Westamerica Bank

july 14, 2009

For Immediate Release

San Rafael, CA: Westamerica Bancorporation (NASDAQ: WABC), parent company of Westamerica Bank, today reported second quarter 2009 net income applicable to common equity of $22.1 million, or $0.75 diluted earnings per common share (EPS), a return on average common equity of 19 percent (annualized). Second quarter 2009 results include FDIC insurance assessments of $3.2 million, compared to $157 thousand in the prior quarter. The increase in FDIC assessments was equivalent to $0.06 EPS. Second quarter 2009 results include the operations of the former County Bank, which was acquired from the Federal Deposit Insurance Corporation (FDIC) on February 6, 2009.

“The integration of the acquired County Bank is proceeding in accordance with our plans. We expect branch and systems integrations to be completed in the third quarter 2009. For the second quarter 2009, our net interest margin of 5.34 percent was stable with the prior quarter’s margin of 5.35 percent. Westamerica’s credit management practices remain conservative; our $43 million allowance for loan losses is equivalent to 143 percent of non-performing loans which are not covered by FDIC loss sharing agreements,” said Chairman, President and CEO David Payne. “Our common shareholders’ equity grew $22.5 million in the second quarter 2009. Westamerica intends to redeem a portion of the preferred stock issued to the United States Treasury this month, which will increase returns to common shareholders,” Payne added.

Second quarter 2009 results compare to first quarter of 2009 net income applicable to common equity of $52.2 million and EPS of $1.80. First quarter 2009 results include a gain recognized  under Financial Accounting Standard 141R and a federal income tax refund which, combined, were equivalent to $1.00 EPS. The estimated fair value of County Bank assets purchased exceeded the estimated fair value of liabilities assumed, which resulted in the FAS 141R gain.

Net interest income on a fully taxable equivalent basis (FTE) was $62.3 million for the second quarter of 2009, compared to $59.4 million (FTE) for the prior quarter and $49.7 million (FTE) reported for the second quarter of 2008. The second quarter 2009 annualized net interest margin was 5.34 percent (FTE), compared to 5.35 percent (FTE) for the prior quarter and 5.16 percent (FTE) for the second quarter of 2008. Net interest income for the six months ended June 30, 2009 was $121.7 million (FTE) generating an annualized margin of 5.35 percent (FTE), compared to net interest income of $97.7 million (FTE) and an annualized margin of 4.97 percent (FTE) for the six months ended June 30, 2008. The improved net interest income is attributable to earning asset growth from the County Bank acquisition and a higher net interest margin. The net interest margin has increased in the first half of 2009 relative to the first half of 2008 as lower short-term interest rates caused funding costs to decline at a faster pace than earning asset yields.

The provision for loan losses was $4.4 million for the six months ended June 30, 2009 compared to $1.2 million for the six months ended June 30, 2008. Net loan charge-offs for the six months ended June 30, 2009 totaled $5.7 million, or 0.49 percent (annualized) of average non-covered loans, compared to $2.7 million, or 0.22 percent  (annualized) of average non-covered loans for the six months ended June 30, 2008. Non-covered non-performing loans at June 30, 2009 totaled $30.2 million, increased from $11.7 million at March 31, 2009. The increase in non-covered non-performing loans is primarily due to one residential construction loan relationship with four single family properties ($6 million), seven consumer mortgages ($3.6 million), and one commercial real estate relationship ($3.4 million). Non-covered classified loans, which include loans graded "substandard," "doubtful" and "loss" using regulatory guidelines, totaled $53.4 million  at June 30, 2009 compared to $41.5 million at March 31, 2009.

Noninterest income for the second quarter 2009 was $16.4 million, compared to $64.0 million in the first quarter 2009 which included the $48.8 million FAS 141R gain. Service charges on deposit accounts, ATM fees and debit card fees have increased following the assumption of County Bank deposit accounts.

Noninterest expense for the second quarter of 2009 totaled $38.7 million, compared to $34.1 million for the prior quarter and $26.3 million for the second quarter of 2008. The increase in expenses is primarily due to the acquisition of County Bank and higher FDIC insurance assessments. FDIC insurance assessments were $3.2 million, $157 thousand, and $133 thousand in the second quarter 2009, first quarter 2009, and second quarter 2008, respectively. Management anticipates quarterly FDIC insurance assessments of $1.5 million beginning in the third quarter, subject to changes in the assessment rate structure and any additional special assessments. Relative to the second quarter 2009, Management expects lower noninterest expenses, excluding FDIC insurance assessments, in the third and fourth quarters of 2009 as County Bank branch and systems integrations are completed in the third quarter 2009.

Shareholders' equity at June 30, 2009 was $559 million, increased from $537 million at March 31, 2009. The increase in shareholders’ equity is attributable to the retention of earnings in excess of shareholder dividends and the exercise of stock options. Westamerica paid a regular quarterly dividend of $0.35 per common share in May 2009, totaling $10.2 million. At June 30, 2009, Westamerica Bancorporation’s total regulatory capital ratio was 15.9 percent and Westamerica Bank’s total regulatory capital ratio was 15.1 percent; both measurements exceed the "well-capitalized" level of ten percent under regulatory requirements.

Westamerica Bancorporation, through its wholly owned subsidiary Westamerica Bank, operates commercial banking offices throughout Northern and Central California. At June 30, 2009, the Company's total assets and total loans outstanding were $5.2 billion and $3.4 billion, respectively.


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 for the quarter ended March 31, 2009 and annual report 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) continued low 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) significantly increasing 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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