For Immediate Release
San Rafael, CA: Westamerica Bancorporation (NASDAQ: WABC), parent company of Westamerica Bank, generated net income for the second quarter 2018 of $18.0 million and diluted earnings per common share (“EPS”) of $0.67, compared to first quarter 2018 net income of $17.5 million and EPS of $0.66 and second quarter 2017 net income of $15.8 million and EPS of $0.60.
“Second quarter 2018 net income benefited from higher interest income as rising market interest rates are benefiting our loan and investment securities yields. Our annualized funding costs were unchanged, however, at 0.04 percent of interest-earning assets due to the predominance of low-cost checking and savings accounts in our deposit portfolio. Net interest income on a fully-taxable equivalent (“FTE”) basis was $36.6 million for the second quarter 2018, compared to $35.5 million for the first quarter 2018 and $35.8 million for the second quarter 2017. Noninterest expenses for the second quarter 2018 were $24.0 million, compared to $24.2 million for first quarter 2018 and $24.4 million second quarter 2017. The improvement in revenue and decline in operating expenses resulted in pre-tax income equal to 50.4 percent of total revenues for the second quarter 2018,” said Chairman, President and CEO David Payne. “Asset quality remains strong with nonperforming assets totaling only $6 million at June 30, 2018, and net loan loss recoveries of $31 thousand for the first six months of 2018. Second quarter 2018 results generated an annualized 11.6 percent return on average common equity for our shareholders,” concluded Payne.
Net interest income (FTE) was $36.6 million for the second quarter 2018, compared to $35.5 million for the first quarter 2018 and $35.8 million for the second quarter 2017. The net interest margin (FTE) was 3.08 percent for the second quarter 2018, compared to 3.02 percent for the first quarter 2018 and 3.12 percent for the second quarter 2017. Checking and savings deposits, which are less sensitive to rising interest rates than time deposits, represented ninety-five percent of the Company’s average deposit base during the second quarter 2018.
The Company recognized no provision for loan losses for the second quarter 2018 given stable nonperforming loan volumes and other credit quality attributes. At June 30, 2018, the allowance for loan losses totaled $23.0 million.
Noninterest income for the second quarter 2018 totaled $11.8 million, compared to $12.0 million for the first quarter 2018 and $12.1 million for the second quarter 2017.
Noninterest expense for the second quarter 2018 totaled $24.0 million, compared to $24.2 million for the first quarter 2018 and $24.4 million for the second quarter 2017.
The tax rate (FTE) applied to pre-tax income was 26.1 percent for the second quarter 2018, compared to 24.6 percent for the first quarter 2018 and 37.8 percent for the second 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 book tax provisions for the second quarter 2018 and the first quarter 2018 include tax benefits of $128 thousand and $451 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 March 31, 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