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Investor Relations
Press Release

Bank of Marin Bancorp Reports Record Fourth Quarter and Full Year 2018 Earnings

Company Release - 1/28/2019 8:00 AM ET

NOVATO, Calif.--(BUSINESS WIRE)-- Bank of Marin Bancorp, "Bancorp" (NASDAQ: BMRC), parent company of Bank of Marin, "Bank," announced record earnings of $9.7 million in the fourth quarter of 2018, compared to $8.7 million in the third quarter of 2018 and $1.1 million in the fourth quarter of 2017. Diluted earnings per share were $0.69 in the fourth quarter of 2018, compared to $0.62 in the prior quarter and $0.08 in the same quarter a year ago. Annual earnings were $32.6 million in 2018 compared to $16.0 million a year ago. Diluted earnings per share were $2.33 for the year ended December 31, 2018, compared to $1.27 per share for the year ended December 31, 2017. 2017 periods were affected by a $3.0 million deferred tax asset write-down associated with the Tax Cuts and Jobs Act of 2017. Share and per share data has been adjusted throughout this document to reflect the two-for-one stock split effective November 27, 2018.

“Balance was the key to our tremendous success in 2018,” said Russell A. Colombo, President and Chief Executive Officer. “Our record-breaking performance is a testament to our consistent execution of disciplined fundamentals across all areas of the Bank. With a low cost and stable deposit base, solid opportunities for loan growth, and our unwavering commitment to relationship banking, we are well-positioned for continued success in 2019."

Bancorp also provided the following highlights for the fourth quarter and year ended December 31, 2018:

  • Pre-tax net income in the fourth quarter of 2018 was up $1.2 million from the prior quarter and $6.5 million from the fourth quarter of 2017. Higher average balances and yields on both loans and investment securities favorably impacted earnings in the current quarter. As discussed below, a $956 thousand gain on the sale of Visa Inc. Class B restricted common stock was mostly offset by a $916 thousand accelerated purchase discount on the early redemption of a subordinated debenture assumed in the 2013 NorCal Community Bancorp acquisition.
  • The Bank achieved loan growth of $84.9 million in 2018, or 5.1% to $1,763.9 million at December 31, 2018, from $1,679.0 million at December 31, 2017. Loans increased $35.0 million in the fourth quarter from $1,728.9 million at September 30, 2018.
  • In 2018, we expanded our footprint in the East Bay and strengthened our team in Sonoma County. Wim-Kees van Hout was hired as Regional Manager to open a new commercial banking office in Walnut Creek, and David Casassa was named Commercial Banking Regional Manager for our Santa Rosa market.
  • Strong credit quality remains a cornerstone of the Bank’s consistent performance. Non-accrual loans represent 0.04% of the Bank's loan portfolio as of December 31, 2018. There was no provision for loan losses recorded in 2018 due to continuing high credit quality.
  • Deposits grew $26.1 million, to $2,174.8 million at December 31, 2018, compared to $2,148.7 million at December 31, 2017. Non-interest bearing deposits grew by $51.9 million in 2018 and made up 49% of total deposits at year end. In 2018, cost of deposits remained low at 0.10% despite the higher interest rate environment, compared to 0.07% in 2017.
  • The efficiency ratio decreased to 51.3% in the fourth quarter from 54.2% in the third quarter of 2018, and 68.3% in the fourth quarter last year. The efficiency ratio was 57.3% for the full year, down from 64.7% in 2017.
  • For the quarter ended December 31, 2018, return on assets ("ROA") was 1.52% and return on equity ("ROE") was 12.37%, up from 1.38% and 11.20%, respectively, in the third quarter.
  • All capital ratios are well above regulatory requirements for a well-capitalized institution. The total risk-based capital ratio for Bancorp was 14.9% at both December 31, 2018 and December 31, 2017. Tangible common equity to tangible assets increased to 11.3% at December 31, 2018, from 10.7% at December 31, 2017 (refer to footnote 3 on page 6 for definition of this non-GAAP financial measure).
  • The Board of Directors declared a cash dividend of $0.19 per share on January 25, 2019, a $0.015 increase from the prior quarter. This is the 55th consecutive quarterly dividend paid by Bank of Marin Bancorp. Since August 2005, Bancorp's average annual dividend growth rate has been 10.2%. The cash dividend is payable on February 15, 2019 to shareholders of record at the close of business on February 8, 2019.
  • On April 23, 2018, Bancorp announced that its Board of Directors approved a Share Repurchase Program under which Bancorp may repurchase up to $25.0 million of its outstanding common stock through May 1, 2019. During 2018, Bancorp repurchased 171,217 shares for a total amount of $7.0 million.

Loans and Credit Quality

Loans grew $35.0 million in the fourth quarter of 2018 and totaled $1,763.9 million at December 31, 2018. For the three months and year ended December 31, 2018, new loan originations of $73.6 million and $239.4 million, respectively, exceeded 2017 loan originations of $51.5 million and $173.1 million for the same periods. New loan originations were partially offset by payoffs of $36.5 million in the fourth quarter and $157.3 million for the full year ended December 31, 2018.

Non-accrual loans totaled $697 thousand, or 0.04%, of the Bank's loan portfolio at December 31, 2018, an increase from $386 thousand, or 0.02%, at September 30, 2018 and $406 thousand, or 0.02%, a year ago. Loans classified substandard totaled $12.6 million at December 31, 2018, compared to $12.4 million at September 30, 2018 and $27.9 million at December 31, 2017. There were no loans classified doubtful at December 31, 2018 or December 31, 2017. Accruing loans past due 30 to 89 days totaled $1.1 million at December 31, 2018, compared to $301 thousand at September 30, 2018 and $1.9 million a year ago.

There was no provision for loan losses recorded in the fourth quarter of 2018, compared to a $500 thousand provision for loan losses in the fourth quarter a year ago. Net recoveries for both the fourth quarter of 2018 and the prior quarter totaled $4 thousand compared to $21 thousand in the fourth quarter a year ago. Net recoveries totaled $54 thousand for the year ended December 31, 2018, compared to net charge-offs of $175 thousand in 2017. The ratio of loan loss reserve to loans, including acquired loans, was 0.9% at December 31, 2018, September 30, 2018 and December 31, 2017.

Investments

The investment portfolio totaled $619.7 million at December 31, 2018, an increase of $49.9 million from September 30, 2018 and $136.2 million from December 31, 2017. Purchases of securities totaling $61.3 million and $237.9 million were made during the fourth quarter and year ended December 31, 2018, respectively. These purchases consisted primarily of securities issued or guaranteed by the U.S. government to take advantage of the higher interest rate environment. Purchases were partially offset by principal paydowns, maturities, calls, and $17.1 million in investments sold in 2018.

Deposits

Deposits totaled $2,174.8 million at December 31, 2018, compared to $2,212.8 million at September 30, 2018 and $2,148.7 million at December 31, 2017. While there was a $38.0 million decrease in deposits from the prior quarter primarily due to the normal cash fluctuations of our large business clients, total average deposits increased $34.2 million in the fourth quarter. The average cost of deposits increased four basis points in the fourth quarter to 0.14%. The average cost of deposits for the full year of 2018 was 0.10%, up three basis points from 2017.

Loan and investment growth in the fourth quarter was largely funded by cash and one overnight FHLB borrowing of $7.0 million on the last day of the year.

Earnings

“Our record results for 2018 were powered by a well-executed strategy for growth combined with staying true to our rigorous lending standards,” said Tani Girton, EVP and Chief Financial Officer. “With a 1.31% ROA, tax equivalent net interest margin of 3.9%, a 10.73% ROE and efficiency ratio of 57.3%, we are excited to enter 2019 with great momentum.”

Net interest income totaled $23.3 million in the fourth quarter of 2018 compared to $23.5 million in the prior quarter and $20.1 million in the same quarter a year ago. The tax-equivalent net interest margin was 3.85%, 3.97% and 3.80% for those respective periods. The $200 thousand net interest income decrease from the prior quarter relates to $916 thousand in accelerated discount accretion from the early redemption of a high-rate subordinated debenture assumed in the NorCal Community Bancorp acquisition and increases in certain deposit rates, partially offset by higher yields and average balances on loans and investments and accelerated accretion from the payoff of acquired loans. While the accelerated accretion from the early redemption of the subordinated debenture reduced net interest margin by 15 basis points for the current quarter, the Bank's interest expense will be lower going forward as a result of this transaction.

The $3.2 million net interest income increase from the same quarter last year was primarily due to the acquisition of Bank of Napa earning assets, organic loan growth, investment security growth, and higher yields across all earning asset categories. The increase was partially offset by the effect of the subordinated debenture redemption and an increase in certain deposit rates.

Net interest income totaled $91.5 million and $74.9 million in 2018 and 2017, respectively. The increase of $16.6 million in 2018 was primarily due to a $337.7 million increase in average earning assets. Additionally, higher yields on loans, investment securities and interest-bearing cash positively impacted interest income. The tax-equivalent net interest margin increased to 3.90% in 2018 compared to 3.80% in 2017 for the same reasons, despite the 0.04% negative impact from the early redemption of the subordinated debenture.

Loans acquired through the acquisition of other banks are classified as purchased credit impaired ("PCI") or non-PCI loans and are recorded at fair value at acquisition date. For acquired loans not considered credit impaired, the level of accretion varies due to maturities and early payoffs. Accretion on PCI loans fluctuates based on changes in cash flows expected to be collected. Gains on payoffs of PCI loans are recorded as interest income when the payoff amounts exceed the recorded investment. PCI loans totaled $2.1 million at December 31, 2018, September 30, 2018, and December 31, 2017.

Accretion and gains on payoffs of purchased loans recorded to interest income were as follows:

  Three months ended
December 31, 2018   September 30, 2018   December 31, 2017
(dollars in thousands; unaudited)  

Dollar
Amount

 

Basis point
impact to net
interest margin

 

Dollar
Amount

 

Basis point
impact to net
interest margin

 

Dollar
Amount

 

Basis point
impact to net
interest margin

Accretion on PCI loans 1 $ 62   1 bps $ 63   1 bps $ 85   2 bps
Accretion on non-PCI loans 2 $ 214 3 bps $ 41 1 bps $ 110 2 bps
Gains on pay-offs of PCI loans $   0 bps   $ 6   0 bps   $ 100   2 bps
    Years ended
December 31, 2018   December 31, 2017
(dollars in thousands; unaudited)    

Dollar
Amount

 

Basis point
impact to net
interest margin

 

Dollar
Amount

 

Basis point
impact to net
interest margin

Accretion on PCI loans 1 $ 320   1 bps $ 331   2 bps
Accretion on non-PCI loans 2 $ 487 2 bps $ 571 3 bps
Gains on pay-offs of PCI loans $ 135 1 bps $ 184 1 bps
1 Accretable yield on PCI loans totaled $934 thousand, $996 thousand and $1.3 million at December 31, 2018, September 30, 2018 and December 31, 2017, respectively.
2 Unaccreted purchase discounts on non-PCI loans totaled $708 thousand, $922 thousand and $1.2 million at December 31, 2018, September 30, 2018 and December 31, 2017, respectively.

Non-interest income in the fourth quarter of 2018 totaled $3.4 million, compared to $2.2 million in the prior quarter and $2.0 million in the same quarter a year ago. The increase compared to the prior quarter and the same quarter a year ago primarily relates to a $956 thousand pre-tax gain on sale of 6,500 shares of Visa Inc. Class B restricted common stock to a member bank of Visa U.S.A, a $180 thousand Federal Home Loan Bank special dividend and an increase in deposit network income. The Bank sold less than half of its Visa Inc. position to realize recent appreciation in market prices and hedge against market volatility. Additionally, there was a net loss of $195 thousand on the sale of investment securities in the fourth quarter of 2017. Non-interest income of $10.1 million in 2018 increased from $8.3 million in 2017 primarily due to the same reasons mentioned above.

Non-interest expense totaled $13.7 million in the fourth quarter of 2018, compared to $14.0 million in the prior quarter and $15.1 million in the same quarter a year ago. The decrease in the fourth quarter of 2018 compared to the same period a year ago was mainly due to Bank of Napa acquisition-related expenses in 2017.

Non-interest expense of $58.3 million in 2018 increased from $53.8 million in 2017, primarily resulting from an increase of approximately $3.4 million in salaries and benefits related to the addition of full-time equivalent personnel (including Bank of Napa employees), annual merit increases, higher employee insurance and stock based compensation awards reaching retirement eligiblity. Additionally, $1.0 million in consulting expenses related to core processing contract negotiations, higher core deposit intangible amortization and acquisition-related rent contributed to the year-over-year increase.

On December 22, 2017, the Tax Cuts and Jobs Act of 2017 was signed into law. The law reduced the federal statutory income tax rate to 21% for tax years beginning on or after January 1, 2018. The effective tax rate decreased from 44.6% in 2017 to 24.9% in 2018, 10.5 percentage points of which was attributable to the write-down of the net deferred tax assets in 2017.

Earnings Call and Webcast Information

Bank of Marin Bancorp will webcast its fourth quarter and year end 2018 earnings call on Monday, January 28, 2019 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 1989 and headquartered in Novato, Bank of Marin is the wholly-owned subsidiary of Bank of Marin Bancorp (NASDAQ: BMRC). A leading business and community bank in the San Francisco Bay Area, with assets of $2.5 billion and 23 retail offices throughout San Francisco, Marin, Napa, Sonoma and Alameda counties, Bank of Marin provides business and personal banking, commercial lending, and wealth management and trust services. Specializing in providing legendary service to its customers and investing in its local communities, Bank of Marin has consistently been ranked one of the “Top Corporate Philanthropists" by the San Francisco Business Times and one of the “Best Places to Work” by the North Bay Business Journal. Bank of Marin Bancorp is included in the Russell 2000 Small-Cap Index and NASDAQ ABA Community Bank Index. For more information, go to www.bankofmarin.com.

Forward-Looking Statements

This release may contain certain forward-looking statements that are based on management's current expectations regarding economic, legislative, and regulatory issues that may impact Bancorp's earnings in future periods. Forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts. They often include the words “believe,” “expect,” “intend,” “estimate” or words of similar meaning, or future or conditional verbs such as “will,” “would,” “should,” “could” or “may.” Factors that could cause future results to vary materially from current management expectations include, but are not limited to, general economic conditions, economic uncertainty in the United States and abroad, changes in interest rates, deposit flows, real estate values, costs or effects of acquisitions, competition, changes in accounting principles, policies or guidelines, legislation or regulation (including the Tax Cuts & Jobs Act of 2017), and other economic, competitive, governmental, regulatory and technological factors (including external fraud and cyber-security threats) affecting Bancorp's operations, pricing, products and services. These and other important factors 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
December 31, 2018
 
(dollars in thousands, except per share data; unaudited)   December 31,
2018
September 30,
2018
December 31,
2017

Quarter-to-Date

  Net income $ 9,662 $ 8,680 $ 1,110
Diluted earnings per common share 4 $ 0.69 $ 0.62 $ 0.08
Return on average assets 1.52 % 1.38 % 0.19 %
Return on average equity 12.37 % 11.20 % 1.63 %
Efficiency ratio 51.34 % 54.20 % 68.25 %
Tax-equivalent net interest margin 1 3.85 % 3.97 % 3.80 %
Net (recoveries) charge-offs $ (4 ) $ (4 ) $ (21 )
Net (recoveries) charge-offs to average loans %

%

%

Year-to-Date

Net income $ 32,622 $ 15,976
Diluted earnings per common share 4 $ 2.33 $ 1.27
Return on average assets 1.31 % 0.75 %
Return on average equity 10.73 % 6.49 %
Efficiency ratio 57.30 % 64.70 %
Tax-equivalent net interest margin 1 3.90 % 3.80 %
Net (recoveries) charge-offs $ (54 ) $ 175
Net (recoveries) charge-offs to average loans

%

0.01

%

At Period End

Total assets $ 2,520,892 $ 2,545,715 $ 2,468,154
Loans:
Commercial and industrial $ 230,739 $ 238,771 $ 235,835
Real estate:
Commercial owner-occupied $ 313,277 $ 316,467 $ 300,963
Commercial investor-owned $ 873,410 $ 841,493 $ 822,984
Construction $ 76,423 $ 68,739 $ 63,828
Home Equity $ 124,696 $ 121,243 $ 132,467
Other residential $ 117,847 $ 113,383 $ 95,526
Installment and other consumer loans $ 27,472     $ 28,775     $ 27,410  
Total loans $ 1,763,864 $ 1,728,871 $ 1,679,013
 
Non-performing loans2:
Commercial and industrial $ 319 $ $
Home equity $ 313 $ 318 $ 406
Installment and other consumer loans $ 65     $ 68     $  
Total non-accrual loans $ 697 $ 386 $ 406
 
Classified loans (graded substandard and doubtful) $ 12,608 $ 12,401 $ 27,906
Total accruing loans 30-89 days past due $ 1,121 $ 301 $ 1,925
Allowance for loan losses to total loans 0.90 % 0.91 % 0.94 %

Allowance for loan losses to non-performing loans

22.71

x

41.00

x

38.88

x

Non-accrual loans to total loans 0.04 % 0.02 % 0.02 %
 
Total deposits $ 2,174,840 $ 2,212,846 $ 2,148,670
Loan-to-deposit ratio 81.1 % 78.1 % 78.1 %
Stockholders' equity $ 316,407 $ 308,603 $ 297,025
Book value per share 4 $ 22.85 $ 22.10 $ 21.46
Tangible common equity to tangible assets 3 11.3 % 10.9 % 10.7 %
Total risk-based capital ratio - Bank 14.0 % 13.7 % 14.7 %
Total risk-based capital ratio - Bancorp 14.9 % 15.3 % 14.9 %
Full-time equivalent employees 290 287 291

 

1 Net interest income is annualized by dividing actual number of days in the period times 360 days.
 
2 Excludes accruing troubled-debt restructured loans of $14.3 million, $15.1 million and $16.5 million at December 31, 2018, September 30, 2018 and December 31, 2017, respectively. Excludes purchased credit-impaired (PCI) loans with carrying values of $2.1 million that were accreting interest at December 31, 2018, September 30, 2018 and December 31, 2017. These amounts are excluded as PCI loan accretable yield. Interest recognition is independent from the underlying contractual loan delinquency status.
 
3 Tangible common equity to tangible assets is considered to be a meaningful non-GAAP financial measure of capital adequacy and is useful for investors to assess Bancorp's ability to absorb potential losses. Tangible common equity includes common stock, retained earnings and unrealized gain on available for sale securities, net of tax, less goodwill and intangible assets of $35.7 million, $35.9 million and $36.6 million at December 31, 2018, September 30, 2018 and December 31, 2017, respectively. Tangible assets excludes goodwill and intangible assets.
 
4 Per share data has been adjusted to reflect the two-for-one stock split effective November 27, 2018.
 
BANK OF MARIN BANCORP

CONSOLIDATED STATEMENTS OF CONDITION

at December 31, 2018, September 30, 2018 and December 31, 2017
 
(in thousands, except share data; unaudited)  

December 31,
2018

 

September 30,
2018

 

December 31,
2017

Assets      
Cash and due from banks $ 34,221 $ 142,718 $ 203,545
Investment securities
Held-to-maturity, at amortized cost 157,206 164,222 151,032
Available-for-sale (at fair value; amortized cost of $465,910, $416,732 and $334,285 at December 31, 2018, September 30, 2018 and December 31, 2017, respectively)   462,464     405,571     332,467  
Total investment securities 619,670 569,793 483,499
Loans, net of allowance for loan losses of $15,821, $15,817 and $15,767 at December 31, 2018, September 30, 2018 and December 31, 2017, respectively 1,748,043 1,713,054 1,663,246
Bank premises and equipment, net 7,376 7,602 8,612
Goodwill 30,140 30,140 30,140
Core deposit intangible 5,571 5,802 6,492
Interest receivable and other assets   75,871     76,606     72,620  
Total assets   $ 2,520,892     $ 2,545,715     $ 2,468,154  
 
Liabilities and Stockholders' Equity
Liabilities
Deposits
Non-interest bearing $ 1,066,051 $ 1,109,909 $ 1,014,103
Interest bearing
Transaction accounts 133,403 138,838 169,195
Savings accounts 178,429 178,171 178,473
Money market accounts 679,775 659,788 626,783
Time accounts   117,182     126,140     160,116  
Total deposits 2,174,840 2,212,846 2,148,670
Federal Home Loan Bank borrowing 7,000
Subordinated debentures 2,640 5,831 5,739
Interest payable and other liabilities   20,005     18,435     16,720  
Total liabilities   2,204,485     2,237,112     2,171,129  
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-
13,844,353 , 13,964,358 and 13,843,084 at December 31, 2018, September 30,
2018 and December 31, 2017, respectively
140,565 145,498 143,967
Retained earnings 179,944 172,723 155,544
Accumulated other comprehensive loss, net   (4,102 )   (9,618 )   (2,486 )
Total stockholders' equity   316,407     308,603     297,025  
Total liabilities and stockholders' equity   $ 2,520,892     $ 2,545,715     $ 2,468,154  
 
BANK OF MARIN BANCORP

CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

 
Three months ended   Years ended
(in thousands, except per share amounts; unaudited)

December 31,
2018

 

September 30,
2018

 

December 31,
2017

December 31,
2018

 

December 31,
2017

Interest income      
Interest and fees on loans $ 20,732 $ 20,284 $ 17,789 $ 79,527 $ 66,799
Interest on investment securities 3,912 3,524 2,489 14,092 8,802
Interest on federal funds sold and due from banks 373     400     372   1,461     995  
Total interest income 25,017 24,208 20,650 95,080 76,596
Interest expense
Interest on interest-bearing transaction accounts 68 58 34 226 108
Interest on savings accounts 18 18 18 72 66
Interest on money market accounts 566 337 195 1,355 555
Interest on time accounts 116 130 153 542 576
Interest on FHLB and overnight borrowings 1 2
Interest on subordinated debentures 977     125     111     1,339     439  
Total interest expense 1,745     669     511   3,536     1,744  
Net interest income 23,272 23,539 20,139 91,544 74,852
Provision for loan losses         500       500  
Net interest income after provision for loan losses 23,272     23,539     19,639   91,544     74,352  
Non-interest income
Service charges on deposit accounts 484 475 447 1,891 1,784
Wealth Management and Trust Services 426 490 544 1,919 2,090
Debit card interchange fees, net 403 402 385 1,561 1,531
Merchant interchange fees, net 81 99 102 378 398
Earnings on bank-owned life Insurance 227 227 217 913 845
Dividends on FHLB stock 377 194 181 959 766
Gains (losses) on investment securities, net 956 (90 ) (195 ) 876 (185 )
Other income 469     439     310   1,642     1,039  
Total non-interest income 3,423     2,236     1,991   10,139     8,268  
Non-interest expense
Salaries and related benefits 7,933 8,069 7,852 33,335 29,958
Occupancy and equipment 1,514 1,444 1,409 5,976 5,472
Depreciation and amortization 518 532 508 2,143 1,941
Federal Deposit Insurance Corporation insurance 188 186 176 756 666
Data processing 1,004 950 2,058 4,358 4,906
Professional services 481 727 1,013 3,317 2,858
Directors' expense 170 173 163 700 720
Information technology 228 262 206 1,023 769
Provision for losses on off-balance sheet commitments 57
Other expense 1,669     1,628     1,719   6,658     6,435  
Total non-interest expense 13,705     13,971     15,104   58,266     53,782  
Income before provision for income taxes 12,990 11,804 6,526 43,417 28,838
Provision for income taxes 3,328     3,124     5,416   10,795     12,862  
Net income $ 9,662     $ 8,680     $ 1,110   $ 32,622     $ 15,976  
Net income per common share:1
Basic $ 0.70 $ 0.62 $ 0.09 $ 2.35 $ 1.29
Diluted $ 0.69 $ 0.62 $ 0.08 $ 2.33 $ 1.27
Weighted average shares:1
Basic 13,841 13,900 12,911 13,864 12,392
Diluted 14,033     14,110     13,100   14,029     12,545  
Comprehensive income:
Net income $ 9,662 $ 8,680 $ 1,110 $ 32,622 $ 15,976
Other comprehensive (loss) income:
Change in net unrealized gain or loss on available-for-sale securities 7,714 (2,120 ) (2,637 ) (1,707 ) 3,671
Reclassification adjustment for losses (gains) on available-for-sale securities in net income 90 195 79 185
Net unrealized loss on securities transferred from available-for-sale to held-to-maturity (278 ) (3,036 )
Amortization of net unrealized losses on securities transferred from available-for-sale to held-to-maturity 120     128     126   516     426  
Subtotal 7,834 (1,902 ) (2,316 ) (1,390 ) 1,246
Deferred tax (benefit) expense 2,318     (562 )   (1,060 ) (412 )   439  
Other comprehensive income (loss), net of tax 5,516     (1,340 )   (1,256 ) (978 )   807  
Comprehensive income (loss) $ 15,178     $ 7,340     $ (146 ) $ 31,644     $ 16,783  
1 Share and per share data has been adjusted to reflect the two-for-one stock split effective November 27, 2018.
 
BANK OF MARIN BANCORP
AVERAGE STATEMENTS OF CONDITION AND ANALYSIS OF NET INTEREST INCOME
 
Three months ended Three months ended Three months ended
December 31, 2018 September 30, 2018 December 31, 2017
Interest Interest Interest
Average Income/ Yield/ Average Income/ Yield/ Average Income/ Yield/
(dollars in thousands; unaudited) Balance Expense Rate Balance Expense Rate Balance Expense Rate
Assets
Interest-bearing due from banks 1 $ 65,961 $ 373 2.21 % $ 79,674 $ 400 1.96 % $ 108,255 $ 372 1.34 %
Investment securities 2, 3 600,914 4,000 2.66 % 558,741 3,624 2.59 % 455,706 2,722 2.39 %
  Loans 1, 3, 4 1,726,045   20,933   4.75 % 1,715,295   20,504   4.68 % 1,578,959   18,245   4.52 %
Total interest-earning assets 1 2,392,920 25,306 4.14 % 2,353,710 24,528 4.08 % 2,142,920 21,339 3.89 %
Cash and non-interest-bearing due from banks 38,943 41,316 40,548
Bank premises and equipment, net 7,529 7,866 8,384
  Interest receivable and other assets, net 84,651       86,039       74,299      
Total assets $ 2,524,043       $ 2,488,931       $ 2,266,151      
Liabilities and Stockholders' Equity
Interest-bearing transaction accounts $ 130,546 $ 68 0.21 % $ 134,293 $ 58 0.17 % $ 129,538 $ 34 0.10 %
Savings accounts 177,018 18 0.04 % 179,429 18 0.04 % 173,057 18 0.04 %
Money market accounts 643,459 566 0.35 % 609,821 337 0.22 % 551,591 195 0.14 %
Time accounts, including CDARS 121,838 116 0.38 % 132,588 130 0.39 % 150,552 153 0.40 %
FHLB and overnight borrowings 1 76 2.52 % 112 1 2.06 % 6 1.75 %
  Subordinate debentures 1 2,770   977   138.09 % 5,815   125   8.43 % 5,720   111   7.63 %
Total interest-bearing liabilities 1,075,707 1,745 0.64 % 1,062,058 669 0.25 % 1,010,464 511 0.20 %
Demand accounts 1,118,785 1,101,288 971,381
Interest payable and other liabilities 19,662 18,022 14,558
  Stockholders' equity 309,889       307,563       269,848      
Total liabilities & stockholders' equity $ 2,524,043       $ 2,488,931       $ 2,266,251      
Tax-equivalent net interest income/margin 1   $ 23,561   3.85 %   $ 23,859   3.97 %   $ 20,828   3.80 %
Reported net interest income/margin 1   $ 23,272   3.81 %   $ 23,539   3.91 %   $ 20,139   3.68 %
Tax-equivalent net interest rate spread     3.49 %     3.83 %     3.69 %
 
Year ended Year ended
December 31, 2018 December 31, 2017
Interest Interest
Average Income/ Yield/ Average Income/ Yield/
(dollars in thousands; unaudited) Balance Expense Rate Balance Expense Rate
Assets
Interest-bearing due from banks 1 $ 78,185 $ 1,461 1.84 % $ 80,351 $ 995 1.22 %
Investment securities 2, 3 566,883 14,512 2.56 % 419,873 9,732 2.32 %
  Loans 1, 3, 4 1,704,390   80,406   4.65 % 1,511,503   68,562   4.47 %
Total interest-earning assets 1 2,349,458 96,379 4.05 % 2,011,727 79,289 3.89 %
Cash and non-interest-bearing due from banks 41,595 42,511
Bank premises and equipment, net 8,021 8,411
  Interest receivable and other assets, net 86,709       63,301      
Total assets $ 2,485,783       $ 2,125,950      
Liabilities and Stockholders' Equity
Interest-bearing transaction accounts $ 143,706 $ 226 0.16 % $ 105,544 $ 108 0.10 %
Savings accounts 178,907 72 0.04 % 167,190 66 0.04 %
Money market accounts 612,372 1,355 0.22 % 542,592 555 0.10 %
Time accounts, including CDARS 137,339 542 0.39 % 146,069 576 0.39 %
FHLB and overnight borrowings 1 105 2 2.03 % 1 1.75 %
  Subordinated debentures 1 5,025   1,339   26.29 % 5,664   439   7.65 %
Total interest-bearing liabilities 1,077,454 3,536 0.33 % 967,060 1,744 0.18 %
Demand accounts 1,085,870 899,289
Interest payable and other liabilities 18,514 13,506
  Stockholders' equity 303,945       246,095      
Total liabilities & stockholders' equity $ 2,485,783       $ 2,125,950      
Tax-equivalent net interest income/margin 1   $ 92,843   3.90 %   $ 77,545   3.80 %
Reported net interest income/margin 1   $ 91,544   3.84 %   $ 74,852   3.67 %
Tax-equivalent net interest rate spread     3.72 %     3.71 %
 
1 Interest income/expense is divided by actual number of days in the period times 360 days to correspond to stated interest rate terms, where applicable.
2 Yields on available-for-sale securities are calculated based on amortized cost balances rather than fair value, as changes in fair value are reflected as a component of stockholders' equity.

Investment security interest is earned on 30/360 day basis monthly.

3 Yields and interest income on tax-exempt securities and loans are presented on a taxable-equivalent basis using the Federal statutory rate of 21 percent in 2018 and 35 percent in 2017.
4 Average balances on loans outstanding include non-performing loans. The amortized portion of net loan origination fees is included in interest income on loans, representing an adjustment to the yield.

Beth Drummey
Marketing & Community Relations Manager
415-763-4529 | [email protected]

Source: Bank of Marin Bancorp