Westamerica Bancorporation ( NASDAQ: WABC), parent company of Westamerica Bank, today reported third quarter 2010 net income applicable to common equity of $23.7 million, or $0.81 diluted earnings per share (“EPS”), compared to $23.6 million, or $0.80 EPS in the prior quarter and $23.8 million, or $0.81 EPS in the third quarter 2009. Third quarter 2010 net income applicable to common equity represents an 18 percent annualized return on average common equity.

“Westamerica’s net interest margin was 5.54 percent in the third quarter 2010, supported by a very low 0.30 percent cost of funding. Our focus on growing checking and savings deposits helps maintain a lower funding cost relative to our peers. We also focus on delivering more of our revenue to the bottom line by operating in the most efficient manner possible. Our operating expenses declined $600 thousand from the prior quarter,” said Chairman, President and CEO David Payne. “The credit quality of legacy Westamerica loans remained stable during the quarter, while FDIC-indemnified nonperforming loans declined $4 million to $56 million at September 30, 2010. Common shareholders’ equity grew to $541 million at September 30, 2010 resulting in a total regulatory capital ratio of 14.9 percent. We were pleased to have deployed some of our excess capital during the quarter acquiring assets and assuming liabilities of the former Sonoma Valley Bank,” Payne added.

Third quarter 2010 operating results include net interest and fee income from acquired assets and assumed liabilities of the former Sonoma Valley Bank, which Westamerica purchased and assumed from the Federal Deposit Insurance Corporation (FDIC) on August 20, 2010. During the third quarter 2010, Westamerica incurred noninterest expenses of approximately $325 thousand due to duplicative operations and recorded a $178 thousand acquisition gain. Management anticipates integration activities will be completed in the first quarter 2011.

Net interest income on a fully taxable equivalent basis (FTE) was $56.7 million for the third quarter 2010, compared to $56.6 million (FTE) for the prior quarter and $61.6 million (FTE) for the third quarter 2009. The third quarter 2010 annualized net interest margin was 5.54 percent (FTE), compared to 5.62 percent (FTE) for the prior quarter and 5.48 percent (FTE) for the third quarter 2009. The decline in the net interest margin from the prior quarter is due to a decline in investment securities yields; yields on recently purchased investment securities are lower than yields on maturing securities and principal paydowns. The decline in net interest income from the third quarter 2009 is attributable to lower levels of interest-earning assets. Weak economic conditions and deleveraging by businesses and individuals have impacted loan volumes.

The provision for loan losses was $2.8 million for the third quarter 2010, unchanged from the prior quarter and from the third quarter 2009.

Noninterest income for the third quarter 2010 was $15.1 million, compared to $15.8 million in the prior quarter. Service charges on deposit accounts declined $467 thousand during the third quarter 2010 when compared to the prior quarter; new overdraft regulations caused a reduction in overdraft fees, which was offset in part by the introduction of new service fees.

Noninterest expense for the third quarter of 2010 totaled $31.5 million, reduced from $32.1 million in the prior quarter, due to lower postage, loan administration and other operating expenses. Noninterest expense for the third quarter 2010 was $3.6 million lower than noninterest expense in the third quarter 2009 due to declines in personnel cost, occupancy and equipment, telephone, postage and other operating expenses. Westamerica completed its integration of acquired assets and assumed liabilities of the former County Bank in August 2009, which were purchased and assumed from the FDIC in February 2009.

Non-performing originated loans totaled $20 million at September 30, 2010 essentially unchanged from June 30, 2010. The allowance for loan losses totaled $38 million at September 30, 2010. Non-performing purchased loans indemnified by the FDIC totaled $56 million at September 30, 2010 reduced from $61 million at June 30, 2010; such loans were measured at estimated fair value on the February 6, 2009 acquisition date. Nonperforming purchased loans totaled $38 million at September 30, 2010; such loans were measured at estimated fair value on the August 20, 2010 acquisition date.

Shareholders' equity at September 30, 2010 was $541 million, increased from $528 million at June 30, 2010. Westamerica paid a regular quarterly dividend of $0.36 per common share in August 2010, totaling $10.5 million. At September 30, 2010, Westamerica Bancorporation’s total regulatory capital ratio was 14.88 percent and Westamerica Bank’s total regulatory capital ratio was 14.95 percent; both measurements exceed the "well-capitalized" level of ten percent under regulatory requirements.

Westamerica operates commercial banking offices throughout Northern and Central California. At September 30, 2010, Westamerica’s total assets and total loans outstanding were $5.0 billion and $3.0 billion, respectively.

Westamerica Bancorporation Web Address: www.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, 2009 filed on Form 10-K and quarterly report for the quarter ended June 30, 2010 filed on Form 10-Q, describe some of these factors, including certain credit, market, operational, liquidity and interest rate 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, legislation including the Dodd Frank Wall Street Reform and Consumer Protection Act of 2010 and the Sarbanes-Oxley Act of 2002, 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 October 19, 2010

WESTAMERICA BANCORPORATION

FINANCIAL HIGHLIGHTS
September 30, 2010
       
1. Net Income Summary.
(dollars in thousands except per-share amounts)
%
Q3'10   Q3'09   Change   Q2'10
 
Net Interest Income (FTE) $ 56,669 $ 61,593 -8.0 % $ 56,573
Provision for Loan Losses 2,800 2,800 0.0 % 2,800
Noninterest Income:
Gain on Acquisition 178 0 n/m 0
Other   14,893       15,961   -6.7 %   15,770  
Total Noninterest Income 15,071 15,961 -5.6 % 15,770
Noninterest Expense   31,508       35,151   -10.4 %   32,095  
Income Before Taxes (FTE) 37,432 39,603 -5.5 % 37,448
Income Tax Provision (FTE)   13,723       14,346   -4.3 %   13,887  
Net Income 23,709 25,257 -6.1 % 23,561

Preferred Stock Dividends and Discount Accretion
  0       1,466   n/m   0  

Net Income Applicable to Common Equity
$ 23,709     $ 23,791   -0.3 % $ 23,561  
 
Average Common Shares Outstanding 29,127 29,210 -0.3 % 29,207
Diluted Average Common Shares 29,385 29,429 -0.2 % 29,568
 
Operating Ratios:
Basic Earnings Per Common Share $ 0.81 $ 0.81 0.0 % $ 0.81
Diluted Earnings Per Common Share 0.81 0.81 0.0 % 0.80
Return On Assets (a) 1.95 % 1.86 % 2.00 %
Return On Common Equity (a) 17.9 % 19.7 % 18.2 %
Net Interest Margin (FTE) (a) 5.54 % 5.48 % 5.62 %
Efficiency Ratio (FTE) 43.9 % 45.3 % 44.4 %
 
Dividends Paid Per Common Share $ 0.36 $ 0.35 2.9 % $ 0.36
Common Dividend Payout Ratio 44 % 43 % 45 %
 
%
9/30'10YTD   9/30'09YTD   Change
 
Net Interest Income (FTE) $ 170,271 $ 183,270 -7.1 %
Provision for Loan Losses 8,400 7,200 16.7 %
Noninterest Income:
Gain on Acquisition 178 48,844 n/m
Other   46,133       47,471   -2.8 %
Total Noninterest Income 46,311 96,315 n/m
Noninterest Expense   95,635       107,940   -11.4 %
Income Before Taxes (FTE) 112,547 164,445 n/m
Income Tax Provision (FTE)   41,701       63,180   n/m
Net Income 70,846 101,265 n/m

Preferred Stock Dividends and Discount Accretion
  0       3,151   n/m

Net Income Applicable to Common Equity
$ 70,846     $ 98,114   n/m
 
Average Common Shares Outstanding 29,187 29,072 0.4 %
Diluted Average Common Shares 29,515 29,313 0.7 %
 
Operating Ratios:
Basic Earnings Per Common Share $ 2.43 $ 3.37 n/m
Diluted Earnings Per Common Share 2.40 3.35 n/m
Return On Assets (a) 1.98 % 2.57 %
Return On Common Equity (a) 18.3 % 28.4 %
Net Interest Margin (FTE) (a) 5.59 % 5.39 %
Efficiency Ratio (FTE) 44.2 % 38.6 %
 
Dividends Paid Per Common Share $ 1.08 $ 1.06 1.9 %
Common Dividend Payout Ratio 45 % 32 %
 
(FTE) Fully Taxable Equivalent
(a) Annualized
 
2. Net Interest Income.
  (dollars in thousands)
    %  
Q3'10   Q3'09   Change   Q2'10
 
Interest and Fee Income (FTE) $ 59,765 $ 66,093 -9.6 % $ 59,718
Interest Expense   3,096       4,500   -31.2 %   3,145  
Net Interest Income (FTE) $ 56,669     $ 61,593   -8.0 % $ 56,573  
 
Average Earning Assets $ 4,068,561 $ 4,470,851 -9.0 % $ 4,033,831

Average Interest-Bearing Liabilities
2,830,355 3,094,081 -8.5 % 2,754,458
 
Yield on Earning Assets (FTE) (a) 5.84 % 5.88 % 5.93 %
Cost of Funds (a) 0.30 % 0.40 % 0.31 %
Net Interest Margin (FTE) (a) 5.54 % 5.48 % 5.62 %

Interest Expense/Interest-Bearing Liabilities (a)
0.43 % 0.58 % 0.46 %
Net Interest Spread (FTE) (a) 5.41 % 5.30 % 5.47 %
 
%
9/30'10YTD   9/30'09YTD   Change
 
Interest and Fee Income (FTE) $ 180,046 $ 198,348 -9.2 %
Interest Expense   9,775       15,078   -35.2 %
Net Interest Income (FTE) $ 170,271     $ 183,270   -7.1 %
 
Average Earning Assets $ 4,071,089 $ 4,541,596 -10.4 %

Average Interest-Bearing Liabilities
2,810,261 3,186,918 -11.8 %
 
Yield on Earning Assets (FTE) (a) 5.91 % 5.83 %
Cost of Funds (a) 0.32 % 0.44 %
Net Interest Margin (FTE) (a) 5.59 % 5.39 %

Interest Expense/Interest-Bearing Liabilities (a)
0.46 % 0.63 %
Net Interest Spread (FTE) (a) 5.45 % 5.20 %
 
(FTE) Fully Taxable Equivalent
(a) Annualized
 
3. Loans & Other Earning Assets.
  (average volume, dollars in thousands)
    %  
Q3'10   Q3'09   Change   Q2'10
 
Total Assets $ 4,835,357 $ 5,072,866 -4.7 % $ 4,731,270
Total Earning Assets 4,068,561 4,470,851 -9.0 % 4,033,831
Total Loans 2,937,501 3,263,388 -10.0 % 2,924,515
Commercial Loans 772,997 901,127 -14.2 % 773,814
Commercial RE Loans 1,234,475 1,313,545 -6.0 % 1,224,442
Consumer Loans 930,029 1,048,716 -11.3 % 926,259
Total Investment Securities 1,131,060 1,207,463 -6.3 % 1,109,316
Available For Sale (Market) 489,581 405,304 20.8 % 435,317
Held To Maturity 641,479 802,159 -20.0 % 673,999
Unrealized Gain 24,044 20,047 n/m 16,361
 
Loans/Deposits 73.8 % 79.0 % 75.1 %
 
%
9/30'10YTD   9/30'09YTD   Change
 
Total Assets $ 4,793,266 $ 5,113,359 -6.3 %
Total Earning Assets 4,071,089 4,541,596 -10.4 %
Total Loans 2,952,665 3,261,462 -9.5 %
Commercial Loans 780,935 910,263 -14.2 %
Commercial RE Loans 1,232,406 1,289,190 -4.4 %
Consumer Loans 939,324 1,062,009 -11.6 %
Total Investment Securities 1,118,424 1,280,134 -12.6 %
Available For Sale (Market) 443,263 412,644 7.4 %
Held To Maturity 675,161 867,490 -22.2 %
Unrealized Gain 24,044 20,047 n/m
 
Loans/Deposits 74.9 % 80.2 %
 
4. Deposits & Other Interest-Bearing Liabilities.
  (average volume, dollars in thousands)
    %  
Q3'10   Q3'09   Change   Q2'10
 
Total Deposits $ 3,981,437 $ 4,131,388 -3.6 % $ 3,895,671
Noninterest Demand 1,417,638 1,371,124 3.4 % 1,384,249
Interest Bearing Transaction 678,524 708,372 -4.2 % 664,952
Savings 993,934 978,656 1.6 % 954,367
Time greater than $100K 549,459 581,681 -5.5 % 541,213
Time less than $100K 341,882 491,555 -30.4 % 350,890
Total Short-Term Borrowings 203,841 221,100 -7.8 % 206,313
Fed Funds Purchased 0 870 n/m 0
Other Short-Term Funds 203,841 220,230 -7.4 % 206,313
Federal Home Loan Bank Advances 36,298 86,166 n/m 10,273
Long-Term Debt 26,417 26,551 -0.5 % 26,450
Shareholders' Equity 525,630 549,331 -4.3 % 518,128
 

Demand Deposits/Total Deposits
35.6 % 33.2 % 35.5 %

Transaction & Savings Deposits / Total Deposits
77.6 % 74.0 % 77.1 %
 
%
9/30'10YTD   9/30'09YTD   Change
 
Total Deposits $ 3,944,231 $ 4,066,462 -3.0 %
Noninterest Demand 1,394,033 1,330,495 4.8 %
Interest Bearing Transaction 669,053 705,777 -5.2 %
Savings 971,368 941,847 3.1 %
Time greater than $100K 548,848 622,168 -11.8 %
Time less than $100K 360,929 466,175 -22.6 %
Total Short-Term Borrowings 209,846 347,072 -39.5 %
Fed Funds Purchased 0 144,037 n/m
Other Short-Term Funds 209,846 203,034 3.4 %
Federal Home Loan Bank Advances 23,767 77,296 n/m
Long-Term Debt 26,450 26,584 -0.5 %
Shareholders' Equity 517,121 527,635 -2.0 %
 

Demand Deposits/Total Deposits
35.3 % 32.7 %

Transaction & Savings Deposits / Total Deposits
76.9 % 73.2 %
 
5. Interest Yields Earned & Rates Paid.
  (dollars in thousands)
Q3'10
Average   Income/   Yield (a) /
Volume   Expense   Rate
 
Interest Income Earned
Total Earning Assets (FTE) $ 4,068,561 $ 59,765 5.84 %
Total Loans (FTE) 2,937,501 45,382 6.13 %
Commercial Loans (FTE) 772,997 12,265 6.29 %
Commercial RE Loans 1,234,475 20,696 6.65 %
Consumer Loans 930,029 12,421 5.30 %
Total Investments (FTE) 1,131,060 14,383 5.09 %
 
Interest Expense Paid
Total Earning Assets 4,068,561 3,096 0.30 %
Total Interest-Bearing Liabilities 2,830,355 3,096 0.43 %
Total Interest-Bearing Deposits 2,563,799 2,047 0.32 %
Interest-Bearing Transaction 678,524 226 0.13 %
Savings 993,934 666 0.27 %
Time less than $100K 341,882 357 0.41 %
Time greater than $100K 549,459 798 0.58 %
Total Short-Term Borrowings 203,841 511 0.98 %
Fed Funds Purchased 0 0 0.00 %
Other Short-Term Funds 203,841 511 0.98 %
Federal Home Loan Bank Advances 36,298 113 1.22 %
Long-Term Debt 26,417 425 6.43 %
 

Net Interest Income and Margin (FTE)
$ 56,669 5.54 %
 
Q3'09
Average Income/ Yield (a) /
Volume   Expense   Rate
 
Interest Income Earned
Total Earning Assets (FTE) $ 4,470,851 $ 66,093 5.88 %
Total Loans (FTE) 3,263,388 49,579 6.03 %
Commercial Loans (FTE) 901,127 13,090 5.76 %
Commercial RE Loans 1,313,545 21,967 6.63 %
Consumer Loans 1,048,716 14,522 5.49 %
Total Investments (FTE) 1,207,463 16,514 5.47 %
 
Interest Expense Paid
Total Earning Assets 4,470,851 4,500 0.40 %
Total Interest-Bearing Liabilities 3,094,081 4,500 0.58 %
Total Interest-Bearing Deposits 2,760,264 3,273 0.47 %
Interest-Bearing Transaction 708,372 263 0.15 %
Savings 978,656 915 0.37 %
Time less than $100K 491,555 829 0.67 %
Time greater than $100K 581,681 1,266 0.86 %
Total Short-Term Borrowings 221,100 509 0.90 %
Fed Funds Purchased 870 0 0.15 %
Other Short-Term Funds 220,230 509 0.92 %
Federal Home Loan Bank Advances 86,166 295 1.34 %
Long-Term Debt 26,551 423 6.36 %
 

Net Interest Income and Margin (FTE)
$ 61,593 5.48 %
 

(FTE) Fully Taxable Equivalent
 
6. Noninterest Income.
  (dollars in thousands except per-share amounts)
    %  
Q3'10   Q3'09   Change   Q2'10
 
Service Charges on Deposits $ 8,162 $ 9,479 -13.9 % $ 8,629
Merchant Credit Card Income 2,234 2,163 3.3 % 2,176
ATM Fees & Interchange 1,004 965 4.0 % 1,021
Debit Card Fees 1,259 1,267 -0.6 % 1,245
Financial Services Commissions 211 129 64.2 % 223
Mortgage Banking Income 23 26 -13.9 % 40
Trust Fees 429 319 34.2 % 448
Other Income   1,571       1,613   -2.5 %   1,988  
Sub-total 14,893 15,961 -6.7 % 15,770
Gain on Acquisition   178       0   n/m   0  
Total Noninterest Income $ 15,071     $ 15,961   -5.6 % $ 15,770  
 
Total Revenue (FTE) $ 71,740 $ 77,554 -7.5 % $ 72,343
Noninterest Income/Revenue (FTE) 21.0 % 20.6 % 21.8 %
Service Charges/Avg. Deposits (a) 0.81 % 0.91 % 0.89 %

Total Revenues (FTE) Per Avg. Common Share (a)
$ 9.77 $ 10.53 -7.2 % $ 9.93
 
%
9/30'10YTD   9/30'09YTD   Change
 
Service Charges on Deposits $ 25,533 $ 27,017 -5.5 %
Merchant Credit Card Income 6,631 6,818 -2.7 %
ATM Fees & Interchange 2,917 2,792 4.5 %
Debit Card Fees 3,678 3,656 0.6 %
Financial Services Commissions 583 420 38.9 %
Mortgage Banking Income 82 68 20.3 %
Trust Fees 1,257 1,056 19.1 %
Other Income   5,452       5,644   -3.4 %
Sub-total 46,133 47,471 -2.8 %
Gain on Acquisition   178       48,844   n/m
Total Noninterest Income $ 46,311     $ 96,315   n/m
 
Total Revenue (FTE) $ 216,582 $ 279,585 n/m
Noninterest Income/Revenue (FTE) 21.4 % 34.4 %
Service Charges/Avg. Deposits (a) 0.87 % 0.89 %

Total Revenues (FTE) Per Avg. Common Share (a)
$ 9.92 $ 12.86 n/m
 
(FTE) Fully Taxable Equivalent
(a) Annualized
 
7. Noninterest Expense.        
(dollars in thousands)
%
Q3'10   Q3'09   Change   Q2'10
 
Salaries & Benefits $ 15,481 $ 16,402 -5.6 % $ 15,476
Occupancy 3,962 4,008 -1.2 % 3,822
Equipment 1,067 1,789 -40.4 % 1,116
Outsourced Data Processing 2,187 2,258 -3.1 % 2,202
Courier 826 989 -16.4 % 903
Postage 322 576 -44.1 % 454
Telephone 346 622 -44.4 % 406
Professional Fees 950 913 4.1 % 867
Stationery & Supplies 276 450 -38.7 % 330
Loan Expense 354 491 -27.8 % 475
Operational Losses 237 242 -2.0 % 158

Amortization of Identifiable Intangibles
1,573 1,671 -5.8 % 1,540
FDIC Insurance Assessment 1,268 1,442 -12.1 % 1,260
Other Operating   2,659       3,298   -19.4 %   3,086  
Total Noninterest Expense $ 31,508     $ 35,151   -10.4 % $ 32,095  
 
Average Full Time Equivalent Staff 1,004 1,086 -7.6 % 1,018
 
Average Assets per Avg. FTE Staff $ 4,816 $ 4,671 3.1 % $ 4,648
Revenues (FTE) per Avg. FTE Staff (a) 283 283 0.0 % 285

Noninterest Expense/Avg. Earning Assets (a)
3.07 % 3.12 % 3.19 %
Noninterest Expense/Revenues (FTE) 43.9 % 45.3 % 44.4 %
 
%
9/30'10YTD   9/30'09YTD   Change
 
Salaries & Benefits $ 46,849 $ 50,221 -6.7 %
Occupancy 11,561 14,831 -22.1 %
Equipment 3,234 4,618 -30.0 %
Outsourced Data Processing 6,629 6,740 -1.6 %
Courier 2,636 2,881 -8.5 %
Postage 1,251 1,570 -20.3 %
Telephone 1,141 1,487 -23.2 %
Professional Fees 2,480 2,580 -3.9 %
Stationery & Supplies 956 1,191 -19.8 %
Loan Expense 1,248 1,689 -26.1 %
Operational Losses 615 658 -6.5 %

Amortization of Identifiable Intangibles
4,711 5,051 -6.7 %
FDIC Insurance Assessment 3,848 4,820 -20.2 %
Other Operating   8,476       9,603   -11.7 %
Total Noninterest Expense $ 95,635     $ 107,940   -11.4 %
 
Average Full Time Equivalent Staff 1,018 1,135 -10.3 %
 
Average Assets per Avg. FTE Staff $ 4,709 $ 4,505 4.5 %
Revenues (FTE) per Avg. FTE Staff (a) 284 329 -13.7 %

Noninterest Expense/Avg. Earning Assets (a)
3.14 % 3.18 %
Noninterest Expense/Revenues (FTE) 44.2 % 38.6 %
(FTE) Fully Taxable Equivalent
(a) Annualized
 
8. Provision for Loan Losses.        
(dollars in thousands)
%
Q3'10   Q3'09   Change   Q2'10
 
Average Total Loans $ 2,937,501 $ 3,263,388 -10.0 % $ 2,924,515

Avg. Total Purchased Covered Loans (1)
743,126 974,057 -23.7 % 788,108

Avg. Total Purchased Non-Covered Loans (2)
97,438 0 n/m 0
Avg. Total Originated Loans 2,096,937 2,289,331 -8.4 % 2,136,407
 
Provision for Loan Losses $ 2,800 $ 2,800 0.0 % $ 2,800
Gross Loan Losses 5,216 3,870 34.8 % 4,255
Net Loan Losses 4,387 3,239 35.4 % 3,400
Recoveries/Gross Losses 16 % 16 % 20 %

Net Loan Losses/Avg. Originated Loans (a)
0.83 % 0.56 % 0.64 %

Provision for Loan Losses/Avg. Originated Loans (a)
0.53 % 0.49 % 0.53 %

Provision for Loan Losses/Net Loan Losses
63.8 % 86.4 % 82.3 %
 
%
9/30'10YTD   9/30'09YTD   Change
 
Average Total Loans $ 2,952,665 $ 3,261,462 -9.5 %

Avg. Total Purchased Covered Loans (1)
787,142 900,922 -12.6 %

Avg. Total Purchased Non-Covered Loans (2)
32,836 0 n/m
Avg. Total Originated Loans 2,132,687 2,360,540 -9.7 %
 
Provision for Loan Losses $ 8,400 $ 7,200 16.7 %
Gross Loan Losses 13,926 10,735 29.7 %
Net Loan Losses 11,314 8,987 25.9 %
Recoveries/Gross Losses 19 % 16 %

Net Loan Losses/Avg. Originated Loans (a)
0.71 % 0.51 %

Provision for Loan Losses/Avg. Originated Loans (a)
0.53 % 0.41 %

Provision for Loan Losses/Net Loan Losses
74.2 % 80.1 %
 
(a) Annualized
(1) Covered loans represent purchased loans on which losses are shared with the FDIC per a Loss Sharing Agreement. Covered loans were recorded at estimated fair value at February 6, 2009, the date of purchase.
(2) Purchased non-covered loans represent purchased loans recorded at estimated fair value at August 20, 2010, the date of purchase.
 
9. Credit Quality.
  (dollars in thousands)
    %  
9/30/10   9/30/09   Change   6/30/10
 
Nonperforming Originated Loans:
Nonperforming Nonaccrual $ 19,194 $ 31,352 -38.8 % $ 19,941
Performing Nonaccrual   233       61   n/m   24  
Total Nonaccrual Loans 19,427 31,413 -38.2 % 19,965
90+ Days Past Due Accruing Loans   686       1,212   -43.4 %   712  
Total 20,113 32,625 -38.4 % 20,677
Repossessed Loan Collateral   19,285       4,319   346.6 %   18,028  

Total Originated Nonperforming Assets
  39,398       36,944   6.6 %   38,705  
 

Nonperforming Purchased Covered Loans (1):
Nonperforming Nonaccrual 39,783 53,255 -25.3 % 37,438
Performing Nonaccrual   12,388       26,277   -52.9 %   22,908  
Total Nonaccrual Loans 52,171 79,532 -34.4 % 60,346
90+ Days Past Due Accruing Loans   4,078       935   n/m   249  
Total 56,249 80,467 -30.1 % 60,595

Repossessed Purchased Covered Loan Collateral (1)
  25,251       18,740   34.7 %   23,670  

Total Nonperforming Purchased Covered Assets (1)
  81,500       99,207   -17.8 %   84,265  
 
Nonperforming Purchased Non-Covered Loans (2):
Nonperforming Nonaccrual 18,304 0 n/m 0
Performing Nonaccrual   19,554       0   n/m   0  
Total Nonaccrual Loans 37,858 0 n/m 0
90+ Days Past Due Accruing Loans   0       0   n/m   0  
Total 37,858 0 n/m 0

Repossessed Purchased Non-Covered Loan Collateral (2)
  2,916       0   n/m   0  

Total Nonperforming Purchased Non-Covered Assets (2)
  40,774       0   n/m   0  
 
Total Nonperforming Assets $ 161,672     $ 136,151   n/m $ 122,970  
 
Total Originated Loans Outstanding $ 2,077,915 $ 2,267,130 -8.3 % $ 2,124,570

Total Purchased Covered Loans Outstanding (1)
718,618 932,656 -22.9 % 763,619

Total Purchased Non-Covered Loans Outstanding (2)
  212,318       0   n/m   0  
Total Loans Outstanding $ 3,008,851     $ 3,199,786   -6.0 % $ 2,888,189  
 
Total Assets $ 4,977,871 $ 4,971,159 0.1 % $ 4,727,086
 
Originated Loans:
Allowance for Loan Losses $ 38,129 $ 42,683 -10.7 % $ 39,716
Allowance/Originated Loans 1.83 % 1.88 % 1.87 %

Nonperforming Originated Loans/Total Originated Loans
0.97 % 1.44 % 0.97 %

Allowance/Originated Nonperforming Loans
190 % 131 % 192 %
 
Purchased Covered Loans (1):

Fair Value Discount on Purchased Covered Loans
$ 66,459 $ 98,738 $ 75,522

Discount/Purchased Covered Loans, gross
8.47 % 9.57 % 9.00 %

Nonperforming Purchased Covered Loans/Total Purchased Covered Loans
7.83 % 8.63 % 7.94 %
 
Purchased Non-Covered Loans (2):

Fair Value Discount on Purchased Non-Covered Loans
$ 36,935 n/m n/m

Discount/Purchased Non-Covered Loans, gross
14.82 % n/m n/m

Nonperforming Purchased Non-Covered Loans/Total Purchased Non-Covered Loans
17.83 % n/m n/m
 
(1) Covered loans and repossessed loan collateral represent purchased assets on which losses are shared with the FDIC per a Loss-Sharing Agreement. Covered assets were recorded at estimated fair value at February 6, 2009, the date of purchase.
(2) Purchased non-covered loans and other real estate owned represent purchased assets recorded at estimated fair value at August 20, 2010, the date of purchase.
 
10. Capital.
  (dollars in thousands, except per-share amounts)
    %  
9/30/10   9/30/09   Change   6/30/10
 
Common Shareholders' Equity $ 541,173 $ 494,383 9.5 % $ 527,681
Preferred Shareholder's Equity 0 41,335 n/m 0
Total Shareholders' Equity 541,173 535,718 1.0 % 527,681
Tier I Regulatory Capital 399,781 394,283 1.4 % 391,538
Total Regulatory Capital 437,615 431,913 1.3 % 426,674
 
Total Assets 4,977,871 4,971,159 0.1 % 4,727,086
Risk-Adjusted Assets 2,941,691 2,866,814 2.6 % 2,714,429
 

Shareholders' Equity/Total Assets
10.87 % 10.78 % 11.16 %

Shareholders' Equity/Total Loans
17.99 % 16.74 % 18.27 %
Tier I Capital/Total Assets 8.03 % 7.93 % 8.28 %

Tier I Capital/Risk-Adjusted Assets
13.59 % 13.75 % 14.42 %

Total Capital/Risk-Adjusted Assets
14.88 % 15.07 % 15.72 %
Tangible Common Equity Ratio 7.95 % 6.95 % 8.17 %
Common Shares Outstanding 29,118 29,207 -0.3 % 29,118
Book Value Per Common Share $ 18.59 $ 16.93 9.8 % $ 18.12
Market Value Per Common Share $ 54.49 $ 52.00 4.8 % $ 52.52
 
Share Repurchase Programs
(shares in thousands)
%
Q3'10   Q3'09   Change   Q2'10
 
Total Shares Repurchased 97 8 n/m 220
Average Repurchase Price $ 52.08 $ 50.45 3.2 % $ 56.35
Net Shares Repurchased 1 7 n/m 88
 
%
9/30'10YTD   9/30'09YTD   Change
 
Total Shares Repurchased

404
30 n/m
Average Repurchase Price $ 54.99 $ 46.02 19.5 %
Net Shares Repurchased (Issued) 90 (327 ) n/m
 
11. Period-End Balance Sheets.
  (unaudited, dollars in thousands)
    %  
9/30/10   9/30/09   Change   6/30/10
Assets:
Cash and Money Market Assets $ 344,561 $ 180,521 90.9 % $ 294,582
 
Investment Securities:
Available For Sale 569,511 391,644 45.4 % 466,500
Held to Maturity 618,838 780,846 -20.7 % 652,958
 
Purchased Covered Loans (1) 718,618 932,656 -22.9 % 763,619
Purchased Non-Covered Loans (2) 212,318 0 n/m 0
Originated Loans 2,077,915 2,267,130 -8.3 % 2,124,570
Allowance For Loan Losses   (38,129 )     (42,683 ) -10.7 %   (39,716 )
Total Loans, net 2,970,722 3,157,103 -5.9 % 2,848,473
 

Non-Covered Other Real Estate Owned
22,201 4,319

n/m

 
18,028

Covered Other Real Estate Owned, net (1)
25,251 18,740 34.7 % 23,670

Premises and Equipment
36,271 38,982 -7.0 % 36,816
Identifiable Intangibles 36,226 38,264 -5.3 % 32,529
Goodwill 121,673 121,699 0.0 % 121,673
Interest Receivable and Other   232,617       239,041   -2.7 %   231,857  
 
Total Assets $ 4,977,871     $ 4,971,159   0.1 % $ 4,727,086  
 
Liabilities and Shareholders' Equity:
Deposits:
Noninterest Bearing $ 1,428,882 $ 1,377,215 3.8 % $ 1,427,611
Interest-Bearing Transaction 689,372 660,001 4.5 % 642,202
Savings 1,032,003 962,823 7.2 % 954,285
Time   922,441       1,024,587   -10.0 %   866,462  
Total Deposits 4,072,698 4,024,626 1.2 % 3,890,560
 
Short-Term Borrowed Funds 193,202 222,030 -13.0 % 210,503
Federal Home Loan Bank Advances 66,934 85,904 -22.1 % 10,223
Debt Financing and Notes 26,396 26,531 -0.5 % 26,430
Interest Payable and Other   77,468       76,350   1.5 %   61,689  
Total Liabilities   4,436,698       4,435,441   0.0 %   4,199,405  
 
Shareholders' Equity:
Preferred Stock 0 41,335 n/m 0
Common Equity:
Paid-In Capital 378,847 368,032 2.9 % 375,713

Accumulated Other Comprehensive Income
7,238 6,053

19.6

%
6,314
Retained Earnings   155,088       120,298   28.9 %   145,654  
Total Common Equity   541,173       494,383   9.5 %   527,681  
Total Shareholders' Equity   541,173       535,718   1.0 %   527,681  
 

Total Liabilities and Shareholders' Equity
$ 4,977,871     $ 4,971,159   0.1 % $ 4,727,086  
 
(1) Covered loans and repossessed loan collateral represent purchased assets on which losses are shared with the FDIC per a Loss-Sharing Agreement. Covered assets were recorded at estimated fair value at February 6, 2009, the date of purchase.
(2) Purchased non-covered loans and other real estate owned represent purchased assets recorded at estimated fair value at August 20, 2010, the date of purchase.
 
12. Income Statements.
  (unaudited, dollars in thousands except per-share amounts)
    %  
Q3'10   Q3'09   Change   Q2'10
Interest Income:
Loans $ 44,434 $ 48,530 -8.4 % $ 44,060
Money Market Assets 1 1 n/m 0
Investment Securities:
Available for Sale 4,189 4,272 -1.9 % 4,026
Held to Maturity   6,579     8,393 -21.6 %   6,992
Total Interest Income   55,203     61,196 -9.8 %   55,078
 
Interest Expense:
Transaction Deposits 226 263 -13.9 % 218
Savings Deposits 666 915 -27.2 % 659
Time Deposits 1,155 2,095 -44.9 % 1,303
Short-Term Borrowed Funds 511 509 0.3 % 491
Federal Home Loan Bank Advances 113 295 n/m 52
Debt Financing and Notes   425     423 0.6 %   422
Total Interest Expense   3,096     4,500 -31.2 %   3,145
 
Net Interest Income   52,107     56,696 -8.1 %   51,933
 
Provision for Loan Losses   2,800     2,800 0.0 %   2,800
 
Noninterest Income:
Service Charges 8,162 9,479 -13.9 % 8,629
Merchant Credit Card 2,234 2,163 3.3 % 2,176
ATM Fees & Interchange 1,004 965 4.0 % 1,021
Debit Card Fees 1,259 1,267 -0.6 % 1,245
Financial Services Commissions 211 129 64.2 % 223
Mortgage Banking 23 26 -13.9 % 40
Trust Fees 429 319 34.2 % 448
Gain on Acquisition 178 0 n/m 0
Other   1,571     1,613 -2.5 %   1,988
Total Noninterest Income   15,071     15,961 -5.6 %   15,770
 
Noninterest Expense:
Salaries and Benefits 15,481 16,402 -5.6 % 15,476
Occupancy 3,962 4,008 -1.2 % 3,822
Equipment 1,067 1,789 -40.4 % 1,116
Outsourced Data Processing 2,187 2,258 -3.1 % 2,202
Amortization of Identifiable Intangibles 1,573 1,671 -5.8 % 1,540
Professional Fees 950 913 4.1 % 867
FDIC Insurance Assessment 1,268 1,442 -12.1 % 1,260
Other   5,020     6,668 -24.7 %   5,812
Total Noninterest Expense   31,508     35,151 -10.4 %   32,095
 
Income Before Income Taxes 32,870 34,706 -5.3 % 32,808
Income Tax Provision   9,161     9,449 -3.0 %   9,247
Net Income 23,709 25,257 -6.1 % 23,561

Preferred Stock Dividends and Discount Accretion
  0     1,466 n/m   0

Net Income Applicable to Common Equity
$ 23,709   $ 23,791 -0.3 % $ 23,561
 
Average Common Shares Outstanding 29,127 29,210 -0.3 % 29,207
Diluted Common Shares Outstanding 29,385 29,429 -0.2 % 29,568
 
Per Common Share Data:
Basic Earnings $ 0.81 $ 0.81 0.0 % $ 0.81
Diluted Earnings 0.81 0.81 0.0 % 0.80
Dividends Paid 0.36 0.35 2.9 % 0.36
 
%
9/30'10YTD   9/30'09YTD   Change
Interest Income:
Loans $ 133,196 $ 143,148 -7.0 %
Money Market Assets 2 3 n/m
Investment Securities:
Available for Sale 12,110 12,550 -3.5 %
Held to Maturity   20,976     27,752 -24.4 %
Total Interest Income   166,284     183,453 -9.4 %
 
Interest Expense:
Transaction Deposits 661 761 -13.1 %
Savings Deposits 2,064 2,874 -28.2 %
Time Deposits 3,991 7,890 -49.4 %
Short-Term Borrowed Funds 1,538 1,572 -2.2 %
Federal Home Loan Bank Advances 249 714 n/m
Debt Financing and Notes   1,272     1,267 0.4 %
Total Interest Expense   9,775     15,078 -35.2 %
 
Net Interest Income   156,509     168,375 -7.0 %
 
Provision for Loan Losses   8,400     7,200 16.7 %
 
Noninterest Income:
Service Charges 25,533 27,017 -5.5 %
Merchant Credit Card 6,631 6,818 -2.7 %
ATM Fees & Interchange 2,917 2,792 4.5 %
Debit Card Fees 3,678 3,656 0.6 %
Financial Services Commissions 583 420 38.9 %
Mortgage Banking 82 68 20.3 %
Trust Fees 1,257 1,056 19.1 %
Gain on Acquisition 178 48,844 n/m
Other   5,452     5,644 -3.4 %
Total Noninterest Income   46,311     96,315 n/m
 
Noninterest Expense:
Salaries and Benefits 46,849 50,221 -6.7 %
Occupancy 11,561 14,831 -22.1 %
Equipment 3,234 4,618 -30.0 %
Outsourced Data Processing 6,629 6,740 -1.6 %
Amortization of Identifiable Intangibles 4,711 5,051 -6.7 %
Professional Fees 2,480 2,580 -3.9 %
FDIC Insurance Assessment 3,848 4,820 -20.2 %
Other   16,323     19,079 -14.4 %
Total Noninterest Expense   95,635     107,940 -11.4 %
 
Income Before Income Taxes 98,785 149,550 n/m
Income Tax Provision   27,939     48,285 n/m
Net Income 70,846 101,265 n/m

Preferred Stock Dividends and Discount Accretion
  0     3,151 n/m

Net Income Applicable to Common Equity
$ 70,846   $ 98,114 n/m
 
Average Common Shares Outstanding 29,187 29,072 0.4 %
Diluted Common Shares Outstanding 29,515 29,313 0.7 %
 
Per Common Share Data:
Basic Earnings $ 2.43 $ 3.37 n/m
Diluted Earnings 2.40 3.35 n/m
Dividends Paid 1.08 1.06 1.9 %
 

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