WABC Results Benefit from County Bank Acquisition

WestAmerica Bancorp. (WABC) reported its 1Q09 results today morning, after market open. The company does not hold a conference call.

The results included WABC’s acquisition of County Bank from FDIC on February 6, 2009. Excluding the gains related to the acquisition and tax refund, we arrive at core earnings of $0.80 per share, three cents ahead of our estimate.

The results benefited from an impressive increase in the net interest income, mainly due to the acquisition. However, the net interest margin declined 9 bps sequentially to 5.35%, as a result of lower short-term interest rates.

Net interest income on a fully taxable equivalent (FTE) basis was $59.4 million for 1Q09, up from $49.9 million for 4Q08 and from $48.0 million for 1Q08, mainly due to the acquisition. NIM for the quarter was 5.35%, down from 5.44% for 4Q08 but up from 4.79% for 1Q08.

Noninterest income for the quarter was $15.1 million, up from $13.2 million for the prior quarter and from $13.7 million for 1Q08, primarily due to an increase in deposit service charges from the larger deposit base following the County Bank acquisition.

The provision for loan losses during the quarter was $1.8 million, up from $900,000 for 4Q08 and $600,000 for 1Q08. Net loan losses totaled $2.5 million or 0.42% of average, compared to 1.08% and 0.14%, respectively, for the prior and prior-year quarters.

Our estimates for FY09 and FY10 are currently under review. We reiterate our Hold recommendation on the shares.

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