EXHIBIT 99.1
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FOR IMMEDIATE RELEASE | MEDIA CONTACT: |
| | Beth Drummey |
| | Marketing & Community Relations Manager |
| | 415-763-4529 | bethdrummey@bankofmarin.com |
BANK OF MARIN BANCORP REPORTS RECORD QUARTERLY EARNINGS OF $8.7 MILLION
INCREASES DIVIDEND AND ANNOUNCES 2:1 STOCK SPLIT
NOVATO, CA, October 22, 2018 - Bank of Marin Bancorp, "Bancorp" (NASDAQ: BMRC), parent company of Bank of Marin, "Bank," announced record earnings of $8.7 million in the third quarter of 2018, compared to $7.9 million in the second quarter of 2018 and $5.1 million in the third quarter of 2017. Diluted earnings per share were $1.23 in the third quarter of 2018, compared to $1.12 in the prior quarter and $0.83 in the same quarter last year. Year-to-date earnings totaled $23.0 million, compared to $14.9 million in the same period last year. Diluted earnings per share were $3.27 and $2.41 in the nine months ended September 30, 2018 and 2017, respectively.
“Our record earnings for the third quarter reflect our proven relationship banking model, which provides us with a growing base of low-cost deposits and attractive lending opportunities,” said Russell A. Colombo, President and Chief Executive Officer. “As we head into Q4, we are focused on finishing the year strong and laying the groundwork for a successful 2019.”
Bancorp also provided the following highlights in the third quarter of 2018:
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| • | Pre-tax net income in the third quarter of 2018 was up $1.2 million from the second quarter of 2018 and $4.0 million from the third quarter of 2017. Higher average balances of both loans and non-interest bearing deposits and higher yields across earning asset categories favorably impacted earnings in the current quarter. Reported net interest margin was 3.91% in the third quarter of 2018, compared to 3.87% in the prior quarter and 3.63% in the same quarter last year. |
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| • | Loans increased $11.3 million to $1,728.9 million at September 30, 2018, compared to $1,717.6 million at June 30, 2018. New loan volume of $52.6 million in the third quarter was well-distributed among our Marin, Napa and San Francisco Commercial Banking markets as well as Consumer Banking. |
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| • | Strong credit quality remains a cornerstone of the Bank's consistent performance. Non-accrual loans continue to represent 0.02% of the Bank's loan portfolio at September 30, 2018. There was no provision for either loan losses or off-balance sheet commitments recorded in the third quarter of 2018. |
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| • | Total deposits increased $75.1 million in the third quarter to $2,212.8 million. Non-interest bearing deposits represented 50.2% of total deposits versus 49.5% last quarter. The cost of total deposits increased to 0.10% for the third quarter of 2018, compared to 0.08% for the prior quarter. |
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| • | All capital ratios are well above regulatory requirements for a well-capitalized institution. The total risk-based capital ratio for Bancorp was 15.3% at September 30, 2018, compared to 15.2% at June 30, 2018. Tangible common equity to tangible assets was 10.9% at September 30, 2018, compared to 11.0% at June 30, 2018 (refer to footnote 3 on page 6 for a definition of this non-GAAP financial measure.) |
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| • | The Board of Directors declared a cash dividend of $0.35 per share, a $0.03 increase from the prior quarter. This represents the 54th consecutive quarterly dividend paid by Bank of Marin Bancorp. The dividend is payable on November 8, 2018, to shareholders of record at the close of business on November 1, 2018. |
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| • | In order to further enhance liquidity in Bank of Marin Bancorp (BMRC) stock and expand diversification in the investor base, the Board of Directors announced a 2:1 stock split payable on November 27, 2018, to shareholders of record at the close of business on November 9, 2018. |
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| • | To reduce our funding costs, on October 5, 2018, Bancorp early-redeemed one of the two subordinated debentures assumed as part of the 2013 acquisition of NorCal Community Bancorp. The unaccreted purchase discount of $916 thousand has been accelerated and will have a one-time impact on net interest income in the fourth quarter of 2018, but will not have a material impact on our capital ratios. |
Loans and Credit Quality
Loans grew $11.3 million in the third quarter and totaled $1,728.9 million at September 30, 2018. For the three months and nine months ended September 30, 2018, new loan originations of $52.6 million and $165.8 million, respectively, exceeded 2017 loan originations of $42.3 million and $121.6 million for the same periods. New loan originations were partially offset by payoffs of $52.0 million in the third quarter and $120.8 million in the nine months ended September 30 of 2018, and combined with lines of credit utilization, resulted in $11.3 million loan growth in the third quarter of 2018.
Non-accrual loans totaled $386 thousand, or 0.02% of the loan portfolio at September 30, 2018, compared to $385 thousand, or 0.02% at June 30, 2018, and $1.3 million, or 0.09% a year ago. Classified loans totaled $12.4 million at September 30, 2018, compared to $13.9 million at June 30, 2018 and $33.5 million at September 30, 2017. There were no loans classified doubtful at September 30, 2018 or December 31, 2017. Accruing loans past due 30 to 89 days totaled $301 thousand at September 30, 2018, compared to $88 thousand at June 30, 2018 and $205 thousand a year ago.
There was no provision for loan losses recorded in either the third or second quarters of 2018 or the third quarter of 2017. Net recoveries were $4 thousand in the third quarter of 2018, compared to $42 thousand in the prior quarter and $16 thousand in the same quarter a year ago. The ratio of loan loss reserves to loans, including acquired loans, was 0.91% at September 30, 2018, 0.92% at June 30, 2018, and 1.00% at September 30, 2017.
Investments
The investment securities portfolio totaled $569.8 million at September 30, 2018, compared to $558.8 million at June 30, 2018. Purchases of $53.3 million in securities issued by U.S. government-sponsored agencies during the third quarter were partially offset by principal paydowns, maturities, and $12.1 million in investments sold.
Deposits
Total deposits were $2,212.8 million at September 30, 2018, compared to $2,137.7 million at June 30, 2018. The increase in deposit balances at September 30, 2018, was primarily due to normal cash fluctuations of our large business clients. The average cost of deposits in the third quarter of 2018 increased 2 basis points to 0.10%, resulting from increases to interest bearing transaction accounts and money market rates.
Earnings
“As a result of the Bank’s strong performance and robust capital ratios, we are raising our dividend by $0.03 or 9.4%,” said Tani Girton, Executive Vice President and Chief Financial Officer. “The 1.38% return on assets, return on equity of 11.20%, and efficiency ratio of 54.20% once again reflect the outstanding value of our franchise.”
Net interest income totaled $23.5 million in the third quarter of 2018, compared to $22.8 million in the prior quarter and $18.8 million a year ago. Average earning asset growth of $16.3 million since the second quarter of 2018 and $327.0 million since the third quarter of 2017, and higher yields across earning asset categories contributed to the net interest income increase.
Net interest income totaled $68.3 million in the nine months ended September 30, 2018, compared to $54.7 million for the same period in 2017. The $13.6 million increase primarily relates to a $367.3 million increase in average earning assets compared to 2017. Additionally, higher yields on investment securities, interest-bearing cash, and loans positively impacted interest income.
Loans obtained through the acquisition of other banks are classified as either purchased credit impaired ("PCI") or non-PCI loans and are recorded at fair value at acquisition date. For acquired loans not considered credit impaired, the level of accretion varies due to maturities and early payoffs. Accretion on PCI loans fluctuates based on changes in cash flows expected to be collected. Gains on payoffs of PCI loans are recorded as interest income when the payoff amounts exceed the recorded investment.
As our acquired loans from prior acquisitions continue to pay off, we expect the accretion on these loans to continue to decline. Accretion and gains on payoffs of purchased loans recorded to interest income were as follows:
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| | Three months ended |
| | September 30, 2018 | | June 30, 2018 | | September 30, 2017 |
| (dollars in thousands; unaudited) | Dollar Amount | Basis point impact to net interest margin | | Dollar Amount | Basis point impact to net interest margin | | Dollar Amount | Basis point impact to net interest margin |
Accretion on PCI loans 1 | | $ | 63 |
| | 1 bps | | | $ | 84 |
| | 1 bps | | | $ | 76 |
| | 2 bps |
Accretion on non-PCI loans 2 | | $ | 41 |
| | 1 bps | | | $ | 133 |
| | 2 bps | | | $ | 132 |
| | 3 bps |
| Gains on payoffs of PCI loans | | $ | 6 |
| | 0 bps | | | $ | 1 |
| | 0 bps | | | $ | — |
| | 0 bps |
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| | | | | | | | | |
| | Nine months ended |
| | September 30, 2018 | | September 30, 2017 |
| (dollars in thousands; unaudited) | Dollar Amount | Basis point impact to net interest margin | | Dollar Amount | Basis point impact to net interest margin |
Accretion on PCI loans 1 | $ | 258 |
| 1 bps | | $ | 246 |
| 2 bps |
Accretion on non-PCI loans 2 | $ | 273 |
| 2 bps | | $ | 460 |
| 3 bps |
| Gains on payoffs of PCI loans | $ | 135 |
| 1 bps | | $ | 84 |
| 1 bps |
1 Accretable yield on PCI loans totaled $1.0 million, $1.1 million and $1.2 million at September 30, 2018, June 30, 2018 and September 30, 2017, respectively.
2 Unaccreted purchase discounts on non-PCI loans totaled $922 thousand, $1.0 million and $1.3 million at September 30, 2018, June 30, 2018 and September 30, 2017, respectively.
Non-interest income totaled $2.2 million in both the third quarter of 2018 and in the prior quarter, compared to $2.1 million in the third quarter of last year. Non-interest income increased $439 thousand to $6.7 million in the nine months ended September 30, 2018, compared to $6.3 million in 2017, primarily due to an increase in deposit network income.
Non-interest expense totaled $14.0 million in the third quarter of 2018, $14.5 million in the prior quarter, and $13.0 million in the same quarter a year ago. The decrease of $538 thousand from the prior quarter was primarily due to lower salaries and benefits resulting from a decline in stock-based compensation expense and 401(k) employer contribution (as more employees reach the maximum employer match),
lower Bank of Napa acquisition expenses and professional services related to core processing contract negotiations.
The $935 thousand increase from the same quarter a year ago was primarily due to higher salaries and benefits related to the addition of Bank of Napa employees, merit increases and filling open positions. Occupancy and equipment expenses increased mainly due to the acquisition of two Bank of Napa branches, partially offset by a significant reduction in acquisition expenses for the third quarter of 2018.
Non-interest expense totaled $44.6 million in the nine months ended September 30, 2018, compared to $38.7 million in the same period of 2017. The increase was primarily due to the addition of Bank of Napa employees and branches, and merit increases mentioned above. Additionally, 2018 included $1.1 million in consulting expenses related to core processing contract negotiations and Bank of Napa acquisition expenses that were higher by $450 thousand.
On December 22, 2017, the Tax Cuts and Jobs Act of 2017 was signed into law. The law reduces the federal statutory income tax rate to 21% for tax years beginning on or after January 1, 2018. Bancorp's effective tax rate in the first nine months of 2018 was 24.5%, compared to 33.4% in the first nine months of 2017 and the reduced rate positively impacted diluted earnings per share by $0.38.
Share Repurchase Program
Bancorp’s Board of Directors approved the repurchase of up to $25.0 million of common stock through May 1, 2019. As of September 30, 2018, Bancorp repurchased 17,943 shares totaling $1.5 million.
Earnings Call and Webcast Information
Bank of Marin Bancorp will present its third quarter earnings call via webcast on Monday, October 22, 2018 at 8:30 a.m. PT/11:30 a.m. ET. Investors will have the opportunity to listen to the webcast online through Bank of Marin’s website at https://www.bankofmarin.com under “Investor Relations.” To listen to the webcast live, please go to the website at least 15 minutes early to register, download and install any necessary audio software. For those who cannot listen to the live broadcast, a replay will be available at the same website location shortly after the call.
About Bank of Marin Bancorp
Founded in 1989 and headquartered in Novato, Bank of Marin is the wholly-owned subsidiary of Bank of Marin Bancorp (NASDAQ: BMRC). A leading business and community bank in the San Francisco Bay Area, with assets of $2.5 billion and 23 offices throughout San Francisco, Marin, Napa, Sonoma and Alameda counties, Bank of Marin provides business and personal banking, commercial lending, and wealth management and trust services. Specializing in providing legendary service to its customers and investing in its local communities, Bank of Marin has consistently been ranked one of the “Top Corporate Philanthropists" by the San Francisco Business Times and one of the “Best Places to Work” by the North Bay Business Journal. Bank of Marin Bancorp is included in the Russell 2000 Small-Cap Index and NASDAQ ABA Community Bank Index. For more information, go to www.bankofmarin.com.
Forward-Looking Statements
This release may contain certain forward-looking statements that are based on management's current expectations regarding economic, legislative, and regulatory issues that may impact Bancorp's earnings in future periods. Forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts. They often include the words “believe,” “expect,” “intend,” “estimate” or words of similar meaning, or future or conditional verbs such as “will,” “would,” “should,” “could” or “may.” Factors that could cause future results to vary materially from current management expectations include,
but are not limited to, general economic conditions, economic uncertainty in the United States and abroad, changes in interest rates, deposit flows, real estate values, costs or effects of acquisitions, competition, changes in accounting principles, policies or guidelines, legislation or regulation (including the Tax Cuts & Jobs Act of 2017), and other economic, competitive, governmental, regulatory and technological factors (including external fraud and cyber-security threats) affecting Bancorp's operations, pricing, products and services. These and other important factors, including the impact of the Bank of Napa acquisition, 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.
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| BANK OF MARIN BANCORP |
| FINANCIAL HIGHLIGHTS |
| September 30, 2018 |
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| (dollars in thousands, except per share data; unaudited) | September 30, 2018 | | | June 30,
2018 | | | September 30, 2017 | |
| QUARTER-TO-DATE | | | | | | | | |
| NET INCOME | $ | 8,680 |
|
| | $ | 7,891 |
| | | $ | 5,132 |
|
|
| DILUTED EARNINGS PER COMMON SHARE | $ | 1.23 |
|
| | $ | 1.12 |
| | | $ | 0.83 |
|
|
| RETURN ON AVERAGE ASSETS (ROA) | 1.38 |
| % | | 1.28 |
| % | | 0.95 |
| % |
| RETURN ON AVERAGE EQUITY (ROE) | 11.20 |
| % | | 10.54 |
| % | | 8.37 |
| % |
| EFFICIENCY RATIO | 54.20 |
| % | | 57.85 |
| % | | 62.51 |
| % |
TAX-EQUIVALENT NET INTEREST MARGIN1 | 3.97 |
| % | | 3.92 |
| % | | 3.77 |
| % |
| NET CHARGE-OFFS (RECOVERIES) | $ | (4 | ) |
| | $ | (42 | ) | | | $ | (16 | ) |
|
| NET CHARGE-OFFS (RECOVERIES) TO AVERAGE LOANS | — |
| % | | — |
| % | | — |
| % |
| | | | | | | | | |
| YEAR-TO-DATE | | | | | | | | |
| NET INCOME | $ | 22,960 |
|
| |
|
| | | $ | 14,866 |
|
|
| DILUTED EARNINGS PER COMMON SHARE | $ | 3.27 |
|
| |
|
| | | $ | 2.41 |
|
|
| RETURN ON AVERAGE ASSETS (ROA) | 1.24 |
| % | |
|
|
| | 0.96 |
| % |
| RETURN ON AVERAGE EQUITY (ROE) | 10.17 |
| % | |
|
|
| | 8.35 |
| % |
| EFFICIENCY RATIO | 59.42 |
| % | |
|
|
| | 63.42 |
| % |
TAX-EQUIVALENT NET INTEREST MARGIN1 | 3.91 |
| % | |
|
|
| | 3.80 |
| % |
| NET CHARGE-OFFS (RECOVERIES) | $ | (50 | ) |
| |
|
| | | $ | 194 |
|
|
| NET CHARGE-OFFS (RECOVERIES) TO AVERAGE LOANS | — |
| % | |
|
|
| | 0.01 |
| % |
| AT PERIOD END | | | | | | | | |
| TOTAL ASSETS | $ | 2,545,715 |
|
| | $ | 2,465,042 |
| | | $ | 2,155,901 |
|
|
| LOANS: | | | | | | | | |
| COMMERCIAL AND INDUSTRIAL | $ | 238,771 |
|
| | $ | 241,994 |
| | | $ | 218,681 |
|
|
| REAL ESTATE |
|
|
| | | | | |
|
| COMMERCIAL OWNER-OCCUPIED | 316,467 |
|
| | 317,587 |
| | | 264,732 |
|
|
| COMMERCIAL INVESTOR-OWNED | 841,493 |
|
| | 839,667 |
| | | 721,576 |
|
|
| CONSTRUCTION | 68,739 |
|
| | 57,015 |
| | | 76,179 |
|
|
| HOME EQUITY | 121,243 |
|
| | 126,031 |
| | | 121,366 |
|
|
| OTHER RESIDENTIAL | 113,383 |
|
| | 108,829 |
| | | 96,937 |
|
|
| INSTALLMENT AND OTHER CONSUMER LOANS | 28,775 |
|
| | 26,488 |
| | | 24,976 |
|
|
| TOTAL LOANS | $ | 1,728,871 |
|
| | $ | 1,717,611 |
| | | $ | 1,524,447 |
|
|
NON-PERFORMING LOANS2: |
|
|
| | | | | |
|
| REAL ESTATE: |
|
|
| | | | | |
|
| COMMERCIAL INVESTOR-OWNED | $ | — |
|
| | $ | — |
| | | $ | 1,024 |
|
|
| HOME EQUITY | 318 |
|
| | 385 |
| | | 292 |
|
|
| INSTALLMENT AND OTHER CONSUMER LOANS | 68 |
|
| | — |
| | | — |
|
|
| TOTAL NON-ACCRUAL LOANS | $ | 386 |
|
| | $ | 385 |
| | | $ | 1,316 |
|
|
| | | | | | | | | |
| CLASSIFIED LOANS (GRADED SUBSTANDARD & DOUBTFUL) | $ | 12,401 |
| | | $ | 13,917 |
| | | $ | 33,483 |
| |
| TOTAL ACCRUING LOANS 30-89 DAYS PAST DUE | $ | 301 |
|
| | $ | 88 |
| | | $ | 205 |
|
|
| LOAN LOSS RESERVE TO LOANS | 0.91 |
| % | | 0.92 |
| % | | 1.00 |
| % |
| LOAN LOSS RESERVE TO NON-ACCRUAL LOANS | 41.00 |
| x | | 41.11 |
| x | | 11.58 |
| x |
| NON-ACCRUAL LOANS TO TOTAL LOANS | 0.02 |
| % | | 0.02 |
| % | | 0.09 |
| % |
| | | | | | | | | |
| TOTAL DEPOSITS | $ | 2,212,846 |
|
| | $ | 2,137,723 |
| | | $ | 1,890,970 |
|
|
| LOAN-TO-DEPOSIT RATIO | 78.1 |
| % | | 80.3 |
| % | | 80.6 |
| % |
| STOCKHOLDERS' EQUITY | $ | 308,603 |
|
| | $ | 304,198 |
| | | $ | 245,049 |
|
|
| BOOK VALUE PER SHARE | $ | 44.20 |
|
| | $ | 43.51 |
| | | $ | 39.68 |
|
|
TANGIBLE COMMON EQUITY TO TANGIBLE ASSETS3 | 10.9 |
| % | | 11.0 |
| % | | 11.0 |
| % |
| TOTAL RISK BASED CAPITAL RATIO-BANK | 13.7 |
| % | | 13.5 |
| % | | 14.7 |
| % |
| TOTAL RISK BASED CAPITAL RATIO-BANCORP | 15.3 |
| % | | 15.2 |
| % | | 15.1 |
| % |
| FULL-TIME EQUIVALENT EMPLOYEES | 287 |
| | | 288 |
| | | 272 |
| |
| | | | | | | | | |
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 $15.1 million, $15.5 million and $16.4 million at September 30, 2018, June 30, 2018 and September 30, 2017, respectively. Excludes purchased credit-impaired (PCI) loans with carrying values of $2.1 million, $2.1 million and $2.3 million that were accreting interest at September 30, 2018, June 30, 2018 and September 30, 2017, respectively. These amounts are excluded as PCI loan accretable yield interest recognition is independent from the underlying contractual loan delinquency status. |
3 Tangible common equity to tangible assets is considered to be a meaningful non-GAAP financial measure of capital adequacy and is useful for investors to assess Bancorp's ability to absorb potential losses. Tangible common equity includes common stock, retained earnings and unrealized gain on available for sale securities, net of tax, less goodwill and intangible assets of $35.9 million, $36.2 million and $8.7 million at September 30, 2018, June 30, 2018 and September 30, 2018, respectively. Tangible assets exclude goodwill and intangible assets. |
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BANK OF MARIN BANCORP CONSOLIDATED STATEMENTS OF CONDITION |
| At September 30, 2018, June 30, 2018 and September 30, 2017 |
|
| | | | | | | | | |
| (in thousands, except share data; unaudited) | September 30, 2018 | June 30, 2018 | September 30, 2017 |
| Assets | |
| | |
| Cash and due from banks | $ | 142,718 |
| $ | 83,855 |
| $ | 149,124 |
|
| Investment securities | |
| |
| |
| Held-to-maturity, at amortized cost | 164,222 |
| 170,652 |
| 155,122 |
|
| Available-for-sale (at fair value; amortized cost $416,732, $397,268 and $257,468 at September 30, 2018, June 30, 2018 and September 30, 2017, respectively) | 405,571 |
| 388,137 |
| 258,092 |
|
| Total investment securities | 569,793 |
| 558,789 |
| 413,214 |
|
| Loans, net of allowance for loan losses of $15,817, $15,813 and $15,248 at September 30, 2018, June 30, 2018 and September 30, 2017, respectively | 1,713,054 |
| 1,701,798 |
| 1,509,199 |
|
| Bank premises and equipment, net | 7,602 |
| 7,965 |
| 8,230 |
|
| Goodwill | 30,140 |
| 30,140 |
| 6,436 |
|
| Core deposit intangible | 5,802 |
| 6,032 |
| 2,226 |
|
| Interest receivable and other assets | 76,606 |
| 76,463 |
| 67,472 |
|
| Total assets | $ | 2,545,715 |
| $ | 2,465,042 |
| $ | 2,155,901 |
|
| | | | |
| Liabilities and Stockholders' Equity | |
| |
| |
| Liabilities | |
| |
| |
| Deposits | | |
| |
| Non-interest bearing | $ | 1,109,909 |
| $ | 1,057,745 |
| $ | 924,073 |
|
| Interest bearing | | |
| |
| Transaction accounts | 138,838 |
| 132,272 |
| 102,236 |
|
| Savings accounts | 178,171 |
| 179,187 |
| 169,488 |
|
| Money market accounts | 659,788 |
| 631,479 |
| 555,013 |
|
| Time accounts | 126,140 |
| 137,040 |
| 140,160 |
|
| Total deposits | 2,212,846 |
| 2,137,723 |
| 1,890,970 |
|
| Subordinated debentures | 5,831 |
| 5,802 |
| 5,703 |
|
| Interest payable and other liabilities | 18,435 |
| 17,319 |
| 14,179 |
|
| Total liabilities | 2,237,112 |
| 2,160,844 |
| 1,910,852 |
|
| | | | |
| Stockholders' Equity | |
| |
| |
Preferred stock, no par value,
Authorized - 5,000,000 shares, none issued | — |
| — |
| — |
|
Common stock, no par value,
Authorized - 15,000,000 shares; Issued and outstanding -
6,982,179, 6,991,821 and 6,175,751 at September 30,
2018, June 30, 2018 and September 30, 2017, respectively | 145,498 |
| 146,195 |
| 90,052 |
|
| Retained earnings | 172,723 |
| 166,281 |
| 156,227 |
|
| Accumulated other comprehensive loss, net of taxes | (9,618 | ) | (8,278 | ) | (1,230 | ) |
| Total stockholders' equity | 308,603 |
| 304,198 |
| 245,049 |
|
| Total liabilities and stockholders' equity | $ | 2,545,715 |
| $ | 2,465,042 |
| $ | 2,155,901 |
|
|
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BANK OF MARIN BANCORP CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME |
|
| | | | | | | | | | | | | | | | |
| | Three months ended | | Nine months ended |
| (in thousands, except per share amounts; unaudited) | September 30, 2018 | June 30, 2018 | September 30, 2017 | | September 30, 2018 | September 30, 2017 |
| Interest income | | | | | | |
| Interest and fees on loans | $ | 20,284 |
| $ | 19,624 |
| $ | 16,738 |
| | $ | 58,795 |
| $ | 49,010 |
|
| Interest on investment securities |
|
|
|
|
|
| | | |
| Securities of U.S. government agencies | 2,953 |
| 2,860 |
| 1,525 |
| | 8,288 |
| 4,577 |
| Obligations of state and political subdivisions | 546 |
| 604 |
| 511 |
| | 1,788 |
| 1,632 |
|
| Corporate debt securities and other | 25 |
| 35 |
| 31 |
| | 104 |
| 104 |
|
| Interest on Federal funds sold and due from banks | 400 |
| 285 |
| 406 |
| | 1,088 |
| 623 |
|
| Total interest income | 24,208 |
| 23,408 |
| 19,211 |
| | 70,063 |
| 55,946 |
|
| Interest expense | |
| |
| |
| | |
| |
|
| Interest on interest-bearing transaction accounts | 58 |
| 48 |
| 24 |
| | 158 |
| 74 |
|
| Interest on savings accounts | 18 |
| 18 |
| 17 |
| | 54 |
| 48 |
|
| Interest on money market accounts | 337 |
| 236 |
| 133 |
| | 789 |
| 360 |
|
| Interest on time accounts | 130 |
| 140 |
| 138 |
| | 426 |
| 423 |
|
| Interest on FHLB and other borrowings | 1 |
| 1 |
| — |
| | 2 |
| — |
|
| Interest on subordinated debentures | 125 |
| 123 |
| 111 |
| | 362 |
| 328 |
|
| Total interest expense | 669 |
| 566 |
| 423 |
| | 1,791 |
| 1,233 |
|
| Net interest income | 23,539 |
| 22,842 |
| 18,788 |
| | 68,272 |
| 54,713 |
|
| Provision for loan losses | — |
| — |
| — |
| | — |
| — |
|
| Net interest income after provision for loan losses | 23,539 |
| 22,842 |
| 18,788 |
| | 68,272 |
| 54,713 |
|
| Non-interest income | |
| |
| |
| | |
| |
|
| Service charges on deposit accounts | 475 |
| 455 |
| 438 |
| | 1,407 |
| 1,337 |
|
| Wealth Management and Trust Services | 490 |
| 488 |
| 539 |
| | 1,493 |
| 1,546 |
|
| Debit card interchange fees | 402 |
| 360 |
| 390 |
| | 1,158 |
| 1,146 |
|
| Merchant interchange fees | 99 |
| 118 |
| 88 |
| | 297 |
| 296 |
|
| Earnings on bank-owned life insurance | 227 |
| 230 |
| 209 |
| | 685 |
| 628 |
|
| Dividends on FHLB stock | 194 |
| 192 |
| 177 |
| | 582 |
| 585 |
|
| (Losses) gains on investment securities, net | (90 | ) | 11 |
| — |
| | (79 | ) | 10 |
|
| Other income | 439 |
| 384 |
| 225 |
| | 1,173 |
| 729 |
|
| Total non-interest income | 2,236 |
| 2,238 |
| 2,066 |
| | 6,716 |
| 6,277 |
|
| Non-interest expense | |
| |
| |
| | |
| |
|
| Salaries and related benefits | 8,069 |
| 8,316 |
| 7,344 |
| | 25,402 |
| 22,106 |
|
| Occupancy and equipment | 1,444 |
| 1,511 |
| 1,364 |
| | 4,462 |
| 4,063 |
|
| Depreciation and amortization | 532 |
| 546 |
| 489 |
| | 1,625 |
| 1,433 |
|
| Federal Deposit Insurance Corporation insurance | 186 |
| 191 |
| 167 |
| | 568 |
| 490 |
|
| Data processing | 950 |
| 1,023 |
| 946 |
| | 3,354 |
| 2,848 |
|
| Professional services | 727 |
| 810 |
| 801 |
| | 2,836 |
| 1,845 |
|
| Directors' expense | 173 |
| 183 |
| 175 |
| | 530 |
| 557 |
|
| Information technology | 262 |
| 264 |
| 179 |
| | 795 |
| 563 |
|
| Provision for losses on off-balance sheet commitments | — |
| — |
| 100 |
| | — |
| 57 |
|
| Other expense | 1,628 |
| 1,665 |
| 1,471 |
| | 4,989 |
| 4,716 |
|
| Total non-interest expense | 13,971 |
| 14,509 |
| 13,036 |
| | 44,561 |
| 38,678 |
|
| Income before provision for income taxes | 11,804 |
| 10,571 |
| 7,818 |
| | 30,427 |
| 22,312 |
|
| Provision for income taxes | 3,124 |
| 2,680 |
| 2,686 |
| | 7,467 |
| 7,446 |
|
| Net income | $ | 8,680 |
| $ | 7,891 |
| $ | 5,132 |
| | $ | 22,960 |
| $ | 14,866 |
|
| Net income per common share: | |
| |
| |
| | | |
| Basic | $ | 1.25 |
| $ | 1.14 |
| $ | 0.84 |
| | $ | 3.31 |
| $ | 2.43 |
|
| Diluted | $ | 1.23 |
| $ | 1.12 |
| $ | 0.83 |
| | $ | 3.27 |
| $ | 2.41 |
|
| Weighted average shares: |
|
| | |
| | | |
| Basic | 6,950 |
| 6,944 |
| 6,123 |
| | 6,936 |
| 6,109 |
|
| Diluted | 7,055 |
| 7,033 |
| 6,191 |
| | 7,031 |
| 6,179 |
|
| Dividends declared per common share | $ | 0.32 |
| $ | 0.31 |
| $ | 0.29 |
| | $ | 0.92 |
| $ | 0.83 |
|
| Comprehensive income: | | | | | | |
| Net income | $ | 8,680 |
| $ | 7,891 |
| $ | 5,132 |
| | $ | 22,960 |
| $ | 14,866 |
|
| Other comprehensive (loss) income |
|
| |
|
| |
|
|
|
|
| Change in net unrealized gain or loss on available-for-sale securities | (2,120 | ) | (1,131 | ) | (362 | ) | | (9,421 | ) | 3,273 |
|
| Reclassification adjustment for losses (gains) on available-for-sale securities in net income | 90 |
| (11 | ) | — |
| | 79 |
| (10 | ) |
| Net unrealized loss on securities transferred from available-for-sale to held-to-maturity | — |
| (278 | ) | — |
| | (278 | ) | — |
|
| Amortization of net unrealized losses on securities transferred from available-for-sale to held-to-maturity | 128 |
| 132 |
| 135 |
| | 396 |
| 299 |
|
| Subtotal | (1,902 | ) | (1,288 | ) | (227 | ) | | (9,224 | ) | 3,562 |
|
| Deferred tax (benefit) expense | (562 | ) | (384 | ) | (96 | ) | | (2,730 | ) | 1,499 |
|
| Other comprehensive (loss) income, net of tax | (1,340 | ) | (904 | ) | (131 | ) | | (6,494 | ) | 2,063 |
|
| Comprehensive income | $ | 7,340 |
| $ | 6,987 |
| $ | 5,001 |
| | $ | 16,466 |
| $ | 16,929 |
|
|
|
| BANK OF MARIN BANCORP |
| AVERAGE STATEMENTS OF CONDITION AND ANALYSIS OF NET INTEREST INCOME |
|
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Three months ended | Three months ended | Three months ended |
| | | September 30, 2018 | June 30, 2018 | September 30, 2017 |
| | | | Interest | | | Interest | | | Interest | |
| | | Average | Income/ | Yield/ | Average | Income/ | Yield/ | Average | Income/ | Yield/ |
| (dollars in thousands) | Balance | Expense | Rate | Balance | Expense | Rate | Balance | Expense | Rate |
| Assets | | | | | | | | | |
| | Interest-bearing due from banks 1 | $ | 79,674 |
| $ | 400 |
| 1.96 | % | $ | 62,665 |
| $ | 285 |
| 1.80 | % | $ | 125,846 |
| $ | 406 |
| 1.26 | % |
| | Investment securities 2, 3 | 558,741 |
| 3,624 |
| 2.59 | % | 574,669 |
| 3,611 |
| 2.51 | % | 400,659 |
| 2,294 |
| 2.29 | % |
| | Loans 1, 3, 4 | 1,715,295 |
| 20,504 |
| 4.68 | % | 1,700,057 |
| 19,852 |
| 4.62 | % | 1,500,167 |
| 17,228 |
| 4.49 | % |
| | Total interest-earning assets 1 | 2,353,710 |
| 24,528 |
| 4.08 | % | 2,337,391 |
| 23,748 |
| 4.02 | % | 2,026,672 |
| 19,928 |
| 3.85 | % |
| | Cash and non-interest-bearing due from banks | 41,316 |
| | | 40,383 |
| | | 45,009 |
| | |
| | Bank premises and equipment, net | 7,866 |
| | | 8,203 |
| | | 8,430 |
| | |
| | Interest receivable and other assets, net | 86,039 |
| | | 87,183 |
| | | 60,622 |
| | |
| Total assets | $ | 2,488,931 |
| | | $ | 2,473,160 |
| | | $ | 2,140,733 |
| | |
| Liabilities and Stockholders' Equity | | | | | | | | | |
| | Interest-bearing transaction accounts | $ | 134,293 |
| $ | 58 |
| 0.17 | % | $ | 142,133 |
| $ | 48 |
| 0.14 | % | $ | 96,504 |
| $ | 24 |
| 0.10 | % |
| | Savings accounts | 179,429 |
| 18 |
| 0.04 | % | 178,956 |
| 18 |
| 0.04 | % | 171,187 |
| 17 |
| 0.04 | % |
| | Money market accounts | 609,821 |
| 337 |
| 0.22 | % | 612,612 |
| 236 |
| 0.15 | % | 560,486 |
| 133 |
| 0.09 | % |
| | Time accounts including CDARS | 132,588 |
| 130 |
| 0.39 | % | 140,799 |
| 140 |
| 0.40 | % | 140,736 |
| 138 |
| 0.39 | % |
| | Overnight borrowings 1 | 112 |
| 1 |
| 2.06 | % | 231 |
| 1 |
| 1.84 | % | — |
| — |
| — | % |
| | Subordinated debentures 1 | 5,815 |
| 125 |
| 8.43 | % | 5,786 |
| 123 |
| 8.40 | % | 5,682 |
| 111 |
| 7.63 | % |
| | Total interest-bearing liabilities | 1,062,058 |
| 669 |
| 0.25 | % | 1,080,517 |
| 566 |
| 0.21 | % | 974,595 |
| 423 |
| 0.17 | % |
| | Demand accounts | 1,101,288 |
| | | 1,072,976 |
| | | 909,900 |
| | |
| | Interest payable and other liabilities | 18,022 |
| | | 19,443 |
| | | 13,055 |
| | |
| | Stockholders' equity | 307,563 |
| | | 300,224 |
| | | 243,183 |
| | |
| Total liabilities & stockholders' equity | $ | 2,488,931 |
| | | $ | 2,473,160 |
| | | $ | 2,140,733 |
| | |
Tax-equivalent net interest income/margin 1 | | $ | 23,859 |
| 3.97 | % | | $ | 23,182 |
| 3.92 | % | | $ | 19,505 |
| 3.77 | % |
Reported net interest income/margin 1 | | $ | 23,539 |
| 3.91 | % | | $ | 22,842 |
| 3.87 | % | | $ | 18,788 |
| 3.63 | % |
| Tax-equivalent net interest rate spread | |
| 3.83 | % | | | 3.81 | % | | | 3.68 | % |
| | | | | | | | | | | |
| | | | Nine months ended | Nine months ended |
| | | | September 30, 2018 | September 30, 2017 |
| | | | | |
| Interest |
|
| Interest |
|
| | | | | | Average | Income/ | Yield/ | Average | Income/ | Yield/ |
| (dollars in thousands) | | | | Balance | Expense | Rate | Balance | Expense | Rate |
| Assets | | | | | | | | | |
| | Interest-bearing due from banks 1 | | | | $ | 82,304 |
| $ | 1,088 |
| 1.74 | % | 70,947 |
| 623 |
| 1.16 | % |
| | Investment securities 2, 3 | | | | 555,414 |
| 10,512 |
| 2.52 | % | 407,798 |
| 7,011 |
| 2.29 | % |
| | Loans 1, 3, 4 | | | | 1,697,093 |
| 59,475 |
| 4.62 | % | 1,488,771 |
| 50,317 |
| 4.46 | % |
| | Total interest-earning assets 1 | | | | 2,334,811 |
| 71,075 |
| 4.01 | % | 1,967,516 |
| 57,951 |
| 3.88 | % |
| | Cash and non-interest-bearing due from banks | | | | 42,488 |
| | | 43,140 |
| | |
| | Bank premises and equipment, net | | | | 8,188 |
| | | 8,420 |
| | |
| | Interest receivable and other assets, net | | | | 87,403 |
| | | 59,593 |
| | |
| Total assets | | | | $ | 2,472,890 |
| | | 2,078,669 |
| | |
| Liabilities and Stockholders' Equity | | | |
|
|
|
|
|
|
| | Interest-bearing transaction accounts | | | | $ | 148,141 |
| $ | 158 |
| 0.14 | % | 97,458 |
| 74 |
| 0.10 | % |
| | Savings accounts | | | | 179,543 |
| 54 |
| 0.04 | % | 165,212 |
| 48 |
| 0.04 | % |
| | Money market accounts | | | | 601,896 |
| 789 |
| 0.18 | % | 539,560 |
| 360 |
| 0.09 | % |
| | Time accounts including CDARS | | | | 142,563 |
| 426 |
| 0.40 | % | 144,559 |
| 423 |
| 0.39 | % |
| | Overnight borrowings 1 | | | | 115 |
| 2 |
| 1.92 | % | — |
| — |
| — | % |
| | Subordinated debentures 1 | | | | 5,785 |
| 362 |
| 8.25 | % | 5,645 |
| 328 |
| 7.65 | % |
| | Total interest-bearing liabilities | | | | 1,078,043 |
| 1,791 |
| 0.22 | % | 952,434 |
| 1,233 |
| 0.17 | % |
| | Demand accounts | | | | 1,074,778 |
| | | 874,995 |
| | |
| | Interest payable and other liabilities | | | | 18,127 |
| | | 13,151 |
| | |
| | Stockholders' equity | | | | 301,942 |
| | | 238,089 |
| | |
| Total liabilities & stockholders' equity | | | | $ | 2,472,890 |
| | | 2,078,669 |
| | |
Tax-equivalent net interest income/margin 1 | | | |
| $ | 69,284 |
| 3.91 | % |
| 56,718 |
| 3.80 | % |
Reported net interest income/margin 1 | | | |
| $ | 68,272 |
| 3.86 | % |
| 54,713 |
| 3.67 | % |
| Tax-equivalent net interest rate spread | | | |
|
| 3.79 | % |
|
| 3.71 | % |
| | | | | | | | | | | |
1 Interest income/expense is divided by actual number of days in the period times 360 days to correspond to stated interest rate terms, where applicable. |
2 Yields on available-for-sale securities are calculated based on amortized cost balances rather than fair value, as changes in fair value are reflected as a component of stockholders' equity. Investment security interest is earned on 30/360 day basis monthly. |
3 Yields and interest income on tax-exempt securities and loans are presented on a taxable-equivalent basis using the Federal statutory rate of 21 percent in 2018 and 35 percent in 2017. |
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. |
