With its latest and biggest deal, First Community Bancorp in Rancho Santa Fe, Calif., would fill a critical void in its southern California operations.
The $4.4 billion-asset company has bought more than a dozen banks over the last six years, mostly in and around Los Angeles, San Diego, and Riverside, but not much in between.
The deal announced Tuesday for the $888 million-asset Community Bancorp Inc. in Escondido would close much of First Community's gap between Riverside and San Diego, adding nine branches in north San Diego County, where it has just one, and three in south Riverside County, where it has none.
"This is a big add to our San Diego franchise and in Riverside County, too," First Community president and chief executive Matthew P. Wagner said Tuesday in an interview. "Those markets are some of the fastest-growing parts of California, and of the country."
Community Bancorp and its Community National Bank would not come cheaply. First Community would pay $277 million in cash and stock - or five times the company's tangible book value, according to Todd Hagerman, an analyst at Swiss Reinsurance Co.'s Fox-Pitt, Kelton Inc. Though First Community has been known to pay top dollar for its acquisitions, this would be its priciest, he said.
But Mr. Hagerman said the deal would be worth the price. Community Bancorp has reported strong loan and deposit growth in recent years, and last quarter it earned a record $3.6 million - 41% more than it did in the same quarter a year earlier.
"It's fairly full priced, but since Community Bancorp is recognized as one of the few remaining high-quality companies in southern California, you wouldn't expect Community accepting nothing less but top dollar," Mr. Hagerman said.
The deal is expected to close in the fourth quarter.
Community would be merged into First Community's San Diego-area bank, First National Bank in Rancho Santa Fe, which would then have more than $2 billion of assets and 26 branches.
The deal would significantly boost First National's market share in San Diego County. As of June 30, First National had the No. 10 deposit share there, with 1.83%, while Community National had the No. 14 share, with 1.16%, according to the Federal Deposit Insurance Corp.
Christopher Marinac, an analyst at FIG Partners LLC in Atlanta, said that First Community would also be getting one of the most experienced bankers in the area: Michael J. Purdue, the president and CEO of Community National.
Mr. Purdue would become the president and CEO of First National once the deal closes. Robert Borgman, who currently holds those positions, would become the chairman of First National Bank.
"They really got a great manager in Mike Purdue, and he's got plenty of gas still in his tank for the next few years," Mr. Marinac said.
Mr. Purdue has been a banker for nearly 30 years, and he has worked in San Diego and Riverside counties since 1987. He joined Community Bancorp in 2003 to succeed the retiring Thomas E. Swanson as the president and CEO.
Two other Community Bancorp's directors, including its chairman, Gary W. Deems, would join First Community's board.
Community Bancorp's shareholders would receive 0.735 shares of First Community stock in exchange for each of their shares. Option holders would receive cash.
First Community's asset total would rise to about $5.3 billion, and its southern California branch total would rise to 71. (The company also has a branch in northern California.)
The acquisition would be First Community's 15th since 2000 and its fifth over the past year.
On May 10 it bought the $750 million-asset Foothill Independent Bancorp in Glendora for $244 million. Foothill was merged into First Community's Santa Monica bank, Pacific Western National Bank, which now has $3.3 billion of assets and 45 branches.
