What changed in this filing

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Item 1. Business

2023-03-16 compared with 2022-03-15 · 33 added, 26 removed, 193 unchanged (23% of the section changed)

8 unchanged sentences

Virtually all of our business is conducted through Bancorp's subsidiary, Bank of Marin, which is headquartered in Novato, California.

In addition to our headquarters, we operate 31 retail branches and 8 commercial banking offices across 10 counties - Alameda, Amador, Contra Costa, Marin, Napa, Placer, Sacramento, San Francisco, San Mateo and Sonoma counties, with a strong emphasis on supporting the local communities.

Our customer base is made up of business, not-for-profit and personal banking relationships from the communities within our Northern California footprint.

Our business banking focus is on small to medium-sized businesses, professionals and not-for-profit organizations.

We offer a broad range of commercial and retail deposit and lending programs designed to meet the needs of our target markets.

In addition to our headquarters and a regional office in the Greater Sacramento region, we operate 31 retail branches and 8 commercial banking offices across 10 counties - Alameda, Amador, Contra Costa, Marin, Napa, Placer, Sacramento, San Francisco, San Mateo and Sonoma - 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 business banking focus is on small to medium-sized businesses, not-for-profit organizations, and commercial real estate investors.

We offer a suite of business and personal financial products designed to meet the needs of our customers.

Our lending categories include commercial real estate loans, commercial and industrial loans (including small business loans), construction financing, consumer loans, and home equity lines of credit.

Through third-party vendors, we offer merchant and payroll services, a commercial equipment leasing program and consumer credit cards.

Other products and services include Apple Pay ® , Samsung Pay ® , Google Pay ® , Zelle ® , Positive Pay (fraud detection tool), and solutions for clients with cash management needs such as Cash Vault and SafePoint ® .

Through third-party vendors, we offer merchant and payroll services, a commercial equipment leasing program and credit cards.

Other products and services include payment solutions (e.g., mobile deposit and Zelle ® ) and treasury management services.

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.

11 unchanged sentences

All service marks registered by Bancorp or the Bank are registered on the United States Patent & Trademark Office Principal Register.

Our primary market area consists of Alameda, Amador, Contra Costa, Marin, Napa, Placer, Sacramento, San Francisco, San Mateo and Sonoma counties.

Our primary market area encompasses Alameda, Amador, Contra Costa, Marin, Napa, Placer, Sacramento, San Francisco, San Mateo 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, 2021, the majority of our deposits were in Marin, Sacramento and southern Sonoma counties, and approximately 60% of our deposits were from businesses and 40% from individuals.

As discussed in Note 18 to the Consolidated Financial Statements in ITEM 8 of this report, in August 2021, we expanded our presence in Amador, Placer, Sacramento and Sonoma counties through the acquisition of American River Bankshares and its subsidiary American River Bank.

This resulted in the addition of $898.4 million of assets and the assumption of $816.6 million of liabilities as of the August 6, 2021 merger date, as well as the addition of 10 branch offices.

As of December 31, 2022, the majority of our deposits were in Marin, Sacramento and southern Sonoma counties, and approximately 60% of our deposits were from businesses and 40% from consumers.

The banking business in California generally, and in our market area specifically, is highly competitive with respect to attracting both loan and deposit relationships.

1 unchanged sentence

The banking industry is seeing strong competition for quality loans, with larger banks expanding their activities to attract businesses that are traditionally community bank customers.

In all of our ten counties, we have significant competition from nationwide banks with much larger branch networks and greater financial resources, as well as credit unions and other local and regional banks.

In all of our 10 counties, we have significant competition from nationwide banks with much larger branch networks and greater financial resources, as

well as credit unions and other local and regional banks.

Nationwide banks have the competitive advantages of developing data analytics and artificial intelligence tools and other technological platforms.

6 unchanged sentences

Human Capital Resources

At December 31, 2021, we employed 328 full-time equivalent staff.

As of December 31, 2022, we employed 313 full-time equivalent staff.

The actual number of employees, including part-time employees, at year-end 2022 included seven executive officers, 145 other corporate officers and 172 staff.

15 unchanged sentences

We have been recognized as one of the “Best Places to Work” by the North Bay Business Journal.

S&P Global Market Intelligence of New York, New York

COVID-19 Pandemic-Related Response

1 unchanged sentence

To protect the health of everyone, we have implemented COVID-19 safety protocols and continue to actively monitor federal, state and local guidelines and information related to COVID-19 to ensure the safety of our employees and customers.

No employees have been laid off and no employees have had their pay reduced.

No employees have been laid off and no employees have had their pay reduced as a result of the pandemic.

S&P Global Market Intelligence of New York, New York

SUPERVISION AND REGULATION

22 unchanged sentences

The agencies have identified a spectrum of risks facing a banking institution including, but not limited to, credit, market, liquidity, operational, legal, and reputational.

In particular, recent regulatory pronouncements have focused on operational risk, which arises from

the potential that inadequate information systems, operational problems, breaches in internal controls, fraud, or unforeseen catastrophes will result in unexpected losses.

In particular, recent regulatory pronouncements have focused on operational risk, which arises from the potential that inadequate information systems, operational problems, breaches in internal controls, fraud, or unforeseen catastrophes will result in unexpected losses.

New products and services, third-party risk management and cybersecurity are critical sources of operational risk that financial institutions are expected to address in the current environment.

5 unchanged sentences

Prior to any distribution from the Bank to Bancorp, we ensure that the dividend computations comply with the provisions of the California Financial Code and regulations set forth by the DFPI and the FDIC.

In August 2022, the Inflation Reduction Act of 2022 was enacted, which among other things, imposed a one percent excise tax on publicly traded U.S.

corporations for the fair market value of stock repurchased after December 31, 2022.

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.

4 unchanged sentences

In deriving the base assessment rate, the FDIC applies financial ratios, scorecards, and other financial measures to determine a bank's ability to withstand financial stress.

In October 2022, the FDIC adopted a final rule to increase the initial base deposit insurance assessment rate schedules uniformly by 2 basis points beginning with the first quarterly assessment period of 2023.

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.

Community Reinvestment Act

12 unchanged sentences

The FDIC assigned a “Satisfactory” rating to Bank of Marin's CRA performance examination based on their most recent examination completed in January 2021, which was performed under the large bank requirements.

In December 2019, the FDIC and the OCC announced a proposal to moderniz e the agencies’ regulations under the CRA that have not been substantively updated for nearly 25 years.

In order to increase transparency for CRA exams, the proposal clarifies what qualifies for credit under the CRA, enabling banks and their partners to better

implement lending and deposit activities that can benefit communities.

The proposal also updates the definition of a small business loan and creates an additional definition of “assessment area” tied to where deposits are located, in part to address changes that have occurred due to the rise in digital banking, ensuring that banks continue to provide loans and other services to low- and moderate-income individuals and businesses in their communities.

Although the proposed rule was never finalized by the FDIC, it is expected that there will be interagency efforts to update and finalize a rule soon.

In May 2022, the federal banking agencies issued a joint notice of proposed rule to revise the regulations implementing the CRA.

The proposed rules, among other things, seek to (i) expand access to credit, investment, and basic banking services in low- and moderate-income communities, (ii) adapt to changes in the banking industry, including internet and mobile banking, (iii) provide greater clarity, consistency, and transparency, (iv) tailor CRA evaluations and data collection to bank size and type, and (v) maintain a unified approach among the bank regulatory agencies.

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.

Anti-Money-Laundering Regulations

8 unchanged sentences

and 3) new Bank Secrecy Act violations and enhanced penalties for repeat and egregious violators.

Privacy and Data Security

Privacy, Data Protection, and Cybersecurity

The Gramm-Leach Bliley Act (“GLBA”) of 1999 imposes requirements on financial institutions with respect to consumer privacy and the disclosure of non-public personal information about individuals who apply for or obtain a financial product to be used for personal, family or household purposes.

12 unchanged sentences

The rule also requires bank service providers to notify each affected banking organization if that bank service provider experiences a computer-security incident that has caused, or is reasonably likely to cause, a material service disruption or degradation for four or more hours.

The rule becomes effective on April 1, 2022, with a compliance date of May 1, 2022.

The rule became effective on April 1, 2022, with a compliance date of May 1, 2022.

In February 2018, the SEC published interpretive guidance to assist public companies in preparing disclosures about cybersecurity risks and incidents.

Additionally, in March 2022, the SEC issued proposed rules that would, among other things, require disclosures of material cybersecurity incidents, along with cybersecurity risk management, strategy and governance.

Consumer Protection Regulations

24 unchanged sentences

The Dodd-Frank Act, a landmark financial reform bill comprised of voluminous new rules and restrictions on bank operations, included provisions aimed at preventing a repeat of the 2008 financial crisis and a new process for winding down failing, systemically important institutions in a manner as close to a controlled bankruptcy as possible.

Among other things, the Dodd-Frank Act established new government oversight responsibilities, enhanced capital

adequacy requirements for certain institutions, established consumer protection laws and regulations, and placed limitations on certain banking activities.

Among other things, the Dodd-Frank Act established new government oversight responsibilities, enhanced capital adequacy requirements for certain institutions, established consumer protection laws and regulations, and placed limitations on certain banking activities.

In an attempt to reduce the regulatory burden on U.S.

25 unchanged sentences

Enforcement actions may be taken against a banking organization if its incentive compensation arrangements, or related risk management control or governance processes, pose a risk to the organization’s safety and soundness and the organization is not taking prompt and effective measures to correct the deficiencies.

In October 2022, the SEC adopted a final rule directing national securities exchanges and associations, including the Nasdaq, to implement listing standards that require public companies to adopt policies mandating the recovery or “clawback” of excess incentive-based compensation earned by a current or former executive officer during the three fiscal years preceding the date the listed company is required to prepare an accounting restatement, including to correct an error that would result in a material misstatement if the error was either corrected or left uncorrected in the current period.

The final rule requires us to adopt a clawback policy within 60 days after such listing standard becomes effective and file the policy as an exhibit in our Annual Report on Form 10-K.

Available Information

On our Internet web site, 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:

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.

8 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business