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Edited Transcript of BMRC earnings conference call or presentation 22-Apr-19 3:30pm GMT

Q1 2019 Bank of Marin Bancorp Earnings Call

Novato May 8, 2019 (Thomson StreetEvents) -- Edited Transcript of Bank of Marin Bancorp earnings conference call or presentation Monday, April 22, 2019 at 3:30:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Andrea Henderson

Bank of Marin Bancorp - Director of Marketing

* Russell A. Colombo

Bank of Marin Bancorp - President, CEO & Director

* Tani Girton

Bank of Marin - Executive VP & CFO

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Conference Call Participants

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* Jacquelynne Chimera Bohlen

Keefe, Bruyette, & Woods, Inc., Research Division - MD, Equity Research

* Jeffrey Allen Rulis

D.A. Davidson & Co., Research Division - Senior VP & Senior Research Analyst

* Matthew Timothy Clark

Piper Jaffray Companies, Research Division - Principal & Senior Research Analyst

* Timothy O'Brien

Sandler O'Neill + Partners, L.P., Research Division - MD of Equity Research

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Presentation

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Andrea Henderson, Bank of Marin Bancorp - Director of Marketing [1]

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Good morning, and thank you for joining Bank of Marin Bancorp's Earnings Call for the First Quarter Ended March 31, 2019. I'm Andrea Henderson, Director of Marketing for Bank of Marin. (Operator Instructions) As a reminder, this conference is being recorded on April 22, 2019.

Joining us on the call today are Russ Colombo, President and CEO; 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 there -- this call is also being webcast.

Before we get started, I want to emphasize that the discussion on this call is based on information we know as of today, April 22, 2019, and may contain forward-looking statements that involve risks and uncertainties. Actual results may differ materially from those set forth in such statements. For a discussion of these risks and uncertainties, please review the forward-looking statements disclosure in our earnings press release as well as our SEC filings.

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

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Russell A. Colombo, Bank of Marin Bancorp - President, CEO & Director [2]

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Thank you, Andrea. Good morning, and welcome to the call. We're off to a solid start for 2019 and are exceptionally well positioned for the year. Our markets continue to demonstrate economic strength, with steady business growth and unemployment rates that hovered near historic lows. That strength breeds intense competition. But our business model resonates strongly in a highly competitive environment. We've proven through multiple cycles that we -- and our focus on customers and relationship banking will not waver in 2019.

In the first quarter, we once again generated solid balance sheet expansion, growing both deposits and loans. Looking forward, we see healthy loan demand and strong underlying fundamentals, and our growth outlook for 2019 remains positive.

Now let me walk you through some of the financial highlights for the first quarter. We reported net income of $7.5 million for the first quarter, down from $9.7 million in the previous quarter, but up from $6.4 million in the same quarter last year. This quarter-over-quarter decline reflects the increases in noninterest expenses that we typically see really each year due to seasonal personnel costs, including an annual reset of payroll taxes and 401 contribution matching as well as stock-based compensation grants.

Diluted earnings per share were $0.54 in the first quarter of 2019 compared to $0.69 last quarter and $0.46 in the same quarter a year ago. Loans increased to $1.77 billion at March 31, 2019 from $1.76 billion at December 31, 2018, and were up 6% from $1.67 billion in the first quarter of 2018.

Total deposits increased by $3.8 million in the first quarter to $2.18 billion. Non-interest-bearing deposits increased $10.3 million from December 31, 2018, and represented 49% of total deposits at March 31st, on par with our 2018 level.

Strong credit quality remains one of the cornerstones of our consistent performance. Nonaccrual loans represented 0.04% of the bank's loan portfolio at March 31st, and there was no provision for loan losses in the quarter.

We are investing in organic growth initiatives, adding talent and building our presence in key markets. We expanded in the East Bay by opening a loan production office in Walnut Creek that will serve businesses across the Diablo Valley. We also made key strategic hires in Napa and Santa Rosa, and named Robert Holden Senior Vice President, Commercial Banking Regional Manager, in the San Francisco market.

Our Board of Directors declared a cash dividend of $0.19 per share payable on May 10, 2019. This represents the 56th consecutive quarterly dividend paid by Bank of Marin Bancorp. In addition, Bancorp's considering an extension of our $25 million share repurchase program.

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

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Tani Girton, Bank of Marin - Executive VP & CFO [3]

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Thank you, Russ. Good morning. I'll begin with net interest income, which totaled $23.8 million in the first quarter of 2019 compared to $23.3 million in the prior quarter and $21.9 million in the same quarter a year ago. Despite 2 fewer days in the quarter, net interest income exceeded the fourth quarter due to lower interest expense related to the early redemption of subordinated debt. Year-over-year, quarterly net interest income is up almost $2 million, thanks to a higher earning asset base, increased yields and controlled funding cost.

The tax-equivalent net interest margin was 4.02% in the first quarter compared to 3.85% in both the prior quarter and the year ago quarter. The 17 basis point increase from the previous quarter was primarily due to accelerated discount accretion on the October 2018 sub debt redemption. The improvement over Q1 2018 is related to the bank's asset sensitivity to higher interest rates.

Noninterest income of $1.8 million in the first quarter of 2019 declined $1.7 million from $3.4 million in the prior quarter due to a $956,000 pretax gain on the sale of 6,500 shares of Visa Inc. Class B restricted common stock and $180,000 Federal Home Loan Bank special dividend in the fourth quarter.

Additionally, the bank incurred a $283,000 cost to underwrite new bank-owned life insurance policies in the first quarter, and income from the sale of excess deposits to deposit network fell $163,000. Likewise, the decline in noninterest income from Q1 2018 is attributable to the new BOLI policy expense and lower deposit network income.

As Russ mentioned, the first quarter of the year typically includes some seasonal expenses, and this year is no exception. Noninterest income -- noninterest expense of $15.5 million included the typical New Year reset of payroll taxes and 401(k) matching. Additionally, 401(k) matching spikes in the first quarter when bonuses are paid.

First quarter also included accelerated stock-based compensation expense for retirement-eligible employee, new grants and performance share payouts. The net increase in all of these first quarter expenses between 2018 and 2019 was just $68,000, primarily attributable to 5 more retirement-eligible employees in 2019.

Other increases included 8 additional full-time employees, annual merit increases, a $136,000 onetime pay cycle adjustment and a $129,000 provision for off-balance sheet commitments in the first quarter of 2019.

The more significant differences accounting for the net decline in expenses between the first quarters of 2018 and 2019 were $713,000 in professional services, mostly related to core processor contract renegotiation, and $366,000 in data processing, primarily due to the Napa acquisition.

The $1.8 million increase in expenses between Q4 2018 and Q1 2019 was primarily attributable to $498,000 in retirement-eligible stock-based compensation expense, $64,000 in performance share vesting, $339,000 more in 401(k) match, 6 additional employees, the onetime pay cycle adjustment and the off-balance sheet commitment provision.

In the first quarter, the bank delivered a return on assets of 1.19% and a return on equity of 9.54%. While several moving parts [impacted] our comparative results this quarter, we are pleased with the bank's continuing profitability and the long-term prospects that derive from strong customer relationships and consistent credit and expense management.

Now Russ would like to share some closing comments.

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Russell A. Colombo, Bank of Marin Bancorp - President, CEO & Director [4]

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Thank you, Tani. I'm pleased with our first quarter results. We are successfully executing on our long-term strategic plan for organic growth, which is reflected in our performance. I'm also pleased that we are able to declare our 56th consecutive annual -- I mean, quarterly dividend. Our ability to consistently deliver this level of value to our shareholders is a testament to our relationship banking model. We build strong and lasting ties with our customers that are based on personalized service. This allows us to focus on both sound underwriting and our customers' needs, while consistently growing loans and deposits. We maintain a low cost and stable deposit base with close to 50% of those funds in demand deposit accounts.

While the competition for high-quality borrowers is strong, our lending activity continues to grow across our commercial banking market in Marin, Sonoma, Napa, San Francisco and East Bay.

One of the biggest challenges that all companies face is access to talent, but we continue to attract and retain great people. Our commercial banking teams in Santa Rosa and Napa are creating solid opportunities for loan growth. Along with our loan production office in Walnut Creek, we have made a number of key personnel moves, including Rob Holden in San Francisco. Our investment in people is helping to build an even stronger foundation for future growth.

Our primary focus for the second quarter and beyond is to leverage the talent and expertise of all of our local teams to drive organic growth. Together, I am confident, we will deliver great results and value to our shareholders.

Thank you for your time this morning. And now, we will open it up to answer your questions.

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Questions and Answers

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Operator [1]

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(Operator Instructions) Our first question comes from the line of Jeff Rulis, D.A. Davidson.

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Jeffrey Allen Rulis, D.A. Davidson & Co., Research Division - Senior VP & Senior Research Analyst [2]

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Thanks, good morning. Wanted to get into the expenses, just a little bit in detail. You know clearly, there's some seasonality occurring. I don't know if you consider some of those items almost nonrecurring. If you could talk about kind of what occurred in the quarter, but also the -- I think you got the LPO kind of coming on, maybe the question is for Tani? Just if you can see where expenses sort of settle in at, not exactly specifics, but kind of what would you expect to recur and what would maybe follow-up?

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Tani Girton, Bank of Marin - Executive VP & CFO [3]

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Yes. So the LPO actually is not coming on in the expense statement. So the second quarter in terms of the real estate and additional employees, of course, we had already hired the manager at that office and that embedded in Q1. So most of the Q1 expenses that we talked about related to salary and benefits is not nonrecurring. So when -- I think, the big item is retirement-eligible employees. When you have new -- when employees become newly retirement-eligible, any of their existing stock-based compensation grants, options, whatever that were not -- had not been expensed prior to that get expensed at that time plus any new grants for all retirement-eligible employees get expensed immediately. And our -- the bulk of our grants are granted in the first quarter. So that -- you'll see that every first quarter. And over the last several years, our first quarter expenses have typically gone up about somewhere around $1 million, between $775,000 and $1.2 million, depending on the year as a result of that plus the 401(k) matching, which, as I said, goes up when bonuses are paid.

Nonrecurring expenses would be the $136,000 onetime pay cycle adjustment. And what happened there is that we had -- we pay our employees on 15th of the month and the end of the month. And for nonexempt employees, due to payroll processing time for the last few days in the pay period, we previously estimated those hours. Now we're not, by law, allowed to do that. So if we pay the -- if we paid on actual hours logged on timecards, employees would have been short [at] a few days because of that payroll processing period. So the bank chose to make up that difference for the nonexempt employees, and that was what that $136,000 cost was. As long as we -- we continue to invest in our infrastructure and also look for revenue-producing employees, and we never stop doing that. And as long as we're successful in doing that, we're going to see expenses go up. I would say that the first quarter, we tend to be more successful, or the first half of the year, in recruiting people because that's when a lot of those folks are getting their bonuses and are ready to move.

So does that cover? Russ, do you want to add something?

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Russell A. Colombo, Bank of Marin Bancorp - President, CEO & Director [4]

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Yes. I was just going to add Jeff -- just going to add one thing, and that was on the retirement benefits. That was something we instituted last year. And it's -- you become retirement-eligible, if age plus years of service exceeds 75 with a minimum of 10 years of service. So it's not just anybody who decides they're going to retire then all of a sudden are vested, you have to have these certain criteria. So we always ran into the situation where people would get to the retirement that have unvested equity, and the Board will be forced to make a decision. We didn't want to make it -- we decided that it was important that we now make that subject to have somebody decide at that time. We made a criteria, which has been every -- it applies to all employees, which is the appropriate thing to do in my mind. So unfortunately from the standpoint of the earnings, you have a one time for that year, but you will have it each year as you have new retirement employees. And those employees who don't retire and are eligible each year, you've got to expense those options or stock that's restricted, so that's where that popped up the last couple of years.

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Jeffrey Allen Rulis, D.A. Davidson & Co., Research Division - Senior VP & Senior Research Analyst [5]

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Got it. Okay. And maybe another one, maybe, Russ, just a bigger picture. Competitive landscape, and you guys seemed like you're talking about a lot of opportunity with bringing folks onto the platform. Maybe if you can just touch on the just a current update of what you see in the market. Obviously, we've seen the Rabo-Mechanics deal and maybe too early to see if there's any potential [of] their customers or the personnel? Any thoughts, Russ, on the competitive landscape and your ability to attract additional talent?

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Russell A. Colombo, Bank of Marin Bancorp - President, CEO & Director [6]

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I think every time you have mergers, which are on community bank [size much larger bank] , it creates opportunities, because people work for community banks for a reason. And when a bank is acquired by a much larger bank, it often creates opportunity for us to acquire talent. And that certainly was the case with some of our people that we've acquired. That being said, it's still very, very competitive for people in the market. It's just tough. And we compete. We're competing for people -- when we're talking about Marin or Sonoma or East Bay, we're competing for people that typically are working in San Francisco. And that's a very competitive market, not only for bankers, but to all employees because of technology and otherwise. So I don't think it's going to change, but it does. There are certain opportunities that do present themselves when you see much larger banks acquiring community banks. So we're certainly on that and focused on those people when that happens.

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Operator [7]

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Our next question comes from the line of Jackie Bohlen, KBW.

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Jacquelynne Chimera Bohlen, Keefe, Bruyette, & Woods, Inc., Research Division - MD, Equity Research [8]

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I just wanted to touch on expenses, again. And thank you for all that background, that was very helpful in knowing what you expect in addition to what would be considered normal seasonality and 1Q with the retirement eligible and everything. But touching on that, Tani, you had mentioned, you had to anticipate roughly one (technical difficulty) first quarter of each year. How do you think about the potential decrease that might occur in 2Q? Is this 401(k) expenses and either eligibility and payroll taxes [write] down?

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Tani Girton, Bank of Marin - Executive VP & CFO [9]

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So payroll taxes is not nearly as significant as the 401(k). The 401(k) kind of tapers down over the course of the year because as people hit their caps in terms of the company matching and that sort of tapers off. But I think the difference between Q1 and Q4 is a good indicator of what that differential is, and that was about $339,000.

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Jacquelynne Chimera Bohlen, Keefe, Bruyette, & Woods, Inc., Research Division - MD, Equity Research [10]

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Okay. So even with some of the new hires and understanding that there will be some added expenses from the LPO in the second quarter, you could see the compensation line turn down in 2Q and then maybe taper just slightly as we go through the rest of the year. Is that fair? Outside of any potential new hires?

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Tani Girton, Bank of Marin - Executive VP & CFO [11]

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Yes. I think when I said that $339,000, that would be over the course of the year. So by the time you've got to December of 2019, it would be down probably something similar to that.

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Russell A. Colombo, Bank of Marin Bancorp - President, CEO & Director [12]

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But a big portion of the expense on the 401(k) line is first quarter because when people get bonuses, the 401(k) is taken off and maxes out on many employees, but you do have a decline there, but some employees it continues to go for the rest of the year. And the stock-based compensation, which is retirement benefit, is not going to show up after -- it's once a year because we give equity first quarter. So that's when you hit. So I think you'll probably see those -- both of those have pretty big impact on the numbers for the first quarter.

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Jacquelynne Chimera Bohlen, Keefe, Bruyette, & Woods, Inc., Research Division - MD, Equity Research [13]

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Okay. And then if you might just provide an update on where you stand? I know that when we spoke last quarter, there were dual systems that were running, and I think that plan was that you'll be down to a single -- down later in the year. Can you just provide an update on that?

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Tani Girton, Bank of Marin - Executive VP & CFO [14]

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Yes. So right now we are in parallel with Q2 and FIS. However, the parallel big jump in expenses that we expected from the parallel processing are not in the Q1 expenses yet. So we will expect a jump in the second quarter likely to -- that will reflect the time period that we're running on both systems. And then after we cut over to the new system and turn off, the FIS digital platform, that form will see a reduction expense. So more to come in the next couple of quarters on that. But it's not in there right now, the parallel processing cost.

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Jacquelynne Chimera Bohlen, Keefe, Bruyette, & Woods, Inc., Research Division - MD, Equity Research [15]

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Okay. And do you have any preliminary estimations of what it would cost to run those systems in parallel?

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Tani Girton, Bank of Marin - Executive VP & CFO [16]

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I think we figured that it was roughly $30,000 to $40,000 in incremental expense when we have both on at the same time.

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Jacquelynne Chimera Bohlen, Keefe, Bruyette, & Woods, Inc., Research Division - MD, Equity Research [17]

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Okay. And is that quarterly or monthly?

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Tani Girton, Bank of Marin - Executive VP & CFO [18]

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I think that was quarterly, though. Let me get back to you on that, Jackie.

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Operator [19]

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Our next question comes from the line of Tim O'Brien, Sandler O'Neill and Partners.

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Timothy O'Brien, Sandler O'Neill + Partners, L.P., Research Division - MD of Equity Research [20]

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Good morning, Tani and Russ. Tani, when you send Jackie that info, could you send it to us all, just so that we have it, the quarterly versus monthly...

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Tani Girton, Bank of Marin - Executive VP & CFO [21]

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Yes, I will.

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Timothy O'Brien, Sandler O'Neill + Partners, L.P., Research Division - MD of Equity Research [22]

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That will be helpful, awesome. And then another follow on is the adjustment fee, could you run just through the BOLI income line item, the net $60,000 negative mark this quarter and the accounting that went into that, color behind that accounting? And is it -- does that signify that BOLI assets perhaps increased this quarter, and we could see higher income generated out of that line going forward?

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Tani Girton, Bank of Marin - Executive VP & CFO [23]

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Yes. So the policies that we put on this time were of a different structure than we usually put on. These are whole life policies, where we normally put on universal policies. So one of the key differences between those 2 kinds of policies is that, with the ones that we put on this time, the administrative expenses are taken upfront and rather than spread across the life of the policy. So what that means is that we'll have a big expense -- chunk of expenses upfront. And then over time, over the life of these policies, they should actually produce more income, not only additional income [because] we have in the policies, but also because we're not netting the expenses out of that income over time. So the total amount of the policies that were added was about $1.9 million, and so -- and then the expense associated with underwriting was $283,000. So if you take out that $283,000, you'll see what the BOLI income would have been without those expenses and we can expect that to go up over time because of new policies.

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Timothy O'Brien, Sandler O'Neill + Partners, L.P., Research Division - MD of Equity Research [24]

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Great. That's helpful. And just the base of BOLI-related assets at year-end, do you happen to have that number handy? I know it's probably in the K somewhere, but...

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Tani Girton, Bank of Marin - Executive VP & CFO [25]

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Let me pull that number, and I'll come back to this question in just a minute.

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Timothy O'Brien, Sandler O'Neill + Partners, L.P., Research Division - MD of Equity Research [26]

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Thanks, Tani. I want to throw another one at you, too, actually though. On other income, that was down a bit in the quarter, just on a sequential quarter basis $469,000 last quarter, $257,000 this quarter. What -- do you have any color on what that difference resulted from?

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Tani Girton, Bank of Marin - Executive VP & CFO [27]

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Yes. So when we have excess deposits, we sell them to deposit networks, and we earn fee income for selling those. And we just had a lower level of those kinds of sales quarter-over-quarter.

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Timothy O'Brien, Sandler O'Neill + Partners, L.P., Research Division - MD of Equity Research [28]

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Great. And then regarding the LPO. Do you have to happen to know what the monthly rent that kicks in here on April 1st, what that's going to be, your quarterly rent or something from that? And then also how many staff did you add, and it sounds like they're coming on here in the -- at the start of the second quarter?

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Russell A. Colombo, Bank of Marin Bancorp - President, CEO & Director [29]

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We've hired 2 people thus far. We're able to market for a third. The space, I think, is about 2,700 square feet. Frankly, I don't remember what the rental per foot is in Walnut Creek, but it's class A space though, but I -- we're going to have to get back to you on that one, Tim. Wim-Kees van Hout, and we tried one other person, we've got another one that will -- we've been trying to get, but nothing reported yet. We're still working on that. Else, we'll have 3 people in. We'll be adding maybe professionally a fourth too.

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Timothy O'Brien, Sandler O'Neill + Partners, L.P., Research Division - MD of Equity Research [30]

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And Russ, I'd love to chat with you for a minute offline about East Bay stuff when you have a chance to just briefly, but we can do it later, it's not time-sensitive at all. And then last question is, Rob Holden joined the Bank of Marin to lead the San Francisco team. When did he join? And is his...

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Russell A. Colombo, Bank of Marin Bancorp - President, CEO & Director [31]

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April 1.

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Timothy O'Brien, Sandler O'Neill + Partners, L.P., Research Division - MD of Equity Research [32]

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Is the payroll associated -- April 1, so that's going to be an additional for...

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Russell A. Colombo, Bank of Marin Bancorp - President, CEO & Director [33]

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Right, right. One on -- in Walnut Creek what I forgot about, there is actually a BDO that we have hired in addition to the 2 that are there. We have a business development officer who is working on a commission basis, and we'll be calling in that market. So ultimately, we'll have 4, because we'll have an RM. We have, what we call, portfolio manager and then the engagement manager. So ultimately with full staff, it will be 4 people, 1 commission based and -- in that 2,700 square-foot location in Walnut Creek.

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Operator [34]

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Next question comes from the line of Matthew Clark, Piper Jaffray.

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Matthew Timothy Clark, Piper Jaffray Companies, Research Division - Principal & Senior Research Analyst [35]

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First one for me just on loan pricing, given what the curve has done, if you can kind of speak to rates on new production? And I guess, what I'm trying to get at is, it looks like you still have some room to run in the margin. And I'm just trying to get a sense for what the incremental spreads are in new business?

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Russell A. Colombo, Bank of Marin Bancorp - President, CEO & Director [36]

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Yes. We -- the spread targets are pretty similar. We look for the same kind of spread over cost plus the numbers are up a little bit. I think I was looking at the quarter-over-quarter and it is about 50 basis points. That were actual loans yields were versus new production versus old versus the portfolio. So you're starting with -- you'll see a little bit of improvement in that, in the yields. That being said, it continued to be very, very competitive, and I don't think that's necessarily a big trend where it's been heavy [even farther up]. I think we're sitting at the same -- pretty much the same target that we've had historically.

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Matthew Timothy Clark, Piper Jaffray Companies, Research Division - Principal & Senior Research Analyst [37]

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Okay. And then just on loan -- sorry, deposit pricing. The pace of increase is fairly consistent from last quarter. Can you speak to the pricing pressure there, with the Fed on hold? Does that maybe suggest that things might start to stabilize here? Or do you think we're just going to continue to see some upward pressure for some period of time?

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Russell A. Colombo, Bank of Marin Bancorp - President, CEO & Director [38]

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Yes. I think actually -- our cost of deposit is 18 basis points, and I think we're up a little bit certainly because of pressure. But I think that's going to stabilize. I don't -- while we have been proactive with our big depositors to go out and make sure that we are pricing appropriately so we don't miss -- moving some of that money elsewhere. We've been proactive, but less than the market to a certain extent. I mean, we're being very selective about where we're going out to big depositors to make sure we're there, they're being treated properly and getting proper returns. But I don't -- it seems like that activity has stabilized a bit. And I think the Fed action and the Fed -- lack of action over the -- probably over this year is going to keep our pricing on the deposit side pretty consistent from now through the end of the year. These are my opinion. I don't -- that obviously can change, but that's where I think we are right now.

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Matthew Timothy Clark, Piper Jaffray Companies, Research Division - Principal & Senior Research Analyst [39]

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Okay. And then can you speak to the tenant in common business? How that portfolio and pipeline is trending of late and competitive pressure there, too?

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Russell A. Colombo, Bank of Marin Bancorp - President, CEO & Director [40]

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Yes. The portfolio is very strong, and we've had -- I think, I have said this before in calls, we've had -- over our 14 years of experience, I think, we've had 1 this fall, which got rewritten and stayed as agreed. It continues that way. The San Francisco residential market is so tight that the TICs have done exceptionally well. We still -- there's only couple of other competitors in the market, and it's interesting -- if we want more volume, we drop the rates like a quarter and we get more volumes, and we've done some of that. And so we've gotten good volume out of TICs historically. I don't know the exact number for the year, but it's been real good and performed exceptionally well. So that's a very solid business line for us.

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Matthew Timothy Clark, Piper Jaffray Companies, Research Division - Principal & Senior Research Analyst [41]

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Great. And then just on the tax rate, Tani, been kind of hovering around 26%. Is that the right rate to use going forward?

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Tani Girton, Bank of Marin - Executive VP & CFO [42]

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Yes. I think so. We had a little bit of increase because of the lower BOLI expense, so that will probably come back. But in general, it is indicative of where we're headed and reflects sort of changes and the permanent differences. Obviously, as the income -- if the income fluctuates significantly, then the permanent differences become smaller percentage and the tax rate does go up, the effective tax rate does go up.

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Russell A. Colombo, Bank of Marin Bancorp - President, CEO & Director [43]

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Matthew, one -- there's one thing I will add on the space is that in the first quarter we had over $7 million of volume in TICs. Last year in the first quarter, that number was over $5 million. So we've had -- continue to get good volume out of that market. And again, as I said, it's been -- credit quality has been pretty darn perfect. Are you still out there? Hello?

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Operator [44]

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(Operator Instructions) We have no further questions on the phone line.

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Tani Girton, Bank of Marin - Executive VP & CFO [45]

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If I could add just one more, Tim, I said I'll get back to you on the cash to [render] at the bank on life insurance. That was, in 2018, $39 million. So that will go up for the new purchases. So that's where it was sitting at the end of last year.

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Russell A. Colombo, Bank of Marin Bancorp - President, CEO & Director [46]

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Okay. If there are no other questions, I want to thank you all for joining us this morning, and we look forward to talking with you, again, next quarter. Thank you.

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Tani Girton, Bank of Marin - Executive VP & CFO [47]

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Thank you.