8-K
Westamerica Bancorporation (WABC)
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_________________
FORM 8-K
_________________
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): April 16, 2020
_______________________________
WESTAMERICA BANCORPORATION
(Exact name of registrant as specified in its charter)
_______________________________
| California | 001-09383 | 94-2156203 |
|---|---|---|
| (State or Other Jurisdiction of Incorporation) | (Commission File Number) | (I.R.S. Employer Identification No.) |
1108 Fifth Avenue
San Rafael, California 94901
(Address of Principal Executive Offices) (Zip Code)
(707) 863-6000
(Registrant's telephone number, including area code)
Not Applicable
(Former name or former address, if changed since last report)
_______________________________
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
|---|---|
| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
|---|---|---|
| Common Stock, no par value | WABC | The Nasdaq Stock Market, LLC |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company,indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02. Results of Operations and Financial Condition. On April 16, 2020, the Registrant issued a press release, a copy of which is attached hereto as Exhibit 99.1 and is incorporated herein by reference.
Item 8.01. Other Events.
The Covid-19 Coronavirus Pandemic Will Have an Uncertain Impact on the Company's Financial Condition and Results of Operations
The Covid-19 coronavirus pandemic caused escalating infections in the United States beginning in the first quarter of 2020 and may continue for some time. The spread of the outbreak has disrupted the United States economy and is likely to disrupt banking and other financial activity in the market areas in which the Company and its banking subsidiary, Westamerica Bank (the "Bank") do business. Regions and states of the United States of America have implemented varying degrees of "stay at home" directives in an effort to prevent the spread of the virus. On March 19, 2020, the Governor of the State of California ordered all individuals living in the State of California to stay within their residence to prevent the spread of the novel coronavirus and many businesses have suspended or reduced business activities. The California "stay at home" directive excludes essential businesses, including banks, and the Bank remains open and fully operational. These "stay at home" directives have, however, significantly reduced economic activity in the United States and the State of California. California-based initial claims for unemployment have risen considerably since March of 2020.
The Bank's deposits are exclusively sourced within California and its loans are primarily to borrowers domiciled within California. Demand for the Bank's products and services, such as loans and deposits, could be affected as a result of the decline in economic activity within the state.
The Bank's investment portfolio contains bonds for which the source of repayment is domestic mortgage repayments, domestic municipalities throughout the United States, and domestic and global corporations. The value of the Bank's investment portfolio may decline.
In response to the pandemic, the Federal Reserve has engaged significant levels of monetary policy to provide liquidity and credit facilities to the financial markets. On March 15, 2020, the Federal Open Market Committee ("FOMC") reduced the target range for the federal funds rate to 0 to 0.25 percent; relatedly, the FOMC reduced the interest rate paid on required and excess reserve balances to 0.10 percent effective March 16, 2020, all of which may negatively impact net interest income. The Bank maintains required and excess reserve balances at the Federal Reserve Bank; the amount that earns interest is identified in the Company's financial statements as "interest-bearing cash".
In response to the pandemic, the United States federal government enacted the Coronavirus Aid, Relief, and Economic Security Act (the "CARES Act") on March 27, 2020. The CARES Act will provide an estimated $2 trillion in fiscal stimulus to the United States economy.
The extent of the spread of the coronavirus, its ultimate containment and its effects on the economy and the Company are uncertain at this time. The effectiveness of the Federal Reserve Bank's monetary policies and the federal government's fiscal policies in stimulating the United States economy is uncertain at this time.
Management expects the Company's net interest income and non-interest income to decline and credit-related losses to increase for an uncertain period given the decline in economic activity occurring due to the coronavirus. The amount of impact on the Company's financial results is uncertain.
In addition, the Company's future success and profitability substantially depends upon the skills and experience of its executive officers and directors, many of whom have held positions with the Company for many years. The unanticipated loss or unavailability of key employees due to the outbreak could adversely affect the Company's ability to operate its business or execute its business strategy.
Any one or a combination of the factors identified above, or other factors, could materially adversely affect impact the Company's business, financial condition, results of operations and prospects.
The Recent Decline in Oil Prices Could Have an Impact on the Company's Financial Condition and Results of Operations Oil prices have declined considerably in the first quarter of 2020. The decline in oil prices could negatively affect the financial results of industrial sector-based and energy sector-based corporate issuers of corporate bonds owned by the Company.
Item 9.01. Financial Statements and Exhibits.
Exhibit 99.1. Press release dated April 16, 2020 Exhibit 104. Cover Page Interactive Data File (embedded within the Inline XBRL document)
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| WESTAMERICA BANCORPORATION | ||
|---|---|---|
| Date: April 16, 2020 | By: | /s/ Jesse Leavitt |
| Jesse Leavitt | ||
| Senior Vice President and Chief Financial Officer |
EdgarFiling EXHIBIT 99.1
Westamerica Bancorporation Reports First Quarter 2020 Financial Results
SAN RAFAEL, Calif., April 16, 2020 (GLOBE NEWSWIRE) -- Westamerica Bancorporation (Nasdaq: WABC), parent company of Westamerica Bank, generated net income for the first quarter 2020 of $17.0 million and diluted earnings per common share ("EPS") of $0.63. First quarter 2020 results include a provision for credit losses of $4.3 million, which reduced EPS $0.11, representing Management’s estimate of additional reserves needed over the remaining life of its loans due to increased credit-risk from deteriorating economic conditions caused by the Covid-19 pandemic. These results compare to net income of $20.7 million and EPS of $0.77 for the fourth quarter 2019 and net income of $19.6 million and EPS of $0.73 for the first quarter 2019.
"Westamerica’s primary objective during the Covid-19 pandemic is to operate without interruption for our customers. As of today, our staffing levels are unaffected, our operating systems remain fully functional, and all but one of our branches are open. The business environment is highly uncertain at this time given the Covid-19 impacts on society and the economy. Westamerica’s annualized net interest margin increased to 3.10 percent for the first quarter 2020 from 3.08 percent in the fourth quarter 2019. Operating expenses were $24.7 million for the first quarter 2020, representing only 47 percent of revenues on a fully-taxable equivalent basis. First quarter 2020 results generated an annualized 9.7 percent return on average common equity, and shareholders were paid a $0.41 per common share dividend during the quarter,” said Chairman, President and CEO David Payne. “The well-being of our customers, employees and communities is of principal concern during this difficult period,” concluded Payne.
Net interest income on a fully-taxable equivalent (FTE) basis was $40.5 million for the first quarter 2020, compared to $40.5 million for the fourth quarter 2019 and $40.2 million for the first quarter 2019. The annualized net interest margin (FTE) was 3.10 percent for the first quarter 2020, compared to 3.08 percent for the fourth quarter 2019 and 3.12 percent for the first quarter 2019. The Federal Open Market Committee (“FOMC”) reduced the interest rate paid on required reserves and excess reserve balances to 0.10 percent on March 16, 2020, which reduced the interest earned on Westamerica’s interest-bearing cash balances. Westamerica has taken loan applications under the United States Small Business Administration’s Paycheck Protection Program. Westamerica’s interest-bearing loans and investment securities are funded exclusively by shareholders’ equity and customers’ deposits. Checking and savings deposits represented ninety-six percent of the Company’s average deposit base during the first quarter 2020. Average deposit volumes during the first quarter 2020 of $4,829 million were stable compared to average deposit volumes during the fourth quarter 2019 and first quarter 2019 of $4,840 million and $4,835 million, respectively. The Company has no debt.
The Company adopted Accounting Standards Update 2016-13, “Financial Instruments – Credit Losses: Measurement of Credit Losses on Financial Instruments” (“CECL”), effective January 1, 2020 with a net-of-tax increase to shareholders’ equity of $52 thousand. The Covid-19 environment, which developed after the CECL implementation, has caused deteriorating economic conditions, including a record number of California-based initial claims for unemployment in March 2020. Management expects developing increases in unemployment to result in higher credit-related losses, particularly consumer installment loans. The Company has been actively working with consumer and commercial borrowers requesting deferral of loan payments. The Company recognized a $4.3 million provision for credit losses in the first quarter 2020 representing Management’s estimate of additional reserves needed over the remaining life of its loans due to increased credit-risk from deteriorating economic conditions caused by the Covid-19 pandemic.
Noninterest income for the first quarter 2020 totaled $11.6 million, compared to $11.7 million for the fourth quarter 2019, and $11.6 million for the first quarter 2019. First quarter 2020 non-interest income includes a $603 thousand receipt on a purchased loan, representing the recovery of a purchased loan credit-risk discount. During the month of March 2020, activity-based fees related to deposit accounts and merchant processing fees were lower due to reduced economic activity related to the Covid-19 pandemic.
Noninterest expense for the first quarter 2020 was $455 thousand higher than noninterest expense for the fourth quarter 2019 due to higher personnel costs offset in part by lower professional fees. Noninterest expense for the first quarter 2020 was $519 thousand lower than noninterest expense for the first quarter 2019 due to lower occupancy and equipment costs, professional fees, FDIC assessments and amortization of intangible assets. First quarter 2020 noninterest expense reflects application of a $246 thousand FDIC insurance assessment credit; the Company’s credit is fully exhausted.
The tax rate (FTE) applied to pre-tax income (FTE) was 27.0 percent for the first quarter 2020, compared to 26.0 percent for the fourth quarter 2019 and 26.3 percent for the first quarter 2019. The lower tax rate for the fourth quarter 2019 is due to a customary adjustment to true-up the Company’s 2018 estimated tax provision to the filed 2018 tax return. The lower tax rate for the first quarter 2019 is due to higher tax deductions from the exercise of employee stock options.
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 & Treasurer | |
| 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 Form 8-K filed on April 16, 2020, the annual report for the year ended December 31, 2019 filed on Form 10-K and quarterly report for the quarter ended September 30, 2019 filed on Form 10-Q, describe some of these factors, including certain pandemic, 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 2011, 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, 2020 | |||||||||||
| 1. Net Income Summary. | |||||||||||
| % | |||||||||||
| Q1'2019 | Change | Q4'2019 | |||||||||
| Net Interest and Fee Income (FTE) | 40,547 | $ | 40,247 | 0.7 | % | $ | 40,481 | ||||
| Provision for Credit Losses | 4,300 | - | n/m | - | |||||||
| Noninterest Income | 11,648 | 11,579 | 0.6 | % | 11,732 | ||||||
| Noninterest Expense | 24,664 | 25,183 | -2.1 | % | 24,209 | ||||||
| Income Before Taxes (FTE) | 23,231 | 26,643 | -12.8 | % | 28,004 | ||||||
| Income Tax Provision (FTE) | 6,269 | 6,997 | -10.4 | % | 7,276 | ||||||
| Net Income | 16,962 | $ | 19,646 | -13.7 | % | $ | 20,728 | ||||
| Average Common Shares Outstanding | 27,068 | 26,841 | 0.8 | % | 27,050 | ||||||
| Diluted Average Common Shares | 27,139 | 26,912 | 0.8 | % | 27,094 | ||||||
| Operating Ratios: | |||||||||||
| Basic Earnings Per Common Share | 0.63 | $ | 0.73 | -14.2 | % | $ | 0.77 | ||||
| Diluted Earnings Per Common Share | 0.63 | 0.73 | -14.4 | % | 0.77 | ||||||
| Return On Assets (a) | 1.21 | % | 1.42 | % | 1.46 | % | |||||
| Return On Common Equity (a) | 9.7 | % | 12.2 | % | 11.8 | % | |||||
| Net Interest Margin (FTE) (a) | 3.10 | % | 3.12 | % | 3.08 | % | |||||
| Efficiency Ratio (FTE) | 47.3 | % | 48.6 | % | 46.4 | % | |||||
| Dividends Paid Per Common Share | 0.41 | $ | 0.40 | 2.5 | % | $ | 0.41 | ||||
| Common Dividend Payout Ratio | 66 | % | 55 | % | 53 | % | |||||
| 2. Net Interest Income. | |||||||||||
| % | |||||||||||
| Q1'2019 | Change | Q4'2019 | |||||||||
| Interest and Fee Income (FTE) | 40,989 | $ | 40,741 | 0.6 | % | $ | 40,932 | ||||
| Interest Expense | 442 | 494 | -10.5 | % | 451 | ||||||
| Net Interest and Fee Income (FTE) | 40,547 | $ | 40,247 | 0.7 | % | $ | 40,481 | ||||
| Average Earning Assets | 5,242,142 | $ | 5,184,978 | 1.1 | % | $ | 5,243,783 | ||||
| Average Interest- | |||||||||||
| Bearing Liabilities | 2,648,581 | 2,689,684 | -1.5 | % | 2,599,703 | ||||||
| Yield on Earning Assets (FTE) (a) | 3.13 | % | 3.16 | % | 3.11 | % | |||||
| Cost of Funds (a) | 0.03 | % | 0.04 | % | 0.03 | % | |||||
| Net Interest Margin (FTE) (a) | 3.10 | % | 3.12 | % | 3.08 | % | |||||
| Interest Expense/ | |||||||||||
| Interest-Bearing Liabilities (a) | 0.07 | % | 0.08 | % | 0.07 | % | |||||
| Net Interest Spread (FTE) (a) | 3.06 | % | 3.08 | % | 3.04 | % | |||||
| 3. Loans & Other Earning Assets. | |||||||||||
| % | |||||||||||
| Q1'2019 | Change | Q4'2019 | |||||||||
| Total Assets | 5,655,460 | $ | 5,611,762 | 0.8 | % | $ | 5,645,013 | ||||
| Total Earning Assets | 5,242,142 | 5,184,978 | 1.1 | % | 5,243,783 | ||||||
| Total Loans | 1,123,934 | 1,205,656 | -6.8 | % | 1,116,446 | ||||||
| Commercial Loans | 223,383 | 281,465 | -20.6 | % | 219,710 | ||||||
| Commercial RE Loans | 579,743 | 580,178 | -0.1 | % | 568,892 | ||||||
| Consumer Loans | 320,808 | 344,013 | -6.7 | % | 327,844 | ||||||
| Total Investment Securities | 3,845,885 | 3,689,852 | 4.2 | % | 3,792,781 | ||||||
| Equity Securities | - | 1,748 | n/m | - | |||||||
| Debt Securities Available For Sale | 3,135,743 | 2,734,658 | 14.7 | % | 3,027,461 | ||||||
| Debt Securities Held To Maturity | 710,142 | 953,446 | -25.5 | % | 765,320 | ||||||
| Total Interest-Bearing Cash | 272,323 | 289,470 | -5.9 | % | 334,556 | ||||||
| Loans/Deposits | 23.3 | % | 24.9 | % | 23.1 | % | |||||
| 4. Deposits, Other Interest-Bearing Liabilities & Equity. | |||||||||||
| % | |||||||||||
| Q1'2019 | Change | Q4'2019 | |||||||||
| Total Deposits | 4,828,988 | $ | 4,834,690 | -0.1 | % | $ | 4,839,552 | ||||
| Noninterest Demand | 2,222,737 | 2,204,232 | 0.8 | % | 2,279,615 | ||||||
| Interest-Bearing Transaction | 941,720 | 946,458 | -0.5 | % | 922,772 | ||||||
| Savings | 1,496,362 | 1,492,100 | 0.3 | % | 1,464,206 | ||||||
| Time greater than 100K | 73,849 | 82,796 | -10.8 | % | 75,314 | ||||||
| Time less than 100K | 94,320 | 109,104 | -13.6 | % | 97,645 | ||||||
| Total Short-Term Borrowings | 42,330 | 59,226 | -28.5 | % | 39,766 | ||||||
| Shareholders' Equity | 705,330 | 655,380 | 7.6 | % | 694,709 | ||||||
| Demand Deposits/ | |||||||||||
| Total Deposits | 46.0 | % | 45.6 | % | 47.1 | % | |||||
| Transaction & Savings | |||||||||||
| Deposits / Total Deposits | 96.5 | % | 96.0 | % | 96.4 | % | |||||
| 5. Interest Yields Earned & Rates Paid. | |||||||||||
| Income/ | Yield (a) / | ||||||||||
| Expense | Rate | ||||||||||
| Interest & Fee Income Earned | |||||||||||
| Total Earning Assets (FTE) | 5,242,142 | $ | 40,989 | 3.13 | % | ||||||
| Total Loans (FTE) | 1,123,934 | 13,910 | 4.98 | % | |||||||
| Commercial Loans (FTE) | 223,383 | 2,776 | 5.00 | % | |||||||
| Commercial RE Loans | 579,743 | 7,599 | 5.27 | % | |||||||
| Consumer Loans | 320,808 | 3,535 | 4.43 | % | |||||||
| Total Investments (FTE) | 3,845,885 | 26,223 | 2.73 | % | |||||||
| Total Interest-Bearing Cash | 272,323 | 856 | 1.24 | % | |||||||
| Interest Expense Paid | |||||||||||
| Total Earning Assets | 5,242,142 | 442 | 0.03 | % | |||||||
| Total Interest-Bearing Liabilities | 2,648,581 | 442 | 0.07 | % | |||||||
| Total Interest-Bearing Deposits | 2,606,251 | 434 | 0.07 | % | |||||||
| Interest-Bearing Transaction | 941,720 | 84 | 0.04 | % | |||||||
| Savings | 1,496,362 | 217 | 0.06 | % | |||||||
| Time less than 100K | 94,320 | 54 | 0.23 | % | |||||||
| Time greater than 100K | 73,849 | 79 | 0.43 | % | |||||||
| Total Short-Term Borrowings | 42,330 | 8 | 0.07 | % | |||||||
| Net Interest Income and | |||||||||||
| Margin (FTE) | $ | 40,547 | 3.10 | % | |||||||
| Income/ | Yield (a) / | ||||||||||
| Expense | Rate | ||||||||||
| Interest & Fee Income Earned | |||||||||||
| Total Earning Assets (FTE) | 5,184,978 | $ | 40,741 | 3.16 | % | ||||||
| Total Loans (FTE) | 1,205,656 | 14,908 | 5.01 | % | |||||||
| Commercial Loans (FTE) | 281,465 | 3,766 | 5.43 | % | |||||||
| Commercial RE Loans | 580,178 | 7,577 | 5.30 | % | |||||||
| Consumer Loans | 344,013 | 3,565 | 4.19 | % | |||||||
| Total Investments (FTE) | 3,689,852 | 24,095 | 2.61 | % | |||||||
| Total Interest-Bearing Cash | 289,470 | 1,738 | 2.40 | % | |||||||
| Interest Expense Paid | |||||||||||
| Total Earning Assets | 5,184,978 | 494 | 0.04 | % | |||||||
| Total Interest-Bearing Liabilities | 2,689,684 | 494 | 0.08 | % | |||||||
| Total Interest-Bearing Deposits | 2,630,458 | 485 | 0.07 | % | |||||||
| Interest-Bearing Transaction | 946,458 | 121 | 0.05 | % | |||||||
| Savings | 1,492,100 | 216 | 0.06 | % | |||||||
| Time less than 100K | 109,104 | 66 | 0.24 | % | |||||||
| Time greater than 100K | 82,796 | 82 | 0.40 | % | |||||||
| Total Short-Term Borrowings | 59,226 | 9 | 0.06 | % | |||||||
| Net Interest Income and | |||||||||||
| Margin (FTE) | $ | 40,247 | 3.12 | % | |||||||
| 6. Noninterest Income. | |||||||||||
| % | |||||||||||
| Q1'2019 | Change | Q4'2019 | |||||||||
| Service Charges on Deposits | 4,248 | $ | 4,504 | -5.7 | % | $ | 4,374 | ||||
| Merchant Processing Services | 2,358 | 2,558 | -7.8 | % | 2,424 | ||||||
| Debit Card Fees | 1,468 | 1,507 | -2.6 | % | 1,568 | ||||||
| Trust Fees | 777 | 717 | 8.4 | % | 764 | ||||||
| ATM Processing Fees | 579 | 633 | -8.5 | % | 696 | ||||||
| Other Service Fees | 506 | 577 | -12.3 | % | 513 | ||||||
| Financial Services Commissions | 125 | 101 | 24.6 | % | 122 | ||||||
| Securities Gains | - | 24 | n/m | 167 | |||||||
| Other Income (3) | 1,587 | 958 | 65.7 | % | 1,104 | ||||||
| Total Noninterest Income | 11,648 | $ | 11,579 | 0.6 | % | $ | 11,732 | ||||
| Total Revenue (FTE) | 52,195 | $ | 51,826 | 0.7 | % | $ | 52,213 | ||||
| Noninterest Income/Revenue (FTE) | 22.3 | % | 22.3 | % | 22.5 | % | |||||
| Service Charges/Avg. Deposits (a) | 0.35 | % | 0.38 | % | 0.36 | % | |||||
| Total Revenues (FTE) Per Avg. | |||||||||||
| Common Share (a) | 7.76 | $ | 7.83 | -1.0 | % | $ | 7.66 | ||||
| 7. Noninterest Expense. | |||||||||||
| % | |||||||||||
| Q1'2019 | Change | Q4'2019 | |||||||||
| Salaries & Benefits | 13,018 | $ | 13,108 | -0.7 | % | $ | 12,297 | ||||
| Occupancy and Equipment | 4,932 | 5,048 | -2.3 | % | 5,077 | ||||||
| Outsourced Data Processing | 2,405 | 2,369 | 1.5 | % | 2,361 | ||||||
| Courier Service | 491 | 442 | 11.0 | % | 529 | ||||||
| Professional Fees | 389 | 665 | -41.5 | % | 674 | ||||||
| Amortization of | |||||||||||
| Identifiable Intangibles | 73 | 310 | -76.5 | % | 73 | ||||||
| Other Operating | 3,356 | 3,241 | 3.5 | % | 3,198 | ||||||
| Total Noninterest Expense | 24,664 | $ | 25,183 | -2.1 | % | $ | 24,209 | ||||
| Noninterest Expense/ | |||||||||||
| Avg. Earning Assets (a) | 1.89 | % | 1.97 | % | 1.83 | % | |||||
| Noninterest Expense/Revenues (FTE) | 47.3 | % | 48.6 | % | 46.4 | % | |||||
| 8. Allowance for Credit Losses. | |||||||||||
| % | |||||||||||
| Q1'2019 | Change | Q4'2019 | |||||||||
| Average Total Loans | 1,123,934 | $ | 1,205,656 | -6.8 | % | $ | 1,116,446 | ||||
| Prior Period Allowance for | |||||||||||
| Credit Losses (Loans) (ACLL) | 19,484 | $ | 21,351 | -8.7 | % | $ | 19,828 | ||||
| Adoption of ASU 2016-13 (1) | 2,017 | - | n/m | - | |||||||
| Beginning of Period ACLL | 21,501 | 21,351 | 0.7 | % | 19,828 | ||||||
| Provision for Credit Losses | 4,300 | - | n/m | - | |||||||
| Net ACLL Losses | (997 | ) | (874 | ) | 14.2 | % | (344 | ) | |||
| End of Period ACLL | 24,804 | $ | 20,477 | 21.1 | % | $ | 19,484 | ||||
| Gross ACLL Recoveries / | |||||||||||
| Gross ACLL Losses | 37 | % | 37 | % | 71 | % | |||||
| Net ACLL Losses / | |||||||||||
| Avg. Total Loans (a) | 0.36 | % | 0.29 | % | 0.12 | % | |||||
| % | |||||||||||
| 3/31/19 | Change | 12/31/19 | |||||||||
| Allowance for Credit Losses (Loans) | 24,804 | $ | 20,477 | 21.1 | % | $ | 19,484 | ||||
| Allowance for Credit Losses | |||||||||||
| (HTM Securities) | 16 | - | n/m | - | |||||||
| Total Allowance for Credit Losses | 24,820 | $ | 20,477 | 21.2 | % | $ | 19,484 | ||||
| Allowance for Unfunded | |||||||||||
| Credit Commitments | 53 | 2,308 | -97.7 | % | 2,160 | ||||||
| 9. Credit Quality. | |||||||||||
| % | |||||||||||
| 3/31/19 | Change | 12/31/19 | |||||||||
| Nonperforming Loans: | |||||||||||
| Nonperforming Nonaccrual | 419 | $ | 330 | 27.0 | % | $ | 659 | ||||
| Performing Nonaccrual | 3,933 | 3,670 | 7.2 | % | 3,781 | ||||||
| Total Nonaccrual Loans | 4,352 | 4,000 | 8.8 | % | 4,440 | ||||||
| 90+ Days Past Due Accruing Loans | 178 | 394 | -54.8 | % | 440 | ||||||
| Total | 4,530 | 4,394 | 3.1 | % | 4,880 | ||||||
| Repossessed Loan Collateral | 43 | 43 | -0.9 | % | 43 | ||||||
| Total Nonperforming Assets | 4,573 | $ | 4,437 | 3.1 | % | $ | 4,923 | ||||
| Total Loans Outstanding | 1,121,243 | $ | 1,204,844 | -6.9 | % | $ | 1,126,664 | ||||
| Total Assets | 5,628,126 | $ | 5,555,961 | 1.3 | % | $ | 5,619,555 | ||||
| Loans: | |||||||||||
| Allowance for Credit Losses (Loans) | 24,804 | $ | 20,477 | 21.1 | % | $ | 19,484 | ||||
| Allowance for Credit Losses (Loans) / | |||||||||||
| Loans | 2.21 | % | 1.70 | % | 1.73 | % | |||||
| Nonperforming Loans/Total Loans | 0.40 | % | 0.36 | % | 0.43 | % | |||||
| 10. Capital. | |||||||||||
| % | |||||||||||
| 3/31/19 | Change | 12/31/19 | |||||||||
| Shareholders' Equity | 705,546 | $ | 656,767 | 7.4 | % | $ | 731,417 | ||||
| Total Assets | 5,628,126 | 5,555,961 | 1.3 | % | 5,619,555 | ||||||
| Shareholders' Equity/ | |||||||||||
| Total Assets | 12.54 | % | 11.82 | % | 13.02 | % | |||||
| Shareholders' Equity/ | |||||||||||
| Total Loans | 62.93 | % | 54.51 | % | 64.92 | % | |||||
| Tangible Common Equity Ratio | 10.58 | % | 9.82 | % | 11.07 | % | |||||
| Common Shares Outstanding | 26,932 | 26,901 | 0.1 | % | 27,062 | ||||||
| Common Equity Per Share | 26.20 | $ | 24.41 | 7.3 | % | $ | 27.03 | ||||
| Market Value Per Common Share | 58.78 | $ | 61.80 | -4.9 | % | $ | 67.77 | ||||
| Share Repurchase Programs | |||||||||||
| % | |||||||||||
| Q1'2019 | Change | Q4'2019 | |||||||||
| Total Shares Repurchased | 180 | - | n/m | - | |||||||
| Average Repurchase Price | 51.52 | $ | - | n/m | $ | - | |||||
| Net Shares Repurchased (Issued) | 130 | (171 | ) | n/m | (48 | ) | |||||
| 11. Period-End Balance Sheets. | |||||||||||
| % | |||||||||||
| 3/31/19 | Change | 12/31/19 | |||||||||
| Assets: | |||||||||||
| Cash and Due from Banks | 304,628 | $ | 421,788 | -27.8 | % | $ | 373,421 | ||||
| Investment Securities: | |||||||||||
| Equity Securities | - | 1,771 | n/m | - | |||||||
| Debt Securities Available For Sale | 3,210,689 | 2,702,240 | 18.8 | % | 3,078,846 | ||||||
| Debt Securities Held To Maturity (2) | 681,821 | 923,190 | -26.1 | % | 738,072 | ||||||
| Loans | 1,121,243 | 1,204,844 | -6.9 | % | 1,126,664 | ||||||
| Allowance For Credit Losses (Loans) | (24,804 | ) | (20,477 | ) | 21.1 | % | (19,484 | ) | |||
| Total Loans, net | 1,096,439 | 1,184,367 | -7.4 | % | 1,107,180 | ||||||
| Other Real Estate Owned | 43 | 43 | 0.0 | % | 43 | ||||||
| Premises and Equipment, net | 35,403 | 33,934 | 4.3 | % | 34,597 | ||||||
| Identifiable Intangibles, net | 1,318 | 1,619 | -18.6 | % | 1,391 | ||||||
| Goodwill | 121,673 | 121,673 | 0.0 | % | 121,673 | ||||||
| Other Assets | 176,112 | 165,336 | 6.5 | % | 164,332 | ||||||
| Total Assets | 5,628,126 | $ | 5,555,961 | 1.3 | % | $ | 5,619,555 | ||||
| Liabilities and Shareholders' Equity: | |||||||||||
| Deposits: | |||||||||||
| Noninterest-Bearing | 2,183,283 | $ | 2,179,803 | 0.2 | % | $ | 2,240,112 | ||||
| Interest-Bearing Transaction | 936,516 | 941,379 | -0.5 | % | 931,888 | ||||||
| Savings | 1,514,431 | 1,482,187 | 2.2 | % | 1,471,284 | ||||||
| Time | 165,196 | 189,215 | -12.7 | % | 169,337 | ||||||
| Total Deposits | 4,799,426 | 4,792,584 | 0.1 | % | 4,812,621 | ||||||
| Short-Term Borrowed Funds | 52,664 | 58,317 | -9.7 | % | 30,928 | ||||||
| Other Liabilities | 70,490 | 48,293 | 46.0 | % | 44,589 | ||||||
| Total Liabilities | 4,922,580 | 4,899,194 | 0.5 | % | 4,888,138 | ||||||
| Shareholders' Equity: | |||||||||||
| Common Equity: | |||||||||||
| Paid-In Capital | 466,472 | 456,075 | 2.3 | % | 466,231 | ||||||
| Accumulated Other | |||||||||||
| Comprehensive Income (Loss) | 171 | (11,249 | ) | n/m | 26,051 | ||||||
| Retained Earnings | 238,903 | 211,941 | 12.7 | % | 239,135 | ||||||
| Total Shareholders' Equity | 705,546 | 656,767 | 7.4 | % | 731,417 | ||||||
| Total Liabilities and | |||||||||||
| Shareholders' Equity | 5,628,126 | $ | 5,555,961 | 1.3 | % | $ | 5,619,555 | ||||
| 12. Income Statements. | |||||||||||
| % | |||||||||||
| Q1'2019 | Change | Q4'2019 | |||||||||
| Interest & Fee Income: | |||||||||||
| Loans | 13,809 | $ | 14,797 | -6.7 | % | $ | 14,103 | ||||
| Investment Securities: | |||||||||||
| Equity Securities | 103 | 98 | 5.1 | % | 103 | ||||||
| Debt Securities Available For Sale | 21,315 | 17,521 | 21.7 | % | 20,067 | ||||||
| Debt Securities Held To Maturity | 3,908 | 5,329 | -26.7 | % | 4,209 | ||||||
| Interest-Bearing Cash | 856 | 1,738 | -50.7 | % | 1,396 | ||||||
| Total Interest & Fee Income | 39,991 | 39,483 | 1.3 | % | 39,878 | ||||||
| Interest Expense: | |||||||||||
| Transaction Deposits | 84 | 121 | -31.1 | % | 89 | ||||||
| Savings Deposits | 217 | 216 | 0.4 | % | 215 | ||||||
| Time Deposits | 133 | 148 | -9.6 | % | 140 | ||||||
| Short-Term Borrowed Funds | 8 | 9 | -11.6 | % | 7 | ||||||
| Total Interest Expense | 442 | 494 | -10.5 | % | 451 | ||||||
| Net Interest Income | 39,549 | 38,989 | 1.4 | % | 39,427 | ||||||
| Provision for Credit Losses | 4,300 | - | n/m | - | |||||||
| Noninterest Income: | |||||||||||
| Service Charges | 4,248 | 4,504 | -5.7 | % | 4,374 | ||||||
| Merchant Processing Services | 2,358 | 2,558 | -7.8 | % | 2,424 | ||||||
| Debit Card Fees | 1,468 | 1,507 | -2.6 | % | 1,568 | ||||||
| Trust Fees | 777 | 717 | 8.4 | % | 764 | ||||||
| ATM Processing Fees | 579 | 633 | -8.5 | % | 696 | ||||||
| Other Service Fees | 506 | 577 | -12.3 | % | 513 | ||||||
| Financial Services Commissions | 125 | 101 | 24.6 | % | 122 | ||||||
| Securities Gains | - | 24 | n/m | 167 | |||||||
| Other Income (3) | 1,587 | 958 | 65.7 | % | 1,104 | ||||||
| Total Noninterest Income | 11,648 | 11,579 | 0.6 | % | 11,732 | ||||||
| Noninterest Expense: | |||||||||||
| Salaries and Benefits | 13,018 | 13,108 | -0.7 | % | 12,297 | ||||||
| Occupancy and Equipment | 4,932 | 5,048 | -2.3 | % | 5,077 | ||||||
| Outsourced Data Processing | 2,405 | 2,369 | 1.5 | % | 2,361 | ||||||
| Courier Service | 491 | 442 | 11.0 | % | 529 | ||||||
| Professional Fees | 389 | 665 | -41.5 | % | 674 | ||||||
| Amortization of Identifiable Intangibles | 73 | 310 | -76.5 | % | 73 | ||||||
| Other | 3,356 | 3,241 | 3.5 | % | 3,198 | ||||||
| Total Noninterest Expense | 24,664 | 25,183 | -2.1 | % | 24,209 | ||||||
| Income Before Income Taxes | 22,233 | 25,385 | -12.4 | % | 26,950 | ||||||
| Income Tax Provision | 5,271 | 5,739 | -8.2 | % | 6,222 | ||||||
| Net Income | 16,962 | $ | 19,646 | -13.7 | % | $ | 20,728 | ||||
| Average Common Shares Outstanding | 27,068 | 26,841 | 0.8 | % | 27,050 | ||||||
| Diluted Common Shares Outstanding | 27,139 | 26,912 | 0.8 | % | 27,094 | ||||||
| Per Common Share Data: | |||||||||||
| Basic Earnings | 0.63 | $ | 0.73 | -13.7 | % | $ | 0.77 | ||||
| Diluted Earnings | 0.63 | 0.73 | -13.7 | % | 0.77 | ||||||
| Dividends Paid | 0.41 | 0.40 | 2.5 | % | 0.41 | ||||||
| Footnotes and Abbreviations: | |||||||||||
| (1) Effective January 1, 2020, the Company adopted Accounting Standards Update (ASU) 2016-13, Financial Instruments - Credit Losses: Measurement of Credit Losses on Financial Instruments ("CECL"), resulting in a period opening adjustment to the allowance for loan losses, held-to-maturity debt securities, other liabilities, deferred tax assets, and shareholders' equity. | |||||||||||
| (2) The Company adopted ASU 2016-13, effective January 1, 2020. Debt Securities Held To Maturity at March 31, 2020, of 681,821 thousand is net of related reserve for expected credit losses of 16 thousand. | |||||||||||
| (3) The Company received 603 thousand in excess of amounts charged-off in prior periods on a purchased loan during the quarter ending March 31, 2020, representing the recovery of a purchased loan credit-risk discount. | |||||||||||
| (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 relatively large 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 | |||||||||||
| Certain amounts in prior periods have been reclassified to conform to the current presentation. |
All values are in US Dollars.