First Community Bank Corp of America (FCFL) 10-Q 2007 Q3 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 September 30, 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	4,082,002 shares
(class)	Outstanding at November 1, 2007

FIRST COMMUNITY BANK CORPORATION OF AMERICA AND SUBSIDIARIES

INDEX

	Page
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheets - At September 30, 2007 (unaudited) and At December 31, 2006	2
Condensed Consolidated Statements of Earnings - Three and Nine Months ended September 30, 2007 and 2006 (unaudited)	3
Condensed Consolidated Statements of Changes in Stockholders’ Equity - Nine Months Ended September 30, 2007 and 2006 (unaudited)	4
Condensed Consolidated Statements of Cash Flows - Nine Months Ended September 30, 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	14-22
Item 3. Quantitative and Qualitative Disclosures About Market Risk	23
Item 4. Controls and Procedures	23
PART II. OTHER INFORMATION
Item 1. Legal Proceedings	23
Item 1A. Risk Factors	23
Item 6. Exhibits	24
SIGNATURES	25

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)

	September 30, 2007		December 31, 2006
	(Unaudited)
Assets
Cash and due from banks	$	9,316	2,219
Interest-bearing deposits with banks		311	9,308
Cash and cash equivalents		9,627	11,527
Other interest-bearing deposits with banks		460	431
Securities available for sale		7,413	4,188
Securities held to maturity		11,394	11,151
Loans, net of allowance for loan losses of $3,890 in 2007 and $3,499 in 2006		368,371	346,788
Federal Home Loan Bank stock, at cost		1,739	2,553
Premises and equipment, net		9,611	7,094
Foreclosed real estate		612	368
Accrued interest receivable		1,870	1,720
Deferred income taxes		1,673	1,673
Bank owned life insurance		7,515	2,395
Other assets		1,524	1,011
	$	421,809	390,899
Liabilities and Stockholders’ Equity
Liabilities:
Noninterest-bearing demand deposits		32,458	38,884
Savings, NOW and money-market deposits		111,566	103,020
Time deposits		196,039	157,806
Total deposits		340,063	299,710
Federal Home Loan Bank advances		21,000	42,500
Other borrowings		17,468	6,289
Accrued expenses and other liabilities		6,885	8,718
Total liabilities		385,416	357,217
Stockholders’ equity:
Preferred stock, $0.01 par value, 2,000,000 shares authorized, no shares issued or outstanding		—	—
Common stock, $0.05 par value, 20,000,000 shares authorized, 4,082,002 and 3,840,687 shares issued and outstanding in 2007 and 2006		204	192
Additional paid-in capital		30,201	25,642
Retained earnings		5,957	7,852
Accumulated other comprehensive income (loss)		31	(4	)
Total stockholders’ equity		36,393	33,682
	$	421,809	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 September 30,			Nine Months Ended September 30,
	2007		2006	2007	2006
Interest income:
Loans	$	7,040	6,244	20,452	17,101
Securities		227	145	593	425
Other interest earning assets		70	48	477	168
Total interest income		7,337	6,437	21,522	17,694
Interest expense:
Deposits		3,243	2,247	9,267	5,816
Other borrowings		343	366	981	896
Total interest expense		3,586	2,613	10,248	6,712
Net interest income		3,751	3,824	11,274	10,982
Provision for loan losses		176	—	489	60
Net interest income after provision for loan losses		3,575	3,824	10,785	10,922
Noninterest income:
Service charges on deposit accounts		220	182	614	511
Other service charges and fees		75	72	186	171
Income from bank owned life insurance		77	22	120	64
Gain on sale of loans held for sale		26	42	130	137
Gain on sale of premises and equipment		—	—	—	225
Other		48	17	145	71
Total noninterest income		446	335	1,195	1,179
Noninterest expenses:
Employee compensation and benefits		1,760	1,809	5,355	5,085
Occupancy and equipment		379	333	1,110	868
Data processing		238	230	703	635
Professional fees		82	34	222	142
Office supplies		40	97	145	194
Insurance		51	51	145	138
Other		208	166	661	560
Total noninterest expenses		2,758	2,720	8,341	7,622
Earnings before income taxes		1,263	1,439	3,639	4,479
Income taxes		429	526	1,295	1,648
Net earnings	$	834	913	2,344	2,831
Earnings per share:
Basic earnings per share	$	0.20	0.23	0.58	0.71
Diluted earnings per share	$	0.19	0.21	0.54	0.66
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

Nine Months Ended September 30, 2007 and 2006

(In thousands, except share amounts)

	Common Stock				Additional Paid-in Capital	Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Total
	Shares		Amount
Balance at December 31, 2005	3,747,582		$	187	24,826	4,200		(66	)	29,147
Comprehensive income:
Net earnings (unaudited)	—			—	—	2,831		—		2,831
Net change in unrealized loss on securities available for sale, net of taxes of $33 (unaudited)	—			—	—	—		54		54
Comprehensive income (unaudited)										2,885
Exercise of stock options (87,658 shares) (unaudited)	87,658			5	528	—		—		533
Three-for-two stock split, fractional shares paid-in cash (unaudited)	(53	)		—	—	—		—		—
Tax benefit from stock options exercised (unaudited)	—			—	188	—		—		188
Share based compensation expense (unaudited)	—			—	11	—		—		11
Balance at September 30, 2006 (unaudited)	3,835,187		$	192	25,553	7,031		(12	)	32,764
Balance at December 31, 2006	3,840,687			192	25,642	7,852		(4	)	33,682
Comprehensive income:
Net earnings (unaudited)	—			—	—	2,344		—		2,344
Net change in unrealized loss on securities available for sale, net of taxes of $18 (unaudited)	—			—	—	—		35		35
Comprehensive income (unaudited)										2,379
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			10	4,227	(4,237	)	—		—
Fractional shares paid-in cash (unaudited)	—			—	—	(2	)	—		(2	)
Exercise of stock options after 5% stock dividend (unaudited)	25,457			1	144	—		—		145
Share based compensation expense (unaudited)	—			—	42	—		—		42
Balance at September 30, 2007 (unaudited)	4,082,002		$	204	30,201	5,957		31		36,393

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)

	Nine Months Ended September 30,
	2007				2006
Cash flows from operating activities:
Net earnings	$	2,344			2,831
Adjustments to reconcile net earnings to net cash provided by operating activities:
Provision for loan losses and costs		489			60
Depreciation and amortization		382			340
Net amortization of deferred loan fees and costs		(206	)		64
Net amortization of premium and discounts on securities		(21	)		—
Income from bank owned life insurance		(120	)		(64	)
Origination of loans held for sale		(13,076	)		(10,580	)
Proceeds from sale of loans held for sale		13,362		��	11,374
Gain on sale of loans held for sale		(130	)		(137	)
Gain on sale of premises and equipment		—			(225	)
Increase in accrued interest receivable		(150	)		(395	)
Decrease in other assets		(513	)		(1,015	)
(Decrease) increase in accrued expenses and other liabilities		(1,851	)		1,094
Share based compensation		42			11
Net cash provided by operating activities		552			3,358
Cash flows from investing activities:
Net change in other interest-bearing deposits with banks		(29	)		94
Purchase of securities available for sale		(5,809	)		(2,500	)
Principal payments on securities available for sale		147			266
Proceeds from maturities and calls of securities available for sale		2,500			5,500
Purchase of securities held to maturity		(1,000	)		(2,160	)
Proceeds from maturities of securities held to maturity		500			—
Principal payments on securities held to maturity		268			325
Net increase in loans		(22,266	)		(63,047	)
Sale (purchase) of premises and equipment, net		(2,899	)		2,409
Redemption (purchase) of Federal Home Loan Bank stock		814			(1,129	)
Purchase of bank owned life insurance		(5,000	)		—
Net cash used in investing activities		(32,774	)		(60,242	)
Cash flows from financing activities:
Increase in deposits		40,353			17,007
Repayment of Federal Home Loan Bank advances		(26,500	)		(76,500	)
Proceeds from Federal Home Loan Bank advances		5,000			99,000
Increase in other borrowings		11,179			2,590
Proceeds from exercise of stock options		292			533
Fractional shares of stock dividend paid in cash		(2	)		—
Repurchase of common stock		—			—
Tax benefit from common stock options exercised		—			188
Net cash provided by financing activities		30,322			42,818
Net decrease in cash and cash equivalents		(1,900	)		(14,066	)
Cash and cash equivalents at beginning of period		11,527			21,698
Cash and cash equivalents at end of period	$	9,627			7,632

(continued)

5

FIRST COMMUNITY BANK CORPORATION OF AMERICA AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows (Unaudited), Continued

(In thousands)

	Nine Months Ended September 30,
	2007		2006
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest	$	10,274	6,411
Income taxes	$	1,579	1,648
Noncash transactions:
Accumulated other comprehensive income, net change in unrealized gain (loss) on securities available for sale, net of income taxes	$	35	54
Transfer from loans to foreclosed real estate	$	244	—

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, two banking offices located in Charlotte County, and two offices located in Hillsborough County, Florida. FCLS had minimal activity during the nine months ended September 30, 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 September 30, 2007, the results of operations for the three- and nine-month periods ended September 30, 2007 and 2006 and cash flows for the nine-month periods ended September 30, 2007 and 2006. The results of operations and other data for the three- and nine-month periods ended September 30, 2007 are not necessarily indicative of results that may be expected for the year ending December 31, 2007.

2.Loan Impairment and Loan Losses.There were no loans identified as impaired during the three and nine months ended September 30, 2007 or 2006.

The activity in the allowance for loan losses is as follows (in thousands):

	Three Months Ended September 30,					Nine Months Ended September 30,
	2007			2006		2007		2006
Balance at beginning of period	$	3,811		3,474		3,499		3,416
Provision for loan losses		176		—		489		60
Charge-offs		(98	)	(14	)	(101	)	(17	)
Recoveries		1		1		3		2
Balance at end of period	$	3,890		3,461		3,890		3,461

Nonaccrual and past due loans were as follows (in thousands):

	At September 30,
	2007		2006
Nonaccrual loans	$	1,075	298
Past due ninety days or more, still accruing		—	—
	$	1,075	298

(continued)

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FIRST COMMUNITY BANK CORPORATION OF AMERICA AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited), Continued

3.Loans Held for Sale.At September 30, 2007 and December 31, 2006 loans held for sale approximated $305,000 and $461,000, respectively and are included in net loans on the condensed consolidated balance sheets.

4.Earnings Per Share (“EPS”).EPS 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 in January 2007. The following tables present the calculations of weighted-average shares outstanding:

	2007	2006
Three Months Ended September 30:
Weighted-average number of common shares outstanding used to calculate basic earnings per common share	4,079,274	4,009,613
Effect of dilutive stock options	204,888	296,469
Weighted-average number of common shares outstanding used to calculate diluted earnings per common share	4,284,162	4,306,082
Nine Months Ended September 30:
Weighted-average number of common shares outstanding used to calculate basic earnings per common share	4,070,244	3,994,349
Effect of dilutive stock options	233,355	293,663
Weighted-average number of common shares outstanding used to calculate diluted earnings per common share	4,303,599	4,288,012

The following options were excluded from the calculation of EPS due to the exercise price being above the average market price:

	Number Outstanding	Exercise Price		Expire
For the three months ended September 30, 2007:
Options	220,500	$	16.31	2011
	6,300		19.23	2012-2016
	5,250		19.52	2012-2016
	10,500		20.00	2012-2016
	10,500		19.19	2016
	10,500		18.71	2017
	6,850		18.57	2017

(continued)

8

FIRST COMMUNITY BANK CORPORATION OF AMERICA AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited), Continued

4.Earnings Per Share (“EPS”), Continued.

	Number Outstanding	Exercise Price		Expire
For the nine months ended September 30, 2007:
Options	6,300	$	19.23	2012-2016
	5,250		19.52	2012-2016
	10,500		20.00	2012-2016
	10,500		19.19	2016
	10,500		18.71	2017
	6,850		18.57	2017

5.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 516,797 (amended) for employees and 620,156 (amended) for directors. At September 30, 2007, no options remain available for grant under the directors’ plan and 39,253 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 September 30, 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.

(continued)

9

FIRST COMMUNITY BANK CORPORATION OF AMERICA AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited), Continued

5.Stock-Based Compensation, Continued. A summary of the activity in the Company’s stock option plans 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
Options granted	22,350
Options exercised	(49,409	)
Options forfeited	(1,574	)
Outstanding at September 30, 2007	686,508		$	10.71	3.7 years	$	3,105
Exercisable at September 30, 2007	649,098		$	10.35	4.0 years	$	3,040

The total intrinsic value of options exercised during the nine months ended September 30, 2007 and 2006 was $645,000 and $1,035,000, respectively and the tax benefit relating to the stock options exercised was $0 and $188,000, respectively. At September 30, 2007, there was approximately $124,000 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 36 months. The total fair value of shares vesting and recognized as compensation expense was approximately $42,000 and $11,000 for the nine months ended September 30, 2007 and 2006, respectively. There was no associated tax benefit recognized for both the nine months ended September 30, 2007 and 2006.

The fair value of each option granted for the three and nine months ended September 30, 2007 and 2006 is estimated on the date of grant using the Black-Scholes option-pricing model with the following assumptions:

	Three Months Ended September 30,					Nine Months Ended September 30,
	2007			2006		2007		2006
Risk-free interest rate		4.28	%	5.04	%	4.60	%	4.94	%
Expected dividend yield		—		—		—		—
Expected volatility		4	%	8	%	5	%	8	%
Expected life in years		6		6		6		5
Per share grant-date fair value of options granted during the period	$	3.28		5.25		4.26		4.79

(continued)

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FIRST COMMUNITY BANK CORPORATION OF AMERICA AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited), Continued

5.Stock-Based Compensation, Continued.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.

6.Regulatory Capital. The Bank is required to maintain certain minimum regulatory capital requirements. At September 30, 2007, the Bank was in compliance with its regulatory capital requirements.

7.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 2% annual 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, has made a limited review of the financial data as of September 30, 2007, and for the three- and nine- month periods ended September 30, 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 interim condensed consolidated balance sheet of First Community Bank Corporation of America and Subsidiaries (the “Company”) as of September 30, 2007, the related interim condensed consolidated statements of earnings for the three- and nine-month periods ended September 30, 2007 and 2006 and the related interim condensed consolidated statements of changes in stockholders’ equity and cash flows for the nine-month periods ended September 30, 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

November 6, 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, two banking offices located in Charlotte County and two offices located in Hillsborough County, Florida. FCLS had minimal activity during the nine months ended September 30, 2007 and 2006.

Liquidity and Capital Resources

The Company’s primary source of cash during the nine months ended September 30, 2007, was from net deposit inflows of approximately $40 million. Cash was used primarily to originate net loans of approximately $22 million and to repay Federal Home Loan Bank advance of $27 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.

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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 September 30, 2007, follows (in thousands):

	Contract Amount
Commitments to extend credit	$	20,534
Unused lines of credit	$	40,418
Standby letters of credit	$	2,293

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.

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FIRST COMMUNITY BANK CORPORATION OF AMERICA AND SUBSIDIARIES

Selected Financial Information

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

	Nine Months Ended September 30, 2007		Year Ended December 31, 2006		Nine Months Ended September 30, 2006
Average equity as a percentage of average assets	8.56	%	8.90	%	9.03	%
Equity to total assets at end of period	8.63	%	8.62	%	8.82	%
Return on average assets (1)	0.76	%	1.03	%	1.09	%
Return on average equity (1)	8.91	%	11.59	%	12.10	%
Noninterest expenses to average assets (1)	2.71	%	2.95	%	2.94	%
Nonperforming assets as a percentage of total assets at end of period	0.40	%	0.13	%	0.08	%

(1) Annualized for the nine months ended September 30.

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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 September 30,
	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)	$	365,621		7,040	7.70	%	$	324,213		6,244	7.70	%
Securities		17,716		227	5.13			13,857		145	4.19
Other interest-earning assets (2)		4,448		70	6.29			7,404		48	2.59
Total interest-earning assets		387,785		7,337	7.57			345,474		6,437	7.45
Noninterest-earning assets		30,082						14,914
Total assets	$	417,867					$	360,388
Interest-bearing liabilities:
Savings, NOW, money-market deposit accounts		110,395		687	2.49			91,269		662	2.90
Time deposits		199,451		2,556	5.13			144,903		1,585	4.38
Total interest-bearing deposits		309,846		3,243	4.19			236,172		2,247	3.81
Other interest-bearing liabilities (3)		30,066		343	4.56			30,868		366	4.74
Total interest-bearing liabilities		339,912		3,586	4.22			267,040		2,613	3.91
Noninterest-bearing liabilities		41,908						61,093
Stockholders' equity		36,047						32,255
Total liabilities and stockholders' equity	$	417,867					$	360,388
Net interest income			$	3,751					$	3,824
Interest-rate spread (4)					3.35	%					3.54	%
Net interest margin (5)					3.87	%					4.43	%
Ratio of average interest-earning assets to average interest-bearing liabilities		1.14						1.29

(1) Includes nonperforming loans.

(2) Includes Federal Home Loan Bank stock, overnight federal funds 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

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.

	Nine Months Ended September 30,
	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)	$	357,291		20,452	7.63	%	$	304,909		17,101	7.48	%
Securities		15,701		593	5.04			15,021		425	3.77
Other interest-earning assets (2)		11,877		477	5.35			9,284		168	2.41
Total interest-earning assets		384,869		21,522	7.46			329,214		17,694	7.17
Noninterest-earning assets		26,160						16,083
Total assets	$	411,029					$	345,297
Interest-bearing liabilities:
Savings, NOW, money-market deposit accounts		112,246		2,018	2.40			92,951		1,576	2.26
Time deposits		192,096		7,249	5.03			135,245		4,240	4.18
Total interest-bearing deposits		304,342		9,267	4.06			228,196		5,816	3.40
Other interest-bearing liabilities (3)		28,046		981	4.66			27,064		896	4.41
Total interest-bearing liabilities		332,388		10,248	4.11			255,260		6,712	3.51
Noninterest-bearing liabilities		43,462						58,843
Stockholders' equity		35,179						31,194
Total liabilities and stockholders' equity	$	411,029					$	345,297
Net interest income			$	11,274					$	10,982
Interest-rate spread (4)					3.35	%					3.66	%
Net interest margin (5)					3.91	%					4.45	%
Ratio of average interest-earning assets to average interest-bearing liabilities		1.16						1.29

(1) Includes nonperforming loans.

(2) Includes Federal Home Loan Bank stock, overnight federal funds 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 September 30, 2007 and 2006

General. Our net earnings for the three months ended September 30, 2007, decreased to $834,000 or $0.20 earnings per basic share and $0.19 earnings per diluted share compared to $913,000 or $0.23 earnings per basic share and $0.21 earnings per diluted share for the three months ended September 30, 2006. The $79,000 decline in third quarter earnings from the prior year reflects a $176,000 increase in provision for loan losses and a $73,000 decrease in net interest income as a result of narrowing spreads.

Net Interest Income. Interest income increased to $7.3 million during the three months ended September 30, 2007, from $6.4 million in 2006. Interest on loans for the three months ended September 30, 2007 increased to $7.0 million from $6.2 million for the three months ended September 30, 2006. The increase in interest on loans was primarily due to an increase in the average balance of loans to $366 million, during the three months ended September 30, 2007 compared to $324 million, during the three months ended September 30, 2006. The average yield earned, 7.70% for the three months ended September 30, 2007 was unchanged from 7.70% for the three months ended September 30, 2006. Interest on securities increased to $227,000 during the three months ended September 30, 2007 from $145,000 for the three months ended September 30, 2006. The increase in interest income on securities was due to an increase in the yield earned from 4.19% in 2006 to 5.13% in 2007, and an increase in the average balance of securities from $13.9 million in 2006 to $17.7 million in 2007.

Interest expense on interest bearing deposit accounts increased to $3.2 million during the three months ended September 30, 2007, compared to $2.2 million during the three months ended September 30, 2006. The increase was due to an increase in the average balance of interest bearing deposits to $310 million in 2007 from $236 million in 2006 and an increase in the average rate paid from 3.81% in 2006 to 4.19% in 2007. Interest expense on other borrowings decreased to $343,000 during the three months ended September 30, 2007, compared to $366,000 during the three months ended September 30, 2006. The decrease was due to a decrease in the average balance of other borrowings to $30.1 million in 2007 from $30.9 million in 2006, and a decrease in the average rate paid on other borrowings to 4.56% during the three months ended September 30, 2007 compared to 4.74% during the three months ended September 30, 2006.

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FIRST COMMUNITY BANK CORPORATION OF AMERICA AND SUBSIDIARIES

Comparison of the Three-Month Periods Ended September 30, 2007 and 2006

Provision for Loan Losses.Calculating the allowance for loan losses is divided into two primary allocation groups: (1) impaired loans and (2) all other passing grade loans. For impaired loans, the Bank has created a methodology which factors in the current market value of the collateral, deducts any related costs of collection and liquidation and the loan balance to determine any deficiency. This process is applied to each impaired loan, then the results are totaled and any possible deficiencies are provided for. The impaired loans are initially identified by the loan officer, loan review, or the credit officer/loan committee. The loans are assigned a risk grade which will move up or down according to the level of severity. On a quarterly basis the loans are evaluated as to the level of allocation towards the allowance. For the other passing grade loans in the portfolio, the methodology that was created factors in historical loss performance, political climate, national economic status, local economic status, local real estate market conditions and an event contingency factor. Each of these factors is given a weight that is totaled and the sum is multiplied by each type of loan product type to arrive at a total portfolio allowance allocation.

The provision for loan losses was $176,000 for the three months ended September 30, 2007 compared to $0 for the three months ended September 30, 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 $3.9 million at September 30, 2007. While management believes that its allowance for loan losses is adequate as of September 30, 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 $446,000 in 2007 from $335,000 for the three- months ended September 30, 2006 primarily due to an increase in service charges on deposit accounts and an increase in income from bank owned life insurance.

Noninterest Expense. Total noninterest expenses increased to $2.8 million for the three months ended September 30, 2007 from $2.7 million for the comparable period ended September 30, 2006, primarily due to an increase in occupancy expense of $46,000. The increase reflects the opening of a new banking office and an investment in infrastructure to support future growth.

Income Taxes. Income taxes for the three months ended September 30, 2007, were $429,000 or 34.0% compared to $526,000 or 36.6% for the period ended September 30, 2006.

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FIRST COMMUNITY BANK CORPORATION OF AMERICA AND SUBSIDIARIES

Comparison of the Nine-Month Periods Ended September 30, 2007 and 2006

General. Our net earnings for the nine months ended September 30, 2007, decreased to $2.3 million or $0.58 earnings per basic share and $0.54 earnings per diluted share compared to $2.8 million or $0.71 earnings per basic share and $0.66 earnings per diluted share for the nine months ended September 30, 2006. The first nine month 2006 results included a $225,000 pre-tax gain on the sale and lease back of bank facilities which contributed $0.04 per share in earnings. The first nine months of 2007 reflected a $429,000 increase in provision for loan losses and a $719,000 increase in noninterest expense reflecting an investment in new branches and infrastructure to support growth.

Net Interest Income. Interest income increased to $21.5 million during the nine months ended September 30, 2007, from $17.7 million in 2006. Interest on loans for the nine months ended September 30, 2007 increased to $20.5 million from $17.1 million for the nine months ended September 30, 2006. The increase in interest on loans was primarily due to an increase in the average balance of loans to $357 million, during the nine months ended September 30, 2007 compared to $305 million, during the nine months ended September 30, 2006. This increase was also due to an increase in the average yield earned to 7.63% for the nine months ended September 30, 2007 from 7.48% for the nine months ended September 30, 2006. Interest on securities increased to $593,000 during the nine months ended September 30, 2007 from $425,000 for the nine months ended September 30, 2006. The increase in interest income on securities was due to an increase in the average yield earned from 3.77% in 2006 to 5.04% in 2007 and a increase in the average balance of securities from $15.0 million in 2006 to $15.7 million in 2007.

Interest expense on interest-bearing deposit accounts increased to $9.3 million during the nine months ended September 30, 2007, compared to $5.8 million during the nine months ended September 30, 2006. The increase was due to an increase in the rate paid to 4.06% during the nine months ended September 30, 2007 from 3.40% during the nine months ended September 30, 2006, and an increase in the average balance of interest bearing deposits to $304 million in 2007 from $228 million in 2006. Interest expense on other borrowings increased to $981,000 during the nine months ended September 30, 2007, compared to $896,000 during the nine months ended September 30, 2006. The increase was due to an increase in the average rate paid on other borrowings to 4.66% during the nine months ended September 30, 2007 compared to 4.41% during the nine months ended September 30, 2006, and an increase in the average balance of other borrowings to $28.0 million in 2007 from $27.1 million in 2006.

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FIRST COMMUNITY BANK CORPORATION OF AMERICA AND SUBSIDIARIES

Comparison of the Nine-Month Periods Ended September 30, 2007 and 2006

Provision for Loan Losses.Calculating the allowance for loan losses is divided into two primary allocation groups: (1) impaired loans and (2) all other passing grade loans. For impaired loans, the Bank has created a methodology which factors in the current market value of the collateral, deducts any related costs of collection and liquidation and the loan balance to determine any deficiency. This process is applied to each impaired loan, then the results are totaled and any possible deficiencies are provided for. The impaired loans are initially identified by the loan officer, loan review, or the credit officer/loan committee. The loans are assigned a risk grade which will move up or down according to the level of severity. On a quarterly basis the loans are evaluated as to the level of allocation towards the allowance. For the other passing grade loans in the portfolio, the methodology that was created factors in historical loss performance, political climate, national economic status, local economic status, local real estate market conditions and an event contingency factor. Each of these factors is given a weight that is totaled and the sum is multiplied by each type of loan product type to arrive at a total portfolio allowance allocation.

The provision for loan losses was $489,000 for the nine months ended September 30, 2007 compared to $60,000 for the nine months ended September 30, 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 $3.9 million at September 30, 2007. While management believes that its allowance for loan losses is adequate as of September 30, 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 remained the same at the nine months ended September 30, 2006. However, the 2006 results included a $225,000 pre-tax gain on the sale and lease back of bank facilities. The 2007 noninterest income reflected a $103,000 increase in service charges on deposits, a $56,000 increase in income from bank owned life insurance and a $74,000 increase in other income.

Noninterest Expenses. Total noninterest expenses increased to $8.3 million for the nine months ended September 30, 2007 from $7.6 million for the comparable period ended September 30, 2006, primarily due to increases in employee compensation and benefits of $270,000 and in occupancy expense of $242,000 due to an investment in new branches and infrastructure to support growth.

Income Taxes. Income taxes for the nine months ended September 30, 2007, was $1.3 million or 35.6% compared to $1.6 million or 36.8% for the period ended September 30, 2006. The lower tax rate reflects an increase in tax-free municipal securities income and an increase in income from bank owned life insurance of $66,000 for the first nine months of 2007.

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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. The Bank is managing through the impact of recent declining interest rates and the subsequent pressure on spreads.

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: November 13, 2007	By:	/s/ Kenneth P. Cherven
		Kenneth P. Cherven, President and Chief Executive Officer
Date: November 13, 2007	By:	/s/ Stan B. McClelland
		Stan B. McClelland, Chief Financial Officer

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