FORM 10-Q

                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

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


For the quarterly period ended June 30, 2000

                                       OR

                 [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR
                     15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from              to
                               -------------  -------------
Commission File No.  0-19618

                        FIRST COMMUNITY BANCSHARES, INC.
             (Exact name of registrant as specified in its charter)

Indiana                                                             35-1833586
(State or other jurisdiction of              (IRS Employer Identification No.)
incorporation or organization)

                                210 East Harriman
                             Bargersville, IN 46106
                    (Address of principal executive offices)
                                   (Zip Code)
                                 (317) 422-5171
              (Registrant's telephone number, including area code)

Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Sections 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months, and (2) has been subject to such filing
requirements for the past 90 days.

                                  Yes  X   No
                                      ---     ---

Outstanding Shares of Common Stock on August 1, 2000                 1,039,959

<PAGE>

                FIRST COMMUNITY BANCSHARES, INC. AND SUBSIDIARIES
                                    FORM 10-Q

                                      INDEX

                                                                        Page No.
                                                                        --------

Forward Looking Statement......................................................3

Part I. Financial Information:

   Item 1.  Financial Statements:

               Consolidated Condensed Balance Sheet............................4

               Consolidated Condensed Statement of Income......................5

               Consolidated Condensed Statement of Comprehensive Income .......6

               Consolidated Condensed Statement of Stockholders' Equity........7

               Consolidated Condensed Statement of Cash Flows..................8

               Notes to Unaudited Consolidated Condensed Financial Statements..9

   Item 2.  Management's Discussion and Analysis of Financial
                 Condition and Results of Operations..........................10

   Item 3.  Quantitative and Qualitative Disclosures About Market Risk........15

Part II. Other Information:

   Item 1.  Legal Proceedings.................................................15

   Item 2.  Changes In Securities.............................................15

   Item 3.  Defaults Upon Senior Securities...................................15

   Item 4.  Submission of Matters to a Vote of Security Holders...............15

   Item 5.  Other Information.................................................15

   Item 6.  Exhibits and Reports on Form 8-K..................................15

Signatures....................................................................16

                                       2
<PAGE>

                            FORWARD LOOKING STATEMENT

This Quarterly Report on Form 10-Q ("Form 10-Q") contains statements which
constitute forward looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. These statements appear in a number of
places in this Form 10-Q and include statements regarding the intent, belief,
outlook, estimate or expectations of the Company (as defined below), its
directors or its officers primarily with respect to future events and the future
financial performance of the Company. Readers of this Form 10-Q are cautioned
that any such forward looking statements are not guarantees of future events or
performance and involve risks and uncertainties, and that actual results may
differ materially from those in the forward looking statements as a result of
various factors. The accompanying information contained in this Form 10-Q
identifies important factors that could cause such differences. These factors
include changes in interest rates; loss of deposits and loan demand to other
financial institutions; substantial changes in financial markets; changes in
real estate values and the real estate market or regulatory changes.





                                       3
<PAGE>

Item 1. Financial Statements
----------------------------

<TABLE>
<CAPTION>
               FIRST COMMUNITY BANCSHARES, INC. AND SUBSIDIARIES
                      Consolidated Condensed Balance Sheet
                                  (Unaudited)

                                                                     June 30,       December 31,
                                                                       2000             1999
                                                                 --------------------------------
<S>                                                              <C>              <C>
Assets
    Cash and due from banks                                      $  1,981,188     $  2,357,531
    Short-term interest-bearing deposits                            1,722,443        2,245,670
                                                                 --------------------------------
        Cash and cash equivalents                                   3,703,631        4,603,201
    Investment securities
        Available for sale                                         11,415,396       14,065,377
        Held to maturity                                            1,451,149        6,966,605
                                                                 --------------------------------
           Total investment securities                             12,866,545       21,031,982
    Loans                                                         118,380,685      111,715,874
        Allowance for loan losses                                    (942,319)        (873,203)
                                                                 --------------------------------
           Net loans                                              117,438,366      110,842,671
    Premises and equipment                                          4,584,249        4,448,634
    Federal Home Loan Bank of Indianapolis stock, at cost             777,800          777,800
    Interest receivable                                             1,045,906        1,084,609
    Cash value of life insurance                                    1,630,349        1,593,788
    Other assets                                                      965,468          854,001
                                                                 --------------------------------

        Total assets                                             $143,012,314     $145,236,686
                                                                 ================================

Liabilities
    Deposits
        Noninterest-bearing                                      $  9,678,314     $  9,411,994
        Interest-bearing                                          115,368,438      118,903,006
                                                                 --------------------------------
           Total deposits                                         125,046,752      128,315,000
    Federal Home Loan Bank of Indianapolis advances                 5,150,000        4,597,389
    Other borrowings                                                2,600,759        2,613,827
    Interest payable                                                  410,517          334,234
    Other liabilities                                                 659,043          570,756
                                                                 --------------------------------
        Total liabilities                                         133,867,071      136,431,206
                                                                 --------------------------------

Commitments and Contingent Liabilities

Stockholders' Equity
    Preferred stock, no-par value
        Authorized and unissued - 1,000,000 shares
    Common stock, no-par value
        Authorized - 4,000,000 shares
        Issued and outstanding - 1,039,959 and 1,019,694 shares     7,023,423        6,930,024
    Retained earnings and contributed capital                       2,344,429        2,096,894
    Accumulated other comprehensive loss                             (222,609)        (221,438)
                                                                 --------------------------------
        Total stockholders' equity                                  9,145,243        8,805,480
                                                                 --------------------------------

        Total liabilities and stockholders' equity               $143,012,314     $145,236,686
                                                                 ================================
</TABLE>

See notes to consolidated condensed financial statements.

                                       4
<PAGE>

<TABLE>
<CAPTION>
               FIRST COMMUNITY BANCSHARES, INC. AND SUBSIDIARIES
                   Consolidated Condensed Statement of Income
                                  (Unaudited)

                                                       Three Months Ended        Six Months Ended
                                                            June 30,                 June 30,
                                                     -------------------------------------------------
                                                        2000         1999        2000        1999
                                                     -------------------------------------------------
<S>                                                  <C>          <C>         <C>         <C>
Interest Income
    Loans, including fees                            $2,527,357   $2,117,343  $5,013,262  $4,234,492
    Investment securities
        Taxable                                          54,195       62,372     137,642     103,674
        Tax exempt                                      124,107       92,269     249,418     160,857
    Interest-bearing time deposits                       71,030      129,325     143,868     211,703
    Dividends                                            15,342       15,513      32,401      32,315
                                                     -------------------------------------------------
        Total interest income                         2,792,031    2,416,822   5,576,591   4,743,041
                                                     ------------ ----------- ----------- ------------

Interest Expense
    Deposits                                          1,466,788    1,226,219   2,935,441   2,351,125
    FHLB advances                                        61,681       80,821     126,842     157,032
    Other borrowings                                     47,211       39,490      95,321      66,887
                                                     -------------------------------------------------
        Total interest expense                        1,575,680    1,346,530   3,157,604   2,575,044
                                                     -------------------------------------------------

Net Interest Income                                   1,216,351    1,070,292   2,418,987   2,167,997
    Provision for loan losses                            55,000       75,000     119,100     150,000
                                                     -------------------------------------------------
Net Interest Income After Provision for Loan Losses   1,161,351      995,292   2,299,887   2,017,997
                                                     -------------------------------------------------

Other Income
    Trust fees                                            8,629       21,575      17,989      25,315
    Service charges on deposit accounts                 122,500       80,287     229,610     155,455
        Loss on sale of securities                       (1,849)           0      (1,849)          0
    Other operating income                               58,879        9,723     101,011      25,945
                                                     -------------------------------------------------
        Total other income                              188,159      111,585     346,761     206,715
                                                     -------------------------------------------------

Other Expenses
    Salaries and employee benefits                      556,008      399,093   1,108,859     780,215
    Premises and equipment                              158,479       93,879     321,939     183,703
    Advertising                                          40,836       44,320      82,819      85,062
    Data processing fees                                120,445       82,646     231,519     163,735
    Deposit insurance expense                             6,558       15,334      13,378      29,343
    Printing and office supplies                         65,832       31,125     139,639      59,825
    Legal and professional fees                          45,276       72,960      98,768     112,626
    Telephone expense                                    27,319       22,895      58,175      46,524
    Other operating expense                              47,380      112,407     225,465     246,247
                                                     -------------------------------------------------
        Total other expenses                          1,068,133      874,659   2,280,561   1,707,280
                                                     -------------------------------------------------

Income Before Income Tax                                281,377      232,218     366,087     517,432
    Income tax expense                                   55,047       51,818      36,588     132,047
                                                     -------------------------------------------------

Net Income                                           $  226,330   $  180,400  $  329,499  $  385,385
                                                     =================================================

Basic earnings per share                             $      .22   $      .18  $      .33  $      .38
Diluted earnings per share                           $      .21   $      .17  $      .32  $      .37
</TABLE>

See notes to consolidated condensed financial statements.

                                       5
<PAGE>

<TABLE>
<CAPTION>
               FIRST COMMUNITY BANCSHARES, INC. AND SUBSIDIARIES
            Consolidated Condensed Statement of Comprehensive Income
                                  (Unaudited)



                                                 Three Months Ended           Six Months Ended
                                                      June 30,                    June 30,
                                              -------------------------------------------------------
                                                  2000         1999          2000           1999
                                              -------------------------------------------------------

<S>                                           <C>           <C>          <C>            <C>
  Net Income                                  $  226,330    $  180,400   $  329,499     $  385,385
  Other comprehensive income, net of tax
      Unrealized gains (losses) on
      securities available for sale
              Unrealized holding gains
              (losses) arising during
              The period, net of tax
              benefit (expense) of
              ($14,814), $74,547,
              $769 and $85,527                    23,703      (113,657)         (54)      (130,399)

              Less:  Reclassification
              adjustment for losses
              included in net income, net
              of tax benefit of
              $732 and $732                       (1,117)                    (1,117)
                                              -------------------------------------------------------
                                                  22,586      (113,657)      (1,171)      (130,399)
                                              -------------------------------------------------------
   Comprehensive income                       $  248,916    $  66,743    $  328,328     $  254,986
                                              =======================================================
</TABLE>


See notes to consolidated condensed financial statements

                                       6
<PAGE>

<TABLE>
<CAPTION>
                FIRST COMMUNITY BANCSHARES, INC AND SUBSIDIARIES
            Consolidated Condensed Statement of Stockholders' Equity
                     For the Six Months Ended June 30, 2000
                                  (Unaudited)



                                                             Retained
                                     Common Stock            Earnings        Accumulated
                               --------------------------       And             Other
                                  Shares                    Contributed     Comprehensive
                               Outstanding     Amount         Capital           Loss           Total
                               -------------------------------------------------------------------------

<S>                            <C>           <C>            <C>             <C>             <C>
Balances, January 1, 2000      1,019,694     $6,930,024     $2,096,894      $ (221,438)     $8,805,480

 Net income for the period                                     329,499                         329,499
 Unrealized losses on                                                           (1,171)         (1,171)
 securities Cash dividend
 $.04 per share)                                               (81,964)                        (81,964)

 Options exercised, net of cost   30,840        170,854                                        170,854

 Tax benefits on options exercised               12,300                                         12,300

 Purchase of stock               (10,575)       (89,755)                                       (89,755)
                               -------------------------------------------------------------------------

Balances, June 30, 2000        1,039,959     $7,023,423     $2,344,429     $  (222,609)     $9,145,243
                               =========================================================================
</TABLE>


See notes to consolidated condensed financial statements.

                                       7
<PAGE>

<TABLE>
<CAPTION>
               FIRST COMMUNITY BANCSHARES, INC. AND SUBSIDIARIES
                 Consolidated Condensed Statement of Cash Flows
                                  (Unaudited)


                                                                        Six Months Ended
                                                                             June 30,
                                                                  ---------------------------
                                                                      2000           1999
                                                                  ---------------------------
<S>                                                               <C>            <C>
Operating Activities
    Net income                                                    $   329,499    $   385,385
    Adjustments to reconcile net income to net cash provided by
       operating activities
      Provision for loan losses                                       119,100        150,000
      Depreciation and amortization                                   175,813         94,777
      Investment securities amortization (accretion)                  (21,459)        31,674
      Gain on sale of foreclosed real estate                                0         (7,241)
      Loss on sale of fixed assets                                          0          2,318
            Loss on sale of securities available for sale               1,849              0
      Net change in:
                Cash value of life insurance                          (36,561)             0
        Interest receivable                                            38,703        (79,459)
        Interest payable                                               76,283          7,678
        Other assets                                                   (9,993)      (155,144)
        Other liabilities                                              87,477         24,602
                                                                  ---------------------------
           Net cash provided by operating activities                  760,711        454,590
                                                                  ---------------------------

Investing Activities
    Purchases of securities available for sale                              0     (6,146,730)
    Proceeds from maturities of securities available for sale       2,634,286        490,000
    Purchases of securities held to maturity                       (4,973,179)      (225,000)
    Proceeds from paydowns and maturities of securities held
      to maturity                                                  10,522,000        420,000
    Net change in loans                                            (6,803,200)    (6,735,655)
    Proceeds from sale of foreclosed real estate                            0         72,500
    Purchases of property and equipment                              (311,428)      (202,343)
                                                                  ---------------------------
           Net cash provided (used) by investing activities         1,068,479    (12,327,228)
                                                                  ---------------------------

Financing Activities
    Net change in
      Noninterest-bearing, NOW and savings deposits                 1,796,504      3,752,477
      Certificates of Deposit                                      (5,064,752)    10,714,598
    Proceeds from borrowings                                        6,000,000      1,830,000
    Repayment of borrowings                                        (5,460,457)        (8,158)
    Purchase of stock                                                 (89,755)        (6,129)
    Cash dividends                                                    (81,154)       (30,660)
    Rights and options exercised, net of costs                        170,854        104,192
                                                                  ---------------------------
           Net cash provided (used) by financing activities        (2,728,760)    16,356,320
                                                                  ---------------------------
Net Change in Cash and Cash Equivalents                              (899,570)     4,483,682

Cash and Cash Equivalents, Beginning of Period                      4,603,201     14,292,071
                                                                  ---------------------------

Cash and Cash Equivalents, End of Period                          $ 3,703,631    $18,775,753
                                                                  ===========================

Supplemental cash flow disclosures
    Interest paid                                                 $ 3,081,321    $ 2,567,366
    Income tax paid                                                    20,000        246,570
    Dividend payable                                                   41,598         30,639
</TABLE>

See notes to consolidated condensed financial statements.

                                       8
<PAGE>

               FIRST COMMUNITY BANCSHARES, INC. AND SUBSIDIARIES
         Notes to Unaudited Consolidated Condensed Financial Statements


Note 1: Basis of Presentation
-----------------------------

The consolidated financial statements include the accounts of First Community
Bancshares, Inc. (the "Company") and its wholly owned subsidiaries, First
Community Bank & Trust, a state chartered bank (the "Bank") and First Community
Real Estate Management, Inc. ("FCREMI"). FCREMI holds and manages real estate
used by the Company and the Bank. A summary of significant accounting policies
is set forth in Note 1 of Notes to Financial Statements included in the December
31, 1999, Annual Report to Shareholders. All significant intercompany accounts
and transactions have been eliminated in consolidation.

The interim consolidated financial statements have been prepared in accordance
with instructions to Form 10-Q, and therefore do not include all information and
footnotes necessary for a fair presentation of financial position, results of
operations and cash flows in conformity with generally accepted accounting
principles.

The interim consolidated financial statements at June 30, 2000, and for the
three and six months ended June 30, 2000 and 1999, have not been audited by
independent accountants, but reflect, in the opinion of management, all
adjustments (which include only normal recurring adjustments) necessary to
present fairly the financial position, results of operations and cash flows for
such periods.


Note 2: Earnings Per Share
--------------------------

<TABLE>
<CAPTION>
                                      Three Months Ended                   Three Months Ended
                                        June 30, 2000                        June 30, 1999
                                        -------------                        -------------
                                          Weighted     Per                      Weighted   Per
                                          Average      Share                    Average    Share
                                 Income    Shares      Amount          Income    Shares    Amount
                                 ------    ------      ------          ------    ------    ------
<S>                             <C>         <C>         <C>           <C>       <C>          <C>
Basic earnings per share
     Income available to
      common stockholders       $226,330    1,014,372   $ .22         $180,400  1,021,850    $ .18
                                                       =======                              =======

Effect of dilutive stock options                2,482                               7,160
Effect of convertible debt        10,568       90,910                   10,568     80,455
                                ----------------------                --------------------
Diluted earnings per share
     Income available to
      common stockholders and
      assumed conversions       $236,898    1,107,764   $ .21         $190,968  1,109,465    $ .17
                                ==============================        =============================
</TABLE>


                                       9
<PAGE>

<TABLE>
<CAPTION>
                                       Six Months Ended                     Six Months Ended
                                        June 30, 2000                        June 30, 1999
                                        -------------                        -------------
                                          Weighted     Per                      Weighted   Per
                                          Average      Share                    Average    Share
                                 Income    Shares      Amount          Income    Shares    Amount
                                 ------    ------      ------          ------    ------    ------
<S>                             <C>         <C>         <C>           <C>       <C>          <C>
Basic earnings per share
     Income available to
      common stockholders       $329,499    1,013,150   $ .33         $385,385  1,020,862    $ .38
                                                       =======                              =======

Effect of dilutive stock options                3,922                              10,530
Effect of convertible debt        10,568       45,455                   13,836     40,227
                                ----------------------                --------------------
Diluted earnings per share
     Income available to
      common stockholders and
      assumed conversions       $340,067    1,062,527   $ .32         $399,221  1,071,619    $ .37
                                ==============================        =============================
</TABLE>


Note 3: Business Combinations
-----------------------------

On November 10, 1999, the Company signed a definitive agreement to acquire Blue
River Federal Savings Bank, Edinburgh, Indiana. The acquisition will be
accounted for under the purchase method of accounting. Under the terms of the
agreement, the Company will pay $41.50 for each share of common stock of Blue
River Federal Savings Bank. The Company will borrow $4,000,000 to finance the
transaction. A loan for $2,000,000 will be secured with Bank stock and the
second loan for $2,000,000 will be unsecured. Both loans will have a 15-year
term with interest only due for the first five years. The secured $2,000,000
loan will bear interest at .25% below the lender's prime rate of interest and
the unsecured $2,000,000 loan will bear interest at .75% over the lender's prime
rate of interest. The transaction is subject to approval by appropriate
regulatory agencies. The Company anticipates amortizing core deposit intangibles
over ten years and goodwill over twenty years. As of June 30, 2000, Blue River
Federal Savings Bank had total assets and stockholders' equity of $25.3 million
and $2.6 million respectively.

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

The Bank is a subsidiary of the Company and operates as an Indiana commercial
bank. On May 26, 1998, the Company formed a new subsidiary, First Community Real
Estate Management, Inc. whose purpose is to purchase and lease back to the Bank
properties originally owned by the Bank thereby allowing the Bank to redeploy
its capital to other uses. The Bank is making monthly lease payments to FCREMI
as lessee of these locations. These lease payments are sufficient to service the
debt incurred by FCREMI to purchase these properties. As a bank holding company,
the Company depends upon the operations of its subsidiaries for all revenue and
reports its results of operations on a consolidated basis with its subsidiaries.

The Bank's profitability depends primarily upon the difference between the
income on its loans and investments and the cost of its deposits and borrowings.
This difference is referred to as the spread or net interest margin. The
difference between the amount of interest earned on loans and investments and
the interest incurred on deposits and borrowings is referred to as net interest
income. Interest income from loans and investments is a function of the amount
of loans and investments outstanding during the period and the interest rates
earned. Interest expense related to deposits and borrowings is a function of the
amount of deposits and borrowings outstanding during the period and the interest
rates paid.

                                       10
<PAGE>

Financial Condition
-------------------

Total assets decreased $2.2 million, or 1.5%, to $143.0 million at June 30,
2000, from $145.2 million at December 31, 1999. Net loans increased from $110.8
million on December 31, 1999 to $117.4 million on June 30, 2000. Deposits
decreased from $128.3 million on December 31, 1999 to $125.0 million on June 30,
2000.

The Company has continued to see strong demand for loan products. The increases
in loans can be attributed to several factors, none of which can be singled out
as the predominant reason for the growth, but each of which is believed to have
contributed to these increases. These factors include: (i) increased population
in the geographic areas serviced; (ii) increased per-household disposable income
in the geographic areas serviced; (iii) an increase in the number of branch
offices; and (iv) the preference of certain individuals in the service area for
dealing with a locally owned institution. The decrease in deposits is directly
related to the pricing methodology used by management during the period and the
efforts being made to shift the concentration of deposits from higher costing
products to lower costing products. The increase in loans and the outflow of
deposits were primarily funded by paydowns and maturities of securities owned by
the Company.

The Company owns certain warrants entitling it to purchase, for a nominal
consideration, shares of common stock (the "Warrant Shares") of a privately held
software development company. The software company has indicated that if a
certain transaction it is currently negotiating were to materialize, the Warrant
Shares could significantly increase in value. There can be no assurance however,
that such transaction will be successfully consummated or that, even if they are
successfully concluded, the Warrant Shares will increase in value or the amount
of any such increase would be significant.

Results of Operations
---------------------

The Company had net income of $329,000 and $385,000 for the six months, and
$226,000 and $180,000 for the three months ended June 30, 2000 and 1999,
respectively. Net interest income was $2.4 million and $2.2 million for the six
months, and $1.2 and $1.1 million for the three months ended June 30, 2000 and
1999, respectively.

Net income decreased $56,000 for the six months ended June 30, 2000, and
increased $46,000 for the three months ended June 30, 2000, when compared to the
same periods in 1999, due primarily to general increases in other expenses
offset by an increase in net interest income and other income. Net interest
income increased $251,000 or 11.6% for the six months ended June 30, 2000 and
$146,000 or 13.6% for the three months ended June 30, 2000. These increases in
net interest income resulted primarily from increases in interest income on
loans and tax-exempt investment securities offset by an increase in interest
expense. The increases in interest income and interest expense resulted
primarily from increases in the volume of interest-earning assets and
interest-bearing liabilities for both the six and three months ended June 30,
2000. The increase in income from service fees of $74,000 and $42,000 for the
six and three months ended June 30, 2000, compared to the prior year, resulted
from a significant increase in both the number of deposit accounts and fees
associated with the same. The increases in other operating income were directly
related to increased earnings from investments in life insurance policies by the
Bank and management's decision to begin assessing surcharges at the Bank's ATM's
during the second quarter of 2000. These increases amounted to $75,000 and
$49,000 for the six and three months ended June 30, 2000. The increases in other
expenses were directly a result of the overall growth of the Bank. The Bank's
growth has been facilitated by and resulted in the increase of additional
personnel, facilities, and equipment, as well as other general expenses
including, but not limited to, advertising, supplies and professional fees. In
addition, as the Bank's loans and deposits increase, the associated data
processing fees have increased. Income taxes increased $3,000 for the three
months ended June 30, 2000 and decreased $95,000 for the six months ended June
30, 2000, when compared to the same periods in 1999. The increase in

                                       11
<PAGE>

taxes for the three month period is due to the Company having more pre-tax
income compared to the year earlier period. The decrease in taxes for the six
month period is due to an increase in the Bank's tax exempt securities portfolio
and having less pre-tax income compared to the prior six month period.

Asset Quality
-------------

The Bank currently classifies loans as substandard, doubtful and loss to assist
management in addressing collection risks and pursuant to regulatory
requirements, which are not necessarily consistent with generally accepted
accounting principles. Substandard loans represent credits characterized by the
distinct possibility that some loss will be sustained if deficiencies are not
corrected. Doubtful loans possess the characteristics of substandard loans, but
collection or liquidation in full is doubtful based upon existing facts,
conditions and values. A loan classified as a loss is considered uncollectible.
As of June 30, 2000, the Bank had $983,000 million of loans classified as
substandard, none as doubtful and none as loss. The allowance for loan losses
was $942,000 or .80% of net loans receivable at June 30, 2000 compared to
$873,000 or .78% of net loans receivable at December 31, 1999. A portion of
classified loans are non-accrual loans. First Community had non-accrual loans
totaling $272,000 at June 30, 2000 compared to $296,000 at December 31, 1999.

Asset/Liability Management
--------------------------

One of the actions undertaken by the Company's management has been to adopt
asset/liability management policies in an attempt to reduce the susceptibility
of the Company's net interest spread to the adverse impact of volatile interest
rates. This goal can be achieved by attempting to match maturities (or
time-to-repricing) of assets with maturities or repricing of liabilities and
then actively managing any mismatch. Accomplishing this objective requires
attention to both the asset and liability sides of the balance sheet. The
difference between maturity of assets and maturity of liabilities is measured by
the interest-rate gap.

At June 30, 2000, the Company's one-year cumulative interest-rate gap as a
percent of total assets was a negative 24.1%. This negative interest-rate gap
represents substantial risk for the Company in an environment of rising interest
rates. A negative interest-rate gap means the Company's earnings are vulnerable
in periods of rising interest rates because during such periods the interest
expense paid on liabilities will generally increase more rapidly than the
interest income earned on assets. Conversely, in a falling interest-rate
environment, the total interest expense paid on liabilities will generally
decrease more rapidly than the interest income earned on assets. A positive
interest-rate gap would have the opposite effect.

Asset management goals have been directed toward obtaining a suitable balance of
asset quality, liquidity and diversification in order to stabilize and improve
earnings. The asset management strategy has concentrated on shortening the
maturity of its loan portfolio by increasing adjustable-rate loans and
short-term installment and commercial loans. However, increasing short-term
installment and commercial loans increases the overall risk of the loan
portfolio. Such risk relates primarily to collection and to the loans that often
are secured by rapidly depreciating assets. The Company's ratio of
non-performing assets to total assets was .27% at June 30, 2000 and .24% at
December 31, 1999.

The primary goal in the management of liabilities has been to extend the
maturities and improve the stability of deposit accounts. Management has
attempted to combine a policy for controlled growth with a strong, loyal
customer base to control interest expense.

The following schedule illustrates the interest-rate sensitivity of
interest-earning assets and interest-bearing liabilities at June 30, 2000.
Mortgages which have adjustable or renegotiable interest rates are shown as
subject to change every one to three years based upon the contracted-for
adjustment period. This schedule does not reflect the effects of possible
prepayments or enforcement of due-on-sale clauses.

                                       12
<PAGE>

<TABLE>
<CAPTION>
                                             At June 30, 2000 Maturing or Repricing
                                     --------------------------------------------------------

                                     One Year     1 - 3       3 - 5      Over 5
                                      or Less     Years       Years      Years       Total
                                     --------------------------------------------------------
                                                       (Dollars in 000's)
<S>                                    <C>         <C>         <C>       <C>          <C>
Interest-earning assets:
  Adjustable rate mortgages            14,714      9,182       4,294                  28,190
  Fixed rate mortgages                  1,326        123         355     23,631       25,435
  Commercial loans                     15,490      4,774       2,122      4,554       26,940
  Consumer loans                       10,760     15,074       7,439      1,980       35,253
  Tax-exempt loans and leases                                    973      1,589        2,562
  Investments                           2,112      3,083       2,713      5,327       13,235
  FHLB stock                              778                                            778
  Interest-bearing deposits             1,722                                          1,722
                                     --------------------------------------------------------
      Total interest-earning assets    46,902     32,236      17,896     37,081      134,115
                                     --------------------------------------------------------
Interest-bearing liabilities:
  Fixed maturity deposits              52,739     12,812       1,796      3,550       70,897
  Other deposits                       26,494     12,470       5,420         87       44,471
  FHLB advances                         2,150      2,000       1,000                   5,150

                                     --------------------------------------------------------
      Total interest-bearing
      liabilities                      81,383     27,282       8,216      3,637      120,518
                                     --------------------------------------------------------
Excess (deficiency) of
interest-earning assets over
interest-bearing liabilities          (34,481)     4,954       9,680     33,444       13,597

Cumulative excess (deficiency) of
interest-earning assets over
interest-bearing liabilities          (34,481)   (29,527)    (19,847)    13,597

Cumulative ratio at June 30, 2000
as a percent of total assets           (24.11)%
</TABLE>



                                       13
<PAGE>

Liquidity and Capital Resources
-------------------------------

Liquidity refers to the ability of a financial institution to generate
sufficient cash to fund current loan demand, meet savings deposit withdrawals
and pay operating expenses. The primary sources of liquidity are cash,
interest-bearing deposits in other financial institutions, marketable
securities, loan repayments, increased deposits and total institutional
borrowing capacity.

Cash and interest-bearing deposits, when combined with investments, have
remained a relatively constant percent of total assets, while increasing in
dollar volume. Management's goal is to maintain approximately twenty percent
(20%) to twenty-five percent (25%) of total assets in cash, interest-bearing
deposits and investments in order to satisfy the Company's need for liquidity
and other short-term obligations.

Management believes that it has adequate liquidity for the Company's short- and
long-term needs. Short-term liquidity needs resulting from normal
deposit/withdrawal functions are provided by the Company retaining a portion of
cash generated from operations in a Federal Home Loan Bank ("FHLB") daily
investment account. This account acts as a short-term liquidity source while
providing interest income to the Company. Long-term liquidity and other
liquidity needs are provided by the ability of the Company to borrow from the
FHLB. The balance of its FHLB advances was $5.2 million at June 30, 2000 and
$4.6 million at December 31, 1999.

On October 30, 1998, the Company issued rights and warrants to shareholders to
purchase one share of common stock of the Company for every ten shares owned as
of October 29, 1998, subject to a minimum offer and purchase of 100 shares. The
rights were exercisable until March 30, 1999 and the warrants were exercisable
from September 15, 1999 to December 13, 1999. The net proceeds to the Company
from the sale of the stock, after deducting the expenses, were $149,000. The
purpose of the rights offering was to raise additional capital for the Bank to
support additional growth and for general corporate purposes.

In addition, on October 30, 1998, the Company commenced the offer and sale of up
to $1.0 million in unsecured convertible notes, of which all $1.0 million were
sold. The notes are due December 31, 2008, bear interest at the rate of 7% per
annum and, at the option of the holder, are convertible to common stock of the
Company at the conversion price of $11.00 per share. The net proceeds of this
offering were used to provide capital to FCREMI to acquire and lease branch
facilities to the Bank and to provide additional capital to the Bank to support
asset growth.

At June 30, 2000, the Bank had tier 1 capital of approximately 7.1% and
risk-based capital of approximately 9.9%. The regulatory tier 1 and risk-based
capital requirements are 4.0% and 8.0% respectively.

Impact of Inflation and Changing Prices
---------------------------------------

The financial statements and related data presented herein have been prepared in
accordance with generally accepted accounting principles. These principles
require the measurement of financial position and operating results in terms of
historical dollars, without considering changes in the relative purchasing power
of money over time due to inflation.

The primary assets and liabilities of the Company are monetary in nature.
Consequently, interest rates generally have a more significant impact on
performance than the effects of inflation. Interest rates, however, do not
necessarily move in the same direction or with the same magnitude as the price
of goods and services. In a period of rapidly rising interest rates, the
liquidity and the maturity structure of the Company's assets and liabilities are
critical to the maintenance of acceptable performance levels.

                                       14
<PAGE>

Other
-----

The Securities and Exchange Commission maintains a Web site that contains
reports, proxy and information statements, and other information regarding
registrants that file electronically with the Commission, including the Company.
The address is (http://www.sec.gov).

Item 3.        Quantitative and Qualitative Disclosures About Market Risk
-------        ----------------------------------------------------------
Although the Company files a Form 10-K in lieu of Form 10-KSB, the Company
qualifies as a small business issuer. Therefore, Item 7A is not required under
Section 229.305 of Regulation S-K.



                           Part II - Other Information

Item 1.        Legal Proceedings.
-------        ------------------
               None.

Item 2.        Changes in Securities.
-------        ----------------------
               On May 31, 2000 the Company issued options for the purchase of
               1,000 shares of common stock to each of five outside directors
               with an exercise price of $6.875 per share in reliance on the
               exemption provided by Section 4(2) of the Securities Act of 1933,
               as amended (the "Act").

               On June 2 and 29, 2000 the Company issued 15,420 shares of common
               stock each to two directors upon exercise of an outstanding
               options in reliance upon the exemption provided by Section 4(2)
               of the Act.

Item 3.        Defaults upon Senior Securities.
-------        --------------------------------
               Not applicable.

Item 4.        Submission of Matters to a Vote by Security Holders.
-------        ----------------------------------------------------
               On May 31, 2000, the Company held its annual meeting of
               shareholders. A total of 914,129 shares were represented in
               person or by proxy at the meeting. Merrill M. Wesemann, M.D.
               was elected to the Board of Directors for a three-year term
               expiring in 2003. 903,620 shares were voted in favor of the
               election of Dr. Wesemann, 288 shares were voted against and there
               were 10,221 abstentions or broker non-votes. Albert R. Jackson,
               III was elected to the Board of Directors for a three-year term
               expiring in 2003. 903,586 shares were voted in favor of the
               election of Mr. Jackson, 322 shares were voted against the
               nominee and there were 10,221 abstentions or broker non-votes.
               Continuing Directors include Albert R. Jackson, Jr. and Eugene W.
               Morris, whose terms expire in 2001and and Frank D. Neese and Roy
               Martin Umbarger whose terms expire in 2002.

Item 5.        Other Information.
-------        ------------------
               None.

Item 6.        Exhibits and Reports on Form 8-K.
-------        ---------------------------------
               (a)   Exhibit 27 Financial Data Schedule.
               (b)   No reports were filed on Form 8-K during the quarter ended
                     June 30, 2000.

                                       15
<PAGE>

                                   SIGNATURES

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

                                   FIRST COMMUNITY BANCSHARES, INC.

 Date:  August 10, 2000            By: /s/ Albert R. Jackson III
                                      -------------------------------------
                                       Albert R. Jackson III
                                       Chief Executive Officer and Director

 Date:  August 10, 2000            By: /s/ Randy J. Sizemore
                                      -------------------------------------
                                       Randy J. Sizemore
                                       Vice President of Finance



                                       16