July 15, 2015
For Immediate Release
San Rafael, CA: Westamerica Bancorporation (NASDAQ: WABC),), parent company of Westamerica Bank, generated net income for the second quarter 2015 of $14.8 million and diluted earnings per common share ("EPS") of $0.58, increased from net income of $14.6 million and EPS of $0.57 for the prior quarter. In the second quarter 2015, Westamerica Bancorporation paid a $0.38 per common share dividend.
"Our annualized net interest margin, on a fully taxable equivalent basis, was 3.37 percent in the second quarter 2015, which benefited from the recent increase in market interest rates. Cash proceeds from investment securities were reinvested at higher yields during the second quarter 2015. Our margin was also supported by a stable and relatively low annualized funding cost of 0.06 percent during the second quarter 2015 given 92 percent of our average deposits were low-cost checking and savings deposits. Westamerica’s credit quality improved from one year ago with nonperforming assets declining 13 percent to $26 million at June 30, 2015. With credit quality at healthy levels, the provision for loan losses remained zero for the second quarter 2015. The level of operating costs in the second quarter 2015 again represented a relatively low 54 percent of total revenues,” said Chairman, President and CEO David Payne. “Our operating results generated an annualized return on shareholders’ common equity of 11.5 percent for the second quarter 2015,” concluded Payne.
Net interest income on a fully taxable equivalent (“FTE”) basis was $37.4 million for the second quarter 2015, increased from $36.9 million for the prior quarter, due to an increase in average interest earning assets and an additional calendar day of interest accruals, offset in part by a 0.06 percent decline in the net interest margin. Interest earning asset volumes increased in the second quarter 2015 due to growth in investment securities, offset in part by lower loan volumes. The Company is currently avoiding long-dated, low-yielding loans given the expectation for rising interest rates. The Company is also reducing its exposure to rising interest rates by purchasing shorter-duration investment securities. Net interest income was lower in the second quarter 2015 compared to the second quarter 2014 due to a decline in the net interest margin, offset in part by an increase in interest earning assets; the decline in the net interest margin is due to re-investment of cash payments from loans and securities at prevailing low interest rates. The annualized net interest margin on a fully taxable equivalent basis was 3.37 percent for the second quarter 2015, compared to 3.43 percent for the prior quarter and 3.76 percent for the second quarter 2014.
The provision for loan losses was zero for the second quarter 2015, unchanged from the prior quarter, and down from $1.0 million for the second quarter 2014. Net loan losses charged against the allowance for loan losses totaled $359 thousand for the second quarter 2015, compared to $298 thousand for the prior quarter and $711 thousand for the second quarter 2014. At June 30, 2015, the allowance for loan losses totaled $30.8 million and nonperforming loans totaled $16.4 million.
Noninterest income for the second quarter 2015 totaled $12.3 million, unchanged from the prior quarter, and compared to $13.2 million for the second quarter 2014. Noninterest income was lower in the second quarter 2015 compared to the second quarter 2014 due todeclines in service charges on deposit accounts and other income.
Noninterest expense for the second quarter 2015 totaled $26.9 million, compared to $26.7 million in the prior quarter and $27.0 million for the second quarter 2014. Noninterest expense increased in the second quarter 2015 compared to the first quarter 2015 due to higher stock-based compensation costs (based on appreciation in the market value of the Company’s common share price) and other employee benefit costs.
At June 30, 2015, Westamerica Bancorporation's tangible common equity-to-asset ratio was 8.0 percent, assets totaled $5.0 billion and loans outstanding totaled $1.6 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, 2014 filed on Form 10-K and quarterly report for the quarter ended March 31, 2015 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