Westamerica Troubled by Margin Pressure - Analyst Blog

We issued an updated research report on Westamerica Bancorp. WABC on Jun 19, 2014. A still low interest rate scenario continues to weigh on the company's net interest margin NIM. Nevertheless, declining expenses amid the subdued economic environment pose as its strength.

Westamerica has been witnessing persistent decline in NIM over the preceding years. The figure decreased to 4.08% in 2013 from 4.79% in 2012, 5.32% in 2011 and 5.54% in 2010. We do not foresee any respite in this front as interest rate scenario is not expected to change significantly in the near term.

Westamerica reported first-quarter 2014 results on Apr 15. Though earnings per share were in line with the Zacks Consensus Estimate, it declined 9.4% year over year. While the company recorded a steady descent in expenses, the positive impact of the same was offset by decline in both net interest income and fee income.

Further, following Westamerica's unimpressive first-quarter results, the Zacks Consensus Estimate for 2014 inched down 1.7% to $2.38 per share over the last 60 days. For 2015, the Zacks Consensus Estimate decreased 1.6% to $2.46 per share over the same time period.

However, Westamerica witnesses a consistent decline in expenses. Also, the management remains focused on checking expenses in the forthcoming quarters.

Currently, Westamerica has a Zacks Rank #4 (Sell).

Stocks That Warrant a Look

Some better-ranked banks in the same region include Central Pacific Financial Corp. CPF, CVB Financial Corp. CVBF and Zions Bancorporation ZION. While Central Pacific Financial and CVB Financial Corp sport a Zacks Rank #1 (Strong Buy), Zions holds a Zacks Rank #2 (Buy).