GlobeNewswire Inc | Oct 21, 2021 10:46AM EDT

October 21, 2021

SAN RAFAEL, Calif., Oct. 21, 2021 (GLOBE NEWSWIRE) -- Westamerica Bancorporation (Nasdaq: WABC), parent company of Westamerica Bank, generated net income for the third quarter 2021 of $22.1 million and diluted earnings per common share ("EPS") of $0.82. Third quarter 2021 results include make-whole interest income on corporate bonds redeemed prior to maturity, which increased EPS $0.02. These results compare to net income of $22.6 million and EPS of $0.84 for the second quarter 2021, which included make-whole interest income on corporate bonds redeemed before maturity, which increased EPS $0.04.

"Westamericas valuable deposit base generated a very low 0.03 percent annualized cost of funding our loan and bond portfolios during the third quarter 2021. Operating expenses remained well managed in the third quarter 2021, delivering fifty-five percent of revenue to pre-tax income. Credit quality remained solid with nonperforming loans of $1.8 million at September 30, 2021, said Chairman, President and CEO David Payne. Third quarter 2021 results generated an annualized 11.6 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 $44.0 million for the third quarter 2021, including make-whole interest income on corporate bonds redeemed prior to maturity of $732 thousand. Third quarter 2021 net interest income (FTE) compares to $44.5 million for the second quarter 2021, which included make-whole interest income on corporate bonds redeemed prior to maturity of $1.4 million. PPP loan average balances declined to $145 million for the third quarter 2021 from $208 million for the second quarter 2021; at September 30, 2021 PPP loans totaled $103 million. Checking and savings deposits represented ninety-eight percent of the Companys average deposit base during the third quarter 2021, generating a low 0.03 percent annualized cost of funding interest-earning assets.

At September 30, 2021, nonperforming loans declined to $1.8 million due to the full payoff of a $3.1 million non-accrual loan during the third quarter 2021. The allowance for credit losses on loans was $23.9 million at September 30, 2021. The Company continues to work with loan customers requesting loan payment deferrals due to economic weakness caused by the pandemic. At September 30, 2021, loans with deferred payments totaled $1.0 million, all of which were consumer automobile loans.

Noninterest income for the third quarter 2021 totaled $11.3 million, compared to noninterest income for the second quarter 2021 of $11.0 million. The increase in noninterest income was primarily due to higher levels of deposit related fees.

Noninterest expense for the third quarter 2021 was $24.7 million compared to $24.3 million for the second quarter 2021.

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 June 30, 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.

Public Information October 21, 2021 WESTAMERICA BANCORPORATIONFINANCIAL HIGHLIGHTS September 30, 2021 1. Net Income Summary. (in thousands except per-share amounts) % Q3'2021 Q3'2020 Change Q2'2021 Net Interest and Fee $43,952 $41,780 5.2% $44,499 Income (FTE) Provision for Credit - - n/m - Losses Noninterest Income 11,282 10,476 7.7% 11,032 Noninterest Expense 24,697 24,603 0.4% 24,291 Income Before Taxes 30,537 27,653 10.4% 31,240 (FTE) Income Tax Provision 8,474 7,602 11.5% 8,661 (FTE) Net Income $22,063 $20,051 10.0% $22,579 Average Common Shares 26,866 26,930 -0.2% 26,865 Outstanding Diluted Average Common 26,875 26,946 -0.3% 26,887 Shares Operating Ratios: Basic Earnings Per $0.82 $0.74 10.8% $0.84 Common Share Diluted Earnings Per 0.82 0.74 10.8% 0.84 Common Share Return On Assets (a) 1.22% 1.24% 1.29% Return On Common Equity 11.6% 11.2% 12.2% (a) Net Interest Margin 2.60% 2.78% 2.70% (FTE) (a) Efficiency Ratio (FTE) 44.7% 47.1% 43.7% Dividends Paid Per $0.41 $0.41 0.0% $0.41 Common Share Common Dividend Payout 50% 55% 49% Ratio % 9/30'21YTD 9/30'20YTD Change Net Interest and Fee $131,034 $124,390 5.3% Income (FTE) Provision for Credit - 4,300 n/m Losses Noninterest Income 32,503 31,678 2.6% Noninterest Expense 73,894 74,021 -0.2% Income Before Taxes 89,643 77,747 15.3% (FTE) Income Tax Provision 24,854 21,172 17.4% (FTE) Net Income $64,789 $56,575 14.5% Average Common Shares 26,851 26,977 -0.5% Outstanding Diluted Average Common 26,868 26,998 -0.5% Shares Operating Ratios: Basic Earnings Per $2.41 $2.10 14.8% Common Share Diluted Earnings Per 2.41 2.10 14.8% Common Share Return On Assets (a) 1.25% 1.25% Return On Common Equity 11.6% 10.7% (a) Net Interest Margin 2.67% 2.95% (FTE) (a) Efficiency Ratio (FTE) 45.2% 47.4% Dividends Paid Per $1.23 $1.23 0.0% Common Share Common Dividend Payout 51% 59% Ratio 2. Net Interest Income. (dollars in thousands) % Q3'2021 Q3'2020 Change Q2'2021 Interest and Fee Income $44,444 $42,246 5.2% $44,983 (FTE) Interest Expense 492 466 5.6% 484 Net Interest and Fee $43,952 $41,780 5.2% $44,499 Income (FTE) Average Earning Assets $6,754,281 $6,001,287 12.5% $6,603,343 Average Interest- Bearing Liabilities 3,370,840 2,931,717 15.0% 3,298,221 Yield on Earning Assets 2.63% 2.81% 2.73% (FTE) (a) Cost of Funds (a) 0.03% 0.03% 0.03% Net Interest Margin 2.60% 2.78% 2.70% (FTE) (a) Interest Expense/ Interest-Bearing 0.06% 0.06% 0.06% Liabilities (a) Net Interest Spread 2.57% 2.75% 2.67% (FTE) (a) % 9/30'21YTD 9/30'20YTD Change Interest and Fee Income $132,485 $125,733 5.4% (FTE) Interest Expense 1,451 1,343 8.0% Net Interest and Fee $131,034 $124,390 5.3% Income (FTE) Average Earning Assets $6,535,949 $5,627,517 16.1% Average Interest- Bearing Liabilities 3,267,311 2,785,451 17.3% Yield on Earning Assets 2.70% 2.98% (FTE) (a) Cost of Funds (a) 0.03% 0.03% Net Interest Margin 2.67% 2.95% (FTE) (a) Interest Expense/ Interest-Bearing 0.06% 0.06% Liabilities (a) Net Interest Spread 2.64% 2.92% (FTE) (a) 3. Loans & Other Earning Assets. (average volume, dollars in thousands) % Q3'2021 Q3'2020 Change Q2'2021 Total Assets $7,158,462 $6,414,399 11.6% $7,004,695 Total Earning Assets 6,754,281 6,001,287 12.5% 6,603,343 Total Loans 1,176,114 1,312,758 -10.4% 1,257,087 Total Commercial 333,327 444,091 -24.9% 413,797 Loans Paycheck Protection 144,641 243,104 -40.5% 207,515 Program (PPP) Loans Commercial Loans 188,686 200,987 -6.1% 206,282 Commercial RE Loans 543,429 566,626 -4.1% 546,470 Consumer Loans 299,358 302,041 -0.9% 296,820 Total Investment 4,615,540 4,360,119 5.9% 4,394,169 Securities Debt Securities 4,235,141 3,750,737 12.9% 3,953,016 Available For Sale Debt Securities Held 380,399 609,382 -37.6% 441,153 To Maturity Total Interest-Bearing 962,627 328,410 193.1% 952,087 Cash Loans/Deposits 18.9% 23.7% 20.7% % 9/30'21YTD 9/30'20YTD Change Total Assets $6,939,636 $6,044,098 14.8% Total Earning Assets 6,535,949 5,627,517 16.1% Total Loans 1,227,971 1,223,250 0.4% Total Commercial 380,638 337,566 12.8% Loans PPP Loans 180,214 125,632 43.4% Commercial Loans 200,424 211,934 -5.4% Commercial RE Loans 549,639 574,950 -4.4% Consumer Loans 297,694 310,734 -4.2% Total Investment 4,484,084 4,055,733 10.6% Securities Debt Securities 4,046,289 3,394,467 19.2% Available For Sale Debt Securities Held 437,795 661,266 -33.8% To Maturity Total Interest-Bearing 823,894 348,534 136.4% Cash Loans/Deposits 20.4% 23.6% 4. Deposits, Other Interest-Bearing Liabilities & Equity. (average volume, dollars in thousands) % Q3'2021 Q3'2020 Change Q2'2021 Total Deposits $6,223,500 $5,533,144 12.5% $6,074,730 Noninterest Demand 2,960,207 2,695,458 9.8% 2,888,259 Interest-Bearing 1,246,667 1,039,833 19.9% 1,208,584 Transaction Savings 1,864,401 1,634,814 14.0% 1,822,625 Time greater than 68,811 72,045 -4.5% 70,750 $100K Time less than $100K 83,414 90,994 -8.3% 84,512 Total Short-Term 107,547 94,031 14.4% 111,750 Borrowings Shareholders' Equity 755,682 714,400 5.8% 744,746 Demand Deposits/ Total Deposits 47.6% 48.7% 47.5% Transaction & Savings Deposits / Total 97.6% 97.1% 97.4% Deposits % 9/30'21YTD 9/30'20YTD Change Total Deposits $6,017,175 $5,188,797 16.0% Noninterest Demand 2,854,936 2,472,495 15.5% Interest-Bearing 1,195,762 987,666 21.1% Transaction Savings 1,811,711 1,563,387 15.9% Time greater than 70,258 72,718 -3.4% $100K Time less than $100K 84,508 92,531 -8.7% Total Short-Term 105,001 68,917 52.4% Borrowings Other Borrowed Funds 71 232 -69.5% Shareholders' Equity 745,382 708,559 5.2% Demand Deposits/ Total Deposits 47.4% 47.7% Transaction & Savings Deposits / Total 97.4% 96.8% Deposits 5. Interest Yields Earned & Rates Paid. (dollars in thousands) Q3'2021 Average Income/ Yield (a) / Volume Expense Rate (a) Interest & Fee Income Earned Total Earning Assets $6,754,281 $44,444 2.63% (FTE) Total Loans (FTE) 1,176,114 14,893 5.02% Total Commercial 333,327 3,866 4.60% Loans (FTE) PPP Loans 144,641 1,865 5.12% Commercial Loans 188,686 2,001 4.21% (FTE) Commercial RE Loans 543,429 7,457 5.44% Consumer Loans 299,358 3,570 4.73% Total Investments 4,615,540 29,182 2.53% (FTE) Total 962,627 369 0.15% Interest-Bearing Cash Interest Expense Paid Total Earning Assets 6,754,281 492 0.03% Total Interest-Bearing 3,370,840 492 0.06% Liabilities Total Interest-Bearing 3,263,293 473 0.06% Deposits Interest-Bearing 1,246,667 101 0.03% Transaction Savings 1,864,401 272 0.06% Time less than 83,414 42 0.20% $100K Time greater than 68,811 58 0.33% $100K Total Short-Term 107,547 19 0.07% Borrowings Net Interest Income and Margin (FTE) $43,952 2.60% Q3'2020 Average Income/ Yield (a) / Volume Expense Rate (a) Interest & Fee Income Earned Total Earning Assets $6,001,287 $42,246 2.81% (FTE) Total Loans (FTE) 1,312,758 15,394 4.67% Total Commercial 444,091 4,648 4.16% Loans (FTE) PPP Loans 243,104 2,501 4.08% Commercial Loans 200,987 2,147 4.25% (FTE) Commercial RE Loans 566,626 7,298 5.12% Consumer Loans 302,041 3,448 4.54% Total Investments 4,360,119 26,768 2.46% (FTE) Total 328,410 84 0.10% Interest-Bearing Cash Interest Expense Paid Total Earning Assets 6,001,287 466 0.03% Total Interest-Bearing 2,931,717 466 0.06% Liabilities Total Interest-Bearing 2,837,686 450 0.06% Deposits Interest-Bearing 1,039,833 85 0.03% Transaction Savings 1,634,814 238 0.06% Time less than 90,994 47 0.21% $100K Time greater than 72,045 80 0.44% $100K Total Short-Term 94,031 16 0.07% Borrowings Net Interest Income and Margin (FTE) $41,780 2.78% 6. Noninterest Income. (dollars in thousands except per-share amounts) % Q3'2021 Q3'2020 Change Q2'2021 Service Charges on $3,578 $3,298 8.5% $3,235 Deposits Merchant Processing 3,159 2,860 10.5% 3,279 Services Debit Card Fees 1,740 1,611 8.0% 1,791 Trust Fees 839 756 11.0% 827 ATM Processing Fees 573 606 -5.4% 618 Other Service Fees 475 454 4.5% 491 Financial Services 95 58 63.8% 95 Commissions Securities Gains - - n/m 34 Other Noninterest 823 833 -1.2% 662 Income Total Noninterest $11,282 $10,476 7.7% $11,032 Income Total Revenue (FTE) $55,234 $52,256 5.7% $55,531 Noninterest Income/ 20.4% 20.0% 19.9% Revenue (FTE) Service Charges/Avg. 0.23% 0.24% 0.21% Deposits (a) Total Revenues (FTE) Per Avg. Common Share (a) $8.16 $7.72 5.7% $8.29 % 9/30'21YTD 9/30'20YTD Change Service Charges on $10,117 $10,697 -5.4% Deposits Merchant Processing 8,998 7,495 20.1% Services Debit Card Fees 5,132 4,538 13.1% Trust Fees 2,467 2,247 9.8% ATM Processing Fees 1,792 1,703 5.2% Other Service Fees 1,435 1,380 4.0% Financial Services 260 306 -15.0% Commissions Securities Gains 34 71 n/m Other Noninterest 2,268 3,241 -30.0% Income Total Noninterest $32,503 $31,678 2.6% Income Total Revenue (FTE) $163,537 $156,068 4.8% Noninterest Income/ 19.9% 20.3% Revenue (FTE) Service Charges/Avg. 0.22% 0.28% Deposits (a) Total Revenues (FTE) Per Avg./ Common Share (a) $8.14 $7.73 5.4% 7. Noninterest Expense. (dollars in thousands) % Q3'2021 Q3'2020 Change Q2'2021 Salaries & Benefits $11,813 $12,540 -5.8% $12,097 Occupancy and Equipment 4,759 5,014 -5.1% 4,808 Outsourced Data 2,429 2,338 3.9% 2,425 Processing Professional Fees 724 669 8.2% 830 Courier Service 534 500 6.8% 567 Amortization of Identifiable 67 72 -6.9% 68 Intangibles Other Noninterest 4,371 3,470 26.0% 3,496 Expense Total Noninterest $24,697 $24,603 0.4% $24,291 Expense Noninterest Expense/ Avg. Earning Assets 1.45% 1.63% 1.48% (a) Noninterest Expense/ 44.7% 47.1% 43.7% Revenues (FTE) % 9/30'21YTD 9/30'20YTD Change Salaries & Benefits $36,575 $38,458 -4.9% Occupancy and Equipment 14,447 14,737 -2.0% Outsourced Data 7,244 7,067 2.5% Processing Professional Fees 2,496 1,701 46.7% Courier Service 1,605 1,499 7.1% Amortization of Identifiable 204 218 -6.4% Intangibles Other Noninterest 11,323 10,341 9.5% Expense Total Noninterest $73,894 $74,021 -0.2% Expense Noninterest Expense/ Avg. Earning Assets 1.51% 1.76% (a) Noninterest Expense/ 45.2% 47.4% Revenues (FTE) 8. Allowance for Credit Losses. (dollars in thousands) % Q3'2021 Q3'2020 Change Q2'2021 Average Total Loans $1,176,114 $1,312,758 -10.4% $1,257,087 Beginning of Period Allowance for Credit Losses on Loans $23,737 $24,529 -3.2% $23,483 (ACLL) Provision for Credit 2 - n/m - Losses Net ACLL Recoveries 143 (387 ) -137.0% 254 (Losses) End of Period ACLL $23,882 $24,142 -1.1% $23,737 Gross ACLL Recoveries / Gross ACLL Losses 115% 56% 176% Net ACLL (Recoveries) Losses / Avg. Total Loans (a) -0.05% 0.12% -0.08% % 9/30'21YTD 9/30'20YTD Change Average Total Loans $1,227,971 $1,223,250 0.4% Prior Period ACLL $23,854 $19,484 22.4% Adoption of ASU 2016-13 - 2,017 n/m (1) Beginning of Period 23,854 21,501 10.9% ACLL Provision for Credit 2 4,300 n/m Losses Net ACLL Recoveries 26 (1,659 ) -101.6% (Losses) End of Period ACLL $23,882 $24,142 -1.1% Gross ACLL Recoveries / Gross ACLL Losses 101% 49% Net ACLL (Recoveries) Losses / Avg. Total Loans (a) 0.00% 0.18% (dollars in thousands) % 9/30/21 9/30/20 Change 6/30/21 Allowance for Credit $23,882 $24,142 -1.1% $23,737 Losses on Loans Allowance for Credit Losses on HTM Securities (2) 7 16 -56.9% 9 Total Allowance for $23,889 $24,158 -1.1% $23,746 Credit Losses Allowance for Unfunded Credit Commitments $101 $53 90.0% $101 9. Credit Quality. (dollars in thousands) % 9/30/21 9/30/20 Change 6/30/21 Nonperforming Loans: Nonperforming $801 $409 95.8% $652 Nonaccrual Performing 436 3,971 -89.0% 3,564 Nonaccrual Total Nonaccrual Loans 1,237 4,380 -71.8% 4,216 90+ Days Past Due 537 360 49.2% 167 Accruing Loans Total 1,774 4,740 -62.6% 4,383 Repossessed Loan - 43 -100.0% - Collateral Total Nonperforming $1,774 $4,783 -62.9% $4,383 Assets Total Loans Outstanding $1,132,472 $1,310,009 -13.6% $1,194,834 Total Assets 7,403,573 6,563,215 12.8% 7,147,779 Loans: Allowance for Credit $23,882 $24,142 -1.1% $23,737 Losses on Loans Allowance for Credit Losses on Loans / Loans 2.11% 1.84% 1.99% Nonperforming Loans/ 0.16% 0.36% 0.37% Total Loans 10. Capital. (in thousands, except per-share amounts) % 9/30/21 9/30/20 Change 6/30/21 Shareholders' Equity $837,953 $825,576 1.5% $842,196 Total Assets 7,403,573 6,563,215 12.8% 7,147,779 Shareholders' Equity/ Total Assets 11.32% 12.58% 11.78% Shareholders' Equity/ Total Loans 73.99% 63.02% 70.49% Tangible Common Equity 9.83% 10.91% 10.24% Ratio Common Shares 26,866 26,898 -0.1% 26,865 Outstanding Common Equity Per Share $31.19 $30.69 1.6% $31.35 Market Value Per Common 56.26 54.35 3.5% 58.03 Share (shares in thousands) % Q3'2021 Q3'2020 Change Q2'2021 Share Repurchase Programs: Total Shares - 35 n/m - Repurchased Average Repurchase $- $52.42 n/m $- Price Net Shares (Issued) (1 ) 35 n/m (1 ) Repurchased % 9/30'21YTD 9/30'20YTD Change Total Shares 4 228 n/m Repurchased Average Repurchase $61.09 $51.39 n/m Price Net Shares (Issued) (59 ) 164 n/m Repurchased 11. Period-End Balance Sheets. (unaudited, dollars in thousands) % 9/30/21 9/30/20 Change 6/30/21 Assets: Cash and Due from $1,011,048 $398,964 153.4% $939,929 Banks Debt Securities 4,602,706 3,983,994 15.5% 4,304,162 Available For Sale Debt Securities Held 356,106 577,795 -38.4% 414,413 To Maturity (3) Loans 1,132,472 1,310,009 -13.6% 1,194,834 Allowance For Credit (23,882 ) (24,142 ) -1.1% (23,737 ) Losses on Loans Total Loans, net 1,108,590 1,285,867 -13.8% 1,171,097 Other Real Estate - 43 n/m - Owned Premises and 31,603 33,437 -5.5% 32,080 Equipment, net Identifiable 900 1,173 -23.3% 967 Intangibles, net Goodwill 121,673 121,673 0.0% 121,673 Other Assets 170,947 160,269 6.7% 163,458 Total Assets $7,403,573 $6,563,215 12.8% $7,147,779 Liabilities and Shareholders' Equity: Deposits: Noninterest-Bearing $2,988,329 $2,684,028 11.3% $2,872,920 Interest-Bearing 1,257,460 1,040,712 20.8% 1,200,634 Transaction Savings 1,894,290 1,653,000 14.6% 1,849,258 Time 148,882 161,450 -7.8% 153,577 Total Deposits 6,288,961 5,539,190 13.5% 6,076,389 Short-Term Borrowed 119,102 107,973 10.3% 90,043 Funds Other Liabilities 157,557 90,476 74.1% 139,151 Total Liabilities 6,565,620 5,737,639 14.4% 6,305,583 Shareholders' Equity: Common Equity: Paid-In Capital 470,711 467,236 0.7% 470,365 Accumulated Other Comprehensive 71,284 103,623 n/m 86,921 Income Retained Earnings 295,958 254,717 16.2% 284,910 Total Shareholders' 837,953 825,576 1.5% 842,196 Equity Total Liabilities and Shareholders' Equity $7,403,573 $6,563,215 12.8% $7,147,779 12. Income Statements. (unaudited, in thousands except per-share amounts) % Q3'2021 Q3'2020 Change Q2'2021 Interest & Fee Income: Loans $14,789 $15,291 -3.3% $15,064 Equity Securities 109 103 5.8% 110 Debt Securities 26,452 22,652 16.8% 26,481 Available For Sale (4) Debt Securities Held To 2,091 3,235 -35.4% 2,362 Maturity Interest-Bearing Cash 369 84 339.3% 259 Total Interest & Fee 43,810 41,365 5.9% 44,276 Income Interest Expense: Transaction Deposits 101 85 18.8% 93 Savings Deposits 272 238 14.3% 263 Time Deposits 100 127 -21.3% 110 Short-Term Borrowed 19 16 18.7% 18 Funds Total Interest Expense 492 466 5.6% 484 Net Interest Income 43,318 40,899 5.9% 43,792 Provision for Credit - - n/m - Losses Noninterest Income: Service Charges 3,578 3,298 8.5% 3,235 Merchant Processing 3,159 2,860 10.5% 3,279 Services Debit Card Fees 1,740 1,611 8.0% 1,791 Trust Fees 839 756 11.0% 827 ATM Processing Fees 573 606 -5.4% 618 Other Service Fees 475 454 4.5% 491 Financial Services 95 58 63.8% 95 Commissions Securities Gains - - n/m 34 Other Noninterest 823 833 -1.2% 662 Income Total Noninterest 11,282 10,476 7.7% 11,032 Income Noninterest Expense: Salaries and Benefits 11,813 12,540 -5.8% 12,097 Occupancy and 4,759 5,014 -5.1% 4,808 Equipment Outsourced Data 2,429 2,338 3.9% 2,425 Processing Professional Fees 724 669 8.2% 830 Courier Service 534 500 6.8% 567 Amortization of Identifiable 67 72 -6.9% 68 Intangibles Other Noninterest 4,371 3,470 26.0% 3,496 Expense Total Noninterest 24,697 24,603 0.4% 24,291 Expense Income Before Income 29,903 26,772 11.7% 30,533 Taxes Income Tax Provision 7,840 6,721 16.7% 7,954 Net Income $22,063 $20,051 10.0% $22,579 Average Common Shares 26,866 26,930 -0.2% 26,865 Outstanding Diluted Common Shares 26,875 26,946 -0.3% 26,887 Outstanding Per Common Share Data: Basic Earnings $0.82 $0.74 10.8% $0.84 Diluted Earnings 0.82 0.74 10.8% 0.84 Dividends Paid 0.41 0.41 0.0% 0.41 % 9/30'21YTD 9/30'20YTD Change Interest & Fee Income: Loans $44,434 $44,378 0.1% Equity Securities 329 309 6.5% Debt Securities 77,822 66,396 17.2% Available For Sale (4) Debt Securities Held To 7,051 10,759 -34.5% Maturity Interest-Bearing Cash 766 1,053 -27.3% Total Interest & Fee 130,402 122,895 6.1% Income Interest Expense: Transaction Deposits 283 243 16.5% Savings Deposits 785 679 15.6% Time Deposits 330 386 -14.5% Short-Term Borrowed 53 34 55.9% Funds Other Borrowed Funds - 1 -100.0% Total Interest Expense 1,451 1,343 8.0% Net Interest Income 128,951 121,552 6.1% Provision for Credit - 4,300 n/m Losses Noninterest Income: Service Charges 10,117 10,697 -5.4% Merchant Processing 8,998 7,495 20.1% Services Debit Card Fees 5,132 4,538 13.1% Trust Fees 2,467 2,247 9.8% ATM Processing Fees 1,792 1,703 5.2% Other Service Fees 1,435 1,380 4.0% Financial Services 260 306 -15.0% Commissions Securities Gains 34 71 n/m Other Operating 2,268 3,241 -30.0% Total Noninterest 32,503 31,678 2.6% Income Noninterest Expense: Salaries and Benefits 36,575 38,458 -4.9% Occupancy and 14,447 14,737 -2.0% Equipment Outsourced Data 7,244 7,067 2.5% Processing Professional Fees 2,496 1,701 46.7% Courier Service 1,605 1,499 7.1% Amortization of Identifiable 204 218 -6.4% Intangibles Other Operating 11,323 10,341 9.5% Total Noninterest 73,894 74,021 -0.2% Expense Income Before Income 87,560 74,909 16.9% Taxes Income Tax Provision 22,771 18,334 24.2% Net Income $64,789 $56,575 14.5% Average Common Shares 26,851 26,977 -0.5% Outstanding Diluted Common Shares 26,868 26,998 -0.5% Outstanding Per Common Share Data: Basic Earnings $2.41 $2.10 14.8% Diluted Earnings 2.41 2.10 14.8% Dividends Paid 1.23 1.23 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) In the third quarter 2021, the Company recorded a $2 thousand reversal of provision for credit losses on Debt Securities Held To Maturity and the balance of the allowance for credit losses on Debt Securities Held To Maturity was reduced from $9 thousand at June 30, 2021 to $7 thousand at September 30, 2021. (3) The Company adopted ASU 2016-13, effective January 1, 2020. Debt Securities Held To Maturity of $356,106 thousand at September 30, 2021, $414,413 thousand at June 30, 2021 and $577,795 thousand at September 30, 2020 are net of related reserve for expected credit losses of $7 thousand, $9 thousand and $16 thousand, respectively. (4) Interest income on Debt Securities Available For Sale included make-whole interest income on called corporate bonds of $732 thousand in the third quarter 2021, $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