Tornado STRONGER TOGETHER ANNUAL REPORT

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1 Tornado STRONGER TOGETHER ANNUAL REPORT

2 STRONGER TOGETHER. The bank has been built on the values that are so prevalent in our communities. Strong work ethic, energy and passion in our efforts and results, and support for our neighbors. Over the last 20 years, we have operated under the motto of Your Town Your Bank. This adage is more than a marketing slogan as its fundamental premise is that success is achieved by working together, by developing relationships with customers and the communities we serve. This past year, Your Bank became stronger together with the addition of the fine customers and staff of Rock Branch Community Bank who share these values, and we are confident this strength will lead to continued outstanding results for Your Bank.

3 SHAREHOLDERS LETTER from the Chairman & Dear Customers, Shareholders, and Friends: On behalf of the staff and board of directors of First Sentry Bancshares, Inc., and its sole subsidiary, First Sentry Bank, Inc., we are pleased to provide you the enclosed condensed, unaudited financial statements representing the financial results for. We will forward the audited financial statements in the second quarter along with other annual meeting documents. Last year in was the first year Your Bank eclipsed the $500 million mark in total assets, and we are most satisfied to report that this year, Your Bank eclipsed the $600 million mark in total assets for the first time in bank history. Net income was also at a new record level for the year ended December 1, as well. Your Bank generated net income of $5.1 million in, or $.50 per weighted average share outstanding. This represents a 9.9% increase from the previous company record of $4.67 million, or $.25 per share, generated in. As is demonstrated in the accompanying pages, this net income improvement was a result of the combination of a $1.06 million increase in net interest income, a $425,000 improvement in non interest income, and a $81,000 reduction in loan loss provision expense, all of which more than offset a $1.44 million increase in operating expenses. We closed on our acquisition of Rock Branch Community Bank in October. We are very pleased with the early results of this acquisition and are excited for the future as this represents our introduction into the Putnam and Kanawha county markets. We incurred $481,000 in one-time costs related to this merger in. These one-time merger costs plus $46,000 of additional operating costs related to the new branch in Nitro for roughly the last three months of, along with increases in various other noninterest expenses related to vendor price increases, new banking products for customers, and increases in employee benefit costs, were the primary reasons for the increase in operating expenses mentioned above. Total assets on December 1, amounted to $629.5 million. This record year-end total represents a $121 million, or 2.8%, increase from the December 1, total assets of $508.5 million. Excluding the $78 million of assets that were acquired in the merger of Rock Branch, the remaining $4 million in asset growth results in an organic growth rate (exclusive of the merger) of 8.5% from December 1,. million in deposit growth represents an organic growth rate of.8% from December 1, when total deposits were $409.7 million. Demand deposits, or checking accounts, stood at $8.1 million on December 1,. This is the highest year-end total for demand deposits in the company s history, and represents a $1.4 million, or 14.2%, increase from the previous record of $94.7 million on December 1,. Demand deposit growth attributable to the merger at December 1, was $. million, and the remaining $.1 million in demand deposit growth represents an organic growth rate of.%. Savings and time deposits total $409.1 million on December 1,. This represents an increase of $94.1 million, or 29.9%, from the December 1, total of $15.0 million. Savings and time deposit growth attributable to the merger was $52.9 million at December 1,. The remaining $41.2 million in savings and time deposit growth represents an organic growth rate of 1.1%. Stockholders equity increased $7.2 million in and amounted to another year-end record of $48.8 million on December 1,. Book value per share on this date was $1.26, an 8.1% increase from December 1, when book value per share was $ This increase is after Your Bank paid a record $1.47 million in cash dividends to its shareholders in. It gives us great pride to report that Your Bank has paid dividends for the past fifty-seven consecutive quarters totaling $12.6 million while also seeing book value grow to 5 times its original value. In closing, thank you! Thank you to our many customers who choose to bank with First Sentry Bank. We do not take lightly the responsibility of being Your Bank. Any and all of our success is because of you, our customers. We are also very appreciative to our loyal shareholders. You continue to honor us with your patronage and express your confidence in us by referring customers to Your Bank. Finally, we would be remiss not to thank our dedicated, talented and professional group of employees and directors who continue to work tirelessly for the betterment of this organization. This three-legged stool of customers, shareholders and employees has stood the test of time, and we plan on continuing our strategy of adding strength to each leg. Total loans on December 1, amounted to $46.4 million. This represents a $68.5 million, or 18.6%, growth from December 1, when total loans amounted to $67.9 million. The loans attributable to the merger at December 1, represent $55.8 million of the growth, while the remaining $12.7 million in loan growth represents an organic growth rate of.4% from December 1,. Primarily funding the growth in assets was a combination of growth in deposits and stockholders equity. Total deposits increased $7.6 million, or 26.%, as they amounted to $517. million on December 1,. Deposit growth at December 1, attributable to the merger was $6.2 million. The remaining $44.4 Robert H. Beymer CHAIRMAN OF THE BOARD Geoffrey S. Sheils PRESIDENT & CEO FINANCIAL HIGHLIGHTS $ 5,250,750 NET INCOME $ EARNINGS PER SHARE 2,250 $,161 $,286 $4,077 $4,667 $5, $2.20 $2.29 $2.84 $.25 $.50

4 FINANCIALS First Sentry Bancshares, Inc. Balance Sheet December 1, and (DOLLARS IN THOUSANDS - except per share data) unaudited unaudited 12/1/16 12/1/15 Cash and Fed Funds Sold $,518 $ 22,8 Investment Securities 17,467 1,588 Loans 46,82 67,904 Less: Allowance for Loan Losses 6,062 5,800 Net Loans 40,20 62,4 Bank Premises and Equipment 6,607 6,171 Intangible Assets 2,8 2,67 Other Assets 5,79 4,600 Total Assets $ 629,484 $ 508,474 DEPOSITS Demand $ 8,120 $ 94,689 Savings 206, ,825 Other Time Deposits 202, ,167 Total Deposits 517, ,681 Borrowings 5,881 47,11 Other Liabilities Total Liabilities 571, ,9 Trust Preferred Securities 9,000 9,000 Common Stock, $1 par value 5,280,000 authorized, 1,47,851 issued on 12/1/15, 1,561,169 issued on 12/1/16* 1,561 1,48 Additional Paid-in Capital 19,245 15,299 Retained Earnings 28,488 24,827 Unrealized Gain (Loss) on Investments (490) 0 Total Stockholders Equity 48,804 41,564 Total Liabilities & Stockholders Equity $ 629,484 $ 508,474 Book Value per Share $ 1.26 $ *Weighted Average Number of Shares Outstanding = 1,466,490 First Sentry Bancshares, Inc. Statement of Income For the Years Ended December 1, and (DOLLARS IN THOUSANDS - except per share data) unaudited unaudited Interest Income Loans, Including Fees $ 18,02 $ 17,247 Investment Securities 2,75 2,524 Total Interest Income 20,785 19,771 Interest Expense,547,597 Net Interest Income 17,28 16,174 Non-Interest Income Service Charges Loss on Real Estate (5) (250) Other Charges and Fees Total Non-Interest Income 1,684 1,259 Loan Loss Provision Expense 85 1,198 Gross Operating Income 18,57 16,25 Other Non-Interest Expenses Salaries and Employee Benefits 5,517 4,971 Equipment and Occupancy 1, Data Processing Professional Fees Insurance Taxes, Other Other Expenses 2,051 1,770 Total Other Expenses,89 9,402 Securities Losses (95) (52) Income before Income Tax 7,60 6,780 Income Tax Expense 2,474 2,11 Net Income $ 5,129 $ 4,667 Earnings per Share $.50 $.25 $ 2.00 BOOK VALUE PER SHARE $ 60,000 ASSETS $ 1,000 DEMAND DEPOSITS $ 50,000 SHAREHOLDERS EQUITY ,000 70,000 5, $2.59 $24.20 $26.69 $28.91 $1.26 0,000 $49,500 $489,900 $495,54 $508,474 $629,484 50,000 $72,700 $75,200 $80,67 $94,689 $8,120 20,000 $,900 $4,800 $8,67 $41,564 $48,804

5 BOARD OF DIRECTORS Scottown 217 BEYMER DILLARD FOX, III HOOD IN MEMORIAM JONES LOGAN Brentwood 7 Proctorville Chesapeake Huntington Robert H. Beymer Chairman of the Board First Sentry Bank Kerry P. Dillard & CEO Bloss & Dillard, Inc. David Fox, III Retired Jeffrey E. Hood Hood Enterprises, Inc. Johnnie Jones & CEO Ducky s Inc. Nester S. Logan SS Logan Packing Co. MCGUIRE J. Grant McGuire Attorney and Member Campbell, Woods, Bagley, Emerson, McNeer & Herndon, P.L.L.C. MCDONIE Joseph K. McDonie Real Estate Development Entrepreneur MCKOWN, JR., MD Charles H. McKown, Jr., M.D. Vice for Health Services Advancement MU School of Medicine MORRISON, JR. Edward W. Morrison, Jr. C.I. Thornburg Company, Inc. OXLEY Shoals Sally C. B. Oxley Huntington Physical Therapy Services, Inc. PATTERSON, III George A. Patterson, III Attorney and Member Bowles, Rice, McDavid, Graff & Love, P.L.L.C. SHEILS SHELL SMITH TURMAN, II WHITE WILLIAMS 7 Wayne East Lynn Geoffrey S. Sheils & CEO First Sentry Bank P. Todd Shell Chief Investment Officer Guyan International J. Roger Smith Real Estate Development Entrepreneur Paul L. Turman, II Big Ike, LLC John Jay White Mahue Construction Company, Inc. Joseph L. Williams & CEO Basic Supply Company, Inc. WOLFE, MD YOUNG S. Kenneth Wolfe, M.D. Retired Physician Kelly Young Esquire Lane & Young YOUR TOWN... YOUR BANK

6 Winfield Lesage 7 Shoals Brentwood 24 7 Proctorville 2 19 Winslow Salt Rock 4 5 Raymond City 2 Chesapeake 19 Huntington West Hamlin Teays Valley Scott Depot Ona Milton Barboursville Hurricane 25 Nitro 622 Sweetland Cross Lanes Barboursville Wayne OUR HISTORY. First Sentry Bancshares, Inc. is a one-bank holding company owning First Sentry Bank, a West Virginia state chartered East Lynn bank. First Sentry Bank commenced operations on October Salt Rock 2, 1996 after raising $6 million in capital from a private stock offering and spent its first twenty months operating from a small, renovated restaurant building. Winslow West Hamlin The Bank moved into its main office facility, a three story building constructed adjacent to the former restaurant building, in June This facility is located in the heart of the Southside of Huntington Branchland on the corner of Eighth Street Myra and Ninth Avenue. The bank opened its Barboursville office in July 2004, and with the acquisitions of Guaranty Bank & Trust Co. in 2009 and the Rock Branch Community Bank Midkiff in, operates three additional full service offices with its Pea Ridge office located on Route 60 East in eastern Huntington, its Lincoln County office located on Second Street in Hamlin, and its Rock Branch office located on First Avenue in Nitro. Sweetland 4 Branchland Midkiff MAIN OFFICE 82 Eighth Street Huntington, WV PHONE: (04) BARBOURSVILLE 6501 Mud River Road Barboursville, WV PHONE: (04) LINCOLN COUNTY 5 Second Street Hamlin, WV 2552 PHONE: (04) PEA RIDGE 5604 US Route 60 East Huntington, WV PHONE: (04) ROCK BRANCH Myra 4650 First Avenue Nitro, WV 2514 PHONE: (04) Tornado St. Albans 214 At the core of our business plan is to produce consistent positive results for the shareholders, and we are pleased with the results presented within this Report. Since the beginning when $6 million in equity capital was raised, results have been produced to allow the payment of cash dividends to shareholders in the amount of $12.6 million while increasing the company s shareholder equity base from $6 million on October 2, 1996 to $48.8 million on December 1, HOUR BANKING (04)