10-Q

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

þ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2009

or

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                      to                     .

Commission file number: 001-9383

WESTAMERICA BANCORPORATION

(Exact Name of Registrant as Specified in Its Charter)

CALIFORNIA	94-2156203
(State or Other Jurisdiction of	(I.R.S. Employer
Incorporation or Organization)	Identification No.)

1108 FIFTH AVENUE, SAN RAFAEL, CALIFORNIA 94901
(Address of Principal Executive Offices) (Zip Code)

Registrant’s Telephone Number, Including Area Code (707) 863-6000

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes o No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer þ	Accelerated filer o	Non-accelerated filer o	Smaller reporting company o
		(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No þ

Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date:

Title of Class	Shares outstanding as of April 29, 2009
Common Stock,	29,190,079
No Par Value

TABLE OF CONTENTS

	Page
Forward Looking Statements		3
PART I — FINANCIAL INFORMATION
Item 1 Financial Statements		4
Notes to Unaudited Condensed Consolidated Financial Statements		8
Financial Summary		17
Item 2 Management’s Discussion and Analysis of Financial Condition and Results of Operations		18
Item 3 Quantitative and Qualitative Disclosures about Market Risk		36
Item 4 Controls and Procedures		37
PART II — OTHER INFORMATION
Item 1 Legal Proceedings		37
Item 1A Risk Factors		37
Item 2 Unregistered Sales of Equity Securities and Use of Proceeds		37
Item 3 Defaults upon Senior Securities		38
Item 4 Submission of Matters to a Vote of Security Holders		38
Item 5 Other Information		38
Item 6 Exhibits		38
Signatures		39
Exhibit Index		40
Exhibit 3(b) - By-laws, as amended (composite copy)
Exhibit 31.1 - Certification of Chief Executive Officer pursuant to Securities Exchange Act Rule 13a-14(a)/15d-14(a)
Exhibit 31.2 - Certification of Chief Financial Officer pursuant to Securities Exchange Act Rule 13a-14(a)/15d-14(a)
Exhibit 32.1 - Certification of Chief Executive Officer Required by 18 U.S.C. Section 1350
Exhibit 32.2 - Certification of Chief Financial Officer Required by 18 U.S.C. Section 1350

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FORWARD-LOOKING STATEMENTS

This report on Form 10-Q 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. 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 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; (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 in this report. The reader is directed to the Company’s annual report on Form 10-K for the year ended December 31, 2008, for further discussion of factors which could affect the Company’s business and cause actual results to differ materially from those expressed in any forward-looking statement made in this report. The Company undertakes no obligation to update any forward-looking statements in this report.

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PART I — FINANCIAL INFORMATION

Item 1 Financial Statements

WESTAMERICA BANCORPORATION
CONSOLIDATED BALANCE SHEETS
(unaudited)

	At March 31,						At December 31,
	2009			2008			2008
	(In thousands)
Assets:
Cash and cash equivalents	$	149,053		$	139,621		$	138,883
Money market assets		513			336			341
Investment securities available for sale		436,343			477,686			288,454
Investment securities held to maturity, with market values of:
$920,513 at March 31, 2009		918,745
1,029,937 at March 31, 2008					1,016,613
950,210 at December 31, 2008								949,325
Non-covered loans		2,356,237			2,448,320			2,382,426
Allowance for loan losses		(43,803	)		(52,234	)		(44,470	)
Non-covered loans, net of allowance for loan losses		2,312,434			2,396,086			2,337,956
Covered loans		1,089,071			—			—
Total loans		3,401,505			2,396,086			2,337,956
Other real estate owned		4,756			954			3,505
Covered other real estate owned		13,391			—			—
Premises and equipment, net		26,729			28,031			27,351
Identifiable intangibles		41,630			17,571			15,208
Goodwill		121,699			121,719			121,699
Interest receivable and other assets		314,501			143,685			150,212
Total Assets	$	5,428,865		$	4,342,302		$	4,032,934
Liabilities:
Deposits:
Noninterest bearing	$	1,353,696		$	1,202,165		$	1,158,632
Interest bearing:
Transaction		730,153			542,468			525,153
Savings		968,411			749,471			745,496
Time		1,204,021			700,534			665,773
Total deposits		4,256,281			3,194,638			3,095,054
Short-term borrowed funds		441,418			635,264			457,275
Federal Home Loan Bank advances		86,772			—			—
Debt financing and Notes payable		26,598			36,736			26,631
Liability for interest, taxes and other expenses		81,128			76,555			44,122
Total Liabilities		4,892,197			3,943,193			3,623,082
Shareholders’ Equity:
Preferred stock		82,550			—			—
Common stock, authorized — 150,000 shares
Issued and outstanding:
28,874 at March 31, 2009		353,917
28,772 at March 31, 2008					336,545
28,880 at December 31, 2008								352,265
Deferred compensation		2,409			2,923			2,409
Accumulated other comprehensive income (loss)		2,274			(3,954	)		1,040
Retained earnings		95,518			63,595			54,138
Total Shareholders’ Equity		536,668			399,109			409,852
Total Liabilities and Shareholders’ Equity	$	5,428,865		$	4,342,302		$	4,032,934

See accompanying notes to unaudited condensed consolidated financial statements.

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WESTAMERICA BANCORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(unaudited)

	Three months ended
	March 31,
	2009		2008
	(In thousands,
	except per share data)
Interest Income:
Loans	$	45,095	$	38,732
Money market assets and funds sold		1		1
Investment securities available for sale
Taxable		1,867		3,112
Tax-exempt		1,872		2,690
Investment securities held to maturity
Taxable		4,790		5,183
Tax-exempt		5,560		5,676
Total Interest Income		59,185		55,394
Interest Expense:
Transaction deposits		205		452
Savings deposits		900		1,330
Time deposits		2,679		5,546
Short-term borrowed funds		495		4,922
Federal Home Loan Bank advances		131		—
Notes payable		423		578
Total Interest Expense		4,833		12,828
Net Interest Income		54,352		42,566
Provision for Loan Losses		1,800		600
Net Interest Income After Provision For Loan Losses		52,552		41,966
Noninterest Income:
Service charges on deposit accounts		8,422		7,296
Merchant credit card		2,432		2,580
Debit card		856		904
Trust fees		364		303
Financial services commissions		154		230
Other		2,896		2,367
FAS 141R gain		48,844		—
Gain on sale of Visa common stock		—		5,698
Total Noninterest Income		63,968		19,378
Noninterest Expense:
Salaries and related benefits		16,371		12,984
Occupancy		5,410		3,390
Outsourced data processing services		2,104		2,120
Amortization of identifiable intangibles		1,685		858
Furniture and equipment		1,222		921
Courier service		898		829
Professional fees		888		536
FDIC insurance assessments		157		95
Other		5,388		3,661
Visa litigation expense		—		(2,338	)
Total Noninterest Expense		34,123		23,056
Income Before Income Taxes		82,397		38,288
Provision for income taxes		29,572		11,510
Net Income		52,825		26,778
Preferred stock dividends and discount accretion		578		—
Net Income Applicable to Common Equity	$	52,247	$	26,778
Average Common Shares Outstanding		28,876		28,861
Diluted Average Common Shares Outstanding		29,105		29,210
Per Common Share Data:
Basic earnings	$	1.81	$	0.93
Diluted earnings		1.80		0.92
Dividends paid		0.36		0.34

See accompanying notes to unaudited condensed consolidated financial statements.

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WESTAMERICA BANCORPORATION
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY AND COMPREHENSIVE INCOME
(unaudited)

	Common								Accumulated
	Shares			Preferred		Common			Deferred			Comprehensive			Retained
	Outstanding			Stock		Stock			Compensation			Income(Loss)			Earnings			Total
	(In thousands)
Balance, December 31, 2007		29,018			—	$	334,211		$	2,990			($4,520	)	$	61,922		$	394,603
Comprehensive income
Net income for the period																26,778			26,778
Other comprehensive income, net of tax:
Net unrealized gain on securities available for sale													557						557
Post-retirement benefit transition obligation amortization													9						9
Total comprehensive income																			27,344
Exercise of stock options		176					6,528												6,528
Stock option tax benefits							224												224
Restricted stock activity							67			(67	)								0
Stock based compensation							336												336
Stock awarded to employees		2					127												127
Purchase and retirement of stock		(424	)				(4,948	)								(15,258	)		(20,206	)
Dividends																(9,847	)		(9,847	)
Balance, March 31, 2008		28,772			—	$	336,545		$	2,923			($3,954	)	$	63,595		$	399,109
Balance, December 31, 2008		28,880			—	$	352,265		$	2,409		$	1,040		$	54,138		$	409,852
Comprehensive income
Net income for the period																52,825			52,825
Other comprehensive income, net of tax:
Net unrealized gain on securities available for sale													1,225						1,225
Post-retirement benefit transition obligation amortization													9						9
Total comprehensive income																			54,059
Issuance of preferred stock and related warrants					82,519		1,207												83,726
Preferred stock dividends and discount accretion					31											(578	)		(547	)
Exercise of stock options		9					299												299
Stock option tax benefits							3												3
Stock based compensation							294												294
Stock awarded to employees		1					46												46
Purchase and retirement of stock		(16	)				(197	)								(470	)		(667	)
Dividends																(10,397	)		(10,397	)
Balance, March 31, 2009		28,874		$	82,550	$	353,917		$	2,409		$	2,274		$	95,518		$	536,668

See accompanying notes to unaudited condensed consolidated financial statements.

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WESTAMERICA BANCORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)

	For the three months
	ended March 31,
	2009			2008
	(In thousands)
Operating Activities:
Net income	$	52,825		$	26,778
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		592			2,273
Loan loss provision		1,800			600
Net amortization of deferred loan (fees) cost		(156	)		95
(Increase) decrease in interest income receivable		(5,865	)		25
FAS 141R gain		(48,844	)		—
Decrease (Increase) in other assets		27,928			(4,214	)
Increase in income taxes payable		27,654			10,910
Increase (decrease) in interest expense payable		623			(1,000	)
Increase in other liabilities		6,276			1,683
Stock option compensation expense		294			336
Stock option tax benefits		(3	)		(224	)
Gain on sale of Visa common stock		—			(5,698	)
Writedown of property and equipment		—			5
Originations of loans for resale		—			(877	)
Net proceeds from sale of loans originated for resale		—			887
Net gain on sale of property acquired in satisfaction of debt		(110	)		—
Writedown of property acquired in satisfaction of debt		65			—
Net Cash Provided by Operating Activities		63,079			31,579
Investing Activities:
Net repayments of loans		98,125			53,340
Purchases of investment securities available for sale		—			(3,836	)
Proceeds from maturity/calls of securities available for sale		24,964			60,390
Proceeds from maturity/calls of securities held to maturity		33,581			28,675
Purchases of FRB/FHLB* securities		—			(38	)
Proceeds from sale of FRB/FHLB* stock		—			11,287
Proceeds from sale of Visa common stock		—			5,698
Proceeds from sale of property acquired in satisfaction of debt		1,118			—
Purchases of property, plant and equipment		(102	)		(413	)
Net cash acquired from acquisitions		44,397			—
Net Cash Provided by Investing Activities		202,083			155,103
Financing Activities:
Net decrease in deposits		(71,307	)		(70,152	)
Net decrease in short-term borrowings		(256,616	)		(163,335	)
Repayments of notes payable and debt financing		(33	)		(37	)
Exercise of stock options		299			6,528
Proceeds from issuance of preferred stock		83,726
Stock option tax benefits		3			224
Repurchases/retirement of stock		(667	)		(20,206	)
Dividends paid		(10,397	)		(9,847	)
Net Cash Used in Financing Activities		(254,992	)		(256,825	)
Net Increase (Decrease) In Cash and Cash Equivalents		10,170			(70,143	)
Cash and Cash Equivalents at Beginning of Period		138,883			209,764
Cash and Cash Equivalents at End of Period	$	149,053		$	139,621
Supplemental Cash Flow Disclosures:
Loan collateral transferred to other real estate owned	$	15,716		$	341
Unrealized gain on securities available for sale, net		1,225			557
Interest paid for the period		5,954			13,828
Income tax payments for the period		1,400			600
Acquisitions:
Assets acquired	$	1,624,464			—
Liabilities assumed		1,575,620			—
Net		48,844			—

* Federal Reserve Bank/Federal Home Loan Bank (“FRB/FHLB”)

See accompanying notes to unaudited condensed consolidated financial statements.

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NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 1: Basis of Presentation

The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and pursuant to the rules and regulations of the Securities and Exchange Commission. The results of operations reflect interim adjustments, all of which are of a normal recurring nature and which, in the opinion of Management, are necessary for a fair presentation of the results for the interim periods presented. The interim results for the three months ended March 31, 2009 and 2008 are not necessarily indicative of the results expected for the full year. These unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements and accompanying notes as well as other information included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2008.

Note 2: Accounting Policies.

Certain accounting policies underlying the preparation of these financial statements require Management to make estimates and judgments. These estimates and judgments may significantly affect reported amounts of assets and liabilities, revenues and expenses, and disclosures of contingent assets and liabilities.

Management exercises judgment to estimate the appropriate level of the Allowance for Credit Losses, which is discussed in Note 1 to the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2008.

As described in Note 3 below, Westamerica Bank (“Bank”) acquired County Bank on February 6, 2009. The acquired assets and assumed liabilities of County Bank were measured at estimated fair values, as required by FASB statement No. 141 (revised 2007), Business Combination (“FAS 141R”). Management made significant estimates and exercised significant judgment in accounting for the acquisition of County Bank. Management judgmentally assigned risk ratings to loans. The assigned risk ratings, appraised collateral values, expected cash flows, and statistically derived loss factors were used to measure fair values for loans. Repossessed loan collateral was primarily valued based upon appraised collateral values. Due to the loss sharing agreements with the Federal Deposit Insurance Corporation (“FDIC”), the Bank recorded a receivable from the FDIC equal to 80 percent of the loss estimates embedded in the fair values of loans and repossessed loan collateral. The Bank also recorded an identifiable intangible asset representing the value of the core deposit customer base of County Bank based on an appraisal performed by an independent third-party. In determining the value of the identifiable intangible asset, the third-party appraiser used significant estimates including average lives of depository accounts, future interest rate levels, the cost of servicing various depository products, and other significant estimates. Management used quoted market prices to determine the fair value of investment securities, FHLB advances and other borrowings which were purchased and assumed from County Bank.

Newly Adopted Accounting Policies

Purchased loans. Purchased loans acquired in a business combination are recorded at estimated fair value on their purchase date and prohibit the carryover of the related allowance for loan losses, which include loans purchased in the County Bank acquisition. Purchased loans are accounted for under American Institute of Certified Public Accountants (AICPA) Statement of Position 03-3, Accounting for Certain Loans or Debt Securities Acquired in a Transfer (SOP 03-3), when the loans have evidence of credit deterioration since origination and it is probable at the date of acquisition that the Company will not collect all contractually required principal and interest payments. Evidence of credit quality deterioration as of the purchase date may include statistics such as past due and nonaccural status. Generally, acquired loans that meet the Company’s definition for nonaccrual status fall within the scope of SOP 03-3. The difference between contractually required payments at acquisition and the cash flows expected to be collected at acquisition is referred to as the nonaccretable difference which is included in the carrying amount of the loans. Subsequent decreases to the expected cash flows will generally result in a provision for loan losses. Subsequent increases in cash flows result in a reversal of the provision for loan losses to the extent of prior charges, or a reversal of the nonaccretable difference with a positive impact on interest income. Further, any excess of cash flows expected at acquisition over the estimated fair value is referred to as the accretable yield and is recognized into interest income over the remaining life of the loan when there is a reasonable expectation about the amount and timing of such cash flows.

Covered loans. Loans covered under loss sharing or similar credit protection agreements with the FDIC are reported in loans exclusive of the expected reimbursement cash flows from the FDIC. Covered loans are initially recorded at fair value at the acquisition date. Subsequent decreases in the amount expected to be collected results in a provision for loan losses and a corresponding increase in the estimated FDIC reimbursement, with the estimated net loss impacting earnings.

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Covered Other Real Estate Owned. Other real estate owned covered under loss sharing agreements with the FDIC is reported exclusive of expected reimbursement cash flows from the FDIC. Fair value adjustments on covered other real estate owned result in a reduction of the covered other real estate carrying amount and a corresponding increase in the estimated FDIC reimbursement, with the estimated net loss charged against earnings.

Recently Adopted Accounting Pronouncements

In December 2007, the FASB issued FASB Statement No. 141 (revised 2007), Business Combinations (“FAS 141R”). This Statement replaces FASB Statement No. 141, Business Combinations. This Statement retains the fundamental requirements in Statement 141 that the acquisition method of accounting (which Statement 141 called the purchase method) be used for all business combinations and for an acquirer to be identified for each business combination. This Statement also retains the guidance in Statement 141 for identifying and recognizing intangible assets separately from goodwill. This Statement requires an acquirer to recognize the assets acquired, the liabilities assumed, and any noncontrolling interest in the acquiree at the acquisition date, measured at their fair values as of that date, with limited exceptions specified in the Statement. That replaces Statement 141’s cost-allocation process, which required the cost of an acquisition to be allocated to the individual assets acquired and liabilities assumed based on their estimated fair values. Statement 141 required the acquirer to include the costs incurred to effect the acquisition (acquisition-related costs) in the cost of the acquisition that was allocated to the assets acquired and the liabilities assumed. This Statement requires those costs to be recognized separately from the acquisition. In addition, in accordance with Statement 141, restructuring costs that the acquirer expected but was not obligated to incur were recognized as if they were a liability assumed at the acquisition date. This Statement requires the acquirer to recognize those costs separately from the business combination. This Statement applies prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008. The Company applied FAS 141R in accounting for the County Bank acquisition.

On January 1, 2009, the Company adopted FASB Statement No. 161, Disclosures about Derivative Instruments and Hedging Activities—an amendment of FASB Statement No. 133 (“FAS 161”). FAS 161 changes disclosure requirements for derivative instruments and hedging activities. The Statement requires enhanced disclosures about (a) how and why derivative instruments are used, (b) how derivative and related hedged items are accounted for under Statement 133 and its related interpretations, and (c) how derivative instruments and related hedged items affect financial position, financial performance, and cash flows. The Company had no derivative instruments designated as hedges as of March 31, 2009.

On January 1, 2009, the Company adopted the provisions of FASB Staff Position (FSP) No. FAS 157-2 relating to the requirements that pertain to nonfinancial assets and nonfinancial liabilities covered by FAS 157, Fair Value Measurements. The adoption of the FSP did not have any effect on the Company’s financial statement at the date of adoption. For additional information, See Note 4.

Recently Issued Accounting Pronouncements

On April 9, 2009, the FASB issued FASB Staff Position (FSP) FAS 115-2 and FAS 124-2, Recognition and Presentation of Other-Than-Temporary Impairments, which amends the other-than-temporary impairment guidance for debt securities to make the guidance more operational and to improve the presentation and disclosure of other-than-temporary impairments on debt and equity securities in the financial statements. The FSP does not amend existing recognition and measurement guidance related to other-than-temporary impairments of equity securities.

On April 9, 2009, the FASB issued Staff Position (FSP) FAS 157-4, Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly, which provides additional guidance for estimating fair value in accordance with FASB Statement No. 157, Fair Value Measurements, when the volume and level of activity for the asset or liability have significantly decreased. This FSP also includes guidance on identifying circumstances that indicate a transaction is not orderly.

FSP FAS 115-2, FAS 124-2 and FSP FAS 157-4 are effective for interim and annual periods ending after June 15, 2009, with early adoption permitted if both Staff Positions are adopted simultaneously. The Company will adopt both FSPs on June 30, 2009, and does not expect the adoption to have any significant effect on the Company’s financial statements.

On April 9, 2009, the FASB issued FSP, FAS 107-1 and APB 28-1, Interim Disclosures about Fair Value of Financial Instruments, which amends FASB Statement No. 107, Disclosures about Fair Value of Financial Instruments, to require disclosures about fair value of financial instruments for interim reporting periods of publicly traded companies as well as in annual financial statements. This FSP also amends APB Opinion No. 28, Interim Financial Reporting, to require those disclosures in summarized financial information at interim reporting periods. This FSP is effective for interim and annual periods ending after June 15, 2009, with early adoption permitted if FSP FAS 115-2, FAS 124-2 and FSP FAS 157-4 are also early adopted. The Company will adopt both FSPs on June 30, 2009 and does not expect the adoption to have any effect on the Company’s financial statements.

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Note 3: Federally Assisted Acquisition of County Bank

On February 6, 2009, Westamerica Bank purchased substantially all the assets and assumed substantially all the liabilities of County Bank from the Federal Deposit Insurance Corporation (“FDIC”), as Receiver of County Bank. County Bank operated 39 commercial banking branches primarily within California’s central valley region between Sacramento and Fresno. The FDIC took County Bank under receivership upon County Bank’s closure by the California Department of Financial Institutions at the close of business February 6, 2009. Westamerica Bank submitted a bid for the acquisition of County Bank with the FDIC on February 3, 2009. The FDIC approved Westamerica Bank’s bid upon reviewing three competing bids and determining Westamerica Bank’s bid would be the least costly to the Deposit Insurance Fund. Westamerica Bank’s bid included the purchase of substantially all County Bank assets at a cost of assuming all County Bank deposits and certain other liabilities. No cash or other consideration was paid by Westamerica Bank. Further, Westamerica Bank and the FDIC entered loss sharing agreements regarding future losses incurred on loans and foreclosed loan collateral existing at February 6, 2009. Under the terms of the loss sharing agreements, the FDIC will absorb 80 percent of losses and share in 80 percent of loss recoveries on the first $269 million of losses, and absorb 95 percent of losses and share in 95 percent of loss recoveries on losses exceeding $269 million. The term for loss sharing on residential real estate loans is ten years, while the term for loss sharing on non-residential real estate loans is three years in respect to losses and five years in respect to loss recoveries. As a result of the loss sharing agreements with the FDIC, the Company has recorded a receivable of $129 million.

The County Bank acquisition was accounted for under the purchase method of accounting in accordance with FAS 141R. The statement of net assets acquired as of February 6, 2009 and the resulting bargain purchase gain are presented in the following table. The purchased assets and assumed liabilities were recorded at their respective acquisition date fair values, and identifiable intangible assets were recorded at fair value. Fair values are preliminary and subject to refinement for up to one year after the closing date of a merger as information relative to closing date fair values becomes available. A “bargain purchase” gain totaling $48.8 million resulted from the acquisition and is included as a component of noninterest income on the statement of income. The amount of the gain is equal to the amount by which the fair value of assets purchased exceeded the fair value of liabilities assumed. The acquisition resulted in a gain due to County Bank’s impaired capital condition at the time of the acquisition. The operations of County Bank provided revenue of $11.5 million and net income of $1.2 million for the period of February 6, 2009 to March 31, 2009, and is included in the consolidated financial statements. County Bank’s results of operations prior to the acquisition are not included in Westamerica’s statement of income.

Statement of Net Assets Acquired (at fair value)

	At
	February 6, 2009
	(In thousands)
Assets
Cash and cash equivalents	$	44,668
Federal funds sold		12,760
Securities		173,839
Loans		1,174,353
Core deposit intangible		28,107
Other real estate owned		9,332
Other assets		181,405
Total Assets	$	1,624,464
Liabilities
Deposits		1,234,123
Federal funds purchased and securities sold under repurchase agreements		153,169
Other borrowed funds		187,252
Liabilities for interest and other expenses		1,076
Total Liabilities		1,575,620
Net assets acquired	$	48,844
County Bank tangible stockholder’s equity	$	58,623
Adjustments to reflect assets acquired and liabilities assumed at fair value:
Loans and leases, net		(150,326	)
Other real estate owned		(5,470	)
FDIC loss-sharing receivable (included in other assets)		128,962
Core deposit intangible		28,107
Deposits		(10,823	)
Securities sold under repurchase agreements		(2,061	)
Other borrowed funds		1,832
FAS 141R Gain	$	48,844

The pro forma consolidated condensed statements of income for Westamerica Bancorporation and County Bank for the quarters ended March 31, 2009 and 2008, and the year ended December 31, 2008 are presented below. The unaudited pro forma information presented does not necessarily reflect the results of operations that would have resulted had the acquisition been completed at the beginning of the applicable periods presented, nor does it indicate the results of operations in future periods.

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The pro forma purchase accounting adjustments related to loans and leases, deposits, securities sold under repurchase agreements and other borrowed funds are being accreted or amortized into income using methods that approximate a level yield over their respective estimated lives. Purchase accounting adjustments related to identifiable intangibles are being amortized and recorded as noninterest expense over their respective estimated lives using accelerated methods. The pro forma consolidated condensed statements of income do not reflect any adjustments to County’s historical provision for credit losses and goodwill impairment charges.

	Quarter ended March 31, 2009										Quarter ended March 31, 2008
						Proforma			Pro Forma						Proforma			Pro forma
	Westamerica		County Bank			Adjustments			Combined		Westamerica		County Bank		Adjustments			combined
Interest Income	$	52,885	$	20,606		$	(1,119	)	$	72,372	$	55,394	$	32,834	$	(1,119	)	$	87,109
Interest Expense		3,324		5,831			(3,225	)		5,930		12,828		12,604		(3,225	)		22,207
Net Interest Income		49,561		14,775			2,106			66,442		42,566		20,230		2,106			64,902
Provision for Credit Losses		1,800		11,734			—			13,534		600		1,407		—			2,007
Net Interest Income after Provision for Credit Losses		47,761		3,041			2,106			52,908		41,966		18,823		2,106			62,895
Noninterest Income		13,404		6,234			48,844			68,482		19,378		4,607		48,844			72,829
Noninterest Expense		25,639		13,656			1,497			40,792		23,056		19,997		1,497			44,550
Income (Loss) Before Taxes		35,526		(4,381	)		49,453			80,598		38,288		3,433		49,453			91,174
Income Tax Provision (Benefit)		13,535		(1,842	)		20,795			32,488		11,510		816		20,795			33,121
Net Income (Loss)	$	21,991	$	(2,539	)	$	28,658		$	48,110	$	26,778	$	2,617	$	28,658		$	58,053
Net Income (Loss) Applicable to Common Equity	$	21,413	$	(2,539	)	$	28,658		$	47,532	$	26,778	$	2,617	$	28,658		$	58,053
Earnings (Loss) Per Common Share	$	0.74	$	(0.09	)	$	0.99		$	1.65	$	0.93	$	0.09	$	0.99		$	2.01
Diluted Earnings (Loss) Per Common Share		0.74		(0.09	)		0.98			1.63		0.92		0.09		0.98			1.99
Average Common Shares Outstanding		28,876										28,861
Diluted Average Common Shares Outstanding		29,105										29,210

	Year ended December 31, 2008
				County			Proforma			Pro Forma
	Westamerica			Bank			Adjustments			Combined
Interest Income	$	208,469		$	117,175		$	(4,477	)	$	321,167
Interest Expense		33,243			40,462			(9,717	)		63,988
Net Interest Income		175,226			76,713			5,240			257,179
Provision for Credit Losses		2,700			55,370			—			58,070
Net Interest Income after Provision for Credit Losses		172,526			21,343			5,240			199,109
Noninterest (Loss) Income		(2,056	)		5,775			48,844			52,563
Noninterest Expense		100,761			115,774			5,989			222,524
Income (Loss) Before Taxes		69,709			(88,656	)		48,095			29,148
Income Tax Provision		9,874			7,381			20,224			37,479
Net Income (Loss)	$	59,835		$	(96,037	)	$	27,871		$	(8,331	)
Net Income (Loss) Applicable to Common Equity	$	59,835		$	(96,037	)	$	27,871		$	(8,331	)
Earnings (Loss) Per Common Share	$	2.07		$	(3.32	)	$	0.96		$	(0.29	)
Diluted Earnings (Loss) Per Common Share		2.04			(3.28	)		0.95			(0.28	)
Average Common Shares Outstanding		28,892
Diluted Average Common Shares Outstanding		29,273

Note 4: Fair Value Measurements

In accordance with FAS 157 the Company groups its assets and liabilities measured at fair value in three levels, based on the markets in which the assets and liabilities are traded and the reliability of the assumptions used to determine fair value. These levels are:

• Level 1 — Valuation is based upon quoted prices for identical instruments traded in active exchange markets, such as the New York Stock Exchange. Level 1 also includes U.S. Treasury and federal agency securities, which are traded by dealers or brokers in active markets. Valuations are obtained from readily available pricing sources for market transactions involving identical assets or liabilities.

• Level 2 — Valuation is based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market. Level 2 includes mortgage-backed securities, municipal bonds and collateralized mortgage obligations as well as other real estate owned and impaired loans collateralized by real property where the fair value is generally based upon independent market prices or appraised values of the collateral.

• Level 3 — Valuation is generated from model-based techniques that use significant assumptions not observable in the market. These unobservable assumptions reflect the Company’s estimates of assumptions that market participants would use in pricing the asset or liability. Valuation techniques include use of option pricing models, discounted cash flow models and similar techniques. Level 3 includes those impaired loans collateralized by other business assets where the expected cash flow has been used in determining the fair value.

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Assets Recorded at Fair Value on a Recurring Basis

The table below presents the balances of available for sale securities measured at fair value on a recurring basis.

At March 31, 2009
(In thousands)
Total	Level 1		Level 2		Level 3
$436,343	$	6,848	$	429,495	$	0

The amortized cost and estimated market value of the available for sale investment securities portfolio as of March 31, 2009 follows:

	At March 31, 2009
	Amortized		Estimated
	Cost		Market Value
	(In thousands)
U.S. Treasury securities	$	3,010	$	3,060
Securities of U.S. Government sponsored entities		1,018		1,090
Mortgage-backed securities		167,254		170,719
Obligations of States and political subdivisions		178,219		181,552
Collateralized mortgage obligations		68,776		68,275
Asset-backed securities		9,999		7,020
FHLMC and FNMA stock		824		930
Other securities		2,778		3,697
Total	$	431,878	$	436,343

The amortized cost and estimated market value of the held to maturity investment securities portfolio as of March 31, 2008 follows:

	At March 31, 2009
	(In thousands)
	Amortized		Estimated
	Cost		Market Value
Securities of U.S. Government sponsored entities	$	100,000	$	100,796
Mortgage-backed securities		79,699		80,938
Obligations of States and political subdivisions		543,872		550,181
Collateralized mortgage obligations		195,174		188,598
Total	$	918,745	$	920,513

Assets Recorded at Fair Value on a Non-Recurring Basis

The Company may be required, from time to time, to measure certain assets at fair value on a nonrecurring basis in accordance with GAAP. These adjustments to fair value usually result from application of lower-of-cost-or-market accounting or write-downs of individual assets. For assets measured at fair value on a nonrecurring basis that were still held in the balance sheet at quarter end, the following table provides the level of valuation assumptions used to determine each adjustment and the carrying value of the related individual assets or portfolios at quarter end.

	Fair Value
	March 31,
	2009		Level 1		Level 2		Level 3
	(In thousands)
Non-covered other real estate owned (1)	$	2,129	$	—	$	2,129	$	—
Non-covered Impaired loans (2)		4,289		—		3,833		456
Total assets measured at fair value on a non-recurring basis	$	6,418	$	—	$	5,962	$	456

(1)	Represents the fair value and related losses of foreclosed real estate owned that was measured at fair value subsequent to their initial classification as foreclosed assets.
(2)	Represents carrying value and related write-downs of loans for which adjustments are predominantly based on the appraised value of the collateral and loans considered impaired under FAS 114 where a specific reserve has been established.

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Note 5: Loans

A summary of the major categories of non-covered and covered loans outstanding is shown in the following tables:

	At
	March 31,			March 31,			December 31,
	2009			2008			2008
	(In thousands)
Non-covered loans:
Commercial	$	519,334		$	516,445		$	524,786
Commercial real estate		822,880			848,991			817,423
Construction		43,833			84,498			52,664
Residential real estate		445,220			473,525			458,447
Consumer installment & other		524,970			524,861			529,106
		2,356,237			2,448,320			2,382,426
Allowance for loan losses		(43,803	)		(52,234	)		(44,470	)
	$	2,312,434		$	2,396,086		$	2,337,956

The carrying amount of the covered loans at March 31, 2009, consisted of loans accounted for in accordance with SOP 03-3 (“SOP 03-3 loans”) and loans not subject to SOP 03-3 (“Non SOP 03-3 loans”) in the following table.

	SOP 03-3		Non SOP 03-3		Total Covered
	Loans		Loans		Loans
	(In thousands)
Covered loans:
Commercial	$	5,669	$	372,517	$	378,186
Commercial real estate		27,251		530,027		557,278
Construction		22,154		7,338		29,492
Residential real estate		141		6,292		6,433
Consumer installment & other		1,019		116,663		117,682
Total loans	$	56,234	$	1,032,837	$	1,089,071

The following table represents the Non SOP 03-3 loans receivable at the acquisition date of February 6, 2009. The amounts include principal only and do not reflect accrued interest as of the date of acquisition or beyond. (In thousands)

Gross contractual loan principal payment receivable	$	1,151,844
Estimate of contractual principal not expected to be collected		57,701
Fair value of Non SOP 03-3 loans receivable		1,108,605

The Company applied the cost recovery method to loans subject to SOP 03-3 at the acquisition date of February 6, 2009 due to the uncertainty as to the timing of expected cash flows as reflected in the following table. (In thousands)

Contractually required payments receivable (including interest)	$	210,561
Nonaccretable difference		(144,813	)
Cash flows expected to be collected		65,748
Accretable difference		—
Fair value of loans acquired	$	65,748

Changes in the carrying amount of loans subject to SOP 03-3 were as follows for the quarter ended March 31, 2009. (In thousands)

Carrying amount at the beginning of the period	$	—
Purchases (1)		65,748
Reductions during the period		(9,514	)
Carrying amount at the end of the period	$	56,234

(1) Represents the fair value of the loans at acquisition.

Acquired loans within the scope of SOP 03-3 had an unpaid principal balance (less prior charge-offs) of $164 million and $149 million at February 6, 2009 and March 31, 2009, respectively.

There were no loans held for sale at March 31, 2009, March 31, 2008 and December 31, 2008.

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Note 6: Goodwill and Other Identifiable Intangible Assets

The Company has recorded goodwill and other identifiable intangibles associated with purchase business combinations. Goodwill is not amortized, but is periodically evaluated for impairment. The Company did not recognize impairment during the three months ended March 31, 2009 and March 31, 2008. The changes in the carrying value of goodwill were (In thousands):

December 31, 2007	$	121,719
		—
March 31, 2008	$	121,719
December 31, 2008	$	121,699
		—
March 31, 2009	$	121,699

Identifiable intangibles are amortized to their estimated residual values over their expected useful lives. Such lives and residual values are also periodically reassessed to determine if any amortization period adjustments are indicated. During the three months ended March 31, 2009 and March 31, 2008, no such adjustments were recorded. The gross carrying amount of identifiable intangible assets and accumulated amortization was:

	March 31,
	2009					2008
	(In thousands)
	Gross					Gross
	Carrying		Accumulated			Carrying		Accumulated
	Amount		Amortization			Amount		Amortization
Core Deposit Intangibles	$	52,490	$	(14,842	)	$	24,383	$	(11,927	)
Merchant Draft Processing Intangible		10,300		(6,318	)		10,300		(5,185	)
Total Identifiable Intangible Assets	$	62,790	$	(21,160	)	$	34,683	$	(17,112	)

As of March 31, 2009, the current year and estimated future amortization expense for identifiable intangible assets was:

			Merchant
	Core		Draft
	Deposit		Processing
	Intangibles		Intangible		Total
Three months ended March 31, 2009 (actual)	$	1,416	$	269	$	1,685
(In thousands)
Estimate for year ended December 31,
2009		5,734		962		6,696
2010		5,534		774		6,308
2011		4,954		624		5,578
2012		4,497		500		4,997
2013		3,957		400		4,357
2014		3,621		324		3,945

Note 7: Post Retirement Benefits

The Company offers a continuation of group insurance coverage to qualifying employees electing early retirement, for the period from the date of retirement until age 65. For eligible employees the Company pays a portion of these early retirees’ insurance premiums. The Company reimburses a portion of Medicare Part B premiums for all qualifying retirees over age 65 and their qualified spouses. Eligibility for post-retirement medical benefits is based on age and years of service, and restricted to employees hired prior to February 1, 2006. The Company uses an actuarial-based accrual method of accounting for post-retirement benefits.

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The following table sets forth the net periodic post-retirement benefit costs:

	For the three months ended
	March 31,
	2009			2008
	(In thousands)
Service cost	$	(79	)	$	(100	)
Interest cost		55			66
Amortization of unrecognized transition obligation		15			15
Net periodic cost	$	(9	)	$	(19	)

The Company does not fund plan assets for any post-retirement benefit plans.

Note 8: Contingent Liabilities

Loan commitments are agreements to lend to a customer provided there is no violation of any condition established in the agreement. Commitments generally have fixed expiration dates or other termination clauses. Since many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future funding requirements. Loan commitments are subject to the Company’s normal credit policies and collateral requirements. Unfunded loan commitments were $433.2 million and $350.8 million at March 31, 2009 and December 31, 2008, respectively. Standby letters of credit commit the Company to make payments on behalf of customers when certain specified future events occur. Standby letters of credit are primarily issued to support customers’ short-term financing requirements and must meet the Company’s normal credit policies and collateral requirements. Standby letters of credit outstanding totaled $32.0 million and $29.0 million at March 31, 2009 and December 31, 2008, respectively. The Company also had commitments for commercial and similar letters of credit of $1.8 million and $1.7 million at March 31, 2009 and December 31, 2008, respectively.

During 2007, the Visa Inc. (“Visa”) organization of affiliated entities announced that it completed restructuring transactions in preparation for an initial public offering planned for early 2008, and, as part of those transactions, the Bank’s membership interest in Visa U.S.A. was exchanged for an equity interest in Visa Inc. In accordance with Visa’s by-laws, the Bank and other Visa U.S.A. member banks were obligated to share in Visa’s litigation obligations which existed at the time of the restructuring transactions. On November 7, 2007, Visa announced that it had reached a settlement with American Express related to an antitrust lawsuit. Visa has disclosed other antitrust lawsuits which existed at the time of the restructuring transactions. In consideration of the American Express settlement and other antitrust lawsuits filed against Visa, the Company recorded in the fourth quarter of 2007 a liability and corresponding expense of $2,338 thousand. In the first quarter 2008, Visa funded a litigation settlement escrow using proceeds from its initial public offering. Upon the escrow funding, the Company relieved its liability with a corresponding expense reversal in the amount of $2,338 thousand.

On October 27, 2008, Visa announced that it had reached a settlement with Discover Financial Services related to an antitrust lawsuit that existed at the time of Visa’s restructuring requiring the payment of the settlement to be funded from the litigation settlement escrow. On December 22, 2008, Visa announced that it had funded its litigation settlement escrow in an amount sufficient to meet such litigation obligation pursuant to Visa’s amended and restated Certificate of Incorporation approved by Visa’s shareholders on December 16, 2008. As such, the Company has not recorded a liability for this settlement.

Due to the nature of its business, the Company is subject to various threatened or filed legal cases. Based on the advice of legal counsel, the Company does not expect such cases will have a material, adverse effect on its financial position or results of operations.

- 15 -

Note 9: Shareholders’ Equity

On February 13, 2009, the Company issued to the United States Department of the Treasury (the “Treasury”) 83,726 shares of Series A Fixed Rate Cumulative Perpetual Preferred Stock (the “Series A Preferred Stock”), having a liquidation preference of $1,000 per share. The Series A Preferred Stock pays cumulative dividends at a rate of 5% per year for the first five years and thereafter at a rate of 9% per year. The Company may, at its option, subject to any necessary bank regulatory approval, redeem the Series A Preferred Stock at par value plus accrued and unpaid dividends. The Series A Preferred Stock is generally non-voting. Prior to February 13, 2012, unless the Company has redeemed the Series A Preferred Stock or the Treasury has transferred all of the Series A Preferred Stock to third parties, the consent of the Treasury will be required for the Company to declare or pay any dividends or make any distribution on its common stock, other than regular quarterly cash dividends not exceeding $0.35 or dividends payable only in shares of its common stock, or repurchase its common stock or other equity or capital securities, other than in connection with benefit plans consistent with past practice and certain other circumstances specified in the Securities Purchase Agreement with the Treasury. The Treasury, as part of the preferred stock issuance, received a warrant to purchase approximately 246,640 shares of the Company’s common stock at an initial exercise price of $50.92. The proceeds from Treasury were allocated based on the relative fair value of the warrant as compared with the fair value of the preferred stock. The fair value of the warrant was determined using a valuation model which incorporates assumptions including the Company’s common stock price, dividend yield, stock price volatility, the risk-free interest rate, and other assumptions. The Company allocated $1.2 million of the proceeds from the Series A Preferred Stock to the warrant. The discount on the preferred stock will be accreted to par value over a five-year term, which is the expected life of the preferred stock, and reported as a reduction to income applicable to common equity over that period.

Note 10: Earnings Per Common Share

The table below shows earnings per common share and diluted earnings per common share. Basic earnings per common share are computed by dividing net income applicable to common equity by the average number of common shares outstanding during the period. Diluted earnings per common share are computed by dividing net income applicable to common equity by the average number of common shares outstanding during the period plus the impact of common stock equivalents.

	For the three months
	ended March 31,
	2009		2008
	(In thousands, except per share data)
Weighted average number of common shares outstanding — basic		28,876		28,861
Add exercise of options reduced by the number of shares that could have been purchased with the proceeds of such exercise		229		349
Weighted average number of common shares outstanding — diluted		29,105		29,210
Net income applicable to common equity	$	52,247	$	26,778
Basic earnings per common share	$	1.81	$	0.93
Diluted earnings per common share		1.80		0.92

For the three months ended March 31, 2009, options and warrants to purchase 1.5 million and 246,640 shares of common stock, respectively, were outstanding but not included in the computation of diluted net income per share because the option exercise price exceeded the fair value of the stock such that their inclusion would have had an anti-dilutive effect. For the three months ended March 31, 2008, options to purchase 1.3 million shares were anti-dilutive.

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WESTAMERICA BANCORPORATION

FINANCIAL SUMMARY

	Three months ended
	March 31,			March 31,			December 31,
	2009			2008			2008
	(In thousands, except per share data)
Net Interest Income (FTE)**	$	59,359		$	47,982		$	49,850
Provision for Credit Losses		1,800			600			900
Noninterest Income:
Net gains (losses) from equity securities		—			5,698			(3,269	)
FAS 141R gain		48,844			—			—
Deposit service charges and other		15,124			13,680			13,177
Total Noninterest Income		63,968			19,378			9,908
Noninterest Expense:
Visa litigation		—			(2,338	)		—
Other		34,123			25,394			26,166
Total Noninterest Expense		34,123			23,056			26,166
Income before income taxes (FTE)**		87,404			43,704			32,692
Provision for income taxes (FTE)**		34,579			16,926			11,882
Net Income		52,825			26,778			20,810
Preferred stock dividends and discount accretion		578			—			—
Net Income Applicable to Common Equity	$	52,247		$	26,778		$	20,810
Average Common Shares Outstanding		28,876			28,861			28,884
Diluted Average Common Shares Outstanding		29,105			29,210			29,218
Common Shares Outstanding at Period End		28,874			28,772			28,880
As Reported:
Basic Earnings Per Common Share	$	1.81		$	0.93		$	0.72
Diluted Earnings Per Common Share		1.80			0.92			0.71
Return On Assets		4.24	%		2.43	%		2.04	%
Return On Common Equity		48.01	%		27.32	%		20.61	%
Net Interest Margin (FTE)**		5.35	%		4.79	%		5.44	%
Net Loan Losses to Average Non-Covered Loans		0.42	%		0.14	%		1.08	%
Efficiency Ratio*		27.7	%		34.2	%		43.8	%
Average Balances:
Total Assets	$	4,998,964		$	4,433,934		$	4,053,295
Earning Assets		4,475,371			4,028,221			3,654,966
Total Gross Loans		3,135,944			2,477,666			2,399,741
Total Deposits		3,862,435			3,212,347			3,115,989
Shareholders’ Equity		485,054			394,273			401,598
Balances at Period End:
Total Assets	$	5,428,865		$	4,342,302		$	4,032,934
Earning Assets		4,800,909			3,942,955			3,620,546
Total Gross Loans		3,445,308			2,448,320			2,382,426
Total Deposits		4,256,281			3,194,638			3,095,054
Shareholders’ Equity		536,668			399,109			409,852
Financial Ratios at Period End:
Allowance for Loan Losses to Non-Covered Loans		1.86	%		2.13	%		1.87	%
Book Value Per Common Share	$	15.73		$	13.87		$	14.19
Equity to Assets		9.89	%		9.19	%		10.16	%
Total Capital to Risk Adjusted Assets		11.38	%		11.04	%		11.76	%
Dividends Paid Per Common Share	$	0.36		$	0.34		$	0.35
Common Dividend Payout Ratio		20	%		37	%		49	%

The above financial summary has been derived from the Company’s unaudited consolidated financial statements. This information should be read in conjunction with those statements, notes and the other information included elsewhere herein. Percentages under the heading “As Reported” are annualized with the exception of the efficiency ratio.

*	The efficiency ratio is defined as noninterest expense divided by total revenue (net interest income on a tax-equivalent basis and noninterest income).
**	Yields on securities and certain loans have been adjusted upward to a “fully taxable equivalent” (“FTE”) basis in order to reflect the effect of income which is exempt from federal income taxation at the current statutory tax rate.

- 17 -

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Westamerica Bancorporation and subsidiaries (the “Company”) reported first quarter 2009 net income applicable to common equity of $52.2 million or $1.80 diluted earnings per common share. These results compare to net income applicable to common equity of $26.8 million or $0.92 diluted earnings per common share and $20.8 million or $0.71 diluted earnings per common share, respectively, for the first and fourth quarters of 2008. The first quarter of 2009 included a $48.8 million FAS 141R gain resulting from the acquisition of County Bank (“County”) which increased net income by $28.3 million and earnings per diluted common share by $0.98. The first quarter of 2008 included benefits from Visa’s initial public offering which increased net income by $4.7 million and earnings per diluted common share by $0.16. The fourth quarter of 2008 included a $3.3 million charge for “other than temporary impairment” securities losses which reduced net income by $1.9 million or earnings per diluted common share by $0.07.

Acquisition

On February 6, 2009, Westamerica Bank (“Bank”) acquired the banking operations of County from the Federal Deposit Insurance Corporation (“FDIC”). The Bank acquired approximately $1.62 billion of assets and assumed $1.56 billion of liabilities. The Bank and the FDIC entered loss sharing agreements regarding future losses incurred on loans and foreclosed loan collateral existing at February 6, 2009. Under the terms of the loss sharing agreements, the FDIC will absorb 80 percent of losses and share in 80 percent of loss recoveries on the first $269 million of losses, and absorb 95 percent of losses and share in 95 percent of loss recoveries on losses exceeding $269 million. The term for loss sharing on residential real estate loans is ten years, while the term for loss sharing on non-residential real estate loans is three years in respect to losses and five years in respect to loss recoveries. The County Bank acquisition was accounted for under the purchase method of accounting in accordance with FAS 141R. The Company recorded a FAS 141R gain totaling $48.8 million resulting from the acquisition, which is a component of noninterest income on the statement of income. The amount of the gain is equal to the amount by which the fair value of assets purchased exceeded the fair value of liabilities assumed. See Note 3 of the Notes to unaudited Consolidated Financial Statements for additional information regarding the acquisition.

Net Income

Following is a summary of the components of net income for the periods indicated:

	Three months ended
	March 31,			March 31,			December 31,
	2009			2008			2008
	(In thousands, except per share data)
Net interest income (FTE)	$	59,359		$	47,982		$	49,850
Provision for loan losses		(1,800	)		(600	)		(900	)
Noninterest income		63,968			19,378			9,908
Noninterest expense		(34,123	)		(23,056	)		(26,166	)
Provision for income taxes (FTE)		(34,579	)		(16,926	)		(11,882	)
Net income	$	52,825		$	26,778		$	20,810
Net income applicable to common equity	$	52,247		$	26,778		$	20,810
Average diluted common shares		29,105			29,210			29,218
Diluted earnings per common share	$	1.80		$	0.92		$	0.71
Average total assets	$	4,998,964		$	4,433,934		$	4,053,295
Net income (annualized) to average total assets		4.24	%		2.43	%		2.04	%
Net income (annualized) to average common stockholders’ equity		48.01	%		27.32	%		20.56	%

Net income applicable to common equity for the first quarter of 2009 was $25.5 million more than the same quarter of 2008, largely attributable to a FAS 141R gain of $48.8 million and higher net interest income (FTE), partially offset by higher provision for loan losses, higher noninterest expense and an increase in income tax provision (FTE). An $11.4 million or 23.7% increase in net interest income (FTE) was mostly attributed to growth in average balances of loans and lower rates paid on interest-bearing liabilities, partially offset by lower yields on loans and higher average balances of interest-bearing liabilities and lower average balances of investments. The provision for loan losses increased $1.2 million, reflecting Management’s assessment of credit risk and the appropriate level of the allowance for loan losses. Noninterest income rose $44.6 million mainly due to the FAS 141R gain and higher service charges on deposit accounts, partially offset by the $5.7 million securities gain in the first quarter of 2008. Noninterest expense increased $11.1 million mostly due to acquisition-related increases in salaries and related benefits, occupancy and equipment expenses, legal fees, loan expenses, higher amortization of intangibles and the reversal of a $2.3 million accrual for Visa related litigation in the first quarter of 2008. The provision for income taxes (FTE) increased $17.7 million primarily due to the FAS 141R gain and higher profitability.

- 18 -

Comparing the first quarter of 2009 to the prior quarter, net income applicable to common equity increased $31.4 million, due to the FAS 141R gain and higher net interest income (FTE), partially offset by increases in the provision for loan losses, noninterest expense and income tax provision (FTE). The higher net interest income (FTE) was mainly caused by higher average loans and lower rates paid on interest-bearing deposits, partially offset by lower yields on loans and higher average balances of interest-bearing liabilities. The provision for loan losses increased $900 thousand to reflect Management’s assessment of credit risk and the appropriate level of the allowance for loan losses. Noninterest income increased $54.1 million largely due to the FAS 141R gain, higher service charges on deposit accounts due to acquired deposits and the securities losses in the fourth quarter of 2008. The income tax provision (FTE) increased $22.7 million primarily due to the FAS 141R gain and higher profitability and the securities losses in the fourth quarter of 2008.

Net Interest Income

Following is a summary of the components of net interest income for the periods indicated:

	Three months ended
	March 31,			December 31,
	2009			2008			2008
	(In thousands)
Interest and fee income	$	59,185		$	55,394		$	49,445
Interest expense		(4,833	)		(12,828	)		(4,592	)
FTE adjustment		5,007			5,416			4,997
Net interest income (FTE)	$	59,359		$	47,982		$	49,850
Average earning assets	$	4,475,371		$	4,028,221		$	3,654,966
Net interest margin (FTE)		5.35	%		4.79	%		5.44	%

Net interest income (FTE) increased during the first quarter of 2009 by $11.4 million or 23.7% from the same period in 2008 to $59.4 million, mainly due to higher average balances of loans (up $658 million) and lower rates paid on interest-bearing liabilities (down 123 basis points (“bp”)), partially offset by lower yields on loans (down 51 bp) and higher average balances of interest-bearing liabilities (up $384 million) and lower average balances of investments (down $211 million).

Comparing the first three months of 2009 with the fourth quarter of 2008, net interest income (FTE) increased $9.5 million or 19.1%, primarily due to a higher volume of average loans (up $736 million) and lower rates paid on interest-bearing deposits (down 13 bp), partially offset by lower yields on loans (down 17 bp) and higher average balances of interest-bearing liabilities (up $730 million).

Interest and Fee Income

Interest and fee income (FTE) for the first quarter of 2009 increased $3.4 million or 5.6% from the same period in 2008. The increase was caused primarily by higher average balances of loans (up $658 million), partially offset by lower yields on loans (down 51 bp) and lower average balances of investments (down $211 million).

The growth in the average earning assets in the first quarter of 2009 compared with the same period in 2008 was substantially attributable to the acquisition of County loans from the FDIC. The average balance of such loans for the first quarter of 2009 was $762 million. The growth in average balances of loans were mainly due to increases in the average balance of commercial real estate loans (up $341 million), taxable commercial loans (up $303 million), and other consumer loans (up $70 million), partially offset by a $23 million decline in average tax-exempt commercial loans, a $21 million decline in average residential real estate loans and a $12 million decline in average construction loans. The average investment portfolio decreased $211 million largely due to declines in average balances of U.S. government sponsored entity obligations (down $135 million), a $24 million decline in municipal securities and a $62 million decline in average balances of FHLMC and FNMA stock resulting from the impairment charge in the second, third and fourth quarters of 2008, partially offset by increases in mortgage backed securities and collateralized mortgage obligations which were purchased from the FDIC as a part of the County acquisition. The average yield on the Company’s earning assets decreased from 6.06% in the first quarter 2008 to 5.79% in the corresponding period of 2009. The composite yield on loans fell 51 bp to 5.97% due to decreases in yields on taxable commercial loans (down 176 bp), commercial real estate loans (down 58 bp) and real estate construction loans (down 466 bp), partially offset by a 21 bp increase in yields on tax-exempt commercial loans. The investment portfolio yield decreased 2 bp to 5.38%, mainly due to a 489 bp decrease in the average yield on corporate and other securities which was affected primarily by suspended dividends on FLHMC and FNMA preferred stock. Offsetting the decline were increases in yields on U.S. government sponsored entity obligations (up 36 bp), mortgage backed securities and collateralized mortgage obligations (up 31 bp) and municipal securities (up 11 bp).

- 19 -

Comparing the first quarter of 2009 with the prior quarter of 2008, interest and fee income (FTE) was up $9.8 million or 17.9%. The increase largely resulted from a higher volume of average loans due to the County acquisition, partially offset by lower yields on loans. Average earning assets increased $820 million or 22.4% for the first quarter of 2009 compared with the previous quarter due to the County acquisition. A $736 million increase in the average balance of the loan portfolio was attributable to increases in average balances of commercial real estate loans (up $372 million), taxable commercial loans (up $288 million), consumer installment loans (up $70 million) and real estate construction loans (up $18 million), partially offset by a $7 million decrease in the average balance of tax-exempt commercial loans and a $5 million decrease in the average balance of residential real estate loans. Average investments rose by $84 million primarily due to County acquisition related growth in the average balances of mortgage backed securities and collateralized mortgage obligations (up $77 million), municipal securities (up $10 million), and corporate and other securities (up $4 million), partially offset by an $8 million decrease in the average balance of U.S. government sponsored entity obligations. The average yield on earning assets for the first three months of 2009 was 5.79% compared with 5.94% in the fourth quarter of 2008. The loan portfolio yield for the first three months of 2009 compared with the previous quarter was lower by 17 bp, due to decreases in yields on commercial real estate loans (down 53 bp), taxable commercial loans (down 46 bp), and real estate construction loans (down 68 bp), partially offset by consumer installment and other consumer loans (up 9 bp). The investment portfolio yield decreased by 16 bp. The decrease resulted mostly from lower yields on corporate and other securities (down 136 bp) and U.S. government sponsored entity obligations (down 13 bp), partially offset by higher yields on mortgage backed securities and collateralized mortgage obligations (up 27 bp) and municipal securities (up 4 bp).

Interest Expense

Interest expense in the first quarter of 2009 decreased $8.0 million compared with the same period in 2008. The decrease was attributable to lower rates paid on the interest-bearing liabilities and higher levels of shareholders’ equity, partially offset by higher average interest-bearing liabilities. The average rate paid on interest-bearing liabilities decreased from 1.85% in the first quarter of 2008 to 0.62% in the same quarter of 2009. Rates paid on most interest-bearing liabilities moved with general market conditions. Rates on interest-bearing deposits decreased 86 bp to 0.60% primarily due to decreases in rates paid on CDs over $100 thousand (down 243 bp) , CDs less than $100 thousand (down 164 bp) and preferred money market savings (down 145 bp). Rates on short-term borrowings also decreased 224 bp mostly due to lower rates on federal funds purchased (down 303 bp) and line of credit and repurchase facilities (down 198 bp). Average interest-bearing liabilities rose by $384 million or 13.9% for the first quarter of 2009 over the same period of 2008 primarily through acquisition. Interest-bearing deposits grew $564 million primarily due to increases in CDs less than $100 thousand (up $170 million), CDs over $100 thousand (up $164 million), money market checking accounts (up $121 million), regular savings (up $58 million) and money market savings (up $53 million). Offsetting the increase were decreases in average balances of short-term borrowings (down $169 million) and long-term debt (down $10 million). Average short-term borrowings decreased $169 million due to declines in average balances of federal funds purchased (down $251 million) and sweep accounts (down $22 million), partially offset by FHLB advances assumed through the County acquisition averaging $59 million and a $45 million increase in average balances of repurchase facilities.

Comparing the first quarter of 2009 with the fourth quarter of 2008, interest expense increased $241 thousand or 5.2%, due to higher average balances of interest-bearing liabilities, offset by lower rates paid and higher levels of shareholders’ equity. Average interest-bearing liabilities during the first quarter of 2009 rose by $730 million or 30.1% over the last quarter of 2008 mainly through the County acquisition. A $628 million growth in interest-bearing deposits was mostly attributable to increases in average balances of CDs over $100 thousand (up $185 million), CDs less than $100 thousand (up $174 million), money market checking accounts (up $134 million), money market savings (up $78 million) and regular savings (up $54 million). Short-term borrowings also increased, mainly the net result of higher average balances of repurchase agreements (up $63 million) and FHLB advances (up $59 million), partially offset by lower average balances of federal funds purchased (down $10 million) and sweep accounts (down $10 million). Rates paid on liabilities averaged 0.62% during the first three months of 2009 compared with 0.75% for the last three months of 2008. The average rate paid on interest-bearing deposits declined 13 bp to 0.60% in the first quarter 2009 mainly due to lower rates on CDs less than $100 thousand (down 59 bp), CDs over $100 thousand (down 49 bp) and preferred money market savings (down 32 bp). Rates on short-term borrowings were also lower by 6 bp largely due to federal funds (down 31 bp) and sweep accounts (down 10 bp).

- 20 -

Net Interest Margin (FTE)

The following summarizes the components of the Company’s net interest margin for the periods indicated:

	Three months ended
	March 31,			March 31,			December 31,
	2009			2008			2008
Yield on earning assets (FTE)		5.79	%		6.06	%		5.94	%
Rate paid on interest-bearing liabilities		0.62	%		1.85	%		0.75	%
Net interest spread (FTE)		5.17	%		4.21	%		5.19	%
Impact of all other net noninterest bearing funds		0.18	%		0.58	%		0.25	%
Net interest margin (FTE)		5.35	%		4.79	%		5.44	%

During the first quarter of 2009, the net interest margin (FTE) increased 56 bp compared with the same period in 2008. Rates paid on interest-bearing liabilities declined faster than yields on earning assets (FTE), resulting in a 96 bp increase in net interest spread. The increase in the net interest spread was partially reduced by the lower net interest margin contribution of noninterest bearing funding sources. The margin contribution of noninterest bearing funds decreased 40 bp because of the lower market rates of interest at which they could be invested. The net interest margin (FTE) in the first three months of 2009 declined by 9 bp compared with the fourth quarter of 2008. Earning asset yields decreased 15 bp while the cost of interest-bearing liabilities declined by 13 bp, resulting in a 2 bp decrease in the net interest spread. The 7 bp decrease in margin contribution from noninterest bearing funding sources lowered the net interest margin to 5.35%.

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- 21 -

Summary of Average Balances, Yields/Rates and Interest Differential

The following tables present, for the periods indicated, information regarding the Company’s consolidated average assets, liabilities and shareholders’ equity, the amount of interest income from average earning assets and the resulting yields, and the amount of interest expense paid on interest-bearing liabilities. Average loan balances include nonperforming loans. Interest income includes proceeds from loans on nonaccrual status only to the extent cash payments have been received and applied as interest income. Yields on securities and certain loans have been adjusted upward to reflect the effect of income which is exempt from federal income taxation at the current statutory tax rate (FTE).

	For the three months ended
	March 31, 2009
	(In thousands)
			Interest		Rates
	Average		Income/		Earned/
	Balance		Expense		Paid
Assets:
Money market assets and funds sold	$	878	$	1		0.46	%
Investment securities:
Available for sale
Taxable		229,304		1,867		3.26	%
Tax-exempt (1)		170,520		2,808		6.59	%
Held to maturity
Taxable		400,229		4,790		4.79	%
Tax-exempt (1)		538,496		8,539		6.34	%
Loans:
Commercial:
Taxable		612,454		8,848		5.86	%
Tax-exempt (1)		191,948		3,165		6.69	%
Commercial real estate		1,191,260		19,072		6.49	%
Real estate construction		80,830		772		3.87	%
Real estate residential		458,180		5,527		4.83	%
Consumer		601,272		8,803		5.94	%
Total loans (1)		3,135,944		46,187		5.97	%
Total earning assets (1)		4,475,371	$	64,192		5.79	%
Other assets		523,593
Total assets	$	4,998,964
Liabilities and shareholders’ equity
Deposits:
Noninterest bearing demand	$	1,286,013	$	—		—
Savings and interest-bearing transaction		1,545,154		1,105		0.29	%
Time less than $100,000		366,794		1,452		1.61	%
Time $100,000 or more		664,474		1,227		0.75	%
Total interest-bearing deposits		2,576,422		3,784		0.60	%
Short-term borrowed funds		552,645		626		0.46	%
Debt financing and notes payable		26,618		423		6.35	%
Total interest-bearing liabilities		3,155,685	$	4,833		0.62	%
Other liabilities		72,212
Shareholders’ equity		485,054
Total liabilities and shareholders’ equity	$	4,998,964
Net interest spread (1) (2)						5.17	%
Net interest income and interest margin (1) (3)			$	59,359		5.35	%

(1)	Interest and rates calculated on a fully taxable equivalent basis using the current statutory federal tax rate.
(2)	Net interest spread represents the average yield earned on earning assets minus the average rate paid on interest-bearing liabilities.
(3)	Net interest margin is computed by calculating the difference between interest income and expense (annualized), divided by the average balance of earning assets.

- 22 -

	For the three months ended
	March 31, 2008
	(In thousands)
			Interest		Rates
	Average		Income/		Earned/
	Balance		Expense		Paid
Assets:
Money market assets and funds sold	$	892	$	1		0.45	%
Investment securities:
Available for sale
Taxable		299,484		3,112		4.16	%
Tax-exempt (1)		218,733		3,962		7.25	%
Held to maturity
Taxable		471,183		5,183		4.40	%
Tax-exempt (1)		560,263		8,655		6.18	%
Loans:
Commercial:
Taxable		309,177		5,858		7.62	%
Tax-exempt (1)		215,145		3,465		6.48	%
Commercial real estate		850,504		14,953		7.07	%
Real estate construction		92,672		1,965		8.53	%
Real estate residential		478,929		5,757		4.81	%
Consumer		531,239		7,899		5.98	%
Total loans (1)		2,477,666		39,897		6.48	%
Total earning assets (1)		4,028,221	$	60,810		6.06	%
Other assets		405,713
Total assets	$	4,433,934
Liabilities and shareholders’ equity
Deposits:
Noninterest bearing demand	$	1,199,604	$	—		—
Savings and interest-bearing transaction		1,314,860		1,782		0.55	%
Time less than $100,000		196,947		1,589		3.25	%
Time $100,000 or more		500,936		3,957		3.18	%
Total interest-bearing deposits		2,012,743		7,328		1.46	%
Short-term borrowed funds		722,025		4,922		2.70	%
Debt financing and notes payable		36,758		578		6.29	%
Total interest-bearing liabilities		2,771,526	$	12,828		1.85	%
Other liabilities		68,531
Shareholders’ equity		394,273
Total liabilities and shareholders’ equity	$	4,433,934
Net interest spread (1) (2)						4.21	%
Net interest income and interest margin (1) (3)			$	47,982		4.79	%

(1)	Interest and rates calculated on a fully taxable equivalent basis using the current statutory federal tax rate.
(2)	Net interest spread represents the average yield earned on earning assets minus the average rate paid on interest-bearing liabilities.
(3)	Net interest margin is computed by calculating the difference between interest income and expense (annualized), divided by the average balance of earning assets.

- 23 -

	For the three months ended
	December 31, 2008
	(dollars in thousands)
			Interest		Rates
	Average		Income/		Earned/
	Balance		Expense		Paid
Assets:
Money market assets and funds sold	$	431	$	1		0.92	%
Investment securities:
Available for sale
Taxable		139,349		1,572		4.51	%
Tax-exempt (1)		160,145		2,727		6.81	%
Held to maturity
Taxable		411,401		4,556		4.43	%
Tax-exempt (1)		543,899		8,523		6.27	%
Loans:
Commercial:
Taxable		324,203		5,147		6.32	%
Tax-exempt (1)		199,022		3,256		6.51	%
Commercial real estate		819,645		14,471		7.02	%
Real estate construction		63,020		720		4.55	%
Real estate residential		462,743		5,662		4.89	%
Consumer		531,108		7,807		5.85	%
Total loans (1)		2,399,741		37,063		6.14	%
Total earning assets (1)		3,654,966	$	54,442		5.94	%
Other assets		398,329
Total assets	$	4,053,295
Liabilities and shareholders’ equity
Deposits:
Noninterest bearing demand	$	1,167,490	$	—		—
Savings and interest-bearing transaction		1,276,643		1,015		0.32	%
Time less than $100,000		192,649		1,065		2.20	%
Time $100,000 or more		479,207		1,491		1.24	%
Total interest-bearing deposits		1,948,499		3,571		0.73	%
Short-term borrowed funds		450,778		598		0.52	%
Debt financing and notes payable		26,651		423		6.34	%
Total interest-bearing liabilities		2,425,928	$	4,592		0.75	%
Other liabilities		58,279
Shareholders’ equity		401,598
Total liabilities and shareholders’ equity	$	4,053,295
Net interest spread (1) (2)						5.19	%
Net interest income and interest margin (1) (3)			$	49,850		5.44	%

(1)	Interest and rates calculated on a fully taxable equivalent basis using the current statutory federal tax rate.
(2)	Net interest spread represents the average yield earned on earning assets minus the average rate paid on interest-bearing liabilities.
(3)	Net interest margin is computed by calculating the difference between interest income and expense (annualized), divided by the average balance of earning assets.

- 24 -

Summary of Changes in Interest Income and Expense due to Changes in Average Asset & Liability Balances and Yields Earned & Rates Paid

The following tables set forth a summary of the changes in interest income and interest expense due to changes in average asset and liability balances (volume) and changes in average interest rates for the periods indicated. Changes not solely attributable to volume or rates have been allocated in proportion to the respective volume and rate components.

	Three months ended March 31, 2009
	compared with
	three months ended March 31, 2008
	(In thousands)
	Volume			Rate			Total
Interest and fee income:
Money market assets and funds sold	$	0		$	0		$	0
Investment securities:
Available for sale
Taxable		(658	)		(587	)		(1,245	)
Tax-exempt (1)		(827	)		(327	)		(1,154	)
Held to maturity
Taxable		(838	)		445			(393	)
Tax-exempt (1)		(372	)		256			(116	)
Loans:
Commercial:
Taxable		4,579			(1,589	)		2,990
Tax-exempt (1)		(411	)		111			(300	)
Commercial real estate		5,405			(1,286	)		4,119
Real estate construction		(234	)		(959	)		(1,193	)
Real estate residential		(254	)		24			(230	)
Consumer		959			(55	)		904
Total loans (1)		10,044			(3,754	)		6,290
Total increase (decrease) in interest and fee income (1)		7,349			(3,967	)		3,382
Interest expense:
Deposits:
Savings and interest-bearing transaction		258			(935	)		(677	)
Time less than $100,000		913			(1,050	)		(137	)
Time $100,000 or more		972			(3,702	)		(2,730	)
Total interest-bearing deposits		2,143			(5,687	)		(3,544	)
Short-term borrowed funds		(1,077	)		(3,219	)		(4,296	)
Debt financing and notes payable		(166	)		11			(155	)
Total increase (decrease) in interest expense		900			(8,895	)		(7,995	)
Increase in Net Interest Income (1)	$	6,449		$	4,928		$	11,377

(1) Amounts calculated on a fully taxable equivalent basis using the current statutory federal tax rate.

- 25 -

	Three months ended March 31, 2009
	compared with
	three months ended December 31, 2008
	(In thousands)
	Volume			Rate			Total
Interest and fee income:
Money market assets and funds sold	$	1		$	(1	)	$	0
Investment securities:
Available for sale
Taxable		800			(505	)		295
Tax-exempt (1)		155			(74	)		81
Held to maturity
Taxable		(190	)		424			234
Tax-exempt (1)		(135	)		151			16
Loans:
Commercial:
Taxable		4,088			(387	)		3,701
Tax-exempt (1)		(181	)		90			(91	)
Commercial real estate		5,735			(1,134	)		4,601
Real estate construction		166			(114	)		52
Real estate residential		(93	)		(42	)		(135	)
Consumer		875			121			996
Total loans (1)		10,590			(1,466	)		9,124
Total increase (decrease) in interest and fee income (1)		11,221			(1,471	)		9,750
Interest expense:
Deposits:
Savings and interest-bearing transaction		177			(87	)		90
Time less than $100,000		727			(340	)		387
Time $100,000 or more		429			(693	)		(264	)
Total interest-bearing deposits		1,333			(1,120	)		213
Short-term borrowed funds		172			(144	)		28
Debt financing and notes payable		(9	)		9			0
Total increase (decrease) in interest expense		1,496			(1,255	)		241
Increase (decrease) in Net Interest Income (1)	$	9,725		$	(216	)	$	9,509

(1) Amounts calculated on a fully taxable equivalent basis using the current statutory
federal tax rate.

Provision for Loan Losses

The Company manages credit costs by consistently enforcing conservative underwriting and administration procedures and aggressively pursuing collection efforts with troubled debtors. County loans purchased from the FDIC are “covered” by loss-sharing agreements the Company entered with the FDIC. Further, the Company recorded the purchased County loans at estimated fair value upon acquisition as of February 6, 2009. Due to the loss-sharing agreements and fair value recognition during the first quarter 2009, the Company did not record a provision for loan losses during the first quarter 2009 related to such loans covered by the FDIC loss-sharing agreements. The Company provided $1.8 million, $600 thousand and $900 thousand for loan losses on non-covered loans in the first quarter of 2009, the first quarter and the fourth quarter of 2008, respectively. The provision reflects Management’s assessment of credit risk and the appropriate level of the allowance for loan losses for each of the periods presented. For further information regarding credit risk, the FDIC loss-sharing agreements, net credit losses and the allowance for loan losses, see the “Classified Assets,” “Nonperforming Assets,” and “Allowance for Credit Losses” section of this report.

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Noninterest Income

The following table summarizes the components of noninterest income for the periods indicated.

	Three months ended
	At March 31,				At December 31,
	2009		2008		2008
	(In thousands)
Service charges on deposit accounts	$	8,422	$	7,296	$	7,383
Merchant credit card fees		2,432		2,580		2,623
Debit card fees		856		904		917
ATM fees and interchange		813		718		685
Other service fees		531		486		508
Trust fees		364		303		255
Check sale income		223		188		166
Financial services commissions		154		230		141
Official check issuance income		19		90		18
Mortgage banking income		17		40		19
Gain on sale of Visa common stock		—		5,698		—
FAS 141R gain		48,844		—		—
Net losses from equity securities		—		—		(3,269	)
Other noninterest income		1,293		845		462
Total	$	63,968	$	19,378	$	9,908

Noninterest income for the first quarter of 2009 rose by $44.6 million from the same period in 2008. The increase was mostly attributable to a $48.8 million FAS 141R gain and a $1.1 million increase in service charges on deposit accounts in the first quarter 2009, partially offset by a $5.7 million gain on sale of Visa common stock in the first quarter 2008. The County acquisition was accounted for under the purchase method of accounting in accordance with FAS 141R. The purchased assets and assumed liabilities were recorded at their respective acquisition date fair values, and identifiable intangible assets were recorded at fair value. The FAS 141R gain totaling $48.8 million resulted from the amount by which the fair value of assets purchased exceeded the fair value of liabilities assumed. Higher service charges on deposit accounts were generally attributable to the growth in deposit accounts through the County acquisition. Merchant credit card fees declined $148 thousand or 5.7% due to lower transaction volume.

In the first quarter of 2009, noninterest income increased $54.1 million compared with the previous quarter primarily due to the $48.8 million FAS 141R gain and increased service charges on deposit accounts (up $1.0 million) attributable to growth in deposit accounts through the County acquisition in the first quarter of 2009 and because noninterest income in the fourth quarter 2008 was reduced by a $3.3 million “other than temporary” impairment charge on FHLMC and FNMA preferred stock and other common stocks. ATM fees and interchange income increased $128 thousand or 18.7% mainly due to an increased customer base through the County acquisition. Trust income also increased $109 thousand largely due to trust accounts acquired from County. Merchant credit card income declined $191 thousand or 7.3% primarily due to seasonally higher credit card draft volumes in the fourth quarter 2008 and the impact of prevailing economic conditions on consumer spending.

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Noninterest Expense

The following table summarizes the components of noninterest expense for the periods indicated.

	At March 31,						At December 31,
	2009			2008			2008
	(In thousands)
Salaries and related benefits	$	16,371		$	12,984		$	12,823
Occupancy		5,410			3,390			3,405
Outsourced data processing services		2,104			2,120			2,117
Amortization of identifiable intangibles		1,685			858			788
Equipment		1,222			921			976
Loan expense		994			170			258
Courier service		898			829			835
Professional fees		888			536			920
Postage		462			383			346
Telephone		387			335			344
Stationery and supplies		367			279			334
In-house meetings		257			193			216
Correspondent Service Charges		256			170			135
Advertising/public relations		227			177			182
Operational losses		195			184			352
Customer checks		176			230			196
FDIC insurance assessments		157			95			159
Visa litigation expense		—			(2,338	)		—
Other noninterest expense		2,067			1,540			1,780
Total	$	34,123		$	23,056		$	26,166
Average full time equivalent staff		1,144			886			886
Noninterest expense to revenues (FTE)		27.67	%		34.23	%		43.79	%

Noninterest expense increased $11.1 million in the three months ended March 31, 2009 compared with the same period in 2008 mainly due to acquisition related incremental costs and the reversal of a $2.3 million accrual for Visa related litigation in the first quarter 2008. Salaries and related benefits increased $3.4 million or 26.1% primarily due to personnel costs related to the County acquisition. Occupancy expense increased $2.0 million mainly due to rent and maintenance costs for County’s branches. Amortization of deposit intangibles increased $827 thousand due to the County acquisition. Loan expense increased $824 thousand due to the County acquisition, including servicing fees on acquired factoring receivables. Professional fees increased $352 thousand generally due to higher legal fees for loans acquired from County, issuance of preferred stock and other professional fees. Equipment expense increased $301 thousand or 32.7% primarily due to the County acquisition. Other noninterest expense increased $527 thousand or 34.2% mainly due to increases in ATM network fees, OREO related expenses and higher amortization expenses of low-income housing investments as tax benefits are realized.

In the first quarter of 2009, noninterest expense rose by $8.0 million or 30.4% compared with the previous quarter mainly due to acquisition related incremental costs. Salaries and related benefits increased $3.5 million mostly due to the County acquisition. Occupancy expense increased $2.0 million mainly due to rent and maintenance costs for County’s facilities. Amortization of deposit intangibles increased $897 thousand due to the acquisition. Loan expense increased $736 thousand due to the County acquisition, including servicing fees on acquired factoring receivables acquired from County. Correspondent service charges increased $121 thousand. Postage increased $116 thousand mainly due to mailings related to the acquisition. Offsetting the increase was a $157 thousand decrease in operational losses.

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Provision for Income Tax

During the first quarter of 2009, the Company recorded income tax expense (FTE) of $34.6 million, compared with $16.9 million and $11.9 million for the first and fourth quarters of 2008, respectively. The current quarter provision represents an effective tax rate (FTE) of 39.6%, compared with 38.7% and 36.3% for the first and fourth quarters of 2008, respectively. The effective tax rate for the first quarter 2009 reflected higher pretax income as well as lower tax preference items when compared to the first quarter of 2008. The effective tax rate for the fourth quarter was reduced primarily due to a $3.3 million charge for “other than temporary impairment” securities losses on FHLMC and FNMA preferred stock and other common stock.

Classified Assets

The Company closely monitors the markets in which it conducts its lending operations and continues its strategy to control exposure to loans with high credit risk and to increase diversification of the loan portfolio. Loan reviews are performed using grading standards and criteria similar to those employed by bank regulatory agencies. Loans receiving lesser grades fall under the “classified” category, which includes all nonperforming and potential problem loans, and receive an elevated level of attention to ensure collection. Other real estate owned is recorded at the lower of cost or fair value less cost to sell.

On February 6, 2009, Westamerica Bank acquired substantially all the assets and assumed substantially all the liabilities of County from the FDIC, as Receiver of County. Westamerica Bank and the FDIC entered loss sharing agreements regarding future losses incurred on loans and foreclosed loan collateral existing at February 6, 2009. Under the terms of the loss sharing agreements, the FDIC will absorb 80 percent of losses and share in 80 percent of loss recoveries on the first $269 million of losses, and absorb 95 percent of losses and share in 95 percent of loss recoveries on losses exceeding $269 million. The term for loss sharing on residential real estate loans is ten years, while the term for loss sharing on non-residential real estate loans is three years in respect to losses and five years in respect to loss recoveries.

Loans and other real estate owned covered under the loss sharing agreement with the FDIC are referred to as “covered loans” and “covered other real estate,” respectively. Covered loans and covered other real estate were recorded at estimated fair value on February 6, 2009.

The following is a summary of classified loans and other real estate owned on the dates indicated:

	At March 31,						At December 31,
	2009			2008			2008
	(In thousands)
Non-covered classified loans	$	41,453		$	33,303		$	34,028
Non-covered other real estate owned		4,756			954			3,505
Non-covered classified loans and Other real estate owned	$	46,209		$	34,257		$	37,533
Allowance for loan losses / non-covered classified loans		106	%		157	%		131	%

	At March 31,
	2009
	(In thousands)
Covered classified loans	$	169,778
Covered other real estate owned		13,391
Covered classified loans and Other real estate owned	$	183,169

Classified loans include loans graded “Substandard”, “Doubtful” and “Loss” using regulatory guidelines. At March 31, 2009, $39.6 million of non-covered loans are graded “Substandard” or 95.6% of total non-covered classified loans. Such substandard loans accounted for 1.68% of total gross non-covered loans at March 31, 2009. Non-covered classified loans at March 31, 2009, increased $8.2 million or 24.5% from a year ago. The increase was primarily due to 10 loans totaling $10.7 million which were downgraded during the first quarter of 2009.

Non-covered other real estate owned at March 31, 2009 was $4.8 million compared with $954 thousand at March 31, 2008 and $3.5 million at December 31, 2008. Management aggressively pursues collection of all classified assets.

Covered classified loans and covered other real estate owned at March 31, 2009 were acquired from County and recorded at estimated fair values as of February 6, 2009.

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Nonperforming Loans

Nonperforming loans include nonaccrual loans and loans 90 or more days past due and still accruing. Loans are placed on nonaccrual status upon becoming delinquent 90 days or more, unless the loan is well secured and in the process of collection. Interest previously accrued on loans placed on nonaccrual status is charged against interest income. In addition, some loans secured by real estate with temporarily impaired values and commercial loans to borrowers experiencing financial difficulties are placed on nonaccrual status even though the borrowers continue to repay the loans as scheduled. Such loans are classified by Management as “performing nonaccrual” and are included in total nonaccrual loans. When the ability to fully collect nonaccrual loan principal is in doubt, payments received are applied against the principal balance of the loans until such time as full collection of the remaining recorded balance is expected. Any additional interest payments received after that time are recorded as interest income on a cash basis. Nonaccrual loans are reinstated to accrual status when improvements in credit quality eliminate the doubt as to the full collectibility of both interest and principal.

The following is a summary of non-covered nonperforming loans and non-covered OREO on the dates indicated:

	At March 31,						At December 31,
	2009			2008			2008
	(In thousands)
Non-covered nonperforming assets
Performing, nonaccrual loans	$	27		$	1,652		$	1,143
Nonperforming, nonaccrual loans		10,943			3,728			8,883
Total nonaccrual loans		10,970			5,380			10,026
Loans 90 days past due and still accruing		777			268			755
Total nonperforming loans		11,747			5,648			10,781
Other real estate owned		4,756			954			3,505
Total	$	16,503		$	6,602		$	14,286
As a percentage of total non-covered loans		0.70	%		0.28	%		0.61	%

Non-covered nonaccrual loans increased $944 thousand during the three months ended March 31, 2009. Twenty five loans comprised the $11.0 million nonaccrual loans as of March 31, 2009. Eleven of those loans were on nonaccrual status throughout the first three months of 2009, while the remaining fourteen loans were placed on nonaccrual status during the three months ended March 31, 2009. The Company actively pursues full collection of nonaccrual loans.

The following is a summary of covered nonperforming loans and covered OREO on the dates indicated:

	At March 31,
	2009
	(In thousands)
Covered nonperforming assets
Performing, nonaccrual loans	$	34,437
Nonperforming, nonaccrual loans		3,632
Total nonaccrual loans		38,069
Loans 90 days past due and still accruing		9,866
Total nonperforming loans		47,935
Covered other real estate owned		13,391
Total	$	61,326
As a percentage of total covered loans		5.63	%

The Company had no restructured loans as of March 31, 2009, December 31, 2008 and March 31, 2008.

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The Company’s residential real estate loan underwriting standards for first mortgages limit the loan amount to no more than 80 percent of the appraised value of the property serving as collateral for the loan at the time of origination, and require verification of income of the borrower(s). The Company had no “sub-prime” non-covered loans as of March 31, 2009, December 31, 2008 and March 31, 2008. Of the non-covered loans 90 days past due and still accruing at March 31, 2009, $-0- and $381 thousand were non-covered residential real estate loans and non-covered automobile loans, respectively. Delinquent consumer loans on accrual status were as follows:

	At March 31,						At December 31,
	2009			2008			2008
	(In thousands)
Non-covered residential real estate loans:
30-89 days delinquent:
Dollar amount	$	3,529		$	28		$	3,273
Percentage of total residential real estate loans		0.79	%		0.01	%		0.71	%
90 or more days delinquent:
Dollar amount	$	-0-		$	-0-		$	-0-
Percentage of total residential real estate loans		0.00	%		0.00	%		0.00	%
Non-covered automobile loans:
30-89 days delinquent:
Dollar amount	$	5,283		$	2,523		$	5,241
Percentage of total automobile loans		1.14	%		0.54	%		1.12	%
90 or more days delinquent:
Dollar amount	$	381		$	185		$	569
Percentage of total automobile loans		0.08	%		0.04	%		0.12	%

The amount of gross interest income that would have been recorded for nonaccrual loans for the three months ended March 31, 2009, if all such loans had been current in accordance with their original terms, was $767 thousand, compared to $105 thousand and $199 thousand, respectively, for the first and fourth quarters of 2008.

The amount of interest income that was recognized on nonaccrual loans from all cash payments, including those related to interest owed from prior years, made during the three months ended March 31, 2009, totaled $39 thousand, compared to $61 thousand and $199 thousand, respectively, for the first and fourth quarters of 2008. These cash payments represent annualized yields of 0.32% for the first three months of 2009 compared to 4.41% and 5.68%, respectively, for the first and the fourth quarters of 2008.

There were no cash payment received, which were applied against the book balance of nonaccrual loans outstanding at March 31, 2009, March 31, 2008 and December 31, 2008 in the first quarter 2009, the first quarter 2008 and the fourth quarter 2008, respectively.

Management believes the overall credit quality of the non-covered loan portfolio is stable; however, non-covered nonperforming assets could fluctuate from period to period. The performance of any individual loan can be affected by external factors such as the interest rate environment, economic conditions, collateral values or factors particular to the borrower. No assurance can be given that additional increases in non-covered nonaccrual loans will not occur in the future.

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Allowance for Credit Losses

The following table summarizes the credit loss provision, net credit losses and allowance for credit losses for the periods indicated:

	Three months ended
	March 31,						December 31,
	2009			2008			2008
	(In thousands)
Balance, beginning of period	$	47,563		$	55,799		$	53,190
Provision for loan losses		1,800			600			900
Loans charged off		(2,928	)		(1,537	)		(6,881	)
Recoveries of previously charged off loans		461			665			354
Net loan losses		(2,467	)		(872	)		(6,527	)
Balance, end of period	$	46,896		$	55,527		$	47,563
Components:
Allowance for loan losses	$	43,803		$	52,234		$	44,470
Reserve for unfunded credit commitments		3,093			3,293			3,093
Allowance for credit losses	$	46,896		$	55,527		$	47,563
Allowance for loan losses / non-covered loans outstanding		1.86	%		2.13	%		1.87	%

The Company’s allowance for credit losses is maintained at a level considered adequate to provide for losses that can be estimated based upon specific and general conditions. These include conditions unique to individual borrowers, as well as overall credit loss experience, the amount of past due, nonperforming loans and classified loans, FDIC loss sharing coverage relative to covered loan carrying amounts, recommendations of regulatory authorities, prevailing economic conditions and other factors. A portion of the allowance is specifically allocated to impaired loans whose full collectibility is uncertain. Such allocations are determined by Management based on loan-by-loan analyses. A second allocation is based in part on quantitative analyses of historical credit loss experience, in which criticized and classified credit balances identified through an independent internal credit review process are analyzed using a linear regression model to determine standard loss rates. The results of this analysis are applied to current criticized and classified loan balances to allocate the reserve to the respective segments of the loan portfolio. In addition, loans with similar characteristics not usually criticized using regulatory guidelines are analyzed based on the historical loss rates and delinquency trends, grouped by the number of days the payments on these loans are delinquent. Last, allocations are made to non-criticized and non-classified commercial loans and residential real estate loans based on historical loss rates, and other statistical data. The remainder of the allowance is considered to be unallocated. The unallocated allowance is established to provide for probable losses that have been incurred as of the reporting date but not reflected in the allocated allowance. It addresses additional qualitative factors consistent with Management’s analysis of the level of risks inherent in the loan portfolio, which are related to the risks of the Company’s general lending activity. Included in the unallocated allowance is the risk of losses that are attributable to national or local economic or industry trends which have occurred but have not yet been recognized in past loan charge-off history (external factors). The external factors evaluated by the Company include: economic and business conditions, external competitive issues, and other factors. Also included in the unallocated allowance is the risk of losses attributable to general attributes of the Company’s loan portfolio and credit administration (internal factors). The internal factors evaluated by the Company include: loan review system, adequacy of lending Management and staff, loan policies and procedures, problem loan trends, concentrations of credit, and other factors. By their nature, these risks are not readily allocable to any specific loan category in a statistically meaningful manner and are difficult to quantify with a specific number. Management assigns a range of estimated risk to the qualitative risk factors described above based on Management’s judgment as to the level of risk, and assigns a quantitative risk factor from the range of loss estimates to determine the appropriate level of the unallocated portion of the allowance. Management considers the $46.9 million allowance for credit losses to be adequate as a reserve against losses as of March 31, 2009.

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The following table presents the allocation of the allowance for credit losses:

	At March 31,					At December 31,
	2009					2008
	(In thousands)
	Allocation		Loans as			Allocation		Loans as
	of the		Percent			of the		Percent
	Allowance		of Total			Allowance		of Total
	Balance		Loans			Balance		Loans
Commercial	$	22,165		57	%	$	23,774		57	%
Real estate construction		5,241		2	%		4,725		2	%
Real estate residential		456		19	%		367		19	%
Consumer		5,619		22	%		6,331		22	%
Unallocated portion		13,415		—			12,366		—
Total	$	46,896		100	%	$	47,563		100	%

The allocation to non-covered loan portfolio segments changed from December 31, 2008 to March 31, 2009. The decrease in allocation for commercial loans was substantially attributable to a lower allocation to municipal loans. The increase in allocation to real estate construction loans reflects an increase in criticized construction loans outstanding, which receive higher allocations due to higher risk attributes, offset in part by lower volumes of non-criticized construction loans and construction loan commitments. The lower allocation for consumer loans was primarily due to a decrease in personal credit lines past due 30 days or more. The unallocated portion of the allowance for credit losses increased $1.0 million from December 31, 2008 to March 31, 2009. The unallocated allowance is established to provide for probable losses that have been incurred, but not reflected in the allocated allowance. At March 31, 2009 and December 31, 2008, Management’s evaluations of the unallocated portion of the allowance for credit losses attributed significant risk levels to developing economic and business conditions ($3.7 million and $3.4 million, respectively), external competitive issues ($783 thousand and $1.2 million, respectively), internal credit administration considerations ($1.6 million and $1.4 million, respectively), and delinquency and problem loan trends ($4.2 million and $3.5 million, respectively). The change in the amounts allocated to the above qualitative risk factors was based upon Management’s judgment, review of trends in its loan portfolio, levels of the allowance allocated to portfolio segments, and current economic conditions in its marketplace. Based on Management’s analysis and judgment, the amount of the unallocated portion of the allowance for credit losses was $12.4 million at December 31, 2008, compared to $13.4 million at March 31, 2009.

Asset/Liability and Market Risk Management

Asset/liability management involves the evaluation, monitoring and management of interest rate risk, market risk, liquidity and funding. The fundamental objective of the Company’s management of assets and liabilities is to maximize its economic value while maintaining adequate liquidity and a conservative level of interest rate risk.

Interest Rate Risk

Interest rate risk is a significant market risk affecting the Company. Interest rate risk results from many factors. Assets and liabilities may mature or reprice at different times. Assets and liabilities may reprice at the same time but by different amounts. Short-term and long-term market interest rates may change by different amounts. The remaining maturity of various assets or liabilities may shorten or lengthen as interest rates change. In addition, interest rates may have an impact on loan demand, credit losses, and other sources of earnings such as account analysis fees on commercial deposit accounts and correspondent bank service charges.

In adjusting the Company’s asset/liability position, Management attempts to manage interest rate risk while enhancing the net interest margin and net interest income. At times, depending on expected increases or decreases in general interest rates, the relationship between long and short term interest rates, market conditions and competitive factors, Management may adjust the Company’s interest rate risk position in order to manage its net interest margin and net interest income. The Company’s results of operations and net portfolio values remain subject to changes in interest rates and to fluctuations in the difference between long and short term interest rates.

The Company’s asset and liability position remains slightly “liability sensitive,” with a greater amount of interest-bearing liabilities subject to immediate and near-term interest rate changes relative to earning assets. Management continues to monitor the interest rate environment as well as economic conditions and other factors it deems relevant in managing the Company’s exposure to interest rate risk.

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Management assesses interest rate risk by comparing the Company’s most likely earnings plan with various earnings models using many interest rate scenarios that differ in the direction of interest rate changes, the degree of change over time, the speed of change and the projected shape of the yield curve. For example, using the current composition of the Company’s balance sheet and assuming no change in the federal funds rate and no change in the 10 year Constant Maturity Treasury Bond yield during the same period, earnings are not estimated to change by a meaningful amount compared to the Company’s most likely net income plan for the twelve months ending March 31, 2010. Conversely, using the current composition of the Company’s balance sheet and assuming an increase of 100 bp in the federal funds rate and an increase of 10 bp in the 10 year Constant Maturity Treasury Bond yield during the same period, estimated earnings at risk would be approximately 3.1% of the Company’s most likely net income plan for the twelve months ending March 31, 2010. Simulation estimates depend on, and will change with, the size and mix of the actual and projected balance sheet at the time of each simulation. Management is currently deploying tactics to reduce the “liability sensitivity” of the Company’s balance sheet to a more “neutral” condition where changes in interest rates result in less significant changes in earnings. The Company does not currently engage in trading activities or use derivative instruments to control interest rate risk, even though such activities may be permitted with the approval of the Company’s Board of Directors.

Market Risk — Equity Markets

Equity price risk can affect the Company. As an example, any preferred or common stock holdings, as permitted by banking regulations, can fluctuate in value. Management regularly assesses the extent and duration of any declines in market value, the causes of such declines, the likelihood of a recovery in market value, and its intent to hold securities until a recovery in value occurs. Declines in value of preferred or common stock holdings that are deemed “other than temporary” could result in loss recognition in the Company’s income statement.

Fluctuations in the Company’s common stock price can impact the Company’s financial results in several ways. First, the Company has regularly repurchased and retired its common stock; the market price paid to retire the Company’s common stock can affect the level of the Company’s shareholders’ equity, cash flows and shares outstanding for purposes of computing earnings per share. On February 13, 2009, the Company issued preferred stock to the Treasury: the terms of such issuance limits the Company’s ability to repurchase stock. Second, the Company’s common stock price impacts the number of dilutive equivalent shares used to compute diluted earnings per share. Third, fluctuations in the Company’s common stock price can motivate holders of options to purchase Company common stock through the exercise of such options thereby increasing the number of shares outstanding. Finally, the amount of compensation expense associated with share based compensation fluctuates with changes in and the volatility of the Company’s common stock price.

Market Risk — Other

Market values of loan collateral can directly impact the level of loan chargeoffs and the provision for loan losses. Other types of market risk, such as foreign currency exchange risk and commodity price risk, are not significant in the normal course of the Company’s business activities.

Liquidity and Funding

The Company generates significant liquidity from its operating activities. The Company’s profitability during the first quarter of 2009 and 2008 contributed substantial operating cash flows of $63.1 million and $31.6 million, respectively. In the first quarter of 2009, the Company paid $10.4 million in shareholder dividends and used $667 thousand to repurchase and retire common stock. In the first quarter of 2008, the Company paid $9.8 million in shareholder dividends and used $20.2 million to repurchase and retire common stock.

The Company’s routine operating sources of liquidity include investment securities, consumer and other loans, deposits, and other borrowed funds. During the first quarter of 2009, investment securities provided $58.5 million in liquidity from paydowns and maturities, and loans provided $98.1 million in liquidity from scheduled payments and maturities, net of loan fundings. The Company also raised $83.7 million from the issuance of preferred stock to the United States Treasury. The Company projects $87.7 million in additional liquidity from investment security paydowns and maturities in the three months ending June 30, 2009. At March 31, 2009, automobile loans totaled $464.9 million, which were experiencing stable monthly principal payments of approximately $17.2 million during the first quarter of 2009.

During the first quarter of 2009, a portion of the liquidity provided by operating activities, investment securities and loans provided funds to meet a net reduction in deposits totaling $71.3 million and a reduction in short-term borrowed funds, primarily federal funds purchased, which declined $256.6 million.

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During the first quarter of 2008, proceeds from maturing investment securities of $89.1 million were only partially reinvested, for a net increase in cash of $85.2 million. This cash inflow, $53.3 million in net loan repayments, and proceeds from sale of Federal Reserve Bank of San Francisco (“FRB”) stock and Visa common stock provided substantial cash to reduce short-term borrowings by $163.3 million.

The Company held $1.4 billion in total investment securities at March 31, 2009. Under certain deposit, borrowing and other arrangements, the Company must hold investment securities as collateral. At March 31, 2009, such collateral requirements totaled approximately $1.2 billion. At March 31, 2009, $436.3 million of the Company’s investment securities were classified as “available-for-sale”, and as such, could provide additional liquidity if sold, subject to the Company’s ability to meet continuing collateral requirements.

At March 31, 2009, $510.9 million in collateralized mortgage obligations (“CMOs”) and mortgage backed securities (“MBSs”) were held in the Company’s investment portfolios. None of the CMOs or MBSs are backed by sub-prime mortgages. All of the Non Agency CMOs are rated AAA based on their subordination structures without reliance on monoline insurance. Other than nominal amounts of FHLMC and FNMA MBSs purchased for Community Reinvestment Act investment purposes, the Company has not purchased a CMO or MBS since November 2005. The CMOs and MBSs provided $31.4 million in liquidity from paydowns during the three months ended March 31, 2009. In addition, at March 31, 2009, the Company had customary lines for overnight borrowings from other financial institutions in excess of $700 million, under which $235.0 million was outstanding. Additionally, the Company has access to borrowing from the Federal Reserve. The Company’s short-term debt rating from Fitch Ratings is F1. The Company’s long-term debt rating from Fitch Ratings is A with a stable outlook. Management expects the Company could access additional long-term debt financing if desired. In Management’s judgment, the Company’s liquidity position is strong and asset liquidations or additional long-term debt are considered unnecessary to meet the ongoing liquidity needs of the Company. The FDIC adopted the Temporary Liquidity Guarantee Program (“TLGP”) because of disruptions in the credit markets. The TLGP guarantees newly issued senior unsecured debt of banks and certain holding companies in addition to providing full coverage of noninterest bearing deposit transaction accounts. Debt issuance is subject to a maximum amount, and fees for use of the program are assessed on a sliding scale. The Company did not opt out of this program. No senior unsecured debt has been issued by the Company under the TLGP.

The Company anticipates maintaining its cash levels in 2009 mainly through profitability and retained earnings. It is anticipated that loan demand from credit-worthy borrowers will be weak during 2009, although such demand will be dictated by economic and competitive conditions. The Company aggressively solicits non-interest bearing demand deposits and money market checking deposits, which are the least sensitive to interest rates. The growth of deposit balances is subject to heightened competition, the success of the Company’s sales efforts, delivery of superior customer service and market conditions. The recent series of reductions in the federal funds rate resulted in declining short-term interest rates, which could impact deposit volumes in the future. Depending on economic conditions, interest rate levels, and a variety of other conditions, deposit growth may be used to fund loans, to reduce short-term borrowings or purchase investment securities. However, due to concerns such as uncertainty in the general economic environment, competition and political uncertainty, loan demand and levels of customer deposits are not certain. Shareholder dividends are expected to continue subject to the Board’s discretion and continuing evaluation of capital levels, earnings, asset quality and other factors. Quarterly shareholder dividends are restricted to the quarterly per share amount prior to October 14, 2008 under the terms of the February 13, 2009 issuance of preferred stock to the Treasury.

Westamerica Bancorporation (“the Parent Company”) is a separate entity and apart from Westamerica Bank (“the Bank”) and must provide for its own liquidity. In addition to its operating expenses, the Parent Company is responsible for the payment of dividends declared for its shareholders, and interest and principal on outstanding debt. Substantially all of the Parent Company’s revenues are obtained from subsidiary service fees and dividends. Payment of such dividends to the Parent Company by the Bank is limited under California law. The amount that can be paid in any calendar year, without prior approval from the state regulatory agency, cannot exceed the net profits (as defined) for the preceding three calendar years less dividends paid. The Company believes that such restriction will not have an impact on the Parent Company’s ability to meet its ongoing cash obligations.

Capital Resources

The Company has historically generated high levels of earnings, which provides a means of raising capital. The Company’s net income as a percentage of average common stock equity (“return on common equity” or “ROE”) was 27.3% in the first quarter of 2008 and 48.0% in the first quarter of 2009. The Company also raises capital as employees exercise stock options, which are awarded as a part of the Company’s executive compensation programs to reinforce shareholders’ interests in the Management of the Company. Capital raised through the exercise of stock options totaled $6.8 million in the first quarter of 2008 and $593 thousand in the first quarter of 2009.

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The Company paid dividends totaling $9.8 million in the first quarter of 2008 and $10.4 million in the first quarter of 2009, which represent dividends per share of $0.34 and $.36, respectively. The Company’s earnings have historically exceeded dividends paid to shareholders. The amount of earnings in excess of dividends gives the Company resources to finance growth and maintain appropriate levels of shareholders’ equity. In the absence of profitable growth opportunities, the Company has repurchased and retired its common stock as another means to return earnings to shareholders. The Company repurchased and retired 424 thousand shares of common stock valued at $20.2 million in the first quarter of 2008 and 16 thousand shares valued at $667 thousand in the first quarter of 2009. Share repurchases are restricted to amounts conducted in coordination with employee benefit programs under the terms of the February 13, 2009 issuance of preferred stock to the Treasury.

The Company’s primary capital resource is shareholders’ equity, which increased $137.6 million or 34.5% in the first quarter of 2009 from the first quarter of 2008, primarily due to a $83.7 million in issuance of preferred stock and $52.2 million in profits earned during the quarter, offset by $10.4 million in dividends paid.

The following summarizes the ratios of capital to risk-adjusted assets for the Company on the date indicated:

										Minimum			Well-capitalized by
	At March 31,			At March 31,			At December 31,			Regulatory			Regulatory
	2009			2008			2008			Requirement			Definition
Tier I Capital		10.16	%		9.74	%		10.47	%		4.00	%		6.00	%
Total Capital		11.38	%		11.04	%		11.76	%		8.00	%		10.00	%
Leverage ratio		8.14	%		6.61	%		7.36	%		4.00	%		5.00	%

The risk-based capital ratios increased at March 31, 2009, compared with March 31, 2008, due to increased Tier I Capital resulting from the February 13, 2009 issuance of $83.7 million in preferred stock and increased profitability, partially offset by an increase in risk-weighted assets. The risk-based capital ratios decreased at March 31, 2009, compared with December 31, 2008, due to risk-weighted assets increasing relatively faster than equity capital.

The following summarizes the ratios of capital to risk-adjusted assets for the Bank on the date indicated:

										Minimum			Well-capitalized by
	At March 31,						At December 31,			Regulatory			Regulatory
	2009			2008			2008			Requirement			Definition
Tier I Capital		9.56	%		9.78	%		9.31	%		4.00	%		6.00	%
Total Capital		10.93	%		11.25	%		10.78	%		8.00	%		10.00	%
Leverage ratio		7.64	%		6.60	%		6.52	%		4.00	%		5.00	%

The Company contributed $93.7 million in capital to the Bank during the first quarter of 2009 to maintain the Bank’s “well capitalized” condition following the February 6, 2009 County Bank acquisition. The risk-based capital ratios decreased at March 31, 2009, compared with March 31, 2008, due to risk-weighted assets increasing relatively faster than equity capital. The risk-based capital ratios increased at March 31, 2009, compared with December 31, 2008, due to equity capital increasing relatively faster than risk-weighted assets.

The Company and the Bank intend to maintain regulatory capital in excess of the highest regulatory standard, referred to as “well capitalized”. The Company and the Bank routinely project capital levels by analyzing forecasted earnings, credit quality, securities valuations, shareholder dividends, asset volumes, share repurchase activity, stock option exercise proceeds, and other factors. Based on current capital projections the Company and the Bank expect to maintain regulatory capital levels exceeding the “well capitalized” standard and pay quarterly dividends to shareholders. No assurance can be given that changes in capital management plans will not occur.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

The Company does not currently engage in trading activities or use derivative instruments to control interest rate risk, even though such activities may be undertaken with the approval of the Company’s Board of Directors. Interest rate risk as discussed above is the most significant market risk affecting the Company. Other types of market risk, such as foreign currency exchange risk, equity price risk and commodity price risk, are not significant in the normal course of the Company’s business activities.

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Item 4. Controls and Procedures

The Company’s principal executive officer and principal financial officer have evaluated the effectiveness of the Company’s “disclosure controls and procedures,” as such term is defined in Rule 13a-15(e) of the Securities Exchange Act of 1934, as amended, as of March 31, 2009. Based upon their evaluation, the principal executive officer and principal financial officer concluded that the Company’s disclosure controls and procedures are effective to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time period specified in the Securities and Exchange Commission’s rules and forms. The evaluation did not identify any change in the Company’s internal control over financial reporting that occurred during the quarter ended March 31, 2009 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

Due to the nature of the banking business, the Bank is at times party to various legal actions; generally such actions are of a routine nature and arise in the normal course of business of the Subsidiary Bank. The Bank is not a party to any pending or threatened legal action that, if determined adversely to the Bank, is likely in Management’s opinion to have a material adverse effect on the Bank’s financial condition or results of operations.

Item 1A. Risk Factors

There are no material changes to the risk factors disclosed in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2008.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

(a) Previously reported on Form 8-K.
(b) None
(c) Issuer Purchases of Equity Securities

The table below sets forth the information with respect to purchases made by or on behalf of Westamerica Bancorporation or any “affiliated purchaser” (as defined in Rule 10b-18(a)(3) under the Securities Exchange Act of 1934), of common stock during the quarter ended March 31, 2009.

					(c)		(d)
					Total		Maximum
					Number		Number
					of Shares		of Shares
			(b)		Purchased		that May
	(a)		Average		as Part of		Yet Be
	Total		Price		Publicly		Purchased
	Number of		Paid		Announced		Under the
	Shares		per		Plans		Plans or
Period	Purchased		Share		or Programs*		Programs
	(In thousands, except per share data)
January 1 through January 31		9	$	42.03		9		1,968
February 1 through February 28		5	$	41.06		5		1,963
March 1 through March 31		2	$	40.42		2		1,961
Total		16	$	41.58		16		1,961

* Includes 2 thousand, 2 thousand and 2 thousand shares purchased in January, February and March, respectively, by the Company in private transactions with the independent administrator of the Company’s Tax Deferred Savings/Retirement Plan (ESOP). The Company includes the shares purchased in such transactions within the total number of shares authorized for purchase pursuant to the currently existing publicly announced program.

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The Company repurchases shares of its common stock in the open market to optimize the Company’s use of equity capital and enhance shareholder value and with the intention of lessening the dilutive impact of issuing new shares to meet stock performance, option plans, and other ongoing requirements.

Shares were repurchased during the first quarter of 2009 pursuant to a program approved by the Board of Directors on August 28, 2008 authorizing the purchase of up to 2 million shares of the Company’s common stock from time to time prior to September 1, 2009.

On February 13, 2009, the Company utilized the Troubled Asset Relief Program and issued 83,726 preferred shares to the United States Treasury at $1,000 per share (“Treasury Preferred Stock”). Under the terms of the Treasury Preferred Stock, share repurchases are limited to repurchase related to employee benefit programs.

Item 3. Defaults upon Senior Securities

None

Item 4. Submission of Matters to a Vote of Security Holders

None

Item 5. Other Information

None

Item 6. Exhibits

(a) The exhibit list required by this item is incorporated by reference to the Exhibit Index filed with this report.

Exhibit 3(b):	By-laws, as amended (composite copy)
Exhibit 31.1:	Certification of Chief Executive Officer pursuant to Securities Exchange Act Rule 13a-14(a)/15d-14(a)
Exhibit 31.2:	Certification of Chief Financial Officer pursuant to Securities Exchange Act Rule 13a-14(a)/15d-14(a)
Exhibit 32.1:	Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
Exhibit 32.2:	Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

WESTAMERICA BANCORPORATION
(Registrant)

/s/ JOHN “ROBERT” THORSON John “Robert” Thorson

Senior Vice President and Chief Financial Officer

(Chief Financial and Accounting Officer)

Date: May 8, 2009

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EXHIBIT INDEX

Exhibit 3(b):	By-laws, as amended (composite copy)
Exhibit 31.1:	Certification of Chief Executive Officer pursuant to Securities Exchange Act Rule 13a-14(a)/15d-14(a)
Exhibit 31.2:	Certification of Chief Financial Officer pursuant to Securities Exchange Act Rule 13a-14(a)/15d-14(a)
Exhibit 32.1:	Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
Exhibit 32.2:	Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

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EX-3.B

Exhibit 3(b)

COMPOSITE COPY

BYLAWS

OF

WESTAMERICA BANCORPORATION

a California corporation

Last Amendment:
February 26, 2009

TABLE OF CONTENTS

	Page(s)
ARTICLE I — OFFICES		1
Section 1.01. Principal Offices		1
Section 1.02. Other Offices		1
ARTICLE I — MEETINGS OF SHAREHOLDERS		1
Section 2.01. Place of Meetings		1
Section 2.02. Annual Meeting		1
Section 2.03. Special Meeting		2
Section 2.04. Notice of Shareholders’ Meetings		2
Section 2.05. Manner of Giving Notice: Affidavit of Notice		2
Section 2.06. Quorum		3
Section 2.07. Adjourned Meeting: Notice		3
Section 2.08. Voting		3
Section 2.09. Waiver of Notice or Consent by Absent Shareholders		3
Section 2.10. Shareholder Action by Written Consent Without a Meeting		4
Section 2.11. Record Date for Shareholder Notice, Voting and Giving Consents		4
Section 2.12. Proxies		4
Section 2.13. Inspectors of Election		5
Section 2.14. Nominations for Director		5
ARTICLE III — DIRECTORS		5
Section 3.01. Powers		5
Section 3.02. Number and Qualification of Directors		6
Section 3.03. Election and Term of Office of Directors		6
Section 3.04. Vacancies		6
Section 3.05. Place of Meetings and Meetings by Telephone		7
Section 3.06. Annual Meeting		7
Section 3.07. Other Regular Meetings		7
Section 3.08. Special Meetings		7
Section 3.09. Quorum		8
Section 3.10. Waiver of Notice		8
Section 3.11. Adjournment		8
Section 3.12. Notice of Adjournment		8
Section 3.13. Action Without Meeting		8
Section 3.14. Fees and Compensation of Directors		8
Section 3.15. Committees of Directors		8
Section 3.16. Meetings and Action of Committees		9
ARTICLE IV — OFFICERS		9
Section 4.01. Officers		9
Section 4.02. Election of Officers		9
Section 4.03. Subordinate Officers		9
Section 4.04. Removal and Resignation of Officers		9
Section 4.05. Vacancies in Offices		9
Section 4.06. Chairman of the Board		9
Section 4.07. President		9
Section 4.08. Vice Presidents		10
Section 4.09. Secretary		10
Section 4.10. Chief Financial Officer		10

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	Page(s)
ARTICLE V — MISCELLANEOUS		10
Section 5.01. Indemnification Provisions		10
Section 5.02. Maintenance and Inspection of Share Register		11
Section 5.03. Maintenance and Inspection of Bylaws		12
Section 5.04. Maintenance and Inspection of Other Corporate Records		12
Section 5.05. Inspection of Books and Records by Directors		12
Section 5.06. Annual Report to Shareholders		12
Section 5.07. Financial Statements		12
Section 5.08. Record Date for Purposes Other than Notice and Voting		13
Section 5.09. Checks, Drafts		13
Section 5.10. Corporate Contracts and Instruments; How Executed		13
Section 5.11. Certificates for Shares		13
Section 5.12. Lost Certificates		13
Section 5.13. Representation of Shares of Other Corporations		14
Section 5.14. Construction and Definitions		14
ARTICLE VI — AMENDMENTS		14
Section 6.01. Amendment by Shareholders		14
Section 6.02. Amendment by Directors		14

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BYLAWS

OF

WESTAMERICA BANCORPORATION

ARTICLE I

OFFICES

Section 1.01. Principal Offices. The principal executive office of the corporation shall be located at 1108 Fifth Avenue, San Rafael, California, or such other place within or outside the State of California as shall be fixed by the board of directors. If the principal executive office is located outside this state, and the corporation has one or more business offices in this state, the board of directors shall fix and designate a principal business office in the State of California.

Section 1.02. Other Offices. The board of directors may at any time establish branch or subordinate offices at any place or places where the corporation is qualified to do business.

ARTICLE II

MEETINGS OF SHAREHOLDERS

Section 2.01. Place of Meetings. Meetings of shareholders shall be held at any place within or outside the State of California designated by the board of directors. In the absence of any such designation, shareholders’ meetings shall be held at the principal executive office of the corporation.

Section 2.02. Annual Meeting. The annual meeting of shareholders shall be held each year on a date and at a time designated by the board of directors. At each annual meeting directors shall be elected, and any other proper business may be transacted which shall have been properly brought before the meeting. To be properly brought before an annual meeting, business must have been (a) specified in the notice of meeting (or any supplement thereto) given by or at the direction of the board of directors, (b) otherwise properly brought before the meeting by or at the direction of the board of directors, or (c) otherwise properly brought before the meeting by a shareholder. In addition to any other applicable requirements, for business to be properly brought before an annual meeting by a shareholder, the shareholder must have given timely notice thereof in writing to the secretary of the corporation. To be timely, a shareholder’s notice must be received by the secretary of the corporation at least 45 days before the anniversary of the date on which the corporation first mailed its proxy materials for the prior year’s annual meeting of the shareholders; provided, however, that in the event the date for the current year’s annual meeting has changed more than 30 days from the date on which the prior year’s annual meeting was held, then notice must be received a reasonable time before the corporation mails its proxy materials for the current year. A shareholder’s notice to the secretary of the corporation shall set forth as to each matter that the shareholder proposes to bring before the annual meeting (a) a brief description of the business desired to be brought before the annual meeting and the reasons for conducting such business at the annual meeting, (b) the name and residence address of the shareholder proposing such business, (c) the number of shares of capital stock of the corporation that are owned by the shareholder, and (d) any material interest of the shareholder in such business.

Notwithstanding anything in the bylaws to the contrary, no business shall be conducted at the annual meeting except in accordance with the procedures set forth in this Section 2.02.

The chairman of an annual meeting shall, if the facts warrant, determine and declare to the meeting that business was not properly brought before the meeting in accordance with the provisions of this Section 2.02, and if he should so determine, he shall so declare to the meeting and any such business not properly brought before the meeting shall not be transacted.

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Section 2.03. Special Meeting. A special meeting of the shareholders may be called at any time by the board of directors, or by the chairman of the board, or by the president, or by one or more shareholders holding shares in the aggregate entitled to cast not less than 10% of the votes at that meeting.

If a special meeting is called by any person or persons other than the board of directors, the request shall be in writing, specifying the time of such meeting and the general nature of the business proposed to be transacted, and shall be delivered personally or sent by registered mail or by telegraphic or other facsimile transmission to the chairman of the board, the president, any vice president, or the secretary of the corporation. The officer receiving the request shall cause notice to be promptly given to the shareholders entitled to vote, in accordance with the provisions of Sections 2.04 and 2.05 hereof, that a meeting will be held at the time requested by the person or persons calling the meeting, not less than thirty-five (35) nor more than sixty (60) days after the receipt of the request. If the notice is not given within twenty (20) days after receipt of the request, the person or persons requesting the meeting may give the notice. Nothing contained in this paragraph of this Section 2.03 shall be construed as limiting, fixing or affecting the time when a meeting of shareholders called by action of the board of directors may be held.

Section 2.04. Notice of Shareholders’ Meetings. All notices of meetings of shareholders shall be sent or otherwise given to shareholders entitled to vote thereat in accordance with Section 2.05 not less than ten (10) (or if sent by third-class mail, thirty (30) nor more than sixty (60)) days before the date of the meeting. The notice shall specify the place, date and hour of the meeting and (i) in the case of a special meeting, the general nature of the business to be transacted, and no other business may be transacted, or (ii) in the case of the annual meeting, those matters which the board of directors, at the time of giving the notice, intends to present for action by the shareholders. The notice of any meeting at which directors are to be elected shall include the name of any nominee or nominees whom, at the time of the notice, management intends to present for election.

If action is proposed to be taken at any meeting for approval of (i) a contract or transaction in which a director has a direct or indirect financial interest, pursuant to Section 310 of the Corporations Code of California, (ii) an amendment of the articles of incorporation, pursuant to Section 902 of that Code, (iii) a reorganization of the corporation, pursuant to Section 1201 of that Code, (iv) a voluntary dissolution of the corporation, pursuant to Section 1900 of that Code, or (v) a distribution in dissolution other than in accordance with the rights of outstanding preferred shares, pursuant to Section 2007 of that Code, the notice shall also state the general nature of that proposal.

Section 2.05. Manner of Giving Notice: Affidavit of Notice. Notice of any meeting of shareholders shall be given to shareholders entitled to vote thereat either personally or by first-class mail or, in the event this corporation has outstanding shares held of record by 500 or more persons (determined as provided in Section 605 of the California Corporations Code) on the record date for the shareholders meeting, by third-class mail, or other means of written communication, addressed to the shareholder at the address of such shareholder appearing on the books of the corporation or given by the shareholder to the corporation for the purpose of notice. If no such address appears on the corporation’s books or is given, notice shall be deemed to have been given if sent to that shareholder by first-class mail or telegraphic or other written communication to the corporation’s principal executive office, or if published at least once in a newspaper of general circulation in the county where that office is located. Notice shall be deemed to have been given at the time when delivered personally or deposited in the mail or sent by telegram or other means of written communication.

If any notice addressed to a shareholder at the address of that shareholder appearing on the books of the corporation is returned to the corporation by the United States Postal Service marked to indicate that the United States Postal Service is unable to deliver the notice to the shareholder at that address, all future notices or reports shall be deemed to have been duly given without further mailing if these shall be available to the shareholder on written demand of the shareholder at the principal executive office of the corporation for a period of one year from the date of the giving of the notice.

An affidavit of the mailing or other means of giving any notice of any shareholders’ meeting may be executed by the secretary, assistant secretary, or any transfer agent of the corporation giving the notice, and shall be filed and maintained in the minute book of the corporation.

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Section 2.06. Quorum. The presence in person or by proxy of the holders of a majority of the shares entitled to vote at any meeting of the shareholders shall constitute a quorum for the transaction of business. The shareholders present at a duly called or held meeting at which a quorum is present may continue to do business until adjournment, notwithstanding the withdrawal of enough shareholders to leave less than a quorum, if any action taken (other than adjournment) is approved by at least a majority of the shares required to constitute a quorum or, if required by the General Corporation Law or the articles, the vote of a greater number or voting by classes.

Section 2.07. Adjourned Meeting: Notice. Any shareholders’ meeting, annual or special, whether or not a quorum is present, may be adjourned from time to time by the vote of the majority of the shares represented at that meeting, either in person or by proxy, but in the absence of a quorum, no other business may be transacted at that meeting, except as provided in Section 2.06 hereof.

When any meeting of shareholders, either annual or special, is adjourned to another time or place, notice need not be given of the adjourned meeting if the time and place are announced at a meeting at which the adjournment is taken, unless a new record date for the adjourned meeting is fixed, or unless the adjournment is for more than forty-five (45) days from the date set for the original meeting, in which case the board of directors shall set a new record date. Notice of any such adjourned meeting shall be given to each shareholder of record entitled to vote at the adjourned meeting in accordance with the provisions of Sections 2.04 and 2.05. At any adjourned meeting the corporation may transact any business which might have been transacted at the original meeting.

Section 2.08. Voting. The shareholders entitled to vote at any meeting of shareholders shall be determined in accordance with the provisions of Section 2.11 hereof, subject to the provisions of Sections 702 to 704, inclusive, of the Corporations Code of California (relating to voting shares held by a fiduciary, in the name of a corporation, or a joint ownership). The shareholders’ vote may be by voice vote or by ballot; provided, however, that any election for directors must be by ballot if demanded by any shareholder before the voting has begun. On any matter other than elections of directors, any shareholder may vote part of the shares in favor of the proposal and refrain from voting the remaining shares or vote them against the proposal, but, if the shareholder fails to specify the number of shares which the shareholder is voting affirmatively, it will be conclusively presumed that the shareholder’s approving vote is with respect to all shares that the shareholder is entitled to vote. The affirmative vote of a majority of the shares represented and voting at a duly held meeting at which a quorum is present (which shares voting affirmatively also constitute a majority of the required quorum) shall be the act of the shareholders, unless the vote of a greater number or voting by classes is required by California General Corporation Law or the articles.

At a shareholders’ meeting at which directors are to be elected, no shareholder shall be entitled to cumulate votes (i.e., cast for any candidate a number of votes greater than the number of votes which such shareholder normally is entitled to cast) unless the candidates’ names have been placed in nomination prior to commencement of the voting and a shareholder has given notice prior to commencement of the voting of the shareholder’s intention to cumulate votes. If any shareholder has given such a notice, then every shareholder entitled to vote may cumulate votes for candidates in nomination and give one candidate a number of votes equal to the number of directors to be elected multiplied by the number of votes to which that shareholder’s shares are normally entitled, or distribute the shareholder’s votes on the same principle among any or all of the candidates, as the shareholder thinks fit. The candidates receiving the highest number of votes, up to the number of directors to be elected, shall be elected.

Section 2.09. Waiver of Notice or Consent by Absent Shareholders. The transactions of any meeting of shareholders, either annual or special, however called and noticed, and wherever held, shall be as valid as though had at a meeting duly held after regular call and notice, if a quorum be present either in person or by proxy, and if, either before or after the meeting, each person entitled to vote, who was not present in person or by proxy, signs a written waiver of notice or a consent to a holding of the meeting, or an approval of the minutes. The waiver of notice, consent or approval need not specify either the business to be transacted or the purpose of any annual or special meeting of shareholders, except that if action is taken or proposed to be taken for approval of any of those matters specified in the second paragraph of Section 2.04 hereof, the waiver of notice, consent or approval shall state the general nature of the proposal. All such waivers, consents or approvals shall be filed with the corporate records or made a part of the minutes of the meeting.

Attendance by a person at a meeting shall also constitute a waiver of notice of that meeting, except when the person objects, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened, and except that attendance at a meeting is not a waiver of any right to object to the consideration of matters required by law to be included in the notice of the meeting but not so included if that objection is expressly made at the meeting.

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Section 2.10. Shareholder Action by Written Consent Without a Meeting. Any action which may be taken at any annual or special meeting of shareholders may be taken without a meeting and without prior notice, if a consent in writing setting forth the action so taken, is signed by the holders of outstanding shares having not less than the minimum number of votes that would be necessary to authorize or take that action at a meeting at which all shares entitled to vote on that action were present and voted. In the case-of election of directors, such a consent shall be effective only if signed by the holders of all outstanding shares entitled to vote for the election of directors; provided, however, that a director may be elected at any-time to fill a vacancy on the board of directors that has not been filled by the directors, by the written consent of the holders of a majority of the outstanding shares entitled to vote for the election of directors. All such consents shall be filed with the secretary of the corporation and shall be maintained in the corporate records. Any shareholder giving a written consent, or the shareholder’s proxy holders, or a transferee of the shares or a personal representative of the shareholder or their respective proxy holders, may revoke the consent by a writing received by the secretary of the corporation before written consents of the number of shares required to authorize the proposed action have been filed with the secretary.

If the consents of all shareholders entitled to vote have not been solicited in writing, and if the unanimous written consent of all such shareholders shall not have been received, the secretary shall give prompt notice of the corporate action approved by the shareholders without a meeting. This notice shall be given in the manner specified in Section 2.05 hereof. In the case of approval of (i) contracts or transactions in which a director has a direct or indirect financial interest, pursuant to Section 310 of the Corporations Code of California, (ii) indemnification of agents of the corporation, pursuant to Section 317 of that Code, (iii) a reorganization of the corporation, pursuant to Section 1201 of that Code, and (iv) a distribution in dissolution other than in accordance with the rights of outstanding preferred shares, pursuant to Section 2007 of that Code, the notice shall be given at least ten (10) days before the consummation of any action authorized by that approval.

Section 2.11. Record Date for Shareholder Notice, Voting and Giving Consents. For purposes of determining the shareholders entitled to notice of any meeting or to vote or entitled to give consent to corporate action without a meeting, the board of directors may fix, in advance, a record date, which shall not be more than sixty (60) days nor less than ten (10) days before the date of any such meeting nor more than sixty (60) days before any such action without a meeting, and in this event only shareholders at the close of business on the record date are entitled to notice and to vote or to give consents, as the case may be, notwithstanding any transfer of any shares on the books of the corporation after the record date, except as otherwise provided in the California General Corporation Law.

If the board of directors does not so fix a record date:

(a) The record date for determining the shareholders entitled to notice of or to vote at a meeting of shareholders shall be at the close of business on the business day next preceding the day on which notice is given or, if notice is waived, at the close of business on the business day next preceding the day on which the meeting is held.

(b) The record date for determining shareholders entitled to give consent to corporate action in writing without a meeting, (i) when no prior action by the board has been taken, shall be the day on which the first written consent is given, or (ii) when prior action of the board has been taken, shall be at the close of business on the day on which the board adopts the resolution relating to that action, or the sixtieth (60th) day before the date of such other action, whichever is later.

Section 2.12. Proxies. Every person entitled to vote for directors or on any other matter shall have the right to do so either in person or by one or more agents authorized by a written proxy signed by the person and filed with the secretary of the corporation. A proxy shall be deemed signed if the shareholder’s name is placed on the proxy (whether by manual signature, typewriting, telegraphic transmission, or otherwise) by the shareholder or the shareholder’s attorney-in-fact. A validly executed proxy which does not state that it is irrevocable shall continue in full force and effect unless (i) revoked by the person executing it, before the vote pursuant to that proxy, by a writing delivered to the corporation stating that the proxy is revoked, or by a subsequent proxy executed by, or as to any meeting by attendance at such meeting and voting in person by, the person executing the proxy; or (ii) written notice of the death or incapacity of the maker of that proxy is received by the corporation before the vote pursuant to that proxy is counted; provided, however, that no proxy shall be valid after the expiration of eleven (11) months from the date of the proxy, unless otherwise provided in the proxy. The revocability of a proxy that states on its face that it is irrevocable shall be governed by the provisions of Sections 705(e) and 705(f) of the Corporations Code of California.

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Section 2.13. Inspectors of Election. Before any meeting of shareholders, the board of directors may appoint any persons other than nominees for office to act as inspectors of election at the meeting or its adjournment. If no inspectors of election are so appointed, the chairman of the meeting may, and on the request of any shareholder or a shareholder’s proxy shall, appoint inspectors of election at the meeting. The number of inspectors shall be either one (1) or three (3). If inspectors are appointed at a meeting on the request of one or more shareholders or proxies, the holders of a majority of shares or their proxies present at the meeting shall determine whether one (1) or three (3) inspectors are to be appointed. If any person appointed as inspector fails to appear or fails or refuses to act, the chairman of the meeting may, and upon the request of any shareholder or a shareholder’s proxy shall, appoint a person to fill that vacancy.

These inspectors shall:

(a) Determine the number of shares outstanding and the voting power of each, the shares represented at the meeting, the existence of a quorum, and the authenticity, validity, and effect of proxies;

(b) Receive votes, ballots, or consents;

(c) Hear and determine all challenges and questions in any way arising in connection with the right to vote;

(d) Count and tabulate all votes or consents;

(e) Determine when the polls shall close;

(f) Determine the result; and

(g) Do any other acts that may be proper to conduct the election or vote with fairness to all shareholders.

Section 2.14. Nominations for Director. Nominations for election to the board of directors may be made by the board of directors or by any shareholder of any outstanding class of capital stock of the corporation entitled to vote for the election of directors. Nominations, other than those made by or on behalf of the board of directors of the corporation, shall be made in writing and shall be received by the secretary of the corporation at least 45 days before the anniversary of the date on which the corporation first mailed its proxy materials for the prior year’s annual meeting of shareholders; provided, however, that in the event the date for the current year’s annual meeting has changed more than 30 days from the date on which the prior year’s annual meeting was held, then notice must be received a reasonable time before the corporation mails its proxy materials for the current year. Any such written nomination shall contain the following information to the extent known to the nominating shareholder: (a) the name and address of each proposed nominee; (b) the principal occupation of each proposed nominee; (c) the total number of shares of capital stock of the corporation that the shareholder expects will be voted for each proposed nominee; (d) the name and residence address of the notifying shareholder; and (e) the number of shares of capital stock of the corporation owned by the notifying shareholder. Nominations not made in accordance herewith may be disregarded by the chairman of the applicable meeting of shareholders called for the election of directors in his sole discretion, and upon his instructions, the inspectors of election may disregard all votes cast for each such nominee.

ARTICLE III

DIRECTORS

Section 3.01. Powers. Subject to the provisions of the California General Corporation Law and any limitations in the articles of incorporation and these bylaws relating to action required to be approved by the shareholders or by the outstanding shares, the business and affairs of the corporation shall be managed and all corporate powers shall be exercised by or under the direction of the board of directors.

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Without prejudice to these general powers, and subject to the same limitations, the directors shall have the power to:

(a) Select and remove all officers, agents, and employees of the corporation; prescribe any powers and duties for them that are consistent with law, with the articles of incorporation, and with these bylaws; fix their compensation; and require from them security for faithful service.

(b) Change the principal executive office or the principal business office in the State of California from one location to another; cause the corporation to be qualified to do business in any other state, territory, dependency, or country and conduct business within or without the State of California; and designate any place within or without the State of California for the holding of any shareholders’ meeting, or meetings, including annual meetings.

(c) Adopt, make, and use a corporate seal; prescribe the forms of certificates of stock; and alter the form of the seal and certificates.

(d) Authorize the issuance of shares of stock of the corporation on any lawful terms, in consideration of money paid, labor done, services actually rendered, debts or securities cancelled, or tangible or intangible property actually received.

(e) Borrow money and incur indebtedness on behalf of the corporation, and cause to be executed and delivered for the corporation’s purposes, in the corporate name, promissory notes, bonds, debentures, deeds of trust, mortgages, pledges, hypothecation, and other evidences of debt and securities.

Section 3.02. Number and Qualification of Directors. The number of directors of the corporation shall not be less than eight (8) nor more than fifteen (15). The exact number of directors shall be nine (9) until changed, within the limits specified above, with the approval of the board of directors or the shareholders. Notwithstanding anything in these bylaws to the contrary, for so long as the corporation’s Fixed Rate Cumulative Perpetual Preferred Stock, Series A (the “Designated Preferred Stock”) is outstanding: (i) whenever, at any time or times, dividends payable on the shares of Designated Preferred Stock have not been paid for an aggregate of six quarterly Dividend Periods (as defined in the Certificate of Determination for the Designated Preferred Stock) or more, whether or not consecutive, the authorized number of directors shall automatically be increased by two (but shall in no event be increased to a number of directors that is greater than the maximum number of directors set forth in this Article III, Section 3.02 of these bylaws); and (ii) this sentence may not be modified, amended or repealed by the Corporation’s board of directors (or any committee thereof) or without the affirmative vote and approval of (x) the shareholders and (y) the holders of at least a majority of the shares of Designated Preferred Stock outstanding at the time of such vote and approval.

The indefinite number of directors set forth in this Article III, Section 3.02 of these bylaws may be changed, or a definite number fixed without provision for an indefinite number, by a duly adopted amendment to the articles of incorporation or by an amendment to this bylaw duly adopted by the vote or written consent of holders of a majority of the outstanding shares entitled to vote; provided, however, that an amendment reducing the fixed number or the minimum number of directors to a number less than five (5) cannot be adopted if the votes cast against its adoption at a meeting of the shareholders, or the shares not consenting in the case of action by written consent, are equal to more than 16-2/3% of the outstanding shares entitled to vote. No amendment may change the stated maximum number of authorized directors to a number greater than two times the stated minimum number of directors minus one.”

Section 3.03. Election and Term of Office of Directors. Directors shall be elected at each annual meeting of the shareholders to hold office until the next annual meeting. Each director, including a director elected to fill a vacancy, shall hold office until the expiration of the term for which elected and until a successor has been elected and qualified. No person shall be eligible for election to the board of directors unless nominated in the manner described by Section 2.14 of these bylaws.

Section 3.04. Vacancies. Vacancies in the board of directors may be filled by a majority of the remaining directors, though less than a quorum, or by a sole remaining director, except that a vacancy created by the removal of a director by the vote or written consent of the shareholders or by court order may be filled only by the vote of a majority of the shares entitled to vote represented at a duly held meeting at which a quorum is present, or by the written consent of holders of a majority of the outstanding shares entitled to vote. Each director so elected shall hold office until the next annual meeting of the shareholders and until a successor has been elected and qualified.

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A vacancy or vacancies in the board of directors shall be deemed to exist in the event of the death, resignation, or removal of any director, or if the board of directors by resolution declares vacant the office of a director who has been declared of unsound mind by an order of court or convicted of a felony, or if the authorized number of directors is increased, or if the shareholders fail, at any meeting of shareholders at which any director or directors are elected, to elect the number of directors to be voted for at that meeting.

The shareholders may elect a director or directors at any time to fill any vacancy or vacancies not filled by the directors, but any such election by written consent other than to fill a vacancy created by removal shall require the consent of a majority of the outstanding shares entitled to vote.

Any director may resign effective on giving written notice to the chairman of the board, the president, the secretary, or the board of directors, unless the notice specifies a later time for that resignation to become effective. If the resignation of a director is effective at a future time, the board of directors may elect a successor to take office when the resignation becomes effective.

No reduction of the authorized number of directors shall have the effect of removing any director before that director’s term of office expires.

Section 3.05. Place of Meetings and Meetings by Telephone. Regular meetings of the board of directors may be held at any place within or outside the State of California that has been designated from time to time by resolution of the board. In the absence of such a designation, regular meetings shall be held at the principal executive office of the corporation. Special meetings of the board shall be held at any place within or outside the State of California that has been designated in the notice of the meeting or, if not stated in the notice or there is no notice, at the principal executive office of the corporation. Any meeting, regular or special, may be held by conference telephone or similar communication equipment, so long as all directors participating in the meeting can hear one another, and all such directors shall be deemed to be present in person at the meeting.

Section 3.06. Annual Meeting. Immediately following each annual meeting of shareholders, the board of directors shall hold a regular meeting for the purpose of organization, any desired election of officers, and the transaction of other business. Notice of this meeting shall not be required.

Section 3.07. Other Regular Meetings. Other regular meetings of the board of directors shall be held without call at such time as shall from time to time be fixed by the board of directors. Such regular meetings may be held without notice.

Section 3.08. Special Meetings. Special meetings of the board of directors for any purpose or purposes may be called at any time by the chairman of the board or the president or any vice president or the secretary or any two directors.

Notice of the time and place of special meetings shall be delivered personally or by telephone to each director or sent by first-class mail or telegram, charges prepaid, addressed to each director at that director’s address as it is shown on the records of the corporation. In case the notice is mailed, it shall be deposited in the United States mail at least four (4) days before the time of the holding of the meeting. In case the notice is delivered personally, or by telephone or telegram, it shall be delivered personally or by telephone or to the telegraph company at least forty-eight (48) hours before the time of the holding of the meeting. Any oral notice given personally or by telephone may be communicated either to the director or to a person at the office of the director who the person giving the notice has reason to believe will promptly communicate it to the director. The notice need not specify the purpose of the meeting nor the place if the meeting is to be held at the principal executive office of the corporation.

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Section 3.09. Quorum. A majority of the authorized number of directors shall constitute a quorum for the transaction of business, except to adjourn as provided in Section 3.11. Every act or decision done or made by a majority of the directors present at a meeting duly held at which a quorum is present shall be regarded as the act of the board of directors, subject to the provisions of Section 310 of the Corporations Code of California (as to approval of contracts or transactions in which a director has a direct or indirect material financial interest), Section 311 of that Code (as to appointment of committees), and Section 317(e) of that Code (as to indemnification of directors). A meeting at which a quorum is initially present may continue to transact business notwithstanding the withdrawal of directors, if any action taken is approved by at least a majority of the required quorum for that meeting.

Section 3.10. Waiver of Notice. The transactions of any meeting of the board of directors, however called and noticed or wherever held, shall be as valid as though had at a meeting duly held after regular call and notice if a quorum is present and if, either before or after the meeting, each of the directors not present signs a written waiver of notice, a consent to holding the meeting or an approval of the minutes. The waiver of notice or consent need not specify the purpose of the meeting. All such waivers, consents, and approvals shall be filed with the corporate records or made a part of the minutes of the meeting. Notice of a meeting shall also be deemed given to any director who attends the meeting without protesting, before or at its commencement, the lack of notice to that director.

Section 3.11. Adjournment. A majority of the directors present, whether or not constituting a quorum, may adjourn any meeting to another time and place.

Section 3.12. Notice of Adjournment. Notice of the time and place of holding an adjourned meeting need not be given, unless the meeting is adjourned for more than twenty-four (24) hours, in which case notice of the time and place shall be given before the time of the adjourned meeting, in the manner specified in Section 3.08, to the directors who were not present at the time of the adjournment.

Section 3.13. Action Without Meeting. Any action required or permitted to be taken by the board of directors may be taken without a meeting, if all members of the board shall individually or collectively consent in writing to that action. Such action by written consent shall have the same force and effect as a unanimous vote of the board of directors. Such written consent or consents shall be filed with the minutes of the proceedings of the board.

Section 3.14. Fees and Compensation of Directors. Directors and members of committees may receive such compensation, if any, for their services, and such reimbursement of expenses, as may be fixed or determined by resolution of the board of directors. This Section 3.14 shall not be construed to preclude any director from serving the corporation in any other capacity as an officer, agent, employee, or otherwise, and receiving compensation for those services.

Section 3.15. Committees of Directors. The board of directors may, by resolution adopted by a majority of the authorized number of directors, designate one or more committees, each consisting of two or more directors, to serve at the pleasure of the board. The board may designate one or more directors as alternate members of any committee, who may replace any absent member at any meeting of the committee. The appointment of members or alternate members of a committee requires the vote of a majority of the authorized number of directors. Any committee, to the extent provided in the resolution of the board, shall have all the authority of the board, except with respect to:

(a) The approval of any action which, under the General Corporation Law of California, also requires shareholders’ approval or approval of the outstanding shares;

(b) The filling of vacancies on the board of directors or in any committee;

(c) The fixing of compensation of the directors for serving on the board or on any committee;

(d) The amendment or repeal of bylaws or the adoption of new bylaws;

(e) The amendment or repeal of any resolution of the board of directors which by its express terms is not so amendable or repealable;

(f) A distribution to the shareholders of the corporation, except at a rate or in a periodic amount or within a price range determined by the board of directors; or

(g) The appointment of any other committees of the board of directors or the members of these committees.

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Section 3.16. Meetings and Action of Committees. Meetings and action of committees shall be governed by, and held and taken in accordance with, the provisions of Sections 3.05 (place of meetings), 3.07 (regular meetings), 3.08 (special meetings and notice), 3.09 (quorum), 3.10 (waiver of notice), 3.11 (adjournment), 3.12 (notice of adjournment), and 3.13 (action without meeting) of these bylaws, with such changes in the context of those bylaws as are necessary to substitute the committee and its members for the board of directors and its members, except that the time of regular meetings of committees may be determined either by resolution of the board of directors or by resolution of the committee; special meetings of committees may also be called by resolution of the board of directors; and notice of special meetings of committees shall also be given to all alternate members, who shall have the right to attend all meetings of the committee. The board of directors may adopt rules for the government of any committee not inconsistent with the provisions of these bylaws.

ARTICLE IV

OFFICERS

Section 4.01. Officers. The officers of the corporation shall be a chairman of the board, a president, a secretary, and a chief financial officer. The corporation may also have, at the discretion of the board of directors, one or more vice presidents, one or more assistant secretaries, one or more treasurers or assistant treasurers, and such other officers as may be appointed in accordance with the provisions of Section 4.03. Any number of offices may be held by the same person.

Section 4.02. Election of Officers. The officers of the corporation, except such officers as may be appointed in accordance with the provisions of Sections 4.03 or 4.05 hereof, shall be chosen by the board of directors, and each shall serve at the pleasure of the board, subject to the rights, if any, of an officer under any contract of employment.

Section 4.03. Subordinate Officers. The board of directors may appoint, and may empower the chairman of the board to appoint, such other officers as the business of the corporation may require, each of whom shall hold office for such period, have such authority and perform such duties as are provided in the bylaws or as the board of directors may from time to time determine.

Section 4.04. Removal and Resignation of Officers. Subject to the rights, if any, of an officer under any contract of employment, any officer may be removed, either with or without cause, by the board of directors, at any regular or special meeting of the board of directors, or, except in the case of an officer chosen by the board of directors, by any other officer upon whom such power of removal may be conferred by the board of directors.

Any officer may resign at any time by giving written notice to the corporation. Any resignation shall take effect at the date of the receipt of that notice or at any later time specified in that notice; and, unless otherwise specified in that notice, the acceptance of the resignation shall not be necessary to make it effective. Any resignation is without prejudice to the rights, if any, of the corporation under any contract to which the officer is a party.

Section 4.05. Vacancies in Offices. A vacancy in any office because of death, resignation, removal, disqualification or any other cause shall be filled in the manner prescribed in these bylaws for regular appointments to that office.

Section 4.06. Chairman of the Board. The board of directors shall appoint one of its members to be chairman of the board to serve at the pleasure of the board. Such person shall preside at all meetings of the board. The chairman of the board shall have the powers conferred by these bylaws and shall also have and may exercise such further powers and duties as from time to time may be conferred or assigned by the board of directors.

Section 4.07. President. The president of the corporation shall, in the absence of the chairman of the board, preside at all meetings of shareholders and at all meetings of the board of directors. The president shall exercise and perform such duties as may be assigned to him by the board of directors or the chairman of the board or as prescribed by the bylaws.

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Section 4.08. Vice Presidents. In the absence or disability of the president, the vice presidents, if any, in order of their rank as fixed by the board of directors or, if not ranked, a vice president designated by the board of directors, shall perform all the duties of the president, and when so acting shall have all the powers of, and be subject to all the restrictions upon, the president. The vice presidents shall have such other powers and perform such other duties as from time to time may be prescribed for them respectively by the board of directors or the bylaws, and the president.

Section 4.09. Secretary. The secretary shall keep or cause to be kept, at the principal executive office or such other place as the board of directors may direct, a book of minutes of all meetings and actions of directors, committees of directors, and shareholders, with the time and place of holding, whether regular or special, and, if special, how authorized, the notice given, the names of those present at directors’ meetings or committee meetings, the number of shares present or represented at shareholders’ meetings, and the proceedings.

The secretary shall keep, or cause to be kept, at the principal executive office or at the office of the corporation’s transfer agent or registrar, as determined by resolution of the board of directors, a share register, or a duplicate share register, showing the names of all shareholders and their addresses, the number and classes of shares held by each, the number and date of certificates issued for the same, and the number and date of cancellation of every certificate surrendered for cancellation.

The secretary shall give, or cause to be given, notice of all meetings of the shareholders and of the board of directors required by the bylaws or by law to be given, and he shall keep the seal of the corporation, if one be adopted, in safe custody, and shall have such other powers and perform such other duties as may be prescribed by the board of directors or by the bylaws.

Section 4.10. Chief Financial Officer. The chief financial officer shall keep and maintain, or cause to be kept and maintained, adequate and correct books and records of accounts of the properties and business transactions of the corporation, including accounts of its assets, liabilities, receipts, disbursements, gains, losses, capital, retained earnings, and shares. The books of account shall at all reasonable times be open to inspection by any director.

The chief financial officer shall deposit all moneys and other valuables in the name and to the credit of the corporation with such depositaries as may be designated by the board of directors. He shall disburse the funds of the corporation as may be ordered by the board of directors, shall render to the president and directors, whenever they request it, an account of all of his transactions as chief financial officer and of the financial condition of the corporation, and shall have other powers and perform such other duties as may be prescribed by the board of directors or these bylaws.

ARTICLE V

MISCELLANEOUS

Section 5.01. Indemnification Provisions. Except as prohibited by law, every director of this corporation shall be entitled as a matter of right to be indemnified by the corporation against reasonable expense and any liability paid or incurred by such person in connection with any threatened, pending or completed claim, action, suit or proceeding, whether civil, criminal, administrative, investigative or other, whether brought by or in the name of the corporation or otherwise, in which he or she may be involved, as a party or otherwise, by reason of such person being or having been a director, officer, employee or agent of the corporation or by reason of the fact that such person is or was serving at the request of the corporation as a director, officer, employee, or agent of another corporation, partnership, joint venture, trust, employee benefit plan or other enterprise or was a director, officer, employee or agent of a corporation which was a predecessor corporation of the corporation or of another enterprise at the request of such predecessor corporation (such claim, action, suit or proceeding hereinafter being referred to as an “Action”); provided, however, that no such right of indemnification shall exist in favor of a director with respect to an Action brought by such director against the corporation (other than a suit for indemnification as provided below in this Section 5.01). Such indemnification shall include the right to have expenses incurred by such person in connection with an Action paid in advance by the corporation until the final disposition of the Action, subject to such conditions as may be prescribed by law. As used herein, “liability” shall include amounts of judgments, excise taxes, fines and penalties, and amounts paid in settlement; and “expense” shall include fees and expenses of counsel subject to the terms of the following paragraph.

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If the corporation shall be obligated to pay the expenses of any Action against a director, the corporation, if appropriate, shall be entitled to assume the defense of such Action, with counsel approved by the director, upon the delivery to the director of written notice of its election so to do. After delivery of such notice, approval of such counsel by the director and the retention of such counsel by the corporation, the corporation will not be liable to the director under this Section 5.01 for any fees or expenses of counsel subsequently incurred by the director with respect to the same Action, provided that (i) the director shall have the right to employ his counsel in any such Action at the director’s expense; and (ii) the fees and expenses of the director’s counsel shall be at the expense of the corporation if (A) the employment of counsel by the director has been previously authorized by the corporation, (B) the director shall have reasonably concluded that there may be a conflict of interest between the corporation and the director in the conduct of any such defense or (C) the corporation shall not, in fact, have employed counsel to assume the defense of such Action. Notwithstanding anything contained herein to the contrary, the corporation shall have no obligation under this Section 5.01 to indemnify any director for any amounts paid in settlement of an Action unless the corporation consents to such settlement, which consent shall not be unreasonably withheld.

If a claim under the two preceding paragraphs is not paid in full by the corporation within thirty (30) days after a written notice thereof has been received by the corporation, the claimant may at any time thereafter bring suit against the corporation to recover the unpaid amount of the claim, and if successful in whole or in part, the claimant shall also be entitled to be paid the expense of prosecuting such claim. It shall be a defense to any such action that the conduct of the claimant was such that under California law the corporation would be prohibited from indemnifying the claimant for the amount claimed, but the burden of proving such defense shall be on the corporation. Neither the failure of the corporation (including its board) to have made a determination prior to the commencement of such action that indemnification of the claimant is proper in the circumstances because the conduct of the claimant was not such that indemnification would be prohibited by law, nor an actual determination by the corporation (including the board of directors, independent legal counsel or its shareholders) that the conduct of the claimant was such that indemnification would be prohibited by law, shall be a defense to the action or create a presumption that the conduct of the claimant was such that indemnification would be prohibited by law.

The right of indemnification provided for herein (a) shall not be deemed exclusive of any other rights, whether now existing or hereafter created, to which those seeking indemnification hereunder may be entitled under any agreement, bylaw or article provision, vote of shareholders or directors or otherwise, (b) shall continue as to persons who have ceased to have the status pursuant to which they were entitled or were denominated as entitled to indemnification hereunder and shall inure to the benefit of the heirs and legal representatives of persons entitled to indemnification hereunder, and (c) shall be applicable to actions, suits or proceedings commenced after the adoption hereof, whether arising from acts or omissions occurring before or after the adoption hereof. The right of indemnification provided for herein may not be amended, modified or repealed so as to limit in any way the indemnification provided for herein with respect to any acts or omissions occurring prior to the adoption of any such amendment or repeal.

The corporation has full power and authority to extend any of the indemnification benefits provided for in this Section 5.01 to any officer or agent of the corporation, but the corporation is under no obligation to extend such benefits to any person who is not entitled thereto by law or pursuant to the first paragraph of this Section 5.01.

Section 5.02. Maintenance and Inspection of Share Register. The corporation shall keep at its principal executive office, or at the office of its transfer agent or registrar, if either be appointed and as determined by resolution of the board of directors, a record of its shareholders, giving the names and addresses of all shareholders and the number and class of shares held by each shareholder.

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A shareholder or shareholders of the corporation holding at least five percent (5%) in the aggregate of the outstanding voting shares of the corporation may (i) inspect and copy the records of shareholders’ names and addresses and shareholdings during usual business hours on five (5) days’ prior written demand on the corporation, and (ii) obtain from the transfer agent of the corporation, on written demand and on the tender of such transfer agent’s usual charges for such list, a list of the shareholders’ names and addresses, who are entitled to vote for the election of directors, and their shareholdings, as of the most recent record date for which that list has been compiled or as of a date specified by the shareholder after the date of demand. This list shall be made available to any such shareholder by the transfer agent on or before the later of five (5) days after the demand is received or the date specified in the demand as the date as of which the list is to be compiled. The record of shareholders shall also be open to inspection on the written demand of any shareholder or holder of a voting trust certificate, at any time during usual business hours, for a purpose reasonably related to the holder’s interests as a shareholder or as the holder of a voting trust certificate. Any inspection and copying under this Section 5.02 may be made in person or by an agent or attorney of the shareholder or holder of a voting trust certificate making the demand.

Section 5.03. Maintenance and Inspection of Bylaws. The corporation shall keep at its principal executive office, or if its principal executive office is not in the State of California, at its principal business office in this state, the original or a copy of the bylaws as amended to date, which shall be open to inspection by the shareholders at all reasonable times during office hours. If the principal executive office of the corporation is outside the State of California and the corporation has no principal business office in this state, the secretary shall, upon the written request of any shareholder, furnish to that shareholder a copy of the bylaws as amended to date.

Section 5.04. Maintenance and Inspection of Other Corporate Records. The accounting books and records and minutes of proceedings of the shareholders and the board of directors and any committee or committees of the board of directors shall be kept at such place or places designated by the board of directors, or, in the absence of such designation, at the principal executive office of the corporation. The minutes shall be kept in written form and the accounting books and records shall be kept either in written form or in any other form capable of being converted into written form. The minutes and accounting books and records shall be open to inspection upon the written demand of any shareholder or holder of a voting trust certificate, at any reasonable time during usual business hours, for a purpose reasonably related to the holder’s interests as a shareholder or as the holder of a voting trust certificate. The inspection may be made in person or by an agent or attorney, and shall include the right to copy and make extracts. These rights of inspection shall extend to the records of each subsidiary corporation of the corporation.

Section 5.05. Inspection of Books and Records by Directors. Every director shall have the absolute right at any reasonable time to inspect all books, records, and documents of every kind and the physical properties of the corporation and each of its subsidiary corporations. This inspection by a director may be made in person or by an agent or attorney and the right of inspection includes the right to copy and make extracts of documents.

Section 5.06. Annual Report to Shareholders. The board of directors shall cause an annual report to be sent to the shareholders not later than one hundred twenty (120) days after the close of the fiscal year adopted by the corporation. This report shall be sent at least fifteen (15) (or, if sent by third-class mail, thirty-five (35)) days before the annual meeting of shareholders to be held during the next fiscal year and in the manner specified in Section 2.05 of these bylaws for giving notice to shareholders of the corporation. The annual report shall contain a balance sheet as of the end of the fiscal year and an income statement and statement of changes in financial position for the fiscal year, accompanied by any report of independent accountants or, if there is no such report, the certificate of an authorized officer of the corporation that the statements were prepared without audit from the books and records of the corporation.

Section 5.07. Financial Statements. A copy of any annual financial statement and any income statement of the corporation for each quarterly period of each fiscal year, and any accompanying balance sheet of the corporation as of the end of each such period, that has been prepared by the corporation shall be kept on file in the principal executive office of the corporation for twelve (12) months and each such statement shall be exhibited at all reasonable times to any shareholder demanding an examination of any such statement or a copy shall be mailed to any such shareholder.

If a shareholder or shareholders holding at least five percent (5%) of the outstanding shares of any class of stock of the corporation makes a written request to the corporation for an income statement of the corporation for the three-month, six-month, or nine-month period of the then current fiscal year ended more than thirty (30) days before the date of the request, and a balance sheet of the corporation as of the end of that period, the chief financial officer shall cause the statements referred to above to be prepared, if not already prepared, and shall deliver personally or mail that statement or statements to the person making the request within thirty (30) days after the receipt of the request. If the corporation has not sent to the shareholders its annual report for the last fiscal year, this report shall likewise be delivered or mailed to any shareholder or shareholders within thirty (30) days after the request.

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The corporation shall also, on the written request of any shareholder, mail to the shareholder a copy of the last annual, semi-annual, or quarterly income statement which it has prepared, and a balance sheet as of the end of that period.

The quarterly income statements and balance sheets referred to in this Section 5.07 shall be accompanied by the report, if any, of any independent accountants engaged by the corporation or the certificate of an authorized officer of the corporation that the financial statements were prepared without audit from the books and records of the corporation.

Section 5.08. Record Date for Purposes Other than Notice and Voting. For purposes of determining the shareholders entitled to receive payment of any dividend or other distribution or allotment of any rights or entitled to exercise any rights in respect of any other lawful action (other than action by shareholders by written consent without a meeting), the board of directors may fix, in advance, a record date, which shall not be more than sixty (60) days before any such action, and in that case only shareholders at the close of business on the record date are entitled to receive the dividend, distribution, or allotment of rights or to exercise the rights, as the case may be, notwithstanding any transfer of any shares on the books of the corporation after the record date so fixed, except as otherwise provided in the California General Corporation Law.

If the board of directors does not so fix a record date, the record date for determining shareholders for any such purpose shall be at the close of business on the day on which the board adopts the applicable resolution or the sixtieth (60th) day before the date of that action, whichever is later.

Section 5.09. Checks, Drafts. Evidences of Indebtedness. All checks, drafts, or other orders for payment of money, notes, or other evidences of indebtedness, issued in the name of or payable to the corporation, shall be signed or endorsed by such person or persons and in such manner as, from time to time, shall be determined by resolution of the board of directors.

Section 5.10. Corporate Contracts and Instruments; How Executed. The board of directors, except as otherwise provided in these bylaws, may authorize any officer or officers, agent or agents, to enter into any contract or execute any instrument in the name of and on behalf of the corporation, and this authority may be general or confined to specific instances; and, unless so authorized or ratified by the board of directors or within the agency power of an officer, no officer, agent, or employee shall have any power or authority to bind the corporation by any contract or engagement or to pledge its credit or to render it liable for any purpose or for any amount.

Section 5.11. Certificates for Shares. A certificate or certificates for shares of the capital stock of the corporation shall be issued to each shareholder when any of these shares are fully paid, and the board of directors may authorize the issuance of certificates or shares as partly paid provided that these certificates shall state the amount of the consideration to be paid for them and the amount paid. All certificates shall be signed in the name of the corporation by the chairman of the board or vice chairman of the board or the president or vice president and by the chief financial officer or the treasurer or an assistant treasurer or the secretary or any assistant secretary, certifying the number of shares and the class or series of shares owned by the shareholder. Any or all of the signatures on the certificate may be facsimile. In case any officer, transfer agent, or registrar who has signed or whose facsimile signature has been placed on a certificate shall have ceased to be that officer, transfer agent, or registrar before that certificate is issued, it may be issued by the corporation with the same effect as if that person were an officer, transfer agent or registrar at the date of issue.

Section 5.12. Lost Certificates. Except as provided in this Section 5.12, no new certificates for shares shall be issued to replace an old certificate unless the latter is surrendered to the corporation and cancelled at the same time. The board of directors may, in case any share certificate or certificate for any other security is lost, stolen or destroyed, authorize the issuance of a replacement certificate on such terms and conditions as the board may require, including provision for indemnification of the corporation secured by a bond or other adequate security sufficient to protect the corporation against any claim that may be made against it, including any expense or liability, on account of the alleged loss, theft, or destruction of the certificate or the issuance of the replacement certificate.

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Section 5.13. Representation of Shares of Other Corporations. The chairman of the board, the president, or any vice president, or any other person authorized by resolution of the board of directors or by any of the foregoing designated officers, is authorized to vote on behalf of the corporation any and all shares of any other corporation or corporations, foreign or domestic, standing in the name of the corporation. The authority granted to these officers to vote or represent on behalf of the corporation any and all shares held by the corporation in any other corporation or corporations may be exercised by any of these officers in person or by any person authorized to do so by a proxy duly executed by these officers.

Section 5.14. Construction and Definitions. Unless the context requires otherwise, the general provisions, rules of construction and definitions in the California General Corporation Law shall govern the construction of these bylaws. Without limiting the generality of this provision, the singular number includes the plural, the plural number includes the singular, and the term “person” includes both a corporation and a natural person.

ARTICLE VI

AMENDMENTS

Section 6.01. Amendment by Shareholders. New bylaws may be adopted or these bylaws may be amended or repealed by the vote or written consent of holders of a majority of the outstanding shares entitled to vote; provided, however, that if the articles of incorporation of the corporation set forth the number of authorized directors of the corporation, the authorized number of directors may be changed only by an amendment of the articles of incorporation.

Section 6.02. Amendment by Directors. Subject to the rights of the shareholders as provided in Section 6.01 hereof, to adopt, amend, or repeal bylaws, bylaws may be adopted, amended, or repealed by the board of directors; provided, however, that the board of directors may adopt a bylaw or amendment of a bylaw changing the authorized number of directors only for the purpose of fixing the exact number of directors within the limits specified in the articles of incorporation or in Section 3.02 of these bylaws.

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EX-31.1

EXHIBIT 31.1

CERTIFICATION UNDER SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, David L. Payne certify that:

1. I have reviewed this report on Form 10-Q of Westamerica Bancorporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

/s/ David L. Payne David L. Payne

Chairman, President and Chief Executive Officer

Date: May 8, 2009

EX-31.2

EXHIBIT 31.2

CERTIFICATION UNDER SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, John “Robert” Thorson certify that:

1. I have reviewed this report on Form 10-Q of Westamerica Bancorporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

/s/ John “Robert” Thorson Senior Vice President and Chief Financial Officer

Date: May 8, 2009

EX-32.1

EXHIBIT 32.1

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED PURSUANT TO SECTION 906 OF THE
SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Westamerica Bancorporation (the Company) on Form 10-Q for the period ended March 31, 2009 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, David L. Payne, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ David L. Payne David L. Payne

Chairman, President and Chief Executive Officer

Date: May 8, 2009

EX-32.2

EXHIBIT 32.2

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED PURSUANT TOSECTION 906 OF THE
SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Westamerica Bancorporation (the Company) on Form 10-Q for the period ended March 31, 2009 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, John “Robert” Thorson, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ John “Robert” Thorson Senior Vice President and Chief Financial Officer

Date: May 8, 2009