Bank of Marin Bancorp announced the successful completion of a balance sheet repositioning.
The company completed a $45 million private placement of 6.750% Fixed-to-Floating Rate Subordinated Notes due 2035.
The reclassification of the HTM securities portfolio into available-for-sale securities will result in a fourth quarter 2025 balance sheet adjustment.
Strategic Initiative Enhancement
The balance sheet repositioning significantly improves the company's earnings power without issuing additional shares of equity.
Impact on Equity
The estimated after-tax negative adjustment to equity is approximately $59 million due to reclassification of HTM securities into available-for-sale.
Strategic Transaction Details
Approximately 74% of the HTM portfolio was sold, resulting in a pre-tax loss of $69.5 million, with reinvestment of proceeds into securities with lower effective duration.
Rating Agency Assessment
Kroll Bond Rating Agency assigned investment grade ratings of BBB- for subordinated debt and BBB+ for deposits, highlighting the company's healthy deposit franchise and strong credit quality.
Notes Details
The Notes bear a fixed interest rate of 6.750% per annum until December 1, 2030, and then reset quarterly to a floating rate based on SOFR plus 335 basis points until maturity on December 1, 2035.
- The balance sheet repositioning aims to maximize expected incremental income while minimizing the impact on regulatory capital ratios.
- The reclassification of securities and strategic sale approach demonstrate the company's commitment to creating shareholder value.
Bank of Marin Bancorp's successful completion of the balance sheet repositioning and subordinated debt offering reflects its strategic financial management and commitment to enhancing shareholder value.