817
Winfield
62
25
817
St. Albans
34
Raymond City
Tornado
35
Teays Valley
Scott Depot
214
25
622
Cross Lanes
Nitro
62
STRONGER
TOGETHER
25
214
St. Albans
Tornado
3
214
214
3
ANNUAL REPORT
2 016
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.
SHAREHOLDERS’ LETTER from the Chairman & President
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 2016. We will forward the audited financial statements
in the second quarter along with other annual meeting documents.
Last year in 2015 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 31, 2016 as well.
Your Bank generated net income of $5.13 million in 2016, or $3.50 per
weighted average share outstanding. This represents a 9.9% increase
from the previous company record of $4.67 million, or $3.25 per share,
generated in 2015. 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 $813,000 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
2016. 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 2016. These one-time merger costs plus $436,000 of
additional operating costs related to the new branch in Nitro for roughly
the last three months of 2016, 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 31, 2016 amounted to $629.5 million. This
record year-end total represents a $121 million, or 23.8%, increase from
the December 31, 2015 total assets of $508.5 million. Excluding the
$78 million of assets that were acquired in the merger of Rock Branch, the
remaining $43 million in asset growth results in an organic growth rate
(exclusive of the merger) of 8.5% from December 31, 2015.
million in deposit growth represents an organic growth rate of 10.8% from
December 31, 2015 when total deposits were $409.7 million.
Demand deposits, or checking accounts, stood at $108.1 million on
December 31, 2016. This is the highest year-end total for demand deposits
in the company’s history, and represents a $13.4 million, or 14.2%,
increase from the previous record of $94.7 million on December 31,
2015. Demand deposit growth attributable to the merger at December
31, 2016 was $10.3 million, and the remaining $3.1 million in demand
deposit growth represents an organic growth rate of 3.3%.
Savings and time deposits total $409.1 million on December 31, 2016.
This represents an increase of $94.1 million, or 29.9%, from the December
31, 2015 total of $315.0 million. Savings and time deposit growth
attributable to the merger was $52.9 million at December 31, 2016. The
remaining $41.2 million in savings and time deposit growth represents an
organic growth rate of 13.1%.
Stockholders’ equity increased $7.2 million in 2016 and amounted to another
year-end record of $48.8 million on December 31, 2016. Book value per
share on this date was $31.26, an 8.1% increase from December 31, 2015
when book value per share was $28.91. This increase is after Your Bank
paid a record $1.47 million in cash dividends to its shareholders in 2016.
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 31, 2016 amounted to $436.4 million. This
represents a $68.5 million, or 18.6%, growth from December 31, 2015
when total loans amounted to $367.9 million. The loans attributable to
the merger at December 31, 2016 represent $55.8 million of the growth,
while the remaining $12.7 million in loan growth represents an organic
growth rate of 3.4% from December 31, 2015.
Primarily funding the growth in assets was a combination of growth in
deposits and stockholders’ equity.
Total deposits increased $107.6 million, or 26.3%, as they amounted to
$517.3 million on December 31, 2016. Deposit growth at December 31,
2016 attributable to the merger was $63.2 million. The remaining $44.4
Robert H. Beymer
CHAIRMAN OF THE BOARD
Geoffrey S. Sheils
PRESIDENT & CEO
NET INCOME
EARNINGS PER SHARE
(in thousands)
FINANCIAL
HIGHLIGHTS
$ 5,250
$ 3.50
3,750
2.50
1.50
2,250
2012
$3,161
2013
$3,286
2014
$4,077
2015
$4,667
2016
$5,129
2012
$2.20
2013
$2.29
2014
$2.84
2015
$3.25
2016
$3.50
FINANCIALS
First Sentry Bancshares, Inc.
Balance Sheet
First Sentry Bancshares, Inc.
Statement of Income
December 31, 2016 and 2015
For the Years Ended
December 31, 2016 and 2015
(DOLLARS IN THOUSANDS - except per share data)
Cash and Fed Funds Sold
$
unaudited
12/31/16
10,518 $
unaudited
12/31/15
22,338
Investment Securities
173,467
110,588
Loans
Less: Allowance for Loan Losses
436,382
6,062
367,904
5,800
430,320
362,104
6,607
2,833
5,739
6,171
2,673
4,600
Net Loans
Bank Premises and Equipment
Intangible Assets
Other Assets
Total Assets
$
629,484 $
508,474
(DOLLARS IN THOUSANDS - except per share data)
Interest Income
Loans, Including Fees
Investment Securities
unaudited
2016
$
Total Interest Income
Interest Expense
Net Interest Income
Non-Interest Income
Service Charges
Loss on Real Estate
Other Charges and Fees
Total Non-Interest Income
DEPOSITS
Demand
Savings
Other Time Deposits
Total Deposits
$
108,120 $
206,427
202,705
517,252
94,689
149,825
165,167
409,681
Borrowings
Other Liabilities
53,881
547
47,311
918
Total Liabilities
571,680
457,910
9,000
9,000
Trust Preferred Securities
Common Stock, $1 par value
5,280,000 authorized,
1,437,851 issued on 12/31/15,
1,561,169 issued on 12/31/16*
Additional Paid-in Capital
Retained Earnings
Unrealized Gain (Loss)
on Investments
Total Stockholders’ Equity
Loan Loss Provision Expense
Gross Operating Income
Other Non-Interest Expenses
SalariesandEmployeeBenefits
Equipment and Occupancy
Data Processing
Professional Fees
Insurance
Taxes, Other
Other Expenses
Total Other Expenses
unaudited
2015
18,032 $
2,753
17,247
2,524
20,785
19,771
3,547
3,597
17,238
16,174
830
(5)
859
689
(250)
819
1,684
1,259
385
1,198
18,537
16,235
5,517
1,044
850
827
378
172
2,051
4,971
923
562
655
361
160
1,770
10,839
9,402
(95)
(52)
1,561
19,245
28,488
1,438
15,299
24,827
Securities Losses
Income before Income Tax
7,603
6,780
(490)
48,804
0
41,564
Income Tax Expense
2,474
2,113
Total Liabilities &
Stockholders’ Equity
$
629,484 $
508,474
Book Value per Share
$
31.26 $
28.91
Net Income
$
5,129 $
4,667
Earnings per Share
$
3.50 $
3.25
*Weighted Average Number of Shares Outstanding 2016 = 1,466,490
BOOK VALUE PER SHARE
ASSETS
DEMAND DEPOSITS
(in thousands)
(in thousands)
SHAREHOLDERS’ EQUITY
(in thousands)
$ 32.00
$ 630,000
$ 110,000
$ 50,000
26.00
480,000
70,000
35,000
20.00
50,000
330,000
2012
$23.59
2013
$24.20
2014
$26.69
2015
$28.91
2016
$31.26
2012
2013
2014
2015
2016
$493,500 $489,900 $495,354 $508,474 $629,484
20,000
2012
$72,700
2013
$75,200
2014
$80,367
2015
2016
$94,689 $108,120
2012
$33,900
2013
$34,800
2014
$38,367
2015
$41,564
2016
$48,804
217
217
378
775
LOGAN
HOOD
JONES
IN MEMORIAM
FOX, III
DILLARD
BEYMER
BOARD OF DIRECTORS
Scottown
243
Brentwood
7
Proctorville
Chesapeake
Huntington
Kerry P. Dillard
President & CEO
Bloss & Dillard, Inc.
Robert H. Beymer
Chairman of the Board
First Sentry Bank
David Fox, III
Retired
Jeffrey E. Hood
President
Hood Enterprises, Inc.
Johnnie Jones
President & CEO
Ducky’s Inc.
Nester S. Logan
President
SS Logan Packing Co.
10
Shoals
PATTERSON, III
OXLEY
MORRISON, JR.
MCKOWN, JR., MD
MCDONIE
MCGUIRE
152
152
J. Grant McGuire
Attorney and Member
Campbell, Woods, Bagley,
Emerson, McNeer &
Herndon, P.L.L.C.
Joseph K. McDonie Charles H. McKown, Jr., M.D.
Real Estate Development
Vice President for Health
Entrepreneur
Services Advancement
MU School of Medicine
Edward W. Morrison, Jr.
President
C.I. Thornburg
Company, Inc.
Sally C. B. Oxley
President
Huntington Physical Therapy
Services, Inc.
George A. Patterson, III
Attorney and Member
Bowles, Rice, McDavid,
Graff & Love, P.L.L.C.
152
WILLIAMS
WHITE
TURMAN, II
SMITH
SHELL
SHEILS
152
Wayne
37
East Lynn
S. Kenneth Wolfe, M.D.
Retired Physician
P. Todd Shell
Chief Investment Officer
Guyan International
YOUNG
WOLFE, MD
Geoffrey S. Sheils
President & CEO
First Sentry Bank
Kelly Young
Esquire
Lane & Young
...
N
W ANK
O
T
B
R
R
U
U
O
Y
YO
™
J. Roger Smith
Real Estate Development
Entrepreneur
Paul L. Turman, II
President
Big Ike, LLC
John Jay White
President
Mahue Construction
Company, Inc.
Joseph L. Williams
President & CEO
Basic Supply
Company, Inc.
378
10
7
2
152
35
Lesage
817
Winfield
775
817
7
2
62
34
Lesage
10
Shoals
34
7
Salt Rock
243
Brentwood
7
10
2
Chesapeake
152
193
Raymond City
35
193
Winslow
Proctorville
Hurricane
Milton
West Hamlin
Huntington
Teays Valley
Ona
3
Scott Depot
2
Milton
Hurricane
Barboursville
10
Sweetland Cross Lanes
Nitro
62
10
152
Barboursville
622
25
Ona
25
152
Wayne
Branchland
OUR HISTORY.
3
Myra
37
St. Albans
10
First Sentry Bancshares, Inc. is a one-bank holding 10company
Shoals
owning First Sentry Bank, a West Virginia state chartered
Salt Rock
bank. First Sentry Bank commenced operations
on October
Winslow
23, 1996 after raising $6 million in capital from a private
stock offering
and spent its first twenty months operating
152
from a small, renovated restaurant building.
34
152
Midkiff
34
Tornado
East Lynn
10
MAIN OFFICE
10
Salt Rock
823 Eighth Street | Huntington, WV 25701
PHONE:
West Hamlin(304) 522-6400
Winslow
10
West Hamlin
10
3
The Bank moved into its main office facility, a three story
152
building constructed adjacent to the former restaurant
Wayne 1998. This facility is located in the heart
building, in June
of the Southside
of Huntington on the corner of Eighth Street
37
152
and Ninth
Avenue. The bank opened its Barboursville office
in July 2004, and with the acquisitions of Guaranty Bank
& Trust Co. in 2009 and East
theLynnRock Branch Community Bank
in 2016, 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.
10
Sweetland
Branchland
3
Myra
10
Midkiff
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 23, 1996 to $48.8 million on
December 31, 2016.
BARBOURSVILLE
214
6501 Mud River Road | Barboursville, WV 25504
Sweetland
PHONE: (304) 733-4244
LINCOLN COUNTY
5
Second Street | Hamlin, WV 25523
Branchland
Myra
PHONE:
(304) 824-6900
3
214
PEA RIDGE
10
5604 US Route 60 East | Huntington, WV 25705
PHONE: (304) 733-7900
Midkiff
ROCK BRANCH
4650 First Avenue | Nitro, WV 25143
3
PHONE: (304) 755-4700
www.firstsentry.com
24-HOUR BANKING (304) 399-6400
3