-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, EzQwgM2DB86EvVPyNXPg1wULLFxaQ8emj94mDNb4fUXHjxcKcZ56nF+b17RjDa6h E0gNrCXuwZAbCx859FvOqg== /in/edgar/work/0000887919-00-000020/0000887919-00-000020.txt : 20001115 0000887919-00-000020.hdr.sgml : 20001115 ACCESSION NUMBER: 0000887919-00-000020 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000930 FILED AS OF DATE: 20001114 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PREMIER FINANCIAL BANCORP INC CENTRAL INDEX KEY: 0000887919 STANDARD INDUSTRIAL CLASSIFICATION: [6022 ] IRS NUMBER: 611206757 STATE OF INCORPORATION: KY FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-20908 FILM NUMBER: 767159 BUSINESS ADDRESS: STREET 1: 115 N HAMILTON ST STREET 2: P O BOX 9 CITY: GEORGETOWN STATE: KY ZIP: 40324 BUSINESS PHONE: 6067963001 10-Q 1 0001.txt 10-Q SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2000 or [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ___________ to ___________ Commission file number 0-20908 PREMIER FINANCIAL BANCORP, INC. (Exact name of registrant as specified in its charter) Kentucky 61-1206757 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 115 N. Hamilton Street Georgetown, Kentucky 40324 (address of principal executive officer) (Zip Code) Registrant's telephone number (502) 863-1955 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to filing requirements for the past 90 days. Yes X No --- --- Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practical date. Common stock - 5,232,230 shares outstanding at November 10, 2000. PART I - FINANCIAL INFORMATION Item 1. Financial Statements The accompanying information has not been audited by independent public accountants; however, in the opinion of management such information reflects all adjustments necessary for a fair presentation of the results for the interim period. All such adjustments are of a normal and recurring nature. The accompanying financial statements are presented in accordance with the requirements of Form 10-Q and consequently do not include all of the disclosures normally required by generally accepted accounting principles or those normally made in the registrant's annual Form 10-K filing. Accordingly, the reader of the Form 10-Q may wish to refer to the registrant's Form 10-K for the year ended December 31, 1999 for further information in this regard. Index to consolidated financial statements: Consolidated Balance Sheets......................................... 3 Consolidated Statements of Income and Comprehensive Income.......... 4 Consolidated Statements of Changes in Stockholders' Equity.......... 5 Consolidated Statements of Cash Flows .............................. 6 Notes to Consolidated Financial Statements.......................... 7
PREMIER FINANCIAL BANCORP, INC. CONSOLIDATED BALANCE SHEETS SEPTEMBER 30, 2000 AND DECEMBER 31, 1999 (IN THOUSANDS EXCEPT SHARE DATA) - --------------------------------------------------------------------------------
2000 1999 ---- ---- (unaudited) ASSETS Cash and due from banks $ 21,659 $ 28,227 Interest earning balances with banks 737 1,634 ------------- -------------- Cash and cash equivalents 22,396 29,861 Federal funds sold 17,111 25,197 Investment securities Available for sale 161,433 151,787 Held to maturity 18,338 18,633 Loans 602,447 570,753 Unearned interest (484) (647) Allowance for loan losses (8,577) (6,812) ------------- -------------- Net loans 593,386 563,294 Federal Home Loan Bank and Federal Reserve Bank stock 4,389 4,123 Premises and equipment, net 15,126 14,935 Real estate and other property acquired through foreclosure 3,710 3,019 Interest receivable 10,049 9,814 Goodwill and other intangibles 23,249 24,339 Other assets 7,687 7,466 ------------- -------------- Total assets $ 876,874 $ 852,468 ============= ============== LIABILITIES AND STOCKHOLDERS' EQUITY Deposits Non-interest bearing $ 69,850 $ 68,490 Time deposits, $100,000 and over 108,112 99,292 Other interest bearing 531,621 525,061 ------------- -------------- Total deposits 709,583 692,843 Securities sold under agreements to repurchase 27,529 21,282 Federal Home Loan Bank advances 31,898 32,647 Other borrowed funds 20,000 20,000 Interest payable 3,836 3,265 Other liabilities 1,782 1,554 ------------- -------------- Total liabilities 794,628 771,591 Guaranteed preferred beneficial interests in Company's debentures 28,750 28,750 Stockholders' equity Preferred stock, no par value; 1,000,000 shares authorized; none issued or outstanding - - Common stock, no par value; 10,000,000 shares authorized; 5,232,230 shares issued and outstanding 1,103 1,103 Surplus 43,445 43,445 Retained earnings 11,896 11,601 Accumulated other comprehensive income (2,948) (4,022) ------------- -------------- Total stockholders' equity 53,496 52,127 ------------- -------------- Total liabilities and stockholders' equity $ 876,874 $ 852,468 ============= ==============
- -------------------------------------------------------------------------------- See Accompanying Notes to Consolidated Financial Statements 3. PREMIER FINANCIAL BANCORP, INC. CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999 (IN THOUSANDS EXCEPT EARNINGS PER SHARE DATA) (UNAUDITED) - --------------------------------------------------------------------------------
Three Months Ended Nine Months Ended September 30, September 30, 2000 1999 2000 1999 ---- ---- ---- ---- Interest income Loans, including fees $ 14,399 $ 13,046 $ 41,580 $ 37,215 Investment securities Taxable 2,520 2,285 7,522 7,188 Tax-exempt 343 358 1,063 1,060 Federal funds sold and other 343 247 1,084 930 ----------- ----------- ----------- ----------- Total interest income 17,605 15,936 51,249 46,393 Interest expense Deposits 8,321 6,977 23,753 20,434 Debt and other borrowings 2,153 1,564 6,038 4,601 ----------- ----------- ----------- ----------- Total interest expense 10,474 8,541 29,791 25,035 Net interest income 7,131 7,395 21,458 21,358 Provision for loan losses 1,125 1,648 4,015 2,743 ----------- ----------- ----------- ----------- Net interest income after provision for loan losses 6,006 5,747 17,443 18,615 Non-interest income Service charges 583 510 1,648 1,460 Insurance commissions 147 153 385 450 Investment securities gains(losses) 1 2 (279) 7 Other 300 235 1,236 886 ----------- ----------- ----------- ----------- 1,031 900 2,990 2,803 Non-interest expenses Salaries and employee benefits 3,551 2,730 10,101 8,644 Occupancy and equipment expenses 827 743 2,365 2,237 Amortization of intangibles 393 392 1,178 1,232 Other expenses 1,823 1,659 5,460 4,659 ----------- ----------- ----------- ----------- 6,594 5,524 19,104 16,772 ----------- ----------- ----------- ----------- Income before income taxes 443 1,123 1,329 4,646 Provision for income taxes 72 352 249 1,346 ----------- ----------- ------------- ----------- Net income $ 371 $ 771 $ 1,080 $ 3,300 =========== =========== =========== =========== Other comprehensive income (loss), net of tax: Unrealized gains and (losses) arising during the period $ 1,178 $ (256) $ 890 $ (2,680) Reclassification of realized amount (1) (1) 184 (5) ----------- ------------ ----------- ----------- Net change in unrealized gain (loss) on securities 1,177 (257) 1,074 (2,685) ----------- ----------- ----------- ----------- Comprehensive income $ 1,548 $ 514 $ 2,154 $ 615 =========== =========== =========== =========== Earnings per share $ .07 $ .15 $ .21 $ .63 Earnings per share assuming dilution $ .07 $ .15 $ .21 $ .63 Weighted average shares outstanding 5,232 5,232 5,232 5,232
- -------------------------------------------------------------------------------- See Accompanying Notes to Consolidated Financial Statements 4. PREMIER FINANCIAL BANCORP, INC. CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY NINE MONTHS ENDED SEPTEMBER 30, 1999 AND SEPTEMBER 30, 2000 (IN THOUSANDS) (UNAUDITED) - --------------------------------------------------------------------------------
Accumulated Other Common Retained Comprehensive Stock Surplus Earnings Income (Loss) Total ----- ------- -------- ------------ ----- Balances, January 1, 1999 $ 1,103 $ 43,445 $ 10,151 $ (300) $ 54,399 Net change in unrealized gains/(losses) on securities available for sale - - - (2,685) (2,685) Net income - - 3,300 - 3,300 Dividends paid - Company ($.45 per share) - - (2,355) - (2,355) ---------- ----------- ----------- ------------ --------- Balances, September 30, 1999 $ 1,103 $ 43,445 $ 11,096 $ (2,985) $ 52,659 ========== =========== =========== ============ ========= Balances, January 1, 2000 $ 1,103 $ 43,445 $ 11,601 $ (4,022) $ 52,127 Net change in unrealized gains/(losses) on securities available for sale - - - 1,074 1,074 Net income - - 1,080 - 1,080 Dividends paid - Company ($.15 per share) - - (785) - (785) ---------- ----------- ----------- ------------ --------- Balances, September 30, 2000 $ 1,103 $ 43,445 $ 11,896 $ (2,948) $ 53,496 ========== =========== =========== ============ =========
- -------------------------------------------------------------------------------- See Accompanying Notes to Consolidated Financial Statements 5. PREMIER FINANCIAL BANCORP, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS NINE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999 (IN THOUSANDS) (UNAUDITED) - --------------------------------------------------------------------------------
2000 1999 ---- ---- Cash flows from operating activities Net income $ 1,080 $ 3,300 Adjustments to reconcile net income to net cash from operating activities Depreciation 1,075 957 Provision for loan losses 4,015 2,743 Amortization, net 904 1,387 FHLB stock dividends (224) (201) Investment securities losses (gains), net 279 (7) Changes in Interest Receivable (235) (263) Other assets (774) (237) Interest Payable 571 611 Other liabilities 228 501 ------------- ------------- Net cash from operating activities 6,919 8,791 Cash flows from investing activities Purchases of securities available for sale (37,080) (81,215) Proceeds from sales of securities available for sale 13,845 39,901 Proceeds from maturities and calls of securities available for sale 15,126 48,090 Purchases of securities held to maturity (1,321) (1,918) Proceeds from maturities and calls of securities held to maturity 1,614 2,976 Purchases of FHLB stock (42) (44) Net change in federal funds sold 8,086 16,913 Net change in loans (35,393) (63,181) Purchases of premises and equipment, net (1,266) (1,869) Proceeds from sale of other real estate acquired through foreclosure 594 256 Net cash received (paid) related to acquisitions - (8,579) ------------- ---------- Net cash from investing activities (35,837) (48,670) Cash flows from financing activities Net change in deposits 16,740 24,940 Advances from Federal Home Loan Bank 38,475 11,045 Repayment of Federal Home Loan Bank advances (39,224) (10,168) Proceeds from other borrowed funds - 12,000 Net change in agreements to repurchase securities 6,247 8,714 Dividends paid (785) (2,355) ------------- ------------- Net cash from financing activities 21,453 44,176 ------------- ------------- Net change in cash and cash equivalents (7,465) 4,297 Cash and cash equivalents at beginning of period 29,861 20,171 ------------- ------------- Cash and cash equivalents at end of period $ 22,396 $ 24,468 ============= =============
- -------------------------------------------------------------------------------- See Accompanying Notes to Consolidated Financial Statements 6. PREMIER FINANCIAL BANCORP, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - -------------------------------------------------------------------------------- NOTE 1 - BASIS OF PRESENTATION The consolidated financial statements include the accounts of Premier Financial Bancorp, Inc. (the Company) and its wholly owned subsidiaries:
Year September 30, 2000 Acquired Assets -------- ------ (In Thousands) Citizens Deposit Bank & Trust Vanceburg, Kentucky 1991 $ 118,547 Bank of Germantown Germantown, Kentucky 1992 28,474 Georgetown Bank & Trust Co. Georgetown, Kentucky 1995 61,792 Citizens Bank Sharpsburg, Kentucky 1995 49,765 Farmers Deposit Bank Eminence, Kentucky 1996 142,769 The Sabina Bank Sabina, Ohio 1997 59,022 Ohio River Bank Ironton, Ohio 1998 53,580 The Bank of Philippi, Inc. Philippi, West Virginia 1998 81,564 Boone County Bank, Inc. Madison, West Virginia 1998 149,447 The Bank of Mt. Vernon Mt. Vernon, Kentucky 1999 137,055
The Company also has a data processing subsidiary, Premier Data Services, Inc., and PFBI Capital Trust subsidiary as discussed in Note 6. All intercompany transactions and balances have been eliminated. NOTE 2 - PURCHASE AND ASSUMPTION AGREEMENT On November 9, 2000, the Company entered into a Purchase and Assumption Agreement with Community Trust Bank, National Association, Pikeville, Kentucky, regarding the Company's subsidiary, Bank of Mt. Vernon (Mt. Vernon), Mt. Vernon, Kentucky. Under the terms of the agreement, Mt. Vernon has agreed to sell substantially all loans, deposits, and fixed assets to Community Trust Bank. At September 30, 2000 Mt. Vernon had approximately $102 million in loans, $115 million in deposits, and $2 million in fixed assets. The transaction is anticipated to be completed in January 2001. 7. PREMIER FINANCIAL BANCORP, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - -------------------------------------------------------------------------------- NOTE 3 - SECURITIES Amortized cost and fair value of investment securities, by category, at September 30, 2000 are summarized as follows:
(In Thousands) Amortized Unrealized Unrealized Fair Cost Gains Losses Value --------- ---------- ---------- ----- Available for sale U. S. Treasury securities $ 2,841 $ 4 $ (3) $ 2,842 U. S. agency securities 143,159 7 (3,955) 139,211 Obligations of states and political Subdivisions 7,278 24 (9) 7,293 Mortgage-backed securities 9,693 - (388) 9,305 Preferred stock 2,000 - - 2,000 Other equity securities 925 - (143) 782 -------------- ----------- ----------- ------------ Total available for sale $ 165,896 $ 35 $ (4,498) $ 161,433 ============== =========== =========== ============ Held to maturity U. S. Treasury securities $ 501 $ - $ - $ 501 U. S. agency securities 1,233 - (20) 1,213 Obligations of states and political Subdivisions 16,586 250 (106) 16,730 Mortgage-backed securities 18 1 (1) 18 -------------- ----------- ----------- ------------ Total held to maturity $ 18,338 $ 251 $ (127) $ 18,462 ============== =========== =========== ============
Amortized cost and fair value of investment securities, by category, at December 31, 1999 are summarized as follows:
(In Thousands) Amortized Unrealized Unrealized Fair Cost Gains Losses Value --------- ---------- ---------- ----- Available for sale U. S. Treasury securities $ 2,900 $ - $ (6) $ 2,894 U. S. agency securities 130,254 - (5,047) 125,207 Obligations of states and political Subdivisions 7,468 - (114) 7,354 Mortgage-backed securities 14,333 - (776) 13,557 Preferred stock 2,000 - - 2,000 Other securities 925 - (150) 775 -------------- -------------- -------------- ------------ Total available for sale $ 157,880 $ - $ (6,093) $ 151,787 ============== ============== ============== ============ Held to maturity U. S. Treasury securities $ 500 $ - $ (1) $ 499 U. S. agency securities 1,233 - (29) 1,204 Obligations of states and political Subdivisions 16,876 132 (150) 16,858 Mortgage-backed securities 24 - - 24 -------------- -------------- -------------- ------------ Total held to maturity $ 18,633 $ 132 $ (180) $ 18,585 ============== ============== ============== ============
8. PREMIER FINANCIAL BANCORP, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - -------------------------------------------------------------------------------- NOTE 4 - LOANS Major classifications of loans at September 30, 2000 and December 31, 1999 are summarized as follows:
2000 1999 ---- ---- (In Thousands) Commercial, secured by real estate $ 153,798 $ 135,078 Commercial, other 87,566 98,543 Real estate construction 25,593 26,092 Residential real estate 210,800 192,088 Agricultural 15,840 17,525 Consumer and home equity 107,195 100,075 Other 1,655 1,352 ------------ ------------ $ 602,447 $ 570,753 ============ ============
NOTE 5 - ALLOWANCE FOR LOAN LOSSES Changes in the allowance for loan losses are as follows:
Three Months Ended Nine Months Ended September 30 September 30 2000 1999 2000 1999 ---- ---- ---- ---- (In Thousands) Balances, beginning of period $ 8,245 $ 5,925 $ 6,812 $ 4,363 Acquired - - - 1,310 Net charge-offs (793) (732) (2,250) (1,575) Provision for loan losses 1,125 1,648 4,015 2,743 ---------- ----------- ----------- ------------ Balances, end of period $ 8,577 $ 6,841 $ 8,577 $ 6,841 ========== =========== =========== ============
NOTE 6 - GUARANTEED PREFERRED BENEFICIAL INTERESTS IN COMPANY'S SUBORDINATED DEBENTURES Guaranteed preferred beneficial interests in Company's debentures (Preferred Securities) represent preferred beneficial interests in the assets of PFBI Capital Trust (Trust). The Trust holds certain 9.75% junior subordinated debentures due June 30, 2027 issued by the Company on June 9, 1997. Distributions on the Preferred Securities is payable at an annual rate of 9.75% of the stated liquidation amount of $25 per Capital Security, payable quarterly. Cash distributions on the Preferred Securities are made to the extent interest on the debentures is received by the Trust. In the event of certain changes or amendments to regulatory requirements or federal tax rules, the Preferred Securities are redeemable in whole. Otherwise, the Preferred Securities are generally redeemable by the Company in whole or in part on or after June 30, 2002 at 100% of the liquidation amount. The Trust's obligations under the Preferred Securities are fully and unconditionally guaranteed by the Company. 9. PREMIER FINANCIAL BANCORP, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - -------------------------------------------------------------------------------- NOTE 7 - REGULATORY MATTERS The Company's principal source of funds for dividend payments is dividends received from the subsidiary Banks. Banking regulations limit the amount of dividends that may be paid without prior approval of regulatory agencies. Under these regulations, the amount of dividends that may be paid in any calendar year is limited to the current year's net profits, as defined, combined with the retained net profits of the preceding two years, subject to the capital requirements as discussed below. During 2000, the Banks could, without prior approval, declare dividends of approximately $4.5 million plus any 2000 net profits retained to the date of the dividend declaration. The Company and the subsidiary Banks are subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Company's financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Company and the Banks must meet specific guidelines that involve quantitative measures of their assets, liabilities, and certain off-balance sheet items as calculated under regulatory accounting practices. These quantitative measures established by regulation to ensure capital adequacy require the Company and Banks to maintain minimum amounts and ratios (set forth in the following table) of Total and Tier I capital (as defined in the regulations) to risk-weighted assets (as defined), and of Tier I capital (as defined) to average assets (as defined). Management believes, as of September 30, 2000, the Company and the Banks meet all quantitative capital adequacy requirements to which they are subject. Shown below is a summary of regulatory capital ratios for the Company:
Regulatory September 30, December 31, Minimum 2000 1999 Requirements ------------ ------------ ------------ Tier I Capital (to Risk-Weighted Assets) 8.9% 8.9% 4.0% Total Capital (to Risk-Weighted Assets) 11.8% 11.9% 8.0% Tier I Capital (to Average Assets) 6.1% 6.2% 4.0%
The capital amounts and classifications are also subject to qualitative judgments by the regulators. As a result of these qualitative judgements, the Company entered into an agreement with the Federal Reserve Bank (FRB) on September 29, 2000 restricting the Company from declaring or paying dividends without prior approval from the FRB. An additional provision of this agreement requires prior approval form the FRB before the Company increases its borrowings or incurs any debt. This agreement is in effect until terminated by the FRB. 10. PREMIER FINANCIAL BANCORP, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - -------------------------------------------------------------------------------- As a result of these qualitative judgments, Citizens Deposit Bank (Citizens) entered into a Written Agreement with the FRB on September 29, 2000 restricting Citizens from declaring or paying dividends without prior approval. This agreement is in effect until terminated by the FRB. Citizens Tier I capital to average assets was 8.9% at September 30, 2000. As a result of these qualitative judgements, Bank of Germantown (Germantown) entered into an agreement with the Kentucky Department of Financial Institutions (KDFI) and the Federal Deposit Insurance Corporation (FDIC) on June 13, 2000 restricting Germantown from declaring or paying dividends, without prior approval, if its Tier I capital to average assets falls below 8%. This agreement, in effect until terminated by the KDFI and FDIC, is more restrictive than the quantitative measures governing a bank's ability to pay dividends. Germantown's Tier I capital to average assets was 7.4% at September 30, 2000. Mt. Vernon Bancshares, Inc. is precluded from declaring or paying any dividends without prior approval as the result of an existing agreement with the Federal Reserve Bank. Mt. Vernon's Tier I capital to average assets was 8.5% at September 30, 2000. NOTE 8 - NEW ACCOUNTING PRONOUNCEMENTS In June 1999, the FASB issued SFAS No. 133 "Accounting for Derivative Instruments and Hedging Activities". This new standard requires companies to record derivatives on the balance sheet as assets or liabilities at fair value. Depending on the use of the derivative and whether it qualifies for hedge accounting, gains or losses resulting from changes in the values of those derivatives would either be recorded as a component of net income or as a change in stockholders' equity. The Company is required to adopt this new standard January 1, 2001 and does not anticipate the impact to be material to the financial statements. 11. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations - -------------------------------------------------------------------------------- A. Results of Operations Net income for the nine months ended September 30, 2000 was $1,080,000 or $0.21 per share compared to net income of $3,300,000 or $0.63 per share for the nine months ended September 30, 1999. Results for the nine months ended September 30, 2000 reflect charges for amortization of goodwill and other intangibles associated with cash acquisitions totaling $932,000 (after tax) as compared to $964,000 (after tax) in the same period for 1999. The table below, in thousands except per share data, illustrates the net of tax impact of these expenses on earnings and earnings per share.
September 30, 2000 September 30, 1999 Amount Per share Amount Per share ------ --------- ------ --------- Income before amortization of intangibles $ 2,012 $ .38 $ 4,264 $ .81 Amortization of intangibles (932) (.17) (964) (.18) ---------- ----------- ----------- ------------ Net income $ 1,080 $ .21 $ 3,300 $ .63 ========== =========== =========== ============
For the three months ended September 30, 2000, net income totaled $371,000 or $.07 per share compared to $711,000 or $.15 per share for the same period in 1999. Net interest income increased $100,000 to $21,458,000 for the nine months ended September 30, 2000 compared to $21,358,000 for the same period in 1999. Net interest income decreased $264,000 to $7,131,000 for the three months ended September 30, 2000 compared to the $7,395,000 reported in the three months ended September 30, 1999. Net interest margin on a tax equivalent basis for the nine months ending September 30, 2000 was approximately 3.72% as compared to 4.07% for the same period in 1999. The decrease in net interest margin is primarily attributable to rising interest rates and their impact on a majority of the Company's subsidiary banks as well as the increased cost of borrowing at the holding company. The returns on stockholders' equity and on average assets were approximately 2.76% and .17% for the nine months ended September 30, 2000 compared to 8.14% and .56% for the same period in 1999. The provision for loan losses increased $1,272,000 to $4,015,000 for the nine months ended September 30, 2000 compared to $2,743,000 for the same period in 1999. This increase is primarily attributable to the replenishment and required additions to the reserve for loan losses at a majority of the Company's subsidiary banks. For the three months ended September 30, 2000, the provision for loan losses was $1,125,000 compared to the $1,648,000 reported in the three months ended September 30, 1999, a decrease of $523,000. Additional information concerning the level of and the activity within the reserve for loan losses can be found in the Financial Position section. Non-interest income increased $187,000 to $2,990,000 for the first nine months of 2000 compared to $2,803,000 for the first nine months of 1999. Non-interest income increased $131,000 to $1,031,000 for the three months ended September 30, 2000 compared to $900,000 for the same period in 1999. This increase in non-interest income can be primarily attributed to increases in service charge income and other income for both the nine-month and three-month periods ended September 30, 2000. 12. Non-interest expenses for the first nine months of 2000 totaled $19,104,000 or 3.0% of average assets on an annualized basis compared to $16,772,000 or 2.8% of average assets for the same period of 1999. Non-interest expenses increased $1,070,000 for the three months ended September 30, 2000 to $6,594,000 compared to $5,524,000 for the three months ended September 30, 1999. This increase in non-interest expense can be primarily attributed to the branching activities of four of the Company's subsidiary banks in the 2000 time periods compared to the same periods for 1999, in addition to general operating increases and the expensing of severance costs. Income tax expense was $249,000 for the first nine months of 2000 compared to $1,346,000 for the first nine months of 1999. For the three-month period ended September 30, 2000, income tax expense decreased $280,000 to $72,000 compared to $352,000 for the three months ended September 30, 1999. The decrease in income tax expense can be attributed to the decrease in income before taxes, primarily as a result of the increase in the provision for loan loss for the nine-month period ended September 30, 2000. The effective tax rate through September 30, 2000 was approximately 19%, compared to the 29% effective tax rate for the same period in 1999. Also contributing to this decrease in the effective tax rate for both the three month and nine month periods ended September 30, 2000 is a consistent level of tax exempt interest income and recurring tax credits. B. Financial Position Total assets increased $24.4 million or 2.9% to $876.9 million from the $852.5 million on December 31, 1999. The increase in total assets can be primarily attributed to general and normal increases in the business activity of the Company at its various locations. Earning assets increased to $804.0 million on September 30, 2000 from $771.5 million on December 31, 1999, an increase of $32.5 million or 4.2%. This is primarily due to the placement of funds into outstanding loans from cash equivalents. Cash and cash equivalents at September 30, 2000 were $22.4 million or a $7.5 million decrease from the $29.9 million on December 31, 1999. Fed funds sold decreased to $17.1 million from $25.2 million during the same period, a decrease of $8.1 million. The decrease in cash equivalents and fed funds sold is primarily attributed to the placement of those funds in higher yielding loans. Total loans at September 30, 2000 were $602.0 million compared to $570.1 million at December 31, 1999, an increase of $31.9 million or 5.6%. This increase is primarily due to the increase in loans secured by real estate. Additional information concerning the level of and current mix of outstanding loan balances compared to December 31, 1999 can be found in Note 4 of the Notes to Consolidated Financial Statements. Deposits totaled $709.6 million as of September 30, 2000, an increase of $16.8 million, or 2.4%, over the December 31, 1999 amount of $692.8 million. Noninterest bearing deposits increased $1.4 million, or 2.0%, and interest bearing deposits increased $15.4 million, or 2.5%, during the period December 31, 1999 to September 30, 2000. These increases are primarily due to increases in normal business activity at the Company's various locations. In order to increase the Company's capital ratio and reduce the Company's outstanding debt, the Board of Directors approved a Purchase and Assumption Agreement with Community Trust Bank, National Association, Pikeville, Kentucky, regarding the Company's subsidiary, Bank of Mt. Vernon, Mt. Vernon, Kentucky. Under the terms of the agreement, Mt. Vernon has agreed to sell substantially all loans, deposits, and fixed assets to Community Trust Bank. At September 30, 2000 Mt. Vernon had approximately $102 million in loans, $115 million in deposits, and $2 million in fixed assets. The transaction is anticipated to be completed in January 2001. The actual net cash received by the Company as a result of this transaction is contingent upon certain provisions of the agreement which can only be completely ascertained on the settlement date. The actual net cash received should enable the Company to reduce borrowing costs in excess of the subsidiary's current earnings. While the complete extent of the transaction is not immediately determinable, the Company expects to recognize a gain on the sale. A significant benefit to the Company will be the strengthening of internal capital on a reduced asset base and the reduction of consolidated leverage positions. 13. The following table sets forth information with respect to the Company's nonperforming assets at September 30, 2000 and December 31, 1999.
2000 1999 ---- ---- (In Thousands) Non-accrual loans $ 7,016 $ 4,540 Accruing loans which are contractually past due 90 days or more 2,425 1,721 Restructured 346 666 -------------- ------------ Total non-performing loans 9,787 6,927 Other real estate acquired through foreclosure 3,710 3,009 -------------- ------------ Total non-performing assets $ 13,497 $ 9,936 Non-performing loans as a percentage of total loans 1.63% 1.22% Non-performing assets as a percentage of total assets 1.54% 1.17%
The provision for loan losses decreased from $1,648,000 for the three months ended September 30, 1999 to $1,125,000 for the three months ended September 30, 2000. The provision for loan losses and net chargeoffs was $4,015,000 and $2,250,000 for the first nine months of 2000 compared to $2,743,000 and $1,575,000, respectively, for the nine months period ended September 30, 1999. The increases in these amounts were prompted by the increase in average loans between the two periods, changes in the economy both locally and nationally and an increase in non-performing loans since December 31, 1999. The allowance for loan losses at September 30, 2000 was 1.42% of total loans as compared to 1.19% at December 31, 1999. C. Liquidity Liquidity objectives for the Company can be expressed in terms of maintaining sufficient cash flows to meet both existing and unplanned obligations in a cost effective manner. Adequate liquidity allows the Company to meet the demands of both the borrower and the depositor on a timely basis, as well as pursuing other business opportunities as they arise. Thus, liquidity management embodies both an asset and liability aspect while attempting to maximize profitability. In order to provide for funds on a current and long-term basis, the Company's subsidiary banks rely primarily on the following sources: 1. Core deposits consisting of both consumer and commercial deposits and certificates of deposit of $100,000 or more. Management believes that the majority of its $100,000 or more certificates of deposit are no more volatile than its other deposits. This is due to the nature of the markets in which the subsidiaries operate. 2. Cash flow generated by repayment of loans and interest. 14. 3. Arrangements with correspondent banks for purchase of unsecured federal funds. 4. The sale of securities under repurchase agreements and borrowing from the Federal Home Loan Bank. 5. Maintenance of an adequate available-for-sale security portfolio. The Company owns $161.4 million of securities at market value as of September 30, 2000. This is an increase of $9.6 million or approximately 6.3% from the December 31, 1999 balance of $151.8 million. The cash flow statements for the periods presented in the financial statements provide an indication of the Company's sources and uses of cash as well as an indication of the ability of the Company to maintain an adequate level of liquidity. D. Capital Total shareholders' equity of $53.5 million was 6.1% of total consolidated assets at September 30, 2000. This compares to total shareholders' equity of $52.1 million on December 31, 1999, also 6.1% of total consolidated assets. Tier I capital totaled $51.9 million at September 30, 2000, which represents a Tier I leverage ratio of 6.1%. Book value per share was $10.22 at September 30, 2000 and $9.96 at December 31, 1999. A decrease in unrealized loss on securities available for sale was primarily responsible for the increase in accumulated other comprehensive income and corresponding increase in book value per share. The Company declared a first quarter dividend of $0.15 per share, or $784,835 payable March 31, 2000 to shareholders of record as of March 20, 2000. The Company did not declare a dividend in either the second or third quarter of 2000. Management's discussion and analysis contains forward-looking statements that are provided to assist in the understanding of anticipated future financial performance. However, such performance involves risks and uncertainties, and there are certain important factors that may cause actual results to differ materially from those anticipated. These important factors include, but are not limited to, economic conditions (both generally and more specifically in the markets in which Premier operates), competition for Premier's customers from other providers of financial services, government legislation and regulation (which changes from time to time), changes in interest rates, Premier's ability to originate quality loans and attract and retain deposits, the impact of Premier's growth, Premier's ability to control costs, and new accounting pronouncements, all of which are difficult to predict and many of which are beyond the control of Premier. Item 3. Quantitative and Qualitative Disclosures About Market Risk The Company currently does not engage in any derivative or hedging activity. Refer to the Company's 1999 10-K for analysis of the interest rate sensitivity. The Company believes there have been no significant changes in the interest rate sensitivity since previously reported 10-K. 15. PART II - OTHER INFORMATION Item 1. Legal Proceedings None Item 2. Changes in Securities None Item 3. Defaults Upon Senior Securities None Item 4. Submission of Matters to a vote of Security Holders None Item 5. Other Information None Item 6. Exhibits and Reports on Form 8-K (a) Exhibits Exhibit No. Description of Document ----------- ----------------------- 27 Financial Data Schedules (b) Reports on Form 8-K No reports on Form 8-K have been filed during the quarter for which the report is filed. 16. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Corporation has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. PREMIER FINANCIAL BANCORP, INC. Date: November 10, 2000 /s/ Marshall T. Reynolds ------------------------------- Marshall T. Reynolds Chairman of the Board Date: November 10, 2000 /s/ Gardner E. Daniel ------------------------------- Gardner E. Daniel President & Chief Executive Officer 17. EX-27 2 0002.txt FDS 27
9 Article 9 Ex-27 FDS 0000887919 Premier Financial Bancorp, Inc. 1000 9-mos Dec-31-2000 Jan-01-2000 Sep-30-2000 21,659 737 17,111 0 161,433 18,338 18,462 601,963 8,577 876,874 709,583 70,929 5,618 37,248 0 0 1,103 52,393 876,874 41,580 8,585 1,084 51,249 23,753 29,791 21,458 4,015 (279) 19,104 1,329 1,080 0 0 1,080 .21 .21 3.72 7,016 2,425 346 0 6,812 2,547 297 8,577 8,577 0 1,575 Computed as tax-equivalent basis
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