Bank of Marin Bancorp ("Bancorp"), the parent company of Bank of Marin, reported earnings of $4.6 million for the second quarter of 2023, compared to $9.4 million in the first quarter of the same year. The decline in earnings was attributed to the cost of interest-bearing deposits catching up to market interest rates and higher average balances on borrowings. Diluted earnings per share were $0.28 for the second quarter, compared to $0.59 for the prior quarter. Despite these challenges, Bancorp remains optimistic about its position in the market and its ability to navigate current economic uncertainties.

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Strong Deposit Growth Bolsters Balance Sheet

Bancorp witnessed robust deposit growth during the second quarter, increasing total deposits to $3.325 billion on June 30, 2023, from $3.251 billion on March 31, 2023. Non-interest bearing deposits constituted 47.8% of total deposits, compared to 50.3% in the previous quarter. Moreover, the average cost of interest-bearing deposits increased by 95 basis points over the last quarter due to targeted relationship-based pricing adjustments. The overall cost of deposits rose to 0.69% from 0.20% quarter over quarter. The Bank also experienced growth in its reciprocal deposit network program, bringing estimated FDIC insured deposits up to 71% of total deposits as of June 30, 2023.

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Loan Portfolio Performance

Despite the challenging economic environment, Bancorp's loan portfolio continues to perform well, with classified loans at only 1.81% of total loans. Non-accrual loans, totaling $2.1 million, remained unchanged from the previous quarter. The Bank recorded a $500 thousand provision for credit losses on loans for the second quarter, compared to $350 thousand for the prior quarter. Loan balances at June 30, 2023, decreased slightly by $9.5 million from the previous quarter due to originations of $22.8 million and payoffs of $24.6 million. However, the Bank remains optimistic about adding senior lenders to boost lending activity amid market disruptions.

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Announcement of Share Repurchase Program

On July 21, 2023, Bancorp's Board of Directors approved the adoption of a new share repurchase program, replacing the existing one that expired on July 31, 2023. The new program allows Bancorp to repurchase up to $25.0 million of its outstanding shares and will expire on July 31, 2025. This move reflects the company's confidence in its financial strength and commitment to driving shareholder returns over the long term.