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Westamerica Bancorporation Reports First Quarter 2017 Financial Results

SAN RAFAEL, Calif., April 20, 2017 (GLOBE NEWSWIRE) -- Westamerica Bancorporation (Nasdaq:WABC), parent company of Westamerica Bank, generated net income for the first quarter 2017 of $15.0 million and diluted earnings per common share ("EPS") of $0.57. First quarter 2017 results reflect the Company’s prospective adoption of a new accounting standard related to the recognition of tax benefits derived from share based compensation; first quarter 2017 EPS measured $0.02 higher than would have been measured under accounting standards applied in 2016. First quarter 2017 results compare to fourth quarter 2016 net income of $14.5 million and EPS of $0.56, and first quarter 2016 net income of $14.2 million and EPS of $0.56.

"Average loan volumes were stable in the first quarter 2017 compared to the prior quarter, and our annualized fully tax equivalent net interest margin was 3.14 percent for the first quarter 2017. Credit quality improved with non-performing assets declining $3 million during the first quarter to total $9 million at March 31, 2017. Our noninterest expenses were $24.6 million in the first quarter 2017, a reduction of $1.3 million compared to the first quarter 2016,” said Chairman, President and CEO David Payne. “Westamerica generated an annualized 10 percent return on shareholders’ common equity for our shareholders in the first quarter 2017, and paid a quarterly dividend of $0.39 per common share,” concluded Payne.

The annualized net interest margin on a fully taxable equivalent basis was 3.14 percent for the first quarter 2017, compared to 3.15 percent for the fourth quarter 2016, and 3.34 percent for the first quarter 2016. Net interest income on a fully taxable equivalent basis was $36.0 million for the first quarter 2017, compared to $36.0 million for the fourth quarter 2016, and $36.4 million for the first quarter 2016. The Company’s average earning assets, loans and investment securities, were $58 million higher in the first quarter 2017 compared to the fourth quarter 2016 due to higher volumes of investment securities. The annualized funding cost of deposits and other interest-bearing borrowings, as a percentage of average earning assets, was 0.04 percent for the first quarter 2017, compared to 0.04 percent for the fourth quarter 2016 and 0.05 percent for the first quarter 2016. Checking and savings deposits, which earn relatively low interest rates and are less volatile than time deposits during periods of rising market interest rates, represented 95 percent of average total deposits during the first quarter 2017.

The provision for loan losses was zero for the first quarter 2017, fourth quarter 2016 and first quarter 2016.

Loan losses, net of loan loss recoveries, were $1.0 million for the first quarter 2017 compared to $405 thousand for the fourth quarter 2016 and $284 thousand for the first quarter 2016; the increase in net loan losses in the first quarter 2017 was due to higher charge-offs of consumer installment loans. At March 31, 2017, the allowance for loan losses totaled $24.9 million.

Noninterest income for the first quarter 2017 totaled $11.7 million, compared $11.5 million for the fourth quarter 2016 and to $11.7 million for the first quarter 2016.

Noninterest expense for the first quarter 2017 totaled $24.6 million, compared to $24.6 million for the fourth quarter 2016 and $25.9 million for the first quarter 2016. The $1.3 million reduction from the first quarter 2016 to the first quarter 2017 was due to reductions in professional fees, courier costs, postage, correspondent service charges, OREO expense, insurance premiums, limited partnership operating losses, and intangible amortization.

The first quarter 2017 income tax provision reflects the prospective adoption of Accounting Standards Update (“ASU”) 2016-09, “Improvements to Employee Share-Based Payment Accounting.” Upon granting non-qualified stock options (“NQSO”), the Company estimates the fair value of the grant and records such value as compensation expense over the attribution period in its financial statements. At the time the NQSO grant is exercised, the ultimate value of the grant is determined and represents taxable income to the grantee and a tax deduction for the Company. The difference between the estimated fair value expensed for financial statement purposes and the realized amount deducted for tax purposes requires a reconciling adjustment to the Company’s tax accounts. Prior to ASU 2016-09, the Company recognized the balancing entry as an adjustment to shareholders’ equity; upon the January 1, 2017 required adoption of ASU 2016-09, the Company must recognize the balancing entry as an adjustment to the provision for income taxes. The Company’s fully-tax equivalent tax rate was 34.8 percent for the first quarter 2017, compared to 37.0 percent for the fourth quarter 2016 and 36.3 percent for the first quarter 2016. The first quarter 2017 fully-tax equivalent tax rate would have been 37.7 percent under accounting rules applied in 2016.

At March 31, 2017, Westamerica Bancorporation's tangible common equity-to-asset ratio was 8.68 percent, and assets totaled $5.4 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, 2016 filed on Form 10-K and quarterly report for the quarter ended September 30, 2016 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 20, 2017
WESTAMERICA BANCORPORATION
FINANCIAL HIGHLIGHTS
March 31, 2017
1. Net Income Summary.
(in thousands except per-share amounts)
%
Q1'17Q1'16ChangeQ4'16
Net Interest and Fee Income (FTE)$36,030 $36,447 -1.1%$35,959
Provision for Loan Losses - - n/m -
Noninterest Income 11,657 11,729 -0.6% 11,545
Noninterest Expense 24,615 25,858 -4.8% 24,577
Income Before Taxes (FTE) 23,072 22,318 3.4% 22,927
Income Tax Provision (FTE) 8,023 8,092 -0.8% 8,474
Net Income$15,049 $14,226 5.8%$14,453
Average Common Shares Outstanding 26,171 25,445 2.9% 25,773
Diluted Average Common Shares 26,329 25,468 3.4% 25,925
Operating Ratios:
Basic Earnings Per Common Share$0.58 $0.56 3.6%$0.56
Diluted Earnings Per Common Share 0.57 0.56 1.8% 0.56
Return On Assets (a) 1.13% 1.11% 1.07%
Return On Common Equity (a) 10.5% 10.9% 10.3%
Net Interest Margin (FTE) (a) 3.14% 3.34% 3.15%
Efficiency Ratio (FTE) 51.6% 53.7% 51.7%
Dividends Paid Per Common Share$0.39 $0.39 0.0%$0.39
Common Dividend Payout Ratio 68% 70% 70%
2. Net Interest Income.
(dollars in thousands)
%
Q1'17Q1'16ChangeQ4'16
Interest and Fee Income (FTE)$36,510 $36,999 -1.3%$36,459
Interest Expense 480 552 -13.0% 500
Net Interest and Fee Income (FTE)$36,030 $36,447 -1.1%$35,959
Average Earning Assets$4,620,001 $4,381,423 5.4%$4,561,619
Average Interest-
Bearing Liabilities 2,704,472 2,601,408 4.0% 2,681,585
Yield on Earning Assets (FTE) (a) 3.18% 3.39% 3.19%
Cost of Funds (a) 0.04% 0.05% 0.04%
Net Interest Margin (FTE) (a) 3.14% 3.34% 3.15%
Interest Expense/
Interest-Bearing Liabilities (a) 0.07% 0.09% 0.07%
Net Interest Spread (FTE) (a) 3.11% 3.30% 3.12%
3. Loans & Other Earning Assets.
(average volume, dollars in thousands)
%
Q1'17Q1'16ChangeQ4'16
Total Assets$5,395,783 $5,174,804 4.3%$5,370,412
Total Earning Assets 4,620,001 4,381,423 5.4% 4,561,619
Total Loans 1,355,250 1,500,616 -9.7% 1,356,350
Commercial Loans 354,896 370,131 -4.1% 349,022
Commercial RE Loans 558,485 630,542 -11.4% 546,145
Consumer Loans 441,869 499,943 -11.6% 461,183
Total Investment Securities 3,264,751 2,880,807 13.3% 3,205,269
Available For Sale (Market) 1,941,028 1,567,335 23.8% 1,821,998
Held To Maturity 1,323,723 1,313,472 0.8% 1,383,271
Unrealized (Loss) Gain (1,676) 23,669 n/m (5,571)
Loans/Deposits 28.9% 33.1% 28.8%
4. Deposits, Other Interest-Bearing Liabilities & Equity.
(average volume, dollars in thousands)
%
Q1'17Q1'16ChangeQ4'16
Total Deposits$4,692,746 $4,537,548 3.4%$4,702,129
Noninterest Demand 2,056,858 1,993,986 3.2% 2,077,213
Interest Bearing Transaction 880,387 872,464 0.9% 871,947
Savings 1,501,961 1,387,217 8.3% 1,492,748
Time greater than $100K 112,140 123,691 -9.3% 113,781
Time less than $100K 141,400 160,190 -11.7% 146,440
Total Short-Term Borrowings 68,584 57,846 18.6% 56,669
Shareholders' Equity 582,384 527,177 10.5% 558,057
Demand Deposits/
Total Deposits 43.8% 43.9% 44.2%
Transaction & Savings
Deposits / Total Deposits 94.6% 93.7% 94.5%
5. Interest Yields Earned & Rates Paid.
(dollars in thousands)
Q1'17
AverageIncome/Yield (a) /
VolumeExpenseRate
Interest & Fee Income Earned
Total Earning Assets (FTE)$4,620,001 $36,510 3.18%
Total Loans (FTE) 1,355,250 16,069 4.81%
Commercial Loans (FTE) 354,896 4,136 4.73%
Commercial RE Loans 558,485 8,072 5.86%
Consumer Loans 441,869 3,861 3.53%
Total Investments (FTE) 3,264,751 20,441 2.50%
Interest Expense Paid
Total Earning Assets 4,620,001 480 0.04%
Total Interest-Bearing Liabilities 2,704,472 480 0.07%
Total Interest-Bearing Deposits 2,635,888 469 0.07%
Interest-Bearing Transaction 880,387 57 0.03%
Savings 1,501,961 223 0.06%
Time less than $100K 141,400 83 0.24%
Time greater than $100K 112,140 106 0.38%
Total Short-Term Borrowings 68,584 11 0.06%
Net Interest Income and
Margin (FTE) $36,030 3.14%
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%
6. Noninterest Income.
(dollars in thousands except per-share amounts)
%
Q1'17Q1'16ChangeQ4'16
Service Charges on Deposits$4,923 $5,248 -6.2%$5,064
Merchant Processing Services 1,875 1,529 22.6% 1,678
Debit Card Fees 1,481 1,516 -2.3% 1,566
Other Service Fees 650 629 3.3% 620
ATM Processing Fees 575 658 -12.6% 551
Trust Fees 702 661 6.3% 682
Financial Services Commissions 195 156 25.0% 157
Other Income 1,256 1,332 -5.7% 1,227
Total Noninterest Income$11,657 $11,729 -0.6%$11,545
Total Revenue (FTE)$47,687 $48,176 -1.0%$47,504
Noninterest Income/Revenue (FTE) 24.4% 24.3% 24.3%
Service Charges/Avg. Deposits (a) 0.43% 0.47% 0.43%
Total Revenues (FTE) Per Avg.
Common Share (a)$7.39 $7.61 -3.0%$7.33
7. Noninterest Expense.
(dollars in thousands)
%
Q1'17Q1'16ChangeQ4'16
Salaries & Benefits$13,070 $13,117 -0.4%$12,439
Occupancy 3,633 3,398 6.9% 3,570
Outsourced Data Processing 2,139 2,130 0.4% 2,131
Amortization of
Identifiable Intangibles 800 905 -11.7% 863
Professional Fees 611 732 -16.4% 797
Furniture & Equipment 1,254 1,213 3.4% 1,290
Other Real Estate Owned (40) 111 n/m 7
Courier Service 421 545 -22.8% 494
Other Operating 2,727 3,707 -26.4% 2,986
Total Noninterest Expense$24,615 $25,858 -4.8%$24,577
Noninterest Expense/
Avg. Earning Assets (a) 2.16% 2.37% 2.14%
Noninterest Expense/Revenues (FTE) 51.6% 53.7% 51.7%
8. Allowance for Loan Losses.
(dollars in thousands)
%
Q1'17Q1'16ChangeQ4'16
Average Total Loans$1,355,250 $1,500,616 -9.7%$1,356,350
Allowance for Loan Loss (ALL)
Beginning of Period $25,954 $29,771 -12.8%$26,359
Provision for Loan Losses - - n/m -
Net ALL Losses (1,035) (284)264.0% (405)
ALL End of Period$24,919 $29,487 -15.5%$25,954
ALL Recoveries/Gross ALL Losses 44% 87% 66%
Net ALL Losses/Avg. Total Loans (a) 0.31% 0.08% 0.12%
9. Credit Quality.
(dollars in thousands)
%
3/31/173/31/16Change12/31/16
Nonperforming Loans (1):
Nonperforming Nonaccrual$2,382 $15,806 -84.9%$3,956
Performing Nonaccrual 4,285 1,921 123.1% 4,429
Total Nonaccrual Loans 6,667 17,727 -62.4% 8,385
90+ Days Past Due Accruing Loans 373 260 43.5% 497
Total 7,040 17,987 -60.9% 8,882
Repossessed Loan Collateral (1) 2,136 8,438 -74.7% 3,095
Total Nonperforming Assets (1)$9,176 $26,425 -65.3%$11,977
Total Loans Outstanding $1,351,090 $1,473,196 -8.3%$1,352,711
Total Assets $5,395,947 $5,199,868 3.8%$5,366,083
Loans:
Allowance for Loan Losses$24,919 $29,487 -15.5%$25,954
Allowance/Loans 1.84% 2.00% 1.92%
Nonperforming Loans/Total Loans 0.52% 1.22% 0.66%
10. Capital.
(in thousands, except per-share amounts)
%
3/31/173/31/16Change12/31/16
Shareholders' Equity$584,888 $538,973 8.5%$561,367
Total Assets 5,395,947 5,199,868 3.8% 5,366,083
Shareholders' Equity/
Total Assets 10.84% 10.37% 10.46%
Shareholders' Equity/
Total Loans 43.29% 36.59% 41.50%
Tangible Common Equity Ratio 8.68% 8.04% 8.26%
Common Shares Outstanding 26,283 25,438 3.3% 25,907
Common Equity Per Share$22.25 $21.19 5.0%$21.67
Market Value Per Common Share$55.83 $48.71 14.6%$62.93
Share Repurchase Programs
(shares in thousands)
%
Q1'17Q1'16ChangeQ4'16
Total Shares Repurchased - 130 n/m -
Average Repurchase Price$- $41.53 n/m $-
Net Shares (Issued) Repurchased (376) 90 n/m (242)
11. Period-End Balance Sheets.
(unaudited, dollars in thousands)
%
3/31/173/31/16Change12/31/16
Assets:
Cash and Due from Banks$546,815 $471,164 16.1%$462,271
Investment Securities:
Available For Sale 1,893,309 1,585,970 19.4% 1,890,758
Held to Maturity 1,298,414 1,358,139 -4.4% 1,346,312
Loans 1,351,090 1,473,196 -8.3% 1,352,711
Allowance For Loan Losses (24,919) (29,487)-15.5% (25,954)
Total Loans, net 1,326,171 1,443,709 -8.1% 1,326,757
Other Real Estate Owned 2,136 8,438 -74.7% 3,095
Premises and Equipment, net 36,025 38,045 -5.3% 36,566
Identifiable Intangibles, net 6,127 9,526 -35.7% 6,927
Goodwill 121,673 121,673 0.0% 121,673
Other Assets 165,277 163,204 1.3% 171,724
Total Assets$5,395,947 $5,199,868 3.8%$5,366,083
Liabilities and Shareholders' Equity:
Deposits:
Noninterest Bearing$2,046,390 $1,989,010 2.9%$2,089,443
Interest-Bearing Transaction 905,588 855,008 5.9% 865,701
Savings 1,494,854 1,393,919 7.2% 1,493,427
Time 251,141 278,813 -9.9% 256,170
Total Deposits 4,697,973 4,516,750 4.0% 4,704,741
Short-Term Borrowed Funds 73,611 52,451 40.3% 59,078
Other Liabilities 39,475 91,694 -56.9% 40,897
Total Liabilities 4,811,059 4,660,895 3.2% 4,804,716
Shareholders' Equity:
Common Equity:
Paid-In Capital 424,203 381,426 11.2% 406,139
Accumulated Other
Comprehensive Income (9,443) 6,619 n/m (10,074)
Retained Earnings 170,128 150,928 12.7% 165,302
Total Shareholders' Equity 584,888 538,973 8.5% 561,367
Total Liabilities and
Shareholders' Equity$5,395,947 $5,199,868 3.8%$5,366,083
12. Income Statements.
(unaudited, in thousands except per-share amounts)
%
Q1'17Q1'16ChangeQ4'16
Interest & Fee Income:
Loans$15,780 $18,353 -14.0%$16,235
Investment Securities:
Available for Sale 10,249 7,967 28.6% 9,422
Held to Maturity 7,295 7,327 -0.4% 7,552
Total Interest & Fee Income 33,324 33,647 -1.0% 33,209
Interest Expense:
Transaction Deposits 57 70 -18.4% 58
Savings Deposits 223 223 0.0% 230
Time Deposits 189 250 -24.2% 203
Short-Term Borrowed Funds 11 9 12.2% 9
Total Interest Expense 480 552 -13.0% 500
Net Interest Income 32,844 33,095 -0.8% 32,709
Provision for Loan Losses - - n/m -
Noninterest Income:
Service Charges 4,923 5,248 -6.2% 5,064
Merchant Processing Services 1,875 1,529 22.6% 1,678
Debit Card Fees 1,481 1,516 -2.3% 1,566
Other Service Fees 650 629 3.3% 620
ATM Processing Fees 575 658 -12.6% 551
Trust Fees 702 661 6.3% 682
Financial Services Commissions 195 156 25.0% 157
Other 1,256 1,332 -5.7% 1,227
Total Noninterest Income 11,657 11,729 -0.6% 11,545
Noninterest Expense:
Salaries and Benefits 13,070 13,117 -0.4% 12,439
Occupancy 3,633 3,398 6.9% 3,570
Outsourced Data Processing 2,139 2,130 0.4% 2,131
Amortization of Identifiable Intangibles 800 905 -11.7% 863
Professional Fees 611 732 -16.4% 797
Furniture & Equipment 1,254 1,213 3.4% 1,290
Other Real Estate Owned (40) 111 n/m 7
Courier Service 421 545 -22.8% 494
Other 2,727 3,707 -26.4% 2,986
Total Noninterest Expense 24,615 25,858 -4.8% 24,577
Income Before Income Taxes 19,886 18,966 4.9% 19,677
Income Tax Provision 4,837 4,740 2.1% 5,224
Net Income$15,049 $14,226 5.8%$14,453
Average Common Shares Outstanding 26,171 25,445 2.9% 25,773
Diluted Common Shares Outstanding 26,329 25,468 3.4% 25,925
Per Common Share Data:
Basic Earnings$0.58 $0.56 3.6%$0.56
Diluted Earnings 0.57 0.56 1.8% 0.56
Dividends Paid 0.39 0.39 0.0% 0.39
Footnotes and Abbreviations:
(FTE) Fully Taxable Equivalent. The Company presents its net interest margin and net interest income on a FTE
basis using the current statutory federal tax rate. Management believes the FTE basis is valuable to the reader
because the Company’s loan and investment securities portfolios contain a relatively large portion of municipal
loans and securities that are federally tax exempt. The Company’s tax exempt loans and securities composition
may not be similar to that of other banks, therefore in order to reflect the impact of the federally tax exempt loans
and securities on the net interest margin and net interest income for comparability with other banks, the Company
presents its net interest margin and net interest income on a FTE basis.
(a) Annualized
(1) All originated and purchased non performing loans and repossessed loan collateral have been combined as of
Q1 '17. Prior period presentation has been updated, accordingly.

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