Consistent Growth and Quality Results. D.A. Davidson Annual Conference May 8-10, 2018 Denver, CO

Transcription

1 Consistent Growth and Quality Results D.A. Davidson Annual Conference May 8-10, 2018 Denver, CO

2 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. 2

3 Russell A. Colombo President and Chief Executive Officer

4 Bank of Marin Bancorp Headquarters Employees, full-time equivalent 288 Novato, California Marin County, North of San Francisco Assets Market capitalization Total loans Total deposits Footprint Ticker $2.51 billion $482 million $1.67 billion $2.2 billion 23 offices in San Francisco Bay Area BMRC (NASDAQ Capital Markets) Founded 1989 Recent awards: As of March 31, 2018 BAUER 2016 Community Bank of the Year FIVE STAR BANK COMMUNTY BANKERS CUP AWARD

5 355 Years of Combined Management Experience Through Economic Cycles Russell A. Colombo President, Chief Executive Officer 43 years in banking Comerica Bank, Security Pacific, Imperial Bank, Union Bank James S. Kimball EVP, Chief Operating Officer 29 years in banking Wells Fargo, Wachovia, Bank of America Tani Girton EVP, Chief Financial Officer 34 years in financial services Bank of the West, Charles Schwab, CalFed Bank Peter Pelham EVP, Retail Banking 40 years in banking Novato National Bank, Westamerica Bank Bob Gotelli SVP, Human Resources 26 years experience Ralphs Grocery James T. Burke EVP, Chief Information Officer 45 years in financial services Visa, Irwin Financial Corporation, Charles Schwab, Bank of America Beth Reizman EVP, Chief Credit Officer 37 years in banking Bank of California, Hibernia Bank, Crocker Bank Deborah Hoke Smith SVP, Wealth Management & Trust 38 years experience Charles Schwab Tim Myers EVP, Commercial Banking 21 years in finance and banking U.S. Bank, Comerica Bank, Imperial Bank Nancy Rinaldi Boatright SVP, Corporate Secretary 42 years in banking Business Bank of California, Westamerica Bank 5

6 Bank of Marin Investment Highlights Established community and business bank in thriving San Francisco Bay Area economy Deep knowledge of local markets and industry expertise Relationship banking model translates into consistent, low-cost deposit base Disciplined underwriting standards result in superior asset quality through credit cycles Well-defined strategy for growth and shareholder value creation Total annual shareholder return averages 9% over 20 years 6

7 Established Community and Business Bank in Thriving San Francisco Bay Area Economy 7

8 Disciplined Underwriting Standards Mitigate Risk and Produce Superior Asset Quality Through Economic Cycles 1.23% NPAs/Total Assets 0.67% 0.55% 0.13% 0.03% 0.02% % NCO / Average Loans 0.00% -0.01% 0.04% -0.16% 0.01% * 8

9 Large and Growing Low-Cost Deposit Base: A Key Competitive Advantage (in $ billions) Well-positioned for a rising interest rate environment Retail Time 3% Jumbo Time 4% Interest Bearing Demand 9% (as of December 31, 2017) MMkt 29% Savings 8% Non-Interest Bearing Demand 47% Non-Interest Bearing DDA up from 31% in

10 Very Strong Origination Pipeline to Drive Loan Growth (in $ billions) Five-year compound annual loan growth rate of 9% 1 1 Compounded annual growth rate through December 31,

11 Tani Girton Executive Vice President and Chief Financial Officer

12 1st Quarter Results Q1 18 earnings of $6.4MM 91 per share Deposit cost 0.08% $37.9MM in Q % Non-interest bearing Loan originations $37.4MM $13.5MM vs. Q1 17 Reported net interest margin 3.79% 11 bps vs. Q4 17 Tax equivalent NIM 3.85% 5 bps vs. Q4 17 Return on assets 1.05% 14 bps vs. Q1 17 As of March 31,

13 Stabilizing Net Interest Margin 5.00% 4.80% 4.74% 4.60% 4.40% 4.20% 4.20% 4.13% 4.00% 3.80% 3.60% 4.11% 3.96% 3.91% 3.90% 3.83% 3.91% 3.73% 3.88% 3.80% 3.85% 3.40% 3.20% 3.00% /31/18 Bank of Marin Bancorp Peer Group Median 1 1 Peer group includes major exchange-traded Western region banks with assets of $1 billion to $5 billion 13

14 Improving Efficiency Ratio 75.0% 70.0% 65.0% 69.0% 68.0% 68.2% 66.0% 66.2% 64.9% 64.7% 66.6% 60.0% 55.0% 50.0% 55.0% Bank of Alameda 59.5% 61.5% 57.9% 62.5% Bank of Napa 45.0% 40.0% /31/18 Bank of Marin Bancorp Peer Group Median 1 1 Peer group includes major exchange-traded Western region banks with assets of $1 billion to $5 billion 14

15 Strong Earnings Drive Consistent Growth in Dividend $3.78 $3.28 $3.28 $3.29 $3.00 $3.04 $2.57 $ Diluted Earnings Per Share Acquisition expenses of $2.4 million Acquisition expenses of $1.6 million and deferred tax asset write-down of $3.0 million $0.70 $0.73 $0.80 $0.90 $1.02 $1.12 Dividends Declared Per Share Quarterly dividend increased after first quarter by 2 to 31 per share 52 nd consecutive dividend

16 Strong Capital Ratios Support Future Growth Opportunities 13.9% 14.0% 10.0% 15.1% 11.4% Tangible common equity: 10.6% 6.5% 8.0% Return on equity: 8.70% 5.0% Share repurchase program Common Equity Tier-One Risk-Based Capital Total Tier-One Risk-Based Capital Total Risk-Based Capital Tier-One Leverage Well Capitalized Threshold Bank of Marin Bancorp (as of 3/31/18) 16

17 Return on Investment 80 Total Annual Shareholder Return Averages 9% Over 20 Years 70 $ $ Book Value: $42.73 As of March 31, $2.60 $ Book Value per Common Share Closing Stock Price 2017 Closing Price: $76.04 As of May 2, 2018 Adjusted for stock splits and stock dividends. 17

18 James Kimball Executive Vice President, Chief Operating Officer

19 Investing in the North Bay Established commercial banking teams in Marin and San Francisco East Bay team exceeding expectations Combined Napa team already making an impact Building team in Santa Rosa to increase growth in northern Sonoma County 19

20 Serving the Wine Industry The lending expertise of our wine industry specialists includes Equipment financing & leasing Barrel purchases Working capital lines of credit Facility expansion and upgrades Commercial real estate loans for purchase or refinance Winery construction loans Recent wine lending successes Vineyard Development, $8 million Construction Financing, $6.4 million Commercial Real Estate Loan, $1.8 million A/R Line of Credit, $1.5 million Barrel Financing, $500,000 20

21 Titus Vineyards Wine Customer Profile We faced some complex financing issues when we decided to build a new winery and tasting room on our vineyard land in St. Helena. Bank of Marin s wine industry team understood our challenges and stepped in to provide the construction loan we needed to bring our vision to life. Eric and Phillip Titus, Owners Titus is in the Ultra Premium segment, with many wines rated in the 90+ range by critics Annual production of approximately 13,000 cases. Sells primarily Bordeaux varietal red wines. Retail price points: $27/bottle for the Sauvignon Blanc $55/bottle for their flagship and largest production wine, Cabernet Sauvignon $92/bottle for their Reserve Cabernet. Owns approximately 50 acres of vineyard on the valley floor in St. Helena. 21

22 Russell A. Colombo President and Chief Executive Officer

23 Well-Defined Strategy for Growth & Value Creation Organic Growth Strategic Investments Capitalize on robust San Francisco Bay Area economy Expand commercial lending in highgrowth areas such as San Francisco, the East Bay, and Napa and Sonoma Counties Commercial banking hires in the East Bay and Napa County driving stronger loan production Continue building competencies in niche industries such as wine and manufacturing Track record of accretive acquisitions in 2011, 2013 & 2017 M&A strategy focused on expanding market presence in Bay Area Targeting banks to increase penetration in existing markets or in new contiguous markets Strong capital base supports future acquisitions and organic growth Expand existing client relationships with additional products/services 23

24 Bank of Marin Investment Highlights Established community and business bank in thriving San Francisco Bay Area economy Deep knowledge of local markets and industry expertise Relationship banking model translates into consistent, low-cost deposit base and loyal following Disciplined underwriting standards result in superior asset quality through credit cycles Well-defined strategy for growth and shareholder value creation Total annual shareholder return averages 9% over 20 years 24