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

FORM 10-K

(Mark One)

For the fiscal year ended December 31, 2001 or

Commission File No. 00-30747

FIRST COMMUNITY BANCORP
(Exact Name of Registrant as Specified in Its Charter)

Registrant's telephone number, including area code: (858) 756-3023

Securities registered pursuant to Section 12(b) of Exchange Act: None

Securities registered pursuant to Section 12(g) of Exchange Act: Common stock, no par value

        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 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 by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.    o

        The aggregate market value of the common stock held by non-affiliates of the registrant, computed by reference to the average bid and asked prices on the Nasdaq National Market on March 27, 2002 of $26.075 was $100,831,034.

        As of March 27, 2002, there were 7,585,825 shares of the Registrant's common stock outstanding.

*

Portions of First Community Bancorp's definitive proxy statement for the 2002 Annual Meeting of Shareholders are incorporated herein by reference.

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        This Annual Report on Form 10-K includes forward-looking information, which is subject to the "safe harbor" created by Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. When the Company uses or incorporates by reference in this Annual Report on Form 10-K (the "Annual Report") the words "anticipate," "estimate," "expect," "project," "intend," "commit," "believe" and similar expressions, the Company intends to identify forward-looking statements. Such statements are subject to certain risks, uncertainties and assumptions, including those described in this Annual Report. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated, estimated, expected, projected, intended, committed or believed. Such risks and uncertainties include, but are not limited to, the following factors:

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Competitive pressure in the banking industry and changes in the regulatory environment.



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Changes in the interest rate environment and volatility of rate sensitive loans and deposits.



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A decline in the health of the economy nationally or regionally which could reduce the demand for loans or reduce the value of real estate collateral securing the Company's loans.



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Credit quality deterioration which could cause an increase in the provision for loan losses.



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Dividend restrictions.



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Regulatory discretion.



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The effects of the September 11, 2001 terrorist attacks and their aftermath.



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Material losses in the Company's merchant credit card processing business from card holder fraud or merchant business failure.



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Changes in the securities markets.



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Asset/liability repricing risks and liquidity risks.



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The cost savings expected from recent or future mergers may not be fully realized or realized during the expected time frame.

        The Company undertakes no obligation to revise or publicly release the results of any revision to these forward-looking statements. For additional information concerning risks and uncertainties related to the Company and its operations please refer to Item 1 through Item 7A of this Annual Report on Form 10-K.

PART I

ITEM 1. BUSINESS

General

        First Community Bancorp (individually and on a consolidated basis, where appropriate, the "Company") is a California corporation registered under the Bank Holding Company Act of 1956, as amended (the "BHCA"). The Company's principal business is to serve as a holding company for its banking subsidiaries. As of December 31, 2001, those subsidiaries were Rancho Santa Fe National Bank ("Rancho Santa Fe"), First Community Bank of the Desert ("First Community") and First Professional Bank, N.A. ("First Professional"). On January 31, 2002, the Company acquired Pacific Western National Bank ("Pacific Western"), and combined Pacific Western, First Professional and First Community under the name "Pacific Western National Bank." On March 7, 2002, the Company acquired W.H.E.C., Inc. ("WHEC"), the holding company of Capital Bank of North County ("Capital Bank"). At the time of the merger, Capital Bank, WHEC's sole subsidiary, was merged into Rancho Santa Fe. Pacific Western and Rancho Santa Fe are referred herein as the "Banks". Discussions about

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the Banks as of and for the periods ended December 31, 2001 refer only to Rancho Santa Fe, First Community and First Professional.

        Rancho Santa Fe, a federally chartered commercial bank organized in 1982, is a community bank serving the commercial, industrial, professional, real estate and private banking markets of San Diego County. In May 2000, the Company acquired both Rancho Santa Fe and First Community. First Community, a California chartered commercial bank organized in 1980, was a community bank established to serve the commercial, industrial, professional, real estate and private banking markets of San Bernardino and Riverside Counties. In January 2001, the Company acquired First Professional, a federally chartered commercial bank serving Los Angeles County.

        The Banks are full-service community banks offering a broad range of banking products and services including: accepting time and demand deposits, originating commercial loans, consumer loans, real estate and construction loans, Small Business Administration guaranteed loans ("SBA" loans) and mortgage loans and making other investments. The Banks' loans are primarily short-term and adjustable rate. At December 31, 2001, the gross loans of the Banks totaled approximately $502,090,000 of which approximately 49% consisted of commercial loans, 49% consisted of real estate loans and 2% consisted of consumer and other loans. Special services and requests beyond the lending limits of the Banks can be arranged through correspondent banks.

        The Company, through the Banks, derives its income primarily from interest received on real estate loans, commercial loans and consumer loans and, to a lesser extent, on fees from the sale of SBA loans originated, interest on investment securities, fees received in connection with loans and other services offered (including SBA loan servicing), and deposit services. The Company's major operating expenses are the interest it pays on deposits and borrowings, salaries and general operating expenses. The Banks rely on a foundation of locally generated deposits. Management believes it has a relatively low cost of funds due to a high percentage of low cost and noninterest bearing deposits. The Company's operations, like those of other financial institutions operating in California, are significantly influenced by economic conditions in California, including the strength of the real estate market, and the fiscal and regulatory policies of the federal government and the regulatory authorities that govern financial institutions. See "—Supervision and Regulation."

        The Company is committed to maintaining premier, relationship-based community banks in Southern California which serve the needs of small to medium sized businesses and the owners and employees of those businesses. The strategy for serving the Company's target markets is the delivery of a finely-focused set of value-added products and services that satisfy the primary needs of the Company's customers, emphasizing superior service and relationships as opposed to transaction volume.

        The Company operates in one business segment: banking.

Strategic Evolution

First Community Bancorp

        The Company was organized on October 22, 1999 as a California corporation for the purpose of becoming a bank holding company and to acquire all the outstanding capital stock of Rancho Santa Fe.

First Community Acquisition

        On May 31, 2000, the Company completed its formation and combined Rancho Santa Fe with First Community as its wholly-owned subsidiaries. Shareholders for both banks approved the transaction at their respective Shareholder Meetings held on May 31, 2000. Under the terms of the merger agreement, each shareholder of First Community received 0.30 shares of Company common stock for each share of First Community common stock. Each Rancho Santa Fe share was exchanged for one share of Company common stock. At the same time as completion of the merger, the Company's

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common stock was listed on NASDAQ under the symbol FCBP. The Company accounted for the merger as a "pooling-of-interests."

        The merger created a $318 million bank holding company operating in the markets of Northern San Diego County and the desert communities of the Coachella Valley and Morongo Basin. Each bank operated under its own name with Rancho Santa Fe having branches in Rancho Santa Fe, San Diego's Golden Triangle, Escondido and Carlsbad. First Community had branches in Palm Springs, Indian Wells, Cathedral City, Yucca Valley and Twenty-nine Palms.

First Professional Merger

        On January 16, 2001, the Company acquired Professional Bancorp, Inc. ("Professional") and its wholly-owned subsidiary, First Professional. Shareholders of Professional received either $8.00 in cash or 0.55 shares of Company common stock for each share of Professional common stock. Professional shareholders had the option to choose either cash or stock consideration. The purchase price received by shareholders of Professional totaled approximately 504,747 shares of Company common stock and approximately $8.9 million in cash, resulting in a total purchase price of approximately $16.3 million.

First Charter Acquisition

        On October 8, 2001, the Company acquired First Charter Bank, N.A. Shareholders of First Charter received 0.008635 of a share of Company common stock for each share of First Charter common stock. Approximately 661,609 shares were issued in this acquisition, resulting in a total purchase price of approximately $14.2 million. First Charter was merged into First Professional with First Professional as the surviving entity.

Pacific Western Acquisition

        On January 31, 2002, the Company acquired Pacific Western. The shareholders and option holders of Pacific Western were paid approximately $36.6 million in cash. Upon completion of this acquisition, Pacific Western and First Community were merged with First Professional Bank. The resulting bank will operate as Pacific Western National Bank and will be headquartered in Santa Monica, California.

W.H.E.C., Inc. Acquisition

        On March 7, 2002, the Company acquired WHEC, the holding company of Capital Bank of North County. The Company issued 1.1 million shares of its common stock in exchange for all of the outstanding common shares and options of WHEC. At the time of the merger, Capital Bank, WHEC's sole subsidiary, was merged into Rancho Santa Fe National Bank. As of March 7, 2002, Mr. Robert Sporrer, former Chairman of WHEC, became a director and Chief Executive Officer of Rancho Santa Fe.

        As of December 31, 2001, the Company had assets of approximately $770 million. As of March 7, 2002, the Company is approximately $1.2 billion in assets and has two wholly-owned banking subsidiaries, Rancho Santa Fe National Bank with eight branches in San Diego County, and Pacific Western National Bank with sixteen branches in Los Angeles, Orange, Riverside and San Bernardino Counties.

Management Changes

        In October of 2001, the Company's Chief Financial Officer, Arnold Hahn, unexpectedly passed away. In the interim, Matt Wagner, the Company's President and Chief Executive Officer has acted as Chief Financial Officer. On April 1, 2002 Lynn Hopkins will assume the responsibilities as Chief

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Financial Officer of the Company. Also on April 1, 2002, Suzanne Brennan will join the Company as Executive Vice President and Manager of Operations and Systems.

Business of the Company

Banking Business

        The Company, through the Banks, provides banking and other financial services throughout Southern California to small and medium sized businesses and the owners and employees of those businesses. The Banks offer a broad range of banking products and services, including many types of business, personal savings and checking accounts and other consumer banking services. The Banks originate several types of loans, including secured and unsecured commercial and consumer loans, commercial and residential real estate mortgage loans, SBA loans and construction loans. The Banks' loans are primarily short-term and adjustable rate. Special services or requests beyond the lending limits of the Banks can be arranged through correspondent banks. The Banks have a network of ATMs and offer access to ATM networks through other major banks. The Banks issue MasterCard and Visa credit and debit cards through a correspondent bank and are also merchant depositories for cardholder drafts under Visa and MasterCard. The Banks can provide investment and international banking services through correspondent banks.

        The Company, through the Banks, concentrates its lending activities in three principal areas:

        (1)  Real Estate Loans. Real estate loans are comprised of construction loans, miniperm loans collateralized by first or junior deeds of trust on specific properties and equity lines of credit. The properties collateralizing real estate loans are principally located in the Company's primary market areas of Los Angeles, San Bernardino, Riverside and San Diego counties in California and the contiguous communities. The construction loans are comprised of loans on residential and income producing properties that generally have terms of less than two years and typically bear an interest rate that floats with the prime rate or another established index. The miniperm loans finance the purchase and/or ownership of income producing properties. Miniperm loans are generally made with an amortization schedule ranging from fifteen to twenty-five years with a lump sum balloon payment due in one to ten years. Equity lines of credit are revolving lines of credit collateralized by junior deeds of trust on real properties. They bear a rate of interest that floats with the prime rate and have maturities of five years. From time to time, the Company purchases participation interests in loans made by other institutions. These loans are subject to the same underwriting criteria and approval process as loans made directly by the Company. The Banks' real estate portfolio is subject to certain risks, including (i) a possible downturn in the Southern California economy, especially like the one which occurred during the early 1990s, (ii) interest rate increases, (iii) reduction in real estate values in Southern California and (iv) continued increase in competitive pricing and loan structure. The Banks strive to reduce the exposure to such risks by (a) reviewing each loan request and renewal individually, (b) using a dual signature approval system whereby both the marketing and credit administration departments must approve each request individually and (c) strict adherence to written loan policies, including, among other factors, minimum collateral requirements and maximum loan-to-value ratio requirements. Each loan request is reviewed on the basis of the Bank's ability to recover both principal and interest in view of the inherent risks.

        (2)  Commercial Loans. Commercial loans are made to finance operations, to provide working capital or for specific purposes, such as to finance the purchase of assets, equipment or inventory. Since a borrower's cash flow from operations is generally the primary source of repayment, the Company's policies provide specific guidelines regarding required debt coverage and other important financial ratios. Commercial loans include lines of credit and commercial term loans. Lines of credit are extended to businesses or individuals based on the financial strength and

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integrity of the borrower and generally (with some exceptions) are collateralized by short-term assets such as accounts receivable, inventory, equipment or real estate and have a maturity of one year or less. Such lines of credit bear an interest rate that floats with the prime rate, LIBOR or another established index. Commercial term loans are typically made to finance the acquisition of fixed assets, refinance short-term debt originally used to purchase fixed assets or, in rare cases, to finance the purchase of businesses. Commercial term loans generally have terms from one to five years. They may be collateralized by the asset being acquired or other available assets and bear interest which either floats with the prime rate, LIBOR or another established index or is fixed for the term of the loan. The Banks' portfolio of commercial loans is subject to certain risks, including (i) a possible downturn in the Southern California economy, (ii) interest rate increases and (iii) the deterioration of a company's financial capabilities. The Banks strive to reduce the exposure to such risks through (a) a dual signature approval system and (b) strict adherence to written loan policies. In addition, loans based on short-term asset values are monitored on a monthly or quarterly basis. In general, the Banks receive and review financial statements of borrowing customers on an ongoing basis during the term of the relationship and respond to any deterioration noted.

        (3)  Consumer Loans. Consumer loans include personal loans, auto loans, boat loans, home improvement loans, equipment loans, revolving lines of credit and other loans typically made by banks to individual borrowers. The Banks' consumer loan portfolio is subject to certain risks, including (i) amount of credit offered to consumers in the market, (ii) interest rates increases and (iii) consumer bankruptcy laws which allow consumers to discharge certain debts. The Banks strive to reduce the exposure to such risks through the direct approval of all consumer loans by (a) using a dual signature system of approval and (b) strict adherence to written credit policies.

        As part of its efforts to achieve long-term stable profitability and respond to a changing economic environment in Southern California, the Company is investigating all possible options to augment its traditional focus by broadening its customer services. Possible avenues of growth and future diversification include more branch locations, expanded days and hours of operation and new types of lending, brokerage, annuity and mutual funds products.

Business Concentrations

        No individual or single group of related accounts is considered material in relation to the Company's assets or the Banks' assets or deposits, or in relation to the overall business of the Banks or the Company. However, approximately 57% of the Company's loan portfolio held for investment at December 31, 2001 consisted of real estate-related loans, including construction loans, miniperm loans, real estate mortgage loans and commercial loans secured by real estate. See "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations—Loans". Moreover, the business activities of the Company are currently focused in Southern California, with the majority of its business concentrated in Los Angeles, San Diego, Riverside, Orange and San Bernardino Counties. Consequently, the results of operations and financial condition of the Company are dependent upon the general trends in the Southern California economies and, in particular, the residential and commercial real estate markets. In addition, the concentration of the Company's operations in Southern California exposes it to greater risk than other banking companies with a wider geographic base in the event of catastrophes, such as earthquakes, fires and floods in this region.

Competition

        The banking business in California, specifically in the Banks' primary service areas, is highly competitive with respect to both loans and deposits as well as other banking and mortgage banking services. The market is dominated by a relatively small number of major banks with a large number of offices and full-service operations over a wide geographic area. Among the advantages such major banks have in comparison to the Banks are their ability to finance and engage in wide-ranging

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advertising campaigns and to allocate their investment assets to regions of higher yield and demand. Such banks offer certain services which are not offered directly by the Banks. In addition, by virtue of their greater total capitalization, such banks have substantially higher lending limits than the Banks. Other entities, in both the public and private sectors, seeking to raise capital through the issuance and sale of debt or equity securities also provide competition for the Banks in the acquisition of deposits. Banks also compete with money market funds and other money market instruments which are not subject to interest rate ceilings. In recent years, increased competition has also developed from specialized finance and non-finance companies that offer wholesale finance, credit card and other consumer finance services (including on-line banking services and personal finance software). Competition for deposit and loan products remains strong from both banking and non-banking firms and this competition directly effects the rates of those products and the terms on which they are offered to consumers.

        Technological innovation continues to contribute to greater competition in domestic and international financial services markets. Technological innovation has, for example, made it possible for non-depository institutions to offer customers automated transfer payment services previously limited to traditional banking products. In addition, customers now expect a choice of several delivery systems and channels, including telephone, mail, home computer, ATMs, self-service branches and in-store branches.

        Mergers between financial institutions have placed additional pressure on banks within the industry to consolidate their operations, reduce expenses and increase revenues to remain competitive. In addition, competition has intensified due to federal and state interstate banking laws, which permit banking organizations to expand geographically with fewer restrictions than in the past. These laws allow banks to merge with other banks across state lines, thereby enabling banks to establish or expand banking operations in the Company's most significant markets. The competitive environment is also significantly impacted by federal and state legislation which make it easier for non-bank financial institutions to compete with the Company.

        Economic factors, along with legislative and technological changes, will have an ongoing impact on the competitive environment within the financial services industry. As an active participant in financial markets, the Company strives to anticipate and adapt to dynamic competitive conditions, but there can be no assurance as to their impact on the Company's future business or results of operations or as to the Company's continued ability to anticipate and adapt to changing conditions. In order to compete with other competitors in their primary service areas, the Banks attempt to use to the fullest extent possible the flexibility which the Banks' independent status permits, including an emphasis on specialized services, local promotional activity and personal contacts. Each of the Banks strives to offer highly personalized banking services. In addition, the Company intends to continue diversifying its services and banking products and to cross-market services and banking products provided by one of the Banks but not the other. The Company believes that through the cross-marketing of products, the Banks can distinguish themselves from other community banks which they compete with based on the range of services provided and products offered. However, there can be no assurance the Company will be able to diversify its services and/or banking products or successfully compete with its competitors in its primary service area.

Employees

        As of March 1, 2002, Rancho Santa Fe had 53 full time equivalent employees, Pacific Western had 232 full time equivalent employees, and the Company had 42 full time equivalent employees in addition to those employed by the Banks.

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Financial and Statistical Disclosure

        Statistical information relating to the Company and its subsidiaries is presented within "Item 6. Selected Financial Data; Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations; Item 7A. Qualitative and Quantitative Disclosure About Market Risk." This information should be read in conjunction with the consolidated financial statements contained in "Item 8. Financial Statements and Supplementary Data."

Supervision and Regulation

General

        The banking and financial services businesses in which the Company engages are highly regulated. Such regulation is intended, among other things, to protect depositors insured by the Federal Deposit Insurance Corporation (the "FDIC") and the entire banking system. The commercial banking business is also influenced by the monetary and fiscal policies of the federal government and the policies of the Federal Reserve Board (the "Board"). The Board implements national monetary policies (with objectives such as curbing inflation and combating recession) by its open-market operations in United States Government securities, by adjusting the required level of reserves for financial intermediaries subject to its reserve requirements and by varying the discount rates applicable to borrowings by depository institutions. The actions of the Board in these areas influence the growth of bank loans, investments and deposits and also effects interest rates charged on loans and paid on deposits. Indirectly such actions may also impact the ability of non-bank financial institutions to compete with the Banks. The nature and impact of any future changes in monetary policies cannot be predicted.

        The laws, regulations and policies effecting financial services businesses are continuously under review by Congress and state legislatures and federal and state regulatory agencies. From time to time, legislation is enacted which has the effect of increasing the cost of doing business, limiting or expanding permissible activities or affecting the competitive balance between banks and other financial intermediaries. Proposals to change the laws and regulations governing the operations and taxation of banks, bank holding companies and other financial intermediaries are frequently made in Congress, in the California legislature and before various bank regulatory agencies and other professional agencies. Changes in the laws, regulations or policies that impact the Company cannot necessarily be predicted, but they may have a material effect on the business and earnings of the Company.

Bank Holding Company Regulation

        The Company, as a bank holding company, is subject to regulation under the BHCA. As a bank holding company, the Company is registered with and is subject to regulation by the Board under the Bank Holding Company Act as amended. In accordance with Board policy, the Company is expected to act as a source of financial strength to the Banks and to commit resources to support the Banks in circumstances where the Company might not otherwise do so. Under the BHCA, the Company is subject to periodic examination by the Board. The Company is also required to file with the Board periodic reports of the Company's operations and such additional information regarding the Company and its subsidiaries as the Board may require. Pursuant to the BHCA, the Company is required to obtain the prior approval of the Board before it acquires all or substantially all of the assets of any bank or ownership or control of voting shares of any bank if, after giving effect to such acquisition, it would own or control, directly or indirectly, more than 5 percent of such bank.

        Under the BHCA, the Company may not engage in any business other than managing or controlling banks or furnishing services to its subsidiaries that the Board deems to be so closely related to banking as "to be a proper incident thereto." The Company is also prohibited, with certain exceptions, from acquiring direct or indirect ownership or control of more than 5 percent of the voting shares of any company unless the company is engaged in banking activities or the Board determines

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that the activity is so closely related to banking to be a proper incident to banking. The Board's approval must be obtained before the shares of any such company can be acquired and, in certain cases, before any approved company can open new offices.

        Additionally, bank holding companies that meet certain eligility requirements prescribed by the BHCA and elect to operate as financial holding companies may engage in, or own shares in companies engaged in, a wider range of nonbanking activities, including securities and insurance activities and any other activity that the Board, in consultation with the Secretary of the Treasury, determines by regulation or order is financial in nature, incidental to any such financial activity or complementary to any such financial activity and does not pose a substantial risk to the safety or soundness of depository institutions or the financial system generally. The BHCA generally does not place territorial restrictions on the domestic activities of non-bank subsidiaries of bank holding companies. As of the date of this filing, the Company does not operate as a financial holding company.

        The BHCA and regulations of the Board also impose certain constraints on the redemption or purchase by a bank holding company of its own shares of stock.

        The Company's earnings and activities are affected by legislation, by regulations and by local legislative and administrative bodies and decisions of courts in the jurisdictions in which the Company and the Banks conduct business. For example, these include limitations on the ability of the Banks to pay dividends to the Company and the ability of the Company to pay dividends to its shareholders. It is the policy of the Board that bank holding companies should pay cash dividends on common stock only out of income available over the past year and only if prospective earnings retention is consistent with the organization's expected future needs and financial condition. The policy provides that bank holding companies should not maintain a level of cash dividends that undermines the bank holding company's ability to serve as a source of strength to its banking subsidiaries. Various federal and state statutory provisions limit the amount of dividends that subsidiary banks and savings associations can pay to their holding companies without regulatory approval. In addition to these explicit limitations, the federal regulatory agencies have general authority to prohibit a banking subsidiary or bank holding company from engaging in an unsafe or unsound banking practice. Depending upon the circumstances, the agencies could take the position that paying a dividend would constitute an unsafe or unsound banking practice.

        In addition, banking subsidiaries of bank holding companies are subject to certain restrictions imposed by federal law in dealings with their holding companies and other affiliates. Subject to certain exceptions set forth in the Federal Reserve Act, a bank can make a loan or extend credit to an affiliate, purchase or invest in the securities of an affiliate, purchase assets from an affiliate, accept securities of an affiliate as collateral for a loan or extension of credit to any person or company, issue a guarantee or accept letters of credit on behalf of an affiliate only if the aggregate amount of the above transactions of such subsidiary does not exceed 10 percent of such subsidiary's capital stock and surplus on an individual basis or 20 percent of such subsidiary's capital stock and surplus on an aggregate basis. Such transactions must be on terms and conditions that are consistent with safe and sound banking practices. A bank and its subsidiaries generally may not purchase a "low-quality asset," as that term is defined in the Federal Reserve Act, from an affiliate. Such restrictions also prevent a holding company and its other affiliates from borrowing from a banking subsidiary of the holding company unless the loans are secured by collateral.

        The Board has cease and desist powers over parent bank holding companies and non-banking subsidiaries where the action of a parent bank holding company or its non-financial institutions represent an unsafe or unsound practice or violation of law. The Board has the authority to regulate debt obligations, other than commercial paper, issued by bank holding companies by imposing interest ceilings and reserve requirements on such debt obligations.

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Regulation of the Banks

        The Banks are extensively regulated under both federal and state law.

        The Banks are insured by the FDIC, which currently insures deposits of each member bank to a maximum of $100,000 per depositor. For this protection, the Banks, as is the case with all insured banks, pay a semi-annual statutory assessment and are subject to the rules and regulations of the FDIC. First Community is a member of the Federal Reserve System and is subject to primary regulation by the Board. Rancho Santa Fe and Pacific Western are national banks and therefore regulated primarily by the Office of the Comptroller of the Currency.

        Various requirements and restrictions under the laws of the State of California and the United States effect the operations of the Banks. State and federal statutes and regulations relate to many aspects of the Banks' operations, including standards for safety and soundness, reserves against deposits, interest rates payable on deposits and loans, investments, mergers and acquisitions, borrowings, dividends, locations of branch offices, fair lending requirements, Community Reinvestment Act activities and loans to affiliates. Further, the Banks are required to maintain certain levels of capital. The following are the regulatory capital guidelines and the actual capitalization levels for Rancho Santa Fe, First Community, First Professional and the Company as of December 31, 2001:

Hazardous Waste Clean-Up

        Since the Company is not involved in any business that manufactures, uses or transports chemicals, waste, pollutants or toxins that might have a material adverse effect on the environment, its primary exposure to environmental laws is through its lending activities. Based on a general survey of the loan portfolios of the Banks, conversations with local appraisers and the type of lending currently and historically done by the Banks, the Company is not aware of any potential liability for hazardous waste contamination that would be reasonably likely to have a material adverse effect on the Company as of March 1, 2002.

USA Patriot Act

        On October 26, 2001, the President signed into law comprehensive anti-terrorism legislation known as the USA Patriot Act. Title III of the USA Patriot Act requires financial institutions, including the Banks, to help prevent, detect and prosecute international money laundering and the financing of terrorism. The Banks have augmented their systems and procedures to accomplish this. The Secretary of the Treasury has proposed additional regulations to further implement Title III. Although we cannot predict when and in what form these regulations will be adopted, we believe that the cost of compliance with Title III of the USA Patriot Act is not likely to be material to the Company.

Federal Deposit Insurance

        Because of favorable loss experience and a healthy reserve ratio in the Bank Insurance Fund (BIF) of the FDIC, well-capitalized and well-managed banks, including the Banks, have in recent years paid minimal premiums for FDIC insurance. A number of factors suggest that as early as the second half of 2002, even well-capitalized and well-managed banks will be required to pay premiums for deposit

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insurance. The amount of any such premiums will depend on the outcome of legislative and regulatory initiatives as well as the BIF loss experience and other factors, none of which we are in position to predict at this time.

BIS Guidelines

        The U.S. federal bank regulatory agencies' risk-capital guidelines are based upon the 1988 capital accord of the Basel Committee on Banking Supervision (the "BIS"). The BIS is a committee of central banks and bank supervisors/regulators from the major industrialized countries that develops broad policy guidelines that each country's supervisors can use to determine the supervisory policies they apply. In January 2001 the BIS released a proposal to replace the 1988 capital accord with a new capital accord that would set capital requirements for operational risk and refine the existing capital requirements for credit risk and market risk exposures. Operational risk is defined to mean the risk of direct or indirect loss resulting from inadequate or failed internal processes, people and systems or from external events. The 1988 capital accord does not include separate capital requirements for operational risk. The events of September 11, 2001 demonstrate the importance for financial institutions of managing operational risks. This BIS proposal outlines several alternatives for capital assessment of operational risks, including two standardized approaches and an "internal measurement approach" tailored to individual institutions' circumstances. The BIS has stated that its objective is to finalize a new capital accord in 2002 and for member countries to implement the new accord in 2005. The ultimate timing for new accord and the specifics of capital assessments for addressing operational risk are uncertain. However, we expect that a new capital accord addressing operational risk will eventually be adopted by the BIS and implemented by the U.S. federal bank regulatory agencies. We cannot determine whether new capital requirements that may arise out of a new BIS capital accord will increase or decrease minimum capital requirements applicable to the Company and its Banks.

ITEM 2. PROPERTIES

Rancho Santa Fe Properties

        Rancho Santa Fe's principal office is located at 6110 El Tordo, Rancho Santa Fe, California 92067. As of March 1, 2002, Rancho Santa Fe had a total of five properties consisting of four branch offices and one operations location. All locations are leased.

Pacific Western Properties

        Pacific Western's principal office is located at 120 Wilshire Blvd., Santa Monica, California 90401. As of March 1, 2002, Pacific Western had a total of nineteen properties consisting of sixteen branch offices, two annex offices and one operations center. Four locations are owned and fifteen are leased.

        For additional information regarding properties of the Company and of the Banks, see "Item 8. Financial Statements and Supplementary Data."

ITEM 3. LEGAL PROCEEDINGS

General

        From time to time, the Company and the Banks are party to claims and legal proceedings arising in the ordinary course of business. Management of the Company evaluates the Company's and/or the Banks' exposure to the cases individually and in the aggregate and provides for potential losses on such litigation if the amount of the loss is determinable and the loss is probable.

        Management of the Company and of the Banks believes that there are no material litigation matters at the current time. However, litigation is inherently uncertain and no assurance can be given

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that any current or future litigation will not result in any loss which might be material to the Company and/or the Banks.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

        No matters have been submitted to the shareholders of the Company, through the solicitation of proxies or otherwise, during the fourth quarter of the year ended December 31, 2001.

PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

Marketplace Designation and Sales Price Information

        The Company's common stock trades on the Nasdaq National Market® under the symbol "FCBP." Prior to June 1, 2000, trading in Rancho Santa Fe's common stock occurred solely "over the counter," and was not extensive. Consequently, the prices listed before that date represent quotations by dealers making a market in Rancho Santa Fe common stock and reflect inter-dealer prices, without adjustments for mark-ups, mark-downs or commissions and may not necessarily represent actual transactions. Prior to June 1, 2000, trading in the Company's common stock was limited in volume and may not be a reliable indicator of its market value. On June 1, 2000, the Company's common stock was designated for quotation on the Nasdaq National Market®. The prices listed below for periods prior to June 1, 2000 are the prices of Rancho Santa Fe. Prices subsequent to June 1, 2000 are prices for the Company as reported by the Nasdaq National Market®.

        The Company believes, based on the records of the transfer agent, that the number of record holders of the Company's common stock as of March 1, 2002 was approximately 1,342.

        The following table summarizes those trades of Company common stock of which management is aware, setting forth the approximate high and low trade prices for each quarterly period ended since January 1, 1999:

        On March 1, 2002, the approximate high and low trade price for the Company's common stock was $20.50 and $20.45, respectively.

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Dividends

        The ability of the Company to pay dividends to its shareholders is subject to the restrictions set forth in the California General Corporation Law (the "CGCL"). The CGCL provides that a corporation may make a distribution to its shareholders if the corporation's retained earnings equal at least the amount of the proposed distribution. The CGCL further provides that, in the event that sufficient retained earnings are not available for the proposed distribution, a corporation may nevertheless make a distribution to its shareholders if it meets two conditions: (i) the corporation's assets equal at least 1¹/4 times its liabilities and (ii) the corporation's current assets equal at least its current liabilities or, alternatively, if the average of the corporation's earnings before taxes on income and interest expense for the two preceding fiscal years was less than the average of the corporation's interest expense for such fiscal years, the corporation's current assets equal at least 1¹/4 times its current liabilities. The Company's ability to pay dividends is also subject to certain other limitations. See "Item 1. Business—Supervision and Regulation."

        The primary source of income of the Company is the receipt of dividends from the Banks. The availability of dividends from the Banks is limited by various statutes and regulations. It is possible, depending upon the financial condition of the Bank in question, and other factors, that the Board and/or the Office of the Comptroller of the Currency could assert that payment of dividends or other payments is an unsafe or unsound practice. In addition, the Company's ability to pay dividends is limited by a Revolving Credit Agreement, dated as of June 26, 2000 (the "Credit Agreement"), between the Company and the Northern Trust Company which provides that the Company may not declare or pay any dividend, other than dividends payable in the Company's common stock or in the ordinary course of business exceeding 50% of net income per fiscal quarter of the Company before goodwill amortization and any restructuring charges incurred in connection with any merger, consolidation or other restructuring contemplated by transactions similar to a merger. See "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations—Liquidity"; and Note 16 of Notes to Consolidated Financial Statements contained in "Item 8. Financial Statements and Supplementary Data."

        Holders of the Company's common stock are entitled to receive dividends declared by the Company's Board of Directors out of funds legally available under the laws of the State of California, subject to the rights of holders of any preferred stock of the Company that may be issued in the future. In January 1998, the Company's Board of Directors (the Rancho Santa Fe Board prior to June 2000) approved the institution of a quarterly dividend and thereafter declared the following dividends:

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        The Company's management believes that it will be able to continue paying quarterly dividends. However, because the Company must comply with the CGCL and banking regulations, there can be no assurance that the Company will continue to pay dividends.

ITEM 6. SELECTED FINANCIAL DATA

        The following table sets forth statistical information relating to the Company and its subsidiaries for each of the years in the five-year period ended December 31, 2001. This data should be read in conjunction with the audited consolidated financial statements as of December 31, 2001 and 2000 and for each of the years in the three-year period ended December 31, 2001 and related notes included elsewhere herein. See "Item 8. Financial Statements and Supplementary Data."

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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Overview

        The Company had total assets of approximately $770,217,000 at December 31, 2001 as compared to total assets of approximately $358,287,000 at December 31, 2000. At January 31, 2002, the Company had total assets of approximately $1,050,000,000 after giving effect to the Pacific Western acquisition. The Company's total deposits increased from approximately $316,938,000 at December 31, 2000 to approximately $677,167,000 at December 31, 2001. The Pacific Western acquisition added approximately $239,000,000 of deposits as of January 31, 2002. Common shareholders' equity increased $27,525,000 million from $27,772,000 million at December 31, 2000 to $55,297,000 million at December 31, 2001. The increases in assets, deposits and shareholders' equity are primarily due to the acquisitions of First Professional and First Charter and the related common stock issuances.

        At March 7, 2002, the Company had total assets of approximately $1,196,000,000 after giving effect to WHEC acquisition. The WHEC acquisition added approximately $93,000,000 in net loans and approximately $135,000,000 in deposits.

Critical Accounting Policies

        The following discussion and analysis of financial condition and results of operations are based upon our consolidated financial statements, and the notes thereto, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these consolidated financial statements requires us to make a number of estimates and assumptions that affect the reported amounts and disclosures in the consolidated financial statements. On an ongoing basis, we evaluate our estimates and assumptions based upon historical experience and various other factors and circumstances. We believe that our estimates and assumptions are reasonable in the circumstances; however, actual results may differ significantly from these estimates and assumptions which could have a material impact on the carrying value of assets and liabilities at the balance sheet dates and our results of operations for the reporting periods.

        Our significant accounting policies and practices are described in Note 1 to the consolidated financial statements. We believe that the estimates and assumptions that are most important to the portrayal of the Company's financial condition and results of operations, in that they require management's most subjective judgments, to form the basis for the accounting policies deemed to be most critical to the Company. These critical accounting policies include the following:

Allowance for loan losses

        The Company's policy with respect to the allowance for loan losses is more fully described in Note 1 to the consolidated financial statements. The Company maintains an allowance for loan losses at an amount which it believes is sufficient to provide adequate protection against losses in the portfolio. Management's periodic evaluation of the adequacy of the allowance is based on such factors as the Company's past loan loss experience, known and inherent risks in the portfolio, adverse situations that have occurred but are not yet known that may affect the borrower's ability to repay, the estimated value of underlying collateral, and economic conditions. As management utilizes information currently available to evaluate the allowance for loan losses, the allowance for loan losses is subjective and may be adjusted in the future depending on changes in economic conditions or other factors.

        During the time the Company holds collateral, it is subject to credit risks, including risks of borrower defaults, bankruptcies and special hazard losses that are not covered by standard hazard insurance (such as those occurring from earthquakes or floods). Although management has established

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an allowance for loan losses that it considers adequate, there can be no assurance that the established allowance for loan losses will be sufficient to offset losses on mortgage loans in the future.

Results of Operations

        Earnings Performance.    The Company reported net earnings for the year ended December 31, 2001 of $6,110,000, compared to $1,904,000 for the year ended December 31, 2000, an increase of $4,206,000, or 220.9%. The Company reported net earnings for the year ended December 31, 2000 of $1,904,000, compared with $4,264,000 for 1999, a decrease of $2,360,000 or 55.3%. In 2001, basic earnings per share and diluted earnings per share were $1.30 and $1.23, respectively, compared with $0.49 and $0.47 in 2000 and $1.10 and $1.05 in 1999. The increase in net earnings for the year ended December 31, 2001 was primarily due to the acquisitions of First Professional and First Charter, as well as, the absence of nonrecurring merger costs of $3,561,000 incurred in 2000. The decrease in net earnings for the year ended December 31, 2000 was primarily attributable to nonrecurring merger costs of $3,561,000 related to the First Community Acquisition. Before these nonrecurring merger costs net income would have been $4,702,000, or a 10.3% increase from 1999. The Company's improved earnings performance, before nonrecurring merger costs, between 2000 and 1999 is primarily attributable to an increase in net interest income arising from a greater quantity of interest-earnings assets particularly in the loan segment. The Company believes that the demand for loans increased in the Banks' market areas due to a strong local economy as well as low interest rates. In addition to the growth in earning assets, a general improvement in operating efficiencies contributed to the Company's earnings performance.

        The following is a condensed summary of the statement of earnings along with selected profitability ratios:

Analysis of Net Income

        Net Interest Income.    Net interest income, which constitutes one of the principal sources of income for the Company, represents the difference between interest earned on assets and interest paid on liabilities. Net interest margin is net interest income expressed as a percentage of average interest-earning assets. Net interest income is affected by changes in both interest rates and the volume of average earning assets and interest-bearing liabilities. The following tables provide information

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concerning average interest-earning assets and interest-bearing liabilities, interest earned and paid and the related yields and rates on major categories for the periods indicated:

Analysis of Average Rates and Balances

(1)

Includes nonaccrual loans and loan fees

(2)

Yields on loans and securities have not been adjusted to a tax-equivalent basis because the impact is not material

        Net interest income before provision for loan losses was $31,863,000 for the year ended December 31, 2001 compared to $20,907,000 in 2000, an increase of $10,956,000 or 52.4%. The increase was attributable to an increase in average interest earning assets of $291,073,000 in 2001 compared to an increase of average interest bearing liabilities of $173,467,000, a net increase of $117,606,000. The rate earned on interest earning assets decreased to 7.21% in 2001 compared to 9.39% in 2000. The decrease was attributable to a decreased interest rate environment in 2001 over 2000 due to decreases in interest rates by the Federal Reserve Bank. Average net loans outstanding during 2001 was $395,337,000 and yielded 8.36% compared to average loans outstanding of $228,638,000 in 2000 that yielded 10.49%. The increase in average loans outstanding of $166,699,000 in

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2001 was primarily due to the acquisitions of First Professional and First Charter, which accounted for $118,099,000 of the increase, and the remaining $48,600,000 was due to internal growth.

        Average investments outstanding during 2001 were $107,277,000 earning interest at a yield of 5.91%, compared with $47,620,000 and 6.21% in 2000. Average Federal funds sold were $95,260,000 and yielded 3.90% in 2001 compared with $26,602,000 and 6.15% in 2000. Average deposits with financial institutions were $286,000 and yielded 4.90% in 2001 compared to $4,227,000 and 6.08% in 2000. These changes in yields are comparable to the changes in interest rates in the general economy over the same period.

        Average outstanding interest-bearing liabilities were $378,714,000 and paid an average of 2.97% compared to $205,247,000 and 3.86% in 2000. The increase in average balances is primarily due to the acquisitions of First Professional and First Charter. These changes in interest costs are comparable to the changes in interest rates in the general economy over this period of time.

        Net interest income before provision for loan losses was $20,907,000 for the year ended December 31, 2000 compared to $17,717,000 in 1999, an increase of $3,190,000 or 18.0%. The increase was attributable to an increase in average interest earning assets of $38,661,000 in 2000 compared to an increase of average interest bearing liabilities of $24,082,000, a net increase of $14,579,000. The rate earned on interest earning assets increased to 9.39% in 2000 compared to 8.72% in 1999. The increase was attributable to an increased interest rate environment in 2000 over 1999 due to increases in interest rates by the Federal Reserve Bank. Average net loans outstanding during 2000 was $228,638,000 and yielded 10.49% compared to average loans outstanding of $187,811,000 in 1999 that yielded 10.15%. The increase in average loans outstanding of $40,827,000 in 2000 was due to a continued strong economic climate in Southern California throughout the year and the Company's successful efforts to exploit this economic climate.

        Average investments outstanding during 2000 were $47,620,000 earning interest at a yield of 6.21%, compared with $45,731,000 and 5.72% in 1999. Average Federal funds sold were $26,602,000 and yielded 6.15% in 2000 compared with $28,372,000 and 4.86% in 1999. Average deposits with financial institutions were $4,227,000 and yielded 6.08% in 2000 compared to $6,512,000 and 5.45% in 1999. These changes in yields are comparable to the changes in interest rates in the general economy over the same period.

        Average outstanding interest-bearing liabilities were $205,247,000 and paid an average of 3.86% compared to $181,165,000 and 3.14% in 1999. The increase in average balances is due to the general increase in economic activity in this period of time and the Company's success in taking advantage of this increase. These changes in interest costs are comparable to the changes in interest rates in the general economy over this period of time.

        As discussed above, the Company's net interest income is affected by the change in the amount and mix of interest-earning assets and interest-bearing liabilities, referred to as a "volume change," as well as yields earned on interest-earning assets and rates paid on deposits and other borrowed funds, referred to as a "rate change."

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        The following table reflects changes in interest income and expense attributable to changes in volume and interest rates of significant interest-bearing assets and liabilities:

Analysis of Volume and Interest Rates

(1)

Includes nonaccrual loans and loan fees

(2)

Yields on loans and securities have not been adjusted to a tax-equivalent basis because the impact is not material

        The change in interest income/expense attributable to volume reflects the change in volume times the prior year's rate and the change in interest income/expense attributable to rate reflects the change in rates times the current year's volume. The change in rate/volume has been allocated to the change attributed to rate.

        Provision for Loan Losses.    The amount of the provision for loan losses in each year is a charge against earnings in that year. The amount of provision is based upon management's evaluation of the loan portfolio, past loan loss experience, general economic conditions and other pertinent factors.

        The Company provided $639,000 for loan losses for the year ended December 31, 2001 compared to $520,000 in the prior year. The allowance for loan losses was $11,209,000, or 2.23% of total loans outstanding, as of December 31, 2001, compared with an allowance for loan losses of $3,930,000, or 1.56% of total loans outstanding, as of December 31, 2000. This increase in the allowance for loan losses is primarily due the acquisitions of First Professional and First Charter. Net loans charged off in 2001 increased by $5,703,000 to $6,318,000 compared to $615,000 in net loans charged off for the year ended December 31, 2000. Included in the net loans charged off of $6,318,000 in 2001, $4,805,000 of First Professional loans were charged off during the first quarter associated with the First Professional acquisition.

        The Company provided $520,000 for loan losses for the year ended December 31, 2000 compared to $518,000 in the prior year. The small change in the provision for loan losses, even with the increase in loans and the small increase in impaired loans, is reflective of the improved credit quality of the

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Company's loan portfolio during the year ended December 31, 2000. The allowance for loan losses was $3,930,000, or 1.56% of total loans outstanding, compared with an allowance for loan losses of $4,025,000, or 1.95% of total loans outstanding, as of December 31, 1999. Net loans charged off in 2000 increased by $337,000 to $615,000 compared to $278,000 in net loans charged off for the year ended December 31, 1999.

        Noninterest Income.    The following table sets forth the details of noninterest income for the years ended December 31, 2001 and 2000:

        Noninterest income increased $2,712,000, or 110.0%, to $5,177,000 for the year ended December 31, 2001 compared with $2,465,000 in 2000. The increase in income is due primarily to the acquisitions of First Professional and First Charter. SBA loan servicing fees decreased $81,000, or 30.2%, to $187,000 in 2001 compared with $268,000 in 2000. The primary reason for this decrease was the average decrease in SBA loans serviced by the Company in the current year. The increase in gain on sale of loans is due to the increase in SBA activity as a result of the lower interest rate environment in 2001.

        The following table sets forth the details of noninterest income for the year ended December 31, 2000 and 1999:

        Noninterest income increased $161,000, or 7.0%, to $2,465,000 for the year ended December 31, 2000 compared with $2,304,000 in 1999. SBA loan servicing fees increased $98,000, or 57.6%, to $268,000 in 2000 compared with $170,0000 in 1999. The primary reason for this increase was the increase in SBA loans serviced by the Company from current year and prior year loan sales. Merchant discount fees, net of expenses, increased $23,000, or 27.4%, to $107,000 in 2000 compared with $84,000 in 1999 due to the increased activity of the Company's merchant customer base. The decline in gain on sale of loans is due to the decline in SBA activity as a result of the higher interest rate environment in

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2000. Other noninterest income increased $69,000, or 13.2%, in 2000 to $591,000 compared with $522,000 in 1999. The increase was attributable to small increases in several other income categories.

        Noninterest Expense.    The following table sets forth the details of noninterest expense for the years ended December 31, 2001 and 2000:

        Total noninterest expenses increased $7,770,000, or 42.8%, to $25,915,000 for 2001 compared with $18,145,000 in 2000. The increases in the noninterest expense categories are due primarily to the acquisitions of First Professional and First Charter offset by nonrecurring merger costs in 2000 of $3,561,000.

        The following table sets forth the details of noninterest expense for the years ended December 31, 2000 and 1999:

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        Total noninterest expenses increased $6,072,000, or 50.3%, to $18,145,000 for 2000 compared with $12,073,000 in 1999. Included in the year 2000 noninterest expense was $3,561,000 in pre-tax, non-recurring expenses associated with the merger of Rancho Santa Fe and First Community. Salaries and employee benefits increased $1,050,000, or 18.7%, to $6,673,000 in 2000 compared with $5,623,000 in 1999. This increase is a result of increased staff levels necessary to accommodate the increased level of business at the Company and required to manage a larger company.

        Occupancy and furniture and equipment expenses increased $272,000, or 12.5%, to $2,455,000 in 2000 compared with $2,183,000 in 1999. This increase is primarily due to increased depreciation at First Community and increased rent expense at Rancho Santa Fe. Legal and other professional services, consisting of audit, tax and accounting services, data processing and other outside services, increased $445,000, or 30.3%, to $1,914,000 in 2000 compared with $1,469,000 in 1999. The increase in 2000 was mostly the result of outsourcing more activities, especially at First Community. This was partially offset by more favorable data processing contracts.

        Advertising increased $130,000, or 42.6%, in 2000 to $435,000 compared with $305,000 in 1999. The increase was a result of the Company's plan to become recognized as "The Community Bank" as competitors are being purchased by larger institutions. Real estate owned and property held-for-sale expenses increased $174,000, or 95.6%, to $356,000 in 2000 compared with $182,000 in 1999. The Company wrote down its other real estate owned to the current market value of the properties.

        Other noninterest expenses increased $400,000, or 22.3%, to $2,194,000 in 2000 compared with $1,794,000 in 1999. Other noninterest expense consists of many different categories, none of which account for a majority of the increase. The largest reasons for the increase are attributable to increases in expenses associated with the growth in loans and deposits such as loan expense and customer service expenses such as courier costs and customer analysis expense.

        Income Taxes.    The provision for income taxes was $4,376,000, $2,803,000, and $3,166,000 for the years ended December 31, 2001, 2000 and 1999, respectively. Effective tax rates were 41.7%, 59.5%, and 42.6% for the years ended December 31, 2001, 2000 and 1999, respectively. The effective tax rate in 2000 is higher than the previous year and current year due to the nondeductability of certain merger costs.

Financial Condition

        Loans.    The following table presents the balance of each major category of loans at the dates indicated: