Earnings Call Transcript - BMRC Q1 2021

Andrea Henderson, Director of Marketing

Good morning, and thank you for joining Bank of Marin Bancorp’s Earnings Call for the First Quarter and Year Ended March 31, 2021. I am Andrea Henderson, Director of Marketing for Bank of Marin. Operator instructions were provided. This conference call is being recorded on April 19, 2021. Joining us on the call today are Russ Colombo, President and CEO; Tani Girton, Executive Vice President and Chief Financial Officer; Tim Myers, Executive Vice President and Chief Operating Officer; and Beth Reizman, Executive Vice President, Chief Credit Officer. Our earnings press release, along with the merger announcement press release and investor presentation, which we issued this morning can be found on our investor relations page at bankofmarin.com, where 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, Monday, April 19, 2021, 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 and merger announcement presentation, as well as our SEC filings. Following our prepared remarks, Russ, Tani, Tim and Beth will be available to answer your questions. And now, I’d like to turn the call over to Russ Colombo.

Russ Colombo, President and CEO

Thanks, Andrea. Good morning. I'd like to begin the call by sharing the exciting news we announced in the press release this morning as Bank of Marin is acquiring American River Bank. This combination will be a great fit for us in many ways. It brings together two exceptional institutions that share complementary values and disciplined fundamentals, which allowed us to expand our franchise while delivering the same legendary service on a regional scale. After I discuss first quarter results, Tim, Tani and I will walk through the details of the deal; there was a brief technical difficulty earlier. Bank of Marin opened ’21 on solid footing, generating first quarter results that included strong credit quality and net income that exceeded results from the prior quarter and the first quarter of 2020. Net income was $8.9 million with diluted earnings per share of $0.66. Given the improved economic forecast, our model indicated that we were over-reserved. So during the quarter, we made the decision to reverse provisions for credit losses on loans and unfunded loan commitments. We reversed $2.9 million in the allowance for credit losses on loans and $590,000 of allowance for credit losses on unfunded loan commitments. As I noted, our credit quality remains strong. Non-accrual loans totaled $9.2 million or 0.43% of the loan portfolio and classified loans increased slightly from the previous quarter to $26.4 million. While we continue to accommodate payment relief requests, the portion of the loan portfolio requiring assistance has declined to 11 relationships comprising 17 loans totaling $59 million as of April 15. We grew our loan portfolio modestly from the prior quarter and 15% from a year ago to a total of $2.1 billion at March 31. This growth reflected our ongoing focus on new loan origination, as well as our continued participation in the SBA’s Paycheck Protection Program. During the quarter, we funded $25 million in new PPP loans, primarily in the Marin and Napa markets. In addition, we have accepted over 1,200 applications for new PPP loans totaling $139 million with $127 million funded as of April 15. The forgiveness portion of the program is accelerating. Of the $177 million in loan forgiveness requests by our original PPP borrowers, 81% of those applications totaling $130 million have been submitted to the SBA with $91 million forgiven and no applications denied. Total deposits grew $152 million to $2.7 billion with noninterest bearing deposits comprising 54% of total deposits and the average cost of deposits at just 7 basis points. Our total risk-based capital ratio of 15.7% at March 31 was well above 'well-capitalized' regulatory requirements. Our balance sheet is strong and stands to benefit from any increases in interest rates. During the quarter, we took advantage of market opportunities to invest excess cash and reduce high-cost debt. As advised on our last earnings call, we redeemed a $2.8 million subordinated debenture on March 15, 2021, which resulted in accelerated discount accretion of $1.3 million. This redemption reduced tax-equivalent net interest margin by 18 basis points for the quarter. It was also the primary driver of our increased efficiency ratio, which would have otherwise been 58.92%. Finally, due to our continued profitability, our Board of Directors declared a cash dividend of $0.23 per share on April 16, 2021. This represents the 64th consecutive quarterly dividend paid by Bank of Marin Bancorp. You will find more detail on our first quarter performance in our earnings press release. In summary, our strong credit quality, the strength of our relationship banking business model and the resiliency of our customer base position the bank for success as the economic outlook improves for the markets we serve. Now let's talk about the deal. With this merger, Bank of Marin becomes a $4 billion bank, well positioned to emerge as the preeminent business bank serving Northern California. The combined company will be one of the largest California-based community banks by market capitalization. Growing in size and scale across the Greater Bay Area and Sacramento region will allow us to increase efficiency, manage costs and help offset the challenges brought on by a low interest rate environment across two highly attractive markets. Bank of Marin and American River Bank have very similar disciplined credit and risk management culture as well as loan and deposit strategy, which allows for a seamless integration of business model. These two organizations share a commitment to exceptional customer service and dedication to our local communities that can be amplified on a regional scale. In the merger, each share of American River Bank common stock will be exchanged for 0.575 of one share of Bank of Marin Bancorp. The deal generates 14% accretion to 2022 earnings on a fully phased-in basis and over 15% internal rate of return. The earn-back period on 4% tangible book value dilution is 3.5 years. Tangible common equity at closing is projected to be 10.8%. All regulatory capital ratios, including total risk-based capital of 17.3% will be well above well-capitalized levels. Bank of Marin Bancorp will invite two American River directors to join both the bank and holding company boards. Now let me turn it over to Tim to give you a snapshot of American River Bank in the Greater Sacramento market.

Tim Myers, Executive Vice President and Chief Operating Officer

Thank you, Russ. Slide 4 gives an overview of American River Bank. Founded in 1983 and headquartered in Rancho Cordova, California, they have 10 full-service branches providing business banking services in Sacramento, Amador, Sonoma and Placer County. Like Bank of Marin, American River is focused on building relationships and maintaining strong credit discipline. In addition to deep expertise in commercial real estate, they also lend to small businesses, wholesalers and manufacturers, professionals and property managers. Their loan portfolio is an excellent complement to our own. Importantly, also like Bank of Marin, American River's credit quality and capital ratios are strong. Their like-minded focus on disciplined management, relationship banking and community commitment was very appealing to us. Slide 5 gives you some regional highlights. Projected population and household income growth expectations by 2026 are exceeding national estimates, providing long-term economic benefits to the Greater Sacramento region. In the last year, the region has been ranked a top migration destination for people looking to relocate, driven in part by newly remote workers seeking a more affordable lifestyle while still accessible to everything Northern California has to offer. There is ample existing office space throughout the region as well as new development activity in Sacramento's Downtown and Midtown areas. There has been more than $6 billion invested in new projects since the opening of the Golden 1 Center, the home of the Sacramento Kings in 2016. Finally, with universities such as UC Davis, Sacramento State and the University of the Pacific nearby, the region is an increasingly attractive market for companies seeking educated young professionals. Slide 6 profiles the combined bank branch network, markets of operations and most recent financial highlights. I will now turn the call over to Tani to share the financial aspects of the transaction in greater detail.

Tani Girton, Executive Vice President and Chief Financial Officer

Thanks, Tim, and good morning. In modeling Bank of Marin and American River Bank’s future earnings, we use consensus analysts' assessments for the remainder of 2021 and 2022 and apply a growth rate of 5% thereafter. Savings on American River expenses are expected to be 35% or roughly $6.1 million phased in over a six-month period. Estimated transaction expenses amount to $9.5 million after tax or about 7.1% of aggregate deal value, and we valued the core deposit intangible at 50 basis points. Slide 7 provides details of fair market value adjustments, which I will summarize by saying that we believe American River's allowance for credit losses on loans is a good indicator of both the credit components of market valuation and the effective allowances for credit losses under the CECL framework. In addition, we applied a positive interest rate mark of $5.2 million on loans, a $1.5 million reduction to accumulated other comprehensive income and a $1.3 million write-up on the owned property in Healdsburg. These marks are amortized, accreted and depreciated through earnings going forward. Turning to Slide 8. You can see the fixed exchange ratio of 0.575 shares of BMRC stock issued for each AMRB common share outstanding, which results in pro forma ownership of approximately 20% for American River shareholders. Assuming 100% stock consideration with vested options to be cashed out at closing, this translates to a transaction value of $134.5 million as of April 16th, when BMRC shares closed at $39.60. That represents $22.46 per share of AMRB stock. Key pricing multiples are 1.75 times tangible book value, 17 times consensus 2022 earnings and a core deposit premium of 7.9%. Prior to signing the merger agreement, we completed due diligence, including an extensive review of American River's loan portfolio and compliance. We anticipate a closing date in the third quarter of this year. We very much look forward to merging our two companies, not only because the combination presents such attractive returns at 14% earnings accretion and an internal rate of return over 15% but also because our institutions are so well aligned. This partnership will allow us to build on the excellent franchise that American River has established in the Greater Sacramento and Amador markets. And now to wrap up our prepared remarks, I'll turn the call back over to Russ.

Russ Colombo, President and CEO

Thank you, Tani. I'd again like to reiterate how excited we are to team up with American River Bank. It's a great strategic fit for all of us for the reasons that we have discussed today, and we want to welcome American River Bank clients and employees to Bank of Marin. Strategic acquisitions have always been part of our growth plan. The bank now has an opportunity to grow assets, acquire talent, expand our footprint and build infrastructure across a diversified geography. Greater scale will increase efficiencies and spread our costs over a larger base. As you know, Bank of Marin has experience with acquisitions. We have successfully integrated multiple banks, and we will draw on that experience and expertise to execute a seamless integration process with the American River team. Now in our 31st year, we have built one of the industry's best banking franchises and established a culture of consistency. We remain dedicated to delivering exceptional customer service and creating shareholder value. I am proud of the disciplined approach that has propelled Bank of Marin to continued growth and new opportunities. We are certainly looking forward to more success in the year ahead. The future is bright. Thank you for your time this morning. And now we will open it up to your questions.

Operator, Operator

Operator: The conference call will now be open for questions. Our first question comes from Jeff Rulis with D.A. Davidson.

Jeff Rulis, Analyst, D.A. Davidson

I had a couple of questions on the margin. One is just the legacy. So Tani, do you have a core margin, I appreciate the impact on the sub debt, but I guess also exclusive of PPP, do you have a sequential number on the core margin linked quarter?

Tani Girton, Executive Vice President and Chief Financial Officer

So as it turns out the Q1 margin was only affected by 1 basis point from PPP because we had some significant amount of forgiveness in the first quarter. So by accelerating some of the outstanding fees on the PPP that brought the PPP contribution in line with what we were getting from the other interest-earning assets.

Jeff Rulis, Analyst, D.A. Davidson

And I don't know what the net impact was in Q4. I guess I could go back and check, but was that material?

Tani Girton, Executive Vice President and Chief Financial Officer

Q4 was impacted by 13 basis points from PPP and that's because we didn't have the forgiveness that we had this quarter.

Jeff Rulis, Analyst, D.A. Davidson

And I guess, regarding margin and the deal, I wanted to ask: American River carries a slightly higher margin. As you combine the two banks, how should we think about the funding side of that bank — could the funding actions net to a positive contribution to overall margin? And with the subordinated debt impact going forward, do you have any ballpark estimate of where core margin will settle?

Tani Girton, Executive Vice President and Chief Financial Officer

Yes. I hesitate to give a number, but I think you hit the two drivers on the head that the margin is going to improve because of the sub debt redemption but we do have some tailwinds from the yields on the AMRB portfolio.

Russ Colombo, President and CEO

We look at the portfolio quite extensively and, interestingly enough, it mirrors our portfolio quite significantly. I'd say, in many cases, actually their yields are a little higher than ours. And so that's going to have a positive impact as we go forward. I think on the funding side, the loan-to-deposit ratio is a bit lower than ours. So a lot of excess liquidity. And that's an opportunity maybe for a total reduction in their costs in terms of the deposit side because they're a little bit higher than us, not tremendously, but a little bit higher than us. So as I look forward, I'd say, well, it's going to improve our margins a little bit and we can bring down their funding costs a bit, so all positive.

Jeff Rulis, Analyst, D.A. Davidson

My other question is about the 35% cost savings. That's a considerable number and, as you said, may reflect the similarities and cultural alignment between the companies, so there is comfort there. I didn't hear an expectation of branch consolidation. Will the majority of those cost savings come from branch consolidation, or will the bulk come from reductions in senior management costs? Where do you expect the expenses to be reduced?

Russ Colombo, President and CEO

Well, Jeff, we do have two overlaps. They have a branch in Santa Rosa as do we and we have a branch in Healdsburg, as do they. So there's going to be cost savings from that because of those two offices. And the 35% we worked those numbers pretty hard and we really took a hard look at all employees and job responsibilities and people, and we're very confident about that number. Let's just put it that way, very confident.

Jeff Rulis, Analyst, D.A. Davidson

So it will be the branch savings and then this back office cleanup, but again. Okay. All right, I’ll step back.

Russ Colombo, President and CEO

You know the administrative side is going to be cost savings.

Operator, Operator

Our next question comes from David Feaster with Raymond James.

David Feaster, Analyst, Raymond James

I just wanted to start on the growth front. Could you just talk about how the pipeline is trending as we're heading into the second quarter, kind of how your conversations with clients are going and just whether you're still expecting a resurgence in growth in the back half of the year as we start hopefully getting some drawdowns on C&I and just any commentary on the growth front? And then whether there's anything in American River that you're expecting maybe that you need to run off or just any color there would be helpful.

Russ Colombo, President and CEO

I'm going to turn this over to Tim, but I will start by just saying that we don't really look at anything for runoff on their portfolio. Like I said, we looked at it and liked what we saw. So we're not anticipating trying to drive any business out of the bank. It's all good from our perspective. So with that, I'll let Tim talk about pipelines and about growth expectations as we go forward.

Tim Myers, Executive Vice President and Chief Operating Officer

The pipeline is definitely improving and we're seeing an improvement in attitude or outlook for the year, but I would say that's all still very muted by reality, meaning I think, we sense the optimism but the loan demand is still relatively weak. And so we're out calling to the extent we can virtually where necessary and we're seeing more requests. But quarter-over-quarter just like commitments we're still down about $8 million on utilization, that was a contributing factor to our non-PPP loan declines in the quarter. And we still get a fair good amount of payoffs due to people having excess cash, and we still see a deleveraging attitude going on. So while we're getting more optimistic conversations, the pipeline is getting bigger. The time that it takes to do that is still pretty protracted. So we are more optimistic. But I can't tell you the timing within the year of when that's all going to come together.

David Feaster, Analyst, Raymond James

And then maybe just could you talk on the Sonoma market. The deal really accelerates your growth there. You guys were expanding there yourselves. Just curious, your plans for that market change, what you're seeing there and just overall thoughts on Sonoma.

Tim Myers, Executive Vice President and Chief Operating Officer

We know their lending team there; they're well respected. Last year we transitioned a new manager into that group on our side with a strong focus on the wine industry, and we're excited about the traction they're getting. We're enthusiastic about combining their team with ours. Those folks have been in the market a long time, so we can benefit from their expertise and contacts. We're optimistic that this combination will help us grow in Santa Rosa and Sonoma County overall, especially in northern Sonoma County, and the overlap with our Healdsburg branch will support that wine industry focus. We expect all of this to come together and drive growth for us down the road.

Russ Colombo, President and CEO

And I would just add, in discussions with Dave Ritchie, American River’s CEO, he was really excited about the growth opportunities that they're seeing in Sonoma County. He talked about that as much as he did Sacramento. I mean they're seeing a really strong pipeline. So that's all good from our perspective. So not only Sacramento but seeing Sonoma growth out of this deal, too.

David Feaster, Analyst, Raymond James

Yes, I agree. I think that's pretty exciting. And then just maybe a bit higher level. I guess, as you become a larger bank, both of your fee income contributions are in that mid to high single digits, around 7%. Just curious your thoughts on additional fee income opportunities. I know you talked about bringing on some of the waived fees, but are there any other fee income lines or cross-sell opportunities to maybe get that fee income contribution a bit higher as you become a larger institution?

Russ Colombo, President and CEO

First of all, we basically waived—we had fee waivers that started back in April of 2020, and we just took them off in the last month or so. And so you're going to see a resurgence of fees, which you hadn't seen during the last year: overdraft fees, ATM fees, things like that, early CD withdrawal penalties. So we waived every one of those fees during the last year. So that had a pretty negative impact in terms of our fee income, that will improve. I think as you become a regional bank, we will have opportunities too from the standpoint of other fee income, whether it’d be potentially expanding our wealth management offerings into Sacramento, just the scale brings opportunities and being in that market. And what I'm excited about in that market is that there has been over the last year and maybe the pandemic has accelerated, there's been a surge of growth in the market, which has come from the Bay Area. It's much more affordable. For those of you who aren't necessarily as familiar with the geography, it's kind of halfway between the Bay Area and Lake Tahoe. And so the opportunities for recreation are abundant and at a lower cost and for housing, and business growth is picking up. So I think it's a great place to be because we just look at it from the standpoint of younger adults moving to that market, which gives you all kinds of opportunities in the future to grow not only the bank but fee income and lots of different opportunities. So we're excited about that.

Operator, Operator

Our next question comes from Bob Shone with Piper Sandler.

Unidentified Analyst (Bob Shone), Analyst, Piper Sandler

Maybe we could start with potential for M&A. Obviously the integration is foremost right now, but knowing strategic M&A is part of the company's growth strategy, what's the bank's willingness to consider M&A once the integration is complete? And if so, is further penetration of the Sacramento market where you want to be, or are there other markets you would consider?

Russ Colombo, President and CEO

It certainly opens up the valley to us. If there are other opportunities in Sacramento, we're going to be open to them, whether in Sacramento or slightly north or south of it. Once you enter a market, you want to grow and find opportunities to expand the bank, so we're open to additional opportunities. We haven't fully integrated this one yet. It's exciting to be there because in the past we've been focused strictly on the Bay Area, and there are many opportunities in the Sacramento Valley and San Joaquin Valley that will open up to us now that we're there.

Unidentified Analyst (Bob Shone), Analyst, Piper Sandler

And then maybe turning to the legacy bank. In terms of the reserve, given the improvement in economic forecast, if we get kind of towards pre-pandemic levels. Do you kind of have an estimation on how much lower the reserve percentage can go excluding PPP considering if credit metrics remain stable?

Russ Colombo, President and CEO

So let me ask our Chief Credit Officer, who's sitting here, Beth Reizman, to answer that question for you.

Beth Reizman, Executive Vice President and Chief Credit Officer

We adopted CECL, which is based on forecast; primarily we're affected by the California unemployment rate. So as the economy continues to improve, we'd assume that our reserves would also diminish. However, I can't really give an estimate, I don't think that would be appropriate at this point in time.

Unidentified Analyst (Bob Shone), Analyst, Piper Sandler

And then maybe last one from me. Looking at expenses outside of the reversal for funding commitments, was there anything more one-time in nature in that number this quarter? I'm just trying to get a sense of kind of a good run rate going forward.

Tani Girton, Executive Vice President and Chief Financial Officer

Yes, not too much. I mean we have sort of the normal seasonal stuff associated with the 401(k) matching that gets bumped up in the first quarter because of the payment of bonuses and then also the acceleration of stock vestings when people get closer to their retirement eligibility. And then a few items in the first quarter that were delayed from 2020 because of the pandemic, a few audits and that sort of thing, but not significant.

Operator, Operator

Our next question comes from Jackie Bohlen with KBW.

Jackie Bohlen, Analyst, KBW

Just wanted to start off with a strategy question, Russ. This deal makes perfect sense in terms of the expansion, especially with what's going on with the Bay Area. Just the movement of some people from there to Sacramento, I know that's been highly written about in local newspapers. Just wondering, number one, if this deal is something that you would have considered, call it, a year and a half ago before we had a lot of trends change with the pandemic? And number two, how, if at all, it hits the overall strategy when you think about Bank of Marin and just growth in operations and everything else?

Russ Colombo, President and CEO

First, a year and a half ago we had always said we were most interested in opportunities in the Bay Area, and that was our focus. As those opportunities began to diminish, Sacramento was always on our mind, but something in-market became more front and center. It became clear Sacramento was a place we should consider because of what you just said: the growth opportunities and the migration from the Bay Area to Sacramento. It's not far — literally about an hour and a half drive from our offices. Strategically, it makes perfect sense and it opens up the valley to us because we're there. We acquire people who know the market, which matters: you can open an office in the Sacramento Valley without the expertise, but buying a bank with really good people is different. I've been very impressed with the people we met, not just those we met during due diligence but also from the write-ups I reviewed. They were very strong and did a very good job. We're impressed with the underwriting and the market knowledge, and that makes a huge difference. It was an exciting opportunity, which is why we're here.

Jackie Bohlen, Analyst, KBW

And it sounds like, based on conversations on the call and one of your comments too, this can be a good growth move, although I know there are still a lot of moving parts right now and demand is a little weaker given the environment. But it sounds like, all else equal, the growth outlook has probably improved from this transaction when we're looking in 2022. Is that fair?

Russ Colombo, President and CEO

I think that's fair. Clearly, when we make an acquisition, we want to not only acquire that bank, but once we integrate it, grow it. We're entering a new market, which we haven't been in. This bank, when added to ours, dramatically increases our capacity to lend in Sacramento. I think there will be opportunities even with the existing customer base to grow those relationships. As we talk to them about size, the size of transaction we're willing to do and what they're willing to do are different. We're a bit smaller because of capital requirements and things of that nature. So this will be a great opportunity for us not only to build new relationships but to grow existing ones.

Jackie Bohlen, Analyst, KBW

And then just in terms of the buyback, you had some activity in the quarter. How are you thinking about that in light of the deal announcement over the next couple of quarters?

Tani Girton, Executive Vice President and Chief Financial Officer

Well, we still have plenty of capital. As you can see, even after the acquisition we have an abundance of capital. We haven't made any pronouncements or decisions about changing our share repurchase program at this point.

Jackie Bohlen, Analyst, KBW

And just one last one for me. In terms of the securities yields in the quarter, I have in my notes that last quarter you benefited a bit from some prepayment penalties. And I'm just wondering if that was a contributor to the quarter's compression or if that was pretty muted last quarter and not a big impact?

Tani Girton, Executive Vice President and Chief Financial Officer

No, that actually did contribute to the compression, yes.

Jackie Bohlen, Analyst, KBW

Do you have a ballpark for about how much?

Tani Girton, Executive Vice President and Chief Financial Officer

I do, but not at my fingertip. So I'll come back to you on that one.

Operator, Operator

Our next question comes from Tim Coffey with Janney Montgomery Scott.

Tim Coffey, Analyst, Janney Montgomery Scott

I had a question on your results for the quarter to start with, and looking at the PPP loans that you originated during the quarter. Do you have a percentage of those loans that came from existing clients?

Russ Colombo, President and CEO

I don't have that in front of me, but it's almost the entirety of that. We've done pretty low volume in both rounds of non-customer loans. There’s always a decision that we would take care of our clients first; it's really important that we did that. I mean, we did bring in some in the first rounds. I think there were about 250 non-customers of the bank, but they were only done after we took care of the existing clients because we thought that was really important to do that first. The vast majority were existing clients.

Tim Myers, Executive Vice President and Chief Operating Officer

It's actually higher towards existing customers.

Tim Coffey, Analyst, Janney Montgomery Scott

And then a couple of questions on the deal. So Russ, improving the combined loan-to-deposit ratio. Is that going to be a quick fix or do you think that's going to take time?

Russ Colombo, President and CEO

It will certainly take time because I think we're running close to 80%, they're much lower than that in the 60s. And so that will certainly take time to improve. I think we're hopeful that as we come out of this pandemic, loan demand will start to pick up and I think that will help. And also, I think as I was talking to you previously, the fact that we can go to existing clients now of American River and expand relationships, there are things that they did where they had to participate which frankly, we would have done the whole transaction ourselves. We like the deal. We only did it because of their size. And so size in this respect will be really important for them and us as a combined organization to grow existing relationships. So that will be part of the improvement. And the other part will be just continuing to drive our commercial banking offering.

Tim Coffey, Analyst, Janney Montgomery Scott

And then what tax rate are you using on the merger accounting? Is it your own?

Tani Girton, Executive Vice President and Chief Financial Officer

29%.

Tim Coffey, Analyst, Janney Montgomery Scott

And then, Russ, not to get too far afield on this question, but do you feel like you're going to need to rebrand the company, because I can see reasons why you wouldn't, but I can also see reasons why you might consider it. What are your thoughts?

Russ Colombo, President and CEO

There are reasons why we wouldn’t and then there are reasons why we might. Certainly, we're getting a bit far afield from Marin, that was a discussion with the people at American River early on. While there will be a period of time where they're branded as American River Bank as a division of Bank of Marin, there wasn't a tremendous push back about the name. We felt that it would play just fine in Sacramento. Interestingly enough, they have branches in Sonoma County and American River doesn't run through Sonoma County. So it remains to be seen long term. But right now, our thought is to keep American River Bank as part of Bank of Marin during the integration. Ultimately, you don't get the efficiencies unless you're one name. We've been working really hard to build the Bank of Marin brand and franchise and thoughts are probably that we will keep Bank of Marin as the name of the organization.

Operator, Operator

It appears we have no more phone questions at this time.

Russ Colombo, President and CEO

Well, I just want to thank everyone for joining us on the call today. We're very excited about this acquisition and merger between ourselves and American River Bank. We think it's going to open up many new opportunities for the organization for growth and success. I thank you for your time and we look forward to talking to you again next quarter. Thank you.