NOTE 2 – ACQUISITION OF FIRST NATIONAL BANKSHARES CORPORATION

Effective at the close of business on January 15, 2016, Premier completed its purchase of First National Bankshares Corporation ("Bankshares"), a $237.3 million single bank holding company headquartered in Ronceverte, West Virginia. Under terms of an agreement of merger dated July 6, 2015, Premier issued 1.859 shares of its common stock for each share of Bankshares for a total acquisition value of approximately $22.0 million. Based on the final valuation of the fair value of tangible and intangible assets acquired and liabilities assumed the purchase price resulted in $1.58 million in goodwill, none of which is deductible for tax purposes. The resulting merger expands Premier's footprint into the Greenbrier Valley of West Virginia and into Covington, Virginia along Interstate 64 with six additional branch locations. The core deposit intangible asset totaled $3.31 million, none of which is deductible for tax purposes. The core deposit intangible will be amortized using an accelerated method over an estimated 10 year life. The following table presents estimated amortization of the Bankshares core deposit intangible as of the acquisition date for each of the first five years and thereafter.

2016	$	455
2017		428
2018		364
2019		309
2020		289
Thereafter		1,463
Total core deposit intangible acquired	$	3,308

Net assets acquired via the acquisition are shown in the table below.

	First National Bankshares
Cash and due from banks	$	11,912
Time deposits with other banks		4,473
Securities available for sale		76,612
Loans, net		132,798
Premises and equipment		5,839
Goodwill and other intangible assets		4,883
Other assets		824
Total assets acquired		237,341

Deposits		(205,174	)
Repurchase agreements		(2,168	)
FHLB borrowings		(1,347	)
Subordinated debt		(5,307	)
Other liabilities		(1,304	)
Total liabilities assumed		(215,300	)
Net assets acquired	$	22,041

The fair value of net assets acquired includes fair value adjustments to certain receivables that were not considered impaired as of the acquisition date. The fair value adjustments were determined using discounted contractual cash flows. However, the Company believes that all contractual cash flows related to these non-impaired financial instruments will be collected. As such, these receivables were not considered impaired at the acquisition date and were not subject to the accounting guidance relating to purchase credit impaired loans, which have shown evidence of credit deterioration since origination. The non-impaired loans excluded from the purchase credit impairment guidance were recorded at an estimated fair value of $125,669 and had gross contractual amounts receivable of $127,347 on the date of acquisition.