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Bank Of Marin Bancorp Reports Record Quarterly Earnings Of $5.6 Million

The following excerpt is from the company's SEC filing.

Results Reflect Strong 4th Quarter Loan Volume and Gains

NOVATO, CA, April 25, 2016 - Bank of Marin Bancorp, "Bancorp" (NASDAQ: BMRC), parent company of Bank of Marin, announced record quarterly earnings of

$5.6 million

in the

first quarter of 2016

, compared to

$4.9 million

fourth quarter of 2015

$4.5 million

first quarter of 2015

. Diluted earnings per share totaled

quarter, an increase from

in the prior quarter and

in the same quarter a year ago.

"We built up considerable earnings momentum coming out of 2015 which is reflected in our first quarter results. Gains on acquired loan payoffs and securities sales also had a positive impact on earnings in the first quarter,” said Russell A. Colombo, President and Chief Executive Officer. “Our deposit and loan pipelines are healthy and we made some important commercial banking hires in the quarter, primarily in the East Bay and Santa Rosa markets.”

Bancorp also provided the following highlights on its operating and financial performance for the

Loans totaled $1,441.8 million at March 31, 2016, compared to $1,451.2 million at December 31, 2015 and $1,346.5 million at March 31, 2015. New loan volume of approximately $29 million in the first quarter of 2016 was offset by payoffs of approximately $37 million.

Deposits continue to reflect the strength of our customer relationships. Non-interest bearing deposits make up 45.1% of total deposits and the cost of total deposits is 0.08%.

Credit quality remains a cornerstone of our credit culture. Non-accrual loans represent

of total loans as of

March 31, 2016

with the Texas Ratio at

%. There was no provision for loan losses recorded in the quarter.

At 10.38%, return on equity is up from 9.12% in the fourth quarter of 2015 and 8.92% in the first quarter of 2015. Return on assets is also up to 1.15% from 0.98% in the prior quarter and 1.00% a year ago.

All capital ratios are well above regulatory requirements for a well-capitalized institution. The total risk-based capital ratio for Bancorp was

December 31, 2015

and tangible common equity to tangible assets increased to

To reflect the strength of the Bank and its future prospects, the Board of Directors declared a quarterly cash dividend of $0.25 per share on April 22, 2016. The cash dividend is payable to shareholders of record at the close of business on May 6, 2016 and will be payable on May 13, 2016.

Loans and Credit Quality

Geographically, loan originations were distributed across our markets. By loan type, investor commercial real estate and commercial and industrial, including related owner-occupied commercial real estate, accounted for the majority of the new loan volume for the quarter.

Non-accrual loans totaled

$2.7 million

% of Bancorp's loan portfolio at

$2.2 million

%, at

$9.5 million

% a year ago. The decrease in non-accrual loans from a year ago primarily relates to a previously non-performing loan that was returned to accrual status, the payoff of a commercial real estate loan, and a land development loan that was sold. Accruing loans past due 30 to 89 days totaled

$584 thousand

$2.1 million

$949 thousand

as the existing level of loan loss reserve did not warrant a provision, consistent with the same quarter a year ago. A provision for loan losses of $500 thousand was recorded in the prior quarter primarily due to the significant loan growth in the fourth quarter. Net recoveries for the

quarter totaled

$29 thousand

$42 thousand

$57 thousand

in the same quarter a year ago. The ratio of loan loss reserve to loans totaled

March 31, 2015

Investments and Borrowings

The investment portfolio totaled

$399.5 million

, a decline of $87.9 million from

. In addition to paydowns and maturities in the securities portfolio, $54.9 million in securities were sold at gains totaling $110 thousand, and overnight borrowings were reduced by $47.7 million.

Deposits totaled

$1,681.3 million

$1,728.2 million

$1,585.1 million

. The $46.9 million decline was due to normal seasonal factors in several deposit customers' balances related to their business models. Non-interest bearing deposits totaled

$758.9 million

, or 45.1% of total deposits, compared to 44.6% at

and 45.2% at

Earnings

“We are pleased to have increased our net interest margin while staying true to our credit culture," said Tani Girton, Chief Financial Officer. "Our expense discipline is evident in the 57.74% efficiency ratio, and strong capital and liquidity positions will support continued growth in 2016.”

Net interest income totaled

$18.6 million

$17.2 million

$16.6 million

in the same quarter a year ago. Interest income increased due to higher average loan balances in the first quarter of 2016 related to substantial loan growth late in the fourth quarter of 2015. Gains on payoffs of Purchased Credit Impaired ("PCI") loans in the first quarter of 2016 also contributed to the increase.

The tax-equivalent net interest margin was

in the same quarter a year ago. The increase from last quarter includes 10 basis points related to a shift in the mix of interest-earning assets from lower yielding interest-bearing cash and investment securities to higher yielding loans. Another 21 basis points came from PCI loan payoffs and market value adjustments on interest rate swaps.

Loans acquired through the acquisition of other banks are classified as PCI or non-PCI loans and are recorded at fair value at acquisition date. For acquired loans not considered credit impaired, the level of accretion varies due to maturities and early payoffs. Accretion on PCI loans fluctuates based on changes in cash flows expected to be collected. Gains on payoffs of PCI loans are recorded as interest income when the payoff amounts exceed the recorded investment. PCI loans totaled $2.8 million, $3.7 million, and $5.1 million at

, respectively.

Accretion and gains on payoffs of purchased loans recorded to interest income were as follows:

Three months ended

(dollars in thousands; unaudited)

Dollar

Amount

Basis point impact to net interest margin

Accretion on non-PCI loans

16 bps

Non-interest income in the

in the same quarter a year ago. The increase compared to the prior quarter relates to a $110 thousand net gain on the sale of four government agency debentures.

Non-interest expense totaled

$12.0 million

$11.1 million

$11.8 million

in the same quarter a year ago. Non-interest expense was higher than the prior quarter and the first quarter of 2015 due to reductions in the off-balance sheet reserve in the first and fourth quarters of 2015. First quarter 2016 non-interest expense was also higher than the prior quarter due to 401(k) employer matching contributions, a decline in deferred costs related to the lower level of loan originations and a reversal of accrued incentive bonus in December 2015.

Earnings Call and Webcast Information

Bank of Marin Bancorp will webcast its first quarter earnings call on Monday, April 25, 2016 at 8:30 a.m. PT/ 11:30 a.m. ET. Investors will have the opportunity to listen to the conference call online through Bank of Marin’s website at http://www.bankofmarin.com under “Investor Relations.” To listen to the live call, please go to the website at least 15 minutes early to register, download and install any necessary audio software. For those who cannot listen to the live broadcast, a replay will be available at the same website location shortly after the call.

About Bank of Marin Bancorp

Bank of Marin is a leading business and community bank in the San Francisco Bay Area, with assets of $2 billion. Founded in 1989 and headquartered in Novato, Bank of Marin is the wholly-owned subsidiary of Bank of Marin Bancorp (NASDAQ: BMRC). With 20 retail offices in San Francisco, Marin, Napa, Sonoma and Alameda counties, Bank of Marin provides business and personal banking, commercial lending, and wealth management and trust services. Specializing in providing legendary service to its customers and investing in its local communities, Bank of Marin was named 2016 Community Bank of the Year by Western Independent Bankers and has consistently been ranked one of the “Top Corporate Philanthropists" by the San Francisco Business Times and one of the “Best Places to Work” by the North Bay Business Journal. Bank of Marin Bancorp is included in the Russell 2000 Small-Cap Index and NASDAQ ABA Community Bank Index and has been recognized as a Top 200 Community Bank by US Banker Magazine for the past five years. For more information, go to

Forward-Looking Statements

This release may contain certain forward-looking statements that are based on management's current expectations regarding economic, legislative, and regulatory issues that may impact Bancorp's earnings in future periods. Forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts. They often include the words “believe,” “expect,” “intend,” “estimate” or words of similar meaning, or future or conditional verbs such as “will,” “would,” “should,” “could” or “may.” Factors that could cause future results to vary materially from current management expectations include, but are not limited to, general economic conditions, economic uncertainty in the United States and abroad, changes in interest rates, deposit flows, real estate values, costs or effects of future acquisitions, competition, changes in accounting principles, policies or guidelines, legislation or regulation, and other economic, competitive, governmental, regulatory and technological factors (including external fraud and cyber-security threats) affecting Bancorp's operations, pricing, products and services. These and other important factors are detailed in various securities law filings made periodically by Bancorp, copies of which are available from Bancorp without charge. Bancorp undertakes no obligation to release publicly the result of any revisions to these forward-looking statements that may be made to reflect events or circumstances after the date of this press release or to reflect the occurrence of unanticipated events.

BANK OF MARIN BANCORP

FINANCIAL HIGHLIGHTS

(dollars in thousands, except per share data; unaudited)

QUARTER-TO-DATE

NET INCOME

DILUTED EARNINGS PER COMMON SHARE

RETURN ON AVERAGE ASSETS (ROA)

RETURN ON AVERAGE EQUITY (ROE)

EFFICIENCY RATIO

TAX-EQUIVALENT NET INTEREST MARGIN

NET CHARGE-OFFS/(RECOVERIES)

NET CHARGE-OFFS/(RECOVERIES) TO AVERAGE LOANS

AT PERIOD END

TOTAL ASSETS

1,943,602

2,031,134

1,826,149

LOANS:

COMMERCIAL AND INDUSTRIAL

213,068

219,452

196,442

REAL ESTATE

COMMERCIAL OWNER-OCCUPIED

238,332

242,309

235,337

COMMERCIAL INVESTOR-OWNED

707,340

715,879

653,848

CONSTRUCTION

74,528

65,495

57,050

HOME EQUITY

110,893

112,300

113,277

OTHER RESIDENTIAL

73,896

73,154

73,375

INSTALLMENT AND OTHER CONSUMER LOANS

23,782

22,639

17,155

TOTAL LOANS

1,441,839

1,451,228

1,346,484

NON-PERFORMING LOANS

TOTAL NON-ACCRUAL LOANS

CLASSIFIED LOANS (GRADED SUBSTANDARD & DOUBTFUL)

22,309

22,331

34,129

TOTAL ACCRUING LOANS 30-89 DAYS PAST DUE

LOAN LOSS RESERVE TO LOANS

LOAN LOSS RESERVE TO NON-ACCRUAL LOANS

NON-ACCRUAL LOANS TO TOTAL LOANS

TEXAS RATIO

TOTAL DEPOSITS

1,681,346

1,728,226

1,585,120

LOAN-TO-DEPOSIT RATIO

STOCKHOLDERS' EQUITY

221,646

214,473

204,506

BOOK VALUE PER SHARE

TANGIBLE COMMON EQUITY TO TANGIBLE ASSETS

TOTAL RISK-BASED CAPITAL RATIO-BANK

TOTAL RISK-BASED CAPITAL RATIO-BANCORP

FULL-TIME EQUIVALENT EMPLOYEES

Net interest income is annualized by dividing actual number of days in the period times 360 days.

Excludes accruing troubled-debt restructured loans of $19.7 million, $19.0 million and $15.6 million at March 31, 2016, December 31, 2015 and March 31, 2015, respectively. Excludes purchased credit-impaired (PCI) loans with carrying values of $2.8 million, $3.7 million and $3.7 million that were accreting interest at March 31, 2016, December 31, 2015 and March 31, 2015, respectively. These amounts are excluded as PCI loan accretable yield interest recognition is independent from the underlying contractual loan delinquency status. Total PCI loans were $2.8 million, $3.7 million and $5.1 million at March 31, 2016, December 31, 2015 and March 31, 2015, respectively.

(Non-performing assets + 90 day delinquent loans)/(tangible common equity + allowance for loan losses).

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 $9.4 million, $9.5 million and $10.0 million at March 31, 2016, December 31, 2015 and March 31, 2015, respectively. Tangible assets exclude goodwill and intangible assets.

CONSOLIDATED STATEMENTS OF CONDITION

(in thousands, except share data; unaudited)

Assets

Cash and due from banks

39,770

26,343

103,164

Investment securities

Held-to-maturity, at amortized cost

63,246

69,637

107,476

Available-for-sale, at fair value

336,234

417,787

204,680

Total investment securities

399,480

487,424

312,156

Loans, net of allowance for loan losses of $15,028, $14,999 and $15,156 at March 31, 2016, December 31, 2015 and March 31, 2015, respectively

1,426,811

1,436,229

1,331,328

Bank premises and equipment, net

Goodwill

Core deposit intangible

Interest receivable and other assets

59,216

62,284

59,636

Total assets

Liabilities and Stockholders' Equity

758,869

770,087

716,719

Interest bearing

Transaction accounts

102,829

114,277

95,439

Savings accounts

145,874

141,316

133,792

Money market accounts

514,274

541,089

478,145

Time accounts

159,500

161,457

161,025

Total deposits

Federal Home Loan Bank ("FHLB") and other borrowings

19,350

67,000

15,000

Subordinated debentures

Interest payable and other liabilities

15,815

16,040

16,285

Total liabilities

1,721,956

1,816,661

1,621,643

Preferred stock, no par value,

Authorized - 5,000,000 shares, none issued

Common stock, no par value,

Authorized - 15,000,000 shares;

Issued and outstanding - 6,116,473, 6,068,543 and

5,967,614 at March 31, 2016, December 31, 2015 and

86,133

84,727

83,011

Retained earnings

133,681

129,553

119,652

Accumulated other comprehensive income, net

Total stockholders' equity

Total liabilities and stockholders' equity

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in thousands, except per share amounts; unaudited)

Interest and fees on loans

17,141

15,590

15,379

Interest on investment securities

Securities of U.S. government agencies

Obligations of state and political subdivisions

Corporate debt securities and other

Interest on Federal funds sold and short-term investments

Total interest income

19,195

17,795

17,180

Interest expense

Interest on interest-bearing transaction accounts

Interest on savings accounts

Interest on money market accounts

Interest on time accounts

Interest on FHLB and other borrowings

Interest on subordinated debentures

Total interest expense

18,638

17,243

16,598

Provision for loan losses

Net interest income after provision for loan losses

16,743

Service charges on deposit accounts

Wealth Management and Trust Services

Debit card interchange fees

Merchant interchange fees

Earnings on bank-owned life insurance

Dividends on FHLB stock

Gains on investment securities, net

Other income

Total non-interest income

Salaries and related benefits

Occupancy and equipment

Depreciation and amortization

Federal Deposit Insurance Corporation insurance

Data processing

Professional services

Directors' expense

Information technology

Reversal of losses on off-balance sheet commitments

Other expense

Total non-interest expense

12,010

11,135

11,848

Income before provision for income taxes

Provision for income taxes

Net income

Net income per common share:

Weighted average shares used to compute net income per common share:

Dividends declared per common share

Comprehensive income:

Other comprehensive income

Change in net unrealized gain (loss) on available-for-

sale securities

(2,456

Reclassification adjustment for (gains) losses on available-

for-sale securities included in net income

Net change in unrealized gain (loss) on available-for-

sale securities, before tax

(2,455

Deferred tax expense (benefit)

(1,048

Other comprehensive income (loss), net of tax

(1,407

AVERAGE STATEMENTS OF CONDITION AND ANALYSIS OF NET INTEREST INCOME

Average

Income/

Yield/

(Dollars in thousands; unaudited)

Balance

Expense

Interest-bearing due from banks

41,604

38,295

Investment securities

428,055

460,811

311,978

1, 3, 4

1,442,601

17,456

1,377,932

15,890

1,351,791

15,675

Total interest-earning assets

1,879,652

19,731

1,880,347

18,309

1,702,064

17,623

Cash and non-interest-bearing due from banks

29,823

45,063

41,073

Interest receivable and other assets, net

58,195

58,342

58,132

1,976,813

1,993,217

1,811,108

Interest-bearing transaction accounts

100,990

101,299

92,376

142,499

139,281

133,877

528,984

538,330

486,830

Time accounts including CDARS

160,943

155,899

154,118

Overnight borrowings

20,567

FHLB fixed-rate advances

Subordinated debentures

Total interest-bearing liabilities

974,401

957,711

887,805

Demand accounts

767,579

805,118

705,024

15,980

16,014

15,594

Stockholders' equity

218,853

214,374

202,685

Total liabilities & stockholders' equity

Tax-equivalent net interest income/margin

19,174

17,757

17,041

Reported net interest income/margin

Tax-equivalent net interest rate spread

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.

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.

Yields and interest income on tax-exempt securities and loans are presented on a taxable-equivalent basis using the Federal statutory rate of 35 percent.

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.

The above information was disclosed in a filing to the SEC. To see the filing, click here.

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