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North Bay Business Journal

Monday, April 22, 2013, 11:46 am

Credit quality improves at Bank of Marin

Nonperforming loans a net positive for first time in several years

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    NOVATO — Bank of Marin Bancorp (NASDAQ: BMRC), parent company of Bank of Marin, today reported net income in the first three months of 2013 increased from the prior quarter and was level with income a year before.

    Bank of MarinThe bank had $4.9 million in net income for the first quarter of the year, compared with $4.7 million in the fourth quarter of 2012. Income was equivalent to 89 cents per diluted share, compared with 86 cents in the prior quarter and 91 cents during the same quarter one year ago.

    The bank noted that those earnings came at a time of continued challenge for lenders, with a low-interest-rate environment that has compressed profit margins on loans. Yet portfolio quality continues to strengthen after the worst of the recession, allowing the bank to realize a net recovery on troubled loans for the first time in several years, said Russell Colombo, president and chief executive.

    “We have a handle on our portfolio,” he said. “The bigger challenge now is building our loan volume.”

    The bank recovered a net of $3,000 from nonperforming loans, compared to $178,000 in chargeoffs for the prior quarter. The bank’s provision for loan losses was reversed to a net gain of $230,000, compared to the $700,000 that was set aside in the last quarter of 2012.

    The volume of loans classified as substandard was $31.1 million, compared to $55.6 million during the same period in 2012. Non-performing loans accounted for 1.43 percent of total loans at the end of the quarter, compared to 1.4 percent one year prior.

    Net interest income totaled $14.8 million, compared to $16.2 million during the first quarter of 2012, the bank announced. The decline, reflecting a tax-equivalent net interest margin of 4.48 percent compared to 4.97 percent one year prior, was largely attributed to the continued pressures pushing interest rates downward.

    The bank has worked to offset those pressures by proactively managing its investments, and interest paid on deposits has also declined. The discontinuation of an interest-bearing account product was cited for an increase in non-interest bearing deposits, which now account for 39.5 percent of deposits versus 32.9 one year ago.

    Bank of Marin announced $1.1 billion in loans and $1.2 billion in deposits, versus $1 billion in loans and $1.3 billion in deposits one year prior. The bank had $1.43 billion in assets at the end of the period, compared to $1.42 at the end of March 2012.

    The bank’s board of directors declared a quarterly cash dividend of 18 cents per share, payable on May 10 to shareholders of record as of May 1.

    With less than two hours left in the Monday trading session, the share in Bank of Marin were at $39.75 in early afternoon trading on Monday, up 2.71 percent from opening.

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