バンク・オブ・マリン・バンコープ（BMRC）2026年第3四半期決算説明会：マージンと貸出成長が改善

バンク・オブ・マリン・バンコープ（NASDAQ: BMRC）が発表した2026年第3四半期決算は、貸出金利回りの上昇、預金コストの低下、融資の伸び、および規律ある費用管理が純利ざやの10ベーシスポイント拡大を後押しし、収益性が強化された。

主なポイント

• 純利益は前四半期の920万ドル（1株当たり0.58ドル）から990万ドル（1株当たり0.62ドル）に増加した。純利益は前年同期（2025年第3四半期）比で32％増加した。
• 純金利収入は3,140万ドルに達した。平均貸出金利回りは前四半期比で11ベーシスポイント上昇して5.23%となり、平均預金コストは4ベーシスポイント低下して1.24%となった。
• 新規融資実行額は合計1億200万ドルとなり、年初来の累計実行額は前年同期比21％増の2億8,100万ドルに達した。新規融資実行分の加重平均利回りは6.65％であった。
• 預金残高は2,530万ドル増加し、これには無利息預金残高の4,500万ドルの増加が含まれる。預金全体に占める無利息預金の割合は37.8％であった。
• 平均総資産利益率（ROA）は1.05%に改善し、平均有形株主資本利益率（ROTCE）は12.26%に達した。また、効率比率は58.65%に低下した。
• 与信指標は一様ではなかった。要注意先債権は3,600万ドル減少した一方、区分債権は自社利用目的の商業用不動産融資に関する特定の借り手側の問題により1,500万ドル増加した。

主要財務データ

事業および業績動向

四半期の新規融資約定額は約9,800万ドルから1億200万ドルに増加し、融資実行額も6,280万ドルから6,360万ドルに増加した。繰上返済額は7,100万ドルから3,160万ドルへと大幅に減少した。経営陣によると、問題債権の処理や建設プロジェクトの完了による圧力が数四半期続いた後、返済の動きは正常化しつつあるという。

当行は当四半期中に2,500万ドルの建設融資コミットメントを追加した。経営陣はこれらのコミットメントが今後の四半期にわたって資金実行されると予想しており、建設融資は同行の商業用不動産融資の中で最も利回りが高い部類に入ると指摘した。

また、バンク・オブ・マリンは過剰流動性を活用し、3,100万ドル規模のカリフォルニア州住宅ローン・プールを購入した。このプールの表面利率は約6.20%で、少額の購入プレミアム考慮後の実質利回りは約6%となる見込みである。25%の条件付期前償還率（CPR）の仮定に基づき、経営陣は平均回収期間を約3.3年と試算している。

預貸率は63%であり、市場調達に依存せず追加の融資に対応できる余力を同行に与えている。経営陣はまた、デュレーションの短い有価証券ポートフォリオからのキャッシュフローが融資成長を後押しすると見込んでいる。

コア手数料収入は力強さを見せた。非金利収入は50万1,000ドル増加した。これには7月1日付の料金改定に伴う法人預金手数料の25万1,000ドルの増加と、連邦ホームローン銀行（FHLB）株式の特別配当19万9,000ドルが含まれる。同社は、預金手数料以外にも新たな手数料収入獲得に向けた施策を検討中であると述べた。

非金利費用は、インセンティブ報酬の引き当て調整、前四半期に計上された特定の年次費用の解消、専門サービス費用の減少、およびFDIC（米連邦預金保険公社）保険料の正常化により、約100万ドル減少した。

取締役会は1株当たり0.25ドルの四半期現金配当を実施することを決定した。これにより、86四半期連続での配当実施となる。

経営陣の見通し・ガイダンス

経営陣は、2026年第4四半期の費用が第3四半期と同水準にとどまると予想している。店舗・不動産関連費用やITプロジェクトの増額が見込まれるものの、給与および福利厚生費の低減傾向は続く可能性がある。2027年のモデリングについて、経営陣は費用に季節性があることを注意喚起し、第4四半期の数字を年換算するのではなく、2026年の対応する四半期をベースとして使用することを推奨した。

資産負債管理（ALM）のバランスシート平準化予測に基づくと、同社は12か月後には月次貸出金利回りが約25ベーシスポイント上昇する可能性があると試算している。経営陣は、期待される融資の伸びがさらなる上振れ要因となり得ると述べたが、公式な純利ざや（NIM）目標値の提示は控えた。

第4四半期の融資パイプラインは、2025年第4四半期開始時と同等の水準と説明された。経営陣は案件の成立時期には依然として不確実性があることを強調した。建設融資の実行、固定・変動金利融資のリプライシング、およびより高利回りの新規融資が貸出金利回りを支えると期待されている。

経営陣は、前回の利上げサイクルにおける過去の総預金ベータが29％であり、同業他社の43％と比較して低水準であったことを挙げ、この関係性が変化する明確な理由はないと考えている。同行の預金残高に占める無利息預金の割合が37.8％であることは、引き続き資金調達コスト戦略の中核となっている。

リスクと注視点

市場金利の上昇により、当四半期中に累積その他の包括利益（AOCI）が2,480万ドル減少し、有形株主資本比率および1株当たり有形純資産が低下した。

借り手固有の問題に直面している自社利用目的の商業用不動産融資案件の格下げに伴い、区分債権が1,500万ドル増加した。経営陣は、当該借り手は返済を継続しており、強固な担保保全があるため損失は予想していないと述べた。貸出金に対する貸倒引当金比率は1.07％で据え置かれた。

同社は、主に融資残高の増加とコミットメントラインの拡大を反映し、貸出金に対する貸倒引当金繰入額50万ドルと未実行コミットメントに対する引当金繰入額32万5,000ドルを計上した。貸倒損失（純額）は極めて小幅にとどまった。

金利上昇に伴い、預金の価格競争は高止まりしている。経営陣は顧客からの要求が大幅に増加しているわけではないものの、大口の法人預金残高が四半期ごとの変動を生む可能性があると述べた。また、融資の繰上返済時期や問題債権の解決時期も予測が困難な状況が続いている。

アナリストQ&Aの要点

• 純利ざや（NIM）：9月のNIMは課税等価ベースで3.54％、公表ベースで3.52％となった。経営陣は、単方向の預金売却を行わなかった場合のNIMは約3.46％であったと試算したものの、当行にはその戦略を引き続き活用する能力と意向の両方があると述べた。
• 融資のリプライシング：新規融資実行分の利回り（6.65％）とポートフォリオ全体の利回り（5.23％）との間にある142ベーシスポイントの格差は、融資のリプライシングやポートフォリオ構成の変化に伴い、利ざやがさらに改善する可能性を示している。
• 融資の買い取り：経営陣は住宅ローン・プールの取得について、主要な成長戦略ではなく戦術的な（機会追求型の）ものと位置付けた。地域、与信指標、リスク調整後リターンが魅力的である場合には、追加購入を検討する可能性がある。
• 資本配分：当四半期中に自社株買いは実施されなかった。経営陣は、資本比率が同業他社の水準に近づいており、必要な規制当局の承認について話し合いを進めやすい段階に近づいていると述べた。
• M&A：経営陣は引き続き機会の検討を行っているが、以前よりも進展している買収協議はないと述べた。
• 与信問題の解決：800万ドルの利息不計上貸出金（ノンアクルーアル・ローン）は、裁判所嘱託参照手続（judicial reference process）を通じて解決した場合、将来の収益の追い風となる可能性があるが、経営陣は時期は未定であるとしている。

決算説明会文字起こし全文

決算説明会の完全なトランスクリプト

経営陣による説明

Krissy Meyer

Good morning, and thank you for joining Bank of Marin Bancorp's earnings call for the third quarter ended September 30, 2026. I'm Krissy Meyer, Corporate Secretary for Bank of Marin Bancorp. [Operator Instructions]

Joining us on the call today are Bank of Marin President and CEO, Tim Myers; and Chief Financial Officer, David Bonaccorso. Our earnings news release and supplementary presentation, which were issued this morning, can be found in the Investor Relations section of our website at bankofmarin.com, where this call is also being webcast. Closed captioning is available during the live webcast as well as on the webcast replay.

Before we begin, I want to note that we will be discussing some non-GAAP financial measures. Please refer to the reconciliation table in our earnings news release for both GAAP and non-GAAP measures. Additionally, the discussion on the call is based on information available as of Friday, October 23, 2026 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 on these risks and uncertainties, please review the forward-looking statements disclosure in our earnings news release as well as our SEC filings. Following our prepared remarks, Tim, Dave and our Chief Credit Officer, Misako Stewart, will be available to answer your questions.

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

Timothy Myers

Thank you, Krissy. Good morning, everyone, and welcome to our quarterly earnings call. Our third quarter results reflected another period of improved financial performance. We increased earnings per share and return on average tangible common equity, expanded net interest margin, grew loans and noninterest-bearing deposits, bolstered core noninterest income and continued our prudent expense management. Our net interest margin expanded 10 basis points in the quarter which drove sequential quarter EPS growth of 7% and year-to-date EPS growth that was 62% higher than the prior year period.

Quarterly return on tangible common equity topped 12%. Return on average assets exceeded 1%. Our efficiency ratio improved to below 60%, and pretax pre-provision earnings increased by 17%. Higher of loan yields higher core fee income, lower deposit costs, healthy loan production and disciplined expense management all contributed to stronger profitability during the quarter. Taken together, these results reflect continued progress across the core drivers of our business and provide further evidence that our efforts are translating into stronger and more reliable core financial performance.

During the quarter, we originated $102 million in new loan commitments, which improved year-to-date originations to $281 million, a level that is 21% higher than last year. While funded loans of $64 million were relatively flat in the third quarter compared to the prior quarter, a higher level of unfunded commitments in the quarter includes $25 million of construction loan commitments, which will contribute to growth in subsequent quarters at relatively high interest rates as projects fund. Newly funded loans were originated at a weighted average rate that was 12 basis points higher than the prior quarter, which contributed to our net interest margin expansion during the quarter and we'll provide additional benefits in the fourth quarter.

Despite competitive pressures, the yield profile of new production remains attractive and is accretive to our overall portfolio yield. And we believe this healthy production, continued relationship development and disciplined underwriting will continue to translate into sustainable improvement in asset yields and earnings of time. Though organic loan fundings resulted in loan growth for the quarter, we supplemented that growth by using a portion of our excess liquidity to purchase a $31 million pool of California residential loans which we expect to provide attractive risk-adjusted returns.

Turning to credit quality. Special mention loans decreased by $36 million, while classified loans increased by $15 million. The movement in both categories was primarily due to the downgrade of $114 million owner-occupied commercial real estate relationship facing a borrower-specific issue. The borrowers paying as agreed, and we do not expect any loss given the strong collateralization. Special mention loans also benefited from $18 million in upgrades and payoffs. Net charge-offs were minimal, primarily driven by loan growth and higher commitments, we did record a $500,000 provision for credit losses on loans and a $325,000 provision for unfunded commitments.

Our allowance for credit losses was 1.07% of total loans, consistent with that of the prior quarter. Total deposit balances increased $25.3 million including a $45 million increase in noninterest-bearing balances, partially offset by decreases in money market and time accounts. We were especially pleased to see meaningful growth in noninterest-bearing deposits during the quarter, which we view as a reflection of the strong relationships our teams have built with clients over time. To that end, our focused outreach continued to result in strong new client activity generating $23.2 million in new relationships, including $13 million in new noninterest-bearing deposits.

Noninterest-bearing deposits represented 37.8% of total deposits at quarter end, continuing to differentiate our franchise and provide a meaningful funding advantage in a very competitive market. With financial markets expecting additional hikes in the Fed funds target rate range, we believe our high noninterest-bearing deposit concentration positions us well to achieve a relatively low rising rate deposit beta as we've experienced in previous rising rate cycles. Overall, the third quarter reflected continued progress across the franchise, including higher earnings, continued margin expansion and loan growth.

With that, I'll turn the call over to David Bonaccorso to discuss our financial results in more detail.

Dave Bonaccorso

Thanks, Tim. Good morning, everyone. Our third quarter net income was $9.9 million or $0.62 per share compared with $9.2 million or $0.58 per share in the prior quarter. Return on average assets increased to 1.05%, return on average tangible common equity grew to 12.26%, and our efficiency ratio improved to 58.65%. Our net interest income increased from the prior quarter to $31.4 million due to both higher interest income and lower interest expense. We recorded higher interest income on loans due to an increase in average loan yields from 5.12% in the second quarter to 5.23% in the third quarter.

Additionally, we recorded lower interest expense, largely due to a higher proportion of noninterest-bearing deposits and active balance sheet management through sales of one-way deposits, which drove a reduction in average total deposit costs from 1.28% to 1.24%. Our yield on new loan fundings increased to 6.65% during the quarter, which was a 12 basis point improvement over the prior quarter. The 142 basis point spread between the yield on new loan fundings and the yield on the entire loan portfolio is evidence of the opportunity we have to improve net interest margin through loan remixing and repricing over the coming quarters.

Importantly, with a loan-to-deposit ratio of 63% and high levels of cash flow expected from our shorter duration securities portfolio, we have substantial capacity to support loan growth without utilizing wholesale funding. Our noninterest income was up by $501,000 during the quarter, primarily due to $251,000 increase in service charges on business deposit accounts resulting from an updated pricing strategy effective July 1. And an increase in dividend income due to a special dividend on FHLB stock of $199,000. Importantly, the increase in service charges reflects initiatives we implemented earlier this year which are helping diversify our revenue streams and build a more durable source of recurring fee income, and we expect to see these continued benefits in our results going forward.

Our noninterest expense improved by approximately $1 million primarily related to an incentive bonus accrual adjustment, prior quarter annual expense that was not repeated, a reduction in professional service expense and more normalized FDIC insurance expense levels. Looking ahead, we expect expenses to remain well managed while continuing to make targeted investments in areas that support future growth. Although quarterly expense levels may vary, our focus remains on balancing disciplined cost management with investments in our people, technology and client-facing capabilities.

With quarterly improvement in interest income, interest expense, noninterest income and noninterest expense, our pretax pre-provision net income improved by 17% on a sequential quarter basis. As Tim noted earlier, growth in both loan fundings and loan commitments drove provisions this quarter, which impacted net income. The quarterly net income still improved 7% compared to the prior quarter and 32% compared to the third quarter of 2025. Our regulatory capital ratios continue to improve with our common equity Tier 1 ratio increasing to 12.96%. Our total capital ratio increasing to 15.59%, and our Tier 1 leverage ratio increasing to 9.04%.

Rising market interest rates negatively impacted AOCI by $24.8 million during the quarter, which lowered our tangible common equity ratio to 8.05% and tangible book value per share to $18.81. Given our continued strength, our Board of Directors declared a cash dividend of $0.25 per share on October 22, the 86th consecutive quarterly dividend paid by the company.

With that, I'll turn it back over to Tim for closing comments.

Timothy Myers

Thank you, Dave. To close, the third quarter was another quarter of strengthening profitability through our strategic focus areas. We delivered improved earnings, expanded net interest margin, we assume balance sheet growth and generated meaningful improvement in core fee income, while maintaining strong liquidity, capital levels and overall credit performance. While the current operating environment remains competitive, we are encouraged by the opportunities we see to continue growing relationships, add earning assets at attractive yields and maintain disciplined deposit pricing. Together with our ongoing focus on balance sheet management and expense control, we believe these efforts position us well to continue building long-term shareholder value.

With that, I want to thank everyone on today's call for your interest and support. We will now open the call to your questions.

Operator

[Operator Instructions] We'll take our first question from Woody Lay with KBW.

質疑応答

Wood Lay

I wanted to start on the net interest margin. Now it's great to see the quarter-over-quarter improvement. And I was just curious if you had the NIM in the month of September to kind of get an idea of the starting point for next quarter? And then just any additional thoughts on the magnitude of NIM expansion we could see over the coming quarters?

Dave Bonaccorso

So the September NIM was 3.54% tax equivalent, 3.52% reported. That includes about $145 million of one-way sales. So that definitely has a positive impact there. If you were to completely eliminate one-way sales, you're probably in the 3.46% area. But I think we have the intent and capacity to continue those. And quarter-to-date, we are about $115 or so million, which gives you sort of a $351 million level that we kept that level of one-way sales going. So around about way to give it to you, but there is some nuance to it.

Wood Lay

Yes. And I guess on the one-way strategy, so you all were at 100 -- call it, $131 million this past quarter. But on an average basis, do you think that can go to $300 million next quarter?

Dave Bonaccorso

No, no, no. I think slightly higher would be the way to go. $300 million would be out of the range, but could we be $150 million, $160 million. Yes, could it be $120 million or $100 million, yes. So that -- those are the magnitudes I have in mind.

The income from one-way sales this quarter, I believe, was $489,000 compared to $386,000 last quarter. And so I know there's a lot of attention on net interest income. But if you adjust for that, you basically assume that the deposits we have, if they weren't in one-way sales were on the balance sheet, our net interest income would have been about $489,000 higher. So another way of thinking about that.

You asked a question about margin trajectory and if you think of -- in the higher rate environment we're in now, if you think about our greatest challenge and our greatest strength, our greatest challenge is loan yields. So the higher environment gives us more time to reprice loans, allows variable rate loans to reset higher than new originations at higher yields than previously thought. And then our biggest strength is our deposit franchise.

And I think clearly, we get questions from customers about deposit rates. I wouldn't say it's been that material solar. But I think we've proven over a cycle, partly due to the high level of noninterest-bearing deposits, we tended to outperform. And if you look at peers, in the last cycle, our total deposit beta was 29% compared to 43% for peers. So I think on a relative basis, we're pushing very well for the rising rate environment, both managing deposit costs and then also continued loan repricing. There's lots of information about the repricing schedule on Page 13 of the deck.

Timothy Myers

Yes. I think, Woody, if you look at as our originations continue to improve, we're looking at a pipeline right now of the Q4 pretty similar to where we were last year. That ended up being a blowout quarter. But a lot of -- left here in the quarter was due to new loan originations. As Dave mentioned, the repricing over the next 12 to -- or 3 to 12 months variable-fixed rate repricing, we continue to think we have good tailwinds there.

And also, we talked about in the loan section. We have some nice tails from construction lending given the type of stuff we do in the geographies. We do it in that was really a headwind for a number of years, primarily in San Francisco. And so a lot of unused commitment is going to borrow on construction loans, and that's -- those are our highest priced commercial real estate loans. So no real silver bullet there for everything, but a lot of things they're going to add up to I think continued growth.

Dave Bonaccorso

Yes. And statistically, we've given out over the years is a monthly low yield 12 months from now. And based on our ALM forecasting with a flat balance sheet, we're looking at probably 25-ish basis points of monthly loan yield benefit a year from now, which I believe compares favorably to closer to 20 basis points last quarter. So that just shows a little bit more benefit in rising rates. And again, plant balance sheet there. So we have loan growth that we expect, there's some upside to that.

Wood Lay

Yes, that's great to hear. And maybe just one more follow-up on the deposit side, deposit betas. You mentioned a 29% historical beta, do you think that's the right way to think about it to the extent we get additional rate hikes from here?

Timothy Myers

Yes. I don't see why it would differ. The last cycle had the complication of the regional bank failures in our market impacting things. And so relative to our nationwide peer group, you could argue we were disproportionately affected by that, and we were still at 29% relative to the 43%. So I don't see why it would differ from that. And we've had a long history of timing interest-bearing balances, which really gets you off on the right foot from that perspective in a rising rate environment.

Operator

Our next question comes from Jeff Rulis with D.A. Davidson.

Jeff Rulis

I think you mentioned $102 million in origination activity. How does that compare linked quarter? And then a similar question, if you had payoffs both in the current and past quarter?

Dave Bonaccorso

Yes. So sequential quarter originations went from $98 million to $102 million roughly. Fundings went from $62.8 million to $63.6 million. Payoffs went from a pretty high margin, $71 million, down to $31.6 million. And there is a table in our earnings release that has all this information, you can catch all that.

Timothy Myers

Yes. And we're excluding that. The $31 million of mortgage purchases are excluded from the numbers you just gave. So a nice trend in the past. And certainly, a big chunk of our year-to-date payoffs have been working on some of the historical problem loans on the real estate and line side. So we feel much better about the trend of that as well.

Jeff Rulis

Okay. That was sort of the payoff visibility is historically pretty tough. But based on what you see, is that -- are you encouraged by maybe the payoff wall that you've seen that maybe is lower going forward? Or is there -- particularly, I guess, if we get higher rates, maybe also. But I guess the question is your expectations on payoff activity ahead.

Timothy Myers

No, that's fair. So there were 2 big headwinds there over the last year in a dead period. So we have about $28 million of the problematic loans, our big pandemic special CRE loan in the city and our large wine industry loan that we had talked about for both of which we had talked about for some time, that was $28 million of the payoffs. We also had a lot of construction projects that were completed which really the flip side of that is it brought our balances down to almost 0, like $16 million, but now we have added a bunch of new loans, those will fund up over the next 18, 24 months. So those are 2 of the larger headwinds for payoffs. So again, it's hard to predict timing. It's hard to predict resolution of workout credits or whatever, but we feel like it's a normalizing trend yet.

Dave Bonaccorso

And this is the first quarter in a year where we've been sort of our last couple of year average, we've averaged about $40-or-so million between $38 million and $42 million, let's say, depending on your time frame over the last couple of years in payoffs. So we've had a lot of headwinds the last few quarters. This is the first quarter we've had a little bit early from a payout perspective.

Jeff Rulis

Okay. And jumping off that, I guess, the further appetite for loan purchases, was this a one-off? Would you have more? And the kind of a related question is what rate did the mortgage pool come on this quarter?

Timothy Myers

I'll start with the first part. I'll let Dave answer about the mortgage pool. I mean, is something we want to be selective about. This is not how we're trying to drive our franchise value, but we can be strategic, given our loan-to-deposit ratio that mortgage pool we acquired a couple of years ago to help boost the yield and offset the impact or drive the earnings impact from the larger AFS trade that we did before the AGM trade, not at a much faster freight rate than we expected.

And so when we look at this year, we saw if we can find an opportunistic portfolio in the geography we're comfortable with, with the metrics we're comfortable with, we'll try to offset that. So that's effectively how we measure that out. We'll continue to be opportunistic about that. That's not our intent about how we're going to grow the bank. But we do have the liquidity and the loan-to-deposit ratio to continue to look at that.

So do you want to answer the rate question?

Dave Bonaccorso

Sure, yes. The coupon on the pool is about 620, and we paid a small premium for it. So our expectation is with pretty conservative rebase fees, probably yielding around 6% which we actually entered into this about 3 months ago, but that was about 160 basis point spread to treasuries at prime.

Operator

Our next question comes from Matthew Clark with Piper Sandler.

Matthew Clark

Just to round out that conversation on the single-family resi pool. What was the expected duration on that purchase?

Dave Bonaccorso

So we ran a 25 CPR, which gets you to about a 3.3-year average life 30-year collateral. So there can be movements in the average life depending on prepayment fees, but that's what we assumed, which we thought was in -- mortgage rates have moved up since then. So I don't think we're going to get the wave of very fast prepayments like we did on the prior pool.

Matthew Clark

Yes. Okay. And then any recoveries or interest reversals in the loan yield this quarter? I don't think so, but I wasn't sure.

Dave Bonaccorso

Nothing material.

Timothy Myers

Nothing meaningful. But we have the one large nonaccrual we've talked about that could resolve through the judicial reference process, but that is sort of an indeterminable period. So when that happens, that's an $8 million loan on nonaccrual, but nothing just last quarter, but that will be a tailwind when that finally resolved.

Matthew Clark

Okay. And then just back on the expense run rate, how should we think about a normalized run rate going forward here at least in the near term?

Dave Bonaccorso

So the -- I would say Q4 is probably going to look pretty similar to Q3. And my thinking behind that is we had some lower salaries and benefits expense this quarter. That could persist to the prior quarter. I think there's some acceleration that probably happens in occupancy as we're rehabbing a few locations and some IT projects catching up. But I think you then all that together, Q4 is probably pretty close to where we were in Q3.

But where I would remind folks, there's quite a bit of seasonality on our expense base. And the way to think about the quarters beyond that is probably to look at the year ago prior quarter. So I wouldn't launch your Q1 numbers off of our Q4 numbers. I would look at Q1 2026 and then apply some sort of growth rate to that we're looking at Q1 2027 and then throughout the year.

So in Q1, we have a lot of resets on personnel-related items. Q2 tends to be where our expenses being due to merit increases and a few special items in Q2 and then they start to drift down from there. And that's the pattern I would recommend thinking about going beyond Q4 this year.

Matthew Clark

Yes. Okay. Great. And then just on capital, you didn't buy back any shares this quarter. Just some color there. And then on Slide 6, you -- not that it's a new slide, but the mentioned acquisitions as part of your strategy, any update on conversations you might be having? Targets you might consider of late?

Timothy Myers

Yes, sure. I'll start bigger picture on the capital buyback. So we've talked pretty anode about working with our regulators, particularly [ DFPI ] on our held-to-maturity trade and that we were going to earn our way back into a more peer level, capital ratios before going back and going through the process of getting the necessary approvals tied to the overall dividend to the bank. So -- but we're getting closer to a period where we'll feel more comfortable having those conversations.

M&A, certainly with our return on profitability or the trajectory we're on the impact that's had on our valuation. That's helping. But I wouldn't say there's any conversations that are more progressed at this point than there have been. But I continue to do my job and be out talking to folks, and we would love to be opportunistic, and that's one of the key reasons we want to keep driving the valuation improvement.

Operator

Our next question comes from David Feaster of Raymond James.

David Feaster

I want a diverse start on the demand side. I'm curious how demand has trended across your footprint as rates have begun rising. And then just kind of how pipelines are. And then as it plays into that, just hiring, I know, has been a big focus for you all and kind of increased production from newer markets like Sacramento and some of the parts of the Bay Area. Kind of curious how productivity from those bankers is and your thoughts on hiring broadly?

Timothy Myers

Okay. David, there's a lot in there. So I think if you look at demand and the rate environment, where we've seen more is on the payoff side, like on the retail side, HELOCs, paying off with rates where they are but we continue to have or have seen much better demand on the consumer side. Again, like construction, with the bulk of our consumer direct consumer lending activity being kind in common loans really died in the save for a while. And I think we're a triple right now year-to-date or almost triple where we were the prior year despite where rates are because of the boom in San Francisco residential lending.

The commercial pipeline while overall, we're achieving a much more consistent and higher consistent level of production, we did have some deals pushed. So we feel good about the volume. Our pipeline looks similar now for Q4 than it did last year for Q4, and that ended up being a great quarter. It's always tough to say how that will all play out. But right now, we saw some residential lending on the floating home side, which we haven't really seen in a while, again, despite where rates are. So you don't know how borrower behavior when rates drop after you've done all that, but we're really not seeing it limit the amount of things going in the fund.

And I'm sorry if I missed something in there, but that's where we're just most -- and on the hiring side, no, we continue to look. Sometimes the hiring is more on the support underwriting function to support the new salespeople. So we've actually had a pretty active hiring quarter or going into Q4. Not all of it producers, but we continue to look to fill those positions and be opportunistic. And we're pretty excited, nothing dramatic to report at this time, but I think the teams are building out nicely to again get that more consistently higher level of activity. I feel good about the trajectory.

David Feaster

That's great. Maybe just on the other side of the balance sheet, just touching on funding. I mean, that's probably one of the more impressive things about the quarter in my mind. I mean, the noninterest-bearing deposit growth was phenomenal. I know we're entering into a seasonally weaker quarter in the fourth quarter. But curious, some of the drivers behind the growth you saw this quarter and how customers are responding as rates are rising? Have you seen more exception pricing requests? Do you see more funding cost leverage on the horizon? And just any thoughts on the deposit side?

Timothy Myers

Well, I think for us, every request is an exception pricing request, and that's a contact. That's partly how we manage that, right? And so I do not -- I have not seen a wave of request for activity than we would have thought, but that's because of the ongoing day-to-day relationship management. The fluctuations are largely driven by balances within our larger customers. And so our goal is really to maintain that and not have them move those funds out elsewhere, but those are operating balances.

We have had over the last couple of quarters the money we where it's a quasi or public entity that investment policies and that money is going to sit in some other type of investment vehicle generating a higher yield than we're willing to pay. But we're not -- and that was more last quarter than this quarter, to be honest. So a pretty bulky impact in the quarter on the deposit side in terms of the trends. Our goal is to just continue to get better had new business client acquisition. Of course, we want to continue to acquire consumer loans to get those business operating accounts, and we continue to have strategies around how we continue to evolve or get better at that, again, have a more consistent growth and get more granularity from there. So as we continue to focus on that and not just sort of leave it to fate in terms of deposit balances.

David Feaster

Okay. And then -- that's great. And then just last one, just -- you've done a great job finding opportunity to maybe charge for products and services that you haven't historically or maybe where you were under charging. You talked about $1 million kind of annualized run rate that you've seen so far. Where are we at in that process? It sounds like, from your commentary, it sounds like there might be some more on the horizon, but curious kind of where are we in that process as you think about opportunities to just maybe generate some revenues where you maybe should have been already?

Timothy Myers

Yes. So I'll break that into parts. We continue to have things coming online, working on that will overall drive greater noninterest income, particularly related to the business service fees. Those are just things where we were undercharging or when you look at a bank that grew in large part by acquisition of smaller banks, very common for banks to waive or have generous fee schedules, et cetera. And it was taking the time to sit back and quantify and qualify that and what is need to look like, what does it need to look like relative to our peers, what's fair, tier that properly.

And so that is implemented. So that run rate is based on this new fee schedule for our business, commercial treasury management customers that utilize those services. We'll continue to look to add things that will be additive to that. Sorry for the redundancy there. But we do have other things in the works overall to drive fee income unrelated to deposit service rate.

Operator

[Operator Instructions] We have no further questions at this time. I'll hand it back to Tim Myers for closing remarks.

Timothy Myers

Thank you very much. Thank you, everyone, for joining. As always, please feel free to reach out to us. We're happy to provide more color. We look forward to talking to you next quarter.