- Forward look: Bank of Marin’s bond sale will result in a fourth-quarter loss, but should significantly enhance profitability going forward, according to analysts.
- Expert quote: “We model for tangible book value growth greater than 10% in both 2026 and 2027,” Janney Montgomery Scott analyst Timothy Coffey wrote in a research note.
- Supporting data: The November sale of held-to-maturity investments followed a July transaction involving available-for-sale instruments.
Bank of Marin Bancorp in Novato, California, will likely report a fourth-quarter loss after selling $595 million in low-yielding, longer-duration securities.
The $3.9 billion-asset company disclosed the securities sale last week. It expects to record an after-tax loss totaling $59 million as part of its earnings for the three months ending Dec. 31. But the sale will yield an $8.3 million pre-tax boost to annual earnings going forward, since Bank of Marin plans to reinvest the proceeds in shorter-duration, higher-yielding investments.
The community bank, based in Marin County, which is across the Golden Gate Bridge from San Francisco, reported third-quarter net income totaling $7.5 million.
“The successful execution of this strategic initiative further enhances the value of our franchise by meaningfully improving our earnings power, which, in turn, allows us to continue reinvesting in the Company’s growth,” CEO Tim Myers said in a press release.
As part of the transaction, the 35-year-old Bank of Marin reclassified its $812 held-to-maturity securities portfolio as available-for-sale. The company also executed a $45 million private placement of subordinated debt to help offset the securities sale’s capital impact.
Dozens of banks have pursued similar repositioning efforts over the past three years, the motivator being the opportunity to offload low-yielding assets. In Bank of Marin’s case, the securities sold carried an average yield of 2.03% — significantly below the current Fed Funds target rate of 3.75% to 4%.
A $73 million bundle of securities
Washington Trust reported a $60.8 million quarterly loss in January, due largely to the previous month’s securities transaction. Through the first nine months of 2025, however, the Westerly, Rhode Island-based company’s net income totaled $36.3 million, up 11% from the same period in 2024.
Analysts are expecting a comparable result for Bank of Marin.
Janney Montgomery Scott’s Timothy Coffey wrote in a research note Tuesday that he expects Bank of Marin’s tangible book value growth to accelerate in the wake of the securities sale.
“We model for tangible book value growth greater than 10% in both 2026 and 2027,” Coffey stated. “Comparatively, tangible book value growth was approximately 2% in the last 12 months.”
“Profitability ratios get a significant lift from the transaction with our estimated 2026 return on assets moving up to 0.96% from 0.80% and our return on tangible common equity estimate increasing to 11.4% from 8.2%,” Keefe Bruyette & Woods analyst Wood Lay wrote in a research note.
The November sale did not come as a complete surprise. In July, Bank of Marin announced the sale of a $186 million portfolio of available-for-sale securities carrying an average yield of 1.96%. On a conference call with analysts, Myers termed the held-to-maturity securities book “the next mountain to climb,” adding that a sale was “something we continue to look at.”