First Community Bankshares Inc

NASDAQ:FCBC

Core business held up: Management said the quarter was hurt by investment write-downs, but core earnings were still $3.8 million for the quarter and $20.7 million for the year.

Credit stayed solid: Non-performing assets were 66 basis points and the allowance for loan losses was 1.23% of loans, though delinquencies rose during the quarter.

Investment losses hit results: The company took $18.25 million in after-tax impairment charges on two securities, including a collateralized mortgage obligation and a pooled trust preferred CDO.

Balance sheet grew: Loans rose $129 million and deposits rose $154 million, helped by the Coddle Creek acquisition and the TARP investment.

Capital remains strong: Management said capital ratios stayed comfortably above “well-capitalized” levels, with Tier I risk-based capital at 11.5% and total risk-based capital at 11.7%.

Outlook: Management expects deposit funding costs to keep falling, sees potential margin support, and said it will rely on internal capital generation and possible acquisitions to rebuild tangible common equity.

Acquisition focus: The company continued to lean on insurance and banking acquisitions, including Carr & Hyde Insurance, and said it expects more opportunistic and government-assisted deals in 2009.