BAIT SHOP UPDATE: First Community Bancorp

First Community Bancorp (FCBP) did show us the new financials last night, and this was important because they have been such an acquisition machine and staying positive required having faith that the books would look good.  Those who follow this one feel ok about shares because the FCBP shares are up over 2.5% to $52.75 on nearly double the average volume.   This appears as a net miss to estimates, but you have to be able to look past the acquisition charges to feel comfortable with the company.

Earnings for the year came in at $3.21 on an EPS basis ($3.28 was the estimate), up from $2.98 in 2005 (keep in mind acquisitions).  Its earnings per share for Q4 were $0.82, down from $0.88 in Q3 and down from $0.84 the year before.  While this looks lower, it is because of more shares outstanding after the acquisitions; the actual net income was sequentially higher.  As I noted in the last update about this being a BAIT SHOP member (takeover candidate) it is often difficult to have faith when you literally cannot envision what the financials will look like at all.  They have made 5 acquisitions since August 2005 and shares outstanding are up 40% y-o-y to some 23.68 million.

Nothing has changed at all on the potential buyout thesis here and it is still a BAIT SHOP member.  There are no options that can be used as a hedge yet, although the implied hedge here is that this amalgamated bank would become a target if the price ever fell too much because one of the Eastern US banks could easily use it as a gateway acquisition into California and some other micro-regional areas in the Western and Southwestern US.

If we trim the EPS from $3.65 and take it down to $3.50 it has a forward P/E of 15; if we take the estimate at face value is has a forward P/E of 14.45.  That doesn’t make it dirt cheap on a comparative basis, but it is cheap on many metrics and is well within the buyout guidelines for a regional banking acquisition in the Western US. 

Update JAN 24, 2007: No change to Bait Shop member status. 

Jon C. Ogg
January 24, 2007