January 17, 2019
For Immediate Release
San Rafael, CA: Westamerica Bancorporation (NASDAQ: WABC), parent company of Westamerica Bank, generated net income for the fourth quarter 2018 of $19.1 million and diluted earnings per common share ("EPS") of $0.71 compared to $17.0 million and EPS of $0.63 for the third quarter 2018. Third quarter 2018 results include a $585 thousand tax-exempt life insurance policy gain and a $3.5 million loss contingency settlement, which on an aggregate basis reduced EPS $0.07.
"Fourth quarter 2018 net interest income demonstrated continuing improvement as higher market interest rates benefit the yields on our interest-earning loans and securities. Our annualized funding costs were unchanged at 0.04 percent of interest-earning assets due to the predominance of low-cost checking and savings accounts in our deposit portfolio. The annualized net interest margin on a fully-taxable equivalent (“FTE”) basis rose from 3.00 percent for the third quarter 2018 to 3.06 percent for the fourth quarter 2018. Asset quality remains solid with nonperforming assets totaling only $5.8 million at December 31, 2018,” said Chairman, President and CEO David Payne. “Fourth quarter 2018 results generated an annualized 11.7 percent return on average common equity. These results allowed the Board of Directors to approve a $0.40 per share dividend in the fourth quarter 2018 for our shareholders,” concluded Payne.
Net interest income (FTE) was $40.3 million for the fourth quarter 2018, compared to $39.5 million for the third quarter 2018 and $37.9 million for the fourth quarter 2017. The annualized net interest margin (FTE) was 3.06 percent for the fourth quarter 2018, compared to 3.00 percent for the third quarter 2018 and 2.96 percent for the fourth quarter 2017. Checking and savings deposits, which are less sensitive to rising interest rates than time deposits, represented ninety-six percent of the Company’s average deposit base during the fourth quarter 2018.
The Company recognized no provision for loan losses for the fourth quarter 2018 given low levels of nonperforming loans and other credit quality attributes.
Noninterest expense for the fourth quarter 2018 totaled $25.8 million, compared to $29.4 million for the third quarter 2018 and $31.4 million for the fourth quarter 2017. Noninterest expense for the third quarter 2018 included a $3.5 million loss contingency settlement to dismiss a lawsuit. Noninterest expense for the fourth quarter 2017 included a $5.5 million loss contingency to provide refunds of revenue to some customers. Loss contingencies represent estimated liabilities which are subject to revision.
The tax rate (FTE) applied to pre-tax income (FTE) was 27.8 percent for the fourth quarter 2018, compared to 25.0 percent for the third quarter 2018 and 84.5 percent for the fourth quarter 2017. The lower tax rates for 2018 compared to 2017 reflect a reduction in the federal corporate tax rate due to the Tax Cuts and Jobs Act of 2017 (the “Act”). The Act was signed into law in the fourth quarter 2017, requiring re-measurement of deferred tax assets which resulted in a $12.3 million charge to the fourth quarter 2017 book tax provision. The book tax provisions for the fourth quarter 2018 and third quarter 2018 include tax benefits of $7 thousand and $152 thousand, respectively, for tax deductions from the exercise of employee stock options which exceed related compensation expense recognized in the financial statements.
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, 2017 filed on Form 10-K and quarterly report for the quarter ended June 30, 2018 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