Bank of Marin’s 2020 results a mixed bag in turbulent year

Amid a pandemic showing little sign of slowing down its impact, Bank of Marin’s parent company (Nasdaq: BMRC) on Monday reported fourth-quarter results that reflected COVID-19's economic challenges.

The Novato-based Bancorp posted earnings of $8.1 million in the quarter ending Dec. 31, 2020, which was 8% higher than the $7.5 million for the third quarter of the same year but nearly 11% lower than the same quarter’s $9.1 million in 2019.

The ending quarter for 2020 resulted in a 7% rise from its third quarter but came with a $1 million drop from 2019’s same three-month period.

Wrapping up the year, annual earnings in 2020 came in as $30.2 million — $4.2 million less than the previous year as COVID-19 raged havoc on business communities nationwide through almost all of 2020.

Diluted earnings per share came in at 60 cents in 2020’s fourth quarter, which amounted to a nickel more than the prior quarter but 6 cents less than 2019’s last three months. The fundamental profitability measure takes into account convertible securities, bonds and preferred stock as well as common stock.

The bank’s Board of Directors declared a cash dividend of 23 cents per share on Jan. 23 that will be paid out on Feb. 12.

“The bank performed exceptionally well given the circumstances. Our earnings were solid, and our deposits were good,” President and CEO Russell Colombo told the Business Journal. “We feel good going into 2021.”

Matters could have looked much worse, when considering government shutdowns devastating certain sectors of the business community such as hospitality and retail.

Low interest rates dominated the landscape during the crisis as the Federal Reserve used the tool to maintain U.S. economic stability — at the expense of banks’ profitability but consumers’ benefit.

Colombo admitted the rates staying low impacted margins, but some customers used them to invest and reinvest.

Not all industries have done poorly during this crisis. Colombo singled out construction as one sector still plowing through the business at hand. Even property owners hunkered down at home decided to take advantage of their time stuck in their houses by finally tackling those long-awaited improvements that might have been put off in pre-pandemic days.

Many industries have learned to adapt in business alongside the bank. The wine industry, in particular, has placed a major emphasis in direct-to-consumer and wholesale selling practices to help alleviate a downward spiral while tasting rooms have been closed.

Wine clubs are king. Bank of Marin has expanded its wine business portfolio west from Napa to Sonoma County to most recently the Central Coast area where pinot noir flourishes.

Key factors remained at sustaining the bank during turbulent times punctuated by troubled industries.

With more consumers saving more and spending less, deposits grew by 7% with $2.5 billion during 2020’s fourth quarter, compared to the same three months in 2019.

2020 was also marked by a 13% increase in loan activity amounting to $2 billion for the year ending Dec. 31, compared to 2019’s $1.8 billion.

Bank of Marin processed 1,777 Paycheck Protection Program loans totaling $402.9 million.

Given the response to the first wave of loans , the bank expects fewer applicants for the second wave of loans administered through the U.S. Small Business Administration, said Chief Operating Officer Tim Myers.

Net interest income totaled $23.6 million in the fourth quarter of 2020. This compares to $24.6 million in the prior quarter and $23.9 million in the same three months in 2019. The bank income is defined as the difference between revenue generated by interest-bearing assets and the costs of servicing liabilities.

Non-interest income came in as $1.8 million for both the third and fourth quarters, which was slightly lower than 2019’s $2.3 million in 2020’s topsy-turvy year. This banking barometer is measured as “fee income.”

Colombo, who has delayed his retirement until the crisis ends, has taken much solace in how well the staff has pulled through in these troubling times. He sees no staff reductions for the coming year. A little less than half the staff is working remotely.

Bank officials anticipate a continued focus on digital banking but also noted there will always be a place for in-person financial transactions — especially given the Marin County financial institution’s reputation for “relationship banking.”

These one-on-one interactions with customers, in conjunction with operating on solid footing before the crisis and continuing with reasonable lending standards and strong credit quality have helped avert obstacles that may arise with the pandemic, bank officials contend.

“In this challenging year, we’ve remained true to our fundamental principles,” Chief Financial Officer Tani Girton said.

Girton, who serves as the bank official who has her finger on the pulse of the Novato bank’s financial picture, told the Busines Journal she’s not surprised by the outcome.

“Our strong credit quality is the foundation for solid performance during times like this. By staying true to our relationship banking model, we were able to respond rapidly with payment relief and PPP loans for businesses, as well as financial support for schools and non-profits,” Girton said. “When our customers are ready to resume business as usual, we will be here for them.”

Founded in 1990, Bank of Marin has 21 retail branches and five commercial offices as well as two lending facilities.