Bank of Marin Bancorp Reports Earnings of $13.1 Million Year-to-Date
Bank of Marin Bancorp Reports Earnings of $13.1 Million Year-to-Date
RESULTS DRIVEN BY STRONG CORE BUSINESS FUNDAMENTALS
NOVATO, Calif.--(BUSINESS WIRE)-- Bank of Marin Bancorp, "Bancorp" (NAS: BMRC) , parent company of Bank of Marin, announced earnings for the nine-month period ended September 30, 2012 of $13.1 million, up 7.7%, from $12.2 million in the same period a year ago. Diluted earnings per share for the nine-month period ended September 30, 2012 totaled $2.41, up $0.15, or 6.6%, from $2.26 in the same period a year ago. Earnings for the quarter ended September 30, 2012 totaled $3.2 million, compared to $5.0 million in the second quarter of 2012, and $4.2 million in the third quarter of 2011. Diluted earnings per share totaled $0.59 in the third quarter, compared to $0.91 in the prior quarter, and $0.79 in the same quarter a year ago. Third quarter earnings reflect a $2.1 million provision for loan loss that is primarily related to one borrowing relationship.
"Bank of Marin's underlying business fundamentals are very strong, including the quality of the credit portfolio and continued deposit growth," said Russell A. Colombo, President and CEO of Bank of Marin. "We continue to focus on growing our loan totals, with funded deals increasing this quarter."
Bancorp also provided the following highlights on its operating and financial performance for the third quarter of 2012:
Loan fundings were $31.8 million in the third quarter, offset by payoffs of $36.1 million, which included the prepayment of five performing real estate loans totaling $20.1 million due to the sale of properties. Loans in Napa increased $13.5 million, or 22.2%, in the third quarter of 2012.
Deposits totaled $1.3 billion at September 30, 2012, increasing 2.3% from $1.2 billion at June 30, 2012 and increasing 7.0% from September 30, 2011. Non-interest bearing deposits totaled 32.5% of total deposits at September 30, 2012.
In a conscious effort to deploy excess liquidity and reduce the cost of funds, Bancorp redeemed a $5.0 million subordinated debenture at one-month LIBOR plus 2.48% in the third quarter of 2012.
The total risk-based capital ratio for Bancorp grew to 14.0%, up from 13.9% at June 30, 2012 and 13.3% at September 30, 2011. The risk-based capital ratio continues to be well above industry requirements for a well-capitalized institution.
On October 18, 2012, the Board of Directors declared a quarterly cash dividend of $0.18 per share. The cash dividend is payable to shareholders of record at the close of business on November 1, 2012 and will be payable on November 9, 2012.
Loans and Credit Quality
Gross loans totaled $1.0 billion at both September 30, 2012 and June 30, 2012, and totaled $992.6 million at September 30, 2011. The third quarter loan activity reflected the payoff of five performing real estate loans totaling $20.1 million, due to the sale of properties.
"We are encouraged by our strong loan pipeline, especially in San Francisco," said Chris Cook, Chief Financial Officer. "We are well-positioned with highly experienced lenders in all of our markets and are confident in our ability to build business relationships."
Non-performing loans totaled $19.2 million, or 1.90%, of Bancorp's loan portfolio at September 30, 2012, compared to $14.3 million, or 1.40%, at June 30, 2012 and $10.7 million, or 1.08%, a year ago. The increase in non-performing loans from the prior quarter primarily relates to a construction loan of $3.0 million that is expected to be paid off before year end and a commercial loan of $4.2 million that is expected to be paid down gradually as the borrower liquidates the collateral in an orderly fashion. Accruing loans past due 30 to 89 days totaled $2.1 million at September 30, 2012, down from $9.8 million at June 30, 2012 and $5.0 million a year ago.
Bancorp's loan loss provision totaled $2.2 million and $4.6 million for the nine-month periods ended September 30, 2012 and 2011, respectively. The provision for loan losses totaled $2.1 million in the third quarter of 2012, compared to $100 thousand in the prior quarter and $500 thousand from the same quarter a year ago. The $2.1 million provision for loan losses in the third quarter of 2012 is primarily related to one commercial real estate borrowing relationship, based on an appraisal received in the third quarter. Foreclosure is in process for the property securing the loan.
The allowance for loan losses totaled 1.30% of loans at September 30, 2012, compared to 1.31% at June 30, 2012 and 1.33% at September 30, 2011. Net charge-offs in the first nine-months of 2012 and 2011 both totaled $3.7 million. Net charge-offs in the third quarter of 2012 totaled $2.4 million, primarily reflecting the partial charge-off of one commercial real estate borrowing relationship discussed above, compared to $187 thousand in the prior quarter and $1.2 million in the third quarter of 2011.
Deposits
Deposits totaled $1.3 billion at September 30, 2012, compared to $1.2 billion at June 30, 2012 and September 30, 2011. Non-interest bearing deposits comprised 32.5% of total deposits at September 30, 2012 and June 30, 2012, and comprised 31.8% at September 30, 2011.
Earnings
Net interest income for the first nine months of 2012 totaled $47.4 million compared to $48.1 million in the same period a year ago. The tax-equivalent net interest margin was 4.78% in the first nine months of 2012 compared to 5.25% in the same period a year ago. The decreases in the first nine months compared to the same period a year ago primarily relate to a lower level of accretion on purchased non-credit impaired loans and a lower level of gains on pay-offs of purchased credit-impaired ("PCI") loans. In addition, rate concessions and downward repricing on existing loans, as well as new loans boarded at lower rates continue to negatively impact the loan yield. The decreases are partially offset by a reduction in the cost of interest-bearing liabilities, as the prior year reflects a $924 thousand pre-payment penalty on a Federal Home Loan Bank ("FHLB") advance in September 2011. Furthermore, the current year reflects the maturity of another FHLB advance in January 2012 and the downward repricing on deposits.
Net interest income totaled $14.9 million in the third quarter of 2012 compared to $15.2 million in the same quarter last year, and the tax-equivalent net interest margin was 4.44% compared to 4.76% for those respective periods. The decreases in the third quarter of 2012 compared to the same quarter a year ago primarily reflect the same reasons mentioned above.
Net interest income totaled $14.9 million in the third quarter of 2012 compared to $16.3 million in the prior quarter, and the tax-equivalent net interest margin was 4.44% compared to 4.94% for those respective periods. The decreases in the third quarter of 2012 compared to the prior quarter primarily relate to rate concessions, the downward repricing on both existing and new loans and a lower level of accretion on purchased loans.
Accretion and gains on pay-offs of purchased loans recorded to interest income were as follows:
Three months ended | Nine months ended | |||||||||
(dollars in thousands; unaudited) | 9/30/2012 | 6/30/2012 | 9/30/2011 | 9/30/2012 | 9/30/2011 | |||||
Accretion on PCI loans | $231 | $478 | $412 | $1,219 | $779 | |||||
Accretion on non-PCI loans | $232 | $311 | $405 | $746 | $2,616 | |||||
Gains on pay-offs of PCI loans | $101 | $69 | $448 | $692 | $1,670 | |||||
Accretion on PCI loans fluctuates based on changes in cash flows expected to be collected. For acquired loans not considered credit-impaired, the level of accretion varies due to maturities and early pay-offs of these loans. Gains on pay-offs of PCI loans are recorded as interest income when the pay-off amounts exceed the recorded investment.
Non-interest income totaled $5.3 million for the first nine months of 2012, an increase of $551 thousand, or 11.6% from the same period a year ago. Non-interest income in the third quarter of 2012 totaled $1.8 million and remained relatively consistent with the prior quarter and increased $236 thousand, or 15.1%, from the same quarter a year ago. The increase in the first nine months and third quarter of 2012 compared to the same periods a year ago primarily relate to higher merchant interchange income, debit card interchange fees and service charges on deposit accounts.
Non-interest expense totaled $29.1 million and $28.5 million in the first nine months of 2012 and 2011, respectively. The increase primarily reflects higher personnel costs associated with merit increases, and to a lesser extent, new hires in the lending and deposit services areas. Non-interest expense totaled $9.6 million in the third quarter of 2012, compared to $9.7 million in the prior quarter and $9.4 million in the same quarter a year ago.
About Bank of Marin Bancorp
Bank of Marin, as the sole subsidiary of Bank of Marin Bancorp (NAS: BMRC) , is the premier community and business bank in Marin County with 17 offices in Marin, San Francisco, Napa and Sonoma counties. Bank of Marin offers business and personal banking, private banking and wealth management services, with a strong focus on supporting local businesses in the community. Incorporated in 1989, Bank of Marin has received the highest five star rating from Bauer Financial for more than thirteen years (www.bauerfinancial.com) and has been recognized for several years as one of the "Best Places to Work in the North Bay" by the North Bay Business Journal and one of the "Top Corporate Philanthropists" by the San Francisco Business Times. With assets exceeding $1.4 billion, Bank of Marin Bancorp is included in the Russell 2000 Small-Cap Index and has been recognized as a Top 200 Community Bank for the past five years by US Banker Magazine.
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, the economic downturn in the United States and abroad, changes in interest rates, deposit flows, real estate values, expected future cash flows on acquired loans, and competition; changes in accounting principles, policies or guidelines; changes in legislation or regulation; and other economic, competitive, governmental, regulatory and technological factors 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 | |||||||||||||||
(dollars in thousands, except per share data; unaudited) | |||||||||||||||
QUARTER-TO-DATE | September 30, 2012 | June 30, 2012 | September 30, 2011 | ||||||||||||
NET INCOME | $ | 3,224 | $ | 4,951 | $ | 4,233 | |||||||||
DILUTED EARNINGS PER COMMON SHARE | $ | 0.59 | $ | 0.91 | $ | 0.79 | |||||||||
RETURN ON AVERAGE ASSETS (ROA) | 0.89 | % | 1.39 | % | 1.23 | % | |||||||||
RETURN ON AVERAGE EQUITY (ROE) | 8.76 | % | 14.01 | % | 12.78 | % | |||||||||
EFFICIENCY RATIO | 57.38 | % | 53.56 | % | 56.13 | % | |||||||||
TAX-EQUIVALENT NET INTEREST MARGIN1 | 4.44 | % | 4.94 | % | 4.76 | % | |||||||||
NET CHARGE-OFFS | $ | 2,396 | $ | 187 | $ | 1,196 | |||||||||
NET CHARGE-OFFS TO AVERAGE LOANS | 0.24 | % | 0.02 | % | 0.12 | % | |||||||||
YEAR-TO-DATE | |||||||||||||||
NET INCOME | $ | 13,115 | $ | 9,891 | $ | 12,181 | |||||||||
DILUTED EARNINGS PER COMMON SHARE | $ | 2.41 | $ | 1.82 | $ | 2.26 | |||||||||
RETURN ON AVERAGE ASSETS (ROA) | 1.23 | % | 1.40 | % | 1.24 | % | |||||||||
RETURN ON AVERAGE EQUITY (ROE) | 12.32 | % | 14.20 | % | 12.74 | % | |||||||||
EFFICIENCY RATIO | 55.25 | % | 54.26 | % | 54.02 | % | |||||||||
TAX-EQUIVALENT NET INTEREST MARGIN1 | 4.78 | % | 4.96 | % | 5.25 | % | |||||||||
NET CHARGE-OFFS | $ | 3,700 | $ | 1,304 | $ | 3,718 | |||||||||
NET CHARGE-OFFS TO AVERAGE LOANS | 0.36 | % | 0.13 | % | 0.38 | % | |||||||||
AT PERIOD END | |||||||||||||||
TOTAL ASSETS | $ | 1,435,114 | $ | 1,407,000 | $ | 1,362,717 | |||||||||
LOANS: | |||||||||||||||
COMMERCIAL AND INDUSTRIAL | $ | 171,662 | $ | 176,002 | $ | 172,389 | |||||||||
REAL ESTATE | |||||||||||||||
COMMERCIAL OWNER-OCCUPIED | $ | 191,397 | $ | 172,757 | $ | 160,558 | |||||||||
COMMERCIAL INVESTOR-OWNED | $ | 438,685 | $ | 453,456 | $ | 420,427 | |||||||||
CONSTRUCTION | $ | 42,857 | $ | 47,948 | $ | 54,806 | |||||||||
HOME EQUITY | $ | 94,939 | $ | 98,565 | $ | 97,323 | |||||||||
OTHER RESIDENTIAL | $ | 53,590 | $ | 55,316 | $ | 63,850 | |||||||||
INSTALLMENT AND OTHER CONSUMER LOANS | $ | 20,580 | $ | 21,150 | $ | 23,290 | |||||||||
TOTAL LOANS | $ | 1,013,710 | $ | 1,025,194 | $ | 992,643 | |||||||||
NON-PERFORMING LOANS2: | |||||||||||||||
COMMERCIAL AND INDUSTRIAL | $ | 6,048 | $ | 1,751 | $ | 3,147 | |||||||||
REAL ESTATE | |||||||||||||||
COMMERCIAL OWNER-OCCUPIED | $ | 1,403 | $ | 1,403 | $ | 2,169 | |||||||||
COMMERCIAL INVESTOR-OWNED | $ | 3,725 | $ | 5,961 | $ | — | |||||||||
CONSTRUCTION | $ | 5,787 | $ | 2,821 | $ | 3,028 | |||||||||
HOME EQUITY | $ | 881 | $ | 981 | $ | 583 | |||||||||
OTHER RESIDENTIAL | $ | 736 | $ | 740 | $ | 1,400 | |||||||||
INSTALLMENT AND OTHER CONSUMER LOANS | $ | 652 | $ | 690 | $ | 413 | |||||||||
TOTAL NON-PERFORMING LOANS | $ | 19,232 | $ | 14,347 | $ | 10,740 | |||||||||
TOTAL ACCRUING LOANS 30-89 DAYS PAST DUE | $ | 2,055 | $ | 9,837 | $ | 4,967 | |||||||||
LOAN LOSS RESERVE TO LOANS | 1.30 | % | 1.31 | % | 1.33 | % | |||||||||
LOAN LOSS RESERVE TO NON-PERFORMING LOANS | 0.68 | x | 0.94 | x | 1.23 | x | |||||||||
NON-PERFORMING LOANS TO TOTAL LOANS | 1.90 | % | 1.40 | % | 1.08 | % | |||||||||
TEXAS RATIO3 | 12.01 | % | 9.14 | % | 7.52 | % | |||||||||
TOTAL DEPOSITS | $ | 1,258,873 | $ | 1,230,717 | $ | 1,176,525 | |||||||||
LOAN TO DEPOSIT RATIO | 80.5 | % | 83.3 | % | 84.4 | % | |||||||||
STOCKHOLDERS' EQUITY | $ | 147,336 | $ | 144,326 | $ | 133,001 | |||||||||
BOOK VALUE PER SHARE | $ | 27.45 | $ | 26.92 | $ | 24.95 | |||||||||
TANGIBLE COMMON EQUITY TO TANGIBLE ASSETS4 | 10.27 | % | 10.26 | % | 9.71 | % | |||||||||
TOTAL RISK BASED CAPITAL RATIO-BANK5 | 13.8 | % | 13.6 | % | 13.0 | % | |||||||||
TOTAL RISK BASED CAPITAL RATIO-BANCORP5 | 14.0 | % | 13.9 | % | 13.3 | % | |||||||||
FULL TIME EQUIVALENT EMPLOYEES | 234 | 232 | 227 | ||||||||||||
1 Net interest income is annualized by dividing actual number of days in the period times 360 days. | |||||||||||||||
2 Excludes accruing troubled-debt restructured loans of $15.7 million, $25.2 million and $5.4 million at September 30, 2012, June 30, 2012 and September 30, 2011, respectively. Excludes purchased credit-impaired (PCI) loans with carrying values of $3.1 million, $3.1 million and $3.9 million that were accreting interest at September 30, 2012, June 30, 2012 and September 30, 2011, 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 $4.7 million at September 30, 2012 and June 30, 2012 and $6.5 million at September 30, 2011. | |||||||||||||||
3 (Non-performing assets + 90 day delinquent loans)/(tangible common equity + allowance for loan losses). | |||||||||||||||
4 Tangible common equity includes common stock, retained earnings and unrealized gain on available for sale securities, net of tax, less intangible assets. Tangible assets exclude core deposit intangibles totaling zero at September 30, 2012 and June 30, 2012 and $695 thousand at September 30, 2011. | |||||||||||||||
5 Current period estimated. | |||||||||||||||
BANK OF MARIN BANCORP CONSOLIDATED STATEMENTS OF CONDITION at September 30, 2012, June 30, 2012 and September 30, 2011 | |||||||||
(in thousands, except share data; unaudited) | September 30, | June 30, | September 30, | ||||||
Assets | |||||||||
Cash and due from banks | $ | 141,438 | $ | 98,321 | $ | 130,675 | |||
Short-term investments | — | — | 2,111 | ||||||
Cash and cash equivalents | 141,438 | 98,321 | 132,786 | ||||||
Investment securities | |||||||||
Held to maturity, at amortized cost | 94,571 | 83,134 | 39,077 | ||||||
Available for sale (at fair value; amortized cost $143,263, $159,024 and $156,531 at September 30, 2012, June 30, 2012 and September 30, 2011, respectively) | 146,789 | ||||||||
