Editor's note: This column was submitted by Stockpickr member Susanne Owen, also known as the Trading Nymph.

Come on, we can tell. You have a crush. You're thinking about California, aren't you, Wells Fargo ( WFC)?

During the bank's Oct. 16 conference call, something jumped out at me: "California continued to be one of our fastest growing states with a 16% increase in core product sales from the third quarter of 2006 on a comparable basis."

Wells went on to indicate that its M&A strategy was to focus on "niche opportunities" combined with investments "to build and strengthen our distribution." Then finally these sweet words: "Given the challenging environment, we expect to see additional acquisition and portfolio purchase opportunities."

So why do I believe California is a likely target for a Wells' M&A initiative? California is the eighth-largest economy in the world. Wells' corporate offices are located in San Francisco. And hey, Wells Fargo doesn't seem to like the East all that much -- maybe it's one of those East Coast/West Coast things. None of its branches is located there.

But mainly, Wells Fargo's preference is evident in its two latest buys. On Oct. 1, the company completed the acquisition of Greater Bay Bancorp, the third- largest bank acquisition in Wells Fargo's history. Greater Bay had 41 banking stores across the San Francisco Bay Area. It also acquired 39 Placer Sierra Bancshares stores, this year for $645 million. Placer Sierra is based in Sacramento.

Wells Fargo Community Banking Group, which includes regional banking, wealth management, mortgage banking and retail Internet, delivered a strong third quarter with 12% revenue growth and 8% earnings growth over the same period last year.

So if Wells Fargo is looking to buy more regional banks in California, which ones may prove too attractive to be ignored? Well, Downey Financial ( DSL) has been mentioned many times before. So I wanted to identify four others that have price-to-book ratios under 2.5 and that haven't been hurt too badly. Heck, even if Wells Fargo isn't interested, other acquisitive banks out there might be.

First up is City National ( CYN), which has been called the Bank of the Stars. Its price-to-book is about 2 and its market cap is $3.2 billion. City shares have taken a tumble since the beginning of October.

This Los Angeles-based company on Oct. 17 reported net income of $60.1 million, or $1.22 a share, up from $59 million, or $1.20 a share, a year ago. Analysts, however, were looking for $1.23 a share.

City National has two housing-related loan portfolios: its $3.1 billion residential mortgage portfolio contains no subprime credits or option-adjustable rate mortgage loans. The company makes mortgage loans as an accommodation to its private banking clients (told you -- "Stars"). These loans have an average loan-to-value ratio of 51% at origination.

City National has 62 offices in Southern California, the San Francisco Bay Area, Nevada and New York City. New York City -- what would Wells Fargo do?

Next is First Community Bancorp ( FCBP), which has a price-to-book of 1.2 and a market cap of $1.5 billion. It also has taken a tumble since the beginning of October.

On Oct. 18, First Community reported earnings of $22.2 million, or 77 cents a share, compared with net earnings of $21.4 million, or 88 cents a share, last year. The bank has 61 full-service community banking branches under the name Pacific Western, located in Los Angeles, Orange, Riverside, San Diego and San Bernardino counties. San Diego is its home base.

So now that I've given you two Southern California banks, let's move up the coast to Pacific Capital Bancorp ( PCBC), a Santa Barbara-based bank with a price-to-book of 1.7 and a market cap of $1.1 billion. On Aug. 1, the company beat second-quarter numbers primarily due to the sale of its auto-finance and commercial-equipment leasing portfolios. It reported net income of $33.2 million, or 70 cents a share, up from $11.5 million, or 24 cents a share, during the same quarter in 2006.

The bank, headquartered on the central coast of California, has 50 branches under the local brand names of Santa Barbara Bank & Trust, First National Bank of Central California, South Valley National Bank, San Benito Bank, Pacific Capital Bank and First Bank of San Luis Obispo.

Last up north is small-cap Bank of Marin Bancorp ( BMRC), which has a price-to-book of 1.9 and a market cap of $165 million.

On Oct. 18, the bank reported third-quarter earnings of $3.2 million, up 2.7% from the same period in 2006. Diluted earnings per share were 60 cents, up 9.1% from 55 cents a year ago.

Bank of Marin has 11 branches in Strawberry, Corte Madera, downtown San Rafael, Andersen Drive and Northgate in San Rafael, Ignacio, downtown Novato, Sausalito and three offices in Petaluma.

Wells Fargo (and perhaps others) may be looking very closely at regional banks -- and there is no better place than California. But this California girl may be a bit biased.

I would gather up a small basket since even without a takeover these banks are doing all right and, just like Downey Savings and Loan, have really been beaten up lately.

Please note that due to factors including low market capitalization and/or insufficient public float, we consider Bank of Marin Bancorp to be a small-cap stock. You should be aware that such stocks are subject to more risk than stocks of larger companies, including greater volatility, lower liquidity and less publicly available information, and that postings such as this one can have an effect on their stock prices.
At the time of publication, Susanne Owen had no positions in stocks mentioned, although positions may change at any time.

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