We reaffirmed our long-term recommendation on
) at Neutral. This was based on the company's strong financials
and its efficient capital deployment activities. However, a
sluggish economic recovery and the existing low interest-rate
environment will keep the company's bottom line under pressure in
the near term.
Why This Stance?
Westamerica's third-quarter 2013 earnings missed the Zacks
Consensus Estimate. However, the company witnessed increased
non-interest income and lower operating expenses. The company
also remained well capitalized.
Westamerica enjoys a competitive edge over its peers owing to its
efficient cost control initiatives amid a challenging environment
of rising expenses across the industry. Further, the company's
capital deployment activities reflect its efforts towards
enhancing shareholder value. Apart from being consistent in
raising its quarterly cash dividend since 2010, the company has
an effective share repurchase program in place.
However, Westamerica's bottom-line growth is expected to be
sluggish in the next few quarters as the company is witnessing a
declining net interest margin and a flat growth of its
interest-earning assets. Moreover, current macroeconomic
headwinds and regulatory pressure are expected to pose a threat
to company's earnings in the near term.
Further, over the last 60 days, the Zacks Consensus Estimate for
2013 and 2014 remained stable at $2.55. As a result, Westamerica
currently carries a Zacks Rank #3 (Hold).
Other Stocks to Consider
Some better-ranked West Banks include
BofI Holding, Inc.
BBCN Bancorp, Inc.
Bank of Hawaii Corp.
). BofI Holding carry a Zacks Rank #1 (Strong Buy) while both
BBCN Bancorp and Bank of Hawaii Corporation hold a Zacks Rank #2
BBCN BANCORP (BBCN): Free Stock Analysis
BOFI HLDG INC (BOFI): Free Stock Analysis
BANK OF HAWAII (BOH): Free Stock Analysis
WESTAMER BANCP (WABC): Free Stock Analysis
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