Greetings and welcome to the First Community Bancshares first quarter 2008 Earnings Call. At this time all participants are in a listen-only-mode. A brief question-and-answer-session will follow the formal presentation. (Operator Instructions). As a reminder, this conference is being recorded. It is now my pleasure to introduce Bob Schumacher, General Counsel for First Community Bancshares. Thank you, Mr. Schumacher. You may begin.

Good morning. In advance to the conference we would just like to tell everybody that the conference may contain forward-looking statements. These statements are based on current expectations that involve risks, uncertainties and assumptions. Should one or more of these risks or uncertainties materialize or should underlying assumptions prove incorrect, actual results may differ materially. These risks include changes in business or other market conditions, the timely development, production and acceptance of new products and services, the challenges of managing asset liability levels, the management of credit risk and interest rate risk, the difficulty of keeping expense growth at modest levels while increasing revenues, and other risks detailed from time to time in the company's Securities and Exchange Commission reports including, but not limited to the annual report on Form 10-K for the most recent year ended. Pursuant to the Private Securities Litigation Reform Act of 1995, the company does not undertake to update forward-looking statements contained within this conference call. Thank you. John Mendez

Good morning, this is John Mendez. I am President and Chief Executive Officer of First Community Bancshares, and I would like to welcome you to our first quarter 2008 conference call for First Community Bancshares. We thank you for your interest in our company and the research that you provide on our behalf. We would like to take this time today to amplify our first quarter earnings release and to advise you on the activities of the company over the first quarter and recent months. Joining me on the call today is Dave Brown. Dave is our Chief Financial Officer. We also have Gary Mills who is Chief Credit Officer for First Community Bank. I will begin with comments on our company generally, our plans and activities and some of our response to the current operating environment. And then I will be followed by Dave Brown who will highlight the financial results. Gary Mills will then conclude with an overview of lending and credit. Following our prepared comments we will take questions from registered callers. I will begin this morning with an overview of our results and operational highlights for the quarter and a discussion of some key trends. As you noted from the published earnings release earlier this morning, our net earnings for the first quarter fell short of the preceding quarter and the comparable quarter in 2007. Dave Brown will discuss the underlying details later in the call, but I would like to address some obvious areas that are driven by current environmental conditions. The general trends affecting our earnings results include the market focus and our focus on credit quality, a general slowdown in economic conditions, and the rapid decline in the general level of interest rates. In particular, the 200 basis point decrease in New York…

Thank you, John, and good morning everyone. I want to get into a little bit of information about the first quarter, tell you about some current and planned positives that are in there and let me just get straight into the color of the quarter. We began the first quarter with a pretty positive outlook on the year. We knew there were some significant headwinds facing the entire industry but we remained optimistic. Then we were hit with prime dropping by 125 basis points in January and another 75 basis points in March. We weathered the surprise cut pretty well, and we were able to make some dramatic changes in deposit pricing to compensate. In response to the end of January cut, we again made some dramatic cuts but we were not able to have nearly the same impact as we did earlier in the month. In March, we again took action, but we were not able to match the decrease in rates point for point. All told, though, we were able to come in with a three basis point increase in margin over fourth quarter 2007. The continued decline in the loan portfolio was something we had not -- the continued decline in the loan portfolio was not something we had expected though. We had modeled very modest growth through the first quarter and accelerated throughout the year and average loans actually decreased over $33 million in the first quarter. When the rate cuts combined with the declines in the loan portfolio, you can see that interest income really took quite a beating. The bright spot in the average balance sheet came from [interest] deposit cost savings. We decreased rates on savings and money market accounts by 29 basis points and pushed CD yields down 14 basis points. We…

Thank you, David, and good morning. Asset quality continued to be very good during the first quarter. Total delinquency improved to 0.65% at quarter end as compared to 0.98% at year end 2007. The reduction in total delinquency was primarily influenced by 30 to 89 day delinquencies improving to 0.38% at the end of the quarter versus 0.74% at year end. It is also noteworthy that non-accrual loans remained relatively flat at $3,137,000 or 0.27% as compared to year-end non-accrual loans of $2,923,000 or 0.24%. The Bank had zero loans 90 plus days past due. Net charge-offs for the quarter were $293,000 or 10 basis points on an annualized basis as compared to 38,000 or one basis point in the first quarter of 2007. I would note that first quarter 2008 gross charge-offs were only $73,000 higher than the first quarter of 2007. However, the Bank had extremely good recovery experience in the first quarter of 2007, which resulted in very low net charge-offs. OREO at quarter end stood at $400,000 as compared to $545,000 at year end. This coupled with non-accrual loans resulted in total non-performing assets of $3,537,000 or 0.17% of total assets, which is comparable to year end postings of $3,468,000 or 0.16% and represents improvement over the first quarter '07 of $4,707,000 or 0.22%. The allowance for loan and lease losses stood at $12,862,000 at the end of the first quarter, which equated to 1.09% of total loans. The reserve at this level also provides a strong coverage ratio to non-performing loans of 410%. At year end the reserve measured $12,833,000 or 1.05% of total loans and provided a non-performing loan coverage ratio of 439%. Our provision for loan losses of $323,000 was made during the first quarter. I believe we are operating within a very…

Thank you, Gary and Dave for those comments. At this time that concludes our prepared remarks, but we would be happy to take questions from registered callers and turn it back to our conference operator to slip in some questions.

(Operator Instructions). Our first question is coming from the line of Mark Muth with FTN. Please proceed with your question.

Good morning, guys.

Good morning, Mark.

Good morning.

Good morning.

Dave, how much contingent income was in the insurance this quarter, do you know?

Mark, I think that about 10% of what we saw in this quarter's income was contingent. It is about $200,000, $250,000 for this quarter.

Okay and then John, you talked about the pipeline earlier and gave a lot of detail there. I was just hoping you could give us a sense of any specific geographic areas where you're having more or less success and thinking about the upstate South Carolina where you recently opened an LPO. I know it is a relatively strong market. Just curious what kind of success you're having there so far.

We are certainly seeing submissions from Greenville, South Carolina area. We have had success there and we have a pipeline, a smaller pipeline in South Carolina. But I think the bigger numbers and the greater number of deals continue to come out of Virginia. We are seeing larger opportunities there and more of those and I would say the biggest portion of the pipeline is coming out of Virginia.

Okay. Thanks, guys.

Our next question is from the line of Brian Klock with KBW. Brian Klock - Keefe, Bruyette & Woods: Hi, good morning guys. How are you doing?

Good morning, Brian.

Good morning. Brian Klock - Keefe, Bruyette & Woods: Well I mean I guess you guys covered a lot of my details, questions already, but John and Dave maybe I guess on the securities portfolio, it continues to run down the available for sale securities portfolio was down about $65 million from the end of the year. What do you guys think going forward? Is there any opportunity for you all to add to the securities portfolio? Are you seeing opportunities there yet or are you going to continue to let that run down?

Yeah, I think Brain, a lot of the rundown that show on the portfolio came from the bond sales we did in January, as well as -- if I remember right in an unchanged rate environment we were expecting about $115 million to come off the portfolio in 2008. In terms of opportunities, they are out there everywhere, and we are constantly evaluating them. I don't know if this is the most opportune time to be putting on new securities, but we will always look, and we will always consider that. Brian Klock - Keefe, Bruyette & Woods: Okay, and I guess. I apologize, I have been bouncing around on another call; how much was the principal of the bond sales in the quarter?

We sold about $25 million or $26 million worth in principal. Brian Klock - Keefe, Bruyette & Woods: Okay. I know you went through the details of the variant linked quarter on personnel expenses. I guess, thinking about the $7.8 million here in the first quarter, is that a good run rate or are some of those items going to come out in the second quarter? Obviously the FICA, FUTA, the [OEM] compensated cost should come down. Wondering I guess, if you can give us the guidance around -- could we expect a little bit lower number going forward?

Yeah, I'd hate to give a whole lot of guidance about that, Brian; but I think historically, you see that those accruals tend to tail down through the year as we make -- as we get to highly [comp] limits through the year and limits are met in terms of contribution, not retirement contributions. The health care is just an unfortunate situation, I think, for everybody in the country and in turn, you just continue to see huge, huge increases across the board. We do our best to mitigate those and we have plans to look at our health insurance but I'm not sure I can tell you anything.

And Dave, that's an area where we had been trending down. We're having some favorable experience and I think the first quarter was a bit of a surprise. And hopefully we will see better experience in following quarters. But again, that is something that is very difficult to project.

Yeah. We were actually able to -- over the course of the last two or three years, we've been able to keep our health insurance premiums on a per person basis for insured basis about level for 2.5 years now. And so now we're just back into the standard increases and I do want to correct what I told you earlier, Brian. We sold $28.5 million worth of principal in January. Brian Klock - Keefe, Bruyette & Woods: Okay, okay. I don't have my notes in front of me from the fourth quarter, but what was your FTE headcount at the end of the year? I know you said it was 619 at the end of the first --

It was 615. Brian Klock - Keefe, Bruyette & Woods: 615, okay. Is that -- should we expect -- I know you talked about the new branch coming online next month, but their headcount is probably already in your first quarter number.

I'm sorry? Brian Klock - Keefe, Bruyette & Woods: The Summersville West Virginia branch that's coming online here next month, their headcount is probably already in your 619 FTE.

Yes, for the most part. I think we may have to hire a few tellers to staff up that one branch, but that's largely going to be -- we are moving -- we're transferring out to a better part of the city, out on the main highway corridor. Brian Klock - Keefe, Bruyette & Woods: Okay, okay. And just one last question, John, for you. I know you talked about the pipeline. Can you give us color about where most of that strength is coming from, which geography?

Well, yeah. And following Mark's question along those lines, I did refer to the pipeline report. And looking by region, in Eastern Virginia, I'm seeing $67 million pipeline. I have, in North Carolina, which is a bit of an anomaly because we have some lenders there who are working in both North Carolina and Virginia, but out of that group we are seeing about a $115 million. And that is going to be really skewed. It's probably going to be split between North Carolina and Virginia. So between those two states it is certainly leading the way. In the Richmond to Charlottesville corridor, that's probably where some of the biggest investment is coming. We are also seeing some opportunities around Charlotte, North Mecklenburg, the Lake area; recent fundings as well as some loans that are in the pipeline today. So it is spread pretty well between North Carolina and Virginia but there is a pretty good concentration in that I-64 corridor, Richmond to Charlottesville. And Petersburg, we actually went a little bit south of Richmond, as well, to Petersburg area where you may know that there is a good bit of development starting up around the Fort Lee base expansion. Brian Klock - Keefe, Bruyette & Woods Inc.: Okay. Alright, great. And I guess I have no questions on credit. It is probably one of the strongest quarters I've seen in the region so far on credit. So good job on the asset quality, guys. Alright, thanks.

Thanks.

Our next question is from the line of Carter Bundy with Stifel Nicolaus. Please proceed with your question. Carter Bundy - Stifel Nicolaus & Co: Hello everyone.

Morning, Carter. Carter Bundy - Stifel Nicolaus & Co: A couple of quick questions. Most of mine have been answered. John, could you remind me of those, the GreenPoint numbers? I was writing them down and didn't catch them all.

Sure. The revenue line for the quarter, let me just go back, $1.3 million for the first quarter. And that did include a portion of the contingency revenues that come in -- early part of the year. There's some discussion here whether that is $130,000 or $250,000, but let's call it $200,000 in contingency revenues included in that $1.3 million. On a pretax basis, the pretax net was $292,000 for the quarter and their cash pretax earnings was $348,000. Carter Bundy - Stifel Nicolaus & Co: Okay. And then, another question, if you look at yours -- accumulated other comprehensive loss in the quarter, it was pretty substantial in your equity bucket. Is that temporary, or is that something that we might need to think about? I just -- Just give me a little color there. Maybe I'm missing something here, but that was a pretty big decline, about $16 million.

That is something in the quarter that we currently consider to be temporary. Carter Bundy - Stifel Nicolaus & Co: Okay. Thanks, guys.

Gentlemen, there are no questions at this time; I would like to give everyone a final opportunity for everyone to ask a question. Gentlemen there are no questions at this time. I would like to turn the call back to management for any closing comments.

Thank you. We would like to, again, thank everyone for joining us for the call this morning. Just to reiterate, we think it was a solid quarter. It was not a record quarter, it was a solid quarter. We managed to deal with the rate environment. We are very pleased with asset quality and where that is going. We continue to work on that hard and our focus now is to regenerate that loan production and again, we think that we have a pipeline in place to do that. Thank you for joining us, and we look forward to seeing you again next quarter.

Ladies and gentlemen, this does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation.