Bank of Marin Bancorp (BMRC) Q4 2024 Earnings Call January 27, 2025 11:30 AM ET Company Participants Krissy Meyer - Corporate SecretaryTim Myers - President & CEODave Bonaccorso - CFOTani Girton - Ex-CFOAndrew Terrell - Managing DirectorWoody Lay - Vice PresidentDavid Feaster - Director - Banking Conference Call Participants Jeff Rulis - MD & Senior Research AnalystMatthew Clark - MD & Senior Research Analyst Krissy Meyer And thank you for joining Bancorp Marine Bancorp's earnings call for the Q4 ended Dece ...

Core Viewpoint - Bank of Marin (BMRC) reported quarterly earnings of $0.38 per share, exceeding the Zacks Consensus Estimate of $0.34 per share, and showing an increase from $0.30 per share a year ago, indicating a positive earnings surprise of 11.76% [1][2] Financial Performance - The company posted revenues of $27.98 million for the quarter ended December 2024, which fell short of the Zacks Consensus Estimate by 1.45%, but represented an increase from $20.98 million year-over-year [2] - Over the last four quarters, Bank of Marin has surpassed consensus EPS estimates two times, but has not beaten consensus revenue estimates during the same period [2] Stock Performance and Outlook - Bank of Marin shares have increased by approximately 0.9% since the beginning of the year, while the S&P 500 has gained 3.7%, indicating underperformance relative to the broader market [3] - The company's earnings outlook is crucial for investors, as it includes current consensus earnings expectations for upcoming quarters and any recent changes to these expectations [4] Earnings Estimate Revisions - The trend for earnings estimate revisions for Bank of Marin is currently favorable, leading to a Zacks Rank 2 (Buy) for the stock, suggesting expected outperformance in the near future [6] - The current consensus EPS estimate for the upcoming quarter is $0.32 on revenues of $28.56 million, and for the current fiscal year, it is $1.53 on revenues of $121.05 million [7] Industry Context - The Banks - West industry, to which Bank of Marin belongs, is currently ranked in the top 36% of over 250 Zacks industries, indicating a favorable industry outlook that can significantly impact stock performance [8]

Financial Performance - Bank of Marin Bancorp reported earnings of $6.0 million for Q4 2024, a 30.43% increase from $4.6 million in Q3 2024, with diluted earnings per share rising 35.71% to $0.38[1][2] - Net income for Q4 2024 was $6,001,000, an increase from $4,570,000 in Q3 2024 and a significant recovery from a loss of $8,409,000 in Q4 2023[38] - The net loss for 2024 was $8.4 million, compared to a net income of $19.9 million in 2023, with comparable net income (non-GAAP) at $14.5 million[32] - The diluted loss per share (GAAP) for 2024 was $(0.52), while the comparable diluted earnings per share (non-GAAP) was $0.90[32] - Basic net income per share for Q4 2024 was $0.38, up from $0.28 in Q3 2024 and $0.04 in Q4 2023[42] Interest Income and Margin - The net interest margin improved by 10 basis points to 2.80% in Q4 2024, driven by a reduction in deposit rates, while loan yields increased by 9 basis points[4] - Total interest income for Q4 2024 was $36,476,000, an increase of 0.43% from $36,319,000 in Q3 2024 and 2.97% from $35,423,000 in Q4 2023[42] - Tax-equivalent net interest income for the year ended December 31, 2024, was $95,362 thousand, with a margin of 2.63%[45] - Reported net interest income for the year ended December 31, 2024, was $94,660 thousand, maintaining a margin of 2.61%[45] Asset and Loan Management - Total loans decreased by $6.8 million to $2.083 billion as of December 31, 2024, with organic originations totaling $47.1 million in Q4 2024, up from $28.2 million in Q3 2024[6][7] - Total assets decreased to $3,701,335,000 as of December 31, 2024, down from $3,792,833,000 in Q3 2024 and $3,803,903,000 in Q4 2023[40] - The allowance for credit losses to total loans ratio was 1.47% as of December 31, 2024, unchanged from Q3 2024 but up from 1.21% in Q4 2023[40] - Non-accrual loans decreased to $33.9 million, or 1.63% of the loan portfolio, down from 1.91% in the previous quarter[8][9] Expenses and Efficiency - Non-interest expenses decreased to $18.3 million in Q4 2024 from $20.4 million in the prior quarter, with a $1.4 million reduction in salaries and related benefits[30] - Total non-interest expenses increased to $81.8 million in 2024 from $79.5 million in 2023, with significant increases in professional services and salaries[31] - The efficiency ratio (GAAP) for 2024 was 111.62%, compared to 73.76% in 2023, indicating increased operational inefficiencies[32] - The efficiency ratio improved to 65.53% in Q4 2024, compared to 75.18% in Q3 2024 and 111.62% in Q4 2023[38] Capital and Dividends - The total risk-based capital ratio for Bancorp was 16.54% as of December 31, 2024, compared to 16.40% at the end of Q3 2024[21] - A cash dividend of $0.25 per share was declared, marking the 79th consecutive quarterly dividend paid by Bancorp[9] Non-Interest Income - Non-interest income for Q4 2024 was $2.8 million, a decrease of $135 thousand from Q3 2024, primarily due to the disbursement of a customer's trust assets[28] - Non-interest income for 2024 showed a loss of $21.4 million, a decrease of $26.3 million from $5.0 million in 2023, largely due to a $32.5 million net loss on the sale of investment securities[29] - Non-interest income totaled $2,753,000 in Q4 2024, compared to a loss of $3,283,000 in Q4 2023, indicating a significant recovery in non-interest revenue[42] Share Repurchase - The company repurchased 220,000 shares for $4.2 million at an average price of $19.21 per share in Q3 2024, with no repurchases in Q4 2024 or in 2023[33]

Core Insights - Bank of Marin (BMRC) is expected to report quarterly earnings of $0.34 per share, reflecting a year-over-year increase of 13.3% [1] - Anticipated revenues for the quarter are projected at $28.4 million, which represents a 35.3% increase compared to the same quarter last year [1] - The consensus EPS estimate has remained unchanged over the last 30 days, indicating stability in analysts' projections [1] Financial Metrics - Analysts predict the 'Efficiency Ratio' will reach 70.6%, a significant improvement from the previous year's value of 91.9% [4] - The 'Average Balance - Total interest earning assets' is estimated to be $3.56 billion, slightly down from $3.78 billion a year ago [4] - The consensus estimate for 'Total non-accrual loans' is $40.87 million, compared to $7.99 million reported in the same quarter last year [4] - 'Net interest income' is projected at $25.43 million, up from $24.26 million year-over-year [5] - 'Net Interest Income (FTE)' is expected to reach $25.49 million, compared to $24.46 million from the previous year [5] Market Performance - Bank of Marin shares have experienced a -0.7% change in the past month, contrasting with the Zacks S&P 500 composite's +2.1% performance [6] - With a Zacks Rank 2 (Buy), BMRC is anticipated to outperform the overall market in the near term [6]

Core Viewpoint - Wall Street anticipates a year-over-year increase in earnings for Bank of Marin (BMRC) due to higher revenues, with actual results being crucial for stock price movement [1][2]. Earnings Expectations - The earnings report is expected on January 27, 2025, with a consensus EPS estimate of $0.34, reflecting a +13.3% year-over-year change, and revenues projected at $28.4 million, up 35.4% from the previous year [3][4]. Estimate Revisions - The consensus EPS estimate has been revised 2.15% higher in the last 30 days, indicating a positive reassessment by analysts [4][10]. Earnings Surprise Prediction - The Zacks Earnings ESP model shows a positive Earnings ESP of +6.67% for Bank of Marin, suggesting a strong likelihood of beating the consensus EPS estimate [10][11]. Historical Performance - In the last reported quarter, Bank of Marin had an earnings surprise of +3.70%, with only one earnings beat in the last four quarters [12][13]. Industry Comparison - East West Bancorp (EWBC), another player in the Zacks Banks - West industry, is expected to post earnings of $2.13 per share, indicating a +5.5% year-over-year change, with revenues projected at $654.31 million, down 0.1% from the previous year [17][18].

Financial Performance - Net income for Q3 2024 was $4.6 million, a significant recovery from a net loss of $21.9 million in Q2 2024, with diluted earnings per share at $0.28 compared to a loss per share of $(1.36) in the previous quarter [144]. - Net income for the three months ended September 30, 2024, was $4,570,000, compared to a net loss of $21,902,000 for the previous quarter [234]. - Comparable diluted earnings per share (non-GAAP) for the three months ended September 30, 2024, was $0.28, up from $0.06 in the previous quarter [234]. - Return on average assets (GAAP) improved to 0.48% for the three months ended September 30, 2024, compared to a negative 2.35% for the three months ended June 30, 2024 [234]. - Return on average equity (GAAP) was 4.17% for the three months ended September 30, 2024, recovering from a negative 20.36% for the three months ended June 30, 2024 [234]. Interest Income and Margin - Net interest income for Q3 2024 totaled $24.3 million, an increase of $1.8 million from the previous quarter due to a favorable reallocation of earning assets [169]. - The tax-equivalent net interest margin improved to 2.70% in Q3 2024, up from 2.52% in the prior quarter, driven by higher average cash and loan balances [170]. - For the first nine months of 2024, net interest income was $69.4 million, down from $78.5 million in the same period last year, primarily due to a smaller balance sheet and higher deposit costs [171]. - The tax-equivalent net interest margin for the first nine months of 2024 was 2.57%, compared to 2.66% for the same period in 2023, with higher deposit costs reducing the margin by 77 basis points [172]. Deposits and Loans - Total deposits rose by $19.2 million to $3.309 billion as of September 30, 2024, with non-interest bearing deposits comprising 44.5% of total deposits [147]. - Loan balances increased to $2.090 billion, with additions totaling $140.4 million in the first nine months of 2024, compared to $90.3 million for the same period in 2023 [150]. - Total loans increased to $2.090 billion as of September 30, 2024, up from $2.074 billion at December 31, 2023, reflecting a growth of $16.4 million [203]. - Non-accrual loans increased to $39.9 million, or 1.91% of total loans, as of September 30, 2024, compared to $8.0 million, or 0.39% at December 31, 2023 [152]. Credit Losses and Provisions - A provision for credit losses on loans was $5.6 million in the first nine months of 2024, compared to $1.3 million for the same period last year, raising the allowance for credit losses to 1.47% of total loans [151]. - There was no provision for credit losses on loans in Q3 2024, while a provision of $5.2 million was recorded in Q2 2024 [178]. - The allowance for credit losses on loans increased by $5.5 million for the nine months ended September 30, 2024, compared to $1.3 million for the same period in 2023 [179]. Non-Interest Income and Expenses - Non-interest income decreased to $2,888,000 from $(29,755,000) in the previous quarter [159]. - Non-interest income for the third quarter of 2024 was $2.9 million, a significant recovery from a loss of $29.8 million in the prior quarter, primarily due to a $32.5 million pre-tax net loss on the sale of investment securities in the second quarter [186]. - Total non-interest expense decreased to $20.4 million in the third quarter of 2024 from $21.9 million in the prior quarter, primarily driven by a $1.5 million reduction in salaries and related benefits [191]. Capital and Liquidity - Bancorp's tangible common equity to tangible assets (TCE ratio) was 9.72% as of September 30, 2024, with a share repurchase of $4.2 million during the quarter, increasing book value per share to $27.17 [155]. - The total risk-based capital ratio for Bancorp was 16.40% at September 30, 2024, down from 16.89% at December 31, 2023, due to losses on securities sales [216]. - Net available contingent funding sources totaled $1.934 billion, which is 58% of total deposits and 208% of estimated uninsured deposits as of September 30, 2024 [222]. - Cash and cash equivalents increased by $198.7 million in the first nine months of 2024, with significant liquidity sources including $355.9 million from investment securities [225]. Market Conditions and Regulatory Environment - The Federal Reserve lowered the target federal funds rate by 50 basis points to a range of 4.75% to 5.00% in September 2024, indicating potential further rate cuts [176]. - The company is continuously monitoring market rates to enhance performance and returns to shareholders [176].

Financial Data and Key Metrics Changes - The company reported a net income of $4.6 million for Q3 2024, translating to $0.28 per share, reflecting the benefits of balance sheet restructuring [11] - Net interest income increased by 8% from the prior quarter to $24.3 million, driven by an 18 basis point increase in net interest margin [12][13] - Non-interest expense decreased by $1.5 million from the prior quarter, primarily due to staff reductions and reallocation of resources [14] Business Line Data and Key Metrics Changes - Total loan commitments generated during the quarter amounted to $44 million, with $28 million funded, leading to a slight increase in total loan balances [7] - The company experienced positive trends in fee income, with total deposits increasing by $96 million, largely from a $55 million rise in non-interest-bearing deposits [8][15] - Loan balances reached $2.1 billion at the end of Q3, up $8 million from the previous quarter, with growth primarily in residential mortgages [19] Market Data and Key Metrics Changes - The proportion of non-interest-bearing deposits increased slightly to 45% of total deposits, benefiting from the relationship banking model [8] - The average cost of total deposits rose by just 1 basis point in Q3, indicating a deceleration in deposit cost increases [16] Company Strategy and Development Direction - The company is focused on strengthening its core deposit franchise and maintaining robust liquidity and capital levels while enhancing customer service [11] - There is an emphasis on disciplined credit management and maintaining a diversified loan pipeline, with expectations for increased loan production in Q4 [23][24] - The company plans to continue investing in talent and technology to improve efficiency and customer experience [24][25] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the stability of the loan portfolio, with no new significant problem loans reported [6][9] - The company anticipates further improvements in profitability due to proactive balance sheet management and expense control [21] - There is an expectation of continued declines in deposit costs, contributing to net interest margin expansion as the yield curve normalizes [22] Other Important Information - The total risk-based capital ratio stands at 16.4%, with a tangible common equity ratio of 9.72%, indicating strong capital levels [9] - The company declared a cash dividend of $0.25 per share, marking the 78th consecutive quarterly dividend [19] Q&A Session Summary Question: Update on expense expectations for Q4 - Management indicated that expense savings from staffing restructures are ahead of expectations, with some costs still to be filled [28][29] Question: Impact of rate cuts on margin outlook - Management noted that while there are headwinds from interest reversals, they expect a positive impact on margins from proactive deposit strategies [30][31] Question: Comfort level with share buybacks - Management expressed confidence in credit quality and capital ratios, leading to the decision to resume share repurchases [32] Question: Specifics on expense run rate for Q4 - Management indicated that they expect expenses to be flat to down in Q4, excluding non-repeatable legal costs [49][50] Question: Loan growth and opportunities - Management acknowledged a slowdown in originations but expressed optimism about the pipeline and activity levels [41][42] Question: Core deposit growth and seasonal impacts - Management clarified that seasonal inflows contributed to deposit growth, alongside new account openings [47][48]

// Bank of Marin Bancorp- Third Quarter 2024 Earnings Presentation O c t o b e r 2 8 , 2 0 2 4 Forward-Looking Statements Text 95,96,96 White 255, 255, 255 Black 0, 0, 0 Light Gray 232, 232, 232 Accent 1 7,89,52 Accent 2 248,153,40 Accent 3 254,217,129 Accent 4 52,153,70 Accent 5 5,39,67 Accent 6 171,184,195 This discussion of financial results includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, (the "1933 Act") and Section 21E of the Securities E ...

For the quarter ended September 2024, Bank of Marin (BMRC) reported revenue of $27.16 million, up 0.3% over the same period last year. EPS came in at $0.28, compared to $0.33 in the year-ago quarter. The reported revenue compares to the Zacks Consensus Estimate of $27.3 million, representing a surprise of -0.52%. The company delivered an EPS surprise of +3.70%, with the consensus EPS estimate being $0.27. While investors closely watch year-over-year changes in headline numbers -- revenue and earnings -- and ...

Bank of Marin (BMRC) came out with quarterly earnings of $0.28 per share, beating the Zacks Consensus Estimate of $0.27 per share. This compares to earnings of $0.33 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an earnings surprise of 3.70%. A quarter ago, it was expected that this bank holding company would post earnings of $0.19 per share when it actually produced earnings of $0.06, delivering a surprise of -68.42%.Over the last four quarters, t ...