On Mar 21, Zacks Investment Research upgraded Westamerica Bancorp. WABC one notch higher to a Zacks Rank #3 (Hold) from a Zacks Rank #4 (Sell).
Why the Upgrade?
Westamerica has been witnessing stable earnings estimates on the back of improving fundamentals. At a time when its peers are troubled by mounting expenses, this CA-based regional bank has seen a decline in expenses, thanks to its prudent cost management. Notably, operating expenses have declined at a CAGR of 4.3% over the past 5 years (2010–2014).
Additionally, the increasing level of non-interest bearing deposits makes the company well-poised to benefit from an anticipated rise in interest rates. Moreover, the company’s credit metrics, mainly provisions and non-performing assets, have shown commendable improvement in the past few quarters.
However, a shrinking net interest margin, coupled with a major decline in loan balances, poses a major headwind.
Further, over the past 30 days, the Zacks Consensus Estimates for 2015 as well as for 2016 remained stable at $2.29 and $2.47, respectively.
Stocks to Consider
Investors interested in the finance space could consider players like JMP Group LLC JMP, Woori Bank Co., Ltd. WF and Chemical Financial Corp. CHFC. All these stocks sport a Zacks Rank #1 (Strong Buy).
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