) reported its first-quarter 2012 earnings of 75 cents per share,
in line with the Zacks Consensus Estimate. However, the result was
slightly down compared with 77 cents recorded in both the prior
quarter and prior-year quarter.
Results in the quarter were impacted by a lower top line.
Nevertheless, a fall in operating expenses along with an improving
credit quality were the positives for Westamerica.
Westamerica reported a net income of $21.0 million compared with
$21.8 million in the prior quarter and $22.4 million in the
Quarter in Detail
Westamerica's total revenue came in at $66.4 million compared
with $68.2 million in the previous quarter and $69.7 million in the
year-ago quarter. Total revenue marginally lagged the Zacks
Consensus Estimate of $67.0 million.
On a fully-taxable equivalent basis, Westamerica's net interest
income fell 3.1% sequentially and 6.0% year over year to $51.7
million. The decline from the prior quarter was attributable to
lower yields on loans and investment securities, along with reduced
Net interest margin in the reported quarter stood at 5.12%, down
12 basis points (bps) sequentially and 23 bps year over year.
Westamerica's non-interest income was $14.7 million in the
reported quarter, dipping 1.3% from $14.9 million in the prior
quarter and in line with the year-ago quarter. The sequential
decrease was mainly due to lower merchant processing services and
debit card fees.
Non-interest expenses decreased 2.1% sequentially and 4.1% year
over year to $30.0 million in the quarter under review. The
sequential decline was primarily attributable to reduction in
professional fees and other real estate owned expenses. However,
these were partly mitigated by higher salaries as well as benefits
expenses and deposit insurance assessment fees.
Efficiency ratio stood at 45.3%, slightly rising from 44.9%
reported in both the prior quarter and previous-year quarter. The
increase in efficiency ratio indicates deterioration in
During the quarter, Westamerica's credit quality showed an
improvement. Provision for loan losses remained flat, sequentially
as well as on a year-over-year basis, at $2.8 million.
Annualized net loan losses, as a percentage of average
originated loans, was 0.69%, up 16 bps sequentially but down 14 bps
year over year. Further, nonperforming assets were $80.9 million at
March 31, 2012, down from $101.0 million at December 31, 2011 and
$132.9 million at March 31, 2011.
Profitability and Capital Ratios
Profitability metrics reflected a modestly cautious outlook.
Westamerica's annualized return on assets was 1.68% as of March 31,
2012 compared with 1.84% as of March 31, 2012. Likewise, annualized
return on common equity declined to 15.5% from 16.6% in the
At March 31, 2012, total regulatory capital ratios for
Westamerica Bancorp and its subsidiary, Westamerica Bank, were
16.1% and 15.6% respectively, exceeding the requirement of 10%, to
be well capitalized as per the regulatory standards.
Share Repurchase Update
In the third quarter of 2011, Westamerica had announced a new
share repurchase program, under which it will be able to repurchase
up to 2 million common shares through September 1, 2012. During the
first quarter 2012, the company repurchased 249,000 shares worth
approximately $11.7 million, at an average price of $46.86.
We believe that a weak interest rate environment and low
investment returns will restrict any significant bottom-line
improvement in the near term. However, we anticipate continued
synergies from Westamerica's strong expense discipline,
conservative credit culture and a sound balance sheet. Once the
market rebounds to a more conducive operating environment, the
company will be able to capitalize on opportunities.
One of Westamerica's peers,
Columbia Banking System Inc.
) is slated to release its first-quarter results on April 25.
Westamerica currently retains a Zacks #3 Rank, which translates
into a short-term 'Hold' rating.
COLUMBIA BK SYS (
): Free Stock Analysis Report
WESTAMER BANCP (
): Free Stock Analysis Report
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