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What changed in Bank of Marin Bancorp's 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of Bank of Marin Bancorp's 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+277 added−277 removedSource: 10-K (2026-03-13) vs 10-K (2025-03-14)

Top changes in Bank of Marin Bancorp's 2025 10-K

277 paragraphs added · 277 removed · 212 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeWe continue to learn and grow, and our current initiatives reflect our ongoing efforts around a more diverse, inclusive and equitable workplace. In order to develop a workforce that aligns with our corporate values, we regularly sponsor local community events so that our employees can better integrate themselves in and support our communities.
Biggest changeIn order to develop a workforce that aligns with our corporate values, we regularly sponsor local community events so that our employees can better integrate themselves in and support our communities. We believe that our employees’ well-being and personal and professional development is fostered by our outreach to the communities we serve.
Available Information On our Internet website, www.bankofmarin.com, 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 reports on Form 8-K, and any amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the 11 Securities and Exchange Act of 1934.
Available Information On our Internet website, www.bankofmarin.com, 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 reports 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.
Consumer Protection Regulations Our lending activities are subject to a variety of statutes and regulations designed to protect consumers, including the CRA, Home Mortgage Disclosure Act, Fair Credit Reporting Act, Fair Lending, Fair Debt Collection Practices Act, Flood Disaster Protection Act, eSign Act, Equal Credit Opportunity Act, the Fair Housing Act, Truth-in-Lending Act ("TILA"), the Real Estate Settlement Procedures Act ("RESPA"), Protecting Tenants at Foreclosure, and the 9 Secure and Fair Enforcement for Mortgage Licensing Act ("SAFE").
Consumer Protection Regulations Our lending activities are subject to a variety of statutes and regulations designed to protect consumers, including the CRA, Home Mortgage Disclosure Act, Fair Credit Reporting Act, Fair Lending, Fair Debt Collection Practices Act, Flood Disaster Protection Act, eSign Act, Equal Credit Opportunity Act, the Fair Housing Act, Truth-in-Lending Act ("TILA"), the Real Estate Settlement Procedures Act ("RESPA"), Protecting Tenants at Foreclosure, and the Secure and Fair Enforcement for Mortgage Licensing Act ("SAFE").
In addition to our headquarters and a regional office in the Greater Sacramento region, we operate 27 retail branches and 8 commercial banking offices across Northern California with a strong emphasis on 4 supporting local communities. Our customer base is comprised of business, not-for-profit, and personal banking relationships wit hin our Northern California footprint.
In addition to our headquarters and a regional office in the Greater Sacramento region, we operate 27 retail branches and 8 commercial banking offices across Northern California with a strong emphasis on supporting local communities. Our customer base is comprised of business, not-for-profit, and personal banking relationships wit hin our Northern California footprint.
Our deposit operations are also subject to laws and regulations that protect consumer rights including Expedited Funds Availability, Truth in Savings Act ("TISA"), and Electronic Funds Transfers. Other regulatory requirements include the Unfair, Deceptive or Abusive Acts and Practices ("UDAAP"), Dodd-Frank Act, Right to Financial Privacy, Telephone Consumer Protection Act and Privacy of Consumer Financial Information.
Our deposit operations are also subject to laws and regulations that protect consumer rights including Expedited Funds Availability, Truth in Savings Act ("TISA"), and Electronic Funds Transfers. Other regulatory requirements include the Unfair, Deceptive or Abusive Acts and Practices ("UDAAP"), Dodd-Frank Act, Right to Financial Privacy, Telephone Consumer Protection Act and Privacy 10 of Consumer Financial Information.
Bancorp is also a bank holding company within the meaning of the California Financial Code. As such, Bancorp and its subsidiaries are subject to examination by, and may be required to file reports with, the DFPI. Bank Regulation Banking regulations are primarily intended to protect consumers, depositors' funds, federal deposit insurance funds and the banking system as a whole.
Bancorp is also a bank holding company within the meaning of the California Financial Code. As such, Bancorp and its subsidiaries are subject to examination by, and may be required to file reports with, the DFPI. 7 Bank Regulation Banking regulations are primarily intended to protect consumers, depositors' funds, federal deposit insurance funds and the banking system as a whole.
We believe that our employee relations are good. In 2024, we were inducted into NorthBay Biz's "Best of" Hall of Fame and were named one of North Bay Business Journal's "Best Places to Work". SUPERVISION AND REGULATION Bank holding companies and banks are extensively regulated under both federal and state law.
We believe that our employee relations are good. In 2025, we were named one of North Bay Business Journal's "Best Places to Work" and in 2024 were inducted into NorthBay Biz's "Best of" Hall of Fame. SUPERVISION AND REGULATION Bank holding companies and banks are extensively regulated under both federal and state law.
Large commercial banks also have substantially greater lending limits and the ability to offer certain services, which are not offered directly by 5 us. Other competitors for depositors' funds are money market mutual funds and non-bank financial institutions such as brokerage firms and insurance companies.
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 institutions such as brokerage firms and insurance companies.
In 2016, Customer Due Diligence Rules under the Bank Secrecy Act clarified and strengthened customer due diligence requirements. These rules contained explicit customer due diligence requirements, which included a new requirement to identify and verify the identity of beneficial owners of legal entity customers. In 2020, the Anti-Money Laundering Act ("AMLA 2020") became law.
In 2016, Customer Due 9 Diligence Rules under the Bank Secrecy Act clarified and strengthened customer due diligence requirements. These rules contained explicit customer due diligence requirements, which included a new requirement to identify and verify the identity of beneficial owners of legal entity customers. In 2020, the Anti-Money Laundering Act ("AMLA 2020") became law.
In addition, any capital loans Bancorp makes to the Bank are subordinate in right of payment to depositors and to certain other indebtedness of the Bank. The BHCA regulates the activities of holding companies 6 including acquisitions, mergers and consolidations and, together with the Gramm-Leach Bliley Act of 1999, the scope of allowable banking activities.
In addition, any capital loans Bancorp makes to the Bank are subordinate in right of payment to depositors and to certain other indebtedness of the 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.
Anti-Money-Laundering Regulations A 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, 8 international drug trafficking, and terrorism.
Anti-Money-Laundering Regulations A 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, international drug trafficking, and terrorism.
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 incorporate any website information into this document.
All such materials on our website are available free of charge. This website 12 address is for information only and is not intended to be an active link, or to 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 Secretary Bank of Marin Bancorp 504 Redwood Boulevard, Suite 100 Novato, CA 94947 415-763-4524 These materials are also available at the SEC’s internet website (https://www.sec.gov). 12
In addition, copies of our filings are available by requesting them in writing or by phone from: Corporate Secretary Bank of Marin Bancorp 504 Redwood Boulevard, Suite 100 Novato, CA 94947 415-763-4524 These materials are also available at the SEC’s internet website (https://www.sec.gov). 13
Market Area Our primary market area encompasses Alameda, Amador, Contra Costa, Marin, Napa, Placer, Sacramento, San Francisco, San Mateo, Solano and Sonoma counties. Our customer base is primarily made up of business, not-for-profit and personal banking relationships within these market areas.
Market Area Our primary market area encompasses Alameda, Amador, Contra Costa, Marin, Napa, Placer, Sacramento, San Francisco, and Sonoma counties. Our customer base is primarily made up of business, not-for-profit and personal banking relationships within these market areas.
As of December 31, 2024, the majority of our deposits were in Marin, Napa, Sacramento and southern Sonoma counties, and approximately 59% of our deposits were from businesses and 41% from consumers. Competition The banking business in California generally, and in our market area specifically, is highly competitive with respect to attracting both loan and deposit relationships.
As of December 31, 2025, the majority of our deposits were in Marin, Napa, Alameda and southern Sonoma counties, and approximately 62% of our deposits were from businesses and 38% from consumers. Competition The banking business in California generally, and in our market area specifically, is highly competitive with respect to attracting both loan and deposit relationships.
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 Accounts (“IRAs”), Health Savings Accounts ("HSA"), Certificate of Deposit Account Registry Service ® ("CDARS"), Insured Cash Sweep ® ("ICS"), and Demand Deposit Marketplace SM ("DDM Sweep") accounts.
Other products and services include payment solutions (e.g., mobile deposit and Zelle ® ) and a wide array of treasury management services. 5 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 Accounts (“IRAs”), Health Savings Accounts ("HSA"), Certificate of Deposit Account Registry Service ® ("CDARS"), Insured Cash Sweep ® ("ICS"), and Demand Deposit Marketplace SM ("DDM Sweep") accounts.
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.
The determination whether an investor "controls" a depository institution 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.
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 institution is based on all of the facts and circumstances surrounding the investment.
These laws include the BHCA and the 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 Bank's experienced professionals deliver innovative and custom financing, with a deep local market knowledge and a personal understanding of each customer's unique needs. Human Capital Resources As of December 31, 2024, we employed 285 full-time equivalent staff. The actual number of employees, including part-time employees, at year-end 2024 included seven executive officers, 147 other corporate officers and 136 staff.
The Bank's experienced professionals deliver innovative and custom financing, with a deep local market knowledge and a personal understanding of each customer's unique needs. 6 Human Capital Resources As of December 31, 2025, we employed 311 full-time equivalent staff.
The increased assessment is expected to improve the likelihood that the deposit insurance fund ("DIF") reserve ratio would reach the statutory minimum of 1.35% by the statutory deadline prescribed under the FDIC's amended restoration plan. The FDIC has indicated that the new assessment rate schedules will remain in effect until the DIF reserve ratio meets or exceeds 2 percent.
The increased assessment was expected to improve the likelihood that the deposit insurance fund ("DIF") reserve ratio would reach the statutory minimum of 1.35% by the statutory deadline prescribed under the FDIC's amended restoration plan.
Since issuance, the effective date of the final rule has been delayed pending the outcome of litigation that challenged the statutory authority of federal regulators. We will continue to evaluate the impact of any changes to the regulations implementing the CRA and their impact to our financial condition, results of operations, and/or liquidity, which cannot be predicted at this time.
We will continue to evaluate the impact of any changes to the regulations implementing the CRA and their impact to our financial condition, results of operations, and/or liquidity, which cannot be predicted at this time.
The rule further describes what is included in tangible equity capital and average total consolidated assets. Qualifying banks may opt in and out of the CBLR framework at any time. While we are a qualifying community banking organization, we have not opted into the CBLR framework at this time. See below, for further discussion of the Economic Growth Act.
While we are a qualifying community banking organization, we have not opted into the CBLR framework at this time. See below, for further discussion of the Economic Growth Act.
With certain exceptions, the value of stock repurchased is net of stock issued in the year, including those issued pursuant to share-based compensation programs.
With certain exceptions, the value of stock repurchased is net of stock issued in the year, including those issued pursuant to share-based compensation programs. Refer to Note 8 to the Consolidated Financial Statements, under the heading “Dividends” in ITEM 8 of this report for more information.
FDIC insurance coverage is funded by the FDIC's assessment on insured depository institutions like us and FDIC's annual base assessment rates are currently between 2.5 and 42 basis points on the depository institution's quarterly average consolidated total assets minus average tangible equity.
FDIC Insurance Assessments The 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”). 8 FDIC insurance coverage is funded by the FDIC's assessment on insured depository institutions like us and FDIC's annual base assessment rates are currently between 2.5 and 42 basis points on the depository institution's quarterly average consolidated total assets minus average tangible equity.
None of our employees are presently represented by a union or covered by a collective bargaining agreement. We offer a competitive total compensation package including a comprehensive benefits program to our employees designed to attract, retain and motivate employees, as well as to align with our performance, including employee ownership through our Employee Stock Ownership Plan.
We offer a competitive total compensation package including a comprehensive benefits program to our employees designed to attract, retain and motivate employees, as well as to align with our performance, including employee ownership through our Employee Stock Ownership Plan. We regularly compare compensation and benefits with peer companies and market data, making adjustments as needed to ensure compensation stays competitive.
The Economic Growth Act’s highlights included 10 improving consumer access to mortgage credit, added certain protections for consumers, included veterans and active duty military personnel, expanded credit freezes and created an identity theft protection database.
The Economic Growth Act’s highlights included improving consumer access to mortgage credit, added certain protections for consumers, included veterans and active duty military personnel, expanded credit freezes and created an identity theft protection database. 11 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.
Community Reinvestment Act Congress 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.
As of June 30, 2025, the reserve ratio exceeded the statutory minimum and, beginning with third quarter 2025, the FDIC no longer operated under a Restoration Plan. Community Reinvestment Act Congress 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.
Such a community banking organization would not be subject to other risk-based and leverage capital requirements (including the Basel III and Basel IV requirements) and would be considered to have met the "well capitalized" ratio requirements. The CBLR is determined by dividing a financial institution’s tangible equity capital by its average total consolidated assets.
Such a community banking organization would not be subject to other risk-based and leverage capital requirements (including the Basel III and Basel IV requirements) and would be considered to have met the "well capitalized" ratio requirements. Recently, federal bank regulators proposed lowering the CBLR to 8 percent with final action on such proposal expected in 2026.
We regularly compare compensation and benefits with peer companies and market data, making adjustments as needed to ensure compensation stays competitive. We are continually investing in our workforce through employee development, education and training. We strive to attract, develop, retain and plan for succession of key talent and executives to achieve our strategic objectives.
We are continually investing in our workforce through employee development, education and training. We strive to attract, develop, retain and plan for succession of key talent and executives to achieve our strategic objectives. We pride ourselves on creating an open, diverse, and transparent culture that celebrates collaboration and recognizes employees at all levels.
We pride ourselves on creating an open, diverse, and transparent culture that celebrates collaboration and recognizes employees at all levels. We believe that the wide array of perspectives that result from such diversity promotes Legendary Service and business success.
We believe that the wide array of perspectives that result from such diversity promotes Legendary Service and business success. We continue to learn and grow, and our current initiatives reflect our ongoing efforts around a more diverse, inclusive and equitable workplace.
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Other products and services include payment solutions (e.g., mobile deposit and Zelle ® ) and a wide array of treasury management services.
Added
The actual number of employees, including part-time employees, at year-end 2025 included seven executive officers, 152 other corporate officers and 152 staff. None of our employees are presently represented by a union or covered by a collective bargaining agreement.
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We believe that our employees’ well-being and personal and professional development is fostered by our outreach to the communities we serve.
Added
Since issuance, the effective date of the final rule has been delayed pending the outcome of litigation that challenged the statutory authority of federal regulators. On July 16, 2025, the federal banking agencies issued a joint notice of proposed rulemaking to rescind the 2023 CRA final rule.
Removed
Refer to Note 8 to the Consolidated Financial Statements, under the heading “Dividends” in ITEM 8 of this report for more information. 7 FDIC Insurance Assessments The 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”).
Added
The CBLR is determined by dividing a financial institution’s tangible equity capital by its average total consolidated assets. The rule further describes what is included in tangible equity capital and average total consolidated assets. Qualifying banks may opt in and out of the CBLR framework at any time.
Removed
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 the Change in Bank Control Act.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeWe May Not Have the Resources to Implement New Technology to Stay Current with These Changes The financial services 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.
Biggest changeThe financial services industry is constantly undergoing technological change, with the frequent introduction of new technology-driven products and services including new payment solutions and the use of agentic artificial intelligence (“AI”). The effective use of technology increases efficiency and enables financial institutions to better serve clients and reduce costs, including mitigating fraud risks.
The weakening of these standards for any reason, such as an attempt to attract higher yielding loans, a lack of discipline or diligence by our employees in underwriting and monitoring loans, the inability of our employees to adequately adapt policies and procedures to changes in economic or any other conditions affecting borrowers and the quality of our loan portfolio, may result in loan defaults, foreclosures and additional charge-offs and may necessitate that we 17 significantly increase our allowance for credit losses on loans, each of which could adversely affect our net income.
The weakening of these standards for any reason, such as an attempt to attract higher yielding loans, a lack of discipline or diligence by our employees in underwriting and monitoring loans, the inability of our employees to adequately adapt policies and procedures to changes in economic or any other conditions affecting borrowers and the quality of our loan portfolio, may result in loan defaults, foreclosures and additional charge-offs and may necessitate that we significantly increase our allowance for credit losses on loans, each of which could adversely affect our net income.
Additionally, there could be increased 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 but could have a material adverse effect on financial condition, results of operations or profitability.
Additionally, there could be increased insurance premiums and deductibles, or a decrease in the availability of coverage, due to severe 22 weather-related losses. The ultimate outcome on our business of a natural disaster, whether or not caused by climate change, is difficult to predict but could have a material adverse effect on financial condition, results of operations or profitability.
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 competitors seek to expand market share in our core markets. Further, our customers may withdraw deposits to pursue alternative investment opportunities.
Further, intense competition for creditworthy borrowers could lead to pressure for loan rate concessions and affect our ability to generate profitable loans. 15 Going forward, we may see continued competition in the industry as competitors seek to expand market share in our core markets. Further, our customers may withdraw deposits to pursue alternative investment opportunities.
Technology and other changes have made it more convenient for bank customers to transfer funds into alternative investments or other deposit platforms 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.
Technology and other changes have made it more convenient for bank customers to transfer funds into alternative investments or other deposit platforms such as online banks and non-bank service providers. Efforts and initiatives we may undertake to retain and increase deposits, including deposit pricing, can increase our costs.
National 13 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 borrowing, capital market access and sophisticated technology infrastructures.
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 borrowing, capital market access and sophisticated technology infrastructures.
We cannot, however, accurately predict the full effects of recent or future legislation or the various other governmental, regulatory, monetary, and fiscal initiatives which have been and may be enacted on the financial markets, the Company, and the Bank. We continue to monitor regulatory developments and adjust our strategies accordingly.
We cannot, however, accurately predict the full effects of recent or 23 future legislation or the various other governmental, regulatory, monetary, and fiscal initiatives which have been and may be enacted on the financial markets, the Company, and the Bank. We continue to monitor regulatory developments and adjust our strategies accordingly.
While it is neither our intention to sell securities at a net loss in the normal course of business, nor were we required to, we strategically sold securities in the third and fourth quarters of 2023 and the second quarter of 2024, to reposition the balance sheet to bolster net interest margin.
While it is neither our intention to sell securities at a net loss in the normal course of business, nor were we required to, we strategically sold securities in the third and fourth quarters of 2023, the second quarter of 2024, and the second and fourth quarters of 2025, to reposition the balance sheet to bolster net interest margin.
A cybersecurity breach of systems operated by the Bank, merchants, vendors, customers, or externally publicized breaches of other financial 19 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.
A cybersecurity breach of systems operated by the Bank, merchants, vendors, customers, or externally publicized breaches 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.
Our ability to operate, as well as our financial condition and results of operations, could be negatively affected in the event of an interruption of an information 20 system, an undetected error, a cyber-breach, or in the event of a natural disaster whereby certain vendors are unable to maintain business continuity.
Our ability to operate, as well as our financial condition and results of operations, could be negatively affected in the event of an 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.
A public trading market having the desired characteristics of depth, liquidity and orderliness depends on the presence of willing buyers and sellers of common 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.
A public trading market having the desired characteristics of depth, liquidity and orderliness depends on the presence of willing buyers and sellers of common stock at any given 19 time. This presence depends on the individual decisions of investors and general economic and market conditions over which we have no control.
We manage our CRE concentrations and 18 discuss them as necessary with the banking regulatory agencies and believe that our underwriting policies, management information systems, independent credit administration process, and monitoring of real estate loan concentrations are currently sufficient to address the CRE Concentration Guidance.
We manage our CRE concentrations and discuss them as necessary with the banking regulatory agencies and believe that our underwriting policies, management information systems, independent credit administration process, and monitoring of real estate loan concentrations are currently sufficient to address the CRE Concentration Guidance.
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 15 collateral securing loans and the stability of our deposits as our primary funding source.
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 deposits as our primary funding source.
We maintain an investment securities portfolio to provide liquidity and to generate earnings on funds 16 that have not been loaned to customers while managing our liquidity and interest rate position, seeking a reasonable yield balanced with risk exposure.
We maintain an investment securities portfolio to provide liquidity and to generate earnings on funds that have not been loaned to customers while managing our liquidity and interest rate position, seeking a reasonable yield balanced with risk exposure.
GSE debt is sponsored but not guaranteed by the federal government and carries implicit backing, 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 U.S. government.
GSE debt is sponsored but not guaranteed by the federal government and carries 21 implicit backing, 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 U.S. government.
The loss of key personnel and/or our inability to secure qualified 14 candidates to replace retiring executives could have an unfavorable effect on our business due to the required skills and knowledge of our market and years of industry experience.
The loss of key personnel and/or our inability to secure qualified candidates to replace retiring executives could have an unfavorable effect on our business due to the required skills and knowledge of our market and years of industry experience.
Rising interest rates and first quarter 2023 disruptions in the banking industry resulted in rapid increases in the cost of funds through rising deposit costs and increased borrowings, putting pressure on net interest margin starting in the second quarter of 2023.
Rising interest rates and first quarter 2023 disruptions in the banking 18 industry resulted in rapid increases in the cost of funds through rising deposit costs and increased borrowings, putting pressure on net interest margin starting in the second quarter of 2023.
Our most important source of funding consists of deposits, which is affected by external factors outside the Bank's control as well as customers' perceptions, business operations, and investment goals.
Our most important source of funding consists of deposits, which is affected by external factors outside the Bank's control as well as customers' perceptions, business operations, 17 and investment goals.
With the advent of artificial intelligence (AI), cyber threats such as social engineering, ransomware, and phishing are more sophisticated and prevalent now than ever before. These incidents include intentional and unintentional events that may present threats designed to disrupt operations, corrupt data, release sensitive information, or cause denial-of-service attacks.
With the advent of AI, cyber threats such as social engineering, ransomware, and phishing are more sophisticated and prevalent now than ever before. These incidents include intentional and unintentional events that may present threats designed to disrupt operations, corrupt data, release sensitive information, or cause denial-of-service attacks.
In addition, our top ten depositor relationships accounted for approximately 9% and 8% of total deposit balances at December 31, 2024 and 2023, respectively. The business models and cash cycles of some of our large commercial depositors may also cause short-term volatility in their deposit balances held with us.
In addition, our top ten depositor relationships accounted for approximately 12% and 9% of total deposit balances at December 31, 2025 and 2024, respectively. The business models and cash cycles of some of our large commercial depositors may also cause short-term volatility in their deposit balances held with us.
The Trading Volume of Bancorp's Common Stock May Be Less than That of Other, Larger Financial Services Companies Our common stock is listed on the Nasdaq Capital Market exchange. Our trading volume is less than that of nationwide or larger regional financial institutions.
The Trading Volume of Bancorp's Common Stock May Be Less than That of Other, Larger Financial Services Companies Our common stock is listed on the Nasdaq Global Select Market exchange. Our trading volume is less than that of nationwide or larger regional financial institutions.
Although Congress has taken steps to improve regulation and consumer protection related to the housing finance system (e.g., the Dodd-Frank Act), FNMA and FHLMC have entered their 17th year of U.S. government conservatorship via the Federal Housing Finance Agency ("FHFA").
Although Congress has taken steps to improve regulation and consumer protection related to the housing finance system (e.g., the Dodd-Frank Act), FNMA and FHLMC have entered their 18th year of U.S. government conservatorship in 2025 via the Federal Housing Finance Agency ("FHFA").
Any Regulatory Examination Scrutiny or New Regulatory Requirements Arising From the Recent Events in the Banking Industry Could Increase the Company’s Expenses and Affect the Company’s Operations The Company could be subject to increased regulatory scrutiny – in the course of routine examinations and otherwise – and new regulations directed towards banks of similar size to the Bank, designed to address the recent 21 negative developments in the banking industry, all of which may increase the Company’s costs of doing business and reduce its profitability. 22 ITEM 1B.
Any Regulatory Examination Scrutiny or New Regulatory Requirements Applicable to the Banking Industry Could Increase the Company’s Expenses and Affect the Company’s Operations The Company could be subject to increased regulatory scrutiny – in the course of routine examinations and otherwise – and new regulations directed towards banks of similar size to the Bank, designed to address the recent negative developments in the banking industry, all of which may increase the Company’s costs of doing business and reduce its profitability. 24 ITEM 1B.
We maintain a well-diversified deposit base, with an estimated 29% of uninsured and/or uncollateralized deposits as of December 31, 2024.
We maintain a well-diversified deposit base, with an estimated 31% of uninsured and/or uncollateralized deposits as of December 31, 2025.
Although we maintain strong liquidity for the normal operations of the Bank, model various stress scenarios, and maintain significant contingent liquidity sources, general depositor concerns given the recent high profile bank closures could lead to deposit outflows from our Bank.
Although we maintain strong liquidity for the normal operations of the Bank, model various stress scenarios, and maintain significant contingent liquidity sources, general depositor concerns could lead to deposit outflows from our Bank.
The Value of Goodwill and Other Intangible Assets May Decline in the Future As of December 31, 2024, we had goodwill totaling $72.8 million and a core deposit intangible asset totaling $2.8 million from business acquisitions.
The Value of Goodwill and Other Intangible Assets May Decline in the Future As of December 31, 2025, we had goodwill totaling $72.8 million and a core deposit intangible asset totaling $1.9 million from business acquisitions.
Rising Interest Rates Have Decreased the Value of the Company’s Held-To-Maturity and Available-for-Sale Securities Portfolio, and the Company Would Realize Losses if It Were Required to Sell Such Securities to Meet Liquidity Needs Because of inflationary pressures and the resulting rapid increases in the federal funds target rate since March 2022, the market value of previously issued government and other fixed income securities has declined significantly.
An Increase in Interest Rates Could Decrease the Value of the Company’s Available-for-Sale Securities Portfolio, and the Company Would Realize Losses if It Were Required to Sell Such Securities to Meet Liquidity Needs Because of inflationary pressures and the resulting rapid increases in the federal funds target rate since March 2022, the market value of previously issued government and other fixed income securities has declined significantly.
Strategic, Financial, and Reputational Risks Growth Strategy or Potential Mergers and Acquisitions May Produce Unfavorable Outcomes We seek to expand our franchise safely and consistently.
Growth Strategy or Potential Mergers and Acquisitions May Produce Unfavorable Outcomes We seek to expand our franchise safely and consistently.
Such uninsured deposits were fully covered by the Bank's available funding sources, including unrestricted cash, unencumbered available-for-sale securities, and a total available borrowing capacity of $1.849 billion, or 57% of total deposits, and 197% of estimated uninsured and/or uncollateralized deposits as of December 31, 2024.
Such uninsured deposits were fully covered by the Bank's available funding sources, including unrestricted cash, unencumbered available-for-sale securities, and a total available borrowing capacity of $2.148 billion, or 63% of total deposits, and 209% of estimated uninsured and/or uncollateralized deposits as of December 31, 2025.
In addition, adverse operating results or changes in industry conditions could lead to difficulty or an inability to access these additional funding sources, constraining our financial flexibility, and ability to originate loans, invest in securities, and distribute dividends to our shareholders.
In addition, adverse operating results or changes in industry conditions could lead to difficulty or an inability to access these additional funding sources, constraining our financial flexibility, and ability to originate loans, invest in securities, and distribute dividends to our shareholders. In addition, such a lack of liquidity could result in the sale of securities in an unrealized loss position.
Excluding zero balance accounts, 59% of deposit balances were held in business accounts with average balances of $127 thousand per account, with the remaining 41% in consumer accounts with average balances of $40 thousand per account as of December 31, 2024.
Excluding zero balance accounts, 62% of deposit balances were held in business accounts with average balances of $141 thousand per account, with the remaining 38% in consumer accounts with average balances of $40 thousand per account as of December 31, 2025.
If we were to conclude that a future write-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.
If we were to conclude that a future write-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. If we are not able to successfully keep pace with technological changes in the industry, our business could be hurt.
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 areas at risk of wildfires, or coastal areas at risk to rising sea levels and erosion, or subject to the risk of drought in California.
For example, our borrowers may have collateral properties or operations located in areas at risk of wildfires, or coastal areas at risk to rising sea levels and erosion, or subject to the risk of drought in California.
Our funding costs increased significantly in 2023 and could increase again if our deposits decline and we replace them with more expensive sources of funding, such as FHLB and FRB borrowings, and/or brokered deposits, if customers shift their deposits into higher cost products, or if we raise interest rates to avoid losing deposits.
If our deposits decline and we replace them with more expensive sources of funding, such as FHLB and FRB borrowings, and/or brokered deposits, if customers shift their deposits into higher cost products, or if we raise interest rates to avoid losing deposits, our financial condition and results of operations could be negatively affected.
Bancorp receives substantially its entire cash stream from the Bank in the form of dividends, which is Bancorp's principal source of funds to pay cash dividends to Bancorp's common shareholders, repurchase shares, 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.
Bancorp receives substantially its entire cash stream from the Bank in the form of dividends, which is Bancorp's principal source of funds to meet Bancorp's debt service requirements, pay cash dividends to Bancorp's common shareholders, repurchase shares, and cover 16 operational expenses of the holding company.
As of December 31, 2024 and 2023, using regulatory definitions in the CRE Concentration Guidance, our CRE loans represente d 389% and 371%, respectively, of our total risk-based capital.
As of December 31, 2025 and 2024, using regulatory definitions in the CRE Concentration Guidance, our CRE loans repr esented 350% and 311%, respectively, of our total risk-based capital.
We May Not Be Able to Attract and Retain Key Employees Our success depends in large part on our ability to attract qualified personnel and to retain key employees, as well as the prompt replacement of retiring executives.
All of these factors could have a material adverse impact on our asset growth, liquidity, business, financial condition, and results of operations. We May Not Be Able to Attract and Retain Key Employees Our success depends in large part on our ability to attract qualified personnel and to retain key employees, as well as the prompt replacement of retiring executives.
Some of our non-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.
Some of our non-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 continued consolidation of many financial institutions and more changes in legislation, regulation and technology.
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 management of deposit volatility, refer to the Liquidity section of ITEM 7, Management's Discussion and Analysis, of this report.
As our customers' businesses grow, the dollar value of their daily activities may also grow leading to larger fluctuations in daily balances. While we manage our liquidity with consideration given to deposit concentration and volatility, any long-term decline in deposit funding would adversely affect our liquidity.
Based on our current strong liquidity position, our adjustment to deposit pricing has lagged 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 funding sources, such as FHLB borrowings.
While we have a relatively low cost of deposits, 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 funding sources, such as FHLB borrowings.
Climate change and related legislative and regulatory initiatives may materially affect the Company’s business and results of operations Concerns over the long-term impacts of climate change have led to governmental efforts around the world to mitigate those impacts. As a result, political and social attention to the issue of climate change has increased.
For additional information on cybersecurity management and governance, refer to ITEM-1C, Cybersecurity, in this report. Climate change and related legislative and regulatory initiatives may materially affect the Company’s business and results of operations Concerns over the long-term impacts of climate change have led to governmental efforts around the world to mitigate those impacts.
As of December 31, 2024, approximately 90% of our loans had real estate as a primary or secondary component of collateral, which were comprised of 72% commercial real estate and 28% residential real estate. Real estate valuations are influenced by demand, and demand is driven by economic factors such as employment rates and interest rates.
As of December 31, 2025, approximately 90% of our loans had real estate as a primary or secondary component of collateral, which were comprised of 72% commercial real estate, 27% residential real estate and 1% land.
We do not lend on high-rise office towers in San Francisco and the Bay Area generally, but we do take office and other commercial properties as collateral in our CRE lending.
There can be no assurance that properties securing our loans will generate sufficient cash flows to allow borrowers to make full and timely loan payments to us. We do not lend on high-rise office towers in San Francisco and the Bay Area generally, but we do take office and other commercial properties as collateral in our CRE lending.
In addition, given the lack of empirical data on the credit and other financial risks posed by climate change, it is impossible to predict how climate change may impact our financial condition and operations. As a banking organization, the physical effects of climate change may present certain unique risks.
These initiatives and increasing supervisory expectations may require the Company to expend significant capital and incur compliance, operating, maintenance and remediation costs. In addition, given the lack of empirical data on the credit and other financial risks posed by climate change, it is impossible to predict how climate change may impact our financial condition and operations.
Primarily due to declining inflation, the Federal Reserve lowered the target for the federal funds rate by 100 basis points, to a range of 4.25% to 4.50% in the later months of 2024.
The FOMC lowered the target for the federal funds rate by 100 basis points, to a range of 4.25% to 4.50% in the later months of 2024. The FOMC resumed decreasing rates in September 2025, and made a total of three rate decreases in 2025 ending the year at a range of 3.50% to 3.75%.
The U.S. government, state legislatures and federal and state regulatory agencies are likely to continue to propose and advance numerous legislative and regulatory initiatives seeking to mitigate the effects of climate change. These initiatives and increasing supervisory expectations may require the Company to expend significant capital and incur compliance, operating, maintenance and remediation costs.
As a result, political and social attention to the issue of climate change has increased. The U.S. government, state legislatures and federal and state regulatory agencies are likely to continue to propose and advance numerous legislative and regulatory initiatives seeking to mitigate the effects of climate change.
For example, our primary market is located in both earthquake and wildfire-prone zones in Northern California, which is also subject to other weather or disasters, such as severe rainstorms, drought or flood. These events have interrupted our business operations unexpectedly at times (e.g., PG&E power shutoffs in the North Bay and Sacramento Region).
As a banking organization, the physical effects of climate change may present certain unique risks. For example, our primary market is located in both earthquake and wildfire-prone zones in Northern California, which is also subject to other weather or disasters, such as severe rainstorms, drought or flood.
Loans secured by CRE include those secured by office buildings, owner-user office/warehouses, mixed-use commercial, retail properties and multi-family residential real estate. There can be no assurance that properties securing our loans will generate sufficient cash flows to allow borrowers to make full and timely loan payments to us.
Real estate valuations are influenced by demand, and demand is driven by economic factors such as employment rates and interest rates. 20 Loans secured by CRE include those secured by office buildings, owner-user office/warehouses, mixed-use commercial, retail properties and multi-family residential real estate.
Removed
We anticipate intense competition will continue for the coming year due to the market disruptions in banking in 2023, the continued consolidation of many financial institutions and more changes in legislation, regulation and technology.
Added
Strategic, Financial, and Reputational Risks We have identified a material weakness in our internal control over financial reporting. Such material weakness could adversely affect our results of operations and financial condition.
Removed
In addition, such a lack of liquidity could result in the sale of securities in an unrealized loss position and/or alter our ability to hold our held-to-maturity securities to their maturity dates. All of these factors could have a material adverse impact on our asset growth, liquidity, business, financial condition, and results of operations.
Added
In the future, we may identify additional material weaknesses or otherwise fail to maintain an effective system of internal control over financial reporting or adequate disclosure controls and procedures, which may result in material errors in our financial statements or cause us to fail to meet our period reporting obligations.
Removed
For additional information on cybersecurity management and governance, refer to ITEM-1C, Cybersecurity, in this report. The Financial Services 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.
Added
Our management is responsible for establishing and maintaining adequate internal control over financial reporting, evaluating the effectiveness of our internal controls and disclosing any changes or material weaknesses identified through such evaluation.
Removed
Our future success will depend in part on our ability to use technology to provide products and services that will satisfy client demands securely and cost-effectively.
Added
A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.
Removed
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 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.
Added
In February 2026, we determined that certain reciprocal network deposits were misclassified as non-interest bearing deposits when they should have been classified as interest bearing deposits. Additionally, certain expense related thereto was classified as non-interest operating expense when it should have been included in interest expense.
Added
As a result, we determined that there were material errors in the financial statements that required a restatement of our financial statements for the years ended December 31, 2023 and 2024 and for the quarterly periods ended March 31, June 30, and September 30, 2024 and 2025. Those restatements are included in this Annual Report on Form 10-K.
Added
In addition, management determined that a material weakness existed, and, as a result, that our internal control over financial reporting was not effective as of December 31, 2025 due to control design and implementation deficiencies with respect to the classification of certain reciprocal network deposits.
Added
In response to the identified material weakness noted above, management has begun a remediation plan to enhance its internal control over financial reporting to: • Enhance risk assessment procedures over deposit networks to identify whether additional control activities are needed to conform to our accounting policies; • Increase involvement of technical accounting resources for complex areas at initial onboarding and for periodic review; and • Require formal documentation of technical conclusion and evidence of supervisory oversight for third party networks.
Added
While the enhanced procedures are expected to be effective mitigants, some elements of our remediation plan are not yet complete. Management believes the remediation plan, once fully implemented, will eliminate the identified material weakness, but no assurance can be given that the remediation plan will be fully effective until it is implemented in its entirety.
Added
Effective internal controls over financial reporting are necessary for us to provide reliable financial reports and, together with adequate disclosure controls and procedures, are designed to prevent fraud. Any failure to implement 14 required new or improved controls, or difficulties encountered in their implementation, could cause us to fail to meet our reporting obligations.
Added
If we are not able to comply with the requirements of the Sarbanes-Oxley Act or if we are unable to maintain effective internal control over financial reporting, we may not be able to produce timely and accurate financial statements or guarantee that information required to be disclosed by us in the reports that we file with the SEC, is recorded, processed, summarized, and reported within the time periods specified in SEC rules and forms.
Added
Any failure of our internal control over financial reporting or disclosure controls and procedures could cause our investors to lose confidence in our publicly reported information, lead to litigation by holders of our securities, cause the market price of our stock to decline, expose us to sanctions or investigations by the SEC or other regulatory authorities, or impact our results of operations.
Added
In addition to the Bank dividends, the Bancorp received proceeds from the issuance of subordinated notes in 2025. Various federal and state laws and regulations limit the amount of dividends that the Bank may pay to Bancorp.
Added
Our future success depends, in part, upon our ability to respond to the needs of our clients by using technology to provide desired products and services and create additional operating efficiencies. Some of our competitors have substantially greater resources to invest in technological improvements.
Added
We may not be able to effectively implement new technology-driven products and services or be successful in marketing these products and services to our clients. Failure to keep pace with technological change in the financial services industry could have a material adverse impact on our business and, in turn, on our financial condition and results of operations.
Added
We are subject to risks associated with the adoption of new technologies such as AI. The Company or its third-party vendors, clients or counterparties may develop or incorporate AI technology, including agentic AI, in certain business processes, services or products.
Added
The legal and regulatory environment relating to AI is uncertain and rapidly evolving, and includes regulation targeted specifically at AI as well as provisions in intellectual property, privacy, consumer protection, employment and other laws applicable to the use of AI.
Added
These evolving laws and regulations could require changes in the Company’s or third parties’ implementation of AI technology and increase the Company’s compliance costs and risk of non-compliance. The Company’s deployment of artificial intelligence at this time is generally limited to internally focused, assistive productivity tools such as Microsoft Copilot.
Added
The Company continues to evaluate additional AI capabilities, including agentic AI, in limited capacities, and the associated risks, including potential errors or inaccuracies in work product, data privacy and confidentiality, intellectual property considerations, potential bias, and cybersecurity.
Added
For additional information on our management of deposit volatility, refer to the Liquidity section of ITEM 7, Management's Discussion and Analysis, of this report.
Added
These events have interrupted our business operations unexpectedly at times (e.g., PG&E power shutoffs in the North Bay and Sacramento Region). Climate-related physical changes and hazards could also pose credit risks for us.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

3 edited+0 added−1 removed8 unchanged
Biggest changeThe Company's cybersecurity risk management program and strategy are regularly reviewed and updated to ensure that they are aligned with the Bank's business objectives and are designed to address evolving cybersecurity threats and satisfy regulatory requirements and industry standards. 23 The Company’s Board of Directors is charged with overseeing the establishment and execution of the Company’s risk management framework and monitoring adherence to related policies required by applicable statutes, regulations and principles of safety and soundness.
Biggest changeThe Company’s Board of Directors is charged with overseeing the establishment and execution of the Company’s risk management framework and monitoring adherence to related policies required by applicable statutes, regulations and principles of safety and soundness.
The Company leverages the following guidelines and frameworks to continue to refine and maintain the information security program: FFIEC Information Security IT Examination Handbook, FFIEC Business Continuity Planning Handbook, FFIEC Cybersecurity Assessment Tool, Center for Internet Security Critical Security Controls, National Institute of Standards and Technology (NIST) Cybersecurity Framework.
This information security program is a critical component of our overall enterprise risk management program. The Company leverages the following guidelines and frameworks to continue to refine and maintain the information security program: FFIEC Information Security IT Examination Handbook, FFIEC Business Continuity Planning Handbook, Center for Internet Security Critical Security Controls, National Institute of Standards and Technology (NIST) Cybersecurity Framework.
These controls include, but are not limited to, access control, data encryption, data loss prevention, incident response, security monitoring, third party risk management, and vulnerability management.
These controls include, but are not limited to, access control, data encryption, data loss prevention, incident response, security monitoring, third party risk management, and vulnerability management. 25 The Company's cybersecurity risk management program and strategy are regularly reviewed and updated to ensure that they are aligned with the Bank's business objectives and are designed to address evolving cybersecurity threats and satisfy regulatory requirements and industry standards.
Removed
This information security program is a critical component of our overall enterprise risk management program.

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

4 edited+0 added−0 removed0 unchanged
Biggest changeFINANCIAL STATEMENTS AND SUPPLEMENTARY DATA Page- 56 Report of Independent Registered Public Accounting Firm Page- 56 Management's Report on Internal Control over Financial Reporting Page- 59 Consolidated Statements of Condition Page- 60 Consolidated Statements of Comprehensive Income (Loss) Page- 61 Consolidated Statements of Changes in Stockholders' Equity Page- 62 Consolidated Statements of Cash Flows Page- 63 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Page- 64 Note 1: Summary of Significant Accounting Policies Page- 64 2 Note 2: Investment Securities Page- 76 Note 3: Loans and Allowance for Credit Losses Page- 83 Note 4: Bank Premises and Equipment Page- 90 Note 5: Bank Owned Life Insurance Page- 90 Note 6: Deposits Page- 91 Note 7: Borrowings Page- 91 Note 8: Stockholders' Equity and Stock Plans Page- 92 Note 9: Fair Value of Assets and Liabilities Page- 96 Note 10: Benefit Plans Page- 98 Note 11: Income Taxes Page- 99 Note 12: Commitments and Contingencies Page- 101 Note 13: Concentrations of Credit Risk Page- 103 Note 14: Derivative Financial Instruments and Hedging Activities Page- 103 Note 15: Regulatory Matters Page- 105 Note 16: Financial Instruments with Off-Balance Sheet Risk Page- 106 Note 17: Condensed Bank of Marin Bancorp Parent Only Financial Statements Page- 108
Biggest changeFINANCIAL STATEMENTS AND SUPPLEMENTARY DATA Page- 59 Report of Independent Registered Public Accounting Firm Page- 59 Consolidated Statements of Condition Page- 62 Consolidated Statements of Comprehensive (Loss) Income Page- 63 Consolidated Statements of Changes in Stockholders' Equity Page- 64 Consolidated Statements of Cash Flows Page- 65 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Page- 66 Note 1: Summary of Significant Accounting Policies Page- 66 2 Note 2: Investment Securities Page- 78 Note 3: Loans and Allowance for Credit Losses Page- 83 Note 4: Bank Premises and Equipment Page- 91 Note 5: Bank Owned Life Insurance Page- 91 Note 6: Deposits Page- 91 Note 7: Borrowings Page- 92 Note 8: Stockholders' Equity and Stock Plans Page- 92 Note 9: Fair Value of Assets and Liabilities Page- 97 Note 10: Benefit Plans Page- 99 Note 11: Income Taxes Page- 100 Note 12: Commitments and Contingencies Page- 103 Note 13: Subordinated Notes Page- 104 Note 14: Concentrations of Credit Risk Page- 105 Note 15: Derivative Financial Instruments and Hedging Activities Page- 105 Note 16: Regulatory Matters Page- 107 Note 17: Financial Instruments with Off-Balance Sheet Risk Page- 108 Note 18: Condensed Bank of Marin Bancorp Parent Only Financial Statements Page- 110 Note 19: Restatement of Prior Period Financials (Quarterly Information Unaudited) Page- 111
ITEM 4. MINE SAFETY DISCLOSURES Page- 24 PART II Page- 25 ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Page- 25 ITEM 6. [RESERVED] Page- 26 ITEM 7.
ITEM 4. MINE SAFETY DISCLOSURES Page- 26 PART II Page- 27 ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Page- 27 ITEM 6. [RESERVED] Page- 28 ITEM 7.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Page- 53 ITEM 8.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Page- 57 ITEM 8.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Page- 26 Forward-Looking Statements Page- 26 Critical Accounting Estimates Page- 27 RESULTS OF OPERATIONS Financial Highlights Page- 30 Executive Summary Page- 31 Net Interest Income Page- 33 Provision for Credit Losses Page- 35 Non-Interest Income Page- 36 Non-Interest Expense Page- 37 Provision for Income Taxes Page- 38 FINANCIAL CONDITION Page- 39 Investment Securities Page- 39 Loans Page- 41 Allowance for Credit Losses Page- 45 Other Assets Page- 48 Deposits Page- 48 Borrowings Page- 49 Deferred Compensation Obligations Page- 50 Capital Adequacy Page- 50 Liquidity and Capital Resources Page- 51 Non-GAAP Financial Measures Page- 52 ITEM 7A.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Page- 28 Forward-Looking Statements Page- 28 Critical Accounting Estimates Page- 29 RESULTS OF OPERATIONS Financial Highlights Page- 31 Executive Summary Page- 34 Net Interest Income Page- 36 Provision for Credit Losses Page- 38 Non-Interest Income Page- 39 Non-Interest Expense Page- 40 Provision for Income Taxes Page- 40 FINANCIAL CONDITION Page- 42 Investment Securities Page- 42 Loans Page- 44 Allowance for Credit Losses Page- 48 Other Assets Page- 51 Deposits Page- 51 Borrowings Page- 52 Deferred Compensation Obligations Page- 53 Capital Adequacy Page- 53 Liquidity and Capital Resources Page- 54 Non-GAAP Financial Measures Page- 55 ITEM 7A.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

8 edited+2 added−0 removed0 unchanged
Biggest changeShares repurchased pursuant to our common stock share repurchase programs during 2024, 2023 and 2022, were as follows. 2024 2023 2022 Cumulative Totals Total number of common shares repurchased 220,000 0 23,275 243,275 Total purchase price of common shares repurchased (in millions) $ 4.3 $ — $ 1.0 $ 5.3 The following table reports information regarding repurchases of our common stock during the year ended December 31, 2024: (in thousands, except per share data) Total Number of Shares Purchased Average Price Paid per Share 1, 2 Total Number of Shares Purchased as Part of Publicly Announced Programs Approximate Dollar Value That May yet Be Purchased Under the Program 3 Period January 1, 2024 to January 31, 2024 — $ — — $ 25,000 February 1, 2024 to February 29, 2024 — — — 25,000 March 1, 2024 to March 31, 2024 — — — 25,000 April 1, 2024 to April 30, 2024 — — — 25,000 May 1, 2024 to May 31, 2024 — — — 25,000 June 1, 2024 to June 30, 2024 — — — 25,000 July 1, 2024 to July 31, 2024 — — — 25,000 August 1, 2024 to August 31, 2024 220 19.21 220 24,780 September 1, 2024 to September 30, 2024 — — — 24,780 October 1, 2024 to October 31, 2024 — — — 24,780 November 1, 2024 to November 30, 2024 — — — 24,780 December 1, 2024 to December 31, 2024 — — — 24,780 Year ended December 31, 2024 220 $ 19.21 220 $ 24,780 1 Average price paid per share excludes commission. 2 The aggregate purchase price and weighted average price per share does not include the effect of excise tax expense incurred on net stock repurchases.
Biggest changeShares repurchased pursuant to our common stock share repurchase programs during 2025, 2024 and 2023, were as follows. 2025 2024 2023 Cumulative Totals Total number of common shares repurchased 150,000 220,000 0 370,000 Total purchase price of common shares repurchased (in millions) $ 3.3 $ 4.3 $ — $ 7.6 The following table reports information regarding repurchases of our common stock during the year ended December 31, 2025: (in thousands, except per share data) Total Number of Shares Purchased Average Price Paid per Share 1, 2 Total Number of Shares Purchased as Part of Publicly Announced Programs Approximate Dollar Value That May yet Be Purchased Under the Program 3 Period January 1, 2025 to January 31, 2025 — $ — — $ 20,766 February 1, 2025 to February 28, 2025 — — — 20,766 March 1, 2025 to March 31, 2025 — — — 20,766 April 1, 2025 to April 30, 2025 — — — 20,766 May 1, 2025 to May 31, 2025 — — — 20,766 June 1, 2025 to June 30, 2025 100 21.72 100 18,591 July 1, 2025 to July 31, 2025 — — — 25,000 August 1, 2025 to August 31, 2025 50 22.33 50 23,882 September 1, 2025 to September 30, 2025 — — — 23,882 October 1, 2025 to October 31, 2025 — — — 23,882 November 1, 2025 to November 30, 2025 — — — 23,882 December 1, 2025 to December 31, 2025 — — — 23,882 Year ended December 31, 2025 150 $ 21.93 150 $ 23,882 1 Average price paid per share excludes commission. 2 The aggregate purchase price and weighted average price per share does not include the effect of excise tax expense incurred on net stock repurchases.
Five-Year Stock Price Performance Graph The 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, 2024 compared to the Russell 2000 Stock index and the S&P Regional Banks Select Industry Index.
Five-Year Stock Price Performance Graph The 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, 2025 compared to the Russell 2000 Stock index and the S&P Regional Banks Select Industry Index.
The comparison assumes the investment of $100 in our common stock on December 31, 2019 and the reinvestment of all dividends. The graph represents past performance and does not indicate future performance.
The comparison assumes the investment of $100 in our common stock on December 31, 2020 and the reinvestment of all dividends. The graph represents past performance and does not indicate future performance.
For the year ended December 31, 2024, the excise tax, net of issuances, was approximately $19 thousand. 3 On July 21, 2023, the Board of Directors approved the adoption of Bancorp's share repurchase program for up to $25.0 million and expiring on July 31, 2025.
For the year ended December 31, 2025, the excise tax, net of issuances, was approximately $6 thousand. 3 On July 24, 2025, the Board of Directors approved the adoption of Bancorp's share repurchase program for up to $25.0 million and this repurchase program expiries on July 31, 2027.
Shares to be issued upon exercise of outstanding options 1 Weighted average exercise price of outstanding options Shares remaining available for future issuance 2 Equity compensation plans approved by shareholders 273,242 $ 33.92 925,140 1 Represents shares of common stock issuable upon exercise of outstanding options under the Bank of Marin 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 2020 Director Stock Plan, excluding 273,242 shares to be issued upon exercise of outstanding options and 370,739 shares available to be issued under the Employee Stock Purchase Plan.
Shares to be issued upon exercise of outstanding options 1 Weighted average exercise price of outstanding options Shares remaining available for future issuance 2 Equity compensation plans approved by shareholders 213,644 $ 35.22 850,547 1 Represents shares of common stock issuable upon exercise of outstanding options under the Bank of Marin 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 2020 Director Stock Plan, excluding 213,644 shares to be issued upon exercise of outstanding options and 369,200 shares available to be issued under the Employee Stock Purchase Plan.
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information and Holders Bancorp's common stock trades on the Nasdaq Capital Market under the symbol BMRC. At February 28, 2025, 16,116,627 shares of Bancorp's common stock, no par value, were outstanding and held by approximately 7,500 holders of record and beneficial owners.
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information and Holders Bancorp's common stock trades on the Nasdaq Capital Market under the symbol BMRC. At February 27, 2026, 16,126,486 shares of Bancorp's common stock, no par value, were outstanding and held by approximate ly 12,800 holders of record and beneficial owners.
In addition, total return performance results vary depending on the length of the performance period. 2019 2020 2021 2022 2023 2024 Bank of Marin Bancorp (BMRC) 100.00 78.30 87.11 79.18 55.82 63.57 Russell 2000 Index 100.00 119.96 137.74 109.59 128.14 142.93 S&P Regional Banks Select Industry Index 1 100.00 92.90 129.98 110.80 102.56 122.17 Source: S&P Global Market Intelligence 1 The index comprises stocks in the S&P Total Market Index that are classified in the Global Industry Classification Standard regional banks sub-industry. 25 Securities Authorized for Issuance under Equity Compensation Plans The following table summarizes information as of December 31, 2024, with respect to equity compensation plans.
In addition, total return performance results vary depending on the length of the performance period. 2020 2021 2022 2023 2024 2025 Bank of Marin Bancorp (BMRC) 100.00 111.20 100.95 71.09 80.97 92.46 Russell 2000 Index 100.00 114.82 91.35 106.82 119.14 134.40 S&P Regional Banks Select Industry Index 1 100.00 139.90 119.26 110.40 131.50 145.48 Source: S&P Global Market Intelligence 1 The index comprises stocks in the S&P Total Market Index that are classified in the Global Industry Classification Standard regional banks sub-industry. 27 Securities Authorized for Issuance under Equity Compensation Plans The following table summarizes information as of December 31, 2025, with respect to equity compensation plans.
Purchases of Equity Securities by the Issuer and Affiliated Purchasers On July 21, 2023, the Board of Directors approved the adoption of Bancorp's share repurchase program for up to $25.0 million and expiring on July 31, 2025. Bancorp repurchased 220,000 shares totaling $4.3 million at an average price of $19.21 per share in the year ended December 31, 2024.
Purchases of Equity Securities by the Issuer and Affiliated Purchasers On July 24, 2025, the Board of Directors approved the adoption of Bancorp's share repurchase program for up to $25.0 million effective July 24, 2025 through July 31, 2027.
Added
This stock buyback program replaced the program approved in 2023 which expired July 31, 2025, under which Bancorp repurchased 320,000 shares totaling $6.4 million.
Added
Bancorp repurchased 150,000 shares totaling $3.3 million at an average price of $21.93 per share during the year ended December 31, 2025, and repurchased 220,000 shares totaling $4.3 million at an average price of $19.21 per share during the year ended December 31, 2024.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

116 edited+37 added−47 removed49 unchanged
Biggest changeThese decreas es were partially offset by adjustments to qualitative risk factors to account for the ongoing deterioration in the economic outlook that management believed was not captured in the quantitative portion of the allowance calculation. 35 Non-interest Income The table below details the components of non-interest income. 2024 compared to 2023 2023 compared to 2022 Years ended December 31, Amount Increase (Decrease) Percent Increase (Decrease) Amount Increase (Decrease) Percent Increase (Decrease) (dollars in thousands; unaudited) 2024 2023 2022 Wealth management and trust services $ 2,420 $ 2,145 $ 2,227 $ 275 12.8 % $ (82) (3.7) % Service charges on deposit accounts 2,164 2,083 2,007 81 3.9 % 76 3.8 % Earnings on bank-owned life insurance, net 1,714 1,802 1,229 (88) (4.9) % 573 46.6 % Debit card interchange fees, net 1,701 1,831 2,051 (130) (7.1) % (220) (10.7) % Dividends on Federal Home Loan Bank stock 1,478 1,265 1,056 213 16.8 % 209 19.8 % Merchant interchange fees, net 324 496 549 (172) (34.7) % (53) (9.7) % Losses on sale of investment securities, net (32,541) (5,893) (63) (26,648) 452.2 % (5,830) 9,254.0 % Other income 1,380 1,260 1,849 120 9.5 % (589) (31.9) % Total non-interest income $ (21,360) $ 4,989 $ 10,905 $ (26,349) (528.1) % $ (5,916) (54.3) % 2024 Compared to 2023 Non-interest income showed a loss of $21.4 million for 2024, a $26.3 million decrease from income of $5.0 million for 2023.
Biggest changeThe provision in 2024 was due primarily to increases in qualitative risk factors to account for continued uncertainty about inflation and recession risks, and from continued negative trends in adversely graded loans and/or collateral values on our non-owner occupied commercial real estate office and multi-family real estate portfolios including $5.2 million taken in the second quarter due to a $6.6 million increased individual reserve for one non-owner occupied commercial real estate loan totaling $16.7 million that, although current, had experienced a deterioration in the collateral value and, therefore, a material increase in the loan-to-value The provision in 2023 was due primarily to adjustments to qualitative risk factors from continued uncertainty about inflation and recession risks, the potential impact of rapidly increasing interest rates and other external factors on both our non-owner-occupied commercial real estate and construction portfolios, loan and collateral concentration risks in our construction and commercial real estate portfolios, heightened portfolio management in light of current economic conditions, and continued negative trends in adversely graded loans and/or collateral values for our non-owner occupied commercial real estate office and multi-family real estate portfolios. 38 Non-interest Income The table below details the components of non-interest income. 2025 compared to 2024 2024 compared to 2023 Years ended December 31, Amount Increase (Decrease) Percent Increase (Decrease) Amount Increase (Decrease) Percent Increase (Decrease) (dollars in thousands; unaudited) 2025 2024 2023 Wealth management and trust services $ 2,312 $ 2,420 $ 2,145 $ (108) (4.5) % $ 275 12.8 % Service charges on deposit accounts 2,188 2,164 2,083 24 1.1 % 81 3.9 % Earnings on bank-owned life insurance, net 1,779 1,714 1,488 65 3.8 % 226 15.2 % Debit card interchange fees, net 1,612 1,701 1,831 (89) (5.2) % (130) (7.1) % Dividends on Federal Home Loan Bank stock 1,475 1,478 1,265 (3) (0.2) % 213 16.8 % Merchant interchange fees, net 377 324 496 53 16.4 % (172) (34.7) % Earnings on bank-owned life insurance death benefits 306 — 314 306 NM (314) (100.0) % Losses on sale of investment securities, net (88,202) (32,541) (5,893) (55,661) 171.0 % (26,648) 452.2 % Other income 1,503 1,380 1,260 123 8.9 % 120 9.5 % Total non-interest income $ (76,650) $ (21,360) $ 4,989 $ (55,290) 258.8 % $ (26,349) (528.1) % 2025 Compared to 2024 Non-interest income showed a loss of $76.7 million for 2025, a $55.3 million decrease from a loss of $21.4 million for 2024.
The allowance for losses on unfunded loan commitments is based on estimates of the probability that these commitments will be drawn upon according to historical utilization experience, expected loss severity, and loss rates as determined for pooled funded loans. The allowance for credit losses on unfunded commitments is a liability account included in interest payable and other liabilities.
The allowance for credit losses on unfunded loan commitments is based on estimates of the probability that these commitments will be drawn upon according to historical utilization experience, expected loss severity, and loss rates as determined for pooled funded loans. The allowance for credit losses on unfunded commitments is a liability account included in interest payable and other liabilities.
Primarily due to declining inflation, the Federal Reserve lowered the target for the federal funds rate by 100 basis points, to a range of 4.25% to 4.50% in the later months of 2024. At the January 2025 meeting, the FOMC left rates unchanged and signaled slower than originally anticipated rate cuts are likely in 2025.
Primarily due to declining inflation, the Federal Reserve lowered the target for the federal funds rate by 100 basis points, to a range of 4.25% to 4.50% in the later months of 2024. At the January 2025 meeting, the FOMC left rates unchanged and signaled slower than originally anticipated rate cuts are in 2025.
Management believes deferred tax assets will be realizable due to our expectation that earnings will continue to be at a level adequate to realize such tax benefits. Therefore, no valuation allowance was established as of December 31, 2024 or 2023. For additional information, refer to Note 11 to the Consolidated Financial Statements in ITEM 8 of this report.
Management believes deferred tax assets will be realizable due to our expectation that earnings will continue to be at a level adequate to realize such tax benefits. Therefore, no valuation allowance was established as of December 31, 2025 or 2024. For additional information, refer to Note 11 to the Consolidated Financial Statements in ITEM 8 of this report.
Almost the entire commercial real estate loan portfolio is comprised of term loans for which the primary source of repayment is either the cash flow from leasing activities of the real estate collateral or the operating cash flow of the owner occupant. 42 Non-owner and Owner Occupied Real Estate Loans by Type (unaudited) Percent of Non-owner Occupied Commercial Real Estate Loans Percent of Owner-Occupied Commercial Real Estate Loans County December 31, 2024 December 31, 2023 December 31, 2024 December 31, 2023 Office 27 % 31 % 19 % 19 % Retail 20 21 7 7 Multi-family 16 12 — — Warehouse & industrial 11 12 23 23 Mixed use 9 7 2 3 School — — 15 15 Wine — — 10 11 Church — — 6 6 Gas/auto — — 8 4 Health club — — 4 2 Other 17 17 6 10 Total 100 % 100 % 100 % 100 % Commercial Real Estate Loans by Type and County Non-owner occupied Owner-occupied (unaudited) Retail Warehouse & industrial Multi-family Office Office County Dec 31, 2024 Dec 31, 2023 Dec 31 2024 Dec 31 2023 Dec 31, 2024 Dec 31, 2023 Dec 31, 2024 Dec 31, 2023 Dec 31, 2024 Dec 31, 2023 Sacramento 20 % 20 % 18 % 18 % 9 % 4 % 6 % 7 % 19 % 19 % Marin 16 17 12 11 10 15 25 24 22 26 Napa 16 16 4 3 5 6 9 10 21 27 Sonoma 15 15 28 27 11 15 17 17 8 9 Alameda 6 6 16 18 20 14 6 6 6 8 San Francisco 3 3 12 11 30 26 18 19 18 2 Other bay area 16 14 4 4 5 5 15 13 — 4 Other 8 9 6 8 10 15 4 4 6 5 Total 100 % 100 % 100 % 100 % 100 % 100 % 100 % 100 % 100 % 100 % With the heightened market concern about non-owner-occupied commercial real estate, and in particular the office sector, we are providing the following additional information: We continue to maintain diversity among property types and within our geographic footprint.
Almost the entire commercial real estate loan portfolio is comprised of term loans for which the primary source of repayment is either the cash flow from leasing activities of the real estate collateral or the operating cash flow of the owner occupant. 45 Non-owner and Owner Occupied Real Estate Loans by Type (unaudited) Percent of Non-owner Occupied Commercial Real Estate Loans Percent of Owner-Occupied Commercial Real Estate Loans County December 31, 2025 December 31, 2024 December 31, 2025 December 31, 2024 Office 27 % 27 % 19 % 19 % Retail 18 20 7 7 Multi-family 18 16 — — Warehouse & industrial 13 11 25 23 Mixed use 7 9 3 2 School — — 14 15 Wine — — 10 10 Church — — 5 6 Gas/auto — — 9 8 Health club — — 3 4 Other 17 17 5 6 Total 100 % 100 % 100 % 100 % Commercial Real Estate Loans by Type and County Non-owner occupied Owner-occupied (unaudited) Retail Warehouse & industrial Multi-family Office Office County Dec 31, 2025 Dec 31, 2024 Dec 31, 2025 Dec 31 2024 Dec 31, 2025 Dec 31, 2024 Dec 31, 2025 Dec 31, 2024 Dec 31, 2025 Dec 31, 2024 Sacramento 20 % 20 % 26 % 18 % 17 % 9 % 5 % 6 % 21 % 19 % Marin 16 16 8 12 9 10 24 25 21 22 Napa 16 16 7 4 5 5 8 9 17 21 Sonoma 16 15 25 28 16 11 17 17 8 8 Alameda 6 6 14 16 22 20 8 6 14 6 San Francisco 3 3 9 12 19 30 16 18 5 18 Other bay area 17 16 7 4 4 5 18 15 13 — Other 6 8 4 6 8 10 4 4 1 6 Total 100 % 100 % 100 % 100 % 100 % 100 % 100 % 100 % 100 % 100 % With the heightened market concern about non-owner-occupied commercial real estate, and in particular the office sector, we are providing the following additional information: We continue to maintain diversity among property types and within our geographic footprint.
We believe the strength of our balance sheet, higher level of productivity that we are seeing from our banking teams, and positive trends in our net interest margin and operating leverage are key factors that should help mitigate any unforeseen credit quality deterioration that may arise and drive further improvement in our financial performance in the year ahead.
We believe the strength of our balance sheet, higher level of loan origination productivity that we are seeing from our banking teams, and positive trends in our net interest margin and operating leverage are key factors that should help mitigate any unforeseen credit quality deterioration that may arise and drive further improvement in our financial performance in the year ahead.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion of financial condition as of December 31, 2024 and 2023 and results of operations for each of the years in the three-year period ended December 31, 2024 should be read in conjunction with our consolidated financial statements and related notes thereto, included in Part II ITEM 8 of this report.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion of financial condition as of December 31, 2025 and 2024 and results of operations for each of the years in the three-year period ended December 31, 2025 should be read in conjunction with our consolidated financial statements and related notes thereto, included in Part II ITEM 8 of this report.
Management determines the maturities and types of securities to be purchased based on liquidity and interest rate risk position, and the desire to attain a reasonable investment yield balanced with risk exposure. The tables below show the composition of the debt securities portfolio by weighted average life at December 31, 2024 and 2023.
Management determines the maturities and types of securities to be purchased based on liquidity and interest rate risk position, and the desire to attain a reasonable investment yield balanced with risk exposure. The tables below show the composition of the debt securities portfolio by weighted average life at December 31, 2025 and 2024.
Weighted average life takes into account the issuer's right to call or prepay obligations, with or without call or prepayment penalties. The weighted average life of the investment portfolio at December 31, 2024 and 2023 was approximately 5.9 and 6.6 years, respectively. The effective duration of the investment portfolio was 4.8 and 5.2 at December 31, 2024 and 2023, respectively.
Weighted average life takes into account the issuer's right to call or prepay obligations, with or without call or prepayment penalties. The weighted average life of the investment portfolio at December 31, 2025 and 2024 was approximately 4.2 and 5.9 years, respectively. The effective duration of the investment portfolio was 2.8 and 4.6 at December 31, 2025 and 2024, respectively.
The following table shows the mix of variable-rate loans and fixed-rate loans due after one year by portfolio class as of December 31, 2024. The large majority of variable-rate loans are tied to independent indices, such as the Prime Rate or a Treasury Constant Maturity Rate.
The following table shows the mix of variable-rate loans and fixed-rate loans due after one year by portfolio class as of December 31, 2025. The large majority of variable-rate loans are tied to independent indices, such as the Prime Rate or a Treasury Constant Maturity Rate.
Our primary uses of funds are the origination of loans, the purchase of investment securities and loans, withdrawals of deposits, maturities of certificates of deposit, repayment of borrowings, dividends to common stockholders, share repurchases and operating expenses. Customer deposits are a significant component of our daily liquidity position.
Our primary uses of funds are the origination of loans, the purchase of investment securities and loans, withdrawals of deposits, maturities of certificates of deposit, dividends to common stockholders, share repurchases and operating expenses. Customer deposits are a significant component of our daily liquidity position.
The following table presents the amortized costs and maturity distribution of our loans by portfolio class as of December 31, 2024 based on their contractual maturity dates. Maturities do not include scheduled payments or potential prepayments.
The following table presents the amortized costs and maturity distribution of our loans by portfolio class as of December 31, 2025 based on their contractual maturity dates. Maturities do not include scheduled payments or potential prepayments.
We expect to maintain strong capital levels and do not expect that we will be required to raise additional capital in 2025. Our anticipated sources of capital in 2025 include future earnings and shares issued under the stock-based compensation program.
We expect to maintain strong capital levels and do not expect that we will be required to raise additional capital in 2026. Our anticipated sources of capital in 2026 include future earnings and shares issued under the stock-based compensation program.
We held $16.7 million of FHLB stock recorded at cost in other assets at both December 31, 2024 and 2023. We received $1.5 million, $1.3 million and $1.0 million in cash dividends in 2024, 2023 and 2022, respectively. For additional information, refer to Note 2 to the Consolidated Financial Statements in ITEM 8 of this report.
We held $16.7 million of FHLB stock recorded at cost in other assets at both December 31, 2025 and 2024. We received $1.5 million, $1.5 million and $1.3 million in cash dividends in 2025, 2024 and 2023, respectively. For additional information, refer to Note 2 to the Consolidated Financial Statements in ITEM 8 of this report.
We performed a sensitivity analysis as of December 31, 2024, and estimated that a 100 basis point change (e.g., 4.5% to 5.5%) in the forecasted unemployment rates over the next four quarters would result in about a 6% change to our allowance for credit losses on loans.
We performed a sensitivity analysis as of December 31, 2025, and estimated that a 100 basis point change (e.g., 5.5% to 6.5%) in the forecasted unemployment rates over the next four quarters would result in about a 5% change to our allowance for credit losses on loans.
For periods beyond the forecast horizon, the economic factors revert to historical averages on a straight-line basis over a one-year period through the remaining lives of the loans.
For period s beyond the forecast horizon, the economic factors revert to historical averages on a straight-line basis over a one-year period through the remaining lives of the loans.
The decrease in 2024 was primarily due to the $32.5 million net loss on the sale of available-for-sale investment securities in the second quarter related to our balance sheet restructuring.
The decrease in 2024 was primarily due to the $32.5 million net loss on the sale of available-for-sale investment securities in 2024 related to our balance sheet restructuring.
The following table summarizes our commercial real estate loan concentrations by the county in which the property was located as of December 31, 2024 and 2023.
The following table summarizes our commercial real estate loan concentrations by the county in which the property was located as of December 31, 2025 and 2024.
See ITEM 1A, Risk Factors, for a discussion of potential risks associated with concentrations and volatility due to the activity of our large deposit customers. Distribution of Average Deposits The table below shows the relative composition of our average deposits for 2024 and 2023.
See ITEM 1A, Risk Factors, for a discussion of potential risks associated with concentrations and volatility due to the activity of our large deposit customers. 51 Distribution of Average Deposits The table below shows the relative composition of our average deposits for 2025 and 2024.
As of December 31, 2024 and 2023, neither the Bank nor Bancorp had accruals for interest or penalties related to unrecognized tax benefits. 38 FINANCIAL CONDITION Investment Securities We maintain an investment securities portfolio to provide liquidity and generate earnings on funds that have not been loaned to customers.
As of December 31, 2025 and 2024, neither the Bank nor Bancorp had accruals for interest or penalties related to unrecognized tax benefits. 41 FINANCIAL CONDITION Investment Securities We maintain an investment securities portfolio to provide liquidity and generate earnings on funds that have not been loaned to customers.
On December 31, 2024 and 2023, our liabilities under the SERPs totaled $4.6 million and $4.5 million, respectively, and were recorded in interest payable and other liabilities in the consolidated statements of condition. The SERPs are unfunded and non-qualified for tax purposes and subject to Title I of the Employee Retirement Income Security Act of 1974.
On December 31, 2025 and 2024, our liabilities under the SERPs totaled $4.8 million and $4.6 million, respectively, and were recorded in interest payable and other liabilities in the consolidated statements of condition. The SERPs are unfunded and non-qualified for tax purposes and subject to Title I of the Employee Retirement Income Security Act of 1974.
This impact does not consider changes to other assumptions for either the quantitative factors, such as probability of default, loss given default, loan mix or cash flows, prepayment/curtailment rates, and individually analyzed loans, or qualitative factors as discussed in Note 1 - Summary of Significant Accounting 27 Policies.
T his impact does not consider changes to other assumptions for either the quantitative factors, such as probability of default, loss given default, loan mix or cash flows, prepayment/curtailment rates, and individually analyzed loans, or qualitative factors as discussed in Note 1 - Summary of Significant Accounting Policies.
At December 31, 2024 and 2023, our aggregate payment obligations under both plans totaled $6.0 million and $6.6 million, respectively, and was recorded in interest payable and other liabilities in the consolidated statements of condition. Decreases in the deferred compensation plans in 2024 mainly resulted from increases in benefit payments to terminated employees.
At December 31, 2025 and 2024, our aggregate payment obligations under both plans totaled $5.4 million and $6.0 million, respectively, and was recorded in interest payable and other liabilities in the consolidated statements of condition. Decreases in the deferred compensation plans in 2025 mainly resulted from increases in benefit payments to terminated employees.
The amortized portion of net loan origination fees is included in interest income on loans, representing an adjustment to the yield. 5 Net loan origination (costs) fees included in interest income totaled $(1.6) million, $(1.3) million, and $1.1 million in 2024, 2023, and 2022, respectively. 33 Analysis of Changes in Net Interest Income The following table presents the effects of changes in average balances (volume) or changes in average rates on tax-equivalent net interest income for the years indicated.
The amortized portion of net loan origination fees is included in interest income on loans, representing an adjustment to the yield. 5 Net loan origination (costs) fees included in interest income totaled $(1.7) million, $(1.6) million, and $(1.3) million in 2025, 2024, and 2023, respectively. 36 Analysis of Changes in Net Interest Income The following table presents the effects of changes in average balances (volume) or changes in average rates on tax-equivalent net interest income for the years indicated.
In particular, our office commercial real estate portfolio in the City of San Francisco represents just 3% of our total loan portfolio and 5% of our total non-owner-occupied commercial real estate portfolio. The following table shows an analysis of construction loans by type and county as of December 31, 2024 and 2023.
In particular, our office commercial real estate portfolio in the City of San Francisco represents just 3% of our total loan portfolio and 4% of our total non-owner-occupied commercial real estate portfolio. The following table shows an analysis of construction loans by type and county as of December 31, 2025 and 2024.
The Bank's total risk-based capital ratio decreased to 16.13% at December 31, 2024, from 16.62% at December 31, 2023 . Bancorp's share repurchase program and activity are discussed in detail in ITEM 5 and in Note 8 to the Consolidated Financial Statements in ITEM 8 of this report.
The Bank's total risk-based capital ratio decreased to 13.90% at December 31, 2025, from 16.13% at December 31, 2024 . Bancorp's share repurchase program and activity are discussed in detail in ITEM 5 and in Note 8 to the Consolidated Financial Statements in ITEM 8 of this report.
For additional information on our allowance for credit losses methodology, refer to Notes 1 and 3 to the Consolidated Financial Statements in ITEM 8 of this report. The ratio of the allowance for credit losses to total loans was 1.47% at December 31, 2024 and 1.21% at December 31, 2023.
For additional information on our allowance for credit losses methodology, refer to Notes 1 and 3 to the Consolidated Financial Statements in ITEM 8 of this report. The ratio of the allowance for credit losses to total loans was 1.42% at December 31, 2025 and 1.47% at December 31, 2024.
Based on the current conditions of the loan portfolio and reasonable and supportable forecasts, management believes that the $30.7 million allowance for credit losses at December 31, 2024 was adequate to absorb expected credit losses in our loan portfolio.
Based on the current conditions of the loan portfolio and reasonable and supportable forecasts, management believes that the $30.1 million allowance for credit losses at December 31, 2025 was adequate to absorb expected credit losses in our loan portfolio.
Estimated uninsured and/or uncollateralized deposits comprised 29% of total deposits as of December 31, 2024. • At December 31, 2024, the Bank had no outstanding borrowings compared to $26.0 million at December 31, 2023, as a result of our strategic balance sheet restructuring in 2023 and 2024.
Estimated uninsured and/or uncollateralized deposits comprised 31% of total deposits as of December 31, 2025. • At December 31, 2025, the Bank had no outstanding short-term borrowings compared to $26.0 million at December 31, 2024, as a result of our strategic balance sheet restructuring in 2025 and 2024.
Estimated uninsured and/or uncollateralized deposits totaled 29% of total deposits as of December 31, 2024, compared to 28% as of December 31, 202 3. 48 Our liquidity policies require that compensating cash balances be held against concentrations over a certain level.
Estimated uninsured and/or uncollateralized deposits totaled 31% of total deposits as of December 31, 2025, compared to 29% as of December 31, 2024 . Our liquidity policies require that compensating cash balances be held against concentrations over a certain level.
For further discussion of bank capital requirements, refer to the SUPERVISION AND REGULATION section in ITEM 1 of this report. The total risk-based capital ratio for Bancorp was 16.54% at December 31, 2024, compared to 16.89% at December 31, 2023.
For further discussion of bank capital requirements, refer to the SUPERVISION AND REGULATION section in ITEM 1 of this report. The total risk-based capital ratio for Bancorp was 15.25% at December 31, 2025, compared to 16.54% at December 31, 2024.
In addition, we offer deposits through Reich & Tang Deposit Networks, LLC, comprised of Demand Deposit Marketplace SM ("DDM") balances. Through these two networks we are able to offer our customers access to FDIC-insured deposit products in aggregate amounts exceeding current insurance limits.
In addition, we offer deposits through R&T Deposit Solutions comprised of Demand Deposit Marketplace SM ("DDM") balances. Through these two networks we are able to offer our customers access to FDIC-insured deposit products in aggregate amounts exceeding current insurance limits.
Criticized and Classified Loans Loans designated as special mention, which are not considered adversely classified, decreased by $26.3 million in 2024, primarily due to net downgrades of $2.6 million from the pass or watch category and downgrades of $25.0 million to substandard.
Loans designated as special mention decreased by $26.3 million in 2024, primarily due to net downgrades of $2.6 million from the pass or watch category and downgrades of $25.0 million to substandard.
The 300 basis point decrease from 2022 to 2023 was primarily due to a larger proportional effect of permanent tax differences on lower pretax income and higher tax-exempt BOLI income. This decrease was partially offset by a reduction in the tax-exempt interest exclusion (due to a larger IRC Section 291(e) interest expense disallowance), compared to 2022.
The 15.60% increase from 2023 to 2024 was primarily due to a larger proportional effect of permanent tax differences on lower pretax income and higher tax-exempt BOLI income. This increase was partially offset by a reduction in the tax-exempt interest exclusion (due to a larger IRC Section 291(e) interest expense disallowance), compared to 2023.
The $8.1 million decrease from the prior year was primarily due to higher deposit costs of $21.2 million, partially offset by the reduction of $11.3 million in borrowing costs. The tax-equivalent net interest margin was 2.63% for 2024, consistent with 2023.
The $8.8 million decrease from the prior year was primarily due to higher deposit costs of $21.9 million, partially offset by the reduction of $11.3 million in borrowing costs. The tax-equivalent net interest margin was 2.55% for 2024, compared to 2.56% for 2023.
The Bank received approval from the State of California - Department of Financial Protection and Innovation on May 30, 2024, for a dividend of $19.0 million which was paid to Bancorp on June 24, 2024. The primary uses of funds for Bancorp are shareholder dividends, share repurchases and ordinary operating expenses.
The Bank received approval from the State of California - Department of Financial Protection and Innovation on May 30, 2025, for a dividend of $32.0 million which was paid to Bancorp on May 30, 2025. The primary uses of funds for Bancorp are shareholder dividends, subordinated notes servicing, share repurchases and ordinary operating expenses.
Non-interest bearing deposits c ontinue to remain strong compared to our peers and made up 43.5% of total deposits as of December 31, 2024, compared to 43.8% as of December 31, 2023. We believe we are appropriately competitive in regard to deposit pricin g, given our relationship banking model, which differentiates Bank of Marin through exceptional service.
Non-interest bearing deposits c ontinue to remain strong and made up 36.7% of total deposits as of December 31, 2025, compared to 39.6% as of December 31, 2024. We believe we are appropriately competitive in regard to deposit pricin g, given our relationship banking model, which differentiates Bank of Marin through exceptional service.
Our allowance model is particularly sensitive to forecasted and seasonally-adjusted actual California unemployment rates, which increased to 5.5% at December 31, 2024, from 5.1% a t December 31, 2023. The ACL model incorporates a one-year forecast.
Our allowance model is particularly sensitive to forecasted and seasonally-adjusted actual California unemployment rates, which was 5.5% at December 31, 2025 and December 31, 2024. The ACL model incorporates a one-year forecast.
Allowance for Credit Losses on Loans Rollforward (dollars in thousands; unaudited) 2024 2023 2022 Beginning balance $ 25,172 $ 22,983 $ 23,023 Provision for (reversal of) credit losses 5,550 2,575 (63) Loans charged-off: Commercial and industrial (41) (11) (9) Real estate: Commercial real estate, owner-occupied — (406) — Installment and other consumer (58) (24) (23) Total loans charged-off (99) (441) (32) Loans recovered: Commercial and industrial 21 29 22 Real estate: Commercial, non-owner occupied 8 — — Construction — 25 33 Installment and other consumer 4 1 — Total loans recovered 33 55 55 Net loans (charged-off) recovered (66) (386) 23 Ending balance $ 30,656 $ 25,172 $ 22,983 Total loans, at amortized cost $ 2,083,256 $ 2,073,720 $ 2,092,546 Average total loans outstanding during year $ 2,074,971 $ 2,099,719 $ 2,175,259 Ratio of allowance for credit losses to total loans at end of year 1.47 % 1.21 % 1.10 % Net charge-offs (recoveries) to average loans NM 0.02 % NM NM - Not meaningful. 46 The following table shows non-performing assets as of December 31, 2024 and 2023.
Allowance for Credit Losses on Loans Rollforward (dollars in thousands; unaudited) 2025 2024 2023 Beginning balance $ 30,656 $ 25,172 $ 22,983 Provision for (reversal of) credit losses 375 5,550 2,575 Loans charged-off: Commercial and industrial (117) (41) (11) Real estate: Commercial real estate, owner-occupied — — (406) Commercial, non-owner occupied (809) — — Installment and other consumer (16) (58) (24) Total loans charged-off (942) (99) (441) Loans recovered: Commercial and industrial — 21 29 Real estate: Commercial, non-owner occupied — 8 — Construction — 25 Installment and other consumer — 4 1 Total loans recovered — 33 55 Net loans charged-off (942) (66) (386) Ending balance $ 30,089 $ 30,656 $ 25,172 Total loans, at amortized cost $ 2,120,853 $ 2,083,256 $ 2,073,720 Average total loans outstanding during year $ 2,074,565 $ 2,074,971 $ 2,099,719 Ratio of allowance for credit losses to total loans at end of year 1.42 % 1.47 % 1.21 % Net charge-offs (recoveries) to average loans 0.05 % NM 0.02 % NM - Not meaningful. 49 The following table shows non-performing assets as of December 31, 2025 and 2024.
The dividend was paid on February 13, 2025 to shareholders of record at the close of business on February 6, 2025. 32 Net Interest Income Net interest income is the interest earned on loans, investments and other interest-earning assets minus interest expense incurred on deposits and other interest-bearing liabilities.
The dividend was paid on February 12, 2026 to shareholders of record at the close of business on February 5, 2026. 35 Net Interest Income Net interest income is the interest earned on loans, investments and other interest-earning assets minus interest expense incurred on deposits and other interest-bearing liabilities.
Net available funding sources, including unrestricted cash, unencumbered available-for-sale securities, and total available borrowing capacity, totaled $1.849 billion, or 57% of total deposits, and 197% of estimated uninsured and/or uncollateralized deposits as of December 31, 2024. The following table details the components of our contingent liquidity sources as of December 31, 2024.
Net available funding sources, including unrestricted cash, unencumbered available-for-sale securities, and total available borrowing capacity, totaled $2.148 billion, or 63% of total deposits, and 209% of estimated uninsured and/or uncollateralized deposits as of December 31, 2025. The following table details the components of our contingent liquidity sources as of December 31, 2025.
December 31, 2024 Within 1 Year 1-5 Years 5-10 Years After 10 Years Total (dollars in thousands; unaudited) AmortizedCost 1 Average Yield 2 AmortizedCost 1 Average Yield 2 AmortizedCost 1 Average Yield 2 AmortizedCost 1 Average Yield 2 Amortized Cost 1 Fair Value Average Yield 2 Held-to-maturity: CMBS/MBS/CMOs issued by U.S. government agencies $ 10,895 2.47 % $ 194,427 3.29 % $ 353,313 2.10 % $ 86,060 2.07 % $ 644,695 $ 560,812 2.46 % SBA-backed securities — — 1,513 3.16 — — — — 1,513 1,452 3.16 Debentures of government-sponsored agencies 20,000 4.25 5,000 5.00 83,460 1.83 32,971 1.85 141,431 118,737 2.29 Obligations of state and political subdivisions - tax-exempt 3 3,041 3.77 2,368 3.64 20,067 3.00 5,765 1.90 31,241 29,057 2.92 Obligations of state and political subdivisions - taxable — — — — 13,637 2.03 16,682 2.36 30,319 24,162 2.21 Corporate bonds 15,000 3.50 15,000 3.75 — — — — 30,000 29,315 3.63 Total held-to-maturity 48,936 3.59 218,308 3.36 470,477 2.09 141,478 2.05 879,199 763,535 2.48 Available-for-sale: CMBS/MBS/CMOs issued by U.S. government agencies 100,397 4.09 131,820 3.29 54,857 2.90 8,718 2.36 295,792 279,838 3.46 SBA-backed securities — — 331 2.20 — — — — 331 308 2.20 Debentures of government sponsored agencies — — — — 8,971 1.36 — — 8,971 7,210 1.36 U.S.
December 31, 2025 Within 1 Year 1-5 Years 5-10 Years After 10 Years Total (dollars in thousands; unaudited) AmortizedCost 1 Average Yield 2 AmortizedCost 1 Average Yield 2 AmortizedCost 1 Average Yield 2 AmortizedCost 1 Average Yield 2 Amortized Cost 1 Fair Value Average Yield 2 Available-for-sale: CMBS/MBS/CMOs issued by U.S. government agencies $ 52,519 4.26 % $ 1,035,618 4.37 % $ 174,622 3.43 % $ — — % $ 1,262,759 $ 1,250,230 4.23 % Debentures of government sponsored agencies — — — — — — 29,988 1.88 29,988 23,694 1.88 Obligations of state and political subdivisions - tax-exempt 3 3,025 5.04 6,836 4.37 — — 33,470 2.82 43,331 39,133 3.22 Obligations of state and political subdivisions - taxable — — — — 7,801 2.41 10,082 2.32 17,883 14,755 2.36 Total available-for-sale $ 55,544 4.30 % $ 1,042,454 4.37 % $ 182,423 3.39 % $ 73,540 2.37 % $ 1,353,961 $ 1,327,812 4.13 % 42 December 31, 2024 Within 1 Year 1-5 Years 5-10 Years After 10 Years Total (dollars in thousands; unaudited) AmortizedCost 1 Average Yield 2 AmortizedCost 1 Average Yield 2 AmortizedCost 1 Average Yield 2 AmortizedCost 1 Average Yield 2 Amortized Cost 1 Fair Value Average Yield 2 Held-to-maturity: CMBS/MBS/CMOs issued by U.S. government agencies $ 10,895 2.47 % $ 194,427 3.29 % $ 353,313 2.10 % $ 86,060 2.07 % $ 644,695 $ 560,812 2.46 % SBA-backed securities — — 1,513 3.16 — — — — 1,513 1,452 3.16 Debentures of government-sponsored agencies 20,000 4.25 5,000 5.00 83,460 1.83 32,971 1.85 141,431 118,737 2.29 Obligations of state and political subdivisions - tax-exempt 3 3,041 3.77 2,368 3.64 20,067 3.00 5,765 1.90 31,241 29,057 2.92 Obligations of state and political subdivisions - taxable — — — — 13,637 2.03 16,682 2.36 30,319 24,162 2.21 Corporate bonds 15,000 3.50 15,000 3.75 — — — — 30,000 29,315 3.63 Total held-to-maturity 48,936 3.59 218,308 3.36 470,477 2.09 141,478 2.05 879,199 763,535 2.48 Available-for-sale: CMBS/MBS/CMOs issued by U.S. government agencies 100,397 4.09 131,820 3.29 54,857 2.90 8,718 2.36 295,792 279,838 3.46 SBA-backed securities — — 331 2.20 — — — — 331 308 2.20 Debentures of government sponsored agencies — — — — 8,971 1.36 — — 8,971 7,210 1.36 U.S.
In addition, management believes that providing selected financial measures excluding the loss on sale of securities discussed above is useful to investors as the strategic short-term loss taken for long-term profitability makes the operational performance difficult to compare to the prior period. The year 2022 did not have a material loss on sale of securities and was therefore excluded below.
In addition, management believes that providing selected financial measures excluding the loss on sale of securities discussed above is useful to investors as the strategic short-term loss taken for long-term profitability makes the operational performance difficult to compare to the prior period.
We file a consolidated return in the U.S. federal tax jurisdiction and a combined return in the state of California tax jurisdiction. There were no ongoing federal or state income tax examinations at the time of the issuance of this report.
We file a consolidated return in the U.S. federal tax jurisdiction and a combined return in the State of California and the State of New Jersey due to interest on purchased auto loans registered in New Jersey. There were no ongoing federal or state income tax examinations at the time of the issuance of this report.
Bancorp held $10.3 million in cash as of December 31, 2024 , which is expected to cover cash needs into the second quarter of 2025 . Statement Regarding Use of Non-GAAP Financial Measures Financial results are presented in accordance with GAAP and with reference to certain non-GAAP financial measures.
Bancorp held $35.2 million in cash as of December 31, 2025 , which is expected to cover cash needs throughout 2026 . Statement Regarding Use of Non-GAAP Financial Measures Financial results are presented in accordance with GAAP and with reference to certain non-GAAP financial measures.
The benefit for income taxes totaled $5.4 million at an effective tax rate of 39.2% in 2024, compared to the provision of $6.1 million at an effective tax rate of 23.6% in 2023 and $16.9 million at an effective tax rate of 26.6% in 2022.
The benefit from income taxes totaled $16.8 million at an effective tax rate of 32.0% in 2025, compared to the benefit from income taxes of $5.4 million at an effective tax rate of 39.2% in 2024 and a provision of $6.1 million at an effective tax rate of 23.6% in 2023.
The increase in 2024 was comprised of the $54.2 million increase within the non-owner occupied loan portfolio, partially offset by the $11.2 million decrease within the owner-occupied loan portfolio. Of the commercial real estate loans as of December 31, 2024, 80% were non-owner occupied and 20% were owner-occupied.
The increase in 2025 was comprised of the $92.7 million increase within the non-owner occupied loan portfolio, partially offset by the $11.7 million decrease within the owner-occupied loan portfolio. Of the commercial real estate loans as of December 31, 2025, 81% were non-owner occupied and 19% were owner-occupied.
Of the downgraded loans, $7.0 million (or 72%) was secured by commercial real estate, and the remaining $2.7 million was to commercial borrowers. Refer to Note 3 to the Consolidated Financial Statements in ITEM 8 of this report for an allocation of criticized and classified loans by loan portfolio class.
Of the downgraded loans, $17.1 million (or 82%) 50 was secured by commercial real estate, $3.5 million was to commercial borrowers, and the remaining $222 thousand were personal loans. Refer to Note 3 to the Consolidated Financial Statements in ITEM 8 of this report for an allocation of criticized and classified loans by loan portfolio class.
For further information, refer to the Provision for Credit Losses section above, and Notes 1 and 3 to the Consolidated Financial Statements in ITEM 8 of this report.
This decline was partially offset by the $375 thousand provision recorded in 2025. For further information, refer to the Provision for Credit Losses section above, and Notes 1 and 3 to the Consolidated Financial Statements in ITEM 8 of this report.
Key considerations include: • The soundness of a municipality’s budgetary position and the stability of its tax revenues • Debt profile and level of unfunded liabilities, diversity of revenue sources, taxing authority of the issuer • Local demographics and economics including unemployment data, the largest local taxpayers and employers, income indices, and home values • For revenue bonds, the source and strength of revenue for municipal authorities, including obligors' financial condition and reserve levels, annual debt service and debt coverage ratio, and credit enhancement (such as insurers' strength) • Credit ratings by major credit rating agencies Loans Loans Outstanding by Class and Percent of Total December 31, 2024 December 31, 2023 (in thousands; unaudited) Amortized Cost Percent of Total Amortized Cost Percent of Total Commercial and industrial $ 152,263 7.3 % $ 153,750 7.4 % Real estate Commercial owner-occupied 321,962 15.5 333,181 16.1 Commercial non-owner occupied 1,273,596 61.1 1,219,385 58.8 Construction 36,970 1.8 99,164 4.8 Home equity 88,325 4.2 82,087 4.0 Other residential 143,207 6.9 118,508 5.7 Installment and other consumer 66,933 3.2 67,645 3.2 Total loans, at amortized cost 2,083,256 100.0 % 2,073,720 100.0 % Allowance for credit losses on loans (30,656) (25,172) Total loans, net of allowance for credit losses $ 2,052,600 $ 2,048,548 41 Loans increased by $9.5 million in 2024, or 0.5%, to $2.083 billion as of December 31, 2024, from $2.074 billion as of December 31, 2023.
Key considerations include: • The soundness of a municipality’s budgetary position and the stability of its tax revenues • Debt profile and level of unfunded liabilities, diversity of revenue sources, taxing authority of the issuer • Local demographics and economics including unemployment data, the largest local taxpayers and employers, income indices, and home values • For revenue bonds, the source and strength of revenue for municipal authorities, including obligors' financial condition and reserve levels, annual debt service and debt coverage ratio, and credit enhancement (such as insurers' strength) • Credit ratings by major credit rating agencies Loans Loans Outstanding by Class and Percent of Total December 31, 2025 December 31, 2024 (in thousands; unaudited) Amortized Cost Percent of Total Amortized Cost Percent of Total Commercial and industrial $ 159,898 7.5 % $ 152,263 7.3 % Real estate Commercial owner-occupied 310,219 14.6 321,962 15.5 Commercial non-owner occupied 1,366,251 64.5 1,273,596 61.1 Construction 15,101 0.7 36,970 1.8 Home equity 99,222 4.7 88,325 4.2 Other residential 110,614 5.2 143,207 6.9 Installment and other consumer 59,548 2.8 66,933 3.2 Total loans, at amortized cost 2,120,853 100.0 % 2,083,256 100.0 % Allowance for credit losses on loans (30,089) (30,656) Total loans, net of allowance for credit losses $ 2,090,764 $ 2,052,600 Loans increased by $37.6 million in 2025, or 1.8%, to $2.121 billion as of December 31, 2025, from $2.083 billion as of December 31, 2024 and was primarily due to a $92.7 million increase in commercial non-owner occupied real estate loans, offset by a decrease of $32.6 million in residential real estate loans and a decrease of $21.9 million in 44 construction loans.
See the discussion in the section captioned “Securities May Lose Value Due to Credit Quality of the Issuers” in ITEM 1A Risk Factors above. 40 At December 31, 2024 and 2023, distribution of our investment in obligations of state and political subdivisions was as follows: December 31, 2024 December 31, 2023 (dollars in thousands; unaudited) Amortized Cost Fair Value Percent of State and Municipal Securities Amortized Cost Fair Value Percent of State and Municipal Securities Within California: General obligation bonds $ 22,913 $ 18,749 14.5 % $ 24,191 $ 20,009 14.7 % Revenue bonds 2,060 1,658 1.3 3,507 2,917 2.1 Tax allocation bonds — — — — — — Total within California 24,973 20,407 15.8 27,698 22,926 16.8 Outside California: General obligation bonds 108,037 94,748 68.5 108,846 98,139 66.3 Revenue bonds 24,728 21,778 15.7 27,692 25,014 16.9 Total outside California 132,765 116,526 84.2 136,538 123,153 83.2 Total obligations of state and political subdivisions $ 157,738 $ 136,933 100.0 % $ 164,236 $ 146,079 100.0 % Percent of investment portfolio 12.2% 11.9% 10.7% 10.7% The portion of the portfolio outside the state of California is distributed among twelve states.
See the discussion in the section captioned “Securities May Lose Value Due to Credit Quality of the Issuers” in ITEM 1A Risk Factors above. 43 At December 31, 2025 and 2024, distribution of our investment in obligations of state and political subdivisions was as follows: December 31, 2025 December 31, 2024 (dollars in thousands; unaudited) Amortized Cost Fair Value Percent of State and Municipal Securities Amortized Cost Fair Value Percent of State and Municipal Securities Within California: General obligation bonds $ 9,981 $ 8,359 16.3 % $ 22,913 $ 18,749 14.5 % Revenue bonds — — — 2,060 1,658 1.3 Total within California 9,981 8,359 16.3 24,973 20,407 15.8 Outside California: General obligation bonds 40,352 35,985 65.9 108,037 94,748 68.5 Revenue bonds 10,881 9,544 17.8 24,728 21,778 15.7 Total outside California 51,233 45,529 83.7 132,765 116,526 84.2 Total obligations of state and political subdivisions $ 61,214 $ 53,888 100.0 % $ 157,738 $ 136,933 100.0 % Percent of investment portfolio 4.5% 4.1% 12.2% 11.9% The portion of the portfolio outside the state of California is distributed among twelve states.
The 15.6% increase in the effective tax rate in 2024, as compared to 2023, was due to the treatment of certain permanent differences while in a loss position, such as in 2024.
The 7.2% decrease in the effective tax rate in 2025, as compared to 2024, was due to the treatment of certain permanent differences while in a larger loss position, such as in 2025.
The $2.7 million decrease was primarily due to a $3.7 million decrease in net deferred tax assets, as discussed below. Net deferred tax assets totaled $30.6 million and $34.3 million at December 31, 2024 and 2023, respectively.
The $12.1 million increase was primarily due to a $12.3 million increase in net deferred tax assets, as discussed below. Net deferred tax assets totaled $42.9 million and $30.6 million at December 31, 2025 and 2024, respectively.
Management considers whether adjustments to the quantitative portion of the ACL are needed for differences in segment-specific risk characteristics or to reflect the extent to which it expects current conditions and reasonable and supportable forecasts of economic conditions to differ from the conditions that existed during the historical period included in the development of PD and LGD.
Under the DCF method, the ACL reflects the difference between the amortized cost basis and the present value of the expected cash flows using the loan's effective rate. 29 Management considers whether adjustments to the quantitative portion of the ACL are needed for differences in segment-specific risk characteristics or to reflect the extent to which it expects current conditions and reasonable and supportable forecasts of economic conditions to differ from the conditions that existed during the historical period included in the development of PD and LGD.
The following table presents the allowance for credit losses on loans by loan portfolio class in accordance with the methodology described in Note 1 to the Consolidated Financial Statements in ITEM 8 of this report, as well as the per centage of total loans in each of the same loan portfolio classes as of December 31, 2024 and 2023. 45 Allocation of the Allowance for Credit Losses (dollars in thousands; unaudited) Commercial and industrial Commercial real estate, owner-occupied Commercial real estate, non-owner occupied Construction Home equity Other residential Installment and other consumer Unallocated Total December 31, 2024 Modeled expected credit losses $ 759 $ 1,241 $ 7,632 $ 41 $ 620 $ 1,133 $ 625 $ — $ 12,051 Qualitative adjustments 672 1,120 6,528 597 64 8 268 1,255 10,512 Specific allocations 145 — 7,933 — — — 15 — 8,093 Total $ 1,576 $ 2,361 $ 22,093 $ 638 $ 684 $ 1,141 $ 908 $ 1,255 $ 30,656 Loans as a percent of total loans 7.3 % 15.5 % 61.1 % 1.8 % 4.2 % 6.9 % 3.2 % N/A 100.0 % December 31, 2023 Modeled expected credit losses $ 897 $ 1,270 $ 7,380 $ 185 $ 482 $ 619 $ 634 $ — $ 11,467 Qualitative adjustments 622 1,205 6,327 1,647 70 33 342 2,038 12,284 Specific allocations 193 1 1,226 — — 1 — — 1,421 Total $ 1,712 $ 2,476 $ 14,933 $ 1,832 $ 552 $ 653 $ 976 $ 2,038 $ 25,172 Loans as a percent of total loans 7.4 % 16.1 % 58.8 % 4.8 % 4.0 % 5.7 % 3.2 % N/A 100.0 % The table below shows the activity in the allowance for credit losses for each of the three years presented below.
The following table presents the allowance for credit losses on loans by loan portfolio class in accordance with the methodology described in Note 1 to the Consolidated Financial Statements in ITEM 8 of this report, as well as the per centage of total loans in each of the same loan portfolio classes as of December 31, 2025 and 2024. 48 Allocation of the Allowance for Credit Losses (dollars in thousands; unaudited) Commercial and industrial Commercial real estate, owner-occupied Commercial real estate, non-owner occupied Construction Home equity Other residential Installment and other consumer Unallocated Total December 31, 2025 Modeled expected credit losses $ 1,512 $ 1,553 $ 8,449 $ 38 $ 736 $ 1,059 $ 697 $ — $ 14,044 Qualitative adjustments 522 901 5,802 161 67 2 106 1,185 8,746 Specific allocations 55 — 7,226 — — 18 — — 7,299 Total $ 2,089 $ 2,454 $ 21,477 $ 199 $ 803 $ 1,079 $ 803 $ 1,185 $ 30,089 Loans as a percent of total loans 7.5 % 14.6 % 64.5 % 0.7 % 4.7 % 5.2 % 2.8 % N/A 100.0 % December 31, 2024 Modeled expected credit losses $ 759 $ 1,241 $ 7,632 $ 41 $ 620 $ 1,133 $ 625 $ — $ 12,051 Qualitative adjustments 672 1,120 6,528 597 64 8 268 1,255 10,512 Specific allocations 145 — 7,933 — — — 15 — 8,093 Total $ 1,576 $ 2,361 $ 22,093 $ 638 $ 684 $ 1,141 $ 908 $ 1,255 $ 30,656 Loans as a percent of total loans 7.3 % 15.5 % 61.1 % 1.8 % 4.2 % 6.9 % 3.2 % N/A 100.0 % The table below shows the activity in the allowance for credit losses for each of the three years presented below.
At December 31, (dollars in thousands, except per share data) 2024 2023 Selected financial condition data: Total assets $ 3,701,335 $ 3,803,903 Investment securities $ 1,266,733 $ 1,477,226 Loans, net of allowance for credit losses on loans $ 2,052,600 $ 2,048,548 Deposits $ 3,220,015 $ 3,290,075 Borrowings and other obligations $ 154 $ 26,298 Stockholders' equity $ 435,407 $ 439,062 Book value per share $ 27.06 $ 27.17 Tangible book value per share $ 22.37 $ 22.44 Asset quality ratios: Allowance for credit losses to total loans 1.47 % 1.21 % Allowance for credit losses to non-accrual loans 0.90x 3.15x Non-accrual loans to total loans 1.63 % 0.39 % Classified loans (graded substandard and doubtful) as a percentage of total loans 2.17 % 1.56 % Capital ratios: Equity to total assets 11.76 % 11.54 % Tangible common equity to tangible assets 9.93 % 9.73 % Total capital (to risk-weighted assets) 16.54 % 16.89 % Tier 1 capital (to risk-weighted assets) 15.32 % 15.91 % Tier 1 capital (to average assets) 10.46 % 10.46 % Common equity Tier 1 capital (to risk-weighted assets) 15.32 % 15.91 % Other data: Loan-to-deposit ratio 64.70 % 63.03 % Number of branches 27 27 Full-time equivalent employees 285 329 For the Years Ended December 31, (dollars in thousands, except per share data) 2024 2023 2022 Selected operating data: Net interest income $ 94,660 $ 102,761 $ 127,492 Provision for (reversal of) credit losses on loans 5,550 2,575 (63) Reversal of credit losses on unfunded loan commitments (233) (342) (318) Non-interest income (21,360) 4,989 10,905 Non-interest expense 81,818 79,481 75,269 Net (loss) income (8,409) 19,895 46,586 Net (loss) income per common share: Basic $ (0.52) $ 1.24 $ 2.93 Diluted $ (0.52) $ 1.24 $ 2.92 Performance and other financial ratios: Return on average assets (0.22) % 0.49 % 1.08 % Return on average equity (1.93) % 4.69 % 11.16 % Tax-equivalent net interest margin 2.63 % 2.63 % 3.11 % Cost of deposits 1.41 % 0.74 % 0.06 % Cost of funds 1.42 % 1.02 % 0.07 % Efficiency ratio 111.62 % 73.76 % 54.39 % Net charge-offs (recoveries) $ 66 $ 386 $ (23) Net charge-offs (recoveries) to average loans NM 0.02 % NM Cash dividend payout ratio on common stock 1 NM 80.65 % 33.45 % Cash dividends per common share $ 1.00 $ 1.00 $ 0.98 1 Calculated as cash dividends per common share divided by basic net income per common share.
At December 31, (dollars in thousands, except per share data) 2025 2024 Selected financial condition data: Total assets $ 3,904,778 $ 3,701,335 Investment securities $ 1,327,812 $ 1,266,733 Loans, net of allowance for credit losses on loans $ 2,090,764 $ 2,052,600 Deposits $ 3,415,542 $ 3,220,015 Borrowings and other obligations $ 709 $ 154 Subordinated notes, net $ 43,857 $ — Stockholders' equity $ 394,654 $ 435,407 Book value per share $ 24.51 $ 27.06 Tangible book value per share $ 19.87 $ 22.37 Asset quality ratios: Allowance for credit losses to total loans 1.42 % 1.47 % Allowance for credit losses to non-accrual loans 1.12x 0.90x Non-accrual loans to total loans 1.27 % 1.63 % Classified loans (graded substandard and doubtful) as a percentage of total loans 1.51 % 2.17 % Capital ratios: Equity to total assets 10.11 % 11.76 % Tangible common equity to tangible assets 8.35 % 9.93 % Total capital (to risk-weighted assets) 15.25 % 16.54 % Tier 1 capital (to risk-weighted assets) 12.34 % 15.32 % Tier 1 capital (to average assets) 8.26 % 10.46 % Common equity Tier 1 capital (to risk-weighted assets) 12.34 % 15.32 % Other data: Loan-to-deposit ratio 62.09 % 64.70 % Number of branches 27 27 Full-time equivalent employees 311 285 For the Years Ended December 31, (dollars in thousands, except per share data) 2025 2024 2023 Selected operating data: Net interest income $ 106,037 $ 91,582 $ 100,352 Provision for credit losses on loans 375 5,550 2,575 Provision for (reversal of) credit losses on unfunded loan commitments 185 (233) (342) Non-interest income (76,650) (21,360) 4,989 Non-interest expense 81,310 78,740 77,072 Net (loss) income (35,675) (8,409) 19,895 Net (loss) income per common share: Basic $ (2.24) $ (0.52) $ 1.24 Diluted $ (2.24) $ (0.52) $ 1.24 31 Performance and other financial ratios: Return on average assets (0.94) % (0.22) % 0.49 % Return on average equity (8.19) % (1.93) % 4.69 % Tax-equivalent net interest margin 2.94 % 2.55 % 2.56 % Cost of deposits 1.39 % 1.50 % 0.82 % Cost of funds 1.40 % 1.51 % 1.09 % Efficiency ratio 276.69 % 112.13 % 73.16 % Net charge-offs $ 942 $ 66 $ 386 Net charge-offs to average loans 0.05 % NM 0.02 % Cash dividend payout ratio on common stock 1 NM NM 80.65 % Cash dividends per common share $ 1.00 $ 1.00 $ 1.00 1 Calculated as cash dividends per common share divided by basic net income per common share.
Other Assets BOLI totaled $71.0 million as of December 31, 2024, compared to $68.1 million at December 31, 2023. The $2.9 million increase was primarily due to the purchase of $1.2 million in new BOLI policies and earnings from the BOLI policies. Interest receivable and other assets totaled $72.3 million and $74.9 million at December 31, 2024 and 2023, respectively.
Other Assets BOLI totaled $71.3 million as of December 31, 2025, compared to $71.0 million at December 31, 2024. The $279 thousand increase was primarily due to increased earnings from higher yields on policies in 2025. Interest receivable and other assets totaled $84.4 million and $72.3 million at December 31, 2025 and 2024, respectively.
Of the total investment in obligations of state and political subdivisions, the largest concentrations outside California are in Texas (38.4%), Washington (15.7%), and Wisconsin (9.4%).
Of the total investment in obligations of state and political subdivisions, the largest concentrations outside California are in Texas (44.3%), Wisconsin (24.1%) and Virginia (6.7%).
The data was derived from the audited consolidated financial statements of Bank of Marin Bancorp.
Financial Highlights The following are highlights of our financial condition and results of operations. The data was derived from the audited consolidated financial statements of Bank of Marin Bancorp.
In 2024, we sold $325.2 million in available-for-sale securities with an average yield of 1.94%, as part of a balance sheet restructuring, including $190.5 million in agency collateralized mortgage obligations ("CMOs"), $65.0 million in debentures of government sponsored agencies, $39.8 million in agency mortgage-backed securities ("MBSs"), $18.4 million in SBA-backed securities, $6.0 million in corporate bonds and $5.5 million in obligations of state and political subdivisions.
In 2025, we sold $778.9 million in available-for-sale securities with an average yield of 1.99%, as part of a balance sheet restructuring, including $279.8 million in agency collateralized mortgage obligations ("CMOs"), $270.8 million in agency mortgage-backed securities ("MBSs"), $98.1 million in debentures of government sponsored agencies, $95.7 million in obligations of state and political subdivisions, $21.0 million in corporate bonds, $12.0 million in U.S.
Average investment securities decreased $42.9 million, while their average yield increased 25 basis points, improving the margin by 14 basis points. Market Interest Rates Market interest rates are, in part, based on the target federal funds interest rate (the interest rate banks charge each other for short-term borrowings) implemented by the Federal Reserve Open Market Committee ("FOMC").
Market Interest Rates Market interest rates are, in part, based on the target federal funds interest rate (the interest rate banks charge each other for short-term borrowings) implemented by the Federal Reserve Open Market Committee ("FOMC").
Increases to salaries and employee benefits were partially offset by a decrease in profit sharing expense mainly from accrual adjustments, a decrease in accrued incentive bonuses, and a decrease in stock-based compensation from changes in award structure and estimated performance award payouts. • Deposit network fees increased by $743 thousand due both to rate and volume. • Depreciation and amortization expenses decreased by $632 thousand, mainly from the acceleration of lease-related costs for four branch closures in 2023. • Amortization of the core deposit intangible decreased by $375 thousand as the Bank of Alameda amortization completed in 2023. 2023 Compared to 2022 Non-interest expenses increased $4.2 million to $79.5 million in 2023 from $75.3 million in 2022.
Increases to salaries and employee benefits were partially offset by a decrease in profit sharing expense mainly from accrual adjustments, a decrease in accrued incentive bonuses, and a decrease in stock-based compensation from changes in award structure and estimated performance award payouts. • Depreciation and amortization expenses decreased by $632 thousand, mainly from the acceleration of lease-related costs for four branch closures in 2023. • Amortization of the core deposit intangible decreased by $375 thousand as the Bank of Alameda amortization completed in 2023. 40 Provision for Income Taxes Income tax provisions reflect accruals for taxes at the applicable rates for federal income tax and California franchise tax based upon reported pre-tax income.
In addition, we took actions to reduce operating expenses in 2024 which positively impacted our results later in the year. Though the percentage of non-accrual loans increased from the prior year, we continue to proactively identify and manage credit risk within the loan portfolio and there were some improvements in credit quality trends during the fourth quarter.
We continue to proactively identify and manage credit risk within the loan portfolio, reflected in the percentage of non-accrual loans which decreased from the prior year, and improvements in credit quality trends during the fourth quarter.
Average Statements of Condition and Analysis of Net Interest Income Year ended Year ended Year ended December 31, 2024 December 31, 2023 December 31, 2022 Interest Interest Interest Average Income/ Yield/ Average Income/ Yield/ Average Income/ Yield/ (dollars in thousands; unaudited) Balance Expense Rate Balance Expense Rate Balance Expense Rate Assets Interest-earning deposits with banks 1 $ 128,752 $ 6,714 5.13 % $ 42,864 $ 2,329 5.36 % $ 120,395 $ 1,407 1.15 % Investment securities 2, 3 1,361,859 33,349 2.45 % 1,753,708 39,100 2.23 % 1,796,628 35,534 1.98 % Loans 1, 3, 4, 5 2,074,971 101,912 4.83 % 2,099,719 99,018 4.65 % 2,175,259 94,614 4.29 % Total interest-earning assets 1 3,565,582 141,975 3.92 % 3,896,291 140,447 3.56 % 4,092,282 131,555 3.17 % Cash and non-interest-bearing due from banks 36,692 37,868 53,534 Bank premises and equipment, net 7,310 8,348 7,400 Interest receivable and other assets, net 164,298 135,200 151,295 Total assets $ 3,773,882 $ 4,077,707 $ 4,304,511 Liabilities and Stockholders' Equity Interest-bearing transaction accounts $ 193,456 $ 1,201 0.62 % $ 240,524 $ 1,036 0.43 % $ 294,682 $ 421 0.14 % Savings accounts 227,061 2,003 0.88 % 281,611 867 0.31 % 341,710 125 0.04 % Money market accounts 1,155,016 33,914 2.94 % 1,013,620 18,553 1.83 % 1,065,104 1,589 0.15 % Time accounts, including CDARS 262,482 9,254 3.53 % 191,056 4,715 2.47 % 140,547 323 0.23 % Borrowings and other obligations 1 4,628 241 5.13 % 221,623 11,562 5.15 % 2,295 91 3.90 % Total interest-bearing liabilities 1,842,643 46,613 2.53 % 1,948,434 36,733 1.89 % 1,844,338 2,549 0.14 % Demand accounts 1,448,346 1,656,047 1,993,373 Interest payable and other liabilities 47,823 49,442 49,456 Stockholders' equity 435,070 423,784 417,344 Total liabilities & stockholders' equity $ 3,773,882 $ 4,077,707 $ 4,304,511 Tax-equivalent net interest income/margin 1,3 $ 95,362 2.63 % $ 103,714 2.63 % $ 129,006 3.11 % Reported net interest income/margin 1 $ 94,660 2.61 % $ 102,761 2.60 % $ 127,492 3.07 % Tax-equivalent net interest rate spread 1.39 % 1.67 % 3.03 % 1 Interest income/expense is divided by actual number of days in the period times 360 days to correspond to stated interest rate terms, where applicable. 2 Yields on available-for-sale securities are calculated based on amortized cost balances rather than fair value, as changes in fair value are reflected as a component of stockholders' equity.
Average Statements of Condition and Analysis of Net Interest Income Year ended Year ended Year ended December 31, 2025 December 31, 2024 December 31, 2023 Interest Interest Interest Average Income/ Yield/ Average Income/ Yield/ Average Income/ Yield/ (dollars in thousands; unaudited) Balance Expense Rate Balance Expense Rate Balance Expense Rate Assets Interest-earning deposits with banks 1 $ 222,747 $ 9,535 4.22 % $ 128,752 $ 6,714 5.13 % $ 42,864 $ 2,329 5.36 % Investment securities 2, 3 1,283,380 38,710 3.02 % 1,361,859 33,349 2.45 % 1,753,708 39,100 2.23 % Loans 1, 3, 4, 5 2,074,565 104,870 4.99 % 2,074,971 101,912 4.83 % 2,099,719 99,018 4.65 % Total interest-earning assets 1 3,580,692 153,115 4.22 % 3,565,582 141,975 3.92 % 3,896,291 140,447 3.56 % Cash and non-interest-bearing due from banks 37,299 36,692 37,868 Bank premises and equipment, net 7,474 7,310 8,348 Interest receivable and other assets, net 180,356 164,298 135,200 Total assets $ 3,805,821 $ 3,773,882 $ 4,077,707 Liabilities and Stockholders' Equity Interest-bearing transaction accounts $ 357,877 $ 5,408 1.51 % $ 325,065 $ 4,279 1.32 % $ 352,363 $ 3,445 0.98 % Savings accounts 224,428 2,329 1.04 % 227,061 2,003 0.88 % 281,611 867 0.31 % Money market accounts 1,257,049 31,841 2.53 % 1,155,016 33,914 2.94 % 1,013,620 18,553 1.83 % Time accounts, including CDARS 219,135 6,436 2.94 % 262,482 9,254 3.53 % 191,056 4,715 2.47 % Borrowings and other obligations 1 253 9 3.53 % 4,628 241 5.13 % 221,623 11,562 5.15 % Subordinated notes 5,189 368 7.10 % — — — % — — — % Total interest-bearing liabilities 2,063,931 46,391 2.25 % 1,974,252 49,691 2.52 % 2,060,273 39,142 1.90 % Demand accounts 1,261,562 1,316,737 1,544,208 Interest payable and other liabilities 44,668 47,823 49,442 Stockholders' equity 435,660 435,070 423,784 Total liabilities & stockholders' equity $ 3,805,821 $ 3,773,882 $ 4,077,707 Tax-equivalent net interest income/margin 1,3 $ 106,724 2.94 % $ 92,284 2.55 % $ 101,305 2.56 % Reported net interest income/margin 1 $ 106,037 2.92 % $ 91,582 2.53 % $ 100,352 2.54 % Tax-equivalent net interest rate spread 1.97 % 1.38 % 1.63 % 1 Interest income/expense is divided by actual number of days in the period times 360 days to correspond to stated interest rate terms, where applicable. 2 Yields on available-for-sale securities are calculated based on amortized cost balances rather than fair value, as changes in fair value are reflected as a component of stockholders' equity.
I n addition, as of December 31, 2024 and 2023 we had $125.0 million and $135.0 million, respectively, in unsecured lines of credit with correspondent banks to cover short-term borrowing needs.
As of December 31, 2024, the Bank had a line of credit through the Discount Window totaling $358.0 million, secured by investment securities and residential loans . I n addition, as of December 31, 2025 and 2024 we had $140.0 million and $125.0 million, respectively, in unsecured lines of credit with correspondent banks to cover short-term borrowing needs.
When we place funds through CDARS, ICS and DDM, on behalf of a customer, we have the option of receiving matching deposits through the network's reciprocal deposit program, or placing deposits "one-way" for which we receive no matching deposits. We consider reciprocal deposits to be in-market deposits, as distinguished from traditional out-of-market brokered deposits.
When we place funds through CDARS, ICS and DDM, on behalf of a customer, we have the option of receiving matching deposits through the network's reciprocal deposit program, or placing deposits "one-way" for which we receive no matching deposits. The following table shows the composition of our network deposits at December 31, 2025 and 2024.
(in thousands) Total Available Amount Used Net Availability Internal Sources Unrestricted cash 1 $ 111,128 N/A $ 111.128 Unencumbered securities at market value 306,773 N/A 306.773 External Sources FHLB line of credit 948,127 $ — 948.127 FRB line of credit 357,970 — 357.97 Lines of credit at correspondent banks 125,000 — 125 Total Liquidity $ 1,848.998 $ — $ 1,848.998 1 Excludes cash items in transit as of December 31, 2024.
(in thousands) Total Available Amount Used Net Availability Internal Sources Unrestricted cash 1 $ 206.6 N/A $ 206.6 Unencumbered securities at market value 489.6 N/A 489.6 External Sources FHLB line of credit 967.2 $ — 967.2 FRB line of credit 344.7 — 344.7 Lines of credit at correspondent banks 140.0 — 140 Total Liquidity $ 2,148.1 $ — $ 2,148.1 1 Excludes cash items in transit as of December 31, 2025.
December 31, 2024 (in thousands; unaudited) Total Uninsured Portion Three months or less $ 48,329 $ 26,829 Over three months through six months 39,264 21,264 Over six months through twelve months 17,769 8,519 Over twelve months 2,949 1,699 Total $ 108,311 $ 58,311 Network Deposits Our deposit portfolio includes deposits offered through the Promontory Interfinancial Network that are comprised of Certificate of Deposit Account Registry Service ® ("CDARS") balances included in time deposits and Insured Cash Sweep ® ("ICS") balances included in money market deposits.
December 31, 2025 (in thousands; unaudited) Total Uninsured Portion Three months or less $ 50,982 $ 32,482 Over three months through six months 35,747 20,747 Over six months through twelve months 15,376 8,376 Over twelve months 1,210 960 Total $ 103,315 $ 62,565 Network Deposits Our deposit portfolio includes deposits offered through the Promontory Interfinancial Network that are comprised of Certificate of Deposit Account Registry Service ® ("CDARS") balances included in time deposits and Insured Cash Sweep ® ("ICS") balances included in money market deposits.
The reversal in the provision for income taxes in 2024, reflected the impact of the net loss before taxes in the year of $13.8 million compared to net income before taxes of $26.0 million in 2023.
The increase in the benefit from income taxes in 2025 reflected the impact of the net loss before taxes in the year of $52.5 million compared to net loss before taxes of $13.8 million in 2024.
Construction Loans Outstanding by Type and County (dollars in thousands; unaudited) December 31, 2024 December 31, 2023 Loan Type Amount Percent of Construction Loans Amount Percent of Construction Loans Apartments and multifamily $ 19,057 51.5 % $ 45,390 45.8 % Commercial real estate 2,261 6.1 26,042 26.3 1-4 Single family residential 15,652 42.4 26,666 26.9 Land - unimproved — — 1,066 1.0 Total $ 36,970 100.0 % $ 99,164 100.0 % 43 (dollars in thousands; unaudited) December 31, 2024 December 31, 2023 County Amount Percent of Construction Loans Amount Percent of Construction Loans San Francisco $ 24,706 66.8 % $ 43,341 43.7 % Contra Costa 4,682 12.7 1,184 1.2 Marin 2,995 8.1 4,542 4.6 Napa 2,326 6.3 — — Placer 2,261 6.1 — — Alameda — — 32,808 33.1 Solano — — 11,372 11.5 San Mateo — — 4,851 4.9 Other — 1,066 1.0 Total $ 36,970 100.0 % $ 99,164 100.0 % Cons truction loans decreased by $62.2 million in 2024, compared to a decrease of $15.2 million in 2023.
Construction Loans Outstanding by Type and County (dollars in thousands; unaudited) December 31, 2025 December 31, 2024 Loan Type Amount Percent of Construction Loans Amount Percent of Construction Loans Apartments and multifamily $ 3,223 21.3 % $ 19,057 51.5 % Commercial real estate — — 2,261 6.1 1-4 Single family residential 11,878 78.7 15,652 42.4 Total $ 15,101 100.0 % $ 36,970 100.0 % 46 (dollars in thousands; unaudited) December 31, 2025 December 31, 2024 County Amount Percent of Construction Loans County Amount Percent of Construction Loans San Francisco $ 6,272 41.6 % San Francisco $ 24,706 66.8 % Napa 5,468 36.2 Contra Costa 4,682 12.7 Marin 3,224 21.3 Marin 2,995 8.1 Santa Clara 137 0.9 Napa 2,326 6.3 Placer — — Placer 2,261 6.1 Total $ 15,101 100.0 % Total $ 36,970 100.0 % Construction loans decreased by $21.9 million in 2025 to $15.1 million from $37.0 million at December 31, 2024.
The decrease in 2023 was primarily due to $22.2 million in payoffs and $16.9 million in conversions to commercial real estate financing. These decreases were partially offset by $24.5 million in advances on existing construction loans. Undisbursed construction loan commitments at December 31, 2024 and 2023 were $8.3 million and $13.9 million, respectively.
The decrease in 2025 was primarily due to payoffs of $28.7 million offset by $6.7 million in advances on existing construction loans. Undisbursed construction loan commitments at December 31, 2025 and 2024 were $10.5 million and $8.3 million, respectively.
Excluding losses on sale of securities in both years, non-interest income increased by $299 thousand, which included a $275 thousand year-over-year increase in wealth management and trust services income due to increased assets. 2023 Compared to 2022 Non-interest income totaled $5.0 million in 2023, a $5.9 million decrease from $10.9 million in 2022.
Excluding losses on sale of securities in both years, non-interest income increased by $300 thousand, which included a $275 thousand year-over-year increase in wealth management and trust services income due to increased assets and an increase of $226 thousand in net earnings on bank-owned life insurance due to increased rates.
Non-Performing Assets (dollars in thousands; unaudited) December 31, 2024 December 31, 2023 Non-accrual loans: Commercial and industrial $ 2,845 $ 4,008 Real estate: Commercial, owner-occupied 1,537 434 Commercial, non-owner occupied 28,525 3,081 Home equity 752 469 Installment and other consumer 222 — Total non-accrual loans $ 33,881 $ 7,992 Other real estate owned $ — $ — Repossessed personal properties 1 — Total non-performing assets $ 33,882 $ 7,992 Criticized and classified loans: Special mention $ 108,916 $ 135,171 Substandard $ 45,104 $ 32,324 Doubtful $ — $ — Allowance for credit losses to non-accrual loans 0.90x 3.15x Non-accrual loans to total loans 1.63 % 0.39 % Non-performing assets to total assets 0.92 % 0.21 % Non-Accrual Loans Non-accrual loans increased by $25.9 million in 2024, primarily due to three relationships designated as non-accrual in the second and third quarters.
Non-Performing Assets (dollars in thousands; unaudited) December 31, 2025 December 31, 2024 Non-accrual loans: Commercial and industrial $ 524 $ 2,845 Real estate: Commercial, owner-occupied 314 1,537 Commercial, non-owner occupied 25,387 28,525 Home equity 401 752 Other residential 72 — Installment and other consumer 204 222 Total non-accrual loans $ 26,902 $ 33,881 Other real estate owned $ — $ — Repossessed personal properties — 1 Total non-performing assets $ 26,902 $ 33,882 Criticized and classified loans: Special mention $ 118,025 $ 108,916 Substandard $ 32,111 $ 45,104 Doubtful $ — $ — Allowance for credit losses to non-accrual loans 1.12x 0.90x Non-accrual loans to total loans 1.27 % 1.63 % Non-performing assets to total assets 0.69 % 0.92 % Non-Accrual Loans Non-accrual loans decreased by $7.0 million in 2025, primarily due to $4.4 million in payoffs including a $3.6 million commercial relationship paid off in full in the fourth quarter and a $2.1 million non-owner occupied real estate loan sale in the first quarter.
The originations and payoffs noted above, combined with utilization on lines of credit and amortization on existing loans, resulted in a net increase for this period. Approximately 89% and 90% of total loans were secured by real estate as of December 31, 2024 and 2023, respectively. For additional inf ormation on loan concentration risk, see ITEM 1A, Risk Factors.
In addition, $90.2 million of loan amortization from scheduled repayments, net of credit line utilization, contributed to the change in loan balances for 2025. Approximately 90% and 89% of total loans were secured by real estate as of December 31, 2025 and 2024, respectively. For additional inf ormation on loan concentration risk, see ITEM 1A, Risk Factors.
Of the total non-accrual loans as of December 31, 2024, approximately 56% were paying as agreed, 91% were real estate secured, and all are being closely managed and monitored. • A $5.6 million provision for credit losses on loans in 2024 including a $5.2 million specific reserve taken on a commercial real estate loan as a result of declining collateral values brought the allowance for credit losses to 1.47% of total loans, compared to 1.21% as of December 31, 2023 . • Total deposits decreased by $70.1 million to $3.220 billion as of December 31, 2024, from $3.290 billion as of December 31, 2023.
Of the total non-accrual loans as of December 31, 2025, approximately 68% were paying as agreed, 97% were real estate secured, and all are being closely managed and monitored. • We recorded a $375 thousand provision for credit losses on loans in 2025 primarily due to loan growth and a modest deterioration in the economic forecast, compared to a $5.6 million provision for credit losses on loans in 2024, including a $6.6 million specific reserve taken on a commercial real estate loan as a result of declining collateral values, partially offset by other factors.
As of December 31, 2024, 59% of deposit balances were held in business accounts, with average balances of $127 thousand per account. The remaining 41% were consumer accounts, with average balances of $40 thousand per account. The largest depositor represented 1.3% of total deposits, and the combined four largest depositors represented 4.8% of total deposits.
The remaining 38% were consumer accounts, with average balances of $40 thousand per account. The largest depositor represented 3.8% of total deposits, and the combined four largest depositors represented 7.3% of total deposits. Balances in reciprocal deposit networks increased by $54.2 million during 2025 to $458.9 million as of December 31, 2025.
(in thousands) December 31, 2024 December 31, 2023 Reciprocal 1 One-Way 1 Reciprocal 1 One-Way 1 CDARS $ 38,885 $ — $ 46,162 $ 2,164 ICS 240,661 — 245,577 — DDM 125,153 — 132,276 — Total network deposits $ 404,699 $ — $ 424,015 $ 2,164 1 Reciprocal deposits are on-balance-sheet while one-way deposits are off-balance-sheet.
(in thousands) December 31, 2025 December 31, 2024 Reciprocal 1 One-Way 1 Reciprocal 1 One-Way 1 CDARS $ 24,774 $ — $ 38,885 $ — ICS 196,284 51,221 240,661 — DDM 237,833 — 125,153 — Total network deposits $ 458,891 $ 51,221 $ 404,699 $ — 1 Reciprocal deposits are on-balance-sheet while one-way deposits are off-balance-sheet.
The Bank had a line of credit through the Discount Window at the Federal Reserve Bank of San Francisco ("FRBSF") totaling $358.0 million as of December 31, 2024, secured by investment securities and residential loans.
Borrowings As of December 31, 2025 and 2024, our borrowing capacity with the Federal Home Loan Bank ("FHLB") under secured lines of credit totaled $967.2 million and $948.1 million, respectively. 52 The Bank had a line of credit through the Discount Window at the Federal Reserve Bank of San Francisco ("FRBSF") totaling $344.7 million as of December 31, 2025, secured by investment securities and residential loans.
In addition, the DCF method incorporates assumptions for probability of default ("PD"), loss given default ("LGD"), and prepayments and curtailments over the contractual terms of the loans. Under the DCF method, the ACL reflects the difference between the amortized cost basis and the present value of the expected cash flows using the loan's effective rate.
In addition, the DCF method incorporates assumptions for probability of default ("PD"), loss given default ("LGD"), and prepayments and curtailments over the contractual terms of the loans.
Commercial Real Estate Loans Outstanding by County (dollars in thousands; unaudited) December 31, 2024 December 31, 2023 County Amount Percent of Commercial Real Estate Loans Amount Percent of Commercial Real Estate Loans Marin $ 303,255 19 % $ 317,862 20 % Sonoma 245,510 15 256,516 16 San Francisco 211,254 13 186,803 12 Alameda 187,526 12 156,934 10 Napa 170,492 11 178,685 12 Sacramento 131,857 8 125,483 8 Contra Costa 75,522 5 72,580 5 Solano 52,294 3 39,247 2 Placer 41,951 2 40,733 3 San Mateo 41,275 2 35,420 2 Santa Clara 23,610 2 24,086 2 San Joaquin 14,933 1 15,261 1 El Dorado 8,460 1 11,257 1 Other 87,619 6 91,699 6 Total $ 1,595,558 100 % $ 1,552,566 100 % Commercial real estate loans increased by $43.0 million in 2024, compared to a $5.8 million increase in 2023.
Commercial Real Estate Loans Outstanding by County (dollars in thousands; unaudited) December 31, 2025 December 31, 2024 County Amount Percent of Commercial Real Estate Loans County Amount Percent of Commercial Real Estate Loans Marin $ 298,615 18 % Marin $ 303,255 19 % Sonoma 265,542 16 Sonoma 245,510 15 Alameda 201,558 12 San Francisco 211,254 13 San Francisco 188,372 11 Alameda 187,526 12 Sacramento 177,277 11 Napa 170,492 11 Napa 173,587 10 Sacramento 131,857 8 Contra Costa 85,559 5 Contra Costa 75,522 5 Solano 51,948 3 Solano 52,294 3 San Mateo 40,511 2 Placer 41,951 2 Placer 39,355 2 San Mateo 41,275 2 Santa Clara 37,682 2 Santa Clara 23,610 2 San Joaquin 14,278 1 San Joaquin 14,933 1 Orange 10,234 1 El Dorado 8,460 1 Other 91,952 7 Other 87,619 6 Total $ 1,676,470 100 % Total $ 1,595,558 100 % Commercial real estate loans increased by $80.9 million in 2025 to $1.676 billion from $1.596 billion at December 31, 2024.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

3 edited+2 added−8 removed7 unchanged
Biggest changeALCO and the Board of Directors review our exposure to interest rate risk at least quarterly. We use simulation models to measure interest rate risk and to evaluate strategies to improve profitability in the context of policy guidelines.
Biggest changeRefer to Note 15 in the Consolidated Financial Statements in ITEM 8 of this report. 57 ALCO and the Board of Directors review our exposure to interest rate risk at least quarterly. We use simulation models to measure interest rate risk and to evaluate strategies to improve profitability in the context of policy guidelines.
Governing policies are subject to review by regulators and are updated to incorporate their observations and adapt to changes in idiosyncratic and systemic risks. As of December 31, 2024, interest rate risk was within the policy guidelines established by ALCO and the Board.
Governing policies are subject to review by regulators and are updated to incorporate their observations and adapt to changes in idiosyncratic and systemic risks. As of December 31, 2025, interest rate risk was within the policy guidelines established by ALCO and the Board.
From time to time, we enter into interest rate swap contracts to mitigate the changes in the fair value of selected investment securities and specified long-term fixed-rate loans and firm commitments to enter into long-term fixed-rate loans caused by changes in interest rates. Refer to Note 14 to the Consolidated Financial Statements in ITEM 8 of this report.
From time to time, we enter into interest rate swap contracts to mitigate the changes in the fair value of selected investment securities and specified long-term fixed-rate loans and firm commitments to enter into long-term fixed-rate loans caused by changes in interest rates.
Removed
One set of interest rates modeled and evaluated against flat interest rates and a static balance sheet is a series of immediate parallel shifts in the yield curve. Our most recent analysis of our interest rate sensitivity is provided in the following table as an example rather than an expectation of likely interest rate movements.
Added
Immediate Changes in Interest Rates (in basis points) Estimated Change in Net Interest Income in Year 1, as Percent of Net Interest Income Estimated Change in Net Interest Income in Year 2, as Percent of Net Interest Income As of December 31, 2025, our interest rate risk position was within the policy guidelines established by ALCO and the Board based on an assessment that was completed before the reclassification of certain reciprocal network deposits from noninterest-bearing to interest-bearing.
Removed
Immediate Changes in Interest Rates (in basis points) Estimated Change in Net Interest Income in Year 1, as Percent of Net Interest Income Estimated Change in Net Interest Income in Year 2, as Percent of Net Interest Income up 400 (7.3) % 6.3 % up 300 (5.3) % 4.8 % up 200 (3.3) % 3.4 % up 100 (1.7) % 1.5 % down 100 1.0 % 0.9 % down 200 2.3 % 2.6 % down 300 2.2 % 0.9 % down 400 1.8 % 2.6 % Interest rate sensitivity is a function of the repricing characteristics of our assets and liabilities.
Added
The results from an updated assessment, which will include the reclassification, are expected to be released in late April 2026 as part of our first quarter earnings release materials and preliminary calculations suggest that we should remain in compliance with policy guidelines. 58
Removed
The Bank runs a combination of scenarios and sensitivities in its attempt to capture the range of interest rate risk including the simulations mentioned above. As with any simulation model or other method of measuring interest rate risk, limitations are inherent in the process and results are dependent on assumptions.
Removed
For example, lower deposit growth than modeled may cause the Bank to increase its borrowing position, thereby increasing its liability sensitivity. Additionally, assets and liabilities may react differently to changes in market interest rates in terms of both timing and responsiveness to market rate movements.
Removed
Important deposit modeling assumptions include the speed of deposit run-off and the amount by which interest-bearing deposit rates increase or decrease when market interest rates change, otherwise known as the deposit beta. The above tables reflect deposit betas of up to 70%, averaging 43%, to rates paid on non-maturity interest-bearing deposits in rising rate scenarios.
Removed
Deposit betas of up to 60%, averaging 35%, are applied to rates paid on non- 54 maturity interest-bearing deposits in falling rate scenarios with a two month lag assumed. However, deposit pricing is actively managed at the relationship level and closely monitored real-time to avoid unintended consequences.
Removed
The actual rates and timing of prepayments on loans and investment securities could vary significantly from the assumptions applied in the various scenarios. Lastly, uneven changes in different tenors of U.S. Treasury rates that result in changes to the shape of the yield curve could produce different results from those presented in the table.
Removed
Accordingly, the results presented should not be relied upon as indicative of actual results in the event of changing market interest rates. 55

Other BMRC 10-K year-over-year comparisons