FPB Bancorp (FPBI) 10QSB 2005 Q2 Quarterly report (small business)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-QSB

(Mark One)

x Quarterly report under Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended June 30, 2005

¨ Transition report under Section 13 or 15(d) of the Exchange Act

For the transition period from             to            

Commission File Number 000-33351

FPB BANCORP, INC.

(Exact Name of Small Business Issuer as Specified in Its Charter)

Florida	65-1147861
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification No.)

1301 SE Port St. Lucie Boulevard

Port St. Lucie, Florida 34952

(Address of Principal Executive Offices)

(772) 398-1388

(Issuer’s Telephone Number, Including Area Code)

(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)

Check whether the issuer: (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 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  ¨

State the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date:

Common stock, par value $.01 per share	1,788,938 shares
(class)	Outstanding at July 31, 2005

Transitional Small Business Format (check one):    YES  ¨    NO  x

FPB BANCORP, INC. AND SUBSIDIARY

INDEX

	Page
PART I.FINANCIAL INFORMATION
Item 1.Financial Statements
Condensed Consolidated Balance Sheets - June 30, 2005 (unaudited) and December 31, 2004	2
Condensed Consolidated Statements of Operations - Three and Six Months ended June 30, 2005 and 2004 (unaudited)	3
Condensed Consolidated Statements of Stockholders’ Equity - Six Months ended June 30, 2005 and 2004 (unaudited)	4
Condensed Consolidated Statements of Cash Flows - Six Months ended June 30, 2005 and 2004 (unaudited)	5
Notes to Condensed Consolidated Financial Statements (unaudited)	6-9
Review By Independent Registered Public Accounting Firm	10
Report of Independent Registered Public Accounting Firm	11
Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations	12-17
Item 3.Controls and Procedures	18
PART II.OTHER INFORMATION
Item 1.Legal Proceedings	18
Item 4.Submission of Matters to a Vote of Security Holders	18
Item 6.Exhibits	19
SIGNATURES	20

1

FPB BANCORP, INC. AND SUBSIDIARY

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

Condensed Consolidated Balance Sheets

(Dollars in thousands, except per share amounts)

	June 30, 2005			December 31, 2004
	(unaudited)
Assets
Cash and due from banks	$	2,283		2,048
Federal funds sold		11,505		7,656
Interest-bearing deposits with banks		185		55
Total cash and cash equivalents		13,973		9,759
Securities available for sale		7,568		8,337
Securities held to maturity		3,023		3,034
Loans, net of allowance for loan losses of $1,255 and $1,097		87,446		68,794
Premises and equipment, net		3,729		3,668
Federal Home Loan Bank stock, at cost		306		253
Accrued interest receivable		436		306
Deferred income taxes		157		214
Other assets		252		232
Total assets	$	116,890		94,597
Liabilities and Stockholders’ Equity
Liabilities:
Noninterest-bearing demand deposits		23,354		20,568
Savings, NOW and money-market deposits		34,317		30,278
Time deposits		34,310		31,090
Total deposits		91,981		81,936
Official checks		1,935		2,455
Federal Home Loan Bank advances		2,600		2,500
Other liabilities		550		286
Total liabilities		97,066		87,177
Stockholders’ equity:
Preferred stock, $.01 par value; 1,000,000 shares authorized, no shares issued or outstanding		—		—
Common stock, $.01 par value; 5,000,000 shares authorized, 1,788,938 and 819,120 shares issued and outstanding		18		8
Additional paid-in capital		19,944		7,927
Accumulated deficit		(110	)	(503	)
Accumulated other comprehensive income (loss)		(28	)	(12	)
Total stockholders’ equity		19,824		7,420
Total liabilities and stockholders’ equity	$	116,890		94,597

See Accompanying Notes to Condensed Consolidated Financial Statements.

2

FPB BANCORP, INC. AND SUBSIDIARY

Condensed Consolidated Statements of Operations (Unaudited)

(Dollars in thousands, except per share amounts)

	Three Months Ended June 30,			Six Months Ended June 30,
	2005		2004	2005	2004
Interest income:
Loans	$	1,522	885	2,867	1,713
Securities		71	69	150	158
Other		88	13	136	26
Total interest income		1,681	967	3,153	1,897
Interest expense:
Deposits		401	231	761	467
Federal Home Loan Bank advances		23	—	36	—
Total interest expense		424	231	797	467
Net interest income		1,257	736	2,356	1,430
Provision for loan losses		92	115	162	240
Net interest income after provision for loan losses		1,165	621	2,194	1,190
Noninterest income:
Service charges and fees on deposit accounts		72	83	134	156
Loan brokerage fees		137	116	145	128
Gain on sale of loans held for sale		124	65	265	94
Gain on sale of securities available for sale		—	—	—	20
Other fees		6	12	8	25
Total noninterest income		339	276	552	423
Noninterest expenses:
Salaries and employee benefits		538	389	1,017	733
Occupancy and equipment		142	123	287	230
Advertising		97	70	182	132
Professional fees		38	8	69	62
Data processing		75	63	143	126
Supplies		30	33	58	64
Other		175	172	354	326
Total noninterest expenses		1,095	858	2,110	1,673
Earnings (loss) before income taxes		409	39	636	(60	)
Income taxes		156	14	243	(21	)
Net earnings (loss)	$	253	25	393	(39	)
Net earnings (loss) per share:
Basic	$	.19	.03	.37	(.05	)
Diluted	$	.18	.03	.37	(.05	)
Dividends per share	$	—	—	—	—

See Accompanying Notes to Condensed Consolidated Financial Statements.

3

FPB BANCORP, INC. AND SUBSIDIARY

Condensed Consolidated Statements of Stockholders’ Equity

Six Months Ended June 30, 2005 and 2004

(Dollars in thousands)

	Common Stock				Additional Paid-In Capital		Accumulated Deficit		Accumulated Other Compre- hensive Income (Loss)		Total Stockholders’ Equity
	Shares		Amount
Balance at December 31, 2003	818,120		$	8	7,918		(567	)	13		7,372
Comprehensive income (loss):
Net loss for the six months ended June 30, 2004 (unaudited)	—			—	—		(39	)	—		(39	)
Net change in unrealized gain on securities available for sale, net of tax of $32 (unaudited)	—			—	—		—		(48	)	(48	)
Comprehensive income (loss) (unaudited)											(87	)
Issuance of common stock from exercise of warrants (unaudited)	8,000			—	80		—		—		80
Repurchase of common stock (unaudited)	(8,000	)		—	(88	)	—		—		(88	)
Balance at June 30, 2004 (unaudited)	818,120		$	8	7,910		(606	)	(35	)	7,277
Balance at December 31, 2004	819,120			8	7,927		(503	)	(12	)	7,420
Proceeds from sale of common stock (net of offering costs of $563) (unaudited)	960,000			10	11,907		—		—		11,917
Comprehensive income:
Net earnings for the six months ended June 30, 2005 (unaudited)	—			—	—		393		—		393
Net change in unrealized loss on securities available for sale, net of tax of $9 (unaudited)	—			—	—		—��		(16	)	(16	)
Comprehensive income (unaudited)											377
Proceeds from exercise of common stock options (unaudited)	9,818			—	99		—		—		99
Tax benefit from common stock options exercised (unaudited)	—			—	11		—		—		11
Balance at June 30, 2005 (unaudited)	1,788,938		$	18	19,944		(110	)	(28	)	19,824

See Accompanying Notes to Condensed Consolidated Financial Statements.

4

FPB BANCORP, INC. AND SUBSIDIARY

Condensed Consolidated Statements of Cash Flows (Unaudited)

(In thousands)

	Six Months Ended June 30,
	2005			2004
Cash flows from operating activities:
Net earnings (loss)	$	393		(39	)
Adjustments to reconcile net earnings (loss) to net cash provided by operating activities:
Depreciation and amortization		135		82
Provision for loan losses		162		240
Deferred income taxes		66		(21	)
Amortization of loan fees, net		(21	)	(10	)
Net amortization of premiums and discounts on securities		(20	)	6
Gain on the sale of securities available for sale		—		(20	)
Gain on sale of loans held for sale		(265	)	(94	)
Proceeds from sale of loans held for sale		4,630		2,319
Originations of loans held for sale		(4,365	)	(2,225	)
Increase in accrued interest receivable		(130	)	(13	)
Increase in other assets		(20	)	(48	)
(Decrease) increase in official checks and other liabilities		(245	)	481
Net cash provided by operating activities		320		658
Cash flows from investing activities:
Maturities of securities available for sale		3,500		—
Purchase of securities available for sale		(3,000	)	—
Principal payments on securities available for sale		262		536
Proceeds from sale of securities available for sale		—		2,000
Principal payments on securities held to maturity		13		38
Net increase in loans		(18,793	)	(9,165	)
Purchase of premises and equipment		(196	)	(1,071	)
(Purchase) redemption of Federal Home Loan Bank stock		(53	)	12
Net cash used in investing activities		(18,267	)	(7,650	)
Cash flows from financing activities:
Net increase in deposits		10,045		8,497
Proceeds from the exercise of common stock options		99		—
Proceeds from exercise of common stock warrants		—		80
Net proceeds from the issuance of common stock		11,917		—
Repurchase of common stock		—		(88	)
Proceeds from Federal Home Loan Bank advance		100		—
Net cash provided by financing activities		22,161		8,489
Net increase in cash and cash equivalents		4,214		1,497
Cash and cash equivalents at beginning of period		9,759		7,218
Cash and cash equivalents at end of period	$	13,973		8,715
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest	$	775		473
Income taxes	$	—		—
Noncash transactions:
Accumulated other comprehensive income (loss), net change in unrealized gain (loss) on securities available for sale, net of tax	$	(16	)	(48	)
Tax benefit associated with exercise of common stock options	$	11		—

See Accompanying Notes to Condensed Consolidated Financial Statements.

5

FPB BANCORP, INC. AND SUBSIDIARY

Notes to Condensed Consolidated Financial Statements (unaudited)

(1) General. FPB Bancorp, Inc. (the “Holding Company”) is a one-bank holding company and owns 100% of the outstanding common stock of First Peoples Bank (the “Bank”), a Florida-chartered commercial bank (collectively, the “Company”). The Holding Company’s only business activity is the operation of the Bank. The Bank’s deposits are insured, up to the limit of the law, by the Federal Deposit Insurance Corporation. The Bank offers a variety of community banking services to individual and corporate customers through its three banking offices located in Port St. Lucie, Fort Pierce and Stuart, Florida. An additional Loan Production Office (LPO) recently opened in Vero Beach, Florida.

In the opinion of management, the accompanying condensed consolidated financial statements of the Company contain all adjustments (consisting principally of normal recurring accruals) necessary to present fairly the financial position at June 30, 2005, and the results of operations for the three- and six-month periods ended June 30, 2005 and 2004, and cash flows for the six month periods ended June 30, 2005 and 2004. The results of operations for the three and six months ended June 30, 2005 are not necessarily indicative of the results to be expected for the full year.

(2) Loan Impairment and Credit Losses. Loans identified as impaired are as follows (in thousands):

	Three Months Ended June 30,			Six Months Ended June 30,
	2005		2004	2005	2004
Gross loans with related allowance for losses recorded, at end of period	$	—	1,473	—	1,473
Less: Allowance on these loans	$	—	359	—	359
Net investment in impaired loans, at end of period	$	—	1,114	—	1,114
Average net investment in impaired loans	$	—	1,472	188	1,455
Interest income recognized on impaired loans	$	—	—	49	—
Interest income received on impaired loans	$	—	—	49	—

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

	Three Months Ended June 30,				Six Months Ended June 30,
	2005			2004	2005		2004
Balance at beginning of period	$	1,168		968	1,097		852
Provision for loan losses		92		115	162		240
Charge-offs, net		(5	)	—	(4	)	(9	)
Balance at end of period	$	1,255		1,083	1,255		1,083

The Bank had no loans held for sale at June 30, 2005 or December 31, 2004.

(continued)

6

FPB BANCORP, INC. AND SUBSIDIARY

Notes to Condensed Consolidated Financial Statements (unaudited), Continued

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

	At June 30, 2005		At December 31, 2004
Nonaccrual loans	$	30	496
Past due ninety days or more, but still accruing		—	—
	$	30	496

(3) Regulatory Capital.The Bank is required to maintain certain minimum regulatory capital requirements. The following is a summary at June 30, 2005 of the regulatory capital requirements and the Bank’s capital on a percentage basis:

	Ratios of the Bank		Regulatory Requirement
Tier I capital to total average assets	8.66	%	4.00	%
Tier I capital to risk-weighted assets	12.20	%	4.00	%
Total capital to risk-weighted assets	13.46	%	8.00	%

(4) Earnings (Loss) Per Share. Basic earnings (loss) per share has been computed on the basis of the weighted-average number of shares of common stock outstanding during the period. Diluted earnings per share were computed based on the weighted-average number of shares outstanding plus the effect of outstanding stock options, computed using the treasury stock method. Earnings per common share have been computed based on the following:

	Three Months Ended June 30,		Six Months Ended June 30,
	2005	2004	2005	2004
Weighted-average number of common shares outstanding used to calculate basic earnings per common share	1,366,533	818,120	1,055,128	818,120
Effect of dilutive stock options	12,672	—	6,807	—
Weighted-average number of common shares outstanding used to calculate diluted earnings per common share	1,379,205	818,120	1,061,935	818,120

(continued)

7

FPB BANCORP, INC. AND SUBSIDIARY

Notes to Condensed Consolidated Financial Statements (unaudited), Continued

(5) Stock Options. The Company established an Incentive Stock Option Plan for officers and employees of the Company. The Plan as amended provides for 122,666 shares of common stock to be available for grant. The exercise price of the stock options is the greater of $10 or the fair market value of the common stock on the date of grant. The options vest 33.3% during the second and third year, respectively, after grant and are fully exercisable during the fourth year after the grant date. The options expire ten years from the date of grant. At June 30, 2005, 13,664 shares remain available for grant. A summary of stock options follows (dollars in thousands, except share amounts):

	Number of Options		Range of Per Option Price			Weighted- Aggregate Per Share Price		Aggregate Option Price
Outstanding at December 31, 2004	109,002		$	10.00-10.75		10.14		1,105
Exercised	(9,818	)		(10.50	)	(10.50	)	(103	)
Outstanding at June 30, 2005	99,184		$	10.00-10.75		10.10		1,002

Statement of Financial Accounting Standards (SFAS) No. 123,Accounting for Stock-Based Compensation, (as amended by SFAS No. 148,Accounting for Stock-Based Compensation Transition and Disclosure) (collectively “FASB No. 123”) encourages all entities to adopt a fair value based method of accounting for employee stock compensation plans, whereby compensation cost is measured at the grant date based on the value of the award and is recognized over the service period, which is usually the vesting period. However, it also allows an entity to continue to measure compensation cost for those plans using the intrinsic value based method of accounting prescribed by Accounting Principles Board Opinion No. 25,Accounting for Stock Issued to Employees (“APB No. 25”), whereby compensation cost is the excess, if any, of the quoted market price of the stock at the grant date (or other measurement date) over the amount an employee must pay to acquire the stock. The Company has elected to continue with the accounting methodology in APB No. 25.

(continued)

8

FPB BANCORP, INC. AND SUBSIDIARY

Notes to Condensed Consolidated Financial Statements (unaudited), Continued

(5) Stock Options, Continued.No stock-based employee compensation cost is reflected in net earnings (loss), as all options granted under those plans had an exercise price which approximated the market value of the underlying common stock on the date of grant. For purposes of proforma disclosures, the estimated fair value is included in expense in the period vesting occurs. The following table illustrates the effect on net earnings (loss) and earnings (loss) per share if the Company had applied the fair value recognition provisions of FASB No. 123 to stock-based employee compensation (dollars in thousands, except per share amounts).

	Three Months Ended June 30,			Six Months Ended June 30,
	2005		2004	2005	2004
Net earnings (loss) as reported	$	253	25	393	(39	)
Deduct: Total stock-based employee compensation determined under the fair value based method for all awards, net of related tax effect		4	11	7	17
Proforma net earnings (loss)	$	249	14	386	(56	)
Basic earnings (loss) per share:
As reported	$	.19	.03	.37	(.05	)
Proforma	$	.18	.02	.37	(.07	)
Diluted earnings (loss) per share:
As reported	$	.18	.03	.37	(.05	)
Proforma	$	.18	.02	.36	(.07	)

There were no stock options granted during the six months ended June 30, 2005 or the three months ended March 31, 2004. The fair value of the options granted during the three months ended June 30, 2004 were estimated on the date of grant using the Black-Scholes option-pricing model with the following assumptions:

	Three Months Ended June 30, 2004
Dividend yield		—	%
Expected life		10 years
Expected volatility		—	%
Risk-free interest rate		4.80	%
Grant-date fair value of options issued during the period	$	6,000

Also in January 2004, 20,000 stock options were granted to a third party as compensation for services provided to the Company. The options were issued at $11.00 per share and vested immediately. As of June 30, 2005, none of these options had been exercised.

9

FPB BANCORP, INC. AND SUBSIDIARY

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 June 30, 2005, and for the three- and six- month periods ended June 30, 2005 and 2004 presented in this document, in accordance with the standards established by the Public Company Accounting Oversight Board.

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

10

Report of Independent Registered Public Accounting Firm

FPB Bancorp, Inc.

Port St. Lucie, Florida:

We have reviewed the accompanying condensed consolidated balance sheet of FPB Bancorp, Inc. and Subsidiary (the “Company”) as of June 30, 2005, and the related condensed consolidated statements of operations for the three- and six-month periods ended June 30, 2005 and 2004 and the related condensed consolidated statements of stockholders’ equity and cash flows for the six-month periods ended June 30, 2005 and 2004. 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, 2004, and the related consolidated statements of earnings, stockholders’ equity and cash flows for the year then ended (not presented herein); and in our report dated March 1, 2005, 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, 2004, 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

Fort Lauderdale, Florida

July 25, 2005

11

FPB BANCORP, INC. AND SUBSIDIARY

Item 2. Management’s Discussion and Analysis

of Financial Condition and Results of Operations

General

FPB Bancorp, Inc. (the “Holding Company”) is a one-bank holding company and owns 100% of the outstanding common stock of First Peoples Bank (the “Bank”), a Florida-chartered commercial bank (collectively, the “Company”). The Holding Company’s only business activity is the operation of the Bank. The Bank’s deposits are insured, up to the limit of the law, by the Federal Deposit Insurance Corporation. The Bank offers a variety of community banking services to individual and corporate customers through its three banking offices located in Port St. Lucie, Fort Pierce and Stuart, Florida. An additional Loan Production Office (LPO) recently opened in Vero Beach, Florida.

Liquidity and Capital Resources

The Company’s primary sources of cash during the six months ended June 30, 2005 were from net deposit inflow of approximately $10.0 million and the issuance of common stock of $12.0 million. Cash was used primarily for net loan originations of $18.8 million. At June 30, 2005, the Company had time deposits of $26.3 million that mature in one year or less. Management believes that, if so desired, it can adjust the rates on time deposits to retain or attract deposits in a changing interest-rate environment.

The following table shows selected information for the periods ended or at the dates indicated:

	Six Months Ended June 30, 2005		Year Ended December 31, 2004		Six Months Ended June 30, 2004
Average equity as a percentage of average assets	7.86	%	7.35	%	9.91	%
Equity to total assets at end of period	16.96	%	7.84	%	9.22	%
Return on average assets (1)	.75	%	.13	%	(.11	)%
Return on average equity (1)	9.51	%	1.78	%	(1.06	)%
Noninterest expenses to average assets (1)	4.01	%	3.67	%	4.51	%
Nonperforming loans to total assets at end of period	.03	%	.52	%	1.93	%

(1) Annualized for the six months ended June 30, 2005 and 2004.

12

FPB BANCORP, INC. AND SUBSIDIARY

Item 2. Management’s Discussion and Analysis

of Financial Condition and Results of Operations, Continued

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 are unfunded loan commitments, available 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 those instruments reflect the extent of the Company’s involvement in particular classes of financial instruments.

The Company’s exposure to credit loss in the event of nonperformance by the other party to the financial instrument for unfunded loan commitments, available 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 commitments issued by the Company to guarantee the performance of a customer to a third party. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loans to customers. The Company generally holds collateral supporting these commitments and management does not anticipate any potential losses if these letters of credit are funded.

A summary of the amounts of the Company’s financial instruments, with off-balance sheet risk at June 30, 2005, follows (in thousands):

	Contract Amount
Unfunded loan commitments	$	9,919
Available lines of credit	$	13,665
Standby letters of credit	$	473

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.

13

FPB BANCORP, INC. AND SUBSIDIARY

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; (v) net interest margin; and (vi) ratio of average interest-earning assets to average interest-bearing liabilities.

	Three Months Ended June 30,
	2005						2004
	Average Balance		Interest and Dividends		Average Yield/ Rate		Average Balance		Interest and Dividends		Average Yield/ Rate
	(Dollars in thousands)
Interest-earning assets:
Loans	$	83,478		1,522	7.29	%	$	55,497		885	6.38	%
Securities		8,943		71	3.18			8,959		69	3.08
Other (1)		13,464		88	2.61			4,125		13	1.26
Total interest-earning assets		105,885		1,681	6.35			68,581		967	5.64
Noninterest-earning assets		4,694						6,872
Total assets	$	110,579					$	75,453
Interest-bearing liabilities:
Savings, NOW and money-market deposit accounts		35,395		155	1.75			25,049		74	1.18
Time deposits		33,894		246	2.90			24,702		157	2.54
Borrowings		2,509		23	3.67			—		—	—
Total interest-bearing liabilities		71,798		424	2.36			49,751		231	1.86
Demand deposits		29,126						17,146
Noninterest-bearing liabilities		655						1,219
Stockholders’ equity		9,000						7,337
Total liabilities and stockholders’ equity	$	110,579					$	75,453
Net interest income			$	1,257					$	736
Interest-rate spread (2)					3.99	%					3.78	%
Net interest margin (3)					4.75	%					4.29	%
Ratio of average interest-earning assets to average interest-bearing liabilities		1.47						1.38

(1) Includes federal funds sold, dividends from Federal Home Loan Bank stock and interest-earning deposits with banks.

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

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

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FPB BANCORP, INC. AND SUBSIDIARY

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; (v) net interest margin; and (vi) ratio of average interest-earning assets to average interest-bearing liabilities.

	Six Months Ended June 30,
	2005						2004
	Average Balance		Interest and Dividends		Average Yield/ Rate		Average Balance		Interest and Dividends		Average Yield/ Rate
	(Dollars in thousands)
Interest-earning assets:
Loans	$	79,434		2,867	7.22	%	$	53,758		1,713	6.37	%
Securities		9,640		150	3.11			9,872		158	3.20
Other (1)		10,922		136	2.49			3,341		26	1.56
Total interest-earning assets		99,996		3,153	6.31			66,971		1,897	5.67
Noninterest-earning assets		5,191						7,188
Total assets	$	105,187					$	74,159
Interest-bearing liabilities:
Savings, NOW and money-market deposit accounts		35,005		297	1.70			24,803		150	1.21
Time deposits		32,933		464	2.82			24,649		317	2.57
Borrowings		2,505		36	2.87			—		—	—
Total interest-bearing liabilities		70,443		797	2.26			49,452		467	1.89
Demand deposits		25,283						16,216
Noninterest-bearing liabilities		1,198						1,145
Stockholders’ equity		8,263						7,346
Total liabilities and stockholders’ equity	$	105,187					$	74,159
Net interest income			$	2,356					$	1,430
Interest-rate spread (2)					4.05	%					3.78	%
Net interest margin (3)					4.71	%					4.27	%
Ratio of average interest-earning assets to average interest-bearing liabilities		1.42						1.35

(1) Includes federal funds sold, dividends from Federal Home Loan Bank stock and interest-earning deposits with banks.

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

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

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FPB BANCORP, INC. AND SUBSIDIARY

Comparison of the Three-Month Periods Ended June 30, 2005 and 2004

General. Net earnings for the three months ended June 30, 2005, were $253,000 or $.19 per basic and $.18 per diluted share compared to net earnings of $25,000 or $.03 per basic and diluted share for the period ended June 30, 2004. This increase in the Company’s net earnings was primarily due to an increase in interest income and noninterest income, which were partially offset by an increase in interest expense, noninterest expense and the provision for income taxes.

Interest Income. Interest income increased to $1.7 million for the three months ended June 30, 2005 from $967,000 for the three months ended June 30, 2004. Interest income on loans increased to $1.5 million due to an increase in the average loan portfolio balance for the three months ended June 30, 2005 and an increase in the average yield earned in 2005. Interest on securities increased to $71,000 due primarily to an increase in the average yield earned during the three months ended June 30, 2005.

Interest Expense.Interest expense increased to $424,000 for the three months ended June 30, 2005, from $231,000 for the three months ended June 30, 2004. Interest expense increased due to an increase in the average rate paid on deposits during 2005 and an increase in the average balance of deposits during 2005.

Provision for Loan Losses. The provision for loan losses is charged to earnings to bring the total allowance to a level deemed appropriate by management and is based upon historical experience, the volume and type of lending conducted by the Company, industry standards, the amount of nonperforming loans, general economic conditions, particularly as they relate to the Company’s market areas, and other factors related to the estimated collectibility of the Company’s loan portfolio. The provision for the three months ended June 30, 2005, was $92,000 compared to $115,000 for the same period in 2004. Management believes the balance in the allowance for loan losses of $1.3 million at June 30, 2005, is adequate.

Noninterest Income. Total noninterest income increased to $339,000 for the three months ended June 30, 2005, from $276,000 for the three months ended June 30, 2004 primarily as a result of an increase in gains on the sale of loans held for sale of $59,000.

Noninterest Expenses. Total noninterest expenses increased to $1.1 million for the three months ended June 30, 2005 from $858,000 for the three months ended June 30, 2004, primarily due to an increase in employee compensation and benefits of $149,000, an increase in occupancy and equipment of $19,000, and an increase in other expenses of $69,000, all due to the continued growth of the Company.

Income Taxes. Income taxes for the three months ended June 30, 2005, were $156,000 (an effective rate of 38.1%) compared to an income tax provision of $14,000 (an effective rate of 35.9%) for the three months ended June 30, 2004.

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FPB BANCORP, INC. AND SUBSIDIARY

Comparison of the Six-Month Periods Ended June 30, 2005 and 2004

General. Net earnings for the six months ended June 30, 2005, was $393,000 or $.37 per basic and diluted share compared to a net loss of $(39,000) or $(.05) per basic and diluted share for the six month period ended June 30, 2004. This increase in the Company’s net earnings was primarily due to an increase in interest income and noninterest income, which was partially offset by an increase in interest expense, noninterest expense and the provision for income taxes.

Interest Income. Interest income increased to $3.2 million for the six months ended June 30, 2005 from $1.9 million for the six months ended June 30, 2004. Interest income on loans increased to $2.9 million due to an increase in the average loan portfolio balance for the six months ended June 30, 2005 and an increase in the average yield earned in 2005. Interest on securities decreased to $150,000 due to a slight decrease in the average security portfolio and a decrease in the average yield earned in 2005.

Interest Expense.Interest expense increased to $797,000 for the six months ended June 30, 2005, from $467,000 for the six months ended June 30, 2004. Interest expense increased due to an increase in the average balance of deposits during 2005 and an increase in the average rate paid on deposits in 2005.

Provision for Loan Losses. The provision for loan losses is charged to earnings to bring the total allowance to a level deemed appropriate by management and is based upon historical experience, the volume and type of lending conducted by the Company, industry standards, the amount of nonperforming loans, general economic conditions, particularly as they relate to the Company’s market areas, and other factors related to the estimated collectibility of the Company’s loan portfolio. The provision for the six months ended June 30, 2005, was $162,000 compared to $240,000 for the same period in 2004. The decrease in the provision was due to a decrease in the specific allowances established with respect to loans that were impaired as of December 31, 2004. Management believes the balance in the allowance for loan losses of $1.3 million at June 30, 2005, is adequate.

Noninterest Income. Total noninterest income increased to $552,000 for the six months ended June 30, 2005, from $423,000 for the six months ended June 30, 2004 primarily as a result of an increase in loan brokerage fees of $17,000 and an increase in gain on sale of loans held for sale of $171,000.

Noninterest Expenses. Total noninterest expenses increased to $2.1 million for the six months ended June 30, 2005 from $1.7 million for the six months ended June 30, 2004, primarily due to an increase in employee compensation and benefits of $284,000, an increase in occupancy and equipment of $57,000, and an increase in other expenses of $96,000, all due to continued growth of the Company.

Income Taxes. The income tax provision for the six months ended June 30, 2005, was $243,000 (an effective rate of 38.2%) compared to an income tax benefit of $21,000 (an effective rate of 35.0%) for the six months ended June 30, 2004.

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FPB BANCORP, INC. AND SUBSIDIARY

Item 3. Controls and Procedures

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

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

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

There are no material pending legal proceeding to which the Company is a party or to which any of their property is subject.

Item 4. Submission of Matters to a Vote of Security Holders

The Annual Meeting of Shareholders (the “Annual Meeting”) of FPB Bancorp, Inc. was held on April 27, 2005 to vote on the following proposals:

Proposal I:	Election of three directors
Proposal II:	Ratification of the appointment of Hacker, Johnson & Smith PA as independent auditors
Proposal III:	Adjournment of the meeting

At the Annual Meeting, 528,487 shares were present in person or by proxy. Listed below are the results of the matters subject to a vote of security holders:

	Term	For	Against	Abstain	Broker Nonvote
Proposal I
Gary A. Berger	1 year	528,487	—	—	—
Robert L. Schweiger	1 year	520,462	8,025	—	—
David W. Skiles	1 year	528,487	—	—	—
Proposal II	—	521,752	200	6,535	—
Proposal III	—	520,587	600	7,300	—

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FPB BANCORP, INC. AND SUBSIDIARY

PART II. OTHER INFORMATION

Item 6. Exhibits

(a)Exhibits. The following exhibits are filed with or incorporated by reference into this report. The exhibits marked with an asterisk (*) were previously filed as a part of the Company’s Registration Statement on Form SB-1, filed with the Federal Deposit Insurance Corporation on April 30, 2000, and those marked with a double asterisk (**) were filed with the Company’s 2003 Proxy Statement filed with the Security and Exchange Commission.

Exhibit No.		Description of Exhibit
*	3.1	Articles of Incorporation
*	3.2	Bylaws
*	4.1	Specimen copy of certificate evidencing shares of the Company’s common capital stock, $0.01 par value
*	4.2	First Peoples Bank Stock Option Plan dated January 14, 1999
*	4.3	Warrant Agreement
*	4.4	Non-Qualified Stock Option Agreement
**	4.5	Amendment to First Peoples Bank Stock Option Plan
*	10.1	First Peoples Bank Qualified 401(k) Profit Sharing Plan, dated May 1, 1999
*	10.2	Employment Agreement for David W. Skiles
	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

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FPB BANCORP, INC. AND SUBSIDIARY

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.

		FPB BANCORP, INC. (Registrant)
Date:	August 9, 2005	By:	/s/ David W. Skiles
			David W. Skiles, President and Chief
			Executive Officer
Date:	August 9, 2005	By:	/s/ Nancy E. Aumack
			Nancy E. Aumack, Senior Vice President and
			Chief Financial Officer

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