|Westamerica Bancorporation reports fourth quarter 2012 earnings|
january 17, 2013
For Immediate Release
San Rafael, CA: Westamerica Bancorporation (NASDAQ: WABC), parent company of Westamerica Bank, today reported net income for the fourth quarter 2012 of $19.1 million and diluted earnings per common share ("EPS") of $0.70. Fourth quarter 2012 results compare to net income of $20.0 million and EPS of $0.73 for the prior quarter, and net income of $21.8 million and EPS of $0.77 for the fourth quarter 2011. Fourth quarter 2012 net income represented an annualized return on shareholders' equity of 14.1 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 problem loans and repossessed loan collateral declined $41.8 million from December 31, 2011 to December 31, 2012, which helped reduce credit administration costs and professional fees. During the fourth quarter, we delivered approximately 34 percent of our revenue, after-taxes, to the bottom line for shareholders," said Chairman, President and CEO David Payne. "Westamerica paid a $0.37 per common share dividend in the fourth quarter 2012, and retired 183 thousand common shares 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 $46.3 million for the fourth quarter 2012, compared to $48.7 million for the prior quarter and $53.4 million for the fourth quarter 2011. 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 0.13 percent in both the fourth quarter 2012 and third quarter 2012 compared to 0.18 percent in the fourth quarter 2011. The annualized net interest margin on a fully taxable equivalent basis was 4.49 percent for the fourth quarter 2012, compared to 4.67 percent for the prior quarter and 5.24 percent for the fourth quarter 2011.
The provision for loan losses was $2.8 million for the fourth quarter 2012, unchanged from the prior quarter and fourth quarter 2011. Net loan losses charged against the allowance for loan losses totaled $3.5 million for the fourth quarter 2012, compared to $3.4 million for the prior quarter and $3.1 million for the fourth quarter 2011. At December 31, 2012, the allowance for loan losses totaled $30.2 million; nonperforming originated loans totaled $12.2 million; nonperforming purchased FDIC-indemnified loans totaled $13.2 million, net of purchase discounts of $1.9 million; and nonperforming purchased non-indemnified loans totaled $7.5 million, net of purchase discounts of $2.0 million.
Noninterest income for the fourth quarter 2012 totaled $14.2 million, compared to $14.6 million in the third quarter 2012 and $14.9 million for the fourth quarter 2011.
Noninterest expense for the fourth quarter 2012 totaled $28.2 million, compared to $29.3 million in the prior quarter and $30.7 million in the fourth quarter 2011. Management is focused on reducing operating expenses over the near-term, primarily professional fees, repossessed loan collateral expenses and other problem loan related costs. Expenses related to repossessed loan collateral in the fourth quarter 2012 were lower by $357 thousand and $301 thousand compared to the third quarter 2012 and fourth quarter 2011, respectively. Professional fees were $553 thousand lower in the fourth quarter 2012 compared to the fourth quarter 2011. In addition, personnel related costs have declined primarily due to lower stock based compensation expense and a decline in the number of employees due to attrition.
At December 31, 2012, Westamerica Bancorporation's tangible common equity-to-asset ratio was 8.6 percent, assets totaled $5.0 billion and loans outstanding totaled $2.1 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, 2011 filed on Form 10-K and quarterly report for the quarter ended September 30, 2012 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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