Bank of Marin Bancorp Reports Second Quarter Financial Results
Strong Capital Supports Repositioning for Profitability
Concurrent with this release, Bancorp issued presentation slides providing supplemental information, some of which will be discussed during the second quarter 2024 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.”
“During the second quarter, we executed on our strategic priorities, which included realizing the benefits from the more robust loan origination engine we have built, increasing our net interest margin, and carefully managing our expenses,” said
“We are starting the second half of 2024 with positive trends in loan growth, core deposit gathering, and expense management, while seeing continued strong asset quality within the bulk of our loan portfolio. We are also seeing the initial benefits from our balance sheet repositioning on our net interest margin and we expect to realize more expansion in our margin as we continue reinvesting the proceeds from the securities sales. We believe all of these trends should result in a higher level of profitability in the second half of the year and position us well to continue generating profitable growth in the years ahead,” said
Bancorp also provided the following highlights for the second quarter of 2024:
-
As previously announced, the Bank sold 56% of its available-for-sale securities ("AFS") portfolio at an after-tax loss of
$22.9 million . Redeployment of the$292.6 million net proceeds is expected to provide a 30 basis point increase in annualized net interest margin and$0.46 per share estimated annualized earnings accretion beginning in the third quarter, assuming an average reinvestment yield of 5.75%. The sale is part of our strategy to improve future earnings and increase return on equity. Excluding the loss on security sales, net income and diluted earnings per share for the second quarter would have been$1.0 million and$0.06 , all other factors unchanged. See Non-GAAP Reconciliation below. -
A
$5.2 million provision for credit losses on loans in the second quarter, compared to a provision of$350 thousand for the previous quarter, brought the allowance for credit losses to 1.47% of total loans, compared to 1.24% as ofMarch 31, 2024 . The provision was largely due to an increased individual reserve for one non-owner occupied commercial real estate loan totaling$16.7 million that, although current, has experienced a deteriorating financial condition and a material increase in its loan-to-value ratio associated with a recent valuation of the underlying collateral. See Loans and Credit Quality section below for more details. -
Non-accrual loans were also significantly impacted by the loan discussed above and increased to 1.62% of total loans at quarter end from 0.31% at
March 31, 2024 . Net charge-offs were minimal. Approximately 60% of non-accrual loans were paying as agreed as ofJune 30, 2024 . Subsequent to quarter end, one commercial loan on non-accrual totaling$1.8 million paid off in full. - Classified loans were relatively stable and down to 2.63% of total loans compared to 2.67% last quarter. Some consumer loan downgrades during the quarter were more than offset by two upgrades on one commercial real estate and one consumer loan, as well as paydowns on other classified loans.
-
Strong originations of
$64.1 million in the quarter led to$27.4 million in loan growth resulting in a balance of$2.082 billion as ofJune 30, 2024 , compared to$2.055 billion as ofMarch 31, 2024 . Payoffs totaled$31.2 million . Loan amortization from scheduled repayments and an increase in utilization of credit lines netted$5.5 million during the quarter. -
Total deposits of
$3.214 billion as ofJune 30, 2024 were down$70.3 million compared to$3.284 billion as ofMarch 31, 2024 , mostly due to timing of month-end payments. Non-interest bearing deposits remain a large component at 44.1% of total deposits as ofJune 30, 2024 , compared to 44.0% as ofMarch 31, 2024 . Shortly after quarter-end balances began to climb again. -
All intra-quarter borrowings were paid down with securities sales proceeds leaving a balance of zero at
June 30, 2024 . Net available funding sources of$1.797 billion provided 202% coverage of an estimated$889.8 million in uninsured deposits, representing 28% of total deposits atJune 30, 2024 . - The tax-equivalent net interest margin increased to 2.52% from 2.50% in the first quarter as loans funded or renewed in the second quarter continue to carry higher yields while deposit cost increases have decelerated. In fact, 69% of the quarter's loan fundings occurred in the month of June, leaving room for expanded net interest income in the coming quarters. The average cost of deposits increased only 7 basis points to 1.45% in the second quarter compared to a 23 basis point increase in the prior quarter.
-
During the quarter the Bank did a review of its expense structure and eliminated some positions not viewed as critical to achieving its strategic objectives within the current operating environment. The Bank recorded severance costs in the second quarter of
$243 thousand with an additional amount expected in the third quarter related to the executive officer departure reported onJuly 25, 2024 . The pre-tax cost save for the remainder of 2024 is$876 thousand and the annualized cost save is approximately$2.7 million . - Return on average assets ("ROA") was (2.35)% for the second quarter of 2024, compared to 0.31% for the first quarter of 2024, and return on average equity ("ROE") was (20.36)%, compared to 2.70% for the prior quarter. The efficiency ratio for the second quarter of 2024 was (300.37)%, compared to 83.18% for the prior quarter. Excluding the loss on security sales, ROA, ROE and the efficiency ratio for the second quarter would have been 0.11%, 0.95% and 86.70%, all other factors unchanged. See Non-GAAP Reconciliation below.
-
Capital was above well-capitalized regulatory requirements with total risk-based capital ratios of 16.46% and 15.54% as of
June 30, 2024 for Bancorp and the Bank, respectively. Bancorp's tangible common equity to tangible assets ("TCE ratio") increased to 9.92% as ofJune 30, 2024 , and the Bank's TCE ratio was 9.27%. As an additional indicator of capital adequacy, we look to the TCE ratio net of after-tax unrealized losses on held-to-maturity securities as if the losses were realized. That ratio was 7.53% as ofJune 30, 2024 , compared to 7.45% as ofMarch 31, 2024 (refer to the discussion and reconciliation of this non-GAAP financial measure in the section below entitled Statement Regarding Use of Non-GAAP Financial Measures). -
Bancorp's share repurchase program continues to be available for up to
$25.0 million , expiring onJuly 31, 2025 . There have been no repurchases to date in 2024 or in 2023, however the Bank will continue to assess opportunities to utilize the program. -
The Board of Directors declared a cash dividend of
$0.25 per share onJuly 25, 2024 , which represents the 77th consecutive quarterly dividend paid by Bancorp. The dividend is payable onAugust 15, 2024 , to shareholders of record at the close of business onAugust 8, 2024 .
“Bank of
“On the expense front, we made strategic staffing adjustments throughout the company which enable us to offset investments in revenue-driving talent as well as technology, creating efficiencies we believe will help manage costs while continuing to drive growth through the year and well into the future.”
Loans and Credit Quality
Loans increased by
Loan payoffs were
During the second quarter, we moved a
Non-accrual loans totaled
Accruing loans past due 30 to 89 days totaled
Loans designated special mention, which are not considered adversely classified, decreased by
Net charge-offs for the second quarter of 2024 totaled
The provision for credit losses on loans in the second quarter was
There was no provision for credit losses on unfunded loan commitments in the second quarter of 2024 or in the prior quarter.
Cash, Cash Equivalents and Restricted Cash
Total cash, cash equivalents and restricted cash were
Investments
The investment securities portfolio totaled
Deposits
Deposits totaled
Borrowings and Liquidity
At
The following table details the components of our contingent liquidity sources as of
(in millions) |
Total Available |
Amount Used |
Net Availability |
||||||
Internal Sources |
|
|
|
||||||
Unrestricted cash 1 |
$ |
201.8 |
$ |
— |
$ |
201.8 |
|||
Unencumbered securities at market value |
|
193.5 |
|
— |
|
193.5 |
|||
External Sources |
|
|
|
||||||
FHLB line of credit |
|
941.7 |
|
— |
|
941.7 |
|||
FRB line of credit |
|
335.4 |
|
— |
|
335.4 |
|||
Lines of credit at correspondent banks |
|
125.0 |
|
— |
|
125.0 |
|||
Total Liquidity |
$ |
1,797.4 |
$ |
— |
$ |
1,797.4 |
|||
1 Excludes cash items in transit as of |
Capital Resources
The total risk-based capital ratio for Bancorp was 16.46% at
Bancorp's tangible common equity to tangible assets ("TCE ratio") was 9.92% at
Earnings
Net Interest Income
Net interest income totaled
Net interest income totaled
The tax-equivalent net interest margin was 2.52% for the second quarter of 2024, compared to 2.50% for the prior quarter. Higher loan yields contributed 6 basis points while a higher cost of deposits reduced margin by 5 basis points. The combination of lower average investment security balances and higher average cash and borrowing balances contributed 1 basis point.
The tax-equivalent net interest margin was 2.51% for the six months ended
Non-Interest Income
Non-interest income was
Non-interest income was
Non-Interest Expense
Non-interest expense totaled
Non-interest expense totaled
Statement Regarding use of Non-GAAP Financial Measures
Financial results are presented in accordance with GAAP and with reference to certain non-GAAP financial measures. Management believes that, given industry turmoil that largely began in the first quarter of 2023, 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 remaining after a hypothetical liquidation of the entire securities portfolio. In addition, management believes that providing selected financial measures excluding the loss on sale of securities discussed above is useful to investors as the strategic short-term loss taken for long-term profitability makes the operational performance difficult to compare to other periods. 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
Reconciliation of GAAP and Non-GAAP Financial Measures
(in thousands, unaudited) |
|
|
|
|
||||||
Tangible Common Equity - Bancorp |
|
|
|
|
||||||
Total stockholders' equity |
|
$ |
434,943 |
|
$ |
436,680 |
|
$ |
439,062 |
|
|
|
|
(76,023 |
) |
|
(76,269 |
) |
|
(76,520 |
) |
Total TCE |
a |
|
358,920 |
|
|
360,411 |
|
|
362,542 |
|
Unrealized losses on HTM securities, net of tax1, 2 |
|
|
(93,600 |
) |
|
(92,438 |
) |
|
(86,500 |
) |
TCE, net of unrealized losses on HTM securities (non-GAAP) |
b |
$ |
265,320 |
|
$ |
267,973 |
|
$ |
276,042 |
|
Total assets |
|
$ |
3,694,728 |
|
$ |
3,767,176 |
|
$ |
3,803,903 |
|
|
|
|
(76,023 |
) |
|
(76,269 |
) |
|
(76,520 |
) |
Total tangible assets |
c |
|
3,618,705 |
|
|
3,690,907 |
|
|
3,727,383 |
|
Unrealized losses on HTM securities, net of tax |
|
|
(93,600 |
) |
|
(92,438 |
) |
|
(86,500 |
) |
Total tangible assets, net of unrealized losses on HTM securities (non-GAAP) |
d |
$ |
3,525,105 |
|
$ |
3,598,469 |
|
$ |
3,640,883 |
|
Bancorp TCE ratio |
a / c |
|
9.9 |
% |
|
9.8 |
% |
|
9.7 |
% |
Bancorp TCE ratio, net of unrealized losses on HTM securities (non-GAAP) |
b / d |
|
7.5 |
% |
|
7.4 |
% |
|
7.6 |
% |
1 Net unrealized losses on held-to-maturity securities as of
2 Includes the remaining unrealized pre-tax losses of |
(in thousand, unaudited) |
Three months ended |
|
Six months ended |
||||||||||
Net (loss) income |
|
|
|
|
|
||||||||
Net (loss) income (GAAP) |
$ |
(21,902 |
) |
$ |
2,922 |
|
|
$ |
(18,980 |
) |
$ |
13,991 |
|
Adjustments: |
|
|
|
|
|
||||||||
Losses on sale of investment securities |
|
32,542 |
|
|
— |
|
|
|
32,542 |
|
|
— |
|
Income tax benefit |
|
(9,620 |
) |
|
— |
|
|
|
(9,620 |
) |
|
— |
|
Adjustments, net of taxes |
|
22,922 |
|
|
— |
|
|
|
22,922 |
|
|
— |
|
Comparable net income (non-GAAP) |
$ |
1,020 |
|
$ |
2,922 |
|
|
$ |
3,942 |
|
$ |
13,991 |
|
Diluted (loss) earnings per share |
|
|
|
|
|
||||||||
Weighted average diluted shares |
|
16,108 |
|
|
16,092 |
|
|
|
16,095 |
|
|
16,008 |
|
Diluted (loss) earnings per share (GAAP) |
$ |
(1.36 |
) |
$ |
0.18 |
|
|
$ |
(1.18 |
) |
$ |
0.87 |
|
Comparable diluted earnings per share (non-GAAP) |
$ |
0.06 |
|
$ |
0.18 |
|
|
$ |
0.24 |
|
$ |
0.87 |
|
Return on average assets |
|
|
|
|
|
||||||||
Average assets |
$ |
3,751,159 |
|
$ |
3,811,270 |
|
|
$ |
3,781,214 |
|
$ |
4,141,284 |
|
Return on average assets (GAAP) |
|
(2.35 |
)% |
|
0.31 |
% |
|
|
(1.01 |
)% |
|
0.68 |
% |
Comparable return on average assets (non-GAAP) |
|
0.11 |
% |
|
0.31 |
% |
|
|
0.21 |
% |
|
0.68 |
% |
Return on average equity |
|
|
|
|
|
||||||||
Average stockholders' equity |
$ |
432,692 |
|
$ |
435,973 |
|
|
$ |
434,332 |
|
$ |
424,386 |
|
Return on average equity (GAAP) |
|
(20.36 |
)% |
|
2.70 |
% |
|
|
(8.79 |
)% |
|
6.65 |
% |
Comparable return on average equity (non-GAAP) |
|
0.95 |
% |
|
2.70 |
% |
|
|
1.83 |
% |
|
6.65 |
% |
Efficiency ratio |
|
|
|
|
|
||||||||
Non-interest expense |
$ |
21,894 |
|
$ |
21,169 |
|
|
$ |
43,063 |
|
$ |
40,445 |
|
Net interest income |
$ |
22,467 |
|
$ |
22,694 |
|
|
$ |
45,161 |
|
$ |
54,029 |
|
Non-interest income (GAAP) |
$ |
(29,755 |
) |
$ |
2,754 |
|
|
$ |
(27,001 |
) |
$ |
5,674 |
|
Losses on sale of investment securities |
|
32,542 |
|
|
— |
|
|
|
32,542 |
|
|
— |
|
Non-interest income (non-GAAP) |
$ |
2,787 |
|
$ |
2,754 |
|
|
$ |
5,541 |
|
$ |
5,674 |
|
Efficiency ratio (GAAP) |
|
(300.37 |
)% |
|
83.18 |
% |
|
|
237.13 |
% |
|
67.74 |
% |
Comparable efficiency ratio (non-GAAP) |
|
86.70 |
% |
|
83.18 |
% |
|
|
84.93 |
% |
|
67.74 |
% |
Share Repurchase Program
On
Earnings Call and Webcast Information
About
Founded in 1990 and headquartered in
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
BANK OF |
|||||||||||||||||||
|
Three months ended |
|
Six months ended |
||||||||||||||||
(in thousands, except per share amounts; unaudited) |
|
|
|
|
|
|
|||||||||||||
Selected operating data and performance ratios: |
|
|
|
|
|
|
|||||||||||||
Net (loss) income |
$ |
(21,902 |
) |
$ |
2,922 |
|
$ |
4,551 |
|
|
$ |
(18,980 |
) |
$ |
13,991 |
|
|||
Diluted (loss) earnings per common share |
$ |
(1.36 |
) |
$ |
0.18 |
|
$ |
0.28 |
|
|
$ |
(1.18 |
) |
$ |
0.87 |
|
|||
Return on average assets |
|
(2.35 |
)% |
|
0.31 |
% |
|
0.44 |
% |
|
|
(1.01 |
)% |
|
0.68 |
% |
|||
Return on average equity |
|
(20.36 |
)% |
|
2.70 |
% |
|
4.25 |
% |
|
|
(8.79 |
)% |
|
6.65 |
% |
|||
Efficiency ratio |
|
(300.37 |
)% |
|
83.18 |
% |
|
76.91 |
% |
|
|
237.13 |
% |
|
67.74 |
% |
|||
Tax-equivalent net interest margin |
|
2.52 |
% |
|
2.50 |
% |
|
2.45 |
% |
|
|
2.51 |
% |
|
2.74 |
% |
|||
Cost of deposits |
|
1.45 |
% |
|
1.38 |
% |
|
0.69 |
% |
|
|
1.41 |
% |
|
0.44 |
% |
|||
Cost of funds |
|
1.46 |
% |
|
1.38 |
% |
|
0.11 |
% |
|
|
1.42 |
% |
|
0.82 |
% |
|||
Net charge-offs |
$ |
26 |
|
$ |
21 |
|
$ |
(2 |
) |
|
$ |
47 |
|
$ |
1 |
|
|||
Net charge-offs to average loans |
|
NM |
|
|
NM |
|
|
NM |
|
|
|
NM |
|
|
NM |
|
(in thousands; unaudited) |
|
|
|
||||||||
Selected financial condition data: |
|
|
|
||||||||
Total assets |
$ |
3,694,728 |
|
$ |
3,767,176 |
|
$ |
3,803,903 |
|
||
Loans: |
|
|
|
||||||||
Commercial and industrial |
$ |
169,247 |
|
$ |
150,896 |
|
$ |
153,750 |
|
||
Real estate: |
|
|
|
||||||||
Commercial owner-occupied |
|
325,091 |
|
|
328,560 |
|
|
333,181 |
|
||
Commercial non-owner occupied |
|
1,267,841 |
|
|
1,236,633 |
|
|
1,219,385 |
|
||
Construction |
|
51,239 |
|
|
71,494 |
|
|
99,164 |
|
||
Home equity |
|
88,045 |
|
|
86,794 |
|
|
82,087 |
|
||
Other residential |
|
114,054 |
|
|
113,479 |
|
|
118,508 |
|
||
Installment and other consumer loans |
|
66,882 |
|
|
67,107 |
|
|
67,645 |
|
||
Total loans |
$ |
2,082,399 |
|
$ |
2,054,963 |
|
$ |
2,073,720 |
|
||
Non-accrual loans: 1 |
|
|
|
||||||||
Commercial and industrial |
$ |
9,280 |
|
$ |
2,220 |
|
$ |
4,008 |
|
||
Real estate: |
|
|
|
||||||||
Commercial owner-occupied |
|
1,306 |
|
|
416 |
|
$ |
434 |
|
||
Commercial non-owner occupied |
|
21,458 |
|
|
3,046 |
|
|
3,081 |
|
||
Home equity |
|
1,197 |
|
|
473 |
|
|
469 |
|
||
Installment and other consumer loans |
|
438 |
|
|
141 |
|
|
— |
|
||
Total non-accrual loans |
$ |
33,679 |
|
$ |
6,296 |
|
$ |
7,992 |
|
||
Classified loans (graded substandard and doubtful) |
$ |
54,684 |
|
$ |
54,800 |
|
$ |
32,324 |
|
||
Classified loans as a percentage of total loans |
|
2.63 |
% |
|
2.67 |
% |
|
1.56 |
% |
||
Total accruing loans 30-89 days past due |
$ |
2,176 |
|
$ |
1,924 |
|
$ |
1,017 |
|
||
Total accruing loans 90+ days past due 1 |
$ |
8,118 |
|
$ |
8,118 |
|
$ |
— |
|
||
Allowance for credit losses to total loans |
|
1.47 |
% |
|
1.24 |
% |
|
1.21 |
% |
||
Allowance for credit losses to non-accrual loans |
0.91x |
4.05x |
3.15x |
||||||||
Non-accrual loans to total loans |
|
1.62 |
% |
|
0.31 |
% |
|
0.39 |
% |
||
Total deposits |
$ |
3,213,777 |
|
$ |
3,284,102 |
|
$ |
3,290,075 |
|
||
Loan-to-deposit ratio |
|
64.80 |
% |
|
62.60 |
% |
|
63.03 |
% |
||
Stockholders' equity |
$ |
434,943 |
|
$ |
436,680 |
|
$ |
439,062 |
|
||
Book value per share |
$ |
26.72 |
|
$ |
26.81 |
|
$ |
27.17 |
|
||
Tangible common equity to tangible assets - Bank |
|
9.27 |
% |
|
9.53 |
% |
|
9.53 |
% |
||
Tangible common equity to tangible assets - Bancorp |
|
9.92 |
% |
|
9.76 |
% |
|
9.73 |
% |
||
Total risk-based capital ratio - Bank |
|
15.54 |
% |
|
16.71 |
% |
|
16.62 |
% |
||
Total risk-based capital ratio - Bancorp |
|
16.46 |
% |
|
17.05 |
% |
|
16.89 |
% |
||
Full-time equivalent employees |
|
321 |
|
|
330 |
|
|
329 |
|
||
1 There was one non-owner occupied commercial real estate loan 90 days past due and accruing interest as of |
|||||||||||
NM - Not meaningful |
CONSOLIDATED STATEMENTS OF CONDITION |
(in thousands, except share data; unaudited) |
|
|
|
||||||||
Assets |
|
|
|
||||||||
Cash, cash equivalents and restricted cash |
$ |
231,408 |
|
$ |
36,308 |
|
$ |
30,453 |
|
||
Investment securities: |
|
|
|
||||||||
Held-to-maturity, at amortized cost (net of zero allowance for credit losses at |
|
904,610 |
|
|
915,068 |
|
|
925,198 |
|
||
Available-for-sale (at fair value; amortized cost of |
|
252,917 |
|
|
536,365 |
|
|
552,028 |
|
||
Total investment securities |
|
1,157,527 |
|
|
1,451,433 |
|
|
1,477,226 |
|
||
Loans, at amortized cost |
|
2,082,399 |
|
|
2,054,963 |
|
|
2,073,720 |
|
||
Allowance for credit losses on loans |
|
(30,675 |
) |
|
(25,501 |
) |
|
(25,172 |
) |
||
Loans, net of allowance for credit losses on loans |
|
2,051,724 |
|
|
2,029,462 |
|
|
2,048,548 |
|
||
|
|
72,754 |
|
|
72,754 |
|
|
72,754 |
|
||
Bank-owned life insurance |
|
70,168 |
|
|
69,747 |
|
|
68,102 |
|
||
Operating lease right-of-use assets |
|
20,460 |
|
|
21,553 |
|
|
20,316 |
|
||
Bank premises and equipment, net |
|
7,263 |
|
|
7,546 |
|
|
7,792 |
|
||
Core deposit intangible, net |
|
3,269 |
|
|
3,515 |
|
|
3,766 |
|
||
Interest receivable and other assets |
|
80,155 |
|
|
74,858 |
|
|
74,946 |
|
||
Total assets |
$ |
3,694,728 |
|
$ |
3,767,176 |
|
$ |
3,803,903 |
|
||
|
|
|
|
||||||||
Liabilities and Stockholders' Equity |
|
|
|
||||||||
Liabilities |
|
|
|
||||||||
Deposits: |
|
|
|
||||||||
Non-interest bearing |
$ |
1,417,661 |
|
$ |
1,444,435 |
|
$ |
1,441,987 |
|
||
Interest bearing: |
|
|
|
||||||||
Transaction accounts |
|
178,712 |
|
|
211,274 |
|
|
225,040 |
|
||
Savings accounts |
|
228,946 |
|
|
224,262 |
|
|
233,298 |
|
||
Money market accounts |
|
1,121,336 |
|
|
1,136,595 |
|
|
1,138,433 |
|
||
Time accounts |
|
267,122 |
|
|
267,536 |
|
|
251,317 |
|
||
Total deposits |
|
3,213,777 |
|
|
3,284,102 |
|
|
3,290,075 |
|
||
Borrowings and other obligations |
|
231 |
|
|
260 |
|
|
26,298 |
|
||
Operating lease liabilities |
|
23,016 |
|
|
24,150 |
|
|
22,906 |
|
||
Interest payable and other liabilities |
|
22,761 |
|
|
21,984 |
|
|
25,562 |
|
||
Total liabilities |
|
3,259,785 |
|
|
3,330,496 |
|
|
3,364,841 |
|
||
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 - 16,278,260, 16,285,786 and
16,158,413 at |
|
218,773 |
|
|
218,342 |
|
|
217,498 |
|
||
Retained earnings |
|
247,477 |
|
|
273,450 |
|
|
274,570 |
|
||
Accumulated other comprehensive loss, net of taxes |
|
(31,307 |
) |
|
(55,112 |
) |
|
(53,006 |
) |
||
Total stockholders' equity |
|
434,943 |
|
|
436,680 |
|
|
439,062 |
|
||
Total liabilities and stockholders' equity |
$ |
3,694,728 |
|
$ |
3,767,176 |
|
$ |
3,803,903 |
|
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) |
|
Three months ended |
|
Six months ended |
||||||||||||
(in thousands, except per share amounts; unaudited) |
|
|
|
|
|
||||||||||
Interest income |
|
|
|
|
|
||||||||||
Interest and fees on loans |
$ |
25,109 |
|
$ |
25,020 |
|
|
$ |
50,129 |
|
$ |
48,837 |
|
||
Interest on investment securities |
|
8,299 |
|
|
8,805 |
|
|
|
17,104 |
|
|
20,027 |
|
||
Interest on federal funds sold and due from banks |
|
924 |
|
|
321 |
|
|
|
1,245 |
|
|
104 |
|
||
Total interest income |
|
34,332 |
|
|
34,146 |
|
|
|
68,478 |
|
|
68,968 |
|
||
Interest expense |
|
|
|
|
|
||||||||||
Interest on interest-bearing transaction accounts |
|
274 |
|
|
261 |
|
|
|
535 |
|
|
488 |
|
||
Interest on savings accounts |
|
511 |
|
|
371 |
|
|
|
882 |
|
|
316 |
|
||
Interest on money market accounts |
|
8,641 |
|
|
8,449 |
|
|
|
17,090 |
|
|
5,377 |
|
||
Interest on time accounts |
|
2,291 |
|
|
2,280 |
|
|
|
4,571 |
|
|
1,169 |
|
||
Interest on borrowings and other obligations |
|
148 |
|
|
91 |
|
|
|
239 |
|
|
7,589 |
|
||
Total interest expense |
|
11,865 |
|
|
11,452 |
|
|
|
23,317 |
|
|
14,939 |
|
||
Net interest income |
|
22,467 |
|
|
22,694 |
|
|
|
45,161 |
|
|
54,029 |
|
||
Provision for credit losses on loans |
|
5,200 |
|
|
350 |
|
|
|
5,550 |
|
|
850 |
|
||
Reversal of credit losses on unfunded loan commitments |
|
— |
|
|
— |
|
|
|
— |
|
|
(342 |
) |
||
Net interest income after provision for (reversal of) credit losses |
|
17,267 |
|
|
22,344 |
|
|
|
39,611 |
|
|
53,521 |
|
||
Non-interest income |
|
|
|
|
|
||||||||||
Wealth management and trust services |
|
585 |
|
|
553 |
|
|
|
1,138 |
|
|
1,070 |
|
||
Service charges on deposit accounts |
|
541 |
|
|
529 |
|
|
|
1,070 |
|
|
1,053 |
|
||
Earnings on bank-owned life insurance, net |
|
421 |
|
|
435 |
|
|
|
856 |
|
|
1,067 |
|
||
Debit card interchange fees, net |
|
444 |
|
|
408 |
|
|
|
852 |
|
|
1,002 |
|
||
Dividends on |
|
366 |
|
|
377 |
|
|
|
743 |
|
|
592 |
|
||
Merchant interchange fees, net |
|
10 |
|
|
167 |
|
|
|
177 |
|
|
260 |
|
||
Losses on sale of investment securities |
|
(32,542 |
) |
|
— |
|
|
|
(32,542 |
) |
|
— |
|
||
Other income |
|
420 |
|
|
285 |
|
|
|
705 |
|
|
630 |
|
||
Total non-interest income |
|
(29,755 |
) |
|
2,754 |
|
|
|
(27,001 |
) |
|
5,674 |
|
||
Non-interest expense |
|
|
|
|
|
||||||||||
Salaries and related benefits |
|
12,364 |
|
|
12,084 |
|
|
|
24,448 |
|
|
22,346 |
|
||
Occupancy and equipment |
|
2,049 |
|
|
1,969 |
|
|
|
4,018 |
|
|
4,394 |
|
||
Professional services |
|
1,043 |
|
|
1,078 |
|
|
|
2,121 |
|
|
1,920 |
|
||
Data processing |
|
1,005 |
|
|
1,070 |
|
|
|
2,075 |
|
|
1,967 |
|
||
Deposit network fees |
|
916 |
|
|
845 |
|
|
|
1,761 |
|
|
616 |
|
||
|
|
426 |
|
|
435 |
|
|
|
861 |
|
|
955 |
|
||
Information technology |
|
448 |
|
|
402 |
|
|
|
850 |
|
|
727 |
|
||
Depreciation and amortization |
|
379 |
|
|
388 |
|
|
|
767 |
|
|
1,282 |
|
||
Directors' expense |
|
306 |
|
|
317 |
|
|
|
623 |
|
|
621 |
|
||
Charitable contributions |
|
604 |
|
|
13 |
|
|
|
617 |
|
|
687 |
|
||
Amortization of core deposit intangible |
|
246 |
|
|
251 |
|
|
|
497 |
|
|
685 |
|
||
Other real estate owned |
|
— |
|
|
— |
|
|
|
— |
|
|
48 |
|
||
Other expense |
|
2,108 |
|
|
2,317 |
|
|
|
4,425 |
|
|
4,197 |
|
||
Total non-interest expense |
|
21,894 |
|
|
21,169 |
|
|
|
43,063 |
|
|
40,445 |
|
||
(Loss) income before (benefit from) provision for income taxes |
|
(34,382 |
) |
|
3,929 |
|
|
|
(30,453 |
) |
|
18,750 |
|
||
(Benefit from) provision for income taxes |
|
(12,480 |
) |
|
1,007 |
|
|
|
(11,473 |
) |
|
4,759 |
|
||
Net (loss) income |
$ |
(21,902 |
) |
$ |
2,922 |
|
|
$ |
(18,980 |
) |
$ |
13,991 |
|
||
Net (loss) income per common share: |
|
|
|
|
|
||||||||||
Basic |
$ |
(1.36 |
) |
$ |
0.18 |
|
|
$ |
(1.18 |
) |
$ |
0.88 |
|
||
Diluted |
$ |
(1.36 |
) |
$ |
0.18 |
|
|
$ |
(1.18 |
) |
$ |
0.87 |
|
||
Weighted average shares: |
|
|
|
|
|
||||||||||
Basic |
|
16,108 |
|
|
16,081 |
|
|
|
16,095 |
|
|
15,990 |
|
||
Diluted |
|
16,108 |
|
|
16,092 |
|
|
|
16,095 |
|
|
16,008 |
|
||
Comprehensive income: |
|
|
|
|
|
||||||||||
Net (loss) income |
$ |
(21,902 |
) |
$ |
2,922 |
|
|
$ |
(18,980 |
) |
$ |
13,991 |
|
||
Other comprehensive income (loss): |
|
|
|
|
|
||||||||||
Change in net unrealized gains or losses on available-for-sale securities |
|
559 |
|
|
(4,568 |
) |
|
|
(4,009 |
) |
|
5,285 |
|
||
Reclassification adjustment for realized losses on available-for-sale securities in net income |
|
32,542 |
|
|
— |
|
|
|
32,542 |
|
|
— |
|
||
Reclassification adjustment for gains or losses on fair value hedges |
|
282 |
|
|
1,217 |
|
|
|
1,499 |
|
|
— |
|
||
Amortization of net unrealized losses on securities transferred from available-for-sale to held-to-maturity |
|
403 |
|
|
361 |
|
|
|
764 |
|
|
914 |
|
||
Other comprehensive income (loss), before tax |
|
33,786 |
|
|
(2,990 |
) |
|
|
30,796 |
|
|
6,199 |
|
||
Deferred tax expense (benefit) |
|
9,981 |
|
|
(884 |
) |
|
|
9,097 |
|
|
1,833 |
|
||
Other comprehensive income (loss), net of tax |
|
23,805 |
|
|
(2,106 |
) |
|
|
21,699 |
|
|
4,366 |
|
||
Total comprehensive income |
$ |
1,903 |
|
$ |
816 |
|
|
$ |
2,719 |
|
$ |
18,357 |
|
|
AVERAGE STATEMENTS OF CONDITION AND ANALYSIS OF NET INTEREST INCOME |
|
|
Three months ended |
Three months ended |
|||||||||||||||
|
|
|
|
|||||||||||||||
|
|
|
Interest |
|
|
Interest |
|
|||||||||||
|
|
Average |
Income/ |
Yield/ |
Average |
Income/ |
Yield/ |
|||||||||||
(in thousands) |
Balance |
Expense |
Rate |
Balance |
Expense |
Rate |
||||||||||||
Assets |
|
|
|
|
|
|
||||||||||||
|
Interest-earning deposits with banks 1 |
$ |
67,786 |
$ |
924 |
5.39 |
% |
$ |
23,439 |
$ |
321 |
5.42 |
% |
|||||
|
Investment securities 2, 3 |
|
1,430,939 |
|
8,367 |
2.34 |
% |
|
1,529,985 |
|
8,880 |
2.32 |
% |
|||||
|
Loans 1, 3, 4, 5 |
|
2,059,273 |
|
25,215 |
4.84 |
% |
|
2,067,431 |
|
25,130 |
4.81 |
% |
|||||
|
Total interest-earning assets 1 |
|
3,557,998 |
|
34,506 |
3.84 |
% |
|
3,620,855 |
|
34,331 |
3.75 |
% |
|||||
|
Cash and non-interest-bearing due from banks |
|
37,248 |
|
|
|
35,302 |
|
|
|||||||||
|
Bank premises and equipment, net |
|
7,420 |
|
|
|
7,708 |
|
|
|||||||||
|
Interest receivable and other assets, net |
|
148,493 |
|
|
|
147,405 |
|
|
|||||||||
Total assets |
$ |
3,751,159 |
|
|
$ |
3,811,270 |
|
|
||||||||||
Liabilities and Stockholders' Equity |
|
|
|
|
|
|
||||||||||||
|
Interest-bearing transaction accounts |
$ |
197,535 |
$ |
274 |
0.56 |
% |
$ |
215,001 |
$ |
261 |
0.49 |
% |
|||||
|
Savings accounts |
|
226,985 |
|
511 |
0.90 |
% |
|
230,133 |
|
371 |
0.65 |
% |
|||||
|
Money market accounts |
|
1,154,346 |
|
8,641 |
3.01 |
% |
|
1,150,637 |
|
8,449 |
2.95 |
% |
|||||
|
Time accounts including CDARS |
|
260,602 |
|
2,291 |
3.54 |
% |
|
264,594 |
|
2,280 |
3.47 |
% |
|||||
|
Borrowings and other obligations 1 |
|
10,909 |
|
148 |
5.35 |
% |
|
7,323 |
|
91 |
4.93 |
% |
|||||
|
Total interest-bearing liabilities |
|
1,850,377 |
|
11,865 |
2.58 |
% |
|
1,867,688 |
|
11,452 |
2.47 |
% |
|||||
|
Demand accounts |
|
1,421,543 |
|
|
|
1,458,686 |
|
|
|||||||||
|
Interest payable and other liabilities |
|
46,547 |
|
|
|
48,923 |
|
|
|||||||||
|
Stockholders' equity |
|
432,692 |
|
|
|
435,973 |
|
|
|||||||||
Total liabilities & stockholders' equity |
$ |
3,751,159 |
|
|
$ |
3,811,270 |
|
|
||||||||||
Tax-equivalent net interest income/margin 1 |
|
$ |
22,641 |
2.52 |
% |
|
$ |
22,879 |
2.50 |
% |
||||||||
Reported net interest income/margin 1 |
|
$ |
22,467 |
2.50 |
% |
|
$ |
22,694 |
2.48 |
% |
||||||||
Tax-equivalent net interest rate spread |
|
|
1.26 |
% |
|
|
1.28 |
% |
||||||||||
|
|
|
|
|
|
|
|
|||||||||||
|
|
Six months ended |
Six months ended |
|||||||||||||||
|
|
|
|
|||||||||||||||
|
|
|
Interest |
|
|
Interest |
|
|||||||||||
|
|
Average |
Income/ |
Yield/ |
Average |
Income/ |
Yield/ |
|||||||||||
(in thousands) |
Balance |
Expense |
Rate |
Balance |
Expense |
Rate |
||||||||||||
Assets |
|
|
|
|
|
|
||||||||||||
|
Interest-earning deposits with banks 1 |
$ |
45,613 |
$ |
1,245 |
5.40 |
% |
$ |
4,217 |
$ |
104 |
4.91 |
% |
|||||
|
Investment securities 2, 3 |
|
1,480,462 |
|
17,247 |
2.33 |
% |
|
1,835,525 |
|
20,297 |
2.21 |
% |
|||||
|
Loans 1, 3, 4 |
|
2,063,351 |
|
50,346 |
4.83 |
% |
|
2,114,952 |
|
49,115 |
4.62 |
% |
|||||
|
Total interest-earning assets 1 |
|
3,589,426 |
|
68,838 |
3.79 |
% |
|
3,954,694 |
|
69,516 |
3.50 |
% |
|||||
|
Cash and non-interest-bearing due from banks |
|
36,275 |
|
|
|
38,985 |
|
|
|||||||||
|
Bank premises and equipment, net |
|
7,564 |
|
|
|
8,471 |
|
|
|||||||||
|
Interest receivable and other assets, net |
|
147,949 |
|
|
|
139,134 |
|
|
|||||||||
Total assets |
$ |
3,781,214 |
|
|
$ |
4,141,284 |
|
|
||||||||||
Liabilities and Stockholders' Equity |
|
|
|
|
|
|
||||||||||||
|
Interest-bearing transaction accounts |
$ |
206,268 |
$ |
535 |
0.52 |
% |
$ |
252,110 |
$ |
488 |
0.39 |
% |
|||||
|
Savings accounts |
|
228,559 |
|
882 |
0.78 |
% |
|
307,402 |
|
316 |
0.21 |
% |
|||||
|
Money market accounts |
|
1,152,492 |
|
17,090 |
2.98 |
% |
|
950,564 |
|
5,377 |
1.14 |
% |
|||||
|
Time accounts including CDARS |
|
262,598 |
|
4,571 |
3.50 |
% |
|
150,384 |
|
1,169 |
1.57 |
% |
|||||
|
Borrowings and other obligations 1 |
|
9,116 |
|
239 |
5.18 |
% |
|
297,853 |
|
7,589 |
5.07 |
% |
|||||
|
Total interest-bearing liabilities |
|
1,859,033 |
|
23,317 |
2.52 |
% |
|
1,958,313 |
|
14,939 |
1.54 |
% |
|||||
|
Demand accounts |
|
1,440,114 |
|
|
|
1,709,907 |
|
|
|||||||||
|
Interest payable and other liabilities |
|
47,735 |
|
|
|
48,678 |
|
|
|||||||||
|
Stockholders' equity |
|
434,332 |
|
|
|
424,386 |
|
|
|||||||||
Total liabilities & stockholders' equity |
$ |
3,781,214 |
|
|
$ |
4,141,284 |
|
|
||||||||||
Tax-equivalent net interest income/margin 1 |
|
$ |
45,521 |
2.51 |
% |
|
$ |
54,577 |
2.74 |
% |
||||||||
Reported net interest income/margin 1 |
|
$ |
45,161 |
2.49 |
% |
|
$ |
54,029 |
2.72 |
% |
||||||||
Tax-equivalent net interest rate spread |
|
|
1.27 |
% |
|
|
1.96 |
% |
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|
|
|
|
|
|
|
|
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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. |
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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. |
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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. |
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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. |
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5 Net loan origination costs in interest income totaled |
View source version on businesswire.com: https://www.businesswire.com/news/home/20240729221024/en/
Marketing & Corporate Communications Manager
916-823-7214 | YahairaGarcia-Perea@bankofmarin.com
Source: