We issued an updated research report on Westamerica Bancorp.WABC on Nov 9, 2015. Pressure on revenues remains a major near-term concern for the company, hurting its profitability.
Low rate environment continues to weigh on Westamerica's interest income and compress its net interest margin ("NIM"). The company has been witnessing a fall in its NIM over the past several quarters. Further, loan balances have been declining, adding to its woes.
Moreover, Westamerica has been witnessing a decrease in non-interest income. Over the last 5 years, fee income has declined at a CAGR of 4.2% (2010-2014), with the trend continuing in the first nine months of 2015. We believe that unless the company is able to tackle increased competition, non-interest income will continue to trend downward.
Hence, overall revenue growth is anticipated to remain under pressure until interest rates rise substantially and loan balances depict an uptrend.
Further, top-line concerns have prompted analysts to lower their estimates for Westamerica. Over the last 30 days, the Zacks Consensus Estimate for 2015 inched down by a penny to $2.31 per share; while for 2016, the same declined 1.7% to $2.32 per share.
Nonetheless, Westamerica's decreasing operating expenses continue to support its bottom line. Also, improving asset quality remains a major strength.
Currently, Westamerica carries a Zacks Rank #4 (Sell).
Stocks That Warrant a Look
Better-ranked banking stocks include BofI Holding, Inc. BOFI , Western Alliance Bancorporation WAL and Central Pacific Financial Corp. CPF . All three stocks hold a Zacks Rank #2 (Buy).
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WESTAMER BANCP (WABC): Free Stock Analysis Report
WESTERN ALLIANC (WAL): Free Stock Analysis Report
CENTRAL PAC FIN (CPF): Free Stock Analysis Report
BOFI HLDG INC (BOFI): Free Stock Analysis Report
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
