KBRA Assigns Ratings to Bank of Marin Bancorp

KBRA assigns a senior unsecured debt rating of BBB, a subordinated debt rating of BBB-, and a short-term debt rating of K3 to Novato, California-based Bank of Marin Bancorp (NASDAQ: BMRC) ("Marin" or "the company"). In addition, KBRA assigns deposit and senior unsecured debt ratings of BBB+, a subordinated debt rating of BBB, and short-term deposit and debt ratings of K2 to its main subsidiary, Bank of Marin. The Outlook for all long-term ratings is Stable.

BMRC’s ratings are supported by its strong funding profile, underpinned by a healthy deposit franchise. The cost of deposits of just 1.28% through 9M25 is partially driven by a robust level of noninterest-bearing deposits at 43% of total deposits, which leads among traditional commercial banks in KBRA’s rated universe. The deposit base has historically demonstrated stability as well, with no major outflows amidst liquidity stresses experienced in 2023 at other CA-based banks.

Earnings volatility in recent periods has been driven primarily by losses on securities portfolio restructuring, which is expected to drive NIM improvement in the coming years following compression through interest rate volatility on limited rate cut pass-through to deposits and slower asset repricing as the Fed hiked beginning in 2022. Profitability also has the potential to improve from efficiency gains following recent technology investments as BMRC continues to grow. Moreover, Marin has taken strategic balance sheet actions to reduce sensitivity and improve the earnings profile, including previously mentioned securities portfolio restructurings in recent years, which should enhance NIM and ROA on a go-forward basis. As such, we expect profitability to move closer to historical levels (ROA of 1.0% or higher) over the medium term.

Credit quality stands out as a strength relative to peers, as evidenced by minimal NCOs in recent years outside of very modest lumpiness driven by losses on proactive sales of acquired loans in 4Q23 and 1Q25. That said, KBRA notes elevated geographic and segment concentration, particularly in investor CRE, which heavily exposes the company to the economic condition of the Bay Area. However, we view the portfolio as conservatively underwritten and supported by a management team with deep experience in that market. The concentration risk is partially offset by loss absorption capacity, driven by robust capitalization (CET1 ratio of 14.9% as of 3Q25) and reserves (1.43% of total loans at 3Q25) relative to peers and its credit history. While capital has the potential to decrease with stronger loan growth or further securities portfolio restructurings, we believe that ratios will remain comfortable for the rated peer group and be rebuilt in a timely manner.

BMRC is spread reliant, with fee income contributing less than 10% of operating revenues, comprised mostly of wealth management, interchange, and deposit service charges, but revenue diversification remains an area of emphasis, notably within wealth management.

To access ratings and relevant documents, click here.

Click here to view the report.

Methodologies