First Community Bank Corp of America (FCFL) 10-Q 2009 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, 2009

¨ 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 has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  ¨    No  ¨

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

Large accelerated filer	¨	Accelerated filer	¨
Non-accelerated filer	¨  (Do not check if a smaller reporting company)	Smaller reporting company	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	4,151,431 shares
(class)	Outstanding at May 4, 2009

FIRST COMMUNITY BANK CORPORATION OF AMERICA AND SUBSIDIARIES

INDEX

PART I. FINANCIAL INFORMATION
	Page
Item 1. Financial Statements
Condensed Consolidated Balance Sheets - At March 31, 2009 (unaudited) and At December 31, 2008	2
Condensed Consolidated Statements of Earnings - Three Months Ended March 31, 2009 and 2008 (unaudited)	3
Condensed Consolidated Statements of Changes in Stockholders’ Equity - Three Months Ended March  31, 2009 and 2008 (unaudited)	4-5
Condensed Consolidated Statements of Cash Flows - Three Months Ended March 31, 2009 and 2008 (unaudited)	6-7
Notes to Condensed Consolidated Financial Statements (unaudited)	8-12
Review by Independent Registered Public Accounting Firm	13
Report of Independent Registered Public Accounting Firm	14
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	15-20
Item 3. Quantitative and Qualitative Disclosures About Market Risk	21
Item 4T. Controls and Procedures	21
PART II. OTHER INFORMATION
Item 1. Legal Proceedings	21
Item 1A. Risk Factors	21
Item 6. Exhibits	22
SIGNATURES	23

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, 2009			December 31, 2008
	(Unaudited)
Assets
Cash and due from banks	$	7,915		6,873
Interest-bearing deposits with banks		21,650		141
Federal funds sold		—		25,444
Cash and cash equivalents		29,565		32,458
Other interest-bearing deposits with banks		380		300
Securities available for sale		42,440		25,227
Securities held to maturity (market value of $7,602 and $7,781)		7,746		8,296
Loans, net of allowance for loan losses of $7,923 in 2009 and $8,230 in 2008		415,265		403,855
Federal Home Loan Bank stock, at cost		2,571		2,555
Premises and equipment, net		13,213		12,903
Foreclosed real estate		2,998		1,523
Accrued interest receivable		1,864		1,765
Deferred income taxes		3,501		3,501
Bank owned life insurance		7,802		7,762
Other assets		1,358		1,500
	$	528,703		501,645
Liabilities and Stockholders’ Equity
Liabilities:
Noninterest-bearing demand deposits		35,713		32,796
Savings, NOW and money-market deposits		145,940		123,098
Time deposits		254,527		246,977
Total deposits		436,180		402,871
Federal Home Loan Bank advances		36,000		38,000
Other borrowings		6,415		10,325
Accrued expenses and other liabilities		5,336		5,975
Total liabilities		483,931		457,171
Stockholders’ equity:
Preferred stock, $0.01 par value, 2,000,000 shares authorized, 10,685 shares issued and outstanding, at redemption value		10,685		10,685
Preferred stock discount		(30	)	(33	)
Common stock, $0.05 par value, 20,000,000 shares authorized, 4,151,431 and 4,111,121 shares issued and outstanding in 2009 and 2008		208		205
Additional paid-in capital		30,590		30,388
Retained earnings		2,763		2,843
Accumulated other comprehensive income		556		386
Total equity		44,772		44,474
	$	528,703		501,645

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,
	2009			2008
Interest income:
Loans	$	6,033		6,691
Securities		480		247
Other interest earning assets		9		100
Total interest income		6,522		7,038
Interest expense:
Deposits		2,626		2,745
Other borrowings		362		503
Total interest expense		2,988		3,248
Net interest income		3,534		3,790
Provision for loan losses		695		180
Net interest income after provision for loan losses		2,839		3,610
Noninterest income:
Service charges on deposit accounts		206		224
Other service charges and fees		50		37
Income from bank owned life insurance		40		82
Gain on sale of loans held for sale		2		25
Other		80		26
Total noninterest income		378		394
Noninterest expenses:
Employee compensation and benefits		1,759		1,906
Occupancy and equipment		420		417
Data processing		352		275
Professional fees		153		85
Office supplies		45		57
Insurance		118		208
Other		307		254
Total noninterest expenses		3,154		3,202
Earnings before income tax (benefit) expense		63		802
Income tax (benefit) expense		(6	)	253
Net earnings		69		549
Preferred stock dividend requirements and amortization of preferred stock discount		(149	)	—
Net (loss) earnings available for common stockholders	$	(80	)	549
(Loss) earnings per share:
Basic earnings per share	$	(.02	)	.13
Diluted earnings per share	$	(.02	)	.13
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, 2009 and 2008

(In thousands, except share amounts)

	Preferred Stock				Common Stock				Additional Paid-In		Retained	Accumulated Other Comprehensive		Total
	Shares	Amount		Discount	Shares		Amount		Capital		Earnings	Income
Balance at December 31, 2007	—	$	—	—	4,082,002		$	204	30,216		6,478	70		36,968
Comprehensive income:
Net earnings (unaudited)	—		—	—	—			—	—		549	—		549
Net change in unrealized gain on securities available for sale, net of taxes of $190 (unaudited)	—		—	—	—			—	—		—	(73	)	(73	)
Comprehensive loss (unaudited)														476
Exercise of stock options (unaudited)	—		—	—	35,141			1	168		—	—		169
Retirement of common stock (unaudited)	—		—	—	(6,022	)		—	(59	)	—	—		(59	)
Share-based compensation expense (unaudited)	—		—	—	—			—	6		—	—		6
Balance at March 31, 2008 (unaudited)	—	$	—	—	4,111,121		$	205	30,331		7,027	(3	)	37,560
														(continued	)

4

FIRST COMMUNITY BANK CORPORATION OF AMERICA AND SUBSIDIARIES

Condensed Consolidated Statements of Changes in Stockholders’ Equity, Continued

Three Months Ended March 31, 2009 and 2008

(In thousands, except share amounts)

	Preferred Stock					Common Stock			Additional Paid-In Capital	Retained Earnings		Accumulated Other Comprehensive Income	Total
	Shares	Amount		Discount		Shares	Amount
Balance at December 31, 2008	10,685	$	10,685	(33	)	4,111,121	$	205	30,388	2,843		386	44,474
Comprehensive income:
Net income (unaudited)	—		—	—		—		—	—	69		—	69
Net change in unrealized gain on securities available for sale, net of taxes of $102 (unaudited)	—		—	—		—		—	—	—		170	170
Comprehensive income (unaudited)													239
Exercise of stock options (unaudited)	—		—	—		40,310		3	192	—		—	195
Share-based compensation expense (unaudited)	—		—	—		—		—	10	—		—	10
Dividend on preferred stock to U.S. Treasury (unaudited)	—		—	—		—		—	—	(146	)	—	(146	)
Amortization of common stock warrants issued to U.S. Treasury (unaudited)	—		—	3		—		—	—	(3	)	—	—
Balance at March 31, 2009 (unaudited)	10,685	$	10,685	(30	)	4,151,431	$	208	30,590	2,763		556	44,772

See Accompanying Notes to Condensed Consolidated Financial Statements.

5

FIRST COMMUNITY BANK CORPORATION OF AMERICA AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows (Unaudited)

(In thousands)

	Three Months Ended March 31,
	2009			2008
Cash flows from operating activities:
Net earnings	$	69		549
Adjustments to reconcile net earnings to net cash provided by operating activities:
Provision for loan losses		695		180
Depreciation and amortization		148		141
Share-based compensation		10		6
Net amortization of deferred loan fees and costs		(64	)	(82	)
Net amortization of premium and discounts on securities		5		—
Income from bank owned life insurance		(40	)	(82	)
Origination of loans held for sale		—		(1,595	)
Proceeds from sale of loans held for sale		—		1,723
Gain on sale of loans held for sale		—		(25	)
(Increase) decrease in accrued interest receivable		(99	)	96
Decrease (increase) in other assets		142		(976	)
(Decrease) increase in accrued expenses and other liabilities		(741	)	763
Net gain on sale of foreclosed assets		(17	)	—
Net cash provided by operating activities		108		698
Cash flows from investing activities:
Net change in other interest-bearing deposits with banks		(80	)	198
Purchase of securities available for sale		(19,627	)	(12,609	)
Principal payments on securities available for sale		1,181		201
Proceeds from calls and maturities of securities available for sale		1,500		500
Proceeds from maturities of securities held to maturity		500		1,160
Principal payments on securities held to maturity		50		81
Net increase in loans		(13,590	)	(2,955	)
Purchase of premises and equipment, net		(458	)	(473	)
Proceeds from the sale of foreclosed real estate		91		—
Purchase of Federal Home Loan Bank stock		(16	)	(397	)
Net cash used in investing activities		(30,449	)	(14,294	)
Cash flows from financing activities:
Increase in deposits		33,309		27,941
Proceeds from Federal Home Loan Bank advances		—		20,000
Repayment of Federal Home Loan Bank advances		(2,000	)	(13,000	)
Decrease in other borrowings		(3,910	)	(5,630	)
Proceeds from exercise of stock options		195		169
Retirement of common stock		—		(59	)
Dividend on preferred stock to U.S. Treasury		(146	)	—
Net cash provided by financing activities		27,448		29,421
Net (decrease) increase in cash and cash equivalents		(2,893	)	15,825
Cash and cash equivalents at beginning of period		32,458		9,100
Cash and cash equivalents at end of period	$	29,565		24,925

(continued)

6

FIRST COMMUNITY BANK CORPORATION OF AMERICA AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows (Unaudited), Continued

(In thousands)

	Three Months Ended March 31,
	2009		2008
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest, net of capitalized interest	$	2,968	3,293
Income taxes	$	—	—
Noncash transactions:
Accumulated other comprehensive income (loss), net change in unrealized gain (loss) on securities available for sale, net of income taxes	$	170	(73	)
Transfer from loans to foreclosed real estate	$	1,549	—
Preferred dividend requirements and amortization of preferred stock discount	$	72	—

See Accompanying Notes to Condensed Consolidated Financial Statements.

7

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, two banking offices in Pasco County, three banking offices located in Charlotte County, and two offices located in Hillsborough County, Florida. FCLS had minimal activity during the three months ended March 31, 2009 and 2008.

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, 2009 and the results of operations and cash flows for the three-month periods ended March 31, 2009 and 2008. The results of operations and other data for the three- month period ended March 31, 2009 are not necessarily indicative of results that may be expected for the year ending December 31, 2009.

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

	Three Months Ended March 31,
	2009			2008
Balance at beginning of period	$	8,230		4,479
Provision for loan losses		695		180
Charge-offs		(1,043	)	(458	)
Recoveries		41		—
Balance at end of period	$	7,923		4,201

Impaired collateral dependent loans are as follows (in thousands) (includes $15,273 and $0 troubled debt restructured loans):

	At March 31,
	2009			2008
Loans identified as impaired:
Gross loans with no related allowance for loan losses	$	33,845		6,595
Gross loans with related allowance for losses recorded		2,021		1,183
Less: Allowances on these loans		(772	)	(253	)
Net investment in impaired loans	$	35,094		7,525
	Three Months Ended March 31,
	2009			2008
Average investment in impaired loans	$	30,333		5,203
Interest income recognized on impaired loans	$	209		—
Interest income received on impaired loans	$	209		—

(continued)

8

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,
	2009		2008
Nonaccrual loans	$	13,619	5,934
Past due ninety days or more, still accruing		—	—
	$	13,619	5,934

3. (Loss) Earnings Per Share (“EPS”).(Loss) earnings per share (“EPS”) of common stock has been computed on the basis of the weighted-average number of shares of common stock outstanding for the three months ended March 31, 2008. Outstanding stock options are considered dilutive securities for purposes of calculating diluted EPS which is computed using the treasury stock method. For the three months ended March 31, 2009, outstanding stock options and warrants are not considered dilutive securities due to the net loss available to common shareholders. 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,
	2009							2008
	(Loss)			Weighted- Average Shares	Per Share Amount			Earnings		Weighted- Average Shares	Per Share Amount
Basic EPS:
Net (loss) earnings available to common stockholders	$	(80	)	4,150,170	$	(.02	)	$	549	4,113,172	$	0.13
Effect of dilutive securities-
Incremental shares from assumed conversion of options				—						136,966
Diluted EPS:
Net (loss) earnings available to common stockholders and assumed conversions	$	(80	)	4,150,170	$	(.02	)	$	549	4,250,138	$	0.13

(continued)

9

FIRST COMMUNITY BANK CORPORATION OF AMERICA AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited), Continued

3. Earnings Per Share (“EPS”), Continued.The following options were excluded from the calculation of EPS for the three months ended March 31, 2008 due to the exercise price being above the average market price:

	Number Outstanding	Year Granted	Exercise Price		Expire
Options	220,500	2005	$	16.31	2011
	16,538	2004		13.53	2010-2014
	15,750	2005		15.24	2011-2015
	19,688	2005		15.36	2011
	12,602	2005		16.31	2011
	788	2005		16.80	2011
	6,300	2006		19.23	2012-2016
	5,250	2006		19.52	2012-2016
	10,500	2006		20.00	2012-2016
	4,200	2006		20.00	2016
	10,500	2007		18.71	2017
	6,850	2007		18.57	2017
	5,000	2007		14.75	2017

4. Stock-Based Compensation. The Company currently has two stock option plans for directors and employees of the Company. Under the plans, the total number of options which may be granted to purchase common stock is 620,156 (amended) for directors and 516,797 (amended) for employees. At March 31, 2009, no options remain available for grant under the directors’ plan and 34,973 options remain available for grant under the employees’ plan. The directors’ options vest immediately and have a life of five years. The employees’ options vest over periods up to four years and have terms up to 10 years.

The 2005 Stock Plan approved by shareholders in April 2006 was terminated by the Board of Directors and the options covering 220,500 shares were cancelled effective February 17, 2009 due to erratic market conditions, the conditions of the national, state and local economies, and out of a desire to evaluate and consider compensation plan options more appropriate to the current economy and regulatory environment.

(continued)

10

FIRST COMMUNITY BANK CORPORATION OF AMERICA AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited), Continued

4. 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, 2008	661,881		$	10.79
Options exercised	(40,310	)		4.84
Options forfeited	(6,234	)		10.32
Options terminated	(220,500	)		16.31
Outstanding at March 31, 2009	394,837		$	7.54	3.0 years	$	—
Exercisable at March 31, 2009	375,117		$	7.91	2.8 years	$	—

The total intrinsic value of options exercised during the three months ended March 31, 2009 and 2008 was $0 and $222,000, respectively. At March 31, 2009, there was approximately $62,000 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 nineteen months. The total fair value of shares vesting and recognized as compensation expense was approximately $10,000 and $6,000 for the three months ended March 31, 2009 and 2008, respectively. There was no associated tax benefit recognized for both the three months ended March 31, 2009 and 2008.

5. Regulatory Capital. The Bank is required to maintain certain minimum regulatory capital requirements. At March 31, 2009, the Bank was in compliance with its regulatory capital requirements.

6. Financial Covenant Compliance Status. First Community Bank Corporation of America has a $12 million line of credit with Silverton Bank. As of March 31, 2009, the Company has funded $2 million on this line. First Community Bank Corporation of America exceeded one of the ratios required in the covenants. First Community Bank of America’s ratio of nonperforming assets as a percent of gross loans was 3.93% on March 31, 2009 which exceeded the covenant limit of 1.50%. All other covenants are well within the prescribed limits. On May 1, 2009, Silverton Bank ceased operations therefore the Bank expects to relocate the line of credit within the next sixty days.

(continued)

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FIRST COMMUNITY BANK CORPORATION OF AMERICA AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited), Continued

7. Fair Value Measurements.Financial assets as of March 31, 2009 subject to fair value measurements on a recurring basis are as follows (in thousands):

			Fair Value Measurements at Reporting Date Using
	Fair Value		Quoted Prices In Active Markets for Identical Assets (Level 1)	Significant Other Observable Inputs (Level 2)	Significant Unobservable Inputs (Level 3)
Available for sale securities	$	42,440	—	42,440	—

Impaired collateral-dependent loans and foreclosed real estate are carried at fair value when the current collateral value is lower than the carrying value of the loan. Those impaired collateral-dependent loans which are measured at fair value on a nonrecurring basis are as follows (in thousands):

	At March 31, 2009							Losses Recorded in Operations For the Period Ended
	Fair Value			Level 1	Level 2	Level 3	Total Losses	March 31, 2009
Impaired loans	$	5,104	(1)	—	—	5,104	1,701	1,701
Foreclosed real estate	$	2,998		—	—	2,998	—	—

⁽¹⁾ Loans with a carrying value of $30,762,000 at March 31, 2009 were measured for impairment using Level 3 inputs and had a fair value in excess of carrying value.

12

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, 2009, and for the three-month periods ended March 31, 2009 and 2008 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.

13

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, 2009 and the related condensed consolidated statements of earnings, changes in stockholders’ equity and cash flows for the three-month periods ended March 31, 2009 and 2008. 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 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, 2008, and the related consolidated statements of operations, changes in stockholders’ equity and cash flow for the year then ended (not presented herein); and in our report dated March 24, 2009, 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, 2008, 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 5, 2009

14

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 four banking offices located in Pinellas County, two banking offices located in Pasco County, three banking offices located in Charlotte County and two offices located in Hillsborough County, Florida. FCLS had minimal activity during the three months ended March 31, 2009 and 2008.

Liquidity and Capital Resources

The Company’s primary source of cash during the three months ended March 31, 2009, was from net deposit inflows of approximately $33 million. Cash was used primarily to increase securities $17 million and to an increase in loans by $11 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.

15

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, 2009, follows (in thousands):

	Contract Amount
Commitments to extend credit	$	12,614
Unused lines of credit	$	34,594
Standby letters of credit	$	3,736

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:

	Three Months Ended March 31, 2009		Year Ended December 31, 2008		Three Months Ended March 31, 2008
Average equity as a percentage of average assets	8.65	%	8.03	%	8.35	%
Equity to total assets at end of period	8.48	%	8.87	%	8.04	%
Return on average assets (1)	0.05	%	(0.78	)%	0.49	%
Return on common average equity (1)	0.82	%	(9.74	)%	5.89	%
Noninterest expenses to average assets	2.47	%	2.83	%	2.87	%
Nonperforming assets as a percentage of total assets at end of period	3.14	%	2.93	%	1.39	%

(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,
	2009						2008
	Average Balance		Interest and Dividends		Average Yield/ Rate		Average Balance		Interest and Dividends		Average Yield/ Rate
					(Dollars in thousands)
Interest-earning assets:
Loans (1)	$	411,042		6,033	5.87	%	$	384,065		6,691	6.97	%
Securities		42,852		480	4.48			20,196		247	4.89
Other interest-earning assets (2)		16,339		9	0.22			9,575		100	4.18
Total interest-earning assets		470,233		6,522	5.55			413,836		7,038	6.80
Noninterest-earning assets		47,487						35,010
Total assets	$	517,720					$	448,846
Interest-bearing liabilities:
Savings, NOW, money-market deposit accounts		137,265		591	1.72			123,371		625	2.03
Time deposits		251,558		2,035	3.24			192,522		2,120	4.40
Total interest-bearing deposits		388,823		2,626	2.70			315,893		2,745	3.48
Other interest-bearing liabilities (3)		45,410		362	3.19			54,845		503	3.67
Total interest-bearing liabilities		434,233		2,988	2.75			370,738		3,248	3.50
Noninterest-bearing liabilities		38,723						40,629
Net preferred stock		10,653						—
Stockholders’ common equity		34,111						37,479
Total liabilities and stockholders’ equity	$	517,720					$	448,846
Net interest income			$	3,534					$	3,790
Interest-rate spread (4)					2.80	%					3.30	%
Net interest margin (5)					3.01	%					3.66	%
Ratio of average interest-earning assets to average interest-bearing liabilities		1.08						1.12

(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, 2009 and 2008

General. Our net earnings for the three months ended March 31, 2009 was $69,000. First Community Bank Corporation of America recognized a dividend on preferred stock to the U.S. Treasury of $146,000 and amortized $3,000 in preferred stock discount. The earnings (loss) available to common stockholders was $(.02) earnings per basic share and $(.02) earnings per diluted share compared to $549,000 or $.13 earnings per basic share and $.13 per diluted share for the three months ended March 31, 2008. Net earnings decreased primarily due to a $515,000 increase in provision for loan losses combined with a $256,000 decrease in net interest income.

Net Interest Income. Interest income was $6.5 million during the three months ended March 31, 2009, compared to $7.0 million during the three months ended March 31, 2008. Interest on loans for the three months ended March 31, 2009 decreased to $6.0 million from $6.7 million for the three months ended March 31, 2008. The decrease in interest on loans was primarily due to the impact of the lower interest rate environment as partially offset by an increase in the average balance of loans to $411 million, during the three months ended March 31, 2009 compared to $384 million, during the three months ended March 31, 2008. The increase in interest income due to higher balances was mostly offset by a decline in the average yield earned on the loan portfolio to 5.87% for the three months ended March 31, 2009 from 6.97% for the three months ended March 31, 2008. Interest on securities increased to $480,000 during the three months ended March 31, 2009 from $247,000 for the three months ended March 31, 2008. The increase in interest income on securities was due to an increase in average balances to $42.9 million in 2009 compared to $20.2 million in 2008. The impact of higher balances was partially offset by a decrease in average yield earned from 4.89% in 2008 to 4.48% in 2009.

Interest expense on interest-bearing deposit accounts decreased to $2.6 million during the three months ended March 31, 2009, compared to $2.7 million during the three months ended March 31, 2008. The decrease was due to a decrease in the rate paid to 2.70% during the three months ended March 31, 2009 from 3.48% during the three months ended March 31, 2008. Interest expense on other borrowings decreased to $362,000 during the three months ended March 31, 2009, compared to $503,000 during the three months ended March 31, 2008. The decrease was due to a decrease in the average balance of other borrowings to $45.4 million in 2009 from $54.8 million in 2008. The average rate paid on other borrowings decreased to 3.19% during the three months ended March 31, 2009 compared to 3.67% during the three months ended March 31, 2008.

Provision for Loan Losses.Provisions for loan losses are based on our review of the historical loan loss experience and such factors which, in management’s judgment, deserve consideration under existing economic conditions in estimating probable credit losses. The allowance is based on ongoing assessments of the estimated losses inherent in the loan portfolio. Our methodology for assessing the appropriate allowance level consists of several key elements described below.

Larger commercial loans that exhibit probable or observed credit weaknesses are subject to individual review. Where appropriate, the allowance is allocated to individual loans based on our estimate of the borrower’s ability to repay the loan given the availability of collateral, other sources of cash flows and available legal options. Included in the review of individual loans are those that are impaired as provided in Statement of Financial Accounting Standards No. 114, “Accounting by Creditors for Impairment of a Loan,” as amended. Any specific allowance for collateral dependent impaired loans are measured based on the fair value of the underlying collateral. The collectability of both principal and interest is evaluated when assessing the allowance. Historical loss rates are applied to other commercial loans not subject to specific allocations.

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FIRST COMMUNITY BANK CORPORATION OF AMERICA AND SUBSIDIARIES

Comparison of the Three-Month Periods Ended March 31, 2009 and 2008, Continued

Provision for Loan Losses, Continued. Homogenous loans, such as installment and residential mortgage loans, are not individually reviewed by management. The allowance is established for each pool of loans based on the expected net charge-offs combined with other qualitative factors reflecting market conditions. Loss rates are based on the average net charge-off history by loan category.

Historical loss rates for commercial and consumer loans may be adjusted for significant factors that, in management’s judgment, reflect the impact of any current conditions on loss recognition. Factors which management considers in the analysis include the effects of the local economy, trends in the nature and volume of loans (delinquencies, charge-offs, non-accrual and problem loans), changes in the internal lending policies and credit standards, collection practices, and examination results from bank regulatory agencies and our internal credit review function. The allowance relating to individual loans and historical loss rates are reviewed throughout the year and adjusted as necessary based on changing borrower and collateral conditions and actual collection and charge-off experience.

During 2007, we changed our overall approach in the determination of the allowances for loan losses. A new methodology was created to be in compliance with the guidance issued by the federal agencies in December of 2006. This methodology incorporated the calculation of loans considered impaired under FAS 114 and allocations for performing portfolio categories based on applying historical charge off data for loans categorized by similar risk characteristics based on the banks experience as per FAS 5. The methodology includes an unallocated portion (qualitative factors) justified by current general market conditions, trends in performance (delinquency), economic and political trends.

The provision for loan losses was $695,000 for the three months ended March 31, 2009 compared to $180,000 for the three months ended March 31, 2008. Management anticipates continued pressure on nonperforming assets and charge-offs related to persistent economic weakness.

The allowance for loan losses was $7.9 million at March 31, 2009. While management believes that its allowance for loan losses is adequate as of March 31, 2009, 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 decreased to $378,000 in 2009 from $394,000 for the three- months ended March 31, 2008. The increase is primarily due to a decrease in gains on sale of loans held for sale, a decrease in service charges on deposit accounts and a decrease in income from bank owned life insurance.

Noninterest Expense. Total noninterest expense decreased to $3,154,000 for the three months ended March 31, 2009 from $3,202,000 for the comparable period ended March 31, 2008. The decrease in expense reflected a $147,000 decrease in employee compensation and benefits despite expansion in the branch network.

Income Taxes (Benefit). Income taxes (benefit) for the three months ended March 31, 2009, was $(6,000) compared to $253,000 for the period ended March 31, 2008.

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

Item 4T. 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, 2008.

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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 13, 2009	By:	/s/ Kenneth P. Cherven
		Kenneth P. Cherven, President and Chief Executive Officer
Date: May 13, 2009	By:	/s/ Stan B. McClelland
		Stan B. McClelland, Chief Financial Officer

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