| FOR IMMEDIATE RELEASE | CONTACT: Sandy Pfaff |
sandy@pfaffpr.com
BANK OF MARIN BANCORP REPORTS SOLID SECOND QUARTER EARNINGS
DISCIPLINED ACQUISITION APPROACH AND STRONG DEPOSIT GROWTH DRIVES POSITIVE RESULTS
NOVATO, CA, July 25, 2011 – Bank of Marin Bancorp (“Bancorp”, NASDAQ: BMRC) announced second quarter 2011 earnings of $3.4 million, up 3% from $3.3 million in the second quarter of 2010. Diluted earnings per share were $0.64, up $0.01 from the same quarter a year ago. Earnings for the six-month period ended June 30, 2011 totaled $7.9 million, up 26% from $6.3 million in the same period a year ago. Diluted earnings per share (EPS) for the six-month period ended June 30, 2011 totaled $1.48, up $0.29 from $1.19 for the same period a year ago. Earnings for the first half of 2011 include the impact of the FDIC1-assisted acquisition of certain assets and the assumption of certain liabilities of the former Charter Oak Bank on February 18, 2011 (the “Acquisition”).
“Our earnings reflect the positive impact of the recently acquired Charter Oak portfolio, as well as certain one-time Acquisition related costs. We expect the uncharacteristic fluctuations related to the accounting for the acquired loan portfolio to be reduced over the next several quarters," said Russell A. Colombo, President and CEO. "In June we successfully completed the conversion and integration of our Napa operations, and are very pleased with our results to date.”
Bancorp also provided the following highlights on its operating and financial performance for the second quarter of 2011:
| | · | Accretion on purchased non-credit impaired loans recorded to interest income totaled $887 thousand and $1.3 million in the second and first quarter of 2011, respectively. The current level of accretion is expected to continue to decline. Non-recurring pre-tax Acquisition-related third-party costs totaled $642 thousand (7 cents of EPS) in the second quarter of 2011 and $348 thousand (4 cents of EPS) in the first quarter of 2011. |
| | · | Total deposits grew $139.7 million or 14.0%, over a year ago, with non-interest bearing deposits growing $88.7 million or 34.4%. The increase reflects the impact of the assumption of $93.9 million of deposits at fair value of the former Charter Oak Bank, as well as growth in other markets, partly offset by decreases in CDARS® time deposits and the disposition of the internet time deposits assumed as part of the Acquisition. |
| | · | The tax equivalent net interest margin totaled 5.51% in the second quarter of 2011, up from 5.01% in the same quarter a year ago, and 5.44% last quarter, reflecting the impact of accounting for acquired loans. |
| | · | Loans grew $47.3 million, or 5.0%, over a year ago, including loans purchased as part of the Acquisition. |
| | · | Credit quality remains solid with non-performing loans at 0.88% of loans, down from 1.15% a year ago, and 0.92% at March 31, 2011. Accruing loans past due 30 to 89 days decreased from $3.7 million a year ago and $21.9 million at March 31, 2011 to $763 thousand at June 30, 2011. Results also include a $2.0 million higher loan loss provision from the prior quarter, primarily relating to the charge-offs of four non-performing loans, and to a lesser extent, newly identified specific reserves on certain acquired loans. |
| | · | In a conscious effort to deploy excess liquidity, Bancorp grew the investment securities portfolio by $59.3 million (primarily securities of U.S. Government agencies) in the second quarter of 2011. |
__________________________
1 Federal Deposit Insurance Corporation
Loans and Credit Quality
Total loans reached $986.6 million at June 30, 2011, representing an increase of $47.3 million, or 5.0%, over a year ago, and an increase of $7.7 million or 0.8% from March 31, 2011. The increase from the same quarter a year ago largely reflects $61.8 million of loans purchased at fair value without loss share as part of the Acquisition, partially offset by a decreased emphasis on certain product lines, including construction lending, as well as payoffs due to the successful resolution of several high credit risk loans.
"We experienced modest loan growth this quarter which was in line with our expectations based on current market demand, and a conscious effort to de-emphasize certain product lines," said Christina Cook, Chief Financial Officer. "Our credit quality continues to be healthy as a result of our disciplined lending practices and strong relationships with our customers."
Non-performing loans decreased to $8.7 million or 0.88% of Bancorp’s loan portfolio at June 30, 2011, from $10.8 million or 1.15% a year ago and $9.0 million, or 0.92% at March 31, 2011. Accruing loans past due 30 to 89 days decreased from $3.7 million a year ago and $21.9 million at March 31, 2011 to $763 thousand at June 30, 2011. The decrease in past due loans from last quarter relates to $21.1 million of past due loans that have become current or paid off.
Non-performing loans exclude purchased credit-impaired (“PCI”) loans, unless such loans experience credit quality deterioration post Acquisition. PCI loans totaled $7.2 million at June 30th, 2011 (excluding loans totaling $701 thousand that have experienced credit deterioration post Acquisition), compared to PCI loans of $9.2 million at March 31, 2011. These loans were reflected at fair value as of the Acquisition date, and are excluded from the non-performing designation as their accretable yield interest recognition is independent from the underlying contractual loan delinquency status.
Bancorp’s loan loss provision totaled $3.0 million in the second quarter of 2011, an increase of $1.7 million from the same quarter a year ago, and an increase of $2.0 million from the first quarter of 2011. The provision for loan losses totaled $4.1 million and $2.9 million in the first half of 2011 and 2010, respectively. Net charge-offs in the second quarter of 2011 totaled $2.1 million compared to $225 thousand in the same quarter a year ago, and $372 thousand in the prior quarter. The increase to the provision for loan losses and net charge-offs primarily reflects the write-off of two unsecured commercial loans, as well as declines in the values of real estate collateral securing one problem commercial loan and one problem construction loan. These loans were part of Bancorp’s originated loan portfolio. The allowance for loan losses of $13.9 million totaled 1.41% of loans at June 30, 2011, compared to 1.25% and 1.34% at June 30, 2010 and March 31, 2011, respectively. The increases in the allowance for loan losses as a percentage of loans from both a year ago and a quarter ago reflect newly identified specific reserves on certain acquired loans.
Deposits
Total deposits grew $139.7 million, or 14%, over a year ago to $1.1 billion. The higher level of deposits reflects growth in most deposit categories, except for CDARS® time deposits which decreased $49.8 million. Demand deposits comprised 30.4% of total deposits at June 30, 2011, compared to 25.8% a year ago. In addition, Management has strategically allowed the $9.0 million internet deposits assumed as part of the Acquisition to run off.
"Our deposit growth continues to be very strong, driven by our successful Acquisition of Charter Oak Bank in Napa and our expansion into new markets," said Russell A. Colombo. "We have also experienced significant deposit increases in our core markets, which is a testament to the confidence our customers have in us."
Earnings
Net interest income of $17.0 million in the quarter ended June 30, 2011 increased $3.2 million, or 23.6%, from the same period last year, and increased $1.1 million, or 7.1%, from the prior quarter. The net interest income for the first half of 2011 totaled $32.9 million, representing an increase of $6.0 million, or 22.3% from the same period last year. The increases primarily reflect the Acquisition of loans from the former Charter Oak Bank and a reduction in the cost of deposits. The tax-equivalent net interest margin was 5.51% in the second quarter of 2011, compared to 5.01% in the same quarter last year and 5.44% in the first quarter of 2011. The tax-equivalent net interest margin was 5.48% in the first half of 2011 compared to 5.00% in the first half of 2010.
The acquired non-credit impaired loans were initially measured and recorded at their estimated fair values at Acquisition date and are being accreted back to their unpaid principal balances over the remaining lives of the loans through interest income. Excluding accretion, one-time third-party Acquisition-related costs, allocated overhead, allocated cost of funds and bargain purchase gain, the acquired operations of the former Charter Oak Bank contributed approximately $618 thousand, after tax, to Bancorp’s earnings in the first half of 2011.
Non-interest income in the second quarter of 2011 totaled $1.6 million and remained relatively unchanged from the same period last year and from the prior quarter. Non-interest income for the first half of 2011 totaled $3.2 million, an increase of $326 thousand, or 11% from the first half of 2010. The increase relates to the pre-tax bargain purchase gain of $146 thousand from the Acquisition and higher Wealth Management and Trust Services fees.
Non-interest expense totaled $10.0 million in the second quarter of 2011, an increase of $1.4 million, or 16.4%, from the same quarter a year ago and increased $868 thousand, or 9.5%, from the prior quarter. Non-interest expense totaled $19.1 million and $16.8 million in the first half of 2011 and 2010, respectively, representing a 13.8% increase. The increases primarily reflect higher personnel costs associated with franchise expansion, as well as data processing costs associated with the Acquisition. Bancorp incurred one-time Acquisition-related third-party costs of approximately $642 thousand in the second quarter of 2011 and $348 thousand in the first quarter of 2011. Bancorp does not expect to incur significant one-time Acquisition-related third-party costs going forward.
About Bank of Marin Bancorp
Bank of Marin Bancorp's assets total $1.3 billion. Bank of Marin, as the sole subsidiary of Bank of Marin Bancorp, is the largest community bank in Marin County with seventeen offices in Marin, San Francisco, Napa and Sonoma counties. The Bank's Administrative offices are located in Novato, California. Bank of Marin offers business and personal banking, private banking and wealth management services, with a strong focus on supporting the local community. Bank of Marin Bancorp is included in the Russell 2000 Small-Cap Index, is recognized as a Top 200 Community Bank, ranked number 43 in the U.S. by US Banker Magazine, and has received the highest five star rating from Bauer Financial for more than ten years (www.bauerfinancial.com). Celebrating its 21st anniversary in 2011, Bank of Marin has been recognized as one of the "Best Places to Work in the Bay Area" and one of the "Top Corporate Philanthropists" by the San Francisco Business Times.
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, estimated fair values related to the assets acquired and liabilities assumed of the former Charter Oak Bank, general economic conditions, the economic downturn in the United States and abroad, 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, 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.
FINANCIAL HIGHLIGHTS
Year To Year ComparisonJune 30, 2011
| (dollars in thousands, except per share data; unaudited) | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| SECOND QUARTER | | QTD 2011 | | | QTD 2010 | | | CHANGE | | | % CHANGE | |
| | | | | | | | | | | | | |
| NET INCOME | | $ | 3,439 | | | $ | 3,338 | | | $ | 101 | | | | 3.0 | % |
| DILUTED EARNINGS PER COMMON SHARE | | $ | 0.64 | | | $ | 0.63 | | | $ | 0.01 | | | | 1.6 | % |
| RETURN ON AVERAGE ASSETS (ROA) | | | 1.04 | % | | | 1.14 | % | | | (0.10 | %) | | | (8.8 | %) |
| RETURN ON AVERAGE EQUITY (ROE) | | | 10.78 | % | | | 11.71 | % | | | (0.93 | %) | | | (7.9 | %) |
| EFFICIENCY RATIO | | | 53.80 | % | | | 56.29 | % | | | (2.49 | %) | | | (4.4 | %) |
TAX-EQUIVALENT NET INTEREST MARGIN 1 | | | 5.51 | % | | | 5.01 | % | | | 0.50 | % | | | 10.0 | % |
| NET CHARGE-OFFS | | $ | 2,149 | | | $ | 225 | | | $ | 1,924 | | | | 855.1 | % |
| NET CHARGE-OFFS TO AVERAGE LOANS | | | 0.22 | % | | | 0.02 | % | | | 0.20 | % | | | 1000.0 | % |
| | | | | | | | | | | | | | | | | |
| YEAR-TO-DATE | | YTD 2011 | | | YTD 2010 | | | CHANGE | | | % CHANGE | |
| | | | | | | | | | | | | | | | | |
| NET INCOME | | $ | 7,948 | | | $ | 6,285 | | | $ | 1,663 | | | | 26.5 | % |
| DILUTED EARNINGS PER COMMON SHARE | | $ | 1.48 | | | $ | 1.19 | | | $ | 0.29 | | | | 24.4 | % |
| RETURN ON AVERAGE ASSETS (ROA) | | | 1.23 | % | | | 1.09 | % | | | 0.14 | % | | | 12.8 | % |
| RETURN ON AVERAGE EQUITY (ROE) | | | 12.72 | % | | | 11.24 | % | | | 1.48 | % | | | 13.2 | % |
| EFFICIENCY RATIO | | | 53.04 | % | | | 56.54 | % | | | (3.50 | %) | | | (6.2 | %) |
TAX-EQUIVALENT NET INTEREST MARGIN 1 | | | 5.48 | % | | | 5.00 | % | | | 0.48 | % | | | 9.6 | % |
| NET CHARGE-OFFS | | $ | 2,522 | | | $ | 1,745 | | | $ | 777 | | | | 44.5 | % |
| NET CHARGE-OFFS TO AVERAGE LOANS | | | 0.26 | % | | | 0.19 | % | | | 0.07 | % | | | 36.8 | % |
| | | | | | | | | | | | | | | | | |
| AT PERIOD END | | June 30, 2011 | | | June 30, 2010 | | | CHANGE | | | % CHANGE | |
| | | | | | | | | | | | | | | | | |
| TOTAL ASSETS | | $ | 1,337,393 | | | $ | 1,185,536 | | | $ | 151,857 | | | | 12.8 | % |
| | | | | | | | | | | | | | | | | |
| LOANS: | | | | | | | | | | | | | | | | |
| COMMERCIAL | | $ | 177,255 | | | $ | 164,711 | | | $ | 12,544 | | | | 7.6 | % |
| REAL ESTATE | | | | | | | | | | | | | | | | |
| COMMERCIAL OWNER-OCCUPIED | | $ | 164,990 | | | $ | 152,504 | | | $ | 12,486 | | | | 8.2 | % |
| COMMERCIAL INVESTOR-OWNED | | $ | 390,549 | | | $ | 347,436 | | | $ | 43,113 | | | | 12.4 | % |
| CONSTRUCTION | | $ | 66,504 | | | $ | 88,358 | | | $ | (21,854 | ) | | | (24.7 | %) |
| HOME EQUITY | | $ | 95,212 | | | $ | 87,947 | | | $ | 7,265 | | | | 8.3 | % |
| OTHER RESIDENTIAL | | $ | 66,886 | | | $ | 70,719 | | | $ | (3,833 | ) | | | (5.4 | %) |
| INSTALLMENT AND OTHER CONSUMER LOANS | | $ | 25,238 | | | $ | 27,618 | | | $ | (2,380 | ) | | | (8.6 | %) |
| TOTAL LOANS | | $ | 986,634 | | | $ | 939,293 | | | $ | 47,341 | | | | 5.0 | % |
| | | | | | | | | | | | | | | | | |
NON-PERFORMING LOANS 2: | | | | | | | | | | | | | | | | |
| COMMERCIAL | | $ | 3,669 | | | $ | 1,354 | | | $ | 2,315 | | | | 171.0 | % |
| REAL ESTATE | | | | | | | | | | | | | | | | |
| COMMERCIAL OWNER-OCCUPIED | | $ | 293 | | | $ | 3,455 | | | $ | (3,162 | ) | | | (91.5 | %) |
| CONSTRUCTION | | $ | 3,263 | | | $ | 5,654 | | | $ | (2,391 | ) | | | (42.3 | %) |
| HOME EQUITY | | $ | 710 | | | $ | 0 | | | $ | 710 | | | NM | |
| OTHER RESIDENTIAL | | $ | 138 | | | $ | 0 | | | $ | 138 | | | NM | |
| INSTALLMENT AND OTHER CONSUMER LOANS | | $ | 621 | | | $ | 310 | | | $ | 311 | | | | 100.3 | % |
| TOTAL NON-PERFORMING LOANS | | $ | 8,694 | | | $ | 10,773 | | | $ | (2,079 | ) | | | (19.3 | %) |
| | | | | | | | | | | | | | | | | |
TOTAL ACCRUING LOANS 30-89 DAYS PAST DUE3 | | $ | 763 | | | $ | 3,675 | | | $ | (2,912 | ) | | | (79.2 | %) |
| LOAN LOSS RESERVE TO LOANS | | | 1.41 | % | | | 1.25 | % | | | 0.16 | % | | | 12.8 | % |
| LOAN LOSS RESERVE TO NON-PERFORMING LOANS | | | 1.60 | x | | | 1.09 | x | | | 0.51 | x | | | 46.8 | % |
| NON-PERFORMING LOANS TO TOTAL LOANS | | | 0.88 | % | | | 1.15 | % | | | (0.27 | %) | | | (23.5 | %) |
TEXAS RATIO 4 | | | 6.11 | % | | | 8.52 | % | | | (2.41 | %) | | | (28.3 | %) |
| | | | | | | | | | | | | | | | | |
| TOTAL DEPOSITS | | $ | 1,138,906 | | | $ | 999,178 | | | $ | 139,728 | | | | 14.0 | % |
| LOAN TO DEPOSIT RATIO | | | 86.6 | % | | | 94.0 | % | | | (7.4 | %) | | | (7.9 | %) |
| STOCKHOLDERS' EQUITY | | $ | 129,058 | | | $ | 115,968 | | | $ | 13,090 | | | | 11.3 | % |
| BOOK VALUE PER SHARE | | $ | 24.25 | | | $ | 22.06 | | | $ | 2.19 | | | | 9.9 | % |
TANGIBLE COMMON EQUITY TO TANGIBLE ASSETS 5 | | | 9.60 | % | | | 9.78 | % | | | (0.18 | %) | | | (1.8 | %) |
TOTAL RISK BASED CAPITAL RATIO-BANK 6 | | | 12.6 | % | | | 12.2 | % | | | 0.4 | % | | | 3.3 | % |
TOTAL RISK BASED CAPITAL RATIO-BANCORP6 | | | 13.0 | % | | | 12.8 | % | | | 0.2 | % | | | 1.6 | % |
1 Net interest income is annualized by dividing actual number of days in the period times 360 days.
2 Excludes accruing troubled-debt restructured loans of $1.5 million and $908 thousand at June 30, 2011 and 2010, respectively. Excludes purchased-credit impaired (PCI) loans that have not experienced credit quality deterioration post-acquisition with a carrying value of $7.2 million at June 30, 2011 and zero at June 30, 2010. These amounts are excluded as PCI loan accretable yield interest recognition is independent from the underlying contractual loan delinquency status.
3 Excludes purchased-credit impaired loans.
4 (Non-performing assets + 90 day delinquent loans)/(tangible common equity + allowance for loan losses).
5 Tangible common equity includes common stock, retained earnings and unrealized gain on available for sale securities, net of tax, less intangible assets. Tangible assets exclude core deposit intangibles totaling $707 thousand at June 30, 2011 and zero at June 30, 2010.
6 Current period estimated.
CONSOLIDATED STATEMENTS OF CONDITION
at June 30, 2011, March 31, 2011 and June 30, 2010
| (in thousands, except share data; unaudited) | | June 30, 2011 | | | March 31, 2011 | | | June 30, 2010 | |
| | | | | | | | | | |
| Assets | | | | | | | | | |
| Cash and due from banks | | $ | 88,043 | | | $ | 109,850 | | | $ | 50,477 | |
| Short-term investments | | | 22,116 | | | | 19,110 | | | | 18,706 | |
| Cash and cash equivalents | | | 110,159 | | | | 128,960 | | | | 69,183 | |
| | | | | | | | | | | | | |
| Investment securities | | | | | | | | | | | | |
| Held to maturity, at amortized cost | | | 35,514 | | | | 34,866 | | | | 30,324 | |
| Available for sale (at fair value; amortized cost $164,731, $107,118 and $108,004 at June 30, 2011, March 31, 2011,and June 30, 2010, respectively) | | | 167,406 | | | | 108,726 | | | | 111,781 | |
Total investment securities | | | 202,920 | | | | 143,592 | | | | 142,105 | |
| | | | | | | | | | | | | |
| Loans, net of allowance for loan losses of $13,920, $13,069 and $11,773 at June 30, 2011, March 31, 2011 and June 30, 2010, respectively | | | 972,714 | | | | 965,881 | | | | 927,520 | |
| Bank premises and equipment, net | | | 9,280 | | | | 8,750 | | | | 8,047 | |
| Interest receivable and other assets | | | 42,320 | | | | 43,516 | | | | 38,681 | |
| | | | | | | | | | | | | |
| Total assets | | $ | 1,337,393 | | | $ | 1,290,699 | | | $ | 1,185,536 | |
| | | | | | | | | | | | �� | |
| Liabilities and Stockholders' Equity | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| Liabilities | | | | | | | | | | | | |
| Deposits | | | | | | | | | | | | |
| Non-interest bearing | | $ | 346,317 | | | $ | 313,599 | | | $ | 257,643 | |
| Interest bearing | | | | | | | | | | | | |
| Transaction accounts | | | 133,429 | | | | 119,331 | | | | 98,375 | |
| Savings accounts | | | 72,458 | | | | 67,711 | | | | 52,041 | |
| Money market accounts | | | 403,782 | | | | 393,867 | | | | 382,277 | |
| CDARS® time accounts | | | 31,674 | | | | 31,670 | | | | 81,463 | |
| Other time accounts | | | 151,246 | | | | 162,182 | | | | 127,379 | |
| Total deposits | | | 1,138,906 | | | | 1,088,360 | | | | 999,178 | |
| | | | | | | | | | | | | |
| Federal Home Loan Bank borrowings | | | 55,000 | | | | 55,000 | | | | 55,000 | |
| Subordinated debenture | | | 5,000 | | | | 5,000 | | | | 5,000 | |
| Interest payable and other liabilities | | | 9,429 | | | | 16,855 | | | | 10,390 | |
| | | | | | | | | | | | | |
| Total liabilities | | | 1,208,335 | | | | 1,165,215 | | | | 1,069,568 | |
| | | | | | | | | | | | | |
| Stockholders' Equity | | | | | | | | | | | | |
| Preferred stock, no par value, $1,000 per share liquidation preference | | | | | | | | | | | | |
| Authorized - 5,000,000 shares; none issued | | | --- | | | | --- | | | | --- | |
| Common stock, no par value | | | | | | | | | | | | |
Authorized - 15,000,000 shares | | | | | | | | | | | | |
Issued and outstanding - 5,321,227 shares, 5,307,247 shares and 5,256,174 shares at June 30, 2011, March 31, 2011 and June 30, 2010, respectively | | | 56,265 | | | | 55,898 | | | | 54,420 | |
| Retained earnings | | | 71,241 | | | | 68,653 | | | | 59,357 | |
| Accumulated other comprehensive income, net | | | 1,552 | | | | 933 | | | | 2,191 | |
| | | | | | | | | | | | | |
| Total stockholders' equity | | | 129,058 | | | | 125,484 | | | | 115,968 | |
| | | | | | | | | | | | | |
| Total liabilities and stockholders' equity | | $ | 1,337,393 | | | $ | 1,290,699 | | | $ | 1,185,536 | |
BANK OF MARIN BANCORP
CONSOLIDATED STATEMENTS OF INCOME
| | | Three months ended | | | Six months ended | |
| (in thousands, unaudited) | | June 30, 2011 | | | Mar. 31, 2011 | | | June 30, 2010 | | | June 30, 2011 | | | June 30, 2010 | |
| | | | | | | | | | | | | | | | |
| Interest income | | | | | | | | | | | | | | | |
| Interest and fees on loans | | $ | 16,862 | | | $ | 15,900 | | | $ | 14,169 | | | $ | 32,762 | | | $ | 27,850 | |
| Interest on investment securities | | | | | | | | | | | | | | | | | | | | |
| Securities on U.S. Government agencies | | | 745 | | | | 733 | | | | 885 | | | | 1,478 | | | | 1,613 | |
| Obligations of state and political subdivisions | | | 303 | | | | 302 | | | | 285 | | | | 605 | | | | 571 | |
| Corporate debt securities and other | | | 171 | | | | 111 | | | | 138 | | | | 282 | | | | 308 | |
| Interest on Federal funds sold and short-term investments | | | 56 | | | | 40 | | | | 28 | | | | 96 | | | | 50 | |
| Total interest income | | | 18,137 | | | | 17,086 | | | | 15,505 | | | | 35,223 | | | | 30,392 | |
| | | | | | | | | | | | | | | | | | | | | |
| Interest expense | | | | | | | | | | | | | | | | | | | | |
| Interest on interest-bearing transaction accounts | | | 48 | | | | 38 | | | | 26 | | | | 86 | | | | 49 | |
| Interest on savings accounts | | | 25 | | | | 29 | | | | 27 | | | | 54 | | | | 52 | |
| Interest on money market accounts | | | 341 | | | | 337 | | | | 729 | | | | 678 | | | | 1,526 | |
| Interest on CDARS® time accounts | | | 48 | | | | 94 | | | | 233 | | | | 142 | | | | 442 | |
| Interest on other time accounts | | | 315 | | | | 358 | | | | 377 | | | | 673 | | | | 731 | |
| Interest on borrowed funds | | | 357 | | | | 352 | | | | 356 | | | | 709 | | | | 707 | |
| Total interest expense | | | 1,134 | | | | 1,208 | | | | 1,748 | | | | 2,342 | | | | 3,507 | |
| | | | | | | | | | | | | | | | | | | | | |
| Net interest income | | | 17,003 | | | | 15,878 | | | | 13,757 | | | | 32,881 | | | | 26,885 | |
| Provision for loan losses | | | 3,000 | | | | 1,050 | | | | 1,350 | | | | 4,050 | | | | 2,900 | |
| Net interest income after provision for loan losses | | | 14,003 | | | | 14,828 | | | | 12,407 | | | | 28,831 | | | | 23,985 | |
| | | | | | | | | | | | | | | | | | | | | |
| Non-interest income | | | | | | | | | | | | | | | | | | | | |
| Service charges on deposit accounts | | | 468 | | | | 443 | | | | 463 | | | | 911 | | | | 909 | |
| Wealth Management and Trust Services | | | 469 | | | | 434 | | | | 368 | | | | 903 | | | | 763 | |
| Other income | | | 644 | | | | 722 | | | | 674 | | | | 1,366 | | | | 1,182 | |
| Total non-interest income | | | 1,581 | | | | 1,599 | | | | 1,505 | | | | 3,180 | | | | 2,854 | |
| | | | | | | | | | | | | | | | | | | | | |
| Non-interest expense | | | | | | | | | | | | | | | | | | | | |
| Salaries and related benefits | | | 5,220 | | | | 4,929 | | | | 4,561 | | | | 10,149 | | | | 9,167 | |
| Occupancy and equipment | | | 1,093 | | | | 907 | | | | 914 | | | | 2,000 | | | | 1,812 | |
| Depreciation and amortization | | | 314 | | | | 308 | | | | 360 | | | | 622 | | | | 698 | |
| FDIC insurance | | | 214 | | | | 387 | | | | 375 | | | | 601 | | | | 737 | |
| Data processing | | | 909 | | | | 582 | | | | 485 | | | | 1,491 | | | | 931 | |
| Professional services | | | 740 | | | | 733 | | | | 454 | | | | 1,473 | | | | 886 | |
| Other expense | | | 1,508 | | | | 1,284 | | | | 1,442 | | | | 2,792 | | | | 2,582 | |
| Total non-interest expense | | | 9,998 | | | | 9,130 | | | | 8,591 | | | | 19,128 | | | | 16,813 | |
| Income before provision for income taxes | | | 5,586 | | | | 7,297 | | | | 5,321 | | | | 12,883 | | | | 10,026 | |
| | | | | | | | | | | | | | | | | | | | | |
| Provision for income taxes | | | 2,147 | | | | 2,788 | | | | 1,983 | | | | 4,935 | | | | 3,741 | |
| Net income | | $ | 3,439 | | | $ | 4,509 | | | $ | 3,338 | | | $ | 7,948 | | | $ | 6,285 | |
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| Net income per common share: | | | | | | | | | | | | | | | | | | | | |
| Basic | | $ | 0.65 | | | $ | 0.85 | | | $ | 0.64 | | | $ | 1.50 | | | $ | 1.20 | |
| Diluted | | $ | 0.64 | | | $ | 0.84 | | | $ | 0.63 | | | $ | 1.48 | | | $ | 1.19 | |
| | | | | | | | | | | | | | | | | | | | | |
| Weighted average shares used to compute net income per common share: | | | | | | | | | | | | | | | | | | | | |
| Basic | | | 5,300 | | | | 5,283 | | | | 5,234 | | | | 5,292 | | | | 5,226 | |
| Diluted | | | 5,385 | | | | 5,366 | | | | 5,308 | | | | 5,376 | | | | 5,302 | |
| | | | | | | | | | | | | | | | | | | | | |
| Dividends declared per common share | | $ | 0.16 | | | $ | 0.16 | | | $ | 0.15 | | | $ | 0.32 | | | $ | 0.30 | |
Average Statements of Condition and Analysis of Net Interest Income
| | | Three months ended | | | Three months ended | | | Three months ended | |
| | | June 30, 2011 | | | March 31, 2011 | | | June 30, 2010 | |
| | | | | | Interest | | | | | | | | | Interest | | | | | | | | | Interest | | | | |
| | | Average | | | Income/ | | | Yield/ | | | Average | | | Income/ | | | Yield/ | | | Average | | | Income/ | | | Yield/ | |
| (in thousands, unaudited) | | Balance | | | Expense | | | Rate | | | Balance | | | Expense | | | Rate | | | Balance | | | Expense | | | Rate | |
| Assets | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Interest-bearing due from banks (1) | | $ | 89,952 | | | $ | 56 | | | | 0.25 | % | | $ | 62,374 | | | $ | 40 | | | | 0.26 | % | | $ | 31,457 | | | $ | 28 | | | | 0.35 | % |
| Investment securities | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| U.S. Government agencies (2) | | | 117,057 | | | | 745 | | | | 2.55 | % | | | 92,172 | | | | 733 | | | | 3.18 | % | | | 96,255 | | | | 885 | | | | 3.68 | % |
| Corporate CMOs and other (2) | | | 16,401 | | | | 171 | | | | 4.17 | % | | | 15,872 | | | | 111 | | | | 2.80 | % | | | 12,586 | | | | 138 | | | | 4.39 | % |
| Obligations of state and political subdivisions (3) | | | 34,986 | | | | 460 | | | | 5.26 | % | | | 34,900 | | | | 460 | | | | 5.27 | % | | | 30,347 | | | | 433 | | | | 5.71 | % |
| Loans and banker's acceptances (1) (3) (4) | | | 979,550 | | | | 16,955 | | | | 6.85 | % | | | 979,674 | | | | 15,988 | | | | 6.53 | % | | | 932,468 | | | | 14,236 | | | | 6.04 | % |
| Total interest-earning assets (1) | | | 1,237,946 | | | | 18,387 | | | | 5.88 | % | | | 1,184,992 | | | | 17,332 | | | | 5.85 | % | | | 1,103,113 | | | | 15,720 | | | | 5.64 | % |
| Cash and non-interest-bearing due from banks | | | 45,133 | | | | | | | | | | | | 42,378 | | | | | | | | | | | | 31,192 | | | | | | | | | |
| Bank premises and equipment, net | | | 8,971 | | | | | | | | | | | | 8,468 | | | | | | | | | | | | 7,994 | | | | | | | | | |
| Interest receivable and other assets, net | | | 38,391 | | | | | | | | | | | | 31,400 | | | | | | | | | | | | 30,807 | | | | | | | | | |
| Total assets | | $ | 1,330,441 | | | | | | | | | | | $ | 1,267,238 | | | | | | | | | | | $ | 1,173,106 | | | | | | | | | |
| Liabilities and Stockholders' Equity | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Interest-bearing transaction accounts | | $ | 127,544 | | | $ | 48 | | | | 0.15 | % | | $ | 115,067 | | | $ | 38 | | | | 0.13 | % | | $ | 96,768 | | | $ | 26 | | | | 0.11 | % |
| Savings accounts | | | 69,357 | | | | 25 | | | | 0.14 | % | | | 62,574 | | | | 29 | | | | 0.19 | % | | | 50,954 | | | | 27 | | | | 0.21 | % |
| Money market accounts | | | 395,159 | | | | 341 | | | | 0.35 | % | | | 382,794 | | | | 337 | | | | 0.36 | % | | | 386,755 | | | | 729 | | | | 0.76 | % |
| CDARS® time accounts | | | 31,879 | | | | 48 | | | | 0.60 | % | | | 54,432 | | | | 94 | | | | 0.70 | % | | | 76,498 | | | | 233 | | | | 1.22 | % |
| Other time accounts | | | 156,008 | | | | 315 | | | | 0.81 | % | | | 157,631 | | | | 358 | | | | 0.92 | % | | | 122,972 | | | | 377 | | | | 1.23 | % |
| FHLB fixed-rate advances | | | 55,000 | | | | 320 | | | | 2.33 | % | | | 58,934 | | | | 316 | | | | 2.17 | % | | | 55,000 | | | | 319 | | | | 2.33 | % |
| Subordinated debenture (1) | | | 5,000 | | | | 37 | | | | 2.93 | % | | | 5,000 | | | | 36 | | | | 2.88 | % | | | 5,000 | | | | 37 | | | | 2.93 | % |
| Total interest-bearing liabilities | | | 839,947 | | | | 1,134 | | | | 0.54 | % | | | 836,432 | | | | 1,208 | | | | 0.59 | % | | | 793,947 | | | | 1,748 | | | | 0.88 | % |
| Demand accounts | | | 346,469 | | | | | | | | | | | | 298,075 | | | | | | | | | | | | 256,211 | | | | | | | | | |
| Interest payable and other liabilities | | | 16,062 | | | | | | | | | | | | 8,635 | | | | | | | | | | | | 8,622 | | | | | | | | | |
| Stockholders' equity | | | 127,963 | | | | | | | | | | | | 124,096 | | | | | | | | | | | | 114,326 | | | | | | | | | |
| Total liabilities & stockholders' equity | | $ | 1,330,441 | | | | | | | | | | | $ | 1,267,238 | | | | | | | | | | | $ | 1,173,106 | | | | | | | | | |
| Tax-equivalent net interest income/margin (1) | | | | | | $ | 17,253 | | | | 5.51 | % | | | | | | $ | 16,124 | | | | 5.44 | % | | | | | | $ | 13,972 | | | | 5.01 | % |
| Reported net interest income/margin (1) | | | | | | $ | 17,003 | | | | 5.43 | % | | | | | | $ | 15,878 | | | | 5.36 | % | | | | | | $ | 13,757 | | | | 4.93 | % |
| Tax-equivalent net interest rate spread | | | | | | | | | | | 5.34 | % | | | | | | | | | | | 5.26 | % | | | | | | | | | | | 4.76 | % |
| | | Six months ended | | | Six months ended | |
| | | June 30, 2011 | | | June 30, 2010 | |
| | | | | | Interest | | | | | | | | | Interest | | | | |
| | | Average | | | Income/ | | | Yield/ | | | Average | | | Income/ | | | Yield/ | |
| (Dollars in thousands; unaudited) | | Balance | | | Expense | | | Rate | | | Balance | | | Expense | | | Rate | |
| Assets | | | | | | | | | | | | | | | | | | |
| Interest-bearing due from banks (1) | | $ | 76,240 | | | $ | 96 | | | | 0.25 | % | | $ | 29,122 | | | $ | 50 | | | | 0.34 | % |
| Investment securities | | | | | | | | | | | | | | | | | | | | | | | | |
| U.S. Government agencies (2) | | | 104,683 | | | | 1,478 | | | | 2.82 | % | | | 88,602 | | | | 1,613 | | | | 3.64 | % |
| Corporate CMOs and other (2) | | | 16,138 | | | | 282 | | | | 3.49 | % | | | 13,365 | | | | 308 | | | | 4.61 | % |
| Obligations of state and political subdivisions (3) | | | 34,943 | | | | 921 | | | | 5.27 | % | | | 30,365 | | | | 870 | | | | 5.73 | % |
| Loans and banker's acceptances (1) (3) (4) | | | 979,611 | | | | 32,943 | | | | 6.69 | % | | | 925,599 | | | | 27,978 | | | | 6.01 | % |
| Total interest-earning assets (1) | | | 1,211,615 | | | | 35,720 | | | | 5.86 | % | | | 1,087,053 | | | | 30,819 | | | | 5.64 | % |
| Cash and non-interest-bearing due from banks | | | 43,763 | | | | | | | | | | | | 33,233 | | | | | | | | | |
| Bank premises and equipment, net | | | 8,721 | | | | | | | | | | | | 7,985 | | | | | | | | | |
| Interest receivable and other assets, net | | | 34,915 | | | | | | | | | | �� | | 30,410 | | | | | | | | | |
| Total assets | | $ | 1,299,014 | | | | | | | | | | | $ | 1,158,681 | | | | | | | | | |
| Liabilities and Stockholders' Equity | | | | | | | | | | | | | | | | | | | | | | | | |
| Interest-bearing transaction accounts | | $ | 121,340 | | | $ | 86 | | | | 0.14 | % | | $ | 93,714 | | | $ | 49 | | | | 0.11 | % |
| Savings accounts | | | 65,984 | | | | 54 | | | | 0.17 | % | | | 49,768 | | | | 52 | | | | 0.21 | % |
| Money market accounts | | | 389,011 | | | | 678 | | | | 0.35 | % | | | 396,897 | | | | 1,526 | | | | 0.78 | % |
| CDARS® time accounts | | | 43,093 | | | | 142 | | | | 0.66 | % | | | 68,429 | | | | 442 | | | | 1.30 | % |
| Other time accounts | | | 156,815 | | | | 673 | | | | 0.87 | % | | | 117,984 | | | | 731 | | | | 1.25 | % |
| FHLB borrowings | | | 56,956 | | | | 636 | | | | 2.25 | % | | | 55,000 | | | | 635 | | | | 2.33 | % |
| Subordinated debenture (1) | | | 5,000 | | | | 73 | | | | 2.90 | % | | | 5,000 | | | | 72 | | | | 2.86 | % |
| Total interest-bearing liabilities | | | 838,199 | | | | 2,342 | | | | 0.56 | % | | | 786,792 | | | | 3,507 | | | | 0.90 | % |
| Demand accounts | | | 322,406 | | | | | | | | | | | | 250,694 | | | | | | | | | |
| Interest payable and other liabilities | | | 12,369 | | | | | | | | | | | | 8,427 | | | | | | | | | |
| Stockholders' equity | | | 126,040 | | | | | | | | | | | | 112,768 | | | | | | | | | |
| Total liabilities & stockholders' equity | | $ | 1,299,014 | | | | | | | | | | | $ | 1,158,681 | | | | | | | | | |
| Tax-equivalent net interest income/margin (1) | | | | | | $ | 33,378 | | | | 5.48 | % | | | | | | $ | 27,312 | | | | 5.00 | % |
| Reported net interest income/margin (1) | | | | | | $ | 32,881 | | | | 5.40 | % | | | | | | $ | 26,885 | | | | 4.92 | % |
| Tax-equivalent net interest rate spread | | | | | | | | | | | 5.30 | % | | | | | | | | | | | 4.74 | % |
(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 asa component of stockholders' equity.
(3) Yields and interest income on tax-exempt securities and loans are presented on a taxable-equivalent basis using the Federal statutory rate of 35percent.
(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.
