Bank of Marin Bancorp in Novato, Calif., will restate financial statements for 2023 and 2024, as well as multiple interim periods in 2024 and 2025, to address an issue tied to classifying reciprocal deposits.
The company disclosed in a regulatory filing that errors were identified during an annual review process tied to preparing the 2025 consolidated financial statements. The board decided to restate results after consulting with the audit committee, management and the independent auditor.
The issue centers on how certain reciprocal network deposits and related expenses were classified. Specifically, some deposits that should have been recorded as interest-bearing were reported as noninterest bearing. Related expenses were categorized as noninterest operating expense, within deposit network fees, rather than interest expense.
Though the income statement classification of the expense was immaterial and had no impact on net income or earnings per share, the balance sheet misclassification was determined to be material to Bank of Marin’s financial presentation.
The errors did not impact total deposits, stockholders’ equity, net income or earnings per share. Still, the reclassification will meaningfully alter totals for noninterest bearing deposits, interest-bearing deposits and related margin metrics.