Bank of Marin Bancorp Reports Record Earnings of $11.1 Million

Rhea-AI Summary

Bank of Marin Bancorp (BMRC) reported record earnings of $11.1 million in Q2 2022, reflecting an increase from $10.5 million in Q1 2022. Diluted EPS rose to $0.69 from $0.66. Year-to-date earnings totaled $21.5 million, up from $18.2 million in the same period last year. The company increased its dividend to $0.25 per share, marking the 69th consecutive quarterly dividend. The loan portfolio showed strong production with $102.2 million in originations despite a slight drop in total loans to $2.163 billion.

Positive

• Record earnings of $11.1 million in Q2 2022, up from $10.5 million in Q1 2022.
• Diluted EPS increased to $0.69 from $0.66.
• Year-to-date earnings of $21.5 million, compared to $18.2 million last year.
• Loan originations of $102.2 million in Q2 2022, more than double from the same quarter last year.
• Increased dividend to $0.25 per share, marking the 69th consecutive quarterly dividend.

Negative

• Total loans decreased to $2.163 billion from $2.202 billion in the prior quarter.
• Net charge-offs in Q2 2022 totaled $8,000, compared to net recoveries of $9,000 in Q1 2022.
• Average yield on investment portfolio decreased from 3.28% to 3.01% compared to the previous year's six months.

Increases Dividend to 25 Cents

NOVATO, Calif.--(BUSINESS WIRE)-- Bank of Marin Bancorp, "Bancorp" (Nasdaq: BMRC), parent company of Bank of Marin, "Bank," announced record earnings of $11.1 million in the second quarter of 2022, compared to $10.5 million in the first quarter of 2022. Diluted earnings per share were $0.69 in the second quarter of 2022, compared to $0.66 in the immediately preceding quarter. Earnings for the first six months of 2022 totaled $21.5 million, compared to $18.2 million in the same period last year. Diluted earnings per share were $1.35 and $1.37 in the first six months of 2022 and 2021, respectively. All periods of earnings presented were impacted by the costs associated with our most recent acquisition, the details of which are discussed throughout this report. In particular, diluted earnings per share for the first half of 2022 would have increased by one cent per share over 2021 without those costs.

“We generated record earnings and robust loan production during the second quarter, building further momentum with our enhanced business development efforts. During the first six months of 2022, our loan originations ex-PPP totaled $152 million, more than double the same period a year earlier,” said Tim Myers, President and Chief Executive Officer. “Our asset quality remains excellent as we continue our traditional focus on disciplined and prudent underwriting. We will not sacrifice credit standards as we grow."

“We are executing on a long-term plan to invest in key talent and technology that we believe will enable us to continue exceeding our customers’ expectations and drive growth while realizing efficiencies,” Myers added. “We are also working to identify cost saving opportunities to offset those investments, managing expenses to deliver strong returns to our shareholders.”

Bancorp also provided the following highlights from the second quarter of 2022:

• Return on Assets of 1.03% and Return on Equity of 10.74% for the three months ended June 30, 2022, would have been 1.05% and 10.95%, respectively, without one-time and conversion costs related to the 2021 merger with American River Bankshares ("ARB"). That compares to 0.98% and 9.61% (GAAP) and 1.01% and 9.96% (non-GAAP), respectively, for the three months ended March 31, 2022. As shown in the reconciliation of GAAP to non-GAAP financial measures on page 3, merger-related costs reduced net income by $219 thousand, net of taxes, or $0.02 per share in the second quarter.

• The second quarter tax-equivalent net interest margin improved 9 basis points over the preceding quarter despite the 7 basis point drag of declining PPP loan fee recognition. Rising interest rates had a positive impact on the Bank's asset sensitive portfolio, as did the deployment of excess cash into securities and flat deposit costs.

• Deposits decreased by $30.7 million to $3.831 billion at June 30, 2022, compared to $3.861 billion at March 31, 2022. Non-interest bearing deposits made up 53% of total deposits as of June 30, 2022 versus 51% as of March 31, 2022. The cost of average deposits in the second quarter of 2022 was 0.06%, unchanged from the preceding quarter.

• Loan balances of $2.163 billion at June 30, 2022 reflected record second quarter originations of $102.2 million. While our production was strong, total loans decreased modestly in the quarter due to payoffs including expected construction project completions, borrowers' sales of underlying assets, PPP loan payoffs, and third party refinancing of acquired loans outside the Bank's credit risk appetite.

• Credit quality remains strong, with non-accrual loans representing 0.37% of total loans as of June 30, 2022, compared to 0.35% at March 31, 2022. There was not a significant change in classified loans. There was no provision made to the allowance for credit losses on loans or to the allowance for credit losses on unfunded loan commitments this quarter as an improvement in the California unemployment rate forecast decreased the quantitative portion of estimated credit losses while ongoing supply chain issues, inflation and recession risks increased qualitative factors.

• Our declining efficiency ratios quarter over quarter and year over year are a testament to the improved operating leverage attained through the ARB acquisition. The efficiency ratios of 55.73% for the second quarter and 57.40% year to date compare to 59.13% and 61.43% for the first quarter of 2022 and year to date 2021, respectively. Changes from the prior quarter were primarily visible in salaries, benefits and professional services expenses.

• All capital ratios were above well-capitalized regulatory requirements. The total risk-based capital ratio for Bancorp was 14.7% at June 30, 2022, compared to 14.4% at March 31, 2022. Bancorp's tangible common equity to tangible assets was 7.8% at June 30, 2022, compared to 8.0% at March 31, 2022 (refer to footnote 5 on page 7 for a discussion of this non-GAAP financial measure). The total risk-based capital ratio for the Bank was 14.2% at June 30, 2022, compared to 14.3% at March 31, 2022. The Bank's tangible common equity to tangible assets was 7.5% at June 30, 2022, compared to 8.0% at March 31, 2022. Declines in the Bank's and Bancorp's tangible common equity were primarily related to an increase in after-tax unrealized losses on available-for-sales securities associated with interest rate increases since March 31, 2022.

• The Board of Directors declared a cash dividend of $0.25 per share, an increase from $0.24 per share in the prior quarter, on July 22, 2022, which represents the 69^th consecutive quarterly dividend paid by Bancorp. The dividend is payable on August 12, 2022, to shareholders of record at the close of business on August 5, 2022.

Statement Regarding use of Non-GAAP Financial Measures

In this press release, Bancorp's financial results are presented in accordance with GAAP and with reference to certain non-GAAP financial measures. Management believes that presentation of operating results using non-GAAP financial measures provides useful supplemental information to investors and facilitates the analysis of Bancorp's operating results and comparison of operating results across reporting periods. Management also uses non-GAAP financial measures to establish budgets and manage Bancorp's business. A reconciliation of the GAAP financial measures to comparable non-GAAP financial measures is presented below.

Reconciliation of GAAP and Non-GAAP Financial Measures

(in thousands, unaudited)		Three months ended								Six months ended
Net income		June 30, 2022				March 31, 2022				June 30, 2022				June 30, 2021
Net income (GAAP)		$	11,066			$	10,465			$	21,531			$	18,232
Merger-related one-time and conversion costs:
Personnel and severance			58				335				393				—
Professional services			—				67				67				201
Data processing			29				48				77				—
Other			224				97				321				16
Total merger costs before tax benefits			311				547				858				217
Income tax benefit of merger-related expenses			(92	)			(162	)			(254	)			(17	)
Total merger-related one-time and conversion costs, net of tax benefits			219				385				604				200
Comparable net income (non-GAAP)		$	11,285			$	10,850			$	22,135			$	18,432
Diluted earnings per share
Weighted average diluted shares			15,955				15,946				15,950				13,316
Diluted earnings per share (GAAP)		$	0.69			$	0.66			$	1.35			$	1.37
Merger-related one-time and conversion costs, net of tax benefits			0.02				0.02				0.04				0.01
Comparable diluted earnings per share (non-GAAP)		$	0.71			$	0.68			$	1.39			$	1.38
Return on average assets
Average assets		$	4,312,919			$	4,345,258			$	4,328,999			$	3,044,933
Return on average assets (GAAP)			1.03	%			0.98	%			1.00	%			1.21	%
Comparable return on average assets (non-GAAP)			1.05	%			1.01	%			1.03	%			1.22	%
Return on average equity
Average stockholders' equity		$	413,271			$	441,626			$	427,370			$	351,227
Return on average equity (GAAP)			10.74	%			9.61	%			10.16	%			10.47	%
Comparable return on average equity (non-GAAP)			10.95	%			9.96	%			10.44	%			10.58	%
Efficiency ratio
Non-interest expense (GAAP)		$	18,906			$	19,375			$	38,281			$	30,968
Merger-related expenses			(311	)			(547	)			(858	)			(217	)
Non-interest expense (non-GAAP)		$	18,595			$	18,828			$	37,423			$	30,751
Net interest income		$	31,197			$	29,898			$	61,095			$	46,565
Non-interest income		$	2,728			$	2,867			$	5,595			$	3,848
Efficiency ratio (GAAP)			55.73	%			59.13	%			57.40	%			61.43	%
Comparable efficiency ratio (non-GAAP)			54.81	%			57.46	%			56.11	%			61.00	%

"Our record second quarter earnings reflect the Bank’s consistent execution on our strategic priorities. The ARB acquisition is achieving earnings accretion above projected levels, one-time costs were negotiated lower, and expense savings are on target with more to be realized," said Tani Girton, EVP and Chief Financial Officer. “Our credit quality, liquidity and capital are strong and the Bank is well-positioned to support the initiatives underway."

Loans and Credit Quality

Loans totaled $2.163 billion at June 30, 2022, compared to $2.202 billion at March 31, 2022, a decrease of $39.2 million, largely due to net declines of $23.6 million in PPP loans and $12.9 million in construction loans. Record loan originations of $102.2 million compared to $49.8 million for the first quarter of 2022. Our consistent calling practices and relationship banking model, coupled with a rising rate environment, drove customer urgency and strong originations in the quarter. Non-PPP loan payoffs of $109.8 million in the second quarter included $34.5 million in expected construction project completions and $28.5 million whereby borrowers sold underlying assets. By comparison, first quarter non-PPP loan payoffs were $49.3 million.

The $93.0 million decrease in loans during the six months ended June 30, 2022 was mostly attributable to a $94.2 million decrease in PPP loans. This compared to an $85.8 million decrease in total loans during the six months ended June 30, 2021. Non-PPP loan originations were $152.0 million for the six months ended June 30, 2022, compared to $69.1 million for the six months ended June 30, 2021. Non-PPP loan payoffs were $159.1 million in the six months ended June 30, 2022, compared to $95.4 million in the six months ended June 30, 2021.

Bank of Marin and ARB originated a combined total of 3,556 loans amounting to $550.3 million in two rounds of SBA PPP loan financing. Of these amounts, as of June 30, 2022 there were 112 loans still outstanding totaling $17.0 million (net of $420 thousand in unrecognized fees and costs) compared to 191 loans outstanding at March 31, 2022 for a total of $40.6 million (net of $993 thousand in unrecognized fees and costs). In the second quarter of 2022, Bank of Marin recognized $573 thousand in PPP fees, net of costs, compared to $1.5 million in the preceding quarter.

During the onset of the pandemic, Bank of Marin granted payment relief for 269 loans totaling $402.9 million. As of June 30, 2022, two borrowing relationships with three loans totaling $23.6 million were continuing to benefit from payment relief under the provisions of the 2020 CARES Act. We will continue to work closely with both of these clients and monitor their performance.

Non-accrual loans totaled $8.0 million, or 0.37%, of the Bank's portfolio at June 30, 2022, compared to $7.7 million, or 0.35% at March 31, 2022. Non-accrual loans at June 30, 2022 included the addition of two loans totaling $381 thousand including one owner-occupied commercial real estate loan and one home equity loan. Also, during the quarter, one personal loan for $16 thousand was charged off and three loans paid down a total of $26 thousand.

Classified loans totaled $37.0 million at June 30, 2022, compared to $36.5 million at March 31, 2022, increasing due to an addition of four loans totaling $2.4 million in the second quarter within commercial real estate and home equity, offset by paydowns of $1.8 million, and one charge off of $16 thousand, as mentioned above. Accruing loans past due 30 to 89 days totaled $3.2 million at June 30, 2022, compared to $2.3 million at March 31, 2022.

Net charge-offs for the second quarter of 2022 totaled $8 thousand, compared to net recoveries of $9 thousand in the first quarter of 2022. The ratio of allowance for credit losses to total loans was 1.04% at June 30, 2022, compared to 1.02% at March 31, 2022.

In the second quarter of 2022 there was no provision for credit losses on loans, compared to first quarter of 2022 when we recorded a reversal of provision of $485 thousand. There was no provision for credit losses on unfunded commitments in the second quarter of 2022, compared to a reversal of $318 thousand in the first quarter of 2022. No adjustments were made this quarter as an improvement in the California unemployment rate forecast decreased the quantitative portion of estimated credit losses while ongoing supply chain issues, inflation and recession risks increased qualitative factors. The preceding quarter's provision reversals were due primarily to the improvement in the underlying California unemployment rate forecast at the time.

Cash, Cash Equivalents and Restricted Cash

Total cash, cash equivalents and restricted cash were $115.9 million at June 30, 2022, compared to $170.9 million at March 31, 2022. The $55.0 million decrease was primarily due to the deployment of funds into investment securities, as noted below.

Investments

The investment securities portfolio totaled $1.825 billion at June 30, 2022, an increase of $79.0 million from March 31, 2022. The increase was primarily the result of securities purchases totaling $153.1 million, partially offset by maturities, calls, and paydowns totaling $45.1 million and an increase in pre-tax unrealized losses of $27.1 million on available-for-sale investment securities primarily due to a continuing rise in market interest rates during the second quarter of 2022. The growth in the portfolio and increase in yield contributed significantly to net interest income during the quarter.

Year-to-date we have recorded other comprehensive losses of $56.0 million after tax. First quarter losses were more significant due to the rapid and dramatic increases in rates as well as the larger available-for-sale portfolio. During the first quarter we transferred $357.5 million in available-for-sale securities to held-to-maturity to mitigate further losses associated with rising interest rates.

Deposits

Deposits totaled $3.831 billion at June 30, 2022, compared to $3.861 billion at March 31, 2022. The $96.0 million decrease in money markets was partially related to a transfer to non-interest bearing deposits by a significant customer in preparation for a withdrawal occurring early in July consistent with that customer's normal business activity. The average cost of deposits for the second quarter was unchanged from the first quarter at 0.06%. The average cost of deposits for the six months ended June 30, 2022 was 0.06% compared to 0.07% in the first half of 2021. Additionally, as part of our liquidity management, the Bank maintained $152.4 million in deposits off-balance sheet with deposit networks at June 30, 2022, compared to $180.0 million at March 31, 2022.

Earnings

Net Interest Income

Net interest income totaled $31.2 million in the second quarter of 2022, compared to $29.9 million in the prior quarter. The $1.3 million increase from the prior quarter was primarily attributable to higher average balances and yields on investment securities causing an increase of $1.6 million, quarter over quarter, in investment interest income.

Net interest income totaled $61.1 million for the six months ended June 30, 2022, compared to $46.6 million for the same period in the prior year. The $14.5 million increase from prior year was primarily due to the larger investment portfolio generating an incremental $8.3 million, and $4.9 million from higher balances and yields on the loan portfolio. First half 2022 average balances and fee recognition on PPP loans decreased $275.5 million and $2.3 million, respectively, from the first half of 2021.

The tax-equivalent net interest margin was 3.05% in the second quarter of 2022, compared to 2.96% in the prior quarter. The increase from the prior quarter was primarily due to continued deployment of cash into higher yielding investment securities and higher interest rates on non-PPP loans, partially offset by lower interest and fee income on PPP loans. Average yields on the investment portfolio increased from 1.69% in the first quarter to 1.87% in the second quarter reflecting recent increases in market interest rates, and the average rate on gross loans increased 10 basis points, which excludes the impact of loan origination fees/costs and purchase discounts/premiums.

The tax-equivalent net interest margin was 3.01% in the six months ended June 30, 2022, compared to 3.28% in the same period in the prior year. The decrease was primarily attributed to a higher proportion of investment securities in the larger balance sheet associated with ARB's lower loan-to-deposit ratio and other deposit growth over the period. The decrease was partially offset by a shift to a higher percentage of non-PPP loans within the loan portfolio and the absence of trust preferred securities redemption which occurred in 2021.

Non-Interest Income

Non-interest income totaled $2.7 million in the second quarter of 2022, compared to $2.9 million in the preceding quarter. The $139.0 thousand decrease was primarily related to payments on bank-owned life insurance in the prior quarter.

Non-interest income totaled $5.6 million in the six months ended June 30, 2022, compared to $3.8 million in the same period of the prior year. The $1.7 million increase from the prior year period was mostly attributable to increased activity associated with the ARB acquisition and higher Wealth Management and Trust Services income.

Non-Interest Expense

Non-interest expense totaled $18.9 million in the second quarter of 2022, compared to $19.4 million in the prior quarter. The decrease from the prior quarter was primarily due to a $1.2 million reduction in salaries and benefits after the completion of the acquisition-related conversion in March 2022 and 22 fewer full-time equivalent employees. Decreases were partially offset by a $466 thousand increase in charitable contributions in the quarter due to the annual distribution of grant funding related to the Bank's corporate giving program.

Non-interest expense totaled $38.3 million in the six months ended June 30, 2022, compared to $31.0 million in the same period of prior year. The largest increases over prior year expenses came from salaries and related benefits, which rose $3.8 million due to increased numbers of employees in acquired branch and loan offices, regularly scheduled annual merit and related increases, and lower deferred loan origination costs. Higher expenses across most other categories reflect the acquisition, including one-time and conversion costs of $858 thousand, an increase in other data processing of $762 thousand, and an additional $346 thousand in amortization associated with the ARB core deposit intangible asset in the first half of 2022.

Share Repurchase Program

Bancorp has an approved share repurchase program with $34.7 million outstanding. The last activity under the program was in the first quarter of 2022. Bancorp continues to evaluate the resumption of share repurchases in the context of other capital and strategic initiatives.

Earnings Call and Webcast Information

Bank of Marin Bancorp will webcast its second quarter of 2022 earnings call on Monday, July 25, 2022 at 8:30 a.m. PT/11:30 a.m. ET. Investors will have the opportunity to listen to the conference call online through Bank of Marin’s website at https://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.

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 $4.3 billion, Bank of Marin has 31 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, 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.

(BMRC-ER)

BANK OF MARIN BANCORP FINANCIAL HIGHLIGHTS
		Three months ended								Six months ended
(in thousands, except per share amounts; unaudited)		June 30, 2022				March 31, 2022				June 30, 2022				June 30, 2021
Selected operating data and performance ratios:
Net income		$	11,066			$	10,465			$	21,531			$	18,232
Diluted earnings per common share		$	0.69			$	0.66			$	1.35			$	1.37
Return on average assets			1.03	%			0.98	%			1.00	%			1.21	%
Return on average equity			10.74	%			9.61	%			10.16	%			10.47	%
Efficiency ratio			55.73	%			59.13	%			57.40	%			61.43	%
Tax-equivalent net interest margin 1			3.05	%			2.96	%			3.01	%			3.28	%
Cost of deposits			0.06	%			0.06	%			0.06	%			0.07	%
Net charge-offs (recoveries)		$	8			$	(9	)		$	(1	)		$	(75	)

(in thousands; unaudited)		June 30, 2022				March 31, 2022				December 31, 2021
Selected financial condition data:
Total assets		$	4,326,904			$	4,330,424			$	4,314,209
Loans:
Commercial and industrial 2		$	213,122			$	248,625			$	301,602
Real estate:
Commercial owner-occupied			382,897				391,924				392,345
Commercial investor-owned			1,190,419				1,176,918				1,189,021
Construction			118,147				131,015				119,840
Home equity			90,629				88,092				88,746
Other residential			113,361				114,277				114,558
Installment and other consumer loans			54,057				51,003				49,533
Total loans		$	2,162,632			$	2,201,854			$	2,255,645
Non-accrual loans: 3
Real estate:
Commercial owner-occupied		$	7,564			$	7,272			$	7,269
Commercial investor-owned			—				—				694
Home equity			454				390				413
Installment and other consumer loans			—				16				—
Total non-accrual loans		$	8,018			$	7,678			$	8,376
Classified loans (graded substandard and doubtful)		$	37,043			$	36,460			$	36,235
Total accruing loans 30-89 days past due		$	3,153			$	2,323			$	1,673
Allowance for credit losses to total loans			1.04	%			1.02	%			1.02	%
Allowance for credit losses to total loans, excluding SBA PPP loans 4			1.05	%			1.04	%			1.07	%
Allowance for credit losses to non-performing loans		2.81x				2.94x				2.75x
Non-accrual loans to total loans			0.37	%			0.35	%			0.37	%
Total deposits		$	3,830,670			$	3,861,342			$	3,808,550
Loan-to-deposit ratio			56.5	%			57.0	%			59.2	%
Stockholders' equity		$	409,573			$	420,408			$	450,368
Book value per share		$	25.58			$	26.27			$	28.27
Tangible common equity to tangible assets - Bank 5			7.5	%			8.0	%			8.6	%
Tangible common equity to tangible assets - Bancorp 5			7.8	%			8.0	%			8.8	%
Total risk-based capital ratio - Bank			14.2	%			14.3	%			14.4	%
Total risk-based capital ratio - Bancorp			14.7	%			14.4	%			14.6	%
Full-time equivalent employees			290				312				328

1 Net interest income is annualized by dividing actual number of days in the period times 360 days.

2 Includes SBA PPP loans of $17.0 million, $40.6 million and $111.2 million at June 30, 2022, March 31, 2022 and December 31, 2021, respectively.

3 There were no non-performing loans over 90 days past due and accruing interest as of June 30, 2022, March 31, 2022 and December 31, 2021.

4 The allowance for credit losses to total loans, excluding guaranteed SBA PPP loans, is considered a meaningful non-GAAP financial measure, as it represents only those loans that were considered in the calculation of the allowance for credit losses. Refer to footnote 2 above for SBA PPP loan totals.

5 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 gains (losses) on available-for-sale securities, net of tax, less goodwill and intangible assets of $78.6 million, $79.0 million and $79.4 million at June 30, 2022, March 31, 2022 and December 31, 2021, respectively. Tangible assets exclude goodwill and intangible assets.

BANK OF MARIN BANCORP
CONSOLIDATED STATEMENTS OF CONDITION
(in thousands, except share data; unaudited)		June 30, 2022				March 31, 2022				December 31, 2021
Assets
Cash, cash equivalents and restricted cash		$	115,905			$	170,901			$	347,641
Investment securities
Held-to-maturity, at amortized cost (net of zero allowance for credit losses at June 30, 2022, March 31, 2022 and December 31, 2021)			931,587				790,264				342,222
Available-for-sale (at fair value; amortized cost of $960,379, $995,637 and $1,169,520 at June 30, 2022, March 31, 2022 and December 31, 2021, respectively; net of zero allowance for credit losses at June 30, 2022, March 31, 2022 and December 31, 2021)			893,149				955,457				1,167,568
Total investment securities			1,824,736				1,745,721				1,509,790
Loans, at amortized cost			2,162,632				2,201,854				2,255,645
Allowance for credit losses on loans			(22,539	)			(22,547	)			(23,023	)
Loans, net of allowance for credit losses on loans			2,140,093				2,179,307				2,232,622
Goodwill			72,754				72,754				72,754
Bank-owned life insurance			61,834				61,536				61,473
Operating lease right-of-use assets			22,353				23,544				23,604
Bank premises and equipment, net			7,067				7,236				7,558
Core deposit intangible, net			5,851				6,225				6,605
Other real estate owned			800				800				800
Interest receivable and other assets			75,511				62,400				51,362
Total assets		$	4,326,904			$	4,330,424			$	4,314,209
Liabilities and Stockholders' Equity
Liabilities
Deposits
Non-interest bearing		$	2,034,717			$	1,960,684			$	1,910,240
Interest bearing
Transaction accounts			297,871				299,336				290,813
Savings accounts			343,585				347,335				340,959
Money market accounts			1,012,823				1,108,852				1,116,303
Time accounts			141,674				145,135				150,235
Total deposits			3,830,670				3,861,342				3,808,550
Borrowings and other obligations			356				388				419
Operating lease liabilities			24,117				25,351				25,429
Interest payable and other liabilities			62,188				22,935				29,443
Total liabilities			3,917,331				3,910,016				3,863,841
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 - 16,009,600, 16,003,847 and 15,929,243 at June 30, 2022, March 31, 2022 and December 31, 2021, respectively			213,864				213,204				212,524
Retained earnings			253,737				246,511				239,868
Accumulated other comprehensive loss, net of taxes			(58,028	)			(39,307	)			(2,024	)
Total stockholders' equity			409,573				420,408				450,368
Total liabilities and stockholders' equity		$	4,326,904			$	4,330,424			$	4,314,209

BANK OF MARIN BANCORP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME
		Three months ended								Six months ended
(in thousands, except per share amounts; unaudited)		June 30, 2022				March 31, 2022				June 30, 2022				June 30, 2021
Interest income
Interest and fees on loans		$	23,334			$	23,677			$	47,011			$	42,090
Interest on investment securities			8,273				6,693				14,966				6,633
Interest on federal funds sold and due from banks			180				106				286				96
Total interest income			31,787				30,476				62,263				48,819
Interest expense
Interest on interest-bearing transaction accounts			53				56				109				78
Interest on savings accounts			32				29				61				40
Interest on money market accounts			438				478				916				598
Interest on time accounts			67				14				81				177
Interest on borrowings and other obligations			—				1				1				—
Interest on subordinated debenture			—				—				—				1,361
Total interest expense			590				578				1,168				2,254
Net interest income			31,197				29,898				61,095				46,565
Reversal of credit losses on loans			—				(485	)			(485	)			(3,849	)
Reversal of credit losses on unfunded loan commitments			—				(318	)			(318	)			(1,202	)
Net interest income after reversal of credit losses			31,197				30,701				61,898				51,616
Non-interest income
Wealth Management and Trust Services			630				600				1,230				1,018
Debit card interchange fees, net			531				505				1,036				785
Service charges on deposit accounts			465				488				953				598
Earnings on bank-owned life insurance, net			298				413				711				490
Dividends on Federal Home Loan Bank stock			249				259				508				326
Merchant interchange fees, net			149				140				289				118
Other income			406				462				868				513
Total non-interest income			2,728				2,867				5,595				3,848
Non-interest expense
Salaries and related benefits			10,341				11,548				21,889				18,096
Occupancy and equipment			1,894				1,909				3,803				3,502
Data processing			1,199				1,277				2,476				1,639
Professional services			665				913				1,578				1,849
Information technology			468				478				946				609
Depreciation and amortization			393				452				845				848
Amortization of core deposit intangible			374				380				754				408
Directors' expense			294				311				605				405
Federal Deposit Insurance Corporation insurance			296				290				586				361
Charitable contributions			511				45				556				493
Other expense			2,471				1,772				4,243				2,758
Total non-interest expense			18,906				19,375				38,281				30,968
Income before provision for income taxes			15,019				14,193				29,212				24,496
Provision for income taxes			3,953				3,728				7,681				6,264
Net income		$	11,066			$	10,465			$	21,531			$	18,232
Net income per common share:
Basic		$	0.70			$	0.66			$	1.35			$	1.38
Diluted		$	0.69			$	0.66			$	1.35			$	1.37
Weighted average shares:
Basic			15,921				15,876				15,898				13,227
Diluted			15,955				15,946				15,950				13,316
Comprehensive (loss) income:
Net income		$	11,066			$	10,465			$	21,531			$	18,232
Other comprehensive (loss) income:
Change in net unrealized (losses) gains on available-for-sale securities			(27,050	)			(38,228	)			(65,278	)			(6,284	)
Net unrealized losses on securities transferred from available-for-sale to held-to-maturity			—				(14,847	)			(14,847	)			—
Amortization of net unrealized losses on securities transferred from available-for-sale to held-to-maturity			472				144				616				281
Other comprehensive loss, before tax			(26,578	)			(52,931	)			(79,509	)			(6,003	)
Deferred tax (benefit) liability			(7,857	)			(15,648	)			(23,505	)			(1,780	)
Other comprehensive loss, net of tax			(18,721	)			(37,283	)			(56,004	)			(4,223	)
Total comprehensive (loss) income		$	(7,655	)		$	(26,818	)		$	(34,473	)		$	14,009

BANK OF MARIN BANCORP
AVERAGE STATEMENTS OF CONDITION AND ANALYSIS OF NET INTEREST INCOME
		Three months ended									Three months ended
		June 30, 2022									March 31, 2022
					Interest									Interest
		Average			Income/			Yield/			Average			Income/			Yield/
(in thousands)		Balance			Expense			Rate			Balance			Expense			Rate
Assets
Interest-earning deposits with banks 1		$	95,326		$	180		0.75	%		$	231,555		$	106		0.18	%
Investment securities 2, 3			1,807,710			8,469		1.87	%			1,626,537			6,871		1.69	%
Loans 1, 3, 4			2,194,810			23,522		4.24	%			2,227,495			23,881		4.29	%
Total interest-earning assets 1			4,097,846			32,171		3.11	%			4,085,587			30,858		3.02	%
Cash and non-interest-bearing due from banks			56,408									69,019
Bank premises and equipment, net			7,182									7,430
Interest receivable and other assets, net			151,483									183,222
Total assets		$	4,312,919								$	4,345,258
Liabilities and Stockholders' Equity
Interest-bearing transaction accounts		$	300,258		$	53		0.07	%		$	295,183		$	56		0.08	%
Savings accounts			343,338			32		0.04	%			343,327			29		0.03	%
Money market accounts			1,076,912			438		0.16	%			1,122,215			478		0.17	%
Time accounts including CDARS			144,432			67		0.19	%			147,707			14		0.04	%
Borrowings and other obligations 1			370			—		0.61	%			399			1		0.62	%
Total interest-bearing liabilities			1,865,310			590		0.13	%			1,908,831			578		0.12	%
Demand accounts			1,984,629									1,942,804
Interest payable and other liabilities			49,709									51,997
Stockholders' equity			413,271									441,626
Total liabilities & stockholders' equity		$	4,312,919								$	4,345,258
Tax-equivalent net interest income/margin 1					$	31,581		3.05	%					$	30,280		2.96	%
Reported net interest income/margin 1					$	31,197		3.01	%					$	29,898		2.93	%
Tax-equivalent net interest rate spread								2.98	%								2.90	%
		Six months ended									Six months ended
		June 30, 2022									June 30, 2021
					Interest									Interest
		Average			Income/			Yield/			Average			Income/			Yield/
(in thousands)		Balance			Expense			Rate			Balance			Expense			Rate
Assets
Interest-earning deposits with banks 1		$	163,064		$	286		0.35	%		$	179,846		$	96		0.11	%
Investment securities 2, 3			1,717,624			15,340		1.79	%			601,498			6,948		2.31	%
Loans 1, 3, 4			2,211,062			47,403		4.26	%			2,081,069			42,437		4.06	%
Total interest-earning assets 1			4,091,750			63,029		3.06	%			2,862,413			49,481		3.44	%
Cash and non-interest-bearing due from banks			62,679									45,059
Bank premises and equipment, net			7,305									4,786
Interest receivable and other assets, net			167,265									132,675
Total assets		$	4,328,999								$	3,044,933
Liabilities and Stockholders' Equity
Interest-bearing transaction accounts		$	297,734		$	109		0.07	%		$	170,943		$	78		0.09	%
Savings accounts			343,333			61		0.04	%			220,946			40		0.04	%
Money market accounts			1,099,439			916		0.17	%			719,769			598		0.17	%
Time accounts including CDARS			146,061			81		0.11	%			95,849			177		0.37	%
Borrowings and other obligations 1			384			1		0.62	%			50			—		1.46	%
Subordinated debenture 1, 5			—			—		—	%			1,076			1,361		251.54	%
Total interest-bearing liabilities			1,886,951			1,168		0.12	%			1,208,633			2,254		0.38	%
Demand accounts			1,963,832									1,442,320
Interest payable and other liabilities			50,846									42,753
Stockholders' equity			427,370									351,227
Total liabilities & stockholders' equity		$	4,328,999								$	3,044,933
Tax-equivalent net interest income/margin 1					$	61,861		3.01	%					$	47,227		3.28	%
Reported net interest income/margin 1					$	61,095		2.97	%					$	46,565		3.24	%
Tax-equivalent net interest rate spread								2.94	%								3.06	%

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 2022 and 2021.

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.

5 2021 interest on subordinated debenture included $1.3 million in accelerated discount accretion from the early redemption of our last subordinated debenture on March 15, 2021.

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20220725005238/en/

Andrea Henderson

Director of Marketing

415-884-4757 | andreahenderson@bankofmarin.com

Source: Bank of Marin Bancorp

FAQ

What are Bank of Marin's Q2 2022 earnings results?

Bank of Marin Bancorp reported record earnings of $11.1 million in Q2 2022, with diluted earnings per share of $0.69.

How much did Bank of Marin increase its dividend in July 2022?

Bank of Marin increased its dividend to $0.25 per share in July 2022.

What were the loan originations for Bank of Marin in Q2 2022?

Bank of Marin achieved loan originations of $102.2 million in Q2 2022.

What is the total loan balance for Bank of Marin as of June 30, 2022?

As of June 30, 2022, Bank of Marin's total loan balance was $2.163 billion.

How did Bank of Marin's financial performance compare year-over-year?

Bank of Marin's year-to-date earnings increased to $21.5 million in 2022, compared to $18.2 million in 2021.