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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Bank of Marin Bancorp | NASDAQ:BMRC | NASDAQ | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
-0.25 | -1.14% | 21.77 | 13.75 | 24.97 | 22.37 | 21.805 | 22.32 | 67,058 | 01:00:00 |
Deposit Stability and Strong Credit
Bank of Marin Bancorp, "Bancorp" (Nasdaq: BMRC), parent company of Bank of Marin, "Bank," announced earnings of $5.3 million for the third quarter of 2023, compared to $4.6 million for the second quarter of 2023. Diluted earnings per share were $0.33 for the third quarter, compared to $0.28 for the prior quarter. Earnings for the first nine months of 2023 totaled $19.3 million, compared to $33.7 million for the same period in 2022. Diluted earnings per share were $1.20 and $2.11 for the first nine months of 2023 and 2022, respectively. Earnings reported for 2022 were impacted by the costs associated with our most recent acquisition, the details of which were discussed in previous filings.
Concurrent with this release, Bancorp issued presentation slides providing supplemental information, some of which will be discussed during the third quarter 2023 earnings call. The earnings release and presentation slides are intended to be reviewed together and can be found online on Bank of Marin’s website at www.bankofmarin.com. under “Investor Relations.”
“We expanded net interest margin and improved our interest rate risk and liquidity positions in the third quarter by reducing borrowings and investments, increasing deposits and cash, and executing balance sheet hedges,” said Tim Myers, President and Chief Executive Officer. “We continued to generate strong deposit growth in the quarter, emphasizing our relationship-based banking model to attract new clients and expand our relationships with existing customers. While the macroeconomic picture remains somewhat uncertain, our loan pipeline is robust, and fourth quarter loan production is shaping up to be strong.”
Bancorp also provided the following highlights for the third quarter of 2023:
“As we have done throughout our 33-year history, we are intently focused on balance sheet strength, including strong capital levels, as we grow alongside our customers and pursue reliable returns on behalf of our shareholders,” said Tani Girton, Executive Vice President and Chief Financial Officer. “Securities sales and balance sheet hedges muted the impact of interest rate increases on tangible capital while deposit growth and cash flows from our earning asset portfolios enabled a significant reduction in borrowings. We remain proactive and successful in managing credit, and are dedicated to prudent investments in our people and infrastructure as well as cost control.”
Loans and Credit Quality
Loans decreased by $15.9 million for the third quarter of 2023 and totaled $2.087 billion at September 30, 2023, compared to $2.103 billion at June 30, 2023. Loan originations for the third quarter were $22.7 million, compared to $22.8 million for the second quarter of 2023. Loan payoffs were $12.7 million for the third quarter, compared to $24.6 million for the second quarter of 2023. In addition, loan amortization from scheduled repayments totaling $20.0 million and net decrease in utilization of credit lines of $5.9 million contributed to the decline in loans for the quarter ended September 30, 2023. Bank of Marin has continued its usual steadfast conservative underwriting practices and has not changed its credit standards or policies in reaction to current market conditions. Our portfolio management and credit teams are exercising heightened awareness of the potential for credit quality deterioration. The Bank continues to focus on extending credit within the markets we know best and serving the needs of our existing clients while ensuring new opportunities present the appropriate levels of risk and return.
Loans decreased $5.6 million during the nine months ended September 30, 2023, compared to a $97.3 million decrease in loans during the nine months ended September 30, 2022. Loan originations were $90.3 million for the nine months ended September 30, 2023, compared to $204.1 million for the nine months ended September 30, 2022. Excluding PPP loans, payoffs were $57.7 million in the nine months ended September 30, 2023, compared to $204.2 million for the same period in 2022. PPP loan payoffs during the nine months ended September 30, 2023 and 2022 were $1.8 million and $103.6 million, respectively. In addition, loan amortization from scheduled repayments totaling $60.6 million was partially offset by a $24.2 million net increase in utilization of credit lines in the nine months ended September 30, 2023.
Non-accrual loans totaled $5.7 million, or 0.27% of the loan portfolio at September 30, 2023, compared to $2.1 million, or 0.10% at June 30, 2023.
Classified loans totaled $39.7 million at September 30, 2023, compared to $38.1 million at June 30, 2023. The increase was primarily due to the addition of three loans totaling $6.3 million. Of the additions, $6.1 million were comprised of two owner-occupied commercial real estate loans. These additions were offset by $4.7 million in payoffs and paydowns. Accruing loans past due 30 to 89 days totaled $2.2 million at September 30, 2023, compared to $983 thousand at June 30, 2023.
With the heightened market concern about non-owner-occupied commercial real estate, and in particular the office sector, we are providing the following additional information. We continue to maintain diversity among property types and within our geographic footprint. In particular, our office commercial real estate portfolio in the City of San Francisco represents just 3% of our total loan portfolio and 6% of our total non-owner occupied commercial real estate portfolio. As of the last measurement period (generally December 2022), the weighted average loan-to-value and weighted average debt-service coverage ratios for the entire non-owner-occupied office portfolio were 56% and 1.68x, respectively. For the eleven non-owner-occupied office loans in the City of San Francisco, the weighted average loan-to-value and debt-service coverage ratios were 66% (61% unweighted) and 1.07x (1.34x unweighted), respectively. During the quarter we conducted a review of the refinance risk in our non-owner-occupied commercial real estate portfolio, the results of which can be seen on slide 13 of our earnings presentation. We evaluated 36 loans with commitments of $1.0 million or more totaling $97.4 million that mature or reprice in 2023 or 2024. We determined that the refinance risk on these loans is manageable with weighted average debt service coverage ratios ranging from 1.28 to 2.01 times across the four cohorts based on current interest rates.
Net recoveries for the third quarter of 2023 totaled $3 thousand, compared to net recoveries of $2 thousand for the second quarter of 2023. The ratio of allowance for credit losses to total loans was 1.16% at September 30, 2023, compared to 1.13% at June 30, 2023.
The provision for credit losses on loans in the third quarter was $425 thousand, compared to $500 thousand in the prior quarter. The provision was due primarily to increases in qualitative factors related to trends in adversely graded, non-owner-occupied commercial real estate loans and the potential impact of rapidly increasing interest rates and other external factors on both our non-owner-occupied commercial real estate and construction portfolios. These increases were partially offset by the impact of the decrease in loan balances.
There was no provision for credit losses on unfunded loan commitments in the third quarter of 2023, compared to a $168 thousand reversal of the provision in the prior quarter, due mainly to a $39.9 million decrease in total unfunded commitments.
Cash, Cash Equivalents and Restricted Cash
Total cash, cash equivalents and restricted cash were $123.1 million at September 30, 2023, compared to $39.7 million at June 30, 2023. The $83.5 million increase was due primarily to the sale of $82.7 million of available-for-sale securities in the third quarter, which resulted in 3 basis points of net interest margin expansion due to the higher interest rate earned on cash and provided diversification to our liquidity profile.
Investments
The investment securities portfolio totaled $1.594 billion at September 30, 2023, a decrease of $123.8 million from June 30, 2023. The decrease was primarily the result of sales of $82.7 million available-for-sale securities, principal repayments totaling $28.8 million, an $11.0 million increase in pre-tax unrealized losses on available-for-sale investment securities, and $1.3 million in net amortization. The securities sales and $102 million fair value hedge reduced the impact of interest rate increases on tangible capital over the quarter by approximately 7 basis points. The $2.8 million net loss on the sale of securities was offset by a $2.8 million gain from the sale of our remaining investment in Visa Inc. Class B restricted common stock, which had a zero carrying value. Both the available-for-sale and held-to-maturity portfolios are eligible for pledging to FHLB or the Federal Reserve as collateral for borrowing. The portfolios are comprised of high credit quality investments with average effective durations of 4.07 on available-for-sale securities and 5.95 on held-to-maturity securities. Both portfolios generate cash flows monthly from interest, principal amortization and payoffs, which supports the Bank's liquidity. Those cash flows totaled $41.1 million and $36.7 million in the third and second quarters of 2023, respectively.
Deposits
Deposits totaled $3.444 billion at September 30, 2023, an increase of $118.5 million compared to $3.325 billion at June 30, 2023, and a decrease of $129.7 million from $3.573 billion at December 31, 2022. We have seen stability in deposit trends, including the utilization of our available deposit networks. That stability extended to our mix in deposits, new account activity and overall growth. Non-interest bearing deposits made up 47.7% of total deposits at September 30, 2023, compared to 47.8% at June 30, 2023. Money market balances increased from 30.9% to 31.7% and time deposits increased from 6.1% to 6.7% of total deposits. Additionally, the Bank's competitive and balanced approach to relationship management and focused outreach supported the growth, adding over 1,200 new accounts during the third quarter, 38% of which were new relationships, bringing the total to over 3,600 new accounts in 2023 (excluding new reciprocal accounts). As a result, we are closing the gap on the deposit outflows experienced in the first quarter of 2023 without accessing brokered deposit markets. As of September 30, 2023, 61% of deposit balances were held in business accounts with average balances of $130 thousand per account. The remaining 39% were consumer accounts with average balances of $41 thousand per account. The largest depositor represented 0.8% of total deposits and the combined four largest depositors represented 3.0% of total deposits. Our liquidity policies require that compensating cash or investment security balances be held against concentrations over a certain level.
Borrowings and Liquidity
At September 30, 2023, the Bank had $120.0 million in outstanding borrowings, compared to $292.2 million at June 30, 2023, a reduction of $172.2 million. This decrease was the result of deposit growth and investment and loan cash flows. Although available as a liquidity source, we have not needed to utilize brokered deposits. Net available funding sources, including unrestricted cash, unencumbered available-for-sale securities and total available borrowing capacity was $2.086 billion, or 61% of total deposits and 211% of estimated uninsured and/or uncollateralized deposits as of September 30, 2023. The Federal Reserve's new Bank Term Funding Program ("BTFP") facility offers borrowing capacity based on par values of securities pledged making the funds available less sensitive to changes in market rates. The following table details the components of our contingent liquidity sources as of September 30, 2023.
(in millions)
Total Available
Amount Used
Net Availability
Internal Sources
Unrestricted cash 1
$
102.6
$
—
$
102.6
Unencumbered securities at market value
613.7
—
613.7
External Sources
FHLB line of credit
1,023.2
—
1,023.2
FRB line of credit and BTFP facility
331.9
(120.0
)
211.9
Lines of credit at correspondent banks
135.0
—
135.0
Total Liquidity
$
2,206.4
$
(120.0
)
$
2,086.4
1 Excludes cash items in transit as of September 30, 2023.
Note: Brokered deposits available through third-party networks are not included above.
Capital Resources
The total risk-based capital ratio for Bancorp was 16.6% at September 30, 2023, compared to 16.4% at June 30, 2023. The total risk-based capital ratio for the Bank was 16.1% at September 30, 2023, compared to 16.0% at June 30, 2023.
Bancorp's tangible common equity to tangible assets ("TCE ratio") was 8.63% at September 30, 2023, compared to 8.64% at June 30, 2023. The TCE ratio was flat quarter over quarter as the shareholder dividend payment and increased unrealized losses on available-for-sale securities due to rising interest rates offset the positive effect of third quarter net income. The Bank's capital plan and point-in-time capital stress tests indicate that capital ratios will remain above regulatory well-capitalized and internal policy minimums throughout the five-year forecast horizon and across stress scenarios. The TCE ratio if held-to-maturity securities were treated the same as available-for-sale securities at September 30, 2023 would have been 6.1%. Management believes this non-GAAP measure is important because it reflects the level of capital available to withstand drastic changes in market conditions (refer to the discussion and reconciliation of this non-GAAP financial measure below).
Earnings
Net Interest Income
Net interest income totaled $24.5 million for the third quarter of 2023, compared to $24.1 million for the prior quarter. The $339 thousand increase from the prior quarter was primarily related to an increase of approximately $358 thousand in interest income from the investment of securities sales proceeds into interest-bearing cash. The $2.3 million reduction in borrowing cost for the quarter was offset by rising deposit rates and higher average deposit balances that resulted in an additional $2.4 million in interest expense.
Net interest income totaled $78.5 million for the nine months ended September 30, 2023, compared to $94.1 million for the same period in the prior year. The $15.6 million decrease from the prior year was primarily due to higher funding costs of $23.9 million, partially offset by higher average yields on earning assets.
The tax-equivalent net interest margin was 2.48% for the third quarter of 2023, compared to 2.45% for the prior quarter. The increase from the prior quarter was primarily due to a $73.3 million increase in average interest-bearing cash balances with an average yield of 5.37% from securities sales proceeds.
The tax-equivalent net interest margin was 2.66% for the nine months ended September 30, 2023, compared to 3.06% for the same period in the prior year. The decrease was primarily attributed to higher deposit and borrowing costs, partially offset by higher interest rates on loans and investment securities. Average interest-bearing deposits balances decreased by $164.2 million while the average cost increased by 55 basis points, mainly for money market and time deposit account types, decreasing the margin by 46 basis points. Average borrowings and other obligations increased by $260.6 million at an average cost of 5.14%, an increase of 4.43%, decreasing the margin by 34 basis points. Average loan balances decreased by $87.3 million while the average yield increased by 36 basis points, increasing the margin by 20 basis points. Average investment securities increased $26.2 million, and their average yield increased 31 basis points, improving the margin by 19 basis points.
Non-Interest Income
Non-interest income totaled $2.6 million for the third quarter of 2023, compared to $2.7 million for the prior quarter. The $141 thousand decrease from the prior quarter was primarily related to a decrease in debit card interchange income.
Non-interest income totaled $8.3 million for the nine months ended September 30, 2023, materially unchanged from the same period of the prior year. The $46 thousand decrease from the prior year period was mostly attributable to decreases in other income including one-way deposit and cash management fees and in wealth management and trust services income, partially offset by higher bank-owned life insurance benefit payments and balances and dividends on Federal Home Loan Bank stock.
Non-Interest Expense
Non-interest expense totaled $19.7 million for the third quarter of 2023, compared to $20.7 million for the prior quarter. The $918 thousand decrease from the prior quarter primarily resulted from a $675 thousand decrease in salaries and related benefits mainly due to decreases in accrued incentive and profit sharing expenses and 401(k) contributions, $618 thousand less in charitable contributions as our annual grant program normally occurs in the second quarter, and a $197 thousand decrease related to a catch-up adjustment in the second quarter for increased FDIC assessments to strengthen the Deposit Insurance Fund. These decreases were partially offset by a $533 thousand net increase in other expense, primarily due to a $688 thousand increase in expenses and fees associated with our customers' participation in reciprocal deposit networks to bolster their FDIC insured balances.
Non-interest expense totaled $60.2 million for the nine months ended September 30, 2023, compared to $57.0 million for the same period of prior year, an increase of $3.2 million. Other expense increased by $1.8 million primarily due to a $1.5 million increase in expenses and fees associated with reciprocal deposits placed into deposit networks. Salaries and related benefits increased by $641 thousand primarily due to regularly scheduled annual merit and other increases, the hiring of several key employees and officers, and lower deferred loan origination costs, partially offset by a reduction in accrued incentive and profit sharing expenses. Occupancy and equipment and depreciation and amortization expenses rose $628 thousand and $446 thousand, respectively, mainly from the acceleration of lease-related costs for branch closures in the first quarter of 2023. Beginning in 2024, the estimated annual pre-tax savings from branch closures are expected to be approximately $1.4 million. In addition, the FDIC insurance assessment rose by $538 thousand due to the increased statutory rate. These increases were partially offset by a $593 thousand decrease in data processing expenses due to our core system contract renegotiation for the current period and because the prior year included data processing expenses largely eliminated after the systems conversion associated with the American River Bankshares merger. In addition, other real estate owned expenses decreased by $307 thousand due to the write-down in the prior year of the asset that was sold in the third quarter of 2023.
Statement Regarding use of Non-GAAP Financial Measures
Results for 2022 were impacted by costs associated with our 2021 acquisition of American River Bankshares, which we considered immaterial to discuss in this release. For additional information regarding the impact of non-GAAP adjustments to our third quarter and year-to-date 2022 performance measures, refer to Form 10-Q filed on November 8, 2022.
Financial results are presented in accordance with GAAP and with reference to certain non-GAAP financial measures. Management believes that, given recent industry turmoil, the presentation of Bancorp's non-GAAP TCE ratio reflecting the after tax impact of unrealized losses on held-to-maturity securities provides useful supplemental information to investors because it reflects the level of capital available to withstand drastic changes in market conditions. Because there are limits to the usefulness of this measure to investors, Bancorp encourages readers to consider its annual and quarterly consolidated financial statements and notes related thereto for their entirety, as filed with the Securities and Exchange Commission, and not to rely on any single financial measure. A reconciliation of the non-GAAP TCE ratio is presented below.
Reconciliation of GAAP and Non-GAAP Financial Measures
(in thousands, unaudited)
September 30,
2023
December 31,
2022
Tangible Common Equity - Bancorp
Total stockholders' equity
$
418,618
$
412,092
Goodwill and core deposit intangible
(76,850
)
(77,870
)
Total TCE
a
341,768
334,222
Unrealized losses on HTM securities, net of tax
(107,011
)
(89,432
)
TCE, net of unrealized losses on HTM securities (non-GAAP)
b
$
234,757
$
244,790
Total assets
$
4,035,549
$
4,147,464
Goodwill and core deposit intangible
(76,850
)
(77,870
)
Total tangible assets
c
3,958,699
4,069,594
Unrealized losses on HTM securities, net of tax
(107,011
)
(89,432
)
Total tangible assets, net of unrealized losses on HTM securities (non-GAAP)
d
$
3,851,688
$
3,980,162
Bancorp TCE ratio
a / c
8.6
%
8.2
%
Bancorp TCE ratio, net of unrealized losses on HTM securities (non-GAAP)
b / d
6.1
%
6.2
%
Share Repurchase Program
On July 21, 2023, the Board of Directors approved the adoption of Bancorp's new share repurchase program, which replaced the existing program that expired on July 31, 2023, for up to $25.0 million and expiring on July 31, 2025. There have been no repurchases in 2023.
Earnings Call and Webcast Information
Bank of Marin Bancorp (Nasdaq: BMRC) will present its second quarter earnings call via webcast on Monday, October 23, 2023 at 8:30 a.m. PT/11:30 a.m. ET. Investors can listen to the webcast online through Bank of Marin’s website at www.bankofmarin.com. under “Investor Relations.” To listen to the live call, please go to the website at least 15 minutes early to register, download and install any necessary audio software. For those who cannot listen to the live broadcast, a replay will be available at the same website location shortly after the call. Closed captioning will be available during the live webcast, as well as on the webcast replay.
About Bank of Marin Bancorp
Founded in 1990 and headquartered in Novato, Bank of Marin is the wholly owned subsidiary of Bank of Marin Bancorp (Nasdaq: BMRC). A leading business and community bank in Northern California, with assets of $4.0 billion, Bank of Marin has 27 retail branches and 8 commercial banking offices located across 10 counties. Bank of Marin provides commercial banking, personal banking, and wealth management and trust services. Specializing in providing legendary service to its customers and investing in its local communities, Bank of Marin has consistently been ranked one of the “Top Corporate Philanthropists" by the San Francisco Business Times and one of the “Best Places to Work” by the North Bay Business Journal. Bank of Marin Bancorp is included in the Russell 2000 Small-Cap Index and Nasdaq ABA Community Bank Index. For more information, go to www.bankofmarin.com.
Forward-Looking Statements
This release may contain certain forward-looking statements that are based on management's current expectations regarding economic, legislative, and regulatory issues that may impact Bancorp's earnings in future periods. Forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts. They often include the words “believe,” “expect,” “intend,” “estimate” or words of similar meaning, or future or conditional verbs such as “will,” “would,” “should,” “could” or “may.” Factors that could cause future results to vary materially from current management expectations include, but are not limited to, general economic conditions and the economic uncertainty in the United States and abroad, including economic or other disruptions to financial markets caused by acts of terrorism, war or other conflicts such as Russia's military action in Ukraine and more recently between Israel and Hamas, impacts from inflation, supply change disruptions, changes in interest rates (including the actions taken by the Federal Reserve to control inflation), California's unemployment rate, deposit flows, real estate values, and expected future cash flows on loans and securities; costs or effects of acquisitions; competition; changes in accounting principles, policies or guidelines; changes in legislation or regulation; natural disasters (such as wildfires and earthquakes in our area); adverse weather conditions; interruptions of utility service in our markets for sustained periods; and other economic, competitive, governmental, regulatory and technological factors (including external fraud and cybersecurity threats) affecting our operations, pricing, products and services; and successful integration of acquisitions. These and other important factors are detailed in various securities law filings made periodically by Bancorp, copies of which are available from Bancorp without charge. Bancorp undertakes no obligation to release publicly the result of any revisions to these forward-looking statements that may be made to reflect events or circumstances after the date of this press release or to reflect the occurrence of unanticipated events.
BANK OF MARIN BANCORP FINANCIAL HIGHLIGHTS
Three months ended
Nine months ended
(in thousands, except per share amounts; unaudited)
September 30,
2023
June 30,
2023
September 30,
2023
September 30,
2022
Selected operating data and performance ratios:
Net income
$
5,295
$
4,551
$
19,285
$
33,705
Diluted earnings per common share
$
0.33
$
0.28
$
1.20
$
2.11
Return on average assets
0.52
%
0.44
%
0.63
%
1.04
%
Return on average equity
4.94
%
4.25
%
6.07
%
10.65
%
Efficiency ratio
72.96
%
76.91
%
69.37
%
55.60
%
Tax-equivalent net interest margin 1
2.48
%
2.45
%
2.66
%
3.06
%
Cost of deposits
0.94
%
0.69
%
0.61
%
0.06
%
Net (recoveries) charge-offs
$
(3
)
$
(2
)
$
(2
)
$
(3
)
(in thousands; unaudited)
September 30,
2023
June 30,
2023
December 31,
2022
Selected financial condition data:
Total assets
$
4,035,549
$
4,092,133
$
4,147,464
Loans:
Commercial and industrial
$
174,096
$
183,157
$
173,547
Real estate:
Commercial owner-occupied
346,307
344,951
354,877
Commercial non-owner occupied
1,190,813
1,196,158
1,191,889
Construction
109,305
108,986
114,373
Home equity
83,267
85,587
88,748
Other residential
116,674
118,646
112,123
Installment and other consumer loans
66,480
65,311
56,989
Total loans
$
2,086,942
$
2,102,796
$
2,092,546
Non-accrual loans: 1
Real estate:
Commercial owner-occupied
$
4,281
$
457
$
1,563
Commercial non-owner occupied
901
906
—
Home equity
490
749
778
Installment and other consumer loans
—
—
91
Total non-accrual loans
$
5,672
$
2,112
$
2,432
Classified loans (graded substandard and doubtful)
$
39,697
$
38,061
$
28,109
Classified loans as a percentage of total loans
1.90
%
1.81
%
1.34
%
Total accruing loans 30-89 days past due
$
2,216
$
983
$
664
Allowance for credit losses to total loans
1.16
%
1.13
%
1.10
%
Allowance for credit losses to non-accrual loans
4.28x
11.28x
9.45x
Non-accrual loans to total loans
0.27
%
0.10
%
0.12
%
Total deposits
$
3,443,684
$
3,325,212
$
3,573,348
Loan-to-deposit ratio
60.6
%
63.2
%
58.6
%
Stockholders' equity
$
418,618
$
423,941
$
412,092
Book value per share
$
25.94
$
26.32
$
25.71
Tangible common equity to tangible assets - Bank
8.34
%
8.39
%
8.10
%
Tangible common equity to tangible assets - Bancorp
8.63
%
8.64
%
8.21
%
Total risk-based capital ratio - Bank
16.13
%
15.99
%
15.73
%
Total risk-based capital ratio - Bancorp
16.56
%
16.36
%
15.90
%
Full-time equivalent employees
334
317
313
1 There were no non-performing loans over 90 days past due and accruing interest as of September 30, 2023, June 30, 2023 and December 31, 2022.
BANK OF MARIN BANCORP
CONSOLIDATED STATEMENTS OF CONDITION
(in thousands, except share data; unaudited)
September 30,
2023
June 30,
2023
December 31,
2022
Assets
Cash, cash equivalents and restricted cash
$
123,132
$
39,657
$
45,424
Investment securities:
Held-to-maturity, at amortized cost (net of zero allowance for credit losses at September 30, 2023, June 30, 2023 and December 31, 2022)
935,142
946,808
972,207
Available-for-sale (at fair value; amortized cost of $755,038, $856,166 and $892,605 at September 30, 2023, June 30, 2023 and December 31, 2022, respectively; net of zero allowance for credit losses at September 30, 2023, June 30, 2023 and December 31, 2022)
658,815
770,942
802,096
Total investment securities
1,593,957
1,717,750
1,774,303
Loans, at amortized cost
2,086,942
2,102,796
2,092,546
Allowance for credit losses on loans
(24,260
)
(23,832
)
(22,983
)
Loans, net of allowance for credit losses on loans
2,062,682
2,078,964
2,069,563
Goodwill
72,754
72,754
72,754
Bank-owned life insurance
67,738
67,367
67,066
Operating lease right-of-use assets
21,589
22,739
24,821
Bank premises and equipment, net
8,174
8,683
8,134
Core deposit intangible, net
4,096
4,431
5,116
Other real estate owned
—
415
455
Interest receivable and other assets
81,427
79,373
79,828
Total assets
$
4,035,549
$
4,092,133
$
4,147,464
Liabilities and Stockholders' Equity
Liabilities
Deposits:
Non-interest bearing
$
1,642,244
$
1,588,723
$
1,839,114
Interest bearing
Transaction accounts
221,128
229,434
287,651
Savings accounts
257,754
274,510
338,163
Money market accounts
1,090,181
1,029,082
989,390
Time accounts
232,377
203,463
119,030
Total deposits
3,443,684
3,325,212
3,573,348
Short-term borrowings and other obligations
120,335
292,572
112,439
Operating lease liabilities
24,040
25,220
26,639
Interest payable and other liabilities
28,872
25,188
22,946
Total liabilities
3,616,931
3,668,192
3,735,372
Stockholders' Equity
Preferred stock, no par value, Authorized - 5,000,000 shares, none issued
—
—
—
Common stock, no par value, Authorized - 30,000,000 shares; issued and outstanding - 16,139,321, 16,107,192 and 16,029,138 at September 30, 2023, June 30 2023 and December 31, 2022, respectively
217,202
216,589
215,057
Retained earnings
277,996
276,732
270,781
Accumulated other comprehensive loss, net of taxes
(76,580
)
(69,380
)
(73,746
)
Total stockholders' equity
418,618
423,941
412,092
Total liabilities and stockholders' equity
$
4,035,549
$
4,092,133
$
4,147,464
BANK OF MARIN BANCORP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME
Three months ended
Nine months ended
(in thousands, except per share amounts; unaudited)
September 30,
2023
June 30,
2023
September 30,
2023
September 30,
2022
Interest income
Interest and fees on loans
$
24,704
$
24,579
$
73,541
$
70,368
Interest on investment securities
9,345
9,994
29,371
24,640
Interest on federal funds sold and due from banks
1,055
48
1,159
832
Total interest income
35,104
34,621
104,071
95,840
Interest expense
Interest on interest-bearing transaction accounts
270
234
758
230
Interest on savings accounts
229
146
545
93
Interest on money market accounts
5,988
4,292
11,365
1,184
Interest on time accounts
1,555
946
2,724
209
Interest on borrowings and other obligations
2,593
4,873
10,182
2
Total interest expense
10,635
10,491
25,574
1,718
Net interest income
24,469
24,130
78,497
94,122
Provision for (reversal of) credit losses on loans
425
500
1,275
(63
)
Reversal of credit losses on unfunded loan commitments
—
(168
)
(342
)
(318
)
Net interest income after provision for (reversal of) credit losses
24,044
23,798
77,564
94,503
Non-interest income
Wealth Management and Trust Services
515
559
1,585
1,737
Service charges on deposit accounts
508
520
1,561
1,488
Debit card interchange fees, net
456
555
1,458
1,538
Earnings on bank-owned life insurance, net
371
362
1,438
933
Dividends on Federal Home Loan Bank stock
324
290
916
759
Merchant interchange fees, net
117
127
377
430
Gains (losses) on sale of investment securities, net
14
—
14
(63
)
Other income
293
326
923
1,496
Total non-interest income
2,598
2,739
8,272
8,318
Non-interest expense
Salaries and related benefits
10,741
11,416
33,087
32,446
Occupancy and equipment
1,973
1,980
6,367
5,739
Data processing
1,009
922
2,976
3,569
Professional services
757
797
2,677
2,314
Depreciation and amortization
423
400
1,705
1,259
Federal Deposit Insurance Corporation insurance
469
666
1,424
886
Information technology
411
357
1,138
1,519
Amortization of core deposit intangible
335
340
1,020
1,124
Directors' expense
272
300
893
838
Charitable contributions
20
638
707
605
Other real estate owned
—
44
48
355
Other expense
3,337
2,805
8,150
6,305
Total non-interest expense
19,747
20,665
60,192
56,959
Income before provision for income taxes
6,895
5,872
25,644
45,862
Provision for income taxes
1,600
1,321
6,359
12,157
Net income
$
5,295
$
4,551
$
19,285
$
33,705
Net income per common share:
Basic
$
0.33
$
0.28
$
1.21
$
2.12
Diluted
$
0.33
$
0.28
$
1.20
$
2.11
Weighted average shares:
Basic
16,028
16,009
16,002
15,912
Diluted
16,036
16,016
16,017
15,959
Comprehensive (loss) income:
Net income
$
5,295
$
4,551
$
19,285
$
33,705
Other comprehensive (loss) income:
Change in net unrealized gains or losses on available-for-sale securities
(13,425
)
(10,928
)
(8,140
)
(97,094
)
Reclassification adjustment for losses (gains) on available-for-sale securities included in net income
2,793
—
2,793
63
Net unrealized losses on securities transferred from available-for-sale to held-to-maturity
—
—
—
(14,847
)
Amortization of net unrealized losses on securities transferred from available-for-sale to held-to-maturity
411
451
1,325
1,126
Other comprehensive (loss) income, before tax
(10,221
)
(10,477
)
(4,022
)
(110,752
)
Deferred tax (benefit) expense
(3,021
)
(3,097
)
(1,188
)
(32,741
)
Other comprehensive (loss) income, net of tax
(7,200
)
(7,380
)
(2,834
)
(78,011
)
Total comprehensive (loss) income
$
(1,905
)
$
(2,829
)
$
16,451
$
(44,306
)
BANK OF MARIN BANCORP
AVERAGE STATEMENTS OF CONDITION AND ANALYSIS OF NET INTEREST INCOME
Three months ended
Three months ended
September 30, 2023
June 30, 2023
Interest
Interest
Average
Income/
Yield/
Average
Income/
Yield/
(in thousands)
Balance
Expense
Rate
Balance
Expense
Rate
Assets
Interest-earning deposits with banks 1
$
76,896
$
1,055
5.37
%
$
3,578
$
48
5.35
%
Investment securities 2, 3
1,721,367
9,436
2.19
%
1,819,486
10,103
2.22
%
Loans 1, 3, 4
2,096,814
24,823
4.63
%
2,108,260
24,700
4.63
%
Total interest-earning assets 1
3,895,077
35,314
3.55
%
3,931,324
34,851
3.51
%
Cash and non-interest-bearing due from banks
37,964
38,154
Bank premises and equipment, net
8,428
8,546
Interest receivable and other assets, net
134,075
141,130
Total assets
$
4,075,544
$
4,119,154
Liabilities and Stockholders' Equity
Interest-bearing transaction accounts
$
230,085
$
270
0.47
%
$
232,090
$
234
0.41
%
Savings accounts
266,770
229
0.34
%
285,745
146
0.20
%
Money market accounts
1,046,011
5,988
2.27
%
948,670
4,292
1.81
%
Time accounts including CDARS
217,467
1,555
2.84
%
174,471
946
2.18
%
Short-term borrowings and other obligations 1
188,415
2,593
5.39
%
372,308
4,873
5.18
%
Total interest-bearing liabilities
1,948,748
10,635
2.17
%
2,013,284
10,491
2.09
%
Demand accounts
1,649,691
1,627,730
Interest payable and other liabilities
52,067
49,116
Stockholders' equity
425,038
429,024
Total liabilities & stockholders' equity
$
4,075,544
$
4,119,154
Tax-equivalent net interest income/margin 1
$
24,679
2.48
%
$
24,360
2.45
%
Reported net interest income/margin 1
$
24,469
2.46
%
$
24,130
2.43
%
Tax-equivalent net interest rate spread
1.38
%
1.42
%
Nine months ended
Nine months ended
September 30, 2023
September 30, 2022
Interest
Interest
Average
Income/
Yield/
Average
Income/
Yield/
(in thousands)
Balance
Expense
Rate
Balance
Expense
Rate
Assets
Interest-earning deposits with banks 1
$
28,710
$
1,159
5.32
%
$
140,114
$
832
0.78
%
Investment securities 2, 3
1,797,054
29,731
2.21
%
1,770,882
25,214
1.90
%
Loans 1, 3, 4
2,108,840
73,938
4.62
%
2,196,173
70,944
4.26
%
Total interest-earning assets 1
3,934,604
104,828
3.51
%
4,107,169
96,990
3.11
%
Cash and non-interest-bearing due from banks
38,641
56,585
Bank premises and equipment, net
8,457
7,220
Interest receivable and other assets, net
137,428
159,994
Total assets
$
4,119,130
$
4,330,968
Liabilities and Stockholders' Equity
Interest-bearing transaction accounts
$
244,688
$
758
0.41
%
$
296,239
$
230
0.10
%
Savings accounts
293,709
545
0.25
%
342,704
93
0.04
%
Money market accounts
982,729
11,365
1.55
%
1,074,597
1,184
0.15
%
Time accounts including CDARS
172,991
2,724
2.11
%
144,807
209
0.19
%
Short-term borrowings and other obligations 1
260,973
10,182
5.14
%
368
2
0.71
%
Total interest-bearing liabilities
1,955,090
25,574
1.75
%
1,858,715
1,718
0.12
%
Demand accounts
1,689,615
1,999,433
Interest payable and other liabilities
49,819
49,747
Stockholders' equity
424,606
423,073
Total liabilities & stockholders' equity
$
4,119,130
$
4,330,968
Tax-equivalent net interest income/margin 1
$
79,254
2.66
%
$
95,272
3.06
%
Reported net interest income/margin 1
$
78,497
2.63
%
$
94,122
3.02
%
Tax-equivalent net interest rate spread
1.76
%
2.99
%
1 Interest income/expense is divided by actual number of days in the period times 360 days to correspond to stated interest rate terms, where applicable.
2 Yields on available-for-sale securities are calculated based on amortized cost balances rather than fair value, as changes in fair value are reflected as a component of stockholders' equity. Investment security interest is earned on 30/360 day basis monthly.
3 Yields and interest income on tax-exempt securities and loans are presented on a taxable-equivalent basis using the Federal statutory rate of 21 percent in 2023 and 2022.
4 Average balances on loans outstanding include non-performing loans. The amortized portion of net loan origination fees is included in interest income on loans, representing an adjustment to the yield.
View source version on businesswire.com: https://www.businesswire.com/news/home/20231023694588/en/
MEDIA: Yahaira Garcia-Perea Marketing & Corporate Communications Manager 916-823-7214 | YahairaGarcia-Perea@bankofmarin.com
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