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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q


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

For the quarterly period ended September 30, 2002

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: 00-30747

FIRST COMMUNITY BANCORP
(Exact name of registrant as specified in its charter)

CALIFORNIA
(State or other jurisdiction of incorporation or organization)		   33-0885320
(I.R.S. Employer Identification Number)

6110 El Tordo
P.O. Box 2388
Rancho Santa Fe, California 92067
(Address of principal executive offices)

Registrant's telephone number: (858) 756-3023

        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, as amended 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 ý    No o

        Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of November 12, 2002: 15,244,507 shares of common stock, no par value.

TABLE OF CONTENTS

 
    
   Page
PART I — FINANCIAL INFORMATION    
  ITEM 1.   Consolidated Financial Statements (unaudited)   2
    Unaudited Condensed Consolidated Balance Sheets   2
    Unaudited Condensed Consolidated Statements of Income   3
    Unaudited Condensed Consolidated Statements of Comprehensive Income   4
    Unaudited Condensed Consolidated Statements of Cash Flows   5
    Notes to Unaudited Condensed Consolidated Financial Statements   7
  ITEM 2.   Management's Discussion and Analysis of Financial Condition and Results of Operations   14
  ITEM 3.   Quantitative and Qualitative Disclosure About Market Risk   28
  ITEM 4.   Controls and Procedures   28
PART II — OTHER INFORMATION   30
  ITEM 1.   Legal Proceedings   30
  ITEM 2.   Changes in Securities   30
  ITEM 3.   Defaults Upon Senior Securities   30
  ITEM 4.   Submission of Matters to a Vote of Security Holders   30
  ITEM 5.   Other Information   31
  ITEM 6.   Exhibits and Reports on Form 8-K   31
SIGNATURES   32


PART I—FINANCIAL INFORMATION

ITEM 1. Consolidated Financial Statements (unaudited)

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

 
   September 30,
2002
   December 31,
2001
  
 
   (In thousands, except share data)

  
Assets:              
Cash and due from banks   $ 109,756   $ 68,513  
Federal funds sold     8,510     36,190  
   
 
 
    Total cash and cash equivalents     118,266     104,703  

Interest-bearing deposits in financial institutions
 
 
757
 
 
190
 

Federal Reserve Bank and Federal Home Loan Bank stock, at cost
 
 
7,865
 
 
2,137
 
Securities held to maturity (fair value of $7,552 at 9/30/02 and $9,982 at 12/31/01)     7,263     9,681  
Securities available-for-sale (amortized cost of $278,255 at 9/30/02 and $116,246 at 12/31/01)     282,193     116,775  
   
 
 
    Total securities     297,321     128,593  

Gross loans
 
 
1,510,365
 
 
502,090
 
Deferred fees and costs     (5,316 )   (350 )
   
 
 
    Loans, net of deferred fees and costs     1,505,049     501,740  
Allowance for loan losses     (24,024 )   (11,209 )
   
 
 
    Net loans     1,481,025     490,531  
Premises and equipment     13,820     5,914  
Other real estate owned, net     4,751     3,075  
Goodwill     174,611     9,793  
Core deposit intangible     8,245     —  
Other assets     62,292     27,418  
   
 
 
    Total Assets   $ 2,161,088   $ 770,217  
   
 
 

Liabilities and Shareholders' Equity:
 
 
 
 
 
 
 
Liabilities:              
Noninterest-bearing deposits   $ 624,264   $ 275,616  
Interest-bearing deposits     1,145,727     401,551  
   
 
 
    Total deposits     1,769,991     677,167  

Accrued interest payable and other liabilities
 
 
29,336
 
 
8,651
 
Short-term borrowings     11,402     431  
Convertible debt     —     671  
Trust preferred securities     38,000     28,000  
   
 
 
    Total Liabilities     1,848,729     714,920  

Shareholders' Equity:
 
 
 
 
 
 
 
Preferred stock; authorized 5,000,000 shares, no shares issued and outstanding     —     —  
Common stock, no par value; authorized 30,000,000 shares and 15,000,000 shares; issued and outstanding 15,225,756 and 5,277,360 at September 30, 2002 and December 31, 2001, respectively     291,153     43,137  
Retained earnings     18,923     11,852  
Accumulated other comprehensive income:              
  Unrealized gains on securities available-for-sale, net     2,283     308  
   
 
 
    Total Shareholders' Equity     312,359     55,297  
   
 
 
    Total Liabilities and Shareholders' Equity   $ 2,161,088   $ 770,217  
   
 
 
Book value per share   $ 20.52   $ 10.48  

See "Notes to Unaudited Condensed Consolidated Financial Statements."

2

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME

 
   Three Months Ended
September 30,
   Nine Months Ended
September 30,
 
   2002
   2001
   2002
   2001
 
   (In thousands, except per share data)
Interest income:                        
  Interest and fees on loans   $ 19,801   $ 8,057   $ 47,118   $ 24,705
  Interest on interest-bearing deposits in financial institutions     3     1     9     7
  Interest on investment securities     2,291     1,511     6,091     4,496
  Interest on federal funds sold     230     862     674     3,255
   
 
 
 
    Total interest income     22,325     10,431     53,892     32,463

Interest expense:
 
 
 
 
 
 
 
 
 
 
 
 
  Interest expense on deposits     2,848     2,308     7,827     7,520
  Interest expense on short-term borrowings     87     101     125     302
  Interest expense on convertible debt     9     11     23     35
  Interest expense on trust preferred securities     678     219     1,778     652
   
 
 
 
    Total interest expense     3,622     2,639     9,753     8,509
   
 
 
 

Net interest income
 
 
18,703
 
 
7,792
 
 
44,139
 
 
23,954
    Provision for loan losses     —     —     —     639
   
 
 
 
    Net interest income after provision for loan losses     18,703     7,792     44,139     23,315

Noninterest income:
 
 
 
 
 
 
 
 
 
 
 
 
  Service charges and fees on deposit accounts     1,546     567     3,890     1,685
  Merchant discount fees     72     86     302     249
  Other commissions and fees     474     280     1,226     903
  Gain on sale of loans     54     130     263     299
  Other income     429     135     1,967     280
   
 
 
 
    Total noninterest income     2,575     1,198     7,648     3,416

Noninterest expense:
 
 
 
 
 
 
 
 
 
 
 
 
  Salaries and employee benefits     6,906     2,985     16,965     9,404
  Occupancy     1,694     796     3,999     2,245
  Furniture and equipment     836     318     2,218     991
  Data processing     841     396     2,321     1,230
  Other professional services     668     325     1,948     1,121
  Business development     275     158     762     504
  Communications     509     212     1,235     626
  Stationary and supplies     237     60     557     167
  Insurance and assessments     280     146     789     669
  Cost of real estate owned     8     20     79     52
  Goodwill amortization     —     73     —     207
  Core deposit intangible amortization     238     —     577     —
  Other     1,270     545     2,794     1,341
   
 
 
 
    Total noninterest expense     13,762     6,034     34,244     18,557
   
 
 
 
Income before income taxes     7,516     2,956     17,543     8,174
Income taxes     3,034     1,304     7,039     3,458
   
 
 
 
    Net income   $ 4,482   $ 1,652   $ 10,504   $ 4,716
   
 
 
 

Per share information:
 
 
 
 
 
 
 
 
 
 
 
 
    Number of shares (weighted average)                        
      Basic     11,792.4     4,604.0     8,628.0     4,517.9
      Diluted     12,234.8     4,874.2     8,983.1     4,780.6
   
Income per share
 
 
 
 
 
 
 
 
 
 
 
 
      Basic   $ 0.38   $ 0.36   $ 1.22   $ 1.04
      Diluted   $ 0.37   $ 0.34   $ 1.17   $ 0.99

See "Notes to Unaudited Condensed Consolidated Financial Statements."

3

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

 
   Three Months Ended
September 30,
   Nine Months Ended
September 30,
 
   2002
   2001
   2002
   2001
 
   (In thousands)

 
 
 
 
 
 
 
 
 
 
 
 
 
Net income   $ 4,482   $ 1,652   $ 10,504   $ 4,716

Other comprehensive income, net of related income taxes:
 
 
 
 
 
 
 
 
 
 
 
 
  Unrealized gains on securities:                        
    Unrealized holding gains arising during the period     731     848     1,975     1,269
   
 
 
 
Comprehensive income   $ 5,213   $ 2,500   $ 12,479   $ 5,985
   
 
 
 

See "Notes to Unaudited Condensed Consolidated Financial Statements."

4

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

 
   Nine Months Ended
September 30,
  
 
   2002
   2001
  
 
   (In thousands)

  
Cash flows from operating activities:              
  Net income   $ 10,504   $ 4,716  
  Adjustments to reconcile net income to net cash (used in) operating activities:              
    Depreciation and amortization     3,116     1,401  
    (Gain) loss on sale of OREO     (148 )   12  
    Gain on sale of loans     (263 )   (299 )
    Proceeds from loans held for sale     2,736     1,500  
    (Gain) loss on sale of premises and equipment     (1 )   46  
    Loss on sale or calls of securities available-for-sale     —     (17 )
    Increase (decrease) in other assets     5,012     (7,218 )
    Decrease in accrued interest payable and other liabilities     (28,454 )   (1,813 )
    Dividend on FHLB stock     (27 )   (9 )
   
 
 
        Net cash (used in) operating activities     (7,525 )   (1,681 )
Cash flows from investing activities:              
  Net cash and cash equivalents acquired in acquisition of:              
    Professional Bancorp     —     84,017  
    Pacific Western Bank     1,401     —  
    WHEC     24,853     —  
    Upland Bank     (2,970 )   —  
    Marathon Bancorp     11,351     —  
    First National Bank     48,900     —  
  Net increase in loans outstanding     (159,571 )   (35,016 )
  Net decrease in interest-bearing deposits in financial institutions     813     535  
  Maturities of securities held-to-maturity     2,348     7,239  
  Securities available-for-sale:              
    Maturities     144,307     38,515  
    Purchases     (89,845 )   (46,477 )
  Net sales (purchases) in FRB and FHLB stock     621     (150 )
  Proceeds from sale of OREO     1,911     864  
  Purchases of premises and equipment, net     (1,990 )   (867 )
  Proceeds from sale of premises and equipment     893     147  
   
 
 
        Net cash (used in) provided by investing activities     (16,978 )   48,807  
Cash flows from financing activities:              
  Net increase (decrease) in deposits:              
    Non-interest bearing     36,979     (20,334 )
    Interest bearing     (61,379 )   67,081  
  Proceeds from trust preferred securities     10,000     —  
  Proceeds from sale of common stock     112,348     —  
  Proceeds from exercise of stock options     694     962  
  Net (decrease) increase in short-term borrowings     (57,029 )   6,027  
  Convertible debt payment     (114 )   —  
  Cash dividends paid     (3,433 )   (1,228 )
   
 
 
        Net cash provided by financing activities     38,066     52,508  
   
 
 
        Net increase in cash and cash equivalents     13,563     99,634  
Cash and cash equivalents at beginning of period     104,703     52,655  
   
 
 
Cash and cash equivalents at end of period   $ 118,266   $ 152,289  
   
 
 
Supplemental disclosure of cash flow information:              
    Cash paid during period for interest     10,666     6,798  
    Cash paid during period for income taxes     2,235     —  
    Transfer from loans to other real estate owned     1,443     154  
    Conversion of convertible debt     557     17  

See "Notes to Unaudited Condensed Consolidated Financial Statements."

5

Supplemental Disclosure of Acquisitions:

 
   2002
   2001
  
 
   Pacific
Western
National
Bank
   WHEC
   Upland
Bank
   Marathon
Bancorp
   First
National
Bank
   Professional
Bancorp
  
 
   (In thousands)

  
Assets Acquired:                                      
  Cash and cash equivalent   $ 38,026   $ 24,853   $ 3,812   $ 18,056   $ 123,409   $ 92,447  
  Interest-bearing deposits in financial institutions     —     450     594     —     336     325  
  Investment securities     20,644     24,393     1,750     25,721     151,015     61,447  
  Loans     194,119     92,526     101,956     61,611     384,627     98,713  
  Premises and equipment     3,042     1,185     229     176     3,918     673  
  Goodwill     18,089     13,627     9,968     12,400     110,586     4,358  
  Core deposit intangible     3,646     4,182     994     —     —     —  
  Other assets     3,922     4,320     4,006     6,589     24,476     7,753  
   
 
 
 
 
 
 
      281,488     165,536     123,309     124,553     798,367     265,716  
Liabilities Assumed:      <