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What changed in WESTAMERICA BANCORPORATION's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of WESTAMERICA BANCORPORATION's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+204 added−208 removedSource: 10-K (2025-02-28) vs 10-K (2024-02-29)

Top changes in WESTAMERICA BANCORPORATION's 2024 10-K

204 paragraphs added · 208 removed · 169 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

22 edited+2 added−4 removed86 unchanged
Biggest changeOn July 2, 2013, the Federal Reserve Board approved a final rule that implements changes to the regulatory capital framework for all banking organizations over a transitional period 2015 through 2018. As of December 31, 2023, the Company’s and the Bank’s respective regulatory capital ratios exceeded applicable regulatory minimum capital requirements.
Biggest changeThe federal banking agencies also consider interest rate risk (related to the interest rate sensitivity of an institution’s assets and liabilities, and its off balance sheet financial instruments) in the evaluation of a bank’s capital adequacy. -5- On July 2, 2013, the Federal Reserve Board approved a final rule that implements changes to the regulatory capital framework for all banking organizations over a transitional period 2015 through 2018.
The Company cannot provide any assurance as to the effect of any future changes in its deposit insurance premium rates. -7- While the FDIC is not Bank's primary federal regulator, as the insurer of the Bank's deposits, the FDIC is authorized to conduct examinations of and to require reporting by FDIC-insured institutions.
The Company cannot provide any assurance as to the effect of any future changes in its deposit insurance premium rates. -7- While the FDIC is not the Bank's primary federal regulator, as the insurer of the Bank's deposits, the FDIC is authorized to conduct examinations of and to require reporting by FDIC-insured institutions.
Employees receive a comprehensive benefits package that includes paid time off, sick time, company contributions of up to 6% to qualified retirement plans, discretionary profit-sharing retirement plan contributions, and other health and wellness benefits including participation in Company paid or subsidized medical, dental, term-life, accidental death and dismemberment (AD&D), long-term disability, and employee assistance programs.
Employees receive a comprehensive benefits package that includes paid time off, sick time, company contributions of up to 6% to qualified retirement plans, discretionary profit-sharing retirement plan contributions, and other health and wellness benefits including participation in Company paid or subsidized medical, dental, vision, term-life, accidental death and dismemberment (AD&D), long-term disability, and employee assistance programs.
A banking organization’s risk-based capital ratios are obtained by dividing its qualifying capital by its total risk-adjusted assets and off balance sheet items. -5- The federal banking agencies take into consideration concentrations of credit risk and risks from nontraditional activities, as well as an institution’s ability to manage those risks, when determining the adequacy of an institution’s capital.
A banking organization’s risk-based capital ratios are obtained by dividing its qualifying capital by its total risk-adjusted assets and off balance sheet items. The federal banking agencies take into consideration concentrations of credit risk and risks from nontraditional activities, as well as an institution’s ability to manage those risks, when determining the adequacy of an institution’s capital.
The Bank is a California-chartered commercial bank whose deposit are insured by the Federal Deposit Insurance Corporation (the “FDIC”) up to applicable limits. The principal communities served are located in Northern and Central California, from Mendocino, Lake and Nevada Counties in the north to Kern County in the south.
The Bank is a California-chartered commercial bank whose deposits are insured by the Federal Deposit Insurance Corporation (the “FDIC”) up to applicable limits. The principal communities served are located in Northern and Central California, from Mendocino, Lake and Nevada Counties in the north to Kern County in the south.
The nature, timing and impact of new and amended laws and regulations cannot be accurately predicted. Regulation and Supervision of Bank Holding Companies The Company is a bank holding company that is subject to the BHCA. The Company files reports with and is subject to examination and supervision by the Board of Governors of the Federal Reserve System (“FRB”).
The nature, timing and impact of new and amended laws and regulations cannot be accurately predicted. -3- Regulation and Supervision of Bank Holding Companies The Company is a bank holding company that is subject to the BHCA. The Company files reports with and is subject to examination and supervision by the Board of Governors of the Federal Reserve System (“FRB”).
Legislative changes, as well as technological and economic factors, can be expected to have an ongoing impact on competitive conditions within the financial services industry. While the future impact of regulatory and legislative changes cannot be predicted with certainty, the business of banking will remain highly competitive.
Legislative changes, as well as technological and economic factors, can be expected to have an ongoing impact on competitive conditions within the financial services industry. While the future impact of regulatory and legislative changes cannot be predicted with certainty, the business of banking will remain highly competitive. -9-
The Company’s code of ethics prohibits discrimination or harassment. The Company requires all employees to agree to the code of ethics and participate in harassment prevention training annually. -3- Supervision and Regulation The following is not intended to be an exhaustive description of the statutes and regulations applicable to the Company’s or the Bank’s business.
The Company’s code of ethics prohibits discrimination or harassment. The Company requires all employees to agree to the code of ethics and participate in harassment prevention training annually. Supervision and Regulation The following is not intended to be an exhaustive description of the statutes and regulations applicable to the Company’s or the Bank’s business.
Any failure to meet the requirements of the Bank Secrecy Act can result in the imposition of substantial penalties and in adverse regulatory action against the offending bank. -8- The Anti-Money Laundering Act of 2020 (“AMLA”), which amends the Bank Secrecy Act, was enacted in January 2021.
Any failure to meet the requirements of the Bank Secrecy Act can result in the imposition of substantial penalties and in adverse regulatory action against the offending bank. The Anti-Money Laundering Act of 2020 (“AMLA”), which amends the Bank Secrecy Act, was enacted in January 2021.
While the Company’s assets were less than $10 billion as of December 31, 2023, interchange fees charged by larger institutions may dictate the level of fees smaller institutions will be able to charge to remain competitive.
While the Company’s assets were less than $10 billion as of December 31, 2024, interchange fees charged by larger institutions may dictate the level of fees smaller institutions will be able to charge to remain competitive.
BHCs may engage in financial activities without prior notice to the FRB if those activities qualify under the list of permissible activities in section 4(k) of the BHCA. However, notice must be given to the FRB within 30 days after an FHC has commenced one or more of the financial activities. The Company has not elected to become an FHC.
BHCs may engage in financial activities without prior notice to the FRB if those activities qualify under the list of permissible activities in section 4(k) of the BHCA. However, notice must be given to the FRB within 30 days after an FHC has commenced one or more of the financial activities.
Such documents as well as the Company’s director, officer and employee Code of Conduct and Ethics are also available free of charge from the Company by request to: Westamerica Bancorporation Corporate Secretary A-2M Post Office Box 1200 Suisun City, California 94585-1200 Human Capital Resources The Company and its subsidiaries employed 641 full-time equivalent staff or 669 employees as of December 31, 2023.
Such documents as well as the Company’s director, officer and employee Code of Conduct and Ethics are also available free of charge from the Company by request to: Westamerica Bancorporation Corporate Secretary A-2M Post Office Box 1200 Suisun City, California 94585-1200 Human Capital Resources The Company and its subsidiaries employed 642 employees (616 full-time equivalent staff) as of December 31, 2024.
At December 31, 2023, the Company had consolidated assets of approximately $6.4 billion, deposits of approximately $5.5 billion and shareholders’ equity of approximately $773 million. The Company assesses and is careful to address potential health, safety, and environmental risks.
At December 31, 2024, the Company had consolidated assets of approximately $6.1 billion, deposits of approximately $5.0 billion and shareholders’ equity of approximately $890 million. The Company assesses and is careful to address potential health, safety, and environmental risks.
Regulation and Supervision of Banks The Bank is a California state-chartered Federal Reserve member bank and its deposits are insured by the FDIC. The Bank is subject to regulation, supervision and regular examination by the California Department of Financial Protection and Innovation and the FRB.
The Company has not elected to become an FHC. -4- Regulation and Supervision of Banks The Bank is a California state-chartered Federal Reserve member bank and its deposits are insured by the FDIC. The Bank is subject to regulation, supervision and regular examination by the California Department of Financial Protection and Innovation and the FRB.
In addition to substantive penalties and corrective measures that may be required for a violation of certain fair lending laws, the federal banking agencies may take compliance with such laws and CRA into account when regulating and supervising other activities including merger applications. In May 2022, the federal banking agencies released for public comment proposed rules to modernize CRA regulations.
In addition to substantive penalties and corrective measures that may be required for a violation of certain fair lending laws, the federal banking agencies may take compliance with such laws and CRA into account when regulating and supervising other activities including merger applications. In 2024, the federal banking agencies issued a final rule to strengthen and modernize the CRA regulations.
The Gramm-Leach-Bliley Act (the “GLBA”), or the Financial Services Act of 1999, repealed provisions of the Glass-Steagall Act, which had prohibited commercial banks and securities firms from affiliating with each other and engaging in each other’s businesses.
The Gramm-Leach-Bliley Act (the “GLBA”), or the Financial Services Act of 1999, repealed provisions of the Glass-Steagall Act, which had prohibited commercial banks and securities firms from affiliating with each other and engaging in each other’s businesses. Thus, many of the barriers prohibiting affiliations between commercial banks and securities firms have been eliminated.
See Note 9 to the consolidated financial statements included in this Report for capital ratios of the Company and the Bank, compared to minimum capital requirements and for the Bank the standards for well capitalized depository institutions.
As of December 31, 2024, the Company’s and the Bank’s respective regulatory capital ratios exceeded applicable regulatory minimum capital requirements. See Note 9 to the consolidated financial statements included in this Report for capital ratios of the Company and the Bank, compared to minimum capital requirements and for the Bank the standards for well capitalized depository institutions.
Among other things, the Guidelines require each financial institution, under the supervision and ongoing oversight of its Board of Directors or an appropriate committee thereof, to develop, implement and maintain a comprehensive written information security program designed to ensure the security and confidentiality of customer information, to protect against any anticipated threats or hazards to the security or integrity of such information, and to protect against unauthorized access to or use of such information that could result in substantial harm or inconvenience to any customer.
Among other things, the Guidelines require each financial institution, under the supervision and ongoing oversight of its Board of Directors or an appropriate committee thereof, to develop, implement and maintain a comprehensive written information security program designed to ensure the security and confidentiality of customer information, to protect against any anticipated threats or hazards to the security or integrity of such information, and to protect against unauthorized access to or use of such information that could result in substantial harm or inconvenience to any customer. -8- Anti-Money Laundering Laws The Bank Secrecy Act, as amended by the USA PATRIOT Act, gives the federal government powers to address money laundering and terrorist threats through enhanced domestic security measures, expanded surveillance powers and mandatory transaction reporting obligations.
If these requirements are met, a BHC may file a certification to that effect with the FRB and declare that it elects to become an FHC.
A bank holding company (“BHC”) may elect to become an FHC if all its subsidiary depository institutions are well capitalized and well managed. If these requirements are met, a BHC may file a certification to that effect with the FRB and declare that it elects to become an FHC.
Thus, many of the barriers prohibiting affiliations between commercial banks and securities firms have been eliminated. -4- The BHCA was also amended by the GLBA to allow new “financial holding companies” (“FHCs”) to offer banking, insurance, securities and other financial products to consumers.
The BHCA was also amended by the GLBA to allow new “financial holding companies” (“FHCs”) to offer banking, insurance, securities and other financial products to consumers. Specifically, the GLBA amended section 4 of the BHCA in order to provide for a framework for the engagement in new financial activities.
In 2009 and 2010, the Bank acquired the banking operations of two failed banks, the former County Bank and Sonoma Valley Bank, from the Federal Deposit Insurance Corporation (“FDIC”). The acquired assets and assumed liabilities from the FDIC were measured at estimated fair values, as required by Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 805, Business Combinations.
The subsidiary banks acquired were merged with and into the Bank. During the period 2000 through 2005, the Company acquired three additional banks. In 2009 and 2010, the Bank acquired the banking operations of two failed banks, the former County Bank and Sonoma Valley Bank, from the Federal Deposit Insurance Corporation (“FDIC”).
This evaluation is made as a part of the institution’s regular safety and soundness examination. The federal banking agencies also consider interest rate risk (related to the interest rate sensitivity of an institution’s assets and liabilities, and its off balance sheet financial instruments) in the evaluation of a bank’s capital adequacy.
This evaluation is made as a part of the institution’s regular safety and soundness examination.
Removed
The subsidiary banks acquired were merged with and into the Bank. These six aforementioned business combinations were accounted for as poolings-of-interests. During the period 2000 through 2005, the Company acquired three additional banks. These acquisitions were accounted for using the purchase accounting method.
Added
Under the final rule, banks with assets of at least $2 billion as of December 31 in both of the prior two calendar years will be a “large bank.” The agencies will evaluate bank classified as large banks, such as the Bank, under four performance tests: the Retail Lending Test, the Retail Services and Products Test, the Community Development Financing Test, and the Community Development Services Test.
Removed
Specifically, the GLBA amended section 4 of the BHCA in order to provide for a framework for the engagement in new financial activities. A bank holding company (“BHC”) may elect to become an FHC if all its subsidiary depository institutions are well capitalized and well managed.
Added
The applicability date for the majority of the provisions in the CRA regulations is January 1, 2026, and additional requirements will be applicable on January 1, 2027.
Removed
The Company continues to evaluate the impact of any changes to the CRA regulations.
Removed
Anti-Money Laundering Laws The Bank Secrecy Act, as amended by the USA PATRIOT Act, gives the federal government powers to address money laundering and terrorist threats through enhanced domestic security measures, expanded surveillance powers and mandatory transaction reporting obligations.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeUnfavorable or uncertain economic and market conditions can be caused by: declines in economic growth, high rates of unemployment, deflation, pandemics, declines in business activity or consumer, investor or business confidence; limitations on the availability of or increases in the cost of credit and capital; increases in inflation; natural disasters; or a combination of these or other factors.
Biggest changeUnfavorable or uncertain economic and market conditions can be caused by: declines in economic growth, high rates of unemployment, deflation, pandemics, declines in business activity or consumer, investor or business confidence; limitations on the availability of or increases in the cost of credit and capital; increases in inflation; natural disasters; or a combination of these or other factors. -12- Such business conditions could adversely affect the credit quality of the Company’s loans, the demand for loans, loan volumes and related revenue, securities valuations, amounts of deposits, availability of funding, results of operations and financial condition.
Additional risks and uncertainties that Management is not aware of or focused on or that Management currently deems immaterial may also impair the Company’s business operations. This Report is qualified in its entirety by these risk factors. -9- If any of the following risks actually occur, the Company’s financial condition and results of operations could be materially and adversely affected.
Additional risks and uncertainties that Management is not aware of or focused on or that Management currently deems immaterial may also impair the Company’s business operations. This Report is qualified in its entirety by these risk factors. If any of the following risks actually occur, the Company’s financial condition and results of operations could be materially and adversely affected.
Any one or a combination of such risk factors, or other factors, could materially adversely affect the Company's business, financial condition, results of operations and prospects. -10- The weakness of other financial institutions could adversely affect the Company. Financial services institutions are interrelated as a result of trading, clearing, counterparty, or other relationships.
Any one or a combination of such risk factors, or other factors, could materially adversely affect the Company's business, financial condition, results of operations and prospects. The weakness of other financial institutions could adversely affect the Company. Financial services institutions are interrelated as a result of trading, clearing, counterparty, or other relationships.
The Articles of Incorporation of the Company authorize the issuance of 150 million shares of common stock (and two additional classes of 1 million shares each, denominated “Class B Common Stock” and “Preferred Stock”, respectively) of which approximately 26.7 million shares of common stock were outstanding at December 31, 2023.
The Articles of Incorporation of the Company authorize the issuance of 150 million shares of common stock (and two additional classes of 1 million shares each, denominated “Class B Common Stock” and “Preferred Stock”, respectively) of which approximately 26.7 million shares of common stock were outstanding at December 31, 2024.
As of December 31, 2023, to the Company’s knowledge, there is no indication that any information has been subject to misuse as a result of the incident. The Company ’ s controls and procedures may fail or be circumvented .
As of December 31, 2024, to the Company’s knowledge, there is no indication that any information has been subject to misuse as a result of the incident. The Company ’ s controls and procedures may fail or be circumvented .
Substantially all of the Company’s business is located in California. A portion of the loan portfolio of the Company is dependent on real estate. At December 31, 2023, real estate served as the principal source of collateral with respect to approximately 59% of the Company’s loan portfolio.
Substantially all of the Company’s business is located in California. A portion of the loan portfolio of the Company is dependent on real estate. At December 31, 2024, real estate served as the principal source of collateral with respect to approximately 65% of the Company’s loan portfolio.
Any failure or circumvention of the Company’s controls and procedures or failure to comply with regulations related to controls and procedures could have a material adverse effect on the Company’s business, results of operations and financial condition. [The remainder of this page intentionally left blank] -14- Operational Risks Climate change and the transition to renewable energy and a net zero emissions economy pose operational, commercial and regulatory risks.
Any failure or circumvention of the Company’s controls and procedures or failure to comply with regulations related to controls and procedures could have a material adverse effect on the Company’s business, results of operations and financial condition. -14- Operational Risks Climate change and the transition to renewable energy and a net zero emissions economy pose operational, commercial and regulatory risks.
Borrowers with real estate loan collateral located in flood zones must carry flood insurance under the loans’ terms. The Company has $18 million in loans to agricultural borrowers; Management continuously monitors these customers’ access to adequate water sources as well as their ability to sustain low crop yields without encountering financial hardship.
Borrowers with real estate loan collateral located in flood zones must carry flood insurance under the loans’ terms. The Company had $5 million in loans to agricultural borrowers at December 31, 2024; Management continuously monitors these customers’ access to adequate water sources as well as their ability to sustain low crop yields without encountering financial hardship.
Also, the Company could experience higher credit losses because of federal or state legislation or regulatory action that limits or delays the Bank's ability to foreclose on property or other collateral or makes foreclosure less economically feasible. Federal, state and local governments could pass tax legislation causing the Company to pay higher levels of taxes.
Also, the Company could experience higher credit losses because of federal or state legislation or regulatory action that limits or delays the Bank's ability to foreclose on property or other collateral or makes foreclosure less economically feasible.
Pursuant to its stock option plans, at December 31, 2023, the Company had outstanding options for 973 thousand shares of common stock, of which 614 thousand were currently exercisable. As of December 31, 2023, 705 thousand shares of Company common stock remained available for grants under the Company’s equity incentive plans.
Pursuant to its stock option plans, at December 31, 2024, the Company had outstanding options for 1,048 thousand shares of common stock, of which 656 thousand were currently exercisable. As of December 31, 2024, 589 thousand shares of Company common stock remained available for grants under the Company’s equity incentive plans.
There can be no assurance that the declines in market value will not result in other than temporary impairments of these assets, which would lead to loss recognition that could have a material adverse effect on the Company’s net income and capital levels.
There can be no assurance that the declines in market value will not result in other than temporary impairments of these assets, which would lead to loss recognition that could have a material adverse effect on the Company’s net income and capital levels. -10- Negative developments affecting the banking industry, such as bank failures, may have a material adverse effect on the Company.
Generally, the counties surrounding and near San Francisco Bay could recover more soundly from the recession than counties in the California “Central Valley,” from Sacramento in the north to Bakersfield in the south, where many of the Bank’s customers are located .
Generally, the counties surrounding and near San Francisco Bay could recover more soundly from the recession than counties in the California “Central Valley,” from Sacramento in the north to Bakersfield in the south, where many of the Bank’s customers are located. Approximately 27% of the Company’s loans were to borrowers in the California “Central Valley” as of December 31, 2024.
In addition, if any of the Company’s subsidiaries were to liquidate, that subsidiary’s creditors will be entitled to receive distributions from the assets of that subsidiary to satisfy their claims against it before the Company, as a holder of an equity interest in the subsidiary, will be entitled to receive any of the assets of the subsidiary. -12- The Company ’ s payment of dividends on common stock could be eliminated or reduced.
In addition, if any of the Company’s subsidiaries were to liquidate, that subsidiary’s creditors will be entitled to receive distributions from the assets of that subsidiary to satisfy their claims against it before the Company, as a holder of an equity interest in the subsidiary, will be entitled to receive any of the assets of the subsidiary.
The behavior of depositors in regard to the level of FDIC insurance could cause the Bank’s existing customers to reduce the amount of deposits held at the Bank, and could cause new customers to open deposit accounts at the Bank.
The behavior of depositors in regard to the level of FDIC insurance could cause the Bank’s existing customers to reduce the amount of deposits held at the Bank, and could cause new customers to open deposit accounts at the Bank. The level and composition of the Bank's deposit portfolio directly impacts the Bank's funding cost and net interest margin.
As a holding company, a substantial portion of the Company’s cash flow typically comes from dividends paid by the Bank. Various statutory provisions restrict the amount of dividends the Company’s subsidiaries can pay to the Company without regulatory approval. A reduction in subsidiary dividends paid to the Company could limit the capacity of the Company to pay dividends.
Regulatory Risks Restrictions on dividends and other distributions could limit amounts payable to the Company. As a holding company, a substantial portion of the Company’s cash flow typically comes from dividends paid by the Bank. Various statutory provisions restrict the amount of dividends the Company’s subsidiaries can pay to the Company without regulatory approval.
For example, the Company maintains a reserve for potential loan defaults and non-performance. There is no precise method of predicting loans losses and determining the adequacy of the reserve requires the Company’s management to make a number of estimates and judgments.
There is no precise method of predicting loan losses and determining the adequacy of the reserve requires the Company’s management to make a number of estimates and judgments.
Holders of the Company’s common stock are entitled to receive dividends only when, as, and if declared by the Company’s Board of Directors.
The Company ’ s payment of dividends on common stock could be eliminated or reduced. Holders of the Company’s common stock are entitled to receive dividends only when, as, and if declared by the Company’s Board of Directors.
Negative developments affecting the banking industry, such as bank failures, may have a material adverse effect on the Company. The banking industry could experience significant volatility with multiple bank failures during 2023. Industrywide concerns could develop related to liquidity, deposit outflows and unrealized losses on investment debt securities.
The banking industry could experience significant volatility with multiple bank failures. Industrywide concerns could develop related to liquidity, deposit outflows and unrealized losses on investment debt securities.
The FDIC insures deposits at insured financial institutions up to certain limits. The FDIC charges insured financial institutions premiums to maintain the Deposit Insurance Fund. The FDIC may increase premium assessments to maintain adequate funding of the Deposit Insurance Fund.
Federal, state and local governments could pass tax legislation causing the Company to pay higher levels of taxes. -13- The FDIC insures deposits at insured financial institutions up to certain limits. The FDIC charges insured financial institutions premiums to maintain the Deposit Insurance Fund. The FDIC may increase premium assessments to maintain adequate funding of the Deposit Insurance Fund.
The level and composition of the Bank's deposit portfolio directly impacts the Bank's funding cost and net interest margin. -13- Systems, Accounting and Internal Control Risks The accuracy of the Company ’ s judgments and estimates about financial and accounting matters will impact operating results and financial condition. The Company makes certain estimates and judgments in preparing its financial statements.
Systems, Accounting and Internal Control Risks The accuracy of the Company ’ s judgments and estimates about financial and accounting matters will impact operating results and financial condition. The Company makes certain estimates and judgments in preparing its financial statements. For example, the Company maintains a reserve for potential loan defaults and non-performance.
Removed
Approximately 25% of the Company’s loans were to borrowers in the California “Central Valley” as of December 31, 2023.
Added
A reduction in subsidiary dividends paid to the Company could limit the capacity of the Company to pay dividends.
Removed
Such business conditions could adversely affect the credit quality of the Company’s loans, the demand for loans, loan volumes and related revenue, securities valuations, amounts of deposits, availability of funding, results of operations and financial condition. Regulatory Risks Restrictions on dividends and other distributions could limit amounts payable to the Company.
Removed
Our principal electricity supplier reports a Power Content Label of 100% greenhouse gas free using the California Energy Commission’s methodology. Our principal information technology vendor’s goal is to achieve 100 percent carbon neutrality for Scope 1 and 2 greenhouse gas emissions by 2025.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeIn addition to this training program, simulated phishing attempts are sent to employees on a regular basis to evaluate their understanding of these risks. The Company uses data loss prevention and web filtering software to ensure malicious data does not enter the Company's network, and sensitive information does not leave the network unless properly secured.
Biggest changeThe Company uses data loss prevention, email filtering and web filtering software to ensure malicious data does not enter the Company's network, and sensitive information does not leave the network unless properly secured. Penetration tests and vulnerability scanning are performed on a regular basis. All Company networks are secured behind firewalls.
During the year ended December 31, 2023, there were no cybersecurity incidents that materially affected or are reasonably likely to materially affect the Company.
During the year ended December 31, 2024, there were no cybersecurity incidents that materially affected or are reasonably likely to materially affect the Company.
Data Security Analysts review changes to access to ensure they are authorized and appropriate. An Incident Response Committee that includes representatives from key areas of the Company meets in the event of cybersecurity incidents. The Committee ensures the proper notifications are made in order to comply with all relevant laws, rules and regulations.
An Incident Response Committee that includes representatives from key areas of the Company meets in the event of cybersecurity incidents. The Committee ensures the proper notifications are made in order to comply with all relevant laws, rules and regulations.
The ISO provides an update to the Board of Directors on a quarterly basis. The Information Security Program is approved by the Board annually. The ISO maintains risk assessments for key IT systems.
The ISO provides an update to the Board of Directors on a quarterly basis. The Information Security Program is approved by the Board annually. -16- The ISO maintains risk assessments for key IT systems. A third party cybersecurity risk assessment tool, as well as the FFIEC's Cybersecurity Assessment Tool (CAT) are also used annually to assess cybersecurity risk.
Penetration tests and vulnerability scanning are performed on a regular basis. All Company networks are secured behind firewalls. Additionally, Security Information and Event Management (SIEM) technology, an Intrusion Detection System (IDS), and an Intrusion Prevention System (IPS) are used. Access to data on the Company's networks is granted only if needed for job functions.
Additionally, Security Information and Event Management (SIEM) technology, an Intrusion Detection System (IDS), and an Intrusion Prevention System (IPS) are used. Access to data on the Company's networks is granted only if needed for job functions. Data Security Analysts review changes to access to ensure they are authorized and appropriate.
The level of due diligence and ongoing monitoring that is performed is based on inherent risk as well as specifics such as if the vendor hosts data in the cloud or has access to consumer information. The Company uses a training system to educate new and existing employees on cybersecurity risks.
Third parties are assessed and categorized according to service type, compliance risk, financial risk, operational risk, and security risk. The level of due diligence and ongoing monitoring that is performed is based on inherent risk as well as specifics such as if the vendor hosts data in the cloud or has access to consumer information.
The Company's Information Security Officer (ISO) oversees the programs and reports on their statuses to management committees including the Information Security Review Committee (ISRC) and the Information Systems Steering Committee (ISSC). The ISO has several years of professional experience in cybersecurity and vendor management, and holds multiple relevant professional certifications.
The Company's Information Security Officer (ISO) oversees the programs and reports on their statuses to management committees including the Information Security Review Committee (ISRC) and the Information Systems Steering Committee (ISSC). The ISRC approves policies, procedures, and standards for information security. It also discusses IT statistics and performance relative to information security performance standards. It reports to the ISSC.
Removed
A third party cybersecurity risk assessment tool, as well as the FFIEC's Cybersecurity Assessment Tool (CAT) are also used annually to assess cybersecurity risk. -16- Third parties are assessed and categorized according to service type, compliance risk, financial risk, operational risk, and security risk.
Added
The ISSC is responsible for the Company’s strategic IT plan, including information security. It reviews the adequacy and allocation of IT resources and monitors major projects and overall IT performance. The strategic plan is presented to the Board annually. The ISO has several years of professional experience in cybersecurity and vendor management, and holds multiple relevant professional certifications.
Added
The Company uses a training system to educate new and existing employees on cybersecurity risks. In addition to this training program, simulated phishing attempts and remote social engineering attacks are performed on a regular basis to evaluate employees’ understanding of these risks.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeThe Company owns 28 banking office locations and one centralized administrative service center facility and leases 55 facilities. Most of the leases contain renewal options and provisions for rental increases, principally for changes in the cost of living index, and for changes in other operating costs such as property taxes and maintenance.
Biggest changeThe Company owns 27 banking office locations and one centralized administrative service center facility and leases 55 facilities. Most of the leases contain renewal options and provisions for rental increases, principally for changes in the cost of living index, and for changes in other operating costs such as property taxes and maintenance.
ITEM 2. PROPERTIES Branch Offices and Facilities The Bank is engaged in the banking business through 77 branch offices in 20 counties in Northern and Central California. The Bank believes all of its offices are constructed and equipped to meet prescribed security requirements.
ITEM 2. PROPERTIES Branch Offices and Facilities The Bank is engaged in the banking business through 76 branch offices in 20 counties in Northern and Central California. The Bank believes all of its offices are constructed and equipped to meet prescribed security requirements.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

8 edited+0 added−1 removed1 unchanged
Biggest changeDecember 31, 2013 2014 2015 2016 2017 2018 Westamerica Bancorporation (WABC) $ 100.00 $ 89.54 $ 88.30 $ 122.54 $ 119.28 $ 114.52 S&P 500 (SPX) 100.00 113.57 115.09 128.83 156.90 149.95 NASDAQ Bank Index (CBNK) 100.00 104.86 114.02 157.13 165.51 138.51 December 31, 2019 2020 2021 2022 2023 Westamerica Bancorporation (WABC) $ 143.05 $ 120.04 $ 128.93 $ 135.57 $ 134.51 S&P 500 (SPX) 197.00 233.39 300.27 245.75 310.24 NASDAQ Bank Index (CBNK) 172.04 159.11 227.27 190.13 183.55 [The remainder of this page intentionally left blank] -18- The following chart compares the cumulative return on the Company’s stock during the five years ended December 31, 2023 with the cumulative return on the S&P 500 composite stock index and NASDAQ’S Bank Index.
Biggest changeDecember 31, 2014 2015 2016 2017 2018 2019 Westamerica Bancorporation (WABC) $ 100.00 $ 98.60 $ 136.84 $ 133.21 $ 127.89 $ 159.75 S&P 500 (SPX) 100.00 101.34 113.44 138.15 132.03 173.46 NASDAQ Bank Index (CBNK) 100.00 108.74 149.85 157.84 132.10 164.07 December 31, 2020 2021 2022 2023 2024 Westamerica Bancorporation (WABC) $ 134.05 $ 143.98 $ 151.39 $ 150.21 $ 144.62 S&P 500 (SPX) 205.50 264.39 216.40 273.19 277.61 NASDAQ Bank Index (CBNK) 151.74 216.73 181.31 175.04 181.05 -18- The following chart compares the cumulative return on the Company’s stock during the five years ended December 31, 2024 with the cumulative return on the S&P 500 composite stock index and NASDAQ’S Bank Index.
See Item 1, “Business - Supervision and Regulation.” -17- The notes to the consolidated financial statements included in this Report contain additional information regarding the Company’s capital levels, capital structure, regulations affecting subsidiary bank dividends paid to the Company, the Company’s earnings, financial condition and cash flows, and cash dividends declared and paid on common stock.
See Item 1, “Business - Supervision and Regulation.” The notes to the consolidated financial statements included in this Report contain additional information regarding the Company’s capital levels, capital structure, regulations affecting subsidiary bank dividends paid to the Company, the Company’s earnings, financial condition and cash flows, and cash dividends declared and paid on common stock.
The repurchase plan approved July 28, 2022 expired September 1, 2023. There is no replacement plan in place currently. No shares were repurchased during the period from October 1, 2023 through December 31, 2023.
The repurchase plan approved July 28, 2022 expired September 1, 2023. There is no replacement plan in place currently. No shares were repurchased during the period from October 1, 2024 through December 31, 2024.
ITEM 5. MARKET FOR REGISTRANT ’ S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES The Company’s common stock is traded on the NASDAQ Stock Market (“NASDAQ”) under the symbol “WABC”. As of January 31, 2024, there were approximately 4,700 shareholders of record of the Company’s common stock.
ITEM 5. MARKET FOR REGISTRANT ’ S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES The Company’s common stock is traded on the NASDAQ Stock Market (“NASDAQ”) under the symbol “WABC”. As of January 31, 2025, there were approximately 4,500 shareholders of record of the Company’s common stock.
Stock performance The following chart compares the cumulative return on the Company’s stock during the ten years ended December 31, 2023 with the cumulative return on the S&P 500 composite stock index and NASDAQ’S Bank Index. The comparison assumes $100 invested in each on December 31, 2013 and reinvestment of all dividends.
Stock performance The following chart compares the cumulative return on the Company’s stock during the ten years ended December 31, 2024 with the cumulative return on the S&P 500 composite stock index and NASDAQ’S Bank Index. The comparison assumes $100 invested in each on December 31, 2014 and reinvestment of all dividends.
The comparison assumes $100 invested in each on December 31, 2018 and reinvestment of all dividends.
The comparison assumes $100 invested in each on December 31, 2019 and reinvestment of all dividends.
It is currently the intention of the Board of Directors of the Company to continue payment of cash dividends on a quarterly basis.
The Company has paid cash dividends on its common stock in every quarter since its formation in 1972. It is currently the intention of the Board of Directors of the Company to continue payment of cash dividends on a quarterly basis.
December 31, 2018 2019 2020 2021 2022 2023 Westamerica Bancorporation (WABC) $ 100.00 $ 124.91 $ 104.82 $ 112.58 $ 118.38 $ 117.45 S&P 500 (SPX) 100.00 131.38 155.65 200.25 163.89 206.90 NASDAQ Bank Index (CBNK) 100.00 124.21 114.87 164.08 137.27 132.52 ISSUER PURCHASES OF EQUITY SECURITIES The Company repurchases shares of its common stock in the open market to optimize the Company’s use of equity capital and enhance shareholder value and with the intention of lessening the dilutive impact of issuing new shares under stock option plans, and other ongoing requirements.
December 31, 2019 2020 2021 2022 2023 2024 Westamerica Bancorporation (WABC) $ 100.00 $ 83.91 $ 90.13 $ 94.77 $ 93.99 $ 90.49 S&P 500 (SPX) 100.00 118.47 152.41 124.75 157.49 160.04 NASDAQ Bank Index (CBNK) 100.00 92.48 132.06 110.47 106.65 110.32 ISSUER PURCHASES OF EQUITY SECURITIES The Company repurchases shares of its common stock in the open market to optimize the Company’s use of equity capital and enhance shareholder value and with the intention of lessening the dilutive impact of issuing new shares under stock option plans, and other ongoing requirements.
Removed
The Company has paid cash dividends on its common stock in every quarter since its formation in 1972. See Item 8, Financial Statements and Supplementary Data, Note 19 to the consolidated financial statements for recent quarterly dividend information.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

110 edited+30 added−30 removed92 unchanged
Biggest changeDebt Securities Held to Maturity Maturity Distribution At December 31, 2023 Within one year After one but within five years After five but within ten years After ten years Mortgage- backed Total ($ in thousands) Obligations of states and political subdivisions $ 15,117 $ 55,359 $ 706 $ - $ - $ 71,182 Interest rate 3.57 % 3.51 % 4.08 % - % - % 3.54 % Corporate securities - 257,488 471,162 - - 728,650 Interest rate - % 4.17 % 4.32 % - % - % 4.29 % Subtotal 15,117 312,847 471,868 - - 799,832 Interest rate 3.57 % 4.05 % 4.32 % - % - % 4.22 % MBS - - - - 78,565 78,565 Interest rate - % - % - % - % 2.25 % 2.25 % Total $ 15,117 $ 312,847 $ 471,868 $ - $ 78,565 $ 878,397 Interest rate 3.57 % 4.05 % 4.32 % - % 2.25 % 4.04 % The Company had corporate securities as shown below at the dates indicated: Corporate securities At December 31, 2023 At December 31, 2022 Amortized Fair Amortized Fair Cost Value Cost Value (In thousands) Debt securities available for sale $ 2,129,103 $ 1,909,548 $ 2,406,566 $ 2,099,955 Debt securities held to maturity 728,650 705,356 721,854 687,406 Total corporate securities $ 2,857,753 $ 2,614,904 $ 3,128,420 $ 2,787,361 The following table summarizes total corporate securities by credit rating: At December 31, 2023 At December 31, 2022 Fair value As a percent of total corporate securities Fair value As a percent of total corporate securities ($ in thousands) AAA $ - - % $ 20,667 1 % AA+ - - % 19,840 1 % AA - - % 19,234 1 % AA- 73,016 3 % 110,552 4 % A+ 250,322 9 % 255,381 9 % A 380,257 14 % 503,437 18 % A- 825,882 32 % 695,865 25 % BBB+ 723,767 28 % 821,102 29 % BBB 361,660 14 % 304,957 11 % BBB- - - % 36,326 1 % Total corporate securities $ 2,614,904 100 % $ 2,787,361 100 % [The remainder of this page intentionally left blank] -33- The following table summarizes total corporate securities by the industry sector in which the issuing companies operate: At December 31, 2023 At December 31, 2022 Fair value As a percent of total corporate securities Fair value As a percent of total corporate securities ($ in thousands) Financial $ 1,516,147 58 % $ 1,539,361 55 % Utilities 274,929 10 % 285,016 10 % Industrial 215,428 8 % 237,554 9 % Consumer, Non-cyclical 170,423 7 % 173,736 6 % Communications 158,495 6 % 162,270 6 % Basic Materials 100,693 4 % 98,072 3 % Energy 69,331 3 % 86,431 3 % Technology 63,185 2 % 101,255 4 % Consumer, Cyclical 46,273 2 % 103,666 4 % Total corporate securities $ 2,614,904 100 % $ 2,787,361 100 % The following table summarizes total corporate securities by the location of the issuers’ headquarters; all the bonds are denominated in United States dollars: At December 31, 2023 At December 31, 2022 Fair value As a percent of total corporate securities Fair value As a percent of total corporate securities ($ in thousands) United States of America $ 1,811,463 69 % $ 1,997,328 72 % Canada 195,979 7 % 192,475 7 % Japan 164,948 6 % 161,804 6 % United Kingdom 162,794 6 % 171,819 6 % Switzerland 93,898 4 % 86,396 3 % France 91,726 4 % 87,781 3 % Netherlands 35,381 1 % 33,216 1 % Australia 24,800 1 % 23,870 1 % Belgium 20,894 1 % 20,243 1 % Germany 13,021 1 % 12,429 - % Total corporate securities $ 2,614,904 100 % $ 2,787,361 100 % The following table summarizes the above corporate securities with issuer’s headquarters located outside of the United States of America by the industry sector in which the issuing companies operate; all the bonds are denominated in United States dollars: At December 31, 2023 At December 31, 2022 Fair value As a percent of total foreign corporate securities Fair value As a percent of total foreign corporate securities ($ in thousands) Financial $ 702,892 87 % $ 680,956 86 % Energy 31,970 4 % 30,600 4 % Basic materials 24,800 3 % 23,870 3 % Consumer, Non-cyclical 20,895 3 % 32,684 4 % Consumer, Cyclical 13,021 2 % 12,429 2 % Utilities 9,863 1 % 9,494 1 % Total foreign corporate securities $ 803,441 100 % $ 790,033 100 % -34- The Company’s $1.5 billion (fair value) in collateralized loan obligations at December 31, 2023, consist of investments in 142 issues that are within the senior tranches of their respective fund securitization structures.
Biggest changeDebt Securities Held to Maturity Maturity Distribution At December 31, 2024 Within one year After one but within five years After five but within ten years Mortgage- backed Total ($ in thousands) Obligations of states and political subdivisions $ 13,508 $ 37,753 $ - $ - $ 51,261 Interest rate 3.82 % 3.51 % - % - % 3.60 % Corporate securities - 309,813 425,634 - 735,447 Interest rate - % 4.16 % 4.28 % - % 4.25 % Subtotal 13,508 347,566 425,634 - 786,708 Interest rate 3.82 % 4.09 % 4.28 % - % 4.21 % MBS - - - 57,927 57,927 Interest rate - % - % - % 2.30 % 2.30 % Total $ 13,508 $ 347,566 $ 425,634 $ 57,927 $ 844,635 Interest rate 3.82 % 4.09 % 4.28 % 2.30 % 4.07 % The Company had corporate securities as shown below at the dates indicated: Corporate securities At December 31, 2024 At December 31, 2023 Amortized Fair Amortized Fair Cost Value Cost Value (In thousands) Debt securities available for sale $ 2,031,144 $ 1,835,937 $ 2,129,103 $ 1,909,548 Debt securities held to maturity 735,447 703,210 728,650 705,356 Total corporate securities $ 2,766,591 $ 2,539,147 $ 2,857,753 $ 2,614,904 The following table summarizes total corporate securities by credit rating: At December 31, 2024 At December 31, 2023 Fair value As a percent of total corporate securities Fair value As a percent of total corporate securities ($ in thousands) AA- $ 72,569 3 % $ 73,016 3 % A+ 256,906 10 % 250,322 9 % A 353,434 14 % 380,257 14 % A- 807,698 32 % 825,882 32 % BBB+ 634,118 25 % 723,767 28 % BBB 414,422 16 % 361,660 14 % Total corporate securities $ 2,539,147 100 % $ 2,614,904 100 % [The remainder of this page intentionally left blank] -33- The following table summarizes total corporate securities by the industry sector in which the issuing companies operate: At December 31, 2024 At December 31, 2023 Fair value As a percent of total corporate securities Fair value As a percent of total corporate securities ($ in thousands) Financial $ 1,450,675 57 % $ 1,516,147 58 % Utilities 275,551 11 % 274,929 10 % Industrial 212,587 8 % 215,428 8 % Consumer, Non-cyclical 169,311 7 % 170,423 7 % Communications 154,358 6 % 158,495 6 % Basic Materials 100,617 4 % 100,693 4 % Energy 69,320 3 % 69,331 3 % Technology 61,008 2 % 63,185 2 % Consumer, Cyclical 45,720 2 % 46,273 2 % Total corporate securities $ 2,539,147 100 % $ 2,614,904 100 % The following table summarizes total corporate securities by the location of the issuers’ headquarters; all the corporate securities are denominated in United States dollars: At December 31, 2024 At December 31, 2023 Fair value As a percent of total corporate securities Fair value As a percent of total corporate securities ($ in thousands) United States of America $ 1,767,669 70 % $ 1,811,463 69 % Canada 192,122 8 % 195,979 7 % Japan 167,624 7 % 164,948 6 % United Kingdom 139,648 5 % 162,794 6 % France 92,970 4 % 91,726 4 % Switzerland 73,424 3 % 93,898 4 % Netherlands 35,425 1 % 35,381 1 % Australia 24,700 1 % 24,800 1 % Belgium 19,726 1 % 20,894 1 % Jersey 12,948 - % - - % Germany 12,891 - % 13,021 1 % Total corporate securities $ 2,539,147 100 % $ 2,614,904 100 % The following table summarizes the above corporate securities with issuer’s headquarters located outside of the United States of America by the industry sector in which the issuing companies operate; all the corporate securities are denominated in United States dollars: At December 31, 2024 At December 31, 2023 Fair value As a percent of total foreign corporate securities Fair value As a percent of total foreign corporate securities ($ in thousands) Financial $ 659,403 86 % $ 702,892 87 % Energy 32,041 4 % 31,970 4 % Consumer, Cyclical 25,839 3 % 13,021 2 % Basic Materials 24,700 3 % 24,800 3 % Consumer, Non-cyclical 19,726 3 % 20,895 3 % Utilities 9,769 1 % 9,863 1 % Total foreign corporate securities $ 771,478 100 % $ 803,441 100 % -34- The Company’s $983 million (fair value) in collateralized loan obligations at December 31, 2024, consist of investments in 96 issues that are within the senior tranches of their respective fund securitization structures.
(2) Net interest spread represents the average yield earned on interest-earning assets less the average rate incurred on interest-bearing liabilities. (3) Net interest margin is computed by calculating the difference between interest income and expense, divided by the average balance of interest-earning assets.
(2) Net interest spread represents the average yield earned on interest-earning assets less the average rate incurred on interest-bearing liabilities. (3) Net interest margin is computed by calculating the difference between interest income and expense, divided by the average balance of interest-earning assets.
(2) Net interest spread represents the average yield earned on interest-earning assets less the average rate incurred on interest-bearing liabilities. (3) Net interest margin is computed by calculating the difference between interest income and expense, divided by the average balance of interest-earning assets.
(2) Net interest spread represents the average yield earned on interest-earning assets less the average rate incurred on interest-bearing liabilities. (3) Net interest margin is computed by calculating the difference between interest income and expense, divided by the average balance of interest-earning assets.
The Company and its critical vendors maintain property and casualty insurance, and maintain and regularly test disaster recovery plans, which include redundant operational locations and power sources. The Company’s operations do not use a significant amount of water in producing our products and services. The Company monitors the climate risks of our loan customers.
The Company and its critical vendors maintain property and casualty insurance, and maintain and regularly test disaster recovery plans, which include redundant operational locations and power sources. The Company’s operations do not use a significant amount of water in producing its products and services. The Company monitors the climate risks of its loan customers.
Changes in interest rates, most notably rising interest rates or increased consumer spending, could impact deposit volumes. Depending on economic conditions, interest rate levels, liquidity management and a variety of other conditions, any deposit growth may be used to fund loans or purchase investment securities.
Changes in interest rates, most notably rising or elevated interest rates, or increased consumer spending, could impact deposit volumes. Depending on economic conditions, interest rate levels, liquidity management and a variety of other conditions, any deposit growth may be used to fund loans or purchase investment securities.
A first lien on the real estate serves as collateral to secure the loan. Residential real estate loans generally represent first lien mortgages used by the borrower to purchase or refinance a principal residence. For interest-rate risk purposes, the Company offers only fully-amortizing, adjustable-rate mortgages.
A first lien on the real estate serves as collateral to secure the loan. -35- Residential real estate loans generally represent first lien mortgages used by the borrower to purchase or refinance a principal residence. For interest-rate risk purposes, the Company offers only fully-amortizing, adjustable-rate mortgages.
The Bank maintains reserve balances at the Federal Reserve Bank; the amount that earns interest is identified as “interest-bearing cash”. -21- Management continues to evaluate the impacts of inflation, the Federal Reserve’s monetary policy and climate changes on the Company’s business and its customers.
The Bank maintains reserve balances at the Federal Reserve Bank; the amount that earns interest is identified as “interest-bearing cash”. Management continues to evaluate the impacts of inflation, the Federal Reserve’s monetary policy and climate changes on the Company’s business and its customers.
Management follows a systematic methodology to estimate loss potential in an effort to reduce the differences between estimated and actual losses. The allowance for credit losses is established through provisions for credit losses charged to income.
Management follows a systematic methodology to estimate loss potential in an effort to reduce the differences between estimated and actual losses. -38- The allowance for credit losses is established through provisions for credit losses charged to income.
The results of this analysis are applied to the amortized cost of the loans included within each pool. -40- Loans that do not share risk characteristics with other loans in the pools are evaluated individually.
The results of this analysis are applied to the amortized cost of the loans included within each pool. Loans that do not share risk characteristics with other loans in the pools are evaluated individually.
Distribution of Assets, Liabilities & Shareholders’ Equity and Yields, Rates & Interest Margin For the Year Ended December 31, 2023 Interest Average Income/ Yields/ Balance Expense Rates ($ in thousands) Assets Investment securities: Taxable $ 5,176,278 $ 221,742 4.28 % Tax-exempt (1) 158,433 5,668 3.58 % Total investments (1) 5,334,711 227,410 4.26 % Loans: Taxable 868,255 45,739 5.27 % Tax-exempt (1) 44,061 1,743 3.96 % Total loans (1) 912,316 47,482 5.20 % Total interest-bearing cash 204,794 10,671 5.21 % Total Interest-earning assets (1) 6,451,821 285,563 4.43 % Other assets 419,545 Total assets $ 6,871,366 Liabilities and shareholders' equity Noninterest-bearing demand $ 2,748,544 $ - - % Savings and interest-bearing transaction 2,922,909 3,450 0.12 % Time less than $100,000 67,832 204 0.30 % Time $100,000 or more 48,076 116 0.24 % Total interest-bearing deposits 3,038,817 3,770 0.12 % Short-term borrowed funds 89,298 120 0.13 % Total interest-bearing liabilities 3,128,115 3,890 0.12 % Other liabilities 100,097 Shareholders' equity 894,610 Total liabilities and shareholders' equity $ 6,871,366 Net interest spread (1) (2) 4.31 % Net interest and fee income and interest margin (1) (3) $ 281,673 4.37 % (1) Amounts calculated on an FTE basis using the current statutory federal tax rate.
The net interest margin is greater than the net interest spread due to the benefit of noninterest-bearing demand deposits. -25- Distribution of Assets, Liabilities & Shareholders’ Equity and Yields, Rates & Interest Margin For the Year Ended December 31, 2023 Interest Average Income/ Yields/ Balance Expense Rates ($ in thousands) Assets Investment securities: Taxable $ 5,176,278 $ 221,742 4.28 % Tax-exempt (1) 158,433 5,668 3.58 % Total investments (1) 5,334,711 227,410 4.26 % Loans: Taxable 868,255 45,739 5.27 % Tax-exempt (1) 44,061 1,743 3.96 % Total loans (1) 912,316 47,482 5.20 % Total interest-bearing cash 204,794 10,671 5.21 % Total Interest-earning assets (1) 6,451,821 285,563 4.43 % Other assets 419,545 Total assets $ 6,871,366 Liabilities and shareholders' equity Noninterest-bearing demand $ 2,748,544 $ - - % Savings and interest-bearing transaction 2,922,909 3,450 0.12 % Time less than $100,000 67,832 204 0.30 % Time $100,000 or more 48,076 116 0.24 % Total interest-bearing deposits 3,038,817 3,770 0.12 % Short-term borrowed funds 89,298 120 0.13 % Total interest-bearing liabilities 3,128,115 3,890 0.12 % Other liabilities 100,097 Shareholders' equity 894,610 Total liabilities and shareholders' equity $ 6,871,366 Net interest spread (1) (2) 4.31 % Net interest and fee income and interest margin (1) (3) $ 281,673 4.37 % (1) Amounts calculated on an FTE basis using the current statutory federal tax rate.
The Company provided no provision for credit losses in 2022 and 2021 based on Management’s estimate of reserves needed over the remaining life of its loans and investments.
The Company provided no provision for credit losses in 2022 based on Management’s estimate of reserves needed over the remaining life of its loans and investments.
ITEM 7. MANAGEMENT ’ S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following financial information for the three years ended December 31, 2023 has been derived from the Company’s audited consolidated financial statements. This information should be read in conjunction with those statements, notes and other information included elsewhere herein.
ITEM 7. MANAGEMENT ’ S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following financial information for the three years ended December 31, 2024 has been derived from the Company’s audited consolidated financial statements. This information should be read in conjunction with those statements, notes and other information included elsewhere herein.
However, no assurance can be given the Bank or Company will not experience a period of reduced earnings or a reduction in capital from unanticipated events and circumstances. -46- Capital to Risk-Adjusted Assets The capital ratios for the Company and the Bank under current regulatory capital standards are presented in the tables below, on the dates indicated.
However, no assurance can be given the Bank or Company will not experience a period of reduced earnings or a reduction in capital from unanticipated events and circumstances. -45- Capital to Risk-Adjusted Assets The capital ratios for the Company and the Bank under current regulatory capital standards are presented in the tables below, on the dates indicated.
The net interest margin is greater than the net interest spread due to the benefit of noninterest-bearing demand deposits. -25- Distribution of Assets, Liabilities & Shareholders’ Equity and Yields, Rates & Interest Margin For the Year Ended December 31, 2022 Interest Average Income/ Yields/ Balance Expense Rates ($ in thousands) Assets Investment securities: Taxable $ 5,093,921 $ 158,465 3.11 % Tax-exempt (1) 209,725 7,390 3.52 % Total investments (1) 5,303,646 165,855 3.13 % Loans: Taxable 951,516 48,274 5.07 % Tax-exempt (1) 46,448 1,781 3.83 % Total loans (1) 997,964 50,055 5.02 % Total interest-bearing cash 691,086 7,790 1.13 % Total Interest-earning assets (1) 6,992,696 223,700 3.20 % Other assets 420,312 Total assets $ 7,413,008 Liabilities and shareholders' equity Noninterest-bearing demand $ 3,018,350 $ - - % Savings and interest-bearing transaction 3,257,858 1,510 0.05 % Time less than $100,000 77,007 180 0.23 % Time $100,000 or more 62,411 156 0.25 % Total interest-bearing deposits 3,397,276 1,846 0.05 % Short-term borrowed funds 109,283 79 0.07 % Total interest-bearing liabilities 3,506,559 1,925 0.05 % Other liabilities 85,610 Shareholders' equity 802,489 Total liabilities and shareholders' equity $ 7,413,008 Net interest spread (1) (2) 3.15 % Net interest and fee income and interest margin (1) (3) $ 221,775 3.17 % (1) Amounts calculated on an FTE basis using the current statutory federal tax rate.
The net interest margin is greater than the net interest spread due to the benefit of noninterest-bearing demand deposits. [The remainder of this page intentionally left blank] -26- Distribution of Assets, Liabilities & Shareholders’ Equity and Yields, Rates & Interest Margin For the Year Ended December 31, 2022 Interest Average Income/ Yields/ Balance Expense Rates ($ in thousands) Assets Investment securities: Taxable $ 5,093,921 $ 158,465 3.11 % Tax-exempt (1) 209,725 7,390 3.52 % Total investments (1) 5,303,646 165,855 3.13 % Loans: Taxable 951,516 48,274 5.07 % Tax-exempt (1) 46,448 1,781 3.83 % Total loans (1) 997,964 50,055 5.02 % Total interest-bearing cash 691,086 7,790 1.13 % Total Interest-earning assets (1) 6,992,696 223,700 3.20 % Other assets 420,312 Total assets $ 7,413,008 Liabilities and shareholders' equity Noninterest-bearing demand $ 3,018,350 $ - - % Savings and interest-bearing transaction 3,257,858 1,510 0.05 % Time less than $100,000 77,007 180 0.23 % Time $100,000 or more 62,411 156 0.25 % Total interest-bearing deposits 3,397,276 1,846 0.05 % Short-term borrowed funds 109,283 79 0.07 % Total interest-bearing liabilities 3,506,559 1,925 0.05 % Other liabilities 85,610 Shareholders' equity 802,489 Total liabilities and shareholders' equity $ 7,413,008 Net interest spread (1) (2) 3.15 % Net interest and fee income and interest margin (1) (3) $ 221,775 3.17 % (1) Amounts calculated on an FTE basis using the current statutory federal tax rate.
Highly liquid assets include cash and amounts due from other banks from daily transaction settlements, reduced by branch cash needs and any Federal Reserve Bank reserve requirements, and investment securities based on regulatory risk-weighting guidelines. Based on the results of the most recent liquidity stress test, Management is satisfied with the liquidity condition of the Bank.
Highly liquid assets include cash and amounts due from other banks from daily transaction settlements, reduced by branch cash needs and any Federal Reserve Bank reserve requirements, and investment securities based on regulatory guidelines. Based on the results of the most recent liquidity stress test, Management is satisfied with the liquidity condition of the Bank.
Westamerica Bancorporation ("Parent Company") is a separate entity apart from the Bank and must provide for its own liquidity. In addition to its operating expenses, the Parent Company is responsible for the payment of dividends declared for its shareholders, and interest and principal on any outstanding debt. The Parent Company had no debt as of December 31, 2023.
Westamerica Bancorporation ("Parent Company") is a separate entity apart from the Bank and must provide for its own liquidity. In addition to its operating expenses, the Parent Company is responsible for the payment of dividends declared for its shareholders, and interest and principal on any outstanding debt. The Parent Company had no debt as of December 31, 2024.
The following table lists debt securities in the Company’s portfolio by type as of the dates indicated. Debt securities held to maturity are listed at amortized cost before related reserve for expected credit losses of $1 thousand at December 31, 2023 and December 31, 2022. Debt securities available for sale are listed at fair value.
The following table lists debt securities in the Company’s portfolio by type as of the dates indicated. Debt securities held to maturity are listed at amortized cost before related reserve for expected credit losses of $1 thousand at December 31, 2024 and December 31, 2023. Debt securities available for sale are listed at fair value.
Both simulations are used to measure expected changes in net interest income assuming various levels of change in market interest rates. The Company’s asset and liability position was generally “asset sensitive” at December 31, 2023, based on the interest rate assumptions applied to the simulation model.
Both simulations are used to measure expected changes in net interest income assuming various levels of change in market interest rates. The Company’s asset and liability position was generally “asset sensitive” at December 31, 2024, based on the interest rate assumptions applied to the simulation model.
The CLOs have interest coupons that change once every three months by the amount of change in the three-month SOFR base rates. The average balances and yields of CLOs for 2023 and 2022 was $1,543 million yielding 6.99% and $1,567 million yielding 3.62%, respectively.
The CLOs have interest coupons that change once every three months by the amount of change in the three-month SOFR base rate. The average balances and yields of CLOs for 2023 and 2022 was $1,543 million yielding 6.99% and $1,567 million yielding 3.62%, respectively.
However, no assurance can be given the Bank will not experience a period of reduced liquidity. -45- Management continually monitors the Bank’s cash levels. Loan demand from credit worthy borrowers will be dictated by economic and competitive conditions.
However, no assurance can be given the Bank will not experience a period of reduced liquidity. -44- Management continually monitors the Bank’s cash levels. Loan demand from credit worthy borrowers will be dictated by economic and competitive conditions.
Debt Securities Available for Sale Maturity Distribution At December 31, 2023 Within one year After one but within five years After five but within ten years CLO and Mortgage- backed Total ($ in thousands) Securities of U.S.
Debt Securities Available for Sale Maturity Distribution At December 31, 2024 Within one year After one but within five years After five but within ten years CLO and Mortgage- backed Total ($ in thousands) Securities of U.S.
At December 31, 2023, no credit loss allowance was assigned to corporate securities held to maturity based on evaluation of each individual issuer’s historical financial performance throughout full business cycles.
At December 31, 2024, no credit loss allowance was assigned to corporate securities held to maturity based on evaluation of each individual issuer’s historical financial performance throughout full business cycles.
It should be read in conjunction with those statements and notes found on pages 52 through 89, as well as with the other information presented throughout this Report. Critical Accounting Policies The Company’s consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America and follow general practices within the banking industry.
It should be read in conjunction with those statements and notes found on pages 51 through 87, as well as with the other information presented throughout this Report. Critical Accounting Policies The Company’s consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America and follow general practices within the banking industry.
Allowance for credit losses related to debt securities held to maturity was $1 thousand related to municipal securities at December 31, 2023 and December 31, 2022, reflecting the expected credit losses on debt securities held to maturity.
Allowance for credit losses related to debt securities held to maturity was $1 thousand related to municipal securities at December 31, 2024 and December 31, 2023, reflecting the expected credit losses on debt securities held to maturity.
Westamerica Bank’s deposit totals are subject to both the fiscal policies of the United States government and monetary policies of the Federal Reserve; the 2023 decline in Westamerica Bank deposits is influenced by these fiscal and monetary policies.
Westamerica Bank’s deposit totals are subject to both the fiscal policies of the United States government and monetary policies of the Federal Reserve; the decline in Westamerica Bank deposits during 2023 was influenced by these fiscal and monetary policies.
These evaluations may cause Management to change the level of funds the Company deploys into investment securities and change the composition of the Company’s investment securities portfolio. At December 31, 2023, substantially all of the Company’s investment securities were investment grade as rated by one or more major rating agency.
These evaluations may cause Management to change the level of funds the Company deploys into investment securities and change the composition of the Company’s investment securities portfolio. At December 31, 2024, substantially all of the Company’s investment securities were investment grade as rated by one or more major rating agencies.
At December 31, 2023 At December 31, 2022 Carrying Value As a percent of total investment securities Carrying Value As a percent of total investment securities ($ in thousands) Securities of U.S.
At December 31, 2024 At December 31, 2023 Carrying Value As a percent of total investment securities Carrying Value As a percent of total investment securities ($ in thousands) Securities of U.S.
The Company's ratio of equity to total assets was 12.14% at December 31, 2023 and 8.7% at December 31, 2022. The Company performs capital stress tests on a periodic basis to evaluate the sustainability of its capital. Under the stress testing, the Company assumes various scenarios such as deteriorating economic and operating conditions, and unanticipated asset devaluations.
The Company's ratio of equity to total assets was 14.65% at December 31, 2024 and 12.14% at December 31, 2023. The Company performs capital stress tests on a periodic basis to evaluate the sustainability of its capital. Under the stress testing, the Company assumes various scenarios such as deteriorating economic and operating conditions, and unanticipated asset devaluations.
In recent years, the Bank's deposit base has provided the majority of the Bank's funding requirements. This low-cost source of funds, along with shareholders' equity, provided 97% of funding for average total assets in the year ended December 31, 2023 and December 31, 2022, respectively.
In recent years, the Bank's deposit base has provided the majority of the Bank's funding requirements. This low-cost source of funds, along with shareholders' equity, provided 96% of funding for average total assets for the year ended December 31, 2024 and 97% for the year ended December 31, 2023.
There were no loans with a remaining maturity of over fifteen years as of December 31, 2023.
There were no loans with a remaining maturity of over fifteen years as of December 31, 2024.
For Common Equity Tier I Capital, Tier 1 Capital and Total Capital, the minimum percentage required for regulatory capital adequacy purposes include a 2.5% “capital conservation buffer.” To Be Well-capitalized Required for Under Prompt At December 31, 2023 Capital Adequacy Corrective Action Company Bank Purposes Regulations (Bank) Common Equity Tier I Capital 18.76 % 14.46 % 7.00 % 6.50 % Tier I Capital 18.76 % 14.46 % 8.50 % 8.00 % Total Capital 19.15 % 14.98 % 10.50 % 10.00 % Leverage Ratio 12.86 % 9.88 % 4.00 % 5.00 % To Be Well-capitalized Required for Under Prompt At December 31, 2022 Capital Adequacy Corrective Action Company Bank Purposes Regulations (Bank) Common Equity Tier I Capital 15.22 % 12.37 % 7.00 % 6.50 % Tier I Capital 15.22 % 12.37 % 8.50 % 8.00 % Total Capital 15.64 % 12.93 % 10.50 % 10.00 % Leverage Ratio 10.18 % 8.26 % 4.00 % 5.00 % The Company and the Bank routinely project capital levels by analyzing forecasted earnings, credit quality, shareholder dividends, asset volumes, share repurchase activity, stock option exercise proceeds, and other factors.
For Common Equity Tier I Capital, Tier 1 Capital and Total Capital, the minimum percentage required for regulatory capital adequacy purposes include a 2.5% “capital conservation buffer.” To Be Well-capitalized Required for Under Prompt At December 31, 2024 Capital Adequacy Corrective Action Company Bank Purposes Regulations (Bank) Common Equity Tier I Capital 22.46 % 15.33 % 7.00 % 6.50 % Tier I Capital 22.46 % 15.33 % 8.50 % 8.00 % Total Capital 22.82 % 15.84 % 10.50 % 10.00 % Leverage Ratio 15.30 % 10.41 % 4.00 % 5.00 % To Be Well-capitalized Required for Under Prompt At December 31, 2023 Capital Adequacy Corrective Action Company Bank Purposes Regulations (Bank) Common Equity Tier I Capital 18.76 % 14.46 % 7.00 % 6.50 % Tier I Capital 18.76 % 14.46 % 8.50 % 8.00 % Total Capital 19.15 % 14.98 % 10.50 % 10.00 % Leverage Ratio 12.86 % 9.88 % 4.00 % 5.00 % The Company and the Bank routinely project capital levels by analyzing forecasted earnings, credit quality, shareholder dividends, asset volumes, share repurchase activity, stock option exercise proceeds, and other factors.
Recently, the banking industry experienced significant volatility with several regional bank failures in the first half of 2023. Industrywide concerns remained related to liquidity, deposit outflows and unrealized losses on debt securities. These events could adversely affect the Company’s funding of its operations.
The banking industry experienced significant volatility with several regional bank failures in 2023, creating industrywide concerns related to liquidity, deposit outflows and unrealized losses on debt securities. These events could adversely affect the Company’s funding of its operations.
Merchant processing service fees decreased in 2023 compared with 2022 primarily due to lower transaction volumes and increased lower-margin transactions. Service charges on deposit accounts decreased in 2023 compared with 2022 primarily due to lower fee income on analyzed deposit accounts, partially offset by fees generated from time deposits redeemed before maturity.
Service charges on deposit accounts decreased in 2023 compared with 2022 primarily due to lower fee income on analyzed deposit accounts, partially offset by fees generated from time deposits redeemed before maturity. ATM processing fee income increased in 2023 compared with 2022 primarily due to increased transaction volumes.
Capital Resources The Company has historically generated high levels of earnings, which provide a means of accumulating capital. The Company's net income as a percentage of average shareholders' equity (“return on equity” or “ROE”) was 18.1% for the year ended December 31, 2023 and 15.2% for the year ended December 31, 2022.
Capital Resources The Company has historically generated high levels of earnings, which provide a means of accumulating capital. The Company's net income as a percentage of average shareholders' equity (“return on equity” or “ROE”) was 13.8% for the year ended December 31, 2024 and 18.1% for the year ended December 31, 2023.
All loan segments are exposed to risks inherent in the economy and market conditions. Significant risk characteristics related to the commercial loan segment include the borrowers’ business performance and financial condition, and the value of collateral for secured loans.
The Company’s lending activities are exposed to various qualitative risks. All loan segments are exposed to risks inherent in the economy and market conditions. Significant risk characteristics related to the commercial loan segment include the borrowers’ business performance and financial condition, and the value of collateral for secured loans.
The Company’s procedures for evaluating investments in securities are in accordance with guidance issued by the Board of Governors of the Federal Reserve System, “Investing in Securities without Reliance on Nationally Recognized Statistical Rating Agencies” (SR 12-15) and other regulatory guidance. -31- The following table shows the fair value carrying amount of the Company’s equity securities and debt securities available for sale as of the dates indicated: At December 31, 2023 2022 2021 (In thousands) Debt securities available for sale: Securities of U.S.
The Company’s procedures for evaluating investments in securities are in accordance with guidance issued by the Board of Governors of the Federal Reserve System, “Investing in Securities without Reliance on Nationally Recognized Statistical Rating Agencies” (SR 12-15) and other regulatory guidance. [The remainder of this page intentionally left blank] -31- The following table shows the fair value carrying amount of the Company’s debt securities available for sale as of the dates indicated: At December 31, 2024 2023 2022 (In thousands) Debt securities available for sale: Securities of U.S.
Borrowers with real estate loan collateral located in flood zones must carry flood insurance under the loans’ terms. At December 31, 2023, the Company had $18 million in loans to agricultural borrowers; Management continuously monitors these customers’ access to adequate water sources as well as their ability to sustain low crop yields without encountering financial hardship.
Borrowers with real estate loan collateral located in flood zones must carry flood insurance under the loans’ terms. At December 31, 2024, the Company had $5 million in loans to agricultural borrowers; Management continuously monitors these customers’ access to adequate water sources as well as their ability to sustain low crop yields and volatile commodity prices without encountering financial hardship.
Payment of dividends to the Parent Company by the Bank is limited under California and Federal laws. The Company believes these regulatory dividend restrictions will not have an impact on the Parent Company's ability to meet its ongoing cash obligations. The Parent Company’s cash balance was $155 million at December 31, 2023 and $99 million at December 31, 2022.
Payment of dividends to the Parent Company by the Bank is limited under California and Federal laws. The Company believes these regulatory dividend restrictions will not impact Parent Company's ability to meet its ongoing cash obligations. The Parent Company’s cash balance was $263 million at December 31, 2024 and $155 million at December 31, 2023.
Noninterest expense in 2023 increased $3.9 million compared with 2022 primarily due to increases in salaries and benefits, occupancy and equipment expenses, and increased FDIC insurance assessments for all insured depository institutions. Lower professional fees partially offset the increases in noninterest expense in 2023 compared with 2022.
Noninterest expense in 2023 increased $3.9 million compared with 2022 primarily due to increases in salaries and benefits, occupancy and equipment expenses, and increased FDIC insurance assessments for all insured depository institutions. Lower professional fees partially offset the increases in noninterest expense in 2023 compared with 2022. The tax rate (FTE) was 27.5% in 2023 and 27.2% in 2022.
The Company paid common dividends totaling $46 million in the year ended December 31, 2023 and $45 million in the year ended December 31, 2022, which represent dividends per common share of $1.72 and $1.68, respectively. The Company's earnings have historically exceeded dividends paid to shareholders.
The Company paid common dividends totaling $47 million in the year ended December 31, 2024 and $46 million in the year ended December 31, 2023, which represent dividends per common share of $1.76 and $1.72, respectively. The Company's earnings have historically exceeded dividends paid to shareholders.
The Bank’s dividends paid to the Parent Company, proceeds from the exercise of stock options, and Parent Company cash balances provided adequate cash for the Parent Company to pay shareholder dividends of $46 million in the year ended December 31, 2023 and $45 million in the year ended December 31, 2022 and retire common stock in the amounts of $14 million and $218 thousand, respectively.
The Bank’s dividends paid to the Parent Company, proceeds from the exercise of stock options, and Parent Company cash balances provided adequate cash for the Parent Company to pay shareholder dividends of $47 million in the year ended December 31, 2024 and $46 million in the year ended December 31, 2023 and retire common stock in the amounts of $210 thousand in the year ended December 31, 2024 and $14 million in the year ended December 31, 2023.
Accrued interest is reversed through interest income when amounts are determined to be uncollectible, which generally occurs when the underlying receivable is placed on nonaccrual status or charged off. The following table summarizes the allowance for credit losses, chargeoffs and recoveries for the periods indicated.
Accrued interest is reversed through interest income when amounts are determined to be uncollectible, which generally occurs when the underlying receivable is placed on nonaccrual status or charged off. [The remainder of this page intentionally left blank] -39- The following table summarizes the allowance for credit losses, chargeoffs and recoveries for the periods indicated.
Total deposits were $5,474 million at December 31, 2023 and $6,225 million at December 31, 2022. Total time deposits were $97 million at December 31, 2023 and $131 million at December 31, 2022. The Company has no foreign time deposits. The standard FDIC deposit insurance amount is $250,000 per depositor, for each account ownership category.
Total deposits were $5,012 million at December 31, 2024 and $5,474 million at December 31, 2023. Total time deposits were $82 million at December 31, 2024 and $97 million at December 31, 2023. The Company has no foreign time deposits. The standard FDIC deposit insurance amount is $250,000 per depositor, for each account ownership category.
If additional operational liquidity is required, the Company can pledge debt securities as collateral for borrowing purposes; at December 31, 2023, the Company’s debt securities which qualify as collateral for borrowing totaled $3,915,867 thousand.
If additional operational liquidity is required, the Company can pledge debt securities as collateral for borrowing purposes; at December 31, 2024, the Company’s debt securities which qualify as collateral for borrowing totaled $3,534,099 thousand.
The net interest margin (FTE) was 4.37% in 2023, 3.17% in 2022 and 2.62% in 2021. The yield on earning assets (FTE) was 4.43% in 2023, 3.20% in 2022 and 2.65% in 2021. The Company’s funding costs were 0.06% in 2023, compared with 0.03% in 2022 and 2021.
The net interest margin (FTE) was 4.14% in 2024, 4.37% in 2023 and 3.17% in 2022. The yield on earning assets (FTE) was 4.43% in 2024, 4.43% in 2023 and 3.20% in 2022. The Company’s funding costs were 0.29% in 2024, compared with 0.06% in 2023 and 0.03% in 2022.
In the ordinary course of business, the Company pledges debt securities as collateral for borrowing from the Federal Reserve Bank; at December 31, 2023, the Company had pledged $996,935 thousand in debt securities at the Federal Reserve Bank.
In the ordinary course of business, the Company pledges debt securities as collateral for borrowing from the Federal Reserve Bank; at December 31, 2024, the Company had pledged $766,606 thousand in debt securities at the Federal Reserve Bank.
The Company also raises capital as employees exercise stock options. Capital raised through the exercise of stock options was $950 thousand in the year ended December 31, 2023 and $2.3 million in the year ended December 31, 2022.
The Company also raises capital as employees exercise stock options. Capital raised through the exercise of stock options was $1.5 million in the year ended December 31, 2024 and $950 thousand in the year ended December 31, 2023.
The following table shows the composition of the loan portfolio of the Company by type of loan and type of borrower, on the dates indicated: Loan Portfolio At December 31, 2023 2022 2021 2020 2019 (In thousands) Commercial $ 136,550 $ 169,617 $ 233,090 $ 394,806 $ 222,085 Commercial real estate 487,523 491,107 535,261 564,300 578,758 Construction 5,063 3,088 48 129 1,618 Residential real estate 9,935 13,834 18,133 23,471 32,748 Consumer installment and other 227,531 280,842 281,594 273,537 291,455 Total loans $ 866,602 $ 958,488 $ 1,068,126 $ 1,256,243 $ 1,126,664 The following table shows the maturity distribution of loans at December 31, 2023.
The following table shows the composition of the loan portfolio of the Company by type of loan and type of borrower, on the dates indicated: Loan Portfolio At December 31, 2024 2023 2022 2021 2020 (In thousands) Commercial $ 127,276 $ 136,550 $ 169,617 $ 233,090 $ 394,806 Commercial real estate 507,900 487,523 491,107 535,261 564,300 Construction 5,064 5,063 3,088 48 129 Residential real estate 8,274 9,935 13,834 18,133 23,471 Consumer installment and other 171,786 227,531 280,842 281,594 273,537 Total loans $ 820,300 $ 866,602 $ 958,488 $ 1,068,126 $ 1,256,243 The following table shows the maturity distribution of loans at December 31, 2024.
Management manages the investment securities portfolio in response to anticipated changes in interest rates, and changes in deposit and loan volumes. The carrying value of the Company’s investment securities portfolio was $4.9 billion at December 31, 2023 and $5.2 billion at December 31, 2022.
The Company had no marketable equity securities at December 31, 2024 and December 31, 2023. Management manages the investment securities portfolio in response to anticipated changes in interest rates, and changes in deposit and loan volumes. The carrying value of the Company’s investment securities portfolio was $4.2 billion at December 31, 2024 and $4.9 billion at December 31, 2023.
In the ordinary course of business, the Company pledges debt securities as collateral for certain depository customers; at December 31, 2023, the Company had pledged $708,439 thousand in debt securities for depository customers.
In the ordinary course of business, the Company pledges debt securities as collateral for certain depository customers; at December 31, 2024, the Company had pledged $726,784 thousand in debt securities for depository customers.
Average balances of higher costing time deposits declined 24% to $116 million from 2021 to 2023. The Company’s average balances of checking and savings accounts represented 98% of average balances of total deposits in 2023, 98% in 2022 and 97% in 2021. Total time deposits were $97 million and $131 million at December 31, 2023 and December 31, 2022, respectively.
Average balances of higher costing time deposits declined 35% to $91 million from 2022 to 2024. The Company’s average balances of checking and savings accounts represented 98% of average balances of total deposits in 2024, 2023 and 2022. Total time deposits were $82 million and $97 million at December 31, 2024 and December 31, 2023, respectively.
At and For the Years Ended December 31, 2023 2022 2021 2020 2019 ($ in thousands) Analysis of the Allowance for Credit Losses Balance, end of prior period $ 20,284 $ 23,514 $ 23,854 $ 19,484 $ 21,351 Adoption of ASU 2016-13 - - - 2,017 - Balance, beginning of period 20,284 23,514 23,854 21,501 21,351 Provision for (reversal of) credit losses on loans (1,150 ) 6 2 4,307 - Loans charged off: Commercial (410 ) (20 ) (56 ) (236 ) (97 ) Commercial real estate (45 ) - - - - Consumer and other installment (7,499 ) (6,205 ) (3,192 ) (3,963 ) (4,473 ) Total chargeoffs (7,954 ) (6,225 ) (3,248 ) (4,199 ) (4,570 ) Recoveries of loans previously charged off: Commercial 2,359 376 228 351 768 Commercial real estate 71 62 743 49 196 Consumer and other installment 3,257 2,551 1,935 1,845 1,739 Total recoveries 5,687 2,989 2,906 2,245 2,703 Net loan losses (2,267 ) (3,236 ) (342 ) (1,954 ) (1,867 ) Balance, end of period $ 16,867 $ 20,284 $ 23,514 $ 23,854 $ 19,484 Net loan losses as a percentage of average loans 0.25 % 0.32 % 0.03 % 0.16 % 0.16 % Selected financial data: (at period end) Loans $ 866,602 $ 958,488 $ 1,068,126 $ 1,256,243 $ 1,126,664 Nonaccrual loans 403 146 692 4,329 4,440 Allowance for credit losses as a percentage of loans 1.95 % 2.12 % 2.20 % 1.90 % 1.73 % Nonaccrual loans as a percentage of loans 0.05 % 0.02 % 0.06 % 0.34 % 0.39 % Allowance for credit losses to nonaccrual loans 4185.36 % 13893.15 % 3397.98 % 551.03 % 438.83 % The following table summarizes net (chargeoffs) recoveries and the ratio of net charge-offs (recoveries) to average loans for the periods indicated: For the Year Ended December 31, 2023 2022 2021 As a percentage As a percentage As a percentage Average of Net chargeoffs Average of Net chargeoffs Average of Net chargeoffs Net (chargeoffs) Loan (recoveries) Net (chargeoffs) Loan (recoveries) Net (chargeoffs) Loan (recoveries) Recoveries Balances to Average loans Recoveries Balances to Average loans Recoveries Balances to Average loans ($ in thousands) Commercial $ 1,949 $ 149,137 (1.31 )% $ 356 $ 191,805 (0.19 )% $ 172 $ 349,882 (0.05 )% Commercial real estate 26 492,183 (0.01 )% 62 504,713 (0.01 )% 743 546,750 (0.14 )% Construction - 4,362 - % - 1,676 - % - 98 - % Residential real estate - 12,080 - % - 15,694 - % - 20,337 - % Consumer and other installment (4,242 ) 254,554 1.67 % (3,654 ) 284,076 1.29 % (1,257 ) 278,067 0.45 % Total $ (2,267 ) $ 912,316 0.25 % $ (3,236 ) $ 997,964 0.32 % $ (342 ) $ 1,195,135 0.03 % The Company's allowance for credit losses on loans is maintained at a level considered adequate to provide for expected losses based on historical loss rates adjusted for current and expected conditions over a forecast period.
At and For the Years Ended December 31, 2024 2023 2022 2021 2020 ($ in thousands) Analysis of the Allowance for Credit Losses Balance, end of prior period $ 16,867 $ 20,284 $ 23,514 $ 23,854 $ 19,484 Adoption of ASU 2016-13 - - - - 2,017 Balance, beginning of period 16,867 20,284 23,514 23,854 21,501 Provision for (reversal of) credit losses on loans 300 (1,150 ) 6 2 4,307 Loans charged off: Commercial (283 ) (410 ) (20 ) (56 ) (236 ) Commercial real estate - (45 ) - - - Consumer and other installment (6,391 ) (7,499 ) (6,205 ) (3,192 ) (3,963 ) Total chargeoffs (6,674 ) (7,954 ) (6,225 ) (3,248 ) (4,199 ) Recoveries of loans previously charged off: Commercial 124 2,359 376 228 351 Commercial real estate 204 71 62 743 49 Consumer and other installment 3,959 3,257 2,551 1,935 1,845 Total recoveries 4,287 5,687 2,989 2,906 2,245 Net loan losses (2,387 ) (2,267 ) (3,236 ) (342 ) (1,954 ) Balance, end of period $ 14,780 $ 16,867 $ 20,284 $ 23,514 $ 23,854 Net loan losses as a percentage of average loans (0.29 )% (0.25 )% (0.32 )% (0.03 )% (0.16 )% Selected financial data: (at period end) Loans $ 820,300 $ 866,602 $ 958,488 $ 1,068,126 $ 1,256,243 Nonaccrual loans 201 403 146 692 4,329 Allowance for credit losses as a percentage of loans 1.80 % 1.95 % 2.12 % 2.20 % 1.90 % Nonaccrual loans as a percentage of loans 0.02 % 0.05 % 0.02 % 0.06 % 0.34 % Allowance for credit losses to nonaccrual loans 7353.23 % 4185.36 % 13893.15 % 3397.98 % 551.03 % The following table summarizes net (chargeoffs) recoveries and the ratio of net (charge-offs) recoveries to average loans for the periods indicated: For the Year Ended December 31, 2024 2023 2022 As a percentage As a percentage As a percentage Average of Net (chargeoffs) Average of Net (chargeoffs) Average of Net (chargeoffs) Net (chargeoffs) Loan recoveries Net (chargeoffs) Loan recoveries Net (chargeoffs) Loan recoveries Recoveries Balances to Average loans Recoveries Balances to Average loans Recoveries Balances to Average loans ($ in thousands) Commercial $ (159 ) $ 128,505 (0.12 )% $ 1,949 $ 149,137 1.31 % $ 356 $ 191,805 0.19 % Commercial real estate 204 493,282 0.04 % 26 492,183 0.01 % 62 504,713 0.01 % Construction - 5,064 - % - 4,362 - % - 1,676 - % Residential real estate - 9,197 - % - 12,080 - % - 15,694 - % Consumer and other installment (2,432 ) 200,088 (1.22 )% (4,242 ) 254,554 (1.67 )% (3,654 ) 284,076 (1.29 )% Total $ (2,387 ) $ 836,136 (0.29 )% $ (2,267 ) $ 912,316 (0.25 )% $ (3,236 ) $ 997,964 (0.32 )% The Company's allowance for credit losses on loans is maintained at a level considered adequate to provide for expected losses based on historical loss rates adjusted for current and expected conditions over a forecast period.
Other noninterest expense increased in 2023 compared with 2022 primarily due to higher FDIC insurance assessments for all insured depository institutions and losses on unauthorized transactions of customer debit and ATM cards. Professional fees decreased in 2023 compared with 2022 primarily due to lower legal fees. Noninterest expense in 2022 increased $1.6 million compared with 2021.
Other noninterest expense increased in 2023 compared with 2022 primarily due to higher FDIC insurance assessments for all insured depository institutions and losses on unauthorized transactions of customer debit and ATM cards.
The Company repurchased and retired 274 thousand shares valued at $14 million in the year ended December 31, 2023 and 3 thousand shares valued at $218 thousand in the year ended December 31, 2022. The Company's primary capital resource is shareholders' equity, which was $773 million at December 31, 2023 compared with $602 million at December 31, 2022.
The Company retired 4 thousand shares valued at $210 thousand in the year ended December 31, 2024 and 274 thousand shares valued at $14 million in the year ended December 31, 2023. The Company's primary capital resource is shareholders' equity, which was $890 million at December 31, 2024 compared with $773 million at December 31, 2023.
At December 31, 2023, the Company had $190,314 thousand in cash balances. During the twelve months ending December 31, 2024, the Company expects to receive $265,000 thousand in principal payments from its debt securities.
At December 31, 2024, the Company had $601,494 thousand in cash balances. During the twelve months ending December 31, 2025, the Company expects to receive $309,000 thousand in principal payments from its debt securities.
The following table summarizes the Company’s average daily amount of deposits and the rates paid for the periods indicated: Deposit Distribution and Average Rates Paid For the Years Ended December 31, 2023 2022 2021 Average Balance Percentage of Total Deposits Rate Average Balance Percentage of Total Deposits Rate Average Balance Percentage of Total Deposits Rate ($ In thousands) Noninterest-bearing demand $ 2,748,544 47.5 % - % $ 3,018,350 47.0 % - % $ 2,897,244 47.5 % - % Interest bearing: Transaction 1,156,684 20.0 % 0.04 % 1,289,956 20.1 % 0.03 % 1,208,269 19.8 % 0.03 % Savings 1,766,225 30.5 % 0.17 % 1,967,902 30.7 % 0.06 % 1,842,590 30.2 % 0.06 % Time less than $100 thousand 67,832 1.2 % 0.30 % 77,007 1.2 % 0.23 % 83,580 1.4 % 0.20 % Time $100 thousand or more 48,076 0.8 % 0.24 % 62,411 1.0 % 0.25 % 69,165 1.1 % 0.38 % Total (1) $ 5,787,361 100.0 % 0.12 % $ 6,415,626 100.0 % 0.05 % $ 6,100,848 100.0 % 0.06 % (1) The rates for total deposits were calculated using the average balances of interest-bearing deposits. -47- The Company’s strategy includes building the value of its deposit base by building balances of lower-costing deposits and avoiding reliance on higher-costing time deposits.
The following table summarizes the Company’s average daily amount of deposits and the rates paid for the periods indicated: Deposit Distribution and Average Rates Paid For the Years Ended December 31, 2024 2023 2022 Average Balance Percentage of Total Deposits Rate Average Balance Percentage of Total Deposits Rate Average Balance Percentage of Total Deposits Rate ($ In thousands) Noninterest-bearing demand $ 2,445,945 47.3 % - % $ 2,748,544 47.5 % - % $ 3,018,350 47.0 % - % Interest bearing: Transaction 977,912 18.9 % 0.03 % 1,156,684 20.0 % 0.04 % 1,289,956 20.1 % 0.03 % Savings 1,660,227 32.1 % 0.63 % 1,766,225 30.5 % 0.17 % 1,967,902 30.7 % 0.06 % Time less than $100 thousand 57,064 1.1 % 0.17 % 67,832 1.2 % 0.30 % 77,007 1.2 % 0.23 % Time $100 thousand or more 33,794 0.6 % 0.55 % 48,076 0.8 % 0.24 % 62,411 1.0 % 0.25 % Total (1) $ 5,174,942 100.0 % 0.40 % $ 5,787,361 100.0 % 0.12 % $ 6,415,626 100.0 % 0.05 % (1) The rates for total deposits were calculated using the average balances of interest-bearing deposits. -46- The Company’s strategy includes building the value of its deposit base by building balances of lower-costing deposits and avoiding reliance on higher-costing time deposits.
Asset/Liability and Market Risk Management Asset/liability management involves the evaluation, monitoring and management of interest rate risk, market risk, liquidity and funding. The fundamental objective of the Company's management of assets and liabilities is to maximize its economic value while maintaining adequate liquidity and a conservative level of interest rate risk.
The fundamental objective of the Company's management of assets and liabilities is to maximize its economic value while maintaining adequate liquidity and a conservative level of interest rate risk. Interest Rate Risk Interest rate risk is a significant market risk affecting the Company.
At December 31, 2023, Management’s most recent measurements of estimated changes in net interest income were: Dynamic simulation (balance sheet composition changes): Assumed change in interest rates over 1 year -2.00 % -1.00 % 0.00 % +1.00 % +2.00 % First year change in net interest income -2.20 % -0.40 % -0.80 % +1.80 % +3.20 % Static simulation (balance sheet composition unchanged): Assumed immediate change in interest rates -2.00 % -1.00 % 0.00 % +1.00 % +2.00 % First year change in net interest income -11.50 % -5.60 % 0.00 % +5.70 % +11.00 % -43- Simulation estimates depend on, and will change with, the size and mix of the actual and projected composition of financial instruments at the time of each simulation.
At December 31, 2023, Management’s most recent measurements of estimated changes in net interest income were: Dynamic simulation (balance sheet composition changes): Assumed change in interest rates over 1 year -2.00% -1.00% 0.00% +1.00% +2.00% First year change in net interest income -7.29% -1.76% -0.40% +2.55% +4.87% Static simulation (balance sheet composition unchanged): Assumed immediate change in interest rates -2.00% -1.00% 0.00% +1.00% +2.00% First year change in net interest income -14.60% -7.30% 0.00% +6.60% +13.30% Simulation estimates depend on, and will change with, the size and mix of the actual and projected composition of financial instruments at the time of each simulation.
Professional fees decreased in 2022 compared with 2021 due to lower legal fees. -30- Provision for Income Tax The Company’s income tax provision (FTE) was $61.4 million in 2023 compared with $45.5 million in 2022 and $33.2 million in 2021.
Professional fees decreased in 2023 compared with 2022 primarily due to lower legal fees. -30- Provision for Income Tax The Company’s income tax provision (FTE) was $51.7 million in 2024 compared with $61.4 million in 2023 and $45.5 million in 2022. The effective tax rates (FTE) were 27.2% in 2024 compared with 27.5% in 2023 and 27.2% in 2022.
At December 31, 2023, estimated federally uninsured deposits and time deposits were $2,544 million and $4 million, respectively.
At December 31, 2024, estimated federally uninsured total deposits and time deposits were $2,491 million and $4 million, respectively.
Noninterest Expense Components of Noninterest Expense For the Years Ended December 31, 2023 2022 2021 (In thousands) Salaries and related benefits $ 47,871 $ 46,125 $ 48,011 Occupancy and equipment 20,520 19,884 19,139 Outsourced data processing services 9,846 9,684 9,601 Limited partnership operating losses 5,754 5,724 2,620 Professional fees 1,751 2,628 3,253 Courier service 2,652 2,614 2,177 Other noninterest expense 14,822 12,702 13,005 Total Noninterest Expense $ 103,216 $ 99,361 $ 97,806 Noninterest expense in 2023 increased $3.9 million compared with 2022.
Noninterest Expense Components of Noninterest Expense For the Years Ended December 31, 2024 2023 2022 (In thousands) Salaries and related benefits $ 50,292 $ 47,871 $ 46,125 Occupancy and equipment 20,673 20,520 19,884 Outsourced data processing services 10,271 9,846 9,684 Limited partnership operating losses 5,185 5,754 5,724 Courier service 2,709 2,652 2,614 Professional fees 1,470 1,751 2,628 Other noninterest expense 13,791 14,822 12,702 Total Noninterest Expense $ 104,391 $ 103,216 $ 99,361 Noninterest expense in 2024 increased $1.2 million compared with 2023.
During the year ended December 31, 2023, the Company’s average borrowings from the Federal Reserve Bank and other correspondent banks were $-0- thousand, respectively, and at December 31, 2023, the Company’s borrowings from the Federal Reserve Bank and other correspondent banks were $-0- thousand.
During the year ended December 31, 2024, the Company’s average borrowings from the Federal Reserve Bank and other correspondent banks were $107,364 thousand and $-0- thousand, respectively, and at December 31, 2024, the Company had no borrowings from the Federal Reserve Bank or other correspondent banks.
WESTAMERICA BANCORPORATION FINANCIAL SUMMARY For the Years Ended December 31, 2023 2022 2021 (In thousands, except per share data and ratios) Interest and loan fee income $ 284,013 $ 221,756 $ 173,443 Interest expense 3,890 1,925 1,955 Net interest and loan fee income 280,123 219,831 171,488 Reversal of provision for credit losses (1,150 ) - - Noninterest income: Life insurance gains 279 930 - Securities (losses) gains (125 ) - 34 Other noninterest income 43,368 44,191 43,311 Total noninterest income 43,522 45,121 43,345 Noninterest expense 103,216 99,361 97,806 Income before income taxes 221,579 165,591 117,027 Income tax provision 59,811 43,557 30,518 Net income $ 161,768 $ 122,034 $ 86,509 Average common shares outstanding 26,703 26,895 26,855 Average diluted common shares outstanding 26,706 26,907 26,870 Common shares outstanding at December 31, 26,671 26,913 26,866 Per common share: Basic earnings $ 6.06 $ 4.54 $ 3.22 Diluted earnings 6.06 4.54 3.22 Book value at December 31, 28.98 22.37 30.79 Financial ratios: Return on assets 2.35 % 1.65 % 1.23 % Return on common equity 18.08 % 15.21 % 11.52 % Net interest margin (FTE) (1) 4.37 % 3.17 % 2.62 % Net loan losses to average loans 0.25 % 0.32 % 0.03 % Efficiency ratio (2) 31.7 % 37.2 % 45.0 % Equity to assets 12.14 % 8.66 % 11.09 % Period end balances: Assets $ 6,364,592 $ 6,950,317 $ 7,461,026 Loans 866,602 958,488 1,068,126 Allowance for credit losses 16,867 20,284 23,514 Investment securities 4,878,198 5,247,657 4,945,258 Deposits 5,474,267 6,225,290 6,413,956 Identifiable intangible assets and goodwill 122,020 122,256 122,508 Short-term borrowed funds 58,162 57,792 146,246 Shareholders' equity 772,894 602,110 827,102 Capital ratios at period end: Total risk based capital 19.15 % 15.64 % 15.47 % Tangible equity to tangible assets 10.43 % 7.03 % 9.60 % Dividends paid per common share $ 1.72 $ 1.68 $ 1.65 Common dividend payout ratio 28 % 37 % 51 % (1) Yields on securities and certain loans have been adjusted upward to a "fully taxable equivalent" ("FTE") basis in order to reflect the effect of income which is exempt from federal income taxation at the current statutory tax rate.
WESTAMERICA BANCORPORATION FINANCIAL SUMMARY For the Years Ended December 31, 2024 2023 2022 (In thousands, except per share data and ratios) Interest and loan fee income $ 268,014 $ 284,013 $ 221,756 Interest expense 17,419 3,890 1,925 Net interest and loan fee income 250,595 280,123 219,831 Provision (Reversal of provision) for credit losses 300 (1,150 ) - Noninterest income: Life insurance gains 202 279 930 Securities losses - (125 ) - Other noninterest income 42,953 43,368 44,191 Total noninterest income 43,155 43,522 45,121 Noninterest expense 104,391 103,216 99,361 Income before income taxes 189,059 221,579 165,591 Income tax provision 50,423 59,811 43,557 Net income $ 138,636 $ 161,768 $ 122,034 Average common shares outstanding 26,685 26,703 26,895 Average diluted common shares outstanding 26,686 26,706 26,907 Common shares outstanding at December 31, 26,708 26,671 26,913 Per common share: Basic earnings $ 5.20 $ 6.06 $ 4.54 Diluted earnings 5.20 6.06 4.54 Book value at December 31, 33.32 28.98 22.37 Financial ratios: Return on assets 2.15 % 2.35 % 1.65 % Return on common equity 13.82 % 18.08 % 15.21 % Net interest margin (FTE) (1) 4.14 % 4.37 % 3.17 % Net loan losses to average loans (0.29 )% (0.25 )% (0.32 )% Efficiency ratio (2) 35.4 % 31.7 % 37.2 % Equity to assets 14.65 % 12.14 % 8.66 % Period end balances: Assets $ 6,076,274 $ 6,364,592 $ 6,950,317 Loans 820,300 866,602 958,488 Allowance for credit losses 14,780 16,867 20,284 Investment securities 4,240,445 4,878,198 5,247,657 Deposits 5,011,850 5,474,267 6,225,290 Identifiable intangible assets and goodwill 121,798 122,020 122,256 Short-term borrowed funds 120,322 58,162 57,792 Shareholders' equity 889,957 772,894 602,110 Capital ratios at period end: Total risk based capital 22.82 % 19.15 % 15.64 % Tangible equity to tangible assets 12.90 % 10.43 % 7.03 % Dividends paid per common share $ 1.76 $ 1.72 $ 1.68 Common dividend payout ratio 34 % 28 % 37 % (1) Yields on securities and certain loans have been adjusted upward to a "fully taxable equivalent" ("FTE") basis in order to reflect the effect of income which is exempt from federal income taxation at the current statutory tax rate.
At December 31, 2023 2022 2021 2020 2019 Allocation of the Allowance Balance Loans as Percent of Total Loans Allocation of the Allowance Balance Loans as Percent of Total Loans Allocation of the Allowance Balance Loans as Percent of Total Loans Allocation of the Allowance Balance Loans as Percent of Total Loans Allocation of the Allowance Balance Loans as Percent of Total Loans ($ in thousands) Commercial $ 4,216 16 % $ 6,138 18 % $ 6,966 22 % $ 9,205 31 % $ 4,959 20 % Commercial real estate 5,925 56 % 5,888 51 % 6,529 50 % 5,660 45 % 4,064 51 % Construction 245 1 % 150 - % 2 - % 6 - % 109 - % Residential real estate 26 1 % 32 2 % 45 2 % 47 2 % 206 3 % Consumer installment and other 6,455 26 % 8,076 29 % 9,972 26 % 8,936 22 % 6,445 26 % Unallocated portion - - % - - % - - % - - % 3,701 - % Total $ 16,867 100 % $ 20,284 100 % $ 23,514 100 % $ 23,854 100 % $ 19,484 100 % Allowance for Credit Losses For the Year Ended December 31, 2023 Consumer Commercial Residential Installment Commercial Real Estate Construction Real Estate and Other Total (In thousands) Allowance for credit losses: Balance at beginning of period $ 6,138 $ 5,888 $ 150 $ 32 $ 8,076 $ 20,284 (Reversal) provision (3,871 ) 11 95 (6 ) 2,621 (1,150 ) Chargeoffs (410 ) (45 ) - - (7,499 ) (7,954 ) Recoveries 2,359 71 - - 3,257 5,687 Total allowance for credit losses $ 4,216 $ 5,925 $ 245 $ 26 $ 6,455 $ 16,867 Management considers the $16.9 million allowance for credit losses on loans to be adequate as a reserve against current expected credit losses in the loan portfolio as of December 31, 2023.
At December 31, 2024 2023 2022 2021 2020 Allocation of the Allowance Balance Loans as Percent of Total Loans Allocation of the Allowance Balance Loans as Percent of Total Loans Allocation of the Allowance Balance Loans as Percent of Total Loans Allocation of the Allowance Balance Loans as Percent of Total Loans Allocation of the Allowance Balance Loans as Percent of Total Loans ($ in thousands) Commercial $ 4,197 15 % $ 4,216 16 % $ 6,138 18 % $ 6,966 22 % $ 9,205 31 % Commercial real estate 6,034 62 % 5,925 56 % 5,888 51 % 6,529 50 % 5,660 45 % Construction 247 1 % 245 1 % 150 - % 2 - % 6 - % Residential real estate 22 1 % 26 1 % 32 2 % 45 2 % 47 2 % Consumer installment and other 4,280 21 % 6,455 26 % 8,076 29 % 9,972 26 % 8,936 22 % Total $ 14,780 100 % $ 16,867 100 % $ 20,284 100 % $ 23,514 100 % $ 23,854 100 % Allowance for Credit Losses For the Year Ended December 31, 2024 Consumer Commercial Residential Installment Commercial Real Estate Construction Real Estate and Other Total (In thousands) Allowance for credit losses: Balance at beginning of period $ 4,216 $ 5,925 $ 245 $ 26 $ 6,455 $ 16,867 Provision (reversal) 140 (95 ) 2 (4 ) 257 300 Chargeoffs (283 ) - - - (6,391 ) (6,674 ) Recoveries 124 204 - - 3,959 4,287 Total allowance for credit losses $ 4,197 $ 6,034 $ 247 $ 22 $ 4,280 $ 14,780 Management considers the $14.8 million allowance for credit losses on loans to be adequate as a reserve against current expected credit losses in the loan portfolio as of December 31, 2024.
Government entities - - 119 Obligations of states and political subdivisions 71,283 82,004 93,920 Corporate securities 1,909,548 2,099,955 2,746,735 Collateralized loan obligations 1,484,597 1,572,883 1,386,355 Total debt securities available for sale $ 3,999,801 $ 4,331,743 $ 4,638,855 The following table sets forth the relative maturities and contractual yields of the Company’s debt securities available for sale (stated at fair value) at December 31, 2023.
Treasury securities 4,955 - - Obligations of states and political subdivisions 62,186 71,283 82,004 Corporate securities 1,835,937 1,909,548 2,099,955 Collateralized loan obligations 982,589 1,484,597 1,572,883 Total debt securities available for sale $ 3,395,810 $ 3,999,801 $ 4,331,743 The following table sets forth the relative maturities and contractual yields of the Company’s debt securities available for sale (stated at fair value) at December 31, 2024.
The Company adopted the following new accounting guidance: FASB ASU 2022-02 , Financial Instruments - Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures , issued March 2022, eliminates the recognition and measurement guidance for troubled debt restructurings and requires enhanced disclosures about loan modifications for borrowers experiencing financial difficulty.
FASB ASU 2022-02 , Financial Instruments - Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures , issued March 2022, eliminates the recognition and measurement guidance for troubled debt restructurings and requires enhanced disclosures about loan modifications for borrowers experiencing financial difficulty. This ASU also requires enhanced disclosure for loans that have been charged off.
Financial Overview The Company reported net income of $161.8 million or $6.06 diluted earnings per common share (“EPS”) in 2023 compared with net income of $122.0 million or $4.54 EPS in 2022 and net income of $86.5 million or $3.22 EPS in 2021. 2023 results included a $1.2 million reversal of provision for credit losses, net of a $400 thousand provision for credit losses, a $279 thousand life insurance gain and a $492 thousand increase to reconcile the 2022 income tax provision to the filed 2022 tax returns. 2022 results included a $1.2 million reconciling payment from a payments network and a $930 thousand life insurance gain equivalent to combined EPS of $0.07. 2021 results included “make-whole” interest income on corporate bonds redeemed prior to maturity of $2.8 million.
Financial Overview The Company reported net income of $138.6 million or $5.20 diluted earnings per common share (“EPS”) in 2024 compared with net income of $161.8 million or $6.06 EPS in 2023 and net income of $122.0 million or $4.54 EPS in 2022. 2024 results included a $202 thousand life insurance gain and a $1.4 million gain on sale of other assets, equivalent to combined EPS of $0.04. 2023 results included a $1.2 million reversal of provision for credit losses, net of a $400 thousand provision for credit losses and a $279 thousand life insurance gain, equivalent to combined EPS of $0.04. 2022 results included a $1.2 million reconciling payment from a payments network and a $930 thousand life insurance gain equivalent to combined EPS of $0.07.
Time Deposits Maturity Distribution At December 31, 2023 (In thousands) 2024 $ 77,625 2025 10,606 2026 3,347 2027 2,526 2028 2,653 Thereafter 45 Total $ 96,802 Short-term Borrowings The following table sets forth the short-term borrowings of the Company: Short-Term Borrowings Distribution At December 31, 2023 2022 2021 (In thousands) Securities sold under agreements to repurchase the securities $ 58,162 $ 57,792 $ 146,246 Total short-term borrowings $ 58,162 $ 57,792 $ 146,246 Further detail of federal funds purchased and other borrowed funds is as follows: For the Years Ended December 31, 2023 2022 2021 ($ in thousands) Federal funds purchased balances and rates paid on outstanding amount: Average balance for the year $ - $ 1 $ 1 Maximum month-end balance during the year - - - Average interest rate for the year - % 4.68 % 0.87 % Average interest rate at period end - % - % - % Securities sold under agreements to repurchase the securities balances and rates paid on outstanding amount: Average balance for the year $ 89,298 $ 109,282 $ 114,266 Maximum month-end balance during the year 138,005 257,560 146,552 Average interest rate for the year 0.13 % 0.07 % 0.07 % Average interest rate at period end 0.31 % 0.06 % 0.07 % PPPLF balances and rates paid on outstanding amount: Average balance for the year $ - $ - $ 53 Maximum month-end balance during the year - - - Average interest rate for the year - % - % 0.35 % Average interest rate at period end - % - % - % -48- Financial Ratios The following table shows key financial ratios for the periods indicated: At and For the Years Ended December 31, 2023 2022 2021 Return on average total assets 2.35 % 1.65 % 1.23 % Return on average common shareholders' equity 18.08 % 15.21 % 11.52 % Average shareholders' equity as a percentage of: Average total assets 13.02 % 10.83 % 10.66 % Average total loans 98.06 % 80.41 % 62.81 % Average total deposits 15.46 % 12.51 % 12.30 % Common dividend payout ratio 28 % 37 % 51 % [The remainder of this page intentionally left blank] -49-
Time Deposits Maturity Distribution At December 31, 2024 (In thousands) 2025 $ 65,470 2026 7,800 2027 3,639 2028 2,603 2029 2,710 Thereafter 16 Total $ 82,238 Short-term Borrowings The following table sets forth the short-term borrowings of the Company: Short-Term Borrowings Distribution At December 31, 2024 2023 2022 (In thousands) Securities sold under agreements to repurchase the securities $ 120,322 $ 58,162 $ 57,792 Total short-term borrowings $ 120,322 $ 58,162 $ 57,792 Further detail of federal funds purchased and other borrowed funds is as follows: For the Years Ended December 31, 2024 2023 2022 ($ in thousands) Federal funds purchased balances and rates paid on outstanding amount: Average balance for the year $ - $ - $ 1 Maximum month-end balance during the year - - - Average interest rate for the year - % - % 4.68 % Average interest rate at period end - % - % - % Securities sold under agreements to repurchase the securities balances and rates paid on outstanding amount: Average balance for the year $ 89,381 $ 89,298 $ 109,282 Maximum month-end balance during the year 132,487 138,005 257,560 Average interest rate for the year 0.74 % 0.13 % 0.07 % Average interest rate at period end 0.62 % 0.31 % 0.06 % Bank Term Funding Program borrowings balances and rates paid on outstanding amount: Average balance for the year $ 107,364 $ - $ - Maximum month-end balance during the year 200,000 - - Average interest rate for the year 5.40 % - % - % Average interest rate at period end - % - % - % -47- Financial Ratios The following table shows key financial ratios for the periods indicated: At and For the Years Ended December 31, 2024 2023 2022 Return on average total assets 2.15 % 2.35 % 1.65 % Return on average common shareholders' equity 13.82 % 18.08 % 15.21 % Average shareholders' equity as a percentage of: Average total assets 15.57 % 13.02 % 10.83 % Average total loans 119.99 % 98.06 % 80.41 % Average total deposits 19.39 % 15.46 % 12.51 % Common dividend payout ratio 34 % 28 % 37 % [The remainder of this page intentionally left blank] -48-
Loan volumes have declined due to payoffs and problem loan workout activities, particularly with purchased loans, and reduced volumes of loan originations. The Company did not take an aggressive posture relative to loan portfolio growth during the post-recession period of historically low interest rates. Management increased investment securities as loan volumes declined.
The Company did not take an aggressive posture relative to loan portfolio growth during the post-recession period of historically low interest rates. Management increased investment securities as loan volumes declined.
This ASU also requires enhanced disclosure for loans that have been charged off. The ASU became effective January 1, 2023 under a prospective approach. The Company adopted the provisions to remove the recognition and measurement guidance for troubled debt restructurings and/or modify relevant disclosures in the “Loans” note to the consolidated financial statements.
The ASU became effective January 1, 2023 under a prospective approach. The Company adopted the provisions to remove the recognition and measurement guidance for troubled debt restructurings and/or modify relevant disclosures in the “Loans” note to the consolidated financial statements. The requirement to include additional disclosures was adopted by the Company January 1, 2023.
Noninterest bearing deposits represented 47% of average deposits in 2023 and 2022, while higher-cost time deposits represented 2% for both periods. Average balances of time deposits in 2023 declined $24 million from 2022. Average balances of checking and saving deposits accounted for 98.0% of average total deposits in 2023 compared with 97.8% in 2022.
Noninterest bearing deposits represented 47% of average deposits in 2024 and 2023, respectively. Average balances of time deposits in 2024 declined $25 million from 2023. Average balances of checking and saving deposits accounted for 98.2% of average total deposits in 2024 compared with 98.0% in 2023.
Interest Rate Risk Interest rate risk is a significant market risk affecting the Company. Many factors affect the Company’s exposure to interest rates, such as general economic and financial conditions, customer preferences, historical pricing relationships, and re-pricing characteristics of financial instruments. Financial instruments may mature or re-price at different times.
Many factors affect the Company’s exposure to interest rates, such as general economic and financial conditions, customer preferences, historical pricing relationships, and re-pricing characteristics of financial instruments. Financial instruments may mature or re-price at different times. Financial instruments may re-price at the same time but by different amounts. Short-term and long-term market interest rates may change by different amounts.
For further information regarding credit risk, net credit losses and the allowance for credit losses, see the “Loan Portfolio Credit Risk” and “Allowance for Credit Losses” sections of this Report. [The remainder of this page intentionally left blank] -29- Noninterest Income Components of Noninterest Income For the Years Ended December 31, 2023 2022 2021 (In thousands) Service charges on deposit accounts $ 14,169 $ 14,490 $ 13,697 Merchant processing services 11,280 11,623 11,998 Debit card fees 7,185 7,879 6,859 Trust fees 3,122 3,216 3,311 ATM processing fees 2,618 2,160 2,280 Other service fees 1,765 1,808 1,884 Financial services commissions 336 417 356 Life insurance gains 279 930 - Securities (losses) gains (125 ) - 34 Other noninterest income 2,893 2,598 2,926 Total Noninterest Income $ 43,522 $ 45,121 $ 43,345 Noninterest income in 2023 decreased $1.6 million compared with 2022 primarily due to lower gains on life insurance and because debit card fees in 2022 included a $1.2 million reconciling payment from a payments network.
For further information regarding credit risk, net credit losses and the allowance for credit losses, see the “Loan Portfolio Credit Risk” and “Allowance for Credit Losses” sections of this Report. [The remainder of this page intentionally left blank] -29- Noninterest Income Components of Noninterest Income For the Years Ended December 31, 2024 2023 2022 (In thousands) Service charges on deposit accounts $ 14,025 $ 14,169 $ 14,490 Merchant processing services 10,449 11,280 11,623 Debit card fees 6,853 7,185 7,879 Trust fees 3,318 3,122 3,216 ATM processing fees 2,170 2,618 2,160 Other service fees 1,770 1,765 1,808 Life insurance gains 202 279 930 Securities losses - (125 ) - Other noninterest income 4,368 3,229 3,015 Total Noninterest Income $ 43,155 $ 43,522 $ 45,121 Noninterest income in 2024 remained at the same level compared with 2023 primarily due to a $1.4 million gain on sale of other assets, offset by lower income from merchant processing services, ATM processing fees and debit card fees.
Changes in value of preferred or common stock holdings are recognized in the Company's income statement. Fluctuations in the Company's common stock price can impact the Company's financial results in several ways.
Market Risk - Equity Markets Equity price risk can affect the Company. Preferred or common stock holdings, as permitted by banking regulations, can fluctuate in value. Changes in value of preferred or common stock holdings are recognized in the Company's income statement. Fluctuations in the Company's common stock price can impact the Company's financial results in several ways.
ATM processing fee income increased in 2023 compared with 2022 primarily due to increased transaction volumes. Other noninterest income in 2023 included higher recoveries of interest and fees on previously charged off loans compared 2022.
Other noninterest income in 2023 included higher recoveries of interest and fees on previously charged off loans compared 2022.
No assurance can be given that additional increases in nonaccrual and delinquent loans will not occur in the future. -39- Allowance for Credit Losses The following table summarizes allowance for credit losses at the dates indicated: At December 31, 2023 2022 (In thousands) Allowance for credit losses on loans $ 16,867 $ 20,284 Allowance for credit losses on held to maturity debt securities 1 1 Total allowance for credit losses $ 16,868 $ 20,285 Allowance for unfunded credit commitments $ 201 $ 201 Allowance for Credit Losses on Debt Securities Held to Maturity Management segmented debt securities held to maturity, selected methods to estimate losses for each segment, and measured a loss estimate.
Allowance for Credit Losses The following table summarizes allowance for credit losses at the dates indicated: At December 31, 2024 2023 (In thousands) Allowance for credit losses on loans $ 14,780 $ 16,867 Allowance for credit losses on held to maturity debt securities 1 1 Total allowance for credit losses $ 14,781 $ 16,868 Allowance for unfunded credit commitments $ 201 $ 201 Allowance for Credit Losses on Debt Securities Held to Maturity Management segmented debt securities held to maturity, selected methods to estimate losses for each segment, and measured a loss estimate.
The Company makes automobile loans; changes in consumer demand, or governmental laws or policies, regarding gasoline, electric and hybrid vehicles are not considered to be material risks to the Company’s automobile lending practices.
The Company makes automobile loans; changes in consumer demand, or governmental laws or policies, regarding gasoline, electric and hybrid vehicles are not considered to be material risks to the Company’s automobile lending practices. The Company considers climate risk in its underwriting of corporate bonds, and avoids purchasing bonds of issuers, which, in Management’s judgement, have elevated climate risk.
For loans secured by real estate, the Bank requires title insurance to insure the status of its lien and each borrower is obligated to insure the real estate collateral, naming the Company as loss payee, in an amount sufficient to repay the principal amount outstanding in the event of a property casualty loss. -37- Consumer installment and other loans are predominantly comprised of indirect automobile loans with underwriting based on credit history and scores, personal income, debt service capacity, and collateral values.
For loans secured by real estate, the Bank requires title insurance to insure the status of its lien and each borrower is obligated to insure the real estate collateral, naming the Company as loss payee, in an amount sufficient to repay the principal amount outstanding in the event of a property casualty loss.
The extent of the impact on the Company’s results of operations, cash flow liquidity, and financial performance, as well as the Company’s ability to execute near- and long-term business strategies and initiatives, will depend on numerous evolving factors and future developments, which are uncertain and cannot be reasonably predicted.
The extent of the impact on the Company’s results of operations, liquidity, and financial performance, as well as the Company’s ability to execute near- and long-term business strategies and initiatives, will depend on numerous evolving factors and future developments, which are uncertain and cannot be reasonably predicted. -21- The Company presents its net interest margin and net interest income on a fully taxable equivalent (“FTE”) basis using the current statutory federal tax rate.
Net interest and loan fee income (FTE) increased $47.6 million in 2022 compared with 2021 due to higher average balances of investment securities (up $723 million) and higher yield on interest-earning assets (up 0.55%), partially offset by lower average balances of loans (down $197 million).
Net interest and loan fee income (FTE) increased $59.9 million in 2023 compared with 2022 due to higher yield on interest-earning assets (up 1.23%) and higher average balances of investment debt securities (up $31 million), partially offset by lower average balances of loans (down $86 million) and interest-bearing cash (down $486 million) and higher rate on interest-bearing liabilities (up 0.07%).

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