SECURITIES
AND EXCHANGE COMMISSION


Washington,
D.C.  20549






FORM
10-K







[ X
]                      ANNUAL
REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACTOF
1934




For the Fiscal Year Ended December 31,2008







[     ]                      TRANSITION
REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGEACT OF
1934







For the
transition period from _______________________ to _____________







Commission
File No. 000-33351





Small BHC Logo


(Name of
small business issuer in its charter)







FLORIDA
            65-1147861


(State
or other jurisdiction of incorporation or
organization)                                         (I.R.S.
Employer Identification No.)






1301 SE Port St. Lucie Boulevard


Port St. Lucie, FL
            34952


(Address
      of principal executive offices)
            (Zip
      Code)






(772) 225-5930


Issuer’s Telephone Number






Securities
Registered Under Section 12(b) of the Exchange Act:






Title
      of each class
            Name
      of each exchange on which
registered





N.A.
            N.A.






Securities
Registered Under Section 12(g) of the Exchange Act:





Common
Stock, $0.01 Par Value


(Title of
Class)





Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities Act. [] Yes  [X] No




Indicate
by check mark if the registrant is not required to file reports pursuant to
Section 13 or 15(d) of the Act. [] Yes  [] No






Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days. [X]Yes []No






Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not
be contained, to the best of registrant’s knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K. []


Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of “large accelerated filer,” “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act.





Large
accelerated filer
[]                                                                                                                      Accelerated
filer []


Non-accelerated
filer (Do not check if a smaller reporting
company)                                                Smaller
reporting company [X]







Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Act). [] Yes  [X] No






The
issuer's revenues for its most recent fiscal year: $14,676,000.









State the
aggregate market value of the voting and non-voting common equity held by
non-affiliates computed by reference to the price at which the common equity was
sold, or the average bid and asked price of such common equity, as of a
specified date within the past 60 days. (See definition of affiliate in Rule
12b-2 of the Exchange Act.)




As of
February 27, 2009, the aggregate market value of the voting and non-voting
common equity held by non-affiliates was $4,630,606.




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




As of
February 27, 2009, the Issuer had 2,058,047 shares of common stock
outstanding.







DOCUMENTS
INCORPORATED BY REFERENCE:




Portions
of the Proxy Statement for the 2009 Annual Meeting of Shareholders and the 2008
Annual Report, filed electronically with the Securities and Exchange Commission
on March 16, 2009 are incorporated in Part III of this Form 10-K by
reference.










Small BHC Logo
  2008
Form 10-K Annual Report
   TABLE OF CONTENTS
   Contents
              
              PagePART I.Item
      1.
              Description
      of Business
              1Item
      1A.
              Risk
      Factors
              14Item
      1B.
              Unresolved
      Staff Comments
              14Item 2.
              Properties
              14Item 3.
              Legal
      Proceedings
              15Item
    4.
              Submission
      of Matters to a Vote of Security Holders
              15PART II.Item
    5.
              Market for
      Registrant’s Common Equity, Related Stockholder Matters and Issuer
      Purchase of  Equity Securities
              15Item 6.
              Selected
      Financial Data
              15Item 7.
              Management’s
      Discussion and Analysis of Financial Condition and Results of
      Operations
              15Item 7A.
              Quantitative
      and Qualitative Disclosures About Market Risk
              15Item 8.
              Financial
      Statements and Supplementary Data
              16Item 9.
              Changes
      in and Disagreements with Accountants on Accounting and Financial
      Disclosure
              16Item 9A.
              Controls
      and Procedures
              16Item 9B.
              Other
      Information
              16PART III.Item 10.
              Directors,
      Executive Officers and Corporate Governance
              17Item 11.
              Executive
      Compensation
              17Item
      12.
              Security
      Ownership of Certain Beneficial Owners and Management and
      Related Stockholder Matters
              17Item 13.
              Certain
      Relationships and Related Transactions, and Director
      Independence
              17Item 14.
              Principal
      Accountants Fees and Services
              17PART
      IV.Item 15.
              Exhibits,
      Financial Statement Schedules
              17SIGNATURES
              19
  
 Table of Contents
  PART
I
 
 Forward-Looking
Statements
 
 This document contains forward-looking
statements as defined by Section 21E of the Securities Exchange Act of
1934.  These forward-looking statements involve substantial risks and
uncertainties.  When used in this document, or in the documents
incorporated by reference, the words “anticipate”, “believe”, “estimate”, “may”,
“intend” and “expect” and similar expressions are some of the forward-looking
statements used in these documents.  Actual results, performance, or
achievements could differ materially from those contemplated, expressed or
implied by the forward-looking statements.  Factors which may cause
results to change materially include competition, inflation, general economic
conditions, changes in interest rates, and changes in the value of collateral
securing loans First Peoples Bank has made, among other things.
 
 ITEM
1.                        BUSINESS
 
 FPB
Bancorp, Inc.
 
 FPB was incorporated on September 5,
2001. On December 3, 2001, we acquired all of the issued and outstanding stock
of First Peoples Bank in a one-for-one share exchange.As of December 31, 2008,
we had total consolidated assets of $239.2 million, and total consolidated
stockholders’ equity of $24.9 million.
 
 First
Peoples Bank
 
 The Bank commenced banking operations
in Port St. Lucie, Florida, on April 26, 1999, as a state-chartered commercial
bank. Our customers are primarily individuals, professionals, small and medium
size businesses, and seasonal retirees located predominantly in St. Lucie,
Martin and Indian River counties, Florida. We currently have six retail
full-service banking offices located in Port St. Lucie, Stuart, Palm City, Fort
Pierce, and Vero Beach, Florida. Our Stuart branch office opened for business in
December 2003, the Fort Pierce branch office opened in June 2004, the Vero Beach
branch office opened in March 2006, the Palm City branch office opened in
January, 2008, and the Gatlin branch office opened in May 2008. The Bank also
opened an Operations Center in March of 2007. Our primary business is attracting
deposits from the general public and using those deposits, together with
borrowings and other funds, to originate loans and to purchase
securities.
 
 We offer a broad range of retail and
commercial banking services, including various types of deposit accounts and
loans for businesses and consumers. As part of our community bank approach,
officers are encouraged to actively participate in community activities and
organizations.
 
 In June, 2008, the Bank formed a
subsidiary, Treasure Coast Holdings, Inc., for the sole purpose of managing
foreclosed assets.
 
 Operating
and Business Strategy
 
 We are organized as a locally-owned,
locally managed community financial institution, owned and managed by people who
are actively involved in our market area and committed to our economic growth
and development. With local ownership, management, and directors, we believe
that we can be more responsive to the communities we serve. Local ownership
allows faster, more responsive and flexible decision-making which is not
generally available at the majority of financial institutions in or near our
market area which mainly consist of branch offices of large regional holding
company banks with headquarters located elsewhere in the United
States.
 
 Our principal business is to attract
deposits from the general public and to invest those funds in various types of
loans and other interest-earning assets. Funds are provided for these
investments from the proceeds from the sale of investments, from amortization
and repayment of outstanding loans and investments, from net deposit inflow, and
from borrowings. Our earnings depend primarily upon the difference between (1)
non-interest income, the interest and fees we receive from loans, the securities
held in our investment portfolio and other investments, and (2) the expenses we
incur in connection with obtaining funds for lending (including interest paid on
deposits and other borrowings) and expenses relating to day-to-day
operations.
  (continued)
 1
 Table
of Contents
 To the extent market conditions permit,
our strategy is intended to insulate our interest rate gap from adverse changes
in interest rates by maintaining spreads through the adjustability of our
interest-earning assets and interest-bearing liabilities. Our ability to reduce
interest-rate risk in our loan and investment portfolios depends upon a number
of factors, many of which are beyond our control, including among others,
competition for loans and deposits in our market area and conditions prevailing
in the economy.
 
 Our primary sources of funds for loans
and for other general business purposes are our capital, deposits and loan
repayments. We expect that loan repayments will be a relatively stable sources
of funds, while deposit inflows and outflows will be significantly influenced by
prevailing interest rates, money market rates, and general economic conditions.
Generally, short-term borrowings may be used to compensate for reductions in
normal sources of funds while longer-term borrowings may be used to support
expanded lending activities.
 
 We continually seek to develop new
business through an ongoing program of personal calls on both present and
potential customers. As a local independent bank, we utilize traditional local
advertising media to promote and develop loans and deposits. In addition, all of
our directors have worked and lived in or near our market area for a number of
years. We believe that these factors, coupled with the past and continued
involvement of the directors, officers and staff in various local community
activities, will further promote our image as a locally-owned independent
institution, which we believe is an important factor to our targeted customer
base.
 
 Personalized
Products and Service. We strive to provide
innovative financial products and high service levels, and to maintain strong
customer relationships. We seek customers who prefer to conduct business with a
locally owned and managed financial institution.
 
 Local Management
and Community Focus. We approach banking with a
community focus, emphasizing local management and local decision-making. Our
main office is located in one of the primary business districts of Port St.
Lucie on Port St. Lucie Boulevard. Most of the executive officers and directors
are long-time residents of the tri-county area, and all management decisions are
made within our market area.
 
 Dedicated
Employees.  We believe that
the key to our success lies with our employees, because it is through our
employees that we are able to provide our banking customers with a very high
level of service and attention. To this end, we seek to hire well qualified
banking professionals who are committed to providing a superior level of banking
service and are willing to accept a significant degree of
responsibility.  Each employee focuses on the individual customer’s
needs and strives to deliver the specific products and services that are best
suited to achieve the customer’s financial goals.
 
 Internal Growth
and Branch Expansion. Our first branch office
opened in December of 2003 at 715 Colorado Avenue in Stuart, Florida, in a 6,100
square foot leased facility.
 
 Our second branch office opened in June
of 2004 in a two-story branch building at 2500 Virginia Avenue in Fort Pierce,
Florida. The bank occupies 3,733 square feet on the first floor. We are leasing
5,025 square feet on the second floor to unaffiliated parties.
 In March 2006, we opened a full-service
branch office at 4000 20th Street,
Vero Beach, Florida, in a former bank branch building.  An 11,000
square foot Operations Center, which is leased, opened in March of 2007, in
Jensen Beach, Florida, and a fifth branch office at 3001 Martin Downs Boulevard
in Palm City, Florida opened in January of 2008 and is 3,000 square
feet.  A 3,700 square foot building now houses our sixth branch
office, which opened in May of 2008 on Gatlin Boulevard, in Port St. Lucie,
Florida.
 
 We have established a courier program
which consists of six persons. This program currently enables us to service
commercial deposit and loan customers in Martin, St. Lucie and Indian River
Counties who are not in close proximity to the Bank. This has proven to be a
great convenience to our customers, especially the small business
owners.
 (continued)
 2
 Table of Contents
 Develop
Commercial Loan Relationships.Since our
inception, we have been gradually building our loan portfolio mix by purchasing,
originating and retaining commercial and commercial real estate loans. We
believe that large regional and out-of-state financial institutions have shifted
their focus away from lending to small and medium-sized business. As part of our
lending efforts, we have been developing, within our market, strong commercial
loan and deposit relationships with small to medium-sized businesses which tend
to value personalized service and attention to their specific borrowing needs.
Timely decisions and prompt, courteous service is very important and we believe
will foster long-term, quality loan and deposit relationships. In addition, we
are active in the Small Business Administration lending program earning our
Preferred Lender Status in 2002.
 
 Residential
Loans. In order
to be a full service bank, we engage in residential lending activities which
include the origination of residential mortgage loans. Our strategy is to sell,
to the extent practical, all of our fixed-rate and adjustable-rate residential
mortgage loan originations. The sale of mortgage loans in the secondary market
provides additional non-interest income, including mortgage loan origination
fees and gains on the sale of mortgage loans. Typically none of these loans are
held in our portfolio.
 
 Maintain Strong
Credit Quality.We place a great
deal of emphasis on maintaining strong asset quality. The asset quality we are
experiencing to date is principally due to our strict underwriting criteria, the
relationship of our senior officers and directors to our customers and their
knowledge of the demographics and needs of our local community. Nonetheless, due
to the economic downturn, particularly in Florida, we have experienced a
decrease in our overall asset quality in 2008.
 
 Primary Market
Areas.We are the only financial institution headquartered in Port St.
Lucie, Florida. Our geographic market area encompasses Martin County, St. Lucie
County, and Indian River County, Florida. St. Lucie, Martin and Indian River
Counties have a total combined year-round adult population of approximately
522,000. From 2000 to 2006, the population of St. Lucie County grew at a
compound annual rate of 31.2%, while Martin County grew by 10% and Indian River
County by 15.2%. Due to the economic downturn, St. Lucie County has suffered
from the effects of the decreased real estate market and in fact, led the
tri-county area with home foreclosures at 1,451 in November 2008 as compared to
757 homes in November 2007. Martin County and Indian River County also had
increases in foreclosures in 2008 as compared to 2007, however, not as drastic
as St. Lucie County. Florida ranks nationally as the second-highest number of
foreclosures and averages three times the national foreclosure
average.
 
 Land development in the market area is
primarily residential in nature and large tracts of land remain available for
residential development. The market area is well connected to and easily
accessible from other east coast communities and is served by Florida’s Turnpike
and Interstate 95.
 
 St. Lucie West is home to the spring
training facility for the New York Mets, the St. Lucie Mets and the PGA training
center, one of the best golf training centers in the world.
 
 Port St. Lucie is home to one of two
family-oriented Club Med’s in the world. Major employers include St. Lucie
County Medical Center, Liberty Medical, Indian River State College, Walmart,
Lawnwood Regional Medical Center, QVC and Publix Supermarkets.
 
 The newest major development in St.
Lucie County is the Town of Tradition, which is a master-planned, mixed-use
community. The Florida Center for Innovation at Tradition is a 120-acre research
park under development, anchored by the new $40 million headquarters for Torrey
Pines Institute for Molecular Studies, set to be fully up and running in
February of 2009. The 100,000 square foot Torrey Pines Facility is just the
beginning of a much larger group of biotechnology companies planning to move
into the 150 acre Florida Center for Innovation at Tradition. There is much hope
that the biotech industry coming to Port St. Lucie will influence positive
change in the economic structure of the city and the immediate surrounding area.
In addition, the Oregon Health & Science University’s Vaccine and Gene
Therapy Institute will be expanding into a 130,000 square-foot facility, and the
Mann Research Center, a six-building, 400,000 square foot life sciences complex
adjacent to both facilities is planned, along with a new medical campus for
Martin Memorial Health Systems. This local expansion is estimated to bring
hundreds of new job opportunities to the St. Lucie County area. Our sixth branch
office, which opened in May of 2008, is located on Gatlin Boulevard, just
outside of the Tradition development.
  (continued)
 3
 Table of Contents
 In Martin County, some of the major
employers include Martin Memorial Health Systems, Martin County School District,
Publix Supermarkets, Home Depot and Armellini Express Lines. The major employers
in the Indian River County area are the school district, the local hospital,
county government, the Sheriff’s Department, Publix Supermarkets and Piper
Aviation.
 
 Competition.Competition for deposits
and loans is intense among financial institutions in Florida and particularly in
areas of high population concentrations such as St. Lucie, Martin and Indian
River Counties. Our competitors include institutions such as Riverside National
Bank of Florida, Bank of America, SunTrust, PNC Bank, Seacoast National Bank,
Gulfstream Business Bank, other commercial banks, savings banks, and credit
unions. Additional competition for deposits comes from government securities,
money-market funds, mutual fund and securities brokerage firms. Many of these
competitors have substantially greater resources, higher lending limits, larger
branch networks and are able to offer a broader range of products and services
than we are able to offer.
 
 The primary factors in competing for
deposits are interest rates, the range of financial services offered,
convenience of office locations, and the flexibility of office hours. The
primary factors in competing for loans include interest rates, loan fees,
flexible terms, and timely loan decisions. We compete for deposits by offering a
variety of deposit programs geared to our potential customers. By developing
strong ties in the local community and providing a high quality of personal
banking services to families, professionals, retirees, and owner-operated
businesses with an emphasis on flexibility and timely responses to customer
demands, we believe that we can successfully compete in our market for
deposits.
 
 With respect to loans, we have targeted
small to medium-sized businesses as our customer base, because we believe that
the large out-of-state financial institutions continue to shift the focus away
from these business opportunities.
   Loan
Activities
 
 General.  Our primary
business emphasis is on making commercial business, commercial real estate and
consumer loans. As of December 31, 2008, the net loan portfolio totaled $184.2
million, or 77% of total assets.
 
 Loan
Underwriting.Loan activities are subject to underwriting standards and loan
origination procedures prescribed by the board of directors and management. Loan
applications are obtained to determine the borrower’s ability to repay, and the
more significant items on these applications are verified through the use of
credit reports, financial statements and confirmations. Our loan policy for real
estate loans generally requires that collateral be appraised by an independent,
outside appraiser approved by the board of directors.
 
 General Loan
Policies.Loans
are approved at various management levels up to and including the board of
directors, depending on the amount of the loan. Loan approvals are made in
accordance with delegated authority approved by the board of directors.
Generally loans less than $150,000 are approved by certain authorized officers.
The President has individual loan authority up to $250,000. Loans up to $500,000
are approved by an officer’s loan committee, and loans between $500,000 and
$1,000,000 are approved by a directors’ loan committee.  All loans
over $1,000,000 require approval by the board of directors.
 
 For real estate
loans our policy is to have a valid mortgage lien on real estate securing a loan
and to obtain a title insurance policy, which insures the validity and priority
of the lien. Borrowers must also obtain hazard insurance policies prior to
closing, and when the property is in a flood prone area, flood insurance is
required.
  (continued)
 4
 Table of Contents
 We are permitted to lend up to 100% of
the appraised value of the real property securing a single family residential
mortgage loan. However, if the amount of a conventional, residential loan
(including a construction loan or a combination construction and permanent loan)
originated or refinanced exceeds 80% of the appraised value or of the purchase
price, whichever is less, we are required by federal regulations to obtain
private mortgage insurance on that portion of the principal amount of the loan
that exceeds 80% of the value of the property or 65% on “raw” land
loans.  We will originate single-family residential mortgage loans
with up to a 90% loan-to-value ratio if the required private mortgage insurance
is obtained. Loans over 90% loan-to-value ratio are limited to special community
support programs or one of the FHA, VA, or Farmers Home Administration guarantee
or insurance programs.  The loan-to-value ratio on a home secured by a
junior lien generally does not exceed 90%, including the amount of the first
mortgage, of the collateral. With respect to home loans granted for construction
or combination construction/permanent financing, we will lend up to 80% of the
appraised value of the property on an “as completed” basis. The loan-to-value
ratio on multi-family residential and commercial real estate loans is generally
limited to 80% of value. Consumer loans are considered to be loans to natural
persons for personal, family or household purposes, and these loans may be
unsecured, secured by personal property or secured by liens on real estate
which, when aggregated with prior liens, equals or exceeds the appraised value
of the collateral property.
 
 The maximum amount which we could have
loaned to one borrower and the borrower’s related entities as of December 31,
2008, was approximately $4.9 million on a secured basis, according to the
Florida Banking Statutes, 658.48 or $2.5 million on a secured basis, based on
our in-house policy limit. Our largest loan to a single borrower is a $3.7
million loan to a corporation, secured by a first commercial real estate
mortgage on 40 acres of land.  The loan is current.
 
 Interest rates charged on loans are
affected principally by competitive factors, the demand for such loans and the
supply of funds available for lending purposes. These factors are, in turn,
affected by general economic conditions, monetary policies of the federal
government, including the Federal Reserve Board, legislative tax policies and
government budgetary matters.
 
 Commercial Real
Estate Loans.
Commercial real estate loans are secured primarily by office, medical and retail
business properties located in St. Lucie, Martin and Indian River Counties.
These types of loans amounted to $95 million or 51% of the total loan portfolio
as of December 31, 2008. Commercial real estate loans may be amortized for up to
25 years, but frequently mature in three to six years.
 
 Commercial and multi-family real estate
loans are originated with a loan-to-value ratio generally not exceeding
80%.  Loans secured by this type of collateral will continue to be a
part of our future loan program.  Commercial and multi-family real
estate loans are generally larger and involve a greater degree of risk than
residential mortgage loans. Because payments on loans secured by commercial
property depend to a large degree on results of operations and management of the
properties, repayment of such loans may be subject to a greater extent to
adverse conditions in the real estate market or the economy. At December 31,
2008, the largest commercial and multi-family real estate loan was approximately
$3.7 million to a Florida corporation, secured by 40 acres of land. The loan is
current.
 
 Commercial
Loans.  Commercial loans
are business loans that are not secured by real estate and are dependent on
business cash flows for repayment. At December 31, 2008, the largest commercial
loan not secured by real estate was $1.5 million loan to a corporation, secured
by an assignment of stock in a cemetery located in St. Lucie County,
Florida.While we
have made Small Business Administration loans, we generally will underwrite
commercial loans for our own portfolio utilizing other sources of collateral and
a maximum of 80% loan to value. The majority of our commercial loans are
adjustable-rate loans with adjustment periods ranging from daily to 5 years. As
of December 31, 2008 we had $64 million in commercial loans, which was 34% of
the total loan portfolio.
 
 Residential  Real
Estate Loans.  We currently
originate fixed-rate residential mortgage loans and adjustable-rate mortgage
loans for terms of up to 30 years. As of December 31, 2008, $324,000 or less
than 0.25% of our total loan portfolio consisted of one-to-four family
residential real estate loans.  As of such date, all of these loans
were adjustable-rate mortgage loans.
 (continued)
 5
 Table of Contents
 The residential adjustable-rate
mortgage loans currently being offered have interest rates that are fixed for a
period of one, three or five years and then after the initial period the
interest rate is adjusted annually based upon an index such as the yield on
treasury securities adjusted to a one-year maturity, plus a margin. Most of our
adjustable-rate mortgage loans limit the amount of any increase or decrease in
the interest rate at each adjustment and over the life of the loan. Typical
limitations are 2% for each adjustment with a limit of 6% over the life of the
loan. We may offer adjustable-rate mortgage loans with different annual and
life-of-loan interest change limits, shorter or longer adjustment periods and
different base indices as may be appropriate to meet market demands, portfolio
needs, and our interest-rate risk management goals.  While the initial
rate on adjustable-rate mortgage loans may be below a fully indexed rate, the
loan is always underwritten based on the borrower’s ability to pay at the
interest rate which would be in effect after adjustment of the loan. Some
adjustable-rate mortgage loans include features that allow the borrower, under
special conditions, to convert the loan to a fixed rate at the then prevailing
market rates.
 
 Adjustable-rate mortgage loans reduce
our risk of changes in interest rates, but involve other risks because as
interest rates increase, the borrower’s required payments increase, thus
increasing the potential for default.  Marketability of real estate
loans is also affected by the level of interest rates.
 
 Our fixed rate home loans are
originated for 30-year amortization terms. Borrowers requesting a term of 15
years or less are usually granted an interest rate slightly lower than is
offered for a 30-year amortizing loan. These loans are originated in compliance
with documentation and underwriting standards which permit their sale in the
secondary market to institutional investors such as Fannie Mae. Fixed-rate home
loans include a “due on sale” clause, which provides us with the contractual
right to declare the loan immediately due and payable in the event the borrower
transfers ownership of the property without our consent.  The “due on
sale” provision is always enforced.
 
 We generally sell all fixed rate,
30-year home loans in the secondary market.  No such loans are held in
our loan portfolio.
 
 Consumer
Loans.   We make various
types of consumer loans, the majority of which are installment loans, which also
include automobile and boat loans, and home equity loans.  Consumer
loans are originated in order to provide a range of financial services to
customers and to create stronger ties to our customers and because the shorter
term and normally higher interest rates on such loans help maintain a profitable
spread between our average loan yield and our cost of funds. The terms of
installment consumer loans generally range from one to five years and are
typically at a fixed rate of interest, while home equity loans are at a variable
rate of interest.  Underwriting standards for consumer loans include
an assessment of the applicant’s repayment history on other debts and ability to
meet existing obligations and payments on the proposed
loans.  Although the applicant’s creditworthiness is a primary
consideration, the underwriting process also includes a comparison of the value
of the security, if any, to the proposed loan amount. Consumer loans generally
involve more credit risks than mortgage loans because of the type and nature of
the collateral or absence of collateral. Consumer loan repayments are dependent
on the borrower’s continuing financial stability, and are likely to be adversely
affected by job loss, divorce and illness.  Furthermore, the
application of various federal and state laws, including federal and state
bankruptcy and insolvency laws, may limit the amount which can be recovered on
such loans. In some cases, repossessed collateral may not provide full repayment
of the outstanding loan balance. Our belief is that the yields earned on
consumer loans are commensurate with the credit risk associated with such loans
and, therefore, we intend to continue to increase our investment in these types
of loans. As of December 31, 2008, consumer loans amounted to $19 million, or
10% of the total loan portfolio.
   6
 Table of Contents
 Income from Loan
Activities. 
Fees are earned in connection with loan commitments and originations, loan
modifications, late payments, changes of property ownership and for
miscellaneous services related to loans. Income from these activities varies
from period to period with the volume and type of loans originated, sold and
purchased, which in turn is dependent upon prevailing interest rates and their
effect on the demand for loans in our primary service area.
 
 Loan fees
typically are charged at the time of loan origination and may be a flat fee or a
percentage of the amount of the loan. Current accounting standards state that
the total amount of such fees cannot be recognized as income immediately; rather
the fees are deferred and taken into income over the contractual life of the
loan, using a level yield method. If loans are prepaid or refinanced, all
remaining deferred fees with respect to such loans are taken into income at that
time.
 
 Non-performing Loans
and Repossessed Assets.   When a borrower
fails to make a required payment on a loan, our loan officers attempt to collect
the payment by contacting the borrower. If a payment on a loan has not been
received by the end of a grace period (usually 10 days from the payment due
date), notices are sent at that time, with follow-up contacts made thereafter.
In most cases, delinquencies are cured promptly. If the delinquency exceeds 29
days and is not cured through normal collection procedures, more formal measures
are instituted to remedy the default, including the commencement of foreclosure
proceedings. We will then attempt to negotiate with the delinquent borrower to
establish a satisfactory payment schedule.
 
 A loan is
generally placed on non-accrual status and ceases accruing interest when loan
payment performance is deemed unsatisfactory. All loans past due 90 days,
however, are placed on non-accrual status, unless the loan is both well
collateralized and in the process of collection. Cash payments received while a
loan is classified as non-accrual are recorded as a reduction of principal as
long as doubt exists as to full collection of all principal and
interest.
 
 If
foreclosure is required, when completed, the property is sold at a public
auction in which we will generally participate as a bidder. If we are the
successful bidder, the acquired real estate property is then included in the
foreclosed assets account until it is sold. We are permitted under federal
regulations to finance sales of foreclosed assets by “loans to facilitate,”
which may involve more favorable interest rates and terms than generally would
be granted under normal underwriting guidelines.
 
 At December
31, 2008, we had $10 million of non-accruing loans which were contractually past
due 90 days or more, and renegotiated debt of $12 million. As of December 31,
2008, we have $1.7 million in foreclosed assets.
   7
 Table of Contents
 Asset
Classification.Commercial banks are required to review and when appropriate classify
their assets on a regular basis.  The FDIC and state banking examiners
have authority to identify problem assets and, if appropriate, require them to
be classified.  There are three classifications for problem assets:
“substandard,” “doubtful” and “loss.”  Substandard assets have one or
more defined weaknesses and are characterized by the distinct possibility that
the insured institution will sustain some loss if the deficiencies are not
corrected. Doubtful assets have the weaknesses of substandard assets with the
additional characteristic that the weaknesses make collection or liquidation in
full on the basis of currently existing facts, conditions and values
questionable, and there is a high possibility of loss. An asset classified as
loss is considered uncollectible and of such little value that continuance as an
asset of the institution is not warranted. If full collection of principal and
interest is doubtful, the insured institution establishes specific allowance for
loan losses, in accordance with the guidelines established under
FAS114.  All or a portion of general loan loss allowances established
to cover possible losses related to assets classified substandard or doubtful
may be included in determining an institution’s regulatory capital, while
specific valuation allowances for loan losses generally do not qualify as
regulatory capital.Assets that do not warrant classification in one of the aforementioned
categories, but possess weaknesses, are classified as special mention and are
closely monitored.
 
 In 2008,
non-performing assets totaled $12.1 million or 6.6% of total loans, as a result
in a deterioration of credit quality and borrowers’ ability to meet their loan
obligations due mostly to the drop in real estate values and overall
recessionary pressures.
 
 Provision for Losses
on Loans.The provision for loan losses is established through a
provision for loan losses charged against income.  Loans are charged
against the provision when we believe that the full collection of principal and
interest is doubtful or when an actual loss is incurred. The provision is an
estimated amount that we believe will be adequate to absorb losses inherent in
the loan portfolio based on evaluations of its collectibility. The evaluations
take into consideration such factors as changes in the nature and volume of the
portfolio, overall portfolio quality, specific impaired loans, and current
anticipated economic conditions that may affect the borrower’s ability to pay.
While we use the best information available to us to recognize losses on loans,
future additions to the provision may be necessary based on changes in economic
conditions. At December 31, 2008, our total allowance for loan losses was
approximately $2.6 million representing 1.36% of total loans.
 
 Personnel.As of December 31, 2008, we had 65 full-time employees and 8 part-time
employees. The employees are not represented by any collective bargaining group.
We believe our relations with our employees to be good.
 
 Employees are
covered by a comprehensive employee benefit program which provides for, among
other benefits, hospitalization and major medical insurance, short and long-term
disability insurance, life insurance, and education assistance. Such employee
benefits are considered by management to be generally competitive with employee
benefits provided by other major employers in our geographic market
area.
 
 
 SUPERVISION
AND REGULATION
  General
 
 As a
one-bankholding
company, we are subject to an extensive body of state and federal banking laws
and regulations which impose specific requirements and restrictions on virtually
all aspects of our operations.  We are affected by government monetary
policy and by regulatory measures affecting the banking industry in
general.
 
 The following
is a brief summary of some of the statutes, rules and regulations which affect
our operations. This summary is qualified in its entirety by reference to the
particular statutory and regulatory provisions referred to below and is not
intended to be an exhaustive description of the statutes or regulations
applicable to our business.  Any change in applicable laws or
regulations may have a material adverse effect on our business.
 34.418
   8
 Table of Contents
   FPB
Bancorp, Inc.
 
 We are a bank
holding company within the meaning of the Bank Holding Company Act of
1956.  As such, we are required to file annual reports and other
information with the Federal Reserve regarding our business operations and those
of our subsidiary. We are also subject to the supervision of, and to periodic
inspections by, the Federal Reserve.
 
 The Bank Holding
Company Act generally requires every bank holding company to obtain the prior
approval of the Federal Reserve before:
 
 Ø
                Acquiring
      all or substantially all of the assets of a
  bank;
 Ø
                Acquiring
      direct or indirect ownership or control of more than 5% of the voting
      shares of any bank or bank holding company;
or
 Ø
                Merging
      or consolidating with another bank holding
  company.
  The Bank
Holding Company Act and the Change in Bank Control Act, together with
regulations promulgated by the Federal Reserve, require that, depending on the
particular circumstances, either the Federal Reserve’s approval must be obtained
or notice must be furnished to the Federal Reserve and not disapproved prior to
any person or company, not a bank holding company, acquiring control of a bank
holding company, subject to certain exemptions. Control is conclusively presumed
to exist when an individual or company acquires 25% or more of any class of
voting securities of the bank holding company. Control is rebuttably presumed to
exist if a person acquires 10% or more, but less than 25%, of any class of
voting securities and either the bank holding company has registered securities
under Section 12 of the Securities Exchange Act of 1934 or no other person owns
a greater percentage of that class of voting securities immediately after the
transaction.
 
 Except as
authorized by the Bank Holding Company Act and Federal Reserve regulations or
order, a bank holding company is generally prohibited from engaging in, or
acquiring direct or indirect control of more than 5% of the voting shares of any
company engaged in any business other than the business of banking or managing
and controlling banks.  Some of the activities the Federal Reserve has
determined by regulation to be proper incidents to the business of banking, and
thus permissible for bank holding companies, include:
  Ø
                Making
      or servicing loans and certain types of
leases;
 Ø
                Engaging
      in certain insurance and discount brokerage
  activities;
 Ø
                Performing
      certain data processing services;
 Ø
                Acting
      in certain circumstances as a fiduciary or investment or financial
      advisor;
 Ø
                Providing
      management consulting services;
 Ø
                Owning
      savings associations; and
 Ø
                Making
      investments in corporations or projects designed primarily to promote
      community welfare.
   In accordance
with Federal Reserve policy, a bank holding company is expected to act as a
source of financial strength to its subsidiary banks. In adhering to the Federal
Reserve’s policy, we may be required to provide financial support to the Bank at
a time when, absent such Federal Reserve policy, it might not be deemed
advisable to provide such assistance. Under the Bank Holding Company Act, the
Federal Reserve may also require a bank holding company to terminate any
activity or relinquish control of a non-bank subsidiary (other than a non-bank
subsidiary of a bank) upon the Federal Reserve’s determination that the activity
or control constitutes a serious risk to the financial soundness or stability of
any subsidiary depository institution of the bank holding company. Further,
federal bank regulatory authorities have additional discretion to require a bank
holding company to divest itself of any bank or non-bank subsidiary if the
agency determines that divestiture may aid the depository institution’s
financial condition.
   9
 Table of Contents
   First
Peoples Bank
 
 As a
state-chartered bank, the Bank is subject to the supervision and regulation of
the Department and the FDIC. Through December of 2009, our deposits are insured
by the FDIC for a maximum of $250,000 per account title and unlimited for all
non-interest bearing accounts. For this protection, we must pay a semi-annual
statutory assessment and comply with the rules and regulations of the FDIC. The
assessment levied on a bank for deposit insurance varies, depending on the
capital position of each bank, and other supervisory factors. Currently, we are
subject to the statutory assessment.
   Areas regulated and
monitored by the bank regulatory authorities include:
   Ø
                Security
      devices and procedures;
 Ø
                Adequacy
      of capitalization and loss
reserves;
 Ø
                Loans;
 Ø
                Investments;
 Ø
                Borrowings;
 Ø
                Deposits;
 Ø
                Mergers;
 Ø
                Issuances
      of securities;
 Ø
                Payment
      of dividends;
 Ø
                Establishment
      of branches;
 Ø
                Corporate
      reorganizations;
 Ø
                Transactions
      with affiliates;
 Ø
                Maintenance
      of books and records; and
 Ø
                Adequacy
      of staff training to carry out safe lending and deposit gathering
      practices.
 Capital
Adequacy Requirements
 
 Banks are
subject to regulatory capital requirements imposed by the Federal Reserve and
the FDIC. Until a bank and its holding company’s assets reach $500 million, the
capital adequacy guidelines issued by the Federal Reserve are applied to bank
holding companies on a non- consolidated basis, unless the bank holding company
is engaged in non-bank activities involving significant leverage, or it has a
significant amount of outstanding debt held by the general public. The
Department’s and the FDIC’s risk-based capital guidelines apply directly to
insured state banks, regardless of whether they are subsidiaries of a bank
holding company. Both agencies’ requirements, which are substantially similar,
establish minimum capital ratios in relation to assets, both on an aggregate
basis as adjusted for credit risks and off balance sheet exposures. The risk
weights assigned to assets are based primarily on credit
risks.  Depending upon the riskiness of a particular asset, it is
assigned to a risk category. For example, securities with an unconditional
guarantee by the United States government are assigned to the lowest risk
category.  The aggregate amount of assets assigned to each risk
category is multiplied by the risk weight assigned to that category to determine
the weighted values, which are added together to determine total risk-weighted
assets.
  (continued)
 10
 Table of Contents
 Capital is
then classified into two categories, Tier 1 and Tier 2. Tier 1 capital consists
of common and qualifying preferred shareholder’s equity, less goodwill and other
adjustments. Tier 2 capital consists of mandatory convertible, subordinated, and
other qualifying term debt, preferred stock not qualifying for Tier 1 capital,
and a limited amount of allowance for credit losses, up to a designated
percentage of risk-weighted assets. Under the risk-based guidelines, financial
institutions must maintain a specified minimum ratio of “qualifying” capital to
risk-weighted assets. At least 50% of an institution’s qualifying capital must
be “core” or “Tier 1” capital, and the balance may be “supplementary” or “Tier
2” capital. In addition, the guidelines require banks to maintain a minimum
leverage ratio standard of capital adequacy. The leverage standard requires
top-rated institutions to maintain a minimum Tier 1 leverage capital to assets
ratio of 3%.  All other institutions are required to maintain a Tier 1
leverage capital ratio of 4% or greater, based upon their particular
circumstances and risk profiles.
 
 Federal
banking regulators have adopted regulations revising the risk-based capital
guidelines to further ensure that the guidelines take adequate account of
interest rate risk. Interest rate risk is the adverse effect that changes in
market interest rates may have on a bank’s financial condition and is inherent
to the business of banking. Under the regulations, when evaluating a bank’s
capital adequacy, the revised capital standards now explicitly include a bank’s
exposure to declines in the economic value of its capital due to changes in
interest rates. The exposure of a bank’s economic value generally represents the
change in the present value of its assets, less the change in the value of its
liabilities, plus the change in the value of its interest rate off-balance sheet
contracts.
 
 Federal bank
regulatory agencies possess broad powers to take prompt corrective action as
deemed appropriate for an insured depository institution and its holding
company, based on the institution’s capital levels.  The extent of
these powers depends upon whether the institution in question is considered
“well-capitalized”, “adequately capitalized”, “undercapitalized”, “significantly
under-capitalized”, or “critically undercapitalized”. Generally, as an
institution is deemed to be less well-capitalized, the scope and severity of the
agencies’ powers increase, ultimately permitting the agency to appoint a
receiver for the institution.  Business activities may also be
influenced by an institution’s capital classification. For instance, only a
“well-capitalized” depository institution may accept brokered deposits without
prior regulatory approval, and can engage in various expansion activities with
prior notice, rather than prior regulatory approval. However, rapid growth, poor
loan portfolio performance or poor earnings performance, or a combination of
these factors, could change the capital position of our subsidiary banks in a
relatively short period of time. Failure to meet these capital requirements
could subject the subsidiary banks to prompt corrective action provisions of the
FDIC, which may include filing with the appropriate bank regulatory authorities
a plan describing the means and a schedule for achieving the minimum capital
requirements. In addition, we would not be able to receive regulatory approval
of any application that required consideration of capital adequacy, such as a
branch or merger application, unless we could demonstrate a reasonable plan to
meet the capital requirement within an acceptable period of time.
   11
 Table of Contents
   Dividends
 
 Our ability
to pay further cash dividends may depend almost entirely upon the amount of
dividends that the Bank is permitted to pay by statutes or regulations.
Additionally, the Florida Business Corporation Act provides that we may only pay
dividends if the dividend payment would not render us insolvent, or unable to
meet our obligations as they come due.
 
 The
Department limits a bank’s ability to pay dividends. As a state-chartered bank,
we are subject to regulatory restrictions on the payment of dividends, including
a prohibition of payment of dividends from the banks’ capital under certain
circumstances without the prior approval of the Department and the FDIC. Except
with the prior approval of the Department, all dividends of any Florida bank
must be paid out of retained net profits from the current period and the
previous two years, after deducting expenses, including losses and bad debts. In
addition, a state-chartered bank in Florida is required to transfer at least 20%
of its net income to surplus until their surplus equals the amount of paid-in
capital.
   Other
Laws
 
 State usury
and credit laws limit the amount of interest and various other charges collected
or contracted by a bank on loans. Our loans are also subject to federal laws
applicable to credit transactions, such as the:
  Ø
                Federal
      Truth-In-Lending Act, which governs disclosures of credit terms to
      consumer borrowers;
 Ø
                Community
      Reinvestment Act, which requires financial institutions to meet their
      obligations to provide for the total credit needs of the communities they
      serve, including investing their assets in loans to low- and
      moderate-income borrowers;
 Ø
                Home
      Mortgage Disclosure Act requiring financial institutions to provide
      information to enable public officials to determine whether a financial
      institution is fulfilling its obligations to meet the housing needs of the
      community it serves;
 Ø
                Equal
      Credit Opportunity Act prohibiting discrimination on the basis of race,
      creed or other prohibitive factors in extending
  credit;
 Ø
                Real
      Estate Settlement Procedures Act, which requires lenders to disclose
      certain information regarding the nature and cost of real estate
      settlements, and prohibits certain lending practices, as well as limits
      escrow account amounts in real estate
  transactions;
 Ø
                Fair
      Credit Reporting Act governing the manner in which consumer debts may be
      collected by collection agencies;
and
 Ø
                The
      rules and regulations of various federal agencies charged with the
      responsibility of implementing such federal
  laws.
 Our
operations are also subject to the:
 
 Ø
                The
      privacy provisions of the Gramm-Leach-Bliley Act of 1999, which requires
      us to maintain privacy policies intended to safeguard consumer financial
      information, to disclose these policies to our customers, and allow
      customers to “opt out” of having their financial service providers
      disclose their confidential financial information to non-affiliated third
      parties, subject to certain
exceptions;
 Ø
                Right
      to Financial Privacy Act, which imposes a duty to maintain confidentiality
      of consumer financial records and prescribes procedures for complying with
      administrative subpoenas of financial records;
  and
 Ø
                Electronic
      Funds Transfer Act and Regulation E, which govern automatic deposits to,
      and withdrawals from, deposit accounts and customers’ rights and
      liabilities arising from the use of debit cards, automated teller machines
      and other electronic banking
services.
  Interstate
Banking and Branching
 
 Under the
Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994, eligible
bank holding companies in any state are permitted, with Federal Reserve
approval, to acquire banking organizations in any other state. The Interstate
Banking and Branching Efficiency Act also removed substantially all of the
prohibitions on interstate branching by banks. The authority of a bank to
establish and operate branches within a state, however, continues to be subject
to applicable state branching laws.  Under current Florida law, we are
permitted to establish branch offices throughout Florida with the prior approval
of the Department and the FDIC.  In addition, with prior regulatory
approval, we would be able to acquire existing banking operations in other
states.
 
 Financial
Modernization
 
 The
Gramm-Leach-Bliley Act of 1999 sought to achieve significant modernization of
the federal bank regulatory framework by allowing the consolidation of banking
institutions with other types of financial services firms, subject to various
restrictions and requirements. In general, the Gramm-Leach-Bliley Act repealed
most of the federal statutory barriers which separated commercial banking firms
from insurance and securities firms and authorized the consolidation of such
firms in a “financial services holding company”. We have no immediate plans to
utilize the structural options created by the Gramm-Leach-Bliley Act, but may
develop such plans in the future.
   12
 Table of Contents
   Anti-Money
Laundering
 
 After
September 11, 2001, terrorist attacks in New York and Washington, D.C., the
United States government acted in several ways to tighten control on activities
perceived to be connected to money laundering and terrorist funding. A series of
orders were issued which identify terrorists and terrorist organizations and
require the blocking of property and assets of, as well as prohibiting all
transactions or dealings with, such terrorists, terrorist organizations and
those that assist or sponsor them. The USA Patriot Act enacted in
2001:
  Ø
                  Substantially
      broadens existing anti-money laundering legislation and the
      extraterritorial jurisdiction of the United
  States;
 Ø
                  Imposes
      new compliance and due diligence
obligations;
 Ø
                  Creates
      new crimes and penalties;
 Ø
                  Compels
      the production of documents located both inside and outside the United
      States; including those of foreign institutions that have a correspondent
      relationship in the United States;
and
 Ø
                  Clarifies
      the safe harbor from civil liability to
  customers.
 Ø
                  In
      addition, the United States Treasury Department issued regulations in
      cooperation with the federal banking agencies, the Securities and Exchange
      Commission, the Commodity Futures Trading Commission and the Department of
      Justice to:
 Ø
                  Require
      customer identification and
verification;
 Ø
                  Expand
      the money-laundering program requirement to the major financial services
      sectors; including insurance and unregistered investment companies, such
      as hedge funds; and
 Ø
                  Facilitate
      and permit the sharing of information between law enforcement and
      financial institutions, as well as among financial institutions
      themselves.
 The United
States Treasury Department also has created the Treasury USA PATRIOT Act Task
Force to work with other financial regulators, the regulated community, law
enforcement and consumers to continually improve the regulations. Recently,
enforcement of the USA PATRIOT Act, the Bank Secrecy Act and other anti-money
laundering laws and regulations has greatly increased from both State and
Federal regulators.
 
 Emergency
Economic Stabilization Act
  In response
to the financial crisis affecting the banking system and financial markets, the
Emergency Economic Stabilization Act (“EESA”) was signed into law on October 3,
2008, and established the Troubled Asset Relief Program (“TARP”). As part of
TARP, the U.S. Treasury established the Capital Purchase Program (“CPP”) to
provide up to $700 billion of funding to eligible financial institutions through
the purchase of capital stock and other financial instruments for the purpose of
stabilizing and providing liquidity to the U.S. financial markets. On December
5, 2008, FPB issued $5.8 million in preferred stock and a warrant to purchase
183,158 shares of common stock at $4.75 to the U.S. Treasury.  In
connection with EESA, there have been numerous actions by the Federal Reserve
Board, Congress, the U.S. Treasury, the FDIC, the SEC and others to further the
economic and banking industry stabilization efforts under EESA. It remains
unclear at this time what further legislative and regulatory measures will be
implemented under EESA affecting FPB.
  American
Recovery and Reinvestment Act of 2009
  On February
17, 2009 President Obama signed into law the American Recovery and Reinvestment
Act of 2009 (“ARRA”), more commonly known as the economic stimulus or economic
recovery package. ARRA includes a wide variety of programs intended to stimulate
the economy and provide for extensive infrastructure, energy, health, and
education needs. In addition, ARRA imposes certain new executive compensation
and corporate expenditure limits on all current and future CPP recipients that
are in addition to those previously announced by the U.S. Treasury, until the
institution has repaid the U.S. Treasury, which is now permitted under ARRA
without penalty and without the need to raise new capital, subject to the U.S.
Treasury’s consultation with the recipient’s appropriate regulatory
agency.
  Future
Legislation
  Various other
legislative and regulatory initiatives, including proposals to overhaul the
banking regulatory system and to limit the investments that a depository
institution may make with insured funds, are from time to time introduced in
Congress and state legislatures, as well as regulatory agencies. Such
legislation may change banking statutes and the operating environment of FPB and
the Bank in substantial and unpredictable ways, and could increase or decrease
the cost of doing business, limit or expand permissible activities or affect the
competitive balance depending upon whether any of this potential legislation
will be enacted, and if enacted, the effect that it or any implementing
regulations, would have on the financial condition or results of operations of
FPB or the Bank. With the recent enactments of EESA and ARRA, the nature and
extent of future legislative and regulatory changes affecting financial
institutions is very unpredictable at this time.  FPB cannot determine
the ultimate effect that such potential legislation, if enacted, would have upon
its financial condition or operations.
   13
 Table of Contents
   ITEM 1A. RISK
FACTORS.
 
 Not applicable
   ITEM 1B. UNRESOLVED STAFF
COMMENTS.
 
 Not applicable.
   ITEM 2.   
PROPERTIES.
 
 Our main
office was purchased in 2002 for approximately $1.1 million.  It is
located at 1301 SE Port St. Lucie Boulevard, Port St. Lucie, Florida
34952.  We purchased land in 2001 and built a two-story, 9,600 square
foot branch building located at 2500 Virginia Avenue, Fort Pierce,
Florida.  The entire first floor is occupied by the Bank, and it
opened for business in June of 2004. The 5,025 square feet on the second floor
is leased to third parties. We also lease our Stuart, Palm City and Vero Beach
branches. The Bank’s Operations Center, located in Jensen Beach, Florida opened
in March of 2007, and is also leased.  The Gatlin Boulevard, Port St.
Lucie, Florida branch office opened in May of 2008, and is owned by the Company,
with a 50-year ground lease.
   14
 Table of Contents
   ITEM 3.LEGAL
PROCEEDINGS.
  There are no
material proceedings to which FPB or the Bank is a party or to which any of our
properties are subject which are not in the ordinary course of
business.
   ITEM 4.   
SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
  Our
shareholders voted on no matters during the fourth quarter of 2008.
 
 PART
II
 
 ITEM 5.
              MARKET
      FOR THE REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER
      MATTERS AND ISSUE PURCHASES OF EQUITY
  SECURITIES.
 
 
 As of
February 28, 2009, we had approximately 1,400 shareholders. On July 21, 2005,
FPB became listed on the Nasdaq Capital Market under the symbol “FPBI.” Prior to
that, there was no public market for the stock. The table below shows the high,
low and closing bid prices on the Nasdaq Capital Market for the periods
indicated. These over-the-counter market quotations reflect inter-dealer prices,
without retail mark-up, markdown, or commission and may not necessarily reflect
actual transactions.
 
  Calendar Quarter
      Ended
                    High
                    Low
                    ClosingMarch 30,
      2007
                    $
                    17.14
                    $
                    15.71
                    $
                    16.19June 30,
      2007
                    $
                    16.61
                    $
                    14.87
                    $
                    15.75September 30,
      2007
                    $
                    15.89
                    $
                    12.72
                    $
                    13.40December 31,
      2007
                    $
                    13.35
                    $
                    9.71
                    $
                    9.80March 31,
      2008
                    $
                    8.66
                    $
                    8.25
                    $
                    8.66June 30,
      2008
                    $
                    7.21
                    $
                    7.21
                    $
                    7.21September 30,
      2008
                    $
                    5.26
                    $
                    5.02
                    $
                    5.02December 31,
      2008
                    $
                    2.84
                    $
                    1.92
                    $
                    1.99
  On June 15, 2007, FPB
paid a 5% stock dividend. No dividend was paid in 2008.
    ITEM 6.
              SELECTED
      FINANCIAL DATA
 
 Not applicable.
   ITEM 7.
                MANAGEMENT’S
      DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
      AND RESULTS OF
OPERATIONS
 
 FPB hereby
incorporates by reference the sections entitled “Selected Financial Data”
contained at page 2 of the 2008 Annual Report and the section entitled
“Management’s Discussion and Analysis of Financial Condition and Results of
Operations” contained at pages 3 through 19 of the 2008 Annual Report. The 2008
Annual Report is attached hereto as Exhibit 13.
   ITEM 7A.QUANTITATIVE AND
QUALITATIVE DISCLOSURES ABOUT MARKET RISK
 
 Not applicable.
   15
 Table of Contents
   ITEM 8.   FINANCIAL
STATEMENTS AND SUPPLEMENTARY DATA
  FPB hereby
incorporates by reference the sections entitled “Selected Financial Data”
contained at page 2 of the 2008 Annual Report and the section entitled
“Consolidated Financial Statements” contained at pages 20 through 52 of the 2008
Annual Report. The 2008 Annual Report is attached hereto as Exhibit
13.
   ITEM 9.   CHANGES IN AND
DISAGREEMENTS WITH ACCOUNTANTS ON
 ACCOUNTING AND FINANCIAL DISCLOSURE.
  Neither FPB
nor the Bank has had any disagreements with its accountants.
   ITEM 9A.CONTROLS AND
PROCEDURES
 
 (a)        Evaluation of
disclosure controls and procedures.
 
 FPB maintains
controls and procedures designed to ensure that information required to be
disclosed in the reports that FPB files or submits under the Securities Exchange
Act of 1934 is recorded, processed, summarized and reported within the time
periods specified in the rules and forms of the Securities and Exchange
Commission. Based upon their evaluation of those controls and procedures
performed within 90 days of the filing date of this report, the Chief Executive
and Chief Financial Officer of FPB concluded that FPB’s disclosure controls and
procedures were adequate.
 
 (b)  Management’s
Annual Report on Internal Control over Financial Reporting
 
 Our
management is responsible for establishing and maintaining adequate internal
control over financial reporting (as defined in Rule 13a-15(f) under the
Securities Exchange Act of 1934). Our internal control over financial reporting
is a process designed to provide reasonable assurance regarding the reliability
of financial reporting and the preparation of financial statements for external
purposes of accounting principles generally accepted in the United
States.
 
 Because of
its inherent limitations, internal control over financial reporting may not
prevent or detect misstatements. Therefore, even those systems determined to be
effective can provide only reasonable assurance of achieving their control
objectives.
  Our
management, with the participation of the Chief Executive Officer and Chief
Financial Officer, evaluated the effectiveness of FPB’s internal control over
financial reporting as of December 31, 2008. In making this
assessment, our management used the criteria set forth by the Committee of
Sponsoring Organizations of the Treadway Commission (COSO) in Internal
Control — Integrated Framework. Based on this evaluation, our management,
with the participation of the Chief Executive Officer and Chief Financial
Officer, concluded that, as of December 31, 2008, our internal control over
financial reporting was effective.
 
 (c)  Changes in
internal controls
 
 FPB made no
significant changes in its internal controls or in other factors that could
significantly affect these controls subsequent to the date of the evaluation of
those controls by the Chief Executive and Chief Financial Officer.
   ITEM 9B.OTHER
INFORMATION
  FPB
experienced no events during the fourth quarter of 2008, which were required to
be reported on Form 8-K which were not so reported.
   16
 Table of Contents
 PART
III
   ITEM 10.
              DIRECTORS,
      EXECUTIVE OFFICERS AND CORPORATE
GOVERNANCE
 
 The
information appearing under the headings “Election of Directors” of the
definitive Proxy Statement and “Compliance with Section 16(a) of the Securities
Exchange Act of 1934” of the definitive Proxy Statement relating to the annual
meeting of shareholders, scheduled to be held on April 29, 2008, is incorporated
herein by reference.  None of the officers and directors named in
those sections has been involved in any material legal
proceedings.  We have adopted a code of ethics that applies to our
executive officers, a copy of which was been filed with our 2005 Form 10-KSB as
Exhibit 14.  Persons who would like a copy of such code of ethics may
receive one without charge upon request made to Nancy E. Aumack, Chief Financial
Officer, FPB Bancorp, Inc., 1792 NE Jensen Beach Blvd., Jensen Beach, Florida
34957.
   ITEM 11. EXECUTIVE
COMPENSATION
 
 The information appearing under the
heading “Executive Compensation” of the definitive Proxy Statement is
incorporated herein by reference.
   ITEM 12.SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND
 MANAGEMENT AND RELATED
      STOCKHOLDER MATTERS
 
 The
information appearing under the heading “Beneficial Ownership of Directors and
Executive Officers” of the definitive Proxy Statement is incorporated herein by
reference.
   ITEM 13. CERTAIN RELATIONSHIP
AND RELATED TRANSACTIONS
 
 The
information appearing under the caption “Certain Relationships and Related
Transactions” of the definitive Proxy Statement is incorporated herein by
reference.
   ITEM 14. PRINCIPAL ACCOUNTING
FEES AND SERVICES
 
 The
information appearing under the caption “Proposal 3.Ratificationofthe Appointment Of TheIndependent Auditor forthe Fiscal Year EndingDecember 31, 2009” of the Proxy
Statement is incorporated herein by reference.
 
 
 PART
IV
 
 ITEM 15. EXHIBITS, FINANCIAL
STATEMENT SCHEDULES
 
 Exhibits.
The following exhibits are filed with or incorporated by reference into this
report. The exhibits marked with an (a) were previously filed as a part of
the Company’s Registration Statement on Form SB-1, filed with the Federal
Deposit Insurance Corporation on April 30, 2000; those marked with a (b)
were filed with the Company’s From 10-KSB on March 31, 2003; those marked
with a (c) were filed with the Company’s Definitive Schedule 14A on October 26,
2005; those marked with a (d) were filed with the Company's Form 8-A on November
16, 2001; those marked with an (e) were filed with the Company's Form 10-QSB/A
on August 2, 2008; those marked with an (f) were filed with the Company’s Form
10-Q on November 6, 2008; those marked with a (g) were filed with the
Company’s Form 10-KSB on March 28, 2005; and those marked with an (h) were filed
with the Company's Form 8-K on December 5, 2008.
   (continued)
 17
 Table of Contents






Exhibit No.
                                  Description of
      Exhibit(d)3.1
                                  Articles
      of Incorporation(d)3.2
                                  Bylaws(f)
      3.3
                                  Amendment
      to Bylaws(d)4.1
                                  Specimen
      copy of certificate evidencing shares of the Company’s common capital
      stock, $0.01 par value(a)4.2
                                  First
      Peoples Bank Stock Option Plan dated January 14, 1999(b)4.5
                                  Amendment
      to First Peoples Bank Stock Option Plan(c)4.6
                                  2005
      Stock Compensation Plan(a)10.1
                                  First
      Peoples Bank Qualified 401(k) Profit Sharing Plan, dated May 1,
      1999(f)10.2
                                  Amended
      and Restated Employment Agreement for David W. Skiles(e)10.3
                                  Amended
      and Restated Change in Control Agreement for Nancy E.
    Aumack(e)10.4
                                  Amended
      and Restated Change in Control Agreement for Stephen J.
      Krumfolz(e)10.5
                                  Amended
      and Restated Change in Control Agreement for Marge
Riley(h)10.6
                                  Letter
      Agreement, dated December 5, 2008 between the Company and the United
      States Department of the Treasury(h)10.7
                                  Form
      of Waiver, executed by each of David W. Skiles, Nancy E. Aumack and Marge
      Riley(h)10.8
                                  Form
      of Compliance Agreement, executed by each of David W. Skiles, Nancy E.
      Aumackand
      Marge Riley(h)10.9
                                  Securities
      Purchase Agreement – Standard Terms between the Company and the United
      States Department of the Treasury13
                                  2008 Annual
    Report(g)14
                                  Code
      of Ethics31.1
                                  Certification of Chief Executive Officer required
      by Rule 13a-14(a)/15d-14(a) under the Exchange Act31.2
                                  Certification of Chief Financial Officer required
      by Rule 13a-14(a)/15d-14(a) under the Exchange Act32.1
                                  Certification of Chief Executive Officer pursuant
      to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of
      Sarbanes-Oxley Act of 200232.2
                                  Certification of Chief Financial Officer pursuant
      to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of
      Sarbanes-Oxley Act of
2002






Financial
Statement Schedules. FPB hereby incorporates by reference the sections
entitled “Selected Financial Data” contained at page 2 of the 2008 Annual Report
and the section entitled “Consolidated Financial Statements” contained at pages
20 through 52 of the 2008 Annual Report. The 2008 Annual Report is attached
hereto as Exhibit 13.









18
 Table of Contents






SIGNATURES





In accordance with Section 13 or 15(d)
of the Securities Exchange Act of 1934, the registrant caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.





FPB BANCORP, INC.





Date: March
4,
2009                                                                      By:
/s/ David W.
Skiles


David W. Skiles


Principal
Executive Officer,


President and Director








Date: March
4,
2009                                                                      
By: /s/ Nancy E.
Aumack


Nancy E.
Aumack


Principal
Financial Officer






Pursuant to the requirements of the
Securities Exchange Act of 1934, this report has been signed below by the
following persons on behalf of the registrant and in capacities and on the dates
indicated.





Signature
                                                          
                                                          Title
                                                          
                                                          Date/s/ Gary A.
      Berger
                                                          
                                                          Chairman
      of the Board
                                                          
                                                          March
      4, 2009Gary
      A. Berger/s/ Donald J.
      Cuozzo
                                                          
                                                          Director
                                                          
                                                          March
      4, 2009Donald
      J. Cuozzo/s/ Ann L.
      Decker
                                                          
                                                          Corporate
      Secretary and
                                                          
                                                          March
      6, 2009Ann
      L. Decker
                                                          
                                                          Director/s/ Timothy K.
      Grimes
                                                          
                                                          Director
                                                          
                                                          March
      6, 2009Timothy
      K. Grimes/s/ John S. Leighton,
      III
                                                          
                                                          Director
                                                          
                                                          March
      6, 2009John
      S. Leighton, III/s/ Paul J.
      Miret
                                                          
                                                          Director
                                                          
                                                          March
      10, 2009Paul
      J. Miret/s/ Robert L.
      Schweiger
                                                          
                                                          Director
                                                          
                                                          March
      4, 2009Robert
      L. Schweiger/s/ Robert L.
      Seeley
                                                          
                                                          Director
                                                          
                                                          March
      4, 2009Robert
      L. Seeley/s/ David W.
      Skiles
                                                          
                                                          Chief
      Executive Officer
                                                          
                                                          March
      4, 2009David
      W. Skiles
                                                          
                                                          President
      and Director/s/ Paul A.
      Zinter
                                                          
                                                          Vice
      Chairman of the Board
                                                          
                                                          March
      9, 2009Paul
      A. Zinter





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