Page 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 11-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2009
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______________ to _______________
Commission file number 001-9383
A. Full title of the plan and the address of the plan, if
different from that of the issuer named below:
WESTAMERICA BANCORPORATION TAX DEFERRED
SAVINGS/RETIREMENT PLAN (ESOP)
B. Name of issuer of the securities held pursuant to the plan and
the address of its principal executive office:
Westamerica Bancorporation
1108 Fifth Avenue
San Rafael, California 94901
Page 2
WESTAMERICA BANCORPORATION
TAX DEFERRED SAVINGS/RETIREMENT PLAN (ESOP)
FINANCIAL STATEMENTS
AS OF DECEMBER 31, 2009 AND 2008 AND
FOR THE YEARS ENDED DECEMBER 31, 2009, 2008 AND 2007
AND
SUPPLEMENTAL SCHEDULES
AS OF AND FOR THE YEAR ENDED DECEMBER 31, 2009
AND
REPORT OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
Page 3
WESTAMERICA BANCORPORATION
TAX DEFERRED SAVINGS/RETIREMENT PLAN (ESOP)
FINANCIAL STATEMENTS
AND SUPPLEMENTAL SCHEDULES
TABLE OF CONTENTS
Page
Report of Independent Registered Public Accounting Firm 4
Financial Statements:
Statement of Net Assets Available for Benefits as of
December 31, 2009 and 2008 5
Statement of Changes in Net Assets Available for Benefits
for the Years Ended December 31, 2009, 2008 and 2007 6
Notes to Financial Statements 7-19
Supplemental Schedules:
Schedule H, Line 4i - Schedule of Assets (Held at End of Year)
as of December 31, 2009 20-21
Schedule H, Line 4j - Schedule of Reportable Transactions
for the Year Ended December 31, 2009 22
Signatures 23
Exhibit Index 24
All other schedules required by Section 2520.103-10 of the Department of Labor's
Rules and Regulations for Reporting and Disclosure under the Employee Retirement
Income Security Act of 1974 have been omitted because they are not applicable.
Page 4
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Employee Benefits and
Compensation Committee of the
Board of Directors of
Westamerica Bancorporation
We have audited the accompanying statement of net assets available for benefits
of the Westamerica Bancorporation Tax Deferred Savings/Retirement Plan (ESOP)
(the "Plan") as of December 31, 2009 and 2008, and the related statement of
changes in net assets available for benefits for each of the years in the three-
year period ended December 31, 2009. These financial statements are the
responsibility of the Plan's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with the auditing standards of the Public
Company Accounting Oversight Board (United States). Those standards require
that we plan and perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for benefits of the Westamerica
Bancorporation Tax Deferred Savings/Retirement Plan (ESOP) as of December 31,
2009 and 2008, and the changes in net assets available for benefits for each of
the years in the three-year period ended December 31, 2009, in conformity with
accounting principles generally accepted in the United States of America.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules of assets
(held at end of year) and reportable transactions, as of and for the year ended
December 31, 2009, are presented for the purpose of additional analysis and are
not a required part of the basic financial statements, but are supplementary
information required by the United States Department of Labor Rules and
Regulations for Reporting and Disclosure under the Employee Retirement Income
Security Act of 1974. These supplemental schedules are the responsibility of
the Plan's management. The supplemental schedules have been subjected to the
auditing procedures applied in the audit of the basic 2009 financial statements
and, in our opinion, are fairly stated in all material respects in relation to
the basic 2009 financial statements taken as a whole.
June 25, 2010
Page 5
WESTAMERICA BANCORPORATION
TAX DEFERRED SAVINGS/RETIREMENT PLAN (ESOP)
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
December 31, 2009 and 2008
2009 2008
-------------- --------------
ASSETS
Investments (Notes 3, 4 and 5) $ 52,046,322 $ 44,591,743
-------------- --------------
Receivables:
Employer contributions 2,374
Participant contributions 4,473
-------------- --------------
Total receivables 6,847
-------------- --------------
Net assets available for benefits $ 52,053,169 $ 44,591,743
============== ==============
The accompanying notes are an integral
part of these financial statements.
Page 6
WESTAMERICA BANCORPORATION
TAX DEFERRED SAVINGS/RETIREMENT PLAN (ESOP)
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
For the Years Ended December 31, 2009, 2008 and 2007
2009 2008 2007
------------ ------------ ------------
ADDITIONS
Investment income:
Dividends and capital gains distributions $ 1,112,914 $ 1,253,444 $ 1,860,130
Interest on participant loans 82,840 86,017 84,168
Net appreciation (depreciation) in fair
value of investments (Note 3) 5,356,144 (4,092,949) (2,615,407)
------------ ------------ ------------
Total investment income 6,551,898 (2,753,488) (671,109)
------------ ------------ ------------
Contributions:
Participants 2,058,159 1,958,673 2,005,817
Employer 1,353,839 1,276,990 1,196,990
Participant rollovers 131,244 67,182 58,629
------------ ------------ ------------
Total contributions 3,543,242 3,302,845 3,261,436
------------ ------------ ------------
Total additions 10,095,140 549,357 2,590,327
------------ ------------ ------------
DEDUCTIONS
Benefits paid to participants 2,618,067 6,901,614 6,498,412
Administrative expenses (Note 7) 15,647 16,482 17,262
Other deductions 3,858 51,576
------------ ------------ ------------
Total deductions 2,633,714 6,921,954 6,567,250
------------ ------------ ------------
Net increase (decrease) 7,461,426 (6,372,597) (3,976,923)
Net assets available for benefits:
Beginning of year 44,591,743 50,964,340 54,941,263
------------ ------------ ------------
End of year $ 52,053,169 $ 44,591,743 $ 50,964,340
============ ============ ============
The accompanying notes are an integral
part of these financial statements.
Page 7
WESTAMERICA BANCORPORATION
TAX DEFERRED SAVINGS/RETIREMENT PLAN (ESOP)
NOTES TO FINANCIAL STATEMENTS
1. DESCRIPTION OF PLAN
The following description of the Westamerica Bancorporation (the "Company") Tax
Deferred Savings/Retirement Plan (ESOP) (the "Plan") provides only general
information. Participants should refer to the Summary Plan Description and Plan
Document for a more complete description of the Plan's provisions.
General
-------
The Plan is a defined contribution plan covering substantially all employees of
the Company. The Plan, which became effective October 1, 1985, is intended to
be a qualified stock bonus plan under section 401(a) of the Internal Revenue
Code (IRC) and is designated as an employee stock ownership plan or ESOP.
Portions of the Plan are also intended to qualify as a qualified cash or
deferred arrangement within the meaning of section 401(k) of the IRC. The Plan
also provides for Roth elective contributions.
The Employee Benefits and Compensation Committee of the Company's Board of
Directors (the "Committee") delegates the administration of the Plan to the
Company's Pension Management Committee. The Committee has the responsibility
for the general operation of the Plan, including the resolution of any questions
arising under the Plan agreement. The Plan is subject to the provisions of the
Employee Retirement Income Security Act of 1974 (ERISA). Investments in the
Plan are participant directed with the exception of employer contributions which
are invested in shares of the Company's common stock at the time of
contribution. Subsequent to investment in the Company's common stock,
participants may direct employer matching contributions among all investment
options. Vanguard Fiduciary Trust Company serves as Trustee of the Plan.
Eligibility
-----------
Under the Plan, employees of the Company who are compensated on a salaried basis
become eligible to participate in the plan on the first day of the calendar
month coinciding with or following the date the employee completes 90
consecutive days of service with the Company or completes 1,000 service hours in
a 12-month consecutive period.
On February 6, 2009 (the "Closing Date"), Westamerica Bank, a subsidiary of the
Company, acquired certain assets and deposits of County Bank from the Federal
Deposit Insurance Corporation and hired certain employees of County Bank. On
September 15, 2009, the Plan was amended to provide past service credit for
eligible employees of County Bank. For eligibility purposes, service with
County Bank is counted as service with the Company for any individual who was an
employee of County Bank on the Closing Date ("County Bank Employees"). Hire
dates for County Bank Employees are their County Bank hire dates. County Bank
Employees who were eligible employees and satisfied the service requirements
under the Plan as of the Closing Date commenced participation in the Plan
effective on the Closing Date.
Page 8
1. DESCRIPTION OF PLAN (Continued)
Vesting
-------
Participants are immediately vested in their salary-deferral contributions, the
Company's discretionary and matching contributions, plus actual earnings
thereon.
Contributions
-------------
Each year, participants may make salary deferral contributions in any whole
percentage of pretax annual compensation subject to certain IRC limitations.
Participants may also elect to make salary deferral contributions on an after-
tax basis in whole percentage increments ("Roth" elective contributions),
subject to certain limitations defined by the Plan.
The Company makes a matching contribution equal to 100 percent of the
participant's elective contribution and Roth elective contribution, up to a
maximum of 6 percent of the participant's compensation. Additional amounts may
be contributed at the discretion of the Company's Board of Directors.
Participants may also contribute amounts representing distributions from other
qualified Roth accounts, defined benefit or defined contribution plans. For the
years ended December 31, 2009, 2008 and 2007, the Company made no discretionary
contributions. Company contributions are subject to certain IRC limitations.
Participant Accounts
--------------------
Individual accounts are maintained for each Plan participant. Each
participant's account is credited with the participant's contribution,
allocation of the Company's matching and discretionary contributions, allocation
of Plan earnings, and charged with withdrawals, allocations of Plan losses and
administrative expenses.
Employer matching contributions are allocated to participants based on the
participant's elective contribution. Employer discretionary contributions are
allocated to the account of each participant in ratio of the participant's
eligible compensation to the total eligible compensation for all Plan
participants.
Participants' Investment Options
--------------------------------
Company matching contributions are invested in the Westamerica Common Stock Fund
in accordance with the Plan Document. Participants may redirect Company
matching contributions from the Westamerica Common Stock Fund to other
investment options at their discretion.
Participants direct participant contributions in whole or in part in any of the
following investment fund options as of December 31, 2009:
* The Westamerica Common Stock Fund, which is invested in the Company's
common stock and temporary interest-bearing money market funds.
Page 9
1. DESCRIPTION OF PLAN (Continued)
Participants' Investment Options (Continued)
--------------------------------
* Vanguard 500 Index Fund, which invests in the 500 stocks that make up the
unmanaged Standard & Poor's 500 Composite Stock Price Index, a widely
recognized benchmark of U.S. stock market performance.
* Vanguard Explorer Fund, which invests in a diversified group of small-company
stocks with prospects for above-average growth.
* Vanguard Morgan Growth Fund, which invests primarily in stocks of large and
mid-sized companies that have strong records of growth in sales and earnings or
that have performed well during certain market cycles.
* Vanguard Prime Money Market Fund, which invests in short-term, high-quality
money market instruments issued by financial institutions, nonfinancial
corporations, the U.S. government, and federal agencies.
* Vanguard Total Bond Market Index Fund, which invests in bonds that attempt to
track the performance of the Barclays Capital U.S. Aggregate Float Adjusted
Bond Index. At least 80% of the fund's assets are invested in bonds held in the
index. The fund maintains a dollar-weighted average maturity ranging between 5
and 10 years.
* Vanguard Total International Stock Index Fund, which invests in three Vanguard
international index funds: a European fund, a Pacific fund, and an emerging
markets fund in addition to direct investments in common stocks. These funds
invest in the stock of companies in more than 30 countries.
* Vanguard Windsor II Fund, which invests in a diversified group of out-of-favor
stocks of large capitalization companies. The stocks selected generally sell at
prices below the market average compared to their dividend income and future
return potential.
* Vanguard Extended Market Index Fund, which invests in a broadly diversified
portfolio of stocks of small and medium sized companies that are regularly
traded on the New York Stock Exchange and NASDAQ over-the-counter market. The
portfolio is designed to be representative of the Standard & Poor's Completion
Index.
* Vanguard Short-Term Federal Fund, which invests in at least 80% of its assets
in short-term bonds issued by U.S. government agencies and instrumentalities,
many of which are not backed by the full faith and credit of the U.S.
government. To reduce fluctuations in its share price, the fund maintains an
average maturity of 1 to 3 years.
Page 10
1. DESCRIPTION OF PLAN (Continued)
Participants' Investment Options (Continued)
--------------------------------
Vanguard Target Retirement Funds consists of eleven targeted maturity funds as
follows:
* Vanguard Target Retirement Income Fund
* Vanguard Target Retirement 2005 Fund
* Vanguard Target Retirement 2010 Fund
* Vanguard Target Retirement 2015 Fund
* Vanguard Target Retirement 2020 Fund
* Vanguard Target Retirement 2025 Fund
* Vanguard Target Retirement 2030 Fund
* Vanguard Target Retirement 2035 Fund
* Vanguard Target Retirement 2040 Fund
* Vanguard Target Retirement 2045 Fund
* Vanguard Target Retirement 2050 Fund
Each fund invests in other Vanguard mutual funds using an asset allocation
strategy designed for investors planning to retire in or within a few years of
the year in the fund's name, except the Income Fund, which is designed for
investors in retirement.
Vanguard Target Retirement Funds are designed as a balanced fund-of-funds for
long-term investors. Each Vanguard Target Retirement Fund invests in broadly
diversified funds, which includes stock funds, bond funds and a money market
fund.
With the exception of the Vanguard Target Retirement Income Fund, the relative
allocations among Vanguard Target Retirement Funds' component funds gradually
grow more conservative over a predetermined schedule.
Participants may change their investment options at any time directly through
The Vanguard Group.
Participant Loans
-----------------
Participants may borrow a minimum of $1,000 up to a maximum equal to the lesser
of 50 percent of their account balance, 100 percent of participant
contributions, or $50,000. For the purposes of this limit, all qualified plans
of the Company shall be considered one plan. Loans are secured by the balance in
the participant's account. Participant loans are funded by selling investments
in the borrowing participant's accounts and bear interest at rates that range
from 4.25 percent to 9.75 percent, which are commensurate with prevailing market
rates at the time the funds are borrowed. Loans are made for a term not to
exceed 5 years. Principal and interest is paid ratably through payroll
deductions and invested in the borrowing participant's accounts in accordance
with their investment directions.
Page 11
1. DESCRIPTION OF PLAN (Continued)
Payment of Benefits
-------------------
Upon termination of service for any reason, a participant may elect to receive a
lump-sum distribution equal to the value in his or her account. Distributions
for the value of a participant's account invested in the Westamerica Common
Stock Fund stock are made in the form of the Company's common stock plus cash
for any fractional shares or, if a participant elects, in cash or an in-kind
transfer, as provided by the Plan document. Participants may also receive in-
service distributions on account of hardship or after attaining age 59 1/2.
Cash dividends paid on Westamerica Bancorporation common stock allocated to
participant accounts may be paid to participants in cash or be credited to the
participant's account as earnings. If the value of a separated participant's
benefit is not more than $1,000, the benefit shall be automatically paid in a
single lump sum in cash or, if elected, directly to an eligible retirement plan.
Benefits payable to participants for amounts greater than $1,000 may be made in
cash or other form of distribution, as defined by the Plan. As of December 31,
2009 and 2008, there were no benefits payable to participants that had elected
to withdraw from the Plan but had not yet been paid.
Voting Rights
-------------
Each participant is entitled to exercise voting rights attributable to the
Westamerica Bancorporation common stock shares allocated to his or her account
and is notified by the Trustee prior to the time that such rights are to be
exercised. The Trustee is not permitted to vote any allocated share for which
instructions have not been given by a participant.
Plan Termination
----------------
Although it has not expressed any interest to do so, the Company has the right
under the Plan to discontinue its contributions at any time and to terminate the
Plan, subject to the provisions of ERISA.
Administrative Expenses
-----------------------
The Company provides bookkeeping and other administrative services for the Plan
at no charge. The Company pays the Plan's annual account maintenance fees for
participants actively employed by the Company and other administrative expenses.
2. SUMMARY OF ACCOUNTING POLICIES
Basis of Accounting
-------------------
The financial statements of the Plan have been prepared on the accrual basis of
accounting in accordance with accounting principles generally accepted in the
United States of America.
Page 12
2. SUMMARY OF ACCOUNTING POLICIES (Continued)
Use of Estimates
----------------
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires the Plan's
management to make estimates and assumptions that affect the reported amounts of
net assets available for benefits and changes therein and disclosure of
contingent assets and liabilities. Actual results could differ from those
estimates.
Investment Valuation and Income Recognition
-------------------------------------------
The Plan's investments are stated at fair value. Fair value is the price that
would be received to sell an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date. See Note 5 for
additional discussion of fair value measurements.
Purchases and sales of securities are recorded on a trade-date basis. Interest
income is recorded on the accrual basis. Dividends are recorded on the ex-
dividend date. Net appreciation (depreciation) in fair value of investments
includes net unrealized market appreciation (depreciation) of investments and
net realized gains and losses on the sale of investments during the period.
Management fees and operating expenses charged to the Plan for investments in
shares of registered investment companies (mutual funds) are deducted from
income earned on a daily basis and are not separately reflected. Consequently,
management fees and operating expenses are reflected as a reduction of
investment return for such investments. Trustee fees for Westamerica
Bancorporation Common Stock are charged to the Westamerica Common Stock Fund.
Risks and Uncertainties
-----------------------
The Plan utilizes various investment instruments, including the common stock of
the Company and mutual funds. Investment securities, in general, are exposed to
various risks, such as interest rate, credit, currency and overall market
volatility. Due to the level of risk associated with certain investment
securities, it is reasonably possible that changes in the values of investment
securities will occur in the near term and that such changes could materially
affect the amounts reported in the financial statements.
Concentrations of Investments
-----------------------------
Included in investments at December 31, 2009 and 2008 are shares of the
Westamerica Common Stock Fund amounting to $27,185,402 and $24,331,790,
respectively. The Westamerica Common Stock Fund represents 52% and 55% of total
investments of the Plan at December 31, 2009 and 2008, respectively. A
significant decline in the market value of the Company's stock would have a
materially adverse effect on the Plan's net assets available for benefits.
Page 13
2. SUMMARY OF ACCOUNTING POLICIES (Continued)
Redemption Fees
---------------
The Vanguard Total International Stock Index Fund charges a 2% fee ($20 per
$1,000 invested) on shares redeemed within two months of purchase. The fee is
paid directly to the Vanguard Total International Stock Index Fund. These
redemption fees are charged at the participant account level, and are not
included in administrative expenses of the Plan.
Payment of Benefits
-------------------
Benefits are recorded when paid.
Reclassifications
-----------------
Certain amounts shown in the prior year have been reclassified to conform to the
current year presentation.
Adoption of New Accounting Standards
------------------------------------
FASB Accounting Standards Codification TM
In June 2009, the Plan adopted Financial Accounting Standards Board (FASB)
Accounting Standards Codification (ASC) 105-10, Accounting Standards
Codification TM (previously SFAS No. 168, Generally Accepted Accounting
Principles - FASB Accounting Standards Codification and the Hierarchy of
Generally Accepted Accounting Principles). ASC 105-10 establishes the FASB
Accounting Standards Codification TM (Codification) as the single source of
authoritative U.S. generally accepted accounting principles (U.S. GAAP)
recognized by the FASB to be applied by nongovernmental entities. The adoption
of this update did not have a material impact on the Plan's financial position
or results of operations.
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
In April 2009, the Plan adopted FASB ASC 820-65, Fair Value Measurements,
(previously FASB 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 ASC 820-10 when
the volume and level of activity for the asset or liability have decreased
significantly. ASC 820-65 also provides guidance on identifying circumstances
that indicate a transaction is not orderly. The adoption of ASC 820-65 did not
have a significant impact on the Plan's financial position or results of
operations.
Page 14
2. SUMMARY OF ACCOUNTING POLICIES (Continued)
Adoption of New Accounting Standards (Continued)
------------------------------------
Subsequent Events
In July 2009, the Plan adopted FASB ASC 855-10, Subsequent Events, which
establishes general standards of accounting for and disclosure of events that
occur after the balance sheet date but before financial statements are issued.
ASC 855-10 requires entities to recognize in the financial statements the effect
of all events or transactions that provide additional evidence of conditions
that existed at the balance sheet date, including the estimates inherent in the
financial preparation process.
In February 2010, the FASB issued accounting guidance that, among other things,
requires management to evaluate subsequent events through the date the financial
statements are issued with the SEC and no longer requires that an SEC filer
disclose the date through which subsequent events have been reviewed. The Plan
Sponsor adopted the amendments upon issuance with no material impact to the
Plan's financial statements.
Financial Accounting Standards Issued but Not Yet Adopted
---------------------------------------------------------
Fair Value Measurements and Disclosures: Improving Disclosures about Fair Value
Measurements
The FASB has issued Accounting Standards Update (ASU) No. 2010-06, Fair Value
Measurements and Disclosures (Topic 820): Improving Disclosures about Fair
Value Measurements. This ASU requires new disclosures and clarifies existing
disclosure requirements about fair value measurement. The FASB's objective is
to improve these disclosures and, thus, increase the transparency in financial
reporting. Specifically, ASU 2010-06 amends Codification Subtopic 820-10 to now
require:
* A reporting entity should disclose separately the amounts of significant
transfers in and out of Level 1 and Level 2 fair value measurements and
describe the reasons for the transfers; and
* In the reconciliation for Level 3 fair value measurements, a reporting
entity should present separately information about purchases, sales,
issuances and settlements.
Page 15
2. SUMMARY OF ACCOUNTING POLICIES (Continued)
Financial Accounting Standards Issued but Not Yet Adopted (Continued)
---------------------------------------------------------
In addition, ASU 2010-06 clarifies the requirements of the following existing
disclosures:
* For purposes of reporting fair value measurement for each class of assets
and liabilities, a reporting entity needs to use judgment in determining the
appropriate classes of assets and liabilities; and
* A reporting entity should provide disclosures about the valuation
techniques and inputs used to measure fair value for both recurring and
nonrecurring fair value measurements.
ASU 2010-06 is effective for annual reporting periods beginning after December
15, 2009, except for the disclosures about purchases, sales, issuances and
settlements in the roll forward of activity in Level 3 fair value measurements.
Those disclosures are effective for fiscal years beginning after December 15,
2010. Early application is permitted.
3. INVESTMENTS
The following table presents investments at fair value that represent 5% or more
of the Plan's net assets as of December 31, 2009 or 2008:
2009 2008
-------------- --------------
Westamerica Common Stock Fund $ 27,185,402 $ 24,331,790
Vanguard Prime Money Market Fund 4,186,773 4,756,924
Vanguard 500 Index Fund 3,741,698 3,089,637
Vanguard Target Retirement 2015 Fund 2,814,281 2,685,330
Other investments 14,118,168 9,728,062
-------------- --------------
$ 52,046,322 $ 44,591,743
============== ==============
The Plan's investments, including investments bought, sold, and held during the
year, appreciated in value by $5,356,144 during 2009, and depreciated in value
by $4,092,949 and $2,615,407 during 2008 and 2007, respectively, as follows:
2009 2008 2007
------------ ------------ ------------
Westamerica Common Stock Fund $ 2,107,726 $ 3,266,908 $(3,345,183)
Mutual funds 3,248,418 (7,359,857) 729,776
------------ ------------ ------------
$ 5,356,144 $(4,092,949) $(2,615,407)
============ ============ ============
Page 16
4. INVESTMENT IN WESTAMERICA BANCORPORATION COMMON STOCK
The Plan's investments at December 31, 2009 and 2008 in Westamerica
Bancorporation common stock are as follows:
2009 2008
-------------- --------------
Number of shares 490,977 475,695
============== ==============
Cost $ 15,610,008 $ 14,426,158
============== ==============
Fair value $ 27,185,402 $ 24,331,790
============== ==============
5. FAIR VALUE MEASUREMENTS
Fair Value Hierarchy
--------------------
The Plan groups its assets and liabilities measured at fair value within 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. Valuations
within these levels are based upon:
Level 1 - Quoted market prices for identical instruments traded in active
exchange markets.
Level 2 - 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
or can be corroborated by observable market data.
Level 3 - Model-based techniques that use at least one significant assumption
not observable in the market. These unobservable assumptions reflect the Plan's
estimates of assumptions that market participants would use on pricing the asset
or liability. Valuation techniques include management judgment and estimation
which may be significant.
In certain cases, the inputs used to measure fair value may fall into different
levels of the fair value hierarchy. In such cases, the level in the fair value
hierarchy within which the fair value measurement in its entirety falls has been
determined based on the lowest level input that is significant to the fair value
measurement in its entirety. The Plan's assessment of the significance of a
particular input to the fair value measurement in its entirety requires
judgment, and considers factors specific to the asset or liability.
Page 17
5. FAIR VALUE MEASUREMENTS (Continued)
Assets Recorded at Fair Value
-----------------------------
There were no changes in the valuation techniques used during 2009. The
following tables present information about the Plan's assets and liabilities
measured at fair value on a recurring basis as of December 31, 2009 and 2008:
The Plan is required or permitted to record the following assets at fair value
on a recurring basis under other accounting pronouncements:
December 31, 2009
---------------------------------------------------------------
Description Fair Value Level 1 Level 2 Level 3
------------ ------------ ------------ ------------
Common stock of
Plan Sponsor $ 27,185,402 $ 27,185,402
Mutual funds 23,330,091 $ 23,330,091
Participant loans 1,530,829 $ 1,530,829
------------ ------------ ------------ ------------
$ 52,046,322 $ 27,185,402 $ 23,330,091 $ 1,530,829
============ ============ ============ ============
December 31, 2008
---------------------------------------------------------------
Description Fair Value Level 1 Level 2 Level 3
------------ ------------ ------------ ------------
Common stock of
Plan Sponsor $ 24,331,790 $ 24,331,790
Mutual funds 19,104,495 $ 19,104,495
Participant loans 1,155,458 $ 1,155,458
------------ ------------ ------------ ------------
$ 44,591,743 $ 24,331,790 $ 19,104,495 $ 1,155,458
============ ============ ============ ============
Fair value of the common stock of the Plan Sponsor is based on the closing
quoted market price reported on the active market on which the individual
securities are traded. Such securities are actively traded throughout each day
on the NASDAQ Global Select Market.
Mutual funds are valued using the Net Asset Value (NAV) provided by the trustee
of the fund. The NAV is computed by dividing the value of the underlying
assets, minus liabilities, allocated to each share class by the number of fund
shares outstanding for that class. Mutual fund NAVs are calculated once each
business day as of the close of regular market trading. The NAV is a quoted
price in a market that is not active.
Participant loans are valued at their outstanding balances, which approximate
fair value.
Page 18
5. FAIR VALUE MEASUREMENTS (Continued)
Assets Recorded at Fair Value (Continued)
-----------------------------
The following table sets forth a summary of changes in the fair value of the
Plan's recurring assets valued under Level 3 for the year ended December 31,
2009.
Participant
Loans
---------------
Balance, January 1, 2009 $ 1,155,458
Advances and repayments, net 375,371
---------------
Balance, December 31, 2009 $ 1,530,829
===============
There were no gains or losses associated with Level 3 investments for the year
ended December 31, 2009.
The Plan did not have any assets or liabilities measured at fair value on a non-
recurring basis at December 31, 2009 or 2008.
6. FEDERAL INCOME TAX STATUS
The Internal Revenue Service has determined and informed the Company by a letter
dated December 12, 2001, that the Plan is qualified and the trust established
under the Plan is tax-exempt, under the appropriate sections of the Internal
Revenue Code. The Plan has been amended since receiving the determination
letter; however, the Plan's management and the Plan's ERISA counsel believe that
the Plan currently is designed and being operated in compliance with the
applicable requirements of the Internal Revenue Code and the Plan continues to
be tax exempt. Therefore, no provision for income taxes has been included in
the Plan's financial statements.
7. RELATED PARTY TRANSACTIONS
Plan investments include shares of mutual funds, including the Westamerica
Common Stock Fund which invests in the common stock of the Company, managed by
an affiliate of Vanguard Fiduciary Trust Company (VFTC). VFTC is the Trustee as
defined by the Plan and, therefore, these transactions qualify as party-in-
interest transactions. Fees paid by the Plan for investment management service
were included as a reduction of the return earned on each fund. Fees paid by
the Plan for trustee services in connection with the Westamerica Common Stock
Fund for the years ended December 31, 2009, 2008 and 2007 amounted to $39,206,
$40,615 and $40,648, respectively.
Page 19
8. RECONCILIATION OF FINANCIAL STATEMENTS TO FORM 5500
The following is a reconciliation of net assets available for benefits per the
financial statements as of December 31, 2009 and 2008 to Form 5500:
2009 2008
-------------- --------------
Net assets available for benefits per the
financial statements $ 52,053,169 $ 44,591,743
Less: Deemed distributions of participant loans (15,862) (6,848)
-------------- --------------
Net assets available for benefits per Form 5500 $ 52,037,307 $ 44,584,895
============== ==============
The following is a reconciliation of benefits paid to participants per the
financial statements for the year ended December 31, 2009 to Form 5500:
Benefits paid to participants per the financial statements $ 2,618,067
Add: Deemed distributions of participant loans 9,014
---------------
Benefits paid to participants per Form 5500 $ 2,627,081
===============
Page 20
SUPPLEMENTAL SCHEDULES
EMPLOYER IDENTIFICATION NUMBER: 94-2156203
PLAN NUMBER: 002
SCHEDULE H, LINE 4i - SCHEDULE OF ASSETS (HELD AT END OF YEAR)
December 31, 2009
(c)
(b) Description of Investment,
Identity of Issuer, Including Maturity Date, (e)
Borrower, Lessor, Rate of Interest, Collateral, (d) Current
(a) or Similar Party Par or Maturity Value Cost Value
----- ---------------------- ---------------------------- ----------- ------------
* Westamerica Common Stock Common Stock
Fund 490,977 shares $ 15,610,008 $ 27,185,402
* Vanguard Prime Money Mutual Fund
Market Fund 4,186,773 shares 4,186,773 4,186,773
* Vanguard 500 Index Fund Mutual Fund
36,444 shares 4,035,038 3,741,698
* Vanguard Target Retirement Mutual Fund
2015 Fund 248,831 shares 2,895,332 2,814,281
* Vanguard Total International Mutual Fund
Stock Index Fund 156,107 shares 2,208,674 2,249,507
* Vanguard Morgan Growth Mutual Fund
Fund 145,305 shares 2,433,301 2,218,803
* Vanguard Total Bond Market Mutual Fund
Index Fund 188,514 shares 1,910,317 1,951,118
* Vanguard Windsor II Fund Mutual Fund
60,619 shares 1,738,858 1,435,469
* Vanguard Target Retirement Mutual Fund
2025 Fund 117,434 shares 1,388,507 1,329,349
* Vanguard Extended Market Mutual Fund
Index Fund 20,772 shares 685,589 678,618
* Vanguard Target Retirement Mutual Fund
2035 Fund 48,977 shares 596,930 569,117
* Vanguard Target Retirement Mutual Fund
2010 Fund 22,239 shares 417,967 456,351
* Vanguard Short Term Mutual Fund
Federal Fund 32,959 shares 353,602 353,646
(Continued)
Page 21
EMPLOYER IDENTIFICATION NUMBER: 94-2156203
PLAN NUMBER: 002
SCHEDULE H, LINE 4i - SCHEDULE OF ASSETS (HELD AT END OF YEAR)
(Continued)
December 31, 2009
(c)
(b) Description of Investment,
Identity of Issuer, Including Maturity Date, (e)
Borrower, Lessor, Rate of Interest, Collateral, (d) Current
(a) or Similar Party Par or Maturity Value Cost Value
----- ---------------------- ---------------------------- ----------- ------------
* Vanguard Target Retirement Mutual Fund
2045 Fund 25,261 shares $ 305,992 $ 303,640
* Vanguard Target Retirement Mutual Fund
2020 Fund 13,240 shares 263,887 264,263
* Vanguard Target Retirement Mutual Fund
2005 Fund 24,711 shares 272,555 271,329
* Vanguard Explorer Fund Mutual Fund
4,347 shares 299,450 249,075
* Vanguard Target Retirement Mutual Fund
Income Fund 14,200 shares 150,030 150,380
* Vanguard Target Retirement Mutual Fund
2050 Fund 2,591 shares 44,233 49,513
* Vanguard Target Retirement Mutual Fund
2030 Fund 2,138 shares 36,977 41,286
* Vanguard Target Retirement Mutual Fund
2040 Fund 833 shares 14,427 15,875
* Participant Loans Interest rates ranging from
4.25% to 9.75% 1,530,829 1,530,829
------------ ------------
$ 41,379,276 $ 52,046,322
============ ============
* Party-in-interest to the Plan.
Page 22
EMPLOYER IDENTIFICATION NUMBER: 94-2156203
PLAN NUMBER: 002
SCHEDULE H, LINE 4j - SCHEDULE OF REPORTABLE TRANSACTIONS
For the Year Ended December 31, 2009
(h)
(f) Current Value
(a) (b) (c) (d) (e) Expense (g) of Asset on (i)
Identity of Description Purchase Selling Lease Incurred with Cost of Transaction Net Gain
Party Involved of Asset Price Price Rental Transaction Asset Date or (Loss)
-------------------------- ------------ ---------- ---------- ------ ------------ ------------ ------------ ------------
Category (I)
--------------------------
Purchases -
Series of Transactions
--------------------------
Vanguard Prime Money
Market Fund $1,099,070 $1,099,070
Westamerica Bancorporation Common Stock $2,554,409 $2,554,409
Sales -
Series of Transactions
--------------------------
Vanguard Prime Money
Market Fund $1,670,721 $1,670,721 $1,670,721
Westamerica Bancorporation Common Stock $1,808,523 $1,370,559 $1,808,523 $ 437,964
Page 23
Duly Authorized Signature
Pursuant to the requirements of the Securities Exchange Act of 1934, the
trustees (or the persons who administer the employee benefit plan) have duly
caused this annual report to be signed on its behalf by the undersigned hereunto
duly authorized.
WESTAMERICA BANCORPORATION
TAX DEFERRED SAVINGS/RETIREMENT PLAN (ESOP)
Date: June 25, 2010
---------------------------
By: /s/ John "Robert" Thorson
---------------------------
John "Robert" Thorson
Senior Vice President
And Member, Pension Management Committee
Page 24
Exhibit Index
Exhibit
Number Description
------- --------------------------------------------------------
23 Consent of Independent Registered Public Accounting Firm
99 Certification pursuant to 18 U.S.C. Section 1350