Bank of Marin Bancorp Files Form 8-K: Announces Restatement of Financial Statements Due to Material Misclassification of Deposits

Bank of Marin Bancorp (NASDAQ: BMRC) has filed a Form 8-K on February 24, 2026, announcing that certain of its previously issued financial statements can no longer be relied upon. This development follows the identification of material errors in the classification of deposits and related interest expenses, a situation that investors and shareholders should note as potentially significant and share-price sensitive.

Key Points from the 8-K Filing

• Restatement Required: The Board of Directors, after consultation with the Audit Committee, management, and independent registered public accounting firm (Baker Tilly), concluded that the audited consolidated financial statements for the years ended December 31, 2024 and 2023, and unaudited financials for several interim periods in 2024 and 2025, should no longer be relied upon due to material errors.
• Nature of the Error: The errors involved the misclassification of certain reciprocal network deposits and related interest expense. These were erroneously reported as non-interest bearing deposits and non-interest expense, rather than as interest bearing deposits and interest expense.
• Scope of the Impact: The misstatements affected key line items in the balance sheet and income statement, specifically the categories of deposits and certain expense classifications. However, the company emphasized that there was no impact on net income or earnings per share for any of the affected periods.
• Materiality: The reclassification of deposits from non-interest to interest bearing was deemed material to the financial condition presented in the affected reports.
• Impacted Periods: The restatement covers:
  • Audited consolidated financial statements for the years ended December 31, 2024, and 2023
  • Unaudited financial statements for the quarters ended September 30, 2025; June 30, 2025; March 31, 2025; September 30, 2024; June 30, 2024; and March 31, 2024
• No Change to Total Deposits or Equity: The company states that the reclassification does not change total balance sheet amounts, including total deposits or stockholders’ equity.
• Correction to be Reflected in Future Filings: The company intends to restate the affected financial statements and file them with the SEC as soon as practicable.

Metrics and Financials Affected

The company will provide “as reported” and “as adjusted” values for the years ended 2023, 2024, and 2025, affecting the following metrics:

• Non-interest bearing deposits (end of period and average)
• Interest bearing deposits (end of period and average)
• Non-interest bearing deposits as a percentage of total deposits
• Interest expense
• Net interest income
• Non-interest expense
• Net interest margin (reported and tax-equivalent)
• Cost of deposits
• Cost of interest-bearing deposits
• Efficiency ratio (GAAP and non-GAAP)

A summary table in the filing details the preliminary adjustments, confirming that the main changes involve reclassification between deposit categories and the corresponding interest expense, but not to net income or EPS.

Internal Controls and Next Steps

• Internal Controls Under Review: Due to the error, management is evaluating the company’s internal control over financial reporting (ICFR) as of December 31, 2025. Any material weaknesses identified will be disclosed, along with remediation plans, in the upcoming 10-K.
• Audit Committee and Auditor Involvement: The Audit Committee and external auditor (Baker Tilly) have been involved in the process and will continue oversight as the restatements are prepared.
• Timing: The company plans to file the corrected financials as soon as practicable but cautions that final adjustments could differ from current estimates.

Potential Price-Sensitive Issues for Shareholders

• Restatement Risk: The need to restate previously issued financials is generally considered a material event that may impact investor confidence and share price, even if net income and EPS remain unaffected. The material misclassification could raise questions about past internal controls and management oversight.
• Market Perception: Although the company asserts that the error is non-cash and does not affect profitability, investors may react to concerns about accounting accuracy and reliability, as well as the effectiveness of internal controls.
• Regulatory Focus: Such restatements often attract additional scrutiny from regulators and analysts, and may impact the company’s reputation until the issue is fully resolved and remediated.

Forward-Looking Statements

The report includes standard safe harbor language, noting that forward-looking statements regarding the timing and impact of the restatement are subject to risks and uncertainties, and actual outcomes may differ.

Conclusion

This announcement is significant for investors as it highlights a material weakness in financial reporting, which, while not affecting net income or EPS, requires the restatement of multiple years of financial statements. Investors should closely monitor forthcoming filings for finalized numbers and additional disclosures regarding internal controls.

Disclaimer: This article is for informational purposes only and does not constitute investment advice. Investors should review official filings and consult with their financial advisors before making investment decisions based on this information. The author assumes no responsibility for actions taken based on this article.

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