Financial News

Bank of Marin Bancorp Reports Second Quarter Earnings of $8.2 Million; Increases Quarterly Dividend Ten Percent

Bank of Marin Bancorp, “Bancorp” (NASDAQ: BMRC), parent company of Bank of Marin, “Bank,” announced earnings of $8.2 million in the second quarter of 2019, compared to $7.5 million in the first quarter of 2019 and $7.9 million in the second quarter of 2018. Diluted earnings per share were $0.60 in the second quarter of 2019 compared to $0.54 in the prior quarter and $0.56 in the same quarter last year (adjusted for stock-split). Earnings for the first six months of 2019 totaled $15.7 million compared to $14.3 million in the same period last year. Diluted earnings per share were $1.13 and $1.02 (adjusted for stock-split) in the first six months of 2019 and 2018, respectively.

“We delivered another strong quarter for our shareholders,” said Russell A. Colombo, President and Chief Executive Officer. “In this competitive environment, we've maintained our low cost, stable deposit base and disciplined underwriting standards, and our credit quality remains excellent. We’re well-positioned to meet the steady loan demand we’re seeing across our markets.”

Bancorp also provided the following highlights from the second quarter of 2019:

  • Loans totaled $1,764.9 million at June 30, 2019, compared to $1,772.5 million at March 31, 2019. New loan originations of $42.2 million in the second quarter were distributed across Commercial Banking and Consumer Banking. Payoffs of $43.3 million in the second quarter included the successful completion of a large construction project.
  • While total deposits decreased $76.6 million in the second quarter to $2,102.0 million, non-interest bearing deposits declined only $19.7 million. Non-interest bearing deposits represented 50% of total deposits versus 49% last quarter, and have been at or near this level since the beginning of last year. The cost of average deposits increased to 0.20% in the second quarter compared to 0.18% in the first quarter of 2019.
  • Strong credit quality remains a cornerstone of the Bank’s consistent performance. Non-accrual loans represented only 0.03% of the Bank’s loan portfolio at June 30, 2019. There were no provisions for loan losses or off-balance sheet commitments recorded in the second quarter of 2019.
  • All capital ratios were above regulatory requirements. The total risk-based capital ratio for Bancorp was 15.2% at June 30, 2019, compared to 14.9% at March 31, 2019. Tangible common equity to tangible assets was 12.0% at June 30, 2019, compared to 11.4% at March 31, 2019 (refer to footnote 3 in Financial Highlights table for a definition of this non-GAAP financial measure).
  • Based on the size of the market and reduced branch foot traffic driven by digital banking offerings, we have decided to close the Petaluma Downtown Branch on August 9, 2019. We will focus our resources on growing our two remaining branches in Petaluma, where most Downtown customers have already moved their business. Our commitment to the Petaluma community remains strong, and employees have accepted positions in other Bank of Marin branches.
  • On June 17, 2019, we upgraded to a new digital banking platform that offers our customers enhanced features and additional functionality for an improved online and mobile banking experience. The conversion is substantially complete, and the implementation and operations teams are working closely with our customers to make their transition to the new platform as smooth as possible.
  • The Board of Directors declared a cash dividend of $0.21 per share on July 19, 2019. This represents the 57th consecutive quarterly dividend paid by Bank of Marin Bancorp. The dividend is payable on August 9, 2019, to shareholders of record at the close of business on August 2, 2019.
  • As a result of her expanded responsibilities, Cecilia Situ, First Vice President, has been named Treasurer of the Bank. David A. Merck, Vice President and Financial Reporting Manager, has assumed the position of Principal Accounting Officer that was previously occupied by Ms. Situ.

Loans and Credit Quality

Loans decreased by $7.6 million in the second quarter and totaled $1,764.9 million at June 30, 2019. For the second quarter and first six months of 2019, new loan originations of $42.2 million and $76.1 million, respectively, were below 2018 loan originations of $75.8 million and $113.2 million for the same periods. Loan payoffs of $43.3 million in the second quarter and $69.3 million in the first six months of 2019, moderately exceeded $37.3 million and $68.8 million in the respective 2018 periods, and included the successful completion of a large construction project.

Non-accrual loans totaled $574 thousand, or 0.03% of the loan portfolio at June 30, 2019, compared to $719 thousand, or 0.04% at March 31, 2019, and $385 thousand, or 0.02% a year ago. Classified loans totaled $10.3 million at June 30, 2019, compared to $14.8 million at March 31, 2019 and $13.9 million at June 30, 2018. The $4.5 million decrease in the second quarter of 2019 was primarily due to a $2.2 million paydown received in April 2019 on a $2.7 million substandard classified loan (the remaining balance was upgraded to a Pass risk rating). Additionally, there were upgrades on loan balances of approximately $1.6 million with improvements in credit quality and a payoff of $188 thousand on a substandard classified loan. There were no loans classified doubtful at June 30, 2019 or March 31, 2019. Accruing loans past due 30 to 89 days totaled $343 thousand at June 30, 2019, compared to $2.2 million at March 31, 2019 and $88 thousand a year ago.

There was no provision for loan losses recorded in the second quarter of 2019, consistent with last quarter and the same quarter a year ago. Recoveries were $18 thousand in the second quarter of 2019, compared to net charge-offs of $4 thousand for the prior quarter and net recoveries of $42 thousand in the second quarter a year ago. The ratio of loan loss reserves to loans, including acquired loans, was 0.90% at June 30, 2019, 0.89% at March 31, 2019, and 0.92% at June 30, 2018.

Investments

The investment securities portfolio totaled $527.0 million at June 30, 2019, compared to $595.7 million at March 31, 2019. The decrease from the prior quarter was primarily attributed to sales of $61.8 million in lower yielding shorter term securities to manage our interest rate spread and cash position.

Deposits

Total deposits were $2,102.0 million at June 30, 2019, compared to $2,178.6 million at March 31, 2019. The $76.6 million decrease during the second quarter primarily resulted from normal cash fluctuations in some of our large business accounts and a $16.1 million increase in one-way deposit sales to third party deposit networks. The average cost of deposits in the second quarter of 2019 was 0.20%, an increase of 2 basis points from the prior quarter.

Earnings

“Bank of Marin’s commitment to our markets and our customers is yielding great results,” said Tani Girton, EVP and Chief Financial Officer. “With a return on assets of 1.26% and efficiency ratio of 58.91% year-to-date, and an increase in tax-equivalent net interest margin of 14 basis points year-over-year, we are seeing what can be achieved when you combine consistent credit and expense management with a focus on relationship banking.”

Net interest income totaled $23.8 million in both the first and second quarters of 2019 and $22.8 million in the second quarter of 2018. The $947 thousand increase from the comparative quarter a year ago was reflective of higher average loan balances and higher yields across earning asset categories, partially offset by higher rates on deposits.

Net interest income totaled $47.6 million in the first six months of 2019, compared to $44.7 million for the same period in 2018. The $2.9 million increase primarily relates to higher average loan and investment securities balances and higher yields across earning asset categories, partially offset by higher rates on deposits.

The tax-equivalent net interest margin was 4.04% in the second quarter of 2019, compared to 4.02% in the prior quarter and 3.92% in the same quarter a year ago. The 2 basis point increase from the prior quarter was primarily due to a more favorable mix of interest-earning assets toward higher yielding loans. The 12 basis point increase from the same quarter a year ago was primarily due to higher interest rates.

The tax-equivalent net interest margin was 4.03% in the first six months of 2019, compared to 3.89% for the same period in 2018. The 14 basis point increase from the same period a year ago was mostly attributed to growth in earning assets and higher interest rates.

Loans obtained through the acquisition of other banks are classified as either purchased credit impaired (“PCI”) or non-PCI loans and are recorded at fair value at acquisition date. For acquired loans not considered credit impaired, the level of accretion varies due to maturities and early payoffs. Accretion on PCI loans fluctuates based on changes in cash flows expected to be collected. Gains on payoffs of PCI loans are recorded as interest income when the payoff amounts exceed the recorded investment. PCI loans totaled $2.1 million at June 30, 2019, March 31, 2019 and June 30, 2018.

As our acquired loans from prior acquisitions continue to pay off, we expect the accretion on these loans to continue to decline. Accretion and gains on payoffs of purchased loans recorded to interest income were as follows:

Three months ended

June 30, 2019

March 31, 2019

June 30, 2018

(dollars in thousands; unaudited)

Dollar
Amount

Basis point
impact to net
interest margin

Dollar
Amount

Basis point
impact to net
interest margin

Dollar
Amount

Basis point
impact to net
interest margin

Accretion on PCI loans 1

$

56

1 bps

$

59

1 bps

$

83

1 bps

Accretion on non-PCI loans 2

$

(3

)

0 bps

$

42

1 bps

$

133

2 bps

Gains on payoffs of PCI loans

$

0 bps

$

0 bps

$

1

0 bps

Six months ended

June 30, 2019

June 30, 2018

(dollars in thousands; unaudited)

Dollar
Amount

Basis point
impact to net
interest margin

Dollar
Amount

Basis point
impact to net
interest margin

Accretion on PCI loans 1

$

115

1 bps

$

195

2 bps

Accretion on non-PCI loans 2

$

39

0 bps

$

233

2 bps

Gains on payoffs of PCI loans

$

0 bps

$

129

1 bps

1 Accretable yield on PCI loans totaled $819 thousand, $875 thousand and $1.1 million at June 30, 2019, March 31, 2019 and June 30, 2018, respectively.

2 Unaccreted purchase discounts on non-PCI loans totaled $669 thousand, $666 thousand and $1.0 million at June 30, 2019, March 31, 2019 and June 30, 2018, respectively.

Non-interest income totaled $2.3 million in the second quarter of 2019, $1.8 million in the prior quarter, and $2.2 million in the same quarter a year ago. The increase of $503 thousand from the prior quarter was due to $283 thousand non-refundable costs for underwriting two new bank-owned life insurance policies purchased in the first quarter and gains on the sale of investment securities in the second quarter. The $36 thousand increase from the same quarter a year ago was attributed to fee income and gains on the sale of investment securities, partially offset by a decrease in deposit network income.

Non-interest income decreased $435 thousand to $4.0 million in the first six months of 2019, compared to $4.5 million in 2018, primarily due to the underwriting costs of new bank-owned life insurance policies and the decrease in deposit network income.

Non-interest expense decreased $612 thousand to $14.9 million in the second quarter of 2019, from $15.5 million in the prior quarter. The decrease was primarily due to lower salaries and benefits as the first quarter included $498 thousand due to participants meeting stock-based compensation retirement eligibility requirements and $239 thousand more in 401K contributions that are typical in the first quarter. The higher expenses were partially offset by a $372 thousand bonus reversal, also in the first quarter of 2019. Additionally, the first quarter included a $129 thousand provision for losses on off-balance sheet commitments.

Non-interest expense increased $407 thousand from $14.5 million in the second quarter of 2018. The increase primarily related to $655 thousand more in salaries (due to five additional full-time equivalent staff and annual merit increases), partially offset by $268 thousand less in professional fees (mostly attributed to core processing contract negotiations in 2018).

Non-interest expense totaled $30.4 million in the first half of 2019, compared to $30.6 million in the first half of 2018. The $146 thousand decrease was primarily attributed to fewer professional fees and data processing expenses (mostly related to Bank of Napa acquisition expenses in 2018), partially offset by the higher expenses in the first half of 2019 mentioned above.

Share Repurchase Program

Bancorp's Board of Directors approved the extension of the $25.0 million Stock Repurchase Program to February 28, 2020. Bancorp repurchased 134,620 shares totaling $5.6 million in the second quarter of 2019 for a cumulative total of 419,741 shares and $17.5 million as of June 30, 2019.

Earnings Call and Webcast Information

Bank of Marin Bancorp will present its second quarter earnings call via webcast on Monday, July 22, 2019 at 8:30 a.m. PT/11:30 a.m. ET. Investors will have the opportunity to listen to the webcast online through Bank of Marin’s website at https://www.bankofmarin.com under “Investor Relations.” To listen to the webcast live, 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 $2.5 billion, Bank of Marin has 23 retail branches, 5 commercial banking offices and 1 loan production office located across the North Bay, San Francisco and East Bay regions. 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, 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 other economic, competitive, governmental, regulatory and technological factors (including external fraud and cyber-security 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.

BANK OF MARIN BANCORP

FINANCIAL HIGHLIGHTS

June 30, 2019

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

June 30, 2019

March 31, 2019

June 30, 2018

Quarter-to-Date

Net income

$

8,235

$

7,479

$

7,891

Diluted earnings per common share 4

$

0.60

$

0.54

$

0.56

Return on average assets

1.32

%

1.19

%

1.28

%

Return on average equity

10.26

%

9.54

%

10.54

%

Efficiency ratio

57.23

%

60.62

%

57.85

%

Tax-equivalent net interest margin 1

4.04

%

4.02

%

3.92

%

Cost of deposits

0.20

%

0.18

%

0.08

%

Net (recoveries) charge-offs

$

(18

)

$

4

$

(42

)

Net (recoveries) charge-offs to average loans

%

%

%

Year-to-Date

Net income

$

15,714

$

14,280

Diluted earnings per common share 4

$

1.13

$

1.02

Return on average assets

1.26

%

1.17

%

Return on average equity

9.90

%

9.63

%

Efficiency ratio

58.91

%

62.16

%

Tax-equivalent net interest margin 1

4.03

%

3.89

%

Cost of deposits

0.19

%

0.08

%

Net (recoveries) charge-offs

$

(14

)

$

(46

)

Net (recoveries) charge-offs to average loans

%

%

At Period End

Total assets

$

2,463,987

$

2,534,076

$

2,465,042

Loans:

Commercial and industrial

$

234,832

$

237,646

$

241,994

Real estate:

Commercial owner-occupied

306,327

310,588

317,587

Commercial investor-owned

878,969

878,494

839,667

Construction

63,563

72,271

57,015

Home equity

125,968

124,512

126,031

Other residential

124,120

117,558

108,829

Installment and other consumer loans

31,100

31,469

26,488

Total loans

$

1,764,879

$

1,772,538

$

1,717,611

Non-performing loans: 2

Commercial and industrial

$

354

$

309

$

Home equity

157

346

385

Installment and other consumer loans

63

64

Total non-accrual loans

$

574

$

719

$

385

Classified loans (graded substandard and doubtful)

$

10,251

$

14,811

$

13,917

Total accruing loans 30-89 days past due

$

343

$

2,194

$

88

Allowance for loan losses to total loans

0.90

%

0.89

%

0.92

%

Allowance for loan losses to non-performing loans

27.59x

21.99x

41.11x

Non-accrual loans to total loans

0.03

%

0.04

%

0.02

%

Total deposits

$

2,102,040

$

2,178,629

$

2,137,723

Loan-to-deposit ratio

84.0

%

81.4

%

80.3

%

Stockholders' equity

$

327,667

$

320,664

$

304,198

Book value per share 4

$

23.99

$

23.26

$

21.76

Tangible common equity to tangible assets 3

12.0

%

11.4

%

11.0

%

Total risk-based capital ratio - Bank

14.6

%

13.9

%

13.5

%

Total risk-based capital ratio - Bancorp

15.2

%

14.9

%

15.2

%

Full-time equivalent employees

293

296

288

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

2 Excludes accruing troubled-debt restructured loans of $11.7 million, $14.0 million and $15.5 million at June 30, 2019, March 31, 2019 and June 30, 2018, respectively. Excludes purchased credit-impaired (PCI) loans with carrying values of $2.1 million that were accreting interest at June 30, 2019, March 31, 2019, and June 30, 2018. These amounts are excluded as PCI loan accretable yield interest recognition is independent from the underlying contractual loan delinquency status.

3 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 gain on available for sale securities, net of tax, less goodwill and intangible assets of $35.3 million, $35.5 million and $36.2 million at June 30, 2019, March 31, 2019, and June 30, 2018, respectively. Tangible assets exclude goodwill and intangible assets.

4 Share and per share data have been adjusted to reflect the two-for-one stock split effective November 27, 2018.

BANK OF MARIN BANCORP
CONSOLIDATED STATEMENTS OF CONDITION

At June 30, 2019, March 31, 2019 and June 30, 2018

(in thousands, except share data; unaudited)

June 30,
2019

March 31,
2019

June 30,
2018

Assets

Cash and due from banks

$

58,757

$

51,639

$

83,855

Investment securities

Held-to-maturity, at amortized cost

148,879

152,845

170,652

Available-for-sale (at fair value; amortized cost $368,712, $442,386 and $397,268 at June 30, 2019, March 31, 2019 and June 30, 2018 respectively)

378,131

442,885

388,137

Total investment securities

527,010

595,730

558,789

Loans, net of allowance for loan losses of $15,835, $15,817 and $15,813 at June 30, 2019, March 31, 2019 and June 30, 2018, respectively

1,749,044

1,756,721

1,701,798

Bank premises and equipment, net

6,872

7,237

7,965

Goodwill

30,140

30,140

30,140

Core deposit intangible

5,128

5,349

6,032

Operating lease right-of-use assets

12,515

12,465

Interest receivable and other assets

74,521

74,795

76,463

Total assets

$

2,463,987

$

2,534,076

$

2,465,042

Liabilities and Stockholders' Equity

Liabilities

Deposits

Non-interest bearing

$

1,056,655

$

1,076,382

$

1,057,745

Interest bearing

Transaction accounts

121,232

130,001

132,272

Savings accounts

172,255

180,758

179,187

Money market accounts

647,592

680,806

631,479

Time accounts

104,306

110,682

137,040

Total deposits

2,102,040

2,178,629

2,137,723

Borrowings and other obligations

297

309

Subordinated debentures

2,674

2,657

5,802

Operating lease liabilities

14,332

14,349

Interest payable and other liabilities

16,977

17,468

17,319

Total liabilities

2,136,320

2,213,412

2,160,844

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 - 13,659,143, 13,786,808 and 13,983,642 at June 30, 2019, March 31, 2019 and June 30, 2018, respectively

132,151

137,125

146,195

Retained earnings

190,416

184,793

166,281

Accumulated other comprehensive income (loss), net of taxes

5,100

(1,254

)

(8,278

)

Total stockholders' equity

327,667

320,664

304,198

Total liabilities and stockholders' equity

$

2,463,987

$

2,534,076

$

2,465,042

BANK OF MARIN BANCORP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Three months ended

Six months ended

(in thousands, except per share amounts; unaudited)

June 30,
2019

March 31,
2019

June 30,
2018

June 30,
2019

June 30,
2018

Interest income

Interest and fees on loans

$

20,988

$

20,695

$

19,624

$

41,683

$

38,511

Interest on investment securities

3,763

4,097

3,499

7,860

6,656

Interest on federal funds sold and due from banks

190

139

285

329

688

Total interest income

24,941

24,931

23,408

49,872

45,855

Interest expense

Interest on interest-bearing transaction accounts

91

77

48

168

100

Interest on savings accounts

17

18

18

35

36

Interest on money market accounts

787

764

236

1,551

452

Interest on time accounts

175

119

140

294

296

Interest on borrowings and other obligations

24

47

1

71

1

Interest on subordinated debentures

58

60

123

118

237

Total interest expense

1,152

1,085

566

2,237

1,122

Net interest income

23,789

23,846

22,842

47,635

44,733

Provision for loan losses

Net interest income after provision for loan losses

23,789

23,846

22,842

47,635

44,733

Non-interest income

Service charges on deposit accounts

485

479

455

964

932

Wealth Management and Trust Services

473

438

488

911

1,003

Debit card interchange fees, net

414

380

360

794

756

Merchant interchange fees, net

87

87

118

174

198

Earnings on (cost of) bank-owned life insurance, net

235

(60

)

230

175

458

Dividends on FHLB stock

193

196

192

389

388

Gains (losses) on investment securities, net

61

(6

)

11

55

11

Other income

326

257

384

583

734

Total non-interest income

2,274

1,771

2,238

4,045

4,480

Non-interest expense

Salaries and related benefits

8,868

9,146

8,316

18,014

17,333

Occupancy and equipment

1,578

1,531

1,511

3,109

3,018

Depreciation and amortization

572

556

546

1,128

1,093

Federal Deposit Insurance Corporation insurance

174

179

191

353

382

Data processing

1,004

1,015

1,023

2,019

2,404

Professional services

535

586

810

1,121

2,109

Directors' expense

187

179

183

366

357

Information technology

284

259

264

543

533

Amortization of core deposit intangible

221

222

230

443

460

Provision for losses on off-balance sheet commitments

129

129

Other expense

1,493

1,726

1,435

3,219

2,901

Total non-interest expense

14,916

15,528

14,509

30,444

30,590

Income before provision for income taxes

11,147

10,089

10,571

21,236

18,623

Provision for income taxes

2,912

2,610

2,680

5,522

4,343

Net income

$

8,235

$

7,479

$

7,891

$

15,714

$

14,280

Net income per common share:1

Basic

$

0.60

$

0.54

$

0.57

$

1.15

$

1.03

Diluted

$

0.60

$

0.54

$

0.56

$

1.13

$

1.02

Weighted average shares:1

Basic

13,655

13,737

13,888

13,696

13,858

Diluted

13,818

13,924

14,066

13,871

14,039

Comprehensive income:

Net income

$

8,235

$

7,479

$

7,891

$

15,714

$

14,280

Other comprehensive income (loss)

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

8,982

3,939

(1,131

)

12,921

(7,301

)

Reclassification adjustment for (gains) losses on available-for-sale securities in net income

(61

)

6

(11

)

(55

)

(11

)

Net unrealized losses on securities transferred from available-for-sale to held-to-maturity

(278

)

(278

)

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

104

101

132

205

268

Subtotal

9,025

4,046

(1,288

)

13,071

(7,322

)

Deferred tax expense (benefit)

2,671

1,198

(384

)

3,869

(2,168

)

Other comprehensive income (loss), net of tax

6,354

2,848

(904

)

9,202

(5,154

)

Comprehensive income

$

14,589

$

10,327

$

6,987

$

24,916

$

9,126

1 Share and per share data have been adjusted to reflect the two-for-one stock split effective November 27, 2018.

BANK OF MARIN BANCORP

AVERAGE STATEMENTS OF CONDITION AND ANALYSIS OF NET INTEREST INCOME

Three months ended

Three months ended

Three months ended

June 30, 2019

March 31, 2019

June 30, 2018

Interest

Interest

Interest

Average

Income/

Yield/

Average

Income/

Yield/

Average

Income/

Yield/

(in thousands; unaudited)

Balance

Expense

Rate

Balance

Expense

Rate

Balance

Expense

Rate

Assets

Interest-bearing due from banks 1

$

30,928

$

190

2.43

%

$

22,690

$

139

2.45

%

$

62,665

$

285

1.80

%

Investment securities 2, 3

567,813

3,844

2.71

%

619,562

4,191

2.71

%

574,669

3,611

2.51

%

Loans 1, 3, 4

1,758,874

21,180

4.76

%

1,756,316

20,887

4.76

%

1,700,057

19,852

4.62

%

Total interest-earning assets 1

2,357,615

25,214

4.23

%

2,398,568

25,217

4.21

%

2,337,391

23,748

4.02

%

Cash and non-interest-bearing due from banks

34,437

30,947

40,383

Bank premises and equipment, net

7,108

7,512

8,203

Interest receivable and other assets, net

107,089

104,685

87,183

Total assets

$

2,506,249

$

2,541,712

$

2,473,160

Liabilities and Stockholders' Equity

Interest-bearing transaction accounts

$

124,620

$

91

0.29

%

$

127,733

$

77

0.24

%

$

142,133

$

48

0.14

%

Savings accounts

174,102

17

0.04

%

180,355

18

0.04

%

178,956

18

0.04

%

Money market accounts

661,363

787

0.48

%

673,137

764

0.46

%

612,612

236

0.15

%

Time accounts including CDARS

115,272

175

0.61

%

113,389

119

0.43

%

140,799

140

0.40

%

Borrowings and other obligations 1

3,608

24

2.59

%

7,414

47

2.55

%

231

1

1.84

%

Subordinated debentures 1

2,664

58

8.69

%

2,647

60

9.05

%

5,786

123

8.40

%

Total interest-bearing liabilities

1,081,629

1,152

0.43

%

1,104,675

1,085

0.40

%

1,080,517

566

0.21

%

Demand accounts

1,073,909

1,086,947

1,072,976

Interest payable and other liabilities

28,621

32,163

19,443

Stockholders' equity

322,090

317,927

300,224

Total liabilities & stockholders' equity

$

2,506,249

$

2,541,712

$

2,473,160

Tax-equivalent net interest income/margin 1

$

24,062

4.04

%

$

24,132

4.02

%

$

23,182

3.92

%

Reported net interest income/margin 1

$

23,789

3.99

%

$

23,846

3.98

%

$

22,842

3.87

%

Tax-equivalent net interest rate spread

3.80

%

3.81

%

3.81

%

Six months ended

Six months ended

June 30, 2019

June 30, 2018

Interest

Interest

Average

Income/

Yield/

Average

Income/

Yield/

(in thousands; unaudited)

Balance

Expense

Rate

Balance

Expense

Rate

Assets

Interest-bearing due from banks 1

$

26,832

$

329

2.44

%

83,641

688

1.64

%

Investment securities 2, 3

593,545

8,034

2.71

%

553,723

6,887

2.49

%

Loans 1, 3, 4

1,757,602

42,067

4.76

%

1,687,841

38,971

4.59

%

Total interest-earning assets 1

2,377,979

50,430

4.22

%

2,325,205

46,546

3.98

%

Cash and non-interest-bearing due from banks

32,702

43,084

Bank premises and equipment, net

7,308

8,351

Interest receivable and other assets, net

105,894

88,096

Total assets

$

2,523,883

2,464,736

Liabilities and Stockholders' Equity

Interest-bearing transaction accounts

$

126,168

$

168

0.27

%

155,180

100

0.13

%

Savings accounts

177,211

35

0.04

%

179,601

36

0.04

%

Money market accounts

667,218

1,551

0.47

%

597,868

452

0.15

%

Time accounts including CDARS

114,336

294

0.52

%

147,633

296

0.40

%

Borrowings and other obligations 1

5,500

71

2.56

%

116

1

1.84

%

Subordinated debentures 1

2,655

118

8.87

%

5,770

237

8.16

%

Total interest-bearing liabilities

1,093,088

2,237

0.41

%

1,086,168

1,122

0.21

%

Demand accounts

1,080,392

1,061,304

Interest payable and other liabilities

30,383

18,180

Stockholders' equity

320,020

299,084

Total liabilities & stockholders' equity

$

2,523,883

2,464,736

Tax-equivalent net interest income/margin 1

$

48,193

4.03

%

45,424

3.89

%

Reported net interest income/margin 1

$

47,635

3.98

%

44,733

3.83

%

Tax-equivalent net interest rate spread

3.81

%

3.77

%

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 2019 and 2018.

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.

Contacts:

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

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