Bank of Marin Bancorp (BMRC) completed a $45 million subordinated debt offering on November 19, 2025, as part of a broader balance‑sheet repositioning strategy that replaces lower‑yielding available‑for‑sale securities with higher‑yielding assets and reduces overall debt levels.
The new notes carry a 6.750 % fixed‑to‑floating rate, mature in 2035, and qualify as Tier 2 capital; Kroll Bond Rating Agency assigned a BBB‑ rating to the issuance, underscoring the bank’s solid credit profile.
In executing the repositioning, BMRC sold $595 million of securities with an average yield of 2.03 %. The sale triggered an after‑tax equity adjustment of roughly $59 million, but the proceeds are expected to lift the bank’s net interest margin by 13 basis points and increase earnings per share by $0.37 annually, with an incremental pre‑tax income of $8.3 million.
The transaction follows a strong Q3 2025 earnings report that showed net income of $7.5 million— a 65 % year‑over‑year rise—and a 38‑basis‑point advance in net interest margin versus Q3 2024. CEO Tim Myers said the initiative “meaningfully improves our earnings power, allowing us to continue reinvesting in growth,” while CFO David Bonaccorso highlighted the incremental income and EPS gains.
Market reaction has been positive: Kroll Bond’s BBB‑ rating for the notes and a BBB+ rating for BMRC deposits reinforce investor confidence, and analysts have maintained “Buy” and “Strong Buy” ratings with favorable price targets. The bank’s ability to raise capital without issuing equity, coupled with the projected margin expansion, has been cited as a key driver of the upbeat sentiment, despite the $59 million after‑tax loss to equity.
By strengthening its capital ratios and enhancing net interest margin, the repositioning positions BMRC to support loan growth and sustain long‑term financial health, aligning with its disciplined expense management and balance‑sheet growth strategy.
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