Westamerica Bancorp.’s (WABC) reported fourth quarter earnings per share of 79 cents and missed the Zacks Consensus Estimate of 82 cents. Earnings were higher from 71 cents reported in the year-ago quarter but a couple of pennies below 81 cents reported in the prior quarter. During the reported quarter 2009, Westamerica redeemed $42 million in preferred stock requiring accelerated discount accretion of $0.52 million, which reduced earnings per share by 2 cents.
Overall results reflected low cost of funding on loan and investment portfolios, risk reduction in loan portfolio and decrease in non-covered non-performing assets. These were partially offset by increase in the provision for loan losses and decrease in non-interest income.
During the reported quarter, net income applicable to common equity was $23.3 million, up from $20.8 million in the year-ago quarter but marginally down from $23.8 million in the prior quarter.
On a fully-taxable equivalent basis, Westamerica’s net interest income was $58.9 million, up from $49.9 million in the year-ago period but down from $61.6 million in the prior quarter. Total non-interest expense increased 25.5% year-over-year but decreased 6.6% sequentially, to $32.8 million. However, interest expense decreased 6.3% year-over-year and 4.4% sequentially to $4.3 million.
For full year 2009, Westamerica generated net income applicable to common equity of $121 million or $4.14 per share, compared to $60 million or $2.04 per share in 2008. Results for 2009 include a $28.3 million net of tax gain from the acquisition of assets and assumption of liabilities of County Bank. Net interest income increased 23.4% year-over-year to $242.2 million in 2009, primarily due to acquired assets and a higher net interest margin.
Credit metrics deteriorated during the reported quarter. Provision for loan losses increased substantially by 267% year-over-year and by 17.9% sequentially to $3.3 million. Annualized net loan losses on non-FDIC covered loans as a percentage of average non-FDIC covered loans increased to 0.88% from 0.56% in the third quarter of 2009. However, non-performing assets not covered by FDIC loss-sharing agreements were $33 million at Dec 31, 2009, down $4 million from $37 million at Sep 30, 2009.
Total earnings assets were $4.27 billion, up 16.8% year-over-year but down 4.5% sequentially. Total deposits were $4.07 billion, up 30.7% year-over-year but down 1.4% sequentially.
Profitability metrics also reflected a challenging outlook. Westamerica’s annualized return on assets decreased to 1.85% from 2.04% in the year-ago quarter and 1.86% in the sequential quarter. Also annualized return on common equity declined to 18.8% from 20.6% in the year-ago quarter and 19.7% in the sequential quarter.
At Dec 31, 2009, total regulatory capital ratios for Westamerica Bancorp and its subsidiary, Westamerica Bank, were 14.5% and 14.9%, respectively, exceeding the 10% requirement for adequate capitalization under regulatory standards. Westamerica’s long-tem debt was marginally reduced to $26.5 million at the end of fourth quarter 2009.
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