Westamerica Bancorporation Reports First Quarter 2014 Earnings

SAN RAFAEL, Calif., April 15, 2014 (GLOBE NEWSWIRE) -- Westamerica Bancorporation (Nasdaq:WABC), parent company of Westamerica Bank, generated net income for the first quarter 2014 of $15.3 million and diluted earnings per common share ("EPS") of $0.58. First quarter 2014 results compare to net income of $16.1 million and EPS of $0.60 for the prior quarter, and net income of $17.3 million and EPS of $0.64 for the first quarter 2013.

"Westamerica's credit quality continued to improve, as nonperforming assets and loan charge-offs again declined in the first quarter 2014. Nonperforming assets declined by $5 million, or 14 percent from the prior quarter. Net loan losses were $584 thousand in the first quarter 2014, down from $1.8 million in the prior quarter. As a result, we further reduced our provision for loan losses to $1.0 million for the first quarter 2014 from $1.6 million in the prior quarter. Low market interest rates contributed to continued pressure on our net interest margin, but the impact was moderated by consistent control over operating costs reducing expenses by $1.1 million in the first quarter 2014 compared to the fourth quarter 2013," said Chairman, President and CEO David Payne. "Our first quarter earnings delivered a relatively high annualized return on common equity of 11.6 percent for our shareholders," concluded Payne.

Net interest income on a fully taxable equivalent ("FTE") basis was $38.9 million for the first quarter 2014, compared to $40.1 million for the prior quarter and $43.8 million for the first quarter 2013. Net interest income declined as market interest rates on many loan products remain below the yields earned on older-dated loans and on the overall loan portfolio. The Company is reducing its exposure to rising interest rates by purchasing shorter-duration investment securities which carry lower yields than longer-duration securities. The annualized interest cost of funding the Company's loans and investment securities was 0.09 percent for the first quarter 2014 compared to 0.10 percent for the prior quarter and 0.12 percent for the first quarter 2013. The annualized net interest margin on a fully taxable equivalent basis was 3.83 percent for the first quarter 2014, compared to 3.92 percent for the prior quarter and 4.27 percent for the first quarter 2013.

The provision for loan losses was $1.0 million for the first quarter 2014 compared to $1.6 million for the prior quarter and $2.8 million for the first quarter 2013. Net loan losses charged against the allowance for loan losses totaled $584 thousand for the first quarter 2014, compared to $1.8 million for the prior quarter and $2.7 million for the first quarter 2013. At March 31, 2014, the allowance for loan losses totaled $32.1 million; nonperforming originated loans totaled $5.0 million; and nonperforming purchased loans totaled $12.8 million, net of purchase discounts of $0.5 million.

Noninterest income for the first quarter 2014 totaled $13.0 million, compared to $14.0 million for the prior quarter and $14.3 million for the first quarter 2013. Noninterest income was lower in the first quarter 2014 due to fewer processing days compared to the prior quarter and lower levels of customer transaction activity during the first quarter 2014. Fourth quarter 2013 other noninterest income included a recovery on a purchased loan.

Noninterest expense for the first quarter 2014 totaled $26.9 million, compared to $28.0 million in the prior quarter and $28.7 million for the first quarter 2013. First quarter 2014 expenses declined from the earlier periods due to lower professional fees, lower OREO expenses, net of disposition gains, and other reduced costs. Fourth quarter 2013 personnel costs increased as the Company's share price performance increased the expense for share-based compensation.

At March 31, 2014, Westamerica Bancorporation's tangible common equity-to-asset ratio was 8.4 percent, assets totaled $4.9 billion and loans outstanding totaled $1.8 billion. Westamerica Bancorporation, through its wholly owned subsidiary Westamerica Bank, operates commercial banking and trust offices throughout Northern and Central California.

Westamerica Bancorporation Web Address: www.westamerica.com

FORWARD-LOOKING INFORMATION:

The following appears in accordance with the Private Securities Litigation Reform Act of 1995:

This press release may contain forward-looking statements about the Company, including descriptions of plans or objectives of its management for future operations, products or services, and forecasts of its revenues, earnings or other measures of economic performance. Forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts. They often include the words "believe," "expect," "anticipate," "intend," "plan," "estimate," or words of similar meaning, or future or conditional verbs such as "will," "would," "should," "could," or "may."

Forward-looking statements, by their nature, are subject to risks and uncertainties. A number of factors — many of which are beyond the Company's control — could cause actual conditions, events or results to differ significantly from those described in the forward-looking statements. The Company's most recent reports filed with the Securities and Exchange Commission, including the annual report for the year ended December 31, 2013 filed on Form 10-K and quarterly report for the quarter ended September 30, 2013 filed on Form 10-Q, describe some of these factors, including certain credit, interest rate, operational, liquidity and market risks associated with the Company's business and operations. Other factors described in these reports include changes in business and economic conditions, competition, fiscal and monetary policies, disintermediation, legislation including the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2011, the Sarbanes-Oxley Act of 2002 and the Gramm-Leach-Bliley Act of 1999, and mergers and acquisitions.

Forward-looking statements speak only as of the date they are made. The Company does not undertake to update forward-looking statements to reflect circumstances or events that occur after the date forward looking statements are made.

WESTAMERICA BANCORPORATION
FINANCIAL HIGHLIGHTS
March 31, 2014
1. Net Income Summary.
(in thousands except per-share amounts)
%
Q1'14 Q1'13 Change Q4'13
Net Interest and Fee Income (FTE) $38,864 $43,835 -11.3% $40,050
Provision for Loan Losses 1,000 2,800 -64.3% 1,600
Noninterest Income 12,990 14,278 -9.0% 14,030
Noninterest Expense 26,873 28,677 -6.3% 27,987
Income Before Taxes (FTE) 23,981 26,636 -10.0% 24,493
Income Tax Provision (FTE) 8,674 9,365 -7.4% 8,437
Net Income $15,307 $17,271 -11.4% $16,056
Average Common Shares Outstanding 26,433 27,145 -2.6% 26,609
Diluted Average Common Shares 26,537 27,157 -2.3% 26,754
Operating Ratios:
Basic Earnings Per Common Share $0.58 $0.64 -9.4% $0.60
Diluted Earnings Per Common Share 0.58 0.64 -9.4% 0.60
Return On Assets (a) 1.27% 1.43% 1.31%
Return On Common Equity (a) 11.6% 12.9% 11.8%
Net Interest Margin (FTE) (a) 3.83% 4.27% 3.92%
Efficiency Ratio (FTE) 51.8% 49.3% 51.8%
Dividends Paid Per Common Share $0.38 $0.37 2.7% $0.38
Common Dividend Payout Ratio 66% 58% 63%
2. Net Interest Income.
(dollars in thousands)
%
Q1'14 Q1'13 Change Q4'13
Interest and Fee Income (FTE) $39,762 $45,087 -11.8% $41,074
Interest Expense 898 1,252 -28.3% 1,024
Net Interest and Fee Income (FTE) $38,864 $43,835 -11.3% $40,050
Average Earning Assets $4,093,087 $4,135,863 -1.0% $4,062,976
Average Interest-
Bearing Liabilities 2,534,251 2,664,391 -4.9% 2,523,585
Yield on Earning Assets (FTE) (a) 3.92% 4.39% 4.02%
Cost of Funds (a) 0.09% 0.12% 0.10%
Net Interest Margin (FTE) (a) 3.83% 4.27% 3.92%
Interest Expense/
Interest-Bearing Liabilities (a) 0.14% 0.19% 0.16%
Net Interest Spread (FTE) (a) 3.78% 4.20% 3.86%
3. Loans & Other Earning Assets.
(average volume, dollars in thousands)
%
Q1'14 Q1'13 Change Q4'13
Total Assets $4,889,940 $4,908,483 -0.4% $4,876,884
Total Earning Assets 4,093,087 4,135,863 -1.0% 4,062,976
Total Loans 1,822,065 2,077,989 -12.3% 1,846,700
Commercial Loans 388,997 404,892 -3.9% 364,534
Commercial RE Loans 788,270 904,841 -12.9% 817,090
Consumer Loans 644,798 768,256 -16.1% 665,076
Total Investment Securities 2,271,022 2,057,874 10.4% 2,216,276
Available For Sale (Market) 1,147,966 902,633 27.2% 1,081,164
Held To Maturity 1,123,056 1,155,241 -2.8% 1,135,112
Unrealized (Loss) Gain (6,502) 23,283 n/m (19,623)
Loans/Deposits 43.3% 49.5% 44.1%
4. Deposits, Other Interest-Bearing Liabilities & Equity.
(average volume, dollars in thousands)
%
Q1'14 Q1'13 Change Q4'13
Total Deposits $4,209,723 $4,199,229 0.2% $4,189,135
Noninterest Demand 1,768,464 1,643,348 7.6% 1,759,495
Interest Bearing Transaction 781,779 766,810 2.0% 763,924
Savings 1,192,651 1,158,454 3.0% 1,160,422
Time greater than $100K 258,202 390,518 -33.9% 288,691
Time less than $100K 208,627 240,099 -13.1% 216,603
Total Short-Term Borrowings 62,472 57,733 8.2% 54,208
Federal Home Loan Bank Advances 20,520 25,777 -20.4% 24,846
Term Repurchase Agreement 10,000 10,000 0.0% 10,000
Debt Financing -- 15,000 n/m 4,891
Shareholders' Equity 533,159 541,874 -1.6% 537,709
Demand Deposits/
Total Deposits 42.0% 39.1% 42.0%
Transaction & Savings
Deposits / Total Deposits 88.9% 85.0% 87.9%
5. Interest Yields Earned & Rates Paid.
(dollars in thousands)
Q1'14
Average Income/ Yield (a) /
Volume Expense Rate
Interest & Fee Income Earned
Total Earning Assets (FTE) $4,093,087 $39,762 3.92%
Total Loans (FTE) 1,822,065 23,359 5.19%
Commercial Loans (FTE) 388,997 5,575 5.81%
Commercial RE Loans 788,270 11,923 6.13%
Consumer Loans 644,798 5,861 3.67%
Total Investments (FTE) 2,271,022 16,403 2.89%
Interest Expense Paid
Total Earning Assets 4,093,087 898 0.09%
Total Interest-Bearing Liabilities 2,534,251 898 0.14%
Total Interest-Bearing Deposits 2,441,259 754 0.13%
Interest-Bearing Transaction 781,779 67 0.03%
Savings 1,192,651 234 0.08%
Time less than $100K 208,627 221 0.43%
Time greater than $100K 258,202 232 0.36%
Total Short-Term Borrowings 62,472 20 0.13%
Federal Home Loan Bank Advances 20,520 99 1.97%
Term Repurchase Agreement 10,000 25 1.01%
Net Interest Income and
Margin (FTE) $38,864 3.83%
Q1'13
Average Income/ Yield (a) /
Volume Expense Rate
Interest & Fee Income Earned
Total Earning Assets (FTE) $4,135,863 $45,087 4.39%
Total Loans (FTE) 2,077,989 27,989 5.46%
Commercial Loans (FTE) 404,892 6,254 6.26%
Commercial RE Loans 904,841 14,128 6.33%
Consumer Loans 768,256 7,607 4.02%
Total Investments (FTE) 2,057,874 17,098 3.32%
Interest Expense Paid
Total Earning Assets 4,135,863 1,252 0.12%
Total Interest-Bearing Liabilities 2,664,391 1,252 0.19%
Total Interest-Bearing Deposits 2,555,881 899 0.14%
Interest-Bearing Transaction 766,810 66 0.03%
Savings 1,158,454 230 0.08%
Time less than $100K 240,099 299 0.51%
Time greater than $100K 390,518 304 0.32%
Total Short-Term Borrowings 57,733 11 0.08%
Federal Home Loan Bank Advances 25,777 118 1.86%
Term Repurchase Agreement 10,000 24 0.96%
Debt Financing 15,000 200 5.35%
Net Interest Income and
Margin (FTE) $43,835 4.27%
6. Noninterest Income.
(dollars in thousands except per-share amounts)
%
Q1'14 Q1'13 Change Q4'13
Service Charges on Deposits $6,010 $6,542 -8.1% $6,266
Merchant Processing Services 1,924 2,409 -20.2% 2,058
Debit Card Fees 1,405 1,358 3.5% 1,527
Other Service Fees 661 762 -13.3% 672
ATM Processing Fees 620 705 -12.1% 630
Trust Fees 654 568 15.2% 593
Financial Services Commissions 171 180 -4.8% 218
Other Income 1,545 1,754 -11.9% 2,066
Total Noninterest Income $12,990 $14,278 -9.0% $14,030
Total Revenue (FTE) $51,854 $58,113 -10.8% $54,080
Noninterest Income/Revenue (FTE) 25.1% 24.6% 25.9%
Service Charges/Avg. Deposits (a) 0.58% 0.63% 0.59%
Total Revenues (FTE) Per Avg.
Common Share (a) $7.96 $8.68 -8.4% $8.06
7. Noninterest Expense.
(dollars in thousands)
%
Q1'14 Q1'13 Change Q4'13
Salaries & Benefits $14,126 $14,403 -1.9% $14,340
Occupancy 3,727 3,886 -4.1% 3,784
Outsourced Data Processing 2,105 2,157 -2.4% 2,112
Amortization of
Identifiable Intangibles 1,105 1,219 -9.4% 1,157
Professional Fees 430 635 -32.4% 947
Furniture & Equipment 1,005 880 14.2% 994
Other Real Estate Owned (350) 334 n/m 245
Courier Service 610 741 -17.7% 664
Other Operating 4,115 4,422 -6.9% 3,744
Total Noninterest Expense $26,873 $28,677 -6.3% $27,987
Noninterest Expense/
Avg. Earning Assets (a) 2.66% 2.81% 2.73%
Noninterest Expense/Revenues (FTE) 51.8% 49.3% 51.8%
8. Provision for Loan Losses.
(dollars in thousands)
%
Q1'14 Q1'13 Change Q4'13
Average Total Loans $1,822,065 $2,077,989 -12.3% $1,846,700
Allowance for Loan Loss (ALL)
Beginning of Period $31,693 $30,234 4.8% $31,916
Provision for Loan Losses 1,000 2,800 -64.3% 1,600
Net ALL Losses (584) (2,680) -78.2% (1,823)
ALL End of Period $32,109 $30,354 5.8% $31,693
ALL Recoveries/Gross ALL Losses 56% 29% 41%
Net ALL Losses/Avg. Total Loans (a) 0.13% 0.52% 0.39%
9. Credit Quality.
(dollars in thousands)
%
3/31/14 3/31/13 Change 12/31/13
Nonperforming Originated Loans:
Nonperforming Nonaccrual $4,784 $7,005 -31.7% $5,301
Performing Nonaccrual 39 1,154 -96.6% 75
Total Nonaccrual Loans 4,823 8,159 -40.9% 5,376
90+ Days Past Due Accruing Loans 196 305 -35.7% 410
Total 5,019 8,464 -40.7% 5,786
Repossessed Loan Collateral 5,347 7,691 -30.5% 5,527
Total Nonperforming
Originated Assets 10,366 16,155 -35.8% 11,313
Nonperforming Purchased Covered Loans (1,3):
Nonperforming Nonaccrual 86 9,578 n/m 11,672
Performing Nonaccrual -- 2,299 n/m 636
Total Nonaccrual Loans 86 11,877 n/m 12,308
90+ Days Past Due Accruing Loans -- 88 n/m --
Total 86 11,965 n/m 12,308
Repossessed Purchased Covered
Loan Collateral (1,3) 585 13,713 n/m 7,793
Total Nonperforming Purchased
Covered Assets (1,3) 671 25,678 n/m 20,101
Nonperforming Purchased Non-Covered Loans (2,3):
Nonperforming Nonaccrual 11,578 6,052 n/m 2,920
Performing Nonaccrual 902 3,060 n/m 698
Total Nonaccrual Loans 12,480 9,112 n/m 3,618
90+ Days Past Due Accruing Loans 209 -- n/m --
Total 12,689 9,112 n/m 3,618
Repossessed Purchased Non-Covered
Loan Collateral (2,3) 6,254 1,980 n/m --
Total Nonperforming Purchased
Non-Covered Assets (2,3) 18,943 11,092 n/m 3,618
Total Nonperforming Assets $29,980 $52,925 -43.4% $35,032
Total Originated Loans Outstanding $1,529,502 $1,613,396 -5.2% $1,523,284
Total Purchased Covered
Loans Outstanding (1,3) 18,969 353,034 n/m 250,670
Total Purchased Non-Covered
Loans Outstanding (2,3) 267,848 70,504 n/m 53,790
Total Loans Outstanding $1,816,319 $2,036,934 -10.8% $1,827,744
Total Assets $4,921,042 $4,887,844 0.7% $4,847,055
Loans:
Allowance for Loan Losses $32,109 $30,354 5.8% $31,693
Allowance/Loans 1.77% 1.49% 1.73%
Nonperforming Loans/Total Loans 0.98% 1.45% 1.19%
Purchased Covered Loans (1,3):
Fair Value Discount on Purchased
Covered Loans $643 $22,660 $10,933
Discount/Purchased Covered
Loans, gross 3.28% 6.03% 4.18%
Nonperforming Purchased Covered Loans/
Total Purchased Covered Loans 0.45% 3.39% 4.91%
Purchased Non-Covered Loans (2,3):
Fair Value Discount on Purchased
Non-Covered Loans $12,140 $4,586 $3,245
Discount/Purchased Non-Covered 4.34% 6.11% 5.69%
Loans, gross
Nonperforming Purchased Non-Covered Loans/
Total Purchased Non-Covered Loans 4.74% 12.92% 6.73%
10. Capital.
(in thousands, except per-share amounts)
%
3/31/14 3/31/13 Change 12/31/13
Shareholders' Equity $540,883 $558,980 -3.2% $542,934
Tier I Regulatory Capital 399,886 408,643 -2.1% 405,798
Total Regulatory Capital 442,274 444,401 -0.5% 446,331
Total Assets 4,921,042 4,887,844 0.7% 4,847,055
Risk-Adjusted Assets 2,910,773 2,778,938 4.7% 2,759,311
Shareholders' Equity/
Total Assets 10.99% 11.44% 11.20%
Shareholders' Equity/
Total Loans 29.78% 27.44% 29.71%
Tier I Capital/Total Assets 8.13% 8.36% 8.37%
Tier I Capital/
Risk-Adjusted Assets 13.74% 14.71% 14.71%
Total Regulatory Capital/
Risk-Adjusted Assets 15.19% 15.99% 16.18%
Tangible Common Equity Ratio 8.40% 8.75% 8.56%
Common Shares Outstanding 26,299 27,018 -2.7% 26,510
Common Equity Per Share $20.57 $20.69 -0.6% $20.48
Market Value Per Common Share $54.08 $45.33 19.3% $56.46
Share Repurchase Programs
(shares in thousands)
%
Q1'14 Q1'13 Change Q4'13
Total Shares Repurchased 437 347 26.0% 326
Average Repurchase Price $51.93 $44.47 16.8% $53.74
Net Shares Repurchased 211 195 8.1% 68
11. Period-End Balance Sheets.
(unaudited, dollars in thousands)
%
3/31/14 3/31/13 Change 12/31/13
Assets:
Cash and Due from Banks $428,840 $355,459 20.6% $472,028
Investment Securities:
Available For Sale 1,240,288 972,176 27.6% 1,079,381
Held to Maturity 1,110,329 1,162,358 -4.5% 1,132,299
Loans 1,816,319 2,036,934 -10.8% 1,827,744
Allowance For Loan Losses (32,109) (30,354) 5.8% (31,693)
Total Loans, net 1,784,210 2,006,580 -11.1% 1,796,051
Other Real Estate Owned 12,186 23,384 -47.9% 13,320
Premises and Equipment, net 36,675 38,519 -4.8% 37,314
Identifiable Intangibles, net 17,452 22,042 -20.8% 18,557
Goodwill 121,673 121,673 0.0% 121,673
Other Assets 169,389 185,653 -8.8% 176,432
Total Assets $4,921,042 $4,887,844 0.7% $4,847,055
Liabilities and Shareholders' Equity:
Deposits:
Noninterest Bearing $1,778,034 $1,621,887 9.6% $1,740,182
Interest-Bearing Transaction 771,299 771,268 0.0% 763,088
Savings 1,207,881 1,160,976 4.0% 1,167,744
Time 457,569 607,819 -24.7% 492,767
Total Deposits 4,214,783 4,161,950 1.3% 4,163,781
Short-Term Borrowed Funds 64,382 61,854 4.1% 62,668
Federal Home Loan Bank Advances 20,437 25,743 -20.6% 20,577
Term Repurchase Agreement 10,000 10,000 0.0% 10,000
Debt Financing -- 15,000 n/m --
Other Liabilities 70,557 54,317 29.9% 47,095
Total Liabilities 4,380,159 4,328,864 1.2% 4,304,121
Shareholders' Equity:
Common Equity:
Paid-In Capital 386,201 376,680 2.5% 381,657
Accumulated Other
Comprehensive Income 8,856 15,372 -42.4% 4,313
Retained Earnings 145,826 166,928 -12.6% 156,964
Total Shareholders' Equity 540,883 558,980 -3.2% 542,934
Total Liabilities and
Shareholders' Equity $4,921,042 $4,887,844 0.7% $4,847,055
12. Income Statements.
(unaudited, in thousands except per-share amounts)
%
Q1'14 Q1'13 Change Q4'13
Interest & Fee Income:
Loans $22,901 $27,399 -16.4% $23,931
Investment Securities:
Available for Sale 5,630 5,336 5.5% 5,528
Held to Maturity 7,033 7,730 -9.0% 7,247
Total Interest & Fee Income 35,564 40,465 -12.1% 36,706
Interest Expense:
Transaction Deposits 67 66 1.5% 67
Savings Deposits 234 230 1.9% 232
Time Deposits 453 603 -25.0% 494
Short-Term Borrowed Funds 20 11 85.6% 20
Federal Home Loan Bank Advances 99 118 -15.8% 120
Term Repurchase Agreement 25 24 4.5% 24
Debt Financing -- 200 n/m 67
Total Interest Expense 898 1,252 -28.3% 1,024
Net Interest Income 34,666 39,213 -11.6% 35,682
Provision for Loan Losses 1,000 2,800 -64.3% 1,600
Noninterest Income:
Service Charges 6,010 6,542 -8.1% 6,266
Merchant Processing Services 1,924 2,409 -20.2% 2,058
Debit Card Fees 1,405 1,358 3.5% 1,527
Other Service Fees 661 762 -13.3% 672
ATM Processing Fees 620 705 -12.1% 630
Trust Fees 654 568 15.2% 593
Financial Services Commissions 171 180 -4.8% 218
Other 1,545 1,754 -11.9% 2,066
Total Noninterest Income 12,990 14,278 -9.0% 14,030
Noninterest Expense:
Salaries and Benefits 14,126 14,403 -1.9% 14,340
Occupancy 3,727 3,886 -4.1% 3,784
Outsourced Data Processing 2,105 2,157 -2.4% 2,112
Amortization of Identifiable Intangibles 1,105 1,219 -9.4% 1,157
Professional Fees 430 635 -32.4% 947
Furniture & Equipment 1,005 880 14.2% 994
Other Real Estate Owned (350) 334 n/m 245
Courier Service 610 741 -17.7% 664
Other 4,115 4,422 -6.9% 3,744
Total Noninterest Expense 26,873 28,677 -6.3% 27,987
Income Before Income Taxes 19,783 22,014 -10.1% 20,125
Income Tax Provision 4,476 4,743 -5.6% 4,069
Net Income $15,307 $17,271 -11.4% $16,056
Average Common Shares Outstanding 26,433 27,145 -2.6% 26,609
Diluted Common Shares Outstanding 26,537 27,157 -2.3% 26,754
Per Common Share Data:
Basic Earnings $0.58 $0.64 -9.4% $0.60
Diluted Earnings 0.58 0.64 -9.4% 0.60
Dividends Paid 0.38 0.37 2.7% 0.38
Footnotes and Abbreviations:
(FTE) Fully Taxable Equivalent
(a) Annualized
(1) Purchased covered loans and repossessed loan collateral represent assets purchased in a business combination on which losses are shared with the FDIC per a Loss-Sharing Agreement.
(2) Purchased non-covered loans and repossessed loan collateral represent assets purchased in a business combination.
(3) The FDIC indemnification of non-single family assets acquired from the former County Bank expired 2/6/14 and were reclassified into purchased non-covered loans and repossessed loan collateral.

CONTACT: Westamerica Bancorporation Robert A. Thorson - SVP & Chief Financial Officer 707-863-6840

Source:Westamerica Bancorporation