Disclosures

First California Financial Group, Inc.

I, Joe Gladue , certify that this report reflects my personal beliefs about this company and that no portion of my compensation was, is or will be directly or indirectly related to the specific recommendations or views discussed in this report.

Disclosure

  • B. Riley & Co., LLC does and seeks to do business with companies covered in its research reports.
  • A portion of this analyst’s compensation is based on the sales, trading and investment banking activities of B. Riley & Co., LLC.
  • B. Riley & Co., LLC makes a market in the securities of the company covered in this report.
Disclosure Chart

Initiated coverage on 1/3/11 with a Buy rating.

Ratings Distribution as of May 17, 2012 % with Investment Banking Relationships
Rating Number of Companies Percent of Total Rating Number of Companies Percent of Total
Buy 112 73.7% Buy 13 100.0%
Neutral 37 24.3% Neutral 0 0.0%
Sell 3 2.0% Sell 0 0.0%
Total 152 100% Total 13 100%

Explanation of B. Riley & Co. LLC's Rating System

  • Buy: We generally expect "Buy" rated stocks to materially outperform both the S&P 500 and Russell 2000 as well as other stocks in their sector. Further, we believe that the potential reward relative to the potential risk is particularly attractive.
  • Neutral: We generally believe "Neutral" rated stocks will perform roughly in line with the S&P 500 and Russell 2000 over the intermediate and long term.
  • Sell: We generally expect "Sell" rated stocks to materially underperform both the S&P 500 and Russell 2000 as well as other stocks in their sector. Further, we believe that the potential reward relative to the potential risk is particularly unattractive.

Risks and Considerations

  • Further Potential Risks - See the Company's SEC filings, particularly its 10-K filing, for a discussion of further potential risks.

Additional Risks and Considerations

    • Economic Slowdown – Though there are signs that the economy is starting to gain some forward momentum, unemployment continues stuck at high levels. This could further affect asset quality and loan demand. The weak economy has had a big impact on state economies and California has had well-publicized budget woes. Government responses to the recession, both at the federal and state level, could affect First California’s business and consumer customer base.
    • Shifting Regulatory Landscape – Since the financial meltdown in 2008, the regulatory framework affecting banks in the U.S has changed considerably. Many elements of the Dodd-Frank Wall Street Reform and Consumer Protection Act will remain unclear until rules are put in place by various agencies. Capital rules under Basel III are also becoming more stringent. These and other changes to the legal, regulatory and accounting framework affecting banks could have a significant impact on future profitability.
    • Geographic Concentration – First California’s banking operations are concentrated in the state of California, particularly in the southern part of the state. This subjects the company to risks that affect the economy of this region. Any downturn in the regional economy could have a more serious impact on First California than on other more geographically diversified banks.
    • Depressed Valuations –The banking sector has suffered from declining valuations in recent months as increased regulatory burdens, the prospects for an extended period of weak loan demand and low interest rates have led many investors to conclude that profitability in the industry will remain depressed for a considerable period. The resulting low valuations (relative to historical norms) for bank stocks could persist for an extended period.