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Westamerica Bancorporation Reports First Quarter 2013 Earnings

SAN RAFAEL, Calif., April 16, 2013 (GLOBE NEWSWIRE) -- Westamerica Bancorporation (Nasdaq:WABC), parent company of Westamerica Bank, today reported net income for the first quarter 2013 of $17.3 million and diluted earnings per common share ("EPS") of $0.64. First quarter 2013 results compare to net income of $19.1 million and EPS of $0.70 for the prior quarter, and net income of $21.0 million and EPS of $0.75 for the first quarter 2012. First quarter 2013 net income represented an annualized return on shareholders' equity of 13 percent.

"Westamerica continues to deliver relatively high levels of profitability in a difficult operating environment. We are focused on controlling costs while banking industry revenues are pressured by low interest rates and aggressive competition. Westamerica's noninterest expenses declined 4.5 percent in the first quarter 2013 compared to the first quarter 2012. Our credit quality continues to improve with problem loans and repossessed loan collateral declining 35 percent from March 31, 2012 to March 31, 2013," said Chairman, President and CEO David Payne. "Westamerica paid a $0.37 per common share dividend in the first quarter 2013, and retired 195 thousand common shares in the quarter using our share repurchase plan. Westamerica's capital ratios continue to exceed the highest regulatory guidelines," added Payne.

Net interest income on a fully taxable equivalent basis was $43.8 million for the first quarter 2013, compared to $46.3 million for the prior quarter and $51.7 million for the first quarter 2012. The change in net interest income is due to reductions in yields on loans and investment securities, which have declined during this period of low market interest rates. The change in net interest income is also attributable to reduced loan volumes, placing greater reliance on lower-yielding investment securities. Loan volumes have declined due to problem loan workout activities, particularly with purchased loans, and reduced volumes of loan originations. In Management's opinion, current levels of competitive loan pricing do not provide adequate forward earnings potential, and competitive loan underwriting standards are loosening, causing newly originated loans to contain higher levels of credit risk; Management is avoiding low-yielding higher-risk loan originations. To offset the decline in interest income, interest expense has been reduced by lowering rates paid on interest-bearing deposits and borrowings and by reducing the volume of higher-cost funding sources. The annualized interest cost of funding the Company's loans and investment securities was 0.12 percent in the first quarter 2013 compared to 0.13 percent in the prior quarter and 0.15 percent in the first quarter 2012. The annualized net interest margin on a fully taxable equivalent basis was 4.27 percent for the first quarter 2013, compared to 4.49 percent for the prior quarter and 5.12 percent for the first quarter 2012.

The provision for loan losses was $2.8 million for the first quarter 2013, unchanged from the prior quarter and first quarter 2012. Net loan losses charged against the allowance for loan losses totaled $2.7 million for the first quarter 2013, compared to $3.5 million for the prior quarter and $3.5 million for the first quarter 2012. At March 31, 2013, the allowance for loan losses totaled $30.4 million; nonperforming originated loans totaled $8.5 million; nonperforming purchased FDIC-indemnified loans totaled $12.0 million, net of purchase discounts of $1.7 million; and nonperforming purchased non-indemnified loans totaled $9.1 million, net of purchase discounts of $1.9 million.

Noninterest income for the first quarter 2013 totaled $14.3 million, compared to $14.2 million for the prior quarter and $14.7 million for the first quarter 2012.

Noninterest expense for the first quarter 2013 totaled $28.7 million, compared to $28.2 million in the prior quarter and $30.0 million in the first quarter 2012. The 4.5 percent decline in noninterest expenses for the first quarter 2013 compared to the first quarter 2012 was primarily due to lower personnel costs, loan administration expenses, intangible amortization and professional fees.

At March 31, 2013, Westamerica Bancorporation's tangible common equity-to-asset ratio was 8.8 percent, assets totaled $4.9 billion and loans outstanding totaled $2.0 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

Public Information April 16, 2013
WESTAMERICA BANCORPORATION
FINANCIAL HIGHLIGHTS
March 31, 2013
1. Net Income Summary.
(in thousands except per-share amounts)
%
Q1'13 Q1'12 Change Q4'12
Net Interest and Fee Income (FTE) $43,835 $51,699 -15.2% $46,283
Provision for Loan Losses 2,800 2,800 0.0% 2,800
Noninterest Income 14,278 14,669 -2.7% 14,194
Noninterest Expense 28,677 30,034 -4.5% 28,233
Income Before Taxes (FTE) 26,636 33,534 -20.6% 29,444
Income Tax Provision (FTE) 9,365 12,529 -25.2% 10,308
Net Income $17,271 $21,005 -17.8% $19,136
Average Common Shares Outstanding 27,145 28,051 -3.2% 27,313
Diluted Average Common Shares 27,157 28,111 -3.4% 27,334
Operating Ratios:
Basic Earnings Per Common Share $0.64 $0.75 -14.7% $0.70
Diluted Earnings Per Common Share 0.64 0.75 -14.7% 0.70
Return On Assets (a) 1.43% 1.68% 1.55%
Return On Common Equity (a) 12.9% 15.5% 14.1%
Net Interest Margin (FTE) (a) 4.27% 5.12% 4.49%
Efficiency Ratio (FTE) 49.3% 45.3% 46.7%
Dividends Paid Per Common Share $0.37 $0.37 0.0% $0.37
Common Dividend Payout Ratio 58% 49% 53%
2. Net Interest Income.
(dollars in thousands)
%
Q1'13 Q1'12 Change Q4'12
Interest and Fee Income (FTE) $45,087 $53,258 -15.3% $47,614
Interest Expense 1,252 1,559 -19.7% 1,331
Net Interest Income (FTE) $43,835 $51,699 -15.2% $46,283
Average Earning Assets $4,135,863 $4,060,271 1.9% $4,111,970
Average Interest-
Bearing Liabilities 2,664,391 2,843,612 -6.3% 2,663,389
Yield on Earning Assets (FTE) (a) 4.39% 5.27% 4.62%
Cost of Funds (a) 0.12% 0.15% 0.13%
Net Interest Margin (FTE) (a) 4.27% 5.12% 4.49%
Interest Expense/
Interest-Bearing Liabilities (a) 0.19% 0.22% 0.20%
Net Interest Spread (FTE) (a) 4.20% 5.05% 4.42%
3. Loans & Other Earning Assets.
(average volume, dollars in thousands)
%
Q1'13 Q1'12 Change Q4'12
Total Assets $4,908,483 $5,030,935 -2.4% $4,920,620
Total Earning Assets 4,135,863 4,060,271 1.9% 4,111,970
Total Loans 2,077,989 2,467,839 -15.8% 2,155,059
Commercial Loans 404,892 523,089 -22.6% 425,035
Commercial RE Loans 904,841 1,091,025 -17.1% 939,943
Consumer Loans 768,256 853,725 -10.0% 790,081
Total Investment Securities 2,057,874 1,592,432 29.2% 1,956,911
Available For Sale (Market) 902,633 637,232 41.6% 796,998
Held To Maturity 1,155,241 955,200 20.9% 1,159,913
Unrealized Gain 23,283 22,946 1.5% 28,516
Loans/Deposits 49.5% 58.0% 51.2%
4. Deposits, Other Interest-Bearing Liabilities & Equity.
(average volume, dollars in thousands)
%
Q1'13 Q1'12 Change Q4'12
Total Deposits $4,199,229 $4,253,764 -1.3% $4,211,609
Noninterest Demand 1,643,348 1,576,058 4.3% 1,654,575
Interest Bearing Transaction 766,810 751,283 2.1% 761,395
Savings 1,158,454 1,133,261 2.2% 1,146,891
Time greater than $100K 390,518 512,427 -23.8% 400,556
Time less than $100K 240,099 280,735 -14.5% 248,192
Total Short-Term Borrowings 57,733 114,906 -49.8% 55,523
Federal Home Loan Bank Advances 25,777 26,000 -0.9% 25,832
Term Repurchase Agreement 10,000 10,000 0.0% 10,000
Debt Financing 15,000 15,000 0.0% 15,000
Shareholders' Equity 541,874 546,676 -0.9% 541,684
Demand Deposits/
Total Deposits 39.1% 37.1% 39.3%
Transaction & Savings
Deposits / Total Deposits 85.0% 81.4% 84.6%
5. Interest Yields Earned & Rates Paid.
(dollars in thousands)
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%
Q1'12
Average Income/ Yield (a) /
Volume Expense Rate
Interest & Fee Income Earned
Total Earning Assets (FTE) $4,060,271 $53,258 5.27%
Total Loans (FTE) 2,467,839 36,372 5.93%
Commercial Loans (FTE) 523,089 8,389 6.45%
Commercial RE Loans 1,091,025 18,249 6.73%
Consumer Loans 853,725 9,734 4.59%
Total Investments (FTE) 1,592,432 16,886 4.24%
Interest Expense Paid
Total Earning Assets 4,060,271 1,559 0.15%
Total Interest-Bearing Liabilities 2,843,612 1,559 0.22%
Total Interest-Bearing Deposits 2,677,706 1,187 0.18%
Interest-Bearing Transaction 751,283 90 0.05%
Savings 1,133,261 236 0.08%
Time less than $100K 280,735 438 0.63%
Time greater than $100K 512,427 423 0.33%
Total Short-Term Borrowings 114,906 27 0.10%
Federal Home Loan Bank Advances 26,000 120 1.85%
Term Repurchase Agreement 10,000 25 0.97%
Debt Financing 15,000 200 5.35%
Net Interest Income and
Margin (FTE) $51,699 5.12%
6. Noninterest Income.
(dollars in thousands except per-share amounts)
%
Q1'13 Q1'12 Change Q4'12
Service Charges on Deposits $6,542 $7,095 -7.8% $6,722
Merchant Processing Services 2,409 2,393 0.7% 2,401
Debit Card Fees 1,358 1,163 16.8% 1,357
ATM Processing Fees 705 933 -24.4% 749
Trust Fees 568 489 16.2% 552
Financial Services Commissions 180 171 5.3% 148
Other Income 2,516 2,425 3.8% 2,265
Total Noninterest Income $14,278 $14,669 -2.7% $14,194
Total Revenue (FTE) $58,113 $66,368 -12.4% $60,477
Noninterest Income/Revenue (FTE) 24.6% 22.1% 23.5%
Service Charges/Avg. Deposits (a) 0.63% 0.67% 0.63%
Total Revenues (FTE) Per Avg.
Common Share (a) $8.68 $9.52 -8.8% $8.81
7. Noninterest Expense.
(dollars in thousands)
%
Q1'13 Q1'12 Change Q4'12
Salaries & Benefits $14,403 $15,046 -4.3% $13,555
Occupancy 3,886 3,934 -1.2% 3,851
Outsourced Data Processing 2,157 2,083 3.5% 2,213
Amortization of
Identifiable Intangibles 1,219 1,402 -13.1% 1,292
Professional Fees 635 767 -17.1% 761
Equipment 880 851 3.4% 892
Other Real Estate Owned 334 230 45.0% 322
Courier Service 741 785 -5.5% 768
Loan Expense 417 627 -33.5% 467
Telephone 448 376 19.1% 511
Postage 300 372 -19.2% 301
Operational Losses 128 173 -26.3% 113
Stationery & Supplies 281 243 15.7% 275
Other Operating 2,848 3,145 -9.4% 2,912
Total Noninterest Expense $28,677 $30,034 -4.5% $28,233
Noninterest Expense/
Avg. Earning Assets (a) 2.81% 2.98% 2.73%
Noninterest Expense/Revenues (FTE) 49.3% 45.3% 46.7%
8. Provision for Loan Losses.
(dollars in thousands)
%
Q1'13 Q1'12 Change Q4'12
Average Total Loans $2,077,989 $2,467,839 -15.8% $2,155,059
Avg. Total Purchased
Covered Loans (1) 363,836 512,966 -29.1% 394,848
Avg. Total Purchased
Non-Covered Loans (2) 72,752 119,503 -39.1% 77,632
Avg. Total Originated Loans 1,641,401 1,835,370 -10.6% 1,682,579
Allowance for Loan Loss (ALL)
Beginning of Period $30,234 $32,597 -7.2% $30,966
Provision for Loan Losses 2,800 2,800 0.0% 2,800
Net ALL Losses (2,680) (3,514) -23.7% (3,532)
ALL End of Period $30,354 $31,883 -4.8% $30,234
ALL Recoveries/Gross ALL Losses 29% 25% 23%
Net ALL Losses/Avg. Loans:
Originated Loans (a) 0.57% 0.69% 0.91%
Purchased Covered Loans (1)(a) 0.39% 0.28% 0.14%
Purchased Non-Covered Loans (2)(a) - - -2.31%
9. Credit Quality.
(dollars in thousands)
%
3/31/13 3/31/12 Change 12/31/12
Nonperforming Originated Loans:
Nonperforming Nonaccrual $7,005 $9,976 -29.8% $10,016
Performing Nonaccrual 1,154 6,374 -81.9% 1,759
Total Nonaccrual Loans 8,159 16,350 -50.1% 11,775
90+ Days Past Due Accruing Loans 305 359 -15.0% 455
Total 8,464 16,709 -49.3% 12,230
Repossessed Loan Collateral 7,691 13,624 -43.5% 9,295
Total Originated
Nonperforming Assets 16,155 30,333 -46.7% 21,525
Nonperforming Purchased Covered Loans (1):
Nonperforming Nonaccrual 9,578 4,510 112.4% 11,698
Performing Nonaccrual 2,299 2,165 6.2% 1,323
Total Nonaccrual Loans 11,877 6,675 77.9% 13,021
90+ Days Past Due Accruing Loans 88 520 -83.1% 155
Total 11,965 7,195 66.3% 13,176
Repossessed Purchased Covered
Loan Collateral (1) 13,713 15,810 -13.3% 13,691
Total Nonperforming Purchased
Covered Assets (1) 25,678 23,005 11.6% 26,867
Nonperforming Purchased Non-Covered Loans (2):
Nonperforming Nonaccrual 6,052 13,948 -56.6% 7,038
Performing Nonaccrual 3,060 7,056 -56.6% 461
Total Nonaccrual Loans 9,112 21,004 -56.6% 7,499
90+ Days Past Due Accruing Loans -- -- n/m 4
Total 9,112 21,004 -56.6% 7,503
Repossessed Purchased Non-Covered
Loan Collateral (2) 1,980 6,543 -69.7% 3,366
Total Nonperforming Purchased
Non-Covered Assets (2) 11,092 27,547 -59.7% 10,869
Total Nonperforming Assets $52,925 $80,885 -34.6% $59,261
Total Originated Loans Outstanding $1,613,396 $1,819,162 -11.3% $1,664,183
Total Purchased Covered
Loans Outstanding (1) 353,034 491,103 -28.1% 372,283
Total Purchased Non-Covered
Loans Outstanding (2) 70,504 112,179 -37.2% 74,891
Total Loans Outstanding $2,036,934 $2,422,444 -15.9% $2,111,357
Total Assets $4,887,844 $5,060,257 -3.4% $4,952,193
Originated Loans:
Allowance for Loan Losses $30,354 $31,883 -4.8% $30,234
Allowance/Originated Loans 1.88% 1.75% 1.82%
Nonperforming Originated Loans/
Total Originated Loans 0.52% 0.92% 0.73%
Allowance/Originated
Nonperforming Loans 359% 191% 247%
Purchased Covered Loans (1):
Fair Value Discount on Purchased
Covered Loans $22,660 $37,503 $26,128
Discount/Purchased Covered
Loans, gross 6.03% 7.09% 6.56%
Nonperforming Purchased Covered Loans/
Total Purchased Covered Loans 3.39% 1.47% 3.54%
Purchased Non-Covered Loans (2):
Fair Value Discount on Purchased
Non-Covered Loans $4,586 $9,960 $5,226
Discount/Purchased Non-Covered 6.11% 8.15% 6.52%
Loans, gross
Nonperforming Purchased Non-Covered Loans/
Total Purchased Non-Covered Loans 12.92% 18.72% 10.02%
10. Capital.
(in thousands, except per-share amounts)
%
3/31/13 3/31/12 Change 12/31/12
Shareholders' Equity $558,980 $559,528 -0.1% $560,102
Tier I Regulatory Capital 408,643 409,203 -0.1% 409,763
Total Regulatory Capital 444,401 444,180 0.0% 444,205
Total Assets 4,887,844 5,060,257 -3.4% 4,952,193
Risk-Adjusted Assets 2,778,938 2,759,789 0.7% 2,720,332
Shareholders' Equity/
Total Assets 11.44% 11.06% 11.31%
Shareholders' Equity/
Total Loans 27.44% 23.10% 26.53%
Tier I Capital/Total Assets 8.36% 8.09% 8.27%
Tier I Capital/
Risk-Adjusted Assets 14.71% 14.83% 15.06%
Total Regulatory Capital/
Risk-Adjusted Assets 15.99% 16.09% 16.33%
Tangible Common Equity Ratio 8.75% 8.36% 8.64%
Common Shares Outstanding 27,018 27,917 -3.2% 27,213
Common Equity Per Share $20.69 $20.04 3.2% $20.58
Market Value Per Common Share $45.33 $48.00 -5.6% $42.59
Share Repurchase Programs
(shares in thousands)
%
Q1'13 Q1'12 Change Q4'12
Total Shares Repurchased 347 249 39.5% 299
Average Repurchase Price $44.47 $46.86 -5.1% $42.92
Net Shares Repurchased 195 233 -15.9% 183
11. Period-End Balance Sheets.
(unaudited, dollars in thousands)
%
3/31/13 3/31/12 Change 12/31/12
Assets:
Cash and Money Market Assets $355,459 $541,102 -34.3% $491,382
Investment Securities:
Available For Sale 972,176 639,738 52.0% 825,636
Held to Maturity 1,162,358 1,038,493 11.9% 1,156,041
Purchased Covered Loans (1) 353,034 491,103 -28.1% 372,283
Purchased Non-Covered Loans (2) 70,504 112,179 -37.2% 74,891
Originated Loans 1,613,396 1,819,162 -11.3% 1,664,183
Allowance For Loan Losses (30,354) (31,883) -4.8% (30,234)
Total Loans, net 2,006,580 2,390,561 -16.1% 2,081,123
Non-Covered Other Real Estate
Owned 9,671 20,167 -52.0% 12,661
Covered Other Real Estate
Owned (1) 13,713 15,810 -13.3% 13,691
Premises and Equipment, net 38,519 37,827 1.8% 38,639
Identifiable Intangibles, net 22,042 27,227 -19.0% 23,261
Goodwill 121,673 121,673 0.0% 121,673
Other Assets 185,653 227,659 -18.5% 188,086
Total Assets $4,887,844 $5,060,257 -3.4% $4,952,193
Liabilities and Shareholders' Equity:
Deposits:
Noninterest Bearing $1,621,887 $1,575,687 2.9% $1,676,071
Interest-Bearing Transaction 771,268 748,149 3.1% 748,818
Savings 1,160,976 1,143,027 1.6% 1,165,032
Time 607,819 782,141 -22.3% 642,571
Total Deposits 4,161,950 4,249,004 -2.0% 4,232,492
Short-Term Borrowed Funds 61,854 106,683 -42.0% 53,687
Federal Home Loan Bank Advances 25,743 25,967 -0.9% 25,799
Term Repurchase Agreement 10,000 10,000 0.0% 10,000
Debt Financing 15,000 15,000 0.0% 15,000
Other Liabilities 54,317 94,075 -42.3% 55,113
Total Liabilities 4,328,864 4,500,729 -3.8% 4,392,091
Shareholders' Equity:
Common Equity:
Paid-In Capital 376,680 378,590 -0.5% 375,113
Accumulated Other
Comprehensive Income 15,372 12,180 26.2% 14,625
Retained Earnings 166,928 168,758 -1.1% 170,364
Total Shareholders' Equity 558,980 559,528 -0.1% 560,102
Total Liabilities and
Shareholders' Equity $4,887,844 $5,060,257 -3.4% $4,952,193
12. Income Statements.
(unaudited, in thousands except per-share amounts)
%
Q1'13 Q1'12 Change Q4'12
Interest & Fee Income:
Loans $27,399 $35,656 -23.2% $29,640
Investment Securities:
Available for Sale 5,336 4,788 11.5% 5,166
Held to Maturity 7,730 7,854 -1.6% 8,087
Total Interest & Fee Income 40,465 48,298 -16.2% 42,893
Interest Expense:
Transaction Deposits 66 90 -26.7% 70
Savings Deposits 230 236 -2.7% 234
Time Deposits 603 861 -29.9% 666
Short-Term Borrowed Funds 11 27 -59.8% 14
Federal Home Loan Bank Advances 118 120 -1.2% 122
Term Repurchase Agreement 24 25 -3.3% 25
Debt Financing and Notes Payable 200 200 0.0% 200
Total Interest Expense 1,252 1,559 -19.7% 1,331
Net Interest Income 39,213 46,739 -16.1% 41,562
Provision for Loan Losses 2,800 2,800 0.0% 2,800
Noninterest Income:
Service Charges 6,542 7,095 -7.8% 6,722
Merchant Processing Services 2,409 2,393 0.7% 2,401
Debit Card Fees 1,358 1,163 16.8% 1,357
ATM Processing Fees 705 933 -24.4% 749
Trust Fees 568 489 16.2% 552
Financial Services Commissions 180 171 5.3% 148
Other 2,516 2,425 3.8% 2,265
Total Noninterest Income 14,278 14,669 -2.7% 14,194
Noninterest Expense:
Salaries and Benefits 14,403 15,046 -4.3% 13,555
Occupancy 3,886 3,934 -1.2% 3,851
Outsourced Data Processing 2,157 2,083 3.5% 2,213
Amortization of Identifiable Intangibles 1,219 1,402 -13.1% 1,292
Professional Fees 635 767 -17.1% 761
Equipment 880 851 3.4% 892
Other Real Estate Owned 334 230 45.0% 322
Courier Service 741 785 -5.5% 768
Other 4,422 4,936 -10.4% 4,579
Total Noninterest Expense 28,677 30,034 -4.5% 28,233
Income Before Income Taxes 22,014 28,574 -23.0% 24,723
Income Tax Provision 4,743 7,569 -37.3% 5,587
Net Income $17,271 $21,005 -17.8% $19,136
Average Common Shares Outstanding 27,145 28,051 -3.2% 27,313
Diluted Common Shares Outstanding 27,157 28,111 -3.4% 27,334
Per Common Share Data:
Basic Earnings $0.64 $0.75 -14.7% $0.70
Diluted Earnings 0.64 0.75 -14.7% 0.70
Dividends Paid 0.37 0.37 0.0% 0.37
Footnotes and Abbreviations:
(FTE) Fully Taxable Equivalent
(a) Annualized
(1) Purchased covered loans represent purchased loans on which losses are shared with the FDIC per a
Loss Sharing Agreement. Purchased covered loans were recorded at estimated fair value at February 6, 2009, the date of purchase.
(2) Purchased non-covered loans represent purchased loans recorded at estimated fair value at August 20, 2010, the date of purchase.

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

Source:Westamerica Bancorporation