UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 FORM 10-Q
 QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarter ended March 31, 2011
 Commission file number 000-19297
 FIRST COMMUNITY BANCSHARES, INC.
  Nevada
    
    55-0694814(State or other jurisdiction
    
    (IRS Employer Identification No.)of incorporation)P.O. Box 989Bluefield, Virginia
    
    24605-0989(Address of principal executive offices)
    
    (Zip Code)
 (276) 326-9000
  þ o
 o o
  Large accelerated filer o
Accelerated filer þ
Non-accelerated filer o(Do not check if a smaller reporting company)
Smaller reporting company o o þ




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##### 



PART I.
    
    FINANCIAL INFORMATIONItem 1.
    
    Financial StatementsConsolidated Balance Sheets as of March 31, 2011 (Unaudited) and December 31, 2010
    
    
    3Consolidated Statements of Income for the Three Months Periods Ended March 31, 2011and 2010 (Unaudited)
    
    
    4Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2011 and2010 (Unaudited)
    
    
    5Consolidated Statements of Changes in Stockholders Equity for the Three MonthsEnded March 31, 2011 and 2010 (Unaudited)
    
    
    6Notes to Consolidated Financial Statements
    
    
    7Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    31Item 3.
    
    Quantitative and Qualitative Disclosures about Market Risk
    
    
    41Item 4.
    
    Controls and Procedures
    
    
    44PART II.
    
    OTHER INFORMATIONItem 1.
    
    Legal Proceedings
    
    
    44Item 1A.
    
    Risk Factors
    
    
    44Item 2.
    
    Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    44Item 3.
    
    Defaults Upon Senior Securities
    
    
    45Item 4.
    
    Reserved
    
    
    45Item 5.
    
    Other Information
    
    
    45Item 6.
    
    Exhibits
    
    
    45SIGNATURES
    
    
    48EXHIBIT INDEX
    
    
    49
 -2-




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##### 



PART I. ITEM 1. Financial Statements
 FIRST COMMUNITY BANCSHARES, INC.
CONSOLIDATED BALANCE SHEETS
 March 31,
    
    
    December 31,2011
    
    
    2010(Dollars in Thousands)
    
    (Unaudited)AssetsCash and due from banks
    
    $
    52,684
    
    
    $
    28,816Federal funds sold
    
    
    121,974
    
    
    
    81,526Interest-bearing balances with banks
    
    
    809
    
    
    
    1,847Total cash and cash equivalents
    
    
    175,467
    
    
    
    112,189Securities available-for-sale
    
    
    430,965
    
    
    
    480,064Securities held-to-maturity
    
    
    4,524
    
    
    
    4,637Loans held for sale
    
    
    2,614
    
    
    
    4,694Loans held for investment, net of unearned income
    
    
    1,375,685
    
    
    
    1,386,206Less allowance for loan losses
    
    
    26,482
    
    
    
    26,482Net loans held for investment
    
    
    1,349,203
    
    
    
    1,359,724Premises and equipment, net
    
    
    56,189
    
    
    
    56,244Other real estate owned
    
    
    5,644
    
    
    
    4,910Interest receivable
    
    
    7,288
    
    
    
    7,675Goodwill and other intangible assets
    
    
    90,396
    
    
    
    90,639Other assets
    
    
    118,690
    
    
    
    123,462Total assets
    
    $
    2,240,980
    
    
    $
    2,244,238LiabilitiesDeposits:Noninterest-bearing
    
    $
    222,072
    
    
    $
    205,151Interest-bearing
    
    
    1,414,945
    
    
    
    1,415,804Total deposits
    
    
    1,637,017
    
    
    
    1,620,955Interest, taxes and other liabilities
    
    
    20,459
    
    
    
    21,318Securities sold under agreements to repurchase
    
    
    139,472
    
    
    
    140,894FHLB borrowings and other indebtedness
    
    
    166,186
    
    
    
    191,193Total liabilities
    
    
    1,963,134
    
    
    
    1,974,360Stockholders EquityPreferred stock, par value undesignated; 1,000,000 shares authorized; no shares
issued or outstanding at March 31, 2011 or December 31, 2010
    
    
    
    
    
    
    Common stock, $1 par value; 50,000,000 shares authorized; 18,082,822 shares
issued at March 31, 2011, and 18,082,822 issued at December 31, 2010,
and 187,923 and 216,487 shares in treasury, respectively
    
    
    18,083
    
    
    
    18,083Additional paid-in capital
    
    
    188,742
    
    
    
    189,239Retained earnings
    
    
    85,450
    
    
    
    81,486Treasury stock, at cost
    
    
    (5,851
    )
    
    
    (6,740
    )Accumulated other comprehensive loss
    
    
    (8,578
    )
    
    
    (12,190
    )Total stockholders equity
    
    
    277,846
    
    
    
    269,878Total liabilities and stockholders equity
    
    $
    2,240,980
    
    
    $
    2,244,238
 See Notes to Consolidated Financial Statements.
 -3-




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##### 



FIRST COMMUNITY BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
 Three Months EndedMarch 31,(Dollars In Thousands, Except Share and Per Share Data)
    
    2011
    
    
    2010Interest IncomeInterest and fees on loans held for investment
    
    $
    20,455
    
    
    $
    21,354Interest on securities  taxable
    
    
    2,533
    
    
    
    3,786Interest on securities  nontaxable
    
    
    1,533
    
    
    
    1,426Interest on federal funds sold and deposits in banks
    
    
    69
    
    
    
    46Total interest income
    
    
    24,590
    
    
    
    26,612Interest ExpenseInterest on deposits
    
    
    3,880
    
    
    
    5,502Interest on borrowings
    
    
    2,435
    
    
    
    2,491Total interest expense
    
    
    6,315
    
    
    
    7,993Net interest income
    
    
    18,275
    
    
    
    18,619Provision for loan losses
    
    
    1,612
    
    
    
    3,665Net interest income after provision for loan losses
    
    
    16,663
    
    
    
    14,954Noninterest IncomeWealth management income
    
    
    894
    
    
    
    885Service charges on deposit accounts
    
    
    3,031
    
    
    
    2,992Other service charges and fees
    
    
    1,406
    
    
    
    1,281Insurance commissions
    
    
    1,943
    
    
    
    2,201Total impairment losses on securities
    
    
    (527
    )
    
    
    Portion of loss recognized in other comprehensive income
    
    
    
    
    
    
    Net impairment losses recognized in earnings
    
    
    (527
    )
    
    
    Net gains on sale of securities
    
    
    1,836
    
    
    
    250Other operating income
    
    
    916
    
    
    
    969Total noninterest income
    
    
    9,499
    
    
    
    8,578Noninterest ExpenseSalaries and employee benefits
    
    
    9,129
    
    
    
    7,969Occupancy expense of bank premises
    
    
    1,647
    
    
    
    1,709Furniture and equipment expense
    
    
    915
    
    
    
    904Amortization of intangible assets
    
    
    259
    
    
    
    256FDIC premiums and assessments
    
    
    878
    
    
    
    701Prepayment penalties on FHLB advances
    
    
    471
    
    
    
    Other operating expense
    
    
    4,764
    
    
    
    4,533Total noninterest expense
    
    
    18,063
    
    
    
    16,072Income before income taxes
    
    
    8,099
    
    
    
    7,460Income tax expense
    
    
    2,348
    
    
    
    2,182Net income available to common shareholders
    
    $
    5,751
    
    
    $
    5,278Basic earnings per common share
    
    $
    0.32
    
    
    $
    0.30Diluted earnings per common share
    
    $
    0.32
    
    
    $
    0.30Cash dividends per common share
    
    $
    0.10
    
    
    $
    0.10Weighted average basic shares outstanding
    
    
    17,867,953
    
    
    
    17,765,556Weighted average diluted shares outstanding
    
    
    17,887,118
    
    
    
    17,784,449
 See Notes to Consolidated Financial Statements.
 -4-




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##### 



FIRST COMMUNITY BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
 Three Months EndedMarch 31,(Dollars In Thousands)
    
    2011
    
    
    2010Operating activities:Net income
    
    $
    5,751
    
    
    $
    5,278Adjustments to reconcile net income to net cash provided by operating activities:Provision for loan losses
    
    
    1,612
    
    
    
    3,665Depreciation and amortization of premises and equipment
    
    
    1,010
    
    
    
    1,021Intangible amortization
    
    
    259
    
    
    
    256Net investment amortization and accretion
    
    
    599
    
    
    
    1Net gain on the sale of assets and securities
    
    
    (1,843
    )
    
    
    (214
    )Mortgage loans originated for sale
    
    
    (9,182
    )
    
    
    (7,583
    )Proceeds from sales of mortgage loans
    
    
    11,517
    
    
    
    17,886Gain on sales of loans
    
    
    (255
    )
    
    
    (221
    )Equity-based compensation expense
    
    
    9
    
    
    
    22Deferred income tax expense
    
    
    274
    
    
    
    73Decrease (increase) in interest receivable
    
    
    387
    
    
    
    (20
    )FHLB debt prepayment fees
    
    
    471
    
    
    
    Net impairment losses recognized in earnings
    
    
    527
    
    
    
    Other operating activities, net
    
    
    1,912
    
    
    
    1,925Net cash provided by operating activities
    
    
    13,048
    
    
    
    22,089Investing activities:Proceeds from sales of securities available-for-sale
    
    
    80,416
    
    
    
    11,512Proceeds from maturities and calls of securities available-for-sale
    
    
    11,937
    
    
    
    23,490Proceeds from maturities and calls of securities held-to-maturity
    
    
    115
    
    
    
    301Purchase of securities available-for-sale
    
    
    (36,830
    )
    
    
    (65,168
    )Net (increase) decrease in loans held for investment
    
    
    8,118
    
    
    
    (580
    )Purchase of premises and equipment
    
    
    (1,113
    )
    
    
    (853
    )Proceeds from sales of equipment
    
    
    175
    
    
    
    3Net cash provided by (used in) investing activities
    
    
    62,818
    
    
    
    (31,295
    )Financing activities:Net increase in demand and savings deposits
    
    
    35,441
    
    
    
    58,674Net decrease in time deposits
    
    
    (19,379
    )
    
    
    (49,023
    )Net decrease in FHLB and other borrowings
    
    
    (25,007
    )
    
    
    (3,051
    )FHLB debt prepayment fees
    
    
    (471
    )
    
    
    Net decrease in securities sold under agreement to repurchase
    
    
    (1,422
    )
    
    
    (9,253
    )Proceeds from the exercise of stock options
    
    
    32
    
    
    
    Excess tax benefit from stock-based compensation
    
    
    5
    
    
    
    Common dividends paid
    
    
    (1,787
    )
    
    
    (1,776
    )Net cash used in financing activities
    
    
    (12,588
    )
    
    
    (4,429
    )Increase (decrease) in cash and cash equivalents
    
    
    63,278
    
    
    
    (13,635
    )Cash and cash equivalents at beginning of period
    
    
    112,189
    
    
    
    101,341Cash and cash equivalents at end of period
    
    $
    175,467
    
    
    $
    87,706Supplemental information  noncash itemsTransfer of loans to other real estate
    
    $
    1,763
    
    
    $
    1,587
 See Notes to Consolidated Financial Statements.
 -5-




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##### 



FIRST COMMUNITY BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS EQUITY (Unaudited)
 AccumulatedAdditional
    
    
    
    
    
    
    
    
    
    
    OtherPreferred
    
    
    Common
    
    
    Paid-in
    
    
    Retained
    
    
    Treasury
    
    
    ComprehensiveStock
    
    
    Stock
    
    
    Capital
    
    
    Earnings
    
    
    Stock
    
    
    Income (Loss)
    
    
    Total(Dollars in Thousands)Balance January 1, 2010
    
    $
    
    
    
    $
    18,083
    
    
    $
    190,967
    
    
    $
    66,760
    
    
    $
    (9,891
    )
    
    $
    (13,652
    )
    
    $
    252,267Comprehensive income:Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,278
    
    
    
    
    
    
    
    
    
    
    
    5,278Other comprehensive income  see
note 9
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,161
    
    
    
    5,161Comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,278
    
    
    
    
    
    
    
    5,161
    
    
    
    10,439Common dividends declared and paid
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,776
    )
    
    
    
    
    
    
    
    
    
    
    (1,776
    )Equity-based compensation expense
    
    
    
    
    
    
    
    
    
    
    22
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    22Retirement plan contribution 
17,627 shares issued
    
    
    
    
    
    
    
    
    
    
    (339
    )
    
    
    
    
    
    
    549
    
    
    
    
    
    
    
    210Balance March 31, 2010
    
    $
    
    
    
    $
    18,083
    
    
    $
    190,650
    
    
    $
    70,262
    
    
    $
    (9,342
    )
    
    $
    (8,491
    )
    
    $
    261,162Balance January 1, 2011
    
    $
    
    
    
    $
    18,083
    
    
    $
    189,239
    
    
    $
    81,486
    
    
    $
    (6,740
    )
    
    $
    (12,190
    )
    
    $
    269,878Comprehensive income:Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,751
    
    
    
    
    
    
    
    
    
    
    
    5,751Other comprehensive income  see
note 9
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,612
    
    
    
    3,612Comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,751
    
    
    
    
    
    
    
    3,612
    
    
    
    9,363Common dividends declared and paid
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,787
    )
    
    
    
    
    
    
    
    
    
    
    (1,787
    )Equity-based compensation expense
    
    
    
    
    
    
    
    
    
    
    9
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9Retirement plan contribution 
25,595 shares issued
    
    
    
    
    
    
    
    
    
    
    (446
    )
    
    
    
    
    
    
    797
    
    
    
    
    
    
    
    351Option exercises  2,969 shares
    
    
    
    
    
    
    
    
    
    
    (60
    )
    
    
    
    
    
    
    92
    
    
    
    
    
    
    
    32Balance March 31, 2011
    
    $
    
    
    
    $
    18,083
    
    
    $
    188,742
    
    
    $
    85,450
    
    
    $
    (5,851
    )
    
    $
    (8,578
    )
    
    $
    277,846
 See Notes to Consolidated Financial Statements.
 -6-




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##### 



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Note 1. General
 Unaudited Consolidated Financial Statements
     Earnings Per Share
  For the Three Monthsended March 31,(In Thousands, Except Share and Per Share Data)
    
    2011
    
    
    2010Net income available to common shareholders
    
    $
    5,751
    
    
    $
    5,278Weighted average shares outstanding
    
    
    17,867,953
    
    
    
    17,765,556Diluted shares for stock options
    
    
    10,266
    
    
    
    4,336Contingently issuable shares
    
    
    8,899
    
    
    
    14,557Weighted average dilutive shares outstanding
    
    
    17,887,118
    
    
    
    17,784,449Basic earnings per share
    
    $
    0.32
    
    
    $
    0.30Diluted earnings per share
    
    $
    0.32
    
    
    $
    0.30
  -7-




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##### 



Recent Accounting Pronouncements
 Financial Accounting Standards Board (FASB) Accounting Standard Codification (ASC) Topic 310,
Receivables.
  Note 2. Mergers, Acquisitions, and Branching Activity
  -8-




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##### 



Note 3. Investment Securities
  March 31, 2011Amortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    Fair
    
    
    OTTI in(In Thousands)
    
    Cost
    
    
    Gains
    
    
    Losses
    
    
    Value
    
    
    AOCI*U.S. Government agency securities
    
    $
    10,000
    
    
    $
    
    
    
    $
    (270
    )
    
    $
    9,730
    
    
    $
    States and political subdivisions
    
    
    146,751
    
    
    
    2,627
    
    
    
    (2,286
    )
    
    
    147,092
    
    
    
    Trust preferred securities:Single issue
    
    
    55,607
    
    
    
    
    
    
    
    (10,840
    )
    
    
    44,767
    
    
    
    Pooled
    
    
    23
    
    
    
    537
    
    
    
    
    
    
    
    560
    
    
    
    Total trust preferred securities
    
    
    55,630
    
    
    
    537
    
    
    
    (10,840
    )
    
    
    45,327
    
    
    
    Mortgage-backed securities:Agency
    
    
    211,848
    
    
    
    5,242
    
    
    
    (1,111
    )
    
    
    215,979
    
    
    
    Non-Agency Alt-A residential
    
    
    18,487
    
    
    
    
    
    
    
    (6,267
    )
    
    
    12,220
    
    
    
    (6,267
    )Total mortgage-backed securities
    
    
    230,335
    
    
    
    5,242
    
    
    
    (7,378
    )
    
    
    228,199
    
    
    
    (6,267
    )Equity securities
    
    
    441
    
    
    
    217
    
    
    
    (41
    )
    
    
    617
    
    
    
    Total
    
    $
    443,157
    
    
    $
    8,623
    
    
    $
    (20,815
    )
    
    $
    430,965
    
    
    $
    (6,267
    )December 31, 2010Amortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    Fair
    
    
    OTTI in(In Thousands)
    
    Cost
    
    
    Gains
    
    
    Losses
    
    
    Value
    
    
    AOCI*U.S. Government agency securities
    
    $
    10,000
    
    
    $
    
    
    
    $
    (168
    )
    
    $
    9,832
    
    
    $
    States and political subdivisions
    
    
    178,149
    
    
    
    2,649
    
    
    
    (4,660
    )
    
    
    176,138
    
    
    
    Trust preferred securities:Single issue
    
    
    55,594
    
    
    
    
    
    
    
    (14,350
    )
    
    
    41,244
    
    
    
    Pooled
    
    
    23
    
    
    
    241
    
    
    
    
    
    
    
    264
    
    
    
    Total trust preferred securities
    
    
    55,617
    
    
    
    241
    
    
    
    (14,350
    )
    
    
    41,508
    
    
    
    Corporate FDIC insured
    
    
    25,282
    
    
    
    378
    
    
    
    
    
    
    
    25,660
    
    
    
    Mortgage-backed securities:Agency
    
    
    209,281
    
    
    
    7,039
    
    
    
    (1,307
    )
    
    
    215,013
    
    
    
    Non-Agency Alt-A residential
    
    
    19,181
    
    
    
    
    
    
    
    (7,904
    )
    
    
    11,277
    
    
    
    (7,904
    )Total mortgage-backed securities
    
    
    228,462
    
    
    
    7,039
    
    
    
    (9,211
    )
    
    
    226,290
    
    
    
    (7,904
    )Equity securities
    
    
    495
    
    
    
    206
    
    
    
    (65
    )
    
    
    636
    
    
    
    Total
    
    $
    498,005
    
    
    $
    10,513
    
    
    $
    (28,454
    )
    
    $
    480,064
    
    
    $
    (7,904
    )
 
 *
    
    Other-than-temporary impairment in accumulated other comprehensive income -9-




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##### 



March 31, 2011Amortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    Fair(In Thousands)
    
    Cost
    
    
    Gains
    
    
    Losses
    
    
    ValueStates and political subdivisions
    
    $
    4,524
    
    
    $
    80
    
    
    $
    
    
    
    $
    4,604Total
    
    $
    4,524
    
    
    $
    80
    
    
    $
    
    
    
    $
    4,604December 31, 2010Amortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    Fair(In Thousands)
    
    Cost
    
    
    Gains
    
    
    Losses
    
    
    ValueStates and political subdivisions
    
    $
    4,637
    
    
    $
    67
    
    
    $
    
    
    
    $
    4,704Total
    
    $
    4,637
    
    
    $
    67
    
    
    $
    
    
    
    $
    4,704
  Amortized(In Thousands)
    
    Cost
    
    
    Fair ValueDue within one year
    
    $
    116
    
    
    $
    117Due after one year but within
five years
    
    
    15,305
    
    
    
    15,868Due after five years but within
ten years
    
    
    34,035
    
    
    
    35,455Due after ten years
    
    
    162,925
    
    
    
    150,709212,381
    
    
    
    202,149Mortgage-backed securities
    
    
    230,335
    
    
    
    228,199Equity securities
    
    
    441
    
    
    
    617Total
    
    $
    443,157
    
    
    $
    430,965
  Amortized(In Thousands)
    
    Cost
    
    
    Fair ValueDue within one year
    
    $
    1,426
    
    
    $
    1,451Due after one year but within
five years
    
    
    2,312
    
    
    
    2,350Due after five years but
within ten years
    
    
    786
    
    
    
    803Due after ten years
    
    
    
    
    
    
    Total
    
    $
    4,524
    
    
    $
    4,604
   -10-




---



##### 



March 31, 2011Less than 12 Months
    
    
    12 Months or longer
    
    
    TotalFair
    
    
    Unrealized
    
    
    Fair
    
    
    Unrealized
    
    
    Fair
    
    
    Unrealized(In Thousands)
    
    Value
    
    
    Losses
    
    
    Value
    
    
    Losses
    
    
    Value
    
    
    LossesU.S. Government agency securities
    
    $
    9,730
    
    
    $
    (270
    )
    
    $
    
    
    
    $
    
    
    
    $
    9,730
    
    
    $
    (270
    )States and political subdivisions
    
    
    52,828
    
    
    
    (2,286
    )
    
    
    
    
    
    
    
    
    
    
    52,828
    
    
    
    (2,286
    )Single issue trust preferred
securities
    
    
    
    
    
    
    
    
    
    
    44,767
    
    
    
    (10,840
    )
    
    
    44,767
    
    
    
    (10,840
    )Mortgage-backed securities:Agency
    
    
    102,306
    
    
    
    (1,104
    )
    
    
    2,580
    
    
    
    (7
    )
    
    
    104,886
    
    
    
    (1,111
    )Alt-A residential
    
    
    
    
    
    
    
    
    
    
    12,220
    
    
    
    (6,267
    )
    
    
    12,220
    
    
    
    (6,267
    )Total mortgage-backed securities
    
    
    102,306
    
    
    
    (1,104
    )
    
    
    14,800
    
    
    
    (6,274
    )
    
    
    117,106
    
    
    
    (7,378
    )Equity securities
    
    
    123
    
    
    
    (36
    )
    
    
    122
    
    
    
    (5
    )
    
    
    245
    
    
    
    (41
    )Total
    
    $
    164,987
    
    
    $
    (3,696
    )
    
    $
    59,689
    
    
    $
    (17,119
    )
    
    $
    224,676
    
    
    $
    (20,815
    )December 31, 2010Less than 12 Months
    
    
    12 Months or longer
    
    
    TotalFair
    
    
    Unrealized
    
    
    Fair
    
    
    Unrealized
    
    
    Fair
    
    
    Unrealized(In Thousands)
    
    Value
    
    
    Losses
    
    
    Value
    
    
    Losses
    
    
    Value
    
    
    LossesU.S. Government agency securities
    
    $
    9,832
    
    
    $
    (168
    )
    
    $
    
    
    
    $
    
    
    
    $
    9,832
    
    
    $
    (168
    )States and political subdivisions
    
    
    80,420
    
    
    
    (4,660
    )
    
    
    
    
    
    
    
    
    
    
    80,420
    
    
    
    (4,660
    )Single issue trust preferred
securities
    
    
    
    
    
    
    
    
    
    
    41,244
    
    
    
    (14,350
    )
    
    
    41,244
    
    
    
    (14,350
    )Mortgage-backed securities:Agency
    
    
    71,613
    
    
    
    (1,307
    )
    
    
    18
    
    
    
    
    
    
    
    71,631
    
    
    
    (1,307
    )Alt-A residential
    
    
    
    
    
    
    
    
    
    
    11,277
    
    
    
    (7,904
    )
    
    
    11,277
    
    
    
    (7,904
    )Total mortgage-backed securities
    
    
    71,613
    
    
    
    (1,307
    )
    
    
    11,295
    
    
    
    (7,904
    )
    
    
    82,908
    
    
    
    (9,211
    )Equity securities
    
    
    155
    
    
    
    (55
    )
    
    
    93
    
    
    
    (10
    )
    
    
    248
    
    
    
    (65
    )Total
    
    $
    162,020
    
    
    $
    (6,190
    )
    
    $
    52,632
    
    
    $
    (22,264
    )
    
    $
    214,652
    
    
    $
    (28,454
    )
    -11-




---



##### 



For the Three Months(In Thousands)
    
    Ended March 31, 2011Estimated credit losses, beginning balance (1)
    
    $
    4,251Additions for credit losses on securities not previously OTTI
    
    
    Additions for credit losses on securities previously OTTI
    
    
    527Reduction for increases in cash flows
    
    
    Reduction for securities management no longer intends to hold to
recovery
    
    
    Reduction for realized losses
    
    
    Estimated credit losses, ending balance
    
    $
    4,778
 
 (1)
    
    The beginning balance includes credit-related losses included in OTTI charges recognized on debt securities in prior periods.   -12-




---



##### 



Note 4. Loans
  March 31, 2011
    
    
    December 31, 2010(Dollars in Thousands)
    
    Amount
    
    
    Percent
    
    
    Amount
    
    
    PercentCommercial loansConstruction  commercial
    
    $
    30,758
    
    
    
    2.24
    %
    
    $
    42,694
    
    
    
    3.08
    %Land development
    
    
    5,781
    
    
    
    0.42
    %
    
    
    16,650
    
    
    
    1.20
    %Other land loans
    
    
    23,959
    
    
    
    1.74
    %
    
    
    24,468
    
    
    
    1.77
    %Commercial and industrial
    
    
    91,964
    
    
    
    6.68
    %
    
    
    94,123
    
    
    
    6.79
    %Multi-family residential
    
    
    75,269
    
    
    
    5.47
    %
    
    
    67,824
    
    
    
    4.89
    %Non-farm, non-residential
    
    
    345,265
    
    
    
    25.10
    %
    
    
    351,904
    
    
    
    25.39
    %Agricultural
    
    
    1,392
    
    
    
    0.10
    %
    
    
    1,342
    
    
    
    0.10
    %Farmland
    
    
    47,228
    
    
    
    3.43
    %
    
    
    36,954
    
    
    
    2.67
    %Total commercial loans
    
    
    621,616
    
    
    
    45.18
    %
    
    
    635,959
    
    
    
    45.89
    %Consumer real estate loansHome equity lines
    
    
    111,802
    
    
    
    8.13
    %
    
    
    111,620
    
    
    
    8.05
    %Single family residential mortgage
    
    
    545,316
    
    
    
    39.64
    %
    
    
    549,157
    
    
    
    39.61
    %Owner-occupied construction
    
    
    22,506
    
    
    
    1.64
    %
    
    
    18,349
    
    
    
    1.32
    %Total consumer real estate loans
    
    
    679,624
    
    
    
    49.41
    %
    
    
    679,126
    
    
    
    48.98
    %Consumer and other loansConsumer loans
    
    
    62,029
    
    
    
    4.51
    %
    
    
    63,475
    
    
    
    4.58
    %Other
    
    
    12,416
    
    
    
    0.90
    %
    
    
    7,646
    
    
    
    0.55
    %Total consumer and other loans
    
    
    74,445
    
    
    
    5.41
    %
    
    
    71,121
    
    
    
    5.13
    %Total loans
    
    $
    1,375,685
    
    
    
    100.00
    %
    
    $
    1,386,206
    
    
    
    100.00
    %Loans held for sale
    
    $
    2,614
    
    
    
    
    
    
    $
    4,694
 Acquired, Impaired Loans
  -13-




---



##### 



Acquired, Impaired Loans(In thousands)
    
    TriStone
    
    
    Other
    
    
    TotalBalance, January 1, 2010
    
    $
    3,838
    
    
    $
    4,196
    
    
    $
    8,034Principal payments received
    
    
    (1,034
    )
    
    
    (2,900
    )
    
    
    (3,934
    )Accretion
    
    
    61
    
    
    
    
    
    
    
    61Other
    
    
    448
    
    
    
    
    
    
    
    448Charge-offs
    
    
    (499
    )
    
    
    (889
    )
    
    
    (1,388
    )Balance, December 31, 2010
    
    $
    2,814
    
    
    $
    407
    
    
    $
    3,221Balance, January 1, 2011
    
    $
    2,814
    
    
    $
    407
    
    
    $
    3,221Principal payments received
    
    
    (35
    )
    
    
    
    
    
    
    (35
    )Accretion
    
    
    7
    
    
    
    
    
    
    
    7Other
    
    
    98
    
    
    
    
    
    
    
    98Charge-offs
    
    
    
    
    
    
    
    
    
    
    Balance, March 31, 2011
    
    $
    2,884
    
    
    $
    407
    
    
    $
    3,291
  Off-Balance Sheet Financial Instruments
     -14-




---



##### 



Note 5. Allowance for Loan Losses and Credit Quality
    For the Three Months Ended March 31, 2011Consumer Real
    
    
    Consumer and(In Thousands)
    
    Commercial
    
    
    Estate
    
    
    Other
    
    
    TotalAllowance for credit losses:Beginning balance
    
    $
    12,300
    
    
    $
    12,641
    
    
    $
    1,541
    
    
    $
    26,482Provision for loan losses
    
    
    361
    
    
    
    1,213
    
    
    
    38
    
    
    
    1,612Loans charged off
    
    
    (440
    )
    
    
    (1,372
    )
    
    
    (215
    )
    
    
    (2,027
    )Recoveries credited to allowance
    
    
    79
    
    
    
    159
    
    
    
    177
    
    
    
    415Net charge-offs
    
    
    (361
    )
    
    
    (1,213
    )
    
    
    (38
    )
    
    
    (1,612
    )Ending balance
    
    $
    12,300
    
    
    $
    12,641
    
    
    $
    1,541
    
    
    $
    26,482
 For the Three Months Ended March 31, 2010Consumer Real
    
    
    Consumer and(In Thousands)
    
    Commercial
    
    
    Estate
    
    
    Other
    
    
    TotalAllowance for credit losses:Beginning balance
    
    $
    13,802
    
    
    $
    8,457
    
    
    $
    2,018
    
    
    $
    24,277Provision for loan losses
    
    
    2,093
    
    
    
    1,278
    
    
    
    294
    
    
    
    3,665Loans charged off
    
    
    (2,079
    )
    
    
    (1,330
    )
    
    
    (323
    )
    
    
    (3,732
    )Recoveries credited to allowance
    
    
    227
    
    
    
    12
    
    
    
    59
    
    
    
    298Net charge-offs
    
    
    (1,852
    )
    
    
    (1,318
    )
    
    
    (264
    )
    
    
    (3,434
    )Ending balance
    
    $
    14,043
    
    
    $
    8,417
    
    
    $
    2,048
    
    
    $
    24,508
 -15-




---



##### 



March 31, 2011Recorded
    
    
    RecordedInvestment
    
    
    Investment
    
    
    Total
    
    
    
    
    
    
    Unpaid
    
    
    Average
    
    
    InterestWith
    
    
    With No
    
    
    Recorded
    
    
    Related
    
    
    Principal
    
    
    Recorded
    
    
    Income(Amounts in Thousands)
    
    Allowance
    
    
    Allowance
    
    
    Investment
    
    
    Allowance
    
    
    Balance
    
    
    Investment
    
    
    RecognizedConstruction  commercial
    
    $
    
    
    
    $
    469
    
    
    $
    469
    
    
    $
    
    
    
    $
    483
    
    
    $
    549
    
    
    $
    Land development
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Other land loans
    
    
    113
    
    
    
    130
    
    
    
    243
    
    
    
    5
    
    
    
    242
    
    
    
    435
    
    
    
    1Commercial and industrial
    
    
    622
    
    
    
    990
    
    
    
    1,612
    
    
    
    340
    
    
    
    9,403
    
    
    
    6,608
    
    
    
    Multi-family residential
    
    
    477
    
    
    
    1,933
    
    
    
    2,410
    
    
    
    200
    
    
    
    2,452
    
    
    
    2,505
    
    
    
    13Non-farm, non-residential
    
    
    1,564
    
    
    
    3,388
    
    
    
    4,952
    
    
    
    193
    
    
    
    5,093
    
    
    
    5,403
    
    
    
    3Home equity lines
    
    
    94
    
    
    
    1,323
    
    
    
    1,417
    
    
    
    34
    
    
    
    1,447
    
    
    
    1,507
    
    
    
    6Single family residential mortgage
    
    
    7,844
    
    
    
    7,795
    
    
    
    15,639
    
    
    
    1,298
    
    
    
    15,861
    
    
    
    16,763
    
    
    
    97Owner-occupied construction
    
    
    
    
    
    
    126
    
    
    
    126
    
    
    
    
    
    
    
    128
    
    
    
    127
    
    
    
    1Consumer loans
    
    
    
    
    
    
    70
    
    
    
    70
    
    
    
    
    
    
    
    72
    
    
    
    78
    
    
    
    $
    10,714
    
    
    $
    16,224
    
    
    $
    26,938
    
    
    $
    2,070
    
    
    $
    35,181
    
    
    $
    33,975
    
    
    $
    121
 December 31. 2010Recorded
    
    
    RecordedInvestment
    
    
    Investment
    
    
    Total
    
    
    
    
    
    
    Unpaid
    
    
    Average
    
    
    InterestWith
    
    
    With No
    
    
    Recorded
    
    
    Related
    
    
    Principal
    
    
    Recorded
    
    
    Income(Amounts in Thousands)
    
    Allowance
    
    
    Allowance
    
    
    Investment
    
    
    Allowance
    
    
    Balance
    
    
    Investment
    
    
    RecognizedConstruction  commercial
    
    $
    
    
    
    $
    285
    
    
    $
    285
    
    
    $
    
    
    
    $
    732
    
    
    $
    730
    
    
    $
    3Land development
    
    
    
    
    
    
    50
    
    
    
    50
    
    
    
    5
    
    
    
    144
    
    
    
    143
    
    
    
    2Other land loans
    
    
    113
    
    
    
    323
    
    
    
    436
    
    
    
    
    
    
    
    855
    
    
    
    266
    
    
    
    20Commercial and industrial
    
    
    
    
    
    
    3,518
    
    
    
    3,518
    
    
    
    
    
    
    
    5,384
    
    
    
    6,237
    
    
    
    10Multi-family residential
    
    
    723
    
    
    
    2,526
    
    
    
    3,249
    
    
    
    257
    
    
    
    3,432
    
    
    
    3,448
    
    
    
    126Non-farm, non-residential
    
    
    1,070
    
    
    
    3,824
    
    
    
    4,894
    
    
    
    158
    
    
    
    6,125
    
    
    
    5,809
    
    
    
    79Home equity lines
    
    
    95
    
    
    
    1,302
    
    
    
    1,397
    
    
    
    34
    
    
    
    1,693
    
    
    
    1,703
    
    
    
    40Single family residential mortgage
    
    
    8,801
    
    
    
    7,992
    
    
    
    16,793
    
    
    
    1,870
    
    
    
    18,430
    
    
    
    18,006
    
    
    
    640Owner-occupied construction
    
    
    
    
    
    
    6
    
    
    
    6
    
    
    
    
    
    
    
    6
    
    
    
    6
    
    
    
    Consumer loans
    
    
    
    
    
    
    98
    
    
    
    98
    
    
    
    
    
    
    
    102
    
    
    
    111
    
    
    
    5$
    10,802
    
    
    $
    19,924
    
    
    $
    30,726
    
    
    $
    2,324
    
    
    $
    36,903
    
    
    $
    36,459
    
    
    $
    925
  -16-




---



##### 




    
    Pass  This grade includes loans to borrowers of acceptable credit quality and risk. The
Company further differentiates within this grade based upon borrower characteristics which
include: capital strength, earnings stability, leverage, and industry.
    
    Special Mention  This grade includes loans that require more than a normal degree of
supervision and attention. These loans have all the characteristics of an adequate asset,
but due to being adversely affected by economic or financial conditions have a potential
weakness that deserves managements close attention. If left uncorrected, these potential
weaknesses may result in deterioration of the repayment prospects for the loan. Substandard
  This grade includes loans that have well defined weaknesses which make payment default
or principal exposure possible, but not yet certain. Such loans are apt to be dependent
upon collateral liquidation, a secondary source of repayment or an event outside of the
normal course of business to meet the repayment terms.
    
    Doubtful  This grade includes loans that are placed on non-accrual status. These loans
have all the weaknesses inherent in a substandard loan with the added factor that the
weaknesses are so severe that collection or liquidation in full, on the basis of current
existing facts, conditions and values, is extremely unlikely, but because of certain
specific pending factors, the amount of loss cannot yet be determined.
    
    Loss  This grade includes loans that are to be charged-off or charged-down when payment
is acknowledged to be uncertain or when the timing or value of payments cannot be
determined. Loss is not intended to imply that the asset has no recovery or salvage
value, but simply that it is not practical or desirable to defer writing off all or some
portion of the loan, even though partial recovery may be affected in the future.
  March 31, 2011Special(Amounts in Thousands)
    
    Pass
    
    
    Mention
    
    
    Substandard
    
    
    Doubtful
    
    
    Loss
    
    
    TotalConstruction  commercial
    
    $
    26,115
    
    
    $
    493
    
    
    $
    4,150
    
    
    $
    
    
    
    $
    
    
    
    $
    30,758Land development
    
    
    4,865
    
    
    
    
    
    
    
    916
    
    
    
    
    
    
    
    
    
    
    
    5,781Other land loans
    
    
    19,485
    
    
    
    480
    
    
    
    3,994
    
    
    
    
    
    
    
    
    
    
    
    23,959Commercial and industrial
    
    
    85,150
    
    
    
    977
    
    
    
    4,855
    
    
    
    982
    
    
    
    
    
    
    
    91,964Multi-family residential
    
    
    70,399
    
    
    
    1,560
    
    
    
    3,310
    
    
    
    
    
    
    
    
    
    
    
    75,269Non-farm, non-residential
    
    
    321,393
    
    
    
    8,350
    
    
    
    15,522
    
    
    
    
    
    
    
    
    
    
    
    345,265Agricultural
    
    
    1,367
    
    
    
    
    
    
    
    25
    
    
    
    
    
    
    
    
    
    
    
    1,392Farmland
    
    
    44,900
    
    
    
    1,024
    
    
    
    1,304
    
    
    
    
    
    
    
    
    
    
    
    47,228Home equity lines
    
    
    107,323
    
    
    
    1,834
    
    
    
    2,645
    
    
    
    
    
    
    
    
    
    
    
    111,802Single family residential mortgage
    
    
    500,236
    
    
    
    10,611
    
    
    
    34,469
    
    
    
    
    
    
    
    
    
    
    
    545,316Owner-occupied construction
    
    
    21,685
    
    
    
    346
    
    
    
    475
    
    
    
    
    
    
    
    
    
    
    
    22,506Consumer loans
    
    
    61,414
    
    
    
    86
    
    
    
    527
    
    
    
    
    
    
    
    2
    
    
    
    62,029Other
    
    
    12,416
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12,416Total loans
    
    $
    1,276,748
    
    
    $
    25,761
    
    
    $
    72,192
    
    
    $
    982
    
    
    $
    2
    
    
    $
    1,375,685
 -17-




---



##### 



December 31, 2010Special(Amounts in Thousands)
    
    Pass
    
    
    Mention
    
    
    Substandard
    
    
    Doubtful
    
    
    Loss
    
    
    TotalConstruction  commercial
    
    $
    40,497
    
    
    $
    663
    
    
    $
    1,534
    
    
    $
    
    
    
    $
    
    
    
    $
    42,694Land development
    
    
    14,458
    
    
    
    1,226
    
    
    
    966
    
    
    
    
    
    
    
    
    
    
    
    16,650Other land loans
    
    
    16,723
    
    
    
    6,138
    
    
    
    1,607
    
    
    
    
    
    
    
    
    
    
    
    24,468Commercial and industrial
    
    
    87,156
    
    
    
    1,756
    
    
    
    5,211
    
    
    
    
    
    
    
    
    
    
    
    94,123Multi-family residential
    
    
    61,059
    
    
    
    2,553
    
    
    
    4,212
    
    
    
    
    
    
    
    
    
    
    
    67,824Non-farm, non-residential
    
    
    316,026
    
    
    
    18,942
    
    
    
    16,936
    
    
    
    
    
    
    
    
    
    
    
    351,904Agricultural
    
    
    1,318
    
    
    
    
    
    
    
    24
    
    
    
    
    
    
    
    
    
    
    
    1,342Farmland
    
    
    33,042
    
    
    
    2,569
    
    
    
    1,343
    
    
    
    
    
    
    
    
    
    
    
    36,954Home equity lines
    
    
    106,803
    
    
    
    1,923
    
    
    
    2,894
    
    
    
    
    
    
    
    
    
    
    
    111,620Single family residential mortgage
    
    
    498,830
    
    
    
    15,224
    
    
    
    34,449
    
    
    
    654
    
    
    
    
    
    
    
    549,157Owner-occupied construction
    
    
    17,389
    
    
    
    789
    
    
    
    171
    
    
    
    
    
    
    
    
    
    
    
    18,349Consumer loans
    
    
    62,676
    
    
    
    306
    
    
    
    493
    
    
    
    
    
    
    
    
    
    
    
    63,475Other
    
    
    7,635
    
    
    
    11
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,646Total loans
    
    $
    1,263,612
    
    
    $
    52,100
    
    
    $
    69,840
    
    
    $
    654
    
    
    $
    
    
    
    $
    1,386,206
  March 31, 2011Loans
    
    
    Allowance
    
    
    Loans
    
    
    Allowance
    
    
    Acquired,
    
    
    Allowance forIndividually
    
    
    for Loans
    
    
    Collectively
    
    
    for Loans
    
    
    Impaired Loans
    
    
    Acquired,Evaluated for
    
    
    Individually
    
    
    Evaluated for
    
    
    Collectively
    
    
    Evaluated for
    
    
    Impaired Loans(Amounts in Thousands)
    
    Impairment
    
    
    Evaluated
    
    
    Impairment
    
    
    Evaluated
    
    
    Impairment
    
    
    EvaluatedCommercial loansConstruction  commercial
    
    $
    469
    
    
    $
    
    
    
    $
    30,289
    
    
    $
    885
    
    
    $
    
    
    
    $
    Land development
    
    
    
    
    
    
    
    
    
    
    5,781
    
    
    
    472
    
    
    
    
    
    
    
    Other land loans
    
    
    243
    
    
    
    5
    
    
    
    23,204
    
    
    
    1,356
    
    
    
    512
    
    
    
    Commercial and industrial
    
    
    1,612
    
    
    
    340
    
    
    
    89,734
    
    
    
    1,937
    
    
    
    618
    
    
    
    Multi-family residential
    
    
    2,410
    
    
    
    200
    
    
    
    72,859
    
    
    
    1,593
    
    
    
    
    
    
    
    Non-farm, non-residential
    
    
    4,952
    
    
    
    193
    
    
    
    339,889
    
    
    
    4,795
    
    
    
    424
    
    
    
    Agricultural
    
    
    
    
    
    
    
    
    
    
    1,392
    
    
    
    19
    
    
    
    
    
    
    
    Farmland
    
    
    
    
    
    
    
    
    
    
    47,228
    
    
    
    505
    
    
    
    
    
    
    
    Total commercial loans
    
    
    9,686
    
    
    
    738
    
    
    
    610,376
    
    
    
    11,562
    
    
    
    1,554
    
    
    
    Consumer real estate loansHome equity lines
    
    
    1,417
    
    
    
    34
    
    
    
    110,385
    
    
    
    2,056
    
    
    
    
    
    
    
    Single family residential mortgage
    
    
    15,639
    
    
    
    1,298
    
    
    
    527,940
    
    
    
    8,923
    
    
    
    1,737
    
    
    
    Owner-occupied construction
    
    
    126
    
    
    
    
    
    
    
    22,380
    
    
    
    330
    
    
    
    
    
    
    
    Total consumer real estate loans
    
    
    17,182
    
    
    
    1,332
    
    
    
    660,705
    
    
    
    11,309
    
    
    
    1,737
    
    
    
    Consumer and other loansConsumer loans
    
    
    70
    
    
    
    
    
    
    
    61,959
    
    
    
    1,541
    
    
    
    
    
    
    
    Other
    
    
    
    
    
    
    
    
    
    
    12,416
    
    
    
    
    
    
    
    
    
    
    
    Total consumer and other loans
    
    
    70
    
    
    
    
    
    
    
    74,375
    
    
    
    1,541
    
    
    
    
    
    
    
    Total loans
    
    $
    26,938
    
    
    $
    2,070
    
    
    $
    1,345,456
    
    
    $
    24,412
    
    
    $
    3,291
    
    
    $
    
 -18-




---



##### 



December 31, 2010Loans
    
    
    Allowance
    
    
    Loans
    
    
    Allowance
    
    
    Acquired,
    
    
    Allowance forIndividually
    
    
    for Loans
    
    
    Collectively
    
    
    for Loans
    
    
    Impaired Loans
    
    
    Acquired,Evaluated for
    
    
    Individually
    
    
    Evaluated for
    
    
    Collectively
    
    
    Evaluated for
    
    
    Impaired Loans(Amounts in Thousands)
    
    Impairment
    
    
    Evaluated
    
    
    Impairment
    
    
    Evaluated
    
    
    Impairment
    
    
    EvaluatedCommercial loansConstruction  commercial
    
    $
    285
    
    
    $
    
    
    
    $
    42,409
    
    
    $
    1,472
    
    
    $
    
    
    
    $
    Land development
    
    
    50
    
    
    
    5
    
    
    
    16,600
    
    
    
    1,767
    
    
    
    
    
    
    
    Other land loans
    
    
    436
    
    
    
    
    
    
    
    23,520
    
    
    
    747
    
    
    
    512
    
    
    
    Commercial and industrial
    
    
    3,518
    
    
    
    
    
    
    
    90,084
    
    
    
    4,511
    
    
    
    521
    
    
    
    Multi-family residential
    
    
    3,249
    
    
    
    257
    
    
    
    64,575
    
    
    
    824
    
    
    
    
    
    
    
    Non-farm, non-residential
    
    
    4,894
    
    
    
    158
    
    
    
    346,586
    
    
    
    2,688
    
    
    
    424
    
    
    
    Agricultural
    
    
    
    
    
    
    
    
    
    
    1,342
    
    
    
    19
    
    
    
    
    
    
    
    Farmland
    
    
    
    
    
    
    
    
    
    
    36,954
    
    
    
    70
    
    
    
    
    
    
    
    Total commercial loans
    
    
    12,432
    
    
    
    420
    
    
    
    622,070
    
    
    
    12,098
    
    
    
    1,457
    
    
    
    Consumer real estate loansHome equity lines
    
    
    1,397
    
    
    
    34
    
    
    
    110,223
    
    
    
    2,104
    
    
    
    
    
    
    
    Single family residential mortgage
    
    
    16,793
    
    
    
    1,870
    
    
    
    530,600
    
    
    
    7,999
    
    
    
    1,764
    
    
    
    Owner-occupied construction
    
    
    6
    
    
    
    
    
    
    
    18,343
    
    
    
    193
    
    
    
    
    
    
    
    Total consumer real estate loans
    
    
    18,196
    
    
    
    1,904
    
    
    
    659,166
    
    
    
    10,296
    
    
    
    1,764
    
    
    
    Consumer and other loansConsumer loans
    
    
    98
    
    
    
    
    
    
    
    63,377
    
    
    
    1,764
    
    
    
    
    
    
    
    Other
    
    
    
    
    
    
    
    
    
    
    7,646
    
    
    
    
    
    
    
    
    
    
    
    Total consumer and other loans
    
    
    98
    
    
    
    
    
    
    
    71,023
    
    
    
    1,764
    
    
    
    
    
    
    
    Total loans
    
    $
    30,726
    
    
    $
    2,324
    
    
    $
    1,352,259
    
    
    $
    24,158
    
    
    $
    3,221
    
    
    $
    
 Non-accrual and Past Due Loans
  March 31,
    
    
    December 31,(Amounts in Thousands)
    
    2011
    
    
    2010Construction  commercial
    
    $
    469
    
    
    $
    285Land development
    
    
    
    
    
    
    50Other land loans
    
    
    130
    
    
    
    321Commercial and industrial
    
    
    3,972
    
    
    
    3,518Multi-family residential
    
    
    1,624
    
    
    
    2,463Non-farm, non-residential
    
    
    4,706
    
    
    
    4,670Home equity lines
    
    
    889
    
    
    
    868Single family residential mortgage
    
    
    4,940
    
    
    
    6,364Owner-occupied construction
    
    
    126
    
    
    
    6Consumer loans
    
    
    70
    
    
    
    99Total
    
    
    16,926
    
    
    
    18,644Acquired, impaired loans
    
    
    777
    
    
    
    770Total non-accrual loans
    
    $
    17,703
    
    
    $
    19,414
 -19-




---



##### 



March 31, 2011Total
    
    
    Current
    
    
    Total(Amounts in Thousands)
    
    30 - 59 Days
    
    
    60 - 89 Days
    
    
    90+ Days
    
    
    Past Due
    
    
    Loans
    
    
    LoansConstruction  commercial
    
    $
    657
    
    
    $
    
    
    
    $
    95
    
    
    $
    752
    
    
    $
    30,006
    
    
    $
    30,758Land development
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,781
    
    
    
    5,781Other land loans
    
    
    100
    
    
    
    
    
    
    
    499
    
    
    
    599
    
    
    
    23,360
    
    
    
    23,959Commercial and industrial
    
    
    230
    
    
    
    34
    
    
    
    3,593
    
    
    
    3,857
    
    
    
    88,107
    
    
    
    91,964Multi-family residential
    
    
    1,823
    
    
    
    
    
    
    
    1,624
    
    
    
    3,447
    
    
    
    71,822
    
    
    
    75,269Non-farm, non-residential
    
    
    2,024
    
    
    
    124
    
    
    
    3,669
    
    
    
    5,817
    
    
    
    339,448
    
    
    
    345,265Agricultural
    
    
    17
    
    
    
    
    
    
    
    
    
    
    
    17
    
    
    
    1,375
    
    
    
    1,392Farmland
    
    
    372
    
    
    
    
    
    
    
    
    
    
    
    372
    
    
    
    46,856
    
    
    
    47,228Home equity lines
    
    
    475
    
    
    
    38
    
    
    
    525
    
    
    
    1,038
    
    
    
    110,764
    
    
    
    111,802Single family residential mortgage
    
    
    6,505
    
    
    
    1,468
    
    
    
    3,308
    
    
    
    11,281
    
    
    
    534,035
    
    
    
    545,316Owner-occupied construction
    
    
    132
    
    
    
    
    
    
    
    124
    
    
    
    256
    
    
    
    22,250
    
    
    
    22,506Consumer loans
    
    
    179
    
    
    
    7
    
    
    
    15
    
    
    
    201
    
    
    
    61,828
    
    
    
    62,029Other
    
    
    3
    
    
    
    
    
    
    
    
    
    
    
    3
    
    
    
    12,413
    
    
    
    12,416Total loans
    
    $
    12,517
    
    
    $
    1,671
    
    
    $
    13,452
    
    
    $
    27,640
    
    
    $
    1,348,045
    
    
    $
    1,375,685
 December 31, 2010Total
    
    
    Current
    
    
    Total(Amounts in Thousands)
    
    30 - 59 Days
    
    
    60 - 89 Days
    
    
    90+ Days
    
    
    Past Due
    
    
    Loans
    
    
    LoansConstruction  commercial
    
    $
    531
    
    
    $
    
    
    
    $
    122
    
    
    $
    653
    
    
    $
    42,041
    
    
    $
    42,694Land development
    
    
    
    
    
    
    
    
    
    
    50
    
    
    
    50
    
    
    
    16,600
    
    
    
    16,650Other land loans
    
    
    
    
    
    
    
    
    
    
    684
    
    
    
    684
    
    
    
    23,784
    
    
    
    24,468Commercial and industrial
    
    
    3,648
    
    
    
    121
    
    
    
    356
    
    
    
    4,125
    
    
    
    89,998
    
    
    
    94,123Multi-family residential
    
    
    956
    
    
    
    
    
    
    
    1,793
    
    
    
    2,749
    
    
    
    65,075
    
    
    
    67,824Non-farm, non-residential
    
    
    3,251
    
    
    
    2,056
    
    
    
    3,249
    
    
    
    8,556
    
    
    
    343,348
    
    
    
    351,904Agricultural
    
    
    19
    
    
    
    
    
    
    
    
    
    
    
    19
    
    
    
    1,323
    
    
    
    1,342Farmland
    
    
    110
    
    
    
    
    
    
    
    
    
    
    
    110
    
    
    
    36,844
    
    
    
    36,954Home equity lines
    
    
    682
    
    
    
    250
    
    
    
    608
    
    
    
    1,540
    
    
    
    110,080
    
    
    
    111,620Single family residential mortgage
    
    
    10,287
    
    
    
    1,741
    
    
    
    4,213
    
    
    
    16,241
    
    
    
    532,916
    
    
    
    549,157Owner-occupied construction
    
    
    855
    
    
    
    326
    
    
    
    6
    
    
    
    1,187
    
    
    
    17,162
    
    
    
    18,349Consumer loans
    
    
    433
    
    
    
    47
    
    
    
    31
    
    
    
    511
    
    
    
    62,964
    
    
    
    63,475Other
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,646
    
    
    
    7,646Total loans
    
    $
    20,772
    
    
    $
    4,541
    
    
    $
    11,112
    
    
    $
    36,425
    
    
    $
    1,349,781
    
    
    $
    1,386,206
 Note 6. Deposits
  March 31,
    
    
    December 31,(In Thousands)
    
    2011
    
    
    2010Interest-bearing demand deposits
    
    $
    287,006
    
    
    $
    262,420Savings and money market deposits
    
    
    420,481
    
    
    
    426,547Certificates of deposit and individual retirement accounts
    
    
    707,458
    
    
    
    726,837Total
    
    $
    1,414,945
    
    
    $
    1,415,804
 -20-




---



##### 



Note 7. Borrowings
  March 31,
    
    
    December 31,(In Thousands)
    
    2011
    
    
    2010Securities sold
under agreements to
repurchase
    
    $
    139,472
    
    
    $
    140,894FHLB borrowings
    
    
    150,000
    
    
    
    175,000Subordinated debt
    
    
    15,464
    
    
    
    15,464Other long-term debt
    
    
    722
    
    
    
    729Total
    
    $
    305,658
    
    
    $
    332,087
     (In Thousands)
    
    Amount2011
    
    $
    2012
    
    
    2013
    
    
    2014
    
    
    2015
    
    
    2016 and thereafter
    
    
    150,000Total
    
    $
    150,000
    -21-




---



##### 



Note 8. Net Periodic Benefit Cost-Defined Benefit Plans
  For the Three MonthsEnded March 31,(In Thousands)
    
    2011
    
    
    2010Service cost
    
    $
    73
    
    
    $
    52Interest cost
    
    
    55
    
    
    
    52Net periodic cost
    
    $
    128
    
    
    $
    104
  For the Three MonthsEnded March 31,(In Thousands)
    
    2011Service cost
    
    $
    29Interest cost
    
    
    11Net periodic cost
    
    $
    40
 Note 9. Comprehensive Income
  For the Three MonthsEnded March 31,(In Thousands)
    
    2011
    
    
    2010Net income
    
    $
    5,751
    
    
    $
    5,278Other comprehensive incomeUnrealized loss on securities available-for-sale
with other-than-temporary impairment
    
    
    943
    
    
    
    Unrealized loss on securities available-for-sale
without other-than-temporary impairment
    
    
    6,122
    
    
    
    8,050Reclassification adjustment for gains
realized in net income
    
    
    (1,836
    )
    
    
    (250
    )Reclassification adjustment for credit related
other-than-temporary impairments recognized
in earnings
    
    
    527
    
    
    
    Unrealized gain on derivative contract
    
    
    
    
    
    
    424Income tax effect
    
    
    (2,144
    )
    
    
    (3,063
    )Total other comprehensive income
    
    
    3,612
    
    
    
    5,161Comprehensive income
    
    $
    9,363
    
    
    $
    10,439
 Note 10. Commitments and Contingencies
  -22-




---



##### 



Note 11. Segment Information
   For the Three MonthsEnded March 31, 2011Community
    
    
    Insurance
    
    
    Parent/(In Thousands)
    
    Banking
    
    
    Services
    
    
    Elimination
    
    
    TotalNet interest income (loss)
    
    $
    18,346
    
    
    $
    (38
    )
    
    $
    (33
    )
    
    $
    18,275Provision for loan losses
    
    
    1,612
    
    
    
    
    
    
    
    
    
    
    
    1,612Noninterest income (loss)
    
    
    7,804
    
    
    
    1,966
    
    
    
    (271
    )
    
    
    9,499Noninterest expense (income)
    
    
    16,936
    
    
    
    1,525
    
    
    
    (398
    )
    
    
    18,063Income before income taxes
    
    
    7,602
    
    
    
    403
    
    
    
    94
    
    
    
    8,099Provision for income taxes
    
    
    2,151
    
    
    
    159
    
    
    
    38
    
    
    
    2,348Net income
    
    $
    5,451
    
    
    $
    244
    
    
    $
    56
    
    
    $
    5,751End of period goodwill and
other intangibles
    
    $
    78,518
    
    
    $
    11,878
    
    
    $
    
    
    
    $
    90,396End of period assets
    
    $
    2,223,371
    
    
    $
    12,797
    
    
    $
    4,812
    
    
    $
    2,240,980
 For the Three MonthsEnded March 31, 2010Community
    
    
    Insurance
    
    
    Parent/(In Thousands)
    
    Banking
    
    
    Services
    
    
    Elimination
    
    
    TotalNet interest income (loss)
    
    $
    18,678
    
    
    $
    (33
    )
    
    $
    (26
    )
    
    $
    18,619Provision for loan losses
    
    
    3,665
    
    
    
    
    
    
    
    
    
    
    
    3,665Noninterest income (loss)
    
    
    6,609
    
    
    
    2,219
    
    
    
    (250
    )
    
    
    8,578Noninterest expense (income)
    
    
    15,021
    
    
    
    1,479
    
    
    
    (428
    )
    
    
    16,072Income before income taxes
    
    
    6,601
    
    
    
    707
    
    
    
    152
    
    
    
    7,460Provision for income taxes
    
    
    1,869
    
    
    
    291
    
    
    
    22
    
    
    
    2,182Net income
    
    $
    4,732
    
    
    $
    416
    
    
    $
    130
    
    
    $
    5,278End of period goodwill and other intangibles
    
    $
    79,237
    
    
    $
    11,568
    
    
    $
    
    
    
    $
    90,805End of period assets
    
    $
    2,252,443
    
    
    $
    12,465
    
    
    $
    14,031
    
    
    $
    2,278,939
 Note 12. Fair Value
  -23-




---



##### 



Level 1 Inputs 
    
    Unadjusted quoted prices in active markets for identical assets or
liabilities that the reporting entity has the ability to access at the measurement date.Level 2 Inputs 
    
    Inputs other than quoted prices included in Level 1 that are observable
for the asset or liability, either directly or indirectly. These might include quoted
prices for similar assets or liabilities in active markets, 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,
volatilities, prepayment speeds, and credit risks, or inputs that are derived principally
from or corroborated by market data by correlation or other means.Level 3 Inputs 
    
    Unobservable inputs for determining the fair values of assets or
liabilities that reflect an entitys own assumptions about the assumptions that market
participants would use in pricing the assets or liabilities.
  Securities Available-for-Sale:
  Other Assets and Associated Liabilities:
 Derivatives:
 Impaired Loans:
  -24-




---



##### 



Other Real Estate Owned
 -25-




---



##### 



March 31, 2011Fair Value Measurements Using
    
    
    Total(In Thousands)
    
    Level 1
    
    
    Level 2
    
    
    Level 3
    
    
    Fair ValueAvailable-for-sale securities:Agency securities
    
    $
    
    
    
    $
    9,730
    
    
    $
    
    
    
    $
    9,730Agency mortgage-backed securities
    
    
    
    
    
    
    215,979
    
    
    
    
    
    
    
    215,979Non-Agency Alt-A residential MBS
    
    
    
    
    
    
    12,220
    
    
    
    
    
    
    
    12,220Municipal securities
    
    
    
    
    
    
    147,092
    
    
    
    
    
    
    
    147,092Single issue trust preferred securities
    
    
    
    
    
    
    44,767
    
    
    
    
    
    
    
    44,767Pooled trust preferred securities
    
    
    
    
    
    
    560
    
    
    
    
    
    
    
    560Equity securities
    
    
    597
    
    
    
    20
    
    
    
    
    
    
    
    617Total available-for-sale securities
    
    $
    597
    
    
    $
    430,368
    
    
    $
    
    
    
    $
    430,965Deferred compensation assets
    
    $
    3,099
    
    
    $
    
    
    
    $
    
    
    
    $
    3,099Derivative assetsInterest rate lock commitments
    
    
    
    
    
    
    64
    
    
    
    
    
    
    
    64Total derivative assets
    
    $
    
    
    
    $
    64
    
    
    $
    
    
    
    $
    64Deferred compensation liabilities
    
    $
    3,099
    
    
    $
    
    
    
    $
    
    
    
    $
    3,099Derivative liabilitiesInterest rate lock commitments
    
    
    
    
    
    
    14
    
    
    
    
    
    
    
    14Total derivative liabilities
    
    $
    
    
    
    $
    14
    
    
    $
    
    
    
    $
    14
 December 31, 2010Fair Value Measurements Using
    
    
    Total(In Thousands)
    
    Level 1
    
    
    Level 2
    
    
    Level 3
    
    
    Fair ValueAvailable-for-sale securities:Agency securities
    
    $
    
    
    
    $
    9,832
    
    
    $
    
    
    
    $
    9,832Agency mortgage-backed securities
    
    
    
    
    
    
    215,013
    
    
    
    
    
    
    
    215,013Non-Agency Alt-A residential MBS
    
    
    
    
    
    
    11,277
    
    
    
    
    
    
    
    11,277Municipal securities
    
    
    
    
    
    
    176,138
    
    
    
    
    
    
    
    176,138FDIC-backed securities
    
    
    
    
    
    
    25,660
    
    
    
    
    
    
    
    25,660Single issue trust preferred securities
    
    
    
    
    
    
    41,244
    
    
    
    
    
    
    
    41,244Pooled trust preferred securities
    
    
    
    
    
    
    264
    
    
    
    
    
    
    
    264Equity securities
    
    
    616
    
    
    
    20
    
    
    
    
    
    
    
    636Total available-for-sale securities
    
    $
    616
    
    
    $
    479,448
    
    
    $
    
    
    
    $
    480,064Deferred compensation assets
    
    $
    3,192
    
    
    $
    
    
    
    $
    
    
    
    $
    3,192Derivative assetsInterest rate lock commitments
    
    
    
    
    
    
    28
    
    
    
    
    
    
    
    28Total derivative assets
    
    $
    
    
    
    $
    28
    
    
    $
    
    
    
    $
    28Deferred compensation liabilities
    
    $
    3,192
    
    
    $
    
    
    
    $
    
    
    
    $
    3,192Derivative liabilitiesInterest rate swap
    
    
    
    
    
    
    31
    
    
    
    
    
    
    
    31Interest rate lock commitments
    
    
    
    
    
    
    59
    
    
    
    
    
    
    
    59Total derivative liabilities
    
    $
    
    
    
    $
    90
    
    
    $
    
    
    
    $
    90
 -26-




---



##### 



March 31, 2011Fair Value Measurements Using
    
    Total(In Thousands)
    
    Level 1
    
    Level 2
    
    Level 3
    
    Fair ValueImpaired loans
    
    $
    
    
    
    $
    
    
    
    $
    5,145
    
    
    $
    5,145Restructured loans
    
    
    
    
    
    
    
    
    
    
    6,520
    
    
    
    6,520Other real estate owned
    
    
    
    
    
    
    
    
    
    
    5,644
    
    
    
    5,644
 December 31, 2010Fair Value Measurements Using
    
    Total(In Thousands)
    
    Level 1
    
    Level 2
    
    Level 3
    
    Fair ValueImpaired loans
    
    $
    
    
    
    $
    
    
    
    $
    10,906
    
    
    $
    10,906Restructured loans
    
    
    
    
    
    
    
    
    
    
    5,771
    
    
    
    5,771Other real estate owned
    
    
    
    
    
    
    
    
    
    
    4,910
    
    
    
    4,910
 -27-




---



##### 



Fair Value of Financial Instruments
  March 31, 2011
    
    December 31, 2010Carrying
    
    
    
    
    
    Carrying(In Thousands)
    
    Amount
    
    Fair Value
    
    Amount
    
    Fair ValueAssetsCash and cash equivalents
    
    $
    175,467
    
    
    $
    175,467
    
    
    $
    112,189
    
    
    $
    112,189Investment securities
    
    
    435,489
    
    
    
    435,569
    
    
    
    484,701
    
    
    
    484,768Loans held for sale
    
    
    2,614
    
    
    
    2,631
    
    
    
    4,694
    
    
    
    4,700Loans held for investment, less allowance
    
    
    1,349,203
    
    
    
    1,361,063
    
    
    
    1,359,724
    
    
    
    1,370,173Accrued interest receivable
    
    
    7,288
    
    
    
    7,288
    
    
    
    7,675
    
    
    
    7,675Bank owned life insurance
    
    
    42,583
    
    
    
    42,583
    
    
    
    42,241
    
    
    
    42,241Derivative financial assets
    
    
    64
    
    
    
    64
    
    
    
    28
    
    
    
    28Deferred compensation assets
    
    
    3,099
    
    
    
    3,099
    
    
    
    3,192
    
    
    
    3,192LiabilitiesDemand deposits
    
    $
    222,072
    
    
    $
    222,072
    
    
    $
    205,151
    
    
    $
    205,151Interest-bearing demand deposits
    
    
    287,006
    
    
    
    287,006
    
    
    
    262,420
    
    
    
    262,420Savings deposits
    
    
    420,481
    
    
    
    420,481
    
    
    
    426,547
    
    
    
    426,547Time deposits
    
    
    707,458
    
    
    
    714,388
    
    
    
    726,837
    
    
    
    735,332Securities sold under agreements to repurchase
    
    
    139,472
    
    
    
    159,687
    
    
    
    140,894
    
    
    
    161,100Accrued interest payable
    
    
    3,001
    
    
    
    3,001
    
    
    
    3,264
    
    
    
    3,264FHLB and other indebtedness
    
    
    166,186
    
    
    
    176,234
    
    
    
    191,193
    
    
    
    203,539Derivative financial liabilities
    
    
    14
    
    
    
    14
    
    
    
    90
    
    
    
    90Deferred compensation liabilities
    
    
    3,099
    
    
    
    3,099
    
    
    
    3,192
    
    
    
    3,192
  Cash and Cash Equivalents:
 Investment Securities and Deferred Compensation Assets and Liabilities:
 Loans:
 Accrued Interest Receivable and Payable:
 Bank-owned Life Insurance:
 -28-




---



##### 



Derivative Financial Instruments:
 Deposits and Securities Sold Under Agreements to Repurchase:
 FHLB and Other Indebtedness:
 Commitments to Extend Credit, Standby Letters of Credit, and Financial Guarantees:
 Note 13. Derivatives and Hedging Activities
    (In Thousands)
    
    March 31, 2011
    
    December 31, 2010
    
    March 31, 2010Interest rate swap
    
    $
    
    
    
    $
    50,000
    
    
    $
    50,000IRLCs
    
    
    7,629
    
    
    
    7,566
    
    
    
    2,966
  Asset DerivativesMarch 31, 2011
    
    
    December 31, 2010
    
    
    March 31, 2010Balance Sheet
    
    
    Fair
    
    
    Balance Sheet
    
    
    Fair
    
    
    Balance Sheet
    
    
    Fair(In Thousands)
    
    Location
    
    
    Value
    
    
    Location
    
    
    Value
    
    
    Location
    
    
    ValueDerivatives not designated as hedgesIRLCs
    
    Other assets
    
    $
    64
    
    
    Other assets
    
    $
    28
    
    
    Other assets
    
    $
    Total
    
    
    
    
    
    $
    64
    
    
    
    
    
    
    $
    28
    
    
    
    
    
    
    $
    
 -29-




---



##### 



Liability DerivativesMarch 31, 2011
    
    
    December 31, 2010
    
    
    March 31, 2010Balance Sheet
    
    
    Fair
    
    
    Balance Sheet
    
    
    Fair
    
    
    Balance Sheet
    
    
    Fair(In Thousands)
    
    Location
    
    
    Value
    
    
    Location
    
    
    Value
    
    
    Location
    
    
    ValueDerivatives designated as hedgesInterest rate swap
    
    Other liabilities
    
    $
    
    
    
    Other liabilities
    
    $
    31
    
    
    Other liabilities
    
    $
    1,691Total
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    31
    
    
    
    
    
    
    $
    1,691Derivatives not designated as hedgesIRLCs
    
    Other liabilities
    
    $
    14
    
    
    Other liabilities
    
    $
    59
    
    
    Other liabilities
    
    $
    49Total
    
    
    
    
    
    $
    14
    
    
    
    
    
    
    $
    59
    
    
    
    
    
    
    $
    49Total derivatives
    
    
    
    
    
    $
    14
    
    
    
    
    
    
    $
    90
    
    
    
    
    
    
    $
    1,740
 Interest Rate Swaps.
 Interest Rate Lock Commitments.
  Effect of Derivatives and Hedging Activities on the Income Statement
  Amount of GainDerivatives Not
    
    Location of Gain
    
    
    Recognized in Income on DerivativeDesignated as Hedging
    
    Recognized in Income on
    
    
    Three Months Ended March 31,Instruments
    
    Derivative
    
    
    2011
    
    
    2010(In Thousands)IRLCs
    
    Other income
    
    $
    81
    
    
    $
    23Total
    
    
    
    
    
    $
    81
    
    
    $
    23
 Counterparty Credit Risk.
 -30-




---



##### 



PART I. ITEM 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    FORWARD-LOOKING STATEMENTS
   
    
    The strength of the United States economy in general and the strength of the local
economies in which we conduct operations;
    
    Geopolitical conditions, including acts or threats of terrorism, actions taken by the
United States or other governments in response to acts or threats of terrorism and/or
military conflicts, which could impact business and economic conditions in the United
States and abroad;
    
    The effects of, and changes in, trade, monetary and fiscal policies and laws, including
interest rate policies of the Board of Governors of the Federal Reserve System (the
Federal Reserve);
    
    Inflation, interest rate, market and monetary fluctuations;
    
    The timely development of competitive new products and services and the acceptance of
these products and services by new and existing customers;
    
    The willingness of users to substitute competitors products and services for our
products and services;
    
    The impact of changes in financial services policies, laws and regulations, including
laws, regulations and policies concerning taxes, banking, securities and insurance, and the
application thereof by regulatory bodies;
    
    Technological changes;
    
    The effect of acquisitions we may make, including, without limitation, the failure to
achieve the expected revenue growth and/or expense savings from such acquisitions;
    
    The growth and profitability of noninterest or fee income being less than expected;
    
    Changes in the level of our non-performing assets and charge-offs;
    
    The effect of changes in accounting policies and practices, as may be adopted from time
to time by bank regulatory agencies, the SEC, the Public Company Accounting Oversight
Board, the Financial Accounting Standards Board or other accounting standards setters;
    
    Possible other-than-temporary impairments of securities held by us;
    
    The impact of current governmental efforts to restructure the U. S. financial
regulatory system, including the recent enactment of the Dodd-Frank Wall Street Reform and
Consumer Protection Act;
 -31-




---



##### 




    
    Changes in consumer spending and savings habits; and
    
    Unanticipated regulatory or judicial proceedings.
   APPLICATION OF CRITICAL ACCOUNTING POLICIES
    COMPANY OVERVIEW
    -32-




---



##### 



RECENT LEGISLATION
  
    
    Centralize responsibility for consumer financial protection by creating a new agency,
the Consumer Financial Protection Bureau, responsible for implementing, examining and
enforcing compliance with federal consumer financial laws.
    
    Limit the preemption of state law by federal law and disallow subsidiaries and
affiliates of national banks, such as the Bank, from availing themselves of such
preemption.
    
    Require the Office of the Comptroller of the Currency (the OCC) to seek to make its
capital requirements for national banks, such as the Bank, countercyclical so that capital
requirements increase in times of economic expansion and decrease in times of economic
contraction.
    
    Require financial holding companies, such as First Community, to be well-capitalized and
well-managed as of July 21, 2011. Bank holding companies and banks must also be both
well-capitalized and well-managed in order to engage in interstate bank acquisitions.
    
    Impose comprehensive regulation of the over-the-counter derivatives market, which would
include certain provisions that would effectively prohibit insured depository institutions
from conducting certain derivatives businesses in the institutions themselves.
    
    Implement corporate governance revisions, including with regard to executive
compensation and proxy access by shareholders.
    
    Make permanent the $250,000 limit for federal deposit insurance and increase the cash
limit of Securities Investor Protection Corporation protection from $100,000 to $250,000
and provide unlimited federal deposit insurance until January 1, 2013 for non-interest
bearing demand transaction accounts at all insured depository institutions.
    
    Repeal the federal prohibitions on the payment of interest on demand deposits, thereby
permitting depository institutions to pay interest on business transaction and other
accounts.
    
    Amend the Electronic Fund Transfer Act to, among other things, give the Federal Reserve
the authority to establish rules regarding interchange fees charged for electronic debit
transactions by payment card issuers having assets over $10 billion and to enforce a new
statutory requirement that such fees be reasonable and proportional to the actual cost of a
transaction to the issuer.
    
    Increase the authority of the Federal Reserve to examine bank holding companies, such as
First Community, and their non-bank subsidiaries.
  RESULTS OF OPERATIONS
 Overview
  
    
    Net income increased $473 thousand, or 8.96%, to $5.75 million for the first quarter
of 2011, as compared to the first quarter of 2010.
    
    Return on average assets for the first quarter of 2011 improved to 1.05%, as
compared to 0.85% for the fourth quarter of 2010.
    
    Loan loss provisions were reduced by $2.07 million for the first quarter of 2011, or
56.27%, from the fourth quarter of 2010.
    
    The allowance for loan losses as a percentage of total loans increased to 1.93% at
March 31, 2011, as compared to 1.91% at December 31, 2010.
 -33-




---



##### 




    
    Net interest income for the first quarter of 2011 increased $176 thousand, or 0.97%,
over the fourth quarter of 2010.
    
    Net interest margin for the first quarter of 2011 increased to 3.96%, or 18 basis
points, over the fourth quarter of 2010.
    
    Net charge-offs for the first quarter of 2011 were $1.61 million, a decrease of
$2.01 million from the fourth quarter of 2010.
    
    Tangible book value per common share increased to $10.48, up $0.45, or 4.49%, from
December 31, 2010.
    
    The ratio of non-performing assets to total assets was 111 basis points, an
improvement of 21 basis points from December 31, 2010.
 Net Income
  Net Interest Income  Quarterly Comparison (See Table I)
       -34-




---



##### 



Table I
 AVERAGE BALANCE SHEETS AND NET INTEREST INCOME ANALYSIS
 Three Months Ended
    
    
    Three Months EndedMarch 31, 2011
    
    
    March 31, 2010Average
    
    
    
    
    
    
    Average
    
    
    Average
    
    
    
    
    
    
    Average(Dollars in Thousands)
    
    Balance
    
    
    Interest (1)
    
    
    Rate (1)
    
    
    Balance
    
    
    Interest (1)
    
    
    Rate (1)AssetsEarning assetsLoans (2)
    
    $
    1,382,526
    
    
    $
    20,496
    
    
    
    6.01
    %
    
    $
    1,395,669
    
    
    $
    21,398
    
    
    
    6.22
    %Securities available-for-sale
    
    
    466,288
    
    
    
    4,796
    
    
    
    4.17
    %
    
    
    481,116
    
    
    
    5,833
    
    
    
    4.92
    %Securities held-to-maturity
    
    
    4,545
    
    
    
    95
    
    
    
    8.48
    %
    
    
    7,139
    
    
    
    148
    
    
    
    8.41
    %Interest-bearing deposits
    
    
    108,179
    
    
    
    69
    
    
    
    0.26
    %
    
    
    76,587
    
    
    
    46
    
    
    
    0.24
    %Total earning assets
    
    
    1,961,538
    
    
    
    25,456
    
    
    
    5.26
    %
    
    
    1,960,511
    
    
    
    27,425
    
    
    
    5.67
    %Other assets
    
    
    265,717
    
    
    
    
    
    
    
    
    
    
    
    283,275Total assets
    
    $
    2,227,255
    
    
    
    
    
    
    
    
    
    
    $
    2,243,786LiabilitiesInterest-bearing depositsDemand deposits
    
    $
    271,604
    
    
    $
    211
    
    
    
    0.32
    %
    
    $
    236,484
    
    
    $
    200
    
    
    
    0.34
    %Savings deposits
    
    
    427,727
    
    
    
    356
    
    
    
    0.34
    %
    
    
    413,037
    
    
    
    831
    
    
    
    0.82
    %Time deposits
    
    
    719,476
    
    
    
    3,313
    
    
    
    1.87
    %
    
    
    791,838
    
    
    
    4,471
    
    
    
    2.29
    %Total interest-bearing deposits
    
    
    1,418,807
    
    
    
    3,880
    
    
    
    1.11
    %
    
    
    1,441,359
    
    
    
    5,502
    
    
    
    1.55
    %BorrowingsRetail repurchase agreements
    
    
    88,684
    
    
    
    173
    
    
    
    0.79
    %
    
    
    91,976
    
    
    
    276
    
    
    
    1.22
    %Wholesale repurchase agreements
    
    
    50,000
    
    
    
    467
    
    
    
    3.79
    %
    
    
    50,000
    
    
    
    463
    
    
    
    3.76
    %FHLB borrowings and other indebtedness
    
    
    178,180
    
    
    
    1,795
    
    
    
    4.09
    %
    
    
    198,744
    
    
    
    1,752
    
    
    
    3.58
    %Total borrowings
    
    
    316,864
    
    
    
    2,435
    
    
    
    3.12
    %
    
    
    340,720
    
    
    
    2,491
    
    
    
    2.97
    %Total interest-bearing liabilities
    
    
    1,735,671
    
    
    
    6,315
    
    
    
    1.48
    %
    
    
    1,782,079
    
    
    
    7,993
    
    
    
    1.82
    %Noninterest-bearing demand deposits
    
    
    211,894
    
    
    
    
    
    
    
    
    
    
    
    199,065Other liabilities
    
    
    4,340
    
    
    
    
    
    
    
    
    
    
    
    5,223Stockholders equity
    
    
    275,350
    
    
    
    
    
    
    
    
    
    
    
    257,419Total liabilities and
stockholders equity
    
    $
    2,227,255
    
    
    
    
    
    
    
    
    
    
    $
    2,243,786Net interest income, tax-equivalent
    
    
    
    
    
    $
    19,141
    
    
    
    
    
    
    
    
    
    
    $
    19,432Net interest rate spread (3)
    
    
    
    
    
    
    
    
    
    
    3.78
    %
    
    
    
    
    
    
    
    
    
    
    3.85
    %Net interest margin (4)
    
    
    
    
    
    
    
    
    
    
    3.96
    %
    
    
    
    
    
    
    
    
    
    
    4.02
    %
 
 (1)
    
    Fully taxable equivalent at the rate of 35% (FTE). The FTE basis adjusts for the tax benefits of income on certain tax-exempt loans and
investments using the federal statutory rate of 35% for each period presented. The Company believes this measure to be the preferred industry
measurement of net interest income and provides relevant comparison between taxable and non-taxable amounts.(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. -35-




---



##### 



Three Months EndedMarch 31, 2011, Compared to 2010Dollar Increase (Decrease) due toRate/(In Thousands)
    
    Volume
    
    
    Rate
    
    
    Volume
    
    
    TotalInterest Earned On:Loans (FTE)
    
    $
    (201
    )
    
    $
    (707
    )
    
    
    6
    
    
    $
    (902
    )Securities available-for-sale (FTE)
    
    $
    (180
    )
    
    $
    (885
    )
    
    
    28
    
    
    
    (1,037
    )Securities held-to-maturity (FTE)
    
    $
    (54
    )
    
    $
    1
    
    
    
    (0
    )
    
    
    (53
    )Interest-bearing deposits with other banks
    
    $
    19
    
    
    $
    3
    
    
    
    1
    
    
    
    23Total interest earning assets
    
    $
    (416
    )
    
    
    (1,588
    )
    
    
    35
    
    
    
    (1,969
    )Interest Paid On:Demand deposits
    
    
    30
    
    
    
    (16
    )
    
    
    (3
    )
    
    
    11Savings deposits
    
    
    30
    
    
    
    (487
    )
    
    
    (18
    )
    
    
    (475
    )Time deposits
    
    
    (409
    )
    
    
    (825
    )
    
    
    76
    
    
    
    (1,158
    )Retail repurchase agreements
    
    
    (10
    )
    
    
    (97
    )
    
    
    4
    
    
    
    (103
    )Wholesale repurchase
agreement
    
    
    
    
    
    
    4
    
    
    
    (0
    )
    
    
    4FHLB borrowings and other
long-term debt
    
    
    (181
    )
    
    
    250
    
    
    
    (26
    )
    
    
    43Total interest-bearing liabilities
    
    
    (540
    )
    
    
    (1,171
    )
    
    
    33
    
    
    
    (1,678
    )Change in net interest income,
tax-equivalent
    
    $
    124
    
    
    $
    (417
    )
    
    $
    2
    
    
    $
    (291
    )
 Provision and Allowance for Loan Losses
   For the Three MonthsEnded March 31,(In Thousands)
    
    2011
    
    
    2010Allowance for loan lossesBeginning balance
    
    $
    26,482
    
    
    $
    24,277Provision for loan losses
    
    
    1,612
    
    
    
    3,665Charge-offs
    
    
    (2,027
    )
    
    
    (3,732
    )Recoveries
    
    
    415
    
    
    
    298Net charge-offs
    
    
    (1,612
    )
    
    
    (3,434
    )Ending balance
    
    $
    26,482
    
    
    $
    24,508
  -36-




---



##### 



Noninterest Income
   Noninterest Expense
  -37-




---



##### 



Income Tax Expense
   FINANCIAL CONDITION
  Securities
    Loan Portfolio
 Loans Held for Sale
  Loans Held for Investment
  -38-




---



##### 



March 31, 2011
    
    
    December 31, 2010
    
    
    March 31, 2010(Dollars in Thousands)
    
    Amount
    
    
    Percent
    
    
    Amount
    
    
    Percent
    
    
    Amount
    
    
    PercentLoans Held for InvestmentCommercial loansConstruction  commercial
    
    $
    30,758
    
    
    
    2.24
    %
    
    $
    42,694
    
    
    
    3.08
    %
    
    $
    41,729
    
    
    
    3.00
    %Land development
    
    
    5,781
    
    
    
    0.42
    %
    
    
    16,650
    
    
    
    1.20
    %
    
    
    22,122
    
    
    
    1.59
    %Other land loans
    
    
    23,959
    
    
    
    1.74
    %
    
    
    24,468
    
    
    
    1.77
    %
    
    
    28,536
    
    
    
    2.05
    %Commercial and industrial
    
    
    91,964
    
    
    
    6.68
    %
    
    
    94,123
    
    
    
    6.79
    %
    
    
    100,744
    
    
    
    7.24
    %Multi-family residential
    
    
    75,269
    
    
    
    5.47
    %
    
    
    67,824
    
    
    
    4.89
    %
    
    
    70,508
    
    
    
    5.07
    %Non-farm, non-residential
    
    
    345,265
    
    
    
    25.10
    %
    
    
    351,904
    
    
    
    25.39
    %
    
    
    351,375
    
    
    
    25.26
    %Agricultural
    
    
    1,392
    
    
    
    0.10
    %
    
    
    1,342
    
    
    
    0.10
    %
    
    
    1,278
    
    
    
    0.09
    %Farmland
    
    
    47,228
    
    
    
    3.43
    %
    
    
    36,954
    
    
    
    2.67
    %
    
    
    39,659
    
    
    
    2.85
    %Total commercial loans
    
    
    621,616
    
    
    
    45.18
    %
    
    
    635,959
    
    
    
    45.89
    %
    
    
    655,951
    
    
    
    47.15
    %Consumer real estate loansHome equity lines
    
    
    111,802
    
    
    
    8.13
    %
    
    
    111,620
    
    
    
    8.05
    %
    
    
    110,391
    
    
    
    7.94
    %Single family residential mortgage
    
    
    545,316
    
    
    
    39.64
    %
    
    
    549,157
    
    
    
    39.61
    %
    
    
    537,530
    
    
    
    38.65
    %Owner-occupied construction
    
    
    22,506
    
    
    
    1.64
    %
    
    
    18,349
    
    
    
    1.32
    %
    
    
    20,753
    
    
    
    1.49
    %Total consumer real estate loans
    
    
    679,624
    
    
    
    49.41
    %
    
    
    679,126
    
    
    
    48.98
    %
    
    
    668,674
    
    
    
    48.08
    %Consumer and other loansConsumer loans
    
    
    62,029
    
    
    
    4.51
    %
    
    
    63,475
    
    
    
    4.58
    %
    
    
    60,632
    
    
    
    4.36
    %Other
    
    
    12,416
    
    
    
    0.90
    %
    
    
    7,646
    
    
    
    0.55
    %
    
    
    5,617
    
    
    
    0.41
    %Total consumer and other loans
    
    
    74,445
    
    
    
    5.41
    %
    
    
    71,121
    
    
    
    5.13
    %
    
    
    66,249
    
    
    
    4.77
    %Total
    
    $
    1,375,685
    
    
    
    100.00
    %
    
    $
    1,386,206
    
    
    
    100.00
    %
    
    $
    1,390,874
    
    
    
    100.00
    %Loans Held for Sale
    
    $
    2,614
    
    
    
    
    
    
    $
    4,694
    
    
    
    
    
    
    $
    1,494
 Non-Performing Assets
  -39-




---



##### 



(Dollars in Thousands)
    
    March 31, 2011
    
    
    December 31, 2010
    
    
    March 31, 2010Non-accrual loans
    
    $
    17,703
    
    
    $
    19,414
    
    
    $
    17,477Restructured loans
    
    
    1,509
    
    
    
    5,325
    
    
    
    1,041Loans 90 days or more past due and still
accruing interest
    
    
    
    
    
    
    
    
    
    
    Total non-performing loans
    
    
    19,212
    
    
    
    24,739
    
    
    
    18,518Other real estate owned
    
    
    5,644
    
    
    
    4,910
    
    
    
    4,740Total non-performing assets
    
    $
    24,856
    
    
    $
    29,649
    
    
    $
    23,258Restructured loans performing in accordance with
modified terms
    
    $
    7,519
    
    
    $
    3,911
    
    
    $
    2,050Non-performing loans as a percentage of total loans
    
    
    1.40
    %
    
    
    1.78
    %
    
    
    1.33
    %Non-performing assets as a percentage of total assets
    
    
    1.11
    %
    
    
    1.32
    %
    
    
    1.02
    %Non-performing assets as a percentage of total loans
and other real estate owned
    
    
    1.80
    %
    
    
    2.13
    %
    
    
    1.67
    %Allowance for loan losses as a percentage of
non-performing loans
    
    
    137.8
    %
    
    
    107.0
    %
    
    
    132.3
    %
    Deposits and Other Borrowings
   -40-




---



##### 



Stockholders Equity
  Risk-Based Capital
   Liquidity and Capital Resources
    PART I. ITEM 3. Quantitative and Qualitative Disclosures about Market Risk
 Interest Rate Risk and Asset/Liability Management
   -41-




---



##### 



-42-




---



##### 



Rate Sensitivity AnalysisMarch 31, 2011(Dollars in Thousands)
    
    Change in
    
    
    
    
    
    Change inIncrease (Decrease) in
    
    Net Interest
    
    Percent
    
    Economic Value
    
    PercentInterest Rates (Basis Points)
    
    Income
    
    Change
    
    of Equity
    
    Change300
    
    $
    2,926
    
    
    
    4.0
    
    
    $
    (3,690
    )
    
    
    (1.1
    )200
    
    
    1,659
    
    
    
    2.3
    
    
    
    489
    
    
    
    0.2100
    
    
    735
    
    
    
    1.0
    
    
    
    3,137
    
    
    
    1.0(100)
    
    
    (351
    )
    
    
    (0.5
    )
    
    
    (14,237
    )
    
    
    (4.4
    )
 December 31, 2010(Dollars in Thousands)
    
    Change in
    
    
    
    
    
    Change inIncrease (Decrease) in
    
    Net Interest
    
    Percent
    
    Economic Value
    
    PercentInterest Rates (Basis Points)
    
    Income
    
    Change
    
    of Equity
    
    Change300
    
    $
    932
    
    
    
    1.2
    
    
    $
    (10,634
    )
    
    
    (3.6
    )200
    
    
    121
    
    
    
    0.2
    
    
    
    (1,530
    )
    
    
    (0.5
    )100
    
    
    329
    
    
    
    0.4
    
    
    
    4,734
    
    
    
    1.6(100)
    
    
    (105
    )
    
    
    (0.1
    )
    
    
    (21,503
    )
    
    
    (7.3
    )
  -43-




---



##### 



PART I. ITEM 4. Controls and Procedures
 Disclosure Controls and Procedures
   Changes in Internal Control over Financial Reporting
  PART II. OTHER INFORMATION
 ITEM 1. Legal Proceedings
  ITEM 1A. Risk Factors
  ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds
    -44-




---



##### 



Total Number
    
    
    MaximumTotal
    
    
    
    
    
    
    of Shares
    
    
    Number ofNumber of
    
    
    Average
    
    
    Purchased as
    
    
    Shares That MayShares
    
    
    Price Paid
    
    
    Part of a Publicly
    
    
    Yet be PurchasedPurchased
    
    
    per Share
    
    
    Announced Plan
    
    
    Under the Plan (1)January 1-31, 2011
    
    
    
    
    
    $
    
    
    
    
    
    
    
    
    884,513February 1-28, 2011
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    885,851March 1-31, 2011
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    912,077Total
    
    
    
    
    
    $
    
    
    
    
    
 
 (1)
    
    The Companys stock repurchase plan, as amended, allows the purchase and retention of up
to 1,100,000 shares. The plan has no expiration date, remains open and no plans have expired during
the reporting period covered by this table. No determination has been made to terminate the plan or
to cease making purchases. The Company held 187,923 shares in treasury at March 31, 2011. ITEM 3. Defaults Upon Senior Securities
  ITEM 4. Reserved
 ITEM 5. Other Information
  ITEM 6. Exhibits
  ExhibitNo.
    
    Exhibit3(i)
    
    Articles of Incorporation of First Community Bancshares, Inc. (31)3(ii)
    
    Bylaws of First Community Bancshares, Inc., as amended. (17)3.1
    
    Reserved.4.1
    
    Specimen stock certificate of First Community Bancshares, Inc. (3)4.2
    
    Indenture Agreement dated September 25, 2003. (11)4.3
    
    Amended and Restated Declaration of Trust of FCBI Capital Trust dated September 25, 2003. (11)4.4
    
    Preferred Securities Guarantee Agreement dated September 25, 2003. (11)4.5
    
    Reserved.4.6
    
    Warrant to purchase 88,273 shares of Common Stock of First Community Bancshares, Inc. (29)4.7
    
    Reserved.4.8
    
    Reserved.10.1**
    
    First Community Bancshares, Inc. 1999 Stock Option Contracts (2) and Plan. (4)10.1.1**
    
    Amendment to First Community Bancshares, Inc. 1999 Stock Option Plan, as amended. (18)10.2**
    
    First Community Bancshares, Inc. 2001 Non-Qualified Directors Stock Option Plan. (5)10.3**
    
    Employment Agreement dated December 16, 2008, between First Community Bancshares, Inc. and
John M. Mendez. (6) and Waiver Agreement (27)10.4**
    
    First Community Bancshares, Inc. 2000 Executive Retention Plan, as amended. (24)10.5**
    
    First Community Bancshares, Inc. Split Dollar Plan and Agreement. (8)10.6**
    
    First Community Bancshares, Inc. 2001 Directors Supplemental Retirement Plan, as amended. (24)10.6.1**
    
    Reserved.10.7**
    
    First Community Bancshares, Inc. Wrap Plan. (7)10.8
    
    Reserved.
 -45-




---



##### 



ExhibitNo.
    
    Exhibit10.9**
    
    Form of Indemnification Agreement between First Community Bancshares, Inc., its Directors
and Certain Executive Officers. (9)10.10**
    
    Form of Indemnification Agreement between First Community Bank, N. A, its Directors and
Certain Executive Officers. (9)10.11
    
    Reserved.10.12**
    
    First Community Bancshares, Inc. 2004 Omnibus Stock Option Plan (10) and Form of Award
Agreement. (13)10.13
    
    Reserved.10.14**
    
    First Community Bancshares, Inc. Directors Deferred Compensation Plan. (7)10.15**
    
    Reserved.10.16**
    
    Employment Agreement dated November 30, 2006, between First Community Bank, N. A. and
Ronald L. Campbell. (19)10.17**
    
    Employment Agreement dated September 28, 2007, between GreenPoint Insurance Group, Inc.
and Shawn C. Cummings. (20)10.18
    
    Securities Purchase Agreement by and between the United States Department of the Treasury
and First Community Bancshares, Inc. dated November 21, 2008. (22)10.19**
    
    Employment Agreement dated December 16, 2008, between First Community Bancshares, Inc. and
David D. Brown. (23)10.20**
    
    Employment Agreement dated December 16, 2008, between First Community Bancshares, Inc. and
Robert L. Buzzo. (26)10.21**
    
    Employment Agreement dated December 16, 2008, between First Community Bancshares, Inc. and
E. Stephen Lilly. (26)10.22**
    
    Employment Agreement dated December 16, 2008, between First Community Bank, N. A. and Gary
R. Mills. (26)10.23**
    
    Employment Agreement dated December 16, 2008, between First Community Bank, N. A. and
Martyn A. Pell. (26)10.24**
    
    Employment Agreement dated December 16, 2008, between First Community Bank, N. A. and
Robert. L. Schumacher. (26)10.25**
    
    Employment Agreement dated July 31, 2009, between First Community Bank, N. A. and Simpson
O. Brown. (25)10.26**
    
    Employment Agreement dated July 31, 2009, between First Community Bank, N. A. and Mark R.
Evans. (25)11
    
    Statement regarding computation of earnings per share. (16)31.1*
    
    Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer.31.2*
    
    Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer.32*
    
    Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
 
 *
    
    Furnished herewith.**
    
    Indicates a management contract or compensation plan.(1)
    
    Incorporated by reference from the Quarterly Report on Form 10-Q for the period ended June
30, 2010, filed on August 16, 2010(2)
    
    Incorporated by reference from the Quarterly Report on Form 10-Q for the period ended June
30, 2002, filed on August 14, 2002.(3)
    
    Incorporated by reference from the Annual Report on Form 10-K for the period ended December
31, 2002, filed on March 25, 2003, as amended on March 31, 2003.(4)
    
    Incorporated by reference from the Annual Report on Form 10-K for the period ended December
31, 1999, filed on March 30, 2000, as amended April 13, 2000.(5)
    
    The option agreements entered into pursuant to the 1999 Stock Option Plan and the 2001
Non-Qualified Directors Stock Option Plan are incorporated by reference from the Quarterly
Report on Form 10-Q for the period ended June 30, 2002, filed on August 14, 2002.(6)
    
    Incorporated by reference from Exhibit 10.1 of the Current Report on Form 8-K dated and filed
December 16, 2008. The Registrant has entered into substantially identical agreements with
Robert L. Buzzo and E. Stephen Lilly, with the only differences being with respect to title
and salary.(7)
    
    Incorporated by reference from Item 1.01 of the Current Report on Form 8-K dated August 22,
2006, and filed August 23, 2006.(8)
    
    Incorporated by reference from Exhibit 10.5 of the Annual Report on Form 10-K for the period
ended December 31, 1999, and filed on April 4, 2000, and amended on April 13, 2000. -46-




---



##### 



(9)
    
    Form of indemnification agreement entered into by the Company and by First Community Bank, N.
A. with their respective directors and certain officers of each including, for the Registrant
and Bank: John M. Mendez, Robert L. Schumacher, Robert L. Buzzo, E. Stephen Lilly, David D.
Brown, and Gary R. Mills. Incorporated by reference from the Annual Report on Form 10-K for
the period ended December 31, 2003, filed on March 15, 2004, and amended on May 19, 2004.(10)
    
    Incorporated by reference from the 2004 First Community Bancshares, Inc. Definitive Proxy
filed on March 15, 2004.(11)
    
    Incorporated by reference from the Quarterly Report on Form 10-Q for the period ended
September 30, 2003, filed on November 10, 2003.(12)
    
    Incorporated by reference from the Quarterly Report on Form 10-Q for the period ended March
31, 2004, filed on May 7, 2004.(13)
    
    Incorporated by reference from the Quarterly Report on Form 10-Q for the period ended June
30, 2004, filed on August 6, 2004.(14)
    
    Incorporated by reference from the Annual Report on Form 10-K for the period ended December
31, 2004, and filed on March 16, 2005. Amendments in substantially similar form were executed
for Directors Clark, Kantor, Hamner, Modena, Perkinson, Stafford, and Stafford II.(15)
    
    Incorporated by reference from the Current Report on Form 8-K dated October 24, 2006, and
filed October 25, 2006.(16)
    
    Incorporated by reference from Note 1 of the Notes to Consolidated Financial Statements
included herein.(17)
    
    Incorporated by reference from Exhibit 3.1 of the Current Report on Form 8-K dated February
14, 2008, filed on February 20, 2008.(18)
    
    Incorporated by reference from Exhibit 10.1.1 of the Quarterly Report on Form 10-Q for the
period ended March 31, 2004, filed on May 7, 2004.(19)
    
    Incorporated by reference from Exhibit 2.1 of the Form S-3 registration statement filed May
2, 2007.(20)
    
    Incorporated by reference from the Exhibit 10.17 of the Annual Report on Form 10-K for the
period ended December 31, 2007, filed on March 13, 2008.(21)
    
    Reserved.(22)
    
    Reserved.(23)
    
    Incorporated by reference from Exhibit 10.2 of the Current Report on Form 8-K dated and filed
December 16, 2008.(24)
    
    Incorporated by reference from Exhibit 10.3 of the Current Report on Form 8-K dated December
16, 2010, and filed December 17, 2010.(25)
    
    Incorporated by reference from Exhibit 2.1 of the Current Report on Form 8-K dated April 2,
2009 and filed April 3, 2009.(26)
    
    Incorporated by reference from the Current Report on Form 8-K dated and filed July 6, 2009.(27)
    
    Incorporated by reference from Exhibit 10.2 on Form 8-K dated December 16, 2010, and filed
December 17, 2010.(28)
    
    Reserved.(29)
    
    Reserved.(30)
    
    Reserved.(31)
    
    Incorporated by reference from Exhibit 3(i) of the Quarterly Report on Form 10-Q for the
period dated June 30, 2010, and filed August 16, 2010. -47-




---



##### 



/s/ John M. MendezJohn M. MendezPresident & Chief Executive Officer
(Principal Executive Officer)/s/ David D. BrownDavid D. BrownChief Financial Officer
(Principal Accounting Officer) -48-




---



##### 



EXHIBIT INDEX
 Exhibit No.
    
    Exhibit31.1
    
    Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer.31.2
    
    Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer.32
    
    Certification of Chief Executive Officer and Chief Financial
Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002.
 -49-