Westamerica Bancorporation Reports Record $24.6 Million Quarterly Earnings

Business Wire, July 20, 2004

SAN RAFAEL, Calif. -- Westamerica Bancorporation (Nasdaq:WABC), parent company of Westamerica Bank, today reported record quarterly net income for the second quarter of 2004 of $24.6 million, or $0.76 diluted earnings per share, compared to net income of $24.3 million, or $0.74 diluted earnings per share, for the prior quarter, and $23.7 million, or $0.71 diluted earnings per share for the second quarter of 2003. Return on assets was 2.21 percent and return on equity was 31.1 percent for the second quarter of 2004. For the first six months of 2004, diluted earnings per share were $1.51 based on year-to-date net income of $49.0 million, while diluted earnings per share for the first six months of 2003 were $1.39 based on year-to-date net income of $46.7 million.

"New deposit service offerings as well as rising mutual fund and annuity sales have generated growing noninterest revenues. Second quarter 2004 noninterest income has risen $795 thousand, or 7.3 percent, from the prior quarter. Westamerica's low cost of funds at 0.44 percent and low efficiency ratio at 37.9 percent for the second quarter of 2004 remain hallmarks for the Company," said Chairman, President and CEO David Payne. "We are proud to be delivering consistent growth in diluted earnings per share, and 31 percent return on equity to our shareholders," Payne added.

Net interest income on a taxable equivalent basis was $54.3 million for the second quarter of 2004, essentially unchanged from $54.3 million for the second quarter of 2003. The second quarter 2004 net interest margin on a taxable equivalent basis was 5.21 percent, compared with 5.43 percent for the second quarter of 2003. The reduced net interest margin primarily resulted from earning asset yields declining more than the cost of funds.

The provision for loan losses was $750 thousand for the second quarter of 2004 unchanged from the prior quarter and down from $900 thousand for the second quarter of 2003. Net charge-offs for the second quarter of 2004 totaled $636 thousand, or 0.11 percent (annualized) of average loans compared to 0.15 percent (annualized) of average loans for the prior quarter and second quarter of 2003.

Noninterest income for the second quarter of 2004 was $11.7 million, compared to $10.9 million for the previous quarter and $11.0 million for the second quarter of 2003. The increase over both the prior quarter and second quarter of 2003 is attributable to increased service charges on deposit accounts, financial services fees, and debit card fees offset in part by lower mortgage banking income. Investment securities gains totaled $395 thousand, $1.8 million, and $277 thousand in the second quarter of 2004, first quarter of 2004, and second quarter of 2003, respectively. Losses on the extinguishment of FHLB advances totaled $390 thousand, $1.8 million, and none in the second quarter of 2004, first quarter of 2004, and second quarter of 2003, respectively. Other noninterest income for the first quarter of 2004 included gains on the sale of repossessed loan collateral totaling $223 thousand.

Noninterest expense for the second quarter of 2004 totaled $25.0 million, essentially unchanged from $25.0 million for the prior quarter, and down 1.9 percent from $25.5 million for the second quarter of 2003. Comparing the second quarter of 2004 to the prior quarter, lower personnel costs offset increased equipment expense and professional fees. Comparing the second quarter of 2004 to the second quarter of 2003, lower personnel, occupancy, and equipment expenses offset increased telephone expenses. The second quarter 2004 efficiency ratio (expenses divided by revenues) was 37.9 percent, compared to 38.2 percent for the prior quarter and 39.0 percent for the second quarter of 2003.

Non-performing loans and repossessed loan collateral at June 30, 2004 totaled $7.1 million, down from $7.5 million at March 31, 2004 and $9.1 million at June 30, 2003.

Shareholders' equity at June 30, 2004 was $330 million, down from $339 million at March 31, 2004. The decrease is primarily due to retained earnings, net of dividends paid, of $16 million, reduced by depreciation in the available for sale investment portfolio of $23 million, net of tax, and the net cost of share repurchases, totaling $2 million. The Company's equity-to-asset ratio was 7.2 percent at June 30, 2004.

Westamerica Bancorporation, through its wholly owned subsidiary Westamerica Bank, operates 87 branches throughout 22 Northern and Central California counties. At June 30, 2004, the Company's total assets and total loans outstanding were $4.6 billion and $2.3 billion, respectively.

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."