UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

Form 10-Q

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2009

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 Number: 000-1170902

FLORIDA COMMUNITY BANKS, INC.

(Exact name of registrant as specified in its charter)

Florida		35-2164765
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

1400 North 15th Street, Immokalee, Florida		34142-2202
(Address of principal executive offices)		(Including zip code)
	(239) 657-3171
	(Issuer's telephone number, including area code)

No Change

(Former name, former address and former fiscal year, if changed since last report)

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.

Yes x

No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes o

No o

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," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer o

Accelerated filer o

Nonaccelerated filer o

(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 of the Exchange Act).

Yes o

No x

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

Common Stock, $0.01 par

Outstanding at November 16, 2009: 7,918,217

Form 10-Q

FLORIDA COMMUNITY BANKS, INC.

September 30, 2009

TABLE OF CONTENTS

	Page No.
Part I - Financial Information

Item 1 - Consolidated Financial Statements (Unaudited)

Condensed Consolidated Statements of Financial Condition as of September 30, 2009 and December 31, 2008		3

Condensed Consolidated Statements of Operations for the Three Months and Nine Months Ended September 30, 2009 and 2008		4

Condensed Consolidated Statement of Shareholders' Equity for the Nine Months Ended September 30, 2009		5

Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2009 and 2008		6

Notes to Condensed Consolidated Financial Statements		7

Item 2 -Management's Discussion and Analysis of Financial Condition and Results of Operations		20

Item 3 - Quantitative and Qualitative Disclosures about Market Risk		27

Item 4 - Controls and Procedures		28

Part II - Other Information

Item 1 - Legal Proceedings		28

Item 1A - Risk Factors		29
Item 5 - Other Information		34
Item 6 - Exhibits		35

Signatures

PART I - FINANCIAL INFORMATION

Item 1 - Financial Statements

FLORIDA COMMUNITY BANKS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

September 30, 2009 (Unaudited) and December 31, 2008

	September 30, 2009 (Unaudited)			December 31, 2008
Assets
Cash and due from banks	$	4,980,398		$	11,169,731
Interest-bearing demand deposits with banks		99,758,186			6,245,791
Federal funds sold		562,000			28,450,000
Cash and Cash Equivalents		105,300,584			45,865,522

Securities available-for-sale		116,675,034			—
Securities held-to-maturity, fair value of $203,310,589 in 2008		—			199,625,229
Other investments		5,263,858			7,987,869
Loans held-for-sale		—			156,231

Loans, net of unearned income		570,100,744			624,478,243
Allowance for loan losses		(36,616,052	)		(36,389,744	)
Net Loans		533,484,692			588,088,499

Premises and equipment, net		24,266,934			24,867,557
Accrued interest		2,641,847			3,511,261
Foreclosed real estate		85,384,334			52,005,241
Income taxes receivable		—			30,483,588
Other assets		4,108,754			2,479,225
Total Assets	$	877,126,037		$	955,070,222

Liabilities and Shareholders’ Equity

Liabilities

Deposits
Noninterest-bearing	$	47,861,251		$	60,474,172
Interest-bearing		747,096,320			784,954,433
Total Deposits		794,957,571			845,428,605

Accrued interest		6,921,119			4,853,139
Deferred compensation		132,145			166,491
FHLB advances		50,000,000			50,000,000
Subordinated debentures		30,929,000			30,929,000
Other liabilities		2,984,785			3,362,046
Total Liabilities		885,924,620			934,739,281

Shareholders’ Equity
Preferred stock - par value $0.01 per share, 5,000,000 shares authorized, none issued and outstanding at September 30, 2009 and December 31, 2008		—			—
Common stock - par value $0.01 per share, 25,000,000 shares authorized, 25,000,000 and 7,918,217 shares issued and outstanding at September 30, 2009 and December 31, 2008		79,182			79,182
Paid-in capital		18,570,303			18,529,677
(Accumulated deficit) retained earnings		(27,110,942	)		2,076,265
Accumulated other comprehensive income (loss)		(337,126	)		(354,183	)
Total Shareholders’ Equity		(8,798,583	)		20,330,941

Total Liabilities and Shareholders’ Equity	$	877,126,037		$	955,070,222

See notes to condensed consolidated financial statements

FLORIDA COMMUNITY BANKS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

Three and Nine Months Ended September 30, 2009 and 2008

(Unaudited)

	Three Months						Nine Months
	Ended September 30,						Ended September 30,
	2009			2008			2009			2008

Interest Income
Interest and fees on loans	$	5,375,934		$	9,755,353		$	18,862,885		$	32,991,324
Interest and dividends on taxable securities		1,116,643			2,452,334			5,183,503			5,630,456
Interest on tax-exempt securities		18,307			208,894			385,944			626,541
Interest on federal funds sold and other interest income		26,226			98,317			95,297			233,150
Total Interest Income		6,537,110			12,514,898			24,527,629			39,481,471

Interest Expense
Interest on deposits		6,593,583			7,313,039			21,051,765			21,188,483
Interest on borrowed funds		661,794			909,014			2,077,383			3,018,425
Total Interest Expense		7,255,377			8,222,053			23,129,148			24,206,908

Net Interest Income (Expense)		(718,267	)		4,292,845			1,398,481			15,274,563

Provision for loan losses		10,950,000			29,290,400			14,330,000			39,802,400

Net Interest Income (Expense) after Provision for Loan Losses		(11,668,267	)		(24,997,555	)		(12,931,519	)		(24,527,837	)

Noninterest Income
Customer service fees		378,438			411,141			1,135,522			1,140,200
Secondary market loan fees		38,348			41,729			96,102			112,989
Gain on sale of other real estate		—			8,056			—			62,552
Gain on sale of investments		—			—			3,124,000			—
Other operating income		176,980			44,989			412,780			398,704
Total Noninterest Income		593,766			505,915			4,768,404			1,714,445

Noninterest Expenses
Salaries and employee benefits		2,392,700			2,739,474			7,481,609			8,253,267
Occupancy and equipment expense		941,805			954,949			2,749,801			2,774,742
Other operating expenses		5,287,477			2,810,388			12,232,663			6,629,892
Total Noninterest Expenses		8,621,982			6,504,811			22,464,073			17,657,901

(Loss) before income taxes		(19,696,483	)		(30,996,451	)		(30,627,188	)		(40,471,293	)
Income tax benefit		—			(12,023,003	)		—			(15,820,234	)

Net (Loss)	$	(19,696,483	)	$	(18,973,448	)	$	(30,627,188	)	$	(24,651,059	)

Basic earnings per common share	$	(2.49	)	$	(2.40	)	$	(3.87	)	$	(3.11	)
Diluted earnings per common share		(2.49	)		(2.40	)		(3.87	)		(3.10	)

Cash dividends declared per common share		0.00			0.00			0.00			0.00

Weighted average common shares outstanding - basic		7,918,217			7,918,217			7,918,217			7,918,119
Weighted average common shares outstanding - diluted		7,918,217			7,918,217			7,918,217			7,949,943

See notes to condensed consolidated financial statements

FLORIDA COMMUNITY BANKS, INC.

CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY

Nine Months Ended September 30, 2009

(Unaudited)

	Preferred Stock		Common Stock		Paid-in Capital		Retained Earnings			Accumulated Comprehensive Loss			Total

Balance at December 31, 2008	$	—	$	79,182	$	18,529,677	$	3,516,246		$	(354,183	)	$	21,770,922

Net loss - nine months ended September 30, 2009		—		—		—		(30,627,188	)		—			(30,627,188	)

Unrealized losses on available-for-sale securities		—		—		—		—			17,057			17,057

Stock-based compensation expense		—		—		40,626		—			—			40,626

Balance at September 30, 2009	$	—	$	79,182	$	18,570,303	$	(27,110,942	)	$	(337,126	)	$	(8,798,583	)

See notes to condensed consolidated financial statements

FLORIDA COMMUNITY BANKS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Nine Months Ended September 30, 2009 and 2008

(Unaudited)

	Nine Months
	Ended September 30,
	2009			2008

Operating Activities
Net loss	$	(30,627,188	)	$	(24,651,059	)
Adjustments to reconcile net loss to net cash provided (used) by operating activities:
Provision for loan losses		14,330,000			39,802,400
Compensation associated with the issuance of options, net of tax		40,626			14,181
Depreciation, amortization and accretion, net		894,108			789,174
Loss on disposal of premises and equipment		15,829			—
Gain on investments		(3,123,999	)		—
(Gain) loss on sale of foreclosed real estate		165,298			(62,552	)
Writedown on foreclosed real estate		(431,962	)		463,969
Decrease in accrued interest receivable		869,414			209,555
Increase (decrease) in accrued interest payable		2,067,980			(282,448	)
(Increase) decrease in accrued income taxes receivable		29,123,997			(12,301,362	)
(Increase) decrease in deferred tax asset, net		1,359,590			(10,518,871	)
Other, net		356,998			(3,293,614	)
Net Cash Provided (Used) by Operating Activities		15,040,691			(9,830,627	)

Investing Activities
Sale of investment securities		172,898,088			—
Purchase of investment securities		(117,148,022	)		(85,718,391	)
Proceeds from paydowns of investment securities		32,640,142			14,221,140
(Purchase) sale of other investment securities		(91,300	)		(1,504,636	)
Net decrease in loans to customers		1,412,895			35,228,276
Proceeds from the sale of premises and equipment		—			—
Purchase of premises and equipment		(202,419	)		(5,314,849	)
Proceeds from the sale of foreclosed real estate		5,356,022			3,332,011
Net Cash Provided (Used) by Investing Activities		94,865,406			(39,756,449	)

Financing Activities
Net increase (decrease) in deposits		(50,471,035	)		48,011,006
Increase in short-term borrowings		—			1,189,000
Net decrease in FHLB advances		—			(5,000,000	)
Net Cash Provided (Used) by Financing Activities		(50,471,035	)		44,200,006

Net Increase (Decrease) in Cash and Cash Equivalents		59,435,062			(5,387,070	)

Cash and Cash Equivalents at Beginning of Period		45,865,522			14,729,315

Cash and Cash Equivalents at End of Period	$	105,300,584		$	9,342,245

See notes to condensed consolidated financial statements

FLORIDA COMMUNITY BANKS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2009

(Unaudited)

Note A - Basis of Presentation

Florida Community Banks, Inc. ("FCBI" or the "Company") is a bank holding company, which owns all of the common stock of Florida Community Bank (“FCB” or "Bank") and special purpose business trusts organized to issue Trust Preferred Securities. The special purpose business trusts are not consolidated in the financial statements that are included elsewhere herein. The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and disclosures required by accounting principles generally accepted in the United States for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the nine-month period ended September 30, 2009, are not necessarily indicative of the results that may be expected for the year ending December 31, 2009.

The consolidated statement of financial condition at December 31, 2008, has been derived from the audited financial statements at that date, but does not include all of the information and related disclosures required by accounting principles generally accepted in the United States for complete financial statements.

The interim unaudited consolidated financial statements contained herein should be read in conjunction with the audited financial statements and disclosures included in Florida Community Banks, Inc.'s Annual Report on Form 10-K/A No.2 for the year ended December 31, 2008.

Some items in the September 30, 2008, financial information have been reclassified to conform to the September 30, 2009, presentation.

FCBI evaluates variable interest entities for which voting interest are not an effective means of identifying controlling financial interests. Variable interests are those in which the value of the interest changes with the fair value of the net assets of the entity exclusive of variable interests. If the results of the evaluation indicate the existence of a primary beneficiary and the entity does not effectively disperse risks among the parties involved, that primary beneficiary is required to consolidate the entity. Likewise, if the evaluation indicates that the requirements for consolidation are not met and the entity has previously been consolidated, then the entity would be deconsolidated.

FCBI has investments in certain entities for which the Company does not have controlling interest. For these investments, the Company records its interest using the equity method with its portion of income or loss being recorded in other noninterest income in the Consolidated Statements of Income. The Company periodically evaluates these investments for impairment.

Subsequent Events

Generally accepted accounting principles establish general standards for accounting for and disclosure of events that occur after the balance sheet date but before the financial statements are issued. In preparing these consolidated financial statements, the Company evaluated the events and transactions that occurred between October 1, 2009 and

November 14, 2009, the date the financial statements were issued, and has identified an events that requires disclosure in the consolidated financial statements see note N.

FLORIDA COMMUNITY BANKS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2009

(Unaudited)

Note A - Basis of Presentation – Continued

Going Concern Issues, Regulatory Oversight, Capital Adequacy, Liquidity and Management’s Plans

The consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the discharge of liabilities in the normal course of business for the foreseeable future. However, due to the Company’s 2008 financial results and the results of the first nine months of 2009, and the lack of a capital restoration plan approved by the regulators, it is uncertain what additional actions our regulators will undertake. We believe this uncertainty causes substantial doubt as to our ability to continue as a going concern. We have determined that significant additional sources of liquidity and capital will be required for us to continue operations through 2009 and beyond. We have engaged financial advisors to assist the company in its efforts to raise additional capital, sell assets and explore other strategic alternatives to address our current and expected liquidity and capital deficiencies. To date, those efforts have not yielded any definitive options.

Regulatory Oversight

As described in Part II, Other Information, the Bank and FCBI are currently operating under heightened regulatory scrutiny; the Bank has entered into a Cease and Desist Order Agreement (“Order”) with the OFR and FCBI has entered into a Written Agreement (“Agreement”) with the Federal Reserve Bank of Atlanta. Both the Order and the Agreement place certain requirements and restrictions on the Bank and FCBI including but not limited to:

The Bank:

	•		Adherence to a Capital Plan to maintain the Tier 1 Leverage Ratio and the Total Risk Based Capital Ratio of at least 8% and 12%, respectively, which are above current levels and the levels necessary to be categorized as “well capitalized” as defined by Prompt Corrective Action regulations.
	•		The ratio of certain “classified assets” to Tier 1 Risk Based Capital and Loan Loss Reserves must be reduced to prescribed levels by dates beginning February 28, 2009.
	•		Reduction of the Bank’s credit concentration risk.

FCBI:

•		FCBI’s resources will be used to support the Bank.
•		No dividends may be paid on common stock without prior regulatory approval.
	•		Additional debt may not be incurred without prior regulatory approval.

Capital Adequacy

As of September 30, 2009, the Bank’s and FCBI’s capital ratio’s were below the minimum ratios set in the OFR’s Order. The Bank’s Tier 1 Leverage Capital Ratio was 2.32%, the Tier 1 Risk Based Capital Ratio was 3.27% and the Total Risk Based Capital Ratio was 4.58%. FCBI’s Tier 1 Leverage Capital Ratio was -0.93%, the Tier 1 Risk Based Capital Ratio was -1.31% and the Total Risk Based Capital Ratio was -1.31%.

In order to return the Bank’s capital ratios to the level prescribed by the Order, FCBI and the Bank are looking at numerous options. Issuing more stock to raise capital is now critical, along with shrinking the Bank; doing both could return the capital ratios to where the Bank would be considered “well capitalized” again. It must also be noted that failure to adequately address the regulatory concerns may result in further enforcement actions by the banking regulators, which could include appointment of a receiver or conservator of the Bank’s assets.

Liquidity

Both the Bank and FCBI actively manage liquidity. FCBI does not have any debt maturing during 2009 or 2010. FCBI suspended its dividend to shareholders and Trust Preferred Securities interest payments until such time as the Company returns to profitability. At September 30, 2009, FCBI had approximately $496,000 thousand in cash at the parent level to meet its future operating needs.

Cash and cash equivalents available at the Bank at September 30, 2009 were approximately $105 million. The Bank does not have any long-term debt maturing until March 2010. Liquidity at the Bank is dependent upon the deposit franchise which funds 90% of the Company’s assets.

The Bank is now subject to restrictions on the interest rates it may offer to its depositors. Under the applicable restrictions, the Bank cannot pay interest rates higher than 75 basis points above the local average rates for each deposit type. In light of the Bank’s historical practice of paying above average rates to attract deposits, the Bank’s liquidity may be negatively impacted, possibly materially, due to deposit run-off to the extent that it is unable to continue offering above average rates.

The Bank is de-leveraging its balance sheet to improve its capital ratios and has been planning so that as assets are removed from the balance sheet, the highest cost funding declines in tandem particularly focusing on decreasing higher cost certificate of deposits. The Bank currently has enough collateral to secure its Fed Funds lines and to pledge for secured long-term debt borrowings. At September 30, 2009, the Bank had the capacity to borrow up to $20 million on a short-term basis which is subject to collateral pledging restrictions and availability. The FDIC’s temporary changes to increase the amount of deposit insurance to $250,000 per deposit relationship and to provide unlimited deposit insurance for certain transaction accounts have contributed to improving the Bank’s deposit base. All banks that have elected to participate in the deposit component of the Temporary Liquidation Guarantee Program (“TLGP”) have the same FDIC insurance coverage. At September 30, 2009, the Bank had approximately $37.4 million of uncollateralized, uninsured deposits. The Bank also does not have a loan portfolio that could rapidly draw additional funds causing an elevated need for additional liquidity at the Bank. At September 30, 2009, the Bank had unfunded loan commitments of approximately $29 million. If a liquidity issue presents itself, deposit promotions would be expected to yield significant in-flows of cash.

Based on current and expected liquidity needs and sources, management expects the Bank and FCBI to be able to meet obligations at least through September 30, 2010.

FLORIDA COMMUNITY BANKS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2009

(Unaudited)

Note A - Basis of Presentation – Continued

As noted above, the Company is actively working toward transactions designed to meet the requirements of the Order and Agreement. Failure to meet these requirements could result in formal, heightened regulatory oversight and could eventually lead to the appointment of a receiver or conservator of the Bank’s assets. If unanticipated market factors emerge and/or the Company is unable to successfully execute its plans or the banking regulators take unexpected actions, it could have a material adverse effect on the Company’s business, results of operations and financial position, and its ability to continue as a going concern.

Note B - Critical Accounting Policies

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

The determination of the adequacy of the allowance for loan losses is based on estimates that are particularly susceptible to significant changes in the economic environment and market conditions. In connection with the determination of the estimated losses on loans, management obtains independent appraisals for significant collateral. While management uses available information to recognize losses on loans, further reductions in the carrying amounts of loans may be necessary based on changes in local economic conditions. In addition, regulatory agencies, as an integral part of their examination process, periodically review the estimated losses on loans. Such agencies may require the Bank to recognize additional losses based on their judgments about information available to them at the time of their examination. Because of these factors, it is reasonably possible that the estimated losses on loans may change materially in the near term. However, the amount of the change that is reasonably possible cannot be estimated.

Note C - Income Taxes

Effective January 1, 2007, the Company adopted a new accounting standard relating to "Accounting for Uncertainties in Income Taxes". This standard requires the Company to record a liability, referred to as an unrecognized tax benefit ("UTB"), for the entire benefit when it believes a position taken in a past or future tax return has a less than 50% chance of being accepted by the taxing or adjudicating authority. If the Company determines the likelihood of a position being accepted is greater than 50%, but less than 100%, the Company should record a UTB for the amount that it believes will not be accepted by the taxing authority. This standard also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. Management has determined that there are no significant uncertain tax positions requiring recognition in the financial statements at the adoption date of January 1, 2007, nor did any arise for the period ending September 30, 2009.

FLORIDA COMMUNITY BANKS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2009

(Unaudited)

Note C - Income Taxes - Continued

The Company may from time to time be assessed interest or penalties by taxing authorities. Historically such assessments have been minimal and immaterial to the financial statements taken as a whole. It is the policy of the Company that these type of assessments be classified as income tax expense in the financial statements.

The effective tax rate was 0.0% and approximately 39.1% for the nine months ended September 30, 2009 and 2008, respectively. For 2009, the Company has a valuation allowance for its deferred tax asset and has elected not to recognize any tax benefits until expected realization becomes probable (Note M). The 2008 figure is more than the federal statutory tax rate for corporations; this is principally because of the effect of state income taxes, net of federal tax benefit.

Note D - Securities

Generally accepted accounting principles related to "Accounting for Certain Investments in Debt and Equity Securities" requires that all investments in debt securities be classified as either "held-to-maturity" securities, which are reported at amortized cost; “trading securities”, which are reported at fair value, with unrealized gains and losses included in earnings; or "available-for-sale" securities, which are reported at fair value, with unrealized gains and losses excluded from earnings and reported in a separate component of shareholders' equity (net of deferred tax effect).

In April 2009, a new accounting standard was released relating to the “Recognition and Presentation of Other-Than-Temporary Impairments”. This standard clarified the interaction of the factors that should be considered when determining whether a debt security is other-than-temporarily impaired. For debt securities, management must assess whether (a) it has the intent to sell the security and (b) it is more likely than not that it will be required to sell the security prior to its anticipated recovery. These steps are done before assessing whether the entity will recover the cost basis of the investment. Previously, this assessment required management to assert it has both the intent and the ability to hold a security for a period of time sufficient to allow for an anticipated recovery in fair value to avoid recognizing an other-than-temporary impairment. This change does not affect the need to forecast recovery of the value of the security through either cash flows or market price.

In instances when a determination is made that an other-than-temporary impairment exists but the investor does not intend to sell the debt security and it is not more likely than not that it will be required to sell the debt security prior to its anticipated recovery, the accounting standards dictates the presentation and the amount of the other-than-temporary impairment that should be recognized in the income statement. The other-than-temporary impairment is separated into (a) the amount of the total other-than-temporary impairment related to a decrease in cash flows expected to be collected from the debt security (the credit loss) and (b) the amount of the total other-than-temporary impairment related to all other factors. The amount of the total other-than-temporary impairment related to the credit loss is recognized in earnings. The amount of the total other-than-temporary impairment related to all other factors is recognized in other comprehensive income.

This accounting standard was effective for the Company for reporting periods June 30, 2009 and after. The adoption of this standard did not have a material impact on Riverview’s consolidated financial statements.

The carrying amounts of securities as shown in the consolidated statements of financial condition and their approximate fair values at September 30, 2009 and December 31, 2008 were as follows:

	Gross Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value

September 30, 2009: Securities available-for-sale
SBA securities	$	12,472,628	$	56,777	$	65,044	$	12,464,361
Municipal securities		1,823,064		23,184		—		1,846,248
Mortgage-backed securities		102,362,285		327,913		325,773		102,364,425

	$	116,657,977	$	407,874	$	390,817	$	116,675,034

December 31, 2008: Securities held-to-maturity
FHLB and FHLMC
agency notes	$	19,486,401	$	546,204	$	—	$	20,032,605
Municipal securities		20,797,848		10,965		725,515		20,083,298
Mortgage-backed securities		159,340,980		4,025,482		171,776		163,194,686

	$	199,625,229	$	4,582,651	$	897,291	$	203,310,589

The following table shows our investments' gross unrealized losses and fair value, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, at September 30, 2009.

	Less Than 12 Months		12 Months or More		Total
Description of Securities	Fair Value	Unrealized Losses	Fair Value	Unrealized Losses	Fair Value	Unrealized Losses

SBA securities	$ 8,195,664	$ 65,044	$ —	$ —	$ 8,195,664	$ 65,044
Mortgage-backed securities	47,544,941	325,773	—	—	47,544,941	325,773

Total	$ 55,740,605	$ 390,817	$ —	$ —	$ 55,740,605	$ 390,817

Management evaluates securities for other-than-temporary impairment at least on a quarterly basis, and more frequently when economic or market concerns warrant such evaluation. Consideration is given to (1) the length of time and the extent to which the fair value has been less than cost, (2) the financial condition and near-term prospects of the issuer, and (3) the intent and ability of the Company to retain its investment in the issuer for a period of time sufficient to allow for any anticipated recovery in fair value.

FLORIDA COMMUNITY BANKS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2009

(Unaudited)

Note D - Securities - Continued

The Company believes all individual securities at September 30, 2009 that were in an unrealized loss position or impaired for the timeframes indicated above are deemed not to be other-than-temporary impairments. Substantially all of these positions are backed by 1-4 family mortgages and the unrealized loss of these securities is based solely on interest rate changes and not due to credit ratings. All the securities have been classified as “available-for-sale” and management may from time to time sell securities to reposition the portfolio.

During the second and third quarter’s of 2009, management sold approximately $172.9 million in securities and realized a net gain of approximately $5.06 million. Approximately $117.1 million in securities were purchased to provide collateral for the Bank’s FHLB Advances, Public Deposits and Federal Funds Lines. The Bank incurred a $1.9 million loss on the writedown of its Silverton Bank stock, accounted for as Other Investments, which was put into receivership by the Office of the Comptroller of the Currency (‘OCC’) on May 1, 2009.

Note E - Subordinated Debentures

On May 12, 2006, FCBI Capital Trust II (“Trust II”), a Delaware statutory trust, Trust II, received $20,000,000 in proceeds. The proceeds of the Trust II transaction and the $10,000,000 in proceeds from the prior statutory trust established June 21, 2002, FCBI Capital Trust I ("Trust I") transaction were then used by the trusts to purchase an equal amount of floating-rate subordinated debentures (the "subordinated debentures") of the Company. The Company has fully and unconditionally guaranteed all obligations of the trusts on a subordinated basis with respect to the preferred securities. Subject to certain limitations, the preferred securities qualify as Tier 1 capital and are presented in the consolidated statements of financial condition as subordinated debentures. The sole assets of the trusts are the subordinated debentures issued by the Company. Both the preferred securities of the trusts and the subordinated debentures of the Company each have approximately 30-year lives. However, both the Company and the trusts have call options of five years, subject to regulatory capital requirements. The Company has elected to defer the interest payments on both trust preferred securities until such time the Bank returns to profitability. The Company can defer the payments for up to five years.

Note F - Segment Information

All of the Company's offices offer similar products and services, are located in the same geographic region, and serve the same customer segments of the market. As a result, management considers all units as one operating segment and therefore feels that the basic financial statements and related footnotes provide details related to segment reporting.

FLORIDA COMMUNITY BANKS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2009

(Unaudited)

Note G - Stock-Based Compensation

On January 1st of 2006, the Company adopted an accounting standard related to "Share-Based Payment" which requires all stock-based payments to employees to be recognized in the income statement based on their fair values. The Company adopted this standard using the modified prospective transition method. The modified prospective transition method does not require the restatement of prior periods to reflect the fair value method of expensing stock-based compensation. The standard does require a cumulative effect adjustment of previously recognized compensation expense in order to estimate forfeitures for awards outstanding on the adoption date. The cumulative effect adjustment was immaterial.

The Company uses the Black-Scholes option pricing model for all grant date estimations of fair value as the Company believes that its stock options have characteristics for which the Black-Scholes model provides an acceptable measure of fair value. The expected term of an option represents the period of time that the Company expects the options granted to be outstanding. The Company bases this estimate on a number of factors including vesting period, historical data, expected volatility and blackout periods. The expected volatility used in the option pricing calculation is estimated considering historical volatility. The Company believes that historical volatility is a good predictor of the expected volatility. The expected dividend yield represents the expected dividend rate that will be paid out on the underlying shares during the expected term of the option, taking into account any expected dividend increases. The Company's options do not permit option holders to receive dividends and therefore the expected dividend yield was factored into the calculation. The risk-free rate is assumed to be a short-term treasury rate on the date of grant, such as a U.S. Treasury zero-coupon issue with a term equal to the expected term of the option.

The additional disclosure requirements of this standard have been omitted due to immateriality.

Note H - Commitments and Contingencies

In the normal course of business the Company enters into commitments to extend credit, which are agreements to lend to customers as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and generally require a payment of fees. Since commitments may expire without being drawn upon, the total reported does not necessarily represent expected future cash flows.

Standby letters of credit are commitments issued by the Company to guarantee the performance of a customer to a third party. These guarantees are primarily issued to support public and private borrowing arrangements, including commercial paper, bond financing and similar transactions, and expire in decreasing amounts with terms ranging from one to four years. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loan facilities to customers.

The following represents the Company's approximate total amounts of commitments to extend credit and standby letters of credit as of September 30, 2009 and December 31, 2008:

	September 30, 2009		December 31,2008
Loan commitments	$	27,591,000	$	48,190,000
Standby letters of credit		1,326,000		1,471,000

	$	28,917,000	$	49,661,000

Florida Community Bank, as part of its retail mortgage loan production activities, routinely enters into short-term commitments to originate fixed rate loans. Most of the loans will be sold to third party correspondent banks upon closing. For those loans, the Company enters into individual forward sales commitments at the same time the commitment to originate is finalized. While the forward sales commitments function as an economic hedge and effectively eliminate the Company's financial risk of rate changes during the rate lock period, both the commitment to originate mortgage loans that will be sold and the commitment to sell the mortgage loans are derivatives, the fair values of which are essentially equal and offsetting, whereas the Company primarily acts as intermediary between the borrower and the ultimate lender.

The Company invested in AMD-FCB, LLP (the "Partnership"), formed to build and lease an office building in which the Bank will lease space upon completion. In early 2007, the Partnership entered into a construction agreement with a third party bank. The Company and the other 50% partner have each guaranteed 50% of a construction loan currently totaling approximately $5,122,000. In addition, the Bank has entered into a 15 year lease agreement with the Partnership to lease 16,809 square feet of the building, approximately one-half. The annual lease payments are projected to be approximately $536,000, with annual increases based on the Consumer Price Index ("CPI").

The Company also entered into lease agreements with North Port Gateway, LLC to lease office space for a branch in North Port, Florida and with Center of Bonita Springs, Inc. to lease office space for a branch in Bonita Springs, Florida. Annual lease payments are projected to be approximately $195,000 and $146,000, respectively, with annual increases based on the CPI.

The opening of all three offices has been put on hold by the Bank’s regulators. The Bank has significant issues (see Legal proceedings below for more details) related to its non-performing assets, that it has to deal with before the branches can be opened.

Note I - Recent Accounting Pronouncements

NEW AND RECENT ACCOUNTING PRONOUNCEMENTS

On June 12, 2009, a new standard was released regarding “Accounting for Transfers of Financial Assets”, an amendment to the “Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities”, and will require more information about transfers of financial assets, including securitization transactions, and where companies have continuing exposure to the risks related to transferred financial assets. This standard also eliminates the concept of a “qualifying special-purpose entity”, changes the requirements for derecognizing financial assets and requires additional disclosures. This standard will be effective as of the beginning of the Company’s first annual reporting period that begins after November 15, 2009, for interim periods within that first annual reporting period and for interim and annual reporting periods thereafter. Earlier application is prohibited. The recognition and measurement provisions of this standard shall be applied to transfers that occur on or after the effective date. The Company will adopt this standard on January 1, 2010, as required. Management has not determined the impact adoption may have on the Company’s consolidated financial statements.

On June 12, 2009, a new standard relating to “Consolidation of Variable Interest Entities”. This standard amends the previous standard and changes how a company determines when an entity that is insufficiently capitalized or is not controlled through voting (or similar rights) should be consolidated. The determination of whether a company is required to consolidate an entity is based on, among other things, an entity’s purpose and design and a company’s ability to direct the activities of the entity that most significantly impact the entity’s economic performance. This standard will be effective as of the Company’s first annual reporting period that begins after November 15, 2009, for interim periods within that first annual reporting period and for interim and annual reporting periods thereafter. Earlier application is prohibited. The Company will adopt this standard on January 1, 2010, as required. Management has not determined the impact adoption may have on the Company’s consolidated financial statements.

On June 29, 2009, a new accounting was released regarding “Accounting Standards Codification TM and the Hierarchy of Generally Accepted Accounting Principles” — a replacement of FASB Statement No. 162. This standard establishes the FASB Accounting Standards Codification TM as the source of authoritative accounting principles recognized by the FASB to be applied by nongovernmental entities in the preparation of financial statements in conformity with US GAAP. This standard will be effective for financial statements issued for interim and annual periods ending after September 15, 2009, for most entities. On the effective date, all non-SEC accounting and reporting standards will be superseded. The Company will adopt this standard for the quarterly period ended September 30, 2009, as required, and adoption is not expected to have a material impact on the Company’s consolidated financial statements.

FLORIDA COMMUNITY BANKS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2009

(Unaudited)

Note I - Recent Accounting Pronouncements - Continued

ADOPTION OF NEW ACCOUNTING PRONOUNCEMENTS

In December 2007, a new standard relating to “Business Combination” was released. The standard significantly changes the financial accounting and reporting of business combination transactions. The standard establishes principles for how an acquirer recognizes and measures the identifiable assets acquired, liabilities assumed, and any noncontrolling interest in the acquiree; recognizes and measures goodwill acquired in the business combination or a gain from a bargain purchase; and determines what information to disclose to enable users of the financial statements to evaluate the nature and financial effects of the business combination. This standard is effective for acquisition dates in fiscal years beginning after December 15, 2008. The adoption of this standard did not have a material impact on the Company’s consolidated financial statements.

In March 2008, a new standard was issued related to “Disclosures About Derivative Instruments and Hedging Activities.” This standard amends a previous standard and requires qualitative disclosures about objectives and strategies for using derivatives, quantitative disclosures about fair value amounts of gains and losses on derivative instruments, and disclosures about credit-risk-related contingent features in derivative agreements. The standard is effective for fiscal years and interim periods beginning after November 15, 2008. The implementation of the standard did not have a material impact on the Company’s consolidated financial statements.

In April 2009, a new accounting standard was released regarding “Determining fair value when the volume and level of activity for the asset or liability have significantly decreased and identifying transactions that are not orderly.” This standard provides additional guidance for estimating fair value in accordance with GAAP when the volume and level of activity for the asset or liability have decreased significantly. The standard also provides guidance on identifying circumstances that indicate a transaction is not orderly. The provisions of this standard are effective for the Company’s interim period ending June 30, 2009. The implementation of this standard did not have a material impact on the Company’s consolidated financial statements.

In April 2009, new standards relating to “Recognition and presentation of other-than-temporary impairments” were issued. These standards amend current other-than-temporary impairment guidance in GAAP for debt securities to make the guidance more operational and to improve the presentation and disclosure of other-than-temporary impairments on debt and equity securities in the financial statements. These standards do not amend existing recognition and measurement guidance related to other-than-temporary impairments of equity securities. The provisions of these standards are effective for the Company’s interim period ending on June 30, 2009. The implementation of these standards did not have a material impact on the Company’s consolidated financial statements.

Effective January 1, 2009, the Company adopted the amended accounting standard relating to “Noncontrolling Interests in Consolidated Financial Statements.” This standard requires that a noncontrolling interest in a subsidiary be reported separately within equity and the amount of consolidated net income specifically attributable to the noncontrolling interest be identified in the consolidated financial statements. It also calls for consistency in the manner of reporting changes in the parent’s ownership interest and requires fair value measurement of any noncontrolling equity investment retained in deconsolidation. The standard requires retrospective application for the presentation and disclosure requirements. The provisions of the standard did not have a material impact on the Company’s consolidated financial statements.

In April 2009, new accounting standards were released relating to “Interim disclosures about fair value of financial instruments.” These standards require disclosures about fair value of financial instruments in interim reporting periods of publicly traded companies that were previously only required to be disclosed in annual financial statements. The provisions of these standards are effective for the Company’s interim period ending on June 30, 2009. As these standard amend only the disclosure requirements about fair value of financial instruments in interim periods, their adoption did not affect the Company’s consolidated financial statements.

FLORIDA COMMUNITY BANKS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2009

(Unaudited)

Note I - Recent Accounting Pronouncements - Continued

On May 28, 2009, a new standard was released regarding “Subsequent Events.” Under this standard, companies are required to evaluate events and transactions that occur after the balance sheet date but before the date the financial statements are issued, or available to be issued in the case of non-public entities. The standard requires entities to recognize in the financial statements the effect of all events or transactions that provide additional evidence of conditions that existed at the balance sheet date, including the estimates inherent in the financial preparation process. Entities shall not recognize the impact of events or transactions that provide evidence about conditions that did not exist at the balance sheet date but arose after that date. The standard also requires entities to disclose the date through which subsequent events have been evaluated. The standard was effective for interim and annual reporting periods ending after June 15, 2009. The Company adopted the provisions of this standard for the quarter ended June 30, 2009, as required, and adoption did not have a material impact on the Company’s financial statements.

In April 2009, a new accounting standard was issued relating to “Accounting for Assets Acquired and Liabilities Assumed in a Business Combination That Arise from Contingencies.” This standard amends and clarifies the “Business Combination” standard to address application issues on initial recognition and measurement, subsequent measurement and accounting, and disclosure of assets and liabilities arising from contingencies in a business combination. This new standard is effective for assets and liabilities arising from contingencies in business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008. The Company does not expect the adoption of this standard to have a material impact on its consolidated financial statements.

In April 2009, the Securities and Exchange Commission issued Staff Accounting Bulletin No. 111 (SAB 111). SAB 111 amended and replaced SAB Topic 5.M. in the SAB Series entitled “Other Than Temporary Impairment of Certain Investments in Debt and Equity Securities.” SAB 111 maintains the SEC Staff’s previous views related to equity securities and amends Topic 5.M. to exclude debt securities from its scope. The Company does not expect the implementation of SAB 111 to have a material impact on its consolidated financial statements.

In June 2009, a new standard relating to “The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles — replacement of FASB Statement No. 162” was issued. This standard establishes the FASB Accounting Standards Codification will become the source of authoritative U.S. generally accepted accounting principles (GAAP) recognized by the FASB to be applied by nongovernmental entities. This standard is effective immediately. The adoption of this standard did not have an impact on the Company’s financial position or results of operations.

In June 2009, the Securities and Exchange Commission issued Staff Accounting Bulletin No. 112 (SAB 112). SAB 112 revises or rescinds portions of the interpretative guidance included in the codification of SABs in order to make the interpretive guidance consistent with current U.S. GAAP. The Company does not expect the adoption of SAB 112 to have a material impact on its (consolidated) financial statements.

In August 2009, the FASB issued Accounting Standards Update No. 2009-05 (ASU 2009-05), “Fair Value Measurements and Disclosures (Topic 820) — Measuring Liabilities at Fair Value.” ASU 2009-05 amends Subtopic 820-10, “Fair Value Measurements and Disclosures — Overall,” and provides clarification for the fair value measurement of liabilities. ASU 2009-05 is effective for the first reporting period including interim period beginning after issuance. The Company does not expect the adoption of ASU 2009-05 to have a material impact on its (consolidated) financial statements.

FLORIDA COMMUNITY BANKS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2009

(Unaudited)

Note J - Fair Value Measurements

The following methods and assumptions were used to estimate the fair value of each class of financial instruments for which it is practicable to estimate that value:

Cash and Short-Term Investments: For cash and short-term instruments, the carrying amount is a reasonable estimate of fair value.

Securities: For securities available-for sale and held-to-maturity, fair values are based on quoted market prices or dealer quotes. For other investments, fair value is estimated to be approximately the carrying amount.

Loans Held-for-Sale: For these short-term instruments, the carrying amount is a reasonable estimate of fair value.

Loans: For certain homogeneous categories of loans, such as some residential mortgage, credit card receivables and other consumer loans, fair value is estimated using the quoted market prices for securities backed by similar loans, adjusted for differences in loan characteristics. The fair value of other types of loans is estimated by discounting the future cash flows using the current rates at which similar loans would be made to borrowers with similar credit ratings and for the same remaining maturities.

Accrued Interest Receivable and Payable: The carrying amount of accrued interest receivable and payable approximates its fair value.

Deposits: The fair value of demand deposits, savings accounts and certain money market deposits is the amount payable on demand at the reporting date. The fair value of fixed-maturity certificates of deposit is estimated using the rates currently offered for deposits of similar remaining maturities.

Long-Term Debt: Rates currently available to the Company for debt with similar terms and remaining maturities are used to estimate fair value of existing debt.

Commitments to Extend Credit, Standby Letters of Credit, and Financial Guarantees Written: The fair value of commitments, letters of credit, and financial guarantees is estimated to be approximately the fees charged for these arrangements.

FLORIDA COMMUNITY BANKS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2009

(Unaudited)

Note J - Fair Value of Financial Instruments - Continued

The estimated fair values of the Company's financial instruments as of September 30, 2009 and December 31, 2008, are as follows:

	09/30/2009				12/31/2008
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
	(in thousands)				(in thousands)
Financial Assets
Cash and short-term investments	$	105,301	$	105,301	$	45,866	$	45,866
Securities		116,675		116,675		199,625		203,311
Other investments		5,264		5,264		7,988		7,988
Loans held-for-sale		—		—		156		156
Loans		570,101		560,409		624,478		628,562
Accrued interest receivable		2,642		2,642		3,511		3,511

Financial Liabilities
Deposits	$	794,958	$	806,394	$	845,429	$	863,237
Accrued interest payable		6,921		6,921		4,853		4,853
Long-term debt		80,929		83,791		80,929		85,513

Financial Instruments
Commitments to extend credit	$	27,591	$	276	$	48,190	$	482
Standby letters of credit		1,326		13		1,471		15

The Company adopted a new standard entitled “Fair Value Measurements“ effective January 1, 2008 on a prospective basis. The standard defines fair value for financial reporting purposes as the price that would be received to sell an asset or paid to transfer a liability in an orderly market transaction between market participants at the measurement date (reporting date). Under the statement, fair value is based on an exit price in the principal market or most advantageous market in which the reporting entity could transact.

For each asset and liability required to be reported at fair value, management has identified the unit of account and valuation premise to be applied for purposes of measuring fair value. The unit of account is the level at which an asset or liability is aggregated or disaggregated for purposes of applying generally accepted accounting principles. The valuation premise is a concept that determines whether an asset is measured on a standalone basis or in combination with other assets. For purposes of applying the provisions of the standard, the Company measures its assets and liabilities on a standalone basis then aggregates assets and liabilities with similar characteristics for disclosure purposes.

In April 2009, the FASB issued a new standard related to “Interim Disclosures about Fair Value of Financial Instruments.” This standard amends the “Disclosures about Fair Value of Financial Instruments” standard, to require disclosure about fair value of financial instruments for interim reporting periods of publicly traded companies as well as in annual financial statements. This standard also amends the “Interim Financial Reporting” standards, to require those disclosures in summarized financial information at interim reporting periods.

Note J - Fair Value Measurements - Continued

This standard is effective for the Company for reporting periods June 30, 2009 and after. The adoption of this standard did not have a material impact on the consolidated financial statements.

Fair Value Hierarchy

Management employs market standard valuation techniques in determining the fair value of assets and liabilities. Inputs used in valuation techniques are based on assumptions that market participants would use in pricing an asset or liability. The standard prioritizes inputs used in valuation techniques as follows:

Level 1 - Quoted market prices in an active market for identical assets and liabilities.

Level 2 - Observable inputs including quoted prices (other than level 1) in active markets for similar assets or liabilities, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability such as interest rates, yield curves, volatilities and default rates, and inputs that are derived principally from or corroborated by observable market data.

Level 3 - Unobservable inputs reflect the reporting entity’s own assumptions about the assumptions market participants would use in pricing the asset or liability based on the best information available.

If the determination of fair value measurement for a particular asset or liability is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety. Management’s assessment of the significance of a particular input to the fair value measurement requires judgment and considers factors specific to the asset or liability measured.

Valuation Techniques

The Company’s assets and liabilities recorded at fair value have been categorized in the following tables based upon a fair value hierarchy.

Items Measured at Fair Value on a Recurring Basis

The following fair value hierarchy table presents information about the Company’s assets and liabilities measured at fair value on a recurring basis as of September 30, 2009:

			Fair Value Measurement at Report Date Using
	Fair Value		Quoted Prices in Active Markets Level 1		Significant Other Observable Inputs Level 2		Significant Unobservable Inputs Level 3

Securities available-for-sale	$	116,675,034	$	—	$	116,675,034	$	—
Total Assets	$	116,675,034	$	—	$	116,675,034	$	—

FLORIDA COMMUNITY BANKS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2009

(Unaudited)

Note J - Fair Value Measurements - Continued

The valuation techniques used to measure fair value for the items in the table above are as follows:

Securities available-for-sale - The fair value is based on quoted market prices in an active market for identical assets and liabilities as of the reporting date.

Items Measured at Fair Value on a Nonrecurring Basis

The following fair value hierarchy table presents information about the Company’s assets and liabilities measured at fair value on a nonrecurring basis as of September 30, 2009:

			Fair Value Measurement at Report Date Using
	Fair Value		Quoted Prices in Active Markets Level 1		Significant Other Observable Inputs Level 2		Significant Unobservable Inputs Level 3

Impaired loans	$	196,095,599	$	—	$	—	$	196,095,599
Foreclosed real estate		85,384,334		—		—		85,384,334

Total Assets	$	281,479,933	$	—	$	—	$	281,479,933

The valuation techniques used to measure fair value for the items in the table above are as follows:

Impaired Loans - Nonrecurring fair value adjustments to loans reflect full or partial writedowns that are based on the loan’s observable market price or current appraised value of the collateral in accordance with the accounting standard “Accounting by Creditors for Impairment of a Loan.” Loans subjected to nonrecurring fair value adjustments based on the current appraised value of the collateral may be classified as Level 2 or Level 3 depending on the type of asset and the inputs to the valuation. When appraisals are used to determine impairment, and these appraisals require significant adjustments to market-based valuation inputs or apply an income approach based on unobservable cash flows to measure fair value, the related loans subjected to nonrecurring fair value adjustments are typically classified as Level 3 due to the fact that Level 3 inputs are significant to the fair value measurement.

Foreclosed real estate - Nonrecurring fair value adjustments to foreclosed real estate reflect full or partial writedowns that are based on the real estate’s observable market price or current appraised value of the collateral in accordance with the accounting standard related to “Accounting by Creditors for Impairment of a Loan.”

A new accounting standard, “Effective Date of FASB Statement No. 157” issued on February 12, 2008, amends the accounting standard, “Fair Value Measurements”, to delay the effective date for all non-financial assets and non-financial liabilities, except those that are recognized or disclosed at fair value in the financial statements on a recurring basis (at least annually).

FLORIDA COMMUNITY BANKS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2009

(Unaudited)

Note K – Other Comprehensive Income

Comprehensive income is generally defined as the change in equity of a business enterprise during a period from transactions and other events and circumstances from no owner sources. Itincludes all changes in equity during a period except those resulting from investments by owners and distributions to owners. Other comprehensive income (loss) are those items not recorded as components of net income. The accumulated balance of other comprehensive income (loss) is reported separately from retained earnings in the equity section of the statements of financial condition

In the calculation of comprehensive income, certain reclassification adjustments are made to avoid double counting items that are displayed as part of net income for a period that also had been displayed as part of other comprehensive income (loss) in that period or earlier periods. The disclosure of the reclassification amounts and other details of other comprehensive income (loss) are as follows:

	09/30/2009			12/31/2008

Unrealized gains (losses) on securities:
Unrealized holding gains (losses) arising during the period	$	2,786,874		$	(354,183	)
Reclassification adjustments		(3,124,000	)		—

Net unrealized gains (losses)		(337,126	)		(354,183	)
Income tax related to items of other comprehensive income		—			—

Other comprehensive income (loss)	$	(337,126	)	$	(354,183	)

Note L – Concentration of Credit Risk

A significant portion of our loan portfolio (approximately 92%) consists of mortgages secured by real estate located in the Collier/Lee County markets. Real estate values and real estate markets are generally affected by, among other things, changes in national, regional or local economic conditions; fluctuations in interest rates and the availability of loans to potential purchasers; changes in the tax laws and other governmental statutes, regulations and policies; and acts of nature. Over the past year, real estate prices in each of our markets have declined and if real estate prices continue to decline in any of these markets, the value of the real estate collateral securing our loans could be reduced. Such a reduction in the value of our collateral could increase the number of non-performing loans and adversely affect our financial performance.

Subsequent events have been evaluated through November 13, 2009, which is the date the financial statements were issued.

FLORIDA COMMUNITY BANKS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2009

(Unaudited)

Note M – Subsequent Events

Continuing Operations

The unforeseen continued severity and longevity of the turmoil in the economy, and more specifically, with respect to the Southwest Florida real estate market has caused increased scrutiny and potential intervention of our regulators. The apparent euphoria with the new administration, which caused the regional economic indicators to give a premature bump in the first quarter, gave way to the harsh reality that nothing was in place to stimulate the area’s small business and essential consumer confidence that initiates tourist demand for real estate. As the company determined in the first quarter that the deferred tax assets that were recorded for financial reporting purposes did not qualify for regulatory capital, the second quarter saw the local economy worsen to lows not seen since the Great Depression era. The area in the Bank’s footprint registered second in the nation for real estate foreclosures at one in thirteen homes. This was evidenced as the Bank filed its third quarter call report. Despite vigilant analysis of the loan portfolio, and writing down or reserving for all foreseen problem loans, nonperforming loans increased to 35.19% of total loans. Additionally, nonperforming assets to total assets rose to 32.61%. These ratios are unsustainable and communications with our regulators have confirmed that the need for additional capital is absolutely critical. Our ability to accomplish capital restoration is significantly constricted by the current economic environment. As has been widely publicized, access to capital markets is extremely limited in the current economic environment, and we can give no assurances that we will be able to access any such capital or sell more assets. Due to the conditions and events discussed herein it is uncertain what additional actions our regulators will undertake. We believe this uncertainty causes substantial doubt as to our ability to continue as a going concern. With the foregoing, it would be impossible to realize any deferred tax assets; we therefore amended our 10-K and restated our financial statements as of December 31, 2008, to properly reflect the appropriate devaluation of those assets at December 31. Since we have determined that significant additional sources of capital will be required for us to continue operations through 2009 and beyond, we have engaged financial advisors to assist the company in its efforts to raise additional capital, and explore other strategic alternatives to address our current capital deficiencies. To date, those efforts have not yielded any definitive options.

Income Taxes

On November 6, 2009, The Worker, Homeownership, and Business Assistance Act of 2009 (H.R. 3548) (the “Act”) was enacted effective for periods ending on or after the date of enactment. The Act provides for the recovery of prior period federal income taxes paid resulting from the carryback of current year net operating losses for an extended five-year carryback period. Prior law had allowed only a two-year carryback period. The increased carryback period will allow the Company to realize tax recovery benefits from its current net operating loss through carryback to years previously unavailable for tax recovery. The Company anticipates a tax net operating loss for the year ending December 31, 2009. The anticipated net operating loss will be available to carryback to prior tax years 2004 and forward. The tax net operating loss as of September 30, 2009, if sustained through year end would generate refunds from carryback of approximately $10.9 million. The subsidiary bank allocation of this recovery would be approximately $10.5 million. The following tables reflect current and pro forma amounts of net income and capital amounts and ratios as if giving effect to the Act as of September 30, 2009.

Pro Forma Net Income

	Consolidated		Bank Only

Net loss as reported for the nine months ended September 30, 2009	$	30,627	$	29,603

Pro forma recognized tax benefit		10,900		10,500

Pro forma net loss	$	19,727	$	19,103

Pro Forma Regulatory Capital

	Actual						Pro Forma
	Amount			Ratio			Amount		Ratio
Tier 1 Leverage
Consolidated	$	(8,462	)		-0.93	%	$	3,251		0.36	%
Bank		21,107			2.32	%		31,607		3.47	%

Tier 1 Risk-Based Capital
Consolidated		(8,462	)		-1.31	%		3,251		0.50	%
Bank		21,107			3.27	%		31,607		4.90	%

Total Risk-Based Capital
Consolidated		(8,462	)		-1.31	%		6,501		1.01	%
Bank		21,107			4.58	%		40,021		6.21	%

FLORIDA COMMUNITY BANKS, INC.

September 30, 2009

Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations

This discussion is intended to assist an understanding of the Company's financial condition and results of operations. This analysis should be read in conjunction with the consolidated financial statements and related notes appearing in Item 1 of the September 30, 2009, Form 10-Q, and "Management's Discussion and Analysis of Financial Condition and Results of Operations," appearing in the Company's Annual Report on Form 10-K/A for the year ended December 31, 2008.

Forward-Looking Information

Certain statements contained in this Quarterly Report on Form 10-Q, which are not historical facts, are forward-looking in nature and relate to trends and events that may affect the Company's future financial position and operating results. In addition, the Company, through its senior management, from time to time makes forward-looking public statements concerning its expected future operations and performance and other developments. All forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The terms "expect," "anticipates," "intend" and "project" and similar words or expression are intended to identify forward-looking statements. In addition to risks and uncertainties that may affect operations, performance, growth projections and the results of the Company's business, which include, but are not limited to, fluctuations in the economy, the relative strength and weakness in the commercial and consumer sector and in the real estate market, the actions taken by the Federal Reserve Board for the purpose of managing the economy, interest rate movements, the impact of competitive products, services and pricing, timely development by the Company of technology enhancements for its products and operating systems, legislation and similar matters, the Company's future operations, performance, growth projections and results will depend on its ability to respond to the challenges associated with a weakening economy, particularly in real estate development, which is prominent in the Company's primary market. Although management of the Company believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to be correct. Prospective investors are cautioned that any such forward-looking statements are not guaranties of future performance, involve risks and uncertainties, and that actual results may differ materially from those contemplated by such forward-looking statements. The Company makes no commitment to update any forward-looking statement or to disclose any facts, events or circumstances that may affect the accuracy of any forward-looking statement.

Going Concern Issues

Florida Community Bank is experiencing the effects of what many consider to be the worst economic downturn since the Great Depression. The effects of the current environment are being felt across many industries, with residential and commercial real estate being hit particularly hard in Southwest Florida. The Bank, with a portfolio of loans primarily secured by real estate, has seen a rapid and incredible decline in the value of the collateral securing our loan portfolio. Coupled with rising unemployment, Southwest Florida has seen the foreclosure rates skyrocket to one the highest levels in the country, and it continues to be a big problem for the Bank, as it tries to sell foreclosed properties at a price that it can afford to. The decline in real estate values in 2008 and through the first nine months of 2009 has contributed to the high level of charge-offs and the significant increase in the provision for credit losses, resulting in net losses of $76.2 million in 2008 and $30.6 million for the first nine months of 2009. These losses have severely depleted the Bank’s capital. We cannot predict when the real estate economy will turn and improve and we cannot assure you that we will be able to return to being profitable again in the near future, or even at all.

We know however that if the Bank’s financial condition continues to deteriorate we will become critically undercapitalized which will require significantly more capital to bring us back to the point where we can be profitable again. Raising capital in this economic climate is and will be extremely challenging and there is no assurance that the Company will succeed in this endeavor. If the Company can not raise sufficient capital to be able to comply with the Order, the regulators may take additional enforcement action against the Company and the Bank.

As stated above, it remains to be seen if the Company and the Bank will be successful, either on a short-term or long-term basis. In addition, it is unclear at this time what impact, if any, the interest rate restrictions included in the Order will have on the Bank’s ability to maintain adequate liquidity. As a result of our financial condition, our regulators are continually monitoring our liquidity and capital adequacy. Based on their assessment of our ability to continue to operate in a safe and sound manner, our regulators at any time may take other and further actions, including placing the Bank into conservatorship or receivership, to protect the interests of depositors insured by the FDIC.

The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the discharge of liabilities in the normal course of business for the foreseeable future, and do not include any adjustments to reflect the possible future effects on the recoverability or classification of assets, and the amounts or classifications of liabilities that may result from the outcome of any regulatory action, which would affect our ability to continue as a going concern.

FINANCIAL CONDITION

September 30, 2009 compared to December 31, 2008

The Bank has continued to originate loans in Southwest Florida, albeit at a much slower pace than in prior years; affected by the worst real estate economy that this part of Florida has ever experienced. As discussed more fully below, loans decreased 8.71% during the first nine months of 2009, while equity capital declined by 140.41%. While management continues to be proactive in recognizing the losses in the bank’s loan portfolio and trying to reduce the high level of non-performing assets on the books, its top priority is trying to raise capital.

Loans

Loans comprised the largest single category of the Company's earning assets on September 30, 2009. Loans, net of unearned income, totaled 65.00% of total assets at September 30, 2009 compared to 65.39% of total assets at December 31, 2008. During the first nine months of 2009, the bank originated approximately $29 million in new loans compared to approximately $77 million during the same time period last year. Over the first nine months of 2009, loans decreased approximately $54.4 million, compared to the decrease of approximately $105.6 million during the same time period last year. Approximately $47 million of the decrease in 2009 was due to nonperforming loans that were either charged-off and or transferred to the other real estate owned category. Management expects that this trend will continue, that the loan portfolio will continue to decrease as loans are transferred over to the other real estate owned category. At some point however management expects that the financing of other real estate sales will slow or stop the decline in the portfolio.

FLORIDA COMMUNITY BANKS, INC.

September 30, 2009

As of September, 30, 2009, commercial real estate loans comprised approximately 74% of the loan portfolio, about the same as it was at the end of 2008.

As part of the Cease and Desist Order, the Bank was required to reduce its concentration in commercial real estate loans. The Bank has reduced the commercial real estate loans by approximately $70.7 million or 14.03% from December 31, 2008; the reduction was mostly through charge-offs.

Investment Securities and Other Earning Assets

The investment securities portfolio is used to provide a source of liquidity, to serve as collateral for borrowings and to secure certain government deposits. Federal funds sold and other interest-bearing deposits held for liquidity purposes increased by $65.6 million during the first nine months of 2009 and totaled approximately $100.3 million at September 30, 2009; they are the most liquid earning asset and is used to manage the daily cash position of the Company. Management increased the bank’s liquidity position by restructuring the securities portfolio, selling approximately $173 million and only purchasing $117 million to cover what was needed for collateral purposes. In the restructuring we sold our Fannie, Freddie and Municipal securities that had a 20% risk-weighting and purchased Ginnie Mae and SBA securities that are 100% guaranteed by the U.S. government and 0% risk-weighted. Additional liquidity came from income tax refunds totaling approximately $29 million. Investment securities and other investment securities totaled $121.9 million at September 30, 2009.

Asset Quality

From December 31, 2008 to September 30, 2009, the Bank's asset quality continued to deteriorate as measured by three key ratios. The ratio of loan loss allowance to total nonperforming assets (defined as non-accrual loans, loans past due 90 days or greater, restructured loans, non-accruing securities, and other real estate) deteriorated, decreasing from 17.11% to 12.80%. The percentage of nonperforming assets to total assets went up, increasing from 22.26% to 32.61%, and the percentage of nonperforming loans to total loans increased from 25.72% to 35.19%. Construction, and land and development loans make up the majority of the Bank’s nonperforming assets. During the first nine months of 2009, nonperforming loans increased by $87.7 million; of that total, $33.2 million was transferred to other real estate owned property and $14.5 million was charged-off for a net increase of $40 million; nonperforming loans totaled $192.1 million at September 30, 2009. Other real estate owned property increased by $33.4 million (net of sales and writedowns) to approximately $85.4 million. Management attributes the increase in nonperforming loans to the depressed real estate economy; real estate prices continue to decline in certain areas and the local unemployment rate continues to rise, up 4% from a year ago to 12.7%, which is 1.8% higher than the state average and 2.9% higher than the national average. The high number of foreclosures in the area has continued to “back up” in the court system’s which has significantly slowed the foreclosure process down, increasing the number of nonperforming loans on the Bank’s books and increasing all the costs related to that process. A “special assets” management team was established to handle these loans. Each nonperforming loan is evaluated for impairment and written down to its net realizable value or a specific reserve is established in the allowance for loan losses if necessary. Management believes that all the known losses in these loans have been recognized, however due to the uncertain economy, future losses may still be likely.

During the first nine months of 2009, net charge-offs totaled $14.1 million.

FLORIDA COMMUNITY BANKS, INC.

September 30, 2009

The following table sets forth certain information with respect to the Bank's loans, net of unearned income, and the allowance for loan losses for the last four years ended December 31, 2008.

Summary of Loan Loss Experience

	September 30, 2009			December 31, 2008			December 31, 2007			December 31, 2006			December 31, 2005
	(Dollars in thousands)

Allowance for loan losses at beginning of year	$	36,390		$	18,309		$	13,590		$	11,523		$	9,791
Loans charged off:
Commercial, financial and agricultural		433			1,475			734			35			131
Real estate – mortgage		14,014			49,548			1,485			118			—
Consumer		80			193			122			111			50
Total loans charged off		14,527			51,216			2,341			264			181

Recoveries on loans previously charged off:
Commercial, financial and agricultural		205			123			9			6			24
Real estate – mortgage		206			28			139			—			2
Consumer		12			16			44			29			125
Total recoveries		423			167			192			35			151

Net loans charged off (recovered)		14,104			51,049			2,149			229			30

Provision for loan losses		14,330			69,130			6,868			2,296			1,762

Allowance for loan losses at end of period	$	36,616		$	36,390		$	18,309		$	13,590		$	11,523

Loans, net of unearned income, at end of period	$	570,101		$	624,478		$	761,431		$	869,608		$	791,609

Average loans, net of unearned income, outstanding for the period		588,613			701,334			812,603			876,604			670,885

Ratio of net charge-offs to net average loans		2.40	%		7.28	%		0.26	%		0.03	%		0.00	%

In evaluating the allowance, management also considers the historical loan loss experience of the Bank, the amount of past due and nonperforming loans, current and anticipated economic conditions, lender requirements and other appropriate information.

As part of the October 2008 Order, the Bank had to report the balance of assets that were classified as “substandard”, “doubtful” and “loss” as a percentage of total Tier 1 capital plus allowance for loan losses. The following table reflects the assets that were classified (1) by the Bank at September 30, 2009 and December 31, 2008.

			Percentage of Tier 1					Percentage of Tier 1
Loan Analysis	9/30/2009		Capital Plus ALLL			12/31/2008		Capital Plus ALLL
Substandard	$	138,457		239.72	%	$	199,330		233.91	%
Doubtful		2,696		4.67	%		6,577		7.72	%
Loss		-		0.00	%		-		0.00	%
Total	$	141,153		244.39	%	$	205,907		241.62	%

Tier 1 Capital	$	21,142				$	48,828
Allowance for loan losses (ALLL)		36,616					36,390
Total	$	57,758				$	85,218

As part of the Order, the Bank was given 120 days (by 2/15/2009) to reduce the classified assets down to 130% of Tier 1 capital and the allowance for loan losses; 210 days (by 5/15/2009) to reduce the percentage down to 100% and 360 days (10/12/2009) to get it down to 60%.

Reducing the classified assets has proven to be a difficult task in this “depressed” real estate economy. Management cannot afford to take any further losses to sell the assets, as its capital levels have already been depleted by charge-offs and writedowns. Attracting and getting new capital seems to be the only viable means to reduce this ratio and get it to the level that the Order requires. Management has kept the regulators informed of their difficulties in reducing the classified assets.

(1)

The total amount of classified assets is higher, but under the Order we are only required to measure the assets that were actually classified at the time of the OFR report. Total classified assets at September 30, 2009, was $354 million or 613% of Tier 1 capital and the allowance for loan losses, compared to $288.7 million or 333.14% at December 31, 2008.

Deposits

Total deposits of $794.9 million at September 30, 2009, represented a decrease of $50.5 million (5.97%) from total deposits of $845.4 million at year-end 2008. The decrease in deposits is as a result of management shrinking the Bank. Brokered deposits were reduced by $100.7 million, while core certificate of deposits increased by $61.4 million, money market, savings and now accounts increased by $1.4 million; noninterest checking decreased $12.6 million. At September 30, 2009, brokered certificates of deposit totaled approximately $252.3 million; management will continue to let the brokered deposits runoff as they shrink deposits and the size of the Bank.

As part of the Cease and Desist Order, the Bank has reduced brokered deposits from approximately $353 million and 42% of total deposits at December 31, 2008, down to approximately $252 million and 32% of total deposits. It was able to do this from two sources, $29 million in income tax refunds and from the excess funds generated from the sale of securities. Further reductions are projected to come from the sale of nonperforming assets.

Shareholders' Equity

Shareholders' equity decreased $29.1 million from December 31, 2008 to September 30, 2009, due to a net loss of approximately $30.6 million in earnings. The Company’s capital position at September 30, 2009 was negative $8.8 million. Unrealized losses on investments totaled $337 thousand at September 30, 2009. The Company is critically undercapitalized at this point in time.

FLORIDA COMMUNITY BANKS, INC.

September 30, 2009

Liquidity Management

Liquidity is defined as the ability of a company to convert assets (by liquidating or pledging for borrowings) into cash or cash equivalents without significant loss. Liquidity management involves maintaining the ability to meet the day-to-day cash flow requirements of its customers, whether they are depositors wishing to withdraw funds or borrowers requiring funds to meet their credit needs. Without proper liquidity management, the Company would not be able to perform the primary function of a financial intermediary and would, therefore, not be able to meet the production and growth needs of the communities it serves.

The primary function of asset and liability management is not only to ensure adequate liquidity in order to meet the needs of its customer base, but also to maintain an appropriate balance between interest-sensitive assets and interest-sensitive liabilities so that the Company can also meet the investment requirements of its shareholders. Daily monitoring of the sources and uses of funds is necessary to maintain an acceptable position that meets both requirements. To the Company, both assets and liabilities are considered sources of liquidity funding and both are, therefore, monitored on a daily basis.

The asset portion of the balance sheet provides liquidity primarily through maturities and the repayment of loan and investment principal. Loans that mature in one year or less equaled approximately $167 million at September 30, 2009, and there are approximately $10 million of investment security payments expected within one year. At September 30, 2009, the Bank had excess cash of approximately $99.4 million in interest bearing accounts at the Federal Reserve Bank of Atlanta and the Federal Home Loan Bank of Atlanta and $562 thousand in Federal Funds Sold through a correspondent bank.

The liability portion of the balance sheet provides liquidity through deposits to various customers' interest-bearing and non-interest-bearing deposit accounts, and through the capacity to borrow short-term overnight funds from our correspondent banks. The Bank’s main correspondent credit line was with Silverton Bank which was cancelled after the bank was put into receivership by the OCC on May 1, 2009; the Bank’s has a $15 million line with another other correspondent bank. The Bank also had the capacity to borrow on an overnight basis up to $5 million from the Federal Reserve Bank of Atlanta. During the second quarter, the Bank’s credit line with the Federal Home Loan Bank of Atlanta (‘FHLB’) was cancelled due to the Bank’s deteriorating financial condition; the Bank has $50 million in advances from the FHLB and can continue to borrow up to that amount. All the Bank’s credit lines are secured by either securities or loans.

The Bank has so far not had a problem raising deposits, however its ability to continue to attract deposits may be restricted by the interest rates restrictions placed on the Bank by the FDIC. The maximum rate that the Bank is currently permitted to offer is 75 basis points over the average local rate, as calculated by RateWatch. This does not mean that the Bank’s rates will not be competitive, but the Bank can no longer go out and pay the highest rate in area to attract deposits.

Capital Resources

A strong capital position is vital to the continued profitability of the Company and the Bank because it promotes depositor and investor confidence and provides a solid foundation for the future growth of the organization. In the past, the Company provided a significant portion of its capital requirements through the retention of earnings, but with significant losses in 2008 and the continued losses in 2009, the Company’s capital strength has been weakened to the point where there is no more capital.

On June 21, 2002, FCBI Capital Trust I (“Trust I”), a Delaware statutory trust established by the Company, received $10,000,000 in proceeds in exchange for $10,000,000 principal amount of Trust I floating rate cumulative trust preferred securities (the “preferred securities”) in a trust preferred private placement. On May 12, 2006, FCBI Capital Trust II (“Trust II”) was established also as a Delaware statutory trust. Trust II received $20,000,000 in similar proceeds. The proceeds of both transactions were then used by the trusts to purchase an equal amount of floating rate subordinated debentures (the “subordinated debentures”) of the Company. The Company has fully and unconditionally guaranteed all obligations of the trusts on a subordinated basis with respect to the preferred securities. Subject to certain limitations, the preferred securities qualify as Tier 1 capital and are presented in the Consolidated Statements of Financial Condition as subordinated debentures. The sole assets of the trusts are the subordinated debentures issued by the Company. Both the preferred securities of the trusts and the subordinated debentures of the Company have approximately 30-year lives. However, both the Company and the trusts have call options of five years, subject to regulatory capital requirements. In December 2008, the Company elected to defer the interest payments as allowed under the agreement to conserve cash. Payments maybe deferred for up to 20 quarters, but the interest will continue to be accrued every month.

Regulatory authorities are placing increased emphasis on the maintenance of adequate capital. In 1990, new risk-based capital requirements became effective. The guidelines take into consideration risk factors, as defined by regulators, associated with various categories of assets, both on and off the balance sheet. Under the guidelines, capital strength is measured in two tiers, which are used in conjunction with risk-adjusted assets to determine the risk-based capital ratios. The Company’s Tier I capital was ($8.5) million, which consisted of just common equity. With negative common equity, the Trust Preferred securities and the allowance for loan losses do not qualify as capital components therefore the Company’s Total Risk-Based capital was the same as the Tier 1, ($8.5) million.

FLORIDA COMMUNITY BANKS, INC.

September 30, 2009

RESULTS OF OPERATIONS

Three months ended September 30, 2009 and 2008

Summary

The Company had a net loss for the three months ended September 30, 2009, totaling $19,696,483 compared to a net loss of $18,973,448 for the same period in 2008, representing a 3.81% decrease. The difference was due to several factors: $5 million decrease in net interest income; $2.1 million increase in non-interest expenses; no income tax benefit (of $12 million); which was all offset by a lower loan loss provision ($18.3 million).

Net Interest Income

Net interest income, the difference between interest earned on assets and the cost of interest-bearing liabilities, is the largest component of the Company's net income. Net interest income during the three months ended September 30, 2009, decreased $5.01 million (116.7%) from the same period in 2008. This decrease was due primarily to lower loan balances and the reversal of interest on non-performing loans, resulting in a $4.4 million reduction (44.9%) in loan income. Interest expense on deposits decreased $719 thousand or 9.8%, due primarily to the decrease in (brokered) certificate of deposits and lower rates.

Earning assets averaged $804.5 million during the third quarter of 2009 compared to $906 million in 2008, with the decrease due primarily to loans, which were down $96 million or approximately 14%; securities which were down $98.6 million, but this decrease was basically offset by an increase in excess cash of $95 million. Average interest-bearing liabilities increased from $843 million during the third quarter of 2008 to $864.3 million during the same period in 2009. Average interest bearing accounts (money market, savings and NOW accounts) were $37 million lower in 2009 compared to the third quarter of 2008 reflecting a decrease of 20.1%; average certificates of deposit increased $62.4 million, reflecting an increase of 10.9%; average short-term borrowing (fed funds purchased) was $4.1 million lower in 2009 compared to the same period in 2008.

The Bank, usually in an asset sensitive position with a larger dollar amount of interest-earning assets subject to re-pricing than interest-bearing liabilities, is currently in a liability sensitive position. The increase in nonaccrual loans has significantly reduced the amount of interest earning assets subject to changes in interest rates. In this current rate environment, the Bank is in a favorable position for re-pricing its liabilities lower. During periods when interest rates are increasing the Bank strives to increase its asset sensitivity to take advantage of the rising rates to increase its net interest margin; when rates have stabilized, the Bank will decrease its asset sensitivity so that if rates decline the Bank’s net interest margin will not decline as much. The Bank achieves this strategy by making floating rate loans that have a floor rate; keeping investment maturities short when rates are low and extending their durations when rates are higher; extending liability maturities when rates are low and shortening the maturities when rates have stabilized or are declining. This strategy helped to stabilize and improve the net interest margin between 2001 and 2003, when rates were declining and also when rates started to increase in 2004 thru 2006. Since July 2007, the Federal Reserve has cut its key interest rate by 500 basis points, driving the prime rate down from 8.25% to 3.25% at the end of 2008; the prime rate has not changed nor is it expected to change in 2009.

The Company’s net interest margin for the three months ended September 30, 2009 was (0.34)%, dropping 222 basis points from the third quarter last year, 1.88%. The decrease in yield is primarily due to the significant increase in nonperforming loans.

Provision for Loan Losses

The provision for loan losses represents the charge against current earnings necessary to maintain the allowance for loan losses at a level which management considers appropriate. Management evaluates this level based on various factors including, but not limited to, the Bank's historical loss experience, delinquency and non-accrual trends, portfolio growth, underlying collateral values and current economic conditions. This evaluation is subjective and requires material estimates that may change over time.

The provision for loan losses was $10.9 million and $29.3 million for the three months ended September 30, 2009 and 2008, respectively. The decrease in provision was not only the result of charging-off $3.9 million less in loans compared to the same period last year, but also due the general consensus of management that real estate values will not deteriorate going forward as much as they did in 2008; there have been several positive trends in the recent months pointing to a possible “bottoming out” in the real estate market, which could lead to an increase in real estate activity, which would benefit the whole area. The components of the allowance for loan losses represents estimates based upon accounting standards “Accounting for Contingencies” and “Accounting for Impairment of a Loan.” “Accounting for Contingencies” applies to homogeneous loan pools such as consumer, residential and certain commercial loans. The provisions of “Accounting for Impairment of a Loan” are applied to loans that are considered impaired. A loan is impaired when, based on current information, it is probable that the loan will not be repaid according to its contractual terms, including both principal and interest. Management performs individual assessments of impaired loans to determine the existence and the extent of any loss exposure based upon the present value of expected future cash flows or based upon the estimated realizable collateral value where the loan is collateral dependent.

Charge-offs exceeded recoveries by approximately $2.9 million for the three months ended September 30, 2009, compared to $6.7 million for the three months ended September 30, 2008. The reserve for loan losses as a percent of outstanding loans, net of unearned income, was 6.42% at September 30, 2009, compared to 5.83% at year-end 2008.

Noninterest Income

Noninterest income for the three months ended September 30, 2009, was $593,766 compared to $505,915 for the same period of 2008, an increase of $87,851 or 17.36%. The increase was primarily due to a $56,000 life insurance benefit payment (on a retired director) and a $38,000 increase in rents received on other real estate owned property. Service charges on deposits were $33,000 lower than they were last year, due to a decrease in deposit volume.

Noninterest Expenses

Noninterest expenses for the three months ended September 30, 2009, totaled $8.6 million reflecting a 32.8% increase from the same period of 2008. The primary components of non-interest expenses are salaries and employee benefits, which decreased by $347 thousand or 12.7%; occupancy and equipment expenses, which decreased $13 thousand or 1.4%, and other expenses which increased $2.5 million or 88.6%. The biggest increase in other operating expenses was expenses related to the Bank’s other real estate owned properties, which totaled approximately $3 million for the quarter and was $1.7 million higher than last year. Another big increase in other operating expenses was the FDIC assessment, which was $1.1 million higher than last year. The increase in the assessment was due an increase in the Bank’s risk rating, caused by the deterioration in the Bank’s financial condition; the Bank is currently at the highest risk rating.

FLORIDA COMMUNITY BANKS, INC.

September 30, 2009

Income Taxes

The provision for income taxes was $0 for the three months ended September 30, 2009, compared to an income tax benefit of $12.0 million for the same period in 2008. The zero effective tax rate for the current period is due to the Company capping its deferred tax asset amount at its December 31, 2008 level. The effective tax rate for the prior period is less than the statutory federal rate principally because of state income taxes, net of the federal tax benefit.

Nine Months Ended September 30, 2009 and 2008

Summary

The Company had a net loss of $30,627,188 for the nine months ended September 30, 2009, compared to net loss of $24,651,059 for the same period in 2008, representing a 24.2% increase. The increase was due to several factors: $13.9 million decrease in net interest income; $4.8 million increase in non-interest expenses; no income tax benefit of $15.8 million; which was offset by a lower loan loss provision ($25.5 million) and net security gains of $3.1 million.

Net Interest Income

Net interest income, the difference between interest earned on assets and the cost of interest-bearing liabilities, is the largest component of the Company’s net income. Net interest income during the nine months ended September 30, 2009, decreased $13.9 million or 90.8% from the same period in 2008. Interest income on loans was down $14.1 million from a year ago due to lower loan balances, lower rates and an increase in non-performing loans; investment income was down $688 thousand, due to lower balances and rates. Interest expense on deposits decreased $137 thousand despite a $74.9 million increase in average interest-bearing deposits; interest expense on borrowed funds decreased $941 thousand due to lower average balances and rates. Earning assets averaged $826.8 million during the first nine months of 2009 compared to $900.9 million in 2008, a decrease of $74.1 million; average loans decreased $130.1 million (primarily thru charge-offs and those balances moved to other real estate owned); average investments decreased $8.7 million; and average federal funds sold and excess funds in other interest bearing accounts increased $64.8 million. Average interest-bearing liabilities increased from $792.4 million during the third quarter of 2008 to $859.3 million during the same period in 2009. Money market accounts averaged $59.4 million lower in 2009 compared to 2008, reflecting a decrease of 37.6% (a good portion of the decrease were accounts related to loans and business accounts that have been impacted by the economy); now accounts averaged $288 thousand or 1.20% higher and savings accounts averaged $2.6 million or 12.3% lower; average certificates of deposit increased $136.6 million or 27.3% (increase in retail CDs to replace brokered CDs); average borrowing (FHLB and overnight) decreased $7.9 million or 8.9%.

As of September 30, 2009, the Company was in a liability sensitive position, with approximately $247 million more in interest-bearing liabilities subject to re-pricing than interest-bearing assets over a 12 month period. In the current low rate environment this is a beneficial position to be in as it is allowing the Company to re-price its liability side at a faster rate than the asset side. While management took steps to lessen the negative impact to earnings that would result when rates fell, which they did, the high level of nonperforming loans has had a significant impact on the net interest margin. At September 30, 2009, the net interest margin was 0.34% compared to 2.26% last September. To protect the net interest margin in declining rate environment, management has floor rates on most of the variable rate loans, which in “normal” times would keep the margin from dropping too low or too fast, which it has. However, since almost all the variable rate loans are currently at their floor rate, when rates do move up these loans will not adjust until rates move up at least 200 basis points, or on till the prime rate hits 5.25% (currently its at 3.25%). This lag effect will negatively impact the net interest margin since the cost of funds will immediately start to increase while the loan side will not. To offset the lag effect management has in the past relied on the new loan volume to make up the difference; however, management is not sure that when the economy recovers this time that the loan volume will be there.

Provision for Loan Losses

The provision for loan losses represents the charge against current earnings necessary to maintain the reserve for loan losses at a level which management considers adequate. This level is determined based upon the Bank’s historical charge-offs, management’s assessment of current economic conditions, the composition of the loan portfolio and the levels of non-accruing and past-due loans. The provision for loan losses was $14,330,000 for the nine months ended September 30, 2009 and $39,802,400 for the comparable period in 2008. This decrease is due primarily to the decrease in the total loan portfolio and management’s assessment that real estate values will not deteriorate at as much as they did in 2008; there is the general perception that real estate values have “bottomed out” in certain areas of Southwest Florida and we may start to see an early recovery; all-be-it a very soft one. Charge-offs exceeded recoveries by approximately $14.1 million during the first nine months of 2009 compared to $18.5 million during the same time period in 2008. Despite the significant increase in the level of non-performing loans from $106.7 million to $192.1 million during the period from September 30, 2008 to September 30, 2009, the level of impairments have not increased at the same pace, possibly signifying that real estate values maybe stabilizing. However, further deterioration is possible and more charge-offs may still be incurred.

Noninterest Income

Noninterest income for the nine months ended September 30, 2009, was $4.8 million compared to $1.7 million for the same period of 2008, an increase of $3.1 million or 183.8%. The increase was primarily due to net security gains of $3.1 million, resulting from restructuring the securities portfolio. Service charges on deposits and other fees were generally down a little compared to last year

FLORIDA COMMUNITY BANKS, INC.

September 30, 2009

Noninterest Expenses

Noninterest expenses for the nine months ended September 30, 2009, totaled $22.4 million reflecting a 27.2% increase from the same period of 2008. The primary components of non-interest expenses are salaries and employee benefits, which decreased by approximately $772 thousand or 9.4%; occupancy and equipments expenses, which increased $25 thousand or 0.90%; and other expenses which increased $5.6 million or 84.8%. The biggest increase in other operating expenses was the FDIC assessment, which was $3.7 million higher than a year ago. The increase in the assessment was due an increase in the Bank’s risk rating, caused by the deterioration in the Bank’s financial condition; the Bank is currently at the highest risk rating. Expenses related to nonperforming assets were $2.1 million higher than last year.

Income Taxes

The provision for income taxes was $0 for the nine months ended September 30, 2009, compared to an income tax benefit of $15.8 million for the same period in 2008. The zero effective tax rate for the current period is due to the Company capping its deferred tax asset at its December 31, 2008 level. The effective tax rate for the prior period is less than the statutory federal rate principally because of state income taxes, net of the federal tax benefit.

Other Accounting Issues

Note I to the Financial Statements outlines the recently issued accounting pronouncements. The discussion is incorporated by reference herein.

Subsequent events have been evaluated through November 16, 2009, which is the date the financial statements were issued.

FLORIDA COMMUNITY BANKS, INC.

September 30, 2009

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Market risk is the risk arising from adverse changes in the fair value of financial instruments due to a change in interest rates, exchange rates, and equity prices. The Company’s primary market risk arises from the possibility that interest rates may change significantly and affect the fair value of the Company’s financial instruments (also known as interest rate risk).

The primary objective of Asset/Liability Management at the Company is to manage interest rate risk and achieve reasonable stability in net interest income throughout interest rate cycles. This is achieved by maintaining a reasonable balance between rate sensitive earning assets and rate sensitive interest-bearing liabilities. The amount invested in rate sensitive earning assets compared to the amount of rate sensitive liabilities issued are the principal factors in projecting the effect that fluctuating interest rates will have on

future net interest income and the fair value of financial instruments. Rate sensitive earning assets and interest-bearing liabilities are those that can be re-priced to current market rates within a given time period. Management monitors the rate sensitivity of all interest earning assets and interest bearing liabilities, but places particular emphasis on the upcoming year. The Company’s Asset/Liability Management policy requires risk assessment relative to interest pricing and related terms and places limits on the risk to be assumed by the Company.

The Company uses several tools to monitor and manage interest rate sensitivity. One of the primary tools is simulation analysis. Simulation analysis is a method of estimating the fair value of financial instruments, the earnings at risk, and capital at risk under varying interest rate conditions. Simulation analysis is used to estimate the sensitivity of the Company’s net interest income and stockholders’ equity to changes in interest rates. Simulation analysis accounts for the expected timing and magnitude of assets and liability cash flows as interest rates change, as well as the expected timing and magnitude of deposit flows and rate changes whether or not these deposits re-price on a contractual basis. In addition, simulation analysis includes adjustments for the lag between movements in market interest rates on loans

and interest-bearing deposits. These adjustments are made to reflect more accurately possible future cash flows, re-pricing behavior, and ultimately net interest income.

As of September 30, 2009, the Company's simulation analysis indicated that the Company is at greatest risk in a sudden decreasing interest rate environment (a 300 plus basis point decrease). This analysis assumes that rates will change suddenly on a specific date. However, with the Federal Funds rate currently at 0.25%, there is not much room to drop rates much lower. The Company believes that the Federal Reserve will hold rates at the current low level until they feel the economy is improving or until they see inflation becoming a significant factor. In any event, management expects its net interest margin to improve over the next twelve months if the cost of funds continues to be priced down and especially if nonperforming assets are returned to performing again.

The table following depicts the results of the simulation assuming one and two percent decrease and increase in market interest rates.

	Estimated Fair Value of Financial Instruments
	Down 1 Percent			Up 1 Percent			Down 2 Percent			Up 2 Percent
	Dollars in Thousands
Interest-earning Assets
Federal funds sold and cash equivalents	$	105,301		$	105,301		$	105,301		$	105,301
Securities		128,853			113,841			137,440			107,416
Loans		558,823			561,458			557,887			561,830
Total Interest-earning Assets		792,977			780,600			800,628			774,547

Interest-bearing Liabilities
Deposits - Savings and demand		127,577			123,167			129,687			121,159
Deposits - Time		632,542			622,805			633,685			618,236
Other borrowings		85,784			82,233			87,786			81,472
Total Interest-bearing Liabilities		845,903			828,205			851,158			820,867

Net Difference in Fair Value	$	(52,926	)	$	(47,605	)	$	(50,530	)	$	(46,320	)

Change in Net Interest Income	$	883		$	(806	)	$	944		$	(1,010	)

FLORIDA COMMUNITY BANKS, INC.

September 30, 2009

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

The Company has evaluated the effectiveness of its disclosure controls and procedures pursuant to Rule 13a-15(e) under the Securities Exchange Act of 1934 (the "Exchange Act"), the Company's chief executive officer and chief financial officer have concluded that as of the end of the period covered by this Quarterly Report of Form 10-Q such disclosure controls and procedures are effective to ensure that information required to be disclosed by the Corporation in reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms.

Changes in Internal Controls

During the quarter under report, there was no change in the Company's internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting.

PART II - Other Information

Item 1 - Legal Proceedings

In the ordinary course of business, the Company is subject to legal proceedings, which involve claims for substantial monetary relief. However, based upon the advice of legal counsel, management is of the opinion that any legal proceedings, individually or in the aggregate, will not have a material adverse effect on the Company's financial condition or results of operations.

On October 17, 2008, Florida Community Banks, Inc.’s wholly-owned subsidiary, Florida Community Bank (“Bank”), the Florida Office of Financial Regulation (“OFR”) and the Federal Deposit Insurance Corporation (“FDIC”) entered into a Stipulation and Consent of Entry of Order to Cease and Desist, which incorporated by reference an Order to Cease and Desist for the Bank (“Order”).

The Order requires the Bank to: (i) recruit three new directors; (ii) review its management to determine if staffing changes or additions are required; (iii) modify its management succession plan; (iv) increase Board oversight and minute keeping; (v) obtain regulatory clearance for the appointment of executive officers; (vi) adopt and adhere to a capital plan for maintaining a Tier 1 Leverage Capital ratio of at least 8%, a Tier 1 Risk Based Capital ratio of at least 10% and a Total Risk Based Capital ratio of at least 12%; (vii) obtain regulator approval for the payment of dividends; (viii) charge off or collect all assets classified as “loss” by the OFR; (ix) establish a special assets committee to adopt a plan to reduce the Bank’s risk exposure to adversely classified assets; (x) refrain, except under certain circumstances, from making loans to borrowers who has had a loan charged off or adversely classified by the Bank; (xi) evaluate and reorganize the Bank’s special assets department and policies; (xii) address and cure deficiencies in loan administration, underwriting, loan policy and loan review; (xiii) review, monitor and reduce the Bank’s credit concentration risk; (xiv) review and modify its allowance for loan and lease losses methodology; (xv) develop a plan to increase earnings; (xvi) amend its 2008 business plan budget and develop a business plan and budget for 2009 and 2010 to reflect the Bank’s current condition and prospects; (xvii) not increase its amount of brokered deposits and develop a plan to reduce their level of use; (xviii) not borrow money other than deposits, Federal Funds purchased or Federal Home Loan Bank advances without regulatory approval; (xix) evaluate its interest rate risk modeling system: and (xx) establish a compliance committee of the Board and file periodic reports with the OFR and FDIC as to compliance with the Order.

Management believes that it is addressing, or has addressed, most of the substantive items in, and is compliant with most of the Cease and Desist Order Agreement however, as of this filing the Bank was not in compliance with all of the items. The Bank has recruited three new directors, but only two to date have been approved by the OFR; approval of the other one is still pending. The Bank’s capital ratios are below the minimums required by the Order; as of September 30, 2009 the Tier 1 Leverage Capital Ratio was 2.32%, the Tier 1 Risk Based Capital ratio was 3.27% and the Total Risk Based Capital Ratio was 4.58%. Management is reviewing and weighing all of its options for increasing capital and is actively trying to reduce the size of the Bank by selling nonperforming assets, which will improve the capital ratios.

On February 13, 2009 FCBI entered into a Written Agreement (‘Agreement’) with the Federal Reserve Bank of Atlanta (‘FRB’). The Agreement requires FCBI to: (i) not pay any dividends without the consent of the FRB; (ii) not accept any dividends or distributions from the Bank which would serve to reduce the Bank’s capital without the approval of the FRB; (iii) not make any payments on its subordinated debentures or trust preferred securities without the FRB’s consent; (iv) not incur or guarantee any debt without the FRB’s consent; (v) not purchase or redeem any Company stock; (vi) prepare and submit to the FRB a plan to provide sufficient capital to the Company and the Bank; (vii) ensure ongoing compliance by the Bank with FRB regulations related to transactions between the Bank and its affiliates; (viii) prepare and submit to the FRB procedures to ensure compliance with the FRB’s reporting requirements; (ix) obtain the FRB’s non-objection to the appointment of any new directors or senior executive officers; (x) limit indemnification and severance payments in accordance with applicable law; and (xi) submit monthly progress reports to the FRB.

Other than completing its capital plan which it hopes to have by the end of October 2009, management believes that it is complying with the terms of the Agreement with the FRB.

FLORIDA COMMUNITY BANKS, INC.

September 30, 2009

Item 1A - Risk Factors

Our operations involve various risks that could adversely affect our financial condition, results of operation, liquidity, and the market price of our common stock. Investing in our common stock involves risk. In addition, to the other information set forth elsewhere in this Form 10-Q you should carefully consider the risks and uncertainties described below before deciding whether to invest in shares of our common stock. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and or operating results.

Risks Related to our Current Financial Position

There is doubt about our ability to continue as a going concern.

Our ability to continue as a going concern is in doubt as a result of the continued deterioration of our loan portfolio and the deterioration of our capital levels. While we are actively trying to sell our nonperforming assets to reduce the size of the Bank and formalizing a capital plan, we can give no assurance that we will be successful in our endeavors. If we are unable to return to profitability and if we are unable to execute a viable capital plan, we may be unable to continue as a going concern.

The Bank may be subject to a federal conservatorship or receivership if it cannot comply with the Cease and Desist Order, or if conditions continue to deteriorate.

The Order requires the Bank to create and implement a capital plan. Failure of the Bank to submit an acceptable capital restoration plan would, among other things, result in the Bank becoming subject to a number of additional restrictions on its operations, and the Bank and the Company may be subject to additional regulatory action. Moreover, the condition of the Bank’s loan portfolio may continue to deteriorate in the current economic environment and thus continue to deplete the Bank’s capital and other financial resources. Therefore, should the Bank fail to submit an acceptable capital restoration plan and comply with its terms, or fail to comply with the Order’s capital and loan requirements, or suffer continued deterioration in its financial condition, the Bank may be subject to being placed into a federal conservatorship or receivership by the FDIC.

The continued deterioration of the real estate market and the economy has adversely affected our business, liquidity and financial results, and if the downturn continues or worsens our ability to continue as a going concern could be adversely affected.

Our loan portfolio is concentrated in loans secured by real estate. As a result, the significant downturn in the real estate market in Southwest Florida has had a substantial negative effect on our business and contributed to the levels of delinquent and nonperforming assets, charge-offs and credit reserves. We reported a net loss of $30.6 million for the nine months ended September 30, 2009, compared to a net loss of $24.7 million for the nine months ended September 30, 2008 and a net loss of $76.2 million for the year ended December 31, 2008, compared to net income of $10.9 million for the year ended December 31, 2007. If these events continue or worsen, it will have a material adverse effect on our business, financial condition and results of operation and also may impact our ability to continue as a going concern.

Our decision to defer interest on our Trust Preferred Securities will likely restrict our access to the debt capital markets until such time we are current on our interest payments, which will further limit our sources of liquidity.

In December 2008, the FRB requested that we defer further interest payments on each of our junior subordinated debt securities relating to the Trust Preferred Securities. As a result, it is likely that we will not be able to raise money through the offering of debt securities until we become current on those obligations. This may also adversely affect our ability to obtain debt financing on commercially reasonable terms, or even at all. As a result, we will likely have greater difficulty in obtaining financing and, thus will have fewer sources to enhance our capital and liquidity position.

We may be subject to negative publicity that may adversely affect our business, financial condition, liquidity and results of operation.

We have been the subject of news reports discussing our financial situation in the past and may continue to be subject to negative publicity as the press and others speculate about whether we will be able to continue as a going concern. These reports may have a negative impact on our business. For example, even though our deposits are insured by the FDIC, customers may choose to withdraw their deposits, and new customers may choose to do business elsewhere. In addition, we may find that our service providers will be reluctant to commit to long-term projects with us. Even if we are able to improve our current financial situation, we may continue to be the object of negative publicity and speculation about our future.

We have become subject to restrictions on the amount of interest that we can pay our customers, which could cause our deposits to decrease. Because we depend on deposits as a source of liquidity, a decrease in deposits would adversely affect our ability to continue as a going concern.

A significant portion of our funding comes from deposits, both local and brokered. The Bank promotes selected deposit accounts locally to both individuals and businesses at competitive rates. Through brokered deposits the Bank is able to get certificate of deposits at rates that in most cases are significantly less than the local rates. The Bank competes for deposits locally on the basis of the interest rates that it pays. Under the Order, the Bank is restricted in the rates that it can offer and we can no longer go to the brokered market for deposits. As a result, we likely could experience a decrease in new deposits, and our existing customers may transfer their deposits to other institutions that are able to offer higher interest rates; plus we may be unable to cover the brokered deposit maturities as they roll off, which could have a material adverse affect on our ability to continue as a going concern.

The Regulatory Agreements prohibit the Company and the Bank from paying any dividends or distributions on our respective equity securities.

Under the terms of the Agreement, the Company cannot pay any dividends or make any distributions on its equity or trust preferred securities without the prior written FRB approval. In addition, under the terms of the Order and in connection with its undercapitalized status, the Bank cannot pay any dividends or make any distributions on its equity securities without, among other things, written FDIC approval. Given the Company’s and Bank’s current condition, it is doubtful that either the FRB or the FDIC would approve any dividend payment or capital distribution at this time. As a result, for at least the time being, the Company probably will not be able to look to the Bank’s financial resources to satisfy its own financial obligations.

Regulatory Factors

The Company is operating under an Agreement issued by the Federal Reserve Bank of Atlanta (“FRB”) and the Bank is under a Cease and Desist Order issued by the State of Florida Office of Financial Regulation (“OFR”); both regulators found defects in our operation and raised concerns regarding the adequacy of our capital and our financial soundness.

Areas addressed by the regulators included inadequate capital; the expertise of the Board and the adequacy of their supervision; the qualifications and competence of management; the lack of adequate loan underwriting standards or a loan review program; excessive levels of adversely classified loans; excessive levels of brokered deposits; excessive levels of concentrations in commercial real estate loans; and inadequate earnings. Failure by the Company to adequately address these regulatory concerns may result in further enforcement actions by the banking regulators, which could include appointment of a receiver or conservator of the Bank’s assets.

FLORIDA COMMUNITY BANKS, INC.

September 30, 2009

Industry Factors

Recent developments in the financial industry and the U.S. and global capital markets may adversely impact our operations.

Developments in the last two years in the capital markets have resulted in uncertainty in the financial markets in general, with the expectation of the general economic downturn continuing in the latter half of 2009 and beyond. Loan portfolio performance has deteriorated at many institutions resulting from, among other factors, a weak economy and a decline in the value of collateral. The competition for our deposits has increased significantly due to liquidity concerns at many of these same institutions. Stock prices of bank holding companies, like ours, have been negatively affected by the current condition of the financial markets, as has our ability, if needed, to raise capital or borrow in the debt markets, compared to prior years. As a result, there is a potential for new federal or state laws and regulations regarding lending and funding practices and capital and liquidity standards, and financial institution regulatory agencies are expected to be very aggressive in responding to concerns and trends identified in examinations, including the expected issuance of many formal enforcement actions. Developments in the financial services industry and the impact of any new legislation in response to those developments could negatively impact us by restricting our business operations, including our ability to originate or sell loans, and adversely impact our financial performance.

Deterioration in the local economy and real estate markets has led to loan losses and reduced earnings and that could lead to additional loan losses and reduced earnings.

For the past two years, there has been a dramatic decrease in housing and real estate values in Southwest Florida, coupled with a significant increase in the rate of unemployment. These trends have contributed to an increase in the Banks' nonperforming loans and reduced asset quality. As of September 30, 2009, the Bank’s nonperforming loans were approximately $201 million, or 35.19% of the loan portfolio. Nonperforming assets were approximately $286 million as of this same date, or 32.61% of total assets. If market conditions continue to deteriorate, this may lead to additional valuation adjustments on the Bank’s loan portfolio and other real estate owned, resulting in additional loan losses and reduced earnings.

FLORIDA COMMUNITY BANKS, INC.

September 30, 2009

Company Factors

The Company is required to maintain elevated capital ratios for the foreseeable future, but that additional capital may not be available when it is needed.

Under the cease and desist order issued by the OFR the Bank is required to maintain a Tier 1 leverage ratio of not less than 8% and a total risk-based capital ratio of not less than 12% for as long as the agreement is in effect. As of September 30, 2009, the Bank’s Tier 1 leverage ratio was 2.32% and its total risk-based capital ratio was 4.58%. In order for the Bank to achieve the capital ratios required by the OFR, we (the holding company) will have to raise additional capital. Our ability to raise capital depends to a great extent on the conditions in the capital markets which are outside of our control. Reducing the size of the bank through the sale of nonperforming assets at a price we can afford is another way to improve our capital ratios, but the sale of nonperforming assets depends to a great extent on the economy and the real estate market which again is outside of our control. Failure by the Company to raise additional or sufficient capital could result in further enforcement actions by the banking regulators, which could include appointment of a receiver or conservator of the Bank’s assets. Additional equity (stock) offerings may dilute the holdings of our existing stockholders or reduce the market price of our common stock, or both.

The Loan Portfolio includes commercial real estate loans that have higher risks.

The Bank’s commercial real estate loans at September 30, 2009, totaled approximately $433 million or 76% of total loans. These loans generally involve a greater degree of financial and credit risk and are usually larger than the other type of loans. Any significant failure to pay on time by the Bank’s customers would hurt our earnings. The increased financial and credit risk associated with these types of loans include the concentration of principal in a limited area (Southwest Florida) and the size of the loan balances and the credit relationships tend to be bigger and more complex making evaluating and monitoring these loans more difficult. The repayment of loans secured by commercial real estate is usually dependent on the successful resale of the real estate; therefore these loans are affected to a greater extent by the underlying condition of the real estate market and the economy.

The federal banking regulatory agencies released guidance on “Concentrations in Commercial Real Estate Lending” (the “Guidance”) in 2006. The Guidance defines commercial real estate loans as exposures secured by raw land, land development and construction (including 1-4 family residential construction), multi-family property, and non-farm nonresidential property where the primary or a significant source of repayment is derived from rental income associated with the property (that is, loans for which 50% or more of the source of repayment comes from third party, non-affiliated, rental income) or the proceeds of the sale, refinancing, or permanent financing of the property. The Guidance requires that appropriate processes be in place to identify, monitor and control risks associated with real estate lending concentrations. This could include enhanced strategic planning, underwriting policies, risk management, internal controls, portfolio stress testing and risk exposure limits as well as appropriately designed compensation and incentive programs. Higher allowances for loan losses and capital levels may also be required.

The Guidance is triggered when commercial real estate loan concentrations exceed either:

·	total reported loans for construction, land development, and other land of 100% or more of a bank's total capital; or

·	total reported loans secured by multifamily and nonfarm nonresidential properties and loans for construction, land development, and other land of 300% or more of a bank's total capital.

Our ratios at September 30, 2009 were 1,283% and 2,051% respectively. These high percentages are due to the capital levels falling and not an increase in commercial real estate loans.

A significant portion of our loans are to customers who have been adversely affected by the down turn in the homebuilding industry.

Customers who are builders and developers face greater difficulty in selling their homes in markets where the decrease in housing and real estate values are more pronounced. Consequently, we have experienced a significant increase in delinquencies and nonperforming assets as these customers are forced to default on their loans. While we see some signs of improvement in the local housing market, we may still have additional downgrades, provisions for loan losses and charge-offs relating to this segment of our loan portfolio, which would negatively impact earnings.

An inadequate allowance for loan losses would reduce our earnings.

The risk of credit losses on loans varies with, among other things, general economic conditions, the type of loan being made, the creditworthiness of the borrower over the term of the loan and in the case of collateral dependent loans, the value and the marketability of the collateral for the loan. Management maintains an allowance for loan losses based upon, among other things, historical experience, an evaluation of economic conditions and regular reviews of delinquencies and the loan portfolio quality. Based on such factors, management makes various assumptions and judgments about the ultimate collectibility of the loan portfolio and provides an allowance for loan losses based upon a percentage of the outstanding balances and for specific loans when their ultimately is considered questionable. If management’s assumptions and judgments prove to be incorrect and the allowance for loan losses is inadequate to absorb losses, or if the bank regulators require the Bank to increase the allowance as part of their examination process, the Bank’s earnings and capital could be significantly and adversely affected.

A lack of liquidity could affect our operations and jeopardize our financial condition.

Liquidity is essential to our business. An inability to raise funds through deposits, borrowings, the sale of loans and other sources could have a substantial negative effect on our liquidity and our ability to operate effectively. Our access to funding sources in amounts adequate to operate on terms that are acceptable to us could be impaired by factors that affect us specifically or the financial services industry or economy in general. Brokered deposits were a reliable and stable source of funds for us, but due to regulatory pressures and the fact that our capital ratios have dropped below being “adequately capitalized” we are no longer permitted to access this source of funds. We have agreed to reduce the level of our brokered deposits to levels that are more consistent with our peer group and are replacing them with local certificate of deposits.

FLORIDA COMMUNITY BANKS, INC.

September 30, 2009

Also as a result of our current financial condition, the Bank is subject to the restrictions on the interest rates it may offer to its depositors. Under the applicable restrictions, the Bank cannot pay interest rates higher than 75 basis points above the local average rates for each deposit type. In light of the Bank’s historical practice of paying above average rates to attract deposits, the Bank’s liquidity may be negatively impacted, possibly materially, due to deposit run-off to the extent that it is unable to continue offering above average rates.

Our business is subject to the success of the local economies where we operate.

Our success depends upon the growth in population, income levels, deposits and the real estate market in each of our primary and secondary markets. Over the past two years, each of these four factors have decreased. If the communities in which we operate do not grow or if the prevailing economic conditions locally or nationally continue to remain challenged, our business may be adversely affected. Our specific market areas have recently experienced economic contraction, which has affected the ability of our customers to repay their loans and generally affected our financial condition and results of operation. We are less able than a larger institution to spread the risks of unfavorable local economic conditions across a large number of diversified markets and economies. We cannot give any assurances that we will benefit from any market growth or favorable economic conditions in our primary market areas if they do occur.

Changes in interest rates may negatively affect our earnings and the value of our assets.

Our earnings and cash flows are largely dependent upon our net interest income. Net interest income is the difference between interest income earned on interest-earning assets, such as loans and investment securities, and interest-bearing liabilities, such as deposits and borrowed funds. Interest rates are sensitive to many factors that are beyond our control, including general economic conditions, competition and policies of various governmental and regulatory agencies and in particular the policies of the Board of Governors of the Federal Reserve. Changes in monetary policy, including changes in interest rates, could influence not only the interest our Banks receive on loans and investment securities and the amount of interest they pay on deposits and borrowings, but such changes could also affect (i) the Bank’s ability to

originate loans and obtain deposits, (ii) the fair value of our financial assets and liabilities, including the available for sale securities portfolio, and (iii) the average duration of our interest-earning assets. This also includes the risk that interest-earning assets may be more responsive to changes in interest rates than interest-bearing liabilities, or vice versa (repricing risk), the risk that the individual interest rates or rates indices underlying various interest-earning assets and interest-bearing liabilities may not change in the same degree over a given time period (basis risk), and the risk of changing interest rate relationships across the spectrum of interest-earning asset and interest-bearing liability maturities (yield curve risk), including a prolonged flat or inverted yield curve environment. Any substantial, unexpected, prolonged change in market interest rates could have a material adverse affect on our financial condition and results of operations.

Our cost of funds may increase as a result of general economic conditions, interest rates and competitive pressures. We have traditionally obtained funds through local deposits (non-interest checking, now and money market accounts) and have a base of lower cost transaction deposits; but we have also obtained funds from the brokered market, which are usually cheaper than the local certificate of deposit specials that we have to compete against. Generally, we believe local deposits are a less expensive and are a more stable source of funds, as other borrowings including brokered deposits are subject to regulatory limits and conditions. Our costs of funds and our profitability are likely to be adversely affected, if and to the extent we have to rely solely upon higher cost local certificate of deposits and borrowings from other institutional lenders to fund loan demand or liquidity needs.

Higher FDIC deposit insurance premiums and assessments could adversely affect our financial condition.

FDIC insurance premiums have increased substantially in 2009 already and we may have to pay significantly higher FDIC premiums in the future. Market developments have significantly depleted the insurance fund of the FDIC and reduced the ratio of reserves to insured deposits. The FDIC adopted a revised risk-based deposit insurance assessment schedule on February 27, 2009, which raised deposit insurance premiums. On May 22, 2009, the FDIC also implemented a five basis point special assessment of each insured depository institution's assets minus Tier I capital as of June 30, 2009, limited to 10 basis points times the institution's assessment base for the second quarter of 2009, to be collected on September 30, 2009. Additional special assessments may be imposed by the FDIC for future periods. We participate in the FDIC's Temporary Liquidity Guarantee Program, or TLG, for noninterest-bearing transaction deposit accounts. Banks that participate in the TLG's noninterest-bearing transaction account guarantee will pay the FDIC an annual assessment of 10 basis points on the amounts in such accounts above the amounts covered by FDIC deposit insurance. To the extent that these TLG assessments are insufficient to cover any loss or expenses arising from the TLG program, the FDIC is authorized to impose an emergency special assessment on all FDIC-insured depository institutions. The FDIC has authority to impose charges for the TLG program upon depository institution holding companies, as well.

These changes may cause the premiums and TLG assessments charged by the FDIC to increase. These actions could significantly increase our noninterest expense in 2009 and for the foreseeable future.

Competition from financial institutions and other financial service providers may adversely affect our profitability.

The banking business is highly competitive and we experience competition in each of our markets from many other financial institutions. We compete with commercial banks, credit unions, savings and loan associations, mortgage banking firms, consumer finance companies, securities brokerage firms, insurance companies, money market funds, and other mutual funds, as well as other super-regional, national and international financial institutions that operate offices in our primary market areas and elsewhere. We compete with these institutions both in attracting deposits and assets under management, and in making loans. In addition, we have to attract our customer base from other existing financial institutions and from new residents. Many of our competitors are well-established, larger financial institutions. While we believe we can and do successfully compete with these other financial institutions in our primary markets, we may face a competitive disadvantage as a result of our smaller size, lack of geographic diversification and inability to spread our marketing costs across a broader market. Although we compete by concentrating our marketing efforts in our primary markets with local advertisements, personal contacts, and greater flexibility and responsiveness in working with local customers, we can give no assurance this strategy will always be successful.

We are subject to extensive regulation that could limit or restrict our activities.

We operate in a highly regulated industry and are subject to examination, supervision, and comprehensive regulation by various federal and state agencies. Our compliance with these regulations is costly and restricts certain of our activities, including payment of dividends, mergers and acquisitions, investments, loans and interest rates charged, interest rates paid on deposits and locations of offices. We are also subject to capitalization guidelines established by our regulators, which require us to maintain adequate capital to support our growth.

The laws and regulations applicable to the banking industry could change at any time, and we cannot predict the effects of these changes on our business and profitability. Because government regulation greatly affects the business and financial results of all commercial banks and bank holding companies, our cost of compliance could adversely affect our ability to operate profitably.

We are dependent upon the services of our management team

Our future success and profitability is substantially dependent upon the management and banking abilities of our senior executives. We believe that our future results will also depend in part upon our attracting and retaining highly skilled and qualified management and sales and marketing personnel. Competition for such personnel is intense, and we cannot assure you that we will be successful in retaining such

personnel. We also cannot guarantee that members of our executive management team will remain with us. Changes in key personnel and their responsibilities may be disruptive to our business and could have a material adverse effect on our business, financial condition and results of operations.

FLORIDA COMMUNITY BANKS, INC.

September 30, 2009

Hurricanes or other adverse weather events would negatively affect our local economies or disrupt our operations, which would have an adverse effect on our business or results of operations.

Our market areas in Florida are susceptible to hurricanes and tropical storms and related flooding and wind damage. Such weather events can disrupt operations, result in damage to properties and negatively affect the local economies in the markets where they operate. We cannot predict whether or to what extent damage that may be caused by future hurricanes will affect our operations or the economies in our current or future market areas, but such weather events could result in a decline in loan originations, a decline in the value or destruction of properties securing our loans and an increase in delinquencies, foreclosures or loan losses. Our business or results of operations may be adversely affected by these and other negative effects of future hurricanes or tropical storms, including flooding and wind damage. Many of our customers have incurred significantly higher property and casualty insurance premiums on their properties located in our markets, which may adversely affect real estate sales and values in those markets.

Risks Related to Our Common Stock

Market conditions and other factors may affect the value of our common stock.

The trading price of the shares of our common stock will depend on many factors, which may change from time to time, including:

·	conditions in the regional and national credit, mortgage and housing markets, the markets for securities relating to mortgages or

·	housing and developments with respect to financial institutions generally;

·	market interest rates;

·	the market for similar securities;

·	government action or regulation;

·	general economic conditions or conditions in the financial markets;

·	changes in global financial markets and global economies and general market conditions, such as interest or foreign exchange rates, stock, commodity or real estate valuations or volatility;

·	our past and future dividend practice; and

·	our financial condition, performance, creditworthiness and prospects.

The trading volume in our common stock has been low and the sale of substantial amounts of our common stock in the public market could depress the price of our common stock.

Our common stock is thinly traded. The average daily trading volume of our shares on the Over the Counter Market during the first nine months of 2009 was approximately 250 shares. Thinly traded stock can be more volatile than stock trading in an active public market. In recent years, the stock market has experienced a high level of price and volume volatility, and market prices for the stock of many companies have experienced wide price fluctuations that have not necessarily been related to their operating performance. Therefore, our shareholders may not be able to sell their shares at the volumes, prices, or times that they desire.

FLORIDA COMMUNITY BANKS, INC.

September 30, 2009

We cannot predict the effect, if any, that future sales of our common stock in the market, or availability of shares of our common stock for sale in the market, will have on the market price of our common stock. We therefore can give no assurance sales of substantial amounts of our common stock in the market, or the potential for large amounts of sales in the market, would not cause the price of our common stock to decline or impair our ability to raise capital through sales of our common stock.

Our ability to pay dividends is limited and we have stopped paying cash dividends.

Holders of our common stock are only entitled to receive such dividends as our board of directors may declare out of funds legally available for such payments. Furthermore, holders of our common stock are subject to the prior dividend rights of any holders of our preferred stock at any time outstanding or depositary shares representing such preferred stock then outstanding. The Company has no preferred stock outstanding at this time.

In our Agreement with the Federal Reserve Bank of Atlanta, we are prohibited in paying any dividends to our shareholders without first getting their approval. In December 2008, we suspended our interest payments on our Trust Preferred Securities with the understanding that we could not pay any cash dividends to anyone until the full amount of suspended interest was paid. The ability of our bank subsidiary to pay dividends to us has been restricted by the OFR to ensure that the bank’s capital is not depleted any further. Accordingly, the Company has not paid a cash dividend since the second quarter of 2007, and do not anticipate paying cash dividends for the foreseeable future.

Item 5 - Other Information

The Company did not fail to file any Form 8-K to disclose any information required to be disclosed therein during the second quarter of 2009.

As disclosed as exhibit 10.10 to the Company’s Form 10-K/A filed with the SEC on April 15, 2009, the FCBI entered into a Written Agreement with the Federal Reserve Bank of Atlanta (together with the Board of Governors of the Federal Reserve System, the “FRB”) on February 13, 2009. Pursuant to this Agreement, the Company has agreed to: (i) not pay any dividends without the consent of the FRB; (ii) not accept any dividends or distributions from the Bank which would serve to reduce the Bank’s capital without the approval of the FRB; (iii) not make any payments on its subordinated debentures or trust preferred securities without the FRB’s consent; (iv) not incur or guarantee any debt without the FRB’s consent; (v) not purchase or redeem any Company stock; (vi) prepare and submit to the FRB a plan to provide sufficient capital to the Company and the Bank; (vii) ensure ongoing compliance by the Bank with FRB regulations related to transactions between the Bank and its affiliates; (viii) prepare and submit to the FRB procedures to ensure compliance with the FRB’s reporting requirements; (ix) obtain the FRB’s non-objection to the appointment of any new directors or senior executive officers; (x) limit indemnification and severance payments in accordance with applicable law; and (xi) submit monthly progress reports to the FRB.

As of this filing management believes that it is in compliance with most of the items in this Agreement

FLORIDA COMMUNITY BANKS, INC.

September 30, 2009

Item 6 - Exhibits

The following Exhibits are filed with this report:

Exhibit No.		Exhibit	Page

	3.1	Articles of Incorporation of FCBI (included as Exhibit 3.1 to FCBI's Registration Statement on Form 8-A filed with the SEC on April 15, 2002, and incorporated herein by reference).

	3.2	By-laws of FCBI (included as Exhibit 3.2 to FCBI's Registration Statement on Form 8-A filed with the SEC on April 15, 2002, and incorporated herein by reference).

	4.1	Subordinated Promissory Note dated December 24, 2001, between Florida Community Bank and Independent Bankers Bank of Florida (included as Exhibit 4.1 to the Bank's Form 10-KSB for the year ended December 31, 2001, and incorporated herein by reference).

	4.2	Specimen Common Stock Certificate of FCBI (included as Exhibit 4.1 to FCBI's Registration Statement on Form 8-A filed with the SEC on April 15, 2002, and incorporated herein by reference).

	10.1	2002 Key Employee Stock Compensation Program of FCBI (included as Appendix D to the Bank's Definitive Schedule 14-A filed with the FDIC on March 22, 2002, and incorporated herein by reference).

	10.2	Amended and Restated Trust Agreement among Florida Community Banks, Inc. as depositor, Wilmington Trust Company as property trustee, Wilmington Trust Company, as Delaware trustee, and Stephen L. Price, and Thomas V. Ogletree as administrators, dated as of June 21, 2002 (included as Exhibit 10.3 to the Company's Form 10-Q for the quarter ended June 30, 2002, and incorporated herein by reference).

	10.3	Guarantee Agreement between Florida Community Banks, Inc. as guarantor, and Wilmington Trust Company as guarantee trustee, dated as of June 21, 2002 (included as Exhibit 10.4 to the Company's Form 10-Q for the quarter ended June 30, 2002, and incorporated herein by reference).

	10.4	Junior Subordinated Indenture between Florida Community Banks, Inc. (as Company) and Wilmington Trust Company (as trustee), dated as of June 21, 2002 (included as Exhibit 10.5 to the Company's Form 10-Q for the quarter ended June 30, 2002, and incorporated herein by reference).

	10.5	Employee Stock Ownership Plan (included as Exhibit 10.5 to the Company's Form S-8 filed May 6, 2004, and incorporated herein by reference).

	10.6	Amended and Restated Declaration of Trust, dated as of May 12, 2006, by and among the Company, as Depositor, Wells Fargo Bank, National Association, as Institutional Trustee and Delaware Trustee, and the Administrators named therein (included as Exhibit 10.3 to the Company's Form 8-K filed with the SEC on May 12, 2006, and incorporated herein by reference).

Exhibit No.		Exhibit	Page

	10.7	Guarantee Agreement, dated as of May 12, 2006, by and between the Company, as Guarantor, and Wells Fargo Bank, National Association, as Guarantee Trustee (included as Exhibit 10.2 to the Company's Form 8-K filed with the SEC on May 12, 2006, and incorporated herein by reference).

	10.8	Indenture, dated as of May 12, 2006, by and between the Company and Wells Fargo Bank, National Association, as Trustee (included as Exhibit 10.1 to the Company's Form 8-K filed with the SEC on May 12, 2006, and incorporated herein by reference).

	10.9	Stipulation and Consent of Entry to Cease and Desist. Dated October 17, 2008 (included as Exhibit 10.9 to the Company’s Form 8-K filed with the SEC on November 4, 2008, and incorporated herein by reference).

	10.10	Written Agreement with the Federal Reserve Bank of Atlanta. Dated February 13, 2009 (included as Exhibit 10.10 to the Company’s Form 10-K filed with the SEC on April 15, 2009, and incorporated herein by reference).

	11	Statement re: computation of earnings per common share		54

	14	Code of Ethics (included as Exhibit 99.1 to the Company's Form 8-K filed on March 3, 2003, and incorporated herein by reference.)

	31.1	Chief Executive Officer - Certification of principal executive officer pursuant to the Exchange Act Rule 13(a)-14(a) or 15(d)-14(a).		55

	31.2	Chief Financial Officer - Certification of principal financial officer pursuant to the Exchange Act Rule 13(a)-14(a) or 15(d)-14(a).		56

	32.1	Chief Executive Officer - Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.		57

	32.2	Chief Financial Officer - Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.		58

FLORIDA COMMUNITY BANKS, INC.

September 30, 2009

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

FLORIDA COMMUNITY BANKS, INC.


By: /s/ Stephen L. Price	November 16, 2009
Stephen L. Price	Date
Principal Executive Officer President, Chief Executive Officer
And Chairman of the Board of Directors

By: /s/ Guy W. Harris	November 16, 2009
Guy W. Harris	Date
Principal Financial Officer Senior Vice president & Chief Financial Officer

FLORIDA COMMUNITY BANKS INC 10-Q