Bank of Marin Q3 earnings reflect influence of coronavirus on Bay Area business

Bank of Marin’s parent company (Nasdaq: BMRC) on Monday released third quarter earnings that showed a mixed bag of financial results.

Novato-based Bancorp reported earnings of $7.49 million in the third quarter of 2020 ending Sept. 30, almost in line with the second quarter of $7.40 million, but down from $9.44 million from the same period last year. The year-to-year comparison amounts to an over 20% drop.

Net interest income totaled $24.6 million in this past quarter in contrast to 2019’s quarter ending Sept. 30 at $24.2 million. The 2019 quarter’s net interest, defined as the difference between revenue generated by interest-bearing assets and the costs of servicing liabilities, was just short of the 2020 second quarter’s $24.4 million.

The bank has been running better-than-expected numbers in 2020, given the financial impact of COVID-19.

“I can tell you that last year in the third quarter I didn’t expect (what Bank of Marin is facing now),” Bank of Marin President and CEO Russell A. Colombo told the Business Journal.

As the U.S. economy experiences historically low interest rates, bank officials have been thankful for a disciplined approach to risk management and credit underwriting.

“Until things change, we’re not going to see a dramatic change. I don’t see the fourth quarter much different. But I feel good about the bank and its portfolio,” he said.

Colombo opened the door to options in managing the bank while the coronavirus enters its eighth month.

“What the pandemic has shown us is that we probably should be more efficient,” Colombo said.

These options include a probable expansion into a more remote workforce and a possible reduction in real estate holdings. With assets of $3 billion, the financial institution operates 22 branches, five commercial banking offices and two loan production locations situated across seven San Francisco Bay Area counties.

The bank is evaluating how many employees may work remotely and how many branches and offices to maintain.

One Petaluma branch had been closed earlier, but it’s unknown whether others will at this time, he said, but Colombo said no layoffs are on the table at this time.

“We have to maintain our costs as our margins continue to get squeezed,” Colombo said.

He said remote work in some departments admittedly comes with advantages and disadvantages for both employees and their customers.

As for the latter, the bank has long prided itself on nurturing one-on-one interactions with its clients, according to Colombo.

“We’re used to interacting a lot with each other. But there are some job functions where we don’t need a person on site. We, as an organization, will look at that more closely,” the bank chief said.

Despite the notion that “customers have become comfortable with technology,” there is a fine line to bank officials.

“We need to make sure we don’t lose our culture,” Colombo said.

Chief Financial Officer Tani Girton noted how training, educational practices and video conferencing have made conducting business in these unprecedented times much easier. Moreover, the bank has managed to reduce costs by scheduling much less travel.

Even with a precise evaluation of ways to cut costs, Bank of Marin invested in responding to the pandemic.

During the third quarter, it contributed $360,000 to remote learning plans for “underserved students” in Marin, Napa and Sonoma counties and the city of Alameda. For its employees, the bank also paid $1,200 to assist each employee in making ends meet. Executive management directed their payments to non-profit organizations of their choice.

Colombo suggested that when times get tough, the call for philanthropy becomes greater.

Since the pandemic broke out, Bank of Marin found methods to issue relief to its customers by waiving ATM and overdraft fees as well as legally canceling early withdrawal penalties for certificates of deposits. In lending, the bank also assisted borrowers by lowering the “interest rate floors on commercial Prime Rate loans.”

Bank of Marin has issued 1,800 loans to small businesses with the intent of saving nearly 28,000 jobs at those companies. Applications to forgive those Paycheck Protection Program loans will be accepted on its portal when the bank is confident the U.S. Small Business Administration has finalized the documentation surrounding the process. Almost half of those PPP loans totaling $18.4 million have balances under $50,000.

Bank of Marin’s Board of Directors declared a cash dividend of 23 cents per share on Oct. 23 for the third quarter, which is payable on Nov. 13.

Susan Wood covers law, cannabis, production and agriculture as well as banking and finance. For 25 years, Susan has worked for a variety of publications including the North County Times in San Diego County, Tahoe Daily Tribune and Lake Tahoe News. She graduated from Fullerton College. Reach her at 530-545-8662 or susan.wood@busjrnl.com.