Executive Summary

Q2 2025 GAAP results were dominated by a strategic securities repositioning: BMRC reported a net loss of $8.5M and diluted EPS of $(0.53), driven by a $18.7M pre-tax realized loss on sale of $185.8M AFS securities; excluding this item, non-GAAP net income was $4.7M and diluted EPS $0.29 (or $0.36 using the quarter’s effective tax rate) .
Core trends improved: tax-equivalent net interest margin (NIM) rose 7 bps sequentially to 2.93% as higher-rate loan originations and targeted deposit pricing cuts took effect; non-GAAP efficiency ratio improved to 74.03% from 76.44% .
Management expects the repositioning to add ~13 bps to annualized NIM beginning in Q3 and ~$0.20 EPS accretion over the next four quarters; the Board declared a $0.25 dividend and authorized up to $25M share repurchase (100k shares, $2.2M repurchased in Q2) .
Versus Street: adjusted EPS modestly exceeded consensus, while “total revenue” missed materially due to the realized loss; consensus EPS $0.344 vs actual adjusted $0.36, consensus revenue $25.2M vs actual $10.3M (reflecting net interest income plus non-interest income) [GetEstimates]* .
Potential stock catalysts: near-term NIM uplift and buyback authorization vs headline GAAP loss; management’s tone was confident on loan growth, deposit cost management, and prospective credit upgrades into Q3 .

What Went Well and What Went Wrong

What Went Well

Continued NIM expansion: tax-equivalent NIM increased to 2.93% from 2.86% sequentially, with higher yields on loans and securities, and targeted deposit rate cuts contributing 7 bps QoQ .
Core profitability metrics (ex-loss) improved: non-GAAP pre-tax, pre-provision income rose to $7.54M (from $6.56M), and non-GAAP efficiency ratio improved to 74.03% (from 76.44%) .
Management quote: “Our recent securities repositioning… should lead to further net interest margin expansion. With stable asset quality… and a healthy loan pipeline, we expect further improvement in our financial performance in the coming quarters.” — Tim Myers, CEO .

What Went Wrong

Headline GAAP results: realized AFS securities loss of $18.7M drove GAAP net loss of $8.5M and a GAAP efficiency ratio of 208.81% for Q2 .
Deposits declined $56.9M QoQ, largely from non-interest-bearing balances due to client business expenses, payroll/distributions, asset purchases, and seasonal tax outflows; non-interest-bearing mix fell to 42.5% from 43.2% .
Classified loans rose to 2.95% of total loans (from 2.77%) on downgrades of two CRE relationships totaling $3.9M, partly offset by paydowns/payoffs .

Financial Results

Income Statement Components

Metric	Q2 2024	Q1 2025	Q2 2025
Net Interest Income ($USD Millions)	$22.467	$24.946	$25.912
Non-Interest Income ($USD Millions)	$(29.755)	$2.874	$(15.621)
Non-Interest Expense ($USD Millions)	$21.894	$21.264	$21.490

EPS and Profitability

Metric	Q2 2024	Q1 2025	Q2 2025
Diluted EPS (GAAP) ($)	$(1.36)	$0.30	$(0.53)
Comparable Diluted EPS (non-GAAP) ($)	$0.06	$0.30	$0.29
ROA (GAAP, %)	(2.35)%	0.53%	(0.92)%
ROE (GAAP, %)	(20.36)%	4.52%	(7.80)%

Note: Management also disclosed adjusted Q2 2025 EPS of $0.36 using the quarter’s 23.78% effective tax rate .

Margins and Efficiency

Metric	Q2 2024	Q1 2025	Q2 2025
Tax-Equivalent NIM (%)	2.52%	2.86%	2.93%
Efficiency Ratio (GAAP, %)	(300.37)%	76.44%	208.81%
Efficiency Ratio (non-GAAP, %)	86.70%	76.44%	74.03%
Cost of Deposits (%)	1.45%	1.29%	1.28%

Balance Sheet and Credit KPIs

Metric	Q2 2024	Q1 2025	Q2 2025
Total Deposits ($USD Millions)	$3,220.015	$3,301.971	$3,245.048
Total Loans ($USD Millions)	$2,083.256	$2,073.548	$2,073.638
Non-Accrual Loans / Total Loans (%)	1.63%	1.59%	1.57%
Classified Loans / Total Loans (%)	2.17%	2.77%	2.95%
Book Value per Share ($)	$27.06	$27.13	$27.21
Tangible Book Value per Share ($)	$22.37	$22.48	$22.55
Bancorp TCE Ratio (%)	9.9%	9.8%	10.0%

Revenue and EPS vs. Estimates (Q2 2025)

Metric	Consensus	Actual
Primary EPS Consensus Mean ($)	0.344*	0.36*
Revenue Consensus Mean ($USD Millions)	25.215*	10.291*

Values retrieved from S&P Global. The “Revenue” line reflects net interest income plus non-interest income; the realized securities loss materially reduced actual revenue [GetEstimates]* .

Deposit Mix (Q2 2025)

Category	Mix %
Non-Interest Bearing	42.5%
Interest-Bearing DDA	5.6%
Savings	6.8%
Money Market	38.4%
Time	6.7%

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Annualized NIM uplift from AFS repositioning	Starting Q3 2025	Not specified	~+13 bps expected	Raised specificity
EPS accretion from repositioning	Next four quarters	Not specified	~$0.20 cumulative	New disclosure
Non-Interest Expense run-rate	2H 2025	General “normalized run-rate”	2H expenses similar to 1H 2025	Maintained/stable
Deposit rate actions	Near-term	Ongoing targeted reductions	Early July: ~$185M balances cut ~15 bps; ongoing targeted repricing	Continued actions
Dividend	Q3 2025 pay date Aug 14	$0.25	$0.25	Maintained
Share Repurchase	Through Jul 31, 2027	Prior program expiring Jul 31, 2025; $6.4M repurchased	New authorization up to $25M; 100k shares repurchased ($2.2M) in Q2	Expanded

Earnings Call Themes & Trends

Topic	Previous Mentions (Q4’24, Q1’25)	Current Period (Q2’25)	Trend
Balance sheet repositioning	2024 actions improved NIM/expenses; considering further optimization	Sold $185.8M AFS; realized $18.7M loss; NIM +13 bps expected; ~$0.20 EPS accretion	Ongoing, accretive
Deposit pricing	Passed-through rate cuts; targeted reductions in April (~$260M, ~6 bps)	Early July cuts (~$185M, ~15 bps); continued targeted actions	Continued downward repricing
Loan growth/pipeline	Pipeline strong; productivity-driven originations	Originations $68.8M commitments ($50.2M funded); expect net growth 2H	Improving
Credit quality	Declines in nonaccrual/classified; negligible charge-offs	Stable nonaccrual (1.57%); classified up to 2.95%; optimistic on upgrades in Q3	Stable to improving outlook
Capital & buybacks	Strong capital; evaluating buybacks; shelf in place	TCE 9.95%; total RBC 16.25%; new $25M buyback authorization; $2.2M repurchased	Increased shareholder returns
HTM repositioning	Considered, but mindful of capital	“Continue to look at” HTM repositioning, cautious on capital/dilution	Evaluating
Macro/regulatory	Rate cuts benefitted deposit costs; liability sensitivity discussed	Forward-looking risks include tariffs/trade, inflation, rates; insider trading policy revisions	Monitoring

Management Commentary

“We continue to take steps to improve our core financial performance… Our recent securities repositioning… should lead to further net interest margin expansion.” — Tim Myers, President & CEO .
“Expenses grew 1.1% compared to the prior quarter… technology-related expenditures are expected to drive future efficiency… Looking ahead, we expect that expenses for the second half of 2025 will be similar to the first half of the year.” — Dave Bonaccorso, CFO .
“Excluding the loss in the security sales… our net income and EPS each grew by 18% compared to the prior quarter.” — Dave Bonaccorso, CFO .
“We did just re-up [the buyback]… It was very attractive… to do that below tangible book. We just ran out of time.” — Tim Myers, CEO .
“We continue to look at [HTM repositioning]… cautious of the impact on capital and potential dilution to shareholders.” — Tim Myers, CEO .

Q&A Highlights

CRE downgrades and resolution: Two small retail/mixed-use CRE loans downgraded; management not particularly concerned given sponsorship and remargining plans .
HTM portfolio: Appetite to consider similar repositioning as AFS but cautious on capital/dilution; market examples noted .
Deposit pricing: Early July targeted cuts (~$185M balances, ~15 bps) worth ~2 bps on interest-bearing deposit costs and ~1 bp on total deposits; ongoing time-deposit repricing .
NIM trajectory: Repositioning adds ~13 bps primarily beginning Q3; natural loan repricing expected to contribute 20–25 bps over next 12 months; longer path to ~3.5% NIM likely back half of 2026 .
Loan growth outlook: Targeting net loan growth in 2H 2025; pipeline slightly higher QoQ, aided by key hires and market leader additions (Sacramento cited as active market) .

Estimates Context

EPS: Adjusted EPS of $0.36 modestly exceeded consensus of $0.344; headline GAAP EPS was $(0.53) due to the securities loss, which consensus did not incorporate [GetEstimates]* .
Revenue: “Total revenue” of ~$10.3M (net interest plus non-interest income) missed consensus ~$25.2M because of the realized loss on AFS sales; core net interest income rose QoQ [GetEstimates]* .
Implication: Expect analysts to raise forward NIM assumptions and adjusted EPS paths (reflecting 13 bps NIM uplift and ~$0.20 EPS accretion), while reclassifying Q2 as a one-time loss event rather than a deterioration in core operating performance .

Values retrieved from S&P Global.

Key Takeaways for Investors

Core earnings trajectory intact: underlying NIM expansion and non-GAAP efficiency improvements point to better core profitability starting Q3, despite Q2’s one-time GAAP loss .
Buyback authorization is a tangible capital deployment lever; alongside the $0.25 dividend, it adds shareholder return optionality as NIM/earnings improve .
Deposit cost management continues via targeted reductions, supporting margins even absent Fed cuts; June spot cost at ~1.29% with interest-bearing ~2.24% .
Credit remains manageable: non-accruals edged down, allowance steady at 1.44%, and management signaled prospective upgrades in Q3; watch classified ratio and CRE downgrades .
Near-term catalysts: Q3 NIM uplift realization and evidence of net loan growth; medium-term thesis hinges on balance sheet remix, disciplined underwriting, and potential HTM actions if capital-efficient .
Narrative to monitor: execution on loan growth (new hires, Sacramento market), further deposit repricing, and any incremental securities repositioning balanced against capital/dilution .

Additional Documents Read

Q2 2025 Earnings 8-K and Exhibits (EX-99.1 press release, EX-99.2 presentation) –.
Q2 2025 Earnings Call Transcripts – –.
Q1 2025 Earnings Call Transcript –.
Q4 2024 Earnings Call Transcript –.
Q2 2025 Webcast Press Release (housekeeping) .

*Values retrieved from S&P Global.

Bank of Marin Bancorp (BMRC)·Q2 2025 Earnings Summary