On Apr 23, 2013, we reiterated our long-term recommendation on
) at Underperform. This reflects Westamerica's dismal
first-quarter results, which declined both on a sequential and
GLACIER BANCORP (GBCI): Free Stock Analysis
PREFERRED BANK (PFBC): Free Stock Analysis
SVB FINL GP (SIVB): Free Stock Analysis
WESTAMER BANCP (WABC): Free Stock Analysis
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Westamerica's first-quarter earnings of 64 cents per share
declined from the prior-quarter earnings of 70 cents and year-ago
earnings of 75 cents. The results were adversely affected by
sluggish top-line growth and an increase in operating expenses.
However, improving credit quality and stable capital ratios were
Following the first-quarter results, the Zacks Consensus Estimate
for 2013 has gone down 2.3% to $2.60 per share. Likewise, the
Zacks Consensus Estimate for 2014 has declined 5.4% to $2.62 per
share. With the Zacks Consensus Estimates for both 2013 and 2014
going down, Westamerica currently carries 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.
Moreover, Westamerica's interest earnings assets have remained a
matter of concern due to weak interest rates and low investment
returns amid a sluggish economic recovery.
Also, Westamerica has been continuously experiencing pressure on
its credit quality. Further, Westamerica's securities portfolio
has historically remained higher than its peers, which is
expected to adversely affect the quality of earnings.
Other Banks Worth Considering
While we have a bearish take on Westamerica, we would suggest
considering stocks with a better Zacks Rank. These include
Glacier Bancorp Inc
) with a Zacks Rank #1 (Strong Buy), and
SVB Financial Group
) with a Zacks Rank #2 (Buy).