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Westamerica Bancorporation Reports First Quarter 2016 Financial Results

SAN RAFAEL, Calif., April 21, 2016 (GLOBE NEWSWIRE) -- Westamerica Bancorporation (Nasdaq:WABC), parent company of Westamerica Bank, generated net income for the first quarter 2016 of $14.2 million and diluted earnings per common share ("EPS") of $0.56, compared to net income of $14.6 million and EPS of $0.57 for the prior quarter, and net income of $14.6 million and EPS of $0.57 for the first quarter 2015.

"Westamerica’s average checking and savings deposits were 6 percent higher in the first quarter 2016 compared to the first quarter 2015. This growth in lower-costing deposit products supported our 3.34 percent net interest margin in the first quarter 2016. Westamerica’s credit quality remained relatively stable at healthy levels throughout the first quarter 2016, requiring no provision for loan losses. Our operating expenses were affected by seasonally high payroll taxes in the first quarter 2016, but represented only 54 percent of our revenues,” said Chairman, President and CEO David Payne. “Our operating results generated an annualized return on shareholders’ common equity of 11 percent for the first quarter 2016, and Westamerica paid its shareholders a $0.39 per share quarterly dividend,” concluded Payne.

The annualized net interest margin on a fully taxable equivalent basis was 3.34 percent for the first quarter 2016, compared to 3.32 percent for the prior quarter, and 3.43 percent for the first quarter 2015. Net interest income on a fully taxable equivalent basis was $36.4 million for the first quarter 2016, compared to $36.7 million for the prior quarter, and $36.9 million for the first quarter 2015. The Company’s loan portfolio has declined from the first quarter 2015 through the first quarter 2016; Management has been avoiding long-dated, low-yielding loans given historically low interest rates. Management has also maintained conservative loan underwriting, terms and conditions. During this period, the investment portfolio has grown. The changing composition of interest earning assets and low market interest rates has pressured the net interest margin. The increase in the net interest margin from the fourth quarter 2015 to the first quarter 2016 reflects the Federal Open Market Committee’s 0.25 percent increase in the federal funds rate on December 16, 2015, which increased yields on loans and investment securities which have floating rates. The funding cost of deposits and other interest-bearing borrowings, as a percentage of average loans and investment securities, was 0.05 percent for the first quarter 2016, unchanged from the prior quarter and down from 0.06 percent for the first quarter 2015.

The provision for loan losses was zero for the first quarter 2016, unchanged from the prior quarter and first quarter 2015. Net loan losses charged against the allowance for loan losses totaled $284 thousand for the first quarter 2016, compared to $265 thousand for the prior quarter and $298 thousand for the first quarter 2015. At March 31, 2016, the allowance for loan losses totaled $29.5 million and nonperforming loans totaled $18.0 million.

Noninterest income for the first quarter 2016 totaled $11.7 million, compared to $11.3 million for the prior quarter, and $12.3 million for the first quarter 2015.

Noninterest expense for the first quarter 2016 totaled $25.9 million, compared to $25.5 million for the prior quarter, and $26.7 million for the first quarter 2015.

At March 31, 2016, Westamerica Bancorporation's tangible common equity-to-asset ratio was 8.0 percent, and assets totaled $5.2 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, 2015 filed on Form 10-K and quarterly report for the quarter ended September 30, 2015 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.

Public Information April 21, 2016
WESTAMERICA BANCORPORATION
FINANCIAL HIGHLIGHTS
March 31, 2016
1. Net Income Summary.
(in thousands except per-share amounts)
%
Q1'16Q1'15ChangeQ4'15
Net Interest and Fee Income (FTE)$36,447 $36,930 -1.3%$36,734
Provision for Loan Losses - - n/m -
Noninterest Income 11,729 12,300 -4.6% 11,305
Noninterest Expense 25,858 26,727 -3.3% 25,504
Income Before Taxes (FTE) 22,318 22,503 -0.8% 22,535
Income Tax Provision (FTE) 8,092 7,946 1.8% 7,957
Net Income$14,226 $14,557 -2.3%$14,578
Average Common Shares Outstanding 25,445 25,651 -0.8% 25,528
Diluted Average Common Shares 25,468 25,655 -0.7% 25,555
Operating Ratios:
Basic Earnings Per Common Share$0.56 $0.57 -1.8%$0.57
Diluted Earnings Per Common Share 0.56 0.57 -1.8% 0.57
Return On Assets (a) 1.11% 1.17% 1.12%
Return On Common Equity (a) 10.9% 11.4% 11.0%
Net Interest Margin (FTE) (a) 3.34% 3.43% 3.32%
Efficiency Ratio (FTE) 53.7% 54.3% 53.1%
Dividends Paid Per Common Share$0.39 $0.38 2.6%$0.39
Common Dividend Payout Ratio 70% 67% 68%
2. Net Interest Income.
(dollars in thousands)
%
Q1'16Q1'15ChangeQ4'15
Interest and Fee Income (FTE)$36,999 $37,589 -1.6%$37,297
Interest Expense 552 659 -16.4% 563
Net Interest and Fee Income (FTE)$36,447 $36,930 -1.3%$36,734
Average Earning Assets$4,381,423 $4,342,031 0.9%$4,411,599
Average Interest-
Bearing Liabilities 2,601,408 2,571,484 1.2% 2,554,447
Yield on Earning Assets (FTE) (a) 3.39% 3.49% 3.37%
Cost of Funds (a) 0.05% 0.06% 0.05%
Net Interest Margin (FTE) (a) 3.34% 3.43% 3.32%
Interest Expense/
Interest-Bearing Liabilities (a) 0.09% 0.10% 0.09%
Net Interest Spread (FTE) (a) 3.30% 3.39% 3.28%
3. Loans & Other Earning Assets.
(average volume, dollars in thousands)
%
Q1'16Q1'15ChangeQ4'15
Total Assets$5,174,804 $5,059,537 2.3%$5,168,805
Total Earning Assets 4,381,423 4,342,031 0.9% 4,411,599
Total Loans 1,500,616 1,683,748 -10.9% 1,543,591
Commercial Loans 370,131 401,167 -7.7% 371,902
Commercial RE Loans 630,542 710,475 -11.3% 651,991
Consumer Loans 499,943 572,106 -12.6% 519,698
Total Investment Securities 2,880,807 2,658,283 8.4% 2,868,008
Available For Sale (Market) 1,567,335 1,632,868 -4.0% 1,589,483
Held To Maturity 1,313,472 1,025,415 28.1% 1,278,525
Unrealized Gain 23,669 15,634 n/m 9,624
Loans/Deposits 33.1% 38.2% 34.0%
4. Deposits, Other Interest-Bearing Liabilities & Equity.
(average volume, dollars in thousands)
%
Q1'16Q1'15ChangeQ4'15
Total Deposits$4,537,548 $4,402,946 3.1%$4,536,256
Noninterest Demand 1,993,986 1,919,820 3.9% 2,036,470
Interest Bearing Transaction 872,464 810,877 7.6% 855,320
Savings 1,387,217 1,292,238 7.3% 1,351,412
Time greater than $100K 123,691 199,251 -37.9% 128,703
Time less than $100K 160,190 180,760 -11.4% 164,351
Total Short-Term Borrowings 57,846 86,354 -33.0% 54,661
Federal Home Loan Bank Advances - 2,004 n/m -
Shareholders' Equity 527,177 516,086 2.1% 525,277
Demand Deposits/
Total Deposits 43.9% 43.6% 44.9%
Transaction & Savings
Deposits / Total Deposits 93.7% 91.4% 93.5%
5. Interest Yields Earned & Rates Paid.
(dollars in thousands)
Q1'16
AverageIncome/Yield (a) /
VolumeExpenseRate
Interest & Fee Income Earned
Total Earning Assets (FTE)$4,381,423 $36,999 3.39%
Total Loans (FTE) 1,500,616 18,689 5.01%
Commercial Loans (FTE) 370,131 4,541 4.93%
Commercial RE Loans 630,542 9,776 6.24%
Consumer Loans 499,943 4,372 3.51%
Total Investments (FTE) 2,880,807 18,310 2.54%
Interest Expense Paid
Total Earning Assets 4,381,423 552 0.05%
Total Interest-Bearing Liabilities 2,601,408 552 0.09%
Total Interest-Bearing Deposits 2,543,562 543 0.09%
Interest-Bearing Transaction 872,464 70 0.03%
Savings 1,387,217 223 0.06%
Time less than $100K 160,190 113 0.28%
Time greater than $100K 123,691 137 0.44%
Total Short-Term Borrowings 57,846 9 0.07%
Net Interest Income and
Margin (FTE) $36,447 3.34%
Q1'15
AverageIncome/Yield (a) /
VolumeExpenseRate
Interest & Fee Income Earned
Total Earning Assets (FTE)$4,342,031 $37,589 3.49%
Total Loans (FTE) 1,683,748 20,613 4.96%
Commercial Loans (FTE) 401,167 4,708 4.76%
Commercial RE Loans 710,475 10,941 6.25%
Consumer Loans 572,106 4,964 3.51%
Total Investments (FTE) 2,658,283 16,976 2.55%
Interest Expense Paid
Total Earning Assets 4,342,031 659 0.06%
Total Interest-Bearing Liabilities 2,571,484 659 0.10%
Total Interest-Bearing Deposits 2,483,126 642 0.10%
Interest-Bearing Transaction 810,877 63 0.03%
Savings 1,292,238 216 0.07%
Time less than $100K 180,760 166 0.37%
Time greater than $100K 199,251 197 0.40%
Total Short-Term Borrowings 86,354 16 0.08%
Federal Home Loan Bank Advances 2,004 1 0.20%
Net Interest Income and
Margin (FTE) $36,930 3.43%
6. Noninterest Income.
(dollars in thousands except per-share amounts)
%
Q1'16Q1'15ChangeQ4'15
Service Charges on Deposits$5,248 $5,707 -8.0%$5,259
Merchant Processing Services 1,529 1,703 -10.2% 1,368
Debit Card Fees 1,516 1,456 4.1% 1,557
Other Service Fees 629 665 -5.5% 648
ATM Processing Fees 658 585 12.6% 569
Trust Fees 661 706 -6.5% 671
Financial Services Commissions 156 153 2.2% 168
Other Income 1,332 1,325 0.5% 1,065
Total Noninterest Income$11,729 $12,300 -4.6%$11,305
Total Revenue (FTE)$48,176 $49,230 -2.1%$48,039
Noninterest Income/Revenue (FTE) 24.3% 25.0% 23.5%
Service Charges/Avg. Deposits (a) 0.47% 0.53% 0.46%
Total Revenues (FTE) Per Avg.
Common Share (a)$7.61 $7.78 -2.2%$7.47
7. Noninterest Expense.
(dollars in thousands)
%
Q1'16Q1'15ChangeQ4'15
Salaries & Benefits$13,117 $13,338 -1.6%$12,398
Occupancy 3,398 3,727 -8.8% 3,761
Outsourced Data Processing 2,130 2,108 1.1% 2,107
Amortization of
Identifiable Intangibles 905 1,001 -9.5% 948
Professional Fees 732 548 33.4% 614
Furniture & Equipment 1,213 1,119 8.4% 1,081
Other Real Estate Owned 111 315 -64.7% 53
Courier Service 545 543 0.4% 585
Other Operating 3,707 4,028 -8.0% 3,957
Total Noninterest Expense$25,858 $26,727 -3.3%$25,504
Noninterest Expense/
Avg. Earning Assets (a) 2.37% 2.50% 2.29%
Noninterest Expense/Revenues (FTE) 53.7% 54.3% 53.1%
8. Provision for Loan Losses.
(dollars in thousands)
%
Q1'16Q1'15ChangeQ4'15
Average Total Loans$1,500,616 $1,683,748 -10.9%$1,543,591
Allowance for Loan Loss (ALL)
Beginning of Period $29,771 $31,485 -5.4%$30,036
Provision for Loan Losses - - n/m -
Net ALL Losses (284) (298) -4.7% (265)
ALL End of Period$29,487 $31,187 -5.5%$29,771
ALL Recoveries/Gross ALL Losses 87% 73% 78%
Net ALL Losses/Avg. Total Loans (a) 0.08% 0.07% 0.07%
9. Credit Quality.
(dollars in thousands)
%
3/31/163/31/15Change12/31/15
Nonperforming Originated Loans:
Nonperforming Nonaccrual$9,205 $3,315 177.7%$6,302
Performing Nonaccrual 1,841 26 n/m 350
Total Nonaccrual Loans 11,046 3,341 230.6% 6,652
90+ Days Past Due Accruing Loans 183 191 -4.2% 295
Total 11,229 3,532 217.9% 6,947
Repossessed Originated Loan Collateral 4,786 5,483 -12.7% 5,829
Total Nonperforming
Originated Assets 16,015 9,015 77.7% 12,776
Nonperforming Purchased Covered Loans (1):
Nonperforming Nonaccrual - - n/m -
Performing Nonaccrual - - n/m -
Total Nonaccrual Loans - - n/m -
90+ Days Past Due Accruing Loans - - n/m -
Total - - n/m -
Repossessed Purchased Covered
Loan Collateral (1) - 486 n/m -
Total Nonperforming Purchased
Covered Assets (1) - 486 n/m -
Nonperforming Purchased Non-Covered Loans (2):
Nonperforming Nonaccrual 6,601 8,952 -26.3% 8,346
Performing Nonaccrual 80 1,093 n/m -
Total Nonaccrual Loans 6,681 10,045 -33.5% 8,346
90+ Days Past Due Accruing Loans 77 - n/m -
Total 6,758 10,045 -32.7% 8,346
Repossessed Purchased Non-Covered
Loan Collateral (2) 3,652 3,264 11.9% 3,435
Total Nonperforming Purchased
Non-Covered Assets (2) 10,410 13,309 -21.8% 11,781
Total Nonperforming Assets$26,425 $22,810 15.9%$24,557
Total Originated Loans Outstanding$1,310,083 $1,465,546 -10.6%$1,351,839
Total Purchased Covered
Loans Outstanding (1) 13,664 16,329 -16.3% 14,061
Total Purchased Non-Covered
Loans Outstanding (2) 149,449 202,009 -26.0% 167,496
Total Loans Outstanding $1,473,196 $1,683,884 -12.5%$1,533,396
Total Assets $5,199,868 $5,035,777 3.3%$5,168,875
Loans:
Allowance for Loan Losses$29,487 $31,187 -5.5%$29,771
Allowance/Loans 2.00% 1.85% 1.94%
Nonperforming Loans/Total Loans 1.22% 0.81% 1.00%
Purchased Covered Loans (1):
Fair Value Discount on Purchased
Covered Loans$18 $200 $152
Discount/Purchased Covered
Loans, gross 0.13% 1.21% 1.07%
Nonperforming Purchased Covered Loans/
Total Purchased Covered Loans 0.00% 0.00% 0.00%
Purchased Non-Covered Loans (2):
Fair Value Discount on Purchased
Non-Covered Loans$6,084 $8,705 $6,432
Discount/Purchased Non-Covered 3.91% 4.13% 3.70%
Loans, gross
Nonperforming Purchased Non-Covered Loans/
Total Purchased Non-Covered Loans 4.52% 4.97% 4.98%
10. Capital.
(in thousands, except per-share amounts)
%
3/31/163/31/15Change12/31/15
Shareholders' Equity$538,973 $527,380 2.2%$532,205
Total Assets 5,199,868 5,035,777 3.3% 5,168,875
Shareholders' Equity/
Total Assets 10.37% 10.47% 10.30%
Shareholders' Equity/
Total Loans 36.59% 31.32% 34.71%
Tangible Common Equity Ratio 8.04% 8.01% 7.94%
Common Shares Outstanding 25,438 25,563 -0.5% 25,528
Common Equity Per Share$21.19 $20.63 2.7%$20.85
Market Value Per Common Share$48.71 $43.21 12.7%$46.75
Share Repurchase Programs
(shares in thousands)
%
Q1'16Q1'15ChangeQ4'15
Total Shares Repurchased 130 183 -28.7% 2
Average Repurchase Price$41.53 $42.99 -3.4%$43.01
Net Shares Repurchased 90 182 -50.5% 2
11. Period-End Balance Sheets.
(unaudited, dollars in thousands)
%
3/31/163/31/15Change12/31/15
Assets:
Cash and Due from Banks$471,164 $247,450 90.4%$433,044
Investment Securities:
Available For Sale 1,585,970 1,777,320 -10.8% 1,570,216
Held to Maturity 1,358,139 1,015,231 33.8% 1,316,075
Loans 1,473,196 1,683,884 -12.5% 1,533,396
Allowance For Loan Losses (29,487) (31,187) -5.5% (29,771)
Total Loans, net 1,443,709 1,652,697 -12.6% 1,503,625
Other Real Estate Owned 8,438 9,233 -8.6% 9,264
Premises and Equipment, net 38,045 38,313 -0.7% 38,693
Identifiable Intangibles, net 9,526 13,286 -28.3% 10,431
Goodwill 121,673 121,673 0.0% 121,673
Other Assets 163,204 160,574 1.6% 165,854
Total Assets$5,199,868 $5,035,777 3.3%$5,168,875
Liabilities and Shareholders' Equity:
Deposits:
Noninterest Bearing$1,989,010 $1,902,904 4.5%$2,026,049
Interest-Bearing Transaction 855,008 787,633 8.6% 860,706
Savings 1,393,919 1,313,007 6.2% 1,366,936
Time 278,813 376,532 -26.0% 286,968
Total Deposits 4,516,750 4,380,076 3.1% 4,540,659
Short-Term Borrowed Funds 52,451 82,960 -36.8% 53,028
Federal Home Loan Bank Advances - - n/m -
Other Liabilities 91,694 45,361 102.1% 42,983
Total Liabilities 4,660,895 4,508,397 3.4% 4,636,670
Shareholders' Equity:
Common Equity:
Paid-In Capital 381,426 377,669 1.0% 381,436
Accumulated Other
Comprehensive Income 6,619 9,600 -31.1% 675
Retained Earnings 150,928 140,111 7.7% 150,094
Total Shareholders' Equity 538,973 527,380 2.2% 532,205
Total Liabilities and
Shareholders' Equity$5,199,868 $5,035,777 3.3%$5,168,875
12. Income Statements.
(unaudited, in thousands except per-share amounts)
%
Q1'16Q1'15ChangeQ4'15
Interest & Fee Income:
Loans$18,353 $20,230 -9.3%$18,798
Investment Securities:
Available for Sale 7,967 7,469 6.7% 7,916
Held to Maturity 7,327 6,218 17.8% 7,174
Total Interest & Fee Income 33,647 33,917 -0.8% 33,888
Interest Expense:
Transaction Deposits 70 63 11.2% 70
Savings Deposits 223 216 3.2% 218
Time Deposits 250 363 -31.2% 266
Short-Term Borrowed Funds 9 16 -43.1% 9
Federal Home Loan Bank Advances - 1 n/m -
Total Interest Expense 552 659 -16.4% 563
Net Interest Income 33,095 33,258 -0.5% 33,325
Provision for Loan Losses - - n/m -
Noninterest Income:
Service Charges 5,248 5,707 -8.0% 5,259
Merchant Processing Services 1,529 1,703 -10.2% 1,368
Debit Card Fees 1,516 1,456 4.1% 1,557
Other Service Fees 629 665 -5.5% 648
ATM Processing Fees 658 585 12.6% 569
Trust Fees 661 706 -6.5% 671
Financial Services Commissions 156 153 2.2% 168
Other 1,332 1,325 0.5% 1,065
Total Noninterest Income 11,729 12,300 -4.6% 11,305
Noninterest Expense:
Salaries and Benefits 13,117 13,338 -1.6% 12,398
Occupancy 3,398 3,727 -8.8% 3,761
Outsourced Data Processing 2,130 2,108 1.1% 2,107
Amortization of Identifiable Intangibles 905 1,001 -9.5% 948
Professional Fees 732 548 33.4% 614
Furniture & Equipment 1,213 1,119 8.4% 1,081
Other Real Estate Owned 111 315 -64.7% 53
Courier Service 545 543 0.4% 585
Other 3,707 4,028 -8.0% 3,957
Total Noninterest Expense 25,858 26,727 -3.3% 25,504
Income Before Income Taxes 18,966 18,831 0.7% 19,126
Income Tax Provision 4,740 4,274 10.9% 4,548
Net Income$14,226 $14,557 -2.3%$14,578
Average Common Shares Outstanding 25,445 25,651 -0.8% 25,528
Diluted Common Shares Outstanding 25,468 25,655 -0.7% 25,555
Per Common Share Data:
Basic Earnings$0.56 $0.57 -1.8%$0.57
Diluted Earnings 0.56 0.57 -1.8% 0.57
Dividends Paid 0.39 0.38 2.6% 0.39
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.

For additional information contact: Westamerica Bancorporation 1108 Fifth Avenue, San Rafael, CA 94901 Robert A. Thorson – SVP & Chief Financial Officer 707-863-6840 investments@westamerica.com

Source:Westamerica Bancorporation