Bank of Marin 2Q earnings rise 8%; opening Healdsburg, East Bay branches

Bank of Marin's second-quarter 2017 earnings climbed 8 percent to $5.2 million, up from $4.8 million in the second quarter of 2016. In about two weeks, Bank of Marin will open its new branch in northern Healdsburg.

The Healdsburg branch at 1260 Healdsburg Avenue on the corner of Dry Creek Road will have nearly 1,200 square feet on the second floor — roughly half the bank's average branch size. The manager will be Tara Johnson, who worked previously at the bank's Sonoma branch. The bank will have two additional employees in Healdsburg.

If the branch can attract new deposits of about $1 million a month, it will take nearly two years to break even, said Russ Colombo, CEO and president, with a branch deposit base near $20 million. Opening a new branch in Marin County, closer to the bank's Novato headquarters, would result in a faster break-even, at about one year. 'As you get farther away from the home base, it's more difficult,' he said.

Earnings for Bank of Marin (NASDAQ: BMRC) in the first six months of 2017 were $9.7 million, down from $10.5 million in the first six months of 2016, when a significant boost in earnings resulted from acquired-loan payoffs. Diluted earnings per share for the first six months were $1.58, down from $1.72 in the first half of 2016.

A cash dividend of 29 cents a share will be paid on August 11 to shareholders of record on August 4.

Deposits increased $61.3 million in the second quarter of 2017 to $1.8 billion. The bank has total assets of $2.1 billion.

'The second quarter was really strong,' Colombo said. 'It's clean. I don't see anything that will harm the bank's outlook. We're pretty bullish as we go forward.'

The new Healdsburg location will bring the bank's total branch number to 21, and is the first new branch since Bank of Marin acquired Bank of Alameda in 2013. The bank signed a five-year lease on a temporary branch location with a clause that allows the lease to be broken before five years if a better branch location is found, Colombo said. The bank aims to build a new facility for the branch.

With the Healdsburg opening, Bank of Marin will have six branches in Sonoma County, with three in Petaluma, one in Santa Rosa and one in Sonoma. The bank has 10 branches in Marin County and plans to add two more in Sonoma County, likely in Santa Rosa, where it has one branch downtown at 50 Santa Rosa Ave. that emphasizes commercial banking. 'We are adding expenses, so we don't want to move too quickly,' Colombo said.

With the Healdsburg branch opening, total full-time-equivalent staffing will be 265.

The bank plans to add another loan-production office for commercial banking in the East Bay. 'We are going to hire the people. Then we go out and find the location,' Colombo said, possibly Walnut Creek or Lafayette in the Diablo Valley, depending on the person hired. 'We're in discussions with a number of people. The success of offices is driven by people.' He expects a hire by the end of 2017.

Bank of Marin has one branch in Napa and one in San Francisco.

The bank has a favorable deposit base in that nearly 45 percent of its deposits are non-interest-bearing demand deposits. Of the $61.3 million increase in new deposits in the second quarter, 48.5 percent were non-interest-bearing, bringing the cost of total deposits down two basis points from June 2016. 'That is a huge benefit we have over our competitors,' Colombo said. 'When rates rise, our costs don't rise equally.'

Founded in 1989 and with headquarters in Novato, Bank of Marin is the sole subsidiary of Bank of Marin Bancorp.

James Dunn covers technology, biotech, law, the food industry, and banking and finance. Reach him at: james.dunn@busjrnl.com or 707-521-4257