Costs related to its acquisition of American River Bank earlier in the year caused its third quarter net income to plummet, Bank of Marin said on Monday.
The Novato-based financial institution reported net income of $ 5.28 million for the quarter ended September 30, up from $ 7.49 million in the same quarter in 2020.
The news follows second quarter results in which Bank of Marin (Nasdaq: BMRC) reported a gain of $ 4 million in net income for the previous quarter ending June 30.
The latest earnings report comes a week after longtime CEO Russell Colombo, 69, retired from October 31. Colombo told the Business Journal that the start was “bittersweet,” given his 17 years at the Bank of Marin and 29 more in the banking industry. industry.
“It’s about time,” said Colombo, who delayed his retirement during the pandemic to guide the bank in its recovery. Still, he added the bank is in “good hands” with chief operating officer and chairman Tim Myers taking the helm.
Myers oversaw the Bank of Marin merger with Rancho Cordova-based American River Bank, completed in August for a value of $ 125 million. The purchase was originally announced in mid-April. Total assets of the Bank of Marin at the end of the third quarter stood at $ 4.26 billion.
The merger resulted in combined loan balances of $ 2.31 billion in the last quarter, up from $ 2.1 billion in the same period in 2020. Of that amount, outstanding loans from the protection program paychecks administered by the US Small Business Administration were $ 164.8 million, a decrease of $ 83.4 million. from the second trimester. Collectively, Bank of Marin and American River Bank have 3,556 PPP loans totaling $ 550.3 million after two rounds of financing.
The acquisition comes with one-time conversion costs and other associated expenses related to employees and suppliers, which may require the cancellation of contracts in the event of duplication. Other âhiddenâ costs include administrative equipment such as various processing systems, Colombo said.
Overall, the bank has faced one-time, temporary, and ongoing acquisition costs that range from capital and legal fees to the elimination of supplier contracts that will run until 2022. The pickup of the staff assigned to 10 new locations will also be included in the future balance. sheets. The merger at this point has reduced net income by $ 3.92 million, according to the bank’s executives and the latest financial report.
Tani Girton, executive vice president and chief financial officer, told the Business Journal that the bank will have a full picture of costs and growth in 2022.
“I feel like we are on the right track for the long term (growth) and also for the short term,” she said.
Colombo and Myers believe the bank will experience a significant increase in profits next year as the full benefits of the acquisition gain popularity.
âWe’re going to get bigger with economies of scale and new geography,â Myers said, referring to the explosive growth that’s happening along the Interstate 80 corridor in the Central Valley.
Bank officials did not rule out other opportunities with other mergers and acquisitions when asked about it during the investor relations results call on Monday morning.
“Who knows when that day will come?” Colombo later told the Business Journal.
The Board of Directors of the Bank of Marin declared a cash dividend of 24 cents per share payable on November 12.
Susan Wood covers law, cannabis, manufacturing, biotechnology, energy, transportation, agriculture, and banking and finance. For 25 years, Susan worked for various publications, including the North County Times, now part of the Union Tribune in San Diego County, as well as the Tahoe Daily Tribune and Lake Tahoe News. She graduated from Fullerton College. Contact her at 530-545-8662 or [email protected]