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Editorial Advisory Board

  • Professor Andrea M. Armani, University of Southern California
  • Ruti Ben-Shlomi, Ph.D., LightSolver
  • James Butler, Ph.D., Hamamatsu
  • Natalie Fardian-Melamed, Ph.D., Columbia University
  • Justin Sigley, Ph.D., AmeriCOM
  • Professor Birgit Stiller, Max Planck Institute for the Science of Light, and Leibniz University of Hannover
  • Professor Stephen Sweeney, University of Glasgow
  • Mohan Wang, Ph.D., University of Oxford
  • Professor Xuchen Wang, Harbin Engineering University
  • Professor Stefan Witte, Delft University of Technology

2 Reasons to Like WABC and 1 to Stay Skeptical

WABC Cover Image

Westamerica Bancorporation currently trades at $51.35 per share and has shown little upside over the past six months, posting a middling return of 1.1%. The stock also fell short of the S&P 500’s 6.2% gain during that period.

Given the weaker price action, is now a good time to buy WABC? Or should investors expect a bumpy road ahead? Find out in our full research report, it’s free.

Why Does Westamerica Bancorporation Spark Debate?

Founded in 1884 and serving communities from Mendocino County in the north to Kern County in the south, Westamerica Bancorporation (NASDAQ: WABC) provides banking services to individuals and small businesses throughout Northern and Central California.

Two Positive Attributes:

1. Net Interest Income Drives Additional Growth Opportunities

While banks generate revenue from multiple sources, investors view net interest income as the cornerstone - its predictable, recurring characteristics stand in sharp contrast to the volatility of non-interest income.

Westamerica Bancorporation’s net interest income has grown at a 9.7% annualized rate over the last four years, a step above the broader bank industry.

Westamerica Bancorporation Quarterly Net Interest Income

2. Efficiency Ratio Improving, Profits Up

The underlying profitability of top-line growth determines the actual bottom-line impact. Banking institutions measure this dynamic using the efficiency ratio, which is calculated by dividing non-interest expenses like personnel, facilities, technology, and marketing by total revenue.

Investors focus on efficiency ratio changes rather than absolute levels, understanding that expense structures vary by revenue mix. Counterintuitively, lower efficiency ratios indicate better performance since they represent lower costs relative to revenue.

Over the last four years, Westamerica Bancorporation’s efficiency ratio has decreased by 11.4 percentage points, clocking in at 36% for the past 12 months. Said differently, the company’s expenses have grown at a slower rate than revenue, which is always a positive sign.

Westamerica Bancorporation Trailing 12-Month Efficiency Ratio

One Reason to be Careful:

Revenue Growth Flatlining

Long-term growth is the most important, but within financials, a stretched historical view may miss recent interest rate changes and market returns. Westamerica Bancorporation’s recent performance shows its demand has slowed as its revenue was flat over the last two years. Westamerica Bancorporation Year-On-Year Revenue GrowthNote: Quarters not shown were determined to be outliers, impacted by outsized investment gains/losses that are not indicative of the recurring fundamentals of the business.

Final Judgment

Westamerica Bancorporation’s merits more than compensate for its flaws. With its shares trailing the market in recent months, the stock trades at 1.4× forward P/B (or $51.35 per share). Is now the time to initiate a position? See for yourself in our comprehensive research report, it’s free.

Stocks We Like Even More Than Westamerica Bancorporation

The market surged in 2024 and reached record highs after Donald Trump’s presidential victory in November, but questions about new economic policies are adding much uncertainty for 2025.

While the crowd speculates what might happen next, we’re homing in on the companies that can succeed regardless of the political or macroeconomic environment. Put yourself in the driver’s seat and build a durable portfolio by checking out our Top 9 Market-Beating Stocks. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025).

Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-micro-cap company Kadant (+351% five-year return). Find your next big winner with StockStory today.

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