-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, KE9vlxNZX03IqWVb3YBb5PDA1CeA1GywjIzMeps0ogVed2vwSY5jGph/t5RW0QaU k3sftNR3kE4quOGHEPJ8Zw== 0000912057-96-017520.txt : 19960814 0000912057-96-017520.hdr.sgml : 19960814 ACCESSION NUMBER: 0000912057-96-017520 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960630 FILED AS OF DATE: 19960813 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: PREMIER FINANCIAL BANCORP INC CENTRAL INDEX KEY: 0000887919 STANDARD INDUSTRIAL CLASSIFICATION: STATE COMMERCIAL BANKS [6022] IRS NUMBER: 611206757 STATE OF INCORPORATION: KY FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-20908 FILM NUMBER: 96610801 BUSINESS ADDRESS: STREET 1: 120 N HAMILTON ST STREET 2: P O BOX 9 CITY: GEORGETOWN STATE: KY ZIP: 40324 BUSINESS PHONE: 6067963001 10-Q 1 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 1996 or [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to ------------ ------------ Commission file number 0-20908 PREMIER FINANCIAL BANCORP, INC. (Exact name of registrant as specified in its charter) KENTUCKY 61-1206757 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 120 N. HAMILTON STREET GEORGETOWN, KENTUCKY 40324 (address of principal executive officer) (Zip Code) Registrant's telephone number (502) 863-7500 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to filing requirements for the past 90 days. Yes X No ------ --------- Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practical date. Common stock - 4,209,090 shares outstanding at August 9, 1996 PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS The accompanying information has not been audited by independent public accountants; however, in the opinion of management such information reflects all adjustments necessary for a fair presentation of the results for the interim period. All such adjustments are of a normal and recurring nature. The accompanying financial statements are presented in accordance with the requirements of Form 10-Q and consequently do not include all of the disclosures normally required by generally accepted accounting principles or those normally made in the registrant's annual Form 10-K filing. Accordingly, the reader of the Form 10-Q may wish to refer to the registrant's Form 10-K for the year ended December 31, 1995 for further information in this regard. Index to consolidated financial statements: Consolidated Balance Sheets.................................3 Consolidated Statements of Income...........................4 Consolidated Statements of Cash Flows.......................5 Notes to Consolidated Financial Statements..................6 Page 2 PREMIER FINANCIAL BANCORP, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (IN THOUSANDS)
June 30 December 31 1996 1995 (Unaudited) (*) ASSETS Cash and due from banks $ 4,785 $ 6,340 Federal funds sold 4,840 6,340 Investment securities: Available for sale 32,305 16,039 Held to maturity 8,630 8,890 Loans $ 125,306 $ 113,775 Less: Unearned interest (788) (711) Allowance for loan losses (1,871) (1,735) ----------- ----------- Net loans $ 122,647 $ 111,329 Premises and equipment, net 2,351 2,129 Other assets 4,244 4,408 ----------- ----------- TOTAL ASSETS $ 179,802 $ 155,475 LIABILITIES AND STOCKHOLDERS' EQUITY Deposits: Non-interest bearing $ 14,854 $ 16,001 Time deposits, $100,000 and over 20,329 20,237 Other interest bearing 103,424 100,009 ----------- ----------- Total deposits $ 138,607 $ 136,247 Agreements to repurchase securities 424 747 Federal Home Loan Bank advances 755 755 Other liabilities 1,421 1,511 Debt 0 5,000 ----------- ----------- Total liabilities $ 141,207 $ 144,260 STOCKHOLDERS' EQUITY: Preferred stock, no par value; 1,000,000 shares authorized; none issued or outstanding $ 0 $ 0 Common stock, no par value; 10,000,000 shares authorized; 4,209,090 shares at June 30, 1996 and 954,545 shares at December 31, 1995, respectively issued and outstanding 978 955 Surplus 33,000 5,897 Retained earnings 4,973 4,493 Net unrealized losses on securities available for sale (356) (130) ----------- ----------- Total stockholders' equity $ 38,595 $ 11,215 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 179,802 $ 155,475
See accompanying notes to the consolidated financial statements. *Derived from audited financial statements. Page 3 PREMIER FINANCIAL BANCORP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (IN THOUSANDS) (UNAUDITED)
Three Months Ended Six Months Ended June 30 June 30 June 30 June 30 1996 1995 1996 1995 INTEREST INCOME: Loans, including fees $ 3,180 $ 2,269 $ 6,129 $ 4,328 Investment securities - Taxable 441 221 754 449 Tax-exempt 83 72 167 140 Federal funds sold and other 52 47 180 143 --------- --------- --------- --------- Total interest income $ 3,756 $ 2,609 $ 7,230 $ 5,060 INTEREST EXPENSE: Deposits $ 1,553 $ 1,108 $ 3,082 $ 2,086 Debt and other borrowings 43 46 167 90 --------- --------- --------- --------- Total interest expense $ 1,596 $ 1,154 $ 3,249 $ 2,176 Net interest income $ 2,160 $ 1,455 $ 3,981 $ 2,884 Provision for possible loan losses 116 11 188 28 --------- --------- --------- --------- Net interest income after provision for possible loan losses $ 2,044 $ 1,444 $ 3,793 $ 2,856 NON-INTEREST INCOME: Service charges $ 177 $ 127 $ 324 $ 232 Insurance commissions 89 33 133 68 Investment securities gains (losses) 0 17 0 (8) Other 68 29 195 51 --------- --------- --------- --------- $ 334 $ 206 $ 652 $ 343 NON-INTEREST EXPENSES: Salaries and employee benefits $ 675 $ 546 $ 1,492 $ 1,151 Occupancy and equipment expenses 156 151 284 302 FDIC insurance 9 57 22 114 Other expenses 471 303 910 580 --------- --------- --------- --------- $ 1,311 $ 1,057 $ 2,708 $ 2,147 Income before income taxes $ 1,067 $ 593 $ 1,737 $ 1,052 Provision for income taxes 320 63 492 129 --------- --------- --------- --------- NET INCOME $ 747 $ 530 $ 1,245 $ 923 Primary earnings per share $ 0.27 $ 0.28 $ 0.53 $ 0.48 Fully diluted earnings per share $ 0.27 $ 0.28 $ 0.53 $ 0.48 Weighted average shares outstanding 2,802 1,909 2,356 1,903
See accompanying notes to the consolidated financial statements. Page 4 PREMIER FINANCIAL BANCORP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (IN THOUSANDS) (UNAUDITED)
Six Months Ended June 30 June 30 1996 1995 CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 1,245 $ 923 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 101 98 Provision for loan losses 188 28 Investment securities losses (gains), net 0 8 Changes in: Other assets 245 (512) Other liabilities (90) 73 --------- --------- Net cash provided by operating activities $ 1,689 $ 618 CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of securities available for sale $ (20,730) $ (1,193) Proceeds from sales of securities available for sale 0 4,372 Proceeds from maturities of securities available for sale 4,150 0 Purchases of investment securities held to maturity (788) (4,115) Proceeds from maturities of securities held to maturity 1,045 925 Net change in federal funds sold 1,500 2,840 Net change in loans (11,506) (7,191) Purchases of bank premises and equipment (312) (1,075) --------- --------- Net cash used in investing activities $ (26,641) $ (5,437) CASH FLOWS FROM FINANCING ACTIVITIES: Net change in deposits $ 2,360 $ 3,068 Net change in agreements to repurchase securities (323) 0 Advances from Federal Home Loan Bank 0 50 Proceeds from debt 0 1,500 Repayment of debt (5,000) 0 Net proceeds from issuance of common stock 27,125 0 Dividends paid (765) (382) --------- --------- Net cash provided by financing activities $ 23,397 $ 4,236 Net decrease in cash and cash equivalents $ (1,555) $ (583) Cash and cash equivalents at beginning of period 6,340 5,066 --------- --------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 4,785 $ 4,483
See accompanying notes to the consolidated financial statements. Page 5 PREMIER FINANCIAL BANCORP, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 1 - BASIS OF PRESENTATION The consolidated financial statements include the accounts of Premier Financial Bancorp, Inc. (the Company) and its wholly-owned subsidiaries, Georgetown Bancorp, Inc., Georgetown, Kentucky, Citizens Deposit Bank & Trust, Vanceburg, Kentucky, Bank of Germantown, Germantown, Kentucky and Citizens Bank, Sharpsburg, Kentucky. In addition, the Company has a data processing service subsidiary, Premier Data Services, Inc., Vanceburg, Kentucky. All material intercompany transactions and balances have been eliminated. NOTE 2 - BUSINESS COMBINATION Effective July 1, 1996, the Company consummated an Agreement and Plan of Share Exchange with Farmers Deposit Bancorp, Eminence, Kentucky (Eminence), a one-bank holding company owning all of the shares of Farmers Deposit Bank. Under the Share Exchange Agreement, the Company acquired all of the outstanding shares of Eminence in a statutory share exchange in exchange for $1,035 cash per share, or an aggregate cash purchase price of $12,549,375. Following consummation of the share exchange, Eminence will be a wholly owned subsidiary of the Company and the Eminence Bank will be an indirect wholly-owned subsidiary of the Company. At June 30, 1996, Eminence had consolidated total assets of $107 million (including net loans of $82 million), consolidated total liabilities of $100 million (including total deposits of $87 million) and consolidated total shareholders' equity of $7 million. Eminence recorded net interest income of $3,487,000 and net income of $1,022,000 for the year ended December 31, 1995 and net interest income of $1,728,000 and net income of $38,000 for the six months ended June 30, 1996. NOTE 3 - INVESTMENT SECURITIES Amortized cost and fair value of investment securities, by category, at June 30, 1996 are summarized as follows:
AMORTIZED UNREALIZED UNREALIZED FAIR COST GAINS LOSSES VALUE Available for sale: U. S. Treasury securities $ 15,943 $ 2 $ (17) $ 15,928 U. S. agency securities 13,937 8 (344) 13,601 Preferred stock 2,000 0 0 2,000 Other equity securities 900 0 (124) 776 ----------- ---------- ---------- ---------- Total available for sale $ 32,780 $ 10 $ (485) $ 32,305 Held to maturity: Obligations of states and political subdivisions $ 6,484 $ 48 $ (141) $ 6,391 U. S. agency securities 1,800 0 (27) 1,773 Other securities 346 0 0 346 ----------- ---------- ---------- ---------- Total held to maturity $ 8,630 $ 48 $ (168) $ 8,510
Page 6 PREMIER FINANCIAL BANCORP, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 3 - INVESTMENT SECURITIES (CONTINUED) Amortized cost and fair value of investment securities, by category, at December 31, 1995 are summarized as follows:
AMORTIZED UNREALIZED UNREALIZED FAIR COST GAINS LOSSES VALUE Available for sale: U. S. Treasury securities $ 2,547 $ 10 $ (1) $ 2,556 U. S. agency securities 10,747 18 (101) 10,664 Preferred stock 2,000 0 0 2,000 Other equity securities 900 0 (81) 819 ---------- ---------- ---------- ---------- Total available for sale $ 16,194 $ 28 $ (183) $ 16,039 Held to maturity: Obligations of states and political subdivisions $ 6,348 $ 86 $ (46) $ 6,388 U. S. agency securities 2,300 0 (41) 2,259 Other securities 242 1 0 243 ---------- ---------- ---------- ---------- Total held to maturity $ 8,890 $ 87 $ (87) $ 8,890 NOTE 4 - ALLOWANCE FOR LOAN LOSSES Changes in the allowance for loan losses are as follows: THREE MONTHS ENDED SIX MONTHS ENDED JUNE 30 JUNE 30 JUNE 30 JUNE 30 1996 1995 1996 1995 Balance, beginning of period $ 1,790 $ 896 $ 1,735 $ 886 Net charge-offs (35) (2) (52) (9) Provision for loan losses 116 11 188 28 ---------- ---------- ---------- ---------- Balance, end of period $ 1,871 $ 905 $ 1,871 $ 905
NOTE 5 - INITIAL PUBLIC OFFERING On May 22, 1996, the Company completed its initial public offering by selling 2,000,000 common shares at an offering price of $13.00 per share and on June 19, 1996, the Company completed the sale of an additional 300,000 common shares (which represented the Underwriters' over-allotment option) at a price of $13.00 per share. Total proceeds to the Company, net of the underwriting discount and issuance costs, were $27,125,000. Page 7 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS A. Financial Condition and Results of Operations Net income for the six months ended June 30, 1996 of $1,245,000 or $.53 per share was 35% higher than the $923,000 or $.48 per share recorded for the same period in 1995. This increase was due largely to the increase of $1,097,000 in net interest income reflecting the growth in the average assets of the Company of approximately $43,000,000 to $161,500,000 compared to $118,500,000 for the same period in 1995. The growth in average assets was primarily the result of the acquisition of Citizens Bank of Sharpsburg in November, 1995, the issuance of 2,300,000 additional common shares near the end of the second quarter of 1996, and the continued growth of the Company's other banks. For the three months ended June 30, 1996, net income totaled $747,000 or $.27 per share compared to $530,000 or $.28 per share for the same period in 1995. The lower earnings per share figure occurred primarily as a result of the sale of the additional shares during the quarter, the proceeds from which were invested in short term investments pending the completion of the acquisition of Farmers Deposit Bancorp which was effected on July 1, 1996. The net interest margin for the six months ended June 30, 1996 was 5.40% compared to 5.34% for the first six months of 1995. The return on average shareholders' equity and return on average assets were 14.7% and 1.54%, respectively, for the six months ended June 30, 1996, compared to 17.55% and 1.55%, respectively for the same period in 1995. Non-interest income increased $309,000 to $652,000 for the first six months of 1996 compared to $343,000 for the first six months of 1995. Non-interest income increased $128,000 to $334,000 for the three months ended June 30, 1996 compared to $206,000 for the same period in 1995. The increases are attributed to the growth and expansion of the Company's business and its customer base, including higher insurance commissions, income from the sale of loans and an overall increase in service charges. In addition, a $50,000 fee was received during the first three months of 1996 in connection with an exchange of an investment in preferred stock. The acquisition of the Sharpsburg Bank contributed $24,000 and $67,000 to the increase in non-interest income for the three and six month period ended June 30, 1996, respectively. Non-interest expenses were $2,708,000 or 3.35% of average assets on an annualized basis during the first six months of 1996 compared to $2,147,000 or 3.61% of average assets during the same period of 1995. Non-interest expenses increased $254,000 during the three months ended June 30, 1996 to $1,311,000 compared to $1,057,000 for the three months ended June 30, 1995. Salaries and employee benefits increased from $546,000 and $1,151,000 for the three and six months ended June 30, 1995, respectively, to $675,000 and $1,492,000 for the three and six months ended June 30, 1996, respectively. Also increasing were other operating expenses from $303,000 and $580,000 for the three and six months ended June 30, 1995 to $471,000 and $910,000 for the same periods in 1996. These increases are reflective of the increase in full-time equivalent employees and the expenses associated with a 36% increase in total consolidated assets during these periods. These increases, however, were partially offset by a slight decrease in occupancy expenses and a substantial reduction in FDIC insurance. The operations of the Sharpsburg Bank added $138,000 and $269,000 to total non-interest expenses for the three and six months ended June 30, 1996, respectively. Page 8 The provision for possible loan losses increased from $11,000 to $116,000 for the three months ended June 30, 1996 compared to 1995 and from $28,000 to $188,000 for the first six months of 1996 compared to 1995. These increases for possible loan losses are in line with the increase in average loans outstanding from $84,894,000 for the six months ended June 30, 1995 to $118,791,000 for the six months ended June 30, 1996. The allowance for loan losses at June 30, 1996 of $1,871,000 represented 1.50% of total loans outstanding. Income before income taxes for the six months ended June 30, 1996 of $1,737,000 was $685,000 or 65% above last years $1,052,000. The provision for income taxes of $492,000 represented a tax rate of 28% versus $129,000 or a 12% tax rate in 1995. The lower tax rate in 1995 was largely as a result of the reduction in the valuation allowance for deferred tax assets at the Georgetown Bank. B. Liquidity Liquidity for a financial institution can be expressed in terms of maintaining sufficient cash flows to meet both existing and unplanned obligations in a cost effective manner. Adequate liquidity allows the Company to meet the demands of both the borrower and the depositor on a timely basis, as well as pursuing other business opportunities as they arise. Thus, liquidity management embodies both an asset and liability aspect. In order to provide for funds on a current and long-term basis, the Company primarily relies on the following sources: 1. Core deposits consisting of both consumer and commercial deposits and certificates of deposit of $100,000 or more. 2. Cash flow generated by repayment of loans and interest. 3. Arrangements with correspondent banks for purchase of unsecured federal funds. 4. The sale of securities under repurchase agreements and borrowing from the Federal Home Loan Bank. 5. Maintenance of an adequate available-for-sale security portfolio. Additional liquidity was provided during the three months ended June 30, 1996 from the sale of 2,300,000 additional shares of the Company's common stock. The cash flow statements for the periods presented in the financial statements provide an indication of the Company's sources and uses of cash as well as an indication of the ability of the Company to maintain an adequate level of liquidity. Page 9 C. Capital On January 19, 1996, the Board of Directors approved a 2-for-1 stock split payable March 29, 1996 in the form of a share dividend to shareholders of record on February 22, 1996, thus, all per share information in this filing has been adjusted for the stock split. Additionally, on March 15, 1996, the shareholders approved an amendment to the Company's articles of incorporation that increased the number of Common Shares authorized from 1,800,000 to 10,000,000, eliminated the $1.00 par value per share relating to Common Shares and authorized 1,000,000 preferred shares, without par value. On January 19, 1996, the Board of Directors adopted, and on March 15, 1996 the Company's shareholders approved, the Premier Financial Bancorp, Inc. 1996 Employee Stock Ownership Incentive Plan, whereby certain employees of the Company are eligible to receive stock options under the Plan. A maximum of 100,000 shares of the Company's common stock (adjusted for the 2-for-1 stock split payable March 29, 1996) may be issued through exercises of these stock options. The option price is the fair market value of the Company's shares at the date of the grant. On May 22, 1996, the Company issued 2,000,000 additional common shares in a public offering at $13.00 per share. After underwriting commissions of $1,820,000 and expenses of $682,000, the Company realized net proceeds of $23,498,000. On June 19, 1996, the underwriters exercised an overallotment option and an additional 300,000 were issued with the Company receiving net proceeds of $3,627,000 after underwriting commissions of $273,000. The total net proceeds from the issuance of the 2,300,000 common shares were $27,125,000. Proceeds of $5,000,000 were used to repay existing Company debt, $12,550,000 was used to acquire Farmers Deposit Bancorp, Eminence, Kentucky, and an additional $1,850,000 was used to repay Farmers Deposit Bancorp's existing debt. The remaining proceeds may be used by the Company to provide additional capital to its existing banks, for possible future acquisitions or for general corporate purposes. At June 30, 1996, total capital of $38,595,000 equaled 21.47% of total consolidated assets. After giving effect to the acquisition of Farmers Deposit Bancorp on July 1, 1996, total capital represented 13.45% of total consolidated assets of approximately $287,000,000. The Company declared a first quarter dividend of $.125 per share, or $238,636, payable March 31, 1996 to shareholders of record as of March 20, 1996 and a second quarter dividend of $.125 per share, or $526,136 payable June 30, 1996 to shareholders of record as of June 20, 1996. Page 10 PART II - OTHER INFORMATION Item 1. Legal Proceedings None Item 2. Changes in Securities The Company issued an additional 2,300,000 common shares in a public offering during the three months ended June 30, 1996 (see Note 5 to the consolidated financial statements) Item 3. Defaults Upon Senior Securities None Item 4. Submission of Matters to a vote of Security Holders None Item 5. Other Information None Item 6. Exhibits and Reports on Form 8-K (a) Exhibits Exhibit No. Description of Document 27 Financial Data Schedule 99 Current Report on Form 8-K filed with the Commission on July 11, 1996 is incorporated herein by reference (regarding completion of the Company's share exchange transaction with Farmers Deposit Bancorp, Eminence, Kentucky) (b) Reports on Form 8-K Current Report on Form 8-K filed with the Commission on July 11, 1996 is incorporated herein by reference (regarding completion of the Company's share exchange transaction with Farmers Deposit Bancorp, Eminence, Kentucky) Page 11 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Corporation has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. PREMIER FINANCIAL BANCORP, INC. Date: August 12, 1996 /s/ Marshall T. ReynoldS ------------------------------- Marshall T. Reynolds Chairman of the Board Date: August 12, 1996 /s/ J. Howell Kelly ------------------------------- J. Howell Kelly President & Chief Executive Officer Page 12 EX-27 2 EXHIBIT 27 FDS
9 1,000 6-MOS DEC-31-1996 JAN-01-1996 JUN-30-1996 4,785 0 4,840 0 32,305 8,630 8,510 125,306 1,871 179,802 138,607 997 1,421 0 0 0 978 37,617 179,802 6,129 921 180 7,230 3,082 3,249 3,981 188 0 2,708 1,737 1,737 0 0 1,245 .53 .53 5.40 705 899 0 0 1,735 139 87 1,871 1,871 0 0 Computed on a tax-equivalent basis
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