NOVATO, Calif.--(BUSINESS WIRE)--Bank of Marin Bancorp, "Bancorp" (Nasdaq: BMRC), parent company of Bank of Marin, "Bank," announced earnings of $9.3 million in the second quarter of 2021, compared to $8.9 million in the first quarter of 2021 and $7.4 million in the second quarter of 2020. Diluted earnings per share were $0.71 in the second quarter, $0.66 in the prior quarter, and $0.55 in the same quarter last year. Earnings for the first six months of 2021 totaled $18.2 million compared to $14.6 million in the same period last year. Diluted earnings per share were $1.37 and $1.07 in the first six months of 2021 and 2020, respectively.
"During the second quarter, we generated strong results for our shareholders, growing both net interest income and non-interest revenue. In addition, we managed expenses closely and maintained exceptional credit quality," said Russell A. Colombo, Chief Executive Officer. "Importantly, our acquisition of American River Bankshares is on track to close in the third quarter. This strategic acquisition will give us a well-established foothold in the growing Sacramento region and expand our Northern California footprint."
Bancorp provided the following highlights from the second quarter of 2021:
- Loan balances were $2.003 billion at June 30, 2021, compared to $2.122 billion at March 31, 2021 and $2.110 billion at June 30, 2020. Small Business Administration ("SBA") Paycheck Protection Program ("PPP") loans outstanding were $248.3 million at June 30, 2021, versus $365.0 million and $298.9 million at March 31, 2021 and June 30, 2020, respectively. As of June 30, 2021, $189.3 million of our PPP loans had been forgiven and paid off by the SBA.
- Credit quality remains strong, with non-accrual loans representing 0.46% of total loans as of June 30, 2021, compared to 0.43% at March 31, 2021, and 0.08% at June 30, 2020. Reversals of $920 thousand to the allowance for credit losses on loans and $612 thousand to the allowance for credit losses on unfunded loan commitments in the second quarter of 2021 were driven primarily by an improvement in economic forecasts.
- Total deposits grew $27.4 million to $2.684 billion at June 30, 2021 from $2.656 billion at March 31, 2021. The increase in the second quarter of 2021 was primarily driven by our customers depositing PPP funds into their accounts and new account openings. Non-interest bearing deposits were 54% of total deposits as of June 30, 2021 and March 31, 2021, versus 52% at the end of the second quarter a year ago. Cost of average deposits were 0.07% in the second quarter and first quarter of 2021, compared to 0.09% in the second quarter of 2020.
- Return on average assets ("ROA") and return on average equity ("ROE") were 1.20% and 10.72%, respectively, for the quarter ended June 30, 2021. ROA and ROE were 1.21% and 10.22% in the prior quarter and 1.01% and 8.52%, respectively, in the second quarter a year ago.
- All capital ratios were above well-capitalized regulatory requirements. The total risk-based capital ratio for Bancorp was 15.5% at June 30, 2021, compared to 15.7% at March 31, 2021, and 15.8% at June 30, 2020. Bancorp's tangible common equity to tangible assets was 10.4% at June 30, 2021, compared to 10.5% at March 31, 2021 and 10.1% at June 30, 2020 (refer to footnote 5 on page 6 for a definition of this non-GAAP financial measure). The Bank's total risk-based capital ratio was 15.3% at June 30, 2021, compared to 14.8% at March 31, 2021, and 15.0% at June 30, 2020.
- As previously announced, on April 16, 2021 Bancorp entered into a definitive agreement to acquire American River Bankshares ("AMRB"), parent company of American River Bank ("ARB"), whereby AMRB will merge with and into Bancorp and immediately thereafter ARB will merge with and into Bank of Marin (collectively, the "Merger"). The acquisition will expand Bank of Marin's presence throughout the Greater Sacramento, Amador and Sonoma County Regions where ARB has ten branches. Pursuant to the terms of the agreement, AMRB shareholders will have the right to receive 0.575 shares of Bank of Marin Bancorp common stock. AMRB had total assets of $916.1 million, total deposits of $788.6 million, and total loans of $475.4 million as of March 31, 2021. These amounts are subject to fair value adjustments upon the close of the Merger. The Boards of Directors of each company unanimously approved the merger. The Merger is expected to close in the third quarter of 2021, subject to regulatory approval and approval by shareholders of Bancorp and AMRB on July 28, 2021.
- The Board of Directors declared a cash dividend of $0.24 per share on July 16, 2021, a $0.01 increase from the prior quarter. This represents the 65th consecutive quarterly dividend paid by Bank of Marin Bancorp. The dividend is payable on August 6, 2021, to shareholders of record at the close of business on July 30, 2021.
- Given our strong capital and liquidity, the Board of Directors approved a new share repurchase program on July 16, 2021 under which Bancorp may repurchase up to $25.0 million of its outstanding common stock through July 31, 2023.
"Our relationship banking model proved itself through the pandemic and into the first half of 2021," said Tim Myers, President and Chief Operating Officer. "Through PPP we helped our customers in need and grew our core deposit base. Our bankers are back out visiting and working with clients to address their evolving needs as the economy reopens and demand for business financing returns."
Loans and Credit Quality
Loans decreased by $119.0 million in the second quarter and totaled $2.003 billion at June 30, 2021. The decrease was comprised of a $116.7 million net decrease in PPP loans, and a $2.3 million decrease in non-PPP loans. Non-PPP-related loan originations were $43.8 million and $69.1 million for the second quarter and first six months of 2021, compared to $41.8 million and $71.6 million for the same periods in 2020. Loan payoffs were $60.9 million and $95.4 million in the second quarter and first half of 2021, compared to $31.7 million and $83.4 million for the first quarter and first half of 2020. Loan payoffs in the second quarter of 2021 consisted largely of HELOC, tenants in common, and commercial loans on which underlying assets were sold or paid off with cash.
As of June 30, 2021, there were 1,532 PPP loans outstanding totaling $248.3 million (net of $6.5 million in unrecognized fees and costs). PPP loans funded in the Bank's second round totaled 1,063 for $136.2 million. Forgiveness of PPP loans continues with 1,395 approved by the SBA as of July 13, 2021 totaling $201.6 million. As of June 30, 2021, PPP loans forgiven and paid off were 1,344 totaling $189.3 million. Of the loans remaining, 70% (1,072 loans) totaling $45.8 million are less than or equal to $150 thousand and have access to streamlined forgiveness processing.
As of July 16, 2021, 6 borrowing relationships with 9 loans totaling $43.4 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 continues to reopen.
Non-accrual loans totaled $9.2 million at June 30, 2021 and March 31, 2021, or 0.46% and 0.43% of total loans, respectively. Non-accrual loans totaled $1.6 million, or 0.08% of total loans a year ago. Classified loans totaled $30.8 million at June 30, 2021, compared to $26.4 million at March 31, 2021 and $13.5 million at June 30, 2020. There were no loans classified doubtful at June 30, 2021, March 31, 2021, or June 30, 2020. Accruing loans past due 30 to 89 days totaled $487 thousand at June 30, 2021, compared to $1.0 million at March 31, 2021 and $83 thousand a year ago.
In the second quarter of 2021, we recorded a reversal of the provision for credit losses on loans of $920 thousand, compared to a reversal of $2.9 million in the prior quarter and a provision of $2.0 million in the second quarter of 2020. Both the current quarter and prior quarter allowances were calculated under the current expected credit loss methodology. The reversal of the provision in the second quarter of 2021 was primarily due to improvements in economic forecasts. The second quarter of 2020 included a $2.0 million provision for credit losses on loans, as determined under the incurred loss methodology, due to economic uncertainties of the COVID-19 pandemic. We recorded a $612 thousand reversal of credit losses on unfunded commitments in the second quarter of 2021, compared to $590 thousand in the prior quarter and a $260 thousand provision in the second quarter of 2020. The reversals in the second and first quarters of 2021 were primarily driven by improvements in economic forecasts. A $39.1 million decrease in unfunded loan commitments also contributed to the reversal of the allowance for credit losses on unfunded commitments in the second quarter of 2021. Net recoveries were $62 thousand in the second quarter of 2021 and $13 thousand in the prior quarter, compared to net charge-offs of $16 thousand in the second quarter a year ago. The ratio of allowance for credit losses to total loans was 0.95% at June 30, 2021, 0.94% at March 31, 2021, and 0.99% at June 30, 2020. Excluding acquired and SBA PPP loans, the allowance for credit losses represented 1.09% of total loans as of June 30, 2021, compared to 1.14% and 1.22% as of March 31, 2021 and June 30, 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 $257.5 million at June 30, 2021, compared to $142.8 million at March 31, 2021. The increase was primarily associated with SBA PPP loan forgiveness and increase in deposits.
Investments
The investment securities portfolio increased to $687.0 million at June 30, 2021 from $670.5 million at March 31, 2021. The increase was primarily attributed to purchases of $41.2 million, partially offset by paydowns and calls of $26.7 million. The fair value of available-for-sale investment securities increased $2.8 million due to a decline in interest rates in the second quarter of 2021.
Deposits
Total deposits were $2.684 billion at June 30, 2021, compared to $2.656 billion at March 31, 2021. The increase was primarily driven by our customers depositing PPP funds into their accounts and new account openings in the second quarter of 2021. The Bank maintained $174.0 million in off-balance sheet deposits with deposit networks at June 30, 2021 as compared to $180.8 million at March 31, 2021. Average cost of deposits held steady at 0.07% in the second 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 provided our customers 30 days notice, and reinstituted the fees as of May 3, 2021.
Earnings
"Bank of Marin is emerging from the pandemic with the increased profitability and strong balance sheet that we have established as hallmarks throughout our 31-year history," said Tani Girton, Executive Vice President and Chief Financial Officer. "We produced strong net income growth during the quarter and over the past year. We are prepared for the American River Bank integration, and we fully expect the acquisition to further drive value for our shareholders."
Net interest income totaled $24.5 million in the second quarter of 2021, compared to $22.0 million in the prior quarter and $24.4 million in the second quarter a year ago. The $2.5 million increase from the prior quarter was attributable to $1.3 million in accelerated discount accretion from the early redemption of a subordinated debenture in the first quarter of 2021, and $947 thousand higher accelerated fee income from SBA PPP loan forgiveness in the second quarter of 2021. We recognized $2.6 million in SBA PPP fees, net of cost in the second quarter of 2021 compared to $1.7 million in prior quarter, and $1.2 million in the second quarter of 2020. Additionally, higher average investment security balances and one more day in the second quarter contributed to increased interest income. Increases were partially offset by lower yields across interest-earning assets and lower average loan balances.
The $159 thousand increase from the comparative quarter a year ago was reflective of higher income from SBA PPP loans, higher average investment securities and commercial real estate loan balances, and lower rates on interest-bearing liabilities. Increases were mostly offset by lower yielding interest-earning assets and lower average commercial, home equity, and other residential loan balances.
Net interest income totaled $46.6 million in the first six months of 2021 compared to $48.5 million in the first six months a year ago. The decrease was primarily attributed to $1.3 million in accelerated discount accretion from the early redemption of a subordinated debenture in the first quarter of 2021, lower yielding interest-earning assets, lower average balances of commercial and consumer loans, and one less day in the period. Decreases were partially offset by higher income from SBA PPP loans and higher investment securities, commercial real estate, and construction loan balances, and lower rates on interest-bearing liabilities. We recognized $4.3 million in SBA PPP fees, net of cost in the first six months of 2021, compared to $1.2 million in the first six months a year ago. As of June 30, 2021 $6.5 million PPP fees, net of deferred costs remain outstanding and will be recognized into income in future periods.
The tax-equivalent net interest margin was 3.37% in the second quarter, 3.19% in the prior quarter, and 3.53% in the second quarter of 2020. The tax-equivalent net interest margin was 3.28% in the first six months of 2021 compared to 3.70% in the six months a year ago. The decreases from the same quarter and year-to-date periods of 2020 were primarily attributed to the lower interest rate environment. SBA PPP loans contributed 12 basis points to the second quarter's net interest margin as compared to 1 basis point in the prior quarter due to higher fee accretion in the second quarter as more PPP loans were forgiven and paid off by the SBA. SBA PPP loans added 5 basis points to the first six months' net interest margin as compared to a 2 basis points reduction to the same period a year ago. The early redemption of our last subordinated debenture reduced first quarter 2021 tax-equivalent net interest margin by approximately 18 basis points.
Non-interest income totaled $2.0 million in the second quarter of 2021, compared to $1.8 million in the prior quarter and second quarter a year ago. The $196 thousand increase from the prior quarter and $209 thousand increase from the second quarter of 2020 were mostly attributed to debit card interchange fees from increased levels of activity and higher Wealth Management and Trust Services income generated from new accounts and favorable market performance. Increases relative to the prior year were partially offset by the absence of gains on investment securities in the second quarter of 2021.
Non-interest income decreased $1.1 million to $3.8 million in the first six months of 2021 from $4.9 million in the first six months of 2020. The decrease was primarily attributed to the absence of gains on investment securities, versus $915 thousand realized in the comparative period a year ago.
Non-interest expense increased $144 thousand to $15.6 million in the second quarter of 2021 from $15.4 million in the prior quarter. The increase was primarily due to $441 thousand more in charitable contributions as the majority of our 2021 contributions were disbursed in the second quarter of 2021, $351 thousand increase in ARB acquisition-related expenses (mostly related to professional services), and $100 thousand in directors expense due to two new board members. Decreases relative to the prior quarter included $460 thousand in stock-based compensation for participants meeting retirement eligibility criteria, and resets on 401K matching and payroll taxes, all of which occurred in the first quarter.
Second quarter non-interest expense increased $1.7 million from $13.9 million in the second quarter of 2020. The increase was primarily attributed to $1.0 million in higher salaries and related benefits (mostly related to fewer deferred SBA PPP loan origination costs), $351 thousand increase in ARB acquisition-related expenses, and $189 thousand increase in charitable contributions.
Non-interest expense increased $1.7 million to $31.0 million in the first six months of 2021 compared to $29.2 million in the first six months of 2020. Higher salaries and related benefits of $755 thousand, of which over half was attributed to fewer deferred SBA PPP loan origination costs, contributed to the increase. Professional services also increased by $755 thousand due to some pandemic related delays in 2020 activities and ARB acquisition-related activities. In addition, FDIC deposit insurance expenses were $243 thousand higher.
The (reversal of) or provision for credit losses on unfunded commitments was reclassified out of non-interest expense and included as a separate line item under net interest income in the consolidated statements of comprehensive income for all periods presented. Efficiency ratios for all periods reported have been updated to reflect the reclassification.
Share Repurchase Program
The $25.0 million share repurchase program approved by the Bancorp Board of Directors on January 24, 2020 was completed in May 2021. Bancorp repurchased 297,935 shares totaling $10.7 million in the second quarter of 2021. Cumulative repurchases under this program amounted to 691,519 shares totaling $25.0 million. The Board of Directors approved a new share repurchase program on July 16, 2021 under which Bancorp may repurchase up to $25.0 million of its outstanding common stock through July 31, 2023.
Earnings Call and Webcast Information
Bank of Marin Bancorp will present its second quarter earnings call via webcast on Monday, July 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 June 30, 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, our ability to successfully close and integrate the acquisition of AMRB and ARB into the Company and Bank, 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) | June 30, 2021 |
| March 31, 2021 |
| June 30, 2020 | |||||||
Quarter-to-Date |
|
|
|
|
| |||||||
Net income | $ | 9,285 |
|
| $ | 8,947 |
|
| $ | 7,406 |
| |
Diluted earnings per common share | $ | 0.71 |
|
| $ | 0.66 |
|
| $ | 0.55 |
| |
Return on average assets | 1.20 | % |
| 1.21 | % |
| 1.01 | % | ||||
Return on average equity | 10.72 | % |
| 10.22 | % |
| 8.52 | % | ||||
Efficiency ratio | 58.58 | % |
| 64.60 | % |
| 53.01 | % | ||||
Tax-equivalent net interest margin 1 | 3.37 | % |
| 3.19 | % |
| 3.53 | % | ||||
Cost of deposits | 0.07 | % |
| 0.07 | % |
| 0.09 | % | ||||
Net (recoveries) charge-offs | $ | (62) |
|
| $ | (13) |
|
| $ | 16 |
| |
Year-to-Date |
|
|
|
|
| |||||||
Net income | $ | 18,232 |
|
|
|
| $ | 14,634 |
| |||
Diluted earnings per common share | $ | 1.37 |
|
|
|
| $ | 1.07 |
| |||
Return on average assets | 1.21 | % |
|
|
| 1.05 | % | |||||
Return on average equity | 10.47 | % |
|
|
| 8.53 | % | |||||
Efficiency ratio | 61.43 | % |
|
|
| 54.74 | % | |||||
Tax-equivalent net interest margin 1 | 3.28 | % |
|
|
| 3.70 | % | |||||
Cost of deposits | 0.07 | % |
|
|
| 0.15 | % | |||||
Net (recoveries) charge-offs | $ | (75) |
|
|
|
| $ | 9 |
| |||
At Period End |
|
|
|
|
| |||||||
Total assets | $ | 3,073,818 |
|
| $ | 3,058,133 |
|
| $ | 3,181,540 |
| |
Loans: |
|
|
|
|
| |||||||
Commercial and industrial 2 | $ | 423,646 |
|
| $ | 545,069 |
|
| $ | 525,117 |
| |
Real estate: |
|
|
|
|
| |||||||
Commercial owner-occupied | 296,407 |
|
| 308,266 |
|
| 296,163 |
| ||||
Commercial investor-owned | 967,335 |
|
| 955,021 |
|
| 946,389 |
| ||||
Construction | 80,841 |
|
| 71,066 |
|
| 66,368 |
| ||||
Home equity | 92,510 |
|
| 96,575 |
|
| 112,911 |
| ||||
Other residential | 120,903 |
|
| 124,383 |
|
| 136,859 |
| ||||
Installment and other consumer loans | 21,125 |
|
| 21,392 |
|
| 26,394 |
| ||||
Total loans | $ | 2,002,767 |
|
| $ | 2,121,772 |
|
| $ | 2,110,201 |
| |
Non-performing loans: 3 |
|
|
|
|
| |||||||
Real estate: |
|
|
|
|
| |||||||
Commercial owner-occupied | $ | 7,148 |
|
| $ | 7,147 |
|
| $ | — |
| |
Commercial investor-owned | 1,597 |
|
| 1,603 |
|
| 907 |
| ||||
Home equity | 445 |
|
| 455 |
|
| 625 |
| ||||
Installment and other consumer loans | — |
|
| — |
|
| 55 |
| ||||
Total non-accrual loans | $ | 9,190 |
|
| $ | 9,205 |
|
| $ | 1,587 |
| |
Classified loans (graded substandard and doubtful) | $ | 30,813 |
|
| $ | 26,421 |
|
| $ | 13,545 |
| |
Total accruing loans 30-89 days past due | $ | 487 |
|
| $ | 1,047 |
|
| $ | 83 |
| |
Allowance for credit losses to total loans | 0.95 | % |
| 0.94 | % |
| 0.99 | % | ||||
Allowance for credit losses to total loans, excluding acquired and SBA PPP loans 4 | 1.09 | % |
| 1.14 | % |
| 1.22 | % | ||||
Allowance for credit losses to non-performing loans | 2.08x |
| 2.17x |
| 13.15x | |||||||
Non-accrual loans to total loans | 0.46 | % |
| 0.43 | % |
| 0.08 | % | ||||
Total deposits | $ | 2,683,575 |
|
| $ | 2,656,199 |
|
| $ | 2,779,866 |
| |
Loan-to-deposit ratio | 74.6 | % |
| 79.9 | % |
| 75.9 | % | ||||
Stockholders' equity | $ | 348,649 |
|
| $ | 350,292 |
|
| $ | 352,240 |
| |
Book value per share | $ | 26.71 |
|
| $ | 26.29 |
|
| $ | 25.92 |
| |
Tangible common equity to tangible assets 5 | 10.4 | % |
| 10.5 | % |
| 10.1 | % | ||||
Total risk-based capital ratio - Bank | 15.3 | % |
| 14.8 | % |
| 15.0 | % | ||||
Total risk-based capital ratio - Bancorp | 15.5 | % |
| 15.7 | % |
| 15.8 | % | ||||
Full-time equivalent employees | 278 |
|
| 282 |
|
| 295 |
| ||||
1 Net interest income is annualized by dividing actual number of days in the period times 360 days.
2 Includes SBA PPP loans of $248.3 million, $365.0 million, and $298.9 million at June 30, 2021, March 31, 2021, and June 30, 2020, respectively.
3 Excludes accruing troubled-debt restructured loans of $3.3 million, $3.4 million and $10.3 million at June 30, 2021, March 31, 2021, and June 30, 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 June 30, 2020 totaled $95.6 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 $33.6 million, $33.8 million and $34.4 million at June 30, 2021, March 31, 2021, and June 30, 2020, respectively. Tangible assets exclude goodwill and intangible assets.
| BANK OF MARIN BANCORP CONSOLIDATED STATEMENTS OF CONDITION | ||||||||||||
(in thousands, except share data; unaudited) | June 30, 2021 | March 31, 2021 | June 30, 2020 | |||||||||
Assets |
|
|
| |||||||||
Cash, cash equivalents and restricted cash | $ | 257,543 |
| $ | 142,819 |
| $ | 397,699 |
| |||
Investment securities: |
|
|
| |||||||||
Held-to-maturity, at amortized cost (net of zero allowance for credit losses at June 30, 2021 and March 31, 20211) | 169,038 |
| 151,970 |
| 125,781 |
| ||||||
Available-for-sale (at fair value; amortized cost $504,934, $508,337, and $411,047 at June 30, 2021, March 31, 2021, June 30, 2020, respectively; net of zero allowance for credit losses at June 30, 2021 and March 31, 20211) | 517,963 |
| 518,568 |
| 429,775 |
| ||||||
Total investment securities | 687,001 |
| 670,538 |
| 555,556 |
| ||||||
Loans, at amortized cost | 2,002,767 |
| 2,121,772 |
| 2,110,201 |
| ||||||
Allowance for credit losses1 | (19,100) |
| (19,958) |
| (20,868) |
| ||||||
Loans, net of allowance for credit losses | 1,983,667 |
| 2,101,814 |
| 2,089,333 |
| ||||||
Bank premises and equipment, net | 5,248 |
| 4,604 |
| 5,278 |
| ||||||
Goodwill | 30,140 |
| 30,140 |
| 30,140 |
| ||||||
Core deposit intangible | 3,423 |
| 3,627 |
| 4,258 |
| ||||||
Operating lease right-of-use assets | 23,506 |
| 24,559 |
| 23,090 |
| ||||||
Interest receivable and other assets | 83,290 |
| 80,032 |
| 76,186 |
| ||||||
Total assets | $ | 3,073,818 |
| $ | 3,058,133 |
| $ | 3,181,540 |
| |||
|
|
|
| |||||||||
Liabilities and Stockholders' Equity |
|
|
| |||||||||
Liabilities |
|
|
| |||||||||
Deposits |
|
|
| |||||||||
Non-interest bearing | $ | 1,460,076 |
| $ | 1,445,282 |
| $ | 1,442,849 |
| |||
Interest bearing |
|
|
| |||||||||
Transaction accounts | 168,226 |
| 176,390 |
| 146,811 |
| ||||||
Savings accounts | 230,730 |
| 224,748 |
| 190,561 |
| ||||||
Money market accounts | 729,193 |
| 714,824 |
| 904,163 |
| ||||||
Time accounts | 95,350 |
| 94,955 |
| 95,482 |
| ||||||
Total deposits | 2,683,575 |
| 2,656,199 |
| 2,779,866 |
| ||||||
Borrowings and other obligations | 438 |
| 30 |
| 140 |
| ||||||
Subordinated debenture | — |
| — |
| 2,743 |
| ||||||
Operating lease liabilities | 24,919 |
| 25,993 |
| 24,574 |
| ||||||
Interest payable and other liabilities | 16,237 |
| 25,619 |
| 21,977 |
| ||||||
Total liabilities | 2,725,169 |
| 2,707,841 |
| 2,829,300 |
| ||||||
|
|
|
| |||||||||
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 - 13,055,105, 13,326,509 and 13,591,835 at June 30, 2021, March 31, 2021, and June 30, 2020, respectively | 108,430 |
| 118,386 |
| 128,633 |
| ||||||
Retained earnings | 231,841 |
| 225,600 |
| 211,613 |
| ||||||
Accumulated other comprehensive income, net of taxes | 8,378 |
| 6,306 |
| 11,994 |
| ||||||
Total stockholders' equity | 348,649 |
| 350,292 |
| 352,240 |
| ||||||
Total liabilities and stockholders' equity | $ | 3,073,818 |
| $ | 3,058,133 |
| $ | 3,181,540 |
| |||
1 The June 30, 2021 and March 31, 2021 allowances were calculated under current expected credit loss methodology, while the June 30, 2020 allowance was calculated 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
| ||||||||||||||||||||
| Three months ended |
| Six months ended | |||||||||||||||||
(in thousands, except per share amounts; unaudited) | June 30, 2021 | March 31, 2021 | June 30, 2020 |
| June 30, 2021 | June 30, 2020 | ||||||||||||||
Interest income |
|
|
|
|
|
| ||||||||||||||
Interest and fees on loans | $ | 21,429 |
| $ | 20,661 |
| $ | 21,217 |
|
| $ | 42,090 |
| $ | 42,104 |
| ||||
Interest on investment securities | 3,504 |
| 3,129 |
| 3,741 |
|
| 6,633 |
| 7,906 |
| |||||||||
Interest on federal funds sold and due from banks | 54 |
| 42 |
| 39 |
|
| 96 |
| 371 |
| |||||||||
Total interest income | 24,987 |
| 23,832 |
| 24,997 |
|
| 48,819 |
| 50,381 |
| |||||||||
Interest expense |
|
|
|
|
|
| ||||||||||||||
Interest on interest-bearing transaction accounts | 39 |
| 39 |
| 39 |
|
| 78 |
| 105 |
| |||||||||
Interest on savings accounts | 21 |
| 19 |
| 17 |
|
| 40 |
| 33 |
| |||||||||
Interest on money market accounts | 312 |
| 286 |
| 383 |
|
| 598 |
| 1,354 |
| |||||||||
Interest on time accounts | 81 |
| 96 |
| 142 |
|
| 177 |
| 303 |
| |||||||||
Interest on borrowings and other obligations | — |
| — |
| 1 |
|
| — |
| 3 |
| |||||||||
Interest on subordinated debenture | — |
| 1,361 |
| 40 |
|
| 1,361 |
| 89 |
| |||||||||
Total interest expense | 453 |
| 1,801 |
| 622 |
|
| 2,254 |
| 1,887 |
| |||||||||
Net interest income | 24,534 |
| 22,031 |
| 24,375 |
|
| 46,565 |
| 48,494 |
| |||||||||
(Reversal of) provision for credit losses on loans | (920) |
| (2,929) |
| 2,000 |
|
| (3,849) |
| 4,200 |
| |||||||||
(Reversal of) provision for credit losses on unfunded loan commitments | (612) |
| (590) |
| 260 |
|
| (1,202) |
| 362 |
| |||||||||
Net interest income after (reversal of) provision for credit losses | 26,066 |
| 25,550 |
| 22,115 |
|
| 51,616 |
| 43,932 |
| |||||||||
Non-interest income |
|
|
|
|
|
| ||||||||||||||
Wealth Management and Trust Services | 530 |
| 488 |
| 421 |
|
| 1,018 |
| 744 |
| |||||||||
Debit card interchange fees | 419 |
| 366 |
| 308 |
|
| 785 |
| 925 |
| |||||||||
Service charges on deposit accounts | 317 |
| 281 |
| 293 |
|
| 598 |
| 668 |
| |||||||||
Earnings on bank-owned life insurance, net | 233 |
| 257 |
| 234 |
|
| 490 |
| 509 |
| |||||||||
Dividends on Federal Home Loan Bank stock | 177 |
| 149 |
| 146 |
|
| 326 |
| 354 |
| |||||||||
Merchant interchange fees | 61 |
| 57 |
| 47 |
|
| 118 |
| 120 |
| |||||||||
Gains on sale of investment securities, net | — |
| — |
| 115 |
|
| — |
| 915 |
| |||||||||
Other income | 285 |
| 228 |
| 249 |
|
| 513 |
| 698 |
| |||||||||
Total non-interest income | 2,022 |
| 1,826 |
| 1,813 |
|
| 3,848 |
| 4,933 |
| |||||||||
Non-interest expense |
|
|
|
|
|
| ||||||||||||||
Salaries and related benefits | 8,888 |
| 9,208 |
| 7,864 |
|
| 18,096 |
| 17,341 |
| |||||||||
Occupancy and equipment | 1,751 |
| 1,751 |
| 1,661 |
|
| 3,502 |
| 3,324 |
| |||||||||
Professional services | 986 |
| 863 |
| 550 |
|
| 1,849 |
| 1,094 |
| |||||||||
Data processing | 820 |
| 819 |
| 829 |
|
| 1,639 |
| 1,615 |
| |||||||||
Depreciation and amortization | 389 |
| 459 |
| 526 |
|
| 848 |
| 1,052 |
| |||||||||
Information technology | 296 |
| 313 |
| 252 |
|
| 609 |
| 502 |
| |||||||||
Amortization of core deposit intangible | 205 |
| 204 |
| 213 |
|
| 409 |
| 426 |
| |||||||||
Federal Deposit Insurance Corporation insurance | 182 |
| 179 |
| 116 |
|
| 361 |
| 118 |
| |||||||||
Directors' expense | 230 |
| 175 |
| 175 |
|
| 405 |
| 349 |
| |||||||||
Charitable contributions | 462 |
| 31 |
| 273 |
|
| 493 |
| 440 |
| |||||||||
Other expense | 1,347 |
| 1,410 |
| 1,422 |
|
| 2,757 |
| 2,987 |
| |||||||||
Total non-interest expense | 15,556 |
| 15,412 |
| 13,881 |
|
| 30,968 |
| 29,248 |
| |||||||||
Income before provision for income taxes | 12,532 |
| 11,964 |
| 10,047 |
|
| 24,496 |
| 19,617 |
| |||||||||
Provision for income taxes | 3,247 |
| 3,017 |
| 2,641 |
|
| 6,264 |
| 4,983 |
| |||||||||
Net income | $ | 9,285 |
| $ | 8,947 |
| $ | 7,406 |
|
| $ | 18,232 |
| $ | 14,634 |
| ||||
Net income per common share: |
|
|
|
|
|
| ||||||||||||||
Basic | $ | 0.71 |
| $ | 0.67 |
| $ | 0.55 |
|
| $ | 1.38 |
| $ | 1.08 |
| ||||
Diluted | $ | 0.71 |
| $ | 0.66 |
| $ | 0.55 |
|
| $ | 1.37 |
| $ | 1.07 |
| ||||
Weighted average shares: |
|
|
|
|
|
| ||||||||||||||
Basic | 13,092 |
| 13,363 |
| 13,514 |
|
| 13,227 |
| 13,519 |
| |||||||||
Diluted | 13,164 |
| 13,469 |
| 13,585 |
|
| 13,316 |
| 13,621 |
| |||||||||
Comprehensive income (loss): |
|
|
|
|
|
| ||||||||||||||
Net income | $ | 9,285 |
| $ | 8,947 |
| $ | 7,406 |
|
| $ | 18,232 |
| $ | 14,634 |
| ||||
Other comprehensive income (loss): |
|
|
|
|
|
| ||||||||||||||
Change in net unrealized gains on available-for-sale securities | 2,798 |
| (9,082) |
| 1,494 |
|
| (6,284) |
| 11,306 |
| |||||||||
Reclassification adjustment for gains on available-for-sale securities included in net income | — |
| — |
| (115) |
|
| — |
| (915) |
| |||||||||
Amortization of net unrealized losses on securities transferred from available-for-sale to held-to-maturity | 138 |
| 143 |
| 135 |
|
| 281 |
| 245 |
| |||||||||
Other comprehensive income (loss), before tax | 2,936 |
| (8,939) |
| 1,514 |
|
| (6,003) |
| 10,636 |
| |||||||||
Deferred tax expense (benefit) | 864 |
| (2,644) |
| 448 |
|
| (1,780) |
| 3,145 |
| |||||||||
Other comprehensive income (loss), net of tax | 2,072 |
| (6,295) |
| 1,066 |
|
| (4,223) |
| 7,491 |
| |||||||||
Total comprehensive income | $ | 11,357 |
| $ | 2,652 |
| $ | 8,472 |
|
| $ | 14,009 |
| $ | 22,125 |
| ||||
BANK OF MARIN BANCORP
| |||||||||||||||||||||||||||||||||
| Three months ended | Three months ended | Three months ended | ||||||||||||||||||||||||||||||
| June 30, 2021 | March 31, 2021 | June 30, 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 | $ | 193,749 |
| $ | 54 |
| 0.11 | % | $ | 165,788 |
| $ | 42 |
| 0.10 | % | $ | 173,161 |
| $ | 39 |
| 0.09 | % | |||||||||
Investment securities 2, 3 | 661,361 |
| 3,666 |
| 2.22 | % | 540,970 |
| 3,282 |
| 2.43 | % | 550,483 |
| 3,886 |
| 2.82 | % | |||||||||||||||
Loans 1, 3, 4 | 2,062,497 |
| 21,601 |
| 4.14 | % | 2,099,847 |
| 20,836 |
| 3.97 | % | 2,043,197 |
| 21,399 |
| 4.14 | % | |||||||||||||||
Total interest-earning assets 1 | 2,917,607 |
| 25,321 |
| 3.43 | % | 2,806,605 |
| 24,160 |
| 3.44 | % | 2,766,841 |
| 25,324 |
| 3.62 | % | |||||||||||||||
Cash and non-interest-bearing due from banks | 39,252 |
|
|
| 50,931 |
|
|
| 37,680 |
|
|
| |||||||||||||||||||||
Bank premises and equipment, net | 4,795 |
|
|
| 4,777 |
|
|
| 5,543 |
|
|
| |||||||||||||||||||||
Interest receivable and other assets, net | 131,667 |
|
|
| 133,693 |
|
|
| 133,639 |
|
|
| |||||||||||||||||||||
Total assets | $ | 3,093,321 |
|
|
| $ | 2,996,006 |
|
|
| $ | 2,943,703 |
|
|
| ||||||||||||||||||
Liabilities and Stockholders' Equity |
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||
Interest-bearing transaction accounts | $ | 167,787 |
| $ | 39 |
| 0.09 | % | $ | 174,135 |
| $ | 39 |
| 0.09 | % | $ | 142,778 |
| $ | 39 |
| 0.11 | % | |||||||||
Savings accounts | 227,767 |
| 21 |
| 0.04 | % | 214,049 |
| 19 |
| 0.04 | % | 182,371 |
| 17 |
| 0.04 | % | |||||||||||||||
Money market accounts | 735,784 |
| 312 |
| 0.17 | % | 703,577 |
| 286 |
| 0.16 | % | 794,654 |
| 383 |
| 0.19 | % | |||||||||||||||
Time accounts including CDARS | 95,354 |
| 81 |
| 0.34 | % | 96,349 |
| 96 |
| 0.40 | % | 95,076 |
| 142 |
| 0.60 | % | |||||||||||||||
Borrowings and other obligations 1 | 61 |
| — |
| 1.15 | % | 36 |
| — |
| 1.99 | % | 156 |
| 1 |
| 2.62 | % | |||||||||||||||
Subordinated debenture 1, 5 | — |
| — |
| — | % | 2,164 |
| 1,361 |
| 251.54 | % | 2,733 |
| 40 |
| 5.73 | % | |||||||||||||||
Total interest-bearing liabilities | 1,226,753 |
| 453 |
| 0.15 | % | 1,190,310 |
| 1,801 |
| 0.61 | % | 1,217,768 |
| 622 |
| 0.21 | % | |||||||||||||||
Demand accounts | 1,478,119 |
|
|
| 1,406,123 |
|
|
| 1,332,986 |
|
|
| |||||||||||||||||||||
Interest payable and other liabilities | 40,976 |
|
|
| 44,551 |
|
|
| 43,255 |
|
|
| |||||||||||||||||||||
Stockholders' equity | 347,473 |
|
|
| 355,022 |
|
|
| 349,694 |
|
|
| |||||||||||||||||||||
Total liabilities & stockholders' equity | $ | 3,093,321 |
|
|
| $ | 2,996,006 |
|
|
| $ | 2,943,703 |
|
|
| ||||||||||||||||||
Tax-equivalent net interest income/margin 1 |
| $ | 24,868 |
| 3.37 | % |
| $ | 22,359 |
| 3.19 | % |
| $ | 24,702 |
| 3.53 | % | |||||||||||||||
Reported net interest income/margin 1 |
| $ | 24,534 |
| 3.33 | % |
| $ | 22,031 |
| 3.14 | % |
| $ | 24,375 |
| 3.49 | % | |||||||||||||||
Tax-equivalent net interest rate spread |
|
| 3.28 | % |
|
| 2.83 | % |
|
| 3.41 | % | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||
|
| Six months ended | Six months ended | ||||||||||||||||||||||||||||||
|
| June 30, 2021 | June 30, 2020 | ||||||||||||||||||||||||||||||
|
|
|
|
| Interest |
|
| Interest |
| ||||||||||||||||||||||||
|
|
|
| Average | Income/ | Yield/ | Average | Income/ | Yield/ | ||||||||||||||||||||||||
(in thousands; unaudited) |
|
|
| Balance | Expense | Rate | Balance | Expense | Rate | ||||||||||||||||||||||||
Assets |
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||
Interest-earning deposits with banks 1 |
|
|
| $ | 179,846 |
| $ | 96 |
| 0.11 | % | $ | 136,261 |
| $ | 371 |
| 0.54 | % | ||||||||||||||
Investment securities 2, 3 |
|
|
| 601,498 |
| 6,948 |
| 2.31 | % | 553,690 |
| 8,151 |
| 2.94 | % | ||||||||||||||||||
Loans 1, 3, 4 |
|
|
| 2,081,069 |
| 42,437 |
| 4.06 | % | 1,938,189 |
| 42,465 |
| 4.33 | % | ||||||||||||||||||
Total interest-earning assets 1 |
|
|
| 2,862,413 |
| 49,481 |
| 3.44 | % | 2,628,140 |
| 50,987 |
| 3.84 | % | ||||||||||||||||||
Cash and non-interest-bearing due from banks |
|
|
| 45,059 |
|
|
| 39,262 |
|
|
| ||||||||||||||||||||||
Bank premises and equipment, net |
|
|
| 4,786 |
|
|
| 5,741 |
|
|
| ||||||||||||||||||||||
Interest receivable and other assets, net |
|
|
| 132,675 |
|
|
| 126,274 |
|
|
| ||||||||||||||||||||||
Total assets |
|
|
| $ | 3,044,933 |
|
|
| $ | 2,799,417 |
|
|
| ||||||||||||||||||||
Liabilities and Stockholders' Equity |
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||
Interest-bearing transaction accounts |
|
|
| $ | 170,943 |
| $ | 78 |
| 0.09 | % | $ | 140,587 |
| $ | 105 |
| 0.15 | % | ||||||||||||||
Savings accounts |
|
|
| 220,946 |
| 40 |
| 0.04 | % | 172,905 |
| 33 |
| 0.04 | % | ||||||||||||||||||
Money market accounts |
|
|
| 719,769 |
| 598 |
| 0.17 | % | 777,635 |
| 1,354 |
| 0.35 | % | ||||||||||||||||||
Time accounts including CDARS |
|
|
| 95,849 |
| 177 |
| 0.37 | % | 95,616 |
| 303 |
| 0.64 | % | ||||||||||||||||||
Borrowings and other obligations 1 |
|
|
| 50 |
| — |
| 1.46 | % | 257 |
| 3 |
| 2.06 | % | ||||||||||||||||||
Subordinated debenture 1 |
|
|
| 1,076 |
| 1,361 |
| 251.54 | % | 2,724 |
| 89 |
| 6.46 | % | ||||||||||||||||||
Total interest-bearing liabilities |
|
|
| 1,208,633 |
| 2,254 |
| 0.38 | % | 1,189,724 |
| 1,887 |
| 0.32 | % | ||||||||||||||||||
Demand accounts |
|
|
| 1,442,320 |
|
|
| 1,226,481 |
|
|
| ||||||||||||||||||||||
Interest payable and other liabilities |
|
|
| 42,753 |
|
|
| 38,150 |
|
|
| ||||||||||||||||||||||
Stockholders' equity |
|
|
| 351,227 |
|
|
| 345,062 |
|
|
| ||||||||||||||||||||||
Total liabilities & stockholders' equity |
|
|
| $ | 3,044,933 |
|
|
| $ | 2,799,417 |
|
|
| ||||||||||||||||||||
Tax-equivalent net interest income/margin 1 |
|
|
|
| $ | 47,227 |
| 3.28 | % |
| $ | 49,100 |
| 3.70 | % | ||||||||||||||||||
Reported net interest income/margin 1 |
|
|
|
| $ | 46,565 |
| 3.24 | % |
| $ | 48,494 |
| 3.65 | % | ||||||||||||||||||
Tax-equivalent net interest rate spread |
|
|
|
|
| 3.06 | % |
|
| 3.52 | % | ||||||||||||||||||||||
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.
Contacts
Beth Drummey
Marketing & Corporate Communications Manager
415-763-4529 | bethdrummey@bankofmarin.com
