While US markets experienced a robust surge during the Thanksgiving holiday week, the performance of Westamerica Bancorporation told a different story. The regional bank’s stock declined by 0.85% on Friday, November 28, closing at $47.98. This downward movement occurred despite a general market upswing, highlighting a significant divergence from broader sector trends.
Revenue Decline Presents Ongoing Challenge
The bank’s financial trajectory reveals a concerning pattern of quarterly revenue contraction. Third-quarter results showed earnings of just $63.99 million, continuing a downward trend that has characterized recent reporting periods:
- Q1 2025: $67.25 million
- Q2 2025: $64.88 million
- Q3 2025: $63.99 million
This persistent erosion in top-line performance contrasts sharply with the technology sector’s strength, which propelled the Nasdaq 100 upward by nearly 5% during the same period.
Profit Stability Amid Falling Revenue
Despite the challenging revenue environment, Westamerica demonstrated resilience in its earnings per share (EPS). The third-quarter GAAP earnings held steady at $1.12, matching the previous quarter’s results though falling below the $1.16 reported at the beginning of the year. Management appears to be implementing effective cost-control measures that are maintaining profitability despite shrinking revenues.
Should investors sell immediately? Or is it worth buying Westamerica Bancorporation?
Dividend-focused investors continue to find value in the company’s consistent quarterly distribution of $0.46 per share. However, the stock’s lack of positive momentum raises questions about whether dividend payments alone provide sufficient incentive for investment.
Interest Rate Environment Squeezes Regional Banks
The current monetary policy landscape presents substantial headwinds for regional banking institutions. While the national average savings rate remains at a modest 0.45%, banks operating in competitive markets like California must offer rates between 4.05% and 4.54% to attract deposits. This significant gap between average and competitive rates continues to compress net interest margins, contributing to the operational challenges facing regional banks.
The fundamental question remains whether Westamerica can achieve growth under these market conditions. Recent performance metrics paint a clear picture: stable earnings coupled with declining revenues and noticeable underperformance relative to the broader market index.
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