FPB Bancorp (FPBI) 10QSB 2007 Q1 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 March 31, 2007

¨ 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) 225-5930

(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  ¨

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

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	1,906,203 shares
(class)	Outstanding at April 25, 2007

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 - March 31, 2007 (unaudited) and December 31, 2006	2
Condensed Consolidated Statements of Earnings - Three Months ended March 31, 2007 and 2006 (unaudited)	3
Condensed Consolidated Statements of Stockholders’ Equity - Three Months ended March 31, 2007 and 2006 (unaudited)	4
Condensed Consolidated Statements of Cash Flows - Three Months ended March 31, 2007 and 2006 (unaudited)	5
Notes to Condensed Consolidated Financial Statements (unaudited)	6-10
Review By Independent Registered Public Accounting Firm	11
Report of Independent Registered Public Accounting Firm	12
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	13-16
Item 3. Controls and Procedures	17
PART II. OTHER INFORMATION
Item 1. Legal Proceedings	17
Item 6. Exhibits	18
SIGNATURES	19

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)

	March 31, 2007			December 31, 2006
	(unaudited)
Assets
Cash and due from banks	$	3,472		1,734
Federal funds sold		11,953		3,499
Interest-bearing deposits with banks		189		189
Total cash and cash equivalents		15,614		5,422
Securities available for sale		6,404		6,444
Securities held to maturity (market value of $505 and $2,499)		508		2,509
Loans, net of allowance for loan losses of $1,837 and $1,801		134,197		130,133
Premises and equipment, net		4,721		4,278
Federal Home Loan Bank stock, at cost		280		259
Accrued interest receivable		904		828
Bank-owned life insurance		2,600		2,573
Other assets		1,254		993
Total assets	$	166,482		153,439
Liabilities and Stockholders’ Equity
Liabilities:
Noninterest-bearing demand deposits		24,641		20,125
Savings, NOW and money-market deposits		33,778		35,486
Time deposits		85,119		74,608
Total deposits		143,538		130,219
Official checks		1,017		1,241
Federal Home Loan Bank advance		100		100
Other liabilities		654		816
Total liabilities		145,309		132,376
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, 1,906,203 shares issued and outstanding		19		19
Additional paid-in capital		21,738		21,729
Accumulated deficit		(548	)	(634	)
Accumulated other comprehensive loss		(36	)	(51	)
Total stockholders’ equity		21,173		21,063
Total liabilities and stockholders’ equity	$	166,482		153,439

See Accompanying Notes to Condensed Consolidated Financial Statements.

2

FPB BANCORP, INC. AND SUBSIDIARY

Condensed Consolidated Statements of Earnings (Unaudited)

(Dollars in thousands, except per share amounts)

	Three Months Ended March 31,
	2007		2006
Interest income:
Loans	$	2,807	2,085
Securities		84	110
Other		77	113
Total interest income		2,968	2,308
Interest expense:
Deposits		1,269	733
Federal Home Loan Bank advance		1	29
Total interest expense		1,270	762
Net interest income		1,698	1,546
Provision for loan losses		95	107
Net interest income after provision for loan losses		1,603	1,439
Noninterest income:
Service charges and fees on deposit accounts		118	104
Loan brokerage fees		76	46
Gain on sale of loans held for sale		63	—
Income from bank-owned life insurance		27	24
Other fees		6	2
Total noninterest income		290	176
Noninterest expenses:
Salaries and employee benefits		918	713
Occupancy and equipment		268	180
Advertising		149	109
Professional fees		40	65
Data processing		110	89
Supplies		41	44
Other		235	180
Total noninterest expenses		1,761	1,380
Earnings before income taxes		132	235
Income taxes		46	79
Net earnings	$	86	156
Earnings per share:
Basic	$	.05	.08
Diluted	$	.04	.08
Dividends per share	$	—	—

See Accompanying Notes to Condensed Consolidated Financial Statements.

3

FPB BANCORP, INC. AND SUBSIDIARY

Condensed Consolidated Statements of Stockholders’ Equity

Three Months Ended March 31, 2007 and 2006

(Dollars in thousands)

	Common Stock			Additional Paid-In Capital	(Accumulated Deficit) Retained Earnings		Accumulated Other Compre- hensive Loss		Total Stockholders’ Equity
	Shares	Amount
Balance at December 31, 2005	1,810,588	$	18	20,136	262		(75	)	20,341
Comprehensive income:
Net earnings for the three months ended March 31, 2006 (unaudited)	—		—	—	156		—		156
Net change in unrealized loss on securities available for sale, net of tax benefit of $3 (unaudited)	—		—	—	—		(4	)	(4	)
Comprehensive income (unaudited)									152
Balance at March 31, 2006 (unaudited)	1,810,588	$	18	20,136	418		(79	)	20,493
Balance at December 31, 2006	1,906,203		19	21,729	(634	)	(51	)	21,063
Comprehensive income:
Net earnings for the three months ended March 31, 2007 (unaudited)	—		—	—	86		—		86
Net change in unrealized loss on securities available for sale, net of tax of $10 (unaudited)	—		—	—	—		15		15
Comprehensive income (unaudited)									101
Share-based compensation (unaudited)	—		—	9	—		—		9
Balance at March 31, 2007 (unaudited)	1,906,203	$	19	21,738	(548	)	(36	)	21,173

See Accompanying Notes to Condensed Consolidated Financial Statements.

4

FPB BANCORP, INC. AND SUBSIDIARY

Condensed Consolidated Statements of Cash Flows (Unaudited)

(In thousands)

	Three Months Ended March 31,
	2007			2006
Cash flows from operating activities:
Net earnings	$	86		156
Adjustments to reconcile net earnings to net cash (used in) provided by operating activities:
Depreciation and amortization		81		64
Provision for loan losses		95		107
Amortization of loan (fees) costs, net		(16	)	32
Net amortization of premiums and discounts on securities		2		(4	)
Gain on sale of loans held for sale		(63	)	—
Proceeds from sale of loans held for sale		1,593		—
Originations of loans held for sale		(1,530	)	—
Increase in accrued interest receivable		(76	)	(51	)
Increase in other assets		(271	)	(115	)
(Decrease) increase in official checks and other liabilities		(386	)	39
Income from bank-owned life insurance		(27	)	(24	)
Share-based compensation		9		—
Net cash (used in) provided by operating activities		(503	)	204
Cash flows from investing activities:
Maturities of securities available for sale		—		1,000
Principal payments on securities available for sale		63		86
Purchase of securities available for sale		—		(239	)
Maturities of securities held to maturity		2,000		—
Principal payments on securities held to maturity		1		4
Net increase in loans		(4,143	)	(8,809	)
Purchase of premises and equipment		(524	)	(9	)
Purchase of bank owned life insurance		—		(250	)
Purchase of Federal Home Loan Bank stock		(21	)	(65	)
Net cash used in investing activities		(2,624	)	(8,282	)
Cash flows from financing activity-
Net increase in deposits		13,319		9,385
Net increase in cash and cash equivalents		10,192		1,307
Cash and cash equivalents at beginning of period		5,422		12,366
Cash and cash equivalents at end of period	$	15,614		13,673
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest	$	1,257		712
Income taxes	$	86		60
Noncash transaction-
Accumulated other comprehensive loss, net change in unrealized loss on securities available for sale, net of taxes	$	15		(4	)

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 four banking offices located in Port St. Lucie, Fort Pierce, Stuart and Vero Beach, Florida. A fifth office is anticipated to open in early 2008 on Gatlin Boulevard in Port St. Lucie, Florida. In addition, an 11,000 square foot Operations Center in Jensen Beach, Florida, opened in March, 2007.

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 March 31, 2007, and the results of operations and cash flows for the three-month periods ended March 31, 2007 and 2006. The results of operations for the three months ended March 31, 2007, are not necessarily indicative of the results to be expected for the full year.

(2) Loan Impairment and Credit Losses. There were no impaired loans identified for the three months ended March 31, 2006. Information about impaired loans, all of which are collateral dependent, for the three months ended March 31, 2007 is as follows (in thousands):

	At March 31, 2007
Loans identified as impaired:
Gross loans with no related allowance for losses	$	—
Gross loans with related allowance for loan losses recorded		311
Less: Allowance on these loans		28
Net investment in impaired loans	$	283
	For the Three Months Ended March 31, 2007
Average investment in impaired loans	$	327
Interest income recognized on impaired loans	$	—
Interest income received on impaired loans	$	—

(continued)

6

FPB BANCORP, INC. AND SUBSIDIARY

Notes to Condensed Consolidated Financial Statements (unaudited), Continued

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

	Three Months Ended March 31,
	2007			2006
Balance at beginning of period	$	1,801		1,383
Provision for loan losses		95		107
(Charge-offs), net of recoveries		(59	)	(3	)
Balance at end of period	$	1,837		1,487

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

	At March 31, 2007		At December 31, 2006
Nonaccrual loans	$	311	344
Past due ninety days or more, but still accruing		—	—
	$	311	344

(3) Regulatory Capital.The Bank is required to maintain certain minimum regulatory capital requirements. The following is a summary at March 31, 2007 of the regulatory capital requirements and the Bank’s capital on a percentage basis:

	Percentage of the Bank		Regulatory Requirement
Tier I capital to total average assets	8.14	%	4.00	%
Tier I capital to risk-weighted assets	9.72	%	4.00	%
Total capital to risk-weighted assets	10.97	%	8.00	%

(continued)

7

FPB BANCORP, INC. AND SUBSIDIARY

Notes to Condensed Consolidated Financial Statements (unaudited), Continued

(4) Earnings Per Share. Basic earnings 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. All per share amounts reflect the 5% stock dividend paid in May, 2006. Earnings per common share have been computed based on the following:

	Three Months Ended March 31,
	2007	2006
Weighted-average number of common shares outstanding used to calculate basic earnings per common share	1,906,203	1,901,117
Effect of dilutive stock options	33,987	27,555
Weighted-average number of common shares outstanding used to calculate diluted earnings per common share	1,940,190	1,928,672

(5) Share-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 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 beginning 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). 16,158 stock options were granted during the three months ended March 31, 2007. No stock options were granted in 2006.

(continued)

8

FPB BANCORP, INC. AND SUBSIDIARY

Notes to Condensed Consolidated Financial Statements (unaudited), Continued

(5) Share-Based Compensation, Continued. The Company established a Stock Option Plan in 1998 for directors, officers and employees of the Company. The Plan as amended provides for 127,027 shares (adjusted) of common stock to be available for grant. The exercise price of the stock options is the greater of $10 or the fair market value of the common stock on the date of grant. The options expire ten years from the date of grant. At March 31, 2007, 105 shares (adjusted) remain available for grant. As of December 31, 2005, all issued options were exercisable and no stock options were granted in 2006 or 2007, therefore, no share-based compensation was recognized in 2006 or 2007. A summary of stock option information follows ($ in thousands, except share amounts):

	Number of Options	Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term	Aggregate Intrinsic Value
Options outstanding and exercisable at December 31, 2006 and March 31, 2007	90,429	$	10.70	4.05 years	$	570

No options were granted or exercised during the three months ended March 31, 2007 or 2006.

In 2005, the Company established a new option plan for directors, officers and employees of the Company. The Plan provides for 151,200 shares (adjusted) of common stock to be available for grant. The exercise price of the stock options is the fair market value of the common stock on the date of grant. The Plan allows for various vesting periods. All options granted in 2005 were vested immediately except for 7,406 (adjusted) options which vest 33.3% in the second and third year, respectively, after grant and are fully exercisable during the fourth year after grant. The options expire ten years from the date of grant. At March 31, 2007, 53,198 shares (adjusted) remain available for grant. A summary of stock option information follows ($ in thousands, except share amounts):

	Number of Options		Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term	Aggregate Intrinsic Value
Options outstanding at December 31, 2006	83,419		$	16.19
Options forfeited	(1,575	)		16.19
Options granted	16,158			17.50
Options outstanding at March 31, 2007	98,002		$	16.41	8.42 years	$	58
Options exercisable at March 31, 2007	78,840		$	16.41	8.42 years	$	47

(continued)

9

FPB BANCORP, INC. AND SUBSIDIARY

Notes to Condensed Consolidated Financial Statements (unaudited), Continued

(5) Share-Based Compensation, Continued. The fair value of each option granted for the three months ended March 31, 2007 was estimated on the date of grant using the Black-Scholes option-pricing model with the following assumptions:

Weighted-average risk-free interest rate		3.88	%
Weighted-average dividend yield		—	%
Weighted-average expected stock volatility		18.62	%
Expected life in years		6 years
Per share weighted-average grant-date fair value of options issued during the period	$	4.96

No stock options were exercised during the three months ended March 31, 2007 or 2006.

The Company has examined its historical pattern of option exercises in an effort to determine if there was 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 issued by the Securities and Exchange Commission to determine the estimated life of options. Expected volatility is based on historical volatility of the Company’s common stock. The risk-free rate for periods within the contractual life of the option is based on the U.S. treasury yield curve in effect at the time of grant. The dividend yield assumptions is based on the Company’s history and expectation of dividend payments.

The total fair value of shares vested and recognized as compensation expense was $9,000 and the tax benefit was $734 for the three months ended March 31, 2007. As of March 31, 2007, the Company had 19,162 (adjusted) stock options not fully vested and there was $73,000 of total unrecognized compensation cost related to these nonvested options. This cost is expected to be recognized monthly over a weighted-average period of 2.3 years on a straight-line basis.

(6) Commitments. A fifty-year ground lease has been signed on property located at the northwest corner of Savage Boulevard and Gatlin Boulevard in Port St. Lucie, Florida for a future branch location.

10

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

11

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 March 31, 2007, and the related condensed consolidated statements of earnings, stockholders equity and cash flows for the three-month periods ended March 31, 2007 and 2006. These interim financial statements are the responsibility of the Company’s management.

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

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

We have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board, the consolidated balance sheet of the Company as of December 31, 2006, and the related consolidated statements of earnings, stockholders’ equity and cash flows for the year then ended (not presented herein); and in our report dated March 7, 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

Fort Lauderdale, Florida

April 30, 2007

12

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 four banking offices located in Port St. Lucie, Fort Pierce, Stuart and Vero Beach, Florida. A fifth office is anticipated to open in early 2008 on Gatlin Boulevard in Port St. Lucie, Florida. An 11,000 square foot Operations Center in Jensen Beach, Florida opened in March, 2007.

Liquidity and Capital Resources

The Company’s primary source of cash during the three months ended March 31, 2007 were from net deposit inflows of approximately $13.3 million. Cash was used primarily for net loan originations of approximately $4.1 million and the purchase of federal funds sold of approximately $8.5 million. At March 31, 2007, the Company had time deposits of $72.8 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:

	Three Months Ended March 31, 2007		Year Ended December 31, 2006		Three Months Ended March 31, 2006
Average equity as a percentage of average assets	13.48	%	14.08	%	15.27	%
Equity to total assets at end of period	12.72	%	13.73	%	14.97	%
Return on average assets (1)	.22	%	.43	%	.47	%
Return on average equity (1)	1.63	%	3.04	%	3.05	%
Noninterest expenses to average assets (1)	4.49	%	4.12	%	4.12	%
Nonperforming loans to total assets at end of period	.19	%	.22	%	.13	%

(1) Annualized for the three months ended March 31, 2007 and 2006.

13

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 commitments to extend credit, 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 commitments to extend credit, 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 March 31, 2007, follows (in thousands):

	Contract Amount
Commitments to extend credit	$	12,115
Available lines of credit	$	22,149
Standby letters of credit	$	152

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.

14

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 March 31,
	2007						2006
	Average Balance		Interest and Dividends		Average Yield/ Rate		Average Balance		Interest and Dividends		Average Yield/ Rate
	(Dollars in thousands)
Interest-earning assets:
Loans	$	132,841		2,807	8.45	%	$	102,772		2,085	8.12	%
Securities		7,728		84	4.35			11,614		110	3.79
Other (1)		6,174		77	4.99			10,718		113	4.22
Total interest-earning assets		146,743		2,968	8.09			125,104		2,308	7.38
Noninterest-earning assets		10,001						8,800
Total assets	$	156,744					$	133,904
Interest-bearing liabilities:
Savings, NOW and money-market deposit accounts		33,335		271	3.25			37,225		227	2.44
Time deposits		77,207		998	5.17			50,977		506	3.97
Borrowings		100		1	4.00			2,600		29	4.46
Total interest-bearing liabilities		110,642		1,270	4.59			90,802		762	3.36
Demand deposits		20,994						20,575
Noninterest-bearing liabilities		3,975						2,081
Stockholders’ equity		21,133						20,446
Total liabilities and stockholders’ equity	$	156,744					$	133,904
Net interest income			$	1,698					$	1,546
Interest-rate spread (2)					3.50	%					4.02	%
Net interest margin (3)					4.63	%					4.94	%
Ratio of average interest-earning assets to average interest-bearing liabilities		1.33						1.38

(1) Includes federal funds sold, dividends from Federal Home Loan Bank stock and interest-bearing 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.

15

FPB BANCORP, INC. AND SUBSIDIARY

Comparison of the Three-Month Periods Ended March 31, 2007 and 2006

General. Net earnings for the three months ended March 31, 2007, were $86,000 or $.05 per basic and $.04 per diluted share compared to net earnings of $156,000 or $.08 per basic and diluted share for the period ended March 31, 2006. This decrease in the Company’s net earnings was primarily due to an increase in interest expense and noninterest expense, partially offset by an increase in interest income and noninterest income.

Interest Income. Interest income increased to $3.0 million for the three months ended March 31, 2007 from $2.3 million for the three months ended March 31, 2006. Interest income on loans increased to $2.8 million due primarily to an increase in the average loan portfolio balance for the three months ended March 31, 2007, and an increase in the average yield earned in 2007. Interest on securities decreased to $84,000 due primarily to a decrease in the average balance during the three months ended March 31, 2007.

Interest Expense.Interest expense increased to $1.3 million for the three months ended March 31, 2007, from $762,000 for the three months ended March 31, 2006. Interest expense increased primarily due to an increase in the average balance of deposits and an increase in the average rate paid on deposits during 2007.

Provision for Loan Losses. The provision for loan losses is charged to operations 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 March 31, 2007, was $95,000 compared to $107,000 for the same period in 2006. Management believes the balance in the allowance for loan losses of $1.8 million at March 31, 2007 is adequate.

Noninterest Income. Total noninterest income increased to $290,000 for the three months ended March 31, 2007, from $176,000 for the three months ended March 31, 2006 primarily as a result of an increase in gains on loans held for sale and loan brokerage fees.

Noninterest Expenses. Total noninterest expenses increased to $1.8 million for the three months ended March 31, 2007 from $1.4 million for the three months ended March 31, 2006, primarily due to an increase in employee compensation and benefits of $205,000, an increase in occupancy and equipment of $88,000 and an increase in advertising expense of $40,000 all due to the continued growth of the Company.

Income Taxes. The income tax provision for the three months ended March 31, 2007, was $46,000 (an effective rate of 34.8%) compared to an income tax provision of $79,000 (an effective rate of 33.6%) for the three months ended March 31, 2006.

16

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.

17

FPB BANCORP, INC. AND SUBSIDIARY

ITEM 6. EXHIBITS

Exhibits. The following exhibits are filed with or incorporated by reference into this report. The exhibits marked with an (a) 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; those marked with a (b) were filed with the Company’s 2003 Proxy Statement filed with the Security and Exchange Commission (“SEC”) on March 28, 2003; those marked with a (c) were filed with the Company’s 2004 Form 10-QSB filed with the SEC on November 10, 2005; those marked with a (d) were filed with the Company’s Definitive Schedule 14A filed with the SEC on October 26, 2005.

Exhibit No.	Description of Exhibit
(a)4.1	Specimen copy of certificate evidencing shares of the Company’s common capital stock, $0.01 par value
(a)4.2	First Peoples Bank Stock Option Plan dated January 14, 1999
(a)4.4	Non-Qualified Stock Option Agreement
(b)4.5	Amendment to First Peoples Bank Stock Option Plan
(d)4.6	2005 Stock Compensation Plan
(a)10.1	First Peoples Bank Qualified 401(k) Profit Sharing Plan, dated May 1, 1999
(a)10.2	Employment Agreement for David W. Skiles
(c)10.3	Change in Control Agreement for Nancy E. Aumack
(c)10.4	Change in Control Agreement for Stephen J. Krumfolz
(c)10.5	Change in Control Agreement for Marge Riley
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

18

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: April 30, 2007	By:	/s/ David W. Skiles
		David W. Skiles, President and
		Chief Executive Officer
Date: April 30, 2007	By:	/s/ Nancy E. Aumack
		Nancy E. Aumack, Senior Vice President and
		Chief Financial Officer

19