preliminary last wanted trends seasonal one loans PPP not you pulls one then, that in just adding in and thoughts to deposits the and impact portfolio normal if the And how for between the see pushes overall of have

Russ Colombo

Well, when came that out PPP was I – saw there the tremendous of first a think was inflow what you in deposits.

go separate think kind really It’s accounts. as cash, that from I they PPP So And they haven’t assume are seen that throughout of normal, the businesses are businesses made, seen a used, all are go that. deposits into loans they – were we’ve difficult those these and the – the but primarily combination year. to there’s would away we just and accumulating accumulating deposits, but that we PPP

it’s again this of of will round but the new I to think first happen big PPP, be not going as clearly as time. event this an with

have so can and – finish. a in about and Tim, maybe had have bit you we and PPP I talk While I jump things little when

Tim Myers

Sure.

Russ Colombo

the We had of the the applications haven’t for dollars. numbers

you PPP on the could So maybe, Tim, side. that add to

Tim Myers

of you I’ll Yes, prior a of in Jackie, I mind, this this some second, course. addresses go your And back if think don’t question.

client environment, base. things the affecting of behavior our is in especially with that’s this borrower One and us conservatism

on XX, not Our revolving utilization – down sat average, PPP credit saw on some significantly, continue X but we was we pay see, proceeds commitment loans. from down to XX credits And – to year-over-year. points

cash. Just is million but that apart, and like gets Russ our fungible, payoffs year, applying is and $XX increased really last they of which cash hard said, deposits pull to borrowers

– your about immediate that, asset Russ an – that as up. very mindset balance momentum that’s now, to pick we right gain change economic our the side. before, and talked economy borrower That’s on see and a the mindset conservative So to question we as sheet

new processing of this of In PPP XXX terms we’re applications weekend, for have about in as about loans, $XX we, that million total.

and XX% applications that maybe of half last expedited of below significant time, with but This the on maybe still loan first between think just total coming round number about I in dollar the of estimating are XX% average one is our process. $XXX,XXX. $XXX,XXX – and of would a that’s So about They’re outstanding, north $XXX,XXX. be But with the overall, of we number the in. new

accept a percentage both one we up round out to first process closer because from rolled time, for expect the under form were able something the XX% to of While the not speed government’s time higher the they’re but that it will to the amount that, XX%. forgiveness that, this probably borrowers that and our be borrowers,

Jackie Bohlen

color. Thank great. everyone. it. good I Okay, you, That’s Very appreciate helpful.

Tim Myers

welcome. are You

Operator

is And our last question of go Tim in line Janney. from with the Coffey Please queue ahead. coming

Tim Coffey

just a a to curing or follow-up that the see monitoring right – Do tell? these and is Hi, now health little it you I to do just enhanced too thanks. having loans these hotels. had pathway and a on club early need they the just themselves quick loan two

Russ Colombo

shutdown. nobody’s answer that It’s that and can I’ll been have are mean very I – involved clear with She this. answer. they Beth has I

but see I gym, think that, recover? for chance get can back as an credits done is opportunity know have, we we they go there as where themselves it’s still them speak. – just I Yes. lack that business. that a have and So right they soon so the it’s It’s to it – then to some do as pretty activities where I mean to outdoor tough. these will have people to to of I

other the over go of suffered right What health that And they seen see look other we’ve COVID? So to country. change? seen, just out. after lots back the they I’ve news. a in So I question the will thing all – will the people or clubs Will have discussion like pathway

We maybe, again, And add color to but Beth, I’m collateral have that, work base, strong these. too? you have we confident can – through can very we some

Beth Reizman

Sure.

were ones fourth that It the to occupancy doing that’s second where classified reopen and struggling, it once guarantors That you etcetera, were able All had first the they but to why they continue. this better but less – saw but event shelter-in-place. our increased in non-accrual the in again, able of credits these or after – were really was past, were difficult for helping, participation made the they quarter. or were they less doing were

do We have for these definitely low pathway the loan-to-value do the a not behind readying them in future. we’re just they’re the of credits. occupancy see hotels, so we sponsorship I that And not It’s So in also out. concerned. case see

now of during the that pandemic, they and reverting the will time, it the economy homeless back but and the been do – thing to take they’re same health have used Some reopen, need workers by clubs. emergency with

Tim Coffey

have questions my Well, and of been Okay. most Alright. asked answered.

the appreciate you. Thank I time. So,

Russ Colombo

Thanks, Tim.

Operator

And questions. no further we have

Russ Colombo

your this appreciate at we next time quarter. much. morning. again Well, forward thank very for to interest, and you look the speaking with Okay. of everyone your really you I Thank We end

Bank of Marin Bancorp (BMRC) 26 Jan 212020 Q4 Earnings call transcript