NOVATO -- Bank of Marin Bancorp (Nasdaq: BMRC), parent company of Bank of Marin, on Monday reported 2013 net income dropped 19.7 percent from the year before, attributing it to costs related to a recent East Bay expansion while pointing to short- and long-term growth for the institution.

Net income in 2013 was $14.3 million, down just 0.56 percent from 2012 when $3.4 million in fourth-quarter costs related to the Nov. 29 acquisition of Bank of Alameda are considered, according to the company. With those costs, the bank earned $2.57 a share in 2013, compared with $3.28 per share last year.

Despite the one-time costs, deposit and loan growth for Bank of Marin has grown significantly with the acquisition of Bank of Alameda's parent company, NorCal Community Bancorp, according to the Novato-based institution.

Gross loans totaled $1.3 billion at the end of 2013, up 18.2 percent over the prior year. Deposits remained level at $1.6 billion, with 40.8 percent being noninterest bearing. The acquisition of Bank of Alameda added $173.8 million in loans and $241 million in deposits.

Nonaccruing loans represented 0.92 percent of the bank's portfolio at year-end, down from 1.64 percent one year ago.

"We're very busy in terms of new loan activity," said Russell Colombo, president and chief executive. "We have very little to resolve in terms of problems. Now we can focus on growth."

The bank also saw organic loan growth over the year. When coupled with Bank of Alameda assets, that growth remained an important measure at a time when low-interest-rates continue to put pressure on lenders' profits from many types of loans and investments. The bank had an average net interest margin of 4.20 percent in 2013, compared with around 5.5 percent five years ago, Mr. Colombo noted. That margin, a measure of interest expenses versus interest income, was 4.74 percent for 2012.

"Growth and the Bank of Alameda acquisition will be accretive to our net interest margin," with more movement expected when short-term interest rates eventually increase, said Tani Girton, chief financial officer.

Acquiring Bank of Alameda was Bank of Marin's first physical foray into the East Bay, adding two branches and a commercial loan office while contributing to staffing growth from 238 to 281 during 2013.

"We acquired a bank, but we also acquired good people," including John Jacobs, long-time East Bay banker and now Bank of Marin's market president for the region, Mr. Colombo said. "That's very important in community banking."

The bank also hired Jim Burke as its first chief information officer in 2013, a new role overseeing efforts like the mobile banking platform launched later that year.

Other changes included Beth Reizman's transition to chief credit officer after the retirement of Kevin Coonan. Former San Francisco office leader Tim Myers moving to her former role in charge of commercial banking. Tani Girton also joined the bank as chief financial officer, following former CFO Christina Cook's move to First California Mortgage Company.

"We have had a lot of change, but a lot of consistency," Mr. Colombo said.

Bank of Marin had total assets of $1.8 billion at the end of last year, compared with $1.4 billion the prior year. Its return on average assets for 2013 was 0.96 percent including acquisition expenses, compared with 1.24 percent in 2012.

The closing price of Bank of Marin was $43.43 a share Monday, down from $43.89 Friday. The board of directors on Jan. 23 approved a 19 cent quarterly dividend, payable Feb. 14 to shareholders of record as of Feb. 7.