##### Table of Contents



UNITED
STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D. C. 20549
 Form 10-Q
  þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended September 30, 2005
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from  to
 Commission
File No.: 333-126401
 FCB BANCORP
 (Exact Name of Registrant as Specified in its Charter)
 California
(State or other jurisdiction of
incorporation or organization)
    
    20-3074387
(I.R.S. Employer
Identification No.)1100 Paseo Camarillo
Camarillo, California
(Address of principal executive offices)
    
    93010
(Zip Code)
 (805) 484-0534
(Registrants telephone number, including area code)
Not Applicable
Former name, former address and former fiscal year,
if changed since last report.
  o þ
 o þ
 o þ




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##### Table of Contents



PART I. FINANCIAL INFORMATIONItem 1. Financial StatementsConsolidated Balance Sheets September 30, 2005 and December 31, 2004
    
    
    3Consolidated Statements of Operations Three and Nine-Month Periods Ended September 30, 2005 and 2004
    
    
    4-5Consolidated Statements of Comprehensive Income Three and Nine-Month Periods Ended September 30, 2005 and 2004
    
    
    6Consolidated Statements of Changes in Shareholders Equity September 30, 2005 and December 31, 2004
    
    
    7Consolidated Statements of Cash Flows Nine-Month Periods Ended September 30, 2005 and 2004
    
    
    8-9Notes
to Consolidated Financial Statements
    
    
    10Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    18Item 3. Quantitative and Qualitative Disclosures about Market Risk
    
    
    36Item 4. Controls and Procedures
    
    
    37PART II. OTHER INFORMATIONItem 1. Legal proceedings
    
    
    38Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    38Item 3. Defaults Upon Senior Securities
    
    
    38Item 4. Submission of Matters to a Vote of Security Holders
    
    
    38Item 5. Other Information
    
    
    38Item 6. Exhibits and Reports on Form 8-K
    
    
    38SIGNATURESExhibit 31.1Exhibit 31.2Exhibit 32.1Exhibit 32.2




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##### Table of Contents



(in thousands, except per share data)
    
    September 30, 2005
    
    
    December 31, 2004ASSETSCash and due from banks
    
    $
    16,989
    
    
    $
    7,194Federal funds sold
    
    
    12,255
    
    
    
    4,055Securities available-for-sale
    
    
    77,171
    
    
    
    77,345Loans, net
    
    
    322,156
    
    
    
    180,527Premises and equipment, net
    
    
    10,002
    
    
    
    4,696Goodwill
    
    
    17,241
    
    
    
    Federal Home Loan Bank stock
    
    
    2,372
    
    
    
    1,992Cash surrender value of life insurance
    
    
    5,123
    
    
    
    4,982Accrued interest receivable and other assets
    
    
    4,082
    
    
    
    2,954Total assets
    
    $
    467,391
    
    
    $
    283,745LIABILITIESChecking
    
    $
    90,782
    
    
    $
    84,699Interest checking
    
    
    21,793
    
    
    
    21,424Regular savings
    
    
    24,395
    
    
    
    14,639Money market savings
    
    
    61,094
    
    
    
    52,900Certificates of deposit, under $100,000
    
    
    88,885
    
    
    
    21,277Certificates of deposit, $100,000 and over
    
    
    74,238
    
    
    
    32,251Total deposits
    
    
    361,187
    
    
    
    227,190Federal Home Loan Bank advances
    
    
    47,566
    
    
    
    32,850Junior subordinated debentures
    
    
    10,000
    
    
    
    Accrued interest payable and other liabilities
    
    
    3,678
    
    
    
    1,160Total liabilities
    
    
    422,431
    
    
    
    261,200SHAREHOLDERS EQUITYCommon stock, no par value, 10,000,000 authorized;
shares issued and outstanding: 3,277,807 at
September 30, 2005 and 2,162,807 at December 31, 2004.
    
    
    32,666
    
    
    
    11,965Retained earnings
    
    
    12,807
    
    
    
    10,839Accumulated other comprehensive loss
    
    
    (513
    )
    
    
    (259
    )Total shareholders equity
    
    
    44,960
    
    
    
    22,545TOTAL LIABILITIES AND SHAREHOLDERS EQUITY
    
    $
    467,391
    
    
    $
    283,745
  3




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FCB
BANCORP and subsidiaries
 
  Three Months Ended September 30,
    
    
    Nine Months Ended September 30,(in thousands, except per share data)
    
    2005
    
    
    2004
    
    
    2005
    
    
    2004INTEREST INCOMEInterest and fees on loans
    
    $
    3,804
    
    
    $
    2,757
    
    
    $
    10,128
    
    
    $
    8,336Taxable interest on securities
    
    
    547
    
    
    
    581
    
    
    
    1,716
    
    
    
    1,452Nontaxable interest on securities
    
    
    86
    
    
    
    73
    
    
    
    234
    
    
    
    225Interest on federal funds sold
    
    
    9
    
    
    
    1
    
    
    
    77
    
    
    
    45Total interest income
    
    
    4,446
    
    
    
    3,412
    
    
    
    12,155
    
    
    
    10,058INTEREST EXPENSEInterest on deposits
    
    
    600
    
    
    
    335
    
    
    
    1,456
    
    
    
    944Interest on borrowings
    
    
    279
    
    
    
    195
    
    
    
    670
    
    
    
    395Total interest expense
    
    
    879
    
    
    
    530
    
    
    
    2,126
    
    
    
    1,339NET INTEREST INCOME
    
    
    3,567
    
    
    
    2,882
    
    
    
    10,029
    
    
    
    8,719PROVISION FOR LOAN LOSSES
    
    
    122
    
    
    
    105
    
    
    
    366
    
    
    
    313NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES
    
    
    3,445
    
    
    
    2,777
    
    
    
    9,663
    
    
    
    8,406NONINTEREST INCOMEService charges on deposit accounts
    
    
    290
    
    
    
    298
    
    
    
    839
    
    
    
    785Earnings on cash surrender value of life insurance
    
    
    57
    
    
    
    57
    
    
    
    168
    
    
    
    168Commissions on brokered loans
    
    
    49
    
    
    
    83
    
    
    
    139
    
    
    
    97Net gain on sales of loans
    
    
    20
    
    
    
    
    
    
    
    98
    
    
    
    75Net servicing fees
    
    
    15
    
    
    
    12
    
    
    
    36
    
    
    
    32Net gain (loss) on sales of securities
    
    
    
    
    
    
    12
    
    
    
    2
    
    
    
    24Other income
    
    
    77
    
    
    
    47
    
    
    
    169
    
    
    
    212Total noninterest income
    
    
    508
    
    
    
    509
    
    
    
    1,451
    
    
    
    1,393
  4




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FCB
BANCORP and subsidiaries
  Three Months Ended September 30,
    
    
    Nine Months Ended September 30,(in thousands, except per share data)
    
    2005
    
    
    2004
    
    
    2005
    
    
    2004NONINTEREST EXPENSESalaries and employee benefits
    
    $
    1,521
    
    
    $
    1,373
    
    
    $
    4,541
    
    
    $
    4,074Premises and equipment
    
    
    445
    
    
    
    335
    
    
    
    1,220
    
    
    
    927Data processing
    
    
    145
    
    
    
    199
    
    
    
    418
    
    
    
    609Legal, audit, and other professional services
    
    
    116
    
    
    
    109
    
    
    
    377
    
    
    
    269Printing, stationary, and supplies
    
    
    39
    
    
    
    40
    
    
    
    133
    
    
    
    104Telephone
    
    
    39
    
    
    
    38
    
    
    
    111
    
    
    
    111Directors fees
    
    
    33
    
    
    
    33
    
    
    
    99
    
    
    
    95Advertising and marketing
    
    
    79
    
    
    
    106
    
    
    
    288
    
    
    
    275Postage
    
    
    20
    
    
    
    15
    
    
    
    48
    
    
    
    60Other expenses
    
    
    290
    
    
    
    133
    
    
    
    708
    
    
    
    563Total noninterest expense
    
    
    2,727
    
    
    
    2,381
    
    
    
    7,943
    
    
    
    7,087INCOME BEFORE PROVISION FOR
INCOME TAXES
    
    
    1,226
    
    
    
    905
    
    
    
    3,171
    
    
    
    2,712PROVISION FOR INCOME TAXES
    
    
    464
    
    
    
    308
    
    
    
    1,203
    
    
    
    949NET INCOME
    
    $
    762
    
    
    $
    597
    
    
    $
    1,968
    
    
    $
    1,763EARNINGS PER SHAREBasic
    
    $
    0.35
    
    
    $
    0.28
    
    
    $
    0.91
    
    
    $
    0.86Diluted
    
    $
    0.35
    
    
    $
    0.27
    
    
    $
    0.90
    
    
    $
    0.83
  5




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FCB
BANCORP and subsidiaries
 
  Three Months Ended September 30,
    
    
    Nine Months Ended September 30,(in thousands)
    
    2005
    
    
    2004
    
    
    2005
    
    
    2004Unrealized holding gains (losses) on securities
available-for-sale arising during the period
    
    $
    (282
    )
    
    $
    1,339
    
    
    $
    (431
    )
    
    $
    (664
    )Reclassification adjustments for (gains)
included in net income
    
    
    
    
    
    
    (12
    )
    
    
    (2
    )
    
    
    (24
    )OTHER COMPREHENSIVE INCOME (LOSS),
BEFORE TAX
    
    
    (282
    )
    
    
    1,327
    
    
    
    (433
    )
    
    
    (688
    )Income tax (expense) benefit related to items of
other comprehensive income
    
    
    116
    
    
    
    (561
    )
    
    
    175
    
    
    
    248OTHER COMPREHENSIVE INCOME (LOSS),
NET OF TAX
    
    
    (166
    )
    
    
    766
    
    
    
    (258
    )
    
    
    (440
    )NET INCOME
    
    
    762
    
    
    
    597
    
    
    
    1,968
    
    
    
    1,763COMPREHENSIVE INCOME
    
    $
    596
    
    
    $
    1,363
    
    
    $
    1,710
    
    
    $
    1,323
  6




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FCB
BANCORP and subsidiaries
 
 CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS EQUITY
 AccumulatedCommon Stock
    
    
    
    
    
    
    Other
    
    
    Total(dollars in thousands,
    
    Shares
    
    
    
    
    
    
    Retained
    
    
    Comprehensive
    
    
    Shareholdersexcept share data)
    
    Outstanding
    
    
    Amount
    
    
    Earnings
    
    
    Income (Loss)
    
    
    EquityBALANCE, December 31, 2003
    
    
    1,983,508
    
    
    $
    10,262
    
    
    $
    8,404
    
    
    $
    (301
    )
    
    $
    18,365Comprehensive income
    
    
    
    
    
    
    
    
    
    
    2,435
    
    
    
    42
    
    
    
    2,477Exercise of warrants
    
    
    179,299
    
    
    
    1,703
    
    
    
    
    
    
    
    
    
    
    
    1,703BALANCE, December 31, 2004
    
    
    2,162,807
    
    
    
    11,965
    
    
    
    10,839
    
    
    
    (259
    )
    
    
    22,545Comprehensive income
    
    
    
    
    
    
    
    
    
    
    1,968
    
    
    
    (254
    )
    
    
    1,714Issuance of Common Stock
    
    
    1,115,000
    
    
    
    20,701
    
    
    
    
    
    
    
    
    
    
    
    20,701BALANCE, September 30, 2005
    
    
    3,277,807
    
    
    $
    32,666
    
    
    $
    12,807
    
    
    $
    (513
    )
    
    $
    44,960
  7




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FCB BANCORP and subsidiaries
 Nine Months Ended September 30,2005
    
    
    2004(in thousands)CASH FLOWS FROM OPERATING ACTIVITIESNet income
    
    $
    1,968
    
    
    $
    1,763Adjustments to reconcile net income to net cash from operating activities:Realized
gains on sale of securities and loans
    
    
    (100
    )
    
    
    (99
    )Net amortization of premiums on securities
available-for-sale
    
    
    280
    
    
    
    419Federal Home Loan Bank stock dividends
    
    
    (43
    )
    
    
    (65
    )Provision for loan losses
    
    
    366
    
    
    
    313Deferred income taxes
    
    
    183
    
    
    
    1Depreciation and amortization
    
    
    376
    
    
    
    316Net appreciation in cash surrender value of life insurance
    
    
    (141
    )
    
    
    (160
    )Change in accrued interest receivable and other assets
    
    
    (291
    )
    
    
    (159
    )Change in accrued interest payable and other liabilities
    
    
    1,468
    
    
    
    727Net cash from operating activities
    
    
    4,066
    
    
    
    3,056CASH FLOWS FOR INVESTING ACTIVITIESNet change in federal funds sold
    
    
    3,200
    
    
    
    15,780Proceeds from maturities, calls, and paydowns of
securities available-for-sale
    
    
    12,112
    
    
    
    12,188Proceeds from sales of securities available-for-sale
    
    
    774
    
    
    
    3,346Purchases of securities available-for-sale
    
    
    (6,516
    )
    
    
    (26,828
    )Purchase of Federal Home Loan Bank stock
    
    
    (337
    )
    
    
    (398
    )Net increase in loans
    
    
    (23,922
    )
    
    
    (15,498
    )Cash paid, net of cash received for net assets of bank subsidiary
    
    
    (29,585
    )
    
    
    Purchases of premises and equipment, net
    
    
    (1,666
    )
    
    
    (995
    )Net cash from investing activities
    
    
    (45,940
    )
    
    
    (12,405
    )




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FCB BANCORP and subsidiaries
 Nine Months Ended September 30,2005
    
    
    2004(in thousands)CASH FLOW FROM FINANCING ACTIVITIESNet increase
(decrease) in deposits
    
    
    6,252
    
    
    
    (3,051
    )Increase in Federal Home Loan Bank advances
    
    
    14,716
    
    
    
    10,665Proceeds from issuance of junior subordinated debentures
    
    
    10,000
    
    
    
    Proceeds from issuance of common stock
    
    
    20,701
    
    
    
    Proceeds from exercise of warrants
    
    
    
    
    
    
    1,703Net cash from financing activities
    
    
    51,669
    
    
    
    9,317CHANGE IN CASH AND DUE FROM BANKS
    
    $
    9,795
    
    
    $
    (32
    )CASH AND DUE FROM BANKS, beginning of period
    
    
    7,194
    
    
    
    7,770CASH AND DUE FROM BANKS, end of period
    
    $
    16,989
    
    
    $
    7,738SUPPLEMENTAL DISCLOSURE OF CASH
FLOW INFORMATIONCash paid during the period for:Interest
    
    $
    1,965
    
    
    $
    1,299Income taxes
    
    $
    1,037
    
    
    $
    1,015SUPPLEMENTAL DISCLOSURE OF NONCASH
INVESTING ACTIVITIESChange in fair value of securities available-for-sale, net of taxes
    
    $
    (254
    )
    
    $
    (392
    )




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NOTE A  BASIS OF PRESENTATION AND MANAGEMENT REPRESENTATION
     NOTE B  ACQUISITION OF SOUTH COAST BANCORP, INC.
   10




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(in thousands)
    
    As ofSeptember 30, 2005AssetsCash and due from banks
    
    $
    6,484Federal funds sold
    
    
    11,400Securities
    
    
    6,972Loans
    
    
    119,050Allowance for loan losses
    
    
    (1,184
    )Premises and equipment, net
    
    
    1,612Other assets
    
    
    622Goodwill
    
    
    Total
    
    $
    144,956Liabilities and Net AssetsDeposits
    
    $
    127,178Borrowings
    
    
    Other liabilities
    
    
    1,051Total liabilities
    
    
    128,229Book value of net assets
    
    
    16,727Total
    
    $
    144,956
  (in thousands, except per share)
    
    Pro forma Results of OperationsThree months ended
    
    Nine months ended
    
    Year endedSeptember 30, 2005
    
    September 30, 2005
    
    December 31, 2004Net interest income
    
    $
    5,155
    
    
    $
    14,517
    
    
    $
    17,092Noninterest income
    
    
    579
    
    
    
    1,633
    
    
    
    2,640Noninterest expense
    
    
    3,547
    
    
    
    10,585
    
    
    
    13,101Provision for loan losses
    
    
    160
    
    
    
    395
    
    
    
    363Income before tax
    
    
    2,027
    
    
    
    5,170
    
    
    
    6,268Income taxes
    
    
    831
    
    
    
    2,073
    
    
    
    2,374Net income
    
    $
    1,196
    
    
    $
    3,097
    
    
    $
    3,894Earnings per shareBasic
    
    $
    0.36
    
    
    $
    0.94
    
    
    $
    1.22Diluted
    
    $
    0.36
    
    
    $
    0.94
    
    
    $
    1.20Weighted average sharesBasic
    
    
    3,278
    
    
    
    3,278
    
    
    
    3,195Diluted
    
    
    3,293
    
    
    
    3,300
    
    
    
    3,251
 11




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(in thousands)
    
    Nine months ended
    
    Year endedSeptember 30, 2005
    
    December 31, 2004incresase (decrease)Net interest incomeSecurities discount
    
    $
    18
    
    
    $
    44Loan premium
    
    
    (10
    )
    
    
    (13
    )Deposit discount
    
    
    (141
    )
    
    
    (211
    )Junior subordinated debt interest
    
    
    459
    
    
    
    615Noninterest expensePremises & equipment
    
    
    11
    
    
    
    14Intangible amortization
    
    
    52
    
    
    
    69Organization expenses
    
    
    (50
    )
    
    
    50Severance and related merger charges
    
    
    (1,733
    )
    
    
    Income taxesIncome taxes
    
    
    802
    
    
    
    950
  (in thousands)
    
    As ofSeptember 30, 2005AssetsCash and due from banks
    
    $
    6,415Federal funds sold
    
    
    11,400Securities
    
    
    6,904Loans
    
    
    119,159Allowance for loan losses
    
    
    (1,184
    )Premises and equipment, net
    
    
    4,016Other assets
    
    
    1,345Total
    
    $
    148,055Liabilities and Net AssetsDeposits
    
    $
    127,647Other liabilities
    
    
    1,050Total liabilities
    
    
    128,697Fair value of net assets
    
    
    19,358Total
    
    $
    148,055
  (in thousands)Cash paid to common shareholders of South Coast Bancorp, Inc.
    
    $
    36,000Transaction costs  investment banking, legal and accounting fees
    
    
    400Estimated restructuring charges
    
    
    200Total
    
    $
    36,600
 12




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NOTE C  EARNINGS PER SHARE
  For the Three Months Ended September 30,
    
    
    For the Nine Months Ended September 30,2005
    
    
    2004
    
    
    2005
    
    
    2004(dollars in thousands, except per share data)
    
    Diluted
    
    
    Basic
    
    
    Diluted
    
    
    Basic
    
    
    Diluted
    
    
    Basic
    
    
    Diluted
    
    
    BasicIncome available to common shareholders
    
    $
    762
    
    
    $
    762
    
    
    $
    597
    
    
    $
    597
    
    
    $
    1,968
    
    
    $
    1,968
    
    
    $
    1,763
    
    
    $
    1,763Weighted average common shares
Outstanding
    
    
    2,174,927
    
    
    
    2,174,927
    
    
    
    2,162,807
    
    
    
    2,162,807
    
    
    
    2,166,891
    
    
    
    2,166,891
    
    
    
    2,052,385
    
    
    
    2,052,385Net effect of dilutive warrants and options 
based on the treasury stock method
using average market price
    
    
    14,886
    
    
    
    
    
    
    
    11,710
    
    
    
    
    
    
    
    22,475
    
    
    
    
    
    
    
    66,672
    
    
    
    2,189,813
    
    
    
    2,174,927
    
    
    
    2,174,517
    
    
    
    2,162,807
    
    
    
    2,189,366
    
    
    
    2,166,891
    
    
    
    2,119,057
    
    
    
    2,052,385Earnings per share
    
    $
    0.35
    
    
    $
    0.35
    
    
    $
    0.27
    
    
    $
    0.28
    
    
    $
    0.90
    
    
    $
    0.91
    
    
    $
    0.83
    
    
    $
    0.86
 NOTE D  SECURITIES
  13




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Gross
    
    
    Gross
    
    
    EstimatedSeptember 30, 2005
    
    Amortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    FairCost
    
    
    Gains
    
    
    Losses
    
    
    Value(in thousands)Mortgage-backed securities
    
    $
    47,443
    
    
    $
    19
    
    
    $
    (802
    )
    
    $
    46,660Collateralized mortgage
Obligations
    
    
    3,469
    
    
    
    27
    
    
    
    (49
    )
    
    
    3,447U.S. Treasury securities
    
    
    7,796
    
    
    
    0
    
    
    
    (86
    )
    
    
    7,710Municipal securities
    
    
    9,142
    
    
    
    92
    
    
    
    (20
    )
    
    
    9,214U.S. agency securities
    
    
    10,261
    
    
    
    
    
    
    
    (120
    )
    
    
    10,141Securities
available-for-sale
    
    $
    78,110
    
    
    $
    138
    
    
    $
    (1,077
    )
    
    $
    77,171
 Gross
    
    
    Gross
    
    
    EstimatedDecember 31, 2004
    
    Amortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    FairCost
    
    
    Gains
    
    
    Losses
    
    
    Value(in thousands)Mortgage-backed securities
    
    $
    56,348
    
    
    $
    126
    
    
    $
    (622
    )
    
    $
    55,852Collateralized mortgage
obligations
    
    
    4,915
    
    
    
    57
    
    
    
    (8
    )
    
    
    4,964U.S. Treasury securities
    
    
    2,993
    
    
    
    
    
    
    
    (10
    )
    
    
    2,983Municipal securities
    
    
    6,733
    
    
    
    90
    
    
    
    (16
    )
    
    
    6,807U.S. agency securities
    
    
    6,796
    
    
    
    
    
    
    
    (57
    )
    
    
    6,739Securities
available-for-sale
    
    $
    77,785
    
    
    $
    273
    
    
    $
    (713
    )
    
    $
    77,345
  NOTE E  LOANS AND ALLOWANCE FOR LOAN LOSSES
  14




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(dollars in thousands)
    
    September 30,
    
    December 31,2005
    
    2004Commercial real estate
    
    $
    224,383
    
    
    $
    83,457Commercial loans
    
    
    56,271
    
    
    
    68,996Construction loans
    
    
    23,004
    
    
    
    12,330Home equity loans
    
    
    7,482
    
    
    
    2,114Home mortgage
    
    
    10,696
    
    
    
    11,558Installment and credit card
    
    
    4,315
    
    
    
    4,418Total loans
    
    
    326,151
    
    
    
    182,873Allowance for loan losses
    
    
    (3,995
    )
    
    
    (2,346
    )$
    322,156
    
    
    $
    180,527
  (dollars in thousands)
    
    Third quarter
    

Nine
months ended September 30,2005
    
    2004
    
    2005
    
    2004Beginning balance
    
    $
    2,593
    
    
    $
    2,533
    
    
    $
    2,346
    
    
    $
    2,325Balance acquired in purchase
    
    
    1,184
    
    
    
    
    
    
    
    1,184
    
    
    
    Provision for loan losses
    
    
    122
    
    
    
    105
    
    
    
    366
    
    
    
    313Loans charged-off
    
    
    
    
    
    
    (73
    )
    
    
    (73
    )
    
    
    (86
    )Recoveries on loans charged-off
    
    
    96
    
    
    
    
    
    
    
    172
    
    
    
    13Ending balance
    
    $
    3,995
    
    
    $
    2,565
    
    
    $
    3,995
    
    
    $
    2,565
 NOTE F  STOCK-BASED COMPENSATION
  15




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##### Table of Contents



(dollars in thousands, except per share data)
    
    Three months ended September 30, 2005
    
    
    Nine months ended September 30, 20052005
    
    
    2004
    
    
    2005
    
    
    2004Net income, as reported
    
    $
    762
    
    
    $
    597
    
    
    $
    1,968
    
    
    $
    1,763Total stock-based employee compensation
expense determined under fair value-based
methods for all awards, net of related tax effects
    
    
    (6
    )
    
    
    (3
    )
    
    
    (19
    )
    
    
    (10
    )$
    754
    
    
    $
    594
    
    
    $
    1,949
    
    
    $
    1,753Pro forma net incomeEarnings per share:Diluted  as reported
    
    $
    0.35
    
    
    $
    0.27
    
    
    $
    0.90
    
    
    $
    0.83Diluted  pro forma
    
    $
    0.34
    
    
    $
    0.27
    
    
    $
    0.89
    
    
    $
    0.83Basic  as reported
    
    $
    0.35
    
    
    $
    0.28
    
    
    $
    0.91
    
    
    $
    0.86Basic  pro forma
    
    $
    0.35
    
    
    $
    0.27
    
    
    $
    0.90
    
    
    $
    0.85
  Three months ended September 30, 2005
    
    
    Nine months ended September 30, 20052005
    
    
    2004
    
    
    2005
    
    
    2004Dividend yield
    
    None
    
    
    None
    
    
    None
    
    
    NoneExpected life
    
    5 years
    
    
    6 years
    
    
    5 years
    
    
    6 yearsExpected volatility
    
    Nil
    
    
    Nil
    
    
    Nil
    
    
    NilRisk-free rate
    
    
    4.17
    %
    
    
    3.95
    %
    
    
    4.17
    %
    
    
    3.95
    %
 NOTE G  RECENTLY ISSUED ACCOUNTING STANDARDS
    16




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Share-Based Payments Accounting for Stock-Based Compensation Accounting for Stock
Issued to Employees
 17




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Item 2  Managements Discussion and Analysis of Financial Condition and Results of
Operations
    
    
    revenues are lower than expected;
    
    credit quality deterioration which could cause an increase in the
provision for credit losses;
    
    competitive pressure among depository institutions increases
significantly;
    
    the Companys ability to complete planned acquisitions, to successfully
integrate acquired entities, or to achieve expected synergies and operating efficiencies
within expected time-frames or at all;
    
    the integration of acquired businesses costs more, takes longer or is
less successful than expected;
    
    the cost of additional capital is more than expected;
    
    a change in the interest rate environment reduces interest margins;
    
    asset/liability repricing risks and liquidity risks;
    
    general economic conditions, either nationally or in the market areas in
which the Company does or anticipates doing business, are less favorable than expected;
    
    the economic and regulatory effects of the continuing war on terrorism
and other events of war, including the war in Iraq;
    
    legislative or regulatory requirements or changes adversely affecting
the Companys business;
    
    changes in the securities markets; and
    
    regulatory approvals for announced or future acquisitions cannot be
obtained on the terms expected or on the anticipated schedule.
  Critical accounting policies
  Allowance for loan losses
  Income taxes
  Overview
    18




---



##### Table of Contents



(in thousands, except per share)
    
    Three months ended September 30,
    
    Nine month ended September 30,2005
    
    2004
    
    2005
    
    2004Net income
    
    $
    762
    
    
    $
    597
    
    
    $
    1,968
    
    
    $
    1,763Basic earnings per share
    
    $
    0.35
    
    
    $
    0.28
    
    
    $
    0.91
    
    
    $
    0.86Diluted earnings per share
    
    $
    0.35
    
    
    $
    0.27
    
    
    $
    0.90
    
    
    $
    0.83Basic weighted average shares
    
    
    2,175
    
    
    
    2,163
    
    
    
    2,167
    
    
    
    2,052Diluted weighted average shares
    
    
    2,190
    
    
    
    2,175
    
    
    
    2,189
    
    
    
    2,119
  (in thousands, except per share)
    
    Three Months Ended
    
    Nine Months Ended
    
    Year EndedSeptember 30, 2005
    
    September 30, 2005
    
    December 31, 2004Net income as reported
    
    $
    762
    
    
    $
    1,968
    
    
    $
    2,435Pro forma combined net income
    
    $
    1,196
    
    
    $
    3,097
    
    
    $
    3,894Earnings per share as reported:Basic
    
    $
    0.35
    
    
    $
    0.91
    
    
    $
    1.17Diluted
    
    $
    0.35
    
    
    $
    0.90
    
    
    $
    1.14Pro forma combined earnings per share:Basic
    
    $
    0.36
    
    
    $
    0.94
    
    
    $
    1.22Diluted
    
    $
    0.36
    
    
    $
    0.94
    
    
    $
    1.20Average shares outstanding as reported:Basic
    
    
    2,175
    
    
    
    2,167
    
    
    
    2,080Diluted
    
    
    2,190
    
    
    
    2,189
    
    
    
    2,136Pro forma average shares outstanding:Basic
    
    
    3,278
    
    
    
    3,278
    
    
    
    3,195Diluted
    
    
    3,293
    
    
    
    3,300
    
    
    
    3,251
  19




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Results of Operations
 Net interest income
        20




---



##### Table of Contents



Nine
months ended September 30,2005
    
    
    2004Average
    
    
    Income/
    
    
    Average
    
    
    Average
    
    
    Income/
    
    
    Average(dollars in thousands)
    
    Balance
    
    
    Expense
    
    
    Rate
    
    
    Balance
    
    
    Expense
    
    
    RateAssets:Loans:Commercial
    
    $
    84,006
    
    
    $
    4,937
    
    
    
    7.86
    %
    
    $
    68,241
    
    
    $
    3,748
    
    
    
    7.34
    %Real estate
    
    
    100,470
    
    
    
    4,835
    
    
    
    6.43
    %
    
    
    93,477
    
    
    
    4,269
    
    
    
    6.10
    %Consumer
    
    
    7,107
    
    
    
    356
    
    
    
    6.69
    %
    
    
    5,348
    
    
    
    319
    
    
    
    7.97
    %Total loans
    
    
    191,583
    
    
    
    10,128
    
    
    
    7.07
    %
    
    
    167,066
    
    
    
    8,336
    
    
    
    6.67
    %Securities:Taxable
    
    
    67,563
    
    
    
    1,716
    
    
    
    3.39
    %
    
    
    64,657
    
    
    
    1,453
    
    
    
    2.99
    %Nontaxable
    
    
    8,042
    
    
    
    234
    
    
    
    5.88
    %
    
    
    7,433
    
    
    
    225
    
    
    
    6.13
    %Total securities
    
    
    75,605
    
    
    
    1,950
    
    
    
    3.65
    %
    
    
    72,090
    
    
    
    1,678
    
    
    
    3.32
    %Federal funds sold
    
    
    3,540
    
    
    
    75
    
    
    
    2.88
    %
    
    
    5,654
    
    
    
    45
    
    
    
    1.06
    %Deposits with banks
    
    
    52
    
    
    
    1
    
    
    
    1.37
    %
    
    
    110
    
    
    
    1
    
    
    
    0.65
    %Total earning assets
    
    
    270,780
    
    
    
    12,154
    
    
    
    6.06
    %
    
    
    244,920
    
    
    
    10,060
    
    
    
    5.53
    %Non-earning assets
    
    
    21,371
    
    
    
    
    
    
    
    
    
    
    
    19,382Total assets
    
    $
    292,151
    
    
    
    
    
    
    
    
    
    
    $
    264,302Liabilities and shareholders equityInterest bearing deposits:Interest bearing
demand deposits
    
    $
    20,148
    
    
    
    16
    
    
    
    0.10
    %
    
    $
    19,705
    
    
    
    16
    
    
    
    0.11
    %Savings
    
    
    63,584
    
    
    
    389
    
    
    
    0.82
    %
    
    
    60,986
    
    
    
    366
    
    
    
    0.80
    %Certificates of deposit
    
    
    56,225
    
    
    
    1,051
    
    
    
    2.50
    %
    
    
    51,985
    
    
    
    562
    
    
    
    1.44
    %Total interest bearing
deposits
    
    
    139,958
    
    
    
    1,456
    
    
    
    1.39
    %
    
    
    132,676
    
    
    
    944
    
    
    
    0.95
    %Borrowed funds:FHLB advances
    
    
    33,122
    
    
    
    670
    
    
    
    2.70
    %
    
    
    29,271
    
    
    
    394
    
    
    
    1.80
    %Total borrowed funds
    
    
    33,122
    
    
    
    670
    
    
    
    2.70
    %
    
    
    29,271
    
    
    
    396
    
    
    
    1.81
    %Total interest bearing funds
    
    
    173,080
    
    
    
    2,126
    
    
    
    1.64
    %
    
    
    161,947
    
    
    
    1,340
    
    
    
    1.11
    %Noninterest bearing demand deposits
    
    
    93,958
    
    
    
    
    
    
    
    
    
    
    
    81,479Other liabilities
    
    
    1,294
    
    
    
    
    
    
    
    
    
    
    
    1,307Shareholders equity
    
    
    23,820
    
    
    
    
    
    
    
    
    
    
    
    19,569Total liabilities and shareholders equity
    
    $
    292,151
    
    
    
    
    
    
    
    
    
    
    $
    264,302Net interest income
    
    
    
    
    
    $
    10,028
    
    
    
    
    
    
    
    
    
    
    $
    8,719Net interest margin
(tax equivalent)
    
    
    
    
    
    
    
    
    
    
    4.95
    %
    
    
    
    
    
    
    
    
    
    
    4.79
    %
   21




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(dollars in thousands)
    
    2005 to 2004 due to:Rate
    
    
    Volume
    
    
    TotalInterest incomeInterest on loans
    
    $
    567
    
    
    $
    1,223
    
    
    $
    1,790Interest on securities
    
    
    191
    
    
    
    82
    
    
    
    273Interest on Federal funds sold
    
    
    48
    
    
    
    (17
    )
    
    
    31Total interest income
    
    
    806
    
    
    
    1,288
    
    
    
    2,094Interest expenseInterest bearing demand deposits
    
    
    (1
    )
    
    
    
    
    
    
    (1
    )Savings
    
    
    8
    
    
    
    16
    
    
    
    24Certificates of deposit
    
    
    443
    
    
    
    46
    
    
    
    489Total interest on deposits
    
    
    450
    
    
    
    62
    
    
    
    512Interest on borrowings
    
    
    221
    
    
    
    52
    
    
    
    273Total interest expense
    
    
    671
    
    
    
    114
    
    
    
    785Net interest income
    
    $
    135
    
    
    $
    1,174
    
    
    $
    1,309
 Provision for loan losses
  Noninterest income
   22




---



##### Table of Contents



(dollars in thousands)
    
    Third quarter
    

Nine
months ended September 30,2005
    
    2004
    
    2005
    
    2004Service charges, fees & other income
    
    $
    439
    
    
    $
    414
    
    
    $
    1,212
    
    
    $
    1,197Loan commissions & sales
    
    
    69
    
    
    
    83
    
    
    
    237
    
    
    
    172Gains(losses) on sales of securities
    
    
    
    
    
    
    12
    
    
    
    2
    
    
    
    24Noninterest income
    
    $
    508
    
    
    $
    509
    
    
    $
    1,451
    
    
    $
    1,393
 Noninterest expense
   (dollars in thousands)
    
    Third quarter
    

Nine
months ended September 30,2005
    
    2004
    
    2005
    
    2004Salaries and employee benefits
    
    $
    1,521
    
    
    $
    1,373
    
    
    $
    4,541
    
    
    $
    4,074Premises and equipment
    
    
    445
    
    
    
    335
    
    
    
    1,220
    
    
    
    927Other expenses
    
    
    761
    
    
    
    673
    
    
    
    2,182
    
    
    
    2,086Noninterest expense
    
    $
    2,727
    
    
    $
    2,381
    
    
    $
    7,943
    
    
    $
    7,087Efficiency ratio
    
    
    66.93
    %
    
    
    70.46
    %
    
    
    69.20
    %
    
    
    70.24
    %
 Income taxes
   Financial Condition
   23




---



##### Table of Contents



24




---



##### Table of Contents



Loans
   (dollars in thousands)
    
    September 30,
    
    December 31,2005
    
    2004Commercial real estate
    
    $
    224,383
    
    
    $
    83,457Commercial loans
    
    
    56,271
    
    
    
    68,996Construction loans
    
    
    23,004
    
    
    
    12,330Home equity loans
    
    
    7,482
    
    
    
    2,114Home mortgage
    
    
    10,696
    
    
    
    11,558Installment and credit card
    
    
    4,315
    
    
    
    4,418Total loans
    
    
    326,151
    
    
    
    182,873Allowance for loan losses
    
    
    (3,995
    )
    
    
    (2,346
    )$
    322,156
    
    
    $
    180,527
       25




---



##### Table of Contents



September 30, 2005After OneOne Year
    
    
    Year to
    
    
    After Five(Dollars in thousands)
    
    or Less
    
    
    Five Years
    
    
    Years
    
    
    TotalFixed rate loanCommercial real estate
    
    $
    3,752
    
    
    $
    6,273
    
    
    $
    10,833
    
    
    $
    20,858Commercial loans and lines
    
    
    584
    
    
    
    2,841
    
    
    
    524
    
    
    
    3,951Construction
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Consumer
    
    
    97
    
    
    
    299
    
    
    
    46
    
    
    
    442Other
    
    
    6,532
    
    
    
    510
    
    
    
    3,906
    
    
    
    10,949Total fixed rate loan maturities
    
    
    10,966
    
    
    
    9,923
    
    
    
    15,310
    
    
    
    36,199Adjustable rate loanCommercial real estate
    
    $
    160,993
    
    
    $
    38,299
    
    
    $
    872
    
    
    $
    200,165Commercial loans and lines
    
    
    54,990
    
    
    
    5,227
    
    
    
    
    
    
    
    60,217Construction
    
    
    21,453
    
    
    
    
    
    
    
    
    
    
    
    21,453Consumer
    
    
    3,345
    
    
    
    
    
    
    
    
    
    
    
    3,345Other
    
    
    4,773
    
    
    
    
    
    
    
    
    
    
    
    4,773Total adjustable rate loan maturities
    
    
    245,554
    
    
    
    43,526
    
    
    
    872
    
    
    
    289,953Total maturities
    
    $
    256,520
    
    
    $
    53,449
    
    
    $
    16,182
    
    
    $
    326,151
 December 31, 2004One Year
    
    
    One Year to
    
    
    After(Dollars in thousands)
    
    or Less
    
    
    Five Years
    
    
    Five Years
    
    
    TotalFixed rate loan maturitiesCommercial real estate
    
    $
    669
    
    
    $
    3,394
    
    
    $
    3,484
    
    
    $
    7,547Commercial loans and lines
    
    
    476
    
    
    
    3,955
    
    
    
    685
    
    
    
    5,116Consumer
    
    
    84
    
    
    
    582
    
    
    
    22
    
    
    
    688Other
    
    
    7,275
    
    
    
    
    
    
    
    5,653
    
    
    
    12,928Total fixed rate loan maturities
    
    
    8,504
    
    
    
    7,931
    
    
    
    9,844
    
    
    
    26,279Adjustable rate loanCommercial real estate
    
    
    38,728
    
    
    
    42,389
    
    
    
    
    
    
    
    81,117Commercial loans and lines
    
    
    50,677
    
    
    
    4,388
    
    
    
    1,950
    
    
    
    57,015Construction
    
    
    12,609
    
    
    
    
    
    
    
    
    
    
    
    12,609Consumer
    
    
    3,308
    
    
    
    
    
    
    
    
    
    
    
    3,308Other
    
    
    2,545
    
    
    
    
    
    
    
    
    
    
    
    2,545Total adjustable rate loan maturities
    
    
    107,867
    
    
    
    46,777
    
    
    
    1,950
    
    
    
    156,594Total maturities
    
    $
    116,371
    
    
    $
    54,708
    
    
    $
    11,794
    
    
    $
    182,873
 Allowance for loan losses
  26




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##### Table of Contents



Third quarter
    
    
    Nine months ended Sep 30,2005
    
    
    2004
    
    
    2005
    
    
    2004(dollars in thousands)Beginning balance
    
    $
    2,593
    
    
    $
    2,533
    
    
    $
    2,346
    
    
    $
    2,325Balance acquired in purchase
    
    
    1,184
    
    
    
    
    
    
    
    1,184
    
    
    
    Provision for loan losses
    
    
    122
    
    
    
    105
    
    
    
    366
    
    
    
    313Loans charged-off
    
    
    
    
    
    
    (73
    )
    
    
    (73
    )
    
    
    (86
    )Recoveries on loans charged-off
    
    
    96
    
    
    
    
    
    
    
    172
    
    
    
    13Ending balance
    
    $
    3,995
    
    
    $
    2,565
    
    
    $
    3,995
    
    
    $
    2,565Allowance to loans
    
    
    1.22
    %
    
    
    1.48
    %Accruing loans past due 90 days or more
    
    $
    0
    
    
    $
    392Nonaccrual loans
    
    $
    0
    
    
    $
    2,376Nonaccrual loans to loans
    
    $
    0
    
    
    
    1.37
    %
    27




---



##### Table of Contents



September 30, 2005
    
    December 31, 2004Percent of
    
    
    
    
    
    Percent ofLoans in
    
    
    
    
    
    Loans inCategory to
    
    
    
    
    
    Category to(dollars in thousands)
    
    Amount
    
    Total Loans
    
    Amount
    
    Total loansCommercial real estate
    
    $
    1,954
    
    
    
    55
    %
    
    $
    880
    
    
    
    47
    %Commercial loans
    
    
    848
    
    
    
    24
    %
    
    
    821
    
    
    
    44
    %Construction loans
    
    
    595
    
    
    
    17
    %
    
    
    62
    
    
    
    3
    %Home equity loans
    
    
    37
    
    
    
    1
    %
    
    
    13
    
    
    
    1
    %Home mortgage
    
    
    53
    
    
    
    2
    %
    
    
    60
    
    
    
    3
    %Installment and
credit card
    
    
    56
    
    
    
    2
    %
    
    
    45
    
    
    
    2
    %Subtotal
    
    $
    3,543
    
    
    
    
    
    
    $
    1,881Unallocated
    
    
    452
    
    
    
    
    
    
    
    465Total
    
    $
    3,995
    
    
    
    100
    %
    
    $
    2,346
    
    
    
    100
    %
   September 30, 2005
    
    
    December 31, 2004(dollars in thousands)Accruing loans past due 90 days or more
    
    $
    0
    
    
    $
    0Nonaccrual loans
    
    $
    0
    
    
    $
    2,180Ratios:Accruing loans past due 90 days or more to average loans
    
    
    0.00
    %
    
    
    0.10
    %Nonaccrual loans to average loans
    
    
    0.00
    %
    
    
    1.29
    %Interest income on nonaccrual loans:Contractually due
    
    $
    0
    
    
    $
    197Collected
    
    $
    0
    
    
    $
    69
    28




---



##### Table of Contents



Securities
   29




---



##### Table of Contents



The nine months ended September 30, 2005After one
    
    
    After fiveOne year or
    
    
    year to five
    
    
    years to ten
    
    
    Over ten(dollars in thousands)
    
    less
    
    
    years
    
    
    years
    
    
    years
    
    
    TotalMaturity distributionMortgage-backed securities
    
    
    
    
    
    $
    35,556
    
    
    $
    10,688
    
    
    $
    1,199
    
    
    $
    47,443Collateralized mortgage obligations
    
    
    
    
    
    
    
    
    
    
    3,469
    
    
    
    
    
    
    
    3,469U.S. Treasury Obligations
    
    
    3,472
    
    
    
    4,324
    
    
    
    
    
    
    
    
    
    
    
    7,796State and municipal securities
    
    
    101
    
    
    
    676
    
    
    
    3,250
    
    
    
    5,115
    
    
    
    9,142U.S. Agency securities
    
    
    2,723
    
    
    
    7,537
    
    
    
    
    
    
    
    
    
    
    
    10,260Total
    
    $
    6,296
    
    
    $
    48,093
    
    
    $
    17,407
    
    
    $
    6,314
    
    
    $
    78,110Weighted average yieldMortgage-backed securities
    
    
    
    
    
    
    3.33
    %
    
    
    4.35
    %
    
    
    5.41
    %
    
    
    3.61
    %Collateralized mortgage obligations
    
    
    
    
    
    
    
    
    
    
    4.83
    %
    
    
    
    
    
    
    4.83
    %U.S. Treasury obligations
    
    
    2.67
    %
    
    
    3.10
    %
    
    
    
    
    
    
    
    
    
    
    2.90
    %State and municipal securities
    
    
    8.03
    %
    
    
    4.17
    %
    
    
    5.50
    %
    
    
    5.77
    %
    
    
    5.58
    %U.S. Agency securities
    
    
    3.06
    %
    
    
    3.85
    %
    
    
    
    
    
    
    
    
    
    
    3.64
    %Total
    
    
    2.92
    %
    
    
    3.33
    %
    
    
    4.66
    %
    
    
    5.28
    %
    
    
    3.57
    %
 December
31, 2004After One
    
    
    After FiveOne Year or
    
    
    Year to Five
    
    
    Years to Ten
    
    
    Over Ten(dollars in thousands)
    
    Less
    
    
    Years
    
    
    Years
    
    
    Years
    
    
    TotalMaturity distributionMortgage-backed securities
    
    $
    1,226
    
    
    $
    36,848
    
    
    $
    10,314
    
    
    $
    7,960
    
    
    $
    56,348Collateralized mortgage obligations
    
    
    
    
    
    
    
    
    
    
    1,568
    
    
    
    3,347
    
    
    
    4,915U.S.
Treasury obligations
    
    
    2,993
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,993State and municipal securities
    
    
    100
    
    
    
    295
    
    
    
    2,723
    
    
    
    3,615
    
    
    
    6,733U.S. agency securities
    
    
    3,746
    
    
    
    3,050
    
    
    
    
    
    
    
    
    
    
    
    6,796Total
    
    $
    8,065
    
    
    $
    40,193
    
    
    $
    14,605
    
    
    $
    14,922
    
    
    $
    77,785Weighted average yieldMortgage-backed securities
    
    
    3.75
    %
    
    
    3.26
    %
    
    
    4.10
    %
    
    
    4.50
    %
    
    
    3.60
    %Collateralized mortgage obligations
    
    
    
    
    
    
    
    
    
    
    4.91
    %
    
    
    4.72
    %
    
    
    4.78
    %U.S. Treasury obligations
    
    
    2.75
    %
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2.75
    %State and municipal securities
    
    
    7.12
    %
    
    
    7.96
    %
    
    
    5.47
    %
    
    
    6.03
    %
    
    
    5.90
    %U.S. Agency securities
    
    
    2.69
    %
    
    
    2.62
    %
    
    
    
    
    
    
    
    
    
    
    2.66
    %Total
    
    
    2.93
    %
    
    
    3.25
    %
    
    
    4.44
    %
    
    
    4.92
    %
    
    
    3.76
    %
  30




---



##### Table of Contents



Deposits
   For the nine months ended September 30,2005
    
    
    2004(dollars in thousands)
    

Average Balance
    
    

Average
Rate
    
    

Average Balance
    
    

Average
RateCore depositsNoninterest bearing demand deposits
    
    $
    93,958
    
    
    
    
    
    
    $
    81,479Interest checking
    
    
    20,148
    
    
    
    0.10
    %
    
    
    19,705
    
    
    
    0.11
    %Savings accounts
    
    
    63,584
    
    
    
    0.82
    %
    
    
    60,986
    
    
    
    0.80
    %Time deposits less than $100,000
    
    
    32,515
    
    
    
    2.39
    %
    
    
    23,763
    
    
    
    1.82
    %Total core deposits
    
    
    210,205
    
    
    
    1.13
    %
    
    
    185,933
    
    
    
    0.90
    %Noncore depositsTime deposits of $100,000 or more
    
    
    23,711
    
    
    
    2.64
    %
    
    
    28,222
    
    
    
    1.12
    %Total core and noncore deposits
    
    $
    233,916
    
    
    
    1.39
    %
    
    $
    214,155
    
    
    
    0.95
    %
   September 30, 2005
    
    
    December 31, 2004(dollars in thousands)
    
    Amount
    
    
    Percentage
    
    
    Amount
    
    
    PercentageThree months or less
    
    $
    17,579
    
    
    
    24
    %
    
    $
    17,394
    
    
    
    54
    %Over three months through six months
    
    
    23,297
    
    
    
    31
    %
    
    
    7,571
    
    
    
    23
    %Over six months through one year
    
    
    15,591
    
    
    
    21
    %
    
    
    2,086
    
    
    
    6
    %Over one year
    
    
    17,771
    
    
    
    24
    %
    
    
    5,200
    
    
    
    16
    %Total
    
    $
    74,238
    
    
    
    100
    %
    
    $
    32,251
    
    
    
    100
    %
 Borrowings
  31




---



##### Table of Contents



Nine months ended September 30, 2005Federal Home Loan Bank
    
    Weighted average interestAdvances
    
    rate(dollars in thousands)Amount outstanding at end of period
    
    $
    47,566
    
    
    
    2.85
    %Maximum amount outstanding at
any month-end during the period
    
    $
    47,566
    
    
    
    2.85
    %Average amount outstanding
during the period
    
    $
    33,011
    
    
    
    2.67
    %
  Maturity Year
    
    
    Amount (in thousands)2005
    
    $
    26,2662006
    
    
    13,0502007
    
    
    6,7502008
    
    
    1,500$
    47,566
  Twelve
months ended December 31, 2004Federal Home Loan Bank
    
    Weighted average interestAdvances
    
    rate(dollars in thousands)Amount outstanding
at end of period
    
    $
    32,850
    
    
    
    2.39
    %Maximum amount outstanding at any month-end
during the period
    
    $
    32,850
    
    
    
    2.39
    %Average amount outstanding during the period
    
    $
    29,706
    
    
    
    1.95
    %
  Maturity Year
    
    
    Amount (in thousands)2005
    
    $
    16,0502006
    
    
    11,5502007
    
    
    5,250$
    32,850
  32




---



##### Table of Contents



To be WellCapitalized UnderFor Capital
    
    Prompt CorrectiveActual
    
    Adequacy Purposes
    
    Action ProvisionAmount
    
    Ratio
    
    Amount
    
    Ratio
    
    Amount
    
    RatioSeptember 30,
2005 (dollars in thousands)Total capital
    
    $
    41,748
    
    
    
    11.42
    %
    
    $
    29,246
    
    
    
    8.00
    %
    
    
    N/A
    
    
    
    N/A(to risk weighted assets)Tier I capital
    
    $
    37,604
    
    
    
    10.28
    %
    
    $
    14,632
    
    
    
    4.00
    %
    
    
    N/A
    
    
    
    N/A(to average assets)Tier I capital
    
    $
    37,604
    
    
    
    8.65
    %
    
    $
    17,389
    
    
    
    4.00
    %
    
    
    N/A
    
    
    
    N/A(to average assets)
 To be WellCapitalized UnderFor Capital
    
    Prompt CorrectiveActual
    
    Adequacy Purposes
    
    Action ProvisionAmount
    
    Ratio
    
    Amount
    
    Ratio
    
    Amount
    
    RatioDecember 31,
2004 (dollars in thousands)Total capital
    
    $
    25,300
    
    
    
    12.25
    %
    
    $
    16,518
    
    
    
    8.00
    %
    
    
    N/A
    
    
    
    N/A(to risk weighted assets)Tier I capital
    
    $
    22,804
    
    
    
    11.04
    %
    
    $
    8,259
    
    
    
    4.00
    %
    
    
    N/A
    
    
    
    N/A(to risk weighted assets)Tier I capital
    
    $
    22,804
    
    
    
    8.61
    %
    
    $
    10,974
    
    
    
    4.00
    %
    
    
    N/A
    
    
    
    N/A(to average assets)
   33




---



##### Table of Contents



To be WellCapitalized UnderFor Capital
    
    Prompt CorrectiveActual
    
    Adequacy Purposes
    
    Action ProvisionAmount
    
    Ratio
    
    Amount
    
    Ratio
    
    Amount
    
    RatioSeptember 30,
2005 (dollars in thousands)Total capital
    
    $
    22,548
    
    
    
    9.38
    %
    
    $
    19,222
    
    
    
    8.00
    %
    
    $
    24,027
    
    
    
    10.00
    %(to risk weighted assets)Tier I capital
    
    $
    19,587
    
    
    
    8.15
    %
    
    $
    9,611
    
    
    
    4.00
    %
    
    $
    14,416
    
    
    
    6.00
    %(to risk weighted assets)Tier I capital
    
    $
    19,587
    
    
    
    6.52
    %
    
    $
    12,017
    
    
    
    4.00
    %
    
    $
    15,028
    
    
    
    5.00
    %(to average assets)
 To be WellCapitalized UnderFor Capital
    
    Prompt CorrectiveActual
    
    Adequacy Purposes
    
    Action ProvisionAmount
    
    Ratio
    
    Amount
    
    Ratio
    
    Amount
    
    RatioDecember 31, 2004 (dollars in thousands)Total capital
    
    $
    25,300
    
    
    
    12.25
    %
    
    $
    16,518
    
    
    
    8.00
    %
    
    $
    20,647
    
    
    
    10.00
    %(to risk weighted assets)Tier I capital
    
    $
    22,804
    
    
    
    11.04
    %
    
    $
    8,259
    
    
    
    4.00
    %
    
    $
    12,388
    
    
    
    6.00
    %(to risk weighted assets)Tier I capital
    
    $
    22,804
    
    
    
    8.61
    %
    
    $
    10,974
    
    
    
    4.00
    %
    
    $
    13,718
    
    
    
    5.00
    %(to average assets)
  To be WellCapitalized UnderFor Capital
    
    Prompt CorrectiveActual
    
    Adequacy Purposes
    
    Action ProvisionAmount
    
    Ratio
    
    Amount
    
    Ratio
    
    Amount
    
    RatioSeptember 30, 2005 (dollars in thousands)Total capital
    
    $
    20,501
    
    
    
    16.35
    %
    
    $
    10,031
    
    
    
    8.00
    %
    
    $
    12,539
    
    
    
    10.00
    %(to risk weighted assets)Tier I capital
    
    $
    19,317
    
    
    
    15.40
    %
    
    $
    5,017
    
    
    
    4.00
    %
    
    $
    7,526
    
    
    
    6.00
    %(to risk weighted assets)Tier I capital
    
    $
    19,317
    
    
    
    14.39
    %
    
    $
    5,370
    
    
    
    4.00
    %
    
    $
    6,712
    
    
    
    5.00
    %(to average assets)
 34




---



##### Table of Contents



To be WellCapitalized UnderFor Capital
    
    Prompt CorrectiveActual
    
    Adequacy Purposes
    
    Action ProvisionAmount
    
    Ratio
    
    Amount
    
    Ratio
    
    Amount
    
    RatioDecember 31, 2004 (dollars in thousands)Total capital
    
    $
    17,691
    
    
    
    14.01
    %
    
    $
    10,100
    
    
    
    8.00
    %
    
    $
    12,625
    
    
    
    10.00
    %(to risk weighted assets)Tier I capital
    
    $
    16,508
    
    
    
    13.07
    %
    
    $
    5,051
    
    
    
    4.00
    %
    
    $
    7,577
    
    
    
    6.00
    %(to risk weighted assets)Tier I capital
    
    $
    16,508
    
    
    
    11.24
    %
    
    $
    5,874
    
    
    
    4.00
    %
    
    $
    7,342
    
    
    
    5.00
    %(to average assets)
  Commitments,
contingent liabilities, contractual obligations and off-balance-sheet arrangements
  35




---



##### Table of Contents



Item 3. Quantitative and Qualitative Disclosures about Market Risk
 Interest rate risk
      September 30, 2005By repricing interval4 - 12(dollars in thousands)
    
    0-3 Months
    
    
    Months
    
    
    1-5 Years
    
    
    > 5 Years
    
    
    TotalEarning assetsLoans
    
    $
    247,210
    
    
    $
    10,092
    
    
    $
    53,769
    
    
    $
    15,053
    
    
    $
    326,124Securities
    
    
    4,926
    
    
    
    19,713
    
    
    
    34,922
    
    
    
    18,549
    
    
    
    78,110Federal funds sold
    
    
    12,255
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12,255Total earning assets
    
    $
    264,391
    
    
    $
    29,805
    
    
    $
    88,691
    
    
    $
    33,602
    
    
    $
    416,489Deposits and borrowingsDeposits
    
    
    66,802
    
    
    
    136,984
    
    
    
    67,737
    
    
    
    
    
    
    
    271,523Borrowings
    
    
    26,266
    
    
    
    11,800
    
    
    
    9,500
    
    
    
    10,000
    
    
    
    57,566Total deposits and borrowings
    
    
    93,068
    
    
    
    148,784
    
    
    
    77,237
    
    
    
    10,000
    
    
    
    329,089Interest rate sensitivity gap
    
    $
    171,323
    
    
    $
    (118,979
    )
    
    $
    11,454
    
    
    $
    23,602
    
    
    $
    87,400Cumulative Gap
    
    $
    171,323
    
    
    $
    52,344
    
    
    $
    63,798
    
    
    $
    87,400Cumulative gap as a percentage
of earning assets
    
    
    36.66
    %
    
    
    11.20
    %
    
    
    13.65
    %
    
    
    18.70
    %
 36




---



##### Table of Contents



December 31 , 2004By Repricing Interval4-12(dollars in thousands)
    
    0-3 Months
    
    
    Months
    
    
    1-5 Years
    
    
    > 5 Years
    
    
    TotalEarning assetsLoans
    
    $
    96,499
    
    
    $
    3,659
    
    
    $
    69,888
    
    
    $
    10,481
    
    
    $
    180,527Securities,
at amortize cost
    
    
    4,755
    
    
    
    9,569
    
    
    
    38,308
    
    
    
    24,713
    
    
    
    77,345Federal funds sold
    
    
    4,055
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,055Total interest earning assets
    
    $
    105,309
    
    
    $
    13,228
    
    
    $
    108,196
    
    
    $
    35,194
    
    
    $
    261,927Deposits and borrowingsDeposits
    
    $
    35,669
    
    
    $
    57,048
    
    
    $
    49,773
    
    
    $
    
    
    
    $
    142,490Borrowings
    
    
    2,500
    
    
    
    13,550
    
    
    
    16,800
    
    
    
    
    
    
    
    32,850Total deposits and borrowings
    
    
    38,169
    
    
    
    70,598
    
    
    
    66,573
    
    
    
    
    
    
    
    175,340Interest rate sensitivity gap
    
    $
    67,140
    
    
    $
    (57,370
    )
    
    $
    41,623
    
    
    $
    35,194
    
    
    $
    86,587Cumulative gap
    
    $
    67,140
    
    
    $
    9,770
    
    
    $
    51,393
    
    
    $
    86,578Cumulative gap as a percentage of interest earning assets
    
    
    25.63
    %
    
    
    3.73
    %
    
    
    19.62
    %
    
    
    33.06
    %
 
 Item 4. Controls and Procedures
 (a)
    
    Evaluation of Disclosure Controls and Procedures: An evaluation of the
Companys disclosure controls and procedures (as defined in Rule 13a-15(e) of the
Securities Exchange Act of 1934) was carried out under the supervision and with the
participation of the Companys Chief Executive Officer, Chief Financial Officer and several
other members of the Companys senior management as of the end of the period covered by
this report. The Companys Chief Executive Officer and Chief Financial Officer concluded
that the Companys disclosure controls and procedures as currently in effect are effective
in ensuring that the information required to be disclosed by the Company in the reports it
files or submits under the Securities Exchange Act of 1934 is (i) accumulated and
communicated to the Companys management (including the Chief Executive Officer and Chief
Financial Officer) in a timely manner, and (ii) recorded, processed, summarized and
reported within the time periods specified in the SECs rules and forms.(b)
    
    Changes in Internal Controls: There was no change in the Companys internal
control over financial reporting during the Companys most recently completed fiscal
quarter that has materially affected, or is reasonably likely to materially affect, the
Companys internal control over financial reporting.
 
   37




---



##### Table of Contents



Item 1. Legal Proceedings
  
 Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
  
 Item 3. Defaults Upon Senior Securities
  
 Item 4. Submission of Matters to a Vote of Security Holders:
  
 Item 5. Other information
  
 Item 6. Exhibits
  ExhibitNumber
    
    Item Description31.1
    
    Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 200231.2
    
    Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 200232.1
    
    Certification of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 200232.2
    
    Certification of Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
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##### Table of Contents



FCB BANCORP/s/ C. G. Kum
    
    November 11, 2005C. G. KumPresident andChief Executive Officer/s/ Romolo Santarosa
    
    November 11, 2005Romolo SantarosaExecutive Vice President andChief Financial Officer
 39