On Jul 9, 2013, we reiterated our long-term recommendation on
) at Underperform. Our decision rests on Westamerica's mounting
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Westamerica's net interest margin (NIM) has been declining over
the last several quarters due to the challenging economic
environment. Moreover, 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.
Further, Westamerica's interest earnings assets have remained a
matter of concern due to the weak interest rates and low
investment returns amid a sluggish economic recovery.
Also, Westamerica has been continuously experiencing pressure on
its credit quality, which is anticipated to increase in the
upcoming quarters due to the prevailing weak macroeconomic
environment. Further, Westamerica's securities portfolio has
historically remained higher than its peers, which is expected to
adversely affect the quality of earnings.
For Westamerica, the Zacks Consensus Estimate for 2013 has gone
down 1.9% to $2.58 per share over the last 90 days. Likewise, the
Zacks Consensus Estimate for 2014 has declined 2.3% to $2.56 per
share over the same time frame. With the Zacks Consensus
Estimates for both 2013 and 2014 going down, Westamerica
currently carries a Zacks Rank #3 (Hold).
Westamerica is scheduled to announce its second-quarter results
on Jul 16. The Zacks Consensus Estimate for the quarter is pegged
at 64 cents per share.
Other Stocks Worth Considering
Some stocks that are performing well include
Central Pacific Financial Corp
). All these carry a Zacks Rank #1 (Strong Buy).