GlobeNewswire Inc | Jul 15, 2021 10:53AM EDT

July 15, 2021

SAN RAFAEL, Calif., July 15, 2021 (GLOBE NEWSWIRE) -- Westamerica Bancorporation (Nasdaq: WABC), parent company of Westamerica Bank, generated net income for the second quarter 2021 of $22.6 million and diluted earnings per common share ("EPS") of $0.84. Second quarter 2021 results include make-whole interest income on corporate bonds redeemed prior to maturity, which increased EPS $0.04. These results compare to net income of $20.1 million and EPS of $0.75 for the first quarter 2021, which included make-whole interest income on corporate bonds redeemed before maturity that increased EPS $0.02.

"Westamerica continued originating loans for our customers under the second round of the Paycheck Protection Program during the second quarter 2021. Average total deposits grew $327 million from the first quarter 2021 to the second quarter 2021. Westamericas valuable deposit base generated a very low 0.03 percent annualized cost of funding our loan and bond portfolios during the second quarter 2021. Operating expenses were well managed in the second quarter 2021 declining $615 thousand from the first quarter 2021 and $463 thousand from the second quarter 2020. Credit quality remained stable with nonperforming loans of $4.4 million at June 30, 2021, said Chairman, President and CEO David Payne. Second quarter 2021 results generated an annualized 12.2 percent return on average common equity, and shareholders were paid a $0.41 per common share dividend during the quarter, concluded Payne.

Net interest income on a fully-taxable equivalent (FTE) basis was $44.5 million for the second quarter 2021, including make-whole interest income on corporate bonds redeemed prior to maturity of $1.4 million. Second quarter 2021 net interest income (FTE) compares to $42.6 million for the first quarter 2021, which included make-whole interest income on corporate bonds redeemed prior to maturity of $700 thousand. Average PPP loans grew $19 million from the first quarter 2021 to the second quarter 2021. Average total deposits grew $327 million from the first quarter 2021 to the second quarter 2021. Checking and savings deposits represented ninety-seven percent of the Companys average deposit base during the second quarter 2021.

At June 30, 2021, nonperforming loans totaled $4.4 million and the allowance for credit losses on loans was $23.7 million. The Company continues to work with loan customers requesting loan payment deferrals due to economic weakness caused by the pandemic. At June 30, 2021, loans with deferred payments totaled $586 thousand, all of which were consumer automobile loans.

Noninterest income for the second quarter 2021 totaled $11.0 million, compared to noninterest income for the first quarter 2021 of $10.2 million. The increase in noninterest income was primarily due to higher levels of merchant processing services fees and debit card fees.

Noninterest expense for the second quarter 2021 was $24.3 million compared to $24.9 million for the first quarter 2021; the decline in noninterest expense was primarily attributable to the seasonal decline in payroll related taxes.

Westamerica Bancorporations wholly owned subsidiary Westamerica Bank, operates commercial banking and trust offices throughout Northern and Central California.

Westamerica Bancorporation Web Address: www.westamerica.com

For additional information contact:Westamerica Bancorporation1108 Fifth Avenue, San Rafael, CA 94901Robert A. Thorson SVP & Treasurer707-863-6840investments@westamerica.com

FORWARD-LOOKING INFORMATION:

The following appears in accordance with the Private Securities Litigation Reform Act of 1995:

This press release may contain forward-looking statements about the Company, including descriptions of plans or objectives of its management for future operations, products or services, and forecasts of its revenues, earnings or other measures of economic performance. Forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts. They often include the words "believe," "expect," "anticipate," "intend," "plan," "estimate," or words of similar meaning, or future or conditional verbs such as "will," "would," "should," "could," or "may."

Forward-looking statements, by their nature, are subject to risks and uncertainties. A number of factors many of which are beyond the Company's control could cause actual conditions, events or results to differ significantly from those described in the forward-looking statements. The Company's most recent reports filed with the Securities and Exchange Commission, including the annual report for the year ended December 31, 2020 filed on Form 10-K and quarterly report for the quarter ended March 31, 2021 filed on Form 10-Q, describe some of these factors, including certain credit, interest rate, operational, liquidity and market risks associated with the Company's business and operations. Other factors described in these reports include changes in business and economic conditions, competition, fiscal and monetary policies, disintermediation, cyber security risks, legislation including the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2011, the Sarbanes-Oxley Act of 2002 and the Gramm-Leach-Bliley Act of 1999, and mergers and acquisitions.

Forward-looking statements speak only as of the date they are made. The Company does not undertake to update forward-looking statements to reflect circumstances or events that occur after the date forward looking statements are made.

WESTAMERICA BANCORPORATION FINANCIAL HIGHLIGHTS June 30, 2021 1. Net Income Summary. (in thousands except per-share amounts) % Q2'2021 Q2'2020 Change Q1'2021 Net Interest and Fee $ 44,499 $ 42,063 5.8 % $ 42,583 Income (FTE) Provision for Credit - - n/m - Losses Noninterest Income 11,032 9,554 15.5 % 10,189 Noninterest Expense 24,291 24,754 -1.9 % 24,906 Income Before Taxes 31,240 26,863 16.3 % 27,866 (FTE) Income Tax Provision 8,661 7,301 18.6 % 7,719 (FTE) Net Income $ 22,579 $ 19,562 15.4 % $ 20,147 Average Common Shares 26,865 26,935 -0.3 % 26,821 Outstanding Diluted Average Common 26,887 26,951 -0.2 % 26,842 Shares Operating Ratios: Basic Earnings Per $ 0.84 $ 0.72 16.7 % $ 0.75 Common Share Diluted Earnings Per 0.84 0.72 16.7 % 0.75 Common Share Return On Assets (a) 1.29 % 1.30 % 1.23 % Return On Common Equity 12.2 % 11.1 % 11.1 % (a) Net Interest Margin 2.70 % 2.99 % 2.74 % (FTE) (a) Efficiency Ratio (FTE) 43.7 % 48.0 % 47.2 % Dividends Paid Per $ 0.41 $ 0.41 0.0 % $ 0.41 Common Share Common Dividend Payout 49 % 57 % 55 % Ratio % 6/30'21YTD 6/30'20YTD Change Net Interest and Fee $ 87,082 $ 82,610 5.4 % Income (FTE) Provision for Credit - 4,300 n/m Losses Noninterest Income 21,221 21,202 0.1 % Noninterest Expense 49,197 49,418 -0.4 % Income Before Taxes 59,106 50,094 18.0 % (FTE) Income Tax Provision 16,380 13,570 20.7 % (FTE) Net Income $ 42,726 $ 36,524 17.0 % Average Common Shares 26,843 27,001 -0.6 % Outstanding Diluted Average Common 26,865 27,024 -0.6 % Shares Operating Ratios: Basic Earnings Per $ 1.59 $ 1.35 17.8 % Common Share Diluted Earnings Per 1.59 1.35 17.8 % Common Share Return On Assets (a) 1.26 % 1.25 % Return On Common Equity 11.6 % 10.4 % (a) Net Interest Margin 2.72 % 3.04 % (FTE) (a) Efficiency Ratio (FTE) 45.4 % 47.6 % Dividends Paid Per $ 0.82 $ 0.82 0.0 % Common Share Common Dividend Payout 52 % 61 % Ratio 2. Net Interest Income. (dollars in thousands) % Q2'2021 Q2'2020 Change Q1'2021 Interest and Fee Income $ 44,983 $ 42,498 5.8 % $ 43,058 (FTE) Interest Expense 484 435 11.3 % 475 Net Interest and Fee $ 44,499 $ 42,063 5.8 % $ 42,583 Income (FTE) Average Earning Assets $ 6,603,343 $ 5,635,014 17.2 % $ 6,244,622 Average Interest- Bearing Liabilities 3,298,221 2,774,450 18.9 % 3,130,227 Yield on Earning Assets 2.73 % 3.02 % 2.77 % (FTE) (a) Cost of Funds (a) 0.03 % 0.03 % 0.03 % Net Interest Margin 2.70 % 2.99 % 2.74 % (FTE) (a) Interest Expense/ Interest-Bearing 0.06 % 0.06 % 0.06 % Liabilities (a) Net Interest Spread 2.67 % 2.96 % 2.71 % (FTE) (a) % 6/30'21YTD 6/30'20YTD Change Interest and Fee Income $ 88,041 $ 83,487 5.5 % (FTE) Interest Expense 959 877 9.4 % Net Interest and Fee $ 87,082 $ 82,610 5.4 % Income (FTE) Average Earning Assets $ 6,424,973 $ 5,438,578 18.1 % Average Interest- Bearing Liabilities 3,214,688 2,711,515 18.6 % Yield on Earning Assets 2.75 % 3.07 % (FTE) (a) Cost of Funds (a) 0.03 % 0.03 % Net Interest Margin 2.72 % 3.04 % (FTE) (a) Interest Expense/ Interest-Bearing 0.06 % 0.07 % Liabilities (a) Net Interest Spread 2.69 % 3.00 % (FTE) (a) 3. Loans & Other Earning Assets. (average volume, dollars in thousands) % Q2'2021 Q2'2020 Change Q1'2021 Total Assets $ 7,004,695 $ 6,058,365 15.6 % $ 6,650,164 Total Earning Assets 6,603,343 5,635,014 17.2 % 6,244,622 Total Loans 1,257,087 1,232,073 2.0 % 1,251,540 Total Commercial Loans 413,797 344,053 20.3 % 395,473 Paycheck Protection 207,515 132,500 56.6 % 188,971 Program (PPP) Loans Commercial Loans 206,282 211,553 -2.5 % 206,502 Commercial RE Loans 546,470 578,572 -5.5 % 559,191 Consumer Loans 296,820 309,448 -4.1 % 296,876 Total Investment 4,394,169 3,957,851 11.0 % 4,440,621 Securities Debt Securities 3,953,016 3,293,009 20.0 % 3,947,549 Available For Sale Debt Securities Held To 441,153 664,842 -33.6 % 493,072 Maturity Total Interest-Bearing 952,087 445,090 113.9 % 552,461 Cash Loans/Deposits 20.7 % 23.7 % 21.8 % % 6/30'21YTD 6/30'20YTD Change Total Assets $ 6,828,409 $ 5,856,913 16.6 % Total Earning Assets 6,424,973 5,438,578 18.1 % Total Loans 1,254,328 1,178,004 6.5 % Total Commercial Loans 404,685 283,718 42.6 % PPP Loans 198,294 66,250 199.3 % Commercial Loans 206,391 217,468 -5.1 % Commercial RE Loans 552,795 579,157 -4.6 % Consumer Loans 296,848 315,129 -5.8 % Total Investment 4,417,267 3,901,868 13.2 % Securities Debt Securities 3,950,298 3,214,376 22.9 % Available For Sale Debt Securities Held To 466,969 687,492 -32.1 % Maturity Total Interest-Bearing 753,378 358,706 110.0 % Cash Loans/Deposits 21.2 % 23.5 % 4. Deposits, Other Interest-Bearing Liabilities & Equity. (average volume, dollars in thousands) % Q2'2021 Q2'2020 Change Q1'2021 Total Deposits $ 6,074,730 $ 5,200,475 16.8 % $ 5,748,070 Noninterest Demand 2,888,259 2,496,840 15.7 % 2,713,632 Interest-Bearing 1,208,584 980,872 23.2 % 1,130,760 Transaction Savings 1,822,625 1,558,201 17.0 % 1,746,815 Time greater than $100K 70,750 72,267 -2.1 % 71,241 Time less than $100K 84,512 92,295 -8.4 % 85,622 Total Short-Term 111,750 70,116 59.4 % 95,575 Borrowings Other Borrowed Funds - 699 -100.0 % 214 Shareholders' Equity 744,746 705,882 5.5 % 735,496 Demand Deposits/ Total Deposits 47.5 % 48.0 % 47.2 % Transaction & Savings Deposits / Total 97.4 % 96.8 % 97.3 % Deposits % 6/30'21YTD 6/30'20YTD Change Total Deposits $ 5,912,303 $ 5,014,731 17.9 % Noninterest Demand 2,801,428 2,359,788 18.7 % Interest-Bearing 1,169,888 961,295 21.7 % Transaction Savings 1,784,929 1,527,282 16.9 % Time greater than $100K 70,994 73,058 -2.8 % Time less than $100K 85,064 93,308 -8.8 % Total Short-Term 103,707 56,223 84.5 % Borrowings Other Borrowed Funds 106 349 -69.6 % Shareholders' Equity 740,147 705,606 4.9 % Demand Deposits/ Total Deposits 47.4 % 47.1 % Transaction & Savings Deposits / Total 97.4 % 96.7 % Deposits 5. Interest Yields Earned & Rates Paid. (dollars in thousands) Q2'2021 Average Income/ Yield (a) / Volume Expense Rate (a) Interest & Fee Income Earned Total Earning Assets $ 6,603,343 $ 44,983 2.73 % (FTE) Total Loans (FTE) 1,257,087 15,168 4.84 % Total Commercial Loans 413,797 4,763 4.62 % (FTE) PPP Loans 207,515 2,713 5.25 % Commercial Loans (FTE) 206,282 2,050 3.98 % Commercial RE Loans 546,470 6,994 5.13 % Consumer Loans 296,820 3,411 4.61 % Total Investments (FTE) 4,394,169 29,556 2.69 % Total Interest-Bearing 952,087 259 0.11 % Cash Interest Expense Paid Total Earning Assets 6,603,343 484 0.03 % Total Interest-Bearing 3,298,221 484 0.06 % Liabilities Total Interest-Bearing 3,186,471 466 0.06 % Deposits Interest-Bearing 1,208,584 93 0.03 % Transaction Savings 1,822,625 263 0.06 % Time less than $100K 84,512 42 0.20 % Time greater than $100K 70,750 68 0.39 % Total Short-Term 111,750 18 0.07 % Borrowings Net Interest Income and Margin (FTE) $ 44,499 2.70 % Q2'2020 Average Income/ Yield (a) / Volume Expense Rate (a) Interest & Fee Income Earned Total Earning Assets $ 5,635,014 $ 42,498 3.02 % (FTE) Total Loans (FTE) 1,232,073 15,376 5.02 % Total Commercial Loans 344,053 4,052 4.74 % (FTE) PPP Loans 132,500 1,673 5.07 % Commercial Loans (FTE) 211,553 2,379 4.52 % Commercial RE Loans 578,572 7,892 5.49 % Consumer Loans 309,448 3,432 4.46 % Total Investments (FTE) 3,957,851 27,009 2.73 % Total Interest-Bearing 445,090 113 0.10 % Cash Interest Expense Paid Total Earning Assets 5,635,014 435 0.03 % Total Interest-Bearing 2,774,450 435 0.06 % Liabilities Total Interest-Bearing 2,703,635 424 0.06 % Deposits Interest-Bearing 980,872 74 0.03 % Transaction Savings 1,558,201 224 0.06 % Time less than $100K 92,295 47 0.20 % Time greater than $100K 72,267 79 0.44 % Total Short-Term 70,116 10 0.06 % Borrowings Other Borrowed Funds 699 1 0.35 % Net Interest Income and Margin (FTE) $ 42,063 2.99 % 6. Noninterest Income. (dollars in thousands except per-share amounts) % Q2'2021 Q2'2020 Change Q1'2021 Service Charges on $ 3,235 $ 3,151 2.6 % $ 3,304 Deposits Merchant Processing 3,279 2,277 44.0 % 2,560 Services Debit Card Fees 1,791 1,459 22.8 % 1,601 Trust Fees 827 714 15.8 % 801 ATM Processing Fees 618 518 19.3 % 601 Other Service Fees 491 420 16.9 % 469 Financial Services 95 123 -22.8 % 70 Commissions Securities Gains 34 71 n/m - Other Noninterest Income 662 821 -19.4 % 783 Total Noninterest Income $ 11,032 $ 9,554 15.5 % $ 10,189 Total Revenue (FTE) $ 55,531 $ 51,617 7.6 % $ 52,772 Noninterest Income/ 19.9 % 18.5 % 19.3 % Revenue (FTE) Service Charges/Avg. 0.21 % 0.24 % 0.23 % Deposits (a) Total Revenues (FTE) Per Avg. Common Share (a) $ 8.29 $ 7.71 7.6 % $ 7.98 % 6/30'21YTD 6/30'20YTD Change Service Charges on $ 6,539 $ 7,399 -11.6 % Deposits Merchant Processing 5,839 4,635 26.0 % Services Debit Card Fees 3,392 2,927 15.9 % Trust Fees 1,628 1,491 9.2 % ATM Processing Fees 1,219 1,097 11.1 % Other Service Fees 960 926 3.7 % Financial Services 165 248 -33.5 % Commissions Securities Gains 34 71 n/m Other Noninterest Income 1,445 2,408 -40.0 % Total Noninterest Income $ 21,221 $ 21,202 0.1 % Total Revenue (FTE) $ 108,303 $ 103,812 4.3 % Noninterest Income/ 19.6 % 20.4 % Revenue (FTE) Service Charges/Avg. 0.22 % 0.30 % Deposits (a) Total Revenues (FTE) Per Avg./ Common Share (a) $ 8.14 $ 7.73 5.2 % 7. Noninterest Expense. (dollars in thousands) % Q2'2021 Q2'2020 Change Q1'2021 Salaries & Benefits $ 12,097 $ 12,900 -6.2 % $ 12,665 Occupancy and Equipment 4,808 4,791 0.4 % 4,880 Outsourced Data 2,425 2,324 4.3 % 2,390 Processing Professional Fees 830 643 29.1 % 942 Courier Service 567 508 11.6 % 504 Amortization of Identifiable Intangibles 68 73 -6.8 % 69 Other Noninterest 3,496 3,515 -0.5 % 3,456 Expense Total Noninterest $ 24,291 $ 24,754 -1.9 % $ 24,906 Expense Noninterest Expense/ Avg. Earning Assets (a) 1.48 % 1.77 % 1.62 % Noninterest Expense/ 43.7 % 48.0 % 47.2 % Revenues (FTE) % 6/30'21YTD 6/30'20YTD Change Salaries & Benefits $ 24,762 $ 25,918 -4.5 % Occupancy and Equipment 9,688 9,723 -0.4 % Outsourced Data 4,815 4,729 1.8 % Processing Professional Fees 1,772 1,032 71.7 % Courier Service 1,071 999 7.2 % Amortization of Identifiable Intangibles 137 146 -6.2 % Other Noninterest 6,952 6,871 1.2 % Expense Total Noninterest $ 49,197 $ 49,418 -0.4 % Expense Noninterest Expense/ Avg. Earning Assets (a) 1.54 % 1.83 % Noninterest Expense/ 45.4 % 47.6 % Revenues (FTE) 8. Allowance for Credit Losses. (dollars in thousands) % Q2'2021 Q2'2020 Change Q1'2021 Average Total Loans $ 1,257,087 $ 1,232,073 2.0 % $ 1,251,540 Beginning of Period Allowance for Credit Losses on Loans $ 23,483 $ 24,804 -5.3 % $ 23,854 (ACLL) Provision for Credit - - n/m - Losses Net ACLL Recoveries 254 (275 ) -192.4 % (371 ) (Losses) End of Period ACLL $ 23,737 $ 24,529 -3.2 % $ 23,483 Gross ACLL Recoveries / Gross ACLL Losses 176 % 66 % 60 % Net ACLL (Recoveries) Losses / Avg. Total Loans (a) -0.08 % 0.09 % 0.12 % % 6/30'21YTD 6/30'20YTD Change Average Total Loans $ 1,254,328 $ 1,178,004 6.5 % Prior Period ACLL $ 23,854 $ 19,484 22.4 % Adoption of ASU 2016-13 - 2,017 n/m (1) Beginning of Period ACLL 23,854 21,501 10.9 % Provision for Credit - 4,300 n/m Losses Net ACLL Losses (117 ) (1,272 ) -90.8 % End of Period ACLL $ 23,737 $ 24,529 -3.2 % Gross ACLL Recoveries / Gross ACLL Losses 91 % 46 % Net ACLL Losses / Avg. Total Loans (a) 0.02 % 0.22 % (dollars in thousands) % 6/30/21 6/30/20 Change 3/31/21 Allowance for Credit $ 23,737 $ 24,529 -3.2 % $ 23,483 Losses on Loans Allowance for Credit Losses on HTM Securities 9 16 -44.6 % 9 Total Allowance for $ 23,746 $ 24,545 -3.3 % $ 23,492 Credit Losses Allowance for Unfunded Credit Commitments $ 101 $ 53 90.0 % $ 101 9. Credit Quality. (dollars in thousands) % 6/30/21 6/30/20 Change 3/31/21 Nonperforming Loans: Nonperforming Nonaccrual $ 652 $ 590 10.5 % $ 402 Performing Nonaccrual 3,564 3,643 -2.2 % 3,569 Total Nonaccrual Loans 4,216 4,233 -0.4 % 3,971 90+ Days Past Due 167 290 -42.4 % 132 Accruing Loans Total 4,383 4,523 -3.1 % 4,103 Repossessed Loan - 43 -100.0 % - Collateral Total Nonperforming $ 4,383 $ 4,566 -4.0 % $ 4,103 Assets Total Loans Outstanding $ 1,194,834 $ 1,316,359 -9.2 % $ 1,293,756 Total Assets 7,147,779 6,463,889 10.6 % 6,912,481 Loans: Allowance for Credit $ 23,737 $ 24,529 -3.2 % $ 23,483 Losses on Loans Allowance for Credit Losses on Loans / Loans 1.99 % 1.86 % 1.82 % Nonperforming Loans/ 0.37 % 0.34 % 0.32 % Total Loans 10. Capital. (in thousands, except per-share amounts) % 6/30/21 6/30/20 Change 3/31/21 Shareholders' Equity $ 842,196 $ 808,076 4.2 % $ 812,132 Total Assets 7,147,779 6,463,889 10.6 % 6,912,481 Shareholders' Equity/ Total Assets 11.78 % 12.50 % 11.75 % Shareholders' Equity/ Total Loans 70.49 % 61.39 % 62.77 % Tangible Common Equity 10.24 % 10.81 % 10.15 % Ratio Common Shares 26,865 26,933 -0.3 % 26,864 Outstanding Common Equity Per Share $ 31.35 $ 30.00 4.5 % $ 30.23 Market Value Per Common 58.03 57.42 1.1 % 62.78 Share Share Repurchase Programs (shares in thousands) % Q2'2021 Q2'2020 Change Q1'2021 Total Shares Repurchased - 13 n/m 4 Average Repurchase Price $ - $ 52.27 n/m $ 61.09 Net Shares Issued (1 ) (1 ) n/m (57 ) % 6/30'21YTD 6/30'20YTD Change Total Shares Repurchased 4 193 n/m Average Repurchase Price $ 61.09 $ 51.50 n/m Net Shares (Issued) (58 ) 129 n/m Repurchased 11. Period-End Balance Sheets. (unaudited, dollars in thousands) % 6/30/21 6/30/20 Change 3/31/21 Assets: Cash and Due from Banks $ 939,929 $ 500,820 87.7 % $ 866,457 Debt Securities 4,304,162 3,708,370 16.1 % 3,990,570 Available For Sale Debt Securities Held To 414,413 638,281 -35.1 % 469,259 Maturity (2) Loans 1,194,834 1,316,359 -9.2 % 1,293,756 Allowance For Credit (23,737 ) (24,529 ) -3.2 % (23,483 ) Losses on Loans Total Loans, net 1,171,097 1,291,830 -9.3 % 1,270,273 Other Real Estate Owned - 43 n/m - Premises and Equipment, 32,080 34,061 -5.8 % 32,216 net Identifiable 967 1,245 -22.4 % 1,035 Intangibles, net Goodwill 121,673 121,673 0.0 % 121,673 Other Assets 163,458 167,566 -2.5 % 160,998 Total Assets $ 7,147,779 $ 6,463,889 10.6 % $ 6,912,481 Liabilities and Shareholders' Equity: Deposits: Noninterest-Bearing $ 2,872,920 $ 2,702,885 6.3 % $ 2,798,542 Interest-Bearing 1,200,634 997,593 20.4 % 1,179,484 Transaction Savings 1,849,258 1,605,169 15.2 % 1,791,636 Time 153,577 162,765 -5.6 % 154,171 Total Deposits 6,076,389 5,468,412 11.1 % 5,923,833 Short-Term Borrowed 90,043 86,170 4.5 % 95,479 Funds Other Borrowed Funds - - n/m 1,681 Other Liabilities 139,151 101,231 37.5 % 79,356 Total Liabilities 6,305,583 5,655,813 11.5 % 6,100,349 Shareholders' Equity: Common Equity: Paid-In Capital 470,365 467,386 0.6 % 469,885 Accumulated Other Comprehensive Income 86,921 93,732 n/m 68,901 Retained Earnings 284,910 246,958 15.4 % 273,346 Total Shareholders' 842,196 808,076 4.2 % 812,132 Equity Total Liabilities and Shareholders' Equity $ 7,147,779 $ 6,463,889 10.6 % $ 6,912,481 12. Income Statements. (unaudited, in thousands except per-share amounts) % Q2'2021 Q2'2020 Change Q1'2021 Interest & Fee Income: Loans $ 15,064 $ 15,278 -1.4 % $ 14,581 Equity Securities 110 103 6.8 % 110 Debt Securities 26,481 22,429 18.1 % 24,889 Available For Sale (3) Debt Securities Held To 2,362 3,616 -34.7 % 2,598 Maturity Interest-Bearing Cash 259 113 129.2 % 138 Total Interest & Fee 44,276 41,539 6.6 % 42,316 Income Interest Expense: Transaction Deposits 93 74 25.7 % 89 Savings Deposits 263 224 17.4 % 250 Time Deposits 110 126 -12.7 % 120 Short-Term Borrowed 18 10 80.0 % 16 Funds Other Borrowed Funds - 1 -100.0 % - Total Interest Expense 484 435 11.3 % 475 Net Interest Income 43,792 41,104 6.5 % 41,841 Provision for Credit - - n/m - Losses Noninterest Income: Service Charges 3,235 3,151 2.6 % 3,304 Merchant Processing 3,279 2,277 44.0 % 2,560 Services Debit Card Fees 1,791 1,459 22.8 % 1,601 Trust Fees 827 714 15.8 % 801 ATM Processing Fees 618 518 19.3 % 601 Other Service Fees 491 420 16.9 % 469 Financial Services 95 123 -22.8 % 70 Commissions Securities Gains 34 71 n/m - Other Noninterest Income 662 821 -19.4 % 783 Total Noninterest Income 11,032 9,554 15.5 % 10,189 Noninterest Expense: Salaries and Benefits 12,097 12,900 -6.2 % 12,665 Occupancy and Equipment 4,808 4,791 0.4 % 4,880 Outsourced Data 2,425 2,324 4.3 % 2,390 Processing Professional Fees 830 643 29.1 % 942 Courier Service 567 508 11.6 % 504 Amortization of 68 73 -6.8 % 69 Identifiable Intangibles Other Noninterest 3,496 3,515 -0.5 % 3,456 Expense Total Noninterest 24,291 24,754 -1.9 % 24,906 Expense Income Before Income 30,533 25,904 17.9 % 27,124 Taxes Income Tax Provision 7,954 6,342 25.4 % 6,977 Net Income $ 22,579 $ 19,562 15.4 % $ 20,147 Average Common Shares 26,865 26,935 -0.3 % 26,821 Outstanding Diluted Common Shares 26,887 26,951 -0.2 % 26,842 Outstanding Per Common Share Data: Basic Earnings $ 0.84 $ 0.72 16.7 % $ 0.75 Diluted Earnings 0.84 0.72 16.7 % 0.75 Dividends Paid 0.41 0.41 0.0 % 0.41 % 6/30'21YTD 6/30'20YTD Change Interest & Fee Income: Loans $ 29,645 $ 29,087 1.9 % Equity Securities 220 206 6.9 % Debt Securities 51,370 43,744 17.4 % Available For Sale (3) Debt Securities Held To 4,960 7,524 -34.1 % Maturity Interest-Bearing Cash 397 969 -59.0 % Total Interest & Fee 86,592 81,530 6.2 % Income Interest Expense: Transaction Deposits 182 158 15.2 % Savings Deposits 513 441 16.2 % Time Deposits 230 259 -11.3 % Short-Term Borrowed 34 18 88.9 % Funds Other Borrowed Funds - 1 -100.0 % Total Interest Expense 959 877 9.4 % Net Interest Income 85,633 80,653 6.2 % Provision for Credit - 4,300 n/m Losses Noninterest Income: Service Charges 6,539 7,399 -11.6 % Merchant Processing 5,839 4,635 26.0 % Services Debit Card Fees 3,392 2,927 15.9 % Trust Fees 1,628 1,491 9.2 % ATM Processing Fees 1,219 1,097 11.1 % Other Service Fees 960 926 3.7 % Financial Services 165 248 -33.5 % Commissions Securities Gains 34 71 n/m Other Operating 1,445 2,408 -40.0 % Total Noninterest Income 21,221 21,202 0.1 % Noninterest Expense: Salaries and Benefits 24,762 25,918 -4.5 % Occupancy and Equipment 9,688 9,723 -0.4 % Outsourced Data 4,815 4,729 1.8 % Processing Professional Fees 1,772 1,032 71.7 % Courier Service 1,071 999 7.2 % Amortization of 137 146 -6.2 % Identifiable Intangibles Other Operating 6,952 6,871 1.2 % Total Noninterest 49,197 49,418 -0.4 % Expense Income Before Income 57,657 48,137 19.8 % Taxes Income Tax Provision 14,931 11,613 28.6 % Net Income $ 42,726 $ 36,524 17.0 % Average Common Shares 26,843 27,001 -0.6 % Outstanding Diluted Common Shares 26,865 27,024 -0.6 % Outstanding Per Common Share Data: Basic Earnings $ 1.59 $ 1.35 17.8 % Diluted Earnings 1.59 1.35 17.8 % Dividends Paid 0.82 0.82 0.0 % Footnotes and Abbreviations: ^(1) Effective January 1, 2020, the Company adopted Accounting Standards Update (ASU) 2016-13, Financial Instruments - Credit Losses: Measurement of Credit Losses on Financial Instruments ("CECL"), resulting in a period opening adjustment to the allowance for credit losses for loans and held-to-maturity debt securities, other liabilities, deferred tax assets, and shareholders' equity. ^(2) The Company adopted ASU 2016-13, effective January 1, 2020. Debt Securities Held To Maturity of $414,413 thousand at June 30, 2021, $469,259 thousand at March 31, 2021 and $638,281 thousand at June 30, 2020 are net of related reserve for expected credit losses of $9 thousand, $9 thousand and $16 thousand, respectively. ^(3) Interest income on Debt Securities Available For Sale included make-whole interest income on called corporate bonds of $1.4 million in the second quarter 2021 and $700 thousand in the first quarter 2021. (FTE) Fully Taxable Equivalent. The Company presents its net interest margin and net interest income on a FTE basis using the current statutory federal tax rate. Management believes the FTE basis is valuable to the reader because the Company?s loan and investment securities portfolios contain a relatively large portion of municipal loans and securities that are federally tax exempt. The Company?s tax exempt loans and securities composition may not be similar to that of other banks, therefore in order to reflect the impact of the federally tax exempt loans and securities on the net interest margin and net interest income for comparability with other banks, the Company presents its net interest margin and net interest income on a FTE basis. (a) Annualized