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Westamerica Bancorporation Reports Third Quarter 2021 Financial Results

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SAN RAFAEL, Calif., Oct. 21, 2021 (GLOBE NEWSWIRE) -- Westamerica Bancorporation (Nasdaq: WABC), parent company of Westamerica Bank, generated net income for the third quarter 2021 of $22.1 million and diluted earnings per common share ("EPS") of $0.82. Third quarter 2021 results include “make-whole” interest income on corporate bonds redeemed prior to maturity, which increased EPS $0.02. These results compare to net income of $22.6 million and EPS of $0.84 for the second quarter 2021, which included “make-whole” interest income on corporate bonds redeemed before maturity, which increased EPS $0.04.

"Westamerica’s valuable deposit base generated a very low 0.03 percent annualized cost of funding our loan and bond portfolios during the third quarter 2021. Operating expenses remained well managed in the third quarter 2021, delivering fifty-five percent of revenue to pre-tax income. Credit quality remained solid with nonperforming loans of $1.8 million at September 30, 2021,” said Chairman, President and CEO David Payne. “Third quarter 2021 results generated an annualized 11.6 percent return on average common equity, and shareholders were paid a $0.41 per common share dividend during the quarter,” concluded Payne.

Net interest income on a fully-taxable equivalent (FTE) basis was $44.0 million for the third quarter 2021, including “make-whole” interest income on corporate bonds redeemed prior to maturity of $732 thousand. Third quarter 2021 net interest income (FTE) compares to $44.5 million for the second quarter 2021, which included “make-whole” interest income on corporate bonds redeemed prior to maturity of $1.4 million. PPP loan average balances declined to $145 million for the third quarter 2021 from $208 million for the second quarter 2021; at September 30, 2021 PPP loans totaled $103 million. Checking and savings deposits represented ninety-eight percent of the Company’s average deposit base during the third quarter 2021, generating a low 0.03 percent annualized cost of funding interest-earning assets.

At September 30, 2021, nonperforming loans declined to $1.8 million due to the full payoff of a $3.1 million non-accrual loan during the third quarter 2021. The allowance for credit losses on loans was $23.9 million at September 30, 2021. The Company continues to work with loan customers requesting loan payment deferrals due to economic weakness caused by the pandemic. At September 30, 2021, loans with deferred payments totaled $1.0 million, all of which were consumer automobile loans.

Noninterest income for the third quarter 2021 totaled $11.3 million, compared to noninterest income for the second quarter 2021 of $11.0 million. The increase in noninterest income was primarily due to higher levels of deposit related fees.

Noninterest expense for the third quarter 2021 was $24.7 million compared to $24.3 million for the second quarter 2021.

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 June 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 October 21, 2021

WESTAMERICA BANCORPORATION

FINANCIAL HIGHLIGHTS

September 30, 2021

1. Net Income Summary.

(in thousands except per-share amounts)

%

Q3'2021

Q3'2020

Change

Q2'2021

Net Interest and Fee Income (FTE)

$43,952

$41,780

5.2%

$44,499

Provision for Credit Losses

-

-

n/m

-

Noninterest Income

11,282

10,476

7.7%

11,032

Noninterest Expense

24,697

24,603

0.4%

24,291

Income Before Taxes (FTE)

30,537

27,653

10.4%

31,240

Income Tax Provision (FTE)

8,474

7,602

11.5%

8,661

Net Income

$22,063

$20,051

10.0%

$22,579

Average Common Shares Outstanding

26,866

26,930

-0.2%

26,865

Diluted Average Common Shares

26,875

26,946

-0.3%

26,887

Operating Ratios:

Basic Earnings Per Common Share

$0.82

$0.74

10.8%

$0.84

Diluted Earnings Per Common Share

0.82

0.74

10.8%

0.84

Return On Assets (a)

1.22%

1.24%

1.29%

Return On Common Equity (a)

11.6%

11.2%

12.2%

Net Interest Margin (FTE) (a)

2.60%

2.78%

2.70%

Efficiency Ratio (FTE)

44.7%

47.1%

43.7%

Dividends Paid Per Common Share

$0.41

$0.41

0.0%

$0.41

Common Dividend Payout Ratio

50%

55%

49%

%

9/30'21YTD

9/30'20YTD

Change

Net Interest and Fee Income (FTE)

$131,034

$124,390

5.3%

Provision for Credit Losses

-

4,300

n/m

Noninterest Income

32,503

31,678

2.6%

Noninterest Expense

73,894

74,021

-0.2%

Income Before Taxes (FTE)

89,643

77,747

15.3%

Income Tax Provision (FTE)

24,854

21,172

17.4%

Net Income

$64,789

$56,575

14.5%

Average Common Shares Outstanding

26,851

26,977

-0.5%

Diluted Average Common Shares

26,868

26,998

-0.5%

Operating Ratios:

Basic Earnings Per Common Share

$2.41

$2.10

14.8%

Diluted Earnings Per Common Share

2.41

2.10

14.8%

Return On Assets (a)

1.25%

1.25%

Return On Common Equity (a)

11.6%

10.7%

Net Interest Margin (FTE) (a)

2.67%

2.95%

Efficiency Ratio (FTE)

45.2%

47.4%

Dividends Paid Per Common Share

$1.23

$1.23

0.0%

Common Dividend Payout Ratio

51%

59%

2. Net Interest Income.

(dollars in thousands)

%

Q3'2021

Q3'2020

Change

Q2'2021

Interest and Fee Income (FTE)

$44,444

$42,246

5.2%

$44,983

Interest Expense

492

466

5.6%

484

Net Interest and Fee Income (FTE)

$43,952

$41,780

5.2%

$44,499

Average Earning Assets

$6,754,281

$6,001,287

12.5%

$6,603,343

Average Interest-

Bearing Liabilities

3,370,840

2,931,717

15.0%

3,298,221

Yield on Earning Assets (FTE) (a)

2.63%

2.81%

2.73%

Cost of Funds (a)

0.03%

0.03%

0.03%

Net Interest Margin (FTE) (a)

2.60%

2.78%

2.70%

Interest Expense/

Interest-Bearing Liabilities (a)

0.06%

0.06%

0.06%

Net Interest Spread (FTE) (a)

2.57%

2.75%

2.67%

%

9/30'21YTD

9/30'20YTD

Change

Interest and Fee Income (FTE)

$132,485

$125,733

5.4%

Interest Expense

1,451

1,343

8.0%

Net Interest and Fee Income (FTE)

$131,034

$124,390

5.3%

Average Earning Assets

$6,535,949

$5,627,517

16.1%

Average Interest-

Bearing Liabilities

3,267,311

2,785,451

17.3%

Yield on Earning Assets (FTE) (a)

2.70%

2.98%

Cost of Funds (a)

0.03%

0.03%

Net Interest Margin (FTE) (a)

2.67%

2.95%

Interest Expense/

Interest-Bearing Liabilities (a)

0.06%

0.06%

Net Interest Spread (FTE) (a)

2.64%

2.92%

3. Loans & Other Earning Assets.

(average volume, dollars in thousands)

%

Q3'2021

Q3'2020

Change

Q2'2021

Total Assets

$7,158,462

$6,414,399

11.6%

$7,004,695

Total Earning Assets

6,754,281

6,001,287

12.5%

6,603,343

Total Loans

1,176,114

1,312,758

-10.4%

1,257,087

Total Commercial Loans

333,327

444,091

-24.9%

413,797

Paycheck Protection Program (PPP) Loans

144,641

243,104

-40.5%

207,515

Commercial Loans

188,686

200,987

-6.1%

206,282

Commercial RE Loans

543,429

566,626

-4.1%

546,470

Consumer Loans

299,358

302,041

-0.9%

296,820

Total Investment Securities

4,615,540

4,360,119

5.9%

4,394,169

Debt Securities Available For Sale

4,235,141

3,750,737

12.9%

3,953,016

Debt Securities Held To Maturity

380,399

609,382

-37.6%

441,153

Total Interest-Bearing Cash

962,627

328,410

193.1%

952,087

Loans/Deposits

18.9%

23.7%

20.7%

%

9/30'21YTD

9/30'20YTD

Change

Total Assets

$6,939,636

$6,044,098

14.8%

Total Earning Assets

6,535,949

5,627,517

16.1%

Total Loans

1,227,971

1,223,250

0.4%

Total Commercial Loans

380,638

337,566

12.8%

PPP Loans

180,214

125,632

43.4%

Commercial Loans

200,424

211,934

-5.4%

Commercial RE Loans

549,639

574,950

-4.4%

Consumer Loans

297,694

310,734

-4.2%

Total Investment Securities

4,484,084

4,055,733

10.6%

Debt Securities Available For Sale

4,046,289

3,394,467

19.2%

Debt Securities Held To Maturity

437,795

661,266

-33.8%

Total Interest-Bearing Cash

823,894

348,534

136.4%

Loans/Deposits

20.4%

23.6%

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

(average volume, dollars in thousands)

%

Q3'2021

Q3'2020

Change

Q2'2021

Total Deposits

$6,223,500

$5,533,144

12.5%

$6,074,730

Noninterest Demand

2,960,207

2,695,458

9.8%

2,888,259

Interest-Bearing Transaction

1,246,667

1,039,833

19.9%

1,208,584

Savings

1,864,401

1,634,814

14.0%

1,822,625

Time greater than $100K

68,811

72,045

-4.5%

70,750

Time less than $100K

83,414

90,994

-8.3%

84,512

Total Short-Term Borrowings

107,547

94,031

14.4%

111,750

Shareholders' Equity

755,682

714,400

5.8%

744,746

Demand Deposits/

Total Deposits

47.6%

48.7%

47.5%

Transaction & Savings

Deposits / Total Deposits

97.6%

97.1%

97.4%

%

9/30'21YTD

9/30'20YTD

Change

Total Deposits

$6,017,175

$5,188,797

16.0%

Noninterest Demand

2,854,936

2,472,495

15.5%

Interest-Bearing Transaction

1,195,762

987,666

21.1%

Savings

1,811,711

1,563,387

15.9%

Time greater than $100K

70,258

72,718

-3.4%

Time less than $100K

84,508

92,531

-8.7%

Total Short-Term Borrowings

105,001

68,917

52.4%

Other Borrowed Funds

71

232

-69.5%

Shareholders' Equity

745,382

708,559

5.2%

Demand Deposits/

Total Deposits

47.4%

47.7%

Transaction & Savings

Deposits / Total Deposits

97.4%

96.8%

5. Interest Yields Earned & Rates Paid.

(dollars in thousands)

Q3'2021

Average

Income/

Yield (a) /

Volume

Expense

Rate (a)

Interest & Fee Income Earned

Total Earning Assets (FTE)

$6,754,281

$44,444

2.63%

Total Loans (FTE)

1,176,114

14,893

5.02%

Total Commercial Loans (FTE)

333,327

3,866

4.60%

PPP Loans

144,641

1,865

5.12%

Commercial Loans (FTE)

188,686

2,001

4.21%

Commercial RE Loans

543,429

7,457

5.44%

Consumer Loans

299,358

3,570

4.73%

Total Investments (FTE)

4,615,540

29,182

2.53%

Total Interest-Bearing Cash

962,627

369

0.15%

Interest Expense Paid

Total Earning Assets

6,754,281

492

0.03%

Total Interest-Bearing Liabilities

3,370,840

492

0.06%

Total Interest-Bearing Deposits

3,263,293

473

0.06%

Interest-Bearing Transaction

1,246,667

101

0.03%

Savings

1,864,401

272

0.06%

Time less than $100K

83,414

42

0.20%

Time greater than $100K

68,811

58

0.33%

Total Short-Term Borrowings

107,547

19

0.07%

Net Interest Income and

Margin (FTE)

$43,952

2.60%

Q3'2020

Average

Income/

Yield (a) /

Volume

Expense

Rate (a)

Interest & Fee Income Earned

Total Earning Assets (FTE)

$6,001,287

$42,246

2.81%

Total Loans (FTE)

1,312,758

15,394

4.67%

Total Commercial Loans (FTE)

444,091

4,648

4.16%

PPP Loans

243,104

2,501

4.08%

Commercial Loans (FTE)

200,987

2,147

4.25%

Commercial RE Loans

566,626

7,298

5.12%

Consumer Loans

302,041

3,448

4.54%

Total Investments (FTE)

4,360,119

26,768

2.46%

Total Interest-Bearing Cash

328,410

84

0.10%

Interest Expense Paid

Total Earning Assets

6,001,287

466

0.03%

Total Interest-Bearing Liabilities

2,931,717

466

0.06%

Total Interest-Bearing Deposits

2,837,686

450

0.06%

Interest-Bearing Transaction

1,039,833

85

0.03%

Savings

1,634,814

238

0.06%

Time less than $100K

90,994

47

0.21%

Time greater than $100K

72,045

80

0.44%

Total Short-Term Borrowings

94,031

16

0.07%

Net Interest Income and

Margin (FTE)

$41,780

2.78%

6. Noninterest Income.

(dollars in thousands except per-share amounts)

%

Q3'2021

Q3'2020

Change

Q2'2021

Service Charges on Deposits

$3,578

$3,298

8.5%

$3,235

Merchant Processing Services

3,159

2,860

10.5%

3,279

Debit Card Fees

1,740

1,611

8.0%

1,791

Trust Fees

839

756

11.0%

827

ATM Processing Fees

573

606

-5.4%

618

Other Service Fees

475

454

4.5%

491

Financial Services Commissions

95

58

63.8%

95

Securities Gains

-

-

n/m

34

Other Noninterest Income

823

833

-1.2%

662

Total Noninterest Income

$11,282

$10,476

7.7%

$11,032

Total Revenue (FTE)

$55,234

$52,256

5.7%

$55,531

Noninterest Income/Revenue (FTE)

20.4%

20.0%

19.9%

Service Charges/Avg. Deposits (a)

0.23%

0.24%

0.21%

Total Revenues (FTE) Per Avg.

Common Share (a)

$8.16

$7.72

5.7%

$8.29

%

9/30'21YTD

9/30'20YTD

Change

Service Charges on Deposits

$10,117

$10,697

-5.4%

Merchant Processing Services

8,998

7,495

20.1%

Debit Card Fees

5,132

4,538

13.1%

Trust Fees

2,467

2,247

9.8%

ATM Processing Fees

1,792

1,703

5.2%

Other Service Fees

1,435

1,380

4.0%

Financial Services Commissions

260

306

-15.0%

Securities Gains

34

71

n/m

Other Noninterest Income

2,268

3,241

-30.0%

Total Noninterest Income

$32,503

$31,678

2.6%

Total Revenue (FTE)

$163,537

$156,068

4.8%

Noninterest Income/Revenue (FTE)

19.9%

20.3%

Service Charges/Avg. Deposits (a)

0.22%

0.28%

Total Revenues (FTE) Per Avg./

Common Share (a)

$8.14

$7.73

5.4%

7. Noninterest Expense.

(dollars in thousands)

%

Q3'2021

Q3'2020

Change

Q2'2021

Salaries & Benefits

$11,813

$12,540

-5.8%

$12,097

Occupancy and Equipment

4,759

5,014

-5.1%

4,808

Outsourced Data Processing

2,429

2,338

3.9%

2,425

Professional Fees

724

669

8.2%

830

Courier Service

534

500

6.8%

567

Amortization of

Identifiable Intangibles

67

72

-6.9%

68

Other Noninterest Expense

4,371

3,470

26.0%

3,496

Total Noninterest Expense

$24,697

$24,603

0.4%

$24,291

Noninterest Expense/

Avg. Earning Assets (a)

1.45%

1.63%

1.48%

Noninterest Expense/Revenues (FTE)

44.7%

47.1%

43.7%

%

9/30'21YTD

9/30'20YTD

Change

Salaries & Benefits

$36,575

$38,458

-4.9%

Occupancy and Equipment

14,447

14,737

-2.0%

Outsourced Data Processing

7,244

7,067

2.5%

Professional Fees

2,496

1,701

46.7%

Courier Service

1,605

1,499

7.1%

Amortization of

Identifiable Intangibles

204

218

-6.4%

Other Noninterest Expense

11,323

10,341

9.5%

Total Noninterest Expense

$73,894

$74,021

-0.2%

Noninterest Expense/

Avg. Earning Assets (a)

1.51%

1.76%

Noninterest Expense/Revenues (FTE)

45.2%

47.4%

8. Allowance for Credit Losses.

(dollars in thousands)

%

Q3'2021

Q3'2020

Change

Q2'2021

Average Total Loans

$1,176,114

$1,312,758

-10.4%

$1,257,087

Beginning of Period Allowance for

Credit Losses on Loans (ACLL)

$23,737

$24,529

-3.2%

$23,483

Provision for Credit Losses

2

-

n/m

-

Net ACLL Recoveries (Losses)

143

(387

)

-137.0%

254

End of Period ACLL

$23,882

$24,142

-1.1%

$23,737

Gross ACLL Recoveries /

Gross ACLL Losses

115%

56%

176%

Net ACLL (Recoveries) Losses /

Avg. Total Loans (a)

-0.05%

0.12%

-0.08%

%

9/30'21YTD

9/30'20YTD

Change

Average Total Loans

$1,227,971

$1,223,250

0.4%

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

4,300

n/m

Net ACLL Recoveries (Losses)

26

(1,659

)

-101.6%

End of Period ACLL

$23,882

$24,142

-1.1%

Gross ACLL Recoveries /

Gross ACLL Losses

101%

49%

Net ACLL (Recoveries) Losses /

Avg. Total Loans (a)

0.00%

0.18%

(dollars in thousands)

%

9/30/21

9/30/20

Change

6/30/21

Allowance for Credit Losses on Loans

$23,882

$24,142

-1.1%

$23,737

Allowance for Credit Losses on

HTM Securities (2)

7

16

-56.9%

9

Total Allowance for Credit Losses

$23,889

$24,158

-1.1%

$23,746

Allowance for Unfunded

Credit Commitments

$101

$53

90.0%

$101

9. Credit Quality.

(dollars in thousands)

%

9/30/21

9/30/20

Change

6/30/21

Nonperforming Loans:

Nonperforming Nonaccrual

$801

$409

95.8%

$652

Performing Nonaccrual

436

3,971

-89.0%

3,564

Total Nonaccrual Loans

1,237

4,380

-71.8%

4,216

90+ Days Past Due Accruing Loans

537

360

49.2%

167

Total

1,774

4,740

-62.6%

4,383

Repossessed Loan Collateral

-

43

-100.0%

-

Total Nonperforming Assets

$1,774

$4,783

-62.9%

$4,383

Total Loans Outstanding

$1,132,472

$1,310,009

-13.6%

$1,194,834

Total Assets

7,403,573

6,563,215

12.8%

7,147,779

Loans:

Allowance for Credit Losses on Loans

$23,882

$24,142

-1.1%

$23,737

Allowance for Credit Losses on Loans /

Loans

2.11%

1.84%

1.99%

Nonperforming Loans/Total Loans

0.16%

0.36%

0.37%

10. Capital.

(in thousands, except per-share amounts)

%

9/30/21

9/30/20

Change

6/30/21

Shareholders' Equity

$837,953

$825,576

1.5%

$842,196

Total Assets

7,403,573

6,563,215

12.8%

7,147,779

Shareholders' Equity/

Total Assets

11.32%

12.58%

11.78%

Shareholders' Equity/

Total Loans

73.99%

63.02%

70.49%

Tangible Common Equity Ratio

9.83%

10.91%

10.24%

Common Shares Outstanding

26,866

26,898

-0.1%

26,865

Common Equity Per Share

$31.19

$30.69

1.6%

$31.35

Market Value Per Common Share

56.26

54.35

3.5%

58.03

(shares in thousands)

%

Q3'2021

Q3'2020

Change

Q2'2021

Share Repurchase Programs:

Total Shares Repurchased

-

35

n/m

-

Average Repurchase Price

$-

$52.42

n/m

$-

Net Shares (Issued) Repurchased

(1

)

35

n/m

(1

)

%

9/30'21YTD

9/30'20YTD

Change

Total Shares Repurchased

4

228

n/m

Average Repurchase Price

$61.09

$51.39

n/m

Net Shares (Issued) Repurchased

(59

)

164

n/m

11. Period-End Balance Sheets.

(unaudited, dollars in thousands)

%

9/30/21

9/30/20

Change

6/30/21

Assets:

Cash and Due from Banks

$1,011,048

$398,964

153.4%

$939,929

Debt Securities Available For Sale

4,602,706

3,983,994

15.5%

4,304,162

Debt Securities Held To Maturity (3)

356,106

577,795

-38.4%

414,413

Loans

1,132,472

1,310,009

-13.6%

1,194,834

Allowance For Credit Losses on Loans

(23,882

)

(24,142

)

-1.1%

(23,737

)

Total Loans, net

1,108,590

1,285,867

-13.8%

1,171,097

Other Real Estate Owned

-

43

n/m

-

Premises and Equipment, net

31,603

33,437

-5.5%

32,080

Identifiable Intangibles, net

900

1,173

-23.3%

967

Goodwill

121,673

121,673

0.0%

121,673

Other Assets

170,947

160,269

6.7%

163,458

Total Assets

$7,403,573

$6,563,215

12.8%

$7,147,779

Liabilities and Shareholders' Equity:

Deposits:

Noninterest-Bearing

$2,988,329

$2,684,028

11.3%

$2,872,920

Interest-Bearing Transaction

1,257,460

1,040,712

20.8%

1,200,634

Savings

1,894,290

1,653,000

14.6%

1,849,258

Time

148,882

161,450

-7.8%

153,577

Total Deposits

6,288,961

5,539,190

13.5%

6,076,389

Short-Term Borrowed Funds

119,102

107,973

10.3%

90,043

Other Liabilities

157,557

90,476

74.1%

139,151

Total Liabilities

6,565,620

5,737,639

14.4%

6,305,583

Shareholders' Equity:

Common Equity:

Paid-In Capital

470,711

467,236

0.7%

470,365

Accumulated Other

Comprehensive Income

71,284

103,623

n/m

86,921

Retained Earnings

295,958

254,717

16.2%

284,910

Total Shareholders' Equity

837,953

825,576

1.5%

842,196

Total Liabilities and

Shareholders' Equity

$7,403,573

$6,563,215

12.8%

$7,147,779

12. Income Statements.

(unaudited, in thousands except per-share amounts)

%

Q3'2021

Q3'2020

Change

Q2'2021

Interest & Fee Income:

Loans

$14,789

$15,291

-3.3%

$15,064

Equity Securities

109

103

5.8%

110

Debt Securities Available For Sale (4)

26,452

22,652

16.8%

26,481

Debt Securities Held To Maturity

2,091

3,235

-35.4%

2,362

Interest-Bearing Cash

369

84

339.3%

259

Total Interest & Fee Income

43,810

41,365

5.9%

44,276

Interest Expense:

Transaction Deposits

101

85

18.8%

93

Savings Deposits

272

238

14.3%

263

Time Deposits

100

127

-21.3%

110

Short-Term Borrowed Funds

19

16

18.7%

18

Total Interest Expense

492

466

5.6%

484

Net Interest Income

43,318

40,899

5.9%

43,792

Provision for Credit Losses

-

-

n/m

-

Noninterest Income:

Service Charges

3,578

3,298

8.5%

3,235

Merchant Processing Services

3,159

2,860

10.5%

3,279

Debit Card Fees

1,740

1,611

8.0%

1,791

Trust Fees

839

756

11.0%

827

ATM Processing Fees

573

606

-5.4%

618

Other Service Fees

475

454

4.5%

491

Financial Services Commissions

95

58

63.8%

95

Securities Gains

-

-

n/m

34

Other Noninterest Income

823

833

-1.2%

662

Total Noninterest Income

11,282

10,476

7.7%

11,032

Noninterest Expense:

Salaries and Benefits

11,813

12,540

-5.8%

12,097

Occupancy and Equipment

4,759

5,014

-5.1%

4,808

Outsourced Data Processing

2,429

2,338

3.9%

2,425

Professional Fees

724

669

8.2%

830

Courier Service

534

500

6.8%

567

Amortization of Identifiable Intangibles

67

72

-6.9%

68

Other Noninterest Expense

4,371

3,470

26.0%

3,496

Total Noninterest Expense

24,697

24,603

0.4%

24,291

Income Before Income Taxes

29,903

26,772

11.7%

30,533

Income Tax Provision

7,840

6,721

16.7%

7,954

Net Income

$22,063

$20,051

10.0%

$22,579

Average Common Shares Outstanding

26,866

26,930

-0.2%

26,865

Diluted Common Shares Outstanding

26,875

26,946

-0.3%

26,887

Per Common Share Data:

Basic Earnings

$0.82

$0.74

10.8%

$0.84

Diluted Earnings

0.82

0.74

10.8%

0.84

Dividends Paid

0.41

0.41

0.0%

0.41

%

9/30'21YTD

9/30'20YTD

Change

Interest & Fee Income:

Loans

$44,434

$44,378

0.1%

Equity Securities

329

309

6.5%

Debt Securities Available For Sale (4)

77,822

66,396

17.2%

Debt Securities Held To Maturity

7,051

10,759

-34.5%

Interest-Bearing Cash

766

1,053

-27.3%

Total Interest & Fee Income

130,402

122,895

6.1%

Interest Expense:

Transaction Deposits

283

243

16.5%

Savings Deposits

785

679

15.6%

Time Deposits

330

386

-14.5%

Short-Term Borrowed Funds

53

34

55.9%

Other Borrowed Funds

-

1

-100.0%

Total Interest Expense

1,451

1,343

8.0%

Net Interest Income

128,951

121,552

6.1%

Provision for Credit Losses

-

4,300

n/m

Noninterest Income:

Service Charges

10,117

10,697

-5.4%

Merchant Processing Services

8,998

7,495

20.1%

Debit Card Fees

5,132

4,538

13.1%

Trust Fees

2,467

2,247

9.8%

ATM Processing Fees

1,792

1,703

5.2%

Other Service Fees

1,435

1,380

4.0%

Financial Services Commissions

260

306

-15.0%

Securities Gains

34

71

n/m

Other Operating

2,268

3,241

-30.0%

Total Noninterest Income

32,503

31,678

2.6%

Noninterest Expense:

Salaries and Benefits

36,575

38,458

-4.9%

Occupancy and Equipment

14,447

14,737

-2.0%

Outsourced Data Processing

7,244

7,067

2.5%

Professional Fees

2,496

1,701

46.7%

Courier Service

1,605

1,499

7.1%

Amortization of Identifiable Intangibles

204

218

-6.4%

Other Operating

11,323

10,341

9.5%

Total Noninterest Expense

73,894

74,021

-0.2%

Income Before Income Taxes

87,560

74,909

16.9%

Income Tax Provision

22,771

18,334

24.2%

Net Income

$64,789

$56,575

14.5%

Average Common Shares Outstanding

26,851

26,977

-0.5%

Diluted Common Shares Outstanding

26,868

26,998

-0.5%

Per Common Share Data:

Basic Earnings

$2.41

$2.10

14.8%

Diluted Earnings

2.41

2.10

14.8%

Dividends Paid

1.23

1.23

0.0%

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 $356,106 thousand at September 30, 2021, $414,413 thousand at June 30, 2021 and $577,795 thousand at September 30, 2020 are net of related reserve for expected credit losses of $7 thousand, $9 thousand and $16 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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