On Feb 4, 2013, we reiterated our long-term recommendation on
) at 'Underperform'. This reflects the company's dismal
fourth-quarter results, which went down both sequentially and on
a year-over-year basis.
Westamerica's fourth-quarter earnings of 70 cents per share
declined from the prior-quarter earnings of 73 cents and the
year-ago earnings of 77 cents. The results were adversely
impacted by sluggish top-line growth, partially offset by lower
operating expenses. However, improving credit quality and stable
capital ratios were the tailwinds for the quarter.
Following the fourth-quarter results, the Zacks Consensus
Estimate for 2013 has gone down 1.8% to $2.75 per share.
Likewise, the Zacks Consensus Estimate for 2014 has also declined
(down 1.4% to $2.77 per share). With the Zacks Consensus
Estimates for both 2013 and 2014 going down, the company now has
a Zacks Rank #4 (Sell).
Further, Westamerica's net interest margin (NIM) has been falling
over the last several quarters owing to the challenging economic
environment. Sluggish economic recovery and the Federal Reserve's
decision to keep short-term interest rates low through mid-2015
are expected to keep NIM under pressure going forward.
Other Banks Worth Considering
While we prefer to avoid Westamerica until we see signs of
improvement in the company's overall performance, other west bank
stocks worth a look include
Columbia Banking System Inc.
Western Alliance Bancorporation
Pacific Continental Corp.
). While the first two stocks carry a Zacks Rank #1 (Strong Buy),
the third one retains a Zacks Rank #2 (Buy).
COLUMBIA BK SYS (COLB): Free Stock Analysis
PACIFIC CONTL (PCBK): Free Stock Analysis
WESTAMER BANCP (WABC): Free Stock Analysis
WESTERN ALLIANC (WAL): Free Stock Analysis
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