Bank of Marin

History

Bank of Marin was incorporated in August of 1989 and became open for business on January 23, 1990. On July 1st, 2007 Bank of Marin Bancorp became the holding company of Bank of Marin. This reorganization meant that Bank of Marin became a wholly-owned subsidiary of Bank of Marin Bancorp. Just about all of Bancorp's business is done through Bank of Marin. Bank of Marin is classified as a commercial bank that is state chartered but not a Fed member. It is FDIC insured and a member of the Deposit Insurance Fund. Since its establishment, Bank of Marin has grown to 13 branch offices and one loan office. Locations are mainly in Marin County and the surrounding region with headquarters located in Novato, California.. According to its' website, Bank of Marin offers "a broad range of deposit products, commercial and personal loans, cash management solutions, and wealth management services." Bank of Marin's main source of business includes individuals, small to medium sized businesses, and non-profit organizations. On the lending side of bank's activities, Bank of Marin loans to commercial as well as retail consumers. Bank of Marin offers commercial loans as well as lines of credit, home equity loans, construction loans, and consumer loans. Although relatively small, Bank of Marin still offers credit cards, ATM abilities, online banking, and telephone banking, just to name a few of its' services.

Overview of Operations

To begin my analytical discussion of Bank of Marin I will start by providing an overview of the bank's operations. I can analyze Bank of Marin's operations by using the Uniform Bank Performance Report (UBPR) and comparing data on the balance sheet between Bank of Marin and its' peer groups. When comparing and analyzing the given data between Bank of Marin and its' peer groups, I am able to see where Bank of Marin stands in comparison to its' peer groups and what this means for Bank of Marin. I will focus on what appears to be Bank of Marin's weak and strong points. The balance sheet for Bank of Marin gives me a snapshot of the bank's financial condition.

As seen on the balance sheet % for Bank of Marin (Appendix Balance Sheet %) loans held for sale are considered to be a liquid asset. Loans held for sale can be a risky investment security for Bank of Marin, especially during our current market condition where many loans are defaulting. Although some say we are out of the recession a lag on the effects of the recession is still hitting many consumers and businesses. Again if we look at the Balance sheet % (Appendix Balance sheet %) we see that Bank of Marin has no Loans Held for Sale. (Loans held for sale: Bank of Marin: 0, PG: .29, PCT 24) Comparing Bank of Marin's loans held for sale to its peer groups we see that Bank of Marin invests much less than the bank's its same peer group. Although based off this we might think Bank of Marin is avoiding risk they are doing quite the opposite. By not having any Loans held for sale they are restricting their liquidity and therefore vulnerable to liquidity risk. We also see that Bank of Marin as a higher amount of Loans not held for sale compared to its peer group banks. This leaves Bank of Marin in what appears to be a risky situation because their loans not held for sale could be a risky investment. This could also be a favorable outcome that will generate a good amount of interest income.

Available for sale securities is a liquid asset and way for Bank of Marin to earn interest revenue through investing activities. Compared to its peer groups (Appendix Balance sheet %: Bank of Marin: 7.54, PG 15.41, pct 21) Bank of Marin has a low amount of Available for sale securities. We see that many of their investing securities are classified as HTM or TS. Bank of Marin could be susceptible to liquidity risk if they do not have enough liquid assets. Bank of Marin's HTM and TS are in the 83 and 89 percentile compared to their peer groups. (Appendix Balance sheet %). These higher amounts of HTM and TS could leave Bank of Marin vulnerable to risk depending on other factors but also could generate interest income which will bring up revenue and net income.

Bank of Marin's Loans and Leases Loss Allowance is also low compared to its peer groups. (Appendix Balance sheet %; Loans and Leases Loss allowance Bank of Marin: .95, PG: 1.25, PCT: 33.) The loan and leases loss allowance is the amount of money that Bank of Marin puts aside because they believe that the amount will be lost through loans and leases that will not be repaid or the balances recovered. This low number has many implications with positive and negative aspects. Because of the lower amount of money that is put aside for loan and leases losses, Bank of Marin will have a higher net income. Having a lower amount of money put aside for loan and lease default could also be unfavorable. Loans and leases always have the risk of not being repaid. If an excessive amount of loans were not repaid the loan loss allowance might not be sufficient to absorb the losses.

We actually see that Bank of Marin has a very high amount of liabilities which include mortgages (Appendix Balance sheet %). This could be where they gain a lot of their interest income. As previously mentioned above Bank of Marin is making a risky choice by not having a larger amount of loans and leases loss allowance.

Interest bearing bank balances is an area in which Bank of Marin receives funds from depositors to then use to give out loans and do other such activities. As seen on the Balance sheet % (Appendix; Interest bearing bank balances Bank of Marin: .39, PG: 2.67, PCT: 25) Bank of Marin has a low amount of interest bearing bank balances compared to its peer groups. Bank of Marin may have a different operations strategy in which they are avoiding paying higher interest on their deposit balances and gaining funds by dipping into other resources. As seen in their Interest Expense compared to their peer groups (Appendix Summary Ratios) Bank of Marin has a low interest Expense. The negative aspect of having a low amount of interest bearing bank balances is they could have an insufficient amount of money to meet the demands of their borrowers. The positive aspect is they are avoiding paying interest on an excessive amount of bank balances.

With the Federal Funds Sold and Resales we again see a very low number. (Appendix: Federal Funds Sold and Resales Bank of Marin:.01, PG: .72,