october 16, 2013
For Immediate Release
San Rafael, CA: Westamerica Bancorporation (NASDAQ: WABC), parent company of Westamerica Bank, generated net income for the third quarter 2013 of $16.7 million and diluted earnings per common share ("EPS") of $0.63. Third quarter 2013 results compare to net income of $17.1 million and EPS of $0.64 for the prior quarter, and net income of $20.0 million and EPS of $0.73 for the third quarter 2012.
"Westamerica generated a relatively high annualized return on common equity of 12.4 percent in the third quarter 2013. These returns were generated in spite of the continued pressure low market interest rates are placing on our interest margin, which was 4.01 percent for the third quarter 2013. The credit quality of our assets continues to demonstrate improvement with net loan charge-offs declining from $10.0 million in the first nine months of 2012 to $4.7 million for the first nine months of 2013,” said Chairman, President and CEO David Payne. “We remain focused on controlling noninterest expenses, which declined $1.5 million for the third quarter 2013 compared to the third quarter 2012. Westamerica paid a $0.37 per common share dividend for the third quarter 2013, and retired 256 thousand common shares during the quarter using our share repurchase plan," added Payne.
Net interest and fee income on a fully taxable equivalent (FTE) basis was $41.2 million for the third quarter 2013, compared to $42.6 million for the prior quarter and $48.7 million for the third quarter 2012. The change in net interest and fee income (FTE) 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 and fee income (FTE) 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 have loosened which increases credit risk. Management is avoiding these low-yielding higher-risk loans. To offset the decline in interest and fee income (FTE), interest expense has been lowered by reducing the volume of higher-cost funding sources. The annualized interest cost of funding the Company's loans and investment securities was 0.11 percent for the third quarter 2013 compared to 0.12 percent for the prior quarter and 0.13 percent for the third quarter 2012. The annualized net interest margin on a fully taxable equivalent basis was 4.01 percent for the third quarter 2013, compared to 4.12 percent for the prior quarter and 4.67 percent for the third quarter 2012.
The provision for loan losses was $1.8 million for both the third quarter 2013 and the prior quarter, down $1.0 million from $2.8 million for the third quarter 2012. Net loan losses charged against the allowance for loan losses totaled $810 thousand for the third quarter 2013, compared to $1.2 million for the prior quarter and $3.4 million for the third quarter 2012. At September 30, 2013, the allowance for loan losses totaled $31.9 million; nonperforming originated loans totaled $7.3 million; nonperforming purchased FDIC-indemnified loans totaled $26.3 million, net of purchase discounts of $2.0 million; and nonperforming purchased non-indemnified loans totaled $3.4 million, net of purchase discounts of $401 thousand.
Noninterest income for the third quarter 2013 totaled $14.4 million, compared to $14.3 million for the prior quarter and $14.6 million for the third quarter 2012.
Noninterest expense for the third quarter 2013 totaled $27.8 million, compared to $28.2 million in the prior quarter and $29.3 million for the third quarter 2012. The expense reductions are primarily related to personnel and loan administration costs.
At September 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.
Quarterly Financial Highlights
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 June 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.
For additional information contact:
Robert A. Thorson, Senior Vice President and Chief Financial Officer, (707) 863-6840