BANK OF MARIN BANCORP : REPORTS FOURTH QUARTER AND FULL YEAR 2021 EARNINGS ANNOUNCES $0.24 DIVIDEND - Form 8-K
January 24, 2022 at 08:44 am EST
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BANK OF MARIN BANCORP REPORTS FOURTH QUARTER AND FULL YEAR 2021 EARNINGS
ANNOUNCES $0.24 DIVIDEND
NOVATO, CA, January 24, 2022 - Bank of Marin Bancorp, "Bancorp" (Nasdaq: BMRC), parent company of Bank of Marin, "Bank," announced earnings of $9.7 million in the fourth quarter of 2021, compared to $5.3 million in the third quarter of 2021 and $8.1 million in the fourth quarter of 2020. Diluted earnings per share were $0.61 in the fourth quarter of 2021, compared to $0.35 in the prior quarter and $0.60 the same quarter a year ago. Annual earnings were $33.2 million in 2021 compared to $30.2 million in 2020. Diluted earnings per share were $2.30 for the year ended December 31, 2021, compared to $2.22 per share for the year ended December 31, 2020.
"As illustrated by our fourth-quarter earnings, we are poised to reap the benefits of better scale gained through our acquisition of American River Bankshares with most of the one-time costs behind us and the increase in our balance sheet size," said Tim Myers, President and Chief Executive Officer. "Improving economic forecasts led to reduced credit loss provisions in 2021 when compared to the prior year, and key hires helped us build substantial momentum as we finished the year with robust loan production across our Northern California footprint. We expect that traction to drive continued growth and strong results for our shareholders in 2022."
Bancorp also provided the following highlights for the fourth quarter and year ended December 31, 2021:
•Merger-related one-time and conversion costs reduced net income by $791 thousand, net of taxes, or 5 cents per share in the fourth quarter and by $4.9 million, net of taxes, or 34 cents per share for the year ended December 31, 2021. Return on average assets ("ROA") and return on average equity ("ROE") ratios were also significantly impacted by provisions for credit losses on acquired loans and shares issued in conjunction with the merger. As shown in the reconciliation of GAAP to non-GAAP financial measures on pages 2 and 3, without those acquisition related components, year-to-date ROA of 0.94% and ROE of 8.43% would have been 1.08% and 9.67%, respectively, compared to 1.04% and 8.60% for the same periods in 2020. For the quarter ended December 31, 2021, ROA and ROE were 0.90% and 8.50%, respectively, compared to 0.56% and 4.99%, respectively, in the prior quarter. The comparable non-GAAP ROA and ROE were 0.97% and 9.19%, respectively, for the quarter ended December 31, 2021, versus 0.98% and 8.69% in the prior quarter.
•Loans increased $167.1 million in 2021, or 8%, to $2.256 billion at December 31, 2021, from $2.089 billion at December 31, 2020. Year-over-year growth was largely attributable to the August 6, 2021 acquisition of $419.4 million from American River Bank. Non-PPP loan originations of $181.7 million for the year were concentrated in commercial and real estate loans and compared to $165.5 million in 2020. Payoffs included $218.1 million non-PPP loans compared to $169.2 million in 2020. In 2021, PPP loan originations were $136.2 million and PPP loans forgiven and paid off were $328.5 million.
•Bank of Marin made significant talent investments in the fourth quarter. We hired a Commercial Banking Sales Manager, a new role at the Bank, to oversee and direct commercial banking growth across the enterprise. This hire also has significant experience in the Sacramento area, and we added two new commercial bankers to support our anticipated growth in that market.
•Credit quality remains strong, with non-accrual loans representing 0.37% of the Bank's loan portfolio as of December 31, 2021, compared to 0.36% as of September 30, 2021. Over the course of 2021, we recorded net reversals of $1.4 million and $992 thousand to our respective allowances for credit losses on loans and unfunded commitments, compared to provisions of $4.6 million and $1.6 million, respectively, in 2020. 2021 activity included the effects of the business combination with American River Bank and ongoing improvements in the underlying economic forecasts. In 2020, the current expected credit loss model was
1
implemented at year end. During the first three quarters, allowance for credit losses were calculated under the incurred loss model and included significant qualitative adjustments for uncertainties associated with the pandemic.
•Deposits grew $1.304 billion, or 52%, to $3.809 billionat December 31, 2021, compared to $2.504 billion at December 31, 2020. Growth was comprised of $790.0 million related to the August 6, 2021 American River Bank acquisition, new accounts and growth in the existing customer base. Non-interest bearing deposits grew by $555.6 million, or 41%, in 2021 and made up 50% of total deposits at year end. Cost of deposits remained low at 0.07% for the full year of 2021, down from 0.11% in 2020. Additionally, the Bank maintained $173.1 million in deposits off-balance sheet with deposit networks at December 31, 2021 as part of our liquidity management.
•A good indicator of the merger's positive impact on operating earnings is the efficiency ratio, as it neither includes provisions for losses on loans and unfunded commitments, nor is it impacted by changes in share counts. As shown in the reconciliation of GAAP to non-GAAP financial measures on pages 2 and 3, the efficiency ratio excluding merger-related one-time and conversion costs of 53.63% for the quarter ended December 31, 2021, improved from 56.02% and 55.93% in the quarters ended September 30, 2021 and December 31, 2020, respectively.
•All capital ratios were above regulatory requirements for a well-capitalized institution. The total risk-based capital ratio for Bancorp was 14.6% at December 31, 2021 and 16.0% at December 31, 2020. Tangible common equity to tangible assets declined to 8.8% at December 31, 2021 from 11.3% at December 31, 2020 primarily due to share repurchases and growth in legacy Bank of Marin deposits (refer to footnote 5 on page 7 for definition of this non-GAAP financial measure). The total risk-based capital ratio for the Bank was 14.4% at December 31, 2021 and 15.8% at December 31, 2020.
•Bank of Marin Bancorp repurchased 149,983 shares totaling $5.6 million in the fourth quarter of 2021 for a cumulative total of 1,117,666 shares and $40.8 million in 2021.
•The Board of Directors declared a cash dividend of $0.24 per share on January 21, 2022. This is the 67th consecutive quarterly dividend paid by Bank of Marin Bancorp. The cash dividend is payable on February 11, 2022 to shareholders of record at the close of business on February 4, 2022.
Statement Regarding Use of Non-GAAP Financial Measures
In this press release, Bancorp's financial results are presented in accordance with GAAP and refer to certain non-GAAP financial measures. Management believes that presentation of operating results using non-GAAP financial measures provides useful supplemental information to investors and facilitates the analysis of Bancorp's operating results and comparison of operating results across reporting periods. Management also uses non-GAAP financial measures to establish budgets and manage Bancorp's business. A reconciliation of the GAAP financial measures to comparable non-GAAP financial measures is presented below.
Reconciliation of GAAP and Non-GAAP Financial Measures
Three months ended
Year ended
(in thousands, except share data; unaudited)
December 31, 2021
September 30, 2021
December 31, 2020
December 31, 2021
December 31, 2020
Net income
Net income (GAAP)
$
9,714
$
5,282
$
8,117
$
33,228
$
30,242
Merger-related one-time and conversion costs:
Personnel and severance
336
2,668
-
3,005
-
Professional services
-
1,778
-
1,976
-
Data processing
695
433
-
1,127
-
Other
67
263
-
350
-
Total merger costs before tax benefits
1,098
5,142
-
6,458
-
Income tax benefit of merger-related expenses
(307)
(1,222)
-
(1,547)
-
Total merger-related one-time and conversion costs, net of taxes
791
3,920
-
4,911
-
Comparable net income (non-GAAP)
$
10,505
$
9,202
$
8,117
$
38,139
$
30,242
2
Reconciliation of GAAP and Non-GAAP Financial Measures (Continued)
Three months ended
Year ended
(in thousands, except share data; unaudited)
December 31, 2021
September 30, 2021
December 31, 2020
December 31, 2021
December 31, 2020
Diluted earnings per share
Weighted average diluted shares
16,027
14,993
13,615
14,422
13,617
Diluted earnings per share (GAAP)
$
0.61
$
0.35
$
0.60
$
2.30
$
2.22
Merger-related one-time and conversion costs, net of taxes
$
0.05
$
0.26
$
-
$
-
$
0.34
$
-
Comparable diluted earnings per share (non-GAAP)
$
0.66
$
0.61
$
0.60
$
2.64
$
2.22
Return on average assets
Average assets
$
4,298,766
$
3,743,968
$
2,958,360
$
3,537,163
$
2,897,165
Return on average assets (GAAP)
0.90
%
0.56
%
1.09
%
0.94
%
1.04
%
Comparable return on average assets (non-GAAP)
0.97
%
0.98
%
1.09
%
1.08
%
1.04
%
Return on average equity
Average stockholders' equity
$
453,468
$
420,124
$
359,481
$
394,363
$
351,494
Return on average equity (GAAP)
8.50
%
4.99
%
8.98
%
8.43
%
8.60
%
Comparable return on average equity (non-GAAP)
9.19
%
8.69
%
8.98
%
9.67
%
8.60
%
Efficiency ratio
Non-interest expense (GAAP)
$
18,984
$
22,686
$
14,220
$
72,638
$
58,458
Merger-related expenses
(1,098)
(5,142)
-
(6,458)
-
Non-interest expense (non-GAAP)
$
17,886
$
17,544
$
14,220
$
66,180
$
58,458
Net interest income
$
30,633
$
27,753
$
23,599
$
104,951
$
96,659
Non-interest income
$
2,719
$
3,565
$
1,827
$
10,132
$
8,550
Efficiency ratio (GAAP)
56.92
%
72.44
%
55.93
%
63.12
%
55.56
%
Comparable efficiency ratio (non-GAAP)
53.63
%
56.02
%
55.93
%
57.51
%
55.56
%
"Thanks to sound underwriting practices, pandemic-driven downgrades within our portfolio have been manageable. We continue to help our customers navigate this environment while maintaining strong capital, liquidity and overall credit quality," said Tani Girton, EVP and Chief Financial Officer. "The American River addition strengthened our relationship banking model and industry-leading low-cost deposit base, leaving us even better positioned financially and strategically to pursue growth opportunities in the year ahead."
Loans and Credit Quality
Loans decreased by $61.4 million in the fourth quarter and totaled $2.256 billion at December 31, 2021. Non-PPP-related loan originations were $80.0 million and $181.7 million for the fourth quarter and full year of 2021, compared to $43.1 million and $165.5 million for the same periods in 2020. Non-PPP loan payoffs were $72.8 million and $218.1 million in the fourth quarter and full year of 2021, compared to $44.9 million and $169.2 million for the same periods of 2020. Loan payoffs in the fourth quarter and full year 2021 consisted largely of commercial borrower real estate asset sales and cash paydowns as part of ongoing deleveraging. Approximately $54 million in PPP loans were forgiven in the fourth quarter and $329 million over the course of the year.
Bank of Marin and American River Bank originated a combined total of 3,556 loans amounting to $550.3 million in two rounds of SBA PPP loan financing. Of these amounts, as of December 31, 2021 there were 368 loans outstanding totaling $111.2 million (net of $2.5 million in unrecognized fees and costs). In 2021 and 2020 respectively, Bank of Marin recognized $8.3 million and $3.8 million in PPP fees, net of costs.
During the onset of the pandemic, Bank of Marin granted payment relief for 269 loans totaling $402.9 million. As of December 31, 2021, only two borrowing relationships with three loans totaling $23.6 million were continuing to benefit from payment relief. We monitor the financial situation of these clients closely and expect them to resume payments as the economy continues to recover.
Non-accrual loans totaled $8.4 million, or 0.37% of the Bank's loan portfolio at December 31, 2021, compared to $8.4 million, or 0.36%, at September 30, 2021 and $9.2 million, or 0.44%, a year ago. Non-accrual loans at year end included two secured owner-occupied commercial real estate loans totaling $7.1 million, which were placed on non-accrual status in fourth quarter of 2020. Loans classified substandard totaled $36.2 million at December 31, 2021, $19.0 million at September 30, 2021, and $25.8 million at December 31, 2020. The increase in substandard loans in the fourth quarter of 2021 was primarily due to one borrowing relationship with two secured non-owner-occupied commercial real estate loans that were negatively affected by the pandemic. Classified loans included
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one $114 thousand loan acquired from American River Bank with a doubtful risk rating as of December 31, 2021, which is well-secured by real estate collateral. There were no loans classified doubtful at December 31, 2020. Accruing loans past due 30 to 89 days totaled $1.7 million at December 31, 2021, compared to $1.4 million at September 30, 2021 and $1.8 million a year ago.
Net recoveries for the fourth quarter of 2021 totaled $9 thousand compared to net recoveries of $9 thousand last quarter and $13 thousand in the fourth quarter of 2020. Net recoveries totaled $93 thousand for the year ended December 31, 2021, compared to net charge-offs of $1 thousand in 2020. The ratio of allowance for credit losses to loans was 1.02% at December 31, 2021, 0.97% at September 30, 2021 and 1.10% at December 31, 2020.
In the fourth quarter of 2021, we recorded a provision for credit losses on loans of $600 thousand resulting from adjustments to qualitative risk factors primarily impacted by recent changes in executive leadership, senior lending positions, and integration of the American River Bank lending staff and loan portfolio as well as further refinements to the discounted cash flow assumptions applied to acquired loans within the allowance model. However, there was a reduction in qualitative risk factors due to a decline in the volume of loans downgraded to substandard classification, fewer delinquencies, and the elimination of an allowance related to a commercial real estate loan that had been individually analyzed for potential credit losses in the previous periods and paid off in the fourth quarter. Additionally, there was an overall improvement in the underlying economic forecasts. In the fourth quarter of 2021, we also recorded a provision of $210 thousand for losses on unfunded commitments due to the adjustments to qualitative risk factors mentioned above.
Cash, Cash Equivalents and Restricted Cash
Cash, cash equivalents and restricted cash totaled $347.6 million at December 31, 2021, compared to $584.7 million at September 30, 2021. The $237.1 million decrease was primarily due to the deployment of funds into investment securities, as noted below.
Investments
The investment portfolio totaled $1.510 billion at December 31, 2021, an increase of $350.0 million from September 30, 2021 and an increase of $1.008 billion from December 31, 2020. The increase in the fourth quarter of 2021 was primarily the result of securities purchases totaling $416.9 million, partially offset by maturities, calls, paydowns, and sales totaling $51.8 million. The year-over-year increase was due to purchases of $925.6 million and acquisition of $297.8 million in securities related to the merger, partially offset by maturities, calls, paydowns and sales totaling $188.4 million.
Deposits
Deposits totaled $3.809 billion at December 31, 2021, compared to $3.728 billion at September 30, 2021 and $2.504 billion at December 31, 2020. The $80.9 million increase in deposits from the prior quarter is consistent with activity experienced throughout 2021 from larger business clients. The average cost of deposits remained consistent in the fourth quarter at 0.06%.
Earnings
Net Interest Income
Net interest income totaled $30.6 million in the fourth quarter of 2021, compared to $27.8 million in the prior quarter and $23.6 million in the same quarter a year ago. The $2.9 million increase from the prior quarter was primarily related to an increase of $1.5 million in loan interest and $1.6 million in investment securities interest income. We recognized $1.8 million in fees, net of cost on SBA PPP loans in the current quarter as compared to $2.3 million in prior quarter, and $1.0 million in the same quarter a year ago. Quarter-over-quarter, average loan balances increased $80.2 million to $2.3 billion and the yield increased 10 basis points to 4.43%, mostly due to lower rate PPP loans paying off. While average yields on investment securities decreased 36 basis points in the fourth quarter to 1.65%, the deployment of cash that resulted in a $565.3 million increase in average investments to $1.4 billion significantly contributed to the increase in quarterly net interest income.
The $7.0 million net interest income increase over the same quarter last year was primarily due to higher loan balances and a 52 bps higher average loan yield driven by accelerated fee recognition from PPP loan payoffs. Additionally, incremental balances in the investment portfolio, while pushing the average yield lower, added $2.4 million to net interest income. Fourth quarter average interest-earning assets increased $1.3 billion versus the
4
same quarter last year, primarily due to the American River Bank acquisition, leading to a $172.9 million increase in average loans and a $911.7 million increase in average investment securities. Average interest-bearing deposit balances increased $720.9 million.
The tax-equivalent net interest margin was 3.03% for the fourth quarter of 2021, compared to 3.15% in the prior quarter and 3.40% in the fourth quarter of 2020. The 12 basis points decrease from the prior quarter was primarily due to a higher proportion of investment securities in the growing balance sheet. The positive impact of SBA PPP loans to the fourth quarter of 2021 net interest margin was 2 basis points lower than the prior quarter. The 37 basis points decrease from the same quarter a year ago was also largely due to the shift in balance sheet composition. The SBA PPP loans improved the fourth quarter of 2021 net interest margin by 11 basis points as compared to lowering the fourth quarter of 2020's net interest margin by 13 basis points.
Net interest income totaled $105.0 million and $96.7 million in 2021 and 2020, respectively. The $8.3 million increase in 2021 was primarily due to higher average loan and investment balances and higher PPP loan income. The tax-equivalent net interest margin decreased 38 basis points to 3.17% in 2021, from 3.55% in 2020 for the reasons mentioned above. The SBA PPP loans improved the 2021 net interest margin by 10 basis points as compared to lowering the 2020 net interest margin by 6 basis points.
Non-Interest Income
Non-interest income totaled $2.7 million in the fourth quarter of 2021, compared to $3.6 million in the third quarter of 2021 and $1.8 million in the fourth quarter of 2020. The decrease from prior quarter was largely attributed to the collection of $1.1 million in benefits on bank-owned life insurance policies in the third quarter of 2021. The $892 thousand increase in the fourth quarter of 2021 compared to the fourth quarter a year ago was spread across most categories and resulted from increased activity largely related to the expanded deposit base.
Non-interest income totaled $10.1 million in 2021, a $1.5 million increase from $8.6 million in 2020. The increase was primarily due to the $1.1 million in benefits collected on bank-owned life insurance policies and changes in other categories as noted above. Wealth Management and Trust Services income increased by $371 thousand due to increases in specialized trust administration matters, new accounts and price appreciation of assets under management. In addition, investment securities sales produced a net loss of $16 thousand in 2021 compared to net gains of $915 thousand in 2020.
Non-Interest Expense
Non-interest expense totaled $19.0 million in the fourth quarter of 2021, compared to $22.7 million in prior quarter and $14.2 million in the same quarter last year. Decreases from prior quarter of $2.4 million in salaries and benefits and $1.8 million in professional services were largely due to one-time merger related costs in the third quarter. Additionally, salaries and benefits expense included offsetting changes related to higher deferred loan origination costs and year-end true-ups to incentives. When compared to the fourth quarter of 2020, increases came largely from acquisition-related one-time and conversion costs, acquisition-related expense growth across categories, and 2021 true-ups to incentive and vacation accruals.
Non-interest expense increased $14.1 million to $72.6 million in 2021 from $58.5 million in 2020. The largest increase of $6.5 million came from acquisition related one-time and conversion costs. In addition to $3.0 million in one-time merger cost, salaries and related benefits rose another $4.5 million due to increased numbers of employees, regularly scheduled annual merit and related increases, and lower deferred loan origination costs. Professional services included $817 thousand more in consulting expenses for PPP loan forgiveness application processing, investment advisory services, and legal costs. Data processing increased by an additional $828 thousand primarily due to increases core processing and mobile banking systems charges, and other categories increased due to the larger size of the bank. Charitable contributions decreased due to supplemental contributions in 2020 related to the pandemic.
Share Repurchase Program
The Bancorp Board of Directors approved a share repurchase program on July 16, 2021 under which Bancorp may repurchase up to $25.0 million of its outstanding common stock through July 31, 2023. On October 22, 2021, the Board of Directors approved an amendment that increased the total authorization from $25.0 million to $57.0 million. Bancorp repurchased 149,983 shares totaling $5.6 million in the fourth quarter of 2021 for a cumulative total of 1,117,666 shares and $40.8 million in 2021 under the current and prior authorizations.
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Earnings Call and Webcast Information
Bank of Marin Bancorp will webcast its fourth quarter and year end 2021 earnings call on Monday, January 24, 2022 at 8:30 a.m. PT/11:30 a.m. ET. Investors will have the opportunity to listen to the conference call online through Bank of Marin's website at https://www.bankofmarin.com under "Investor Relations." To listen to the live call, please go to the website at least 15 minutes early to register, download and install any necessary audio software. For those who cannot listen to the live broadcast, a replay will be available at the same website location shortly after the call.
About Bank of Marin Bancorp
Founded in 1990 and headquartered in Novato, Bank of Marin is the wholly owned subsidiary of Bank of Marin Bancorp (Nasdaq: BMRC). A leading business and community bank in Northern California, with assets of $4.314 billion, Bank of Marin has 31 retail branches and 8 commercial banking offices located across 10 counties. Bank of Marin provides commercial banking, personal banking, and wealth management and trust services. Specializing in providing legendary service to its customers and investing in its local communities, Bank of Marin has consistently been ranked one of the "Top Corporate Philanthropists" by the San Francisco Business Times and one of the "Best Places to Work" by the North Bay Business Journal. Bank of Marin Bancorp is included in the Russell 2000 Small-Cap Index and Nasdaq ABA Community Bank Index. For more information, go to www.bankofmarin.com.
Forward-Looking Statements
This release may contain certain forward-looking statements that are based on management's current expectations regarding economic, legislative, and regulatory issues that may impact Bancorp's earnings in future periods. Forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts. They often include the words "believe," "expect," "intend," "estimate" or words of similar meaning, or future or conditional verbs such as "will," "would," "should," "could" or "may." Factors that could cause future results to vary materially from current management expectations include, but are not limited to, our ability to successfully integrate the acquisition of American River Bankshares and American River Bank into the Company and Bank, natural disasters (such as wildfires, floods and earthquakes), our borrowers' actual payment performance as loan deferrals related to the COVID-19 pandemic expire, changes to statutes, regulations, or regulatory policies or practices as a result of, or in response to COVID-19, including the potential adverse impact of loan modifications and payment deferrals implemented consistent with recent regulatory guidance, general economic conditions, economic uncertainty in the United States and abroad, changes in interest rates, deposit flows, real estate values, costs or effects of acquisitions, competition, changes in accounting principles, policies or guidelines, legislation or regulation (including the Tax Cuts & Jobs Act of 2017 and the Coronavirus Aid, Relief and Economic Security Act of 2020, as amended), interruptions of utility service in our markets for sustained periods, and other economic, competitive, governmental, regulatory and technological factors (including external fraud and cybersecurity 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.
(BMRC-ER)
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BANK OF MARIN BANCORP FINANCIAL HIGHLIGHTS
(dollars in thousands, except per share data; unaudited)
December 31,
2021
September 30,
2021
December 31,
2020
Quarter-to-Date
Net income
$
9,714
$
5,282
$
8,117
Diluted earnings per common share
$
0.61
$
0.35
$
0.60
Return on average assets
0.90
%
0.56
%
1.09
%
Return on average equity
8.50
%
4.99
%
8.98
%
Efficiency ratio
56.92
%
72.44
%
55.93
%
Tax-equivalent net interest margin 1
3.03
%
3.15
%
3.40
%
Cost of deposits
0.06
%
0.06
%
0.07
%
Net recoveries
$
(9)
$
(9)
$
(13)
Year-to-Date
Net income
$
33,228
$
30,242
Diluted earnings per common share
$
2.30
$
2.22
Return on average assets
0.94
%
1.04
%
Return on average equity
8.43
%
8.60
%
Efficiency ratio
63.12
%
55.56
%
Tax-equivalent net interest margin 1
3.17
%
3.55
%
Cost of deposits
0.07
%
0.11
%
Net (recoveries) charge-offs
$
(93)
$
1
At Period End
Total assets
$
4,314,209
$
4,261,062
$
2,911,926
Loans:
Commercial and industrial 2
$
301,602
$
377,965
$
498,408
Real estate:
Commercial owner-occupied
392,345
398,543
304,963
Commercial investor-owned
1,189,021
1,157,344
961,208
Construction
119,840
125,060
73,046
Home equity
88,746
92,396
104,813
Other residential
114,558
117,778
123,395
Installment and other consumer loans
49,533
47,933
22,723
Total loans
$
2,255,645
$
2,317,019
$
2,088,556
Non-performing loans:3
Real estate:
Commercial owner-occupied
$
7,269
$
7,273
$
7,147
Commercial investor-owned
694
709
1,610
Home equity
413
441
459
Installment and other consumer loans
-
-
17
Total non-accrual loans
$
8,376
$
8,423
$
9,233
Classified loans (graded substandard and doubtful)
$
36,235
$
18,988
$
25,829
Total accruing loans 30-89 days past due
$
1,673
$
1,354
$
1,827
Allowance for credit losses to total loans
1.02
%
0.97
%
1.10
%
Allowance for credit losses to total loans, excluding SBA PPP loans 4
1.07
%
1.04
%
1.27
%
Allowance for credit losses to non-performing loans
2.75x
2.66x
2.48x
Non-accrual loans to total loans
0.37
%
0.36
%
0.44
%
Total deposits
$
3,808,550
$
3,727,696
$
2,504,249
Loan-to-deposit ratio
59.2
%
62.2
%
83.4
%
Stockholders' equity
$
450,368
$
458,525
$
358,253
Book value per share
$
28.27
$
28.54
$
26.54
Tangible common equity to tangible assets 5
8.8
%
9.1
%
11.3
%
Total risk-based capital ratio - Bank
14.4
%
14.4
%
15.8
%
Total risk-based capital ratio - Bancorp
14.6
%
15.0
%
16.0
%
Full-time equivalent employees
328
348
289
1 Net interest income is annualized by dividing actual number of days in the period times 360 days.
2 Includes SBA PPP loans of $111.2 million, $164.8 million, and $291.6 million at December 31, 2021, September 30, 2021, and December 31, 2020, respectively.
3 Excludes accruing troubled-debt restructured loans of $2.1 million, $3.9 million, and $5.1 million at December 31, 2021, September 30, 2021 and December 31, 2020, respectively.
4 The allowance for credit losses to total loans, excluding guaranteed SBA PPP loans, is considered a meaningful non-GAAP financial measure, as it represents only those loans that were considered in the calculation of the allowance for credit losses. Refer to footnote 2 above for SBA PPP totals.
5 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 gains on available for sale securities, net of tax, less goodwill and core deposit intangible assets of $79.4 million, $79.8 million and $34.0 million at December 31, 2021, September 30, 2021 and December 31, 2020, respectively. Tangible assets excludes goodwill and core deposit intangible assets.
7
BANK OF MARIN BANCORP
CONSOLIDATED STATEMENTS OF CONDITION
at December 31, 2021, September 30, 2021 and December 31, 2020
(in thousands, except share data; unaudited)
December 31, 2021
September 30, 2021
December 31, 2020
Assets
Cash, cash equivalents and restricted cash
$
347,641
$
584,739
$
200,320
Investment securities:
Held-to-maturity (at amortized cost, net of zero allowance for credit losses at December 31, 2021, September 30, 2021, and December 31, 2020)
342,222
196,801
109,036
Available-for-sale (at fair value; amortized cost of $1,169,520, $952,278 and $373,038 at December 31, 2021, September 30, 2021 and December 31, 2020, respectively; net of zero allowance for credit losses at December 31, 2021, September 30, 2021 and December 31, 2020)
1,167,568
963,033
392,351
Total investment securities
1,509,790
1,159,834
501,387
Loans, at amortized cost
2,255,645
2,317,019
2,088,556
Allowance for credit losses on loans
(23,023)
(22,414)
(22,874)
Loans, net of allowance for credit losses on loans 1
2,232,622
2,294,605
2,065,682
Goodwill
72,754
72,754
30,140
Bank-owned life insurance
61,473
61,171
43,552
Operating lease right-of-use assets
23,604
24,776
25,612
Bank premises and equipment, net
7,558
7,807
4,919
Core deposit intangible
6,605
6,998
3,831
Other real estate owned
800
800
-
Interest receivable and other assets
51,362
47,578
36,483
Total assets
$
4,314,209
$
4,261,062
$
2,911,926
Liabilities and Stockholders' Equity
Liabilities
Deposits:
Non-interest bearing
$
1,910,240
$
1,837,595
$
1,354,650
Interest bearing:
Transaction accounts
290,813
288,401
183,552
Savings accounts
340,959
336,867
201,507
Money market accounts
1,116,303
1,124,660
667,107
Time accounts
150,235
140,173
97,433
Total deposits
3,808,550
3,727,696
2,504,249
Borrowings and other obligations
419
451
58
Subordinated debenture
-
-
2,777
Operating lease liabilities
25,429
26,637
27,062
Interest payable and other liabilities
29,443
47,753
19,527
Total liabilities
3,863,841
3,802,537
2,553,673
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 -
15,929,243, 16,066,889 and 13,500,453 at December 31,
2021, September 30, 2021 and
December 31, 2020, respectively
212,524
217,680
125,905
Retained earnings
239,868
233,997
219,747
Accumulated other comprehensive (loss) income, net of taxes
(2,024)
6,848
12,601
Total stockholders' equity
450,368
458,525
358,253
Total liabilities and stockholders' equity
$
4,314,209
$
4,261,062
$
2,911,926
8
BANK OF MARIN BANCORP
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
Three months ended
Years ended
(in thousands, except per share amounts; unaudited)
December 31, 2021
September 30, 2021
December 31, 2020
December 31, 2021
December 31, 2020
Interest income
Interest and fees on loans
$
25,495
$
24,027
$
20,794
$
91,612
$
84,674
Interest on investment securities
5,625
4,084
3,254
16,342
14,503
Interest on federal funds sold and due from banks
125
178
40
399
461
Total interest income
31,245
28,289
24,088
108,353
99,638
Interest expense
Interest on interest-bearing transaction accounts
53
41
40
172
186
Interest on savings accounts
28
26
18
94
68
Interest on money market accounts
505
417
278
1,520
2,009
Interest on time accounts
25
44
118
246
554
Interest on borrowings and other obligations
1
8
1
9
4
Interest on subordinated debentures
-
-
34
1,361
158
Total interest expense
612
536
489
3,402
2,979
Net interest income
30,633
27,753
23,599
104,951
96,659
Provision for (reversal of) credit losses
600
1,800
(856)
(1,449)
4,594
(Reversal of) provision for credit losses on unfunded loan commitments
210
-
960
(992)
1,570
Net interest income after provision for (reversal of) credit losses and unfunded loan commitments
29,823
25,953
23,495
107,392
90,495
Non-interest income
Wealth Management and Trust Services
607
597
476
2,222
1,851
Earnings on bank-owned life Insurance, net
302
1,402
232
2,194
973
Debit card interchange fees
544
483
387
1,812
1,438
Service charges on deposit accounts
531
464
286
1,593
1,314
Dividends on FHLB stock
255
179
151
760
654
Merchant interchange fees
175
129
56
422
239
(Losses) gains on investment securities, net
(17)
1
-
(16)
915
Other income
322
310
239
1,145
1,166
Total non-interest income
2,719
3,565
1,827
10,132
8,550
Non-interest expense
Salaries and employee benefits
10,716
13,127
8,414
41,939
34,393
Occupancy and equipment
1,929
1,871
1,843
7,302
6,943
Data processing
1,887
1,613
747
5,139
3,184
Professional services
653
2,472
432
4,974
2,181
Depreciation and amortization
461
431
558
1,740
2,149
Information technology
445
496
292
1,550
1,050
Amortization of core deposit intangible
393
334
214
1,135
853
Directors' expense
297
255
180
957
713
Federal Deposit Insurance Corporation insurance
292
236
175
889
474
Charitable contributions
90
4
113
587
1,034
Other expense
1,821
1,847
1,252
6,426
5,484
Total non-interest expense
18,984
22,686
14,220
72,638
58,458
Income before provision for income taxes
13,558
6,832
11,102
44,886
40,587
Provision for income taxes
3,844
1,550
2,985
11,658
10,345
Net income
$
9,714
$
5,282
$
8,117
$
33,228
$
30,242
Net income per common share:
Basic
$
0.61
$
0.35
$
0.60
$
2.32
$
2.24
Diluted
$
0.61
$
0.35
$
0.60
$
2.30
$
2.22
Weighted average shares:
Basic
15,948
14,922
13,523
14,340
13,525
Diluted
16,027
14,993
13,615
14,422
13,617
Comprehensive income:
Net income
$
9,714
$
5,282
$
8,117
$
33,228
$
30,242
Other comprehensive income (loss):
Change in net unrealized gains or losses on available-for-sale securities
(12,723)
(2,274)
286
(21,281)
11,891
Reclassification adjustment for gains on available-for-sale securities included in net income
17
(1)
-
16
(915)
Amortization of net unrealized losses on securities transferred from available-for-sale to held-to-maturity
108
104
129
493
524
Other comprehensive income (loss), before tax
(12,598)
(2,171)
415
(20,772)
11,500
Deferred tax (benefit) expense
(3,726)
(641)
124
(6,147)
3,402
Other comprehensive (loss) income, net of tax
(8,872)
(1,530)
291
(14,625)
8,098
Comprehensive income
$
842
$
3,752
$
8,408
$
18,603
$
38,340
9
BANK OF MARIN BANCORP
AVERAGE STATEMENTS OF CONDITION AND ANALYSIS OF NET INTEREST INCOME
Three months ended
Three months ended
Three months ended
December 31, 2021
September 30, 2021
December 31, 2020
Interest
Interest
Interest
Average
Income/
Yield/
Average
Income/
Yield/
Average
Income/
Yield/
(dollars in thousands; unaudited)
Balance
Expense
Rate
Balance
Expense
Rate
Balance
Expense
Rate
Assets
Interest-earning deposits with banks 1
$
330,894
$
125
0.15
%
$
456,405
$
178
0.15
%
$
157,389
$
40
0.10
%
Investment securities 2, 3
1,410,383
5,801
1.65
%
845,127
4,249
2.01
%
498,730
3,395
2.72
%
Loans 1, 3, 4
2,269,785
25,711
4.43
%
2,189,563
24,229
4.33
%
2,096,908
20,974
3.91
%
Total interest-earning assets 1
4,011,062
31,637
3.09
%
3,491,095
28,656
3.21
%
2,753,027
24,409
3.47
%
Cash and non-interest-bearing due from banks
85,869
68,680
64,600
Bank premises and equipment, net
7,777
6,468
5,213
Interest receivable and other assets, net
194,058
177,725
135,520
Total assets
$
4,298,766
$
3,743,968
$
2,958,360
Liabilities and Stockholders' Equity
Interest-bearing transaction accounts
$
290,394
$
53
0.07
%
$
237,883
$
41
0.07
%
$
160,827
$
40
0.10
%
Savings accounts
336,715
28
0.03
%
293,434
26
0.03
%
198,616
18
0.04
%
Money market accounts
1,102,943
505
0.18
%
911,294
417
0.18
%
697,203
278
0.16
%
Time accounts, including CDARS
144,993
25
0.07
%
124,247
44
0.14
%
97,512
118
0.48
%
Borrowings and other obligations 1, 6
430
1
0.62
%
3,010
8
1.09
%
72
1
2.37
%
Subordinate debentures 1, 5
-
-
-
%
-
-
-
%
2,768
34
4.85
%
Total interest-bearing liabilities
1,875,475
612
0.13
%
1,569,868
536
0.14
%
1,156,998
489
0.17
%
Demand accounts
1,915,309
1,707,142
1,397,349
Interest payable and other liabilities
54,514
46,834
44,532
Stockholders' equity
453,468
420,124
359,481
Total liabilities & stockholders' equity
$
4,298,766
$
3,743,968
$
2,958,360
Tax-equivalent net interest income/margin 1
$
31,025
3.03
%
$
28,120
3.15
%
$
23,920
3.40
%
Reported net interest income/margin 1
$
30,633
2.99
%
$
27,753
3.11
%
$
23,599
3.35
%
Tax-equivalent net interest rate spread
2.96
%
3.07
%
3.30
%
Year ended
Year ended
December 31, 2021
December 31, 2020
Interest
Interest
Average
Income/
Yield/
Average
Income/
Yield/
(dollars in thousands; unaudited)
Balance
Expense
Rate
Balance
Expense
Rate
Assets
Interest-earning deposits with banks 1
$
287,626
$
399
0.14
%
$
153,794
$
461
0.29
%
Investment securities 2, 3
866,790
16,999
1.96
%
533,186
15,025
2.82
%
Loans 1, 3, 4
2,155,982
92,376
4.23
%
2,023,203
85,398
4.15
%
Total interest-earning assets 1
3,310,398
109,774
3.27
%
2,710,183
100,884
3.66
%
Cash and non-interest-bearing due from banks
61,299
49,676
Bank premises and equipment, net
5,964
5,526
Interest receivable and other assets, net
159,502
131,780
Total assets
$
3,537,163
$
2,897,165
Liabilities and Stockholders' Equity
Interest-bearing transaction accounts
$
217,924
$
172
0.08
%
$
148,817
$
186
0.13
%
Savings accounts
268,397
94
0.04
%
184,146
68
0.04
%
Money market accounts
864,625
1,520
0.18
%
763,689
2,009
0.26
%
Time accounts, including CDARS
115,393
246
0.21
%
96,558
554
0.57
%
Borrowings and other obligations 1, 6
892
9
1.08
%
174
4
2.16
%
Subordinated debentures 1, 5
534
1,361
251.54
%
2,741
158
5.68
%
Total interest-bearing liabilities
1,467,765
3,402
0.23
%
1,196,125
2,979
0.25
%
Demand accounts
1,628,289
1,308,199
Interest payable and other liabilities
46,746
41,347
Stockholders' equity
394,363
351,494
Total liabilities & stockholders' equity
$
3,537,163
$
2,897,165
Tax-equivalent net interest income/margin 1
$
106,372
3.17
%
$
97,905
3.55
%
Reported net interest income/margin 1
$
104,951
3.13
%
$
96,659
3.51
%
Tax-equivalent net interest rate spread
3.04
%
3.41
%
1 Interest income/expense is divided by actual number of days in the period times 360 days to correspond to stated interest rate terms, where applicable.
2 Yields on available-for-sale securities are calculated based on amortized cost balances rather than fair value, as changes in fair value are reflected as a component of stockholders' equity. Investment security interest is earned on 30/360 day basis monthly.
3 Yields and interest income on tax-exempt securities and loans are presented on a taxable-equivalent basis using the Federal statutory rate of 21 percent.
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.
5 2021 interest on subordinated debenture included $1.3 million in accelerated discount accretion from the early redemption of our last subordinated debenture on March 15, 2021.
6 Average balances and rate consider $13.9 million in FHLB borrowings acquired from American River Bank that were redeemed on August 25, 2021.
10
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Bank of Marin Bancorp published this content on 24 January 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 24 January 2022 13:43:04 UTC.
Bank of Marin Bancorp is a holding company for Bank of Marin (the Bank). The Bank offers a suite of business and personal financial products and services designed to meet the needs of its customers. Its lending categories include commercial real estate loans, commercial and industrial loans, construction financing, consumer loans and home equity lines of credit. Through third-party vendors, it offers merchant and payroll services, a commercial equipment leasing program and credit cards. Its other products and services include payment solutions (mobile deposit and Zelle) and a wide array of treasury management services. It offers personal and business checking and savings accounts, and a number of time deposit alternatives, including time certificates of deposit, Individual Retirement Accounts (IRAs), Health Savings Accounts (HSA), Certificate of Deposit Account Registry Service (CDARS), Insured Cash Sweep (ICS), and Demand Deposit Marketplace (DDM Sweep) accounts.