More from the Central Coast

A recent takeover hit, Central Coast Bancorp, had its origins in an early roadtrip to California's Central Coast.

On a return trip recently, I added another couple of local banks to my watch and buy list. Arroyo Grande based Mid-State Bancshares (MDST) and Paso Robles based Heritage Oaks Bancorp (HEOP) are good takeover bets. I don't own either yet, but plan to open small positions soon.

Both are close to their 52-week high levels, and hence buying in volume is not recommended. The dividends are a small, but real, comfort. The downside with both is their exposure to California's unsustainable real-estate bubble. While the Central Coast dances to a different tune than Northern or Southern California, resulting in a less-pronounced bubble, it is still present and the effects of any severe slowdown will be felt.