First Commerce Bank (CMRB) 10QSB 2007 Q2 Quarterly report (small business)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20429

FORM 10-QSB

(Mark One)

þ QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2007

o TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT

For the transition period from                    to                    

Commission File No. 000-52257

FIRST COMMERCE BANCORP, INC.

(Exact name of small business issuer as specified in its charter)

62-1867883

(I.R.S. Employer Identification No.)

TENNESSEE

(State or other jurisdiction of incorporation or organization)

500 North Ellington Parkway, Lewisburg, TN 37091
(Address of principal executive offices)

(931) 359-4322

(Issuer’s telephone number)

(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.

Yesþ          Noo

     Indicate by check mark whether the registrant is a shell company (as defined in rule 12b-2 of the Exchange Act).

Yeso          Noþ

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

Common stock outstanding, $1.00 par value: 1,326,909 shares at August 14, 2007

     Transitional Small Business Disclosure Format (check one): Yeso          Noþ

PART I — FINANCIAL INFORMATION

Item 1. Consolidated Financial Statements

The unaudited consolidated financial statements of the registrant, First Commerce Bancorp, Inc. (the “Company”) are as follows:

Certifications

 Ex-31.1 Section 302 Certification of the CEO

 Ex-31.2 Section 302 Certification of the CFO

 Ex-32.1 Section 906 Certification of the CEO and CFO

2

FIRST COMMERCE BANCORP, INC.

Consolidated Balance Sheets

June 30, 2007 and December 31, 2006

(Unaudited)

	June 30,			December 31,
	2007			2006
	(In Thousands)
Assets
Loans, less allowance for loan losses of $1,372,000 and $1,340,000, respectively	$	118,919		$	113,083	��
Securities held-to-maturity, at amortized cost (market value $2,382,000 and $2,464,000, respectively)		2,479			2,520
Securities available-for-sale, at market (amortized cost of $42,847,000 and $41,909,000, respectively)		41,838			41,335
Restricted equity securities		644			602
Interest-bearing deposits in financial institutions		109			158
Federal funds sold		4,710			7,391
Total earning assets		168,699			165,089
Cash and due from banks		1,520			2,235
Bank premises and equipment, net		3,547			3,621
Accrued interest receivable		1,325			1,321
Deferred income taxes		681			420
Other assets		1,794			1,712
Total assets	$	177,566		$	174,398
Liabilities and Shareholders’ Equity
Deposits	$	156,576		$	153,682
Accrued interest payable		987			997
Accounts payable and other liabilities		339			318
Advances from Federal Home Loan Bank		5,000			5,000
Total liabilities		162,902			159,997
Shareholders’ equity:
Preferred stock, no par, authorized 20,000,000 shares		—			—
Common stock, $1 par value; authorized 20,000,000 shares, 1,326,909 and 1,302,245 shares issued and outstanding, respectively		1,327			1,302
Additional paid-in capital		12,410			12,184
Net unrealized losses on available-for-sale securities, net of taxes of $415,000 and $220,000, respectively		(594	)		(354	)
Retained earnings		1,521			1,269
Total shareholders’ equity		14,664			14,401
Total liabilities and shareholders’ equity	$	177,566		$	174,398

See accompanying notes to consolidated financial statements (unaudited).

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FIRST COMMERCE BANCORP, INC.

Consolidated Statements of Operations

Three Months and Six Months Ended June 30, 2007 and 2006

(Unaudited)

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2007			2006			2007			2006
	(Dollars In Thousands, Except Share and Per Share Amounts)
Interest income:
Interest and fees on loans	$	2,317		$	1,901		$	4,557		$	3,664
Interest and dividends on securities:
Taxable securities		486			509			990			948
Exempt from Federal income taxes		24						35			—
Interest and dividends on restricted equity securities		—			5			6			9
Interest on interest-bearing deposits in financial institutions		—			—			—			1
Interest on Federal funds sold		185			36			258			99
Total interest income		3,012			2,451			5,846			4,721
Interest expense:
Interest on negotiable order of withdrawal accounts		27			21			50			41
Interest on money market demand accounts		176			158			342			309
Interest on savings accounts		9			6			18			12
Interest on certificate of deposits over $100,000		791			574			1,547			1,055
Interest on certificate of deposits — other		541			383			1,052			711
Interest on Federal Home Loan Bank advances		60			61			120			118
Total interest expense		1,604			1,203			3,129			2,246
Net interest income before provision for loan losses		1,408			1,248			2,717			2,475
Provision for loan losses		7			24			56			42
Net interest income after provision for loan losses		1,401			1,224			2,661			2,433
Non-interest income:
Service charges on deposit accounts		73			71			155			126
Other fees and commissions		85			73			199			126
Fees on mortgage originations		66			75			129			104
Total other income		224			219			483			356
Non-interest expense:
Salaries and employee benefits		611			548			1,220			1,074
Occupancy expenses		58			66			115			121
Furniture and equipment expense		70			68			127			131
Professional fees		80			40			134			77
Loss on sale of fixed assets		—			10			1			10
Data processing expense		127			122			259			236
Other operating expense		134			112			280			237
Loss on sale of securities		666			—			666			—
Total other expenses		1,746			966			2,802			1,886
Earnings (loss) before income taxes		(121	)		477			342			903
Income tax benefit (expense)		65			(165	)		(90	)		(328	)
Net earnings (loss)	$	(56	)	$	312		$	252		$	575
Weighted average shares outstanding-basic		1,324,198			1,274,331			1,317,143			1,273,787
Weighted average shares outstanding-diluted		1,389,117			1,354,026			1,382,062			1,353,482
Basic earnings (loss) per common share	$	(.04	)	$	.24		$	.19		$	.45
Diluted earnings (loss) per common share	$	(.04	)	$	.23		$	.18		$	.42

See accompanying notes to consolidated financial statements (unaudited).

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FIRST COMMERCE BANCORP, INC.

Consolidated Statements of Comprehensive Earnings (Loss)

Three and Six Months Ended June 30, 2007 and 2006
(Unaudited)

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2007			2006			2007			2006
Net earnings (loss)	$	(56	)	$	312		$	252		$	575
Other comprehensive loss:
Unrealized losses on available-for-sale securities arising during period, net of taxes of $503,000 and $135,000, $450,000 and $206,000, respectively		(735	)		(218	)		(651	)		(330	)
Less: reclassification adjustment for losses included in earnings, net of taxes of $255,000		411			—			411			—
Other comprehensive loss		(324	)		(218	)		(240	)		(330	)
Comprehensive earnings (loss)	$	(380	)	$	94		$	12		$	245

See accompanying notes to consolidated financial statements (unaudited).

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FIRST COMMERCE BANCORP, INC.

Consolidated Statements of Cash Flows

Six Months Ended June 30, 2007 and 2006

Increase (Decrease) in Cash and Cash Equivalents

(Unaudited)

	2007			2006
	(In Thousands)
Cash flows from operating activities:
Interest received	$	5,814		$	4,522
Fees and commissions received		449			326
Interest paid		(3,139	)		(2,123	)
Cash paid to suppliers and employees		(2,036	)		(2,179	)
Income taxes paid		(156	)		(270	)
Net cash provided by operating activities		932			276
Cash flows from investing activities:
Loans made to customers, net of repayments		(5,892	)		(5,567	)
Purchase of premises and equipment		(65	)		(108	)
Proceeds from paydowns, calls and maturities of available-for- sale securities		2,311			1,234
Proceeds from paydowns of held-to-maturity securities		41			40
Purchase of available-for-sale securities		(28,024	)		(8,976	)
Proceeds from sales of available-for-sale securities		24,095			—
Decrease (increase) in interest-bearing deposit in financial institutions		49			(174	)
Purchase of restricted equity securities		—			(140	)
Proceeds from sale of fixed assets		16			16
Net cash used in investing activities		(7,469	)		(13,675	)
Cash flows from financing activities:
Net decrease in non-interest bearing, savings and NOW deposit accounts		(2,674	)		(3,474	)
Net increase in time deposits		5,568			11,419
Net increase in FHLB borrowings		—			5,000
Proceeds from sale of common stock issued pursuant to stock option plan		247			26
Net cash provided by financing activities		3,141			12,971
Net decrease in cash and cash equivalents		(3,396	)		(428	)
Cash and cash equivalents at beginning of period		9,626			4,847
Cash and cash equivalents at end of period	$	6,230		$	4,419

See accompanying notes to consolidated financial statements (unaudited).

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FIRST COMMERCE BANCORP, INC.

Consolidated Statements of Cash Flows, Continued

Six Months Ended June 30, 2007 and 2006

Increase (Decrease) in Cash and Cash Equivalents

(Unaudited)

	2007			2006
	(In Thousands)
Reconciliation of net earnings to net cash provided by operating activities:
Net earnings	$	252		$	575
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation		122			120
Amortization and accretion		14			26
Stock option compensation		4			7
Loss on sale of securities		666			—
Loss on sale of fixed assets		1			10
Increase in cash surrender value on bank owned life insurance		(34	)		(30	)
Provision for loan losses		56			42
FHLB stock dividends		(42	)		(4	)
Increase in interest receivable		(4	)		(221	)
Increase (decrease) in interest payable		(10	)		123
Increase in other assets		(48	)		(25	)
Increase in deferred taxes		(66	)		(12	)
Increase (decrease) in other liabilities		21			(335	)
Total adjustments		680			(299	)
Net cash provided by operating activities	$	932		$	276
Supplemental Schedule of Non-Cash Activities:
Change in unrealized loss in value of securities available-for-sale, net of taxes of $195,000 and $206,000, respectively	$	(240	)	$	(330	)

See accompanying notes to consolidated financial statements (unaudited).

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FIRST COMMERCE BANCORP, INC.

Notes to Consolidated Financial Statements

(Unaudited)

Basis of Presentation

The accompanying consolidated financial statements have been prepared, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to such rules and regulations.

In the opinion of management, the consolidated financial statements contain all adjustments and disclosures necessary to summarize fairly the financial position of First Commerce Bancorp, Inc. (the “Company”) as of June 30, 2007 and December 31, 2006 and the results of operations for the three and six months ended June 30, 2007 and 2006, comprehensive earnings (loss) for the three and six months ended June 30, 2007, and 2006 and changes in cash flows for the six months ended June 30, 2007 and 2006. The interim consolidated financial statements should be read in conjunction with the notes to the consolidated financial statements presented in the Company’s December 31, 2006 consolidated financial statements. The results for interim periods are not necessarily indicative of results to be expected for the complete fiscal year. Certain reclassifications have been made to 2006 and 2007 interim financial information for purposes of consistent presentation with the correct period.

On September 26, 2006 the shareholders of First Commerce Bank (“the Bank”) approved a share exchange between the Company and the Bank on a one for one basis (the “Share Exchange”) pursuant to which the Company acquired 100% of the outstanding common stock of the Bank and the shareholders of the Bank exchanged their shares of Bank common stock for Company common stock. The transaction was consummated on October 6, 2006.

Allowance for Loan Losses

Transactions in the allowance for loan losses were as follows:

	2007			2006
	(In Thousands)
Balance, January 1, 2007 and 2006, respectively	$	1,340		$	1,197
Add (deduct):
Reclassification of allowance for unfunded commitments to a liability account		(18	)		—
Losses charged to allowance		(14	)		(15	)
Recoveries credited to allowance		8			1
Provision for loan losses		56			42
Balance, June 30, 2007 and 2006, respectively	$	1,372		$	1,225

The provision for loan losses was $7,000 and $56,000 for the three and six months ended June 30, 2007, respectively. The provision for loan losses represents a charge to earnings necessary, after loan charge-offs and recoveries, to maintain the allowance for loan losses at an appropriate level which is adequate to absorb estimated losses inherent in the loan portfolio. Such estimated losses arise primarily from the loan portfolio but may also be derived from other sources, including commitments to extend credit and

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FIRST COMMERCE BANCORP, INC.

Notes to Consolidated Financial Statements, Continued

(Unaudited)

Allowance for Loan Losses, Continued

standby letters of credit. The level of the allowance is determined on a quarterly basis using procedures which include: (1) categorizing commercial and commercial real estate loans into risk categories to estimate loss probabilities based primarily on the historical loss experience of those risk categories and current economic conditions; (2) analyzing significant commercial and commercial real estate credits and calculating specific reserves as necessary; (3) assessing various homogeneous consumer loan categories to estimate loss probabilities based primarily on historical loss experience; (4) reviewing unfunded commitments (classified as a liability if significant); and (5) considering various other factors, such as changes in credit concentrations, loan mix, and economic conditions which may not be specifically quantified in the loan analysis process.

The allowance for loan losses consists of an allocated portion and an unallocated, or general portion. The allocated portion is maintained to cover estimated losses applicable to specific segments of the loan portfolio. The unallocated portion is maintained to absorb losses which probably exist as of the evaluation date but are not identified by the more objective processes used for the allocated portion of the allowance due to risk of errors or imprecision. While the total allowance consists of an allocated portion and an unallocated portion, these terms are primarily used to describe a process. Both portions of the allowance are available to provide for inherent loss in the entire portfolio.

The allowance for loan losses is increased by provisions for loan losses charged to expense and is reduced by loans charged off net of recoveries on loans previously charged off. The provision is based on management’s determination of the amount of the allowance necessary to provide for estimated loan losses based on its evaluation of the loan portfolio. Determining the appropriate level of the allowance and the amount of the provision involves uncertainties and matters of judgment and therefore cannot be determined with precision. From time to time unscheduled developments, including requirements of regulatory agencies, may require additional contributions to the reserve.

Earnings Per Share

Statement of Financial Accounting Standards (SFAS) No. 128 “Earnings Per Share” establishes uniform standards for computing and presenting earnings per share. SFAS No. 128 replaces the presentation of primary earnings per share with the presentation of basic earnings per share and diluted earnings per share. The computation of basic earnings per share is based on the weighted average number of common shares outstanding during the period. For the Company the computation of diluted earnings per share begins with the basic earnings per share plus the effect of common shares contingently issuable from stock options.

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FIRST COMMERCE BANCORP, INC.

Notes to Consolidated Financial Statements, Continued

(Unaudited)

Earnings Per Share, Continued

The following is a summary of the components comprising basic and diluted earnings (loss) per share for the three and six months ended June 30, 2007 and 2006:

	Three Months Ended					Six Months Ended
	June 30,					June 30,
	2007			2006		2007		2006
	(In Thousands, Except Share and Per Share Amounts)
Basic earnings (loss) per share computation:
Numerator – Net earnings (loss) for the period	$	(56	)	$	312	$	252	$	575
Denominator – Weighted average number of common shares outstanding		1,324,198			1,274,331		1,317,143		1,273,787
Basic earnings (loss) per common share	$	(.04	)	$	.24	$	.19	$	.45
Diluted earnings (loss) per share computation:
Numerator – Net earnings (loss) for the period	$	(56	)	$	312	$	252	$	575
Denominator:
Weighted average number of common shares outstanding		1,324,198			1,274,331		1,317,143		1,273,787
Effect of stock options		64,919			79,695		64,919		79,695
		1,389,117			1,354,026		1,382,062		1,353,482
Diluted earnings (loss) per common share	$	(.04	)	$	.23	$	.18	$	.42

Stock Option Plan

     In December, 2002, the Board of Directors of the Bank approved the First Commerce Bancorp, Inc. 2002 Stock Option Plan (the “Plan”). In conjunction with the Share Exchange, the Plan and all options outstanding under the Plan were assumed by the Company and now represent options to purchase a like number of shares of the Company’s common stock. The Plan provides for the granting of stock options, and authorizes the issuance of common stock upon the exercise of such options, for up to 146,666 shares of common stock to employees and organizers of the Company and up to 73,334 shares of common stock for future use as decided by the Board of Directors. At June 30, 2007, 146,665 shares have been granted at $10 per share and 34,915 shares have been granted at $22 per share (1,352 shares have been forfeited and 51,422 share have been exercised). Of these shares 100,861 are exercisable as of June 30, 2007.

     Under the Plan, stock option awards may be granted in the form of incentive stock options or nonstatutory stock options, and are generally expected to be exercisable for up to ten years following the date such option awards are granted. Exercise prices of incentive stock options must be equal to or greater than 100% of the fair market value of the common stock on the grant date and generally vest at the end of four years. In general, the forfeited options are available for reissuance.

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FIRST COMMERCE BANCORP, INC.

Notes to Consolidated Financial Statements, Continued

(Unaudited)

Stock Option Plan, Continued

     Statement of Financial Accounting Standards No. 123 (Revised 2004) (Statement 123R), “Share-Based Payment” was adopted by the Company as of January 1, 2006. This accounting standard revises Statement of Financial Accounting Standards No. 123 (Statement 123), “Accounting for Stock-Based Compensation” by requiring that all share-based payments to employees, including grants of employee stock options, be recognized in the financial statements based on their fair values at the date of grant.

     A summary of the stock option activity for 2007 is as follows:

	2007
				Weighted
				Average
				Exercise
	Shares			Price
Outstanding at beginning of year		153,470		$	12.73
Granted		—			—
Exercised		(24,664	)		10.00
Forfeited		—			—
Outstanding at end of period		128,806		$	13.25
Options exercisable at period end		100,861		$	10.82
Aggregate intrinsic value of options outstanding (in thousands)				$	1,771
Aggregate intrinsic value of options exercisable (in thousands)				$	1,632

     The total intrinsic value of options exercised during the six months ended June 30, 2007 was $419,000.

     As of June 30, 2007, there was $16,000 of total unrecognized cost related to non-vested share-based compensation arrangements granted under the Plan. The cost is expected to be recognized over a weighted-average period of 1.56 years.

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FIRST COMMERCE BANCORP, INC.

Item 2.Management’s Discussion and Analysis or Plan of Operation

General

     The Company is a one bank holding company which acquired 100% of First Commerce Bank’s (the “Bank”) common stock on October 6, 2006. First Commerce Bank is a state chartered bank which began operations on December 2, 2002. First Commerce Bank operates as a full-service community bank chartered under the laws of the State of Tennessee with deposits insured through the Bank Insurance Fund administered by the Federal Deposit Insurance Corporation (FDIC). It has elected not to apply for membership in the Federal Reserve System. The Bank offers a wide range of banking services including checking, savings, money market accounts, certificates of deposits and loans for consumers, commercial and real estate purposes. The Company is subject to regulation, supervision, and examination by the Tennessee Department of Financial Institutions and the FDIC. However, such regulation, supervision and examination are for the protection of consumers, the deposit insurance fund administered by the FDIC, and the banking system and not for the protection of investors or other stakeholders. The area served by the Company is Marshall and adjacent counties of Middle Tennessee. Services are provided at the main office in Lewisburg, Tennessee, a branch in Lewisburg, Tennessee and a branch in Chapel Hill, Tennessee. In addition, the Bank has a wholly-owned subsidiary, First Commerce Mortgage Company, Inc.

     The Company has targeted commercial business lending, commercial and residential real estate lending and consumer lending as potential growth areas in its highly competitive markets. The Company seeks to build a loan portfolio which is capable of adjusting to changes in the interest rate market, and it is the Company’s policy to maintain a diverse loan portfolio not dependent on any particular market or industrial segment.

     The purpose of this discussion is to provide insight into the financial condition and results of operations of the Company. This discussion should be read in conjunction with the annual consolidated financial statements filed in conjunction with the Company’s Annual Report on Form 10-KSB for previous years.

Forward-Looking Statements

     Management’s discussion of the Company and management’s analysis of the Company’s operations and prospects, and other matters, may include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and other provisions of federal and state securities laws. Although the Company believes that the assumptions underlying such forward-looking statements contained in this Report are reasonable, any of the assumptions could be inaccurate and, accordingly, there can be no assurance that the forward-looking statements included herein will prove to be accurate. The use of such words as expect, projects, anticipate, forecast, and comparable terms should be understood by the reader to indicate that the statement is “forward-looking” and thus subject to change in a manner that can be unpredictable. Factors that could cause actual results to differ materially from the results anticipated include (without limitation) economic and social conditions, competition for loans, mortgages, deposits and other financial services and products, changes in interest rates, unforeseen changes in liquidity, the Company’s ability to successfully consummate its going private transaction described in more detail below, results of operations, and financial conditions affecting the Company’s customers, as well as other risks that cannot be accurately quantified or completely identified. Many

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FIRST COMMERCE BANCORP, INC.

Item 2.Management’s Discussion and Analysis or Plan of Operation, Continued

Forward-Looking Statements, Continued

     factors affecting the Company’s financial condition and profitability, including changes in economic conditions, the volatility of interest rates, political events and competition from other providers of financial services cannot be predicted, and because these factors are unpredictable and beyond the Company’s control, earnings may fluctuate from period to period. The purpose of this type of information is to provide Form 10-QSB readers with information relevant to understanding and assessing the financial condition and results of operations of the Company, and not to predict the future or to guarantee results.

     The Company is unable to predict the types of circumstances, conditions, and factors that can cause anticipated results to change. The Company undertakes no obligation to publish revised forward-looking statements to reflect the occurrence of changes or unanticipated events, circumstances, or results.

Formation of Holding Company

     On October 6, 2006, the Company consummated its acquisition of 100% of the outstanding shares of the Bank’s common stock pursuant to the terms of an Agreement and Plan of Share Exchange, dated as of August 9, 2006, by and between the Company and the Bank. In connection with the Share Exchange, the holders of the Bank common stock exchanged their shares of Bank common stock for a like number of shares of Company common stock and the Company assumed the Bank’s 2002 Stock Option Plan (the “Plan”) and all of the outstanding options issued pursuant to the Plan. Following consummation of the Share Exchange, the Company became a bank holding company registered under the Bank Holding Company Act of 1956, as amended and as a result is subject to regulation by the Board of Governors of the Federal Reserve Bank.

Proposed Common Stock Share Reclassification

     On May 23, 2007, the Company’s Board of Directors voted to reclassify the Company’s common stock to reduce the number of record holders of common stock below 300 for the purpose of going private.

     To facilitate this transaction a proposal to amend the Company’s charter to reclassify the common stock is expected to be presented to Company’s shareholders for a vote. Under the proposal, shares of existing common stock held by shareholders who own between 204 and 1,020 shares as of the effective time of the transaction will be reclassified into shares of Class A stock. Shares of existing common stock held by shareholders who own less than 204 shares as of the effective time of the transaction will be reclassified into shares of Class B stock. Shareholders owning in excess of 1,020 shares of common stock at the effective time of the transaction will continue to hold shares of common stock. The reclassifications will be made on the basis of one share of Class A or Class B stock for each share of common stock held. The proposal is subject to shareholder approval and is expected to be submitted to the Company’s shareholders in the third quarter of 2007.

     The primary effect of this transaction will be to reduce the Company’s total number or record holders of common stock to below 300. As a result, the registration of our common stock under federal securities laws will be terminated and we will no longer be considered a “public” company.

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FIRST COMMERCE BANCORP, INC.

Item 2.Management’s Discussion and Analysis or Plan of Operation, Continued

Results of Operations

     The Company sustained a loss of $56,000 and had earnings of $252,000 for the three and six months ended June 30, 2007, respectively, as compared to earnings of $312,000 and $575,000 for the same periods in 2006. The loss sustained for the three months ended June 30, 2007, is primarily a result of the sale of $24,000,000 in securities resulting in a realized loss of $666,000. The Company liquidated these securities in response to interest rate trends with the intent to improve overall yield on earning assets. On a per share basis, the net earnings (loss) for the three and six months ended June 30, 2007 resulted in basic earnings (loss) per common share of $(.04) and $.19, respectively. For the same periods in 2006 the net earnings resulted in basic earnings per common share of $.24 and $.45, respectively. On a per share basis the net earnings (loss) for the three and six months ended June 30, 2007, resulted in diluted earnings (loss) per common share of $(.04) and $.18, respectively. For the same periods in 2006, the net earnings resulted in diluted earnings per common share of $.23 and $.42, respectively.

Net Interest Income

     Net interest income represents the amount by which interest earned on various earning assets exceeds interest paid on deposits and other interest-bearing liabilities and is the most significant component of the Company’s earnings. Total interest income for the six months ended June 30, 2007 and 2006 was $5,846,000 and $4,721,000, respectively, and total interest expenses was $3,129,000 and $2,246,000, respectively. This resulted in an increase in net interest income of $242,000, or 9.8%, during the first six months of 2007 as compared to the comparable period in the prior year. Total interest income for the three months ended June 30, 2007 and 2006 was $3,012,000 and $2,451,000, respectively. Total interest expense for the three months ended June 30, 2007 and 2006 was $1,604,000 and $1,203,000, respectively. The foregoing resulted in an increase in net interest income of $160,000, or 12.8%, during the three months ended June 30, 2007 as compared to the same period in 2006. The increase in interest expense related to an increase in the volume of our liabilities as well as an increase in rates paid on interest-bearing deposits and other borrowings. Management currently believes that interest rates will remain stable for the remainder of 2007. Managing interest rate risk is a very subjective exercise based on a wide variety of factors, and is based significantly on management’s subjective beliefs about future events (such as actions of the Federal Reserve Board and the conduct of competitors) and is never guaranteed.

Provision for Loan Losses

     The Company has designed a system calculated and intended to identify weaknesses or losses in its loan portfolio. The provision for loan losses represents a charge to earnings necessary to establish an allowance for loan losses that, in management’s evaluation, is adequate to provide coverage for estimated losses on outstanding loans and to provide for uncertainties in the economy. The provision for loan losses was $7,000 and $56,000 for the three and six months ended June 30, 2007, respectively. The provision for loan losses was $24,000 and $42,000 for the three and six months ended June 30, 2006, respectively. The provision for loan losses for the six months ended June 30, 2007 and 2006 are consistent with loan growth over the same period. From time to time unscheduled developments, including requirements of bank regulatory agencies, may require additional contributions to the reserve.

14

FIRST COMMERCE BANCORP, INC.

Item 2.Management’s Discussion and Analysis or Plan of Operation, Continued

Provision for Loan Losses, Continued

     The allowance for loan losses at June 30, 2007 and December 31, 2006 was $1,372,000 and $1,340,000, respectively. The level of the allowance and the amount of the provision involve evaluation of uncertainties and matters of judgment. Management believes the allowance for loan losses at June 30, 2007 and December 31, 2006 to be adequate. The allowance for loan losses was 1.14% and 1.17% of loans at June 30, 2007 and December 31, 2006, respectively.

Non-Interest Income

     The Company’s non-interest income consists of service charges on deposit accounts, fees on mortgage originations and other fees and commissions. Non-interest income increased $127,000, or 35.7%, to $483,000 during the six months ended June 30, 2007 as compared to the same period in 2006. The increase for the quarter ended June 30, 2007 was $5,000, or 2.3%, as compared to the same period in 2006. Non-interest income continues to increase as management achieves service and product growth. Management projects that other fees and commissions, fees on mortgage originations and service charges on deposit accounts will increase for the remainder of 2007 due to the expected growth of the Company.

Non-Interest Expense

     Non-interest expense consists primarily of employee costs, occupancy expenses, furniture and equipment expenses, professional fees, data processing expense and other operating expenses. Non-interest expense increased $916,000, or 48.6% to $2,802,000 during the six months ended June 30, 2007 from $1,886,000 for the same period in 2006. The increase for the quarter ended June 30, 2007 was $780,000, or 80.7% as compared to the same period in 2006. The increases in the non-interest expense are attributable primarily to losses on the sale of securities and increases in salaries and benefits due to continued growth of the Company.

Income Taxes

     Income taxes expense totaled $90,000 for the six months ended June 30, 2007. Due to the loss sustained for the three months ended June 30, 2007, the Company had an income tax benefit of $65,000. Income taxes expense totaled $165,000 and $328,000 for the three and six months ended June 30, 2006. Income taxes have a direct impact on reportable earnings. The effective tax rate for the six months ended June 30, 2007 was 27% and is primarily effected by the non-taxable interest on municipal bonds and tax exempt loans.

Financial Condition

     Balance Sheet Summary. The Company’s total assets were $177,566,000 and $174,398,000 at June 30, 2007 and December 31, 2006, respectively. Loans, net of allowance for loan losses, totaled $118,919,000 and $113,083,000 at June 30, 2007 and December 31, 2006, respectively, and investment securities totaled $44,317,000 and $43,855,000, respectively. Restricted equity securities totaled $644,000 and $602,000 at June 30, 2007 and December 31, 2006, respectively. The increase in assets was due to the continued growth of the Company.

     Total liabilities were $162,902,000 and $159,997,000 at June 30, 2007 and December 31, 2006, respectively, and shareholders’ equity was $14,664,000 and $14,401,000, respectively. A more detailed discussion of assets, liabilities and capital follows.

15

FIRST COMMERCE BANCORP, INC.

Item 2.Management’s Discussion and Analysis or Plan of Operation, Continued

Financial Condition, Continued

     Loans

     Loan categories are as follows:

	June 30, 2007					December 31, 2006
	(In Thousands)					(In Thousands)
	Amount		Percentage			Amount		Percentage
Commercial, financial and agricultural	$	58,297		48.5	%	$	53,278		46.6	%
Consumer		7,418		6.2			7,450		6.5
Real estate — mortgage		38,495		32.0			37,269		32.6
Real estate — construction		16,081		13.3			16,426		14.3
Total	$	120,291		100.0	%	$	114,423		100.0	%

     Loans are the largest component of the Company’s assets and are a primary source of income. The loan portfolio is composed of four primary loan categories: commercial, financial and agricultural; consumer; real estate — mortgage; and real estate — construction. The table above sets forth the loan categories in the portfolio at June 30, 2007 and December 31, 2006. As represented in the table, primary loan growth was in commercial, financial and agricultural loans. Management continues to focus on maintaining strong asset quality as it grows the Company’s loan portfolio.

     The Company follows the provisions of Statement of Financial Accounting Standards (“SFAS”) No. 114, “Accounting by Creditors for Impairment of a Loan” and SFAS No. 118, “Accounting by Creditors for Impairment of a Loan — Income Recognition and Disclosures”. These pronouncements apply to impaired loans except for large groups of smaller-balance homogeneous loans that are collectively evaluated for impairment including credit card, residential mortgage, and consumer installment loans.

     A loan is impaired when it is probable that the Company will be unable to collect the scheduled payments of principal and interest due under the contractual terms of the loan agreement. Impaired loans are measured at the present value of expected future cash flows discounted at the loan’s effective interest rate, at the loan’s observable market price, or the fair value of the collateral if the loan is collateral dependent. If the measure of the impaired loan is less than the recorded investment in the loan, the Company shall recognize an impairment by creating a valuation allowance with a corresponding charge to the provision for loan losses or by adjusting an existing valuation allowance for the impaired loan with a corresponding charge or credit to the provision for loan losses.

     The Company’s first mortgage single family residential and consumer loans which total approximately $26,557,000 and $7,418,000, respectively at June 30, 2007, are divided into various groups of smaller-balance homogeneous loans that are collectively evaluated for impairment and thus are not subject to the provisions of SFAS Nos. 114 and 118. Substantially all other loans of the Company are evaluated for impairment under the provisions of SFAS Nos. 114 and 118.

16

FIRST COMMERCE BANCORP, INC.

Item 2.Management’s Discussion and Analysis or Plan of Operation, Continued

Financial Condition, Continued

     Loans, Continued

     The Company considers all loans subject to the provisions of SFAS Nos. 114 and 118 that are on nonaccrual status to be impaired. Loans are placed on nonaccrual status when doubt as to timely collection of principal or interest exists, or when principal or interest is past due 90 days or more unless such loans are well-secured and in the process of collection. Delays or shortfalls in loan payments are evaluated with various other factors to determine if a loan is impaired. Generally, delinquencies under 90 days are considered insignificant unless certain other factors are present which indicate impairment is probable. The decision to place a loan on nonaccrual status is also based on an evaluation of the borrower’s financial condition, collateral, liquidation value, and other factors that affect the borrower’s anticipated ability to pay.

     Generally, at the time a loan is placed on nonaccrual status, all interest accrued on the loan in the current fiscal year is reversed from income, and all interest accrued and uncollected from the prior year is charged off against the allowance for loan losses. Thereafter, interest on nonaccrual loans is recognized as interest income only to the extent that cash is received and future collection of principal is not in doubt. If the collectibility of outstanding principal is doubtful, such interest received is applied as a reduction of principal. A nonaccrual loan may be restored to accruing status when principal and interest are no longer past due and unpaid and future collection of principal and interest on a timely basis is not believed to be in doubt. At June 30, 2007 and December 31, 2006 the Company had $2,000 of loans on nonaccrual status.

     Other loans may be classified as impaired when the current net worth and financial capacity of the borrower or of the collateral pledged, if any, is viewed as inadequate. In those cases, such loans have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt, and if such deficiencies are not corrected, there is a probability that the Company will sustain some loss. In such cases, interest income continues to accrue as long as the loan does not meet the Company’s criteria for nonaccrual status.

     As of June 30, 2007, the Company had impaired loans totaling $57,000. A specific reserve of $6,000 has been established by management related to these loans. The total amount of interest recognized during the six months ended June 30, 2007 on impaired loans approximated $2,000 and the average recorded investment for the six months ended June 30, 2007 was $58,000. At December 31, 2006, impaired loans totaled $57,000 with a specific allowance for loan losses of $6,000 allocated. The total amount of interest recognized on impaired loans approximated $4,000 and the average recorded investment was $60,000 for the year ended December 31, 2006. The impaired loans are generally commercial loans and meet the above mentioned criteria for impaired loans. The total value of the collateral securing these loans at June 30, 2007 is approximately $76,000.

     Non-performing loans, which included non-accrual loans and loans 90 days past due, at June 30, 2007 and December 31, 2006, totaled $2,000.

17

FIRST COMMERCE BANCORP, INC.

Item 2.Management’s Discussion and Analysis or Plan of Operation, Continued

Financial Condition, Continued

     Loans, Continued

     The following schedule details selected information as to non-performing loans of the Company at June 30, 2007 and December 31, 2006:

	June 30, 2007				December 31, 2006
	(In Thousands)				(In Thousands)
	Past Due				Past Due
	90 Days		Non-Accrual		90 Days		Non-Accrual
Real estate loans	$	—	$	—	$	—	$	—
Installment loans		—		—		—		—
Commercial		—		2		—		2
	$	—	$	2	$	—	$	2
Renegotiated loans	$	—			$	—

     Loans are listed as classified when information obtained about possible credit problems of the borrower has prompted management to question the ability of the borrower to comply with the agreed repayment terms of the loan agreement. The loan classifications do not represent or result from trends or uncertainties which management expects will materially impact future operating results, liquidity or capital resources.

     The allowance for loan losses is discussed under “Provision for Loan Losses”. The Company maintains its allowance for loan losses at an amount considered by management to be adequate to provide for loan losses in the loan portfolio.

     Essentially all of the Company’s loans originate from Marshall and adjacent counties in Tennessee. The Company seeks to exercise prudent risk management in lending, including diversification by loan category and industry segment, as well as by identification of credit risks.

     The Company has targeted commercial business lending, commercial and residential real estate lending and consumer lending as potential growth areas in its highly competitive markets. The Company seeks to build a loan portfolio which is capable of adjusting to swings in the interest rate market, and it is the Company’s policy to maintain a diverse loan portfolio not dependent on any particular market or industrial segment. Management has set a goal for loans to approximate 80% of deposits.

18

FIRST COMMERCE BANCORP, INC.

Item 2.Management’s Discussion and Analysis or Plan of Operation, Continued

Securities

     Securities totaled $44,317,000 and $43,855,000 at June 30, 2007 and December 31, 2006, respectively, and were a primary component of the Company’s earning assets. Restricted equity securities totaled $644,000 and $602,000 at June 30, 2007 and December 31, 2006, respectively. The Company has adopted the provisions of Statement of Financial Accounting Standards No. 115 (SFAS No. 115), “Accounting for Certain Investments in Debt and Equity Securities”. Under the provisions of SFAS No. 115, securities are to be classified in three categories and accounted for as follows:

• Debt securities for which the enterprise has the positive intent and ability to hold to maturity are classified as held-to-maturity securities and reported at amortized costs.

• Debt and equity securities that are bought and held principally for the purpose of selling them in the near term are classified as trading securities and reported at fair value, with unrealized gains and losses included in earnings.

• Debt and equity securities not classified as either held-to-maturity securities or trading securities are classified as available-for-sale securities and reported at fair value, with unrealized gains and losses excluded from earnings and reported in a separate component of shareholders’ equity.

     The Company’s classification of securities as of June 30, 2007 and December 31, 2006 is as follows:

	Available-for-Sale(In Thousands)
	June 30, 2007				December 31, 2006
			Estimated				Estimated
	Amortized		Market		Amortized		Market
	Cost		Value		Cost		Value
U.S. Treasury and other U.S. Government agencies and corporations	$	22,505	$	22,084	$	30,483	$	30,213
Mortgage-backed securities		15,433		15,043		9,993		9,700
Collateralized mortgage obligations		—		—		282		272
Obligations of states and political subdivisions		4,909		4,711		1,151		1,150
	$	42,847	$	41,838	$	41,909	$	41,335

	Held-to-Maturity(In Thousands)
	June 30, 2007				December 31, 2006
			Estimated				Estimated
	Amortized		Market		Amortized		Market
	Cost		Value		Cost		Value
U.S. Treasury and other U.S. Government agencies and corporations	$	2,200	$	2,117	$	2,200	$	2,154
Mortgage-backed securities		279		265		320		310
	$	2,479	$	2,382	$	2,520	$	2,464

     No securities have been classified as trading securities.

19

FIRST COMMERCE BANCORP, INC.

Item 2.Management’s Discussion and Analysis or Plan of Operation, Continued

Deposits

     Deposits totaled $156,576,000 and $153,682,000 at June 30, 2007 and December 31, 2006, respectively. The Company has targeted local consumers, professionals, local governments and commercial businesses as its central clientele; therefore, deposit instruments in the form of demand deposits, savings accounts, money market demand accounts, certificates of deposits and individual retirement accounts are offered to customers.

     Management believes Marshall County and the surrounding areas are a growing economic market offering growth opportunities for the Company; however, the Company competes with several larger bank holding companies that have company offices in this area. Even though the Company is in a very competitive market, management currently believes that its market share will be expanded as a result of the fact that the Company is the only locally owned financial institution that offers personalized service. However, no assurance of market growth can be given.

Liquidity and Asset Management

     The Company’s management seeks to maximize net interest income by managing the Company’s assets and liabilities within appropriate constraints on capital, liquidity and interest rate risk. Liquidity is the ability to maintain sufficient cash levels necessary to fund operations, meet the requirements of depositors and borrowers and fund attractive investment opportunities. Higher levels of liquidity bear corresponding costs, measured in terms of lower yields on short-term more liquid earning assets and higher interest expense involved in extending liability maturities.

     The Company maintains a formal asset and liability management process to quantify, monitor and control interest rate risk and to assist management in maintaining stability in the net interest margin under varying interest rate environments. The Company accomplishes this process through the development and implementation of lending, funding and pricing strategies designed to maximize net interest income under varying interest rate environments subject to specific liquidity and interest rate risk guidelines.

     Analysis of rate sensitivity and rate gap analysis are the primary tools used to assess the direction and magnitude of changes in net interest income resulting from changes in interest rates. Included in the analysis are cash flows and maturities of financial instruments held for purposes other than trading, changes in market conditions, loan volumes and pricing and deposit volume and mix. These assumptions are inherently uncertain, and, as a result, net interest income cannot be precisely estimated nor can the impact of higher or lower interest rates on net interest income be precisely predicted. Actual results will differ due to timing, magnitude and frequency of interest rate changes and changes in market conditions and managements strategies, among other factors.

20

FIRST COMMERCE BANCORP, INC.

Item 2.Management’s Discussion and Analysis or Plan of Operation, Continued

Liquidity and Asset Management, Continued

     The Company’s securities portfolio consists of earning assets that provide interest income. Securities classified as available-for-sale include securities intended to be used as part of the Company’s asset/liability strategy and/or securities that may be sold in response to changes in interest rate, prepayment risk, the need or desire to increase capital and similar economic factors. No securities will mature or will be subject to rate adjustments within the next twelve months.

     A secondary source of liquidity is the Company’s loan portfolio. At June 30, 2007, loans of approximately $61.0 million either will become due or will be subject to rate adjustments within twelve months from the respective date.

     As for liabilities, certificates of deposit of $100,000 or greater of approximately $53.1 million will become due during the next twelve months. Management anticipates that there will be no significant reductions from withdrawable accounts such as negotiable order of withdrawal accounts, money market demand accounts, demand deposit and regular savings accounts in the future.

     The Company’s management seeks to maximize net interest income by managing the Company’s assets and liabilities within appropriate constraints on capital, liquidity and interest rate risk. Liquidity is the ability to maintain sufficient cash levels necessary to fund operations, meet the requirements of depositors and borrowers and fund attractive investment opportunities. The Company’s primary source of liquidity is expected to be a stable core deposit base. In addition, short-term investments, loan payments and investment security maturities provide a secondary source. At the present time, there are no known trends or any known commitments, demands, events or uncertainties that will result in or that are reasonably likely to result in the Company’s liquidity changing in any material way.

Capital Position and Dividends

     At June 30, 2007 and December 31, 2006, total shareholders’ equity was $14,664,000 and $14,401,000 or 8.3% and 8.3%, respectively, of total assets. During the six months ended June 30, 2007 shareholders’ equity increased $263,000 resulting from an increase in unrealized losses on available-for-sale securities, net of taxes, of $240,000, net earnings of $252,000, proceeds from sale of stock issued pursuant to the exercise of options granted pursuant to the Plan of $247,000 and $4,000 of stock-based compensation.

     The Company’s principal regulators, have established minimum risk-based capital requirements and leverage capital requirements for the Company. These guidelines classify capital into two categories of Tier I and Total risk-based capital. Total risk-based capital consists of Tier I (or core) capital (essentially common equity less intangible assets) and Tier II capital (essentially qualifying long-term debt and a part of the allowance for loan losses). In determining risk based capital requirements, assets are assigned risk-weights of 0% to 100%, depending on regulatory assigned levels of credit risk associated with such assets. The risk-based capital guidelines require the Company to have a total risk-based capital ratio of 8.0% and a Tier I risk-based capital ratio of 4.0%. At June 30, 2007, the Company’s total risk-based capital ratio was 13.3% and its Tier I risk-based capital ratio was 12.2%. At December 31, 2006, the Company’s total risk-based capital ratio was 13.6% and its Tier I risk based capital ratio was 16.5%. The required Tier I leverage capital ratio (Tier I capital to average assets for the most recent quarter) for the Company is 4%. At June 30, 2007, the Company had a leverage ratio of 8.5%. At December 31, 2006 the Company had a leverage ratio of 9.5%.

21

FIRST COMMERCE BANCORP, INC.

Item 2.Management’s Discussion and Analysis or Plan of Operation, Continued

Capital Position and Dividends, Continued

     On April 26, 2005, management announced that general policy in the future will be to pay a cash dividend up to 25% of prior fiscal year earnings if the Company’s budgeted net earnings are achieved and other liquidity needs do not arise. There are statutory, regulatory and prudential limitations on the payment of dividends by the Company to its shareholders or by the Bank to the Company. Tennessee law restricts the amount of dividends that may be paid by the Company. In no event is a Tennessee chartered bank permitted to pay dividends in any calendar year that exceed the total of its net income of that year combined with its retained net income of the preceding two years without the prior approval of the Commissioner of the TDFI. Prior regulatory approval must be obtained before declaring any dividends if the amount of the Bank’s capital and surplus is below certain statutory limits. Dividends can also be restricted under federal law, and under state safety and soundness considerations, as a result of a declining or inadequate capital level. Presently, the Company’s capital position would enable it to pay dividends, if the board of directors so determined. Dividends are never assured.

     There is no established trading market for the Company’s stock. From time to time the Company may acquire shares of its stock to provide some liquidity in the shares. During the six months ended June 30, 2007, the Company issued 24,664 shares of its common stock at $10 per share as a result of exercises of stock options. The Company did not redeem any shares of its voting common stock during the six months ended June 30, 2007. The Company’s legal ability to redeem shares going forward is limited as well as being subject to Board discretion. During any given period privately negotiated trades may involve the Company, its directors and officers and, accordingly, may not be reliable indicators of value. The Company believes that Marshall County, Tennessee, is the principal market for the Company’s common stock.

     The Company is subject to numerous federal and state laws, rules and regulations, and compliance with these legal requirements is mandatory. One significant and developing area of law involves Homeland Security and the Bank Secrecy Act. The Company currently believes that its systems are adequate to meet its compliance needs with respect to these and other regulations. However, compliance with the Bank Secrecy Act may prove expensive to the Company in the near-term and in the long-term. Current regulatory statements indicate that the cost of non-compliance, even if inadvertent non-compliance, may be significant. Management cannot at this time quantify the costs of compliance or the expense of inadvertent non-compliance.

Off Balance Sheet Arrangements

     At June 30, 2007 the Company had unfunded loan commitments and lines of credit outstanding of $19,565,000 and outstanding standby letters of credit of $1,798,000 Because these commitments generally have fixed expiration dates and many will expire without being drawn upon, the total commitment level does not necessarily represent future cash requirements. If needed to fund these outstanding commitments, the Company has the ability to liquidate Federal funds sold or securities available-for-sale or on a short-term basis to borrow and purchase Federal funds from other financial institutions. Additionally, the Company could sell participations in these or other loans to correspondent banks. As mentioned above, the Company has historically been able to fund its ongoing liquidity needs through its stable core deposit base, loan payments, its investment security maturities and short-term borrowings.

22

FIRST COMMERCE BANCORP, INC.

Item 2.Management’s Discussion and Analysis or Plan of Operation, Continued

Impact of Inflation

     Although interest rates are significantly affected by inflation, the inflation rate is immaterial when reviewing the Company’s results of operations for the period of this report.

Item 3T.Controls and Procedures

     The Company maintains disclosure controls and procedures, as defined in Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934 (the “Exchange Act”), that are designed to ensure that information required to be disclosed by it in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms and that such information is accumulated and communicated to the Company’s management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. The Company carried out an evaluation, under the supervision and with the participation of its management, including its Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures as of the end of the period covered by this report. Based on the evaluation of these disclosure controls and procedures, the Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective.

     There were no changes in the Company’s internal control over financial reporting during the quarter ended June 30, 2007 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

23

PART II. OTHER INFORMATION

Item 1. LEGAL PROCEEDINGS

None

Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

(a)	None
(b)	Not applicable
(c)	The Company did not repurchase any shares of its common stock during the quarter ended June 30, 2007.
(d)	The only restrictions on working capital and/or dividends are those reported in Part I of this Quarterly Report on Form 10-QSB, as well as those discussed with respect to dividends in the Company’s Annual Report on Form 10-KSB, particularly in the section “Supervision and Regulation” and in the discussion of the Company’s common stock.

Item 3. DEFAULTS UPON SENIOR SECURITIES

(a)	None
(b)	Not applicable

Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

(a)	The annual meeting of Company’s shareholders was held April 17, 2007.
(b)	Election of all of the members of the board of directors are as listed in Item 4(c)(1).
(c)	(1) Each of the directors were elected for a one year term by the following tabulation:

	Number
	of Shares		Votes		Votes		Broker
Name	Voting		For		Withheld		Non-Votes
Walter W. Bussart		858,216		858,216		—		—
John O. Chunn		858,216		858,216		—		—
Glenn Hardison		858,216		858,216		—		—
Thomas H. Hawkins, III		858,216		858,216		—		—
Allen L. Henderson, Jr.		858,216		858,216		—		—
David Jent		858,216		858,216		—		—
William B. Marsh		858,216		858,216		—		—
James P. Moon		858,216		858,216		—		—
James L. Russell, Jr.		858,216		858,216		—		—
Robert E. Wiles, Jr.		858,216		858,216		—		—

24

PART II. OTHER INFORMATION, CONTINUED

Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS, CONTINUED

(2) The vote to consider the ratification of the Audit Committee’s selection of Maggart & Associates, P.C. as independent auditors for the Company was as follows:

Number
of Shares				Broker
Voting	For	Against	Abstain	Non-Votes
858,216	858,116	100	—	—

(d) Not Applicable.

Item 5. OTHER INFORMATION

(a)	None
(b)	Not Applicable

Item 6. EXHIBITS

31.1	Certification of the Chief Executive Officer Pursuant to Section 302 of the Sarbanes- Oxley Act of 2002.
31.2	Certification of the Chief Financial Officer Pursuant to Section 302 of the Sarbanes- Oxley Act of 2002.
32.1	Certifications Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

25

SIGNATURES

     In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

          FIRST COMMERCE BANCORP, INC.          
(Registrant)

DATE:August 14, 2007	/s/ William B. Marsh
	William B. Marsh, President and
	Chief Executive Officer
DATE:August 14, 2007	/s/ Glenn Hardison
	Glenn Hardison, Chief Financial and
	Accounting Officer

26