Westamerica Bancorporation ( NASDAQ: WABC), parent company of Westamerica Bank, today reported fourth quarter 2010 net income applicable to common equity of $23.7 million, or $0.81 diluted earnings per share (“EPS”), compared to $23.7 million, or $0.81 EPS in the prior quarter, and $23.3 million, or $0.79 EPS in the fourth quarter 2009. Fourth quarter 2010 net income applicable to common equity represents an 18 percent annualized return on average common equity.

“Westamerica’s net interest margin was 5.39 percent in the fourth quarter 2010. Yields on loans and investment securities are relatively low in the current interest rate environment, which has caused a reduction in asset yields. Our focus on checking and savings deposits delivered a 0.29 percent cost of funding our loans and securities, a much lower funding cost than our peers. We have worked diligently to operate efficiently in spite of cyclically higher problem loan workout costs and FDIC insurance assessments. From our total revenues of $72 million in the fourth quarter 2010, only $32 million was spent on operating expenses, delivering well over one-half of our revenue as pre-tax income for our shareholders,” said Chairman, President and CEO David Payne. “The credit quality of legacy Westamerica assets improved during the quarter as nonperforming assets declined $6 million to $33 million at December 31, 2010. Purchased nonperforming assets declined $12 million to $111 million at December 31, 2010, of which $69 million are indemnified by the FDIC under loss-sharing agreements. Common shareholders’ equity increased to $545 million at December 31, 2010 resulting in a total regulatory capital ratio of 15.5 percent,” Payne added.

Net interest income on a fully taxable equivalent basis (FTE) was $56.4 million for the fourth quarter 2010, compared to $56.7 million (FTE) for the prior quarter and $58.9 million (FTE) for the fourth quarter 2009. The fourth quarter 2010 annualized net interest margin was 5.39 percent (FTE), compared to 5.54 percent (FTE) for the prior quarter and 5.50 percent (FTE) for the fourth quarter 2009. The decline in net interest margin from the prior quarter is due to a decline in yields on loans and investment securities; current market yields are generally lower than yields on existing portfolios. The decline in net interest income in the fourth quarter 2010 compared to the fourth quarter 2009 is attributable to a lower net interest margin and lower levels of loans; loans have declined due to weak economic conditions and weak loan demand.

The provision for loan losses was $2.8 million for the fourth quarter 2010, unchanged from the prior quarter and down from $3.3 million for the fourth quarter 2009.

Noninterest income for the fourth quarter 2010 was $15.1 million, compared to $15.1 million in the prior quarter and $15.7 million the fourth quarter 2009. Service charges on deposit accounts were lower in both the fourth quarter 2010 and third quarter 2010 compared to the fourth quarter 2009 due to new overdraft regulations which were effective July 1, 2010.

Noninterest expense for the fourth quarter of 2010 totaled $31.5 million, unchanged from the prior quarter, and reduced from $32.8 million for the fourth quarter 2009. Westamerica continually manages its expense base as a general business practice in light of industry developments and economic conditions.

Non-performing originated assets totaled $33 million at December 31, 2010, reduced $6 million from September 30, 2010. Excluding repossessed loan collateral, nonperforming originated loans were $21.6 million compared to the allowance for loan losses of $35.6 million at December 31, 2010. Non-performing purchased loans indemnified by the Federal Deposit Insurance Corporation totaled $48 million at December 31, 2010 reduced from $56 million at September 30, 2010; such loans were measured at estimated fair value on the February 6, 2009 acquisition date. Nonperforming non-indemnified purchased loans totaled $39 million at December 31, 2010 compared to $38 million at September 30, 2010; such loans were measured at estimated fair value on the August 20, 2010 acquisition date.

Shareholders' equity at December 31, 2010 was $545 million, increased from $541 million at September 30, 2010. Westamerica paid a regular quarterly dividend of $0.36 per common share in November 2010, totaling $10.5 million. At December 31, 2010, Westamerica Bancorporation’s total regulatory capital ratio was 15.5 percent and Westamerica Bank’s total regulatory capital ratio was 15.3 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 December 31, 2010, Westamerica’s total assets and total loans outstanding were $4.9 billion and $2.9 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 September 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 January 20, 2011

WESTAMERICA BANCORPORATION

FINANCIAL HIGHLIGHTS
December 31, 2010
 
1. Net Income Summary.

(dollars in thousands except per-share amounts)
%
Q4'10   Q4'09   Change   Q3'10
 
Net Interest Income (FTE) $ 56,413 $ 58,949

-4.3
% $

56,669
Provision for Loan Losses 2,800 3,300 -15.2 %

 
2,800
Noninterest Income:
Gain on Acquisition 0 0 n/m 178
Other   15,142       15,696   -3.5 %   14,893  
Total Noninterest Income 15,142 15,696 -3.5 % 15,071
Noninterest Expense   31,512       32,836   -4.0 %   31,508  
Income Before Taxes (FTE) 37,243 38,509 -3.3 % 37,432
Income Tax Provision (FTE)   13,512       14,348   -5.8 %   13,723  
Net Income 23,731 24,161 -1.8 % 23,709

Preferred Stock Dividends and Discount Accretion
  0       812   n/m   0  

Net Income Applicable to Common Equity
$ 23,731     $ 23,349   1.6 % $ 23,709  
 
Average Common Shares Outstanding 29,103 29,205 -0.3 % 29,127
Diluted Average Common Shares 29,341 29,471 -0.4 % 29,385
 
Operating Ratios:
Basic Earnings Per Common Share $ 0.82 $ 0.80 2.5 % $ 0.81
Diluted Earnings Per Common Share 0.81 0.79 2.5 % 0.81
Return On Assets (a) 1.87 % 1.85 % 1.95 %
Return On Common Equity (a) 17.5 % 18.8 % 17.9 %
Net Interest Margin (FTE) (a) 5.39 % 5.50 % 5.54 %
Efficiency Ratio (FTE) 44.0 % 44.0 % 43.9 %
 
Dividends Paid Per Common Share $ 0.36 $ 0.35 2.9 % $ 0.36
Common Dividend Payout Ratio 44 % 44 % 44 %
 
%
12/31'10YTD   12/31'09YTD   Change  
 
Net Interest Income (FTE) $ 226,683 $ 242,218 -6.4 %
Provision for Loan Losses 11,200 10,500 6.7 %
Noninterest Income:
Gain on Acquisition 178 48,844 n/m
Other   61,276       63,167   -3.0 %
Total Noninterest Income 61,454 112,011 n/m
Noninterest Expense   127,147       140,776   -9.7 %
Income Before Taxes (FTE) 149,790 202,953 n/m
Income Tax Provision (FTE)   55,213       77,527   n/m
Net Income 94,577 125,426 n/m

Preferred Stock Dividends and Discount Accretion
  0       3,963   n/m

Net Income Applicable to Common Equity
$ 94,577     $ 121,463   n/m
 
Average Common Shares Outstanding 29,166 29,105 0.2 %
Diluted Average Common Shares 29,471 29,353 0.4 %
 
Operating Ratios:
Basic Earnings Per Common Share $ 3.24 $ 4.17 n/m
Diluted Earnings Per Common Share 3.21 4.14 n/m
Return On Assets (a) 1.95 % 2.39 %
Return On Common Equity (a) 18.1 % 25.8 %
Net Interest Margin (FTE) (a) 5.54 % 5.42 %
Efficiency Ratio (FTE) 44.1 % 39.7 %
 
Dividends Paid Per Common Share $ 1.44 $ 1.41 2.1 %
Common Dividend Payout Ratio 45 % 34 %
 
(FTE) Fully Taxable Equivalent
(a) Annualized
 
 
2. Net Interest Income.
    (dollars in thousands)
    %  
Q4'10   Q4'09   Change   Q3'10
 
Interest and Fee Income (FTE) $ 59,477 $ 63,250 -6.0 % $ 59,765
Interest Expense   3,064       4,301   -28.8 %   3,096  
Net Interest Income (FTE) $ 56,413     $ 58,949   -4.3 % $ 56,669  
 
Average Earning Assets $ 4,164,013 $ 4,268,101 -2.4 % $ 4,068,561

Average Interest-Bearing Liabilities
2,964,999 2,985,494 -0.7 % 2,830,355
 
Yield on Earning Assets (FTE) (a) 5.68 % 5.90 % 5.84 %
Cost of Funds (a) 0.29 % 0.40 % 0.30 %
Net Interest Margin (FTE) (a) 5.39 % 5.50 % 5.54 %

Interest Expense/Interest-Bearing Liabilities (a)
0.41 % 0.57 % 0.43 %
Net Interest Spread (FTE) (a) 5.27 % 5.33 % 5.41 %
 
%
12/31'10YTD   12/31'09YTD   Change  
 
Interest and Fee Income (FTE) $ 239,523 $ 261,598 -8.4 %
Interest Expense   12,840       19,380   -33.7 %
Net Interest Income (FTE) $ 226,683     $ 242,218   -6.4 %
 
Average Earning Assets $ 4,094,511 $ 4,472,660 -8.5 %

Average Interest-Bearing Liabilities
2,849,262 3,136,144 -9.1 %
 
Yield on Earning Assets (FTE) (a) 5.85 % 5.85 %
Cost of Funds (a) 0.31 % 0.43 %
Net Interest Margin (FTE) (a) 5.54 % 5.42 %

Interest Expense/Interest-Bearing Liabilities (a)
0.45 % 0.62 %
Net Interest Spread (FTE) (a) 5.40 % 5.23 %
 
(FTE) Fully Taxable Equivalent
(a) Annualized
 
         
3. Loans & Other Earning Assets.
(average volume, dollars in thousands)
%
Q4'10   Q4'09   Change   Q3'10
 
Total Assets $ 5,032,157 $ 5,007,341 0.5 % $ 4,835,357
Total Earning Assets 4,164,013 4,268,101 -2.4 % 4,068,561
Total Loans 2,958,095 3,124,583 -5.3 % 2,937,501
Commercial Loans 744,830 848,704 -12.2 % 772,997
Commercial RE Loans 1,283,836 1,265,086 1.5 % 1,234,475
Consumer Loans 929,429 1,010,793 -8.0 % 930,029
Total Investment Securities 1,205,918 1,143,518 5.5 % 1,131,060
Available For Sale (Market) 601,764 392,229 53.4 % 489,581
Held To Maturity 604,154 751,289 -19.6 % 641,479
Unrealized Gain 13,983 9,335 n/m 24,044
 
Loans/Deposits 71.1 % 76.7 % 73.8 %
 
%
12/31'10YTD   12/31'09YTD   Change
 
Total Assets $ 4,853,480 $ 5,086,637 -4.6 %
Total Earning Assets 4,094,511 4,472,660 -8.5 %
Total Loans 2,954,033 3,226,961 -8.5 %
Commercial Loans 771,834 894,747 -13.7 %
Commercial RE Loans 1,245,369 1,283,114 -2.9 %
Consumer Loans 936,830 1,049,100 -10.7 %
Total Investment Securities 1,140,478 1,245,699 -8.4 %
Available For Sale (Market) 483,214 407,498 18.6 %
Held To Maturity 657,264 838,201 -21.6 %
Unrealized Gain 13,983 9,335 n/m
 
Loans/Deposits 73.9 % 79.3 %
 
       
4. Deposits & Other Interest-Bearing Liabilities.
  (average volume, dollars in thousands)
%
Q4'10   Q4'09   Change   Q3'10
 
Total Deposits $ 4,159,497 $ 4,074,105 2.1 % $ 3,981,437
Noninterest Demand 1,468,098 1,425,867 3.0 % 1,417,638
Interest Bearing Transaction 721,521 669,519 7.8 % 678,524
Savings 1,063,554 979,973 8.5 % 993,934
Time greater than $100K 556,635 564,539 -1.4 % 549,459
Time less than $100K 349,689 434,207 -19.5 % 341,882
Total Short-Term Borrowings 181,349 225,011 -19.4 % 203,841
Fed Funds Purchased 0 0 n/m 0
Other Short-Term Funds 181,349 225,011 -19.4 % 203,841
Federal Home Loan Bank Advances 65,868 85,728 n/m 36,298
Long-Term Debt 26,383 26,517 -0.5 % 26,417
Shareholders' Equity 537,204 514,497 4.4 % 525,630
 

Demand Deposits/Total Deposits
35.3 % 35.0 % 35.6 %

Transaction & Savings Deposits / Total Deposits
78.2 % 75.5 % 77.6 %
 
%
12/31'10YTD   12/31'09YTD   Change  
 
Total Deposits $ 3,998,490 $ 4,068,388 -1.7 %
Noninterest Demand 1,412,702 1,354,534 4.3 %
Interest Bearing Transaction 682,278 696,638 -2.1 %
Savings 994,604 951,457 4.5 %
Time greater than $100K 550,810 607,642 -9.4 %
Time less than $100K 358,096 458,117 -21.8 %
Total Short-Term Borrowings 202,663 316,306 -35.9 %
Fed Funds Purchased 0 107,732 n/m
Other Short-Term Funds 202,663 208,574 -2.8 %
Federal Home Loan Bank Advances 34,378 79,417 n/m
Long-Term Debt 26,433 26,567 -0.5 %
Shareholders' Equity 522,183 524,324 -0.4 %
 

Demand Deposits/Total Deposits
35.3 % 33.3 %

Transaction & Savings Deposits / Total Deposits
77.3 % 73.8 %
 
     
5. Interest Yields Earned & Rates Paid.
  (dollars in thousands)
Q4'10

Average Volume
 

Income/ Expense
 

Yield (a) / Rate
 
Interest Income Earned
Total Earning Assets (FTE) $ 4,164,013 $ 59,477 5.68 %
Total Loans (FTE) 2,958,095 44,929 6.03 %
Commercial Loans (FTE) 744,830 12,021 6.40 %
Commercial RE Loans 1,283,836 20,526 6.34 %
Consumer Loans 929,429 12,382 5.29 %
Total Investments (FTE) 1,205,918 14,548 4.83 %
 
Interest Expense Paid
Total Earning Assets 4,164,013 3,064 0.29 %
Total Interest-Bearing Liabilities 2,964,999 3,064 0.41 %
Total Interest-Bearing Deposits 2,691,399 2,002 0.30 %
Interest-Bearing Transaction 721,521 233 0.13 %
Savings 1,063,554 585 0.22 %
Time less than $100K 349,689 345 0.39 %
Time greater than $100K 556,635 839 0.60 %
Total Short-Term Borrowings 181,349 453 0.98 %
Fed Funds Purchased 0 0 0.00 %
Other Short-Term Funds 181,349 453 0.98 %
Federal Home Loan Bank Advances 65,868 187 1.11 %
Long-Term Debt 26,383 422 6.40 %
 

Net Interest Income and Margin (FTE)
$ 56,413 5.39 %
 
Q4'09

Average Volume
 

Income/ Expense
 

Yield (a) / Rate
 
Interest Income Earned
Total Earning Assets (FTE) $ 4,268,101 $ 63,250 5.90 %
Total Loans (FTE) 3,124,583 47,694 6.06 %
Commercial Loans (FTE) 848,704 12,498 5.84 %
Commercial RE Loans 1,265,086 21,119 6.62 %
Consumer Loans 1,010,793 14,077 5.53 %
Total Investments (FTE) 1,143,518 15,556 5.44 %
 
Interest Expense Paid
Total Earning Assets 4,268,101 4,301 0.40 %
Total Interest-Bearing Liabilities 2,985,494 4,301 0.57 %
Total Interest-Bearing Deposits 2,648,238 3,024 0.45 %
Interest-Bearing Transaction 669,519 238 0.14 %
Savings 979,973 803 0.33 %
Time less than $100K 434,207 845 0.77 %
Time greater than $100K 564,539 1,138 0.80 %
Total Short-Term Borrowings 225,011 560 0.98 %
Fed Funds Purchased 0 0 0.00 %
Other Short-Term Funds 225,011 560 0.98 %
Federal Home Loan Bank Advances 85,728 295 1.35 %
Long-Term Debt 26,517 422 6.36 %
 

Net Interest Income and Margin (FTE)
$ 58,949 5.50 %
 
(FTE) Fully Taxable Equivalent
(a) Annualized
 
       
6. Noninterest Income.
  (dollars in thousands except per-share amounts)
%
Q4'10   Q4'09   Change   Q3'10
 
Service Charges on Deposits $ 7,984 $ 9,376 -14.8 % $ 8,162
Merchant Credit Card Income 2,427 2,250 7.9 % 2,234
ATM Fees & Interchange 930 901 3.3 % 1,004
Debit Card Fees 1,210 1,219 -0.8 % 1,259
Financial Services Commissions 164 163 0.5 % 211
Mortgage Banking Income 30 14 n/m 23
Trust Fees 447 373 19.9 % 429
Other Income   1,950       1,400   39.2 %   1,571  
Sub-total 15,142 15,696 -3.5 % 14,893
Gain on Acquisition   0       0   n/m   178  
Total Noninterest Income $ 15,142     $ 15,696   -3.5 % $ 15,071  
 
Total Revenue (FTE) $ 71,555 $ 74,645 -4.1 % $ 71,740
Noninterest Income/Revenue (FTE) 21.2 % 21.0 % 21.0 %
Service Charges/Avg. Deposits (a) 0.76 % 0.91 % 0.81 %

Total Revenues (FTE) Per Avg. Common Share (a)
$ 9.75 $ 10.14 -3.8 % $ 9.77
%
12/31'10YTD   12/31'09YTD   Change  
 
Service Charges on Deposits $ 33,517 $ 36,392 -7.9 %
Merchant Credit Card Income 9,057 9,068 -0.1 %
ATM Fees & Interchange 3,848 3,693 4.2 %
Debit Card Fees 4,888 4,875 0.3 %
Financial Services Commissions 747 583 28.2 %
Mortgage Banking Income 112 82 36.2 %
Trust Fees 1,705 1,429 19.3 %
Other Income   7,402       7,045   5.1 %
Sub-total 61,276 63,167 -3.0 %
Gain on Acquisition   178       48,844   n/m
Total Noninterest Income $ 61,454     $ 112,011   n/m
 
Total Revenue (FTE) $ 288,137 $ 354,229 n/m
Noninterest Income/Revenue (FTE) 21.3 % 31.6 %
Service Charges/Avg. Deposits (a) 0.84 % 0.89 %

Total Revenues (FTE) Per Avg. Common Share (a)
$ 9.88 $ 12.17 n/m
 
(FTE) Fully Taxable Equivalent
(a) Annualized
 
       
7. Noninterest Expense.
  (dollars in thousands)
%
Q4'10   Q4'09   Change   Q3'10
 
Salaries & Benefits $ 14,899 $ 15,170 -1.8 % $ 15,481
Occupancy 4,073 3,917 4.0 % 3,962
Equipment 1,091 1,240 -12.0 % 1,067
Outsourced Data Processing 2,328 2,260 3.0 % 2,187
Courier 859 927 -7.4 % 826
Postage 289 540 -46.5 % 322
Telephone 448 490 -8.4 % 346
Professional Fees 896 1,003 -10.7 % 950
Stationery & Supplies 329 364 -9.7 % 276
Loan Expense 391 342 14.3 % 354
Operational Losses 213 295 -27.7 % 237

Amortization of Identifiable Intangibles
1,622 1,646 -1.5 % 1,573
FDIC Insurance Assessment 1,320 1,440 -8.3 % 1,268
Other Operating   2,754       3,202   -14.0 %   2,659  
Total Noninterest Expense $ 31,512     $ 32,836   -4.0 % $ 31,508  
 
Average Full Time Equivalent Staff 1,006 1,056 -4.7 % 1,004
 
Average Assets per Avg. FTE Staff $ 5,002 $ 4,742 5.5 % $ 4,816
Revenues (FTE) per Avg. FTE Staff (a) 282 280 0.7 % 283

Noninterest Expense/Avg. Earning Assets (a)
3.00 % 3.05 % 3.07 %
Noninterest Expense/Revenues (FTE) 44.0 % 44.0 % 43.9 %
 
%
12/31'10YTD   12/31'09YTD   Change
 
Salaries & Benefits $ 61,748 $ 65,391 -5.6 %
Occupancy 15,633 18,748 -16.6 %
Equipment 4,325 5,859 -26.2 %
Outsourced Data Processing 8,957 9,000 -0.5 %
Courier 3,495 3,808 -8.2 %
Postage 1,540 2,110 -27.0 %
Telephone 1,590 1,977 -19.6 %
Professional Fees 3,376 3,583 -5.8 %
Stationery & Supplies 1,285 1,555 -17.4 %
Loan Expense 1,639 2,031 -19.3 %
Operational Losses 828 953 -13.1 %

Amortization of Identifiable Intangibles
6,333 6,697 -5.4 %
FDIC Insurance Assessment 5,168 6,260 -17.4 %
Other Operating   11,230       12,804   -12.3 %
Total Noninterest Expense $ 127,147     $ 140,776   -9.7 %
 
Average Full Time Equivalent Staff 1,015 1,115 -9.0 %
 
Average Assets per Avg. FTE Staff $ 4,782 $ 4,562 4.8 %
Revenues (FTE) per Avg. FTE Staff (a) 284 318 -10.7 %

Noninterest Expense/Avg. Earning Assets (a)
3.11 % 3.15 %
Noninterest Expense/Revenues (FTE) 44.1 % 39.7 %
 
(FTE) Fully Taxable Equivalent
(a) Annualized
 
8. Provision for Loan Losses.
    (dollars in thousands)
    %  
Q4'10   Q4'09   Change   Q3'10
 
Average Total Loans $ 2,958,095 $ 3,124,583 -5.3 % $ 2,937,501

Avg. Total Purchased Covered Loans (1)
704,728 889,101 -20.7 % 743,126

Avg. Total Purchased Non-Covered Loans (2)
207,450 0 n/m 97,438
Avg. Total Originated Loans 2,045,917 2,235,482 -8.5 % 2,096,937
 
Provision for Loan Losses $ 2,800 $ 3,300 -15.2 % $ 2,800
Gross Loan Losses 6,342 6,533 -2.9 % 5,216
Net Loan Losses 5,293 4,940 7.1 % 4,387
Recoveries/Gross Losses 17 % 24 % 16 %

Net Loan Losses/Avg. Originated Loans (a)
1.03 % 0.88 % 0.83 %

Provision for Loan Losses/Avg. Originated Loans (a)
0.54 % 0.59 % 0.53 %

Provision for Loan Losses/Net Loan Losses
52.9 % 66.8 % 63.8 %
 
%
12/31'10YTD   12/31'09YTD   Change  
 
Average Total Loans $ 2,954,033 $ 3,226,961 -8.5 %

Avg. Total Purchased Covered Loans (1)
766,369 897,942 -14.7 %

Avg. Total Purchased Non-Covered Loans (2)
76,158 0 n/m
Avg. Total Originated Loans 2,111,506 2,329,019 -9.3 %
 
Provision for Loan Losses $ 11,200 $ 10,500 6.7 %
Gross Loan Losses 20,268 17,267 17.4 %
Net Loan Losses 16,607 13,927 19.2 %
Recoveries/Gross Losses 18 % 19 %

Net Loan Losses/Avg. Originated Loans (a)
0.79 % 0.60 %

Provision for Loan Losses/Avg. Originated Loans (a)
0.53 % 0.45 %

Provision for Loan Losses/Net Loan Losses
67.4 % 75.4 %
 
(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)
%
12/31/10   12/31/09   Change   9/30/10
 
Nonperforming Originated Loans:
Nonperforming Nonaccrual $ 20,845 $ 19,837 5.1 % $ 19,194
Performing Nonaccrual   23       25   n/m   233  
Total Nonaccrual Loans 20,868 19,862 5.1 % 19,427
90+ Days Past Due Accruing Loans   766       800   -4.3 %   686  
Total 21,634 20,662 4.7 % 20,113
Repossessed Loan Collateral   11,424       12,642   -9.6 %   19,285  

Total Originated Nonperforming Assets
  33,058       33,304   -0.7 %   39,398  
 
Nonperforming Purchased Covered Loans(1):
Nonperforming Nonaccrual 28,581 66,965 -57.3 % 39,783
Performing Nonaccrual   18,564       18,183   2.1 %   12,388  
Total Nonaccrual Loans 47,145 85,148 -44.6 % 52,171
90+ Days Past Due Accruing Loans   355       210   n/m   4,078  
Total 47,500 85,358 -44.4 % 56,249

Repossessed Purchased Covered Loan Collateral (1)
  21,791       23,297   -6.5 %   25,251  

Total Nonperforming Purchased Covered Assets (1)
  69,291       108,655   -36.2 %   81,500  
 
Nonperforming Purchased Non-Covered Loans (2):
Nonperforming Nonaccrual 29,311 0 n/m 18,304
Performing Nonaccrual   9,852       0   n/m   19,554  
Total Nonaccrual Loans 39,163 0 n/m 37,858
90+ Days Past Due Accruing Loans   1       0   n/m   0  
Total 39,164 0 n/m 37,858

Repossessed Purchased Non-Covered Loan Collateral (2)
  2,196       0   n/m   2,916  

Total Nonperforming Purchased Non-Covered Assets (2)
  41,360       0   n/m   40,774  
 
Total Nonperforming Assets $ 143,709     $ 141,959   n/m $ 161,672  
 
Total Originated Loans Outstanding $ 2,029,541 $ 2,201,088 -7.8 % $ 2,077,915

Total Purchased Covered Loans Outstanding (1)
692,972 855,301 -19.0 % 718,618

Total Purchased Non-Covered Loans Outstanding (2)
  199,571       0   n/m   212,318  
Total Loans Outstanding $ 2,922,084     $ 3,056,389   -4.4 % $ 3,008,851  
 
Total Assets $ 4,931,524 $ 4,975,501 -0.9 % $ 4,977,871
 
Originated Loans:
Allowance for Loan Losses $ 35,636 $ 41,043 -13.2 % $ 38,129
Allowance/Originated Loans 1.76 % 1.86 % 1.83 %

Nonperforming Originated Loans/Total Originated Loans
1.07 % 0.94 % 0.97 %

Allowance/Originated Nonperforming Loans
165 % 199 % 190 %
 
Purchased Covered Loans (1):

Fair Value Discount on Purchased Covered Loans
$ 61,784 $ 93,251 $ 66,459

Discount/Purchased Covered Loans, gross
8.19 % 9.83 % 8.47 %

Nonperforming Purchased Covered Loans/Total Purchased Covered Loans
6.85 % 9.98 % 7.83 %
 
Purchased Non-Covered Loans (2):

Fair Value Discount on Purchased Non-Covered Loans
$ 32,381 n/m $ 36,935

Discount/Purchased Non-Covered Loans, gross
13.96 % n/m 14.82 %
Nonperforming Purchased Non-Covered Loans/ Total Purchased Non-Covered Loans 19.62 % n/m 17.83 %

 
 

(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)
    %  
12/31/10   12/31/09   Change   9/30/10
 
Common Shareholders' Equity $ 545,287 $ 505,448 7.9 % $ 541,173
Preferred Shareholder's Equity 0 0 n/m 0
Total Shareholders' Equity 545,287 505,448 7.9 % 541,173
Tier I Regulatory Capital 412,463 370,011 11.5 % 399,781
Total Regulatory Capital 449,876 406,339 10.7 % 437,615
 
Total Assets 4,931,524 4,975,501 -0.9 % 4,977,871
Risk-Adjusted Assets 2,901,802 2,803,007 3.5 % 2,941,691
 

Shareholders' Equity/Total Assets
11.06 % 10.16 % 10.87 %

Shareholders' Equity/Total Loans
18.66 % 16.54 % 17.99 %
Tier I Capital/Total Assets 8.36 % 7.44 % 8.03 %

Tier I Capital/Risk-Adjusted Assets
14.21 % 13.20 % 13.59 %

Total Capital/Risk-Adjusted Assets
15.50 % 14.50 % 14.88 %
Tangible Common Equity Ratio 8.15 % 7.22 % 7.95 %
Common Shares Outstanding 29,090 29,208 -0.4 % 29,118
Book Value Per Common Share $ 18.74 $ 17.31 8.3 % $ 18.59
Market Value Per Common Share $ 55.47 $ 55.37 0.2 % $ 54.49
 
Share Repurchase Programs
(shares in thousands)
%
Q4'10   Q4'09   Change   Q3'10
 
Total Shares Repurchased 128 11 n/m 97
Average Repurchase Price $ 50.35 $ 52.16 -3.5 % $ 52.08

Net Shares Repurchased (Issued)
28 (1 ) n/m 1
 
%
12/31'10YTD   12/31'09YTD   Change  
 
Total Shares Repurchased 533 41 n/m
Average Repurchase Price $ 53.87 $ 47.62 13.1 %

Net Shares Repurchased (Issued)
118 (328 ) n/m
 
11. Period-End Balance Sheets.
    (unaudited, dollars in thousands)
    %  
12/31/10   12/31/09   Change   9/30/10
Assets:
Cash and Money Market Assets $ 339,185 $ 361,577 -6.2 % $ 344,561
 
Investment Securities:
Available For Sale 671,484 384,208 74.8 % 569,511
Held to Maturity 580,728 726,935 -20.1 % 618,838
 
Purchased Covered Loans (1) 692,972 855,301 -19.0 % 718,618
Purchased Non-Covered Loans (2) 199,571 0 n/m 212,318
Originated Loans 2,029,541 2,201,088 -7.8 % 2,077,915
Allowance For Loan Losses   (35,636 )     (41,043 ) -13.2 %   (38,129 )
Total Loans, net 2,886,448 3,015,346 -4.3 % 2,970,722
 

Non-Covered Other Real Estate Owned
13,620 12,642 7.7 % 22,201

Covered Other Real Estate Owned, net (1)
21,791 23,297 -6.5 % 25,251
Premises and Equipment 36,278 38,098 -4.8 % 36,271
Identifiable Intangibles 34,604 35,667 -3.0 % 36,226
Goodwill 121,673 121,699 0.0 % 121,673
Interest Receivable and Other   225,713       256,032   -11.8 %   232,617  
 
Total Assets $ 4,931,524     $ 4,975,501   -0.9 % $ 4,977,871  
 
Liabilities and Shareholders' Equity:
Deposits:
Noninterest Bearing $ 1,454,663 $ 1,428,432 1.8 % $ 1,428,882
Interest-Bearing Transaction 718,885 669,004 7.5 % 689,372
Savings 1,063,837 971,384 9.5 % 1,032,003
Time   895,576       991,388   -9.7 %   922,441  
Total Deposits 4,132,961 4,060,208 1.8 % 4,072,698
 
Short-Term Borrowed Funds 107,385 227,178 -52.7 % 193,202
Federal Home Loan Bank Advances 61,698 85,470 -27.8 % 66,934
Debt Financing and Notes 26,363 26,497 -0.5 % 26,396
Interest Payable and Other   57,830       70,700   -18.2 %   77,468  
Total Liabilities   4,386,237       4,470,053   -1.9 %   4,436,698  
 
Shareholders' Equity:
Preferred Stock 0 0 n/m 0
Common Equity:
Paid-In Capital 381,609 368,732 3.5 % 378,847

Accumulated Other Comprehensive Income
159 3,714 n/m 7,238
Retained Earnings   163,519       133,002   22.9 %   155,088  
Total Common Equity   545,287       505,448   7.9 %   541,173  
Total Shareholders' Equity   545,287       505,448   7.9 %   541,173  
 

Total Liabilities and Shareholders' Equity
$ 4,931,524     $ 4,975,501   -0.9 % $ 4,977,871  
 

(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 represent purchased loans recorded at estimated fair value at August 20, 2010, the date of purchase.
12. Income Statements.
    (unaudited, dollars in thousands except per-share amounts)
    %  
Q4'10   Q4'09   Change   Q3'10
Interest Income:
Loans $ 44,028 $ 46,653 -5.6 % $ 44,434
Money Market Assets 0 0 n/m 1
Investment Securities:
Available for Sale 4,657 3,996 16.5 % 4,189
Held to Maturity   6,186     7,847 -21.2 %   6,579
Total Interest Income   54,871     58,496 -6.2 %   55,203
 
Interest Expense:
Transaction Deposits 233 238 -2.3 % 226
Savings Deposits 585 803 -27.2 % 666
Time Deposits 1,184 1,983 -40.3 % 1,155
Short-Term Borrowed Funds 453 560 -19.0 % 511
Federal Home Loan Bank Advances 187 295 n/m 113
Debt Financing and Notes   422     422 0.0 %   425
Total Interest Expense   3,064     4,301 -28.8 %   3,096
 
Net Interest Income   51,807     54,195 -4.4 %   52,107
 
Provision for Loan Losses   2,800     3,300 -15.2 %   2,800
 
Noninterest Income:
Service Charges 7,984 9,376 -14.8 % 8,162
Merchant Credit Card 2,427 2,250 7.9 % 2,234
ATM Fees & Interchange 930 901 3.3 % 1,004
Debit Card Fees 1,210 1,219 -0.8 % 1,259
Financial Services Commissions 164 163 0.5 % 211
Mortgage Banking 30 14 n/m 23
Trust Fees 447 373 19.9 % 429
Gain on Acquisition 0 0 n/m 178
Other   1,950     1,400 39.2 %   1,571
Total Noninterest Income   15,142     15,696 -3.5 %   15,071
 
Noninterest Expense:
Salaries and Benefits 14,899 15,170 -1.8 % 15,481
Occupancy 4,073 3,917 4.0 % 3,962
Equipment 1,091 1,240 -12.0 % 1,067
Outsourced Data Processing 2,328 2,260 3.0 % 2,187
Amortization of Identifiable Intangibles 1,622 1,646 -1.5 % 1,573
Professional Fees 896 1,003 -10.7 % 950
FDIC Insurance Assessment 1,320 1,440 -8.3 % 1,268
Other   5,283     6,160 -14.2 %   5,020
Total Noninterest Expense   31,512     32,836 -4.0 %   31,508
 
Income Before Income Taxes 32,637 33,755 -3.3 % 32,870
Income Tax Provision   8,906     9,594 -7.2 %   9,161

Net Income
23,731 24,161 -1.8 % 23,709

Preferred Stock Dividends and Discount Accretion
 

0
    812 n/m   0

Net Income Applicable to Common Equity
$ 23,731   $ 23,349 1.6 % $ 23,709
 

Average Common Shares Outstanding
29,103 29,205 -0.3 % 29,127
Diluted Common Shares Outstanding 29,341 29,471 -0.4 % 29,385
 
Per Common Share Data:
Basic Earnings $ 0.82 $ 0.80 2.5 % $ 0.81
Diluted Earnings 0.81 0.79 2.5 % 0.81
Dividends Paid 0.36 0.35 2.9 % 0.36
%
12/31'10YTD   12/31'09YTD   Change
Interest Income:
Loans $ 177,224 $ 189,801 -6.6 %
Money Market Assets 2 3 n/m
Investment Securities:
Available for Sale 16,766 16,547 1.3 %
Held to Maturity   27,163     35,598 -23.7 %
Total Interest Income   221,155     241,949 -8.6 %
 
Interest Expense:
Transaction Deposits 894 999 -10.6 %
Savings Deposits 2,649 3,678 -28.0 %
Time Deposits 5,175 9,872 -47.6 %
Short-Term Borrowed Funds 1,991 2,132 -6.6 %
Federal Home Loan Bank Advances 437 1,010 n/m
Debt Financing and Notes   1,694     1,689 0.3 %
Total Interest Expense   12,840     19,380 -33.7 %
 
Net Interest Income   208,315     222,569 -6.4 %
 
Provision for Loan Losses   11,200     10,500 6.7 %
 
Noninterest Income:
Service Charges 33,517 36,392 -7.9 %
Merchant Credit Card 9,057 9,068 -0.1 %
ATM Fees & Interchange 3,848 3,693 4.2 %
Debit Card Fees 4,888 4,875 0.3 %
Financial Services Commissions 747 583 28.2 %
Mortgage Banking 112 82 36.2 %
Trust Fees 1,705 1,429 19.3 %
Gain on Acquisition 178 48,844 n/m
Other   7,402     7,045 5.1 %
Total Noninterest Income   61,454     112,011 n/m
 
Noninterest Expense:
Salaries and Benefits 61,748 65,391 -5.6 %
Occupancy 15,633 18,748 -16.6 %
Equipment 4,325 5,859 -26.2 %
Outsourced Data Processing 8,957 9,000 -0.5 %
Amortization of Identifiable Intangibles 6,333 6,697 -5.4 %
Professional Fees 3,376 3,583 -5.8 %
FDIC Insurance Assessment 5,168 6,260 -17.4 %
Other   21,607     25,238 -14.4 %
Total Noninterest Expense   127,147     140,776 -9.7 %
 
Income Before Income Taxes 131,422 183,304 n/m
Income Tax Provision   36,845     57,878 n/m
Net Income 94,577 125,426 n/m

Preferred Stock Dividends and Discount Accretion
  0     3,963 n/m

Net Income Applicable to Common Equity
$ 94,577   $ 121,463 n/m
 
Average Common Shares Outstanding 29,166 29,105 0.2 %
Diluted Common Shares Outstanding 29,471 29,353 0.4 %
 
Per Common Share Data:
Basic Earnings $ 3.24 $ 4.17 n/m
Diluted Earnings 3.21 4.14 n/m
Dividends Paid 1.44 1.41 2.1 %
 

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