WABC Jumps 4.5% on EPS Beat, Shrugging Off Revenue Decline
Westamerica Bancorporation increased its dividend and share buybacks, rewarding investors even as declining net interest income signals underlying pressure.
Shares of Westamerica Bancorporation (NASDAQ: WABC) surged nearly 4.5% in recent trading after the company posted fourth-quarter earnings that beat analyst expectations on profit but revealed persistent headwinds in its core lending operations.
The San Rafael-based bank reported diluted earnings of $1.12 per share, surpassing the consensus estimate of $1.075 by 4.2%. However, the celebration on the bottom line was tempered by a slight miss on the top line. Quarterly revenue came in at $63.6 million, falling just short of the $64.2 million analysts had projected.
Beneath the surface of the headline numbers, Westamerica's results reflect the challenging environment facing many U.S. regional banks. Net interest income, a critical measure of a bank's profitability from its primary lending activities, declined 9.6% year-over-year to $53.5 million. This contributed to a 12.3% drop in net income to $27.8 million compared to the same period in the prior year, according to a company filing.
The decline in net interest income highlights the pressure on the bank's margins. While the broader banking sector has seen some stabilization in net interest margins (NIMs) in late 2025, many institutions are still grappling with higher costs for deposits, which squeeze profitability. This industry-wide trend makes Westamerica’s performance a focal point for investors gauging the health of the regional banking sector.
Despite the operational pressures, Westamerica's management delivered for shareholders. The company announced it was increasing its quarterly dividend to $0.46 per share. Furthermore, Westamerica was active in the market on its own behalf, retiring 485,000 of its own shares during the quarter as part of its existing buyback program. These moves signal a strong commitment to returning capital to shareholders and suggest confidence from leadership.
Following the release, WABC's stock rose to $50.70, pushing its market capitalization to approximately $1.23 billion. The positive market reaction indicates investors are, for now, prioritizing the earnings beat and shareholder-friendly capital returns over the decline in core revenue and interest income. Analyst consensus currently places a price target on the stock around $53.00.
The bank's leadership emphasized its strong capital position and credit quality in its quarterly results announcement. Nonperforming assets remained exceptionally low at just $1.8 million, and the bank’s capital ratios continue to exceed the highest regulatory standards, providing a substantial buffer against economic uncertainty.
Looking ahead, investors will be closely watching whether Westamerica can reverse the trend in net interest income in the coming quarters. The bank's ability to navigate the competitive landscape for deposits and manage its lending margins will be critical to achieving sustainable growth, even as its robust capital position and commitment to shareholder returns provide a solid foundation.