Westamerica Banc Reports EPS of $0.74 vs. $0.78 Est

Westamerica Bancorporation WABC, parent company of Westamerica Bank, today reported net income for the second quarter of 2011 of $21.3 million and diluted earnings per common share of $0.74. Second quarter 2011 results include accruals for estimated settlement costs equivalent to $0.04 EPS. Second quarter 2011 results compare to first quarter 2011 net income of $22.4 million and EPS of $0.77. "Westamerica's second quarter net income represents a return on average shareholders' equity of 15.6 percent. We are pleased to be generating relatively high returns for our shareholders under current economic and operating conditions. Our second quarter 2011 net interest margin was 5.38 percent, supported by a relatively low 0.21 percent cost of funding our loan and investment portfolios. With 79 percent of deposits represented by low-cost checking and savings accounts, Westamerica's funding cost will continue to remain relatively low if interest rates begin rising," said Chairman, President and CEO David Payne. "The credit quality of Westamerica's legacy loans remained stable, while non-performing purchased loans continued to decline due to our workout and collection activities. Westamerica's capital levels remain robust with a total regulatory capital ratio of 15.7 percent," added Payne. Net interest income on a fully taxable equivalent basis was $55.8 million for the second quarter 2011 compared to $56.6 million for the second quarter 2010. The change in net interest income is due to reductions in the net interest margin. Yields on interest-earning assets have declined due to relatively low interest rates prevailing in the market. Economic conditions and deleveraging by businesses and individuals have reduced loan volumes, placing greater reliance on lower-yielding investment securities. Rates on interest-bearing deposits and borrowings have declined to offset some of the decline in asset yields. The second quarter 2011 net interest margin on a fully taxable equivalent basis was 5.38 percent, compared to 5.62 percent for the second quarter 2010. The provision for loan losses was $2.8 million for the second quarter 2011, unchanged from the prior quarter and second quarter 2010. Second quarter 2011 net loan losses totaled $4.1 million, or 0.83 percent (annualized) of average originated loans. Comparable net loan loss rates were 0.83 percent and 0.64 percent, respectively, for the prior quarter and second quarter 2010. At June 30, 2011, the $33.0 million reserve for loan losses represented 154 percent of nonperforming originated loans and 199 percent of annualized first half 2011 net loan losses.