-----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, NGfdNUck18LdFAxjJJ8lL/J0N9sS8/OKeKbXh5kvFCdY6QgD9l4CxiHOv96TXpxJ fT+yPQ5SKn8rQb+wpNUsYg== 0000912057-97-016941.txt : 19970513 0000912057-97-016941.hdr.sgml : 19970513 ACCESSION NUMBER: 0000912057-97-016941 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970331 FILED AS OF DATE: 19970512 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: 97601151 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 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 March 31, 1997 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 May 8, 1997 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, 1996 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) March 31 December 31 1997 1996 ---------- -------------- ASSETS Cash and due from banks $ 6,898 $ 7,134 Federal funds sold 8,285 10,635 Investment securities: Available for sale 22,852 21,827 Held to maturity 21,795 20,993 Loans $ 225,197 $ 219,632 Less: Unearned interest (2,105) (2,045) Allowance for loan losses (2,669) (2,523) ---------- ---------- Net loans $ 220,423 $ 215,064 Premises and equipment, net 4,315 3,800 Goodwill 5,456 5,490 Other assets 8,035 7,622 ---------- ---------- TOTAL ASSETS $ 298,059 $ 292,565 LIABILITIES AND STOCKHOLDERS' EQUITY Deposits: Non-interest bearing $ 24,657 $ 25,031 Time deposits, $100,000 and over 32,788 33,651 Other interest bearing 182,423 176,892 ---------- ---------- Total deposits $ 239,868 $ 235,574 Agreements to repurchase securities 5,779 5,599 Federal Home Loan Bank advances 9,484 9,377 Other liabilities 2,519 2,151 ---------- ---------- Total liabilities $ 257,650 $ 252,701 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 March 31, 1997 and December 31, 1996, issued and outstanding 978 978 Surplus 32,941 32,941 Retained earnings 6,744 6,112 Net unrealized losses on securities available for sale (254) (167) ---------- ---------- Total stockholders' equity $ 40,409 $ 39,864 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 298,059 $ 292,565 See accompanying notes to the consolidated financial statements. Page 3 PREMIER FINANCIAL BANCORP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (IN THOUSANDS) Three Months Ended ---------------------------- March 31 March 31 1997 1996 ------------ ---------- INTEREST INCOME: Loans, including fees $ 5,470 $ 2,949 Investment securities - Taxable 415 313 Tax-exempt 239 83 Federal funds sold and other 186 129 ------------ ---------- Total interest income $ 6,310 $ 3,474 INTEREST EXPENSE: Deposits $ 2,644 $ 1,528 Debt and other borrowings 200 125 ------------ ---------- Total interest expense $ 2,844 $ 1,653 Net interest income $ 3,466 $ 1,821 Provision for possible loan losses 184 73 ------------ ---------- Net interest income after provision for possible loan losses $ 3,282 $ 1,748 NON-INTEREST INCOME: Service charges $ 232 $ 147 Insurance commissions 120 44 Investment securities gains (losses) 0 0 Other 207 128 ------------ ---------- $ 559 $ 319 NON-INTEREST EXPENSES: Salaries and employee benefits $ 1,228 $ 817 Occupancy and equipment expenses 290 128 Other expenses 665 452 ------------ ---------- $ 2,183 $ 1,397 Income before income taxes $ 1,658 $ 670 Provision for income taxes 500 172 ------------ ---------- NET INCOME $ 1,158 $ 498 Primary earnings per share $ .28 $ .26 Weighted average shares outstanding 4,209,090 1,909,090 See accompanying notes to the consolidated financial statements. Page 4 PREMIER FINANCIAL BANCORP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (IN THOUSANDS)
Three Months Ended --------------------------- March 31 March 31 1997 1996 ------------ ------------ CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 1,158 $ 498 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 112 42 Provision for loan losses 184 73 Changes in: Other assets (378) 40 Other liabilities 368 (2) ------------ ------------ Net cash provided by operating activities $ 1,444 $ 651 CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of securities available for sale $ (1,801) $(7,702) Proceeds from sales of securities available for sale 0 1,800 Proceeds from maturities and calls of securities available for sale 650 1,600 Purchases of investment securities held to maturity (1,148) (89) Proceeds from maturities and calls of securities held to maturity 351 721 Net change in federal funds sold 2,350 1,670 Net change in loans (5,543) (1,981) Purchases of bank premises and equipment (594) (27) ------------ ------------ Net cash used in investing activities $ (5,735) $(4,008) CASH FLOWS FROM FINANCING ACTIVITIES: Net change in deposits $ 4,294 $ 2,617 Increase in other borrowings, net 287 (103) Dividends paid (526) (238) ------------ ------------ Net cash provided by financing activities $ 4,055 $ 2,276 Net decrease in cash and cash equivalents $ (236) $(1,081) Cash and cash equivalents at beginning of period 7,134 6,340 ------------ ------------ CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 6,898 $ 5,259
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, Citizens Bank, Sharpsburg, Kentucky, and Farmers Deposit Bank, Eminence, 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 - INVESTMENT SECURITIES Amortized cost and fair value of investment securities, by category, at March 31, 1997 are summarized as follows:
Amortized Unrealized Unrealized Fair Cost Gains Losses Value --------- ---------- ---------- ---------- Available for sale: U. S. Treasury securities $ 3,696 $ 2 $ (8) $ 3,690 U. S. agency securities 14,891 6 (226) 14,671 Obligations of states and political subdivisions 1,683 36 (3) 1,716 Preferred stock 2,000 0 0 2,000 Other equity securities 900 0 (125) 775 ------- ----- ------ ------- Total available for sale $23,170 $ 44 $(362) $22,852 Held to maturity: U. S. Treasury securities $ 1,855 $ 5 $ (6) $ 1,854 U. S. agency securities 6,128 17 (24) 6,121 Obligations of states and political subdivisions 13,425 215 (95) 13,545 Asset-backed securities 387 2 (3) 386 ------- ----- ------ ------- Total held to maturity $21,795 $239 $(128) $21,906
Amortized cost and fair value of investment securities, by category, at December 31, 1996 are summarized as follows:
Amortized Unrealized Unrealized Fair Cost Gains Losses Value --------- ---------- ---------- ---------- Available for sale: U. S. Treasury securities $ 4,098 $ 5 $ (9) $ 4,094 U. S. agency securities 13,440 40 (157) 13,323 Obligations of states and political subdivisions 1,584 40 (2) 1,622 Preferred stock 2,000 0 0 2,000 Other equity securities 900 0 (112) 788 ------- ----- ------ ------- Total available for sale $22,022 $ 85 $(280) $21,827
Page 6 PREMIER FINANCIAL BANCORP, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 2 - INVESTMENT SECURITIES (CONTINUED)
Amortized Unrealized Unrealized Fair Cost Gains Losses Value --------- ---------- ---------- ---------- Held to maturity: ------- ----- ------ ------- U. S. Treasury securities $ 2,058 $ 6 $ (9) $ 2,055 U. S. agency securities 6,329 18 (26) 6,321 Obligations of states and political subdivisions 12,190 250 (60) 12,380 Asset-backed securities 416 4 (4) 416 ------- ----- ------ ------- Total held to maturity $20,993 $278 $ (99) $21,172
NOTE 3 - LOANS Major classifications of loans are summarized as follows: March 31 December 31 1997 1996 ----------- ------------- (In Thousands) Commercial, secured by real estate $ 60,214 $ 59,834 Commercial, other 37,388 33,908 Real estate construction 3,315 4,138 Real estate mortgage 78,595 76,600 Agricultural 9,731 10,050 Consumer 35,504 33,751 Other 450 1,351 -------- -------- $225,197 $219,632 Unearned interest (2,105) (2,045) Allowance for loan losses (2,669) (2,523) -------- -------- $220,423 $215,064 NOTE 4 - ALLOWANCE FOR LOAN LOSSES Changes in the allowance for loan losses are as follows: Three Months Ended -------------------------- March 31 March 31 1997 1996 ----------- ------------- (In Thousands) -------- -------- Balance, beginning of period $ 2,523 $ 1,735 Charge-offs (90) (80) Recoveries 52 62 Provision for loan losses 184 73 -------- -------- Balance, end of period $ 2,669 $ 1,790 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 three months ended March 31, 1997, of $1,158,000 or $0.28 per share, was 132% above net income of $498,000 or $0.26 for the three months ended March 31, 1996. This $660,000 increase in net income was primarily due to the increase in average interest earning assets of $127,356,000. The Company's asset growth is attributed to the additional capital from the proceeds of the initial public stock offering in May and June, 1996, and the acquisition of Farmers Deposit Bancorp on July 1, 1996, in addition to the continued growth of the Company's other commercial bank subsidiaries. The primary component of the growth is an increase of $106,294,000 in average loans for the three month period as compared to the corresponding three month period in 1996. The net interest margin was 5.24% for the first quarter of 1997 compared to a 5.19% in the first quarter of 1996 and 5.32% for the full year 1996. The return on stockholders' equity and return on average assets were 11.6% and 1.59%, respectively, for the three months ended March 31, 1997 compared to 17.7% and 1.27%, respectively, for the same period in 1996. The decrease in the return on equity is attributable to the additional $27 million received from the initial public offering in the second quarter of 1996. Non-interest income increased $240,000 to $559,000 for the first three months of 1997 compared to $319,000 for the first three months of 1996. Non-interest income of $207,000 was recorded at Farmers Deposit Bank, which was acquired in the second quarter of 1996, with the balance of the growth attributed to overall growth and expansion of the Company's business and its customer base. Non-interest income recorded in the first quarter of 1996 included a non-recurring fee of $50,000 received in connection with an exchange of an investment in preferred stock. Non-interest expenses for the first quarter of 1997 totaled $2,183,000 or 2.96% of average assets on an annualized basis compared to $1,397,000 or 3.56% of average assets for the same period of 1996. This increase in non-interest expense is attributed to the expansion of the Company's business, with $524,000 representing non-interest expenses incurred at Farmers Deposit Bank. As a percentage of average assets, non-interest expenses for the first quarter of 1997 were reduced by 16.7% as compared to the first quarter of 1996. Income tax expense was $500,000 for the first quarter of 1997 compared to $172,000 for the first quarter of 1996. Income tax expense for 1997 was higher than 1996 as a result of higher income before taxes and a higher effective tax rate. The effective tax rate for 1997 was 30.2% as compared to 25.7% for the same period in 1996. This higher rate was primarily attributable to the inclusion of amortization of goodwill recorded in connection with the Farmers Deposit Bancorp acquisition which is non-deductible for tax purposes. The provision for possible loan losses and net chargeoffs were $184,000 and $38,000, respectively, for the first quarter of 1997, compared to $73,000 and $18,000, respectively, for the first quarter of 1996. The increases in these amounts primarily relate to the increase in average loans between the two periods. Total nonperforming loans were $1,313,000 at March 31, 1997, compared to $951,000 at December 31, 1996. The allowance for loan losses at March 31, 1997, of 1.20% of total loans was an increase from 1.16% of total loans at December 31, 1996. Page 8 Any loans classified by regulatory examiners as loss, doubtful, substandard, or special mention that have not been disclosed under Item III of Industry Guide 3 do not (1) represent or result from trends or uncertainties which management reasonably expects will materially impact future operating results, liquidity, or capital resources, or (2) represent material credits about which management is aware of any information which causes management to have serious doubts as to the ability of borrowers to comply with the loan repayment terms. The Company is unaware of any trends, events, uncertainties or current recommendations by regulatory authorities that will have, or that are reasonably likely to have a material effect. 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 Corporation 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. 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 March 31, 1997, the Company's Tier I leverage capital ratio was 12.25%, which is approximately three times the regulatory minimum. The proceeds from the initial public offering in the second quarter of 1996 have provided the Company with the necessary capital required to fund the Company's future growth, both internal growth and additional acquisitions. The Company's principal source of funds for dividend payments to stockholders is dividends received from the subsidiary Banks. Banking regulations limit the amount of dividends that may be paid without prior approval of regulatory agencies. Under these regulations, the amount of dividends that may be paid without prior approval of regulatory agencies in any calendar year is limited to the current year's net profits, as defined, combined with the retained net profits of the preceding two years, subject to the capital requirement limitations. At March 31, 1997, the Banks could, without prior approval, declare dividends to the Company of approximately $4,000,000 plus any additional 1997 net profits retained to the date of the dividend declaration. The Company declared a first quarter dividend of $.125 per share, or $526,136, payable March 31, 1997 to shareholders of record as of March 24, 1997. Page 10 PART II - OTHER INFORMATION Item 1. Legal Proceedings None Item 2. Changes in Securities None 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 None 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. /s/ Marshall T. Reynolds Date: May 12, 1997 --------------------------------- Marshall T. Reynolds Chairman of the Board /s/ J. Howell Kelly Date: May 12, 1997 ---------------------------------- J. Howell Kelly President & Chief Executive Officer Page 12 EX-27 2 FINANCIAL DATA SCHEDULE
9 1,000 3-MOS DEC-31-1997 JAN-01-1997 MAR-31-1997 6,898 0 8,285 0 22,852 21,795 21,906 223,092 2,669 298,059 239,868 12,779 5,003 0 0 0 978 39,431 298,059 5,470 654 186 6,310 2,644 2,844 3,466 184 0 2,183 1,658 1,658 0 0 1,158 .28 .28 5.24 426 887 0 0 2,523 90 52 2,669 2,669 0 0 Note 1, Tag number 46 computed on a tax-equivalent basis
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