Bank of Marin reported fourth-quarter earnings of $1.1 million today after a $3 million write-down of deferred-tax assets and $1.7 million in expenses from its acquisition of Bank of Napa.
Without those two unusual events, the bank’s earnings would have been $5.2 million, on par with the $5.1 million it reported in the third quarter of 2017. Diluted earnings per share in the fourth quarter were 17 cents, compared to 93 cents in the year-ago quarter.
Earnings for all of 2017 were $16 million, compared to $23.1 million for all of 2016. The bank declared a cash dividend of 29 cents a share, payable on Feb. 9 to shareholders of record on Feb. 2, 2018.
Deposits totaled $2.1 billion as of Dec. 31, up from $1.9 billion at the end of the third quarter.
The $51 million deal for Bank of Napa, which closed in November, added two new Bank of Marin branches in Napa, making a total of three. Out of 30 former employees of Bank of Napa, all but nine were retained, including four who were hired for functions at the bank’s offices in Novato. In Napa, 17 employees were retained under the new ownership.
Thomas LeMasters, formerly CEO of Bank of Napa, is one of the layoffs, though he will be available in a consulting capacity for the next year. Some of the other eight employees who will be part of the layoffs are continuing to work through the transition.
Bank of Marin’s new branches in Napa are being managed in part by James Kimball, executive vice president and chief operating officer. Kimball was hired by Bank of Marin last year.
The $3 million write-down of deferred-tax assets was due to the Tax Cuts and Jobs Act of 2017, signed into law on Dec. 22. San Rafael-based Westamerica Bank last week reported a 15 percent income decline year over year.
The bill cuts federal corporate income tax rates from 35 percent to 21 percent, beginning Jan. 1. “The bank has valued all of its deferred-tax assets and liabilities at the 21 percent rate,” the bank said in a statement. “The adjustment to the net deferred tax assets valuation as of December 22, 2017 was $3 million as recorded in provision for income taxes for the fourth quarter of 2017.”
The present value of future tax benefits is less as a result of the tax cut. The bank wrote down a portion of those benefits. “Everybody is showing it, it’s just a matter of how much,” said Russ Colombo, CEO and president of Bank of Marin.
Both the Bank of Napa acquisition and the cutting of corporate taxes will benefit Bank of Marin in the long term. “Benefits going forward will be great,” Colombo said. “But in the short term, you have to take the charge.”
With its headquarters in Novato, Bank of Marin was founded in 1989 and has total assets of $2.5 billion with 23 branches in Marin, Sonoma, Napa, San Francisco and Alameda counties.
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