Investor Relations

Press Release

Bank of Marin Bancorp Reports Fourth Quarter and Full Year 2020 Earnings

Company Release - 1/25/2021 8:00 AM ET

Announces $0.23 Dividend

NOVATO, Calif.--(BUSINESS WIRE)-- Bank of Marin Bancorp, "Bancorp" (Nasdaq: BMRC), parent company of Bank of Marin, "Bank," announced earnings of $8.1 million in the fourth quarter of 2020, compared to $7.5 million in the third quarter of 2020 and $9.1 million in the fourth quarter of 2019. Diluted earnings per share were $0.60 in the fourth quarter of 2020, compared to $0.55 in the prior quarter and $0.66 the same quarter a year ago. Annual earnings were $30.2 million in 2020 compared to $34.2 million in 2019. Diluted earnings per share were $2.22 for the year ended December 31, 2020, compared to $2.48 per share for the year ended December 31, 2019.

"We effectively served our clients and produced strong results for our shareholders in an extraordinary and challenging year,” said Russell A. Colombo, President and Chief Executive Officer. “We have gained actionable insight into the future of our relationship banking model, adapting to customers' increased adoption of technology and leveraging remote work to recruit and retain the best talent."

Bancorp also provided the following highlights for the fourth quarter and year ended December 31, 2020:

  • Loans increased $245.3 million in 2020, or 13%, to $2.089 billion at December 31, 2020, from $1.843 billion at December 31, 2019. SBA PPP loans outstanding at December 31, 2020 were $291.6 million. Loans decreased $19.4 million, or 1%, in the fourth quarter from $2.108 billion at September 30, 2020, which included $10.9 million of PPP loans forgiven in the fourth quarter of 2020.
  • Credit quality remains strong, with non-accrual loans representing 0.44% of the Bank's loan portfolio as of December 31, 2020. We adopted the current expected credit loss ("CECL") standard in the fourth quarter of 2020, which resulted in an increase to the allowance for credit losses for loans of $748 thousand and a $1.1 million increase to the allowance for unfunded loan commitments. See the Loan and Credit Quality section, below, for detail on the adoption of CECL.
  • Deposits grew $167.8 million, or 7%, to $2.504 billion at December 31, 2020, compared to $2.336 billion at December 31, 2019. Non-interest bearing deposits grew by $225.8 million, or 20%, in 2020 and made up 54% of total deposits at year end. Cost of deposits remained low at 0.11% for the full year of 2020, down from 0.20% in 2019. Cost of deposits was 0.07% for the fourth quarter of 2020, compared to 0.09% in the prior quarter. Additionally, the Bank maintained $173.4 million deposits off-balance sheet with deposit networks as part of our liquidity management.
  • For the full year 2020, return on assets ("ROA") and return on equity ("ROE") were 1.04% and 8.60%, respectively, compared to 1.34% and 10.49% in the prior year. For the quarter ended December 31, 2020, ROA was 1.09% and ROE was 8.98%, compared to 0.98% and 8.37%, respectively, in the prior quarter.
  • All capital ratios were above regulatory requirements for a well-capitalized institution. The total risk-based capital ratio for Bancorp was 16.0% at December 31, 2020 and 15.1% at December 31, 2019. Tangible common equity to tangible assets was 11.3% at both December 31, 2020 and December 31, 2019 (refer to footnote 5 on page 6 for definition of this non-GAAP financial measure). The total risk-based capital ratio for the Bank was 15.8% at December 31, 2020 and 14.6% at December 31, 2019.
  • The Board of Directors declared a cash dividend of $0.23 per share on January 22, 2021. This is the 63rd consecutive quarterly dividend paid by Bank of Marin Bancorp. The cash dividend is payable on February 12, 2021 to shareholders of record at the close of business on February 5, 2021.
  • Our strong capital and liquidity position affords us the opportunity to eliminate a high cost funding source. On March 15, 2021 we intend to redeem the $2.8 million subordinated debentures, which carried a rate of 4.85% in the fourth quarter. The redemption will consist of $4.1 million principal balance, quarterly interest due, and $1.3 million in accelerated accretion of purchase discount. The contractual interest rate on the subordinated debentures is 3-month LIBOR plus 1.40%, or 1.62% as of December 31, 2020.

Pandemic-Related Response Update

As of December 31, 2020, there were 1,777 PPP loans outstanding totaling $291.6 million, net of $5.4 million in unaccreted fees and costs. During the fourth quarter Bank of Marin opened a secure PPP loan forgiveness application portal and gave all PPP borrowers access to apply. As of December 31, 2020 we received SBA loan forgiveness payments totaling $10.9 million for 35 loans that were forgiven. Of the total PPP loans remaining, 74% (1,309 loans) totaling $58.7 million are less than or equal to $150 thousand and have access to streamlined forgiveness processing. On January 19, 2021, the Bank launched the application process and began accepting loan requests for the PPP program as revised by the Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act.

Of the 269 loans totaling $402.9 million granted payment relief since the onset of the pandemic, 222 loans or $324.2 million have resumed normal payments and 18 loans or $7.7 million paid off. As of December 31, 2020, 14 borrowing relationships with 29 loans totaling $71.0 million had requested additional payment relief. We know each of these clients very well and anticipate that the vast majority will work through current adverse conditions and resume payments. The following table summarizes these loans by industry or collateral type.

Payment Relief by Type

Industry/Collateral Type

Outstanding
Loan Balance

(in thousands)

Weighted Average
LTV

Education

$

17,580

26

%

Health Clubs

16,551

38

%

Office and Mixed Use

15,883

44

%

Hospitality

12,439

49

%

Retail Related CRE

6,899

52

%

Auto Dealership

393

49

%

Non-CRE Related

121

N/A

 

Residential Real Estate

1,130

60

%

Payment Relief Totals

$

70,996

40

%

Loans and Credit Quality

Loans declined $19.4 million in the fourth quarter of 2020 and totaled $2.089 billion at December 31, 2020. For the quarter and year ended December 31, 2020, new non-PPP-related loan originations were $43.1 million and $165.5 million, respectively, compared to 2019 loan originations of $103.4 million and $259.6 million for the same periods. New loan originations were more than offset by payoffs of $55.4 million in the fourth quarter and $180.1 million for the full year ended December 31, 2020. Fourth quarter and year to date 2020 loan payoffs were concentrated in consumer and retail loans (mostly tenant in common and HELOC) and commercial loans on which underlying assets were sold or paid off with cash. Other sources of payoffs were loans refinanced with other banks and SBA PPP loans forgiven.

Non-accrual loans totaled $9.2 million, or 0.44% of the Bank's loan portfolio at December 31, 2020, an increase from $1.4 million, or 0.07%, at September 30, 2020 and $226 thousand, or 0.01%, a year ago. The increase from the prior quarter was primarily due to one well-secured commercial real estate loan where the primary tenant is a health club that was severely affected by the prolonged shutdown due to the pandemic. Loans classified substandard totaled $25.8 million at December 31, 2020, $11.0 million at September 30, 2020, and $9.9 million at December 31, 2019. There were no loans classified doubtful at December 31, 2020 or December 31, 2019. The increase in substandard loans was primarily due to two well-secured loans for hotel properties and one well-secured commercial real estate loan, mentioned above, that were negatively impacted by the pandemic. Accruing loans past due 30 to 89 days totaled $1.8 million at December 31, 2020, compared to $318 thousand at September 30, 2020 and $1.5 million a year ago.

Net recoveries for the fourth quarter of 2020 totaled $13 thousand compared to net charge-offs of $4 thousand last quarter and $63 thousand in the fourth quarter of 2019. Net charge-offs totaled $1 thousand for the year ended December 31, 2020, compared to $44 thousand in 2019. The ratio of loan loss reserve to loans was 1.10% at December 31, 2020, 1.05% at September 30, 2020 and 0.90% at December 31, 2019.

Adoption of CECL

We adopted the CECL accounting standard on December 31, 2020, which was previously postponed under the optional accounting relief provisions of the Coronavirus Aid, Relief and Economic Security ("CARES") Act passed in March 2020 to the earlier of the end of the national emergency or December 31, 2020. During the first nine months of 2020, we applied the incurred loss method in determining the allowance for credit losses on loans ("ACL") and recorded a $5.5 million provision for credit losses and a $610 thousand provision for credit losses on unfunded loan commitments. Upon adoption of the CECL standard, we increased the ACL by $748 thousand and the allowance for credit losses on unfunded loan commitments by $1.1 million, which represented the difference between allowances calculated under the CECL method as of December 31, 2020 and the incurred loss method as of September 30, 2020. The $1.1 million increase in the allowance for unfunded loan commitments includes approximately $550 thousand related to a $36.9 million increase in available commitments during the fourth quarter of 2020.

The following table shows the impact to our financial statement due to adoption of CECL as of and during the quarter ended December 31, 2020.

(in thousands)

Pre-tax increase (decrease) upon the adoption of CECL

Deferred tax
effect

After tax impact of adoption of CECL

Impact to allowance for credit losses on loans:

 

 

 

Allowance for credit losses on loans

$

748

 

 

 

Retained earnings (cumulative transition adjustment)

$

(1,604

)

$

474

 

$

(1,130

)

Net income (reversal of provision for credit losses on loans)

$

856

 

$

(253

)

$

603

 

Impact to allowance for credit losses on unfunded loan commitments:

 

 

 

Allowance for credit losses on unfunded commitments

$

1,082

 

 

 

Retained earnings (cumulative transition adjustment)

$

(122

)

$

36

 

$

(86

)

Net income (provision for credit losses on unfunded commitments)

$

(960

)

$

284

 

$

(676

)

Cash, Cash Equivalents and Restricted Cash

Total cash, cash equivalents and restricted cash were $200.3 million at December 31, 2020, compared to $213.6 million at September 30, 2020. The $13.3 million decrease was primarily due to temporary transfers of deposits to third-party deposit networks as part of our liquidity management. Effective March 26, 2020, the Federal Reserve reduced the reserve requirement ratios to zero percent in response to the COVID-19 pandemic, resulting in no restricted cash requirements as of December 31, 2020 and September 30, 2020.

Investments

The investment portfolio totaled $501.4 million at December 31, 2020, a decrease of $29.4 million from September 30, 2020 and a decrease of $68.3 million from December 31, 2019. The decrease in the fourth quarter of 2020 was primarily attributed to calls of $25.4 million, principal paydowns of $28.7 million, and maturities of $1.1 million, partially offset by purchases of securities totaling $25.8 million. The year-over-year decrease was a combination of principal paydowns of $89.8 million, calls of $38.4 million, sales of $32.8 million, and maturities of $15.0 million, partially offset by purchases of $97.5 million, and an $11.0 million increase in the fair value of available-for-sale securities.

Deposits

Deposits totaled $2.504 billion at December 31, 2020, compared to $2.569 billion at September 30, 2020 and $2.336 billion at December 31, 2019. The $65.1 million decrease in deposits from the prior quarter primarily resulted from normal year-end cash fluctuations in some of our large clients' business accounts and continued PPP spending. The average cost of deposits decreased 2 basis points in the fourth quarter to 0.07%. The average cost of deposits for the full year of 2020 was 0.11%, down 9 basis points from 2019.

Earnings

“Bank of Marin remains true to our disciplined fundamentals of solid credit quality, capital, liquidity and expense management. Our low-cost deposit franchise is a testament to our relationship banking model,” said Tani Girton, EVP and Chief Financial Officer. “We enter 2021 confident in our ability to shift into growth mode when we transition to a post-pandemic economy."

Net Interest Income

Net interest income totaled $23.6 million in the fourth quarter of 2020, compared to $24.6 million in the prior quarter and $23.9 million in the same quarter a year ago. The $1.0 million decrease from the prior quarter primarily related to lower SBA PPP loan income, lower average loan balances across all categories (with the exception of commercial real-estate), lower average investment securities balances, and lower yields on commercial real-estate loans. Yields on investment securities partially offset the negative variances.

The $295 thousand net interest income decrease from the same quarter last year was primarily due to lower yields across interest-earning assets and lower average balances across several loan categories and investment securities. Decreases were largely offset by higher SBA PPP loan income, lower rates on interest-bearing deposits, and higher average commercial real-estate and construction loan balances.

The tax-equivalent net interest margin was 3.40% for the fourth quarter of 2020, compared to 3.44% in the prior quarter and 3.82% in the fourth quarter of 2019. The 4 basis point decrease from the prior quarter was primarily due to extension of payment deferral from six months to sixteen months on SBA PPP loans, which extended the period over which the net fees are accreted, lower loan volume, and lower rates on loans. The impact of the SBA PPP loans lowered the fourth quarter 2020 net interest margin by 13 basis points as compared to 4 basis points in the prior quarter. The 42 basis point decrease from the same quarter a year ago was due to lower yields on most interest-earning asset categories, partially offset by lower rates on interest-bearing deposits.

Net interest income totaled $96.7 million and $95.7 million in 2020 and 2019, respectively. The $1.0 million increase in 2020 was primarily due to SBA PPP loans and lower rates on interest-bearing deposits, largely offset by lower yields on earning-assets. Notable balance increases occurred in interest-earning balances with other banks, commercial real estate loans and deposits. The tax-equivalent net interest margin decreased 43 basis points to 3.55% in 2020, from 3.98% in 2019 for the reasons mentioned above, somewhat offset by higher loan balances.

Non-Interest Income

Non-interest income totaled $1.8 million in the fourth and third quarter of 2020, compared to $2.3 million in the fourth quarter of 2019. The $491 thousand decrease in the fourth quarter of 2020, compared to the fourth quarter a year ago, primarily resulted from lower fee income related to lower interest rates on one-way deposit sales to third-party networks, fewer service charges on deposit accounts, and lower dividends on Federal Home Loan Bank ("FHLB") stock.

Non-interest income totaled $8.6 million in 2020, a $534 thousand decrease from $9.1 million in 2019. The decline was primarily due to $699 thousand fewer service charges on deposit accounts and ATM fees, lower income from bank-owned life insurance ("BOLI") policies due to the $562 thousand benefit collected on BOLI policies in the third quarter of 2019 (partially offset by $283 thousand underwriting expenses for two new BOLI policies in the first quarter of 2019), $182 thousand lower fee income from one-way deposit sales to third-party deposit networks and $145 thousand lower dividends on FHLB stock, partially offset by $860 thousand net gains on the sale of investment securities.

Non-Interest Expense

Non-interest expense totaled $15.2 million in the fourth and third quarter of 2020. Decreases in charitable contributions, salaries and related benefits, and professional service fees were almost entirely offset by a higher provision for credit losses on unfunded loan commitments.

The $1.9 million increase in non-interest expense from $13.3 million in fourth quarter of 2019 was mainly attributed to a $960 thousand provision for losses on unfunded loan commitments in the fourth quarter of 2020, $587 thousand higher salaries and related benefits primarily due to annual merit increases and incentive bonuses, $316 thousand higher occupancy and equipment expenses mostly due to lease renewals for our existing headquarters offices and new lease for a loan production office in San Mateo, and $168 thousand higher Federal Deposit Insurance Corporation ("FDIC") insurance expense due to the receipt of FDIC assessment credits in 2019.

Non-interest expense increased $2.0 million from $58.0 million in 2019 to $60.0 million in 2020. The largest increases came from the provision for unfunded loan commitments, occupancy expenses (primarily due to lease renewals mentioned above, common area maintenance and janitorial expenses), and charitable contributions. The decrease in data processing costs was due to our digital platform conversion in 2019. While salaries and related benefits were relatively unchanged year over year, annual merit and related increases were mostly offset by $915 thousand in SBA PPP-related deferred loan origination costs.

Share Repurchase Program

On October 23, 2020, the Board reactivated the $25.0 million share repurchase program that was suspended in March 2020. Bancorp repurchased 111,045 shares totaling $4.0 million in the fourth quarter of 2020 for a cumulative total of 169,571 shares totaling $5.8 million under this program. Repurchases for the full year 2020, under our current and prior repurchase program, were 203,709 shares totaling $7.2 million.

Earnings Call and Webcast Information

Bank of Marin Bancorp will webcast its fourth quarter and year end 2020 earnings call on Monday, January 25, 2021 at 8:30 a.m. PT/11:30 a.m. ET. Investors will have the opportunity to listen to the conference call online through Bank of Marin’s website at https://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.

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 the San Francisco Bay Area, with assets of $2.9 billion, Bank of Marin has 21 retail branches, 5 commercial banking offices and 2 loan production offices located across 7 Bay Area 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, natural disasters (such as wildfires and earthquakes), our borrowers’ actual payment performance as loan deferrals related to the COVID-19 pandemic expire, changes to statutes, regulations, or regulatory policies or practices as a result of, or in response to COVID-19, including the potential adverse impact of loan modifications and payment deferrals implemented consistent with recent regulatory guidance, general economic conditions, economic uncertainty in the United States and abroad, changes in interest rates, deposit flows, real estate values, costs or effects of acquisitions, competition, changes in accounting principles, policies or guidelines, legislation or regulation (including the Tax Cuts & Jobs Act of 2017 and the Coronavirus Aid, Relief and Economic Security Act of 2020, as amended), 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 Bancorp's operations, pricing, products and services. 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.

(BMRC-ER)

BANK OF MARIN BANCORP FINANCIAL HIGHLIGHTS

 

(dollars in thousands, except per share data; unaudited)

December 31,
2020

 

September 30,
2020

 

December 31,
2019

Quarter-to-Date

 

 

 

 

 

Net income

$

8,117

 

 

$

7.491

 

 

$

9,079

 

Diluted earnings per common share

$

0.60

 

 

$

0.55

 

 

$

0.66

 

Return on average assets

 

1.09

%

 

 

0.98

%

 

 

1.37

%

Return on average equity

 

8.98

%

 

 

8.37

%

 

 

10.75

%

Efficiency ratio

 

59.70

%

 

 

57.82

%

 

 

50.84

%

Tax-equivalent net interest margin 1

 

3.40

%

 

 

3.44

%

 

 

3.82

%

Cost of deposits

 

0.07

%

 

 

0.09

%

 

 

0.23

%

Net (recoveries) charge-offs

$

(13

)

 

$

4

 

 

$

63

 

Year-to-Date

 

 

 

 

 

Net income

$

30,242

 

 

 

 

$

34,241

 

Diluted earnings per common share

$

2.22

 

 

 

 

$

2.48

 

Return on average assets

 

1.04

%

 

 

 

 

1.34

%

Return on average equity

 

8.60

%

 

 

 

 

10.49

%

Efficiency ratio

 

57.06

%

 

 

 

 

55.33

%

Tax-equivalent net interest margin 1

 

3.55

%

 

 

 

 

3.98

%

Cost of deposits

 

0.11

%

 

 

 

 

0.20

%

Net charge-offs

$

1

 

 

 

 

$

44

 

At Period End

 

 

 

 

 

Total assets

$

2,911,926

 

 

$

2,975,225

 

 

$

2,707,280

 

Loans:

 

 

 

 

 

Commercial and industrial 2

$

498,408

 

 

$

512,973

 

 

$

246,687

 

Real estate:

 

 

 

 

 

Commercial owner-occupied

 

304,963

 

 

 

299,754

 

 

 

308,824

 

Commercial investor-owned

 

961,208

 

 

 

966,517

 

 

 

946,317

 

Construction

 

73,046

 

 

 

66,663

 

 

 

61,095

 

Home Equity

 

104,813

 

 

 

107,364

 

 

 

116,024

 

Other residential

 

123,395

 

 

 

130,915

 

 

 

136,657

 

Installment and other consumer loans

 

22,723

 

 

 

23,805

 

 

 

27,682

 

Total loans

$

2,088,556

 

 

$

2,107,991

 

 

$

1,843,286

 

Non-performing loans:3

 

 

 

 

 

Real estate:

 

 

 

 

 

Commercial owner-occupied

$

7,147

 

 

$

 

 

$

 

Commercial investor-owned

 

1,610

 

 

 

886

 

 

 

 

Home equity

 

459

 

 

 

532

 

 

 

168

 

Installment and other consumer loans

 

17

 

 

 

24

 

 

 

58

 

Total non-accrual loans

$

9,233

 

 

$

1,442

 

 

$

226

 

Classified loans (graded substandard and doubtful)

$

25,829

 

 

$

10,999

 

 

$

9,934

 

Total accruing loans 30-89 days past due

$

1,827

 

 

$

318

 

 

$

1,481

 

Allowance for credit losses to total loans

 

1.10

%

 

 

1.05

%

 

 

0.90

%

Allowance for credit losses to total loans, excluding acquired and SBA PPP loans 4

 

1.27

%

 

 

1.29

%

 

 

0.96

%

Allowance for credit losses to non-performing loans

 

2.48

x

 

 

15.34

x

 

 

73.86

x

Non-accrual loans to total loans

 

0.44

%

 

 

0.07

%

 

 

0.01

%

Total deposits

$

2,504,249

 

 

$

2,569,289

 

 

$

2,336,489

 

Loan-to-deposit ratio

 

83.4

%

 

 

82.0

%

 

 

78.9

%

Stockholders' equity

$

358,253

 

 

$

357,570

 

 

$

336,788

 

Book value per share

$

26.54

 

 

$

26.28

 

 

$

24.81

 

Tangible common equity to tangible assets 5

 

11.3

%

 

 

11.0

%

 

 

11.3

%

Total risk-based capital ratio - Bank

 

15.8

%

 

 

15.5

%

 

 

14.6

%

Total risk-based capital ratio - Bancorp

 

16.0

%

 

 

16.1

%

 

 

15.1

%

Full-time equivalent employees

 

289

 

 

 

291

 

 

 

290

 

1 Net interest income is annualized by dividing actual number of days in the period times 360 days.

2 Includes SBA PPP loans of $291.6 million and $301.7 million at December 31, 2020 and September 30, 2020, respectively. There were no SBA PPP loans at December 31, 2019.

3 Excludes accruing troubled-debt restructured loans of $12.5 million, $12.6 million and $11.3 million at December 31, 2020, September 30, 2020 and December 31, 2019, respectively.

4 The allowance for credit losses to total loans, excluding non-impaired acquired loans and guaranteed SBA PPP loans, is considered a meaningful non-GAAP financial measure, as it represents only those loans that were considered in the calculation of the allowance for credit losses. Due to the adoption of CECL on December 31, 2020, all loans previously considered "acquired" are now included in the calculation of the allowance for credit losses. Acquired loans that were not impaired at September 30, 2020 and December 31, 2019 totaled $90.4 million and $106.8 million, respectively. Refer to footnote 2 above for SBA PPP loan totals.

5 Tangible common equity to tangible assets is considered to be a meaningful non-GAAP financial measure of capital adequacy and is useful for investors to assess Bancorp's ability to absorb potential losses. Tangible common equity includes common stock, retained earnings and unrealized gains on available for sale securities, net of tax, less goodwill and core deposit intangible assets of $34.0 million, $34.2 million and $34.8 million at December 31, 2020, September 30, 2020 and December 31, 2019, respectively. Tangible assets excludes goodwill and core deposit intangible assets.

BANK OF MARIN BANCORP

CONSOLIDATED STATEMENTS OF CONDITION

at December 31, 2020, September 30, 2020 and December 31, 2019

 

(in thousands, except share data; unaudited)

December 31, 2020

September 30, 2020

December 31, 2019

Assets

 

 

 

Cash, cash equivalents and restricted cash

$

200,320

 

$

213,584

 

$

183,388

 

Investment securities:

 

 

 

Held-to-maturity, at amortized cost; net of zero allowance for credit losses, respectively

 

109,036

 

 

117,350

 

 

137,413

 

Available-for-sale (at fair value; amortized cost of $373,038, $394,437 and $423,923 at December 31, 2020, September 30, 2020 and December 31, 2019, respectively)

 

392,351

 

 

413,464

 

 

432,260

 

Total investment securities

 

501,387

 

 

530,814

 

 

569,673

 

Loans, amortized cost

 

2,088,556

 

 

2,107,991

 

 

1,843,286

 

Allowance for credit losses

 

(22,874

)

 

(22,113

)

 

(16,677

)

Loans, net of allowance for credit losses

 

2,065,682

 

 

2,085,878

 

 

1,826,609

 

Bank premises and equipment, net

 

4,919

 

 

5,266

 

 

6,070

 

Goodwill

 

30,140

 

 

30,140

 

 

30,140

 

Core deposit intangible

 

3,831

 

 

4,045

 

 

4,684

 

Operating lease right-of-use assets

 

25,612

 

 

26,041

 

 

11,002

 

Interest receivable and other assets

 

80,035

 

 

79,457

 

 

75,714

 

Total assets

$

2,911,926

 

$

2,975,225

 

$

2,707,280

 

Liabilities and Stockholders' Equity

 

 

 

Liabilities

 

 

 

Deposits

 

 

 

Non-interest bearing

$

1,354,650

 

$

1,383,719

 

$

1,128,823

 

Interest bearing

 

 

 

Transaction accounts

 

183,552

 

 

156,061

 

 

142,329

 

Savings accounts

 

201,507

 

 

192,764

 

 

162,817

 

Money market accounts

 

667,107

 

 

738,661

 

 

804,710

 

Time accounts

 

97,433

 

 

98,084

 

 

97,810

 

Total deposits

 

2,504,249

 

 

2,569,289

 

 

2,336,489

 

Borrowings and other obligations

 

58

 

 

99

 

 

212

 

Subordinated debentures

 

2,777

 

 

2,760

 

 

2,708

 

Operating lease liabilities

 

27,062

 

 

27,527

 

 

12,615

 

Interest payable and other liabilities

 

19,527

 

 

17,980

 

 

18,468

 

Total liabilities

 

2,553,673

 

 

2,617,655

 

 

2,370,492

 

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 - 13,500,453,
13,605,363 and 13,577,008 at December 31, 2020, September 30, 2020 and
December 31, 2019, respectively

 

125,905

 

 

129,284

 

 

129,058

 

Retained earnings

 

219,747

 

 

215,976

 

 

203,227

 

Accumulated other comprehensive income, net of taxes

 

12,601

 

 

12,310

 

 

4,503

 

Total stockholders' equity

 

358,253

 

 

357,570

 

 

336,788

 

Total liabilities and stockholders' equity

$

2,911,926

 

$

2,975,225

 

$

2,707,280

 

BANK OF MARIN BANCORP

CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

 

 

Three months ended

Years ended

(in thousands, except per share amounts; unaudited)

December 31,
2020

September 30,
2020

December 31,
2019

December 31,
2020

December 31,
2019

Interest income

 

 

 

 

 

Interest and fees on loans

$

20,794

 

$

21,776

$

21,123

 

$

84,674

 

$

84,331

 

Interest on investment securities

 

3,254

 

 

3,343

 

3,543

 

 

14,503

 

 

14,785

 

Interest on federal funds sold and due from banks

 

40

 

 

50

 

567

 

 

461

 

 

1,321

 

Total interest income

 

24,088

 

 

25,169

 

25,233

 

 

99,638

 

 

100,437

 

Interest expense

 

 

 

 

 

Interest on interest-bearing transaction accounts

 

40

 

 

41

 

78

 

 

186

 

 

347

 

Interest on savings accounts

 

18

 

 

17

 

18

 

 

68

 

 

70

 

Interest on money market accounts

 

278

 

 

377

 

1,033

 

 

2,009

 

 

3,439

 

Interest on time accounts

 

118

 

 

133

 

154

 

 

554

 

 

595

 

Interest on borrowings and other obligations

 

1

 

 

 

2

 

 

4

 

 

77

 

Interest on subordinated debentures

 

34

 

 

35

 

54

 

 

158

 

 

229

 

Total interest expense

 

489

 

 

603

 

1,339

 

 

2,979

 

 

4,757

 

Net interest income

 

23,599

 

 

24,566

 

23,894

 

 

96,659

 

 

95,680

 

(Reversal of) provision for credit losses

 

(856

)

 

1,250

 

500

 

 

4,594

 

 

900

 

Net interest income after provision for credit losses

 

24,455

 

 

23,316

 

23,394

 

 

92,065

 

 

94,780

 

Non-interest income

 

 

 

 

 

Service charges on deposit accounts

 

286

 

 

284

 

462

 

 

1,314

 

 

1,865

 

Wealth Management and Trust Services

 

476

 

 

450

 

501

 

 

1,851

 

 

1,907

 

Debit card interchange fees, net

 

387

 

 

383

 

386

 

 

1,438

 

 

1,586

 

Merchant interchange fees, net

 

56

 

 

63

 

78

 

 

239

 

 

331

 

Earnings on bank-owned life Insurance, net

 

232

 

 

232

 

226

 

 

973

 

 

1,196

 

Dividends on FHLB stock

 

151

 

 

149

 

208

 

 

654

 

 

799

 

Gains on investment securities, net

 

 

 

 

 

 

915

 

 

55

 

Other income

 

239

 

 

229

 

457

 

 

1,166

 

 

1,345

 

Total non-interest income

 

1,827

 

 

1,790

 

2,318

 

 

8,550

 

 

9,084

 

Non-interest expense

 

 

 

 

 

Salaries and related benefits

 

8,414

 

 

8,638

 

7,827

 

 

34,393

 

 

34,253

 

Occupancy and equipment

 

1,843

 

 

1,776

 

1,527

 

 

6,943

 

 

6,143

 

Depreciation and amortization

 

558

 

 

539

 

527

 

 

2,149

 

 

2,228

 

Federal Deposit Insurance Corporation insurance

 

175

 

 

181

 

7

 

 

474

 

 

361

 

Data processing

 

747

 

 

822

 

775

 

 

3,184

 

 

3,717

 

Professional services

 

432

 

 

655

 

431

 

 

2,181

 

 

2,132

 

Directors' expense

 

180

 

 

184

 

180

 

 

713

 

 

735

 

Information technology

 

292

 

 

256

 

243

 

 

1,050

 

 

1,065

 

Amortization of core deposit intangible

 

214

 

 

213

 

222

 

 

853

 

 

887

 

Provision for credit losses on unfunded loan commitments

 

960

 

 

248

 

 

 

1,570

 

 

129

 

Charitable contributions

 

113

 

 

481

 

130

 

 

1,034

 

 

508

 

Other expense

 

1,252

 

 

1,245

 

1,457

 

 

5,484

 

 

5,812

 

Total non-interest expense

 

15,180

 

 

15,238

 

13,326

 

 

60,028

 

 

57,970

 

Income before provision for income taxes

 

11,102

 

 

9,868

 

12,386

 

 

40,587

 

 

45,894

 

Provision for income taxes

 

2,985

 

 

2,377

 

3,307

 

 

10,345

 

 

11,653

 

Net income

$

8,117

 

$

7,491

$

9,079

 

$

30,242

 

$

34,241

 

Net income per common share:

 

 

 

 

 

Basic

$

0.60

 

$

0.55

$

0.67

 

$

2.24

 

$

2.51

 

Diluted

$

0.60

 

$

0.55

$

0.66

 

$

2.22

 

$

2.48

 

Weighted average shares:

 

 

 

 

 

Basic

 

13,523

 

 

13,539

 

13,521

 

 

13,525

 

 

13,620

 

Diluted

 

13,615

 

 

13,610

 

13,703

 

 

13,617

 

 

13,794

 

Comprehensive income:

 

 

 

 

 

Net income

$

8,117

 

$

7,491

$

9,079

 

$

30,242

 

$

34,241

 

Other comprehensive income (loss):

 

 

 

 

 

Change in net unrealized gains or losses on available-for-sale securities

 

286

 

 

299

 

(2,018

)

 

11,891

 

 

11,839

 

Reclassification adjustment for gains on available-for-sale securities included in net income

 

 

 

 

 

 

(915

)

 

(55

)

Amortization of net unrealized losses on securities transferred from available-for-sale to held-to-maturity

 

129

 

 

149

 

117

 

 

524

 

 

445

 

Subtotal

 

415

 

 

448

 

(1,901

)

 

11,500

 

 

12,229

 

Deferred tax expense (benefit)

 

124

 

 

132

 

(558

)

 

3,402

 

 

3,624

 

Other comprehensive income (loss), net of tax

 

291

 

 

316

 

(1,343

)

 

8,098

 

 

8,605

 

Comprehensive income

$

8,408

 

$

7,807

$

7,736

 

$

38,340

 

$

42,846

 

BANK OF MARIN BANCORP

AVERAGE STATEMENTS OF CONDITION AND ANALYSIS OF NET INTEREST INCOME

 

 

Three months ended

Three months ended

Three months ended

 

December 31, 2020

September 30, 2020

December 31, 2019

 

 

Interest

 

 

Interest

 

 

Interest

 

 

Average

Income/

Yield/

Average

Income/

Yield/

Average

Income/

Yield/

(dollars in thousands; unaudited)

Balance

Expense

Rate

Balance

Expense

Rate

Balance

Expense

Rate

Assets

 

 

 

 

 

 

 

 

 

Interest-earning deposits with banks 1

$

157,389

$

40

0.10

%

$

184,883

$

50

0.11

%

$

136,320

$

567

1.63

%

Investment securities 2, 3

 

498,730

 

3,395

2.72

%

 

527,077

 

3,488

2.64

%

 

530,596

 

3,625

2.73

%

Loans 1, 3, 4

 

2,096,908

 

20,975

3.91

%

 

2,117,679

 

21,957

4.06

%

 

1,804,667

 

21,276

4.61

%

Total interest-earning assets 1

 

2,753,027

 

24,410

3.47

%

 

2,829,639

 

25,495

3.53

%

 

2,471,583

 

25,468

4.03

%

Cash and non-interest-bearing due from banks

 

64,600

 

 

 

55,353

 

 

 

39,882

 

 

Bank premises and equipment, net

 

5,213

 

 

 

5,412

 

 

 

6,326

 

 

Interest receivable and other assets, net

 

135,520

 

 

 

138,938

 

 

 

112,895

 

 

Total assets

$

2,958,360

 

 

$

3,029,342

 

 

$

2,630,686

 

 

Liabilities and Stockholders' Equity

 

 

 

 

 

 

 

 

 

Interest-bearing transaction accounts

$

160,827

$

41

0.10

%

$

153,089

$

41

0.11

%

$

145,237

$

79

0.22

%

Savings accounts

 

198,616

 

18

0.04

%

 

191,915

 

17

0.04

%

 

164,664

 

17

0.04

%

Money market accounts

 

697,203

 

279

0.16

%

 

802,585

 

377

0.19

%

 

725,192

 

1,033

0.57

%

Time accounts, including CDARS

 

97,512

 

118

0.48

%

 

97,465

 

133

0.54

%

 

97,302

 

154

0.63

%

Borrowings and other obligations 1

 

72

 

2.37

%

 

113

 

2.51

%

 

226

 

2

2.80

%

Subordinate debentures 1

 

2,768

 

34

4.85

%

 

2,751

 

35

4.97

%

 

2,698

 

54

7.79

%

Total interest-bearing liabilities

 

1,156,998

 

490

0.17

%

 

1,247,918

 

603

0.19

%

 

1,135,319

 

1,339

0.47

%

Demand accounts

 

1,397,349

 

 

 

1,380,708

 

 

 

1,129,068

 

 

Interest payable and other liabilities

 

44,532

 

 

 

44,486

 

 

 

31,270

 

 

Stockholders' equity

 

359,481

 

 

 

356,230

 

 

 

335,029

 

 

Total liabilities & stockholders' equity

$

2,958,360

 

 

$

3,029,342

 

 

$

2,630,686

 

 

Tax-equivalent net interest income/margin 1

 

$

23,920

3.40

%

 

$

24,892

3.44

%

 

$

24,129

3.82

%

Reported net interest income/margin 1

 

$

23,599

3.35

%

 

$

24,566

3.40

%

 

$

23,894

3.78

%

Tax-equivalent net interest rate spread

 

 

3.30

%

 

 

3.33

%

 

 

3.56

%

 

 

 

 

 

 

 

 

 

 

 

 

Year ended

Year ended

 

 

December 31, 2020

December 31, 2019

 

 

 

 

 

Interest

 

 

Interest

 

 

 

 

 

Average

Income/

Yield/

Average

Income/

Yield/

(dollars in thousands; unaudited)

 

 

 

Balance

Expense

Rate

Balance

Expense

Rate

Assets

 

 

 

 

 

 

 

 

 

Interest-earning deposits with banks 1

 

 

 

$

153,794

$

461

0.29

%

$

67,192

$

1,321

1.94

%

Investment securities 2, 3

 

 

 

 

533,186

 

15,025

2.82

%

 

555,618

 

15,102

2.72

%

Loans 1, 3, 4

 

 

 

 

2,023,203

 

85,398

4.15

%

 

1,775,193

 

85,062

4.73

%

Total interest-earning assets 1

 

 

 

 

2,710,183

 

100,884

3.66

%

 

2,398,003

 

101,485

4.17

%

Cash and non-interest-bearing due from banks

 

 

 

 

49,676

 

 

 

35,956

 

 

Bank premises and equipment, net

 

 

 

 

5,526

 

 

 

6,911

 

 

Interest receivable and other assets, net

 

 

 

 

131,780

 

 

 

109,837

 

 

Total assets

 

 

 

$

2,897,165

 

 

$

2,550,707

 

 

Liabilities and Stockholders' Equity

 

 

 

 

 

 

 

 

 

Interest-bearing transaction accounts

 

 

 

$

148,817

$

186

0.13

%

$

133,922

$

347

0.26

%

Savings accounts

 

 

 

 

184,146

 

68

0.04

%

 

172,273

 

70

0.04

%

Money market accounts

 

 

 

 

763,689

 

2,009

0.26

%

 

680,296

 

3,439

0.51

%

Time accounts, including CDARS

 

 

 

 

96,558

 

554

0.57

%

 

106,783

 

595

0.56

%

Borrowings and other obligations 1

 

 

 

 

174

 

4

2.16

%

 

2,935

 

77

2.57

%

Subordinated debentures 1

 

 

 

 

2,741

 

158

5.68

%

 

2,673

 

229

8.44

%

Total interest-bearing liabilities

 

 

 

 

1,196,125

 

2,979

0.25

%

 

1,098,882

 

4,757

0.43

%

Demand accounts

 

 

 

 

1,308,199

 

 

 

1,094,806

 

 

Interest payable and other liabilities

 

 

 

 

41,347

 

 

 

30,578

 

 

Stockholders' equity

 

 

 

 

351,494

 

 

 

326,441

 

 

Total liabilities & stockholders' equity

 

 

 

$

2,897,165

 

 

$

2,550,707

 

 

Tax-equivalent net interest income/margin 1

 

 

 

 

$

97,905

3.55

%

 

$

96,728

3.98

%

Reported net interest income/margin 1

 

 

 

 

$

96,659

3.51

%

 

$

95,680

3.94

%

Tax-equivalent net interest rate spread

 

 

 

 

 

3.41

%

 

 

3.74

%

 

 

 

 

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.

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.

 

Beth Drummey
Marketing & Corporate Communications Manager
415-763-4529 | bethdrummey@bankofmarin.com

Source: Bank of Marin Bancorp

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