SAN RAFAEL – Westamerica Bancorporation (NASDAQ: WABC), the parent company of Westamerica Bank, said in a report today that a low interest rate environment pressuring the banking industry led to a decrease in income in 2011.

Net income fell 7.1 percent in 2011 versus 2010, to $87.89 million. Net interest income was $218.87 million, down 3.4 percent from 2010. Diluted earnings per common share were $3.06 for the year, down from $3.24.

For the final quarter of the year, the bank earned $21.8 million in net income – 8.1 percent less than the same period in 2010. That income represents 77 cents of diluted earnings per share.

New loans and purchased securities have generated less yield than the bank’s portfolio as a whole, said David Payne, Westamerica’s chairman, president and CEO, in a statement. The bank focused on building checking and savings deposits and reducing their interest cost in 2011 – that cost was 0.18 percent in the quarter that ended on Dec. 31 2011, down from 0.29 percent during the same quarter in 2010.

Nonperforming assets decreased to $101 million at the end of the year, versus $144 million at the end of 2010. The provision for loan losses remained unchanged at $2.8 million, and the allowance for losses decreased from $35.6 million at the end of 2010 to $32.6 million at the end of last year.

Mr. Payne said that the bank reduced operating costs by $850,000 in the fourth quarter of 2011, compared to the same period in 2010.

Westamerica Bancorporation’s regulatory capital ratio was 15.7 percent at the end of 2011, and Westamerica Bank’s ratio was 15.2 percent. Both exceed the 10 percent threshold regulators use to define a bank as “well capitalized.”

“Our shareholder dividend was increased to $0.37 per share in the fourth quarter 2011, and we repurchased 360,000 shares during the quarter,” Mr. Payne said.

The bank held $5 billion in total assets at the end of 2011, with $2.5 billion in total loans. Westamerica shares traded at $45.90 when the NASDAQ closed on Thursday, down 3.27 percent.