Westamerica Bancorporation(US:WABC)2025-05-09 19:02PART I - FINANCIAL INFORMATION Financial Statements This section presents Westamerica Bancorporation's unaudited consolidated financial statements for the quarter ended March 31, 2025, detailing its financial position, performance, and cash flows Consolidated Balance Sheets Total assets decreased to $5.97 billion at March 31, 2025, from $6.08 billion at December 31, 2024, primarily due to a reduction in loans and debt securities, while shareholders' equity increased Balance Sheet Highlights (in thousands) | Account | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total Assets | $5,966,624 | $6,076,274 | | Loans, net | $757,116 | $805,520 | | Total Deposits | $4,874,095 | $5,011,850 | | Total Liabilities | $5,043,486 | $5,186,317 | | Total Shareholders' Equity | $923,138 | $889,957 | Consolidated Statements of Income For the first quarter of 2025, net income was $31.0 million, a decrease from $36.4 million in the first quarter of 2024, primarily driven by a $9.6 million decrease in net interest and fee income Income Statement Highlights (in thousands, except per share data) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net Interest and Fee Income | $56,095 | $65,745 | | (Reversal of) Provision for Credit Losses | ($550) | $300 | | Noninterest Income | $10,321 | $10,097 | | Noninterest Expense | $25,127 | $26,099 | | Net Income | $31,037 | $36,417 | | Diluted Earnings Per Share | $1.16 | $1.37 | Consolidated Statements of Comprehensive Income Total comprehensive income for Q1 2025 was $62.4 million, a significant increase from $29.8 million in Q1 2024, driven by a positive change in net unrealized losses on debt securities available for sale Comprehensive Income (in thousands) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net Income | $31,037 | $36,417 | | Other Comprehensive Income (Loss), net of tax | $31,336 | ($6,575) | | Total Comprehensive Income | $62,373 | $29,842 | Consolidated Statements of Cash Flows For the three months ended March 31, 2025, net cash provided by operating activities was $42.4 million, and net cash provided by investing activities was $258.3 million, resulting in a net increase in cash and due from banks of $125.8 million Cash Flow Summary (in thousands) | Activity | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net Cash Provided by Operating Activities | $42,394 | $52,212 | | Net Cash Provided by Investing Activities | $258,283 | $130,839 | | Net Cash (Used in) Provided by Financing Activities | ($174,835) | $60,885 | | Net Change In Cash and Due from Banks | $125,842 | $243,936 | Notes to Unaudited Consolidated Financial Statements This section provides detailed disclosures on accounting policies and specific financial statement items, including investment securities, loan portfolio, allowance for credit losses, deposits, borrowings, fair value measurements, and commitments Note 3: Investment Securities The investment securities portfolio totaled $4.1 billion at fair value as of March 31, 2025, primarily composed of corporate securities and collateralized loan obligations, with unrealized losses mainly due to higher market interest rates Investment Securities Portfolio (Amortized Cost, in thousands) | Security Type | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Debt securities available for sale | $3,430,221 | $3,634,471 | | Debt securities held to maturity | $839,349 | $844,635 | | Total | $4,269,570 | $4,479,106 | - Unrealized losses on debt securities were primarily caused by market conditions, specifically higher interest rates, not credit deterioration. All collateralized loan obligations, municipal, and corporate securities were investment grade at March 31, 202557 - The company does not intend to sell any debt securities available for sale with a material unrealized loss and believes it is more likely than not that it will not be required to sell them prior to recovery of the amortized cost basis58 Note 4: Loans, Allowance for Credit Losses, and OREO Total loans decreased to $771.0 million at March 31, 2025, with the allowance for credit losses at 1.80% of total loans, and a net reversal of provision recorded in Q1 2025 Loan Portfolio Composition (in thousands) | Loan Category | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Commercial | $111,888 | $127,276 | | Commercial real estate | $489,612 | $507,900 | | Consumer installment & other | $156,405 | $171,786 | | Total Loans | $771,030 | $820,300 | Allowance for Credit Losses Activity - Q1 2025 (in thousands) | Activity | Amount | | :--- | :--- | | Beginning Balance (Jan 1, 2025) | $14,780 | | (Reversal) provision | ($550) | | Charge-offs | ($1,726) | | Recoveries | $1,410 | | Ending Balance (Mar 31, 2025) | $13,914 | - As of March 31, 2025, there were no loans on nonaccrual status, a decrease from $201 thousand at year-end 2024. The company held no Other Real Estate Owned (OREO)7281 Note 8: Deposits and Borrowed Funds Total deposits decreased to $4.87 billion at March 31, 2025, with noninterest-bearing deposits comprising 46% of the total, and no outstanding borrowings from available credit lines Deposit Composition (in thousands) | Deposit Type | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Noninterest-bearing | $2,241,802 | $2,333,389 | | Interest-bearing | $2,632,293 | $2,678,461 | | Total Deposits | $4,874,095 | $5,011,850 | - At March 31, 2025, the Company had access to borrowing from the Federal Reserve up to $725 million and a $60 million line of credit with a correspondent bank, with no outstanding balances on either97 Management's Discussion and Analysis (MD&A) Management discusses the financial results for Q1 2025, highlighting a decrease in net income due to lower net interest income and a compressed net interest margin, while affirming strong capital ratios and liquidity Key Financial Performance Metrics | Metric | Q1 2025 | Q1 2024 | Q4 2024 | | :--- | :--- | :--- | :--- | | Net Income (in millions) | $31.0 | $36.4 | $31.7 | | Diluted EPS | $1.16 | $1.37 | $1.19 | | Return On Assets (ROA) | 2.03% | 2.24% | 2.02% | | Return On Common Equity (ROE) | 11.92% | 15.17% | 12.14% | | Net Interest Margin (FTE) | 3.90% | 4.30% | 4.01% | Net Interest Income and Margin Net interest income (FTE) decreased by $9.7 million year-over-year in Q1 2025, leading to a net interest margin compression to 3.90%, primarily due to lower asset yields and higher deposit rates - The decrease in net interest income compared to Q1 2024 was due to lower average balances of investment securities (down $703 million) and loans (down $64 million), lower yields on securities and cash, and higher rates on deposits131 - The annualized net interest margin (FTE) was 3.90% in Q1 2025, down from 4.30% in Q1 2024 and 4.01% in Q4 2024133 Loan Portfolio and Credit Risk The company maintains a conservative credit risk approach, with very low nonperforming loans and an adequate allowance for credit losses at 1.80% of total loans, recording a reversal of provision in Q1 2025 Nonperforming Loans (in thousands) | Status | March 31, 2025 | March 31, 2024 | Dec 31, 2024 | | :--- | :--- | :--- | :--- | | Total nonaccrual loans | $0 | $958 | $201 | | Accruing loans 90+ days past due | $277 | $525 | $534 | | Total nonperforming loans | $277 | $1,483 | $735 | - The allowance for credit losses as a percentage of total loans was 1.80% at March 31, 2025, consistent with the 1.80% at year-end 2024189 Liquidity and Capital Resources The company maintains strong liquidity, primarily from a stable deposit base, and robust capital ratios significantly exceeding regulatory minimums, while also engaging in dividends and stock repurchases - At March 31, 2025, estimated federally uninsured deposits totaled $2.36 billion212 - During Q1 2025, the company paid dividends of $0.44 per share (totaling $12 million) and retired 361 thousand shares of common stock for $18 million217219 Company Capital Ratios (March 31, 2025) | Ratio | Company Actual | Required for Adequacy | | :--- | :--- | :--- | | Common Equity Tier I Capital | 23.33% | 7.00% | | Tier I Capital | 23.33% | 8.50% | | Total Capital | 23.68% | 10.50% | | Leverage Ratio | 15.47% | 4.00% | Quantitative and Qualitative Disclosures about Market Risk The company identifies credit and interest rate risk as its most significant market risks, which are discussed in the MD&A, and does not use derivative instruments for trading or risk management - The company identifies credit risk and interest rate risk as its most significant market risks224 - The company does not engage in trading activities or use derivative instruments to manage interest rate risk223 Controls and Procedures The company's disclosure controls and procedures were deemed effective as of March 31, 2025, with no material changes to internal control over financial reporting identified during the quarter - Management concluded that the Company's disclosure controls and procedures are effective227 PART II - OTHER INFORMATION Legal Proceedings The company is subject to various legal cases in the ordinary course of business but does not expect them to materially affect its financial position or results of operations - The company is not a party to any material pending legal proceedings outside of the ordinary course of business228 Issuer Purchases of Equity Securities In March 2025, the company repurchased 356 thousand shares of common stock under a new program authorizing up to 2 million shares through March 31, 2026 - A new stock repurchase plan was approved on February 27, 2025, authorizing the purchase of up to 2,000,000 shares233 Share Repurchases in Q1 2025 | Period | Shares Purchased | Average Price Paid | | :--- | :--- | :--- | | Jan 2025 | N/A | N/A | | Feb 2025 | 0 | $0.00 | | Mar 2025 | 356,000 | $50.44 | | Total Q1 | 356,000 | $50.44 |