Dear Customers, Shareholders and Friends:

Please find enclosed the unaudited financial statements as of March 31, 2012 and for the first three months of 2012.

As you can see on the following page, total assets amounted to $491.8 million on March 31, 2012, which represents a $3.3 million increase from March 31, 2011 when total assets were $488.5 million. As has been seen in past quarterly reports, the consistent level of assets is largely a function of management strategy to reposition the balance sheet to add further strength and liquidity.

Total loans decreased to $349.1 million on March 31, 2012 from $353.5 million on March 31, 2011. This decrease was primarily due to a few large loans paying off during this time frame combined with the continuing softening of loan demand.

Over this same time period, total deposits increased to $408.7 million on March 31, 2012 from $407.1 million on March 31, 2011. It is important to note that demand and savings deposits increased $9.1 million while time deposits decreased $7.5 million, contributing to a 16.9% reduction in interest expense during the first quarter of 2012 when compared to the prior year period.

On March 31, 2012, stockholders’ equity totaled $32.0 million. This equates to a book value per share of $22.27 and represents a 7.2% increase from the March 31, 2011 book value per share of $20.77. This increase in book value is after cash dividends of $1.15 million were paid to shareholders over this twelve month time frame. Total dividends paid by the Company since its first dividend payment back in December 2002 now exceeds $6.5 million.

As it relates to the income statement, net interest income increased 1.7% during the first quarter of 2012 compared to the first quarter of 2011. The loan loss provision expense was $884,000 for the first three months of 2012 compared to $329,000 for the first three months of 2011. In 2011, the loan loss provision expense was largely weighted in the second half of the year, when 70% of the total 2011 expense was recorded. During the first quarter of 2012, the provision expense was increased compared to the first quarter of 2011 in order to provide a more consistent provision expense for each quarter of 2012. Because of this strategy, net income for the first quarter was negatively impacted.

Non-interest expense decreased $235,000, or 9.3%, to $2.3 million during the first three months of 2012 compared to $2.5 million during the first three months of 2011. Contributing to the decrease in non-interest expense during the first quarter of 2012 when compared to the prior year period, insurance expense decreased $95,000 primarily as a result of a decrease in FDIC insurance assessments while other expenses decreased $92,000 from a combination of various expense reductions. These events produced a net income of $755,000 during the first quarter ended March 30, 2012 compared to $943,000 for the comparable period in 2011.

Taking into consideration the increase in our loan loss provision expense during the first quarter of 2012, we remain encouraged with our operating results and continue to look forward with much excitement and energy. It remains a challenging environment in which to navigate the bank during this time of record low interest rates and economic uncertainty. Recognizing this, our management and staff is as dedicated as ever to continue to position the bank in a manner to absorb the appropriate risks while retaining the capability of posting record profitability levels.

We are always most appreciative of your support of First Sentry Bank. Should you ever have any questions about Your Bank, please do not hesitate to call.

Sincerely,

/s/ Geoffrey S. Sheils	/s/ Robert H. Beymer
Geoffrey S. Sheils	Robert H. Beymer
President & CEO	Chairman of the Board

First Sentry Bancshares, Inc.
Balance Sheets
March 31, 2012 and 2011
(DOLLARS IN THOUSANDS - except per share data)
	(unaudited)
	3/31/12		3/31/11
Cash and Fed Funds Sold	$	13,108	$	28,658

Investment Securities		119,909		93,926

Loans		349,117		353,534
Less: Allowance for Loan Losses		6,040		5,230
Net Loans		343,077		348,304

Bank Premises and Equipment		6,317		6,660
Intangible Assets		2,804		2,839
Other Assets		6,584		8,069

Total Assets	$	491,799	$	488,456

DEPOSITS
Demand	$	61,983	$	54,793
Savings		138,044		136,145
Time Deposits		208,703		216,158
Total Deposits		408,730		407,096

Borrowings		40,919		40,894
Other Liabilities		1,129		1,609

Total Liabilities		450,778		449,599

Trust Preferred Securities		9,000		9,000

Common Stock, $1 par value,
5,280,000 authorized,
1,437,651 issued and outstanding		1,438		1,438
Additional Paid-in Capital		15,294		15,294
Retained Earnings		15,009		13,314
Unrealized Gain (Loss) on Investments		280		(189	)
Total Stockholders’ Equity		32,021		29,857

Total Liabilities & Stockholders’ Equity	$	491,799	$	488,456

Book Value per Share	$	22.27	$	20.77

First Sentry Bancshares, Inc.
Statements of Income
For the Three Months Ended
March 31, 2012 and 2011
(DOLLARS IN THOUSANDS - except per share data)
	(unaudited)
	YTD			YTD
Interest Income	3/31/12			3/31/11
Loans, Including Fees	$	4,626		$	4,811
Investment Securities		718			686
Total Interest Income		5,344			5,497

Interest Expense		1,349			1,569

Net Interest Income		3,995			3,928

Non-Interest Income
Service Charges		183			199
Other Charges and Fees		162			134
Total Non-Interest Income		345			333

Loan Loss Provision Expense		884			329

Gross Operating Income		3,456			3,932

Non-Interest Expense
Salaries and Employee Benefits		1,130			1,107
Equipment and Occupancy		234			297
Data Processing		185			156
Professional Fees		168			200
Insurance		120			215
Taxes, Other		58			63
Other Expenses		404			496
Total Other Expense		2,299			2,534

Securities Losses		(58	)		(23	)

Income before Income Tax		1,099			1,375

Income Tax Expense		324			432

Net Income	$	775		$	943

Nine Months Earnings per Share	$	0.54		$	0.66

First Sentry Bancshares, Inc. 8-K