|Westamerica Bancorporation reports fourth quarter 2013 earnings|
january 16, 2014
For Immediate Release
San Rafael, CA: Westamerica Bancorporation (NASDAQ: WABC), parent company of Westamerica Bank, generated net income for the fourth quarter 2013 of $16.1 million and diluted earnings per common share ("EPS") of $0.60. Fourth quarter 2013 results compare to net income of $16.7 million and EPS of $0.63 for the prior quarter, and net income of $19.1 million and EPS of $0.70 for the fourth quarter 2012.
"Westamerica’s credit quality continued to improve with nonperforming assets declining to $35 million at December 31, 2013 from $52 million at September 30, 2013. As a result, we reduced our provision for loan losses to $1.6 million for the fourth quarter 2013 from $1.8 million for the third quarter 2013. Originated loan volumes stabilized at $1.5 billion, however, purchased loan volumes continued to decline. Low market interest rates continue to pressure our net interest margin which was an annualized 3.92 percent for the fourth quarter 2013,” said Chairman, President and CEO David Payne. “Our lower-risk balance sheet continues to generate a relatively high annualized return on common equity of 11.8 percent for the fourth quarter 2013.”
Net interest income on a fully taxable equivalent (“FTE”) basis was $40.1 million for the fourth quarter 2013, compared to $41.2 million for the prior quarter and $46.3 million for the fourth 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 have loosened which increases credit risk. Management is avoiding low-yielding higher-risk loans. To offset the decline in interest income, 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 0.10 percent for the fourth quarter 2013 compared to 0.11 percent for the prior quarter and 0.13 percent for the fourth quarter 2012. The annualized net interest margin on a fully taxable equivalent basis was 3.92 percent for the fourth quarter 2013, compared to 4.01 percent for the prior quarter and 4.49 percent for the fourth quarter 2012.
The provision for loan losses was $1.6 million for the fourth quarter 2013 compared to $1.8 million for the prior quarter and $2.8 million for the fourth quarter 2012. Net loan losses charged against the allowance for loan losses totaled $1.8 million for the fourth quarter 2013, compared to $0.8 million for the prior quarter and $3.5 million for the fourth quarter 2012. At December 31, 2013, the allowance for loan losses totaled $31.7 million; nonperforming originated loans totaled $5.8 million; nonperforming purchased FDIC-indemnified loans totaled $12.3 million, net of purchase discounts of $0.5 million; and nonperforming purchased non-indemnified loans totaled $3.6 million, net of purchase discounts of $0.4 million.
Noninterest income for the fourth quarter 2013 totaled $14.0 million, compared to $14.4 million for the prior quarter and $14.2 million for the fourth quarter 2012.
Noninterest expense for the fourth quarter 2013 totaled $28.0 million, compared to $27.8 million in the prior quarter and $28.2 million for the fourth quarter 2012. Fourth quarter 2013 personnel costs increased due to re-measuring stock-based compensation based on the Company’s share price.
At December 31, 2013, Westamerica Bancorporation's tangible common equity-to-asset ratio was 8.6 percent, assets totaled $4.8 billion and loans outstanding totaled $1.8 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 September 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.
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