Westamerica third-quarter profit slips 0.4% while buybacks lift EPS 8.9%

Westamerica Bancorporation reported third-quarter 2026 net income of $28.15 million, or $1.22 per diluted common share, down 0.4% from $28.26 million and $1.12 a year earlier. Net interest margin widened to 3.81% on a fully taxable equivalent basis from 3.77% in the second quarter as deposits funded a larger securities portfolio, and the bank recorded no provision for credit losses for a second consecutive quarter.

Margin widens as cash moves into securities

Net interest and loan fee income on a fully taxable equivalent basis was $53.52 million, $848,000 more than the $52.67 million of the second quarter and 0.6% below the $53.85 million of a year earlier. The average yield on earning assets rose to 4.07% from 4.01% sequentially while the cost of funds edged up to 0.26% from 0.24%.

What moved more than the totals was the mix. Average interest-bearing cash fell 60.6% to $276.8 million from $702.52 million a year earlier, while average investment securities rose 11.5% to $4.66 billion. Average total loans were $661.29 million, 11.1% below the prior-year quarter, and average earning assets slipped 0.5% from a year earlier, so the margin now rests on securities bought with deposits that used to sit in cash. Average deposits were $4.81 billion, up 0.2% from a year earlier.

David Payne, the company's chairman, president and chief executive, described that funding mix in the release: "Excess cash from stable deposit balances was invested in higher interest earning investment securities resulting in an annualized net interest margin of 3.81 percent for the third quarter 2026, a 4 basis point increase when compared to the second quarter 2026." The same table puts the efficiency ratio at 40.8% of revenue, against 41.3% in the second quarter and 40.3% a year earlier.

A one-time fee lift and a smaller share count

Net income of $28.15 million was 0.4% lower than a year earlier but $767,000 above the second quarter's $27.39 million. Per-share results diverge from that flat line. Diluted earnings per share were $1.22, 8.9% above the $1.12 of a year earlier and above the second quarter's $1.17, because average diluted shares fell 8.8% to 23.12 million from 25.34 million.

Westamerica retired 51,000 common shares in the quarter at an average price of $57.92, after retiring 753,000 shares in the second quarter, and paid a $0.48 per common share dividend, unchanged from the second quarter, for a payout ratio of 39%. Through nine months, net income was $82.89 million, 6.2% below the $88.37 million of a year earlier, while diluted earnings per share rose 3.5% to $3.52 from $3.40. The gap is arithmetic: earnings are steady, the share count is not.

Noninterest income contributed $10.7 million, 5.4% more than a year earlier, but the release attributes the increase primarily to a one-time termination fee in merchant processing services, a line that rose 14.4% to $3.27 million. That fee does not repeat, and the release names no recurring driver for the quarter's fee growth beyond higher transaction volumes.

Equity falls on a wider comprehensive loss while credit stays clean

Shareholders' equity was $789.67 million at September 30, 2026, 15.2% below the $931.65 million of a year earlier and below the $853.15 million recorded at June 30, 2026, even as annualized return on average common equity rose to 11.5% from 10.9%. The accumulated other comprehensive loss widened to $202.79 million from $99.91 million a year earlier and $117.59 million at mid-year. The release prints that line without itemizing it, so the document alone cannot establish how much of the move came from securities marks rather than other components.

Credit measures moved the other way. Nonperforming loans were $476,000, 82.0% below the $2.64 million of a year earlier, and the allowance for credit losses on loans ended the quarter at $10.51 million, 11.4% lower than a year earlier and 1.60% of loans. Net allowance losses were $277,000 against $1.93 million in the third quarter of 2025. Payne's description of capital — "capital ratios remain at historically high levels exceeding the highest regulatory guidelines" — sits beside a tangible common equity ratio of 11.78%, down from 13.98% a year earlier; the reported ratio is the measurable part of that claim.

Silence on guidance and the 10-Q still to come

The release carries no fourth-quarter or full-year outlook and names no earnings call, and no consensus estimates were captured for the quarter, so nothing here describes the results as a beat or a miss.

The next dated document is the quarterly report on Form 10-Q for the period ended September 30, 2026. Westamerica's most recent 10-Q, for the quarter ended June 30, 2026, was filed on August 5, 2026, and the report for the September 2025 quarter was filed on November 7, 2025; the September 2026 report was not in the company's filing history when this article was prepared. Two figures carry into it: loans ended the quarter at $658.2 million, 11.2% below a year earlier, and year-to-date net interest and loan fee income on an FTE basis was $158.89 million, 3.6% below the first nine months of 2025, so the securities-funded margin has to keep carrying earnings while the loan book shrinks.