First California Bank has expanded its geographic footprint northward by acquiring the assets of a troubled bank in San Luis Obispo County. Westlake Village-based First California Financial Group Inc. — the holding company for First California Bank — has assumed all the deposits and substantially all the assets of single-branch San Luis Trust Bank from the Federal Deposit Insurance Corporation. The transaction became effective the close of the business day on Feb. 18, and the acquired bank site reopened Feb. 22 as First California Bank franchise’s 19th branch office. The new branch is the bank franchise’s first site in San Luis Obispo County and its most northern location, which reaches the Central Coast. Other branch offices are located in Los Angeles, Orange, Riverside, San Bernardino, San Diego and Ventura Counties. “This transaction gives us a strategic foothold into what I think will be a very vibrant and attractive market, that being the San Luis Obispo city and the San Luis Obispo County,” said C. G. Kum, president and CEO of First California Financial Group. “The San Luis Obispo marketplace has numerous institutions that are having issues as we speak, and so this foothold enables us to further consolidate our position in the San Luis Obispo market. In addition, it allows us to look at San Barbara County as a future market for us to infill.” Kum said the deal was also financially lucrative for the bank franchise. Through the transaction, First California Bank has assumed about $275 million in total deposits and $220 million in total loans. All of the loans purchased from the FDIC are covered under loss-sharing agreements that afford First California Bank significant protection from losses. Third FDIC transaction This acquisition marks First California Bank’s third FDIC transaction and its fifth acquisition altogether. Kum said San Luis Trust Bank was different than other banking institutions his company had acquired in that it had more of a savings and loan history. “It’s not (like) the traditional banks that we look for, which is a commercial bank with core deposit orientation,” Kum said. “In this case, this is an institution that has more real estate, and I would say more time-sensitive deposits. Our job, and the goal, is to complement its current capabilities to the real estate with our expertise and focus on the business clients as well as the core deposit cultivation.” Before the most recent transaction, First California Bank had acquired Western Commercial Bank in Woodland Hills from the FDIC in November. Growth mode Julianna Balicka, regional bank analyst for Keefe, Bruyette & Woods Inc., said the deal appears to be beneficial for First California Bank. “I think they got a very good deal,” she said, adding that the bank’s bargain purchase option gain was $0.56 per share. “The accounting and the gains that you get from the financial attractiveness of an FDIC-assisted acquisition often makes such acquisitions worth your while.” As a result of the transaction, Keefe, Bruyette & Woods announced it was increasing its price target for the company’s shares to $4.50 from $4. The company’s market price closed at $3.60 on Feb. 23. First California Bank could also benefit because it is moving into another coastal area, which is seen as demographically more attractive than inland markets and already very similar to the bank group’s Ventura County market, she added. Balicka described First California Bank as “growth-oriented.” “I think the growth strategy of growth by acquisition remains to be a strategy that they’re going to execute on,” she said. “But they take their time with growth. … They seem to be careful not to bite off more than they can handle.” Keefe, Bruyette & Woods provides investment banking services and has previously managed or co-managed a public offering of securities for First California Bank. Geographic strategy Roberto Barragan, president of the Valley Economic Development Center and a board member of Encino-based California United Bank, also recognized that the bank has been growing in recent years. “They’ve been in an acquisition mode for some time,” he said. “If you’re a bank with sufficient capital, you’re going to be the kind of go-to player for regulators when they have a takeover situation like a (San Luis Trust Bank).” He also said First California Bank’s geographic growth strategy is not an uncommon one. “I’ve seen a number of banks do a hopscotch,” he said. “You kind of leap past one or two counties, and you fill in as the opportunities come up.” See related stories in Finance >