On Friday, Keefe, Bruyette & Woods adjusted its outlook on Bank of Marin Bancorp (NASDAQ:BMRC), lowering the price target to $21 from $25, while maintaining an Outperform rating on the stock. The revision follows the company's first-quarter results for 2024, which fell short of both Keefe, Bruyette & Woods' and consensus estimates, largely due to a decrease in net interest income (NII).
The bank's net interest margin (NIM) declined slightly by 3 basis points to 2.54%. However, Bank of Marin anticipates NIM will stabilize in the future, with potential for improvement if loan growth occurs. Despite a 4% quarter-over-quarter contraction in loans, the bank expressed optimism about its loan pipeline moving forward.
Bank of Marin experienced a modest increase in non-interest bearing deposits in the first quarter of 2024, a positive development according to the analyst. Additionally, nonperforming assets (NPAs) showed a decrease compared to the previous quarter, although classified loans rose to 2.67% of total loans. The bank has a history of being proactive with its risk ratings.
In light of these factors, Keefe, Bruyette & Woods revised its earnings estimates for Bank of Marin for the years 2024 and 2025 to $0.86 and $1.30, respectively. The adjustments reflect expectations of lower net interest income and marginally higher expenses. Despite the reduction in the price target and earnings estimates, the firm's rating for the stock remains Outperform.
InvestingPro Insights
Bank of Marin Bancorp (NASDAQ:BMRC) has demonstrated a commitment to its shareholders, as evidenced by its track record of raising dividends for 18 consecutive years and maintaining dividend payments for 21 consecutive years. These are notable InvestingPro Tips that highlight the bank's dedication to returning value to its investors. Additionally, the company's significant dividend yield of 6.58% stands out, particularly in an environment where income-generating investments are highly sought after.
From a valuation standpoint, BMRC's P/E ratio stands at 12.38, with a slightly adjusted P/E ratio of 12.59 for the last twelve months as of Q4 2023. Despite the recent downward revisions in earnings by analysts for the upcoming period, the bank's profitability over the last twelve months and predictions of profitability this year provide a measure of reassurance for investors. Moreover, Bank of Marin's price has experienced a notable decline over the past three months, which could present a buying opportunity for value investors, especially considering the InvestingPro Fair Value estimate of 18.7 USD.
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