With loan demand still weak in most of its markets, Westamerica Bancorporation in San Rafael, Calif., said Tuesday that its second-quarter profit fell by nearly 10% from the same period last year, to $21.3 million.

Its diluted earnings per share declined by nearly 8%, to 74 cents, or four cents shy of estimates of analysts surveyed by Thomson Reuters.

In a news release, the $4.9 billion-asset company attributed the decrease largely to a shrinking net interest margin. The margin, though still well above the industry average, fell by 24 basis points, to 5.38%.

"Economic conditions and deleveraging by businesses and individuals have reduced loan volumes, placing greater reliance on lower-yielding investment securities," the company said.

Westamerica has been one of the industry's best-performing companies throughout the economic downturn. Its return on assets of 1.73% and return on equity of 15.6%, while down from previous quarters, remain comfortably above industry averages. Its shares are trading at nearly 2.5 times times book value.

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