EX-99 3 ex99042104pressrelease.txt TEXT OF 2003 ANNUAL EARNINGS PRESS RELEASE EXHIBIT 99.1 ------------ NEWS FOR IMMEDIATE RELEASE CONTACT: BRIEN M. CHASE, CFO April 21, 2004 (304) 525-1600 PREMIER FINANCIAL BANCORP, INC. ANNOUNCES 2003 ANNUAL FINANCIAL RESULTS PREMIER FINANCIAL BANCORP, INC. (PREMIER), HUNTINGTON, WEST VIRGINIA (NASDAQ/NMS-PFBI), a $622 million community bank holding company with seven bank subsidiaries announced its annual financial results for the year ended December 31, 2003. As more fully explained in its Annual Report on Form 10-K filed with the Securities and Exchange Commission and in Premier's upcoming annual report to shareholders, Premier has restated its 2002 and 2001 financial results and has adjusted previously reported 2003 quarterly financial results to reflect the financial statement effect of loan charge-offs and additional provisions for loan losses at its wholly-owned subsidiary Farmers Deposit Bank (the Bank) that occurred in those periods but were improperly concealed by former subsidiary management. Included at the end of the financial highlights section below is a summary of the restatement's effects on the operating results of Premier. In addition, on February 13, 2004, Premier announced that it had signed a definitive agreement to sell its subsidiary Citizens Bank (Kentucky) Inc. ("Citizens Bank") in a cash transaction valued at approximately $14,500,000. In accordance with Financial Accounting Standard 144, "Accounting for the Impairment or Disposal of Long-lived Assets", the financial position and results of operations of Citizens Bank have been removed from the detail line items in Premier's financial statements and presented separately as "discontinued operations." The following discussion and summary financial statements below reflect the two situations described above. Due to additional loan loss provisions at the Bank, Premier realized a net loss from continuing operations of $596,000 or $0.11 per share for the quarter ending December 31, 2003. As management continues to work through the past due and problem loans identified at the Bank, Premier charged-off $546,000 of loans at the Bank (net of $141,000 of recoveries) in the fourth 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 $2.12 million provision for loan losses at the Bank during the fourth quarter. In contrast, the remaining six bank subsidiaries recorded a combined provision for loan losses of $9,000 during the fourth quarter. Premier's annual results were also negatively impacted by write-offs resulting from the Bank's investigation findings. Consolidated annual results total a loss from continuing operations of $9,617,000 or $1.84 per share. Robert W. Walker, Premier's President and CEO, commented, "While a decline from prior quarters, the fourth quarter provision for loan losses was necessary as we continue to work our problem credits at Farmers Deposit Bank. The local Bank board is engaged in weekly executive sessions to review the progress on these problem credits as the Bank seeks collection or a strengthening of the credit position of the loans. As a result, Premier's allowance for loan losses at year-end was 4.31% of total loans compared to 2.60% of total loans at the end of last year. We also hope to close the sale of our Citizens Bank affiliate late in the second quarter or early in the third quarter of 2004." Net interest income for the quarter ending December 31, 2003 totaled $4.480 million, a 4.1% decrease from the $4.671 million earned in the third quarter of 2003. The decrease was due in part to reversals of interest income related to loans placed on non-accrual status at the Bank. 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 December 31, 2003 totaled $3.717 million. This compares to $3.315 million in the third quarter of 2003 and $3.480 million in the fourth quarter of 2002. The increase in the fourth quarter is primarily related to increased professional fees associated with the Farmers investigation and the writedown of an OREO property to net realizable value. For the year, 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 December 31, 2003 of $622 million were 7.8% less than the $675 million of total assets at the prior year-end, largely due to the impact of the large provision for loan losses, the planned pay down of $17.4 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 $45.5 million equaled 7.3% of total assets at December 31, 2003. This compares to shareholders' equity of $56.1 million or 8.3% 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. Following is a summary of the financial highlights for Premier as of and for the periods ending December 31, 2003. PREMIER FINANCIAL BANCORP, INC. Financial Highlights Dollars in Thousands (except per share data) For the Year Ended Dec 31 Dec 31 2003 2002 (Restated) Interest Income 31,729 38,303 Interest Expense 12,547 17,465 Net Interest Income 19,182 20,838 Provision for Loan Losses 20,513 9,456 Net Interest Income after Provision (1,331) 11,385 Non-Interest Income 3,448 2,790 Securities Gains (Losses) 616 (73) Non-Interest Expenses 17,632 17,831 (Loss) from Continuing Operations Before Taxes (14,899) (3,729) Income Taxes (Benefits) (5,282) (1,522) (Loss) from Continuing Operations (9,617) (2,207) Loss from Discontinued Operations (80) (1,130) NET INCOME (LOSS) (9,697) (3,337) EARNINGS PER SHARE (1.85) (0.64) For the Quarters Ended Mar 31 June 30 Sept 30 Dec 31 2003 2003 2003 2003 (Restated) (Restated) (Restated) Interest Income 8,606 8,178 7,665 7,280 Interest Expense 3,505 3,248 2,994 2,800 Net Interest Income 5,101 4,930 4,671 4,480 Provision for Loan Losses 2,267 11,778 4,343 2,125 Net Interest Income after Provision 2,834 (6,848) 328 2,355 Non-Interest Income 710 798 899 951 Securities Gains (Losses) 189 15 2 410 Non-Interest Expenses 4,338 4,322 4,214 4,668 Loss from Continuing Operations Before Taxes (605) (10,357) (2,985) (952) Income Taxes (Benefits) (240) (3,578) (1,108) (356) Loss from Continuing Operations (365) (6,779) (1,877) (596) Income (Loss) from Discontinued Operations (27) (76) 21 2 NET INCOME (LOSS) (393) (6,855) (1,856) (594) EARNINGS PER SHARE (0.08) (1.31) (0.35) (0.11) PREMIER FINANCIAL BANCORP, INC. Financial Highlights (continued) Dollars in Thousands (except per share data) Balances as of December 31 December 31 2003 2002 (Restated) Cash/Due From Banks/Fed Funds 33,473 39,081 Investment Securities 147,646 144,698 Loans (net) 317,494 363,401 Other Real Estate Owned 3,187 3,505 Other Assets 25,613 24,368 Goodwill 15,816 15,816 Assets of Discontinued Operation 79,163 84,406 TOTAL ASSETS 622,392 675,275 LIABILITIES Deposits 455,474 477,724 Other Debt 18,307 32,600 Junior Subordinated Debentures 26,546 29,639 Other Liabilities 5,129 2,662 Liabilities of Discontinued Operation 71,396 76,526 TOTAL LIABILITIES 576,332 618,262 Stockholders' Equity 45,540 56,124 TOTAL LIABILITIES & STOCKHOLDERS' EQUITY 622,392 675,275 TOTAL BOOK VALUE PER SHARE 8.70 10.73 Summary of restatement effects on the operating results of Premier for the years ended December 31, (in thousands except per share data): 2003 2002 2001 Increase Increase Increase Operating statement caption (Decrease) (Decrease) (Decrease) --------------------------- ---------- ---------- ---------- Interest income, loans 108 (226) (139) Provision for loan losses (4,804) 2,981 1,566 Net interest income after provision for loan losses 4,912 (3,207) (1,705) Income (loss) from continuing operations before income taxes 4,912 (3,207) (1,705) Provision (benefit) for income taxes 1,670 (1,090) (580) Income (loss) from continuing operations 3,242 (2,117) (1,125) Net (loss) income 3,242 (2,117) (1,125) Net (loss) income per share, basic and diluted 0.62 (0.40) (0.22)