First Community Bankshares (FCBC) 8-K First Community Bancshares, Inc. Announces Second Quarter 2009 Results

NEWS RELEASE

FOR IMMEDIATE RELEASE: July 23, 2009	FOR MORE INFORMATION, CONTACT:David D. Brown
	(276) 326-9000

First Community Bancshares, Inc. Announces Second Quarter 2009 Results

Bluefield, Virginia – First Community Bancshares, Inc. (NASDAQ: FCBC) (www.fcbinc.com) today reported net income for the quarter ended June 30, 2009 of $3.47 million.  Net income available to common shareholders for the second quarter was $2.89 million, or $0.23 per diluted common share.  Return on average assets for the second quarter was 0.53% and return on average common equity was 6.05%.

Commenting on second quarter results, Chief Executive Officer John M. Mendez said, “Despite continued challenges in financial markets and weak economic conditions we produced solid core operating results for the second quarter.  On the strength of our core operations, we were able to absorb the current elevated credit costs for the quarter, non-cash impairment charges stemming from the weakened operations of others in the industry and $988 thousand in special assessments by the FDIC.” The non-cash impairment charges and the FDIC special assessment had the effect of decreasing second quarter earnings by approximately $0.15 per diluted share.

Net Interest Income

Tax-equivalent net interest margin for the second quarter of 2009 was 3.62%.  Net interest income was $16.32 million, a decrease of $304 thousand, or 1.83%, from second quarter 2008.  Interest income was $26.19 million, a decrease of $1.24 million, or 4.53%, from second quarter 2008.  The decrease was due primarily to decreases in loan and securities yields reflecting a decrease of 200 basis points in the prime lending rate to 3.25% in the second quarter of 2009 from 5.25% in the second quarter of 2008.  The yield on loans dropped to 6.19% from 6.78% while average loans increased $88.77 million to $1.27 billion from second quarter 2008, reflective of the Coddle Creek acquisition.  Yields on loans have dropped as a direct result of the precipitous declines in market rates of interest.

The Company also maintained an average federal funds sold position of $58 million through the second quarter.  This increased liquidity position had a profound negative impact on net interest margin.

Second quarter interest expense decreased $940 thousand, or 8.70%, from 2008.  Second quarter deposit costs decreased $42 thousand compared to the second quarter of 2008, while the average rate paid on interest-bearing deposits decreased 47 basis points to 2.08%.  Compared to the second quarter of 2008, interest costs on borrowings decreased $898 thousand to $2.79 million, while the average balance decreased $118.73 million due to the redemption of various wholesale debt issues and the Company’s relatively liquid balance sheet.  The second quarter cost of interest-bearing liabilities decreased 42 basis points compared to the second quarter of 2008.  Average interest bearing liabilities increased $120.56 million, or 7.53%, compared with second quarter 2008, and included a decrease of $56.56 million in FHLB borrowings.

Non-interest Income

Wealth management revenues increased $35 thousand, or 3.19%, as investment advisory revenue increased $113 thousand.  At June 30, 2009, the Wealth Management Division reported $811 million in assets under management.  Service charges on deposit accounts were $3.49 million for the second quarter of 2009, an increase of $28 thousand, or 0.81%, from the second quarter of 2008.  Insurance commissions were $1.64 million for the second quarter of 2009, an increase of $493 thousand, or 43.02%, from the same period in 2008.  These revenues reflect GreenPoint’s acquisitions of Carr & Hyde Insurance in December 2008 and REL Insurance in July 2008.

The Company recognized approximately $2.08 million in net credit-related impairment charges on investment securities during the second quarter.  Approximately $1.67 million of the charge is attributable to credit-related impairments in two pooled trust preferred holdings.  In addition, the Company enhanced and increased the default and deferral assumptions used this quarter. The impairment charges resulted from increasing levels of underlying defaults and deferrals.  The remaining $406 thousand was due to impairment recognized on certain equity securities.

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Non-interest Expenses

Excluding penalties on debt prepayment, non-interest expenses for the second quarter of 2009 increased $1.30 million, or 8.78%, from the second quarter of 2008.  Salaries and employee benefits decreased $175 thousand, or 2.31%, from the second quarter of 2008. Branches from the November 2008 acquisition of Coddle Creek Financial accounted for an increase in salaries and employee benefits of approximately $291 thousand and GreenPoint acquisitions accounted for an increase of approximately $360 thousand.  The remainder of the Company showed an overall decrease of $826 thousand, a result of increased efficiency initiatives.

Occupancy and furniture and equipment expenses increased due to the Coddle Creek acquisition, new branches, and the addition of operating expenses at GreenPoint, as it acquired new agencies throughout 2008.  During the second quarter the Company accrued approximately $988 thousand for the special FDIC assessment. Other non-interest expenses increased $141 thousand, or 2.97%, compared to the second quarter of 2008.  The second quarter efficiency ratio was 58.62% compared to 57.55% in the second quarter of 2008.

The acquisition of Coddle Creek was completed in November, and integration is largely complete.  The Company continues to be on track to realize its projected pre-tax cost savings of approximately $1.65 million, or 42%, in 2009.

Credit Quality

The Company’s loan quality measures at June 30, 2009 continue to compare favorably to the Company’s peers and the industry.  Total loan delinquencies, including non-accrual loans, as a percent of total loans were 1.35% at June 30, 2009, compared with 1.59% at March 31, 2009 and 1.97% at December 31, 2008.  The ratio of allowance for loan losses as a percent of loans held for investment was 1.31% at June 30, 2009, compared with 1.30% at March 31, 2009 and 1.23% at December 31, 2008.  Non-performing assets increased slightly to $15.26 million at June 30, 2009, from $13.74 million at March 31, 2009 and $14.09 million at December 31, 2008.  Non-performing loans as a percentage of loans held for investment were 0.92% compared with 0.83% at March 31, 2009 and 0.98% at December 31, 2008.

Mr. Mendez added, “We are pleased that our loan portfolio continues to perform well in the face of a prolonged recessionary economy.  This is a tribute to our credit processes and the markets which we serve.”  Net charge-offs for the second quarter of 2009 were $2.43 million, and the Company made a provision for loan losses of $2.55 million in the second quarter of 2009 compared with $937 thousand in the second quarter of 2008.  Mr. Mendez continued, “Despite elevated net charge-offs for the quarter, we are pleased with the overall level of asset quality measures, particularly our controlled level of non-performing assets at 69 basis points, which is well below the industry average.”

Balance Sheet

Since year-end 2008, consolidated assets have increased $69.87 million to $2.20 billion at June 30, 2009 driven by an increase in deposits of $43.60 million and $61.67 million in new capital from the June 2009 equity offering.  Total stockholders’ equity for the Company was $283.58 million, resulting in a book value per common share outstanding of $14.32 at June 30, 2009, compared to $220.34 million and $15.46 per common share at December 31, 2008. Earlier this month the board of directors announced a $0.10 per share dividend on common shares.  2009 is the Company’s 24th consecutive year of dividends to common shareholders.

TARP Repayment

On July 8, 2009 First Community repaid all of the $41.50 million in funds to the United States Treasury obtained under the Capital Purchase Program commonly referred to as TARP.  First Community was one of the first companies to be offered funds from the Treasury Department and is now among the first banks to repay the government’s investment.  The Company expects to recognize a deemed dividend of approximately $972 thousand associated with the discount in the third quarter of 2009 which will decrease net income available to common shareholders by the same amount.

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TriStone Merger

The TriStone Community Bank merger is progressing towards a third quarter closing.  All regulatory approvals have been received and the shareholder meeting will be held July 30, 2009.  The transaction is expected to add approximately $152 million in assets and an excellent team of bankers in the Winston-Salem, North Carolina market.

The Company will host an investor and media teleconference and webcast on Friday, July 24, 2009 at 11:00 a.m.  To access the teleconference, the toll-free number is (877) 407-8033.  Alternatively, individuals may listen to the live or archived webcast of the conference call.  To listen to the webcast, visit www.fcbinc.com and follow the link under the Current News Releases section.  The Company’s press release and financial summary will be available in this section, as well.  Copies of the Company’s second quarter 2009 earnings press release and financial summary will also be made available upon request via fax, email or postal service mail.  To request a copy, contact David D. Brown, Chief Financial Officer, at (800) 425-0839.

First Community Bancshares, Inc., headquartered in Bluefield, Virginia, is a $2.20 billion financial holding company and is the parent company of First Community Bank, N. A.  First Community Bank, N. A. operates through fifty-nine locations in the five states of Virginia, West Virginia, North Carolina, South Carolina, and Tennessee.  First Community Bank, N. A. offers wealth management services through its Trust & Financial Services Division and Investment Planning Consultants, Inc., a registered investment advisory firm which offers wealth management and investment advice.  The Company’s wealth management group managed assets with a market value of $811 million at June 30, 2009.  First Community is also the parent company of GreenPoint Insurance Group, Inc., a full-service insurance agency located in High Point, North Carolina.  First Community Bancshares, Inc.’s common stock is traded on the NASDAQ Global Select 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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First Community Bancshares, Inc.		Three Months Ended						Six Months Ended
Consolidated Statements of Income		June 30,						June 30,
(In Thousands, Except Share and Per Share Data)(Unaudited)		2009			2008			2009			2008
Interest	Interest and fees on loans held for investment	$	19,571		$	19,891		$	39,555		$	41,128
Income	Interest on securities-taxable		5,177			5,467			10,341			11,534
	Interest on securities-nontaxable		1,402			2,004			3,078			4,067
	Interest on federal funds sold and deposits		39			71			78			251
	Total interest income		26,189			27,433			53,052			56,980
Interest	Interest on deposits		7,076			7,118			14,643			15,859
Expense	Interest on borrowings		2,792			3,690			5,655			8,136
	Total interest expense		9,868			10,808			20,298			23,995
	Net interest income		16,321			16,625			32,754			32,985
	Provision for loan losses		2,552			937			4,639			1,260
	Net interest income after provision for loan losses		13,769			15,688			28,115			31,725
Non-Interest	Wealth management income		1,133			1,098			2,117			1,997
Income	Service charges on deposit accounts		3,491			3,463			6,648			6,562
	Other service charges and fees		1,133			1,064			2,311			2,185
	Insurance commissions		1,639			1,146			3,956			2,490
	Total other-than-temporary impairment loss		(23,469	)		-			(23,678	)		-
	Portion of loss recognized in OCI		21,393			-			21,393			-
	Net impairment losses recognized in earnings		(2,076	)		-			(2,285	)		-
	Security gains		1,653			150			2,064			1,970
	Other operating income		349			803			935			1,661
	Total non-interest income		7,322			7,724			15,746			16,865
Non-Interest	Salaries and employee benefits		7,405			7,580			15,271			15,370
Expense	Occupancy expense of bank premises		1,333			1,256			2,936			2,420
	Furniture and equipment expense		892			973			1,830			1,874
	Amortization of intangible assets		244			158			489			318
	Prepayment penalty		88			-			88			1,647
	FDIC premiums and assessments		1,287			39			1,475			79
	Other operating expense		4,894			4,753			9,248			9,334
	Total non-interest expense		16,143			14,759			31,337			31,042
	Income before income taxes		4,948			8,653			12,524			17,548
	Income tax expense		1,481			2,415			3,827			4,998
	Net income		3,467			6,238			8,697			12,550
	Dividends on preferred stock		578			-			1,149			-
	Net income available to common shareholders	$	2,889		$	6,238		$	7,548		$	12,550
	Basic earnings per common share (EPS)	$	0.23		$	0.57		$	0.62		$	1.14
	Diluted earnings per common share (DEPS)	$	0.23		$	0.56		$	0.62		$	1.13
	Weighted Average Shares Outstanding:
	Basic		12,696,202			10,992,301			12,135,103			11,011,116
	Diluted		12,741,080			11,073,440			12,181,843			11,091,714
	For the period:
	Return on average assets		0.53	%		1.23	%		0.70	%		1.22	%
	Return on average common equity		6.05	%		12.08	%		8.23	%		11.87	%
	Cash dividends per common share	$	0.20		$	0.28		$	0.20		$	0.56

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First Community Bancshares, Inc.
Quarterly Performance Summary			As of and for the Quarter Ended
Income Statements			June 30,			March 31,			December 31,			September 30,		June 30,
(In Thousands, Except Share and Per Share Data)(Unaudited)			2009			2009			2008			2008		2008
Interest	Interest and fees on loans held for investment		$	19,571		$	19,984		$	19,830		$	19,266	$	19,891
Income	Interest on securities-taxable			5,177			5,164			5,613			5,567		5,467
	Interest on securities-nontaxable			1,402			1,676			1,746			1,708		2,004
	Interest on federal funds sold and deposits			39			39			46			9		71
		Total interest income		26,189			26,863			27,235			26,550		27,433
Interest	Interest on deposits			7,076			7,567			7,249			6,684		7,118
Expense	Interest on borrowings			2,792			2,863			3,459			3,543		3,690
		Total interest expense		9,868			10,430			10,708			10,227		10,808
		Net interest income		16,321			16,433			16,527			16,323		16,625
	Provision for loan losses			2,552			2,087			2,701			3,461		937
		Net interest income after provision
		for loan losses		13,769			14,346			13,826			12,862		15,688
Non-Int	Wealth management income			1,133			984			1,146			957		1,098
Income	Service charges on deposit accounts			3,491			3,157			3,697			3,808		3,463
	Other service charges and fees			1,133			1,178			1,023			1,040		1,064
	Insurance commissions			1,639			2,317			1,258			1,240		1,146
	Total other-than-temporary impairment loss			(23,469	)		(209	)		(29,923	)		-		-
	Portion of loss recognized in OCI			21,393			-			-			-		-
	Net impairment losses recognized in earnings			(2,076	)		(209	)		(29,923	)		-		-
	Securities gains (losses)			1,653			411			(234	)		163		150
	Other operating income			349			586			659			675		803
		Total non-interest income		7,322			8,424			(22,374	)		7,883		7,724
Non-Int	Salaries and employee benefits			7,405			7,866			7,135			7,371		7,580
Expense	Occupancy expense of bank premises			1,333			1,603			1,385			1,297		1,256
	Furniture and equipment expense			892			938			942			924		973
	Amortization of intangible assets			244			245			205			166		158
	Prepayment penalty			88			-			-			-		-
	FDIC premiums and assessments			1,287			188			61			62		39
	Other operating expense			4,894			4,354			5,305			4,621		4,753
		Total non-interest expense		16,143			15,194			15,033			14,441		14,759
	Income (loss) before income taxes			4,948			7,576			(23,581	)		6,304		8,653
	Income tax expense (benefit)			1,481			2,346			(9,561	)		1,753		2,415
		Net income (loss)		3,467			5,230			(14,020	)		4,551		6,238
	Preferred dividends			578			571			255			-		-
		Net income (loss) available to
		common shareholders	$	2,889		$	4,659		$	(14,275	)	$	4,551	$	6,238
Per	Basic EPS		$	0.23		$	0.40		$	(1.27	)	$	0.42	$	0.57
Share	Diluted EPS		$	0.23		$	0.40		$	(1.27	)	$	0.41	$	0.56
	Cash dividends per common share		$	0.20		$	-		$	0.28		$	0.28	$	0.28
	Weighted Average Shares Outstanding:
		Basic		12,696,202			11,567,769			11,252,183			10,956,867		10,992,301
		Diluted		12,741,080			11,616,568			11,252,183			11,034,059		11,073,440

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First Community Bancshares, Inc.
Quarterly Balance Sheets
(Unaudited)		June 30,			March 31,			December 31,			September 30,			June 30,
		2009			2009			2008			2008			2008
(In Thousands)
Cash and due from banks		$	116,095		$	100,881		$	39,310		$	53,238		$	44,672
Interest-bearing deposits with banks			28,354			79			7,129			664			10,745
Securities available for sale			521,879			549,664			520,723			513,001			598,438
Securities held to maturity			7,725			8,471			8,670			9,043			10,511
Loans held for sale			802			1,445			1,024			140			1,522
Loans held for investment, net of unearned income			1,269,444			1,276,790			1,298,159			1,168,286			1,181,107
	Less allowance for loan losses		16,678			16,555			15,978			14,510			13,433
Net loans			1,253,569			1,261,680			1,283,205			1,153,916			1,169,196
Premises and equipment			55,193			54,893			55,024			50,504			50,075
Other real estate owned			3,615			3,114			1,326			896			500
Interest receivable			8,934			8,848			10,084			9,156			9,992
Intangible assets			89,534			89,338			89,612			72,222			71,181
Other assets			118,282			122,173			118,231			104,817			88,377
	Total Assets	$	2,203,180		$	2,199,141		$	2,133,314		$	1,967,457		$	2,053,687
Deposits:
	Demand	$	202,543		$	207,947		$	199,712		$	214,582		$	224,716
	Interest-bearing demand		195,905			194,934			185,117			186,403			172,623
	Savings		311,435			319,007			309,577			312,451			312,148
	Time		837,475			861,556			809,352			636,108			629,920
	Total Deposits		1,547,357			1,583,444			1,503,758			1,349,544			1,339,407
Interest, taxes and other liabilities			27,577			28,293			27,423			20,494			18,695
Federal funds purchased			-			-			-			29,500			66,500
Securities sold under agreements to repurchase			153,804			153,824			165,914			180,388			215,610
FHLB and other indebtedness			190,862			215,870			215,877			216,720			216,862
	Total Liabilities		1,919,601			1,981,431			1,912,972			1,796,646			1,857,074
Preferred stock, net of discount			40,525			40,471			40,419			-			-
Common stock			17,341			12,051			12,051			11,499			11,499
Additional paid-in capital			183,955			127,992			128,526			108,862			108,926
Retained earnings			118,058			118,021			107,231			124,731			123,253
Treasury stock, at cost			(13,712	)		(14,453	)		(15,368	)		(16,882	)		(17,328	)
Accumulated other comprehensive loss			(62,588	)		(66,372	)		(52,517	)		(57,399	)		(29,737	)
	Total Stockholders' Equity		283,579			217,710			220,342			170,811			196,613
	Total Liabilities and
	Stockholders' Equity	$	2,203,180		$	2,199,141		$	2,133,314		$	1,967,457		$	2,053,687
Actual shares outstanding at period end			16,909,592			11,596,249			11,567,449			10,967,597			10,954,078
Book value per common share at period end		$	14.32		$	15.20		$	15.46		$	15.57		$	17.95
Tangible book value per common share
	at period end (1)	$	9.02		$	7.49		$	7.71		$	8.99		$	11.45
(1)	Tangible book value is defined as stockholders' equity less goodwill and other intangibles.

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First Community Bancshares, Inc.
Selected Financial Information
(Unaudited)	As of and for the Quarter Ended
	June 30,			March 31,			December 31,			September 30,			June 30,
	2009			2009			2008			2008			2008
				(Dollars in Thousands)
Summary of Loan Loss Experience
Allowance for loan losses:
Beginning balance	$	16,555		$	15,978		$	14,510		$	13,433		$	12,862
Balance acquired		-			-			1,169			-			-
Provision for loan losses		2,552			2,087			2,701			3,461			937
Charge-offs		(2,681	)		(1,730	)		(2,606	)		(2,601	)		(1,198	)
Recoveries		252			220			204			217			832
Net charge-offs		(2,429	)		(1,510	)		(2,402	)		(2,384	)		(366	)
Ending balance	$	16,678		$	16,555		$	15,978		$	14,510		$	13,433
Summary of Asset Quality
Nonaccrual loans	$	11,645		$	10,628		$	12,763		$	6,997		$	4,126
Loans 90 days or more past due and still accruing		-			-			-			-			-
Total non-performing loans		11,645			10,628			12,763			6,997			4,126
Other real estate owned		3,615			3,114			1,326			896			500
Total non-performing assets	$	15,260		$	13,742		$	14,089		$	7,893		$	4,626
Asset Quality Ratios
Non-performing loans as a percentage
of  loans held for investment		0.92	%		0.83	%		0.98	%		0.60	%		0.35	%
Non-performing assets as a percentage
of total assets		0.69	%		0.62	%		0.66	%		0.40	%		0.23	%
Annualized net charge-offs as a percentage of
average loans held for investment		0.77	%		0.47	%		0.77	%		0.81	%		0.12	%
Allowance for loan losses as a percentage of loans
held for investment		1.31	%		1.30	%		1.23	%		1.24	%		1.14	%
Ratio of allowance for loan losses to
non-performing loans		1.43			1.56			1.25			2.07			3.26

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First Community Bancshares, Inc.
Selected Financial Information
(Unaudited)	As of and for the Quarter Ended
	June 30,			March 31,			December 31,			September 30,			June 30,
	2009			2009			2008			2008			2008
				(Dollars in Thousands)
Ratios
Return on average assets		0.53	%		0.87	%		-2.77	%		0.90	%		1.23	%
Return on average common equity		6.05	%		10.61	%		-33.28	%		9.39	%		12.08	%
Net interest margin		3.62	%		3.73	%		3.93	%		3.90	%		3.92	%
Efficiency ratio for the quarter (a)		58.62	%		58.25	%		57.97	%		56.62	%		57.55	%
Efficiency ratio year-to-date (a)		58.43	%		58.25	%		57.54	%		57.39	%		57.78	%
Equity as a percent of total assets at end of period		12.87	%		9.90	%		10.33	%		8.68	%		9.57	%
Average earning assets as a percentage of
average total assets		86.78	%		86.68	%		86.38	%		87.89	%		88.83	%
Average loans as a percentage of average deposits		81.19	%		82.83	%		86.01	%		88.25	%		88.10	%
Average Balances
Investments	$	564,934		$	521,776		$	508,289		$	582,605		$	623,338
Loans		1,269,584			1,292,179			1,235,023			1,174,855			1,180,813
Earning assets		1,892,403			1,887,583			1,768,113			1,758,895			1,817,322
Total assets		2,180,779			2,177,762			2,046,879			2,001,191			2,045,773
Deposits		1,563,640			1,560,109			1,435,956			1,331,293			1,340,384
Interest-bearing deposits		1,361,970			1,360,798			1,230,547			1,120,138			1,122,680
Borrowings		359,628			372,282			400,393			459,475			478,361
Interest-bearing liabilities		1,721,597			1,733,080			1,630,940			1,579,613			1,601,041
Equity		233,093			219,653			189,122			192,743			207,660
Tax equivalent net interest income		17,093			17,349			17,483			17,264			17,726

(a) Excludes securities gains/losses, intangible amortization, foreclosed property expenses, non-recurring income and expense items, and includes tax equivalency adjustment.

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First Community Bancshares, Inc.
Investment Securities Portfolio
June 30, 2009
							Unrealized			Cumulative
							Gains/(Losses)			OTTI
	Par		Fair		Amortized		Recognized			Recognized in
	Value		Value		Cost		in AOCI			Earnings
					(Dollars in Thousands)
Available for sale
Agency	$	53,435	$	53,830	$	53,426		404		$	-
Agency mortgage-backed		248,216		252,502		250,279		2,223			-
Non-Agency MBS
AAA		6,632		5,258		6,596		(1,338	)		-
CCC		25,000		10,503		20,968		(10,465	)		4,252
Total		31,632		15,761		27,564		(11,803	)		4,252
Municipals
AAA		5,919		5,921		5,920		1			-
AA		51,096		50,635		51,061		(426	)		-
A		57,444		56,158		57,438		(1,280	)		-
BBB		13,090		12,767		12,994		(227	)		-
NR		9,540		8,485		8,945		(460	)		-
Total		137,089		133,966		136,358		(2,392	)		-
Single issue bank trust preferred
AA		5,764		2,956		4,902		(1,946	)		-
A		22,430		12,115		21,880		(9,765	)		-
BBB		31,204		17,440		28,770		(11,330	)		-
Total		59,398		32,511		55,552		(23,041	)		-
Pooled trust preferred
CCC		7,887		2,480		7,934		(5,454	)		-
CC		80,967		24,727		63,913		(39,186	)		17,126
C		20,123		943		20,123		(19,180	)		-
Total		108,977		28,150		91,970		(63,820	)		17,126
Equity securities		-		5,159		5,476		(317	)		615
Total	$	638,747	$	521,879	$	620,625	$	(98,746	)	$	21,993
										Cumulative
										OTTI
	Par		Fair		Amortized		Unrealized			Recognized in
Held to maturity	Value		Value		Cost		Gains/(Losses)			Earnings
Municipals
AA		2,930		2,966		2,918		48			-
A		4,062		4,044		3,973		71			-
BBB		835		836		834		2			-
Total		7,827		7,846		7,725		121			-

In cases where investment securities were not identically rated by two or more securities rating agencies, the lowest rating was used.  Amortized cost and cumulative OTTI include a pre-tax cumulative effect adjustment of approximately $10.44 million in connection with adoption of FSP FAS 115-2 and FAS 124-2.

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First Community Bancshares, Inc.
Consolidated Average Balance Sheets, Yields, and Rates
(Unaudited)
	Three Months Ended June 30,
	2009								2008
						Yield/								Yield/
	Average		Interest			Rate			Average		Interest			Rate
	Balance			(1	)		(1	)	Balance			(1	)		(1	)
	(Dollars in Thousands)
Earning assets
Loans held for investment (2)	$	1,269,584	$	19,588			6.19	%	$	1,180,813	$	19,912			6.78	%
Securities available for  sale		557,110		7,169			5.16	%		612,411		8,278			5.44	%
Held to maturity securities		7,824		164			8.41	%		10,927		273			10.05	%
Interest-bearing deposits with banks		57,885		39			0.27	%		13,171		71			2.17	%
Total earning assets		1,892,403	$	26,960			5.71	%		1,817,322	$	28,534			6.31	%
Other assets		288,376								228,451
Total	$	2,180,779							$	2,045,773
Interest-bearing liabilities
Interest-bearing demand deposits	$	197,710	$	81			0.16	%	$	174,100	$	65			0.15	%
Savings deposits		317,700		540			0.68	%		308,344		1,188			1.55	%
Time deposits		846,560		6,455			3.06	%		640,236		5,866			3.69	%
Fed funds purchased		-		-						9,932		60			2.44	%
Retail repurchase agreements		101,525		333			1.32	%		153,768		788			2.06	%
Wholesale repurchase agreements		50,000		465			3.73	%		50,000		214			1.72	%
FHLB borrowings & other long-term debt		208,103		1,994			3.84	%		264,661		2,627			3.99	%
Total interest-bearing liabilities		1,721,597		9,868			2.30	%		1,601,041		10,808			2.72	%
Noninterest-bearing demand deposits		201,670								217,704
Other liabilities		24,419								19,368
Stockholders' equity		233,093								207,660
Total	$	2,180,779							$	2,045,773
Net interest income			$	17,093							$	17,726
Net interest rate spread (3)							3.41	%							3.59	%
Net interest margin (4)							3.62	%							3.92	%

(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 earning assets.

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First Community Bancshares, Inc.
Consolidated Average Balance Sheets, Yields, and Rates
(Unaudited)
	Six Months Ended June 30,
	2009								2008
						Yield/								Yield/
	Average		Interest			Rate			Average		Interest			Rate
	Balance			(1	)		(1	)	Balance			(1	)		(1	)
	(Dollars in Thousands)
Earning assets
Loans held for investment (2)	$	1,280,394	$	39,584			6.23	%	$	1,193,147	$	41,169			6.94	%
Securities available for  sale		535,326		14,741			5.55	%		617,843		17,276			5.62	%
Held to maturity securities		8,147		336			8.32	%		11,501		515			9.00	%
Interest-bearing deposits with banks		65,713		78			0.24	%		17,887		251			2.82	%
Total earning assets		1,889,580	$	54,739			5.84	%		1,840,378	$	59,211			6.47	%
Other assets		289,273								228,202
Total	$	2,178,853							$	2,068,580
Interest-bearing liabilities
Interest-bearing demand deposits	$	193,983	$	160			0.17	%	$	168,138	$	140			0.17	%
Savings deposits		315,146		1,196			0.77	%		317,702		2,675			1.69	%
Time deposits		852,258		13,287			3.14	%		656,440		13,044			4.00	%
Fed funds purchased		-		-						5,875		79			2.70	%
Retail repurchase agreements		103,984		723			1.40	%		151,675		1,809			2.40	%
Wholesale repurchase agreements		50,000		975			3.93	%		50,000		687			2.76	%
FHLB borrowings & other long-term debt		211,511		3,957			3.77	%		270,583		5,561			4.13	%
Total interest-bearing liabilities		1,726,882		20,298			2.37	%		1,620,413		23,994			2.98	%
Noninterest-bearing demand deposits		200,497								215,338
Other liabilities		25,064								20,159
Stockholders' equity		226,410								212,670
Total	$	2,178,853							$	2,068,580
Net interest income			$	34,442							$	35,217
Net interest rate spread (3)							3.47	%							3.49	%
Net interest margin (4)							3.68	%							3.85	%

(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 earning assets.

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