Core Insights - Bank of Marin Bancorp reported a sequential and year-to-date growth in pretax pre-provision net income, despite a GAAP net loss due to a one-time securities repositioning [10][21] - The repositioning is expected to increase net interest margin by 13 basis points, with the majority of benefits beginning in Q3 2025 [10][16] - The bank's total risk-based capital ratio was 16.25% and TCE ratio at 9.95%, indicating strong capital levels [8][19] Financial Performance - Pretax pre-provision net income increased by 15% sequentially in Q2 2025 and 85% compared to the prior year [4][15] - Net loss for Q2 2025 was $6.5 million, or $0.53 per share, primarily due to a one-time securities repositioning loss [5][21] - Net interest income was $25.9 million for Q2 2025, up sequentially due to higher average earning assets and a seven basis point improvement in net interest margin [5][22] Loan and Deposit Trends - Total loan originations were $68.8 million in commitments and $50.2 million in fundings, consistent with the prior quarter [6][17] - Total deposits declined due to client cash usage and seasonal tax outflows, but over 70% of outflows were recouped in July [7][18] - The average yield on loans increased by seven basis points from the prior quarter, with newly originated loans yielding more than runoff loans [6][22] Expense Management - Non-interest expense rose slightly due to technology and branch upgrades, but is expected to remain stable for the remainder of the year [7][23] - The bank executed $2.2 million in share repurchases under renewed authorization, while maintaining a cash dividend of $0.25 per share [9][25] Market Position and Outlook - The company is focused on expanding its market share and enhancing client relationships, particularly in Sacramento and San Francisco [12][56] - Management projects mid-single-digit loan growth for the year, with expectations for an acceleration in fundings in the second half of 2025 [12][46] - The bank's pipeline remains strong, with loan production expected to continue positively into the second half of the year [27][46]

Financial Data and Key Metrics Changes - The pretax, pre-provision net income increased by 15% compared to the prior quarter and 85% compared to the prior year to date [4] - The net interest income rose to $25.9 million, primarily due to a higher balance of average earning assets and a seven basis point increase in the net interest margin [10] - The total risk-based capital ratio stood at 16.25% and the tangible common equity (TCE) ratio was 9.95% [9] Business Line Data and Key Metrics Changes - Total loan originations were $68.8 million, with $50.2 million in fundings, consistent with the prior quarter [5] - The average yield on loans increased by seven basis points from the prior quarter, while the average yield on interest-earning assets increased by six basis points [10] - Noninterest income was negative due to a loss incurred on the securities portfolio repositioning, but most other areas remained consistent with the prior quarter [11] Market Data and Key Metrics Changes - Total deposits declined in the second quarter due to normal client activity, but year-to-date deposits have grown, with over 70% of outflows recouped in July [6][7] - The rate environment remains competitive, but limited attrition of deposits was noted due to service levels and community commitment [8] Company Strategy and Development Direction - The company is focused on maintaining disciplined underwriting and pricing criteria while expanding its banking teams to drive future growth [5] - The management plans to continue enhancing efficiency through technology and adding banking talent to support profitable growth [15] - The company expects to generate improved financial performance over the remainder of the year, targeting loan growth and further expansion of the net interest margin [15] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about loan demand remaining healthy despite broader economic uncertainty [14] - The loan pipeline is strong, and management anticipates loan growth in the second half of the year [15] - The company is cautious about the impact of potential securities repositioning on capital and shareholder dilution [21] Other Important Information - The company declared a cash dividend of $0.25 per share, marking the 81st consecutive quarterly dividend [12] - The securities repositioning is expected to add 13 basis points to the net interest margin and $0.20 to annual earnings per share, with benefits starting in the third quarter [5] Q&A Session Summary Question: Details on the two CRE loans that migrated this quarter - The loans are generally retail or mixed-use, located outside San Francisco, experiencing tenancy or cash flow issues, but management is optimistic about their resolution [19][20] Question: Appetite for restructuring the HTM securities portfolio - Management is cautiously considering this, balancing potential capital impacts and shareholder dilution [21] Question: Update on share buyback plans - The company has renewed its buyback allocation and is looking to execute below tangible book value, but timing constraints have limited recent actions [25] Question: Performance of the AFS book in the second quarter - The final yield on purchases was slightly above 5%, aligning with expectations [32] Question: Recent deposit rate cuts - Targeted cuts were made, with a recent reduction impacting approximately $185 million in deposits, contributing to a slight benefit in net interest margin [38] Question: Outlook for loan growth in the second half of the year - Management is targeting net growth, supported by a strong pipeline and new market leaders joining the bank [44][51]

Financial Data and Key Metrics Changes - The pretax, pre-provision net income increased by 15% compared to the prior quarter and 85% compared to the prior year to date [4] - Net interest income rose to $25,900,000, primarily due to a higher balance of average earning assets and a seven basis point increase in net interest margin [10] - The total risk-based capital ratio stood at 16.25% and the tangible common equity (TCE) ratio was 9.95% [8] Business Line Data and Key Metrics Changes - Total loan originations were $68,800,000, with $50,200,000 in fundings, consistent with the prior quarter [5] - The average yield on loans increased by seven basis points from the prior quarter, reflecting higher rates on new loan production compared to paid-off loans [10] - Noninterest income was negative due to losses from securities portfolio repositioning, but most other areas remained consistent with the prior quarter [11] Market Data and Key Metrics Changes - Total deposits declined in the second quarter due to normal client activity, but year-to-date growth in deposits was noted, with over 70% of outflows recouped in July [6][7] - The competitive rate environment remains, but limited attrition of deposits was observed as clients value service levels and community commitment [7] Company Strategy and Development Direction - The company is focused on maintaining disciplined underwriting and pricing criteria while expanding its banking teams to drive future growth [5] - Plans for further securities portfolio repositioning are in place to enhance earnings and net interest margin [14] - The company aims to increase market share and generate profitable growth through strategic hiring and technology enhancements [15][16] Management's Comments on Operating Environment and Future Outlook - Despite economic uncertainty, loan demand remains healthy, and the loan pipeline is strong, indicating expectations for loan growth in the second half of the year [14] - Management expressed optimism about continued positive trends in net interest margin and revenue, with expectations for improved financial performance [15] Other Important Information - The company declared a cash dividend of $0.25 per share, marking the 81st consecutive quarterly dividend [12] - The company repurchased $2,200,000 of shares during the quarter [8] Q&A Session Summary Question: Details on the two CRE loans that migrated this quarter - The loans are generally retail or mixed-use, located outside San Francisco, and are experiencing tenancy or cash flow issues, but management is not particularly concerned due to good sponsorship [20][21] Question: Appetite for restructuring the HTM securities portfolio - The company is cautiously considering this, weighing the impact on capital and potential shareholder dilution [22] Question: Update on share buyback plans - The company has renewed its buyback allocation and is looking to buy back shares below tangible book value, balancing this with other capital uses [25][26] Question: Performance of the AFS book and reinvestment rates - The final yield on purchases was slightly above 5%, aligning with expectations [33][34] Question: Recent deposit rate cuts - Targeted deposit rate cuts were implemented, with a recent cut of about 15 basis points, contributing to a small benefit to net interest margin [38][40] Question: Expectations for loan growth in the second half of the year - Management is optimistic about net growth, supported by a strong pipeline and new market leaders joining the bank [42][49] Question: Credit upgrades anticipated in the third quarter - Upgrades are expected across various segments, with some meaningful amounts involved [58][62]

Financial Performance - The company reported a net loss of $8.5 million, or ($0.53) diluted EPS, for Q2 2025, but excluding the loss on the sale of securities, net income would have been $4.7 million, or $0.29 EPS, using a blended statutory tax rate of 29.56%[8] - Tax-equivalent net interest margin increased to 2.93% from 2.86%, primarily due to new loan production at higher rates[8] - The company sold $185.8 million in AFS securities, resulting in a pre-tax loss of $18.7 million, but expects a 13bp increase in annualized NIM and $0.20 EPS accretion over 4 quarters with a 4-year earnback[8] Capital & Liquidity - The company's total risk-based capital remained strong at 16.25%[8] - The company repurchased $2.2 million in shares during Q2 2025[8, 18] - The company has $1.9 billion in immediately available net funding, representing 200% coverage of estimated uninsured deposits[8, 20] Deposits & Loans - Total deposits decreased by $56.9 million, with non-interest bearing deposits remaining a strong 42.5% of total deposits[8] - The company originated $68.8 million in new loans, including $49.1 million in commercial loans[8] - Non-accrual loans decreased to 1.57% of total loans from 1.59% in the prior quarter, while classified loans increased to 2.95% of total loans[8] Loan Portfolio - The company's loan portfolio is well-diversified, with non-owner occupied commercial real estate (NOO-CRE) representing 62% of the $2.1 billion total loan portfolio[38] - Within the NOO-CRE portfolio, office properties account for 28% of the $1.3 billion, while retail, warehouse & industrial, and multi-family properties represent 19%, 12%, and 15% respectively[38] - The company's non-owner occupied (NOO) CRE office exposure in the City of San Francisco is $61.1 million, representing 3% of the total loan portfolio and 5% of total NOO CRE loans[52, 53]

Group 1 - Bank of Marin (BMRC) reported quarterly earnings of $0.29 per share, missing the Zacks Consensus Estimate of $0.36 per share, and showing an increase from $0.06 per share a year ago, resulting in an earnings surprise of -19.44% [1] - The company posted revenues of $29.2 million for the quarter ended June 2025, surpassing the Zacks Consensus Estimate by 0.35%, compared to year-ago revenues of $25.25 million [2] - Over the last four quarters, Bank of Marin has surpassed consensus EPS estimates two times and topped consensus revenue estimates just once [2] Group 2 - The stock's immediate price movement will depend on management's commentary on the earnings call and the sustainability of earnings expectations [3][4] - Bank of Marin shares have added about 0% since the beginning of the year, underperforming the S&P 500's gain of 8.6% [3] - The current consensus EPS estimate for the coming quarter is $0.45 on $31.5 million in revenues, and for the current fiscal year, it is $1.49 on $120.2 million in revenues [7] Group 3 - The Zacks Industry Rank indicates that the Banks - West industry is currently in the top 36% of over 250 Zacks industries, suggesting a favorable outlook for the sector [8] - Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can be tracked by investors [5][6]

[Second Quarter 2025 Financial Performance](index=1&type=section&id=Second%20Quarter%202025%20Financial%20Performance) Bank of Marin Bancorp reported a net loss primarily due to a strategic securities sale, while non-GAAP comparable net income showed a slight decrease [Overview of Results](index=1&type=section&id=Overview%20of%20Results) Bank of Marin Bancorp reported a net loss of $8.5 million due to a strategic securities sale, while non-GAAP comparable net income was $4.7 million Q2 2025 Key Financial Results (GAAP vs. Non-GAAP) | Metric | Q2 2025 (GAAP) | Q1 2025 (GAAP) | Q2 2025 (Non-GAAP) | | :--- | :--- | :--- | :--- | | Net (Loss) Income (Millions USD) | ($8.5) | $4.9 | $4.7 | | Diluted (Loss) EPS (USD) | ($0.53) | $0.30 | $0.29 | - The reported loss was directly attributable to a previously announced securities repositioning strategy, which resulted in a **significant one-time loss** on the sale of securities[1](index=1&type=chunk) - CEO Tim Myers highlighted that comparable pre-tax pre-provision net income grew by **15%** compared to the prior quarter and **85%** year-to-date, indicating improvement in core financial performance[2](index=2&type=chunk) [Securities Repositioning Strategy](index=2&type=section&id=Securities%20Repositioning%20Strategy) The bank sold $185.8 million in AFS securities, incurring an $18.7 million pre-tax loss, to enhance future earnings and net interest margin - Sold **$185.8 million** in AFS securities, resulting in a pre-tax loss of **$18.7 million**[6](index=6&type=chunk) - The redeployment of proceeds is projected to increase the annualized net interest margin by **13 basis points** and add an estimated **$0.20** to EPS over the next year[6](index=6&type=chunk) - The strategy has an estimated **four-year earn-back period** and is aimed at improving future earnings and return on equity[6](index=6&type=chunk) [Key Performance Ratios](index=2&type=section&id=Key%20Performance%20Ratios) Key performance ratios were significantly impacted by the securities sale, with GAAP ROA at (0.92)% and ROE at (7.80)% Q2 2025 Performance Ratios (GAAP vs. Non-GAAP) | Ratio | Q2 2025 (GAAP) | Q1 2025 (GAAP) | Q2 2025 (Non-GAAP) | | :--- | :--- | :--- | :--- | | Return on Average Assets (ROA) | (0.92)% | 0.53% | 0.50% | | Return on Average Equity (ROE) | (7.80)% | 4.52% | 4.26% | | Efficiency Ratio | 208.81% | 76.44% | 74.03% | [Balance Sheet and Credit Quality](index=3&type=section&id=Balance%20Sheet%20and%20Credit%20Quality) The bank maintained stable loan portfolios and strong liquidity while managing deposit fluctuations and strategic investments [Loans and Credit Quality](index=3&type=section&id=Loans%20and%20Credit%20Quality) The total loan portfolio remained stable at $2.074 billion, with mixed but generally stable credit quality metrics and no Q2 provision for credit losses Loan Portfolio and Credit Quality Metrics | Metric | June 30, 2025 | March 31, 2025 | | :--- | :--- | :--- | | Total Loans (Billions USD) | $2.074 | $2.074 | | Non-accrual Loans to Total Loans | 1.57% | 1.59% | | Classified Loans to Total Loans | 2.95% | 2.77% | | Allowance for Credit Losses to Total Loans | 1.44% | 1.44% | - Loan originations in Q2 2025 totaled **$68.8 million** (**$50.2 million** funded), compared to **$63.6 million** in Q1 2025[9](index=9&type=chunk) - There was **no provision for credit losses** on loans in Q2 2025, compared to a **$75 thousand** provision in Q1 2025[7](index=7&type=chunk)[17](index=17&type=chunk) [Deposits](index=4&type=section&id=Deposits) Total deposits decreased by $56.9 million to $3.245 billion, with non-interest bearing deposits remaining a strong 42.5% of the total Deposit Balances | Metric | June 30, 2025 | March 31, 2025 | | :--- | :--- | :--- | | Total Deposits (Billions USD) | $3.245 | $3.302 | | Non-Interest Bearing Deposits % of Total | 42.5% | 43.2% | - The average cost of total deposits decreased by **1 basis point** to **1.28%** in Q2 2025[7](index=7&type=chunk) - The bank generated over **1,000 new accounts** during the second quarter, with **40%** representing new relationships[20](index=20&type=chunk) [Investments](index=4&type=section&id=Investments) The investment securities portfolio decreased to $1.215 billion due to strategic AFS sales and new purchases, maintaining high credit quality - The total investment portfolio stood at **$1.215 billion** as of June 30, 2025[19](index=19&type=chunk) - Key portfolio activities included the sale of **$185.8 million** in AFS securities and the purchase of **$219.2 million** in new AFS securities[19](index=19&type=chunk) [Liquidity and Borrowings](index=4&type=section&id=Liquidity%20and%20Borrowings) The bank maintained a strong liquidity position with no outstanding borrowings, boasting $1.863 billion in total available funding Contingent Liquidity Sources (June 30, 2025) | Source | Net Availability (Millions USD) | | :--- | :--- | | Unrestricted cash | $201.1 | | Unencumbered securities | $271.0 | | FHLB line of credit | $946.0 | | FRB line of credit | $319.8 | | Lines of credit at correspondent banks | $125.0 | | **Total Liquidity** | **$1,862.9** | - The bank had **no outstanding borrowings** as of June 30, 2025, and has not utilized brokered deposits[21](index=21&type=chunk) [Earnings Analysis](index=5&type=section&id=Earnings%20Analysis) Net interest income and margin improved, while non-interest income was significantly impacted by a one-time securities loss [Net Interest Income and Margin](index=5&type=section&id=Net%20Interest%20Income%20and%20Margin) Net interest income increased to $25.9 million, and the tax-equivalent net interest margin expanded by 7 basis points to 2.93% Net Interest Income and Margin | Metric | Q2 2025 | Q1 2025 | | :--- | :--- | :--- | | Net Interest Income (Millions USD) | $25.9 | $24.9 | | Tax-Equivalent Net Interest Margin | 2.93% | 2.86% | - The **7 basis point increase** in NIM was attributed to higher rate loan originations (**+4 bps**), higher average deposit balances (**+2 bps**), and the securities repositioning (**+1 bp**)[27](index=27&type=chunk) [Non-Interest Income (Loss)](index=5&type=section&id=Non-Interest%20Income%20%28Loss%29) Non-interest income reported a $15.6 million loss for Q2 2025, primarily due to an $18.7 million pre-tax loss on AFS securities - A loss of **$18.7 million** on the sale of AFS securities drove the total non-interest income to a loss of **$15.6 million**[28](index=28&type=chunk) - Excluding the securities loss, non-interest income was **$3.1 million**, an increase of **$241 thousand** from the prior quarter[28](index=28&type=chunk) [Non-Interest Expense](index=5&type=section&id=Non-Interest%20Expense) Non-interest expense increased slightly to $21.5 million in Q2 2025, driven by higher information technology costs - Total non-interest expense was **$21.5 million**, a modest increase from **$21.3 million** in Q1 2025[29](index=29&type=chunk) - CFO Dave Bonaccorso noted that expense growth of **1.1% QoQ** is in line with the recent annual growth rate of approximately **4%**[8](index=8&type=chunk) [Capital Management and Shareholder Returns](index=3&type=section&id=Capital%20Management%20and%20Shareholder%20Returns) The company maintained strong capital ratios and continued to return capital to shareholders through dividends and share repurchases [Capital Ratios](index=3&type=section&id=Capital%20Ratios) The company's capital ratios remain well above regulatory thresholds, with a total risk-based capital ratio of 16.25% Key Capital Ratios | Ratio | June 30, 2025 | March 31, 2025 | | :--- | :--- | :--- | | Total Risk-Based Capital Ratio (Bancorp) | 16.25% | 16.69% | | TCE to Tangible Assets Ratio (Bancorp) | 9.95% | 9.82% | - Capital stress tests indicate that capital ratios will remain above regulatory and internal minimums across various stress scenarios over a **five-year horizon**[25](index=25&type=chunk) [Shareholder Returns](index=3&type=section&id=Shareholder%20Returns) Bancorp continued to return capital to shareholders through share repurchases and dividends, authorizing a new $25.0 million buyback program - The Board declared a quarterly cash dividend of **$0.25 per share**[15](index=15&type=chunk) - Repurchased **100,000 shares** for **$2.2 million** in Q2 2025[15](index=15&type=chunk)[33](index=33&type=chunk) - A new share repurchase program authorizing up to **$25.0 million** in buybacks was approved, effective through **July 31, 2027**[33](index=33&type=chunk) [Corporate and Investor Information](index=7&type=section&id=Corporate%20and%20Investor%20Information) The company updated its insider trading policy and scheduled an investor webcast to discuss Q2 2025 financial results [Corporate Governance](index=7&type=section&id=Corporate%20Governance) The Board revised the Insider Trading Policy, shortening the blackout period and adding pre-approval for 10b5-1 trading plans - The quarterly blackout period for insider trading was shortened from **three weeks to two weeks** prior to quarter-end[34](index=34&type=chunk) - New provisions require pre-approval for any **10b5-1 trading plans** by employees and directors to ensure compliance with SEC rules[34](index=34&type=chunk)[35](index=35&type=chunk) [Investor Relations](index=8&type=section&id=Investor%20Relations) The company will host a webcast on July 28, 2025, to discuss its second quarter financial results - An earnings call and webcast is scheduled for **July 28, 2025**, at **8:30 a.m. PT / 11:30 a.m. ET**[36](index=36&type=chunk) [Appendix: Financial Statements and Reconciliations](index=6&type=section&id=Appendix%3A%20Financial%20Statements%20and%20Reconciliations) This appendix provides detailed reconciliations of non-GAAP financial measures and comprehensive financial statements for investor analysis [Non-GAAP Financial Measures Reconciliation](index=6&type=section&id=Non-GAAP%20Financial%20Measures%20Reconciliation) This section provides detailed reconciliation of GAAP to non-GAAP financial measures, excluding the securities portfolio repositioning impact - The report includes reconciliations for key metrics such as pre-tax pre-provision net income, net income, EPS, ROA, ROE, and the efficiency ratio, adjusting for the loss on sale of investment securities[32](index=32&type=chunk) - A reconciliation of tangible common equity (TCE) is also provided, showing adjustments for goodwill, intangible assets, and unrealized losses on held-to-maturity (HTM) securities[31](index=31&type=chunk) [Financial Highlights](index=9&type=section&id=Financial%20Highlights) This section presents a comprehensive table of selected operating data, performance ratios, and financial condition data [Consolidated Statements of Condition (Balance Sheet)](index=11&type=section&id=Consolidated%20Statements%20of%20Condition%20%28Balance%20Sheet%29) The Consolidated Statements of Condition details the company's assets, liabilities, and stockholders' equity for current and prior periods [Consolidated Statements of Comprehensive Income (Income Statement)](index=12&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income%20%28Income%20Statement%29) This statement provides a detailed breakdown of revenues and expenses for the three and six months ended June 30, 2025 [Average Statements of Condition and Net Interest Income Analysis](index=14&type=section&id=Average%20Statements%20of%20Condition%20and%20Net%20Interest%20Income%20Analysis) This section analyzes net interest income based on average asset and liability balances, detailing yields and rates

Core Viewpoint - Wall Street anticipates a year-over-year increase in earnings for Bank of Marin (BMRC) due to higher revenues, with a focus on how actual results compare to estimates impacting stock price [1][2]. Earnings Expectations - Bank of Marin is expected to report quarterly earnings of $0.36 per share, reflecting a significant year-over-year increase of +500% [3]. - Revenues are projected to reach $29.1 million, which is a 15.3% increase from the same quarter last year [3]. Estimate Revisions - The consensus EPS estimate has been revised 14.53% higher in the last 30 days, indicating a reassessment by analysts [4]. - The Most Accurate Estimate for Bank of Marin is lower than the Zacks Consensus Estimate, resulting in an Earnings ESP of -4.67%, suggesting a bearish outlook from analysts [12]. Earnings Surprise Prediction - The Zacks Earnings ESP model indicates that a positive or negative reading can predict deviations from consensus estimates, with positive readings being more reliable [9][10]. - Bank of Marin's current Zacks Rank is 3 (Hold), complicating predictions for an earnings beat [12]. Historical Performance - In the last reported quarter, Bank of Marin was expected to post earnings of $0.32 per share but delivered only $0.30, resulting in a surprise of -6.25% [13]. - Over the past four quarters, the company has beaten consensus EPS estimates two times [14]. Industry Comparison - In the Zacks Banks - West industry, Glacier Bancorp (GBCI) is expected to report earnings of $0.47 per share, indicating a year-over-year change of +20.5% [18]. - Glacier Bancorp's revenue is projected at $243.5 million, up 22.6% from the previous year, with a higher Most Accurate Estimate leading to an Earnings ESP of +7.45% [19].

Group 1 - BRC Inc. (BRCC) has been added to the Zacks Rank 5 (Strong Sell) List due to a 33.3% downward revision in the consensus estimate for its current year earnings over the last 60 days [1] - Foot Locker, Inc. (FL) is also on the Zacks Rank 5 (Strong Sell) List, with a 19% downward revision in the consensus estimate for its current year earnings over the last 60 days [1] - Bank of Marin Bancorp (BMRC) has seen a 5.9% downward revision in the consensus estimate for its current year earnings over the last 60 days [2]

Financial Performance - Net income for Q1 2025 was $4.9 million, down from $6.0 million in Q4 2024, with diluted earnings per share at $0.30 compared to $0.38 in the previous quarter[133]. - Return on average assets (ROA) was 0.53% for Q1 2025, down from 0.63% in Q4 2024, while return on average equity (ROE) was 4.52% compared to 5.48% in the prior quarter[133]. - Net interest income for Q1 2025 totaled $24.9 million, a decrease of $284 thousand from Q4 2024, primarily due to a $36.3 million reduction in average earning assets[142]. - Non-interest income for Q1 2025 was $2.9 million, an increase of $120 thousand or 4.4% year-over-year, primarily driven by bank-owned life insurance dividend income[158]. - Total non-interest expense for Q1 2025 was $21.3 million, reflecting a $95 thousand increase or 0.4% compared to the same period in 2024, mainly due to higher charitable contributions[163]. Interest Margin and Income - The tax-equivalent net interest margin increased to 2.86% in Q1 2025 from 2.80% in Q4 2024, and was 2.50% in the same period last year, reflecting a 36 basis point year-over-year increase[133]. - Compared to Q1 2024, net interest income rose by $2.3 million, reaching $24.9 million, attributed to higher average earning asset yields and lower deposit costs[144]. - The tax-equivalent net interest margin improved by 36 basis points from 2.50% in Q1 2024, influenced by higher yields on investment securities and lower deposit costs[145]. Loans and Credit Quality - Loan balances decreased by $9.7 million to $2.074 billion, with loan fundings of $47.4 million and payoffs of $25.5 million during Q1 2025[133]. - The provision for credit losses on loans was $75 thousand in Q1 2025, with the allowance for credit losses at 1.44% of total loans[133]. - Non-accrual loans decreased to $32.9 million, or 1.59% of total loans, with approximately 57% of non-accrual loans paying as agreed[133]. - Classified loans increased to $57.4 million as of March 31, 2025, compared to $45.1 million at December 31, 2024, primarily due to downgrades in commercial relationships[178]. - Net charge-offs for Q1 2025 totaled $825 thousand, significantly higher than $19 thousand in Q4 2024, primarily due to a charge-off of an acquired commercial real estate loan[180]. Deposits and Liquidity - Total deposits rose by $82.0 million to $3.302 billion as of March 31, 2025, with non-interest bearing deposits comprising 43.2% of total deposits[133]. - Total cash, cash equivalents, and restricted cash rose to $259.9 million as of March 31, 2025, up $122.6 million from $137.3 million at December 31, 2024, driven by an $82 million increase in deposits[168]. - Cash and cash equivalents increased by $122.6 million in Q1 2025, driven by an $82.0 million net increase in deposits and $63.0 million from investment securities[199]. - The Bank had no outstanding borrowings at March 31, 2025, maintaining a strong liquidity position[203]. - Unfunded credit commitments totaled $451.2 million as of March 31, 2025, with expectations to fund these through existing loan repayments and liquid assets[201]. Capital Ratios - Bancorp's total risk-based capital ratio was 16.69% as of March 31, 2025, indicating strong capital levels above regulatory thresholds[134]. - The total risk-based capital ratio for Bancorp was 16.69% as of March 31, 2025, up from 16.54% at the end of 2024, indicating strong capital adequacy[188]. - Bancorp's tangible common equity to tangible assets (TCE ratio) was 9.82% at March 31, 2025, down from 9.93% at December 31, 2024[189]. - The Bank's capital ratios exceed the regulatory definition of "well capitalized" as of March 31, 2025[187]. Expenses and Contributions - Salaries and related benefits increased by $2.6 million in Q1 2025, attributed to various factors including new talent acquisition and increased 401(k) contributions[162]. - Charitable contributions expense in Q1 2025 was $403 thousand, significantly higher than $30 thousand in Q4 2024 and $12 thousand in Q1 2024[162]. - Total non-interest expense rose to $21.3 million in Q1 2025, compared to $21.2 million in Q1 2024, with a significant increase in charitable contributions of $391 thousand[163]. Economic Environment - The Federal Reserve's target federal funds rate was left unchanged in early 2025, reflecting projected slower economic growth and higher inflation[148]. - The effective tax rate for Q1 2025 was 24.8%, down from 37.8% in the prior quarter, reflecting lower pre-tax income and the treatment of certain permanent tax differences[165].

Financial Highlights - Bank of Marin Bancorp's total assets reached $3.8 billion as of March 31, 2025[5] - The company's total risk-based capital remained strong at 16.69%[8] - The bank's immediate available net funding was $1.9 billion, representing 203% coverage of estimated uninsured deposits[8] Deposit and Loan Portfolio - Total deposits increased by $82 million, including $26.6 million in non-interest bearing deposits[8] - Non-interest bearing deposits remained a strong 43.2% of total deposits, which totaled $3.30 billion[8, 26] - The bank originated $63.6 million in new loans, with $47.4 million funded, including $50.2 million in commercial loans ($43.2 million funded)[8] Net Interest Margin and Liquidity - Tax-equivalent net interest margin increased to 2.86% from 2.80%, reflecting the reduction in cost of deposits[8] - The bank's liquidity position is strong, with $1.9174 billion in net availability, covering 203% of estimated uninsured deposits[20] Loan Portfolio Diversification - The loan portfolio is well-diversified, with non-owner occupied commercial real estate (NOO-CRE) representing 62% of the $2.1 billion total loan portfolio[37] - The NOO-CRE portfolio is further diversified by property type, including office (28%), mixed use (9%), retail (19%), warehouse & industrial (11%), and multi-family (16%)[37]