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First Community Bancshares, Inc.   Corresp

August 28, 2007

Via EDGAR

Ms. Sharon Blume

Reviewing Accountant

Division of Corporation Finance

U.S. Securities and Exchange Commission

100 F Street, NW

Washington, D.C. 20549

Mail Stop 4561

    Re:

    First Community Bancshares, Inc.

Form 10-K for the Fiscal Year Ended December 31, 2006

Form 10-Q for the Fiscal Quarters Ended March 31, 2007 and June 30, 2007

File No. 0-19297

Dear Ms. Blume:

This letter is provided on behalf of First Community Bancshares, Inc. (“First Community” or the
“Company”) in response to your letter of August 17, 2007, regarding the Company’s Annual Report on
Form 10-K for the fiscal year ended December 31, 2006, and its Quarterly Reports on Form 10-Q for
the fiscal quarters ended March 31 and June 30, 2007.

The Company acknowledges that:

    •

    The Company is responsible for the adequacy and accuracy of the disclosure in the
referenced filings;

    •

    Staff comments or changes to disclosures in response to staff comments do not foreclose
the Commission from taking any action with respect to the referenced filings; and

    •

    The Company may not assert staff comments as a defense in any proceeding initiated by
the Commission or any person under the federal securities laws of the United States.

For your convenience, we have included in this letter in bold the number and description of each of
the comments in your letter; our responses thereto follow.

Item 8. Financial Statements and Supplementary Data

Consolidated Statements of Cash Flows, page 42

    1.

    We note you recorded “cash used in divestitures and acquisitions, net” as a cash outflow,
rather than a cash inflow, in the investing section of your Statements of Cash Flows. Please
tell us whether you received or paid cash when you sold the Rowlesburg, West Virginia, Drakes
Branch, Virginia and Clifton Forge, Virginia branch locations during 2006 and 2005,
respectively. If you did not receive cash for the branch sales, please tell us the type(s) of
consideration received.

The Company paid cash in the net settlement of all three of the branch sales. In all three cases,
the dollar amount of customer deposits assumed by the buyer exceeded the dollar amount of loans
sold by the Company. In all the transactions, the Company sold the loans at par to the buyers and
transferred the

P.O. Box 989 o One Community Place o Bluefield, VA 24605 o Telephone: 276-326-9000 o Fax: 276-326-9010 o www.fcbinc.com

Ms. Sharon Blume

August 28, 2007

Page 2

deposits net of a deposit premium paid by the buyer. In the cases of Drakes Branch and Clifton
Forge, Virginia, the Company also sold the branch real estate as part of the transactions.

Notes to Consolidated Financial Statements

Note 13 — Derivative Instruments and Hedging Activities, page 70

    2.

    We note you entered into an interest rate swap in January 2006 to effectively fix the
interest rate on a portion of FHLB borrowings and that you account for this hedging
relationship as a cash flow hedge under the shortcut provisions of SFAS 133. Please tell us
the following so that we may better understand your accounting treatment:

    •

    the specific terms of the FHLB borrowings, including any upfront fees, conversion,
call, or deferral features;

    •

    the specific terms of the interest rate swap and how those match the terms of the
FHLB borrowings;

    •

    the specific documented risk being hedged; and

    •

    how you determined this hedging relationship meets each of the conditions in
paragraph 68 of SFAS 133 to qualify for use of the shortcut method.

The Company borrowed $50 million in the form of a FHLB advance that settled January 6, 2006. This
advance has a final fifteen-year maturity. For the first five years of the advance, the rate
adjusts quarterly based on USD-BBA 3-month LIBOR with a two-day look-back period and a New York
holiday schedule. The initial rate of the advance was 4.10% and interest payments are due
quarterly beginning April 6, 2006, and are calculated on an actual/360 basis. After the initial
five years, the FHLB has a one-time option to convert, or “flip”, the advance to a fixed-rate of
4.00%. If the FHLB does not exercise this option, the advance moves to a standard adjustable-rate
credit structure. Additionally, if the FHLB does not exercise its conversion option, the Company
may prepay the obligation with no penalty only at that date. There were no upfront fees associated
with the advance, and it contains no interest deferral provisions.

In order to hedge against the interest rate risk and the associated changes in cash flow resulting
from this advance being indexed to 3-month LIBOR, the Company decided to effectively fix the
interest rate during the first five years of this advance through the use of a 5-year interest rate
swap. The swap is between the Company and SunTrust beginning January 6, 2006, with a notional
amount of $50 million. The swap obligates the Company to pay a fixed interest rate of 4.335% and
receive interest equal to 3-month LIBOR less 45 basis points on a $50 million notional amount. The
variable leg of the contract resets quarterly, based on USD-BBA 3-month LIBOR with a two-day
look-back period and a New York holiday schedule, and is settled quarterly beginning April 6, 2006,
and ending January 6, 2011. Each settlement entails paying fixed and receiving variable interest
on an actual/360 basis.

At the inception of the interest rate swap, the Company concluded the advance is a permissible item
to hedge. The associated variability of interest payments present a permissible risk exposure that
could affect reported earnings and cash flows. The Company documented its conclusions
contemporaneously with the execution of the hedge.

The notional amount of the interest rate swap matches the advance. The interest rate swap had a
fair value of zero at the inception of the contract. The formula for computing net settlements
under the swap is the same for each of the twenty quarterly settlements. At any time other than
the FHLB not exercising its conversion option, the Company may terminate the advance prior to
maturity by paying a make-whole

Ms. Sharon Blume

August 28, 2007

Page 2

payment to the FHLB. The hedging relationship involves a recognized interest-bearing liability and
an interest rate swap based on LIBOR, an acceptable benchmark interest rate.

Additionally, the Company designated all interest payments due during the life of the swap as
hedged, and did not designate any interest payments beyond the life of the swap as hedged based on
this transaction. The life of the interest rate swap ends before the FHLB has the option to
convert to a fixed interest rate. The scheduled repricing dates for the FHLB advance and the
interest rate swap were the same. There is no floor or cap on the interest rate of the swap.

Based on the above information, the Company determined at inception that it would account for
the cash flow hedge under the shortcut accounting method allowed in paragraph 68 of SFAS 133.

Thank you for your consideration of our responses to your comments. If you have any questions, or
we can be of further assistance you in the review process, please call me at (276) 326-9000.

Sincerely,

/s/ David D. Brown

David D. Brown

Chief Financial Officer

    cc:

    Mr. David Irving

Staff Accountant

Division of Corporation Finance

U.S. Securities and Exchange Commission

100 F Street, NW

Washington, D.C. 20549