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Westamerica Bancorporation Reports Fourth Quarter 2021 Financial Results

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SAN RAFAEL, Calif., Jan. 20, 2022 (GLOBE NEWSWIRE) -- Westamerica Bancorporation (Nasdaq: WABC), parent company of Westamerica Bank, generated net income for the fourth quarter 2021 of $21.7 million and diluted earnings per common share ("EPS") of $0.81. Fourth quarter 2021 results compare to net income of $22.1 million and EPS of $0.82 for the third quarter 2021, which included “make-whole” interest income on corporate bonds redeemed before maturity, which increased EPS $0.02.

"Westamerica’s operating expenses remained well managed in the fourth quarter 2021, delivering fifty-six percent of revenue to pre-tax income. Checking and savings deposits represented ninety-eight percent of the Company’s average deposit base during the fourth quarter 2021, placing limited reliance on higher-costing time deposits. Credit quality remained solid with nonperforming loans of $1.0 million at December 30, 2021,” said Chairman, President and CEO David Payne. “Fourth quarter 2021 results generated an annualized 11.2 percent return on average common equity. Shareholders were paid a $0.42 per common share dividend during the fourth quarter 2021, representing fifty-two percent of diluted earnings per share,” concluded Payne.

Net interest income on a fully-taxable equivalent (FTE) basis was $43.1 million for the fourth quarter 2021, compared to $44.0 million for the third quarter 2021, which included “make-whole” interest income on corporate bonds redeemed prior to maturity of $732 thousand. Interest income on Paycheck Protection Program (“PPP”) loans was $1.2 million for the fourth quarter 2021, compared to $1.9 million for the third quarter 2021. Average PPP loan balances declined to $69 million for the fourth quarter 2021 from $145 million for the third quarter 2021; at December 31, 2021 PPP loans totaled $46 million. Checking and savings deposits represented ninety-eight percent of the Company’s average deposit base during the fourth quarter 2021, generating a low 0.03 percent annualized cost of funding interest-earning assets.

At December 31, 2021, nonperforming loans totaled $1.0 million and the allowance for credit losses on loans was $23.5 million. The Company continues to work with loan customers requesting loan payment deferrals due to economic weakness caused by the pandemic. At December 31, 2021, loans with deferred payments totaled $84 thousand, all of which were consumer automobile loans.

Noninterest income for the fourth quarter 2021 totaled $10.8 million, compared to noninterest income for the third quarter 2021 of $11.3 million.

Noninterest expense for the fourth quarter 2021 was $23.9 million compared to $24.7 million for the third quarter 2021; the lower fourth quarter operating expenses were primarily personnel benefit costs and other expenses.

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, 2020 filed on Form 10-K and quarterly report for the quarter ended September 30, 2021 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.



Public Information January 20, 2022

WESTAMERICA BANCORPORATION

FINANCIAL HIGHLIGHTS

December 31, 2021

1. Net Income Summary.

(in thousands except per-share amounts)

%

Q4'2021

Q4'2020

Change

Q3'2021

Net Interest and Fee Income (FTE)

$43,117

$43,292

-0.4

%

$43,952

Provision for Credit Losses

-

-

n/m

-

Noninterest Income

10,842

13,959

-22.3

%

11,282

Noninterest Expense

23,912

24,545

-2.6

%

24,697

Income Before Taxes (FTE)

30,047

32,706

-8.1

%

30,537

Income Tax Provision (FTE)

8,327

8,868

-6.1

%

8,474

Net Income

$21,720

$23,838

-8.9

%

$22,063

Average Common Shares Outstanding

26,866

26,838

0.1

%

26,866

Diluted Average Common Shares

26,875

26,849

0.1

%

26,875

Operating Ratios:

Basic Earnings Per Common Share

$0.81

$0.89

-9.0

%

$0.82

Diluted Earnings Per Common Share

0.81

0.89

-9.0

%

0.82

Return On Assets (a)

1.17

%

1.44

%

1.22

%

Return On Common Equity (a)

11.2

%

13.2

%

11.6

%

Net Interest Margin (FTE) (a)

2.49

%

2.81

%

2.60

%

Efficiency Ratio (FTE)

44.3

%

42.9

%

44.7

%

Dividends Paid Per Common Share

$0.42

$0.41

2.4

%

$0.41

Common Dividend Payout Ratio

52

%

46

%

50

%

%

12/31'21YTD

12/31'20YTD

Change

Net Interest and Fee Income (FTE)

$174,151

$167,682

3.9

%

Provision for Credit Losses

-

4,300

n/m

Noninterest Income

43,345

45,637

-5.0

%

Noninterest Expense

97,806

98,566

-0.8

%

Income Before Taxes (FTE)

119,690

110,453

8.4

%

Income Tax Provision (FTE)

33,181

30,040

10.5

%

Net Income

$86,509

$80,413

7.6

%

Average Common Shares Outstanding

26,855

26,942

-0.3

%

Diluted Average Common Shares

26,870

26,960

-0.3

%

Operating Ratios:

Basic Earnings Per Common Share

$3.22

$2.98

8.1

%

Diluted Earnings Per Common Share

3.22

2.98

8.1

%

Return On Assets

1.23

%

1.30

%

Return On Common Equity

11.5

%

11.3

%

Net Interest Margin (FTE)

2.62

%

2.91

%

Efficiency Ratio (FTE)

45.0

%

46.2

%

Dividends Paid Per Common Share

$1.65

$1.64

0.6

%

Common Dividend Payout Ratio

51

%

55

%

2. Net Interest Income.

(dollars in thousands)

%

Q4'2021

Q4'2020

Change

Q3'2021

Interest and Fee Income (FTE)

$43,621

$43,773

-0.3

%

$44,444

Interest Expense

504

481

4.8

%

492

Net Interest and Fee Income (FTE)

$43,117

$43,292

-0.4

%

$43,952

Average Earning Assets

$6,919,528

$6,156,749

12.4

%

$6,754,281

Average Interest-

Bearing Liabilities

3,468,111

3,034,240

14.3

%

3,370,840

Yield on Earning Assets (FTE) (a)

2.52

%

2.84

%

2.63

%

Cost of Funds (a)

0.03

%

0.03

%

0.03

%

Net Interest Margin (FTE) (a)

2.49

%

2.81

%

2.60

%

Interest Expense/

Interest-Bearing Liabilities (a)

0.06

%

0.06

%

0.06

%

Net Interest Spread (FTE) (a)

2.46

%

2.78

%

2.57

%

%

12/31'21YTD

12/31'20YTD

Change

Interest and Fee Income (FTE)

$176,106

$169,506

3.9

%

Interest Expense

1,955

1,824

7.2

%

Net Interest and Fee Income (FTE)

$174,151

$167,682

3.9

%

Average Earning Assets

$6,632,632

$5,760,548

15.1

%

Average Interest-

Bearing Liabilities

3,317,924

2,847,988

16.5

%

Yield on Earning Assets (FTE)

2.65

%

2.94

%

Cost of Funds

0.03

%

0.03

%

Net Interest Margin (FTE)

2.62

%

2.91

%

Interest Expense/

Interest-Bearing Liabilities

0.06

%

0.06

%

Net Interest Spread (FTE)

2.59

%

2.88

%

3. Loans & Other Earning Assets.

(average volume, dollars in thousands)

%

Q4'2021

Q4'2020

Change

Q3'2021

Total Assets

$7,334,977

$6,562,753

11.8

%

$7,158,462

Total Earning Assets

6,919,528

6,156,749

12.4

%

6,754,281

Total Loans

1,097,698

1,286,480

-14.7

%

1,176,114

Total Commercial Loans

259,007

426,564

-39.3

%

333,327

Paycheck Protection Program (PPP) Loans

68,870

227,828

-69.8

%

144,641

Commercial Loans

190,137

198,736

-4.3

%

188,686

Commercial RE Loans

538,177

561,394

-4.1

%

543,429

Consumer Loans

300,514

298,522

0.7

%

299,358

Total Investment Securities

4,866,476

4,430,592

9.8

%

4,615,540

Debt Securities Available For Sale

4,533,494

3,884,451

16.7

%

4,235,141

Debt Securities Held To Maturity

332,982

546,141

-39.0

%

380,399

Total Interest-Bearing Cash

955,354

439,677

117.3

%

962,627

Loans/Deposits

17.3

%

22.7

%

18.9

%

%

12/31'21YTD

12/31'20YTD

Change

Total Assets

$7,039,284

$6,174,470

14.0

%

Total Earning Assets

6,632,632

5,760,548

15.1

%

Total Loans

1,195,135

1,239,144

-3.6

%

Total Commercial Loans

349,981

359,937

-2.8

%

PPP Loans

152,149

151,320

0.5

%

Commercial Loans

197,832

208,617

-5.2

%

Commercial RE Loans

546,750

571,543

-4.3

%

Consumer Loans

298,404

307,664

-3.0

%

Total Investment Securities

4,580,468

4,149,960

10.4

%

Debt Securities Available For Sale

4,169,091

3,517,633

18.5

%

Debt Securities Held To Maturity

411,377

632,327

-34.9

%

Total Interest-Bearing Cash

857,029

371,444

130.7

%

Loans/Deposits

19.6

%

23.4

%

4. Deposits, Other Interest-Bearing Liabilities & Equity.

(average volume, dollars in thousands)

%

Q4'2021

Q4'2020

Change

Q3'2021

Total Deposits

$6,349,137

$5,655,768

12.3

%

$6,223,500

Noninterest Demand

3,022,787

2,736,348

10.5

%

2,960,207

Interest-Bearing Transaction

1,245,385

1,071,576

16.2

%

1,246,667

Savings

1,934,220

1,688,031

14.6

%

1,864,401

Time greater than $100K

65,920

71,306

-7.6

%

68,811

Time less than $100K

80,825

88,507

-8.7

%

83,414

Total Short-Term Borrowings

141,761

114,820

23.5

%

107,547

Shareholders' Equity

766,358

720,473

6.4

%

755,682

Demand Deposits/

Total Deposits

47.6

%

48.4

%

47.6

%

Transaction & Savings

Deposits / Total Deposits

97.7

%

97.2

%

97.6

%

%

12/31'21YTD

12/31'20YTD

Change

Total Deposits

$6,100,848

$5,306,177

15.0

%

Noninterest Demand

2,897,244

2,538,819

14.1

%

Interest-Bearing Transaction

1,208,269

1,008,758

19.8

%

Savings

1,842,590

1,594,718

15.5

%

Time greater than $100K

69,165

72,363

-4.4

%

Time less than $100K

83,580

91,519

-8.7

%

Total Short-Term Borrowings

114,267

80,456

42.0

%

Other Borrowed Funds

53

174

-69.6

%

Shareholders' Equity

750,669

711,554

5.5

%

Demand Deposits/

Total Deposits

47.5

%

47.8

%

Transaction & Savings

Deposits / Total Deposits

97.5

%

96.9

%

5. Interest Yields Earned & Rates Paid.

(dollars in thousands)

Q4'2021

Average

Income/

Yield (a) /

Volume

Expense

Rate (a)

Interest & Fee Income Earned

Total Earning Assets (FTE)

$6,919,528

$43,621

2.52

%

Total Loans (FTE)

1,097,698

13,223

4.78

%

Total Commercial Loans (FTE)

259,007

3,187

4.88

%

PPP Loans

68,870

1,208

6.96

%

Commercial Loans (FTE)

190,137

1,979

4.13

%

Commercial RE Loans

538,177

6,492

4.79

%

Consumer Loans

300,514

3,544

4.68

%

Total Investments (FTE)

4,866,476

30,032

2.47

%

Total Interest-Bearing Cash

955,354

366

0.15

%

Interest Expense Paid

Total Earning Assets

6,919,528

504

0.03

%

Total Interest-Bearing Liabilities

3,468,111

504

0.06

%

Total Interest-Bearing Deposits

3,326,350

479

0.06

%

Interest-Bearing Transaction

1,245,385

95

0.03

%

Savings

1,934,220

282

0.06

%

Time less than $100K

80,825

41

0.20

%

Time greater than $100K

65,920

61

0.37

%

Total Short-Term Borrowings

141,761

25

0.07

%

Net Interest Income and

Margin (FTE)

$43,117

2.49

%

Q4'2020

Average

Income/

Yield (a) /

Volume

Expense

Rate (a)

Interest & Fee Income Earned

Total Earning Assets (FTE)

$6,156,749

$43,773

2.84

%

Total Loans (FTE)

1,286,480

15,103

4.67

%

Total Commercial Loans (FTE)

426,564

4,459

4.16

%

PPP Loans

227,828

2,342

4.08

%

Commercial Loans (FTE)

198,736

2,117

4.24

%

Commercial RE Loans

561,394

7,288

5.16

%

Consumer Loans

298,522

3,356

4.47

%

Total Investments (FTE)

4,430,592

28,558

2.58

%

Total Interest-Bearing Cash

439,677

112

0.10

%

Interest Expense Paid

Total Earning Assets

6,156,749

481

0.03

%

Total Interest-Bearing Liabilities

3,034,240

481

0.06

%

Total Interest-Bearing Deposits

2,919,420

462

0.06

%

Interest-Bearing Transaction

1,071,576

90

0.03

%

Savings

1,688,031

246

0.06

%

Time less than $100K

88,507

45

0.20

%

Time greater than $100K

71,306

81

0.45

%

Total Short-Term Borrowings

114,820

19

0.07

%

Net Interest Income and

Margin (FTE)

$43,292

2.81

%

6. Noninterest Income.

(dollars in thousands except per-share amounts)

%

Q4'2021

Q4'2020

Change

Q3'2021

Service Charges on Deposits

$3,580

$3,452

3.7

%

$3,578

Merchant Processing Services

3,000

2,713

10.6

%

3,159

Debit Card Fees

1,727

1,643

5.1

%

1,740

Trust Fees

844

765

10.3

%

839

ATM Processing Fees

488

570

-14.4

%

573

Other Service Fees

449

457

-1.8

%

475

Financial Services Commissions

96

66

45.5

%

95

Gains on Sales of Real Property

-

3,536

n/m

-

Other Noninterest Income

658

757

-13.1

%

823

Total Noninterest Income

$10,842

$13,959

-22.3

%

$11,282

Total Revenue (FTE)

$53,959

$57,251

-5.8

%

$55,234

Noninterest Income/Revenue (FTE)

20.1

%

24.4

%

20.4

%

Service Charges/Avg. Deposits (a)

0.22

%

0.24

%

0.23

%

Total Revenues (FTE) Per Avg.

Common Share (a)

$7.97

$8.49

-6.1

%

$8.16

%

12/31'21YTD

12/31'20YTD

Change

Service Charges on Deposits

$13,697

$14,149

-3.2

%

Merchant Processing Services

11,998

10,208

17.5

%

Debit Card Fees

6,859

6,181

11.0

%

Trust Fees

3,311

3,012

9.9

%

ATM Processing Fees

2,280

2,273

0.3

%

Other Service Fees

1,884

1,837

2.6

%

Financial Services Commissions

356

372

-4.3

%

Gains on Sales of Real Property

-

3,536

-100.0

%

Securities Gains

34

71

n/m

Other Noninterest Income

2,926

3,998

-26.8

%

Total Noninterest Income

$43,345

$45,637

-5.0

%

Total Revenue (FTE)

$217,496

$213,319

2.0

%

Noninterest Income/Revenue (FTE)

19.9

%

21.4

%

Service Charges/Avg. Deposits

0.22

%

0.27

%

Total Revenues (FTE) Per Avg./

Common Share

$8.10

$7.92

2.3

%

7. Noninterest Expense.

(dollars in thousands)

%

Q4'2021

Q4'2020

Change

Q3'2021

Salaries & Benefits

$11,436

$12,291

-7.0

%

$11,813

Occupancy and Equipment

4,692

4,900

-4.2

%

4,759

Outsourced Data Processing

2,357

2,359

-0.1

%

2,429

Professional Fees

757

722

4.8

%

724

Courier Service

572

502

13.9

%

534

Amortization of

Identifiable Intangibles

65

69

-5.8

%

67

Other Noninterest Expense

4,033

3,702

8.9

%

4,371

Total Noninterest Expense

$23,912

$24,545

-2.6

%

$24,697

Noninterest Expense/

Avg. Earning Assets (a)

1.37

%

1.59

%

1.45

%

Noninterest Expense/Revenues (FTE)

44.3

%

42.9

%

44.7

%

%

12/31'21YTD

12/31'20YTD

Change

Salaries & Benefits

$48,011

$50,749

-5.4

%

Occupancy and Equipment

19,139

19,637

-2.5

%

Outsourced Data Processing

9,601

9,426

1.9

%

Professional Fees

3,253

2,423

34.3

%

Courier Service

2,177

2,001

8.8

%

Amortization of

Identifiable Intangibles

269

287

-6.3

%

Other Noninterest Expense

15,356

14,043

9.3

%

Total Noninterest Expense

$97,806

$98,566

-0.8

%

Noninterest Expense/

Avg. Earning Assets

1.47

%

1.71

%

Noninterest Expense/Revenues (FTE)

45.0

%

46.2

%

8. Allowance for Credit Losses.

(dollars in thousands)

%

Q4'2021

Q4'2020

Change

Q3'2021

Average Total Loans

$1,097,698

$1,286,480

-14.7

%

$1,176,114

Beginning of Period Allowance for

Credit Losses on Loans (ACLL)

$23,882

$24,142

-1.1

%

$23,737

Provision for Credit Losses

-

7

n/m

2

Net ACLL (Losses) Recoveries

(368

)

(295

)

24.7

%

143

End of Period ACLL

$23,514

$23,854

-1.4

%

$23,882

Gross ACLL Recoveries /

Gross ACLL Losses

64

%

69

%

115

%

Net ACLL Losses (Recoveries) /

Avg. Total Loans (a)

0.13

%

0.09

%

-0.05

%

%

12/31'21YTD

12/31'20YTD

Change

Average Total Loans

$1,195,135

$1,239,144

-3.6

%

Prior Period ACLL

$23,854

$19,484

22.4

%

Adoption of ASU 2016-13(1)

-

2,017

n/m

Beginning of Period ACLL

23,854

21,501

10.9

%

Provision for Credit Losses

2

4,307

n/m

Net ACLL Losses

(342

)

(1,954

)

-82.5

%

End of Period ACLL

$23,514

$23,854

-1.4

%

Gross ACLL Recoveries /

Gross ACLL Losses

89

%

53

%

Net ACLL Losses /

Avg. Total Loans

0.03

%

0.16

%

(dollars in thousands)

%

12/31/21

12/31/20

Change

9/30/21

Allowance for Credit Losses on Loans

$23,514

$23,854

-1.4

%

$23,882

Allowance for Credit Losses on

HTM Securities (2)

7

9

-22.3

%

7

Total Allowance for Credit Losses

$23,521

$23,863

-1.4

%

$23,889

Allowance for Unfunded

Credit Commitments

$201

$101

99.3

%

$101

9. Credit Quality.

(dollars in thousands)

%

12/31/21

12/31/20

Change

9/30/21

Nonperforming Loans:

Nonperforming Nonaccrual

$265

$526

-49.6

%

$801

Performing Nonaccrual

427

3,803

-88.8

%

436

Total Nonaccrual Loans

692

4,329

-84.0

%

1,237

90+ Days Past Due Accruing Loans

339

450

-24.7

%

537

Total

$1,031

$4,779

-78.4

%

$1,774

Total Loans Outstanding

$1,068,126

$1,256,243

-15.0

%

$1,132,472

Total Assets

7,461,026

6,747,931

10.6

%

7,403,573

Loans:

Allowance for Credit Losses on Loans

$23,514

$23,854

-1.4

%

$23,882

Allowance for Credit Losses on Loans /

Loans

2.20

%

1.90

%

2.11

%

Nonperforming Loans/Total Loans

0.10

%

0.38

%

0.16

%

10. Capital.

(in thousands, except per-share amounts)

%

12/31/21

12/31/20

Change

9/30/21

Shareholders' Equity

$827,102

$844,809

-2.1

%

$837,953

Total Assets

7,461,026

6,747,931

10.6

%

7,403,573

Shareholders' Equity/

Total Assets

11.09

%

12.52

%

11.32

%

Shareholders' Equity/

Total Loans

77.43

%

67.25

%

73.99

%

Tangible Common Equity Ratio

9.60

%

10.90

%

9.83

%

Common Shares Outstanding

26,866

26,807

0.2

%

26,866

Common Equity Per Share

$30.79

$31.51

-2.3

%

$31.19

Market Value Per Common Share

57.73

55.29

4.4

%

56.26

(shares in thousands)

%

Q4'2021

Q4'2020

Change

Q3'2021

Share Repurchase Programs:

Total Shares Repurchased

-

91

n/m

-

Average Repurchase Price

$-

$52.22

n/m

$-

Net Shares Repurchased (Issued)

-

91

n/m

(1

)

%

12/31'21YTD

12/31'20YTD

Change

Total Shares Repurchased

4

319

n/m

Average Repurchase Price

$61.09

$51.63

n/m

Net Shares (Issued) Repurchased

(59

)

255

n/m

11. Period-End Balance Sheets.

(unaudited, dollars in thousands)

%

12/31/21

12/31/20

Change

9/30/21

Assets:

Cash and Due from Banks

$1,132,085

$621,275

82.2

%

$1,011,048

Debt Securities Available For Sale

4,638,855

4,063,185

14.2

%

4,602,706

Debt Securities Held To Maturity (3)

306,396

515,589

-40.6

%

356,106

Loans

1,068,126

1,256,243

-15.0

%

1,132,472

Allowance For Credit Losses on Loans

(23,514

)

(23,854

)

-1.4

%

(23,882

)

Total Loans, net

1,044,612

1,232,389

-15.2

%

1,108,590

Premises and Equipment, net

31,155

32,813

-5.1

%

31,603

Identifiable Intangibles, net

835

1,104

-24.3

%

900

Goodwill

121,673

121,673

0.0

%

121,673

Other Assets

185,415

159,903

16.0

%

170,947

Total Assets

$7,461,026

$6,747,931

10.6

%

$7,403,573

Liabilities and Shareholders' Equity:

Deposits:

Noninterest-Bearing

$3,069,080

$2,725,177

12.6

%

$2,988,329

Interest-Bearing Transaction

1,260,869

1,102,601

14.4

%

1,257,460

Savings

1,940,395

1,703,812

13.9

%

1,894,290

Time

143,612

156,389

-8.2

%

148,882

Total Deposits

6,413,956

5,687,979

12.8

%

6,288,961

Short-Term Borrowed Funds

146,246

102,545

42.6

%

119,102

Other Liabilities

73,722

112,598

-34.5

%

157,557

Total Liabilities

6,633,924

5,903,122

12.4

%

6,565,620

Shareholders' Equity:

Common Equity:

Paid-In Capital

471,043

466,041

1.1

%

470,711

Accumulated Other

Comprehensive Income

49,664

114,412

n/m

71,284

Retained Earnings

306,395

264,356

15.9

%

295,958

Total Shareholders' Equity

827,102

844,809

-2.1

%

837,953

Total Liabilities and

Shareholders' Equity

$7,461,026

$6,747,931

10.6

%

$7,403,573

12. Income Statements.

(unaudited, in thousands except per-share amounts)

%

Q4'2021

Q4'2020

Change

Q3'2021

Interest & Fee Income:

Loans

$13,124

$14,999

-12.5

%

$14,789

Equity Securities

129

110

17.3

%

109

Debt Securities Available For Sale (4)

27,598

24,947

10.6

%

26,452

Debt Securities Held To Maturity

1,824

2,793

-34.7

%

2,091

Interest-Bearing Cash

366

112

226.8

%

369

Total Interest & Fee Income

43,041

42,961

0.2

%

43,810

Interest Expense:

Transaction Deposits

95

90

5.6

%

101

Savings Deposits

282

246

14.6

%

272

Time Deposits

102

126

-19.0

%

100

Short-Term Borrowed Funds

25

19

31.5

%

19

Total Interest Expense

504

481

4.8

%

492

Net Interest Income

42,537

42,480

0.1

%

43,318

Provision for Credit Losses

-

-

n/m

-

Noninterest Income:

Service Charges

3,580

3,452

3.7

%

3,578

Merchant Processing Services

3,000

2,713

10.6

%

3,159

Debit Card Fees

1,727

1,643

5.1

%

1,740

Trust Fees

844

765

10.3

%

839

ATM Processing Fees

488

570

-14.4

%

573

Other Service Fees

449

457

-1.8

%

475

Financial Services Commissions

96

66

45.5

%

95

Gains on Sales of Real Property

-

3,536

n/m

-

Other Noninterest Income

658

757

-13.1

%

823

Total Noninterest Income

10,842

13,959

-22.3

%

11,282

Noninterest Expense:

Salaries and Benefits

11,436

12,291

-7.0

%

11,813

Occupancy and Equipment

4,692

4,900

-4.2

%

4,759

Outsourced Data Processing

2,357

2,359

-0.1

%

2,429

Professional Fees

757

722

4.8

%

724

Courier Service

572

502

13.9

%

534

Amortization of Identifiable Intangibles

65

69

-5.8

%

67

Other Noninterest Expense

4,033

3,702

8.9

%

4,371

Total Noninterest Expense

23,912

24,545

-2.6

%

24,697

Income Before Income Taxes

29,467

31,894

-7.6

%

29,903

Income Tax Provision

7,747

8,056

-3.8

%

7,840

Net Income

$21,720

$23,838

-8.9

%

$22,063

Average Common Shares Outstanding

26,866

26,838

0.1

%

26,866

Diluted Common Shares Outstanding

26,875

26,849

0.1

%

26,875

Per Common Share Data:

Basic Earnings

$0.81

$0.89

-9.0

%

$0.82

Diluted Earnings

0.81

0.89

-9.0

%

0.82

Dividends Paid

0.42

0.41

2.4

%

0.41

%

12/31'21YTD

12/31'20YTD

Change

Interest & Fee Income:

Loans

$57,558

$59,377

-3.1

%

Equity Securities

458

419

9.3

%

Debt Securities Available For Sale (4)

105,420

91,343

15.4

%

Debt Securities Held To Maturity

8,875

13,552

-34.5

%

Interest-Bearing Cash

1,132

1,165

-2.8

%

Total Interest & Fee Income

173,443

165,856

4.6

%

Interest Expense:

Transaction Deposits

378

333

13.5

%

Savings Deposits

1,067

925

15.4

%

Time Deposits

432

512

-15.6

%

Short-Term Borrowed Funds

78

53

47.2

%

Other Borrowed Funds

-

1

-100.0

%

Total Interest Expense

1,955

1,824

7.2

%

Net Interest Income

171,488

164,032

4.5

%

Provision for Credit Losses

-

4,300

n/m

Noninterest Income:

Service Charges

13,697

14,149

-3.2

%

Merchant Processing Services

11,998

10,208

17.5

%

Debit Card Fees

6,859

6,181

11.0

%

Trust Fees

3,311

3,012

9.9

%

ATM Processing Fees

2,280

2,273

0.3

%

Other Service Fees

1,884

1,837

2.6

%

Financial Services Commissions

356

372

-4.3

%

Gains on Sales of Real Property

-

3,536

n/m

Securities Gains

34

71

n/m

Other Operating

2,926

3,998

-26.8

%

Total Noninterest Income

43,345

45,637

-5.0

%

Noninterest Expense:

Salaries and Benefits

48,011

50,749

-5.4

%

Occupancy and Equipment

19,139

19,637

-2.5

%

Outsourced Data Processing

9,601

9,426

1.9

%

Professional Fees

3,253

2,423

34.3

%

Courier Service

2,177

2,001

8.8

%

Amortization of Identifiable Intangibles

269

287

-6.3

%

Other Operating

15,356

14,043

9.3

%

Total Noninterest Expense

97,806

98,566

-0.8

%

Income Before Income Taxes

117,027

106,803

9.6

%

Income Tax Provision

30,518

26,390

15.6

%

Net Income

$86,509

$80,413

7.6

%

Average Common Shares Outstanding

26,855

26,942

-0.3

%

Diluted Common Shares Outstanding

26,870

26,960

-0.3

%

Per Common Share Data:

Basic Earnings

$3.22

$2.98

8.1

%

Diluted Earnings

3.22

2.98

8.1

%

Dividends Paid

1.65

1.64

0.6

%

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 credit losses for loans and held-to-maturity debt securities, other liabilities, deferred tax assets, and shareholders' equity.

(2) In the third quarter 2021, the Company recorded a $2 thousand reversal of provision for credit losses on Debt Securities Held To Maturity and the balance of the allowance for credit losses on Debt Securities Held To Maturity was reduced from $9 thousand at June 30, 2021 to $7 thousand at September 30, 2021.

(3) The Company adopted ASU 2016-13, effective January 1, 2020. Debt Securities Held To Maturity of $306,396 thousand at December 31, 2021, $356,106 thousand at September 30, 2021 and $515,589 thousand at December 31, 2020 are net of related reserve for expected credit losses of $7 thousand, $7 thousand and $9 thousand, respectively.

(4) Interest income on Debt Securities Available For Sale included make-whole interest income on called corporate bonds of $732 thousand in the third quarter 2021, $1.4 million in the second quarter 2021 and $700 thousand in the first quarter 2021.

(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


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