exhibit8-1.htm

You have requested our opinion as to certain federal income tax consequences with respect to the consummation of the proposed merger (“Merger”) of Citizens First Bank, Inc., a West Virginia corporation (“Citizens”) into CFB Interim Bank, Inc., a West Virginia corporation (the “Interim Bank”), pursuant to an Agreement of Merger and related Plan of Merger, dated October 25, 2007 (the “Agreement”), by and among Citizens, the Interim Bank and Premier Financial Bancorp, Inc., a Kentucky corporation (“Premier”).

The relevant facts concerning the Merger are set forth in the Agreement and related Plan of Merger executed by the above parties. A description of the transaction set forth therein is incorporated herein reference.

In addition to the general statement of facts set forth in the Registration Statement, and exhibits attached thereto, you have made the following representations concerning the Merger:

1. The Merger will be consummated in compliance with the material terms of the Agreement and related Plan of Merger and none of the material terms and conditions therein have been waived or modified and the parties have no plan or intention to waive or modify any such material condition.

2. The ratio for the exchange of shares of stock of Citizens for common stock of Premier and other consideration in the Merger was negotiated through arm’s length bargaining. Accordingly, the fair market value of the Premier common stock and other consideration to be received by Citizens stockholders in the Merger will be approximately equal to the fair market value of the Citizens stock surrendered by such stockholders in exchange therefor.

3. At least 40% of the proprietary interest in Citizens will be exchanged for Premier common stock and will be preserved within the meaning of Treasury Regulation Section 1.368-1(e).

4. Neither Premier nor any “related person” with respect to Premier within the meaning of Treasury Regulation Section 1.368-1(e)(4): (i) has purchased or will purchase any Citizens common stock with consideration other than Premier common stock (other than as required by the Agreement and related Plan of Merger), or has furnished cash or other property directly or indirectly in connection with redemptions of Citizens common stock or distributions by Citizens to Citizens shareholders, in connection with or in contemplation of the Merger or (ii) except for cash paid in lieu of fractional interests of Premier common stock pursuant to the Merger, has any plan or intention to purchase, redeem or otherwise reacquire any of the Premier common stock issued in connection with the Merger.

5. Prior to and in connection with the Merger, (i) Citizens has not redeemed (and will not redeem) any Citizens common stock and has not made (and will not make) any extraordinary distributions with respect thereto and (ii) the persons that are related to Citizens within the meaning of Treasury Regulation Section 1.368-1(e)(4) (determined without regard to Treasury Regulation Section 1.368-1(e)(4)(i)(A)), have not acquired (and will not acquire) Citizens common stock from any holder thereof with consideration other than either Citizens stock or Premier stock (other than as required by the Agreement and related Plan of Merger).

6. As a result of the Merger, Citizens will transfer to Interim Bank at least ninety percent (90%) of the fair market value of the net assets and at least seventy percent (70%) of the fair market value of the gross assets of Citizens held by it immediately prior to the Merger. For this purpose, amounts used to pay dissenters or to pay reorganization expenses, and all redemptions and distributions (except for regular, normal dividends) made by Citizens immediately prior to the Merger will be considered as assets held by Citizens immediately prior to the Merger. Citizens has not redeemed any of the Citizens stock, made any distribution with respect to any of the Citizens stock, or disposed of any of its assets in anticipation of or as a part of a plan for the acquisition of Citizens by Interim Bank.

8. Premier has no plan or intention to cause Interim Bank after the Merger to issue additional shares of the stock of Interim Bank that would result in Premier losing control of Interim Bank within the meaning of Section 368(c) of the Code.

9. Premier is the owner of all of the outstanding stock of Interim Bank. Premier has no plan or intention after the Merger to liquidate Interim Bank; to merge Interim Bank into another corporation; to make any extraordinary distribution in respect of its stock in Interim Bank; to sell or otherwise dispose of the stock of Interim Bank or to cause Interim Bank to sell or otherwise dispose of any of the assets of Citizens acquired in the Merger, except for dispositions made in the ordinary course of business or transfers described in Section 368(a)(2)(C) of the Code.

10. The assumption by Interim Bank of the liabilities of Citizens pursuant to the Merger is for a bona fide business purpose and the principal purpose of such assumption is not the avoidance of federal income tax on the transfer of assets of Citizens to Interim Bank pursuant to the Merger.

11. The liabilities of Citizens assumed by Interim Bank and the liabilities to which the transferred assets of Citizens are subject were incurred by Citizens in the ordinary course of its business. No liabilities of any person other than Citizens will be assumed by Interim Bank or Premier in the Merger, and none of the shares of Citizens to be surrendered in exchange for Premier common stock in the Merger will be subject to any liabilities.

12. Immediately after the Merger, Premier intends to cause members of Premier’s “qualified group” (as defined in Treasury Regulation Section 1.368-1(d)(4)) to continue the historic business of Citizens or use a significant portion of the historic business assets of Citizens in a business.

13. Premier, Interim Bank and Citizens will pay their respective expenses, if any, incurred in connection with the Merger. Neither Premier, Interim Bank nor Citizens will pay any of the expenses of the stockholders of Citizens incurred in connection with the Merger.

19. The payment of cash in lieu of fractional shares of stock of Citizens was not separately bargained for consideration and is being made for the purpose of saving Premier the expense and inconvenience of issuing fractional shares.

20. None of the compensation received by any stockholder-employee of Citizens pursuant to any employment, consulting or similar arrangement is or will be separate consideration for, or allocable to, any of his/her shares of Citizens stock. None of the shares of common stock of Premier received by any stockholder-employee of Citizens pursuant to the Merger (other than any such shares received in connection with the termination in the Merger of certain stock options to purchase Citizens common stock) are or will be separate consideration for, or allocable to, any such employment, consulting or similar arrangement. The compensation paid to any stockholder-employee of Citizens pursuant to any such employment, consulting or similar arrangement is or will be for services actually rendered and will be commensurate with amounts paid to third parties bargaining at arm’s length for similar services.

1. Provided the Merger qualifies as a statutory merger in accordance with applicable state law, the Merger will constitute and qualify as a reorganization within the meaning of Section 368 of the Code and Premier, Interim Bank and Citizens will each qualify as "a party to a reorganization" as that term is defined in the Code;

2. No gain or loss will be recognized by the shareholders of Citizens who exchange their Citizens common stock solely for Premier common stock pursuant to the Merger, except that gain or loss may be recognized as to cash received as Merger Consideration, as defined in the Agreement, and cash received in lieu of fractional share interests;

4. The holding period of Premier common stock received by Citizens shareholders in exchange for Premier common stock will include the holding period of the shares of Citizens common stock so exchanged, provided that the Premier common stock is held as a capital asset at the Effective Time, as defined in the Agreement.

The opinions expressed in this letter are based upon statutory, judicial and administrative authority as of the date of this opinion. There can be no assurance that such authority will not be changed in the future, or that such changes will not be made retroactively applicable to the transactions described herein. Moreover, the above-stated opinions are based upon the facts as we understand them and upon the representations set forth herein. If the facts turn out to be different in any material respect from the facts or representations stated herein, or if the laws or regulations applicable to the proposed transactions are changed or reinterpreted by competent tribunals, some or all of the opinions expressed in this letter may become inapplicable.

This opinion is solely for the benefit of Premier, Interim Bank and Citizens in connection with the Merger and may not be used or relied upon in any other matter by any other person without our prior written consent. We hereby consent to the use of this opinion as an exhibit to the S-4 registration statement to be filed in connection with the Merger.