##### 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 March 31, 2006
 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
  þ o
  o o þ
 o þ




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##### 



PART I. FINANCIAL INFORMATIONItem 1. Financial StatementsConsolidated Balance Sheets at March 31, 2006 and December 31, 2005Consolidated Statements of Operations for the Three Months Ended March 31, 2006 and 2005Consolidated Statements of Comprehensive Income for the Three Months Ended March 31, 2006 and 2005Consolidated Statements of Changes in Shareholders Equity for the March 31, 2006 and December 31, 2005Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2006 and 2005Notes to Consolidated Financial StatementsItem 2. Managements Discussion and Analysis of Financial Condition and Results of OperationsItem 3. Quantitative and Qualitative Disclosures about Market RiskItem 4. Controls and ProceduresPART II. OTHER INFORMATIONItem 1. Legal proceedingsItem 1A.
Risk FactorsItem 2. Unregistered Sales of Equity Securities and Use of ProceedsItem 3. Defaults Upon Senior SecuritiesItem 4. Submission of Matters to a Vote of Security HoldersItem 5. Other InformationItem 6. Exhibits and Reports on Form 8-KSIGNATURESExhibit 10.13Exhibit 10.14Exhibit 31.1Exhibit 31.2Exhibit 32.1Exhibit 32.2
  2




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FCB BANCORP and subsidiaries
 
  (in thousands, except share data)
    
    March 31, 2006
    
    
    December 31, 2005Cash and due from banks
    
    $
    10,833
    
    
    $
    14,435Federal funds sold
    
    
    8,820
    
    
    
    306Securities available-for-sale
    
    
    67,886
    
    
    
    73,419Loans, net
    
    
    349,286
    
    
    
    338,778Premises and equipment, net
    
    
    10,337
    
    
    
    10,315Goodwill and other intangibles
    
    
    16,934
    
    
    
    16,951Federal Home Loan Bank stock
    
    
    2,053
    
    
    
    2,395Cash surrender value of life insurance
    
    
    10,220
    
    
    
    5,171Accrued interest receivable and other assets
    
    
    4,621
    
    
    
    5,341Total assets
    
    $
    480,990
    
    
    $
    467,111Checking
    
    $
    108,560
    
    
    $
    112,596Interest checking
    
    
    24,280
    
    
    
    23,691Regular savings
    
    
    19,497
    
    
    
    22,129Money market savings
    
    
    54,051
    
    
    
    57,144Certificates of deposit, under $100,000
    
    
    84,857
    
    
    
    82,770Certificates of deposit, $100,000 and over
    
    
    100,587
    
    
    
    74,018Total deposits
    
    
    391,832
    
    
    
    372,348Federal Home Loan Bank advances
    
    
    30,050
    
    
    
    36,319Junior subordinated debentures
    
    
    10,310
    
    
    
    10,310Accrued interest payable and other liabilities
    
    
    2,102
    
    
    
    2,355Total liabilities
    
    
    434,294
    
    
    
    421,332Common stock, no par value, 10,000,000 authorized;
shares issued and outstanding: 3,277,807 at
March 31, 2006 and December 31, 2005
    
    
    32,685
    
    
    
    32,666Retained earnings
    
    
    15,073
    
    
    
    14,063Accumulated other comprehensive loss
    
    
    (1,062
    )
    
    
    (950
    )Total shareholders equity
    
    
    46,696
    
    
    
    45,779Total liabilities and shareholders equity
    
    $
    480,990
    
    
    $
    467,111
  3




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FCB BANCORP and subsidiaries
 
  Three Months Ended March 31,(in thousands, except per share data)
    
    2006
    
    
    2005Interest and fees on loans
    
    $
    6,869
    
    
    $
    3,002Taxable interest on securities
    
    
    599
    
    
    
    595Nontaxable interest on securities
    
    
    87
    
    
    
    71Interest on federal funds sold
    
    
    88
    
    
    
    28Total interest income
    
    
    7,643
    
    
    
    3,696Interest on deposits
    
    
    1,976
    
    
    
    399Interest on borrowings
    
    
    430
    
    
    
    195Total interest expense
    
    
    2,406
    
    
    
    594Net interest income
    
    
    5,237
    
    
    
    3,102Provision for loan losses
    
    
    153
    
    
    
    122Net interest income after provision for loan losses
    
    
    5,084
    
    
    
    2,980Service charges on deposit accounts
    
    
    253
    
    
    
    293Earnings on cash surrender value of life insurance
    
    
    95
    
    
    
    55Commissions on brokered loans
    
    
    19
    
    
    
    55Net gain on sales of loans
    
    
    33
    
    
    
    47Net servicing fees
    
    
    12
    
    
    
    10Net loss on sales of securities
    
    
    (20
    )
    
    
    Other income
    
    
    113
    
    
    
    56Total noninterest income
    
    
    505
    
    
    
    516Salaries and employee benefits
    
    
    2,262
    
    
    
    1,529Premises and equipment
    
    
    643
    
    
    
    386Data processing
    
    
    160
    
    
    
    135Legal, audit, and other professional services
    
    
    153
    
    
    
    108Printing, stationary, and supplies
    
    
    62
    
    
    
    46Telephone
    
    
    70
    
    
    
    36Directors fees
    
    
    33
    
    
    
    33Advertising and marketing
    
    
    130
    
    
    
    87Postage
    
    
    26
    
    
    
    18Other expenses
    
    
    384
    
    
    
    187Total noninterest expense
    
    
    3,923
    
    
    
    2,565Income before provision for income taxes
    
    
    1,666
    
    
    
    931Provision for income taxes
    
    
    656
    
    
    
    354Net income
    
    $
    1,010
    
    
    $
    577Earnings per shareBasic
    
    $
    0.31
    
    
    $
    0.27Diluted
    
    $
    0.31
    
    
    $
    0.26
  4




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FCB BANCORP and subsidiaries
 
  Three Months Ended March 31,(in thousands)
    
    2006
    
    
    2005Unrealized holding losses on securities
available-for-sale arising during the period
    
    $
    (210
    )
    
    $
    (907
    )Reclassification adjustments for losses
included in net income
    
    
    20
    
    
    
    Other comprehensive loss, before taxes
    
    
    (190
    )
    
    
    (907
    )Income tax benefit related to items of
other comprehensive income
    
    
    78
    
    
    
    372Other comprehensive loss, net of tax
    
    
    (112
    )
    
    
    (535
    )Net income
    
    
    1,010
    
    
    
    577Comprehensive income
    
    $
    898
    
    
    $
    42
 
  Three Months Ended March 31,(in thousands)
    
    2006
    
    
    2005Common stockCommon stock, beginning of year
    
    $
    32,666
    
    
    $
    11,965Share-based compensation
    
    
    19
    
    
    
    Common stock, end of period
    
    $
    32,685
    
    
    $
    11,965Retained earningsNet income
    
    $
    1,010
    
    
    $
    577Retained earnings, beginning of year
    
    
    14,063
    
    
    
    10,839Retained earnings, end of period
    
    $
    15,073
    
    
    $
    11,416Accumulated other comprehensive lossAccumulated other comprehensive loss
    
    $
    (112
    )
    
    $
    (535
    )Accumulated
other comprehensive loss, net, beginning of year
    
    
    (950
    )
    
    
    (259
    )Accumulated other comprehensive loss, net, end of period
    
    $
    (1,062
    )
    
    $
    (794
    )
  5




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FCB BANCORP and subsidiaries
 
  Three Months Ended March 31,(in thousands)
    
    2006
    
    
    2005Net income
    
    $
    1,010
    
    
    $
    577Adjustments to reconcile net income to net cash
from operating activities:Realized gains on sale of securities, loans,
and premises and equipment
    
    
    (13
    )
    
    
    (47
    )Net (accretion) amortization of premiums and discounts
on securities available-for-sale
    
    
    (17
    )
    
    
    114Federal Home Loan Bank stock dividends
    
    
    (28
    )
    
    
    (18
    )Provision for loan losses
    
    
    153
    
    
    
    122Share-based
compensation
    
    
    19
    
    
    
    Deferred income taxes
    
    
    (92
    )
    
    
    (4
    )Depreciation and amortization
    
    
    209
    
    
    
    124Net appreciation in cash surrender value of life insurance
    
    
    (95
    )
    
    
    (45
    )Change in accrued interest receivable and other assets
    
    
    907
    
    
    
    479Change in accrued interest payable and other liabilities
    
    
    (224
    )
    
    
    (70
    )Net cash from operating activities
    
    
    1,829
    
    
    
    1,232Net change in federal funds sold
    
    
    (8,514
    )
    
    
    (25
    )Proceeds from maturities, calls, and paydowns of
securities available-for-sale
    
    
    3,646
    
    
    
    3,843Proceeds from sales of securities available-for-sale
    
    
    2,998
    
    
    
    1,038Purchases of securities available-for-sale
    
    
    (1,304
    )
    
    
    (3,564
    )Proceeds
from sale of Federal Home Loan Bank stock
    
    
    370
    
    
    
    183Net increase in loans
    
    
    (10,628
    )
    
    
    (2,789
    )Purchases of premises and equipment, net
    
    
    (231
    )
    
    
    (256
    )Purchases of life insurance
    
    
    (4,964
    )
    
    
    Net cash used for investing activities
    
    
    (18,627
    )
    
    
    (1,570
    )Net increase in deposits
    
    
    19,484
    
    
    
    4,692Net change in FHLB overnight advances
    
    
    (10,019
    )
    
    
    Proceeds from FHLB term advances
    
    
    5,000
    
    
    
    Payments on FHLB term advances
    
    
    (1,250
    )
    
    
    (2,500
    )Share-based
compensation
    
    
    (19
    )
    
    
    Net cash from financing activities
    
    
    13,196
    
    
    
    2,192Change in cash and due from banks
    
    $
    (3,602
    )
    
    $
    1,854Cash and due from banks, beginning of period
    
    
    14,435
    
    
    
    7,194Cash and due from banks, end of period
    
    $
    10,833
    
    
    $
    9,048Supplemental cash flow information:Cash paid for interest
    
    $
    1,526
    
    
    $
    235Cash paid for income taxes
    
    $
    359
    
    
    $
    142Supplemental disclosure of noncash investing activitiesChange in fair value of securities available-for-sale, net of taxes
    
    $
    (112
    )
    
    $
    (535
    )
  6




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NOTE 1  BASIS OF PRESENTATION AND MANAGEMENT REPRESENTATION
 Organization and nature of operations 
  Consolidation
 Basis of presentation
 Managements estimates and assumptions
 NOTE 2
 STOCK-BASED COMPENSATION
     7




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2003 Grant
    
    2004 Grant
    
    2005 Grant
    
    2006 GrantExpected option term
    
    6.0 years
    
    6.0 years
    
    6.0 years
    
    5.2 yearsExpected volatility
    
    Nil
    
    Nil
    
    Nil
    
    
    5.71
    %Expected dividend yield
    
    
    0
    %
    
    
    0
    %
    
    
    0
    %
    
    
    0
    %Risk-free interest rate
    
    
    2.87
    %
    
    
    3.95
    %
    
    
    4.50
    %
    
    
    4.59
    %Stock option fair value
    
    $
    1.77
    
    
    $
    4.24
    
    
    $
    4.92
    
    
    $
    4.49
     NOTE 3
 SECURITIES
  March
31, 2006Gross
    
    
    Gross
    
    
    EstimatedAmortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    Fair(in
thousands)
    
    Cost
    
    
    Gains
    
    
    Losses
    
    
    ValueU.S. Treasury notes
    
    $
    3,505
    
    
    $
    
    
    
    $
    (63
    )
    
    $
    3,442U.S. agency notes
    
    
    9,930
    
    
    
    
    
    
    
    (157
    )
    
    
    9,773U.S. agency mortgage-backed securities
    
    
    42,841
    
    
    
    1
    
    
    
    (1,425
    )
    
    
    41,417Collateralized mortgage obligations
    
    
    4,281
    
    
    
    
    
    
    
    (133
    )
    
    
    4,148Municipal securities
    
    
    9,134
    
    
    
    44
    
    
    
    (72
    )
    
    
    9,106Securities available-for-sale
    
    $
    69,691
    
    
    $
    45
    
    
    $
    (1,850
    )
    
    $
    67,886
 December 31, 2005Gross
    
    
    Gross
    
    
    EstimatedAmortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    Fair(in
thousands)
    
    Cost
    
    
    Gains
    
    
    Losses
    
    
    ValueU.S. Treasury notes
    
    $
    6,976
    
    
    $
    
    
    
    $
    (33
    )
    
    $
    6,943U.S. agency notes
    
    
    10,376
    
    
    
    
    
    
    
    (156
    )
    
    
    10,220U.S. agency mortgage-backed securities
    
    
    45,089
    
    
    
    1
    
    
    
    (1,274
    )
    
    
    43,816Collateralized mortgage obligations
    
    
    3,414
    
    
    
    1
    
    
    
    (89
    )
    
    
    3,326Municipal securities
    
    
    9,179
    
    
    
    36
    
    
    
    (101
    )
    
    
    9,114Securities available-for-sale
    
    $
    75,034
    
    
    $
    38
    
    
    $
    (1,653
    )
    
    $
    73,419
 8




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NOTE 4  LOANS AND ALLOWANCE FOR LOAN LOSSES
  At March 31,
    
    
    At December 31,(in thousands)
    
    2006
    
    
    2005Commercial mortgage
    
    $
    198,088
    
    
    $
    192,263Multifamily mortgage
    
    
    31,859
    
    
    
    31,708Commercial loans and lines
    
    
    66,107
    
    
    
    64,271Construction
    
    
    26,301
    
    
    
    28,157Home equity loans and lines
    
    
    9,075
    
    
    
    8,689Home mortgage
    
    
    20,785
    
    
    
    13,443Installment & credit card
    
    
    1,358
    
    
    
    4,352Total loans
    
    
    353,573
    
    
    
    342,883Allowance for loan losses
    
    
    (4,287
    )
    
    
    (4,105
    )Loans, net
    
    $
    349,286
    
    
    $
    338,778
   Three Months Ended March 31,(in thousands)
    
    2006
    
    
    2005Balance at beginning of year
    
    $
    4,105
    
    
    $
    2,346Provision for loan losses
    
    
    153
    
    
    
    122Loans charged-off
    
    
    
    
    
    
    Recoveries on loans charged-off
    
    
    29
    
    
    
    69Ending at end of period
    
    $
    4,287
    
    
    $
    2,537Allowance for loan losses
    
    
    1.21
    %
    
    
    1.37
    %
  NOTE 5  GOODWILL AND OTHER INTANGIBLE ASSETS
   NOTE 6  EARNINGS PER SHARE
  9




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Three Months Ended March 31,2006
    
    
    2005(in thousands, except per share data)
    
    Diluted
    
    
    Basic
    
    
    Diluted
    
    
    BasicIncome available to common shareholders
    
    $
    1,010
    
    
    $
    1,010
    
    
    $
    577
    
    
    $
    577Weighted average basic common shares outstanding
    
    
    3,278
    
    
    
    3,278
    
    
    
    2,163
    
    
    
    2,163Net effect of dilutive options
    
    
    14
    
    
    
    
    
    
    
    24
    
    
    
    Weighted average diluted common shares outstanding
    
    
    3,292
    
    
    
    3,278
    
    
    
    2,187
    
    
    
    2,163Earnings per share
    
    $
    0.31
    
    
    $
    0.31
    
    
    $
    0.26
    
    
    $
    0.27
 NOTE 7RECENTLY ISSUED ACCOUNTING STANDARDS
   10




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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;
    
    our 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 we do or
anticipate 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 our 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.
  11




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New Accounting Standard Adopted during the First Quarter of 2006
     2003 Grant
    
    2004 Grant
    
    2005 Grant
    
    2006 GrantExpected option term
    
    6.0 years
    
    6.0 years
    
    6.0 years
    
    5.2 yearsExpected volatility
    
    Nil
    
    Nil
    
    Nil
    
    
    5.71
    %Expected dividend yield
    
    
    0
    %
    
    
    0
    %
    
    
    0
    %
    
    
    0
    %Risk-free interest rate
    
    
    2.87
    %
    
    
    3.95
    %
    
    
    4.50
    %
    
    
    4.59
    %Stock option fair value
    
    $
    1.77
    
    
    $
    4.24
    
    
    $
    4.92
    
    
    $
    4.49
   Weighted averageOptions
    
    Shares
    
    
    exercise priceBalance, beginning of year
    
    
    119,500
    
    
    $
    17.64Issued
    
    
    40,600
    
    
    $
    21.00Exercised
    
    
    
    
    
    
    Cancelled, forfeited, expired
    
    
    
    
    
    
    Balance, end of period
    
    
    160,100
    
    
    $
    18.49
   12




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Critical Accounting Policies
  Allowance for loan losses
  Income taxes
  Goodwill
  Overview
     13




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Three Months Ended March 31,(in thousands, except per share)
    
    2006
    
    2005Net income
    
    $
    1,010
    
    
    $
    577Basic earnings per share
    
    $
    0.31
    
    
    $
    0.27Diluted earnings per share
    
    $
    0.31
    
    
    $
    0.26Basic weighted average shares
    
    
    3,278
    
    
    
    2,163Diluted weighted average shares
    
    
    3,292
    
    
    
    2,187
  Three Months Ended March 31,(in thousands)
    
    2006
    
    
    2005Net income as reported
    
    $
    1,010
    
    
    $
    577Proforma combined net income
    
    $
    1,010
    
    
    $
    844Earnings per share as reported:Basic
    
    $
    0.31
    
    
    $
    0.27Diluted
    
    $
    0.31
    
    
    $
    0.26Proforma combined earnings per share:Basic
    
    $
    0.31
    
    
    $
    0.27Diluted
    
    $
    0.31
    
    
    $
    0.27Average shares outstanding as reported:Basic
    
    
    3,278
    
    
    
    2,163Diluted
    
    
    3,292
    
    
    
    2,187Proforma average shares outstanding:Basic
    
    
    3,278
    
    
    
    3,278Diluted
    
    
    3,292
    
    
    
    3,302
  14




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Results of Operations  for the three months ended March 31, 2006 and 2005
 Net interest income
        15




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Three Months Ended March 31,2006
    
    
    2005Average
    
    
    Income/
    
    
    Average
    
    
    Average
    
    
    Income/
    
    
    Average(in thousands)
    
    Balance
    
    
    Expense
    
    
    Rate
    
    
    Balance
    
    
    Expense
    
    
    RateCommercial
    
    $
    104,669
    
    
    $
    2,300
    
    
    
    8.91
    %
    
    $
    77,336
    
    
    $
    1,415
    
    
    
    7.42
    %Real estate
    
    
    222,146
    
    
    
    4,411
    
    
    
    8.05
    %
    
    
    96,228
    
    
    
    1,481
    
    
    
    6.24
    %Consumer
    
    
    8,424
    
    
    
    158
    
    
    
    7.58
    %
    
    
    6,571
    
    
    
    106
    
    
    
    6.57
    %Total loans
    
    
    335,239
    
    
    
    6,869
    
    
    
    8.31
    %
    
    
    180,135
    
    
    
    3,002
    
    
    
    6.76
    %Taxable
    
    
    71,019
    
    
    
    599
    
    
    
    3.37
    %
    
    
    69,823
    
    
    
    595
    
    
    
    3.40
    %Nontaxable
    
    
    9,146
    
    
    
    87
    
    
    
    5.79
    %
    
    
    7,328
    
    
    
    71
    
    
    
    5.88
    %Total securities
    
    
    80,165
    
    
    
    686
    
    
    
    3.65
    %
    
    
    77,151
    
    
    
    666
    
    
    
    3.64
    %Federal funds sold
    
    
    7,577
    
    
    
    88
    
    
    
    4.69
    %
    
    
    4,382
    
    
    
    28
    
    
    
    2.59
    %Deposits with banks
    
    
    23
    
    
    
    
    
    
    
    3.37
    %
    
    
    
    
    
    
    
    
    
    
    Total earning assets
    
    
    423,004
    
    
    
    7,643
    
    
    
    7.32
    %
    
    
    261,668
    
    
    
    3,696
    
    
    
    5.78
    %Non-earning assets
    
    
    54,275
    
    
    
    
    
    
    
    
    
    
    
    21,216Total assets
    
    $
    477,279
    
    
    
    
    
    
    
    
    
    
    $
    282,884Interest bearing demand deposits
    
    
    23,876
    
    
    
    27
    
    
    
    0.45
    %
    
    
    20,689
    
    
    
    5
    
    
    
    0.10
    %Savings
    
    
    78,270
    
    
    
    300
    
    
    
    1.55
    %
    
    
    63,066
    
    
    
    114
    
    
    
    0.73
    %Certificates of deposit
    
    
    174,704
    
    
    
    1,649
    
    
    
    3.83
    %
    
    
    54,410
    
    
    
    280
    
    
    
    2.08
    %Total interest bearing deposits
    
    
    276,850
    
    
    
    1,976
    
    
    
    2.89
    %
    
    
    138,165
    
    
    
    399
    
    
    
    1.17
    %Federal funds purchased
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    FHLB advances
    
    
    30,510
    
    
    
    276
    
    
    
    3.68
    %
    
    
    32,730
    
    
    
    195
    
    
    
    2.42
    %Junior subordinated debentures
    
    
    10,310
    
    
    
    154
    
    
    
    6.15
    %
    
    
    
    
    
    
    
    
    
    
    Total borrowed funds
    
    
    40,820
    
    
    
    430
    
    
    
    4.28
    %
    
    
    32,730
    
    
    
    195
    
    
    
    2.42
    %Total interest bearing funds
    
    
    317,670
    
    
    
    2,406
    
    
    
    3.07
    %
    
    
    170,895
    
    
    
    594
    
    
    
    1.41
    %Noninterest bearing demand deposits
    
    
    100,094
    
    
    
    
    
    
    
    
    
    
    
    87,773Other liabilities
    
    
    2,171
    
    
    
    
    
    
    
    
    
    
    
    1,027Shareholders equity
    
    
    57,344
    
    
    
    
    
    
    
    
    
    
    
    23,189Total liabilities and shareholders equity
    
    $
    477,279
    
    
    
    
    
    
    
    
    
    
    $
    282,884Net interest income
    
    
    
    
    
    $
    5,237
    
    
    
    
    
    
    
    
    
    
    $
    3,102Net interest margin (tax equivalent)
    
    
    
    
    
    
    
    
    
    
    5.05
    %
    
    
    
    
    
    
    
    
    
    
    4.86
    %
  16




---



##### Table of Contents



2006 to 2005 due to:(in thousands)
    
    Rate
    
    
    Volume
    
    
    TotalInterest incomeInterest on loans
    
    $
    1,282
    
    
    $
    2,585
    
    
    $
    3,867Interest on securities
    
    
    (5
    )
    
    
    26
    
    
    
    21Interest on Federal funds sold
    
    
    39
    
    
    
    20
    
    
    
    59Interest on deposits with banks
    
    
    (22
    )
    
    
    22
    
    
    
    Total interest income
    
    
    1,294
    
    
    
    2,653
    
    
    
    3,947Interest expenseInterest bearing demand deposits
    
    
    21
    
    
    
    1
    
    
    
    22Savings
    
    
    158
    
    
    
    27
    
    
    
    185Certificates of deposit
    
    
    752
    
    
    
    618
    
    
    
    1,370Total interest on deposits
    
    
    931
    
    
    
    646
    
    
    
    1,577Interest on borrowings
    
    
    187
    
    
    
    48
    
    
    
    235Total interest expense
    
    
    1,118
    
    
    
    694
    
    
    
    1,812Net interest income
    
    $
    176
    
    
    $
    1,959
    
    
    $
    2,135
 Provision for loan losses
  Noninterest income
     17




---



##### Table of Contents



Three MonthsEnded March 31,(in thousands)
    
    2006
    
    2005Service charges on deposit accounts
    
    $
    253
    
    
    $
    293Net servicing fees
    
    
    12
    
    
    
    10Other income
    
    
    113
    
    
    
    56Earnings on cash value of life insurance
    
    
    95
    
    
    
    55Service charges, fees and other
    
    
    473
    
    
    
    414Loan commissions and sales
    
    
    52
    
    
    
    102Loss on sales of securities
    
    
    (20
    )
    
    
    Total noninterest income
    
    $
    505
    
    
    $
    516
 Noninterest expense
    Three MonthsEnded March 31,(in thousands)
    
    2006
    
    2005Salaries and benefits
    
    $
    2,262
    
    
    $
    1,529Premises and equipment
    
    
    643
    
    
    
    386Data processing
    
    
    160
    
    
    
    135Legal, audit and other professional
    
    
    153
    
    
    
    108Printing, stationary and supplies
    
    
    62
    
    
    
    46Telephone
    
    
    70
    
    
    
    36Directors fees
    
    
    33
    
    
    
    33Advertising and marketing
    
    
    130
    
    
    
    87Postage
    
    
    26
    
    
    
    18Other expense
    
    
    384
    
    
    
    187Total noninterest expenses
    
    $
    3,923
    
    
    $
    2,565Efficiency ratio
    
    
    67.79
    %
    
    
    70.90
    %
  18




---



##### Table of Contents



Income taxes
  Financial Position  March 31, 2006 compared with December 31, 2005
 Lending and credit risk
        19




---



##### Table of Contents



Loans
   At March 31,
    
    
    At December 31,(in thousands)
    
    2006
    
    
    2005Commercial mortgage
    
    $
    198,088
    
    
    $
    192,263Multifamily mortgage
    
    
    31,859
    
    
    
    31,708Commercial loans and lines
    
    
    66,107
    
    
    
    64,271Construction
    
    
    26,301
    
    
    
    28,157Home equity loans and lines
    
    
    9,075
    
    
    
    8,689Home mortgage
    
    
    20,785
    
    
    
    13,443Installment & credit card
    
    
    1,358
    
    
    
    4,352Total loans
    
    
    353,573
    
    
    
    342,883Allowance for loan losses
    
    
    (4,287
    )
    
    
    (4,105
    )Loans, net
    
    $
    349,286
    
    
    $
    338,778
    20




---



##### Table of Contents



21




---



##### Table of Contents



Allowance for Loan Losses
    22




---



##### Table of Contents



Three Months Ended March 31,(in thousands)
    
    2006
    
    2005Beginning balance
    
    $
    4,105
    
    
    $
    2,346Provision for loan losses
    
    
    153
    
    
    
    122Loans charged-off
    
    
    
    
    
    
    Recoveries on loans charged-off
    
    
    29
    
    
    
    69Ending balance
    
    $
    4,287
    
    
    $
    2,537Allowance to loans
    
    
    1.21
    %
    
    
    1.37
    %
  March 31, 2006
    
    
    December 31, 2005Percent of
    
    
    
    
    
    
    Percent ofLoans in
    
    
    
    
    
    
    Loans inCategory to
    
    
    
    
    
    
    Category to(in thousands)
    
    Amount
    
    
    Total Loans
    
    
    Amount
    
    
    Total loansCommercial mortgage
    
    $
    1,409
    
    
    
    56
    %
    
    $
    1,273
    
    
    
    56
    %Mulitfamily mortgage
    
    
    158
    
    
    
    9
    %

    
    
    159
    
    
    
    9
    %Commercial loans
    
    
    1,044
    
    
    
    19
    %
    
    
    1,062
    
    
    
    19
    %Construction loans
    
    
    599
    
    
    
    7
    %
    
    
    620
    
    
    
    8
    %Home equity loans
    
    
    27
    
    
    
    3
    %
    
    
    43
    
    
    
    3
    %Home mortgage
    
    
    76
    
    
    
    6
    %
    
    
    67
    
    
    
    4
    %Installment and
credit card
    
    
    43
    
    
    
    0
    %
    
    
    60
    
    
    
    1
    %Subtotal
    
    $
    3,356
    
    
    
    
    
    
    $
    3,284Unallocated
    
    
    931
    
    
    
    
    
    
    
    821Total
    
    $
    4,287
    
    
    
    100
    %
    
    $
    4,105
    
    
    
    100
    %
   (in thousands)
    
    March 31, 2006
    
    December 31, 2005Accruing loans past due 90 days or more
    
    $
    312
    
    
    $
    137Nonaccrual loans
    
    
    
    
    
    
    Ratios:Accruing loans past due 90 days or more to
average loans
    
    
    0.09
    %
    
    
    0.06
    %Nonaccrual loans to average loans
    
    
    
    
    
    
    
 Investing, funding and liquidity risk
  23




---



##### Table of Contents



Securities
   24




---



##### Table of Contents



At March 31, 2006After one
    
    
    After fiveOne year or
    
    
    year to five
    
    
    years to ten
    
    
    Over ten(in thousands)
    
    less
    
    
    years
    
    
    years
    
    
    years
    
    
    TotalMaturity distributionU.S. Treasury notes
    
    $
    1,504
    
    
    $
    2,001
    
    
    
    
    
    
    
    
    
    
    $
    3,505U.S. agency notes
    
    
    6,381
    
    
    
    3,549
    
    
    
    
    
    
    
    
    
    
    
    9,930U.S. agency mortgage-backed securities
    
    
    
    
    
    
    39,025
    
    
    
    2,696
    
    
    
    1,120
    
    
    
    42,841Collateralized mortgage obligations
    
    
    
    
    
    
    1,015
    
    
    
    3,266
    
    
    
    
    
    
    
    4,281Municipal securities
    
    
    100
    
    
    
    674
    
    
    
    3,508
    
    
    
    4,852
    
    
    
    9,134Total
    
    $
    7,985
    
    
    $
    46,264
    
    
    $
    9,470
    
    
    $
    5,972
    
    
    $
    69,691Weighted average yieldU.S. Treasury notes
    
    
    2.67
    %
    
    
    3.11
    %

    
    
    
    

    
    
    
    

    
    
    2.93
    %U.S. agency notes
    
    
    3.29
    %
    
    
    3.25
    %
    
    
    
    
    
    
    
    

    
    
    3.28
    %U.S. agency mortgage-backed securities
    
    
    
    
    
    
    3.84
    %
    
    
    4.61
    %
    
    
    5.91
    %
    
    
    3.93
    %Collateralized mortgage obligations
    
    
    
    
    
    
    4.93
    %
    
    
    4.80
    %
    
    
    
    
    
    
    4.79
    %Municipal securities
    
    
    8.03
    %
    
    
    5.74
    %
    
    
    5.46
    %
    
    
    6.00
    %
    
    
    5.79
    %Total
    
    
    3.23
    %
    
    
    3.96
    %
    
    
    5.00
    %
    
    
    5.98
    %
    
    
    4.10
    %
 At December 31, 2005After one
    
    
    After fiveOne year or
    
    
    year to five
    
    
    years to ten
    
    
    Over ten(in thousands)
    
    less
    
    
    years
    
    
    years
    
    
    years
    
    
    TotalMaturity distributionU.S. Treasury notes
    
    $
    4,524
    
    
    $
    2,452
    
    
    
    
    
    
    
    
    
    
    $
    6,976U.S. agency notes
    
    
    5,779
    
    
    
    4,597
    
    
    
    
    
    
    
    
    
    
    
    10,376U.S. agency mortgage-backed securities
    
    
    
    
    
    
    41,053
    
    
    
    2,810
    
    
    
    1,226
    
    
    
    45,089Collateralized mortgage obligations
    
    
    
    
    
    
    
    
    
    
    3,414
    
    
    
    
    
    
    
    3,414State and municipal securities
    
    
    100
    
    
    
    679
    
    
    
    3,525
    
    
    
    4,875
    
    
    
    9,179Total
    
    $
    10,403
    
    
    $
    48,781
    
    
    $
    9,749
    
    
    $
    6,101
    
    
    $
    75,034Weighted average yieldU.S. Treasury notes
    
    
    3.11
    %
    
    
    4.19
    %
    
    
    
    

    
    
    
    

    
    
    3.50
    %U.S. agency notes
    
    
    3.25
    %
    
    
    3.50
    %
    
    
    
    

    
    
    
    

    
    
    3.36
    %U.S. agency mortgage-backed securities
    
    
    
    
    
    
    3.74
    %
    
    
    4.64
    %
    
    
    5.41
    %
    
    
    3.84
    %Collateralized mortgage obligations
    
    
    
    
    
    
    
    
    
    
    4.79
    %
    
    
    
    
    
    
    4.79
    %State and municipal securities
    
    
    8.03
    %
    
    
    5.69
    %
    
    
    5.45
    %
    
    
    6.00
    %
    
    
    5.79
    %Total
    
    
    3.24
    %
    
    
    3.77
    %
    
    
    4.99
    %
    
    
    5.88
    %
    
    
    4.03
    %
   25




---



##### Table of Contents



Deposits
   For the Three Months EndedMarch 31, 2006
    
    
    March 31, 2005(in thousands)
    
    Balance
    
    
    Rate
    
    
    Balance
    
    
    RateAverage core depositsNoninterest bearing demand deposits
    
    $
    100,094
    
    
    
    
    
    
    $
    87,774Interest checking
    
    
    23,876
    
    
    
    0.45
    %
    
    
    20,689
    
    
    
    0.10
    %Savings accounts
    
    
    78,270
    
    
    
    1.55
    %
    
    
    63,066
    
    
    
    0.73
    %Time deposits less than $100,000
    
    
    95,113
    
    
    
    3.39
    %
    
    
    27,232
    
    
    
    2.02
    %Total average core deposits
    
    
    297,353
    
    
    
    
    
    
    
    198,761Average noncore depositsTime deposits of $100,000 or more
    
    
    79,591
    
    
    
    4.37
    %
    
    
    27,177
    
    
    
    2.15
    %Total average core and noncore deposits
    
    $
    376,944
    
    
    
    
    
    
    $
    225,938Total average interest bearing deposits
    
    $
    276,850
    
    
    
    2.89
    %
    
    $
    138,165
    
    
    
    1.17
    %
   March 31, 2006
    
    
    December 31, 2005(in thousands)
    
    Amount
    
    
    Percentage
    
    
    Amount
    
    
    PercentageThree months or less
    
    $
    38,519
    
    
    
    38
    %
    
    $
    28,960
    
    
    
    39
    %Over three months through six months
    
    
    30,304
    
    
    
    30
    %
    
    
    19,947
    
    
    
    27
    %Over six months through one year
    
    
    17,503
    
    
    
    17
    %
    
    
    9,358
    
    
    
    13
    %Over one year
    
    
    14,262
    
    
    
    15
    %
    
    
    15,753
    
    
    
    21
    %Total
    
    $
    100,587
    
    
    
    100
    %
    
    $
    74,018
    
    
    
    100
    %
 Borrowings
  26




---



##### Table of Contents



Three Months Ended March 31, 2006
    
    
    Year Ended December 31, 2005Federal Home Loan
    
    
    Weighted average
    
    
    Federal Home Loan
    
    
    Weighted average(in thousands)
    
    Bank Advances
    
    
    interest rate
    
    
    Bank Advances
    
    
    interest rateAmount outstanding at end of period
    

    $ 30,050
    
    

    3.68%
    
    

    $ 36,319
    
    

3.70%Maximum amount outstanding at
any month-end during the period
    

    $ 30,050
    
    

    3.68%
    
    

$ 47,566
    
    

    3.39%Average amount outstanding
during the period
    

    $ 30,510
    
    

    3.68%
    
    

$ 35,202
    
    

    3.71%
  Maturity
    
    
    Weighted Average(in thousands)
    
    Amount
    
    
    Year
    
    
    Interest RateOvernight advances
    
    $
    
    
    
    
    
    
    
    
    Term advances
    
    
    15,300
    
    
    
    2006
    
    
    
    3.01
    %Term advances
    
    
    9,500
    
    
    
    2007
    
    
    
    4.03
    %Term advances
    
    
    4,500
    
    
    
    2008
    
    
    
    4.72
    %Term advances
    
    
    750
    
    
    
    2009
    
    
    
    4.98
    %$
    30,050
 Capital resources
   27




---



##### Table of Contents



For CapitalActual
    
    
    Adequacy Purposes(in thousands)
    
    Amount
    
    
    Ratio
    
    
    Amount
    
    
    RatioMarch 31, 2006Total capital
(to risk weighted assets)
    
    
    45,773
    
    
    
    11.71
    %
    
    
    29,518
    
    
    
    3  8.00
    %Tier I capital
(to risk weighted assets)
    
    
    41,286
    
    
    
    10.56
    %
    
    
    14,666
    
    
    
    3  4.00
    %Tier I capital
(to average assets)
    
    
    41,286
    
    
    
    8.96
    %
    
    
    12,964
    
    
    
    3  3.00
    %
 For CapitalActual
    
    
    Adequacy PurposesAmount
    
    
    Ratio
    
    
    Amount
    
    
    RatioDecember 31, 2005Total capital
(to risk weighted assets)
    
    
    44,545
    
    
    
    11.74
    %
    
    
    30,352
    
    
    
    3  8.00
    %Tier I capital
(to risk weighted assets)
    
    
    40,239
    
    
    
    10.60
    %
    
    
    15,181
    
    
    
    3  4.00
    %Tier I capital
(to average assets)
    
    
    40,239
    
    
    
    8.69
    %
    
    
    13,889
    
    
    
    3  3.00
    %
  To be WellCapitalized UnderFor Capital
    
    Prompt CorrectiveActual
    
    Adequacy Purposes
    
    Action Provision(in thousands)
    
    Amount
    
    Ratio
    
    Amount
    
    Ratio
    
    Amount
    
    RatioMarch 31, 2006Total capital (to risk weighted assets)
    
    
    45,212
    
    
    
    11.57
    %
    
    
    31,261
    
    
    
    3 8.00
    %
    
    
    39,077
    
    
    
    3  10.00
    %Tier I capital (to risk weighted assets)
    
    
    40,724
    
    
    
    10.42
    %
    
    
    15,633
    
    
    
    3  4.00
    %
    
    
    23,450
    
    
    
    3  6.00
    %Tier I capital (to average assets)
    
    
    40,724
    
    
    
    9.04
    %
    
    
    18,020
    
    
    
    3  4.00
    %
    
    
    22,524
    
    
    
    3  5.00
    %
 To be WellCapitalized UnderFor Capital
    
    Prompt CorrectiveActual
    
    Adequacy Purposes
    
    Action Provision(in thousands)
    
    Amount
    
    Ratio
    
    Amount
    
    Ratio
    
    Amount
    
    RatioDecember 31, 2005Total capital
(to risk weighted assets)
    
    
    43,900
    
    
    
    11.62
    %
    
    
    30,224
    
    
    
    3  8.00
    %
    
    
    37,780
    
    
    
    3  10.00
    %Tier I capital
(to risk weighted assets)
    
    
    39,595
    
    
    
    10.48
    %
    
    
    15,113
    
    
    
    3  4.00
    %
    
    
    22,669
    
    
    
    3  6.00
    %Tier I capital
(to average assets)
    
    
    39,595
    
    
    
    8.88
    %
    
    
    17,836
    
    
    
    3  4.00
    %
    
    
    22,294
    
    
    
    3  5.00
    %
 28




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##### Table of Contents



Commitments, Contingent Liabilities, Contractual Obligations and Off-Balance Sheet Arrangements
   March 31, 2006One to
    
    Three to
    
    GreaterLess Than
    
    Three
    
    Five
    
    Than Five(in thousands)
    
    One Year
    
    Years
    
    Years
    
    Years
    
    TotalFHLB term advances
    
    $
    16,800
    
    
    $
    13,250
    
    
    $
    
    
    
    $
    
    
    
    $
    30,050Salary continuation benefits
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    353
    
    
    
    353Director post-service award
    
    
    
    
    
    
    102
    
    
    
    
    
    
    
    
    
    
    
    102Junior subordinated debentures
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10,310
    
    
    
    10,310Operating lease obligations
    
    
    742
    
    
    
    1,467
    
    
    
    1,204
    
    
    
    3,146
    
    
    
    6,559Total
    
    $
    17,542
    
    
    $
    14,819
    
    
    $
    1,204
    
    
    $
    13,809
    
    
    $
    47,374
  29




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##### Table of Contents



Item 3. Quantitative and Qualitative Disclosures about Market Risk
 Interest rate risk
      March 31, 2006By repricing interval4 - 12(in thousands)
    
    0-3 Months
    
    
    Months
    
    
    1-5 Years
    
    
    > 5 Years
    
    
    TotalLoans
    
    $
    249,482
    
    
    $
    21,812
    
    
    $
    62,744
    
    
    $
    19,535
    
    
    $
    353,573Securities
    
    
    4,960
    
    
    
    15,199
    
    
    
    29,408
    
    
    
    18,319
    
    
    
    67,886Federal funds sold
    
    
    8,820
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,820Total earning assets
    
    
    263,262
    
    
    
    37,011
    
    
    
    92,152
    
    
    
    37,854
    
    
    
    430,279Deposits
    
    
    97,711
    
    
    
    136,238
    
    
    
    49,323
    
    
    
    
    
    
    
    283,272Junior subordinated debentures
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10,310
    
    
    
    10,310Borrowings
    
    
    8,750
    
    
    
    8,050
    
    
    
    13,250
    
    
    
    
    
    
    
    30,050Total deposits and borrowings
    
    
    106,461
    
    
    
    144,288
    
    
    
    62,573
    
    
    
    10,310
    
    
    
    323,632Interest rate sensitivity gap
    
    $
    156,801
    
    
    $
    (107,277
    )
    
    $
    29,579
    
    
    $
    27,544
    
    
    $
    106,647Cumulative gap
    
    $
    156,801
    
    
    $
    49,524
    
    
    $
    79,103
    
    
    $
    106,647Cumulative gap as a percentage
of earning assets
    
    
    32.59
    %
    
    
    10.29
    %
    
    
    16.44
    %
    
    
    22.17
    %
 30




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##### Table of Contents



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.
 
   
 Item 1. Legal Proceedings
  
 Item 1A.
Risk Factors
  
 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
 (a)
    
    On May 11, 2006, the Bank entered into a Salary Continuation Agreement with Romolo
Santarosa, the Companys Executive Vice President and Chief Financial Officer. The agreement
provides for an annual benefit of $85,000, which will be paid in 12 equal monthly installments for
a period of 15 years commencing on the later of his attaining 65 years of age or termination of his
employment. The Salary Continuation Agreement is an unfunded arrangement, which means that Mr.
Santarosa has no rights under the agreement beyond those of a general creditor of the Bank, and
there are no specific assets set aside by the Bank in connection with the establishment of the
agreement. The Salary Continuation Agreement is not an employment contract. If Mr. Santarosa
leaves the Banks employ by virtue of early voluntary retirement (prior to attaining age 65) or is
terminated for cause (as defined in the agreement), he will not be eligible for a benefit under
the agreement. In the event Mr. Santarosa leaves the Banks employ by virtue of death (either
prior or subsequent to retirement), involuntary termination (without cause), disability or, under
certain circumstances, a change in control, he will receive partial benefits under the agreement or
certain benefits under a split dollar agreement (see below). The Bank also entered into a
Split-Dollar Life Insurance Agreement with Mr. Santarosa on May 11, 2006. Pursuant to the terms of
that agreement, the Bank owns the insurance policies, is entitled to the cash value of the policies
and is responsible for paying the associated premiums. Upon Mr. Santarosas death, the beneficiary
is entitled to receive $850,000 of the total proceeds, with the Bank entitled to the balance. The
Bank paid an aggregate premium in 2006 amounting to $479,000.(b)
    
    None.
 
 Item 6. Exhibits
  ExhibitNumber
    
    Item Description10.13
    
    Salary Continuation Agreement, dated May 11, 2006, with Romolo Santarosa10.14
    
    Split Dollar Agreement, dated May 11, 2006, with Romolo Santarosa31.1
    
    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
 31




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##### Table of Contents



FCB BANCORP/s/ C. G. Kum
    
    May 12, 2006C. G. KumPresident and

Chief Executive Officer/s/ Romolo Santarosa
    
    May 12, 2006Romolo SantarosaExecutive Vice President and

Chief Financial Officer
 32