Bank of Marin Bancorp Reports Second Quarter Financial Results

Press Release Company Release - 7/28/2025 8:30 AM ET Continued Net Interest Margin Expansion From Active Balance Sheet Management Bank of Marin Bancorp, "Bancorp" (Nasdaq: BMRC), parent company of Bank of Marin, "Bank," announced a net loss of $8.5 million for the second quarter of 2025, compared to net income of $4.9 million for the first quarter of 2025. Diluted loss per share was $0.53 for the second quarter, compared to diluted earnings per share of $0.30 for the prior quarter. The loss was attributable to the previously announced securities repositioning which is more fully described below. Net income and diluted earnings per share for the second quarter excluding the loss on sale of securities was $4.7 million and $0.29, respectively, all other factors unchanged and with adjustments made based on the Company's blended statutory tax rate of 29.56%. See Reconciliation of GAAP and Non-GAAP Financial Measures below. If the adjustments were made using the Company's second quarter 2025 effective tax rate of 23.78%, net income and diluted earnings per share for the second quarter of 2025 excluding the loss on sale of securities was $5.7 million and $0.36, respectively, all other factors unchanged. Comparable (non-GAAP) Excluding Loss on Sale of Securities Three months ended Six months ended (in thousands, except per share amounts; unaudited) June 30, 2025 March 31, 2025 June 30, 2025 June 30, 2024 Pre-tax, pre-provision net (loss) income Pre-tax, pre-provision net (loss) income (GAAP) $ (11,199 ) $ 6,556 $ (4,643 ) $ (24,903 ) Comparable pre-tax, pre-provision net income (non-GAAP) 7,537 6,556 14,093 7,639 Net (loss) income Net (loss) income (GAAP) (8,536 ) 4,876 (3,660 ) (18,980 ) Comparable net income (non-GAAP) 4,662 4,876 9,538 3,942 Diluted (loss) earnings per share Diluted (loss) earnings per share (GAAP) (0.53 ) 0.30 (0.23 ) (1.18 ) Comparable diluted earnings per share (non-GAAP) 0.29 0.30 0.59 0.24 See complete Reconciliation of GAAP and Non-GAAP Financial Measures below Related tax benefit calculated using blended statutory rate of 29.5636% Concurrent with this release, Bancorp issued presentation slides providing supplemental information, some of which will be discussed during the second quarter 2025 earnings call. The earnings release and presentation slides are intended to be reviewed together and can be found online on Bank of Marin’s website at www.bankofmarin.com. under “Investor Relations.” "We continue to take steps to improve our core financial performance as demonstrated by pre-tax pre-provision net income growth of 15% and 85% compared to the prior quarter and prior year to date, respectively," said Tim Myers, President and Chief Executive Officer. "Our recent securities repositioning, which was made possible by our strong capital and liquidity levels, should lead to further net interest margin expansion. "With stable asset quality, the continued addition of new loan and deposit relationships, and a healthy loan pipeline, we expect further improvement in our financial performance in the coming quarters," said Myers. Bancorp also provided the following highlights for the second quarter of 2025: As previously announced, the Bank sold available-for-sale ("AFS") securities with a book value of $185.8 million, resulting in a pre-tax loss of $18.7 million. Redeployment of the proceeds is expected to provide a 13 basis point increase in annualized net interest margin beginning in the third quarter and $0.20 of estimated earnings per share accretion over the next four quarters, assuming a 5.0% average yield on reinvestment. The securities repositioning is expected to have an approximate four-year earn back. The sale is part of a continued strategy to improve future earnings and increase return on equity. Excluding the loss on security sales, net income and diluted earnings per share for the second quarter would have been $4.7 million and $0.29, respectively, all other factors unchanged. See Reconciliation of GAAP and Non-GAAP Financial Measures below.The second quarter tax-equivalent net interest margin improved 7 basis points over the preceding quarter to 2.93% from 2.86%, largely due to the effects of new loan production at higher rates. The tax-equivalent net interest margin for the six months ended June 30, 2025 improved 39 basis points over the same period of the prior year due to the favorable impact of the securities repositioned in the second quarter of 2024, which resulted in higher yielding assets during the first six months of 2025.Return on average assets ("ROA") was (0.92)% (non-GAAP 0.50%) for the second quarter of 2025, compared to 0.53% for the prior quarter. Return on average equity ("ROE") was (7.80)% (non-GAAP 4.26%), compared to 4.52% for the prior quarter. The efficiency ratio for the second quarter of 2025 was 208.81% (non-GAAP 74.03%), compared to 76.44% last quarter. Non-GAAP ratios exclude the loss on security sales, all other factors unchanged, and with adjustments made based on the Company's blended statutory tax rate of 29.56%. See Reconciliation of GAAP and Non-GAAP Financial Measures below. Comparable (non-GAAP) Excluding Loss on Sale of Securities Three months ended Six months ended (in thousands, except per share amounts; unaudited) June 30, 2025 March 31, 2025 June 30, 2024 June 30, 2025 June 30, 2024 Return on average assets Return on average assets (GAAP) (0.92 )% 0.53 % (2.35 )% (0.20 )% (1.01 )% Comparable return on average assets (non-GAAP) 0.50 % 0.53 % 0.11 % 0.52 % 0.21 % Return on average equity Return on average equity (GAAP) (7.80 )% 4.52 % (20.36 )% (1.68 )% (8.79 )% Comparable return on average equity (non-GAAP) 4.26 % 4.52 % 0.95 % 4.39 % 1.83 % Efficiency ratio Efficiency ratio (GAAP) 208.81 % 76.44 % (300.37 )% 112.18 % 237.13 % Comparable efficiency ratio (non-GAAP) 74.03 % 76.44 % 86.70 % 75.21 % 84.93 % See complete Reconciliation of GAAP and Non-GAAP Financial Measures below Related tax benefit calculated using blended statutory rate of 29.5636% The average cost of total deposits and of interest-bearing deposits decreased by 1 and 3 basis points, respectively, to 1.28% and 2.24%, in the second quarter of 2025, compared to the prior quarter. Non-interest bearing deposits continued to make up a strong portion of total deposits at 42.5% as of June 30, 2025, compared to 43.2% last quarter.There was no provision for credit losses on loans in the second quarter of 2025 compared to a $75 thousand provision in the previous quarter. The allowance for credit losses was 1.44% of total loans at June 30, 2025, consistent with March 31, 2025.Classified loans were 2.95% of total loans compared to 2.77% last quarter largely due to downgrades from special mention in two commercial real estate relationships during the quarter totaling $3.9 million.Non-accrual loans were 1.57% of total loans at quarter-end, down from 1.59% at March 31, 2025.Total deposits of $3.245 billion as of June 30, 2025 compared to $3.302 billion as of March 31, 2025, the decrease mainly due to business expenses, payroll and distributions, asset purchases and seasonal outflows for tax payments.Capital was above well-capitalized regulatory thresholds with total risk-based capital ratios of 16.25% as of June 30, 2025 for Bancorp compared to 16.69% as of March 31, 2025. Bancorp's tangible common equity to tangible assets ("TCE ratio") was 9.95% as of June 30, 2025. Bancorp's TCE ratio net of after-tax unrealized losses on held-to-maturity securities as if the losses were realized 1 was 8.26% as of June 30, 2025.Bancorp repurchased 100,000 in shares for $2.2 million during the second quarter of 2025, contributing to an increase in the book value per share to $27.21 at June 30, 2025 compared to $27.13 at March 31, 2025, and the tangible book value per share 2 to $22.55 at June 30, 2025 compared to $22.48 at March 31, 2025.The Board of Directors declared a cash dividend of $0.25 per share on July 24, 2025, which represents the 81 st consecutive quarterly dividend paid by Bancorp. The dividend is payable on August 14, 2025, to shareholders of record at the close of business on August 7, 2025. "Expenses grew 1.1% compared to the prior quarter, which was in line with a roughly 4% annual expense growth rate in recent years," said Chief Financial Officer Dave Bonaccorso. "The expense increases included technology-related expenditures that are expected to drive future efficiency as well as costs for branch upgrades, annual events, and regulatory agencies. This increase was partially offset by a decline in contributions expense from the acceleration of most of our annual charitable contributions from the second quarter into the first quarter. Looking ahead, we expect that expenses for the second half of 2025 will be similar to the first half of the year." ____________________________ 1 Refer to the discussion and reconciliation of this non-GAAP financial measure in the section below entitled Statement Regarding Use of Non-GAAP Financial Measures. 2 Tangible book value per share is a non-GAAP financial measure used by Bancorp, as well as investors and analysts, in assessing Bancorp’s use of equity. Refer to the reconciliation of common equity to tangible common equity and resulting calculation of tangible book value per share in the section below entitled Statement Regarding Use of Non-GAAP Financial Measures. Loans and Credit Quality Loans totaled $2.074 billion as of June 30, 2025, a net increase of $90 thousand from March 31, 2025. Loan originations for the second quarter were $68.8 million ($50.2 million funded) including $49.1 million ($41.6 million funded) in commercial loans, which includes commercial and industrial and commercial real estate loans. In the prior quarter, loan originations were $63.6 million ($47.4 million funded) including $50.2 million ($43.2 million funded) in commercial loans. The second quarter of the prior year included total originations of $94.5 million ($64.1 million funded) including $43.1 million ($30.0 million funded) in commercial loans. Loan payoffs were $36.5 million for the second quarter of 2025, compared to $25.5 million for the first quarter of 2025 and $31.2 million in the second quarter of the prior year. In addition, there was $18.6 million of loan amortization from scheduled repayments and a net increase of $4.7 million in credit line utilization during the quarter ended June 30, 2025. Accruing loans past due 30 to 89 days totaled $2.7 million as of June 30, 2025, compared to $6.0 million as of March 31, 2025. Contributing to the decrease were two commercial loans totaling $3.6 million, of which $2.8 million was paid off and the remaining was reclassified as non-accrual. Non-accrual loans totaled $32.5 million, or 1.57% of the loan portfolio, at June 30, 2025, compared to $32.9 million, or 1.59% at March 31, 2025. Of the total non-accrual loans as of June 30, 2025, approximately 60% were paying as agreed, 89% were real estate secured, and all are being closely managed and monitored. The Bank continues to uphold its prudent underwriting standards. In response to current market conditions, we continue to closely monitor our portfolio for signs of potential weakness to ensure proactive risk management and actively work towards a resolution on our classified loans. Classified loans increased by $3.7 million to $61.1 million as of June 30, 2025, from $57.4 million as of March 31, 2025. The increase was largely due to downgrades of two commercial real estate loans totaling $3.9 million, partially offset by paydowns and payoffs totaling $1.1 million. Loans designated special mention, which are not considered adversely classified, increased by $2.6 million to $91.5 million as of June 30, 2025, from $88.9 million as of March 31, 2025. The increase was largely due to downgrades from pass or watch of $9.4 million, slightly offset by contractual paydowns and payoffs of $2.6 million and the downgrade of $4.2 million to substandard. There were $52 thousand in net charge-offs for the second quarter of 2025. This compared to net charge-offs of $825 thousand for the first quarter of 2025. There was no provision for credit losses on loans in the second quarter of 2025 and a $75 thousand provision in the prior quarter. The ratio of allowance for credit losses to total loans was unchanged at 1.44% at June 30, 2025, compared to 1.44% at March 31, 2025. Cash, Cash Equivalents and Restricted Cash Total cash, cash equivalents and restricted cash were $228.9 million at June 30, 2025, a decrease of $31.1 million compared to $259.9 million at March 31, 2025 largely due to the $56.9 million decrease in deposits, partially offset by paydowns and maturities of investment securities. Investments The investment securities portfolio totaled $1.215 billion at June 30, 2025, a decrease of $25.4 million from March 31, 2025. The decrease was primarily the result of the sale of available-for-sale securities with a book value of $185.8 million along with principal repayments and maturities of $57.0 million and $20.1 million, respectively, offset by the purchase of $219.2 million in available-for-sale securities and the reduction of the unrealized loss of $18.3 million in the portfolio which included the reduction of $18.7 million unrealized loss that was realized and recognized in the sale. Both the available-for-sale and held-to-maturity portfolios are eligible for pledging to FHLB or the Federal Reserve as collateral for borrowing. The portfolios are comprised of high credit quality investments with average effective durations of 2.55 on available-for-sale securities and 5.58 on held-to-maturity securities. Both portfolios generate cash flows monthly from interest, principal amortization and payoffs, which supports the Bank's liquidity. Those cash flows totaled $85.4 million and $72.8 million in the second and first quarters of 2025, respectively. Deposits Deposits decreased $56.9 million to $3.245 billion at June 30, 2025, compared to $3.302 billion at March 31, 2025. The majority of this decrease was $46.6 million in non-interest bearing deposits, largely affected by business expenses, payroll and distributions, asset purchases and seasonal outflows for tax payments. Despite that, non-interest bearing deposits continued to make up a strong 42.5% of total deposits at June 30, 2025, compared to 43.2% at March 31, 2025. The Bank's competitive and balanced approach to relationship management and focused outreach to customers seeking alternative options for banking solutions generated over 1,000 new accounts during the second quarter, 40% of which were new relationships (excluding new reciprocal accounts). Borrowings and Liquidity At June 30, 2025, the Bank had no outstanding borrowings, consistent with March 31, 2025. While available as a liquidity source, we have not utilized brokered deposits. Net available funding sources, including unrestricted cash, unencumbered available-for-sale securities and total available borrowing capacity totaled $1.863 billion, or 57% of total deposits and 200% of estimated uninsured and/or uncollateralized deposits as of June 30, 2025. The following table details the components of our contingent liquidity sources as of June 30, 2025. (in millions) Total Available Amount Used Net Availability Internal Sources Unrestricted cash1 $ 201.1 $ — $ 201.1 Unencumbered securities at market value 271.0 — 271.0 External Sources FHLB line of credit 946.0 — 946.0 FRB line of credit 319.8 — 319.8 Lines of credit at correspondent banks 125.0 — 125.0 Total Liquidity $ 1,862.9 $ — $ 1,862.9 1 Excludes cash items in transit as of June 30, 2025. Note: Brokered deposits available through third-party networks are not included above. Capital Resources The total risk-based capital ratio for Bancorp was 16.25% at June 30, 2025, compared to 16.69% at March 31, 2025. The decrease was largely due to losses realized on the sale of available-for-sale securities associated with the portfolio repositioning. The total risk-based capital ratio for the Bank was 15.00% at June 30, 2025, compared to 16.45% at March 31, 2025. The decrease was mainly due to a dividend of $32.0 million that was paid by the Bank to Bancorp during the second quarter of 2025. Bancorp's tangible common equity to tangible assets ("TCE ratio") was 9.95% at June 30, 2025, compared to 9.82% at March 31, 2025. Our capital plan and point-in-time capital stress tests indicate that Bank of Marin and Bancorp capital ratios will remain above regulatory well-capitalized and internal policy minimums throughout a five-year forecast horizon and across stress scenarios such as additional unrealized losses on the investment portfolio, additional deposit growth or decline, loan credit quality deterioration, and potential share repurchases. Earnings Net Interest Income Net interest income totaled $25.9 million for the second quarter of 2025, a $966 thousand increase from the prior quarter. This was driven by an increase of $9.6 million in average earning assets including a $678 thousand increase in loan interest income due to the continued replenishment of the loan portfolio at higher rates. The tax-equivalent net interest margin increased to 2.93% for the second quarter of 2025, compared to 2.86% for the prior quarter. Loan originations at higher rates contributed to 4 basis points growth in the second quarter. Higher average interest-earning deposit balances with banks increased the margin by 2 basis points and the repositioning of securities added 1 basis point to the margin, with more impact to come. Non-Interest Income (Loss) Non-interest income was in a loss position of $15.6 million for the second quarter of 2025, compared to net interest income of $2.9 million for the prior quarter. The decrease of $18.5 million from the prior quarter was primarily attributable to a loss of $18.7 million on the sale of available-for-sale investment securities during the second quarter, slightly offset by the recording of a bank owned life insurance death benefit receivable. Excluding the loss on sale of securities, non-interest income for the quarter was $3.1 million, an increase of $241 thousand from prior quarter. Non-Interest Expense Non-interest expense totaled $21.5 million for the second quarter of 2025, compared to $21.3 million for the prior quarter, an increase of $226 thousand. This was mainly due to increased information technology expense and other expenses including the annual shareholders meeting and other events, partially offset by reduced charitable contribution expense in the second quarter which was paid out mostly in the first quarter for the 2025 year. Statement Regarding use of Non-GAAP Financial Measures Financial results are presented in accordance with GAAP and with reference to certain non-GAAP financial measures. Management believes that, given industry turmoil that largely began in the first quarter of 2023, the presentation of Bancorp's non-GAAP TCE ratio reflecting the after tax impact of unrealized losses on held-to-maturity securities provides useful supplemental information to investors because it reflects the level of capital remaining after a hypothetical liquidation of the entire securities portfolio. In addition, management believes that providing selected financial measures excluding the loss on sale of securities discussed above is useful to investors as the strategic short-term loss taken for long-term profitability makes the operational performance difficult to compare to other periods. Because there are limits to the usefulness of this or any other non-GAAP measure to investors, Bancorp encourages readers to consider its annual and quarterly consolidated financial statements and notes related thereto for their entirety, as filed with the Securities and Exchange Commission, and not to rely on any single financial measure. A reconciliation of the GAAP financial measures to comparable non-GAAP financial measures is presented below. Reconciliation of GAAP and Non-GAAP Financial Measures (in thousands, except per share amounts; unaudited) June 30, 2025 March 31, 2025 December 31, 2024 Tangible Common Equity - Bancorp Total stockholders' equity $ 438,538 $ 439,566 $ 435,407 Goodwill and core deposit intangible (75,098 ) (75,319 ) (75,546 ) Total TCE a 363,440 364,247 359,861 Unrealized losses on HTM securities, net of tax1 (74,625 ) (77,768 ) (89,171 ) Unrealized losses on HTM securities included in AOCI, net of tax 2 7,205 7,462 7,701 TCE, net of unrealized losses on HTM securities (non-GAAP) b $ 296,020 $ 293,941 $ 278,391 Total assets $ 3,726,193 $ 3,784,243 $ 3,701,335 Goodwill and core deposit intangible (75,098 ) (75,319 ) (75,546 ) Total tangible assets c 3,651,095 3,708,924 3,625,789 Unrealized losses on HTM securities, net of tax1 (74,625 ) (77,768 ) (89,171 ) Unrealized losses on HTM securities included in AOCI, net of tax 7,205 7,462 7,701 Total tangible assets, net of unrealized losses on HTM securities (non-GAAP) d $ 3,583,675 $ 3,638,618 $ 3,544,319 Bancorp TCE ratio a / c 10.0 % 9.8 % 9.9 % Bancorp TCE ratio, net of unrealized losses on HTM securities (non-GAAP) b / d 8.3 % 8.1 % 7.9 % Tangible Book Value Per Share Common shares outstanding e 16,116 16,203 16,089 Book value per share $ 27.21 $ 27.13 $ 27.06 Tangible book value per share a / e $ 22.55 $ 22.48 $ 22.37 1 Unrealized losses on held-to-maturity securities as of June 30, 2025, March 31, 2025 and December 31, 2024 of $105.9 million, $110.4 million and $126.6 million, respectively, including the unrealized losses that resulted from the transfer of securities from AFS to HTM, net of an estimated $31.3 million, $32.6 million and $37.4 million, respectively, in deferred tax benefits based on a blended state and federal statutory tax rate of 29.56%. 2 The remaining unrealized losses that resulted from the transfer of securities from AFS to HTM, as of June 30, 2025, March 31, 2025 and December 31, 2024, net of an estimated $3.0 million, $3.1 million and $3.2 million, respectively, in deferred tax benefits based on a blended state and federal statutory tax rate of 29.56% are added back as they are already included in AOCI. Reconciliation of GAAP and Non-GAAP Financial Measures (continued) (in thousands, except per share amounts; unaudited) Three months ended Six months ended Pre-tax, pre-provision net (loss) income June 30, 2025 March 31, 2025 June 30, 2024 June 30, 2025 June 30, 2024 (Loss) income before (benefit from) provision for income taxes $ (11,199 ) $ 6,481 $ (34,382 ) $ (4,718 ) $ (30,453 ) Provision for credit losses on loans — 75 5,200 75 5,550 Pre-tax, pre-provision net (loss) income (GAAP) (11,199 ) 6,556 (29,182 ) (4,643 ) (24,903 ) Adjustments: Losses on sale of investment securities from portfolio repositioning 18,736 — 32,542 18,736 32,542 Comparable pre-tax, pre-provision net income (non-GAAP) $ 7,537 $ 6,556 $ 3,360 $ 14,093 $ 7,639 Net (loss) income Net (loss) income (GAAP) $ (8,536 ) $ 4,876 $ (21,902 ) $ (3,660 ) $ (18,980 ) Adjustments: Losses on sale of investment securities from portfolio repositioning 18,736 — 32,542 18,736 32,542 Related income tax benefit1 (5,538 ) — (9,620 ) (5,538 ) (9,620 ) Adjustments, net of taxes 13,198 — 22,922 13,198 22,922 Comparable net income (non-GAAP) $ 4,662 $ 4,876 $ 1,020 $ 9,538 $ 3,942 Diluted (loss) earnings per share Weighted average diluted shares 15,989 16,002 16,108 15,983 16,095 Diluted (loss) earnings per share (GAAP) $ (0.53 ) $ 0.30 $ (1.36 ) $ (0.23 ) $ (1.18 ) Comparable diluted earnings per share (non-GAAP) $ 0.29 $ 0.30 $ 0.06 $ 0.60 $ 0.24 Return on average assets Average assets $ 3,737,794 $ 3,728,066 $ 3,751,159 $ 3,732,957 $ 3,781,214 Return on average assets (GAAP) (0.92 )% 0.53 % (2.35 )% (0.20 )% (1.01 )% Comparable return on average assets (non-GAAP) 0.50 % 0.53 % 0.11 % 0.52 % 0.21 % Return on average equity Average stockholders' equity $ 439,187 $ 437,176 $ 432,962 $ 438,187 $ 434,332 Return on average equity (GAAP) (7.80 )% 4.52 % (20.36 )% (1.68 )% (8.79 )% Comparable return on average equity (non-GAAP) 4.26 % 4.52 % 0.95 % 4.39 % 1.83 % Efficiency ratio Non-interest expense $ 21,490 $ 21,264 $ 21,894 $ 42,754 $ 43,063 Net interest income $ 25,912 $ 24,946 $ 22,467 $ 50,858 $ 45,161 Non-interest income (GAAP) $ (15,621 ) $ 2,874 $ (29,755 ) $ (12,747 ) $ (27,001 ) Losses on sale of investment securities from portfolio repositioning 18,736 — 32,542 18,736 32,542 Non-interest income (non-GAAP) $ 3,115 $ 2,874 $ 2,787 $ 5,989 $ 5,541 Efficiency ratio (GAAP) 208.81 % 76.44 % (300.37 )% 112.18 % 237.13 % Comparable efficiency ratio (non-GAAP) 74.03 % 76.44 % 86.70 % 75.21 % 84.93 % 1Related tax benefit calculated using blended statutory rate of 29.5636% Share Repurchase Program Bancorp repurchased 100,000 shares totaling $2.2 million at an average price of $21.72 per share during the second quarter of 2025 under our existing share repurchase program expiring July 31, 2025. As announced in the Form 8-K filed simultaneously today, the board of directors has authorized the repurchase of up to $25.0 million of its common stock effective July 24, 2025 through July 31, 2027. This stock buyback program replaces the existing program approved in 2023 and expiring July 31, 2025 under which Bancorp repurchased $6.4 million worth in shares. Insider Trading Policy Revisions Following a review of industry practice and consultation with Bancorp’s legal counsel, certain revisions to Bancorp’s Insider Trading Policy were approved by the board of directors at a meeting on July 24, 2025. Among the revisions, the commencement of the regular quarterly blackout period was changed from three weeks prior to quarter end to two weeks prior to quarter end. Additionally, provisions were added covering the use of 10b5-1 trading plans by Bancorp employees and directors requiring pre-approval of any such plans by Bancorp and mandating that such plans conform to Securities and Exchange Commission rules. Earnings Call and Webcast Information Bank of Marin Bancorp (Nasdaq: BMRC) will present its second quarter financial results call via webcast on Monday, July 28, 2025 at 8:30 a.m. PT/11:30 a.m. ET. Investors can listen to the webcast online through Bank of Marin’s website at www.bankofmarin.com. under “Investor Relations.” To listen to the live call, please go to the website at least 15 minutes early to register, download and install any necessary audio software. For those who cannot listen to the live broadcast, a replay will be available at the same website location shortly after the call. Closed captioning will be available during the live webcast, as well as on the webcast replay. About Bank of Marin Bancorp Founded in 1990 and headquartered in Novato, Bank of Marin is the wholly owned subsidiary of Bank of Marin Bancorp (Nasdaq: BMRC). A leading business and community bank with assets of $3.7 billion, Bank of Marin provides commercial and personal banking, specialty lending, and wealth management and trust services throughout its network of 27 branches and eight commercial banking offices serving Northern California. Specializing in providing legendary service to its clients and investing in its local communities, Bank of Marin has consistently been ranked one of the “Top Corporate Philanthropists” by San Francisco Business Times since 2003, was inducted into NorthBay Biz’s “Best of” Hall of Fame in 2024, and ranked top 13 in Sacramento Business Journal’s 2025 Corporate Direct Giving List. Bank of Marin Bancorp is included in the Russell 2000 Small-Cap Index and Nasdaq ABA Community Bank Index. For more information, visit www.bankofmarin.com. Forward-Looking Statements This release may contain certain forward-looking statements that are based on management's current expectations regarding economic, legislative, and regulatory issues that may impact Bancorp's earnings in future periods. Forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts. They often include the words “believe,” “expect,” “intend,” “estimate” or words of similar meaning, or future or conditional verbs such as “will,” “would,” “should,” “could” or “may.” Factors that could cause future results to vary materially from current management expectations include, but are not limited to, general economic conditions and the economic uncertainty in the United States and abroad, including economic or other disruptions to financial markets caused by the Trump administration's approach to tariffs and trade, acts of terrorism, war or other conflicts, impacts from inflation, supply chain disruptions, changes in interest rates (including the actions taken by the Federal Reserve to control inflation), California's unemployment rate, deposit flows, real estate values, and expected future cash flows on loans and securities; the impact of adverse developments at other banks, including bank failures, that impact general sentiment regarding the stability and liquidity of banks; costs or effects of acquisitions; competition; changes in accounting principles, policies or guidelines; changes in legislation or regulation; natural disasters (such as wildfires and earthquakes in our area); adverse weather conditions; interruptions of utility service in our markets for sustained periods; and other economic, competitive, governmental, regulatory and technological factors (including external fraud and cybersecurity threats) affecting our operations, pricing, products and services; and successful integration of acquisitions. These and other important factors are detailed in various securities law filings made periodically by Bancorp, copies of which are available from Bancorp without charge. Bancorp undertakes no obligation to release publicly the result of any revisions to these forward-looking statements that may be made to reflect events or circumstances after the date of this press release or to reflect the occurrence of unanticipated events. BANK OF MARIN BANCORP FINANCIAL HIGHLIGHTS Three months ended Six months ended (in thousands, except per share amounts; unaudited) June 30, 2025 March 31, 2025 June 30, 2024 June 30, 2025 June 30, 2024 Selected operating data and performance ratios: Net income (loss) $ (8,536 ) $ 4,876 $ (21,902 ) $ (3,660 ) $ (18,980 ) Diluted earnings (loss) per common share $ (0.53 ) $ 0.30 $ (1.36 ) $ (0.23 ) $ (1.18 ) Return on average assets (0.92 )% 0.53 % (2.35 )% (0.20 )% (1.01 )% Return on average equity (7.80 )% 4.52 % (20.36 )% (1.68 )% (8.79 )% Efficiency ratio 208.81 % 76.44 % (300.37 )% 112.18 % 237.13 % Tax-equivalent net interest margin 2.93 % 2.86 % 2.52 % 2.90 % 2.51 % Cost of deposits 1.28 % 1.29 % 1.45 % 1.28 % 1.41 % Cost of funds 1.28 % 1.29 % 1.46 % 1.28 % 1.42 % Net charge-offs (recoveries) $ 52 $ 825 $ 26 $ 877 $ 47 Net charge-offs to average loans NM 0.04 % NM 0.04 % NM (in thousands; unaudited) June 30, 2025 March 31, 2025 December 31, 2024 Selected financial condition data: Total assets $ 3,726,193 $ 3,784,243 $ 3,701,335 Loans: Commercial and industrial $ 154,576 $ 147,291 $ 152,263 Real estate: Commercial owner-occupied 320,439 319,112 321,962 Commercial non-owner occupied 1,285,803 1,292,281 1,273,596 Construction 25,018 25,745 36,970 Home equity 95,242 89,240 88,325 Other residential 127,946 133,960 143,207 Installment and other consumer loans 64,614 65,919 66,933 Total loans $ 2,073,638 $ 2,073,548 $ 2,083,256 Non-accrual loans: 1 Commercial and industrial $ 2,793 $ 2,845 $ 2,845 Real estate: Commercial owner-occupied 1,554 1,493 $ 1,537 Commercial non-owner occupied 26,012 26,826 28,525 Home equity 1,456 1,353 752 Other residential 282 206 — Installment and other consumer loans 375 198 222 Total non-accrual loans $ 32,472 $ 32,921 $ 33,881 Non-accrual loans to total loans 1.57 % 1.59 % 1.63 % Classified loans (graded substandard and doubtful) $ 61,090 $ 57,435 $ 45,104 Classified loans as a percentage of total loans 2.95 % 2.77 % 2.17 % Total accruing loans 30-89 days past due $ 2,702 $ 5,965 $ 2,231 Total accruing loans 90+ days past due 1 $ — $ — $ — Allowance for credit losses to total loans 1.44 % 1.44 % 1.47 % Allowance for credit losses to non-accrual loans 0.92x 0.91x 0.90x Total deposits $ 3,245,048 $ 3,301,971 $ 3,220,015 Loan-to-deposit ratio 63.90 % 62.80 % 64.70 % Stockholders' equity $ 438,538 $ 439,566 $ 435,407 Book value per share $ 27.21 $ 27.13 $ 27.06 Tangible book value per share $ 22.55 $ 22.48 $ 22.37 Tangible common equity to tangible assets - Bank 9.09 % 9.66 % 9.64 % Tangible common equity to tangible assets - Bancorp 9.95 % 9.82 % 9.93 % Total risk-based capital ratio - Bank 15.00 % 16.45 % 16.13 % Total risk-based capital ratio - Bancorp 16.25 % 16.69 % 16.54 % Full-time equivalent employees 302 291 285 1 There were no non-performing loans over 90 days past due and accruing interest as of June 30, 2025, March 31, 2025 and December 31, 2024. NM - Not meaningful BANK OF MARIN BANCORP CONSOLIDATED STATEMENTS OF CONDITION (in thousands, except share data; unaudited) June 30, 2025 March 31, 2025 December 31, 2024 Assets Cash, cash equivalents and restricted cash $ 228,863 $ 259,924 $ 137,304 Investment securities: Held-to-maturity, at amortized cost (net of zero allowance for credit losses at June 30, 2025, March 31, 2025 and December 31, 2024) 823,314 834,640 879,199 Available-for-sale (at fair value; amortized cost of $402,205, $434,479 and $419,292 at June 30, 2025, March 31, 2025 and December 31, 2024, respectively; net of zero allowance for credit losses at June 30, 2025, March 31, 2025 and December 31, 2024) 391,985 406,009 387,534 Total investment securities 1,215,299 1,240,649 1,266,733 Loans, at amortized cost 2,073,638 2,073,548 2,083,256 Allowance for credit losses on loans (29,854 ) (29,906 ) (30,656 ) Loans, net of allowance for credit losses on loans 2,043,784 2,043,642 2,052,600 Goodwill 72,754 72,754 72,754 Bank-owned life insurance 70,432 71,066 71,026 Operating lease right-of-use assets 18,316 19,076 19,025 Bank premises and equipment, net 7,472 6,824 6,832 Core deposit intangible, net 2,344 2,565 2,792 Interest receivable and other assets 66,929 67,743 72,269 Total assets $ 3,726,193 $ 3,784,243 $ 3,701,335 Liabilities and Stockholders' Equity Liabilities Deposits: Non-interest bearing $ 1,379,814 $ 1,426,446 $ 1,399,900 Interest bearing: Transaction accounts 180,444 184,322 198,301 Savings accounts 221,172 228,038 225,691 Money market accounts 1,246,013 1,246,739 1,153,746 Time accounts 217,605 216,426 242,377 Total deposits 3,245,048 3,301,971 3,220,015 Borrowings and other obligations 77 116 154 Operating lease liabilities 20,668 21,497 21,509 Interest payable and other liabilities 21,862 21,093 24,250 Total liabilities 3,287,655 3,344,677 3,265,928 Stockholders' Equity Preferred stock, no par value, Authorized - 5,000,000 shares, none issued — — — Common stock, no par value, Authorized - 30,000,000 shares; issued and outstanding - 16,116,470, 16,202,869 and 16,089,454 at June 30, 2025, March 31, 2025 and December 31, 2024, respectively 214,713 216,263 215,511 Retained earnings 238,225 250,815 249,964 Accumulated other comprehensive loss, net of taxes (14,400 ) (27,512 ) (30,068 ) Total stockholders' equity 438,538 439,566 435,407 Total liabilities and stockholders' equity $ 3,726,193 $ 3,784,243 $ 3,701,335 BANK OF MARIN BANCORP CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME Three months ended Six months ended (in thousands, except per share amounts; unaudited) June 30, 2025 March 31, 2025 June 30, 2025 June 30, 2024 Interest income Interest and fees on loans $ 25,861 $ 25,183 $ 51,044 $ 50,129 Interest on investment securities 8,423 8,261 16,684 17,104 Interest on federal funds sold and due from banks 2,004 1,795 3,799 1,245 Total interest income 36,288 35,239 71,527 68,478 Interest expense Interest on interest-bearing transaction accounts 351 343 694 535 Interest on savings accounts 587 533 1,120 882 Interest on money market accounts 7,878 7,626 15,504 17,090 Interest on time accounts 1,559 1,790 3,349 4,571 Interest on borrowings and other obligations 1 1 2 239 Total interest expense 10,376 10,293 20,669 23,317 Net interest income 25,912 24,946 50,858 45,161 Provision for credit losses on loans — 75 75 5,550 Net interest income after provision for credit losses 25,912 24,871 50,783 39,611 Non-interest income Earnings on bank-owned life insurance, net 667 544 1,211 856 Wealth management and trust services 612 563 1,175 1,138 Service charges on deposit accounts 550 548 1,098 1,070 Debit card interchange fees, net 410 396 806 852 Dividends on Federal Home Loan Bank stock 362 375 737 743 Merchant interchange fees, net 90 96 186 177 Losses on sale of investment securities (18,736 ) — (18,736 ) (32,542 ) Other income 424 352 776 705 Total non-interest income (15,621 ) 2,874 (12,747 ) (27,001 ) Non-interest expense Salaries and related benefits 12,045 12,050 24,095 24,448 Occupancy and equipment 2,226 2,106 4,332 4,018 Deposit network fees 1,054 932 1,986 1,761 Data processing 1,041 1,136 2,177 2,075 Professional services 908 937 1,845 2,121 Information technology 563 413 976 850 Federal Deposit Insurance Corporation insurance 421 388 809 861 Depreciation and amortization 320 322 642 767 Directors' expense 279 304 583 623 Amortization of core deposit intangible 220 227 447 497 Charitable contributions 116 403 519 617 Other expense 2,297 2,046 4,343 4,425 Total non-interest expense 21,490 21,264 42,754 43,063 (Loss) income before (benefit from) provision for income taxes (11,199 ) 6,481 (4,718 ) (30,453 ) (Benefit from) provision for income taxes (2,663 ) 1,605 (1,058 ) (11,473 ) Net (loss) income $ (8,536 ) $ 4,876 $ (3,660 ) $ (18,980 ) Net (loss) income per common share Basic $ (0.53 ) $ 0.31 $ (0.23 ) $ (1.18 ) Diluted $ (0.53 ) $ 0.30 $ (0.23 ) $ (1.18 ) Weighted average shares: Basic 15,989 15,977 15,983 16,095 Diluted 15,989 16,002 15,983 16,095 Comprehensive income: Net (loss) income $ (8,536 ) $ 4,876 $ (3,660 ) $ (18,980 ) Other comprehensive income: Change in net unrealized gains or losses on available-for-sale securities (486 ) 3,289 2,803 (4,009 ) Reclassification adjustment for realized losses on available-for-sale securities in net income 18,736 — 18,736 32,542 Reclassification adjustment for gains or losses on fair value hedges — — — 1,499 Amortization of net unrealized losses on securities transferred from available-for-sale to held-to-maturity 365 340 705 764 Other comprehensive income, before tax 18,615 3,629 22,244 30,796 Deferred tax expense 5,503 1,073 6,576 9,097 Other comprehensive income, net of tax 13,112 2,556 15,668 21,699 Total comprehensive income $ 4,576 $ 7,432 $ 12,008 $ 2,719 BANK OF MARIN BANCORP AVERAGE STATEMENTS OF CONDITION AND ANALYSIS OF NET INTEREST INCOME Three months ended Three months ended June 30, 2025 March 31, 2025 Interest Interest Average Income/ Yield/ Average Income/ Yield/ (in thousands) Balance Expense Rate Balance Expense Rate Assets Interest-earning deposits with banks 1 $ 180,730 $ 2,004 4.39 % $ 163,446 $ 1,795 4.39 % Investment securities 2, 3 1,266,317 8,495 2.68 % 1,273,422 8,331 2.62 % Loans1, 3, 4, 5 2,073,110 25,965 4.95 % 2,073,739 25,289 4.88 % Total interest-earning assets 1 3,520,157 36,464 4.10 % 3,510,607 35,415 4.04 % Cash and non-interest-bearing due from banks 37,721 37,493 Bank premises and equipment, net 7,259 6,831 Interest receivable and other assets, net 172,657 173,135 Total assets $ 3,737,794 $ 3,728,066 Liabilities and Stockholders' Equity Interest-bearing transaction accounts $ 187,297 $ 351 0.75 % $ 191,089 $ 343 0.73 % Savings accounts 222,524 587 1.06 % 227,098 533 0.95 % Money market accounts 1,227,506 7,878 2.57 % 1,192,956 7,626 2.59 % Time accounts including CDARS 218,150 1,559 2.87 % 228,018 1,790 3.18 % Borrowings and other obligations1 91 1 3.39 % 130 1 2.86 % Total interest-bearing liabilities 1,855,568 10,376 2.24 % 1,839,291 10,293 2.27 % Demand accounts 1,398,570 1,406,648 Interest payable and other liabilities 44,469 44,951 Stockholders' equity 439,187 437,176 Total liabilities & stockholders' equity $ 3,737,794 $ 3,728,066 Tax-equivalent net interest income/margin1 $ 26,088 2.93 % $ 25,122 2.86 % Reported net interest income/margin1 $ 25,912 2.91 % $ 24,946 2.84 % Tax-equivalent net interest rate spread 1.86 % 1.77 % Six months ended Six months ended June 30, 2025 June 30, 2024 Interest Interest Average Income/ Yield/ Average Income/ Yield/ (in thousands) Balance Expense Rate Balance Expense Rate Assets Interest-earning deposits with banks1 $ 172,136 $ 3,799 4.39 % $ 45,613 $ 1,245 5.40 % Investment securities2, 3 1,269,850 16,821 2.65 % 1,480,462 17,247 2.33 % Loans 1, 3, 4, 5 2,073,423 51,254 4.92 % 2,063,351 50,346 4.83 % Total interest-earning assets1 3,515,409 71,874 4.07 % 3,589,426 68,838 3.79 % Cash and non-interest-bearing due from banks 37,608 36,275 Bank premises and equipment, net 7,046 7,564 Interest receivable and other assets, net 172,894 147,949 Total assets $ 3,732,957 $ 3,781,214 Liabilities and Stockholders' Equity Interest-bearing transaction accounts $ 189,182 $ 694 0.74 % $ 206,268 $ 535 0.52 % Savings accounts 224,798 1,120 1.00 % 228,559 882 0.78 % Money market accounts 1,210,327 15,504 2.58 % 1,152,492 17,090 2.98 % Time accounts including CDARS 223,057 3,349 3.03 % 262,598 4,571 3.50 % Borrowings and other obligations1 110 2 3.08 % 9,116 239 5.18 % Total interest-bearing liabilities 1,847,474 20,669 2.26 % 1,859,033 23,317 2.52 % Demand accounts 1,402,587 1,440,114 Interest payable and other liabilities 44,709 47,735 Stockholders' equity 438,187 434,332 Total liabilities & stockholders' equity $ 3,732,957 $ 3,781,214 Tax-equivalent net interest income/margin1 $ 51,205 2.90 % $ 45,521 2.51 % Reported net interest income/margin 1 $ 50,858 2.88 % $ 45,161 2.49 % Tax-equivalent net interest rate spread 1.81 % 1.27 % 1 Interest income/expense is divided by actual number of days in the period times 360 days to correspond to stated interest rate terms, where applicable. 2 Yields on available-for-sale securities are calculated based on amortized cost balances rather than fair value, as changes in fair value are reflected as a component of stockholders' equity. Investment security interest is earned on 30/360 day basis monthly. 3 Yields and interest income on tax-exempt securities and loans are presented on a taxable-equivalent basis using the Federal statutory rate of 21 percent. 4 Average balances on loans outstanding include non-performing loans. The amortized portion of net loan origination fees is included in interest income on loans, representing an adjustment to the yield. 5 Net loan origination costs in interest income totaled $399 thousand and $364 thousand for the three months ended June 30, 2025 and March 31, 2025, and totaled $764 thousand and $811 thousand for the six months ended June 30, 2025 and 2024, respectively. Source: Bank of Marin Bancorp