PREM Premier Comm Bankshares (MM)

WINCHESTER, Va., April 26 /PRNewswire-FirstCall/ -- Premier Community Bankshares, Inc. (NASDAQ:PREM) reports net income of $1.7 million for the quarter ended March 31, 2007, an increase of 1.1% or $18 thousand compared to the corresponding period in 2006. Earnings per share on a diluted basis were $0.29, compared to $0.33 per share for the same period in 2006. During the first quarter of 2007, the return on average equity was 9.61% and return on average assets was 0.76%, compared to the returns on average equity and average assets of 13.51% and 0.98%, respectively, for the first quarter of 2006. The decline in earnings per share was attributable mainly to three factors. First, the Company incurred merger-related expenses such as legal and investment bank fees that totaled $229 thousand, net of tax. These expenses were partially offset by increases in other income. Next, as part of our acquisition of Albemarle First Bank in July 2006, the Company issued 688,788 common stock shares, which increased our average shares outstanding. Finally, the Company continued to experience a compression in our net interest margin which is the basis for the majority our income. On January 26, 2007, the Company entered into an Agreement and Plan of Reorganization with United Bankshares, Inc. The Agreement sets forth the terms and conditions of United's acquisition of the Company through the merger of the Company with and into a subsidiary of United. Consummation of the merger is subject to a number of customary conditions, including the approval of the merger by the Company's shareholders and the receipt of all regulatory approvals. The merger is currently expected to be completed during the third quarter of 2007. The operations of Albemarle First Bank, which have been reflected in the financial statements since July 1, 2006, contributed $430 thousand in net income to the consolidated earnings of the Company in 2007. Our de novo institution subsidiary, Premier Bank, produced a net loss of $156 thousand for the first quarter of 2007 compared to a net loss of $260 thousand for the same period of 2006. Donald L. Unger, President and CEO of the Company stated, "The current interest rate environment has continued to apply downward pressure on our net interest margin, which directly impacts our earnings. In addition, we have been working through merger related issues and expenses during the first quarter. We believe these merger-related issues are behind us and we are focused on growing our balance sheet through loan demand and a focus on low cost deposits." Total assets for the Company at March 31, 2007 were $915.8 million compared to $698.5 million at March 31, 2006, an increase of $217.3 million or 31.1%. Total assets acquired in the Albemarle acquisition and related goodwill and other intangible assets were approximately $140.8 million. Net loans outstanding grew by $150.1 million or 25.1% since March 31, 2006. Loans acquired in conjunction with the Albemarle acquisition totaled $90.2 million at March 31, 2007. The increase in loans was primarily funded by a $154.3 million increase in deposits, which includes $97.9 million of deposits assumed from Albemarle and a $25.0 million increase in advances from the Federal Home Loan Bank. The Company also increased Trust Preferred Capital Notes outstanding by $17.5 million or 80.9% since March 31, 2006. Other income increased $314 thousand or 27.9%, while other expenses increased $1.5 million or 28.1%, which was attributable to increased personnel expenses, additional equipment, and the related premises needed to service an expanding customer base. Premier Community Bankshares, Inc. is a growing multi-bank holding company that operates 21 offices in the Shenandoah Valley region in the northwestern part of Virginia, three offices in the central part of Virginia and two offices in the eastern panhandle of West Virginia. The Company's three subsidiary banks of Rockingham Heritage Bank, The Marathon Bank and Premier Bank serve an increasingly diversified market with a rapidly growing population. This press release may contain forward-looking statements, as defined by federal securities laws, which may involve significant risks and uncertainties. The statements are based on estimates and assumptions made by management in conjunction with other factors deemed appropriate under the circumstances. Actual results could differ materially from current projections. Readers are encouraged to read filings the company has made with the Securities and Exchange Commission, including the Annual Report on Form 10-K for the year ended December 31, 2006, for additional information. PREMIER COMMUNITY BANKSHARES (Unaudited) ($ In Thousands) Three Months Ended Balance Sheet March 31st, Assets: 2007 2006 % Change Cash & Due From Banks $24,170 $16,935 42.7% Interest Bearing Due From Banks 1,737 3617 -52.0% Fed Funds Sold 41,751 15,331 172.3% Securities-HTM 6,774 7,234 -6.4% Securities-AFS 31,731 24,095 31.7% Loans 756,183 604,621 25.1% Allowance for Loan Losses -7,123 -5,654 26.0% Bank Premises & Equipment 26,197 18,616 40.7% Other Assets 34,376 13,734 150.3% Total Assets $915,796 $698,529 31.1% Liabilities: Noninterest Bearing Deposits $95,519 $93,075 2.6% Interest Bearing Deposits 646,754 494,929 30.7% Total Deposits $742,273 $588,004 26.2% Other Borrowed Money 55,687 32,400 71.9% Other Liabilities 4,813 4,419 8.9% Trust Preferred Capital Notes 39,177 21,651 80.9% Total Liabilities $841,950 $646,474 30.2% Shareholders' Equity Common Stock $5,738 $4,967 15.5% Capital Surplus 34,445 19,886 73.2% Retained Earnings 33,698 27,317 23.4% Accumulated Other Comp Income(loss) -35 -115 -69.6% Total Shareholders' Equity $73,846 $52,055 41.9% Total Liabilities and Shareholders' Equity $915,796 $698,529 31.1% Three Months Ended March 31st, 2007 2006 % Change Income Statement Interest Income $15,987 $11,417 40.0% Interest Expense 7,683 4,356 76.4% Net Interest Income 8,304 7,061 17.6% Provision for Loan Losses 79 103 -23.3% Net Interest Income After Provision for Loans Losses 8,225 6,958 18.2% Other Income 1,441 1,127 27.9% Other Expenses 7,081 5,526 28.1% Income Before Taxes 2,585 2,559 1.0% Income Taxes 862 854 0.9% Net Income $1,723 $1,705 1.1% Results of Operation Book Value Per Share $12.87 $10.48 22.8% Earnings Per Share-Basic $0.30 $0.34 -11.8% Earnings Per Share-Assuming Dilution $0.29 $0.33 -12.1% Return on Average Assets 0.76% 0.98% -22.4% Return on Average Equity 9.61% 13.51% -28.9% Nonperforming Assets to Total Assets 0.33% 0.09% 266.7% Allowance for Loan Losses to Loans 0.94% 0.94% 0.0% Common Shares Outstanding, (Thousands) 5,738 4,967 15.5% DATASOURCE: Premier Community Bankshares, Inc. CONTACT: John A. Willingham, SVP & CFO of Premier Community Bankshares, Inc., +1-540-450-3077,

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