Westamerica Bancorp. (WABC) approved a new share repurchase authorization of up to $2.0 million, representing 7% of the company’s common stock outstanding as of Jun 30, 2013. This buyback program is scheduled to close by Sep 1, 2014.
Concurrently, Westamerica declared its quarterly cash dividend of 37 cents per share. The dividend will be paid on Aug 16, 2013 to shareholders of record as of Aug 5, 2013.
In the first half of 2013, the company repurchased 444,000 shares worth $2.0 million. Westamerica’s capital deployment activities demonstrate its steady cash position and improving credit quality. Notably, the company’s cash and due from banks was $384.3 million as of Jun 30, 2013, up 20% year over year. Moreover, declining provision for loan losses and non-performing assets indicate Westamerica’s enhanced credit quality.
Though Westamerica continues with its legacy of share buybacks and dividend payouts, the disappointing second-quarter results indicate weakness in its business activities. Second-quarter 2013 earnings of 64 cents missed the Zacks Consensus Estimate by a penny, and declined 14.7% from the prior-year quarter.
We believe that a low interest-rate environment and insignificant investment returns will limit significant bottom-line improvement in the near term. However, we anticipate continued synergies from the company’s expense management, conservative credit culture and stable balance sheet. Further, once the market rebounds to a more conducive operating environment, the company will be able to capitalize on growth opportunities.
Apart from Westamerica, Associated Banc-Corp (ASBC) – a leading Midwest banking franchise – recently announced a share repurchase authorization of up to $120.0 million. The buyback program is subject to certain regulatory approvals.
Westamerica currently carries a Zacks #4 (Sell). Some better performing banks include East West Bancorp, Inc. (EWBC) and Umpqua Holdings Corporation (UMPQ). Both of these stocks carry a Zacks Rank #1 (Strong Buy).
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