1、2?0?1?A?N?N?U?A?L R?E?P?O?R?T UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington,D.C.20549 FORM 10-K(Mark One)ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31,2017 OR TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)OF T
2、HE SECURITIES EXCHANGE ACT OF 1934For the transition period from _ to _ Commission File Number 001-33572Bank of Marin Bancorp(Exact name of Registrant as specified in its charter)California 20-8859754(State or other jurisdiction of incorporation)(IRS Employer Identification No.)504 Redwood Boulevard
3、,Suite 100,Novato,CA 94947(Address of principal executive office)(Zip Code)Registrants telephone number,including area code:(415)763-4520Securities registered pursuant to Section 12(b)of the Act:NoneSecurities registered pursuant to section 12(g)of the Act:Common Stock,No Par Value,and attached Shar
4、e Purchase RightsNASDAQ Capital Market(Title of each class)(Name of each exchange on which registered)Indicate by check mark if the registrant is a well-known seasoned issuer,as defined in Rule 405 of the Securities Act.Yes No Indicate by check mark if the registrant is not required to file reports
5、pursuant to Section 13 or Section 15(d)of the Act.Yes No Note-checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d)of the Exchange Act from their obligations under these sections.Indicate by check mark whether the registrant(1)has filed all r
6、eports to be filed by Section 13 or 15(d)of the Securities Exchange Act of 1934 during the preceding 12 months(or for such shorter period that the registrant was required to file such reports),and(2)has been subject to such filing requirements for the past 90 days.Yes No Indicate by check mark wheth
7、er the registrant has submitted electronically and posted on its corporate web site,if any,every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months(or for such shorter period that the registrant was required to submit and p
8、ost such files).Yes No Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein,and will not be contained,to the best of the registrants knowledge,in definitive proxy or information statements incorporated by reference in Part III of th
9、is form 10-K or any amendment to this Form 10-K.Indicate by check mark whether the registrant is a large accelerated filer,an accelerated filer,a non-accelerated filer,smaller reporting company,or an emerging growth company.See the definitions of“large accelerated filer,”“accelerated filer”,“smaller
10、 reporting company,”and emerging growth company in Rule 12b-2 of the Exchange Act.Large accelerated filer Accelerated filer Non-accelerated filer (Do not check if a smaller reporting company)Smaller reporting company Emerging growth company If an emerging growth company,indicate by check mark if the
11、 registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a)of the Exchange Act.Indicate by check mark if the registrant is a shell company,as defined in Rule 12b-2 of the Exchange Act.Yes No
12、 As of June 30,2017,the last business day of the registrants most recently completed second fiscal quarter,the aggregate market value of the voting common equity held by non-affiliates,based upon the closing price per share of the registrants common stock as reported by the NASDAQ,was approximately$
13、396 million.For the purpose of this response,directors and certain officers of the Registrant are considered the affiliates at that date.As of February 28,2018,there were 6,970,446 shares of common stock outstanding.DOCUMENTS INCORPORATED BY REFERENCEPortions of the registrants Proxy Statement for t
14、he Annual Meeting of Shareholders to be held on May 22,2018 are incorporated by reference into Part III.Page-2TABLE OF CONTENTS PART IForward-Looking StatementsITEM 1.BUSINESSITEM 1A.RISK FACTORSITEM 1B.UNRESOLVED STAFF COMMENTSITEM 2.PROPERTIESITEM 3.LEGAL PROCEEDINGSITEM 4.MINE SAFETY DISCLOSURESP
15、ART IIITEM 5.MARKET FOR REGISTRANTS COMMON EQUITY,RELATED STOCKHOLDERMATTERS AND ISSUER PURCHASES OF EQUITY SECURITIESITEM 6.SELECTED FINANCIAL DATAITEM 7.MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION ANDRESULTS OF OPERATIONSForward-Looking StatementsExecutive SummaryCritical Accounting
16、 PoliciesRESULTS OF OPERATIONSNet Interest IncomeProvision for Loan LossesNon-Interest IncomeNon-Interest ExpenseProvision for Income TaxesFINANCIAL CONDITIONInvestment SecuritiesLoansAllowance for Loan LossesOther AssetsDepositsBorrowingsDeferred Compensation ObligationsOff Balance Sheet Arrangemen
17、ts and CommitmentsCapital AdequacyLiquiditySelected Quarterly Financial DataITEM 7A.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKITEM 8.FINANCIAL STATEMENTS AND SUPPLEMENTARY DATAPage-4Page-4Page-4Page-10Page-20Page-20Page-20Page-20Page-21Page-21Page-23Page-24Page-24Page-25Page-24Page-2
18、7Page-27Page-29Page-30Page-31Page-32Page-32Page-32Page-35Page-37Page-40Page-40Page-41Page-41Page-41Page-42Page-42Page-44Page-44Page-46Page-3 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 1:Summary of Significant Accounting PoliciesNote 2:Investment SecuritiesNote 3:Loans and Allowance for Loan Los
19、sesNote 4:Bank Premises and EquipmentNote 5:Bank Owned Life InsuranceNote 6:DepositsNote 7:BorrowingsNote 8:Stockholders Equity and Stock PlansNote 9:Fair Value of Assets and LiabilitiesNote 10:Benefit PlansNote 11:Income TaxesNote 12:Commitments and ContingenciesNote 13:Concentrations of Credit Ris
20、kNote 14:Derivative Financial Instruments and Hedging ActivitiesNote 15:Regulatory MattersNote 16:Financial Instruments with Off-Balance Sheet RiskNote 17:Condensed Bank of Marin Bancorp Parent Only Financial StatementsNote 18:AcquisitionITEM 9.CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUN
21、TINGAND FINANCIAL DISCLOSUREITEM 9A.CONTROLS AND PROCEDURESITEM 9B.OTHER INFORMATIONPART IIIITEM 10.DIRECTORS,EXECUTIVE OFFICERS AND CORPORATE GOVERNANCEITEM 11.EXECUTIVE COMPENSATIONITEM 12.SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENTAND RELATED STOCKHOLDER MATTERSITEM 13.CERTAIN
22、RELATIONSHIPS AND RELATED TRANSACTIONS,AND DIRECTORINDEPENDENCEITEM 14.PRINCIPAL ACCOUNTANT FEES AND SERVICESPART IVITEM 15.EXHIBITS AND FINANCIAL STATEMENT SCHEDULESITEM 16.FORM 10-K SUMMARY SIGNATURESPage-53Page-53Page-65Page-69Page-75Page-75Page-76Page-76Page-77Page-82Page-85Page-86Page-88Page-88
23、Page-89Page-90Page-92Page-93Page-95Page-98Page-98Page-99Page-99Page-99Page-99Page-99Page-99Page-99Page-100Page-100Page-101Page-102Page-4PART I Forward-Looking Statements This discussion of financial results includes forward-looking statements within the meaning of Section 27A of the Securities Act o
24、f 1933,as amended,(the 1933 Act)and Section 21E of the Securities Exchange Act of 1934,as amended,(the 1934 Act).Those sections of the 1933 Act and 1934 Act provide a safe harbor for forward-looking statements to encourage companies to provide prospective information about their financial performanc
25、e so long as they provide meaningful,cautionary statements identifying important factors that could cause actual results to differ significantly from projected results.Our forward-looking statements include descriptions of plans or objectives of Management for future operations,products or services,
26、and forecasts of revenues,earnings or other measures of economic performance.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 c
27、onditional verbs preceded by will,would,should,could or may.Forward-looking statements are based on Managements current expectations regarding economic,legislative,and regulatory issues,and the successful integration of acquisitions that may affect our earnings in future periods.A number of factors,
28、many of which are beyond Managements control,could cause future results to vary materially from current Management expectations.Such factors include,but are not limited to,general economic conditions and the economic uncertainty in the United States and abroad,including changes in interest rates,dep
29、osit flows,real estate values,and expected future cash flows on loans and securities;costs or effects of acquisitions;competition;changes in accounting principles,policies or guidelines;changes in legislation or regulation(including the Tax Cuts and Jobs Act of 2017);natural disasters(such as the re
30、cent wildfires in our area);adverse weather conditions;and other economic,competitive,governmental,regulatory and technological factors(including external fraud and cyber-security threats)affecting our operations,pricing,products and services.Important factors that could cause results or performance
31、 to materially differ from those expressed in our prior forward-looking statements are detailed in ITEM 1A.Risk Factors of this report.Forward-looking statements speak only as of the date they are made.We do not undertake to update forward-looking statements to reflect circumstances or events that o
32、ccur after the date the forward-looking statements are made or to reflect the occurrence of unanticipated events.ITEM 1 BUSINESSBank of Marin(the“Bank”)was incorporated in August 1989,received its charter from the California Superintendent of Banks(now the California Department of Business Oversight
33、 or DBO)and commenced operations in January 1990.The Bank is an insured bank by the Federal Deposit Insurance Corporation(“FDIC”).On July 1,2007(the“Effective Date”),a bank holding company reorganization was completed whereby Bank of Marin Bancorp(“Bancorp”)became the parent holding company for the
34、Bank,the sole and wholly-owned subsidiary of Bancorp.On the Effective Date,each outstanding share of Bank of Marin common stock was converted into one share of Bank of Marin Bancorp common stock.Bancorp is listed at NASDAQ under the ticker symbol BMRC,which was formerly used by the Bank.Prior to the
35、 Effective Date,the Bank filed reports and proxy statements with the FDIC pursuant to Section 12 of the 1934 Act.Upon formation of the holding company,Bancorp became subject to regulation under the Bank Holding Company Act of 1956,as amended,and reporting and examination requirements by the Board of
36、 Governors of the Federal Reserve System(Federal Reserve).Bancorp files periodic reports and proxy statements with the Securities and Exchange Commission pursuant to the Securities Exchange Act of 1934,as amended.References in this report to“Bancorp”mean Bank of Marin Bancorp,parent holding company
37、for the Bank.References to“we,”“our,”“us”mean the holding company and the Bank that are consolidated for financial reporting purposes.Virtually all of our business is conducted through Bancorps subsidiary,Bank of Marin,which is headquartered in Novato,California.In addition to our headquarters,we op
38、erate twenty-three offices in Marin,Sonoma,San Francisco,Napa and Alameda counties,with a strong emphasis on supporting the local communities.Our customer base is made up of business and personal banking relationships from the communities near the branch office locations.Our business banking focus i
39、s on small to medium-sized businesses,professionals and not-for-profit organizations.Page-5We offer a broad range of commercial and retail deposit and lending programs designed to meet the needs of our target markets.Our lending categories include commercial real estate loans,commercial and industri
40、al loans,construction financing,consumer loans,and home equity lines of credit.Merchant card services are available for our business customers.Through third party vendors,we offer a consumer Visa credit card product combined with a rewards program to our customers,a Business Visa program,an American
41、 Express credit card program,a leasing program for commercial equipment financing,and cash management sweep services.We offer a variety of personal and business checking and savings accounts,and a number of time deposit alternatives,including time certificates of deposit,Individual Retirement Accoun
42、ts(“IRAs”),Health Savings Accounts,Certificate of Deposit Account Registry Service(CDARS),Insured Cash Sweep(ICS),and Demand Deposit MarketplaceSM (DDM Sweep)accounts.CDARS,ICS and DDM Sweep accounts are networks through which we offer full FDIC insurance coverage in excess of the regulatory maximum
43、 by placing deposits in multiple banks participating in the networks.We also offer deposit options including mobile deposit,remote deposit capture,Automated Clearing House services(“ACH”),wire transfers,and image lockbox services.A valet pick-up service is available for non-cash deposits to our prof
44、essional and business clients.Other products and services include Apple Pay,Samsung Pay,Android Pay,SurePayroll,Positive Pay fraud detection tool,and cash management solutions including Cash Vault and SafePoint.Automated teller machines(“ATMs”)are available at most retail branch locations.Our ATM ne
45、twork is linked to the PLUS,CIRRUS and NYCE networks,as well as to a network of nation-wide surcharge-free ATMs called MoneyPass.We also offer our depositors 24-hour access to their accounts by telephone and through our internet and mobile banking services available to personal and business account
46、holders.We offer Wealth Management and Trust Services(“WMTS”)which include customized investment portfolio management,trust administration,estate settlement and custody services.We also offer 401(k)plan services to small and medium-sized businesses through a third party vendor.We make international
47、banking services available to our customers indirectly through other financial institutions with whom we have correspondent banking relationships.We hold no patents,licenses(other than licenses required by the appropriate banking regulatory agencies),franchises or concessions.The Bank has registered
48、 the service marks The Spirit of Marin,the words“Bank of Marin”,the Bank of Marin logo,and the Bank of Marin tagline“Committed to your business and our community”with the United States Patent&Trademark Office.In addition,Bancorp has registered the service marks for the words“Bank of Marin Bancorp”an
49、d for the Bank of Marin Bancorp logo with the United States Patent&Trademark Office.All service marks registered by Bancorp or the Bank are registered on the United States Patent&Trademark Office Principal Register,with the exception of the words Bank of Marin Bancorp which is registered on the Unit
50、ed States Patent&Trademark Office Supplemental Register.Market AreaOur primary market area consists of Marin,San Francisco,Napa,Sonoma and Alameda counties.Our customer base is primarily made up of business,not-for-profit and personal banking relationships within these market areas.As discussed in N
51、ote 18 to the Consolidated Financial Statements in ITEM 8 of this report,in November 2017,we expanded our presence in Napa County through the acquisition of Bank of Napa,N.A.This resulted in the addition of$302.1 million of assets and the assumption of$251.9 million of liabilities as well as the add
52、ition of two branch offices serving the city of Napa.As a result,Bank of Marin is the largest community bank in Napa County based on deposit share1.We attract deposit relationships from small to medium-sized businesses,not-for-profit organizations and professionals,merchants and individuals who live
53、 and/or work in the communities comprising our market areas.As of December 31,_1 We obtained the FDIC deposit market share data from S&P Global Market Intelligence of New York,New York.Page-62017,approximately 67%of our deposits are in Marin County and southern Sonoma County,and approximately 55%of
54、our deposits are from businesses and 45%from individuals.CompetitionThe banking business in California generally,and in our market area specifically,is highly competitive with respect to attracting both loan and deposit relationships.The increasingly competitive environment is affected by changes in
55、 regulation,interest rates,technology and product delivery systems,and consolidation among financial service providers.The banking industry is seeing strong competition for quality loans,with larger banks expanding their activities to attract businesses that are traditionally community bank customer
56、s.In all of our five counties,we have significant competitionfrom nationwide banks with much larger branch networks and greater financial resources,as well as credit unions and other local and regional banks.Nationwide banks have the competitive advantages of national advertising campaigns and techn
57、ology infrastructure to achieve economies of scale.Large commercial banks also have substantially greater lending limits and the ability to offer certain services,which are not offered directly by us.Other competitors for depositors funds are money market mutual funds and non-bank financial institut
58、ions such as brokerage firms and insurance companies.In order to compete with the numerous,and often larger,financial institutions in our primary market area,we use,to the fullest extent possible,the flexibility and rapid response capabilities that derive from our local leadership and decision makin
59、g.Our competitive advantages also include an emphasis on personalized service,extensive community involvement,philanthropic giving,local promotional activities and strong relationships with our customers.In Marin County,we have the third largest market share of total deposits at 10.4%,based upon FDI
60、C deposit market share data as of June 30,20172.A significant driver of our franchise value is the growth and stability of our checking deposits,a low-cost funding source for our loan portfolio.EmployeesAt December 31,2017,we employed 291 full-time equivalent(“FTE”)staff.The actual number of employe
61、es,including part-time employees,at year-end 2017 included seven executive officers,123 other corporate officers and 183 staff.None of our employees are presently represented by a union or covered by a collective bargaining agreement.We believe that our employee relations are good.We have consistent
62、ly been recognized as one of the“Best Places to Work”by the North Bay Business Journal and as a Top Corporate Philanthropist”by the San Francisco Business Times.SUPERVISION AND REGULATIONBank holding companies and banks are extensively regulated under both federal and state law.The following discuss
63、ion summarizes certain significant laws,rules and regulations affecting Bancorp and the Bank.Bank Holding Company RegulationUpon formation of the bank holding company on July 1,2007,we became subject to regulation under the Bank Holding Company Act of 1956,as amended(“BHCA”)which subjects Bancorp to
64、 Federal Reserve reporting and examination requirements.Under the Federal Reserve regulations,a bank holding company is required to serve as a source of financial and managerial strength to its subsidiary banks.Under this requirement,we are expected to commit resources to support the Bank,including
65、at times when we may not be in a financial position to provide such resources,and it may not be in our,or our shareholders or creditors,best interests to do so.In addition,any capital loans we make to the Bank are subordinate in right of payment to depositors and to certain other indebtedness of the
66、 Bank.The BHCA regulates the activities of holding companies including acquisitions,mergers and consolidations and,together with the Gramm-Leach Bliley Act of 1999,the scope of allowable banking activities.Bancorp is also a bank holding company within the meaning of the California Financial Code.As
67、such,Bancorp and its subsidiaries are subject to examination by,and may be required to file reports with,the DBO._2 Source:S&P Global Market Intelligence of New York,New YorkPage-7Bank RegulationBanking regulations are primarily intended to protect consumers,depositors funds,federal deposit insuranc
68、e funds and the banking system as a whole.These regulations affect our lending practices,consumer protections,capital structure,investment practices and dividend policy.As a state chartered bank,we are subject to regulation,supervision and examination by the DBO.We are also subject to regulation,sup
69、ervision and periodic examination by the FDIC.If,as a result of an examination of the Bank,the FDIC or the DBO should determine that the financial condition,capital resources,asset quality,earnings prospects,management,liquidity,or other aspects of our operations are unsatisfactory,or that we have v
70、iolated any law or regulation,various remedies are available to those regulators including issuing a“cease and desist”order,monetary penalties,restitution,restricting our growth or removing officers and directors.The Bank addresses the many state and federal regulations it is subject to through a co
71、mprehensive compliance program that addresses the various risks associated with these issues.DividendsThe payment of cash dividends by the Bank to Bancorp is subject to restrictions set forth in the California Financial Code(the“Code”)in addition to regulations and policy statements of the Federal R
72、eserve.Prior to any distribution from the Bank to Bancorp,a calculation is made to ensure compliance with the provisions of the Code and to ensure that the Bank remains within capital guidelines set forth by the DBO and the FDIC.See also Note 8 to the Consolidated Financial Statements,under the head
73、ing“Dividends”in ITEM 8 of this report.FDIC Insurance AssessmentsThe FDIC insures our customers deposits to the maximum amount permitted by law,which is currently$250,000 per depositor,based on the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act(the“Dodd-Frank Act”).Our FDIC insurance
74、 assessment base is quarterly average consolidated total assets minus average tangible equity,defined as Common Equity Tier 1 Capital.The FDIC has reduced the deposit insurance assessment rates since the Deposit Insurance Fund Reserve Ratio reached its target level as of June 30,2016.Assessment rate
75、s are currently between 1.5 and 40 basis points annually on the assessment base for banks in all risk categories.In deriving the risk categories,the FDIC uses a banks capital level,supervisory ratios and other financial measures to determine a banks ability to withstand financial stress.Community Re
76、investment ActCongress enacted the Community Reinvestment Act(“CRA”)in 1977 to encourage financial institutions to meet the credit needs of the communities in which they are located.All banks and thrifts have a continuing and affirmative obligation,consistent with safe and sound operations,to help m
77、eet the credit needs of their entire communities,including low and moderate income neighborhoods.Regulatory agencies rate each banks performance in assessing and meeting these credit needs.The Bank is committed to serving the credit needs of the communities in which we do business,and it is our poli
78、cy to respond to all creditworthy segments of our market.As part of its CRA commitment,the Bank maintains strong philanthropic ties to the community.We invest in affordable housing projects that help economically disadvantaged individuals and residents of low-and moderate-income census tracts,in eac
79、h case consistent with our long-established prudent underwriting practices.We also donate to,invest in and volunteer with organizations that serve the communities in which we do business,especially low-and moderate-income individuals.These organizations offer educational and health programs to econo
80、mically disadvantaged students and families,community development services and affordable housing programs.We offer CRA reportable small business,small farm and community development loans within our assessment areas.The CRA requires a depository institutions primary federal regulator,in connection
81、with its examination of the institution,to assess the institutions record in meeting CRA requirements.The regulatory agencys assessment of the institutions record is made available to the public.This record is taken into consideration when the institution establishes a new branch that accepts deposi
82、ts,relocates an office,applies to merge or consolidate,or expands into other activities.The FDIC assigned a“Satisfactory”rating to its CRA performance examination completed in May 2015,which was performed under the large bank requirements.The FDIC completed a performance examination in January 2018,
83、the report of which is pending.Page-8Anti-Money-Laundering RegulationsA series of banking laws and regulations beginning with the Bank Secrecy Act in 1970 requires banks to prevent,detect,and report illicit or illegal financial activities to the federal government to prevent money laundering,interna
84、tional drug trafficking,and terrorism.Under the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001,financial institutions are subject to prohibitions against specified financial transactions and account relationships,requirements
85、 regarding the Customer Identification Program,as well as enhanced due diligence and“know your customer”standards in their dealings with high risk customers,foreign financial institutions,and foreign individuals and entities.Privacy and Data SecurityThe Gramm-Leach Bliley Act(“GLBA”)of 1999 imposes
86、requirements on financial institutions with respect to consumer privacy.The GLBA generally prohibits disclosure of consumer information to non-affiliated third parties unless the consumer has been given the opportunity to object and has not objected to such disclosure.Financial institutions are furt
87、her required to disclose their privacy policies to consumers annually.The GLBA also directs federal regulators,including the FDIC,to prescribe standards for the security of consumer information.We are subject to such standards,as well as standards for notifying consumers in the event of a security b
88、reach.We must disclose our privacy policy to consumers and permit consumers to“opt out”of having non-public customer information disclosed to third parties.We are required to have an information security program to safeguard the confidentiality and security of customer information and to ensure prop
89、er disposal of information that is no longer needed.We notify our customers when unauthorized disclosure involves sensitive customer information that may be misused.Consumer Protection RegulationsOur lending activities are subject to a variety of statutes and regulations designed to protect consumer
90、s,including the CRA,Home Mortgage Disclosure Act,Fair Credit Reporting Act,Fair Lending,Fair Debt Collection Practices Act,Flood Disaster Protection Act,Equal Credit Opportunity Act,the Fair Housing Act,Truth-in-Lending Act(TILA),the Real Estate Settlement Procedures Act(RESPA),and the Secure and Fa
91、ir Enforcement for Mortgage Licensing Act(SAFE).Our deposit operations are also subject to laws and regulations that protect consumer rights including Expedited Funds Availability,Truth in Savings,and Electronic Funds Transfers.Other regulatory requirements include:the Unfair,Deceptive or Abusive Ac
92、ts and Practices(UDAAP),Dodd-Frank Act,Right to Financial Privacy and Privacy of Consumer Financial Information.Additional rules govern check writing ability on certain interest earning accounts and prescribe procedures for complying with administrative subpoenas of financial records.Restriction on
93、Transactions between Banks AffiliatesTransactions between Bancorp and the Bank are quantitatively and qualitatively restricted under Sections 23A and 23B of the Federal Reserve Act and Federal Reserve Regulation W.Section 23A places restrictions on the Banks“covered transactions”with Bancorp,includi
94、ng loans and other extensions of credit,investments in the securities of,and purchases of assets from Bancorp.Section 23B requires that certain transactions,including all covered transactions,be on market terms and conditions.Federal Reserve Regulation W combines statutory restrictions on transactio
95、ns between the Bank and Bancorp with Federal Reserve interpretations in an effort to simplify compliance with Sections 23A and 23B.Capital RequirementsThe Federal Reserve and the FDIC have adopted risk-based capital guidelines for bank holding companies and banks.Bancorps ratios exceed the required
96、minimum ratios for capital adequacy purposes and the Bank meets the definition for well capitalized.Undercapitalized depository institutions may be subject to significant restrictions.Banks that are categorized as critically undercapitalized under applicable FDIC regulations are subject to dividend
97、restrictions.In July 2013,the federal banking regulators approved a final rule to implement the revised capital adequacy standards of the Basel Committee on Banking Supervision,commonly called Basel III.The final rule strengthens the definition of regulatory capital,increases risk-based capital requ
98、irements,makes selected changes to the calculation of risk-weighted assets,and adjusts the prompt corrective action thresholds.We became subject to the new rule on January 1,Page-92015 and certain provisions of the new rule will be phased in over the period of 2015 through 2019.In August 2017,the fe
99、deral banking regulators published a final rule,halting the phase-in of certain Basel III capital rules.The rule extends the regulatory capital treatment applicable during 2017 under the regulatory capital rules for certain items.This effectively pauses the full transition to the Basel III treatment
100、 of certain assets until the federal banking regulators pursue more extensive rulemaking to simplify the treatment of those assets.We have modeled our ratios under the finalized Basel III rules and we do not expect that we will be required to raise additional capital when the new rules fully phase i
101、n.For further information on our risk-based capital positions and the effect of the new Basel III rules,see Note 15 to the Consolidated Financial Statements in ITEM 8 of this report.The Dodd-Frank Wall Street Reform and Consumer Protection ActThe Dodd-Frank Act,a landmark financial reform bill compr
102、ised of voluminous new rules and restrictions on bank operations,included provisions aimed at preventing a repeat of the 2008 financial crisis and a new process for winding down failing,systemically important institutions in a manner as close to a controlled bankruptcy as possible.Among other things
103、,the Dodd-Frank Act established new government oversight responsibilities,enhanced capital adequacy requirements for certain institutions,established consumer protection laws and regulations,and placed limitations on certain banking activities.The current Presidential Administration(Administration)i
104、ssued an executive order to consider reforming the Dodd-Frank Act in order to reduce the regulatory burden on U.S.companies,including financial institutions.At this time,no details on the proposed reforms have been published and we are uncertain whether the intended deregulation will have a signific
105、ant impact on us.Notice and Approval Requirements Related to Control Banking laws impose notice,approval and ongoing regulatory requirements on any shareholder or other party that seeks to acquire direct or indirect control of an FDIC-insured depository institution.These laws include the BHCA and th
106、e Change in Bank Control Act.Among other things,these laws require regulatory filings by a shareholder or other party that seeks to acquire direct or indirect control of an FDIC-insured depository institution or bank holding company.The determination whether an investor controls a depository institu
107、tion is based on all of the facts and circumstances surrounding the investment.As a general matter,a party is deemed to control a depository institution or other company if the party owns or controls 25%or more of any class of voting stock.Subject to rebuttal,a party may be presumed to control a dep
108、ository institution or other company if the investor owns or controls 10%or more of any class of voting stock.Ownership by family members,affiliated parties,or parties acting in concert,is typically aggregated for these purposes.If a partys ownership of the Company were to exceed certain thresholds,
109、the investor could be deemed to control the Company for regulatory purposes.This could subject the investor to regulatory filings or other regulatory consequences.In addition,except under limited circumstances,bank holding companies are prohibited from acquiring,without prior approval:1)control of a
110、ny other bank or bank holding company or all or substantially all the assets thereof;or 2)more than 5%of the voting shares of a bank or bank holding company that is not already a subsidiary.Incentive CompensationThe Dodd-Frank Act required federal bank regulators and the Securities and Exchange Comm
111、ission(SEC)to establish joint regulations or guidelines prohibiting incentive-based payment arrangements that encourage inappropriate risks by providing an executive officer,employee,director or principal stockholder with excessive compensation,fees,or benefits or that could lead to material financi
112、al loss to the entity.These regulations apply to institutions having at least$1 billion in total assets.In addition,regulators must establish regulations or guidelines requiring enhanced disclosure to regulators of incentive-based compensation arrangements.The agencies have not finalized regulations
113、 proposed in April 2011.If the agencies adopt the regulations in the form initially proposed,they will impose limitations on the manner in which we may structure compensation for our executives.The Federal Reserve will review,as part of the regular,risk-focused examination process,the incentive comp
114、ensation arrangements of banking organizations,such as us,that are not“large,complex banking organizations.”The Federal Reserve will tailor their reviews for each organization based on the scope and complexity of the organizations activities and the prevalence of incentive compensation arrangements.
115、The findings of the supervisory initiatives will be included in reports of examination.Deficiencies will be incorporated into the organizations supervisory ratings,which can affect the organizations ability to make acquisitions and take other actions.Enforcement actions may be taken against a Page-1
116、0banking organization if its incentive compensation arrangements,or related risk management control or governance processes,pose a risk to the organizations safety and soundness and the organization is not taking prompt and effective measures to correct the deficiencies.Available InformationOn our I
117、nternet web site,we post the following filings as soon as reasonably practical after they are filed with or furnished to the Securities and Exchange Commission:Annual Report to Shareholders,Form 10-K,Proxy Statement for the Annual Meeting of Shareholders,quarterly reports on Form 10-Q,current report
118、s on Form 8-K,and any amendments to those reports filed or furnished pursuant to Section 13(a)or 15(d)of the Securities and Exchange Act of 1934.All such materials on our website are available free of charge.This website address is for information only and is not intended to be an active link,or to
119、incorporate any website information into this document.In addition,copies of our filings are available by requesting them in writing or by phone from:Corporate SecretaryBank of Marin Bancorp 504 Redwood Boulevard,Suite 100Novato,CA 94947415-763-4523ITEM 1A RISK FACTORSWe assume and manage a certain
120、degree of risk in order to conduct our business.The material risks and uncertainties that Management believes may affect our business are listed below and in ITEM 7A,Quantitative and Qualitative Disclosure about Market Risk.The list is not exhaustive;additional risks and uncertainties that Managemen
121、t is not aware of,or focused on,or currently deems immaterial may also impair business operations.If any of the following risks,or risks that have not been identified,actually occur,our financial condition,results of operations,and stock trading price could be materially and adversely affected.We ma
122、nage these risks by promoting sound corporate governance practices,which includes but is not limited to,establishing policies and internal controls,and implementing internal review processes.Before making an investment decision,investors should carefully consider the risks,together with all of the o
123、ther information included or incorporated by reference in this Annual Report on Form 10-K and our other filings with the SEC.This report is qualified in its entirety by these risk factors.Earnings are Significantly Influenced by General Business and Economic ConditionsOur success depends,to a certai
124、n extent,on local,national and global economic and political conditions.While labor market conditions continue to strengthen,real gross domestic product rose at a solid pace during the second half of 2017,and household spending had been expanding at a moderate pace,there is no assurance that these i
125、mprovements are sustainable.Economic pressure on consumers and uncertainty regarding the sustainability of the economic improvements may result in changes in consumer and business spending,borrowing and savings habits,which may affect the demand for loans and other products and services we offer.Our
126、 success also depends on the general economic conditions of the State of California,particularly the local markets in which we operate within the San Francisco Bay Area.Unlike larger national or other regional banks that are more geographically diversified,we provide banking and financial services t
127、o customers in the greater Bay Area.The local economic conditions in these areas have a significant impact on the demand for our products and services as well as the ability of our customers to repay loans,the value of the collateral securing loans and the stability of our deposit funding sources.In
128、 addition,oil price volatility,the level of U.S.debt and global economic conditions could destabilize financial markets.Lastly,the pro-growth fiscal policy could cause the inflation rate to rise faster than expected,compelling the Federal Open Market Committee(FOMC)of the Federal Reserve to raise in
129、terest rates rapidly to combat inflation and causing stock market volatility,which we observed in early 2018.In general,weakness in commercial and residential real estate values and home sale volumes,financial stress on borrowers,increases in unemployment rates1,and customers inability to pay debt c
130、ould adversely affect our financial condition and results of operations in the following ways:_1 According to the California Employment Development Departments December 2017 labor reports,the unemployment rates in Marin,San Francisco,Sonoma,Alameda and Napa counties were 2.3%,2.4%,2.8%,3.0%and 3.6%,
131、respectively,compared to the state of California record low of 4.3%,which was down from 5.2%at the end of 2016.Page-11 Demand for our products and services may decline;Low cost or non-interest bearing deposits may decrease;Collateral for our loans,especially real estate,may decline in value;Loan del
132、inquencies,problem assets and foreclosures may increase as a result of a deterioration of our borrowers creditworthiness;and Investment securities may become impaired.Interest Rate Risk is Inherent in Our BusinessOur earnings are largely dependent upon our net interest income,which is the difference
133、 between interest income earned on interest-earning assets,such as loans and securities,and interest expense paid on interest-bearing liabilities,such as deposits and borrowed funds.Interest rates are sensitive to many factors outside of our control,including general economic conditions and the poli
134、cies of various governmental and regulatory agencies and,in particular,the FOMC,which regulates the supply of money and credit in the United States.Changes in monetary policy,including changes in interest rates,can influence not only the interest we receive on loans and securities and interest we pa
135、y on deposits and borrowings,but can also affect(i)our ability to originate loans and obtain deposits,(ii)the fair value of our financial assets and liabilities,and(iii)the average duration of our securities and loan portfolios.Our portfolio of loans and securities will generally decline in value if
136、 market interest rates increase,and increase in value if market interest rates decline.In addition,our loans and callable mortgage-backed securities are also subject to prepayment risk when interest rates fall,and the borrowers credit risk may increase in rising rate environments.The FOMC increased
137、the federal funds target rate by 25 basis points(basis points are equal to one hundredth of a percentage point)each in March,June and December 2017 to a current range of 1.25%to 1.50%.While there was no interest rate action in the first meeting of 2018,the FOMC indicated that it may consider further
138、 gradual adjustments in 2018 in light of strong labor markets and expectations that inflation will reach the targeted two percent inflation rate over the medium term.Additionally,other factors such as productivity,oil prices,the strength of the U.S.dollar,and global demand play a role in the FOMCs c
139、onsideration of future rate hikes.Our net interest income is vulnerable to a falling or flat rate environment and will benefit if the prevailing market interest rates increase.However,a rise in index rates leads to lower debt service coverage of variable rate loans if the borrowers operating cash fl
140、ow does not also rise.This creates a paradox of an improving economy(leading to higher interest rates)with increased credit risk as short-term rates move up faster than the cash flow or income of the borrowers.Higher interest rates may also depress loan demand,making it more difficult for us to grow
141、 loans.See the sections captioned“Net Interest Income”in Managements Discussion and Analysis of Financial Condition and Results of Operations in ITEM 7 and Quantitative and Qualitative Disclosures about Market Risk in ITEM 7A of this report for further discussion related to management of interest ra
142、te risk.Banks and Bank Holding Companies are Subject to Extensive Government Regulation and SupervisionBancorp and the Bank are subject to extensive federal and state governmental supervision,regulation and control.Holding company regulations affect the range of activities in which Bancorp is engage
143、d.Banking regulations affect the Banks lending practices,capital structure,investment practices and dividend policy,and compliance costs among other things.Future legislative changes or interpretations may also alter the structure and competitive relationship among financial institutions.Disruptions
144、 in the financial marketplace have led to additional regulations in an attempt to reform financial markets.This reform included,among other things,regulations over consumer financial products,capital adequacy,and the creation of a regime for regulating systemic risk across all types of financial ser
145、vice firms.Further restrictions on financial service companies may adversely affect our results of operations and financial condition,as well as increase our compliance risk.While regulations for higher capital requirements have been postponed and there are discussions to deregulate further the fina
146、ncial industry under the current Administration,the nature and extent of future legislative and regulatory changes from both the federal and California legislatures affecting us are unpredictable at this time.Compliance risk is the current and prospective risk to earnings or capital arising from vio
147、lations of,or non-conformance with,laws,rules,regulations,prescribed practices,internal policies and procedures,or ethical standards set forth by regulators.Compliance risk also arises in situations where the laws or rules governing certain bank products or activities Page-12of our clients may be am
148、biguous or untested.This risk exposes Bancorp and the Bank to potential fines,civil money penalties,payment of damages and the voiding of contracts.Compliance risk can lead to diminished reputation,reduced franchise value,limited business opportunities,reduced expansion potential and an inability to
149、 enforce contracts.For further information on supervision and regulation,see the section captioned“Supervision and Regulation”in ITEM 1 above.Intense Competition with Other Financial Institutions to Attract and Retain Banking CustomersWe are facing significant competition for customers from other ba
150、nks and financial institutions located in the markets that we serve.We compete with commercial banks,saving institutions,credit unions,non-bank financial services companies,including financial technology firms,and other financial institutions operating within or near our service areas.Some of our no
151、n-bank competitors and peer-to-peer lenders may not be subject to the same extensive regulations as we are,giving them greater flexibility in competing for business.We anticipate intense competition will continue for the coming year due to the consolidation of many financial institutions and more ch
152、anges in legislature,regulation and technology.National and regional banks much larger than our size have entered our market through acquisitions and they may be able to benefit from economies of scale through their wider branch networks,more prominent national advertising campaigns,lower cost of bo
153、rrowing,capital market access and sophisticated technology infrastructures.Further,intense competition for creditworthy borrowers could lead to pressure for loan rate concessions and affect our ability to generate profitable loans.Going forward,we may see continued competition in the industry as com
154、petitors seek to expand market share in our core markets.Further,our customers may withdraw deposits to pursue alternative investment opportunities in the recent bullish equity market.Technology and other changes have made it more convenient for bank customers to transfer funds into alternative inve
155、stments or other deposit accounts such as online virtual banks and non-bank service providers.Efforts and initiatives we may undertake to retain and increase deposits,including deposit pricing,can increase our costs.Based on our current strong liquidity position,our adjustment to deposit pricing may
156、 lag the market in a rising interest rate environment.If our customers move money into higher yielding deposits or alternative investments,we may lose a relatively inexpensive source of funds,thus increasing our funding costs through more expensive wholesale borrowings.Activities of Our Large Borrow
157、ers and Depositors May Cause Unexpected Volatilities in Our Loan and Deposit Balances,as well as Net Interest MarginRising real estate values in the Bay Area market have motivated some of our borrowers to sell real estate that collateralized our loans,contributing to loan payoff activity.We experien
158、ced loan payoffs of$133 million and$158 million in 2017 and 2016,respectively.These payoffs approximated nine and eleven percent annual turnover of our loan portfolio in 2017 and 2016,respectively.Payoffs of loans originated during a higher interest rate environment may be replaced by new loans with
159、 lower interest rates,causing downward pressure on our net interest margin.In addition,the top ten depositor relationships account for approximately nine percent of our total deposit balances.The business models and cash cycles of some of our large commercial depositors may also cause short-term vol
160、atility in their deposit balances held with us.As our customers businesses grow,the dollar value of their daily activities may also grow leading to larger fluctuations in daily balances.Any long-term decline in deposit funding would adversely affect our liquidity.For additional information on our ma
161、nagement of deposit volatility,refer to the Liquidity section of ITEM 7,Managements Discussion and Analysis,of this report.Negative Conditions Affecting Real Estate May Harm Our Business and Our Commercial Real Estate(CRE)Concentration May Heighten Such RiskConcentration of our lending activities in
162、 the California real estate sector could negatively affect our results of operations if adverse changes in our lending area occur.Although we do not offer traditional first mortgages,nor have sub-prime or Alt-A residential loans or significant amounts of securities backed by such loans in the portfo
163、lio,we are not immune to volatility in those markets.Approximately 87%of our loans were secured by real estate at December 31,2017,of which 70%were secured by CRE and the remaining 17%by residential real estate.Real estate valuations are influenced by demand,and demand is driven by economic factors
164、such as employment rates and interest rates.Page-13Loans secured by CRE include those secured by office buildings,owner-user office/warehouses,mixed-use residential/commercial properties and retail properties.There can be no assurance that the companies or properties securing our loans will generate
165、 sufficient cash flows to allow borrowers to make full and timely loan payments to us.In the event of default,the collateral value may not cover the outstanding amount due to us,especially during real estate market downturns.Rising CRE lending concentrations may expose institutions to unanticipated
166、earnings and capital volatility in the event of adverse changes in the CRE market.The FDIC applies two criteria for identifying institutions that are potentially exposed to significant CRE concentration risk.The first criterion looks at whether non-owner occupied commercial real estate loans,as defi
167、ned by the guidelines,exceed 300%of the Banks total capital.As of December 31,2017,our non-owner occupied CRE loans represented 317%of the Banks capital,which declined from 332%as of December 31,2016.The second criterion measures whether the non-owner occupied CRE growth rate during the prior thirty
168、 six months exceeds 50%.Since December 31,2014,our non-owner occupied CRE portfolio has grown by 22%,below the 50%growth rate per the regulatory guideline.We maintain heightened review and analyses of our concentrations and have regular conversations with regulators to avoid unexpected regulatory ri
169、sk.Severe Weather,Natural Disasters or Other Climate Change Related Matters Could Significantly Affect Our BusinessOur primary market is located in an earthquake-prone zone in northern California,which is also subject to other weather or disasters,such as severe rainstorms,wildfire,drought or flood.
170、These events could interrupt our business operations unexpectedly.Climate-related physical changes and hazards could also pose credit risks for us.For example,our borrowers may have collateral properties or operations located in coastal areas at risk to rising sea levels and erosion or subject to th
171、e risk of drought in California.The properties pledged as collateral on our loan portfolio could also be damaged by tsunamis,landslides,floods,earthquakes or wildfires and thereby the recoverability of loans could be impaired.A number of factors can affect credit losses,including the extent of damag
172、e to the collateral,the extent of damage not covered by insurance,the extent to which unemployment and other economic conditions caused by the natural disaster adversely affect the ability of borrowers to repay their loans,and the cost of collection and foreclosure to us.Lastly,there could be increa
173、sed insurance premiums and deductibles,or a decrease in the availability of coverage,due to severe weather-related losses.The ultimate outcome on our business of a natural disaster,whether or not caused by climate change,is difficult to predict.In October 2017,much of the North Bay region of Norther
174、n California was struck by widespread and destructive wildfires.Fortunately,there was no damage to bank facilities and no significant impairment to services.Management has assessed the impact of the fires on our loan and investment portfolios;including mapping client addresses and locations of munic
175、ipal bond issuers to areas affected by the fires and evaluating any known damage to collateral and businesses.Based on our assessment,the loss to properties and businesses located in the affected areas that are pledged as collateral to our loans or bonds is minimal.However,the long-term impact to th
176、e Napa and Sonoma regional economies is uncertain.Management is monitoring the situation and will continue to respond to the needs of customers and employees during the rebuilding process.We are Subject to Significant Credit Risk and Loan Losses May Exceed Our Allowance for Loan Losses in the Future
177、We maintain an allowance for loan losses,which is a reserve established through provisions for loan losses charged to expense,that represents Managements best estimate of probable losses that may be incurred within the existing portfolio of loans(the incurred loss model).The level of the allowance r
178、eflects Managements continuing evaluation of specific credit risks,loan loss experience,current loan portfolio quality and present economic,political and regulatory conditions.The determination of the appropriate level of the allowance for loan losses inherently involves a high degree of subjectivit
179、y and requires us to make significant estimates of current credit risks and future trends,all of which may undergo material changes.Further,we generally rely on appraisals of the collateral or comparable sales data to determine the level of specific reserve and/or the charge-off amount on certain co
180、llateral dependent loans.Inaccurate assumptions in the appraisals or an inappropriate choice of the valuation techniques may lead to an inadequate level of specific reserve or charge-offs.Changes in economic conditions affecting borrowers,new information regarding existing loans and their collateral
181、,identification of additional problem loans,and other factors may require an increase in our allowance for loan losses.Page-14In addition,bank regulatory agencies periodically review our allowance for loan losses and may require an increase in the provision for loan losses or the recognition of furt
182、her loan charge-offs.If charge-offs in future periods exceed the allowance for loan losses or cash flows from acquired loans do not perform as expected,we will need to record additional provision for loan losses.In June 2016,the FASB issued ASU No.2016-13,Financial Instruments-Credit Losses(Topic 32
183、6):Measurement of Credit Losses on Financial Instruments.Under the new guidance,entities will be required to measure expected credit losses by utilizing forward-looking information to assess an entitys allowance for credit losses.The measurement of expected credit losses will be based on historical
184、experience,current conditions and reasonable and supportable forecasts that affect the collectability of a credit over its remaining life.In addition,the ASU amends the accounting for potential credit losses on available-for-sale debt securities and purchased financial assets with credit deteriorati
185、on.ASU 2016-13 is effective for fiscal years beginning after December 15,2019,including interim periods within those fiscal years.Early adoption is permitted for fiscal years beginning after December 15,2018,including interim periods within those fiscal years.We have formed an internal Current Expec
186、ted Credit Loss(CECL)committee and are working with our third party vendor to determine the appropriate methodologies and resources to utilize in preparation for transition to the new accounting standards.Refer to Note 1 to the Consolidated Financial Statements in ITEM 8 for further discussion.Non-p
187、erforming Assets Take Significant Time to Resolve and Adversely Affect Results of Operations and Financial Condition.While our non-performing assets are currently at a low level,there can be no assurance that we will not experience increases in non-performing assets in the future.Generally,interest
188、income is not recognized on non-performing loans and the administrative costs on these loans are higher than performing loans.We might incur losses if the creditworthiness of our borrowers deteriorates to a point when we need to take collateral in foreclosures and similar proceedings,resulting in po
189、ssible mark down of the loans to the fair value of the collateral.While we have managed our problem assets through workouts,restructurings and other proactive credit management practices that mitigate credit losses,decreases in the value of the underlying collateral,or deterioration in borrowers per
190、formance or financial conditions,whether or not due to economic and market conditions beyond our control,could adversely affect our business,results of operations and financial condition.In addition,the resolution of non-performing assets can distract Management from other responsibilities.Securitie
191、s May Lose Value due to Credit Quality of the IssuersWe invest in significant portions of investment securities issued by government-sponsored enterprises(GSE),such as Federal Home Loan Bank(FHLB),Federal National Mortgage Association(“FNMA”),Federal Home Loan Mortgage Corporation(FHLMC),and Federal
192、 Farm Credit Bank.We also hold mortgage-backed securities(“MBS”)securities issued by FNMA and FHLMC.While we consider these securities to have low credit risk as they carry the backing of the U.S.Government,they are not direct obligations of the U.S.Government.GSE debt is sponsored but not guarantee
193、d by the federal government,whereas government agencies such as Government National Mortgage Association(GNMA)are divisions of the government whose securities are backed by the full faith and credit of the United States.Since 2008,both FNMA and FHLMC have been under a U.S.Government conservatorship.
194、As a result,securities issued by FNMA and FHLMC have benefited from this government support.However,housing finance reform may be introduced to end GSE status,place FNMA and FHLMC into receivership and replace them with multiple mortgage guarantors,which could impact the fair value of our securities
195、 issued or guaranteed by these entities.In October 2017,the FOMC initiated the balance sheet normalization program,in which it intends to reduce the Federal Reserves holdings of Treasury and agency securities by gradually decreasing its reinvestment of the principal payments it receives from securit
196、ies.If the U.S.Government stops reinvesting or starts selling their holdings in U.S.Treasury or MBS issued by the GSE;if the government support is phased-out or completely withdrawn;or if either FNMA or FHLMC comes under financial stress or suffers creditworthiness deterioration,the value of our inv
197、estments may be significantly impacted.We also invest in tax exempt obligations of state and political subdivisions whose value have been affected by tax rate reductions from the Tax Cuts and Jobs Act of 2017.Additionally,while we generally seek to minimize our exposure by diversifying the geographi
198、c location of our portfolio and investing in investment grade securities,there is no guarantee that the issuers will remain financially sound or continue their payments on these debentures.Page-15Unexpected Early Termination of Interest Rate Swap Agreements May Affect EarningsWe have entered into in
199、terest-rate swap agreements,primarily as an asset/liability risk management tool,in order to mitigate the changes in the fair value of specified long-term fixed-rate loans and firm commitments to enter into long-term fixed-rate loans caused by changes in interest rates.These hedges allow us to offer
200、 long-term,fixed-rate loans to customers without assuming the interest rate risk of a long-term asset by swapping our fixed-rate interest stream for a floating-rate interest stream.In the event of default by the borrowers on our hedged loans,we may have to terminate these designated interest-rate sw
201、ap agreements early,resulting in prepayment penalties charged by our counterparties and negatively affect our earnings.Growth Strategy or Potential Future Acquisitions May Produce Unfavorable OutcomesWe seek to expand our franchise safely and consistently.A successful growth strategy requires us to
202、manage multiple aspects of the business simultaneously,such as following adequate loan underwriting standards,balancing loan and deposit growth without increasing interest rate risk or compressing our net interest margin,maintaining sufficient capital,and recruiting,training and retaining qualified
203、professionals.Our strategic plan also includes merger and acquisition possibilities that either enhance our market presence or have potential for improved profitability through financial management,economies of scale or expanded services,such as the Bank of Napa acquisition in 2017.We may incur sign
204、ificant acquisition related expenses either during the due diligence phase of acquisition targets or during integration of the acquirees.These expenses have and may continue to negatively impact our earnings prior to realizing the benefits of acquisitions.We may also be exposed to difficulties in co
205、mbining the operations of acquired institutions into our own operations,which may prevent us from achieving the expected benefits from our acquisition activities.Our earnings,financial condition and prospects after the merger may affect our stock price and will depend in part on our ability to integ
206、rate the operations and management of the acquired institution while continuing to implement other aspects of our business plan.Inherent uncertainties exist in integrating the operations of an acquired institution and there is no assurance that we will be able to do so successfully.Among the issues
207、that we could face are:unexpected problems with operations,personnel,technology or credit;loss of customers and employees of the acquiree;difficulty in working with the acquirees employees and customers;the assimilation of the acquirees operations,culture and personnel;instituting and maintaining un
208、iform standards,controls,procedures and policies;and litigation risk not discovered during the due diligence period.Undiscovered factors as a result of an acquisition could bring liabilities against us,our management and the management of the institutions we acquire.These factors could contribute to
209、 our not achieving the expected benefits from our acquisitions within desired time frames,if at all.Further,although we generally anticipate cost savings from acquisitions,we may not be able to fully realize those savings.Any cost savings may be offset by losses in revenues or other charges to earni
210、ngs.We May Not Be Able to Attract and Retain Key EmployeesOur success depends,in large part,on our ability to attract and retain key people.Competition for the best people in most activities engaged by us has been intense,especially in light of the recent improvement in the job market,and we may not
211、 be able to hire skilled people or retain them.We do not have non-compete agreements with any of our senior officers.The unexpected loss of key personnel could have an unfavorable effect on our business because of the skills,knowledge of our market,years of industry experience and difficulty of prom
212、ptly finding qualified replacement personnel.Accounting Estimates and Risk Management Processes Rely on Analytical and Forecasting ModelsThe processes we use to estimate probable loan losses and to measure the fair value of financial instruments,as well as the processes used to estimate the effects
213、of changing interest rates and other market measures on our financial condition and results of operations,depends upon the use of analytical and forecasting models.These models reflect assumptions that may not be accurate,particularly in times of market stress or other unforeseen circumstances.Even
214、Page-16if these assumptions are adequate,the models may prove to be inadequate or inaccurate because of other flaws in their design or their implementation.If the models we use for interest rate risk and asset-liability management are inadequate,we may incur increased or unexpected losses upon chang
215、es in market interest rates or other market measures.If the models we use for determining our probable loan losses are inadequate,the allowance for loan losses may not be sufficient to support future charge-offs.If the models we use to measure the fair value of financial instruments are inadequate,t
216、he fair value of such financial instruments may fluctuate unexpectedly or may not accurately reflect what we could realize upon sale or settlement of such financial instruments.Any such failure in our analytical or forecasting models could have a material adverse effect on our business,financial con
217、dition and results of operations.The Value of Goodwill and Other Intangible Assets May Decline in the FutureAs of December 31,2017,we had goodwill totaling$30.1 million and a core deposit intangible asset totaling$6.5 million from business acquisitions.A significant decline in expected future cash f
218、lows,a significant adverse change in the business climate,slower growth rates or a significant and sustained decline in the price of our common stock could necessitate taking charges in the future related to the impairment of goodwill or other intangible assets.If we were to conclude that a future w
219、rite-down of goodwill or other intangible assets is necessary,we would record the appropriate charge,which could have a material adverse effect on our business,financial condition and results of operations.We May Take Filing Positions or Follow Tax Strategies That May Be Subject to ChallengeWe provi
220、de for current and deferred tax provision in our consolidated financial statements based on our results of operations,business activities and business combinations,legal structure and federal and state legislation and regulations,which is still evolving from the December 2017 enactment of the Tax Cu
221、ts and Jobs Act of 2017.We may take filing positions or follow tax strategies that are subject to interpretation of tax statutes.Our net income may be reduced if a federal,state or local authority were to assess charges for taxes that have not been provided for in our consolidated financial statemen
222、ts.Taxing authorities could change applicable tax laws and interpretations,challenge filing positions or assess new taxes and interest charges.If taxing authorities take any of these actions,our business,results of operations or financial condition could be significantly affected.The Financial Servi
223、ces Industry is Undergoing Rapid Technological Changes and,As a Result,We Have a Continuing Need to Stay Current with Those Changes to Compete Effectively and Increase Our Efficiencies.We May Not Have the Resources to Implement New Technology to Stay Current with These ChangesThe financial services
224、industry is undergoing technological changes with frequent introductions of new technology-driven products and services.In addition to providing better client service,the effective use of technology increases efficiency and reduces operational costs.Our future success will depend in part upon our ab
225、ility to use technology to provide products and services that will satisfy client demands securely and cost-effectively.In connection with implementing new technology enhancements and/or products,we may experience operational challenges(e.g.human error,system error,incompatibility)which could result
226、 in us not fully realizing the anticipated benefits from such new technology or require us to incur significant costs to remedy any such challenges in a timely manner.Risks Associated with Cyber Security Could Negatively Affect Our Earnings and ReputationOur business requires the secure management o
227、f sensitive client and bank information.We work diligently to implement security measures that intend to make our communications and information systems safe to conduct business.Cyber threats such as social engineering,ransomware,and phishing emails are more prevalent now than ever before.These inci
228、dents include intentional and unintentional events that may present threats designed to disrupt operations,corrupt data,release sensitive information or cause denial-of-service attacks.A cyber security breach of systems operated by the Bank,merchants,vendors,customers,or externally publicized breach
229、es of other financial institutions may significantly harm our reputation,result in a loss of customer business,subject us to regulatory scrutiny,or expose us to civil litigation and financial liability.While we have systems and procedures designed to prevent security breaches,we cannot be certain th
230、at advances in criminal capabilities,physical system or network break-ins or inappropriate access will not compromise or breach the technology protecting our networks or proprietary client information.Page-17We Rely on Third-Party Vendors for Important Aspects of Our OperationWe depend on the accura
231、cy and completeness of information and systems provided by certain key vendors,including but not limited to data processing,payroll processing,technology support,investment safekeeping and accounting.For example,we outsource core processing to Fidelity Information Services(FIS)and wire processing to
232、 Finastra,which are leading financial services solution providers that allow us access to competitive technology offerings without having to invest in their development.Our ability to operate,as well as our financial condition and results of operations,could be negatively affected in the event of an
233、 interruption of an information system,an undetected error,a cyber-breach,or in the event of a natural disaster whereby certain vendors are unable to maintain business continuity.Failure of Correspondent Banks May Affect LiquidityFinancial services institutions are highly interrelated because of cle
234、aring and exchange,counterparty,and other business relationships.In particular,the financial services industry in general was materially and adversely affected by the recent credit crisis,including the failure and consolidation of banks in the industry in recent years.While we regularly monitor the
235、financial health of our correspondent banks and we have diverse sources of liquidity,should any one of our correspondent banks become financially impaired,our available credit may decline and/or they may be unable to honor their commitments.Deterioration of Credit Quality or Insolvency of Insurance
236、Companies May Impede Our Ability to Recover LossesWe have property,casualty and financial institution risk coverage underwritten by several insurance companies,who may not avoid insolvency risk inherent in the insurance industry.In addition,some of our investments in obligations of state and politic
237、al subdivisions are insured by insurance companies.While we closely monitor the credit ratings of our insurers and the insurers of our municipal securities and we are poised to make quick changes if needed,we cannot predict an unexpected inability to honor commitments.We also invest in bank-owned li
238、fe insurance policies on certain members of Management,which may lose value in the event of a carriers insolvency.In the event that a bank-owned life insurance policy carriers credit ratings fall below investment grade,we may exchange policies to other carriers at a cost charged by the original carr
239、ier,or we may terminate the policies,which may result in adverse tax consequences.Our loan portfolio is secured primarily by properties located in earthquake or fire-prone zones.In the event of a disaster that causes pervasive damage to the region in which we operate,not only the Bank,but also the l
240、oan collateral may suffer losses not recoverable by insurance.Bancorp Relies on Dividends from the Bank to Pay Cash Dividends to ShareholdersBancorp is a separate legal entity from its subsidiary,the Bank.Bancorp receives substantially all of its cash stream from the Bank in the form of dividends,wh
241、ich is Bancorps principal source of funds to pay cash dividends to Bancorps common shareholders,service subordinated debt,and cover operational expenses of the holding company.Various federal and state laws and regulations limit the amount of dividends that the Bank may pay to Bancorp.In the event t
242、hat the Bank is unable to pay dividends to Bancorp,Bancorp may not be able to pay dividends to its shareholders or pay interest on the subordinated debentures.As a result,it could have an adverse effect on Bancorps stock price and investment value.Federal law would prohibit capital distributions fro
243、m the Bank,with limited exceptions,if the Bank were categorized as undercapitalized under applicable Federal Reserve or FDIC regulations.In addition,as a California bank,Bank of Marin is subject to state law restrictions on the payment of dividends.For further information on the distribution limit f
244、rom the Bank to Bancorp,see the section captioned“Bank Regulation”in ITEM 1 above and“Dividends”in Note 8 to the Consolidated Financial Statements in ITEM 8 of this report.The Trading Volume of Bancorps Common Stock is Less than That of Other,Larger Financial Services CompaniesOur common stock is li
245、sted on the NASDAQ Capital Market exchange.Our trading volume is less than that of nationwide or larger regional financial institutions.A public trading market having the desired characteristics of depth,liquidity Page-18and orderliness depends on the presence of willing buyers and sellers of common
246、 stock at any given time.This presence depends on the individual decisions of investors and general economic and market conditions over which we have no control.Given the low trading volume of our common stock,significant trades of our stock in a given time,or the expectations of these trades,could
247、cause volatility in the stock price.We may need to Raise Additional Capital in the Future,and if we Fail to Maintain Sufficient Capital,Whether due to Losses,an Inability to Raise Additional Capital or Otherwise,our Financial Condition,Liquidity and Results of Operations,as well as our Ability to Ma
248、intain Regulatory Compliance,Could be Adversely Affected We face significant capital and other regulatory requirements as a financial institution.We may need to raise additional capital in the future to provide us with sufficient capital resources and liquidity to meet our commitments and business n
249、eeds,which could include the possibility of financing acquisitions.In addition,Bancorp,on a consolidated basis,and the Bank,on a stand-alone basis,must meet certain regulatory capital requirements and maintain sufficient liquidity.Importantly,as discussed below,regulatory capital requirements could
250、increase from current levels,which could require us to raise additional capital or contract our operations.Our ability to raise additional capital depends on conditions in the capital markets,economic conditions and a number of other factors,including investor perceptions regarding the banking indus
251、try,market conditions and governmental activities,and on our financial condition and performance.Accordingly,we cannot assure that we will be able to raise additional capital if needed or on terms acceptable to us.If we fail to maintain capital to meet regulatory requirements,our liquidity,business,
252、financial condition and results of operations could be materially and adversely affected.We may be Subject to more Stringent Capital Requirements in the FutureWe are subject to regulatory requirements specifying minimum amounts and types of capital that we must maintain.From time to time,the regulat
253、ors change these regulatory capital adequacy guidelines.If we fail to meet these minimum capital guidelines and other regulatory requirements,Bancorp or the Bank may be restricted in the types of activities we may conduct and we may be prohibited from taking certain capital actions,such as paying di
254、vidends and repurchasing or redeeming capital securities.If we become subject to annual stress testing requirements,our stress test results may have the effect of requiring us to comply with even greater capital requirements.While we currently meet the requirements of the Basel III-based capital rul
255、es on a fully implemented basis,we may eventually fail to do so.In addition,these requirements could negatively affect our ability to lend,grow deposit balances,make acquisitions or make capital distributions in the form of dividends or share repurchases.Higher capital levels could also lower our re
256、turn on equity.We may be Subject to Environmental Liabilities in Connection with the Foreclosure on Real Estate Assets Securing our Loan PortfolioHazardous or toxic substances or other environmental hazards may be located on the properties that secure our loans.If we acquire such properties as a res
257、ult of foreclosure or otherwise,we could become subject to various environmental liabilities.For example,we could be held liable for the cost of cleaning up or otherwise addressing contamination at or from these properties.We could also be held liable to a governmental entity or third party for prop
258、erty damage,personal injury or other claims relating to any environmental contamination at or from these properties.In addition,we own and operate certain properties that may be subject to similar environmental liability risks.Although we have policies and procedures that are designed to mitigate ag
259、ainst certain environmental risks,we may not detect all environmental hazards associated with these properties.If we ever became subject to significant environmental liabilities,our business,financial condition and results of operations could be adversely affected.The Small to Medium-sized Businesse
260、s that we Lend to may have Fewer Resources to Weather Adverse Business Developments,which may Impair a Borrowers Ability to Repay a Loan,and such Impairment could Adversely Affect our Results of Operations and Financial ConditionWe focus our business development and marketing strategy primarily on s
261、mall to medium-sized businesses.Small to medium-sized businesses frequently have smaller market shares than their competition,may be more vulnerable to economic downturns,often need substantial additional capital to expand or compete and may experience substantial volatility in operating results,any
262、 of which may impair a borrowers ability to repay a loan.In addition,the success of a small and medium-sized business often depends on the management talents and efforts of one or two people or a small group of people,and the death,disability or resignation of one or more of these people could adver
263、sely affect Page-19the business and its ability to repay its loan.If general economic conditions negatively affect the California markets in which we operate and small to medium-sized businesses are adversely affected or our borrowers are otherwise affected by adverse business developments,our busin
264、ess,financial condition and results of operations may be negatively affected.A Lack of Liquidity could Adversely Affect our Operations and Jeopardize our Business,Financial Condition and Results of OperationsLiquidity is essential to our business.We rely on our ability to generate deposits and effec
265、tively manage the repayment and maturity schedules of our loans and investment securities,respectively,to ensure that we have adequate liquidity to fund our operations.An inability to raise funds through deposits,borrowings,securities sales,Federal Home Loan Bank advances,the sale of loans and other
266、 sources could have a substantial negative effect on our liquidity.Our most important source of funds consists of deposits.Deposit balances can decrease when customers perceive alternative investments as providing a better risk/return tradeoff.If customers move money out of bank deposits and into ot
267、her investments,then we would lose a relatively low-cost source of funds,increasing our funding costs and reducing our net interest income and net income.Other primary sources of funds consist of cash flows from operations,investment maturities and sales,loan repayments,and proceeds from the issuanc
268、e and sale of any equity and debt securities to investors.Additional liquidity is provided by the ability to borrow from the Federal Reserve Bank of San Francisco and the Federal Home Loan Bank and our ability to raise brokered deposits.We also may borrow funds from third-party lenders,such as other
269、 financial institutions.Our access to funding sources in amounts adequate to finance or capitalize our activities,or on terms that are acceptable to us,could be impaired by factors that affect us directly or the bank or non-bank financial services industries or the economy in general,such as disrupt
270、ions in the financial markets or negative views and expectations about the prospects for the bank or non-bank financial services industries.Based on experience,we believe that our deposit accounts are relatively stable sources of funds.If we increase interest rates paid to retain deposits,our earnin
271、gs may be adversely affected,which could have an adverse effect on our business,financial condition and results of operations.Any decline in available funding could adversely affect our ability to originate loans,invest in securities,meet our expenses,and pay dividends to our shareholders or fulfill
272、 obligations such as repaying our borrowings or meeting deposit withdrawal demands,any of which could have a material adverse impact on our liquidity,business,financial condition and results of operations.Changes to,or Elimination of,London Interbank Offered Rate(“LIBOR”)Could Adversely Affect our F
273、inancial Instruments with Interest Rates Currently Indexed to LIBORRegulators and law-enforcement agencies from a number of governments,including entities in the United States,Japan,Canada and the United Kingdom,have been conducting civil and criminal investigations into whether the banks that contr
274、ibuted to the British Bankers Association(the“BBA”)in connection with the calculation of daily LIBOR may have underreported or otherwise manipulated or attempted to manipulate LIBOR.Based on a review conducted by the Financial Conduct Authority of the United Kingdom(the“FCA”)and a consultation condu
275、cted by the European Commission,proposals have been made for governance and institutional reform,regulation,technical changes and contingency planning.In particular:(a)new legislation has been enacted in the United Kingdom pursuant to which LIBOR submissions and administration are now“regulated acti
276、vities”and manipulation of LIBOR has been brought within the scope of the market abuse regime;(b)legislation has been proposed which if implemented would,among other things,alter the manner in which LIBOR is determined,compel more banks to provide LIBOR submissions,and require these submissions to b
277、e based on actual transaction data;and(c)LIBOR rates for certain currencies and maturities are no longer published daily.In addition,pursuant to authorization from the FCA,the ICE Benchmark Administration Limited(the“IBA”)took over the administration of LIBOR from the BBA on February 1,2014.In a spe
278、ech on July 27,2017,Andrew Bailey,the Chief Executive of the FCA,announced the FCAs intention to cease sustaining LIBOR after 2021.The FCA has statutory powers to require panel banks to contribute to LIBOR where necessary.The FCA has decided not to ask,or to require,that panel banks continue to subm
279、it contributions to LIBOR beyond the end of 2021.The FCA has indicated that it expects that the current panel banks will voluntarily sustain LIBOR until the end of 2021.The FCAs intention is that after 2021,it will no longer be necessary for the FCA to ask,Page-20or to require,banks to submit contri
280、butions to LIBOR.The FCA does not intend to sustain LIBOR through using its influence or legal powers beyond that date.While it is possible that the IBA and the panel banks could continue to produce LIBOR on the current basis after 2021,there is no assurance that LIBOR will survive in its current fo
281、rm,or at all.We have floating rate loans and investment securities,interest rate swap agreements and subordinated debentures whose interest rates are indexed to LIBOR.We cannot predict the effect of the FCAs decision not to sustain LIBOR or,if changes are ultimately made to LIBOR,the effect of those
282、 changes.In addition,we cannot predict what alternative index would be chosen,should this occur.If LIBOR in its current form does not survive or if an alternative index is chosen,the market value and/or liquidity of our financial instruments currently indexed to LIBOR could be adversely affected.ITE
283、M 1B UNRESOLVED STAFF COMMENTSNone ITEM 2 PROPERTIESWe lease our corporate headquarters building in Novato,California,which houses substantial loan production,operations and administration.We also lease other branch or office facilities within our primary market areas in the cities of Corte Madera,S
284、an Rafael,Novato,Sausalito,Mill Valley,Tiburon,Greenbrae,Petaluma,Santa Rosa,Healdsburg,Sonoma,Napa,San Francisco,Alameda and Oakland.We consider our properties to be suitable and adequate for our needs.For additional information on properties,see Notes 4 and 12 to the Consolidated Financial Stateme
285、nts included in ITEM 8 of this report.ITEM 3 LEGAL PROCEEDINGS We may be party to legal actions that arise from time to time as part of the normal course of our business.We believe,after consultation with legal counsel,that we have meritorious defenses in these actions,and that litigation contingent
286、 liability,if any,will not have a material adverse effect on our financial position,results of operations,or cash flows.We are responsible for our proportionate share of certain litigation indemnifications provided to Visa U.S.A.by its member banks in connection with lawsuits related to anti-trust c
287、harges and interchange fees.For further details,see Note 12 to the Consolidated Financial Statements in ITEM 8 of this report.ITEM 4 MINE SAFETY DISCLOSURES Not applicable.Page-21PART II ITEM 5 MARKET FOR REGISTRANTS COMMON EQUITY,RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
288、Bancorp common stock trades on the NASDAQ Capital Market under the symbol BMRC.At February 28,2018,6,970,446 shares of Bancorps common stock,no par value,were outstanding and held by approximately 2,900 holders of record and beneficial owners.The following table sets forth,for the periods indicated,
289、the range of high and low intra-day sales prices of Bancorps common stock.Calendar20172016 QuarterHighLowHighLow1st Quarter$72.50$63.25$54.50$45.652nd Quarter$69.95$59.05$51.61$47.163rd Quarter$70.75$60.95$52.47$47.254th Quarter$77.90$63.90$75.05$49.25The table below shows cash dividends paid to com
290、mon shareholders on a quarterly basis in the last two fiscal years.Calendar20172016 QuarterPer ShareDollarsPer ShareDollars1st Quarter$0.27$1,655$0.25$1,5182nd Quarter$0.27$1,661$0.25$1,5263rd Quarter$0.29$1,788$0.25$1,5284th Quarter$0.29$1,792$0.27$1,651$1.12$6,896$1.02$6,223On January 19,2018,the
291、Board of Directors declared a cash dividend of$0.29 per share,payable on February 9,2018 to shareholders of record at the close of business on February 2,2018.For additional information regarding our ability to pay dividends,see discussion in Note 8 to the Consolidated Financial Statements,under the
292、 heading“Dividends,”in ITEM 8 of this report.There were no purchases made by or on behalf of Bancorp or any“affiliated purchaser”(as defined in Rule 10b-18(a)(3)under the Securities Exchange Act of 1934)of the Bancorps common stock during the fourth quarter of 2017.On July 6,2017,Bancorp executed a
293、shareholder rights agreement(“Rights Agreement”),which expires July 23,2022,designed to discourage takeovers that involve abusive tactics or do not provide fair value to shareholders.For further information,see Note 8 to the Consolidated Financial Statements,under the heading“Preferred Stock and Sha
294、reholder Rights Plan”in ITEM 8 of this report.Securities Authorized for Issuance under Equity Compensation PlansThe following table summarizes information as of December 31,2017,with respect to equity compensation plans.All plans have been approved by the shareholders.Shares to be issued upon exerci
295、se of outstanding options1Weighted averageexercise price ofoutstandingoptionsShares remaining available for future issuance 2Equity compensation plans approved by shareholders258,968$40.84219,4141 Represents shares of common stock issuable upon exercise of outstanding options under the Bank of Marin
296、 Bancorp 2017 Equity Plan and 2007 Equity Plan.2 Represents remaining shares of common stock available for future grants under the 2017 Equity Plan and the 2010 Director Stock Plan,excluding 258,968 shares to be issued upon exercise of outstanding options and 192,453 shares available to be issued un
297、der the Employee Stock Purchase Plan.Page-22Five-Year Stock Price Performance GraphThe following graph,compiled by S&P Global Market Intelligence of New York,New York,shows a comparison of cumulative total shareholder return on our common stock during the five fiscal years ended December 31,2017comp
298、ared to the Russell 2000 Stock index and the SNL Bank$1B-$5B Index.The comparison assumes the investment of$100 in our common stock on December 31,2012 and the reinvestment of all dividends.The graph represents past performance and does not indicate future performance.In addition,total return perfor
299、mance results vary depending on the length of the performance period.201220132014201520162017Bank of Marin Bancorp(BMRC)100.00117.90145.42150.33200.41198.70Russell 2000 Index100.00138.82145.62139.19168.85193.58SNL Bank$1B-$5B Index 1100.00145.41152.04170.20244.85261.04Source:S&P Global Market Intell
300、igence1 Includes all Major Exchange(NYSE,NYSE MKT,and Nasdaq)banks in S&P Globals coverage universe with$1 billion to$5 billion in assets as of the most recent available financial data.Page-23ITEM 6 SELECTED FINANCIAL DATAThe following data has been derived from the audited consolidated financial st
301、atements of Bank of Marin Bancorp.For additional information,refer to ITEM 7,Managements Discussion and Analysis of Financial Condition and Results of Operations,and ITEM 8,Financial Statements and Supplementary Data.At December 31,(in thousands)20172016201520142013Selected financial condition data:
302、Total assets$2,468,154$2,023,493$2,031,134$1,787,130$1,805,194Loans,net1,663,2461,471,1741,436,2991,348,2521,255,098Deposits2,148,6701,772,7001,728,2261,551,6191,587,102Borrowings5,7395,58672,39520,18519,969Stockholders equity297,025230,563214,473200,026180,887For the Years Ended December 31,(dollar
303、s in thousands,except per share data)20172016201520142013Selected operating data:Net interest income$74,852$73,161$67,187$70,441$58,775Provision for(reversal of)loan losses500(1,850)500750540Non-interest income8,2689,1619,1939,0418,066Non-interest expense 153,78247,69246,94947,26344,092Net income 11
304、5,97623,13418,44119,77114,270Net income per common share:Basic$2.58$3.81$3.09$3.35$2.62Diluted$2.55$3.78$3.04$3.29$2.57At or for the Years Ended December 31,20172016201520142013Performance and other financial ratios:Return on average assets0.75%1.15%0.98%1.08%0.96%Return on average equity6.49%10.23%
305、8.84%10.31%8.86%Tax-equivalent net interest margin3.80%3.91%3.83%4.13%4.20%Efficiency ratio64.70%57.93%61.47%59.46%65.97%Loan-to-deposit ratio78.14%83.86%83.97%87.87%79.98%Cash dividend payout ratio on common stock 243.41%26.77%29.10%23.90%27.90%Cash dividends per common share$1.12$1.02$0.90$0.80$0.
306、73Asset quality ratios:Allowance for loan losses to total loans0.94%1.04%1.03%1.11%1.12%Allowance for loan losses to non-performing loans 338.88x106.5x6.88x1.61x1.22xNon-performing loans to total loans 30.02%0.01%0.15%0.69%0.92%Capital ratios:Equity to total assets ratio12.03%11.39%10.60%11.20%10.00
307、%Total capital(to risk-weighted assets)14.91%14.32%13.37%13.94%13.21%Tier 1 capital(to risk-weighted assets)14.04%13.37%12.44%12.87%12.18%Tier 1 capital(to average assets)12.13%11.39%10.67%10.62%10.78%Common equity Tier 1 capital(to risk-weighted assets)13.75%13.07%12.16%N/AN/AOther data:Number of f
308、ull service offices2320202121Full time equivalent employees2912622592602811 2017,2014 and 2013 included$2.2 million,$746 thousand and$3.7 million,respectively,in merger-related expenses.2 Calculated as dividends on common shares divided by basic net income per common share.3 Non-performing loans inc
309、lude loans on non-accrual status and loans past due 90 days or more and still accruing interest.Page-24ITEM 7 MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion of financial condition as of December 31,2017 and 2016 and results of operations
310、 for each of the years in the three-year period ended December 31,2017 should be read in conjunction with our consolidated financial statements and related notes thereto,included in Part II ITEM 8 of this report.Average balances,including balances used in calculating certain financial ratios,are gen
311、erally comprised of average daily balances.Forward-Looking Statements The disclosures set forth in this item are qualified by important factors detailed in Part I captioned Forward-Looking Statements and ITEM 1A captioned Risk Factors of this report and other cautionary statements set forth elsewher
312、e in the report.Critical Accounting Policies and EstimatesCritical accounting policies are those that are both very important to the portrayal of our financial condition and results of operations and require Managements most difficult,subjective,or complex judgments,often because of the need to make
313、 estimates about the effect of matters that are inherently uncertain and imprecise.Management has determined the following four accounting policies to be critical:Allowance for Loan Losses:For information regarding our ALLL methodology,the related provision for loan losses,risks related to asset qua
314、lity and lending activity,see ITEM 1A-Risk Factors,ITEM 7-Managements Discussion and Analysis of Financial Condition and Results of Operations,and Note 1-Summary of Significant Accounting Policies and Note 3-Loans and Allowance for Loan Losses in ITEM 8-Financial Statements and Supplementary Data of
315、 this Form 10-K.Other-than-temporary Impairment of Investment Securities:For information regarding our investment securities,investment activity,and related risks,see ITEM 1A-Risk Factors,ITEM 7-Managements Discussion and Analysis of Financial Condition and Results of Operations,Note 1-Summary of Si
316、gnificant Accounting Policies and Note 2-Investment Securities in ITEM 8-Financial Statements and Supplementary Data of this Form 10-K.Accounting for Income Taxes:For information on our tax assets and liabilities,and related provision for income taxes,see Note 1-Summary of Significant Accounting Pol
317、icies and Note 11-Income Taxes in ITEM 8-Financial Statements and Supplementary Data of this Form 10-K.Fair Value Measurements:For information on our use of fair value measurements and our related valuation methodologies,see Note 1-Summary of Significant Accounting Policies and Note 9-Fair Value of
318、Assets and Liabilities in ITEM 8-Financial Statements and Supplementary Data of this Form 10-K.Page-25Executive Summary Annual earnings were$16.0 million in 2017 compared to$23.1 million in 2016.Diluted earnings were$2.55 per share for the year ended December 31,2017,compared to$3.78 per share in th
319、e same period of 2016.The following are highlights of operating and financial performance 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
320、six years that strengthens the Banks presence in the San Francisco Bay Area.Additionally,we expanded our presence in Sonoma County by opening our Healdsburg office.Earnings in 2017 included a$3.0 million one-time deferred tax asset write-down due to the enactment of the new federal tax law on Decemb
321、er 22,2017,and expenses related to the acquisition of Bank of Napa.Without these expenses,diluted earnings per share(EPS)would have been$3.28 for the full year,and net income would have been$20.5 million for the year ended December 31,2017.Refer to table on the following page for a detailed reconcil
322、iation 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
323、 2016 EPS by$0.47.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 millionat December 31,2017.In early 2018,we are funding loans carried over from the
324、 prior year as we continue to rebuild our pipeline.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
325、.Non-interest bearing deposits,including those acquired,grew by$197.1 million in 2017 and made up 47%of total deposits at year end.Cost of total deposits remained low at 0.07%despite three short-term interest rate increases by the Federal Reserve Open Market Committee in 2017.Strong credit quality r
326、emains a cornerstone of the Banks consistent performance.Non-accrual loans represent 0.02%of the Banks 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
327、 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
328、 to helping our customers and our communities recover and rebuild.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
329、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.Refer to the Net Interest Income section below for information on the tax equivalent net interest margin
330、 and the reported net interest margin.The effective tax rate of 44.6%for the year was elevated by 10.5 percentage points due to the deferred tax asset write-down.Without this charge,the effective tax rate would have been slightly lower than the previous years.The efficiency ratio was 64.7%for the fu
331、ll year,up from 57.9%in 2016.Acquisition expenses increased the efficiency ratio by 2.7 percentage points for the year.We expect approximately$1.0 million in additional acquisition-related expenses in 2018.Page-26 For the year ended December 31,2017,return on assets(ROA)was 0.75%and return on equity
332、(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 De
333、cember 31,2017,compared to 14.3%at December 31,2016.Looking forward into the new year,the investments we made in both organic growth and the Bank of Napa acquisition in 2017 should position us very well for 2018.The reduced tax rate resulting from the Tax Cuts and Jobs Act of 2017 presents an opportunity for the Bank to consider or accelerate certain strategies,including potential value-added inv
0731-84720580
sgpjbg002
工作日 9:30 - 18:00
研報
新質生產力
DeepSeek?
低空經濟
大模型
AI Agent
AI Infra
具身智能
自動駕駛
寵物
銀發經濟
人形機器人
企業出海
算力
微短劇
薪酬
白皮書
創新藥
人工智能
AI產業
信息科技
互聯網
消費經濟
汽車交通
電商零售
傳媒娛樂
醫藥健康
投資金融
能源環境
地產建筑
傳統產業
英文報告
其它
最新報告
中英對照
全文搜索
報告精選
PDF上傳翻譯
多格式文檔互轉
入駐&報告售賣
會員權益
機構報告
券商研報
財報庫
專題合集
英文報告
數據圖表
會議報告
其他資源
行業聚焦
芯片產業
熱點概念
全球咨詢智庫
人工智能
500強
新質生產力
會議峰會
新能源汽車
企業年報
互聯網
公司研究
行業綜觀
消費教育
科技通信
醫藥健康
人力資源
投資金融
汽車產業
物流地產
電子商務
傳統產業
傳媒營銷
其它
2025低空經濟/低空產業報告合集（共49套打包）
2025年智算中心/AIDC/AI數據中心研究報告合集（共37套打包）
AI、科技與通信
廣告、傳媒與營銷
消費、零售與支付
HR、文化與旅游
金融、保險與投資
能源、環境與工業
醫療制藥與大健康
物流、地產與建筑
其他行業
AI ? 科技 ? 通信
數字化
金融財經
智能制造
電商傳媒
地產建筑
醫療醫學
能源化工
其他行業
收藏
下載
2025-05-20
AI查數
行業數據
政策法規
商業模式
產業鏈
競爭格局
市場規模
產業概述
其它
2025年
AI讀財報
年報
一季報
半年報
三季報
IPO招股書
社會責任報告
A股
IPO申報
港股
美股&全球
新三板
掃碼登錄
手機快捷登錄
賬號登錄
