0001403475FALSEQ3202400014034752024-10-242024-10-24
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) October 24, 2024
Bank of Marin Bancorp
(Exact name of Registrant as specified in its charter)
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California | 001-33572 | 20-8859754 |
| (State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification No.) |
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504 Redwood Blvd., Suite 100, Novato, CA | 94947 |
| (Address of principal executive office) | (Zip Code) |
Registrant’s telephone number, including area code: (415) 763-4520
Not Applicable
(Former name or former address, if changes since last report)
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| Check the appropriate box below if the Form 8-K filing is to simultaneously satisfy the filing obligation of the registrant under any of the following provisions: |
| ☐ Written communications pursuant to Rule 425 under the Securities Act (17CFR 230.425) |
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| ☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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| ☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
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| ☐ Pre-commencement communications pursuant to Rule 13e-4(c)) under the Exchange Act (17 CFR 240.13e-4(c)) |
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| Securities registered pursuant to 12(b) of the Act: |
| Title of each class | Trading Symbol | Name of each exchange on which registered |
| Common stock, no par value | BMRC | The Nasdaq Stock Market |
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| Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter). |
| Emerging growth company ☐ |
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐ |
Section 2 - Financial Information
Item 2.02 Results of Operations and Financial Condition
On October 28, 2024, Bank of Marin Bancorp, "Bancorp" (Nasdaq: BMRC), parent company of Bank of Marin, released its financial results for the quarter ended September 30, 2024. A copy of the press release is included as Exhibit 99.1 and the related Third Quarter 2024 Earnings Presentation is included as Exhibit 99.2.
The press release and presentation will be available on Bank of Marin's website at http://www.bankofmarin.com under “Investor Relations/News & Market Data/Press Releases" and "Presentations” on October 28, 2024.
Section 8 - Other Events
Item 8.01 Other Events
In the press release, Bancorp announced that on October 24, 2024, its Board of Directors approved a quarterly cash dividend of $0.25 per share. The cash dividend is payable on November 14, 2024, to shareholders of record at the close of business on November 7, 2024.
A copy of the press release is attached to this report as Exhibit 99.1.
Section 9 - Financial Statements and Exhibits
Item 9.01 Financial Statements and Exhibits
(d) Exhibits.
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| Exhibit No. | Description | Page Number |
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| 99.1 | | 1-12 |
| 99.2 | | |
| 104 | Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101) | |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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| Date: | October 28, 2024 | | BANK OF MARIN BANCORP |
| | | By: | /s/ Tani Girton |
| | | | Tani Girton |
| | | | Executive Vice President |
| | | | and Chief Financial Officer |
EXHIBIT 99.1
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| FOR IMMEDIATE RELEASE | MEDIA CONTACT: |
| Yahaira Garcia-Perea |
| Marketing & Corporate Communications Manager |
| 916-823-7214 | YahairaGarcia-Perea@bankofmarin.com |
BANK OF MARIN BANCORP REPORTS THIRD QUARTER FINANCIAL RESULTS
STRATEGIC ACTIONS TAKEN IN FIRST HALF OF 2024 RESULT IN IMPROVED PROFITABILITY
NOVATO, CA, October 28, 2024 - Bank of Marin Bancorp, "Bancorp" (Nasdaq: BMRC), parent company of Bank of Marin, "Bank," announced net income of $4.6 million for the third quarter of 2024, compared to a net loss of $21.9 million for the second quarter of 2024. Diluted earnings per share was $0.28 for the third quarter, compared to a net loss per share of $(1.36) for the prior quarter. Net loss for the first nine months of 2024 totaled $14.4 million, compared to net income of $19.3 million for the same period last year. Diluted (loss) earnings per share were $(0.90) and $1.20 for the first nine months of 2024 and 2023, respectively. Year-to-date 2024 results reflected a $32.5 million pretax loss from the balance sheet restructuring in the second quarter.
Concurrent with this release, Bancorp issued presentation slides providing supplemental information, some of which will be discussed during the third quarter 2024 earnings call. The earnings release and presentation slides are intended to be reviewed together and can be found online on Bank of Marin’s website at www.bankofmarin.com. under “Investor Relations.”
“The strategic, proactive steps we took to reposition our balance sheet and reduce operating expenses in the first half of the year delivered the net interest margin expansion and improved profitability that we expected in our third quarter results,” said Tim Myers, President and Chief Executive Officer. “We also continued to invest in talent, and our banking teams generated a steady volume of attractive lending opportunities while maintaining our strong underwriting criteria and overall credit quality. We added higher yielding assets in the third quarter and positioned the bank for ongoing growth we believe will further support our margin in coming quarters.
“We also grew our deposits in the quarter, primarily with non-interest bearing accounts,” Myers added. “Our proven relationship banking model enables us to attract new customers and deepen ties with existing ones via high-touch service on deposits. We expect these positive trends on both sides of our balance sheet to continue, driving additional momentum and ongoing improvement in our financial performance on behalf of our shareholders.”
Bancorp also provided the following highlights for the third quarter of 2024:
•The tax-equivalent net interest margin increased to 2.70% in the third quarter from 2.52%, reflecting the addition of higher average earning assets from the second quarter balance sheet restructuring, including new loans funded and purchased at yields higher than both the portfolio average yield and loans that paid off.
•The average cost of total deposits increased only 1 basis point to 1.46% in the third quarter compared to a 7 basis point increase in the prior quarter. After a targeted effort to begin reducing rates was initiated mid-August, the average spot rate on non-deposit-network, interest-bearing deposits declined 18 bps while balances went up approximately $10.0 million by September 30th.
•There was no provision for credit losses on loans in the third quarter and a $233 thousand reversal of provision for credit losses on unfunded commitments, compared to a provision of $5.2 million for credit losses and no provision for losses on unfunded commitments in the previous quarter. The allowance for credit losses remained at 1.47% of total loans compared to June 30, 2024.
•Classified loans decreased to 2.51% of total loans compared to 2.63% last quarter largely due to the payoff in full of a $1.8 million commercial loan, including all accrued interest.
•Total deposits of $3.309 billion as of September 30, 2024 were up $95.5 million compared to $3.214 billion as of June 30, 2024, mostly due to seasonal inflows and new deposit accounts added in the quarter. Non-interest bearing deposits increased to 44.5% of total deposits as of September 30, 2024, compared to 44.1% as of June 30, 2024.
•Return on average assets ("ROA") was 0.48% for the third quarter of 2024 and return on average equity ("ROE") was 4.17%. The efficiency ratio for the third quarter of 2024 was 75.18%.
•Capital was above well-capitalized regulatory thresholds with total risk-based capital ratios of 16.40% and 15.82% as of September 30, 2024 for Bancorp and the Bank, respectively. Bancorp's tangible common equity to tangible assets ("TCE ratio") was 9.72% as of September 30, 2024, and the Bank's TCE ratio was 9.32%. The Bancorp's TCE ratio net of after-tax unrealized losses on held-to-maturity securities as if the losses were realized1 was 8.16% as of September 30, 2024.
•Bancorp repurchased $4.2 million in shares during the quarter, contributing to an increase in the book value per share to $27.17 at September 30, 2024 compared to $26.72 at June 30, 2024, and the tangible book value per share2 to $22.46 at September 30, 2024 compared to $22.05 at June 30, 2024.
•Non-interest expense included an accrual for a non-repeatable legal resolution of a Private Attorneys General Act / putative class action lawsuit of approximately $615 thousand with an after-tax estimated $0.04 impact to earnings-per-share.
•The Board of Directors declared a cash dividend of $0.25 per share on October 24, 2024, which represents the 78th consecutive quarterly dividend paid by Bancorp. The dividend is payable on November 14, 2024, to shareholders of record at the close of business on November 7, 2024.
“As we have throughout our 30-plus years, we maintain consistently high capital and liquidity levels, while prudently managing costs even as we generate new business and pursue more robust loan growth,” said Tani Girton, Executive Vice President and Chief Financial Officer.
“As we often do, we expect to see seasonal strengthening in loan production in the fourth quarter as our commercial borrowers firm up year-ahead budgets and align credit plans with their growth initiatives for 2025,” Girton continued. “Our pipeline is well-diversified across industries and throughout our Northern California footprint.”
Loans and Credit Quality
Loans increased by $7.7 million for the third quarter of 2024 and totaled $2.090 billion as of September 30, 2024, compared to $2.082 billion as of June 30, 2024. Additions to the loan portfolio in the third quarter totaled $63.9 million and consisted of loan originations of $28.2 million and the previously announced purchase of a residential real estate loan pool totaling $35.7 million, compared to originations of $64.1 million for the second quarter of 2024 and $22.7 million for the third quarter of 2023. Loans increased $16.4 million during the nine months ended September 30, 2024, compared to a $5.6 million decrease during the nine months ended September 30, 2023. Excluding the loan pool purchase noted above, loan originations totaled $104.7 million for the nine months ended September 30, 2024, compared to $90.3 million for the nine months ended September 30, 2023.
Loan payoffs were $30.9 million for the third quarter, compared to $31.2 million for the second quarter of 2024 and $12.7 million for the third quarter of 2023. The largest portion was the result of asset sales by customers and cash payoffs, most notably in commercial loans and commercial real estate loans during the quarter. Payoffs were $83.9 million in the nine months ended September 30, 2024, compared to $59.5 million for the same period in 2023.
1 Refer to the discussion and reconciliation of this non-GAAP financial measure in the section below entitled Statement Regarding Use of Non-GAAP Financial Measures.
2 Tangible book value per share is a non-GAAP financial measure used by Bancorp, as well as investors and analysts, in assessing Bancorp’s use of equity. Refer to the reconciliation of common equity to tangible common equity and resulting calculation of tangible book value per share in the section below entitled Statement Regarding Use of Non-GAAP Financial Measures.
Non-accrual loans totaled $39.9 million, or 1.91% of the loan portfolio, at September 30, 2024, compared to $33.7 million, or 1.62% at June 30, 2024. The $6.2 million increase resulted from the movement of three loans totaling $8.5 million to non-accrual status in the third quarter, $8.1 million of which was a non-owner occupied commercial real estate loan whose renewal negotiations remain ongoing with no expectations for actual losses. This was partially offset by payoffs and paydowns of $1.8 million and $412 thousand, respectively, and removal of non-accrual status on $79 thousand. Of the total non-accrual loans as of September 30, 2024, approximately 50% were paying as agreed, 80% were real estate secured, and all are being closely monitored for payments or payoff.
Bank of Marin has continued its conservative underwriting practices and, in light of current market conditions, our portfolio management and credit teams are exercising heightened vigilance for potential credit quality weakening. Classified loans decreased by $2.3 million to $52.4 million as of September 30, 2024, down from $54.7 million as of June 30, 2024. The decrease was largely due to a $1.8 million payoff of a commercial loan, $494 thousand of contractual paydowns, and upgrades to pass of home equity loans totaling $336 thousand, partially offset by downgrades of a $305 thousand owner-occupied commercial real estate loan and a $67 thousand home equity loan.
Accruing loans past due 30 to 89 days excluding non-accrual totaled $6.9 million as of September 30, 2024, compared to $2.2 million as of June 30, 2024. The increase of $4.7 million was primarily due to $6.7 million of additions, partially offset by $1.7 million of loan paydowns or pay offs and a $309 thousand loan placed on non-accrual.
Loans designated special mention, which are not considered adversely classified, decreased by $9.5 million to $89.5 million as of September 30, 2024, from $99.0 million as of June 30, 2024. The decrease was largely due to $20.1 million in upgrades to pass risk ratings and contractual paydowns of $1.2 million, partially offset by $11.7 million in downgrades from pass. Of the loans designated special mention, 90% were real estate secured.
There were no net charge-offs for the third quarter of 2024, compared to net charge-offs of $26 thousand for the second quarter of 2024.
There was no provision for credit losses on loans in the third quarter compared to $5.2 million in the prior quarter. Minor qualitative risk factor adjustments and loan growth in several segments with lower reserve rates in the quarter were offset by balance declines in other segments with higher reserve rates, as well as a slight improvement in the economic forecast. The ratio of allowance for credit losses to total loans remained at 1.47% at September 30, 2024, compared to June 30, 2024.
There was a reversal of provision for credit losses on unfunded loan commitments of $233 thousand in the third quarter of 2024 due to a decrease in available commitments, compared to no adjustment to the provision in the prior quarter.
Cash, Cash Equivalents and Restricted Cash
Total cash, cash equivalents and restricted cash were $229.2 million at September 30, 2024, a decrease of $2.2 million compared to $231.4 million at June 30, 2024 largely due to loan pool and investment securities purchases and loan fundings, partially offset by the growth in deposits.
Investments
The investment securities portfolio totaled $1.257 billion at September 30, 2024, an increase of $99.5 million from June 30, 2024. The increase was primarily the result of $114.5 million available-for-sale securities purchases and a $7.9 million improvement in unrealized losses on available-for-sale securities, offset by principal repayments and maturities totaling $22.9 million. Both the available-for-sale and held-to-maturity portfolios are eligible for pledging to FHLB or the Federal Reserve as collateral for borrowing. The portfolios are comprised of high credit quality investments with average effective durations of 3.58 on available-for-sale securities and 5.35 on held-to-maturity securities. Both portfolios generate cash flows monthly from interest, principal amortization and payoffs, which supports the Bank's liquidity. Those cash flows totaled $31.9 million and $28.6 million in the third and second quarters of 2024, respectively.
Deposits
Deposits increased $95.5 million to $3.309 billion at September 30, 2024, compared to $3.214 billion at June 30, 2024. Non-interest bearing deposits made up 44.5% of total deposits at September 30, 2024, compared to 44.1% at June 30, 2024. The Bank's competitive and balanced approach to relationship management and focused outreach to customers seeking alternative options for banking solutions generated nearly 1,200 new accounts during the third quarter, 48% of which were new relationships (excluding new reciprocal accounts).
Borrowings and Liquidity
At September 30, 2024, the Bank had no outstanding borrowings, consistent with June 30, 2024. While available as a liquidity source, we have not utilized brokered deposits. Net available funding sources, including unrestricted cash, unencumbered available-for-sale securities and total available borrowing capacity totaled $1.934 billion, or 58% of total deposits and 208% of estimated uninsured and/or uncollateralized deposits as of September 30, 2024.
The following table details the components of our contingent liquidity sources as of September 30, 2024.
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(in millions) | Total Available | Amount Used | Net Availability |
| Internal Sources | | | |
Unrestricted cash 1 | $ | 204.9 | | $ | — | | $ | 204.9 | |
| Unencumbered securities at market value | 302.3 | | — | | 302.3 | |
| External Sources | | | |
| FHLB line of credit | 923.6 | | — | | 923.6 | |
| FRB line of credit | 377.8 | | — | | 377.8 | |
| Lines of credit at correspondent banks | 125.0 | | — | | 125.0 | |
| Total Liquidity | $ | 1,933.6 | | $ | — | | $ | 1,933.6 | |
1 Excludes cash items in transit as of September 30, 2024.
Note: Brokered deposits available through third-party networks are not included above.
Capital Resources
The total risk-based capital ratio for Bancorp was 16.40% at September 30, 2024, compared to 16.46% at June 30, 2024. The decrease was largely due to the $4.2 million in share repurchases. The total risk-based capital ratio for the Bank was 15.82% at September 30, 2024, compared to 15.54% at June 30, 2024.
Bancorp's tangible common equity to tangible assets ("TCE ratio") was 9.72% at September 30, 2024, compared to 9.92% at June 30, 2024. The TCE ratio decreased slightly quarter over quarter due mainly to the increase in tangible total assets. The capital plan and point-in-time capital stress tests indicate that Bank of Marin and Bancorp capital ratios will remain above regulatory well-capitalized and internal policy minimums throughout a five-year forecast horizon and across stress scenarios such as additional unrealized losses on the investment portfolio, additional deposit growth or decline, loan credit quality deterioration, and potential share repurchases.
Earnings
Net Interest Income
Net interest income totaled $24.3 million for the third quarter of 2024, a $1.8 million increase from the prior quarter related to the favorable reallocation of earning assets from lower yielding investments to higher yielding cash, loans and investments.
Net interest income totaled $69.4 million for the nine months ended September 30, 2024, compared to $78.5 million for the same period in the prior year. The $9.1 million decrease from the prior year was primarily due to a smaller balance sheet and higher costing deposits, partially offset by lower borrowing costs and higher average earning asset yields.
The tax-equivalent net interest margin was 2.70% for the third quarter of 2024, compared to 2.52% for the prior quarter. Higher average cash and loan balances, and lower average borrowing balances contributed 26, 3, and 2 basis points, respectively, while lower average investment security balances and higher cost of deposits reduced margin by 8 and 3 basis points, respectively.
The tax-equivalent net interest margin was 2.57% for the nine months ended September 30, 2024, compared to 2.66% for the same period in the prior year. The decrease was primarily attributed to higher deposit costs which reduced the margin by 77 basis points, partially offset by higher loan yields contributing 32 basis points and lower borrowing balances which positively affected the margin by 33 basis points. Higher interest-earnings deposits with banks and decreased investment security balances netted a positive effect of 6 basis points.
Non-Interest Income
Non-interest income was $2.9 million for the third quarter of 2024, compared to a loss of $29.8 million for the prior quarter. The increase from the prior quarter was primarily attributed to a $32.5 million net loss on sale of available-for-sale investment securities in the second quarter, as discussed previously. Excluding the loss on sale, non-interest income was $2.8 million for the second quarter. See the non-GAAP disclosure below. The quarter over quarter increase of $100 thousand excluding the loss on sale was primarily due to a $121 thousand increase in wealth management and trust services income.
Non-interest income showed a loss of $24.1 million for the nine months ended September 30, 2024, compared to income of $8.3 million for the same period of the prior year. The $32.4 million decrease from the prior year period was primarily attributed to a $32.5 million pre-tax net loss on sale of available-for-sale investment securities in the second quarter, as discussed previously. Excluding the loss on sale, non-interest income was $8.4 million for the nine months ended September 30, 2024. See the non-GAAP disclosure below.
Non-Interest Expense
Non-interest expense totaled $20.4 million for the third quarter of 2024, compared to $21.9 million for the prior quarter, a decrease of $1.5 million. The decrease was primarily due to a $1.5 million reduction in salaries and related benefits. This included the majority of the severance and salaries related to the reduction in force in the second quarter. At the same time we have redeployed resources to ensure staffing is aligned with our long-term strategic vision which resulted in the reduction in average full-time equivalent staff quarter over quarter. Additional third quarter decreases came from $574 thousand in charitable contributions as the annual grant program is paid out each year in the second quarter, as well as a $375 thousand reduction in other expense. These reductions were partially offset by an $836 thousand increase in professional services expense that included an accrual for a non-repeatable legal resolution of a Private Attorneys General Act / putative class action lawsuit of approximately $615 thousand with an after-tax estimated $0.04 impact to earnings-per-share.
Non-interest expense totaled $63.5 million for the nine months ended September 30, 2024, compared to $60.2 million for the same period of 2023, an increase of $3.3 million. The most significant increase was $2.2 million in salaries and related benefits, which included annual merit increases and $418 thousand in severance payments related to the staff reduction discussed above. Stock-based compensation expenses increased due to the accelerated vesting of an officer's awards due to retirement eligibility. Additionally, professional services increased by $1.3 million and deposit network fees increased by $845 thousand. Increases were partially offset by reductions
in depreciation and amortization of $580 thousand, amortization of core deposit intangible of $282 thousand, and occupancy and equipment of $252 thousand.
Statement Regarding use of Non-GAAP Financial Measures
Financial results are presented in accordance with GAAP and with reference to certain non-GAAP financial measures. Management believes that, given industry turmoil that largely began in the first quarter of 2023, the presentation of Bancorp's non-GAAP TCE ratio reflecting the after tax impact of unrealized losses on held-to-maturity securities provides useful supplemental information to investors because it reflects the level of capital remaining after a hypothetical liquidation of the entire securities portfolio. In addition, management believes that providing selected financial measures excluding the loss on sale of securities discussed above is useful to investors as the strategic short-term loss taken for long-term profitability makes the operational performance difficult to compare to other periods. Because there are limits to the usefulness of this or any other non-GAAP measure to investors, Bancorp encourages readers to consider its annual and quarterly consolidated financial statements and notes related thereto for their entirety, as filed with the Securities and Exchange Commission, and not to rely on any single financial measure. A reconciliation of the GAAP financial measures to comparable non-GAAP financial measures is presented below.
Reconciliation of GAAP and Non-GAAP Financial Measures
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(in thousands, except per share amounts; unaudited) | | September 30, 2024 | June 30, 2024 | December 31, 2023 |
| Tangible Common Equity - Bancorp | | | | |
| Total stockholders' equity | | $ | 436,960 | | $ | 434,943 | | $ | 439,062 | |
| Goodwill and core deposit intangible | | (75,782) | | (76,023) | | (76,520) | |
| Total TCE | a | 361,178 | | 358,920 | | 362,542 | |
Unrealized losses on HTM securities, net of tax1 | | (70,837) | | (93,600) | | (86,500) | |
Unrealized losses on HTM securities included in AOCI, net of tax 2 | | 7,951 | | 8,222 | | 8,761 | |
| TCE, net of unrealized losses on HTM securities (non-GAAP) | b | $ | 298,292 | | $ | 273,542 | | $ | 284,803 | |
| Total assets | | $ | 3,792,833 | | $ | 3,694,728 | | $ | 3,803,903 | |
| Goodwill and core deposit intangible | | (75,782) | | (76,023) | | (76,520) | |
| Total tangible assets | c | 3,717,051 | | 3,618,705 | | 3,727,383 | |
Unrealized losses on HTM securities, net of tax1 | | (70,837) | | (93,600) | | (86,500) | |
| Unrealized losses on HTM securities included in AOCI, net of tax | | 7,951 | | 8,222 | | 8,761 | |
| Total tangible assets, net of unrealized losses on HTM securities (non-GAAP) | d | $ | 3,654,165 | | $ | 3,533,327 | | $ | 3,649,644 | |
| Bancorp TCE ratio | a / c | 9.7 | % | 9.9 | % | 9.7 | % |
| Bancorp TCE ratio, net of unrealized losses on HTM securities (non-GAAP) | b / d | 8.2 | % | 7.7 | % | 7.8 | % |
Tangible Book Value Per Share | | | | |
Common shares outstanding | e | 16,083 | | 16,278 | | 16,158 | |
Book value per share | | $ | 27.17 | | $ | 26.72 | | $ | 27.17 | |
Tangible book value per share | a / e | $ | 22.46 | | $ | 22.05 | | $ | 22.44 | |
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1 Unrealized losses on held-to-maturity securities as of September 30, 2024, June 30, 2024 and December 31, 2023 of $100.6 million, $132.9 million, and $122.8 million, respectively, including the unrealized losses that resulted from the transfer of securities from AFS to HTM, net of an estimated $29.8 million, $39.3 million, and $36.3 million, respectively, in deferred tax benefits based on a blended state and federal statutory tax rate of 29.56%. 2 The remaining unrealized losses that resulted from the transfer of securities from AFS to HTM, net of an estimated $3.3 million, $3.5 million, and $3.7 million, respectively, in deferred tax benefits based on a blended state and federal statutory tax rate of 29.56% are added back as they are already included in AOCI. |
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(in thousands, except per share amounts; unaudited) | Three months ended | | Nine months ended | | |
Net (loss) income | September 30, 2024 | June 30, 2024 | | September 30, 2024 | September 30, 2023 | | |
Net (loss) income (GAAP) | $ | 4,570 | | $ | (21,902) | | | $ | (14,410) | | $ | 19,285 | | | |
| Adjustments: | | | | | | | |
| Losses on sale of investment securities from portfolio repositioning | — | | 32,542 | | | 32,542 | | — | | | |
| Related income tax benefit | — | | (9,620) | | | (9,620) | | — | | | |
| Adjustments, net of taxes | — | | 22,922 | | | 22,922 | | — | | | |
| Comparable net income (non-GAAP) | $ | 4,570 | | $ | 1,020 | | | $ | 8,512 | | $ | 19,285 | | | |
Diluted (loss) earnings per share | | | | | | | |
| Weighted average diluted shares | 16,066 | | 16,108 | | | 16,076 | | 16,017 | | | |
Diluted (loss) earnings per share (GAAP) | $ | 0.28 | | $ | (1.36) | | | $ | (0.90) | | $ | 1.20 | | | |
| Comparable diluted earnings per share (non-GAAP) | $ | 0.28 | | $ | 0.06 | | | $ | 0.53 | | $ | 1.20 | | | |
| Return on average assets | | | | | | | |
| Average assets | $ | 3,763,660 | | $ | 3,751,159 | | | $ | 3,775,320 | | $ | 4,119,130 | | | |
| Return on average assets (GAAP) | 0.48 | % | (2.35) | % | | (0.51) | % | 0.63 | % | | |
| Comparable return on average assets (non-GAAP) | 0.48 | % | 0.11 | % | | 0.30 | % | 0.63 | % | | |
| Return on average equity | | | | | | | |
| Average stockholders' equity | $ | 435,645 | | $ | 432,692 | | | $ | 434,773 | | $ | 424,606 | | | |
| Return on average equity (GAAP) | 4.17 | % | (20.36) | % | | (4.43) | % | 6.07 | % | | |
| Comparable return on average equity (non-GAAP) | 4.17 | % | 0.95 | % | | 2.62 | % | 6.07 | % | | |
| Efficiency ratio | | | | | | | |
| Non-interest expense | $ | 20,417 | | $ | 21,894 | | | $ | 63,480 | | $ | 60,192 | | | |
| Net interest income | $ | 24,269 | | $ | 22,467 | | | $ | 69,430 | | $ | 78,497 | | | |
| Non-interest income (GAAP) | $ | 2,888 | | $ | (29,755) | | | $ | (24,113) | | $ | 8,272 | | | |
| Losses on sale of investment securities from portfolio repositioning | — | | 32,542 | | | 32,542 | | — | | | |
| Non-interest income (non-GAAP) | $ | 2,888 | | $ | 2,787 | | | $ | 8,429 | | $ | 8,272 | | | |
| Efficiency ratio (GAAP) | 75.18 | % | (300.37) | % | | 140.08 | % | 69.37 | % | | |
| Comparable efficiency ratio (non-GAAP) | 75.18 | % | 86.70 | % | | 81.53 | % | 69.37 | % | | |
Share Repurchase Program
On July 21, 2023, the Board of Directors approved the adoption of Bancorp's share repurchase program for up to $25.0 million and expiring on July 31, 2025. Bancorp repurchased 220,000 shares totaling $4.2 million at an average price of $19.21 per share in the three and nine months ending September 30, 2024. There were no repurchases in 2023.
Earnings Call and Webcast Information
Bank of Marin Bancorp (Nasdaq: BMRC) will present its third quarter financial results call via webcast on Monday, October 28, 2024 at 8:30 a.m. PT/11:30 a.m. ET. Investors can listen to the webcast online through Bank of Marin’s website at www.bankofmarin.com. under “Investor Relations.” To listen to the live call, please go to the website at least 15 minutes early to register, download and install any necessary audio software. For those who cannot listen to the live broadcast, a replay will be available at the same website location shortly after the call. Closed captioning will be available during the live webcast, as well as on the webcast replay.
About Bank of Marin Bancorp
Founded in 1990 and headquartered in Novato, Bank of Marin is the wholly owned subsidiary of Bank of Marin Bancorp (Nasdaq: BMRC). A leading business and community bank with assets of $3.8 billion, Bank of Marin provides commercial and personal banking, specialty lending, and wealth management and trust services throughout its network of 27 branches and seven commercial banking offices located across 10 Northern California counties. 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 San Francisco Business Times since 2003, was inducted into NorthBay Biz’s “Best of” Hall of Fame in 2024, and ranked top 10 in Sacramento Business Journal’s Corporate Direct Giving List for philanthropic efforts in 2023. Bank of Marin Bancorp is included in the Russell 2000 Small-Cap Index and Nasdaq ABA Community Bank Index. For more information, visit www.bankofmarin.com.
Forward-Looking Statements
This release may contain certain forward-looking statements that are based on management's current expectations regarding economic, legislative, and regulatory issues that may impact Bancorp's earnings in future periods. Forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts. They often include the words “believe,” “expect,” “intend,” “estimate” or words of similar meaning, or future or conditional verbs such as “will,” “would,” “should,” “could” or “may.” Factors that could cause future results to vary materially from current management expectations include, but are not limited to, general economic conditions and the economic uncertainty in the United States and abroad, including economic or other disruptions to financial markets caused by acts of terrorism, war or other conflicts, impacts from inflation, supply chain disruptions, changes in interest rates (including the actions taken by the Federal Reserve to control inflation), California's unemployment rate, deposit flows, real estate values, and expected future cash flows on loans and securities; the impact of adverse developments at other banks, including bank failures, that impact general sentiment regarding the stability and liquidity of banks; costs or effects of acquisitions; competition; changes in accounting principles, policies or guidelines; changes in legislation or regulation; natural disasters (such as wildfires and earthquakes in our area); adverse weather conditions; interruptions of utility service in our markets for sustained periods; and other economic, competitive, governmental, regulatory and technological factors (including external fraud and cybersecurity threats) affecting our operations, pricing, products and services; and successful integration of acquisitions. These and other important factors are detailed in various securities law filings made periodically by Bancorp, copies of which are available from Bancorp without charge. Bancorp undertakes no obligation to release publicly the result of any revisions to these forward-looking statements that may be made to reflect events or circumstances after the date of this press release or to reflect the occurrence of unanticipated events.
| | | | | | | | | | | | | | | | | | |
| BANK OF MARIN BANCORP FINANCIAL HIGHLIGHTS |
| Three months ended | | Nine months ended |
| (in thousands, except per share amounts; unaudited) | September 30, 2024 | June 30, 2024 | | | September 30, 2024 | September 30, 2023 |
| Selected operating data and performance ratios: | | | | | | |
| Net income (loss) | $ | 4,570 | | $ | (21,902) | | | | $ | (14,410) | | $ | 19,285 | |
| Diluted earnings (loss) per common share | $ | 0.28 | | $ | (1.36) | | | | $ | (0.90) | | $ | 1.20 | |
| Return on average assets | 0.48 | % | (2.35) | % | | | (0.51) | % | 0.63 | % |
| Return on average equity | 4.17 | % | (20.36) | % | | | (4.43) | % | 6.07 | % |
| Efficiency ratio | 75.18 | % | (300.37) | % | | | 140.08 | % | 69.37 | % |
Tax-equivalent net interest margin | 2.70 | % | 2.52 | % | | | 2.57 | % | 2.66 | % |
| Cost of deposits | 1.46 | % | 1.45 | % | | | 1.43 | % | 0.61 | % |
Cost of funds | 1.46 | % | 1.46 | % | | | 1.43 | % | 0.94 | % |
Net charge-offs (recoveries) | $ | — | | $ | 26 | | | | $ | 47 | | $ | (2) | |
Net charge-offs to average loans | NM | NM | | | NM | NM |
| | | | | | | | | | | |
| (in thousands; unaudited) | September 30, 2024 | June 30, 2024 | December 31, 2023 |
| Selected financial condition data: | | | |
| Total assets | $ | 3,792,833 | | $ | 3,694,728 | | $ | 3,803,903 | |
| Loans: | | | |
| Commercial and industrial | $ | 160,390 | | $ | 169,247 | | $ | 153,750 | |
| Real estate: | | | |
| Commercial owner-occupied | 318,712 | | 325,091 | | 333,181 | |
| Commercial non-owner occupied | 1,266,377 | | 1,267,841 | | 1,219,385 | |
| Construction | 39,326 | | 51,239 | | 99,164 | |
| Home equity | 86,479 | | 88,045 | | 82,087 | |
| Other residential | 150,573 | | 114,054 | | 118,508 | |
| Installment and other consumer loans | 68,234 | | 66,882 | | 67,645 | |
| Total loans | $ | 2,090,091 | | $ | 2,082,399 | | $ | 2,073,720 | |
Non-accrual loans: 1 | | | |
| Commercial and industrial | $ | 7,483 | | $ | 9,280 | | $ | 4,008 | |
| Real estate: | | | |
| Commercial owner-occupied | 1,578 | | 1,306 | | $ | 434 | |
| Commercial non-owner occupied | 29,229 | | 21,458 | | 3,081 | |
| Home equity | 1,161 | | 1,197 | | 469 | |
| Installment and other consumer loans | 432 | | 438 | | — | |
| Total non-accrual loans | $ | 39,883 | | $ | 33,679 | | $ | 7,992 | |
| Classified loans (graded substandard and doubtful) | $ | 52,430 | | $ | 54,684 | | $ | 32,324 | |
| Classified loans as a percentage of total loans | 2.51 | % | 2.63 | % | 1.56 | % |
| Total accruing loans 30-89 days past due | $ | 6,886 | | $ | 2,176 | | $ | 1,017 | |
Total accruing loans 90+ days past due 1 | $ | — | | $ | 8,118 | | $ | — | |
| Allowance for credit losses to total loans | 1.47 | % | 1.47 | % | 1.21 | % |
| Allowance for credit losses to non-accrual loans | 0.77x | 0.91x | 3.15x |
| Non-accrual loans to total loans | 1.91 | % | 1.62 | % | 0.39 | % |
| Total deposits | $ | 3,309,249 | | $ | 3,213,777 | | $ | 3,290,075 | |
| Loan-to-deposit ratio | 63.16 | % | 62.80 | % | 63.03 | % |
| Stockholders' equity | $ | 436,960 | | $ | 434,943 | | $ | 439,062 | |
| Book value per share | $ | 27.17 | | $ | 26.72 | | $ | 27.17 | |
Tangible book value per share | $ | 22.46 | | $ | 22.05 | | $ | 22.44 | |
Tangible common equity to tangible assets - Bank | 9.32 | % | 9.27 | % | 9.53 | % |
Tangible common equity to tangible assets - Bancorp | 9.72 | % | 9.92 | % | 9.73 | % |
| Total risk-based capital ratio - Bank | 15.82 | % | 15.54 | % | 16.62 | % |
| Total risk-based capital ratio - Bancorp | 16.40 | % | 16.46 | % | 16.89 | % |
| Full-time equivalent employees | 288 | | 321 | | 329 | |
1 There was one non-owner occupied commercial real estate loan 90 days past due and accruing interest as of June 30, 2024 that was in extended renewal negotiations and well-secured that was expected to be restored to a current payment status. However, as of September 30, 2024 the loan has been placed on non-accrual status due to ongoing negotiations, but with no expectations for actual losses. There were no non-performing loans over 90 days past due and accruing interest as of December 31, 2023. |
NM - Not meaningful |
| | |
BANK OF MARIN BANCORP CONSOLIDATED STATEMENTS OF CONDITION |
| | | | | | | | | | | | |
| (in thousands, except share data; unaudited) | September 30, 2024 | June 30, 2024 | December 31, 2023 | |
| Assets | | | | |
| Cash, cash equivalents and restricted cash | $ | 229,172 | | $ | 231,408 | | $ | 30,453 | | |
| | | | |
| | | | |
| Investment securities: | | | | |
Held-to-maturity, at amortized cost (net of zero allowance for credit losses at September 30, 2024, June 30, 2024 and December 31, 2023) | 888,804 | | 904,610 | | 925,198 | | |
Available-for-sale (at fair value; amortized cost of $393,066, $285,835 and $613,479 at September 30, 2024, June 30, 2024 and December 31, 2023, respectively; net of zero allowance for credit losses at September 30, 2024, June 30, 2024 and December 31, 2023) | 368,188 | | 252,917 | | 552,028 | | |
| Total investment securities | 1,256,992 | | 1,157,527 | | 1,477,226 | | |
| Loans, at amortized cost | 2,090,091 | | 2,082,399 | | 2,073,720 | | |
| Allowance for credit losses on loans | (30,675) | | (30,675) | | (25,172) | | |
| Loans, net of allowance for credit losses on loans | 2,059,416 | | 2,051,724 | | 2,048,548 | | |
| Goodwill | 72,754 | | 72,754 | | 72,754 | | |
| Bank-owned life insurance | 70,595 | | 70,168 | | 68,102 | | |
| Operating lease right-of-use assets | 19,745 | | 20,460 | | 20,316 | | |
| Bank premises and equipment, net | 7,010 | | 7,263 | | 7,792 | | |
| Core deposit intangible, net | 3,028 | | 3,269 | | 3,766 | | |
| | | | |
| Interest receivable and other assets | 74,121 | | 80,155 | | 74,946 | | |
| Total assets | $ | 3,792,833 | | $ | 3,694,728 | | $ | 3,803,903 | | |
| | | | |
| Liabilities and Stockholders' Equity | | | | |
| Liabilities | | | | |
| Deposits: | | | | |
| Non-interest bearing | $ | 1,473,379 | | $ | 1,417,661 | | $ | 1,441,987 | | |
| Interest bearing: | | | | |
| Transaction accounts | 181,001 | | 178,712 | | 225,040 | | |
| Savings accounts | 222,588 | | 228,946 | | 233,298 | | |
| Money market accounts | 1,156,483 | | 1,121,336 | | 1,138,433 | | |
| Time accounts | 275,798 | | 267,122 | | 251,317 | | |
| Total deposits | 3,309,249 | | 3,213,777 | | 3,290,075 | | |
| Borrowings and other obligations | 193 | | 231 | | 26,298 | | |
| | | | |
| Operating lease liabilities | 22,278 | | 23,016 | | 22,906 | | |
| Interest payable and other liabilities | 24,153 | | 22,761 | | 25,562 | | |
| Total liabilities | 3,355,873 | | 3,259,785 | | 3,364,841 | | |
| | | | |
| Stockholders' Equity | | | | |
Preferred stock, no par value, Authorized - 5,000,000 shares, none issued | — | | — | | — | | |
Common stock, no par value, Authorized - 30,000,000 shares; issued and outstanding - 16,082,881, 16,278,260 and 16,158,413 at September 30, 2024, June 30, 2024 and December 31, 2023, respectively | 215,465 | | 218,773 | | 217,498 | | |
| Retained earnings | 247,983 | | 247,477 | | 274,570 | | |
| Accumulated other comprehensive loss, net of taxes | (26,488) | | (31,307) | | (53,006) | | |
| Total stockholders' equity | 436,960 | | 434,943 | | 439,062 | | |
| Total liabilities and stockholders' equity | $ | 3,792,833 | | $ | 3,694,728 | | $ | 3,803,903 | | |
|
| | |
BANK OF MARIN BANCORP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) |
| | | | | | | | | | | | | | | | | | |
| Three months ended | | | Nine months ended |
| (in thousands, except per share amounts; unaudited) | September 30, 2024 | June 30, 2024 | | | September 30, 2024 | September 30, 2023 |
| Interest income | | | | | | |
| Interest and fees on loans | $ | 25,483 | | $ | 25,109 | | | | $ | 75,612 | | $ | 73,541 | |
| Interest on investment securities | 7,594 | | 8,299 | | | | 24,698 | | 29,371 | |
| Interest on federal funds sold and due from banks | 3,242 | | 924 | | | | 4,487 | | 1,159 | |
| Total interest income | 36,319 | | 34,332 | | | | 104,797 | | 104,071 | |
| Interest expense | | | | | | |
| Interest on interest-bearing transaction accounts | 339 | | 274 | | | | 874 | | 758 | |
| Interest on savings accounts | 565 | | 511 | | | | 1,447 | | 545 | |
| Interest on money market accounts | 8,714 | | 8,641 | | | | 25,804 | | 11,365 | |
| Interest on time accounts | 2,431 | | 2,291 | | | | 7,002 | | 2,724 | |
| Interest on borrowings and other obligations | 1 | | 148 | | | | 240 | | 10,182 | |
| | | | | | |
| Total interest expense | 12,050 | | 11,865 | | | | 35,367 | | 25,574 | |
| Net interest income | 24,269 | | 22,467 | | | | 69,430 | | 78,497 | |
| Provision for credit losses on loans | — | | 5,200 | | | | 5,550 | | 1,275 | |
| Reversal of credit losses on unfunded loan commitments | (233) | | — | | | | (233) | | (342) | |
| Net interest income after provision for (reversal of) credit losses | 24,502 | | 17,267 | | | | 64,113 | | 77,564 | |
| Non-interest income | | | | | | |
| Wealth management and trust services | 706 | | 585 | | | | 1,844 | | 1,585 | |
| Service charges on deposit accounts | 543 | | 541 | | | | 1,613 | | 1,561 | |
| Earnings on bank-owned life insurance, net | 426 | | 421 | | | | 1,282 | | 1,438 | |
| Debit card interchange fees, net | 423 | | 444 | | | | 1,275 | | 1,458 | |
| Dividends on Federal Home Loan Bank stock | 365 | | 366 | | | | 1,108 | | 916 | |
| Merchant interchange fees, net | 67 | | 10 | | | | 244 | | 377 | |
| Gains (losses) on sale of investment securities | 1 | | (32,542) | | | | (32,541) | | 14 | |
| Other income | 357 | | 420 | | | | 1,062 | | 923 | |
| Total non-interest income | 2,888 | | (29,755) | | | | (24,113) | | 8,272 | |
| Non-interest expense | | | | | | |
| Salaries and related benefits | 10,822 | | 12,364 | | | | 35,270 | | 33,087 | |
| Occupancy and equipment | 2,097 | | 2,049 | | | | 6,115 | | 6,367 | |
| Professional services | 1,879 | | 1,043 | | | | 4,000 | | 2,677 | |
| Data processing | 1,051 | | 1,005 | | | | 3,126 | | 2,976 | |
| Deposit network fees | 927 | | 916 | | | | 2,688 | | 1,843 | |
| Federal Deposit Insurance Corporation insurance | 582 | | 426 | | | | 1,443 | | 1,424 | |
| Information technology | 404 | | 448 | | | | 1,254 | | 1,138 | |
| Depreciation and amortization | 358 | | 379 | | | | 1,125 | | 1,705 | |
| Directors' expense | 293 | | 306 | | | | 916 | | 893 | |
| Amortization of core deposit intangible | 241 | | 246 | | | | 738 | | 1,020 | |
| Charitable contributions | 30 | | 604 | | | | 647 | | 707 | |
| Other real estate owned | — | | — | | | | — | | 48 | |
| Other expense | 1,733 | | 2,108 | | | | 6,158 | | 6,307 | |
| Total non-interest expense | 20,417 | | 21,894 | | | | 63,480 | | 60,192 | |
| Income (loss) before provision for (benefit from) income taxes | 6,973 | | (34,382) | | | | (23,480) | | 25,644 | |
| Provision for (benefit from) income taxes | 2,403 | | (12,480) | | | | (9,070) | | 6,359 | |
| Net income (loss) | $ | 4,570 | | $ | (21,902) | | | | $ | (14,410) | | $ | 19,285 | |
| Net income (loss) per common share | | | | | | |
| Basic | $ | 0.28 | | $ | (1.36) | | | | $ | (0.90) | | $ | 1.21 | |
| Diluted | $ | 0.28 | | $ | (1.36) | | | | $ | (0.90) | | $ | 1.20 | |
| Weighted average shares: | | | | | | |
| Basic | 16,038 | | 16,108 | | | | 16,076 | | 16,002 | |
| Diluted | 16,066 | | 16,108 | | | | 16,076 | | 16,017 | |
| Comprehensive income: | | | | | | |
| Net income (loss) | $ | 4,570 | | $ | (21,902) | | | | $ | (14,410) | | $ | 19,285 | |
| Other comprehensive income (loss): | | | | | | |
| Change in net unrealized gains or losses on available-for-sale securities | 8,041 | | 559 | | | | 4,032 | | (8,507) | |
| Reclassification adjustment for realized losses on available-for-sale securities in net income | (1) | | 32,542 | | | | 32,541 | | 2,793 | |
| Reclassification adjustment for gains or losses on fair value hedges | (1,584) | | 282 | | | | (85) | | 367 | |
| | | | | | |
| Amortization of net unrealized losses on securities transferred from available-for-sale to held-to-maturity | 385 | | 403 | | | | 1,149 | | 1,325 | |
| Other comprehensive income (loss), before tax | 6,841 | | 33,786 | | | | 37,637 | | (4,022) | |
| Deferred tax expense (benefit) | 2,022 | | 9,981 | | | | 11,119 | | (1,188) | |
| Other comprehensive income (loss), net of tax | 4,819 | | 23,805 | | | | 26,518 | | (2,834) | |
| Total comprehensive income | $ | 9,389 | | $ | 1,903 | | | | $ | 12,108 | | $ | 16,451 | |
| | |
| BANK OF MARIN BANCORP |
| AVERAGE STATEMENTS OF CONDITION AND ANALYSIS OF NET INTEREST INCOME |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Three months ended | Three months ended | | |
| | September 30, 2024 | June 30, 2024 | | |
| | | Interest | | | Interest | | | | | | | |
| | Average | Income/ | Yield/ | Average | Income/ | Yield/ | | | | | | |
| (in thousands) | Balance | Expense | Rate | Balance | Expense | Rate | | | | | | |
| Assets | | | | | | | | | | | | |
| Interest-earning deposits with banks 1 | $ | 238,378 | | $ | 3,242 | | 5.32 | % | $ | 67,786 | | $ | 924 | | 5.39 | % | | | | | | |
| Investment securities 2, 3 | 1,207,545 | | 7,661 | | 2.54 | % | 1,430,939 | | 8,367 | | 2.34 | % | | | | | | |
| Loans 1, 3, 4, 5 | 2,091,146 | | 25,588 | | 4.79 | % | 2,059,273 | | 25,215 | | 4.84 | % | | | | | | |
| Total interest-earning assets 1 | 3,537,069 | | 36,491 | | 4.04 | % | 3,557,998 | | 34,506 | | 3.84 | % | | | | | | |
| Cash and non-interest-bearing due from banks | 37,448 | | | | 37,248 | | | | | | | | | |
| Bank premises and equipment, net | 7,181 | | | | 7,420 | | | | | | | | | |
| Interest receivable and other assets, net | 181,962 | | | | 148,493 | | | | | | | | | |
| Total assets | $ | 3,763,660 | | | | $ | 3,751,159 | | | | | | | | | |
| Liabilities and Stockholders' Equity | | | | | | | | | | | | |
| Interest-bearing transaction accounts | $ | 177,929 | | $ | 339 | | 0.76 | % | $ | 197,535 | | $ | 274 | | 0.56 | % | | | | | | |
| Savings accounts | 227,179 | | 565 | | 0.99 | % | 226,985 | | 511 | | 0.90 | % | | | | | | |
| Money market accounts | 1,147,786 | | 8,714 | | 3.02 | % | 1,154,346 | | 8,641 | | 3.01 | % | | | | | | |
| Time accounts including CDARS | 267,637 | | 2,431 | | 3.61 | % | 260,602 | | 2,291 | | 3.54 | % | | | | | | |
| Borrowings and other obligations 1 | 206 | | 1 | | 2.32 | % | 10,909 | | 148 | | 5.35 | % | | | | | | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| Total interest-bearing liabilities | 1,820,737 | | 12,050 | | 2.63 | % | 1,850,377 | | 11,865 | | 2.58 | % | | | | | | |
| Demand accounts | 1,460,011 | | | | 1,421,543 | | | | | | | | | |
| Interest payable and other liabilities | 47,267 | | | | 46,547 | | | | | | | | | |
| Stockholders' equity | 435,645 | | | | 432,692 | | | | | | | | | |
| Total liabilities & stockholders' equity | $ | 3,763,660 | | | | $ | 3,751,159 | | | | | | | | | |
Tax-equivalent net interest income/margin 1 | | $ | 24,441 | | 2.70 | % | | $ | 22,641 | | 2.52 | % | | | | | | |
Reported net interest income/margin 1 | | $ | 24,269 | | 2.68 | % | | $ | 22,467 | | 2.50 | % | | | | | | |
| Tax-equivalent net interest rate spread | | | 1.41 | % | | | 1.26 | % | | | | | | |
| | | | | | | | | | | | | |
| | Nine months ended | Nine months ended | | | | | | |
| | September 30, 2024 | September 30, 2023 | | | | | | |
| | | Interest | | | Interest | | | | | | | |
| | Average | Income/ | Yield/ | Average | Income/ | Yield/ | | | | | | |
| (in thousands) | Balance | Expense | Rate | Balance | Expense | Rate | | | | | | |
| Assets | | | | | | | | | | | | |
| Interest-earning deposits with banks 1 | $ | 110,337 | | $ | 4,487 | | 5.34 | % | $ | 28,710 | | $ | 1,159 | | 5.32 | % | | | | | | |
| Investment securities 2, 3 | 1,388,825 | | 24,907 | | 2.39 | % | 1,797,054 | | 29,731 | | 2.21 | % | | | | | | |
| Loans 1, 3, 4, 5 | 2,072,684 | | 75,934 | | 4.81 | % | 2,108,840 | | 73,938 | | 4.62 | % | | | | | | |
| Total interest-earning assets 1 | 3,571,846 | | 105,328 | | 3.87 | % | 3,934,604 | | 104,828 | | 3.51 | % | | | | | | |
| Cash and non-interest-bearing due from banks | 36,669 | | | | 38,641 | | | | | | | | | |
| Bank premises and equipment, net | 7,436 | | | | 8,457 | | | | | | | | | |
| Interest receivable and other assets, net | 159,369 | | | | 137,428 | | | | | | | | | |
| Total assets | $ | 3,775,320 | | | | $ | 4,119,130 | | | | | | | | | |
| Liabilities and Stockholders' Equity | | | | | | | | | | | | |
| Interest-bearing transaction accounts | $ | 196,752 | | $ | 874 | | 0.59 | % | $ | 244,688 | | $ | 758 | | 0.41 | % | | | | | | |
| Savings accounts | 228,096 | | 1,447 | | 0.85 | % | 293,709 | | 545 | | 0.25 | % | | | | | | |
| Money market accounts | 1,150,911 | | 25,804 | | 2.99 | % | 982,729 | | 11,365 | | 1.55 | % | | | | | | |
| Time accounts including CDARS | 264,290 | | 7,002 | | 3.54 | % | 172,991 | | 2,724 | | 2.11 | % | | | | | | |
| Borrowings and other obligations 1 | 6,125 | | 240 | | 5.15 | % | 260,973 | | 10,182 | | 5.14 | % | | | | | | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| Total interest-bearing liabilities | 1,846,174 | | 35,367 | | 2.56 | % | 1,955,090 | | 25,574 | | 1.75 | % | | | | | | |
| Demand accounts | 1,446,795 | | | | 1,689,615 | | | | | | | | | |
| Interest payable and other liabilities | 47,578 | | | | 49,819 | | | | | | | | | |
| Stockholders' equity | 434,773 | | | | 424,606 | | | | | | | | | |
| Total liabilities & stockholders' equity | $ | 3,775,320 | | | | $ | 4,119,130 | | | | | | | | | |
Tax-equivalent net interest income/margin 1 | | $ | 69,961 | | 2.57 | % | | $ | 79,254 | | 2.66 | % | | | | | | |
Reported net interest income/margin 1 | | $ | 69,430 | | 2.55 | % | | $ | 78,497 | | 2.63 | % | | | | | | |
| Tax-equivalent net interest rate spread | | | 1.31 | % | | | 1.76 | % | | | | | | |
| | | | | | | | | | | | | |
1 Interest income/expense is divided by actual number of days in the period times 360 days to correspond to stated interest rate terms, where applicable. |
2 Yields on available-for-sale securities are calculated based on amortized cost balances rather than fair value, as changes in fair value are reflected as a component of stockholders' equity. Investment security interest is earned on 30/360 day basis monthly. |
3 Yields and interest income on tax-exempt securities and loans are presented on a taxable-equivalent basis using the Federal statutory rate of 21 percent. |
4 Average balances on loans outstanding include non-performing loans. The amortized portion of net loan origination fees is included in interest income on loans, representing an adjustment to the yield. |
5 Net loan origination costs in interest income totaled $436 thousand for both the three months ended September 30, 2024 and June 30, 2024, and totaled $1.2 million and $927 thousand for the nine months ended September 30, 2024 and 2023, respectively. |
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Third Quarter 2024 Earnings Presentation O c t o b e r 2 8 , 2 0 2 4
2 Text 95,96,96 Light Gray 232, 232, 232 Black 0, 0, 0 White 255, 255, 255 Accent 1 7,89,52 Accent 2 248,153,40 Accent 3 254,217,129 Accent 4 52,153,70 Accent 5 5,39,67 Accent 6 171,184,195 Forward-Looking Statements This discussion of financial results includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, (the "1933 Act") and Section 21E of the Securities Exchange Act of 1934, as amended, (the "1934 Act"). Those sections of the 1933 Act and 1934 Act provide a "safe harbor" for forward-looking statements to encourage companies to provide prospective information about their financial performance so long as they provide meaningful, cautionary statements identifying important factors that could cause actual results to differ significantly from projected results. Our forward-looking statements include descriptions of plans or objectives of management for future operations, products or services, and forecasts of revenues, earnings or other measures of economic performance. 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 preceded by "will," "would," "should," "could" or "may." Forward-looking statements are based on management's current expectations regarding economic, legislative, and regulatory issues that may affect our earnings in future periods. Factors that could cause future results to vary materially from current management expectations include, but are not limited to, general economic conditions and the economic uncertainty in the United States and abroad, including economic or other disruptions to financial markets caused by acts of terrorism, war, impacts from inflation, supply chain disruptions, changes in interest rates (including the actions taken by the Federal Reserve to control inflation), California's unemployment rate, deposit flows, real estate values, and expected future cash flows on loans and securities; the impact of adverse developments at other banks, including bank failures, that impact general sentiment regarding the stability and liquidity of banks; costs or effects of acquisitions; competition; changes in accounting principles, policies or guidelines; changes in legislation or regulation; natural disasters (such as wildfires and earthquakes in our area); adverse weather conditions; interruptions of utility service in our markets for sustained periods; and other economic, competitive, governmental, regulatory and technological factors (including external fraud and cybersecurity threats) affecting our operations, pricing, products and services; and successful integration of acquisitions. These and other important factors detailed in various securities law filings made periodically by Bancorp, copies of which are available from us at no charge. Forward-looking statements speak only as of the date they are made. 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 that occur after the date of this press release or to reflect the occurrence of unanticipated events. GAAP to Non-GAAP Financial Measures This presentation includes some non-GAAP financial measures as shown in the Appendix of this presentation. Please refer to the reconciliation of GAAP to Non-GAAP financial measures included in our Form 8-K under Item 9 - Financial Statements and Exhibit 99.1 filed with the SEC on October 28, 2024.
3 Text 95,96,96 Light Gray 232, 232, 232 Black 0, 0, 0 White 255, 255, 255 Accent 1 7,89,52 Accent 2 248,153,40 Accent 3 254,217,129 Accent 4 52,153,70 Accent 5 5,39,67 Accent 6 171,184,195 Bank of Marin Bancorp Novato, CA Headquarters BMRC NASDAQ $323.1 Million Market Cap $3.8 Billion Total Assets 4.98% Dividend Yield 16.40% Total RBC BMRC AT A GLANCE O P T I O N 2 Data as of 9/30/24 Relationship Banking Build strong, long-term customer relationships based on trust, integrity and expertise, inspiring loyalty though exceptional service. Disciplined Fundamentals Apply a disciplined business approach with sound banking practices, high quality products, and consistent fundamentals ensuring continued strong results. Community Commitment Give back to the communities that we serve through active employee volunteerism, nonprofit board leadership and financial contributions. 27 Branch Locations 7 Commercial Banking Offices
4 Text 95,96,96 Light Gray 232, 232, 232 Black 0, 0, 0 White 255, 255, 255 Accent 1 7,89,52 Accent 2 248,153,40 Accent 3 254,217,129 Accent 4 52,153,70 Accent 5 5,39,67 Accent 6 171,184,195 Third Quarter 2024 Highlights (1) See Reconciliation of Non-GAAP Financial Measures in the Appendix Activities • Originated $28.2 million of new loans • Acquired $35.7 million residential real estate loan pool, as previously announced • Began selected deposit rate reductions mid-August, reducing spot rate on non-deposit-network, interest-bearing deposits 18 bps while balances went up approximately $10.4 million by September 30th • Purchased $114.5 million available-for-sale securities with proceeds from Q2 balance sheet repositioning and saw $7.9 million improvement in unrealized losses on available-for-sale securities Capital • Bancorp total risk-based capital remained strong at 16.4% • Bancorp TCE / TA of 9.7%, 8.2% when adjusted for HTM securities 1 Key Operating Trends • Tax-equivalent net interest margin increased to 2.70% from 2.52%, reflecting higher average earning asset yields from Q2 balance sheet restructuring • Tax-equivalent yield on interest-earning assets of 4.04%, up 20 bps • Total cost of deposits stable at 1.46% (interest-bearing 2.63%) for Q3 and trending down at 1.43% (interest-bearing 2.59%) for the month of September • Book value per share increased to $27.17 and tangible book value per share1 similarly increased to $22.46 largely due to stock repurchase of 220 thousand shares and improvement in unrealized losses on available-for-sale securities Deposits and Liquidity • Total deposits increased 3.0% • Non-interest bearing deposits increased by $55.7 million and remained a strong 44.5% of total deposits • Uninsured deposits estimated to represent 28% of total deposits • Immediately available net funding $1.9 billion representing 208% coverage of estimated uninsured deposits Credit Quality • No provision for credit losses • Non-accrual loans of 1.91% (from 1.62% last quarter) of total loans, due largely to one relationship totaling $8.1 million moved to non-accrual status in Q3 due to ongoing renewal negotiations, no actual loss anticipated • Non-accrual loan payoff of $1.8 million including all accrued interest and fees • Classified loans stable with minimal migration and down to 2.51% (from 2.63% last quarter) of total loans due to payoff above
5 Text 95,96,96 Light Gray 232, 232, 232 Black 0, 0, 0 White 255, 255, 255 Accent 1 7,89,52 Accent 2 248,153,40 Accent 3 254,217,129 Accent 4 52,153,70 Accent 5 5,39,67 Accent 6 171,184,195 • Linked-quarter NIM increased 18 bps due primarily to higher rates on loans and higher interest-bearing cash balances, partially offset by lower securities balances and higher deposit rates • The Bank began deposit rate cuts in August and accelerated in September • As a result, the quarter-over-quarter increase in cost of deposits decelerated, increasing only by 1 bp compared to 7 bps last quarter. Linked- month cost of deposits reduced by 5 bps in September • Over time, we expect these cuts to offset declines in yields of floating rate assets • Our practice is to use conservative modeled beta assumptions relative to actuals for both rising and falling environments, and we make adjustments as needed to reflect repricing expectations Net Interest Margin Drivers 2.52% 0.03% (0.08)% 0.25% (0.03)% 0.01% 2.70% 2Q24 Loans Securities Cash Deposits Borrowings 3Q24 Net Interest Margin Linked-Quarter Change 2.03% 2.11% 2.24% 2.39% 2.47% 2.50% 2.51% 2.58% 2.60% 2.64% 2.67% 2.59% 5.33% 5.33% 5.33% 5.33% 5.33% 5.33% 5.33% 5.33% 5.33% 5.33% 5.33% 5.13% IB Deposits Fed Funds 10/23 11/23 12/23 1/24 2/24 3/24 4/24 5/24 6/24 7/24 8/24 9/24 Average Monthly Cost of IB Deposits vs. Fed Funds
6 Text 95,96,96 Light Gray 232, 232, 232 Black 0, 0, 0 White 255, 255, 255 Accent 1 7,89,52 Accent 2 248,153,40 Accent 3 254,217,129 Accent 4 52,153,70 Accent 5 5,39,67 Accent 6 171,184,195 Robust Capital Ratios As of 9/30/24 • We maintained high capital levels and are in a position of strength • Total risk-based capital of 16.4% • Tangible common equity ratio of 9.7% • Stock repurchases of 220,000 shares totaling $4.2 million in 3Q24 * See Reconciliation of Non-GAAP Financial Measures in the Appendix. 6.5% 8.0% 10.0% 5.0% 15.2% 15.2% 16.4% 10.4% 9.7% 8.2% Well Capitalized Threshold Bank of Marin Bancorp Bancorp TCE adj. for HTM securities* Common Equity Tier- One Risk-Based Capital Total Tier-One Risk- Based Capital Total Risk-Based Capital Tier-One Leverage Tangible Common Equity
7 Text 95,96,96 Light Gray 232, 232, 232 Black 0, 0, 0 White 255, 255, 255 Accent 1 7,89,52 Accent 2 248,153,40 Accent 3 254,217,129 Accent 4 52,153,70 Accent 5 5,39,67 Accent 6 171,184,195 Strong Liquidity: $1.9 Billion in Net Availability • Immediately available contingent funding represented 208% of September 30, 2024 estimated uninsured and/or uncollateralized deposits • The Bank has long-established minimum liquidity requirements regularly monitored using metrics and tools similar to larger banks, such as the liquidity coverage ratio and multi-scenario, long-horizon stress tests • Deposit outflow assumptions for liquidity monitoring and stress testing are conservative relative to actual experience Liquidity & Uninsured Deposits ($ in millions) 2.1x Coverage Ratio At September 30, 2024 ($ in millions) Total Available Amount Used Net Availability Internal Sources Unrestricted Cash 1 $ 204.9 N/A $ 204.9 Unencumbered Securities 302.3 N/A 302.3 External Sources FHLB line of credit 923.6 — 923.6 FRB line of credit 377.8 — 377.8 Lines of credit at correspondent banks 125.0 — 125.0 Total Liquidity $ 1,933.6 $ — $ 1,933.6 1 Excludes cash items in transit Note: Access to brokered deposit purchases through networks such as Intrafi and Reich & Tang and brokered CD sales not included above $1,933.6 $931.8 Liquidity Est. Uninsured and/or Uncollateralized Deposits
8 Text 95,96,96 Light Gray 232, 232, 232 Black 0, 0, 0 White 255, 255, 255 Accent 1 7,89,52 Accent 2 248,153,40 Accent 3 254,217,129 Accent 4 52,153,70 Accent 5 5,39,67 Accent 6 171,184,195 Strong Deposit Franchise • Deposit mix continues to favor a high percentage of non-interest bearing deposits • Total cost of deposits was 1.46% (interest-bearing 2.63%) for Q3 and 1.43% (interest-bearing 2.59%) for the month of September • Bank began targeted deposit rate reductions mid-August with insignificant attrition • Our time deposits are not derived from brokered CD markets or advertised CD specials Total Deposit Mix at 3Q24Total Deposits ($ in millions) $2,337 $2,504 $3,808 $3,574 $3,290 $3,309 $1,271 $1,538 $2,201 $2,127 $1,667 $1,654 $968 $869 $1,457 $1,328 $1,372 $1,379$98 $97 $150 $119 $251 $276 Transaction Savings & MMDA Time 2019 2020 2021 2022 2023 3Q24 Non-Interest Bearing 44.5% IB DDA 5.5% Savings 6.7% Money Market 35.0% Time 8.3% $3.31B
9 Text 95,96,96 Light Gray 232, 232, 232 Black 0, 0, 0 White 255, 255, 255 Accent 1 7,89,52 Accent 2 248,153,40 Accent 3 254,217,129 Accent 4 52,153,70 Accent 5 5,39,67 Accent 6 171,184,195 • 48% of new accounts consisted of new relationships to the Bank • 59% of new accounts were non-interest bearing by count • 71% of new accounts were interest- bearing in dollars at a weighted average rate of 2.76% • Reciprocal deposit network program (expanded FDIC insurance products) utilization increased notionally by $30.9 million New Accounts Mix (by count) 3Q24Granular Deposit Account Composition Existing Relationships - New $ 18% Account Migration 34% New Relationships 48% 1,182 (in thousands; except for # of Accounts) Interest Bearing Non-Interest Bearing Total Consumer Account Balances $ 971,581 $ 334,178 $ 1,305,759 # of Accounts 15,363 17,544 32,907 Avg Balance Per Account $ 63 $ 19 $ 40 Business Account Balances $ 863,552 $ 1,133,147 $ 1,996,699 # of Accounts 3,764 11,465 15,229 Avg Balance Per Account $ 229 $ 99 $ 131 *Excludes internal operating accounts such as holding company cash and deposit settlement accounts totaling $6.8 million Deposit Accounts Mix - Consumer vs Business 3Q24
10 Text 95,96,96 Light Gray 232, 232, 232 Black 0, 0, 0 White 255, 255, 255 Accent 1 7,89,52 Accent 2 248,153,40 Accent 3 254,217,129 Accent 4 52,153,70 Accent 5 5,39,67 Accent 6 171,184,195 • Loan originations were at yields higher than those on paid off loans • Notable pipeline growth and diversification from key hires, enhanced compensation, and calling programs • Sound underwriting produces a high- quality loan portfolio with low credit costs and stable earnings through cycles • Extending credit and serving the needs of existing clients while ensuring new opportunities present the appropriate levels of risk and return Prudent, Sustainable Model for Loan Growth $1.843 $2.089 $2.256 $2.093 $2.074 $2.090 4.73% 4.15% 4.23% 4.29% 4.65% 4.79% Non-PPP Loans SBA PPP Loans Average Annual Yield on Loans 2019 2020 2021 2022 2023 3Q2024 Five-year compound annual loan growth rate: 3.4%1 Total Loans ($ in billions) 1 Compounded annual growth rate from September 30, 2019 to September 30, 2024 2 Includes American River Bank loans acquired in 3Q21 2
11 Text 95,96,96 Light Gray 232, 232, 232 Black 0, 0, 0 White 255, 255, 255 Accent 1 7,89,52 Accent 2 248,153,40 Accent 3 254,217,129 Accent 4 52,153,70 Accent 5 5,39,67 Accent 6 171,184,195 Well-diversified Loan Portfolio As of 9/30/24 - No material changes from 2Q24 • Loan portfolio is well-diversified across borrowers, industries, loan and property types within our geographic footprint • 86% of all loans and 93% of loans excluding nonprofit organizations are guaranteed by owners of the borrowing entities • Non-owner occupied commercial real estate is well-diversified by property type with 88% of loans (90% of loans excluding nonprofit organizations) being guaranteed by owners of the borrowing entities • Since 2001, net charge-offs for all NOO CRE and OO CRE totals $1.6 million • Construction loans represent a small portion of the overall portfolio OO-CRE 15% C&I 8% Consumer 14% Construction 2% NOO-CRE 61% 3Q24 Total Loans $2.1B Office 28% Mixed Use 8% Retail 20% Warehouse & Industrial 11% Multi-Family 16% Other 17% 3Q24 Total NOO-CRE Loans $1.3B
12 Text 95,96,96 Light Gray 232, 232, 232 Black 0, 0, 0 White 255, 255, 255 Accent 1 7,89,52 Accent 2 248,153,40 Accent 3 254,217,129 Accent 4 52,153,70 Accent 5 5,39,67 Accent 6 171,184,195 * Calculated for loans exceeding $1 million, based on the most recent annual review process Note: Sacramento includes surrounding regional counties NOO CRE Portfolio Diversified Across Property Type & County As of 9/30/24 - No material changes from 2Q24 Average Balance: $1.8MM Largest Balance: $13.8MM Total # of Loans: 141 Wtd. Avg. LTV*: 58% Average Balance: $1.9MM Largest Balance: $14.6MM Total # of Loans: 73 Wtd. Avg. LTV*: 55% Average Balance: $1.7MM Largest Balance: $21.6MM Total # of Loans: 121 Wtd. Avg. LTV*: 63% San Francisco 3% Alameda 5% Sacramento 21% Napa 17% Other Bay Area 15% Other 9% Marin 16% Sonoma 14% San Francisco 11% Alameda 18% Sacramento 18% Napa 3% Other Bay Area 4% Other 6% Marin 11% Sonoma 29% San Francisco 32% Alameda 20%Sacramento 6% Napa 5% Other Bay Area 5% Other 9% Marin 11% Sonoma 12% Retail 3Q24 Warehouse & Industrial 3Q24 Multifamily 3Q24 $247MM $136MM $207MM
13 Text 95,96,96 Light Gray 232, 232, 232 Black 0, 0, 0 White 255, 255, 255 Accent 1 7,89,52 Accent 2 248,153,40 Accent 3 254,217,129 Accent 4 52,153,70 Accent 5 5,39,67 Accent 6 171,184,195 • $349 million in credit exposure spread across our lending footprint comprised of 144 loans • $2.4 million average loan balance – largest loan at $16.4 million • 59% weighted average loan-to-value and 1.60x weighted average debt-service coverage ratio* • City of San Francisco NOO CRE office exposure is 3% of total loan portfolio and 5% of total NOO CRE loans NOO CRE Office Portfolio by County * Calculated for loans exceeding $1 million, based on the most recent annual review process, and net of individual reserves Non-owner Occupied Office Exposure As of 9/30/24 - No material changes from 2Q24 San Francisco 19% Alameda 6% Sacramento 7% Napa 10% Other Bay Area 13% Other 4% Marin 24% Sonoma 17% $349MM City of S.F. NOO CRE Office Portfolio Total Balance: $62.5 million Average Loan Bal: $5.2 million Number of Loans: 12 loans Wtd. Average LTV*: 65% Wtd. Average DCR: 1.04x Average Occupancy: 81% 11 of the 12 loans are secured by low rise buildings and one loan is secured by a 10 story building Note: Shortly after quarter end, one loan for $7.2 million was reclassified to OO CRE. For the purpose of this presentation, this loan has been moved to the OO CRE category.
14 Text 95,96,96 Light Gray 232, 232, 232 Black 0, 0, 0 White 255, 255, 255 Accent 1 7,89,52 Accent 2 248,153,40 Accent 3 254,217,129 Accent 4 52,153,70 Accent 5 5,39,67 Accent 6 171,184,195 ($ in millions at Fair Value) * Loan-to-value largely based on appraised values at origination, or updated appraisals for certain classified loans, and balances as of 9/30/24 Owner-Occupied CRE Portfolio As of 9/30/24 - No material changes from 2Q24 Retail 7% School 15% Wine 10% Church 6% Gas/Auto 8% Health Club 4% Mixed Use 3% Other 5% Office 19% Industrial 23% Napa 16% Sacramento 19% San Francisco 4% Sonoma 9% Other 17% Alameda 14% Marin 21% OO CRE by County 3Q24 Average Balance: $1.1MM Largest Loan: $15.2MM Wtd. Avg. LTV*: 47% Total Balance: $325.9MM Total Loans: 299 Note: Shortly after quarter end, one loan for $7.2 million was reclassified from NO OCRE to OO CRE. For the purpose of this presentation, this loan has been included above under the OO CRE category. OO CRE by Type 3Q24 $326MM $326MM
15 Text 95,96,96 Light Gray 232, 232, 232 Black 0, 0, 0 White 255, 255, 255 Accent 1 7,89,52 Accent 2 248,153,40 Accent 3 254,217,129 Accent 4 52,153,70 Accent 5 5,39,67 Accent 6 171,184,195 ($ in millions at Fair Value) * Loan-to-value largely based on appraised values at origination, or updated appraisals for certain high dollar loans and, balances as of 9/30/24 Construction Portfolio Concentrations As of 9/30/24 Construction by Type 3Q24 Construction by County 3Q24 Multi-Family 49% 1-4 Residential 50% Land & Ag. 1% San Francisco 64% Napa 4% Other Bay Area 11% Marin 20% Sonoma 1% Average Balance: $3.2MM Largest Loan: $11.4MM Wtd. Avg. LTV*: 67% Total Balance: $39.3MM Unfunded Commitments: $9.7MM Total Loans: 12 $39MM • Construction loans decreased by a net $11.9 million since 2Q24 primarily from two project completions that converted to NOO CRE • The completions were in San Francisco County, decreasing the county concentration to 64% from 77% $39MM
16 Text 95,96,96 Light Gray 232, 232, 232 Black 0, 0, 0 White 255, 255, 255 Accent 1 7,89,52 Accent 2 248,153,40 Accent 3 254,217,129 Accent 4 52,153,70 Accent 5 5,39,67 Accent 6 171,184,195 ($ in millions at Fair Value) History of Strong Asset Quality • Allowance for credit losses to total loans of 1.47%, consistent with prior quarter • Non-accrual balances increased largely due to one $8.1 million NOO CRE loan which moved to non-accrual while renewal negotiations remain ongoing. Management believes there is no expectation of actual loss related. • Consistent, robust credit culture and underwriting principles support strong asset quality • Net charge-offs have consistently been negligible for the last five years due to strong underwriting fundamentals, except that in 4Q23 charge-offs included $406 thousand charged to the allowance due to the sale of an acquired loan. Net Charge-Offs (Recoveries) as % of Average Loans 0.00% 0.00% 0.00% 0.02% 0.00% 2020 2021 2022 2023 2024YTD -0.0025 0 0.0025 0.005 0.0075 0.01 Non-accrual Loans / Total Loans Quarterly Progression 0.27% 0.39% 0.31% 1.62% 1.91% 3Q23 4Q23 1Q24 2Q24 3Q24 Net Charge-Offs (Recoveries) as % of Average Loans 0.00% 0.00% 0.00% 0.02% 0.00% 2020 2021 2022 2023 2024 YTD 0.00% 0.25% 0.50% 0.75% 1.00%
17 Text 95,96,96 Light Gray 232, 232, 232 Black 0, 0, 0 White 255, 255, 255 Accent 1 7,89,52 Accent 2 248,153,40 Accent 3 254,217,129 Accent 4 52,153,70 Accent 5 5,39,67 Accent 6 171,184,195 Low Refinance Risk in NOO CRE Portfolio through 2025 • We conducted a DEEP DIVE on loans maturing or repricing before year-end 2025 * • PORTFOLIO IS WELL-POSITIONED TO ABSORB HIGHER RATE ENVIRONMENT AT MATURITY OR REPRICING DATE • Wtd. Avg. DSC Assumptions for Maturing Loans: Current market interest rate + spread of 3.00%, fully drawn commercial real estate lines of credit, 25-year amortization • Wtd. Avg. DSC Assumptions for Repricing Loans: Current market interest rate + contractual spread, fully drawn commercial real estate lines of credit, remaining amortization on each loan Maturing Loan Commitments > $1.0MM # of loans Commitment Outstanding Balance Wtd. Avg. Rate Wtd. Avg. DSC 2024 4 $10.6MM $10.6MM 4.32% 2.91x 2025 26 $84.5MM $79.3MM 5.01% 1.44x TOTAL 30 $106.3MM $99.1MM Repricing Loan Commitments > $1.0MM # of loans Commitment Outstanding Balance Wtd. Avg. Rate Wtd. Avg. DSC 2024 4 $12.8MM $12.8MM 4.43% 1.35x 2025 17 $34.5MM $34.5MM 4.47% 1.58x TOTAL 21 $54.0MM $54.0MM *Commitments, outstanding balances and weighted average rates as of 9/30/24
18 Text 95,96,96 Light Gray 232, 232, 232 Black 0, 0, 0 White 255, 255, 255 Accent 1 7,89,52 Accent 2 248,153,40 Accent 3 254,217,129 Accent 4 52,153,70 Accent 5 5,39,67 Accent 6 171,184,195 Loans & Securities — Repricing & Maturity $ in millions, unless otherwise indicated Total Loans1 * at 9/30/2024 Repricing Term Rate Structure 3 mo or less 3-12 mos 1-3 years 3-5 years 5-15 years Over 15 years Total Floating Rate Variable Rate Variable Rate at Floor Variable Rate at Ceiling Fixed Rate C&I $ 62.2 $ 24.2 $ 12.3 $ 32.6 $ 26.5 $ 2.6 $ 160.4 $ 54.0 $ 11.9 $ 23.4 $ — $ 71.1 Real estate: Owner-occupied CRE 0.3 9.3 38.3 61.7 202.1 7.0 318.7 0.2 36.6 97.1 — 184.8 Non-owner occupied CRE 19.0 60.0 214.7 271.5 688.1 13.1 1,266.4 7.8 102.8 347.8 — 808.0 Construction 2.2 31.8 5.3 — — — 39.3 2.2 — 2.0 15.3 19.8 Home equity 0.6 85.2 — — 0.7 — 86.5 85.8 — — — 0.7 Other residential — 7.0 1.0 0.6 1.5 140.5 150.6 — 8.4 106.6 — 35.6 Installment & other consumer 0.3 2.8 7.8 3.1 53.2 1.0 68.2 0.6 8.9 9.3 — 49.4 Total $ 84.6 $ 220.3 $ 279.4 $ 369.5 $ 972.1 $ 164.2 $ 2,090.1 $ 150.6 $ 168.6 $ 586.2 $ 15.3 $ 1,169.4 % of Total 4 % 11 % 13 % 18 % 47 % 7 % 100 % 7 % 8 % 28 % 1 % 56 % Weighted Average Rate 8.24 % 7.26 % 4.82 % 5.15 % 4.35 % 4.69 % 5.04 % 1 Amounts represent amortized cost. Based on maturity date for fixed rate loans and variable rate loans at their floors and ceilings and next repricing date for all other variable rate loans. Does not included prepayment assumptions. Investment Securities2 * at 9/30/24 2 Includes both available-for-sale and held-to-maturity investment securities with prepayment assumptions applied Maturity & Projected Cash Flow Distribution 3 mo or less 3-12 mos 1-3 years 3-5 years 5-10 years Over 10 years Total Principal (par) & interest $ 26.3 $ 204.2 $ 254.8 $ 265.1 $ 458.8 $ 269.6 $ 1,478.8 % of Total 2 % 14 % 17 % 18 % 31 % 18 % 100 %
19 Text 95,96,96 Light Gray 232, 232, 232 Black 0, 0, 0 White 255, 255, 255 Accent 1 7,89,52 Accent 2 248,153,40 Accent 3 254,217,129 Accent 4 52,153,70 Accent 5 5,39,67 Accent 6 171,184,195 1 Taxable equivalent 2 See Reconciliation of Non-GAAP Financial Measures in the Appendix High-Quality Securities Portfolio Generates Cash Flow Data as of 9/30/24 AFS Securities Portfolio Agency MBS/CMO 70% GSEs 2% Municipal Bonds 23% Corporate Bonds & Other 2% USTs 3% ($ in millions at Fair Value) $368.2MM HTM Securities Portfolio Agency MBS/CMO 74% GSEs 16% Municipal Bonds 7% Corporate Bonds 3% $888.8MM ($ in millions at Cost) Average Yield1 — 3.29% Approx. Effective Duration — 3.58 Unrealized Losses (after tax) — $17.5 million TCE Bancorp — 9.7% Average Yield — 2.45% Approx. Effective Duration — 5.35 Unrealized Losses (after tax) — $70.8 million TCE Bancorp w/ HTM — 8.2% 2
Text 95,96,96 Light Gray 232, 232, 232 Black 0, 0, 0 White 255, 255, 255 Accent 1 7,89,52 Accent 2 248,153,40 Accent 3 254,217,129 Accent 4 52,153,70 Accent 5 5,39,67 Accent 6 171,184,195 Appendix
21 Text 95,96,96 Light Gray 232, 232, 232 Black 0, 0, 0 White 255, 255, 255 Accent 1 7,89,52 Accent 2 248,153,40 Accent 3 254,217,129 Accent 4 52,153,70 Accent 5 5,39,67 Accent 6 171,184,195 Reconciliation of GAAP to Non-GAAP Financial Measures (in thousands, except per share amounts; unaudited) September 30, 2024 Tangible Common Equity - Bancorp Total stockholders' equity $ 436,960 Goodwill and core deposit intangible (75,782) Total TCE a 361,178 Unrealized losses on HTM securities, net of tax 1 (70,837) Unrealized losses on HTM securities included in AOCI, net of tax 2 7,951 TCE, net of unrealized losses on HTM securities (non-GAAP) b $ 298,292 Total assets $ 3,792,833 Goodwill and core deposit intangible (75,782) Total tangible assets c 3,717,051 Unrealized losses on HTM securities, net of tax 1 (70,837) Unrealized losses on HTM securities included in AOCI, net of tax 2 7,951 Total tangible assets, net of unrealized losses on HTM securities (non-GAAP) d $ 3,654,165 Bancorp TCE ratio a / c 9.7 % Bancorp TCE ratio, net of unrealized losses on HTM securities (non-GAAP) b / d 8.2 % Tangible Book Value Per Share Common shares outstanding e 16,083 Book value per share $ 27.17 Tangible book value per share a / e $ 22.46 For further discussion about these non-GAAP financial measures, refer to our Form 8-K under Item 9 - Financial Statements and Exhibit 99.1 filed with the SEC on October 28, 2024. 1 Unrealized losses on held-to-maturity securities as of September 30, 2024 of $100.6 million, including the unrealized losses that resulted from the transfer of securities from AFS to HTM, net of an estimated $29.8 million in deferred tax benefits based on a blended state and federal statutory tax rate of 29.56%. 2 The remaining unrealized losses that resulted from the transfer of securities from AFS to HTM, net of an estimated $3.3 million in deferred tax benefits based on a blended state and federal statutory tax rate of 29.56% are added back as they are already included in AOCI.
22 Text 95,96,96 Light Gray 232, 232, 232 Black 0, 0, 0 White 255, 255, 255 Accent 1 7,89,52 Accent 2 248,153,40 Accent 3 254,217,129 Accent 4 52,153,70 Accent 5 5,39,67 Accent 6 171,184,195 Reconciliation of GAAP to Non-GAAP Financial Measures (Excluding Loss on Sale of Securities) (in thousands, except per share amounts; unaudited) Three months ended Nine months ended Net (loss) income September 30, 2024 June 30, 2024 September 30, 2024 September 30, 2023 Net (loss) income (GAAP) $ 4,570 $ (21,902) $ (14,410) $ 19,285 Adjustments: Losses on sale of investment securities from portfolio repositioning — 32,542 32,542 — Related income tax benefit — (9,620) (9,620) — Adjustments, net of taxes — 22,922 22,922 — Comparable net income (non-GAAP) $ 4,570 $ 1,020 $ 8,512 $ 19,285 Diluted (loss) earnings per share Weighted average diluted shares 16,066 16,108 16,076 16,017 Diluted (loss) earnings per share (GAAP) $ 0.28 $ (1.36) $ (0.90) $ 1.20 Comparable diluted earnings per share (non-GAAP) $ 0.28 $ 0.06 $ 0.53 $ 1.20 Return on average assets Average assets $ 3,763,660 $ 3,751,159 $ 3,775,320 $ 4,119,130 Return on average assets (GAAP) 0.48 % (2.35) % (0.51) % 0.63 % Comparable return on average assets (non-GAAP) 0.48 % 0.11 % 0.30 % 0.63 % Return on average equity Average stockholders' equity $ 435,645 $ 432,692 $ 434,773 $ 424,606 Return on average equity (GAAP) 4.17 % (20.36) % (4.43) % 6.07 % Comparable return on average equity (non-GAAP) 4.17 % 0.95 % 2.62 % 6.07 % Efficiency ratio Non-interest expense $ 20,417 $ 21,894 $ 63,480 $ 60,192 Net interest income 24,269 22,467 69,430 78,497 Non-interest income (GAAP) 2,888 (29,755) (24,113) 8,272 Losses on sale of investment securities from portfolio repositioning — 32,542 32,542 — Non-interest income (non-GAAP) $ 2,888 $ 2,787 $ 8,429 $ 8,272 Efficiency ratio (GAAP) 75.18 % (300.37) % 140.08 % 69.37 % Comparable efficiency ratio (non-GAAP) 75.18 % 86.70 % 81.53 % 69.37 %
23 Text 95,96,96 Light Gray 232, 232, 232 Black 0, 0, 0 White 255, 255, 255 Accent 1 7,89,52 Accent 2 248,153,40 Accent 3 254,217,129 Accent 4 52,153,70 Accent 5 5,39,67 Accent 6 171,184,195 Contact Us Tim Myers President and Chief Executive Officer (415) 763-4970 timmyers@bankofmarin.com Tani Girton EVP, Chief Financial Officer (415) 884-7781 tanigirton@bankofmarin.com Media Requests: Yahaira Garcia-Perea Marketing & Corporate Communications Manager (916) 231-6703 yahairagarcia-perea@bankofmarin.com
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Bank of Marin Bancorp (NASDAQ:BMRC)
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