Attached files
| file | filename |
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| 8-K - 8-K - Bank of Marin Bancorp | form8k-q32016.htm |
EXHIBIT 99.1
 | ||
FOR IMMEDIATE RELEASE | CONTACT: | Sandy Pfaff |
415-819-7447 | ||
sandy@pfaffpr.com | ||
BANK OF MARIN BANCORP REPORTS RECORD EARNINGS OF $7.0 MILLION
NOVATO, CA, October 24, 2016 - Bank of Marin Bancorp, "Bancorp" (NASDAQ: BMRC), parent company of Bank of Marin, announced quarterly earnings of $7.0 million in the third quarter of 2016, compared to $4.8 million in both the second quarter of 2016 and the third quarter of 2015. Diluted earnings per share of $1.14 in the third quarter increased $0.35 from $0.79 in both the prior quarter and the same quarter a year ago, due to the recovery of a problem credit and accelerated accretion of an acquired loan discount upon early payoff. Year-to-date earnings of $17.4 million grew 29.1% from $13.5 million for the same period a year ago. Diluted earnings per share were $2.86 in the first nine months of 2016, an increase from $2.23 for the same period in 2015.
“Bank of Marin has exceeded the record earnings achieved in the first quarter this year,” said Russell A. Colombo, President and Chief Executive Officer. “I'm pleased with our performance overall, particularly with our organic growth in both deposits and loans. We enter the fourth quarter with strong focus and positive momentum thanks to our commitment to relationship banking and our discipline, both of which drive the way the Bank operates. Our relationship focus has allowed us to build a strong customer base and work with our clients to resolve issues. This is clearly evident in the recovery we achieved in the third quarter.”
Bancorp also provided the following highlights from its operating and financial performance for the third quarter of 2016:
• | The resolution of a problem commercial real estate credit added $1.4 million interest recovery to net interest income and resulted in a $1.6 million reversal of the provision for loan losses. Non-accrual loans represent 0.04% of total loans as of September 30, 2016. |
• | Deposit growth of $95.9 million in the third quarter reflects the strength of our customer relationships. Non-interest bearing deposits grew by $56.2 million and represent 47.8% of total deposits. The 0.08% cost of total deposits is consistent with the prior quarter. |
• | Loans increased by $19.3 million and totaled $1,467.7 million at September 30, 2016, compared to $1,448.4 million at June 30, 2016. New loan volume of $56.3 million in the third quarter of 2016 was $11.8 million higher than last quarter. |
• | All capital ratios are well above regulatory requirements for a well-capitalized institution. The total risk-based capital ratio for Bancorp was 14.3% at September 30, 2016 compared to 14.1% at June 30, 2016. Tangible common equity to tangible assets decreased to 10.9% at September 30, 2016 from 11.2% at June 30, 2016, primarily due to the increase in total assets. |
• | The Board of Directors declared a cash dividend of $0.27 per share on October 21, 2016. This represents the 46th consecutive quarterly dividend paid by Bank of Marin Bancorp. The dividend is payable on November 14, 2016, to shareholders of record at the close of business on November 4, 2016. |
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Loans and Credit Quality
Loan originations of $56.3 million in the third quarter of 2016 were spread throughout our markets. Investor commercial real estate, commercial and industrial loans and owner-occupied commercial real estate accounted for the majority of the new loan volume for the quarter. New loan originations in the third quarter were offset by payoffs of $38.6 million, and combined with lines of credit utilization and amortization on existing loans, resulted in the net increase of $19.3 million. Payoffs in the quarter ended September 30, 2016 were primarily the result of property sales or scheduled project completion.
Year-to-date loan originations of $129.9 million are consistent with 2015 while payoffs of $116.1 million are lower than the first nine months of 2015.
Non-accrual loans totaled $540 thousand, or 0.04% of Bank of Marin's loan portfolio at September 30, 2016, compared to $2.7 million, or 0.19%, at June 30, 2016 and $2.6 million, or 0.19% a year ago. The decrease in non-accrual loans from the prior quarter and a year ago primarily relates to the payoff of the problem commercial real estate credit mentioned above. Classified loans increased $2.2 million to $22.6 million at September 30, 2016, from $20.4 million at June 30, 2016. Accruing loans past due 30 to 89 days totaled $160 thousand at September 30, 2016, compared to $135 thousand at June 30, 2016 and $3.4 million a year ago.
A $1.6 million reversal of the provision for loan losses was recorded in the third quarter of 2016 and resulted from charged-off principal recovery of $2.2 million on the problem credit previously mentioned. Net recoveries were $59 thousand in the prior quarter and $102 thousand in the same quarter a year ago. The ratio of loan loss reserve to loans totaled 1.07% at September 30, 2016 compared to 1.04% at June 30, 2016 and 1.06% at September 30, 2015.
Investments
The investment portfolio totaled $425.4 million at September 30, 2016, an increase of $43.6 million from June 30, 2016, mainly due to the deployment of cash generated by deposit growth into agency and municipal securities.
Deposits
Deposits totaled $1,801.5 million at September 30, 2016, compared to $1,705.6 million at June 30, 2016 and $1,635.5 million at September 30, 2015. The increase of $95.9 million in the third quarter is due to the normal business activity of our customers. Non-interest bearing deposits totaled $860.6 million, or 47.8% of total deposits, compared to 47.2% at June 30, 2016 and 46.0% at September 30, 2015.
Earnings
“Our credit quality continues to be exceptional. It’s the hallmark of this bank and one of the important ways by which we measure our success. Over the Bank's history, we have only taken $306 thousand in net loan losses on commercial real estate loans originated by Bank of Marin,” said Tani Girton, Chief Financial Officer. “Our 1.35% return on assets and 55.41% efficiency ratio for the quarter demonstrate the exceptional performance associated with disciplined underwriting, lending, relationship management and expense control."
Net interest income totaled $55.2 million in the first nine months of 2016 compared to $49.9 million for the same period of 2015. The increase of $5.2 million was primarily due to an increase in average earning assets of $146.8 million. Additional positive variances in 2016 include interest recovery of $1.4 million mentioned above and an increase in gains on payoffs of purchased credit impaired ("PCI") loans of $696 thousand (as seen in the table below), which were partially offset by lower average rates
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on loans and investments and prepayment fees of $312 thousand on a Federal Home Loan Bank ("FHLB") advance in the second quarter of 2016.
Net interest income totaled $19.4 million in the third quarter of 2016, compared to $17.2 million in the prior quarter and $16.9 million in the same quarter a year ago. The increase from both earlier quarters was due to $1.4 million interest recovery previously discussed and an increase in purchased loan accretion shown in the table below. In addition, average earning assets were higher while interest expense was lower as a result of the Federal Home Loan Bank fixed rate advance prepayment. These positive variances were minimally offset by a decline in the average rates on loans.
The tax-equivalent net interest margin was 4.05% in the third quarter of 2016, compared to 3.77% in the prior quarter and 3.79% in the same quarter a year ago. The increase in the third quarter of 2016 compared to both the second quarter of 2016 and the third quarter of 2015 is primarily due to the same changes impacting net interest income mentioned above.
Loans acquired through the acquisition of other banks are classified as 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 $2.9 million, $2.9 million, and $3.7 million at September 30, 2016, June 30, 2016 and September 30, 2015, respectively.
Accretion and gains on payoffs of purchased loans recorded to interest income were as follows:
Three months ended | ||||||||||||||||||||||
September 30, 2016 | June 30, 2016 | September 30, 2015 | ||||||||||||||||||||
(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 | $ | 89 | 2 bps | $ | 87 | 2 bps | $ | 128 | 3 bps | |||||||||||||
Accretion on non-PCI loans 2 | $ | 605 | 12 bps | $ | 317 | 7 bps | $ | 366 | 8 bps | |||||||||||||
Gains on payoffs of PCI loans | $ | — | 0 bps | $ | — | 0 bps | $ | 1 | 0 bps | |||||||||||||
Nine months ended | |||||||||
September 30, 2016 | September 30, 2015 | ||||||||
(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 | $ | 274 | 2 bps | $ | 367 | 3 bps | |||
Accretion on non-PCI loans 2 | $ | 1,252 | 9 bps | $ | 1,202 | 9 bps | |||
Gains on payoffs of PCI loans | $ | 740 | 5 bps | $ | 44 | 0 bps | |||
1 Accretable yield on PCI loans totaled $1.6 million, $1.7 million and $2.7 million at September 30, 2016, June 30, 2016 and September 30, 2015, respectively.
2 Unaccreted purchase discounts on non-PCI loans totaled $1.9 million, $2.5 million and $3.4 million at September 30, 2016, June 30, 2016 and September 30, 2015, respectively.
Non-interest income in the third quarter of 2016 totaled $2.1 million, compared to $2.4 million in the prior quarter and $2.3 million in the same quarter a year ago. The decrease compared to the prior quarter primarily relates to a $284 thousand gain on the sale of four securities in the second quarter of 2016. The decrease from the same quarter last year is partially due to a $72 thousand gain on the sale of four securities in the third quarter of 2015, lower merchant card interchange fees of $57 thousand related to a decline in sales volume and $62 thousand lower wealth management and trust services fees in the third quarter of 2016.
Non-interest expense has been very stable totaling $11.9 million in the third quarter of 2016, $12.0 million in the prior quarter and $11.6 million in the same quarter a year ago. The increase from the third quarter
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of 2015 was partially due to an increase in salaries and benefits related to annual merit increases and higher full time equivalents in 2016.
Earnings Call and Webcast Information
Bank of Marin Bancorp will webcast its third quarter earnings call on Monday, October 24, 2016 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 http://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
Bank of Marin is a leading business and community bank in the San Francisco Bay Area, with assets of $2.1 billion. Founded in 1989 and headquartered in Novato, Bank of Marin is the wholly-owned subsidiary of Bank of Marin Bancorp (NASDAQ: BMRC). With 20 retail offices in 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 was named 2016 Community Bank of the Year by Western Independent Bankers and 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 and has been recognized as a Top 200 Community Bank by US Banker Magazine for the past five years. 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 future acquisitions, competition, changes in accounting principles, policies or guidelines, legislation or regulation, 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.
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BANK OF MARIN BANCORP | |||||||||||||||
FINANCIAL HIGHLIGHTS | |||||||||||||||
September 30, 2016 | |||||||||||||||
(dollars in thousands, except per share data; unaudited) | |||||||||||||||
QUARTER-TO-DATE | September 30, 2016 | June 30, 2016 | September 30, 2015 | ||||||||||||
NET INCOME | $ | 6,964 | $ | 4,837 | $ | 4,773 | |||||||||
DILUTED EARNINGS PER COMMON SHARE | $ | 1.14 | $ | 0.79 | $ | 0.79 | |||||||||
RETURN ON AVERAGE ASSETS (ROA) | 1.35 | % | 0.99 | % | 1.00 | % | |||||||||
RETURN ON AVERAGE EQUITY (ROE) | 12.08 | % | 8.68 | % | 9.00 | % | |||||||||
EFFICIENCY RATIO | 55.41 | % | 61.35 | % | 60.67 | % | |||||||||
TAX-EQUIVALENT NET INTEREST MARGIN1 | 4.05 | % | 3.77 | % | 3.79 | % | |||||||||
NET CHARGE-OFFS (RECOVERIES) | $ | (2,176 | ) | $ | (59 | ) | $ | (102 | ) | ||||||
NET CHARGE-OFFS (RECOVERIES) TO AVERAGE LOANS | (0.15 | ) | % | — | % | (0.01 | ) | % | |||||||
YEAR-TO-DATE | |||||||||||||||
NET INCOME | $ | 17,447 | $ | 10,483 | $ | 13,516 | |||||||||
DILUTED EARNINGS PER COMMON SHARE | $ | 2.86 | $ | 1.72 | $ | 2.23 | |||||||||
RETURN ON AVERAGE ASSETS (ROA) | 1.17 | % | 1.07 | % | 0.97 | % | |||||||||
RETURN ON AVERAGE EQUITY (ROE) | 10.40 | % | 9.52 | % | 8.75 | % | |||||||||
EFFICIENCY RATIO | 58.07 | % | 59.49 | % | 62.79 | % | |||||||||
TAX-EQUIVALENT NET INTEREST MARGIN1 | 3.95 | % | 3.90 | % | 3.88 | % | |||||||||
NET CHARGE-OFFS (RECOVERIES) | $ | (2,264 | ) | $ | (89 | ) | $ | 643 | |||||||
NET CHARGE-OFFS (RECOVERIES) TO AVERAGE LOANS | (0.15 | ) | % | (0.01 | ) | % | 0.05 | % | |||||||
AT PERIOD END | |||||||||||||||
TOTAL ASSETS | $ | 2,054,821 | $ | 1,950,452 | $ | 1,882,794 | |||||||||
LOANS: | |||||||||||||||
COMMERCIAL AND INDUSTRIAL | $ | 221,207 | $ | 215,257 | $ | 189,967 | |||||||||
REAL ESTATE | |||||||||||||||
COMMERCIAL OWNER-OCCUPIED | $ | 237,538 | $ | 242,103 | $ | 239,335 | |||||||||
COMMERCIAL INVESTOR-OWNED | $ | 715,051 | $ | 703,458 | $ | 671,677 | |||||||||
CONSTRUCTION | $ | 80,491 | $ | 77,024 | $ | 54,921 | |||||||||
HOME EQUITY | $ | 111,211 | $ | 112,240 | $ | 113,731 | |||||||||
OTHER RESIDENTIAL | $ | 77,769 | $ | 73,761 | $ | 71,682 | |||||||||
INSTALLMENT AND OTHER CONSUMER LOANS | $ | 24,396 | $ | 24,556 | $ | 21,887 | |||||||||
TOTAL LOANS | $ | 1,467,663 | $ | 1,448,399 | $ | 1,363,200 | |||||||||
NON-PERFORMING LOANS2: | |||||||||||||||
COMMERCIAL AND INDUSTRIAL | $ | 44 | $ | 21 | $ | 354 | |||||||||
REAL ESTATE | |||||||||||||||
COMMERCIAL OWNER-OCCUPIED | $ | 176 | $ | 176 | $ | — | |||||||||
COMMERCIAL INVESTOR-OWNED | $ | — | $ | 1,676 | $ | 2,020 | |||||||||
CONSTRUCTION | $ | — | $ | — | $ | 2 | |||||||||
HOME EQUITY | $ | 260 | $ | 789 | $ | 172 | |||||||||
OTHER RESIDENTIAL | $ | — | $ | — | $ | — | |||||||||
INSTALLMENT AND OTHER CONSUMER LOANS | $ | 60 | $ | 63 | $ | 90 | |||||||||
TOTAL NON-ACCRUAL LOANS | $ | 540 | $ | 2,725 | $ | 2,638 | |||||||||
CLASSIFIED LOANS (GRADED SUBSTANDARD & DOUBTFUL) | $ | 22,592 | $ | 20,399 | $ | 24,023 | |||||||||
TOTAL ACCRUING LOANS 30-89 DAYS PAST DUE | $ | 160 | $ | 135 | $ | 3,361 | |||||||||
LOAN LOSS RESERVE TO LOANS | 1.07 | % | 1.04 | % | 1.06 | % | |||||||||
LOAN LOSS RESERVE TO NON-ACCRUAL LOANS | 29.11 | x | 5.54 | x | 5.48 | x | |||||||||
NON-ACCRUAL LOANS TO TOTAL LOANS | 0.04 | % | 0.19 | % | 0.19 | % | |||||||||
TOTAL DEPOSITS | $ | 1,801,469 | $ | 1,705,615 | $ | 1,635,482 | |||||||||
LOAN-TO-DEPOSIT RATIO | 81.5 | % | 84.9 | % | 83.4 | % | |||||||||
STOCKHOLDERS' EQUITY | $ | 231,780 | $ | 226,452 | $ | 211,954 | |||||||||
BOOK VALUE PER SHARE | $ | 37.85 | $ | 37.00 | $ | 34.97 | |||||||||
TANGIBLE COMMON EQUITY TO TANGIBLE ASSETS3 | 10.9 | % | 11.2 | % | 10.8 | % | |||||||||
TOTAL RISK BASED CAPITAL RATIO-BANK | 13.9 | % | 13.8 | % | 13.6 | % | |||||||||
TOTAL RISK BASED CAPITAL RATIO-BANCORP | 14.3 | % | 14.1 | % | 14.0 | % | |||||||||
FULL-TIME EQUIVALENT EMPLOYEES | 263 | 255 | 257 | ||||||||||||
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 $19.1 million, $19.9 million and $18.8 million at September 30, 2016, June 30, 2016 and September 30, 2015, respectively. Excludes purchased credit-impaired (PCI) loans with carrying values of $2.9 million, $2.9 million and $3.7 million that were accreting interest at September 30, 2016, June 30, 2016 and September 30, 2015, respectively. These amounts are excluded as PCI loan accretable yield interest recognition is independent from the underlying contractual loan delinquency status. Total PCI loans were $2.9 million, $2.9 million and $3.7 million at September 30, 2016, June 30, 2016 and September 30, 2015, respectively. | |||||||||||||||
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 $9.1 million, $9.3 million and $9.7 million at September 30, 2016, June 30, 2016 and September 30, 2015, respectively. Tangible assets exclude goodwill and intangible assets. | |||||||||||||||
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BANK OF MARIN BANCORP CONSOLIDATED STATEMENTS OF CONDITION |
At September 30, 2016, June 30, 2016 and September 30, 2015 |
(in thousands, except share data; unaudited) | September 30, 2016 | June 30, 2016 | September 30, 2015 | ||||||
Assets | |||||||||
Cash and due from banks | $ | 96,930 | $ | 55,438 | $ | 35,315 | |||
Investment securities | |||||||||
Held-to-maturity, at amortized cost | 46,423 | 58,491 | 86,471 | ||||||
Available-for-sale (at fair value; amortized cost $374,802, $318,335 and $331,024 at September 30, 2016, June 30, 2016 and September 30, 2015, respectively) | 378,996 | 323,361 | 333,856 | ||||||
Total investment securities | 425,419 | 381,852 | 420,327 | ||||||
Loans, net of allowance for loan losses of $15,713, $15,087 and $14,457 at September 30, 2016, June 30, 2016 and September 30, 2015, respectively | 1,451,950 | 1,433,312 | 1,348,743 | ||||||
Bank premises and equipment, net | 8,611 | 8,650 | 9,537 | ||||||
Goodwill | 6,436 | 6,436 | 6,436 | ||||||
Core deposit intangible | 2,713 | 2,846 | 3,268 | ||||||
Interest receivable and other assets | 62,762 | 61,918 | 59,168 | ||||||
Total assets | $ | 2,054,821 | $ | 1,950,452 | $ | 1,882,794 | |||
Liabilities and Stockholders' Equity | |||||||||
Liabilities | |||||||||
Deposits | |||||||||
Non-interest bearing | $ | 860,638 | $ | 804,447 | $ | 752,336 | |||
Interest bearing | |||||||||
Transaction accounts | 91,979 | 88,365 | 95,522 | ||||||
Savings accounts | 156,225 | 149,745 | 136,021 | ||||||
Money market accounts | 533,682 | 502,476 | 495,642 | ||||||
Time accounts | 158,945 | 160,582 | 155,961 | ||||||
Total deposits | 1,801,469 | 1,705,615 | 1,635,482 | ||||||
Federal Home Loan Bank ("FHLB") and other borrowings | — | — | 15,000 | ||||||
Subordinated debentures | 5,540 | 5,493 | 5,343 | ||||||
Interest payable and other liabilities | 16,032 | 12,892 | 15,015 | ||||||
Total liabilities | 1,823,041 | 1,724,000 | 1,670,840 | ||||||
Stockholders' Equity | |||||||||
Preferred stock, no par value, Authorized - 5,000,000 shares, none issued | — | — | — | ||||||
Common stock, no par value, Authorized - 15,000,000 shares; Issued and outstanding - 6,123,181, 6,120,684 and 6,060,744 at September 30, 2016, June 30, 2016 and September 30, 2015, respectively | 86,926 | 86,569 | 84,272 | ||||||
Retained earnings | 142,427 | 136,992 | 126,082 | ||||||
Accumulated other comprehensive income, net | 2,427 | 2,891 | 1,600 | ||||||
Total stockholders' equity | 231,780 | 226,452 | 211,954 | ||||||
Total liabilities and stockholders' equity | $ | 2,054,821 | $ | 1,950,452 | $ | 1,882,794 | |||
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BANK OF MARIN BANCORP CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME |
Three months ended | Nine months ended | |||||||||||||||
(in thousands, except per share amounts; unaudited) | September 30, 2016 | June 30, 2016 | September 30, 2015 | September 30, 2016 | September 30, 2015 | |||||||||||
Interest income | ||||||||||||||||
Interest and fees on loans | $ | 17,840 | $ | 16,097 | $ | 15,498 | $ | 51,078 | $ | 46,164 | ||||||
Interest on investment securities | ||||||||||||||||
Securities of U.S. government agencies | 1,283 | 1,191 | 1,223 | 3,826 | 3,248 | |||||||||||
Obligations of state and political subdivisions | 569 | 588 | 527 | 1,743 | 1,578 | |||||||||||
Corporate debt securities and other | 38 | 77 | 162 | 220 | 546 | |||||||||||
Interest on Federal funds sold and short-term investments | 104 | 40 | 35 | 155 | 107 | |||||||||||
Total interest income | 19,834 | 17,993 | 17,445 | 57,022 | 51,643 | |||||||||||
Interest expense | ||||||||||||||||
Interest on interest-bearing transaction accounts | 27 | 28 | 28 | 82 | 88 | |||||||||||
Interest on savings accounts | 15 | 14 | 12 | 43 | 37 | |||||||||||
Interest on money market accounts | 112 | 107 | 125 | 330 | 375 | |||||||||||
Interest on time accounts | 190 | 193 | 212 | 579 | 649 | |||||||||||
Interest on FHLB and other borrowings | — | 378 | 80 | 478 | 236 | |||||||||||
Interest on subordinated debentures | 109 | 107 | 105 | 325 | 314 | |||||||||||
Total interest expense | 453 | 827 | 562 | 1,837 | 1,699 | |||||||||||
Net interest income | 19,381 | 17,166 | 16,883 | 55,185 | 49,944 | |||||||||||
(Reversal of) provision for loan losses | (1,550 | ) | — | — | (1,550 | ) | — | |||||||||
Net interest income after provision for loan losses | 20,931 | 17,166 | 16,883 | 56,735 | 49,944 | |||||||||||
Non-interest income | ||||||||||||||||
Service charges on deposit accounts | 447 | 441 | 489 | 1,344 | 1,518 | |||||||||||
Wealth Management and Trust Services | 506 | 527 | 568 | 1,599 | 1,809 | |||||||||||
Debit card interchange fees | 393 | 381 | 372 | 1,112 | 1,087 | |||||||||||
Merchant interchange fees | 114 | 128 | 171 | 355 | 430 | |||||||||||
Earnings on bank-owned life insurance | 216 | 209 | 204 | 626 | 610 | |||||||||||
Dividends on FHLB stock | 223 | 185 | 209 | 577 | 817 | |||||||||||
Gains on investment securities, net | — | 284 | 72 | 394 | 80 | |||||||||||
Other income | 215 | 266 | 213 | 691 | 744 | |||||||||||
Total non-interest income | 2,114 | 2,421 | 2,298 | 6,698 | 7,095 | |||||||||||
Non-interest expense | ||||||||||||||||
Salaries and related benefits | 6,683 | 6,724 | 6,300 | 20,155 | 19,762 | |||||||||||
Occupancy and equipment | 1,275 | 1,175 | 1,346 | 3,731 | 4,181 | |||||||||||
Depreciation and amortization | 449 | 441 | 441 | 1,343 | 1,512 | |||||||||||
Federal Deposit Insurance Corporation insurance | 253 | 246 | 250 | 760 | 739 | |||||||||||
Data processing | 894 | 916 | 835 | 2,666 | 2,413 | |||||||||||
Professional services | 476 | 554 | 493 | 1,528 | 1,572 | |||||||||||
Directors' expense | 143 | 116 | 182 | 448 | 620 | |||||||||||
Information technology | 307 | 165 | 186 | 665 | 554 | |||||||||||
Provision for losses on off-balance sheet commitments | — | 150 | 324 | 150 | 14 | |||||||||||
Other expense | 1,430 | 1,530 | 1,281 | 4,491 | 4,447 | |||||||||||
Total non-interest expense | 11,910 | 12,017 | 11,638 | 35,937 | 35,814 | |||||||||||
Income before provision for income taxes | 11,135 | 7,570 | 7,543 | 27,496 | 21,225 | |||||||||||
Provision for income taxes | 4,171 | 2,733 | 2,770 | 10,049 | 7,709 | |||||||||||
Net income | $ | 6,964 | $ | 4,837 | $ | 4,773 | $ | 17,447 | $ | 13,516 | ||||||
Net income per common share: | ||||||||||||||||
Basic | $ | 1.14 | $ | 0.80 | $ | 0.80 | $ | 2.87 | $ | 2.27 | ||||||
Diluted | $ | 1.14 | $ | 0.79 | $ | 0.79 | $ | 2.86 | $ | 2.23 | ||||||
Weighted average shares: | ||||||||||||||||
Basic | 6,083 | 6,078 | 5,963 | 6,070 | 5,943 | |||||||||||
Diluted | 6,117 | 6,109 | 6,067 | 6,106 | 6,059 | |||||||||||
Dividends declared per common share | $ | 0.25 | $ | 0.25 | $ | 0.22 | $ | 0.75 | $ | 0.66 | ||||||
Comprehensive income: | ||||||||||||||||
Net income | $ | 6,964 | $ | 4,837 | $ | 4,773 | $ | 17,447 | $ | 13,516 | ||||||
Other comprehensive income | ||||||||||||||||
Change in net unrealized (loss) gain on available-for-sale securities | (831 | ) | 2,119 | 1,523 | 4,211 | 1,037 | ||||||||||
Reclassification adjustment for gains on available-for-sale securities included in net income | — | (284 | ) | — | (394 | ) | (8 | ) | ||||||||
Net change in unrealized (loss) gain on available-for-sale securities, before tax | (831 | ) | 1,835 | 1,523 | 3,817 | 1,029 | ||||||||||
Deferred tax (benefit) expense | (367 | ) | 776 | 654 | 1,583 | 517 | ||||||||||
Other comprehensive (loss) income, net of tax | (464 | ) | 1,059 | 869 | 2,234 | 512 | ||||||||||
Comprehensive income | $ | 6,500 | $ | 5,896 | $ | 5,642 | $ | 19,681 | $ | 14,028 | ||||||
7
BANK OF MARIN BANCORP |
AVERAGE STATEMENTS OF CONDITION AND ANALYSIS OF NET INTEREST INCOME |
Three months ended | Three months ended | Three months ended | |||||||||||||||||||||||
September 30, 2016 | June 30, 2016 | September 30, 2015 | |||||||||||||||||||||||
Interest | Interest | Interest | |||||||||||||||||||||||
Average | Income/ | Yield/ | Average | Income/ | Yield/ | Average | Income/ | Yield/ | |||||||||||||||||
(dollars in thousands) | Balance | Expense | Rate | Balance | Expense | Rate | Balance | Expense | Rate | ||||||||||||||||
Assets | |||||||||||||||||||||||||
Interest-bearing due from banks 1 | $ | 79,672 | $ | 105 | 0.51 | % | $ | 28,766 | $ | 39 | 0.54 | % | $ | 51,378 | $ | 35 | 0.27 | % | |||||||
Investment securities 2, 3 | 394,980 | 2,120 | 2.15 | % | 389,023 | 2,080 | 2.14 | % | 389,260 | 2,094 | 2.15 | % | |||||||||||||
Loans 1, 3, 4 | 1,454,617 | 18,182 | 4.89 | % | 1,440,847 | 16,416 | 4.51 | % | 1,352,023 | 15,800 | 4.57 | % | |||||||||||||
Total interest-earning assets 1 | 1,929,269 | 20,407 | 4.14 | % | 1,858,636 | 18,535 | 3.95 | % | 1,792,661 | 17,929 | 3.91 | % | |||||||||||||
Cash and non-interest-bearing due from banks | 48,901 | 40,540 | 43,054 | ||||||||||||||||||||||
Bank premises and equipment, net | 8,808 | 8,827 | 9,680 | ||||||||||||||||||||||
Interest receivable and other assets, net | 61,649 | 60,205 | 57,589 | ||||||||||||||||||||||
Total assets | $ | 2,048,627 | $ | 1,968,208 | $ | 1,902,984 | |||||||||||||||||||
Liabilities and Stockholders' Equity | |||||||||||||||||||||||||
Interest-bearing transaction accounts | $ | 91,035 | $ | 27 | 0.12 | % | $ | 93,355 | $ | 28 | 0.12 | % | $ | 93,933 | $ | 28 | 0.12 | % | |||||||
Savings accounts | 152,370 | 15 | 0.04 | % | 149,234 | 14 | 0.04 | % | 135,202 | 13 | 0.04 | % | |||||||||||||
Money market accounts | 531,130 | 112 | 0.08 | % | 510,727 | 107 | 0.08 | % | 506,952 | 125 | 0.10 | % | |||||||||||||
Time accounts including CDARS | 160,595 | 190 | 0.47 | % | 160,031 | 192 | 0.48 | % | 157,252 | 212 | 0.53 | % | |||||||||||||
Overnight borrowings 1 | — | — | — | % | 1,082 | 1 | 0.40 | % | 188 | — | — | % | |||||||||||||
FHLB fixed-rate advances 1 | — | — | — | % | 12,363 | 377 | 12.07 | % | 15,000 | 79 | 2.07 | % | |||||||||||||
Subordinated debentures 1 | 5,516 | 109 | 7.68 | % | 5,471 | 108 | 7.78 | % | 5,316 | 105 | 7.73 | % | |||||||||||||
Total interest-bearing liabilities | 940,646 | 453 | 0.19 | % | 932,263 | 827 | 0.36 | % | 913,843 | 562 | 0.24 | % | |||||||||||||
Demand accounts | 864,460 | 797,935 | 765,284 | ||||||||||||||||||||||
Interest payable and other liabilities | 14,124 | 13,853 | 13,467 | ||||||||||||||||||||||
Stockholders' equity | 229,397 | 224,157 | 210,390 | ||||||||||||||||||||||
Total liabilities & stockholders' equity | $ | 2,048,627 | $ | 1,968,208 | $ | 1,902,984 | |||||||||||||||||||
Tax-equivalent net interest income/margin 1 | $ | 19,954 | 4.05 | % | $ | 17,708 | 3.77 | % | $ | 17,367 | 3.79 | % | |||||||||||||
Reported net interest income/margin 1 | $ | 19,382 | 3.93 | % | $ | 17,166 | 3.65 | % | $ | 16,883 | 3.69 | % | |||||||||||||
Tax-equivalent net interest rate spread | — | 3.95 | % | 3.59 | % | 3.67 | % | ||||||||||||||||||
Nine months ended | Nine months ended | ||||||||||||||||||||||||
September 30, 2016 | September 30, 2015 | ||||||||||||||||||||||||
Interest | Interest | ||||||||||||||||||||||||
Average | Income/ | Yield/ | Average | Income/ | Yield/ | ||||||||||||||||||||
(dollars in thousands) | Balance | Expense | Rate | Balance | Expense | Rate | |||||||||||||||||||
Assets | |||||||||||||||||||||||||
Interest-bearing due from banks 1 | $ | 39,293 | $ | 155 | 0.52 | % | $ | 55,509 | $ | 107 | 0.25 | % | |||||||||||||
Investment securities 2, 3 | 403,986 | 6,458 | 2.13 | % | 340,373 | 5,864 | 2.30 | % | |||||||||||||||||
Loans 1, 3, 4 | 1,446,053 | 52,072 | 4.73 | % | 1,346,689 | 47,063 | 4.61 | % | |||||||||||||||||
Total interest-earning assets 1 | 1,889,332 | 58,685 | 4.08 | % | 1,742,571 | 53,034 | 4.01 | % | |||||||||||||||||
Cash and non-interest-bearing due from banks | 39,788 | 44,368 | |||||||||||||||||||||||
Bank premises and equipment, net | 8,926 | 9,786 | |||||||||||||||||||||||
Interest receivable and other assets, net | 60,022 | 58,153 | |||||||||||||||||||||||
Total assets | $ | 1,998,068 | $ | 1,854,878 | |||||||||||||||||||||
Liabilities and Stockholders' Equity | |||||||||||||||||||||||||
Interest-bearing transaction accounts | $ | 95,112 | $ | 82 | 0.11 | % | $ | 93,762 | $ | 88 | 0.13 | % | |||||||||||||
Savings accounts | 148,050 | 43 | 0.04 | % | 133,553 | 38 | 0.04 | % | |||||||||||||||||
Money market accounts | 523,641 | 330 | 0.08 | % | 494,142 | 375 | 0.10 | % | |||||||||||||||||
Time accounts including CDARS | 160,523 | 579 | 0.48 | % | 156,458 | 648 | 0.55 | % | |||||||||||||||||
Overnight borrowings 1 | 7,190 | 22 | 0.42 | % | 194 | — | — | % | |||||||||||||||||
FHLB fixed-rate advances 1 | 9,087 | 456 | 6.59 | % | 15,000 | 236 | 2.07 | % | |||||||||||||||||
Subordinated debentures 1 | 5,469 | 325 | 7.80 | % | 5,261 | 314 | 7.98 | % | |||||||||||||||||
Total interest-bearing liabilities | 949,072 | 1,837 | 0.26 | % | 898,370 | 1,699 | 0.25 | % | |||||||||||||||||
Demand accounts | 810,190 | 735,487 | |||||||||||||||||||||||
Interest payable and other liabilities | 14,651 | 14,466 | |||||||||||||||||||||||
Stockholders' equity | 224,155 | 206,555 | |||||||||||||||||||||||
Total liabilities & stockholders' equity | $ | 1,998,068 | $ | 1,854,878 | |||||||||||||||||||||
Tax-equivalent net interest income/margin 1 | $ | 56,848 | 3.95 | % | $ | 51,335 | 3.88 | % | |||||||||||||||||
Reported net interest income/margin 1 | $ | 55,185 | 3.84 | % | $ | 49,944 | 3.78 | % | |||||||||||||||||
Tax-equivalent net interest rate spread | 3.82 | % | 3.76 | % | |||||||||||||||||||||
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 35 percent. | |||||||||||||||||||||||||
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. | |||||||||||||||||||||||||
8