First Community Bankshares (FCBC) 8-K Results of Operations and Financial Condition

NEWS RELEASE

FOR IMMEDIATE RELEASE: March 15, 2006	FOR MORE INFORMATION, CONTACT:Mark A. Wendel
	(276) 326-9000

First Community Bancshares, Inc. Announces Revised Fourth Quarter and Annual Earnings for the Year
Ended December 31, 2005

Bluefield, Virginia – First Community Bancshares, Inc. (NASDAQ: FCBC) (www.fcbinc.com) today reported that subsequent to the release of its fourth quarter and year ended December 31, 2005, financial results, it made further necessary adjustments to deferred loan fees and origination expenses and its provision for federal and state income taxes.

The adjustment to deferred loan fees and origination expenses was necessary to defer additional costs in accordance with FAS 91. The adjustment resulted in the deferral of an additional $732 thousand in loan origination costs after current year amortization. A significant portion of the additional deferral relates to the costs associated with a promotional home equity (HELOC) program which was launched in the first quarter of 2005. The promotional HELOC program was offered on a “no closing cost” basis with First Community bearing the cost of appraisals and other loan closing costs. Under FAS 91, these costs are to be deferred and amortized over the life of the related loans as a yield adjustment. During 2005, the promotional costs accumulated with respect to the program to an amount which First Community believes requires recognition in the deferral of loan costs under FAS 91. Accordingly, First Community is adjusting its fourth quarter and annual results for 2005 to reflect the deferral of such costs and the associated 2005 amortization of the costs so deferred, along with the related federal and state deferred income tax effect.

The total $440 thousand cost deferral, net of amortization and income taxes was recorded in the fourth quarter of 2005. The most significant adjustments were made to salaries expense and other expense which were reduced on an annual basis by $205 thousand and $648 thousand, respectively, and to income tax expense which was increased by $661 thousand for the full year. The adjustment to the federal and state income tax provisions included a $363 thousand adjustment associated with the realization of a deferred tax asset on certain historic rehabilitation investments. Further review of underlying tax information received for 2005 indicated that basis limitations on First Community’s investment in the real estate partnership would not allow for realization of deferred tax benefits previously associated with the credits. Accordingly, the deferred tax charge and credit to the tax provisions were reversed.

The net effect of all adjustments was an increase to net income of $104 thousand for the fourth quarter and the full year 2005 to $7.2 million and $26.3 million, respectively. Basic earnings per share for the fourth quarter and full year 2005 both increased by $0.01 to $0.64 and $2.34, respectively. Diluted earnings per share also increased $0.01 to $0.64 and $2.32 for the fourth quarter and full year 2005, respectively.

First Community also updated market values on its available for sale securities portfolio at December 31, 2005, resulting in a $921 thousand increase and a corresponding increase of $553 thousand in other comprehensive income, net of the related income tax effect. After properly reclassifying FHLB and FRB stock from securities available for sale to other assets, securities available for sale were $404.4 million at December 31, 2005.

The following schedules present the results of operations and financial position for First Community for the fourth quarter and full year for 2005 as revised and as previously presented.

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First Community Bancshares, Inc.		Three Months Ended						Twelve Months Ended
Consolidated Statements of Income		December 31, 2005						December 31, 2005
					Previously						Previously
(Dollars in Thousands, Except Share and Per Share Data)		Revised			Reported			Revised			Reported
Interest	Interest and fees on loans held for investment	$	23,720		$	23,841		$	89,903		$	90,024
Income	Interest on securities-taxable		3,322			3,322			11,077			11,077
	Interest on securities-nontaxable		1,854			1,854			7,451			7,451
	Interest on federal funds sold and deposits		341			341			1,077			1,077
	Total interest income		29,237			29,358			109,508			109,629
Interest	Interest on deposits		7,225			7,225			24,030			24,030
Expense	Interest on borrowings		3,380			3,380			11,850			11,850
	Total interest expense		10,605			10,605			35,880			35,880
	Net interest income		18,632			18,753			73,628			73,749
	Provision for loan losses		882			882			3,706			3,706
	Net interest income after provision for loan losses		17,750			17,871			69,922			70,043
Non-Interest	Wealth management income		716			716			2,956			2,956
Income	Service charges on deposit accounts		2,664			2,664			10,095			10,095
	Other service charges, commissions and fees		723			723			2,785			2,785
	Gain on sale of securities		74			74			753			753
	Other operating income		4,804			4,771			5,716			5,683
	Total non-interest income		8,981			8,948			22,305			22,272
Non-Interest	Salaries and employee benefits		7,451			7,656			29,481			29,686
Expense	Occupancy expense of bank premises		992			992			3,903			3,903
	Furniture and equipment expense		867			867			3,319			3,319
	Amortization of intangible assets		102			102			435			435
	Prepayment penalties on FHLB advances		3,794			3,794			3,794			3,794
	Other operating expense		3,470			4,118			14,659			15,307
	Total non-interest expense		16,676			17,529			55,591			56,444
	Income from continuing operations before income taxes		10,055			9,290			36,636			35,871
	Income tax expense continuing operations		2,819			2,158			10,191			9,530
	Income from continuing operations		7,236			7,132			26,445			26,341
	Loss from discontinued operations before tax		(27	)		(27	)		(233	)		(233	)
	Income tax benefit from discontinued operations		(11	)		(11	)		(91	)		(91	)
	Loss from discontinued operations		(16	)		(16	)		(142	)		(142	)
	Net income	$	7,220		$	7,116		$	26,303		$	26,199
	Basic earnings per common share (EPS)	$	0.64		$	0.63		$	2.33		$	2.32
	Diluted earnings per common share (DEPS)	$	0.64		$	0.63		$	2.32		$	2.31
	Basic earnings per common share-continuing operations	$	0.64		$	0.63		$	2.35		$	2.34
	Diluted earnings per common share-continuing operations	$	0.64		$	0.63		$	2.33		$	2.32
	Weighted Average Shares Outstanding:
	Basic		11,268,496			11,268,496			11,269,258			11,269,258
	Diluted		11,340,526			11,340,526			11,341,804			11,341,804
	For the period:
	Return on average assets		1.44	%		1.42	%		1.37	%		1.36	%
	Return on average assets-continuing operations		1.45	%		1.43	%		1.38	%		1.37	%
	Return on average equity		14.69	%		14.47	%		13.79	%		13.74	%
	Return on average equity-continuing operations		14.72	%		14.51	%		13.87	%		13.81	%
	Return on average tangible equity		21.58	%		21.27	%		20.53	%		20.45	%
	Return on average tangible equity-continuing operations		21.63	%		21.32	%		20.64	%		20.56	%
	Cash dividends per share	$	0.255		$	0.255		$	1.02		$	1.02
	At period end:
	Book value per share	$	17.29		$	17.23		$	17.29		$	17.23
	Market value	$	31.16		$	31.16		$	31.16		$	31.16

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First Community Bancshares, Inc.
Balance Sheet
(Unaudited)

	December 31, 2005
				Previously
	Revised			Reported
	(Amounts in Thousands)
Cash and due from banks	$	46,872		$	46,872
Interest-bearing deposits with banks		10,667			10,667
Securities available for sale		404,381			417,257
Securities held to maturity		24,173			24,173
Loans held for sale		1,274			1,274
Loans held for investment, net of unearned income		1,331,039			1,331,039
Less allowance for loan losses		14,736			14,736
Net loans		1,316,303			1,316,303
Premises and equipment		34,993			34,993
Other real estate owned		1,400			1,400
Interest receivable		10,232			10,232
Intangible assets		61,119			61,119
Other assets		41,069			28,261
Total Assets	$	1,952,483		$	1,952,551
Deposits:
Demand	$	230,542		$	230,542
Interest-bearing demand		144,314			144,314
Savings		355,184			355,184
Time		675,904			675,904
Total Deposits		1,405,944			1,405,944
Interest, taxes and other liabilities		16,153			16,877
Federal funds purchased		82,500			82,500
Securities sold under agreements to repurchase		124,154			124,154
FHLB and other indebtedness		129,231			129,231
Total Liabilities		1,757,982			1,758,706
Common stock, $1 par value		11,496			11,496
Additional paid-in capital		108,573			108,573
Retained earnings		82,828			82,725
Treasury stock, at cost		(7,625	)		(7,625	)
Accumulated other comprehensive income (loss)		(771	)		(1,324	)
Total Stockholders’ Equity		194,501			193,845
Total Liabilities and Stockholders’ Equity	$	1,952,483		$	1,952,551

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First Community Bancshares, Inc.

Consolidated Average Balance Sheets, Yields, and Rates

(Unaudited)

	Three Months Ended December 31, 2005
	Revised							Previously Reported
					Yield/							Yield/
	Average		Interest		Rate			Average		Interest		Rate
	Balance		(1)		(1)			Balance		(1)		(1)
	(Dollars in thousands)
Earning Assets:
Loans:
Held for Investment (2)
Taxable	$	1,325,231	$	23,699		7.09	%	$	1,325,231	$	23,820		7.13	%
Tax-Exempt		1,627		33		8.04	%		1,627		33		8.04	%
Total		1,326,858		23,732		7.10	%		1,326,858		23,853		7.13	%
Securities Available for Sale:
Taxable		290,546		3,318		4.53	%		290,546		3,318		4.53	%
Tax-Exempt		149,707		2,358		6.25	%		149,707		2,358		6.25	%
Total		440,253		5,676		5.11	%		440,253		5,676		5.11	%
Held to Maturity Securities:
Taxable		394		4		4.03	%		394		4		4.03	%
Tax-Exempt		24,066		494		8.14	%		24,066		494		8.14	%
Total		24,460		498		8.08	%		24,460		498		8.08	%
Interest Bearing Deposits with Banks		34,650		341		3.90	%		34,650		341		3.90	%
Fed Funds Sold		—		—					—		—
Total Earning Assets		1,826,221	$	30,247		6.57	%		1,826,221	$	30,368		6.60	%
Other Assets		156,190							156,190
Total	$	1,982,411						$	1,982,411
Interest-Bearing Liabilities:
Demand Deposits	$	149,318	$	106		0.28	%	$	149,318	$	106		0.28	%
Savings Deposits		371,081		1,496		1.60	%		371,081		1,496		1.60	%
Time Deposits		682,573		5,624		3.27	%		682,573		5,624		3.27	%
Short-term Borrowings (5)		267,450		2,606		3.87	%		267,450		2,606		3.87	%
Long-term Borrowings		67,467		774		4.55	%		67,467		774		4.55	%
Total Interest-bearing Liabilities		1,537,889		10,606		2.74	%		1,537,889		10,606		2.74	%
Demand Deposits		233,955							233,955
Other Liabilities		15,516							15,516
Stockholders’ Equity		195,051							195,051
Total	$	1,982,411						$	1,982,411
Net Interest Income			$	19,641						$	19,762
Net Interest Rate Spread (3)						3.83	%						3.86	%
Net Interest Margin (4)						4.27	%						4.29	%

(1)	Fully Taxable Equivalent at the rate of 35%.
(2)	Non-accrual loans are included in average balances outstanding but with no related interest income during the period of non-accrual.
(3)	Represents the difference between the yield on earning assets and cost of funds.
(4)	Represents tax equivalent net interest income divided by average interest earning assets.
(5)	FHLB advances are included in short-term borrowings due to quarterly call options.

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First Community Bancshares, Inc.
Consolidated Average Balance Sheets, Yields, and Rates
(Unaudited)

	Twelve Months Ended December 31, 2005
	Revised							Previously Reported
					Yield/							Yield/
	Average		Interest		Rate			Average		Interest		Rate
	Balance		(1)		(1)			Balance		(1)		(1)
	(Dollars in thousands)
Earning Assets:
Loans:
Held for Investment (2)
Taxable	$	1,299,328	$	89,788		6.91	%	$	1,299,328	$	89,909		6.92	%
Tax-Exempt		2,692		177		6.58	%		2,692		177		6.58	%
Total		1,302,020		89,965		6.91	%		1,302,020		90,086		6.92	%
Securities Available for Sale:
Taxable		262,715		11,062		4.21	%		262,715		11,062		4.21	%
Tax-Exempt		144,242		9,193		6.37	%		144,242		9,193		6.37	%
Total		406,957		20,255		4.98	%		406,957		20,255		4.98	%
Held to Maturity Securities:
Taxable		399		15		3.76	%		399		15		3.76	%
Tax-Exempt		28,336		2,269		8.01	%		28,336		2,269		8.01	%
Total		28,735		2,284		7.95	%		28,735		2,284		7.95	%
Interest Bearing Deposits with Banks		32,100		1,077		3.36	%		32,100		1,077		3.36	%
Fed Funds Sold		—		—					—		—
Total Earning Assets		1,769,812	$	113,581		6.42	%		1,769,812	$	113,702		6.42	%
Other Assets		153,410							153,410
Total	$	1,923,222						$	1,923,222
Interest-Bearing Liabilities:
Demand Deposits	$	152,774	$	401		0.26	%	$	152,774	$	401		0.26	%
Savings Deposits		368,339		4,309		1.17	%		368,339		4,309		1.17	%
Time Deposits		661,498		19,321		2.92	%		661,498		19,321		2.92	%
Short-term Borrowings (5)		272,388		9,721		3.57	%		272,388		9,721		3.57	%
Long-term Borrowings		33,995		2,129		6.26	%		33,995		2,129		6.26	%
Total Interest-bearing Liabilities		1,488,994		35,881		2.41	%		1,488,994		35,881		2.41	%
Demand Deposits		228,781							228,781
Other Liabilities		14,772							14,772
Stockholders’ Equity		190,675							190,675
Total	$	1,923,222						$	1,923,222
Net Interest Income			$	77,700						$	77,821
Net Interest Rate Spread (3)						4.01	%						4.01	%
Net Interest Margin (4)						4.39	%						4.40	%

(1)	Fully Taxable Equivalent at the rate of 35%.
(2)	Non-accrual loans are included in average balances outstanding but with no related interest income during the period of non-accrual.
(3)	Represents the difference between the yield on earning assets and cost of funds.
(4)	Represents tax equivalent net interest income divided by average interest earning assets.
(5)	FHLB advances are included in short-term borrowings due to quarterly call options.

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First Community Bancshares, Inc., headquartered in Bluefield, Virginia, is a $1.97 billion bank holding company and is the parent company of First Community Bank, N. A. First Community Bank, N. A. operates through fifty-one full service banking locations, ten loan production offices, and six wealth management offices in the four states of Virginia, West Virginia, North Carolina and Tennessee. First Community Bank, N. A. is also the parent of Stone Capital Management, Inc., a SEC registered investment advisory firm, which offers wealth management and investment advice. The Company also offers wealth management services through its Trust & Financial Services Division, which as of December 31, 2005 manages assets with a market value of $487 million. First Community Bancshares, Inc.’s common stock is traded on the NASDAQ National Market under the symbol “FCBC”. Additional investor information can be found on the Internet at www.fcbinc.com.

This news release may include forward-looking statements. These forward-looking statements are based on current expectations that involve risks, uncertainties and assumptions. Should one or more of these risks or uncertainties materialize or should underlying assumptions prove incorrect, actual results may differ materially. These risks include: changes in business or other market conditions; the timely development, production and acceptance of new products and services; the challenge of managing asset/liability levels; the management of credit risk and interest rate risk; the difficulty of keeping expense growth at modest levels while increasing revenues; and other risks detailed from time to time in the Company’s Securities and Exchange Commission reports, including but not limited to the Annual Report on Form 10-K for the most recent year ended. Pursuant to the Private Securities Litigation Reform Act of 1995, the Company does not undertake to update forward-looking statements contained within this news release.

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