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 Bank of Marin Bancorp Reports Fourth Quarter and Full Year 2017 Results
   Monday, January 22, 2018 8:00:03 AM ET

Bank of Marin Bancorp, "Bancorp" (BMRC ), parent company of Bank of Marin, "Bank," announced earnings of $1.1 million in the fourth quarter of 2017, which reflected $3.0 million in a deferred tax asset write-down and $1.7 million in acquisition expenses ($1.1 million net of taxes), compared to $5.1 million in the third quarter of 2017 and $5.7 million in the fourth quarter of 2016. Diluted earnings per share were $0.17 in the fourth quarter of 2017, compared to $0.83 in the prior quarter and $0.93 in the same quarter a year ago. Annual earnings were $16.0 million in 2017 compared to $23.1 million a year ago. Diluted earnings per share were $2.55 for the year ended December 31, 2017, compared to $3.78 per share for the year ended December 31, 2016.



Earnings in the fourth quarter and full year 2017 included a $3.0 million one-time deferred tax asset write-down due to the enactment of the new federal tax law on December 22, 2017, and expenses related to the acquisition of Bank of Napa. Without these expenses, diluted earnings per share would have been $0.80 for the fourth quarter and $3.28 for the full year, and net income would have been $5.2 million and $20.5 million for the quarter and the year ended December 31, 2017, respectively. Refer to Page 5 for a detailed reconciliation of these financial measures presented according to the Generally Accepted Accounting Principles ("GAAP") vs. non-GAAP. Additionally, annual earnings in 2016 were higher than 2017 due to loan recoveries and early payoff of several acquired loans purchased at a discount, which positively impacted the 2016 EPS by $0.47.

"Every area of the Bank executed exceptionally well in 2017, and this allowed us to deliver another year of healthy financial performance and significant growth in loans and deposits," said Russell A. Colombo, President and CEO of Bank of Marin. "Our acquisition of Bank of Napa and our investment in organic growth are already contributing to our performance. These investments, in combination with our relationship banking model and our strong market position and reputation in the attractive San Francisco Bay area, should position us well for another year of growth and robust performance in 2018."

Bancorp also provided the following highlights for the year ended December 31, 2017:

-- In 2017, Bank of Marin acquired Bank of Napa. As a result, Bank of Marin is the largest community bank in Napa County by deposit share. This is the third acquisition in the past six years that strengthens the Bank’s presence in the San Francisco Bay Area.

-- As part of its organic growth plan, the Bank expanded its executive and lending teams with several strategic hires in 2017, including James Kimball, EVP and Chief Operating Officer, and Scott McAdams, SVP and Commercial Banking Regional Manager for the Bank’s Napa and Sonoma markets.

-- The Bank achieved organic loan growth of $59.5 million, or 4.0% in 2017. Including loans acquired from Bank of Napa, the total loan portfolio grew 12.9% from $1,486.6 million at December 31, 2016 to $1,679.0 million at December 31, 2017.

-- Organic deposit growth was $144.5 million, or 8.2% for the year. Combined organic growth and deposits acquired from Bank of Napa resulted in 21.2% total deposit growth to $2,148.7 million at December 31, 2017, compared to $1,772.7 million at December 31, 2016. Non-interest bearing deposits, including those acquired, grew by $90.0 million in the fourth quarter of 2017 and made up 47% of total deposits at year end.

-- Strong credit quality remains a cornerstone of the Bank’s consistent performance. Non-accrual loans represent 0.02% of the Bank’s loan portfolio as of December 31, 2017. A $500 thousand provision for loan losses was recorded in the fourth quarter due to continuing loan growth and elevated risk factors associated with the unknown long-term impacts of the 2017 North Bay wildfires and effects of the Bank of Napa acquisition.

-- While the long-term impact of the October 2017 wildfires on the North Bay economy is still unknown, the immediate impact to our loan portfolio and to our customer base was minimal. Bank of Marin is committed to helping our customers and our communities recover and rebuild.

-- The efficiency ratio increased to 68.3% in the fourth quarter from 62.5% in the third quarter of 2017, primarily due to acquisition-related expenses. The efficiency ratio was 64.7% for the full year, up from 57.9% in 2016. Acquisition expenses increased the efficiency ratio by 6 percentage points in the fourth quarter and 2.2 percentage points for the year.

-- For the year ended December 31, 2017, return on assets ("ROA") was 0.75% and return on equity ("ROE") was 6.49%. Acquisition expenses and the deferred tax asset write-down reduced ROA by 0.22 percentage points and ROE by 1.86 percentage points.

-- All capital ratios are well above regulatory requirements for a well-capitalized institution. The total risk-based capital ratio for Bancorp was 14.9% at December 31, 2017, compared to 14.3% at December 31, 2016. Tangible common equity to tangible assets decreased to 10.7% at December 31, 2017, from 11.0% at December 31, 2016 (refer to footnote 3 on page 9 for definition of this non-GAAP financial measure). The deferred tax asset write-down of $3.0 million represented 1.16% of tangible equity.

-- The Board of Directors declared a cash dividend of $0.29 per share on January 19, 2018. This represents the 51st consecutive quarterly dividend paid by Bank of Marin Bancorp. The cash dividend is payable on February 9, 2018 to shareholders of record at the close of business on February 2, 2018.

Loans and Credit Quality

Organic loan originations totaled approximately $51.5 million in the fourth quarter of 2017, compared to $42.3 million in the third quarter and $61.8 million in the fourth quarter of 2016. New loan originations were partially offset by payoffs of $26.4 million, and combined with utilization on lines of credit and amortization on existing loans, resulted in a net increase of $21.7 million. Payoffs in the quarter ended December 31, 2017 were down from $41.8 million in the same quarter last year.

Full-year organic loan originations totaled $173.1 million, compared to $191.8 million last year, with increasing contributions from commercial banking offices in our newer markets. Originations increased in the Napa market and were enhanced by the acquisition, and lending activity has increased in Oakland. Loan payoffs of $132.5 million were down from $157.9 million in 2016 and remain largely due to asset sales and the successful completion of construction projects.

Non-accrual loans totaled $406 thousand, or 0.02%, of the Bank’s loan portfolio at December 31, 2017, a decrease from $1.3 million, or 0.09%, at September 30, 2017 and an increase from $145 thousand, or 0.01%, a year ago. Loans classified substandard totaled $27.9 million at December 31, 2017, compared to $33.5 million at September 30, 2017 and $19.6 million at December 31, 2016. There were no loans classified doubtful at December 31, 2017 or December 31, 2016. Accruing loans past due 30 to 89 days totaled $1.9 million at December 31, 2017, compared to $205 thousand at September 30, 2017 and $410 thousand a year ago.

The provision for loan losses totaled $500 thousand in the fourth quarter of 2017, which was consistent with our organic loan growth and changing risk factors, compared to a reversal of $300 thousand in the fourth quarter a year ago. The provision for loan losses totaled $500 thousand in 2017, compared to reversal of loan losses of $1.9 million in 2016 due to the resolution of a problem credit upon payoff. Net recoveries for the fourth quarter totaled $21 thousand compared to $16 thousand in the prior quarter and $29 thousand in the fourth quarter a year ago. Net charge-offs totaled $175 thousand for the year ended December 31, 2017, compared to net recoveries of $2.3 million in 2016, primarily related to the resolution of a problem commercial real estate credit. The ratio of loan loss reserve to loans, including acquired loans, was 0.94% at December 31, 2017, 1.00% at September 30, 2017 and 1.04% at December 31, 2016. Based on legacy portfolio only, the ratio of loan loss reserve to loans was 1.06% at December 31, 2017 compared to 1.05% at September 30, 2017.

Investments

The investment portfolio totaled $483.5 million at December 31, 2017, an increase of $70.3 million from September 30, 2017 and $66.5 million from December 31, 2016, primarily due to $75.4 million acquired from Bank of Napa, of which $16.8 million were sold post-acquisition due to changes in credit and tax law implications.

Deposits

Deposits totaled $2,148.7 million at December 31, 2017, compared to $1,891.0 million at September 30, 2017 and $1,772.7 million at December 31, 2016. The increase in deposits from the prior quarter and last year reflects both organic growth and deposits acquired from Bank of Napa. The average cost of deposits for 2017 dropped one basis point from 2016 to 0.07%.

Earnings

"Our solid results for 2017 reflect the economic health of our market and consistent execution by our team," said Tani Girton, EVP and Chief Financial Officer. "We are pleased we were able to maintain our profitability while at the same time making significant investments in our platform to drive organic growth in the years to come. We are excited about 2018. We have a substantial pipeline of opportunities going into the new year and our credit metrics remain excellent."

Net interest income totaled $20.1 million in the fourth quarter of 2017 compared to $18.8 million in the prior quarter and $18.0 million in the same quarter a year ago. The increase from the prior quarter primarily relates to a $116.2 million increase in earning assets which includes the acquisition. The tax-equivalent net interest margin was 3.80%, 3.77% and 3.78% for those respective periods.

Net interest income totaled $74.9 million and $73.2 million in 2017 and 2016, respectively. The increase of $1.7 million in 2017 is primarily due to an increase in earning assets of $114.4 million, partially offset by a decrease in gains on payoffs and accretion on purchased loans, and a $1.4 million interest recovery in 2016. The tax-equivalent net interest margin decreased to 3.80% in 2017 compared to 3.91% in 2016 for the same reasons.

Loans acquired through the acquisition of other banks are classified as purchased credit impaired ("PCI") or non-PCI loans and are recorded at fair value at acquisition date. For acquired loans not considered credit impaired, the level of accretion varies due to maturities and early payoffs. Accretion on PCI loans fluctuates based on changes in cash flows expected to be collected. Gains on payoffs of PCI loans are recorded as interest income when the payoff amounts exceed the recorded investment. PCI loans totaled $2.1 million at December 31, 2017, $2.3 million at September 30, 2017, and $2.9 million at December 31, 2016.

Accretion and gains on payoffs of purchased loans recorded to interest income were as follows:

                  
--------------------------------- -------------------- ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                                        Three months ended
                                                       ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                December 31, 2017                                                       September 30, 2017                                                         December 31, 2016
                                                       ------------------------------------------------------------------                     -----------------------------------------------------------------------------                     ------------------------------------------------------------------
(dollars in thousands; unaudited)              Dollar                 Basis point                     Dollar                      Basis point               Dollar                 Basis point
                                                                  Amount                                   impact to net                                       Amount                                        impact to net                                 Amount                                   impact to net
                                                                                                          interest margin                                                                                   interest margin                                                                        interest margin
--------------------------------- -------------------- --------------------------   -------------------- --------------- -------------------- -------------------------------------   -------------------- --------------- -------------------- --------------------------   -------------------- ---------------
Accretion on PCI loans (1)                               $  85                                  2 bps                        $             76                                  2 bps                        $  90                                  2 bps
Accretion on non-PCI loans (2)                           $ 110                                                     2 bps                        $            132                                                     3 bps                        $ 159                                                     3 bps
Gains on pay-offs of PCI loans        $ 100               2 bps     $ --               0 bps     $ 287               6 bps
--------------------------------- -------------------- --- --- -------------------- -------------------- --------------- -------------------- --- -------------- -------------------- -------------------- --------------- -------------------- --- --- -------------------- -------------------- ---------------
                  
--------------------------------- -------------------- -----------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                            Years ended
                                                       -----------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                December 31, 2017                                                    December 31, 2016
                                                       ------------------------------------------------------------------                     --------------------------------------------------------------------
(dollars in thousands; unaudited)              Dollar                 Basis point                Dollar                  Basis point
                                                                  Amount                                   impact to net                                  Amount                                    impact to net
                                                                                                          interest margin                                                                          interest margin
--------------------------------- -------------------- --------------------------   -------------------- --------------- -------------------- ----------------------------   -------------------- ---------------
Accretion on PCI loans (1)                               $ 331                                  2 bps                        $   364                                  2 bps
Accretion on non-PCI loans (2)                           $ 571                                                     3 bps                        $ 1,411                                                     7 bps
Gains on pay-offs of PCI loans        $ 184               1 bps     $ 1,027               5 bps
--------------------------------- -------------------- --- --- -------------------- -------------------- --------------- -------------------- --- ----- -------------------- -------------------- ---------------

(1) Accretable yield on PCI loans totaled $1.3 million, $1.2 million and $1.5 million at December 31, 2017, September 30, 2017 and December 31, 2016, respectively.

(2) Unaccreted purchase discounts on non-PCI loans totaled $1.2 million, $1.3 million and $1.8 million at December 31, 2017, September 30, 2017 and December 31, 2016, respectively.

Non-interest income in the fourth quarter of 2017 totaled $2.0 million, compared to $2.1 million in the prior quarter and $2.5 million in the same quarter a year ago. The decrease compared to the same quarter a year ago primarily relates to a special dividend of $347 thousand from the Federal Home Loan Bank of San Francisco ("FHLB") in the fourth quarter of 2016 and $195 thousand net losses on the sale of investment securities in the same period of 2017. Non-interest income of $8.3 million in 2017 decreased from $9.2 million in 2016 primarily due to the special FHLB dividend and $425 thousand net gains on the sale of investment securities recorded in 2016.

Non-interest expense totaled $15.1 million in the fourth quarter of 2017, compared to $13.0 million in the prior quarter and $11.8 million in the same quarter a year ago, mainly due to acquisition-related expenses. Non-interest expense increased $6.1 million to $53.8 million in 2017 from $47.7 million in 2016, resulting from a $3.3 million increase in salaries and benefits related to additional full-time equivalent personnel, annual merit increases, and higher employee insurance, and $2.2 million in acquisition expenses. Increases were partially offset by lower FDIC assessments.

On December 22, 2017, the Tax Cuts and Jobs Act of 2017 was signed into law. The law reduces the federal corporate income tax rate to 21% for tax years beginning on or after January 1, 2018. Due to the passage of the Tax Cuts and Jobs Act of 2017, the Bank has valued all of its deferred tax assets and liabilities at the 21% rate. The adjustment to the net deferred tax assets valuation as of December 22, 2017 was $3.0 million as recorded in provision for income taxes in the fourth quarter of 2017. The effective tax rate increased from 36.6% in 2016 to 44.6% in 2017, 10.5 percentage points of which was attributable to the write-down of the net deferred tax assets.

Statement regarding use of non-GAAP financial measures

In this press release, Bancorp’s financial results and financial guidance are provided in accordance with GAAP and use certain non-GAAP financial measures. Management believes that presentation of operating results using non-GAAP financial measures provides useful supplemental information to investors and facilitates the analysis of Bancorp’s core operating results and comparison of operating results across reporting periods. Management also uses non-GAAP financial measures to establish budgets and manage Bancorp’s business. A reconciliation of the GAAP financial results to non-GAAP financial results is included in the following table.

                                                                                                                                                                                                                               
Reconciliation of GAAP and Non-GAAP Financial Measures
                                                                                         Years ended                                                                                                            Three months ended
                                                                             ------------------------------------------------------------------------                     -------------------------------------------------------------------------------------------------------------------------------------
(in thousand, unaudited)                                             December 31,                December 31,                                 December 31,                        September 30,                   December 31,
                                                                                            2017                                           2016                                         2017                                                   2017                                               2016
------------------------------------------------------- -------------------- --------------------------------   -------------------- --------------                       -----------------------------   -------------------- ----------------------------------   -------------------- --------------------
Net income (GAAP)                                                                 $ 15,976                              $  23,134                         $ 1,110                                                 $   5,132                                                    $      5,687
Acquisition-related expenses                                                         2,209                                            --                           1,705                                                       495                                                  --
Tax effect associated with acquisition-related expenses                               (657 )                                          --                            (596 )                                                     (61 )                                                --
Deferred tax asset write-down                                                        3,017      --                           3,017      --            --
                                                                             ---------------------------------- -------------------- ----------------                     ------------------------------- -------------------- ------------------------------------ -------------------- ----------------------
Comparable net income (Non-GAAP)                                                  $ 20,545           $  23,134                         $ 5,236           $   5,566              $      5,687
                                                                             ------ ------ -------------------- -------------------- ------- -------                      ---- ----- -------------------- -------------------- ------- ------- -------------------- -------------------- ---------- ----------
                                                                                                                                                                                                                                                                                          
Diluted earnings per share (GAAP)                                                 $   2.55                                                 $    3.78                         $  0.17                                                 $    0.83                                                    $       0.93
Acquisition-related expenses                                                          0.35                                            --                            0.26                                                      0.08                                                  --
Tax effect associated with acquisition-related expenses                              (0.10 )                                          --                           (0.09 )                                                   (0.01 )                                                --
Deferred tax asset write-down                                                         0.48      --                            0.46      --            --
                                                                             ---------------------------------- -------------------- ----------------                     ------------------------------- -------------------- ------------------------------------ -------------------- ----------------------
Comparable diluted earnings per share (Non-GAAP)                                  $   3.28           $    3.78                         $  0.80           $    0.90              $       0.93
                                                                             ====== ====== ==================== ==================== ======= =======                      ==== ===== ==================== ==================== ======= ======= ==================== ==================== ========== ==========

Following is a description of the adjustments made to GAAP financial measures:

-- Acquisition-related costs: Costs related to closing and integration of the acquired bank.

-- Tax expense associated with write-down of the net deferred tax assets due to the Tax Cuts and Jobs Act of 2017 discussed earlier.

Acquisition

The following table presents the acquisition-related expenses recognized:

(dollars in thousands, unaudited)           Three months ended                        Three months ended                     Year Ended
                                                                December 31, 2017                                           September 30, 2017                                     December 31, 2017
---------------------------------                      --------------------------------                        -----------------------------------------                        --------------------
                                                                                                                                                                                 
Data processing(1)                                          $  1,108                                                 $ --                                                    $      1,108
Professional services(2)                                         494                                                              449                                                             952
Personnel severance                                               35                                                   --                                                              35
Other                                                             68                                            46                                          114
                                                       ----------------------------------                      -------------------------------------------                      ----------------------
   Total(2)                                                 $  1,705                              $            495                                 $      2,209
                                                       ====== ====== ====================                      ======= ============== ====================                      ========== ==========
                                                                                                                                                                                 
(1) Primarily relates to Bank of Napa’s core processing
system contract termination and deconversion fees.
(2) Year-to-date professional services and total expenses
includes $9 thousand expensed in the second quarter of 2017.

The following table reflects the estimated fair values of the assets acquired and liabilities assumed related to the acquisition:

(dollars in thousands, unaudited)                                          Acquisition Date
                                                                                              November 21, 2017
--------------------------------------------------------------------- -------------------- --------------------
Assets:                                                                
  Cash and cash equivalents                                                                         $     59,779
  Investment securities                                                                                   75,469
  Loans                                                                                                  134,720
  Core deposit intangible                                                                                  4,441
  Goodwill                                                                                                23,705
  Bank premises and equipment                                                                                599
  Other assets                                                                                             6,408
                                                                                           ----------------------
     Total assets acquired                                                                          $    305,121
                                                                                           ---------- ----------
                                                                                            
Liabilities:
  Deposits:
     Non-interest bearing                                                                           $     77,266
     Interest bearing
        Transaction accounts                                                                              50,080
        Savings accounts                                                                                  12,157
        Money market accounts                                                                             85,045
        Other time accounts                                                                               25,338
                                                                                           ----------------------
      Total deposits                                                                                     249,886
                                                                                            
  Other liabilities                                                                                        2,050
                                                                                           ----------------------
     Total liabilities assumed                                                                      $    251,936
Merger consideration of $53,185 (735,264 common shares and 70,145                                   $     53,185
shares of replacement stock options issued by Bank of Marin Bancorp).
                                                                                           ========== ==========

The acquired assets and assumed liabilities were recorded at fair value at closing. The following table presents the net assets acquired from Bank of Napa and the estimated fair value adjustments:

(dollars in thousands, unaudited)                                        Acquisition Date
                                                                                            November 21, 2017
------------------------------------------------------------- -------------------- --------------------------------
Book value of net assets acquired from Bank of Napa                    26,152
                                                                                    
Fair value adjustments:
  Loans                                                                                    1,301
  Core deposit intangible asset                                                            4,441  
                                                                                   ----------------------------------
     Total purchase accounting adjustments                                                 5,742
                                                                                    
  Deferred tax liabilities (tax effect of purchase accounting                             (2,414 )
  adjustments at 42.05%)
                                                                                   ------------  --------------------
  Fair value of net assets acquired from Bank of Napa                                   $ 29,480  
                                                                                   ====== ====== ====================
                                                                                    
Merger consideration                                                                    $ 53,185
Less: fair value of net assets acquired                                                  (29,480 )
                                                                                   ----------------------------------
Goodwill                                                                                $ 23,705  
                                                                                   ====== ====== ====================

Earnings Call and Webcast Information

Bank of Marin Bancorp will webcast its fourth quarter earnings call on Monday, January 22, 2018 at 8:30 a.m. PT/11:30 a.m. ET. Investors will have the opportunity to listen to the conference call online through Bank of Marin’s website at http://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.

About Bank of Marin Bancorp

Founded in 1989 and headquartered in Novato, Bank of Marin is the wholly-owned subsidiary of Bank of Marin Bancorp (BMRC ). A leading business and community bank in the San Francisco Bay Area, with assets of $2.5 billion and 23 retail offices throughout San Francisco, Marin, Napa, Sonoma and Alameda counties, Bank of Marin provides business and personal banking, commercial lending, and wealth management and trust services. Specializing in providing legendary service to its customers and investing in its local communities, Bank of Marin was named 2016 Community Bank of the Year by Western Independent Bankers and has consistently been ranked one of the "Top Corporate Philanthropists" by the San Francisco Business Times and one of the "Best Places to Work" by the North Bay Business Journal. Bank of Marin Bancorp is included in the Russell 2000 Small-Cap Index and NASDAQ ABA Community Bank Index. For more information, go to 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, economic uncertainty in the United States and abroad, changes in interest rates, deposit flows, real estate values, costs or effects of acquisitions, competition, changes in accounting principles, policies or guidelines, legislation or regulation (including the Tax Cuts & Jobs Act of 2017), and other economic, competitive, governmental, regulatory and technological factors (including external fraud and cyber-security threats) affecting Bancorp’s operations, pricing, products and services. These and other important factors, including the impact of the Bank of Napa acquisition, 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
                                                                                                                          December
                                                                                                                          31, 2017
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
 
(dollars in thousands, except per share data; unaudited)                   December 31,                                  September 30,                                 December 31,
                                                                                                  2017                                                             2017                                                             2016
                                                                              -----------------------------------------                        -----------------------------------------                        -----------------------------------------
Quarter-to-Date
--------------------------------------------------------
   Net income                                                                       $          1,110                                                 $          5,132                                                 $          5,687
   Diluted earnings per common share                                                $           0.17                                                 $           0.83                                                 $           0.93
   Return on average assets                                                                     0.19 %                                                           0.95 %                                                           1.11 %
   Return on average equity                                                                     1.63 %                                                           8.37 %                                                           9.74 %
   Efficiency ratio                                                                            68.25 %                                                          62.51 %                                                          57.51 %
   Tax-equivalent net interest margin (1)                                                       3.80 %                                                           3.77 %                                                           3.78 %
   Net (recoveries) charge-offs                                                     $            (21 )                                               $            (16 )                                               $            (29 )
   Net (recoveries) charge-offs to average loans                                      -- %                                                 -- %                                                 -- %
Year-to-Date
--------------------------------------------------------
   Net income                                                                       $         15,976                                                                                                                  $         23,134
   Diluted earnings per common share                                                $           2.55                                                                                                                  $           3.78
   Return on average assets                                                                     0.75 %                                                                                                                            1.15 %
   Return on average equity                                                                     6.49 %                                                                                                                           10.23 %
   Efficiency ratio                                                                            64.70 %                                                                                                                           57.93 %
   Tax-equivalent net interest margin(1)                                                        3.80 %                                                                                                                            3.91 %
   Net (recoveries) charge-offs                                                     $            175                                                                                                                  $         (2,294 )
   Net (recoveries) charge-offs to average loans                                                0.01 %                                                                                                                           (0.15 )%
At Period End
--------------------------------------------------------
   Total assets                                                                     $      2,468,154                                                 $      2,155,901                                                 $      2,023,493
   Loans:
      Commercial and industrial                                                     $        231,166                                                 $        218,681                                                 $        218,615
      Real estate:
         Commercial owner-occupied                                                  $        268,872                                                 $        264,732                                                 $        247,713
         Commercial investor-owned                                                  $        858,603                                                 $        721,576                                                 $        724,228
         Construction                                                               $         63,828                                                 $         76,179                                                 $         74,809
         Home equity                                                                $        132,466                                                 $        121,366                                                 $        117,207
         Other residential                                                          $         96,668                                                 $         96,937                                                 $         78,549
      Installment and other consumer loans                                          $         27,410           $         24,976           $         25,495  
                                                                              ------- -------------- -------------------- -------------------- ------- -------------- -------------------- -------------------- ------- -------------- --------------------
            Total loans                                                             $      1,679,013                                                 $      1,524,447                                                 $      1,486,616
                                                                                                                                                                                                                 
   Non-performing loans(2):
      Real estate:
         Commercial investor-owned                                                  $ --                                                 $          1,024                                                 $ --
         Home equity                                                                $            406                                                 $            292                                                 $             90
      Installment and other consumer loans                                          $ --           $ --           $             55  
                                                                              ------- -------------- -------------------- -------------------- ------- -------------- -------------------- -------------------- ------- -------------- --------------------
            Total non-accrual loans                                                 $            406                                                 $          1,316                                                 $            145
                                                                                                                                                                                                                 
   Classified loans (graded substandard and doubtful)                               $         27,906                                                 $         33,483                                                 $         19,601
   Total accruing loans 30-89 days past due                                         $          1,925                                                 $            205                                                 $            410
   Allowance for loan losses to total loans                                                     0.94 %                                                           1.00 %                                                           1.04 %
   Allowance for loan losses to non-performing loans                                                               38.88x                                                           11.58x                                                           106.5x
   Non-accrual loans to total loans                                                             0.02 %                                                           0.09 %                                                           0.01 %
                                                                                                                                                                                                                 
   Total deposits                                                                   $      2,148,670                                                 $      1,890,970                                                 $      1,772,700
   Loan-to-deposit ratio                                                                        78.1 %                                                           80.6 %                                                           83.9 %
   Stockholders’ equity                                                             $        297,025                                                 $        245,049                                                 $        230,563
   Book value per share                                                             $          42.91                                                 $          39.68                                                 $          37.63
   Tangible common equity to tangible assets (3)                                                10.7 %                                                           11.0 %                                                           11.0 %
   Total risk-based capital ratio - Bank                                                        14.7 %                                                           14.7 %                                                           14.1 %
   Total risk-based capital ratio - Bancorp                                                     14.9 %                                                           15.1 %                                                           14.3 %
   Full-time equivalent employees                                                                291                                                              272                                                              262
(1) Net interest income is annualized by dividing actual
number of days in the period times 360 days.
(2) Excludes accruing troubled-debt restructured loans of
$16.5 million, $16.4 million and $18.1 million at December 31, 2017,
September 30, 2017 and December 31, 2016, respectively. Excludes
purchased credit-impaired (PCI) loans with carrying values of $2.1
million, $2.3 million and $2.9 million that were accreting interest
at December 31, 2017, September 30, 2017 and December 31, 2016,
respectively. These amounts are excluded as PCI loan accretable
yield interest recognition is independent from the underlying
contractual loan delinquency status.
(3) Tangible common equity to tangible assets is
considered to be a meaningful non-GAAP financial measure of
capital adequacy and is useful for investors to assess Bancorp’s
ability to absorb potential losses. Tangible common equity
includes common stock, retained earnings and unrealized gain on
available for sale securities, net of tax, less goodwill and
intangible assets of $36.6 million, $8.7 million and $9.0 million
at December 31, 2017, September 30, 2017 and December 31, 2016,
respectively. Tangible assets excludes goodwill and intangible
assets.
 
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                    BANK OF MARIN BANCORP
                                                                                                            CONSOLIDATED STATEMENTS OF CONDITION
                                                                                               at December 31, 2017, September 30, 2017 and December 31, 2016
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                                            
(in thousands, except share data; unaudited)                                            December 31,                             September 30,                            December 31,
                                                                                                               2017                                                        2017                                                        2016
------------------------------------------------------------------------ -------------------- ------------------------------------   -------------------- ------------------------------------   -------------------- ------------------------------------
Assets
   Cash and due from banks                                                                          $   203,545                                                 $   149,124                                                 $    48,804
   Investment securities
      Held-to-maturity, at amortized cost                                                               151,032                                                     155,122                                                      44,438
      Available-for-sale (at fair value; amortized cost of $334,285,                 332,467               258,092               372,580  
      $257,468 and $378,254 at December 31, 2017, September 30, 2017 and
      December 31, 2016, respectively)
------------------------------------------------------------------------ -------------------- ----------------  -------------------- -------------------- ----------------  -------------------- -------------------- ----------------  --------------------
         Total investment securities                                                                    483,499                                                     413,214                                                     417,018
   Loans, net of allowance for loan losses of $15,767, $15,248 and                                    1,663,246                                                   1,509,199                                                   1,471,174
   $15,442 at December 31, 2017, September 30, 2017 and December 31,
   2016, respectively
   Bank premises and equipment, net                                                                       8,612                                                       8,230                                                       8,520
   Goodwill                                                                                              30,140                                                       6,436                                                       6,436
   Core deposit intangible                                                                                6,492                                                       2,226                                                       2,580
   Interest receivable and other assets                                               72,620                67,472                68,961  
------------------------------------------------------------------------ -------------------- -------------------------------------- -------------------- -------------------------------------- -------------------- --------------------------------------
            Total assets                                                         $ 2,468,154           $ 2,155,901           $ 2,023,493  
======================================================================== ==================== ======= ========= ==================== ==================== ======= ========= ==================== ==================== ======= ========= ====================
                                                                                                                                                                                                                       
Liabilities and Stockholders’ Equity
Liabilities
   Deposits
      Non-interest bearing                                                                          $ 1,014,103                                                 $   924,073                                                 $   817,031
      Interest bearing
         Transaction accounts                                                                           169,195                                                     102,236                                                     100,723
         Savings accounts                                                                               178,473                                                     169,488                                                     163,516
         Money market accounts                                                                          626,783                                                     555,013                                                     539,967
         Time accounts                                                               160,116               140,160               151,463  
------------------------------------------------------------------------ -------------------- -------------------------------------- -------------------- -------------------------------------- -------------------- --------------------------------------
   Total deposits                                                                                     2,148,670                                                   1,890,970                                                   1,772,700
   Subordinated debentures                                                                                5,739                                                       5,703                                                       5,586
   Interest payable and other liabilities                                             16,720                14,179                14,644  
------------------------------------------------------------------------ -------------------- -------------------------------------- -------------------- -------------------------------------- -------------------- --------------------------------------
            Total liabilities                                                      2,171,129             1,910,852             1,792,930  
------------------------------------------------------------------------ -------------------- -------------------------------------- -------------------- -------------------------------------- -------------------- --------------------------------------
Stockholders’ Equity
                                                                                                 --                                              --                                              --
   Preferred stock, no par value, Authorized - 5,000,000 shares, none
   issued
                                                                                                        143,967                                                      90,052                                                      87,392
   Common stock, no par value, Authorized - 15,000,000 shares; Issued
   and outstanding - 6,921,542, 6,175,751 and 6,127,314 at December
   31, 2017, September 30, 2017 and December 31, 2016, respectively
   Retained earnings                                                                                    155,544                                                     156,227                                                     146,464
   Accumulated other comprehensive loss, net                                          (2,486 )                                 (1,230 )                                 (3,293 )
------------------------------------------------------------------------ -------------------- -------------------------------------- -------------------- -------------------------------------- -------------------- --------------------------------------
         Total stockholders’ equity                                                  297,025               245,049               230,563  
------------------------------------------------------------------------ -------------------- -------------------------------------- -------------------- -------------------------------------- -------------------- --------------------------------------
            Total liabilities and stockholders’ equity                           $ 2,468,154           $ 2,155,901           $ 2,023,493  
======================================================================== ==================== ======= ========= ==================== ==================== ======= ========= ==================== ==================== ======= ========= ====================
 
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                                                          BANK OF MARIN BANCORP
                                                                                                                                                       CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                                                                                                                       
                                                                                                                                                                   Three months ended                                                                                                                                 Years ended
                                                                                                ---------------------------------------------------------------------------------------------------------------------------------------------------------                     -------------------------------------------------------------------------------------------
(in thousands, except per share amounts; unaudited)                                      December 31,                           September 30,                          December 31,                                              December 31,                         December 31,
                                                                                                                2017                                                      2017                                                      2016                                                      2017                                                    2016
-------------------------------------------------------------------------- -------------------- ----------------------------------   -------------------- ----------------------------------   -------------------- ----------------------------------                        ----------------------------------   -------------------- ------------------------------
Interest income                                                                                                                                                                                                                                                               
   Interest and fees on loans                                                                         $  17,789                                                 $  16,738                                                 $  16,394                                                 $  66,799                                              $ 67,472
   Interest on investment securities
      Securities of U.S. government agencies                                                              1,886                                                     1,525                                                     1,329                                                     6,463                                                                      5,155
      Obligations of state and political subdivisions                                                       563                                                       511                                                       596                                                     2,195                                                 2,339
      Corporate debt securities and other                                                                    40                                                        31                                                        36                                                       144                                                   256
   Interest on federal funds sold and due from banks                                     372                 406                  53                                    995             208  
-------------------------------------------------------------------------- -------------------- ------------------------------------ -------------------- ------------------------------------ -------------------- ------------------------------------                      ------------------------------------ -------------------- --------------------------------
         Total interest income                                                                           20,650                                                    19,211                                                    18,408                                                    76,596                                                75,430
Interest expense
   Interest on interest-bearing transaction accounts                                                         34                                                        24                                                        27                                                       108                                                   109
   Interest on savings accounts                                                                              18                                                        17                                                        15                                                        66                                                    58
   Interest on money market accounts                                                                        195                                                       133                                                       115                                                       555                                                   445
   Interest on time accounts                                                                                153                                                       138                                                       164                                                       576                                                   743
   Interest on FHLB and overnight borrowings                                                     --                                            --                                            --                                            --                                                   478
   Interest on subordinated debentures                                                   111                 111                 111                 439             436  
-------------------------------------------------------------------------- -------------------- ------------------------------------ -------------------- ------------------------------------ -------------------- ------------------------------------ -------------------- ------------------------------------ -------------------- --------------------------------
         Total interest expense                                                          511                 423                 432                                  1,744           2,269  
-------------------------------------------------------------------------- -------------------- ------------------------------------ -------------------- ------------------------------------ -------------------- ------------------------------------                      ------------------------------------ -------------------- --------------------------------
            Net interest income                                                                          20,139                                                    18,788                                                    17,976                                                    74,852                                                73,161
   Provision for (reversal of) loan losses                                               500      --                (300 )                                                     500          (1,850 )
-------------------------------------------------------------------------- -------------------- ------------------------------------ -------------------- ------------------------------------ -------------------- ------------------------------------                      ------------------------------------ -------------------- --------------------------------
               Net interest income after provision for loan losses                    19,639              18,788              18,276                                 74,352          75,011  
-------------------------------------------------------------------------- -------------------- ------------------------------------ -------------------- ------------------------------------ -------------------- ------------------------------------                      ------------------------------------ -------------------- --------------------------------
Non-interest income
   Service charges on deposit accounts                                                                      447                                                       438                                                       445                                                     1,784                                                 1,789
   Wealth Management and Trust Services                                                                     544                                                       539                                                       491                                                     2,090                                                 2,090
   Debit card interchange fees                                                                              385                                                       390                                                       391                                                     1,531                                                 1,503
   Merchant interchange fees                                                                                102                                                        88                                                        94                                                       398                                                   449
   Earnings on bank-owned life Insurance                                                                    217                                                       209                                                       218                                                       845                                                   844
   Dividends on FHLB stock                                                                                  181                                                       177                                                       576                                                       766                                                 1,153
   (Losses) gains on investment securities, net                                                            (195 )                                          --                                                        31                                                      (185 )                                                 425
   Other income                                                                          310                 225                 217                                  1,039             908  
-------------------------------------------------------------------------- -------------------- ------------------------------------ -------------------- ------------------------------------ -------------------- ------------------------------------                      ------------------------------------ -------------------- --------------------------------
      Total non-interest income                                                        1,991               2,066               2,463                                  8,268           9,161  
-------------------------------------------------------------------------- -------------------- ------------------------------------ -------------------- ------------------------------------ -------------------- ------------------------------------                      ------------------------------------ -------------------- --------------------------------
Non-interest expense
   Salaries and related benefits                                                                          7,852                                                     7,344                                                     6,508                                                    29,958                                                26,663
   Occupancy and equipment                                                                                1,409                                                     1,364                                                     1,350                                                     5,472                                                 5,081
   Depreciation and amortization                                                                            508                                                       489                                                       479                                                     1,941                                                 1,822
   Federal Deposit Insurance Corporation insurance                                                          176                                                       167                                                        65                                                       666                                                   825
   Data processing                                                                                        2,058                                                       946                                                       959                                                     4,906                                                 3,625
   Professional services                                                                                  1,013                                                       801                                                       516                                                     2,858                                                 2,044
   Directors’ expense                                                                                       163                                                       175                                                       105                                                       720                                                   553
   Information technology                                                                                   206                                                       179                                                       197                                                       769                                                   862
   Provision for losses on off-balance sheet commitments                                         --                                                       100                                            --                                                        57                                                   150
   Other expense                                                                       1,719               1,471               1,576                                  6,435           6,067  
-------------------------------------------------------------------------- -------------------- ------------------------------------ -------------------- ------------------------------------ -------------------- ------------------------------------                      ------------------------------------ -------------------- --------------------------------
         Total non-interest expense                                                   15,104              13,036              11,755                                 53,782          47,692  
-------------------------------------------------------------------------- -------------------- ------------------------------------ -------------------- ------------------------------------ -------------------- ------------------------------------                      ------------------------------------ -------------------- --------------------------------
         Income before provision for income taxes                                                         6,526                                                     7,818                                                     8,984                                                    28,838                                                36,480
   Provision for income taxes                                                          5,416               2,686               3,297                                 12,862          13,346  
-------------------------------------------------------------------------- -------------------- ------------------------------------ -------------------- ------------------------------------ -------------------- ------------------------------------                      ------------------------------------ -------------------- --------------------------------
            Net income                                                             $   1,110           $   5,132           $   5,687                              $  15,976        $ 23,134  
========================================================================== ==================== ======= ======= ==================== ==================== ======= ======= ==================== ==================== ======= ======= ====================                      ======= ======= ==================== ==================== ==== ====== ====================
   Net income per common share:
               Basic                                                                                  $    0.17                                                 $    0.84                                                 $    0.93                                                 $    2.58                                              $   3.81
               Diluted                                                                                $    0.17                                                 $    0.83                                                 $    0.93                                                 $    2.55                                              $   3.78
   Weighted average shares:
               Basic                                                                                      6,455                                                     6,123                                                     6,085                                                     6,196                                                 6,073
               Diluted                                                                                    6,550                                                     6,191                                                     6,142                                                     6,273                                                 6,115
   Dividends declared per common share                                             $    0.29           $    0.29           $    0.27                              $    1.12        $   1.02  
-------------------------------------------------------------------------- -------------------- ------- ------- -------------------- -------------------- ------- ------- -------------------- -------------------- ------- ------- --------------------                      ------- ------- -------------------- -------------------- ---- ------ --------------------
Comprehensive income:
   Net income                                                                                         $   1,110                                                 $   5,132                                                 $   5,687                                                 $  15,976                                              $ 23,134
   Other comprehensive (loss) income
      Change in net unrealized gain or loss on available-for-sale                                        (2,511 )                                                    (362 )                                                  (9,869 )                                                   1,061                                                (5,658 )
      securities
      Reclassification adjustment for losses (gains) on available-for-sale               195                 135      --                                    185            (394 )
      securities included in net income
-------------------------------------------------------------------------- -------------------- --------------  -------------------- -------------------- --------------  -------------------- -------------------- --------------  --------------------                      --------------  -------------------- -------------------- ----------  --------------------
         Net change in unrealized gain or loss on available-for-sale                                     (2,316 )                                                    (227 )                                                  (9,869 )                                                   1,246                                                (6,052 )
         securities, before tax
      Deferred tax (benefit) expense                                                  (1,060 )                                  (96 )                               (4,149 )                                                     439          (2,566 )
-------------------------------------------------------------------------- -------------------- ------------------------------------ -------------------- ------------------------------------ -------------------- ------------------------------------                      ------------------------------------ -------------------- --------------------------------
         Other comprehensive (loss) income, net of tax                                (1,256 )                                 (131 )                               (5,720 )                                                     807          (3,486 )
-------------------------------------------------------------------------- -------------------- ------------------------------------ -------------------- ------------------------------------ -------------------- ------------------------------------                      ------------------------------------ -------------------- --------------------------------
            Comprehensive (loss) income                                            $    (146 )                            $   5,001           $     (33 )                                               $  16,783        $ 19,648  
========================================================================== ==================== ======= ======= ==================== ==================== ======= ======= ==================== ==================== ======= ======= ====================                      ======= ======= ==================== ==================== ==== ====== ====================
 
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                                                                                                                     BANK OF MARIN BANCORP
                                                                                                                                                                                                                                     AVERAGE STATEMENTS OF
                                                                                                                                                                                                                                     CONDITION AND ANALYSIS OF NET INTEREST INCOME
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                                                                                                                                                                                                                              
                                                                                                                                 Three months ended                                                                                                                           Three months ended                                                                                                                           Three months ended
                                                                                                                                  December 31, 2017                                                                                                                                              September 30, 2017                                                                                                                                               December 31, 2016
                                                                     ---------------------------------------------------------------------------------------------------------------------------------          -------------------- ---------------------------------------------------------------------------------------------------------------------------------          -------------------- --------------------------------------------------------------------------------------------------------------------------------
(dollars in thousands; unaudited)                                 Average                                Interest                        Yield/                          Average                                Interest                        Yield/                          Average                               Interest                        Yield/
                                                                                     Balance                                                    Income/                                            Rate                                              Balance                                                    Income/                                            Rate                                              Balance                                                   Income/                                            Rate
                                                                                                                                                Expense                                                                                                                                                         Expense                                                                                                                                                        Expense
----------------------------------------------- -------------------- ------------------------------------   -------------------- ----------------------------------   -------------------- -------------------  -------------------- ------------------------------------   -------------------- ----------------------------------   -------------------- -------------------  -------------------- -----------------------------------   -------------------- ----------------------------------   -------------------- -------------------
Assets
   Interest-bearing due from banks (1)                                     $   108,255                                                 $     372                                                     1.34     %                            $   125,846                                                 $     406                                                     1.26     %                           $    35,398                                                 $      53                                                     0.59     %
   Investment securities (2, 3)                                                455,706                                                     2,722                                                     2.39     %                                400,659                                                     2,294                                                     2.29     %                               414,544                                                     2,214                                                     2.14     %
   Loans(1, 3, 4)                                         1,578,959              18,245               4.52     %           1,500,167              17,228               4.49     %          1,471,134              16,723               4.45     %
----------------------------------------------- -------------------- -------------------------------------- -------------------- ------------------------------------ -------------------- -------------- ----- -------------------- -------------------------------------- -------------------- ------------------------------------ -------------------- -------------- ----- -------------------- ------------------------------------- -------------------- ------------------------------------ -------------------- -------------- -----
      Total interest-earning assets(1)                                       2,142,920                                                    21,339                                                     3.89     %                              2,026,672                                                    19,928                                                     3.85     %                             1,921,076                                                    18,990                                                     3.87     %
   Cash and non-interest-bearing due from banks                                 40,648                                                                                                                                                          45,009                                                                                                                                                         49,184
   Bank premises and equipment, net                                              8,384                                                                                                                                                           8,430                                                                                                                                                          8,568
   Interest receivable and other assets, net                 74,299                                        60,622                                       59,890                          
----------------------------------------------- -------------------- -------------------------------------- -------------------- --------------------------------------------------------- ----------------------------------------- -------------------------------------- -------------------- --------------------------------------------------------- ----------------------------------------- ------------------------------------- -------------------- --------------------------------------------------------- ---------------------
Total assets                                            $ 2,266,251                                   $ 2,140,733                                  $ 2,038,718                          
----------------------------------------------- -------------------- ------- --------- -------------------- -------------------- --------------------------------------------------------- ----------------------------------------- ------- --------- -------------------- -------------------- --------------------------------------------------------- ----------------------------------------- ------ --------- -------------------- -------------------- --------------------------------------------------------- ---------------------
Liabilities and Stockholders’ Equity
   Interest-bearing transaction accounts                                   $   129,538                                                 $      34                                                     0.10     %                            $    96,504                                                 $      24                                                     0.10     %                           $    91,692                                                 $      27                                                     0.12     %
   Savings accounts                                                            173,057                                                        18                                                     0.04     %                                171,187                                                        17                                                     0.04     %                               160,638                                                        16                                                     0.04     %
   Money market accounts                                                       551,591                                                       195                                                     0.14     %                                560,486                                                       133                                                     0.09     %                               529,003                                                       115                                                     0.09     %
   Time accounts, including CDARS                                              150,552                                                       153                                                     0.40     %                                140,736                                                       138                                                     0.39     %                               153,976                                                       163                                                     0.42     %
   Overnight borrowings(1)                                                           6                                            --                                                     1.75     %                         --                                            --                                           --     %                                     3                                            --                                           --     %
   Subordinate debentures (1)                                 5,720                 111               7.63     %               5,682                 111               7.63     %              5,564                 111               7.82     %
----------------------------------------------- -------------------- -------------------------------------- -------------------- ------------------------------------ -------------------- -------------- ----- -------------------- -------------------------------------- -------------------- ------------------------------------ -------------------- -------------- ----- -------------------- ------------------------------------- -------------------- ------------------------------------ -------------------- -------------- -----
      Total interest-bearing liabilities                                     1,010,464                                                       511                                                     0.20     %                                974,595                                                       423                                                     0.17     %                               940,876                                                       432                                                     0.18     %
   Demand accounts                                                             971,381                                                                                                                                                         909,900                                                                                                                                                        848,881
   Interest payable and other liabilities                                       14,558                                                                                                                                                          13,055                                                                                                                                                         16,604
   Stockholders’ equity                                     269,848                                       243,183                                      232,357                          
----------------------------------------------- -------------------- -------------------------------------- -------------------- --------------------------------------------------------- ----------------------------------------- -------------------------------------- -------------------- --------------------------------------------------------- ----------------------------------------- ------------------------------------- -------------------- --------------------------------------------------------- ---------------------
Total liabilities & stockholders’ equity                $ 2,266,251                                   $ 2,140,733                                  $ 2,038,718                          
----------------------------------------------- -------------------- ------- --------- -------------------- -------------------- --------------------------------------------------------- ----------------------------------------- ------- --------- -------------------- -------------------- --------------------------------------------------------- ----------------------------------------- ------ --------- -------------------- -------------------- --------------------------------------------------------- ---------------------
Tax-equivalent net interest income/margin (1)                                 $  20,828               3.80     %                               $  19,505               3.77     %                              $  18,558               3.78     %
----------------------------------------------- -------------------- ----------------------------------------------------------- ------- ------- -------------------- -------------------- -------------- ----- -------------------- ----------------------------------------------------------- ------- ------- -------------------- -------------------- -------------- ----- -------------------- ---------------------------------------------------------- ------- ------- -------------------- -------------------- -------------- -----
Reported net interest income/margin(1)                                        $  20,139               3.68     %                               $  18,788               3.63     %                              $  17,976               3.66     %
----------------------------------------------- -------------------- ----------------------------------------------------------- ------- ------- -------------------- -------------------- -------------- ----- -------------------- ----------------------------------------------------------- ------- ------- -------------------- -------------------- -------------- ----- -------------------- ---------------------------------------------------------- ------- ------- -------------------- -------------------- -------------- -----
Tax-equivalent net interest rate spread                                                               3.69     %                                                       3.68     %                                                      3.69     %
----------------------------------------------- -------------------- ----------------------------------------------------------- --------------------------------------------------------- -------------- ----- -------------------- ----------------------------------------------------------- --------------------------------------------------------- -------------- ----- -------------------- ---------------------------------------------------------- --------------------------------------------------------- -------------- -----
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
                                                                                                                                     Year ended                                                                                                                                   Year ended
                                                                                                                                  December 31, 2017                                                                                                                                               December 31, 2016
                                                                     ---------------------------------------------------------------------------------------------------------------------------------          -------------------- ---------------------------------------------------------------------------------------------------------------------------------
(dollars in thousands; unaudited)                                                    Average                                Interest                        Yield/                          Average                                Interest                        Yield/
                                                                                     Balance                                                    Income/                                            Rate                                              Balance                                                    Income/                                            Rate
                                                                                                                                                Expense                                                                                                                                                         Expense
                                                                     ------------------------------------   -------------------- ----------------------------------   -------------------- -------------------  -------------------- ------------------------------------   -------------------- ----------------------------------   -------------------- -------------------
Assets
   Interest-bearing due from banks (1)                                     $    80,351                                                 $     995                                                     1.22     %                            $    38,314                                                 $     209                                                     0.54     %
   Investment securities (2, 3)                                                419,873                                                     9,732                                                     2.32     %                                406,640                                                     8,671                                                     2.13     %
   Loans (1, 3, 4)                                        1,511,503              68,562               4.47     %           1,452,357              68,794               4.66     %
----------------------------------------------- -------------------- -------------------------------------- -------------------- ------------------------------------ -------------------- -------------- ----- -------------------- -------------------------------------- -------------------- ------------------------------------ -------------------- -------------- -----
      Total interest-earning assets (1)                                      2,011,727                                                    79,289                                                     3.89     %                              1,897,311                                                    77,674                                                     4.03     %
   Cash and non-interest-bearing due from banks                                 42,511                                                                                                                                                          42,150
   Bank premises and equipment, net                                              8,411                                                                                                                                                           8,836
   Interest receivable and other assets, net                 63,301                                        59,989                          
----------------------------------------------- -------------------- -------------------------------------- -------------------- --------------------------------------------------------- ----------------------------------------- -------------------------------------- -------------------- --------------------------------------------------------- ---------------------
Total assets                                            $ 2,125,950                                   $ 2,008,286                          
----------------------------------------------- -------------------- ------- --------- -------------------- -------------------- --------------------------------------------------------- ----------------------------------------- ------- --------- -------------------- -------------------- --------------------------------------------------------- ---------------------
Liabilities and Stockholders’ Equity
   Interest-bearing transaction accounts                                   $   105,544                                                 $     108                                                     0.10     %                            $    94,252                                                 $     109                                                     0.12     %
   Savings accounts                                                            167,190                                                        66                                                     0.04     %                                151,214                                                        58                                                     0.04     %
   Money market accounts                                                       542,592                                                       555                                                     0.10     %                                524,989                                                       445                                                     0.08     %
   Time accounts, including CDARS                                              146,069                                                       576                                                     0.39     %                                158,878                                                       742                                                     0.47     %
   Overnight borrowings (1)                                                          1                                            --                                                     1.75     %                                  5,383                                                        23                                                     0.42     %
   FHLB fixed-rate advances (1)                                         --                                            --                                           --     %                                  6,803                                                       456                                                     6.59     %
   Subordinated debentures(1)                                 5,664                 439               7.65     %               5,493                 436               7.80     %
----------------------------------------------- -------------------- -------------------------------------- -------------------- ------------------------------------ -------------------- -------------- ----- -------------------- -------------------------------------- -------------------- ------------------------------------ -------------------- -------------- -----
      Total interest-bearing liabilities                                       967,060                                                     1,744                                                     0.18     %                                947,012                                                     2,269                                                     0.24     %
   Demand accounts                                                             899,289                                                                                                                                                         819,916
   Interest payable and other liabilities                                       13,506                                                                                                                                                          15,142
   Stockholders’ equity                                     246,095                                       226,216                          
----------------------------------------------- -------------------- -------------------------------------- -------------------- --------------------------------------------------------- ----------------------------------------- -------------------------------------- -------------------- --------------------------------------------------------- ---------------------
Total liabilities & stockholders’ equity                $ 2,125,950                                   $ 2,008,286                          
----------------------------------------------- -------------------- ------- --------- -------------------- -------------------- --------------------------------------------------------- ----------------------------------------- ------- --------- -------------------- -------------------- --------------------------------------------------------- ---------------------
Tax-equivalent net interest income/margin (1)                                 $  77,545               3.80     %                               $  75,405               3.91     %
----------------------------------------------- -------------------- ----------------------------------------------------------- ------- ------- -------------------- -------------------- -------------- ----- -------------------- ----------------------------------------------------------- ------- ------- -------------------- -------------------- -------------- -----
Reported net interest income/margin(1)                                        $  74,852               3.67     %                               $  73,161               3.79     %
----------------------------------------------- -------------------- ----------------------------------------------------------- ------- ------- -------------------- -------------------- -------------- ----- -------------------- ----------------------------------------------------------- ------- ------- -------------------- -------------------- -------------- -----
Tax-equivalent net interest rate spread                                                               3.71     %                                                       3.79     %
----------------------------------------------- -------------------- ----------------------------------------------------------- --------------------------------------------------------- -------------- ----- -------------------- ----------------------------------------------------------- --------------------------------------------------------- -------------- -----
                                                                                                                                                                                                                                                                                                                                                                                                      
(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 35 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.

http://cts.businesswire.com/ct/CT?id=bwnews&sty=20180122005294r1&sid=cmtx6&distro=nx&lang=en

View source version on businesswire.com: http://www.businesswire.com/news/home/20180122005294/en/

SOURCE: Bank of Marin Bancorp

Bank of Marin Bancorp 
Beth Drummey, 415-763-4529 
Marketing & Community Relations Manager 
bethdrummey@bankofmarin.com


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