-----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, AIEvoJ4jipEngWlNARlNpNQxcTQVzq3CUayZf9AczoUuP8CL/qD+3SiUqwFUNobG kd+ceYcrP30RarNSE7Cp1A== 0000887919-03-000048.txt : 20031110 0000887919-03-000048.hdr.sgml : 20031110 20031110085155 ACCESSION NUMBER: 0000887919-03-000048 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20031107 ITEM INFORMATION: FILED AS OF DATE: 20031110 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: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-20908 FILM NUMBER: 03986767 BUSINESS ADDRESS: STREET 1: 2883 FIFTH AVENUE STREET 2: NONE CITY: HUNTINGTON STATE: WV ZIP: 25702 BUSINESS PHONE: 3045251600 8-K 1 pfbi8k110603.txt NOV 7, 2003 THIRD QUARTER 2003 EARNINGS RELEASE SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. Date of Report (date of earliest event reported) November 7, 2003 Premier Financial Bancorp, Inc. (Exact name of registrant as specified in its charter) -------------------------------------------------------- Kentucky 0-20908 61-1206757 --------------------- --------------------- ------------------------ (State or other juris- (Commission File No.) (IRS Employer Identi- diction of corporation) fication No.) 2883 Fifth Avenue Huntington, West Virginia 25702 -------------------------------------------------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (304) 525-1600 --------------------- Not Applicable ---------------------------------------------------------------------------- (Former name or former address, if changes since last report) INFORMATION TO BE INCLUDED IN THE REPORT Item 12. Results of Operations and Financial Condition On November 7, 2003, Premier issued a press release regarding its financial results for the nine months and quarter ended September 30, 2003 and other information about related matters. The full text of that press release is furnished as Exhibit 99.1. This press release includes certain non-GAAP financial measures. A reconciliation of those measures to the most directly related comparable GAAP measures is attached hereto as Exhibit 99.2. Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. PREMIER FINANCIAL BANCORP, INC. ------------------------------- (Registrant) /s/ Brien M. Chase ----------------------------------- Date: November 7, 2003 Brien M. Chase, Vice President and Chief Financial Officer EXHIBIT INDEX Exhibit Number Description -------------- ------------------------------------- 99.1 Press Release dated November 6, 2003, captioned "Premier Financial Bancorp, Inc. Third Quarter 2003 Results Reflect Additional Losses at Farmers Deposit Bank" 99.2 Reconciliations of non-GAAP financial measures EX-99 3 ex99110703pressrelease.txt TEXT OF NOV 7, 2003 EARNINGS RELEASE Exhibit 99.1 ------------ NEWS FOR IMMEDIATE RELEASE CONTACT: BRIEN M. CHASE, CFO NOVEMBER 7, 2003 (304) 525-1600 PREMIER FINANCIAL BANCORP, INC. THIRD QUARTER 2003 RESULTS REFLECT ADDITIONAL LOSSES AT FARMERS DEPOSIT BANK PREMIER FINANCIAL BANCORP, INC. (PREMIER), HUNTINGTON, WEST VIRGINIA (NASDAQ/NMS-PFBI), a $652 million community bank holding company with seven bank subsidiaries announced its financial results for the third quarter of 2003. Due to additional loan charge-offs at its wholly owned subsidiary Farmers Deposit Bank (the "Bank"), Premier realized a net loss of $4,375,000 or $0.84 per share for the quarter ending September 30, 2003. As a result of a previously announced investigation into the conduct of the Bank's former president by Premier and the Federal Deposit Insurance Corporation ("FDIC"), Premier charged-off over $9.5 million of loans in the third quarter of 2003. The resulting depletion of the allowance for loan losses together with the current analysis of additional risk in the loan portfolio warranted an additional $7.9 million provision for loan losses at the Bank during the third quarter. In addition to the provision for loan losses, $641,000 of interest income reversals and other non-interest expenses including bad check write-offs and loan review expenses were recorded in the third quarter 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 September 30, 2003 of approximately $1,262,000. Similarly, Premier's year-to-date results were also negatively impacted by write-offs resulting from the Bank's investigation findings. Year-to-date results total a net loss of $11,918,000 or $2.28 per share. Excluding the Transactions, year-to-date net income would have been $2,073,000. Due to the impact of the year-to-date charge-offs and other write-offs on the Bank's regulatory capital level, the FDIC recently notified management concerning the Bank's key capital ratios falling within the "undercapitalized" capital category for purposes of prompt corrective action. An "undercapitalized" bank is one that does not meet prescribed minimum capital ratios. FDIC rules require "undercapitalized' banks to file a written capital restoration plan with the FDIC within 45 days of the notice and also restrict "undercapitalized" banks from paying capital distributions or growing the size of the bank without prior written approval from the FDIC. On the Bank's September 30, 2003 call report filed with the FDIC on October 29, 2003, the capital ratios were calculated to be above the prescribed minimum capital ratios which would designate the Bank as "adequately capitalized". Premier continues to work with the FDIC and the Kentucky Department of Financial Institutions on plans to increase the Bank's capital. The Securities and Exchange Commission ("SEC") is also investigating the information disclosed in Premier's June 19 and July 31, 2003 Forms 8-K regarding the Bank and has requested information about Premier's ongoing investigation. Robert W. Walker, Premier's President and Chief Executive Officer commented, "Premier is cooperating with the FDIC and the SEC. We have taken several steps to restore the health of Farmers Deposit Bank. We have recruited and hired Carroll Yates to be the Bank's new President and CEO. We have also hired a Chief Financial Officer for the Bank. We have reviewed all loan relationships exceeding $25,000. We have hired experienced collectors and retained attorneys. Although progress has been made, the collection process is often lengthy and slow to produce the desired results. We are continuing to review significant credit relationships for collection and future loan deterioration may result in additional loan loss provisions." Premier's third quarter loss was largely due to its increased provisions for loan losses. Excluding the $7.9 million provision resulting from the Bank investigation, Premier's provision for loan losses totaled $115,000 for the quarter. As a result of the additional provision, the allowance for loan losses at September 30, 2003 was 4.00% of total loans compared to 2.61% of total loans at year-end 2002 and 2.49% of total loans at September 30, 2002. Net interest income for the quarter ending September 30, 2003 totaled $5.207 million, a 5.4% decrease from the $5.503 million earned in the second quarter of 2003, and a 13.9% decrease from the $6.046 million of net interest income earned in the third quarter of 2002. The decrease was due in part to approximately $441,000 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 and lower reinvestment yields on securities. The resulting decline in 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 September 30, 2003 totaled $3.966 million, which included $200,000 of expenses resulting from the Bank investigation. This compares to $4.185 million in the second quarter of 2003 and $4.384 million in the third quarter of 2002. Premier has reduced its overhead expenses by reducing staff costs and other real estate owned expenses while increasing revenue from deposit service charges. Total assets as of September 30, 2003 of $652 million were 3.7% 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 $8.6 million of borrowed funds, the non-renewal of some high rate certificates of deposit and a decline in other interest bearing deposit balances. Shareholders' equity of $47.0 million equaled 7.2% of total assets at September 30, 2003. This compares to shareholders' equity of $59.4 million or 8.8% of total assets at December 31, 2002. The decline in shareholders' equity is largely due to the losses incurred at Farmers Deposit Bank. Certain Statements contained in this news release, including without limitation statements including the word "believes," "anticipates," "intends," "expects" or words of similar import, constitute "forward-looking statements" within the meaning of section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of Premier to be materially different from any future results, performance or achievements of Premier expressed or implied by such forward-looking statements. Such factors include, among others, general economic and business conditions, changes in business strategy or development plans and other factors referenced in this press release. Given these uncertainties, prospective investors are cautioned not to place undue reliance on such forward-looking statements. Premier disclaims any obligation to update any such factors or to publicly announce the results of any revisions to any of the forward-looking statements contained herein to reflect future events or developments. This press release also includes certain non-GAAP financial measures as defined under SEC rules. As required by SEC rules, we have provided a reconciliation of those measures to the most directly comparable GAAP measures below. More information about those measures is contained in Premier's filings with the SEC. Reconciliation of Net Income Before Bank Investigation Transactions to Reported Net Loss For the Quarter Nine Months Ended Ended Sept 30 Sept 30 Dollars in thousands 2003 2003 --------- --------- Net Income before Bank investigation transactions 1,262 2,073 Impact on net income of transactions related to Bank investigation Interest income reversal (441) (744) Additional provision for loan losses (7,900) (20,000) Additional non-interest expenses (200) (455) Income tax benefit 2,904 7,208 --------- --------- Reported Net Loss (4,375) (11,918) ========= ========= Following is summary information including financial highlights for Premier as of and for the periods ending September 30, 2003. PREMIER FINANCIAL BANCORP, INC. Financial Highlights Dollars in Thousands (except per share data) For the For the Quarter Ended Nine Months Ended Sept 30 Sept 30 Sept 30 Sept 30 2003 2002 2003 2002 -------- -------- -------- -------- Interest Income 8,655 10,925 27,904 33,816 Interest Expense 3,448 4,879 11,213 15,646 Net Interest Income 5,207 6,046 16,691 18,170 Provision for Loan Losses 8,015 3,094 22,798 7,280 Net Interest Income after Provision (2,808) 2,952 (6,107) 10,890 Non-Interest Income 1,134 893 3,326 2,576 Non-Interest Expense 5,098 5,276 15,562 16,162 Net Income (Loss) Before Taxes (6,772) (1,431) (18,343) (2,696) Income Taxes (Benefits) (2,397) (592) (6,425) (1,121) NET INCOME (LOSS) (4,375) (839) (11,918) (1,575) EARNINGS PER SHARE (0.84) (0.16) (2.28) (0.30) Balances as of September 30 December 31 2003 2002 ------- ------- Cash/Due From Banks/Fed Funds 66,461 47,871 Securities Available for Sale 156,454 157,633 Loans (net) 377,556 423,777 Other Real Estate Owned 3,693 3,939 Other Assets 32,202 28,364 Goodwill 16,044 16,044 TOTAL ASSETS 652,410 677,628 LIABILITIES Deposits 535,052 547,974 Other Debt 32,449 38,486 Trust Preferred Certificates 25,750 28,750 Other Liabilities 12,110 3,052 TOTAL LIABILITIES 605,361 618,262 Stockholders' Equity 47,049 59,366 TOTAL LIABILITIES & STOCKHOLDERS' EQUITY 652,410 677,628 TOTAL BOOK VALUE PER SHARE 8.99 11.35 Non-Accrual Loans 15,467 10,588 Loans 90 Days Past Due and Still Accruing 4,099 1,399 EX-99 4 ex992110703pressrelease.txt EXHIBIT 99.2 NON GAAP FINANCIAL MEASURES Exhibit 99.2 ------------ Non-GAAP Financial Measures The press release dated November 6, 2003, which announces earnings for our third quarter includes "non-GAAP financial measures" as defined by SEC rules. Specifically, the release refers to: a.) Net profit for the quarter ending September 30, 2003 excluding transactions related to the Farmers Deposit Bank (the "Bank") investigation; and b.) Net profit for the year-to-date period ending September 30, 2003 excluding transactions related to the Bank investigation. Management believes that meaningful analysis of our financial performance requires an understanding of the factors underlying that performance and our judgments about the likelihood that particular factors will repeat. In some cases, short-term patterns and long-term trends may be obscured by large factors or events. For example, significant non-recurring transactions and/or events at a particular banking institution may be so significant as to obscure patterns and trends of the remaining banking franchise as a whole. For this reason, management believes that investors may find it useful to see the effects that the write-offs and other charges to earnings related to the investigation at the Company's wholly owned subsidiary, Farmers Deposit Bank, had on the Company's reported consolidated net operating results. To permit the reader to evaluate the value of the "non-GAAP financial measures", a reconciliation to GAAP was also provided in the body of the press release. Reconciliation of Net Income Before Bank Investigation Transactions to Reported Net Loss For the Quarter Nine Months Ended Ended Sept 30 Sept 30 Dollars in thousands 2003 2003 --------- --------- Net Income before Bank investigation transactions 1,262 2,073 Impact on net income of transactions related to Bank investigation Interest income reversal (441) (744) Additional provision for loan losses (7,900) (20,000) Additional non-interest expenses (200) (455) Income tax benefit 2,904 7,208 --------- --------- Reported Net Loss (4,375) (11,918) ========= ========= -----END PRIVACY-ENHANCED MESSAGE-----