8-K

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 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 10, 2006

PREMIER FINANCIAL BANCORP, INC.

(Exact name of registrant as specified in its charter)

Kentucky	61-1206757
(State or other jurisdiction of incorporation organization)	(I.R.S. Employer Identification No.)
2883 Fifth Avenue Huntington, West Virginia	25702
(Address of principal executive offices)	(Zip Code)
Registrant’s telephone number (304) 525-1600

Not Applicable

Former name or former address, if changes since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2 below):

oWritten communication pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

oSoliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

oPre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act

(17 CFR 240.14d-2(b))

oPre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act

(17 CFR 240.13e-4(c))

PREMIER FINANCIAL BANCORP, INC,

INFORMATION TO BE INCLUDED IN THE REPORT

Item 2.03. Creation of a Direct Financial Obligation

On November 10, 2006, Premier Financial Bancorp, Inc. (“Premier”) executed and delivered to The Bankers’ Bank of Kentucky, Inc. of Frankfort, Kentucky (“Bankers’ Bank”) a Term Note and Business Loan Agreement dated November 10, 2006 in the principal amount of $6,500,000, bearing interest floating daily at the “Wall Street Journal” prime rate minus 1.00% (initially 7.25%) and requiring 83 monthly principal and interest payments of $100,000 and a final payment of any balance due at maturity on November 9, 2013. The note is secured by a pledge of Premier’s 100% interest in Citizens Deposit Bank and Trust, Inc. (a wholly owned subsidiary) and Premier’s 100% interest in Farmers-Deposit Bank, Eminence, Kentucky (a wholly owned subsidiary) under a Stock Pledge and Security Agreement dated November 10, 2006. The proceeds of this note were used in conjunction with $1,750,000 of the Company’s own cash to redeem the final $8,250,000 (330,000 shares) of Premier’s 9.75% Trust Preferred Securities on November 10, 2006.

In addition to the $6,500,000 Term Note, Premier executed and delivered to the Bankers’ Bank a Promissory Note whereby Premier may request and receive monies from Bankers’ Bank from time to time, but the aggregate outstanding principal balance under the Promissory Note at any time shall not exceed $3,500,000, and the right to request and receive monies from Bankers’ Bank hereunder shall cease and terminate on November 9, 2007. The outstanding principal balance under this Promissory Note shall bear annual interest floating daily at the “Wall Street Journal” prime rate minus 1.00% (initially 7.25%). Interest on this Promissory Note shall be due and payable on the 5th day of each, January, April, July and October during the term of this Promissory Note, and at the maturity date hereof. Any outstanding principal amount loaned to Premier under this Promissory Note, and not previously repaid, shall be due on November 9, 2007.  The Promissory Note is secured by the same collateral as the $6,500,000 Term Note.

Item 9.01.Financial Statements and Exhibits

(c) Exhibit 10.1 - Loan Agreement between Premier Financial Bancorp, Inc. and The Kentucky Bankers’ Bank, Inc. dated November 10, 2006.

(c) Exhibit 10.2 - Term Note between Premier Financial Bancorp, Inc. and The Kentucky Bankers’ Bank, Inc. dated November 10, 2006.

(c) Exhibit 10.3 - Promissory Note between Premier Financial Bancorp, Inc. and The Kentucky Bankers’ Bank, Inc. dated November 10, 2006.

(c) Exhibit 10.4 - Stock Pledge and Security Agreement between Premier Financial Bancorp, Inc. and The Kentucky Bankers’ Bank, Inc. dated November 10, 2006.

PREMIER FINANCIAL BANCORP, INC,

SIGNATURE

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 10, 2006Brien M. Chase, Vice President

   and Chief Financial Officer

EXHIBIT INDEX

Exhibit Number	Description
10.1	Loan Agreement between Premier Financial Bancorp, Inc. and The Kentucky Bankers’ Bank, Inc. dated November 10, 2006.
10.2	Term Note between Premier Financial Bancorp, Inc. and The Kentucky Bankers’ Bank, In.c dated November 10, 2006.
10.3	Promissory Note between Premier Financial Bancorp, Inc. and The Kentucky Bankers’ Bank, Inc. dated November 10, 2006.
10.4	Stock Pledge and Security Agreement between Premier Financial Bancorp, Inc. and The Kentucky Bankers’ Bank, Inc. dated November 10, 2006.

EX-10.1

EXHIBIT 10.1

LOAN AGREEMENT

This Loan Agreement is made and entered into as of the 10^th day of November, 2006, by and between THE BANKERS’ BANK OF KENTUCKY, INC., a Kentucky banking organization with main offices in Frankfort, Kentucky (“Bankers’”) and PREMIER FINANCIAL BANCORP, INC., a Kentucky corporation (“Borrower”) and a multi-bank holding company under the Bank Holding Company Act of 1956, as amended, for various banking organizations;

WHEREAS, the parties hereto have reached an understanding as to the lending of money by Bankers’ to Borrower which Borrower will use to retire in full existing Trust Preferred Securities and from time to time, for general corporate purposes.

NOW, THEREFORE, in consideration of the mutual representations, covenants and agreements and undertakings contained in this Agreement, which Borrower acknowledges Bankers’ is relying upon in granting, renewing, and making advances upon the Credit Facility referred to below, and for all the good and valuable consideration, Bankers’ and Borrower hereby agree as follows:

I.

Loan.

1. The Loan.

(a) Bankers’ agrees, on the terms and conditions set forth herein, to make a Credit Facility (“Facility”) in the maximum amount of Ten Million ($10,000,000) Dollars through the lending to Borrower of Six Million Five Hundred Thousand ($6,500,000) Dollars under that Term Note of even date herewith (“Term Note”) and the lending to Borrower from time to time of up to Three Million Five Hundred Thousand ($3,500,000) Dollars under that Promissory Note of even date herewith (“Promissory Note”) all in accordance with the terms hereof and the Stock Pledge and Security Agreement of even date herewith; provided, that the outstanding principal balance at any time through advances of funds under the Promissory Note shall not exceed $3,500,000 (the “Maximum Amount”).

(b) Advances by Bankers’ to Borrower under the Promissory Note shall be made by Bankers’ within three (3) business days after written request for an advance is received by Bankers’ from Borrower; provided, however, that any advance by Bankers’ shall be contingent and conditioned upon:

(i) receipt of a written Request for Advance by Bankers’ from Borrower, which shall state the amount requested to be advanced; and

(ii) no Default or Event of Default shall have occurred under this Agreement; and

(iii) no material adverse change shall have occurred with respect to the business, assets, or operations of Borrower or its subsidiaries which, in the sole discretion of the Bankers’, would adversely effect Borrower, its subsidiaries or their businesses; and

(iv) the amount requested to be advanced by Bankers’ to Borrower shall not cause or result in the outstanding amount owed under the Promissory Note to exceed the Maximum Amount.

1.2 Security.

The Credit Facility (including both the Term Note and the Promissory Note) to Borrower, including all costs, expenses and interest thereunder, shall be continuously secured by a first and prior pledge and security interest in a minimum of one hundred (100%) percent of (a) the outstanding shares of common capital stock, $1 par value, of Citizens Deposit Bank and Trust, Inc., Vanceburg, Kentucky (“Citizens”) and (b) the outstanding shares of common capital stock, $25 par value, of Farmers-Deposit Bank, Eminence, Kentucky (“Farmers”), and any other equity security of Citizens and Farmers as may be outstanding from time to time and as allowed under this Agreement, the Stock pledge and Security Agreement or the Term Note or the Promissory Note.

II.

Closing.

2.1 The Closing.

The closing (“Closing”) shall take place at ____ o’clock _M, local time, on November 10, 2006, at the main offices of Bankers’.

2.2 Documents at Closing.

At or prior to Closing, Borrower shall deliver to Bankers’ each of the following documents duly authorized, and executed, and in form acceptable to Bankers’:

(a) This Agreement;

(b) The Term Note and the Promissory Note (Exhibits “A” and “B”) evidencing the obligation of Borrower to Bankers’ pursuant to this Agreement;

(c) The Stock Pledge and Security Agreement attached hereto as Exhibit “C”, together with original Certificates representing the shares specified in Subsection 1.2 hereof, (clear of all liens and encumbrances) with duly executed stock powers;

(d) Certificates executed by Borrower affirming that, as of the date of Closing (i) the representations and warranties set forth herein are true, complete and accurate; (ii) Borrower is not in breach of any covenants contained herein; and (iii) no Event of Default has occurred or is existing;

(e) An Opinion of Counsel for Borrower dated the date of Closing in the form of Exhibit “D”, attached hereto and otherwise in form and substance satisfactory to Bankers’ in its sole discretion;

(f) A copy of the Articles of Incorporation of Borrower, Citizens and Farmers, and a copy of the By-Laws of each said Organization, certified by the Secretary of each of said Organizations to be true, complete and correct copies thereof, as of the date of Closing;

(g) Copies of Minutes of Borrower, certified by its Secretary, evidencing due and proper authorization for Borrower to enter into this Agreement, the Stock Pledge Agreement and Security Agreement, the Term Note and the Promissory Note and supplemental documents thereto and to engage in the acts and transactions specified therein;

(h) A Certificate of the Secretary of Borrower certifying the names of the officers authorized to execute and deliver this Agreement, the Note, the Stock Pledge and Security Agreement and other documents supplemental thereto and to which the Borrower is party, together with the true signatures of such officers so authorized;

(i) Borrower’s check in an amount sufficient too pay the costs of preparation of this Loan Agreement, supplemental documents and closing this loan transaction.

(j) Such other documents and instruments as Bankers’ may request to insure the binding effect in accordance with the terms thereof of any document supplemental to this Agreement, or to effect the intent of this Agreement.

2.3 Further Considerations to Closing.

The obligation of Bankers’ to enter into the Credit Facility and to make the loans under the Term Note and the Promissory Note at Closing is subject additionally to the following conditions:

(a) Accuracy of Representations: The representations and warranties made herein and in any document supplemental hereto shall be true and correct as of the date of Closing;

(b) Compliance of Covenants: There shall be no violation of, and no event or condition shall have occurred which could or would result in a violation of, any covenant or other provision contained in this Agreement, the Term Note and the Promissory Note, the Stock Pledge and Security Agreement, or any document supplemental hereto;

(c) Event of Default: No Event of Default shall have occurred or be continuing or be threatened as of the date of Closing;

(d) Satisfactory Financial Condition: Borrower’s financial condition and that of Bank, shall be satisfactory to Bankers’, in its sole discretion, as of Closing;

(e) Proceedings: All proceedings to be taken in connection with the transactions contemplated by this Agreement and all documents instrumental thereto, shall be satisfactory in form and substance to Bankers’ and their counsel, in Bankers’ sole and absolute discretion.

III.

Representations and Warranties.

To induce Bankers’ to enter into this Agreement, Borrower makes the following representations and warranties as of the date hereof, and, except where specified, to be effective and true at all times throughout the term of this Agreement, which shall survive the Closing and shall be deemed to be restated each time Borrower delivers documents or reports required hereby pursuant to this Agreement or receives an advance of funds under the Promissory Note:

3.1 Organization:

(a) Borrower is a corporation duly organized and validly existing under the laws of the Commonwealth of Kentucky, has paid all fees due and owing to the Office of the Kentucky Secretary of State, and has delivered to that Office its most recent Annual Report as required, has never filed Articles of Dissolution, has the requisite power and authority (corporate and otherwise), to own its property and conduct its business as such business presently is being conducted, and is qualified and in good standing as a foreign corporation in all jurisdictions where such qualification is required. Borrower maintains its principal office at 2883 Fifth Avenue, Huntington, West Virginia, 25702. Borrower is authorized to become a bank holding company and is duly registered by the Board of Governors of the Federal Reserve System under the Bank Holding Company Act of 1956, as amended, and the regulations promulgated thereunder. Borrower owns all of the outstanding shares of stock of Citizens and Farmers.

(b) Citizens is a Kentucky banking organization, validly existing under the laws of the Commonwealth of Kentucky, has paid all fees due and owing to Kentucky and/or regulatory entities and agencies, has never filed Articles of Dissolution, is a member in good standing of the Federal Deposit Insurance Corporation, is not subject to any Order, Memorandum or Letter of Agreement with any bank regulatory agency, and has all requisite power and authority (corporate or otherwise) to own its assets and to conduct its business as such business is presently being conducted. Citizens does not own any property or carry on any activities that do or will require it to qualify to do business as a foreign organization in any state other than Kentucky. Citizens presently has authorized, and has issued and outstanding 559,800 shares of Common Capital Stock, $1 par value. All of such outstanding shares have been duly and validly issued, are fully paid and non-assessable, have not been issued in violation of any person’s pre-emptive rights and no options, rights or agreements to issue shares of Citizens exist. Citizens has no subsidiaries.

(c) Farmers is a Kentucky banking organization, validly existing under the laws of the Commonwealth of Kentucky, has paid all fees due and owing to Kentucky and/or regulatory entities and agencies, has never filed Articles of Dissolution, is a member in good standing of the Federal Deposit Insurance Corporation, is not subject to any Order, Memorandum or Letter of Agreement with any bank regulatory agency (except for a Board Resolution entered into on October 30, 2006, at the direction of the Federal Deposit Insurance Corporation), and has all requisite power and authority (corporate or otherwise) to own its assets and to conduct its business as such business is presently being conducted. Farmers does not own any property or carry on any activities that do or will require it to qualify to do business as a foreign organization in any state other than Kentucky. Farmers presently has authorized, and has issued and outstanding 18,750 shares of Common Capital Stock, $25 par value. All of such outstanding shares have been duly and validly issued, are fully paid and non-assessable, have not been issued in violation of any person’s pre-emptive rights and no options, rights or agreements to issue shares of Farmers exist. Farmers has no subsidiaries.

3.2 Authorization. Borrower has full right, power and authority to execute and deliver this Agreement, the Term Note and Promissory Note, Stock Pledge and Security Agreement and other documents supplemental thereto, and to consummate the transactions contemplated hereby and thereby, and such actions have been duly and validly authorized by all necessary corporate actions. The documents executed by Borrower will be valid, legal and binding obligations, enforceable and in accordance with their respective terms.

3.3 Financial Statements. Borrower has delivered to Bankers’ audited financial statements for Borrower, consolidated with its subsidiaries for the twelve month period ended December 31, 2005, and they are hereby certified by Borrower to be complete and accurate in all respects. (“Financial Statements”). To the best of Borrower’s knowledge, after good faith investigation, the Financial Statements fairly present the financial condition of Borrower and any banks owned by Borrower, respectively, as of the date stated, and have been prepared in conformity with Generally Accepted Accounting Principals applied on a consistent basis for such periods.

3.4 Taxes. Borrower and all of its subsidiaries have filed all tax returns which are required to be filed and each such party has paid, or has made adequate provision for the payment of, all taxes which are, or may become, due pursuant to such returns or to assessments received by each of them and neither of them has been advised of or is aware of any deficiency with respect to any such periods which has not been paid or settled except for a deficiency of approximately $56,000 which is being contested.

3.5 Litigation. There are no actions or proceedings pending, or to the knowledge of Borrower, threatened, against or effecting Borrower or its subsidiaries, or any of the rights or properties of any of them in any Court or before any governmental authority, or in any other forum, which involve the possibility of materially or adversely affecting Borrower’s, or its subsidiaries, their respective businesses, properties or rights, or the ability of Borrower to comply with the provisions of this Agreement and the documents supplemental hereto, and neither Borrower nor its subsidiaries is in default with respect to any Order or directive of any Court or governmental authority.

3.6 Compliance with Instruments. Neither Borrower nor its subsidiaries are, to the extent applicable, in default under or violating:

(a) Any provisions of their respective Articles of Incorporation or By-Laws; or

(b) Any indenture, agreement, deed, lease, loan agreement, note or other instrument to which it is a party or is bound or to which it or its assets is subject. Neither the execution or delivery of this Agreement, the Term Note and Promissory Note, or the documents supplemental thereto, nor the consummation of the transactions contemplated therein, nor compliance with the terms, conditions or provisions thereof, will (i) conflict with or result in the breach of, or constitute a default under, any of the foregoing, (ii) result in the creation of any lien or encumbrance upon the assets of Borrower or its subsidiaries, other than the lien created thereby, or (iii) violate, or cause Borrower or its subsidiaries to violate, any statute, law, rule, regulation, interpretation or ordinance of any governmental authority. No Event of Default, or condition which could reasonably result in an Event of Default, has occurred or is continuing.

3.7 Enforceability. No registration with, notice to, consent or approval of any third party, including any governmental agency of any kind, is required for the due execution and delivery, or the enforceability of, this Agreement, or the documents supplemental hereto, or for the consummation of the loan transactions specified herein.

3.8 Disclosure. Neither this Agreement, nor the Financial Statements referred to in Section 3.3 hereof, nor any other document, certificate or statement referred to herein, or furnished to Bankers’ by or on behalf of Borrower in connection herewith contains any untrue statement of a material fact or omits to state a material fact necessary in order to make the statements contained herein and therein not misleading. There is no fact which does or may materially or adversely effect the business, operations, affairs, prospects or condition of Borrower or its subsidiaries, or any of the properties or assets of any of them, which has not been specifically identified in this Agreement or in the Financial Statements.

3.9 Special Contracts. Except as specified in Attachment 3.9, there are no contracts or agreements of Borrower or Citizens or Farmers, which:

(a) Require any of them to repurchase any assets previously sold by them except for repurchase agreements entered into in the ordinary course of business; or

(b) Obligate Borrower beyond one year or in an amount greater than Five Hundred Thousand ($500,000) Dollars; or

(c) Obligate Citizens or Farmers beyond one year or in an amount greater than One Hundred Thousand ($100,000) Dollars; or

(d) Are otherwise material to the business of any of them.

3.10 Title to Shares and Assets. Except as specified on Attachment 3.10, Borrower and Citizens and Farmers have good and marketable title to all their assets and property. None of the Shares of Citizens or Farmers covered by this Agreement are subject to any lien, charge, pledge, encumbrance, claim or security interest other than Bankers’ created hereby, nor are those shares subject to a voting trust or any other agreement or understanding which effects the ability of Borrower to vote or dispose of them. Other than liens or encumbrances permitted hereunder, there are no liens or encumbrances existing with respect to any assets of Borrower or Citizens or Farmers, except as specified on Attachment 3.10.

3.11 Compliance with Laws. Borrower and Citizens and Farmers are in compliance with all applicable governmental, occupational safety and health, workers compensation laws and regulations applicable to the conduct of their business and the ownership of their properties and they have obtained such licenses, permits, and governmental authorizations as are necessary to the carrying on of their businesses.

3.12 Use of Proceeds. Borrower shall use the proceeds of the Term Note solely and exclusively to retire all of the trust preferred securities Borrower has outstanding. Borrower shall use the proceeds of the Promissory Note for general corporate purposes (not including retiring trust preferred securities).

3.13 Loans and Allowance for Loan and Lease Losses. Each of the allowances for possible loan and lease losses and any allowance for real estate owned for Citizens and Farmers is adequate (i) in all material respects to provide for all known and anticipated losses of each of them and (ii) in all material respects under the requirements of GAAP and standard banking practice to provide for possible losses, net recoveries relating to loans and leases previously charged off, on loans outstanding, lease receivables or real estate owned by them (including, without limitation, accrued interest receivable).

3.14 Repurchase Agreements. With respect to all repurchase agreements to which Borrower, Citizens or Farmers is a party, (i) where either Borrower, Citizens or Farmers has the obligation to sell securities, it has a valid, perfected first lien or security interest in the government securities or other collateral securing the repurchase agreement, and the value of the collateral securing each such repurchase agreement equals or exceeds the amount of the debt secured by such collateral under such agreement, and (ii) where either Borrower, Citizens or Farmers has the obligation to buy securities, the value of the collateral securing such obligation does not materially exceed the amount of the obligation.

3.15 Absence of Changes. Except as specified on Attachment 3.15, since December 31, 2005, the business of Borrower and its subsidiaries has been conducted in the ordinary course of business and none of said entities has otherwise:

(a) experienced or suffered any material adverse change in their assets, revenue or business;

(b) borrowed or agreed to borrow any funds or incurred, or become subject to, any other absolute or contingent obligation or liability, or guaranteed any liabilities or obligations of any other person;

(c) created any encumbrance with respect to its properties, business or assets;

(d) sold, pledged, transferred or otherwise disposed of, or agreed to sell, transfer or otherwise dispose of any portion of its assets, properties or rights, except in the ordinary course of business;

(e) incurred or become subject to any claim or liability for any damages which could have a material adverse effect on it, for negligence or any other tort, or for breach of contract;

(f) entered into any contract other than in the ordinary course of business;

(g) forgiven or canceled any debts or claims, or waived or permitted to lapse any rights, other than in the ordinary course of business; or

(h) committed any act or omitted to do any act which would cause a breach of any contract to which it is a party or by which it is bound on the date hereof, which breach may reasonably result in a material adverse effect.

3.16 Environmental Matters. Except as specified on Attachment 3.16, apart from non-compliance which could not have a material adverse effect, Borrower, Citizens and Farmers have complied, and are currently in compliance, with all Environmental Laws, and neither of Borrower, Citizens or Farmers, nor any assets at any time owned, leased, operated or held as collateral by any of them is or has been (to their knowledge) in violation of any Environmental Laws. There are (to the knowledge of Borrower, Citizens or Farmers) no locations at any real estate or facilities now or heretofore owned, leased, operated or held as collateral by them or at which they have disposed of (or arranged for the disposal of) hazardous materials, where hazardous materials have caused conditions in the environment that require or required remedial action in order to comply with Environmental Laws, or the common law of nuisance, or which locations are the subject of any governmental body enforcement action or other investigation under any Environmental Laws, which may lead to any material adverse consequences for Borrower, Citizens or Farmers.

3.17 ERISA. Each employee benefit plan, including these defined in Section 3(3) of ERISA, which is maintained by Borrower, Citizens or Farmers for the benefit of their employees is in compliance with all applicable requirements of ERISA, the Internal Revenue Code and other applicable laws. No Reportable Event within the meaning of Section 4043 of ERISA has occurred and is outstanding with regard to any such employee benefit plan.

3.18 Contract Status. Borrower, Citizens or Farmers is not in default under any contract, entered into in the ordinary course of business or otherwise, which default is reasonably likely to result in a material adverse effect with respect to Borrower, Citizens or Farmers.

3.20 Full Disclosure. None of the representations, warranties and statements of Borrower made in this Section III or in any other provisions of this Agreement contains any untrue statement of a material fact or omits to state a material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading.

IV.

Covenants.

Borrower covenants that so long as this Agreement is in effect and until all obligations of Borrower to Bankers’ have been paid or satisfied in full, Borrower shall comply with the following covenants and shall take all necessary and appropriate action to cause its subsidiaries, as applicable, to so comply and therefore, warrants and agrees to their respective compliance with the following covenants:

4.1 Financial Statements and Other Information. If not available through electronic media, within the time frames specified, Borrower shall furnish to Bankers’ (i) copies of all Call and other Reports submitted by them to any Federal regulatory agency having or claiming supervisory authority over Borrower, Citizens or Farmers, promptly after such reports are submitted; (ii) if not included within the reports described in Subsection (i) of this sentence, copies, at least quarterly within forty-five (45) days after the end of each fiscal quarter of Citizens or Farmers, of the reports submitted to any federal agency which disclose the “average daily assets” and the “average net outstanding loans” of Citizens and Farmers, or if no reports containing such information are so submitted, a calculation in reasonable detail of such amounts certified as correct by their Chief Executive Officer(s) and Chief Financial Officer(s); (iii) as soon as practicable, and in any event within ninety (90) days after the end of each fiscal year, an annual audit, including an audit of the balance sheet of Borrower on a consolidated basis with its subsidiaries, as of the end of the applicable fiscal year, and related audited statements of operations, changes in stockholders’ equity and cash flows for such years, setting forth in comparative form the figures for such fiscal year and the prior fiscal year, prepared in reasonable detail, and in conformity with Generally Accepted Accounting Principles accompanied by an opinion of Borrower’s Certified Public Accountants stating such facts, it being agreed that Bankers’ personnel shall have the right to on site review of the management report of such accounting firm to the Board of Directors of Borrower; and (iv) with reasonable promptness, such other information concerning the business affairs and financial condition of Borrower and its subsidiaries as Bankers’ may reasonably request.

In conjunction with Borrower’s delivery of the information specified above, Borrower shall also submit a Certificate stating that there exists no Event of Default under this Agreement at the time of delivery. Borrower will, and will cause Citizens and Farmers, upon obtaining knowledge of an Event of Default, or any facts or events which could reasonably lead to an Event of Default hereunder, to deliver within three (3) days of obtaining such knowledge to Bankers’ a Certificate specifying the nature thereof, the period of existence thereof, and what action has been taken or is proposed to be taken with respect thereto.

4.2 Financial Records and Assets. Borrower and its subsidiaries shall: (i) keep true and complete financial records in accordance with Generally Accepted Accounting Principles consistently applied; (ii) maintain and make readily available to Bankers’ the books and records of each of them at their principal offices; and (iii) permit authorized representatives of Bankers’ to visit and inspect their respective properties and books and records, upon reasonable notice, and to discuss said matters with their respective officers and directors at reasonable times.

4.3 Insurance. Borrower, Citizens and Farmers shall each procure, maintain and carry in full force and effect general liability, public liability, workmens’ compensation liability and property damage insurance with respect to their respective operations to such extent, in such amounts and with such deductibles as are commonly carried by prudent businesses similarly situated, and shall cause Citizens and Farmers to obtain and maintain “standard bankers bond insurance” protecting it from loss.

4.4 Obligations. Borrower and its subsidiaries, respectively, shall pay in full, and when due, all taxes, assessments, governmental charges and levies (except those being contested in good faith) and all obligations for, or on account of, borrowed funds.

4.5 Corporate Existence. Borrower and its subsidiaries will do or cause to be done all things necessary to preserve in good standing and keep in full force and effect the corporate existence and rights and franchises of Borrower and its subsidiaries, and to comply with all applicable laws and regulations applicable to them.

4.6 Maintenance of Properties. Borrower, Citizens and Farmers will maintain in good repair, working order and condition all property owned by them or used in their businesses.

4.7 Disclosure. Borrower and its subsidiaries shall promptly notify Bankers’ of any fact or event, including the institution of any litigation, investigation or proceeding, which could reasonably have a material adverse effect upon the businesses or assets of any of them, or their subsidiaries, and shall provide prompt notice to Bankers’ of any default by any of them under any obligation, deed, indenture, liability, indebtedness, agreement, contract or note or other instrument or document to which any of them is a party, of any breach or failure of any covenant made herein, and of any proceeding, investigation, order, judgment, memorandum or letter of agreement against Borrower or its subsidiaries affecting or relating to any property or business of Borrower or its subsidiaries in any material adverse respect.

4.8 Performance Agreements. Unless disputed in good faith, Borrower and its subsidiaries shall comply with all their respective agreements and obligations to and with all parties, and will not permit any event or fact to exist which could have a material adverse effect upon their businesses or assets.

4.9 Compliance with Laws. Borrower and its subsidiaries shall comply with all applicable material laws, regulations and orders, so long as the applicability thereof is not being continuously and promptly contested in good faith, but in any event, each shall promptly advise Bankers’ of any such contest, and the pertinent facts applicable thereto.

4.10 Use of Proceeds. Borrower shall not, directly or indirectly, use any part of the Credit Facility provided for under this Agreement for any purpose other than as provided for herein.

4.11 Loan to Officers and Directors. Borrower shall cause Citizens and Farmers to be in continuous compliance with, and shall not violate, the provisions of Regulation O as promulgated by the Federal Reserve Board of Governors.

4.12 Dividend and Stock Ownership Restriction. Citizens and Farmers may pay, declare or make any dividend payments during any calendar year during the term of this Agreement in compliance with both federal and Kentucky law; provided, however, that at no time shall Borrower’s outstanding obligations to Bankers’ under this Credit Facility exceed seventy-five (75%) percent of the combined equity of Citizens and Farmers. So long as this Agreement is in effect, neither Citizens nor Farmers shall return any capital to their stockholders as such or make any distribution of assets to their stockholders, and neither Citizens nor Farmers shall create or issue any new shares of any class of stock without prior written consent of Bankers’. Borrower will continue to own l00% of the outstanding capital stock of Citizens and Farmers, all of such shares of Citizens and Farmers to be free and clear of all liens, encumbrances or any cloud of title whatsoever, except as granted to Bankers’ hereunder. Bankers’ shall continue to hold and own a first priority security interest in and to one hundred (100%) percent of the issued and outstanding capital stock of Citizens and Farmers. Citizens and Farmers shall issue no additional capital stock without the prior written consent of Bankers’.

4.13 Limitation of Debt or Stock Issuances. Borrower shall not incur debt except in the ordinary course of its business. Neither Citizens nor Farmers shall issue bonds, debentures, trust preferred securities, capital or other notes, or debt of similar nature. Farmers and Citizens shall be permitted to borrow from the Federal Home Loan Bank on a short and/or long term basis in the ordinary course of business.

4.14 Limitation on Encumbrances. Neither Borrower nor its subsidiaries will directly or indirectly, subordinate to any other person the payment of any indebtedness owed by any person to any of them, nor, except as specified on Attachment 3.10, shall they incur, create, assume or suffer to exist, any pledge, lien or encumbrances upon any properties or assets owned by any of them, except for security interest held by Bankers’, but so long as no other provision of this Loan Agreement and the documents supplemental hereto is violated, the following are permitted:

(a) Mechanics, materialmens, carriers and other similar liens incurred in the ordinary course of business; and

(b) Liens of taxes or assessments not at the time due, or the liens of taxes or assessments already due, but the validity of which is being contested in good faith and which adequate reserves have been established; and

(c) Judgment liens, so long as the finality of such Judgment is being contested in good faith and execution thereon is stayed; and

(d) Easements, zoning restrictions or similar defects, encumbrances or restrictions the existence of which does not impair the use of the property subject thereto; and

(e) Actions appropriate under customary banking practices in dealing with past-due “work-out” loans.

4.15 Contingent Liabilities. Except for customary actions and procedures under the Gold Medallion Guaranty Program, neither Borrower nor its subsidiaries will guarantee or become a surety for or otherwise become contingently liable for any obligations of any other person.

4.16 Lease Obligation. Except as specified on Attachment 4.16, without Bankers’ prior written consent, which shall not be unreasonably withheld by Bankers’, neither Borrower, Citizens nor Farmers will enter into any arrangements with any person involving the leasing by one or either of them of any real or personal property or interest therein which requires payment with respect to Borrower in excess of Five Hundred Thousand ($500,000), in the aggregate, or with respect to either Citizens or Farmers in excess of One Hundred Thousand ($100,000) Dollars in aggregate in any calendar year.

4.17 Subsidiaries. Except as presently existing, neither of Borrower, Citizens nor Farmers shall create or acquire any subsidiaries without Bankers’ prior written consent, which shall not be unreasonably withheld.

4.18 Amendment to Articles or By-Laws. Neither Citizens nor Farmers will amend their respective Articles of Incorporation or any material provisions of their By-Laws, without the prior written consent of Bankers’.

4.19 Transactions with Affiliates. Neither Borrower, Citizens nor Farmers shall make any advances to, or enter into any contract or agreement material to the business of either of them, with any affiliate, other than in the ordinary course of banking business, without the prior written consent of Bankers’, which shall not be unreasonably withheld.

4.20 Sale of Assets, Merger, Dissolution. Neither Borrower, Citizens nor Farmers shall dispose of all or substantially all their assets, or any portion of their assets which are material to either of them, their business operations or their financial condition, except in the ordinary course of business. None of them shall purchase all or substantially all of the assets of any person, purchase, create or acquire any interest in any other enterprise or entity, liquidate, dissolve, consolidate or merge with any other person or effect a split, reverse split, recapitalization, reorganization, reclassification or take any similar corporate action without the prior written consent of Bankers’.

4.21 Financial Condition. The financial condition of Borrower, Citizens and Farmers, shall at all times be acceptable to Bankers’, in its sole discretion.

4.22 Hazardous Waste. Except as specified at Attachment 3.16, neither Borrower nor its subsidiaries have or will permit to be stored or released or discharged upon, in or under any premises or property owned or leased by them, any toxic materials or hazardous substance as defined under applicable federal and state law; nor do either of them have any knowledge of the prior storage of any such substance or material in, on or under any of their respective properties, nor do either of them have any knowledge of any environmental spill, damage or release or any environmental lien on any of their respective properties.

4.23 Conduct of Business in Ordinary Course. Without in any way limiting or otherwise altering the terms, promises, covenants and agreements contained herein, Borrower nor its subsidiaries shall not engage in any transaction other than in good faith in the ordinary course of business.

4.24 Regulatory Proceedings. Borrower shall notify Bankers’ in writing within three (3) business days should Borrower, Citizens, or Farmers become subject to any Order, Memorandum, Letter of Agreement or any proceeding instituted by any governmental regulatory agency having jurisdiction over any of them. Upon such notice, Borrower shall provide Bankers’ with a plan of action addressing any such proceeding within 90 calendar days of the effective date of the proceeding. Furthermore, Borrower shall provide updates as to the progress toward achieving satisfactory resolution of any such proceeding within 30 days of each March 31, June 30, September 30 and December 31 of each year during the term of this Loan Agreement and such information pertaining to the proceedings as Bankers’ may request at any time.

4.25 Financial Status. Citizens and Farmers shall maintain at the end of each fiscal quarter a ratio of Tier 1 Capital to Risk Based Assets and a ratio of Total Qualifying Capital to Risk Based Assets, in amounts to qualify as, and meet the criteria of, “well capitalized” as specified and defined by the Federal Deposit Insurance Corporation.

4.26 Return on Assets. Citizens shall maintain a rate of Net Income to Total Assets of a minimum of .75 percent for each fiscal year this Credit Facility is in effect. Farmers shall maintain such a ratio of 0.5 percent for fiscal year 2007, 0.6 percent for fiscal year 2008, and .75 percent for each fiscal year thereafter that this Credit Facility is in effect.

4.27 Loan Loss Reserve. Each of Citizens and Farmers shall, at all times, maintain an adequate loan loss reserve to provide for all of its known and anticipated losses and adequate under the requirements of GAAP and standard banking practices. Adequacy shall be calculated using the methodology determined by Citizens and Farmers and approved by their Boards of Directors and validated by their primary bank regulatory agency. The reserve shall be at least equal to the lowest amount calculated to be adequate under their methodology and shall be reported promptly to Bankers’ as of December 31, March 31, June 30 and September 30 of each year.

4.28 Designation of Loans as Non-Accruing. Citizens and Farmers shall place each loan made by either of them or in which they have purchased a non-recourse participation interest on a non-accrual basis on their books and records in accordance with the requirements and guidelines of the governmental body having jurisdiction over Citizens and Farmers.

4.29 Non-Performing Loans.

(A) Citizens shall not permit the sum of (i) its aggregate unpaid principal and accrued interest on loans and leases or in which it has purchased a non-recourse participation and which is more than ninety (90) days past due, (ii) the aggregate of its unpaid principal and accrued interest on loans and leases or in which it has purchased a non-recourse participation and which have been placed in a non-accrual basis and (iii) the value on its books of other real estate owned as determined by reference to its most recent quarterly report of condition and income, to exceed (a) as of any two consecutive fiscal year ends 2% of the total loans and leases made by Citizens or in which it has purchased a non-recourse participation, net of unearned income or (b) as of its fiscal year ends, 5% of the total loans and leases made by Citizens or in which it has purchased a non-recourse participation, in each case net of unearned income.

(B) Farmers shall not permit the sum of (i) its aggregate unpaid principal and accrued interest on loans and leases or in which it has purchased a non-recourse participation and which is more than ninety (90) days past due, (ii) the aggregate of its unpaid principal and accrued interest on loans and leases or in which it has purchased a non-recourse participation and which have been placed in a non-accrual basis and (iii) the value on its books of other real estate owned as determined by reference to its most recent quarterly report of condition and income, to exceed as of its fiscal year ending December 31, 2006, 6.5% of the total loans and leases made by Farmers or in which it has purchased a non-recourse participation, in each case net of unearned income. Further, with respect to the fiscal year ending December 31, 2007, this percentage shall decrease to 6% and with respect to the fiscal year ending December 31, 2008, this percentage shall decrease to 5%. Thereafter, this percentage shall remain below 5.0% with respect to each calendar quarter-end.

4.30 Principal Office. Borrower shall not change its principal office, or that of Citizens or Farmers, without Bankers’ written consent, which shall not be unreasonably withheld by Bankers’.

V.

Events of Default

Each of the following shall constitute an Event of Default under this Agreement (whether the occurrence of same shall be voluntary or involuntary or come about or be effected by operation of law or pursuant to or in compliance with any judgment, decree or order of any court or any order, rule or regulation of any governmental body):

5.1 Payments. Failure to make payment of the principal of, or interest or cost upon, the Term Note or the Promissory Note within ten (10) days after the due date of such payment.

5.2 Covenants and Agreements. If any covenant or agreement required pursuant to this Agreement, the Term Note and Promissory Note, the Stock Pledge or Security Agreement or any other documents supplemental thereto, (other than as referred to in Section 5.1 above) to be kept or performed by Borrower or its subsidiaries, shall not be kept or performed and such failure or breach shall not be remedied within the time period, if any, provided in any such loan document; provided that in the case of a breach of any provision of this Loan Agreement, such failure or breach shall not be remedied within thirty (30) days after Bankers’ provides Borrower with notice of such breach. Borrower shall be strictly liable and accountable for any such default by such other person specified.

5.3 Other Obligations. If any default shall be made in the due and punctual payment or performance of any of the other obligations of Borrower or its subsidiaries other than the Agreement, the Term Note or the Promissory Note or the Stock Pledge and Security Agreement, and such default shall not be remedied within thirty (30) days after the date for such payment and/or performance.

5.4 Representations and Warranties. If any representation or warranty contained herein shall be untrue at the time when made or during the terms of this Agreement.

5.5 Judgments and Liens. If a final judgment or judgments for the payment of money in excess of the sum of Two Hundred Fifty Thousand ($250,000) Dollars in the aggregate shall be rendered against either Borrower, Citizens or Farmers and such judgment or judgments shall remain unsatisfied and in effect and shall not have been discharged by the last to occur of: (i) the expiration of thirty (30) consecutive days after the entry thereof, if execution thereon shall not have been stayed pending appeal, or (ii) if so stayed, thirty (30) days after the expiration of such stay; or if a lien or notice of lien is filed against any of Borrower’s, Citizens’ or Farmers’ assets (other than a lien of ad valorem taxers not yet due and payable or any mechanics’ or materialmen or suppliers’ lien filed pursuant to applicable law for monies not yet due and payable), and the same is not released within twenty (20) days after the filing thereof.

5.6 Solvency. If Borrower or any banking subsidiary of Borrower, as applicable, shall (a) discontinue business; or (b) make a general assignment for the benefit of creditors; or (c) apply for or consent to the appointment of a receiver, trustee or liquidator of all or a substantial part of their assets; (d) be adjudicated bankrupt or insolvent; or (e) file a voluntary petition in bankruptcy or file a petition or answer seeking reorganization or an arrangement with creditors to seek to take advantage of any other law (whether federal or state) relating to relief from debtors, or admit (by answer, default or otherwise) the material allegations of any involuntary petition filed against it in any bankruptcy, reorganization, insolvency or other proceeding (whether federal or state) relating to relief from debtors; or (f) suffer the filing of any involuntary petition in any bankruptcy, reorganization, insolvency or other proceeding (whether federal or state), if the same is not dismissed within thirty (30) days after the date of such filing; or (g) suffer or permit any judgment, decree or order entered by a court or governmental agency of competent jurisdiction which assumes control of any of them or approves a petition seeking reorganization, composition or arrangement of any of them or any other judicial modification of the rights of any of their respective creditors, or appoints a receiver, trustee or liquidator for any of them or for all or a substantial part of any of the businesses or assets of any of them; or (h) be enjoined or restrained from conducting all or a material part of any of the businesses as then conducted and the same is not dismissed and dissolved within thirty (30) days after the entry thereof.

5.7 Impairment of Permits, Security of Payment. If Borrower, Citizens or Farmers shall fail to seek, gain, obtain, and retain all licenses, permits and all other approvals of any governmental agency or other person necessary to continue their respective businesses.

5.8 Borrower Impairment. If Bankers’, at any time in good faith, shall deem itself insecure or shall determine that a substantial likelihood exists that Borrower will be unable to repay the Credit Facility in accordance with its terms, or perform the other obligations of Borrower to Bankers’ arising under this Agreement or any other document supplemental hereto.

5.9 Change of Control. If Borrower, Citizens or Farmers experiences a Change of Control as defined by applicable laws and regulations of federal and state agencies.

VI.

Rights and Remedies Upon Default.

Notwithstanding any contrary provision or inference herein or elsewhere:

6.1 Bankers’ Right to Declare Default in its Sole Discretion. If any Event of Default referred to in this Agreement entitled “Events of Default”, except for Section 5.6 of that Article, shall occur or begin to exist, Bankers’ may declare the Credit Facility, including the Term Note and the Promissory Note, and each or all of the other obligations of the Borrower to Bankers’ to be, whereupon the same shall be, immediately due and payable in full, all without any presentment, demand or notice of any kind, all of which are hereby expressly waived by Borrower; and

6.2 Automatic Default. If any Event of Default referred to in Section V of the Article of this Agreement entitled “Events of Default” shall occur, the Credit Facility, and all of Borrower’s other obligations to Bankers’ shall thereupon become immediately due and payable in full, all without presentment, demand or notice of any kind, all of which are hereby expressly waived by Borrower; and

6.3 Enforcement. Immediately upon a declaration of a Default pursuant to Section 6.1 of this Article or the occurrence of an Event of Default resulting in automatic Default pursuant to Section 6.2 of this Article, Bankers’ may exercise any and all rights at law or in equity to realize upon the security afforded herein or under any other loan document, including without limitation, the security secured pursuant to the Stock Pledge and Security Agreement, the right to seize any collateral securing the Credit Facility and the right to commence proceedings for the foreclosure upon and sale of any or all of the collateral in any sequence or order whatsoever and to pursue all remedies afforded under the terms of any Loan Document; and

6.4 Right of Set-Off. If any Event of Default or default conditions shall occur or begin to exist, Bankers’ shall have the right then, or any time thereafter, to set off against, and to appropriate and apply toward the payment of the unpaid principal of and accrued and unpaid interest on the Term Note and/or the Promissory Note, in such order as Bankers’ may select in its sole and absolute discretion, whether or not the Term Note and/or the Promissory Note shall then have matured or be due and payable and whether or not Bankers’ has declared the Term Note or the Promissory Note to be in default and immediately due and payable, any and all deposit balances, other sums, indebtedness and other property then held or owed by Bankers’ or for the credit or account of Borrower, and in and on all of which Borrower hereby grants Bankers’ a first priority security interest and lien to secure the payment of the Note, all without notice to or demand upon Borrower or any person, all such notices and demands being hereby expressly waived.

6.5 Rights Cumulative. All of the rights and remedies of Bankers’ upon occurrence of an Event of Default hereunder shall be cumulative to the greatest extent permitted by law and shall be in addition to all those rights and remedies afforded Bankers’ at law or in equity or bankruptcy.

VII.

Miscellaneous

7.1 Courses of Dealing; No Waiver. No course of dealing in respect of, nor any omission or delay in the exercise of, any right, power, remedy or privilege by Bankers’ shall operate as a waiver thereof, nor shall any right, power, remedy or privilege of Bankers’ be exclusive of any other right, power, remedy or privilege referred to herein or in any related document, or now or hereafter available at law, in equity, in bankruptcy, by statute or otherwise. Each such right, power, remedy or privilege may be exercised by Bankers’, either independently or concurrently with others, and as often and in such order as Bankers’ may deem expedient. Bankers’ shall not be deemed to have waived any rights under this Agreement, unless such waiver is given in writing and signed by Bankers’. No delay or omission on the part of Bankers’ in exercising any right shall operate as a waiver of such right or any other right. A waiver by Bankers’ of a provision of this Agreement shall not prejudice or constitute a waiver of Bankers’ right otherwise to demand strict compliance with that provision or any other provision of this Agreement. No prior waiver by Bankers’, nor any course of dealing between Bankers’ and Borrower, shall constitute a waiver of any of Bankers’ rights or of any of Borrower’s obligations as to any future transactions. Whenever the consent of Bankers’ is required under this Agreement, the granting of such consent by Bankers’ in any instance shall not constitute continuing consent to subsequent instances where such consent is required and in all cases such consent may be granted or withheld in the sole discretion of Bankers’.

7.2 No Oral Amendment. No amendment or modification of any provision of the Loan Agreement, Note, Stock Pledge and Security Agreement, or documents supplemental thereto, nor consent to any departure by any party therefrom, shall be binding and effective unless the same shall be in writing and signed by Bankers’, which writing shall be strictly construed.

7.3 Indemnification. Borrower agrees to indemnify Bankers’, and to defend and hold harmless Bankers’, its affiliates, officers, directors, employees and agents from, all claims, demands, causes of action, damages, settlement costs and/or expenses (including without limitation, attorneys’ fees of counsel selected by Bankers’ to defend) which arise out of or in any way connected with the making, maintenance or collection of the Credit Facility (including without limitation, claims, demands, causes of action, damages, settlement costs and/or expenses resulting from or involving the Borrower’s or its subsidiaries, acts or omissions, and which are asserted by a third party). This Agreement and all obligations provided for by this Section 7.3 shall survive the termination or cancellation of this Agreement. All amounts due pursuant to these provisions shall constitute a part of the Credit Facility, payable upon demand, and until all such amounts are paid, interest shall accrue at the rate set forth in the Term Note and Promissory Note as applicable to overdue payments of the principal and/or interest.

7.4 Time of Essence. Time shall be of the essence in the performance of all of the obligations of Borrower.

7.5 Successors. The provisions of this Loan Agreement shall bind and benefit Borrower and Bankers’, and the respective heirs, successors, legal representatives and assigns of each of them, including each subsequent holder, if any, of the Term Note and Promissory Note.

7.6 Captions. The several captions, section heading and subsection headings of this Agreement are inserted for convenience only and shall be ignored in interpreting the provision of this Agreement.

7.7 Governing Law. This Agreement, the Note, and documents supplemental thereto and all other related writings and the respective rights and obligations of the parties thereto shall be construed in accordance with and governed by the laws of the Commonwealth of Kentucky.

7.8 Severability. The invalidity or unenforceability of any provision hereof shall not affect or impair the validity or enforceability of any other provisions.

7.9 Entire Agreement. This Agreement, the Term Note, the Promissory Note, the Stock Pledge and Security Agreement and the documents supplemental thereto contain the final, complete and exclusive agreement of the parties pertaining to its subject matter and cancel and supersede all prior written and oral agreements pertaining hereto.

7.10 Notices. All notices required or permitted to be given hereunder shall be sufficient if given in writing and delivered personally, or delivered or sent by registered or certified mail, postage prepaid, addressed as follows:

Borrower:    Robert W. Walker, President/CEO

Premier Financial Bancorp, Inc.

2883 5^th Avenue

Huntington, West Virginia 25702

Bankers’:The Bankers’ Bank of Kentucky, Inc.

Attention: John Clark, Executive Vice

President

Post Office Box 713

Frankfort, Kentucky 40602

or, as to each party, at such other address as such party shall have designated in a written notice to the party giving such notice or communication. All such notices and communications shall be, when mailed, in accordance with the foregoing, deemed given one (1) day following the date deposited in the United States mails, first class mail, postage prepaid.

7.11 No Third Party Beneficiaries. The provisions of this Agreement shall inure to the benefit and responsibility of the parties hereto, their heirs, successors and assigns (but only to the extent such assignment is permitted herein) and shall not benefit or affect any third party.

7.12 Gender, Number: Accounting Principles. As used herein, any gender includes all other genders, the singular includes the plural, and the plural includes the singular. Except as otherwise provided herein, all accounting terms used herein shall be defined in accordance with Generally Accepted Accounting Principles.

7.13 Exhibits. Any Exhibits and Attachments hereto, and all terms and provisions thereof, are deemed to be a part hereof as if fully set forth herein and are deemed to be incorporated by reference herein.

7.14 Compliance with Covenants. Each covenant by the Borrower contained in the Article of this Agreement entitled “Covenants” shall be construed without reference to any other such covenant, and any determination of whether is in compliance with any such covenant shall be made without reference to whether Borrower is in compliance with any other such covenant.

7.15 Consent to Jurisdiction and Venue; Waiver of Jury Trial. BORROWER HEREBY IRREVOCABLY AND UNCONDITIONALLY AGREES THAT THE CIRCUIT COURTS OF FRANKLIN COUNTY, KENTUCKY AND/OR UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF KENTUCKY, SITTING IN FRANKFORT, KENTUCKY, SHALL BE THE SOLE PROPER VENUE FOR THE RESOLUTION OF ANY DISPUTES, CLAIMS OR PROCEEDINGS REGARDING THE OBLIGATIONS AND LIABILITIES OF BORROWER UNDER THIS AGREEMENT AND BORROWER HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT TO A DETERMINATION OF ANY SUCH PROCEEDING AGAINST OR INVOLVING BANK BY A COURT IN ANY OTHER VENUE AND AGREE NOT TO PLEAD OR CLAIM THAT ANY SUCH PROCEEDING BROUGHT IN THE CIRCUIT COURT OF FRANKLIN COUNTY, KENTUCKY AND/OR THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF KENTUCKY, SITTING IN FRANKFORT, KENTUCKY, HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. BORROWER FURTHER AGREES THAT SERVICE OF PROCESS BY ANY JUDICIAL OFFICER OR BY REGISTERED OR CERTIFIED U.S. MAIL SHALL ESTABLISH PERSONAL JURISDICTION OVER BORROWER AND BORROWER WAIVES ANY RIGHTS UNDER THE LAWS OF ANY STATE TO OBJECT TO JURISDICTION WITHIN THE COMMONWEALTH OF KENTUCKY.

7.16 Waiver of a Jury Trial. BORROWER HEREBY AGREES TO WAIVE ITS RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT. THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL-ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT THAT RELATE TO THE SUBJECT MATTER OF THIS TRANSACTION, INCLUDING WITHOUT LIMITATION CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS. BORROWER ACKNOWLEDGES THAT THIS WAIVER IS A MATERIAL INDUCEMENT FOR BANK TO ENTER INTO A BUSINESS RELATIONSHIP WITH BORROWER AND THAT BANK HAS ALREADY RELIED ON THE WAIVER IN ITS RELATED FUTURE DEALINGS WITH BORROWER. BORROWER FURTHER WARRANTS AND REPRESENTS THAT IT HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL, AND THAT IT KNOWINGLY AND VOLUNTARILY WAIVES JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING, AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT (IF ANY). IN THE EVENT OF LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.

7.17 Relationship of the Parties. Bankers’ and Borrower intend that the relationship between them be solely that of creditor and debtor. Nothing contained in the Loan Documents shall be deemed or construed to create a partnership, fiduciary relationship, joint venture or co-ownership by or between the parties herein. Bankers’ shall not, in any way, be responsible or liable for the debts, losses, obligations or duties of Borrower. All obligations to pay property or other taxes, assessments, insurance on the collateral and all other fees and charges arising from the ownership and operation of the assets of Borrower shall be the sole responsibility of the Borrower.

IN WITNESS WHEREOF, the parties have caused this Agreement to be signed by their duly authorized representatives as of the date first set forth above.

The Bankers’ Bank of Kentucky, Inc.:

/s/ John Clark    

By: John Clark

Title: Executive Vice President

Premier Financial Bancorp, Inc.:

/s/ Robert W. Walker   

By: Robert W. Walker

Title: President/CEO

ATTACHMENTS

3.9-Contracts

3.10-Title to Shares and Assets

3.15 - Absence of Changes

3.16 - Environmental Matters

4.16 - Exceptions to Lease Obligations

Schedule 3.9 Contracts

1.)Loan Agreement dated January 31, 2006 between Borrower and First Guaranty Bank, Hammond, Louisiana

2.)Data processing contract dated December 20, 2004 between Borrower and Fiserv Solutions, Inc. also obligating Farmers and Citizens for their respective portions of services rendered.

3.)Item processing contract dated December 30, 2004 between Borrower and Fiserv Solutions, Inc. also obligating Farmers and Citizens for their respective portions of services rendered.

4.)ATM processing contract dated November 28, 2001 between Farmers and Fifth Third Bank.

5.)ATM processing contract dated November 28, 2001 between Citizens and Fifth Third Bank.

6.)Overdraft permission (Bounce Protection) contract dated November 9, 2001 between Citizens and Pinnacle.

7.)Overdraft permission (Bounce Protection) contract dated January 31, 2003 between Farmers and Pinnacle.

8.)Internet access and bill payment services contract dated March 14, 2005 between Citizens and Funds Xpress.

9.)Checkbook printing services contract dated February 23, 2006 between Borrower and Clarke American.

Schedule 3.10 Title to Shares and Assets

1.)Loan Agreement dated January 31, 2006 between Borrower and First Guaranty Bank, Hammond, Louisiana encumbering Borrower’s stock ownership of Boone County Bank, Inc.

2.)Standard FHLB blanket lien on 1-4 family mortgages at Citizens to secure the following FHLB borrowings:

  $2,000,000 bullet maturity on May 3, 2010

$2,000,000 bullet maturity on May 24, 2010

3.)Standard FHLB blanket lien on 1-4 family mortgages at Farmers to secure the following FHLB borrowings:

$1,000,000 amortizing 10 year note maturing on March 9, 2011,

Sept 30, 2006 balance, $407,905

$2,000,000 amortizing 10 year note maturing on March 27, 2011,

Sept 30, 2006 balance, $811,045

$400,000 amortizing 10 year note maturing on April 4, 2011,

Sept 30, 2006 balance, $165,000

$1,000,000 amortizing 10 year note maturing on June 1, 2011,

Sept 30, 2006 balance, $427,791

$1,500,000 amortizing 10 year note maturing on June 5, 2011,

Sept 30, 2006 balance, $640,262

$1,200,000 amortizing 10 year note maturing on October 31, 2011,

Sept 30, 2006 balance, $554,659

$1,500,000 amortizing 10 year note maturing on June 11, 2012,

Sept 30, 2006 balance, $625,774

4.)FHLB holds bonds totaling $4,400,000 face value $4,323,000 market value as of September 30, 2006 in safekeeping as collateral securing the FHLB borrowings at Farmers detailed in item 3 above.

5.)Citizens and Farmers routinely pledge investment portfolio securities in the normal course of business to collateralize certain deposits from customers that exceed $100,000. The aggregate pledged balance is reported quarterly in the FDIC call report on Schedule RC-B.

Schedule 3.15 Absence of Changes

Since December 31, 2005 the following events have occurred:

1.)Borrower entered into a $7.0 million loan agreement dated January 31, 2006 with First Guaranty Bank, Hammond, Louisiana. The proceeds were used to redeem $7.0 million of Trust Preferred Securities outstanding. After the redemption there were $8.25 million of Trust Preferred Securities still outstanding.

2.)A decision was made to terminate in due course the trust department line of business at Farmers. This process is on-going as trust agreements expire and are not renewed.

Schedule 3.16 Environmental Matters

1.)Mt. Vernon Financial Holdings, Inc. (Mt. Vernon), a wholly owned non-banking subsidiary of Borrower, owns title to a tract of land acquired through foreclosure that was once a Petroleum Storage Tank Facility. In preparing the property for sale, Mt. Vernon contracted for remedial environmental clean-up services in order to secure compliance with the 401 KAR 100:030 remediation requirements. Notice of such compliance was obtained from the Kentucky Division of Waste Management in a letter dated October 14, 2005 whereby no further action was required.

Schedule 4.16 Exceptions to Lease Obligations

1.)Lease agreement between Borrower and River City Properties, LLC (“lessor”) dated September 1, 2002.

2.)Lease agreement between Citizens and Triad Exchange, LLC (“lessor”) dated March 9, 2004.

3.)Lease agreement between Citizens and Bee Mart Express, Inc. now FDE Properties (“lessor”) dated September 18, 1997.

EX-10.2

Exhibit 10.2

TERM NOTE

 $6,500,000 November 10, 2006 

  (1) For value received, the undersigned, Premier Financial Bancorp, Inc., a Kentucky corporation with principal offices in Huntington, West Virginia (“Borrower”) hereby promises to pay in lawful money of the United States of America to the order of The Bankers’ Bank of Kentucky, Inc., a Kentucky banking organization, with main offices in Frankfort, Kentucky (“Lender”), at the main offices of Lender, 107 Progress Drive, Frankfort, Kentucky, 40602, equal payments of principal and interest in the amount of One Hundred Thousand ($100,000) Dollars, in eighty-three (83) consecutive monthly installments commencing December 9, 2006, and on each monthly anniversary thereof, with the entire remaining outstanding principal balance on November 9, 2013, together with interest then due and owing.

(2) The outstanding principal balance under this Term Note shall bear annual interest at the rate of the Prime Rate, as announced from time to time by J.P. Morgan Chase Bank, New York, New York, minus one (1%) percent, adjusted daily. The Prime Rate of J.P. Morgan Chase Bank will function only as a tool for setting the rate on this Term Note and Lender does not represent that such rate has any relationship to the rate it charges its other customers.

(3) All payments on account of indebtedness evidenced by this Term Note shall be first applied to interest, costs and expenses, and then to principal, and interest shall be computed on the basis of a 360-day year.

(4) The occurrence of any one or more of the following shall constitute a Default or Event of Default under this Term Note as those terms are defined under the Loan Agreement executed of even date herewith:

  (i) Failure to make any payment of principal, interest or costs within ten (10) days after any such payment is due hereunder; and

  (ii) The occurrence of any other Default or Event of Default under the Loan Agreement, the Promissory Note, or the Stock Pledge and Security Agreement executed of even date herewith by Lender and Borrower.

(5) Time is of the essence with respect to this Term Note and in the Event of Default or an Event of Default under this Term Note, then (i) the entire principal balance hereof, and all accrued interest and costs shall, at the option of the Lender, without notice, bear interest at a rate from time to time equal to five (5%) percentage points over what otherwise would have been the Term Note rate from the date of Default or Event of Default and until said is cured; and (ii) the entire principal balance hereof and all accrued interest and costs shall immediately become due and payable at the option of the Lender without notice. Lender’s failure to exercise any option hereunder shall not constitute a waiver of the right to exercise the same at a subsequent time or upon the occurrence of any such Default or Event of Default.

(6) Borrower acknowledges that, if any payment, whether of principal, interest or costs, under this Term Note is not paid when due, Lender will, as a result thereof, incur costs not contemplated hereunder, the exact amount of which would be extremely difficult or impractical to ascertain. Such costs include, without limitation, process and accounting charges. Therefore, Borrower hereby agrees to pay to Lender with respect to each payment of any nature which is not received by Lender within twenty (20) days after such payment is due hereunder, a late charge equal to three (3%) percent of the amount of such payment. Borrower and Lender agree that such late charge represents a fair and reasonable estimate of the cost(s) Lender will incur by reason of any such late payment. Acceptance of such late charge by Lender shall in no event constitute a waiver of a Default or Event of Default with respect to the overdue payment and shall not prohibit or prevent Lender from exercising any of the other rights and remedies available to Lender.

(7) If there is any Default or Event of Default under this Term Note and Lender consults with an attorney regarding the enforcement of any of its rights hereunder or under the Stock Pledge and Security Agreement, the Promissory Note or the Loan Agreement executed of even date herewith, or if this Term Note is placed in the hands of an attorney for collection, or if suit be brought to enforce this Term Note, or Loan Agreement, the Promissory Note or the Stock Pledge and Security Agreement, Borrower promises and agrees to pay all costs thereof, including reasonable attorneys fee’s. Such costs and attorneys fees shall include, without limitation, costs and attorneys fee’s in any appeal or in any proceeding under any present or future federal bankruptcy act, state receivership law or federal or state banking agency proceedings.

(8) This Term Note is secured by a pledge under the Stock Pledge and Security Agreement of even date herewith of one hundred (100%) percent of the outstanding common stock of Citizens Deposit Bank and Trust, Vanceburg, Kentucky, and one hundred (100%) percent of the outstanding common stock of Farmers Deposit Bank, Eminence, Kentucky.

(9) Borrower hereby waives presentment and demand for payment, notice of dishonor, protest and notice of protest.

(10) This Term Note shall be construed and enforced and otherwise governed by the Laws of the Commonwealth of Kentucky.

(11) As used herein, the term “Lender” shall mean any holder or owner of this Term Note, or any portion thereof, or participation therein.

Premier Financial Bancorp, Inc.

A Kentucky Corporation

By: /s/ Robert W. Walker   

Title: Chief Executive Officer  

EX-10.3

Exhibit 10.3

PROMISSORY NOTE

 $3,500,000 November 10, 2006 

  (1) For value received, the undersigned, Premier Financial Bancorp, Inc., a Kentucky corporation with principal offices in Huntington, West Virginia (“Borrower”) hereby promises to pay in lawful money of the United States of America to the order of The Bankers’ Bank of Kentucky, Inc., a Kentucky banking organization, with main offices in Frankfort, Kentucky (“Lender”), at the main offices of Lender, 107 Progress Drive, Frankfort, Kentucky, 40602, on November 9 of 2007, the outstanding principal amount loaned to Borrower under this Promissory Note, and not previously repaid, together with interest due and owing as of such date upon such outstanding principal amount, as reflected by the books and records of the Lender. The Parties agree and acknowledge that the Borrower may request and receive monies from Lender under this Promissory Note from time to time, but the aggregate outstanding principal balance at any time shall not exceed Three Million Five Hundred Thousand ($3,500,000) Dollars, and that the right to request and receive monies from Lender hereunder shall cease and terminate on November 9, 2007.

(2) The outstanding principal balance under this Promissory Note shall bear annual interest at the rate of the Prime Rate, as announced from time to time by J.P. Morgan Chase Bank, New York, New York, minus one (1%) percent, adjusted daily. In addition to the interest payments required under this Paragraph (1) above, interest on this Promissory Note shall be due and payable on the 5th day of each, January, April, July and October during the term of this Promissory Note, and at the maturity date hereof. The Prime Rate of J.P. Morgan Chase Bank will function only as a tool for setting the rate on this Promissory Note and Lender does not represent that such rate has any relationship to the rate it charges its other customers.

(3) All payments on account of indebtedness evidenced by this Promissory Note shall be first applied to interest, costs and expenses, and then to principal, and interest shall be computed on the basis of a 360-day year.

   (4) The occurrence of any one or more of the following shall constitute a Default or Event of Default under this Promissory Note as those terms are defined under the Loan Agreement described above:

  (i) Failure to make any payment of principal, interest or costs within ten (10) days after any such payment is due hereunder; and

  (ii) The occurrence of any other Default or Event of Default under the Loan Agreement, the Term Note, or the Stock Pledge and Security Agreement executed of even date herewith by Lender and Borrower.

(5) Time is of the essence with respect to this Promissory Note and in the Event of Default or an Event of Default under this Promissory Note, then (i) the entire principal balance hereof, and all accrued interest and costs shall, at the option of the Lender, without notice, bear interest at a rate from time to time equal to five (5%) percentage points over what otherwise would have been the Promissory Note rate from the date of Default or Event of Default and until said is cured; and (ii) the entire principal balance hereof and all accrued interest and costs shall immediately become due and payable at the option of the Lender without notice. Lender’s failure to exercise any option hereunder shall not constitute a waiver of the right to exercise the same at a subsequent time or upon the occurrence of any such Default or Event of Default.

(6) Borrower acknowledges that, if any payment, whether of principal, interest or costs, under this Promissory Note is not paid when due, Lender will, as a result thereof, incur costs not contemplated hereunder, the exact amount of which would be extremely difficult or impractical to ascertain. Such costs include, without limitation, process and accounting charges. Therefore, Borrower hereby agrees to pay to Lender with respect to each payment of any nature which is not received by Lender within twenty (20) days after such payment is due hereunder, a late charge equal to three (3%) percent of the amount of such payment. Borrower and Lender agree that such late charge represents a fair and reasonable estimate of the cost(s) Lender will incur by reason of any such late payment. Acceptance of such late charge by Lender shall in no event constitute a waiver of a Default or Event of Default with respect to the overdue payment and shall not prohibit or prevent Lender from exercising any of the other rights and remedies available to Lender.

(7) If there is any Default or Event of Default under this Promissory Note and Lender consults with an attorney regarding the enforcement of any of its rights hereunder or under the Stock Pledge and Security Agreement, the Term Note or the Loan Agreement executed of even date herewith, or if this Promissory Note is placed in the hands of an attorney for collection, or if suit be brought to enforce this Promissory Note, or Loan Agreement, the Term Note or the Stock Pledge and Security Agreement, Borrower promises and agrees to pay all costs thereof, including reasonable attorneys fee’s. Such costs and attorneys fees shall include, without limitation, costs and attorneys fee’s in any appeal or in any proceeding under any present or future federal bankruptcy act, state receivership law or federal or state banking agency proceedings.

(8) This Promissory Note is secured by a pledge under the Stock Pledge and Security Agreement of even date herewith of one hundred (100%) percent of the outstanding common stock of Citizens Deposit Bank and Trust, Vanceburg, Kentucky, and one hundred (100%) percent of the outstanding common stock of Farmers Deposit Bank, Eminence, Kentucky.

(9) Borrower hereby waives presentment and demand for payment, notice of dishonor, protest and notice of protest.

(10) This Promissory Note shall be construed and enforced and otherwise governed by the Laws of the Commonwealth of Kentucky.

(11) As used herein, the term “Lender” shall mean any holder or owner of this Promissory Note, or any portion thereof, or participation therein.

Premier Financial Bancorp, Inc.

A Kentucky Corporation

By: /s/ Robert W. Walker   

Title: Chief Executive Officer  

EX-10.4

Exhibit 10.4

STOCK PLEDGE AND SECURITY AGREEMENT

THIS STOCK PLEDGE AND SECURITY AGREEMENT (“Pledge Agreement”) is made and entered into on this 10^th day of November, 2006, by and between PREMIER FINANCIAL BANCORP, INC. (“Pledgor”), a Kentucky corporation serving as a bank holding company under the Bank Holding Company Act of 1956, as amended for Citizens Deposit Bank and Trust, Inc., Vanceburg, Kentucky (“Citizens”) and Farmers-Deposit Bank, Eminence, Kentucky (“Farmers”), both Kentucky banking organizations, and THE BANKERS’ BANK OF KENTUCKY, INC., a Kentucky banking organization with principal office and place of business in Frankfort, Kentucky (the “Bank”).

PRELIMINARY STATEMENT

A. Pursuant to that certain Loan Agreement of even date herewith, between the Pledgor and the Bank, the Bank has agreed to enter into a Credit Facility for Pledgor, such Loan from Bank being evidenced by a Term Note and a Promissory Note of even date herewith, made by Pledgor, payable to the order of the Bank (the “Notes”).

B. The Pledgor hereby agrees that the payment of the Notes and the other indebtedness referred to below shall be secured by this Pledge Agreement and acknowledges that Bank would not have entered into the Loan without Pledgor becoming a party to this Agreement.

NOW, THEREFORE, in consideration of the Loan made contemporaneously herewith by the Bank to Pledgor, and for other good and valuable consideration, the mutuality, receipt and sufficiency of which are hereby acknowledged, the Pledgor and the Bank hereby agree as follows:

1. Definitions. The capitalized terms and phrases not otherwise defined herein shall have the meanings given them in the Loan Agreement, and the following terms or phrases shall have the following meanings:

1.1 “Event of Default” shall have the meaning set forth in Section 10 of this Pledge Agreement.

1.2 “Pledged Shares” means (a) the 559,800 shares of the issued and outstanding Common Capital Stock of Citizens which constitutes One Hundred (100%) Percent of the outstanding common stock of Citizens and (b) the 18,750 shares of issued and outstanding common stock of Farmers which constitutes One Hundred (100%) Percent of the outstanding common stock of Farmers.

2. Grant of Security Interest.

2.1 The Pledgor hereby pledges and assigns to the Bank, and hereby grants to the Bank a security interest in, the Pledged Shares. The Pledgor further grants to the Bank a security interest in any and all stock rights, rights to subscribe, liquidating dividends, dividends paid in stock, new securities or any other property to which the Pledgor is or may hereafter become entitled to receive on account of the Pledged Shares owned by the Pledgor. If the Pledgor receives additional property of such nature, the Pledgor shall immediately deliver such property to the Bank, to be held by the Bank pursuant to his Pledge Agreement.

2.2 The Pledgor hereby grants a security interest in the Pledgor’s share of all proceeds of any sale or other disposition of the Pledged Shares.

3. Secured Obligations. Pledgor has granted to the Bank a security interest in the collateral to secure (a) the payment of the entire unpaid principal of, and all interest now accrued or hereafter to accrued or hereafter to accrue on, the Notes and all costs and expenses, including, without limitation, reasonable attorneys’ fees now or hereafter incurred by the Bank in enforcing the Loan Agreement, the Notes and this Pledge Agreement, and (b) the performance of all other covenants, agreements and obligations of the Pledgor set forth herein and in the Loan Agreement and the documents supplemental thereto.

4. Representations and Warranties. To induce the Bank to enter into the Loan Agreement, and to make the Loan to Pledgor, Pledgor hereby represents and warrants to the Bank as follows, which representations and warranties shall survive the execution and delivery of this Pledge Agreement and the delivery of the Pledged Shares to the Bank:

4.1 The Pledgor has the full right, power and authority to enter into and perform this Pledge Agreement. This Pledge Agreement has been duly entered into and delivered by the Pledgor and constitutes a legal, valid and binding obligation of the Pledgor, enforceable in accordance with its terms, except as enforceability thereof may be limited by applicable bankruptcy, insolvency or other laws affecting creditors’ rights generally, and by the application of usual equitable principles where equitable principles are sought.

4.2 The Pledgor has good and marketable title to the Pledged Shares represented to be owned by the Pledgor, and the Pledged Shares are not subject to any lien, charge, pledge, encumbrance, claim or security interest of any nature whatsoever, other than the security interest created by this Pledge Agreement.

4.3 The Pledged Shares are fully paid and nonassessable.

4.4 The Pledgor has not entered into any stock restriction, voting agreement, proxy or purchase agreement with respect to the Pledged Shares which would in any way restrict the sale, pledge or other transfer of the Pledged Shares or of any interest in or to the Pledged Shares.

5. Duration of Security Interest. The Bank shall hold the Pledged Shares upon the terms and provisions of this Pledge Agreement and the security interest in the Pledged Shares granted to the Bank pursuant to this Pledge Agreement shall continue until Notes have been paid in full to the Bank.

6. Maintaining Freedom from Liens. Pledgor shall keep the Pledged Shares owned by such Pledgor free and clear of all liens and encumbrances and shall pay all amounts, including taxes, assessments or charges, which might result in a lien against the Pledged Shares if left unpaid, unless the Pledgor, all at the Pledgor’s expense, is contesting any such amount in good faith by an appropriate proceeding timely instituted and which shall operate to prevent the collection or satisfaction of the lien or amount so contested. If Pledgor fails to pay such amounts and is not contesting the validity of amount thereof in accordance with the preceding sentence, the Bank may, but is not obligated to, pay such amounts, and such payment shall be conclusive evidence of the legality or validity.

7. Certain Rights Respecting the Pledged Shares.

7.1 Pledgor shall continue to be the sole owner of the Pledged Shares represented to be owned by such Pledgor, and may exercise all voting rights with respect to the Pledged Shares owned by such Pledgor, so long as no Event of Default has occurred and is continuing.

7.2 Pledgor shall not sell, transfer or attempt to sell or transfer the Pledged Shares, or any part thereof or interest therein, without the prior express written consent of the Bank. Any such consent of the Bank shall not constitute the release by the Bank of its security interest in the Pledged Shares so sold or transferred, and any such sale or transfer consented to by the Bank shall transfer the Pledged Shares, subject to the security interest therein of the Bank created pursuant to this Pledge Agreement.

7.3 The Bank, at its option upon the occurrence of any Event of Default, and so long as such Event of Default exists, may exercise all voting rights and privileges whatsoever with respect to the Pledged Shares, and to that end, Pledgor hereby constitutes any executive officer of the Bank as such Pledgor's proxy and attorney-in-fact for all purposes of voting the Pledged Shares represented to be owned by such Pledgor at any annual, regular or special meeting of shareholders of Citizens and/or Farmers, and this appointment shall be deemed coupled with an interest and is and shall be irrevocable until the Notes have been fully paid and performed to the Bank, and all persons whatsoever shall be conclusively entitled to rely upon any oral or written certification of the Bank that it is entitled to vote the Pledged Shares. Pledgor shall execute and deliver to the Bank any additional proxies and powers of attorney that the Bank may desire in its own name to effectuate the provisions of the Loan Agreement and this Pledge Agreement.

8. Issuance or Acquisition of New Stock or Sale of Treasury Shares, Mergers, Sales and Other Distribution of Assets. Until the Notes have been paid and performed in full to the Bank, Pledgor shall not vote in favor of permitting Citizens or Farmers (a) to issue new shares of their capital stock, or any options, subscription rights or warrants with respect thereto, (b) to sell any treasury shares, (c) to merge into or with, or consolidate with, any other entity, (d) to sell or otherwise transfer any material part of their assets, or (e) to liquidate or dissolve or take any action with a view towards liquidation or dissolution.

9. Delivery of Certificates and Stock Powers. Pledgor shall deliver to the Bank, and the Bank shall be entitled to possess, the share certificates evidencing the Pledged Shares represented to be owned by the Pledgor and an executed blank stock power with respect to each such share certificate. If for any reason Pledgor acquires any interest in any additional Capital Stock of Citizens or Farmers, Pledgor shall immediately deliver certificates representing that stock and a blank stock power for those certificates to Bank, to be held by the Bank in the same manner as the Pledged Shares, and that stock shall be pledged under this Pledge Agreement and shall constitute a part of the Pledged Shares.

10. Event of Default. The following shall each constitute an “Event of Default” hereunder:

10.1 If any principal or interest on the Notes shall not be paid in full punctually when due and payable and shall remain unpaid for a period of ten (10) days after written notice of such default has been given to Pledgor.

10.2 If Pledgor breaches, violates or fails to perform or observe any covenant, obligation, agreement, condition or other provision contained in this Pledge Agreement, and the same is not cured to the satisfaction of the Bank within thirty (30) days after the Bank has specified such default in a written notice delivered to the Pledgor.

10.3 If any representation or warranty or other statement of fact contained herein or in any related writing furnished to the Bank in connection with the transaction contemplated hereby shall be false or misleading in any material respect as of the date of this Pledge Agreement and shall continue to be false or misleading in any material respect, or shall omit to state a material fact required to be stated therein in order to make the statements contained therein, in light of the circumstances under which made, not misleading as of the date of this Pledge Agreement, whether or not made with knowledge of the same, and such omission to state a material fact shall not have been corrected.

10.4 The occurrence of any Event of Default under the Loan Agreement.

11. Remedies.

11.1 Upon the occurrence of any Event of Default, the Bank may, at its option, declare the Term Note or the Promissory Note, or both of them, to be immediately due and payable, may exercise the rights with respect to the Pledged Shares contemplated in Section 7 of this Pledge Agreement, and, in addition to exercising all other rights or remedies, proceed to exercise with respect to the Pledged Shares all rights, options and remedies of a secured party upon default as provided for under the Uniform Commercial Code as enacted in the Commonwealth of Kentucky.

11.2 The rights of the Bank upon the occurrence of any Event of Default shall include, without limitation, the following:

(a) The right to the immediate possession of Pledged Shares not then in the Bank’s possession without requirement of notice or demand or of any legal process.

(b) The right to sell the Pledged Shares at public or private sale and in one or more lots, and in any order or sequence. The Bank shall be entitled to apply the proceeds of any such sale to the satisfaction of the Term Note or the Promissory Note, or both of them, as the Bank determines, and to expenses incurred in realizing upon the Pledged Shares in accordance with the Uniform Commercial Code as enacted in the Commonwealth of Kentucky; provided, however, the Bank may, but shall not be obligated to, postpone the time of any proposed sale of any of the Pledged Shares, or any part thereof, and may change the time and/or place of such sale, subject to the obligation of the Bank to give the Pledgor notice of such new time and/or place of the Pledged Shares, or any part thereof, as applicable, as provided in Section 18.1 below. In the event the Bank sells the Pledged Shares, or any part thereof on credit or for future delivery, which may be elected by the Bank at its sole discretion, the Pledged Shares so sold may, at the Bank’s sole option, be transferred and/or delivered to the purchaser thereof or retained by the Bank until the purchase price thereof has been paid by the purchaser.

(c) The right to recover the reasonable expenses of the Bank in preparing for sale and selling the Pledged Shares and other like expenses, together with court costs and reasonable attorneys’ fees incurred by the Bank.

(d) The right to proceed by appropriate legal process at law or in equity to enforce any provision of this Pledge Agreement or in aid of the execution of any power of sale, or for foreclosure of the security interest of the Bank in the Pledged Shares, or for the sale of the Pledged Shares under the judgment or decree of any court.

(e) In furtherance of the rights and remedies of the Bank upon the occurrence of an Event of Default, Pledgor hereby constitutes any officer of the Bank as Pledgor’s proxy and attorney-in-fact to complete, execute and file with the Securities and Exchange Commission, if such filing be required by law, one or more notices of proposed sale of securities pursuant to Rule 144 under the Securities Act of 1933, as amended, and this appointment shall be deemed coupled with an interest, and is and shall be irrevocable, until the Notes have been paid and performed in full to the Bank.

12. Exercise of Remedies. The rights and remedies of the Bank shall be deemed to be cumulative, and any exercise of any right or remedy shall not be deemed to be an election of that right or remedy to the exclusion of any other right or remedy.

13. Waiver. Pledgor hereby waives any claim arising by reason of (a) the fact that the price or prices for which the Pledged Shares or any part thereof is sold at any private sale or sales is less than the price which would have been obtained at a public sale or sales or is less than the amount of the Notes, (b) any reasonable delay by the Bank in selling the Pledged Shares following the occurrence of an Event of Default, including, without limitation, any delays in selling the Pledged Shares resulting from the compliance by the Bank with applicable federal and state securities laws, even if the price of the Pledged Shares thereafter declines; or (c) the immediate sale of the Pledged Shares upon the occurrence of an Event of Default, even if the price of the Pledged Shares should thereafter increase. Pledgor shall remain liable for any deficiency remaining due, after the sale of the Pledged Shares, on the Notes.

14. Payment of Costs, Attorneys’ Fees and Expenses. To the extent not paid out of the proceeds of the sale of the Pledged Shares, Pledgor shall be responsible for and shall pay any and all reasonable costs, attorneys’ fees and other expenses of whatever kind incurred by the Bank in connection with (i) enforcing the Loan Agreement, the Notes and/or this Pledge Agreement; (ii) obtaining possession of the Pledged Shares; (iii) the protection and preservation of the Pledged Shares; (iv) the collection of the Notes or any part thereof; and (v) any litigation involving the Pledged Shares, and/or any benefit accruing by virtue of the provisions hereof or the rights of the Bank hereunder.

15. Advances by Bank. Pledgor shall reimburse the Bank for all reasonable advances made by the Bank in performing any actions on behalf of the Pledgor pursuant to this Pledge Agreement, including, without limitation, all amounts paid by the Bank (a) to discharge taxes, levies, liens and/or security interests against the Pledged Shares, and/or (b) in connection with the exercise by the Bank of its rights and remedies hereunder. All such advances made by the Bank shall bear interest at the rate set forth in the Notes as applicable to overdue principal and/or accrued interest on the Notes, and all such advances and all interest thereon shall be secured by this Pledge Agreement with the same priority as the Notes, to the fullest extent permitted by applicable law, and shall be due and payable in full to the Bank upon demand by the Bank at any time in its sole and absolute discretion.

16. Irrevocable Attorney-in-Fact. Pledgor hereby irrevocably appoints the Bank as such Pledgor’s attorney-in-fact (a) to do all acts and things which the Bank may deem necessary or appropriate in its sole and absolute discretion to perfect and to continue the perfected status of the security interest in the Pledged Shares created in favor of the Bank pursuant to this Pledge Agreement and to protect the Pledged Shares, and (b) to perform such other acts in connection with the Pledged Shares as the Bank determines in its reasonable discretion to be necessary or appropriate to effectuate the purposes of this Pledge Agreement.

17. Return of Pledged Shares. The Bank may, at any time, deliver the Pledged Shares, or any part thereof, to the Pledgor. The receipt by the Pledgor of the Pledged Shares, or any part thereof shall be a complete and full discharge of the Bank, and the Bank shall be discharged from any liability or responsibility with respect thereto.

18. Notice.

18.1 Any requirement of the Uniform Commercial Code of Kentucky of reasonable notice of the intended sale or other disposition of the Pledged Shares shall be met if such notice is given to the Pledgor at least ten (10) business days before the time of sale, disposition or other event or thing giving rise to the requirement of notice.

18.2 All notices or communications under this Pledge Agreement shall be in writing and shall be personally delivered or sent by express courier service or by registered or certified United States mail, return receipt requested, postage prepaid, addressed as follows (or to such other address as to which either party shall have given the other party written notice):

If to the Pledgor:     Robert W. Walker, President/CEO

Premier Financial Bancorp, Inc.

2883 5^th Avenue

Huntington, West Virginia 25702

If to the Bank:The Bankers’ Bank of Kentucky, Inc.

Attention: John Clark, Executive Vice President

P.O. Box 713

Frankfort, Kentucky 40602

All notices and other communications hereunder shall be deemed given upon the earliest of (a) actual delivery in person, (b) one (1) business day after having been delivered to an express courier service, or (c) two (2) business days after having been deposited in the United States mails, in accordance with the foregoing, as applicable.

19. Further Assurances. The Pledgor shall execute any such other documents or instruments, and take such other actions, as the Bank may request to more fully create and maintain, or to verify, ratify or perfect the security interest intended to be created in this Pledge Agreement.

20. No Implied Waiver. All options and rights of the Bank hereunder are continuing, and the failure of the Bank to exercise any such option or right of election in any instance shall not be construed as waiving the right to exercise such option or right at any subsequent time or be construed as waiving the right to exercise any other option or right hereunder, at law or at equity. No exercise by the Bank of any of the options, rights or powers provided herein and no delay or omission in the exercise of such options, rights or powers provided herein shall be construed to exhaust the same or be construed as a waiver thereof, and each such option, right and power may be exercised at any time and from time to time.

21. Severability of Provisions. If any term or provision of this Pledge Agreement is held to be invalid or unenforceable in any jurisdiction, the other terms and provisions hereof shall remain in full force and effect in such jurisdiction and the invalid or unenforceable provision shall remain in full force and effect in all other jurisdictions.

22. Governing Law. This Pledge Agreement and the respective rights, duties and obligations of the parties hereto shall be governed by and construed in accordance with the laws of the Commonwealth of Kentucky.

23. Successors and Assigns. This Pledge Agreement shall bind the Pledgor and its respective heirs, personal representatives, successors and assigns and shall inure to the benefit of the Bank and its successors and assigns, including, without limitation, each subsequent holder of the Term Note and/or the Promissory Note.

24. Captions. The various section headings used in this Pledge Agreement are inserted for convenience of reference only and shall be ignored in construing the provisions hereof.

25. Time of Essence. Time shall be of the essence in the performance of all of the covenants, obligations and agreements under this Pledge Agreement.

26. Entire Agreement. This Pledge Agreement constitutes the entire agreement of the parties with respect to the subject matter hereof and supersedes all prior understandings with respect to the subject matter hereof. No change, modification, addition or termination of this Pledge Agreement shall be enforceable unless in writing and signed by the party against whom enforcement is sought.

IN WITNESS WHEREOF, the Pledgor and the Bank have executed this Pledge Agreement on the day, month and year first above written.

PREMIER FINANCIAL BANCORP, INC.

(Pledgor)

By: /s/ Robert W. Walker   

Robert W. Walker

Title: President

THE BANKERS’ BANK OF KENTUCKY, INC.

(Bank)

By: /s/ John Clark     

John Clark

Title: Executive VicePresident