January 15, 2015
For Immediate Release
San Rafael, CA: Westamerica Bancorporation (NASDAQ: WABC), parent company of Westamerica Bank, generated net income for the fourth quarter 2014 of $15.0 million and diluted earnings per common share ("EPS") of $0.58, which matched the prior quarter’s EPS.
"Westamerica’s credit quality continued to show improvement with nonperforming assets declining to $24 million at December 31, 2014, compared to $26 million at September 30, 2014, and $35 million at December 31, 2013. Net loan losses for the year 2014 were 0.17 percent of total average loans, compared to 0.33 percent for 2013. With this improvement in credit quality, we further reduced our loan loss provision to $200 thousand for the fourth quarter, compared to $600 thousand for the third quarter 2014 and $1.6 million for the fourth quarter 2013. Our annualized net interest margin was 3.53 percent in the fourth quarter, down from 3.66 percent in the prior quarter. Low market interest rates continue to pressure our net interest margin, particularly the securities portfolio yield as we purchase shorter-duration, lower-yielding securities in anticipation of rising interest rates. Our margin is supported by a relatively low 0.08 annual percentage funding rate, given 91 percent of our deposits are low-cost checking and savings deposits. We also continue to focus on controlling operating costs while providing superior customer service; our 2014 expenses were down five percent from 2013 levels,” said Chairman, President and CEO David Payne. “Our operating results generated an annualized return on shareholders’ common equity of 11.5 percent for the fourth quarter 2014 and 11.6 percent for the year 2014,” concluded Payne.
Net interest income on a fully taxable equivalent (“FTE”) basis was $37.3 million for the fourth quarter 2014, compared to $37.9 million for the prior quarter and $40.1 million for the fourth quarter 2013. Net interest income declined as market interest rates on many loan products remain below the yields earned on older-dated loans and on the overall loan portfolio. The Company is reducing its exposure to rising interest rates by purchasing shorter-duration investment securities which carry lower yields than longer-duration securities. The annualized interest cost of funding the Company's loans and investment securities was 0.08 percent for the fourth quarter 2014, unchanged from the prior quarter, and down from 0.10 percent for the fourth quarter 2013. The annualized net interest margin on a fully taxable equivalent basis was 3.53 percent for the fourth quarter 2014, compared to 3.66 percent for the prior quarter and 3.92 percent for the fourth quarter 2013.
The provision for loan losses was $200 thousand for the fourth quarter 2014, down from $600 thousand for the prior quarter, and down from $1.6 million for the fourth quarter 2013. Net loan losses charged against the allowance for loan losses totaled $484 thousand for the fourth quarter 2014, compared to $1.2 million for the prior quarter and $1.8 million for the fourth quarter 2013. At December 31, 2014, the allowance for loan losses totaled $31.5 million; nonperforming originated loans totaled $5.8 million; and nonperforming purchased loans totaled $12.3 million.
Noninterest income for the fourth quarter 2014 totaled $12.5 million, compared to $13.1 million for the prior quarter and $14.0 million for the fourth quarter 2013. Noninterest income was lower in the fourth quarter 2014 due to reduced levels of service charges on deposit accounts and debit card fees. Merchant processing service fees were essentially unchanged in the fourth quarter 2014 compared to the prior quarter; however, such fees declined from the fourth quarter 2013 to the fourth quarter 2014.
Noninterest expense for the fourth quarter 2014 totaled $26.4 million, compared to $26.6 million in the prior quarter and $28.0 million for the fourth quarter 2013.
At December 31, 2014, Westamerica Bancorporation's tangible common equity-to-asset ratio was 8.0 percent, assets totaled $5.0 billion and loans outstanding totaled $1.7 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, 2013 filed on Form 10-K and quarterly report for the quarter ended September 30, 2014 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