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WB

WESTAMERICA BANCORPORATION (WABC)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 2025 diluted EPS was $1.12, up $0.05 above Wall Street consensus of $1.07*, while Total Revenue (FTE) was $64.9M, modestly below the $65.8M* consensus; net income was $29.1M .
  • Net interest margin compressed to 3.85% from 3.90% in Q1 and 4.01% in Q4; yield on earning assets declined to 4.07%, partially offset by a lower cost of funds at 0.22% .
  • Credit quality mixed: allowance for credit losses on loans remained strong at $13.8M, but nonperforming loans rose to $5.0M (0.66% of loans) due to performing nonaccrual loans emerging in Q2 .
  • Capital and liquidity remain robust: cash balances of $626.4M, Fed borrowing capacity of $703.4M, estimated unpledged collateral $1.68B; 773k shares retired in Q2 and quarterly dividend declared at $0.46 per share .
  • Near-term stock catalysts: EPS beat vs consensus*, offset by NIM compression and increased nonperforming loans; buyback and dividend support the equity story .
    Note: Consensus figures marked with * are from S&P Global.

What Went Well and What Went Wrong

  • What Went Well

    • “Westamerica’s second quarter 2025 results benefited from the Company’s low-cost operating principles,” with cost of funds at 0.22% and efficiency ratio at 39% .
    • Dividend discipline and capital return: paid $0.46 dividend in Q2 and retired 773k shares; tangible common equity ratio 14.03% .
    • Taxable-equivalent net interest income remained resilient at $54.6M despite lower yields and assets, aided by very low funding costs .

  • What Went Wrong

    • NIM compression and lower earning asset yields: NIM fell to 3.85% (from 3.90% Q1) and yield to 4.07% (from 4.14% Q1), pressuring revenue .
    • Credit quality: nonperforming loans climbed to $4.964M (0.66% of loans) versus $277k last quarter, driven by performing nonaccrual loans appearing in Q2 .
    • Average earning assets and loans down year over year (earning assets −8.0%, loans −9.0%), constraining net interest income capacity .

Financial Results

Headline metrics vs prior periods

MetricQ4 2024Q1 2025Q2 2025
Total Revenue (FTE, $USD Millions)$69.880 $66.711 $64.877
Net Interest Income (FTE, $USD Millions)$59.247 $56.390 $54.562
Noninterest Income ($USD Millions)$10.633 $10.321 $10.315
Net Income ($USD Millions)$31.700 $31.037 $29.066
Diluted EPS ($USD)$1.19 $1.16 $1.12
Net Interest Margin (FTE, %)4.01% 3.90% 3.85%
Efficiency Ratio (FTE, %)37.0% 37.7% 39.3%
Return on Common Equity (annualized, %)12.1% 11.9% 11.2%
Return on Assets (annualized, %)2.02% 2.03% 1.93%

Results vs Wall Street consensus (Q2 2025)

MetricConsensusActualSurprise
EPS ($USD)$1.07*$1.12+$0.05*
Total Revenue (FTE, $USD Millions)$65.800*$64.877−$0.923*
EPS - # of Estimates2*——
Revenue - # of Estimates1*——
Values retrieved from S&P Global.

Net interest yields and funding costs

MetricQ4 2024Q1 2025Q2 2025
Yield on Earning Assets (FTE, %)4.25% 4.14% 4.07%
Cost of Funds (%)0.24% 0.24% 0.22%
Net Interest Spread (FTE, %)3.76% 3.64% 3.59%

Average loans and earning assets (quarterly averages, $USD Millions)

MetricQ4 2024Q1 2025Q2 2025
Total Earning Assets$5,850.6 $5,794.8 $5,652.4
Total Loans$821.8 $789.9 $762.2
Commercial Loans$131.1 $120.2 $115.9
Commercial Real Estate Loans$503.5 $497.4 $489.0
Consumer Loans$187.1 $172.4 $157.3

Noninterest income components ($USD Millions)

ComponentQ4 2024Q1 2025Q2 2025
Service Charges$3.501 $3.381 $3.368
Merchant Processing$2.735 $2.733 $2.687
Debit Card Fees$1.902 $1.581 $1.664
Trust Fees$0.867 $0.899 $0.867
ATM Processing$0.506 $0.463 $0.482
Other Service Fees$0.428 $0.429 $0.450
Life Insurance Gains$— $0.102 $0.106
Other Noninterest Income$0.694 $0.733 $0.691

Deposit mix and liquidity

MetricQ4 2024Q1 2025Q2 2025
Demand Deposits / Total Deposits (%)46.6% 46.2% 46.4%
Transaction & Savings / Total Deposits (%)98.3% 98.3% 98.4%
Cash Balances ($USD Millions, period-end)$601.5 $727.3 $626.4
Estimated Unpledged Collateral ($USD Millions)$1,597.5 $1,615.4 $1,683.8
Fed Borrowing Capacity ($USD Millions)$766.6 $725.0 $703.4

Credit quality

MetricQ4 2024Q1 2025Q2 2025
Nonperforming Loans ($USD Millions)$0.735 $0.277 $4.964
NPL / Total Loans (%)0.09% 0.04% 0.66%
ACL on Loans ($USD Millions)$14.780 $13.914 $13.787
ACL / Loans (%)1.80% 1.80% 1.84%

Capital actions

MetricQ4 2024Q1 2025Q2 2025
Shares Retired (000s)— 361 773
Avg Retirement Price ($)— $50.96 $49.61
Dividend per Share ($)$0.44 $0.44 $0.46 (declared July 24)
TCE Ratio (%)12.90% 13.71% 14.03%

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Dividend per Share ($)Q3 2025$0.44 (Q1 2025 paid) $0.46 declared (payable Aug 15, 2025) Raised
Revenue/EPS Guidance2025Not provided Not provided Maintained (none)
Operating Expense Guidance2025Not providedNot providedMaintained (none)
Tax Rate/OI&E Guidance2025Not providedNot providedMaintained (none)
Capital/RegulatoryOngoing“Capital ratios remain at historically high levels exceeding the highest regulatory guidelines.” Reiterated Maintained

Earnings Call Themes & Trends

Note: A Q2 2025 earnings call transcript was not available in the document catalog after targeted searches. The narrative below tracks themes using company earnings materials.

TopicPrevious Mentions (Q4 2024, Q1 2025)Current Period (Q2 2025)Trend
Cost of Funds0.24% in Q4 ; 0.24% in Q1 0.22% in Q2 Improving
Net Interest Margin4.01% in Q4 ; 3.90% in Q1 3.85% in Q2 Down
Yield on Earning Assets4.25% in Q4 ; 4.14% in Q1 4.07% in Q2 Down
Deposit Mix (Demand/Total)46.6% in Q4 ; 46.2% in Q1 46.4% in Q2 Stable
Credit Quality (NPLs)$0.735M in Q4 ; $0.277M in Q1 $4.964M in Q2 Deteriorated
Liquidity & CollateralCash $601.5M, unpledged $1.60B in Q4 ; cash $727.3M, unpledged $1.62B in Q1 Cash $626.4M, unpledged $1.68B Strong, modestly lower cash QoQ
Capital ReturnNo retirements Q4 ; 361k shares retired Q1 773k shares retired Q2 Increased buybacks
Dividend$0.44 Q4 & Q1 $0.46 declared for Q3 Raised

Management Commentary

  • “The annualized cost of funding interest-earning loans, bonds and cash was 0.22 percent for the second quarter 2025… Westamerica operated efficiently, spending 39 percent of its revenue on operating costs… Second quarter 2025 results generated an annualized 11.2 percent return on average common equity.” — Chairman, President & CEO David Payne .
  • “The Company recognized no provision for credit losses in the second quarter 2025. At June 30, 2025, nonperforming assets were $5.0 million and the allowance for credit losses on loans was $13.8 million.” .
  • “Westamerica paid a $0.46 per common share dividend during the second quarter 2025, and retired 773 thousand common shares using its share repurchase plan. Westamerica’s capital ratios remain at historically high levels exceeding the highest regulatory guidelines.” .

Q&A Highlights

  • A Q2 2025 earnings call transcript was not available in the document catalog after targeted searches; no published Q&A themes or clarifications were found for the quarter.

Estimates Context

  • Q2 2025 EPS of $1.12 exceeded consensus $1.07* (≈+4.7%); Total Revenue (FTE) of $64.9M was slightly below $65.8M* consensus .
  • With NIM down and average earning assets lower, revenue expectations may be tempered, but funding cost tailwinds and disciplined expenses support EPS durability .
    Values retrieved from S&P Global.

Key Takeaways for Investors

  • EPS beat vs consensus* despite revenue softness; disciplined cost of funds (0.22%) and operating efficiency (39.3% FTE) underpinned earnings resilience .
  • NIM continued to compress (3.85% vs 3.90% QoQ), reflecting lower asset yields; watch trajectory of yields and asset mix for margin stabilization .
  • Credit quality warrants monitoring: NPLs rose to $4.964M (0.66% of loans) from $0.277M last quarter, though ACL coverage remained strong at 1.84% of loans .
  • Strong liquidity and collateral provide flexibility: $626.4M cash, $703.4M Fed capacity, $1.68B unpledged collateral; no Fed or correspondent borrowings outstanding .
  • Capital return accelerates: 773k shares retired in Q2 and dividend increased to $0.46, supporting TSR and per-share metrics .
  • Revenue headwinds from lower yields and earning assets (-8% YoY) suggest near-term top-line pressure; continued low funding costs can partially offset .
  • Actionable: bias toward EPS sustainability over revenue growth; monitor NIM/asset yield trends and NPL developments as key catalysts for sentiment and valuation .