Non-Interest Bearing Deposit Growth and Proactive Credit Risk
Management
NOVATO, Calif.--(BUSINESS WIRE)--
Bank of Marin Bancorp, "Bancorp" (Nasdaq: BMRC), parent company of Bank of
Marin, "Bank," announced earnings of $2.9 million for the first quarter of
2024, compared to $610 thousand for the fourth quarter of 2023 and $9.4
million for the first quarter of 2023. Diluted earnings per share were $0.18
for the first quarter, compared to $0.04 for the prior quarter and $0.59 for
the first quarter of 2023. Net interest margin compression due to the rapid
rise in interest rates this cycle is clearly evident in the comparison of
2024 and 2023 first quarter earnings. In addition, prior quarter results
reflected a $5.9 million pretax loss from balance sheet restructuring.
Concurrent with this release, Bancorp issued presentation slides providing
supplemental information, some of which will be discussed during the first
quarter 2024 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 produced improved results for the first quarter, selectively identifying
attractive lending opportunities at higher yields and helping to offset
payoffs and continued increases in our cost of funds amid the higher for
longer interest rate environment,” said Tim Myers, President and Chief
Executive Officer. “Importantly, we maintained our non-interest bearing
deposit levels, and we have put in place important building blocks for
growth and stronger profitability ahead, including a restructured balance
sheet and new banking talent who are bolstering our loan pipeline.
“Additionally, building on our successful securities sale in 2023, we will
continue to prioritize balance sheet optimization and expense efficiencies.
We notably reduced our borrowings to zero during the first quarter, another
key step toward increased profitability on behalf of our shareholders.”
Bancorp also provided the following highlights for the first quarter of
2024:
-
The tax-equivalent net interest margin stabilized at 2.50% for the first
quarter from 2.53% the previous quarter. Climbing deposit rates continued
to put pressure on the margin this quarter. While the average cost of
deposits increased 23 basis points to 1.38% in the first quarter compared
to a 21 basis point increase in the prior quarter, monthly trends since
January show a clear slow down in the pace of increase. Although we
reduced borrowings to zero and gained ground in higher yields on loans,
the overall average earning asset balances decreased, limiting the margin
growth.
-
A $350 thousand provision for credit losses on loans in the first quarter,
compared to a provision of $1.3 million for the previous quarter, brought
the allowance for credit losses to 1.24% of total loans, compared to 1.21%
as of December 31, 2023.
-
Non-accrual loans declined to 0.31% of total loans at quarter end, from
0.39% at December 31, 2023, and net charge-offs were minimal. Classified
loans increased to 2.67% of total loans, from 1.56% last quarter,
evidencing our diligent monitoring of those impacted by current economic
conditions.
-
Loan balances of $2.055 billion as of March 31, 2024, were relatively
stable from $2.074 billion as of December 31, 2023 reflecting originations
of $12.4 million and payoffs of $21.8 million. Originations were at rates
averaging approximately 266 basis points above the rates on loans paid off
during the quarter. Loan amortization from scheduled repayments, partially
offset by a net increase in utilization of credit lines was $9.4 million
during the quarter.
-
Total deposits of $3.284 billion as of March 31, 2024 were essentially
flat, compared to $3.290 billion as of December 31, 2023. Non-interest
bearing deposits increased $2.5 million representing 44.0% of total
deposits as of March 31, 2024, compared to 43.8% as of December 31, 2023.
-
Total borrowings of zero represented a $26.0 million decrease from
December 31, 2023, resulting in a $97.5 million decrease in average
balances over the quarter, or a $1.3 million decline in interest expense.
Net available funding sources of $1.905 billion provided 208% coverage of
an estimated $915.4 million in uninsured deposits, representing only 28%
of total deposits at March 31, 2024.
-
Return on average assets ("ROA") was 0.31% for the first quarter of 2024,
compared to 0.06% for the fourth quarter of 2023, and return on average
equity ("ROE") was 2.70%, compared to 0.57% for the prior quarter. The
efficiency ratio for the first quarter of 2024 was 83.18%, compared to
91.94% for the prior quarter.
-
Capital was above well-capitalized regulatory requirements, and total
risk-based capital ratios increased during the quarter to 17.05% and
16.71% as of March 31, 2024 for Bancorp and the Bank, respectively.
Bancorp's tangible common equity to tangible assets ("TCE ratio")
increased to 9.76% as of March 31, 2024, and the Bank's TCE ratio was
9.53%, consistent with prior quarter. While we do not intend to sell our
held-to-maturity securities, the TCE ratio, net of after-tax unrealized
losses on held-to-maturity securities as if the losses were realized was
7.67% as of March 31, 2024, compared to 7.80% as of December 31, 2023
(refer to the discussion and reconciliation of this non-GAAP financial
measure in the section below entitled Statement Regarding Use of
Non-GAAP Financial Measures).
-
The Board of Directors declared a cash dividend of $0.25 per share on
April 25, 2024, which represents the 76th consecutive quarterly
dividend paid by Bancorp. The dividend is payable on May 16, 2024, to
shareholders of record at the close of business on May 9, 2024.
“Bank of Marin has strong capital and liquidity levels, and our loan
portfolio is conservatively underwritten to perform well across credit
cycles,” said Tani Girton, Executive Vice President and Chief Financial
Officer. “While our loan portfolio is healthy overall, we are mindful of
stress within the commercial real estate sector and proactively managing our
credits,” Girton added. “Bank of Marin is well-positioned to pursue prudent
deposit and loan growth throughout 2024, driven by the local expertise and
high-end service that defines our proven relationship banking model. As
always, we continue to emphasize careful expense management, which enabled
us to invest in talent during the first quarter and enhance our ability to
generate profitable growth in the future.”
Loans and Credit Quality
Loans decreased by $18.8 million for the first quarter of 2024 and totaled
$2.055 billion as of March 31, 2024, compared to $2.074 billion as of
December 31, 2023. Loan originations for the first quarter were $12.4
million, compared to $53.8 million for the fourth quarter of 2023. While
originations were muted, the pipeline has grown, and key opportunistic hires
and new compensation plans have already accelerated calling activity,
pipeline growth and diversification.
Loan payoffs were $21.8 million for the first quarter, compared to $50.3
million for the fourth quarter of 2023. The largest portion of payoffs were
the result of construction project completions, followed by refinances of
loans not meeting our strategic and risk profile standards, and cash
payoffs. There was no dominant trend noted in the quarter.
Non-accrual loans totaled $6.3 million, or 0.31% of the loan portfolio, at
March 31, 2024, compared to $8.0 million, or 0.39% at December 31, 2023. The
$1.7 million decrease resulted from various payoffs and paydowns. Three loan
relationships totaling $370 thousand moved to non-accrual status in the
first quarter, partially offsetting the decrease. Of the total non-accrual
loans as of March 31, 2024 approximately 50% were paying as agreed, with the
remaining 50% closely monitored for payments, and 63% were real estate
secured.
While Bank of Marin has continued its 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 vigilance for potential credit quality weakening.
Classified loans totaled $54.8 million as of March 31, 2024, compared to
$32.3 million as of December 31, 2023. The increase of $22.5 million was due
primarily to a migration of $24.4 million in loans from special mention to
substandard risk ratings. The majority of these downgrades were due to
protracted issues, therefore, these borrowers' financial conditions merit
extra attention and proactive management. The three significant
relationships downgraded are of different types and geographies. Two of
these are commercial real estate loans that are fully secured and supported
with owner-level personal guarantees that have ample liquidity, and we
believe there is minimal loss potential in these credits. Only 1% of the
additions were on non-accrual status as of March 31, 2024, with 11% of all
classified loans on non-accrual status. Excluding the accruing loan over 90
days past due mentioned below, 98% of all classified loans were current on
their payments as of March 31, 2024. Additions to classified loans were
offset by $2.9 million in payoffs and paydowns.
Accruing loans past due 30 to 89 days totaled $1.9 million as of March 31,
2024, compared to $1.0 million as of December 31, 2023. We had one accruing
non-owner-occupied commercial real estate loan over 90 days past due as of
March 31, 2024 totaling $8.1 million that has been in extended renewal
negotiations, but it is well-secured and expected to be restored to a
current payment status in the near future.
Loans designated special mention, which are not considered adversely
classified, decreased by $34.3 million to $100.9 million as of March 31,
2024, from $135.2 million as of December 31, 2023. The decrease was largely
due to $24.4 million in downgrades from special mention to substandard
mentioned above, $10.5 million in upgrades to pass risk ratings, and $1.8
million in net paydowns and payoffs, partially offset by $2.0 million in
downgrades from pass risk ratings and $443 thousand in balance increases. Of
the loans designated special mention, 98% were real estate secured. All but
one of the loans, outside of not-for-profits, are guaranteed by owners or
sponsors.
Net charge-offs for the first quarter of 2024 totaled $21 thousand, compared
to net charge-offs of $387 thousand for the fourth quarter of 2023. The
ratio of allowance for credit losses to total loans was 1.24% at March 31,
2024, compared to 1.21% at December 31, 2023.
The provision for credit losses on loans in the first quarter was $350
thousand, compared to $1.3 million in the prior quarter. The provision was
due primarily to adjustments to certain qualitative risk factors to account
for continued negative trends in adversely graded loans for our non-owner
occupied commercial real estate and commercial and industrial portfolios,
adjustments to the discounted cash flow modeling assumptions related to
estimated default timing, and a slight increase in Moody's Analytics'
Baseline Forecast of California's unemployment rates, partially offset by
the impact of a decrease in pooled loans and changes in loan mix. Because
default and loss probabilities are considered in the Bank's estimated credit
loss methodology, the migration of individual loans to a classified risk
rating status does not always directly correlate to an increase in the
estimated credit losses. However, the Bank may consider trends in adversely
graded loans in the assessment of qualitative risk factors affecting the
credit loss provision.
There was no provision for credit losses on unfunded loan commitments in the
first quarter of 2024 or in the prior quarter.
Cash, Cash Equivalents and Restricted Cash
Total cash, cash equivalents and restricted cash were $36.3 million at March
31, 2024, an increase of $5.9 million compared to $30.5 million at December
31, 2023.
Investments
The investment securities portfolio totaled $1.451 billion at March 31,
2024, a decrease of $25.8 million from December 31, 2023. The decrease was
primarily the result of principal repayments totaling $20.3 million, a $4.6
million increase in pre-tax unrealized losses on available-for-sale
investment securities, and $900 thousand in net amortization. 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 4.41 on available-for-sale securities and 5.66 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 $31.3 million and $28.0 million in the
first quarter of 2024 and the fourth quarter of 2023, respectively.
Deposits
Deposits totaled $3.284 billion at March 31, 2024, compared to $3.290
billion at December 31, 2023. Non-interest bearing deposits made up 44.0% of
total deposits at March 31, 2024, compared to 43.8% at December 31, 2023.
Money market balances remained constant at 34.6% while time deposits
increased from 7.6% to 8.1% of total deposits with a weighted average rate
of 3.17% and average duration of 6 months. Additionally, the Bank's
competitive and balanced approach to relationship management and focused
outreach supported the growth, adding nearly 1,200 new accounts during the
first quarter, 34% of which were new relationships (excluding new reciprocal
accounts).
Borrowings and Liquidity
At March 31, 2024, the Bank had zero outstanding borrowings, compared to
$26.0 million at December 31, 2023, a decrease of $26.0 million. This
decrease was the result of investment and loan cash flows. Although
available as a liquidity source, we have not utilized brokered deposits. Net
available funding sources, including unrestricted cash, unencumbered
available-for-sale securities and total available borrowing capacity totaled
$1.905 billion, or 58% of total deposits and 208% of estimated uninsured
and/or uncollateralized deposits as of March 31, 2024.
The following table details the components of our contingent liquidity
sources as of March 31, 2024.
(in millions)
|
Total Available
|
Amount Used
|
Net Availability
|
Internal Sources
|
|
|
|
Unrestricted cash 1
|
$
|
13.4
|
$
|
—
|
$
|
13.4
|
Unencumbered securities at market value
|
|
465.0
|
|
—
|
|
465.0
|
External Sources
|
|
|
|
FHLB line of credit
|
|
951.2
|
|
—
|
|
951.2
|
FRB line of credit
|
|
350.0
|
|
—
|
|
350.0
|
Lines of credit at correspondent banks
|
|
125.0
|
|
—
|
|
125.0
|
Total Liquidity
|
$
|
1,904.6
|
$
|
—
|
$
|
1,904.6
|
1 Excludes cash items in transit as of March 31, 2024.
|
Note: Brokered deposits available through third-party networks are
not included above.
|
Capital Resources
The total risk-based capital ratio for Bancorp was 17.05% at March 31, 2024,
compared to 16.89% at December 31, 2023. The total risk-based capital ratio
for the Bank was 16.71% at March 31, 2024, compared to 16.62% at December
31, 2023.
Bancorp's tangible common equity to tangible assets ("TCE ratio") was 9.76%
at March 31, 2024, compared to 9.73% at December 31, 2023. The TCE ratio
increased slightly quarter over quarter due mainly to the decrease in
tangible risk weighted assets. The capital plan and point-in-time capital
stress tests indicate that Bank of Marin and Bancorp capital ratios will
remain above regulatory well-capitalized and internal policy minimums
throughout a five-year forecast horizon and across stress scenarios such as
additional unrealized losses on the investment portfolio, additional deposit
growth or decline, loan credit quality deterioration, and potential share
repurchases.
Earnings
Net Interest Income
Net interest income totaled $22.7 million for the first quarter of 2024,
compared to $24.3 million for the prior quarter. The $1.6 million decrease
from the prior quarter was primarily related to an increase of $1.6 million
in interest expense on deposits and a decrease of $1.3 million in interest
on cash and investments. These were partially offset by a $1.3 million
decrease in borrowing expense. Quarter-over-quarter, average
interest-bearing deposit balances increased by $36.5 million to $1.860
billion, raising the cost of total deposits 23 basis points to 1.38%.
Average borrowings and other obligations decreased by $97.5 million to $7.3
million, and average investment security balances were down a similar
amount.
The tax-equivalent net interest margin was 2.50% for the first quarter of
2024, compared to 2.53% for the prior quarter. The higher cost of deposits
reduced margin by 23 basis points while higher loan yields added 15 basis
points. The combined effect of lower investment security and wholesale
borrowing balances was a contribution of 5 basis points.
Non-Interest Income
Non-interest income totaled $2.8 million for the first quarter of 2024,
compared to a loss of $3.3 million for the prior quarter. The $6.0 million
increase from the prior quarter was primarily attributed to a $5.9 million
net loss on sale of available-for-sale investment securities in the prior
quarter.
Non-Interest Expense
Non-interest expense totaled $21.2 million for the first quarter of 2024,
compared to $19.3 million for the prior quarter, an increase of $1.9
million. Salaries and related benefits increased $1.7 million, due to
various factors, both in prior and current quarter. Last quarter, profit
sharing, supplemental executive retirement plan and stock-based compensation
accrual adjustments reduced expenses. In the first quarter of 2024, there
were lower deferred loan origination costs, an increase to the 401(k)
contribution matching associated with the usual reset and bonus payments at
the beginning of the year, and increased salary costs due to new talent
acquisition, partially offset by incentive adjustments. In addition,
professional services expenses from certain legal, accounting, and
consulting costs increased by $157 thousand.
Statement Regarding use of Non-GAAP Financial Measures
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 remaining after a hypothetical liquidation of
the entire securities portfolio. 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 GAAP financial measures to comparable non-GAAP
financial measures is presented below.
Reconciliation of GAAP and Non-GAAP Financial Measures
(in thousands, unaudited)
|
|
March 31, 2024
|
December 31, 2023
|
Tangible Common Equity - Bancorp
|
|
|
|
Total stockholders' equity
|
|
$
|
436,680
|
|
$
|
439,062
|
|
Goodwill and core deposit intangible
|
|
|
(76,269
|
)
|
|
(76,520
|
)
|
Total TCE
|
a
|
|
360,411
|
|
|
362,542
|
|
Unrealized losses on HTM securities, net of tax1
|
|
|
(83,931
|
)
|
|
(77,739
|
)
|
TCE, net of unrealized losses on HTM securities (non-GAAP)
|
b
|
$
|
276,480
|
|
$
|
284,803
|
|
Total assets
|
|
$
|
3,767,176
|
|
$
|
3,803,903
|
|
Goodwill and core deposit intangible
|
|
|
(76,269
|
)
|
|
(76,520
|
)
|
Total tangible assets
|
c
|
|
3,690,907
|
|
|
3,727,383
|
|
Unrealized losses on HTM securities, net of tax
|
|
|
(83,931
|
)
|
|
(77,739
|
)
|
Total tangible assets, net of unrealized losses on HTM securities
(non-GAAP)
|
d
|
$
|
3,606,976
|
|
$
|
3,649,644
|
|
Bancorp TCE ratio
|
a / c
|
|
9.8
|
%
|
|
9.7
|
%
|
Bancorp TCE ratio, net of unrealized losses on HTM securities
(non-GAAP)
|
b / d
|
|
7.7
|
%
|
|
7.8
|
%
|
1 Net unrealized losses on held-to-maturity securities as
of March 31, 2024 and December 31, 2023 of $119.2 million and $110.4
million, respectively, net of an estimated $35.3 million and $32.6
million, respectively, in deferred tax benefits based on a blended
state and federal statutory tax rate of 29.56%.
|
Share Repurchase Program
On July 21, 2023, the Board of Directors approved the adoption of Bancorp's
share repurchase program for up to $25.0 million and expiring on July 31,
2025. There have been no repurchases to date in 2024 or in 2023.
Earnings Call and Webcast Information
Bank of Marin Bancorp (Nasdaq: BMRC) will present its first quarter earnings
call via webcast on Monday, April 29, 2024 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 $3.8 billion, Bank
of Marin has 27 retail branches and 7 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 the war between Russia
and Ukraine and more recently the war between Israel and Hamas, impacts from
inflation, supply chain 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; the impact of adverse developments at
other banks, including bank failures, that impact general sentiment
regarding the stability and liquidity of banks; 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
|
(in thousands, except per share amounts; unaudited)
|
March 31,
2024
|
December 31,
2023
|
March 31,
2023
|
Selected operating data and performance ratios:
|
|
|
|
Net income
|
$
|
2,922
|
|
$
|
610
|
|
$
|
9,440
|
|
Diluted earnings per common share
|
$
|
0.18
|
|
$
|
0.04
|
|
$
|
0.59
|
|
Return on average assets
|
|
0.31
|
%
|
|
0.06
|
%
|
|
0.92
|
%
|
Return on average equity
|
|
2.70
|
%
|
|
0.57
|
%
|
|
9.12
|
%
|
Efficiency ratio
|
|
83.18
|
%
|
|
91.94
|
%
|
|
60.24
|
%
|
Tax-equivalent net interest margin 1
|
|
2.50
|
%
|
|
2.53
|
%
|
|
3.04
|
%
|
Cost of deposits
|
|
1.38
|
%
|
|
1.15
|
%
|
|
0.20
|
%
|
Cost of funds
|
|
1.38
|
%
|
|
1.27
|
%
|
|
0.49
|
%
|
Net charge-offs
|
$
|
21
|
|
$
|
387
|
|
$
|
3
|
|
Net charge-offs to average loans
|
|
NM
|
|
|
0.02
|
%
|
|
NM
|
|
(in thousands; unaudited)
|
March 31,
2024
|
December 31,
2023
|
Selected financial condition data:
|
|
|
Total assets
|
$
|
3,767,176
|
|
$
|
3,803,903
|
|
Loans:
|
|
|
Commercial and industrial
|
$
|
150,896
|
|
$
|
153,750
|
|
Real estate:
|
|
|
Commercial owner-occupied
|
|
328,560
|
|
|
333,181
|
|
Commercial non-owner occupied
|
|
1,236,633
|
|
|
1,219,385
|
|
Construction
|
|
71,494
|
|
|
99,164
|
|
Home equity
|
|
86,794
|
|
|
82,087
|
|
Other residential
|
|
113,479
|
|
|
118,508
|
|
Installment and other consumer loans
|
|
67,107
|
|
|
67,645
|
|
Total loans
|
$
|
2,054,963
|
|
$
|
2,073,720
|
|
Non-accrual loans: 1
|
|
|
Commercial and industrial
|
$
|
2,220
|
|
$
|
4,008
|
|
Real estate:
|
|
|
Commercial owner-occupied
|
|
416
|
|
|
434
|
|
Commercial non-owner occupied
|
|
3,046
|
|
|
3,081
|
|
Home equity
|
|
473
|
|
|
469
|
|
Installment and other consumer loans
|
|
141
|
|
|
—
|
|
Total non-accrual loans
|
$
|
6,296
|
|
$
|
7,992
|
|
Classified loans (graded substandard and doubtful)
|
$
|
54,800
|
|
$
|
32,324
|
|
Classified loans as a percentage of total loans
|
|
2.67
|
%
|
|
1.56
|
%
|
Total accruing loans 30-89 days past due
|
$
|
1,924
|
|
$
|
1,017
|
|
Total accruing loans 90+ days past due 1
|
$
|
8,118
|
|
$
|
—
|
|
Allowance for credit losses to total loans
|
|
1.24
|
%
|
|
1.21
|
%
|
Allowance for credit losses to non-accrual loans
|
4.05x
|
3.15x
|
Non-accrual loans to total loans
|
|
0.31
|
%
|
|
0.39
|
%
|
Total deposits
|
$
|
3,284,102
|
|
$
|
3,290,075
|
|
Loan-to-deposit ratio
|
|
62.60
|
%
|
|
63.03
|
%
|
Stockholders' equity
|
$
|
436,680
|
|
$
|
439,062
|
|
Book value per share
|
$
|
26.81
|
|
$
|
27.17
|
|
Tangible common equity to tangible assets - Bank
|
|
9.53
|
%
|
|
9.53
|
%
|
Tangible common equity to tangible assets - Bancorp
|
|
9.76
|
%
|
|
9.73
|
%
|
Total risk-based capital ratio - Bank
|
|
16.71
|
%
|
|
16.62
|
%
|
Total risk-based capital ratio - Bancorp
|
|
17.05
|
%
|
|
16.89
|
%
|
Full-time equivalent employees
|
|
330
|
|
|
329
|
|
1 There was one non-owner occupied commercial real estate
loan 90 days past due and accruing interest as of March 31, 2024
that has been in extended renewal negotiations, but it is
well-secured and expected to be restored to a current payment status
in the near future. There were no non-performing loans over 90 days
past due and accruing interest as of December 31, 2023.
|
NM - Not meaningful
|
|
BANK OF MARIN BANCORP
CONSOLIDATED STATEMENTS OF CONDITION
|
|
|
|
(in thousands, except share data; unaudited)
|
March 31,
2024
|
December 31,
2023
|
Assets
|
|
|
Cash, cash equivalents and restricted cash
|
$
|
36,308
|
|
$
|
30,453
|
|
Investment securities:
|
|
|
Held-to-maturity, at amortized cost (net of zero allowance for
credit losses at March 31, 2024 and December 31, 2023)
|
|
915,068
|
|
|
925,198
|
|
Available-for-sale (at fair value; amortized cost of $602,384 and
$613,479 at March 31, 2024 and December 31, 2023, respectively; net
of zero allowance for credit losses at March 31, 2024 and December
31, 2023)
|
|
536,365
|
|
|
552,028
|
|
Total investment securities
|
|
1,451,433
|
|
|
1,477,226
|
|
Loans, at amortized cost
|
|
2,054,963
|
|
|
2,073,720
|
|
Allowance for credit losses on loans
|
|
(25,501
|
)
|
|
(25,172
|
)
|
Loans, net of allowance for credit losses on loans
|
|
2,029,462
|
|
|
2,048,548
|
|
Goodwill
|
|
72,754
|
|
|
72,754
|
|
Bank-owned life insurance
|
|
69,747
|
|
|
68,102
|
|
Operating lease right-of-use assets
|
|
21,553
|
|
|
20,316
|
|
Bank premises and equipment, net
|
|
7,546
|
|
|
7,792
|
|
Core deposit intangible, net
|
|
3,515
|
|
|
3,766
|
|
Interest receivable and other assets
|
|
74,858
|
|
|
74,946
|
|
Total assets
|
$
|
3,767,176
|
|
$
|
3,803,903
|
|
|
|
|
Liabilities and Stockholders' Equity
|
|
|
Liabilities
|
|
|
Deposits:
|
|
|
Non-interest bearing
|
$
|
1,444,435
|
|
$
|
1,441,987
|
|
Interest bearing:
|
|
|
Transaction accounts
|
|
211,274
|
|
|
225,040
|
|
Savings accounts
|
|
224,262
|
|
|
233,298
|
|
Money market accounts
|
|
1,136,595
|
|
|
1,138,433
|
|
Time accounts
|
|
267,536
|
|
|
251,317
|
|
Total deposits
|
|
3,284,102
|
|
|
3,290,075
|
|
Borrowings and other obligations
|
|
260
|
|
|
26,298
|
|
Operating lease liabilities
|
|
24,150
|
|
|
22,906
|
|
Interest payable and other liabilities
|
|
21,984
|
|
|
25,562
|
|
Total liabilities
|
|
3,330,496
|
|
|
3,364,841
|
|
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 - 16,285,786 and 16,158,413 at March 31, 2024 and
December 31 2023, respectively
|
|
218,342
|
|
|
217,498
|
|
Retained earnings
|
|
273,450
|
|
|
274,570
|
|
Accumulated other comprehensive loss, net of taxes
|
|
(55,112
|
)
|
|
(53,006
|
)
|
Total stockholders' equity
|
|
436,680
|
|
|
439,062
|
|
Total liabilities and stockholders' equity
|
$
|
3,767,176
|
|
$
|
3,803,903
|
|
|
|
|
BANK OF MARIN BANCORP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
|
|
|
|
Three months ended
|
(in thousands, except per share amounts; unaudited)
|
March 31,
2024
|
December 31,
2023
|
March 31,
2023
|
Interest income
|
|
|
|
Interest and fees on loans
|
$
|
25,020
|
|
$
|
24,964
|
|
$
|
24,258
|
|
Interest on investment securities
|
|
8,805
|
|
|
9,289
|
|
|
10,033
|
|
Interest on federal funds sold and due from banks
|
|
321
|
|
|
1,170
|
|
|
56
|
|
Total interest income
|
|
34,146
|
|
|
35,423
|
|
|
34,347
|
|
Interest expense
|
|
|
|
Interest on interest-bearing transaction accounts
|
|
261
|
|
|
278
|
|
|
254
|
|
Interest on savings accounts
|
|
371
|
|
|
322
|
|
|
170
|
|
Interest on money market accounts
|
|
8,449
|
|
|
7,188
|
|
|
1,085
|
|
Interest on time accounts
|
|
2,280
|
|
|
1,991
|
|
|
223
|
|
Interest on borrowings and other obligations
|
|
91
|
|
|
1,380
|
|
|
2,716
|
|
Total interest expense
|
|
11,452
|
|
|
11,159
|
|
|
4,448
|
|
Net interest income
|
|
22,694
|
|
|
24,264
|
|
|
29,899
|
|
Provision for credit losses on loans
|
|
350
|
|
|
1,300
|
|
|
350
|
|
Reversal of credit losses on unfunded loan commitments
|
|
—
|
|
|
—
|
|
|
(174
|
)
|
Net interest income after provision for (reversal of) credit losses
|
|
22,344
|
|
|
22,964
|
|
|
29,723
|
|
Non-interest income
|
|
|
|
Wealth management and trust services
|
|
553
|
|
|
560
|
|
|
511
|
|
Service charges on deposit accounts
|
|
529
|
|
|
522
|
|
|
533
|
|
Earnings on bank-owned life insurance, net
|
|
435
|
|
|
364
|
|
|
705
|
|
Debit card interchange fees, net
|
|
408
|
|
|
373
|
|
|
447
|
|
Dividends on Federal Home Loan Bank stock
|
|
377
|
|
|
349
|
|
|
302
|
|
Merchant interchange fees, net
|
|
167
|
|
|
119
|
|
|
133
|
|
Losses on sale of investment securities, net of gains
|
|
—
|
|
|
(5,907
|
)
|
|
—
|
|
Other income
|
|
285
|
|
|
337
|
|
|
304
|
|
Total non-interest income
|
|
2,754
|
|
|
(3,283
|
)
|
|
2,935
|
|
Non-interest expense
|
|
|
|
Salaries and related benefits
|
|
12,084
|
|
|
10,361
|
|
|
10,930
|
|
Occupancy and equipment
|
|
1,969
|
|
|
1,939
|
|
|
2,414
|
|
Professional services
|
|
1,078
|
|
|
921
|
|
|
1,123
|
|
Data processing
|
|
1,070
|
|
|
1,081
|
|
|
1,045
|
|
Deposit network fees
|
|
845
|
|
|
940
|
|
|
96
|
|
Federal Deposit Insurance Corporation insurance
|
|
435
|
|
|
454
|
|
|
289
|
|
Information technology
|
|
402
|
|
|
431
|
|
|
370
|
|
Depreciation and amortization
|
|
388
|
|
|
393
|
|
|
882
|
|
Directors' expense
|
|
317
|
|
|
319
|
|
|
321
|
|
Amortization of core deposit intangible
|
|
251
|
|
|
330
|
|
|
345
|
|
Other real estate owned
|
|
—
|
|
|
—
|
|
|
4
|
|
Other expense
|
|
2,330
|
|
|
2,120
|
|
|
1,961
|
|
Total non-interest expense
|
|
21,169
|
|
|
19,289
|
|
|
19,780
|
|
Income before provision for income taxes
|
|
3,929
|
|
|
392
|
|
|
12,878
|
|
Provision for income taxes
|
|
1,007
|
|
|
(218
|
)
|
|
3,438
|
|
Net income
|
$
|
2,922
|
|
$
|
610
|
|
$
|
9,440
|
|
Net income per common share:
|
|
|
|
Basic
|
$
|
0.18
|
|
$
|
0.04
|
|
$
|
0.59
|
|
Diluted
|
$
|
0.18
|
|
$
|
0.04
|
|
$
|
0.59
|
|
Weighted average shares:
|
|
|
|
Basic
|
|
16,081
|
|
|
16,040
|
|
|
15,970
|
|
Diluted
|
|
16,092
|
|
|
16,052
|
|
|
15,999
|
|
Comprehensive income:
|
|
|
|
Net income
|
$
|
2,922
|
|
$
|
610
|
|
$
|
9,440
|
|
Other comprehensive (loss) income:
|
|
|
|
Change in net unrealized gains or losses on available-for-sale
securities
|
|
(4,568
|
)
|
|
28,865
|
|
|
16,213
|
|
Reclassification adjustment for realized losses on
available-for-sale securities in net income
|
|
—
|
|
|
5,907
|
|
|
—
|
|
Reclassification adjustment for gains or losses on fair value hedges
|
|
1,217
|
|
|
(1,726
|
)
|
|
—
|
|
Amortization of net unrealized losses on securities transferred from
available-for-sale to held-to-maturity
|
|
361
|
|
|
418
|
|
|
463
|
|
Other comprehensive (loss) income, before tax
|
|
(2,990
|
)
|
|
33,464
|
|
|
16,676
|
|
Deferred tax (benefit) expense
|
|
(884
|
)
|
|
9,890
|
|
|
4,930
|
|
Other comprehensive (loss) income, net of tax
|
|
(2,106
|
)
|
|
23,574
|
|
|
11,746
|
|
Total comprehensive income
|
$
|
816
|
|
$
|
24,184
|
|
$
|
21,186
|
|
|
|
|
|
BANK OF MARIN BANCORP
AVERAGE STATEMENTS OF CONDITION AND ANALYSIS OF NET INTEREST
INCOME
|
|
|
|
|
|
|
|
Three months ended
|
|
Three months ended
|
|
Three months ended
|
|
March 31, 2024
|
|
December 31, 2023
|
|
March 31, 2023
|
|
|
|
Interest
|
|
|
|
|
|
Interest
|
|
|
|
|
|
Interest
|
|
|
|
Average
|
|
Income/
|
|
Yield/
|
|
Average
|
|
Income/
|
|
Yield/
|
|
Average
|
|
Income/
|
|
Yield/
|
(in thousands)
|
Balance
|
|
Expense
|
|
Rate
|
|
Balance
|
|
Expense
|
|
Rate
|
|
Balance
|
|
Expense
|
|
Rate
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest-earning deposits with banks 1
|
$
|
23,439
|
|
$
|
321
|
|
5.42
|
%
|
|
$
|
84,864
|
|
$
|
1,170
|
|
5.40
|
%
|
|
$
|
4,863
|
|
$
|
56
|
|
4.58
|
%
|
Investment securities 2, 3
|
|
1,529,985
|
|
|
8,880
|
|
2.32
|
%
|
|
|
1,625,084
|
|
|
9,368
|
|
2.31
|
%
|
|
|
1,851,743
|
|
|
10,194
|
|
2.20
|
%
|
Loans 1, 3, 4, 5
|
|
2,067,431
|
|
|
25,130
|
|
4.81
|
%
|
|
|
2,072,654
|
|
|
25,081
|
|
4.73
|
%
|
|
|
2,121,718
|
|
|
24,415
|
|
4.60
|
%
|
Total interest-earning assets 1
|
|
3,620,855
|
|
|
34,331
|
|
3.75
|
%
|
|
|
3,782,602
|
|
|
35,619
|
|
3.68
|
%
|
|
|
3,978,324
|
|
|
34,665
|
|
3.49
|
%
|
Cash and non-interest-bearing due from banks
|
|
35,302
|
|
|
|
|
|
|
35,572
|
|
|
|
|
|
|
39,826
|
|
|
|
|
Bank premises and equipment, net
|
|
7,708
|
|
|
|
|
|
|
8,027
|
|
|
|
|
|
|
8,396
|
|
|
|
|
Interest receivable and other assets, net
|
|
147,405
|
|
|
|
|
|
|
128,587
|
|
|
|
|
|
|
137,114
|
|
|
|
|
Total assets
|
$
|
3,811,270
|
|
|
|
|
|
$
|
3,954,788
|
|
|
|
|
|
$
|
4,163,660
|
|
|
|
|
Liabilities and Stockholders' Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest-bearing transaction accounts
|
$
|
215,001
|
|
$
|
261
|
|
0.49
|
%
|
|
$
|
228,168
|
|
$
|
278
|
|
0.48
|
%
|
|
$
|
272,353
|
|
$
|
254
|
|
0.38
|
%
|
Savings accounts
|
|
230,133
|
|
|
371
|
|
0.65
|
%
|
|
|
245,712
|
|
|
322
|
|
0.52
|
%
|
|
|
329,299
|
|
|
170
|
|
0.21
|
%
|
Money market accounts
|
|
1,150,637
|
|
|
8,449
|
|
2.95
|
%
|
|
|
1,105,286
|
|
|
7,188
|
|
2.58
|
%
|
|
|
952,479
|
|
|
1,085
|
|
0.46
|
%
|
Time accounts including CDARS
|
|
264,594
|
|
|
2,280
|
|
3.47
|
%
|
|
|
244,661
|
|
|
1,991
|
|
3.23
|
%
|
|
|
126,030
|
|
|
223
|
|
0.72
|
%
|
Borrowings and other obligations 1
|
|
7,323
|
|
|
91
|
|
4.93
|
%
|
|
|
104,855
|
|
|
1,380
|
|
5.15
|
%
|
|
|
222,571
|
|
|
2,716
|
|
4.88
|
%
|
Total interest-bearing liabilities
|
|
1,867,688
|
|
|
11,452
|
|
2.47
|
%
|
|
|
1,928,682
|
|
|
11,159
|
|
2.30
|
%
|
|
|
1,902,732
|
|
|
4,448
|
|
0.95
|
%
|
Demand accounts
|
|
1,458,686
|
|
|
|
|
|
|
1,556,437
|
|
|
|
|
|
|
1,792,998
|
|
|
|
|
Interest payable and other liabilities
|
|
48,923
|
|
|
|
|
|
|
48,322
|
|
|
|
|
|
|
48,233
|
|
|
|
|
Stockholders' equity
|
|
435,973
|
|
|
|
|
|
|
421,347
|
|
|
|
|
|
|
419,697
|
|
|
|
|
Total liabilities & stockholders' equity
|
$
|
3,811,270
|
|
|
|
|
|
$
|
3,954,788
|
|
|
|
|
|
$
|
4,163,660
|
|
|
|
|
Tax-equivalent net interest income/margin 1
|
|
|
$
|
22,879
|
|
2.50
|
%
|
|
|
|
$
|
24,460
|
|
2.53
|
%
|
|
|
|
$
|
30,217
|
|
3.04
|
%
|
Reported net interest income/margin 1
|
|
|
$
|
22,694
|
|
2.48
|
%
|
|
|
|
$
|
24,264
|
|
2.51
|
%
|
|
|
|
$
|
29,899
|
|
3.01
|
%
|
Tax-equivalent net interest rate spread
|
|
|
|
|
1.28
|
%
|
|
|
|
|
|
1.38
|
%
|
|
|
|
|
|
2.54
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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.
|
5 Net loan origination costs in interest income totaled
$375 thousand, $324 thousand, and $190 thousand for the three months
ended March 31, 2024, December 31, 2023 and March 31, 2023,
respectively.
|
Source: Bank of Marin Bancorp