EX-99.1 2 earningsrelease-ex991q22022.htm EX-99.1 Document

EXHIBIT 99.1
bankofmarinbancorplogoa22.jpg
FOR IMMEDIATE RELEASE
MEDIA CONTACT:
Andrea Henderson
Director of Marketing
415-884-4757 | andreahenderson@bankofmarin.com

BANK OF MARIN BANCORP REPORTS RECORD EARNINGS OF $11.1 MILLION
INCREASES DIVIDEND TO 25 CENTS


NOVATO, CA, July 25, 2022 - Bank of Marin Bancorp, "Bancorp" (Nasdaq: BMRC), parent company of Bank of Marin, "Bank," announced record earnings of $11.1 million in the second quarter of 2022, compared to $10.5 million in the first quarter of 2022. Diluted earnings per share were $0.69 in the second quarter of 2022, compared to $0.66 in the immediately preceding quarter. Earnings for the first six months of 2022 totaled $21.5 million, compared to $18.2 million in the same period last year. Diluted earnings per share were $1.35 and $1.37 in the first six months of 2022 and 2021, respectively. All periods of earnings presented were impacted by the costs associated with our most recent acquisition, the details of which are discussed throughout this report. In particular, diluted earnings per share for the first half of 2022 would have increased by one cent per share over 2021 without those costs.

“We generated record earnings and robust loan production during the second quarter, building further momentum with our enhanced business development efforts. During the first six months of 2022, our loan originations ex-PPP totaled $152 million, more than double the same period a year earlier,” said Tim Myers, President and Chief Executive Officer. “Our asset quality remains excellent as we continue our traditional focus on disciplined and prudent underwriting. We will not sacrifice credit standards as we grow."

“We are executing on a long-term plan to invest in key talent and technology that we believe will enable us to continue exceeding our customers’ expectations and drive growth while realizing efficiencies,” Myers added. “We are also working to identify cost saving opportunities to offset those investments, managing expenses to deliver strong returns to our shareholders.”

Bancorp also provided the following highlights from the second quarter of 2022:
•Return on Assets of 1.03% and Return on Equity of 10.74% for the three months ended June 30, 2022, would have been 1.05% and 10.95%, respectively, without one-time and conversion costs related to the 2021 merger with American River Bankshares ("ARB"). That compares to 0.98% and 9.61% (GAAP) and 1.01% and 9.96% (non-GAAP), respectively, for the three months ended March 31, 2022. As shown in the reconciliation of GAAP to non-GAAP financial measures on page 3, merger-related costs reduced net income by $219 thousand, net of taxes, or $0.02 per share in the second quarter.

•The second quarter tax-equivalent net interest margin improved 9 basis points over the preceding quarter despite the 7 basis point drag of declining PPP loan fee recognition. Rising interest rates had a positive impact on the Bank's asset sensitive portfolio, as did the deployment of excess cash into securities and flat deposit costs.

•Deposits decreased by $30.7 million to $3.831 billion at June 30, 2022, compared to $3.861 billion at March 31, 2022. Non-interest bearing deposits made up 53% of total deposits as of June 30, 2022 versus 51% as of March 31, 2022. The cost of average deposits in the second quarter of 2022 was 0.06%, unchanged from the preceding quarter.

•Loan balances of $2.163 billion at June 30, 2022 reflected record second quarter originations of $102.2 million. While our production was strong, total loans decreased modestly in the quarter due to payoffs including expected construction project completions, borrowers' sales of underlying assets, PPP loan payoffs, and third party refinancing of acquired loans outside the Bank's credit risk appetite.

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•Credit quality remains strong, with non-accrual loans representing 0.37% of total loans as of June 30, 2022, compared to 0.35% at March 31, 2022. There was not a significant change in classified loans. There was no provision made to the allowance for credit losses on loans or to the allowance for credit losses on unfunded loan commitments this quarter as an improvement in the California unemployment rate forecast decreased the quantitative portion of estimated credit losses while ongoing supply chain issues, inflation and recession risks increased qualitative factors.

•Our declining efficiency ratios quarter over quarter and year over year are a testament to the improved operating leverage attained through the ARB acquisition. The efficiency ratios of 55.73% for the second quarter and 57.40% year to date compare to 59.13% and 61.43% for the first quarter of 2022 and year to date 2021, respectively. Changes from the prior quarter were primarily visible in salaries, benefits and professional services expenses.

•All capital ratios were above well-capitalized regulatory requirements. The total risk-based capital ratio for Bancorp was 14.7% at June 30, 2022, compared to 14.4% at March 31, 2022. Bancorp's tangible common equity to tangible assets was 7.8% at June 30, 2022, compared to 8.0% at March 31, 2022 (refer to footnote 5 on page 7 for a discussion of this non-GAAP financial measure). The total risk-based capital ratio for the Bank was 14.2% at June 30, 2022, compared to 14.3% at March 31, 2022. The Bank's tangible common equity to tangible assets was 7.5% at June 30, 2022, compared to 8.0% at March 31, 2022. Declines in the Bank's and Bancorp's tangible common equity were primarily related to an increase in after-tax unrealized losses on available-for-sales securities associated with interest rate increases since March 31, 2022.

•The Board of Directors declared a cash dividend of $0.25 per share, an increase from $0.24 per share in the prior quarter, on July 22, 2022, which represents the 69th consecutive quarterly dividend paid by Bancorp. The dividend is payable on August 12, 2022, to shareholders of record at the close of business on August 5, 2022.

Statement Regarding use of Non-GAAP Financial Measures

In this press release, Bancorp's financial results are presented in accordance with GAAP and with reference 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.


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Reconciliation of GAAP and Non-GAAP Financial Measures

 (in thousands, unaudited)Three months endedSix months ended
Net incomeJune 30, 2022March 31, 2022June 30, 2022June 30, 2021
Net income (GAAP)$11,066 $10,465 $21,531 $18,232 
Merger-related one-time and conversion costs:
Personnel and severance58 335 393 — 
Professional services— 67 67 201 
Data processing29 48 77 — 
Other224 97 321 16 
Total merger costs before tax benefits311 547 858 217 
Income tax benefit of merger-related expenses(92)(162)(254)(17)
Total merger-related one-time and conversion costs, net of tax benefits219 385 604 200 
Comparable net income (non-GAAP)$11,285 $10,850 $22,135 $18,432 
Diluted earnings per share
Weighted average diluted shares15,955 15,946 15,950 13,316 
Diluted earnings per share (GAAP)$0.69 $0.66 $1.35 $1.37 
Merger-related one-time and conversion costs, net of tax benefits0.02 0.02 0.04 0.01 
Comparable diluted earnings per share (non-GAAP)$0.71 $0.68 $1.39 $1.38 
Return on average assets
Average assets$4,312,919 $4,345,258 $4,328,999 $3,044,933 
Return on average assets (GAAP)1.03 %0.98 %1.00 %1.21 %
Comparable return on average assets (non-GAAP)1.05 %1.01 %1.03 %1.22 %
Return on average equity
Average stockholders' equity$413,271 $441,626 $427,370 $351,227 
Return on average equity (GAAP)10.74 %9.61 %10.16 %10.47 %
Comparable return on average equity (non-GAAP)10.95 %9.96 %10.44 %10.58 %
Efficiency ratio
Non-interest expense (GAAP)$18,906 $19,375 $38,281 $30,968 
Merger-related expenses(311)(547)(858)(217)
Non-interest expense (non-GAAP)$18,595 $18,828 $37,423 $30,751 
Net interest income$31,197 $29,898 $61,095 $46,565 
Non-interest income$2,728 $2,867 $5,595 $3,848 
Efficiency ratio (GAAP)55.73 %59.13 %57.40 %61.43 %
Comparable efficiency ratio (non-GAAP)54.81 %57.46 %56.11 %61.00 %

"Our record second quarter earnings reflect the Bank’s consistent execution on our strategic priorities. The ARB acquisition is achieving earnings accretion above projected levels, one-time costs were negotiated lower, and expense savings are on target with more to be realized," said Tani Girton, EVP and Chief Financial Officer. “Our credit quality, liquidity and capital are strong and the Bank is well-positioned to support the initiatives underway."

Loans and Credit Quality

Loans totaled $2.163 billion at June 30, 2022, compared to $2.202 billion at March 31, 2022, a decrease of $39.2 million, largely due to net declines of $23.6 million in PPP loans and $12.9 million in construction loans. Record loan originations of $102.2 million compared to $49.8 million for the first quarter of 2022. Our consistent calling practices and relationship banking model, coupled with a rising rate environment, drove customer urgency and strong originations in the quarter. Non-PPP loan payoffs of $109.8 million in the second quarter included $34.5 million in expected construction project completions and $28.5 million whereby borrowers sold underlying assets. By comparison, first quarter non-PPP loan payoffs were $49.3 million.

The $93.0 million decrease in loans during the six months ended June 30, 2022 was mostly attributable to a $94.2 million decrease in PPP loans. This compared to an $85.8 million decrease in total loans during the six months ended June 30, 2021. Non-PPP loan originations were $152.0 million for the six months ended June 30, 2022, compared to $69.1 million for the six months ended June 30, 2021. Non-PPP loan payoffs were $159.1 million in the six months ended June 30, 2022, compared to $95.4 million in the six months ended June 30, 2021.

Bank of Marin and ARB 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 June 30, 2022 there were 112 loans still outstanding totaling $17.0 million (net of $420 thousand in unrecognized fees and costs) compared to 191 loans outstanding at March 31,
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2022 for a total of $40.6 million (net of $993 thousand in unrecognized fees and costs). In the second quarter of 2022, Bank of Marin recognized $573 thousand in PPP fees, net of costs, compared to $1.5 million in the preceding quarter.

During the onset of the pandemic, Bank of Marin granted payment relief for 269 loans totaling $402.9 million. As of June 30, 2022, two borrowing relationships with three loans totaling $23.6 million were continuing to benefit from payment relief under the provisions of the 2020 CARES Act. We will continue to work closely with both of these clients and monitor their performance.

Non-accrual loans totaled $8.0 million, or 0.37%, of the Bank's portfolio at June 30, 2022, compared to $7.7 million, or 0.35% at March 31, 2022. Non-accrual loans at June 30, 2022 included the addition of two loans totaling $381 thousand including one owner-occupied commercial real estate loan and one home equity loan. Also, during the quarter, one personal loan for $16 thousand was charged off and three loans paid down a total of $26 thousand.

Classified loans totaled $37.0 million at June 30, 2022, compared to $36.5 million at March 31, 2022, increasing due to an addition of four loans totaling $2.4 million in the second quarter within commercial real estate and home equity, offset by paydowns of $1.8 million, and one charge off of $16 thousand, as mentioned above. Accruing loans past due 30 to 89 days totaled $3.2 million at June 30, 2022, compared to $2.3 million at March 31, 2022.

Net charge-offs for the second quarter of 2022 totaled $8 thousand, compared to net recoveries of $9 thousand in the first quarter of 2022. The ratio of allowance for credit losses to total loans was 1.04% at June 30, 2022, compared to 1.02% at March 31, 2022.

In the second quarter of 2022 there was no provision for credit losses on loans, compared to first quarter of 2022 when we recorded a reversal of provision of $485 thousand. There was no provision for credit losses on unfunded commitments in the second quarter of 2022, compared to a reversal of $318 thousand in the first quarter of 2022. No adjustments were made this quarter as an improvement in the California unemployment rate forecast decreased the quantitative portion of estimated credit losses while ongoing supply chain issues, inflation and recession risks increased qualitative factors. The preceding quarter's provision reversals were due primarily to the improvement in the underlying California unemployment rate forecast at the time.

Cash, Cash Equivalents and Restricted Cash

Total cash, cash equivalents and restricted cash were $115.9 million at June 30, 2022, compared to $170.9 million at March 31, 2022. The $55.0 million decrease was primarily due to the deployment of funds into investment securities, as noted below.

Investments

The investment securities portfolio totaled $1.825 billion at June 30, 2022, an increase of $79.0 million from March 31, 2022. The increase was primarily the result of securities purchases totaling $153.1 million, partially offset by maturities, calls, and paydowns totaling $45.1 million and an increase in pre-tax unrealized losses of $27.1 million on available-for-sale investment securities primarily due to a continuing rise in market interest rates during the second quarter of 2022. The growth in the portfolio and increase in yield contributed significantly to net interest income during the quarter.

Year-to-date we have recorded other comprehensive losses of $56.0 million after tax. First quarter losses were more significant due to the rapid and dramatic increases in rates as well as the larger available-for-sale portfolio. During the first quarter we transferred $357.5 million in available-for-sale securities to held-to-maturity to mitigate further losses associated with rising interest rates.

Deposits

Deposits totaled $3.831 billion at June 30, 2022, compared to $3.861 billion at March 31, 2022. The $96.0 million decrease in money markets was partially related to a transfer to non-interest bearing deposits by a significant customer in preparation for a withdrawal occurring early in July consistent with that customer's normal business activity. The average cost of deposits for the second quarter was unchanged from the first quarter at 0.06%. The average cost of deposits for the six months ended June 30, 2022 was 0.06% compared to 0.07% in the first half of
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2021. Additionally, as part of our liquidity management, the Bank maintained $152.4 million in deposits off-balance sheet with deposit networks at June 30, 2022, compared to $180.0 million at March 31, 2022.

Earnings

Net Interest Income

Net interest income totaled $31.2 million in the second quarter of 2022, compared to $29.9 million in the prior quarter. The $1.3 million increase from the prior quarter was primarily attributable to higher average balances and yields on investment securities causing an increase of $1.6 million, quarter over quarter, in investment interest income.

Net interest income totaled $61.1 million for the six months ended June 30, 2022, compared to $46.6 million for the same period in the prior year. The $14.5 million increase from prior year was primarily due to the larger investment portfolio generating an incremental $8.3 million, and $4.9 million from higher balances and yields on the loan portfolio. First half 2022 average balances and fee recognition on PPP loans decreased $275.5 million and $2.3 million, respectively, from the first half of 2021.

The tax-equivalent net interest margin was 3.05% in the second quarter of 2022, compared to 2.96% in the prior quarter. The increase from the prior quarter was primarily due to continued deployment of cash into higher yielding investment securities and higher interest rates on non-PPP loans, partially offset by lower interest and fee income on PPP loans. Average yields on the investment portfolio increased from 1.69% in the first quarter to 1.87% in the second quarter reflecting recent increases in market interest rates, and the average rate on gross loans increased 10 basis points, which excludes the impact of loan origination fees/costs and purchase discounts/premiums.

The tax-equivalent net interest margin was 3.01% in the six months ended June 30, 2022, compared to 3.28% in the same period in the prior year. The decrease was primarily attributed to a higher proportion of investment securities in the larger balance sheet associated with ARB's lower loan-to-deposit ratio and other deposit growth over the period. The decrease was partially offset by a shift to a higher percentage of non-PPP loans within the loan portfolio and the absence of trust preferred securities redemption which occurred in 2021.

Non-Interest Income

Non-interest income totaled $2.7 million in the second quarter of 2022, compared to $2.9 million in the preceding quarter. The $139.0 thousand decrease was primarily related to payments on bank-owned life insurance in the prior quarter.

Non-interest income totaled $5.6 million in the six months ended June 30, 2022, compared to $3.8 million in the same period of the prior year. The $1.7 million increase from the prior year period was mostly attributable to increased activity associated with the ARB acquisition and higher Wealth Management and Trust Services income.

Non-Interest Expense

Non-interest expense totaled $18.9 million in the second quarter of 2022, compared to $19.4 million in the prior quarter. The decrease from the prior quarter was primarily due to a $1.2 million reduction in salaries and benefits after the completion of the acquisition-related conversion in March 2022 and 22 fewer full-time equivalent employees. Decreases were partially offset by a $466 thousand increase in charitable contributions in the quarter due to the annual distribution of grant funding related to the Bank's corporate giving program.

Non-interest expense totaled $38.3 million in the six months ended June 30, 2022, compared to $31.0 million in the same period of prior year. The largest increases over prior year expenses came from salaries and related benefits, which rose $3.8 million due to increased numbers of employees in acquired branch and loan offices, regularly scheduled annual merit and related increases, and lower deferred loan origination costs. Higher expenses across most other categories reflect the acquisition, including one-time and conversion costs of $858 thousand, an increase in other data processing of $762 thousand, and an additional $346 thousand in amortization associated with the ARB core deposit intangible asset in the first half of 2022.


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Share Repurchase Program

Bancorp has an approved share repurchase program with $34.7 million outstanding. The last activity under the program was in the first quarter of 2022. Bancorp continues to evaluate the resumption of share repurchases in the context of other capital and strategic initiatives.

Earnings Call and Webcast Information

Bank of Marin Bancorp will webcast its second quarter of 2022 earnings call on Monday, July 25, 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 $4.3 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, general economic conditions and the economic uncertainty in the United States and abroad, including economic or other disruptions to financial markets caused by acts of terrorism, war or other conflicts such as Russia's military action in Ukraine, impacts from inflation, supply change disruptions, changes in interest rates (including the actions taken by the Federal Reserve to control inflation), California's unemployment rate, deposit flows, real estate values, and expected future cash flows on loans and securities; costs or effects of acquisitions; competition; changes in accounting principles, policies or guidelines; changes in legislation or regulation; natural disasters (such as wildfires and earthquakes in our area); adverse weather conditions; 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 our operations, pricing, products and services; and successful integration of acquisitions. 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
Three months endedSix months ended
(in thousands, except per share amounts; unaudited)June 30, 2022March 31, 2022June 30, 2022June 30, 2021
Selected operating data and performance ratios:
Net income$11,066 $10,465 $21,531 $18,232 
Diluted earnings per common share$0.69 $0.66 $1.35 $1.37 
Return on average assets1.03 %0.98 %1.00 %1.21 %
Return on average equity10.74 %9.61 %10.16 %10.47 %
Efficiency ratio55.73 %59.13 %57.40 %61.43 %
Tax-equivalent net interest margin 1
3.05 %2.96 %3.01 %3.28 %
Cost of deposits0.06 %0.06 %0.06 %0.07 %
Net charge-offs (recoveries) $8 $(9)$(1)$(75)
(in thousands; unaudited)June 30, 2022March 31, 2022December 31, 2021
Selected financial condition data:
Total assets$4,326,904 $4,330,424 $4,314,209 
Loans:
Commercial and industrial 2
$213,122 $248,625 $301,602 
Real estate:
Commercial owner-occupied382,897 391,924 392,345 
Commercial investor-owned1,190,419 1,176,918 1,189,021 
Construction118,147 131,015 119,840 
Home equity90,629 88,092 88,746 
Other residential113,361 114,277 114,558 
Installment and other consumer loans54,057 51,003 49,533 
Total loans$2,162,632 $2,201,854 $2,255,645 
Non-accrual loans: 3
Real estate:
Commercial owner-occupied$7,564 $7,272 $7,269 
Commercial investor-owned— — 694 
Home equity454 390 413 
Installment and other consumer loans— 16 — 
Total non-accrual loans$8,018 $7,678 $8,376 
Classified loans (graded substandard and doubtful)$37,043 $36,460 $36,235 
Total accruing loans 30-89 days past due $3,153 $2,323 $1,673 
Allowance for credit losses to total loans1.04 %1.02 %1.02 %
Allowance for credit losses to total loans, excluding SBA PPP loans 4
1.05 %1.04 %1.07 %
Allowance for credit losses to non-performing loans2.81x2.94x2.75x
Non-accrual loans to total loans0.37 %0.35 %0.37 %
Total deposits$3,830,670 $3,861,342 $3,808,550 
Loan-to-deposit ratio56.5 %57.0 %59.2 %
Stockholders' equity$409,573 $420,408 $450,368 
Book value per share$25.58 $26.27 $28.27 
Tangible common equity to tangible assets - Bank 5
7.5 %8.0 %8.6 %
Tangible common equity to tangible assets - Bancorp 5
7.8 %8.0 %8.8 %
Total risk-based capital ratio - Bank14.2 %14.3 %14.4 %
Total risk-based capital ratio - Bancorp14.7 %14.4 %14.6 %
Full-time equivalent employees290 312 328 
1 Net interest income is annualized by dividing actual number of days in the period times 360 days.
2 Includes SBA PPP loans of $17.0 million, $40.6 million and $111.2 million at June 30, 2022, March 31, 2022 and December 31, 2021, respectively.
3 There were no non-performing loans over 90 days past due and accruing interest as of June 30, 2022, March 31, 2022 and December 31, 2021.
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 loan 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 (losses) on available-for-sale securities, net of tax, less goodwill and intangible assets of $78.6 million, $79.0 million and $79.4 million at June 30, 2022, March 31, 2022 and December 31, 2021, respectively. Tangible assets exclude goodwill and intangible assets.
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BANK OF MARIN BANCORP
CONSOLIDATED STATEMENTS OF CONDITION 
(in thousands, except share data; unaudited)June 30, 2022March 31, 2022December 31, 2021
Assets  
Cash, cash equivalents and restricted cash$115,905 $170,901 $347,641 
Investment securities  
Held-to-maturity, at amortized cost (net of zero allowance for credit losses at June 30, 2022, March 31, 2022 and December 31, 2021)
931,587 790,264 342,222 
Available-for-sale (at fair value; amortized cost of $960,379, $995,637 and $1,169,520 at June 30, 2022, March 31, 2022 and December 31, 2021, respectively; net of zero allowance for credit losses at June 30, 2022, March 31, 2022 and
December 31, 2021)
893,149 955,457 1,167,568 
Total investment securities1,824,736 1,745,721 1,509,790 
Loans, at amortized cost2,162,632 2,201,854 2,255,645 
Allowance for credit losses on loans(22,539)(22,547)(23,023)
Loans, net of allowance for credit losses on loans2,140,093 2,179,307 2,232,622 
Goodwill72,754 72,754 72,754 
Bank-owned life insurance61,834 61,536 61,473 
Operating lease right-of-use assets22,353 23,544 23,604 
Bank premises and equipment, net7,067 7,236 7,558 
Core deposit intangible, net5,851 6,225 6,605 
Other real estate owned800 800 800 
Interest receivable and other assets75,511 62,400 51,362 
Total assets$4,326,904 $4,330,424 $4,314,209 
Liabilities and Stockholders' Equity  
Liabilities  
Deposits 
Non-interest bearing$2,034,717 $1,960,684 $1,910,240 
Interest bearing
Transaction accounts297,871 299,336 290,813 
Savings accounts343,585 347,335 340,959 
Money market accounts1,012,823 1,108,852 1,116,303 
Time accounts141,674 145,135 150,235 
Total deposits3,830,670 3,861,342 3,808,550 
Borrowings and other obligations356 388 419 
Operating lease liabilities24,117 25,351 25,429 
Interest payable and other liabilities62,188 22,935 29,443 
Total liabilities3,917,331 3,910,016 3,863,841 
Stockholders' Equity  
Preferred stock, no par value,
    Authorized - 5,000,000 shares, none issued		— — — 
Common stock, no par value,
Authorized - 30,000,000 shares; issued and outstanding - 16,009,600, 16,003,847 and 15,929,243 at June 30, 2022, March 31, 2022 and December 31, 2021, respectively
213,864 213,204 212,524 
Retained earnings253,737 246,511 239,868 
Accumulated other comprehensive loss, net of taxes(58,028)(39,307)(2,024)
Total stockholders' equity409,573 420,408 450,368 
Total liabilities and stockholders' equity$4,326,904 $4,330,424 $4,314,209 

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BANK OF MARIN BANCORP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME
Three months endedSix months ended
(in thousands, except per share amounts; unaudited)June 30, 2022March 31, 2022June 30, 2022June 30, 2021
Interest income  
Interest and fees on loans$23,334 $23,677 $47,011 $42,090 
Interest on investment securities8,273 6,693 14,966 6,633 
Interest on federal funds sold and due from banks180 106 286 96 
Total interest income31,787 30,476 62,263 48,819 
Interest expense    
Interest on interest-bearing transaction accounts53 56 109 78 
Interest on savings accounts32 29 61 40 
Interest on money market accounts438 478 916 598 
Interest on time accounts67 14 81 177 
Interest on borrowings and other obligations— 1 1 — 
Interest on subordinated debenture— — — 1,361 
Total interest expense590 578 1,168 2,254 
Net interest income31,197 29,898 61,095 46,565 
Reversal of credit losses on loans— (485)(485)(3,849)
Reversal of credit losses on unfunded loan commitments— (318)(318)(1,202)
Net interest income after reversal of credit losses31,197 30,701 61,898 51,616 
Non-interest income  
Wealth Management and Trust Services630 600 1,230 1,018 
Debit card interchange fees, net531 505 1,036 785 
Service charges on deposit accounts465 488 953 598 
Earnings on bank-owned life insurance, net298 413 711 490 
Dividends on Federal Home Loan Bank stock249 259 508 326 
Merchant interchange fees, net149 140 289 118 
Other income406 462 868 513 
Total non-interest income2,728 2,867 5,595 3,848 
Non-interest expense   
Salaries and related benefits10,341 11,548 21,889 18,096 
Occupancy and equipment1,894 1,909 3,803 3,502 
Data processing1,199 1,277 2,476 1,639 
Professional services665 913 1,578 1,849 
Information technology468 478 946 609 
Depreciation and amortization393 452 845 848 
Amortization of core deposit intangible374 380 754 408 
Directors' expense294 311 605 405 
Federal Deposit Insurance Corporation insurance296 290 586 361 
Charitable contributions511 45 556 493 
Other expense2,471 1,772 4,243 2,758 
Total non-interest expense18,906 19,375 38,281 30,968 
Income before provision for income taxes15,019 14,193 29,212 24,496 
Provision for income taxes3,953 3,728 7,681 6,264 
Net income$11,066 $10,465 $21,531 $18,232 
Net income per common share:  
Basic$0.70 $0.66 $1.35 $1.38 
Diluted$0.69 $0.66 $1.35 $1.37 
Weighted average shares:
Basic15,921 15,876 15,898 13,227 
Diluted15,955 15,946 15,950 13,316 
Comprehensive (loss) income:
Net income$11,066 $10,465 $21,531 $18,232 
Other comprehensive (loss) income:
Change in net unrealized (losses) gains on available-for-sale securities(27,050)(38,228)(65,278)(6,284)
Net unrealized losses on securities transferred from available-for-sale to held-to-maturity— (14,847)(14,847)— 
Amortization of net unrealized losses on securities transferred from available-for-sale to held-to-maturity472 144 616 281 
Other comprehensive loss, before tax(26,578)(52,931)(79,509)(6,003)
Deferred tax (benefit) liability(7,857)(15,648)(23,505)(1,780)
Other comprehensive loss, net of tax(18,721)(37,283)(56,004)(4,223)
Total comprehensive (loss) income$(7,655)$(26,818)$(34,473)$14,009 
9

BANK OF MARIN BANCORP
AVERAGE STATEMENTS OF CONDITION AND ANALYSIS OF NET INTEREST INCOME
Three months endedThree months ended
June 30, 2022March 31, 2022
InterestInterest
AverageIncome/Yield/AverageIncome/Yield/
(in thousands)BalanceExpenseRateBalanceExpenseRate
Assets
Interest-earning deposits with banks 1
$95,326 $180 0.75 %$231,555 $106 0.18 %
Investment securities 2, 3
1,807,710 8,469 1.87 %1,626,537 6,871 1.69 %
Loans 1, 3, 4
2,194,810 23,522 4.24 %2,227,495 23,881 4.29 %
   Total interest-earning assets 1
4,097,846 32,171 3.11 %4,085,587 30,858 3.02 %
Cash and non-interest-bearing due from banks56,408 69,019 
Bank premises and equipment, net7,182 7,430 
Interest receivable and other assets, net151,483 183,222 
Total assets$4,312,919 $4,345,258 
Liabilities and Stockholders' Equity
Interest-bearing transaction accounts$300,258 $53 0.07 %$295,183 $56 0.08 %
Savings accounts343,338 32 0.04 %343,327 29 0.03 %
Money market accounts1,076,912 438 0.16 %1,122,215 478 0.17 %
Time accounts including CDARS144,432 67 0.19 %147,707 14 0.04 %
Borrowings and other obligations 1
370 — 0.61 %399 1 0.62 %
   Total interest-bearing liabilities1,865,310 590 0.13 %1,908,831 578 0.12 %
Demand accounts1,984,629 1,942,804 
Interest payable and other liabilities49,709 51,997 
Stockholders' equity413,271 441,626 
Total liabilities & stockholders' equity$4,312,919 $4,345,258 
Tax-equivalent net interest income/margin 1
$31,581 3.05 %$30,280 2.96 %
Reported net interest income/margin 1
$31,197 3.01 %$29,898 2.93 %
Tax-equivalent net interest rate spread2.98 %2.90 %
Six months endedSix months ended
June 30, 2022June 30, 2021
InterestInterest
AverageIncome/Yield/AverageIncome/Yield/
(in thousands)BalanceExpenseRateBalanceExpenseRate
Assets
Interest-earning deposits with banks 1
$163,064 $286 0.35 %$179,846 $96 0.11 %
Investment securities 2, 3
1,717,624 15,340 1.79 %601,498 6,948 2.31 %
Loans 1, 3, 4
2,211,062 47,403 4.26 %2,081,069 42,437 4.06 %
   Total interest-earning assets 1
4,091,750 63,029 3.06 %2,862,413 49,481 3.44 %
Cash and non-interest-bearing due from banks62,679 45,059 
Bank premises and equipment, net7,305 4,786 
Interest receivable and other assets, net167,265 132,675 
Total assets$4,328,999 $3,044,933 
Liabilities and Stockholders' Equity
Interest-bearing transaction accounts$297,734 $109 0.07 %$170,943 $78 0.09 %
Savings accounts343,333 61 0.04 %220,946 40 0.04 %
Money market accounts1,099,439 916 0.17 %719,769 598 0.17 %
Time accounts including CDARS146,061 81 0.11 %95,849 177 0.37 %
Borrowings and other obligations 1
384 1 0.62 %50 — 1.46 %
Subordinated debenture 1, 5
— — — %1,076 1,361 251.54 %
   Total interest-bearing liabilities1,886,951 1,168 0.12 %1,208,633 2,254 0.38 %
Demand accounts1,963,832 1,442,320 
Interest payable and other liabilities50,846 42,753 
Stockholders' equity427,370 351,227 
Total liabilities & stockholders' equity$4,328,999 $3,044,933 
Tax-equivalent net interest income/margin 1
$61,861 3.01 %$47,227 3.28 %
Reported net interest income/margin 1
$61,095 2.97 %$46,565 3.24 %
Tax-equivalent net interest rate spread2.94 %3.06 %
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 in 2022 and 2021.
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.
10