Westamerica Bancorporation Reports Second Quarter 2020 Financial Results

7/16, 4:57 PM (Source: GlobeNewswire)

SAN RAFAEL, Calif., July 16, 2020 (GLOBE NEWSWIRE) -- Westamerica Bancorporation (Nasdaq: WABC), parent company of Westamerica Bank, generated net income for the second quarter 2020 of $19.6 million and diluted earnings per common share ("EPS") of $0.72. These results compare to net income of $17.0 million and EPS of $0.63 for the first quarter 2020 and net income of $19.6 million and EPS of $0.73 for the second quarter 2019.

"Westamerica’s primary objective during the Covid-19 pandemic is to support our customers. Westamerica remains open for business during regular business hours at all but one branch. Westamerica funded $249 million Paycheck Protection Program loans for our customers during the second quarter 2020. We are following all health orders affecting our business to keep our customers and employees safe. Westamerica’s net interest income on a fully-tax equivalent basis for the second quarter 2020 increased to $42.1 million from $40.5 million for the first quarter 2020. Operating expenses were $24.8 million for the second quarter 2020, representing only 48 percent of revenues on a fully-taxable equivalent basis. Credit quality remained stable with nonperforming assets of $4.6 million at June 30, 2020,” said Chairman, President and CEO David Payne. “Second quarter 2020 results generated an annualized 11.1 percent return on average common equity, and shareholders were paid a $0.41 per common share dividend during the quarter,” concluded Payne.

Net interest income on a fully-taxable equivalent (FTE) basis was $42.1 million for the second quarter 2020, compared to $40.5 million for the first quarter 2020 and $40.3 million for the second quarter 2019. The annualized net interest margin (FTE) was 2.99 percent for the second quarter 2020, compared to 3.10 percent for the first quarter 2020 and 3.13 percent for the second quarter 2019. The decline in the margin during the second quarter 2020 is primarily due to higher average interest-bearing cash balances and lower cash yields. Total average deposits grew $371 million during the second quarter 2020. Checking and savings deposits represented ninety-seven percent of the Company’s average deposit base during the second quarter 2020 maintaining a 0.03 percent annualized cost of funding interest-earning assets.

The Company has been actively working with consumer and commercial borrowers requesting deferral of loan payments. At June 30, 2020, automobile loans and other consumer loans granted loan deferrals totaled $29 million and $5 million, respectively, commercial real estate loans with deferred payments totaled $66 million, primarily for hospitality and retail properties, and commercial loans with deferred payments totaled $3 million. The commercial real estate loans with deferred payments are seasoned with low loan-to-value ratios.

Nonperforming assets were $4.6 million at June 30, 2020. The Company’s allowance for credit losses was $25 million at June 30, 2020. The Company recognized no provision for credit losses in the second quarter 2020 compared to a Covid-19 related provision of $4.3 million for the first quarter 2020.

Noninterest income for the second quarter 2020 totaled $9.6 million, compared to $11.6 million for the first quarter 2020, and $12.3 million for the second quarter 2019. Beginning March 2020, activity-based fees related to deposit accounts and merchant processing fees have been lower due to reduced economic activity.

Noninterest expense for the second quarter 2020 was $24.8 million compared to $24.7 million for the first quarter 2020 and $25.6 million for the second quarter 2019.

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 annual report for the year ended December 31, 2019 filed on Form 10-K and quarterly report for the quarter ended March 31, 2020 filed on Form 10-Q, describe some of these factors, including certain 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
June 30, 2020
 
1. Net Income Summary.
 
 (in thousands except per-share amounts)
     %   
 Q2'2020 Q2'2019 Change Q1'2020 
         
Net Interest and Fee Income (FTE)$42,063 $40,330 4.3%$40,547 
Provision for Credit Losses  -   - n/m   4,300 
Noninterest Income9,554  12,288 -22.2% 11,648 
Noninterest Expense24,754  25,561 -3.2% 24,664 
Income Before Taxes (FTE)26,863 27,057 -0.7% 23,231 
Income Tax Provision (FTE)7,301 7,432 -1.8% 6,269  
Net Income$19,562 $19,625 -0.3% $16,962 
         
Average Common Shares Outstanding26,935 26,942 0.0%27,068  
Diluted Average Common Shares26,951 26,987 -0.1%27,139  
         
Operating Ratios:        
Basic Earnings Per Common Share$0.72 $0.73 -1.9%$0.63 
Diluted Earnings Per Common Share$0.72 0.73 -1.9%0.63 
Return On Assets (a)1.30%1.42%  1.21%
Return On Common Equity (a)11.1%11.7%  9.7%
Net Interest Margin (FTE) (a)2.99%3.13%  3.10%
Efficiency Ratio (FTE)48.0%48.6%  47.3%
         
Dividends Paid Per Common Share$0.41 $0.41 0.0%$0.41 
Common Dividend Payout Ratio 57%56%  66%
         


     % 
 6/30'20YTD 6/30'19YTD Change 
       
Net Interest and Fee Income (FTE)$82,610 $80,577 2.5%
Provision for Credit Losses  4,300   - n/m 
Noninterest Income21,202 23,867 -11.2%
Noninterest Expense49,418 50,744 -2.6%
Income Before Taxes (FTE)50,094 53,700 -6.7%
Income Tax Provision (FTE)13,570 14,429 -6.0%
Net Income$36,524 $39,271 -7.0%
       
Average Common Shares Outstanding27,001 26,892 0.4%
Diluted Average Common Shares27,024 26,950 0.3%
       
Operating Ratios:      
Basic Earnings Per Common Share$1.35 $1.46 -7.5%
Diluted Earnings Per Common Share1.35 1.46 -7.4%
Return On Assets (a)1.25%1.42%  
Return On Common Equity (a)10.4%12.0%  
Net Interest Margin (FTE) (a)3.04%3.12%  
Efficiency Ratio (FTE)47.6%48.6%  
       
Dividends Paid Per Common Share$0.82 $0.81 1.2%
Common Dividend Payout Ratio 61%55%  
       


2. Net Interest Income.        
 (dollars in thousands)
     %   
 Q2'2020 Q2'2019 Change Q1'2020 
         
Interest and Fee Income (FTE)$42,498 $40,817 4.1%$40,989 
Interest Expense435 487 -10.7%442 
Net Interest and Fee Income (FTE)$42,063 $40,330 4.3%$40,547 
         
Average Earning Assets$5,635,014 $5,159,112 9.2%$5,242,142 
Average Interest-        
Bearing Liabilities2,774,450 2,646,681 4.8%2,648,581 
         
Yield on Earning Assets (FTE) (a)3.02%3.17%  3.13%
Cost of Funds (a)0.03%0.04%  0.03%
Net Interest Margin (FTE) (a)2.99%3.13%  3.10%
Interest Expense/        
Interest-Bearing Liabilities (a)0.06%0.08%  0.07%
Net Interest Spread (FTE) (a)2.96%3.09%  3.06%
         


     % 
 6/30'20YTD 6/30'19YTD Change 
       
Interest and Fee Income (FTE)$83,487 $81,558 2.4%
Interest Expense877 981 -10.6%
Net Interest and Fee Income (FTE)$82,610 $80,577 2.5%
       
Average Earning Assets$5,438,578 $5,171,973 5.2%
Average Interest-      
Bearing Liabilities2,711,515 2,668,063 1.6%
       
Yield on Earning Assets (FTE) (a)3.07%3.16%  
Cost of Funds (a)0.03%0.04%  
Net Interest Margin (FTE) (a)3.04%3.12%  
Interest Expense/      
Interest-Bearing Liabilities (a)0.07%0.08%  
Net Interest Spread (FTE) (a)3.00%3.08%  
       


3. Loans & Other Earning Assets.        
 (average volume, dollars in thousands)
     %   
 Q2'2020 Q2'2019 Change Q1'2020 
         
Total Assets$6,058,365 $5,560,740 8.9%$5,655,460 
Total Earning Assets5,635,014 5,159,112 9.2%5,242,142 
Total Loans1,232,073 1,183,539 4.1%1,123,934 
Total Commercial Loans344,053 262,804 30.9%223,383 
Paycheck Protection Program (PPP) Loans  132,500   - n/m   - 
Commercial Loans211,553 262,804 -19.5%223,383 
Commercial RE Loans 578,572 582,126 -0.6%579,743 
Consumer Loans309,448 338,609 -8.6%320,808 
Total Investment Securities3,957,851 3,648,436 8.5%3,845,885 
Equity Securities  - 1,772 n/m   - 
Debt Securities Available For Sale3,293,009 2,750,093 19.7%3,135,743 
Debt Securities Held To Maturity664,842 896,571 -25.8%710,142 
Total Interest-Bearing Cash445,090 327,137 36.1%272,323 
         
Loans/Deposits23.7%24.9%  23.3%
         


     % 
 6/30'20YTD 6/30'19YTD Change 
       
Total Assets$5,856,913 $5,586,110 4.8%
Total Earning Assets5,438,578 5,171,973 5.2%
Total Loans1,178,004 1,194,536 -1.4%
Total Commercial Loans283,718 272,083 4.3%
PPP Loans  66,250   - n/m 
Commercial Loans217,468 272,083 -20.1%
Commercial RE Loans 579,157 581,157 -0.3%
Consumer Loans315,129 341,296 -7.7%
Total Investment Securities3,901,868 3,669,029 6.3%
Equity Securities  - 1,760 n/m 
Debt Securities Available For Sale3,214,376 2,742,418 17.2%
Debt Securities Held To Maturity687,492 924,851 -25.7%
Total Interest-Bearing Cash358,706 308,408 16.3%
       
Loans/Deposits23.5%24.9%  


4. Deposits, Other Interest-Bearing Liabilities & Equity.      
 (average volume, dollars in thousands)
     %   
 Q2'2020 Q2'2019 Change Q1'2020 
         
Total Deposits$5,200,475 $4,762,286 9.2%$4,828,988 
Noninterest Demand 2,496,840 2,172,207 14.9%2,222,737 
Interest-Bearing Transaction980,872 945,128 3.8%941,720 
Savings1,558,201 1,459,287 6.8%1,496,362 
Time greater than $100K72,267 80,120 -9.8%73,849 
Time less than $100K92,295 105,544 -12.6%94,320 
Total Short-Term Borrowings70,116 56,602 23.9%42,330 
Other Borrowed Funds  699   - n/m   - 
Shareholders' Equity705,882 669,947 5.4%705,330 
         
Demand Deposits/        
Total Deposits48.0%45.6%  46.0%
Transaction & Savings         
Deposits / Total Deposits96.8%96.1%  96.5%
         


     % 
 6/30'20YTD 6/30'19YTD Change 
       
Total Deposits$5,014,731 $4,798,288 4.5%
Noninterest Demand 2,359,788 2,188,131 7.8%
Interest-Bearing Transaction961,295 945,789 1.6%
Savings1,527,282 1,475,603 3.5%
Time greater than $100K73,058 81,451 -10.3%
Time less than $100K93,308 107,314 -13.1%
Total Short-Term Borrowings56,223 57,906 -2.9%
Other Borrowed Funds  349   - n/m 
Shareholders' Equity705,606 662,704 6.5%
       
Demand Deposits/      
Total Deposits47.1%45.6%  
Transaction & Savings       
Deposits / Total Deposits96.7%96.1%  
       


5. Interest Yields Earned & Rates Paid.  
 (dollars in thousands)
 Q2'2020
 AverageIncome/Yield (a) /
 VolumeExpenseRate
     
Interest & Fee Income Earned    
Total Earning Assets (FTE)$5,635,014$42,4983.02%
Total Loans (FTE)  1,232,07315,3765.02%
Total Commercial Loans (FTE)344,0534,0524.74%
PPP Loans  132,500  1,6735.07%
Commercial Loans (FTE)211,5532,3794.52%
Commercial RE Loans 578,5727,8925.49%
Consumer Loans309,4483,4324.46%
Total Investments (FTE)3,957,85127,0092.73%
Total Interest-Bearing Cash445,0901130.10%
     
Interest Expense Paid    
Total Earning Assets 5,635,0144350.03%
Total Interest-Bearing Liabilities2,774,4504350.06%
Total Interest-Bearing Deposits2,703,6354240.06%
Interest-Bearing Transaction980,872740.03%
Savings1,558,2012240.06%
Time less than $100K92,295470.20%
Time greater than $100K72,267790.44%
Total Short-Term Borrowings 70,116100.06%
Other Borrowed Funds  699  10.35%
     
Net Interest Income and     
Margin (FTE) $42,0632.99%
     


 Q2'2019
 AverageIncome/Yield (a) /
 VolumeExpenseRate
     
Interest & Fee Income Earned    
Total Earning Assets (FTE)$5,159,112$40,8173.17%
Total Loans (FTE)1,183,53914,9295.06%
Commercial Loans (FTE)262,8043,5615.43%
Commercial RE Loans 582,1267,7095.31%
Consumer Loans338,6093,6594.33%
Total Investments (FTE)3,648,43623,9302.62%
Total Interest-Bearing Cash327,1371,9582.37%
     
Interest Expense Paid    
Total Earning Assets 5,159,1124870.04%
Total Interest-Bearing Liabilities2,646,6814870.08%
Total Interest-Bearing Deposits2,590,0794780.07%
Interest-Bearing Transaction945,1281190.05%
Savings1,459,2872120.06%
Time less than $100K105,544650.25%
Time greater than $100K80,120820.41%
Total Short-Term Borrowings 56,60290.06%
     
Net Interest Income and    
Margin (FTE) $40,3303.13%
     


6. Noninterest Income.        
 (dollars in thousands except per-share amounts)
     %   
 Q2'2020 Q2'2019 Change Q1'2020 
         
Service Charges on Deposits$3,151 $4,493 -29.9%$4,248 
Merchant Processing Services2,277 2,657 -14.3%2,358 
Debit Card Fees1,459 1,641 -11.1%1,468 
Trust Fees714 749 -4.7%777 
ATM Processing Fees518 722 -28.3%579 
Other Service Fees420 585 -28.2%506 
Financial Services Commissions123 93 32.6%125 
Life Insurance Gains  - 433 n/m   - 
Securities Gains  71   26 n/m   - 
Other Income (4)821 889 -7.6%1,587 
Total Noninterest Income$9,554 $12,288 -22.2%$11,648 
         
Total Revenue (FTE)$51,617 $52,618 -1.9%$52,195 
Noninterest Income/Revenue (FTE)18.5%23.4%  22.3%
Service Charges/Avg. Deposits (a)0.24%0.38%  0.35%
Total Revenues (FTE) Per Avg.         
Common Share (a)$7.71 $7.83 -1.6%$7.76 
         


     % 
 6/30'20YTD 6/30'19YTD Change 
       
Service Charges on Deposits$7,399 $8,997 -17.8%
Merchant Processing Services4,635 5,215 -11.1%
Debit Card Fees2,927 3,148 -7.0%
Trust Fees1,491 1,466 1.7%
ATM Processing Fees1,097 1,355 -19.0%
Other Service Fees926 1,162 -20.3%
Financial Services Commissions248 194 27.4%
Life Insurance Gains  -   433 n/m 
Securities Gains  71   50 n/m 
Other Income (4)2,408  1,847 30.4%
Total Noninterest Income$21,202 $23,867 -11.2%
       
Total Revenue (FTE)$103,812 $104,444 -0.6%
Noninterest Income/Revenue (FTE)20.4%22.9%  
Service Charges/Avg. Deposits (a)0.30%0.38%  
Total Revenues (FTE) Per Avg./      
Common Share (a)$7.73 $7.83 -1.3%
       

 

7. Noninterest Expense.        
 (dollars in thousands)
     %   
 Q2'2020 Q2'2019 Change Q1'2020 
         
Salaries & Benefits$12,900 $13,090 -1.5%$13,018 
Occupancy and Equipment4,791 4,916 -2.5%4,932 
Outsourced Data Processing2,324 2,367 -1.8%2,405 
Professional Fees643 481 33.7%389 
Courier Service508 451 12.6%491 
Amortization of         
Identifiable Intangibles73 79 -7.6%73 
Loss Contingency (1)  - 553 n/m   - 
Other Operating3,515 3,624  -3.0%3,356  
Total Noninterest Expense$24,754 $25,561 -3.2%$24,664 
         
Noninterest Expense/        
Avg. Earning Assets (a)1.77%1.99%  1.89%
Noninterest Expense/Revenues (FTE)48.0%48.6%  47.3%
         


     % 
 6/30'20YTD 6/30'19YTD Change 
       
Salaries & Benefits$25,918 $26,198 -1.1%
Occupancy and Equipment9,723 9,964 -2.4%
Outsourced Data Processing4,729 4,736 -0.1%
Professional Fees1,032 1,146 -9.9%
Courier Service999 893 11.9%
Amortization of       
Identifiable Intangibles146 389 -62.5%
Loss Contingency (1)  -   553 n/m 
Other Operating6,871 6,865 0.1%
Total Noninterest Expense$49,418 $50,744 -2.6%
       
Noninterest Expense/      
Avg. Earning Assets (a)1.83%1.98%  
Noninterest Expense/Revenues (FTE)47.6%48.6%  
       


8. Allowance for Credit Losses.        
 (dollars in thousands)
     %   
 Q2'2020 Q2'2019 Change Q1'2020 
         
Average Total Loans$1,232,073 $1,183,539 4.1%$1,123,934 
         
Prior Period Allowance for        
Credit Losses on Loans (ACLL)$24,804 $20,477 21.1%$19,484 
Adoption of ASU 2016-13(2)  -   - n/m   2,017 
Beginning of Period ACLL 24,804  20,477  21.1%21,501  
Provision for Credit Losses   -   - n/m   4,300 
Net ACLL Losses(275)(360)-23.5%(997)
End of Period ACLL$24,529 $20,117 21.9%$24,804 
Gross ACLL Recoveries /        
Gross ACLL Losses 66%63%  37%
Net ACLL Losses /         
Avg. Total Loans (a) 0.09%0.12%  0.36%
         


     % 
 6/30'20YTD 6/30'19YTD Change 
       
Average Total Loans$1,178,004 $1,194,536 -1.4%
       
Prior Period Allowance for      
Credit Losses on Loans (ACLL)$19,484 $21,351 n/m 
Adoption of ASU 2016-13(2)  2,017   - n/m 
Beginning of Period ACLL   21,501   21,351 0.7%
Provision for Credit Losses   4,300   - n/m 
Net ACLL Losses(1,272)(1,234)n/m 
End of Period ACLL$24,529 $20,117 21.9%
Gross ACLL Recoveries /      
Gross ACLL Losses 46%48%  
Net ACLL Losses /       
Avg. Total Loans (a)0.22%0.21%  
       


 (dollars in thousands)
   %  
 6/30/206/30/19Change 3/31/20
Allowance for Credit Losses on Loans$24,529$20,11721.9%$24,804
Allowance for Credit Losses on     
HTM Securities16   -n/m   16
Total Allowance for Credit Losses$24,545$20,11722.0%$24,820
      
Allowance for Unfunded     
Credit Commitments  53  2,308-97.7%  53
      


9. Credit Quality.        
 (dollars in thousands)
     %   
 6/30/20 6/30/19 Change 3/31/20 
         
Nonperforming Loans:        
Nonperforming Nonaccrual$590 $177 232.7%$419 
Performing Nonaccrual  3,643   3,670 -0.7%  3,933 
Total Nonaccrual Loans4,233 3,847 10.0%4,352 
90+ Days Past Due Accruing Loans290 249 16.5%178 
Total4,523 4,096 10.4%4,530 
Repossessed Loan Collateral 43 43 -0.9%43 
Total Nonperforming Assets$4,566 $4,139 10.3%$4,573 
         
Total Loans Outstanding $1,316,359 $1,161,712 13.3%$1,121,243 
         
Total Assets $6,463,889 $5,523,448 17.0%$5,628,126 
         
Loans:        
Allowance for Credit Losses on Loans$24,529 $20,117 21.9%$24,804 
Allowance for Credit Losses on Loans /        
Loans1.86%1.73%  2.21%
Nonperforming Loans/Total Loans0.34%0.35%  0.40%
         


10. Capital.        
 (in thousands, except per-share amounts)
     %   
 6/30/20 6/30/19 Change 3/31/20 
         
Shareholders' Equity$808,076 $693,437 16.5%$705,546 
Total Assets6,463,889 5,523,448 17.0%5,628,126 
Shareholders' Equity/        
Total Assets12.50%12.55%  12.54%
Shareholders' Equity/        
Total Loans61.39%59.69%  62.93%
Tangible Common Equity Ratio10.81%10.56%  10.58%
Common Shares Outstanding26,933 26,962 -0.1%26,932 
Common Equity Per Share$30.00 $25.72 16.7%$26.20 
Market Value Per Common Share$57.42 $61.61 -6.8%$58.78 
         
Share Repurchase Programs        
 (shares in thousands)
     %   
 Q2'2020 Q2'2019 Change Q1'2020 
         
Total Shares Repurchased  13   8 n/m   180 
Average Repurchase Price$ 52.27 $ 61.98 n/m $ 51.52 
Net Shares (Issued) Repurchased  (1)(61)n/m 130 
         
     %   
 6/30'20YTD 6/30'19YTD Change   
         
Total Shares Repurchased  193   8 n/m   
Average Repurchase Price$51.50 $61.98 n/m   
Net Shares Repurchased (Issued)129 (232)n/m   



11. Period-End Balance Sheets.        
 (unaudited, dollars in thousands)
     %   
 6/30/20 6/30/19 Change 3/31/20 
Assets:        
Cash and Due from Banks$500,820 $418,586 19.6%$304,628 
         
Investment Securities:        
Equity Securities  - 1,797 n/m   - 
Debt Securities Available For Sale3,708,370 2,775,899 33.6%3,210,689 
Debt Securities Held To Maturity (3)638,281 867,989 -26.5%681,821 
         
Loans1,316,359 1,161,712 13.3%1,121,243 
Allowance For Credit Losses on Loans(24,529)(20,117)21.9%(24,804)
Total Loans, net1,291,830 1,141,595 13.2%1,096,439 
         
Other Real Estate Owned43 43 0.0%43 
Premises and Equipment, net34,061 34,014 0.1%35,403 
Identifiable Intangibles, net1,245 1,540 -19.2%1,318 
Goodwill 121,673 121,673 0.0%121,673 
Other Assets167,566 160,312 4.5%176,112 
         
Total Assets$6,463,889 $5,523,448 17.0%$5,628,126 
         
Liabilities and Shareholders' Equity:        
Deposits:        
Noninterest-Bearing$2,702,885 $2,163,841 24.9%$2,183,283 
Interest-Bearing Transaction997,593 942,140 5.9%936,516 
Savings1,605,169 1,442,552 11.3%1,514,431 
Time162,765 181,729 -10.4%165,196 
Total Deposits5,468,412 4,730,262 15.6%4,799,426 
         
Short-Term Borrowed Funds86,170 54,581 57.9%52,664 
Other Liabilities101,231 45,168 124.1%70,490 
Total Liabilities5,655,813 4,830,011 17.1%4,922,580 
         
Shareholders' Equity:        
Common Equity:        
Paid-In Capital467,386 460,140 1.6%466,472 
Accumulated Other        
Comprehensive Income93,732 13,124 n/m 171 
Retained Earnings246,958 220,173 12.2%238,903 
Total Shareholders' Equity808,076 693,437 16.5%705,546 
         
Total Liabilities and         
Shareholders' Equity$6,463,889 $5,523,448 17.0%$5,628,126 
         


12. Income Statements.     
 (unaudited, in thousands except per-share amounts)
   % 
 Q2'2020Q2'2019ChangeQ1'2020
Interest & Fee Income:     
Loans$15,278$14,8223.1%$13,809
Investment Securities:     
Equity Securities103994.0%103
Debt Securities Available For Sale22,42917,82325.8%21,315
Debt Securities Held To Maturity3,6164,924-26.6%3,908
Interest-Bearing Cash1131,958-94.3%856
Total Interest & Fee Income41,53939,6264.8%39,991
      
Interest Expense:     
Transaction Deposits74119-37.8%84
Savings Deposits2242125.6%217
Time Deposits126147-14.3%133
Short-Term Borrowed Funds1099.4%8
Other Borrowed Funds1  -n/m   -
Total Interest Expense435487-10.8%442
      
Net Interest Income41,10439,1395.0%39,549
      
Provision for Credit Losses  -  -n/m   4,300
      
Noninterest Income:     
Service Charges 3,1514,493-29.9%4,248
Merchant Processing Services2,2772,657-14.3%2,358
Debit Card Fees1,4591,641-11.1%1,468
Trust Fees714749-4.7%777
ATM Processing Fees518722-28.3%579
Other Service Fees420585-28.2%506
Financial Services Commissions1239332.6%125
Life Insurance Gains  -433n/m   -
Securities Gains  71  26n/m   -
Other Income (4)821889-7.6%1,587
Total Noninterest Income9,55412,288-22.2%11,648
      
Noninterest Expense:     
Salaries and  Benefits12,90013,090-1.5%13,018
Occupancy and Equipment4,7914,916-2.5%4,932
Outsourced Data Processing2,3242,367-1.8%2,405
Professional Fees64348133.7%389
Courier Service50845112.6%491
Amortization of Identifiable Intangibles7379-7.6%73
Loss Contingency (1)  -553n/m   -
Other3,5153,624-3.0%3,356
Total Noninterest Expense24,75425,561-3.2%24,664
      
Income Before Income Taxes25,90425,8660.1%22,233
Income Tax Provision6,3426,2411.6%5,271
Net Income$19,562$19,625-0.3%$16,962
      
Average Common Shares Outstanding26,93526,9420.0%27,068
Diluted Common Shares Outstanding26,95126,987-0.1%27,139
      
Per Common Share Data:     
Basic Earnings$0.72$0.73-1.9 $0.63
Diluted Earnings0.720.73-1.9 0.63
Dividends Paid0.410.410.0%0.41


   % 
 6/30'20YTD6/30'19YTDChange 
Interest & Fee Income:    
Loans$29,087$29,619-1.8
Investment Securities:    
Equity Securities2061974.5%
Debt Securities Available For Sale43,74435,34423.8%
Debt Securities Held To Maturity7,52410,253-26.6%
Interest-Bearing Cash9693,696-73.8%
Total Interest & Fee Income81,53079,1093.1%
     
Interest Expense:    
Transaction Deposits158240-34.4%
Savings Deposits4414283.2%
Time Deposits259295-12.2%
Short-Term Borrowed Funds18181.1%
Other Borrowed Funds1  -n/m 
Total Interest Expense877981-10.7%
     
Net Interest Income80,65378,1283.2%
     
Provision for Credit Losses  4,300  -n/m 
     
Noninterest Income:    
Service Charges 7,3998,997-17.8%
Merchant Processing Services4,6355,215-11.1%
Debit Card Fees2,9273,148-7.0%
Trust Fees1,4911,4661.7%
ATM Processing Fees1,0971,355-19.0%
Other Service Fees9261,162-20.3%
Financial Services Commissions24819427.4%
Life Insurance Gains  -  433n/m 
Securities Gains  71  50n/m 
Other Income (4)2,4081,84730.4%
Total Noninterest Income21,20223,867-11.2%
     
Noninterest Expense:    
Salaries and  Benefits25,91826,198-1.1%
Occupancy and Equipment9,7239,964-2.4%
Outsourced Data Processing4,7294,736-0.1%
Professional Fees1,0321,146-9.9%
Courier Service99989311.9%
Amortization of Identifiable Intangibles146389-62.5%
Loss Contingency (1)  -  553n/m 
Other6,8716,8650.1%
Total Noninterest Expense49,41850,744-2.6%
     
Income Before Income Taxes48,13751,251-6.1%
Income Tax Provision11,61311,980-3.1%
Net Income$36,524$39,271-7.0%
     
Average Common Shares Outstanding27,00126,8920.4%
Diluted Common Shares Outstanding27,02426,9500.3%
     
Per Common Share Data:    
Basic Earnings$1.35$1.46-7.5%
Diluted Earnings1.351.46-7.4%
Dividends Paid0.820.811.2%
     


Footnotes and Abbreviations:  
      
 (1) In the second quarter 2019, the Company recorded a $301 thousand increase in estimated customer refunds of revenue recognized prior to 2018 and a $252 thousand loss settlement to dismiss a lawsuit.
 (2) 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. 
 (3) The Company adopted ASU 2016-13, effective January 1, 2020.  Debt Securities Held To Maturity of $638,281 thousand at June 30, 2020 and $681,821 thousand at March 31, 2020 are net of related reserve for expected credit losses of $16 thousand.
 (4) 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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