Westamerica Bank

january 21, 2010

For Immediate Release

San Rafael, CA: Westamerica Bancorporation (NASDAQ: WABC), earned net income applicable to common shareholders of $23.3 million, or $0.79 per diluted common share (“EPS”), for the three months ended December 31, 2009. During the fourth quarter 2009, Westamerica redeemed $42 million in preferred stock requiring accelerated discount accretion of $517 thousand, which reduced EPS $0.02.

For the third quarter 2009, Westamerica earned net income applicable to common shareholders of $23.8 million, or $0.81 EPS. During the third quarter 2009, Westamerica also redeemed $42 million in preferred stock requiring accelerated discount accretion of $538 thousand, which reduced EPS $0.02. Also during the third quarter, Westamerica eliminated $587 thousand in tax reserves due to a lapse in the statute of limitations, which reduced tax provisions and increased EPS $0.02. Fourth quarter 2009 results represents a 19 percent return on common shareholders’ equity.

“Westamerica’s net interest margin remained steady at 5.50 percent. With checking and savings deposits representing 75 percent of our total deposits, Westamerica has maintained a low 0.40 percent cost of funding our loan and investment portfolios. The risk profile of our loan portfolio is significantly reduced as loss-sharing agreements with the Federal Deposit Insurance Corporation cover 28 percent of our loan portfolio. The credit quality of the non-FDIC covered loans remained relatively stable with non-covered non-performing assets declining $4 million during the quarter,” said Chairman, President and CEO David Payne. “Our quality balance sheet, healthy profitability and 14.5 percent total regulatory capital ratio distinguish Westamerica as a safe and sound bank,” added Payne.

Westamerica generated net income applicable to common equity of $121 million, or $4.14 EPS, during 2009. Results for this period include a $28.3 million net of tax gain from the acquisition of assets and assumption of liabilities of County Bank. Westamerica generated net income applicable to common shareholders of $60 million, or $2.04 EPS, during 2008. Results for 2008 include a $5.7 million gain on the sale of VISA common stock resulting from VISA’s initial public offering (“IPO”), and $2.3 million in reduced expenses as known litigation contingencies were satisfied as a part of the VISA IPO. EPS was increased $0.16 due to transactions recognized as a result of the VISA IPO. Results for 2008 also include $36 million in losses, net of tax, recognized as a result of the decline in value of securities, which reduced EPS by $1.24. Also, in 2008 the Company recorded a $1.0 million reduction in its tax provision primarily due to filing its 2007 tax return and adjusting tax estimates to actual amounts included in the filed tax return, which increased EPS by $0.03.

Net interest income on a fully-taxable equivalent basis (“FTE”) totaled $58.9 million in the fourth quarter 2009, compared to $61.6 million in the third quarter 2009, and $49.9 million in the fourth quarter 2008. For the years 2009 and 2008, net interest income (FTE) totaled $242.2 million and $196.3 million, respectively. Net interest income increased in 2009 compared to 2008 due to acquired assets and a higher net interest margin. The net interest margin has improved due to a decline in interest rates paid on deposits and other borrowings used to fund loans and investment securities.

The provision for credit losses was $3.3 million for the fourth quarter 2009, compared to $2.8 million for the previous quarter. For the years 2009 and 2008, the provision for credit losses was $10.5 million and $2.7 million, respectively. The increased provision for credit losses was due to an increase in net loan losses during 2009.

Non-interest income for the fourth quarter 2009 was $15.7 million compared to $16.0 million in the prior quarter.

Non-interest expense for the fourth quarter 2009 was $32.8 million compared to $35.2 million in the prior quarter. Personnel, occupancy and equipment expenses have declined following the August 2009 systems integrations and branch consolidations related to the acquired County Bank.

Non-performing assets not covered by FDIC loss-sharing agreements were $33 million at December 31, 2009, reduced $4 million from $37 million at September 30, 2009. Annualized net loan losses on non-FDIC covered loans as a percentage of average non-FDIC covered loans were 0.88 percent and 0.56 percent during the fourth and third quarters of 2009, and 0.60 percent and 0.44 percent during 2009 and 2008, respectively. Fourth quarter 2009 net charge-offs include a $1.6 million commercial loan charge-off related to a customer engaged in the real estate industry. The reserve for loan losses to non-FDIC covered loans was 1.86 percent at December 31, 2009 and 1.88 percent at September 30, 2009.

Common shareholders' equity was $505 million at December 31, 2009 compared to $494 million at September 30, 2009.  At December 31, 2009, total regulatory capital ratios for Westamerica Bancorporation and its subsidiary bank, Westamerica Bank, were 14.5 percent and 14.9 percent, respectively, exceeding the 10 percent requirement to be “well capitalized” under regulatory standards.

Westamerica Bancorporation, through its wholly owned subsidiary, Westamerica Bank, operates 99 branches and two trust offices throughout Northern and Central California counties.

Quarterly Financial Highlights

FORWARD-LOOKING INFORMATION:

This press release contains forward-looking statements about Westamerica Bancorporation for which it claims the protection of the safe harbor provisions contained in the Private Securities Litigation Reform Act of 1995. Examples of forward-looking statements include, but are not limited to: (i) projections of revenues, expenses, income or loss, earnings or loss per share, the payment or nonpayment of dividends, capital structure and other financial items; (ii) statements of plans, objectives and expectations of the Company or its management or board of directors, including those relating to products or services; (iii) statements of future economic performance; and (iv) statements of assumptions underlying such statements. Words such as "believes", "anticipates", "expects", "intends", "targeted", "projected", "continue", "remain", "will", "should", "may" and other similar expressions are intended to identify forward-looking statements but are not the exclusive means of identifying such statements.

These forward-looking statements are based on Management’s current knowledge and belief and include information concerning the Company’s possible or assumed future financial condition and results of operations. A number of factors, some of which are beyond the Company’s ability to predict or control, could cause future results to differ materially from those contemplated. The Company’s most recent quarterly report on Form 10-Q for the quarter ended September 30, 2009 and annual report on Form 10-K for the year ended December 31, 2008 filed with the Securities and Exchange Commission describe some of these factors. These factors include but are not limited to (1) the length and severity of current difficulties in the national and California economies and the effects of federal and state government efforts to address those difficulties; (2) liquidity levels in capital markets; (3) fluctuations in asset prices including, but not limited to, stocks, bonds, real estate, and commodities; (4) the effect of acquisitions and integration of acquired businesses including the recently acquired County Bank; (5) economic uncertainty created by terrorist threats and attacks on the United States, the actions taken in response, and the uncertain effect of these events on the national and regional economies; (6) changes in the interest rate environment; (7) changes in the regulatory environment; (8) competitive pressure in the banking industry; (9) operational risks including data processing system failures or fraud; (10) volatility of rate sensitive loans, deposits and investments; (11) asset/liability management risks and liquidity risks; and (12) changes in the securities markets. The Company undertakes no obligation to update any forward-looking statements to reflect circumstances or events that occur after the date forward-looking statements are made.

Forward-looking statements speak only as of the date they are made.

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For additional information contact:

Westamerica Bancorporation
Robert A. Thorson, Senior Vice President and Chief Financial Officer, (707) 863-6840
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