NOVATO – Bank of Marin Bancorp (NASDAQ: BMRC), parent company of Bank of Marin, reported record earnings in the second quarter of 2012, a period that bank executives said was noteworthy for its asset quality.
The Novato-based bank reported $5 million in earnings in the three months ended June 30, up from $4.9 million in the first quarter and up 44 percent from the second quarter in 2011. The bank earned 91 cents per diluted share, and will distribute an 18 cents-per-share dividend on Aug. 10 to shareholders of record as of Aug. 2.
Bank President and CEO Russell Colombo said that the surge in earnings was partially attributed to the resolution of problem assets related to the Federal Deposit Insurance Corp. assisted of Charter Oak Bank in Napa in February 2011. The bank, which holds $1.4 billion in assets, devoted $100,000 to its provision for loan losses in the second quarter, versus $2.9 million during the same period in 2011.
“Last year was a pretty noisy quarter,” he said, “This one is pretty clean.”
Business in Napa has increased following the acquisition: loans in Napa increased $4.7 million – 8.1 percent – in the second quarter of 2012, excluding $1.9 million in payoffs for problem loans. Total loans as of June 30 were $1 billion, with nonperforming loans totaling $14.3 million.
Deposits at the bank grew to $1.2 billion at the end of the second quarter, up from $1.1 billion at the same time in 2011. Non-interest bearing deposits were 32.5 percent of total deposits as of June 30.
The bank grew its investment portfolio by $36.6 million in the second quarter, focusing on government-guaranteed securities and other low-risk assets in a conscious effort t deploy excess liquidity. The portfolio is now valued at $245 million, with a risk-based capital ratio that grew to 13.9 percent.
Net interest income for the first half of 2012 totaled $32.5 million, decreasing $399,000, or 1.2 percent, compared to the first six months of 2011. The tax-equivalent net interest margin was 4.94 percent for the first quarter of 2012, compared to 4.97 in the prior quarter and 5.51 percent during the same quarter in 2011. Those decreases were attributed to a lower level of gains from the pay off of credit-impaired purchased loans and a lower level of income from purchased, non-credit impaired loans. The low interest rate environment has decreased the cost of certain liabilities for the bank, helping to offset those factors.
“Our continued high level of financial performance and the confidence our management has in the bank drove our decision to increase our cash dividend to shareholders this quarter,” said Chris Cook, chief financial officer, in a release.
Executives from the bank will be ringing the closing bell at NASDAQ on August 1. Bank of Marin’s stock is often mentioned for its performance in financial publications, and exceeded its pre-recession stock price peak in January 2012 at $39.99 per share.