Westamerica Bank

July 15, 2008

FOR IMMEDIATE RELEASE

San Rafael, CA: Westamerica Bancorporation (NASDAQ: WABC), parent company of Westamerica Bank, today reported quarterly net income for the second quarter of 2008 of $12.2 million, or $0.42 diluted earnings per share (EPS), compared to net income of $22.4 million, or $0.74 EPS for the second quarter of 2007.  Second quarter  2008 results include a $18.2 million “other than temporary impairment charge” (OTTI) related to FHLMC and FNMA preferred stock which reduced net income $10.5 million and reduced EPS $0.35.

Net income for the six months ended June 30, 2008 was $39.0 million or $1.33 diluted earnings per share including the OTTI charge, and  benefits from Visa’s initial public offering which increased net income by $4.7 million and EPS by $0.16. Net income for the six months ended June 30, 2007 was  $45.9 million or $1.50 diluted earnings per share including a $822 thousand gain on company-owned life insurance which contributed $0.02 to diluted earnings per share.

“Our net interest margin expanded to 5.16 percent in the second quarter 2008, compared to 4.79 percent for the first quarter 2008. Lower short-term interest rates allowed us to manage a 0.40 percent decline in our funding costs to generate this improved margin. Our credit quality remains sound. Non-performing loans totaled $12.0 million at June 30, 2008, or 0.49 percent of total loans, while our reserve for loan losses totaled 2.10 percent of total loans. Classified loans remained relatively stable at $33.5 million at June 30, 2008 compared to $33.3 million at March 31, 2008,” said Chairman, President and CEO David Payne. “Our capital grew $11 million in the second quarter 2008 in spite of the OTTI charge.  Our return on shareholders’ equity was 19.4 percent for the first six months of 2008,” Payne added.

Net interest income on a fully taxable equivalent basis (FTE) was $49.7 million for the second quarter of 2008, compared to $48.0 million (FTE) for the prior quarter and $46.1 million (FTE) reported for the second quarter of 2007. The second quarter 2008 net interest margin was 5.16 percent (FTE), compared to 4.79 percent (FTE) for the prior quarter and 4.36 percent (FTE) for the second quarter of 2007. Net interest income for the six months ended June 30, 2008 was $97.7 million (FTE) generating a margin of 4.97 percent (FTE), compared to net interest income of $93.0 million (FTE) and a margin of 4.38 percent (FTE) for the six months ended June 30, 2007. The improved net interest income is attributable to a higher net interest margin offset partially by lower average earning assets. The net interest margin has increased 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 $1.2 million for the six months ended June 30, 2008 compared to $150 thousand for the six months ended June 30, 2007. Net charge-offs for the six months ended June 30, 2008 totaled $2.7 million, or 0.22 percent (annualized) of average loans, compared to $2.0 million, or 0.16 percent  (annualized) of average loans for the six months ended June 30, 2007. Non-performing loans at June 30, 2008 totaled $12.0 million, increased from $5.6 million at March 31, 2008. Classified loans, which include loans graded "substandard," "doubtful" and "loss" using regulatory guidelines, totaled $33.5 million at June 30, 2008 compared to $33.3 million at March 31, 2008. The increase in net charge-offs and non-performing loans is generally attributable to one construction loan relationship with loan collateral comprised of developed land and residential real estate properties located north of Sacramento, California. The borrower has marketed and received purchase offers on thirteen of the project’s seventeen finished and nearly completed properties, and is negotiating a sale of a portion of the remaining developed land with an interested party. Management is aggressively pursuing collection of this loan relationship.

Noninterest income for the six months ended June 30, 2008 was $15.5 million, compared to $30.0 million for the six months ended June 30, 2007.  Non-interest income for the 2008 period included the $18.2 million OTTI charge and $5.7 million in securities gains from the redemption of Visa Class B common stock as part of Visa’s initial public offering.  Non-interest income for the first six months of 2007 included a $822 thousand gain on company-owned life insurance.  During 2008, the Company began issuing its own cashiers checks rather than use a vendor which paid the Company fees based on the availability of funds while the cashiers checks remained outstanding (“float”).  By issuing its own cashiers’ checks, the Company uses the related float as a source of funding and reduces its interest expense.  Such vendor fees were $500 thousand lower in the six months ended June 30, 2008 compared to the six months ended June 30, 2007.

Noninterest expense for the second quarter of 2008 totaled $26.3 million, compared to $23.1 million for the prior quarter and $24.7 million for the second quarter of 2007. The increase in expenses from the prior quarter was primarily due to the first quarter 2008 reversal of a $2.3 million accrual for Visa related litigation, which was reversed with the funding of a litigation escrow as a part of the Visa IPO. In addition, professional fees were $147 thousand higher in the second quarter 2008 compared to the first quarter 2008. The increase in expenses from the second quarter 2007 to the second quarter 2008 was attributable to higher data processing, personnel, professional, and occupancy costs. Data processing costs were higher due to conversion of the Company’s item processing function to an outside vendor in the third quarter 2007.

Shareholders' equity at June 30, 2008 was $410 million, increased from $399 million at March 31, 2008. During the second quarter 2008, the number of shares issued due to the exercise of stock options exceeded shares repurchased by the Company by 117 thousand shares.  At June 30, 2008, 777 thousand shares of Company common stock may be purchased and retired under repurchase programs approved by the Company’s Board of Directors.  At June 30, 2008, Westamerica Bancorporation’s total regulatory capital ratio was 11.5 percent and Westamerica Bank’s total regulatory capital ratio was 11.0 percent; both measurements exceed the "well-capitalized" level of ten percent under regulatory requirements.

Westamerica Bancorporation, through its wholly owned subsidiary Westamerica Bank, operates 86 branches and two trust offices throughout 21 Northern and Central California counties. At June 30, 2008, the Company's total assets and total loans outstanding were $4.2 billion and $2.4 billion, respectively.

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 March 31, 2008, and Form 10-K for the year ended December 31, 2007, 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.

#####

For additional information contact: