Bank of Marin Bancorp Reports Fourth Quarter and Full Year 2020 Earnings

Rhea-AI Summary

Bank of Marin Bancorp (BMRC) reported fourth-quarter 2020 earnings of $8.1 million, up from $7.5 million in Q3 2020, yet down from $9.1 million in Q4 2019. Diluted EPS was $0.60 compared to $0.55 in Q3 2020 and $0.66 a year ago. Annual earnings fell to $30.2 million in 2020 from $34.2 million in 2019. Loans increased by 13% to $2.089 billion, although a slight decline occurred in Q4. Deposits rose by 7% to $2.504 billion, and the bank declared a dividend of $0.23 per share, marking the 63rd consecutive quarterly payment.

Positive

• Loans increased 13% in 2020 to $2.089 billion.
• Deposits grew by 7% to $2.504 billion.
• Strong credit quality with non-accrual loans at 0.44% of the portfolio.
• Declared a dividend of $0.23 per share.

Negative

• Annual earnings decreased to $30.2 million from $34.2 million.
• Diluted EPS dropped to $2.22 from $2.48 year-over-year.

Bank of Marin Bancorp, "Bancorp" (Nasdaq: BMRC), parent company of Bank of Marin, "Bank," announced earnings of $8.1 million in the fourth quarter of 2020, compared to $7.5 million in the third quarter of 2020 and $9.1 million in the fourth quarter of 2019. Diluted earnings per share were $0.60 in the fourth quarter of 2020, compared to $0.55 in the prior quarter and $0.66 the same quarter a year ago. Annual earnings were $30.2 million in 2020 compared to $34.2 million in 2019. Diluted earnings per share were $2.22 for the year ended December 31, 2020, compared to $2.48 per share for the year ended December 31, 2019.

"We effectively served our clients and produced strong results for our shareholders in an extraordinary and challenging year,” said Russell A. Colombo, President and Chief Executive Officer. “We have gained actionable insight into the future of our relationship banking model, adapting to customers' increased adoption of technology and leveraging remote work to recruit and retain the best talent."

Bancorp also provided the following highlights for the fourth quarter and year ended December 31, 2020:

• Loans increased $245.3 million in 2020, or 13%, to $2.089 billion at December 31, 2020, from $1.843 billion at December 31, 2019. SBA PPP loans outstanding at December 31, 2020 were $291.6 million. Loans decreased $19.4 million, or 1%, in the fourth quarter from $2.108 billion at September 30, 2020, which included $10.9 million of PPP loans forgiven in the fourth quarter of 2020.

• Credit quality remains strong, with non-accrual loans representing 0.44% of the Bank's loan portfolio as of December 31, 2020. We adopted the current expected credit loss ("CECL") standard in the fourth quarter of 2020, which resulted in an increase to the allowance for credit losses for loans of $748 thousand and a $1.1 million increase to the allowance for unfunded loan commitments. See the Loan and Credit Quality section, below, for detail on the adoption of CECL.

• Deposits grew $167.8 million, or 7%, to $2.504 billion at December 31, 2020, compared to $2.336 billion at December 31, 2019. Non-interest bearing deposits grew by $225.8 million, or 20%, in 2020 and made up 54% of total deposits at year end. Cost of deposits remained low at 0.11% for the full year of 2020, down from 0.20% in 2019. Cost of deposits was 0.07% for the fourth quarter of 2020, compared to 0.09% in the prior quarter. Additionally, the Bank maintained $173.4 million deposits off-balance sheet with deposit networks as part of our liquidity management.

• For the full year 2020, return on assets ("ROA") and return on equity ("ROE") were 1.04% and 8.60%, respectively, compared to 1.34% and 10.49% in the prior year. For the quarter ended December 31, 2020, ROA was 1.09% and ROE was 8.98%, compared to 0.98% and 8.37%, respectively, in the prior quarter.

• All capital ratios were above regulatory requirements for a well-capitalized institution. The total risk-based capital ratio for Bancorp was 16.0% at December 31, 2020 and 15.1% at December 31, 2019. Tangible common equity to tangible assets was 11.3% at both December 31, 2020 and December 31, 2019 (refer to footnote 5 on page 6 for definition of this non-GAAP financial measure). The total risk-based capital ratio for the Bank was 15.8% at December 31, 2020 and 14.6% at December 31, 2019.

• The Board of Directors declared a cash dividend of $0.23 per share on January 22, 2021. This is the 63^rd consecutive quarterly dividend paid by Bank of Marin Bancorp. The cash dividend is payable on February 12, 2021 to shareholders of record at the close of business on February 5, 2021.

• Our strong capital and liquidity position affords us the opportunity to eliminate a high cost funding source. On March 15, 2021 we intend to redeem the $2.8 million subordinated debentures, which carried a rate of 4.85% in the fourth quarter. The redemption will consist of $4.1 million principal balance, quarterly interest due, and $1.3 million in accelerated accretion of purchase discount. The contractual interest rate on the subordinated debentures is 3-month LIBOR plus 1.40%, or 1.62% as of December 31, 2020.

Pandemic-Related Response Update

As of December 31, 2020, there were 1,777 PPP loans outstanding totaling $291.6 million, net of $5.4 million in unaccreted fees and costs. During the fourth quarter Bank of Marin opened a secure PPP loan forgiveness application portal and gave all PPP borrowers access to apply. As of December 31, 2020 we received SBA loan forgiveness payments totaling $10.9 million for 35 loans that were forgiven. Of the total PPP loans remaining, 74% (1,309 loans) totaling $58.7 million are less than or equal to $150 thousand and have access to streamlined forgiveness processing. On January 19, 2021, the Bank launched the application process and began accepting loan requests for the PPP program as revised by the Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act.

Of the 269 loans totaling $402.9 million granted payment relief since the onset of the pandemic, 222 loans or $324.2 million have resumed normal payments and 18 loans or $7.7 million paid off. As of December 31, 2020, 14 borrowing relationships with 29 loans totaling $71.0 million had requested additional payment relief. We know each of these clients very well and anticipate that the vast majority will work through current adverse conditions and resume payments. The following table summarizes these loans by industry or collateral type.

Payment Relief by Type
Industry/Collateral Type	Outstanding Loan Balance (in thousands)		Weighted Average LTV
Education	$	17,580	26

FAQ

What were Bank of Marin's earnings in Q4 2020?

Bank of Marin Bancorp reported earnings of $8.1 million in Q4 2020.

What is the diluted EPS for Bank of Marin for 2020?

The diluted EPS for Bank of Marin for the year ended December 31, 2020, was $2.22.

What was the loan growth for Bank of Marin in 2020?

Loans increased by 13% to $2.089 billion in 2020.

How much did deposits grow at Bank of Marin in 2020?

Deposits grew by 7% to $2.504 billion at the end of 2020.

What dividend did Bank of Marin declare in January 2021?

Bank of Marin declared a cash dividend of $0.23 per share.