Bank of Marin Bancorp Reports First Quarter Earnings of $8.9 Million

Announces $0.23 Dividend

Bank of Marin Bancorp, "Bancorp" (Nasdaq: BMRC), parent company of Bank of Marin, "Bank," announced earnings of $8.9 million in the first quarter of 2021, compared to $8.1 million in the fourth quarter of 2020 and $7.2 million in the first quarter of 2020. Diluted earnings per share were $0.66 in the first quarter, $0.60 in the prior quarter, and $0.53 in the same quarter last year.

“Bank of Marin delivered steady, reliable results throughout 2020, reflecting our sound underwriting and commitment to relationship banking,” said Russell A. Colombo, President and Chief Executive Officer. “Our first quarter results in 2021 reinforced that consistency. Our credit quality is strong, and we are poised to grow as the economy reopens and our markets gain momentum.”

First quarter 2021 earnings included a $2.9 million reversal of the allowance for credit losses on loans and $590 thousand reversal of allowance for credit losses on unfunded loan commitments. Additionally, the early redemption of our last subordinated debenture generated $1.3 million in accelerated discount accretion in interest expense.

Bancorp provided the following highlights from the first quarter of 2021:

  • Loan balances of $2.122 billion at March 31, 2021 compared to $2.089 billion at December 31, 2020 and $1.844 billion at March 31, 2020. Small Business Administration ("SBA") Paycheck Protection Program ("PPP") loans contributed to the increase and represented $365.0 million outstanding at March 31, 2021 versus $291.6 million at December 31, 2020. There were no PPP loans in the comparative year ago period. As of March 31, 2021, $55.9 million of our PPP loans had been forgiven and paid off by the SBA.
  • Credit quality remains strong, with non-accrual loans representing 0.43% of total loans as of March 31, 2021, compared to 0.44% at December 31, 2020, and 0.09% at March 31, 2020. Reversals of $2.9 million to the allowance for credit losses on loans and $590 thousand to the allowance for credit losses on unfunded loan commitments were driven primarily by an improvement in economic forecasts and a $40.2 million decrease in non-PPP loan balances.
  • Total deposits grew $152.0 million from $2.504 billion at December 31, 2020 to $2.656 billion at March 31, 2021. The increase was primarily due to increases in PPP borrower-related accounts and normal fluctuations in some of our large business accounts. Non-interest bearing deposits represented 54% of total deposits as of the end of the first quarter of 2021 and fourth quarter of 2020, versus 49% at the end of the first quarter a year ago. First quarter 2021 cost of average deposits was consistent with the prior quarter at 0.07%, compared to 0.21% in the first quarter of 2020.
  • Return on average assets ("ROA") and return on average equity ("ROE") were 1.21% and 10.22%, respectively, for the quarter ended March 31, 2021. These reflect meaningful increases as ROA was 1.09% in both the prior and year-ago quarters. ROE was 8.98% and 8.54%, respectively, for the fourth quarter and first quarter of 2020.
  • Our strong capital and liquidity position afforded us the opportunity to eliminate a high cost funding source. On March 15, 2021 we redeemed a $2.8 million subordinated debenture, which carried an effective rate of approximately 5.7%. While the redemption decreased our net interest margin by 18 basis points in the first quarter of 2021, it will serve to improve net interest margin in the future.
  • All capital ratios were above well-capitalized regulatory requirements. The total risk-based capital ratio for Bancorp was 15.7% at March 31, 2021, compared to 16.0% at December 31, 2020, and 15.3% at March 31, 2020. Bancorp's tangible common equity to tangible assets was 10.5% at March 31, 2021, compared to 11.3% at December 31, 2020 and 11.7% at March 31, 2020 (refer to footnote 5 on page 6 for a definition of this non-GAAP financial measure). The subordinated debt redemption contributed to the decline in total risk-based capital, and share repurchases were the primary driver of the declines in both total risk-based capital and tangible common equity. The total risk-based capital ratio for the Bank was 14.8% at March 31, 2021, compared to 15.8% at December 31, 2020, and 14.4% at March 31, 2020.
  • The Board of Directors declared a cash dividend of $0.23 per share on April 16, 2021. This represents the 64th consecutive quarterly dividend paid by Bank of Marin Bancorp. The dividend is payable on May 7, 2021, to shareholders of record at the close of business on April 30, 2021.
  • As previously announced, Secil Tabli Watson was appointed as a new director on the boards of both the Bancorp and Bank effective April 1, 2021.

Loans and Credit Quality

Loans increased by $33.2 million in the first quarter and totaled $2.122 billion at March 31, 2021, which was comprised of a $73.4 million net increase in PPP loans, and a $40.2 million decrease in non-PPP loans. Non-PPP-related loan originations were $25.3 million for the first quarter of 2021, compared to $29.8 million for the first quarter of 2020. Loan payoffs were $34.6 million in the first quarter of 2021, compared to $51.7 million for the first quarter of 2020. Loan payoffs in the first quarter consisted largely of consumer loans and loans whereby underlying assets were sold (including completed construction projects). Other negative variances included loans refinanced with other banks and decreased commitment line utilization.

As of March 31, 2021, there were 2,513 PPP loans outstanding totaling $365.0 million (net of $8.0 million in unrecognized fees and costs), which included 841 loans totaling $119.5 million funded during the first quarter of 2021 under the second round of the PPP stimulus plan. Of the total PPP loans funded as of March 31, 2021, 144 loans amounting to $55.9 million were forgiven and paid off by the SBA. We expect the forgiveness of the first round of PPP loans to accelerate during the second quarter of 2021. Of the loans remaining, 77% (1,940 loans) totaling $89.6 million are less than or equal to $150 thousand and have access to streamlined forgiveness processing.

As of April 15, 2021, 11 borrowing relationships with 17 loans totaling $59.2 million were benefiting from payment relief. We monitor the financial situation of these clients closely and expect the majority to resume payments as the economy reopens. The following table summarizes these loans by industry or collateral type.

Industry/Collateral Type (dollars in thousands)

Outstanding Loan Balance

Weighted Average LTV

Education

$

17,076

26

%

Health Clubs

16,427

45

%

Office and Mixed Use

13,794

42

%

Hospitality

7,135

48

%

Retail Related CRE

4,760

58

%

Payment Relief Totals

$

59,192

40

%

Non-accrual loans totaled $9.2 million, or 0.43% of the loan portfolio, at March 31, 2021, $9.2 million, or 0.44% at December 31, 2020, and $1.6 million, or 0.09% a year ago. Classified loans totaled $26.4 million at March 31, 2021, compared to $25.8 million at December 31, 2020 and $12.1 million at March 31, 2020. There were no loans classified doubtful at March 31, 2021, December 31, 2020, or March 31, 2020. Accruing loans past due 30 to 89 days totaled $1.0 million at March 31, 2021, compared to $1.8 million at December 31, 2020 and $1.3 million a year ago.

In the first quarter of 2021, we recorded a reversal of the provision for credit losses on loans of $2.9 million, compared to a reversal of $856 thousand in the prior quarter and an increase of $2.2 million in the first quarter of 2020. Both the current and previous quarters' allowances were calculated under the current expected credit loss methodology. The reversal of the provision in the first quarter of 2021 was primarily due to improvements in the forecasted California unemployment rates over the next four quarters and a $40.2 million decrease in non-PPP loans. The first quarter of 2020 included a $2.2 million provision for credit losses on loans, as determined under the incurred loss methodology, due to economic uncertainties of the COVID-19 pandemic. Net recoveries were $13 thousand in the first quarter of 2021 and fourth quarter of 2020, compared to $7 thousand in the first quarter a year ago. The ratio of allowance for credit losses to total loans was 0.94% at March 31, 2021, 1.10% at December 31, 2020, and 1.02% at March 31, 2020. Excluding acquired and SBA PPP loans, the allowance for credit losses represented 1.14% of total loans as of March 31, 2021, compared to 1.27% and 1.08% as of December 31, 2020 and March 31, 2020, respectively (refer to footnote 4 on page 6 for a definition of this non-GAAP financial measure).

Cash, Cash Equivalents and Restricted Cash

Total cash, cash equivalents and restricted cash were $142.8 million at March 31, 2021, compared to $200.3 million at December 31, 2020. The reduction was primarily due to growth in SBA PPP loans and investment securities, partially offset by increased deposits.

Investments

The investment securities portfolio increased to $670.5 million at March 31, 2021 from $501.4 million at December 31, 2020. The increase was primarily attributed to purchases of $203.4 million to deploy excess cash in a more favorable interest rate environment, partially offset by paydowns, calls and maturities of $24.7 million. The fair value of available-for-sale investment securities decreased $9.1 million, primarily due to the rise in interest rates in the first quarter of 2021.

Deposits

Total deposits were $2.656 billion at March 31, 2021, compared to $2.504 billion at December 31, 2020. PPP borrower-related deposits and normal fluctuations in some of our large business accounts drove the increase. Additionally, the bank maintained $180.8 million in off-balance sheet deposits with deposit networks at March 31, 2021. The average cost of deposits held steady at 0.07% in the first quarter of 2021.

On March 30, 2020, we implemented temporary fee waivers for all ATM fees, overdraft fees and early withdrawal penalties for time deposits to help ease the financial burden customers began experiencing due to the pandemic. After honoring the fee waivers for one year, we announced at the beginning of April those fees would no longer be automatically waived as of May 3, 2021, allowing our customers 30 days to adjust.

Earnings

“We continued our established tradition of carefully managing expenses in the first quarter, while taking advantage of market opportunities to invest excess cash and reduce high-cost debt,” said Tani Girton, EVP and Chief Financial Officer. “With consistent profitability, excellent asset quality and low-cost funding, we are confident in our ability to grow alongside our clients and continue to develop value for our shareholders.”

Net interest income totaled $22.0 million in the first quarter of 2021, compared to $23.6 million in the prior quarter and $24.1 million a year ago. The $1.6 million decrease from the prior quarter was mostly attributable to $1.3 million in accelerated discount accretion from the early redemption of a subordinated debenture. Additionally, interest income declined due to two fewer days in the quarter.

The $2.1 million decrease in net interest income from the comparative quarter a year ago was primarily caused by lower yields across interest-earning assets stemming from the low interest rate environment, early redemption of the subordinated debenture as mentioned above, and lower average commercial and home equity loan balances. These negative variances were partially offset by interest and fees on PPP loans and lower rates on interest-bearing liabilities.

The tax-equivalent net interest margin was 3.19% in the first quarter, 3.40% in the prior quarter, and 3.88% in the first quarter of 2020. The early redemption of our last subordinated debenture reduced first quarter 2021 tax-equivalent net interest margin by approximately 18 basis points, but will improve net interest margin going forward. The decrease from the same quarter a year ago was primarily attributed to the lower interest rate environment.

Non-interest income totaled $1.8 million in the first quarter of 2021 and the fourth quarter of 2020, compared to $3.1 million in the first quarter a year ago. The $1.3 million decrease from the first quarter of 2020 was mostly attributed to the absence of gains on sales of investment securities, lower service charges on deposit accounts, and lower fee income from one-way deposit sales to third-party deposit networks.

Non-interest expense decreased $358 thousand to $14.8 million in the first quarter of 2021 from $15.2 million in the prior quarter. The decrease was primarily due to a $590 thousand reversal of the allowance for credit losses on unfunded loan commitments versus a $960 thousand provision for credit losses on unfunded loan commitments in the prior quarter. This favorable variance was partially offset by $794 thousand in higher salaries and related benefits expenses, which included January resets of 401K matching, accelerated stock-based compensation for participants meeting retirement eligibility criteria. Professional services also increased due to some pandemic related delays in 2020 activities.

First quarter non-interest expense decreased $647 thousand from $15.5 million in the first quarter of 2020. The decrease was primarily attributed to the $590 thousand reversal of allowance for credit losses on unfunded loan commitments versus a $102 thousand provision a year ago. In addition, salaries and related benefits decreased $269 thousand (mostly attributed to $421 thousand additional deferred loan origination costs from funding the second round of SBA PPP loans) and charitable contributions $136 thousand. Increases included professional services as mentioned above and the discontinuation of Federal Deposit Insurance Corporation ("FDIC") insurance credits received in 2020.

The efficiency ratio was 62.13% in the first quarter of 2021, up from 59.70% in the prior quarter and 56.79% in the comparative period a year ago. Without the $1.3 million accelerated discount accretion from the early redemption of the subordinated debenture our efficiency ratio would have been 58.92%.

Share Repurchase Program

Bancorp repurchased 224,013 shares totaling $8.5 million in the first quarter of 2021 for a cumulative total of 393,584 shares amounting to $14.3 million under the $25.0 million share repurchase program that was approved by the Board of Directors on January 24, 2020, expiring February 28, 2022.

Earnings Call and Webcast Information

Bank of Marin Bancorp will present its first quarter earnings call via webcast on Monday, April 19, 2021 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 $3.1 billion as of March 31, 2021, Bank of Marin has 21 branches and 7 commercial banking offices located across 7 Bay Area counties. Bank of Marin provides commercial banking, personal banking, specialty lending 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)

March 31,

2021

 

December 31,

2020

 

March 31,

2020

Quarter-to-Date

 

 

 

 

 

Net income

$

8,947

 

 

$

8,117

 

 

$

7,228

 

Diluted earnings per common share

$

0.66

 

 

$

0.60

 

 

$

0.53

 

Return on average assets

 

1.21

%

 

 

1.09

%

 

 

1.09

%

Return on average equity

 

10.22

%

 

 

8.98

%

 

 

8.54

%

Efficiency ratio

 

62.13

%

 

 

59.70

%

 

 

56.79

%

Tax-equivalent net interest margin 1

 

3.19

%

 

 

3.40

%

 

 

3.88

%

Cost of deposits

 

0.07

%

 

 

0.07

%

 

 

0.21

%

Net recoveries

$

(13

)

 

$

(13

)

 

$

(7

)

At Period End

 

 

 

 

 

Total assets

$

3,058,133

 

 

$

2,911,926

 

 

$

2,697,738

 

Loans:

 

 

 

 

 

Commercial and industrial 2

$

545,069

 

 

$

498,408

 

 

$

264,405

 

Real estate:

 

 

 

 

 

Commercial owner-occupied

 

308,266

 

 

 

304,963

 

 

 

306,371

 

Commercial investor-owned

 

955,021

 

 

 

961,208

 

 

 

930,479

 

Construction

 

71,066

 

 

 

73,046

 

 

 

63,425

 

Home equity

 

96,575

 

 

 

104,813

 

 

 

116,968

 

Other residential

 

124,383

 

 

 

123,395

 

 

 

135,929

 

Installment and other consumer loans

 

21,392

 

 

 

22,723

 

 

 

26,283

 

Total loans

$

2,121,772

 

 

$

2,088,556

 

 

$

1,843,860

 

Non-performing loans: 3

 

 

 

 

 

Real estate:

 

 

 

 

 

Commercial owner-occupied

$

7,147

 

 

$

7,147

 

 

$

 

Commercial investor-owned

 

1,603

 

 

$

1,610

 

 

$

942

 

Home equity

 

455

 

 

 

459

 

 

 

633

 

Installment and other consumer loans

 

 

 

 

17

 

 

 

57

 

Total non-accrual loans

$

9,205

 

 

$

9,233

 

 

$

1,632

 

Classified loans (graded substandard and doubtful)

$

26,423

 

 

$

25,829

 

 

$

12,056

 

Total accruing loans 30-89 days past due

$

1,047

 

 

$

1,827

 

 

$

1,315

 

Allowance for credit losses to total loans

 

0.94

%

 

 

1.10

%

 

 

1.02

%

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

 

1.14

%

 

 

1.27

%

 

 

1.08

%

Allowance for credit losses to non-performing loans

2.17x

 

2.48x

 

11.57x

Non-accrual loans to total loans

 

0.43

%

 

 

0.44

%

 

 

0.09

%

Total deposits

$

2,656,199

 

 

$

2,504,249

 

 

$

2,307,110

 

Loan-to-deposit ratio

 

79.9

%

 

 

83.4

%

 

 

79.9

%

Stockholders' equity

$

350,292

 

 

$

358,253

 

 

$

345,940

 

Book value per share

$

26.29

 

 

$

26.54

 

 

$

25.50

 

Tangible common equity to tangible assets 5

 

10.5

%

 

 

11.3

%

 

 

11.7

%

Total risk-based capital ratio - Bank

 

14.8

%

 

 

15.8

%

 

 

14.4

%

Total risk-based capital ratio - Bancorp

 

15.7

%

 

 

16.0

%

 

 

15.3

%

Full-time equivalent employees

 

282

 

 

 

289

 

 

 

296

 

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

2 Includes SBA PPP loans of $365.0 million and $291.6 million at March 31, 2021 and December 31, 2020, respectively. There were no SBA PPP loans as of March 31, 2020.

3 Excludes accruing troubled-debt restructured loans of $3.4 million, $5.1 million and $11.1 million at March 31, 2021, December 31, 2020 and March 31, 2020, 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 March 31, 2020 totaled $100.4 million. 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 gain on available for sale securities, net of tax, less goodwill and intangible assets of $33.8 million, $34.0 million and $34.6 million at March 31, 2021, December 31, 2020, and March 31, 2020, respectively. Tangible assets exclude goodwill and intangible assets.

BANK OF MARIN BANCORP

CONSOLIDATED STATEMENTS OF CONDITION

At March 31, 2021, December 31, 2020 and March 31, 2020

 

(in thousands, except share data; unaudited)

March 31,

2021

December 31,

2020

March 31,

2020

Assets

 

 

 

Cash, cash equivalents and restricted cash

$

142,819

 

$

200,320

 

$

156,274

 

Investment securities:

 

 

 

Held-to-maturity, at amortized cost (net of zero allowance for credit losses at March 31, 2021 and December 31, 2020 1)

 

151,970

 

 

109,036

 

 

131,140

 

Available-for-sale (at fair value; amortized cost $508,337, $373,038, and $431,519 at March 31, 2021, December 31, 2021, March 31, 2020, respectively; net of zero allowance for credit losses at March 31, 2021 and December 31, 20201)

 

518,568

 

 

392,351

 

 

448,868

 

Total investment securities

 

670,538

 

 

501,387

 

 

580,008

 

Loans, at amortized cost

 

2,121,772

 

 

2,088,556

 

 

1,843,860

 

Allowance for credit losses 1

 

(19,958

)

 

(22,874

)

 

(18,884

)

Loans, net of allowance for credit losses

 

2,101,814

 

 

2,065,682

 

 

1,824,976

 

Bank premises and equipment, net

 

4,604

 

 

4,919

 

 

5,708

 

Goodwill

 

30,140

 

 

30,140

 

 

30,140

 

Core deposit intangible

 

3,627

 

 

3,831

 

 

4,471

 

Operating lease right-of-use assets

 

24,559

 

 

25,612

 

 

22,225

 

Interest receivable and other assets

 

80,032

 

 

80,035

 

 

73,936

 

Total assets

$

3,058,133

 

$

2,911,926

 

$

2,697,738

 

 

 

 

 

Liabilities and Stockholders' Equity

 

 

 

Liabilities

 

 

 

Deposits

 

 

 

Non-interest bearing

$

1,445,282

 

$

1,354,650

 

$

1,130,460

 

Interest bearing

 

 

 

Transaction accounts

 

176,390

 

 

183,552

 

 

137,802

 

Savings accounts

 

224,748

 

 

201,507

 

 

167,210

 

Money market accounts

 

714,824

 

 

667,107

 

 

776,271

 

Time accounts

 

94,955

 

 

97,433

 

 

95,367

 

Total deposits

 

2,656,199

 

 

2,504,249

 

 

2,307,110

 

Borrowings and other obligations

 

30

 

 

58

 

 

185

 

Subordinated debenture

 

 

 

2,777

 

 

2,725

 

Operating lease liabilities

 

25,993

 

 

27,062

 

 

23,726

 

Interest payable and other liabilities

 

25,619

 

 

19,527

 

 

18,052

 

Total liabilities

 

2,707,841

 

 

2,553,673

 

 

2,351,798

 

 

 

 

 

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 - 13,326,509, 13,500,453 and 13,565,969 at March 31, 2021, December 31, 2020, and March 31, 2020, respectively

 

118,386

 

 

125,905

 

 

127,684

 

Retained earnings

 

225,600

 

 

219,747

 

 

207,328

 

Accumulated other comprehensive income, net of taxes

 

6,306

 

 

12,601

 

 

10,928

 

Total stockholders' equity

 

350,292

 

 

358,253

 

 

345,940

 

Total liabilities and stockholders' equity

$

3,058,133

 

$

2,911,926

 

$

2,697,738

 

1 The March 31, 2021 and December 31, 2020 allowances were under current expected credit loss methodology. Whereas, the March 31, 2020 allowance was under incurred loss methodology. Refer to Note 1, Summary of Accounting Policies, in our 2020 Form 10-K for further information on the adoption of ASU 2016-13.

BANK OF MARIN BANCORP

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

 

 

Three months ended

(in thousands, except per share amounts; unaudited)

March 31,

2021

December 31,

2020

March 31,

2020

Interest income

 

 

 

Interest and fees on loans

$

20,661

 

$

20,794

 

$

20,887

 

Interest on investment securities

 

3,129

 

 

3,254

 

 

4,165

 

Interest on federal funds sold and due from banks

 

42

 

 

40

 

 

332

 

Total interest income

 

23,832

 

 

24,088

 

 

25,384

 

Interest expense

 

 

 

Interest on interest-bearing transaction accounts

 

39

 

 

40

 

 

66

 

Interest on savings accounts

 

19

 

 

18

 

 

16

 

Interest on money market accounts

 

286

 

 

278

 

 

971

 

Interest on time accounts

 

96

 

 

118

 

 

161

 

Interest on borrowings and other obligations

 

 

 

1

 

 

2

 

Interest on subordinated debenture

 

1,361

 

 

34

 

 

49

 

Total interest expense

 

1,801

 

 

489

 

 

1,265

 

Net interest income

 

22,031

 

 

23,599

 

 

24,119

 

(Reversal of) provision for credit losses on loans

 

(2,929

)

 

(856

)

 

2,200

 

Net interest income after (reversal of) provision for credit losses

 

24,960

 

 

24,455

 

 

21,919

 

Non-interest income

 

 

 

Wealth Management and Trust Services

 

488

 

 

476

 

 

504

 

Debit card interchange fees

 

366

 

 

387

 

 

360

 

Service charges on deposit accounts

 

281

 

 

286

 

 

451

 

Earnings on bank-owned life insurance, net

 

257

 

 

232

 

 

275

 

Dividends on Federal Home Loan Bank stock

 

149

 

 

151

 

 

208

 

Merchant interchange fees

 

57

 

 

56

 

 

73

 

Gains on sale of investment securities, net

 

 

 

 

 

800

 

Other income

 

228

 

 

239

 

 

449

 

Total non-interest income

 

1,826

 

 

1,827

 

 

3,120

 

Non-interest expense

 

 

 

Salaries and related benefits

 

9,208

 

 

8,414

 

 

9,477

 

Occupancy and equipment

 

1,751

 

 

1,843

 

 

1,663

 

Professional services

 

863

 

 

432

 

 

544

 

Data processing

 

819

 

 

747

 

 

786

 

Depreciation and amortization

 

459

 

 

558

 

 

526

 

Information technology

 

313

 

 

292

 

 

250

 

Amortization of core deposit intangible

 

204

 

 

214

 

 

213

 

Federal Deposit Insurance Corporation insurance

 

179

 

 

175

 

 

2

 

Directors' expense

 

175

 

 

180

 

 

174

 

Charitable contributions

 

31

 

 

113

 

 

167

 

(Reversal of) provision for credit losses on unfunded loan commitments

 

(590

)

 

960

 

 

102

 

Other expense

 

1,410

 

 

1,252

 

 

1,565

 

Total non-interest expense

 

14,822

 

 

15,180

 

 

15,469

 

Income before provision for income taxes

 

11,964

 

 

11,102

 

 

9,570

 

Provision for income taxes

 

3,017

 

 

2,985

 

 

2,342

 

Net income

$

8,947

 

$

8,117

 

$

7,228

 

Net income per common share:

 

 

 

Basic

$

0.67

 

$

0.60

 

$

0.53

 

Diluted

$

0.66

 

$

0.60

 

$

0.53

 

Weighted average shares:

 

 

 

Basic

 

13,363

 

 

13,523

 

 

13,525

 

Diluted

 

13,469

 

 

13,615

 

 

13,656

 

Comprehensive income (loss):

 

 

 

Net income

$

8,947

 

$

8,117

 

$

7,228

 

Other comprehensive (loss) income:

 

 

 

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

 

(9,082

)

 

286

 

 

9,812

 

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

 

 

 

 

 

(800

)

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

 

143

 

 

129

 

 

110

 

Other comprehensive (loss) income, before tax

 

(8,939

)

 

415

 

 

9,122

 

Deferred tax (benefit) expense

 

(2,644

)

 

124

 

 

2,697

 

Other comprehensive (loss) income, net of tax

 

(6,295

)

 

291

 

 

6,425

 

Total comprehensive income

$

2,652

 

$

8,408

 

$

13,653

 

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, 2021

December 31, 2020

March 31, 2020

 

 

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-earning deposits with banks 1

$

165,788

$

42

0.10

%

$

157,389

$

40

0.10

%

$

99,362

$

332

1.32

%

Investment securities 2, 3

 

540,970

 

3,282

2.43

%

 

498,730

 

3,395

2.72

%

 

556,897

 

4,266

3.06

%

Loans 1, 3, 4

 

2,099,847

 

20,836

3.97

%

 

2,096,908

 

20,975

3.91

%

 

1,833,180

 

21,066

4.55

%

Total interest-earning assets 1

 

2,806,605

 

24,160

3.44

%

 

2,753,027

 

24,410

3.47

%

 

2,489,439

 

25,664

4.08

%

Cash and non-interest-bearing due from banks

 

50,931

 

 

 

64,600

 

 

 

40,844

 

 

Bank premises and equipment, net

 

4,777

 

 

 

5,213

 

 

 

5,939

 

 

Interest receivable and other assets, net

 

133,693

 

 

 

135,520

 

 

 

118,909

 

 

Total assets

$

2,996,006

 

 

$

2,958,360

 

 

$

2,655,131

 

 

Liabilities and Stockholders' Equity

 

 

 

 

 

 

 

 

 

Interest-bearing transaction accounts

$

174,135

$

39

0.09

%

$

160,827

$

41

0.10

%

$

138,395

$

66

0.19

%

Savings accounts

 

214,049

 

19

0.04

%

 

198,616

 

18

0.04

%

 

163,439

 

16

0.04

%

Money market accounts

 

703,577

 

286

0.16

%

 

697,203

 

279

0.16

%

 

760,616

 

971

0.51

%

Time accounts including CDARS

 

96,349

 

96

0.40

%

 

97,512

 

118

0.48

%

 

96,157

 

161

0.67

%

Borrowings and other obligations 1

 

36

 

1.99

%

 

72

 

2.37

%

 

358

 

2

1.81

%

Subordinated debenture 1, 5

 

2,164

 

1,361

251.54

%

 

2,768

 

34

4.85

%

 

2,715

 

49

7.19

%

Total interest-bearing liabilities

 

1,190,310

 

1,801

0.61

%

 

1,156,998

 

490

0.17

%

 

1,161,680

 

1,265

0.44

%

Demand accounts

 

1,406,123

 

 

 

1,397,349

 

 

 

1,119,975

 

 

Interest payable and other liabilities

 

44,551

 

 

 

44,532

 

 

 

33,045

 

 

Stockholders' equity

 

355,022

 

 

 

359,481

 

 

 

340,431

 

 

Total liabilities & stockholders' equity

$

2,996,006

 

 

$

2,958,360

 

 

$

2,655,131

 

 

Tax-equivalent net interest income/margin 1

 

$

22,359

3.19

%

 

$

23,920

3.40

%

 

$

24,399

3.88

%

Reported net interest income/margin 1

 

$

22,031

3.14

%

 

$

23,599

3.35

%

 

$

24,119

3.83

%

Tax-equivalent net interest rate spread

 

 

2.83

%

 

 

3.30

%

 

 

3.64

%

 

 

 

 

 

 

 

 

 

 

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 2021 and 2020.

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 First quarter 2021 interest expense includes $1.3 million accelerated discount accretion from the early redemption of our last subordinated debenture on March 15, 2021.

 

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