NOVATO -- Bank of Marin Bancorp (Nasdaq: BMRC), parent company of Bank of Marin, today announced second-quarter earnings of $3.4 million, up 3 percent from $3.3 million in the second quarter of 2010.

Diluted earnings per share were 64 cents, up a penny from the same quarter a year ago.

Earnings for the six-month period ended June 30 totaled $7.9 million, up 26 percent from $6.3 million in the same prior year period.  Diluted earnings per share for the six-month period ended June 30 totaled $1.48, up 29 cents from $1.19 for the same period in 2010.

Earnings for the first half of 2011 include the Federal Deposit Insurance Corp.-assisted acquisition of certain assets and the assumption for certain liabilities of the former Charter Oak Bank in Napa.

[caption id="attachment_28391" align="alignright" width="115" caption="Russ Colombo"][/caption]

“Our earnings reflect the positive impact of the recently acquired Charter Oak portfolio, as well as certain one time acquisition-related costs," said Russell A. Colombo, president and chief executive officer. "We expect the uncharacteristic fluctuations related to the accounting for the acquired loan portfolio to be reduced over the next several quarters. In June we successfully completed the conversion and integration of our Napa operations, and we are very pleased with our results to date.”

On Feb. 18 Bancorp acquired Charter Oak Bank and its two branches at 600 Trancas St. in Napa and 1050 Adams St. in St. Helena.

Total deposits at the end of the second quarter grew by $139.7 million or 14 percent from a year ago, with noninterest bearing deposits growing $88.7 million, or 34.4 percent.

Mr. Colombo said this increase reflects the impact of assuming $93.9 million of deposits at fair value of the former Charter Oak Bank and growth in other markets, partly offset by decreases in CDARS time deposits and the disposition of the Internet time deposits assumed as part of the acquisition.

Total loans reached $986.6 million by the end of June -- including $61.8 million in loans purchased at fair value without loss as part of the acquisition -- representing an increase of $47.3 million, or 5.0 percent, over a year ago, and an increase of $7.7 million or 0.8 percent from March 31, 2011.

Credit quality remains solid with non-performing loans decreased to $8.7 million representing 0.88 percent of Bancorp’s loan portfolio, down from $10.8 million, or 1.15 percent a year ago, and $9 million or 0.92 percent at March 31, 2011.  Non-performing loans exclude purchased credit-impaired loans, unless such loans experience credit quality deterioration after the acquisition.

To deploy excess liquidity, the bancorp grew its investment securities portfolio by $59.3 million in the second quarter, primarily through the purchase of U.S. government securities.

Net interest income was $17.0 million at the end of the second quarter, an increase of $3.2 million, or 23.6 percent, from the same period last year. Such income increased $1.1 million, or 7.1 percent, from the first quarter.

For the first half of the year, net interest income totaled $32.9 million, an increase of $6.0 million, or 22.3 percent, from a year before.

The quarterly and half-year increases primarily reflect the acquisition of loans from the former Charter Oak Bank and from a reduction in the cost of deposits, according to the bancorp.

Assets  totaled $1.3 billion at the end of the second quarter.

Novato-based Bank of Marin, the bancorp's only subsidiary, is the largest community bank in Marin County with 17 offices in Marin, San Francisco, Napa and Sonoma counties.

Bank of Marin Bancorp is included in the Russell 2000 Small-Cap Index and is recognized as a Top 200 Community Bank, ranked 43rd in the country by US Bank magazine. The 21-year-old institution has received the highest five-star rating from Bauer Financial for more than 10 years.