Westamerica Bancorporation (WABC) in San Rafael, Calif., reported another decline in quarterly profits as low interest rates continued to reduce yields on loans and investment securities.
The $4.9 billion-asset parent of Westamerica Bank said Tuesday that its second-quarter net income dropped 11.4% from the same period last year, to $52 million. Earnings per share fell 9.4%, to 58 cents, in line with estimates of analysts polled by Bloomberg,
Net interest income for the quarter was $38.6 million, down 9.3% from the second quarter of 2013. The company attributed the year-over-year drop to an overall decline in loan volume and shrinking yields on earning assets. Yields fell 43 basis points year over year, to 3.88%, while the net interest margin contracted by 36 basis points, to 3.76%.
"Low market rates continued to pressure our net interest margin, particularly yields on the investment securities portfolio," Chairman, President and Chief Executive David Payne said in a news release Tuesday. He added that the company is purchasing shorter-duration, lower-yielding securities to "prepare for higher interest rates."
Noninterest income fell 7.6% from a year earlier, to $13.2 million, as a result of lower service charges on deposit accounts and a decline in merchant processing service fees.
Westamerica's shares were trading $50.86 late Tuesday, down 0.6% from Monday's close.