SAN RAFAEL, Calif., April 20, 2023 (GLOBE NEWSWIRE) -- Westamerica Bancorporation (NASDAQ:WABC), parent company of Westamerica Bank, generated net income for the first quarter 2023 of $40.5 million and diluted earnings per common share ("EPS") of $1.51. First quarter 2023 results include a provision for credit losses reversal of $1.6 million, which increased EPS $0.04. These results compare to net income for fourth quarter 2022 of $39.3 million and EPS of $1.46.

"Westamerica's first quarter 2023 results benefited from the Company's valuable low-cost deposit base; the cost of funding our loan and bond portfolios was 0.03 percent in the first quarter 2023, unchanged from the prior quarter. Non-interest bearing deposits represented 47 percent of average deposits in the first quarter 2023 while higher-cost time deposits represented only 2 percent of average deposits. The first quarter 2023 also benefited from higher yields on variable-rate assets. Operating expenses were well controlled and credit quality remained stable with nonperforming assets of $785 thousand at March 31, 2023," said Chairman, President and CEO David Payne. "First quarter 2023 results generated an annualized 19.1 percent return on average common equity. Shareholders were paid a $0.42 per common share dividend during the first quarter 2023," concluded Payne.

Net interest income on a fully-taxable equivalent (FTE) basis was $69.6 million for the first quarter 2023, compared to $69.2 million for the fourth quarter 2022. The yield earned on loans, bonds and cash for the first quarter 2023 was 4.21 percent, up from 3.98 percent for the fourth quarter 2022. The cost of funding the loan and bond portfolios was 0.03 percent for both the first quarter 2023 and fourth quarter 2022.

The Company recognized a $1.6 million provision for credit losses reversal in the first quarter 2023 as a result of a $2.2 million recovery on a previously charged-off commercial loan.

Variable rate assets at March 31, 2023 included $1.5 billion in collateralized loan obligations for which interest rates reset quarterly.

Noninterest income for the first quarter 2023 totaled $10.5 million unchanged from the fourth quarter 2022.

Noninterest expenses for the first quarter 2023 were $26.2 million compared to $25.1 million for the fourth quarter 2022; the increase in noninterest expenses is primarily due to an increase in seasonal payroll taxes and increased FDIC insurance assessments for all insured depository institutions.

Westamerica Bancorporation's wholly owned subsidiary Westamerica Bank, operates commercial banking and trust offices throughout Northern and Central California.

Westamerica Bancorporation Web Address: www.westamerica.com

For additional information contact:

Westamerica Bancorporation

1108 Fifth Avenue, San Rafael, CA 94901

Robert A. Thorson – SVP & Chief Financial Officer

707-863-6840

investments@westamerica.com

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, 2022 filed on Form 10-K and quarterly report for the quarter ended September 30, 2022 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, cyber security risks, legislation including the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, 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.

WESTAMERICA BANCORPORATION

FINANCIAL HIGHLIGHTS

March 31, 2023

1. Net Income Summary.

(in thousands except per-share amounts)

Q1'2023

Q1'2022

Change

Q4'2022

Net Interest and Fee Income (FTE)

69,562

43,807

58.8

69,155

Reversal of Provision for Credit Losses (2)

(1,550

)

n/m

Noninterest Income (1)

10,549

11,576

-8.9

10,463

Noninterest Expense

26,210

24,875

5.4

25,090

Income Before Taxes (FTE)

55,451

30,508

81.8

54,528

Income Tax Provision (FTE)

15,000

7,892

90.1

15,184

Net Income

40,451

22,616

78.9

39,344

Average Common Shares Outstanding

26,859

26,870

-0.0

26,912

Diluted Average Common Shares Outstanding

26,866

26,885

-0.1

26,924

Operating Ratios:

Basic Earnings Per Common Share

1.51

0.84

79.8

1.46

Diluted Earnings Per Common Share

1.51

0.84

79.8

1.46

Return On Assets (a)

2.31

1.24

2.12

Return On Common Equity (a)

19.1

11.8

18.6

Net Interest Margin (FTE) (a)

4.18

2.51

3.95

Efficiency Ratio (FTE)

32.7

44.9

31.5

Dividends Paid Per Common Share

0.42

0.0

0.42

Common Dividend Payout Ratio

2. Net Interest Income.

(dollars in thousands)

Q1'2023

Q1'2022

Change

Q4'2022

Interest and Fee Income (FTE)

70,033

44,287

58.1

69,630

Interest Expense

471

480

-1.9

475

Net Interest and Fee Income (FTE)

69,562

43,807

58.8

69,155

Average Earning Assets

6,665,156

6,998,234

-4.8

6,930,584

Average Interest- Bearing Liabilities

3,287,158

3,546,146

-7.3

3,412,189

Yield on Earning Assets (FTE) (a)

4.21

2.54

3.98

Cost of Funds (a)

0.03

Net Interest Margin (FTE) (a)

4.18

2.51

3.95

Interest Expense/

Interest-Bearing Liabilities (a)

0.06

0.05

0.06

Net Interest Spread (FTE) (a)

4.15

2.49

3.92

3. Loans & Other Earning Assets.

(average volume, dollars in thousands)

Q1'2023

Q1'2022

Change

Q4'2022

Total Assets

7,112,317

7,406,321

-4.0

7,353,270

Total Earning Assets

6,665,156

6,998,234

-4.8

6,930,584

Total Loans

945,864

1,029,724

-8.1

964,287

Commercial Loans

165,360

207,901

-20.5

173,527

Commercial Real Estate Loans

493,132

524,040

-5.9

492,549

Consumer Loans

287,372

297,783

-3.5

298,211

Total Investment Securities

5,548,780

4,947,846

12.1

5,694,280

Debt Securities Available for Sale

4,636,098

4,655,983

-0.4

4,767,459

Debt Securities Held to Maturity

912,682

291,863

212.7

926,821

Total Interest-Bearing Cash

170,512

1,020,664

-83.3

272,017

Loans/Deposits

15.6

16.1

15.2

4. Deposits, Other Interest-Bearing Liabilities & Equity.

(average volume, dollars in thousands)

Q1'2023

Q1'2022

Change

Q4'2022

Total Deposits

6,061,923

6,393,458

-5.2

6,349,401

Noninterest Demand

2,851,600

3,005,065

-5.1

3,010,806

Interest-Bearing Transaction

1,233,439

1,265,100

-2.5

1,287,304

Savings

1,847,428

1,980,092

-6.7

1,917,370

Time greater than $100K

57,630

64,172

-10.2

59,720

Time less than $100K

71,826

79,029

-9.1

74,201

Total Short-Term Borrowings

76,835

157,753

-51.3

73,594

Shareholders' Equity

858,473

776,225

10.6

837,499

Demand Deposits/ Total Deposits

47.0

47.4

Transaction & Savings Deposits / Total Deposits

97.9

97.8

97.9

5. Interest Yields Earned & Rates Paid.

(dollars in thousands)

Q1'2023

Average

Income/

Yield (a) /

Volume

Expense

Rate (a)

Interest & Fee Income Earned:

Total Earning Assets (FTE)

6,665,156

70,033

4.21

Total Loans (FTE)

945,864

11,834

5.07

Commercial Loans (FTE)

165,360

2,760

6.77

Commercial Real Estate Loans

493,132

5,627

4.63

Consumer Loans

287,372

3,447

4.86

Total Investments (FTE)

5,548,780

56,257

4.06

Total Debt Securities Available for Sale (FTE)

4,636,098

47,114

4.06

Corporate Securities

2,350,403

16,446

2.80

Collateralized Loan Obligations

1,577,260

25,006

6.34

Agency Mortgage Backed Securities

304,863

1,865

2.45

Securities of U.S. Government sponsored entities

306,441

2,777

3.62

Obligations of States and Political Subdivisions (FTE)

83,914

637

3.04

Other Debt Securities Available for Sale (FTE)

13,217

383

11.59

Total Debt Securities Held to Maturity (FTE)

912,682

9,143

4.01

Agency Mortgage Backed Securities

101,911

547

2.15

Corporate Securities

722,452

7,815

4.33

Obligations of States and Political Subdivisions (FTE)

88,319

781

3.54

Total Interest-Bearing Cash

170,512

1,942

4.56

Interest Expense Paid:

Total Earning Assets

6,665,156

471

0.03

Total Interest-Bearing Liabilities

3,287,158

471

0.06

Total Interest-Bearing Deposits

3,210,323

458

0.06

Interest-Bearing Transaction

1,233,439

0.03

Savings

1,847,428

280

0.06

Time less than $100K

71,826

0.28

Time greater than $100K

57,630

0.24

Total Short-Term Borrowings

76,835

0.07

Net Interest Income and

Margin (FTE)

69,562

4.18

Q1'2022

Average

Income/

Yield (a) /

Volume

Expense

Rate (a)

Interest & Fee Income Earned:

Total Earning Assets (FTE)

6,998,234

44,287

2.54

Total Loans (FTE)

1,029,724

13,038

5.14

Commercial Loans (FTE)

207,901

2,843

5.55

Commercial Real Estate Loans

524,040

6,731

5.21

Consumer Loans

297,783

3,464

4.72

Total Investments (FTE)

4,947,846

30,770

2.49

Total Debt Securities Available for Sale (FTE)

4,655,983

28,862

2.48

Corporate Securities

2,701,476

18,488

2.74

Collateralized Loan Obligations

1,464,266

7,045

1.92

Agency Mortgage Backed Securities

385,900

2,256

2.34

Obligations of States and Political Subdivisions (FTE)

89,998

694

3.08

Other Debt Securities Available for Sale (FTE)

14,343

379

10.56

Total Debt Securities Held to Maturity (FTE)

291,863

1,908

2.61

Agency Mortgage Backed Securities

141,733

646

1.82

Obligations of States and Political Subdivisions (FTE)

150,130

1,262

3.36

Total Interest-Bearing Cash

1,020,664

479

0.19

Interest Expense Paid:

Total Earning Assets

6,998,234

480

0.03

Total Interest-Bearing Liabilities

3,546,146

480

0.05

Total Interest-Bearing Deposits

3,388,393

452

0.05

Interest-Bearing Transaction

1,265,100

0.03

Savings

1,980,092

283

0.06

Time less than $100K

79,029

0.21

Time greater than $100K

64,172

0.26

Total Short-Term Borrowings

157,753

0.07

Net Interest Income and

Margin (FTE)

43,807

2.51

6. Noninterest Income.

(dollars in thousands except per-share amounts)

Q1'2023

Q1'2022

Change

Q4'2022

Service Charges on Deposit Accounts

3,465

3,582

-3.3

3,484

Merchant Processing Services

2,637

2,623

0.5

2,701

Debit Card Fees (1)

1,642

2,872

-42.8

1,704

Trust Fees

765

843

-9.3

754

ATM Processing Fees

654

451

45.0

646

Other Service Fees

399

449

-11.2

416

Financial Services Commissions

117

-23.9

103

Other Noninterest Income

898

639

40.5

655

Total Noninterest Income

10,549

11,576

-8.9

10,463

Operating Ratios:

Total Revenue (FTE)

80,111

55,383

44.6

79,618

Noninterest Income/Revenue (FTE)

13.2

20.9

13.1

Service Charges/Avg. Deposits (a)

0.23

0.22

Total Revenue (FTE) Per Avg.

Common Share (a)

12.10

8.36

44.8

11.74

7. Noninterest Expense.

(dollars in thousands)

Q1'2023

Q1'2022

Change

Q4'2022

Salaries & Benefits

12,067

11,920

1.2

11,482

Occupancy and Equipment

5,485

4,746

15.6

5,218

Outsourced Data Processing

2,444

2,437

0.3

2,390

Limited Partnership Operating Losses

1,434

1,431

0.2

1,431

Professional Fees

476

736

-35.3

574

Courier Service

615

582

5.7

700

Other Noninterest Expense

3,689

3,023

22.0

3,295

Total Noninterest Expense

26,210

24,875

5.4

25,090

Operating Ratios:

Noninterest Expense/ Avg. Earning Assets (a)

1.59

1.44

Noninterest Expense/Revenues (FTE)

32.7

44.9

31.5

8. Allowance for Credit Losses.

(dollars in thousands)

Q1'2023

Q1'2022

Change

Q4'2022

Average Total Loans

945,864

1,029,724

-8.1

964,287

Beginning of Period Allowance for

Credit Losses on Loans (ACLL)

20,284

23,514

-13.7

21,218

(Reversal of) Provision for Credit Losses (2)

(1,550

)

n/m

Net ACLL Recoveries (Losses)

775

(589

)

n/m

(940

)

End of Period ACLL

19,509

22,925

-14.9

20,284

Gross ACLL Recoveries / Gross ACLL Losses

138

Net ACLL (Recoveries) Losses /

Avg. Total Loans (a)

-0.33

0.23

0.39

(dollars in thousands)

3/31/23

3/31/22

Change

12/31/22

Allowance for Credit Losses on Loans

19,509

22,925

-14.9

20,284

Allowance for Credit Losses on

Held to Maturity Securities

-85.5

Total Allowance for Credit Losses

19,510

22,932

-14.9

20,285

Allowance for Unfunded

Credit Commitments

201

0.0

201

9. Credit Quality.

(dollars in thousands)

3/31/23

3/31/22

Change

12/31/22

Nonperforming Loans:

Nonperforming Nonaccrual Loans

207

228.6

146

Performing Nonaccrual Loans

421

n/m

Total Nonaccrual Loans

214

484

-55.8

146

90+ Days Past Due Accruing Loans

571

431

32.5

628

Total Nonperforming Loans

785

915

-14.2

774

Total Loans Outstanding

938,628

1,002,514

-6.4

958,488

Total Assets

6,700,471

7,306,417

-8.3

6,950,317

Loans:

Allowance for Credit Losses on Loans

19,509

22,925

-14.9

20,284

Allowance for Credit Losses on Loans / Loans

2.08

2.29

2.12

Nonperforming Loans/Total Loans

0.08

0.09

0.08

10. Liquidity.

At March 31, 2023, the Company had $195,202 thousand in cash balances. During the twelve months ending March 31, 2024, the Company expects to receive $337,000 thousand in principal payments from its debt securities. If additional operational liquidity is required, the Company can pledge debt securities as collateral for borrowing purposes; at March 31, 2023, the Company's debt securities which qualify as collateral for borrowing totaled $4,107,153 thousand. In the ordinary course of business, the Company pledges debt securities as collateral for certain depository customers; at March 31, 2023, the Company had pledged $686,533 thousand in debt securities for depository customers. In the ordinary course of business, the Company pledges debt securities as collateral for borrowing from the Federal Reserve Bank; at March 31, 2023, the Company's had pledged $670,649 thousand in debt securities at the Federal Reserve Bank. During the three months ended March 31, 2023, the Company's average borrowings from the Federal Reserve Bank and other correspondent banks were $1 thousand, and at March 31, 2023, the Company's borrowings from the Federal Reserve Bank and other correspondent banks were $-0- thousand. At March 31, 2023, the Company's unpledged collateral qualifying debt securities totaled $2,574,254 thousand. The following schedule is shown in market value unless otherwise noted.

(in thousands)

3/31/23

Debt Securities Eligible as Collateral:

Corporate Securities

$2,715,376

Collateralized Loan Obligations rated AAA

525,666

Obligations of States and Political Subdivisions

170,268

Agency Mortgage Backed Securities

369,010

Securities of U.S. Government Sponsored Entities (Par Value)

326,833

Total Debt Securities Eligible as Collateral

$4,107,153

Debt Securities Pledged as Collateral:

Public funds

($686,533

)

Short-term borrowed funds (Deposit Sweep)

(169,352

)

Other

(6,365

)

Total Debt Securities Pledged as Collateral

($862,250

)

Debt Securities Pledged at the Federal Reserve Bank

($670,649

)

Debt Securities Available to Pledge

$2,574,254

11. Capital.

(in thousands, except per-share amounts)

3/31/23

3/31/22

Change

12/31/22

Shareholders' Equity

642,925

701,744

-8.4

602,110

Total Assets

6,700,471

7,306,417

-8.3

6,950,317

Shareholders' Equity/

Total Assets

9.60

8.66

Shareholders' Equity/

Total Loans

68.50

70.00

62.82

Tangible Common Equity Ratio

7.92

8.06

7.03

Common Shares Outstanding

26,648

26,883

-0.9

26,913

Common Equity Per Share

24.13

26.10

-7.6

22.37

Market Value Per Common Share

44.30

60.50

-26.8

59.01

(shares in thousands)

Q1'2023

Q1'2022

Change

Q4'2022

Share Repurchase Programs:

Total Shares Repurchased / Canceled

274

n/m

Average Repurchase Price

50.11

58.66

n/m

Net Shares Repurchased (Issued)

265

(17

)

n/m

)

12. Period-End Balance Sheets.

(unaudited, dollars in thousands)

3/31/23

3/31/22

Change

12/31/22

Assets:

Cash and Due from Banks

195,202

1,037,593

-81.2

294,236

Debt Securities Available for Sale

Corporate Securities

2,019,240

2,547,118

-20.7

2,099,955

Collateralized Loan Obligations

1,542,377

1,616,584

-4.6

1,572,883

Agency Mortgage Backed Securities

276,078

363,181

-24.0

286,048

Securities of U.S. Government sponsored entities

297,140

n/m

290,853

Obligations of States and Political Subdivisions

82,678

89,595

-7.7

82,004

Other Debt Securities Available for Sale

110

n/m

Total Debt Securities Available for Sale

4,217,513

4,616,588

-8.6

4,331,743

Debt Securities Held to Maturity

Agency Mortgage Backed Securities

98,006

133,754

-26.7

104,852

Corporate Securities

723,553

n/m

721,854

Obligations of States and Political Subdivisions (3)

87,760

146,766

-40.2

89,207

Total Debt Securities Held to Maturity (3)

909,319

280,520

224.2

915,913

Loans

938,628

1,002,514

-6.4

958,488

Allowance For Credit Losses on Loans

(19,509

)

(22,925

)

-14.9

(20,284

)

Total Loans, net

919,119

979,589

-6.2

938,204

Premises and Equipment, net

28,331

30,626

-7.5

28,819

Identifiable Intangibles, net

523

771

-32.1

583

Goodwill

121,673

0.0

121,673

Other Assets

308,791

239,057

29.2

319,146

Total Assets

6,700,471

7,306,417

-8.3

6,950,317

Liabilities and Shareholders' Equity:

Deposits:

Noninterest-Bearing

2,788,992

3,000,268

-7.0

2,947,277

Interest-Bearing Transaction

1,201,356

1,279,165

-6.1

1,273,143

Savings

1,783,667

1,984,719

-10.1

1,874,115

Time

125,300

141,722

-11.6

130,755

Total Deposits

5,899,315

6,405,874

-7.9

6,225,290

Short-Term Borrowed Funds

83,088

124,442

-33.2

57,792

Other Liabilities

75,143

74,357

1.1

65,125

Total Liabilities

6,057,546

6,604,673

-8.3

6,348,207

Shareholders' Equity:

Common Equity:

Paid-In Capital

471,159

472,470

-0.3

475,121

Accumulated Other

Comprehensive Loss

(231,573

)

(88,300

)

n/m

(256,105

)

Retained Earnings

403,339

317,574

27.0

383,094

Total Shareholders' Equity

642,925

701,744

-8.4

602,110

Total Liabilities and

Shareholders' Equity

6,700,471

7,306,417

-8.3

6,950,317

13. Income Statements.

(unaudited, in thousands except per-share amounts)

Q1'2023

Q1'2022

Change

Q4'2022

Interest & Fee Income:

Loans

11,740

12,942

-9.3

12,201

Equity Securities

152

128

18.8

153

Debt Securities Available for Sale

46,810

28,566

63.9

45,216

Debt Securities Held to Maturity

8,980

1,644

446.2

9,061

Interest-Bearing Cash

1,942

479

305.4

2,567

Total Interest & Fee Income

69,624

43,759

59.1

69,198

Interest Expense:

Transaction Deposits

6.8

Savings Deposits

280

283

-1.1

280

Time Deposits

3.7

Short-Term Borrowed Funds

-53.6

Total Interest Expense

471

480

-1.9

475

Net Interest Income

69,153

43,279

59.8

68,723

Reversal of Provision for Credit Losses (2)

(1,550

)

n/m

Noninterest Income:

Service Charges on Deposit Accounts

3,465

3,582

-3.3

3,484

Merchant Processing Services

2,637

2,623

0.5

2,701

Debit Card Fees (1)

1,642

2,872

-42.8

1,704

Trust Fees

765

843

-9.3

754

ATM Processing Fees

654

451

45.0

646

Other Service Fees

399

449

-11.2

416

Financial Services Commissions

117

-23.9

103

Other Noninterest Income

898

639

40.5

655

Total Noninterest Income

10,549

11,576

-8.9

10,463

Noninterest Expense:

Salaries and Related Benefits

12,067

11,920

1.2

11,482

Occupancy and Equipment

5,485

4,746

15.6

5,218

Outsourced Data Processing

2,444

2,437

0.3

2,390

Limited Partnership Operating Losses

1,434

1,431

0.2

1,431

Professional Fees

476

736

-35.3

574

Courier Service

615

582

5.7

700

Other Noninterest Expense

3,689

3,023

22.0

3,295

Total Noninterest Expense

26,210

24,875

5.4

25,090

Income Before Income Taxes

55,042

29,980

83.6

54,096

Income Tax Provision

14,591

7,364

98.1

14,752

Net Income

40,451

22,616

78.9

39,344

Average Common Shares Outstanding

26,859

26,870

-0.0

26,912

Diluted Average Common Shares Outstanding

26,866

26,885

-0.1

26,924

Per Common Share Data:

Basic Earnings

1.51

0.84

79.8

1.46

Diluted Earnings

1.51

0.84

79.8

1.46

Dividends Paid

0.42

0.0

0.42

Footnotes and Abbreviations:

(1) The Company received a $1.2 million reconciling payment from a payments network in the first quarter 2022.

(2) A recovery of a previously charged off loan in the first quarter 2023 resulted in a $1,550 thousand reversal of the allowance for credit loss provision in the first quarter 2023.

(3) Debt Securities Held To Maturity and Obligations of States and Political Subdivisions are net of related reserve for expected credit losses of $1 thousand at March 31, 2023, December 31, 2022 and $7 thousand at March 31, 2022.

(FTE) Fully Taxable Equivalent. The Company presents its net interest margin and net interest income on a FTE basis using the current statutory federal tax rate. Management believes the FTE basis is valuable to the reader because the Company's loan and investment securities portfolios contain a portion of municipal loans and securities that are federally tax exempt. The Company's tax exempt loans and securities composition may not be similar to that of other banks, therefore in order to reflect the impact of the federally tax exempt loans and securities on the net interest margin and net interest income for comparability with other banks, the Company presents its net interest margin and net interest income on a FTE basis.

(a) Annualized

Westamerica Bancorporation Reports First Quarter 2023 Financial Results