Earnings

Bank of Marin NIM Expansion Slows to 10 Basis Points

The Tip Desk · November 8, 2026 · 4 min read

Net interest income rose $619 thousand to $31.4 million as the tax-equivalent margin reached 3.48% after a faster 14-basis-point lift in the second quarter.

Bank of Marin Bancorp (BMRC), parent of Bank of Marin, reported tax-equivalent net interest margin of 3.48% for the three months ended September 30, 2026, a 10-basis-point expansion from 3.38% in the prior quarter after a 14-basis-point lift in the second quarter.

The slower sequential pace still lifted net interest income by $619 thousand to $31.4 million. Interest income on loans rose $834 thousand as average loan yields increased 11 basis points. Deposit interest expense fell $527 thousand on improved mix and one-way sales of money-market balances. Securities interest income declined $505 thousand on paydowns.

The company said the margin gain came from the 11-basis-point rise in average loan yields, a four-basis-point drop in the cost of deposits, and one-way sales that improved the mix of average assets and liabilities. Newly funded loans carried a weighted average rate of 12 basis points higher than in the prior quarter.

Total loans increased $43.4 million, or 2.07%, to $2.144 billion. New fundings were $63.6 million, versus $62.8 million in the second quarter, at a 6.65% weighted average rate compared with 6.53%. The bank also used excess liquidity to purchase a $31.1 million California residential mortgage pool. President and Chief Executive Officer Tim Myers said organic originations drove loan growth and that the pool purchase is expected to provide attractive risk-adjusted returns.

Total deposits rose $25.3 million, or 0.75%, to $3.395 billion. Noninterest-bearing balances increased $45.0 million and accounted for 37.8% of total deposits, up from 36.7%. The average cost of interest-bearing deposits fell to 2.03% from 2.04%, and the average cost of total deposits fell to 1.24% from 1.28%. The bank sold an average of $130.6 million of one-way money-market deposits in the quarter, versus an average of $93.7 million in the second quarter, with no one-way sales remaining at period-end.

Non-interest income rose 15.8% to $3.7 million from $3.2 million, including $251 thousand more service charges on business deposit accounts after a July 1 pricing update and $199 thousand of FHLB special dividend income. Non-interest expense fell $1.0 million to $20.6 million, led by a $465 thousand decline in salaries and related benefits, a $239 thousand drop in FDIC insurance expense, $263 thousand less other expense, and $132 thousand less professional services. The GAAP efficiency ratio improved to 58.65% from 63.62%.

Net income was $9.9 million, or $0.62 a share, versus $9.2 million, or $0.58 a share, in the second quarter. Diluted earnings per share rose 32% from $0.47 a year earlier. Pre-tax pre-provision net income increased 17.4% sequentially to $14.5 million. Return on average tangible common equity was 12.26%.

Credit metrics moved in opposite directions. Classified loans increased $15.2 million to $35.0 million, or 1.63% of loans from 0.95%, primarily from a $14.1 million owner-occupied commercial real estate downgrade. The company said the loan is well-collateralized, the borrower is paying as agreed, and there is no expected loss potential. Special mention loans fell to $65.1 million from $100.9 million. Non-accrual loans rose $1.2 million to $9.7 million, or 0.45% of loans from 0.40%. Net charge-offs were $21 thousand. The bank recorded a $500 thousand provision for credit losses on loans and a $325 thousand provision on unfunded commitments, versus a $320 thousand loan-provision reversal and no unfunded-commitment provision in the prior quarter. The allowance remained 1.07% of loans.

Bancorp’s Tier I leverage ratio rose 38 basis points to 9.04% from 8.66%. Common Equity Tier 1 to risk-weighted assets was 12.96%. Tangible common equity to tangible assets declined 47 basis points to 8.05% as accumulated other comprehensive loss worsened $24.8 million on higher market rates. Book value per share was $23.37. The board declared a $0.25 cash dividend, the 86th consecutive quarterly dividend.

Chief Financial Officer Dave Bonaccorso said the company expects a relatively low rising-rate deposit beta and that continued legacy loan repricing along with new originations at higher rates should support modest net interest margin expansion over time.

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