Capital Corp. of the West Warns

Capital Corp. of the West (CCOW Quote) slashed third-quarter guidance late Tuesday, citing the changed interest rate environment and the increased competition for deposits.

The Merced, Calif., company said it expects to make 47 cents to 50 cents a share for the quarter, excluding nonrecurring items, shy of the 55-cent Thomson Financial view.

"As with other financial institutions, Capital Corp of the West is experiencing the effects of 17 consecutive 1/4 point increases in interest rates by the Federal Reserve since June 2004," said CEO Tom Hawker. "In our last three earnings announcements, we have discussed the fact that, eventually, the rising interest rate environment could lead to a flattened yield curve and compression of our net interest margin. Although loan demand remains strong, the current competitive landscape creates a situation where we are limited in what we can charge our borrowers, while at the same time, our costs for deposits have risen significantly."