) reported its fourth-quarter 2011 earnings of 77 cents per share,
slightly below the Zacks Consensus Estimate of 79 cents. The result
was also down compared with the prior quarter's earnings of 79
cents and the prior-year quarter's earnings of 81 cents.
For the full year 2011, Westamerica recorded earnings per share
of $3.06, down 5% from $3.21 in the prior year. The full year
earnings also missed the Zacks Consensus Estimate of $3.16.
Results in the quarter were impacted by a lower top line.
However, fall in operating expenses along with improving credit
quality were the positives for Westamerica.
Westamerica reported a net income of $21.8 million compared with
$22.4 million in the prior quarter and $23.7 million in the
prior-year quarter. For fiscal 2011, the net income stood at $87.9
million versus $94.6 million recorded in 2010.
Quarter in Detail
Westamerica's total revenue came in at $68.2 million, down 2.4%
sequentially from $69.9 million and 4.7% year over year from $71.6
million. Total revenue slightly lagged the Zacks Consensus Estimate
of $68.0 million.
For full year 2011, total revenue was $279.0 million, down 3.2%
from $288.1 million in the previous year. However, this was ahead
of the Zacks Consensus Estimate of $275.0 million.
On a fully-taxable equivalent basis, Westamerica's net interest
income fell 2.4% sequentially and 5.4% year over year to $53.4
million. The year-over-year decline was mainly due to a lower net
interest margin, which fell 8 basis points (bps) sequentially and
15 bps year over year to 5.24%.
Westamerica's non-interest income was $14.9 million in the
reported quarter, dipping 2% from $15.2 million in the prior
quarter and 1.3% from $15.1 million in the year-ago quarter. The
drop was mainly due to lower service charges on deposit accounts,
ATM processing fees and debit card fees.
Non-interest expenses decreased 2.3% sequentially and 2.7% year
over year to $30.7 million in the quarter under review. The decline
was primarily attributable to reduction in salaries as well as
benefits expenses and deposit insurance assessment fees. However,
these were partly mitigated by higher professional fees and loan
Efficiency ratio stood at 44.9%, at par with the previous
quarter but slightly rising from 44.0% reported in the
previous-year quarter. The increase in efficiency ratio indicates
deterioration in profitability.
During the quarter, Westamerica's credit quality improved.
Provision for loan losses remained flat, sequentially and year over
year, at $2.8 million.
Annualized net loan losses, as a percentage of average
originated loans, was 0.65%, up 5 bps both sequentially, but down
38 bps year over year. Further, nonperforming assets were $101.0
million at December 31, 2011, down from $107.8 million at September
30, 2011 and $143.7 million at December 31, 2010.
Profitability and Capital Ratios
Profitability metrics reflect a modestly cautious outlook.
Westamerica's annualized return on assets was 1.78% as of December
31, 2011 compared with 1.95% as of December 31, 2010. Similarly,
annualized return on common equity declined to 16.1% from 18.1% in
the prior period.
At December 31, 2011, total regulatory capital ratios for
Westamerica Bancorp and its subsidiary, Westamerica Bank, were
15.7% and 15.2% respectively, exceeding the 10% requirement to be
well capitalized as per the regulatory standards.
During the third quarter, Westamerica had announced new share
repurchase program, under which it will be able to repurchase up to
2 million common shares through September 1, 2012. During the
fourth quarter, the company repurchased 361,000 shares worth
approximately $15.5 million, at an average price of $42.83.
For the fiscal 2011, the company repurchased 1.32 million shares
amounting $60.6 million in total, at an average price of
We expect continued synergies from Westamerica's strong expense
discipline, conservative credit culture and sound balance sheet.
Once the market rebounds to a more conducive operating environment,
the company will be able to capitalize on opportunities, leading to
increased top and bottom-line growth. However, a weak interest rate
environment and low investment returns will restrict any
significant bottom-line improvement in the near term.
One of Westamerica's peers,
Central Pacific Financial Corp
) is slated to release its fourth quarter and full year 2011
results on January 25.
Westamerica currently retains a Zacks #4 Rank, which translates
into a short-term 'Sell' rating.
CENTRAL PAC FIN (
): Free Stock Analysis Report
WESTAMER BANCP (
): Free Stock Analysis Report
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