Bank of Marin Bancorp Reports First Quarter Earnings of $8.9 Million

Bank of Marin Bancorp, "Bancorp" (Nasdaq: BMRC), parent company of Bank of Marin, "Bank," announced earnings of $8.9 million in the first quarter of 2021, compared to $8.1 million in the fourth quarter of 2020 and $7.2 million in the first quarter of 2020. Diluted earnings per share were $0.66 in the first quarter, $0.60 in the prior quarter, and $0.53 in the same quarter last year.

“Bank of Marin delivered steady, reliable results throughout 2020, reflecting our sound underwriting and commitment to relationship banking,” said Russell A. Colombo, President and Chief Executive Officer. “Our first quarter results in 2021 reinforced that consistency. Our credit quality is strong, and we are poised to grow as the economy reopens and our markets gain momentum.”

First quarter 2021 earnings included a $2.9 million reversal of the allowance for credit losses on loans and $590 thousand reversal of allowance for credit losses on unfunded loan commitments. Additionally, the early redemption of our last subordinated debenture generated $1.3 million in accelerated discount accretion in interest expense.

Bancorp provided the following highlights from the first quarter of 2021:

• Loan balances of $2.122 billion at March 31, 2021 compared to $2.089 billion at December 31, 2020 and $1.844 billion at March 31, 2020. Small Business Administration ("SBA") Paycheck Protection Program ("PPP") loans contributed to the increase and represented $365.0 million outstanding at March 31, 2021 versus $291.6 million at December 31, 2020. There were no PPP loans in the comparative year ago period. As of March 31, 2021, $55.9 million of our PPP loans had been forgiven and paid off by the SBA.

• Credit quality remains strong, with non-accrual loans representing 0.43% of total loans as of March 31, 2021, compared to 0.44% at December 31, 2020, and 0.09% at March 31, 2020. Reversals of $2.9 million to the allowance for credit losses on loans and $590 thousand to the allowance for credit losses on unfunded loan commitments were driven primarily by an improvement in economic forecasts and a $40.2 million decrease in non-PPP loan balances.

• Total deposits grew $152.0 million from $2.504 billion at December 31, 2020 to $2.656 billion at March 31, 2021. The increase was primarily due to increases in PPP borrower-related accounts and normal fluctuations in some of our large business accounts. Non-interest bearing deposits represented 54% of total deposits as of the end of the first quarter of 2021 and fourth quarter of 2020, versus 49% at the end of the first quarter a year ago. First quarter 2021 cost of average deposits was consistent with the prior quarter at 0.07%, compared to 0.21% in the first quarter of 2020.

• Return on average assets ("ROA") and return on average equity ("ROE") were 1.21% and 10.22%, respectively, for the quarter ended March 31, 2021. These reflect meaningful increases as ROA was 1.09% in both the prior and year-ago quarters. ROE was 8.98% and 8.54%, respectively, for the fourth quarter and first quarter of 2020.

• Our strong capital and liquidity position afforded us the opportunity to eliminate a high cost funding source. On March 15, 2021 we redeemed a $2.8 million subordinated debenture, which carried an effective rate of approximately 5.7%. While the redemption decreased our net interest margin by 18 basis points in the first quarter of 2021, it will serve to improve net interest margin in the future.

• All capital ratios were above well-capitalized regulatory requirements. The total risk-based capital ratio for Bancorp was 15.7% at March 31, 2021, compared to 16.0% at December 31, 2020, and 15.3% at March 31, 2020. Bancorp's tangible common equity to tangible assets was 10.5% at March 31, 2021, compared to 11.3% at December 31, 2020 and 11.7% at March 31, 2020 (refer to footnote 5 on page 6 for a definition of this non-GAAP financial measure). The subordinated debt redemption contributed to the decline in total risk-based capital, and share repurchases were the primary driver of the declines in both total risk-based capital and tangible common equity. The total risk-based capital ratio for the Bank was 14.8% at March 31, 2021, compared to 15.8% at December 31, 2020, and 14.4% at March 31, 2020.

• The Board of Directors declared a cash dividend of $0.23 per share on April 16, 2021. This represents the 64th consecutive quarterly dividend paid by Bank of Marin Bancorp. The dividend is payable on May 7, 2021, to shareholders of record at the close of business on April 30, 2021.

• As previously announced, Secil Tabli Watson was appointed as a new director on the boards of both the Bancorp and Bank effective April 1, 2021.

Loans and Credit Quality

Loans increased by $33.2 million in the first quarter and totaled $2.122 billion at March 31, 2021, which was comprised of a $73.4 million net increase in PPP loans, and a $40.2 million decrease in non-PPP loans. Non-PPP-related loan originations were $25.3 million for the first quarter of 2021, compared to $29.8 million for the first quarter of 2020. Loan payoffs were $34.6 million in the first quarter of 2021, compared to $51.7 million for the first quarter of 2020. Loan payoffs in the first quarter consisted largely of consumer loans and loans whereby underlying assets were sold (including completed construction projects). Other negative variances included loans refinanced with other banks and decreased commitment line utilization.

As of March 31, 2021, there were 2,513 PPP loans outstanding totaling $365.0 million (net of $8.0 million in unrecognized fees and costs), which included 841 loans totaling $119.5 million funded during the first quarter of 2021 under the second round of the PPP stimulus plan. Of the total PPP loans funded as of March 31, 2021, 144 loans amounting to $55.9 million were forgiven and paid off by the SBA. We expect the forgiveness of the first round of PPP loans to accelerate during the second quarter of 2021. Of the loans remaining, 77% (1,940 loans) totaling $89.6 million are less than or equal to $150 thousand and have access to streamlined forgiveness processing.

As of April 15, 2021, 11 borrowing relationships with 17 loans totaling $59.2 million were benefiting from payment relief. We monitor the financial situation of these clients closely and expect the majority to resume payments as the economy reopens. The following table summarizes these loans by industry or collateral type.

Industry/Collateral Type (dollars in thousands)	Outstanding Loan Balance			Weighted Average LTV
Education	$	17,076		26	%
Health Clubs	16,427			45	%
Office and Mixed Use	13,794			42	%
Hospitality	7,135			48	%
Retail Related CRE	4,760			58	%
Payment Relief Totals	$	59,192		40	%

Non-accrual loans totaled $9.2 million, or 0.43% of the loan portfolio, at March 31, 2021, $9.2 million, or 0.44% at December 31, 2020, and $1.6 million, or 0.09% a year ago. Classified loans totaled $26.4 million at March 31, 2021, compared to $25.8 million at December 31, 2020 and $12.1 million at March 31, 2020. There were no loans classified doubtful at March 31, 2021, December 31, 2020, or March 31, 2020. Accruing loans past due 30 to 89 days totaled $1.0 million at March 31, 2021, compared to $1.8 million at December 31, 2020 and $1.3 million a year ago.

In the first quarter of 2021, we recorded a reversal of the provision for credit losses on loans of $2.9 million, compared to a reversal of $856 thousand in the prior quarter and an increase of $2.2 million in the first quarter of 2020. Both the current and previous quarters' allowances were calculated under the current expected credit loss methodology. The reversal of the provision in the first quarter of 2021 was primarily due to improvements in the forecasted California unemployment rates over the next four quarters and a $40.2 million decrease in non-PPP loans. The first quarter of 2020 included a $2.2 million provision for credit losses on loans, as determined under the incurred loss methodology, due to economic uncertainties of the COVID-19 pandemic. Net recoveries were $13 thousand in the first quarter of 2021 and fourth quarter of 2020, compared to $7 thousand in the first quarter a year ago. The ratio of allowance for credit losses to total loans was 0.94% at March 31, 2021, 1.10% at December 31, 2020, and 1.02% at March 31, 2020. Excluding acquired and SBA PPP loans, the allowance for credit losses represented 1.14% of total loans as of March 31, 2021, compared to 1.27% and 1.08% as of December 31, 2020 and March 31, 2020, respectively (refer to footnote 4 on page 6 for a definition of this non-GAAP financial measure).

Cash, Cash Equivalents and Restricted Cash

Total cash, cash equivalents and restricted cash were $142.8 million at March 31, 2021, compared to $200.3 million at December 31, 2020. The reduction was primarily due to growth in SBA PPP loans and investment securities, partially offset by increased deposits.

Investments

The investment securities portfolio increased to $670.5 million at March 31, 2021 from $501.4 million at December 31, 2020. The increase was primarily attributed to purchases of $203.4 million to deploy excess cash in a more favorable interest rate environment, partially offset by paydowns, calls and maturities of $24.7 million. The fair value of available-for-sale investment securities decreased $9.1 million, primarily due to the rise in interest rates in the first quarter of 2021.

Deposits

Total deposits were $2.656 billion at March 31, 2021, compared to $2.504 billion at December 31, 2020. PPP borrower-related deposits and normal fluctuations in some of our large business accounts drove the increase. Additionally, the bank maintained $180.8 million in off-balance sheet deposits with deposit networks at March 31, 2021. The average cost of deposits held steady at 0.07% in the first quarter of 2021.

On March 30, 2020, we implemented temporary fee waivers for all ATM fees, overdraft fees and early withdrawal penalties for time deposits to help ease the financial burden customers began experiencing due to the pandemic. After honoring the fee waivers for one year, we announced at the beginning of April those fees would no longer be automatically waived as of May 3, 2021, allowing our customers 30 days to adjust.

Earnings

“We continued our established tradition of carefully managing expenses in the first quarter, while taking advantage of market opportunities to invest excess cash and reduce high-cost debt,” said Tani Girton, EVP and Chief Financial Officer. “With consistent profitability, excellent asset quality and low-cost funding, we are confident in our ability to grow alongside our clients and continue to develop value for our shareholders.”

Net interest income totaled $22.0 million in the first quarter of 2021, compared to $23.6 million in the prior quarter and $24.1 million a year ago. The $1.6 million decrease from the prior quarter was mostly attributable to $1.3 million in accelerated discount accretion from the early redemption of a subordinated debenture. Additionally, interest income declined due to two fewer days in the quarter.

The $2.1 million decrease in net interest income from the comparative quarter a year ago was primarily caused by lower yields across interest-earning assets stemming from the low interest rate environment, early redemption of the subordinated debenture as mentioned above, and lower average commercial and home equity loan balances. These negative variances were partially offset by interest and fees on PPP loans and lower rates on interest-bearing liabilities.

The tax-equivalent net interest margin was 3.19% in the first quarter, 3.40% in the prior quarter, and 3.88% in the first quarter of 2020. The early redemption of our last subordinated debenture reduced first quarter 2021 tax-equivalent net interest margin by approximately 18 basis points, but will improve net interest margin going forward. The decrease from the same quarter a year ago was primarily attributed to the lower interest rate environment.

Non-interest income totaled $1.8 million in the first quarter of 2021 and the fourth quarter of 2020, compared to $3.1 million in the first quarter a year ago. The $1.3 million decrease from the first quarter of 2020 was mostly attributed to the absence of gains on sales of investment securities, lower service charges on deposit accounts, and lower fee income from one-way deposit sales to third-party deposit networks.

Non-interest expense decreased $358 thousand to $14.8 million in the first quarter of 2021 from $15.2 million in the prior quarter. The decrease was primarily due to a $590 thousand reversal of the allowance for credit losses on unfunded loan commitments versus a $960 thousand provision for credit losses on unfunded loan commitments in the prior quarter. This favorable variance was partially offset by $794 thousand in higher salaries and related benefits expenses, which included January resets of 401K matching, accelerated stock-based compensation for participants meeting retirement eligibility criteria. Professional services also increased due to some pandemic related delays in 2020 activities.

First quarter non-interest expense decreased $647 thousand from $15.5 million in the first quarter of 2020. The decrease was primarily attributed to the $590 thousand reversal of allowance for credit losses on unfunded loan commitments versus a $102 thousand provision a year ago. In addition, salaries and related benefits decreased $269 thousand (mostly attributed to $421 thousand additional deferred loan origination costs from funding the second round of SBA PPP loans) and charitable contributions $136 thousand. Increases included professional services as mentioned above and the discontinuation of Federal Deposit Insurance Corporation ("FDIC") insurance credits received in 2020.

The efficiency ratio was 62.13% in the first quarter of 2021, up from 59.70% in the prior quarter and 56.79% in the comparative period a year ago. Without the $1.3 million accelerated discount accretion from the early redemption of the subordinated debenture our efficiency ratio would have been 58.92%.

Share Repurchase Program

Bancorp repurchased 224,013 shares totaling $8.5 million in the first quarter of 2021 for a cumulative total of 393,584 shares amounting to $14.3 million under the $25.0 million share repurchase program that was approved by the Board of Directors on January 24, 2020, expiring February 28, 2022.

Earnings Call and Webcast Information

Bank of Marin Bancorp will present its first quarter earnings call via webcast on Monday, April 19, 2021 at 8:30 a.m. PT/11:30 a.m. ET. Investors will have the opportunity to listen to the webcast online through Bank of Marin’s website at https://www.bankofmarin.com under “Investor Relations.” To listen to the webcast live, 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 the San Francisco Bay Area, with assets of $3.1 billion as of March 31, 2021, Bank of Marin has 21 branches and 7 commercial banking offices located across 7 Bay Area counties. Bank of Marin provides commercial banking, personal banking, specialty lending 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, natural disasters (such as wildfires 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)

BANK OF MARIN BANCORP FINANCIAL HIGHLIGHTS
(dollars in thousands, except per share data; unaudited)		March 31, 2021				December 31, 2020				March 31, 2020
Quarter-to-Date
Net income		$	8,947			$	8,117			$	7,228
Diluted earnings per common share		$	0.66			$	0.60			$	0.53
Return on average assets			1.21	%			1.09	%			1.09	%
Return on average equity			10.22	%			8.98	%			8.54	%
Efficiency ratio			62.13	%			59.70	%			56.79	%
Tax-equivalent net interest margin 1			3.19	%			3.40	%			3.88	%
Cost of deposits			0.07	%			0.07	%			0.21	%
Net recoveries		$	(13	)		$	(13	)		$	(7	)
At Period End
Total assets		$	3,058,133			$	2,911,926			$	2,697,738
Loans:
Commercial and industrial 2		$	545,069			$	498,408			$	264,405
Real estate:
Commercial owner-occupied			308,266				304,963				306,371
Commercial investor-owned			955,021				961,208				930,479
Construction			71,066				73,046				63,425
Home equity			96,575				104,813				116,968
Other residential			124,383				123,395				135,929
Installment and other consumer loans			21,392				22,723				26,283
Total loans		$	2,121,772			$	2,088,556			$	1,843,860
Non-performing loans: 3
Real estate:
Commercial owner-occupied		$	7,147			$	7,147			$	—
Commercial investor-owned			1,603			$	1,610			$	942
Home equity			455				459				633
Installment and other consumer loans			—				17				57
Total non-accrual loans		$	9,205			$	9,233			$	1,632
Classified loans (graded substandard and doubtful)		$	26,423			$	25,829			$	12,056
Total accruing loans 30-89 days past due		$	1,047			$	1,827			$	1,315
Allowance for credit losses to total loans			0.94	%			1.10	%			1.02	%
Allowance for credit losses to total loans, excluding acquired and SBA PPP loans 4			1.14	%			1.27	%			1.08	%
Allowance for credit losses to non-performing loans		2.17x				2.48x				11.57x
Non-accrual loans to total loans			0.43	%			0.44	%			0.09	%
Total deposits		$	2,656,199			$	2,504,249			$	2,307,110
Loan-to-deposit ratio			79.9	%			83.4	%			79.9	%
Stockholders' equity		$	350,292			$	358,253			$	345,940
Book value per share		$	26.29			$	26.54			$	25.50
Tangible common equity to tangible assets 5			10.5	%			11.3	%			11.7	%
Total risk-based capital ratio - Bank			14.8	%			15.8	%			14.4	%
Total risk-based capital ratio - Bancorp			15.7	%			16.0	%			15.3	%
Full-time equivalent employees			282				289				296
1 Net interest income is annualized by dividing actual number of days in the period times 360 days.
2 Includes SBA PPP loans of $365.0 million and $291.6 million at March 31, 2021 and December 31, 2020, respectively. There were no SBA PPP loans as of March 31, 2020.
3 Excludes accruing troubled-debt restructured loans of $3.4 million, $5.1 million and $11.1 million at March 31, 2021, December 31, 2020 and March 31, 2020, respectively.
4 The allowance for credit losses to total loans, excluding non-impaired acquired loans and 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. Due to the adoption of CECL on December 31, 2020, all loans previously considered "acquired" are now included in the calculation of the allowance for credit losses. Acquired loans that were not impaired at March 31, 2020 totaled $100.4 million. 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 gain on available for sale securities, net of tax, less goodwill and intangible assets of $33.8 million, $34.0 million and $34.6 million at March 31, 2021, December 31, 2020, and March 31, 2020, respectively. Tangible assets exclude goodwill and intangible assets.

BANK OF MARIN BANCORP
CONSOLIDATED STATEMENTS OF CONDITION
At March 31, 2021, December 31, 2020 and March 31, 2020
(in thousands, except share data; unaudited)		March 31, 2021				December 31, 2020				March 31, 2020
Assets
Cash, cash equivalents and restricted cash		$	142,819			$	200,320			$	156,274
Investment securities:
Held-to-maturity, at amortized cost (net of zero allowance for credit losses at March 31, 2021 and December 31, 2020 1)			151,970				109,036				131,140
Available-for-sale (at fair value; amortized cost $508,337, $373,038, and $431,519 at March 31, 2021, December 31, 2021, March 31, 2020, respectively; net of zero allowance for credit losses at March 31, 2021 and December 31, 20201)			518,568				392,351				448,868
Total investment securities			670,538				501,387				580,008
Loans, at amortized cost			2,121,772				2,088,556				1,843,860
Allowance for credit losses 1			(19,958	)			(22,874	)			(18,884	)
Loans, net of allowance for credit losses			2,101,814				2,065,682				1,824,976
Bank premises and equipment, net			4,604				4,919				5,708
Goodwill			30,140				30,140				30,140
Core deposit intangible			3,627				3,831				4,471
Operating lease right-of-use assets			24,559				25,612				22,225
Interest receivable and other assets			80,032				80,035				73,936
Total assets		$	3,058,133			$	2,911,926			$	2,697,738
Liabilities and Stockholders' Equity
Liabilities
Deposits
Non-interest bearing		$	1,445,282			$	1,354,650			$	1,130,460
Interest bearing
Transaction accounts			176,390				183,552				137,802
Savings accounts			224,748				201,507				167,210
Money market accounts			714,824				667,107				776,271
Time accounts			94,955				97,433				95,367
Total deposits			2,656,199				2,504,249				2,307,110
Borrowings and other obligations			30				58				185
Subordinated debenture			—				2,777				2,725
Operating lease liabilities			25,993				27,062				23,726
Interest payable and other liabilities			25,619				19,527				18,052
Total liabilities			2,707,841				2,553,673				2,351,798
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 - 13,326,509, 13,500,453 and 13,565,969 at March 31, 2021, December 31, 2020, and March 31, 2020, respectively			118,386				125,905				127,684
Retained earnings			225,600				219,747				207,328
Accumulated other comprehensive income, net of taxes			6,306				12,601				10,928
Total stockholders' equity			350,292				358,253				345,940
Total liabilities and stockholders' equity		$	3,058,133			$	2,911,926			$	2,697,738
1 The March 31, 2021 and December 31, 2020 allowances were under current expected credit loss methodology. Whereas, the March 31, 2020 allowance was under incurred loss methodology. Refer to Note 1, Summary of Accounting Policies, in our 2020 Form 10-K for further information on the adoption of ASU 2016-13.

BANK OF MARIN BANCORP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
		Three months ended
(in thousands, except per share amounts; unaudited)		March 31, 2021				December 31, 2020				March 31, 2020
Interest income
Interest and fees on loans		$	20,661			$	20,794			$	20,887
Interest on investment securities			3,129				3,254				4,165
Interest on federal funds sold and due from banks			42				40				332
Total interest income			23,832				24,088				25,384
Interest expense
Interest on interest-bearing transaction accounts			39				40				66
Interest on savings accounts			19				18				16
Interest on money market accounts			286				278				971
Interest on time accounts			96				118				161
Interest on borrowings and other obligations			—				1				2
Interest on subordinated debenture			1,361				34				49
Total interest expense			1,801				489				1,265
Net interest income			22,031				23,599				24,119
(Reversal of) provision for credit losses on loans			(2,929	)			(856	)			2,200
Net interest income after (reversal of) provision for credit losses			24,960				24,455				21,919
Non-interest income
Wealth Management and Trust Services			488				476				504
Debit card interchange fees			366				387				360
Service charges on deposit accounts			281				286				451
Earnings on bank-owned life insurance, net			257				232				275
Dividends on Federal Home Loan Bank stock			149				151				208
Merchant interchange fees			57				56				73
Gains on sale of investment securities, net			—				—				800
Other income			228				239				449
Total non-interest income			1,826				1,827				3,120
Non-interest expense
Salaries and related benefits			9,208				8,414				9,477
Occupancy and equipment			1,751				1,843				1,663
Professional services			863				432				544
Data processing			819				747				786
Depreciation and amortization			459				558				526
Information technology			313				292				250
Amortization of core deposit intangible			204				214				213
Federal Deposit Insurance Corporation insurance			179				175				2
Directors' expense			175				180				174
Charitable contributions			31				113				167
(Reversal of) provision for credit losses on unfunded loan commitments			(590	)			960				102
Other expense			1,410				1,252				1,565
Total non-interest expense			14,822				15,180				15,469
Income before provision for income taxes			11,964				11,102				9,570
Provision for income taxes			3,017				2,985				2,342
Net income		$	8,947			$	8,117			$	7,228
Net income per common share:
Basic		$	0.67			$	0.60			$	0.53
Diluted		$	0.66			$	0.60			$	0.53
Weighted average shares:
Basic			13,363				13,523				13,525
Diluted			13,469				13,615				13,656
Comprehensive income (loss):
Net income		$	8,947			$	8,117			$	7,228
Other comprehensive (loss) income:
Change in net unrealized gains on available-for-sale securities			(9,082	)			286				9,812
Reclassification adjustment for (gains) on available-for-sale securities included in net income			—				—				(800	)
Amortization of net unrealized losses on securities transferred from available-for-sale to held-to-maturity			143				129				110
Other comprehensive (loss) income, before tax			(8,939	)			415				9,122
Deferred tax (benefit) expense			(2,644	)			124				2,697
Other comprehensive (loss) income, net of tax			(6,295	)			291				6,425
Total comprehensive income		$	2,652			$	8,408			$	13,653

BANK OF MARIN BANCORP
AVERAGE STATEMENTS OF CONDITION AND ANALYSIS OF NET INTEREST INCOME
		Three months ended									Three months ended									Three months ended
		March 31, 2021									December 31, 2020									March 31, 2020
					Interest									Interest									Interest
		Average			Income/			Yield/			Average			Income/			Yield/			Average			Income/			Yield/
(in thousands; unaudited)		Balance			Expense			Rate			Balance			Expense			Rate			Balance			Expense			Rate
Assets
Interest-earning deposits with banks 1		$	165,788		$	42		0.10	%		$	157,389		$	40		0.10	%		$	99,362		$	332		1.32	%
Investment securities 2, 3			540,970			3,282		2.43	%			498,730			3,395		2.72	%			556,897			4,266		3.06	%
Loans 1, 3, 4			2,099,847			20,836		3.97	%			2,096,908			20,975		3.91	%			1,833,180			21,066		4.55	%
Total interest-earning assets 1			2,806,605			24,160		3.44	%			2,753,027			24,410		3.47	%			2,489,439			25,664		4.08	%
Cash and non-interest-bearing due from banks			50,931									64,600									40,844
Bank premises and equipment, net			4,777									5,213									5,939
Interest receivable and other assets, net			133,693									135,520									118,909
Total assets		$	2,996,006								$	2,958,360								$	2,655,131
Liabilities and Stockholders' Equity
Interest-bearing transaction accounts		$	174,135		$	39		0.09	%		$	160,827		$	41		0.10	%		$	138,395		$	66		0.19	%
Savings accounts			214,049			19		0.04	%			198,616			18		0.04	%			163,439			16		0.04	%
Money market accounts			703,577			286		0.16	%			697,203			279		0.16	%			760,616			971		0.51	%
Time accounts including CDARS			96,349			96		0.40	%			97,512			118		0.48	%			96,157			161		0.67	%
Borrowings and other obligations 1			36			—		1.99	%			72			—		2.37	%			358			2		1.81	%
Subordinated debenture 1, 5			2,164			1,361		251.54	%			2,768			34		4.85	%			2,715			49		7.19	%
Total interest-bearing liabilities			1,190,310			1,801		0.61	%			1,156,998			490		0.17	%			1,161,680			1,265		0.44	%
Demand accounts			1,406,123									1,397,349									1,119,975
Interest payable and other liabilities			44,551									44,532									33,045
Stockholders' equity			355,022									359,481									340,431
Total liabilities & stockholders' equity		$	2,996,006								$	2,958,360								$	2,655,131
Tax-equivalent net interest income/margin 1					$	22,359		3.19	%					$	23,920		3.40	%					$	24,399		3.88	%
Reported net interest income/margin 1					$	22,031		3.14	%					$	23,599		3.35	%					$	24,119		3.83	%
Tax-equivalent net interest rate spread								2.83	%								3.30	%								3.64	%
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 2021 and 2020.
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 First quarter 2021 interest expense includes $1.3 million accelerated discount accretion from the early redemption of our last subordinated debenture on March 15, 2021.

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20210419005184/en/