|Westamerica Bancorporation reports second quarter 2013 earnings|
july 16, 2013
For Immediate Release
San Rafael, CA: Westamerica Bancorporation (NASDAQ: WABC), parent company of Westamerica Bank, generated net income for the second quarter 2013 of $17.1 million and diluted earnings per common share ("EPS") of $0.64. Second quarter 2013 results compare to net income of $17.3 million and EPS of $0.64 for the prior quarter, and net income of $21.0 million and EPS of $0.75 for the second quarter 2012. Second quarter 2013 net income represented an annualized return on shareholders' equity of 13 percent.
"Westamerica continues to deliver relatively high levels of profitability from a high-quality balance sheet. Our credit quality has continued to improve with nonperforming assets declining 36 percent in the last twelve months, and net loan charge-offs declining to $3.9 million in the six-months ended June 30, 2013 compared to $6.9 million in the six-months ended December 31, 2012. The sustained improvement in our credit quality resulted in a reduced provision for loan losses of $1.8 million for the second quarter 2013. Our annualized net interest margin was 4.12 percent for the second quarter 2013, which reflects continued pressure from low market interest rates and aggressive loan competition," said Chairman, President and CEO David Payne. “We remain focused on controlling noninterest expenses, which declined $1.2 million in the second quarter 2013 compared to the second quarter 2012. Westamerica paid a $0.37 per common share dividend in the second quarter 2013, and retired 249 thousand common shares in the quarter using our share repurchase plan," added Payne.
Net interest income on a fully taxable equivalent basis was $42.6 million for the second quarter 2013, compared to $43.8 million for the prior quarter and $50.3 million for the second 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 which increases credit risk. Management is avoiding these low-yielding higher-risk loans. To offset the decline in interest income, interest expense has been reduced by lowering rates paid on interest-bearing deposits 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 second quarter 2013 compared to 0.12 percent in the prior quarter and 0.15 percent in the second quarter 2012. The annualized net interest margin on a fully taxable equivalent basis was 4.12 percent for the second quarter 2013, compared to 4.27 percent for the prior quarter and 4.89 percent for the second quarter 2012.
The provision for loan losses was $1.8 million for the second quarter 2013, down $1.0 million from $2.8 million in both the prior quarter and second quarter 2012. Net loan losses charged against the allowance for loan losses totaled $1.2 million for the second quarter 2013, compared to $2.7 million for the prior quarter and $3.2 million for the second quarter 2012. At June 30, 2013, the allowance for loan losses totaled $30.9 million; nonperforming originated loans totaled $9.2 million; nonperforming purchased FDIC-indemnified loans totaled $16.9 million, net of purchase discounts of $1.6 million; and nonperforming purchased non-indemnified loans totaled $4.9 million, net of purchase discounts of $802 thousand.
Noninterest income for the second quarter 2013 totaled $14.3 million, compared to $14.3 million for the prior quarter and $13.5 million for the second quarter 2012. The second quarter 2012 included $1.3 million in realized securities losses.
Noninterest expense for the second quarter 2013 totaled $28.2 million, compared to $28.7 million in the prior quarter and $29.3 million for the second quarter 2012. The 2 percent decline in noninterest expenses for the second quarter 2013 compared to the first quarter 2013 was primarily due to seasonally lower payroll taxes and reduced occupancy costs. The 4 percent decline in noninterest expenses for the second quarter 2013 compared to the second quarter 2012 was primarily due to lower personnel costs, occupancy expenses, professional fees, and intangible asset amortization.
At June 30, 2013, Westamerica Bancorporation's tangible common equity-to-asset ratio was 8.6 percent, assets totaled $4.8 billion and loans outstanding totaled $1.9 billion. Westamerica Bancorporation, through its wholly owned subsidiary Westamerica Bank, operates commercial banking and trust offices throughout Northern and Central California.
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, 2012 filed on Form 10-K and quarterly report for the quarter ended March 31, 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.
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