Unassociated Document

NEWS RELEASE

FOR IMMEDIATE RELEASE: April 26, 2010		FOR MORE INFORMATION, CONTACT: David D. Brown
		(276) 326-9000

First Community Bancshares, Inc. Announces First Quarter 2010 Results

Bluefield, Virginia – First Community Bancshares, Inc. (NASDAQ: FCBC) (www.fcbinc.com) today reported net income for the quarter ended March 31, 2010, of $5.28 million, or $0.30 per diluted common share.

Commenting on first quarter results, Chief Executive John M. Mendez stated, “We are happy to return to what we consider more normalized earnings. We are also very pleased to report favorable trends in our net interest income and margin, strong earnings per share, and that asset quality measures remain very good compared to the industry.”

First Quarter 2010 Highlights –

Asset quality metrics continue to compare favorably to peers with a ratio of non-performing assets to total assets at March 31, 2010, of 97 basis points

Net interest margin increased to 4.02%, up 10 basis points from the quarter ended December 31, 2009

Net interest income increased $2.19 million, or 13.30%, from the first quarter of 2009

Tangible book value per common share increased to $9.67, up $0.51 from the quarter ended December 31, 2009

First Community Bancshares, Inc. remains “well-capitalized” with a total risk-based capital ratio of 14.1%, Tier 1 risk-based capital ratio of 12.9%, and a Tier 1 leverage ratio of 9.0% at March 31, 2010

Net Interest Income

Tax-equivalent net interest margin for the first quarter of 2010 was 4.02%. Net interest income was $18.62 million, an increase of $2.19 million, or 13.30%, from the first quarter of 2009. Interest income was $26.61 million, a slight decrease of $251 thousand, or 0.93%, from the first quarter of 2009. The yield on loans dropped to 6.22% from 6.28%, while average loans increased $103.49 million to $1.40 billion from first quarter 2009, which reflects the acquisition of TriStone Community Bank in July 2009. The Company continues to maintain a high level of liquidity with average invested cash balances of $76.59 million in the first quarter.

First quarter 2010 interest expense was $7.99 million, a decrease of $2.44 million, or 23.37%, from the first quarter of 2009. First quarter deposit costs decreased $2.07 million compared to the first quarter of 2009, while the average rate paid on interest bearing deposits decreased 71 basis points to 1.55%. Compared to the first quarter of 2009, interest costs on borrowings decreased $372 thousand to $2.49 million, while the average balance decreased $31.56 million due to the redemption and restructuring of various wholesale borrowings. The cost of interest bearing liabilities decreased 62 basis points during the first quarter of 2010 compared to the first quarter of 2009. Average interest bearing liabilities increased $49.00 million, or 2.83%, compared with the first quarter of 2009, and included a decrease of $17.07 million in Federal Home Loan Bank (“FHLB”) borrowings.

Noninterest Income

During the first quarter of 2010, wealth management revenues decreased $99 thousand, or 10.06%, to $885 thousand. Trust Division revenue was very strong in the prior year due to several estate settlements. The Wealth Management Division reported $831 million in assets under management at March 31, 2010. Service charges on deposit accounts were $2.99 million for the first quarter of 2010, a decrease of $165 thousand, or 5.23%, from the first quarter of 2009. Insurance commissions were $2.20 million for the first quarter of 2010, a decrease of $116 thousand, or 5.01%, from the same period in 2009.

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Noninterest Expenses

Noninterest expenses for the first quarter of 2010 increased $885 thousand, or 5.83%, from the first quarter of 2009. The increase was primarily due to increased Federal Deposit Insurance Corporation (“FDIC”) deposit insurance premiums. Salaries and employee benefits increased $103 thousand, or 1.31%, from the first quarter of 2009. TriStone Community Bank branches accounted for an increase in salaries and employee benefits of $326 thousand. The remainder of the Company showed an overall decrease in salaries and benefits of $223 thousand. Other operating expenses increased $187 thousand, or 4.30%, compared to the first quarter of 2009. The efficiency ratio in the first quarter of 2010 was 54.53% compared to 58.25% in the first quarter of 2009.

Credit Quality

The Company’s loan quality measures at March 31, 2010, continue to compare favorably to the Company’s Federal Reserve peer group of bank holding companies with total assets between $1 and $3 billion. Total loan delinquencies of 30 days or more, including non-accrual loans, as a percent of total loans were 2.35% at March 31, 2010, compared to 4.57% for the Federal Reserve peer group at December 31, 2009. During the first quarter, non-accrual loans decreased $50 thousand from December 31, 2009. The ratio of allowance for loan losses as a percent of loans held for investment was 1.58% at March 31, 2010.

Non-performing assets remained stable at 0.97% of total assets at March 31, 2010, and non-performing loans as a percentage of loans held for investment was 1.26%, even with December 31, 2009. The Federal Reserve peer group reported non-performing assets to total assets of 3.23% and non-performing loans to total loans held for investment of 3.49% at December 31, 2009.

Balance Sheet

Consolidated assets were $2.28 billion at March 31, 2010. Total stockholders’ equity for the Company was $262.76 million, resulting in a book value per common share outstanding of $14.78 at March 31, 2010, compared to $253.86 million and $14.29 per common share at December 31, 2009. During the first quarter, the Company paid a $0.10 per share dividend on common shares. 2010 marks the Company’s 25th consecutive year of dividends to shareholders.

The Company will host an investor and media teleconference and webcast on Monday, April 26, 2010, 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 first 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 (276) 326-9000.

First Community Bancshares, Inc., headquartered in Bluefield, Virginia, is a $2.28 billion financial holding company and is the parent company of First Community Bank, N. A. First Community Bank, N. A. operates through fifty-seven 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 Division managed assets with a market value of $831 million at March 31, 2010. First Community is also the parent company of GreenPoint Insurance Group, Inc., a full-service insurance agency headquartered in High Point, North Carolina, that operates eleven offices. 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.

Condensed Consolidated Statements of Income

(Unaudited)	For the Quarter Ended
(In Thousands, Except Share and Per Share Data)	March 31,
	2010			2009
Interest Income
Interest and fees on loans held for investment	$	21,354		$	19,984
Interest on securities-taxable		3,786			5,164
Interest on securities-nontaxable		1,426			1,676
Interest on federal funds sold and deposits		46			39
Total interest income		26,612			26,863
Interest Expense
Interest on deposits		5,502			7,567
Interest on borrowings		2,491			2,863
Total interest expense		7,993			10,430
Net interest income		18,619			16,433
Provision for loan losses		3,665			2,087
Net interest income after provision for loan losses		14,954			14,346
Noninterest Income
Wealth management income		885			984
Service charges on deposit accounts		2,992			3,157
Other service charges and fees		1,281			1,178
Insurance commissions		2,201			2,317
Net impairment losses recognized in earnings		-			(209	)
Security gains		250			411
Other operating income		969			579
Total noninterest income		8,578			8,417
Noninterest Expense
Salaries and employee benefits		7,969			7,866
Occupancy expense of bank premises		1,709			1,603
Furniture and equipment expense		904			938
Amortization of intangible assets		256			245
FDIC premiums and assessments		701			188
Merger-related expenses		-			1
Other operating expense		4,533			4,346
Total noninterest expense		16,072			15,187
Income before income taxes		7,460			7,576
Income tax expense		2,182			2,346
Net income		5,278			5,230
Dividends on preferred stock		-			571
Net income available to common shareholders	$	5,278		$	4,659
Per Share
Basic earnings per common share	$	0.30		$	0.40
Diluted earnings per common share	$	0.30		$	0.40
Weighted average shares outstanding:
Basic		17,765,556			11,567,769
Diluted		17,784,449			11,616,568
For the period:
Return on average assets		0.95	%		0.87	%
Return on average common equity		8.26	%		10.61	%
Cash dividends per common share	$	0.10		$	-

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First Community Bancshares, Inc.

Condensed Quarterly Income/(Loss) Statements

	As of and for the Quarter Ended
(Unaudited)	March 31,		December 31,			September 30,			June 30,			March 31,
(In Thousands, Except Share and Per Share Data)	2010		2009			2009			2009			2009
Interest Income
Interest and fees on loans held for investment	$	21,354	$	22,085		$	21,064		$	19,571		$	19,984
Interest on securities-taxable		3,786		4,190			4,562			5,177			5,164
Interest on securities-nontaxable		1,426		1,445			1,449			1,402			1,676
Interest on federal funds sold and deposits		46		32			55			39			39
Total interest income		26,612		27,752			27,130			26,189			26,863
Interest Expense
Interest on deposits		5,502		6,155			6,998			7,076			7,567
Interest on borrowings		2,491		2,635			2,596			2,792			2,863
Total interest expense		7,993		8,790			9,594			9,868			10,430
Net interest income		18,619		18,962			17,536			16,321			16,433
Provision for loan losses		3,665		6,996			3,418			2,552			2,087
Net interest income after provision for loan losses		14,954		11,966			14,118			13,769			14,346
Noninterest Income
Wealth management income		885		1,059			971			1,133			984
Service charges on deposit accounts		2,992		3,585			3,659			3,491			3,157
Other service charges and fees		1,281		1,248			1,156			1,133			1,178
Insurance commissions		2,201		1,465			1,567			1,639			2,317
Net impairment losses recognized in earnings		-		(44,067	)		(30,811	)		(3,776	)		(209	)
Securities gains (losses)		250		(14,603	)		866			1,653			411
Acquisition gain		-		-			4,493			-			-
Other operating income		969		983			815			247			579
Total noninterest income		8,578		(50,330	)		(17,284	)		5,520			8,417
Noninterest Expense
Salaries and employee benefits		7,969		8,254			7,860			7,405			7,866
Occupancy expense of bank premises		1,709		1,687			1,266			1,333			1,603
Furniture and equipment expense		904		988			928			892			938
Amortization of intangible assets		256		277			262			244			245
FHLB debt prepayment fees		-		-			-			88			-
FDIC premiums and assessments		701		1,474			1,313			1,287			188
Merger-related expenses		-		146			1,505			74			1
Other operating expense		4,533		4,802			4,634			4,718			4,346
Total noninterest expense		16,072		17,628			17,768			16,041			15,187
Income (loss) before income taxes		7,460		(55,992	)		(20,934	)		3,248			7,576
Income tax expense (benefit)		2,182		(21,430	)		(9,633	)		843			2,346
Net income (loss)		5,278		(34,562	)		(11,301	)		2,405			5,230
Preferred dividends		-		-			1,011			578			571
Net income (loss) available to common shareholders	$	5,278	$	(34,562	)	$	(12,312	)	$	1,827		$	4,659
Per Share
Basic EPS	$	0.30	$	(1.95	)	$	(0.71	)	$	0.14		$	0.40
Diluted EPS	$	0.30	$	(1.95	)	$	(0.71	)	$	0.14		$	0.40
Cash dividends per common share	$	0.10	$	-		$	0.10		$	0.20		$	-
Weighted average shares outstanding:
Basic		17,765,556		17,687,413			17,427,434			12,696,202			11,567,769
Diluted		17,784,449		17,687,413			17,427,434			12,741,080			11,616,568

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First Community Bancshares, Inc.

Reconciliation of GAAP Net Income to Core Earnings

(Unaudited)	Three Months Ended
(In Thousands, Except Per Share Data)	March 31,
	2010			2009

Net income, GAAP	$	5,278		$	5,230
Non-GAAP adjustments:
Security gains		(250	)		(411	)
Merger expenses		-			1
Other-than-temporary security impairments		-			209
Other non-core, non-recurring items		935			300
Total adjustments to core earnings		685			99
Tax effect		257			39
Core earnings, non-GAAP	$	5,706		$	5,290

Core return on average assets		1.03	%		0.99	%
Core return on average equity		8.93	%		9.77	%
Core diluted earnings per share	$	0.32		$	0.46

Efficiency Ratio Calculation

(Unaudited)	Three Months Ended
(In Thousands)	March 31,
	2010			2009

Noninterest expenses, GAAP	$	16,072		$	15,187
Non-GAAP adjustments:
Merger expenses		-			(1	)
Other non-core, non-recurring items		(935	)		(300	)
Adjusted noninterest expenses		15,137			14,886

Net interest income, GAAP		18,619			16,433
Noninterest income, GAAP		8,578			8,417
Non-GAAP adjustments:
Tax-equivalency adjustment		813			916
Security gains		(250	)		(411	)
Other-than-temporary security impairments		-			209
Adjusted net interest and noninterest income		27,760			25,564

Efficiency Ratio		54.53	%		58.23	%

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First Community Bancshares, Inc.

Quarterly Balance Sheets

	For the Quarter Ended
(Unaudited)	March 31,			December 31,			September 30,			June 30,			March 31,
(Dollars In Thousands)	2010			2009			2009			2009			2009

Cash and due from banks	$	74,962		$	97,641		$	51,905		$	116,095		$	100,881
Interest-bearing deposits with banks		12,744			3,700			3,352			28,354			79
Securities available for sale		524,297			486,057			575,800			521,879			549,664
Securities held to maturity		7,155			7,454			7,452			7,725			8,471
Loans held for sale		1,494			11,576			4,376			802			1,445
Loans held for investment, net of unearned income		1,390,874			1,393,931			1,396,617			1,269,443			1,276,790
Less allowance for loan losses		21,956			21,725			17,444			16,678			16,555
Net loans		1,370,412			1,383,782			1,383,549			1,253,568			1,261,680
Premises and equipment		56,772			56,946			57,695			55,193			54,893
Other real estate owned		4,740			4,578			3,955			3,615			3,114
Interest receivable		8,630			8,610			9,046			8,934			8,848
Intangible assets		90,805			91,061			90,134			89,534			89,338
Other assets		130,017			135,049			115,453			118,313			122,173
Total Assets	$	2,280,534		$	2,274,878		$	2,298,341		$	2,203,210		$	2,199,141
Deposits:
Demand	$	205,810		$	208,244		$	198,107		$	202,543		$	207,947
Interest bearing demand		246,513			231,907			216,184			195,905			194,934
Savings		427,883			381,381			351,450			311,435			319,007
Time		775,405			824,428			896,716			837,475			861,556
Total Deposits		1,655,611			1,645,960			1,662,457			1,547,358			1,583,444
Interest, taxes and other liabilities		21,912			22,498			24,374			27,630			28,293
Securities sold under agreements to repurchase		144,381			153,634			147,042			153,804			153,824
FHLB and other indebtedness		195,873			198,924			198,932			190,863			215,870
Total Liabilities		2,017,777			2,021,016			2,032,805			1,919,655			1,981,431

Preferred stock, net of discount		-			-			-			40,525			40,471
Common stock		18,083			18,083			18,083			17,341			12,051
Additional paid-in capital		190,650			190,967			192,799			183,955			127,992
Retained earnings		71,857			68,355			102,920			116,997			118,021
Treasury stock, at cost		(9,342	)		(9,891	)		(12,768	)		(13,712	)		(14,453	)
Accumulated other comprehensive loss		(8,491	)		(13,652	)		(35,498	)		(61,551	)		(66,372	)
Total Stockholders' Equity		262,757			253,862			265,536			283,555			217,710
Total Liabilities and Stockholders' Equity	$	2,280,534		$	2,274,878		$	2,298,341		$	2,203,210		$	2,199,141

Actual shares outstanding at period end		17,782,791			17,765,164			17,680,328			16,909,592			11,596,249
Book value per common share at period end	$	14.78		$	14.29		$	15.02		$	14.31		$	15.20
Tangible book value per common share at period end (1)	$	9.67		$	9.16		$	9.92		$	9.02		$	7.49

(1) Tangible book value per common share is defined as stockholders' equity less goodwill and other intangibles divided by common shares outstanding.

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First Community Bancshares, Inc.

Selected Financial Information

	As of and for the Quarter Ended
(Unaudited)	March 31,			December 31,			September 30,			June 30,			March 31,
(Dollars in Thousands)	2010			2009			2009			2009			2009
Summary of Loan Loss Experience
Allowance for loan losses:
Beginning balance	$	21,725		$	17,444		$	16,678		$	16,555		$	15,978
Balance acquired		-			-			-			-			-
Provision for loan losses		3,665			6,996			3,418			2,552			2,087
Charge-offs		(3,732	)		(2,954	)		(2,990	)		(2,681	)		(1,730	)
Recoveries		298			239			338			252			220
Net charge-offs		(3,434	)		(2,715	)		(2,652	)		(2,429	)		(1,510	)
Ending balance	$	21,956		$	21,725		$	17,444		$	16,678		$	16,555

Summary of Asset Quality
Nonaccrual loans	$	17,477		$	17,527		$	12,278		$	11,645		$	10,628
Loans 90 days or more past due and still accruing		-			-			-			-			-
Total non-performing loans		17,477			17,527			12,278			11,645			10,628

Other real estate owned		4,740			4,578			3,955			3,615			3,114
Total non-performing assets	$	22,217		$	22,105		$	16,233		$	15,260		$	13,742

Asset Quality Ratios
Non-performing loans as a percentage of loans held for investment		1.26	%		1.26	%		0.88	%		0.92	%		0.83	%
Non-performing assets as a percentage of total assets		0.97	%		0.97	%		0.71	%		0.69	%		0.62	%
Annualized net charge-offs as a percentage of average loans held for investment		1.00	%		0.77	%		0.77	%		0.77	%		0.47	%
Allowance for loan losses as a percentage of loans held for investment		1.58	%		1.56	%		1.25	%		1.31	%		1.30	%
Ratio of allowance for loan losses to non-performing loans		1.26			1.24			1.42			1.43			1.56

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First Community Bancshares, Inc.

Nonaccrual Loan Detail

(Unaudited)	As of March 31, 2010
					Nonaccrual
	Loans		Nonaccrual		Loans to Loans
(Dollars in Thousands)	Outstanding		Loans		Outstanding
Commercial
Commercial & industrial	$	106,377	$	734		0.69	%
Agriculture		1,279		-		0.00	%
Total commercial		107,656		734		0.68	%

Commercial real estate
Construction, land development & vacant land		113,139		3,961		3.50	%
Non-owner occupied		163,909		1,597		0.97	%
Owner occupied		187,466		3,571		1.90	%
Farmland		39,659		10		0.03	%
Total commercial real estate		504,173		9,139		1.81	%

Consumer		60,643		108		0.18	%

Residential real estate
Residential		537,436		5,627		1.05	%
Multi-family		70,508		1,604		2.27	%
Home equity lines		110,458		265		0.24	%
Total residential		718,402		7,496		1.04	%

Total loans	$	1,390,874	$	17,477		1.26	%

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First Community Bancshares, Inc.

Selected Financial Information

	As of and for the Quarter Ended
(Unaudited)	March 31,			December 31,			September 30,			June 30,			March 31,
(Dollars in Thousands)	2010			2009			2009			2009			2009
Ratios
Return on average assets		0.95	%		-5.99	%		-2.15	%		0.34	%		0.87	%
Return on average common equity		8.26	%		-51.15	%		-18.78	%		3.82	%		10.61	%
Net interest margin		4.02	%		3.92	%		3.68	%		3.62	%		3.73	%
Efficiency ratio for the quarter		54.53	%		61.29	%		59.40	%		58.62	%		58.23	%
Efficiency ratio year-to-date		54.53	%		59.10	%		58.37	%		58.43	%		58.23	%
Equity as a percent of total assets at end of period		11.52	%		11.16	%		11.55	%		12.87	%		9.90	%
Average earning assets as a percentage of average total assets		87.31	%		87.41	%		87.14	%		86.78	%		86.68	%
Average loans as a percentage of average deposits		85.08	%		85.13	%		83.25	%		81.19	%		82.83	%

Average Balances
Investments	$	481,116		$	549,386		$	536,485		$	564,934		$	521,776
Loans		1,395,669			1,406,497			1,362,603			1,269,584			1,292,179
Earning assets		1,960,511			2,001,576			1,978,626			1,892,403			1,887,583
Total assets		2,245,381			2,289,946			2,270,592			2,180,779			2,177,762
Deposits		1,640,424			1,652,082			1,636,744			1,563,640			1,560,109
Interest bearing deposits		1,441,359			1,452,369			1,437,763			1,361,970			1,360,798
Borrowings		340,720			346,990			347,292			359,628			372,282
Interest bearing liabilities		1,782,079			1,799,359			1,785,055			1,721,597			1,733,080
Equity		259,014			268,074			260,126			233,093			219,653
Tax equivalent net interest income		19,432			19,778			18,329			17,093			17,349

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First Community Bancshares, Inc.

Consolidated Average Balance Sheets, Yields, and Rates

	Three Months Ended March 31,
	2010							2009
					Yield/							Yield/
	Average		Interest		Rate			Average		Interest		Rate
(Unaudited)	Balance		(1)		(1)			Balance		(1)		(1)
	(Dollars in Thousands)
Earning assets
Loans held for investment (2)	$	1,395,669	$	21,398		6.22	%	$	1,292,179	$	19,997		6.28	%
Securities available for sale		481,116		5,833		4.92	%		513,300		7,571		5.98	%
Held to maturity securities		7,139		148		8.41	%		8,473		172		8.23	%
Interest bearing deposits with banks		76,587		46		0.24	%		73,628		39		0.21	%
Total earning assets		1,960,511	$	27,425		5.67	%		1,887,580	$	27,779		5.97	%
Other assets		284,870							290,182
Total	$	2,245,381						$	2,177,762
Interest bearing liabilities
Interest bearing demand deposits	$	236,484	$	200		0.34	%	$	190,215	$	79		0.17	%
Savings deposits		413,037		831		0.82	%		312,563		656		0.85	%
Time deposits		791,838		4,471		2.29	%		858,020		6,832		3.23	%
Retail repurchase agreements		91,976		276		1.22	%		106,469		390		1.49	%
Wholesale repurchase agreements		50,000		463		3.76	%		50,000		510		4.14	%
FHLB borrowings & other long-term debt		198,744		1,752		3.58	%		215,813		1,963		3.69	%
Total interest-bearing liabilities		1,782,079		7,993		1.82	%		1,733,080		10,430		2.44	%
Noninterest bearing demand deposits		199,065							199,311
Other liabilities		5,223							25,718
Stockholders' equity		259,014							219,653
Total	$	2,245,381						$	2,177,762
Net interest income			$	19,432						$	17,349
Net interest rate spread (3)						3.85	%						3.53	%
Net interest margin (4)						4.02	%						3.73	%

(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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