First Community Bank Corp of America (FCFL) 10-Q 2007 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, 2007

¨ 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	4,067,667 shares
(class)	Outstanding at April 30, 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, 2007 (unaudited) and At December 31, 2006	2
	Condensed Consolidated Statements of Earnings - Three Months ended March 31, 2007 and 2006 (unaudited)	3
	Condensed Consolidated Statements of Changes in Stockholders' Equity - Three Months Ended March 31, 2007 and 2006 (unaudited)	4
	Condensed Consolidated Statements of Cash Flows - Three Months Ended March 31, 2007 and 2006 (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.	Quantitative and Qualitative Disclosures About Market Risk	20
Item 4.	Controls and Procedures	20
PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	20
Item 1A.	Risk Factors	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

(In thousands, except share amounts)

	March 31, 2007			December 31, 2006
	(Unaudited)
Assets
Cash and due from banks	$	1,811		2,219
Interest-bearing deposits with banks		12,689		9,308
Cash and cash equivalents		14,500		11,527
Other interest-bearing deposits with banks		651		431
Securities available for sale		3,133		4,188
Securities held to maturity		12,076		11,151
Loans, net of allowance for loan losses of $3,637 in 2007 and $3,499 in 2006		353,838		346,788
Federal Home Loan Bank stock, at cost		1,514		2,553
Premises and equipment, net		8,657		7,094
Foreclosed real estate		368		368
Accrued interest receivable		1,716		1,720
Deferred income taxes		1,471		1,673
Bank owned life insurance		2,416		2,395
Other assets		1,454		1,011
	$	401,794		390,899
Liabilities and Stockholders’ Equity
Liabilities:
Noninterest-bearing demand deposits		37,592		38,884
Savings, NOW and money-market deposits		109,810		103,020
Time deposits		188,694		157,806
Total deposits		336,096		299,710
Federal Home Loan Bank advances		18,000		42,500
Other borrowings		6,810		6,289
Accrued expenses and other liabilities		6,234		8,718
Total liabilities		367,140		357,217
Stockholders’ equity:
Common stock, $0.05 par value, 6,250,000 shares authorized, 4,067,667 and 3,840,687 shares issued and outstanding in 2007 and 2006		194		192
Additional paid-in capital		25,862		25,642
Retained earnings		8,600		7,852
Accumulated other comprehensive loss		(2	)	(4	)
Total stockholders’ equity		34,654		33,682
	$	401,794		390,899

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,
	2007		2006
Interest income:
Loans	$	6,629	5,122
Securities		192	132
Other interest earning assets		106	70
Total interest income		6,927	5,324
Interest expense:
Deposits		2,851	1,624
Other borrowings		334	235
Total interest expense		3,185	1,859
Net interest income		3,742	3,465
Provision for loan losses		137	60
Net interest income after provision for loan losses		3,605	3,405
Noninterest income:
Service charges on deposit accounts		188	154
Other service charges and fees		53	54
Income from bank owned life insurance		21	21
Gain on sale of loans held for sale		32	48
Other		47	22
Total noninterest income		341	299
Noninterest expenses:
Employee compensation and benefits		1,808	1,559
Occupancy and equipment		360	276
Data processing		239	207
Professional fees		46	55
Office supplies		66	53
Insurance		45	44
Other		201	173
Total noninterest expenses		2,765	2,367
Earnings before income taxes		1,181	1,337
Income taxes		431	490
Net earnings	$	750	847
Earnings per share:
Basic earnings per share	$	.18	.21
Diluted earnings per share	$	.17	.20
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, 2007 and 2006

(In thousands, except share amounts)

	Common Stock				Additional			Accumulated Other
	Shares		Amount		Paid-in Capital	Retained Earnings		Comprehensive Loss		Total
Balance at December 31, 2005	3,747,582		$	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)	49,221			2	248	—		—		250
Three-for-two stock split, fractional shares paid in cash (unaudited)	(53	)		—	—	—		—		—
Tax benefit from stock options exercised (unaudited)	—			—	188	—		—		188
Balance at March 31, 2006 (unaudited)	3,796,750		$	189	25,262	5,047		(50	)	30,448
Balance at December 31, 2006	3,840,687			192	25,642	7,852		(4	)	33,682
Comprehensive income:
Net earnings (unaudited)	—			—	—	750		—		750
Net change in unrealized loss on securities available for sale, net of taxes of $2 (unaudited)	—			—	—	—		2		2
Comprehensive income (unaudited)										752
Exercise of stock options before 5% stock dividend (unaudited)	22,811			1	146	—		—		147
5% stock dividend, net of fractional shares paid in cash (unaudited)	193,047			—	—	(2	)	—		(2	)
Exercise of stock options after 5% stock dividend (unaudited)	11,122			1	62	—		—		63
Stock option expense (unaudited)	—			—	12	—		—		12
Balance at March 31, 2007 (unaudited)	4,067,667		$	194	25,862	8,600		(2	)	34,654

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,
	2007			2006
Cash flows from operating activities:
Net earnings	$	750		847
Adjustments to reconcile net earnings to net cash (used in) provided by operating activities:
Provision for loan losses		137		60
Depreciation and amortization		123		129
Share-based compensation		12		—
Net amortization of deferred loan fees and costs		(72	)	36
Income from bank owned life insurance		(21	)	(21	)
Origination of loans held for sale		(3,693	)	(2,797	)
Proceeds from sale of loans held for sale		2,922		3,759
Gain on sale of loans held for sale		(32	)	(48	)
Decrease (increase) in accrued interest receivable		4		(39	)
Increase in other assets		(443	)	(362	)
(Decrease) increase in accrued expenses and other liabilities		(2,484	)	592
Deferred income taxes		200		—
Net cash (used in) provided by operating activities		(2,597	)	2,156
Cash flows from investing activities:
Net change in other interest-bearing deposits with banks		(220	)	192
Purchase of securities available for sale		(1,000	)	(500	)
Principal payments on securities available for sale		59		95
Proceeds from calls and maturities of securities available for sale		2,000		1,500
Purchase of securities held to maturity		(1,000	)	(2,160	)
Principal payments on securities held to maturity		75		112
Net increase in loans		(6,312	)	(26,794	)
Purchase of premises and equipment, net		(1,686	)	(35	)
Redemption (purchase) of Federal Home Loan Bank stock		1,039		(386	)
Net cash used in investing activities		(7,045	)	(27,976	)
Cash flows from financing activities:
Increase in deposits		36,386		7,655
Proceeds from Federal Home Loan Bank advances		—		31,500
Repayment of Federal Home Loan Bank advances		(24,500	)	(25,500	)
Net increase in other borrowings		521		2,213
Fractional shares of stock dividend paid in cash		(2	)	—
Proceeds from exercise of stock options		210		250
Tax benefits from stock options exercised		—		188
Net cash provided by financing activities		12,615		16,306
Net increase (decrease) in cash and cash equivalents		2,973		(9,514	)
Cash and cash equivalents at beginning of period		11,527		21,698
Cash and cash equivalents at end of period	$	14,500		12,184

(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,
	2007		2006
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest	$	2,935	1,813
Income taxes	$	50	200
Noncash transaction-
Accumulated other comprehensive income (loss), net change in unrealized gain (loss) on securities available for sale, net of income taxes	$	2	16

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 operation of the Bank. The Bank is a federally-chartered stock savings bank providing a variety of banking services to small and middle market businesses and individuals through its three banking offices located in Pinellas County, one banking office in Pasco County, one banking office located in Charlotte County, and two offices located in Hillsborough County, Florida. FCLS had minimal activity during the three months ended March 31, 2007 and 2006.

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, 2007 and the results of operations and cash flows for the three-month periods ended March 31, 2007 and 2006. The results of operations and other data for the three- month period ended March 31, 2007 are not necessarily indicative of results that may be expected for the year ending December 31, 2007.

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

	Three Months Ended March 31,
	2007			2006
Balance at beginning of period	$	3,499		3,416
Provision for loan losses		137		60
Charge-offs		(1	)	—
Recoveries		2		—
Balance at end of period	$	3,637		3,476

Impaired collateral dependent loans are as follows (in thousands):

	At March 31,
	2007		2006
Balance at end of period	$	973	189
Total related allowance for losses	$	102	4
	Three Months Ended March 31,
	2007		2006
Average investment in impaired loans	$	974	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,
	2007		2006
Nonaccrual loans	$	973	189
Past due ninety days or more, still accruing		—	—
	$	973	189

Loans Held for Sale.At March 31, 2007 and December 31, 2006 loans held for sale were $1,264,000 and $461,000, 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 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 5% stock dividend declared in January 2007 and paid in February 2007. The following table presents the calculations of EPS (dollars in thousands, except per share amounts).

	Three Months Ended March 31,
	2007					2006
	Earnings		Weighted- Average Shares	Per Share Amount		Earnings		Weighted- Average Shares	Per Share Amount
Basic EPS:
Net earnings available to common stockholders	$	750	4,058,637	$	0.18	$	847	3,986,588	$	0.21
Effect of dilutive securities-
Incremental shares from assumed conversion of options			273,212					294,005
Diluted EPS:
Net earnings available to common stockholders and assumed conversions	$	750	4,331,849	$	0.17	$	847	4,280,593	$	0.20

The following options were excluded from the calculation of EPS for the three months ended March 31, 2007 due to the exercise price being above the average market price:

	Number Outstanding	Year Granted	Exercise Price		Expire
Options	32,550	2006	$	19.51	2012-2016

(continued)

8

FIRST COMMUNITY BANK CORPORATION OF AMERICA AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited), Continued

4.  Stock-Based Compensation. Prior to January 1, 2006, the Company’s stock option plans were accounted for under the recognition and measurement provisions of Accounting Principles Board (APB) Opinion No. 25 (Opinion 25),Accounting for Stock Issued to Employees, and related Interpretations, as permitted by Financial Accounting Standards Board (FASB) Statement No. 123,Accounting for Stock-Based Compensation (as amended by Statement of Financial Accounting Standards (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 consolidated 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 123(R)), 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). At December 31, 2005, all outstanding options had vested.

The Company has three stock option plans for directors and employees of the Company. Under the first two plans, the total number of options which may be granted to purchase common stock is 620,156 (amended) for employees and 516,797 (amended) for directors. At March 31, 2007, no options remain available for grant under the directors’ plan and 50,317 options remain available for grant under the employees’ plan. The total number of options which may be granted to purchase common stock under the third plan is 236,250 (amended) for either directors or employees. At March 31, 2007, 15,750 options remain available for grant under the third plan. The directors’ options vest immediately and have a life of five years. The employees’ options vest over periods up to four years and have terms up to 10 years.

A summary of the activity in the Company’s stock option plan is as follows. All amounts reflect the 5% stock dividend paid in February 2007 (dollars in thousands, except per share amounts):

	Number of Options		Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term	Aggregate Intrinsic Value
Outstanding at December 31, 2006	715,141		$	10.28
Options granted	10,500			18.71
Options exercised	(35,074	)		5.97
Options forfeited	(787	)		16.31
Outstanding at March 31, 2007	689,780		$	10.62	4.1 years	$	5,797
Exercisable at March 31, 2007	656,600		$	10.18	3.9 years	$	5,795

(continued)

9

FIRST COMMUNITY BANK CORPORATION OF AMERICA AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited), Continued

4.  Stock-Based Compensation, Continued. The total intrinsic value of options exercised during the three months ended March 31, 2007 and 2006 was $483,000 and $652,000, respectively and the tax benefit relating to the stock options exercised was $0 and $188,000, respectively. At March 31, 2007, there was approximately $159,000 of total unrecognized compensation expense related to nonvested share-based compensation arrangements granted under the plans. The cost is expected to be recognized over a weighted-average period of 45 months. The total fair value of shares vesting and recognized as compensation expense was approximately $12,000 and $0 for the three months ended March 31, 2007 and 2006, respectively. There was no associated tax benefit recognized for both the three months ended March 31, 2007 and 2006.

The fair value of each option granted for the three months ended March 31, 2007 and 2006 is estimated on the date of grant using the Black-Scholes option-pricing model with the following assumptions:

	Three Months Ended March 31,
	2007			2006
Risk-free interest rate		4.71	%	4.61	%
Expected dividend yield		—		—
Expected volatility		8	%	9	%
Expected life in years		6		7
Per share grant-date fair value of options issued during the year	$	4.63		5.63

As part of its adoption of SFAS 123(R), the Company examined its historical pattern of option exercises in an effort to determine if there were any pattern based on certain employee populations. From this analysis, the Company could not identify any patterns in the exercise of options. As such, the Company used the guidance in Staff Accounting Bulletin No. 107 to determine the estimated life of options issued subsequent to the adoption of SFAS 123(R). The expected volatility is based on historical volatility of similar peer banks’ common stock. The risk-free rate for periods within the contractual life of the option is based on U.S. Treasury yield curve in effect at the time of grant. The expected dividend yield assumption is based on the Company’s history and expectation of dividend payments.

(continued)

10

FIRST COMMUNITY BANK CORPORATION OF AMERICA AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited), Continued

5.  Regulatory Capital. The Bank is required to maintain certain minimum regulatory capital requirements. At March 31, 2007, the Bank was in compliance with its regulatory capital requirements.

6.  Sale-Leaseback Transaction. The Bank sold its office properties in St. Petersburg and Pinellas Park, Florida on May 17, 2006, and simultaneously leased both properties with favorable long-term leases. An immediate gain of approximately $225,000 was recognized on one of the properties because of the excess gain over the present value of the lease payments. The remaining gain of approximately $2.6 million was deferred and is being amortized using the straight-line method over the ten year lease term. The lease expense is being straight-lined over the ten year lease life due to yearly 2% CPI increases.

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, 2007, and for the three-month periods ended March 31, 2007 and 2006 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

The Board of Directors and Stockholders

First Community Bank Corporation of America

Pinellas Park, Florida:

We have reviewed the accompanying condensed consolidated balance sheet of First Community Bank Corporation of America and Subsidiaries (the “Company”) as of March 31, 2007 and the related condensed consolidated statements of earnings, changes in stockholders’ equity and cash flows for the three-month periods ended March 31, 2007 and 2006. 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, 2006, 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 March 22, 2007, 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, 2006, 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

May 2, 2007

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 operation of the Bank. The Bank is a federally-chartered stock savings bank providing a variety of banking services to small and middle market businesses and individuals through its three banking offices located in Pinellas County, one banking office located in Pasco County, one banking office located in Charlotte County and two offices located in Hillsborough County, Florida. FCLS had minimal activity during the three months ended March 31, 2007 and 2006.

Liquidity and Capital Resources

The Company’s primary source of cash during the three months ended March 31, 2007, was from net deposit inflows of approximately $36 million. Cash was used primarily to originate net loans of approximately $6 million and to repay Federal Home Loan Bank advance of $25 million.

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.

14

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, 2007, follows (in thousands):

	Contract Amount
Commitments to extend credit	$	15,839
Unused lines of credit	$	38,212
Standby letters of credit	$	2,383

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, 2007		Year Ended December 31, 2006		Three Months Ended March 31, 2006
Average equity as a percentage of average assets	8.64	%	8.90	%	9.18	%
Equity to total assets at end of period	8.62	%	8.62	%	8.89	%
Return on average assets (1)	0.77	%	1.03	%	1.03	%
Return on average equity (1)	8.87	%	11.59	%	11.23	%
Noninterest expenses to average assets (1)	2.83	%	2.95	%	2.88	%
Nonperforming assets as a percentage of total assets at end of period	0.33	%	0.13	%	0.06	%

(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,
	2007						2006
	Average Balance		Interest and Dividends		Average Yield/ Rate		Average Balance		Interest and Dividends		Average Yield/ Rate
	(Dollars in thousands)
Interest-earning assets:
Loans (1)	$	349,703		6,629	7.58	%	$	279,697		5,122	7.33	%
Securities		16,003		192	4.80			15,520		132	3.40
Other interest-earning assets (2)		12,967		106	3.27			11,414		70	2.45
Total interest-earning assets		378,673		6,927	7.32			306,631		5,324	6.95
Noninterest-earning assets		18,206						22,003
Total assets	$	396,879					$	328,634
Interest-bearing liabilities:
Savings, NOW, money-market deposit accounts		111,014		639	2.30			94,017		441	1.88
Time deposits		180,367		2,212	4.91			122,446		1,183	3.87
Total interest-bearing deposits		291,381		2,851	3.91			216,463		1,624	3.00
Other interest-bearing liabilities (3)		27,289		334	4.90			23,699		235	3.97
Total interest-bearing liabilities		318,670		3,185	4.00			240,162		1,859	3.10
Noninterest-bearing liabilities		43,935						58,311
Stockholders’ equity		34,274						30,161
Total liabilities and stockholders’ equity	$	396,879					$	328,634
Net interest income			$	3,742					$	3,465
Interest-rate spread (4)					3.32	%					3.85	%
Net interest margin (5)					3.95	%					4.52	%
Ratio of average interest-earning assets to average interest-bearing liabilities		1.19						1.28

(1) Includes nonperforming 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, 2007 and 2006

General. Our net earnings for the three months ended March 31, 2007 was $750,000 or $.18 earnings per basic share and $.17 earnings per diluted share compared to $847,000 or $.22 earnings per basic share and $.21 per diluted share for the three months ended March 31, 2006. Net earnings decreased primarily due to an increase in noninterest expenses related to branch expansion and an investment in infrastructure to support future growth.

Net Interest Income. Interest income increased to $6.9 million during the three months ended March 31, 2007, from $5.3 million in 2006. Interest on loans for the three months ended March 31, 2007 increased to $6.6 million from $5.1 million for the three months ended March 31, 2006. The increase in interest on loans was primarily due to an increase in the average balance of loans to $349.7 million, during the three months ended March 31, 2007 compared to $279.7 million, during the three months ended March 31, 2006. This increase was also due to an increase in the average yield earned to 7.58% for the three months ended March 31, 2007 from 7.33% for the three months ended March 31, 2006. Interest on securities increased to $192,000 during the three months ended March 31, 2007 from $132,000 for the three months ended March 31, 2006. The increase in interest income on securities was due to a increase in average yield earned from 3.40% in 2006 to 4.80% in 2007.

Interest expense on interest-bearing deposit accounts increased to $2.9 million during the three months ended March 31, 2007, compared to $1.6 million during the three months ended March 31, 2006. The increase was due to a increase in the rate paid to 3.91% during the three months ended March 31, 2007 from 3.00% during the three months ended March 31, 2006, and an increase in the average balance of interest bearing deposits to $291.4 million in 2007 from $216.5 million in 2006. Interest expense on other borrowings increased to $334,000 during the three months ended March 31, 2007, compared to $235,000 during the three months ended March 31, 2006. The increase was due to an increase in the average balance of other borrowings to $27.3 million in 2007 from $23.7 million in 2006, and an increase in the average rate paid on other borrowings to 4.90% during the three months ended March 31, 2007 compared to 3.97% during the three months ended March 31, 2006.

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FIRST COMMUNITY BANK CORPORATION OF AMERICA AND SUBSIDIARIES

Comparison of the Three-Month Periods Ended March 31, 2007 and 2006, 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. In addition to historical experience factors, the Company also provides for losses due to economic factors, concentration of credit risk and portfolio composition changes. 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 5% to determine the amount to be included in the allowance. Loans graded substandard are multiplied by a loss factor of 10%, loans graded doubtful are multiplied by a loss factor of 50% and loans graded loss are multiplied by a loss factor of 100%. In addition to the 10% 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.

The provision for loan losses was $137,000 for the three months ended March 31, 2007 compared to $60,000 for the three months ended March 31, 2006. 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 $3.6 million at March 31, 2007. While management believes that its allowance for loan losses is adequate as of March 31, 2007, 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 $341,000 in 2007 from $299,000 for the three- months ended March 31, 2006. The increase is primarily due to an increase in service charges on deposit accounts and in other noninterest income.

Noninterest Expense. Total noninterest expense increased to $2.8 million for the three months ended March 31, 2007 from $2.4 million for the comparable period ended March 31, 2006, primarily due to an increase in employee compensation and benefits to $1.8 million from $1.6 million for the same period in 2006. The opening of a new banking office in the third quarter of 2006 added $134,000 in noninterest expense for the first quarter compared to same period in 2006. Additional investments were made in staffing and facilities to support future growth.

Income Taxes. Income taxes for the three months ended March 31, 2007, was $431,000 or 36.5% compared to $490,000 or 36.6% for the period ended March 31, 2006.

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FIRST COMMUNITY BANK CORPORATION OF AMERICA AND SUBSIDIARIES

Item 3. Quantitative and Qualitative Disclosures about Market Risk

Market risk is the risk of loss from adverse changes in market prices and rates. The Company’s market risk arises primarily from interest-rate risk inherent in its lending, investment and deposit taking activities. The Company has little or no risk related to trading accounts, commodities or foreign exchange.

Management actively monitors and manages its interest rate risk exposure. The primary objective in managing interest-rate risk is to limit, within established guidelines, the adverse impact of changes in interest rates on the Company’s net interest income and capital, while adjusting the Company’s asset-liability structure to obtain the maximum yield-cost spread on that structure. Management relies primarily on its asset-liability structure to control interest rate risk. However, a sudden and substantial increase in interest rates could adversely impact the Company’s earnings, to the extent that the interest rates borne by assets and liabilities do not change at the same speed, to the same extent, or on the same basis. There has been no significant change in the Company’s market risk exposure since December 31, 2006.

Item 4. 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 effective to ensure that the information required to be disclosed by the Company in the reports that it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the U.S. Securities and Exchange Commission’s rules and forms.

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.

Item 1A. Risk Factors

There have been no material changes to the risk factors disclosed in Item 1A“Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2006.

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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 15, 2007	By:	/s/ Kenneth P. Cherven
			Kenneth P. Cherven, President and Chief Executive Officer
Date:	May 15, 2007	By:	/s/ Stan B. McClelland
			Stan B. McClelland, Chief Financial Officer

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