For Immediate Release
San Rafael, CA: Westamerica Bancorporation (NASDAQ: WABC), parent company of Westamerica Bank, generated net income for the first quarter 2018 of $17.5 million and diluted earnings per common share (“EPS”) of $0.66, compared to first quarter 2017 net income of $15.0 million and EPS of $0.57. Fourth quarter 2017 net income of $4.2 million and EPS of $0.16 include adjustments to asset values triggered by enactment of the Tax Cuts and Jobs Act of 2017 (“Act”), recognition of a loss contingency, and securities gains which collectively reduced EPS by $0.42.
“First quarter 2018 net income benefited from higher interest income as rising market interest rates are benefiting our asset yields. Our funding costs were unchanged, however, at 0.04 percent of earning assets due to the predominance of low-cost checking and savings accounts in our deposit base. Net interest income was $34.0 million for the first quarter 2018, compared to $33.7 million for the fourth quarter 2017 and $32.8 million for the first quarter 2017. First quarter 2018 net income also benefited from Westamerica’s operating efficiency; noninterest expenses were $24.2 million for the first quarter 2018 compared to $24.6 million for the first quarter 2017, said Chairman, President and CEO David Payne. “Asset quality remains strong with nonperforming assets totaling only $7.8 million at March 31, 2018, and net loan loss recoveries of $72 thousand for the first quarter 2018. First quarter 2018 results generated an 11.6 percent return on average common equity for our shareholders,” concluded Payne.
Interest income earned on loans and securities was $34.5 million for the first quarter 2018, compared to $34.2 million for the fourth quarter 2017 and $33.3 million for the first quarter 2017. Interest expense paid on deposits and short-term borrowed funds was $459 thousand for the first quarter 2018, compared to $471 thousand for the fourth quarter 2017 and $480 thousand for the first quarter 2017. Checking and savings deposits represented ninety-five percent of the Company’s average deposit base during the first quarter 2018; checking and savings deposits are less sensitive to rising interest rates than time deposits.
The Company recognized no provision for loan losses for the first quarter 2018 given stable nonperforming loan volumes and other credit quality attributes. At March 31, 2018, the allowance for loan losses totaled $23.1 million compared to $23.0 million at December 31, 2017.
Noninterest income for the first quarter 2018 totaled $12.0 million, compared to $20.3 million for the fourth quarter 2017 and $11.7 million for the first quarter 2017. Noninterest income for the fourth quarter 2017 included $8.0 million in securities gains.
Noninterest expense for the first quarter 2018 totaled $24.2 million, compared to $30.2 million for the fourth quarter 2017 and $24.6 million for the first quarter 2017. Noninterest expense for the fourth quarter 2017 included a $625 thousand impairment of low income housing limited partnership investments due to enactment of the Act and a $5.5 million loss contingency accrual.
The book tax provision for the first quarter 2018 was $4.3 million, compared to $19.7 million for the fourth quarter 2017 and $4.8 million for the first quarter 2017, representing effective tax rates of 19.7 percent, 82.6 percent and 24.3 percent, respectively. The book tax provisions for the first quarter 2018 and the first quarter 2017 include tax benefits of $451 thousand and $671 thousand, respectively, for tax deductions from the exercise of employee stock options which exceed related compensation expenses recognized in the financial statements; these benefits reduced the effective tax rate by 2.0 percent and 3.4 percent, respectively. The lower effective tax rate for the first quarter 2018 reflects a reduction in the federal corporate tax rate due to the Act. The book tax provision for the fourth quarter 2017 includes a charge of $12.3 million to re-measure the Company’s net deferred tax asset triggered by enactment of the Act.
Westamerica Bancorporation, through its wholly owned subsidiary Westamerica Bank, operates commercial banking and trust offices throughout Northern and Central California.
Quarterly Financial Highlights
FORWARD-LOOKING INFORMATION:
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 September 30, 2017 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.
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:
Westamerica Bancorporation
Robert A. Thorson, Senior Vice President and Chief Financial Officer, (707) 863-6840
E-mail: investments@westamerica.com