EX-99 3 ex99080803pressrelease.txt TEXT OF AUG 08, 2003 PRESS RELEASE Exhibit 99.1 ------------ NEWS FOR IMMEDIATE RELEASE CONTACT: BRIEN M. CHASE, CFO AUGUST 8, 2003 (304) 525-1600 PREMIER FINANCIAL BANCORP, INC. REPORTS SECOND QUARTER 2003 NET LOSS PREMIER FINANCIAL BANCORP, INC. (PREMIER), HUNTINGTON, WEST VIRGINIA (NASDAQ/NMS-PFBI), a $663 million community bank holding company with seven bank subsidiaries announced its financial results for the second quarter of 2003. As previously announced on July 31, 2003, Premier recorded a $12.1 million provision for loan losses at its subsidiary Farmers Deposit Bank (the "Bank") in the month of June as a result of the findings from the investigation prompted by conduct of the Bank's former president. As a result, on a consolidated basis Premier realized a net loss of $7,896,000 for the quarter ending June 30, 2003. The loss for the second quarter compares to a $1,380,000 loss reported for the second quarter of 2002 which was also the result of additional loan loss provisions and OREO writedowns. On a per share basis, Premier's loss for the second quarter of 2003 was $1.51 per share, compared to a loss of 26 cents per share for the same quarter last year. In addition to the provision for loan losses, $558,000 of expense accruals and interest income reversals were recorded as a result of the investigation. Excluding the transactions related to the Bank investigation (the "Transactions"), Premier would have realized a net profit for the quarter ending June 30, 2003 of approximately $458,000. Premier's year-to-date results were also negatively impacted by the Bank's investigation findings. Year-to-date results total a net loss of $7,543,000 or $1.44 per share. Excluding the Transactions, year-to-date net income would have been $811,000. Premier's second quarter loss was largely due to its increased provisions for loan losses. Excluding the $12.1 million provision resulting from the Bank investigation, Premier's provision for loan losses totaled $1.3 million for the quarter. While management has not yet exhausted all efforts and means available to collect these loans, the additional provisions were made in accordance with Premier's policies regarding the adequacy of the allowance for loan losses which are in accordance with generally accepted accounting principles. Any collections on these loans would be presented in future financial statements as recoveries of the amounts charged against the allowance. As a result, the allowance for loan losses at June 30, 2003 was 4.36% of total loans compared to 2.61% of total loans at year-end 2002 and 2.02% of total loans at June 30, 2002. Net interest income for the quarter ending June 30, 2003 totaled $5.503 million, an 8.0% decrease from the $5.981 million earned in the first quarter of 2003, and a 10.5% decrease from the $6.150 million of net interest income earned in the second quarter of 2002. The decrease was due in part to over $303,000 of interest income reversals related to the Bank investigation. The remaining decrease is largely due to a lower volume of loans outstanding at Premier's other bank subsidiaries. The resulting decline in loan interest income more than offset the lower interest costs resulting from the decline in market interest rates over the past year and the repayment of certain borrowed funds. Net overhead for the quarter ending June 30, 2003 totaled $4.185 million, which included $255,000 of expenses resulting from the Bank investigation. This compares to $4.291 million in the first quarter of 2003 and $5.016 million in the second quarter of 2002. Premier has reduced its overhead expenses by reducing staff costs and increasing its volume of originating secondary market mortgages. Net overhead in the second quarter of 2002 also included $932,000 of writedowns, expenses and sales of OREO compared to $190,000 in the second quarter of this year. Total assets as of June 30, 2003 of $663 million were 2.2% less than the $678 million of total assets at year-end, largely due to the impact of the large provision for loan losses, the planned pay down of $4.7 million of borrowed funds, the non-renewal of some high rate certificates of deposit and a $3.5 million decline in non-interest bearing deposits. Shareholders' equity of $52.1 million equaled 7.9% of total assets at June 30, 2003. This compares to shareholders' equity of $59.4 million or 8.8% of total assets at December 31, 2002. Following is summary information including financial highlights for Premier as of and for the periods ending June 30, 2003. For the Quarter Six Months Ended Ended June 30 June 30 Dollars in thousands 2003 2003 ------- ------- Net Income before Bank investigation transactions 458 811 Impact on net income of transactions related to Bank investigation Interest income reversal (303) (303) Additional provision for loan losses (12,100) (12,100) Additional non-interest expenses (255) (255) Income tax benefit 4,304 4,304 ------- ------- Reported Net Loss (7,896) (7,543) ======= ======= PREMIER FINANCIAL BANCORP, INC. Financial Highlights Dollars in Thousands (except per share data) For the For the Quarter Ended Six Months Ended June 30 June 30 June 30 June 30 2003 2002 2003 2002 -------- -------- -------- -------- Interest Income 9,256 11,345 19,249 22,891 Interest Expense 3,753 5,195 7,765 10,767 Net Interest Income 5,503 6,150 11,484 12,124 Provision for Loan Losses 13,386 3,200 14,783 4,186 Net Interest Income after Provision (7,883) 2,950 (3,299) 7,938 Non-Interest Income 1,067 825 2,192 1,683 Non-Interest Expenses 5,237 5,944 10,464 10,886 Net Income (Loss) Before Taxes (12,053) (2,169) (11,571) (1,265) Income Taxes (Benefits) (4,157) (789) (4,028) (529) NET INCOME (LOSS) (7,896) (1,380) (7,543) (736) EARNINGS PER SHARE (1.51) (0.26) (1.44) (0.14) Balances as of June 30 December 31 2003 2002 ------- ------- Cash/Due From Banks/Fed Funds 63,915 47,871 Securities Available for Sale 153,846 157,633 Loans (net) 395,591 423,777 Other Real Estate Owned 2,831 3,939 Other Assets 30,574 28,364 Goodwill 16,044 16,044 TOTAL ASSETS 662,801 677,628 LIABILITIES Deposits 544,105 547,974 Other Debt 36,710 38,486 Trust Preferred Certificates 25,750 28,750 Other Liabilities 4,159 3,052 TOTAL LIABILITIES 610,724 618,262 Stockholders' Equity 52,077 59,366 TOTAL LIABILITIES & STOCKHOLDERS' EQUITY 662,801 677,628 TOTAL BOOK VALUE PER SHARE 9.95 11.35 Non-Accrual Loans 8,188 10,588 Loans 90 Days Past Due and Still Accruing 1,661 1,399