Westamerica Bancorporation: Stronger Than Ever Despite COVID-19, Economic Challenges and Payroll Tax Issue

Westamerica Bancorporation (Nasdaq: WABC) has recently announced its first-quarter earnings, which totaled $36.4 million. Although this figure is a slight decrease from the previous quarter and $4 million less than the first quarter of the previous year, the bank’s total earnings for 2023 amounted to $161.8 million, marking a 32% increase from the previous year as it emerges from challenges related to the pandemic and the economy.

Net interest income for the first quarter of 2024 amounted to $66 million, slightly lower than the $69.5 million reported in the previous quarter. Net interest income refers to the difference between revenues generated by interest-bearing accounts and the costs of servicing liabilities. Despite this slight decrease, President and CEO David Payne stated that the institution continues to effectively manage its low-cost deposit base against the costs of services.

Total deposits for the first quarter of 2024 were $5.3 billion, which is slightly lower than the fourth quarter of 2023 and over $600 million less than the same period last year. The competitive market for deposits has been influenced by benchmark interest rates set by the Federal Reserve, particularly following the failures of regional banks like Silicon Valley Bank. However, Senior Vice President and Chief Financial Officer Robert Thorson noted that this payroll tax issue was expected.

Noninterest income remained consistent at $10 million, comparable to previous quarters of the previous year. Noninterest expenses increased slightly to $26.1 million, primarily due to higher payroll taxes. The payroll tax issue was expected, according to Thorson.

Westamerica Bancorporation manages assets totaling $6.5 billion across more than 80 branches in Northern and Central California. The bank, established in 1884, is currently upgrading its Santa Rosa branch on Santa Rosa Avenue with a planned $2 million investment. A dividend of 44 cents per share will be paid on May 17 to shareholders.

In conclusion, despite some slight decreases in certain areas such as net interest income and total deposits compared to previous quarters or years, Westamerica Bancorporation is still performing well overall with strong earnings growth for 2023 and continued effective management of its low-cost deposit base against costs of services.