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As filed with the Securities and Exchange Commission on July 17, 2002

Registration No. 333-91586



SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549


AMENDMENT NO. 1
TO
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933


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

California 6712 33-0885320
(State or other jurisdiction of
incorporation or organization)
(Primary Standard Industrial
Classification Code Number)
(I.R.S. Employer
Identification No.)

6110 El Tordo
Rancho Santa Fe, California 92067
(858) 756-3023
(Address, including zip code, and telephone number, including area code, of Registrant's principal executive offices)


Lynn M. Hopkins
Executive Vice President and Chief Financial Officer
First Community Bancorp
275 North Brea Boulevard
Brea, California 92821
(714) 671-6800
(Name, address, including zip code, and telephone number, including area code, of agent for service)


Copies To:

Stanley F. Farrar, Esq.   Robert E. Braun, Esq.
Sullivan & Cromwell   Jeffer, Mangels, Butler & Marmaro LLP
1888 Century Park East   2121 Avenue of the Stars
Los Angeles, California 90067   Los Angeles, California 90067
(310) 712-6600   (310) 203-8080

        Approximate date of commencement of the proposed sale of the securities to the public: As soon as practicable after the effective date of this Registration Statement and upon consummation of the transactions described herein.

        If the securities being registered on this Form are being offered in connection with the formation of a holding company and there is compliance with General Instruction G, check the following box. o

        If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

        If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

        The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment that specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until this registration statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.





LOGO

Proxy Statement
for a
Special Meeting of Shareholders
and Prospectus

Merger Proposal—Your Vote is Very Important

To the Shareholders of Marathon Bancorp:

        The board of directors of Marathon has approved a merger agreement that provides for the merger of Marathon with and into First Community Bancorp. We are seeking your vote on this important transaction.

        If the merger is completed, Marathon shareholders will receive a fraction of a share of First Community common stock or cash for each share of Marathon common stock that they own. The amount that Marathon shareholders will receive fluctuates depending on the average price of First Community common stock over a fifteen-day averaging period, and you should read the section entitled "The Merger—Consideration to be Received in the Merger", which shows examples of the consideration you could receive in exchange for one share of Marathon common stock. If the average price is greater than or equal to $19.50 and less than or equal to $23.30, a Marathon shareholder will receive $4.80 in cash or an amount of First Community common stock with a value of $4.80. If the average price is less than $19.50, a Marathon shareholder will receive either cash in an amount that will be less than $4.80 or First Community common stock with a value that will be less than $4.80. If the average price is greater than $23.30, a Marathon shareholder will receive either cash in an amount that will be greater than $4.80 or First Community common stock with a value that will be greater than $4.80. First Community shareholders will continue to own their existing shares after the merger. First Community stock is traded on the Nasdaq Stock Market under the symbol "FCBP". On July 16, 2002, First Community common stock closed at $27.26 per share. If $27.26 were the average price, you would receive, for each Marathon share that you own, either cash in the amount of $5.33 or First Community common stock with a value of $5.33.

        We cannot complete the merger unless Marathon shareholders approve the principal terms of the merger. Your vote is very important. There will be a special meeting of Marathon shareholders held for the purpose of voting on the principal terms of the merger. Whether or not you plan to attend the special meeting, please take the time to vote on the proposal to approve the principal terms of the merger by completing and mailing the enclosed proxy card to us. The Marathon board of directors unanimously recommends that you vote "FOR" approval of the principal terms of the merger. First Community shareholders are not being asked to vote on the merger because their approval is not required.

        The special meeting of Marathon shareholders will be held on August 19, 2002 at 11150 West Olympic Boulevard, Los Angeles, California, 90064 at 4:00 p.m.

        We encourage you to read carefully the detailed information about the merger contained in this proxy statement-prospectus, including the section entitled "Risk Factors" beginning on page 16. This proxy statement-prospectus incorporates important business and financial information and risk factors about First Community and Marathon that is not included in or delivered with this document. See "Where You Can Find More Information" on page 87.

    Craig D. Collette
President and Chief Executive Officer
Marathon Bancorp

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of the shares to be issued under this proxy statement-prospectus or passed upon the adequacy or accuracy of this proxy statement-prospectus. Any representation to the contrary is a criminal offense.



        You should rely only on the information provided or incorporated by reference in this proxy statement-prospectus. We have not authorized anyone to provide you with different information. We are not making an offer of these securities in any state where the offer is not permitted. You should not assume that the information in this proxy statement-prospectus is accurate as of any date other than the date on the front of the document.


        This proxy statement-prospectus is dated July 17, 2002 and will first be mailed to Marathon shareholders on or about July 19, 2002.


Sources of Additional Information

        This proxy statement-prospectus incorporates important business and financial information about First Community and Marathon that is not included in or delivered with this document. You can obtain this information upon written or oral request, without charge, excluding exhibits (other than those that are specifically incorporated by reference into the documents that you request). Any request for documents should be made by August 12, 2002 to ensure timely delivery.

        Requests for documents should be directed to:


Marathon Bancorp
11150 West Olympic Boulevard
Los Angeles, California 90064


NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD AUGUST 19, 2002


TO OUR SHAREHOLDERS:

A Special Meeting of Shareholders of Marathon Bancorp will be held at Marathon's main office located at 11150 West Olympic Boulevard, Los Angeles, California, on August 19, 2002, at 4:00 p.m. local time.

At the meeting, we will ask you to act on the following matters:

1.
Merger. To consider and vote on a proposal to approve the principal terms of the merger of Marathon Bancorp with and into First Community Bancorp, pursuant to which you will receive, at your election (subject to proration), a fraction of a share of First Community Bancorp common stock or an amount in cash for each share of Marathon Bancorp common stock you own.

No other business may be transacted at the special meeting.

YOUR BOARD OF DIRECTORS HAS DETERMINED THAT THE MERGER IS IN THE BEST INTERESTS OF MARATHON BANCORP AND ITS SHAREHOLDERS AND UNANIMOUSLY RECOMMENDS THAT YOU VOTE "FOR" APPROVAL OF THE PRINCIPAL TERMS OF THE PROPOSED MERGER.

If you were a shareholder of record at the close of business on July 3, 2002, you may vote at the meeting or at any postponement or adjournment of the meeting.

In connection with the proposed merger, you may exercise dissenter's rights as provided in the California General Corporation Law. If you meet all the requirements of this law, and follow all of its required procedures, you may receive cash in the amount equal to the fair market value, as determined by mutual agreement between you and Marathon Bancorp, or if there is no agreement, by appraisal of your shares of Marathon Bancorp common stock as of the day before first announcement of the merger. The procedure for exercising your dissenters' rights is summarized under the heading "Dissenters' Rights" in the attached proxy statement-prospectus. The relevant provisions of the California General Corporation Law on dissenters' rights are attached to this document as Appendix C.

    BY ORDER OF THE BOARD OF DIRECTORS



 

 
July 17, 2002   SIGNATURE
Robert L. Oltman, Secretary


Table of Contents

QUESTIONS AND ANSWERS ABOUT THE MERGER   1
SUMMARY   4
Selected Consolidated Financial Information of First Community   10
Selected Consolidated Financial Data of Marathon Bancorp   12
Comparative Per Share Data   13
Market Price Data and Dividend Information   14
RISK FACTORS   16
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS   21
UNAUDITED PRO FORMA COMBINED CONDENSED CONSOLIDATED FINANCIAL INFORMATION   23
NOTES TO UNAUDITED PRO FORMA COMBINED CONDENSED CONSOLIDATED FINANCIAL INFORMATION   30
THE SPECIAL MEETING OF MARATHON BANCORP SHAREHOLDERS   42
Introduction   42
Record Date   42
Voting   42
Revocation of Proxies   42
Proxy Solicitation   43
Outstanding Voting Securities   43
THE MERGER   45
General   45
Background of the Merger   45
Merger Discussions   45
Reasons for the Merger and Recommendation of the Marathon Board of Directors   46
Consideration to be Received in the Merger   47
Election and Proration Procedures   49
Opinion of Marathon's Financial Advisor   51
Regulatory Approvals Required for the Merger   58
Material United States Federal Income Tax Considerations of the Merger   58
Accounting Treatment   61
Interests of Certain Persons in the Merger   61
Restrictions on Resales by Affiliates   62
Method of Effecting the Combination   62
Effective Time   62
Treatment of Options   63
Declaration and Payment of Dividends   63
No Fractional Shares   63
THE MERGER AGREEMENT   64
Representations and Warranties   64
Conduct of Business Pending the Merger   64
Conduct of Business of Marathon and Marathon Bank Pending the Merger   65
Additional Covenants   67
Conditions to Consummation of the Merger   69
Nonsolicitation   70
Termination of the Merger Agreement   70
Waiver and Amendment of the Merger Agreement   71
Termination Fee   72
Stock Exchange Listing   72
Expenses   72

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Shareholder Agreements   72
Non-Competition and Non-Solicitation Agreements   73
INFORMATION ABOUT FIRST COMMUNITY   74
Company History   74
Business of First Community   74
Concurrent Transactions   75
Limitations on Dividends   76
Employees   76
INFORMATION ABOUT MARATHON BANCORP   77
REGULATION AND SUPERVISION   78
General   78
Dividend Regulation   78
Government Policies   79
USA Patriot Act   79
Federal Deposit Insurance   79
Hazardous Waste Clean-Up   79
DESCRIPTION OF FIRST COMMUNITY CAPITAL STOCK   80
Common Stock   80
Preferred Stock   80
COMPARISON OF SHAREHOLDERS' RIGHTS   81
General   81
Vacancies on the Board   81
Shareholder Nominations and Proposals   81
Amendment of Charter   82
Amendment of Bylaws   82
Classified Board of Directors   82
Removal of Directors   82
Cumulative Voting   82
Special Meetings of the Shareholders   83
Shareholder Action Without a Meeting   83
Inspection of Shareholder Lists   83
DISSENTERS' RIGHTS   84
VALIDITY OF COMMON STOCK   86
EXPERTS   86
OTHER MATTERS   86
WHERE YOU CAN FIND MORE INFORMATION   87
Appendix A   Agreement & Plan of Merger   A-1
Appendix B   Opinion of Wedbush Morgan Securities   B-1
Appendix C   Chapter 13 of the General Corporation Law of California   C-1
Appendix D   Marathon Bancorp's 10-KSB for the Year Ended December 31, 2001   D-1
Appendix E   Marathon Bancorp's 10-QSB for the Period Ended March 31, 2002   E-1

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Questions and Answers About the Merger

Q:    What do I need to do now?

A:    After you have carefully read this proxy statement-prospectus, just indicate on your proxy card how you want your shares to be voted, then sign and mail the proxy card in the enclosed prepaid return envelope marked "Proxy" as soon as possible so that your shares may be represented and voted at the Marathon special meeting.

Q:    Can I change my vote after I have mailed my signed proxy card?

A:    Yes. There are three ways for you to revoke your proxy and change your vote. First, you may send a written notice to the corporate secretary of Marathon stating that you would like to revoke your proxy. Second, you may complete and submit a new proxy card. Third, you may vote in person at the special meeting.

Q:    What if I don't vote?

A:    If you fail to respond or if you respond and abstain from voting, it will have the same effect as a vote against the principal terms of the merger. If you respond and do not indicate how you want to vote, your proxy will be counted as a vote in favor of the principal terms of the merger.

Q:    What shareholder approvals are needed?

A:    For First Community, no shareholder vote is needed. For Marathon, the affirmative vote of the holders of a majority of the outstanding shares of Marathon common stock is required to approve the principal terms of the merger. As of the record date, Robert Abernethy, Frank Jobe, Robert Oltman and the Collette Revocable Trust collectively owned approximately 12.1% of the outstanding shares of Marathon common stock. They have agreed to vote these shares in favor of the principal terms of the merger.

Q:    As a holder of Marathon common stock, what will I receive in the merger?

A:    For each share of Marathon common stock you own, you will have the right to elect, on a share-by-share basis, to receive either:

        A Marathon shareholder may elect to receive a combination of cash and First Community common stock in exchange for his or her shares of Marathon common stock, but with respect to each share of Marathon stock, a shareholder must elect to receive either all cash or all First Community common stock. The amount of cash or First Community common stock you will receive will be determined by reference to the average price of First Community common stock over a fifteen-day averaging period ending on the third business day prior to the special meeting, referred to as the average price, as follows:

        Your election may be subject to proration as described on page 50.

Q:    How do I elect the form of payment I prefer?

A:    We are sending a form of election to you in a separate mailing. If you wish to make an election, you should complete the appropriate form and send it in the envelope provided with the form of election to U.S. Stock Transfer Corporation, which is the exchange agent. For you to make an effective election, your properly executed election form must be received by the



exchange agent before the election deadline on August 20, 2002. You must include your Marathon stock certificates with your election form. Please read the instructions to the election form for information on completing that form. Those instructions will also inform you of what to do if your stock certificates have been lost, stolen or destroyed.

        Do not send your Marathon stock certificates in the envelope provided for returning your proxy card. The stock certificates should only be forwarded to the exchange agent with the letter of transmittal and election form.

        Copies of this proxy statement-prospectus and the election form will be provided to all persons who become Marathon shareholders after the record date and prior to the election deadline in order to permit them to make an election.

Q:    What happens if I don't make an election for cash or shares?

A:    If you fail to make an election prior to the election deadline, other than because you are exercising your dissenters' rights, you will be deemed to have elected either cash or First Community common stock depending on how many Marathon shareholders request shares of First Community common stock versus how many request cash. See "The Merger" beginning on page 45.

Q:    What regulatory approvals are required to complete the merger?

A:    In order to complete the merger, First Community and Marathon must first obtain the prior written approval of the Office of the Comptroller of the Currency, or OCC, for the merger of Marathon National Bank, a wholly owned subsidiary of Marathon, with and into Pacific Western National Bank, a wholly owned subsidiary of First Community. The banks have received the OCC's approval by letter dated July 3, 2002. In addition, the Federal Reserve Bank of San Francisco must confirm that prior approval of the Board of Governors of the Federal Reserve System is not required under the Bank Holding Company Act. We expect to submit a request for their confirmation soon.

Q:    What are the tax consequences of the merger to me?

A:    In general, for United States federal income tax purposes, if you exchange your Marathon common stock solely for cash in the merger, you will recognize gain or loss in an amount equal to the difference between the cash received and your adjusted tax basis in your Marathon common stock. We expect that if you receive solely First Community common stock in exchange for your shares of Marathon common stock, you generally will not recognize any gain or loss for United States federal income tax purposes. However, you will have to recognize income or gain in connection with cash received in lieu of fractional shares of First Community common stock. If you receive a combination of cash and First Community common stock in the merger, you will not recognize loss but will recognize gain, if any, on the shares exchanged to the extent of any cash received. This tax treatment may not apply to all Marathon shareholders.

        Each of First Community's and Marathon's obligation to complete the merger is conditioned on First Community's and Marathon's receipt of legal opinions about the federal income tax treatment of the merger. These opinions will not bind the Internal Revenue Service, which could take a different view. To review the tax consequences to Marathon shareholders in greater detail, see pages 58-61. You should consult your own tax advisor for a full understanding of the tax consequences to you of the merger.

Q:    What risks should I consider before I vote on the merger?

A:    We encourage you to read carefully the detailed information about the merger contained in this proxy statement-prospectus, including the section entitled "Risk Factors" beginning on page 16.

Q:    When do you expect to merge?

A:    We are working to complete the merger in the third quarter of 2002. We must first obtain the necessary regulatory approval and the approval of Marathon's shareholders at the special meeting. We cannot assure you as to if

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and when all the conditions to the merger will be met nor can we predict the exact timing. It is possible we will not complete the merger.

Q:    Whom should I contact with questions or to obtain additional copies of this proxy statement-prospectus?

A:    You should contact:

Q:    Has Marathon retained a financial advisor with respect to this transaction?

A:    Yes. Marathon retained the services of Wedbush Morgan Securities. Wedbush Morgan Securities delivered its opinion dated May 9, 2002, to the board of directors of Marathon that, subject to certain assumptions, limitations and qualifications stated therein, the consideration to be received by Marathon shareholders was fair to Marathon shareholders from a financial point of view. Wedbush Morgan Securities will receive a fee of 1% of the value of the merger consideration upon consummation of the merger.

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Summary

        This brief summary includes selected information from this proxy statement-prospectus and does not contain all of the information that is important to you. You should carefully read this entire document and the other documents to which this document refers you. See "Where You Can Find More Information" on page 87. Each item in this summary contains a page reference directing you to a more complete description of that item. References to "we", "our" and "us" in this summary mean First Community and Marathon together.

The Merger (Page 45)

        We propose a merger in which Marathon will merge with and into First Community, and Marathon National Bank, a wholly owned subsidiary of Marathon, which we refer to as Marathon Bank, will merge with and into Pacific Western National Bank, a wholly owned subsidiary of First Community, which we refer to as Pacific Western. As a result of the merger, Marathon will cease to exist as a separate corporation and you will have the right to become a shareholder of First Community. We expect to complete the merger in the third quarter of 2002. When we complete the merger, for each share of Marathon common stock you own, you will have the right to elect, on a share-by-share basis, to receive either:

        A Marathon shareholder may elect to receive a combination of cash and First Community common stock in exchange for his or her shares of Marathon common stock, but with respect to each share of Marathon stock, a shareholder must elect to receive either all cash or all First Community common stock.

        The amount of cash or First Community common stock you will receive will be determined by reference to the average price of First Community common stock over a fifteen-day averaging period ending on the third business day prior to the special meeting, referred to as the average price, as follows:

        Your election may be subject to proration. The merger agreement sets a maximum number of shares of Marathon stock that may be converted into the right to receive cash in the merger. That number of shares may not exceed an amount equal to 6,473,072 divided by the amount of cash per share or the value of the First Community common stock you receive for a share of Marathon stock, determined by reference to the price of First Community common stock. If elections are made by Marathon shareholders that would result in more Marathon shares being converted into the right to receive cash than that number, or fewer Marathon shares being converted into the right to receive cash than that number, either those electing to receive cash or those electing to receive First Community common stock will have

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the consideration of the type they selected reduced by a pro rata amount and will receive a portion of their consideration in the form that they did not elect to receive. See "Election and Proration Procedures" on pages 49-50.

        We are sending a form of election to you in a separate mailing. If you wish to make an election, you should complete the appropriate form and send it in the envelope provided with the form of election to U.S. Stock Transfer Corporation, which is the exchange agent. For you to make an effective election, your properly executed election form must be received by the exchange agent before the election deadline on August 20, 2002. You must include your Marathon stock certificates with your election form. Please read the instructions to the election form for information on completing that form. Those instructions will also inform you of what to do if your stock certificates have been lost, stolen or destroyed.

        Do not send your Marathon stock certificates in the envelope provided for returning your proxy card. The stock certificates should only be forwarded to the exchange agent with the letter of transmittal and election form.

        Copies of this proxy statement-prospectus and the election form will be provided to all persons who become Marathon shareholders after the record date and prior to the election deadline in order to permit them to make an election.

The Companies (Pages 74-77)

First Community Bancorp
6110 El Tordo
Rancho Santa Fe, California 92067
(858) 756-3023

        First Community is a California corporation registered under the Bank Holding Company Act of 1956. First Community's principal business is to serve as a holding company for its banking subsidiaries Pacific Western National Bank and Rancho Santa Fe National Bank. First Community was established in October 1998. In May 2000, it became the parent of Rancho Santa Fe National Bank and of First Community Bank of the Desert, which was subsequently consolidated with other banks acquired by First Community and renamed Pacific Western National Bank in January 2002. Rancho Santa Fe National Bank is a federally chartered commercial bank established in 1982 to serve the commercial, industrial, professional, real estate and private banking markets of San Diego County. Pacific Western National Bank is a federally chartered commercial bank that serves the commercial, industrial, professional, real estate and private banking markets of Los Angeles, Orange, Riverside and San Bernardino Counties.

        As of March 31, 2002, on an unaudited basis, First Community had total consolidated assets of approximately $1,199.8 million, total consolidated loans, net of deferred fees, of approximately $798.7 million, total consolidated deposits of approximately $1,046.0 million and total consolidated shareholders' equity of approximately $104.3 million. First Community had 327 active full time equivalent employees on March 31, 2002.

Marathon Bancorp
11150 West Olympic Boulevard
Los Angeles, California 90064
(310) 996-9100

        Marathon is a California corporation registered under the Bank Holding Company Act of 1956. Marathon's principal business is to serve as a holding company for its banking subsidiary, Marathon Bank. Marathon Bank is a federally chartered commercial bank, established in March 1982. Marathon Bank has one full-service branch, located in Los Angeles, California, and a loan production office located in Woodland Hills, California.

        As of March 31, 2002, on an unaudited basis, Marathon had total consolidated assets of approximately $109.3 million, total consolidated loans, net of deferred fees, of approximately $70.2 million, total consolidated deposits of approximately $95.0 million, and total consolidated shareholders' equity of approximately $11.9 million. Marathon and Marathon Bank had 35 active full time equivalent employees on March 31, 2002.

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Material United States Federal Income Tax Considerations (Page 58)

        In general, for United States federal income tax purposes, if you exchange your Marathon common stock solely for cash in the merger, you will recognize gain or loss in an amount equal to the difference between the cash received and your adjusted tax basis in your Marathon common stock. We expect that if you receive solely First Community common stock in exchange for your shares of Marathon common stock, you generally will not recognize any gain or loss for United States federal income tax purposes. However, you will have to recognize income or gain in connection with cash received in lieu of fractional shares of First Community common stock. If you receive a combination of cash and First Community common stock in the merger, you will not recognize loss but will recognize gain, if any, on the shares exchanged to the extent of any cash received. This tax treatment may not apply to all Marathon shareholders.

        Each of First Community's and Marathon's obligation to complete the merger is conditioned on the receipt of legal opinions about the federal income tax treatment of the merger. These opinions will not bind the Internal Revenue Service, which could take a different view. To review the tax consequences to Marathon shareholders in greater detail, see pages 58-61. You should consult your own tax advisor for a full understanding of the tax consequences to you of the merger.

Concurrent Transactions (Page 75)

        On April 18, 2002, First Community entered into an agreement to acquire Upland Bank, a California state-chartered bank headquartered in Upland, California. Pursuant to that agreement, Upland Bank will merge with and into Pacific Western National Bank.

        On April 25, 2002, First Community entered into an agreement to acquire First National Bank, a national bank with its principal place of business in San Diego, California. Pursuant to that agreement, First National Bank will merge with and into Rancho Santa Fe National Bank.

        The transactions mentioned above may affect the ability of First Community to consummate the merger and to successfully integrate Marathon with the businesses of First Community. For more information see "Risk Factors" beginning on page 16.

        On June 26, 2002, First Community closed an offering of trust preferred securities with an aggregate liquidation preference of $10.0 million.

        On July 17, 2002, First Community raised $83,300,000, before expenses and underwriting discounts, through the sale of shares of its common stock in a registered public offering.

Market Price Information (Page 14)

        First Community trades on the Nasdaq National Market under the symbol "FCBP". The historical closing price for First Community's common stock on May 13, 2002, the last trading day before the public announcement of the merger, was $25.10. The historical closing price for First Community's common stock on July 16, 2002, the last practicable trading date before the date of this proxy statement-prospectus, was $27.26. Marathon trades on the Over the Counter Bulletin Board under the symbol "MARB.OB". The historical closing price for Marathon's common stock on May 13, 2002, the last trading day before the public announcement of the merger, was $4.85. The historical closing price for Marathon's common stock on July 16, 2002, the last practicable trading date before the date of this proxy-statement prospectus, was $5.00.

        Because the number of shares of First Community common stock that you will receive in exchange for each share of Marathon common stock in the merger may fluctuate, if you elect to receive First Community common stock, the value of the shares of First Community common stock you will receive in the merger (valued at the average price) will remain constant if the average price of First Community common stock is greater than or equal to $19.50 and less than or equal to $23.30, but fluctuate if the price falls below $19.50 or rises above $23.30. First Community cannot assure you that its stock price will continue to trade at or above the prices shown above. You

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should obtain current stock price quotations for First Community common stock from a newspaper, via the Internet or by calling your broker.

The Special Meeting of Shareholders (Page 42)

        The special meeting of Marathon shareholders will be held on August 19, 2002 at 4:00 p.m., local time, at 11150 West Olympic Boulevard, Los Angeles, California 90064. At the special meeting, you will be asked to approve the principal terms of the merger between First Community and Marathon.

Record Date; Vote Required (Page 42)

        You can vote at the Marathon special meeting if you owned Marathon common stock at the close of business on July 3, 2002. On that date, there were 3,853,019 shares of common stock of Marathon outstanding and entitled to vote. You can cast one vote for each share of common stock of Marathon you owned on that date.

        Approval of the principal terms of the merger requires the affirmative vote of the holders of a majority of the outstanding shares of Marathon common stock entitled to vote at the special meeting. Not voting, or failing to instruct your broker how to vote shares held for you in the broker's name, will have the same effect as voting against the merger. If you submit a signed proxy card without indicating a vote with respect to the merger, it will be deemed a vote in favor of the merger.

        At close of business on the record date, Robert Abernethy, Frank Jobe, Robert Oltman and the Collette Revocable Trust collectively owned approximately 465,334 shares of Marathon common stock, allowing them to exercise approximately 12.1% of the voting power of Marathon common stock entitled to vote at the Marathon special meeting. These shareholders have agreed to vote these shares in favor of the principal terms of the merger, as more fully described in the summary of Shareholder Agreements starting on page 72. As of July 3, 2002, the directors and executive officers of Marathon collectively owned shares sufficient to exercise 16.6% of the voting power of Marathon common stock. As of the same date, none of First Community and its subsidiaries, nor their directors, executive officers and affiliates, beneficially owned any shares of Marathon common stock.

Revocability of Proxies (Page 42)

        You may revoke your proxy at any time before your proxy is voted at the special meeting by (1) filing with the Corporate Secretary of Marathon a written notice of revocation of your proxy; (2) submitting a duly executed proxy bearing a later date; or (3) voting in person at the special meeting.

Opinion of Marathon's Financial Advisor (Page 51)

        Among other factors considered in deciding to approve the merger, the Marathon board of directors received the written opinion dated May 9, 2002, of Marathon's financial advisor, Wedbush Morgan Securities, that, as of that date and subject to the assumptions, limitations and qualifications set forth in its opinion, the consideration to be received by shareholders of Marathon was fair to the shareholders of Marathon from a financial point of view. The opinion of Wedbush Morgan Securities, dated as of May 9, 2002, is attached as Appendix B. You should read this opinion completely to understand the procedures followed, assumptions made, matters considered and qualifications and limitations of the review undertaken by Wedbush Morgan Securities in providing its opinion. Upon consummation of the merger, Marathon will pay a cash fee equal to 1% of the value of the merger consideration to Wedbush Morgan Securities for its services relating to the merger.

The Marathon Board of Directors Recommends that You Approve the Merger (Page 46)

        Based on Marathon's reasons for the merger described in this document, including Wedbush Morgan Securities' fairness opinion, the Marathon board of directors believes that the merger is in your best interests as a shareholder of Marathon and unanimously recommends that you vote "FOR" the proposal to approve the principal terms of the merger.

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Conditions to Completion of the Merger (Page 69)

        The completion of the merger depends on a number of conditions being met, including:

        Where the law permits, a party to the merger agreement could elect to waive a condition to its obligation to complete the merger although that condition has not been satisfied. We cannot be certain when (or if) the conditions to the merger will be satisfied or waived or that the merger will be completed.

We May Decide Not to Complete the Merger (Page 70)

        Marathon and First Community can agree at any time not to complete the merger, even if you have voted to approve the principal terms of the merger. Also, either of us can decide, without the consent of the other, not to complete the merger in a number of other situations, including:

Termination Fee (Page 72)

        Under certain conditions, either First Community or Marathon may owe to the other party a termination fee in the amount of $750,000 if the merger agreement is terminated. The merger agreement requires Marathon to pay the termination fee to First Community if:

8


        The merger agreement requires First Community to pay the termination fee to Marathon if:

We May Amend the Terms of the Merger and Waive Some Conditions (Page 71)

        First Community and Marathon may jointly amend the terms of the merger agreement, and each of us may waive our right to require the other party to adhere to those terms, to the extent legally permissible. However, after you approve the principal terms of the merger, any subsequent amendment or waiver that reduces or changes the amount or form of the consideration that you will receive as a result of the merger cannot be completed without your prior approval.

Marathon Shareholders May Have Appraisal Rights (Page 84)

        Under California law, you may have the right to dissent from the merger and to have the fair market value of your shares of Marathon common stock paid to you in cash. You will have the right to seek appraisal of the value of your Marathon shares and be paid the appraised value if you (1) do not vote in favor of the merger, (2) make written demand to Marathon within 30 days of the mailing notice of approval of the merger, (3) submit your Marathon stock certificates to Marathon prior to the merger or First Community after the merger within 30 days after the mailing of the notice of approval of the merger by the outstanding shares and (4) otherwise comply with the provisions governing dissenters' rights under California law.

        If you dissent from the merger and the conditions outlined above are met, your shares of Marathon will not be exchanged for shares of First Community common stock in the merger, and your only right will be to receive the fair market value of your shares as determined by mutual agreement between you and Marathon or by appraisal if you are unable to agree. You should be aware that submitting a signed proxy card without indicating a vote with respect to the merger will be deemed a vote "FOR" the merger and a waiver of your dissenters' rights. A vote "AGAINST" the merger does not dispense with the other requirements to request an appraisal under California law.

        The appraised value may be more or less than the consideration you would receive under the terms of the merger agreement.

        For more detailed information about your rights under California law, see "Dissenters' Rights".

In Order to Complete the Merger, We Must First Obtain Federal Regulatory Approval (Page 58)

        In order to complete the merger, First Community and Marathon must first obtain the prior written approval of the OCC for the merger of Marathon Bank with and into Pacific Western. The banks have received the OCC's approval by letter dated July 3, 2002. In addition, the Federal Reserve Bank of San Francisco must confirm that prior approval of the Board of Governors of the Federal Reserve System is not required under the Bank Holding Company Act. We expect to submit a request for their confirmation soon.

9



Selected Consolidated Financial Information of First Community

        First Community is providing the following information to aid you in your analysis of the financial aspects of the merger. First Community derived the information as of and for the years ended December 31, 1997 through December 31, 2001 from its historical audited consolidated financial statements for these fiscal years. First Community derived the financial information for the three months ended March 31, 2001 and March 31, 2002 from its unaudited condensed consolidated financial statements that include, in the opinion of management, all normal and recurring adjustments that management considers necessary for a fair statement of the results. The audited and unaudited consolidated financial information contained herein is the same historical information that First Community has presented in its prior filings with the SEC. The consolidated unaudited pro forma financial data set forth below as of and for the three-month period ended March 31, 2002 and for the year ended December 31, 2001 have been derived from First Community's unaudited pro forma combined condensed financial statements included in this proxy statement-prospectus.

        The operating results for the three months ended March 31, 2002 are not necessarily indicative of the operating results that may be expected for the year ended December 31, 2002. First Community expects that it will incur merger and restructuring expenses as a result of the acquisition of Marathon, as well as for the proposed acquisitions of First National and Upland, and the completed acquisitions of Pacific Western and W.H.E.C., Inc. First Community and Marathon both anticipate that the merger, as well as other acquisitions mentioned above, will provide the combined company with financial benefits that include reduced operating expenses and enhanced opportunities to earn more revenue. The information presented below does not reflect these financial expenses or benefits and, accordingly, does not attempt to predict or suggest future results. This information is only a summary, and you should read it in conjunction with First Community's consolidated financial statements and notes thereto contained in First Community's 2001 Annual Report on Form 10-K, which is incorporated by reference into this document. See "Sources of Additional Information" on the inside front cover of this proxy statement-prospectus.

 
  At or for the Three Months
Ended March 31, 2002

  At or for the Year Ended
December 31, 2001

   
   
   
   
 
  At or for the Years Ended
December 31,

 
   
  Pro
Forma(2)

  Pro
Forma(3)

   
  Pro
Forma(2)

  Pro
Forma(3)

 
  Actual(1)
  Actual(4)
  2000(5)(6)
  1999(5)
  1998(5)
  1997(5)
 
  (dollars in thousands, except per share data)

Consolidated Statements of Earnings Data:                                                            
Interest Income   $ 13,901   $ 18,641   $ 29,641   $ 43,114   $ 84,928   $ 141,673   $ 28,831   $ 23,405   $ 20,258   $ 16,707
Interest expense     2,988     4,120     7,547     11,251     27,615     50,885     7,924     5,688     5,390     4,564
   
 
 
 
 
 
 
 
 
 
Net interest income     10,913     14,521     22,094     31,863     57,313     90,788     20,907     17,717     14,868     12,143
Provision for loan losses         145     1,045     639     2,039     12,844     520     518     941     310
   
 
 
 
 
 
 
 
 
 
  Net interest income after provision for loan losses     10,913     14,376     21,049     31,224     55,274     77,944     20,387     17,199     13,927     11,833
Noninterest income     1,940     2,710     4,790     5,177     10,476     18,459     2,465     2,304     2,692     2,426
Noninterest expense     9,217     12,434     20,654     25,915     51,081     88,166     18,145     12,073     10,897     9,544
   
 
 
 
 
 
 
 
 
 
  Earnings from continuing operations before income taxes     3,636     4,652     5,185     10,486     14,669     8,237     4,707     7,430     5,722     4,715
Income taxes     1,474     1,714     1,931     4,376     5,526     2,949     2,803     3,166     2,140     1,878
   
 
 
 
 
 
 
 
 
 
  Net earnings from continuing operations   $ 2,162   $ 2,938   $ 3,254   $ 6,110   $ 9,143   $ 5,288   $ 1,904   $ 4,264   $ 3,582   $ 2,837
   
 
 
 
 
 
 
 
 
 
  Basic earnings from continuing operations per share   $ 0.33   $ 0.36   $ 0.22   $ 1.30   $ 1.14   $ 0.36   $ 0.49   $ 1.10   $ 0.93   $ 0.74
  Diluted earnings from continuing operations per share     0.32     0.35     0.22     1.23     1.11     0.36     0.47     1.05     0.88     0.71

10


Consolidated Balance Sheets Data:                                                            
Total cash and cash equivalents   $ 157,595   $ 158,980   $ 256,165   $ 104,703     N/A     N/A   $ 52,655   $ 32,037   $ 54,966   $ 25,728
Time deposits in financial institutions     390     390     1,083     190     N/A     N/A     495     7,502     5,440     4,160
Total securities     158,445     185,230     329,004     128,593     N/A     N/A     46,313     50,563     38,380     28,136
Loans, net of deferred fees and costs     798,714     868,911     1,365,149     501,740     N/A     N/A     250,552     206,102     170,980     151,064
Total assets     1,199,817     1,318,368     2,188,551     770,217     N/A     N/A     358,287     304,362     277,613     214,846
Total deposits     1,046,032     1,141,040     1,761,730     677,167     N/A     N/A     316,938     274,232     251,421     191,940
Trust preferred securities     28,000     28,000     38,000     28,000     N/A     N/A     8,000            
Total shareholders' equity     104,326     117,656     273,314     55,297     N/A     N/A     27,772     25,855     22,833     19,680

 


 

At or for the Three Months
Ended March 31, 2002


 

 


 

 


 

 


 

 


 

 


 
 
  At or for the Years Ended December 31,
 
 
   
  Pro
Forma(2)

  Pro
Forma(3)

 
 
  Actual(1)
  2001(4)
  2000(5)(6)
  1999(5)
  1998(5)
  1997(5)
 
Other Data:                                                  
Dividends declared per share   $ 0.09     N/A     N/A   $ 0.36   $ 0.36   $ 0.30   $ 0.24      
Dividends payout ratio     28.1 %   N/A     N/A     29.3 %   76.6 %   28.6 %   27.3 %    
Book value per share   $ 13.84   $ 14.56   $ 18.64   $ 10.48   $ 6.99   $ 6.67   $ 5.92   $ 5.15  
Tangible book value per share   $ 7.77   $ 7.60   $ 7.80   $ 8.62   $ 6.99   $ 6.67   $ 5.92   $ 5.15  
Shareholders' equity to assets at period end     8.70 %   8.92 %   12.49 %   7.18 %   7.75 %   8.49 %   8.22 %   9.16 %
Return on average assets     0.89     N/A     N/A     0.92     0.56     1.44     1.48     1.45  
Return on average equity     12.86     N/A     N/A     16.33     7.01     17.46     16.87     15.62  
Net interest margin     5.24     N/A     N/A     5.33     6.81     6.60     6.79     6.85  
Non-performing assets to total assets     0.76     N/A     N/A     1.01     0.92     1.06     0.33     0.49  
Allowance for loan losses to total loans     1.70     N/A     N/A     2.23     1.57     1.95     2.21     2.24  
Net charge-offs to average loans     0.38     N/A     N/A     1.60     0.27     0.15     0.33     0.09  
Non-performing loans to total loans     0.79     N/A     N/A     0.93     0.91     0.93     0.47     0.59  
Allowance for loan losses to non-performing loans     214.7     N/A     N/A     239.9     173.1     209.6     471.9     376.6  

(1)
First Community acquired Pacific Western on January 31, 2002 in a transaction accounted for as a purchase, and First Community acquired WHEC on March 7, 2002 in a transaction accounted for as a purchase. The consolidated statements of earnings and other data for the three months ended March 31, 2002 include the results of operations of Pacific Western subsequent to January 31, 2002 and of WHEC subsequent to March 7, 2002.

(2)
The pro forma statement of earnings and other data for the three months ended March 31, 2002 reflect the completed acquisitions of Pacific Western and WHEC and the proposed acquisition of Marathon as if each of those acquisitions had occurred on January 1, 2002, and the pro forma statement of earnings data for the year ended December 31, 2001 reflects the completed acquisitions and the proposed acquisition of Marathon, as well as the acquisition of First Charter, as if each of those acquisitions had occurred on January 1, 2001. The pro forma balance sheet data as of March 31, 2002 reflects the proposed acquisition of Marathon as if it had occurred on March 31, 2002. Please see "Unaudited Pro Forma Combined Condensed Consolidated Financial Information" beginning on page 23 for additional information regarding First Community's pro forma data and other matters to which First Community's pro forma data give effect.

(3)
The pro forma statement of earnings and other data for the three months ended March 31, 2002 reflect the acquisitions of Pacific Western and WHEC and the proposed acquisitions of First National, Upland Bank and Marathon as if each of those acquisitions or proposed acquisitions had occurred on January 1, 2002, and the pro forma statement of earnings data for the year ended December 31, 2001 reflects the completed and proposed acquisitions, as well as the acquisition of First Charter as if each of those acquisitions had occurred on January 1, 2001. The pro forma balance sheet data as of March 31, 2002 reflects the proposed acquisitions as if they had occurred on March 31, 2002. Please see "Unaudited Pro Forma Combined Condensed Consolidated Financial Information" beginning on page 23 for additional information regarding First Community's pro forma data and other matters to which First Community's pro forma data give effect.

(4)
First Community acquired First Professional on January 16, 2001 in a transaction accounted for as a purchase, and First Community acquired First Charter on October 8, 2001 in a transaction accounted for as a purchase. The consolidated statements of earnings and other data for the year ended December 31, 2001 include the results of operations of First Professional subsequent to January 16, 2001 and of First Charter subsequent to October 8, 2001.

(5)
First Community acquired First Community Bank of the Desert and Rancho Santa Fe National Bank on May 31, 2000 in a transaction accounted for on a pooling of interests basis. Accordingly, First Community's historical financial data has been restated for the years ended December 31, 2000, 1999, 1998 and 1997 include the results of both Rancho Santa Fe National Bank and First Community Bank of the Desert.

(6)
The statements of earnings data for the year ended December 31, 2000 include non-recurring merger costs of $3.6 million.

11



Selected Consolidated Financial Data of Marathon Bancorp

        The following selected consolidated financial data with respect to Marathon's consolidated statement of financial position as of December 31, 2001 and its consolidated statements of operations for the years ended December 31, 2001 and 2000 have been derived from the audited consolidated financial statements included with this proxy statement-prospectus in Appendix D. This information should be read in conjunction with such consolidated financial statements and the notes thereto. The summary financial data with respect to Marathon's consolidated statements of financial position as of December 31, 2000, 1999, 1998 and 1997 and its consolidated statements of operations for the years ended December 31, 1999, 1998 and 1997 have been derived from Marathon's audited consolidated financial statements, which are not presented herein. The summary consolidated financial data at and for the periods ended March 31, 2002 and 2001 are unaudited and have been derived from Marathon's unaudited consolidated financial statements included with this proxy statement-prospectus in Appendix E.

 
  At or for the Three Months Ended March 31,
  At or for the Years ended December 31,
 
 
  2002
  2001
  2001
  2000
  1999
  1998
  1997
 
 
  (dollars in thousands, except per share data)

 
Consolidated Statements of Operations Data:                                            
  Interest income   $ 1,619   $ 1,737   $ 6,877   $ 6,760   $ 5,266   $ 5,022   $ 4,730  
  Interest expense     329     582     2,058     2,122     1,476     1,407     1,144  
   
 
 
 
 
 
 
 
Net interest income     1,290     1,155     4,819     4,638     3,790     3,615     3,586  
  Provision for loan losses     30         45     100         56     301  
   
 
 
 
 
 
 
 
Net interest income after provision for loan losses     1,260     1,155     4,774     4,538     3,790     3,559     3,285  
  Non-interest income     280     187     708     557     497     441     565  
  Non-interest expense     1,096     1,091     4,416     4,103     3,803     3,752     4,212  
   
 
 
 
 
 
 
 
Earnings before income taxes     444     251     1,066     992     484     248     (362 )
  Income taxes (benefits)     45     (2 )   19     (112 )   (161 )   (197 )   (2 )
   
 
 
 
 
 
 
 
Net earnings (loss)   $ 399   $ 253   $ 1,047   $ 1,104   $ 645   $ 445   $ (364 )
   
 
 
 
 
 
 
 
Consolidated Balance Sheets Data:                                            
  Total cash and cash equivalents   $ 7,858   $ 9,175   $ 7,196   $ 10,940   $ 8,891   $ 9,249   $ 16,027  
  Total assets     109,304     91,615     102,339     92,916     83,119     74,400     79,069  
  Net loans     69,064     54,020     59,906     51,806     49,249     42,259     46,028  
  Total investments     26,342     22,640     29,286     24,540     21,468     20,044     14,396  
  Total deposits     95,008     79,870     89,648     79,885     71,555     65,218     70,448  
  Total shareholders' equity     11,932     10,860     11,792     10,455     9,136     8,658     8,201  

Other Data:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
  Book value per share   $ 3.10   $ 2.82   $ 3.06   $ 2.73   $ 2.39   $ 2.27   $ 2.15  
  Shareholders' equity to assets at period end     10.92 %   11.85 %   11.52 %   11.25 %   10.99 %   11.64 %   10.37 %
  Return on average assets     1.52     1.11     1.05     1.24     0.82     0.60     (0.52 )
  Return on average equity     13.64     9.64     9.39     11.45     7.26     5.34     (6.63 )
  Average equity/average assets     11.12     11.57     11.23     10.85     11.34     11.21     7.78  
  Net interest margin     5.35     5.41     5.33     5.76     5.35     5.33     5.60  

12



Comparative Per Share Data

        The following table presents certain historical per share data of First Community and Marathon and certain unaudited pro forma per share data that reflects the combination of First Community and Marathon using the purchase method of accounting. This data should be read in conjunction with First Community's audited and unaudited consolidated financial statements and notes thereto that are incorporated by reference in this proxy statement-prospectus and Marathon's audited and unaudited consolidated financial statements and notes thereto that are included as Appendix D and Appendix E with this proxy statement-prospectus, and the unaudited pro forma combined condensed consolidated financial information included elsewhere in this proxy statement-prospectus. The pro forma combined per share data does not necessarily indicate the operating results that would have been achieved had the combination of First Community and Marathon actually occurred at the beginning of the periods presented, nor does it indicate future results of operations or financial position.

 
  As of and for the Three Months Ended March 31, 2002
 
   
   
  Pro Forma
 
  First
Community

  Marathon
  First Community
and Marathon

  Marathon
Equivalent(1)

 
  (Unaudited)

Net income per common share:                        
  Basic   $ 0.33   $ 0.10   $ 0.36   $ 0.07
  Diluted   $ 0.32   $ 0.10   $ 0.35   $ 0.07
Dividends declared on common stock   $ 0.09       $ 0.09   $ 0.02
Book value per common share   $ 13.84   $ 3.10   $ 14.56   $ 2.95

 


 

As of and for the Year Ended December 31, 2001

 
   
   
  Pro Forma
 
  First
Community

  Marathon
  First Community
and Marathon

  Marathon
Equivalent(1)

 
   
   
  (Unaudited)

Net income per common share:                        
  Basic   $ 1.30   $ 0.27   $ 1.14   $ 0.23
  Diluted   $ 1.23   $ 0.27   $ 1.11   $ 0.22
Dividends declared on common stock   $ 0.36       $ 0.36   $ 0.07
Book value per common share   $ 10.48   $ 3.06   $ 14.41   $ 2.92

(1)
This calculation assumes that the average price of First Community common stock is $24.50, resulting in a holder of Marathon common stock receiving a fraction of a share of First Community common stock with a value of $4.96 (valued at the average price) in exchange for a share of Marathon common stock. The Marathon pro forma equivalent per share amounts are computed by multiplying the First Community and Marathon pro forma combined amounts by an exchange ratio, which in this example is 0.2025: $24.50 x 0.1339 + $1.68 = $4.9606 ÷ 24.50 = 0.2025.

13



Market Price Data and Dividend Information

Comparative Market Price Information

        The following table presents trading information for First Community common stock on the Nasdaq National Market System and Marathon common stock on the Over the Counter Bulletin Board on May 13, 2002. May 13, 2002 was the last trading day prior to the announcement of the signing of the merger agreement. July 16, 2002 was the last practical trading day for which information was available prior to the date of the printing of this proxy statement-prospectus.

 
  Closing Sales Price
 
 
  First Community
  Marathon
  Marathon Equivalent
 
Price per share:                    
May 13, 2002   $ 25.10   $ 4.85   $ 5.04 (1)
July 16, 2002   $ 27.26   $ 5.00   $ 5.33 (2)

(1)
Calculated assuming the average price of First Community common stock is $25.10: $25.10 × 0.1339 + 1.68 = $5.04.

(2)
Calculated assuming the average price of First Community common stock is $27.26: $27.26 × 0.1339 + 1.68 = $5.33.

        You should obtain current market quotations for First Community common stock. The market price of First Community common stock will probably fluctuate between the date of this document and the date on which the merger is completed and after the merger. Because the market price of First Community common stock is subject to fluctuation, the value of the shares of First Community common stock that you may receive in the merger may increase or decrease prior to and after the merger.

Historical Market Prices and Dividend Information

        First Community.    First Community common stock is listed on the Nasdaq National Market System under the symbol "FCBP". The following table sets forth, for the calendar quarters indicated, the high and low sales prices per share of First Community common stock as reported on the Nasdaq National Market System, and the dividends per share of First Community common stock.

Quarter Ended

  High
  Low
  Dividends
Declared

2000:                  
First quarter   $ 15.50   $ 13.75   $ 0.09
Second quarter   $ 14.25   $ 13.00   $ 0.09
Third quarter   $ 15.44   $ 13.88   $ 0.09
Fourth quarter   $ 15.13   $ 14.75   $ 0.09

2001:

 

 

 

 

 

 

 

 

 
First quarter   $ 21.00   $ 14.81   $ 0.09
Second quarter   $ 20.63   $ 17.44   $ 0.09
Third quarter   $ 22.95   $ 18.75   $ 0.09
Fourth quarter   $ 21.90   $ 19.25   $ 0.09

2002:

 

 

 

 

 

 

 

 

 
First quarter   $ 26.30   $ 19.25   $ 0.09
Second quarter   $ 29.24   $ 23.21   $ 0.15
Third quarter (through July 16, 2002)   $ 27.75   $ 23.42    

14


        The timing and amount of future dividends will depend upon earnings, cash requirements, the financial condition of First Community and its subsidiaries, applicable government regulations and other factors deemed relevant by the First Community board of directors.

        Marathon.    Marathon common stock is listed on the Over the Counter Bulletin Board under the symbol "MARB.OB". The following table sets forth, for the calendar quarters indicated, the high and low sales prices per share of Marathon common stock as reported on the Over the Counter Bulletin Board, and the dividends per share of Marathon common stock.

Quarter Ended

  High
  Low
  Dividends
Declared

2000:                
First quarter   $ 3.00   $ 2.50  
Second quarter   $ 3.00   $ 2.50  
Third quarter   $ 3.31   $ 2.63  
Fourth quarter   $ 3.38   $ 3.13  

2001:

 

 

 

 

 

 

 

 
First quarter   $ 3.25   $ 2.97  
Second quarter   $ 3.10   $ 2.90  
Third quarter   $ 4.75   $ 3.57  
Fourth quarter   $ 4.73   $ 3.60  

2002:

 

 

 

 

 

 

 

 
First quarter   $ 4.84   $ 3.50  
Second quarter   $ 5.07   $ 4.50  
Third quarter (through July 16, 2002)   $ 5.00   $ 4.60  

15



Risk Factors

        By voting in favor of the merger, you will be choosing to invest in the combined company's common stock to the extent you receive First Community common stock in exchange for your shares of Marathon common stock. An investment in the combined company's common stock contains a high degree of risk. In addition to the other information included in this proxy statement-prospectus, including the matters addressed in "Cautionary Statement Regarding Forward-Looking Statements", you should carefully consider the matters described below in determining whether to approve the principal terms of the merger.

Risks Related to the Merger

The merger consideration that is paid in First Community common stock can fluctuate based on the price of First Community stock.

        If you receive First Community common stock in the merger, the price of First Community common stock may vary from the price of First Community common stock stated on the date the merger was announced, on the date that this proxy statement-prospectus is mailed to Marathon shareholders, and on the date of the special meeting of Marathon shareholders. Any change in the price of First Community common stock prior to the determination date may affect the value of the merger consideration that you will receive upon completion of the merger. Stock price changes may result from a variety of factors, including general market and economic conditions, changes in our respective businesses, operations and prospects, regulatory considerations and completion of the merger. Many of these factors are beyond our control. We urge you to obtain current market quotations for First Community common stock.

You may not receive the form of merger consideration that you elect.

        The merger agreement sets a number of shares of Marathon stock that will be converted into the right to receive cash in the merger. That number will be an amount equal to 6,473,072 divided by the amount of cash or the value of the First Community common stock you receive for a share of Marathon common stock, which amount or value is determined by reference to the average price of First Community common stock over the averaging period. If elections are made by Marathon shareholders that would result in more Marathon shareholders receiving cash for their shares than that number, or fewer Marathon shareholders receiving cash for their shares than that number, either those electing to receive cash or those electing to receive First Community common stock will have the consideration of the type they selected reduced by a pro rata amount and will receive a portion of their consideration in the form that they did not elect to receive. Accordingly, there is a risk that you will not receive a portion of the merger consideration in the form that you elect, which could result in, among other things, tax consequences that differ from those that would have resulted had you received the form of consideration you elected (including with respect to the recognition of taxable gain to the extent cash is received). See "The Merger—Material United States Federal Income Tax Considerations of the Merger".

If First Community is unable to successfully integrate its business with Marathon and with those of the other banks it has acquired or proposes to acquire, First Community's business and earnings may be negatively affected.

        First Community has acquired six banks since its formation, including three banks since September 30, 2001. In addition, First Community has announced agreements to acquire three additional banks, including Marathon, which, if consummated, will nearly double the size of its operations. Successful integration of these banks, each of which previously operated independently, will depend primarily on First Community's ability to consolidate operations, systems and procedures and to eliminate redundancies and costs. First Community cannot assure you that First Community will be

16



able to integrate its operations without encountering difficulties including, without limitation, the loss of key employees and customers, the disruption of First Community's respective ongoing businesses or possible inconsistencies in standards, controls, procedures and policies. Estimated cost savings are projected to come from various areas that First Community identified through its due diligence and integration planning process. If First Community has difficulties with any of these integrations, First Community might not achieve the economic benefits it expects to result from these acquisitions and this would likely hurt First Community's business and its earnings. In addition, First Community may experience greater than expected costs or difficulties relating to the integration of these banks, and/or may not realize expected cost savings from these acquisitions within the expected time frames.

The inability to raise cash through a registered offering of First Community common stock may delay consummation of the merger.

        If First Community is unable to raise cash pursuant to an ongoing registered offering of its common stock, it will need to secure alternative sources of funding in order to finance the acquisitions of Marathon, First National Bank and Upland Bank. The time necessary to secure alternative funding, if it is needed, may delay the consummation of the merger.

Shares eligible for future sale could have a dilutive effect.

        As of July 12, 2002, there are 15,000,000 shares of First Community common stock authorized, of which approximately 7,546,831 shares are outstanding. An estimated maximum of 637,073 additional shares will be issued to Marathon shareholders in the merger.

        Shares of First Community common stock eligible for future sale, including those that may be issued in the acquisition of Marathon, First National Bank and Upland Bank and any offering of First Community common stock for cash, could have a dilutive effect on the market for First Community common stock and could adversely affect market prices.

        First Community also plans on filing two additional registration statements with the SEC on Form S-4 in connection with the acquisitions of First National Bank and Upland Bank, respectively. These registration statements will provide for First Community to issue up to 3.2 million shares of its common stock in connection with those acquisitions. First Community currently intends to complete the issuance of those shares and close those transactions by the end of the third quarter of 2002.

Risks Related to First Community Following Completion of the Merger
References to "we", "our" and "us" in this subsection mean First Community after acquiring Marathon.

We face strong competition from financial service companies and other companies that offer banking services, which can hurt our business.

        After the merger we will continue to conduct our banking operations exclusively in Southern California. Increased competition in our market may result in reduced loans and deposits. Ultimately, we may not be able to compete successfully against current and future competitors. Many competitors offer the banking services that we offer in our service area. These competitors include national banks, regional banks and other community banks. We also face competition from many other types of financial institutions, including without limitation, savings and loans, finance companies, brokerage firms, insurance companies, credit unions, mortgage banks and other financial intermediaries. In particular, our competitors include several major financial companies whose greater resources may afford them a marketplace advantage by enabling them to maintain numerous banking locations and mount extensive promotional and advertising campaigns. Additionally, banks and other financial institutions with larger capitalization and financial intermediaries not subject to bank regulatory restrictions have larger lending limits and are thereby able to serve the credit needs of larger

17



customers. Areas of competition include interest rates for loans and deposits, efforts to obtain deposits, and range and quality of products and services provided, including new technology-driven products and services. Technological innovation continues to contribute to greater competition in domestic and international financial services markets as technological advances enable more companies to provide financial services. We also face competition from out-of-state financial intermediaries that have opened low-end production offices or that solicit deposits in our market areas. If we are unable to attract and retain banking customers, we may be unable to continue our loan growth and level of deposits, and our results of operations and financial condition may otherwise be adversely affected.

Changes in economic conditions, in particular an economic slowdown in Southern California, could hurt our business materially.

        Our business is directly affected by factors such as economic, political and market conditions, broad trends in industry and finance, legislative and regulatory changes, changes in government monetary and fiscal policies and inflation, all of which are beyond our control. A deterioration in economic conditions, in particular an economic slowdown in Southern California, could result in the following consequences, any of which could hurt our business materially:

A downturn in the real estate market could hurt our business.

        A downturn in the real estate market could hurt our business because many of our loans are secured by real estate. Our ability to recover on defaulted loans by selling the real estate collateral would then be diminished, and we would be more likely to suffer losses on defaulted loans. As of March 31, 2002, approximately 50% of the book value of our loan portfolio consisted of loans secured by various types of real estate. Substantially all of our real property collateral is located in Southern California. If there is a significant decline in real estate values, especially in Southern California, the collateral for our loans will provide less security. Real estate values in California could be affected by, among other things, earthquakes and other national disasters particular to California.

Our business is subject to interest rate risk, and variations in interest rates may negatively affect our financial performance.

        Changes in the interest rate environment may reduce our profits. It is expected that we will continue to realize income from the differential or "spread" between the interest earned on loans, securities and other interest-earning assets, and interest paid on deposits, borrowings and other interest-bearing liabilities. Net interest spreads are affected by the difference between the maturities and repricing characteristics of interest-earning assets and interest-bearing liabilities. In addition, loan volume and yields are affected by market interest rates on loans, and rising interest rates generally are associated with a lower volume of loan originations. We cannot assure you that we can minimize our interest rate risk. In addition, an increase in the general level of interest rates may adversely affect the ability of certain borrowers to pay the interest on and principal of their obligations. Accordingly, changes in levels of market interest rates could materially and adversely affect our net interest spread, asset quality, loan origination volume and overall profitability.

18



We are dependent on key personnel, and the loss of one or more of those key personnel may materially and adversely affect our prospects.

        We currently depend heavily on the services of our chairman, John Eggemeyer, our chief executive officer, Matthew Wagner, and a number of other key management personnel. The loss of Mr. Eggemeyer's or Mr. Wagner's services or those of other key personnel could materially and adversely affect our results of operations and financial condition. Our success will also depend in part on the ability to attract and retain additional qualified management personnel. Competition for such personnel is strong in the banking industry and we may not be successful in attracting or retaining the personnel we require.

We are subject to extensive regulation, which could adversely affect our business.

        Our operations are subject to extensive regulation by federal, state and local governmental authorities and are subject to various laws and judicial and administrative decisions imposing requirements and restrictions on part or all of our operations. We believe that we are in substantial compliance in all material respects with applicable federal, state and local laws, rules and regulations. Because our business is highly regulated, the laws, rules and regulations applicable to us are subject to regular modification and change. There are currently proposed various laws, rules and regulations that, if adopted, would impact our operations. There can be no assurance that these proposed laws, rules and regulations, or any other laws, rules or regulations, will not be adopted in the future, which could make compliance much more difficult or expensive, restrict our ability to originate, broker or sell loans, further limit or restrict the amount of commissions, interest or other charges earned on loans originated or sold by us or otherwise adversely affect our business or prospects.

We are exposed to risk of environmental liabilities with respect to properties to which we take title.

        In the course of our business, we may foreclose and take title to real estate, and could be subject to environmental liabilities with respect to these properties. We may be held liable to a governmental entity or to third parties for property damage, personal injury, investigation and clean-up costs incurred by these parties in connection with environmental contamination, or may be required to investigate or clean up hazardous or toxic substances, or chemical releases at a property. The costs associated with investigation or remediation activities could be substantial. In addition, as the owner or former owner of a contaminated site, we may be subject to common law claims by third parties based on damages and costs resulting from environmental contamination emanating from the property. If we ever become subject to significant environmental liabilities, our business, financial condition, liquidity and results of operations could be materially and adversely affected.

Our ability to pay dividends is restricted by law and contractual arrangements and depends on capital distributions from the banks which are subject to regulatory limits.

        Our ability to pay dividends to our shareholders is subject to the restrictions set forth in California law. In addition, our ability to pay dividends to our shareholders is restricted under specified circumstances under indentures and a revolving credit agreement to which we are a party. See "Information About First Community—Limitations on Dividends" beginning on page 76 for more information on these restrictions. We cannot assure you that we will meet the criteria specified under California law or these agreements in the future, in which case we may reduce or stop paying dividends on our common stock.

        The primary source of our income from which we pay dividends is the receipt of dividends from our 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 of Governors of the Federal Reserve System, which we refer to as the Federal Reserve Board,

19



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 the event our subsidiaries were unable to pay dividends to us, we in turn would likely have to reduce or stop paying dividends on our common stock. Our failure to pay dividends on our common stock could have a material adverse effect on the market price of our common stock. See "Regulation and Supervision" beginning on page 78 for additional information on the regulatory restrictions to which we and our banks are subject.

Only a limited market exists for First Community common stock, which could lead to price volatility and losses for investors purchasing in this offering.

        Our common stock was designated for quotation on the Nasdaq National Market in June 2000 and trading volumes since that time have been modest. We cannot assure you that an active trading market for our common stock will develop. The limited trading market for our common stock may cause fluctuations in the market value of our common stock to be exaggerated, leading to price volatility in excess of that which would occur in a more active trading market of our common stock. In addition, even if a more active market in our common stock develops, we cannot assure you that such a market will continue or that shareholders will be able to sell their shares at or above the price at which they obtained them.

Our allowance for loan losses may not be adequate to cover actual losses.

        Like all financial institutions, we maintain an allowance for loan losses to provide for loan defaults and non-performance. Our allowance for loan losses may not be adequate to cover actual loan losses, and future provisions for loan losses could materially and adversely affect our operating results. Our allowance for loan losses is based on prior experience, as well as an evaluation of the risks in the current portfolio. The amount of future losses is susceptible to changes in economic, operating and other conditions, including changes in interest rates that may be beyond our control, and these losses may exceed current estimates. Federal regulatory agencies, as an integral part of their examination process, review our loans and allowance for loan losses. While we believe that our allowance for loan losses is adequate to cover current losses, we cannot assure you that we will not further increase the allowance for loan losses or that regulators will not require us to increase this allowance. Either of these occurrences could materially adversely affect our earnings.

Concentrated ownership of our common stock creates a risk of sudden changes in our share price.

        As of March 31, 2002, directors and members of our executive management team beneficially owned or controlled approximately 35% of our common stock. Certain shareholders in First National will also acquire large percentages of our common stock if we consummate the First National acquisition. Investors who purchase our common stock may be subject to certain risks due to the concentrated ownership of our common stock. The sale by any of our large shareholders of a significant portion of that shareholder's holdings could have a material adverse effect on the market price of our common stock. In addition, the registration of shares of our common stock in the First National acquisition will have the immediate effect of increasing the public float of our common stock. Such increase may cause the market price of our common stock to decline or fluctuate significantly.

20



Cautionary Statement Regarding Forward-Looking Statements

        This proxy statement-prospectus contains and incorporates by reference certain forward-looking statements about First Community's financial condition, results of operations and business of each of First Community and the businesses it has agreed to acquire. These statements may include statements regarding projected performance of First Community for the period following the completion of the merger. You can find many of these statements by looking for words such as "believes", "expects", "anticipates", "estimates", "intends", "will", "plans" or similar words or expressions. These forward-looking statements involve substantial risks and uncertainties. Some of the factors that may cause actual results to differ materially from those contemplated by such forward-looking statements include, but are not limited to those identified under "Risk Factors" above as well as the following:

        Because forward-looking statements are subject to risks and uncertainties, actual results may differ materially from those expressed or implied by such statements. Marathon shareholders are cautioned not to place undue reliance on such statements, which speak only as of the date of this proxy statement-prospectus. Forward-looking statements are not guarantees of performance. They involve risks, uncertainties and assumptions. The future results and shareholder values of First Community following completion of the merger may differ materially from those expressed in these forward-looking statements. Many of the factors that will determine these results and values are beyond the ability of First Community or Marathon to control or predict. For those statements, First Community and Marathon claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995.

21



        All subsequent written and oral forward-looking statements attributable to First Community or Marathon or any person acting on their behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. Neither First Community nor Marathon undertakes any obligation to release publicly any revisions to such forward-looking statements to reflect events or circumstances after the date of this proxy statement-prospectus or to reflect the occurrence of unanticipated events.

22



Unaudited Pro Forma Combined Condensed Consolidated Financial Information

        The following tables present financial data at and for the three months ended March 31, 2002 and for the year ended December 31, 2001 for First Community after giving effect to the completion of:

The pro forma financial data gives effect to each of the acquisitions under the purchase accounting method in accordance with accounting principles generally accepted in the United States. The unaudited pro forma combined condensed consolidated financial statements combine the historical condensed consolidated financial statements of First Community, First Charter, Pacific Western, WHEC, Upland Bank, Marathon and First National giving effect to these acquisitions as if they had been effective on March 31, 2002 with respect to the unaudited pro forma combined condensed consolidated balance sheet, and as of the beginning of the periods indicated with respect to the unaudited pro forma combined condensed consolidated statements of operations.

        The information for the year ended December 31, 2001 is derived from:

You should read First Community's unaudited pro forma combined condensed consolidated statement of operations for the year ended December 31, 2001 in conjunction with the historical consolidated financial statements, and related notes thereto, described above that have been incorporated by

23



reference into this proxy statement-prospectus. The information as of and for the three months ended March 31, 2002 is derived from:

You should read First Community's unaudited pro forma combined condensed consolidated financial statements as of and for the three months ended March 31, 2002 in conjunction with the historical financial statements, and related notes thereto, described above that have been incorporated by reference into this proxy statement-prospectus.

        First Community has incurred and expects to incur reorganization and restructuring expenses as a result of combining First Charter, Pacific Western and WHEC and in connection with the proposed acquisitions. The effect of the estimated merger and reorganization costs expected to be incurred in connection with the completed and proposed acquisitions has been reflected in the unaudited pro forma combined condensed consolidated balance sheet. First Community also anticipates that the acquisitions will provide the combined company with certain future financial benefits that include reduced operation expenses and opportunities to earn more revenue. However, First Community does not reflect any of these anticipated cost savings or benefits in the pro forma financial information. Finally, the pro forma financial information does not reflect any divestures of branches or deposits that may be required in connection with the acquisitions. Therefore, the pro forma financial information, while helpful in illustrating the financial characteristics of the combined company under one set of assumptions, does not attempt to predict or suggest future results. The pro forma financial information also does not attempt to show how the combined company would actually have performed had the companies been combined throughout the periods presented. First Community has included in the pro forma consolidated financial statements all the adjustments, consisting of only normal recurring adjustments, necessary for a fair statement of results of the historical periods.

        Given the information regarding the completed and proposed acquisitions, the actual consolidated financial position and results of operations will differ, perhaps significantly, from the pro forma amounts reflected herein because, among other reasons:

24


UNAUDITED PRO FORMA COMBINED CONDENSED CONSOLIDATED BALANCE SHEET
As of March 31, 2002

 
  First Community
Bancorp

  Pacific Western and WHEC Adjustments
  Marathon
  Marathon
Adjustments

  First Community
Bancorp with
Marathon
Pro Forma

  Upland Bank
  Upland Bank
Adjustments

  First National
  First National
Adjustments

  Additional
Adjustments

  First Community
Bancorp
Pro Forma

 
 
  (in thousands, except per share data)

 
Assets:                                                                    
Cash and due from banks   $ 81,504   $   $ 7,183   $   $ 88,687   $ 5,477   $   $ 31,052   $   $   $ 125,216  
Federal funds sold     76,091         675     (6,473 )i   70,293     10,156     (6,732 )q   22,000     (70,100 )y   73,305   gg   98,922  
Money market mutual funds                                 32,027             32,027  
   
 
 
 
 
 
 
 
 
 
 
 
  Total cash and cash equivalents     157,595         7,858     (6,473 )   158,980     15,633     (6,732 )   85,079     (70,100 )   73,305     256,165  
Interest-bearing deposits in financial institutions     390                 390     693                     1,083  
Federal Reserve Bank and Federal Home Loan Bank stock, at cost     2,263         443         2,706             5,446             8,152  
Securities held to maturity     8,930         12,554         21,484     1,749                     23,233  
Securities available-for-sale     147,252         13,788         161,040     39         136,540             297,619  
   
 
 
 
 
 
 
 
 
 
 
 
  Total securities     158,445         26,785         185,230     1,788         141,986             329,004  

Gross loans

 

 

800,129

 

 


 

 

70,337

 

 


 

 

870,465

 

 

89,976

 

 


 

 

408,796

 

 


 

 


 

 

1,369,238

 
Deferred fees and costs     (1,415 )       (140 )       (1,555 )   (935 )       (1,599 )           (4,089 )
   
 
 
 
 
 
 
 
 
 
 
 
  Loans, net of deferred fees and costs     798,714         70,197         868,911     89,041         407,197             1,365,149  
Allowance for loan losses     (13,563 )       (1,133 )       (14,696 )   (1,215 )         (10,239 )           (26,150 )
   
 
 
 
 
 
 
 
 
 
 
 
  Net loans     785,151         69,064         854,215     87,826         396,958             1,338,999  

Property, plant and equipment

 

 

10,381

 

 

 

 

 

212

 

 


 

 

10,593

 

 

355

 

 


 

 

5,507

 

 


 

 


 

 

16,455

 
Other real estate owned     2,747                   2,747     174                     2,921  
Goodwill     45,775     (4,540 )d       8,812   j   50,047         6,315   r       85,538   z       141,900  
Core deposit intangible         7,828   e       2,852   j   10,680         2,872   r       15,749   z       29,301  
Other assets     39,333         5,385     768   k   45,486     3,367     707   s   19,601     3,562   aa       72,723  
   
 
 
 
 
 
 
 
 
 
 
 
  Total Assets   $ 1,199,817   $ 3,288   $ 109,304   $ 5,959   $ 1,318,368   $ 109,836   $ 3,162   $ 649,131   $ 34,749   $ 73,305   $ 2,188,551  
   
 
 
 
 
 
 
 
 
 
 
 
Liabilities and Shareholders' Equity:                                                                    
Liabilities:                                                                    
Non-interest bearing deposits   $ 392,052   $   $ 34,647   $   $ 426,699   $ 24,863   $   $ 144,448   $   $   $ 596,010  
Interest bearing deposits     653,980         60,361         714,341     70,873         380,506             1,165,720  
   
 
 
 
 
 
 
 
 
 
 
 
  Total deposits     1,046,032         95,008         1,141,040     95,736         524,954             1,761,730  

Accrued interest payable and other liabilities

 

 

17,086

 

 

3,288

  
f

 

864

 

 

4,561

  
l

 

25,799

 

 

2,566

 

 

4,425

  
t

 

4,601

 

 

18,640

  
bb

 


 

 

56,031

 
Short-term borrowings     3,719         1,500         5,219             68,000         (14,397 )hh   58,822  
Convertible debt     654                 654                         654  
Trust preferred securities     28,000                 28,000                     10,000   ii   38,000  
   
 
 
 
 
 
 
 
 
 
 
 
  Total liabilities     1,095,491     3,288     97,372     4,561     1,200,712     98,302     4,425     597,555     18,640     (4,397 )   1,915,237  

Shareholders' Equity:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
Common stock     90,933         3,000     10,330   m   104,263     5,836     4,435   u   9,804     57,881   cc   77,702   jj   259,921  
Preferred Stock                                 1,412     (1,412 )cc        
Additional paid-in-capital             10,714     (10,714 )n               45,947     (45,947 )dd        
Retained earnings (accumulated deficit)     13,432         (1,770 )   1,770   n   13,432     5,695     (5,695 )v   (5,720 )   5,720   dd       13,432  
Accumulated other comprehensive income (loss):                                                                    
  Net unrealized gains (losses) on securities available-for-sale, net     (39 )       (12 )   12   n   (39 )   3     (3 )v   133     (133 )dd       (39 )
   
 
 
 
 
 
 
 
 
 
 
 
  Total Shareholders' Equity     104,326         11,932     1,398     117,656     11,534     (1,263 )   51,576     16,109     77,702     273,314  
   
 
 
 
 
 
 
 
 
 
 
 
    Total Liabilities and Shareholders' Equity   $ 1,199,817   $ 3,288   $ 109,304   $ 5,959   $ 1,318,368   $ 109,836   $ 3,162   $ 649,131   $ 34,749   $ 73,305   $ 2,188,551  
   
 
 
 
 
 
 
 
 
 
 
 
Shares outstanding     7,539           3,853     544     8,083     1,388     419     11,216     2,763     3,400     14,665  
Book value per share   $ 13.84         $ 3.10         $ 14.56   $ 8.31         $ 4.60               $ 18.64  

See accompanying notes to unaudited pro forma combined condensed consolidated financial information.

25


UNAUDITED PRO FORMA COMBINED CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
For the Three Months Ended March 31, 2002

 
  First
Community
Bancorp

  Pacific
Western

  WHEC
  Pacific
Western &
WHEC
Adjustments

  First
Community
Bancorp
with Pacific
Western &
WHEC
Pro Forma

  Marathon
  Marathon
Adjustments

  First
Community
Bancorp
with
Marathon
Pro Forma

  Upland
Bank

  Upland
Bank
Adjustments

  First
National

  First
National
Adjustments

  Additional
Adjustments

  First
Community
Bancorp
Pro Forma

 
  (in thousands, except per share data)

Interest income:                                                                                    
  Interest and fees on loans   $ 11,805   $ 1,557   $ 1,171   $   $ 14,533   $ 1,225   $   $ 15,758   $ 1,937   $   $ 7,357   $   $   $ 25,052
  Interest on interest-bearing deposits in other banks     2         2         4             4     7         8             19
  Interest on investment securities     1,855     93     218         2,166     374         2,540     22         1,490             4,052
  Interest on federal funds sold     239     42     38         319     20         339     14         165             518
   
 
 
 
 
 
 
 
 
 
 
 
 
 
    Total interest income     13,901     1,692     1,429         17,022     1,619         18,641     1,980         9,020             29,641

Interest expense:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
  Interest expense on deposits     2,449     498     305         3,252     328         3,580     547         1,986             6,113
  Interest expense on short-term borrowings     7                 7     1         8             954             962
  Interest expense on convertible debt     4                 4             4                         4
  Interest expense on trust preferred securities     528                 528             528                     (60)   ee   468
   
 
 
 
 
 
 
 
 
 
 
 
 
 
    Total interest expense     2,988     498     305         3,791     329         4,120     547         2,940         (60 )   7,547
   
 
 
 
 
 
 
 
 
 
 
 
 
 
Net interest income     10,913     1,194     1,124         13,231     1,290         14,521     1,433         6,080         60     22,094
  Less: provision for loan losses         110     5         115     30         145             900             1,045
   
 
 
 
 
 
 
 
 
 
 
 
 
 
    Net interest income after provision for loan losses     10,913     1,084     1,119         13,116     1,260         14,376     1,433         5,180         60     21,049
Non-interest income:                                                                                    
  Service charges and fees on deposit accounts     1,118     91     200         1,409     132         1,541     161         564             2,266
  Merchant discount fees, net     84     4     19         107             107     18         39             164
  Other commissions and fees     346         77         423             423             639             1,062
  Gain on sale of loans     64         11         75     62         137                         137
  Other income     328     5     83         416     86         502     46         613             1,161
   
 
 
 
 
 
 
 
 
 
 
 
 
 
    Total non-interest income     1,940     100     390         2,430     280         2,710     225         1,855             4,790

26


UNAUDITED PRO FORMA COMBINED CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
For the Three Months Ended March 31, 2002 (continued)

 
  First
Community
Bancorp

  Pacific
Western

  WHEC
  Pacific
Western &
WHEC
Adjustments

  First
Community
Bancorp with
Pacific
Western &
WHEC
Pro Forma

  Marathon
  Marathon
Adjustments

  First
Community
Bancorp
with
Marathon
Pro Forma

  Upland
Bank

  Upland
Bank
Adjustments

  First
National

  First
National
Adjustments

  Additional
Adjustments

  First
Community
Bancorp
Pro Forma

 
  (in thousands, except per share data)

Non-interest expense:                                                                                    
  Salaries and employee benefits     4,714     387     554         5,655     573         6,228     644         3,327             10,199
  Occupancy     1,080     94     155         1,329     142         1,471     72         784             2,327
  Furniture and equipment     640     69     49         758     26         784     52         518             1,354
  Legal expenses     242     13     4         259     54         313     33         133             479
  Other professional services     974     42     76         1,092     114         1,206     118         158             1,482
  Stationery, supplies and printing     403     69     45         517     13         530     36         102             668
  FDIC assessment     67     4     4         75     4         79     4         65             148
  Cost of other real estate owned     65                 65             65     1                     66
  Advertising     157     28     44         229     6         235     63         163             461
  Insurance     79     6     16         101     29         130     31         83             244
  Other     796     91     67         954     135         1,089     100         1,162             2,351
  Intangible amortization                 226   a   226         78   g   304         88   o       483   w       875
   
 
 
 
 
 
 
 
 
 
 
 
 
 
    Total non-interest expense     9,217     803     1,014     226     11,260     1,096     78     12,434     1,154     88     6,495     483         20,654
   
 
 
 
 
 
 
 
 
 
 
 
 
 
Income (loss) from continuing operations before income taxes     3,636     381     495     (226 )   4,286     444     (78 )   4,652     504     (88 )   540     (483 )   60     5,185
Income taxes (benefit)     1,474     160     163     (95 )c   1,702     45     (33 )h   1,714     204     (37 )p   228     (203 )x   25   ff   1,931
   
 
 
 
 
 
 
 
 
 
 
 
 
 
    Net income (loss) from continuing operations   $ 2,162   $ 221   $ 332   $ (131 ) $ 2,584   $ 399   $ (45 ) $ 2,938   $ 300   $ (51 ) $ 312   $ (280 ) $ 35   $ 3,254
   
 
 
 
 
 
 
 
 
 
 
 
 
 
Per share information:                                                                                    
  Number of shares (weighted average):                                                                                    
    Basic     6,491     921     4,028     2,239     7,524     3,853     544     8,068     1,388     419     9,711     2,763     3,400     14,650
    Diluted     6,774     944     4,532     2,251     7,807     3,929     544     8,351     1,423     419     11,265     2,763     3,400     14,933
 
Income from continuing operations per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
    Basic   $ 0.33   $ 0.24   $ 0.08         $ 0.34   $ 0.10         $ 0.36   $ 0.22         $ 0.03               $ 0.22
    Diluted   $ 0.32   $ 0.23   $ 0.07         $ 0.33   $ 0.10         $ 0.35   $ 0.21         $ 0.03               $ 0.22

See accompanying notes to unaudited pro forma combined condensed consolidated financial information.

27


UNAUDITED PRO FORMA COMBINED CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
For the Year Ended December 31, 2001

 
  First
Community
Bancorp

  First
Charter

  Pacific
Western

  WHEC
  First
Charter,
Pacific
Western &
WHEC
Adjustments

  First
Community
Bancorp
with First
Charter,
Pacific
Western &
WHEC
Pro Forma

  Marathon
  Marathon
Adjustments

  First Community
Bancorp
with
Marathon
Pro Forma

  Upland
Bank

  Upland
Bank
Adjustments

  First
National

  First National Adjustments
  Additional
Adjustments

  First
Community
Bancorp
Pro Forma

 
  (in thousands, except per share data)

Interest income:                                                                                          
  Interest and fees on loans   $ 33,052   $ 4,384   $ 18,606   $ 7,115   $   $ 63,157   $ 5,152   $   $ 68,309   $ 8,748   $   $ 37,805   $   $   $ 114,862
  Interest on interest-bearing deposits in other banks     14     43         28         85             85     49                     134
  Interest on investment securities     6,335     1,114     552     1,044         9,045     1,476         10,521     114         7,943             18,578
  Interest on federal funds sold     3,713     509     819     723         5,764     249         6,013     416         1,670             8,099
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
    Total interest income     43,114     6,050     19,977     8,910         78,051     6,877         84,928     9,327         47,418             141,673

Interest expense:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
  Interest expense on deposits     9,860     2,844     7,606     2,493         22,803     2,056         24,859     3,340         16,073             44,272
  Interest expense on short-term
borrowings
    383     301     16             700     2         702             4,098             4,800
  Interest expense on convertible debt     46                     46             46                         46
  Interest expense on trust preferred securities     962                 1,046   b   2,008             2,008                     (241)   ee   1,767
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
    Total interest
expense
    11,251     3,145     7,622     2,493     1,046     25,557     2,058         27,615     3,340         20,171         (241 )   50,885
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net interest income     31,863     2,905     12,355     6,417     (1,046 )   52,494     4,819         57,313     5,987         27,247         241     90,788
  Less: provision for loan losses     639         1,260     95         1,994     45         2,039     130         10,675             12,844
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
    Net interest income after provision for loan losses     31,224     2,905     11,095     6,322     (1,046 )   50,500     4,774         55,274     5,857         16,572         241     77,944

Non-interest income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
  Service charges and fees on deposit accounts     2,560     123     948     955         4,586     386         4,972     674         1,614             7,260
  Merchant discount fees net     327                     327             327             202             529
  Other commissions and fees     1,367         16             1,383             1,383             3,122             4,505
  Gain on sale of loans     444         201     39         684             684             389             1,073
  Other income     479     1,495     191     623         2,788     322         3,110     13         1,969             5,092
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
    Total non-interest income     5,177     1,618     1,356     1,617         9,768     708         10,476     687         7,296             18,459

28


UNAUDITED PRO FORMA COMBINED CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
For the Year Ended December 31, 2001 (continued)

 
  First
Community
Bancorp

  First
Charter

  Pacific
Western

  WHEC
  First
Charter,
Pacific
Western &
WHEC
Adjustments

  First
Community
Bancorp
with First
Charter,
Pacific
Western &
WHEC
Pro Forma

  Marathon
  Marathon
Adjustments

  First Community Bancorp with Marathon Bank
Pro Forma

  Upland
Bank

  Upland
Bank
Adjustments

  First
National

  First National Adjustments
  Additional
Adjustments

  First
Community
Bancorp
Pro Forma

 
  (in thousands, except per share data)

Non-interest expense:                                                                                          
  Salaries and employee benefits     13,285     1,474     4,534     3,090         22,383     2,228         24,611     2,378         15,510             42,499
  Occupancy     3,365     476     947     642         5,430     575         6,005     308         3,455             9,768
  Furniture and equipment     1,438     277     889     290         2,894     89         2,983     212         2,177             5,372
  Legal expenses     605     775     266     21         1,667     317         1,984     104         672             2,760
  Other professional services     2,964     471     1,229     481         5,145     381         5,526     413         812             6,751
Stationery, supplies and printing     662     35     501     243         1,441     51         1,492     164         539             2,195
  FDIC assessment     366     14     33     21         434     14         448     16         185             649
  Cost of other real estate owned     47     15                 62     2         64     4                     68
  Advertising     490     3     431     262         1,186     61         1,247     158         849             2,254
  Insurance     288     80     65     78         511     137         648     108         152               908
    Other     2,198     897     662     258         4,015     561         4,576     342         5,165             10,083
Provision for restructuring/branch closures                                                 1,100             1,100
  Intangibles amortization     207         86     2     894   a   1,189         308   g   1,497         349   o       1,913   w       3,759
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
    Total non-interest expense     25,915     4,517     9,643     5,388     894     46,357     4,416     308     51,081     4,207     349     30,616     1,913         88,166
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Income (loss) from continuing operations before income taxes (benefit)     10,486     6     2,808     2,551     (1,940 )   13,911     1,066     (308 )   14,669     2,337     (349 )   (6,748 )   (1,913 )   241     8,237
  Income taxes (benefit)     4,376     1     1,155     919     (815 )c   5,636     19     (129 )h   5,526     971     (147 )p   (2,699 )   (803 )x   101   ff   2,949
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  Net income (loss) from continuing operations   $ 6,110   $ 5   $ 1,653   $ 1,632   $ (1,125 ) $ 8,275   $ 1,047   $ (179 ) $ 9,143   $ 1,366   $ (202 ) $ (4,049 ) $ (1,110 ) $ 140   $ 5,288
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Per share information:                                                                                          
  Number of shares (weighted average):                                                                                          
    Basic     4,696     2,290     921     4,028     2,239     7,442     3,849     544     7,986     1,340     419     9,316     2,763     3,400     14,568
    Diluted     4,958     2,290     944     4,532     2,251     7,704     3,881     544     8,248     1,362     419     9,316     2,763     3,400     14,830

Income (loss) from continuing operations per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
    Basic income per share   $ 1.30   $ 0.00   $ 1.79   $ 0.41         $ 1.11   $ 0.27         $ 1.14   $ 1.02         $ (0.43 )             $ 0.36
    Diluted income per share   $ 1.23   $ 0.00   $ 1.75   $ 0.36         $ 1.07   $ 0.27         $ 1.11   $ 1.00         $ (0.43 )             $ 0.36

See accompanying notes to unaudited pro forma combined condensed consolidated financial information.

29


Notes to Unaudited Pro Forma Combined Condensed Consolidated Financial Information

NOTE 1: BASIS OF PRESENTATION OF FIRST CHARTER ACQUISITION

        On October 8, 2001, First Community completed the acquisition of First Charter and merged it into its wholly-owned subsidiary, Pacific Western, formerly called First Professional Bank. The First Charter merger was accounted for using purchase accounting. Therefore, First Community's historical results of operations for the three months ended March 31, 2002 include the operations of First Charter, and its historical results of operations for the year ended December 31, 2001 include the operations of First Charter subsequent to October 8, 2001. First Community's historical balance sheet at March 31, 2002 includes the impact of the First Charter acquisition.

        The unaudited pro forma combined condensed consolidated statement of operations for the year ended December 31, 2001 is presented as if the First Charter acquisition occurred at the beginning of this period. The information is not intended to reflect the actual results that would have been achieved had the First Charter acquisition actually occurred on that date.

        Certain historical data of First Charter have been reclassified on a pro forma basis to conform to First Community's classifications.

NOTE 2: BASIS OF PRESENTATION OF PACIFIC WESTERN ACQUISITION

        On January 31, 2002, First Community completed the acquisition of Pacific Western in a transaction accounted for using purchase accounting. Therefore, First Community's historical results of operations for the three months ended March 31, 2002 include the operations of Pacific Western since January 31, 2002 and First Community's historical results of operations for the year ended December 31, 2001 do not include the operations of Pacific Western. First Community's historical balance sheet at March 31, 2002 includes the impact of the Pacific Western acquisition.

        The unaudited pro forma combined condensed consolidated statements of operations for the three months ended March 31, 2002 and for the year ended December 31, 2001 are presented as if the Pacific Western acquisition occurred at the beginning of the respective periods. This information is not intended to reflect the actual results that would have been achieved had the Pacific Western acquisition actually occurred on those dates, and it should be read in conjunction with the historical financial information incorporated by reference in this proxy statement-prospectus.

        Certain historical data of Pacific Western have been reclassified on a pro forma basis to conform to First Community's classifications.

NOTE 3: PURCHASE PRICE AND FUNDING OF PACIFIC WESTERN

        The shareholders and option holders of Pacific Western were paid $36.6 million based on each share of common stock of Pacific Western issued and outstanding immediately prior to the acquisition of Pacific Western being converted into the right to receive $37.15 in cash. The purchase price was financed through a combination of:

30


        As a result of the issuance of the trust preferred securities, interest expense in First Community's unaudited pro forma combined condensed consolidated statement of operations for year ended December 31, 2001 has been increased by $1.0 million representing the interest expense associated with those securities.

NOTE 4: BASIS OF PRESENTATION OF WHEC ACQUISITION

        On March 7, 2002, First Community completed the acquisition of WHEC, the holding company of Capital Bank of North County, in a transaction accounted for using purchase accounting. Therefore, First Community's historical results of operations for the three months ended March 31, 2002 include the operations of WHEC since March 7, 2002 and First Community's historical results of operations for the year ended December 31, 2001 do not include the operations of WHEC. First Community's historical balance sheet at March 31, 2002 includes the impact of the WHEC acquisition.

        The unaudited pro forma combined condensed consolidated statements of operations for the three months ended March 31, 2002 and for the year ended December 31, 2001 are presented as if the WHEC acquisition occurred at the beginning of the respective periods. This information is not intended to reflect the actual results that would have been achieved had the WHEC acquisition actually occurred on those dates, and it should be read in conjunction with the historical financial information incorporated by reference in this proxy statement-prospectus.

        Certain historical data of WHEC have been reclassified on a pro forma basis to conform to First Community's classifications.

NOTE 5: PURCHASE PRICE AND FUNDING OF WHEC

        In the WHEC acquisition, First Community issued 1,043,799 shares of its common stock for an aggregate purchase price of $24.5 million based on each share of common stock of WHEC issued and outstanding immediately prior to the acquisition of WHEC being converted into 0.2353 of a share of First Community's common stock.

NOTE 6: KEY TO PRO FORMA ADJUSTMENTS OF FIRST CHARTER, PACIFIC WESTERN AND WHEC ACQUISITIONS

        Summarized below are the pro forma adjustments necessary to reflect the acquisition of First Charter, Pacific Western and WHEC based on the purchase method of accounting:

31


NOTE 7: BASIS OF PRESENTATION OF MARATHON ACQUISITION

        On May 14, 2002, First Community announced that it had executed a definitive agreement to acquire all of the outstanding common stock of Marathon. It is expected that the Marathon acquisition will close in the third quarter of 2002. Therefore, First Community's historical financial statements as of and for the three months ended March 31, 2002 and for the year ended December 31, 2001 do not include the financial position and results of Marathon.

        The unaudited pro forma combined condensed consolidated statements of operations for the three months ended March 31, 2002 and for the year ended December 31, 2001 are presented as if the Marathon acquisition occurred at the beginning of the respective periods. The unaudited pro forma combined condensed consolidated balance sheet as of March 31, 2002 is presented as if the Marathon acquisition occurred as of that date. This information is not intended to reflect the actual results that would have been achieved had the Marathon acquisition actually occurred on those dates.

        Certain historical data of Marathon have been reclassified on a pro forma basis to conform to First Community's classifications.

NOTE 8: PURCHASE PRICE AND FUNDING OF MARATHON

        Pursuant to the Marathon merger agreement, each Marathon shareholder will have the right to elect to receive for each share of Marathon common stock issued and outstanding immediately prior to the merger either cash or First Community common stock with a value that depends on the average price of First Community common stock over a 15-day averaging period ending on the third business day prior to the Marathon shareholders' meeting, known as the average price. The value is determined as follows:

32


        Based on a share price of $24.50 for First Community's common stock, the estimated total consideration to be paid in connection with the Marathon acquisition is $19.8 million, 67% of which will be in the form of First Community common stock and the remainder in the form of cash, and is calculated as follows:

 
  Purchase Price
 
  (in thousands)

Stock consideration   $ 13,330
Cash consideration     6,473
   
Total estimated purchase price   $ 19,803
   

        If the average price is less than $19.50, the definitive agreement contains provisions that allow First Community to ensure that at least 50% of the total consideration shall be in the form of First Community common stock.

        The cash portion of the purchase price is expected to be financed through a combination of the proceeds resulting from the proceeds of the sale of common stock by First Community, the proceeds from the issuance of additional trust preferred securities in June 2002 (see note 22) and dividends from First Community's banks.

NOTE 9: ALLOCATION OF PURCHASE PRICE OF MARATHON

        The purchase price of Marathon has been allocated as follows (in thousands):

Cash and cash equivalents   $ 7,858  
Securities     26,785  
Net loans     69,064  
Premises and equipment     212  
Other assets     6,153  
Goodwill     8,812  
Core deposit intangible     2,852  
Deposits     (95,008 )
Other liabilities     (6,925 )
   
 
Total purchase price   $ 19,803  
   
 

        In allocating the purchase price, the following adjustments were made to Marathon's historical amounts:

33


        All of the other asset and liability categories are either variable rate or short-term in nature and fair market value adjustments were considered to be immaterial to the financial presentation.

        The purchase price adjustments are subject to further refinement, including the determination of a core deposit intangible and its life for amortization purposes. For pro forma presentation purposes only, First Community has included an estimated core deposit intangible calculated as three percent of deposits. In accordance with Statement of Financial Accounting Standards No 141, "Business Combinations" and No. 142, "Goodwill and Other Intangible Assets," goodwill and intangible assets with indefinite lives are not amortized for acquisitions initiated after June 30, 2001; therefore, no goodwill amortization is presented in the pro forma financial statements. However, the core deposit intangible will be amortized over its estimated useful life and recorded as a charge to operations.

NOTE 10: MERGER COSTS OF MARATHON

        The table below reflects First Community's current estimate, for purposes of pro forma presentation, of the aggregate estimated merger costs of $3.4 million ($2.6 million net of taxes, computed using the combined federal and state tax rate of 42%) expected to be incurred in connection with the acquisition. While a portion of these costs may be required to be recognized over time, the current estimate of these costs has been recorded in the pro forma combined costs, primarily comprised of anticipated cash charges, include the following (in thousands):

Employee costs (severance and retention costs)   $ 1,158
Conversion costs     400
Other costs     270
   
Deductible merger costs     1,828
Tax benefits     768
   
Deductible merger costs, net of tax benefits     1,060
Investment banking and other professional fees     1,535
   
Total merger costs, net of tax benefits   $ 2,595
   

        First Community's cost estimates are forward-looking. While the costs represent First Community's current estimate of merger costs associated with the acquisition that will be incurred, the ultimate level and timing of recognition of these costs will be based on the final integration in connection with consummation of the acquisition. Readers are cautioned that the completion of this integration and other actions that may be taken in connection with the Marathon acquisition will impact these estimates. The type and amount of actual costs incurred could vary materially from these estimates if future developments differ from the underlying assumptions used by management in determining the current estimate of these costs. For additional factors that may cause actual results to differ, please see "Cautionary Statement Regarding Forward-Looking Statements" on page 21.

NOTE 11: KEY TO PRO FORMA ADJUSTMENTS OF MARATHON ACQUISITION

        Summarized below are the pro forma adjustments necessary to reflect the acquisition of Marathon based on the purchase method of accounting:

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NOTE 12: BASIS OF PRESENTATION OF UPLAND BANK ACQUISITION

        On April 18, 2002, First Community announced that it had executed a definitive agreement to acquire all of the outstanding common stock of Upland Bank. It is expected that the Upland Bank acquisition will close in the third quarter of 2002. Therefore, First Community's historical financial statements as of and for the three months ended March 31, 2002 and for the year ended December 31, 2001 do not include the financial position and results of Upland Bank.

        The unaudited pro forma combined condensed consolidated statements of operations for the three months ended March 31, 2002 and for the year ended December 31, 2001 are presented as if the Upland Bank acquisition occurred at the beginning of the respective periods. The unaudited pro forma combined condensed consolidated balance sheet as of March 31, 2002 is presented as if the Upland Bank acquisition occurred as of that date. This information is not intended to reflect the actual results that would have been achieved had the Upland Bank acquisition actually occurred on those dates.

        Certain historical data of Upland Bank have been reclassified on a pro forma basis to conform to First Community's classifications.

NOTE 13: PURCHASE PRICE AND FUNDING OF UPLAND BANK

        Pursuant to the Upland Bank merger agreement, shareholders of Upland will have the right to elect to receive for each share of Upland Bank common stock either $11.73 in cash or 0.5034 of a share of First Community's common stock. If the price of First Community's common stock and the closing of the merger is $23.30 or more, at least 60% of the total consideration will be in the form of First Community's common stock and the remainder will be in cash. However, if the average price of First Community's common stock is less than $19.80 as measured over the twenty day trading period ending as of the fifth business day prior to the effective date of the merger and such decline is not proportionate to the decline in the Nasdaq Bank Index, if any, over the same period, the merger agreement contains provisions that allow First Community to issue stock and/or cash at its option to

35



ensure that the consideration Upland Bank shareholders receive is at least equal to the consideration they would have received had the average closing price of First Community's common stock over the twenty day measuring period been $19.80 and to ensure that at least 45% of the total consideration shall be in the form of First Community common stock.

        Based on an estimated share price of $24.50 for First Community's common stock, determined pursuant to the Upland Bank merger agreement, and 60% of the Upland shareholders electing to receive stock consideration, the estimated total consideration to be paid in connection with the Upland acquisition is $17.0 million and is calculated as follows:

 
  Purchase Price
 
  (in thousands)

Stock consideration   $ 10,271
Cash consideration     6,732
   
Total estimated purchase price   $ 17,003
   

        The cash portion of the purchase price is expected to be financed through a combination of the proceeds resulting from the sale of common stock by First Community, the proceeds from the issuance of additional trust preferred securities in June 2002 (see note 22) and dividends from First Community's banks.

NOTE 14: ALLOCATION OF PURCHASE PRICE OF UPLAND BANK

        The purchase price of Upland has been allocated as follows (in thousands):

Cash and cash equivalents   $ 15,633  
Interest bearing deposits in financial institutions     693  
Securities     1,788  
Net loans     87,826  
Premises and equipment     355  
Other assets     4,248  
Goodwill     6,315  
Core deposit intangible     2,872  
Deposits     (95,736 )
Other liabilities     (6,991 )
   
 
Total purchase price   $ 17,003  
   
 

        In allocating the purchase price, the following adjustments were made to Upland Bank's historical amounts:

        All of the other asset and liability categories are either variable rate or short-term in nature and fair market value adjustments were considered to be immaterial to the financial presentation.

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        The purchase price adjustments are subject to further refinement, including the determination of a core deposit intangible and its life for amortization purposes. For pro forma presentation purposes only, First Community has included an estimated core deposit intangible calculated as three percent of deposits. In accordance with Statement of Financial Accounting Standards No 141, "Business Combinations" and No. 142, "Goodwill and Other Intangible Assets," goodwill and intangible assets with indefinite lives are not amortized for acquisitions initiated after June 30, 2001; therefore, no goodwill amortization is presented in the pro forma financial statements. However, the core deposit intangible will be amortized over its estimated useful life and recorded as a charge to operations.

NOTE 15: MERGER COSTS OF UPLAND BANK

        The table below reflects First Community's current estimate, for purposes of pro forma presentation, of the aggregate estimated merger costs of $3.2 million ($2.5 million net of taxes, computed using a combined federal and state tax rate of 42%) expected to be incurred in connection with the Upland Bank acquisition. While a portion of these costs may be required to be recognized over time, the current estimate of these costs has been recorded in the pro forma combined costs, primarily comprised of anticipated cash charges, include the following (in thousands):

Employee costs (severance and retention costs)   $ 1,013
Conversion costs     400
Other costs     270
   
Deductible merger costs     1,683
Tax benefits     707
   
Deductible merger costs, net of tax benefits     976
Investment banking and other professional fees     1,536
   
Total merger costs, net of tax benefits   $ 2,512
   

        First Community's cost estimates are forward-looking. While the costs represent First Community's current estimate of merger costs associated with the acquisition that will be incurred, the ultimate level and timing of recognition of these costs will be based on the final integration in connection with consummation of the Upland Bank acquisition. Readers are cautioned that the completion of this integration and other actions that may be taken in connection with the Upland Bank acquisition will impact these estimates. The type and amount of actual costs incurred could vary materially from these estimates if future developments differ from the underlying assumptions used by management in determining the current estimate of these costs. For additional factors that may cause actual results to differ, please see "Cautionary Statement Regarding Forward-Looking Statements" on page 21.

NOTE 16: KEY TO PRO FORMA ADJUSTMENTS OF UPLAND BANK ACQUISITION

        Summarized below are the pro forma adjustments necessary to reflect the acquisition of Upland Bank based on the purchase method of accounting:

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NOTE 17: BASIS OF PRESENTATION OF FIRST NATIONAL ACQUISITION

        On April 29, 2002, First Community announced that it had entered into an agreement to acquire all of the outstanding capital stock of First National. It is expected that the First National acquisition will close in the third quarter of 2002. Therefore, First Community's historical financial statements as of and for the three months ended March 31, 2002 and for the year ended December 31, 2001 do not include the financial position and results of First National.

        The unaudited pro forma combined condensed consolidated statements of operations for the three months ended March 31, 2002 and for the year ended December 31, 2001 are presented as if the First National acquisition occurred at the beginning of the respective periods. The unaudited pro forma combined condensed consolidated balance sheet as of March 31, 2002 is presented as if the First National acquisition occurred as of that date. This information is not intended to reflect the actual results that would have been achieved had the First National acquisition actually occurred on those dates, and it should be read in conjunction with the historical financial information incorporated by reference in this proxy statement-prospectus.

        Certain historical data of First National have been reclassified on a pro forma basis to conform to First Community classifications.

NOTE 18: PURCHASE PRICE AND FUNDING OF FIRST NATIONAL

        Pursuant to the First National merger agreement, each First National shareholder will have the right to elect to receive for each share of First National common stock or First National preferred stock either $10.00 in cash or 0.5008 of a share of First Community common stock. The definitive agreement provides that 2,762,662 shares of First Community's common stock are to be issued to First National shareholders. In the event that the closing price of First Community's common stock is less than $19.97 per share as of the closing date of the merger, the merger agreement contains provisions that require First Community to issue stock to ensure that the value of the consideration First National shareholders receive is at least equal to the consideration they would have received had the closing price of First Community's common stock on the closing date of the merger been $19.97 per share, and

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to ensure that at least 45% of the total consideration shall be in the form of First Community's common stock.

        Based on a share price of $24.50 for First Community common stock, determined pursuant to the First National merger agreement, and 45% of the First National shareholders electing to receive stock consideration, the estimated total consideration to be paid in connection with the First National acquisition is $137.8 million and is calculated as follows:

 
  Purchase Price
 
  (in thousands)

Stock consideration   $ 67,685
Cash consideration     70,100
   
Total estimated purchase price   $ 137,785
   

        The cash portion of the purchase price is expected to be financed through a combination of the proceeds resulting from the proceeds of the sale of common stock of First Community, the proceeds from the issuance of additional trust preferred securities in June 2002 (see note 22) and dividends from First Community's banks.

NOTE 19: ALLOCATION OF PURCHASE PRICE OF FIRST NATIONAL

        The purchase price of First National has been allocated as follows (in thousands):

Cash and cash equivalents   $ 85,079  
Securities     141,986  
Net loans     396,958  
Premises and equipment     5,507  
Other assets     23,163  
Goodwill     85,538  
Core deposit intangible     15,749  
Deposits     (524,954 )
Other liabilities     (23,241 )
Borrowings     (68,000 )
   
 
Total purchase price   $ 137,785  
   
 

        In allocating the purchase price, the following adjustments were made to First National's historical amounts:

        All of the other asset and liability categories are either variable rate or short-term in nature and fair market value adjustments were considered to be immaterial to the financial presentation.

        The purchase price adjustments are subject to further refinement, including the determination of a core deposit intangible and its life for amortization purposes. For pro forma presentation purposes

39



only, First Community has included an estimated core deposit intangible calculated as three percent of deposits. In accordance with Statement of Financial Accounting Standards No 141, "Business Combinations" and No. 142, "Goodwill and Other Intangible Assets," goodwill and intangible assets with indefinite lives are not amortized for acquisitions initiated after June 30, 2001; therefore, no goodwill amortization is presented in the pro forma financial statements. However, the core deposit intangible will be amortized over its estimated useful life and recorded as a charge to operations.

NOTE 20: MERGER COSTS OF FIRST NATIONAL

        The table below reflects First Community's current estimate, for purposes of pro forma presentation, of the aggregate estimated merger costs of $12.0 million ($8.5 million net of taxes, computed using a combined federal and state tax rate of 42%) expected to be incurred in connection with the acquisition. While a portion of these costs may be required to be recognized over time, the current estimate of these costs has been recorded in the pro forma combined costs, primarily comprised of anticipated cash charges, include the following (in thousands):

Employee costs (severance and retention costs)   $ 3,170
Conversion costs     4,370
Other costs, including branch closure     940
   
Deductible merger costs     8,480
Tax benefits     3,562
   
Deductible merger costs, net of tax benefits     4,918
Investment banking and other professional fees     3,545
   
Total merger costs, net of tax benefits   $ 8,463
   

        First Community's cost estimates are forward-looking. While the costs represent First Community's current estimate of merger costs associated with the merger that will be incurred, the ultimate level and timing of recognition of such costs will be based on the final integration in connection with consummation of the First National acquisition. Readers are cautioned that the completion of this integration and other actions that may be taken in connection with the First National acquisition will impact these estimates. The type and amount of actual costs incurred could vary materially from these estimates if future developments differ from the underlying assumptions used by management in determining the current estimate of these costs. For additional factors that may cause actual results to differ, please see "Cautionary Statement Regarding Forward-Looking Statements" on page 21.

NOTE 21: KEY TO PRO FORMA ADJUSTMENTS OF FIRST NATIONAL ACQUISITION

        Summarized below are the pro forma adjustments necessary to reflect the acquisition of First National based on the purchase method of accounting:

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NOTE 22: KEY TO ADDITIONAL ADJUSTMENTS

41



The Special Meeting of Marathon Bancorp Shareholders

        This proxy statement-prospectus constitutes the proxy statement of Marathon Bancorp, which we refer to as Marathon, for use at the special meeting of Marathon's shareholders to be held on August 19, 2002, at 11150 West Olympic Boulevard, Los Angeles, California 90064, at 4:00 p.m., and any adjournments thereof.

        At the special meeting, the shareholders of Marathon will consider and vote upon a proposal to approve the principal terms of a merger pursuant to an Agreement and Plan of Merger dated as of May 13, 2002, which is included as Appendix A, under the terms of which Marathon would merge with and into First Community.

        Pursuant to the merger agreement, Marathon, a California corporation, will be merged with and into First Community, a California corporation, and all of the outstanding shares of Marathon common stock shall be automatically cancelled in a transaction we refer to as the merger. In addition Marathon National Bank, or Marathon Bank, a wholly owned subsidiary of Marathon, will merge with and into Pacific Western National Bank, or Pacific Western, a wholly owned subsidiary of First Community in a transaction we refer to as the bank merger.

        Upon consummation of the merger, Marathon will cease to exist and First Community will continue as the surviving entity. All information contained in this proxy statement with respect to Marathon has been supplied by Marathon. All information contained in this proxy statement with respect to First Community has been supplied by management or authorized representatives of First Community without independent verification.

        This proxy statement is first being mailed to shareholders of Marathon on or about July 19, 2002.

        The close of business on July 3, 2002 was the record date for determining Marathon shareholders entitled to receive notice of and to vote at the special meeting.

        On the record date, there were 3,853,019 shares of Marathon common stock outstanding held by 250 holders of record. Each holder of Marathon common stock is entitled to one vote for each share of Marathon common stock in that holder's name on Marathon's books as of the record date on any matter submitted to the vote of the Marathon shareholders at the special meeting. The approval of the principal terms of the merger will require the affirmative vote, in person or by proxy, of a majority of the outstanding shares of Marathon common stock.

        Shares of Marathon common stock that are not represented in person or by proxy at the special meeting shall not be counted in determining whether a quorum is present and shall not be deemed present at the special meeting. Proxies submitted by any shareholder that are unmarked as to any matter shall be voted in favor of the merger in accordance with the recommendation of the board of directors of Marathon. A vote of abstention as to any proposal as to which abstention is permitted, by any shareholder, will be counted as a vote opposed to a proposal.

        Any proxy in the form enclosed for Marathon shareholders that is properly completed and returned in time for voting with a choice specified thereon will be voted in accordance with that specification.

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        Marathon shareholders may revoke a proxy at any time by (i) sending written notice of revocation to the Secretary of Marathon prior to the special meeting; (ii) executing and delivering a proxy for the special meeting bearing a later date; or (iii) attending the special meeting and voting in person.

        Proxies which do not provide the proxyholders with direction in voting on the merger will be voted in favor of the merger, in accordance with the recommendation of the board of directors of Marathon, and Marathon shareholders who have provided such proxies will not be eligible to assert their dissenters' rights.

        The accompanying proxy is being solicited by the board of directors of Marathon. Marathon will bear the entire cost of solicitation of proxies from holders of its shares. In addition to the solicitation of proxies by mail, certain officers, directors and employees of Marathon, without extra remuneration, may also solicit proxies in person, by telephone, facsimile or otherwise. Marathon will pay printing, postage and mailing costs for preparation and mailing of the proxy statement. All other costs, including legal and accounting fees, shall be borne by the party incurring such costs.

        Marathon has only one class of voting securities outstanding, Marathon common stock. Shareholders of record entitled to notice of and to vote at the special meeting have been determined as of the record date, July 3, 2002, and, as of such date, 3,853,019 shares of Marathon common stock were outstanding, all of which are entitled to vote at the special meeting.

        The following table sets forth certain information regarding the beneficial ownership of Marathon common stock, as of July 3, 2002, by: (i) each Marathon director; (ii) certain executive officers; (iii) all Marathon directors and executive officers as a group; and (iv) each 5% shareholder of Marathon.

Name and Address of Beneficial Owner(1)

  Amount and Nature of Beneficial
Ownership of Marathon Common Stock

  Percentage of Class(2)
 
Directors          
Nikolas Patsaouras   92,044 (3) 2.2 %
Robert J. Abernethy   142,039 (4) 3.4 %
Craig D. Collette   105,123 (5) 2.5 %
Frank W. Jobe, M.D.   101,182 (6) 2.4 %
C. Thomas Mallos   90,719 (7) 2.2 %
Robert L. Oltman   233,663 (8) 5.6 %
Ann Pappas   104,269 (9) 2.5 %

Executive Officers

 

 

 

 

 
Timothy J. Herles   45,834 (10) 1.1 %
Howard J. Stanke   31,700 (11) 0.8 %
Adrienne Caldwell   14,677 (12) 0.4 %

All Directors and Executive Officers

 

961,250

(13)

23.0

%

5% Shareholders

 

 

 

 

 
Banc Funds L.P.(14)   226,553 (15) 5.4 %
Oppenheimer-Spence Financial Services Partnership LP.(16)   224,897 (17) 5.4 %

(1)
Unless indicated otherwise, the address of each beneficial owner is Marathon Bancorp, 11150 West Olympic Boulevard, Los Angeles, California 90064.

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(2)
Percentages are calculated on the basis of the number of shares of Marathon common stock actually outstanding on July 3, 2002, plus the number of shares that the person or entity has the right to acquire beneficial ownership of within 60 days after July 3, 2002.

(3)
Mr. Patsaouras has shared voting and investment powers as to 37,500 of these shares. The amount includes 54,134 shares acquirable by exercise of stock options.

(4)
The amount includes 34,740 shares acquirable by exercise of stock options.

(5)
Mr. Collette has shared voting and investment powers as to 92,923 shares. The amount includes 12,200 shares acquirable by exercise of stock options.

(6)
The amount includes 26,992 shares acquirable by exercise of stock options.

(7)
Mr. Mallos has shared voting and investment powers as to 47,451 of these shares. The amount includes 42,741 shares acquirable by exercise of stock options.

(8)
Mr. Oltman has shared voting and investment powers as to 179,424 of these shares. The amount includes 42,741 shares acquirable by exercise of stock options.

(9)
Ms. Pappas has shared voting and investment powers as to 61,413 of these shares. The amount includes 42,741 shares acquirable by exercise of stock options.

(10)
Mr. Herles has shared voting and investment powers as to 1,184 of these shares. The amount includes 44,650 shares acquirable by exercise of stock options.

(11)
Mr. Stanke has shared voting and investment powers as to 26,100 shares. The amount includes 5,600 shares acquirable by exercise of stock options.

(12)
These shares are acquirable by exercise of stock options.

(13)
This amount includes 321,216 shares acquirable by exercise of stock options.

(14)
The address of this beneficial owner is 208 S. LaSalle Street, Chicago, IL 60604.

(15)
Based on a Schedule 13G filed with the Securities and Exchange Commission on February 14, 2002.

(16)
The address of this beneficial owner is 119 West 57th Street, New York, NY 10019.

(17)
Based on a Schedule 13D/A filed with the Securities and Exchange Commission on September 12, 1997.

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The Merger

        The following summary of the material terms and provisions of the merger agreement is qualified in its entirety by reference to the merger agreement by and between First Community and Marathon, which is dated as of May 13, 2002. The merger agreement is attached as Appendix A to this proxy statement-prospectus and is incorporated by reference herein.

        The boards of directors of First Community and Marathon have unanimously approved the merger agreement providing for the merger of Marathon into First Community. First Community will be the surviving entity in the merger, and upon completion of the merger, the separate corporate existence of Marathon will end. Immediately following the merger, Marathon Bank will merge with and into Pacific Western. We expect to complete the merger in the third quarter of 2002. The directors and officers of First Community immediately prior to the merger will be the directors and officers of First Community, after the merger until they resign or their respective successors are duly elected and qualified.

        Since its founding in 1981, Marathon has concentrated on servicing the banking needs of entrepreneurs, small- to medium-sized businesses and professionals in the West Side of Los Angeles. While Marathon believed it had developed and implemented an effective marketing strategy, Marathon also recognized that significant changes were taking place in the banking industry and believed that sharing management and resources as a result of an acquisition or merger could enable it to survive the competitive pressures of an industry dominated by large banks and holding companies, and regularly considered alternatives to enhance shareholder value.

        From time to time, the board of directors of Marathon considered proposals offered by financial institutions and others to enter into a transaction with Marathon; however, none of these opportunities presented Marathon with what it felt were compelling reasons to pursue negotiations.

        Beginning in the fall of 2001, in light of the competitive environment in which smaller banks find themselves operating, the board of directors of Marathon again considered various strategies for maximizing shareholder value. The board of directors considered, among other things, expanding the size and activities of Marathon Bank through internal growth and/or acquisitions, pursuing its ongoing business plan and marketing efforts to increase its assets, return on equity and return on assets, and other opportunities. In December 2001, the board of directors engaged Wedbush Morgan Securities, or Wedbush Morgan, for the purpose of analyzing and exploring Marathon's strategic alternatives, including acquisitions by Marathon, raising capital for expansion and consideration of potential merger partners. After considering Wedbush Morgan's analysis and considering the experience of the board of directors over the past twenty years of overseeing the operations of Marathon, the board concluded that Marathon should seek potential acquisition partners who could provide growth, liquidity and size to Marathon, its depositors, borrowers and shareholders, and instructed Wedbush Morgan to commence making contacts to determine whether an acceptable opportunity existed.

        In mid-December 2001, Wedbush Morgan initiated, on a "no-name" basis, contact with several potential transaction partners, including First Community. As of January 3, 2002, Wedbush Morgan had determined that eleven parties expressed interest in a transaction, and on or about January 16, 2002, after receipt of executed confidentiality agreements, provided information developed by Wedbush Morgan and the management of Marathon concerning Marathon.

45


        These contacts resulted in two written expressions of interest, one of which was from First Community. After considering both potential transactions, the board of directors determined that First Community's offer was superior, and instructed Wedbush Morgan and Marathon's management to pursue a transaction with First Community.

        After several discussions and further negotiation, the parties initially agreed to an exchange ratio of First Community common stock to be paid for each share of Marathon common stock. The Marathon representatives said they would present this proposal to Marathon's board of directors for discussion and determine whether further efforts towards concluding a transaction would be appropriate. The substance of that initial meeting and further negotiations with First Community representatives was reported by Wedbush Morgan to the board of directors, and a due diligence evaluation was commenced, which was conducted by First Community's staff, auditors and counsel, on behalf of First Community, and by Wedbush Morgan, Marathon's senior executives, Marathon's auditors and outside loan consultants on behalf of Marathon.

        During and following the due diligence review, Wedbush Morgan, in coordination with Marathon's special counsel, Jeffer, Mangels, Butler & Marmaro LLP, managed the negotiation of the documentation for the proposed transaction. During that time, multiple drafts of the merger agreement and related documents were generated as negotiations proceeded. At regular and special meetings of Marathon's board of directors, the directors discussed the status of the due diligence review, the proposed terms of the merger and the related documents negotiated, as well as the open issues remaining at that time.

        At a special board of directors meeting on May 13, 2002, the full board met to consider the final documentation for the merger and unanimously authorized Marathon to proceed with the transaction.

        After consultation with Wedbush Morgan, the board has unanimously concluded that the terms of the merger are fair to, and in the best interests of, Marathon's shareholders and unanimously recommends that Marathon's shareholders approve the principal terms of the agreement. In reaching this decision, the board of directors considered a number of factors, to which relative weights were not assigned, including the following:

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        The foregoing discussion of the information and factors considered by the board is not intended to be exhaustive, but constitutes the material factors considered by the board. In reaching its determination to approve and recommend the principal terms of the merger, the board did not assign relative or specific weights to the foregoing factors and individual directors may have weighted such factors differently.

        For the reasons set forth above, the board of directors of Marathon has unanimously approved the merger agreement as in the best interests of Marathon and its shareholders and unanimously recommends that Marathon's shareholders vote for approval of the principal terms of the merger.

        For each share of Marathon common stock you own, you will have the right to elect, on a share-by-share basis, to receive either:

        A Marathon shareholder may elect to receive a combination of cash and First Community common stock in exchange for his or her shares of Marathon common stock, but with respect to each share of Marathon stock, a shareholder must elect to receive either all cash or all First Community common stock.

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        The amount of cash or First Community common stock you will receive will be determined by reference to the average price of First Community common stock over a fifteen-day averaging period ending on the third business day prior to the special meeting, referred to as the average price, as follows:

        Following is a table that shows examples of the merger consideration a Marathon shareholder could receive, depending on the average price of First Community common stock.

Average price of First
Community common stock
over the fifteen-day
averaging period

  Multiplier
  Plus
  Amount of cash or value
of First Community
common stock received

$ 18.00   0.1600   $ 1.68   $ 4.56
$ 18.50   0.1600   $ 1.68   $ 4.64
$ 19.00   0.1600   $ 1.68   $ 4.72
$ 19.50   0.1600   $ 1.68   $ 4.80
$ 20.00   0.1560   $ 1.68   $ 4.80
$ 20.50   0.1522   $ 1.68   $ 4.80
$ 21.00   0.1486   $ 1.68   $ 4.80
$ 21.50   0.1451   $ 1.68   $ 4.80
$ 22.00   0.1418   $ 1.68   $ 4.80
$ 22.50   0.1387   $ 1.68   $ 4.80
$ 23.00   0.1357   $ 1.68   $ 4.80
$ 23.30   0.1339   $ 1.68   $ 4.80
$ 23.50   0.1339   $ 1.68   $ 4.83
$ 24.00   0.1339   $ 1.68   $ 4.89
$ 24.50   0.1339   $ 1.68   $ 4.96
$ 25.00   0.1339   $ 1.68   $ 5.03
$ 25.50   0.1339   $ 1.68   $ 5.09
$ 26.00   0.1339   $ 1.68   $ 5.16
$ 26.50   0.1339   $ 1.68   $ 5.23
$ 27.00   0.1339   $ 1.68   $ 5.30
$ 27.50   0.1339   $ 1.68   $ 5.36
$ 28.00   0.1339   $ 1.68   $ 5.43
$ 28.50   0.1339   $ 1.68   $ 5.50
$ 29.00   0.1339   $ 1.68   $ 5.56
$ 29.50   0.1339   $ 1.68   $ 5.63
$ 30.00   0.1339   $ 1.68   $ 5.70

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        The number of shares of Marathon common stock to be converted into the right to receive cash in the merger will be limited to a certain number known as the cash election number, which equals 6,473,072 divided by the amount of cash or value of First Community common stock received, determined by reference to the average price of First Community common stock. If holders of more or less than that set number of Marathon shares elect to receive cash, then your election may be subject to proration as described below in "The Merger—Election and Proration Procedures".

        Making the Election.    First Community has selected U.S. Stock Transfer Corporation, which is the current transfer agent for First Community, to serve as the exchange agent for purposes of effecting the election, allocation, and proration procedures. An election form is being sent to you contemporaneously in a separate mailing. If you do not exercise dissenters' rights, you must use the election form to make the election to receive either (i) First Community common stock with respect to all of your shares of Marathon common stock, or a stock election, (ii) cash with respect to all of your shares of Marathon common stock, or a cash election, or (iii) First Community common stock in exchange for a specified number of shares of Marathon common stock, or a combination stock election, and cash in exchange for a specified number of shares of Marathon common stock, or a combination cash election. Shares of Marathon common stock will be undesignated shares if you either:

        The deadline for you to submit your election forms to the exchange agent is August 20, 2002.

        All elections will be required to be made on an election form. To make an effective election with respect to shares of Marathon common stock, you must deliver the following items to the exchange agent prior to the election deadline:

        You may change your election by submitting to the exchange agent a properly completed and signed revised letter of transmittal and election form and all required additional documents. To be effective, however, the exchange agent must receive these revised documents prior to the election deadline. If some but not all of the revised documents are received by the election deadline, the shares will be considered undesignated shares.

        You may revoke your prior valid election by written notice received by the exchange agent prior to the election deadline. You may also revoke a prior valid election by submitting a written withdrawal of your share certificates or of the notice of guaranteed delivery of your share certificates previously deposited with the exchange agent. Again, this written withdrawal must be received by the exchange agent before the election deadline.

        Do not return your certificates representing shares of Marathon common stock with the enclosed proxy. The stock certificates should only be forwarded to the exchange agent with the letter of transmittal and election form.

        If you have a preference as to the form of consideration to be received for your shares of Marathon common stock, you should make an election. Shares as to which an election is made will be given priority in allocating the merger consideration over shares for which an election is not received. None of First Community, the board of directors of First Community, Marathon, or the board of

49



directors of Marathon makes any recommendation as to whether you should make a cash election, a stock election or a combination cash election and a combination stock election. You must make your own decision with respect to that election.

        Following the completion of the merger and upon surrender of all of the certificates representing shares of Marathon common stock registered in your name, or a satisfactory indemnity if any of such certificates are lost, stolen or destroyed, together with a properly completed letter of transmittal, U.S. Stock Transfer Corporation will mail to you the cash and/or First Community common stock to which you are entitled, less the amount of any required withholding taxes. You will not receive interest on any cash.

        Declaration of dividends by First Community after the completion of the merger will include dividends on all First Community common stock issued in the merger, but no dividend or other distribution payable to the holders of record of First Community common stock at or as of any time after the completion of the merger will be paid to holders of Marathon common stock who receive First Community common stock in the merger until they physically surrender all certificates as described above. After the completion of the merger, the stock transfer books of Marathon will close, and there will be no transfers on the transfer books of Marathon.

        Allocation and Proration Procedures.    The merger agreement requires that First Community provide cash in exchange for a certain number of Marathon shares. Therefore, it is possible that you will not receive the exact form of merger consideration you elected to receive.

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        At the request of Marathon, Wedbush Morgan has provided to the Marathon board of directors a written opinion dated May 9, 2002 to the effect that, subject to the assumptions, limitations and qualifications set forth in the opinion, the consideration to be received by the holders of Marathon common stock as provided in the merger agreement was fair to such holders from a financial point of view.

        Wedbush Morgan was retained by the board of directors of Marathon to serve as the exclusive financial advisor to Marathon. Wedbush Morgan is an investment banking and brokerage firm that provides a broad range of financial services, and, as part of its investment banking activities, is regularly engaged in the valuation of businesses and securities in connection with merger transactions and other types of acquisitions, underwritings, private placements, secondary distributions and valuations for corporate, estate and other purposes. Marathon selected Wedbush Morgan to deliver its fairness opinion because of its experience in working with community banks in Southern California, and its familiarity with Marathon as a result of its activities in attempting to locate a potential acquiror and consultation over that time with the board of directors in connection with that engagement. No limitations were imposed by the board of directors upon Wedbush Morgan with respect to the investigation made or procedures followed by it in rendering its opinion.

        The full text of Wedbush Morgan's written opinion to the Marathon board of directors, which sets forth the procedures followed, assumptions made, matters considered, and qualifications and limitations of the review undertaken by Wedbush Morgan, is attached as Appendix B to this proxy statement-prospectus and is incorporated by reference. The following summary of Wedbush Morgan's opinion is qualified in its entirety by reference to the full text of the opinion, and shareholders of Marathon are urged to read the opinion in its entirety in connection with their consideration of the proposed merger.

        For purposes of Wedbush Morgan's opinion and in connection with its review of the merger, Wedbush Morgan, among other things:


        In addition, Wedbush Morgan held discussions with the managements of Marathon and First Community concerning their views as to the financial and other information described above and the potential cost savings, operating synergies, revenue enhancements and strategic benefits expected to

51


result from the merger and, in the case of the management of First Community, from its proposed acquisitions of First National Bank and Upland Bank. Wedbush Morgan also conducted such other analyses and examinations and considered such other financial, economic and market criteria as it deemed appropriate to arrive at its opinion. It did not, however, make or review any independent evaluations or appraisals of any of the assets, properties, liabilities or securities, or make any physical inspection of the properties or assets of Marathon. It assumed the adequacy of allowances for losses in loan portfolios, and did not undertake to review any individual credit files, for Marathon, First Community or either of the other companies that First Community proposes to acquire.

        In delivering its opinion to the board of directors of Marathon, Wedbush Morgan prepared and delivered to the board written materials containing various analyses and other information. For purposes of its analysis, Wedbush Morgan assumed that 4,340,000 diluted shares of Marathon common stock were outstanding and, while the total value and allocation of the consideration in the merger may vary depending on the average price of First Community common stock over the averaging period, that from approximately 530,000 to 630,000 shares of common stock would be issued by First Community for from 63.0% to 68.5% of the Marathon shares outstanding and cash consideration of $1.68 per share would be paid for the remaining shares outstanding. It used in this analysis an implied acquisition value per Marathon share (cash amount plus value of First Community shares) ranging from $4.56 to $5.30, depending on an average price of First Community common stock under the merger agreement ranging from $18.00 to $27.00.

        The following are summaries of the analyses contained in the materials delivered to the Marathon board of directors:

        Market Trading Analysis.    Wedbush Morgan reviewed the stock trading history of Marathon common stock and First Community common stock. The following table summarizes the stock trading information:

 
  Marathon
  First Community
 
  Price
  Volume
  Price
  Volume
Closing Price (5/9/02)   $ 4.85   0   $ 25.48   9,700
30 Consecutive Trading Day Closing Average   $ 4.67   18,400   $ 27.02   10,200
60 Consecutive Trading Day Closing Average   $ 4.40   14,500   $ 24.56   21,600
90 Consecutive Trading Day Closing Average   $ 4.28   11,000   $ 22.90   15,700
180 Consecutive Trading Day Closing Average   $ 4.18   7,400   $ 21.65   8,900
52-Week Average   $ 3.99   7,100   $ 21.02   6,700
52-Week High Trade   $ 5.00     $ 28.96  
52-Week Low Trade   $ 2.95     $ 18.20  

        Wedbush Morgan also illustrated the relative stock price performance of Marathon common stock against the Nasdaq Composite Index, the Nasdaq Banking Stock Index, and an index of selected comparable companies identified below for the period May 7, 2001 through May 8, 2002. Similarly, the relative stock price performance of First Community common stock was compared to the Nasdaq Composite Index, the Nasdaq Banking Stock Index, and an index of selected comparable companies identified below for the period May 7, 2001 through May 8, 2002. The performance of Marathon common stock during that period was consistently above these indexes, and the performance of First Community common stock during that period was consistently above the Nasdaq Composite Index and generally tracked the Nasdaq Banking Stock Index and the index of selected comparable companies, except for a period during September-October 2001 and March-April 2002 when it exceeded those indexes.

        Public Comparable Company Analysis.    Using publicly available information, Wedbush Morgan compared selected financial data of Marathon with similar data of selected publicly-traded companies

52



that were considered by Wedbush Morgan to be comparable to Marathon. These companies were Alliance Bancshares California, Bank of Amador, Bank of Astoria, Canyon National Bank, Central Sierra Bank, Coast Bancorp, EvergreenBancorp, Inc., First American Bank, First Coastal Bancshares, North State National Bank, Northwest Bancorporation Inc., Pacific State Bank, Santa Lucia Bank, Sonoma Valley Bancorp, Summit Bancshares, Incorporated, Temecula Valley Bank, N.A., and Yosemite Bank. Although these companies were considered similar, Wedbush Morgan noted that none of them had the same management, makeup, size or combination of business as Marathon. This group was selected from companies that are commercial banks or bank holding companies that operate in California or in any of the Western United States, and have assets between $100 million and $200 million.

        Wedbush Morgan analyzed the following financial data for each of these companies: the closing price of the common stock on May 9, 2002 as a multiple of (i) earnings per share, which we refer to as EPS, for the latest twelve months (four most recent fiscal quarters) for which income had been publicly reported, which we refer to as LTM, (ii) book value per share, and (iii) tangible book value per share. Estimated EPS for 2002 and 2003 from the Institutional Brokers Estimate Service were not available. This data was then compared with an implied value of the Marathon common stock in the merger ranging from $4.56 to $5.30 per share (based on an average price of the First Community common stock over the averaging period ranging from $18.00 to $27.00) as a multiple of the same items, including LTM EPS and estimated EPS for 2002 and 2003 on a fully-taxed basis. Wedbush Morgan's analysis showed the following:

 
  Comparable Companies
   
 
 
  Low
  Mean
  Median
  High
  Marathon
 
Share Price to LTM EPS   10.2 x 14.0 x 13.3 x 22.7 x 23.9x - 27.8 x
Share Price to Estimated 2002 EPS   N/A   N/A   N/A   N/A   22.4x - 26.1 x
Share Price to Estimated 2003 EPS   N/A   N/A   N/A   N/A   16.4x - 19.0 x
Share Price to Book Value   0.8 x 1.5 x 1.4 x 2.8 x 1.5x - 1.7 x
Share Price to Tangible Book Value   1.1 x 2.1 x 1.6 x 10.9 x 1.5x - 1.7 x

        Similarly, Wedbush Morgan compared selected financial data of First Community with similar data of publicly-traded companies that Wedbush Morgan deemed to be comparable to First Community. These companies were Banner Corporation, Bay View Capital Corporation, Cathay Bancorp, Inc., Columbia Banking System, Inc., CVB Financial Corp., East West Bancorp, Inc., First Banks America, Inc., First Republic Bank, Frontier Financial Corporation, GBC Bancorp, Hanmi Financial Corporation, Mid-State Banchsares, Pacific Capital Bancorp, Pacific Northwest Bancorp, Silicon Valley Bancshares, UCBH Holdings, Inc., Umpqua Holdings Corp., VIB Corp., West Coast Bancorp, and Westamerica Bancorporation. This group was selected from companies that are commercial banks or bank holding companies which operate in California or in any of the Western United States, and have assets between $1 billion and $5 billion.

        Wedbush Morgan analyzed the following financial data for each of these companies: the closing price of the common stock on May 9, 2002 as a multiple of (i) LTM EPS, (ii) 2002 and 2003 estimated EPS (which earnings estimates reflected a mean consensus of research analysts' earnings estimates as reported by the Institutional Brokers Estimate Service), (iii) book value per share, and (iv) tangible book value per share. This data was then compared with the closing price of the common stock of First Community on May 9, 2002 ($25.48 per share) as a multiple of these same items for First Community standing alone and on a proforma basis combining First Community (FCBP) with Marathon (MARB) (fully taxed), and combining First Community with Marathon and two other proposed acquisitions,

53



First National Bank (FNBQ) and Upland Bank (ULDB). Wedbush Morgan's analysis showed the following:

 
  Comparable Companies
   
   
  Pro Forma
Combined
FCBP/MARB/
FNBQ/ULDB

 
 
  FCBP
Stand Alone

  Pro Forma
Combined
FCBP/MARB

 
 
  Low
  Mean
  Median
  High
 
Share Price to LTM EPS   13.3 x 20.5 x 18.2 x 34.8 x 20.7 x 29.0 x NM *
Share Price to Estimated
2002 EPS
  13.0 x 17.6 x 16.6 x 33.7 x 13.3 x 13.4 x 17.7 x
Share Price to Estimated
2003 EPS
  10.3 x 14.6 x 13.8 x 30.2 x 10.2 x 9.8 x 9.4 x
Share Price to Book Value   1.2 x 2.6 x 2.2 x 6.2 x 3.5 x 3.1 x 2.7 x
Share Price to Tangible Book Value   1.4 x 2.9 x 2.5 x 6.3 x 4.3 x 3.7 x 2.9 x

*
NM = not meaningful

        Merger and Acquisition Transaction Analysis.    Wedbush Morgan reviewed certain publicly available information regarding 21 selected merger transactions from January 2, 2000 to May 9, 2002 involving commercial banks and bank holding companies (i) headquartered and operating a banking business in California, (ii) headquartered and operating a banking business in California with transaction values less than $25 million, and (iii) with assets less than $200 million; and mergers during the same period involving California-based commercial banks and bank holding companies acquired by California-based companies. Some of these mergers fall into more than one of these categories.

        For each category, Wedbush Morgan analyzed data illustrating, among other things, the multiple of the purchase price to book value, the multiple of the purchase price to tangible book value, the ratio of the purchase price to deposits, the ratio of the premium (i.e., purchase price in excess of tangible book value) to core deposits (total deposits less deposits of $100,000 or more), and the multiple of the purchase price to LTM EPS.

        A summary of the median multiples and ratios in this analysis is as follows:

 
  Price to
Book
Value

  Price to
Tangible Book
Value

  Price to
Deposits
(%)

  Premium to
Core Deposits
(%)

  Price to
LTM EPS

  Number of
Transactions
Examined

Mergers of California-based Sellers   1.87 x 1.89 x 18.0 % 10.9 % 16.9 x 21
Mergers of California-based Sellers with transaction value less than $25 million   1.71 x 1.71 x 17.0 % 9.7 % 16.2 x 17
Mergers of Sellers with assets less than $200 million   1.87 x 1.89 x 18.0 % 10.9 % 16.9 x 21
Mergers of California-based Sellers acquired by California-based Buyers   1.89 x 1.89 x 16.9 % 10.9 % 16.9 x 15

        Assuming an implied value of the Marathon common stock in the merger ranging from $4.56 to $5.30 per share (depending on an average price of the First Community common stock over the averaging period ranging from $18.00 to $27.00), Wedbush Morgan derived price multiples of this implied value ranging from 1.49 to 1.73 to book value and to tangible book value, ratios ranging from

54



19.0% to 22.4% to deposits and premium to core deposits, and price multiples ranging from 23.9 to 27.8 to LTM EPS (fully taxed).

        An analysis of the results of the foregoing necessarily involves complex considerations and judgments concerning differences in financial and operating characteristics of Marathon and the companies included in the selected merger transactions and other factors that could affect the acquisition value of the companies to which it is being compared. Mathematical analyses such as determining the median or average is not in itself a meaningful method of using comparable transaction data.

        Wedbush Morgan also reviewed these selected merger transactions, where pricing information was available, to analyze premiums paid compared to the stock price of the acquired company at various times prior to the announcement of the merger. The premiums ranged from 7.2% to 41.2%, with a median of 13.5%, to the stock price one day prior to the announcement; from 0.8% to 149.2%, with a median of 36.5%, one month prior to the announcement; and from 6.3% to 140.0%, with a median of 60.7%, three months prior to the announcement. Assuming an announcement date of May 9, 2002, and based on an implied value ranging from $4.56 to $5.30 (depending on an average price of the First Community common stock over the averaging period ranging from $18.00 to $27.00) of the Marathon common stock, the premium (discount) of the implied value to the Marathon stock price ranged from (5.0)% to 10.3% one day prior to the announcement, from 3.6% to 20.3% one month prior to the announcement, and from 4.8% to 21.7% three months prior to the announcement.

        Wedbush Morgan also reviewed the historical acquisitions made by First Community and analyzed the multiple of purchase price to book value, the multiple price to tangible book value, the ratio of purchase price to deposits, the ratio of the premium to core deposits, and the multiple of purchase price to earnings per share for the last twelve months. Also analyzed were premium paid by First Community to the seller stock price one day prior to the announcement, one month prior to the announcement, and three months prior to the announcement. The following table summarizes this data:

 
   
   
   
   
   
   
   
 
Implied Premium

 
 
   
   
  Price to
Tangible
Book
Value

   
   
   
 
Effective
Date

   
  Price to
Book
Value

  Price to
Deposits (%)

  Premium To
Core
Deposits (%)

  Price to
LTM
EPS

  One
Day

  One
Month

  Three
Months

 
Pending   First National Bank   2.9 x 2.9 x 24.2 % 19.4 % NM * 43.0 % 43.0 % 135.7 %
Pending   Upland Bank   1.7 x 1.7 x 20.7 % 10.2 % 13.6 x 88.7 % 88.7 % 88.7 %
3/7/02   W.H.E.C., Incorporated   2.2 x 2.2 x 17.2 % 10.9 % 14.0 x N/A   N/A   N/A  
1/31/02   Pacific Western National Bank   2.0 x 2.0 x 18.7 % 12.3 % 17.1 x 50.1 % 56.3 % 87.9 %
10/8/01   First Charter Bank, N.A.   1.4 x 1.5 x 11.3 % 4.1 % NM * 228.0 % 228.0 % 228.0 %
1/16/01   Professional Bancorp Inc.   1.1 x 1.1 x 6.0 % 0.7 % NM * 110.85 % 114.4 % 83.5 %
5/31/00   First Community Bank of the Desert   2.4 x 2.4 x 17.1 % 10.6 % 15.8 % N/A   N/A   N/A  

*
NM = not meaningful

        Assuming an implied value of the Marathon common stock in the merger ranging from $4.56 to $5.30 per share (depending on an average price of the First Community common stock over the averaging period ranging from $18.00 to $27.00), Wedbush Morgan derived multiples of this implied value ranging from 1.49 to 1.73 to book value and tangible book value, ratios ranging from 19.0% to 22.4% of deposits and premium to core deposits, and multiples of 23.9 to 27.8 of LTM EPS (fully taxed).

        Present Value Analysis.    In performing the present value analysis, Wedbush Morgan applied an estimated price to earnings multiple ranging from 15.0 to 20.0 to Marathon's 2003 projected earnings per share (fully taxed), resulting in an implied projected stock price range. The projected stock price was discounted to the present using discount rates of 10%, 12% and 15%. This analysis indicated that the present value of Marathon's projected future stock price ranged from $3.64 to $5.07 per share, as compared to the implied Marathon share value ranging from $4.56 to $5.30 per share, depending on an

55



average price of First Community common stock over the averaging period ranging from $18.00 to $27.00. In determining the discount rates used in the present value analysis, Wedbush Morgan noted, among other things, factors such as inflation, prevailing market interest rates, the inherent business risk and rates of return required by investors.

        Analysis of Marathon's Earnings Per Share.    Wedbush Morgan compared the projected 2003 earnings per share (fully taxed) for the holders of Marathon common stock on a stand-alone basis, on a proforma basis combining First Community with Marathon and on a proforma basis combining First Community with Marathon, First National Bank and Upland Bank. This analysis suggested that the potential for higher earnings per share for the holders of Marathon common stock is greater if the merger is consummated.

        Tangible Book Value Per Share Analysis.    Wedbush Morgan compared the tangible book value per share of Marathon common stock with the proforma First Community tangible book value per share that a Marathon shareholder would receive who elects to receive 100% stock in the merger, as well as tangible book value upon completion by First Community of the acquisitions of First National Bank and Upland Bank. The analysis showed that Marathon shareholders would sustain dilution in tangible book value ranging from 37.0% to 50.5% in the merger and from 20.5% to 38.0% in the combination with First Community, First National Bank and Upland Bank. This dilution would be mitigated to the extent cash is received for Marathon shares.

        Contribution Analysis.    Wedbush Morgan analyzed the contribution of Marathon to, among other things, total equity, tangible equity, assets and deposits on the proforma combined balance sheets at December 31, 2001 of First Community and Marathon and on the proforma combined balance sheets at December 31, 2001 of First Community, Marathon, First National Bank and Upland Bank. This analysis showed that based on the proforma combined balance sheets of First Community and Marathon at December 31, 2001, Marathon would have contributed 17.0% of total equity, 21.1% of total tangible equity, 11.6% of total assets and 11.6% of total deposits, and that based on the proforma combined balance sheets of First Community and Marathon, First National Bank and Upland Bank at December 31, 2001, Marathon would have contributed 9.1% of total equity, 10.4% of total tangible equity, 6.0% of total assets and 6.2% of total deposits.

        Based on the proforma combined projected net income of First Community and Marathon (fully taxed) for 2002 and 2003, Marathon would have contributed 5.7% of the net income of the combined companies each year, and based on the proforma combined projected net income of First Community and Marathon (fully taxed), First National Bank and Upland Bank for 2002 and 2003, Marathon would have contributed 4.6% and 3.4%, respectively, of the net income of the combined companies. Assuming an exchange ratio ranging from 0.1600 to 0.1339 of a share of First Community common stock for each share of Marathon common stock and a 65% stock transaction, holders of Marathon common stock would own from approximately 6.6% to 7.7% of a combined First Community and Marathon, and from approximately 4.1% to 4.8% of a combined First Community, Marathon, First National Bank and Upland Bank, based on shares of First Community common stock outstanding as of March 31, 2002 and as proposed to be issued in these acquisitions. The holders of Marathon common stock will also receive cash of approximately $6.7 million.

        Analysis of First Community's Earnings Per Share.    Wedbush Morgan compared the projected diluted earnings per share for 2003 to 2007 of First Community on a stand-alone basis to the projected diluted earnings per share for the proforma combined First Community and Marathon. Also, Wedbush Morgan compared the projected diluted earnings per share for 2003 to 2007 of First Community on a stand- alone basis to the projected diluted earnings per share for the proforma combined First Community, Marathon, First National Bank and Upland Bank. Wedbush Morgan noted that the projected earnings per share of the proforma combined companies were adjusted for the cost savings, one-time charges related to the acquisitions and certain assumptions as to, among other things, the merger consideration and cost of acquisition funds. Its analysis showed that these transactions would be accretive in each of these years.

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        Dividend Pickup Analysis.    In performing the dividend pickup analysis, Wedbush Morgan assumed that the Marathon shareholders elect to receive all stock in the merger for each Marathon share based on a First Community average stock price of $18.00 to $27.00, and then applied First Community's current annual dividend rate per share of $0.36. This analysis showed that at this rate, holders of Marathon common stock would receive an annual dividend ranging from $0.0706 to $0.0912 per one original Marathon share, whereas no dividend currently is being paid on the Marathon common stock.

        While the foregoing summaries describe several analyses and examinations that Wedbush Morgan deemed material in its opinion, it is not a comprehensive description of all analyses and examinations actually conducted by Wedbush Morgan. The preparation of a fairness opinion necessarily involves various determinations of the most appropriate and relevant methods of financial analysis and the application of these methods to the particular circumstances, and, therefore, is not susceptible to partial analysis or summary description. Each of the analyses conducted by Wedbush Morgan was carried out in order to provide a different perspective on the transaction and to add to the total mix of information available. Wedbush Morgan did not form a conclusion as to whether any individual analysis, considered alone, supported or failed to support an opinion as to fairness from a financial point of view. Rather, in reaching its conclusion, Wedbush Morgan considered the results of the analyses as a whole and did not place particular reliance or weight on any individual factor. Therefore, selecting portions of the analyses and of the factors considered, without considering all such analyses and factors, would create an incomplete or misleading view of the process underlying the analysis. The range of valuations resulting from any particular analysis should not be taken to be Wedbush Morgan's view of the actual value or predicted future value of the Marathon or First Community common stock.

        In performing its analyses, Wedbush Morgan made numerous assumptions with respect to industry performance and general business and economic conditions such as industry growth, inflation, interest rates and many other matters, many of which are beyond the control of Marathon or Wedbush Morgan. Any estimates contained in Wedbush Morgan's analyses are not necessarily indicative of actual values or future results, which may be significantly more or less favorable than suggested by the analyses. Additionally, estimates of the values of the business and securities do not purport to be appraisals of the assets or market value of Marathon or First Community, or their securities, nor do they necessarily reflect the prices at which transactions may actually be consummated.

        In arriving at its opinion, Wedbush Morgan assumed and relied upon the accuracy and completeness of all financial and other information provided to or reviewed by Wedbush Morgan or publicly available, and Wedbush Morgan did not assume any responsibility for independent verification of any such information. With respect to financial projections and other information provided to or reviewed by Wedbush Morgan, Wedbush Morgan was advised by the managements of Marathon and First Community that such projections and information were reasonably prepared on bases reflecting the best currently available estimates and judgments of the respective managements of Marathon and First Community as to the expected future financial performance of Marathon and First Community and the strategic implications and operational benefits anticipated from the merger and from the other proposed acquisitions by First Community, and Wedbush Morgan assumed that, after the merger, First Community and its subsidiaries will perform substantially in accordance with such projections.

        Wedbush Morgan's opinion relates to the relative values of Marathon and First Community and does not imply any conclusion as to what the value of First Community common stock actually will be, if and when issued pursuant to the merger agreement. Wedbush Morgan's opinion does not address the underlying business decision of Marathon to enter into the merger agreement or complete the merger.

        Pursuant to the terms of an engagement letter with Marathon, Wedbush Morgan has received an initial fee of $10,000 and is entitled to receive upon consummation of the merger an additional fee for its services equal to 1% of the value of the merger consideration. Marathon has also agreed to reimburse Wedbush Morgan for its expenses incurred in connection with its engagement and to indemnify Wedbush Morgan against certain liabilities.

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        In the ordinary course of its business, Wedbush Morgan and its affiliates may actively trade the common stock of Marathon and First Community for its own account and for the accounts of its customers and, accordingly, Wedbush Morgan may at any time hold a long or short position in the common stock of Marathon or First Community.

        Wedbush Morgan's opinion is for the benefit and use of the members of the board of directors of Marathon in connection with their evaluation of the merger and does not constitute a recommendation to any holder of Marathon common stock as to how such holder should vote with respect to the merger.

        For the reasons set forth above, the board has unanimously approved the merger agreement as in the best interests of Marathon and its shareholders and unanimously recommends that Marathon's shareholders vote for approval of the merger agreement.

        The closing of the merger is conditioned upon the receipt of all approvals of regulatory authorities required for the merger without the imposition of any conditions or requirements that would materially and adversely impact the economic or business benefits to First Community of the merger. Under the terms of the merger agreement, First Community and Marathon have agreed to use their reasonable best efforts to obtain all necessary actions or non-actions, extensions, waivers, consents and approvals from any governmental authority necessary, proper or advisable to consummate the merger.

        In order to complete the merger, we must first obtain the prior written approval of the OCC to complete the merger of Marathon Bank with and into Pacific Western. First Community's subsidiary, Pacific Western National Bank, filed an application for prior written approval of the merger of Marathon Bank and Pacific Western with the OCC on May 31, 2002, which was received by letter dated July 3, 2002. In addition, the Board of Governors of the Federal Reserve System, must confirm that approval is not required under the Bank Holding Company Act. We expect to submit a request for their confirmation soon.

        In the opinion of Sullivan & Cromwell and Jeffer, Mangels, Butler & Marmaro LLP, the following are the material United States federal income tax considerations of the merger generally applicable to Marathon stockholders. These opinions and the following discussion are based on and subject to the Internal Revenue Code of 1986, as amended, or the Code, the regulations promulgated under the Code, existing interpretations and court decisions, all of which are subject to change, possibly with retroactive effect. Any such change could affect the continuing validity of the discussion. This discussion does not address all aspects of United States federal income taxation that may be important to you in light of your particular circumstances or if you are subject to special rules, such as rules relating to:

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        This discussion assumes you hold your shares of Marathon common stock as capital assets within the meaning of Section 1221 of the Code.

        It is intended that the merger will be treated as a reorganization within the meaning of Section 368(a) of the Code. First Community's and Marathon's obligations to complete the merger are conditioned on, among other things, First Community's receipt of an opinion from Sullivan & Cromwell and Marathon's receipt of an opinion from Jeffer, Mangels, Butler & Marmaro LLP, dated the effective date, to the effect that, on the basis of the facts, representations and assumptions set forth in the opinions, the merger constitutes a reorganization under Section 368(a) of the Code. The opinions of counsel will be based on the then-existing law, will assume the absence of changes in existing facts, will rely on customary assumptions and may rely on representations contained in certificates executed by officers of First Community and Marathon. The opinions neither bind the Internal Revenue Service, nor preclude them from adopting a contrary position, and it is possible that they may successfully assert a contrary position in litigation or other proceedings. Neither First Community nor Marathon intends to obtain a ruling from the Internal Revenue Service with respect to the tax consequences of the merger.

        In the opinion of Sullivan & Cromwell and Jeffer, Mangels, Butler & Marmaro LLP, assuming that the merger is consummated in accordance with the terms of the merger agreement and as described in this proxy statement-prospectus and that the assumptions and representations described in the proceeding paragraph are true and complete as of the effective date, the merger will be treated as a "reorganization" within the meaning of Section 368(a) of the Code. The following discussion assumes that the merger will be treated accordingly.

        Marathon Shareholders Who Receive Only First Community Common Stock.    If you are a holder of Marathon common stock, except as discussed below with respect to cash received in lieu of fractional shares, you will not recognize gain or loss for United States federal income tax purposes if you exchange your Marathon common stock solely for First Community common stock pursuant to the merger.

        Marathon Shareholders Who Receive Both First Community Common Stock and Cash.    If you are a holder of Marathon common stock and you receive both First Community common stock and cash (other than cash received in lieu of fractional shares) in exchange for your Marathon common stock, you will recognize any gain, but not loss, in an amount equal to the lesser of:

        Any gain will be treated as capital gain unless the receipt of the cash has the effect of the distribution of a dividend for U.S. federal income tax purposes, in which case the gain will be treated as ordinary dividend income to the extent of your ratable share of Marathon's accumulated earnings and profits. Any capital gain will be long-term capital gain if, as of the date of the merger, your holding period in your Marathon common stock is greater than one year. The following is a brief discussion of the tax treatment described above; however, you should consult your own tax advisor about the possibility that all or a portion of any cash received in exchange for Marathon common stock will be treated as a dividend.

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        The stock redemption provisions of Section 302 of the Code apply in determining whether cash received by you in exchange for your Marathon common stock has the effect of a distribution of a dividend under Section 356(a)(2) of the Code, which we refer to as a hypothetical redemption analysis. Under the hypothetical redemption analysis, you will be treated as if the portion of Marathon common stock that you exchange for cash in the merger will instead be exchanged for First Community common stock, which we call the hypothetical shares, followed immediately by a redemption of the hypothetical shares by First Community for cash. Under the principles of Section 302 of the Code, you will recognize capital gain rather than dividend income with respect to the cash received if the hypothetical redemption is "not essentially equivalent to a dividend" or is "substantially disproportionate" with respect to you. In applying the principles of Section 302, the constructive ownership rules of Section 318 of the Code will apply in comparing your ownership interest in First Community both immediately after the merger (but before the hypothetical redemption) and after the hypothetical redemption.

        If you are a holder of Marathon common stock, whether the hypothetical redemption by First Community of the hypothetical shares for cash is "not essentially equivalent to a dividend" will depend on your particular circumstances. However, the hypothetical redemption must, in any event, result in a "meaningful reduction" in your percentage ownership of First Community common stock. In determining whether the hypothetical redemption by First Community results in a meaningful reduction in your percentage ownership of First Community common stock, and, therefore, does not have the effect of a distribution of a dividend, you should compare your interest in First Community (including interests owned actually, hypothetically and constructively) immediately after the merger (but before the hypothetical redemption) to your interest after the hypothetical redemption. The Internal Revenue Service has indicated, in Revenue Ruling 76-385, that a stockholder in a publicly-held corporation whose relative stock interest in the corporation is minimal and who exercises no "control" over corporate affairs is generally treated as having had a meaningful reduction in his or her stock after a redemption transaction if his or her percentage stock ownership in the corporation has been reduced to any extent, taking into account the stockholder's actual and constructive ownership before and after the hypothetical redemption.

        If you are a holder of Marathon common stock, the hypothetical redemption transaction would be "substantially disproportionate," and, therefore, would not have the effect of a distribution of a dividend if you own less than 50% of the voting power of the outstanding First Community common stock and the percentage of First Community common stock actually and constructively owned by you immediately after the hypothetical redemption is less than 80% of the percentage of First Community common stock actually, hypothetically and constructively owned by you immediately before the hypothetical redemption.

        Marathon Shareholders Who Receive Only Cash.    If you are a holder of Marathon common stock who exchanges all of your shares of common stock for cash or who exercises appraisal rights in connection with the merger, you will generally recognize capital gain to the extent the amount of cash received in the merger exceeds your tax basis in the Marathon common stock, or loss to the extent your tax basis in Marathon common stock exceeds the amount of cash received in the exchange. Any capital gain or loss will be long-term capital gain or loss if you have held your shares of Marathon common stock for more than one year at the time the merger is completed. Long-term capital gain of a non-corporate U.S. shareholder is generally subject to a maximum rate of 20%.

        Tax Basis and Holding Period.    The aggregate tax basis of the First Community common stock you receive as a result of the merger will be the same as your aggregate tax basis in the Marathon common stock you surrender in exchange for the First Community common stock, decreased by the amount of cash received in the merger and increased by the amount of dividend or gain recognized in the merger. The holding period of the First Community common stock you receive as a result of the exchange will include the holding period of the Marathon common stock you exchange in the merger.

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        Cash Received in Lieu of Fractional Shares.    If you receive cash in the merger instead of a fractional share interest in First Community common stock, you will be treated as having received the cash in redemption of the fractional share interest. Assuming that, immediately after the merger, you hold a minimal interest in First Community, you exercise no control over First Community and, as a result of the deemed redemption and after giving effect to certain constructive ownership rules, you experience an actual reduction in your interest in First Community, you will recognize capital gain or loss on the deemed redemption in an amount equal to the difference between the amount of cash received and your adjusted tax basis allocable to such fractional share. Otherwise, the cash payment may be taxable to you as a dividend. Any capital gain or loss will be long-term capital gain or loss if you have held your shares of Marathon common stock for more than one year at the time the merger is completed. Long-term capital gain of a non-corporate U.S. shareholder is generally subject to a maximum rate of 20%.

        Backup Withholding and Information Reporting.    If you receive cash in exchange for surrendering your shares of Marathon common stock, you may be subject to information reporting and backup withholding at a rate of 30% if you are a non-corporate United States person and you (i) fail to provide an accurate taxpayer identification number; (ii) are notified by the United States Internal Revenue Service that you have failed to report all interest or dividends required to be shown on your federal income tax returns; or (iii) in certain circumstances, fail to comply with applicable certification requirements.

The foregoing discussion is not intended to be a complete analysis or description of all potential United States federal income tax consequences of the merger. In addition, the discussion does not address tax consequences which may vary with, or are contingent on, your individual circumstances. Moreover, the discussion does not address any non-income tax or any foreign, state or local tax consequences of the merger. Accordingly, you are strongly urged to consult with your tax advisor to determine the particular United States federal, state, local or foreign income or other tax consequences to you of the merger.

        The merger will be accounted for as a purchase for financial accounting purposes in accordance with accounting principles generally accepted in the United States. For purposes of preparing First Community's consolidated financial statements, First Community will establish a new accounting basis for Marathon's assets and liabilities based upon their fair values, the merger consideration and the costs of the merger. Any excess of cost over the fair value of the net assets of Marathon will be recorded as goodwill and other intangible assets. A final determination of the intangible asset values and required purchase accounting adjustments, including the allocation of the purchase price to the assets acquired and liabilities assumed based on their respective fair values, has not yet been made. First Community will determine the fair value of Marathon's assets and liabilities and will make appropriate purchase accounting adjustments, including adjustments to the amortization period of the intangible assets, upon completion of that determination.

        In considering the recommendation of the Marathon board of directors, you should be aware that certain members of Marathon management have certain interests in the transactions contemplated by the merger agreement that are in addition to the interests of shareholders generally and that may create potential conflicts of interest. The Marathon board of directors was aware of these interests and considered them, among other matters, in approving the merger agreement and the contemplated transactions.

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        Ownership of Marathon Common Stock.    As of July 3, 2002, as a group, Marathon's executive officers and directors have the right to vote approximately 16.6% of Marathon common stock outstanding. As of the record date, none of the directors or executive officers of First Community owned any shares of Marathon common stock.

        Indemnification; Directors and Officers Insurance.    Following the effective time of the merger, First Community is obligated to indemnify present and former directors and officers of Marathon in connection with any claim arising out of actions or omissions occurring at or prior to the effective time to the fullest extent that Marathon is permitted to indemnify its directors and officers. In addition, First Community is obligated for three years from the effective time, to provide the portion of directors and officers liability insurance that serves to reimburse the present and former directors and officers of Marathon on terms and conditions comparable to those provided by Marathon; provided, however, that First Community is not required to spend on an annual basis more than 150% of the current amount spent by Marathon to procure such insurance coverage.

        Severance Benefits.    The employment agreements and salary continuation agreements between Marathon Bank and Craig D. Collette and Howard Stanke, respectively, and the salary continuation agreement between Marathon Bank and Timothy Herles, together with a severance payment to Mr. Herles in connection with the merger, entitle them to receive, in the aggregate, approximately $2,997,025 upon the closing of the merger, which amount shall be payable over a period of ten years.

        Employee Benefits.    First Community has agreed to provide those employees of Marathon and Marathon Bank who continue as employees of First Community or any of its subsidiaries with employee benefit plans no less favorable in the aggregate than those provided to similarly situated employees of First Community and its subsidiaries.

        The shares of First Community common stock to be issued to Marathon shareholders in the merger will be registered under the Securities Act of 1933. These shares may be traded freely and without restriction by those shareholders not deemed to be "affiliates" of Marathon. An affiliate of a corporation, as defined by the Securities Act, is a person who directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with, that corporation and generally may include Marathon directors, executive officers and major shareholders. Any subsequent transfer by an affiliate of Marathon must be one permitted by the resale provisions of Rule 145 promulgated under the Securities Act or as otherwise permitted under the Securities Act.

        First Community may at any time change the method of effecting the combination of Marathon and First Community or the combination of Marathon Bank and Pacific Western. However, no change may (1) alter or change the amount or kind of consideration to be issued to holders of the capital stock of Marathon as provided for in the merger agreement, (2) adversely affect the tax treatment of Marathon shareholders as a result of receiving the merger consideration, (3) materially impede or delay completion of the transactions contemplated by the merger agreement or (4) otherwise be materially prejudicial to the interests of Marathon shareholders.

        The effective time of the merger will be the time and date when the merger becomes effective, as set forth in the agreement of merger that will be filed with the California Secretary of State on the closing date of the merger. The closing date will occur on a date to be specified by First Community and Marathon. Subject to applicable law, this date will be no later than the third business day after the satisfaction or waiver of the latest to occur of the conditions precedent to the merger set forth in the

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merger agreement, unless extended by mutual agreement of the parties. We anticipate that the merger will be completed in the third quarter of 2002. However, completion of the merger could be delayed if there is a delay in obtaining the required regulatory approvals or in satisfying other conditions to the merger. See "The Merger—Regulatory Approvals Required for the Merger" and "The Merger Agreement—Conditions to Consummation of the Merger".

        Each Marathon stock option, whether vested or unvested immediately prior to the effective time of the merger, will be cancelled and entitle the option holder to consideration comprised of 65% shares of First Community common stock and 35% cash, in accordance with the formula below. An option holder will be entitled to the following consideration:

        Holders of Marathon common stock will accrue but will not be paid dividends or other distributions declared after the effective time with respect to First Community common stock into which their shares have been converted until they surrender their Marathon stock certificates for exchange after the effective time. Upon surrender of those certificates after the effective time, the combined company will pay any unpaid dividends or other distributions, without interest. After the effective time, there will be no transfers on the stock transfer books of Marathon of shares of Marathon common stock issued and outstanding immediately prior to the effective time. If certificates representing shares of Marathon common stock are presented for transfer after the effective time, they will be cancelled and exchanged for certificates representing the applicable number of shares of First Community common stock.

        No fractional shares of First Community common stock will be issued to any shareholder of Marathon upon completion of the merger. For each fractional share that would otherwise be issued, First Community will pay cash in an amount equal to the fraction of a share of First Community common stock to which the holder would otherwise be entitled to receive multiplied by the price of First Community common stock on Nasdaq as reported on the Nasdaq Composite Transactions reporting system at the effective time. No interest will be paid or accrue on cash payable to holders of those certificates in lieu of fractional shares.

        None of First Community, Marathon, the exchange agent or any other person will be liable to any former shareholder of Marathon for any amount delivered in good faith to a public official pursuant to applicable abandoned property, escheat or similar laws.

        If a certificate for Marathon stock has been lost, stolen or destroyed, the exchange agent will issue the consideration properly payable under the merger agreement upon the making of an affidavit by the person claiming that loss, theft or destruction and the posting of a bond in an amount reasonably necessary as indemnity against any claim that may be made against First Community with respect to that lost certificate.

        For a description of First Community common stock and a description of the differences between the rights of the holders of Marathon common stock, on the one hand, and the holders of First Community common stock, on the other hand, see "Description of First Community Capital Stock" and "Comparison of Shareholders' Rights".

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The Merger Agreement

        The merger agreement contains substantially similar representations and warranties of First Community and Marathon as to, among other things:

        In addition, the merger agreement contains further representations and warranties of Marathon as to, among other things:

        Prior to the effective time of the merger, except as expressly contemplated by the merger agreement, each of First Community and Marathon has agreed to:

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        Furthermore, prior to the effective time, except as expressly contemplated by the merger agreement, Marathon has agreed that, without the consent of First Community, it will not, and will not permit Marathon Bank to, among other things:

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        Marathon and First Community have agreed to:

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        Marathon has further agreed to:


        First Community has further agreed to:

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        Each party's obligation to effect the merger is subject to the satisfaction or waiver, where permissible, of the following conditions:

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        First Community's obligation to effect the merger is subject to satisfaction, or waiver, of the following conditions:

        We cannot assure you if, or when, we will obtain the required regulatory approvals necessary to consummate the merger, or whether all of the other conditions precedent to the merger will be satisfied or waived by the party permitted to do so. If the merger is not completed on or before November 30, 2002, either First Community or Marathon may terminate the merger agreement, unless the failure to effect the merger by that date is due to the failure of the party seeking to terminate the merger agreement to perform or observe covenants and agreements of that party set forth in the merger agreement.

        Under the terms of the merger agreement, Marathon has agreed not to solicit, initiate or encourage any takeover proposals or other forms of business combination with a third party. In addition, Marathon has agreed not to negotiate, furnish information or otherwise cooperate in any way in connection with any competing takeover proposals by third parties, unless:

        The parties may terminate the merger agreement and abandon the merger at any time prior to the effective time, whether before or after approval by the shareholders of Marathon:

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        First Community may terminate if Marathon exercises its rights under Section 6.08 of the merger agreement in entertaining a competing takeover proposal and either continues discussions with a third party for more than 10 business days after receiving a competing proposal, or does not reject a publicly disclosed takeover proposal within 10 business days after the proposal was made.

        Marathon may terminate if the average closing price of First Community common stock on Nasdaq for the fifteen consecutive days ending on the third business day immediately prior to the Marathon shareholders' meeting is below $19.50 and such decline in the average closing price is not proportionate to the decline over the same period, if any, in the Nasdaq Bank Index (symbol: IXBK) as published from time to time, and First Community and Marathon do not adjust the amount of cash and/or shares of First Community stock to be received by Marathon shareholders such that they will receive consideration that will at least equal the consideration they would have received had the average closing price First Community's stock price been $19.50.

        Waiver.    At any time prior to the closing of the merger, First Community and Marathon, by action taken or authorized by their respective boards of directors, may, if legally allowed:


        However, after any approval of the transactions contemplated by the merger agreement by the shareholders of Marathon, there may not be, without further approval of those shareholders, any extension or waiver of the merger agreement or any portion of the merger agreement which reduces the amount or changes the form of the consideration to be delivered to the Marathon shareholders under the merger agreement, other than as contemplated by the merger agreement.

        Any agreement by a party to any extension or waiver must be set forth in a written instrument signed on behalf of such party and shall not operate as a waiver of, or estoppel with respect to, any subsequent or other failure.

        Amendment.    Subject to compliance with applicable law and the ability of the parties to change the structure of effecting the merger, First Community and Marathon may amend the merger agreement by action taken or authorized by their respective boards of directors at any time before or

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after approval of the merger agreement by Marathon shareholders. However, after any approval of the principal terms of the merger by Marathon shareholders, there may not be, without further approval of those shareholders, any amendment of the merger agreement that changes the amount or the form of the consideration to be delivered to the Marathon shareholders, other than as contemplated by the merger agreement.

        Under certain conditions, either First Community or Marathon may owe to the other party a termination fee in the amount of $750,000 if the merger agreement is terminated. The merger agreement requires Marathon to pay the termination fee to First Community if the merger agreement is terminated under the following circumstances:

        The merger agreement requires First Community to pay the termination fee to Marathon if the merger agreement is terminated under the following circumstance:

        First Community has agreed to cause the shares of First Community common stock to be issued in the merger to be approved for quotation on Nasdaq.

        The merger agreement provides that each of First Community and Marathon will pay its own costs and expenses incurred in connection with the merger agreement and the transactions contemplated by the merger agreement.

        Robert Abernethy, Frank Jobe, Robert Oltman and the Collette Revocable Trust, in their capacities as shareholders of Marathon, have separately entered into shareholder agreements with First Community in which they have agreed to vote all shares of Marathon common stock that they owned as of the date of their respective agreements, and that they subsequently acquire, in favor of the principal terms of the merger and the transactions contemplated therein. As of the record date, these shareholders owned, in the aggregate, 465,334 shares of the common stock of Marathon, allowing them to exercise approximately 12.1% of the voting power of Marathon common stock.

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        Simultaneously with the execution of the merger agreement, all Marathon directors (other than Craig D. Collette) entered into non-competition agreements with First Community, and Craig D. Collette entered into a non-solicitation agreement with First Community. The Marathon directors who are parties to the non-competition agreements are prohibited from, for a period of two years following the effective time, engaging, having ownership interest or participating in the financing, operation, management or control of any institution the deposits of which are insured by the Federal Deposit Insurance Corporation, except that they may own bonds, preferred stock or up to 5% of the outstanding common stock, if publicly traded, of any such entity and may conduct business with any such entity. This restriction extends to the geographic area of Los Angeles County. In addition, for a period of two years from the effective date of the merger, these Marathon directors shall not solicit the business of existing customers of Marathon, Marathon Bank, First Community or their affiliates for the purpose of extending any loan or accepting any deposit, or the existing employees of Marathon, Marathon Bank, First Community or their affiliates for purposes of engaging them in the operation of any institution the deposits of which are insured by the FDIC. These Marathon directors have also agreed not to disclose or use confidential information of Marathon, Marathon Bank and First Community and its affiliates.

        Craig D. Collette, President and Chief Executive Officer of Marathon and Marathon Bank, entered into a non-solicitation agreement with First Community providing that he will not, during the two years following the effective time, solicit the business of, engage in commercial banking in the geographic area consisting of Los Angeles, Orange, Riverside, San Bernardino and San Diego counties with, or interfere with or damage the relationship with certain prospective or existing customers of Marathon, Marathon Bank and Pacific Western or solicit the services of existing and certain former employees of Marathon, Marathon Bank and Pacific Western. Mr. Collette has also agreed not to disclose or use confidential information of Marathon, Marathon Bank and Pacific Western.

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Information About First Community

        Our banks, Rancho Santa Fe National Bank and Pacific Western, were independent banks prior to our acquisition of those entities in 2000. In mid-1994, our principal shareholder, Castle Creek Financial LLC, was engaged by Rancho Santa Fe National Bank, a four-branch bank with assets, as of the end of that year, of approximately $92.3 million, to develop a new strategic plan for the bank. In late 1994, Castle Creek also began advising First Community Bank of the Desert, a California state-chartered bank that operated through five branches located in the area surrounding Palm Springs, generally referred to as the Coachella Valley. First Community Bank of the Desert has since been merged with Pacific Western.

        In mid-1999, the management of each of Rancho Santa Fe National Bank and First Community Bank of the Desert, together with Castle Creek, determined that a merger of the two banks could create the foundation for a premier community bank. In October 1999, Rancho Santa Fe National Bank announced that it and First Community Bank of the Desert would combine through the creation of First Community Bancorp as a multi-bank holding company that would subsequently own and operate the two banks as separate subsidiaries. When this transaction closed on June 1, 2000, First Community Bancorp became a $325 million-asset multi-bank holding company with branches in San Diego County and the Coachella Valley.

        In June 2000, we began trading on the Nasdaq National Market under the ticker "FCBP". Shortly thereafter, on August 7, 2000, we announced the acquisition of Professional Bancorp, a troubled bank holding company whose sole subsidiary, First Professional Bank, operated five branches in West Los Angeles and targeted borrowers in the health care services sector. The First Professional acquisition, which closed on January 16, 2001, extended our reach into Los Angeles and added $230 million in low-cost deposits to our balance sheet. On May 22, 2001, we announced the acquisition of First Charter Bank, which was headquartered in Beverly Hills. First Charter serviced the banking needs of small- and medium-sized businesses and the real estate industry out of two branches on the west side of Los Angeles. On August 22, 2001, we announced the acquisition of Pacific Western, a bank with four branches in Los Angeles and one branch in Orange County. Pacific Western focused on servicing the banking needs of small- and medium-sized businesses and the real estate industry. On November 13, we announced the acquisition of WHEC, the bank holding company for Capital Bank of North County, a bank with three branches in Carlsbad and one branch each in Encinitas and Vista. On January 31, 2002, we completed the acquisition of Pacific Western, and just five weeks later, on March 7, 2002, the acquisition of WHEC. Each bank that we have acquired since our formation has been merged with Pacific Western, other than Capital Bank which was merged with Rancho Santa Fe National Bank. In January 2002, we completed the consolidation of First Professional Bank, First Community Bank of the Desert and Pacific Western National Bank under the charter of First Professional Bank, which was renamed Pacific Western National Bank upon completion of the consolidation.

        Through our banks, we provide 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

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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.

        Through our banks, we concentrate our lending activities in two principal areas, real estate loans and commercial 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 banks' real estate portfolio is subject to certain risks, including a possible downturn in the Southern California economy, similar to the one which occurred during the early 1990s, interest rate increases, reduction in real estate values in Southern California and continued increases in competitive pricing and loan structure. The banks strive to reduce the exposure to such risks by reviewing each loan request and renewal individually, using a dual signature approval system whereby both the marketing and credit administration departments must approve each request individually and 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.

        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, our policies provide specific guidelines regarding required debt coverage and other important financial ratios. Commercial loans include lines of credit and commercial term loans. The banks' portfolio of commercial loans is subject to certain risks, including a possible downturn in the Southern California economy, interest rate increases and the deterioration of a company's financial capabilities. The banks strive to reduce the exposure to such risks through a dual signature approval system and 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.

        In addition, our banks provide consumer loans including 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 amount of credit offered to consumers in the market, interest rates increases and 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 using a dual signature system of approval and strict adherence to written credit policies.

        On April 18, 2002, First Community signed a definitive Agreement and Plan of Merger providing for the acquisition of Upland Bank, a California chartered commercial bank. Pursuant to that merger agreement, Upland Bank will merge with and into Pacific Western. At March 31, 2002, Upland Bank had total assets of $110 million and total deposits of $96 million. The Upland Bank acquisition is also subject to customary conditions to consummation, including prior approval by the OCC, which it has received.

        On April 25, 2002, First Community signed a definitive Agreement and Plan of Merger providing for the acquisition of First National Bank, a national banking association with seven branches in Southern California. At March 31, 2002, First National Bank had assets of $649 million and total deposits of $525 million. Pursuant to that merger agreement, First National Bank will merge into Rancho Santa Fe National Bank. At the closing of the merger, Rancho Santa Fe's name will be

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changed to First National Bank. The First National Bank acquisition is subject to customary conditions to consummation, including prior approval by the OCC.

        On June 26, 2002, First Community closed an offering of trust preferred securities with an aggregate liquidation preference of $10.0 million.

        On July 17, 2002, First Community raised $83,300,000 before expenses and underwriting discounts, through the sale of shares of its common stock in a registered public offering.

        Our ability to pay dividends is limited by federal law, state law and contractual provisions. California law 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:

        It is also possible, depending upon the financial condition of the bank in question and other factors that the Federal Reserve 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, our ability to pay dividends is limited by a Revolving Credit Agreement, dated as of June 26, 2000, between First Community and the Northern Trust Company, which provides that First Community may not declare or pay any dividend, other than dividends payable in our common stock or in the ordinary course of business exceeding 50% of net income per fiscal quarter of First Community before intangible amortization and any restructuring charges incurred in connection with any merger, consolidation or other restructuring contemplated by transactions similar to a merger. Also, First Community would be prohibited from paying dividends on its common stock by the indentures, dated as of September 7, 2000, between First Community and the State Street Bank and Trust Company, December 18, 2001 between First Community and the State Street Bank and Trust Company, and November 28, 2001, between First Community and the Wilmington Trust Company, in the event that First Community defaults on certain obligations or defers interest payments under the indentures.

        As of March 31, 2002, First Community on a consolidated basis had a total of 327 full time equivalent employees, with 53 full time equivalent employees at Rancho Santa Fe National Bank, 232 full time equivalent employees at Pacific Western and 42 at the holding company.

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Information About Marathon Bancorp

        Marathon's 10-KSB as of and for the year ended December 31, 2001 is attached to this proxy statement-prospectus as Appendix D, and Marathon's 10-QSB as of and for the period ended March 31, 2002 is attached as Appendix E. There have been no material changes in Marathon's affairs that have not been disclosed in its latest Form 10-KSB or Form 10-QSB.

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Regulation and Supervision

        The following is a summary of certain statutes and regulations affecting Marathon, First Community and their subsidiaries. This summary is qualified in its entirety by such statutes and regulations.

        First Community and Marathon are registered bank holding companies under the Bank Holding Company Act of 1956, as amended, and as such are subject to regulation by the Board of Governors of the Federal Reserve System, which we refer to as the Federal Reserve. A bank holding company is required to file with the Federal Reserve annual reports and other information regarding its business operations and those of its subsidiaries. A bank holding company and its subsidiary banks are also subject to examination by the Federal Reserve.

        The Bank Holding Company Act requires every bank holding company to obtain the approval of the Federal Reserve before acquiring substantially all the assets of any bank or bank holding company or ownership or control of any voting shares of any bank or bank holding company, if, after such acquisition, it would own or control, directly or indirectly, more than 5% of the voting shares of such bank or bank holding company.

        In approving acquisitions by bank holding companies or companies engaged in banking-related activities, the Federal Reserve considers whether the performance of any such activity by a subsidiary of the holding company reasonably can be expected to produce benefits to the public, such as greater convenience, increased competition or gains in efficiency, which outweigh possible adverse effects, such as over-concentration of resources, decreased competition or unsound banking practices.

        In addition, bank holding companies are restricted in, and subject to, limitations regarding transactions with subsidiaries and other affiliates.

        The ability of First Community to obtain funds for the payment of dividends and for other cash requirements is largely dependent on the amount of dividends which may be declared by its subsidiaries—Rancho Santa Fe National Bank and Pacific Western National Bank, which are federally chartered commercial banks, or "national banks". Marathon Bank, as a national bank, is subject to the National Bank Act, as are Rancho Santa Fe and Pacific Western.

        Pursuant to 12 U.S.C. Section 56, no national bank may pay dividends from its capital. All dividends must be paid out of net profits after deducting losses and bad debts. The payment of dividends out of net profits of national banks is further limited by 12 U.S.C. Section 60(a), which prohibits a bank from declaring a dividend on its shares of common stock until the surplus fund equals the amount of capital stock or, if the surplus fund does not equal the amount of capital stock, until one-tenth of a bank's net profits for the preceding half-year in the case of quarterly or semi-annual dividends or the preceding two half-years in the case of an annual dividend, are transferred to the surplus fund.

        Pursuant to 12 U.S.C. Section 60(b), the approval of the Office of the Comptroller of the Currency, referred to as the OCC, is required prior to the payment of dividends if the total of all dividends declared by a national bank in any calendar year exceeds the total of its retained net profits for that year combined with its net profits for the two preceding years, less any required transfers to surplus or a fund for the retirement of any preferred stock. Further, the OCC also has authority to prohibit the payment of dividends by a national bank when it determines such payment to be an unsafe and unsound banking practice. A bank may, upon approval by the OCC, be able to undergo a "quasi-

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reorganization", which would allow the bank to ignore accumulated losses before the quasi-reorganization.

        The policies of regulatory authorities, including the OCC, Federal Reserve and the FDIC, have had a significant effect on the operating results of commercial banks in the past and are expected to do so in the future. An important function of the Federal Reserve System is to regulate aggregate national credit and money supply through such means as open market dealings in securities, establishing the discount rate on member bank borrowings and changes in reserve requirements against member bank deposits. Policies of these agencies may be influenced by many factors, including inflation, unemployment, short-term and long-term changes in the international trade balance and fiscal policies of the United State government.

        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. First Community's banks and Marathon Bank 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, each of First Community and Marathon believe that the cost of compliance with Title III of the USA Patriot Act is not likely to be material to First Community or Marathon, respectively.

        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 Pacific Western and Marathon Bank, have in recent years paid minimal premiums for FDIC insurance. A number of factors suggest that as early as the first half of 2003, even well-capitalized and well-managed banks will be required to pay premiums for deposit insurance. The amount of any such premiums will depend on the outcome of legislative and regulatory initiatives as well as the growth of insured deposits, the BIF loss experience and other factors, none of which we are in position to predict at this time.

        Since neither First Community nor Marathon is involved in any business that manufactures, uses or transports chemicals, waste, pollutants or toxins that might have a material adverse effect on the environment, their primary exposure to environmental laws is through its lending activities. Based on a general survey of the loan portfolios of First Community's banking subsidiaries and Marathon Bank, conversations with local appraisers and the type of lending currently and historically done by the subsidiaries, First Community is not aware of any potential liability for hazardous waste contamination that would be reasonably likely to have a material adverse effect on First Community or Marathon.

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Description of First Community Capital Stock

        In the merger, Marathon shareholders will exchange their shares of Marathon common stock for shares of First Community common stock or for cash. The following is a summary of the material features of First Community capital stock.

        Pursuant to the articles of incorporation of First Community, the authorized capital stock of First Community consists of 15,000,000 shares of common stock, of which approximately 7,546,831 shares are outstanding as of July 12, 2002, and 5,000,000 shares of preferred stock, of which none is outstanding. The 7,546,831 shares of First Community common stock outstanding on July 12, 2002 does not include 3,400,000 shares of First Community common stock issued July 17, 2002 in a registered public offering.

        In the future, the authorized but unissued and unreserved shares of First Community common stock and the authorized but unissued and reserved shares of First Community preferred stock will be available for general corporate purposes, including but not limited to, possible issuance as stock dividends or stock splits, in future mergers or acquisitions, pursuant to stock compensation plans of First Community or in future private placements or public offerings. First Community has no present plans for the issuance of additional authorized shares of its capital stock, other than as pursuant to the 2000 Stock Incentive Plan or other such plans that First Community has assumed. Except as otherwise may be required to approve a merger or other transaction in which the additional authorized shares of First Community common stock or authorized shares of First Community preferred stock would be issued, no approval of First Community shareholders will be required for the issuance of those authorized shares.

        Each share of First Community common stock has the same relative rights as, and is identical in all respects to, each other share of First Community common stock. Holders of First Community common stock are entitled to one vote per share on all matters requiring shareholder action, including but not limited to, the election of, and any other matters relating to, directors. Holders of First Community common stock are entitled to cumulate their votes for the election of directors.

        The holders of First Community common stock are entitled to receive dividends, out of funds legally available therefor, subject to any restrictions imposed by federal regulators and the payment of any preferential amounts to which any class of preferred stock may be entitled. Upon liquidation, dissolution or winding up of First Community, holders of First Community common stock will be entitled to share ratably all assets remaining after the payment of liabilities of First Community and of preferential amounts to which any preferred stock may be entitled.

        The holders of First Community common stock have no preemptive or other subscription rights. First Community common stock is not subject to call or redemption, and, upon receipt by First Community of the full purchase price therefor, each share of First Community common stock will be fully paid and non-assessable.

        First Community's articles of incorporation currently authorize it to issue up to 5,000,000 shares of preferred stock. The board of directors has broad authority to designate and establish the terms of one or more series of preferred stock. Among other matters, the board is authorized to establish voting powers, designations, preferences and special rights of each such series and any qualifications, limitations and restrictions thereon. First Community preferred stock may rank prior to First Community common stock as to dividend rights, liquidation preferences, or both, may have full or limited voting rights, and may be convertible into First Community common stock. The holders of any class or series of First Community preferred stock also may have the right to vote separately as a class or series under the terms of the class or series as hereafter fixed by the board or otherwise required by California law.

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Comparison of Shareholders' Rights

        First Community is a California corporation and, accordingly, the rights of shareholders of First Community are governed by the California General Corporation Law, or the CGCL, as well as the articles of incorporation and bylaws of First Community. Marathon is also a California corporation, and its shareholders' rights are governed by the CGCL and its articles of incorporation and bylaws. As a result of the merger, Marathon's shareholders will become shareholders of First Community. There are certain differences between the charters of First Community and Marathon. The summary contained below describes some of the differences but is not intended to be complete and is qualified by reference to California law and the charter documents of First Community and Marathon.

        The CGCL provides that, unless the corporation's articles or bylaws provide otherwise, vacancies (other than those created by removal) may be filled by approval of the board of directors, or if the number of directors then in office is less than a quorum, by (1) the unanimous written consent of the directors then in office, (2) the affirmative vote of a majority of directors then in office at a duly called meeting or (3) the sole remaining director. Unless the corporation's articles or a bylaw provision adopted by the corporation's shareholders provide that the board of directors may fill vacancies on the board resulting from the removal of directors, such vacancies must be filled by the affirmative vote of a majority of the shares represented and voting at a duly held meeting at which a quorum is present (which shares voting affirmatively also constitute at least a majority of the required quorum). The CGCL permits shareholders to elect a director at any time to fill any vacancy not filled by the directors. Any such election by written consent (other than to fill a vacancy created by removal, which requires the unanimous consent of all shares entitled to vote) requires the consent of a majority of the outstanding shares entitled to vote. The CGCL further provides that if, after the filling of any vacancy by the directors, the directors then in office who were elected by the shareholders constitute less than a majority of the directors then in office, then (1) any holder or holders of an aggregate of 5% or more of the total number of shares at the time outstanding having the right to vote for those directors may call a special meeting of the shareholders, or (2) upon the application of such holder or holders, the superior court of the proper county will order a special meeting of shareholders to elect the entire board of directors.

        First Community and Marathon.    The First Community and Marathon bylaws substantially restate the provisions of the CGCL.

        First Community.    First Community's bylaws provide that shareholder nominations for election of directors must be delivered to the secretary of First Community not less than 60 days nor more than 90 days prior to the date of a meeting of shareholders called for the election of directors. The First Community bylaws provide that any proper business may be transacted at the annual meeting of shareholders, except as limited by the CGCL.

        Marathon.    Marathon's bylaws make no reference to shareholder nominations for election of directors. They provide that the election of directors and transaction of any other proper business may take place at the annual meeting of shareholders.

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        To amend the articles of incorporation of a California corporation, the CGCL requires the approval of the corporation's board of directors and a majority of the outstanding shares entitled to vote.

        First Community.    The First Community articles do not contain any supermajority provisions for amendments.

        Marathon.    The Marathon articles require the votes of at least two-thirds of the total voting power of all outstanding shares to amend or repeal certain provisions in the articles.

        The CGCL provides that holders of a majority of the outstanding shares entitled to vote and the corporation's board of directors each have the power to adopt, amend or repeal a corporation's bylaws, although the articles or bylaws of the corporation may restrict or eliminate the power of the board to take such action.

        First Community.    Neither First Community's articles nor bylaws restrict the power of First Community's board or shareholders to adopt, amend or repeal its bylaws.

        Marathon.    Marathon's articles and bylaws require the vote of at least two-thirds of the total voting power of all outstanding shares to adopt, repeal or amend a bylaw specifying or changing a fixed number of directors or the maximum or minimum number of directors or changing from a fixed to a variable board, or vice versa.

        First Community and Marathon.    First Community and Marathon do not currently have classified boards. First Community's and Marathon's bylaws currently require that all directors be elected at each annual meeting of shareholders for a term of one year.

        The CGCL provides that directors may be removed without cause, if the removal is approved by the majority of the outstanding shares entitled to vote. However, the CGCL further provides that, with respect to directors of corporations not having classified boards of directors, no director can be removed (unless the entire board is removed) if the votes cast against removal of the director would be sufficient to elect the director if voted cumulatively (without regard to whether cumulative voting is permitted) at an election at which the same total number of votes were cast and the entire number of directors authorized at the time of the director's most recent election were then being elected.

        First Community and Marathon.    First Community and Marathon do not currently have classified boards. First Community's bylaws and Marathon's charter substantially restate the statutory provisions set out above.

        Cumulative voting allows a shareholder to cast a number of votes equal to the number of directors to be elected multiplied by the number of shares held in the shareholder's name on the record date. This total number of votes may be cast for one nominee or may be distributed among as many of the candidates as the shareholder desires. The candidates who receive the highest number of votes are elected, up to the total number of directors to be elected. In general, cumulative voting may help groups of minority shareholders elect some candidates to the board.

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        First Community and Marathon.    Shareholders of Marathon and First Community are entitled to cumulate their votes for the election of directors. The CGCL provides for cumulative voting for directors, unless the corporation's articles or bylaws provide otherwise. First Community's and Marathon's articles do not provide otherwise.

        Under the CGCL, the board of directors, the chair of the board, the president, the holders of shares entitled to cast not less than 10% of the votes at a meeting, and such additional persons as are specified in the corporation's articles or bylaws have the authority to call special meetings of shareholders.

        First Community and Marathon.    The First Community and Marathon bylaws substantially restate the provisions set out above. The First Community bylaws do not specify any additional persons, and the Marathon bylaws specify the Secretary in addition to the persons set forth above.

        The CGCL provides that, unless otherwise provided in the articles of incorporation, any action that may be taken at a special or annual meeting of shareholders may be taken without a meeting and without prior notice if a consent in writing, setting forth the action taken, is signed by the holders of outstanding shares having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted. Except as discussed above with respect to filling vacancies on the board of directors, the CGCL does not permit shareholders to elect directors by written consent except by the unanimous written consent of all shares entitled to vote in the election of directors.

        First Community.    First Community's articles do not provide otherwise.

        Marathon.    Marathon's articles provide that no actions shall be taken by shareholders except at an annual or special meeting of the shareholders.

        The CGCL provides an absolute right of inspection of a corporation's list of shareholders to any shareholder or shareholders holding at least 5% of the voting stock or a shareholder or shareholders holding at least 1% of the voting stock who have filed a Schedule 14B with the SEC or, in the case the corporation is a bank with deposits insured under the FDIA, have filed a Form F-6 with the appropriate federal bank regulatory agency. Schedule 14B is filed in connection with certain proxy contests relating to the election of directors. Form F-6 relates to the election of directors. In addition, the CGCL provides a right of inspection of shareholders lists to any shareholder for a purpose reasonably related to the holder's interest as a shareholder.

        First Community and Marathon.    First Community's bylaws specifically allow for any shareholder authorized under California law to inspect its list of shareholders, and Marathon's articles and bylaws substantially restate the provisions of the CGCL.

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Dissenters' Rights

        Under California law, you have the right to dissent from the merger and have the appraised fair market value of your shares of Marathon common stock paid to you in cash. Sections 1300 through 1304 of the CGCL are attached hereto as Appendix C. The description of dissenters' rights contained in this proxy statement-prospectus is qualified in its entirety by reference to Chapter 13 of the CGCL. In order for you to exercise dissenters' rights, you must make a written demand upon Marathon as provided in the CGCL, which must be received by Marathon before the 30th day following the mailing by Marathon of notice of approval of the merger, you must not vote for the approval of the principal terms of the merger, and you must comply with such other procedures as required by the CGCL, as more fully described below. Failure to send such notice, to vote against the principal terms of the merger or to follow such other procedures will result in a waiver of your dissenters' rights.

        Any demands, notices, certificates or other documents delivered to Marathon prior to the merger may be sent to Marathon Bancorp, 11150 West Olympic Boulevard, Los Angeles, California 90064. Thereafter, they may be sent to Corporate Secretary, First Community Bancorp, 275 North Brea Boulevard, Brea, California 92821.

        If no instructions are indicated on proxies received by Marathon, such proxies will be voted for the proposal to approve the principal terms of the merger at the Marathon special shareholders' meeting. If you return your proxy without instructions, resulting in a vote for the approval of the principal terms of the merger, you will not be entitled to dissenters' rights.

        In the event that the merger is approved by the shareholders of Marathon and you object to the merger, you will be entitled to payment of the fair market value of your shares, as of May 13, 2002 (the day before the public announcement of the merger); provided that (a) such shares were outstanding immediately prior to the date for the determination of shareholders entitled to vote on the merger; (b) you did not vote your shares for the approval of the principal terms of the merger; (c) you made a demand for purchase in cash of your shares at their fair market value as of May 13, 2002; and (d) you have submitted certificates representing your shares for endorsement, in accordance with Section 1302 of the CGCL.

        You must (a) make a written demand for purchase of your shares and for payment on your shares in cash of their fair market value as of May 13, 2002; (b) have your demand received by Marathon on or before the 30th day following the mailing by Marathon of notice of approval of the merger; (c) state the number and class of the shares held of record by you that you demand that Marathon purchase; and (d) state what you claim to be the fair market value of your shares as of May 13, 2002. Such statement of fair market value constitutes an offer by you to sell your shares at such price. You may not withdraw such demand unless Marathon consents thereto. A proxy or vote against the approval of the principal terms of the merger does not in itself constitute a demand for your shares.

        You must submit to Marathon at its principal office or at the office of its transfer agent the certificates representing any shares that you are demanding that the corporation purchase, for endorsement as dissenting shares within 30 days after the date on which notice of approval of the merger by Marathon shareholders was mailed to you.

        If you hold dissenting shares, Marathon will mail to you a notice of the approval of the merger by the Marathon shareholders within ten days after the date of such approval, accompanied by (a) a copy of Sections 1300, 1301, 1302, 1303 and 1304 of Chapter 13 of the CGCL; (b) a statement of the price determined by Marathon to represent the fair market value as of May 13, 2002 of the dissenting shares; and (c) a brief description of the procedure to be followed if you desire to exercise your dissenter's rights under such sections. The statement of price constitutes an offer by Marathon to purchase at the price stated such dissenting shares.

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        If Marathon denies that shares submitted to it as dissenting shares are dissenting shares, or if Marathon and you fail to agree on the fair market value of your shares, either you or Marathon may file a complaint in the superior court of the proper county in California requesting that the court determine such issue. Such complaint must be filed within six months after the date on which notice of the approval of the merger is mailed to you.

        On trial of the action, the court will first determine if the shares are dissenting shares, and if so determined, the court will either determine the fair market value or appoint one or more impartial appraisers to do so. If both Marathon and you fail to file a complaint within six months after the date on which notice of the approval of the merger was mailed to you, your shares will cease to be dissenting shares. In addition, if you transfer your shares prior to their submission for the required endorsement, your shares will lose their status as dissenting shares.

        Failure to take any necessary step will result in a termination or waiver of your rights under Chapter 13 of the CGCL. A person having a beneficial interest in Marathon common stock that is held of record in the name of another person, such as a trustee or nominee, must act promptly to cause the record holder to follow the requirements of Chapter 13 of the CGCL in a timely manner if such person elects to demand payment of the fair market value of such shares.

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Validity of Common Stock

        The validity of the shares of First Community common stock to be issued in connection with the merger will be passed upon for First Community by Sullivan & Cromwell, Los Angeles, California.


Experts

        The consolidated financial statements of First Community Bancorp and subsidiaries as of December 31, 2001 and 2000 and for each of the years in the three-year period ended December 31, 2001 are incorporated by reference in the registration statement and this proxy statement-prospectus in reliance upon the report of KPMG LLP, independent auditors, incorporated by reference in the registration statement and this proxy statement-prospectus, and upon the authority of said firm as experts in accounting and auditing.

        The consolidated financial statements of Marathon Bancorp and subsidiary as of December 31, 2001 and for the years ended December 31, 2001 and 2000 are included as Appendix D in the registration statement and this proxy statement-prospectus in reliance upon the report of Vavrinek, Trine, Day & Co., LLP, independent auditors, incorporated by reference in the registration statement and this proxy statement-prospectus, and upon the authority of said firm as experts in accounting and auditing.

        The consolidated financial statements of First National Bank and subsidiary as of December 31, 2001 and 2000 and for each of the years in the three-year period ended December 31, 2001 are incorporated by reference in the registration statement and this proxy statement-prospectus in reliance upon the report of KPMG LLP, independent auditors, incorporated by reference in the registration statement and this proxy statement-prospectus, and upon the authority of said firm as experts in accounting and auditing.

        The consolidated financial statements of W.H.E.C., Inc. and subsidiary as of December 31, 2001 and for the year ended December 31, 2001 are incorporated by reference in the registration statement and this proxy statement-prospectus in reliance upon the report of Vavrinek, Trine, Day & Co., LLP, independent auditors, incorporated by reference in the registration statement and this proxy statement-prospectus, and upon the authority of said firm as experts in accounting and auditing.

        The financial statements of Pacific Western National Bank as of December 31, 2001 and for the year ended December 31, 2001 are incorporated by reference in the registration statement and this proxy statement-prospectus in reliance upon the report of Vavrinek, Trine, Day & Co., LLP, independent auditors, incorporated by reference in the registration statement and this proxy statement-prospectus, and upon the authority of said firm as experts in accounting and auditing.

        The consolidated financial statements of Professional Bancorp, Inc. and subsidiary as of December 31, 2000 and for the year ended December 31, 2000 are incorporated by reference in the registration statement and this proxy statement-prospectus in reliance upon the report of KPMG LLP, independent auditors, incorporated by reference in the registration statement and this proxy statement-prospectus, and upon the authority of said firm as experts in accounting and auditing.

        The consolidated financial statements of Professional Bancorp, Inc. and subsidiary as of December 31, 1999 and for the year ended December 31, 1999 are incorporated by reference in the registration statement and this proxy statement-prospectus in reliance upon the report of Moss Adams LLP, independent auditors, incorporated by reference in the registration statement and this proxy statement-prospectus, and upon the authority of said firm as experts in accounting and auditing.


Other Matters

        No other business may be transacted at the special meeting.

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Where You Can Find More Information

        First Community and Marathon file annual, quarterly and special reports, proxy statements and other information with the Securities and Exchange Commission, or SEC. You may read and copy any document we file at the SEC's Public Reference Room at 450 Fifth Street, N.W., Washington, D.C. 20549. You may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC also maintains an Internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC. The internet address of the SEC's website is http://www.sec.gov.

        This document incorporates the following documents filed by First Community by reference:

        All documents filed by First Community pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this document and before the date of the Marathon special meeting are also deemed to be incorporated by reference into and are made a part of this document from the date of filing of those documents.

        This document incorporates the following documents filed by Marathon by reference:

        You should rely only on the information contained in, delivered with or referred to in this document. We have not authorized anyone to provide you with information that is different.

        Any statement contained in a document incorporated or deemed to be incorporated by reference into this document will be deemed to be modified or superseded for purposes of this document to the extent that a statement contained in this document or any other subsequently filed document that is deemed to be incorporated by reference into this document modifies or supersedes that statement. Any statement so modified or superseded will not be deemed, except as so modified or superseded, to constitute a part of this document.

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        In addition, First Community filed a registration statement on Form S-4 to register with the SEC the First Community common stock to be issued to Marathon's shareholders in the merger, and this document constitutes a prospectus for First Community common stock as well as a proxy statement of Marathon. This proxy statement-prospectus does not contain all the information set forth in the registration statement, certain portions of which have been omitted as permitted by the rules and regulations of the SEC. For further information with respect to the merger and the securities offered hereby, reference is made to the registration statement and the exhibits filed as part thereof or incorporated by reference therein, which may be inspected at the public reference facilities of the SEC mentioned above.

        You may request a copy of any of these filings at no cost, by writing or telephoning the filing company at the addresses and phone numbers set forth below:

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APPENDIX A



AGREEMENT AND PLAN OF MERGER

dated as of May 13, 2002

by and between

First Community Bancorp

and

Marathon Bancorp





TABLE OF CONTENTS

ARTICLE I CERTAIN DEFINITIONS

1.01.

 

Certain Definitions

 

A-1

ARTICLE II THE MERGER

2.01.

 

The Merger

 

A-6
2.02.   Effective Date and Effective Time   A-6

ARTICLE III CONSIDERATION; EXCHANGE PROCEDURES

3.01.

 

Effect on Capital Stock

 

A-7
3.02.   Conversion of Company Common Stock   A-7
3.03.   Election and Proration Procedures   A-8
3.04.   Rights as Shareholders; Stock Transfers   A-10
3.05.   No Fractional Shares   A-10
3.06.   Exchange Procedures   A-10
3.07.   Anti-Dilution Provisions   A-12
3.08.   Dissenters' Rights   A-12
3.09.   Company Stock Options   A-13

ARTICLE IV ACTIONS PENDING ACQUISITION

4.01.

 

Forbearances of the Company

 

A-13
4.02.   Forbearances of Parent   A-15

ARTICLE V REPRESENTATIONS AND WARRANTIES

5.01.

 

Disclosure Schedules

 

A-16
5.02.   Standard   A-16
5.03.   Representations and Warranties of the Company   A-16
5.04.   Representations and Warranties of Parent   A-24

ARTICLE VI COVENANTS

6.01.

 

Reasonable Best Efforts

 

A-27
6.02.   Shareholder Approval   A-27
6.03.   Registration Statement   A-27
6.04.   Press Releases   A-28
6.05.   Access; Information   A-28
6.06.   Affiliates   A-29
6.07.   Stock De-listing   A-29
6.08.   Acquisition Proposals   A-29
6.09.   Certain Policies   A-30
6.10.   Nasdaq Listing   A-30
6.11.   Regulatory Applications   A-30
6.12.   Indemnification   A-30
6.13.   Benefit Plans   A-31
6.14.   Non-Competition Agreements   A-32
6.15.   Notification of Certain Matters   A-32
6.16.   Human Resources Issues   A-32
6.17.   Assistance with Third-Party Agreements   A-32
6.18.   Bank Merger   A-33
6.19.   Shareholder Agreements   A-33

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6.20.   Additional Agreements   A-33
6.21.   Pre-Closing Adjustments   A-33
6.22.   Company Stock Options   A-34
6.23.   Tax Treatment of the Merger   A-34
6.24.   Non-Solicitation Agreement   A-34

ARTICLE VII CONDITIONS TO CONSUMMATION OF THE MERGER

7.01.

 

Conditions to Each Party's Obligation to Effect the Merger

 

A-34
7.02.   Conditions to Obligation of the Company   A-35
7.03.   Conditions to Obligation of Parent   A-35

ARTICLE VIII TERMINATION

8.01.

 

Termination

 

A-37
8.02.   Effect of Termination and Abandonment   A-39

ARTICLE IX MISCELLANEOUS

9.01.

 

Survival

 

A-40
9.02.   Waiver; Amendment   A-40
9.03.   Counterparts   A-40
9.04.   Governing Law, Jurisdiction and Venue   A-40
9.05.   Expenses   A-40
9.06.   Notices   A-40
9.07.   Entire Understanding; No Third Party Beneficiaries   A-41
9.08.   Effect   A-42
9.09.   Severability   A-42
9.10.   Enforcement of the Agreement   A-42
9.11.   Interpretation   A-42

EXHIBIT A

 

Form of Shareholder Agreement
EXHIBIT B   Form of Non-Competition Agreement
EXHIBIT C   Form of Company Affiliate Agreement
EXHIBIT D   Form of Agreement of Merger
EXHIBIT E   Form of Non-Solicitation Agreement
Disclosure Schedule

ii


        AGREEMENT AND PLAN OF MERGER, dated as of May 13, 2002 (this "Agreement"), by and between Marathon Bancorp, a California corporation (the "Company"), and First Community Bancorp, a California corporation ("Parent").

RECITALS

        A.    The Company.    The Company is a California corporation, having its principal place of business in Los Angeles, California.

        B.    Parent.    Parent is a California corporation, having its principal place of business in Rancho Santa Fe, California.

        C.    Board Action.    The respective Boards of Directors of Parent and the Company have determined that it is in the best interests of their respective companies and their shareholders to consummate the merger of the Company with and into Parent (the "Merger") and the merger of Marathon Bank with and into Parent Bank (the "Bank Merger").

        D.    Intentions of the Parties.    It is the intention of the parties to this Agreement that the Merger be treated as a "reorganization" under Section 368(a) of the Internal Revenue Code of 1986, as amended (the "Code").

        E.    Shareholder Agreements.    As a condition to, and simultaneously with, the execution of this Agreement, each Shareholder (as defined herein) is entering into an agreement, in the form of Exhibit A hereto, (collectively, the "Shareholder Agreements") pursuant to which they have agreed, among other things, to vote their shares in favor of the principal terms of the Merger.

        F.    Non-Competition Agreements.    As a condition to, and simultaneously with, the execution of this Agreement, each director of the Company (other than Craig D. Collette) is entering into non-competition agreements with Parent in the form of Exhibit B, hereto (collectively, the "Non-Competition Agreements").

        G.    Non-Solicitation Agreement.    As a condition to, and simultaneously with, the execution of this Agreement, Craig D. Collette is entering into a non-solicitation agreement in the form of Exhibit E hereto (the "Non-Solicitation Agreement").

        NOW, THEREFORE, in consideration of the premises and of the mutual covenants, representations, warranties and agreements contained herein the parties agree as follows:


ARTICLE I

CERTAIN DEFINITIONS

        1.01.    Certain Definitions    The following terms are used in this Agreement with the meanings set forth below:

A-1


A-2


A-3


A-4


A-5



ARTICLE II

THE MERGER

        2.01.    The Merger.    (a) The Combination.    At the Effective Time, the Company shall merge with and into Parent, the separate corporate existence of the Company shall cease and Parent shall survive and continue to exist as a California corporation. Parent may, at any time prior to the Effective Time (including, to the extent permitted by applicable law, after the Company's shareholders have approved the principal terms of the Merger) change the method of effecting the acquisition of the Company and Marathon Bank (including, without limitation, the provisions of this Article II and including, without limitation, by electing not to merge the Company or Marathon Bank with Parent or any of its existing Subsidiaries, but rather with a merger subsidiary of Parent) if and to the extent it deems such change to be necessary, appropriate or desirable; provided, however, that no such change shall (i) alter or change the amount or kind of consideration to be issued to holders of Company Common Stock as provided for in this Agreement (the "Merger Consideration"), (ii) adversely affect the tax treatment of the Company's shareholders as a result of receiving the Merger Consideration, (iii) materially impede or delay consummation of the transactions contemplated by this Agreement or (iv) otherwise be materially prejudicial to the interests of the shareholders of the Company.

        (b)    Articles of Incorporation and By-Laws.    The articles of incorporation and by-laws of Parent immediately after the Effective Time shall be those of Parent as in effect immediately prior to the Effective Time.

        (c)    Directors and Officers of Parent.    The directors and officers of Parent immediately after the Effective Time shall be the directors and officers of Parent immediately prior to the Effective Time, until such time as their successors shall be duly elected and qualified.

        (d)    Effect of the Merger.    At the Effective Time, the effect of the Merger shall be as provided in §1107 of the CCC, including any regulations or rules promulgated thereunder. Without limiting the generality of the foregoing, and subject thereto, at the Effective Time, all the property, rights, privileges, powers and franchises of the Company shall vest in Parent, and all debts, liabilities, obligations, restrictions, disabilities and duties of the Company shall become the debts, liabilities, obligations, restrictions, disabilities and duties of Parent.

        2.02.    Effective Date and Effective Time.    On such date as Parent selects (and promptly provides notice thereof to Company), which shall be within ten days after the last to occur of the expiration of all applicable waiting periods in connection with approvals of Governmental Authorities and the receipt of all approvals of Governmental Authorities and all conditions to the consummation of the Merger are satisfied or waived (or, at the election of Parent, on the last business day of the month in which such tenth day occurs or, if such tenth day occurs on one of the last five business days of such month, on the last business day of the succeeding month), or on such earlier or later date as may be agreed in writing by the parties, the Agreement of Merger shall be filed with the California Secretary, in accordance with all appropriate legal requirements together with such certificates or other documents executed as may be required by law, and the Merger provided for herein shall become effective upon such filing. The date of such filing is herein called the "Effective Date." The "Effective Time" of the Merger shall be the time of such filing.

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ARTICLE III

CONSIDERATION; EXCHANGE PROCEDURES

        3.01.    Effect on Capital Stock.    Subject to the other provisions of this Article III, at the Effective Time of the Merger, by virtue of the Merger and without any additional action on the part of the holders of shares of Parent Common Stock:

        (a)    Parent Common Stock.    Each share of Parent Common Stock issued and outstanding immediately prior to the Effective Time shall remain an issued and outstanding share of common stock of Parent, and shall not be affected by the Merger;

        (b)    Company Common Stock.    Each share of Company Common Stock, issued and outstanding immediately prior to the Effective Time of the Merger (other than Dissenters' Shares and Treasury Shares, as defined below) shall be converted into the right to receive either Parent Common Stock or cash as provided in Section 3.02(a);

        (c)    Dissenter's Shares.    All shares of Company Common Stock that are "dissenting shares" within the meaning of CCC §1300 ("Dissenters' Shares") shall not be converted into or represent a right to receive Parent Common Stock or cash hereunder unless and until such shares have lost their status as dissenting shares under CCC §1300, at which time such shares shall either be converted into cash or Parent Common Stock pursuant to Section 3.08; and

        (d)    Cancellation of Certain Shares.    Any shares of Company Common Stock held directly or indirectly by Parent or the Company, other than those held in a fiduciary capacity or as a result of debts previously contracted ("Treasury Shares"), shall be cancelled and retired at the Effective Time of the Merger and no consideration shall be issued in exchange therefor.

        3.02.    Conversion of Company Common Stock.    

        (a)  Subject to the other provisions of this Article III, each share of Company Common Stock issued and outstanding immediately prior to the Effective Time of the Merger (other than Dissenters' Shares and Treasury Shares) shall, by virtue of the Merger, be converted into the right to receive, at the election of the holder thereof as provided in Section 3.03, either (i) cash (the "Cash Consideration") in an amount equal to the Company Common Stock Value or (ii) a number of shares of Parent Common Stock (the "Stock Consideration") equal to the Company Common Stock Value divided by the Parent Measuring Price. The Company Common Stock Value shall be determined as follows:

A shareholder may elect to receive a combination of cash and Parent Common Stock (the "Combination Consideration") in exchange for his or her shares of Company Common Stock; provided, however, that with respect to each individual share of Company Common Stock held, a shareholder must elect to receive either all cash or all Parent Common Stock.

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        3.03.    Election and Proration Procedures.    

        (a)    Election Forms and Types of Elections.    An election form and other appropriate and customary transmittal materials (which shall specify that delivery shall be effected, and risk of loss and title to the certificates theretofore representing shares of Company Common Stock shall pass, only upon proper delivery of such certificates to the Exchange Agent selected by Parent and reasonably acceptable to the Company (the "Exchange Agent")) in such form and substance as designated by Parent and reasonably acceptable to the Company (the "Election Form") shall be mailed no less than forty days prior to the Effective Time of the Merger or on such other date as Parent and the Company shall mutually agree (the "Mailing Date") to each holder of record of Company Common Stock as of a date of Parent's choice which is at least three Business Days prior to the Mailing Date (the "Election Form Record Date"). Parent shall make available one or more Election Forms as may be reasonably requested by all persons who become holders of Company Common Stock after the Election Form Record Date and prior to the Election Deadline (as defined herein), and the Company shall use its best efforts to promptly provide or cause to be provided to the Exchange Agent all information reasonably necessary for the Exchange Agent to perform its obligations as specified herein. Each Election Form shall permit the holder (or the beneficial owner through appropriate and customary documentation and instructions) to elect (an "Election") to receive either (i) Parent Common Stock (a "Stock Election") with respect to all of such holder's shares of Company Common Stock, (ii) cash (a "Cash Election") with respect to all of such holder's shares of Company Common Stock, or (iii) Parent Common Stock in exchange for a specified number of shares of Company Common Stock (a "Combination Stock Election") and cash in exchange for a specified number of shares of Company Common Stock (a "Combination Cash Election"). Any shares of Company Common Stock (other than Dissenters' Shares or Treasury Shares) with respect to which the holder (or indirectly the beneficial owner) shall not have submitted to the Exchange Agent an effective, properly completed Election Form, which was received prior to the Election Deadline, shall be deemed to be "Undesignated Shares" hereunder.

        (b)    Proper and Timely Election.    Any Election shall have been properly made and effective only if the Exchange Agent shall have actually received a properly completed Election Form by 5:00 P.M. Pacific Time on the 30th day following the Mailing Date (or such other time and date as the Company and Parent may mutually agree) (the "Election Deadline"). An Election Form shall be deemed properly completed only if an Election is indicated for each share of Company Common Stock covered by such Election Form and if accompanied by one or more certificates (or customary affidavits and indemnification regarding the loss or destruction of such certificates or the guaranteed delivery of such certificates) representing all shares of Company Common Stock covered by such Election Form, together with duly executed transmittal materials included in or required by the Election Form. Any Election Form may be revoked or changed by the person submitting such Election Form prior to the Election Deadline. In the event an Election Form is revoked prior to the Election Deadline, the shares of Company Common Stock represented by such Election Form shall automatically become Undesignated Shares unless and until a new Election is properly and timely made with respect to such shares on or before the Election Deadline, and Parent shall cause the certificates representing such shares of Company Common Stock to be promptly returned without charge to the person submitting

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the revoked Election Form upon written request to that effect from the holder who submitted such Election Form. Subject to the terms of this Agreement and of the Election Form, the Exchange Agent shall have reasonable discretion to determine whether any election, revocation or change has been properly or timely made and to disregard immaterial defects in the Election Forms, and any decisions of Parent and Company required by the Exchange Agent and made in good faith in determining such matters shall be binding and conclusive. Neither Parent nor the Exchange Agent shall be under any obligation to notify any person of any defect in an Election Form.

        (c)    Allocation.    Notwithstanding anything in this Agreement to the contrary, the number of shares of Company Common Stock to be converted into the right to receive Cash Consideration in the Merger (the "Cash Election Number") shall be equal to (i) 6,473,072 divided by the Company Common Stock Value less (ii) the sum of (A) the number of Dissenters' Shares, if any, and (B) the number of Treasury Shares. The number of shares of Company Common Stock to be converted into the right to receive Stock Consideration in the Merger (the "Stock Election Number") shall be equal to the number of shares of Company Common Stock issued and outstanding immediately prior to the Effective Time of the Merger less the sum of (i) the Cash Election Number, (ii) the number of Dissenters' shares and (iii) the number of Treasury Shares.

        (d)    Payment and Proration.    As promptly as practicable but not later than five Business Days after the Effective Time of the Merger, Parent shall cause the Exchange Agent to effect the allocation among the holders of Company Common Stock of rights to receive Parent Common Stock or cash in the Merger in accordance with the Election Forms as follows:

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        (e)    Calculations.    Any calculation of a portion of a share of Parent Common Stock shall be rounded to the nearest ten-thousandth of a share, and any cash payment shall be rounded to the nearest cent.

        3.04.    Rights as Shareholders; Stock Transfers.    At the Effective Time, holders of Company Common Stock shall cease to be, and shall have no rights as, shareholders of the Company other than to receive the consideration provided under this Article III. After the Effective Time, there shall be no transfers on the stock transfer books of the Company of shares of Company Common Stock.

        3.05.    No Fractional Shares.    Notwithstanding any other provision hereof, no fractional shares of Parent Common Stock and no certificates or scrip therefor, or other evidence of ownership thereof, will be issued in the Merger; instead, Parent shall pay to each holder of Company Common Stock who would otherwise be entitled to a fractional share of Parent Common Stock (after taking into account all certificates of Company Common Stock delivered by such holder) an amount in cash (without interest) determined by multiplying such fraction by the Parent Measuring Price. No holder will be entitled to dividends, voting rights or any other rights as a shareholder in respect of any fractional share of Parent Common Stock.

        3.06.    Exchange Procedures.    (a) Exchange Agent.    No later than the Effective Time of the Merger, Parent shall deposit with the Exchange Agent certificates representing the number of shares of Parent Common Stock issuable in the Merger and the amount of cash payable in the Merger (the "Exchange Fund"). The Exchange Agent shall not be entitled to vote or exercise any rights of ownership with respect to Parent Common Stock held by it from time to time hereunder, except that it

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shall receive and hold all dividends or other distributions paid or distributed with respect to such shares for the account of the persons entitled thereto.

        (b)    Exchange of Certificates and Cash.    After completion of the allocation procedure set forth in Section 3.03, each holder of a certificate formerly representing shares of Company Common Stock (other than Dissenters' Shares or Treasury Shares) who surrenders or has surrendered such certificate (or customary affidavits and indemnification regarding the loss or destruction of such certificate), together with duly executed transmittal materials included in or required by the Election Form, to the Exchange Agent shall, upon acceptance thereof, be entitled to a certificate representing Parent Common Stock and/or cash into which the shares of Company Common Stock shall have been converted pursuant hereto, as well as cash in lieu of any fractional shares of Parent Common Stock to which such holder would otherwise be entitled. The Exchange Agent shall accept such certificate representing shares of Company Common Stock upon compliance with such reasonable and customary terms and conditions as the Exchange Agent may impose to effect an orderly exchange thereof in accordance with normal practices. Until surrendered as contemplated by this Section 3.06, each certificate representing shares of Company Common Stock shall be deemed from and after the Effective Time of the Merger to evidence only the right to receive cash and/or Parent Common Stock, as the case may be, upon such surrender. Parent shall not be obligated to deliver the consideration to which any former holder of Company Common Stock is entitled as a result of the Merger until such holder surrenders his certificate or certificates representing shares of Company Common Stock for exchange as pro