-----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, C6KYBTY5vsG3GO+4gG9bIWe7hvP6kEx6V5uJSBdFDDDEK/rYQi3NF5y949bHDjkG uXzx0hUTcFwSELbuXcFiwA== 0000887919-01-500007.txt : 20010516 0000887919-01-500007.hdr.sgml : 20010516 ACCESSION NUMBER: 0000887919-01-500007 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20010331 FILED AS OF DATE: 20010515 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PREMIER FINANCIAL BANCORP INC CENTRAL INDEX KEY: 0000887919 STANDARD INDUSTRIAL CLASSIFICATION: STATE COMMERCIAL BANKS [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: 1636945 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 firstqtr0110qt.txt MARCH 2001 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 March 31, 2001 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 May 11, 2001. 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, 2000 for further information in this regard. Index to consolidated financial statements: Consolidated Balance Sheets....................................... 3 Consolidated Statements of Income ................................ 4 Consolidated Statements of Comprehensive Income .................. 5 Consolidated Statements of Cash Flows............................. 6 Notes to Consolidated Financial Statements........................ 7 PREMIER FINANCIAL BANCORP, INC. CONSOLIDATED BALANCE SHEETS MARCH 31, 2001 AND DECEMBER 31, 2000 (DOLLARS IN THOUSANDS) - --------------------------------------------------------------------------------
(UNAUDITED) 2001 2000 ---- ---- ASSETS Cash and due from banks $ 20,610 $ 23,339 Interest earning balances with banks 61 737 Federal funds sold 40,226 21,087 Investment securities Available for sale 156,280 176,494 Held to maturity - 17,906 Loans 523,224 595,947 Unearned interest (274) (371) Allowance for loan losses (7,953) (7,821) ------------- -------------- Net loans 514,997 587,755 Federal Home Loan Bank and Federal Reserve Bank stock 4,266 4,476 Premises and equipment, net 13,613 15,474 Real estate and other property acquired through foreclosure 2,734 3,116 Interest receivable 7,920 10,144 Goodwill and other intangibles 18,353 22,856 Other assets 6,739 6,548 ------------- -------------- Total assets $ 785,799 $ 889,932 ============= ============== LIABILITIES AND STOCKHOLDERS' EQUITY Deposits Non-interest bearing $ 63,426 $ 74,438 Time deposits, $100 and over 90,265 105,490 Other interest bearing 474,792 548,484 ------------- -------------- Total deposits 628,483 728,412 Securities sold under agreements to repurchase 11,135 20,553 Federal Home Loan Bank advances 30,923 30,687 Other borrowed funds 20,000 20,000 Interest payable 2,821 3,901 Other liabilities 5,164 1,799 ------------- -------------- Total liabilities 698,526 805,352 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 13,375 12,151 Accumulated other comprehensive income 600 (869) ------------- -------------- Total stockholders' equity 58,523 55,830 ------------- -------------- Total liabilities and stockholders' equity $ 785,799 $ 889,932 ============= ==============
- -------------------------------------------------------------------------------- See Accompanying Notes to Consolidated Financial Statements 3. PREMIER FINANCIAL BANCORP, INC. CONSOLIDATED STATEMENTS OF INCOME THREE MONTHS ENDED MARCH 31, 2001 AND 2000 (IN THOUSANDS EXCEPT PER SHARE DATA) (UNAUDITED) - --------------------------------------------------------------------------------
2001 2000 ---- ---- Interest income Loans, including fees $ 12,580 $ 13,359 Investment securities Taxable 2,442 2,416 Tax-exempt 302 357 Federal funds sold and other 472 479 ----------- ----------- Total interest income 15,796 16,611 Interest expense Deposits 7,645 7,663 Debt and other borrowings 1,797 1,862 ----------- ----------- Total interest expense 9,442 9,525 Net interest income 6,354 7,086 Provision for possible loan losses 632 1,385 ----------- ----------- Net interest income after provision for possible loan losses 5,722 5,701 Non-interest income Service charges 526 492 Insurance commissions 39 117 Investment securities gains 180 1 Gain on the sale of subsidiary's banking operations 3,418 - Other 399 376 ----------- ----------- 4,562 986 Non-interest expenses Salaries and employee benefits 3,032 3,283 Occupancy and equipment expenses 772 772 Amortization of intangibles 337 393 Other expenses 1,944 1,672 ----------- ----------- 6,085 6,120 ----------- ----------- Income before income taxes 4,199 567 Provision for income taxes 2,975 120 ----------- ----------- Net income $ 1,224 $ 447 =========== =========== Earnings per share $ .23 $ .09 Earnings per share assuming dilution $ .23 $ .09 Weighted average shares outstanding 5,232 5,232
- -------------------------------------------------------------------------------- See Accompanying Notes to Consolidated Financial Statements 4. PREMIER FINANCIAL BANCORP, INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME THREE MONTHS ENDED MARCH 31, 2001 AND 2000 (IN THOUSANDS) (UNAUDITED) - --------------------------------------------------------------------------------
2001 2000 ---- ---- Net Income $ 1,224 $ 447 Other comprehensive income (loss), net of tax: Unrealized gains and (losses) arising during the period $ 1,588 $ (216) Reclassification of realized amount (119) (1) ----------- ----------- Net change in unrealized gain (loss) on securities 1,469 (217) ----------- ----------- Comprehensive income $ 2,693 $ 230 =========== ===========
- -------------------------------------------------------------------------------- See Accompanying Notes to Consolidated Financial Statements 5. PREMIER FINANCIAL BANCORP, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS THREE MONTHS ENDED MARCH 31, 2001 AND 2000 (IN THOUSANDS) (UNAUDITED) - --------------------------------------------------------------------------------
2001 2000 ---- ---- Cash flows from operating activities Net income $ 1,224 $ 447 Adjustments to reconcile net income to net cash from operating activities Depreciation 342 329 Provision for loan losses 632 1,385 Amortization, net 214 304 FHLB stock dividends (69) (74) Investment securities losses (gains), net (180) (1) Gain on the sale of subsidiary's banking operations (3,418) - Changes in Interest Receivable 625 572 Other assets (1,031) (156) Interest Payable (625) 105 Other liabilities 3,365 (18) ------------- ------------- Net cash from operating activities 1,079 2,893 Cash flows from investing activities Purchases of securities available for sale (48,871) (19,137) Proceeds from sales of securities available for sale 10,602 500 Proceeds from maturities and calls of securities available for sale 66,356 8,230 Purchases of securities held to maturity - (958) Proceeds from maturities and calls of securities held to maturity - 505 Purchases of FHLB stock (172) (7) Redemption of FHLB stock 451 - Net change in federal funds sold (19,139) (1,616) Net change in loans (7,150) (4,627) Purchases of premises and equipment, net (115) (355) Proceeds from sale of other real estate acquired through foreclosure 530 258 Net cash received (paid) related to acquisitions (7,178) - ------------- ------------- Net cash from investing activities (4,686) (17,207) Cash flows from financing activities Net change in deposits 8,584 11,369 Advances from Federal Home Loan Bank 17,220 4,600 Repayment of Federal Home Loan Bank advances (16,984) (6,940) Net change in agreements to repurchase securities (8,618) 508 Dividends paid - (784) ------------- ------------- Net cash from financing activities 202 8,753 ------------- ------------- Net change in cash and cash equivalents (3,405) (5,561) Cash and cash equivalents at beginning of period 24,076 29,861 ------------- ------------- Cash and cash equivalents at end of period $ 20,671 $ 24,300 ============= =============
- -------------------------------------------------------------------------------- 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 March 31, 2001 Acquired Assets -------- ------ (In Thousands) Citizens Deposit Bank & Trust Vanceburg, Kentucky 1991 $ 120,088 Bank of Germantown Germantown, Kentucky 1992 29,646 Citizens Bank (Kentucky), Inc. Georgetown, Kentucky 1995 110,798 Farmers Deposit Bank Eminence, Kentucky 1996 144,299 The Sabina Bank Sabina, Ohio 1997 54,914 Ohio River Bank Ironton, Ohio 1998 70,985 The Bank of Philippi, Inc. Philippi, West Virginia 1998 79,778 Boone County Bank, Inc. Madison, West Virginia 1998 151,803
The Company also has a data processing subsidiary, Premier Data Services, Inc., the PFBI Capital Trust subsidiary as discussed in Note 7, and a loan servicing subsidiary, Mt. Vernon Financial Holdings, Inc., the successor to Bank of Mt. Vernon. All intercompany transactions and balances have been eliminated. NOTE 2 - BUSINESS COMBINATIONS On January 26, 2001, the Company disposed of all the deposits (approximately $109 million), the majority of loans (approximately $79 million), approximately $12.5 million of investment securities and the premises and equipment (approximately $1.6 million) of the Bank of Mt. Vernon under the terms of a Purchase and Assumption Agreement. As a result of this transaction, the banking charter of the Bank of Mt. Vernon has been relinquished and the Company has agreed to not compete in the markets previously served by the Bank of Mt. Vernon. NOTE 3 - REGULATORY MATTERS On September 29, 2000, the Company entered into an agreement with the Federal Reserve Bank (FRB) that prohibits the Company from paying dividends or incurring any additional debt without the prior written approval of the FRB. Additionally, the agreement requires the Company to develop and monitor compliance with certain operational policies designed to strengthen Board of Director oversight including credit administration, liquidity, internal audit and loan review. - -------------------------------------------------------------------------------- CONTINUED 7. PREMIER FINANCIAL BANCORP, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - -------------------------------------------------------------------------------- NOTE 3 - REGULATORY MATTERS (Continued) Two of the Company's subsidiaries, Citizens Deposit Bank & Trust and Bank of Germantown, have entered into similar agreements with their respective primary regulators which, among other things, prohibit the payment of dividends without prior written approval and requires significant changes in their credit administration policies. These agreements, which require periodic reporting, will remain in force until the regulators are satisfied that the Company and the banks have fully complied with the terms of the agreement. NOTE 4 - SECURITIES Amortized cost and fair value of investment securities, by category, at March 31, 2001 are summarized as follows:
(In Thousands) Amortized Unrealized Unrealized Fair Cost Gains Losses Value ---- ----- ------ ----- Available for sale U. S. Treasury securities $ 2,300 $ 31 $ - $ 2,331 U. S. agency securities 121,367 537 (67) 121,837 Obligations of states and political Subdivisions 20,163 562 (3) 20,722 Mortgage-backed securities 9,984 2 (32) 9,954 Other equity securities 1,555 2 (121) 1,436 -------------- -------------- -------------- --------------- Total available for sale $ 155,369 $ 1,134 $ (223) $ 156,280 ============== ============== ============== ===============
Upon adoption of Financial Accounting Standards Board Statement 133 on January 1, 2001, all of the Company's securities classified as held to maturity were re-classified as available for sale. Amortized cost and fair value of investment securities, by category, at December 31, 2000 are summarized as follows:
(In Thousands) Amortized Unrealized Unrealized Fair Cost Gains Losses Value ---- ----- ------ ----- Available for sale U. S. Treasury securities $ 3,345 $ 13 $ (1) $ 3,357 U. S. agency securities 155,045 232 (1,389) 153,888 Obligations of states and political Subdivisions 7,016 117 (1) 7,132 Mortgage-backed securities 9,478 - (159) 9,319 Preferred stock 2,000 - - 2,000 Other securities 925 - (127) 798 -------------- -------------- -------------- --------------- Total available for sale $ 177,809 $ 362 $ (1,677) $ 176,494 ============== ============== ============== ===============
- -------------------------------------------------------------------------------- CONTINUED 8. PREMIER FINANCIAL BANCORP, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - -------------------------------------------------------------------------------- NOTE 4 - SECURITIES (Continued)
(In Thousands) Amortized Unrealized Unrealized Fair Cost Gains Losses Value ---- ----- ------ ----- Held to maturity U. S. agency securities 1,233 4 (7) 1,230 Obligations of states and political Subdivisions 16,656 378 (31) 17,003 Mortgage-backed securities 17 - (1) 16 -------------- -------------- --------------- --------------- Total held to maturity $ 17,906 $ 382 $ (39) $ 18,249 ============== ============== ============== ===============
NOTE 5 - LOANS Major classifications of loans at March 31, 2001 and December 31, 2000 are summarized as follows:
2001 2000 ---- ---- (In Thousands) Commercial, secured by real estate $ 111,807 $ 149,733 Commercial, other 83,645 86,069 Real estate construction 19,428 24,774 Residential real estate 195,705 211,662 Agricultural 11,304 13,817 Consumer and home equity 99,852 108,646 Other 1,483 1,246 ------------ ------------ $ 523,224 $ 595,947 ============ ============
NOTE 6 - ALLOWANCE FOR LOAN LOSSES Changes in the allowance for loan losses for the three months ended March 31, 2001 and 2000 are as follows:
2001 2000 ---- ---- Balance, beginning of period $ 7,821 $ 6,812 Net charge-offs (500) (571) Provision for loan losses 632 1,385 ------------ ------------ Balance, end of period $ 7,953 $ 7,626 ============ ============
- -------------------------------------------------------------------------------- CONTINUED 9. PREMIER FINANCIAL BANCORP, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - -------------------------------------------------------------------------------- NOTE 7 - 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. NOTE 8 - STOCKHOLDERS' EQUITY 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 and additional restrictions as discussed below. During 2001, the Banks could, without prior approval, declare dividends of approximately $2.3 million plus any 2001 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 March 31, 2001, the Company and the Banks meet all quantitative capital adequacy requirements to which they are subject. - -------------------------------------------------------------------------------- CONTINUED 10. PREMIER FINANCIAL BANCORP, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - -------------------------------------------------------------------------------- NOTE 8 - STOCKHOLDERS' EQUITY (Continued) Shown below is a summary of regulatory capital ratios for the Company:
Regulatory March 31, December 31, Minimum 2001 2000 Requirements ---- ---- ------------ Tier I Capital (to Risk-Weighted Assets) 11.5% 9.0% 4.0% Total Capital (to Risk-Weighted Assets) 14.8% 12.0% 8.0% Tier I Capital (to Average Assets) 7.4% 6.1% 4.0%
The capital amounts and classifications are also subject to qualitative judgments by the regulators. As a result of these qualitative judgments, the Company and two of the Company's subsidiaries have entered into agreements with the applicable regulatory authorities which provide for additional restrictions on their respective capital levels and the payment of dividends. 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 from the FRB before the Company increases its borrowings or incurs any debt. This agreement is in effect until terminated by the FRB. 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 9.1% at March 31, 2001. 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 is in effect until terminated by the KDFI and FDIC. Germantown's Tier I capital to average assets was 6.6% at March 31, 2001. As of March 31, 2001, the most recent notification from the Federal Reserve Bank categorized the Company and its subsidiary banks as well capitalized under the regulatory framework for prompt corrective action. To be categorized as well capitalized, the Company must maintain minimum Total risk-based, Tier I risk-based and Tier I leverage ratios as set forth in the preceding table. There are no conditions or events since that notification that management believes have changed the Company's category. - -------------------------------------------------------------------------------- 11. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations - -------------------------------------------------------------------------------- A. Results of Operations Net income for the three months ended March 31, 2001 was $1,224,000 or $0.23 per share compared to net income of $447,000 or $0.09 per share for the three months ended March 31, 2000. This $777,000 increase is primarily the result of the $625,000 net gain (after tax) realized from the sale of Bank of Mt. Vernon's banking operations. Excluding the net gain on the sale and the operations of the Bank of Mt. Vernon, Premier's net income for the quarter ending March 31, 2001 was $545,000, or $0.10 per share. This compares to Premier's net income for the quarter ending March 31, 2000, net of the Bank of Mt. Vernon's operations, of $323,000 or $0.06 cents per share. Results for the quarter reflect charges for amortization of goodwill and other intangibles associated with cash acquisitions totaling $255,000 (after tax) as compared to $311,000 (after tax) in the same period for 2000. Not including these charges and the net gain on the sale, net income for the first quarter 2001 was $854,000 or $0.16 per share versus $758,000 or $0.14 per share in 2000. Net interest income decreased $732,000 to $6,354,000 for the three months ended March 31, 2001 compared to $7,086,000 for the same period in 2000. This is primarily due to the decrease in earning assets associated with the sale of Bank of Mt. Vernon's banking operations. Net interest margin for the three months ending March 31, 2001 was approximately 3.55% as compared to 3.73% for the same period in 2000. This decrease in net interest margin is the result primarily from an increase in shorter term assets which are at lower rates from the same period last year due to the recent drop in market interest rates. The annualized returns on stockholders' equity and on average assets were approximately 8.48% and .61% for the three months ended March 31, 2001 compared to 3.45% and .21% for the same period in 2000. Excluding the net gain (after tax) from the sale of the operations of the Bank of Mt. Vernon, the annualized returns on stockholders equity and on average assets were approximately 4.15% and .30% for the three months ended March 31, 2001. Non-interest income increased $3,576,000 to $4,562,000 for the first three months of 2001 compared to $986,000 for the first three months of 2000. Excluding the gain on sale of subsidiary's banking operations of $3,418,000, non-interest income increased $158,000 or 16.0%, for the quarter ending March 31, 2001 compared to the same period for 2000. Non-interest expenses for the first quarter of 2001 totaled $6,085,000 or 3.0% of average assets on an annualized basis compared to $6,120,000 or 2.9% of average assets for the same period of 2000. Contributing to this decrease is the exclusion of the Bank of Mt. Vernon's operations for a partial quarter in 2001 versus its inclusion for the full quarter for 2000. This decrease was partially offset by increased costs associated with heightened levels of risk identification and controls. Income tax expense was $2,975,000 for the first quarter of 2001 compared to $120,000 for the first quarter of 2000. The increase in income tax expense can be primarily attributed to the $2,792,000 tax effect associated with the gain on sale of subsidiary's banking operations. The annualized effective tax rate for the period ended March 31, 2001 was 70.9%, compared to the 21.2% effective tax rate for the same period in 2000. This is primarily due to the elimination of 12. intangibles associated with the Company's acquisition of the Bank of Mt. Vernon. The expensing of this intangible was a non-taxable event thereby raising the annualized effective tax rate for the quarter ended March 31, 2001. B. Financial Position Total assets decreased $104.1 million or 11.7% to $785.8 million from the $889.9 million on December 31, 2000. This decrease can be attributed to the decrease in assets of approximately $110 million associated with the sale of Bank of Mt. Vernon's banking operations. Exclusive of the assets involved in this sale total assets increased approximately $5.5 million, or .7%, when comparing March 31, 2001 to December 31, 2000. Earning assets decreased to $723.8 on March 31, 2001 from $816.3 million on December 31, 2000, a decrease of $92.5 million, or 11.3%. This decrease can be attributed to the decrease in earning assets of approximately $92 million associated with the sale of Bank of Mt. Vernon' s banking operations. Exclusive of the earning assets involved in this sale, total earning assets were essentially unchanged from December 31, 2000 to March 31, 2001. Cash and cash equivalents at March 31, 2001 were $20.7 million or a $3.3 million decrease from $24.0 million on December 31, 2000. Fed funds sold increased to $40.2 million from $21.1 million during the same period; an increase of $19.1 million. Total loans at March 31, 2001 were $522.9 million compared to $595.6 million at December 31, 2000, a decrease of $72.7 million. This decrease can be attributed to the approximately $79 million of loans included in the sale of Bank of Mt. Vernon's banking operations. Exclusive of the loans involved in this sale, total loans increased approximately $6.8 million, or 1.4%, when comparing March 31, 2001 to December 31, 2000. Deposits totaled $628.5 million as of March 31, 2001, a decrease of $99.9 million, or 13.7%, from the December 31, 2000 amount of $728.4 million. This decrease can be attributed to the decrease in deposits of approximately $109 million associated with the sale of Bank of Mt. Vernon's banking operations. Exclusive of the deposits involved in this sale, total deposits increased $8.1 million, or 1.3%, when comparing March 31, 2001 to December 31, 2000. 13. The following table sets forth information with respect to the Company's nonperforming assets at March 31, 2001 and December 31, 2000.
(In Thousands) 2001 2000 ---- ---- Non-accrual loans $ 8,871 $ 7,840 Accruing loans which are contractually past due 90 days or more 3,009 2,196 Restructured 762 689 -------------- ------------ Total non-performing loans 12,642 10,725 Other real estate acquired through Foreclosure 2,734 3,116 -------------- ------------ Total non-performing assets $ 15,376 $ 13,841 Non-performing loans as a percentage of total loans 2.42% 1.80% Non-performing assets as a percentage of total assets 1.96% 1.56%
The provision for possible loan losses and net chargeoffs were $632,000 and $500,000 for the first quarter of 2001 compared to $1,385,000 and $571,000, respectively, for the first quarter of 2001. The decrease in the provision for loan losses was prompted primarily by a reduction in overall loan growth. The allowance for loan losses at March 31, 2001 was 1.52% of total loans as compared to 1.31% at December 31, 2000. This increase in the percentage of allowance for loan losses to total loans can be primarily attributed to the reduction in total loans associated with the sale of Bank of Mt. Vernon's banking operations. Nonperforming loans increased to $12.6 million as of March 31, 2001, when compared to the $10.7 million on December 31, 2000. This increase in conjunction with the decrease in total loans, resulted in the increase of the ratio of nonperforming loans to total loans from 1.80% on December 31, 2000 to 2.42% on March 31, 2001. The Company retained approximately $20 million of loans that were previously serviced and held by Bank of Mt. Vernon. These loans are now held in the Company's subsidiary, Mt. Vernon Financial Holdings, Inc. Exclusive of the nonperforming loans associated with Bank of Mt. Vernon or Mt. Vernon Financial Holdings, Inc., total nonperforming loans decreased approximately 4.3% from December 31, 2000 to March 31, 2001. 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: 14. 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. 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 $156.3 million of securities at market value as of March 31, 2001. 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 At March 31, 2001, total shareholders' equity of $58.5 million was 7.4% of total consolidated assets. This compares to total shareholders' equity of $55.8 million or 6.3% of total consolidated assets on December 31, 2000. Tier I capital totaled $58.8 million at March 31, 2001, which represents a Tier I leverage ratio of 7.4%. Book value per share was $11.19 at March 31, 2001, and $10.67 at December 31, 2000. An increase in unrealized gain on securities available for sale was primarily responsible for the increase in accumulated other comprehensive income and corresponding increase in book value per share. Also, contributing to the increase in book value per share, as well as total shareholders' equity, was the retention of earnings in the amount of $1,224,000. The Company declared a first quarter dividend of $0.15 per share, or $784,835 during the quarter ended March 31, 2000. The Company did not declare a first quarter 2001 dividend. 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 2000 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 on the Company's 2000 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 Form 8-K dated February 12, 2001, reporting the consummation of a Purchase and Assumption Agreement involving the Company's affiliate, Bank of Mt. Vernon. 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: May 14, 2001 /s/ Marshall T. Reynolds ------------------------------- Marshall T. Reynolds Chairman of the Board Date: May 14, 2001 /s/ Gardner E. Daniel ------------------------------- Gardner E. Daniel President & Chief Executive Officer Date: May 14, 2001 /s/ Edward Barnes ------------------------------- Edward Barnes Vice President & Chief Financial Officer 17. Exhibit No. 27 Financial Data Schedules Article 9 MULTIPLIER 1000 PERIOD TYPE 3-mos FISCAL-YEAR-END Dec-31-2001 PERIOD-START Jan-01-2001 PERIOD-END Mar-31-2001 CASH 20,610 INT-BEARING-DEPOSITS 61 FED-FUNDS-SOLD 40,226 TRADING ASSETS 0 INVESTMENTS-HELD-FOR-SALE 156,280 INVESTMENTS-CARRYING 0 INVESTMENTS-MARKET 0 LOANS 522,950 ALLOWANCE 7,953 TOTAL-ASSETS 785,799 DEPOSITS 628,483 SHORT-TERM 48,361 LIABILITIES-OTHER 7,985 LONG-TERM 42,447 PREFERRED-MANDATORY 0 PREFERRED 0 COMMON 1,103 OTHER-SE 57,420 TOTAL-LIABILTIES-AND-EQUITY 785,799 INTEREST-LOAN 12,580 INTEREST-INVEST 2,744 INTEREST-OTHER 472 INTEREST-TOTAL 15,796 INTEREST-DEPOSIT 7,645 INTEREST-EXPENSE 9,442 INTEREST-INCOME-NET 6,354 LOAN-LOSSES 632 SECURITIES-GAINS 180 EXPENSE-OTHER 6,085 INCOME-PRETAX 4,199 INCOME-PRE-EXTRAORDINARY 1,224 EXTRAORDINARY 0 CHANGES 0 NET-INCOME 1,224 EPS-BASIC .23 EPS-DILUTED .23 YIELD-ACTUAL 3.55 F1 LOANS-NON 8,871 LOANS-PAST 3,009 LOANS-TROUBLED 762 LOANS-PROBLEM 0 ALLOWANCE-OPEN 7,821 CHARGE-OFFS 658 RECOVERIES 158 ALLOWANCE-CLOSE 7,953 ALLOWANCE-DOMESTIC 7,953 ALLOWANCE-FOREIGN 0 ALLOWANCE-UNALLOCATED 618 F1 Computed as tax-equivalent basis
-----END PRIVACY-ENHANCED MESSAGE-----