Attached files
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| 8-K - 8-K - Bank of Marin Bancorp | form8k-q22017.htm |
EXHIBIT 99.1
 | |
FOR IMMEDIATE RELEASE | MEDIA CONTACT: |
Beth Drummey | |
Marketing & Community Relations Manager | |
415-763-4529 | bethdrummey@bankofmarin.com | |
BANK OF MARIN BANCORP REPORTS EARNINGS OF $5.2 MILLION
RAISES DIVIDEND TWO CENTS PER SHARE
NOVATO, CA, July 24, 2017 - Bank of Marin Bancorp, "Bancorp" (NASDAQ: BMRC), parent company of Bank of Marin, announced earnings of $5.2 million in the second quarter of 2017, compared to $4.5 million in the first quarter of 2017 and $4.8 million in the second quarter of 2016. Diluted earnings per share were $0.84 in the second quarter of 2017, compared to $0.74 in the prior quarter and $0.79 in the same quarter last year. Earnings for the first six months of 2017 totaled $9.7 million, compared to $10.5 million in the same period last year. Diluted earnings per share were $1.58 and $1.72 in the first six months of 2017 and 2016, respectively.
“We had another strong, productive quarter,” said Russell A. Colombo, President and Chief Executive Officer. “Our consistent, disciplined sales management process allowed us to both expand existing relationships and build new ones, which resulted in both loan and deposit growth. In addition, we have strategic initiatives in place to open new offices in Healdsburg and in the East Bay by the end of the year. I am pleased with our excellent results and remain confident that 2017 will be another outstanding year for Bank of Marin."
Bancorp also provided the following highlights from its operating and financial performance for the second quarter of 2017:
• | Total deposits increased $61.3 million in the second quarter to $1,840.5 million. Non-interest bearing deposits represented 48.5% of total deposits and the cost of total deposits for the quarter was 0.06%, down one basis point from March 31, 2017 and down two basis points from June 30, 2016. |
• | Gross loans totaled $1,491.5 million at June 30, 2017 and increased $13.9 million from $1,477.6 million at March 31, 2017. New loan volume of $55.5 million in the second quarter of 2017 was $11.0 million higher than the same quarter of 2016. Our current pipeline approximates last year at this time, and should translate into loan growth throughout the year. |
• | Excellent credit quality remains the hallmark of our culture. Non-accrual loans represented 0.08% of total loans as of June 30, 2017. There was no provision for loan losses recorded in the quarter, and a $208 thousand reversal of provision for losses on off-balance sheet commitments primarily related to a decrease in unfunded commitments. |
• | All capital ratios are well above regulatory requirements for a well-capitalized institution. Total risk-based capital ratio for Bancorp increased to 15.0% at June 30, 2017, compared to 14.7% at March 31, 2017. Tangible common equity to tangible assets was 11.1% at June 30, 2017, compared to 11.2% at March 31, 2017. |
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• | The Board of Directors declared a cash dividend of $0.29 per share on July 21, 2017, a $0.02 increase from prior quarter. This represents the 49th consecutive quarterly dividend paid by Bank of Marin Bancorp. The dividend is payable on August 11, 2017, to shareholders of record at the close of business on August 4, 2017. |
Loans and Credit Quality
Second quarter loan originations totaled $55.5 million, compared to $23.9 million last quarter and $44.5 million in the same quarter last year. Loan payoffs for the quarter were $48.1 million, up from $32.7 million in the first quarter and $40.2 million in the same quarter last year. The largest portion of payoffs in the current quarter came from the successful completion of construction projects and the sale of assets underlying other loans.
Non-accrual loans totaled $1.2 million, or 0.08% of the loan portfolio at both June 30, 2017 and March 31, 2017, down from $2.7 million, or 0.19% a year ago. Classified loans totaled $29.3 million at June 30, 2017, compared to $30.2 million at March 31, 2017 and $20.4 million at June 30, 2016. Accruing loans past due 30 to 89 days totaled $393 thousand at June 30, 2017, compared to $834 thousand at March 31, 2017 and $135 thousand a year ago.
There was no provision for loan losses recorded in the second quarter of 2017, as the level of reserves was deemed appropriate for the portfolio, consistent with the prior quarter and same quarter a year ago. Net recoveries were $13 thousand in the second quarter of 2017, compared to net charge-offs of $223 thousand in the prior quarter and net recoveries of $59 thousand in the same quarter a year ago. The ratio of loan loss reserves to loans was 1.02% at June 30, 2017, compared to 1.03% at March 31, 2017 and 1.04% at June 30, 2016. At June 30, 2017, total loan loss reserves to loans excluding acquired loans was 1.07%.
Investments
The investment portfolio decreased $12.1 million from the prior quarter to $401.9 million. The decrease was primarily due to principal paydowns and maturities, partially offset by purchases of $5.3 million during the second quarter. Given the interest rate environment, the Bank opted to leave excess cash at the Federal Reserve Bank as a short-term investment alternative.
Deposits
On-balance sheet deposits increased to $1,840.5 million at June 30, 2017, compared to $1,779.3 million at March 31, 2017. The quarterly increase was primarily due to $46.0 million in off-balance sheet funds returned in the second quarter from our third party deposit networks. We continue to see fluctuations from large deposit clients' seasonal cash flows and the placement by existing clients of funds from asset sales that will be distributed to the beneficiaries of trusts or transitioned into real estate or other investments.
Earnings
“The second quarter 2017 results affirm the success of our efforts to grow organically,” said Tani Girton, Chief Financial Officer. “Our hard work and commitment to relationship banking are also paying off, with a stronger net interest margin, improved efficiency ratio, and 1.01% return on assets.”
Net interest income totaled $18.3 million in the second quarter of 2017, compared to $17.6 million in the prior quarter. Actions by the Federal Open Market Committee to increase rates in December 2016, March 2017 and June 2017, have positively impacted yields on our rate sensitive interest earning assets.
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Additionally, the increase in net interest income from the prior quarter reflects slightly higher acquired loan income as shown in the table below and an increase of $30.0 million in average earnings assets.
Net interest income of $18.3 million in the second quarter of 2017 increased $1.1 million from $17.2 million for the same quarter last year. The increase was primarily driven by a $93.7 million increase in interest earning assets. In addition, the second quarter of 2016 included a $312 thousand prepayment fee on the retirement of a Federal Home Loan Bank ("FHLB") fixed advance. Higher yields on investment securities and interest-bearing cash, and upward repricing of variable rate loans also positively impacted interest income.
Net interest income totaled $35.9 million in the first six months of 2017, compared to $35.8 million for the same period in 2016. The $121 thousand increase primarily relates to a $68.3 million increase in average earning assets compared to June 30, 2016, a decrease in interest expense resulting from a prepayment fee and interest associated with the retirement of a FHLB fixed advance in June 2016 and a decline in rates paid on deposits. Additionally, the higher yield on investment securities and interest-bearing cash, and the upward repricing of variable rate loans positively impacted interest income, partially offset by a decrease of $990 thousand in acquired loan income and a decline in the yield on fixed rate loans when compared to June 30, 2016.
The tax-equivalent net interest margin was 3.85% in the second quarter of 2017, compared to 3.79% in the prior quarter and 3.77% in the same quarter a year ago. The increase of six basis points in the second quarter of 2017 compared to the prior quarter is primarily due to an increase in the yield on earning assets and increased acquired loan income.
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.
As our acquired loans continue to pay off, we expect the accretion on acquired loans to continue to decline. Accretion and gains on payoffs of purchased loans recorded to interest income were as follows:
Three months ended | ||||||||||||||||||||||
June 30, 2017 | March 31, 2017 | June 30, 2016 | ||||||||||||||||||||
(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 | $ | 80 | 2 bps | $ | 90 | 2 bps | $ | 87 | 2 bps | |||||||||||||
Accretion on non-PCI loans 2 | $ | 178 | 3 bps | $ | 150 | 3 bps | $ | 317 | 7 bps | |||||||||||||
Gains on payoffs of PCI loans | $ | 84 | 2 bps | $ | — | 0 bps | $ | — | 0 bps | |||||||||||||
Six months ended | |||||||||
June 30, 2017 | June 30, 2016 | ||||||||
(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 | $ | 170 | 2 bps | $ | 185 | 2 bps | |||
Accretion on non-PCI loans 2 | $ | 328 | 3 bps | $ | 647 | 7 bps | |||
Gains on payoffs of PCI loans | $ | 84 | 1 bps | $ | 740 | 8 bps | |||
1 Accretable yield on PCI loans totaled $1.3 million, $1.4 million and $1.7 million at June 30, 2017, March 31, 2017 and June 30, 2016, respectively.
2 Unaccreted purchase discounts on non-PCI loans totaled $1.4 million, $1.6 million and $2.5 million at June 30, 2017, March 31, 2017 and June 30, 2016, respectively.
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Non-interest income totaled $2.1 million in both the first and second quarter of 2017 and $2.4 million in the same quarter a year ago. The decrease compared to the same quarter a year ago primarily relates to $284 thousand in gains on the sale of investment securities in the second quarter of 2016. Non-interest income totaled $4.2 million in the first half of 2017 compared to $4.6 million for the same period of 2016. The decrease primarily relates to $394 thousand in gains on the sale of investment securities in the first half of 2016.
Non-interest expense totaled $12.6 million in the second quarter of 2017, $13.0 million in the prior quarter and $12.0 million in the same quarter a year ago. The decrease from the prior quarter was primarily due to a reversal of the provision for losses on off-balance sheet commitments. The reversal resulted from a decrease in total commitments during the quarter primarily driven by the completion and pay-off of a construction project, an increase in average commitment usage, and a reduction of estimated loss factors. Lower personnel expense also contributed to the decrease in non-interest expense from the prior quarter. The decrease in 401(k) employer contribution (as maximum employer match has been reached) and deferrals of loan origination costs, were partially offset by an increase in salaries due to additional full-time equivalent personnel and annual merit increases.
The increase from the same quarter a year ago was primarily due to higher salaries and benefits related to filling open positions and incentive bonus, as well as higher occupancy expense and recruiting fees. These increases were partially offset by the reversal of provision for losses on off-balance sheet commitments (discussed above).
Non-interest expense totaled $25.6 million in the first half of 2017, compared to $24.0 million in the first half of 2016. The increase was primarily due to higher salaries and benefits related to filling open positions which resulted in additional incentive bonus, stock-based compensation and 401(k) employer match. The search for qualified employees resulted in recruiting fees which contributed to an increase in other expenses. Occupancy and equipment expense also increased primarily due to higher rent and maintenance costs.
Earnings Call and Webcast Information
Bank of Marin Bancorp will webcast its second quarter earnings call on Monday, July 24, 2017 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.
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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 | |||||||||||||||
June 30, 2017 | |||||||||||||||
(dollars in thousands, except per share data; unaudited) | |||||||||||||||
QUARTER-TO-DATE | June 30, 2017 | March 31, 2017 | June 30, 2016 | ||||||||||||
NET INCOME | $ | 5,186 | $ | 4,548 | $ | 4,837 | |||||||||
DILUTED EARNINGS PER COMMON SHARE | $ | 0.84 | $ | 0.74 | $ | 0.79 | |||||||||
RETURN ON AVERAGE ASSETS (ROA) | 1.01 | % | 0.91 | % | 0.99 | % | |||||||||
RETURN ON AVERAGE EQUITY (ROE) | 8.74 | % | 7.92 | % | 8.68 | % | |||||||||
EFFICIENCY RATIO | 61.92 | % | 65.92 | % | 61.35 | % | |||||||||
TAX-EQUIVALENT NET INTEREST MARGIN1 | 3.85 | % | 3.79 | % | 3.77 | % | |||||||||
NET CHARGE-OFFS (RECOVERIES) | $ | (13 | ) | $ | 223 | $ | (59 | ) | |||||||
NET CHARGE-OFFS (RECOVERIES) TO AVERAGE LOANS | — | % | 0.02 | % | — | % | |||||||||
YEAR-TO-DATE | |||||||||||||||
NET INCOME | $ | 9,734 | $ | 10,483 | |||||||||||
DILUTED EARNINGS PER COMMON SHARE | $ | 1.58 | $ | 1.72 | |||||||||||
RETURN ON AVERAGE ASSETS (ROA) | 0.96 | % | 1.07 | % | |||||||||||
RETURN ON AVERAGE EQUITY (ROE) | 8.34 | % | 9.52 | % | |||||||||||
EFFICIENCY RATIO | 63.89 | % | 59.49 | % | |||||||||||
TAX-EQUIVALENT NET INTEREST MARGIN1 | 3.82 | % | 3.90 | % | |||||||||||
NET CHARGE-OFFS (RECOVERIES) | $ | 210 | $ | (89 | ) | ||||||||||
NET CHARGE-OFFS (RECOVERIES) TO AVERAGE LOANS | 0.01 | % | (0.01 | ) | % | ||||||||||
AT PERIOD END | |||||||||||||||
TOTAL ASSETS | $ | 2,100,716 | $ | 2,033,708 | $ | 1,950,452 | |||||||||
LOANS: | |||||||||||||||
COMMERCIAL AND INDUSTRIAL | $ | 217,417 | $ | 219,760 | $ | 215,257 | |||||||||
REAL ESTATE | |||||||||||||||
COMMERCIAL OWNER-OCCUPIED | $ | 265,249 | $ | 254,180 | $ | 242,103 | |||||||||
COMMERCIAL INVESTOR-OWNED | $ | 717,197 | $ | 712,081 | $ | 703,458 | |||||||||
CONSTRUCTION | $ | 54,990 | $ | 67,162 | $ | 77,024 | |||||||||
HOME EQUITY | $ | 119,500 | $ | 115,180 | $ | 112,240 | |||||||||
OTHER RESIDENTIAL | $ | 92,421 | $ | 84,720 | $ | 73,761 | |||||||||
INSTALLMENT AND OTHER CONSUMER LOANS | $ | 24,711 | $ | 24,487 | $ | 24,556 | |||||||||
TOTAL LOANS | $ | 1,491,485 | $ | 1,477,570 | $ | 1,448,399 | |||||||||
NON-PERFORMING LOANS2: | |||||||||||||||
COMMERCIAL AND INDUSTRIAL | $ | — | $ | — | $ | 21 | |||||||||
REAL ESTATE | |||||||||||||||
COMMERCIAL OWNER-OCCUPIED | $ | — | $ | — | $ | 176 | |||||||||
COMMERCIAL INVESTOR-OWNED | $ | 1,041 | $ | 1,076 | $ | 1,676 | |||||||||
HOME EQUITY | $ | 87 | $ | 87 | $ | 789 | |||||||||
INSTALLMENT AND OTHER CONSUMER LOANS | $ | 51 | $ | 52 | $ | 63 | |||||||||
TOTAL NON-ACCRUAL LOANS | $ | 1,179 | $ | 1,215 | $ | 2,725 | |||||||||
CLASSIFIED LOANS (GRADED SUBSTANDARD & DOUBTFUL) | $ | 29,262 | $ | 30,230 | $ | 20,399 | |||||||||
TOTAL ACCRUING LOANS 30-89 DAYS PAST DUE | $ | 393 | $ | 834 | $ | 135 | |||||||||
LOAN LOSS RESERVE TO LOANS | 1.02 | % | 1.03 | % | 1.04 | % | |||||||||
LOAN LOSS RESERVE TO NON-ACCRUAL LOANS | 12.92 | x | 12.52 | x | 5.54 | x | |||||||||
NON-ACCRUAL LOANS TO TOTAL LOANS | 0.08 | % | 0.08 | % | 0.19 | % | |||||||||
TOTAL DEPOSITS | $ | 1,840,540 | $ | 1,779,269 | $ | 1,705,615 | |||||||||
LOAN-TO-DEPOSIT RATIO | 81.0 | % | 83.0 | % | 84.9 | % | |||||||||
STOCKHOLDERS' EQUITY | $ | 240,733 | $ | 234,986 | $ | 226,452 | |||||||||
BOOK VALUE PER SHARE | $ | 39.07 | $ | 38.22 | $ | 37.00 | |||||||||
TANGIBLE COMMON EQUITY TO TANGIBLE ASSETS3 | 11.1 | % | 11.2 | % | 11.2 | % | |||||||||
TOTAL RISK BASED CAPITAL RATIO-BANK | 14.8 | % | 14.3 | % | 13.8 | % | |||||||||
TOTAL RISK BASED CAPITAL RATIO-BANCORP | 15.0 | % | 14.7 | % | 14.1 | % | |||||||||
FULL-TIME EQUIVALENT EMPLOYEES | 264 | 262 | 255 | ||||||||||||
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 $17.0 million, $17.2 million and $19.9 million at June 30, 2017, March 31, 2017 and June 30, 2016, respectively. Excludes purchased credit-impaired (PCI) loans with carrying values of $2.3 million, $2.9 million and $2.9 million that were accreting interest at June 30, 2017, March 31,2017 and June 30, 2016, respectively. 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 $8.8 million, $8.9 million and $9.3 million at June 30, 2017, March 31, 2017 and June 30, 2016, respectively. Tangible assets exclude goodwill and intangible assets. | |||||||||||||||
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BANK OF MARIN BANCORP CONSOLIDATED STATEMENTS OF CONDITION |
At June 30, 2017, March 31, 2017 and June 30, 2016 |
(in thousands, except share data; unaudited) | June 30, 2017 | March 31, 2017 | June 30, 2016 | ||||||
Assets | |||||||||
Cash and due from banks | $ | 137,906 | $ | 73,162 | $ | 55,438 | |||
Investment securities | |||||||||
Held-to-maturity, at amortized cost | 163,018 | 172,272 | 58,491 | ||||||
Available-for-sale (at fair value; amortized cost $237,884, $242,650 and $318,335 at June 30, 2017, March 31, 2017 and June 30, 2016, respectively) | 238,870 | 241,684 | 323,361 | ||||||
Total investment securities | 401,888 | 413,956 | 381,852 | ||||||
Loans, net of allowance for loan losses of $15,232, $15,219 and $15,087 at June 30, 2017, March 31, 2017 and June 30, 2016, respectively | 1,476,253 | 1,462,351 | 1,433,312 | ||||||
Bank premises and equipment, net | 8,390 | 8,336 | 8,650 | ||||||
Goodwill | 6,436 | 6,436 | 6,436 | ||||||
Core deposit intangible | 2,344 | 2,462 | 2,846 | ||||||
Interest receivable and other assets | 67,499 | 67,005 | 61,918 | ||||||
Total assets | $ | 2,100,716 | $ | 2,033,708 | $ | 1,950,452 | |||
Liabilities and Stockholders' Equity | |||||||||
Liabilities | |||||||||
Deposits | |||||||||
Non-interest bearing | $ | 892,988 | $ | 878,416 | $ | 804,447 | |||
Interest bearing | |||||||||
Transaction accounts | 87,866 | 100,628 | 88,365 | ||||||
Savings accounts | 165,596 | 159,889 | 149,745 | ||||||
Money market accounts | 546,586 | 494,324 | 502,476 | ||||||
Time accounts | 147,504 | 146,012 | 160,582 | ||||||
Total deposits | 1,840,540 | 1,779,269 | 1,705,615 | ||||||
Subordinated debentures | 5,666 | 5,628 | 5,493 | ||||||
Interest payable and other liabilities | 13,777 | 13,825 | 12,892 | ||||||
Total liabilities | 1,859,983 | 1,798,722 | 1,724,000 | ||||||
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 - 6,160,952, 6,148,486 and 6,120,684 at June 30, 2017, March 31, 2017 and June 30, 2016, respectively | 88,949 | 87,911 | 86,569 | ||||||
Retained earnings | 152,883 | 149,357 | 136,992 | ||||||
Accumulated other comprehensive (loss) income, net | (1,099 | ) | (2,282 | ) | 2,891 | ||||
Total stockholders' equity | 240,733 | 234,986 | 226,452 | ||||||
Total liabilities and stockholders' equity | $ | 2,100,716 | $ | 2,033,708 | $ | 1,950,452 | |||
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BANK OF MARIN BANCORP CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME |
Three months ended | Six months ended | |||||||||||||||
(in thousands, except per share amounts; unaudited) | June 30, 2017 | March 31, 2017 | June 30, 2016 | June 30, 2017 | June 30, 2016 | |||||||||||
Interest income | ||||||||||||||||
Interest and fees on loans | $ | 16,423 | $ | 15,849 | $ | 16,097 | $ | 32,272 | $ | 33,238 | ||||||
Interest on investment securities | ||||||||||||||||
Securities of U.S. government agencies | 1,534 | 1,518 | 1,191 | 3,052 | 2,543 | |||||||||||
Obligations of state and political subdivisions | 553 | 568 | 588 | 1,121 | 1,174 | |||||||||||
Corporate debt securities and other | 36 | 37 | 77 | 73 | 182 | |||||||||||
Interest on Federal funds sold and short-term investments | 157 | 60 | 40 | 217 | 51 | |||||||||||
Total interest income | 18,703 | 18,032 | 17,993 | 36,735 | 37,188 | |||||||||||
Interest expense | ||||||||||||||||
Interest on interest-bearing transaction accounts | 21 | 29 | 28 | 50 | 55 | |||||||||||
Interest on savings accounts | 16 | 15 | 14 | 31 | 28 | |||||||||||
Interest on money market accounts | 114 | 113 | 107 | 227 | 218 | |||||||||||
Interest on time accounts | 139 | 146 | 193 | 285 | 389 | |||||||||||
Interest on FHLB and other borrowings | — | — | 378 | — | 478 | |||||||||||
Interest on subordinated debentures | 109 | 108 | 107 | 217 | 216 | |||||||||||
Total interest expense | 399 | 411 | 827 | 810 | 1,384 | |||||||||||
Net interest income | 18,304 | 17,621 | 17,166 | 35,925 | 35,804 | |||||||||||
Provision for loan losses | — | — | — | — | — | |||||||||||
Net interest income after provision for loan losses | 18,304 | 17,621 | 17,166 | 35,925 | 35,804 | |||||||||||
Non-interest income | ||||||||||||||||
Service charges on deposit accounts | 447 | 452 | 441 | 899 | 897 | |||||||||||
Wealth Management and Trust Services | 504 | 503 | 527 | 1,007 | 1,093 | |||||||||||
Debit card interchange fees | 384 | 372 | 381 | 756 | 719 | |||||||||||
Merchant interchange fees | 112 | 96 | 128 | 208 | 241 | |||||||||||
Earnings on bank-owned life insurance | 210 | 209 | 209 | 419 | 410 | |||||||||||
Dividends on FHLB stock | 176 | 232 | 185 | 408 | 354 | |||||||||||
Gains on investment securities, net | 10 | — | 284 | 10 | 394 | |||||||||||
Other income | 253 | 251 | 266 | 504 | 476 | |||||||||||
Total non-interest income | 2,096 | 2,115 | 2,421 | 4,211 | 4,584 | |||||||||||
Non-interest expense | ||||||||||||||||
Salaries and related benefits | 7,287 | 7,475 | 6,724 | 14,762 | 13,472 | |||||||||||
Occupancy and equipment | 1,380 | 1,319 | 1,175 | 2,699 | 2,456 | |||||||||||
Depreciation and amortization | 463 | 481 | 441 | 944 | 894 | |||||||||||
Federal Deposit Insurance Corporation insurance | 162 | 161 | 246 | 323 | 507 | |||||||||||
Data processing | 963 | 939 | 916 | 1,902 | 1,772 | |||||||||||
Professional services | 522 | 522 | 554 | 1,044 | 1,052 | |||||||||||
Directors' expense | 224 | 158 | 116 | 382 | 305 | |||||||||||
Information technology | 186 | 198 | 165 | 384 | 358 | |||||||||||
(Reversal) provision for losses on off-balance sheet commitments | (208 | ) | 165 | 150 | (43 | ) | 150 | |||||||||
Other expense | 1,652 | 1,593 | 1,530 | 3,245 | 3,061 | |||||||||||
Total non-interest expense | 12,631 | 13,011 | 12,017 | 25,642 | 24,027 | |||||||||||
Income before provision for income taxes | 7,769 | 6,725 | 7,570 | 14,494 | 16,361 | |||||||||||
Provision for income taxes | 2,583 | 2,177 | 2,733 | 4,760 | 5,878 | |||||||||||
Net income | $ | 5,186 | $ | 4,548 | $ | 4,837 | $ | 9,734 | $ | 10,483 | ||||||
Net income per common share: | ||||||||||||||||
Basic | $ | 0.85 | $ | 0.75 | $ | 0.80 | $ | 1.60 | $ | 1.73 | ||||||
Diluted | $ | 0.84 | $ | 0.74 | $ | 0.79 | $ | 1.58 | $ | 1.72 | ||||||
Weighted average shares: | ||||||||||||||||
Basic | 6,110 | 6,092 | 6,078 | 6,101 | 6,063 | |||||||||||
Diluted | 6,174 | 6,172 | 6,109 | 6,173 | 6,100 | |||||||||||
Dividends declared per common share | $ | 0.27 | $ | 0.27 | $ | 0.25 | $ | 0.54 | $ | 0.50 | ||||||
Comprehensive income: | ||||||||||||||||
Net income | $ | 5,186 | $ | 4,548 | $ | 4,837 | $ | 9,734 | $ | 10,483 | ||||||
Other comprehensive income | ||||||||||||||||
Change in net unrealized gain or loss on available-for-sale securities | 1,961 | 1,674 | 2,119 | 3,635 | 5,042 | |||||||||||
Amortization of net unrealized loss on available for sale securities transferred to held-to-maturity securities | 124 | 41 | — | 165 | — | |||||||||||
Reclassification adjustment for gains on available-for-sale securities included in net income | (10 | ) | — | (284 | ) | (10 | ) | (394 | ) | |||||||
Net change in unrealized gain or loss on available-for-sale securities, before tax | 2,075 | 1,715 | 1,835 | 3,790 | 4,648 | |||||||||||
Tax effect | 892 | 704 | 776 | 1,596 | 1,950 | |||||||||||
Other comprehensive income, net of tax | 1,183 | 1,011 | 1,059 | 2,194 | 2,698 | |||||||||||
Comprehensive income | $ | 6,369 | $ | 5,559 | $ | 5,896 | $ | 11,928 | $ | 13,181 | ||||||
8
BANK OF MARIN BANCORP |
AVERAGE STATEMENTS OF CONDITION AND ANALYSIS OF NET INTEREST INCOME |
Three months ended | Three months ended | Three months ended | |||||||||||||||||||||||
June 30, 2017 | March 31, 2017 | June 30, 2016 | |||||||||||||||||||||||
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 | $ | 56,597 | $ | 157 | 1.10 | % | $ | 29,339 | $ | 60 | 0.82 | % | $ | 28,766 | $ | 39 | 0.54 | % | |||||||
Investment securities 2, 3 | 408,335 | 2,355 | 2.31 | % | 414,552 | 2,361 | 2.28 | % | 389,023 | 2,080 | 2.14 | % | |||||||||||||
Loans 1, 3, 4 | 1,487,419 | 16,868 | 4.49 | % | 1,478,487 | 16,222 | 4.39 | % | 1,440,847 | 16,416 | 4.51 | % | |||||||||||||
Total interest-earning assets 1 | 1,952,351 | 19,380 | 3.93 | % | 1,922,378 | 18,643 | 3.88 | % | 1,858,636 | 18,535 | 3.95 | % | |||||||||||||
Cash and non-interest-bearing due from banks | 46,204 | 38,131 | 40,540 | ||||||||||||||||||||||
Bank premises and equipment, net | 8,390 | 8,440 | 8,827 | ||||||||||||||||||||||
Interest receivable and other assets, net | 60,115 | 58,014 | 60,205 | ||||||||||||||||||||||
Total assets | $ | 2,067,060 | $ | 2,026,963 | $ | 1,968,208 | |||||||||||||||||||
Liabilities and Stockholders' Equity | |||||||||||||||||||||||||
Interest-bearing transaction accounts | $ | 94,799 | $ | 21 | 0.09 | % | $ | 101,121 | $ | 29 | 0.12 | % | $ | 93,355 | $ | 28 | 0.12 | % | |||||||
Savings accounts | 163,424 | 16 | 0.04 | % | 160,913 | 15 | 0.04 | % | 149,234 | 14 | 0.04 | % | |||||||||||||
Money market accounts | 539,192 | 114 | 0.08 | % | 518,540 | 113 | 0.09 | % | 510,727 | 107 | 0.08 | % | |||||||||||||
Time accounts including CDARS | 146,042 | 139 | 0.38 | % | 146,966 | 146 | 0.40 | % | 160,031 | 192 | 0.48 | % | |||||||||||||
Overnight borrowings 1 | — | — | — | % | — | — | — | % | 1,082 | 1 | 0.40 | % | |||||||||||||
FHLB fixed-rate advances 1 | — | — | — | % | — | — | — | % | 12,363 | 378 | 12.07 | % | |||||||||||||
Subordinated debentures 1 | 5,646 | 109 | 7.59 | % | 5,607 | 108 | 7.74 | % | 5,471 | 107 | 7.78 | % | |||||||||||||
Total interest-bearing liabilities | 949,103 | 399 | 0.17 | % | 933,147 | 411 | 0.18 | % | 932,263 | 827 | 0.36 | % | |||||||||||||
Demand accounts | 868,070 | 846,316 | 797,935 | ||||||||||||||||||||||
Interest payable and other liabilities | 11,771 | 14,645 | 13,853 | ||||||||||||||||||||||
Stockholders' equity | 238,116 | 232,855 | 224,157 | ||||||||||||||||||||||
Total liabilities & stockholders' equity | $ | 2,067,060 | $ | 2,026,963 | $ | 1,968,208 | |||||||||||||||||||
Tax-equivalent net interest income/margin 1 | $ | 18,981 | 3.85 | % | $ | 18,232 | 3.79 | % | $ | 17,708 | 3.77 | % | |||||||||||||
Reported net interest income/margin 1 | $ | 18,304 | 3.71 | % | $ | 17,621 | 3.67 | % | $ | 17,166 | 3.65 | % | |||||||||||||
Tax-equivalent net interest rate spread | — | 3.76 | % | 3.70 | % | 3.59 | % | ||||||||||||||||||
Six months ended | Six months ended | ||||||||||||||||||||||||
June 30, 2017 | June 30, 2016 | ||||||||||||||||||||||||
Interest | Interest | ||||||||||||||||||||||||
Average | Income/ | Yield/ | Average | Income/ | Yield/ | ||||||||||||||||||||
(dollars in thousands) | Balance | Expense | Rate | Balance | Expense | Rate | |||||||||||||||||||
Assets | |||||||||||||||||||||||||
Interest-bearing due from banks 1 | $ | 43,043 | $ | 217 | 1.00 | % | $ | 18,881 | $ | 51 | 0.53 | % | |||||||||||||
Investment securities 2, 3 | 411,427 | 4,716 | 2.29 | % | 408,539 | 4,344 | 2.13 | % | |||||||||||||||||
Loans 1, 3, 4 | 1,482,977 | 33,090 | 4.44 | % | 1,441,724 | 33,872 | 4.65 | % | |||||||||||||||||
Total interest-earning assets 1 | 1,937,447 | 38,023 | 3.90 | % | 1,869,144 | 38,267 | 4.05 | % | |||||||||||||||||
Cash and non-interest-bearing due from banks | 42,189 | 35,182 | |||||||||||||||||||||||
Bank premises and equipment, net | 8,415 | 8,985 | |||||||||||||||||||||||
Interest receivable and other assets, net | 59,071 | 59,200 | |||||||||||||||||||||||
Total assets | $ | 2,047,122 | $ | 1,972,511 | |||||||||||||||||||||
Liabilities and Stockholders' Equity | |||||||||||||||||||||||||
Interest-bearing transaction accounts | $ | 97,943 | $ | 50 | 0.10 | % | $ | 97,173 | $ | 55 | 0.11 | % | |||||||||||||
Savings accounts | 162,175 | 31 | 0.04 | % | 145,866 | 28 | 0.04 | % | |||||||||||||||||
Money market accounts | 528,923 | 227 | 0.09 | % | 519,856 | 218 | 0.08 | % | |||||||||||||||||
Time accounts including CDARS | 146,501 | 285 | 0.39 | % | 160,486 | 389 | 0.49 | % | |||||||||||||||||
Overnight borrowings 1 | — | — | — | % | 10,825 | 23 | 0.42 | % | |||||||||||||||||
FHLB fixed-rate advances 1 | — | — | — | % | 13,681 | 456 | 6.59 | % | |||||||||||||||||
Subordinated debentures 1 | 5,627 | 217 | 7.67 | % | 5,445 | 216 | 7.86 | % | |||||||||||||||||
Total interest-bearing liabilities | 941,169 | 810 | 0.17 | % | 953,332 | 1,385 | 0.29 | % | |||||||||||||||||
Demand accounts | 857,253 | 782,757 | |||||||||||||||||||||||
Interest payable and other liabilities | 13,200 | 14,917 | |||||||||||||||||||||||
Stockholders' equity | 235,500 | 221,505 | |||||||||||||||||||||||
Total liabilities & stockholders' equity | $ | 2,047,122 | $ | 1,972,511 | |||||||||||||||||||||
Tax-equivalent net interest income/margin 1 | $ | 37,213 | 3.82 | % | $ | 36,882 | 3.90 | % | |||||||||||||||||
Reported net interest income/margin 1 | $ | 35,925 | 3.69 | % | $ | 35,804 | 3.79 | % | |||||||||||||||||
Tax-equivalent net interest rate spread | 3.73 | % | 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. | |||||||||||||||||||||||||
9