First Community Bank Corp of America (FCFL) 10-Q 2006 Q1 Quarterly report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

x Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended March 31, 2006

¨ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from            to            

Commission file number 000-50357

FIRST COMMUNITY BANK CORPORATION OF AMERICA

(Exact name of registrant as specified in its charter)

Florida	65-0623023
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

9001 Belcher Road

Pinellas Park, Florida 33782

(Address of principal executive offices) (Zip Codes)

(727) 520-0987

(Registrant’s telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report)

Indicated by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days:    Yes  x    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer or a non-accelerated filer (see definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act). Check One:

Large accelerated filer  ¨    Accelerated filer  ¨    Non-accelerated filer  x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  x

Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date;

Common stock, par value $.05 per share	3,796,750 shares
(class)	Outstanding at April 26, 2006

FIRST COMMUNITY BANK CORPORATION OF AMERICA AND SUBSIDIARIES

INDEX

	Page
PART I. FINANCIAL INFORMATION
Item 1.Financial Statements
Condensed Consolidated Balance Sheets - At March 31, 2006 (unaudited) and At December 31, 2005	2
Condensed Consolidated Statements of Earnings - Three Months ended March 31, 2006 and 2005 (unaudited)	3
Condensed Consolidated Statements of Changes in Stockholders’ Equity Three Months Ended March 31, 2006 and 2005 (unaudited)	4
Condensed Consolidated Statements of Cash Flows - Three Months Ended March 31, 2006 and 2005 (unaudited)	5-6
Notes to Condensed Consolidated Financial Statements (unaudited)	7-11
Review by Independent Registered Public Accounting Firm	12
Report of Independent Registered Public Accounting Firm	13
Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations	14-19
Item 3.Controls and Procedures	20
PART II. OTHER INFORMATION
Item 1.Legal Proceedings	20
Item 6.Exhibits	21
SIGNATURES	22

1

FIRST COMMUNITY BANK CORPORATION OF AMERICA AND SUBSIDIARIES

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

Condensed Consolidated Balance Sheets

(Dollars in thousands, except per share amounts)

		March 31, 2006			December 31, 2005
		(Unaudited)
Assets
Cash and due from banks		$	2,263		2,273
Interest-bearing deposits with banks			9,921		19,425
	��
Cash and cash equivalents			12,184		21,698
Other interest-bearing deposits with banks			335		527
Securities available for sale			7,849		8,918
Securities held to maturity			7,326		5,278
Loans, net of allowance for loan losses of $3,476 in 2006 and $3,416 in 2005			298,318		272,534
Federal Home Loan Bank stock, at cost			1,495		1,109
Premises and equipment, net			8,696		8,790
Accrued interest receivable			1,284		1,245
Deferred income taxes			1,471		1,471
Bank owned life insurance			2,331		2,310
Other assets			1,236		874
		$	342,525		324,754
Liabilities and Stockholders’ Equity
Liabilities:
Noninterest-bearing demand deposits			41,755		37,010
Savings, NOW and money-market deposits			105,688		115,286
Time deposits			132,841		120,333
Total deposits			280,284		272,629
Federal Home Loan Bank advances			18,000		12,000
Other borrowings			5,922		3,709
Accrued expenses and other liabilities			7,871		7,269
Total liabilities			312,077		295,607
Stockholders’ equity:
Common stock, $0.05 par value, 6,250,000 shares authorized, 3,796,750 and 3,747,582 shares issued and outstanding in 2006 and 2005			189		187
Additional paid-in capital			25,262		24,826
Retained earnings			5,047		4,200
Accumulated other comprehensive loss			(50	)	(66	)
Total stockholders’ equity			30,448		29,147
		$	342,525		324,754

See Accompanying Notes to Condensed Consolidated Financial Statements.

2

FIRST COMMUNITY BANK CORPORATION OF AMERICA AND SUBSIDIARIES

Condensed Consolidated Statements of Earnings (Unaudited)

(In thousands, except per share amounts)

	Three Months Ended March 31,
	2006		2005
Interest income:
Loans	$	5,122	3,414
Securities		132	95
Other interest earning assets		70	46
Total interest income		5,324	3,555
Interest expense:
Deposits		1,624	838
Other borrowings		235	104
Total interest expense		1,859	942
Net interest income		3,465	2,613
Provision for loan losses		60	158
Net interest income after provision for loan losses		3,405	2,455
Noninterest income:
Service charges on deposit accounts		154	121
Other service charges and fees		54	23
Income from bank owned life insurance		21	22
Gain on sale of loans held for sale		48	14
Other		22	71
Total noninterest income		299	251
Noninterest expenses:
Employee compensation and benefits		1,559	1,072
Occupancy and equipment		276	171
Data processing		207	168
Professional fees		55	61
Office supplies		53	43
Insurance		44	38
Other		173	154
Total noninterest expenses		2,367	1,707
Earnings before income taxes		1,337	999
Income taxes		490	369
Net earnings	$	847	630
Earnings per share:
Basic earnings per share	$	.22	.19
Diluted earnings per share	$	.21	.17
Dividends per share	$	—	—

See Accompanying Notes to Condensed Consolidated Financial Statements.

3

FIRST COMMUNITY BANK CORPORATION OF AMERICA AND SUBSIDIARIES

Condensed Consolidated Statements of Changes in Stockholders’ Equity

Three Months Ended March 31, 2006 and 2005

(In thousands, except share amounts)

	Common Stock		Additional Paid-in Capital	Retained Earnings		Accumulated Other Comprehensive Loss		Total
Balance at December 31, 2004	$	169	19,374	4,136		(61	)	23,618
Comprehensive income:
Net earnings (unaudited)		—	—	630		—		630
Net change in unrealized loss on securities available for sale, net of taxes of $25 (unaudited)		—	—	—		(41	)	(41	)
Comprehensive income (unaudited)								589
5% stock dividend (105,641 shares), fractional shares paid in cash of $4 (unaudited)		9	2,785	(2,798	)	—		(4	)
Balance at March 31, 2005 (unaudited)	$	178	22,159	1,968		(102	)	24,203
Balance at December 31, 2005		187	24,826	4,200		(66	)	29,147
Comprehensive income:
Net earnings (unaudited)		—	—	847		—		847
Net change in unrealized loss on securities available for sale, net of taxes of $10 (unaudited)		—	—	—		16		16
Comprehensive income (unaudited)								863
Exercise of stock options (unaudited)		2	248	—		—		250
Tax benefit from stock options exercised (unaudited)		—	188	—		—		188
Balance at March 31, 2006 (unaudited)	$	189	25,262	5,047		(50	)	30,448

See Accompanying Notes to Condensed Consolidated Financial Statements.

4

FIRST COMMUNITY BANK CORPORATION OF AMERICA AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows (Unaudited)

(In thousands)

	Three Months Ended March 31,
	2006			2005
Cash flows from operating activities:
Net earnings	$	847		630
Adjustments to reconcile net earnings to net cash provided by (used in) operating activities:
Provision for loan losses		60		158
Depreciation and amortization		129		78
Net amortization of deferred loan fees and costs		36		34
Income from bank owned life insurance		(21	)	(22	)
Origination of loans held for sale		(2,797	)	(1,018	)
Proceeds from sale of loans held for sale		3,759		964
Gain on sale of loans held for sale		(48	)	(14	)
Loss on sale of foreclosed real estate		—		2
Increase in accrued interest receivable		(39	)	(44	)
Increase in other assets		(362	)	(1,440	)
Increase in accrued expenses and other liabilities		780		51
Net cash provided by (used in) operating activities		2,344		(621	)
Cash flows from investing activities:
Net change in other interest-bearing deposits with banks		192		(95	)
Purchase of securities available for sale		(500	)	(491	)
Principal payments on securities available for sale		95		121
Proceeds from calls and maturities of securities available for sale		1,500		1,500
Purchase of securities held to maturity		(2,160	)	(999	)
Principal payments on securities held to maturity		112		53
Net increase in loans		(26,794	)	(14,415	)
Purchase of premises and equipment, net		(35	)	(1,787	)
Purchase of Federal Home Loan Bank stock		(386	)	(121	)
Proceeds from sale of foreclosed real estate		—		37
Net cash used in investing activities		(27,976	)	(16,197	)
Cash flows from financing activities:
Increase in deposits		7,655		20,950
Proceeds from Federal Home Loan Bank advances		31,500		—
Repayment of Federal Home Loan Bank advances		(25,500	)	—
Net increase in other borrowings		2,213		(329	)
Fractional shares of stock dividend paid in cash		—		(4	)
Proceeds from exercise of stock options		250		—
Net cash provided by financing activities		16,118		20,617
Net (decrease) increase in cash and cash equivalents		(9,514	)	3,799
Cash and cash equivalents at beginning of period		21,698		9,738
Cash and cash equivalents at end of period	$	12,184		13,537

(continued)

5

FIRST COMMUNITY BANK CORPORATION OF AMERICA AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows (Unaudited), Continued

(In thousands)

	Three Months Ended March 31,
	2006		2005
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest	$	1,813	944
Income taxes	$	490	580
Noncash transactions:
Accumulated other comprehensive income (loss), net change in unrealized gain (loss) on securities available for sale, net of income taxes	$	16	(41	)
Stock dividend	$	—	9
Tax benefit from stock options exercised	$	188	—

See Accompanying Notes to Condensed Consolidated Financial Statements.

6

FIRST COMMUNITY BANK CORPORATION OF AMERICA AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

1. General.First Community Bank Corporation of America (the “Holding Company”) owns all of the outstanding common stock of First Community Bank of America (the “Bank”) and First Community Lender Services, Inc. (“FCLS”) (collectively, the “Company”). The Holding Company’s primary business activity is the operations of the Bank. The Bank is a federally-chartered stock savings bank that provides a variety of banking services to small and middle market businesses and individuals through its three banking offices located in Pinellas County and one banking office located in Charlotte County and Hillsborough County, Florida. FCLS had minimal activity during the three months ended March 31, 2006 and 2005.

In the opinion of the management of the Company, the accompanying condensed consolidated financial statements contain all adjustments (consisting principally of normal recurring accruals) necessary to present fairly the financial position at March 31, 2006 and the results of operations and cash flows for the three-month periods ended March 31, 2006 and 2005. The results of operations and other data for the three- month period ended March 31, 2006 are not necessarily indicative of results that may be expected for the year ending December 31, 2006.

2. Loan Impairment and Loan Losses.The activity in the allowance for loan losses is as follows (in thousands):

	Three Months Ended March 31,
	2006		2005
Balance at beginning of period	$	3,416	2,640
Provision for loan losses		60	158
Charge-offs		—	(14	)
Recoveries		—	1
Balance at end of period	$	3,476	2,785

There were no loans identified as impaired during the three months ended March 31, 2005. Impaired collateral dependent loans at March 31, 2006 were as follows (in thousands):

	At March 31, 2006
Balance at end of period	$	189
Total related allowance for losses	$	4
	Three Months Ended March 31, 2006
Average investment in impaired loans	$	202
Interest income recognized on impaired loans	$	—
Interest income received on impaired loans	$	—

(continued)

7

FIRST COMMUNITY BANK CORPORATION OF AMERICA AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited), Continued

2. Loan Impairment and Loan Losses, Continued.Nonaccrual and past due loans were as follows (in thousands):

	At March 31,
	2006		2005
Nonaccrual loans	$	189	21
Past due ninety days or more, still accruing		—	—
	$	189	21

At March 31, 2006 and December 31, 2005 loans held for sale were $472,000 and $1,386,000, respectively, and are included in net loans on the condensed consolidated balance sheets.

3. Earnings Per Share (“EPS”).Earnings per share (“EPS”) of common stock has been computed on the basis of the weighted-average number of shares of common stock outstanding. Outstanding stock options and warrants are considered dilutive securities for purposes of calculating diluted EPS which is computed using the treasury stock method. All per share amounts have been adjusted to reflect the three-for-two stock split declared in December 2005. The following tables present the calculations of EPS (dollars in thousands, except per share amounts).

	Three Months Ended March 31,
	2006					2005
	Earnings		Weighted- Average Shares	Per Share Amount		Earnings		Weighted- Average Shares	Per Share Amount
Basic EPS:
Net earnings available to common stockholders	$	847	3,796,750	$	0.22	$	630	3,331,707	$	0.19
Effect of dilutive securities- Incremental shares from assumed conversion of options and warrants			280,005					459,935
Diluted EPS:
Net earnings available to common stockholders and assumed conversions	$	847	4,076,755	$	0.21	$	630	3,791,642	$	0.17

The following options were excluded from the calculation of EPS for the three months ended March 31, 2006 due to the exercise price being above the average market price:

	Number Outstanding	Exercise Price		Expire
Options	6,000	$	20.19	2012-2016

(continued)

8

FIRST COMMUNITY BANK CORPORATION OF AMERICA AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited), Continued

4. Stock Option Plans.The Company has two stock option plans for directors and employees of the Company. Under the plans, the total number of options which may be granted to purchase common stock is 492,188 (amended) for directors and 590,625 (amended) for employees. At March 31, 2006, no options remain available for grant under the directors’ plan and 80,671 options remain available for grant under the employees’ plan. The directors’ options vest immediately and have a life of five years. The employees’ options vest over a range from grant date to eight years and expire six years after vesting is complete, however no employee option exceeds 10 years. All options and share prices have been adjusted to reflect the three-for-two stock split in January 2006 (dollars in thousands, except per share amounts).

	Number of Shares		Range of Per Share Option Price			Weighted Average Per Share Price		Aggregate Option Price
Options outstanding at December 31, 2005	534,744		$	5.08-18.41		7.02		3,754
Options granted	6,000			20.19		20.19		121
Options exercised	(49,221	)		(5.08	)	(5.08	)	(250	)
Options outstanding at March 31, 2006	491,523		$	5.08-20.19		7.38		3,625

Stock-Based Compensation. Prior to January 1, 2006, the Company’s stock option plans were accounted for under the recognition and measurement provisions of APB Opinion No. 25 (Opinion 25),Accounting for Stock Issued to Employees, and related Interpretations, as permitted by FASB Statement No. 123,Accounting for Stock-Based Compensation (as amended by SFAS No. 148,Accounting for Stock-Based Compensation Transition and Disclosure) (collectively SFAS 123). No stock-based employee compensation cost was recognized in the Company’s Statements of Earnings through December 31, 2005, as all options granted under the plans had an exercise price equal to the market value of the underlying common stock on the date of grant. Effective January 1, 2006, the Company adopted the fair value recognition provisions of FASB Statement No. 123(R),Share-Based Payment(SFAS 123R), using the modified-prospective-transition method. Under that transition method, compensation cost recognized in 2006 includes: (a) compensation cost for all share-based payments granted prior to, but not yet vested as of January 1, 2006, based on the grant date fair value calculated in accordance with the original provisions of SFAS 123, and (b) compensation cost for all share-based payments granted subsequent to December 31, 2005, based on the grant-date fair value estimated in accordance with the provisions of SFAS 123(R). As of December 31, 2005, all stock options were fully vested.

In 2005, the Company’s Board of Directors approved the acceleration of vesting of all outstanding stock options that existed as of December 31, 2005 (the “Acceleration”). In accordance with SFAS 123, in 2005 the Company expensed the remaining unrecognized compensation cost associated with the options with accelerated vesting in the pro forma disclosure. These actions were taken in order to avoid expense recognition in future financial statements upon adoption of SFAS 123(R).

(continued)

9

FIRST COMMUNITY BANK CORPORATION OF AMERICA AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited), Continued

4. Stock Option Plans, Continued. The effect of adopting SFAS 123(R) on January 1, 2006, was immaterial to the Company’s earnings before income taxes for the three-months ended March 31, 2006. As of March 31, 2006, the Company had 6,000 nonvested options outstanding and there was $34,000 of total unrecognized compensation cost related to these nonvested options. This cost is expected to be recognized monthly on a straight line basis.

The following table illustrates the effect on net earnings and earnings per share if the Company had applied the fair value recognition provisions of SFAS 123 to options granted under the Company’s stock option plan for the three months ended March 31, 2005. All per share amounts have been adjusted to reflect the three-for-two stock split declared in December 2005. For purposes of this pro forma disclosure, the value of the options is estimated using the Black-Scholes option-pricing model and is being amortized to expense over the options’ vesting periods (in thousands, except per share data).

	Three Months Ended March 31, 2005
Net earnings, as reported	$	630
Deduct: Total stock-based employee compensation expense determined under fair value based method for all awards		(81	)
Proforma net earnings	$	549
Basic earnings per share:
As reported	$	.19
Proforma	$	.17
Diluted earnings per share:
As reported	$	.17
Proforma	$	.15

(continued)

10

FIRST COMMUNITY BANK CORPORATION OF AMERICA AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited), Continued

4. Stock Option Plans, Continued.The fair value of each option granted for the three months ended March 31, 2006 and 2005 is estimated on the date of grant using the Black-Scholes option-pricing model with the following assumptions ($ in thousands):

	Three Months Ended March 31,
	2006			2005
Risk-free interest rate		4.61	%	3.98	%
Dividend yield		—		—
Expected volatility		9	%	10	%
Expected life in years		7		4
Per share grant-date fair value of options issued during the year	$	5.63		4.37

5. Regulatory Capital. The Bank is required to maintain certain minimum regulatory capital requirements. At March 31, 2006, the Bank was in compliance with its regulatory capital requirements.

6. Reclassifications. Certain reclassification of prior period amounts have been made to conform to the current period presentation.

11

FIRST COMMUNITY BANK CORPORATION OF AMERICA AND SUBSIDIARIES

Review by Independent Registered Public Accounting Firm

Hacker, Johnson & Smith PA, the Company’s independent registered public accounting firm, have made a limited review of the financial data as of March 31, 2006, and for the three-month periods ended March 31, 2006 and 2005 presented in this document, in accordance with standards established by the Public Company Accounting Oversight Board.

Their report furnished pursuant to Article 10 of Regulation S-X is included herein.

12

Report of Independent Registered Public Accounting Firm

First Community Bank Corporation of America

Pinellas Park, Florida:

We have reviewed the accompanying interim condensed consolidated balance sheet of First Community Bank Corporation of America and Subsidiaries (the “Company”) as of March 31, 2006 and the related interim condensed consolidated statements of earnings, changes in stockholders’ equity and cash flows for the three-month periods ended March 31, 2006 and 2005. These interim financial statements are the responsibility of the Company’s management.

We conducted our reviews in accordance with the standards of the Public Company Accounting Oversight Board (United States). A review of interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the Public Company Accounting Oversight Board, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.

Based on our reviews, we are not aware of any material modifications that should be made to the accompanying interim condensed consolidated financial statements for them to be in conformity with U.S. generally accepted accounting principles.

We have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board, the consolidated balance sheet of the Company as of December 31, 2005, and the related consolidated statements of earnings, changes in stockholders’ equity and cash flows for the year then ended (not presented herein); and in our report dated February 24, 2006, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying condensed consolidated balance sheet as of December 31, 2005, is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived.

/s/ Hacker, Johnson & Smith PA

HACKER, JOHNSON & SMITH PA

Tampa, Florida

April 25, 2006

13

FIRST COMMUNITY BANK CORPORATION OF AMERICA AND SUBSIDIARIES

Item 2. Management’s Discussion and Analysis of

Financial Condition and Results of Operations

Forward Looking Statements

This document contains forward-looking statements as defined by Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements involve substantial risks and uncertainties. When used in this document, or in the documents incorporated by reference, the words “anticipate”, “believe”, “estimate”, “may”, “intend” and “expect” and similar expressions are some of the forward-looking statements used in these documents. Actual results, performance, or achievements could differ materially from those contemplated, expressed or implied by the forward-looking statements. Factors which may cause results to change materially include competition, inflation, general economic conditions, changes in interest rates, and changes in the value of collateral securing loans First Community Bank Corporation of America has made, among other things.

General

First Community Bank Corporation of America (the “Holding Company”) owns all of the outstanding common stock of First Community Bank of America (the “Bank”) and First Community Lender Services, Inc. (“FCLS”) (collectively, the “Company”). The Holding Company’s primary business activity is the operations of the Bank. The Bank is a federally-chartered stock savings bank that provides a variety of banking services to small and middle market businesses and individuals through its three banking offices located in Pinellas County and one banking office located in Charlotte County and Hillsborough County, Florida. FCLS had minimal activity during the three months ended March 31, 2006 and 2005.

Liquidity and Capital Resources

The Company’s primary source of cash during the three months ended March 31, 2006, was from net deposit inflows of approximately $7.7 million proceeds from Federal Home Loan Bank advances of $31.5 million and principle repayments and calls of securities of approximately $1.7 million. Cash was used primarily to originate net loans of approximately $26.8 million to repay Federal Home Loan Bank advance of $25.5 million and purchase securities of approximately $2.7 million. At March 31, 2006, the Bank exceeded its regulatory liquidity requirements.

Off-Balance Sheet Arrangements

The Company is a party to financial instruments with off-balance-sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments include commitments to extend credit, unused lines of credit and standby letters of credit. These instruments involve, to varying degrees, elements of credit and interest-rate risk in excess of the amounts recognized in the condensed consolidated balance sheet. The contract amounts of these instruments reflect the extent of the Company’s involvement in particular classes of financial instruments.

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FIRST COMMUNITY BANK CORPORATION OF AMERICA AND SUBSIDIARIES

The Company’s exposure to credit loss in the event of nonperformance by the other party to the financial instrument for commitments to extend credit, unused lines of credit and standby letters of credit is represented by the contractual amount of those instruments. The Company uses the same credit policies in making commitments as it does for on-balance-sheet instruments.

Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since many of the commitments are expected to expire without being drawn upon, the total committed amounts do not necessarily represent future cash requirements. The Company evaluates each customer’s credit worthiness on a case-by-case basis. The amount of collateral obtained, if it is deemed necessary by the Company upon extension of credit, is based on management’s credit evaluation of the counter party.

Standby letters of credit are conditional lending commitments issued by the Company to guarantee the performance of a customer to a third party and to support public and private borrowing arrangements. Essentially all letters of credit issued have expiration dates within one year. The credit risk involved in issuing letters-of-credit is essentially the same as that involved in extending loan facilities to customers. The Company generally holds collateral supporting these commitments.

Unused lines of credit and commitments to extend credit typically result in loans with a market interest rate.

A summary of the amounts of the Company’s financial instruments, with off-balance sheet risk at March 31, 2006, follows (in thousands):

	Contract Amount
Commitments to extend credit	$	3,301
Unused lines of credit	$	31,316
Standby letters of credit	$	1,416

Management believes that the Company has adequate resources to fund all of its commitments and that substantially all its existing commitments will be funded within the next twelve months.

15

FIRST COMMUNITY BANK CORPORATION OF AMERICA AND SUBSIDIARIES

Selected Financial Information

The following rates are presented for the dates and periods indicated:

	Three Months Ended March 31, 2006		Year Ended December 31, 2005		Three Months Ended March 31, 2005
Average equity as a percentage of average assets	9.18	%	9.03	%	9.51	%
Equity to total assets at end of period	8.89	%	8.98	%	9.20	%
Return on average assets (1)	1.03	%	1.02	%	1.00	%
Return on average equity (1)	11.23	%	11.34	%	10.51	%
Noninterest expenses to average assets (1)	2.88	%	2.79	%	2.71	%
Nonperforming assets as a percentage of total assets at end of period	.06	%	—	%	.01	%

(1) Annualized for the three months ended March 31.

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FIRST COMMUNITY BANK CORPORATION OF AMERICA AND SUBSIDIARIES

Results of Operations

The following table sets forth, for the periods indicated, information regarding (i) the total dollar amount of interest and dividend income of the Company from interest-earning assets and the resultant average yields; (ii) the total dollar amount of interest expense on interest-bearing liabilities and the resultant average cost; (iii) net interest income; (iv) interest-rate spread; and (v) net interest margin.

	Three Months Ended March 31,
	2006						2005
	Average Balance		Interest and Dividends		Average Yield/ Rate		Average Balance		Interest and Dividends		Average Yield/ Rate
	(Dollars in thousands)
Interest-earning assets:
Loans (1)	$	279,697		5,122	7.33	%	$	211,269		3,414	6.46	%
Securities		15,520		132	3.40			15,421		95	2.46
Other interest-earning assets (2)		11,414		70	2.45			11,326		46	1.62
Total interest-earning assets		306,631		5,324	6.95			238,016		3,555	5.97
Noninterest-earning assets		22,003						14,180
Total assets	$	328,634					$	252,196
Interest-bearing liabilities:
Savings, NOW, money-market deposit accounts		94,017		441	1.88			79,680		178	.89
Time deposits		122,446		1,183	3.87			97,724		660	2.70
Total interest-bearing deposits		216,463		1,624	3.00			177,404		838	1.89
Other interest-bearing liabilities (3)		23,699		235	3.97			13,048		104	3.19
Total interest-bearing liabilities		240,162		1,859	3.10			190,452		942	1.98
Noninterest-bearing liabilities		58,311						37,759
Stockholders’ equity		30,161						23,985
Total liabilities and stockholders’ equity	$	328,634					$	252,196
Net interest income			$	3,465					$	2,613
Interest-rate spread (4)					3.85	%					3.99	%
Net interest margin (5)					4.52	%					4.39	%
Ratio of average interest-earning assets to average interest-bearing liabilities		1.28						1.25

(1) Includes non-performing loans.

(2) Includes Federal Home Loan Bank stock and interest-bearing deposits with banks.

(3) Includes Federal Home Loan Bank advances and other borrowings.

(4) Interest-rate spread represents the difference between the average yield on interest-earning assets and the average rate of interest-bearing liabilities.

(5) Net interest margin is net interest income divided by average interest-earning assets.

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FIRST COMMUNITY BANK CORPORATION OF AMERICA AND SUBSIDIARIES

Comparison of the Three-Month Periods Ended March 31, 2006 and 2005

General. Our net earnings for the three months ended March 31, 2006, increased to $847,000 or $.22 earnings per basic share and $.21 earnings per diluted share compared to $630,000 or $.19 earnings per basic share and $.17 per diluted share for the three months ended March 31, 2005. Net earnings increased primarily due to an increase in net interest income, which was partially offset by an increase in noninterest expenses and income taxes.

Net Interest Income. Interest income increased to $5.3 million during the three months ended March 31, 2006, from $3.6 million in 2005. Interest on loans for the three months ended March 31, 2006 increased to $5.1 million from $3.4 million for the three months ended March 31, 2005. The increase in interest on loans was primarily due to an increase in the average balance of loans to $279.7 million, during the three months ended March 31, 2006 compared to $211.3 million, during the three months ended March 31, 2005. This increase was also due to an increase in the average yield earned to 7.33% for the three months ended March 31, 2006 from 6.46% for the three months ended March 31, 2005. Interest on securities increased to $132,000 during the three months ended March 31, 2006 from $95,000 for the three months ended March 31, 2005. The increase in interest income on securities was due to a increase in average yield earned from 2.46% in 2005 to 3.40% in 2006.

Interest expense on interest bearing deposit accounts increased to $1.6 million during the three months ended March 31, 2006, compared to $838,000 during the three months ended March 31, 2005. The increase was due to a increase in the rate paid to 3.00% during the three months ended March 31, 2006 from 1.89% during the three months ended March 31, 2005, and an increase in the average balance of interest bearing deposits to $216.4 million in 2006 from $177.4 million in 2005. Interest expense on other borrowings increased to $235,000 during the three months ended March 31, 2006, compared to $104,000 during the three months ended March 31, 2005. The increase was due to an increase in the average balance of other borrowings to $23.7 million in 2006 from $13.0 million in 2005, and an increase in the average rate paid on other borrowings to 3.97% during the three months ended March 31, 2006 compared to 3.19% during the three months ended March 31, 2005.

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FIRST COMMUNITY BANK CORPORATION OF AMERICA AND SUBSIDIARIES

Comparison of the Three-Month Periods Ended March 31, 2006 and 2005, Continued

Provision for Loan Losses.Calculating the allowance for loan losses is divided into two primary allocation groups: (1) specific allocation loans and (2) all other passing grade loans. For specific allocation loans, the Company has determined an allowance amount to set aside which it believes is sufficient to cover any potential collateral shortfall. Problem loans are identified by the loan officer, loan review, loan committee or by the examiners. Those loans identified as problem loans are assigned a risk grade. Loans graded special mention are multiplied by an inherent loss factor of 3% - 5% to determine the amount to be included in the allowance. Loans graded substandard are generally multiplied by a loss factor of 5% - 15%, loans graded doubtful are generally multiplied by a loss factor of 50% and loans graded loss are multiplied by a loss factor of 100%. In addition to the 5% - 15% and 50% on substandard and doubtful loans, respectively, the loans are individually reviewed for any additional reserve that may be necessary. All other loans, graded pass are multiplied by an historical experience factor to determine the appropriate level of the allowance for loan losses. In addition to historical experience factors, the Company also provides for losses due to economic factors, concentration of credit risk and portfolio composition changes.

The provision for loan losses was $60,000 for the three months ended March 31, 2006 compared to $158,000 for the three months ended March 31, 2005. While continued economic weakness, rapidly rising interest rates, or other factors could cause stress on the loan portfolio and affect the levels of nonperforming assets and charge-offs, management believes that the levels of nonperforming assets and the charge-off ratio are stable under the current circumstances.

The allowance for loan losses is $3.5 million at March 31, 2006. While management believes that its allowance for loan losses is adequate as of March 31, 2006, future adjustments to the Company’s allowance for loan losses may be necessary if economic conditions differ substantially from the assumptions used in making the initial determination.

Noninterest Income. Noninterest income increased to $299,000 in 2006 from $251,000 for the three- months ended March 31, 2005. The increase is primarily due to an increase in service charges on deposit accounts, other service charges and fees and an increase in gains recognized on the sale of loans held for sale which was partially offset by a decrease in other noninterest income.

Noninterest Expense. Total noninterest expense increased to $2.4 million for the three months ended March 31, 2006 from $1.7 million for the comparable period ended March 31, 2005, primarily due to an increase in employee compensation and benefits to $1.6 million due to the opening of two new banking offices in the second and fourth quarters of 2005.

Income Taxes. Income taxes for the three months ended March 31, 2006, was $490,000 or 36.6% compared to $369,000 or 36.9% for the period ended March 31, 2005.

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FIRST COMMUNITY BANK CORPORATION OF AMERICA AND SUBSIDIARIES

Item 3. Controls and Procedures

a.Evaluation of disclosure controls and procedures. The Company maintains controls and procedures designed to ensure that information required to be disclosed in the reports that the Company files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission. Based upon their evaluation of those controls and procedures performed within 90 days of the filing date of this report, the Chief Executive and Chief Financial officers of the Company concluded that the Company’s disclosure controls and procedures were adequate.

b.Changes in internal controls. The Company made no significant changes in its internal controls or in other factors that could significantly affect these controls subsequent to the date of the evaluation of those controls by the Chief Executive and Chief Financial officers.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

There are no material pending legal proceeding to which First Community Bank Corporation of America and Subsidiaries, is a party or to which any of their property is subject.

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FIRST COMMUNITY BANK CORPORATION OF AMERICA AND SUBSIDIARIES

PART II. OTHER INFORMATION, CONTINUED

Item 6. Exhibits

Exhibits. The following exhibits were filed with the Securities and Exchange Commission.

Exhibit No.		Description of Exhibit
*	3.1	Amended and Restated Articles of Incorporation
*	3.2	Bylaws
*	4.1	Specimen Common Stock Certificate
*	4.3	Warrant Certificate
**	10.1	Employment Agreement of Kenneth P. Cherven dated June 16, 2002
*	10.2	First Amended and Restated Non-Employee Director Stock Option Plan
*	10.3	Long-Term Incentive Plan
*	10.4	Incentive Compensation Plan
***	10.5	Employment Agreement of Kenneth P. Cherven dated November 29, 2004
****	10.6	Deferred Compensation Plan of Kenneth P. Cherven dated January 1, 2005.
	31.1	Certification of Chief Executive Officer required by Rule 13a-14(a)/15d-14(a) under the Exchange Act
	31.2	Certification of Chief Financial Officer required by Rule 13a-14(a)/15d-14(a) under the Exchange Act
	32.1	Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of Sarbanes-Oxley Act of 2002
	32.2	Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of Sarbanes-Oxley Act of 2002
**	99.5	Audit Committee Charter

* Exhibits marked with an asterisk were submitted with the Company’s original filing of Form SB-2 on April 7, 2003.

** Exhibits marked with a double asterisk were submitted with the Company’s filing of its Amendment One to Form SB-2 on May 8, 2003.

*** Exhibits marked with triple asterisk were submitted with the Company’s filing of Form 10-QSB on May 13, 2005.

**** Exhibits marked with quadruple asterisk were submitted with the Company’s filing of Form 10-QSB on August 12, 2005.

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FIRST COMMUNITY BANK CORPORATION OF AMERICA AND SUBSIDIARIES

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	FIRST COMMUNITY BANK CORPORATION OF AMERICA
	(Registrant)
Date: May 4, 2006	By:	/s/Kenneth P. Cherven
		Kenneth P. Cherven, President and Chief
		Executive Officer
Date: May 4, 2006	By:	/s/John A. Stewart, Jr.
		John A. Stewart, Jr., Senior Vice President and
		Chief Financial Officer

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