Westamerica Bank

January 17, 2008

For Immediate Release


San Rafael, CA: Westamerica Bancorporation (NASDAQ: WABC), parent company of Westamerica Bank, today reported net income for the year ended December 31, 2007 of $89.8 million, compared to $98.8 million for 2006. Diluted earnings per share (EPS) for 2007 were $2.98, compared to $3.11 for the year 2006. Return on shareholders’ equity for the year 2007 was 22.1 percent and return on assets was 1.93 percent, compared to 23.4 percent and 2.01 percent, respectively, for the year 2006.

Net income for the fourth quarter 2007 totaled $21.8 million, or EPS of $0.74, compared to net income of $22.0 million and EPS of $0.74 for the third quarter 2007, and net income of $24.0 million and EPS of $0.77 for the fourth quarter 2006. Fourth quarter 2007 results include a $2.3 million litigation expense for Westamerica’s proportionate share of Visa’s litigation exposure for which Visa's members are responsible. Management currently anticipates that the Company’s proportional share of the proceeds of the planned initial public offering by Visa will more than offset any liabilities related to Visa litigation. Fourth quarter 2007 results also include a $700 thousand income tax refund, derived from an amended 2003 tax return, which reduced income tax expense. The expense for Visa litigation and the income tax refund combined to reduce net income by $590 thousand, or diluted earnings per share by $0.02.

"Our net interest margin increased to 4.53 percent in the fourth quarter 2007, compared to 4.34 percent in the third quarter 2007. The margin improvement was in large part due to declining short-term interest rates, which allowed us to reduce our cost of funds. Our consistent application of traditional, conservative loan underwriting practices over the last several years has helped maintain relatively steady loan quality. Our total non-performing assets were $5.8 million at December 31, 2007, compared to $5.7 million at September 30, 2007, $5.2 million at December 31, 2006 and $6.5 million at December 31, 2005," said Chairman, President and CEO David Payne. "Throughout 2007, we also focused on improving our fee income, which increased seven percent over 2006, and reducing our ongoing operating expenses, which fell two percent from 2006. We are proud to have generated a 22 percent return on our shareholders' equity in 2007," continued Payne.

Net interest income on a fully taxable equivalent basis was $46.8 million in the fourth quarter of 2007 compared to $45.6 million in the prior quarter and $49.0 million in the same quarter a year ago. The fourth quarter 2007 net interest margin on a fully taxable equivalent basis was 4.53 percent, compared to 4.34 percent for the previous quarter and 4.49 percent for the fourth quarter of 2006. For the full year 2007, net interest income and the net interest margin on a fully taxable equivalent basis were $185.3 million and 4.40 percent, compared to $204.7 million and 4.57 percent, respectively, for 2006.

The provision for credit losses was $475 thousand for the fourth quarter of 2007, compared to $75 thousand for the previous quarter and $70 thousand for the year ago quarter. The increase in the provision for credit losses in the fourth quarter 2007 reflects Management’s assessment of credit risk for the Company. In addition to increasing the provision for credit losses, Management reduced the reserve for unfunded credit commitments by $400 thousand during the fourth quarter 2007 to reflect a reduction in unfunded construction loan commitments. As discussed below, the reduction in the reserve for unfunded credit commitments was recorded in other expenses.

Noninterest income in the fourth quarter of 2007 totaled $14.7 million, unchanged from the prior quarter and compared to $13.7 million reported for the year ago quarter. The increase from the year ago quarter is due to higher deposit service charges and merchant card processing fees. For the full year 2007, noninterest income increased to $59.3 million from $55.3 million for 2006. The $4.0 million annual increase is primarily attributable to higher deposit service charges, merchant card processing fees, debit card fees, and $822 thousand company owned life insurance proceeds recognized in 2007.

Noninterest expense for the fourth quarter of 2007 totaled $27.2 million compared to $24.9 million in the prior quarter and $24.5 million in the year ago quarter. The increase from the prior quarter is primarily attributable to:

• A $402 thousand increase in data processing costs,
• A $221 thousand reduction in personnel expenses,
• A $149 thousand reduction in equipment costs,
• Lower other expenses primarily attributable to a $400 thousand reduction in the reserve for unfunded credit commitments, and
• The $2.3 million Visa litigation charge.

• A $2.2 million reduction in personnel costs,
• A $647 thousand reduction in equipment costs,
• A $548 thousand reduction in professional fees,
• $434 thousand lower intangible asset amortization,
• A $1.0 million increase in data processing costs,
• A $299 increase in occupancy costs,
• The $400 thousand reduction in the reserve for unfunded credit commitments, and
• The $2.3 million Visa litigation charge.

Shareholders' equity was $395 million at December 31, 2007, and the equity-to-asset ratio was 8.7 percent. At December 31, 2007, there were approximately 1.4 million shares remaining to purchase under the Company’s existing share repurchase program. At December 31, 2007, the Company's assets totaled $4.6 billion and loans outstanding totaled $2.5 billion.

Westamerica Bancorporation, through its wholly owned subsidiary Westamerica Bank, operates 86 branches throughout 21 Northern and Central California counties.


Quarterly Financial Highlights


FORWARD-LOOKING INFORMATION:

The following appears in accordance with the Private Securities Litigation Reform Act of 1995

This press release may contain forward-looking statements about the Company, including descriptions of plans or objectives of its management for future operations, products or services, and forecasts of its revenues, earnings or other measures of economic performance. Forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts. They often include the words "believe," "expect," "anticipate," "intend," "plan," "estimate," or words of similar meaning, or future or conditional verbs such as "will," "would," "should," "could," or "may."

Forward-looking statements, by their nature, are subject to risks and uncertainties. A number of factors - many of which are beyond the Company's control - could cause actual conditions, events or results to differ significantly from those described in the forward-looking statements. The Company's most recent annual and quarterly reports filed with the Securities and Exchange Commission, including the Company's Form 10-Q for the quarter ended September 30, 2007 and Form 10-K for the year ended December 31, 2006, describe some of these factors, including certain credit, market, operational, liquidity and interest rate risks associated with the Company's business and operations. Other factors described in these reports include changes in business and economic conditions, competition, fiscal and monetary policies, disintermediation, legislation including the Sarbanes-Oxley Act of 2002 and the Gramm-Leach-Bliley Act of 1999, and mergers and acquisitions.

Forward-looking statements speak only as of the date they are made. The Company does not undertake to update forward-looking statements to reflect circumstances or events that occur after the date forward looking statements 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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