Note 1 - Basis of Presentation	3 Months Ended
Mar. 31, 2018
Notes to Financial Statements
Basis of Accounting [Text Block]	Note 1. Basis of Presentation General First Community Bancshares, Inc. (the “Company”), a financial holding company, was founded in 1989 and incorporated under the laws of Nevada in 1997. The Company’s principal executive office is located at One Community Place, Bluefield, Virginia. The Company provides banking products and services to individual and commercial customers through its wholly owned subsidiary First Community Bank (the “Bank”), a Virginia-chartered banking institution founded in 1874. The Bank operates as First Community Bank in Virginia, West Virginia, and North Carolina and People’s Community Bank, a Division of First Community Bank, in Tennessee. The Bank provides insurance services through its wholly owned subsidiary First Community Insurance Services (“FCIS”) and offers wealth management and investment advice through its Trust Division and wholly owned subsidiary First Community Wealth Management (“FCWM”). Unless the context suggests otherwise, the terms “First Community,” “Company,” “we,” “our,” and “us” refer to First Community Bancshares, Inc. and its subsidiaries as a consolidated entity. Principles of Consolidation The Company’s accounting and reporting policies conform with U.S. generally accepted accounting principles (“GAAP”) and prevailing practices in the banking industry. The consolidated financial statements include all accounts of the Company and its wholly owned subsidiaries and eliminate all intercompany balances and transactions. The Company operates in one business segment, Community Banking, which consists of all operations, including commercial and consumer banking, lending activities, wealth management, and insurance services. Operating results for interim periods are not necessarily indicative of results that may be expected for other interim periods or for the full year. In management’s opinion, the accompanying unaudited interim condensed consolidated financial statements contain all necessary adjustments, including normal recurring accruals, and disclosures for a fair presentation. These unaudited interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and accompanying notes included in the Company’s Annual Report on Form 10 -K for the year ended December 31, 2017 ( the “2017 Form 10 -K”), as filed with the Securities and Exchange Commission (the “SEC”) on March 5, 2018. The condensed consolidated balance sheet as of December 31, 2017, has been derived from the audited consolidated financial statements. Reclassifications Certain amounts reported in prior years have been reclassified to conform to the current year’s presentation. These reclassifications had no effect on the Company’s results of operations, financial position, or cash flow. Use of Estimates Preparation of the condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the balance sheet and reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Material estimates that require the most subjective or complex judgments relate to fair value measurements, investment securities, the allowance for loan losses, goodwill and other intangible assets, and income taxes. A discussion of the Company’s application of critical accounting estimates is included in “Critical Accounting Estimates” in Item 2 of this report. Significant Accounting Policies The following detailed description of the Company’s significant accounting policies are in addition to those included in Note 1, “Basis of Presentation and Significant Accounting Policies,” of the Notes to Consolidated Financial Statements in Part II, Item 8 of the Company’s 2017 Form 10 -K. Revenue Recognition Accounting Standards Codification Topic 606 (“ASC 606” ), “Revenue from Contracts with Customers,” establishes principles for reporting information about the nature, amount, timing and uncertainty of revenue and cash flows arising from the Company's contracts to provide goods or services to customers. The core principle requires an entity to recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration that it expects to be entitled to receive in exchange for those goods or services recognized as performance obligations are satisfied. The great majority of the Company’s revenue-generating transactions are not subject to ASC 606, including revenue generated from financial instruments, such as loans, letters of credit, and derivatives and investment securities, as these activities are subject to other GAAP discussed elsewhere within our disclosures. Descriptions of the Company’s revenue-generating activities that are within the scope of ASC 606, which are discussed below, are presented in the Company’s consolidated statements of income as components of noninterest income. Wealth management . Wealth management income represents monthly fees due from wealth management customers as consideration for managing the customers' assets. Wealth management and trust services include custody of assets, investment management, escrow services, fees for trust services and similar fiduciary activities. Revenue is recognized when the performance obligation is completed each month, which is generally the time that payment is received. Income also includes fees received from a third party broker-dealer as part of a revenue-sharing agreement for fees earned from customers that are referred to the third party. These fees are paid to the Company by the third party on a quarterly basis and recognized ratably throughout the quarter as the performance obligation is satisfied. Service charges on deposits and other service charges and fees . Service charges on deposits and other service charges and fees represent general service fees for account maintenance and activity and transaction-based fees that consist of transaction-based revenue, time-based revenue (service period), item-based revenue, or some other individual attribute-based revenue. Revenue is recognized when the performance obligation is completed, which is generally monthly for account maintenance services or when a transaction has been completed. Payment for such performance obligations is generally received at the time the performance obligations are satisfied. Other service charges and fees include interchange income from debit and credit card transaction fees. In accordance with the adoption of ASC 606, the Company reclassified interchange expense, which was previously a component of noninterest expense, to net against interchange income. Interchange income totaled $1.76 million and interchange expense totaled $650 thousand for the three month ended March 31, 2018, resulting in net interchange income of $1.11 million. Interchange income totaled $1.60 million and interchange expense totaled $576 thousand for the three months ended March 31, 2017, resulting in net interchange income of $1.03 million. Other operating income . Other operating income consists primarily of dividends received and income on life insurance contracts, which are not subject to the requirements of ASC 606. Recent Accounting Standards Standards Adopted in 2018 In May 2017, the FASB issued ASU 2017 - 09, “Compensation – Stock Compensation (Topic 718 ): Scope of Modification Accounting.” This ASU clarifies when to account for a change to the terms or conditions of a share-based payment award as a modification. Under the new guidance, modification accounting is required only if the fair value, the vesting conditions, or the classification of the award (as equity or liability) changes as a result of the change in terms or conditions. ASU 2017 - 09 will be effective for the Company for fiscal years beginning after December 15, 2017. The Company adopted ASU 2017 - 09 in the first quarter of 2018. The adoption of the standard did not have a material effect on the Company’s financial statements. In March 2017, the FASB issued ASU 2017 - 08, “Receivables – Nonrefundable Fees and Other Costs (Subtopic 310 - 20 ): Premium Amortization on Purchased Callable Securities.” This ASU amends the amortization period for certain purchased callable debt securities. ASU 2017 - 08 will be effective for the Company for fiscal years beginning after December 15, 2018. The Company early adopted ASU 2017 - 08 in the first quarter of 2018. The adoption of the standard did not have a material effect on the Company’s financial statements since securities held at a premium are already amortized to the earliest call date. In March 2017, the FASB issued ASU 2017 - 07, “Compensation – Retirement Benefits (Topic 715 ): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost.” This ASU intends to improve the presentation of net periodic pension cost and net periodic postretirement benefit costs in the income statement and to narrow the amounts eligible for capitalization in assets. ASU 2017 - 07 will be effective for the Company for fiscal years beginning after December 15, 2017. The Company adopted ASU 2017 - 07 in the first quarter of 2018. The adoption of the standard did not have a material effect on the Company’s financial statements. In accordance with the standard, the Company reclassified the non-service components of the net periodic benefit costs from salaries and employee benefits to other expense on a retrospective basis. In November 2016, the FASB issued ASU 2016 - 18, “Statement of Cash Flows (Topic 230 ): Restricted Cash.” This ASU requires that a statement of cash flows explains the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. ASU 2016 - 18 will be effective for the Company for fiscal years beginning after December 15, 2017. The Company adopted ASU 2016 - 18 in the first quarter of 2018. The adoption of the standard did not have a material effect on the Company’s financial statements. In August 2016, the FASB issued ASU 2016 - 15, “Statement of Cash Flows (Topic 230 ): Classification of Certain Cash Receipts and Cash Payments.” This ASU makes eight targeted changes to how cash receipts and cash payments are presented and classified in the statement of cash flows. ASU 2016 - 15 will be effective for the Company for fiscal years beginning after December 15, 2017, with early adoption permitted. The update should be applied on a retrospective basis, if practicable. The Company adopted ASU 2016 - 15 in the first quarter of 2018. The adoption of the standard did not have a material effect on the Company’s financial statements. In accordance with the standard, the Company reclassified proceeds from bank owned life insurance from operating activities to investing activities on a retrospective basis. In January 2016, the FASB issued ASU 2016 - 01, “Financial Instruments – Overall (Subtopic 825 - 10 ): Recognition and Measurement of Financial Assets and Financial Liabilities.” This ASU significantly revises how entities account and disclose financial assets and liabilities. The guidance ( 1 ) requires most equity investments to be measured at fair value with changes in fair value recognized in net income; ( 2 ) simplifies the impairment assessment of equity investments without a readily determinable fair value; ( 3 ) eliminates the requirement to disclose the methods and significant assumptions used to estimate the fair value for financial instruments measured at amortized cost on the balance sheet; ( 4 ) requires public business entities to use exit price notion, rather than entry prices, when measuring fair value of financial instruments for disclosure purposes; ( 5 ) requires separate presentation of financial assets and financial liabilities by measurement category and form of financial assets on the balance sheet or the accompanying notes to the financial statements; ( 6 ) requires separate presentation in other comprehensive income of the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk when the organization has elected to measure the liability at fair value in accordance with the fair value option for financial instruments; and ( 7 ) states that a valuation allowance on deferred tax assets related to available-for-sale securities should be evaluated in combination with other deferred tax assets. In February 2018, the FASB issued ASU 2018 - 03, which included technical corrections and improvements to clarify the guidance in ASU 2016 - 01. ASU 2016 - 01 will be effective for the Company for fiscal years beginning after December 15, 2017, with early adoption permitted for the instrument-specific credit risk provision. The Company adopted ASU 2016 - 01 in the first quarter of 2018. The adoption of the standard did not have a material effect on the Company’s financial statements. In accordance with the prospective application of the standard, the Company measured the fair value of loans using an exit price notion as of March 31, 2018. For additional information, see Note 13, “Fair Value” to the Condensed Consolidated Financial Statements of this report. In May 2014, the FASB issued ASU 2014 - 09, “Revenue from Contracts with Customers (Topic 606 ).” This ASU’s core principle is that an entity will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. In doing so, companies will need to use more judgment and make more estimates than under existing guidance. These may include identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to each separate performance obligation. In August 2015, the FASB issued ASU 2015 - 14, “Revenue from Contracts with Customers” deferring the effective date of ASU 2014 - 09 for the Company until fiscal years beginning after December 15, 2017, with early adoption permitted for fiscal years beginning after December 15, 2016. The Company adopted Topic 606, and related updates, in the first quarter of 2018 using the modified retrospective method. The Company’s primary source of revenue is interest income, which is excluded from the scope of this guidance; however, the Company evaluated the impact on other income; which includes fees for services, commissions on sales, and various deposit service charges; revenue contracts; and disclosures and determined that no cumulative-effect adjustment to retained earnings was necessary. The adoption of the standard did not have a material effect on the Company’s financial statements. Standards Not Yet Adopted In August 2017, the FASB issued ASU 2017 - 12, “Derivatives and Hedging (Topic 815 ): Targeted Improvements to Accounting for Hedging Activities.” This ASU intends to improve the financial reporting of hedging relationships to better portray the economic results of an entity’s risk management activities in its financial statements and simplify the application of hedge accounting guidance. ASU 2017 - 12 will be effective for the Company for fiscal years beginning after December 15, 2018. The Company expects to adopt ASU 2017 - 12 in the first quarter of 2019. The Company is evaluating the impact of the standard and does not expect the guidance to have a material effect on its financial statements. In June 2016, the FASB issued ASU 2016 - 13, “Financial Instruments – Credit Losses (Topic 326 ): Measurement of Credit Losses on Financial Instruments.” This ASU intends to improve financial reporting by requiring timelier recording of credit losses on loans and other financial instruments held by financial institutions and other organizations. This ASU requires an organization to measure all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts and requires enhanced disclosures related to the significant estimates and judgments used in estimating credit losses, as well as the credit quality and underwriting standards of an organization’s portfolio. In addition, the update amends the accounting for credit losses on available-for-sale debt securities and purchased financial assets with credit deterioration. ASU 2016 - 13 will be effective for the Company for fiscal years beginning after December 15, 2019, with early adoption permitted for fiscal years beginning after December 15, 2018. The Company expects to adopt ASU 2016 - 13 in the first quarter of 2020 and recognize a cumulative adjustment to retained earnings as of the beginning of the year of adoption. The Company is evaluating the impact of the standard. In February 2016, the FASB issued ASU 2016 - 02, “Leases (Topic 842 ).” This ASU increases transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and requiring more disclosures related to leasing transactions. ASU 2016 - 02 will be effective for the Company for fiscal years beginning after December 15, 2018, with early adoption permitted. The Company expects to adopt ASU 2016 - 02 in the first quarter of 2019. The Company leases certain banking offices under lease agreements it classifies as operating leases. The Company is evaluating the impact of the standard and expects an increase in assets and liabilities and an impact on capital; however, the Company does not expect the guidance to have a material effect on its financial statements or resulting operations. The Company does not expect other recent accounting standards issued by the FASB or other standards-setting bodies to have a material impact on the consolidated financial statements.

Note

Basis of Presentation

General

First Community Bancshares, Inc. (the “Company”), a financial holding company, was founded in

1989

and incorporated under the laws of Nevada in

1997.

The Company’s principal executive office is located at One Community Place, Bluefield, Virginia. The Company provides banking products and services to individual and commercial customers through its wholly owned subsidiary First Community Bank (the “Bank”), a Virginia-chartered banking institution founded in

1874.

The Bank operates as First Community Bank in Virginia, West Virginia, and North Carolina and People’s Community Bank, a Division of First Community Bank, in Tennessee. The Bank provides insurance services through its wholly owned subsidiary First Community Insurance Services (“FCIS”) and offers wealth management and investment advice through its Trust Division and wholly owned subsidiary First Community Wealth Management (“FCWM”). Unless the context suggests otherwise, the terms “First Community,” “Company,” “we,” “our,” and “us” refer to First Community Bancshares, Inc. and its subsidiaries as a consolidated entity.

Principles of Consolidation

The Company’s accounting and reporting policies conform with U.S. generally accepted accounting principles (“GAAP”) and prevailing practices in the banking industry. The consolidated financial statements include all accounts of the Company and its wholly owned subsidiaries and eliminate all intercompany balances and transactions. The Company operates in

one

business segment, Community Banking, which consists of all operations, including commercial and consumer banking, lending activities, wealth management, and insurance services. Operating results for interim periods are

not

necessarily indicative of results that

may

be expected for other interim periods or for the full year. In management’s opinion, the accompanying unaudited interim condensed consolidated financial statements contain all necessary adjustments, including normal recurring accruals, and disclosures for a fair presentation.

These unaudited interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and accompanying notes included in the Company’s Annual Report on Form

-K for the year ended

December 31, 2017 (

the

“2017

Form

-K”), as filed with the Securities and Exchange Commission (the “SEC”) on

March 5, 2018.

The condensed consolidated balance sheet as of

December 31, 2017,

has been derived from the audited consolidated financial statements.

Reclassifications

Certain amounts reported in prior years have been reclassified to conform to the current year’s presentation. These reclassifications had

effect on the Company’s results of operations, financial position, or cash flow.

Use of Estimates

Preparation of the condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the balance sheet and reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Material estimates that require the most subjective or complex judgments relate to fair value measurements, investment securities, the allowance for loan losses, goodwill and other intangible assets, and income taxes. A discussion of the Company’s application of critical accounting estimates is included in “Critical Accounting Estimates” in Item

of this report.

Significant Accounting Policies

The following detailed description of the Company’s significant accounting policies are in addition to those included in Note

“Basis of Presentation and Significant Accounting Policies,” of the Notes to Consolidated Financial Statements in Part II, Item

of the Company’s

2017

Form

-K.

Revenue Recognition

Accounting Standards Codification Topic

606

(“ASC

606”

), “Revenue from Contracts with Customers,” establishes principles for reporting information about the nature, amount, timing and uncertainty of revenue and cash flows arising from the Company's contracts to provide goods or services to customers. The core principle requires an entity to recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration that it expects to be entitled to receive in exchange for those goods or services recognized as performance obligations are satisfied.

The great majority of the Company’s revenue-generating transactions are

not

subject to ASC

606,

including revenue generated from financial instruments, such as loans, letters of credit, and derivatives and investment securities, as these activities are subject to other GAAP discussed elsewhere within our disclosures. Descriptions of the Company’s revenue-generating activities that are within the scope of ASC

606,

which are discussed below, are presented in the Company’s consolidated statements of income as components of noninterest income.

Wealth management

. Wealth management income represents monthly fees due from wealth management customers as consideration for managing the customers' assets. Wealth management and trust services include custody of assets, investment management, escrow services, fees for trust services and similar fiduciary activities. Revenue is recognized when the performance obligation is completed each month, which is generally the time that payment is received. Income also includes fees received from a

third

party broker-dealer as part of a revenue-sharing agreement for fees earned from customers that are referred to the

third

party. These fees are paid to the Company by the

third

party on a quarterly basis and recognized ratably throughout the quarter as the performance obligation is satisfied.

Service charges on deposits and other service charges and fees

. Service charges on deposits and other service charges and fees represent general service fees for account maintenance and activity and transaction-based fees that consist of transaction-based revenue, time-based revenue (service period), item-based revenue, or some other individual attribute-based revenue. Revenue is recognized when the performance obligation is completed, which is generally monthly for account maintenance services or when a transaction has been completed. Payment for such performance obligations is generally received at the time the performance obligations are satisfied. Other service charges and fees include interchange income from debit and credit card transaction fees. In accordance with the adoption of ASC

606,

the Company reclassified interchange expense, which was previously a component of noninterest expense, to net against interchange income. Interchange income totaled

$1.76

million and interchange expense totaled

$650

thousand for the

three

month ended

March 31, 2018,

resulting in net interchange income of

$1.11

million. Interchange income totaled

$1.60

million and interchange expense totaled

$576

thousand for the

three

months ended

March 31, 2017,

resulting in net interchange income of

$1.03

million.

Other

operating

income

Other operating income consists primarily of dividends received and income on life insurance contracts, which are

not

subject to the requirements of ASC

606.

Recent Accounting

Standards

Standards Adopted in

2018

May 2017,

the FASB issued ASU

2017

09,

“Compensation – Stock Compensation (Topic

718

): Scope of Modification Accounting.” This ASU clarifies when to account for a change to the terms or conditions of a share-based payment award as a modification. Under the new guidance, modification accounting is required only if the fair value, the vesting conditions, or the classification of the award (as equity or liability) changes as a result of the change in terms or conditions. ASU

2017

will be effective for the Company for fiscal years beginning after

December 15, 2017.

The Company adopted ASU

2017

in the

first

quarter of

2018.

The adoption of the standard did

not

have a material effect on the Company’s financial statements.

March 2017,

the FASB issued ASU

2017

08,

“Receivables – Nonrefundable Fees and Other Costs (Subtopic

310

): Premium Amortization on Purchased Callable Securities.” This ASU amends the amortization period for certain purchased callable debt securities. ASU

2017

will be effective for the Company for fiscal years beginning after

December 15, 2018.

The Company early adopted ASU

2017

in the

first

quarter of

2018.

The adoption of the standard did

not

have a material effect on the Company’s financial statements since securities held at a premium are already amortized to the earliest call date.

March 2017,

the FASB issued ASU

2017

07,

“Compensation – Retirement Benefits (Topic

715

): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost.” This ASU intends to improve the presentation of net periodic pension cost and net periodic postretirement benefit costs in the income statement and to narrow the amounts eligible for capitalization in assets. ASU

2017

will be effective for the Company for fiscal years beginning after

December 15, 2017.

The Company adopted ASU

2017

in the

first

quarter of

2018.

The adoption of the standard did

not

have a material effect on the Company’s financial statements. In accordance with the standard, the Company reclassified the non-service components of the net periodic benefit costs from salaries and employee benefits to other expense on a retrospective basis.

November 2016,

the FASB issued ASU

2016

18,

“Statement of Cash Flows (Topic

230

): Restricted Cash.” This ASU requires that a statement of cash flows explains the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. ASU

2016

will be effective for the Company for fiscal years beginning after

December 15, 2017.

The Company adopted ASU

2016

in the

first

quarter of

2018.

The adoption of the standard did

not

have a material effect on the Company’s financial statements.

August 2016,

the FASB issued ASU

2016

15,

“Statement of Cash Flows (Topic

230

): Classification of Certain Cash Receipts and Cash Payments.” This ASU makes

eight

targeted changes to how cash receipts and cash payments are presented and classified in the statement of cash flows. ASU

2016

will be effective for the Company for fiscal years beginning after

December 15, 2017,

with early adoption permitted. The update should be applied on a retrospective basis, if practicable. The Company adopted ASU

2016

in the

first

quarter of

2018.

The adoption of the standard did

not

have a material effect on the Company’s financial statements. In accordance with the standard, the Company reclassified proceeds from bank owned life insurance from operating activities to investing activities on a retrospective basis.

January 2016,

the FASB issued ASU

2016

01,

“Financial Instruments – Overall (Subtopic

825

): Recognition and Measurement of Financial Assets and Financial Liabilities.” This ASU significantly revises how entities account and disclose financial assets and liabilities. The guidance (

) requires most equity investments to be measured at fair value with changes in fair value recognized in net income; (

) simplifies the impairment assessment of equity investments without a readily determinable fair value; (

) eliminates the requirement to disclose the methods and significant assumptions used to estimate the fair value for financial instruments measured at amortized cost on the balance sheet; (

) requires public business entities to use exit price notion, rather than entry prices, when measuring fair value of financial instruments for disclosure purposes; (

) requires separate presentation of financial assets and financial liabilities by measurement category and form of financial assets on the balance sheet or the accompanying notes to the financial statements; (

) requires separate presentation in other comprehensive income of the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk when the organization has elected to measure the liability at fair value in accordance with the fair value option for financial instruments; and (

) states that a valuation allowance on deferred tax assets related to available-for-sale securities should be evaluated in combination with other deferred tax assets. In

February 2018,

the FASB issued ASU

2018

03,

which included technical corrections and improvements to clarify the guidance in ASU

2016

01.

ASU

2016

will be effective for the Company for fiscal years beginning after

December

15,

2017,

with early adoption permitted for the instrument-specific credit risk provision. The Company adopted ASU

2016

in the

first

quarter of

2018.

The adoption of the standard did

not

have a material effect on the Company’s financial statements. In accordance with the prospective application of the standard, the Company measured the fair value of loans using an exit price notion as of

March 31, 2018.

For additional information, see Note

13,

“Fair Value” to the Condensed Consolidated Financial Statements of this report.

May 2014,

the FASB issued ASU

2014

09,

“Revenue from Contracts with Customers (Topic

606

).” This ASU’s core principle is that an entity will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. In doing so, companies will need to use more judgment and make more estimates than under existing guidance. These

may

include identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to each separate performance obligation. In

August 2015,

the FASB issued ASU

2015

14,

“Revenue from Contracts with Customers” deferring the effective date of ASU

2014

for the Company until fiscal years beginning after

December 15, 2017,

with early adoption permitted for fiscal years beginning after

December 15, 2016.

The Company adopted Topic

606,

and related updates, in the

first

quarter of

2018

using the modified retrospective method. The Company’s primary source of revenue is interest income, which is excluded from the scope of this guidance; however, the Company evaluated the impact on other income; which includes fees for services, commissions on sales, and various deposit service charges; revenue contracts; and disclosures and determined that

cumulative-effect adjustment to retained earnings was necessary. The adoption of the standard did

not

have a material effect on the Company’s financial statements.

Standards

Not

Yet Adopted

August 2017,

the FASB issued ASU

2017

12,

“Derivatives and Hedging (Topic

815

): Targeted Improvements to Accounting for Hedging Activities.” This ASU intends to improve the financial reporting of hedging relationships to better portray the economic results of an entity’s risk management activities in its financial statements and simplify the application of hedge accounting guidance. ASU

2017

will be effective for the Company for fiscal years beginning after

December 15, 2018.

The Company expects to adopt ASU

2017

in the

first

quarter of

2019.

The Company is evaluating the impact of the standard and does

not

expect the guidance to have a material effect on its financial statements.

June 2016,

the FASB issued ASU

2016

13,

“Financial Instruments – Credit Losses (Topic

326

): Measurement of Credit Losses on Financial Instruments.” This ASU intends to improve financial reporting by requiring timelier recording of credit losses on loans and other financial instruments held by financial institutions and other organizations. This ASU requires an organization to measure all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts and requires enhanced disclosures related to the significant estimates and judgments used in estimating credit losses, as well as the credit quality and underwriting standards of an organization’s portfolio. In addition, the update amends the accounting for credit losses on available-for-sale debt securities and purchased financial assets with credit deterioration. ASU

2016

will be effective for the Company for fiscal years beginning after

December 15, 2019,

with early adoption permitted for fiscal years beginning after

December 15, 2018.

The Company expects to adopt ASU

2016

in the

first

quarter of

2020

and recognize a cumulative adjustment to retained earnings as of the beginning of the year of adoption. The Company is evaluating the impact of the standard.

February 2016,

the FASB issued ASU

2016

02,

“Leases (Topic

842

).” This ASU increases transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and requiring more disclosures related to leasing transactions. ASU

2016

will be effective for the Company for fiscal years beginning after

December 15, 2018,

with early adoption permitted. The Company expects to adopt ASU

2016

in the

first

quarter of

2019.

The Company leases certain banking offices under lease agreements it classifies as operating leases. The Company is evaluating the impact of the standard and expects an increase in assets and liabilities and an impact on capital; however, the Company does

not

expect the guidance to have a material effect on its financial statements or resulting operations.

The Company does

not

expect other recent accounting standards issued by the FASB or other standards-setting bodies to have a material impact on the consolidated financial statements.