Westamerica Bancorporation (WABC)

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Neena Mishra

www.zacks.com

Westamerica Bancorporation (WABC) is a bank holding company based in San Rafael, California, operating in 21 northern and central California counties through its principal subsidiary, Westamerica Bank. Focusing primarily on the small-business segment, WABC provides traditional retail banking services, electronic banking, trust, credit card, and 401(k) retirement plans through 87 branches and two trust offices. WABC operates a traditional community banking model, deriving 79% of its net revenue in 2006 from net interest income and 11% more from service charges on deposit accounts. A number of items contribute to the balance, with merchant card processing being the largest (3.8% of 2006 net revenue). Mortgage banking is a minimal component of revenue (0.1% in 2006).

In March 2005, WABC filled in its footprint through the acquisition of Redwood Empire Bancorp (REBC), with $520 million in assets and six offices in Sonoma, Mendocino, and Lake Counties, for $153 million ($57 million in cash and $96 million in WABC stock). Further acquisitions might be used to accelerate growth.

Consumer loans in total represented 40.5% of WABC's average loan portfolio in 3Q07, followed by commercial real estate (35%), and commercial loans (25%). The securities portfolio remained fairly large at 40% of average interest-earning assets. Non-interest-bearing and other low-cost deposits funded 63% of average earning assets in the quarter, with time deposits and borrowing funding 17% and 19%, respectively. As of September 30, 2007, WABC had $4.7 billion in assets, $2.5 billion in loans, and $3.4 billion in deposits.

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