##### Table of Contents





UNITED STATES SECURITIES AND
    EXCHANGE COMMISSIONWashington, D.C.
    20549
  Form 10-K
  ANNUAL
    REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
    EXCHANGE ACT OF 1934
  For
    the fiscal year ended December 31, 2009
  Commission file number
    000-19297
 FIRST COMMUNITY BANCSHARES,
    INC.
 (Exact name of registrant as
    specified in its charter)
  Nevada

55-0694814(State or other jurisdiction of
    incorporation)

(I.R.S. Employer Identification
    No.)P.O. Box 989
    Bluefield, Virginia(Address of principal
    executive offices)

24605-0989(Zip Code)   (276) 326-9000
 Registrants telephone
    number, including area code:
  Securities registered pursuant to Section 12(b) of the
    Act:
  Title of each class

Name of exchange on which registeredCommon Stock, $1.00 par value

NASDAQ Global Select   Securities registered pursuant to Section 12(g) of the
    Act:
 None
  o þ
  o þ
  þ o
  Regulation S-T o o
  Regulation S-K Form 10-K Form 10-K. o
  Rule 12b-2
  Large accelerated filer o

Accelerated filer þ

Non-accelerated filer o

Smaller reporting company o(Do not check if a smaller reporting company)   Rule 12b-2 o þ
          DOCUMENTS
    INCORPORATED BY REFERENCE
  Form 10-K.




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##### 





TABLE OF
    CONTENTS
   
 PagePART IItem 1

Business


3Item 1A.

Risk Factors


12Item 1B.

Unresolved Staff Comments


19Item 2.

Properties


19Item 3.

Legal Proceedings


19Item 4.

Reserved


19PART IIItem 5.

Market for Registrants Common Equity,
    Related Stockholder Matters and Issuer Purchases of Equity
    Securities


19Item 6.

Selected Financial Data


22Item 7.

Managements Discussion and Analysis of
    Financial Condition and Results of Operations


23Item 7A.

Quantitative and Qualitative Disclosures About
    Market Risk


48Item 8.

Financial Statements and Supplementary Data


50Item 9.

Changes in and Disagreements with Accountants on
    Accounting and Financial Disclosure


106Item 9A.

Controls and Procedures


106Item 9B.

Other Information


106PART IIIItem 10.

Directors, Executive Officers and Corporate
    Governance


106Item 11.

Executive Compensation


109Item 12.

Security Ownership of Certain Beneficial Owners
    and Management and Related Stockholder Matters


109Item 13

Certain Relationships and Related Transactions,
    and Director Independence


109Item 14.

Principal Accounting Fees and Services


109PART IVItem 15.

Exhibits, Financial Statement Schedules


110Signatures


113EX-12EX-23.1EX-31.1EX-31.2EX-32   2




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##### Table of Contents



PART I  ITEM 1.
    BUSINESS.  General
        Operating
    Segments
    Competition
    Employees
    Regulation
    and Supervision
  General
   3




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##### Table of Contents



The
    Company
    Regulatory Restrictions on Dividends; Source of
    Strength.
    Scope of Permissible Activities.
      Anti-Tying Restrictions.
 4




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##### Table of Contents



Stock Repurchases.
  Capital Adequacy Requirements.
    plus minus
     5




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##### Table of Contents



Acquisitions by Bank Holding Companies.
  Incentive Compensation.
        The
    Bank
    Restrictions on Transactions with Affiliates and
    Insiders. and/or
   6




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Restrictions on Distribution of Subsidiary Bank Dividends and
    Assets.
      Examinations. on-site
  Capital Adequacy Requirements.
      Corrective Measures for Capital
    Deficiencies.
 7




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Deposit Insurance Assessments.
   8




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##### Table of Contents



Temporary Liquidity Guarantee Program.
  Safety and Soundness Standards.
  Enforcement Powers.
 9




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##### Table of Contents



Consumer Laws and Regulations.
    USA PATRIOT Act of 2001.
  Regulatory Reform. over-the-counter
   10




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##### Table of Contents



Participation
    in the Troubled Asset Relief Program Capital Purchase
    Program
    10-year
  Website
    Access to Company Documents
  Form 10-K, Form 10-Q Form 8-K, Form 10-K. Form 10-K,
    Forward-Looking
    Statements
  Form 10-K and/or
 11




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Form 10-K.
    ITEM 1A.
    RISK
    FACTORS.  Changes
    in the fair value of the Companys securities may reduce
    its stockholders equity and net income.
  available-for-sale. available-for-sale available-for-sale
  other-than-temporary. other-than-temporary, other-than-temporary
     12




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The
    current economic environment poses significant challenges for
    the Company and could adversely affect its financial condition
    and results of operations.
    
    Economic conditions that negatively affect housing prices and
    the job market have resulted, and may continue to result, in
    deterioration in credit quality of the Companys loan
    portfolios, and such deterioration in credit quality has had,
    and could continue to have, a negative impact on the
    Companys business.
    Market developments may affect consumer confidence levels and
    may cause adverse changes in payment patterns, causing increases
    in delinquencies and default rates on loans and other credit
    facilities.
    The processes the Company uses to estimate allowance for loan
    losses and reserves may no longer be reliable because they rely
    on complex judgments, including forecasts of economic
    conditions, which may no longer be capable of accurate
    estimation.
    The Companys ability to assess the creditworthiness of its
    customers may be impaired if the models and approaches it uses
    to select, manage, and underwrite its customers become less
    predictive of future charge-offs.
    The Company expects to face increased regulation of its
    industry, and compliance with such regulation may increase its
    costs, limit its ability to pursue business opportunities, and
    increase compliance challenges.    The
    Company and its subsidiary business are subject to interest rate
    risk and variations in interest rates may negatively affect its
    financial performance.
   13




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The
    Banks allowance for loan losses may not be adequate to
    cover actual losses.
      The
    declining real estate market could impact the Companys
    business.
    The
    Companys level of credit risk is increasing due to its
    focus on commercial and construction lending, and the
    concentration on small businesses and middle market customers
    with heightened vulnerability to economic
    conditions.
   14




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The
    Bank may suffer losses in its loan portfolio despite its
    underwriting practices.
    The
    Company and its subsidiaries are subject to extensive regulation
    which could adversely affect them.
  and/or and/or
   15




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The
    Banks ability to pay dividends is subject to regulatory
    limitations which, to the extent the Company requires such
    dividends in the future, may affect the Companys ability
    to pay its obligations and pay dividends.
    The
    Company faces strong competition from other financial
    institutions, financial service companies and other
    organizations offering services similar to those offered by the
    Company and its subsidiaries, which could hurt the
    Companys business.
     16




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Potential
    Acquisitions May Disrupt the Companys Business and Dilute
    Stockholder Value
    
    Potential exposure to unknown or contingent liabilities of the
    target company.
    Exposure to potential asset quality issues of the target company.
    Difficulty and expense of integrating the operations and
    personnel of the target company.
    Potential disruption to the Companys business.
    Potential diversion of the Companys managements time
    and attention.
    The possible loss of key employees and customers of the target
    company.
    Difficulty in estimating the value of the target company.
    Potential changes in banking or tax laws or regulations that may
    affect the target company.  and/or
    The
    Companys goodwill may be determined to be
    impaired.
    The
    Company may lose members of its management team and have
    difficulty attracting skilled personnel.
   17




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Higher
    FDIC deposit insurance premiums and assessments could adversely
    affect the Companys financial condition.
      The
    Company may need to raise additional capital in the future, and
    such capital may not be available when needed or at
    all.
    Liquidity
    risk could impair the Companys ability to fund its
    operations and jeopardize its financial condition.
   18




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ITEM 1B.
    UNRESOLVED
    STAFF COMMENTS.  Form 10-K.
  ITEM 2.
    PROPERTIES.  Form 10-K.
  ITEM 3.
    LEGAL
    PROCEEDINGS.    ITEM 4.
    RESERVED. PART II  ITEM 5.
    MARKET
    FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS
    AND ISSUER PURCHASES OF EQUITY SECURITIES.  Common
    Stock Market Prices and Dividends
        2009

2008High

Low

High

LowSales Price Per ShareFirst quarter

$
35.13


$
7.90


$
34.89


$
28.00Second quarter


17.55



10.27



34.89



27.79Third quarter


14.29



12.00



39.00



25.54Fourth quarter


13.06



10.50



38.00



23.49   19




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##### Table of Contents



2009


2008Cash Dividends Per ShareFirst quarter

$



$
0.28Second quarter


0.20



0.28Third quarter


0.10



0.28Fourth quarter






0.28Total

$
0.30


$
1.12   Stock
    Repurchase Plans
  Rule 10b-18(a)(3)
  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)October 1-31, 2009


8,500


$
12.53



8,500



689,006November 1-30, 2009


4,000



11.66



4,000



707,514December 1-31, 2009














782,342Total


12,500


$
12.25



12,500     (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 317,658 shares in
    treasury at December 31, 2009. 20




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##### Table of Contents



Total
    Return Analysis
    Total
    Return Performance
  
  Period EndingIndex

12/31/04

12/31/05

12/31/06

12/31/07

12/31/08

12/31/09First Community Bancshares, Inc.


100.00



89.28



116.96



97.44



110.34



39.06S&P 500


100.00



104.91



121.48



128.16



80.74



102.11NASDAQ Composite


100.00



101.37



111.03



121.92



72.49



104.31Asset & Regional Peer Group**


100.00



104.09



116.63



86.19



72.47



51.23   **
    
    The Asset Size & Regional Peer Group consists of the
    following institutions: Ameris Bancorp, Atlantic Southern
    Financial Group, Inc., BancTrust Financial Group, Inc., Bank of
    Florida Corporation, Bank of Granite Corporation, Bank of the
    Ozarks, Inc., BNC Bancorp, Burke & Herbert
    Bank & Trust Company, Cadence Financial
    Corporation, Capital Bank Corporation, Capital City Bank Group,
    Inc., Cardinal Financial Corporation, Carter Bank &
    Trust, CenterState Banks, Inc., City Holding Company, Colony
    Bankcorp, Inc., Commonwealth Bankshares, Inc., Crescent Banking
    Company, Crescent Financial Corporation, Eastern Virginia
    Bankshares, Inc., Fidelity Southern Corporation, First Bancorp,
    First Bancorp, Inc., First M&F Corporation, First National
    Bank of Shelby, First Security Group, Inc., FNB United Corp.,
    Great Florida Bank, Green Bankshares, Inc., Hampton Roads
    Bankshares, Inc., Home BancShares, Inc., NewBridge Bancorp,
    Nexity Financial Corporation, PAB Bankshares, Inc., Palmetto
    Bancshares, Inc., Peoples Bancorp of North Carolina, Inc.,
    Renasant Corporation, Savannah Bancorp, Inc., SCBT Financial
    Corporation, Seacoast Banking Corporation of Florida, Simmons
    First National Corporation, Southeastern Bank Financial
    Corporation, Southern Bancshares (N.C.), Inc., Southern
    Community Financial Corporation, StellarOne Corporation, Summit
    Financial Group, Inc., Tennessee Commerce Bancorp, Inc., TIB
    Financial Corp., TowneBank, Union Bankshares Corporation,
    Virginia Commerce Bancorp, Inc., Wilson Bank Holding Company,
    and Yadkin Valley Financial Corporation. 21




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##### Table of Contents



ITEM 6.
    SELECTED
    FINANCIAL DATA.  Form 10-K.
  At or for the Year Ended December 31,Five-Year Selected Financial Data

2009


2008


2007


2006


2005(Dollars in thousands, except per share data)Balance Sheet Summary
    (at end of period)Securities

$
493,511


$
529,393


$
676,195


$
528,389


$
428,554Loans held for sale


11,576



1,024



811



781



1,274Loans, net of unearned income


1,393,931



1,298,159



1,225,502



1,284,863



1,331,039Allowance for loan losses


21,725



15,978



12,833



14,549



14,736Total assets


2,274,878



2,133,314



2,149,838



2,033,698



1,952,483Deposits


1,645,960



1,503,758



1,393,443



1,394,771



1,403,220Borrowings


352,558



381,791



517,843



406,556



335,885Total liabilities


2,021,016



1,912,972



1,932,740



1,820,968



1,757,982Stockholders equity


253,862



220,342



217,098



212,730



194,501Summary of EarningsTotal interest income

$
107,934


$
110,765


$
127,591


$
120,026


$
109,508Total interest expense


38,682



44,930



59,276



48,381



35,880Net interest income


69,252



65,835



68,315



71,645



73,628Provision for loan losses


15,053



7,422



717



2,706



3,706Net interest income after provision for loan losses


54,199



58,413



67,598



68,939



69,922Non-interest income


25,186



32,297



24,831



21,323



22,305Investment securities impairment


78,863



29,923











Non-interest expense


66,624



60,516



50,463



49,837



55,591(Loss) income from continuing operations before income taxes


(66,102
)


271



41,966



40,425



36,636Income (benefit) tax expense


(27,874
)


(2,810
)


12,334



11,477



10,191(Loss) income from continuing operations


(38,228
)


3,081



29,632



28,948



26,445Loss from discontinued operations before income taxes


















(233
)Income tax benefit


















(91
)Loss from discontinued operations


















(142
)Net (loss) income


(38,228
)


3,081



29,632



28,948



26,303Dividends on preferred stock


2,160



255











Net (loss) income available to common shareholders


(40,388
)


2,826



29,632



28,948



26,303  22




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##### Table of Contents



At or for the Year Ended December 31,Five-Year Selected Financial Data-continued

2009


2008


2007


2006


2005Per Share DataBasic (loss) earnings per common share

$
(2.72
)

$
0.26


$
2.64


$
2.58


$
2.33Basic (loss) earnings per common share-continuing operations


(2.72
)


0.26



2.64



2.58



2.35Basic loss per common share-discontinued operations


















(0.02
)Diluted (loss) earnings per common share

$
(2.72
)

$
0.25


$
2.62


$
2.57


$
2.32Diluted (loss) earnings per common share-continuing operations


(2.72
)


0.25



2.62



2.57



2.33Diluted loss per common share-discontinued operations


















(0.01
)Cash dividends

$
0.30


$
1.12


$
1.08


$
1.04


$
1.02Book value per common share at year-end

$
14.29


$
15.46


$
19.61


$
18.92


$
17.29Selected RatiosReturn on average assets


−1.81
%


0.14
%


1.39
%


1.46
%


1.37
%Return on average equity


−16.46
%


1.40
%


13.54
%


14.32
%


13.79
%Average equity to average assets


11.00
%


9.86
%


10.30
%


10.21
%


9.91
%Dividend payout










40.91
%


40.31
%


43.78
%Risk based capital to risk adjusted assets


13.90
%


12.91
%


12.34
%


12.69
%


11.65
%Leverage ratio


8.58
%


9.75
%


8.09
%


8.50
%


7.77
%   ITEM 7.
    MANAGEMENTS
    DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
    OPERATIONS.  Executive
    Overview
    Economy
     23




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Competition
    Application
    of Critical Accounting Policies
        Investment
    securities
  other-than-temporary
 24




---



##### Table of Contents



other-than-temporarily other-than-temporary,
  Allowance
    for Loan Losses
          Acquisitions
    and Intangible Assets
       25




---



##### Table of Contents



Income
    Taxes
      Recent
    Acquisitions and Branching Activity
     26




---



##### Table of Contents



RESULTS
    OF OPERATIONS
  2009
    COMPARED TO 2008
      Net
    Interest Income
     27




---



##### Table of Contents



available-for-sale
      3-month 3-month
 28




---



##### Table of Contents



Average
    Balance Sheets and Net Interest Income Analysis
  2009


2008


2007Average





Yield/


Average





Yield/


Average





Yield/Balance


Interest(1)


Rate(1)


Balance


Interest(1)


Rate(1)


Balance


Interest(1)


Rate(1)(Dollars in thousands)Earning Assets:Loans held for 
    investment:(2)


1,333,112



82,785



6.21
%


1,199,076



80,305



6.70
%


1,251,028



93,561



7.48
%Available-for-sale
    securities


537,278



27,638



5.14
%


576,864



33,438



5.80
%


625,413



36,113



5.77
%Held-to-maturity
    securities


7,828



643



8.21
%


10,302



849



8.24
%


15,220



1,212



7.96
%Interest bearing deposits with banks


62,242



165



0.27
%


15,489



306



1.98
%


24,662



1,175



4.76
%Total earning assets


1,940,460



111,231



5.73
%


1,801,731



114,898



6.38
%


1,916,323



132,061



6.89
%Other assets


289,724











244,455











208,916Total

$
2,230,184










$
2,046,186










$
2,125,239Interest-bearing liabilities:Demand deposits

$
205,997


$
443



0.22
%

$
174,809


$
292



0.17
%

$
147,856


$
456



0.31
%Savings deposits


334,217



2,588



0.77
%


312,363



4,693



1.50
%


330,969



7,327



2.21
%Time deposits


863,357



24,765



2.87
%


671,729



24,807



3.69
%


697,996



30,974



4.44
%Total interest bearing deposits


1,403,571



27,796



1.98
%


1,158,901



29,792



2.57
%


1,176,821



38,757



3.29
%Borrowings:Federal funds purchased














15,942



362



2.27
%


5,773



312



5.40
%Retail repurchase agreements


101,775



1,375



1.38
%


143,159



3,029



2.12
%


167,359



5,809



3.47
%Wholesale repurchase agreements


50,000



1,922



3.84
%


50,000



1,630



3.26
%


50,000



2,181



4.36
%FHLB borrowings and other debt


204,678



7,589



3.71
%


244,801



10,117



4.13
%


258,644



12,217



4.72
%Total borrowings


356,453



10,886



3.05
%


453,902



15,138



3.34
%


481,776



20,519



4.26
%Total interest bearing liabilities


1,760,024



38,682



2.20
%


1,612,803



44,930



2.79
%


1,658,597



59,276



3.57
%Demand deposits


199,917











211,791











228,583Other liabilities


24,832











19,850











19,210Stockholders equity


245,411











201,742











218,849Total

$
2,230,184










$
2,046,186










$
2,125,239Net interest income





$
72,549










$
69,968










$
72,785Net interest rate spread(3)










3.53
%










3.59
%










3.32
%Net interest margin(4)










3.74
%










3.88
%










3.80
%     (1)
    
    Fully taxable equivalent at the rate of 35%.(2)
    
    Non-accrual loans are included in average balances outstanding
    but with no related interest income during the period of
    non-accrual.(3)
    
    Represents the difference between the tax equivalent yield on
    earning assets and cost of funds.(4)
    
    Represents tax equivalent net interest income divided by average
    interest earning assets. 29




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##### Table of Contents



Rate and
    Volume Analysis of Interest
    Twelve Months Ended


Twelve Months EndedDecember 31,


December 31,2009 Compared to 2008


2008 Compared to 2007$ Increase/(Decrease) due to


$ Increase/(Decrease) due toRate/











Rate/Volume


Rate


Volume


Total


Volume


Rate


Volume


Total(In thousands)Interest Earned On:Loans(1)

$
8,980


$
(5,875
)

$
(625
)

$
2,480


$
(3,886
)

$
(9,758
)

$
388


$
(13,256
)Securities
    available-for-sale(1)


(2,296
)


(3,807
)


303



(5,800
)


(2,801
)


188



(61
)


(2,675
)Securities
    held-to-maturity(1)


(204
)


(3
)


1



(206
)


(391
)


43



(14
)


(363
)Interest-bearing deposits with other banks


926



(265
)


(802
)


(141
)


(437
)


(686
)


253



(869
)Total interest-earning assets


7,406



(9,951
)


(1,123
)


(3,667
)


(7,515
)


(10,213
)


566



(17,163
)Interest Paid On:Demand deposits


53



87



11



151



84



(207
)


(41
)


(164
)Savings deposits


328



(2,280
)


(153
)


(2,105
)


(411
)


(2,350
)


127



(2,634
)Time deposits


7,071



(5,508
)


(1,605
)


(42
)


(1,166
)


(5,235
)


234



(6,167
)Fed funds purchased


(363
)






1



(362
)


551



(181
)


(320
)


50Retail repurchase agreements


(877
)


(1,102
)


326



(1,654
)


(840
)


(2,259
)


319



(2,780
)Wholesale repurchase agreements






290



2



292







(550
)


(1
)


(551
)FHLB borrowings and other long-term debt


(1,657
)


(1,028
)


157



(2,528
)


(653
)


(1,526
)


79



(2,100
)Total interest-bearing liabilities


4,555



(9,542
)


(1,261
)


(6,248
)


(2,436
)


(12,308
)


398



(14,346
)Change in net interest income, tax-equivalent

$
2,851


$
(409
)

$
139


$
2,581


$
(5,079
)

$
2,095


$
168


$
(2,817
)     (1)
    
    Fully taxable equivalent using a rate of 35%.  Provision
    for Loan Losses
    Noninterest
    Income
  other-than-temporary Available-for-Sale
 30




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##### Table of Contents



Noninterest
    Expense
            period-to-period
   31




---



##### Table of Contents



2009


2008


2007(Dollars in thousands)GAAP-based efficiency ratioNoninterest expenses

$
66,624


$
60,516


$
50,463Net interest income plus noninterest income

$
15,575


$
68,209


$
93,146GAAP-based efficiency ratio


427.76
%


88.72
%


54.18
%Non-GAAP efficiency ratioNoninterest expenses  GAAP-based

$
66,624


$
60,516


$
50,463Less non-GAAP adjustments:Foreclosed property expense


(763
)


(382
)


(185
)Amortization of intangibles


(1,028
)


(689
)


(467
)Prepayment penalties on FHLB advances


(88
)


(1,647
)


Merger expenses


(1,726
)






FDIC special assessments


(988
)






Other non-core, non-recurring expense items


(225
)


(51
)


(100
)Adjusted non-interest expenses


61,806



57,747



49,711Net interest income plus noninterest income 
    GAAP-based


15,575



68,209



93,146Plus non-GAAP adjustment:Tax equivalency


3,297



4,133



4,470Less non-GAAP adjustments:Security losses (gains)


11,673



(1,899
)


(411
)Other-than-temporary
    security impairments


78,863



29,923



Acquisition gains


(4,493
)Other non-core, non-recurring income items


(340
)






(104
)Adjusted net interest income plus noninterest income


104,575



100,366



97,101Non-GAAP efficiency ratio


59.10
%


57.54
%


51.20
%   Income
    Tax Expense
     32




---



##### Table of Contents



2008
    COMPARED TO 2007
      Net
    Interest Income
        available-for-sale
     33




---



##### Table of Contents



3-month end-of-period 3-month
  Provision
    for Loan Losses
    Noninterest
    Income
            Noninterest
    Expense
   34




---



##### Table of Contents



Income
    Tax Expense
      FINANCIAL
    POSITION
  Available-for-Sale
    Securities
  Available-for-sale
  Available-for-sale held-to-maturity
   35




---



##### Table of Contents



available-for-sale
    CurrentCurrent























Year


CumulativeComposite


Credit











Deferrals/Defaults


Unrealized


Credit-


Credit-Credit


Rating at


Issuing


Book


Fair


Actual


Percent


Loss


Related


RelatedDeal Name

Rating


Purchase


Banks


Value


Value


Amount


of Deal


in OCI


OTTI


OTTI(Dollars in thousands)Single-issueBank of America


BB



A+



1


$
28,793


$
22,970



None



n/a


$
(5,823
)

$



$
JPMorgan Chase


BBB+



A



1



10,070



7,300



None



n/a



(2,770
)






Northern Trust


A−



A2



1



4,008



2,752



None



n/a



(1,256
)






SunTrust


BB+



A



1



4,941



3,104



None



n/a



(1,837
)






Wells Fargo


BBB+



A+



1



7,812



4,984



None



n/a



(2,828
)






$
55,624


$
41,110










$
(14,514
)

$



$
PooledPreTSL X B1


Ca



A



58


$
188


$
188


$
195,625



38.6
%

$



$
9,900


$
9,900PreTSL XII B1


Ca



A



79



366



366



197,100



25.8
%






19,748



19,748PreTSL XIV B1


Ca



A



64



901



901



89,500



18.8
%






8,099



8,099PreTSL XXII C1


Ca



A



82



119



119



339,500



24.5
%






12,559



12,559PreTSL XXIII C1


Caa3



A



70



74



74



270,500



19.5
%






7,890



7,890$
1,648


$
1,648










$



$
58,196


$
58,196  36




---



##### Table of Contents



UnrealizedGains/(Losses)Par


Fair


Amortized


Recognized


CumulativeValue


Value


Cost


in AOCL


OTTI(Amounts in thousands)Available for saleAgency securities

$
25,435


$
25,276


$
25,421


$
(145
)

$
Agency mortgage-backed securities


259,032



264,218



260,220



3,998



Non-Agency mortgage-backed securities:BB


5,766



5,170



5,743



(573
)


CCC


25,000



11,301



20,968



(9,667
)


4,251Total


30,766



16,471



26,711



(10,240
)


4,251Municipals:AAA


4,583



4,652



4,580



72



AA


52,105



53,380



52,063



1,317



A


47,042



48,071



46,989



1,082



BBB


14,870



14,886



14,757



129



Not rated


15,570



14,612



14,796



(184
)


Total


134,170



135,601



133,185



2,416



Single-issue bank trust preferred securities:A


4,130



2,752



4,008



(1,256
)


BBB


18,300



12,283



17,882



(5,599
)


BB


34,125



26,075



33,734



(7,659
)


Total


56,555



41,110



55,624



(14,514
)


Pooled trust preferred securities:Below investment grade


59,948



1,648



1,648







58,196Total


59,948



1,648



1,648







58,196Equity securities






1,733



1,717



16



1,189Total

$
565,906


$
486,057


$
504,526


$
(18,469
)

$
63,636Held to maturityMunicipals:AA

$
2,830


$
2,867


$
2,819


$
48


$
A


3,670



3,567



3,495



72



BBB


660



661



659



2



Not rated


1,120



484



481



3



Total

$
8,280


$
7,579


$
7,454


$
125


$
  37




---



##### Table of Contents



available-for-sale
  December 31,2009


2008


2007Amortized


Fair


Amortized


Fair


Amortized


FairCost


Value


Cost


Value


Cost


Value(Amounts in thousands)U.S. Government agency securities

$
25,421


$
25,276


$
53,425


$
54,818


$
136,791


$
139,237States and political subdivisions


133,185



135,601



163,042



159,419



186,834



188,536Trust preferred securities:Single-issue


55,624



41,110



55,491



33,542



55,422



51,549Pooled


1,648



1,648



93,269



32,511



109,309



99,076Total trust preferred securites


57,272



42,758



148,760



66,053



164,731



150,625Mortgage-backed securities:Agency


260,220



264,218



212,315



216,962



177,965



176,708Non-Agency prime residential


5,743



5,170



7,423



5,766



4



4Non-Agency Alt-A residential


20,968



11,301



10,750



10,750



15



15Total mortgage-backed securities


286,931



280,689



230,488



233,478



177,984



176,727Equities


1,717



1,733



7,979



6,955



8,597



8,995Total

$
504,526


$
486,057


$
603,694


$
520,723


$
674,937


$
664,120   Held-to-Maturity
    Securities
  held-to-maturity held-to-maturity
  held-to-maturity
  December 31,2009


2008


2007Amortized


Fair


Amortized


Fair


Amortized


FairCost


Value


Cost


Value


Cost


Value(Amounts in thousands)States and political subdivisions

$
7,454


$
7,579


$
8,670


$
8,802


$
11,699


$
11,922Corporate notes


















375



375Mortgage-backed securities


















1



1Total

$
7,454


$
7,579


$
8,670


$
8,802


$
12,075


$
12,298  38




---



##### Table of Contents



Loans
    Held for Sale
    Loans
    Held for Investment
      Loan
    Portfolio Summary
  December 31,2009


2008


2007


2006


2005(Amounts in thousands)Commercial, financial andagricultural

$
96,366


$
85,034


$
96,261


$
106,645


$
110,211Real estate  commercial


450,611



407,638



386,112



421,067



464,510Real estate  construction


124,896



130,610



163,310



158,566



143,976Real estate  residential


657,367



602,573



498,345



506,370



504,387Consumer


60,090



66,259



75,450



88,679



106,206Other


4,601



6,046



6,027



3,549



1,808Total


1,393,931



1,298,160



1,225,505



1,284,876



1,331,098Less unearned income






1



3



13



591,393,931



1,298,159



1,225,502



1,284,863



1,331,039Less allowance for loan losses


21,725



15,978



12,833



14,549



14,736Net loans

$
1,372,206


$
1,282,181


$
1,212,669


$
1,270,314


$
1,316,303      39




---



##### Table of Contents



Remaining MaturitiesOverOne Year


One to


Over Fiveand Less


Five Years


Years


Total


Percent(Amounts in thousands)Commercial, financial and agricultural

$
40,887


$
51,353


$
4,126


$
96,366



6.91
%Real estate  commercial


91,712



292,656



66,242



450,610



32.33
%Real estate  construction


61,653



47,141



16,104



124,898



8.96
%Real estate  mortgage


53,082



156,766



447,519



657,367



47.16
%Consumer


17,712



39,814



2,563



60,089



4.31
%Other


1,814



1,141



1,646



4,601



0.33
%$
266,860


$
588,871


$
538,200


$
1,393,931



100.00
%Rate Sensitivity:Predetermined rate

$
124,794


$
444,222


$
202,451


$
771,467



55.34
%Floating or adjustable rate


142,066



144,648



335,750



622,464



44.66
%$
266,860


$
588,870


$
538,201


$
1,393,931



100.00
%   Allowance
    for Loan Losses
         40




---



##### Table of Contents



Years Ended December 31,2009


2008


2007


2006


2005(Dollars in thousands)Allowance for loan losses at beginning of period

$
15,978


$
12,833


$
14,549


$
14,736


$
16,339Acquisition balances






1,169











Charge-offs:Commercial, financial, and agricultural


6,742



3,079



1,874



1,522



4,481Real estate  construction


274



731



75



51



148Real estate  mortgage


2,295



1,625



962



1,579



770Installment loans to individuals


1,044



1,936



1,384



1,391



1,537Total charge-offs


10,355



7,371



4,295



4,543



6,936Recoveries:Commercial, financial, and agricultural


570



1,336



720



881



1,232Real estate  construction


23



5



3



1



112Real estate  mortgage


111



121



567



275



183Installment loans to individuals


345



463



572



493



492Total recoveries


1,049



1,925



1,862



1,650



2,019Net charge-offs


9,306



5,446



2,433



2,893



4,917Provision charged to operations


15,053



7,422



717



2,706



3,706Reclassification of allowance for lending-related commitments(1)


















(392
)Allowance for loan losses at end of period

$
21,725


$
15,978


$
12,833


$
14,549


$
14,736Ratio of net charge-offs to average loans outstanding


0.70
%


0.45
%


0.19
%


0.22
%


0.38
%Ratio of allowance for loan losses to total loans outstanding


1.56
%


1.23
%


1.05
%


1.13
%


1.11
%     (1)
    
    At June 30, 2005, the Company reclassified $392 thousand of
    its allowance for loan losses to a separate allowance for
    lending-related liabilities. Net income and prior period
    balances were not affected by this reclassification. The
    allowance for lending-related liabilities is included in other
    liabilities.    December 31,2009


2008


2007


2006


2005(Dollars in thousands)Commercial, financial, andagricultural

$
10,508



39
%

$
6,224



38
%

$
7,118



39
%

$
8,153



41
%

$
9,627



43
%Real estate  construction


694



9
%


496



10
%


409



13
%


378



12
%


452



11
%Real estate  mortgage


8,191



47
%


6,760



46
%


3,613



41
%


3,745



39
%


2,377



38
%Installment loans to individuals


1,999



5
%


2,025



6
%


1,693



7
%


2,273



8
%


2,281



8
%Unallocated


333







473























Total

$
21,725



100
%

$
15,978



100
%

$
12,833



100
%

$
14,549



100
%

$
14,737



100
%  41




---



##### Table of Contents



Risk
    Elements
    December 31,2009


2008


2007


2006


2005(Dollars in thousands)Non-accrual loans

$
17,527


$
12,763


$
2,923


$
3,813


$
3,383Loans 90 days or more past due and still accruing interest


















11Total non-performing loans


17,527



12,763



2,923



3,813



3,394Other real estate owned


4,578



1,326



545



258



1,400Total non-performing assets

$
22,105


$
14,089


$
3,468


$
4,071


$
4,794Non-performing loans as a percentage of total loans


1.26
%


0.98
%


0.24
%


0.30
%


0.25
%Non-performing assets as a percentage of total loans and other
    real estate owned


1.58
%


1.08
%


0.28
%


0.32
%


0.36
%Allowance for loan losses as a percentage of non-performing loans


124.0
%


125.2
%


439.0
%


381.6
%


434.2
%Allowance for loan losses as a percentage of non-performing
    assets


98.3
%


113.4
%


370.0
%


357.4
%


307.4
%Restructured loans performing in accordance with modified terms

$
3,215


$
113


$
245


$
272


$
302        42




---



##### Table of Contents



December 31,2009


2008


2007


2006


2005(Amounts in thousands)Non-accruing loans

$
17,527


$
12,763


$
2,923


$
3,813


$
3,383Loans past due over 90 days and still accruing interest


















11Restructured loans performing in accordance with modified terms


3,565



113



245



272



302Gross interest income which would have been recorded under
    original terms of non-accruing and restructured loans


698



458



301



397



380Actual interest income during the period


395



89



179



286



161   30-89 days
           43




---



##### Table of Contents



and/or
        Deposits
      Borrowings
     44




---



##### Table of Contents



2009

2008

2007Amount

Rate

Amount

Rate

Amount

Rate(Dollars in thousands)At year-end

$
103,634



1.22
%

$
115,914



1.49
%

$
225,927



3.19
%Average during the year


101,775



1.35
%


159,101



2.13
%


223,132



3.53
%Maximum month-end balance


106,407







232,110







273,920       Stockholders
    Equity
      Risk-Based
    Capital
  capital-to-asset
 45




---



##### Table of Contents



Liquidity
    and Capital Resources
    available-for-sale held- to-maturity
          Total Payments Due by PeriodLess than


One to


Three to


More thanTotal


One year


Three Years


Five Years


Five Years(Amounts in thousands)Deposits without a stated maturity(1)

$
821,532


$
821,532


$



$



$
Federal funds borrowed and overnight security repurchase
    agreements


84,528



84,528











Certificates of Deposit(2)(3)


847,198



617,337



160,984



68,877



Term security repurchase agreements


85,429



12,577



5,965



12,851



54,036FHLB advances(2)(3)


215,979



14,460



8,390



8,360



184,769Trust preferred indebtedness


27,893



641



1,175



1,022



25,055Leases


5,729



1,084



1,633



1,106



1,906Total

$
2,088,288


$
1,552,159


$
178,147


$
92,216


$
265,766     (1)
    
    Excludes interest.(2)
    
    Includes interest on both fixed and variable rate obligations.
    The interest associated with variable rate obligations is based
    upon interest rates in effect at December 31, 2009. The
    interest to be paid on variable rate obligations is affected by
    changes in market interest rates, which materially affect the
    contractual obligation amounts to be paid.(3)
    
    Excludes carrying value adjustments such as unamortized premiums
    or discounts. 46




---



##### Table of Contents



Amount of Commitment Expiration Per PeriodLess thanOne Year


One to


Three to


More thanTotal


(1)


Three Years


Five Years


Five Years(Amounts in thousands)Commitments to extend creditCommercial, financial and agricultural


34,960


$
25,611


$
6,622


$
2,683


$
44Real estate  commercial


17,757



11,930



2,891



2,560



376Real estate  residential


84,209



6,896



5,465



9,786



62,062Real estate  construction


36,475



22,632



2,139



7,661



4,043Consumer


49,501



49,449



9



30



13Other


206



179







27



Total unused commitments

$
223,108


$
116,697


$
17,126


$
22,747


$
66,538Financial letters of credit

$
576


$
559


$
7


$



$
10Performance letters of credit


1,224



1,091



64



5



64Total letters of credit

$
1,800


$
1,650


$
71


$
5


$
74     (1)
    
    Lines of credit with no stated maturity date are included in
    commitments for less than one year.    Wealth
    Management Services
      Insurance
    Services
   47




---



##### Table of Contents



ITEM 7A.
    QUANTITATIVE
    AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.         48




---



##### Table of Contents



Rate
    Sensitivity Analysis
  December 31, 2009 SimulationIncrease (Decrease)

Change in



Change inin Interest Rates

Net Interest

%

Market Value

%(Basis Points)

Income

Change

of Equity

Change(Dollars in thousands)200

$
(1,405
)


(1.9
)

$
(18,634
)


(6.9
)100


(866
)


(1.2
)


(7,715
)


(2.9
)(100)


2,117



2.9



16,087



5.9   December 31, 2008 SimulationIncrease (Decrease)

Change in



Change inin Interest Rates

Net Interest

%

Market Value

%(Basis Points)

Income

Change

of Equity

Change200

$
1,479



2.3


$
(8,040
)


(3.7
)100


1,493



2.3



719



0.3(100)


1,874



2.9



(21,443
)


(9.9
)  49




---



##### Table of Contents



ITEM 8.
    FINANCIAL
    STATEMENTS AND SUPPLEMENTARY DATA.  Consolidated Financial StatementsConsolidated Balance Sheets


51Consolidated Statements of Operations


52Consolidated Statements of Cash Flows


53Consolidated Statements of Changes in
    Stockholders Equity


54Notes to Consolidated Financial Statements


55Report of Independent Registered Public
    Accounting Firms on Consolidated Financial Statements


103Managements Assessment of Internal Control
    Over Financial Reporting


104Report of Independent Registered Public
    Accounting Firm on Managements Assessment of Internal
    Control Over Financial Reporting


105  50




---



##### Table of Contents



FIRST
    COMMUNITY BANCSHARES, INC.CONSOLIDATED BALANCE SHEETS
  December 31,2009


2008(Amounts in thousands,except share and per share data)ASSETSCash and due from banks

$
36,265


$
39,310Federal funds sold


61,376



Interest-bearing balances with banks


3,700



7,129Total cash and cash equivalents


101,341



46,439Securities available for sale


486,057



520,723Securities held to maturity


7,454



8,670Loans held for sale


11,576



1,024Loans held for investment, net of unearned income


1,393,931



1,298,159Less allowance for loan losses


21,725



15,978Net loans held for investment


1,372,206



1,282,181Premises and equipment, net


56,946



55,024Other real estate owned


4,578



1,326Interest receivable


8,610



10,084Goodwill


84,648



83,192Other intangible assets


6,413



6,420Other assets


135,049



118,231Total Assets

$
2,274,878


$
2,133,314LIABILITIESDeposits:Non-interest bearing

$
208,244


$
199,712Interest bearing


1,437,716



1,304,046Total Deposits


1,645,960



1,503,758Interest, taxes and other liabilities


22,498



27,423Securities sold under agreements to repurchase


153,634



165,914FHLB borrowings and other indebtedness


198,924



215,877Total Liabilities


2,021,016



1,912,972Stockholders EquityPreferred stock, par value undesignated; 1,000,000 shares
    authorized; no shares issued and outstanding at 2009 and 41,500
    at 2008






40,419Common stock, $1 par value; shares authorized: 25,000,000;
    shares issued: 18,082,822 at 2009 and 12,051,234 at 2008; shares
    outstanding: 17,765,164 at 2009 and 11,567,449 at 2008


18,083



12,051Additional paid-in capital


190,967



128,526Retained earnings


68,355



107,231Treasury stock, at cost


(9,891
)


(15,368
)Accumulated other comprehensive loss


(13,652
)


(52,517
)Total Stockholders Equity


253,862



220,342Total Liabilities and Stockholders Equity

$
2,274,878


$
2,133,314    51




---



##### Table of Contents



FIRST
    COMMUNITY BANCSHARES, INC.CONSOLIDATED STATEMENTS OF OPERATIONS
  Years Ended December 31,2009


2008


2007(Amounts in thousands,except share and per share data)Interest IncomeInterest and fees on loans

$
82,704


$
80,224


$
93,501Interest on securities-taxable


19,093



22,714



24,725Interest on securities-nontaxable


5,972



7,521



8,190Interest on federal funds sold and deposits in banks


165



306



1,175Total interest income


107,934



110,765



127,591Interest ExpenseInterest on deposits


27,796



29,792



38,757Interest on short-term borrowings


3,297



5,252



9,760Interest on long-term debt


7,589



9,886



10,759Total interest expense


38,682



44,930



59,276Net Interest Income


69,252



65,835



68,315Provision for loan losses


15,053



7,422



717Net interest income after provision for loan losses


54,199



58,413



67,598Noninterest IncomeWealth management income


4,147



4,100



3,880Service charges on deposit accounts


13,892



14,067



11,387Other service charges, commissions and fees


4,715



4,248



3,600Insurance commissions


6,988



4,988



1,142Total impairment losses on securities


(88,435
)


(29,923
)


Portion of loss recognized in other comprehensive income


9,572







Net impairment losses recognized in earnings


(78,863
)


(29,923
)


Net (losses) gains on sale of securities


(11,673
)


1,899



411Gain on acquisition


4,493







Other operating income


2,624



2,995



4,411Total noninterest income


(53,677
)


2,374



24,831Noninterest ExpenseSalaries and employee benefits


31,385



29,876



25,848Occupancy expense of bank premises


5,889



5,102



4,180Furniture and equipment expense


3,746



3,740



3,370Amortization of intangible assets


1,028



689



467Prepayment penalties on FHLB advances


88



1,647



FDIC premiums and assessments


4,262



202



Merger related expenses


1,726







Other operating expense


18,500



19,260



16,598Total noninterest expense


66,624



60,516



50,463Income (loss) before income taxes


(66,102
)


271



41,966Income tax (benefit) expense


(27,874
)


(2,810
)


12,334Net (loss) income


(38,228
)


3,081



29,632Dividends on preferred stock


2,160



255



Net (loss) income available to common shareholders

$
(40,388
)

$
2,826


$
29,632Basic earnings (loss) per common share

$
(2.72
)

$
0.26


$
2.64Diluted earnings (loss) per common share

$
(2.72
)

$
0.25


$
2.62Dividends declared per common share

$
0.30


$
1.12


$
1.08Weighted average basic shares outstanding


14,868,547



11,058,076



11,204,676Weighted average diluted shares outstanding


14,868,547



11,134,025



11,292,871    52




---



##### Table of Contents



FIRST
    COMMUNITY BANCSHARES, INC.CONSOLIDATED STATEMENTS OF CASH FLOWS
  Years Ended December 31,2009


2008


2007(Amounts in thousands)Cash flows from operating activitiesNet income (loss)

$
(38,228
)

$
3,081


$
29,632Adjustments to reconcile net income (loss) to net cash provided
    by (used in) operating activities:Provision for loan losses


15,053



7,422



717Depreciation and amortization of premises and equipment


4,028



3,885



3,276Intangible amortization


1,028



689



467Net investment amortization and accretion


1,234



(161
)


534Gains (losses) on the sale of assets


11,599



(1,839
)


(357
)Net gain on acquisitions


(4,493
)






Mortgage loans originated for sale


(35,249
)


(32,704
)


(42,598
)Proceeds from sale of mortgage loans


27,464



32,672



42,822Gain on sale of loans


(83
)


(181
)


(254
)Equity-based compensation expense


153



260



271Deferred income tax (benefit) expense


(18,586
)


(12,647
)


216Decrease (increase) in interest receivable


2,071



3,071



(324
)Excess tax benefit from stock-based compensation


(2
)


(85
)


(327
)Prepayment penalty


88



1,647



Contribution of treasury stock to 401(k) plan


1,414



1,208



FDIC prepayment


(10,885
)






Net impairment losses recognized in earnings


78,863



29,923



Net changes in other assets and liabilities


(20,338
)


(2,651
)


2,581Net cash provided by (used in) operating activities


15,131



33,590



36,656Cash flows from investing activitiesProceeds from sales of securities available for sale


167,071



128,888



12,010Proceeds from maturities and calls of securities available for
    sale


77,178



87,144



28,635Proceeds from maturities and calls of held to maturity securities


1,238



3,417



7,907Purchase of securities available for sale


(218,961
)


(171,446
)


(211,321
)Net decrease in loans made to customers


18,902



58,473



56,623Net redemption (purchase) of FHLB stock


351



4,013



(4,207
)Cash provided by (used in) divestitures and acquisitions, net


21,749



(4,661
)


(5,364
)Purchase of premises and equipment


(4,380
)


(6,040
)


(15,160
)Proceeds from sale of equipment


327



21



526Net cash provided by (used in) investing activities


63,475



99,809



(130,351
)Cash flows from financing activitiesNet increase (decrease) in demand and savings deposits


71,436



(52,079
)


2,158Net (decrease) increase in time deposits


(71,931
)


24,788



(3,649
)Net (decrease) increase in FHLB and other borrrowings


(25,130
)


(76,039
)


93,272FHLB debt prepayment fees


(88
)


(1,647
)


Net (decrease) increase in federal funds purchased






(18,500
)


10,800Net (decrease) increase in securities sold under agreement to
    repurchase


(12,280
)


(41,513
)


6,242Redemption of preferred stock


(41,500
)






Net proceeds from the issuance of common stock


61,668







Net proceeds from the issuance of preferred stock






41,409



Proceeds from the exercise of stock options


21



464



781Excess tax benefit from stock-based compensation


2



85



327Acquisition of treasury stock


(167
)


(4,222
)


(9,170
)Preferred dividends paid


(1,116
)






Common dividends paid


(4,619
)


(12,452
)


(12,079
)Net cash provided by (used in) financing activities


(23,704
)


(139,706
)


88,682Net increase (decrease) in cash and cash equivalents


54,902



(6,307
)


(5,013
)Cash and cash equivalents at beginning of year


46,439



52,746



57,759Cash and cash equivalents at end of year

$
101,341


$
46,439


$
52,746Supplemental information  Noncash itemsTransfers of loans to other real estate

$
6,490


$
2,653


$
1,342Cumulative effect adjustment, net of tax

$
6,131


$



$
      53




---



##### Table of Contents



FIRST
    COMMUNITY BANCSHARES, INC.CONSOLIDATED STATEMENTS OF CHANGES IN
    STOCKHOLDERS EQUITY
   AccumulatedAdditional








OtherPreferred


Common


Paid-in


Retained


Treasury


ComprehensiveStock


Stock


Capital


Earnings


Stock


(Loss) Income


Total(Amounts in thousands, except share and per share
    information)Balance January 1, 2007

$



$
11,499


$
108,806


$
100,117


$
(7,924
)

$
232


$
212,730Comprehensive income:Net income














29,632











29,632Other comprehensive income (loss)  See note 17






















(7,515
)


(7,515
)Comprehensive income (loss)














29,632







(7,515
)


22,117Common dividends declared ($1.08 per share)














(12,079
)










(12,079
)Purchase of 287,500 treasury shares at $31.89 per share


















(9,170
)






(9,170
)Acquisition of GreenPoint Insurance Group (49,088 shares)










133







1,524







1,657Acquisition of Investment Planning Consultants
    (13,401 shares)










30







425







455Equity-based compensation










169







102







271Tax benefit from exercise of stock options










336















336Common stock options exercised (45,665 shares)










(649
)






1,430







781Balance December 31, 2007

$



$
11,499


$
108,825


$
117,670


$
(13,613
)

$
(7,283
)

$
217,098Comprehensive income:Net income

$



$



$



$
3,081


$



$



$
3,081Other comprehensive income (loss)  See note 17






















(45,234
)


(45,234
)Comprehensive income (loss)














3,081







(45,234
)


(42,153
)Cumulative effect of change in accounting principle














(813
)










(813
)Preferred stock issuance, net


40,395







(91
)














40,304Common stock warrant issuance










1,105















1,105Preferred dividend, net


24











(255
)










(231
)Common dividends declared ($1.12 per share)














(12,452
)










(12,452
)Purchase of 132,100 treasury shares at $31.96 per share


















(4,222
)






(4,222
)Acquisition of Coddle Creek (552,216 shares)






552



18,588















19,140Acquisition of GreenPoint Insurance Group (7,728 shares)










22







245







267Acquisition of Investment Planning Consultants
    (8,361 shares)










(26
)






266







240Contribution of treasury stock to 401(k) plan
    (37,775 shares)










8







1,200







1,208Equity-based compensation










244







16







260Tax benefit from exercise of stock options










127















127Common stock options exercised (22,323 shares)










(276
)






740







464Balance December 31, 2008

$
40,419


$
12,051


$
128,526


$
107,231


$
(15,368
)

$
(52,517
)

$
220,342Cumulative effect of change in accounting principle

$



$



$



$
6,131


$



$
(6,131
)

$
Comprehensive income:Net (loss) income














(38,228
)










(38,228
)Other comprehensive income  See note 17






















44,996



44,996Comprehensive income














(32,097
)






38,865



6,768Preferred dividend, net


1,081







(37
)


(2,160
)










(1,116
)Common dividends declared ($0.30 per share)














(4,619
)










(4,619
)Redemption of preferred stock


(41,500
)






















(41,500
)Purchase of 13,500 treasury shares at $12.29 per share


















(167
)






(167
)Acquisition of GreenPoint Insurance Group (22,008 shares)










(404
)






685







281Acquisition of Investment Planning Consultants
    (43,054 shares)










(851
)






1,341







490Acquisition of TriStone Community Bank (741,588 shares)






742



9,385















10,127Equity-based compensation










115







38







153Common stock issuance, net (5,290,000 shares)






5,290



56,378















61,668Contribution of treasury stock to 401(k) plan
    (111,365 shares)










(2,103
)






3,517







1,414Common stock options exercised (2,000 shares)










(42
)






63







21Balance December 31, 2009

$



$
18,083


$
190,967


$
68,355


$
(9,891
)

$
(13,652
)

$
253,862    54




---



##### Table of Contents



FIRST
    COMMUNITY BANCSHARES, INC.
  NOTES TO
    CONSOLIDATED STATEMENTS
  Note 1.
    Summary
    of Significant Accounting Policies  Basis
    of Presentation
    Accounting
    Standards Codification
    Principles
    of Consolidation
    Use of
    Estimates
    Cash
    and Cash Equivalents
    2009

2008

2007(Amounts in thousands)Interest

$
39,871


$
46,381


$
58,797Income Taxes


9,318



8,777



12,097    55




---



##### Table of Contents



FIRST
    COMMUNITY BANCSHARES, INC.
  NOTES TO
    CONSOLIDATED STATEMENTS  (Continued)
  Investment
    Securities
  available-for-sale
    other-than-temporary other-than-temporarily other-than-temporary,
  Loans
    Held for Sale
  one-to-four
    Loans
    Held for Investment
   56




---



##### Table of Contents



FIRST
    COMMUNITY BANCSHARES, INC.
  NOTES TO
    CONSOLIDATED STATEMENTS  (Continued)
    Allowance
    for Loan Losses
          Long-term
    Investments
   57




---



##### Table of Contents



FIRST
    COMMUNITY BANCSHARES, INC.
  NOTES TO
    CONSOLIDATED STATEMENTS  (Continued)
    Premises
    and Equipment
      Other
    Real Estate Owned
    Goodwill
    and Other Intangible Assets
     58




---



##### Table of Contents



FIRST
    COMMUNITY BANCSHARES, INC.
  NOTES TO
    CONSOLIDATED STATEMENTS  (Continued)
      OtherGoodwill


Intangibles(Amounts in thousands)Balance at December 31, 2006


60,135



2,061Acquisitions


6,175



2,152Amortization






(467
)Balance at December 31, 2007


66,310



3,746Acquisitions


15,990



3,362Other Adjustments


892



Amortization






(689
)Balance at December 31, 2008


83,192



6,419Acquisitions and dispositions, net


1,456



1,022Amortization






(1,028
)Balance at December 31, 2009

$
84,648


$
6,413   Other
    Assets
      Securities
    Sold Under Agreements to Repurchase
   59




---



##### Table of Contents



FIRST
    COMMUNITY BANCSHARES, INC.
  NOTES TO
    CONSOLIDATED STATEMENTS  (Continued)
    Preferred
    Stock and Participation in the U.S. Treasury Capital Purchase
    Program
    10-year
  Loan
    Interest Income Recognition
    Loan
    Fee Income
    Advertising
    Expenses
    Equity-Based
    Compensation
   60




---



##### Table of Contents



FIRST
    COMMUNITY BANCSHARES, INC.
  NOTES TO
    CONSOLIDATED STATEMENTS  (Continued)
    Income
    Taxes
        Earnings
    Per Share
    For the Year Ended December 31,2009


2008


2007(Amounts in thousands, except share and per share data)Net (loss) income available to common shareholders

$
(40,388
)

$
2,826


$
29,632Weighted average shares outstanding


14,868,547



11,058,076



11,204,676Dilutive shares for stock options






53,680



65,320Contingently issuable shares






22,269



22,875Common stock warrants










Weighted average dilutive shares outstanding


14,868,547



11,134,025



11,292,871Basic earnings per share

$
(2.72
)

$
0.26


$
2.64Diluted earnings per share

$
(2.72
)

$
0.25


$
2.62    61




---



##### Table of Contents



FIRST
    COMMUNITY BANCSHARES, INC.
  NOTES TO
    CONSOLIDATED STATEMENTS  (Continued)
  Variable
    Interest Entities
    Derivative
    Instruments
        Other
    Recent Accounting Developments
  FASB ASC Topic 320, Investments  Debt and Equity
    Securities. held-to-maturity available-for-sale
  FASB ASC Topic 805, Business Combinations.
 62




---



##### Table of Contents



FIRST
    COMMUNITY BANCSHARES, INC.
  NOTES TO
    CONSOLIDATED STATEMENTS  (Continued)
    FASB ASC Topic 810, Consolidation.
  FASB ASC Topic 815, Derivatives and
    Hedging.
  FASB ASC Topic 820, Fair Value Measurements and
    Disclosures.
   63




---



##### Table of Contents



FIRST
    COMMUNITY BANCSHARES, INC.
  NOTES TO
    CONSOLIDATED STATEMENTS  (Continued)
  FASB ASC Topic 855, Subsequent Events.
  FASB ASC Topic 860, Transfers and
    Servicing.
  Note 2.
    Merger,
    Acquisitions and Branching Activity       64




---



##### Table of Contents



FIRST
    COMMUNITY BANCSHARES, INC.
  NOTES TO
    CONSOLIDATED STATEMENTS  (Continued)
  Acquisition
    of TriStone Community Bank
  (In thousands)Consideration:Common Stock  741,588 shares

$
10,082Cash paid for dissenting shares


649Cash in lieu of fractional shares


4Option consideration


42Fair value of total consideration paid

$
10,777Recognized amounts of assets acquired and liabilities assumed:Cash and cash equivalents

$
21,948Investments


8,656Loans, net


130,808Premises and equipment, net


2,112Other assets


1,624Identifiable assets


165,148Deposits


141,833Other liabilities, primarily FHLB advances


8,045Identifiable liabilities


149,878Identifiable net assets


15,270Gain on purchase

$
(4,493
)       65




---



##### Table of Contents



FIRST
    COMMUNITY BANCSHARES, INC.
  NOTES TO
    CONSOLIDATED STATEMENTS  (Continued)
  2009First





Pro Forma


Pro FormaCommunity


TriStone


Adjustments


Combined(Dollars in thousands)Interest Income

$
104,459


$
7,527


$
265


$
112,251Interest Expense


37,760



3,214



(427
)


40,547Net interest income


66,699



4,313



692



71,704Provision for loan losses


15,053



175







15,228Net interest income after provision for loan losses


51,646



4,138



692



56,476Noninterest Income


(58,237
)


992



4,493



(52,752
)Noninterest Expense


64,004



4,177



1,726



69,907Income (loss) before income taxes


(70,595
)


953



3,459



(66,183
)Income tax expense (benefit)


(29,007
)






1,133



(27,874
)Net income (loss)


(41,588
)


953



2,326



(38,309
)Dividends on preferred stock


2,160











2,160Net income (loss) available to common shareholders

$
(43,748
)

$
953


$
2,326


$
(40,469
)   2008First





Pro Forma


Pro FormaCommunity


TriStone


Adjustments


Combined(Dollars in thousands)Interest Income

$
110,765


$
7,633


$
265


$
118,663Interest Expense


44,930



3,882



(427
)


48,385Net interest income


65,835



3,751



692



70,278Provision for loan losses


7,422



687







8,109Net interest income after provision for loan losses


58,413



3,064



692



62,169Noninterest Income


2,374



680



4,493



7,547Noninterest Expense


60,516



3,993



1,726



66,235Income (loss) before income taxes


271



(249
)


3,459



3,481Income tax expense (benefit)


(2,810
)






1,133



(1,677
)Net income (loss)


3,081



(249
)


2,326



5,158Dividends on preferred stock


255











255Net income (loss) available to common shareholders

$
2,826


$
(249
)

$
2,326


$
4,903    66




---



##### Table of Contents



FIRST
    COMMUNITY BANCSHARES, INC.
  NOTES TO
    CONSOLIDATED STATEMENTS  (Continued)
          2009


2008


2007(Amounts in thousands)Fair value of investments acquired

$
7,837


$
1,269


$
Fair value of loans acquired


129,937



136,035



Fair value of premises and equipment acquired


1,797



4,505



Fair value of other assets


26,746



23,872



382Fair value of deposits assumed


(142,697
)


(137,606
)


Fair value of other liabilities assumed


(9,008
)


(4,967
)


(1,167
)Purchase price (lesser than) in excess of net assets acquired


(3,037
)


15,991



7,838Total purchase price


11,575



39,099



7,053Less non-cash purchase price


11,579



19,647



1,658Less cash acquired


21,295



14,792



32Net cash (received) paid for acquisition

$
(21,299
)

$
4,660


$
5,363Book value of assets sold

$
(110
)

$



$
Book value of liabilities sold










Sales price in excess of net liabilities assumed


(340
)






Total sales price


(450
)






Add cash on hand sold










Less amount due remaining on books










Net cash paid (received) for divestiture

$
(450
)

$



$
  67




---



##### Table of Contents



FIRST
    COMMUNITY BANCSHARES, INC.
  NOTES TO
    CONSOLIDATED STATEMENTS  (Continued)
   Note 3.
    Investment
    Securities  available-for-sale
  December 31, 2009Amortized


Unrealized


Unrealized


Fair


OTTI inCost


Gains


Losses


Value


AOCI(Amounts in thousands)U.S. Government agency securities

$
25,421


$
10


$
(155
)

$
25,276


$
States and political subdivisions


133,185



3,309



(893
)


135,601



Trust preferred securities:Single Issue


55,624







(14,514
)


41,110



Pooled


1,648











1,648



Total trust preferred securities


57,272







(14,514
)


42,758



Mortgage-backed securities:Agency


260,220



5,399



(1,401
)


264,218



Non-Agency prime residential


5,743







(573
)


5,170



Non-Agency Alt-A residential


20,968







(9,667
)


11,301



(9,667
)Total mortgage-backed securities


286,931



5,399



(11,641
)


280,689



(9,667
)Equities


1,717



207



(191
)


1,733



Total

$
504,526


$
8,925


$
(27,394
)

$
486,057


$
(9,667
)   December 31, 2008Amortized


Unrealized


Unrealized


FairCost


Gains


Losses


Value(Amounts in thousands)U.S. Government agency securities

$
53,425


$
1,393


$



$
54,818States and political subdivisions


163,042



864



(4,487
)


159,419Trust preferred securities:Single Issue


55,491







(21,950
)


33,541Pooled


93,269







(60,757
)


32,512Total trust preferred securities


148,760







(82,707
)


66,053Mortgage-backed securities:Agency


212,315



4,649



(2
)


216,962Non-Agency prime residential


7,423







(1,657
)


5,766Non-Agency Alt-A residential


10,750











10,750Total mortgage-backed securities


230,488



4,649



(1,659
)


233,478Equities


7,979



357



(1,381
)


6,955Total

$
603,694


$
7,263


$
(90,234
)

$
520,723   available-for-sale
  68




---



##### Table of Contents



FIRST
    COMMUNITY BANCSHARES, INC.
  NOTES TO
    CONSOLIDATED STATEMENTS  (Continued)
  U.S.


States








TaxGovernment


and








EquivalentAgencies &


Political


Corporate





PurchaseAvailable For Sale

Corporations


Subdivisions


Notes


Total


Yield(Dollars in thousands)Amortized Cost Maturity:Within one year

$



$
627


$



$
627



5.87
%After one year through five years


994



8,402







9,396



5.69
%After five years through ten years






67,410







67,410



6.05
%After ten years


24,427



56,746



57,272



138,445



4.14
%Amortized cost

$
25,421


$
133,185


$
57,272



215,878Mortgage-backed securities














286,931



4.78
%Equity securities














1,717Total Amortized cost













$
504,526Tax equivalent purchase yield


5.45
%


6.24
%


1.19
%


4.81
%Average contractual maturity (in years)


11.32



9.80



18.10



12.18Fair Value Maturity:Within one year

$



$
630


$



$
630After one year through five years


1,004



8,656







9,660After five years through ten years






69,662







69,662After ten years


24,272



56,653



42,758



123,683Fair Value

$
25,276


$
135,601


$
42,758



203,635Mortgage-backed securities














280,689Equity securities














1,733Total Fair Value













$
486,057   held-to-maturity
  December 31, 2009Amortized


Unrealized


Unrealized


FairCost


Gains


Losses


Value(Amounts in thousands)States and political subdivisions

$
7,454


$
125


$



$
7,579Total

$
7,454


$
125


$



$
7,579   December 31, 2008Amortized


Unrealized


Unrealized


FairCost


Gains


Losses


Value(Amounts in thousands)States and political subdivisions

$
8,670


$
133


$
(1
)

$
8,802Total

$
8,670


$
133


$
(1
)

$
8,802    69




---



##### Table of Contents



FIRST
    COMMUNITY BANCSHARES, INC.
  NOTES TO
    CONSOLIDATED STATEMENTS  (Continued)
  States


Taxand


EquivalentPolitical


PurchaseHeld-to-Maturity

Subdivisions


Yield(Dollars in thousands)Amortized Cost Maturity:Within one year

$
1,091



7.61
%After one year through five years


4,227



8.25
%After five years through ten years


2,136



8.19
%After ten years


Total amortized cost

$
7,454Tax equivalent purchase yield


8.14
%Average contractual maturity (in years)


3.40Fair Value Maturity:Within one year

$
1,103After one year through five years


4,303After five years through ten years


2,173After ten years


Total fair value

$
7,579       available-for-sale held-to-maturity,
 70




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##### Table of Contents



FIRST
    COMMUNITY BANCSHARES, INC.
  NOTES TO
    CONSOLIDATED STATEMENTS  (Continued)
    December 31, 2009Less than 12 Months


12 Months or Longer


TotalFair


Unrealized


Fair


Unrealized


Fair


UnrealizedDescription of Securities

Value


Losses


Value


Losses


Value


Losses(Amounts in thousands)U.S. Government agency securities

$
23,271


$
(155
)

$



$



$
23,271


$
(155
)States and political subdivisions


13,864



(270
)


16,285



(623
)


30,149



(893
)Trust preferred securities:Single Issue










41,111



(14,514
)


41,111



(14,514
)Mortgage-backed securities:Agency


83,491



(1,400
)


34



(1
)


83,525



(1,401
)Prime residential










5,169



(573
)


5,169



(573
)Alt-A residential


11,301



(9,667
)










11,301



(9,667
)Total mortgage-backed securities


94,792



(11,067
)


5,203



(574
)


99,995



(11,641
)Equity securities


86



(60
)


731



(131
)


817



(191
)Total

$
132,013


$
(11,552
)

$
63,330


$
(15,842
)

$
195,343


$
(27,394
)   December 31, 2008Less than 12 Months


12 Months or Longer


TotalFair


Unrealized


Fair


Unrealized


Fair


UnrealizedDescription of Securities

Value


Losses


Value


Losses


Value


Losses(Amounts in thousands)States and political subdivisions

$
85,374


$
(2,948
)

$
16,413


$
(1,539
)

$
101,787


$
(4,487
)Trust preferred securities:Single Issue










30,693



(21,950
)


30,693



(21,950
)Pooled










29,567



(60,757
)


29,567



(60,757
)Total trust preferred securities










60,260



(82,707
)


60,260



(82,707
)Mortgage-backed securities:Agency


42,674



(1
)


43



(1
)


42,717



(2
)Prime residential


5,766



(1,657
)










5,766



(1,657
)Total mortgage-backed securities


48,440



(1,658
)


43



(1
)


48,483



(1,659
)Equity securities


2,167



(1,161
)


2,201



(220
)


4,368



(1,381
)Total

$
135,981


$
(5,767
)

$
78,917


$
(84,467
)

$
214,898


$
(90,234
)     other-than-temporary
 71




---



##### Table of Contents



FIRST
    COMMUNITY BANCSHARES, INC.
  NOTES TO
    CONSOLIDATED STATEMENTS  (Continued)
           72




---



##### Table of Contents



FIRST
    COMMUNITY BANCSHARES, INC.
  NOTES TO
    CONSOLIDATED STATEMENTS  (Continued)
    Year EndedDecember 31, 2009(In thousands)Estimated credit losses, beginning balance*

$
19,707Additions for credit losses on securities not previously
    recognized


30,953Additions for credit losses on securities previously recognized


2,944Reduction for increases in cash flows


Reduction for securities management no longer intends to hold to
    recovery


(14,499
)Reduction for securities sold/realized losses


(34,854
)Estimated credit losses as of December 31, 2009

$
4,251     *
    
    The beginning balance includes credit related losses included in
    OTTI charges recognized on debt securities in prior periods.      Note 4.
    Loans    2009


2008(Amounts in thousands)Real estate- commercial

$
450,611


$
407,638Real estate- construction


124,896



130,610Real estate- residential


657,367



602,573Commercial, financial and agricultural


96,366



85,034Loans to individuals for household and other consumer
    expenditures


60,090



66,258All other loans


4,601



6,046Total loans

$
1,393,931


$
1,298,159Loans Held for Sale

$
11,576


$
1,024    73




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##### Table of Contents



FIRST
    COMMUNITY BANCSHARES, INC.
  NOTES TO
    CONSOLIDATED STATEMENTS  (Continued)
    case-by-case
          310-30
 74




---



##### Table of Contents



FIRST
    COMMUNITY BANCSHARES, INC.
  NOTES TO
    CONSOLIDATED STATEMENTS  (Continued)
      (In thousands)Contractually required principal payments to balance sheet
    received

$
125,366Fair value of adjustment for credit, interest rate, and liquidity


(472
)Fair value of loans receivable, with no credit deterioration

$
124,894     TriStone


Other


Total(In thousands)Balance, January 1, 2009

$



$



$
Contractually required principal payments to balance sheet
    receivable


6,862



8,790



15,652Nonaccretable difference


(1,670
)


(2,488
)


(4,158
)Present value of cash flows expected to be collected


5,192



6,302



11,494Accretable difference


(149
)


(891
)


(1,040
)Fair value of acquired impaired loans


5,043



5,411



10,454Principal payments received


(1,240
)


(1,215
)


(2,455
)Accretion


104







104Balance, December 31, 2009

$
3,907


$
4,196


$
8,103       Note 5.
    Allowance
    for Loan Losses   75




---



##### Table of Contents



FIRST
    COMMUNITY BANCSHARES, INC.
  NOTES TO
    CONSOLIDATED STATEMENTS  (Continued)
        2009


2008


2007(Amounts in thousands)Balance at January 1

$
15,978


$
12,833


$
14,549Provision for loan losses


15,053



7,422



717Acquisition balance






1,169



Loans charged off


(10,355
)


(7,371
)


(4,295
)Recoveries credited to allowance


1,049



1,925



1,862Net charge-offs


(9,306
)


(5,446
)


(2,433
)Balance at December 31

$
21,725


$
15,978


$
12,833     2009


2008


2007(Amounts in thousands)Recorded investment in loans considered to be impaired:Recorded investment in impaired loans with related allowance

$
13,241


$
4,796


$
3,129Recorded investment in impaired loans with no related allowance


13,371



8,504



1,196Total recorded investment in loans considered to be impaired


26,612



13,300



4,325Loans considered to be impaired that were on a non-accrual basis


17,014



12,764



2,923Allowance for loan losses related to loans considered to be
    impaired


2,932



678



880Average recorded investment in impaired loans


15,928



14,914



4,762Total interest income recognized on impaired loans


663



793



237    76




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##### Table of Contents



FIRST
    COMMUNITY BANCSHARES, INC.
  NOTES TO
    CONSOLIDATED STATEMENTS  (Continued)
   Note 6.
    Premises
    and Equipment    2009


2008(Amounts in thousands)Land

$
19,158


$
18,634Bank premises


50,845



47,147Equipment


32,542



29,968102,545



95,749Less: accumulated depreciation and amortization


45,599



40,725Total

$
56,946


$
55,024         Year Ended December 31:(Amounts inthousands)2010

$
1,0842011


8552012


7772013


7142014


392Later years


1,907Total

$
5,729    77




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##### Table of Contents



FIRST
    COMMUNITY BANCSHARES, INC.
  NOTES TO
    CONSOLIDATED STATEMENTS  (Continued)
    Year Ended December 31:(Amounts inthousands)2010

$
1572011


2842012


2152013


1972014


21Later years


253Total

$
1,127   Note 7.
    Deposits    2009


2008(Amounts in thousands)Interest bearing demand deposits

$
231,907


$
185,117Money market accounts


199,229



144,017Savings deposits


182,152



165,560Certificates of deposit


718,552



708,954Individual Retirement Accounts


105,876



100,398Total

$
1,437,716


$
1,304,046     (Amounts inthousands)2010

$
525,7802011


118,6282012


32,2982013


33,5642014 and thereafter


114,157$
824,427    78




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##### Table of Contents



FIRST
    COMMUNITY BANCSHARES, INC.
  NOTES TO
    CONSOLIDATED STATEMENTS  (Continued)
    (Amounts inthousands)Three months or less

$
99,506Over three to six months


112,335Over six to twelve months


76,321Over twelve months


84,397Total

$
372,559     Note 8.
    Borrowings    2009


2008(Amounts in thousands)Securities sold under agreements to repurchase

$
153,634


$
165,914FHLB borrowings


183,177



200,000Subordinated debt


15,464



15,464Other debt


283



413Total

$
352,558


$
381,791        79




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##### Table of Contents



FIRST
    COMMUNITY BANCSHARES, INC.
  NOTES TO
    CONSOLIDATED STATEMENTS  (Continued)
    (Amounts inthousands)2010

$
8,1772011


2012


2013


2014


2015 and thereafter


175,000$
183,177         Note 9.
    Income
    Taxes, Continuing Operations    Years Ended December 31,2009


2008


2007(Amounts in thousands)Current tax expenseFederal

$
(9,534
)

$
8,577


$
10,777State


246



1,260



1,341(9,288
)


9,837



12,118Deferred tax (benefit) expenseFederal


(17,346
)


(11,350
)


194State


(1,240
)


(1,297
)


22(18,586
)


(12,647
)


216Total income tax (benefit) expense

$
(27,874
)

$
(2,810
)

$
12,334  80




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##### Table of Contents



FIRST
    COMMUNITY BANCSHARES, INC.
  NOTES TO
    CONSOLIDATED STATEMENTS  (Continued)
    2009


2008(Amounts in thousands)Deferred tax assets:Allowance for loan losses

$
8,147


$
6,299Unrealized losses on AFS securities


6,926



33,208Unrealized loss on derivative security


794



1,298Securities impairments


23,912



11,670Deferred compensation


4,175



4,120Other


3,244



1,920Total deferred tax assets

$
47,198


$
58,515Deferred tax liabilities:Intangible assets

$
6,295


$
6,209Odd days interest deferral


1,358



1,710Fixed assets


2,446



1,675Other


1,564



1,358Total deferred tax liabilities


11,663



10,952Net deferred tax assets

$
35,535


$
47,563       For Years Ended2009


2008


2007Tax at statutory rate


35.00
%


35.00
%


35.00
%(Reduction) increase resulting from:Tax-exempt interest, net of nondeductible expense


2.91



(871.99
)


(5.95
)State income taxes, net of federal benefit


0.65



2.33



2.12Gain on acquisition, net of acquisition related costs


2.27



0.00



0.00Other, net


1.30



(202.24
)


(1.78
)Effective tax rate


42.13
%


(1036.90
)%


29.39
%   Note 10.
    Employee
    Benefits  Employee
    Stock Ownership and Savings Plan
   81




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##### Table of Contents



FIRST
    COMMUNITY BANCSHARES, INC.
  NOTES TO
    CONSOLIDATED STATEMENTS  (Continued)
  Employer Stock Fund:
  Employee Savings Plan:
  Employee
    Welfare Plan
    Deferred
    Compensation Plan
      Executive
    Retention Plan
     82




---



##### Table of Contents



FIRST
    COMMUNITY BANCSHARES, INC.
  NOTES TO
    CONSOLIDATED STATEMENTS  (Continued)
      (Amounts inthousands)2010

$
592011


592012


1762013


2372014


2372015 through 2019


1,384     Year Ended


Year EndedDecember 31,


December 31,2009


2008(In thousands)Service cost

$
213


$
253Interest cost


189



173Net periodic cost

$
402


$
426     Directors
    Supplemental Retirement Plan
    Note 11.
    Equity-Based
    Compensation  Stock
    Options
     83




---



##### Table of Contents



FIRST
    COMMUNITY BANCSHARES, INC.
  NOTES TO
    CONSOLIDATED STATEMENTS  (Continued)
             84




---



##### Table of Contents



FIRST
    COMMUNITY BANCSHARES, INC.
  NOTES TO
    CONSOLIDATED STATEMENTS  (Continued)
    WeightedWeighted


AverageAverage


Remaining


AggregateOption


Exercise


Contractual


IntrinsicShares


Price


Term (Years)


Value(In thousands)Outstanding at January 1, 2009


252,091


$
24.25Granted


15,000



13.81Acquired with TriStone Community Bank


148,764



20.55Exercised


2,000



9.52Forfeited


375



26.54Outstanding at December 31, 2009


413,480


$
22.71



8.0


$
9,389Exercisable at December 31, 2009


394,481


$
22.82



7.9


$
9,001       2009

2008

2007Volatility


44.83
%


29.11
%


28.33
%Expected dividend yield


2.71
%


3.64
%


3.28
%Expected term (in years)


6.20



10.00



6.00Risk-free rate


2.81
%


2.96
%


4.74
%     Stock
    Awards
   85




---



##### Table of Contents



FIRST
    COMMUNITY BANCSHARES, INC.
  NOTES TO
    CONSOLIDATED STATEMENTS  (Continued)
    Grant-DateShares


Fair ValueNonvested at January 1, 2009


2,100


$
36.58Granted


1,000



11.67Vested


1,200



36.70Forfeited


100



36.42Nonvested at December 31, 2009


1,800



22.67     Note 12.
    Litigation,
    Commitments and Contingencies      case-by-case
     86




---



##### Table of Contents



FIRST
    COMMUNITY BANCSHARES, INC.
  NOTES TO
    CONSOLIDATED STATEMENTS  (Continued)
    Note 13.
    Derivative
    Instruments and Hedging Activities          December 31,

December 31,2009

2008(In thousands)Interest rate swap

$
50,000


$
50,000IRLCs


4,636



10,500     Asset DerivativesDecember 31, 2009


December 31, 2008Balance Sheet


Fair


Balance Sheet


FairLocation


Value


Location


Value(In thousands)Derivatives not designated as hedgesIRLCs


Other assets


$
2



Other assets


$
39Total





$
2






$
39   87




---



##### Table of Contents



FIRST
    COMMUNITY BANCSHARES, INC.
  NOTES TO
    CONSOLIDATED STATEMENTS  (Continued)
  Liability DerivativesDecember 31, 2009


December 31, 2008Balance Sheet





Balance SheetLocation


Fair Value


Location


Fair Value(In thousands)Derivatives designated as hedgesInterest rate swap


Other liabilities


$
2,117



Other liabilities


$
3,327Total





$
2,117






$
3,327Derivatives not designated as hedgesIRLCs


Other liabilities


$
74



Other liabilities


$
16Total





$
74






$
16Total derivatives





$
2,191






$
3,343   Interest Rate Swaps.
  Interest Rate Lock Commitments.
    Effect of Derivatives and Hedging Activities on the Income
    Statement.
  Location ofGain/(Loss)


Amount of Gain/(Loss)Derivatives not

Recognized in


Recognized in Income on Derivativedesignated as hedging

Income on


Year Ended December 31,instruments

Derivative


2009


2008(In thousands)IRLCs


Other income


$
(94
)

$
16Total





$
(94
)

$
16   Counterparty Credit Risk.
 88




---



##### Table of Contents



FIRST
    COMMUNITY BANCSHARES, INC.
  NOTES TO
    CONSOLIDATED STATEMENTS  (Continued)
    Note 14.
    Regulatory
    Capital Requirements and Restrictions        December 31, 2009To Be WellFor Capital

Capitalized UnderAdequacy

Prompt CorrectiveActual

Purposes

Action ProvisionsAmount

Ratio

Amount

Ratio

Amount

Ratio(Dollars in thousands)Total Capital to Risk-Weighted AssetsFirst Community Bancshares, Inc.

$
210,416



13.90
%

$
121,095



8.00
%


N/A



N/AFirst Community Bank, N. A.


177,515



11.85
%


119,853



8.00
%

$
149,816



10.00
%Tier 1 Capital to Risk-Weighted AssetsFirst Community Bancshares, Inc.


191,452



12.65
%


60,547



4.00
%


N/A



N/AFirst Community Bank, N. A.


158,746



10.60
%


59,926



4.00
%


89,890



6.00
%Tier 1 Capital to Average Assets (Leverage)First Community Bancshares, Inc.


191,452



8.58
%


89,290



4.00
%


N/A



N/AFirst Community Bank, N. A.


158,746



7.16
%


88,709



4.00
%


110,887



5.00
%   89




---



##### Table of Contents



FIRST
    COMMUNITY BANCSHARES, INC.
  NOTES TO
    CONSOLIDATED STATEMENTS  (Continued)
  December 31, 2008To Be WellFor Capital

Capitalized UnderAdequacy

Prompt CorrectiveActual

Purposes

Action ProvisionsAmount

Ratio

Amount

Ratio

Amount

Ratio(Dollars in thousands)Total Capital to Risk-Weighted AssetsFirst Community Bancshares, Inc.

$
213,949



12.91
%

$
132,591



8.00
%


N/A



N/AFirst Community Bank, N. A.


191,104



11.69
%


130,762



8.00
%

$
163,452



10.00
%Tier 1 Capital to Risk-Weighted AssetsFirst Community Bancshares, Inc.


197,600



11.92
%


66,296



4.00
%


N/A



N/AFirst Community Bank, N. A.


174,755



10.69
%


65,381



4.00
%


98,071



6.00
%Tier 1 Capital to Average Assets (Leverage)First Community Bancshares, Inc.


197,600



9.75
%


84,629



4.00
%


N/A



N/AFirst Community Bank, N. A.


174,755



8.71
%


80,232



4.00
%


100,290



5.00
%     Note 15.
    Other
    Operating Income and Expenses    Years Ended December 31,2009


2008


2007(Amounts in Thousands)IncomeBank owned life insurance

$
819


$
746


$
1,306ExpenseAdvertising and public relations


1,633



2,166



1,616Service fees


3,767



3,557



3,031Telephone and data communications


1,399



1,505



1,372Professional fees


1,759



1,878



1,370Office supplies


1,323



1,426



1,378ATM processing expenses


975



986



511Non-employee production commissions


648



310



54   Note 16.
    Fair
    Value  Financial
    Instruments Measured at Fair Value
   90




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##### Table of Contents



FIRST
    COMMUNITY BANCSHARES, INC.
  NOTES TO
    CONSOLIDATED STATEMENTS  (Continued)
    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: available-for-sale
       91




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##### Table of Contents



FIRST
    COMMUNITY BANCSHARES, INC.
  NOTES TO
    CONSOLIDATED STATEMENTS  (Continued)
    Other Assets and Associated
    Liabilities:
  Derivatives:
  Impaired Loans:
      and/or
   92




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##### Table of Contents



FIRST
    COMMUNITY BANCSHARES, INC.
  NOTES TO
    CONSOLIDATED STATEMENTS  (Continued)
      Other Real Estate Owned.
    December 31, 2009Fair Value Measurements Using


TotalLevel 1


Level 2


Level 3


Fair Value(In thousands)Available-for-sale
    securities:Agency securities

$



$
25,276


$



$
25,276Agency mortgage-backed securities






264,218







264,218Non-Agency prime residential MBS






5,170







5,170Non-Agency Alt-A residential MBS






11,301







11,301Municipal securities






135,601







135,601Single-issue trust preferred securities






41,110







41,110Pooled trust preferred securities










1,648



1,648Equity securities


1,713



20







1,733Total
    available-for-sale
    securities


1,713



482,696



1,648



486,057Deferred compensation assets


2,872











2,872Derivative assets






2







2Deferred compensation liabilities


2,872











2,872Derivative liabilities






2,191







2,191   93




---



##### Table of Contents



FIRST
    COMMUNITY BANCSHARES, INC.
  NOTES TO
    CONSOLIDATED STATEMENTS  (Continued)
  December 31, 2008Fair Value Measurements Using


TotalLevel 1


Level 2


Level 3


Fair Value(In thousands)Available-for-sale
    securities:Agency securities

$



$
54,818


$



$
54,818Agency mortgage-backed securities






216,962







216,962Non-Agency prime residential MBS






5,766







5,766Non-Agency Alt-A residential MBS






10,750







10,750Municipal securities






159,419







159,419Single-issue trust preferred securities






33,541







33,541Pooled trust preferred securities






4,445



28,067



32,512Equity securities


6,811



144







6,955Total
    available-for-sale
    securities


6,811



485,845



28,067



520,723Other assets


2,637











2,637Derivative assets






39







39Other liabilities


2,637











2,637Derivative liabilities






3,343







3,343     Available-for-SaleSecurities(In thousands)Balance, January 1, 2009

$
28,067Total gains or losses (realized/unrealized)Included in earnings


(26,419
)Payments and maturities


Transfers in and/or out of Level 3


Balance, December 31, 2009

$
1,648     December 31, 2009Fair Value Measurements Using

TotalLevel 1

Level 2

Level 3

Fair Value(In thousands)Impaired loans

$



$



$
11,702


$
11,702Other real estate owned










4,578



4,578   94




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##### Table of Contents



FIRST
    COMMUNITY BANCSHARES, INC.
  NOTES TO
    CONSOLIDATED STATEMENTS  (Continued)
  December 31, 2008Fair Value Measurements Using

TotalLevel 1

Level 2

Level 3

Fair Value(In thousands)Impaired loans

$



$



$
5,980


$
5,980   Fair
    Value of Financial Instruments
      December 31, 2009


December 31, 2008Carrying





CarryingAmount


Fair Value


Amount


Fair Value(Amounts in thousands)AssetsCash and cash equivalents

$
101,341


$
101,341


$
46,439


$
46,439Investment Securities


493,511



493,636



529,393



529,525Loans held for sale


11,576



11,580



1,024



1,026Loans held for investment


1,372,206



1,365,366



1,282,181



1,276,479Accrued interest receivable


8,610



8,610



10,084



10,084Bank owned life insurance


40,972



40,972



40,784



40,784Derivative financial assets


2



2



39



39Deferred compensation assets


2,872



2,872



2,637



2,637LiabilitiesDemand deposits


208,244



208,244


$
199,712


$
199,712Interest-bearing demand deposits


231,907



231,907



185,117



185,117Savings deposits


381,381



381,381



309,577



309,577Time deposits


824,428



834,546



809,352



824,068Securities sold under agreements to repurchase


153,634



156,653



165,914



177,454Accrued interest payable


4,130



4,130



5,326



5,326FHLB and other indebtedness


198,924



208,334



215,877



242,223Derivative financial liabilities


2,191



2,191



3,343



3,343Deferred compensation liabilities


2,872



2,872



2,637



2,637  95




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##### Table of Contents



FIRST
    COMMUNITY BANCSHARES, INC.
  NOTES TO
    CONSOLIDATED STATEMENTS  (Continued)
  Cash
    and Cash Equivalents:
    Investment
    Securities and Deferred Compensation Assets and
    Liabilities:
    Loans:
    Accrued
    Interest Receivable and Payable:
    Bank-owned
    Life Insurance:
    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:
   96




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##### Table of Contents



FIRST
    COMMUNITY BANCSHARES, INC.
  NOTES TO
    CONSOLIDATED STATEMENTS  (Continued)
   Note 17.
    Accumulated
    Other Comprehensive Income (Loss)    December 31,2009


2008


2007(In thousands)Net (loss) income

$
(38,228
)

$
3,081


$
29,632Other comprehensive income (loss)Unrealized loss on securities
    available-for-sale
    with
    other-than-temporary
    impairment


(28
)






Unrealized loss on securities
    available-for-sale
    without
    other-than-temporary
    impairment


(10,103
)






Unrealized loss on securities
    available-for-sale
    prior to adoption of ASC Topic 320






(102,303
)


(11,028
)Reclassification adjustment for losses (gains) realized in net
    income


11,673



30,100



263Reclassification adjustment for credit related
    other-than-temporary
    impairments recognized in earnings


78,863







Cumulative effect of change in accounting principle


(9,771
)






Unrealized (loss) gain on derivative securities


1,073



(2,007
)


(1,760
)Change related to employee benefit plans






(1,180
)


Income tax effect


(26,711
)


30,156



5,010Total other comprehensive income (loss)


44,996



(45,234
)


(7,515
)Comprehensive income (loss)

$
6,768


$
(42,153
)

$
22,117     UnrealizedUnrealized


Loss


Benefit


AccumulatedLoss


on Cash Flow


Plan


Comprehensiveon Securities


Hedge Derivative


Liability


Loss(Amounts in thousands)December 31, 2009

$
(11,543
)

$
(1,323
)

$
(786
)

$
(13,652
)December 31, 2008

$
(49,813
)

$
(1,996
)

$
(708
)

$
(52,517
)  97




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##### Table of Contents



FIRST
    COMMUNITY BANCSHARES, INC.
  NOTES TO
    CONSOLIDATED STATEMENTS  (Continued)
   Note 18.
    Parent
    Company Financial Information    December 31,Condensed Balance Sheets

2009


2008(Amounts in thousands)AssetsCash

$
17,426


$
2,038Securities available for sale


10,142



11,609Loans






1,000Investment in subsidiary


234,666



211,529Other assets


4,563



8,167Total assets

$
266,797


$
234,343LiabilitiesOther liabilities

$
310


$
603Long-term debt


15,464



15,464Total liabilities


15,774



16,067Stockholders EquityPreferred stock






40,419Common stock


18,083



12,051Additional paid-in capital


190,967



128,526Retained earnings


65,516



105,165Treasury stock


(9,891
)


(15,368
)Accumulated other comprehensive loss


(13,652
)


(52,517
)Total stockholders equity


251,023



218,276Total liabilities and stockholders equity

$
266,797


$
234,343   Years Ended December 31,Condensed Statements of Income

2009


2008


2007(Amounts in thousands)Cash dividends received from subsidiary bank

$
4,027


$
22,383


$
26,408Other income


3,774



2,104



2,853Operating expense


(3,030
)


(2,200
)


(2,106
)Income tax benefit (expense)


(2,691
)


24



(545
)Equity in undistributed earnings (loss) of subsidiary


(40,308
)


(19,230
)


3,022Net income (loss)


(38,228
)


3,081



29,632Dividends on preferred stock


2,160



255



Net income (loss) available to common shareholders

$
(40,388
)

$
2,826


$
29,632   98




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##### Table of Contents



FIRST
    COMMUNITY BANCSHARES, INC.
  NOTES TO
    CONSOLIDATED STATEMENTS  (Continued)
  Years Ended December 31,Condensed Statements of Cash Flows

2009


2008


2007(Amounts in thousands)Cash flows from operating activitiesNet income (loss)

$
(38,228
)

$
3,081


$
29,632Adjustments to reconcile net income to net cash provided byoperating activities:Equity in undistributed loss (earnings) of subsidiary


40,308



19,230



(3,022
)Loss (gain) on sale of securities


60



625



(447
)(Increase) decrease in other assets


661



(2,059
)


(2,678
)(Decrease) increase in other liabilities


881



(7
)


996Other, net


1,081



2,471



Net cash provided by operating activities


4,763



23,341



24,481Cash flows from investing activitiesPurchase of securities available for sale


(931
)


(13,117
)


(3,217
)Proceeds from sale of securities available for sale


4,402



3,324



4,671Investment in subsidiary


(10,000
)


(40,000
)


(5,397
)Other, net


1,000



(1,042
)


(2,390
)Net cash provided by (used in) investing activities


(5,529
)


(50,835
)


(6,333
)Cash flows from financing activitiesIssuance of preferred stock






41,500



Redemption of preferred stock


(41,500
)






Issuance of common stock


61,688



606



1,117Acquisition of treasury stock


(167
)


(4,222
)


(9,170
)Common dividends paid


(4,620
)


(12,452
)


(12,079
)Preferred dividends paid


(1,116
)






Other, net


1,869



1,220



353Net cash provided by (used in) financing activities


16,154



26,652



(19,779
)Net increase (decrease) in cash and cash equivalents


15,388



(842
)


(1,631
)Cash and cash equivalents at beginning of year


2,038



2,880



4,511Cash and cash equivalents at end of year

$
17,426


$
2,038


$
2,880   Note 19.
    Segment
    Information   99




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##### Table of Contents



FIRST
    COMMUNITY BANCSHARES, INC.
  NOTES TO
    CONSOLIDATED STATEMENTS  (Continued)
    December 31, 2009Community


Insurance


Parent/Banking


Services


Elimination


Total(In thousands)Net interest income

$
69,364


$
(73
)

$
(39
)

$
69,252Provision for loan losses


15,053











15,053Noninterest income


(60,839
)


7,427



(265
)


(53,677
)Noninterest expense


61,523



6,139



(1,038
)


66,624Income (loss) before income taxes


(68,051
)


1,215



734



(66,102
)Provision for income taxes (benefit)


(30,288
)


506



1,908



(27,874
)Net income (loss)

$
(37,763
)

$
709


$
(1,174
)

$
(38,228
)End of period goodwill and other intangibles

$
79,419


$
11,642


$



$
91,061End of period assets

$
2,248,991


$
12,230


$
13,657


$
2,274,878   December 31, 2008Community


Insurance


Parent/Banking


Services


Elimination


Total(In thousands)Net interest income

$
66,703


$
(49
)

$
(819
)

$
65,835Provision for loan losses


7,422











7,422Noninterest income


(4,730
)


5,042



2,062



2,374Noninterest expense


57,704



4,371



(1,559
)


60,516Income before income taxes


(3,153
)


622



2,802



271Provision for income taxes (benefit)


(3,802
)


183



809



(2,810
)Net income

$
649


$
439


$
1,993


$
3,081End of period goodwill and other intangibles

$
78,869


$
10,743


$



$
89,612End of period assets

$
2,103,445


$
12,111


$
17,758


$
2,133,314  100




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##### Table of Contents



FIRST
    COMMUNITY BANCSHARES, INC.
  NOTES TO
    CONSOLIDATED STATEMENTS  (Continued)
   Note 20.
    Supplemental
    Financial Data (Unaudited)    2009Quarter EndedMarch 31


June 30


Sept 30


Dec 31(Amounts in thousands, except per share Data)Interest income

$
26,863


$
26,189


$
27,130


$
27,752Interest expense


10,430



9,868



9,594



8,790Net interest income


16,433



16,321



17,536



18,962Provision for loan losses


2,087



2,552



3,418



6,996Net interest income after provision for loan losses


14,346



13,769



14,118



11,966Other income


8,006



3,867



( 18,150
)


(35,727
)Net securities gains (losses)


411



1,653



866



(14,603
)Other expenses


15,187



16,041



17,768



17,628Income (loss) before income taxes


7,576



3,248



( 20,934
)


(55,992
)Income taxes


2,346



843



(9,633
)


(21,430
)Net income (loss)


5,230



2,405



( 11,301
)


(34,562
)Preferred dividends


571



578



1,011



Net income (loss) available to common shareholders

$
4,659


$
1,827


$
(12,312
)

$
(34,562
)Per share:Basic earnings

$
0.40


$
0.14


$
(0.71
)

$
(1.95
)Diluted earnings

$
0.40


$
0.14


$
(0.71
)

$
(1.95
)Dividends

$



$
0.20


$
0.10


$
Weighted average basic shares outstanding


11,568



12,696



17,427



17,687Weighted average diluted shares outstanding


11,617



12,741



17,427



17,687   101




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##### Table of Contents



FIRST
    COMMUNITY BANCSHARES, INC.
  NOTES TO
    CONSOLIDATED STATEMENTS  (Continued)
  2008Quarter EndedMarch 31


June 30


Sept 30


Dec 31(Amounts in thousands, except per share Data)Interest income

$
29,547


$
27,433


$
26,550


$
27,235Interest expense


13,187



10,808



10,227



10,708Net interest income


16,360



16,625



16,323



16,527Provision for loan losses


323



937



3,461



2,701Net interest income after provision for loan losses


16,037



15,688



12,862



13,826Other income


7,321



7,574



7,720



(22,140
)Net securities gains (losses)


1,820



150



163



(234
)Other expenses


16,283



14,759



14,441



15,033Income (loss) before income taxes


8,895



8,653



6,304



(23,581
)Income taxes


2,583



2,415



1,753



(9,561
)Net income (loss)


6,312



6,238



4,551



(14,020
)Preferred dividends














255Net income (loss) available to common shareholders

$
6,312


$
6,238


$
4,551


$
(14,275
)Per share:Basic earnings

$
0.57


$
0.57


$
0.42


$
(1.27
)Diluted earnings

$
0.57


$
0.56


$
0.41


$
(1.27
)Dividends

$
0.28


$
0.28


$
0.28


$
0.28Weighted average basic shares outstanding


11,030



10,992



10,957



11,252Weighted average diluted shares outstanding


11,108



11,073



11,034



11,252  102




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##### Table of Contents



- REPORT
    OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM -             Internal Control  Integrated Framework
   
    103




---



##### Table of Contents



MANAGEMENTS
    ASSESSMENT OF INTERNAL CONTROL OVER FINANCIAL
    REPORTING
  Form 10-K. Form 10-K
    Internal Control-Integrated Framework
  Form 10-K.
    
     
    104




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##### Table of Contents



- REPORT
    OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM -     Internal Control 
    Integrated Framework
        Internal Control  Integrated
    Framework
    
    105




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##### Table of Contents



ITEM 9.
    CHANGES
    IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
    FINANCIAL DISCLOSURE.    ITEM 9A.
    CONTROLS
    AND PROCEDURES.  Rule 13a-15(b).
    Form 10-K.
  ITEM 9B.
    OTHER
    INFORMATION.   PART III  ITEM 10.
    DIRECTORS,
    EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.         106




---



##### Table of Contents



Form 10-K,
  BOARD OF
    DIRECTORS, FIRST COMMUNITY BANCSHARES, INC.
  Franklin P. Hall

A. A. ModenaBusinessman; Senior Partner, Hall & Hall Family Law
    Firm; Commissioner, Virginia Department of Alcoholic Beverage
    Control; Former Delegate, Virginia General Assembly

Past Executive Vice President and Secretary, First Community
    Bancshares, Inc.; Past President and Chief Executive Officer,
    The Flat Top National Bank of BluefieldAllen T. Hamner, Ph.D.

Robert E. Perkinson, Jr.Retired Professor of Chemistry, West Virginia Wesleyan College

Past Vice President-Operations, MAPCO Coal, Inc.  Virginia
    RegionRichard S. Johnson

William P. StaffordPresident, The Wilton Companies

President, Princeton Machinery Service, Inc.I. Norris Kantor

William P. Stafford, IIOf Counsel, Katz, Kantor & Perkins,
    Attorneys at Law

Attorney at Law, Brewster, Morhous, Cameron, Caruth, Moore,
    Kersey & Stafford, PLLCJohn M. MendezPresident and Chief Executive Officer, First Community
    Bancshares, Inc.; Chief Executive Officer, First Community Bank,
    N. A.   EXECUTIVE
    OFFICERS, FIRST COMMUNITY BANCSHARES, INC.
  John M. Mendez

E. Stephen LillyPresident and Chief Executive Officer

Chief Operating OfficerDavid D. Brown

Robert L. BuzzoChief Financial Officer

Vice President and Secretary  107




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##### Table of Contents



BOARD OF
    DIRECTORS, FIRST COMMUNITY BANK, N. A.
  W. C. Blankenship, Jr.

I. Norris KantorAgent, State Farm Insurance

Of Counsel, Katz, Kantor & Perkins,
    Attorneys at LawD. L. Bowling, Jr.

John M. MendePresident, Best Energy, Inc.

President and Chief Executive Officer, First Community
    Bancshares, Inc.; Chief Executive Officer, First Community Bank,
    N. A.Juanita G. Bryan

A. A. ModenaHomemaker

Past Executive Vice President and Secretary, First Community
    Bancshares, Inc.; Past President and Chief Executive Officer,
    The Flat Top National Bank of BluefieldRobert L. Buzzo

Robert E. Perkinson, Jr.Vice President and Secretary, First Community Bancshares, Inc.;
    President, First Community Bank, N. A.

Past Vice President-Operations, MAPCO Coal, Inc. 
    Virginia RegionC. William Davis

William P. StaffordAttorney at Law, Richardson & Davis

President, Princeton Machinery Service, Inc.T. Vernon Foster

William P. Stafford, IIPresident of J. LaVerne Print Communications Past
    Director, TriStone Community Bank

Attorney at Law, Brewster, Morhous, Cameron, Caruth, Moore,
    Kersey & Stafford, PLLCFranklin P. Hall

Frank C. TinderBusinessman; Senior Partner, Hall & Hall Family Law
    Firm; Commissioner, Virginia Department of Alcoholic Beverage
    Control; Former Delegate, Virginia General Assembly

President, Tinder Enterprises, Inc. and Tinco Leasing CorporationAllen T. Hamner, Ph.D.

Dale F. WoodyRetired Professor of Chemistry, West Virginia Wesleyan College

President, Woody Lumber CompanyRichard S. JohnsonPresident, The Wilton Companies  108




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##### Table of Contents



ITEM 11.
    EXECUTIVE
    COMPENSATION.    ITEM 12.
    SECURITY
    OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
    RELATED STOCKHOLDER MATTERS.    Equity
    Compensation Plan Information
    Number of





Number of SecuritiesSecurities to be





Remaining AvailableIssued Upon


Weighted-Average


for Future IssuanceExercise of


Exercise Price of


Under EquityOutstanding


Outstanding


Compensation PlansOptions, Warrants


Options, Warrants


(Excluding SecuritiesPlan Category

and Rights


and Rights


Reflected in Column (a))(a)


(b)


(c)Equity compensation plans approved by security holders


56,625


$
26.02



85,343Equity compensation plans not approved by security holders


356,855


$
22.05



71,801Total


413,480







157,144     ITEM 13.
    CERTAIN
    RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
    INDEPENDENCE.    ITEM 14.
    PRINCIPAL
    ACCOUNTING FEES AND SERVICES.   109




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##### Table of Contents



PART IV  ITEM 15.
    EXHIBITS,
    FINANCIAL STATEMENT SCHEDULES.  Documents Filed as Part of this Report
  Financial Statements
    Financial Statement Schedules
    Exhibits
  Exhibit No.

Exhibit2
.1

Reserved2
.2

Reserved3
(i)

Articles of Incorporation of First Community Bancshares, Inc.,
    as amended.(1)3
(ii)

Certificate of Designation Series A Preferred Stock(22)3
(iii)

Bylaws of First Community Bancshares, Inc., as amended.(17)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

Reserved4
.6

Warrant to purchase 176,546 shares of Common Stock of First
    Community Bancshares, Inc.(22)10
.1

First Community Bancshares, Inc. 1999 Stock Option
    Agreements(2) and Plan.(4)10
.1.1

Amendment to First Community Bancshares, Inc. 1999 Stock Option
    Plan.(11)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)10
.4

First Community Bancshares, Inc. 2000 Executive Retention Plan,
    as amended.(24)10
.5

First Community Bancshares, Inc. Split Dollar Plan and
    Agreement.(2)10
.6

First Community Bancshares, Inc. 2001 Directors
    Supplemental Retirement Plan.(2)10
.6.1

First Community Bancshares, Inc. 2001 Directors
    Supplemental Retirement Plan. Second Amendment (B.W. Harvey,
    Sr.  October 19, 2004).(14)10
.7

First Community Bancshares, Inc. Wrap Plan.(7)10
.8

Reserved10
.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

Reserved10
.12

First Community Bancshares, Inc. 2004 Omnibus Stock Option Plan
    (10) and Award Agreement.(13)10
.13

Reserved10
.14

First Community Bancshares, Inc. Directors Deferred Compensation
    Plan.(7)10
.15

First Community Bancshares, Inc. Deferred Compensation and
    Supplemental Bonus Plan For Key Employees.(15)10
.16

Employment Agreement dated November 30, 2006, between First
    Community Bank, N. A. and Ronald L. Campbell.(19) 110




---



##### Table of Contents



Exhibit No.

Exhibit10
.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
.25

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)12
*

Computation of Ratios21


Subsidiaries of Registrant  Reference is made to
    Item 1. Business for the required information23
.1*

Consent of Dixon Hughes PLLC, Independent Registered Public
    Accounting Firm for First Community Bancshares, Inc.31
.1*

Certification as Adopted Pursuant to Section 302(a) of the
    Sarbanes-Oxley Act of 2002 by Chief Executive Officer31
.2*

Certification as Adopted Pursuant to Section 302(a) of the
    Sarbanes-Oxley Act of 2002 by Chief Financial Officer32
*

Certification Pursuant to 18 U.S.C. Section 1350, as
    Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act
    of 2002 by Chief Executive Officer and Chief Financial Officer     *
    
    Furnished herewith.(1)
    
    Incorporated by reference from the Quarterly Report on
    Form 10-Q
    for the period ended June 30, 2005, filed on August 5,
    2005.(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 the Current Report on
    Form 8-K
    dated August 22, 2006, and filed August 23, 2006. 111




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##### Table of Contents



(8)
    
    Reserved.(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 Footnote 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)
    
    Reserved(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 Annual Report on
    Form 10-K
    for the period ended December 31, 2007, filed on
    March 13, 2008.(21)
    
    Reserved.(22)
    
    Incorporated by reference from the Current Report on
    Form 8-K
    dated November 21, 2008, and filed November 24, 2008.(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 10.1 of the Current
    Report on
    Form 8-K
    dated December 30, 2008, and filed January 5, 2009.(25)
    
    Incorporated by reference from Exhibit 2.2 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. 112




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##### Table of Contents



SIGNATURES
    
  By:
    /s/  John
    M. Mendez      By:
    /s/  David
    D. Brown        Signature

Title

Date/s/  John
    M. MendezJohn
    M. Mendez

Director, President and
    Chief Executive Officer

March 4, 2010/s/  David
    D. BrownDavid
    D. Brown

Chief Financial Officer

March 4, 2010/s/  Franklin
    P. HallFranklin
    P. Hall

Director

March 4, 2010/s/  Allen
    T. HamnerAllen
    T. Hamner

Director

March 4, 2010/s/  Richard
    S. JohnsonRichard
    S. Johnson

Director

March 4, 2010/s/  Robert
    E. Perkinson, Jr.Robert
    E. Perkinson, Jr.

Director

March 4, 2010/s/  William
    P. StaffordWilliam
    P. Stafford

Chairman of the Board of Directors

March 4, 2010/s/  William
    P. Stafford, IIWilliam
    P. Stafford, II

Director

March 4, 2010  113