Westamerica Bancorporation Reports Quarterly and Annual Earnings

    Business Editors

    SAN RAFAEL, Calif.--(BUSINESS WIRE)--Jan. 20, 2005--Westamerica Bancorporation (Nasdaq:WABC), parent company of Westamerica Bank, today reported net income for the fourth quarter of 2004 of $21.2 million, diluted earnings per share (EPS) of $0.65, return on common equity (ROE) of 24.0 percent, and return on average assets (ROA) of 1.81 percent. Fourth quarter 2004 results include a $4.2 million after-tax securities impairment charge related to Freddie Mac and Fannie Mae preferred stock (more fully described below), which reduced fourth quarter 2004 EPS by $0.13, ROE by 4.8 percent, and ROA by 0.35 percent. Fourth quarter 2004 EPS and ROE were further constrained by reduced share repurchase activity in order to accumulate approximately $57 million in cash required to complete the pending acquisition of Redwood Empire Bancorp (more fully described below). As a result, share repurchases, net of shares issued, declined to 76 thousand shares in the fourth quarter of 2004 and to 68 thousand shares in the previous quarter. Net share repurchases were 647 thousand shares for the year 2004, compared to 1.1 million shares for 2003.
    Net income for the year ended December 31, 2004 was $95.2 million, compared to $95.1 million for 2003. EPS for 2004 was $2.93, compared to $2.85 for the year 2003. ROE for the year 2004 was 28.8 percent, while ROA was 2.10 percent, compared to 29.4 percent and 2.19 percent, respectively, for the year 2003.
    "Fourth quarter and full year 2004 profitability benefited from our focus on growing noninterest income, on gathering low cost deposits, and operational efficiencies," said Chairman, President and CEO David Payne. "During 2004, new deposit-related products fueled an 8 percent increase in service charges on deposit accounts, and our low-cost deposits grew 7 percent, reducing our average cost of funds to 0.50 percent for the year. Our efforts to maintain an efficient cost structure and hold positions open for Redwood Empire employees resulted in a 3 percent decline in expenses, which improved our efficiency ratio from the prior year," continued Payne.
    Net interest income on a fully taxable equivalent basis was $54.6 million in the fourth quarter of 2004 compared to $54.5 million in the prior quarter and $54.8 million in the same quarter a year ago. The fourth quarter 2004 net interest margin on a taxable equivalent basis was 5.01 percent, compared to 5.11 percent in the previous quarter and 5.26 percent in the fourth quarter of 2003. For the full year, net interest income and the net interest margin on a taxable equivalent basis were $218.0 million and 5.14 percent, compared to $217.4 million and 5.39 percent, respectively, for 2003. A reduction in high-yielding commercial real estate loans combined with a sustained period of low interest rates have resulted in an operating environment with declining net interest margins.
    The provision for loan losses was $600 thousand for the fourth quarter of 2004, unchanged from the previous quarter and down from $750 thousand in the year ago quarter. The level of the loan loss provision reflects management's assessment of credit risk for the loan portfolio.
    Noninterest income in the fourth quarter of 2004 totaled $4.3 million, compared to $11.8 million and $10.5 million, respectively, reported in the previous and year ago quarters. The decrease from the prior and year ago quarters includes a $7.2 million "other than temporary impairment" charge for Freddie Mac and Fannie Mae preferred stock. "This securities writedown was an ultra-conservative interpretation of current accounting literature for securities rated investment grade by all nationally recognized rating agencies, and for valuations derived primarily by prevailing interest rates and technical conditions in the capital markets," stated Chairman, President and CEO David Payne. The non-cash securities impairment charge does not affect capital levels as the securities are held in the available-for-sale investment portfolio for which market value adjustments are recorded as other comprehensive income. At December 31, 2004, Westamerica held Freddie Mac and Fannie Mae preferred stock with an adjusted book value of $63.9 million and a tax-equivalent dividend yield of 7.65 percent. The remaining $300 thousand decrease in noninterest income from the prior quarter is primarily attributable to lower service charges on deposit accounts and financial services commissions. Noninterest income other than securities impairment increased $1.0 million in the fourth quarter of 2004 from the year ago quarter primarily due to higher service charges on deposit accounts and debit card income. For the full year, noninterest income other than securities impairment increased 7 percent to $45.8 million from $42.9 million for 2003. This increase in annual results is primarily attributable to increased service charges on deposit accounts, debit card income, and financial services commissions partially offset by lower mortgage banking income.
    Noninterest expense for the fourth quarter of 2004 totaled $24.3 million compared to $24.5 million in the prior quarter and $25.2 million in the year ago quarter. The decrease from the prior quarter is primarily attributable to lower salaries and benefits, offset in part by higher equipment costs and professional fees. The decrease from the year ago quarter is primarily attributable to lower salaries and benefits. For the full year, noninterest expense was $98.8 million, down 3 percent from $101.7 million for 2003. The decrease is primarily attributable to reduced salaries and benefits, occupancy and equipment expense, postage, loan expense, and amortization of core deposit intangibles, offset in part by higher telephone expense.
    Shareholders' equity was $359 million at December 31, 2004, compared to $340 million at December 31, 2003. The equity-to-asset ratio was 7.6 percent at December 31, 2004, compared to 7.4 percent at December 31, 2003. At December 31, 2004, there were approximately 1.8 million shares remaining to purchase under the existing share repurchase program.
    At December 31, 2004, the Company had total assets and total loans outstanding of $4.7 billion and $2.3 billion, respectively.
    As announced August 25, 2004 Westamerica signed a definitive agreement to acquire Redwood Empire Bancorp (REBC), parent company of National Bank of the Redwoods. REBC shareholders approved the merger at a shareholder meeting December 14, 2004. The merger also requires customary regulatory approvals. The transaction is valued at approximately $148 million, of which, approximately $57 million will be paid in cash and the remainder by issuance of Westamerica common stock. The pricing of the transaction is subject to adjustments fully described in Westamerica's Form S-4 registration statement filed with the Securities and Exchange Commission on October 15, 2004.
    Westamerica Bancorporation, through its wholly owned subsidiary Westamerica Bank, operates 87 branches throughout 22 Northern and Central California counties.

    Westamerica Bancorporation Web Address: www.westamerica.com

    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, 2004 and Form 10-K for the year ended December 31, 2003, 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.

Public Information January 20, 2005

WESTAMERICA BANCORPORATION -------------------------- FINANCIAL HIGHLIGHTS -------------------- December 31, 2004

1. Net Income Summary. (dollars in thousands, except per-share data)

% Q4'04 Q4'03 Change Q3'04 ------------------------------------------ Net Interest Income (FTE) $54,587 $54,758 -0.3% $54,528 Loan Loss Provision 600 750 -20.0% 600 Noninterest Income Securities (Impairment) Gains (7,180) 0 n/m (14) Debt Extinguishment Loss 0 0 n/m 0 Other 11,449 10,493 9.1% 11,802 ----------------------- ---------- Total Noninterest Income 4,269 10,493 -59.3% 11,788 ----------------------- ---------- Noninterest Expense 24,277 25,158 -3.5% 24,491 Income Tax Provision (FTE) 12,814 15,035 -14.8% 16,130 ----------------------- ---------- Net Income $21,165 $24,308 -12.9% $25,095 ======================= ========== Average Shares Outstanding 31,761 32,523 -2.3% 31,713 Diluted Average Shares 32,487 33,154 -2.0% 32,352 Operating Ratios: Basic Earnings Per Share $0.67 $0.75 -10.8% $0.79 Diluted Earnings Per Share 0.65 0.73 -11.1% 0.78 Return On Assets 1.81% 2.17% 2.19% Return On Equity 24.05% 29.38% 30.05% Net Interest Margin 5.01% 5.26% 5.11% Efficiency Ratio 41.2% 38.6% 36.9% Dividends Paid Per Share $0.28 $0.26 7.7% $0.28 Dividend Payout Ratio 43% 35% 36%

% 12/31'04YTD 12/31'03YTD Change -------------------------------

Net Interest Income (FTE) $217,993 $217,407 0.3% Loan Loss Provision 2,700 3,300 -18.2% Noninterest Income Securities (Impairment) Gains (5,011) 2,443 n/m Debt Extinguishment Loss (2,204) (2,166) 1.8% Other 45,798 42,639 7.4% ------------------------ Total Noninterest Income 38,583 42,916 -10.1% ------------------------ Noninterest Expense 98,751 101,703 -2.9% Income Tax Provision (FTE) 59,906 60,257 -0.6% ------------------------ Net Income $95,219 $95,063 0.2% ========================

Average Shares Outstanding 31,821 32,849 -3.1% Diluted Average Shares 32,461 33,369 -2.7%

Operating Ratios: Basic Earnings Per Share $2.99 $2.89 3.4% Diluted Earnings Per Share 2.93 2.85 3.0% Return On Assets 2.10% 2.19% Return On Equity 28.83% 29.38% Net Interest Margin (FTE) 5.14% 5.39% Efficiency Ratio (FTE) 38.5% 39.1%

Dividends Paid Per Share $1.10 $1.00 10.0% Dividend Payout Ratio 37% 35%

2. Net Interest Income. (dollars in thousands)

% Q4'04 Q4'03 Change Q3'04 -------------------------------------------- Interest and Fee Income (FTE) $60,540 $60,521 0.0% $59,570 Interest Expense 5,953 5,763 3.3% 5,042 ------------------------ ------------ Net Interest Income (FTE) $54,587 $54,758 -0.3% $54,528 ======================== ============ Average Earning Assets $4,352,493 $4,149,994 4.9% $4,260,701 Average Interest- Bearing Liabilities 2,912,943 2,842,273 2.5% 2,882,817 Yield on Earning Assets (FTE) 5.55% 5.81% 5.58% Cost of Funds 0.54% 0.55% 0.47% Net Interest Margin (FTE) 5.01% 5.26% 5.11% Interest Expense/ Interest-Bearing Liabilities 0.81% 0.80% 0.69% Net Interest Spread (FTE) 4.74% 5.01% 4.89%

% 12/31'04YTD 12/31'03YTD Change -------------------------------

Interest and Fee Income (FTE) $239,099 $244,604 -2.3% Interest Expense 21,106 27,197 -22.4% ------------------------- Net Interest Income (FTE) $217,993 $217,407 0.3% =========================

Average Earning Assets $4,236,903 $4,033,964 5.0% Average Interest- Bearing Liabilities 2,886,233 2,798,180 3.1%

Yield on Earning Assets (FTE) 5.64% 6.06% Cost of Funds 0.50% 0.67% Net Interest Margin (FTE) 5.14% 5.39% Interest Expense/ Interest-Bearing Liabilities 0.73% 0.97% Net Interest Spread (FTE) 4.91% 5.09%

3. Loans & Other Earning Assets.

(average volume, dollars in thousands)

% Q4'04 Q4'03 Change Q3'04 ----------------------------------------------

Total Assets $4,653,950 $4,451,423 4.5% $4,557,925 Total Earning Assets 4,352,493 4,149,994 4.9% 4,260,701 Total Loans 2,235,375 2,285,717 -2.2% 2,247,664 Commercial Loans 620,309 616,511 0.6% 624,925 Commercial RE Loans 740,909 826,792 -10.4% 752,395 Consumer Loans 874,157 842,414 3.8% 870,344 Total Investment Securities 2,117,118 1,864,277 13.6% 2,013,037 Available For Sale (Market) 941,614 1,326,259 -29.0% 928,930 Held To Maturity 1,175,504 538,018 118.5% 1,084,107 Unrealized Gain (Loss) 5,064 7,352 -31.1% 9,176

Loans/Deposits 60.1% 64.5% 62.2%

% 12/31'04YTD 12/31'03YTD Change ---------------------------------

Total Assets $4,536,452 $4,332,707 4.7% Total Earning Assets 4,236,903 4,033,964 5.0% Total Loans 2,258,482 2,354,270 -4.1% Commercial Loans 621,258 616,710 0.7% Commercial RE Loans 769,533 889,076 -13.4% Consumer Loans 867,691 848,484 2.3% Total Investment Securities 1,978,421 1,679,694 17.8% Available For Sale (Market) 1,096,789 1,152,930 -4.9% Held To Maturity 881,632 526,764 67.4% Unrealized Gain (Loss) 5,064 7,352 -31.1%

Loans/Deposits 63.3% 68.6%

4. Deposits & Other Interest-Bearing Liabilities.

(average volume, dollars in thousands)

% Q4'04 Q4'03 Change Q3'04 --------------------------------------------

Total Deposits $3,718,114 $3,542,433 5.0% $3,616,319 Noninterest Demand 1,354,129 1,243,860 8.9% 1,305,840 Money Market Checking 588,362 569,965 3.2% 581,264 Other Low-Cost 1,139,713 1,085,299 5.0% 1,115,052 Other Time greater than $100K 373,846 348,405 7.3% 347,579 Other Time less than $100K 262,064 294,904 -11.1% 266,584 Total Short-Term Borrowings 527,529 418,896 25.9% 550,909 Fed Funds Purchased 369,986 270,515 36.8% 350,071 Other Short-Term Funds 157,543 148,381 6.2% 200,838 FHLB Debt 0 105,000 n/m 0 Long-Term Debt 21,429 19,804 8.2% 21,429 Shareholders' Equity 350,151 328,209 6.7% 332,219

Demand Deposits/ Total Deposits 36.4% 35.1% 36.1% Transaction & Savings Deposits/Total Deposits 82.9% 81.8% 83.0%

% 12/31'04YTD 12/31'03YTD Change --------------------------------

Total Deposits $3,565,308 $3,430,177 3.9% Noninterest Demand 1,281,349 1,173,853 9.2% Money Market Checking 577,296 563,022 2.5% Other Low-Cost 1,085,051 1,015,699 6.8% Other Time greater than $100K 350,400 370,549 -5.4% Other Time less than $100K 271,212 307,054 -11.7% Total Short-Term Borrowings 556,415 378,362 47.1% Fed Funds Purchased 360,771 222,225 62.3% Other Short-Term Funds 195,644 156,137 25.3% FHLB Debt 24,153 142,272 -83.0% Long-Term Debt 21,706 21,222 2.3% Shareholders' Equity 330,330 323,555 2.1%

Demand Deposits/ Total Deposits 35.9% 34.2% Transaction & Savings Deposits/Total Deposits 82.6% 80.2%

5. Interest Yields Earned & Rates Paid.

(dollars in thousands)

Q4'04 ------------------------------ Average Income/ Yield/ Volume Expense Rate ------------------------------

Interest Income Earned to: Total Earning Assets (FTE) $4,352,493 $60,540 5.55% Total Loans (FTE) 2,235,375 34,297 6.10% Commercial Loans (FTE) 620,309 9,959 6.34% Commercial RE Loans 740,909 13,793 7.41% Consumer Loans 874,157 10,545 4.91% Total Investments (FTE) 2,117,118 26,243 4.96%

Interest Expense Paid to: Total Earning Assets 4,352,493 5,953 0.54% Total Interest-Bearing Liabilities 2,912,943 5,953 0.81% Total Interest-Bearing Deposits 2,363,985 3,649 0.61% Interest-Bearing Transaction 588,362 213 0.14% Savings 1,139,713 874 0.31% Other Time less than $100K 262,064 1,081 1.64% Other Time greater than $100K 373,846 1,481 1.58% Total Short-Term Borrowings 527,529 1,988 1.48% Fed Funds Purchased 369,986 1,874 1.98% Other Short-Term Funds 157,543 114 0.29% FHLB Debt 0 0 0.00% Long-Term Debt 21,429 316 5.90%

Net Interest Margin (FTE) $54,587 5.01%

Q4'03 ------------------------------ Average Income/ Yield/ Volume Expense Rate ------------------------------ Interest Income Earned to: Total Earning Assets (FTE) $4,149,994 $60,521 5.81% Total Loans (FTE) 2,285,717 36,760 6.38% Commercial Loans (FTE) 616,511 9,438 6.01% Commercial RE Loans 826,792 16,061 7.71% Consumer Loans 842,414 11,261 5.42% Total Investments (FTE) 1,864,277 23,761 5.10% Interest Expense Paid to: Total Earning Assets 4,149,994 5,763 0.55% Total Interest-Bearing Liabilities 2,842,273 5,763 0.80% Total Interest-Bearing Deposits 2,298,573 3,622 0.63% Interest-Bearing Transaction 569,965 129 0.09% Savings 1,085,299 1,381 0.50% Other Time less than $100K 294,904 1,087 1.46% Other Time greater than $100K 348,405 1,025 1.17% Total Short-Term Borrowings 418,896 856 0.80% Fed Funds Purchased 270,515 686 0.99% Other Short-Term Funds 148,381 170 0.45% FHLB Debt 105,000 979 3.65% Long-Term Debt 19,804 306 6.18% Net Interest Margin (FTE) $54,758 5.26%

6. Noninterest Income. (dollars in thousands)

% Q4'04 Q4'03 Change Q3'04 ------------------------------------------

Service Charges on Deposits $6,928 $6,572 5.4% $7,465 Merchant Credit Card Income 875 864 1.3% 899 ATM Fees & Interchange 597 573 4.2% 664 Debit Card Fees 700 512 36.7% 654 Financial Services Fees 294 227 29.5% 409 Mortgage Banking Income 82 139 -41.0% 41 Trust Fees 254 235 8.1% 265 Other Income 1,719 1,371 25.4% 1,405 ----------------------- ------------ Sub-total 11,449 10,493 9.1% 11,802 Securities (Impairment) Gains (7,180) 0 n/m (14) Debt Extinguishment Loss 0 0 n/m 0 ----------------------- ------------ Total Noninterest Income $4,269 $10,493 -59.3% $11,788 ======================= ============

Total Revenue (FTE) $58,856 $65,251 -9.8% $66,316 Noninterest Income/Revenue 7.3% 16.1% 17.8% Service Charges/Deposits (a) 0.74% 0.74% 0.82% Total Revenues Per Share (a) $7.37 $7.96 -7.4% $8.32

% 12/31'04YTD 12/31'03YTD Change --------------------------------

Service Charges on Deposits $28,621 $26,381 8.5% Merchant Credit Card Income 3,509 3,619 -3.0% ATM Fees & Interchange 2,487 2,378 4.6% Debit Card Fees 2,541 2,125 19.6% Financial Services Fees 1,250 893 40.0% Mortgage Banking Income 386 851 -54.6% Trust Fees 1,027 995 3.2% Other Income 5,977 5,397 10.7% ------------------------- Sub-total 45,798 42,639 7.4% Securities (Impairment) Gains (5,011) 2,443 n/m Debt Extinguishment Loss (2,204) (2,166) 1.8% ------------------------- Total Noninterest Income $38,583 $42,916 -10.1% =========================

Total Revenue (FTE) $256,576 $260,323 -1.4% Noninterest Income/Revenue 15.0% 16.5% Service Charges/Deposits (a) 0.80% 0.77% Total Revenues Per Share (a) $8.06 $7.92 1.7%

(a) Annualized

7. Noninterest Expense. (dollars in thousands)

% Q4'04 Q4'03 Change Q3'04 -------------------------------------------

Salaries & Benefits $12,595 $13,183 -4.5% $13,054 Occupancy 3,022 3,037 -0.5% 3,022 Equipment 1,259 1,290 -2.4% 1,101 Data Processing 1,494 1,523 -1.9% 1,525 Courier 910 900 1.1% 923 Postage 361 422 -14.5% 288 Telephone 476 530 -10.2% 529 Professional Fees 537 486 10.5% 411 Stationery & Supplies 351 344 2.0% 333 Loan Expense 237 326 -27.3% 289 Merchant Card Expense 270 207 30.4% 292 Operational Losses 217 297 -26.9% 265 Amortization of Core Deposit Intangibles 136 165 -17.6% 136 Other Operating 2,412 2,448 -1.5% 2,323 ------------------------ ------------ Total Noninterest Expense $24,277 $25,158 -3.5% $24,491 ======================== ============

FTE Staff 960 1,007 -4.7% 980

Average Assets per FTE Staff $4,848 $4,420 9.7% $4,651 Revenues per FTE Staff (a) $244 $257 -5.1% $269 Noninterest Expense/ Earning Assets (a) 2.22% 2.41% 2.29% Noninterest Expense/Revenues 41.2% 38.6% 36.9%

% 12/31'04YTD 12/31'03YTD Change -------------------------------

Salaries & Benefits $52,507 $53,974 -2.7% Occupancy 11,935 12,152 -1.8% Equipment 4,794 5,364 -10.6% Data Processing 6,057 6,121 -1.0% Courier 3,605 3,695 -2.4% Postage 1,407 1,624 -13.4% Telephone 2,112 1,898 11.3% Professional Fees 1,869 1,886 -0.9% Stationery & Supplies 1,280 1,301 -1.6% Loan Expense 1,077 1,322 -18.5% Merchant Card Expense 1,104 1,183 -6.7% Operational Losses 964 936 3.0% Amortization of Core Deposit Intangibles 543 743 -26.9% Other Operating 9,497 9,504 -0.1% ------------------------ Total Noninterest Expense $98,751 $101,703 -2.9% ========================

FTE Staff 984 1,026 -4.1%

Average Assets per FTE Staff $4,610 $4,223 9.2% Revenues per FTE Staff (a) $261 $254 2.8% Noninterest Expense/ Earning Assets 2.33% 2.52% Noninterest Expense/Revenues 38.5% 39.1%

(a) Annualized

8. Loan Loss Provision. (dollars in thousands)

% Q4'04 Q4'03 Change Q3'04 -------------------------------------------

Loan Loss Provision $600 $750 -20.0% $600 Gross Loan Losses 1,596 1,542 3.5% 1,115 Net Loan Losses 836 1,020 -18.0% 161 Recoveries/Gross Losses 48% 34% 86% Average Total Loans $2,235,375 $2,285,717 -2.2% $2,247,664 Net Loan Losses/Loans (a) 0.15% 0.18% 0.03% Loan Loss Provision/Loans (a) 0.11% 0.13% 0.11% Loan Loss Provision/ Net Loan Losses 71.8% 73.5% 372.7%

% 12/31'04YTD 12/31'03YTD Change -------------------------------

Loan Loss Provision $2,700 $3,300 -18.2% Gross Loan Losses 5,593 6,833 -18.1% Net Loan Losses 2,458 3,617 -32.0% Recoveries/Gross Losses 56% 47% Average Total Loans $2,258,482 $2,354,270 -4.1% Net Loan Losses/Loans (a) 0.11% 0.15% Loan Loss Provision/Loans (a) 0.12% 0.14% Loan Loss Provision/ Net Loan Losses 109.8% 91.2%

(a) Annualized

9. Credit Quality. (dollars in thousands)

% 12/31/04 12/31/03 Change 9/30/04 -------------------------------------------

Nonaccrual Loans: Nonperforming $2,970 $5,759 -48.4% $3,996 Performing 4,071 1,658 145.5% 2,777 ------------------------ ------------ Total Nonaccrual Loans 7,041 7,417 -5.1% 6,773 Past Due Accruing Loans 10 199 -95.0% 182 ------------------------ ------------ Total Nonperforming Loans 7,051 7,616 -7.4% 6,955 Repossessed Collateral 0 90 n/m 0 ------------------------ ------------ Total Nonperforming Loans & Repossessed Collateral $7,051 $7,706 -8.5% $6,955 ======================== ============

Classified Loans $19,225 $23,460 -18.1% $20,868 ======================== ============

Allowance for Loan Losses $54,152 $53,910 0.4% $54,388 Total Loans Outstanding 2,300,230 2,323,330 -1.0% 2,301,991 Total Assets 4,737,268 4,576,385 3.5% 4,636,071

Allowance for Loan Losses/ Total Loans 2.35% 2.32% 2.36% Nonperforming Loans/ Total Loans 0.31% 0.33% 0.30% Nonperforming Loans & Repossessed Assets/Total Assets 0.15% 0.17% 0.15% Allowance for Loan Losses/ Nonperforming Loans 768% 708% 782% Allowance for Loan Losses/ Classified Loans 282% 230% 261% Classified Loans/ (Equity + Allowance for Loan Losses) 4.7% 6.0% 5.1%

10. Capital. (dollars in thousands, except per-share amounts)

% 12/31/04 12/31/03 Change 9/30/04 -------------------------------------------

Shareholders' Equity $358,609 $340,371 5.4% $351,924 Tier I Regulatory Capital 327,070 304,734 7.3% 321,700 Total Regulatory Capital 367,333 342,627 7.2% 361,868

Total Assets 4,737,268 4,576,385 3.5% 4,636,071 Risk-Adjusted Assets 2,948,797 3,007,545 -2.0% 2,964,945

Shareholders' Equity/ Total Assets 7.57% 7.44% 7.59% Shareholders' Equity/ Total Loans 15.59% 14.65% 15.29% Tier I Capital/Total Assets 6.90% 6.66% 6.94% Tier I Capital/ Risk-Adjusted Assets 11.09% 10.13% 10.85% Total Capital/ Risk-Adjusted Assets 12.46% 11.39% 12.20% Shares Outstanding 31,640 32,287 -2.0% 31,716 Book Value Per Share ($) $11.33 $10.54 7.5% $11.10 Market Value Per Share ($) $58.31 $49.78 17.1% $54.89

Share Repurchase Programs (shares in thousands)

% Q4'04 Q4'03 Change Q3'04 -------------------------------------------

Total Shares Repurchased 242 530 -54.3% 92 Average Repurchase Price $58.85 $50.80 15.8% $51.95 Net Shares Repurchased 76 436 n/m 68

% 12/31'04YTD 12/31'03YTD Change -------------------------------

Total Shares Repurchased 1,062 1,570 -32.4% Average Repurchase Price $52.00 $44.97 15.6% Net Shares Repurchased 647 1,124 -42.4%

11. Period-End Balance Sheets. (dollars in thousands)

% 12/31/04 12/31/03 Change 9/30/04 ------------------------------------------- Assets: Cash $126,687 $190,162 -33.4% $165,811

Investment Securities: Available For Sale 931,710 1,413,911 -34.1% 967,266 Held to Maturity 1,260,832 535,377 135.5% 1,080,392

Loans, gross 2,300,230 2,323,330 -1.0% 2,301,991 Allowance For Loan Losses (54,152) (53,910) 0.4% (54,388) ------------------------ ------------ Loans, net 2,246,078 2,269,420 -1.0% 2,247,603 ------------------------ ------------

Premises and Equipment 35,223 35,748 -1.5% 35,267 Core Deposit Intangibles 2,894 3,438 -15.8% 3,030 Goodwill 18,996 18,996 0.0% 18,996 Interest Receivable and Other 114,848 109,333 5.0% 117,706 ------------------------ ------------

Total Assets $4,737,268 $4,576,385 3.5% $4,636,071 ======================== ============

Liabilities and Shareholders' Equity: Deposits: Noninterest Bearing $1,273,825 $1,240,379 2.7% $1,323,446 Interest-Bearing Transaction 591,593 561,696 5.3% 561,206 Savings 1,091,981 1,058,082 3.2% 1,119,356 Time 626,220 603,834 3.7% 641,798 ------------------------ ------------ Total Deposits 3,583,619 3,463,991 3.5% 3,645,806 ------------------------ ------------

Short-Term Borrowed Funds 735,423 590,646 24.5% 578,285 FHLB Debt 0 105,000 n/m 0 Debt Financing and Notes 21,429 24,643 -13.0% 21,429 Interest Payable and Other 38,188 51,734 -26.2% 38,627 ------------------------ ------------ Total Liabilities 4,378,659 4,236,014 3.4% 4,284,147 ------------------------ ------------

Shareholders' Equity: Paid-In Capital 229,975 220,285 4.4% 224,489 Unrealized (Loss) Gain on Securities Available For Sale 9,638 13,191 -26.9% 8,185 Retained Earnings 118,996 106,895 11.3% 119,250 ------------------------ ------------ Total Shareholders' Equity 358,609 340,371 5.4% 351,924 ------------------------ ------------

Total Liabilities and Shareholders' Equity $4,737,268 $4,576,385 3.5% $4,636,071 ======================== ============

12. Income Statements. (dollars in thousands)

% Q4'04 Q4'03 Change Q3'04 ------------------------------------------- Interest Income: Loans $32,889 $35,434 -7.2% $32,912 Money Market assets 1 2 n/m 0 Investment Securities: Available for Sale 10,096 14,164 -28.7% 10,721 Held to Maturity 11,764 5,211 125.8% 10,271 ------------------------ ------------ Total Interest Income 54,750 54,811 -0.1% 53,904 ------------------------ ------------

Interest Expense: Transaction Deposits 213 129 65.1% 164 Savings Deposits 874 1,381 -36.7% 954 Time Deposits 2,562 2,112 21.3% 2,135 Short-Term Borrowed Funds 1,988 856 132.2% 1,473 FHLB Debt 0 979 n/m 0 Debt Financing and Notes 316 306 3.3% 316 ------------------------ ------------ Total Interest Expense 5,953 5,763 3.3% 5,042 ------------------------ ------------

Net Interest Income 48,797 49,048 -0.5% 48,862 ------------------------ ------------

Provision for Loan Losses 600 750 -20.0% 600 ------------------------ ------------

Noninterest Income: Service Charges 6,928 6,572 5.4% 7,465 Merchant Credit Card 875 864 1.3% 899 Financial Services 294 227 29.5% 409 Mortgage Banking 82 139 -41.0% 41 Trust Fees 254 235 8.1% 265 Securities (Impairment) Gains (7,180) 0 n/m (14) Debt Extinguishment Loss 0 0 n/m 0 Other 3,016 2,456 22.8% 2,723 ------------------------ ------------ Total Noninterest Income 4,269 10,493 -59.3% 11,788 ------------------------ ------------

Noninterest Expense: Salaries and Benefits 12,595 13,183 -4.5% 13,054 Occupancy 3,022 3,037 -0.5% 3,022 Equipment 1,259 1,290 -2.4% 1,101 Data Processing 1,494 1,523 -1.9% 1,525 Professional Fees 537 486 10.5% 411 Other 5,370 5,639 -4.8% 5,378 ------------------------ ------------ Total Noninterest Expense 24,277 25,158 -3.5% 24,491 ------------------------ ------------

Income Before Income Taxes 28,189 33,633 -16.2% 35,559 Provision for Income Taxes 7,024 9,325 -24.7% 10,464 ------------------------ ------------ Net Income $21,165 $24,308 -12.9% $25,095 ======================== ============

Average Shares Outstanding 31,761 32,523 -2.3% 31,713 Diluted Shares Outstanding 32,487 33,154 -2.0% 32,352

Per Share Data: Basic Earnings $0.67 $0.75 -10.8% $0.79 Diluted Earnings 0.65 0.73 -11.1% 0.78 Dividends Paid 0.28 0.26 7.7% 0.28

% 12/31'04YTD 12/31'03YTD Change ------------------------------- Interest Income: Loans $133,226 $152,758 -12.8% Money Market assets 1 8 -87.5% Investment Securities: Available for Sale 47,745 50,948 -6.3% Held to Maturity 35,365 19,779 78.8% ------------------------ Total Interest Income 216,337 223,493 -3.2% ------------------------

Interest Expense: Transaction Deposits 612 727 -15.8% Savings Deposits 3,931 6,091 -35.5% Time Deposits 8,504 10,167 -16.4% Short-Term Borrowed Funds 5,878 3,415 72.1% FHLB Debt 897 5,318 -83.1% Debt Financing and Notes 1,284 1,479 -13.2% ------------------------ Total Interest Expense 21,106 27,197 -22.4% ------------------------

Net Interest Income 195,231 196,296 -0.5% ------------------------

Provision for Loan Losses 2,700 3,300 -18.2% ------------------------

Noninterest Income: Service Charges 28,621 26,381 8.5% Merchant Credit Card 3,509 3,619 -3.0% Financial Services 1,250 893 40.0% Mortgage Banking 386 851 -54.6% Trust Fees 1,027 995 3.2% Securities (Impairment) Gains (5,011) 2,443 n/m Debt Extinguishment Loss (2,204) (2,166) 1.8% Other 11,005 9,900 11.2% ------------------------ Total Noninterest Income 38,583 42,916 -10.1% ------------------------

Noninterest Expense: Salaries and Benefits 52,507 53,974 -2.7% Occupancy 11,935 12,152 -1.8% Equipment 4,794 5,364 -10.6% Data Processing 6,057 6,121 -1.0% Professional Fees 1,869 1,886 -0.9% Other 21,589 22,206 -2.8% ------------------------ Total Noninterest Expense 98,751 101,703 -2.9% ------------------------

Income Before Income Taxes 132,363 134,209 -1.4% Provision for Income Taxes 37,144 39,146 -5.1% ------------------------ Net Income $95,219 $95,063 0.2% ========================

Average Shares Outstanding 31,821 32,849 -3.1% Diluted Shares Outstanding 32,461 33,369 -2.7%

Per Share Data: Basic Earnings $2.99 $2.89 3.4% Diluted Earnings 2.93 2.85 3.0% Dividends Paid 1.10 1.00 10.0%

--30--MER/sf*

CONTACT: Westamerica Bancorporation Robert A. Thorson, 707-863-6840

KEYWORD: CALIFORNIA INDUSTRY KEYWORD: BANKING MERGERS/ACQ EARNINGS SOURCE: Westamerica Bancorporation

Copyright Business Wire 2005