After returning from the annual executive conference for Western Independent Bankers, a community bank trade group, Russell Colombo, president and CEO of Bank of Marin, said that leaders in the industry are starting to express greater optimism after a historically challenging economic period.

Challenges remain, including the profit squeeze from a low interest rate environment. But as chair of the committee that organized this year's conference, Mr. Colombo said that today's community banks are finding success by leveraging their traditional edge.

[caption id="attachment_43854" align="alignright" width="176"] Russell Colombo[/caption]

"The banks that have survived -- they have built deep relationships with their clients," he said.

The annual conference, held this year in Kauai, Hawaii, invites executives from community banks throughout the western United States.

Among the topics that garnered significant interest this year was the future of the brick-and-mortar bank branch. As new technologies have become the preferred route for many functions that traditionally required an in-person transaction, Mr. Colombo said that many expect branches to shrink in size and focus more on troubleshooting products in the future.

With an eye on those changes, Bank of Marin is itself preparing to deploy a mobile banking product this summer, he said. The bank recently announced the hiring of Jim Burke as its first chief information officer, charged with guiding that effort.

Mr. Colombo said that many themes at the conference were familiar, including the increased regulatory burden that many banks currently face. As has been the case for several years, the cost of compliance is expected to push some smaller banks to more closely consider the idea of merging with a larger entity.

"It's tough to manage in this environment," he said. "The smaller banks can't manage the costs for compliance."

Mr. Colombo also discussed Bank of Marin's earnings announcement for the first three months of 2012, defined largely for an improvement in credit quality. The volume of loans classified as substandard was $31.1 million, compared to $55.6 million during the same period in 2012.

Net income in the first three months of 2013, $4.9 million,  was up from $4.7 million in the prior quarter and was level with income a year before.

Bank of Marin announced $1.1 billion in loans and $1.2 billion in deposits, versus $1 billion in loans and $1.3 billion in deposits one year prior. The bank had $1.43 billion in assets at the end of the period, compared to $1.42 at the end of March 2012.***

Loans and deposits have grown at Bank of Napa, N.A. (OTCBB: BNNP), with net assets growing 8.2 percent over the course of a year and approaching $150 million as of March 31.

The bank had added $13.5 million in net loans compared to the same period in 2012, now nearly $94 million. Deposits were $126.9 million, up $9.2 million. Total assets were $148.3 million.

Pre-tax net income was up 17 percent, but a reduction in the bank's income tax benefit from the prior year meant that net income was down 9.4 percent for the quarter compared to the same three months in 2012. Net income was $424,000.

Return on assets was 1.17 percent, and return on equity was 8.38 percent....

 Submit items for this column to Staff Writer Eric Gneckow at 707-521-4259 or eric.gneckow@busjrnl.com.