Westamerica Bancorporation Reports First Quarter 2020 Financial Results

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SAN RAFAEL, Calif., April 16, 2020 (GLOBE NEWSWIRE) -- Westamerica Bancorporation 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.

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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.    
  (in thousands except per-share amounts)
    % 
  Q1'2020Q1'2019ChangeQ4'2019
      
 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.    
  (dollars in thousands)
    % 
  Q1'2020Q1'2019ChangeQ4'2019
      
 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.    
  (average volume, dollars in thousands)
    % 
  Q1'2020Q1'2019ChangeQ4'2019
      
 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.  
  (average volume, dollars in thousands)
    % 
  Q1'2020Q1'2019ChangeQ4'2019
      
 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.   
  (dollars in thousands) 
  Q1'2020 
  AverageIncome/Yield (a) / 
  VolumeExpenseRate 
 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% 
      
  Q1'2019 
  AverageIncome/Yield (a) / 
  VolumeExpenseRate 
 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.    
  (dollars in thousands except per-share amounts)
    % 
  Q1'2020Q1'2019ChangeQ4'2019
      
 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.    
  (dollars in thousands)
    % 
  Q1'2020Q1'2019ChangeQ4'2019
      
 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.    
  (dollars in thousands)
    % 
  Q1'2020Q1'2019ChangeQ4'2019
      
 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%
      
  (dollars in thousands)
    % 
  3/31/203/31/19Change12/31/19
 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.    
  (dollars in thousands)
    % 
  3/31/203/31/19Change12/31/19
 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.    
  (in thousands, except per-share amounts)
    % 
  3/31/203/31/19Change12/31/19
      
 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    
  (shares in thousands)
    % 
  Q1'2020Q1'2019ChangeQ4'2019
      
 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.    
  (unaudited, dollars in thousands)
    % 
  3/31/203/31/19Change12/31/19
 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.    
  (unaudited, in thousands except per-share amounts)
    % 
  Q1'2020Q1'2019ChangeQ4'2019
 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.

 



 

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