Bank of Marin

Bank of Marin Bancorp Reports Record Earnings of $7.0 Million October 24, 2016 08:00 AM Eastern Daylight Time NOVATO, Calif.–(BUSINESS WIRE)–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. “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” Tweet this “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. 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 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. David Nolen Swaim Owner Tam Realty Inc DRE-1070789 609 San Anselmo Ave San Anselmo CA 94960 415-710-5504 www.tamrealty.com

Leave a Reply

Your email address will not be published. Required fields are marked *