Deposit Stability and Strong Credit
Bank of Marin Bancorp, "Bancorp" (Nasdaq: BMRC), parent company
of Bank of Marin, "Bank," announced earnings of $5.3 million for
the third quarter of 2023, compared to $4.6 million for the second
quarter of 2023. Diluted earnings per share were $0.33 for the
third quarter, compared to $0.28 for the prior quarter. Earnings
for the first nine months of 2023 totaled $19.3 million, compared
to $33.7 million for the same period in 2022. Diluted earnings per
share were $1.20 and $2.11 for the first nine months of 2023 and
2022, respectively. Earnings reported for 2022 were impacted by the
costs associated with our most recent acquisition, the details of
which were discussed in previous filings.
Concurrent with this release, Bancorp issued presentation slides
providing supplemental information, some of which will be discussed
during the third quarter 2023 earnings call. The earnings release
and presentation slides are intended to be reviewed together and
can be found online on Bank of Marin’s website at
www.bankofmarin.com. under “Investor Relations.”
“We expanded net interest margin and improved our interest rate
risk and liquidity positions in the third quarter by reducing
borrowings and investments, increasing deposits and cash, and
executing balance sheet hedges,” said Tim Myers, President and
Chief Executive Officer. “We continued to generate strong deposit
growth in the quarter, emphasizing our relationship-based banking
model to attract new clients and expand our relationships with
existing customers. While the macroeconomic picture remains
somewhat uncertain, our loan pipeline is robust, and fourth quarter
loan production is shaping up to be strong.”
Bancorp also provided the following highlights for the third
quarter of 2023:
- The third quarter tax-equivalent net interest margin increased
3 basis points to 2.48% from 2.45% in the previous quarter due
primarily to higher rates on interest-bearing cash balances
generated from securities sales.
- Our experienced team of bankers continued to build upon our
strong deposit franchise with consistent growth from proactive
outreach to both existing and prospective customers in all of our
markets. As a result, total deposits increased by $118.5 million to
$3.444 billion as of September 30, 2023 from $3.325 billion as of
June 30, 2023. Non-interest bearing deposits remained stable at
47.7% of total deposits at September 30, 2023, compared to 47.8% at
June 30, 2023. Average cost of deposits increased 25 basis points
over the third quarter, from 0.69% to 0.94%, compared to a 49 basis
point increase in the prior quarter. We believe we are
competitively aligned in regard to deposit pricing, helping to
maintain deposit levels. Customer participation in the reciprocal
deposit network program grew $62.3 million during the quarter to
$483.3 million, and estimated uninsured deposits remained at 29% of
total deposits as of September 30, 2023.
- Total borrowings declined $172.2 million to $120.0 million
during the third quarter as a result of deposit growth and cash
flows from investments and loans. Net available funding sources of
$2.1 billion provided 211% coverage of an estimated $989.8 million
in uninsured deposits at September 30, 2023.
- Our loan portfolio continues to perform well with classified
loans at 1.90% of total loans. Non-owner-occupied commercial real
estate loans made up $23.6 million or 59% of total classified loans
as of September 30, 2023, compared to $24.3 million or 64% at June
30, 2023. Shortly after quarter-end three unsecured commercial
substandard loans to one borrower totaling approximately $4.6
million paid off.
- Non-accrual loans were 0.27% of total loans at quarter end, up
from 0.10% at June 30, 2023. Two loans totaling $4.0 million moved
to non-accrual status in the third quarter, one of which for $3.8
million was a legacy acquired-bank agricultural loan. These
increases were partially offset by $471 thousand in payoffs and
paydowns. All of the non-accrual loans are collateralized by real
estate with no expected credit loss as of September 30, 2023.
- A $425 thousand provision for credit losses on loans in the
third quarter brought the allowance for credit losses to 1.16% of
total loans. The provision was due primarily to qualitative risk
factor adjustments as discussed further below and compared to a
provision of $500 thousand for the previous quarter.
- Loan balances of $2.087 billion at September 30, 2023,
decreased $15.9 million from $2.103 billion at June 30, 2023
reflecting originations of $22.7 million and payoffs of $12.7
million. New loans were originated at rates approximately 150 basis
points above the rates on loans paid off during the quarter. Loan
amortization from scheduled repayments and a net decrease in
utilization of credit lines was $25.9 million during the
quarter.
- Return on average assets ("ROA") was 0.52% for the third
quarter of 2023, compared to 0.44% for the second quarter of 2023.
Return on average equity ("ROE") was 4.94%, compared to 4.25% for
the prior quarter. The efficiency ratio for the third quarter of
2023 was 72.96%, compared to 76.91% for the prior quarter.
- All capital ratios were above well-capitalized regulatory
requirements. The total risk-based capital ratios at September 30,
2023 for Bancorp and the Bank were 16.6% and 16.1%, respectively.
Bancorp's tangible common equity to tangible assets ("TCE ratio")
was 8.6% at September 30, 2023, and the Bank's TCE ratio was 8.3%.
As of September 30, 2023, Bancorp's TCE ratio, net of after tax
unrealized losses on held-to-maturity securities, was 6.1% (refer
to the discussion and reconciliation of this non-GAAP financial
measure below).
- The Board of Directors declared a cash dividend of $0.25 per
share on October 20, 2023, which represents the 74th consecutive
quarterly dividend paid by Bancorp. The dividend is payable on
November 10, 2023, to shareholders of record at the close of
business on November 3, 2023.
- As previously announced, David Bloom, Executive Vice President
and Head of Commercial Banking, joined the Bank on July 31 and is
responsible for the direction, vision, growth, and performance of
the Bank’s commercial banking division, including its eight
regional offices located throughout northern California and its
specialty wine business. He previously served as senior managing
director of business banking in northern California and the Pacific
Northwest at First Republic Bank. Under David's direction we have
already funded or approved for funding amounts exceeding third
quarter originations since quarter end.
- Also as previously announced, effective October 20, 2023, the
Board of Directors for Bank of Marin Bancorp appointed Cigdem
Gencer to its board, increasing its membership to thirteen
directors. Gencer brings extensive leadership and financial
services experience to the Board. Throughout her career, she has
developed and executed transformative growth, expansion, and
investment strategies for organizations, including international
expansion efforts. For nearly two decades, Gencer served as
executive vice president at a Fortune 500 financial institution
where she served as head of international human resources, head of
enterprise data strategy and analytics in the Chief Data Office,
and chief financial officer, chief operating officer, and regional
sales director for its Private Wealth division. Her experience also
includes serving as a management consultant in the financial
services sector and chief financial officer at Intrax, Inc. In
2021, she established Fazilet Consulting—an executive coaching and
organizational consulting firm—in which she also serves as an
executive coach.
“As we have done throughout our 33-year history, we are intently
focused on balance sheet strength, including strong capital levels,
as we grow alongside our customers and pursue reliable returns on
behalf of our shareholders,” said Tani Girton, Executive Vice
President and Chief Financial Officer. “Securities sales and
balance sheet hedges muted the impact of interest rate increases on
tangible capital while deposit growth and cash flows from our
earning asset portfolios enabled a significant reduction in
borrowings. We remain proactive and successful in managing credit,
and are dedicated to prudent investments in our people and
infrastructure as well as cost control.”
Loans and Credit Quality
Loans decreased by $15.9 million for the third quarter of 2023
and totaled $2.087 billion at September 30, 2023, compared to
$2.103 billion at June 30, 2023. Loan originations for the third
quarter were $22.7 million, compared to $22.8 million for the
second quarter of 2023. Loan payoffs were $12.7 million for the
third quarter, compared to $24.6 million for the second quarter of
2023. In addition, loan amortization from scheduled repayments
totaling $20.0 million and net decrease in utilization of credit
lines of $5.9 million contributed to the decline in loans for the
quarter ended September 30, 2023. Bank of Marin has continued its
usual steadfast conservative underwriting practices and has not
changed its credit standards or policies in reaction to current
market conditions. Our portfolio management and credit teams are
exercising heightened awareness of the potential for credit quality
deterioration. The Bank continues to focus on extending credit
within the markets we know best and serving the needs of our
existing clients while ensuring new opportunities present the
appropriate levels of risk and return.
Loans decreased $5.6 million during the nine months ended
September 30, 2023, compared to a $97.3 million decrease in loans
during the nine months ended September 30, 2022. Loan originations
were $90.3 million for the nine months ended September 30, 2023,
compared to $204.1 million for the nine months ended September 30,
2022. Excluding PPP loans, payoffs were $57.7 million in the nine
months ended September 30, 2023, compared to $204.2 million for the
same period in 2022. PPP loan payoffs during the nine months ended
September 30, 2023 and 2022 were $1.8 million and $103.6 million,
respectively. In addition, loan amortization from scheduled
repayments totaling $60.6 million was partially offset by a $24.2
million net increase in utilization of credit lines in the nine
months ended September 30, 2023.
Non-accrual loans totaled $5.7 million, or 0.27% of the loan
portfolio at September 30, 2023, compared to $2.1 million, or 0.10%
at June 30, 2023.
Classified loans totaled $39.7 million at September 30, 2023,
compared to $38.1 million at June 30, 2023. The increase was
primarily due to the addition of three loans totaling $6.3 million.
Of the additions, $6.1 million were comprised of two owner-occupied
commercial real estate loans. These additions were offset by $4.7
million in payoffs and paydowns. Accruing loans past due 30 to 89
days totaled $2.2 million at September 30, 2023, compared to $983
thousand at June 30, 2023.
With the heightened market concern about non-owner-occupied
commercial real estate, and in particular the office sector, we are
providing the following additional information. We continue to
maintain diversity among property types and within our geographic
footprint. In particular, our office commercial real estate
portfolio in the City of San Francisco represents just 3% of our
total loan portfolio and 6% of our total non-owner occupied
commercial real estate portfolio. As of the last measurement period
(generally December 2022), the weighted average loan-to-value and
weighted average debt-service coverage ratios for the entire
non-owner-occupied office portfolio were 56% and 1.68x,
respectively. For the eleven non-owner-occupied office loans in the
City of San Francisco, the weighted average loan-to-value and
debt-service coverage ratios were 66% (61% unweighted) and 1.07x
(1.34x unweighted), respectively. During the quarter we conducted a
review of the refinance risk in our non-owner-occupied commercial
real estate portfolio, the results of which can be seen on slide 13
of our earnings presentation. We evaluated 36 loans with
commitments of $1.0 million or more totaling $97.4 million that
mature or reprice in 2023 or 2024. We determined that the refinance
risk on these loans is manageable with weighted average debt
service coverage ratios ranging from 1.28 to 2.01 times across the
four cohorts based on current interest rates.
Net recoveries for the third quarter of 2023 totaled $3
thousand, compared to net recoveries of $2 thousand for the second
quarter of 2023. The ratio of allowance for credit losses to total
loans was 1.16% at September 30, 2023, compared to 1.13% at June
30, 2023.
The provision for credit losses on loans in the third quarter
was $425 thousand, compared to $500 thousand in the prior quarter.
The provision was due primarily to increases in qualitative factors
related to trends in adversely graded, non-owner-occupied
commercial real estate loans and the potential impact of rapidly
increasing interest rates and other external factors on both our
non-owner-occupied commercial real estate and construction
portfolios. These increases were partially offset by the impact of
the decrease in loan balances.
There was no provision for credit losses on unfunded loan
commitments in the third quarter of 2023, compared to a $168
thousand reversal of the provision in the prior quarter, due mainly
to a $39.9 million decrease in total unfunded commitments.
Cash, Cash Equivalents and Restricted Cash
Total cash, cash equivalents and restricted cash were $123.1
million at September 30, 2023, compared to $39.7 million at June
30, 2023. The $83.5 million increase was due primarily to the sale
of $82.7 million of available-for-sale securities in the third
quarter, which resulted in 3 basis points of net interest margin
expansion due to the higher interest rate earned on cash and
provided diversification to our liquidity profile.
Investments
The investment securities portfolio totaled $1.594 billion at
September 30, 2023, a decrease of $123.8 million from June 30,
2023. The decrease was primarily the result of sales of $82.7
million available-for-sale securities, principal repayments
totaling $28.8 million, an $11.0 million increase in pre-tax
unrealized losses on available-for-sale investment securities, and
$1.3 million in net amortization. The securities sales and $102
million fair value hedge reduced the impact of interest rate
increases on tangible capital over the quarter by approximately 7
basis points. The $2.8 million net loss on the sale of securities
was offset by a $2.8 million gain from the sale of our remaining
investment in Visa Inc. Class B restricted common stock, which had
a zero carrying value. Both the available-for-sale and
held-to-maturity portfolios are eligible for pledging to FHLB or
the Federal Reserve as collateral for borrowing. The portfolios are
comprised of high credit quality investments with average effective
durations of 4.07 on available-for-sale securities and 5.95 on
held-to-maturity securities. Both portfolios generate cash flows
monthly from interest, principal amortization and payoffs, which
supports the Bank's liquidity. Those cash flows totaled $41.1
million and $36.7 million in the third and second quarters of 2023,
respectively.
Deposits
Deposits totaled $3.444 billion at September 30, 2023, an
increase of $118.5 million compared to $3.325 billion at June 30,
2023, and a decrease of $129.7 million from $3.573 billion at
December 31, 2022. We have seen stability in deposit trends,
including the utilization of our available deposit networks. That
stability extended to our mix in deposits, new account activity and
overall growth. Non-interest bearing deposits made up 47.7% of
total deposits at September 30, 2023, compared to 47.8% at June 30,
2023. Money market balances increased from 30.9% to 31.7% and time
deposits increased from 6.1% to 6.7% of total deposits.
Additionally, the Bank's competitive and balanced approach to
relationship management and focused outreach supported the growth,
adding over 1,200 new accounts during the third quarter, 38% of
which were new relationships, bringing the total to over 3,600 new
accounts in 2023 (excluding new reciprocal accounts). As a result,
we are closing the gap on the deposit outflows experienced in the
first quarter of 2023 without accessing brokered deposit markets.
As of September 30, 2023, 61% of deposit balances were held in
business accounts with average balances of $130 thousand per
account. The remaining 39% were consumer accounts with average
balances of $41 thousand per account. The largest depositor
represented 0.8% of total deposits and the combined four largest
depositors represented 3.0% of total deposits. Our liquidity
policies require that compensating cash or investment security
balances be held against concentrations over a certain level.
Borrowings and Liquidity
At September 30, 2023, the Bank had $120.0 million in
outstanding borrowings, compared to $292.2 million at June 30,
2023, a reduction of $172.2 million. This decrease was the result
of deposit growth and investment and loan cash flows. Although
available as a liquidity source, we have not needed to utilize
brokered deposits. Net available funding sources, including
unrestricted cash, unencumbered available-for-sale securities and
total available borrowing capacity was $2.086 billion, or 61% of
total deposits and 211% of estimated uninsured and/or
uncollateralized deposits as of September 30, 2023. The Federal
Reserve's new Bank Term Funding Program ("BTFP") facility offers
borrowing capacity based on par values of securities pledged making
the funds available less sensitive to changes in market rates. The
following table details the components of our contingent liquidity
sources as of September 30, 2023.
(in millions)
Total Available
Amount Used
Net Availability
Internal Sources
Unrestricted cash 1
$
102.6
$
—
$
102.6
Unencumbered securities at market
value
613.7
—
613.7
External Sources
FHLB line of credit
1,023.2
—
1,023.2
FRB line of credit and BTFP facility
331.9
(120.0
)
211.9
Lines of credit at correspondent banks
135.0
—
135.0
Total Liquidity
$
2,206.4
$
(120.0
)
$
2,086.4
1 Excludes cash items in transit
as of September 30, 2023.
Note: Brokered deposits available
through third-party networks are not included above.
Capital Resources
The total risk-based capital ratio for Bancorp was 16.6% at
September 30, 2023, compared to 16.4% at June 30, 2023. The total
risk-based capital ratio for the Bank was 16.1% at September 30,
2023, compared to 16.0% at June 30, 2023.
Bancorp's tangible common equity to tangible assets ("TCE
ratio") was 8.63% at September 30, 2023, compared to 8.64% at June
30, 2023. The TCE ratio was flat quarter over quarter as the
shareholder dividend payment and increased unrealized losses on
available-for-sale securities due to rising interest rates offset
the positive effect of third quarter net income. The Bank's capital
plan and point-in-time capital stress tests indicate that capital
ratios will remain above regulatory well-capitalized and internal
policy minimums throughout the five-year forecast horizon and
across stress scenarios. The TCE ratio if held-to-maturity
securities were treated the same as available-for-sale securities
at September 30, 2023 would have been 6.1%. Management believes
this non-GAAP measure is important because it reflects the level of
capital available to withstand drastic changes in market conditions
(refer to the discussion and reconciliation of this non-GAAP
financial measure below).
Earnings
Net Interest Income
Net interest income totaled $24.5 million for the third quarter
of 2023, compared to $24.1 million for the prior quarter. The $339
thousand increase from the prior quarter was primarily related to
an increase of approximately $358 thousand in interest income from
the investment of securities sales proceeds into interest-bearing
cash. The $2.3 million reduction in borrowing cost for the quarter
was offset by rising deposit rates and higher average deposit
balances that resulted in an additional $2.4 million in interest
expense.
Net interest income totaled $78.5 million for the nine months
ended September 30, 2023, compared to $94.1 million for the same
period in the prior year. The $15.6 million decrease from the prior
year was primarily due to higher funding costs of $23.9 million,
partially offset by higher average yields on earning assets.
The tax-equivalent net interest margin was 2.48% for the third
quarter of 2023, compared to 2.45% for the prior quarter. The
increase from the prior quarter was primarily due to a $73.3
million increase in average interest-bearing cash balances with an
average yield of 5.37% from securities sales proceeds.
The tax-equivalent net interest margin was 2.66% for the nine
months ended September 30, 2023, compared to 3.06% for the same
period in the prior year. The decrease was primarily attributed to
higher deposit and borrowing costs, partially offset by higher
interest rates on loans and investment securities. Average
interest-bearing deposits balances decreased by $164.2 million
while the average cost increased by 55 basis points, mainly for
money market and time deposit account types, decreasing the margin
by 46 basis points. Average borrowings and other obligations
increased by $260.6 million at an average cost of 5.14%, an
increase of 4.43%, decreasing the margin by 34 basis points.
Average loan balances decreased by $87.3 million while the average
yield increased by 36 basis points, increasing the margin by 20
basis points. Average investment securities increased $26.2
million, and their average yield increased 31 basis points,
improving the margin by 19 basis points.
Non-Interest Income
Non-interest income totaled $2.6 million for the third quarter
of 2023, compared to $2.7 million for the prior quarter. The $141
thousand decrease from the prior quarter was primarily related to a
decrease in debit card interchange income.
Non-interest income totaled $8.3 million for the nine months
ended September 30, 2023, materially unchanged from the same period
of the prior year. The $46 thousand decrease from the prior year
period was mostly attributable to decreases in other income
including one-way deposit and cash management fees and in wealth
management and trust services income, partially offset by higher
bank-owned life insurance benefit payments and balances and
dividends on Federal Home Loan Bank stock.
Non-Interest Expense
Non-interest expense totaled $19.7 million for the third quarter
of 2023, compared to $20.7 million for the prior quarter. The $918
thousand decrease from the prior quarter primarily resulted from a
$675 thousand decrease in salaries and related benefits mainly due
to decreases in accrued incentive and profit sharing expenses and
401(k) contributions, $618 thousand less in charitable
contributions as our annual grant program normally occurs in the
second quarter, and a $197 thousand decrease related to a catch-up
adjustment in the second quarter for increased FDIC assessments to
strengthen the Deposit Insurance Fund. These decreases were
partially offset by a $533 thousand net increase in other expense,
primarily due to a $688 thousand increase in expenses and fees
associated with our customers' participation in reciprocal deposit
networks to bolster their FDIC insured balances.
Non-interest expense totaled $60.2 million for the nine months
ended September 30, 2023, compared to $57.0 million for the same
period of prior year, an increase of $3.2 million. Other expense
increased by $1.8 million primarily due to a $1.5 million increase
in expenses and fees associated with reciprocal deposits placed
into deposit networks. Salaries and related benefits increased by
$641 thousand primarily due to regularly scheduled annual merit and
other increases, the hiring of several key employees and officers,
and lower deferred loan origination costs, partially offset by a
reduction in accrued incentive and profit sharing expenses.
Occupancy and equipment and depreciation and amortization expenses
rose $628 thousand and $446 thousand, respectively, mainly from the
acceleration of lease-related costs for branch closures in the
first quarter of 2023. Beginning in 2024, the estimated annual
pre-tax savings from branch closures are expected to be
approximately $1.4 million. In addition, the FDIC insurance
assessment rose by $538 thousand due to the increased statutory
rate. These increases were partially offset by a $593 thousand
decrease in data processing expenses due to our core system
contract renegotiation for the current period and because the prior
year included data processing expenses largely eliminated after the
systems conversion associated with the American River Bankshares
merger. In addition, other real estate owned expenses decreased by
$307 thousand due to the write-down in the prior year of the asset
that was sold in the third quarter of 2023.
Statement Regarding use of Non-GAAP Financial
Measures
Results for 2022 were impacted by costs associated with our 2021
acquisition of American River Bankshares, which we considered
immaterial to discuss in this release. For additional information
regarding the impact of non-GAAP adjustments to our third quarter
and year-to-date 2022 performance measures, refer to Form 10-Q
filed on November 8, 2022.
Financial results are presented in accordance with GAAP and with
reference to certain non-GAAP financial measures. Management
believes that, given recent industry turmoil, the presentation of
Bancorp's non-GAAP TCE ratio reflecting the after tax impact of
unrealized losses on held-to-maturity securities provides useful
supplemental information to investors because it reflects the level
of capital available to withstand drastic changes in market
conditions. Because there are limits to the usefulness of this
measure to investors, Bancorp encourages readers to consider its
annual and quarterly consolidated financial statements and notes
related thereto for their entirety, as filed with the Securities
and Exchange Commission, and not to rely on any single financial
measure. A reconciliation of the non-GAAP TCE ratio is presented
below.
Reconciliation of GAAP and Non-GAAP Financial
Measures
(in thousands, unaudited)
September 30,
2023
December 31,
2022
Tangible Common Equity -
Bancorp
Total stockholders' equity
$
418,618
$
412,092
Goodwill and core deposit intangible
(76,850
)
(77,870
)
Total TCE
a
341,768
334,222
Unrealized losses on HTM securities, net
of tax
(107,011
)
(89,432
)
TCE, net of unrealized losses on HTM
securities (non-GAAP)
b
$
234,757
$
244,790
Total assets
$
4,035,549
$
4,147,464
Goodwill and core deposit intangible
(76,850
)
(77,870
)
Total tangible assets
c
3,958,699
4,069,594
Unrealized losses on HTM securities, net
of tax
(107,011
)
(89,432
)
Total tangible assets, net of unrealized
losses on HTM securities (non-GAAP)
d
$
3,851,688
$
3,980,162
Bancorp TCE ratio
a / c
8.6
%
8.2
%
Bancorp TCE ratio, net of unrealized
losses on HTM securities (non-GAAP)
b / d
6.1
%
6.2
%
Share Repurchase Program
On July 21, 2023, the Board of Directors approved the adoption
of Bancorp's new share repurchase program, which replaced the
existing program that expired on July 31, 2023, for up to $25.0
million and expiring on July 31, 2025. There have been no
repurchases in 2023.
Earnings Call and Webcast Information
Bank of Marin Bancorp (Nasdaq: BMRC) will present its second
quarter earnings call via webcast on Monday, October 23, 2023 at
8:30 a.m. PT/11:30 a.m. ET. Investors can listen to the webcast
online through Bank of Marin’s website at www.bankofmarin.com.
under “Investor Relations.” To listen to the live call, please go
to the website at least 15 minutes early to register, download and
install any necessary audio software. For those who cannot listen
to the live broadcast, a replay will be available at the same
website location shortly after the call. Closed captioning will be
available during the live webcast, as well as on the webcast
replay.
About Bank of Marin Bancorp
Founded in 1990 and headquartered in Novato, Bank of Marin is
the wholly owned subsidiary of Bank of Marin Bancorp (Nasdaq:
BMRC). A leading business and community bank in Northern
California, with assets of $4.0 billion, Bank of Marin has 27
retail branches and 8 commercial banking offices located across 10
counties. Bank of Marin provides commercial banking, personal
banking, 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 and the
economic uncertainty in the United States and abroad, including
economic or other disruptions to financial markets caused by acts
of terrorism, war or other conflicts such as Russia's military
action in Ukraine and more recently between Israel and Hamas,
impacts from inflation, supply change disruptions, changes in
interest rates (including the actions taken by the Federal Reserve
to control inflation), California's unemployment rate, deposit
flows, real estate values, and expected future cash flows on loans
and securities; costs or effects of acquisitions; competition;
changes in accounting principles, policies or guidelines; changes
in legislation or regulation; natural disasters (such as wildfires
and earthquakes in our area); adverse weather conditions;
interruptions of utility service in our markets for sustained
periods; and other economic, competitive, governmental, regulatory
and technological factors (including external fraud and
cybersecurity threats) affecting our operations, pricing, products
and services; and successful integration of acquisitions. These and
other important factors are detailed in various securities law
filings made periodically by Bancorp, copies of which are available
from Bancorp without charge. Bancorp undertakes no obligation to
release publicly the result of any revisions to these
forward-looking statements that may be made to reflect events or
circumstances after the date of this press release or to reflect
the occurrence of unanticipated events.
BANK OF MARIN BANCORP
FINANCIAL HIGHLIGHTS
Three months ended
Nine months ended
(in thousands, except per share
amounts; unaudited)
September 30,
2023
June 30,
2023
September 30,
2023
September 30,
2022
Selected operating data and performance
ratios:
Net income
$
5,295
$
4,551
$
19,285
$
33,705
Diluted earnings per common share
$
0.33
$
0.28
$
1.20
$
2.11
Return on average assets
0.52
%
0.44
%
0.63
%
1.04
%
Return on average equity
4.94
%
4.25
%
6.07
%
10.65
%
Efficiency ratio
72.96
%
76.91
%
69.37
%
55.60
%
Tax-equivalent net interest margin 1
2.48
%
2.45
%
2.66
%
3.06
%
Cost of deposits
0.94
%
0.69
%
0.61
%
0.06
%
Net (recoveries) charge-offs
$
(3
)
$
(2
)
$
(2
)
$
(3
)
(in thousands; unaudited)
September 30,
2023
June 30,
2023
December 31,
2022
Selected financial condition
data:
Total assets
$
4,035,549
$
4,092,133
$
4,147,464
Loans:
Commercial and industrial
$
174,096
$
183,157
$
173,547
Real estate:
Commercial owner-occupied
346,307
344,951
354,877
Commercial non-owner occupied
1,190,813
1,196,158
1,191,889
Construction
109,305
108,986
114,373
Home equity
83,267
85,587
88,748
Other residential
116,674
118,646
112,123
Installment and other consumer loans
66,480
65,311
56,989
Total loans
$
2,086,942
$
2,102,796
$
2,092,546
Non-accrual loans: 1
Real estate:
Commercial owner-occupied
$
4,281
$
457
$
1,563
Commercial non-owner occupied
901
906
—
Home equity
490
749
778
Installment and other consumer loans
—
—
91
Total non-accrual loans
$
5,672
$
2,112
$
2,432
Classified loans (graded substandard and
doubtful)
$
39,697
$
38,061
$
28,109
Classified loans as a percentage of total
loans
1.90
%
1.81
%
1.34
%
Total accruing loans 30-89 days past
due
$
2,216
$
983
$
664
Allowance for credit losses to total
loans
1.16
%
1.13
%
1.10
%
Allowance for credit losses to non-accrual
loans
4.28x
11.28x
9.45x
Non-accrual loans to total loans
0.27
%
0.10
%
0.12
%
Total deposits
$
3,443,684
$
3,325,212
$
3,573,348
Loan-to-deposit ratio
60.6
%
63.2
%
58.6
%
Stockholders' equity
$
418,618
$
423,941
$
412,092
Book value per share
$
25.94
$
26.32
$
25.71
Tangible common equity to tangible assets
- Bank
8.34
%
8.39
%
8.10
%
Tangible common equity to tangible assets
- Bancorp
8.63
%
8.64
%
8.21
%
Total risk-based capital ratio - Bank
16.13
%
15.99
%
15.73
%
Total risk-based capital ratio -
Bancorp
16.56
%
16.36
%
15.90
%
Full-time equivalent employees
334
317
313
1 There were no non-performing
loans over 90 days past due and accruing interest as of September
30, 2023, June 30, 2023 and December 31, 2022.
BANK OF MARIN BANCORP
CONSOLIDATED STATEMENTS OF
CONDITION
(in thousands, except share data;
unaudited)
September 30,
2023
June 30,
2023
December 31,
2022
Assets
Cash, cash equivalents and restricted
cash
$
123,132
$
39,657
$
45,424
Investment securities:
Held-to-maturity, at amortized cost (net
of zero allowance for credit losses at September 30, 2023, June 30,
2023 and December 31, 2022)
935,142
946,808
972,207
Available-for-sale (at fair value;
amortized cost of $755,038, $856,166 and $892,605 at September 30,
2023, June 30, 2023 and December 31, 2022, respectively; net of
zero allowance for credit losses at September 30, 2023, June 30,
2023 and December 31, 2022)
658,815
770,942
802,096
Total investment securities
1,593,957
1,717,750
1,774,303
Loans, at amortized cost
2,086,942
2,102,796
2,092,546
Allowance for credit losses on loans
(24,260
)
(23,832
)
(22,983
)
Loans, net of allowance for credit losses
on loans
2,062,682
2,078,964
2,069,563
Goodwill
72,754
72,754
72,754
Bank-owned life insurance
67,738
67,367
67,066
Operating lease right-of-use assets
21,589
22,739
24,821
Bank premises and equipment, net
8,174
8,683
8,134
Core deposit intangible, net
4,096
4,431
5,116
Other real estate owned
—
415
455
Interest receivable and other assets
81,427
79,373
79,828
Total assets
$
4,035,549
$
4,092,133
$
4,147,464
Liabilities and Stockholders'
Equity
Liabilities
Deposits:
Non-interest bearing
$
1,642,244
$
1,588,723
$
1,839,114
Interest bearing
Transaction accounts
221,128
229,434
287,651
Savings accounts
257,754
274,510
338,163
Money market accounts
1,090,181
1,029,082
989,390
Time accounts
232,377
203,463
119,030
Total deposits
3,443,684
3,325,212
3,573,348
Short-term borrowings and other
obligations
120,335
292,572
112,439
Operating lease liabilities
24,040
25,220
26,639
Interest payable and other liabilities
28,872
25,188
22,946
Total liabilities
3,616,931
3,668,192
3,735,372
Stockholders' Equity
Preferred stock, no par value, Authorized
- 5,000,000 shares, none issued
—
—
—
Common stock, no par value, Authorized -
30,000,000 shares; issued and outstanding - 16,139,321, 16,107,192
and 16,029,138 at September 30, 2023, June 30 2023 and December 31,
2022, respectively
217,202
216,589
215,057
Retained earnings
277,996
276,732
270,781
Accumulated other comprehensive loss, net
of taxes
(76,580
)
(69,380
)
(73,746
)
Total stockholders' equity
418,618
423,941
412,092
Total liabilities and stockholders'
equity
$
4,035,549
$
4,092,133
$
4,147,464
BANK OF MARIN BANCORP
CONSOLIDATED STATEMENTS OF
COMPREHENSIVE (LOSS) INCOME
Three months ended
Nine months ended
(in thousands, except per share
amounts; unaudited)
September 30,
2023
June 30,
2023
September 30,
2023
September 30,
2022
Interest income
Interest and fees on loans
$
24,704
$
24,579
$
73,541
$
70,368
Interest on investment securities
9,345
9,994
29,371
24,640
Interest on federal funds sold and due
from banks
1,055
48
1,159
832
Total interest income
35,104
34,621
104,071
95,840
Interest expense
Interest on interest-bearing transaction
accounts
270
234
758
230
Interest on savings accounts
229
146
545
93
Interest on money market accounts
5,988
4,292
11,365
1,184
Interest on time accounts
1,555
946
2,724
209
Interest on borrowings and other
obligations
2,593
4,873
10,182
2
Total interest expense
10,635
10,491
25,574
1,718
Net interest income
24,469
24,130
78,497
94,122
Provision for (reversal of) credit losses
on loans
425
500
1,275
(63
)
Reversal of credit losses on unfunded loan
commitments
—
(168
)
(342
)
(318
)
Net interest income after provision for
(reversal of) credit losses
24,044
23,798
77,564
94,503
Non-interest income
Wealth Management and Trust Services
515
559
1,585
1,737
Service charges on deposit accounts
508
520
1,561
1,488
Debit card interchange fees, net
456
555
1,458
1,538
Earnings on bank-owned life insurance,
net
371
362
1,438
933
Dividends on Federal Home Loan Bank
stock
324
290
916
759
Merchant interchange fees, net
117
127
377
430
Gains (losses) on sale of investment
securities, net
14
—
14
(63
)
Other income
293
326
923
1,496
Total non-interest income
2,598
2,739
8,272
8,318
Non-interest expense
Salaries and related benefits
10,741
11,416
33,087
32,446
Occupancy and equipment
1,973
1,980
6,367
5,739
Data processing
1,009
922
2,976
3,569
Professional services
757
797
2,677
2,314
Depreciation and amortization
423
400
1,705
1,259
Federal Deposit Insurance Corporation
insurance
469
666
1,424
886
Information technology
411
357
1,138
1,519
Amortization of core deposit
intangible
335
340
1,020
1,124
Directors' expense
272
300
893
838
Charitable contributions
20
638
707
605
Other real estate owned
—
44
48
355
Other expense
3,337
2,805
8,150
6,305
Total non-interest expense
19,747
20,665
60,192
56,959
Income before provision for income
taxes
6,895
5,872
25,644
45,862
Provision for income taxes
1,600
1,321
6,359
12,157
Net income
$
5,295
$
4,551
$
19,285
$
33,705
Net income per common share:
Basic
$
0.33
$
0.28
$
1.21
$
2.12
Diluted
$
0.33
$
0.28
$
1.20
$
2.11
Weighted average shares:
Basic
16,028
16,009
16,002
15,912
Diluted
16,036
16,016
16,017
15,959
Comprehensive (loss) income:
Net income
$
5,295
$
4,551
$
19,285
$
33,705
Other comprehensive (loss) income:
Change in net unrealized gains or losses
on available-for-sale securities
(13,425
)
(10,928
)
(8,140
)
(97,094
)
Reclassification adjustment for losses
(gains) on available-for-sale securities included in net income
2,793
—
2,793
63
Net unrealized losses on securities
transferred from available-for-sale to held-to-maturity
—
—
—
(14,847
)
Amortization of net unrealized losses on
securities transferred from available-for-sale to
held-to-maturity
411
451
1,325
1,126
Other comprehensive (loss) income, before
tax
(10,221
)
(10,477
)
(4,022
)
(110,752
)
Deferred tax (benefit) expense
(3,021
)
(3,097
)
(1,188
)
(32,741
)
Other comprehensive (loss) income, net of
tax
(7,200
)
(7,380
)
(2,834
)
(78,011
)
Total comprehensive (loss)
income
$
(1,905
)
$
(2,829
)
$
16,451
$
(44,306
)
BANK OF MARIN BANCORP
AVERAGE STATEMENTS OF
CONDITION AND ANALYSIS OF NET INTEREST INCOME
Three months ended
Three months ended
September 30, 2023
June 30, 2023
Interest
Interest
Average
Income/
Yield/
Average
Income/
Yield/
(in thousands)
Balance
Expense
Rate
Balance
Expense
Rate
Assets
Interest-earning deposits with banks 1
$
76,896
$
1,055
5.37
%
$
3,578
$
48
5.35
%
Investment securities 2, 3
1,721,367
9,436
2.19
%
1,819,486
10,103
2.22
%
Loans 1, 3, 4
2,096,814
24,823
4.63
%
2,108,260
24,700
4.63
%
Total interest-earning assets 1
3,895,077
35,314
3.55
%
3,931,324
34,851
3.51
%
Cash and non-interest-bearing due from
banks
37,964
38,154
Bank premises and equipment, net
8,428
8,546
Interest receivable and other assets,
net
134,075
141,130
Total assets
$
4,075,544
$
4,119,154
Liabilities and Stockholders' Equity
Interest-bearing transaction accounts
$
230,085
$
270
0.47
%
$
232,090
$
234
0.41
%
Savings accounts
266,770
229
0.34
%
285,745
146
0.20
%
Money market accounts
1,046,011
5,988
2.27
%
948,670
4,292
1.81
%
Time accounts including CDARS
217,467
1,555
2.84
%
174,471
946
2.18
%
Short-term borrowings and other
obligations 1
188,415
2,593
5.39
%
372,308
4,873
5.18
%
Total interest-bearing liabilities
1,948,748
10,635
2.17
%
2,013,284
10,491
2.09
%
Demand accounts
1,649,691
1,627,730
Interest payable and other liabilities
52,067
49,116
Stockholders' equity
425,038
429,024
Total liabilities & stockholders'
equity
$
4,075,544
$
4,119,154
Tax-equivalent net interest income/margin
1
$
24,679
2.48
%
$
24,360
2.45
%
Reported net interest income/margin 1
$
24,469
2.46
%
$
24,130
2.43
%
Tax-equivalent net interest rate
spread
1.38
%
1.42
%
Nine months ended
Nine months ended
September 30, 2023
September 30, 2022
Interest
Interest
Average
Income/
Yield/
Average
Income/
Yield/
(in thousands)
Balance
Expense
Rate
Balance
Expense
Rate
Assets
Interest-earning deposits with banks 1
$
28,710
$
1,159
5.32
%
$
140,114
$
832
0.78
%
Investment securities 2, 3
1,797,054
29,731
2.21
%
1,770,882
25,214
1.90
%
Loans 1, 3, 4
2,108,840
73,938
4.62
%
2,196,173
70,944
4.26
%
Total interest-earning assets 1
3,934,604
104,828
3.51
%
4,107,169
96,990
3.11
%
Cash and non-interest-bearing due from
banks
38,641
56,585
Bank premises and equipment, net
8,457
7,220
Interest receivable and other assets,
net
137,428
159,994
Total assets
$
4,119,130
$
4,330,968
Liabilities and Stockholders' Equity
Interest-bearing transaction accounts
$
244,688
$
758
0.41
%
$
296,239
$
230
0.10
%
Savings accounts
293,709
545
0.25
%
342,704
93
0.04
%
Money market accounts
982,729
11,365
1.55
%
1,074,597
1,184
0.15
%
Time accounts including CDARS
172,991
2,724
2.11
%
144,807
209
0.19
%
Short-term borrowings and other
obligations 1
260,973
10,182
5.14
%
368
2
0.71
%
Total interest-bearing liabilities
1,955,090
25,574
1.75
%
1,858,715
1,718
0.12
%
Demand accounts
1,689,615
1,999,433
Interest payable and other liabilities
49,819
49,747
Stockholders' equity
424,606
423,073
Total liabilities & stockholders'
equity
$
4,119,130
$
4,330,968
Tax-equivalent net interest income/margin
1
$
79,254
2.66
%
$
95,272
3.06
%
Reported net interest income/margin 1
$
78,497
2.63
%
$
94,122
3.02
%
Tax-equivalent net interest rate
spread
1.76
%
2.99
%
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 2023 and 2022.
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.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20231023694588/en/
MEDIA: Yahaira Garcia-Perea Marketing & Corporate
Communications Manager 916-823-7214 |
YahairaGarcia-Perea@bankofmarin.com
Grafico Azioni Bank of Marin Bancorp (NASDAQ:BMRC)
Storico
Da Mag 2024 a Giu 2024
Grafico Azioni Bank of Marin Bancorp (NASDAQ:BMRC)
Storico
Da Giu 2023 a Giu 2024