| FOR IMMEDIATE RELEASE | CONTACT: PAM HAMILTON |
| July 18, 2008 | 415-381-8198 |
| | pam@hamiltoninkpr.com |
BANK OF MARIN BANCORP ANNOUNCES
SECOND QUARTER EARNINGS UP 17%
Novato, CA--- Bank of Marin Bancorp (Nasdaq: BMRC) President and CEO Russell A. Colombo announced second quarter 2008 earnings for Bank of Marin Bancorp (Bancorp) of $3.4 million, up $483 thousand, or 16.6%, from the same period in 2007. Diluted earnings per share were $0.65 in the second quarter of 2008, compared to $0.54 in the second quarter of 2007, up 11 cents, or 20.4%.
Earnings for the six-month period ended June 30, 2008 totaled $6.7 million, an increase of $785 thousand, or 13.4% over the same period a year ago. Diluted earnings per share for the six-month period totaled $1.27, an increase of 18 cents per share, or 16.5%, over the same period a year ago.
“Higher earnings were driven by an expanded net interest margin and improved efficiencies. The strong results demonstrate the ability of our Bank to effectively navigate through difficult economic times,” said Colombo.
Net income for the first six months of 2008 includes a pre-tax non-recurring gain of $457 thousand recorded in the first quarter related to the mandatory redemption of a portion of Bank of Marin’s (the Bank) shares in Visa Inc., which became a public company through an initial public offering (IPO) on March 19, 2008. In addition, in the first six months of 2008, Bancorp reversed a pre-tax charge of $242 thousand that was originally recorded in the fourth quarter of 2007, for the potential obligation to Visa Inc. in connection with certain litigation indemnifications provided to Visa Inc. by Visa member banks. Subsequent to its IPO, Visa Inc. established an escrow account from which it plans to pay any potential settlements.
Net income for the second quarter and first six months of 2007 included pre-tax non-recurring gains of $190 thousand and $710 thousand, respectively, related to the Bank’s second-quarter 2007 sale of its $77 million indirect auto portfolio. The proceeds from the sale provided a source of funding for more desirable relationship loans.
Loans totaled $799.5 million at June 30, 2008, an increase of 22.3% over June 30, 2007. The mix of loans is relatively unchanged from March 31, 2008 and December 31, 2007. Credit quality remains strong with $236 thousand in non-performing loans at June 30, 2008. Net loan charge-offs totaled $145 thousand in the first six months of 2008 compared to $62 thousand in the same period a year ago. The loan loss provision in the second quarter and first half of 2008 equaled $510 thousand and $1.1 million, respectively, compared to $75 thousand and $140 thousand in the second quarter and first half of last year, respectively. The increase supports the significant level of loan growth that the Bank experienced in 2008. The allowance for loan losses as a percentage of loans totaled 1.07% at June 30, 2008 compared to 1.08% a year ago.
“We continue to experience strong loan growth while maintaining exceptional credit quality, as demonstrated by low delinquencies and nominal losses.” said Christina Cook, Chief Financial Officer. “Credit quality continues to be one of our highest priorities and our loan growth is regulated by solid underwriting standards.” The Bank has not participated in subprime lending nor does it hold investment securities backed by subprime loans. The Bank does not hold common or preferred stock of either the Federal National Mortgage Association (Fannie Mae) or the Federal Home Loan Mortgage Corporation (Freddie Mac).
Deposits totaled $801.2 million at June 30, 2008, compared to $776.5 million a year ago, an increase of 3.2%. Demand deposits increased $15.3 million, or 7.5% from June 30 2007 to June 30, 2008. “We continue to make every possible effort to increase deposits in an economic environment of intense competition and tight liquidity,” said Colombo.
Net interest income of $11.9 million in the in the second quarter increased $1.4 million, or 13.7%, from the same period a year ago, and in the first six months of 2008 increased $2.7 million, or 13.3% from the first six months of last year. This improvement reflects growth in interest-earning assets and a decline in the cost of funds, partially offset by lower loan yields. “Lower cost of funds together with careful asset management resulted in improved net interest income and net interest margin,” said Cook.
The net interest margin expanded to 5.52% in the second quarter of 2008 compared to 5.07% in the second quarter of 2007. The net interest margin totaled 5.46% in the first half of 2008 compared to 5.04% in the same period in 2007.
Non-interest income totaled $1.3 million in the second quarter of 2008. Excluding the $190 thousand pre-tax non-recurring gain recorded in the second quarter of 2007 related to the sale of the indirect auto portfolio, this represents an increase of $76 thousand, or 6.3% from the prior year. Non-interest income totaled $3.0 million in the first half of 2008. Excluding the $457 thousand pre-tax non-recurring gain on the sale of Visa Inc. shares in the first half of 2008 and the $710 thousand pre-tax non-recurring gain recorded in the first half of 2007 related to the sale of the indirect auto portfolio, this represents an increase of $333 thousand, or 15.2% over the first half of 2007. The increases reflect an increase in fees from the Bank’s business analysis accounts, an increase in fees the Bank charges for checks drawn against insufficient funds and an increase in Wealth Management fees.
Non-interest expense totaled $7.1 million in the second quarter of 2008, an increase of $110 thousand, or 1.6% over the same period a year ago. Non-interest expense in the first six months of 2008, excluding the reversal of the $242 thousand Visa Inc. litigation accrual discussed earlier, totaled $14.4 million, which represents an increase of $664 thousand, or 4.8%, from the same period a year ago. The increase includes higher FDIC premiums, professional fees related to Bank initiatives, increases in premises rent including the new branch discussed below, as well as higher information technology and processing costs. “Higher revenues combined with modest growth in noninterest expenses have resulted in a marked improvement in our efficiency,” said Colombo. The efficiency ratio improved 508 basis points, to 54.14%, in the second quarter of 2008 compared to the second quarter of 2007, and by 468 basis points, to 54.01%, in the six months ended June 30, 2008 compared to the same period a year ago.
In November 2007, Bancorp initiated a stock repurchase plan to buy back up to $5 million of its common stock. Bancorp purchased 58,609 shares during the first half of 2008 for $1.7 million, bringing the total amount purchased under this program to $3.2 million. Bancorp repurchased 27,007 shares for $749 thousand during the second quarter of 2008. Bancorp has maintained its strong capital position, with a total risk-based capital ratio of 11.8% at June 30, 2008. Bancorp’s return on equity increased to 14.73%, up 83 basis points in the second quarter of 2008 compared to the same quarter a year ago.
In June 2008, Bank of Marin opened its second branch in Mill Valley and its twelfth branch in its franchise. “This new branch demonstrates our commitment to the community that we serve,” said Colombo, “and it enhances our accessibility in the southern Marin County market.”
Bank of Marin has eleven other branch offices with locations in, Strawberry, Corte Madera, downtown San Rafael, Andersen Drive and Northgate in San Rafael, Ignacio, downtown Novato, Sausalito and three offices in Petaluma. The Bank has a commercial loan production office in San Francisco. The Bank’s administrative offices are located in Novato, and its Wealth Management Services are located in Corte Madera, Novato and Petaluma.
The financial information for periods presented subsequent to July 1, 2007 relates to Bank of Marin Bancorp, which was formed on July 1, 2007, while information pertaining to prior periods relates to the Bank of Marin. This information is comparable between periods as the only subsidiary of Bank of Marin Bancorp is Bank of Marin.
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, changes in interest rates, deposit flows, real estate values, and competition; changes in accounting principles, policies or guidelines; changes in legislation or regulation; and other economic, competitive, governmental, regulatory and technological factors affecting Bancorp’s operations, pricing, products and services. These and other important factors are detailed in various securities law filings made periodically by Bancorp or the Bank, 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
Year To Year Comparison
June 30, 2008
| SECOND QUARTER | | QTR 2008 | | | QTR 2007 | | | CHANGE | | | % CHANGE | |
| | | | | | | | | | | | | |
| NET INCOME | | $ | 3,386,000 | | | $ | 2,903,000 | | | $ | 483,000 | | | | 16.6 | % |
| | | | | | | | | | | | | | | | | |
| DILUTED EARNINGS PER SHARE | | $ | 0.65 | | | $ | 0.54 | | | $ | 0.11 | | | | 20.4 | % |
| | | | | | | | | | | | | | | | | |
| RETURN ON ASSETS (ROA) | | | 1.48 | % | | | 1.32 | % | | | 0.16 | % | | | 12.1 | % |
| | | | | | | | | | | | | | | | | |
| RETURN ON EQUITY (ROE) | | | 14.73 | % | | | 13.90 | % | | | 0.83 | % | | | 6.0 | % |
| | | | | | | | | | | | | | | | | |
| EFFICIENCY RATIO | | | 54.14 | % | | | 59.22 | % | | | (5.08 | %) | | | (8.6 | %) |
| | | | | | | | | | | | | | | | | |
| NET INTEREST MARGIN | | | 5.52 | % | | | 5.07 | % | | | 0.45 | % | | | 8.9 | % |
| | | | | | | | | | | | | | | | | |
| YEAR TO DATE | | YTD 2008 | | | YTD 2007 | | | CHANGE | | | % CHANGE | |
| | | | | | | | | | | | | | | | | |
| NET INCOME | | $ | 6,662,000 | | | $ | 5,877,000 | | | $ | 785,000 | | | | 13.4 | % |
| | | | | | | | | | | | | | | | | |
| DILUTED EARNINGS PER SHARE | | $ | 1.27 | | | $ | 1.09 | | | $ | 0.18 | | | | 16.5 | % |
| | | | | | | | | | | | | | | | | |
| RETURN ON ASSETS (ROA) | | | 1.48 | % | | | 1.36 | % | | | 0.12 | % | | | 8.8 | % |
| | | | | | | | | | | | | | | | | |
| RETURN ON EQUITY (ROE) | | | 14.68 | % | | | 14.13 | % | | | 0.55 | % | | | 3.9 | % |
| | | | | | | | | | | | | | | | | |
| EFFICIENCY RATIO | | | 54.01 | % | | | 58.69 | % | | | (4.68 | %) | | | (8.0 | %) |
| | | | | | | | | | | | | | | | | |
| NET INTEREST MARGIN | | | 5.46 | % | | | 5.04 | % | | | 0.42 | % | | | 8.3 | % |
| | | | | | | | | | | | | | | | | |
| AT PERIOD END | | Jun 30 2008 | | | Jun 30 2007 | | | CHANGE | | | % CHANGE | |
| | | | | | | | | | | | | | | | | |
| TOTAL ASSETS | | $ | 952,539,000 | | | $ | 890,377,000 | | | $ | 62,162,000 | | | | 7.0 | % |
| | | | | | | | | | | | | | | | | |
| TOTAL DEPOSITS | | $ | 801,220,000 | | | $ | 776,477,000 | | | $ | 24,743,000 | | | | 3.2 | % |
| | | | | | | | | | | | | | | | | |
| TOTAL LOANS | | $ | 799,510,000 | | | $ | 653,924,000 | | | $ | 145,586,000 | | | | 22.3 | % |
| | | | | | | | | | | | | | | | | |
| LOAN LOSS RESERVE TO LOANS | | | 1.07 | % | | | 1.08 | % | | | (0.01 | %) | | | (0.9 | %) |
| | | | | | | | | | | | | | | | | |
| TOTAL NON PERFORMING LOANS | | $ | 236,000 | | | $ | 5,000 | | | $ | 231,000 | | | NM | |
| | | | | | | | | | | | | | | | | |
| LOAN LOSS RESERVE TO NON-PERFORMING LOANS | | | 36.3 | x | | | 1410.6 | x | | | (1,374.3 | )x | | NM | |
| | | | | | | | | | | | | | | | | |
| STOCKHOLDERS' EQUITY | | $ | 92,547,000 | | | $ | 84,150,000 | | | $ | 8,397,000 | | | | 10.0 | % |
| | | | | | | | | | | | | | | | | |
| BOOK VALUE PER SHARE | | $ | 18.00 | | | $ | 16.21 | | | $ | 1.79 | | | | 11.0 | % |
| | | | | | | | | | | | | | | | | |
| TOTAL CAPITAL TO ASSETS | | | 9.72 | % | | | 9.45 | % | | | 0.27 | % | | | 2.9 | % |
| | | | | | | | | | | | | | | | | |
| TOTAL RISK BASED CAPITAL RATIO-BANK * | | | 11.6 | % | | | 12.7 | % | | | (1.1 | %) | | | (8.7 | %) |
| | | | | | | | | | | | | | | | | |
| TOTAL RISK BASED CAPITAL RATIO-BANCORP * | | | 11.8 | % | | | N/A | | | | N/A | | | | N/A | |
* Current period estimated
N/A - - not applicable
NM - - not meaningful
| BANK OF MARIN BANCORP |
| CONSOLIDATED STATEMENT OF CONDITION |
| at June 30, 2008, March 31, 2008 and June 30, 2007 |
| (in thousands, except share amounts - unaudited) | | June 30, 2008 | | | March 31, 2008 | | | June 30, 2007 | |
| | | | | | | | | | |
| Assets | | | | | | | | | |
| Cash and due from banks | | $ | 30,355 | | | $ | 28,328 | | | $ | 29,319 | |
| Fed funds sold | | | 800 | | | | --- | | | | 76,500 | |
| Cash and cash equivalents | | | 31,155 | | | | 28,328 | | | | 105,819 | |
| | | | | | | | | | | | | |
| Investment securities | | | | | | | | | | | | |
| Held to maturity, at amortized cost | | | 19,476 | | | | 20,297 | | | | 15,161 | |
Available for sale (at fair market value, amortized cost $73,577 at 6/30/08, $73,747 at 3/31/08 and $88,054 at 6/30/07) | | | 72,999 | | | | 74,118 | | | | 86,740 | |
| Total investment securities | | | 92,475 | | | | 94,415 | | | | 101,901 | |
| | | | | | | | | | | | | |
| Loans, net of allowance for losses of $8,555 at 6/30/08,$8,199 at 3/31/08 and $7,053 at 6/30/07 | | | 790,955 | | | | 761,331 | | | | 646,871 | |
| Bank premises and equipment, net | | | 8,635 | | | | 7,887 | | | | 8,216 | |
| Interest receivable and other assets | | | 29,319 | | | | 27,878 | | | | 27,570 | |
| | | | | | | | | | | | | |
| Total assets | | $ | 952,539 | | | $ | 919,839 | | | $ | 890,377 | |
| | | | | | | | | | | | | |
| Liabilities and Stockholders' Equity | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| Liabilities | | | | | | | | | | | | |
| Deposits | | | | | | | | | | | | |
| Non-interest bearing | | $ | 219,684 | | | $ | 204,875 | | | $ | 204,335 | |
| Interest bearing | | | | | | | | | | | | |
| Transaction accounts | | | 76,839 | | | | 76,461 | | | | 74,387 | |
| Savings and money market | | | 422,834 | | | | 396,463 | | | | 409,795 | |
| Time | | | 81,863 | | | | 82,363 | | | | 87,960 | |
| Total deposits | | | 801,220 | | | | 760,162 | | | | 776,477 | |
| | | | | | | | | | | | | |
| Federal funds purchased and Federal Home Loan Bank borrowings | | | 46,800 | | | | 55,300 | | | | 10,000 | |
| Subordinated debenture | | | 5,000 | | | | 5,000 | | | | 5,000 | |
| Interest payable and other liabilities | | | 6,972 | | | | 8,664 | | | | 14,750 | |
| | | | | | | | | | | | | |
| Total liabilities | | | 859,992 | | | | 829,126 | | | | 806,227 | |
| | | | | | | | | | | | | |
| Stockholders' Equity | | | | | | | | | | | | |
| Common stock, no par value | | | | | | | | | | | | |
| Authorized - 15,000,000 shares Issued and outstanding - 5,140,351 at 6/30/08,5,131,546 at 3/31/08 and 5,190,791 at 6/30/07 | | | 50,679 | | | | 50,959 | | | | 53,032 | |
| Retained earnings | | | 42,203 | | | | 39,539 | | | | 31,880 | |
| Accumulated other comprehensive (loss) gain, net | | | (335 | ) | | | 215 | | | | (762 | ) |
| | | | | | | | | | | | | |
| Total stockholders' equity | | | 92,547 | | | | 90,713 | | | | 84,150 | |
| | | | | | | | | | | | | |
| Total liabilities and stockholders' equity | | $ | 952,539 | | | $ | 919,839 | | | $ | 890,377 | |
| BANK OF MARIN BANCORP |
| CONSOLIDATED STATEMENT OF OPERATIONS |
| for the three months ended June 30, 2008, March 31, 2008 and June 30, 2007 |
| (in thousands, except per share amounts - unaudited) | | June 30, 2008 | | | March 31, 2008 | | | June 30, 2007 | |
| | | | | | | | | | |
| Interest income | | | | | | | | | |
| Interest and fees on loans held in portfolio | | $ | 13,400 | | | $ | 13,312 | | | $ | 13,027 | |
| Interest on auto loans held for sale | | | --- | | | | --- | | | | 954 | |
| Interest on investment securities | | | | | | | | | | | | |
| U.S. Treasury securities | | | --- | | | | --- | | | | --- | |
| Securities of U.S. Government agencies | | | 882 | | | | 867 | | | | 809 | |
| Obligations of state and political subdivisions (tax exempt) | | | 183 | | | | 161 | | | | 111 | |
| Corporate debt securities and other | | | 78 | | | | 89 | | | | 123 | |
| Interest on Federal funds sold | | | 1 | | | | 112 | | | | 415 | |
| Total interest income | | | 14,544 | | | | 14,541 | | | | 15,439 | |
| | | | | | | | | | | | | |
| Interest expense | | | | | | | | | | | | |
| Interest on interest bearing transaction accounts | | | 96 | | | | 88 | | | | 74 | |
| Interest on savings and money market deposits | | | 1,583 | | | | 2,191 | | | | 3,778 | |
| Interest on time deposits | | | 654 | | | | 751 | | | | 882 | |
| Interest on borrowed funds | | | 302 | | | | 221 | | | | 227 | |
| Total interest expense | | | 2,635 | | | | 3,251 | | | | 4,961 | |
| | | | | | | | | | | | | |
| Net interest income | | | 11,909 | | | | 11,290 | | | | 10,478 | |
| Provision for loan losses | | | 510 | | | | 615 | | | | 75 | |
| Net interest income after provision for loan losses | | | 11,399 | | | | 10,675 | | | | 10,403 | |
| | | | | | | | | | | | | |
| Non-interest income | | | | | | | | | | | | |
| Service charges on deposit accounts | | | 430 | | | | 406 | | | | 321 | |
| Wealth Management Services | | | 310 | | | | 336 | | | | 298 | |
| Net gain on indirect auto portfolio | | | --- | | | | --- | | | | 190 | |
| Net gain on redemption of shares in Visa, Inc. | | | --- | | | | 457 | | | | --- | |
| Other income | | | 539 | | | | 503 | | | | 584 | |
| Total non-interest income | | | 1,279 | | | | 1,702 | | | | 1,393 | |
| | | | | | | | | | | | | |
| Non-interest expense | | | | | | | | | | | | |
| Salaries and related benefits | | | 4,035 | | | | 4,158 | | | | 4,163 | |
| Occupancy and equipment | | | 793 | | | | 768 | | | | 729 | |
| Depreciation and amortization | | | 327 | | | | 318 | | | | 310 | |
| Data processing | | | 430 | | | | 445 | | | | 425 | |
| Professional services | | | 419 | | | | 406 | | | | 384 | |
| Other expense | | | 1,136 | | | | 906 | | | | 1,019 | |
| Total non-interest expense | | | 7,140 | | | | 7,001 | | | | 7,030 | |
| Income before provision for income taxes | | | 5,538 | | | | 5,376 | | | | 4,766 | |
| | | | | | | | | | | | | |
| Provision for income taxes | | | 2,152 | | | | 2,100 | | | | 1,863 | |
| Net income | | $ | 3,386 | | | $ | 3,276 | | | $ | 2,903 | |
| | | | | | | | | | | | | |
| Net income per common share: | | | | | | | | | | | | |
| Basic | | $ | 0.66 | | | $ | 0.64 | | | $ | 0.56 | |
| Diluted | | $ | 0.65 | | | $ | 0.63 | | | $ | 0.54 | |
| | | | | | | | | | | | | |
| Weighted average shares used to compute net income per common share: | | | | | | | | | | | | |
| Basic | | | 5,139 | | | | 5,136 | | | | 5,187 | |
| Diluted | | | 5,226 | | | | 5,238 | | | | 5,329 | |
| | | | | | | | | | | | | |
| Dividends declared per common share | | $ | 0.14 | | | $ | 0.14 | | | $ | 0.13 | |
BANK OF MARIN BANCORP |
| CONSOLIDATED STATEMENT OF OPERATIONS |
| for the six months ended June 30, 2008 and June 30, 2007 |
| (in thousands, except per share amounts - unaudited) | | June 30, 2008 | | | June 30, 2007 | |
| | | | | | | |
| Interest income | | | | | | |
| Interest and fees on loans held in portfolio | | $ | 26,712 | | | $ | 25,723 | |
| Interest on auto loans held for sale | | | --- | | | | 2,062 | |
| Interest on investment securities | | | | | | | | |
| U.S. Treasury securities | | | --- | | | | 8 | |
| Securities of U.S. Government agencies | | | 1,749 | | | | 1,651 | |
| Obligations of state and political subdivisions (tax exempt) | | | 344 | | | | 229 | |
| Corporate debt securities and other | | | 167 | | | | 221 | |
| Interest on Federal funds sold | | | 113 | | | | 417 | |
| Total interest income | | | 29,085 | | | | 30,311 | |
| | | | | | | | | |
| Interest expense | | | | | | | | |
| Interest on interest bearing transaction accounts | | | 184 | | | | 151 | |
| Interest on savings and money market deposits | | | 3,774 | | | | 7,170 | |
| Interest on time deposits | | | 1,405 | | | | 1,751 | |
| Interest on borrowed funds | | | 523 | | | | 764 | |
| Total interest expense | | | 5,886 | | | | 9,836 | |
| | | | | | | | | |
| Net interest income | | | 23,199 | | | | 20,475 | |
| Provision for loan losses | | | 1,125 | | | | 140 | |
| Net interest income after provision for loan losses | | | 22,074 | | | | 20,335 | |
| | | | | | | | | |
| Non-interest income | | | | | | | | |
| Service charges on deposit accounts | | | 836 | | | | 569 | |
| Wealth Management Services | | | 646 | | | | 573 | |
| Net gain on indirect auto portfolio | | | --- | | | | 710 | |
| Net gain on redemption of shares in Visa, Inc. | | | 457 | | | | --- | |
| Other income | | | 1,042 | | | | 1,049 | |
| Total non-interest income | | | 2,981 | | | | 2,901 | |
| | | | | | | | | |
| Non-interest expense | | | | | | | | |
| Salaries and related benefits | | | 8,193 | | | | 8,126 | |
| Occupancy and equipment | | | 1,561 | | | | 1,439 | |
| Depreciation and amortization | | | 645 | | | | 611 | |
| Data processing | | | 875 | | | | 843 | |
| Professional services | | | 825 | | | | 702 | |
| Other expense | | | 2,042 | | | | 1,998 | |
| Total non-interest expense | | | 14,141 | | | | 13,719 | |
| Income before provision for income taxes | | | 10,914 | | | | 9,517 | |
| | | | | | | | | |
| Provision for income taxes | | | 4,252 | | | | 3,640 | |
| Net income | | $ | 6,662 | | | $ | 5,877 | |
| | | | | | | | | |
| Net income per common share: | | | | | | | | |
| Basic | | $ | 1.30 | | | $ | 1.13 | |
| Diluted | | $ | 1.27 | | | $ | 1.09 | |
| | | | | | | | | |
| Weighted average shares used to compute net income per common share: | | | | | | | | |
| Basic | | | 5,137 | | | | 5,209 | |
| Diluted | | | 5,232 | | | | 5,376 | |
| | | | | | | | | |
| Dividends declared per common share | | $ | 0.28 | | | $ | 0.25 | |
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