For immediate release

The Federal Reserve Board today announced its approval of the applications of Westamerica Bank, San Rafael, California, to merge with ValliWide Bank, Fresno, California, and to establish branches at the former branch locations of ValliWide Bank. Attached is the Board's Order relating to this action.

Westamerica Bank San Rafael, California Order Approving the Merger of Banks and Establishment of Bank Branches

Westamerica Bank, San Rafael, California, a state member bank, has requested the Board's approval under section 18(c) of the Federal Deposit Insurance Act (12 U.S.C. § 1828(c)) (the "Bank Merger Act") to merge with ValliWide Bank, Fresno, California. Westamerica Bank also has requested the Board's approval under section 9 of the Federal Reserve Act (12 U.S.C. § 321) to establish branches at the former branch locations of ValliWide Bank.1 Notice of this proposal, affording interested persons an opportunity to submit comments, has been given in accordance with the Bank Merger Act and the Board's Rules of Procedure (12 C.F.R. 262.3(b)). As required by the Bank Merger Act, reports on the competitive effects of the merger were requested from the United States Attorney General and the Federal Deposit Insurance Corporation. The time for filing comments has expired, and the Board has considered the applications and all the facts of record in light of the factors set forth in the Bank Merger Act and section 9 of the Federal Reserve Act. Westamerica Bank and ValliWide Bank are wholly owned subsidiaries of Westamerica Bancorporation, San Rafael, California ("Westamerica"), and the proposal represents a reorganization of two affiliated banks. Westamerica, with total assets of $2.5 billion, is the tenth largest commercial banking organization in California, controlling deposits of approximately $3.2 billion, representing 1.4 percent of the total deposits in commercial banking organizations in California.2 Convenience and Needs Factor The Board has carefully considered the effect of the proposal on the convenience and needs of the community to be served in light of all the facts of record. In particular, the Board has considered the performance record of Westamerica Bank and ValliWide Bank and the programs for helping serve the banking needs of the community as explained in the Board's order approving the acquisition of ValliCorp Holding, Inc., Fresno, California, by Westamerica,3 and the fact that the transaction under review in this case represents a reorganization of affiliated institutions. The Board also has considered that Westamerica Bank received an "outstanding" rating at the most recent examination of its CRA performance by the Federal Reserve Bank of San Francisco ("Reserve Bank"), as of May 13, 1996 ("Westamerica Examination"). ValliWide Bank also received an "outstanding" rating for CRA performance at its most recent examination by the Reserve Bank, as of January 22, 1996 ("ValliWide Examination"). Westamerica has indicated that it plans to introduce many of its Community Access Loan ("CAL") products in the communities currently served by ValliWide Bank. Several of those programs are designed for low-income borrowers and include the CAL Program, which provides home equity loans, automobile loans, and home improvement loans with lower monthly payment terms. Westamerica plans that the merged bank would offer the CAL PAL Loan program, which provides residential mortgage loans with flexible underwriting criteria, lower down payments, and no private mortgage insurance, and the CAL Business Loan Program, which offers "microenterprise" or "incubator" business loans to minorities and women through local agencies that also provide technical support to the borrowers. As explained more fully in the Westamerica Order, Westamerica has implemented several programs that help serve the banking needs of the community, including low- and moderate-income neighborhoods. After the proposed merger, Westamerica would operate approximately 85 branches throughout California. As part of its review of the applications, the Board also has considered submissions by commenters ("Commenters")4 stating that the proposed closing of certain branches of ValliWide Bank would reduce access to banking facilities in several communities and adversely affect the local businesses and residents that currently rely on these branches.5 As noted in the Westamerica Order, examiners have reviewed Westamerica's branch closing policy, and found the policy to be effective. The California Superintendent of Banks ("Superintendent") has reviewed the proposed branch closings and has approved the closure of these branches after reviewing the potential effect on the public convenience in the areas served by the branches in light of substantially similar comments submitted to the Superintendent. The Board notes that Federal banking law addresses branch closing by specifically requiring an insured depository to provide notice to the appropriate regulatory agency prior to closing a branch.6 The statute, however, does not authorize the federal regulators to prevent the closing of any branch. Similarly, the Bank Merger Act does not make approval of a proposal contingent on an applicant maintaining open all branch offices of the resulting institution. The availability of bank services and offices after a merger must be reviewed in the context of the effect of the merger on the convenience and needs of communities served by the institution and is one of several factors the Board must consider in assessing the effect of the acquisition on the convenience and needs of the communities to be served. Four of the branches to be closed, which serve the communities of Caruthers, Coalinga, Hanford and Lemoore, are located in middle income census tracts, and each affected community would continue to be served by at least one insured depository institution in the community.7 The four other branches that are proposed to be closed are located in moderate-income census tracts in the communities of Lamont, Dos Palos, Firebaugh, and Mendota. Lamont would continue to be served by a savings association in that community, and several insured depository institutions that are a short distance from Lamont. Dos Palos and Firebaugh would also have an insured depository institution in each community. The Board also notes that a California state-chartered bank has provided notice to the Superintendent of its intention to open a branch in Firebaugh.8 Although no other depository institution would remain in Mendota, an on-site inspection conducted by the Reserve Bank indicates a substantial degree of economic integration between the communities of Mendota and Firebaugh, which are located within eight miles of each other in a rural area in which residents travel to obtain necessary services. As noted, Firebaugh is currently served by one insured depository institution located in the community, and another insured depository institution has filed with the Superintendent its intent to establish a branch in that community. The Board also has considered confidential financial information provided by Westamerica regarding the profitability of the branches proposed to be closed. These data show that these ValliWide Bank branches have been unprofitable for several years. The Board has carefully considered the proposed closing of each of these branches in light of these and all the other facts of record including concerns that residents will, in some cases, have to travel a greater distance for banking services if certain ValliWide Bank branches are closed. The Board believes that the CRA performance record of Westamerica Bank and ValliWide Bank, the programs Westamerica proposes to offer through the merged institution, the availability of banking services from other insured depository institutions, the unprofitability of the branches, other benefits offered by the merger, and the other facts indicate that, on the whole, the convenience and needs of the community weigh in favor of approval of this proposal. Other Factors The Bank Merger Act provides that the Board may not approve an application if the effect of the acquisition of another bank is to substantially lessen competition in any section of the country unless the Board finds that the anticompetitive effects of the proposal are clearly outweighed in the public interest by the probable effect of the proposal in meeting the convenience and needs of the community.9 The proposal represents a reorganization of Westamerica's existing banking operations. Based on all the facts of record, consummation of the proposal would not have any significantly adverse effects on competition or concentration of banking resources in any relevant banking market.10 The Bank Merger Act also requires the Board to consider the financial and managerial resources and future prospects of the existing and proposed institutions. The Board notes that the proposal represents a corporate reorganization for Westamerica and its subsidiaries, which would result in a more efficient organization and does not involve an expenditure of additional resources. Based on all the facts of record, the Board concludes that all supervisory factors under the Bank Merger Act are consistent with approval. The Board also concludes that all factors required to be considered under the Federal Reserve Act are consistent with approval.11 Conclusion Based on the foregoing and all the facts of record, the Board has determined that these applications should be,12 and hereby are, approved.13 The Board's approval of this proposal is conditioned on compliance by Westamerica Bank with the commitments made in connection with this proposal. For purposes of this action, the commitments and conditions relied on in reaching this decision are both conditions imposed in writing by the Board and, as such, may be enforced in proceedings under applicable law. The merger of Westamerica Bank and ValliWide Bank may not be consummated before the fifteenth calendar day following the effective date of this order, and the proposal may not be consummated later than three months after the effective date of this order, unless such period is extended by the Board or by the Federal Reserve Bank of San Francisco, acting pursuant to delegated authority.

By order of the Board of Governors,14 effective May 27, 1997. (signed) William W. Wiles William W. Wiles Secretary of the Board

Appendix Branch Offices of Valliwide Bank to be established by Westamerica Bank: 1255 Grand Avenue, Arroyo Grande, California 93420 540 Wall Street, Auburn, California 95603 1810 Chester Avenue, Bakersfield, California 93302 101 Main Street, Buttonwillow, California 93026 1835 Shaw Avenue, Clovis, California 93612 1172 E. Shaw Avenue, Fresno, California 93755 790 W. Shaw Avenue, Fresno, California 93755 1315 Van Ness Avenue, Fresno, California 93721 3006 W. Bullard Avenue, Fresno, California 93711 10375 Brunswick Boulevard, Grass Valley, California 95645 400 N. Irwin Street, Hanford, California 93230 36582 Dinero Way, Huron, California 93234 215 S. Madera Road, Kerman, California 93630 27 Big Blue Road, Kernville, California 93283 1400 Draper Street, Kingsburg, California 92631 6100 Lake Isabella Road, Lake Isabella, California 93240 401 W. Yosemite Avenue, Madera, California 93637 1666 'N' Street, Merced, California 95341 310 Morro Bay Boulevard, Morro Bay, California 93442 126 W. F Street, Oakdale, California 95361 1204 Spring Street, Paso Robles, California 93446 2893 Sunrise Boulevard, Rancho Cordova, California 95742 545 Higuera Street, San Luis Obispo, California 93401 1601 Seventh Street, Sanger, California 93657 3700 McCall Avenue, Selma, California 93662 600 James Street, Shafter, California 93263 172 W. Stockton Rd., Sonora, California 95370 14729 Mono Way, Sonora, California 95370 811 Center Street, Taft, California 93283 255 E. King Avenue, Tulare, California 93274 701 W. Main Street, Visalia, California 93291 100 W. Court Street, Woodland, California 95695

Footnotes 1 The locations are contained in the Appendix. 2 Deposit data are as of June 30, 1996, and incorporate structural changes through January 1997 and asset data are as of September 30, 1996. 3 See Westamerica Bank, 82 Federal Reserve Bulletin 435 (1997) ("Westamerica Order"). The acquisition of ValliCorp Holdings, Inc., by Westamerica was consummated on April 12, 1997. 4 Commenters included a Congressman, a California state senator, a city manager and mayor, officials from the Board of Supervisors for two counties, the California Reinvestment Committee ("CRC"), and local businesses and residents. 5 Commenters raised concerns about certain branches in Caruthers, Coalinga, Dos Palos, Firebaugh, Hanford, Lamont, Lemoore and Mendota, all in California. CRC also contends that 1995 data filed under the Home Mortgage Disclosure Act (12 U.S.C. § 2801 et seq.) ("HMDA") show that Westamerica and ValliWide Bank made few loans to minorities and that the outreach and marketing efforts of the organizations were ineffective. The Board previously considered these contentions in the Westamerica/ValliCorp proposal in light of all the facts of record relating to both organizations, including their most recent satisfactory or better ratings for performance under the Community Reinvestment Act (12 U.S.C. § 2901 et seq.) (CRA), their overall CRA-related activities such as lending and ascertainment, and their compliance with fair lending laws. In light of the facts discussed in detail in the Westamerica Order, the Board concluded that considerations relating to the convenience and needs of the community, including the CRA performance records of Westamerica Bank and ValliWide Bank, were consistent with approval for all the reasons, which are incorporated herein. 6 Section 42 of the Federal Deposit Insurance Corporation Act (12 U.S.C. § 1831r-1) ("section 42"), as implemented by the Joint Policy Statement Regarding Branch Closing (58 Federal Register 49,083 (1993)), requires that a bank provide the public with at least 30 days notice and the primary federal supervisor with at least 90 days notice before the date of the proposed branch closing. The bank also is required to provide reasons and other supporting data for the closure, consistent with the institution's written policy for branch closing. Westamerica has provided the Reserve Bank with all the information required by section 42 for the proposed branch closing identified by the Commenters and in the California communities of Atwater, Bakersfield, Livingston, and Visalia. 7 The Hanford community is currently served by two branches of ValliWide Bank. After the closure of one Hanford bank branch, Westamerica would continue to serve the Hanford community. 8 Commenters assert that the insured depository institution that would remain in Dos Palos and Firebaugh intends to sell its branch in each community. If the branches are sold, bank branches could, therefore, continue to be operated in Dos Palos and Firebaugh. In the event that the branches are not sold, but instead are closed by the institution, the closing would be reviewed under section 42 by the institution's primary federal supervisor, the Office of the Comptroller of the Currency. Dos Palos is nine miles from Firebaugh, and the record indicates that residents in this rural area of California are likely to drive reasonable distances to obtain services. Accordingly, if the branches are not sold to another depository institution, the residents of Dos Palos could still have reasonable access to an insured depository institution in Firebaugh. 9 12 U.S.C. § 1828(c)(5)(B). 10 One commenter maintains that the proposal would reduce the number of competitors and thereby substantially lessen competition in the areas where the branches proposed to be closed are located. In reviewing the competitive effects of the proposal, the Board notes that this merger would not cause Westamerica to increase its market share in any relevant banking market, and represents a reorganization of Westamerica's existing subsidiaries. In addition, there is no evidence that the branch closures are the result of agreements or understandings by market participants to increase their market share. The branches to be closed, moreover, are unprofitable, and may have been closed regardless of the proposed merger. 11 Commenters also contend that the closure of certain branches would increase unemployment in the local economy or possibly raise crime due to the availability of cash in homes and businesses. The commenters provide no evidence that the proposed branch closing would have any effect on the crime rate in communities, and, as indicated above, branches of other insured depository institutions would remain in many of the relevant communities. The Bank Merger Act specifically enumerates the factors the Board may consider in reviewing a proposal under that Act. These factors relate to the effect of the proposal on competition, the financial and managerial resources of the institutions involved, certain supervisory factors, and the convenience and needs of the communities served by the institutions involved. The effect of the proposed acquisition on employment is not among the factors the Board is to consider under the Bank Merger Act. 12 Commenters have requested that the Board delay action until other insured depository institutions are identified that can compete with, or replace, the ValliWide Bank branches that would be closed. As discussed above, the Board has carefully reviewed the record in this case; and, based on all the facts of record, including the Commenter's submissions, reports of examination, and Westamerica's responses, the Board concludes that the record is sufficient to act on this proposal at this time. 13 Commenters have requested a hearing on the proposal. The Board is not required under the Bank Merger Act or the Federal Reserve Act to hold a public hearing or meeting in this case. Under its rules, the Board may, in its discretion, hold a public hearing or meeting on an application to clarify factual issues related to the application and to provide an opportunity for testimony, if appropriate. The Board has carefully considered the request for a hearing. In the Board's view, interested parties have had a sufficient opportunity to present written submissions, and have submitted substantial written comments that have been considered by the Board. The request fails to show why a written presentation would not suffice in lieu of a hearing, identifying specifically any questions of fact that are in dispute, and summarizing what evidence would be presented at a hearing. See 12 C.F.R. 262.3(e). On the basis of all the facts of record, the Board has determined that a public meeting or hearing is not necessary to clarify the factual record in these applications, or otherwise warranted in this case. Accordingly, the request for a public meeting or hearing on these applications is hereby denied. 14 Voting for this action: Chairman Greenspan, Vice Chair Rivlin, and Governors Kelley, Phillips, and Meyer.

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1997 Orders on banking applications