Merger

6 Months Ended

Jun. 30, 2022

Business Combination and Asset Acquisition [Abstract]

Bancorp completed its merger and acquired all assets and assumed all liabilities of American River Bankshares on August 6, 2021. The Merger expanded Bank of Marin's presence throughout the Greater Sacramento, Amador and Sonoma County Regions where ARB had ten branches. The Merger added $297.8 million in investment securities, $419.4 million in loans and $790.0 million in deposits to Bank of Marin as of the merger date. Bancorp accounted for the Merger as a business combination under the acquisition method of accounting. The assets acquired and liabilities assumed, both tangible and intangible, were recorded at their fair values as of the merger date in accordance with ASC 805, Business Combinations.

AMRB shareholders received 0.575 shares of Bancorp's common stock for each share of AMRB common stock outstanding immediately prior to the Merger resulting in the issuance of 3,441,235 shares of Bancorp common stock. In addition, merger consideration included cash paid for outstanding stock options and cash paid in lieu of fractional shares, as summarized in the following table.


(in thousands)	Merger Consideration
Value of common stock consideration paid to shareholders (0.575 fixed exchange ratio, stock price $36.15)	$	124,401
Cash consideration for stock options	63
Cash paid in lieu of fractional shares	13
Total merger consideration	$	124,477

We recorded $42.6 million in goodwill, which represents the excess of the total merger consideration paid over the fair value of the assets acquired, net of the fair values of liabilities assumed. Goodwill mainly reflects expected value created through the combined operations of AMRB and Bancorp and is evaluated for impairment annually.

The core deposit intangible ("CDI") represents the estimated future benefits of acquired deposits and is recorded separately from the related deposits. We recorded a core deposit intangible asset of $3.9 million related to the ARB merger, of which $179 thousand and $363 thousand, respectively, were amortized in the three and six month periods ended June 30, 2022. No amortization was recognized in the comparable periods of 2021. The CDI is amortized on an accelerated basis over an estimated ten-year life and is evaluated periodically for impairment. No impairment loss was recognized as of June 30, 2022.

Merger-related one time and conversion costs are recognized as incurred and continue until all systems have been converted and operational functions are fully integrated. Bancorp's merger-related costs reflected in the consolidated statements of comprehensive income are summarized in the following table.


	Three months ended				Six months ended
(in thousands, unaudited)	June 30, 2022		June 30, 2021		June 30, 2022		June 30, 2021
Personnel and severance	$	58	$	—	$	393	$	—
Professional services	—		201		67		201
Data processing	29		—		77		—
Other expense	224		16		321		16
Total merger-related one-time and conversion costs	$	311	$	217	$	858	$	217