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How did they do?
Westamerica Bancorporation (Nasdaq:WABC), parent company of Westamerica Bank, generated net income for the third quarter 2015 of $14.9 million and diluted earnings per common share of $0.58, compared to net income of $14.8 million and EPS of $0.58 for the prior quarter, and net income of $15.2 million and EPS of $0.58 for the third quarter 2014.
“Our operating results generated an annualized return on shareholders’ common equity of 11.3 percent for the third quarter 2015. These relatively strong results were achieved from our consistent and disciplined operating practices. While our net interest margin declined to 3.31 percent for the third quarter 2015, the margin was supported by a low 0.05 percent cost of funding our interest generating assets. Lower-costing checking and savings deposits continued to grow in the third quarter 2015, and represented 93 percent of total deposits at September 30, 2015. Westamerica’s credit quality remained stable at healthy levels throughout the quarter, requiring no provision for loan losses, and our operating expenses represented only 53 percent of our revenues during the third quarter 2015,” said Chairman, President and CEO David Payne. “Westamerica paid our shareholders a $0.38 per share dividend in the third quarter 2015,” concluded Payne.
Net interest income on a fully taxable equivalent (“FTE”) basis was $37.2 million for the third quarter 2015, compared to $37.4 million for the prior quarter, and $37.9 million for the third quarter 2014. The decline in net interest income is due to a decline in the net interest margin, offset in part by increasing volumes of interest-earning assets. The annualized net interest margin on a fully taxable equivalent basis was 3.31 percent for the third quarter 2015, compared to 3.37 percent for the prior quarter and 3.66 percent for the third quarter 2014. 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 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. The increase in volumes of interest-earning assets has been funded by growth in checking and savings deposits.
The provision for loan losses was zero for the third quarter 2015, unchanged from the prior quarter, and down from $600 thousand for the third quarter 2014. Net loan losses charged against the allowance for loan losses totaled $792 thousand for the third quarter 2015, compared to $359 thousand for the prior quarter and $1.2 million for the third quarter 2014. At September 30, 2015, the allowance for loan losses totaled $30 million and nonperforming loans totaled $17 million.
Noninterest income for the third quarter 2015 totaled $12.0 million, compared to $12.3 million for the prior quarter, and $13.1 million for the third quarter 2014. Noninterest income was lower in the third quarter 2015 compared to the third quarter 2014 due to declines in service charges on deposit accounts and merchant processing fees.
Noninterest expense for the third quarter 2015 totaled $26.2 million, compared to $26.9 million in the prior quarter and $26.6 million for the third quarter 2014. The decline in noninterest expense is due to declines in personnel costs and other expenses.
At September 30, 2015, Westamerica Bancorporation’s tangible common equity-to-asset ratio was 8.2 percent, and assets totaled $5.0 billion. Westamerica Bancorporation, through its wholly owned subsidiary Westamerica Bank, operates commercial banking and trust offices throughout Northern and Central California.
