Westamerica Bancorporation (WABC) Q3 2024 earnings summary

Executive summary

• Q3 2024 net income was $35.1 million ($1.31 EPS), down from $41.6 million ($1.56 EPS) in Q3 2023 and $35.5 million ($1.33 EPS) in Q2 2024; nine-month net income was $106.9 million ($4.01 EPS), down from $122.3 million ($4.58 EPS) year-over-year.

• Q3 2024 results included $1.6 million in gains from life insurance and asset sales, contributing $0.04 EPS.

• Nonperforming assets remained stable at $0.9 million; nonperforming loans decreased 35.2% year-over-year to $1.03 million.

• Net interest and loan fee income (FTE) declined $9.6 million year-over-year in Q3 2024, mainly due to lower average balances and higher funding costs.

• The Federal Reserve reduced the federal funds rate by 0.5% in September 2024; inflation remains above target but is declining.

Financial highlights

• Net interest and loan fee income (FTE) for Q3 2024 was $62.5 million, down 13.4% year-over-year and 2.6% sequentially; nine-month total was $192.7 million, down from $211.9 million year-over-year.

• Net interest margin (FTE) was 4.08% in Q3 2024 (down from 4.43% in Q3 2023); nine-month margin was 4.18% (down from 4.32%).

• Noninterest income for Q3 2024 was $11.9 million, up 5.7% year-over-year and 13.6% sequentially, including $1.6 million in gains from life insurance and asset sales; nine-month noninterest income was flat at $32.5 million.

• Noninterest expense for Q3 2024 was $26.3 million, up 2.6% year-over-year and 0.7% sequentially; nine-month expense was $78.5 million, up from $77.7 million.

• Total assets at quarter-end were $6.16 billion, down 6.2% year-over-year.

Outlook and guidance

• Management continues to monitor inflation, monetary policy, and climate change impacts on business and customers.

• The company expects to maintain regulatory capital levels well above minimums and continue paying quarterly dividends.

• Deposit totals are expected to remain influenced by fiscal and monetary policy, competitive pricing, and tax payment timing.

• Management highlighted the benefit of a low-cost deposit base, with 48% in non-interest bearing checking accounts and a 0.37% annualized cost of funding.

• Forward-looking statements note risks from credit, interest rate, operational, liquidity, and market factors, as well as regulatory and economic changes.