Earnings call transcript Q4 2022

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Andrea Henderson

Good morning, and thank you for joining Bank of Marin Bancorp's Earnings Call for the Fourth Quarter Ended December 31, 2022. I'm Andrea Henderson, Director of Marketing for Bank of Marin, and thank you for your patience this morning.

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] This conference call is being recorded on January 23, 2023.

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

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

GAAP discussing Please X get we both refer release reconciliation on Page be to our wanted financial earnings measures for that we to the non-GAAP Before non-GAAP note on of press I will started, measures. some and the call. table

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

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

Tani prepared questions. remarks, Tim our Following be and your answer available to will

the Myers. like Tim call And to to now turn I'd over

Tim Myers

Thank to you, Andrea. Good welcome call. our morning, everyone, and

fourth are expense control, reflected banking management disciplined with with We pleased our paired and model, quarter our credit strength and of efforts. the risk liquidity earnings. relationship Both year full record

As always, prudent and disciplined we to remain underwriting lending. dedicated

represented a XXXX credit in quarter fourth fees year best million without quality. second for Origination full in production the the need compromise the since $XXX to

saw derisking fact, the of steady the a year. In course we credit portfolio of over

mindful concerns associated demand. and course impact recessionary of of loan are We on

any approach our meeting culture slowdown. maintaining on However, needs, rely order strong balanced to in economic we continue navigate will to credit a customer to while

strictly unnecessary competing expertise service with exceptional customers ties risks. on without or provide local price market taking deepening We and our

million funded of January in as the in had from scheduled sheet million remain XXXX, $XX $XX quarter million $XX of early close loans Although our commercial that total is loan commitments to balances modestly that for balance on fourth XXXX. expected have amount. to third our been we of that participation in the quarter, declined we

our net performance be yields total on close helped our earning we More sheet balance assets. margin bearing were deposits in than the of driving at interest XXXX. interest asset-sensitive Our protecting will of XXXX. And in about non-interest XXXX diligent half

of cost fourth rose over by the our quarter in points basis net prior the boosted of rising equivalent tax XX the points quarter, and margin rates XX in interest basis our quarter While two the deposits points just year. fourth fourth basis

head year. synergies resources to improved Finally, from our us our American acquisition Bank allowing strategic efficiency earnings generated XXXX towards of allocate River further new contributed into ratio, the as we our and initiatives to

locations. to XXXX, QX from we customers merger gain per branches thereafter we nearby Northern deliver plans our to into be effectively County in generate where and will additional Also will able four that two that close the serve further of efforts reinvested will quarter, on be expected $XXX,XXX coverage. branches In overlapping we both technology. to savings efficiencies by talent $X.X have the in year in two customer will and Sonoma million from XXXX are These consolidating approximately

to produced quarter to compared of in We $XX.X in income highlights. record fourth Now million third $X.XX additional I'll turn net quarter. the in share $X.XX $XX.X quarter. to third the compared per earnings some of Diluted the million

generated from we XXXX. For full in $XX.X million year XXXX, record of million, up $XX.X earnings

share cost our the deposits per basis third of of close average for deposits at for deposits $X.XX points. quarter, were share total per the just down compared slightly accounted the Noninterest-bearing prior earnings very XX.X% low of at year. remained but quarter from X Diluted to $X.XX year, the the

pricing carefully quarter, we further a climb continue will anticipates market deposit manage the in basis. While will on first to interest customer-specific rates the

and million noted, I nonaccrual or XX. only representing quarter in $X.X fourth X.XX% September and X.XX% down at fourth declining loans quarter from With as improving. loans total the is strong quality, XX% Credit in

ratio fourth XX.XX% securities. in expenses the prior and was the The and on for loans fourth interest XX.XX% the quarter lower driven quarter income both higher Our compared for improvement net to and XX.XX% operating was quarter by efficiency of XXXX.

Given the earnings, of Bancorp. of a our of consistency by dividend record This per dividend of payable our performance February $X.XX Board XXst consecutive cash XX, quarterly XXXX. quarterly paid and Marin declared Directors share the on Bank represents

Now Tani results to discuss financial I'll detail. the our call more over to turn in

Tani Girton

you, Good morning, Tim. Thank everyone.

our Net fourth quarter. and on return a of assets We in of higher the into the are the in and translated equity in and XX.X% X on return of which deposits. the increased from interest over XX.X%, X.X% the basis quarter income X.X% proud of of third earnings, offset than $XXX,XXX cost million yields fourth X.X% $XX.X in increase earning point assets as quarter more decline prior quarter sequential up

well from the XX.X% up net the to For as year, income of primarily full as $XXX.X XXXX. as higher costs lower and in growth subordinated interest retirement from deposit XXXX million, XXXX acquisition, earning funding the related of early result in assets generated was debt a

quarter asset or from paydowns the down million offset prior new than more decreasing consisting and the largely in of production sales the quarter. in X.X% fourth quarter, payoffs by as were were $XXX million. down of cash fourth balances in Loan also $XX X% $XX million Deposits real estate

activity deposits been the be have of we customers' commercial attributed time. of planned outflows some our for year-end anticipating specific events, pandemic can decline and While to some surge

and network held in million outflows. cash At balances and of bank $XXX the the of in XXXX, expected anticipation end potential unexpected deposit

course those portfolio. securities financed reduction of year, the and outflows million the the as in growth $XXX million loans well balances and as deposit $XXX Over in in borrowings

deterioration X driven in the by portion loans in liabilities. interest-earning base point assets, was compared the increase the credit ongoing tax net captured points, offset quantitative the for basis partially to by improved in XX interest margin higher the $XXX,XXX basis in Our balances. economic our a by yields in the qualitative quarter, offset There fourth outlook decrease account provision cost fourth losses increase provision of to no allowance not factors of in in equivalent on third on the was quarter for loan interest-bearing quarter risk a an the

quarter noninterest was higher increases on on reduction balances in deposit decreased insurance. $XXX,XXX networks million earnings to by generating third transaction from increased balances. size volume the XXXX mostly due quarter, fees reduction noninterest the held partially at -- due the network larger deposit income sorry, due fee Those the $X.X offset life in income and bank-owned over to Fourth down to XXXX of bank. the more of were slightly

quarter plans. and due employee fourth reduction $XXX,XXX an applied quarter. to increase bonus to a accrual salaries benefits, third in Noninterest $XXX,XXX adjustment quarter the down expense Decreases in a million of largely to in the was the the $XX.X rate prior retirement from and discount included

on real result size closures. XXXX equipment, and expenses million valuation of a pretax costs. In prior Those $X.X and larger as estate-owned $XXX,XXX addition, were noninterest the in declined to valuation our accelerated the over adjustment quarter. increases owned million a and by Full software reduction due real partially investments with other increased $X.X expense the in year upcoming adjustment in estate branch offset costs associated merger-related conversion

for the our the efficiency improved in We positive as the benefits XX.X% were leverage quarter operating and from both XX.X% ratios XX.X% continue respectively, full of in prior XX.X% year, and fourth reap quarter and XXXX. to

was well-capitalized ratios expenses a non-GAAP requirements. XX.X% The September acquisition-related were capital for XXXX, risk-based there September basis improvement XX XX.X% the ratio above were XXX in on more XX. basis All year-over-year XX.X% December was As points. the capital at based at XX, capital at December to total regulatory was compared to bank's compared Bancorp at XX.X% XX. diluted And substantially ratio

contribution equity after-tax common of respectively, unrealized decrease interest and X.X% well with prior losses decreases associated were Bank from our earnings. and as strong up of the due to quarter the for basis XX on available-for-sale points, in rate as quarter during tangible for Year-end fourth Marin Bancorp X.X% the XX securities from the

balance liquidity to strategic of results Bank this We that XXXX, interest strengthen across and capital economic our us been will as to has continue that and initiatives cycles. enabling improve strong rate believe further further case continue and invest our yield in many healthy Overall, will in the franchise. profitability sheet, Marin's

Tim With some that, to back over it to I'll share comments. turn final

Tim Myers

you, Tani. Thank

digital our our Bank risk prudent of throughout shareholders management well sheet all positions market for expertise. We remain XXXX, control, continue more both banking upgrades with service positioning. can to advanced we technology diligent and of tools year cycles to XX-year and Marin history Our increasing in of well-established invest attractive delivering ahead. balance the also highly Yet, explore expense ways than bankers in on high-touch returns combined we by proactive new proven performance backed focused and for meet preference clients' ensuring to meet talent

California, Northern acquisition. our clients and existing River We lending are customers American committed continuing on to to commercial new across expand to Bank the our building

are to channels, and optimize As identify delivery offset investments cost-saving opportunities make, footprint. continue we delivery to further our which of services new exceptional throughout our products will we we

With want today's for everyone and thank that, I support. call to interest your on

open now will your to the We questions. call

Operator

the with Go right line Thank of Sandler. one from first on from [Operator phone We'll you. Clark Instructions] Piper proceed the Matthew our ahead.

Matthew Clark

Tani. Good morning, Tim,

Tim Myers

Good Matthew. morning,

Matthew Clark

beta just beta X% date. on deposit bearing cycle of Maybe first to updated your this only your cycle, interest thoughts deposit around

the the towards here lot stage, think at I of you about call, first It better you last the XX% that seems on this than through assuming maybe getting a year. might the spoke half done do cycle. like in this Fed's

pricing deposit of around in as deposit the well. decline light thoughts balances your around commentary any Just in

Tim Myers

other we things a to Yes, bigger have in the both of to and what we increases runoff a tied alternative it that. call I'll on couple you vehicles. of so environment I'll to people, it and start little and areas money quarter, year-over-year further. where for deposit both to institutions from look Tani. But on some to that client manage Very were did of We over picture, financial But rate election to biggest basis, and basis accounts other rate we higher chunk lost our was yield the if the as and amount accounts then year-to-date total. change and losing hand the where cycles business went looking usual, at relative outflows - runoff side money changes a they key as like a had Matthew can they quarter we're investment

of to more for specifics. it the hand Tani I'll

Tani Girton

we we've have of the total that, So half beta because on bearing beta going we're would full what about say, our I'd XX% really just concerns less come we're them making non-interest up relationship And said, our a that raising deposits be across XX%, customers addressing achieved historically than the proactively basis board. interest Obviously, but to that. bearing. sure model of I Tim is to but in as out roughly opposed to reaching deposits reinforce rates the rate and when on is

not tapped years. have for We have a we many, liquidity, contingent many into amount significant of that liquidity

And so be that enables our us we about of thoughtful manage how really cost deposits. to

Matthew Clark

then And the Okay. out discussion. just margin to round

If in it, at and the year you of average deposits month of the the spot December? the interest have on rate the end margin bearing

Tani Girton

Let you me pull come on back you to for those those. and

Matthew Clark

Okay.

Tani Girton

You the want December month of right, that is December? rates, for XX

Matthew Clark

the December or of rate or end interest other month the deposit total overall Yes, at NIM had spot and of year you costs the end on the then the the December one, if it? of at average for bearing

Tani Girton

I'll back some on to papers. that. I Yes, Okay. shuffle come have

Matthew Clark

Okay, no worry.

Tim Myers

you, Matthew. Thank

Matthew Clark

but the reconsidering on guess would the other for benefit just Capital sense you than - can mention other rates? rates, some obviously about a in release with changed then and helpful? I us reinitiating be of buyback. buyback, the color give what's there is the Yes, any up there's

Tim Myers

to We at us think we to attractive back this valuation, Yes, for it's be really stock. Matthew. prepared, want buy

talk the and don't We to we economy on the to ability the have to and trends Board risk boxed about. watch impacts doing capital. want credit in for with do into something We continue we it's want potential not that But other to and it. be have to regularly

Matthew Clark

And from last me. one then Okay.

that in Just of and the could outstandings seeing of you your exposure, the over relative might and rural on exposure remind what office there of ongoing terms tech coming months? split how office there us and the perform you're to the impact layoffs between kind just metro downtown

Tim Myers

have XX, under million loan San to $XXX and office we about all time on loan is of the That had file that. is estate. real is million changes the Francisco on $XX based we total the December valuations just value that of commercial most The to XX%. same. obviously as value So in recent

where borrowers that we are exposure cushion is we we alluding good environment with So to have there significant you're working and reevaluating and proactively those think to properties.

a of to seen Tower throughout buildings that fact world, the We're various - other really loan all haven't worsen we the submarkets. So, value but our the that materially trends properties. for to as pretty not portfolio. the Salesforce lending consistent is But

we proactively that have properties, and again, concerns do So have valuations change, we but we we have on.

And we cushion that and for gives behind the closely work to significant in But sure have vast us that borrowers. those on sponsorship track with vast, repayment. stay those to make with work them majority cases, we

Tani Girton

Matt, I've pulled those spot rates you. for

the tax of net December, equivalent. deposits cost points X X.XX% and So month for basis of the was interest margin was the

Matthew Clark

Thank you.

Tim Myers

on Did I fully question real your estate? the Matthew answer

Matthew Clark

did. much. Yes, you Thanks very

Tim Myers

You're welcome.

Operator

to Thank Please you. our go question. phone of your from Rulis from D.A. We'll with get question the the next on line right Davidson. line ahead Jeff

Jeff Rulis

good morning. Thanks,

Tim Myers

Good Jeff. morning,

Tani Girton

morning. Good

Jeff Rulis

or American the Marin at payoffs, were those legacy three commercial acquired credits through of Looking real estate Bank River?

Tim Myers

about talking non-accruals? you reduce that Are the ones

Jeff Rulis

Yes.

Tim Myers

Bank legacy Marin. of Yes, those were

a was the a small Bank earlier, had longstanding similar borrower million one $X legacy of to Bank related to of of then And Marin. were non-accrual we one So ones we've That other referred Marin. before. the

the If related about a loans. chunk acquired was payoffs you're there overall, to talking

Jeff Rulis

some would a, speaking, things was or just some And down there there ahead of trying shift some that to get chase would in-house? a you. Got in seeing chalk it if let's economically you up kind self-directed timing sense timing you just potentially what of was or these of any or be it could to - for aggressiveness success movement, was

Tim Myers

it's partially both. Yes,

I one larger for loan just that that's the the been on long So time. referenced, books

external about that not minds proactive resolving environment smaller situation the were If this going - any in of with the in is we you're talking to better. our ones, borrower very and that back get the certainly was that

to we worked and came so, agreeable closely And mutually them solution. a with

So into environment played this there's no question that that.

Jeff Rulis

Okay. offset, how puts figure of specific should 'XX? the in Hopping just expenses that the year-over-year XXXX you how takes over not given branch rate, consolidation partial expense just expected a to maybe growth think savings we to the are about and and/or see be

Tani Girton

quite say of that. I'd a So we a vacancies lot in XXXX. few had We've resolved

an that's upward So push.

we the our realize also, strategic of plan we and and the However, from some closures branch then savings some that of to other efficiencies initiatives. invest into

but on had related merger So, few in the and very hand, to expenses conversion XXXX. other we the

expenses, of I'd in other. with quarter go going of the of in a have normal associated say general, typical those uptick in but kind to lot and sort XXX(k) that are counterbalance parts each We probably see So first with increase both moving there along also can bonuses. you're that directions a do bonuses contributions

Jeff Rulis

was and/or a one activity and on Maybe where driven payoff of you just sense been? given especially last where you visibility year-end that - or payoffs can subside rates okay. forward, a Yes, the have get any sort do going that any of timing they've are that could

Tim Myers

that I'll it's start do think going we Well, Yes, with do. subside. part. last to We

project was asset If and we typically had very completions of million sales that flat. that pretty year-over-year. components. $XXX from a down you larger deleveraging the did was payoff loan year as payoffs jump one was at trend, payoffs the We look have lumpy. full largest been construction in were That have actually Cash Park

that year-over-year relatively were component or But - or on category was acquired the didn't third-party biggest refinancing jumped that refinancings increase refinance and where continue and the half those wise to over The have loans. appetite we just up significantly. that of that loans with largest

year the activity rate earlier question about to your so yes, intense accelerated in that. drove we had competition really and of lot timing the And a

that anyway, undoubtedly banks kind over and on. force life things, things were decision Those early would of come that those, to having compete but happen have

to half that, but a but believe long-winded every was timing bit was of - so overall. we subside there - key a decline. will that, see one, terms those But in have little the refinancing, over rate the a assets said of a of reason being I we those yes, those of books, answer. off that both two, third-party that like So, trend categories aspect environment And did, actually of couple

Jeff Rulis

Okay.

a - strong churn under in of there of initial your quite a least you sort comments, de-risking was there feel the book? you eyes, of consistent for the if quality but guess, of our will, the better bit hood, that originations, bit a with about I of So did year you at

Tim Myers

Yes.

Jeff Rulis

right, Okay all you. thank

Tim Myers

you. Thank

Operator

line next James. very Feaster the the with Thank much. our on right you line question Go We'll - David ahead. get Raymond to of from

David Feaster

everybody. Hi good morning,

Tim Myers

morning, Good David.

Tani Girton

Good morning.

David Feaster

that wanted touched side. maybe have to some just deposit I this We talked are about pay about most debt. side. on as back used the or to on talked money, to go gotten point but flows excess bit or out when we of deposits you at I'm you you down the a that just the surge think seeing liquidity betas, rate-sensitive curious, more still And the about more being of we

outflows so, the you are And to first continue, looking question? for is more

And sounds source about And sources you talked on do here? It borrowings then of I how like securities outflows think the selling some fund that? primary maybe would funding additional about touch securities as to having then mean some Tani, liquidity. just other the you versus flows be of cash kind maybe well?

Tani Girton

okay, first your going to Yes question. so back

David Feaster

Sorry, that question. a big was

Tani Girton

beginning our you $XXX to if the have we've And since went so trough million. of look deposits Yes, about the peak about deposits up what million. since lost done just from - $XXX at by XXXX, pandemic, before

well, $XXX say, in million question. could you there's So

a and all the lose did a time the However, financial last Great situation like in the had we deposit the not reaction we when Recession, to of had this, surge we deposits. crisis

that said to make contingent enables where rates lot us gives markets of the liquidity raise versus we that willing I really about - of us And beauty before, where we're want the we capital all deposit so choices pay have flexibility. And having as rates. to a to

unrealized The on securities duration portfolio. we have securities some said, the losses you those do is As multiyear. in

cash months. several to for at sell inclined not a we're to finance losses need significant So

for So to to $XXX deposit per or it's rates flows million the year. into the selectively portfolio securities average generally side. increase markets out the better us about on Cash capital go off

I think I know let if I got me all your didn't. questions there, but

David Feaster

Yes. side. And No, on that touching credit be may was the then terrific.

a have conservative borrowing the I'd look hikes? materially. where service in we points as portfolio look guys be You another curious, of there your seeing and Are just you rate prospects But up you borrowers seen floating some material of and we've debt such as - insights. good stress change costs coverage XX you and maybe approach ratios the a at basis of at go

think the quality? flows I collateral loans high some mean, the you how for you and come do a curious think and cash just what renewal? impacts approaching was just up for about see they level? I or do you about ultimately, that How more thoughts values you would these that, TDRs credit as of how are think expect to at - that And your

Tim Myers

especially up affect commercial where will so good sensitivity So, the disciplined the to our long We've that's can't the our cash position about estate things for far that David, are floating in. be fixed and one office I that holding well. and rates. real of is And higher going predict trends stressed for portfolio, overall are constantly within now, we both mentioned, But right rent rates. feel you approach. doing rates really flow we rate we're on vacancy

in to fully dealing future know quantify a meantime, is this but have problems. some create of out we've at even that the with the the a said in agreeable about don't right with But now that you in our way talked how risk, we customers And the we've for I control qualify question things credits time. you But substandard the we everything we're for past. cleaning can Those had certainly, mutually in good. portfolio, feel now, that or a problem We've that worsened. moved to potential runway

David Feaster

hoping Yes, about okay. working bit. a And your said was a some hired you're you of talent. things talking about you delivery lot of maybe thing just expound you've Tim, could in Talk one then I on. know prepared the on optimizing - channels. you that remarks, I

in invested technology. You've

you curious what on [technical Just some difficulty]? and working of guys are

Tim Myers

some extremely like it's cycles you point, this, of an when service it's you of part into covering how model. question and important area. our service get customer network But do what a begs Retail many at need

two River had certainly had redundant and off put Santa those what Bank. branches we're we were Healdsburg American Rosa, So - had we with doing closing, both and in of We that.

where there's markets nearby. in are service two other The

serving So to okay, way We've looking that look relatively but includes our just banking. of markets, the deliver defined always say always to model. we our need to and regionally a banking had is this, customers, can we at our having commercial service centric customer continue model office - relation and right narrowly commercial banking

growth I a There's going deposit C&I are efficiently we're no operating promise or have and growth we to always in our our delivering at look we deposit else anything there leverage in but builds think that guarantee, on do that way into to - growth, most core loan model.

going talked we've drive that. about before, to to as So to continue ways we're look for

David Feaster

Make sense, thank you.

Tim Myers

welcome. You're

Operator

next on we'll the proceed from go our Please right is ahead. line with Andrew And question to Stephens. Terrell

Andrew Terrell

Tim, good Tani. morning Hi, good morning

Tim Myers

Andrew. morning, Good

Andrew Terrell

starting just of then you thoughts an issue how back? would specifically, you're the stood within might fourth then growth? - growth, And been growth. more hear wanted of where loan loan timing looks of the loan expectations? some more the I quarter for strength and kind to overall portfolio conversely, pipeline your of Tim anticipate guess maybe And growth have areas just on Hi, like where any kind maybe pockets pulling any on

Tim Myers

Yes, you know a it's question. good

that given environment it is where into depending increasing. our pipeline encouraging QX. set at as QX, now now timing, the it on as at not probability external close, What's you threshold year, of very going last fairly you're as your decent was looking And different actually a last environment. yes, for year it's it's was rate the right terms quite if is but In amount robust

in always per way going for it to do San where new we have. of lot large, at look But cautious large that's we're the about and areas property do. a request to the certainly, going be why by we're - we And way not we to Francisco. se we're credits, back pulling look investor real continue There's, office estate

and - don't our credit our customers with parameters. disparate we prospects So whiplash

not Yes, But volume we on timing did decrease quarter. off. paid we are large problem loans the certainly the - fourth and borrowing out fairly caution growing payoffs. in are in one had a looking closely the sure But Certainly, that regions the the have. chunk the at environment of among of I'm fully everything universe was economic there continuing the that unexpected, the on the this rate every focus given environment. we we to

the of that bringing that side was effort some to this really rebuild doing Marin It good Bank one was things past, Certainly, they're team, an the absorption in a job. people. talked commercial of of time as Bank then year the we've and culture on embedding River and into certainly took and time banking about American credit

and loan production activity leaves all to for regions Sacramento, fairly and generate typical. we'll ways we look Marin, drive across to believe our we continue continue that can the Oakland, those the So growth. was to Napa, growth in areas,

Andrew Terrell

you of I great spreads months loans? That's still kind or are of loan are have the sticking as that - I'd have new spread curious, growth rates for and competitive you for maybe on getting point, color, today be appreciate gone as And seen up new compress kind market just you - rates ago similar it. dynamics XX

Tim Myers

see have I to of is that loans going competition that on the saw really no and consistent we're and speak two doubt certainly, quarters yield in nature in booking is the up we heading the level into trend the can't spreads, the every type first we're but not same I to category. last year. year early of this So on a

things lot competitive very have last focused competitors are a now market, things on at they It's were than and disparate year this different we but time. always that a of right

the of really yields for how higher helps. the So, continue being but asset can't we're I happy and sensitive by going certainly competition, promise to way spreads are -

Andrew Terrell

for Tani. XXXX? Do you last Okay. rate have And an maybe for tax expected one

Tani Girton

I XXX. kind That's a one. around tough of it I think hovers mean -

played a role because higher percent rate. balance little life tax-exempt a reducing munis the the as total in was rate tax The of smaller and this tax insurance earnings year bank-owned sheet. from Our a

as hand, merger in other many didn't expenses the On non-deductible we have XXXX.

that to So, jumping - the there's in on horizon out a tax significant impact on nothing for rate. our have

Andrew Terrell

Okay the me. it Thank questions. from you for taking that's

Tim Myers

Thank you.

Operator

next get from question the And right is ahead. our we'll KBW. to Woody Lay on lines it phone with Go -

Woody Lay

Hi, good guys. morning

Tim Myers

Good morning, Woody.

Woody Lay

I of regards capital. circle it of it constraining myriad know but ratio to you a just factors, at depends the capital I sort I on wanted buyback. that of do to relates in mean, you the buyback? back as to sort a on have look

Tim Myers

think taken that's was up, equity deposits when now of a aerospace bit talk on, tangible certainly target. moving of Early been a the I running leverage assets Well, a there and common were ratio, and sort conversations. obviously of about focus to a lot more tangible about

So we're really looking at all of those, honestly.

about our and margin position the might And we to opportunities, have would the how impact affect of safety of capital being cautious going in of that want advantage but in environment. a again, be to, take forward that

WoodyLay

look of opening focus in at mentioned can Yes. for I on me, you the of your of XQ the Makes you're continue then ratios. I think I focused sort see improving profitability mean, do sense. to ahead? And year remarks, sort believe last you think is sort watermark? high just pretax you If do pre-provision, sort of improvement you in on Or that

Tani Girton

okay, benefit from interest a still want I with talk rates. That's stand increase in mean, pretax you -- pre-provision. to an to provisions question. tough We

the necessarily, difference. sheet a size not also but So does make balance

continue we balance I our steady, think then is to that extent the to improvement. see sheet So can

a factors just are of there in moving question. So that lot

punt to sorry on So that one, but really can't predict. I

WoodyLay

awesome. guys. Thanks All right,

Tim Myers

Thank you.

Operator

ahead. queued the Scott. Go up Montgomery right from a do of have Tim with We line [Operator Janney Instructions] question Coffey

Tim Coffey

opportunity Great. Thank you. Good ask the morning. Thank you the to questions. for

Tim Myers

Good morning, Tim.

Tim Coffey

color percentage of noninterest-bearing you on. think the total on you wondering provided you end the think deposits and that deposits I potential do of put a spot appreciate I at and you're outflows, as deposit could where though, I'm Tani, year? end this

Tani Girton

XX%. So of, an When toward nothing the And go of that, it to kind it up expectation noninterest the had every another we down. of bearing Great climb. question. percentage XX%, our tough -- but again, average say, went had there, Recession, that end would cycle from we did, the And did we that's XX% never

going to for to that yes, I we that can't that will something it's going something historically, I going to go it's that our all -- go a we But further. to attention And business can work big, model, XX%. focus think big from predict any not go hard us, just that up think maintain. I'm is to that down that's But it So I'm say down. pay And given and not the it that's time.

Tim Coffey

Right.

Okay. And I there earlier, with apologize closures missed but associated I the it were costs branch XQ? in any if

Tani Girton

some Yes. costs. had accelerated amount We of small

So accelerated we lease gets the and have properties. is that what happens remaining occupy those time tenant over that improvements we expense some

a ends of impact but the happened in so that small and being the And you the XXXX, in of up net it of that will December. happen Most piece year as savings for saw, positive.

Tim Myers

all And and really other We're going annualized just is places. retaining and the them forward. going that the employees. nearby the reposition rate for cost We're into the we the XXXX costs set between run to branches differential

what entirely mentioned. there's costs It's Tani almost no So employment-related there.

Tim Coffey

to soon like? you're provide And a Okay. customer clearly, I'm Tim, All right then, business there appreciate to for rate of what's mean, the sentiment and the you this now? make general but environment? on right. able it investments wondering hesitancy Is booking bit I I can in current loans some that. color still open

Tim Myers

to I think word. hesitancy the

the of is build bit few least, I of see going couple and I -- out it the think continue increase of months there But news starting months was silence, are gloom it what uncertainty around there a at really as rates a we're up. doom to The to right? news be. and lot mentioned, to certainly back a was a for pipeline

And so not rates. than but grow higher they're people to do higher recently. accustomed were rates They we've seen long-term historically, than different certainly are most abnormally they

means increase. to committed that. there's but seeing generate doing activity are we have -- an And activity, So to just -- that adjustment but I we harder And think to that are period. we work that

Tim Coffey

Thank much. Great, you great. okay. Those questions. were Well, very my

Tim Myers

Thanks.

Tani Girton

operator. of couple a have did ahead, go We --

Operator

Certainly.

the on follow-up another question more Terrell right with Andrew It's one actually Stephens. phone. Go ahead. from have We

Andrew Terrell

Tani, the follow-up hi Tim, for question. thanks Hi

Tim Myers

Sure.

Andrew Terrell

it at I interest internally right I maybe Tim, get just was is all how M&A to going in the focus now were seems wanted market kind like you focus. if an on maybe from wanted now? conversations to or -- at that of update company to the just of right you more

Tim Myers

competitors. as talking tell and And in Well, bankers can the many open banks you've sold, it, out bought. opportunities. as Sure. I'm to I'm I sure you there. it's of market always know, from investment remain slow We to there out what not they're my as are those other heard

but to So But plan, can't raise to a their strategic importantly, hand. remains and of part right wait force increases. key remain the you finding activity have someone most then to I for that activity when no, our open partner opportunity, the and we that does

Andrew Terrell

for Thanks Understood. questions.

Tim Myers

You're welcome.

Operator

the Thank line. more with questions proceed you. Please We actually any on questions. no have online phone

Tani Girton

Great. Thank you.

the duration of One So have what was a we securities is portfolio? do the couple.

is portfolio total the of duration the -- X.XX total the years. So

held-to-maturity duration. and between which However, it's But the That's roughly, held-to-maturity longer the the available-for-sale portfolio up years. years that the portfolio and very important split portfolio has a to X.XX is X.XX AFS roughly half. is portfolio,

think that I question. So answers that

year-end share I at had losses point the was similar the answered And what accumulated earlier, portfolio, larger losses we And to we that think order with to would to bank? at the a that about book tangible selling related finance in another the on securities $XX.XX. per start value then question question, question

a we of in -- I lot position, headroom think said, the manage our capital well right pricing, as as of markets. deposit I as through liquidity our And to have lot a both now we have

want don't we be to we take. feel losses to like don't So that forced take we'll

Unidentified Analyst

included? portfolio the is their office granularity health the and how much? So care office is of What

Tim Myers

sorry, data the in I have average office. that size. have available, health of I'm have about we'll don't answer of the that, second level loan we would a on don't on granularity. detail have make the commercial front but is level I be contact that information a to me in office If talk included on But to yes, Yes. care granularity

follow hear we'll didn't level in of that that the And so embedded to the included office line detail the it estate provide granularity, what don't in the that? have that was real on I the is or on health of up. those is office For question, care exposure? granularity commercial

Tim Myers

If Thank happy you appreciate With your We're that, I out this questions. answer your us. joining any to and them. will support reach please to end call. of you We any for us. follow-on have all questions, you. Thank

Bank of Marin Bancorp (BMRC) 23 Jan 232022 Q4 Earnings call transcript