(Mark One) | ||
þ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
For the fiscal year ended December 31, | ||
or | ||
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
For the transition period from to |
California | 94-2156203 | |
(State of incorporation) | (I.R.S. Employer Identification Number) |
20032004 as reported on the Nasdaq National Market System, was approximately $1,376,138,000.$1,598,661,045.43. Shares of Common Stock held by each officer and director and by each person who owns 5% or more of the outstanding Common Stock have been excluded in that such persons may be deemed to be affiliates. This determination of affiliate status is not necessarily a conclusive determination for other purposes.3, 2004: 31,887,4298, 2005: 33,009,928 Shares22, 2004,28, 2005, are incorporated by reference in Items 10, 11, 12, 13 and 1314 of Part III to the extent described therein.
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Item 1. | Business |
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Westamerica Bancorporation | |
Corporate Secretary A-2M | |
Post Office Box 1200 | |
Suisun City, California 94585-1200 |
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Supervision and Regulation
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Regulation and Supervision of Bank Holding Companies |
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Regulation and Supervision of Banks |
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Capital Standards |
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Prompt Corrective Action and Other Enforcement Mechanisms |
Safety and Soundness Standards |
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6
Restrictions on Dividends and Other Distributions |
Premiums for Deposit Insurance and Assessments for Examinations |
Community Reinvestment Act and Fair Lending Developments
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Financial Privacy Legislation |
FRB,sFRB’s regulations.U.S. Patriot ActCustomer Information Security
U.S.A. PATRIOT Act |
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Sarbanes-Oxley Act of 2002
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Pending Legislation |
Certain pending
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According to information obtained through an independent market research firm, WAB was the eighth largest commercial banking company headquartered in California in terms of total assets in the third quarter of 2003. In the individual markets in which it has branch offices, WAB was the third largest financial institution. The share of individual markets within the overall market varies, with the most dominant continuing to be in the San Rafael area of Marin County where WAB ranked first in core deposits among federally-insured depository institutions.
Item 2. | Properties |
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Item 3. | Legal Proceedings |
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Item 4. | Submission of Matters to a Vote of Security Holders |
10 11 12 Report. 13 14 2002, respectively. 15 The following tables present information regarding the consolidated average assets, liabilities and shareholders’ equity, the amounts of interest income from average earning assets and the resulting yields, and the amount of interest expense paid on interest-bearing liabilities. Average loan balances include nonperforming loans. Interest income includes proceeds from loans on nonaccrual status only to the extent cash payments2003.PART IIItem 5. Market for Registrant’s Common Equity and Related Stockholders Matters and Issuer Purchases of Equity Securities High Low 2004: 2004: First quarter $ 51.63 $ 47.85 Second quarter 52.99 47.58 High Low Third quarter 55.80 49.04 Fourth quarter 61.05 54.43 2003: 2003: 2003: First quarter $ 41.94 $ 38.07 First quarter $ 41.94 $ 38.07 Second quarter $ 44.66 $ 39.24 Second quarter 44.66 39.24 Third quarter $ 42.67 $ 45.76 Third quarter 42.67 45.76 Fourth quarter $ 53.55 $ 44.45 Fourth quarter 53.55 44.45 2002: First quarter $ 42.95 $ 35.22 Second quarter $ 45.27 $ 38.70 Third quarter $ 42.65 $ 34.11 Fourth quarter $ 43.59 $ 35.46 2004,2005, there were approximately 8,9008,600 shareholders of record of the Company’s common stock.2003, $174.22004, $179.1 million was available for payment of dividends by the Company to its shareholders, under applicable laws and regulations.on October 28, 1999 and became effective on November 19, 1999.in 2004. The new amended plan is very similar in purpose and effect to the plan as it existed prior to this amendment, aimed at helping the Board of Directors to maximize shareholder value in the event of a change of control of the Company and otherwise resist actions that the Board considers likely to injure the Company or its shareholders. In addition to extending the maturity date of the plan to December 31, 2004, the other material changes included: (1) an increase in the exercise price to $75.00 per share; (2) a decrease in the redemption price of each Right to $.001; and (3) a reduction in the amount of securities required to be acquired for a person or entity to become an Acquiring Person, thus triggering the Rights, from 15% to 10%. (a) (b) (c) Number of Securities Remaining Available for Number of Securities Future Issuance under to be Issued upon Weighted-Average Equity Compensation Exercise of Exercise Price of Plans (Excluding Outstanding Options, Outstanding Options, Securities Reflected in Plan Category Warrants and Rights Warrants and Rights Column (a)) Equity compensation plans approved by security holders 3,058 $ 36 1,745* Equity compensation plans not approved by security holders 0 N/A 0 Total 3,058 $ 36 1,745 Item 5(d).* Equity CompensationThe Amended and Restated Stock Option Plan, InformationArticle III, provides that the number of shares reserved for Awards under the plan may increase on the first day of each fiscal year by an amount equal to the least of 1) 2% of the shares outstanding as of the last day of the prior fiscal year, 2) 675,000 shares, or 3) such lesser amount as determined by the Board.information required by this Item 5 of this Annual Report on Form 10-K from Regulation S-K, Item 201(d), is incorporated by reference fromtable below sets forth the information containedwith respect to purchases made by or on behalf of Westamerica Bancorporation or any “affiliated purchaser” (as defined in Rule 10b-18(a)(3) under the caption “Early Compensation Plan Information” on pages 16 and 17 of the Company’s definitive Proxy Statement for its 2003 Annual Meeting of Shareholders which was filed pursuant to Regulation 14A of the Securities Exchange Act of 1934.1934), of common stock during the quarter ended December 31, 2004 (in thousands, except per share data). (a) (b) (c) (d) Total Number of Total Shares Purchased Maximum Number of Number of Average Price as Part of Publicly Shares that May Yet Shares Paid per Announced Plans Be Purchased Under Period Purchased Share or Programs* the Plans or Programs October 1 through October 31 2 55.55 2 1,996 November 1 through November 30 108 59.77 108 1,888 December 1 through December 31 132 58.02 132 1,756 Total 242 58.80 242 1,756 * Includes 2 thousand, 5 thousand and 1 thousand shares purchased in October, November and December, respectively, by the Company in private transactions with the independent administrator of the Company’s Tax Deferred Savings/ Retirement Plan (ESOP). The Company includes the shares purchased in such transactions within the total number of shares authorized for purchase pursuant to the currently existing publicly announced program. Item 6. Selected Financial Data 20032004 has been derived from the Company’s Consolidated Financial Statements. This information should be read in conjunction with the Consolidated Financial Statements and related notes thereto included elsewhere herein. Year Ended December 31, Year Ended December 31 2003 2002 2001 2000 1999 2004 2003 2002 2001 2000 (In thousands, except per share data) (In thousands, except per share data) Interest income Interest income $ 223,493 $ 237,633 $ 257,056 $ 269,516 $ 257,656 Interest income $ 216,337 $ 223,493 $ 237,633 $ 257,056 $ 269,516 Interest expense Interest expense 27,197 39,182 68,887 88,614 78,456 Interest expense 21,106 27,197 39,182 68,887 88,614 Net interest income Net interest income 196,296 198,451 188,169 180,902 179,200 Net interest income 195,231 196,296 198,451 188,169 180,902 Provision for loan losses Provision for loan losses 3,300 3,600 3,600 3,675 4,780 Provision for loan losses 2,700 3,300 3,600 3,600 3,675 Noninterest income: Noninterest income: Noninterest income: Securities gains (impairment) 2,443 (4,278 ) 0 0 0 Securities (impairment) gains, net (5,011 ) 2,443 (4,278 ) 0 0 Loss on extinguishment of debt (2,166 ) 0 0 0 0 Loss on extinguishment of debt (2,204 ) (2,166 ) 0 0 0 Deposit services charges and other 42,639 40,829 42,655 41,130 40,174 Deposit service charges and other 45,798 42,639 40,829 42,655 41,130 Total noninterest income Total noninterest income 42,916 36,551 42,655 41,130 40,174 Total noninterest income 38,583 42,916 36,551 42,655 41,130 Noninterest expense Noninterest expense 101,703 103,323 102,651 100,198 100,133 Noninterest expense 98,751 101,703 103,323 102,651 100,198 Income before income taxes Income before income taxes 134,209 128,079 124,573 118,159 114,461 Income before income taxes 132,363 134,209 128,079 124,573 118,159 Provision for income taxes Provision for income taxes 39,146 40,941 40,294 38,380 38,373 Provision for income taxes 37,145 39,146 40,941 40,294 38,380 Net income Net income $ 95,063 $ 87,138 $ 84,279 $ 79,779 $ 76,088 Net income $ 95,218 $ 95,063 $ 87,138 $ 84,279 $ 79,779 Earnings per share: Earnings per share: Earnings per share: Basic $ 2.89 $ 2.59 $ 2.39 $ 2.19 $ 1.97 Basic $ 2.99 $ 2.89 $ 2.59 $ 2.39 $ 2.19 Diluted 2.85 2.55 2.36 2.16 1.94 Diluted 2.93 2.85 2.55 2.36 2.16 Per share: Per share: Per share: Dividends paid $ 1.00 $ 0.90 $ 0.82 $ 0.74 $ 0.66 Dividends paid $ 1.10 $ 1.00 $ 0.90 $ 0.82 $ 0.74 Book value at December 31 10.54 10.22 9.19 9.32 8.10 Book value at December 31 11.33 10.54 10.22 9.19 9.32 Average common shares outstanding Average common shares outstanding 32,849 33,686 35,213 36,410 38,588 Average common shares outstanding 31,821 32,849 33,686 35,213 36,410 Average diluted common shares outstanding Average diluted common shares outstanding 33,369 34,225 35,748 36,936 39,194 Average diluted common shares outstanding 32,461 33,369 34,225 35,748 36,936 Shares outstanding at December 31 Shares outstanding at December 31 32,287 33,411 34,220 36,251 37,125 Shares outstanding at December 31 31,640 32,287 33,411 34,220 36,251 Loans, net Loans, net $ 2,269,420 $ 2,440,411 $ 2,432,371 $ 2,429,880 $ 2,269,272 Loans, net $ 2,246,078 $ 2,269,420 $ 2,440,411 $ 2,432,371 $ 2,429,880 Investments Investments 1,949,288 1,386,833 1,158,139 1,149,310 1,219,491 Investments 2,192,542 1,949,288 1,386,833 1,158,139 1,149,310 Total assets Total assets 4,576,385 4,224,867 3,927,967 4,031,381 3,893,187 Total assets 4,737,268 4,576,385 4,224,867 3,927,967 4,031,381 Total deposits Total deposits 3,463,991 3,294,065 3,234,635 3,236,744 3,065,344 Total deposits 3,583,619 3,463,991 3,294,065 3,234,635 3,236,744 Short-term borrowed funds Short-term borrowed funds 590,646 349,736 271,911 386,942 462,345 Short-term borrowed funds 735,423 590,646 349,736 271,911 386,942 Federal Home Loan Bank advances Federal Home Loan Bank advances 105,000 170,000 40,000 0 0 Federal Home Loan Bank advances 0 105,000 170,000 40,000 0 Debt financing and notes payable Debt financing and notes payable 24,643 24,607 27,821 31,036 41,500 Debt financing and notes payable 21,429 24,643 24,607 27,821 31,036 Intangible assets Intangible assets 22,433 23,176 19,013 20,376 10,200 Intangible assets 21,890 22,433 23,176 19,013 20,376 Shareholders’ equity Shareholders’ equity 340,371 341,499 314,359 337,747 300,592 Shareholders’ equity 358,609 340,371 341,499 314,359 337,747 For the year: For the year: For the year: Return on assets 2.19 % 2.17 % 2.18 % 2.06 % 1.99 % Return on assets 2.10 % 2.19 % 2.17 % 2.18 % 2.06 % Return on equity 29.38 % 28.70 % 27.17 % 25.78 % 23.31 % Return on equity 28.83 % 29.38 % 28.70 % 27.17 % 25.78 % Net interest margin* 5.39 % 5.76 % 5.71 % 5.48 % 5.46 % Net interest margin* 5.14 % 5.39 % 5.76 % 5.71 % 5.48 % Net loan losses to average loans 0.15 % 0.14 % 0.15 % 0.17 % 0.20 % Net loan losses to average loans 0.11 % 0.15 % 0.14 % 0.15 % 0.17 % Efficiency ratio* 39.07 % 40.96 % 41.67 % 42.45 % 43.19 % Efficiency ratio* 38.49 % 39.07 % 40.96 % 41.67 % 42.45 % At December 31: At December 31: At December 31: Equity to assets 7.44 % 8.08 % 8.00 % 8.38 % 7.72 % Equity to assets 7.57 % 7.44 % 8.08 % 8.00 % 8.38 % Total capital to risk-adjusted assets 11.39 % 10.97 % 10.63 % 11.61 % 11.75 % Total capital to risk-adjusted assets 12.46 % 11.39 % 10.97 % 10.63 % 11.61 % Allowance for loan losses to loans 2.32 % 2.17 % 2.10 % 2.11 % 2.22 % Allowance for loan losses to loans 2.35 % 2.32 % 2.17 % 2.10 % 2.11 % * Fully taxable equivalent Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 4042 through 68,74, as well as with the other information presented throughout the report.Approximately one-half of theThe fair values and the information used to record valuation adjustments for certain assets and liabilities are based either on quoted market prices or are provided by other third-party sources, when available. When third-party information is not available, valuation adjustments are estimated in good faith by management.inherent lossesloss in the loan portfolio that can be reasonably estimated as of the balance sheet date. Determining the amount of the Allowance for Loan Losses is considered a critical accounting estimate because it requires significant judgment and the use of estimates related to the amount and timing of expected future cash flows on impaired loans, estimated losses on pools of homogeneous loans based on historical loss experience, and consideration of current economic trends, uncertainties and conditions, all of which may be susceptible to significant change. A discussion of the factors driving changes in the amount of the Allowance for Loan losses is included in the “Credit Quality” discussion below.$95.1$95.2 million in 2003,2004, reflecting a $4.2 million after-tax writedown in the value of FNMA and FHLMC preferred stock, representing a 9.1%0.2% increase from the $87.1$95.1 million earned in 2002,2003, which was 3.4%up 9.1% over 20012002 earnings of $84.3$87.1 million.Components of Net Income Year Ended December 31, Year ended December 31, 2003 2002 2001 2004 2003 2002 (In thousands) (In thousands) Net interest and fee income* Net interest and fee income* $ 217,407 $ 215,708 $ 203,687 Net interest and fee income* $ 217,993 $ 217,407 $ 215,708 Provision for loan losses Provision for loan losses (3,300 ) (3,600 ) (3,600 ) Provision for loan losses (2,700 ) (3,300 ) (3,600 ) Noninterest income Noninterest income 42,916 36,551 42,655 Noninterest income 38,583 42,916 36,551 Noninterest expense Noninterest expense (101,703 ) (103,323 ) (102,651 ) Noninterest expense (98,751 ) (101,703 ) (103,323 ) Taxes* Taxes* (60,257 ) (58,198 ) (55,812 ) Taxes* (59,907 ) (60,257 ) (58,198 ) Net income $ 95,063 $ 87,138 $ 84,279 Net income $ 95,218 $ 95,063 $ 87,138 Net income per average fully-diluted share Net income per average fully-diluted share $ 2.85 $ 2.55 $ 2.36 Net income per average fully-diluted share $ 2.93 $ 2.85 $ 2.55 Net income as a percentage of average shareholders’ equity Net income as a percentage of average shareholders’ equity 29.38 % 28.70 % 27.17 % Net income as a percentage of average shareholders’ equity 28.83 % 29.38 % 28.70 % Net income as a percentage of average total assets Net income as a percentage of average total assets 2.19 % 2.17 % 2.18 % Net income as a percentage of average total assets 2.10 % 2.19 % 2.17 % * Fully taxable equivalent (FTE) Earnings in 2002 increased $2.8 million or 3.4% compared to 2001, primarily due to higher net interest and fee income (FTE), which grew by $12.0 million or 5.9%. Approximately eighty-seven percent of that increase was due to growth of earning assets and the remainder to a higher net interest margin. The increase in net interest income exceeded a significant decline in noninterest income and a slight increase in noninterest expense. Noninterest income reflected a $4.3 million charge for the impairment of investment securities. The provision for income taxes (FTE) increased $2.4 million or 4.3% primarily due to higher pretax income.compared to 2.17% and 2.18% in 2002, and 2001, respectively. Return on average equity in 20032004 was 29.38%28.83%, compared to 29.38% and 28.70% in 2003 and 27.17% in the two previous years.14 from 2002, to $217.4 million. Comparing 2002 to 2001, net interest income (FTE) increased $12.0 million or 5.9%.Components of Net Interest Income Year Ended December 31, Year ended December 31, 2003 2002 2001 2004 2003 2002 (In thousands) (In thousands) Interest and fee income Interest and fee income $ 223,493 $ 237,633 $ 257,056 Interest and fee income $ 216,337 $ 223,493 $ 237,633 Interest expense Interest expense (27,197 ) (39,182 ) (68,887 ) Interest expense (21,106 ) (27,197 ) (39,182 ) FTE adjustment FTE adjustment 21,111 17,257 15,518 FTE adjustment 22,762 21,111 17,257 Net interest income (FTE) $ 217,407 $ 215,708 $ 203,687 Net interest income (FTE) $ 217,993 $ 217,407 $ 215,708 Net interest margin (FTE) Net interest margin (FTE) 5.39 % 5.76 % 5.71 % Net interest margin (FTE) 5.14 % 5.39 % 5.76 % loansloan yields (down 39 bp to 6.11%), commercial real estate loansloan yields (down 34 bp to 7.63%), residential real estate loansloan yields (down 117 bp to 5.09%), and indirect consumer loansloan yields (down 110 bp to 6.09%). The investment portfolio yield also fell 72 bp to 5.16%, mainly due to declines in U.S. Treasury securities yields (down 150 bp to 4.13%), U.S. Agency obligationsgovernment sponsored entity obligation yields (down 114 bp to 3.83%), mortgage backed securities and collateralized mortgage obligationsobligation yields (down 108 bp to 3.33%) and municipal securities yields (down 44 bp to 7.14%).small$1.4 million increase in interest expense, mainly due to increases in short-term borrowings (up $129 million or 51.7%) and money market savings accounts (up $101 million or 19.4%). In addition, as a result of continuing marketing efforts to acquire commercial relationships, noninterest-bearing balances increased 9.1%, indirectly causing interest expense to decline an additional $1.0 million. Interest and fee income (FTE) fell $17.7 million or 6.5% from 2001 to 2002, the net result of declining yields on earning assets and the effect of volume growth of earning assets. The total yield on earning assets fell from 7.63% in 2001 to 6.81% in 2002, following the general trend in interest markets in which short-term rates decreased an average of over 50 basis points and medium-term rates by more than 100 basis points. The most significant yield declines in the loan portfolio were as follows: commercial loans (down from 8.11% to 6.50%, or 161 basis points), construction loans (down from 9.19% to 7.12%, or 207 basis points) and personal lines of credit (down from 9.26% to 6.88% or 238 basis points). The investment portfolio yield fell 75 basis points to 5.88% with the largest decline occurring in mortgage backed securities and collateralized mortgage obligations (down from 6.10% to 4.41% or 169 basis points). The lower yields caused interest income to decline by $28.2 million, which was offset by the $10.5 million effect of growth in average earning assets (up $166.2 million to $3,737.8 million in 2002). Interest expense fell $29.7 million or 43.1% from 2001 to 2002 primarily due to a lower cost of funds. The average rate paid on interest-bearing liabilities dropped 123 basis points to 1.50%. Notable decreases were on overnight funds purchased (down from 4.27% to 1.61%), Jumbo CDs (down from 4.32% to 2.16%), Public15CDs (down from 4.41% to 2.54%) and preferred money market deposits (down from 3.28% to 1.42%). Interest expense decreased by a net $51 thousand due to volume-related factors. Volume-related expense was reduced due to a change in mix to lower-rate deposits, including an 8.4% increase in noninterest bearing balances.
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Distribution of Assets, Liabilities & Shareholders’ Equity and Yields, Rates & Interest Margin |
Year Ended December 31, 2003 | ||||||||||||||||||||||||||||
Year Ended December 31, 2004 | ||||||||||||||||||||||||||||
Average | Interest | Rates | ||||||||||||||||||||||||||
Balance | Income/Expense | Earned/Paid | Average | Interest | Rates | |||||||||||||||||||||||
Balance | Income/Expense | Earned/Paid | ||||||||||||||||||||||||||
(Dollars in thousands) | (Dollars in thousands) | |||||||||||||||||||||||||||
Assets | Assets | Assets | ||||||||||||||||||||||||||
Money market assets and funds sold | Money market assets and funds sold | $ | 875 | $ | 8 | 0.91 | % | Money market assets and funds sold | $ | 784 | $ | 1 | 0.13 | % | ||||||||||||||
Trading account securities | Trading account securities | — | — | — | Trading account securities | — | — | — | ||||||||||||||||||||
Investment securities: | Investment securities: | Investment securities: | ||||||||||||||||||||||||||
Available for sale | ||||||||||||||||||||||||||||
Taxable | 822,662 | 34,336 | 4.17 | % | Available for sale | |||||||||||||||||||||||
Tax-exempt | 315,333 | 23,115 | 7.33 | % | Taxable | 803,722 | 33,230 | 4.13 | % | |||||||||||||||||||
Held to maturity | Tax-exempt | 293,067 | 21,619 | 7.38 | % | |||||||||||||||||||||||
Taxable | 212,891 | 6,387 | 3.00 | % | Held to maturity Taxable | 451,635 | 17,209 | 3.81 | % | |||||||||||||||||||
Tax-exempt | 327,933 | 22,814 | 6.96 | % | Tax-exempt | 429,213 | 28,281 | 6.59 | % | |||||||||||||||||||
Loans: | Loans: | Loans: | ||||||||||||||||||||||||||
Commercial | Commercial | |||||||||||||||||||||||||||
Taxable | 1,253,514 | 91,191 | 7.27 | % | Taxable | 1,115,148 | 77,278 | 6.93 | % | |||||||||||||||||||
Tax-exempt | 209,911 | 15,095 | 7.19 | % | Tax-exempt | 239,495 | 16,045 | 6.70 | % | |||||||||||||||||||
Real estate construction | 42,362 | 3,049 | 7.20 | % | Real estate construction | 36,148 | 2,517 | 6.96 | % | |||||||||||||||||||
Real estate residential | 342,118 | 17,409 | 5.09 | % | Real estate residential | 360,208 | 16,049 | 4.46 | % | |||||||||||||||||||
Consumer | 506,365 | 31,200 | 6.16 | % | Consumer | 507,483 | 26,870 | 5.29 | % | |||||||||||||||||||
Earning assets | Earning assets | 4,033,964 | 244,604 | 6.06 | % | Earning assets | 4,236,903 | 239,099 | 5.64 | % | ||||||||||||||||||
Other assets | Other assets | 298,743 | Other assets | 299,549 | ||||||||||||||||||||||||
Total assets | $ | 4,332,707 | Total assets | $ | 4,536,452 | |||||||||||||||||||||||
Liabilities and shareholders’ equity | Liabilities and shareholders’ equity | Liabilities and shareholders’ equity | ||||||||||||||||||||||||||
Deposits: | Deposits: | Deposits: | ||||||||||||||||||||||||||
Noninterest bearing demand | $ | 1,173,853 | $ | — | — | Noninterest bearing demand | $ | 1,281,349 | — | — | ||||||||||||||||||
Savings and interest-bearing transaction | 1,578,721 | 6,818 | 0.43 | % | Savings and interest-bearing transaction | 1,662,347 | 4,543 | 0.27 | % | |||||||||||||||||||
Time less than $100,000 | 307,054 | 5,147 | 1.68 | % | Time less than $100,000 | 271,212 | 4,038 | 1.49 | % | |||||||||||||||||||
Time $100,000 or more | 370,549 | 5,020 | 1.35 | % | Time $100,000 or more | 350,400 | 4,466 | 1.27 | % | |||||||||||||||||||
Total interest-bearing deposits | 2,256,324 | 16,985 | 0.75 | % | Total interest-bearing deposits | 2,283,959 | 13,047 | 0.57 | % | |||||||||||||||||||
Short-term borrowed funds | Short-term borrowed funds | 378,362 | 3,415 | 0.90 | % | Short-term borrowed funds | 556,415 | 5,878 | 1.06 | % | ||||||||||||||||||
Federal Home Loan Bank advances | Federal Home Loan Bank advances | 142,271 | 5,318 | 3.74 | % | Federal Home Loan Bank advances | 24,153 | 897 | 3.65 | % | ||||||||||||||||||
Debt financing and notes payable | Debt financing and notes payable | 21,222 | 1,479 | 6.97 | % | Debt financing and notes payable | 21,706 | 1,284 | 5.91 | % | ||||||||||||||||||
Total interest-bearing liabilities | 2,798,179 | 27,197 | 0.97 | % | Total interest-bearing liabilities | 2,886,233 | 21,106 | 0.73 | % | |||||||||||||||||||
Other liabilities | Other liabilities | 37,120 | Other liabilities | 38,540 | ||||||||||||||||||||||||
Shareholders’ equity | Shareholders’ equity | 323,555 | Shareholders’ equity | 330,330 | ||||||||||||||||||||||||
Total liabilities and shareholders’ equity | $ | 4,332,707 | Total liabilities and shareholders’ equity | $ | 4,536,452 | |||||||||||||||||||||||
Net interest spread(1) | Net interest spread(1) | 5.09 | % | Net interest spread(1) | 4.91 | % | ||||||||||||||||||||||
Net interest income and interest margin(2) | Net interest income and interest margin(2) | $ | 217,407 | 5.39 | % | Net interest income and interest margin(2) | $ | 217,993 | 5.14 | % | ||||||||||||||||||
(1) | Net interest spread represents the average yield earned on interest-earning assets less the average rate paid on interest-bearing liabilities. |
(2) | Net interest margin is computed by dividing net interest income by total average earning assets. |
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Distribution of Assets, Liabilities & Shareholders’ Equity and Yields, Rates & Interest Margin |
Year Ended December 31, 2002 | ?Year Ended December 31, 2003 | |||||||||||||||||||||||||||
Average | Interest | Rates | Average | Interest | Rates | |||||||||||||||||||||||
Balance | Income/Expense | Earned/Paid | Balance | Income/Expense | Earned/Paid | |||||||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||||||||
Assets | Assets | Assets | ||||||||||||||||||||||||||
Money market assets and funds sold | Money market assets and funds sold | $ | 1,143 | $ | 12 | 1.05 | % | Money market assets and funds sold | $ | 875 | $ | 8 | 0.91 | % | ||||||||||||||
Trading account securities | Trading account securities | — | — | — | Trading account securities | — | — | — | ||||||||||||||||||||
Investment securities: | Investment securities: | Investment securities: | ||||||||||||||||||||||||||
Available for sale | Available for sale | |||||||||||||||||||||||||||
Taxable | 656,284 | 32,426 | 4.94 | % | Taxable | 842,729 | 35,385 | 4.20 | % | |||||||||||||||||||
Tax-exempt | 309,931 | 23,343 | 7.53 | % | Tax-exempt | 310,200 | 23,415 | 7.55 | % | |||||||||||||||||||
Held to maturity | Held to maturity | |||||||||||||||||||||||||||
Taxable | 137,529 | 6,810 | 4.95 | % | Taxable | 197,957 | 5,038 | 2.54 | % | |||||||||||||||||||
Tax-exempt | 167,001 | 12,398 | 7.42 | % | Tax-exempt | 327,933 | 22,814 | 6.96 | % | |||||||||||||||||||
Loans: | Loans: | Loans: | ||||||||||||||||||||||||||
Commercial | Commercial | |||||||||||||||||||||||||||
Taxable | 1,376,262 | 103,690 | 7.53 | % | Taxable | 1,253,514 | 91,191 | 7.27 | % | |||||||||||||||||||
Tax-exempt | 196,900 | 14,959 | 7.60 | % | Tax-exempt | 209,911 | 15,095 | 7.19 | % | |||||||||||||||||||
Real estate construction | 55,457 | 4,105 | 7.40 | % | Real estate construction | 42,362 | 3,049 | 7.20 | % | |||||||||||||||||||
Real estate residential | 331,822 | 20,763 | 6.26 | % | Real estate residential | 342,118 | 17,409 | 5.09 | % | |||||||||||||||||||
Consumer | 505,435 | 36,384 | 7.20 | % | Consumer | 506,365 | 31,200 | 6.16 | % | |||||||||||||||||||
Earning assets | Earning assets | 3,737,764 | 254,890 | 6.81 | % | Earning assets | 4,033,964 | 244,604 | 6.06 | % | ||||||||||||||||||
Other assets | Other assets | 284,763 | Other assets | 298,743 | ||||||||||||||||||||||||
Total assets | $ | 4,022,527 | Total assets | $ | 4,332,707 | |||||||||||||||||||||||
Liabilities and shareholders’ equity | Liabilities and shareholders’ equity | Liabilities and shareholders’ equity | ||||||||||||||||||||||||||
Deposits: | Deposits: | Deposits: | ||||||||||||||||||||||||||
Noninterest bearing demand | $ | 1,075,845 | — | — | Noninterest bearing demand | $ | 1,173,853 | — | — | |||||||||||||||||||
Savings and interest-bearing transaction | 1,492,611 | 11,942 | 0.80 | % | Savings and interest-bearing transaction | 1,578,721 | 6,818 | 0.43 | % | |||||||||||||||||||
Time less than $100,000 | 334,601 | 8,289 | 2.48 | % | Time less than $100,000 | 307,054 | 5,147 | 1.68 | % | |||||||||||||||||||
Time $100,000 or more | 368,456 | 8,414 | 2.28 | % | Time $100,000 or more | 370,549 | 5,020 | 1.35 | % | |||||||||||||||||||
Total interest-bearing deposits | 2,195,668 | 28,645 | 1.30 | % | Total interest-bearing deposits | 2,256,324 | 16,985 | 0.75 | % | |||||||||||||||||||
Short-term borrowed funds | Short-term borrowed funds | 249,439 | 3,524 | 1.41 | % | Short-term borrowed funds | 378,362 | 3,415 | 0.90 | % | ||||||||||||||||||
Federal Home Loan Bank advances | Federal Home Loan Bank advances | 138,615 | 5,225 | 3.72 | % | Federal Home Loan Bank advances | 142,271 | 5,318 | 3.74 | % | ||||||||||||||||||
Debt financing and notes payable | Debt financing and notes payable | 24,875 | 1,788 | 7.19 | % | Debt financing and notes payable | 21,222 | 1,479 | 6.97 | % | ||||||||||||||||||
Total interest-bearing liabilities | Total interest-bearing liabilities | 2,798,179 | 27,197 | 0.97 | % | |||||||||||||||||||||||
Other liabilities | Other liabilities | 2,608,597 | 39,182 | 1.50 | % | Other liabilities | 37,120 | |||||||||||||||||||||
Shareholders’ equity | Shareholders’ equity | 34,512 | Shareholders’ equity | 323,555 | ||||||||||||||||||||||||
303,573 | ||||||||||||||||||||||||||||
Total liabilities and shareholders’ equity | $ | 4,332,707 | ||||||||||||||||||||||||||
Total liabilities and shareholders’ equity | $ | 4,022,527 | ||||||||||||||||||||||||||
Net interest spread (1) | ||||||||||||||||||||||||||||
Net interest spread(1) | Net interest spread(1) | 5.09 | % | |||||||||||||||||||||||||
Net interest income and interest margin(2) | Net interest income and interest margin(2) | 5.31 | % | Net interest income and interest margin(2) | $ | 217,407 | 5.39 | % | ||||||||||||||||||||
$ | 215,708 | 5.76 | % | |||||||||||||||||||||||||
(1) | Net interest spread represents the average yield earned on interest-earning assets less the average rate paid on interest-bearing liabilities. |
(2) | Net interest margin is computed by dividing net interest income by total average earning assets. |
18
Distribution of Assets, Liabilities & Shareholders’ Equity and Yields, Rates & Interest Margin |
Year Ended December 31, 2001 | |||||||||||||||||||||||||||||
Year Ended December 31, 2002 | |||||||||||||||||||||||||||||
Average | Interest | Rates | |||||||||||||||||||||||||||
Balance | Income/Expense | Earned/Paid | Average | Interest | Rates | ||||||||||||||||||||||||
Balance | Income/Expense | Earned/Paid | |||||||||||||||||||||||||||
(Dollars in thousands) | (Dollars in thousands) | ||||||||||||||||||||||||||||
Assets | Assets | Assets | |||||||||||||||||||||||||||
Money market assets and funds sold | Money market assets and funds sold | $ | 1,040 | $ | 24 | 2.31 | % | Money market assets and funds sold | $ | 1,143 | $ | 12 | 1.05 | % | |||||||||||||||
Trading account securities | Trading account securities | — | — | — | Trading account securities | — | — | — | |||||||||||||||||||||
Investment securities: | Investment securities: | Investment securities: | |||||||||||||||||||||||||||
Available for sale | Available for sale | ||||||||||||||||||||||||||||
Taxable | 616,954 | 36,813 | 5.97 | % | Taxable | 656,284 | 32,426 | 4.94 | % | ||||||||||||||||||||
Tax-exempt | 268,348 | 20,257 | 7.55 | % | Tax-exempt | 309,931 | 23,343 | 7.53 | % | ||||||||||||||||||||
Held to maturity | Held to maturity | ||||||||||||||||||||||||||||
Taxable | 74,325 | 4,572 | 6.15 | % | Taxable | 137,529 | 6,810 | 4.95 | % | ||||||||||||||||||||
Tax-exempt | 145,269 | 11,560 | 7.96 | % | Tax-exempt | 167,001 | 12,398 | 7.42 | % | ||||||||||||||||||||
Loans: | Loans: | Loans: | |||||||||||||||||||||||||||
Commercial | Commercial | ||||||||||||||||||||||||||||
Taxable | 1,370,663 | 113,433 | 8.28 | % | Taxable | 1,376,262 | 103,690 | 7.53 | % | ||||||||||||||||||||
Tax-exempt | 189,808 | 14,784 | 7.79 | % | Tax-exempt | 196,900 | 14,959 | 7.60 | % | ||||||||||||||||||||
Real estate construction | 68,910 | 6,441 | 9.35 | % | Real estate construction | 55,457 | 4,105 | 7.40 | % | ||||||||||||||||||||
Real estate residential | 353,438 | 24,499 | 6.93 | % | Real estate residential | 331,822 | 20,763 | 6.26 | % | ||||||||||||||||||||
Consumer | 482,797 | 40,191 | 8.32 | % | Consumer | 505,435 | 36,384 | 7.20 | % | ||||||||||||||||||||
Earning assets | Earning assets | 3,571,552 | 272,574 | 7.63 | % | Earning assets | 3,737,764 | 254,890 | 6.81 | % | |||||||||||||||||||
Other assets | Other assets | 286,267 | Other assets | 284,763 | |||||||||||||||||||||||||
Total assets | $ | 3,857,819 | Total assets | $ | 4,022,527 | ||||||||||||||||||||||||
Liabilities and shareholders’ equity | Liabilities and shareholders’ equity | Liabilities and shareholders’ equity | |||||||||||||||||||||||||||
Deposits: | Deposits: | Deposits: | |||||||||||||||||||||||||||
Noninterest bearing demand | $ | 992,182 | — | — | Noninterest bearing demand | $ | 1,075,845 | — | — | ||||||||||||||||||||
Savings and interest-bearing transaction | 1,360,978 | 19,896 | 1.46 | % | Savings and interest-bearing transaction | 1,492,611 | 11,942 | 0.80 | % | ||||||||||||||||||||
Time less than $100,000 | 387,407 | 16,898 | 4.36 | % | Time less than $100,000 | 334,601 | 8,289 | 2.48 | % | ||||||||||||||||||||
Time $100,000 or more | 477,035 | 20,794 | 4.36 | % | Time $100,000 or more | 368,456 | 8,414 | 2.28 | % | ||||||||||||||||||||
Total interest-bearing deposits | 2,225,420 | 57,588 | 2.59 | % | Total interest-bearing deposits | 2,195,668 | 28,645 | 1.30 | % | ||||||||||||||||||||
Short-term borrowed funds | Short-term borrowed funds | 265,474 | 9,283 | 3.50 | % | Short-term borrowed funds | 249,439 | 3,524 | 1.41 | % | |||||||||||||||||||
Federal Home Loan Bank advances | Federal Home Loan Bank advances | 0 | 0 | 0.00 | % | Federal Home Loan Bank advances | 138,615 | 5,225 | 3.72 | % | |||||||||||||||||||
Debt financing and notes payable | Debt financing and notes payable | 28,089 | 2,016 | 7.18 | % | Debt financing and notes payable | 24,875 | 1,788 | 7.19 | % | |||||||||||||||||||
Total interest-bearing liabilities | 2,518,983 | 68,887 | 2.73 | % | Total interest-bearing liabilities | ||||||||||||||||||||||||
Other liabilities | Other liabilities | 36,412 | Other liabilities | 2,608,597 | 39,182 | 1.50 | % | ||||||||||||||||||||||
Shareholders’ equity | Shareholders’ equity | 310,242 | Shareholders’ equity | 34,512 | |||||||||||||||||||||||||
303,573 | |||||||||||||||||||||||||||||
Total liabilities and shareholders’ equity | $ | 3,857,819 | |||||||||||||||||||||||||||
Total liabilities and shareholders’ equity | $ | 4,022,527 | |||||||||||||||||||||||||||
Net interest spread(1) | Net interest spread(1) | 4.90 | % | Net interest spread(1) | 5.31 | % | |||||||||||||||||||||||
Net interest income and interest margin(2) | Net interest income and interest margin(2) | $ | 203,687 | 5.71 | % | Net interest income and interest margin(2) | $ | 215,708 | 5.76 | % | |||||||||||||||||||
(1) | Net interest spread represents the average yield earned on interest-earning assets less the average rate paid on interest-bearing liabilities. |
(2) | Net interest margin is computed by dividing net interest income by total average earning assets. |
19
Years Ended December 31, 2004 | |||||||||||||||
Compared with 2003 | |||||||||||||||
Volume | Rate | Total | |||||||||||||
(Dollars in thousands) | |||||||||||||||
Increase (decrease) in interest and fee income: | |||||||||||||||
Money market assets and funds sold | $ | (1 | ) | $ | (6 | ) | $ | (7 | ) | ||||||
Trading account securities | — | — | — | ||||||||||||
Investment securities: | |||||||||||||||
Available for sale | |||||||||||||||
Taxable | (1,597 | ) | (558 | ) | (2,155 | ) | |||||||||
Tax-exempt(1) | (1,255 | ) | (541 | ) | (1,796 | ) | |||||||||
Held to maturity | |||||||||||||||
Taxable | 8,787 | 3,384 | 12,171 | ||||||||||||
Tax-exempt(1) | 6,739 | (1,272 | ) | 5,467 | |||||||||||
Loans: | |||||||||||||||
Commercial: | |||||||||||||||
Taxable | (10,102 | ) | (3,811 | ) | (13,913 | ) | |||||||||
Tax-exempt(1) | 2,043 | (1,093 | ) | 950 | |||||||||||
Real estate construction | (434 | ) | (98 | ) | (532 | ) | |||||||||
Real estate residential | 916 | (2,276 | ) | (1,360 | ) | ||||||||||
Consumer | 140 | (4,470 | ) | (4,330 | ) | ||||||||||
Total loans(1) | (7,437 | ) | (11,748 | ) | (19,185 | ) | |||||||||
Total increase (decrease) in interest and fee income(1) | 5,236 | (10,741 | ) | (5,505 | ) | ||||||||||
Increase (decrease) in interest expense: | |||||||||||||||
Deposits: | |||||||||||||||
Savings/interest-bearing | 355 | (2,630 | ) | (2,275 | ) | ||||||||||
Time less than $100,000 | (561 | ) | (548 | ) | (1,109 | ) | |||||||||
Time $100,000 or more | (259 | ) | (295 | ) | (554 | ) | |||||||||
Total interest-bearing | (465 | ) | (3,473 | ) | (3,938 | ) | |||||||||
Short-term borrowed funds | 1,813 | 650 | 2,463 | ||||||||||||
Federal Home Loan Bank advances | (4,372 | ) | (49 | ) | (4,421 | ) | |||||||||
Notes and mortgages payable | 36 | (231 | ) | (195 | ) | ||||||||||
Total increase (decrease) in interest expense | (2,988 | ) | (3,103 | ) | (6,091 | ) | |||||||||
Increase (decrease) in net interest income(1) | $ | 8,224 | $ | (7,638 | ) | $ | 586 | ||||||||
Years Ended December 31, 2003 | |||||||||||||||
Compared with 2002 | |||||||||||||||
Volume | Rate | Total | |||||||||||||
(Dollars in thousands) | |||||||||||||||
Increase (decrease) in interest and fee income: | |||||||||||||||
Money market assets and funds sold | $ | (3 | ) | $ | (1 | ) | $ | (4 | ) | ||||||
Trading account securities | — | — | — | ||||||||||||
Investment securities: | |||||||||||||||
Available for sale | |||||||||||||||
Taxable | 7,429 | (5,519 | ) | 1,910 | |||||||||||
Tax-exempt(1) | 403 | (631 | ) | (228 | ) | ||||||||||
Held to maturity | |||||||||||||||
Taxable | 2,876 | (3,299 | ) | (423 | ) | ||||||||||
Tax-exempt(1) | 11,242 | (826 | ) | 10,416 | |||||||||||
Loans: | |||||||||||||||
Commercial: | |||||||||||||||
Taxable | (9,116 | ) | (3,383 | ) | (12,499 | ) | |||||||||
Tax-exempt(1) | 959 | (823 | ) | 136 | |||||||||||
Real estate construction | (945 | ) | (111 | ) | (1,056 | ) | |||||||||
Real estate residential | 627 | (3,981 | ) | (3,354 | ) | ||||||||||
Consumer | 67 | (5,251 | ) | (5,184 | ) | ||||||||||
Total loans(1) | (8,408 | ) | (13,549 | ) | (21,957 | ) | |||||||||
Total increase (decrease) in interest and fee income(1) | 13,539 | (23,825 | ) | (10,286 | ) | ||||||||||
Increase (decrease) in interest expense: | |||||||||||||||
Deposits: | |||||||||||||||
Savings/interest-bearing | 654 | (5,778 | ) | (5,124 | ) | ||||||||||
Time less than $100,000 | (638 | ) | (2,504 | ) | (3,142 | ) | |||||||||
Time $100,000 or more | 48 | (3,442 | ) | (3,394 | ) | ||||||||||
Total interest-bearing | 64 | (11,724 | ) | (11,660 | ) | ||||||||||
Funds purchased | 1,434 | (1,544 | ) | (110 | ) | ||||||||||
Federal Home Loan Bank advances | 136 | (43 | ) | 93 | |||||||||||
Notes and mortgages payable | (256 | ) | (52 | ) | (308 | ) | |||||||||
Total increase (decrease) in interest expense | 1,378 | (13,363 | ) | (11,985 | ) | ||||||||||
Increase (decrease) in net interest income(1) | $ | 12,161 | $ | (10,462 | ) | $ | 1,699 | ||||||||
(1) | Amounts calculated on a fully taxable equivalent basis using the current statutory federal tax rate. |
20
Summary of Changes in Interest Income and Expense |
Years Ended December 31, 2002 | ||||||||||||||||||||||||||||||
Compared with 2001 | 2003 Compared with 2002 | |||||||||||||||||||||||||||||
Volume | Rate | Total | Volume | Rate | Total | |||||||||||||||||||||||||
Years Ended December 31, | ||||||||||||||||||||||||||||||
(Dollars in thousands) | (Dollars in thousands) | |||||||||||||||||||||||||||||
Increase (decrease) in interest and fee income: | Increase (decrease) in interest and fee income: | Increase (decrease) in interest and fee income: | ||||||||||||||||||||||||||||
Money market assets and funds sold | $ | 2 | $ | (14 | ) | $ | (12 | ) | Money market assets and funds sold | $ | (3 | ) | $ | (1 | ) | $ | (4 | ) | ||||||||||||
Trading account securities | — | — | — | Trading account securities | — | — | — | |||||||||||||||||||||||
Investment securities: | Investment securities: | |||||||||||||||||||||||||||||
Available for sale | Available for sale | |||||||||||||||||||||||||||||
Taxable | 2,238 | (6,625 | ) | (4,387 | ) | Taxable | 8,307 | (5,348 | ) | 2,959 | ||||||||||||||||||||
Tax-exempt(1) | 3,132 | (46 | ) | 3,086 | Tax-exempt(1) | 20 | 52 | 72 | ||||||||||||||||||||||
Held to maturity | Held to maturity | |||||||||||||||||||||||||||||
Taxable | 3,271 | (1,033 | ) | 2,238 | Taxable | 2,302 | (4,074 | ) | (1,772 | ) | ||||||||||||||||||||
Tax-exempt(1) | 1,649 | (811 | ) | 838 | Tax-exempt(1) | 11,242 | (826 | ) | 10,416 | |||||||||||||||||||||
Loans: | Loans: | |||||||||||||||||||||||||||||
Commercial: | Commercial: | |||||||||||||||||||||||||||||
Taxable | 486 | (10,229 | ) | (9,743 | ) | Taxable | (9,116 | ) | (3,383 | ) | (12,499 | ) | ||||||||||||||||||
Tax-exempt(1) | 544 | (369 | ) | 175 | Tax-exempt(1) | 959 | (823 | ) | 136 | |||||||||||||||||||||
Real estate construction | (1,131 | ) | (1,205 | ) | (2,336 | ) | Real estate construction | (945 | ) | (111 | ) | (1,056 | ) | |||||||||||||||||
Real estate residential | (1,442 | ) | (2,294 | ) | (3,736 | ) | Real estate residential | 627 | (3,981 | ) | (3,354 | ) | ||||||||||||||||||
Consumer | 1,819 | (5,626 | ) | (3,807 | ) | Consumer | 67 | (5,251 | ) | (5,184 | ) | |||||||||||||||||||
Total loans(1) | 276 | (19,723 | ) | (19,447 | ) | Total loans(1) | (8,408 | ) | (13,549 | ) | (21,957 | ) | ||||||||||||||||||
Total increase (decrease) in interest and fee income(1) | Total increase (decrease) in interest and fee income(1) | 10,568 | (28,252 | ) | (17,684 | ) | Total increase (decrease) in interest and fee income(1) | 13,460 | (23,746 | ) | (10,286 | ) | ||||||||||||||||||
Increase (decrease) in interest expense: | Increase (decrease) in interest expense: | Increase (decrease) in interest expense: | ||||||||||||||||||||||||||||
Deposits: | Deposits: | |||||||||||||||||||||||||||||
Savings/interest-bearing | 1,771 | (9,725 | ) | (7,954 | ) | Savings/interest-bearing | 654 | (5,778 | ) | (5,124 | ) | |||||||||||||||||||
Time less than $100,000 | (2,065 | ) | (6,544 | ) | (8,609 | ) | Time less than $100,000 | (638 | ) | (2,504 | ) | (3,142 | ) | |||||||||||||||||
Time $100,000 or more | (4,004 | ) | (8,376 | ) | (12,380 | ) | Time $100,000 or more | 48 | (3,442 | ) | (3,394 | ) | ||||||||||||||||||
Total interest-bearing | (4,298 | ) | (24,645 | ) | (28,943 | ) | Total interest-bearing | 64 | (11,724 | ) | (11,660 | ) | ||||||||||||||||||
Funds purchased | (517 | ) | (5,018 | ) | (5,535 | ) | Short-term borrowed funds | 1,434 | (1,544 | ) | (110 | ) | ||||||||||||||||||
Federal Home Loan Bank advances | 4,995 | 7 | 5,002 | Federal Home Loan Bank advances | 136 | (43 | ) | 93 | ||||||||||||||||||||||
Notes and mortgages payable | (231 | ) | 2 | (229 | ) | Notes and mortgages payable | (256 | ) | (52 | ) | (308 | ) | ||||||||||||||||||
Total decrease in interest expense | (51 | ) | (29,654 | ) | (29,705 | ) | Total increase (decrease) in interest expense | 1,378 | (13,363 | ) | (11,985 | ) | ||||||||||||||||||
Increase in net interest income(1) | $ | 10,619 | $ | 1,402 | $ | 12,021 | Increase (decrease) in net interest income(1) | $ | 12,082 | $ | (10,383 | ) | $ | 1,699 | ||||||||||||||||
(1) | Amounts calculated on a fully taxable equivalent basis using the current statutory federal tax rate. |
21
2002.
Available for Sale Portfolio |
At December 31, | ||||||||||||||||||||||||||
At December 31, | ||||||||||||||||||||||||||
2003 | 2002 | 2001 | ||||||||||||||||||||||||
2004 | 2003 | 2002 | ||||||||||||||||||||||||
(Dollars in thousands) | (Dollars in thousands) | |||||||||||||||||||||||||
U.S. Treasury | U.S. Treasury | $ | 0 | $ | 21,088 | $ | 135,086 | U.S. Treasury | $ | 0 | $ | 0 | $ | 21,088 | ||||||||||||
U.S. Government agencies and corporations | 961,727 | 385,508 | 213,454 | |||||||||||||||||||||||
U.S. Government sponsored entities | U.S. Government sponsored entities | 557,057 | 961,727 | 385,508 | ||||||||||||||||||||||
States and political subdivisions | States and political subdivisions | 278,393 | 296,259 | 303,048 | States and political subdivisions | 247,731 | 278,393 | 296,259 | ||||||||||||||||||
Asset backed securities | Asset backed securities | 12,990 | 42,075 | 33,283 | Asset backed securities | 3,257 | 12,990 | 42,075 | ||||||||||||||||||
Corporate securities | Corporate securities | 73,425 | 144,497 | 172,991 | Corporate securities | 48,658 | 73,425 | 144,497 | ||||||||||||||||||
Other | Other | 87,376 | 58,421 | 91,108 | Other | 75,007 | 87,376 | 58,421 | ||||||||||||||||||
Total | $ | 1,413,911 | $ | 947,848 | $ | 948,970 | Total | $ | 931,710 | $ | 1,413,911 | $ | 947,848 | |||||||||||||
22
22
At December 31, 2004 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
At December 31, 2003 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
After One | After Five | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
After One | After Five | Within | but Within | but Within | After Ten | Mortgage- | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Within | but Within | but Within | After Ten | Mortgage- | One Year | Five Years | Ten Years | Years | backed | Other | Total | |||||||||||||||||||||||||||||||||||||||||||||||||
One Year | Five Years | Ten Years | Years | Backed | Other | Total | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
U.S. Government agencies and corporations | $ | 40,398 | $ | 415,789 | $ | 40,051 | $ | — | $ | — | $ | — | $ | 496,238 | ||||||||||||||||||||||||||||||||||||||||||||||
U.S. Government sponsored entities | U.S. Government sponsored entities | $ | — | $ | 308,859 | $ | 46 | $ | — | $ | — | $ | — | $ | 308,905 | |||||||||||||||||||||||||||||||||||||||||||||
Interest rate | 5.91 | % | 3.43 | % | 3.20 | % | — | % | — | % | — | % | 3.61 | % | Interest rate | — | % | 3.30 | % | 7.95 | % | — | % | — | % | — | % | 3.30 | % | |||||||||||||||||||||||||||||||
States and political subdivisions | States and political subdivisions | 5,509 | 36,722 | 144,469 | 74,090 | — | — | 260,790 | States and political subdivisions | 3,955 | 33,853 | 152,073 | 44,242 | — | — | 234,123 | ||||||||||||||||||||||||||||||||||||||||||||
Interest rate (FTE) | 9.45 | % | 7.74 | % | 7.46 | % | 7.18 | % | — | — | 7.46 | % | Interest rate (FTE) | 7.32 | % | 7.67 | % | 7.33 | % | 7.06 | % | — | — | 7.33 | % | |||||||||||||||||||||||||||||||||||
Asset-backed | — | 7,898 | 5,028 | — | — | — | 12,926 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Asset-backed securities | Asset-backed securities | — | 3,256 | — | — | — | — | 3,256 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Interest rate | — | 3.71 | % | 2.43 | % | — | — | — | 3.21 | % | Interest rate | — | 2.87 | % | — | — | — | — | 2.87 | % | ||||||||||||||||||||||||||||||||||||||||
Other securities | Other securities | 15,000 | 54,703 | — | — | — | — | 69,703 | Other securities | 22,187 | 25,130 | — | — | — | — | 47,317 | ||||||||||||||||||||||||||||||||||||||||||||
Interest rate | 6.18 | % | 6.27 | % | — | — | — | — | 6.25 | % | Interest rate | 5.95 | % | 6.54 | % | — | — | — | — | 6.26 | % | |||||||||||||||||||||||||||||||||||||||
Subtotal | 60,907 | 515,112 | 189,548 | 74,090 | — | — | 839,657 | Subtotal | 26,142 | 371,098 | 152,119 | 44,242 | — | — | 593,601 | |||||||||||||||||||||||||||||||||||||||||||||
Interest rate | 6.30 | % | 4.04 | % | 6.43 | % | 7.18 | % | — | — | 5.03 | % | Interest rate | 6.16 | % | 3.91 | % | 7.33 | % | 7.06 | % | — | — | 5.11 | % | |||||||||||||||||||||||||||||||||||
Mortgage Backed | — | — | — | — | 467,684 | — | 467,684 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Mortgage backed securities | Mortgage backed securities | — | — | — | — | 253,936 | — | 253,936 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Interest rate | — | — | — | — | 4.24 | % | — | 4.24 | % | Interest rate | — | — | — | — | 4.22 | % | — | 4.22 | % | |||||||||||||||||||||||||||||||||||||||||
Other without set maturities | Other without set maturities | — | — | — | — | — | 83,809 | 83,809 | Other without set maturities | — | — | — | — | — | 67,541 | 67,541 | ||||||||||||||||||||||||||||||||||||||||||||
Interest rate | — | — | — | — | — | 6.95 | % | 6.95 | % | Interest rate | — | — | — | — | — | 7.61 | % | 7.61 | % | |||||||||||||||||||||||||||||||||||||||||
Total | $ | 60,907 | $ | 515,112 | $ | 189,548 | $ | 74,090 | $ | 467,684 | $ | 83,809 | $ | 1,391,150 | Total | $ | 26,142 | $ | 371,098 | $ | 152,119 | $ | 44,242 | $ | 253,936 | $ | 67,541 | $ | 915,078 | |||||||||||||||||||||||||||||||
Interest rate | 6.30 | % | 4.04 | % | 6.43 | % | 7.18 | % | 4.24 | % | 6.95 | % | 4.88 | % | Interest rate | 6.16 | % | 3.91 | % | 7.33 | % | 7.06 | % | 4.22 | % | 7.61 | % | 5.05 | % | |||||||||||||||||||||||||||||||
At December 31, | |||||||||||||
2004 | 2003 | 2002 | |||||||||||
(Dollars in thousands) | |||||||||||||
U.S. Government sponsored entities | 736,137 | 98,287 | 201,486 | ||||||||||
States and political subdivisions | 524,695 | 417,984 | 212,569 | ||||||||||
Asset backed securities | 0 | 6,322 | 9,769 | ||||||||||
Other | 0 | 12,784 | 15,161 | ||||||||||
Total | $ | 1,260,832 | $ | 535,377 | $ | 438,985 | |||||||
Fair value | $ | 1,265,986 | $ | 542,729 | $ | 450,771 | |||||||
At December 31, | |||||||||||||
2003 | 2002 | 2001 | |||||||||||
(Dollars in thousands) | |||||||||||||
U.S. Government agencies and corporations | 98,287 | 201,486 | 55,320 | ||||||||||
States and political subdivisions | 417,984 | 212,569 | 141,712 | ||||||||||
Asset backed securities | 6,322 | 9,769 | 0 | ||||||||||
Other | 12,784 | 15,161 | 12,137 | ||||||||||
Total | $ | 535,377 | $ | 438,985 | $ | 209,169 | |||||||
Fair value | $ | 542,729 | $ | 450,771 | $ | 214,866 | |||||||
23
The following table sets forth the relative maturities and yields of the Company’s held to maturity securities at December 31, 2003.2004. Weighted average yields have been computed by dividing annual interest income, adjusted for amortization of premium and accretion of discount, by the amortized value of the related security. Yields on state and political subdivision securities have been calculated on a fully taxable equivalent basis using the current statutory rate.
At December 31, 2003 | |||||||||||||||||||||||||||||||
After One | After Five | ||||||||||||||||||||||||||||||
Within | but Within | but Within | After Ten | Mortgage- | |||||||||||||||||||||||||||
One Year | Five Years | Ten Years | Years | Backed | Other | Total | |||||||||||||||||||||||||
(Dollars in thousands) | |||||||||||||||||||||||||||||||
States and political subdivisions | 10,402 | 57,745 | 52,963 | 296,874 | — | — | 417,984 | ||||||||||||||||||||||||
Interest rate (FTE) | 7.87 | % | 7.16 | % | 7.03 | % | 6.10 | % | — | — | 6.41 | % | |||||||||||||||||||
Asset backed | — | 6,322 | — | — | — | — | 6,322 | ||||||||||||||||||||||||
Interest rate | — | 3.60 | % | — | — | — | — | 3.60 | % | ||||||||||||||||||||||
Other securities | — | — | — | — | — | 12,784 | 12,784 | ||||||||||||||||||||||||
Interest rate | — | — | — | — | — | 4.83 | % | 4.83 | % | ||||||||||||||||||||||
Subtotal | 10,402 | 64,067 | 52,963 | 296,874 | — | 12,784 | 437,090 | ||||||||||||||||||||||||
Interest rate | 7.87 | % | 6.81 | % | 7.03 | % | 6.10 | % | — | % | 4.83 | % | 6.33 | % | |||||||||||||||||
Mortgage backed | — | — | — | — | 98,287 | — | 98,287 | ||||||||||||||||||||||||
Interest rate | — | — | — | — | 2.70 | % | — | 2.70 | % | ||||||||||||||||||||||
Total | $ | 10,402 | $ | 64,067 | $ | 52,963 | $ | 296,874 | $ | 98,287 | $ | 12,784 | $ | 535,377 | |||||||||||||||||
Interest rate | 7.87 | % | 6.81 | % | 7.03 | % | 6.10 | % | 2.70 | % | 4.83 | % | 5.66 | % | |||||||||||||||||
23
At December 31, 2004 | |||||||||||||||||||||||||||||||
After One | After Five | ||||||||||||||||||||||||||||||
Within | but Within | but Within | After Ten | Mortgage- | |||||||||||||||||||||||||||
One Year | Five Years | Ten Years | Years | Backed | Other | Total | |||||||||||||||||||||||||
(Dollars in thousands) | |||||||||||||||||||||||||||||||
U.S. Government sponsored entities | $ | — | $ | 227,056 | $ | — | $ | — | $ | — | $ | — | $ | 227,056 | |||||||||||||||||
Interest rate | — | % | 3.43 | % | — | % | — | % | — | % | — | % | 3.43 | % | |||||||||||||||||
States and political subdivisions | 9,799 | 44,281 | 74,395 | 396,220 | — | — | 524,695 | ||||||||||||||||||||||||
Interest rate (FTE) | 6.81 | % | 6.85 | % | 6.54 | % | 6.08 | % | — | — | 6.23 | % | |||||||||||||||||||
Asset backed | — | — | — | — | — | — | — | ||||||||||||||||||||||||
Interest rate | — | — | — | — | — | — | — | ||||||||||||||||||||||||
Other securities | — | — | — | — | — | — | — | ||||||||||||||||||||||||
Interest rate | — | — | — | — | — | — | — | ||||||||||||||||||||||||
Subtotal | 9,799 | 271,337 | 74,395 | 396,220 | — | — | 751,751 | ||||||||||||||||||||||||
Interest rate | 6.81 | % | 3.99 | % | 6.54 | % | 6.08 | % | — | — | 5.38 | % | |||||||||||||||||||
Mortgage backed | — | — | — | — | 509,081 | — | 509,081 | ||||||||||||||||||||||||
Interest rate | — | — | — | — | 4.22 | % | — | 4.22 | % | ||||||||||||||||||||||
Total | $ | 9,799 | $ | 271,337 | $ | 74,395 | $ | 396,220 | $ | 509,081 | $ | — | $ | 1,260,832 | |||||||||||||||||
Interest rate | 6.81 | % | 3.99 | % | 6.54 | % | 6.08 | % | 4.22 | % | — | % | 4.91 | % | |||||||||||||||||
Loan Portfolio Distribution |
At December 31, | ||||||||||||||||||||||||||||||||||||||||
At December 31, | ||||||||||||||||||||||||||||||||||||||||
2003 | 2002 | 2001 | 2000 | 1999 | ||||||||||||||||||||||||||||||||||||
2004 | 2003 | 2002 | 2001 | 2000 | ||||||||||||||||||||||||||||||||||||
(Dollars in thousands) | (Dollars in thousands) | |||||||||||||||||||||||||||||||||||||||
Commercial and commercial real estate | $ | 1,429,645 | $ | 1,588,803 | $ | 1,576,723 | $ | 1,562,462 | $ | 1,502,237 | $ | 1,388,639 | $ | 1,429,645 | $ | 1,588,803 | $ | 1,576,723 | $ | 1,562,462 | ||||||||||||||||||||
Real estate construction | 38,019 | 45,547 | 69,658 | 64,195 | 50,928 | 29,724 | 38,019 | 45,547 | 69,658 | 64,195 | ||||||||||||||||||||||||||||||
Real estate residential | 347,794 | 330,460 | 347,114 | 355,488 | 337,002 | 375,532 | 347,794 | 330,460 | 347,114 | 355,488 | ||||||||||||||||||||||||||||||
Consumer | 507,911 | 530,054 | 491,793 | 502,367 | 434,803 | 506,338 | 507,911 | 530,054 | 491,793 | 502,367 | ||||||||||||||||||||||||||||||
Unearned income | (39 | ) | (226 | ) | (831 | ) | (2,353 | ) | (4,124 | ) | (3 | ) | (39 | ) | (226 | ) | (831 | ) | (2,353 | ) | ||||||||||||||||||||
Gross loans | $ | 2,323,330 | $ | 2,494,638 | $ | 2,484,457 | $ | 2,482,159 | $ | 2,320,846 | $ | 2,300,230 | $ | 2,323,330 | $ | 2,494,638 | $ | 2,484,457 | $ | 2,482,159 | ||||||||||||||||||||
Allowance for loan losses | (53,910 | ) | (54,227 | ) | (52,086 | ) | (52,279 | ) | (51,574 | ) | (54,152 | ) | (53,910 | ) | (54,227 | ) | (52,086 | ) | (52,279 | ) | ||||||||||||||||||||
Net loans | $ | 2,269,420 | $ | 2,440,411 | $ | 2,432,371 | $ | 2,429,880 | $ | 2,269,272 | $ | 2,246,078 | $ | 2,269,420 | $ | 2,440,411 | $ | 2,432,371 | $ | 2,429,880 | ||||||||||||||||||||
24
andcommercial real estate, and construction loans at December 31, 2003.2004. Balances exclude loans to individuals and residential mortgages totaling $855.7$881.9 million. These types of loans are typically paid in monthly installments over a number of years.
At December 31, 2004 | |||||||||||||||||
Within | One to | After Five | |||||||||||||||
One Year | Five Years | Years | Total | ||||||||||||||
(Dollars in thousands) | |||||||||||||||||
Commercial and commercial real estate * | $ | 502,468 | $ | 669,127 | $ | 217,044 | $ | 1,388,639 | |||||||||
Real estate construction | 29,724 | 0 | 0 | 29,724 | |||||||||||||
Total | $ | 532,192 | $ | 669,127 | $ | 217,044 | $ | 1,418,363 | |||||||||
Loans with fixed interest rates | $ | 91,602 | $ | 321,000 | $ | 217,044 | $ | 629,646 | |||||||||
Loans with floating or adjustable interest rates | 440,590 | 348,127 | 0 | 788,717 | |||||||||||||
Total | $ | 532,192 | $ | 669,127 | $ | 217,044 | $ | 1,418,363 | |||||||||
At December 31, 2003 | |||||||||||||||||
Within | One to | After | |||||||||||||||
One Year | Five Years | Five Years | Total | ||||||||||||||
(Dollars in thousands) | |||||||||||||||||
Commercial and commercial real estate * | $ | 770,834 | $ | 371,203 | $ | 287,608 | $ | 1,429,645 | |||||||||
Real estate construction | 38,019 | 0 | 0 | 38,019 | |||||||||||||
Total | $ | 808,853 | $ | 371,203 | $ | 287,608 | $ | 1,467,664 | |||||||||
Loans with fixed interest rates | $ | 107,305 | $ | 371,203 | $ | 287,608 | $ | 766,116 | |||||||||
Loans with floating interest rates | 701,548 | 0 | 0 | 701,548 | |||||||||||||
Total | $ | 808,853 | $ | 371,203 | $ | 287,608 | $ | 1,467,664 | |||||||||
* | Includes demand loans |
Classified Loans and Other Real Estate Owned |
Classified Loans and OREO
At December 31, | ||||||||||||||||
At December 31, | ||||||||||||||||
2003 | 2002 | |||||||||||||||
2004 | 2003 | |||||||||||||||
(Dollars in thousands) | (Dollars in thousands) | |||||||||||||||
Classified loans | $ | 23,460 | $ | 34,001 | $ | 19,225 | $ | 23,316 | ||||||||
Other real estate owned | 90 | 381 | 0 | 90 | ||||||||||||
Total | $ | 23,550 | $ | 34,382 | $ | 19,225 | $ | 23,406 | ||||||||
25
20032004 declined $10.5$4.1 million or 31.0%17.5% to $23.5$19.2 million from December 31, 2002,2003, mainly due to upgrades, payoffs, and principal reductions and chargeoffs, partially reduced by new downgrades and new loans. Other real estate owned decreased $300$90 thousand from the prior year to none, due to sales and writedowns of properties acquired in satisfaction of debt, partially offset by new foreclosures on real estate collateralizing loans.two small properties.Nonperforming Loans
At December 31, | |||||||||||||||||||||||||||||||||||||||||||
At December 31, | |||||||||||||||||||||||||||||||||||||||||||
2003 | 2002 | 2001 | 2000 | 1999 | |||||||||||||||||||||||||||||||||||||||
2004 | 2003 | 2002 | 2001 | 2000 | |||||||||||||||||||||||||||||||||||||||
(Dollars in thousands) | (Dollars in thousands) | ||||||||||||||||||||||||||||||||||||||||||
Performing nonaccrual loans | Performing nonaccrual loans | $ | 1,658 | $ | 3,464 | $ | 3,055 | $ | 3,499 | $ | 3,460 | Performing nonaccrual loans | $ | 4,072 | $ | 1,658 | $ | 3,464 | $ | 3,055 | $ | 3,499 | |||||||||||||||||||||
Nonperforming nonaccrual loans | Nonperforming nonaccrual loans | 5,759 | 5,717 | 5,058 | 4,525 | 5,501 | Nonperforming nonaccrual loans | 2,970 | 5,759 | 5,717 | 5,058 | 4,525 | |||||||||||||||||||||||||||||||
Nonaccrual loans | 7,417 | 9,181 | 8,113 | 8,024 | 8,961 | Nonaccrual loans | 7,042 | 7,417 | 9,181 | 8,113 | 8,024 | ||||||||||||||||||||||||||||||||
Loans 90 or more days past due and still accruing | Loans 90 or more days past due and still accruing | 199 | 738 | 550 | 650 | 584 | Loans 90 or more days past due and still accruing | 10 | 199 | 738 | 550 | 650 | |||||||||||||||||||||||||||||||
Other real estate owned | Other real estate owned | 90 | 381 | 523 | 2,065 | 3,269 | Other real estate owned | 0 | 90 | 381 | 523 | 2,065 | |||||||||||||||||||||||||||||||
Total Nonperforming loans and OREO | $ | 7,706 | $ | 10,300 | $ | 9,186 | $ | 10,739 | $ | 12,814 | Total Nonperforming loans and OREO | $ | 7,052 | $ | 7,706 | $ | 10,300 | $ | 9,186 | $ | 10,739 | ||||||||||||||||||||||
Allowance for loan losses as a percentage of nonaccrual loans and loans 90 or more days past due and still accruing | Allowance for loan losses as a percentage of nonaccrual loans and loans 90 or more days past due and still accruing | 708 | % | 547 | % | 601 | % | 603 | % | 540 | % | Allowance for loan losses as a percentage of nonaccrual loans and loans 90 or more days past due and still accruing | 768 | % | 708 | % | 547 | % | 601 | % | 603 | % | |||||||||||||||||||||
Allowance for loan losses as a percentage of total nonperforming loans and OREO | Allowance for loan losses as a percentage of total nonperforming loans and OREO | 700 | % | 526 | % | 567 | % | 487 | % | 402 | % | Allowance for loan losses as a percentage of total nonperforming loans and OREO | 768 | % | 700 | % | 526 | % | 567 | % | 487 | % | |||||||||||||||||||||
Performing and nonperforming nonaccrual loans at December 31, 2002 were $409 thousand and $659 thousand above 2001 levels, respectively. Most performing nonaccrual loans from 2001 were either paid off or returned to accrual status in 2002 and other loans were downgraded. The increase in nonperforming loans was the net result of downgrades and $1.4 million of loans remaining on nonaccrual from 2001, partially reduced by payoffs and upgrades. The $142 thousand decline of other real estate owned balances at December 31, 2002 was due to sales of most properties from 2001, partially offset by an addition of one large property recorded at $261 thousand.
26
26
2002. Management believes the overall credit quality of the loan portfolio continues to be strong; however, total nonperforming assets could fluctuate from year to year. The performance of any individual loan can be impacted by external factors such as the interest rate environment or factors particular to the borrower. The Company expects to maintain nonperforming loans and OREO at their current levels; however, no assurance can be given that additional increases in nonaccrual loans will not occur in future periods.
December 31, 2004.
27
Loan Loss Allowance, Chargeoffs & Recoveries
Year Ended December 31, | ||||||||||||||||||||||||||||||||||||||||||
Year Ended December 31, | ||||||||||||||||||||||||||||||||||||||||||
2003 | 2002 | 2001 | 2000 | 1999 | ||||||||||||||||||||||||||||||||||||||
2004 | 2003 | 2002 | 2001 | 2000 | ||||||||||||||||||||||||||||||||||||||
(Dollars in thousands) | (dollars in thousands) | |||||||||||||||||||||||||||||||||||||||||
Total loans outstanding | Total loans outstanding | $ | 2,323,330 | $ | 2,494,638 | $ | 2,484,457 | $ | 2,482,159 | $ | 2,320,846 | Total loans outstanding | $ | 2,300,230 | $ | 2,323,330 | $ | 2,494,638 | $ | 2,484,457 | $ | 2,482,159 | ||||||||||||||||||||
Average loans outstanding during the period | Average loans outstanding during the period | 2,354,270 | 2,465,876 | 2,465,616 | $ | 2,369,065 | 2,292,386 | Average loans outstanding during the period | 2,258,482 | 2,354,270 | 2,465,876 | 2,465,616 | $ | 2,369,065 | ||||||||||||||||||||||||||||
Analysis of the Allowance | Analysis of the Allowance | Analysis of the Allowance | ||||||||||||||||||||||||||||||||||||||||
Balance, beginning of period | Balance, beginning of period | $ | 54,227 | $ | 52,086 | $ | 52,279 | $ | 51,574 | $ | 51,304 | Balance, beginning of period | $ | 53,910 | $ | 54,227 | $ | 52,086 | $ | 52,279 | $ | 51,574 | ||||||||||||||||||||
Additions to the allowance charged to operating expense | Additions to the allowance charged to operating expense | 3,300 | 3,600 | 3,600 | 3,675 | 4,780 | Additions to the allowance charged to operating expense | 2,700 | 3,300 | 3,600 | 3,600 | 3,675 | ||||||||||||||||||||||||||||||
Allowance acquired through merger | Allowance acquired through merger | 0 | 2,050 | 0 | 1,036 | 0 | Allowance acquired through merger | 0 | 0 | 2,050 | 0 | 1,036 | ||||||||||||||||||||||||||||||
Loans charged off: | Loans charged off: | Loans charged off: | ||||||||||||||||||||||||||||||||||||||||
Commercial and commercial real estate | (2,455 | ) | (1,885 | ) | (2,475 | ) | (4,148 | ) | (5,071 | ) | Commercial and commercial real estate | (2,154 | ) | (2,455 | ) | (1,885 | ) | (2,475 | ) | (4,148 | ) | |||||||||||||||||||||
Real estate construction | 0 | 0 | (10 | ) | 0 | (94 | ) | Real estate construction | 0 | 0 | 0 | (10 | ) | 0 | ||||||||||||||||||||||||||||
Real estate residential | (26 | ) | 0 | 0 | (16 | ) | (18 | ) | Real estate residential | 0 | (26 | ) | 0 | 0 | (16 | ) | ||||||||||||||||||||||||||
Consumer | (4,352 | ) | (4,340 | ) | (4,968 | ) | (3,818 | ) | (2,754 | ) | Consumer | (3,439 | ) | (4,352 | ) | (4,340 | ) | (4,968 | ) | (3,818 | ) | |||||||||||||||||||||
Total chargeoffs | Total chargeoffs | (6,833 | ) | (6,225 | ) | (7,453 | ) | (7,982 | ) | (7,937 | ) | Total chargeoffs | (5,593 | ) | (6,833 | ) | (6,225 | ) | (7,453 | ) | (7,982 | ) | ||||||||||||||||||||
Recoveries of loans previously charged off: | Recoveries of loans previously charged off: | Recoveries of loans previously charged off: | ||||||||||||||||||||||||||||||||||||||||
Commercial and commercial real estate | 1,234 | 950 | 1,577 | 2,333 | 2,052 | Commercial and commercial real estate | 1,623 | 1,234 | 950 | 1,577 | 2,333 | |||||||||||||||||||||||||||||||
Real estate construction | 0 | 0 | 0 | 0 | 0 | Real estate construction | 0 | 0 | 0 | 0 | 0 | |||||||||||||||||||||||||||||||
Real estate residential | 0 | 0 | 243 | 0 | 0 | Real estate residential | 0 | 0 | 0 | 243 | 0 | |||||||||||||||||||||||||||||||
Consumer | 1,982 | 1,766 | 1,840 | 1,643 | 1,375 | Consumer | 1,512 | 1,982 | 1,766 | 1,840 | 1,643 | |||||||||||||||||||||||||||||||
Total recoveries | Total recoveries | 3,216 | 2,716 | 3,660 | 3,976 | 3,427 | Total recoveries | 3,135 | 3,216 | 2,716 | 3,660 | 3,976 | ||||||||||||||||||||||||||||||
Net loan losses | Net loan losses | (3,617 | ) | (3,509 | ) | (3,793 | ) | (4,006 | ) | (4,510 | ) | Net loan losses | (2,458 | ) | (3,617 | ) | (3,509 | ) | (3,793 | ) | (4,006 | ) | ||||||||||||||||||||
Balance, end of period | Balance, end of period | $ | 53,910 | $ | 54,227 | $ | 52,086 | $ | 52,279 | $ | 51,574 | Balance, end of period | $ | 54,152 | $ | 53,910 | $ | 54,227 | $ | 52,086 | $ | 52,279 | ||||||||||||||||||||
Net loan losses to average loans | Net loan losses to average loans | 0.15 | % | 0.14 | % | 0.15 | % | 0.17 | % | 0.20 | % | Net loan losses to average loans | 0.11 | % | 0.15 | % | 0.14 | % | 0.15 | % | 0.17 | % | ||||||||||||||||||||
Allowance for loan losses as a percentage of loans outstanding | Allowance for loan losses as a percentage of loans outstanding | 2.32 | % | 2.17 | % | 2.10 | % | 2.11 | % | 2.22 | % | Allowance for loan losses as a percentage of loans outstanding | 2.35 | % | 2.32 | % | 2.17 | % | 2.10 | % | 2.11 | % |
28
At December 31, | ||||||||||||||||||||||||||||||||||||||||
2004 | 2003 | 2002 | 2001 | 2000 | ||||||||||||||||||||||||||||||||||||
Allocation | Loans as | Allocation | Loans as | Allocation | Loans as | Allocation | Loans as | Allocation | Loans as | |||||||||||||||||||||||||||||||
of the | Percent | of the | Percent | of the | Percent | of the | Percent | of the | Percent | |||||||||||||||||||||||||||||||
Allowance | of Total | Allowance | of Total | Allowance | of Total | Allowance | of Total | Allowance | of Total | |||||||||||||||||||||||||||||||
Balance | Loans | Balance | Loans | Balance | Loans | Balance | Loans | Balance | Loans | |||||||||||||||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||||||||||||||||||||
Commercial | $ | 29,857 | 60 | % | $ | 31,875 | 61 | % | $ | 23,692 | 64 | % | $ | 21,206 | 63 | % | $ | 21,632 | 63 | % | ||||||||||||||||||||
Real estate construction | 1,441 | 1 | % | 1,827 | 2 | % | 2,370 | 2 | % | 4,860 | 3 | % | 4,344 | 3 | % | |||||||||||||||||||||||||
Real estate residential | 917 | 16 | % | 870 | 15 | % | 893 | 13 | % | 417 | 14 | % | 427 | 14 | % | |||||||||||||||||||||||||
Consumer | 5,140 | 22 | % | 6,423 | 22 | % | 7,862 | 21 | % | 4,986 | 20 | % | 5,648 | 20 | % | |||||||||||||||||||||||||
Unallocated portion | 16,797 | — | 12,915 | — | 19,410 | — | 20,617 | — | 20,228 | — | ||||||||||||||||||||||||||||||
Total | $ | 54,152 | 100 | % | $ | 53,910 | 100 | % | $ | 54,227 | 100 | % | $ | 52,086 | 100 | % | $ | 52,279 | 100 | % | ||||||||||||||||||||
At December 31, | ||||||||||||||||||||||||||||||||||||||||
2003 | 2002 | 2001 | 2000 | 1999 | ||||||||||||||||||||||||||||||||||||
Allocation | Loans as | Allocation | Loans as | Allocation | Loans as | Allocation | Loans as | Allocation | Loans as | |||||||||||||||||||||||||||||||
of the | Percent | of the | Percent | of the | Percent | of the | Percent | of the | Percent | |||||||||||||||||||||||||||||||
Allowance | of Total | Allowance | of Total | Allowance | of Total | Allowance | of Total | Allowance | of Total | |||||||||||||||||||||||||||||||
Balance | Loans | Balance | Loans | Balance | Loans | Balance | Loans | Balance | Loans | |||||||||||||||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||||||||||||||||||||
Commercial | $ | 31,875 | 61 | % | $ | 23,692 | 64 | % | $ | 21,206 | 63 | % | $ | 21,632 | 63 | % | $ | 23,523 | 65 | % | ||||||||||||||||||||
Real estate construction | 1,827 | 2 | % | 2,370 | 2 | % | 4,860 | 3 | % | 4,344 | 3 | % | 2,042 | 2 | % | |||||||||||||||||||||||||
Real estate residential | 870 | 15 | % | 893 | 13 | % | 417 | 14 | % | 427 | 14 | % | 877 | 14 | % | |||||||||||||||||||||||||
Consumer | 6,423 | 22 | % | 7,862 | 21 | % | 4,986 | 20 | % | 5,648 | 20 | % | 4,670 | 19 | % | |||||||||||||||||||||||||
Unallocated portion | 12,915 | — | 19,410 | — | 20,617 | — | 20,228 | — | 20,462 | — | ||||||||||||||||||||||||||||||
Total | $ | 53,910 | 100 | % | $ | 54,227 | 100 | % | $ | 52,086 | 100 | % | $ | 52,279 | 100 | % | $ | 51,574 | 100 | % | ||||||||||||||||||||
�� The Company considers a loan to be impaired when, based on current information and events, it is probable that it will be unable to collect all amounts due (principal and interest) according to the contractual terms of the loan agreement. The measurement of impairment may be based on (i) the present value of the expected cash flows of the impaired loan discounted at the loan’s original effective interest rate, (ii) the observable market price of the impaired loan or (iii) the fair value of the collateral of a collateral-dependent loan. The Company does not apply this definition to smaller-balance loans that are collectively evaluated for impairment. In measuring impairment, the Company reviews all commercial and construction loans classified “Substandard” and “Doubtful” that meet materiality thresholds of $250 thousand and $100 thousand, respectively. The Company considers classified loans below the established thresholds to represent immaterial credit risk. All loans classified as “Loss” are considered impaired.
Year Ended | ||||||||||||||||
December 31, | Year Ended | |||||||||||||||
December 31, | ||||||||||||||||
2003 | 2002 | |||||||||||||||
2004 | 2003 | |||||||||||||||
(Dollars in thousands) | (Dollars in thousands) | |||||||||||||||
Total impaired loans | $ | 1,664 | $ | 1,095 | $ | 0 | $ | 1,664 | ||||||||
Specific reserves | $ | 623 | $ | 1,087 | $ | 0 | $ | 623 | ||||||||
29
Estimated Increase | ||||||||||||||||
(Decrease) in NII | ||||||||||||||||
2005 | Estimated | |||||||||||||||
Changes in Interest Rates (Basis Points) | NII Amount | Amount | Percent | |||||||||||||
(Dollars in millions) | ||||||||||||||||
+200 | $ | 215.5 | $ | (7.5 | ) | -3.5 | % | |||||||||
— | 223.0 | — | — | |||||||||||||
-100 | 223.5 | 0.5 | 0.2 | % |
Estimated Increase | ||||||||||||||||
(Decrease) in NII | ||||||||||||||||
2004 | Estimated | |||||||||||||||
Changes in Interest Rates (Basis Points) | NII Amount | Amount | Percent | |||||||||||||
(Dollars in millions) | ||||||||||||||||
+200 | $ | 215.8 | $ | (3.9 | ) | -1.8 | % | |||||||||
— | 219.7 | — | — | |||||||||||||
-50 | 219.9 | 0.2 | 0.1 | % |
Estimated Increase | ||||||||||||||||
(Decrease) in NII | ||||||||||||||||
2003 | Estimated | |||||||||||||||
Changes in Interest Rates (Basis Points) | NII Amount | Amount | Percent | |||||||||||||
(Dollars in millions) | ||||||||||||||||
+200 | $ | 215.8 | $ | (3.9 | ) | -1.8 | % | |||||||||
— | 219.7 | — | — | |||||||||||||
-50 | 219.9 | 0.2 | 0.1 | % |
Estimated Increase | ||||||||||||||||
(Decrease) in NII | ||||||||||||||||
2002 | Estimated | |||||||||||||||
Changes in Interest Rates (Basis Points) | NII Amount | Amount | Percent | |||||||||||||
(Dollars in millions) | ||||||||||||||||
+100 | $ | 217.1 | $ | (2.2 | ) | -1.0 | % | |||||||||
— | 219.3 | — | — | |||||||||||||
100 | 221.1 | 1.8 | 0.8 | % |
30
2003:2004:Interest Rate Sensitivity Analysis
Repricing within (days) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Non- | Repricing within (days) | |||||||||||||||||||||||||||||||||||||||||||||||||||
0-90 | 91-180 | 181-365 | Over 365 | Repricing | Total | Non- | ||||||||||||||||||||||||||||||||||||||||||||||
0-90 | 91-180 | 181-365 | Over 365 | Repricing | Total | |||||||||||||||||||||||||||||||||||||||||||||||
(Dollars in thousands) | (Dollars in thousands) | |||||||||||||||||||||||||||||||||||||||||||||||||||
Assets | Assets | Assets | ||||||||||||||||||||||||||||||||||||||||||||||||||
Investment securities | $ | 74,949 | $ | 63,697 | $ | 48,826 | $ | 1,761,816 | — | $ | 1,949,288 | Investment securities | $ | 49,066 | $ | 49,942 | $ | 89,846 | $ | 2,003,688 | — | $ | 2,192,542 | |||||||||||||||||||||||||||||
Loans | $ | 904,878 | $ | 87,840 | $ | 162,350 | $ | 1,168,262 | — | 2,323,330 | Loans | $ | 593,809 | $ | 109,935 | $ | 208,037 | $ | 1,388,449 | — | 2,300,230 | |||||||||||||||||||||||||||||||
Other assets | — | — | — | — | 303,767 | 303,767 | Other assets | — | — | — | — | 244,496 | 244,496 | |||||||||||||||||||||||||||||||||||||||
Total assets | $ | 979,827 | $ | 151,537 | $ | 211,176 | $ | 2,930,078 | $ | 303,767 | $ | 4,576,385 | Total assets | $ | 642,875 | $ | 159,877 | $ | 297,883 | $ | 3,392,137 | $ | 244,496 | $ | 4,737,268 | |||||||||||||||||||||||||||
Liabilities | Liabilities | Liabilities | ||||||||||||||||||||||||||||||||||||||||||||||||||
Noninterest bearing | $ | — | $ | — | $ | — | $ | — | $ | 1,240,379 | $ | 1,240,379 | Noninterest bearing | $ | — | — | — | $ | — | $ | 1,273,825 | $ | 1,273,825 | |||||||||||||||||||||||||||||
Interest-bearing: | Interest-bearing: | |||||||||||||||||||||||||||||||||||||||||||||||||||
Transaction | 168,809 | 168,809 | 224,078 | 0 | — | 561,696 | Transaction | 591,593 | 0 | 0 | 0 | — | 591,593 | |||||||||||||||||||||||||||||||||||||||
Money market savings | 225,274 | 225,274 | 300,364 | 0 | — | 750,912 | Money market savings | 764,373 | 0 | 0 | 0 | — | 764,373 | |||||||||||||||||||||||||||||||||||||||
Passbook savings | 92,151 | 92,151 | 122,868 | 0 | — | 307,170 | Passbook savings | 327,608 | 0 | 0 | 0 | — | 327,608 | |||||||||||||||||||||||||||||||||||||||
Time | 377,205 | 96,236 | 64,998 | 65,395 | — | 603,834 | Time | 403,271 | 89,524 | 70,687 | 62,738 | — | 626,220 | |||||||||||||||||||||||||||||||||||||||
Short-term borrowings | Short-term borrowings | 590,646 | 0 | 0 | 0 | — | 590,646 | Short-term borrowings | ||||||||||||||||||||||||||||||||||||||||||||
Federal Home Loan Bank advances | 0 | 0 | 70,000 | 35,000 | — | 105,000 | ||||||||||||||||||||||||||||||||||||||||||||||
Debt financing and notes payable | 3,214 | 0 | 0 | 21,429 | — | 24,643 | ||||||||||||||||||||||||||||||||||||||||||||||
Other liabilities | — | — | — | — | 51,734 | 51,734 | ||||||||||||||||||||||||||||||||||||||||||||||
Federal funds purchased | 568,275 | 0 | 0 | 0 | — | 568,275 | ||||||||||||||||||||||||||||||||||||||||||||||
Other | 167,148 | 0 | 0 | 0 | — | 167,148 | ||||||||||||||||||||||||||||||||||||||||||||||
Debt financing and notes payable | 3,214 | 0 | 0 | 18,215 | — | 21,429 | ||||||||||||||||||||||||||||||||||||||||||||||
Other liabilities | — | — | — | — | 38,188 | 38,188 | ||||||||||||||||||||||||||||||||||||||||||||||
Shareholders’ equity | Shareholders’ equity | — | — | — | — | 340,371 | 340,371 | Shareholders’ equity | — | — | — | — | 358,609 | 358,609 | ||||||||||||||||||||||||||||||||||||||
Total liabilities and shareholders’ equity | $ | 1,457,299 | $ | 582,470 | $ | 782,308 | $ | 121,824 | $ | 1,632,484 | $ | 4,576,385 | Total liabilities and shareholders’ equity | $ | 2,825,482 | $ | 89,524 | $ | 70,687 | $ | 80,953 | $ | 1,670,622 | $ | 4,737,268 | |||||||||||||||||||||||||||
Net (liabilities) assets subject to repricing | Net (liabilities) assets subject to repricing | (477,472 | ) | (430,933 | ) | (571,132 | ) | 2,808,254 | (1,328,717 | ) | Net (liabilities) assets subject to repricing | (2,182,607 | ) | 70,353 | 227,196 | 3,311,184 | (1,426,126 | ) | ||||||||||||||||||||||||||||||||||
Cumulative net (liabilities) assets subject to repricing | Cumulative net (liabilities) assets subject to repricing | (477,472 | ) | (908,405 | ) | (1,479,537 | ) | 1,328,717 | 0 | Cumulative net (liabilities) assets subject to repricing | (2,182,607 | ) | (2,112,254 | ) | (1,885,058 | ) | 1,426,126 | 0 | ||||||||||||||||||||||||||||||||||
31
prepayment fees. In 2003, other financing activities included the net result of a $169.9 million increase in deposits and a $240.9 million proceeds fromincrease in short-term borrowings, reduced by a $67.2 million payment of FHLB advances including a loss on extinguishment of debt. During 2002, other financing activities included a $88.1 million proceeds fromincrease in short-term borrowings and $130.0 million from FHLB advances, reduced by a $24.1 million decrease in deposits. During 2001, other financing activities included $75.0 million in net repayments of short-term borrowings.
common stock. The Company anticipates maintaining its cash levels through the end of 20042005 mainly due to increased profitability and retained earnings. It is anticipated that the loan demand will increase moderately. Demand for loansmoderately, although such demand will be dictated by economic conditions. The growth of deposit balances is expected to exceed the anticipated growth in loan demand through the end of 2004. The2005, resulting in an increase in the investment securities portfolio, is expected to increase.a reduction of time deposits and borrowed funds, or a combination of both. However, due to concerns regarding consumer confidence, possible terrorist attacks, aftermath of the war in the Middle East,Iraq, and uncertainty in the general economic environment, loan demand and levels of customer deposits are not certain. Shareholder dividends and share repurchases are expected to continue from time to time in 2004.
2005.
32
2003:2004:Contractual Obligations
At December 31, 2003 | ||||||||||||||||||||||||||||||||||||||||||
At December 31, 2004 | ||||||||||||||||||||||||||||||||||||||||||
Within | One to | Three to | After | |||||||||||||||||||||||||||||||||||||||
One Year | Three Years | Five Years | Five Years | Total | Within | One to | Three to | After | ||||||||||||||||||||||||||||||||||
One Year | Three Years | Five Years | Five Years | Total | ||||||||||||||||||||||||||||||||||||||
(Dollars in thousands) | (Dollars in thousands) | |||||||||||||||||||||||||||||||||||||||||
Long-Term Debt Obligations | Long-Term Debt Obligations | $ | 3,214 | $ | 6,429 | $ | 0 | $ | 15,000 | $ | 24,643 | Long-Term Debt Obligations | $ | 3,214 | $ | 3,215 | $ | 0 | $ | 15,000 | $ | 21,429 | ||||||||||||||||||||
Operating Lease Obligations | Operating Lease Obligations | 5,228 | 7,306 | 4,873 | 1,134 | 18,541 | Operating Lease Obligations | 4,590 | 7,020 | 3,772 | 6,075 | 21,457 | ||||||||||||||||||||||||||||||
Purchase Obligations | Purchase Obligations | 5,386 | 10,771 | 0 | 0 | 16,157 | Purchase Obligations | 5,562 | 11,124 | 0 | 0 | 16,686 | ||||||||||||||||||||||||||||||
Total | $ | 13,828 | $ | 24,506 | $ | 4,873 | $ | 16,134 | $ | 59,341 | Total | $ | 13,366 | $ | 21,359 | $ | 3,772 | $ | 21,075 | $ | 59,572 | |||||||||||||||||||||
2002. As in 2004, the Company retains the flexibility to reduce share repurchase activity to conserve cash for strategic acquisitions or other purposes. At December 31, 2004, the Company had accumulated $39 million in cash and cash equivalents toward Redwood Empire Bancorp cash merger consideration of approximately $57 million.
options substantially reduced by a $3.6 million decline in unrealized gains on securities available-for-sale, $35.1 million in dividends paid and $55.4 million in stock repurchases.
At December 31, | At December 31, | |||||||||||||||||||||||
Minimum | Minimum | |||||||||||||||||||||||
Regulatory | Regulatory | |||||||||||||||||||||||
2003 | 2002 | Requirement | 2004 | 2003 | Requirement | |||||||||||||||||||
Tier I Capital | 10.13 | % | 9.71 | % | 4.00 | % | 11.09 | % | 10.13 | % | 4.00 | % | ||||||||||||
Total Capital | 11.39 | % | 10.97 | % | 8.00 | % | 12.46 | % | 11.39 | % | 8.00 | % | ||||||||||||
Leverage ratio | 6.85 | % | 7.27 | % | 4.00 | % | 7.06 | % | 6.85 | % | 4.00 | % | ||||||||||||
33
33
At December 31, | At December 31, | |||||||||||||||||||||||||
2003 | 2002 | 2001 | 2004 | 2003 | 2002 | |||||||||||||||||||||
Return on average total assets | Return on average total assets | 2.19 | % | 2.17 | % | 2.18 | % | Return on average total assets | 2.10 | % | 2.19 | % | 2.17 | % | ||||||||||||
Return on average shareholders’ equity | Return on average shareholders’ equity | 29.38 | % | 28.70 | % | 27.17 | % | Return on average shareholders’ equity | 28.83 | % | 29.38 | % | 28.70 | % | ||||||||||||
Average shareholders’ equity as a percentage of: | Average shareholders’ equity as a percentage of: | Average shareholders’ equity as a percentage of: | ||||||||||||||||||||||||
Average total assets | 7.47 | % | 7.55 | % | 8.04 | % | Average total assets | 7.28 | % | 7.47 | % | 7.55 | % | |||||||||||||
Average total loans | 13.74 | % | 12.31 | % | 12.58 | % | Average total loans | 14.63 | % | 13.74 | % | 12.31 | % | |||||||||||||
Average total deposits | 9.43 | % | 9.28 | % | 9.64 | % | Average total deposits | 9.27 | % | 9.43 | % | 9.28 | % | |||||||||||||
Dividend payout ratio (diluted EPS) | Dividend payout ratio (diluted EPS) | 35 | % | 35 | % | 35 | % | Dividend payout ratio (diluted EPS) | 38 | % | 35 | % | 35 | % |
Deposit categories |
Deposit Distribution and Average Rates Paid |
Years Ended December 31, | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Years Ended December 31, | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2003 | 2002 | 2001 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2004 | 2003 | 2002 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Percentage | Percentage | Percentage | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Average | of Total | Average | of Total | Average | of Total | Percentage | Percentage | Percentage | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance | Deposits | Rate* | Balance | Deposits | Rate* | Balance | Deposits | Rate* | Average | of Total | Average | of Total | Average | of Total | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance | Deposits | Rate* | Balance | Deposits | Rate* | Balance | Deposits | Rate* | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(Dollars in thousands) | (Dollars in thousands) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Noninterest bearing demand | Noninterest bearing demand | $ | 1,173,853 | 34.2% | —% | $ | 1,075,845 | 32.9% | — | % | $ | 992,182 | 30.8% | — | % | Noninterest bearing demand | $ | 1,281,349 | 35.9 | % | — | % | $ | 1,173,853 | 34.2 | % | — | % | $ | 1,075,845 | 32.9 | % | — | % | ||||||||||||||||||||||||||||||||||||||||
Interest bearing: | Interest bearing: | Interest bearing: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Transaction | 563,022 | 16.4% | 0.13% | 534,190 | 16.3% | 0.29 | % | 514,235 | 16.0% | 0.54 | % | Transaction | 577,296 | 16.2 | % | 0.11 | % | 563,022 | 16.4 | % | 0.13 | % | 534,190 | 16.3 | % | 0.29 | % | |||||||||||||||||||||||||||||||||||||||||||||||
Savings | 1,015,699 | 29.6% | 0.60% | 958,421 | 29.3% | 1.09 | % | 846,743 | 26.3% | 2.02 | % | Savings | 1,085,051 | 30.4 | % | 0.36 | % | 1,015,699 | 29.6 | % | 0.60 | % | 958,421 | 29.3 | % | 1.09 | % | |||||||||||||||||||||||||||||||||||||||||||||||
Time less than $100 thousand | 307,054 | 9.0% | 1.68% | 334,601 | 10.2% | 2.48 | % | 387,407 | 12.0% | 4.36 | % | Time less than $100 thousand | 271,212 | 7.6 | % | 1.49 | % | 307,054 | 9.0 | % | 1.68 | % | 334,601 | 10.2 | % | 2.48 | % | |||||||||||||||||||||||||||||||||||||||||||||||
Time $100 thousand or more | 370,549 | 10.8% | 1.35% | 368,456 | 11.3% | 2.28 | % | 477,035 | 14.8% | 4.36 | % | Time $100 thousand or more | 350,400 | 9.8 | % | 1.27 | % | 370,549 | 10.8 | % | 1.35 | % | 368,456 | 11.3 | % | 2.28 | % | |||||||||||||||||||||||||||||||||||||||||||||||
Total | Total | $ | 3,430,177 | 100.0% | 0.75% | $ | 3,271,513 | 100.0% | 1.30 | % | $ | 3,217,602 | 100.0% | 2.59 | % | Total | $ | 3,565,308 | 100.0 | % | 0.57 | % | $ | 3,430,177 | 100.0 | % | 0.75 | % | $ | 3,271,513 | 100.0 | % | 1.30 | % | ||||||||||||||||||||||||||||||||||||||||
* | Rate is computed based on interest-bearing deposits |
34
During 2002, total average deposits increased by $5.39 million or 1.7% from 2001 due to an inflow of $83.7 million of noninterest bearing deposits, a $20 million increase in interest bearing demand deposits and a $11.7 million increase in savings deposits, partially offset by declines in consumer CDs (down $52.8 million) and public and jumbo CDs (down $108.6 million).
34
Deposit Over $100,000 Maturity Distribution |
December 31, | December 31, | |||||||
2003 | 2004 | |||||||
(In thousands) | (In thousands) | |||||||
Three months or less | $ | 238,533 | $ | 287,582 | ||||
Over three through six months | 34,055 | 34,410 | ||||||
Over six through twelve months | 24,934 | 28,828 | ||||||
Over twelve months | 17,731 | 14,479 | ||||||
Total | $ | 315,253 | $ | 365,299 | ||||
Short-Term Borrowings Distribution |
At December 31, | ||||||||||||||||||||||||||
At December 31, | ||||||||||||||||||||||||||
2003 | 2002 | 2001 | ||||||||||||||||||||||||
2004 | 2003 | 2002 | ||||||||||||||||||||||||
(In thousands) | (In thousands) | |||||||||||||||||||||||||
Federal funds purchased | Federal funds purchased | $ | 438,500 | $ | 146,425 | $ | 62,675 | Federal funds purchased | $ | 568,275 | $ | 438,500 | $ | 146,425 | ||||||||||||
Other borrowed funds: | Other borrowed funds: | Other borrowed funds: | ||||||||||||||||||||||||
Retail repurchase agreements | 152,146 | 203,311 | 209,236 | Retail repurchase agreements | 167,148 | 152,146 | 203,311 | |||||||||||||||||||
Total short term borrowings | $ | 590,646 | $ | 349,736 | $ | 271,911 | Total short term borrowings | $ | 735,423 | $ | 590,646 | $ | 349,736 | |||||||||||||
Other Borrowed Funds Balances and Rates Paid
Years Ended December 31, | ||||||||||||||||||||||||||
Years Ended December 31, | ||||||||||||||||||||||||||
2003 | 2002 | 2001 | ||||||||||||||||||||||||
2004 | 2003 | 2002 | ||||||||||||||||||||||||
(Dollars in thousands) | (Dollars in thousands) | |||||||||||||||||||||||||
Outstanding amount: | Outstanding amount: | Outstanding amount: | ||||||||||||||||||||||||
Average for the year | $ | 156,137 | $ | 184,942 | $ | 181,483 | Average for the year | $ | 195,118 | $ | 156,137 | $ | 184,942 | |||||||||||||
Maximum during the year | 199,276 | 239,130 | 210,927 | Maximum during the year | 400,372 | 199,276 | 239,130 | |||||||||||||||||||
Interest rates: | Interest rates: | Interest rates: | ||||||||||||||||||||||||
Average for the year | 0.58 | % | 1.34 | % | 3.14 | % | Average for the year | 0.45 | % | 0.58 | % | 1.34 | % | |||||||||||||
Average at period end | 0.43 | % | 0.77 | % | 1.93 | % | Average at period end | 0.27 | % | 0.43 | % | 0.77 | % |
35
Components of Noninterest Income |
Years Ended December 31, | ||||||||||||||||||||||||||
Years Ended December 31, | ||||||||||||||||||||||||||
2003 | 2002 | 2001 | ||||||||||||||||||||||||
2004 | 2003 | 2002 | ||||||||||||||||||||||||
(Dollars in thousands) | (Dollars in thousands) | |||||||||||||||||||||||||
Service charges on deposit accounts | Service charges on deposit accounts | $ | 26,381 | $ | 24,447 | $ | 23,114 | Service charges on deposit accounts | $ | 28,621 | $ | 26,381 | $ | 24,447 | ||||||||||||
Merchant credit card fees | Merchant credit card fees | 3,619 | 3,730 | 3,993 | Merchant credit card fees | 3,509 | 3,619 | 3,730 | ||||||||||||||||||
ATM fees & interchange | ATM fees & interchange | 2,378 | 2,396 | 2,282 | ATM fees & interchange | 2,487 | 2,378 | 2,396 | ||||||||||||||||||
Debit card fees | Debit card fees | 2,125 | 1,879 | 1,515 | Debit card fees | 2,541 | 2,125 | 1,879 | ||||||||||||||||||
Trust fees | Trust fees | 995 | 1,020 | 966 | Trust fees | 1,027 | 995 | 1,020 | ||||||||||||||||||
Financial services commissions | Financial services commissions | 893 | 1,315 | 1,375 | Financial services commissions | 1,250 | 893 | 1,315 | ||||||||||||||||||
Mortgage banking income | Mortgage banking income | 851 | 985 | 918 | Mortgage banking income | 386 | 851 | 985 | ||||||||||||||||||
Official check sales fees | Official check sales fees | 505 | 637 | 1,102 | Official check sales fees | 631 | 505 | 637 | ||||||||||||||||||
Gains on sale of foreclosed property | Gains on sale of foreclosed property | 122 | 108 | 156 | Gains on sale of foreclosed property | 231 | 122 | 108 | ||||||||||||||||||
Investment securities gains (impairment) | 2,443 | (4,260 | ) | 0 | ||||||||||||||||||||||
Investment securities gains (losses) | Investment securities gains (losses) | 2,169 | 2,443 | (18 | ) | |||||||||||||||||||||
Investment securities impairment | Investment securities impairment | (7,180 | ) | 0 | (4,260 | ) | ||||||||||||||||||||
Loss on extinguishment of debt | Loss on extinguishment of debt | (2,166 | ) | 0 | 0 | Loss on extinguishment of debt | (2,204 | ) | (2,166 | ) | 0 | |||||||||||||||
Other noninterest income | Other noninterest income | 4,770 | 4,294 | 7,234 | Other noninterest income | 5,115 | 4,770 | 4,312 | ||||||||||||||||||
Total | $ | 42,916 | $ | 36,551 | $ | 42,655 | Total | $ | 38,583 | $ | 42,916 | $ | 36,551 | |||||||||||||
36
Noninterest income for 2002 was $6.1 million or 14.3% lower than 2001 primarily due to a $4.3 million charge for the other-than-temporary impairment of corporate bonds of an issuer in the telecom industry which declared bankruptcy. Additionally, other noninterest income in 2002 was lower because 2001 benefited from $1.5 million additional gains on sales of other assets and a gain on sale of four branches. Merchant credit card income fell $263 thousand for 2002 primarily due to a lower average discount rate of 2.16% compared with 2.19% the prior year. Official check income declined $465 thousand for 2002 or 42.2% due to lower earnings on outstanding checks. The largest offset to the decrease in 2002 was service charges on deposits. Specifically, deficit fees charged on analyzed accounts increased $1.8 million, or 23.4%. Fees generated from users of the Company’s debit card product grew $364 thousand (24.0%) to $1.9 million, as card usage continued to increase.
36
Components of Noninterest Expense |
Years Ended December 31, | ||||||||||||||||||||||||||
Years Ended December 31, | ||||||||||||||||||||||||||
2003 | 2002 | 2001 | ||||||||||||||||||||||||
2004 | 2003 | 2002 | ||||||||||||||||||||||||
(Dollars in thousands) | (Dollars in thousands) | |||||||||||||||||||||||||
Salaries and wages | Salaries and wages | $ | 36,631 | $ | 37,877 | $ | 36,513 | Salaries and wages | $ | 36,278 | $ | 36,631 | $ | 37,877 | ||||||||||||
Incentive compensation | Incentive compensation | 5,438 | 6,068 | 5,404 | Incentive compensation | 4,905 | 5,438 | 6,068 | ||||||||||||||||||
Other personnel benefits | Other personnel benefits | 11,905 | 11,415 | 10,973 | Other personnel benefits | 11,324 | 11,905 | 11,415 | ||||||||||||||||||
Occupancy | Occupancy | 12,152 | 11,971 | 11,943 | Occupancy | 11,935 | 12,152 | 11,971 | ||||||||||||||||||
Data processing | Data processing | 6,121 | 6,078 | 6,034 | Data processing | 6,057 | 6,121 | 6,078 | ||||||||||||||||||
Equipment | Equipment | 5,364 | 5,873 | 6,171 | Equipment | 4,794 | 5,364 | 5,873 | ||||||||||||||||||
Contract courier | 3,695 | 3,642 | 3,650 | |||||||||||||||||||||||
Courier service | Courier service | 3,605 | 3,695 | 3,642 | ||||||||||||||||||||||
Telephone | Telephone | 1,898 | 1,700 | 1,917 | Telephone | 2,112 | 1,898 | 1,700 | ||||||||||||||||||
Professional fees | Professional fees | 1,886 | 1,770 | 1,626 | Professional fees | 1,869 | 1,886 | 1,770 | ||||||||||||||||||
Postage | Postage | 1,624 | 1,601 | 1,711 | Postage | 1,407 | 1,624 | 1,601 | ||||||||||||||||||
Loan expenses | Loan expenses | 1,322 | 1,324 | 1,107 | Loan expenses | 1,077 | 1,322 | 1,324 | ||||||||||||||||||
Stationery and supplies | Stationery and supplies | 1,301 | 1,451 | 1,479 | Stationery and supplies | 1,280 | 1,301 | 1,451 | ||||||||||||||||||
Merchant credit card processing | Merchant credit card processing | 1,183 | 1,412 | 1,465 | Merchant credit card processing | 1,104 | 1,183 | 1,412 | ||||||||||||||||||
Advertising and public relations | Advertising and public relations | 1,066 | 1,190 | 1,406 | Advertising and public relations | 1,037 | 1,066 | 1,190 | ||||||||||||||||||
Operational losses | Operational losses | 936 | 916 | 986 | Operational losses | 964 | 936 | 916 | ||||||||||||||||||
Amortization of deposit intangibles | Amortization of deposit intangibles | 743 | 1,003 | 1,364 | Amortization of deposit intangibles | 543 | 743 | 1,003 | ||||||||||||||||||
Amortization of goodwill | Amortization of goodwill | — | — | 1,176 | Amortization of goodwill | — | — | — | ||||||||||||||||||
Other | Other | 8,438 | 8,032 | 7,726 | Other | 8,460 | 8,438 | 8,032 | ||||||||||||||||||
Total | $ | 101,703 | $ | 103,323 | $ | 102,651 | Total | $ | 98,751 | $ | 101,703 | $ | 103,323 | |||||||||||||
Noninterest expense to revenues (“efficiency ratio”)(FTE) | Noninterest expense to revenues (“efficiency ratio”)(FTE) | 39.1 | % | 41.0 | % | 41.7 | % | Noninterest expense to revenues (“efficiency ratio”)(FTE) | 38.5 | % | 39.1 | % | 41.0 | % | ||||||||||||
Average full-time equivalent staff | Average full-time equivalent staff | 1,026 | 1,072 | 1,082 | Average full-time equivalent staff | 984 | 1,026 | 1,072 | ||||||||||||||||||
Total average assets per full-time staff | Total average assets per full-time staff | $ | 4,223 | $ | 3,752 | $ | 3,565 | Total average assets per full-time staff | $ | 4,610 | $ | 4,223 | $ | 3,752 | ||||||||||||
37
37
Noninterest expense increased by $672 thousand in 2002 compared to 2001, proportionately less than the corresponding increase in total revenues. This resulted in an efficiency ratio of 41.0%. Personnel-related cost increased $2.5 million or 4.7%. The growth was attributable to merit increases for employees, severance costs incurred in connection with the Company’s acquisition of KSB in June 2002 and higher incentive payments. Professional fees increased $144 thousand (8.9%) primarily in connection with legal costs incurred as a result of the KSB acquisition. Loan expense rose $217 thousand or 19.6% due to growth in new loans and refinancings.
Offsetting these increases, equipment expense, which consists largely of depreciation charges, decreased $298 thousand (4.8%). Amortization of intangibles declined primarily because of the discontinuation of goodwill amortization in accordance with the implementation of Statement of Financial Accounting Standards No. 142 and, to a lesser extent, the expiration of intangibles associated with prior acquisitions. Telephone expense continued to drop (down $217 thousand or 11.3% from 2001). Advertising and public relations fell $216 thousand (15.4%) primarily due to decreases in promotional advertising.
interest.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Item 7A. | Quantitative and Qualitative Disclosures About Market Risk |
38
Item 8. | Financial Statements and Supplementary Data |
Page | ||||
Management’s Report on Internal Control Over Financial Reporting | 40 | |||
Report of Independent Registered Public Accounting Firm | 41 | |||
Consolidated Balance Sheets as of December 31, | ||||
Consolidated Statements of Income and Comprehensive Income for the years ended December 31, 2004, 2003 | ||||
Consolidated Statements of Changes in Shareholders’ Equity for the years ended December 31, 2004, 2003 | ||||
Consolidated Statements of Cash Flows for the years ended December 31, 2004, 2003 | ||||
Notes to Consolidated Financial Statements | ||||
Report of Independent | ||||
39
40
/s/KPMG LLP | |
KPMG LLP |
41
Balances as of December 31, | Balances as of December 31, | |||||||||||||||||||||||
2003 | 2002 | 2004 | 2003 | |||||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||
ASSETS | ASSETS | ASSETS | ||||||||||||||||||||||
Cash and cash equivalents (Note 15) | $ | 126,153 | $ | 189,628 | ||||||||||||||||||||
Cash and cash equivalents (Note 15) | $ | 189,628 | $ | 222,577 | Money market assets | 534 | 534 | |||||||||||||||||
Money market assets | 534 | 633 | Investment securities available for sale (Note 2) | 931,710 | 1,413,911 | |||||||||||||||||||
Investment securities available for sale (Note 2) | 1,413,911 | 947,848 | Investment securities held to maturity; market values of $1,265,986 in 2004 and $542,729 in 2003 (Note 2) | 1,260,832 | 535,377 | |||||||||||||||||||
Investment securities held to maturity; market values of $542,729 in 2003 and $450,771 in 2002 (Note 2) | 535,377 | 438,985 | Loans, net of an allowance for loan losses of: | |||||||||||||||||||||
Loans, net of an allowance for loan losses of: | $54,152 in 2004 and $53,910 in 2003 (Notes 3, 4 and 14) | 2,246,078 | 2,269,420 | |||||||||||||||||||||
$53,910 in 2003 and $54,227 in 2002 (Notes 3, 4 and 14) | 2,269,420 | 2,440,411 | Other real estate owned | 0 | 90 | |||||||||||||||||||
Other real estate owned | 90 | 381 | Premises and equipment, net (Note 5) | 35,223 | 35,748 | |||||||||||||||||||
Premises and equipment, net (Note 5) | 35,748 | 37,396 | Interest receivable and other assets (Note 9) | 136,738 | 131,677 | |||||||||||||||||||
Interest receivable and other assets (Note 9) | 131,677 | 136,636 | ||||||||||||||||||||||
Total Assets | $ | 4,737,268 | $ | 4,576,385 | ||||||||||||||||||||
Total Assets | $ | 4,576,385 | $ | 4,224,867 | ||||||||||||||||||||
LIABILITIES | LIABILITIES | LIABILITIES | ||||||||||||||||||||||
Deposits: | Deposits: | |||||||||||||||||||||||
Noninterest bearing | $ | 1,240,379 | $ | 1,146,828 | Noninterest bearing | $ | 1,273,825 | $ | 1,240,379 | |||||||||||||||
Interest bearing: | Interest bearing: | |||||||||||||||||||||||
Transaction | 561,696 | 559,875 | Transaction | 591,593 | 561,696 | |||||||||||||||||||
Savings | 1,058,082 | 952,319 | Savings | 1,091,981 | 1,058,082 | |||||||||||||||||||
Time (Notes 2 and 6) | 603,834 | 635,043 | Time (Notes 2 and 6) | 626,220 | 603,834 | |||||||||||||||||||
Total deposits | 3,583,619 | 3,463,991 | ||||||||||||||||||||||
Total deposits | 3,463,991 | 3,294,065 | ||||||||||||||||||||||
Short-term borrowed funds (Notes 2 and 6) | 735,423 | 590,646 | ||||||||||||||||||||||
Short-term borrowed funds (Notes 2 and 6) | 590,646 | 349,736 | Federal Home Loan Bank advances (Note 6) | 0 | 105,000 | |||||||||||||||||||
Federal Home Loan Bank advances (Note 6) | 105,000 | 170,000 | Notes Payable (Note 6) | 21,429 | 24,643 | |||||||||||||||||||
Notes Payable (Note 6) | 24,643 | 24,607 | Liability for interest, taxes and other expenses (Note 9) | 38,188 | 51,734 | |||||||||||||||||||
Liability for interest, taxes and other expenses (Note 9) | 51,734 | 44,960 | ||||||||||||||||||||||
Total Liabilities | 4,378,659 | 4,236,014 | ||||||||||||||||||||||
Total Liabilities | 4,236,014 | 3,883,368 | ||||||||||||||||||||||
Shareholders’ Equity (Notes 7, 8 and 15) | Shareholders’ Equity (Notes 7, 8 and 15) | Shareholders’ Equity (Notes 7, 8 and 15) | ||||||||||||||||||||||
Common Stock (no par value) Authorized — 150,000 shares Issued and outstanding — 32,287 in 2003 and 33,411 in 2002 | 220,285 | 217,198 | Common Stock (no par value) Authorized — 150,000 shares Issued and outstanding — 31,640 in 2004 and 32,287 in 2003 | 227,829 | 218,461 | |||||||||||||||||||
Accumulated other comprehensive income: | Deferred compensation | 2,146 | 1,824 | |||||||||||||||||||||
Unrealized gain on securities available for sale, net | 13,191 | 19,152 | Accumulated other comprehensive income: | |||||||||||||||||||||
Retained earnings | 106,895 | 105,149 | Unrealized gain on securities available for sale, net | 9,638 | 13,191 | |||||||||||||||||||
Retained earnings | 118,996 | 106,895 | ||||||||||||||||||||||
Total Shareholders’ Equity | 340,371 | 341,499 | ||||||||||||||||||||||
Total Shareholders’ Equity | 358,609 | 340,371 | ||||||||||||||||||||||
Total Liabilities and Shareholders’ Equity | $ | 4,576,385 | $ | 4,224,867 | ||||||||||||||||||||
Total Liabilities and Shareholders’ Equity | $ | 4,737,268 | $ | 4,576,385 | ||||||||||||||||||||
4042
For the Years Ended December 31, | |||||||||||||||
2003 | 2002 | 2001 | |||||||||||||
(In thousands, except per share | |||||||||||||||
data) | |||||||||||||||
Interest Income | |||||||||||||||
Loans | $ | 152,758 | $ | 174,810 | $ | 194,432 | |||||||||
Money market assets and funds sold | 8 | 12 | 24 | ||||||||||||
Investment securities: | |||||||||||||||
Available for sale | |||||||||||||||
Taxable | 34,336 | 32,426 | 36,813 | ||||||||||||
Tax-exempt | 15,263 | 14,960 | 13,482 | ||||||||||||
Held to maturity | |||||||||||||||
Taxable | 6,387 | 6,810 | 4,572 | ||||||||||||
Tax-exempt | 14,741 | 8,615 | 7,733 | ||||||||||||
Total Interest Income | 223,493 | 237,633 | 257,056 | ||||||||||||
Interest Expense | |||||||||||||||
Transaction deposits | 727 | 1,533 | 2,769 | ||||||||||||
Savings deposits | 6,091 | 10,409 | 17,127 | ||||||||||||
Time deposits (Note 6) | 10,167 | 16,703 | 37,692 | ||||||||||||
Short-term borrowed funds (Note 6) | 3,415 | 3,524 | 9,060 | ||||||||||||
Federal Home Loan Bank advances | 5,318 | 5,225 | 223 | ||||||||||||
Debt financing and notes payable (Note 6) | 1,479 | 1,788 | 2,016 | ||||||||||||
Total Interest Expense | 27,197 | 39,182 | 68,887 | ||||||||||||
Net Interest Income | 196,296 | 198,451 | 188,169 | ||||||||||||
Provision for loan losses (Note 3) | 3,300 | 3,600 | 3,600 | ||||||||||||
Net Interest Income After Provision for Loan Losses | 192,996 | 194,851 | 184,569 | ||||||||||||
Noninterest Income | |||||||||||||||
Service charges on deposit accounts | 26,381 | 24,446 | 23,114 | ||||||||||||
Merchant credit card | 3,619 | 3,730 | 3,993 | ||||||||||||
Financial services commissions | 893 | 1,315 | 1,375 | ||||||||||||
Mortgage banking | 851 | 985 | 918 | ||||||||||||
Trust fees | 995 | 1,020 | 966 | ||||||||||||
Securities gains (impairment) | 2,443 | (4,278 | ) | 0 | |||||||||||
Loss on extinguishment of debt | (2,166 | ) | 0 | 0 | |||||||||||
Other | 9,900 | 9,333 | 12,289 | ||||||||||||
Total Noninterest Income | 42,916 | 36,551 | 42,655 | ||||||||||||
Noninterest Expense | |||||||||||||||
Salaries and related benefits (Note 13) | 53,974 | 55,360 | 52,890 | ||||||||||||
Occupancy (Notes 5 and 11) | 12,152 | 11,971 | 11,943 | ||||||||||||
Furniture and equipment (Notes 5 and 11) | 5,364 | 5,873 | 6,171 | ||||||||||||
Data processing | 6,121 | 6,078 | 6,034 | ||||||||||||
Contract courier | 3,695 | 3,643 | 3,650 | ||||||||||||
Professional fees | 1,886 | 1,770 | 1,626 | ||||||||||||
Other real estate owned | 46 | 143 | 166 | ||||||||||||
Other | 18,465 | 18,485 | 20,171 | ||||||||||||
Total Noninterest Expense | 101,703 | 103,323 | 102,651 | ||||||||||||
Income Before Income Taxes | 134,209 | 128,079 | 124,573 | ||||||||||||
Provision for income taxes (Note 9) | 39,146 | 40,941 | 40,294 | ||||||||||||
Net Income | $ | 95,063 | $ | 87,138 | $ | 84,279 | |||||||||
Comprehensive Income, net: | |||||||||||||||
Change in unrealized gain on securities available for sale, net | (5,961 | ) | 7,252 | 4,731 | |||||||||||
Comprehensive Income | $ | 89,102 | $ | 94,390 | $ | 89,010 | |||||||||
Average Shares Outstanding | 32,849 | 33,686 | 35,213 | ||||||||||||
Diluted Average Shares Outstanding | 33,369 | 34,225 | 35,748 | ||||||||||||
Per Share Data (Note 7) | |||||||||||||||
Basic earnings | $ | 2.89 | $ | 2.59 | $ | 2.39 | |||||||||
Diluted earnings | 2.85 | 2.55 | 2.36 | ||||||||||||
Dividends paid | 1.00 | 0.90 | 0.82 |
For the Years Ended December 31, | |||||||||||||||
2004 | 2003 | 2002 | |||||||||||||
(In thousands, except per share data) | |||||||||||||||
Interest and Fee Income | |||||||||||||||
Loans | $ | 133,226 | $ | 152,758 | $ | 174,810 | |||||||||
Money market assets and funds sold | 1 | 8 | 12 | ||||||||||||
Investment securities: | |||||||||||||||
Available for sale | |||||||||||||||
Taxable | 33,230 | 35,385 | 32,426 | ||||||||||||
Tax-exempt | 14,514 | 15,563 | 14,960 | ||||||||||||
Held to maturity | |||||||||||||||
Taxable | 17,209 | 5,038 | 6,810 | ||||||||||||
Tax-exempt | 18,157 | 14,741 | 8,615 | ||||||||||||
Total Interest and fee Income | 216,337 | 223,493 | 237,633 | ||||||||||||
Interest Expense | |||||||||||||||
Transaction deposits | 612 | 727 | 1,533 | ||||||||||||
Savings deposits | 3,931 | 6,091 | 10,409 | ||||||||||||
Time deposits (Note 6) | 8,504 | 10,167 | 16,703 | ||||||||||||
Short-term borrowed funds (Note 6) | 5,878 | 3,415 | 3,524 | ||||||||||||
Federal Home Loan Bank advances | 897 | 5,318 | 5,225 | ||||||||||||
Debt financing and notes payable (Note 6) | 1,284 | 1,479 | 1,788 | ||||||||||||
Total Interest Expense | 21,106 | 27,197 | 39,182 | ||||||||||||
Net Interest Income | 195,231 | 196,296 | 198,451 | ||||||||||||
Provision for loan losses (Note 3) | 2,700 | 3,300 | 3,600 | ||||||||||||
Net Interest Income After Provision for Loan Losses | 192,531 | 192,996 | 194,851 | ||||||||||||
Noninterest Income | |||||||||||||||
Service charges on deposit accounts | 28,621 | 26,381 | 24,446 | ||||||||||||
Merchant credit card | 3,509 | 3,619 | 3,730 | ||||||||||||
Financial services commissions | 1,250 | 893 | 1,315 | ||||||||||||
Mortgage banking | 386 | 851 | 985 | ||||||||||||
Trust fees | 1,027 | 995 | 1,020 | ||||||||||||
Securities (impairment) gains, net | (5,011 | ) | 2,443 | (4,278 | ) | ||||||||||
Loss on extinguishment of debt | (2,204 | ) | (2,166 | ) | 0 | ||||||||||
Other | 11,005 | 9,900 | 9,333 | ||||||||||||
Total Noninterest Income | 38,583 | 42,916 | 36,551 | ||||||||||||
Noninterest Expense | |||||||||||||||
Salaries and related benefits (Note 13) | 52,507 | 53,974 | 55,360 | ||||||||||||
Occupancy (Notes 5 and 11) | 11,935 | 12,152 | 11,971 | ||||||||||||
Furniture and equipment (Notes 5 and 11) | 4,794 | 5,364 | 5,873 | ||||||||||||
Data processing | 6,057 | 6,121 | 6,078 | ||||||||||||
Courier Service | 3,605 | 3,695 | 3,643 | ||||||||||||
Professional fees | 1,869 | 1,886 | 1,770 |
43
For the Years Ended December 31, | ||||||||||||||
2004 | 2003 | 2002 | ||||||||||||
(In thousands, except per share data) | ||||||||||||||
Other real estate owned | (7 | ) | 46 | 143 | ||||||||||
Other | 17,991 | 18,465 | 18,485 | |||||||||||
Total Noninterest Expense | 98,751 | 101,703 | 103,323 | |||||||||||
Income Before Income Taxes | 132,363 | 134,209 | 128,079 | |||||||||||
Provision for income taxes (Note 9) | 37,145 | 39,146 | 40,941 | |||||||||||
Net Income | $ | 95,218 | $ | 95,063 | $ | 87,138 | ||||||||
Comprehensive Income, net: | ||||||||||||||
Change in unrealized gain on securities available for sale, net | (3,553 | ) | (5,961 | ) | 7,252 | |||||||||
Comprehensive Income | $ | 91,665 | $ | 89,102 | $ | 94,390 | ||||||||
Average Shares Outstanding | 31,821 | 32,849 | 33,686 | |||||||||||
Diluted Average Shares Outstanding | 32,461 | 33,369 | 34,225 | |||||||||||
Per Share Data (Note 7) | ||||||||||||||
Basic earnings | $ | 2.99 | $ | 2.89 | $ | 2.59 | ||||||||
Diluted earnings | 2.93 | 2.85 | 2.55 | |||||||||||
Dividends paid | 1.10 | 1.00 | 0.90 |
4144
Accumulated | ||||||||||||||||||||||||||||||||||||||||||
Other | ||||||||||||||||||||||||||||||||||||||||||
Common | Comprehensive | Retained | ||||||||||||||||||||||||||||||||||||||||
Stock | Income (Loss) | Earnings | Total | |||||||||||||||||||||||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||||||||||||||||||||
December 31, 2000 | $ | 206,952 | $ | 7,169 | $ | 123,626 | $ | 337,747 | ||||||||||||||||||||||||||||||||||
Net income for the year 2001 | 84,279 | 84,279 | Accumulated | |||||||||||||||||||||||||||||||||||||||
Stock issued, including stock option tax benefits | 17,987 | 17,987 | Other | |||||||||||||||||||||||||||||||||||||||
Purchase and retirement of stock | (15,865 | ) | (85,448 | ) | (101,313 | ) | Common | Deferred | Comprehensive | Retained | ||||||||||||||||||||||||||||||||
Dividends | (29,072 | ) | (29,072 | ) | Shares | Stock | Compensation | Income (Loss) | Earnings | Total | ||||||||||||||||||||||||||||||||
Unrealized gain on securities available for sale, net | 4,731 | 4,731 | ||||||||||||||||||||||||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||||||||||||||||||||
December 31, 2001 | December 31, 2001 | 209,074 | 11,900 | 93,385 | 314,359 | December 31, 2001 | 34,220 | 208,033 | 1,041 | 11,900 | 93,385 | 314,359 | ||||||||||||||||||||||||||||||
Net income for the year 2002 | 87,138 | 87,138 | Net income for the year 2002 | 87,138 | 87,138 | |||||||||||||||||||||||||||||||||||||
Stock issued in connection with purchase of Kerman State Bank | 14,620 | 14,620 | Stock issued in connection with purchase of Kerman State Bank | 355 | 14,620 | 14,620 | ||||||||||||||||||||||||||||||||||||
Other stock issued, including stock option tax benefits | 12,425 | 12,425 | Stock issued for stock options | 366 | 8,652 | 8,652 | ||||||||||||||||||||||||||||||||||||
Purchase and retirement of stock | (18,921 | ) | (45,112 | ) | (64,033 | ) | Stock option tax benefits | 2,985 | 2,985 | |||||||||||||||||||||||||||||||||
Dividends | (30,262 | ) | (30,262 | ) | Restricted stock activity | 20 | 557 | 231 | 788 | |||||||||||||||||||||||||||||||||
Unrealized gain on securities available for sale, net | 7,252 | 7,252 | Purchase and retirement of stock | (1,550 | ) | (18,921 | ) | (45,112 | ) | (64,033 | ) | |||||||||||||||||||||||||||||||
Dividends | (30,262 | ) | (30,262 | ) | ||||||||||||||||||||||||||||||||||||||
Unrealized gain on securities available for sale, net | 7,252 | 7,252 | ||||||||||||||||||||||||||||||||||||||||
December 31, 2002 | December 31, 2002 | 217,198 | 19,152 | 105,149 | 341,499 | December 31, 2002 | 33,411 | 215,926 | 1,272 | 19,152 | 105,149 | 341,499 | ||||||||||||||||||||||||||||||
Net income for the year 2003 | 95,063 | 95,063 | ||||||||||||||||||||||||||||||||||||||||
Stock issued for stock options | 425 | 8,353 | 8,353 | |||||||||||||||||||||||||||||||||||||||
Net income for the year 2003 | 95,063 | 95,063 | Stock option tax benefits | 4,162 | 4,162 | |||||||||||||||||||||||||||||||||||||
Other stock issued, including stock option tax benefits | 13,474 | 13,474 | Restricted stock activity | 24 | 407 | 552 | 959 | |||||||||||||||||||||||||||||||||||
Purchase and retirement of stock | (10,387 | ) | (60,382 | ) | (70,769 | ) | Purchase and retirement of stock | (1,573 | ) | (10,387 | ) | (60,382 | ) | (70,769 | ) | |||||||||||||||||||||||||||
Dividends | (32,935 | ) | (32,935 | ) | Dividends | (32,935 | ) | (32,935 | ) | |||||||||||||||||||||||||||||||||
Unrealized loss on securities available for sale, net | (5,961 | ) | (5,961 | ) | Unrealized gain on securities available for sale, net | (5,961 | ) | (5,961 | ) | |||||||||||||||||||||||||||||||||
December 31, 2003 | December 31, 2003 | $ | 220,285 | $ | 13,191 | $ | 106,895 | $ | 340,371 | December 31, 2003 | 32,287 | 218,461 | 1,824 | 13,191 | 106,895 | 340,371 | ||||||||||||||||||||||||||
Net income for the year 2004 | 95,218 | 95,218 | ||||||||||||||||||||||||||||||||||||||||
Stock issued for stock options | 403 | 12,810 | 12,810 | |||||||||||||||||||||||||||||||||||||||
Stock option tax benefits | 3,508 | 3,508 | ||||||||||||||||||||||||||||||||||||||||
Restricted stock activity | 16 | 467 | 322 | 789 | ||||||||||||||||||||||||||||||||||||||
Purchase and retirement of stock | (1,066 | ) | (7,417 | ) | (48,027 | ) | (55,444 | ) | ||||||||||||||||||||||||||||||||||
Dividends | (35,090 | ) | (35,090 | ) | ||||||||||||||||||||||||||||||||||||||
Unrealized loss on securities available for sale, net | (3,553 | ) | (3,553 | ) | ||||||||||||||||||||||||||||||||||||||
December 31, 2004 | December 31, 2004 | 31,640 | $ | 227,829 | $ | 2,146 | $ | 9,638 | $ | 118,996 | $ | 358,609 | ||||||||||||||||||||||||||||||
4245
For the Years Ended December 31, | ||||||||||||||||||||||||||||
For the Years Ended December 31, | ||||||||||||||||||||||||||||
2003 | 2002 | 2001 | ||||||||||||||||||||||||||
2004 | 2003 | 2002 | ||||||||||||||||||||||||||
(In thousands) | (In thousands) | |||||||||||||||||||||||||||
Operating Activities: | Operating Activities: | Operating Activities: | ||||||||||||||||||||||||||
Net income | Net income | $ | 95,063 | $ | 87,138 | $ | 84,279 | Net income | $ | 95,218 | $ | 95,063 | $ | 87,138 | ||||||||||||||
Adjustments to reconcile net income to net cash provided by operating activities: | Adjustments to reconcile net income to net cash provided by operating activities: | Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||||||||||||||||||
Depreciation of fixed assets | 3,993 | 4,507 | 4,899 | Depreciation and amortization of fixed assets | 3,867 | 3,993 | 4,507 | |||||||||||||||||||||
Amortization of intangibles and other assets | 1,944 | 1,989 | 3,343 | Amortization of intangibles and other assets | 2,296 | 1,944 | 1,989 | |||||||||||||||||||||
Loan loss provision | 3,300 | 3,600 | 3,600 | Loan loss provision | 2,700 | 3,300 | 3,600 | |||||||||||||||||||||
Amortization of deferred net loan fees | 249 | 420 | 1,330 | Amortization of deferred net loan (cost) fees | (105 | ) | 249 | 420 | ||||||||||||||||||||
(Increase) decrease in interest income receivable | (269 | ) | 501 | 6,304 | Decrease (increase) in interest income receivable | 1,217 | (269 | ) | 501 | |||||||||||||||||||
Decrease (increase) in other assets | 57,671 | (10,103 | ) | (5,028 | ) | (Increase) decrease in other assets | (1,547 | ) | 57,671 | (9,815 | ) | |||||||||||||||||
Increase (decrease) in income taxes payable | 6,550 | (833 | ) | 4,210 | (Decrease) increase in income taxes payable | (3,779 | ) | 6,550 | (833 | ) | ||||||||||||||||||
Decrease in interest expense payable | (1,027 | ) | (1,724 | ) | (5,072 | ) | Increase (decrease) in interest expense payable | 43 | (1,027 | ) | (1,724 | ) | ||||||||||||||||
(Decrease) increase in other liabilities | (53,279 | ) | 71 | 2,751 | Increase (decrease) in other liabilities | 7,020 | (53,279 | ) | 71 | |||||||||||||||||||
Gain on sale of securities | (2,443 | ) | (18 | ) | 0 | Gain on sale of securities | (2,169 | ) | (2,443 | ) | (18 | ) | ||||||||||||||||
Loss on extinguishment of debt | 2,166 | 0 | 0 | Gain on other assets | (402 | ) | 0 | (288 | ) | |||||||||||||||||||
Net loss (gain)on sales/write-down of fixed assets | 142 | 558 | (330 | ) | Loss on extinguishment of debt | 2,204 | 2,166 | 0 | ||||||||||||||||||||
Originations of loans for resale | (9,113 | ) | (12,431 | ) | (5,329 | ) | Net loss on sales/write-down of fixed assets | 47 | 142 | 558 | ||||||||||||||||||
Net proceeds from sale of loans originated for resale | 10,233 | 12,605 | 4,848 | Originations of loans for resale | (3,988 | ) | (9,113 | ) | (12,431 | ) | ||||||||||||||||||
Net gain on sale of property acquired in satisfaction of debt | (122 | ) | (108 | ) | (156 | ) | Net proceeds from sale of loans originated for resale | 3,955 | 10,233 | 12,605 | ||||||||||||||||||
Write-downs of other real estate owned | 307 | 126 | 78 | Net gain on sale of property acquired in satisfaction of debt | (231 | ) | (122 | ) | (108 | ) | ||||||||||||||||||
Impairment of investment securities | 0 | 4,260 | 0 | Write-downs of other real estate owned | 0 | 307 | 126 | |||||||||||||||||||||
Impairment of investment securities | 7,180 | 0 | 4,260 | |||||||||||||||||||||||||
Net Cash Provided by Operating Activities | 115,365 | 90,558 | 99,727 | |||||||||||||||||||||||||
Net Cash Provided by Operating Activities | 113,526 | 115,365 | 90,558 | |||||||||||||||||||||||||
Investing Activities | Investing Activities | Investing Activities | ||||||||||||||||||||||||||
Net cash obtained in mergers and acquisitions | Net cash obtained in mergers and acquisitions | 0 | 5,368 | 0 | Net cash obtained in mergers and acquisitions | 0 | 0 | 5,368 | ||||||||||||||||||||
Net repayments (disbursements) of loans | 164,521 | 45,346 | (7,245 | ) | ||||||||||||||||||||||||
Net repayments of loans | Net repayments of loans | 20,778 | 164,521 | 45,346 | ||||||||||||||||||||||||
Purchases of money market assets | Purchases of money market assets | 0 | 0 | (284 | ) | Purchases of money market assets | 0 | 0 | 0 | |||||||||||||||||||
Purchases of investment securities available for sale | Purchases of investment securities available for sale | (1,072,090 | ) | (1,618,742 | ) | (447,295 | ) | Purchases of investment securities available for sale | (96,027 | ) | (1,072,090 | ) | (1,618,742 | ) | ||||||||||||||
Purchases of investment securities held to maturity | Purchases of investment securities held to maturity | (371,037 | ) | (272,184 | ) | (3,861 | ) | Purchases of investment securities held to maturity | (890,836 | ) | (371,037 | ) | (272,184 | ) | ||||||||||||||
Purchases of property, plant and equipment | Purchases of property, plant and equipment | (4,345 | ) | (2,103 | ) | (4,060 | ) | Purchases of property, plant and equipment | (3,390 | ) | (4,345 | ) | (2,103 | ) | ||||||||||||||
Proceeds from maturity/calls of securities available for sale | Proceeds from maturity/calls of securities available for sale | 496,011 | 1,629,286 | 427,114 | Proceeds from maturity/calls of securities available for sale | 348,027 | 496,011 | 1,629,286 | ||||||||||||||||||||
Proceeds from maturity/calls of securities held to maturity | Proceeds from maturity/calls of securities held to maturity | 233,580 | 58,993 | 22,727 | Proceeds from maturity/calls of securities held to maturity | 158,929 | 233,580 | 58,993 | ||||||||||||||||||||
Proceeds from sale of securities available for sale | Proceeds from sale of securities available for sale | 153,128 | 1,000 | 651 | Proceeds from sale of securities available for sale | 209,173 | 153,128 | 1,000 | ||||||||||||||||||||
Proceeds from sale of property and equipment | Proceeds from sale of property and equipment | 1,859 | 548 | 1,147 | Proceeds from sale of property and equipment | 0 | 1,859 | 548 | ||||||||||||||||||||
Proceeds from sale of other real estate owned | Proceeds from sale of other real estate owned | 1,882 | 391 | 1,941 | Proceeds from sale of other real estate owned | 321 | 1,882 | 391 | ||||||||||||||||||||
Net Cash Used In Investing Activities | (396,491 | ) | (152,097 | ) | (9,165 | ) | Net Cash Used In Investing Activities | (253,025 | ) | (396,491 | ) | (152,097 | ) | |||||||||||||||
Financing Activities | Financing Activities | Financing Activities | ||||||||||||||||||||||||||
Net increase (decrease) in deposits | Net increase (decrease) in deposits | 169,925 | (24,137 | ) | (1,406 | ) | Net increase (decrease) in deposits | 119,628 | 169,925 | (24,137 | ) | |||||||||||||||||
Net increase (decrease) in short-term borrowings | 240,910 | 88,100 | (75,031 | ) | ||||||||||||||||||||||||
Repayments to the FHLB | (67,166 | ) | 0 | 0 | ||||||||||||||||||||||||
Advances from the FHLB | 0 | �� | 130,000 | 0 | ||||||||||||||||||||||||
Advances (repayments) of notes payable | 36 | (3,214 | ) | (3,215 | ) | |||||||||||||||||||||||
Net increase in short-term borrowings | Net increase in short-term borrowings | 144,776 | 240,910 | 88,100 | ||||||||||||||||||||||||
Repayments to the Federal Home Loan Bank | Repayments to the Federal Home Loan Bank | (107,204 | ) | (67,166 | ) | 0 | ||||||||||||||||||||||
Advances from the Federal Home Loan Bank | Advances from the Federal Home Loan Bank | 0 | 0 | 130,000 | ||||||||||||||||||||||||
(Repayments) advances of notes payable | (Repayments) advances of notes payable | (3,214 | ) | 36 | (3,214 | ) | ||||||||||||||||||||||
Exercise of stock options/issuance of shares | Exercise of stock options/issuance of shares | 8,176 | 8,480 | 12,175 | Exercise of stock options/issuance of shares | 12,572 | 8,176 | 8,480 | ||||||||||||||||||||
Retirement of common stock including repurchases | Retirement of common stock including repurchases | (70,769 | ) | (64,033 | ) | (101,313 | ) | Retirement of common stock including repurchases | (55,444 | ) | (70,769 | ) | (64,033 | ) | ||||||||||||||
Dividends paid | Dividends paid | (32,935 | ) | (30,262 | ) | (29,072 | ) | Dividends paid | (35,090 | ) | (32,935 | ) | (30,262 | ) | ||||||||||||||
Net Cash Provided By (Used In) Financing Activities | 248,177 | 104,934 | (197,862 | ) | Net Cash Provided By Financing Activities | 76,024 | 248,177 | 104,934 | ||||||||||||||||||||
Net (Decrease) Increase In Cash and Cash Equivalents | Net (Decrease) Increase In Cash and Cash Equivalents | (32,949 | ) | 43,395 | (107,300 | ) | Net (Decrease) Increase In Cash and Cash Equivalents | (63,475 | ) | (32,949 | ) | 43,395 | ||||||||||||||||
Cash and Cash Equivalents at Beginning of Year | Cash and Cash Equivalents at Beginning of Year | 222,577 | 179,182 | 286,482 | Cash and Cash Equivalents at Beginning of Year | 189,628 | 222,577 | 179,182 | ||||||||||||||||||||
Cash and Cash Equivalents at End of Year | Cash and Cash Equivalents at End of Year | $ | 189,628 | $ | 222,577 | $ | 179,182 | Cash and Cash Equivalents at End of Year | $ | 126,153 | $ | 189,628 | $ | 222,577 | ||||||||||||||
Supplemental Disclosures: | ||||||||||||||||||||||||||||
Supplemental disclosure of noncash activities: | ||||||||||||||||||||||||||||
Loans transferred to other real estate owned | $ | 1,800 | $ | 375 | $ | 321 | ||||||||||||||||||||||
Unrealized (loss) gain on securities available for sale, net | (5,961 | ) | 7,252 | 4,731 | ||||||||||||||||||||||||
The acquisition of Kerman State Bank involved the following: | ||||||||||||||||||||||||||||
Common Stock issued | 0 | 14,620 | 0 | |||||||||||||||||||||||||
Liabilities assumed | 0 | 85,085 | 0 | |||||||||||||||||||||||||
Fair value of assets acquired, other than cash and cash equivalents | 0 | (89,170 | ) | 0 | ||||||||||||||||||||||||
Core deposit intangible | 0 | (2,500 | ) | 0 | ||||||||||||||||||||||||
Goodwill | 0 | (2,667 | ) | 0 | ||||||||||||||||||||||||
Net Cash and Cash Equivalents Received | 0 | 5,368 | 0 | |||||||||||||||||||||||||
Supplemental disclosure of cash flow activity: | ||||||||||||||||||||||||||||
Interest paid for the period | 26,547 | 40,858 | 73,959 | |||||||||||||||||||||||||
Income tax payments for the period | 33,146 | 40,272 | 37,488 |
46
For the Years Ended December 31, | |||||||||||||||
2004 | 2003 | 2002 | |||||||||||||
(In thousands) | |||||||||||||||
Supplemental Disclosures: | |||||||||||||||
Supplemental disclosure of noncash activities: | |||||||||||||||
Loans transferred to other real estate owned | $ | 0 | $ | 1,800 | $ | 375 | |||||||||
Unrealized (loss) gain on securities available for sale, net | (3,553 | ) | (5,961 | ) | 7,252 | ||||||||||
The acquisition of Kerman State Bank involved the following: | |||||||||||||||
Common Stock issued | 0 | 0 | 14,620 | ||||||||||||
Liabilities assumed | 0 | 0 | 85,085 | ||||||||||||
Fair value of assets acquired, other than cash and cash equivalents | 0 | 0 | (89,170 | ) | |||||||||||
Core deposit intangible | 0 | 0 | (2,500 | ) | |||||||||||
Goodwill | 0 | 0 | (2,667 | ) | |||||||||||
Net Cash and Cash Equivalents Received | 0 | 0 | 5,368 | ||||||||||||
Supplemental disclosure of cash flow activity: | |||||||||||||||
Interest paid for the period | 21,149 | 26,547 | 40,858 | ||||||||||||
Income tax payments for the period | 37,432 | 33,146 | 40,272 | ||||||||||||
Tax benefit from stock option exercises | 3,508 | 4,162 | 2,985 |
4347
Note 1: | Business and Accounting Policies |
Summary of Significant Accounting Policies
entities other than low income housing partnerships sponsored by third parties.
changes.
44
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
subject to immediate loss recognition in income. Although these evaluations involve significant judgment, an unrealized loss in the fair value of a debt security is generally deemed to be temporary when the fair value of the security is below the carrying value primarily due to changes in interest rates, there
48
method.
45
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
economic conditions and other factors. A portion of the allowance is specifically allocated to impaired and other identified loans whose full collectibility is uncertain. Such allocations are determined by Management based on loan-by-loan analyses. A second allocation is based in part on quantitative analyses of historical
49
factors.
46
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
For comparison purposes, the following table reconciles the Company’s reported earnings to earnings adjusted to exclude goodwill amortization (dollars in thousands, except per share data):
2003 | 2002 | 2001 | |||||||||||
Net Income — | |||||||||||||
As reported | $ | 95,063 | $ | 87,138 | $ | 84,279 | |||||||
Goodwill Amortization | 0 | 0 | 1,176 | ||||||||||
Adjusted | $ | 95,063 | $ | 87,138 | $ | 85,455 | |||||||
Basic Earnings Per Share — | |||||||||||||
As reported | $ | 2.89 | $ | 2.59 | $ | 2.39 | |||||||
Goodwill Amortization | 0.00 | 0.00 | 0.03 | ||||||||||
Adjusted | $ | 2.89 | $ | 2.59 | $ | 2.42 | |||||||
Diluted Earnings Per Share — | |||||||||||||
As reported | $ | 2.85 | $ | 2.55 | $ | 2.36 | |||||||
Goodwill Amortization | 0.00 | 0.00 | 0.03 | ||||||||||
Adjusted | $ | 2.85 | $ | 2.55 | $ | 2.39 | |||||||
Intangible assets with definite useful lives are amortized over their respective estimated useful lives to their estimated residual values, and also reviewedvalues. If an event occurs that indicates the carrying amount of an intangible asset may not be recoverable, Management reviews the asset for impairment. The Company was required to adopt the provisions of Statement 141 immediately upon issuance and Statement 142 effective January 1, 2002. Accordingly, anyAny goodwill and any intangible asset determined to have an indefinite useful life acquired in a purchase business combination is no longernot amortized, but is periodically evaluated for impairment in accordance with the appropriate accounting literature. The Company was also required to reassess the useful lives and residual values of all such intangible assets and make any necessary amortization period adjustments by the end of the first interim period after adoption. In addition, to the extent an intangible asset was identified as having an indefinite useful life, the Company was required to test the intangible asset for impairment within the first interim period and recognize any impairment loss measured as of the date of adoption as the cumulative effect of a change in accounting principle in the period. The Company did not have any transitional impairment losses.
At | At | |||||||||||||||
January 1, | December 31, | |||||||||||||||
2004 | Additions | Reductions | 2004 | |||||||||||||
Goodwill | $ | 22,968 | $ | 0 | $ | 0 | $ | 22,968 | ||||||||
Accumulated Amortization | (3,972 | ) | 0 | 0 | (3,972 | ) | ||||||||||
Net | $ | 18,996 | $ | 0 | $ | 0 | $ | 18,996 | ||||||||
Core Deposit Intangibles | $ | 7,783 | $ | 0 | $ | 0 | $ | 7,783 | ||||||||
Accumulated Amortization | (4,345 | ) | 0 | 544 | (4,889 | ) | ||||||||||
Net | $ | 3,438 | $ | 0 | $ | 544 | $ | 2,894 | ||||||||
50
At | At | |||||||||||||||
January 1, | December 31, | |||||||||||||||
2003 | Additions | Reductions | 2003 | |||||||||||||
Goodwill | $ | 22,968 | $ | 0 | $ | 0 | $ | 22,968 | ||||||||
Accumulated Amortization | (3,972 | ) | 0 | 0 | (3,972 | ) | ||||||||||
Net | $ | 18,996 | $ | 0 | $ | 0 | $ | 18,996 | ||||||||
Core Deposit Intangibles | $ | 7,783 | $ | 0 | $ | 0 | $ | 7,783 | ||||||||
Accumulated Amortization | (3,603 | ) | 0 | 742 | (4,345 | ) | ||||||||||
Net | $ | 4,180 | $ | 0 | $ | 742 | $ | 3,438 | ||||||||
47
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Impairment of Long-Lived Assets. The Company reviews its long-lived assets and certain intangibles for impairment whenever events or changes indicate that the carrying amount of an asset may not be recoverable. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell.
51
2003 | 2002 | 2001 | ||||||||||||||||||||||||
2004 | 2003 | 2002 | ||||||||||||||||||||||||
(In thousands, except per share | (In thousands, except per share | |||||||||||||||||||||||||
data) | data) | |||||||||||||||||||||||||
Compensation cost based on fair value method, net of tax effect | Compensation cost based on fair value method, net of tax effect | $ | 2,388 | $ | 3,600 | $ | 4,096 | Compensation cost based on fair value method, net of tax effect | $ | 2,105 | $ | 2,388 | $ | 3,600 | ||||||||||||
Net income: | Net income: | Net income: | ||||||||||||||||||||||||
As reported | $ | 95,063 | $ | 87,138 | $ | 84,279 | As reported | $ | 95,218 | $ | 95,063 | $ | 87,138 | |||||||||||||
Pro forma | 92,675 | 83,538 | 80,183 | Pro forma | 93,113 | 92,675 | 83,538 | |||||||||||||||||||
Basic earnings per share: | Basic earnings per share: | Basic earnings per share: | ||||||||||||||||||||||||
As reported | $ | 2.89 | $ | 2.59 | $ | 2.39 | As reported | $ | 2.99 | $ | 2.89 | $ | 2.59 | |||||||||||||
Pro forma | 2.82 | 2.48 | 2.28 | Pro forma | 2.93 | 2.82 | 2.48 | |||||||||||||||||||
Diluted earnings per share: | Diluted earnings per share: | Diluted earnings per share: | ||||||||||||||||||||||||
As reported | 2.85 | 2.55 | 2.36 | As reported | $ | 2.93 | $ | 2.85 | $ | 2.55 | ||||||||||||||||
Pro forma | 2.78 | 2.44 | 2.24 | Pro forma | 2.87 | 2.78 | 2.44 | |||||||||||||||||||
48
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Note 2: Investment Securities
Note 2: | Investment Securities |
Gross | Gross | Estimated | ||||||||||||||
Amortized | Unrealized | Unrealized | Market | |||||||||||||
Cost | Gains | Losses | Value | |||||||||||||
(In thousands) | ||||||||||||||||
Securities of U.S. Government sponsored entities | $ | 562,842 | $ | 783 | $ | (6,568 | ) | $ | 557,057 | |||||||
Obligations of States and political subdivisions | 234,123 | 13,622 | (14 | ) | 247,731 | |||||||||||
Asset-backed securities | 3,256 | 1 | 0 | 3,257 | ||||||||||||
Corporate bonds | 47,316 | 1,342 | 0 | 48,658 | ||||||||||||
Other securities | 67,541 | 7,493 | (27 | ) | 75,007 | |||||||||||
Total | $ | 915,078 | $ | 23,241 | $ | (6,609 | ) | $ | 931,710 | |||||||
52
Gross | Gross | Estimated | ||||||||||||||
Amortized | Unrealized | Unrealized | Market | |||||||||||||
Cost | Gains | Losses | Value | |||||||||||||
(In thousands) | ||||||||||||||||
Securities of U.S. Government sponsored entities | $ | 736,137 | $ | 1,593 | $ | (4,627 | ) | $ | 733,103 | |||||||
Obligations of States and political subdivisions | 524,695 | 10,840 | (2,652 | ) | 532,883 | |||||||||||
Asset-backed securities | 0 | 0 | 0 | 0 | ||||||||||||
Other securities | 0 | 0 | 0 | 0 | ||||||||||||
Total | $ | 1,260,832 | $ | 12,433 | $ | (7,279 | ) | $ | 1,265,986 | |||||||
Gross | Gross | Estimated | Gross | Gross | Estimated | |||||||||||||||||||||||||||
Amortized | Unrealized | Unrealized | Market | Amortized | Unrealized | Unrealized | Market | |||||||||||||||||||||||||
Cost | Gains | Losses | Value | Cost | Gains | Losses | Value | |||||||||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||||||||||
Securities of U.S. Government agencies and corporations | $ | 963,922 | $ | 4,325 | $ | (6,520 | ) | $ | 961,727 | |||||||||||||||||||||||
Securities of U.S. Government sponsored entities | $ | 963,922 | $ | 4,325 | $ | (6,520 | ) | 961,727 | ||||||||||||||||||||||||
Obligations of States and political subdivisions | 260,790 | 17,655 | (52 | ) | 278,393 | 260,790 | 17,655 | (52 | ) | 278,393 | ||||||||||||||||||||||
Asset-backed securities | 12,926 | 66 | (2 | ) | 12,990 | 12,926 | 66 | (2 | ) | 12,990 | ||||||||||||||||||||||
Corporate bonds | 69,703 | 3,721 | 0 | 73,424 | 69,703 | 3,721 | 0 | 73,424 | ||||||||||||||||||||||||
Other securities | 83,809 | 6,697 | (3,129 | ) | 87,377 | 83,809 | 6,697 | (3,129 | ) | 87,377 | ||||||||||||||||||||||
Total | $ | 1,391,150 | $ | 32,464 | $ | (9,703 | ) | $ | 1,413,911 | $ | 1,391,150 | $ | 32,464 | $ | (9,703 | ) | $ | 1,413,911 | ||||||||||||||
Gross | Gross | Estimated | Gross | Gross | Estimated | |||||||||||||||||||||||||||
Amortized | Unrealized | Unrealized | Market | Amortized | Unrealized | Unrealized | Market | |||||||||||||||||||||||||
Cost | Gains | Losses | Value | Cost | Gains | Losses | Value | |||||||||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||||||||||
Securities of U.S. Government agencies and corporations | $ | 98,287 | $ | 939 | $ | (1,112 | ) | $ | 98,114 | |||||||||||||||||||||||
Securities of U.S. Government sponsored entities | $ | 98,287 | $ | 939 | $ | (1,112 | ) | $ | 98,114 | |||||||||||||||||||||||
Obligations of States and political subdivisions | 417,984 | 10,642 | (3,112 | ) | 425,514 | 417,984 | 10,642 | (3,112 | ) | 425,514 | ||||||||||||||||||||||
Asset-backed securities | 6,322 | 18 | (23 | ) | 6,317 | 6,322 | 18 | (23 | ) | 6,317 | ||||||||||||||||||||||
Other securities | 12,784 | 0 | 0 | 12,784 | 12,784 | 0 | 0 | 12,784 | ||||||||||||||||||||||||
Total | $ | 535,377 | $ | 11,599 | $ | (4,247 | ) | $ | 542,729 | $ | 535,377 | $ | 11,599 | $ | (4,247 | ) | $ | 542,729 | ||||||||||||||
The amortized cost, unrealized gains and losses, and estimated market value of the available for sale investment securities portfolio as of December 31, 2002, follows:
Gross | Gross | Estimated | ||||||||||||||
Amortized | Unrealized | Unrealized | Market | |||||||||||||
Cost | Gains | Losses | Value | |||||||||||||
(In thousands) | ||||||||||||||||
U.S. Treasury securities | $ | 20,484 | $ | 603 | $ | 0 | $ | 21,087 | ||||||||
Securities of U.S. Government agencies and corporations | 377,727 | 7,793 | (13 | ) | 385,507 | |||||||||||
Obligations of States and political subdivisions | 278,834 | 17,540 | (115 | ) | 296,259 | |||||||||||
Asset-backed securities | 41,494 | 596 | (15 | ) | 42,075 | |||||||||||
Corporate bonds | 141,814 | 4,360 | (1,677 | ) | 144,497 | |||||||||||
Other securities | 54,448 | 4,771 | (796 | ) | 58,423 | |||||||||||
Total | $ | 914,801 | $ | 35,663 | $ | (2,616 | ) | $ | 947,848 | |||||||
4953
The amortized cost, unrealized gains and losses, and estimated market value of the held to maturity investment securities portfolio as of December 31, 2002, follows:
Gross | Gross | Estimated | ||||||||||||||
Amortized | Unrealized | Unrealized | Market | |||||||||||||
Cost | Gains | Losses | Value | |||||||||||||
(In thousands) | ||||||||||||||||
Securities of U.S. Government agencies and corporations | $ | 201,486 | $ | 2,484 | $ | (611 | ) | $ | 203,359 | |||||||
Obligations of States and political subdivisions | 212,569 | 10,029 | (236 | ) | 222,362 | |||||||||||
Asset-backed securities | 9,769 | 119 | 0 | 9,888 | ||||||||||||
Other securities | 15,161 | 0 | 0 | 15,161 | ||||||||||||
Total | $ | 438,985 | $ | 12,632 | $ | (847 | ) | $ | 450,770 | |||||||
Securities Available | Securities Held to | |||||||||||||||||||||||||||||||||
for Sale | Maturity | Securities Available for | ||||||||||||||||||||||||||||||||
Sale | Securities Held to Maturity | |||||||||||||||||||||||||||||||||
Estimated | Estimated | |||||||||||||||||||||||||||||||||
Amortized | Market | Amortized | Market | Estimated | Estimated | |||||||||||||||||||||||||||||
Cost | Value | Cost | Value | Amortized | Market | Amortized | Market | |||||||||||||||||||||||||||
Cost | Value | Cost | Value | |||||||||||||||||||||||||||||||
(In thousands) | (In thousands) | |||||||||||||||||||||||||||||||||
Maturity in years: | Maturity in years: | Maturity in years: | ||||||||||||||||||||||||||||||||
1 year or less | $ | 60,907 | $ | 61,748 | $ | 10,402 | $ | 10,596 | 1 year or less | $ | 26,142 | $ | 26,502 | $ | 9,799 | $ | 9,885 | |||||||||||||||||
1 to 5 years | 515,112 | 519,932 | 64,067 | 66,240 | 1 to 5 years | 371,098 | 370,048 | 271,337 | 272,239 | |||||||||||||||||||||||||
5 to 10 years | 189,548 | 199,334 | 52,963 | 56,149 | 5 to 10 years | 152,119 | 161,243 | 74,395 | 77,508 | |||||||||||||||||||||||||
Over 10 years | 74,090 | 78,842 | 296,874 | 298,846 | Over 10 years | 44,242 | 46,942 | 396,220 | 399,992 | |||||||||||||||||||||||||
Subtotal | Subtotal | 839,657 | 859,856 | 424,306 | 431,831 | Subtotal | 593,601 | 604,735 | 751,751 | 759,624 | ||||||||||||||||||||||||
Mortgage-backed | Mortgage-backed | 467,684 | 466,678 | 98,287 | 98,114 | Mortgage-backed | 253,936 | 251,968 | 509,081 | 506,362 | ||||||||||||||||||||||||
Other securities | Other securities | 83,809 | 87,377 | 12,784 | 12,784 | Other securities | 67,541 | 75,007 | 0 | 0 | ||||||||||||||||||||||||
Total | Total | $ | 1,391,150 | $ | 1,413,911 | $ | 535,377 | $ | 542,729 | Total | $ | 915,078 | $ | 931,710 | $ | 1,260,832 | $ | 1,265,986 | ||||||||||||||||
50
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
An analysis of gross unrealized losses of the available for sale investment securities portfolio as of December 31, 2003,2004, follows:
Less than 12 Months | 12 months or longer | Total | ||||||||||||||||||||||||||||||||||||||||||||||||
Less Than 12 Months | 12 Months or Longer | Total | ||||||||||||||||||||||||||||||||||||||||||||||||
Unrealized | Unrealized | Unrealized | ||||||||||||||||||||||||||||||||||||||||||||||||
Unrealized | Unrealized | Unrealized | Fair Value | Losses | Fair Value | Losses | Fair Value | Losses | ||||||||||||||||||||||||||||||||||||||||||
Fair Value | Losses | Fair Value | Losses | Fair Value | Losses | |||||||||||||||||||||||||||||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||||||||||||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||||||||||||||||||||||||||||
Securities of U.S. Government agencies and corporations | $ | 420,899 | $ | (6,520 | ) | $ | 23 | $ | 0 | $ | 420,922 | $ | (6,520 | ) | ||||||||||||||||||||||||||||||||||||
Securities of U.S. Government sponsored entities | Securities of U.S. Government sponsored entities | $ | 418,488 | $ | (5,413 | ) | $ | 20,058 | $ | (1,155 | ) | $ | 438,546 | $ | (6,568 | ) | ||||||||||||||||||||||||||||||||||
Obligations of States and political subdivisions | Obligations of States and political subdivisions | 880 | (5 | ) | 1,711 | (47 | ) | 2,591 | (52 | ) | Obligations of States and political subdivisions | 703 | (2 | ) | 2,015 | (12 | ) | 2,718 | (14 | ) | ||||||||||||||||||||||||||||||
Asset-backed securities | Asset-backed securities | 737 | (2 | ) | 0 | 0 | 737 | (2 | ) | Asset-backed securities | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||||||||||||||||||
Corporate bonds | Corporate bonds | 0 | 0 | 0 | 0 | 0 | 0 | Corporate bonds | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||||||||||||||||||||
Other securities | Other securities | 55,503 | (2,609 | ) | 4,480 | (520 | ) | 59,983 | (3,129 | ) | Other securities | 1,974 | (27 | ) | 0 | 0 | 1,974 | (27 | ) | |||||||||||||||||||||||||||||||
Subtotal, debt securities | 478,019 | (9,136 | ) | 6,214 | (567 | ) | 484,233 | (9,703 | ) | Subtotal, debt securities | 421,165 | (5,442 | ) | 22,073 | (1,167 | ) | 443,238 | (6,609 | ) | |||||||||||||||||||||||||||||||
Common stock | Common stock | 0 | 0 | 0 | 0 | 0 | 0 | Common stock | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||||||||||||||||||||
Total | Total | $ | 478,019 | $ | (9,136 | ) | $ | 6,214 | $ | (567 | ) | $ | 484,233 | $ | (9,703 | ) | Total | $ | 421,165 | $ | (5,442 | ) | $ | 22,073 | $ | (1,167 | ) | $ | 443,238 | $ | (6,609 | ) | ||||||||||||||||||
54
Less than 12 Months | 12 months or longer | Total | ||||||||||||||||||||||||||||||||||||||||||||||||
Less Than 12 Months | 12 Months or Longer | Total | ||||||||||||||||||||||||||||||||||||||||||||||||
Unrealized | Unrealized | Unrealized | ||||||||||||||||||||||||||||||||||||||||||||||||
Unrealized | Unrealized | Unrealized | Fair Value | Losses | Fair Value | Losses | Fair Value | Losses | ||||||||||||||||||||||||||||||||||||||||||
Fair Value | Losses | Fair Value | Losses | Fair Value | Losses | |||||||||||||||||||||||||||||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||||||||||||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||||||||||||||||||||||||||||
Securities of U.S. Government agencies and corporations | $ | 52,834 | $ | (936 | ) | $ | 5,045 | $ | (176 | ) | $ | 57,879 | $ | (1,112 | ) | |||||||||||||||||||||||||||||||||||
Securities of U.S. Government sponsored entities | Securities of U.S. Government sponsored entities | $ | 449,345 | $ | (4,010 | ) | $ | 23,018 | $ | (617 | ) | $ | 472,363 | $ | (4,627 | ) | ||||||||||||||||||||||||||||||||||
Obligations of States and political subdivisions | Obligations of States and political subdivisions | 131,397 | (3,067 | ) | 5,160 | (45 | ) | 136,557 | (3,112 | ) | Obligations of States and political subdivisions | 67,763 | (548 | ) | 101,554 | (2,104 | ) | 169,317 | (2,652 | ) | ||||||||||||||||||||||||||||||
Asset-backed securities | Asset-backed securities | 3,603 | (23 | ) | 0 | 0 | 3,603 | (23 | ) | Asset-backed securities | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||||||||||||||||||
Corporate bonds | Corporate bonds | 0 | 0 | 0 | 0 | 0 | 0 | Corporate bonds | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||||||||||||||||||||
Other securities | Other securities | 0 | 0 | 0 | 0 | 0 | 0 | Other securities | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||||||||||||||||||||
Subtotal, debt securities | 187,834 | (4,026 | ) | 10,205 | (221 | ) | 198,039 | (4,247 | ) | Subtotal, debt securities | 517,108 | (4,558 | ) | 124,572 | (2,721 | ) | 641,680 | (7,279 | ) | |||||||||||||||||||||||||||||||
Common stock | Common stock | 0 | 0 | 0 | 0 | 0 | 0 | Common stock | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||||||||||||||||||||
Total | Total | $ | 187,834 | $ | (4,026 | ) | $ | 10,205 | $ | (221 | ) | $ | 198,039 | $ | (4,247 | ) | Total | $ | 517,108 | $ | (4,558 | ) | $ | 124,572 | $ | (2,721 | ) | $ | 641,680 | $ | (7,279 | ) | ||||||||||||||||||
No declines
temporary impairment was recorded on these securities at December 31, 2004.
5155
Note 3: Loans and Allowance for Loan Losses
Note 3: Loans and Allowance for Loan Losses
2003 | 2002 | |||||||||||||||||||
2004 | 2003 | |||||||||||||||||||
(In thousands) | (In thousands) | |||||||||||||||||||
Commercial | Commercial | $ | 619,317 | $ | 631,405 | Commercial | $ | 647,462 | $ | 619,317 | ||||||||||
Real estate-commercial | Real estate-commercial | 810,328 | 957,398 | Real estate-commercial | 741,177 | 810,328 | ||||||||||||||
Real estate-construction | Real estate-construction | 38,019 | 45,547 | Real estate-construction | 29,724 | 38,019 | ||||||||||||||
Real estate-residential | Real estate-residential | 347,794 | 330,460 | Real estate-residential | 375,532 | 347,794 | ||||||||||||||
Total real estate loans | 1,196,141 | 1,333,405 | Total real estate loans | 1,146,433 | 1,196,141 | |||||||||||||||
Installment and personal | Installment and personal | 507,911 | 530,054 | Installment and personal | 506,338 | 507,911 | ||||||||||||||
Unearned income | Unearned income | (39 | ) | (226 | ) | Unearned income | (3 | ) | (39 | ) | ||||||||||
Gross loans | 2,323,330 | 2,494,638 | Gross loans | 2,300,230 | 2,323,330 | |||||||||||||||
Allowance for loan losses | Allowance for loan losses | (53,910 | ) | (54,227 | ) | Allowance for loan losses | (54,152 | ) | (53,910 | ) | ||||||||||
Net loans | $ | 2,269,420 | $ | 2,440,411 | Net loans | $ | 2,246,078 | $ | 2,269,420 | |||||||||||
2004 and 2003.
2003 | 2002 | 2001 | ||||||||||||||||||||||
2004 | 2003 | 2002 | ||||||||||||||||||||||
(In thousands) | (In thousands) | |||||||||||||||||||||||
Balance at January 1, | $ | 54,227 | $ | 52,086 | $ | 52,279 | $ | 53,910 | $ | 54,227 | $ | 52,086 | ||||||||||||
Provision for loan losses | 3,300 | 3,600 | 3,600 | 2,700 | 3,300 | 3,600 | ||||||||||||||||||
Loans charged off | (6,833 | ) | (6,225 | ) | (7,453 | ) | (5,593 | ) | (6,833 | ) | (6,225 | ) | ||||||||||||
Recoveries of loans previously charged off | 3,216 | 2,716 | 3,660 | 3,135 | 3,216 | 2,716 | ||||||||||||||||||
Acquisition | — | 2,050 | — | — | — | 2,050 | ||||||||||||||||||
Balance at December 31, | $ | 53,910 | $ | 54,227 | $ | 52,086 | $ | 54,152 | $ | 53,910 | $ | 54,227 | ||||||||||||
52
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Nonaccrual loans at December 31, 2004 and 2003 and 2002 were $7.4$7.0 million and $9.2$7.4 million, respectively. The following is a summary of the effect of nonaccrual loans on interest income for the years ended December 31:
2003 | 2002 | 2001 | ||||||||||||||||||||||
2004 | 2003 | 2002 | ||||||||||||||||||||||
(In thousands) | (In thousands) | |||||||||||||||||||||||
Interest income that would have been recognized had the loans performed in accordance with their original terms | $ | 527 | $ | 629 | $ | 673 | $ | 462 | $ | 527 | $ | 629 | ||||||||||||
Less: Interest income recognized on nonaccrual loans | (592 | ) | (489 | ) | (632 | ) | (439 | ) | (592 | ) | (489 | ) | ||||||||||||
Total effect on interest income | $ | (65 | ) | $ | 140 | $ | 41 | $ | 23 | $ | (65 | ) | $ | 140 | ||||||||||
56
Note 4: Concentration of Credit Risk
Note 4: | Concentration of Credit Risk |
Note 5: Premises and Equipment
Note 5: Premises and Equipment
Accumulated | Accumulated | |||||||||||||||||||||||||
Depreciation | Depreciation | |||||||||||||||||||||||||
and | Net Book | and | Net Book | |||||||||||||||||||||||
Cost | Amortization | Value | Cost | Amortization | Value | |||||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||||
2004 | 2004 | |||||||||||||||||||||||||
Land | Land | $ | 8,834 | $ | — | $ | 8,834 | |||||||||||||||||||
Buildings and improvements | Buildings and improvements | 33,875 | (15,340 | ) | 18,535 | |||||||||||||||||||||
Leasehold improvements | Leasehold improvements | 4,565 | (2,840 | ) | 1,725 | |||||||||||||||||||||
Furniture and equipment | Furniture and equipment | 11,715 | (5,586 | ) | 6,129 | |||||||||||||||||||||
Total | $ | 58,989 | $ | (23,766 | ) | $ | 35,223 | |||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||||
2003 | 2003 | 2003 | ||||||||||||||||||||||||
Land | Land | $ | 8,834 | $ | — | $ | 8,834 | Land | $ | 8,834 | $ | — | $ | 8,834 | ||||||||||||
Buildings and improvements | Buildings and improvements | 32,634 | (13,566 | ) | 19,068 | Buildings and improvements | 32,634 | (13,566 | ) | 19,068 | ||||||||||||||||
Leasehold improvements | Leasehold improvements | 5,256 | (3,280 | ) | 1,976 | Leasehold improvements | 5,256 | (3,280 | ) | 1,976 | ||||||||||||||||
Furniture and equipment | Furniture and equipment | 10,432 | (4,562 | ) | 5,870 | Furniture and equipment | 10,432 | (4,562 | ) | 5,870 | ||||||||||||||||
Total | $ | 57,156 | $ | (21,408 | ) | $ | 35,748 | Total | $ | 57,156 | $ | (21,408 | ) | $ | 35,748 | |||||||||||
2002 | ||||||||||||||||||||||||||
Land | $ | 9,486 | $ | — | $ | 9,486 | ||||||||||||||||||||
Buildings and improvements | 34,321 | (12,944 | ) | 21,377 | ||||||||||||||||||||||
Leasehold improvements | 5,199 | (3,190 | ) | 2,009 | ||||||||||||||||||||||
Furniture and equipment | 12,418 | (7,894 | ) | 4,524 | ||||||||||||||||||||||
Total | $ | 61,424 | $ | (24,028 | ) | $ | 37,396 | |||||||||||||||||||
5357
Note 6: Deposits and Borrowed Funds
Note 6: Deposits and Borrowed Funds 20032004 and 2002,2003, were as follows:
2003 | 2002 | |||||||||||||||
2004 | 2003 | |||||||||||||||
(In thousands) | (In thousands) | |||||||||||||||
Senior note, issued by Westamerica Bancorporation, originated in October 2003 and maturing October 31, 2013. Interest of 5.31% per annum is payable semiannually on April 30 and October 31, with original principal payment due at maturity | $ | 15,000 | 0 | $ | 15,000 | $ | 15,000 | |||||||||
Senior notes, issued by Westamerica Bancorporation, originated in February 1996 and maturing February 1, 2006. Interest of 7.11% per annum is payable semiannually on February 1 and August 1, with annual principal payments commencing February 1, 2000 and the remaining principal amount due at maturity | 9,643 | 12,857 | 6,429 | 9,643 | ||||||||||||
Subordinated note, issued by Westamerica Bank, originated in December 1993 and matured on September 30, 2003. Interest of 6.99% per annum is payable semiannually on March 31 and September 30, with original principal payment due at maturity | 0 | 11,750 | ||||||||||||||
Total notes payable | $ | 24,643 | $ | 24,607 | $ | 21,429 | $ | 24,643 | ||||||||
indenture as of December 31, 2004.
Sweep accounts totaled $149.5 million and $198.5 million at December 31, 2003 and 2002, respectively. Average outstanding balances were $150.3 million and $173.6 million, respectively, during 2003 and 2002. The weighted average interest rate paid was 0.56% in 2003 and 1.29% in 2002.
Securities sold with repurchase agreements were $2.7 million at December 31, 2003 and $3.0 million at December 31, 2002. Average outstanding balances were $5.8 million and $11.4 million, respectively, during 2003 and 2002. The weighted average interest rate paid was 1.32% in 2003 and 2.04% in 2002. Securities under these repurchase agreementswhich are held in the custody of independent securities brokers.
The Company has aCompany’s line of credit amountingincreased to $10.0$35 million under which no amount was outstanding at December 31, 2003. Outstanding advances totaled $1.8in 2004 from $10 million at December 31, 2002. Average outstanding advances were $2.6 million and $7.1 million, respectively, during 2003 and 2002. The weighted average interest rate paid was 1.88% in 2003 and 2.44% in 2002.a year ago. Compensating balance arrangements for such line are not significant to the operations of the Company.
Federal Home Loan Bank advances were $105.0 million and $170.0 million, respectively, at December 31, 2003 and 2002. Such FHLB advances ranged in maturity from 0.8 years to 1.7 years at a weighted average interest rate of 3.68% at December 31, 2003. Maturity ranged from 1.8 years to 2.8 years at a weighted average interest rate of 3.74% at December 31, 2002. Average outstanding balances were $138.6 million and
54
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
$142.3 million, respectively, during 2003 and 2002. The weighted average interest rateInterest paid was 3.69% in 2003 and 3.72% in 2002.
At December 31, 2003 and 2002, the Bank had $315.3 million and $314.3 million, respectively, inon time deposit accountsdeposits in excess of $100 thousand. Average outstanding balances were $205.0thousand was $4.5 million and $228.8 million, respectively, during 2003 and 2002. The weighted average interest rate paid was 1.47% in 20032004 and 2.16% in 2002. Interest paid on these time deposit accounts in 2003, 2002 and 2001 was $5.0 million $8.4 millionin 2003. The following table summarizes deposits and $20.8 million, respectively.
2004 | 2003 | ||||||||||||||||||||||||
Weighted | Weighted | ||||||||||||||||||||||||
Balance at | Average | Average | Balance at | Average | Average | ||||||||||||||||||||
December 31, | Balance | Rate | December 31, | Balance | Rate | ||||||||||||||||||||
(In thousands) | (In thousands) | ||||||||||||||||||||||||
Federal funds purchased | $ | 568,275 | $ | 360,771 | 1.38 | % | $ | 438,500 | $ | 222,225 | 1.13 | % | |||||||||||||
Sweep accounts | 163,439 | 152,299 | 0.31 | 149,479 | 150,311 | 0.56 | |||||||||||||||||||
Securities sold under repurchase agreements | 3,709 | 42,820 | 0.95 | 2,667 | 3,264 | 0.87 | |||||||||||||||||||
Line of credit | 0 | 526 | 2.72 | 0 | 2,561 | 1.88 | |||||||||||||||||||
FHLB advances | 0 | 24,153 | 3.65 | 105,000 | 142,272 | 3.69 | |||||||||||||||||||
Time deposits | |||||||||||||||||||||||||
Over $100 thousand | 365,299 | 350,400 | 1.27 | 315,253 | 370,549 | 1.35 |
Note 7: Shareholders’ Equity
Note 7: | Shareholders’ Equity |
58
2003 | 2002 | 2001 | 2004 | 2003 | 2002 | |||||||||||||||||||||||||||||||||||||||||||
Weighted | Weighted | Weighted | Weighted | Weighted | Weighted | |||||||||||||||||||||||||||||||||||||||||||
Average | Average | Average | Average | Average | Average | |||||||||||||||||||||||||||||||||||||||||||
Number | Exercise | Number | Exercise | Number | Exercise | Number | Exercise | Number | Exercise | Number | Exercise | |||||||||||||||||||||||||||||||||||||
of shares | Price | of shares | Price | of shares | Price | of shares | Price | of shares | Price | of shares | Price | |||||||||||||||||||||||||||||||||||||
Outstanding at beginning of year | 2,812,127 | $ | 30 | 2,670,544 | $ | 27 | 2,914,131 | $ | 24 | 2,972,517 | $ | 33 | 2,812,127 | $ | 30 | 2,670,544 | $ | 27 | ||||||||||||||||||||||||||||||
Granted | 577,880 | 41 | 615,420 | 39 | 562,850 | 39 | 539,780 | 50 | 577,880 | 41 | 615,420 | 39 | ||||||||||||||||||||||||||||||||||||
Acquisitions converted | — | — | 15,562 | 27 | — | — | — | — | — | — | 15,562 | 27 | ||||||||||||||||||||||||||||||||||||
Exercised | (417,112 | ) | 20 | (362,202 | ) | 23 | (607,872 | ) | 20 | (398,877 | ) | 32 | (417,112 | ) | 20 | (362,202 | ) | 23 | ||||||||||||||||||||||||||||||
Forfeited | (378 | ) | 56 | (127,197 | ) | 33 | (198,565 | ) | 32 | (55,890 | ) | 42 | (378 | ) | 56 | (127,197 | ) | 33 | ||||||||||||||||||||||||||||||
Outstanding at end of year | 2,972,517 | $ | 33 | 2,812,127 | $ | 30 | 2,670,544 | $ | 27 | 3,057,530 | $ | 36 | 2,972,517 | $ | 33 | 2,812,127 | $ | 30 | ||||||||||||||||||||||||||||||
Options exercisable at end of year | 1,900,330 | $ | 30 | 1,787,843 | $ | 27 | 1,575,612 | $ | 24 | 1,998,611 | $ | 32 | 1,900,330 | $ | 30 | 1,787,843 | $ | 27 | ||||||||||||||||||||||||||||||
5559
Options Outstanding | Options Outstanding | |||||||||||||||||||||||||||||||||||||||
Options Exercisable | Options Exercisable | |||||||||||||||||||||||||||||||||||||||
Weighted | Weighted | |||||||||||||||||||||||||||||||||||||||
Average | Weighted | Weighted | Average | Weighted | Weighted | |||||||||||||||||||||||||||||||||||
Range of | Number | Remaining | Average | Number | Average | Number | Remaining | Average | Number | Average | ||||||||||||||||||||||||||||||
Exercise | Outstanding | Contractual | Exercise | Exercisable at | Exercise | Outstanding | Contractual | Exercise | Exercisable at | Exercise | ||||||||||||||||||||||||||||||
Price | at 12/31/2003 | Life (yrs) | Price | 12/31/2003 | Price | at 12/31/2004 | Life (yrs) | Price | 12/31/2004 | Price | ||||||||||||||||||||||||||||||
2003 | ||||||||||||||||||||||||||||||||||||||||
2004 | ||||||||||||||||||||||||||||||||||||||||
$10 – 15 | 35,638 | 2.0 | $ | 11 | 35,638 | $ | 11 | 11,237 | 3.3 | $ | 13 | 11,237 | $ | 13 | ||||||||||||||||||||||||||
15 – 19 | 126,887 | 2.0 | 15 | 126,887 | 15 | 79,650 | 1.1 | 15 | 79,650 | 15 | ||||||||||||||||||||||||||||||
19 – 20 | 154,030 | 2.9 | 19 | 154,030 | 19 | 132,150 | 2.1 | 19 | 132,150 | 19 | ||||||||||||||||||||||||||||||
20 – 24 | 442,576 | 6.0 | 24 | 442,579 | 24 | 429,196 | 5.1 | 24 | 429,196 | 24 | ||||||||||||||||||||||||||||||
32 – 33 | 333,270 | 4.1 | 33 | 333,270 | 33 | 257,760 | 3.1 | 33 | 257,760 | 33 | ||||||||||||||||||||||||||||||
33 – 35 | 385,530 | 5.1 | 35 | 385,530 | 35 | 336,120 | 4.1 | 35 | 336,120 | 35 | ||||||||||||||||||||||||||||||
35 – 40 | 916,206 | 7.6 | 39 | 421,896 | 39 | 763,939 | 6.6 | 39 | 591,960 | 39 | ||||||||||||||||||||||||||||||
40 – 55 | 578,380 | 9.0 | 41 | 500 | 48 | |||||||||||||||||||||||||||||||||||
40 – 45 | 780,988 | 8.4 | 44 | 160,538 | 41 | |||||||||||||||||||||||||||||||||||
45 – 50 | 266,490 | 9.1 | 50 | 0 | 0 | |||||||||||||||||||||||||||||||||||
$10 – 55 | 2,972,517 | 6.4 | $ | 33 | 1,900,330 | $ | 30 | 3,057,530 | 6.1 | $ | 36 | 1,998,611 | $ | 32 | ||||||||||||||||||||||||||
Options Outstanding | Options Outstanding | |||||||||||||||||||||||||||||||||||||||
Options Exercisable | Options Exercisable | |||||||||||||||||||||||||||||||||||||||
Weighted | Weighted | |||||||||||||||||||||||||||||||||||||||
Average | Weighted | Weighted | Average | Weighted | Weighted | |||||||||||||||||||||||||||||||||||
Range of | Number | Remaining | Average | Number | Average | Number | Remaining | Average | Number | Average | ||||||||||||||||||||||||||||||
Exercise | Outstanding | Contractual | Exercise | Exercisable at | Exercise | Outstanding | Contractual | Exercise | Exercisable at | Exercise | ||||||||||||||||||||||||||||||
Price | at 12/31/2002 | Life (yrs) | Price | 12/31/2002 | Price | at 12/31/2003 | Life (yrs) | Price | 12/31/2003 | Price | ||||||||||||||||||||||||||||||
2002 | ||||||||||||||||||||||||||||||||||||||||
$ 3 – 9 | 1,602 | 1.0 | $ | 6 | 1,602 | $ | 6 | |||||||||||||||||||||||||||||||||
9 – 10 | 92,745 | 1.0 | 9 | 92,745 | 9 | |||||||||||||||||||||||||||||||||||
10 – 15 | 108,488 | 2.4 | 11 | 108,488 | 11 | |||||||||||||||||||||||||||||||||||
2003 | ||||||||||||||||||||||||||||||||||||||||
$10 – 15 | 35,638 | 2.0 | $ | 11 | 35,638 | $ | 11 | |||||||||||||||||||||||||||||||||
15 – 19 | 145,920 | 3.1 | 15 | 145,920 | 15 | 126,887 | 2.0 | 15 | 126,887 | 15 | ||||||||||||||||||||||||||||||
19 – 20 | 187,270 | 4.1 | 19 | 187,270 | 19 | 154,030 | 2.9 | 19 | 154,030 | 19 | ||||||||||||||||||||||||||||||
20 – 24 | 568,534 | 7.1 | 24 | 354,744 | 24 | 442,576 | 6.0 | 24 | 442,579 | 24 | ||||||||||||||||||||||||||||||
32 – 33 | 357,900 | 5.1 | 33 | 357,900 | 33 | 333,270 | 4.1 | 33 | 333,270 | 33 | ||||||||||||||||||||||||||||||
33 – 35 | 400,240 | 6.1 | 35 | 400,240 | 35 | 385,530 | 5.1 | 35 | 385,530 | 35 | ||||||||||||||||||||||||||||||
35 – 60 | 949,428 | 8.6 | 39 | 138,934 | 39 | |||||||||||||||||||||||||||||||||||
35 – 40 | 916,206 | 7.6 | 39 | 421,896 | 39 | |||||||||||||||||||||||||||||||||||
40 – 55 | 578,380 | 9.0 | 41 | 500 | 48 | |||||||||||||||||||||||||||||||||||
$ 3 – 60 | 2,812,127 | 6.4 | $ | 30 | 1,787,843 | $ | 27 | |||||||||||||||||||||||||||||||||
$10 – 55 | 2,972,517 | 6.4 | $ | 33 | 1,900,330 | $ | 30 | |||||||||||||||||||||||||||||||||
2003 | 2002 | 2001 | 2004 | 2003 | 2002 | |||||||||||||||||||
Outstanding at beginning of year | 57,550 | 61,470 | 73,760 | 53,900 | 57,550 | 61,470 | ||||||||||||||||||
Granted | 20,720 | 19,520 | 24,540 | 19,610 | 20,720 | 19,520 | ||||||||||||||||||
Exercised | (24,370 | ) | (19,908 | ) | (22,373 | ) | (15,760 | ) | (24,370 | ) | (19,908 | ) | ||||||||||||
Forfeited | 0 | (3,532 | ) | (14,457 | ) | 0 | 0 | (3,532 | ) | |||||||||||||||
Outstanding at end of year | 53,900 | 57,550 | 61,470 | 57,750 | 53,900 | 57,550 | ||||||||||||||||||
5660
2002.
2003 | 2002 | 2001 | 2004 | 2003 | 2002 | |||||||||||||||||||
Expected dividend yield | 2.46 | % | 1.68 | % | 2.58 | % | 2.25 | % | 2.46 | % | 1.68 | % | ||||||||||||
Expected volatility | 17 | 20 | 20 | 15 | 17 | 20 | ||||||||||||||||||
Risk-free interest rate | 3.30 | % | 4.60 | % | 5.23 | % | 3.41 | % | 3.30 | % | 4.60 | % | ||||||||||||
Expected lives | 7.0 years | 7.0 years | 7.0 years | 7.0 years | 7.0 years | 7.0 years |
Net | Number | Per Share | Net | Number | Per Share | |||||||||||||||||||||
Income | of Shares | Amount | Income | of Shares | Amount | |||||||||||||||||||||
(In thousands, | ||||||||||||||||||||||||||
(In thousands, | except per share data) | |||||||||||||||||||||||||
except per share data) | ||||||||||||||||||||||||||
2003 | ||||||||||||||||||||||||||
2004 | 2004 | |||||||||||||||||||||||||
Basic EPS: | Basic EPS: | Basic EPS: | ||||||||||||||||||||||||
Income available to common shareholders | $ | 95,063 | 32,849 | $ | 2.89 | Income available to common shareholders | $ | 95,218 | 31,821 | $ | 2.99 | |||||||||||||||
Effect of dilutive securities: | Effect of dilutive securities: | Effect of dilutive securities: | ||||||||||||||||||||||||
Stock options outstanding | — | 520 | — | Stock options outstanding | — | 640 | — | |||||||||||||||||||
Diluted EPS: | Diluted EPS: | Diluted EPS: | ||||||||||||||||||||||||
Income available to common shareholders plus assumed conversions | $ | 95,063 | 33,369 | $ | 2.85 | Income available to common shareholders plus assumed conversions | $ | 95,218 | 32,461 | $ | 2.93 | |||||||||||||||
2002 | ||||||||||||||||||||||||||
Basic EPS: | ||||||||||||||||||||||||||
Income available to common shareholders | $ | 87,138 | 33,686 | $ | 2.59 | |||||||||||||||||||||
Effect of dilutive securities: | ||||||||||||||||||||||||||
Stock options outstanding | — | 539 | — | |||||||||||||||||||||||
Diluted EPS: | ||||||||||||||||||||||||||
Income available to common shareholders plus assumed conversions | $ | 87,138 | 34,225 | $ | 2.55 | |||||||||||||||||||||
Net | Number | Per Share | |||||||||||
Income | of Shares | Amount | |||||||||||
(In thousands, | |||||||||||||
except per share data) | |||||||||||||
2003 | |||||||||||||
Basic EPS: | |||||||||||||
Income available to common shareholders | $ | 95,063 | 32,849 | $ | 2.89 | ||||||||
Effect of dilutive securities: | |||||||||||||
Stock options outstanding | — | 520 | — | ||||||||||
Diluted EPS: | |||||||||||||
Income available to common shareholders plus assumed conversions | $ | 95,063 | 33,369 | $ | 2.85 | ||||||||
5761
Net | Number | Per Share | Net | Number | Per Share | |||||||||||||||||||||
Income | of Shares | Amount | Income | of Shares | Amount | |||||||||||||||||||||
(In thousands, | ||||||||||||||||||||||||||
(In thousands, | except per share data) | |||||||||||||||||||||||||
except per share data) | ||||||||||||||||||||||||||
2001 | ||||||||||||||||||||||||||
2002 | 2002 | |||||||||||||||||||||||||
Basic EPS: | Basic EPS: | Basic EPS: | ||||||||||||||||||||||||
Income available to common shareholders | $ | 84,279 | 35,213 | $ | 2.39 | Income available to common shareholders | $ | 87,138 | 33,686 | $ | 2.59 | |||||||||||||||
Effect of dilutive securities: | Effect of dilutive securities: | Effect of dilutive securities: | ||||||||||||||||||||||||
Stock options outstanding | — | 535 | — | Stock options outstanding | — | 539 | — | |||||||||||||||||||
Diluted EPS: | Diluted EPS: | Diluted EPS: | ||||||||||||||||||||||||
Income available to common shareholders plus assumed conversions | $ | 84,279 | 35,748 | $ | 2.36 | Income available to common shareholders plus assumed conversions | $ | 87,138 | 34,225 | $ | 2.55 | |||||||||||||||
62
58
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
amounts and classification are also subject to qualitative judgments by the regulators about components, risk weighting and other factors.
To Be Well | ||||||||||||||||||||||||||||||||||||||||||||||||||
To Be Well | Capitalized Under | |||||||||||||||||||||||||||||||||||||||||||||||||
Capitalized Under | the FDICIA | |||||||||||||||||||||||||||||||||||||||||||||||||
the FDICIA | For Capital | Prompt Corrective | ||||||||||||||||||||||||||||||||||||||||||||||||
For Capital | Prompt Corrective | Adequacy Purposes | Action Provisions | |||||||||||||||||||||||||||||||||||||||||||||||
Adequacy Purposes | Action Provisions | |||||||||||||||||||||||||||||||||||||||||||||||||
Amount | Ratio | Amount | Ratio | Amount | Ratio | |||||||||||||||||||||||||||||||||||||||||||||
Amount | Ratio | Amount | Ratio | Amount | Ratio | |||||||||||||||||||||||||||||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||||||||||||||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||||||||||||||||||||||||||||||
2003 | ||||||||||||||||||||||||||||||||||||||||||||||||||
2004 | 2004 | |||||||||||||||||||||||||||||||||||||||||||||||||
Total Capital (to risk-weighted assets) | Total Capital (to risk-weighted assets) | Total Capital (to risk-weighted assets) | ||||||||||||||||||||||||||||||||||||||||||||||||
Consolidated Company | $ | 342,627 | 11.39 | % | $ | 240,604 | 8.00 | % | $ | 300,755 | 10.00 | % | Consolidated Company | $ | 367,333 | 12.46 | % | $ | 235,904 | 8.00 | % | $ | 294,880 | 10.00 | % | |||||||||||||||||||||||||
Westamerica Bank | 332,643 | 11.18 | % | 237,921 | 8.00 | % | 297,401 | 10.00 | % | Westamerica Bank | 330,288 | 11.32 | % | 233,380 | 8.00 | % | 291,725 | 10.00 | % | |||||||||||||||||||||||||||||||
Tier 1 Capital (to risk-weighted assets) | Tier 1 Capital (to risk-weighted assets) | Tier 1 Capital (to risk-weighted assets) | ||||||||||||||||||||||||||||||||||||||||||||||||
Consolidated Company | 304,734 | 10.13 | % | 120,302 | 4.00 | % | 180,453 | 6.00 | % | Consolidated Company | 327,070 | 11.09 | % | 117,952 | 4.00 | % | 176,928 | 6.00 | % | |||||||||||||||||||||||||||||||
Westamerica Bank | 289,166 | 9.72 | % | 118,960 | 4.00 | % | 178,441 | 6.00 | % | Westamerica Bank | 287,497 | 9.86 | % | 116,690 | 4.00 | % | 175,035 | 6.00 | % | |||||||||||||||||||||||||||||||
Leverage Ratio * | ||||||||||||||||||||||||||||||||||||||||||||||||||
Leverage Ratio* | Leverage Ratio* | |||||||||||||||||||||||||||||||||||||||||||||||||
Consolidated Company | 304,734 | 6.66 | % | 178,057 | 4.00 | % | 222,571 | 5.00 | % | Consolidated Company | 327,070 | 7.06 | % | 185,282 | 4.00 | % | 231,602 | 5.00 | % | |||||||||||||||||||||||||||||||
Westamerica Bank | 289,166 | 6.54 | % | 176,898 | 4.00 | % | 221,122 | 5.00 | % | Westamerica Bank | 287,497 | 6.25 | % | 184,039 | 4.00 | % | 230,049 | 5.00 | % | |||||||||||||||||||||||||||||||
2002 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Total Capital (to risk-weighted assets) | ||||||||||||||||||||||||||||||||||||||||||||||||||
Consolidated Company | $ | 339,115 | 10.97 | % | $ | 247,286 | 8.00 | % | $ | 309,108 | 10.00 | % | ||||||||||||||||||||||||||||||||||||||
Westamerica Bank | 328,518 | 10.73 | % | 244,829 | 8.00 | % | 306,036 | 10.00 | % | |||||||||||||||||||||||||||||||||||||||||
Tier 1 Capital (to risk-weighted assets) | ||||||||||||||||||||||||||||||||||||||||||||||||||
Consolidated Company | 300,159 | 9.71 | % | 123,643 | 4.00 | % | 185,465 | 6.00 | % | |||||||||||||||||||||||||||||||||||||||||
Westamerica Bank | 283,944 | 9.28 | % | 122,414 | 4.00 | % | 183,622 | 6.00 | % | |||||||||||||||||||||||||||||||||||||||||
Leverage Ratio * | ||||||||||||||||||||||||||||||||||||||||||||||||||
Consolidated Company | 300,159 | 7.27 | % | 165,139 | 4.00 | % | 206,423 | 5.00 | % | |||||||||||||||||||||||||||||||||||||||||
Westamerica Bank | 283,944 | 6.92 | % | 164,029 | 4.00 | % | 205,037 | 5.00 | % |
To Be Well | |||||||||||||||||||||||||
Capitalized Under | |||||||||||||||||||||||||
the FDICIA | |||||||||||||||||||||||||
For Capital | Prompt Corrective | ||||||||||||||||||||||||
Adequacy Purposes | Action Provisions | ||||||||||||||||||||||||
Amount | Ratio | Amount | Ratio | Amount | Ratio | ||||||||||||||||||||
(Dollars in thousands) | |||||||||||||||||||||||||
2003 | |||||||||||||||||||||||||
Total Capital (to risk-weighted assets) | |||||||||||||||||||||||||
Consolidated Company | $ | 342,627 | 11.39 | % | $ | 240,604 | 8.00 | % | $ | 300,755 | 10.00 | % | |||||||||||||
Westamerica Bank | 332,643 | 11.18 | % | 237,921 | 8.00 | % | 297,401 | 10.00 | % | ||||||||||||||||
Tier 1 Capital (to risk-weighted assets) | |||||||||||||||||||||||||
Consolidated Company | 304,734 | 10.13 | % | 120,302 | 4.00 | % | 180,453 | 6.00 | % | ||||||||||||||||
Westamerica Bank | 289,166 | 9.72 | % | 118,960 | 4.00 | % | 178,441 | 6.00 | % | ||||||||||||||||
Leverage Ratio* | |||||||||||||||||||||||||
Consolidated Company | 304,734 | 6.88 | % | 177,159 | 4.00 | % | 221,449 | 5.00 | % | ||||||||||||||||
Westamerica Bank | 289,166 | 6.57 | % | 176,000 | 4.00 | % | 209,905 | 5.00 | % | ||||||||||||||||
63
* | The leverage ratio consists of Tier 1 capital divided by quarterly average assets excluding certain intangible assets. The minimum leverage ratio guideline is 3.00% for banking organizations that do not anticipate significant growth and that have well-diversified risk, excellent asset quality, high liquidity, good earnings and, in general, are considered top-rated, strong banking organizations. |
59
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Note 9: Income Taxes
2003 | 2002 | |||||||||||||||||||
2004 | 2003 | |||||||||||||||||||
(In thousands) | (In thousands) | |||||||||||||||||||
Deferred tax asset | Deferred tax asset | Deferred tax asset | ||||||||||||||||||
Allowance for loan losses | $ | 22,619 | $ | 22,698 | Allowance for loan losses | $ | 22,737 | $ | 22,619 | |||||||||||
State franchise taxes | 4,224 | 4,236 | State franchise taxes | 4,700 | 4,097 | |||||||||||||||
Deferred compensation | 6,556 | 5,761 | Deferred compensation | 7,649 | 6,866 | |||||||||||||||
Real estate owned | 53 | 50 | Real estate owned | 0 | 16 | |||||||||||||||
Net operating loss carryforwards | 81 | 190 | Net operating loss carryforwards | 29 | 81 | |||||||||||||||
Interest on nonaccrual loans | 506 | 338 | Interest on nonaccrual loans | 68 | 128 | |||||||||||||||
Other reserves | 619 | 577 | Other reserves | 516 | 619 | |||||||||||||||
Impaired asset writedown | 0 | 1,791 | Impaired asset writedown | 3,019 | 0 | |||||||||||||||
Other | 1,938 | 1,610 | Other | 1,505 | 1,390 | |||||||||||||||
Subtotal deferred tax asset | 36,596 | 37,251 | Subtotal deferred tax asset | 40,223 | 35,816 | |||||||||||||||
Valuation allowance | Valuation allowance | 0 | 0 | Valuation allowance | 0 | 0 | ||||||||||||||
Total deferred tax asset | 36,596 | 37,251 | Total deferred tax asset | 40,223 | 35,816 | |||||||||||||||
Deferred tax liability Net deferred loan costs | 320 | 699 | ||||||||||||||||||
Deferred tax liability | Deferred tax liability | |||||||||||||||||||
Net deferred loan costs | 306 | 821 | ||||||||||||||||||
Fixed assets | 926 | 1,644 | Fixed assets | 496 | 1,217 | |||||||||||||||
Intangible assets | 969 | 1,096 | Intangible assets | 928 | 971 | |||||||||||||||
Securities available for sale | 9,570 | 13,895 | Securities available for sale | 6,993 | 9,570 | |||||||||||||||
Leases | 1,349 | 1,333 | Leases | 1,422 | 1,401 | |||||||||||||||
Other | 346 | 346 | Other | 398 | 398 | |||||||||||||||
Total deferred tax liability | Total deferred tax liability | 13,480 | 19,013 | Total deferred tax liability | 10,543 | 14,378 | ||||||||||||||
Net deferred tax asset | Net deferred tax asset | $ | 23,116 | $ | 18,238 | Net deferred tax asset | $ | 29,680 | $ | 21,438 | ||||||||||
64
60
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
The provision for federal and state income taxes consists of amounts currently payable and amounts deferred which, for the years ended December 31, are as follows:
2003 | 2002 | 2001 | ||||||||||||||||||||||||
2004 | 2003 | 2002 | ||||||||||||||||||||||||
(In thousands) | (In thousands) | |||||||||||||||||||||||||
Current income tax expense: | Current income tax expense: | Current income tax expense: | ||||||||||||||||||||||||
Federal | $ | 26,182 | $ | 30,460 | $ | 28,678 | Federal | $ | 28,619 | $ | 26,182 | $ | 30,460 | |||||||||||||
State | 13,517 | 15,215 | 13,293 | State | 14,191 | 13,517 | 15,215 | |||||||||||||||||||
Total current | 39,699 | 45,675 | 41,971 | Total current | 42,810 | 39,699 | 45,675 | |||||||||||||||||||
Deferred income tax (benefit) expense: | Deferred income tax (benefit) expense: | Deferred income tax (benefit) expense: | ||||||||||||||||||||||||
Federal | (542 | ) | (3,150 | ) | (1,087 | ) | Federal | (4,526 | ) | (542 | ) | (3,150 | ) | |||||||||||||
State | (11 | ) | (1,584 | ) | (590 | ) | State | (1,139 | ) | (11 | ) | (1,584 | ) | |||||||||||||
Total deferred | (553 | ) | (4,734 | ) | (1,677 | ) | Total deferred | (5,665 | ) | (553 | ) | (4,734 | ) | |||||||||||||
Provision for income taxes | Provision for income taxes | $ | 39,146 | $ | 40,941 | $ | 40,294 | Provision for income taxes | $ | 37,145 | $ | 39,146 | $ | 40,941 | ||||||||||||
2003 | 2002 | 2001 | ||||||||||||||||||||||||||
2004 | 2003 | 2002 | ||||||||||||||||||||||||||
(In thousands) | (In thousands) | |||||||||||||||||||||||||||
Federal income taxes due at statutory rate | Federal income taxes due at statutory rate | $ | 46,973 | $ | 44,828 | $ | 43,601 | Federal income taxes due at statutory rate | $ | 46,327 | $ | 46,973 | $ | 44,828 | ||||||||||||||
(Reductions) increases in income taxes resulting from: | (Reductions) increases in income taxes resulting from: | (Reductions) increases in income taxes resulting from: | ||||||||||||||||||||||||||
Interest on state and municipal securities not taxable for federal income tax purposes | (12,921 | ) | (10,913 | ) | (9,818 | ) | Interest on state and municipal securities not taxable for federal income tax purposes | (13,981 | ) | (12,921 | ) | (10,913 | ) | |||||||||||||||
State franchise taxes, net of federal income tax benefit | 8,779 | 8,861 | 8,257 | State franchise taxes, net of federal income tax benefit | 8,483 | 8,779 | 8,861 | |||||||||||||||||||||
Costs related to acquisitions | — | 55 | — | Costs related to acquisitions | 49 | — | 55 | |||||||||||||||||||||
Low income housing tax credits | (1,749 | ) | (1,646 | ) | (1,274 | ) | Low income housing tax credits | (1,925 | ) | (1,749 | ) | (1,646 | ) | |||||||||||||||
Other | (1,936 | ) | (244 | ) | (472 | ) | Other | (1,808 | ) | (1,936 | ) | (244 | ) | |||||||||||||||
Provision for income taxes | Provision for income taxes | $ | 39,146 | $ | 40,941 | $ | 40,294 | Provision for income taxes | $ | 37,145 | $ | 39,146 | $ | 40,941 | ||||||||||||||
Net Operating | |||||||||
Loss | Tax Credit | ||||||||
Expires Dec. 31, | Carryforwards | Carryforwards | |||||||
(In thousands) | |||||||||
2017 | $ | 416 | $ | 0 | |||||
Total | $ | 416 | $ | 0 | |||||
Note 10: Fair Value of Financial Instruments
The fair value of financial instruments does not represent actual amounts that may be realized upon the sale or liquidation of the related assets or liabilities. In addition, these values do not give effect to discounts to fair value which may occur when financial instruments are sold in larger quantities.
Note 10: | Fair Value of Financial Instruments |
6165
expected realization were valued using historical cost.
2003 | 2002 | |||||||||||||||
2004 | 2003 | |||||||||||||||
(In thousands) | (In thousands) | |||||||||||||||
Cash and cash equivalents | $ | 189,628 | $ | 222,577 | $ | 126,153 | $ | 189,628 | ||||||||
Money market assets | 534 | 633 | 534 | 534 | ||||||||||||
Interest and taxes receivable | 61,485 | 63,338 | 60,437 | 61,485 | ||||||||||||
Noninterest bearing and interest-bearing transaction and savings deposits | 2,860,157 | 2,659,022 | 2,957,399 | 2,860,157 | ||||||||||||
Short-term borrowed funds | 590,646 | 349,736 | 735,423 | 590,646 | ||||||||||||
Interest payable | 2,075 | 3,102 | 2,117 | 2,075 | ||||||||||||
2003 | 2002 | |||||||||||||||||||||||||||||||
2004 | 2003 | |||||||||||||||||||||||||||||||
Book Value | Fair Value | Book Value | Fair Value | |||||||||||||||||||||||||||||
Book Value | Fair Value | Book Value | Fair Value | |||||||||||||||||||||||||||||
(In thousands) | (In thousands) | |||||||||||||||||||||||||||||||
Investment securities available for sale | $ | 1,413,911 | $ | 1,413,911 | $ | 947,848 | $ | 947,848 | $ | 915,078 | $ | 931,710 | $ | 1,391,150 | $ | 1,413,911 | ||||||||||||||||
Investment securities held to maturity | 535,377 | 542,729 | 438,985 | 450,770 | 1,260,832 | 1,265,986 | 535,377 | 542,729 | ||||||||||||||||||||||||
$53.9$54.2 million allowance for loan losses in 20032004 and $54.2$53.9 million in 20022003 were applied against the estimated fair values to recognize future defaults of contractual cash flows. The book values and the estimated fair values of loans at December 31 were:
2003 | 2002 | |||||||||||||||
Book Value | Fair Value | Book Value | Fair Value | |||||||||||||
(In thousands) | ||||||||||||||||
Loans | $ | 2,269,420 | $ | 2,282,364 | $ | 2,440,411 | $ | 2,531,162 |
2004 | 2003 | |||||||||||||||
Book Value | Fair Value | Book Value | Fair Value | |||||||||||||
(In thousands) | ||||||||||||||||
Loans | $ | 2,246,078 | $ | 2,253,939 | $ | 2,269,420 | $ | 2,282,364 | ||||||||
2003 | 2002 | |||||||||||||||||||||||||||||||
2004 | 2003 | |||||||||||||||||||||||||||||||
Book Value | Fair Value | Book Value | Fair Value | |||||||||||||||||||||||||||||
Book Value | Fair Value | Book Value | Fair Value | |||||||||||||||||||||||||||||
(In thousands) | (In thousands) | |||||||||||||||||||||||||||||||
Time deposits | $ | 603,834 | $ | 605,491 | $ | 635,043 | $ | 637,940 | $ | 626,220 | $ | 626,737 | $ | 603,834 | $ | 605,491 | ||||||||||||||||
Federal Home Loan Bank advances | 105,000 | 105,838 | 170,000 | 172,643 | 0 | 0 | 105,000 | 105,838 | ||||||||||||||||||||||||
Notes payable | 24,643 | 24,312 | 24,607 | 26,975 | 21,429 | 21,927 | 24,643 | 24,312 | ||||||||||||||||||||||||
66
Note 11: Lease Commitments
Thirty
Note 11: | Lease Commitments |
62
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
principally for cost of living index, property taxes and maintenance. The Company also leases certain pieces of equipment.
(In thousands) | |||||
2004 | $ | 5,228 | |||
2005 | 3,848 | ||||
2006 | 3,458 | ||||
2007 | 2,438 | ||||
2008 | 2,435 | ||||
Thereafter | 1,134 | ||||
Total minimum lease payments | $ | 18,541 | |||
(In | ||||||
thousands) | ||||||
2005 | $ | 4,590 | ||||
2006 | 4,059 | |||||
2007 | 2,961 | |||||
2008 | 2,237 | |||||
2009 | 1,535 | |||||
Thereafter | 6,075 | |||||
Total minimum lease payments | $ | 21,457 | ||||
Note 12: Commitments and Contingent Liabilities
Note 12: | Commitments and Contingent Liabilities |
Note 13: Retirement Benefit Plans
Note 13: | Retirement Benefit Plans |
2002.
The Company continues to use an actuarial-based accrual method of accounting for post-retirement benefits.67
63
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
started to reimburse 50 percent of Medicare Part B premiums for retirees and spouses over 65. The Company continues to use an actuarial-based accrual method of accounting for post-retirement benefits. The Company uses a September 30 measurement date for determining post-retirement benefit calculations.
2003 | 2002 | 2001 | |||||||||||||
(In thousands) | |||||||||||||||
Service cost | $ | 14 | $ | 207 | $ | 261 | |||||||||
Interest cost | 169 | 172 | 155 | ||||||||||||
Amortization of unrecognized transition obligation | 61 | 61 | 61 | ||||||||||||
�� | |||||||||||||||
Net periodic cost | $ | 244 | $ | 440 | $ | 477 | |||||||||
Change in benefit obligation | |||||||||||||||
Benefit obligation at beginning of year | $ | 3,222 | $ | 2,967 | $ | 2,675 | |||||||||
Service cost | 14 | 207 | 261 | ||||||||||||
Interest cost | 169 | 172 | 155 | ||||||||||||
Benefits paid | (143 | ) | (124 | ) | (124 | ) | |||||||||
Benefit obligation at end of year | $ | 3,262 | $ | 3,222 | $ | 2,967 | |||||||||
Accumulated post retirement benefit obligation attributable to: | |||||||||||||||
Retirees | $ | 2,214 | $ | 2,315 | $ | 2,070 | |||||||||
Fully eligible participants | 813 | 735 | 700 | ||||||||||||
Other | 235 | 172 | 197 | ||||||||||||
Total | $ | 3,262 | $ | 3,222 | $ | 2,967 | |||||||||
Fair value of plan assets | — | — | — | ||||||||||||
Accumulated post retirement benefit obligation in excess of plan assets | $ | 3,262 | $ | 3,222 | $ | 2,967 | |||||||||
Comprised of: | |||||||||||||||
Unrecognized transition obligation | $ | 857 | $ | 918 | $ | 979 | |||||||||
Recognized post-retirement obligation | 2,405 | 2,304 | 1,988 | ||||||||||||
Total | $ | 3,262 | $ | 3,222 | $ | 2,967 | |||||||||
2004 | 2003 | 2002 | ||||||||||
(In thousands) | ||||||||||||
Service cost | $ | 190 | $ | 243 | $ | 221 | ||||||
Interest cost | 196 | 181 | 184 | |||||||||
Amortization of unrecognized transition obligation | 61 | 61 | 61 | |||||||||
Net periodic cost | $ | 447 | $ | 485 | $ | 466 | ||||||
2004 | 2003 | 2002 | |||||||||||||
(In thousands) | |||||||||||||||
Change in benefit obligation | |||||||||||||||
Benefit obligation at beginning of year | $ | 3,736 | $ | 3,455 | $ | 3,174 | |||||||||
Service cost | 190 | 243 | 221 | ||||||||||||
Interest cost | 196 | 181 | 184 | ||||||||||||
Benefits paid | (106 | ) | (143 | ) | (124 | ) | |||||||||
Benefit obligation at end of year | $ | 4,016 | $ | 3,736 | $ | 3,455 | |||||||||
Accumulated post retirement benefit obligation attributable to: | |||||||||||||||
Retirees | $ | 2,686 | $ | 2,536 | $ | 2,483 | |||||||||
Fully eligible participants | 1,067 | 931 | 788 | ||||||||||||
Other | 263 | 269 | 184 | ||||||||||||
Total | $ | 4,016 | $ | 3,736 | $ | 3,455 | |||||||||
Fair value of plan assets | — | — | — | ||||||||||||
Accumulated post retirement benefit obligation in excess of plan assets | $ | 4,016 | $ | 3,736 | $ | 3,455 | |||||||||
Comprised of: | |||||||||||||||
Unrecognized transition obligation | $ | 795 | $ | 857 | $ | 918 | |||||||||
Recognized post-retirement obligation | 3,221 | 2,879 | 2,537 | ||||||||||||
Total | $ | 4,016 | $ | 3,736 | $ | 3,455 | |||||||||
68
2003 | 2002 | 2001 | |||||||||||
Weighted-average assumptions used to determine benefit obligations and net periodic benefit cost at December 31 | |||||||||||||
Discount rate | 5.25 | % | 5.80 | % | 5.80 | % |
2004 | 2003 | 2002 | |||||||||||
Weighted-average assumptions used to determine benefit obligations and net periodic benefit cost at December 31 | |||||||||||||
Discount rate | 5.25 | % | 5.25 | % | 5.80 | % |
64
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Assumed benefit inflation rates have a significant effect on the amounts reported for health care plans. A one percentage point change in the assumed benefit inflation rate would have the following effect on 20032004 results:
One | One | One | One | |||||||||||||
Percentage | Percentage | Percentage | Percentage | |||||||||||||
Point | Point | Point | Point | |||||||||||||
Increase | Decrease | Increase | Decrease | |||||||||||||
(In thousands) | ||||||||||||||||
(In thousands) | ||||||||||||||||
Effect on total service and and interest cost components | $ | 172 | $ | (142 | ) | |||||||||||
Effect on total service and interest cost components | $ | 223 | $ | (184 | ) | |||||||||||
Effect on post-retirement benefit obligation | 566 | (453 | ) | 721 | (575 | ) | ||||||||||
Note 14: Related Party Transactions
Note 14: Related Party Transactions 20032004 and 2002.2003. All such loans were made in the ordinary course of business on normal credit terms, including interest rate and collateral requirements. In the opinion of Management, these credit transactions did not involve, at the time they were contracted, more than the normal risk of collectibility or present other unfavorable features. The table below reflects information concerning loans to certain directors and executive officers and/or family members during 20032004 and 2002:2003:
2003 | 2002 | |||||||||||||||
2004 | 2003 | |||||||||||||||
(In thousands) | (In thousands) | |||||||||||||||
Beginning balance | $ | 2,054 | $ | 2,022 | $ | 2,331 | $ | 2,054 | ||||||||
Originations | 662 | 517 | 55 | 662 | ||||||||||||
Payoffs/principal payments | (385 | ) | (337 | ) | (54 | ) | (385 | ) | ||||||||
Other changes * | 0 | (148 | ) | |||||||||||||
At December 31, | $ | 2,331 | $ | 2,054 | $ | 2,332 | $ | 2,331 | ||||||||
Percent of total loans outstanding | 0.10 | % | 0.08 | % | 0.10 | % | 0.10 | % |
Note 15: Regulatory Matters
Note 15: | Regulatory Matters |
69
Note 16: | Westamerica Bancorporation (Parent Company Only) |
For the Years Ended December 31, | 2004 | 2003 | 2002 | |||||||||||
(In thousands) | ||||||||||||||
Dividends from subsidiaries | $ | 98,436 | $ | 91,390 | $ | 87,449 | ||||||||
Interest income | 394 | 289 | 204 | |||||||||||
Other income | 5,758 | 5,660 | 5,819 | |||||||||||
Total income | 104,588 | 97,339 | 93,472 | |||||||||||
Interest on borrowings | 1,298 | 892 | 1,113 | |||||||||||
Salaries and benefits | 5,850 | 6,790 | 6,615 | |||||||||||
Other expense | 2,365 | 2,394 | 2,594 | |||||||||||
Total expenses | 9,513 | 10,076 | 10,322 | |||||||||||
Income before taxes and equity in undistributed income of subsidiaries | 95,075 | 87,263 | 83,150 | |||||||||||
Income tax benefit | 2,321 | 2,787 | 2,294 | |||||||||||
Earnings of subsidiaries (less) greater than subsidiary dividends | (2,178 | ) | 5,013 | 1,694 | ||||||||||
Net income | $ | 95,218 | $ | 95,063 | $ | 87,138 | ||||||||
Comprehensive income, net: | ||||||||||||||
Change in unrealized (loss) gain on securities available for sale, net | (3,553 | ) | (5,961 | ) | 7,252 | |||||||||
Comprehensive income | $ | 91,665 | $ | 89,102 | $ | 94,390 | ||||||||
6570
Statements of Income and Comprehensive Income
For the Years Ended December 31, | ||||||||||||||
2003 | 2002 | 2001 | ||||||||||||
(In thousands) | ||||||||||||||
Dividends from subsidiaries | $ | 91,390 | $ | 87,449 | $ | 88,155 | ||||||||
Interest income | 289 | 204 | 611 | |||||||||||
Other income | 5,660 | 5,819 | 7,179 | |||||||||||
Total income | 97,339 | 93,472 | 95,945 | |||||||||||
Interest on borrowings | 892 | 1,113 | 1,186 | |||||||||||
Salaries and benefits | 6,790 | 6,615 | 6,262 | |||||||||||
Other expense | 2,394 | 2,594 | 2,185 | |||||||||||
Total expenses | 10,076 | 10,322 | 9,633 | |||||||||||
Income before taxes and equity in undistributed income of subsidiaries | 87,263 | 83,150 | 86,312 | |||||||||||
Income tax benefit | 2,787 | 2,294 | 1,656 | |||||||||||
Earnings of subsidiaries greater (less) than subsidiary dividends | 5,013 | 1,694 | (3,689 | ) | ||||||||||
Net income | $ | 95,063 | $ | 87,138 | $ | 84,279 | ||||||||
Comprehensive income, net: | ||||||||||||||
Change in unrealized (loss) gain on securities available for sale, net | (5,961 | ) | 7,252 | 4,731 | ||||||||||
Comprehensive income | $ | 89,102 | $ | 94,390 | $ | 89,010 | ||||||||
December 31, | |||||||||
2004 | 2003 | ||||||||
Assets | |||||||||
Cash and cash equivalents | $ | 37,909 | $ | 10,608 | |||||
Money market assets and investment securities available for sale | 10,004 | 9,584 | |||||||
Investment in subsidiaries | 324,346 | 330,368 | |||||||
Premises and equipment, net | 12,198 | 12,373 | |||||||
Accounts receivable from subsidiaries | 586 | 548 | |||||||
Other assets | 12,612 | 11,262 | |||||||
Total assets | $ | 397,655 | $ | 374,743 | |||||
Liabilities | |||||||||
Notes payable | $ | 21,429 | $ | 24,643 | |||||
Other liabilities | 17,617 | 9,729 | |||||||
Total liabilities | 39,046 | 34,372 | |||||||
Shareholders’ equity | 358,609 | 340,371 | |||||||
Total liabilities and shareholders’ equity | $ | 397,655 | $ | 374,743 | |||||
Balance Sheets
December 31, | |||||||||
2003 | 2002 | ||||||||
(In thousands) | |||||||||
Assets | |||||||||
Cash and cash equivalents | $ | 10,608 | $ | 1,661 | |||||
Money market assets and investment securities available for sale | 9,584 | 7,268 | |||||||
Investment in subsidiaries | 330,368 | 332,655 | |||||||
Premises and equipment, net | 12,373 | 13,285 | |||||||
Accounts receivable from subsidiaries | 548 | 573 | |||||||
Other assets | 11,262 | 9,555 | |||||||
Total assets | $ | 374,743 | $ | 364,997 | |||||
Liabilities | |||||||||
Notes payable | $ | 24,643 | $ | 14,657 | |||||
Other liabilities | 9,729 | 8,841 | |||||||
Total liabilities | 34,372 | 23,498 | |||||||
Shareholders’ equity | 340,371 | 341,499 | |||||||
Total liabilities and shareholders’ equity | $ | 374,743 | $ | 364,997 | |||||
6671
For the Years Ended December 31, | ||||||||||||||||||||||||||||||
2003 | 2002 | 2001 | For the Years Ended December 31, | |||||||||||||||||||||||||||
2004 | 2003 | 2002 | ||||||||||||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||||||||
Operating Activities | Operating Activities | Operating Activities | ||||||||||||||||||||||||||||
Net income | $ | 95,063 | $ | 87,138 | $ | 84,279 | Net income | $ | 95,218 | $ | 95,063 | $ | 87,138 | |||||||||||||||||
Adjustments to reconcile net income to net cash provided by operating activities: | Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||||||||||||||||||||
Depreciation | 536 | 633 | 671 | Depreciation | 321 | 536 | 633 | |||||||||||||||||||||||
Decrease (increase) in accounts receivable from affiliates | 25 | 37 | (237 | ) | (Increase) decrease in accounts receivable from affiliates | (39 | ) | 25 | 37 | |||||||||||||||||||||
(Increase) decrease in other assets | (1,804 | ) | (348 | ) | (812 | ) | Increase in other assets | (363 | ) | (1,804 | ) | (348 | ) | |||||||||||||||||
Provision for deferred income tax | 2,226 | 1,545 | 4,745 | Provision for deferred income tax | 8,251 | 2,226 | 1,545 | |||||||||||||||||||||||
Increase in other liabilities | 3,085 | 2,934 | 796 | Increase in other liabilities | 2,973 | 3,085 | 2,934 | |||||||||||||||||||||||
Earnings of subsidiaries (less) greater than subsidiary dividends | (5,013 | ) | (1,694 | ) | 3,689 | Earnings of subsidiaries greater (less) than subsidiary dividends | 2,178 | (5,013 | ) | (1,694 | ) | |||||||||||||||||||
Gain on sales of assets | 0 | 0 | (1,879 | ) | ||||||||||||||||||||||||||
Net cash provided by operating activities | 94,118 | 90,245 | 91,252 | |||||||||||||||||||||||||||
Net cash provided by operating activities | Net cash provided by operating activities | 108,539 | 94,118 | 90,245 | ||||||||||||||||||||||||||
Investing Activities | Investing Activities | Investing Activities | ||||||||||||||||||||||||||||
Purchases of premises and equipment | 376 | 402 | 240 | Purchases of premises and equipment | (146 | ) | 376 | 402 | ||||||||||||||||||||||
Net increase in short term investments | (5 | ) | (527 | ) | (763 | ) | Net increase in short term investments | (4 | ) | (5 | ) | (527 | ) | |||||||||||||||||
Purchase of investment securities available for sale | 0 | 0 | (963 | ) | Purchase of investment securities available for sale | 88 | 0 | 0 | ||||||||||||||||||||||
Proceeds from sale/maturities of investment securities | 0 | 1,508 | 0 | Proceeds from sale/maturities of investment securities | 0 | 0 | 1,508 | |||||||||||||||||||||||
Proceeds from sale of other assets | 0 | 0 | 2,530 | |||||||||||||||||||||||||||
Net cash provided by investing activities | 371 | 1,383 | 1,044 | |||||||||||||||||||||||||||
Net cash (used) provided by investing activities | Net cash (used) provided by investing activities | (62 | ) | 371 | 1,383 | |||||||||||||||||||||||||
Financing Activities | Financing Activities | Financing Activities | ||||||||||||||||||||||||||||
(Decrease) increase in short-term debt | (1,800 | ) | 1,800 | 0 | (Decrease) increase in short-term debt | 0 | (1,800 | ) | 1,800 | |||||||||||||||||||||
Net increases (reductions) in notes payable and long-term other borrowings | 11,786 | (6,849 | ) | 420 | Net (reductions) increases in notes payable and long-term borrowings | (3,214 | ) | 11,786 | (6,849 | ) | ||||||||||||||||||||
Exercise of stock options/issuance of shares | 8,176 | 8,480 | 12,175 | Exercise of stock options/issuance of shares | 12,572 | 8,176 | 8,480 | |||||||||||||||||||||||
Retirement of common stock including repurchases | (70,769 | ) | (64,033 | ) | (101,313 | ) | Retirement of common stock including repurchases | (55,444 | ) | (70,769 | ) | (64,033 | ) | |||||||||||||||||
Dividends | (32,935 | ) | (30,262 | ) | (29,072 | ) | Dividends | (35,090 | ) | (32,935 | ) | (30,262 | ) | |||||||||||||||||
Net cash used in financing activities | (85,542 | ) | (90,864 | ) | (117,790 | ) | ||||||||||||||||||||||||
Net cash used in financing activities | Net cash used in financing activities | (81,176 | ) | (85,542 | ) | (90,864 | ) | |||||||||||||||||||||||
Net increase (decrease) in cash and cash equivalents | Net increase (decrease) in cash and cash equivalents | 8,947 | 764 | (25,494 | ) | Net increase (decrease) in cash and cash equivalents | 27,301 | 8,947 | 764 | |||||||||||||||||||||
Cash and cash equivalents at beginning of year | Cash and cash equivalents at beginning of year | 1,661 | 897 | 26,391 | Cash and cash equivalents at beginning of year | 10,608 | 1,661 | 897 | ||||||||||||||||||||||
Cash and cash equivalents at end of year | Cash and cash equivalents at end of year | $ | 10,608 | $ | 1,661 | $ | 897 | Cash and cash equivalents at end of year | $ | 37,909 | $ | 10,608 | $ | 1,661 | ||||||||||||||||
Supplemental disclosure: | Supplemental disclosure: | Supplemental disclosure: | ||||||||||||||||||||||||||||
Unrealized (loss) gain on securities available for sale, net | $ | (5,961 | ) | $ | 7,252 | $ | 4,731 | Unrealized (loss) gain on securities available for sale, net | $ | (3,553 | ) | $ | (5,961 | ) | $ | 7,252 | ||||||||||||||
Issuance of common stock in connection with Bank acquisitions | 0 | 14,620 | 0 | Issuance of common stock in connection with Bank acquisitions | 0 | 0 | 14,620 |
6772
Note 17: Quarterly Financial Information (Unaudited)
Note 17: | Quarterly Financial Information (Unaudited) |
March 31, | June 30, | September 30, | December 31, | March 31, | June 30, | September 30, | December 31, | |||||||||||||||||||||||||
(In thousands, except per share data and price range of common stock) | ||||||||||||||||||||||||||||||||
(In thousands, except per share data and price range of common stock) | ||||||||||||||||||||||||||||||||
2004 | ||||||||||||||||||||||||||||||||
Interest and fee income (FTE) | $ | 60,120 | $ | 58,868 | $ | 59,570 | $ | 60,542 | ||||||||||||||||||||||||
Net interest income (FTE) | 54,605 | 54,271 | 54,528 | 54,589 | ||||||||||||||||||||||||||||
Provision for loan losses | 750 | 750 | 600 | 600 | ||||||||||||||||||||||||||||
Noninterest income | 10,866 | 11,661 | 11,788 | 4,268 | ||||||||||||||||||||||||||||
Noninterest expense | 24,992 | 24,990 | 24,491 | 24,278 | ||||||||||||||||||||||||||||
Income before taxes (FTE) | 39,729 | 40,192 | 41,225 | 33,979 | ||||||||||||||||||||||||||||
Net income | 24,314 | 24,644 | 25,095 | 21,165 | ||||||||||||||||||||||||||||
Basic earnings per share | 0.76 | 0.78 | 0.79 | 0.66 | ||||||||||||||||||||||||||||
Diluted earnings per share | 0.74 | 0.76 | 0.78 | 0.65 | ||||||||||||||||||||||||||||
Dividends paid per share | 0.26 | 0.28 | 0.28 | 0.28 | ||||||||||||||||||||||||||||
Price range, common stock | 47.85 – 51.63 | 47.58 – 52.99 | 49.04 – 55.80 | 54.43 – 61.05 | ||||||||||||||||||||||||||||
2003 | ||||||||||||||||||||||||||||||||
Interest and fee income (FTE) | $ | 61,799 | $ | 61,733 | $ | 60,552 | $ | 60,520 | $ | 61,799 | $ | 61,733 | $ | 60,552 | $ | 60,520 | ||||||||||||||||
Net interest income (FTE) | 54,062 | 54,324 | 54,264 | 54,757 | 54,062 | 54,324 | 54,264 | 54,757 | ||||||||||||||||||||||||
Provision for loan losses | 900 | 900 | 750 | 750 | 900 | 900 | 750 | 750 | ||||||||||||||||||||||||
Noninterest income | 10,375 | 11,036 | 11,013 | 10,492 | 10,375 | 11,036 | 11,013 | 10,492 | ||||||||||||||||||||||||
Noninterest expense | 25,535 | 25,476 | 25,534 | 25,158 | 25,535 | 25,476 | 25,534 | 25,158 | ||||||||||||||||||||||||
Income before taxes (FTE) | 38,002 | 38,984 | 38,993 | 39,341 | 38,002 | 38,984 | 38,993 | 39,341 | ||||||||||||||||||||||||
Net income | 23,012 | 23,671 | 24,073 | 24,307 | 23,012 | 23,671 | 24,073 | 24,307 | ||||||||||||||||||||||||
Basic earnings per share | 0.70 | 0.72 | 0.73 | 0.74 | 0.70 | 0.72 | 0.73 | 0.74 | ||||||||||||||||||||||||
Diluted earnings per share | 0.69 | 0.71 | 0.72 | 0.73 | 0.69 | 0.71 | 0.72 | 0.73 | ||||||||||||||||||||||||
Dividends paid per share | 0.24 | 0.24 | 0.26 | 0.26 | 0.24 | 0.24 | 0.26 | 0.26 | ||||||||||||||||||||||||
Price range, common stock | 38.07 – 41.94 | 39.24 – 44.66 | 42.67 – 45.76 | 44.45 – 53.55 | 38.07 – 41.94 | 39.24 – 44.66 | 42.67 – 45.76 | 44.45 – 53.55 | ||||||||||||||||||||||||
2002 | ||||||||||||||||||||||||||||||||
Interest and fee income (FTE) | $ | 63,133 | $ | 63,325 | $ | 64,913 | $ | 63,519 | $ | 63,133 | $ | 63,325 | $ | 64,913 | $ | 63,519 | ||||||||||||||||
Net interest income (FTE) | 52,712 | 53,096 | 54,914 | 54,985 | 52,712 | 53,096 | 54,914 | 54,985 | ||||||||||||||||||||||||
Provision for loan losses | 900 | 900 | 900 | 900 | 900 | 900 | 900 | 900 | ||||||||||||||||||||||||
Noninterest income | 9,999 | 5,884 | 10,455 | 10,213 | 9,999 | 5,884 | 10,455 | 10,213 | ||||||||||||||||||||||||
Noninterest expense | 25,693 | 25,909 | 25,964 | 25,757 | 25,693 | 25,909 | 25,964 | 25,757 | ||||||||||||||||||||||||
Income before taxes (FTE) | 36,118 | 32,171 | 38,505 | 38,541 | 36,118 | 32,171 | 38,505 | 38,541 | ||||||||||||||||||||||||
Net income | 21,659 | 19,347 | 22,877 | 23,255 | 21,659 | 19,347 | 22,877 | 23,255 | ||||||||||||||||||||||||
Basic earnings per share | 0.64 | 0.58 | 0.68 | 0.69 | 0.64 | 0.58 | 0.68 | 0.69 | ||||||||||||||||||||||||
Diluted earnings per share | 0.63 | 0.57 | 0.67 | 0.68 | 0.63 | 0.57 | 0.67 | 0.68 | ||||||||||||||||||||||||
Dividends paid per share | 0.22 | 0.22 | 0.22 | 0.24 | 0.22 | 0.22 | 0.22 | 0.24 | ||||||||||||||||||||||||
Price range, common stock | 35.22 – 42.95 | 38.70 – 45.27 | 34.11 – 42.65 | 35.46 – 43.59 | 35.22 – 42.95 | 38.70 – 45.27 | 34.11 – 42.65 | 35.46 – 43.59 | ||||||||||||||||||||||||
2001 | ||||||||||||||||||||||||||||||||
Interest and fee income (FTE) | $ | 70,756 | $ | 68,765 | $ | 67,643 | $ | 65,410 | ||||||||||||||||||||||||
Net interest income (FTE) | 49,259 | 50,269 | 51,778 | 52,381 | ||||||||||||||||||||||||||||
Provision for loan losses | 900 | 900 | 900 | 900 | ||||||||||||||||||||||||||||
Noninterest income | 10,286 | 10,994 | 10,590 | 10,785 | ||||||||||||||||||||||||||||
Noninterest expense | 25,577 | 25,626 | 25,763 | 25,684 | ||||||||||||||||||||||||||||
Income before taxes (FTE) | 33,068 | 34,737 | 35,705 | 36,582 | ||||||||||||||||||||||||||||
Net income | 20,424 | 20,758 | 21,325 | 21,772 | ||||||||||||||||||||||||||||
Basic earnings per share | 0.57 | 0.59 | 0.61 | 0.63 | ||||||||||||||||||||||||||||
Diluted earnings per share | 0.56 | 0.58 | 0.60 | 0.62 | ||||||||||||||||||||||||||||
Dividends paid per share | 0.19 | 0.21 | 0.21 | 0.21 | ||||||||||||||||||||||||||||
Price range, common stock | 33.94 – 43.00 | 35.83 – 39.25 | 33.94 – 41.40 | 32.77 – 40.40 |
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Note 18: | Acquisition (Unaudited) |
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the Public Company Accounting Oversight Board (United States), the effectiveness of the Company’s internal control over financial reporting as of December 31, 2004, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), and our report dated March 4, 2005 expressed an unqualified opinion on management’s assessment of, and the effective operation of, internal control over financial reporting.
/s/KPMG LLP | |
KPMG LLP |
February 6, 2004March 4, 2005
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MANAGEMENT’S LETTER OF FINANCIAL RESPONSIBILITY
To Our Shareholders:
The Management of Westamerica Bancorporation is responsible for the preparation, integrity, reliability and consistency of the information contained in this annual report. The consolidated financial statements, which necessarily include amounts based on judgments and estimates, were prepared in conformity with generally accepted accounting principles and prevailing practices in the banking industry. All other financial information appearing throughout this annual report is presented in a manner consistent with the consolidated financial statements.
Management has established and maintains a system of internal controls that provides reasonable assurance that the underlying financial records are reliable for preparing the consolidated financial statements, and that assets are safeguarded from unauthorized use or loss. This system includes extensive written policies and operating procedures and a comprehensive internal audit function, and is supported by the careful selection and training of staff, an organizational structure providing for division of responsibility, and a Code of Ethics covering standards of personal and business conduct.
Management believes that, as of December 31, 2003, the Corporation’s internal control environment is adequate to provide reasonable assurance as to the integrity and reliability of the consolidated financial statements and related financial information contained in the annual report. However, there are limits inherent in all systems of internal accounting control and Management recognizes that errors or irregularities may occur. Based on the recognition that the costs of such systems should not exceed the benefits to be derived, Management believes the Company’s system provides an appropriate cost/benefit balance.
The system of internal controls is under the general oversight of the Board of Directors acting through its Audit Committee, which is comprised entirely of outside directors. The Audit Committee monitors the effectiveness of and compliance with internal controls through a continuous program of internal audit. This is accomplished through periodic meetings with Management, internal auditors and independent auditors to assure that each is carrying out their responsibilities.
The Corporation’s consolidated financial statements have been audited by KPMG LLP, independent certified public auditors elected by the shareholders. All financial records and related data, as well as the minutes of shareholders and directors meetings, have been made available to them. Management believes that all representations made to the independent auditors during their audit were valid and appropriate.
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Item 9. | Changes in and Disagreements on Accounting and Financial Disclosure |
Item 9A. Controls and Procedures
76 Statements: Exhibits: 15, 20052003.2004. Based upon their evaluation, the principal executive officer and principal financial officer concluded that the Company’s disclosure controls and procedures are effective. There were no significant changesThe evaluation did not identify any change in the Company’s internal controlscontrol over financial reporting that occurred during the quarter ended December 31, 2004 that has materially affected, or in other factors that could significantlyis reasonably likely to materially affect, these controls since the dateCompany’s internal control over financial reporting. Management’s Report on Internal Control Over Financial Reporting and the controls were evaluated.PART IIIItem 9B. Other Information Item 10. Directors and Executive Officers of the Registrant 20042005 Annual Meeting of Shareholders which will be filed pursuant to Regulation 14A of the Securities Exchange Act of 1934. Held Name of Executive Position Since David L. Payne Mr. Payne, born in 1955, is the Chairman of the Board, President and Chief Executive Officer of the Corporation. Mr. Payne is President and Chief Executive Officer of Gibson Printing and Publishing Company and Gibson Radio and Publishing Company which are newspaper, commercial printing and real estate investment companies headquartered in Vallejo, California. 1984 Robert W. Entwisle Mr. Entwisle, born in 1947, is Senior Vice President in charge of the Banking Division of Westamerica Bank.President. 1986 Jennifer J. Finger Ms. Finger, born in 1954, is Senior Vice President and Chief Financial Officer for the Corporation. 1997 Held Name of Executive Position Since Dennis R. Hansen Mr. Hansen, born in 1950, is Senior Vice President and Controller for the Corporation. 1978 71HeldName of ExecutivePositionSinceRobert A. Thorson Mr. Thorson, born in 1960, is Senior Vice President and Treasurer for the Corporation. Mr. Thorson joined Westamerica Bancorporation in 1989 and was Vice President and Manager of Human Resources from 1995 until 2001. 2002 Hans T. Y. Tjian Mr. Tjian, born in 1939, is Senior Vice President and manager of the Operations and Systems Administration of Westamerica Bank. 1989 Frank R. Zbacnik Mr. Zbacnik, born in 1947, is Senior Vice President and Chief Credit Administrator of Westamerica Bank. Mr. Zbacnik joined Westamerica Bank in 1984 and was Vice President and Manager of Retail Credit from 1995 until 2000. 2001 Item 11. Executive Compensation 20042005 Annual Meeting of Shareholders which will be filed pursuant to Regulation 14A of the Securities Exchange Act of 1934.Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 20042005 Annual Meeting of Shareholders which will be filed pursuant to Regulation 14A of the Securities Exchange Act of 1934.Item 13. Certain Relationships and Related Transactions 20042005 Annual Meeting of Shareholders which will be filed pursuant to Regulation 14A of the Securities Exchange Act of 1934.Item 14. Principal Accountant Fees and Services 20042005 Annual Meeting of Shareholders which will be filed pursuant to Regulation 14A of the Securities Exchange Act of 1934.7277Item 15. Exhibits, Financial Statement Schedules and Reports on Form 8-K Statements:Exhibits: Exhibit Number 2(b) Agreement and Plan of Reorganization and Merger, dated March 14, 2000, by and among Westamerica Bancorporation, Westamerica Bank and First Counties Bank, incorporated by reference to Exhibit 2 of Registrant’s Form 8-K filed with the Securities and Exchange Commission on March 17, 2000.2000 2(c) Agreement and Plan of Reorganization, dated February 25, 2002, among Westamerica Bancorporation, Westamerica Bank and Kerman State Bank, incorporated by reference to Exhibit 2 of Registrant’s Form 8-K filed with the Securities and Exchange Commission on March 8, 2002.20022(c) Agreement and Plan of Reorganization, dated August 25, 2004, among Westamerica Bancorporation, Westamerica Bank and Redwood Empire Bancorp and National Bank of the Redwoods, incorporated by reference to Exhibit 2.1 of Registrant’s Form 8-K filed with the Securities and Exchange Commission on August 27, 2004 3(a) Restated Articles of Incorporation (composite copy), incorporated by reference to Exhibit 3(a) to the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 1997, filed with the Securities and Exchange Commission on March 30, 1998.1998 3(b) By-laws, as amended (composite copy), incorporated by reference to Exhibit 3(i) to the Registrant’s Quarterly Report on Form 10-Q for the third quarter ended September 30, 2003, filed with the Securities and Exchange Commission on November 13, 2003.2003 4(a) Amended and Restated Rights Agreement dated November 19, 1999,as of December 31, 2004, incorporated by reference to Exhibit 99 to the Registrant’s Form 8-A/ A, Amendment No. 3,4, filed with the Securities and Exchange Commission on November 19, 1999.December 22, 2004 10(a)* Amended and Restated Stock Option Plan of 1995, incorporated by reference to Exhibit A to the Registrant’s definitive Proxy Statement pursuant to Regulation 14(a) filed with the Securities and Exchange Commission on March 17, 2003.2003 10(b)* Employment Agreement with Robert W. Entwisle dated January 7, 1987, incorporated by reference to Exhibit 10(c) to the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 1998, filed with the Securities and Exchange Commission on March 31, 1999.1999 10(c) Note Purchase Agreement by and between Westamerica Bancorporation and The Northwestern Mutual Life Insurance Company dated as of October 30, 2003, pursuant to which registrant issued its 5.31% Senior Notes due October 31, 2013 in the principal amount of $15 million and form of 5.31% Senior Note due October 31, 2013 incorporated by reference to Exhibit 4 of Registrant’s Quarterly Report on Form 10-Q for the third quarter ended September 30, 2003, filed with the Securities and Exchange Commission on November 13, 2003.2003 10(d)* Westamerica Bancorporation Chief Executive Officer Deferred Compensation Agreement by and between Westamerica Bancorporation and David L. Payne, dated December 18, 1998 incorporated by reference to Exhibit 10(e) to the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 1999, filed with the Securities and Exchange Commission on March 29, 2000.10(e)Description of Executive Cash Bonus Program incorporated by reference to Exhibit 10(e) to the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2002, filed with the Securities and Exchange Commission on March 26, 2003.20007378 Exhibit Exhibit Exhibit Number Number Number 11 Computation of Earnings Per Share on common and common equivalent shares and on common shares assuming full dilution. 10(e)* Description of Executive Cash Bonus Program incorporated by reference to Exhibit 10 of the Registrant’s Form 8-K filed with the Securities Exchange Commission on March 14, 2005 14 Code of Ethics 10(f)* Non-Qualified Annuity Performance Agreement with David L. Payne dated November 19, 1997 21 Subsidiaries of the registrant. 10(g)* Form of Nonstatutory Stock Option Agreement pursuant to the Westamerica Bancorporation Amended and Restated Stock Option Plan of 1995 23(a) Consent of KPMG LLP 10(h)* Form of Restricted Performance Share Grant Agreement pursuant to the Westamerica Bancorporation Amended and Restated Stock Option Plan of 1995 31 .1 Certification of Chief Executive Officer pursuant to Securities Exchange Act Rule 13a-14(a)/15d-14(a) 11 Computation of Earnings Per Share on common and common equivalent shares and on common shares assuming full dilution 31 .2 Certification of Chief Financial Officer pursuant to Securities Exchange Act Rule 13a-14(a)/15d-14(a) 14 Code of Ethics incorporated by reference to Exhibit 14 to the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2003, filed with the Securities and Exchange Commission on March 10, 2004 32 .1 Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 21 Subsidiaries of the registrant 32 .2 Certification pursuant to 18 U.S.C. pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 23(a) Consent of KPMG LLP 31 .1 Certification of Chief Executive Officer pursuant to Securities Exchange Act Rule 13a-14(a)/15d-14(a) 31 .2 Certification of Chief Financial Officer pursuant to Securities Exchange Act Rule 13a-14(a)/15d-14(a) 32 .1 Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 32 .2 Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 * Indicates management contract or compensatory plan or arrangement. The Company will furnish to shareholders a copy of any exhibit listed above, but not contained herein, upon written request to the Office of the Corporate Secretary A-2M, Westamerica Bancorporation, P.O. Box 1200, Suisun City, California 94585-1200, and payment to the Company of $.25 per page. The Company will furnish to shareholders a copy of any exhibit listed above, but not contained herein, upon written request to the Office of the Corporate Secretary A-2M, Westamerica Bancorporation, P.O. Box 1200, Suisun City, California 94585-1200, and payment to the Company of $.25 per page.16, 2003,20, 2004, the Company filed a report on form 8-K with respect to item 12, therein, reporting third quarter, 20032004 financial results. Included in the report was a press release dated October 14, 2003.19, 2004. On December 22, 2004, the Company filed a report on form 8-K with respect to Amended and Restated Rights Agreement dated as of December 31, 2004 between Westamerica Bancorporation and Computershare Investor Services, LLC.7479 WESTAMERICA BANCORPORATION /s/ DENNISDennis R. HANSENHansen DENNISDennis R. HANSENHansen Senior Vice President and Controller Principal Accounting Officer 8, 2004 Signature Title Date SignatureTitleDate /s/ DAVIDDavid L. PAYNEPayne
David L. Payne Chairman of the Board and Director President and Chief Executive Officer March 8, 200415, 2005 /s/ ETTA ALLEN
Etta Allen
Etta Allen Director March 8, 200415, 2005 /s/ LOUIS E. BARTOLINI
Louis E. Bartolini
Louis E. Bartolini Director March 8, 200415, 2005 /s/ E. JOSEPH BOWLER
E. Joseph Bowler
E. Joseph Bowler Director March 8, 200415, 2005 /s/ ARTHUR C. LATNO
Arthur C. Latno, Jr.
Arthur C. Latno, Jr. Director March 8, 200415, 2005 /s/ PATRICK D. LYNCH
Patrick D. Lynch
Patrick D. Lynch Director March 8, 200415, 2005 /s/ CATHERINE COPE MACMILLANCatherine C. MacMillan
Catherine CopeC. MacMillan Director March 8, 200415, 2005 /s/ RONALD A. NELSON
Ronald A. Nelson
Ronald A. Nelson Director March 8, 200415, 2005 /s/ CARL OTTO
Carl Otto
Carl Otto Director March 8, 200415, 2005 /s/ EDWARD B. SYLVESTER
Edward B. Sylvester
Edward B. Sylvester Director March 8, 200415, 20057580