-----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, LDKr+ZmtzIhmGJhPf2YAQ+RX2boeKVBzdGrgJ8sC6aIieR6ebR2ukWKM1IU5aCD3 abSFg0LzCv+MGhLB4gSFhA== 0001047469-99-020943.txt : 19990518 0001047469-99-020943.hdr.sgml : 19990518 ACCESSION NUMBER: 0001047469-99-020943 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19990331 FILED AS OF DATE: 19990517 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: SEC FILE NUMBER: 000-20908 FILM NUMBER: 99625884 BUSINESS ADDRESS: STREET 1: 115 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, 1999 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.) 115 N. HAMILTON STREET GEORGETOWN, KENTUCKY 40324 (address of principal executive officer) (Zip Code) Registrant's telephone number (502) 863-1955 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 - 5,232,257 shares outstanding at May 12, 1999. 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, 1998 for further information in this regard. Index to consolidated financial statements: Consolidated Balance Sheets.................................................. 3 Consolidated Statements of Income............................................ 4 Consolidated Statements of Changes in Stockholders' Equity................... 5 Consolidated Statements of Cash Flows........................................ 6 Notes to Consolidated Financial Statements................................... 7
PREMIER FINANCIAL BANCORP, INC. CONSOLIDATED BALANCE SHEETS MARCH 31, 1999 AND DECEMBER 31, 1998 (IN THOUSANDS) - --------------------------------------------------------------------------------
1999 1998 ---- ---- ASSETS Cash and due from banks $ 23,154 $ 20,171 Federal funds sold 21,584 19,406 Investment securities Available for sale 172,000 157,140 Held to maturity 20,262 20,052 Loans 512,343 398,728 Less: Unearned interest (2,883) (3,108) Allowance for loan losses (5,746) (4,363) ------------- -------------- Net loans 503,714 391,257 FHLB and Federal Reserve stock 3,869 3,416 Premises and equipment, net 14,140 11,764 Real estate and other property acquired through foreclosure 1,080 992 Interest receivable 8,644 8,053 Goodwill and other intangibles 25,439 21,555 Other assets 5,806 3,938 ------------- -------------- TOTAL ASSETS $ 799,692 $ 657,744 ------------- -------------- ------------- -------------- LIABILITIES AND STOCKHOLDERS' EQUITY Deposits Non-interest bearing $ 68,967 $ 62,813 Time deposits, $100,000 and over 80,646 61,190 Other interest bearing 501,414 399,190 ------------- -------------- Total deposits 651,027 523,193 Securities sold under agreements to repurchase 6,737 7,772 Federal Home Loan Bank advances 33,275 31,898 Other borrowed funds 20,000 8,000 Interest payable 3,296 2,384 Other liabilities 2,314 1,348 ------------- -------------- Total liabilities 716,649 574,595 Guaranteed preferred beneficial interests in Company's debentures 28,750 28,750 Stockholders' equity Preferred stock, no par value; 1,000,000 shares authorized; none issued or outstanding - - Common stock, no par value; 10,000,000 shares authorized; 5,232,257 shares at March 31, 1999 and December 31, 1998, issued and outstanding 1,103 1,103 Surplus 43,445 43,445 Retained earnings 10,584 10,151 Accumulated other comprehensive income (839) (300) -------------- -------------- Total stockholders' equity 54,293 54,399 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 799,692 $ 657,744 ------------- -------------- ------------- --------------
(Continued) 3. CONSOLIDATED STATEMENTS OF INCOME THREE MONTHS ENDED MARCH 31, 1999 AND 1998 (IN THOUSANDS) - --------------------------------------------------------------------------------
1999 1998 ---- ---- INTEREST INCOME Loans, including fees $ 11,565 $ 7,833 Investment securities Taxable 2,484 1,082 Tax-exempt 355 279 Federal funds sold and other 381 641 ----------- ----------- Total interest income 14,785 9,835 INTEREST EXPENSE Deposits 6,560 4,189 Debt and other borrowings 1,507 1,090 ----------- ----------- Total interest expense 8,067 5,279 Net interest income 6,718 4,556 Provision for possible loan losses 474 276 ----------- ----------- Net interest income after provision for possible loan losses 6,244 4,280 NON-INTEREST INCOME Service charges 434 312 Insurance commissions 124 102 Investment securities gains 31 2 Other 349 74 ----------- ----------- 938 490 NON-INTEREST EXPENSES Salaries and employee benefits 2,960 1,538 Occupancy and equipment expenses 685 503 Amortization of intangibles 448 154 Other expenses 1,427 969 ----------- ----------- 5,520 3,164 ----------- ----------- Income before income taxes 1,662 1,606 Provision for income taxes 444 225 ------------- ----------- NET INCOME $ 1,218 $ 1,381 ------------- ----------- ------------- ----------- Change in net unrealized losses on securities (539) (274) ------------- ----------- COMPREHENSIVE INCOME $ 679 $ 1,107 ------------- ----------- ------------- ----------- Earnings per share $ .23 $ .26 Earnings per share assuming dilution $ .23 $ .26 Weighted average shares outstanding 5,232 5,232
(Continued) 4. CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY THREE MONTHS ENDED MARCH 31, 1999 (IN THOUSANDS)
Accumulated Other Common Retained Comprehensive Stock Surplus Earnings Income (Loss) Total ----- ------- -------- ------------- ----- Balances, January 1, 1999 $ 1,103 $ 43,445 $ 10,151 $ (300) $ 54,399 Net change in unrealized losses on securities available for sale - - - (539) (539) Net income - - 1,218 - 1,218 Dividends paid - Company ($.15 per share) - - (785) - (785) ---------- ----------- ----------- ------------ ------------ Balances, March 31, 1999 $ 1,103 $ 43,445 $ 10,584 $ (839) $ 54,293 ---------- ----------- ----------- ------------ ------------ ---------- ----------- ----------- ------------ ------------
(Continued) 5. CONSOLIDATED STATEMENTS OF CASH FLOWS THREE MONTHS ENDED MARCH 31, 1999 AND 1998 (IN THOUSANDS) - --------------------------------------------------------------------------------
1999 1998 ---- ---- CASH FLOWS FROM OPERATING ACTIVITIES Net income $ 1,218 $ 1,381 Adjustments to reconcile net income to net cash from operating activities Depreciation and amortization 971 272 Provision for loan losses 474 276 Investment securities losses (gains), net (31) (2) Changes in Other assets 647 (407) Other liabilities 1,174 140 ------------- ------------- Net cash from operating activities 4,453 1,660 CASH FLOWS FROM INVESTING ACTIVITIES Purchases of investment securities available for sale (62,640) (117,381) Proceeds from sales of investment securities available for sale 23,419 751 Proceeds from maturities of investment securities available for sale 34,402 12,047 Purchases of investment securities held to maturity (1,600) (2,291) Proceeds from maturities of investment securities held to maturity 1,391 1,881 Net change in federal funds sold 10,546 14,023 Net change in loans (17,838) (4,153) Purchases of bank premises and equipment (694) (474) Net cash paid Mt. Vernon acquisition (8,579) - ------------- ------------- Net cash used in investing activities (21,593) (95,597) CASH FLOWS FROM FINANCING ACTIVITIES Net change in deposits 9,167 4,332 Net change in agreements to repurchase securities (1,635) 75,969 Advances from Federal Home Loan Bank, net 1,376 14,489 Net change in borrowed funds 12,000 - Dividends paid (785) (748) ------------- ------------- Net cash from financing activities 20,123 94,042 ------------- ------------- Net change in cash and cash equivalents 2,983 105 Cash and cash equivalents at beginning of period 20,171 13,100 ------------- ------------- Cash and cash equivalents at end of period $ 23,154 $ 13,205 ------------- ------------- ------------- -------------
(Continued) 6. PREMIER FINANCIAL BANCORP, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - -------------------------------------------------------------------------------- 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; Farmers Deposit Bancorp, Eminence, Kentucky; The Sabina Bank, Sabina, Ohio; Ohio River Bank, Ironton, Ohio; The Bank of Philippi, Inc., Philippi, West Virginia; Boone County Bank, Inc., Madison, West Virginia; and Mt. Vernon Bancshares, Mt. Vernon, 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 COMBINATIONS On January 20, 1999, the Company completed the purchase of Mt. Vernon Bancshares Inc., the holding company for The Bank of Mt. Vernon (Mt. Vernon), in a cash transaction. Mt. Vernon offers full service banking in Rockcastle and Pulaski counties and has two loan production offices in Madison County, Kentucky. Total acquisition cost was $13.5 million which exceeded the net assets acquired by $4.5 million. At date of acquisition, Mt. Vernon had total assets of $120.1 million, total loans of $96.8 million, and total deposits of $118.7 million. On June 26, 1998, the Company chartered Boone County Bank, Inc. in Madison, West Virginia, and The Bank of Philippi, Inc. in Philippi, West Virginia, for the purpose of acquiring three branch offices of Banc One Corporation located in Madison, Philippi and Van, West Virginia. Included in the purchase were $150 million in deposits, $9 million in loans and $1.5 million in premises and equipment. On March 20, 1998, the Company acquired Ohio River Bank (Ohio River) whereby the Company exchanged 297,840 shares of its common stock for all the issued and outstanding shares of Ohio River in a business combination accounted for as a pooling of interests. The accompanying financial statements for 1998 are based on the assumption that the companies were combined for the full year. At the date of acquisition, Ohio River had $40.9 million in total assets, $28.0 million in net loans, $35.2 million in deposits, and $4.3 million in stockholders' equity. NOTE 3 - STOCK DIVIDEND The Company paid a 5% stock dividend on September 30, 1998. For comparability, prior per share information has been restated to reflect the 249,027 shares issued as a result. (Continued) 7. PREMIER FINANCIAL BANCORP, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - -------------------------------------------------------------------------------- NOTE 4 - SECURITIES Amortized cost and fair value of investment securities, by category, at March 31, 1999 are summarized as follows:
Amortized Unrealized Unrealized Fair Cost Gains Losses Value ---- ----- ------ ----- Available for sale U. S. Treasury securities $ 6,781 $ 34 $ - $ 6,815 U. S. agency securities 142,054 2 (1,404) 140,652 Obligations of states and political Subdivisions 6,132 260 - 6,392 Asset-backed securities 15,414 22 (81) 15,355 Preferred stock 2,000 - - 2,000 Other equity securities 900 - (114) 786 -------------- -------------- -------------- --------------- Total available for sale $ 173,281 $ 318 $ (1,599) $ 172,000 -------------- -------------- -------------- --------------- -------------- -------------- -------------- --------------- Held to maturity U. S. Treasury securities $ 1,052 $ 8 $ - $ 1,060 U. S. agency securities 1,576 2 - 1,578 Obligations of states and political Subdivisions 17,594 596 (5) 18,185 Asset-backed securities 40 - - 40 -------------- -------------- -------------- --------------- Total held to maturity $ 20,262 $ 606 $ (5) $ 20,863 -------------- -------------- -------------- --------------- -------------- -------------- -------------- ---------------
Amortized cost and fair value of investment securities, by category, at December 31, 1998 are summarized as follows:
Amortized Unrealized Unrealized Fair Cost Gains Losses Value ---- ----- ------ ----- Available for sale U. S. Treasury securities $ 7,185 $ 44 $ - $ 7,229 U. S. agency securities 125,372 45 (540) 124,877 Obligations of states and political Subdivisions 3,691 142 (2) 3,831 Asset-backed securities 18,452 20 (67) 18,405 Preferred stock 2,000 - - 2,000 Other equity securities 900 - (102) 798 -------------- -------------- -------------- --------------- Total available for sale $ 157,600 $ 251 $ (711) $ 157,140 -------------- -------------- -------------- --------------- -------------- -------------- -------------- --------------- Held to maturity U. S. Treasury securities $ 899 $ 16 $ - $ 915 U. S. agency securities 2,631 - (73) 2,558 Obligations of states and political Subdivisions 16,474 770 (1) 17,243 Asset-backed securities 48 - - 48 -------------- -------------- -------------- --------------- Total held to maturity $ 20,052 $ 786 $ (74) $ 20,764 -------------- -------------- -------------- --------------- -------------- -------------- -------------- ---------------
(Continued) 8. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - -------------------------------------------------------------------------------- NOTE 5 - LOANS Major classifications of loans at March 31, 1999 and December 31, 1998 are summarized as follows:
1999 1998 ---- ---- (In Thousands) Commercial, secured by real estate $ 122,666 $ 86,010 Commercial, other 91,936 73,982 Real estate construction 26,018 13,374 Real estate mortgage 165,037 131,212 Agricultural 13,685 15,433 Consumer and home equity 91,638 74,215 Other 1,363 4,502 ------------ ------------ $ 512,343 $ 398,728 ------------ ------------ ------------ ------------
NOTE 6 - ALLOWANCE FOR LOAN LOSSES Changes in the allowance for loan losses for the three months ended March 31, 1999 and 1998 are as follows:
1999 1998 ------- ------- Balance, beginning of period $ 4,363 $ 3,479 Acquired through purchase of Mt. Vernon Bancshares 1,310 -- Net charge-offs (401) (155) Provision for loan losses 474 276 ------- ------- Balance, end of period $ 5,746 $ 3,600 ------- ------- ------- -------
NOTE 7 - GUARANTEED PREFERRED BENEFICIAL INTERESTS IN COMPANY'S SUBORDINATED DEBENTURES Guaranteed preferred beneficial interests in the Company's subordinated debentures (Preferred Securities) represent preferred beneficial interests in the assets of PFBI Capital Trust (Trust), a wholly-owned subsidiary of the Company. The Trust's sole assets are 9.75% junior subordinated debentures due June 30, 2027 issued by the Company on June 9, 1997. Distributions on the Preferred Securities will be payable at an annual rate of 9.75% of the stated liquidation amount of $25 per Preferred Security, payable quarterly. Cash distributions on the Preferred Securities are made to the extent interest on the debentures is received by the Trust. In the event of certain changes or amendments to regulatory requirements or federal tax rules, the Preferred Securities are redeemable in whole. Otherwise, the Preferred Securities are generally redeemable in whole or in part on or after June 30, 2002 at 100% of the liquidation amount. The Trust's obligations under the Preferred Securities are fully and unconditionally guaranteed by the Company. 9. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS A. Results of Operations Net income for the three months ended March 31, 1999 was $1,218,000 or $0.23 per share compared to net income of $1,381,000 or $0.26 per share for the three months ended March 31, 1998. Results for the quarter reflect charges for amortization of goodwill and other intangibles associated with cash acquisitions totaling $354,000 (after tax) as compared to $136,000 (after tax) in the same period for 1998. Not including these charges, net income for the first quarter 1999 was $1,572,000 or $0.30 per share versus $1,517,000 or $0.29 per share in 1998. Earning assets increased $131 million to $727 million at March 31, 1999 over December 31, 1998. The increase is primarily the result of the first quarter acquisition of Mt. Vernon which provided an additional $124 million in earning assets. Net interest income increased $2,162,000 to $6,718,000 for the three months ended March 31, 1999 compared to $4,556,000 for the same period in 1998. Net interest margin for the three months ending March 31, 1999 was approximately 3.88% as compared to 4.04% for the same period in 1998. The decrease in net interest margin is primarily attributable to the acquisition of the deposit liabilities of the three West Virginia branches. Proceeds from these branches have been placed in lower yielding assets until higher yielding assets can be generated. The returns on stockholders' equity and on average assets were approximately 8.93% and .64% for the three months ended March 31, 1999 compared to 10.49% and 1.15% for the same period in 1998. Non-interest income increased $448,000 to $938,000 for the first three months of 1999 compared to the first three months of 1998. The increase is attributable to the West Virginia and Mt. Vernon acquisitions and the expansion of the Company's business. Non-interest expenses for the first quarter of 1999 totaled $5,520,000 or 2.9% of average assets on an annualized basis compared to $3,164,000 or 2.6% of average assets for the same period of 1998. This increase in non-interest expense can be primarily attributed to the start up of the new West Virginia banks and their inclusion in the period ending March 31, 1999 along with the Mt. Vernon acquisition. Income tax expense was $444,000 for the first quarter of 1999 compared to $225,000 for the first quarter of 1998. The increase in income tax expense can be attributed to the reversal of a $234,000 valuation allowance in the quarter ending March 31, 1998, for deferred tax assets of an acquired subsidiary. Absent this event, the effective tax rate for 1998 was 29%, compared to the 27% effective tax rate for the same period in 1999. Pre-tax income for the period ending March 31, 1999 was $1,662,000, an increase of $56,000 or 3.5% over the $1,606,000 for the same period in 1998. B. Financial Position Total assets increased $142.0 million or 21.6% to $799.7 million from December 31, 1998. Excluding the Mt. Vernon acquisition, assets grew approximately $21.9 million or 3.3% since December 31, 1998. Cash and cash equivalents at March 31, 1999 were $23.2 million or a $3.0 million increase over the $20.2 million on December 31, 1998. Fed funds sold increased to $21.6 million from $19.4 million during the same period; an increase of $2.2 million, or 11.3%. 10. Total loans at March 31, 1999 were $509.5 million compared to $395.6 million at December 31, 1998. Of this $113.9 million increase, approximately $96.8 million is a result of the Mt. Vernon acquisition. Excluding this event, the increase would be $17.1 million, or 4.3%. Deposits totaled $651.0 million as of March 31, 1999, an increase of $127.8 million over the December 31, 1998 amount of $523.2 million. Excluding the approximately $118.7 million involved with the Mt. Vernon acquisition, the increase would be $9.1 million, or 1.7%. Noninterest bearing deposits increased $6.2 million, or 9.9%, and interest bearing deposits increased $121.6 million, or 26.4%, during the period December 31, 1998 to March 31, 1999. The following table sets forth information with respect to the Company's nonperforming assets at March 31, 1999 and December 31, 1998.
1999 1998 ---- ---- (In Thousands) Non-accrual loans $ 4,872 $ 3,500 Accruing loans which are contractually past due 90 days or more 1,052 1,322 Restructured 104 105 -------------- ------------ Total non-performing loans 6,028 4,927 Other real estate acquired through Foreclosure 1,080 961 -------------- ------------ Total non-performing assets $ 7,108 $ 5,888 Non-performing loans as a percentage of total net loans 1.18% 1.25% Non-performing assets as a percentage of total assets .89% .90%
The provision for possible loan losses and net chargeoffs were $474,000 and $401,000 for the first quarter of 1999 compared to $276,000 and $155,000, respectively, for the first quarter of 1998. The increases in these amounts primarily relate to the increase in average loans between the two periods. The allowance for loan losses at March 31, 1999 was 1.13% of total loans as compared to 1.10% at December 31, 1998. C. Liquidity Liquidity objectives for the Company 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 while attempting to maximize profitability. In order to provide for funds on a current and long-term basis, the Company's subsidiary banks rely primarily on the following sources: 11. 1. Core deposits consisting of both consumer and commercial deposits and certificates of deposit of $100,000 or more. Management believes that the majority of its $100,000 or more certificates of deposit are no more volatile than its other deposits. This is due to the nature of the markets in which the subsidiaries operate. 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 Company owns $172.0 million of securities at market value as of March 31, 1999. This reflects an increase of $14.9 million or approximately 9.5% from the December 31, 1998 balance of $157.1 million. 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. D. Capital At March 31, 1999, total shareholders' equity of $54.3 million was 6.8% of total consolidated assets. This compares to total shareholders' equity of $54.4 million or 8.3% of total consolidated assets on December 31, 1998. This decrease in equity to assets ratio is reflective of the increase in asset size as a result of the Mt. Vernon acquisition. Tier I capital totaled $48.0 million at March 31, 1999, which represents a Tier I leverage ratio of 6.5%. Shown below is a summary of regulatory capital ratios:
REGULATORY MARCH 31 DECEMBER 31 MINIMUM 1999 1998 REQUIREMENTS - ------------------------------------------ ----------------- ---------------------------- ---------------------------- Tier I Risk Based Capital Ratio 9.3% 12.6% 4.0% Total Risk Based Capital Ratio 12.4% 16.2% 8.0% Leverage Ratio 6.5% 8.1% 4.0%
Book value per share was $10.38 at March 31, 1999, and $10.40 at December 31, 1998. An increase in unrealized loss on securities available for sale was largely responsible for the decrease in comprehensive income and corresponding decrease in book value per share. The Company declared a first quarter dividend of $0.15 per share, or $785,179 payable March 31, 1999 to shareholders of record as of March 22, 1999. 12. E. Year 2000 Management has assessed the operational and financial implications of its Year 2000 needs and developed a plan to ensure that data processing systems can properly handle the change. Management has determined that if a business interruption as a result of the Year 2000 issue occurred, such an interruption could be material. The primary effort required to prevent a potential business interruption was the installation of the most current software release from the Company's third party provider and replacement of certain system hardware. The third party software provider has warranted that Year 2000 remediation and testing efforts to become compliant have been successfully completed. Non-compliant hardware has already been replaced through routine hardware upgrades. Management locally installed and tested the current software release before the end of 1998, which completed the Year 2000 plan for mission critical systems. Non-mission critical systems, including systems other than data processing with embedded technology, will continue to be evaluated and if necessary, will be upgraded or replaced. Management projects that the cost of Year 2000 readiness will be approximately $100,000, which is being expensed as incurred. Year 2000 expenses are subject to change and could vary from current estimates if the final requirements for Year 2000 readiness exceed management's expectations. 13. 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. Reports on Form 8-K Form 8-K dated January 25, 1999 reporting consummation of the Company's acquisition of Mt. Vernon Bancshares, Mt. Vernon, Kentucky. 14. 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: May 12, 1999 /s/ Marshall T. Reynolds ---------------------------------------- Marshall T. Reynolds Chairman of the Board Date: May 12, 1999 /s/ J. Howell Kelly ---------------------------------------- J. Howell Kelly President & Chief Executive Officer 15. EX-27 2 EXHIBIT 27 FDS
9 0000887919 PREMIER FINANCIAL BANCORP 1,000 3-MOS DEC-31-1999 JAN-01-1999 MAR-31-1999 18,625 4,529 21,584 0 172,000 20,262 20,863 509,460 5,746 799,692 651,027 28,237 5,610 60,525 0 0 1,103 53,190 799,692 11,565 2,839 381 14,785 6,560 8,067 6,718 474 31 5,520 1,662 1,218 0 0 1,218 .23 .23 3.88 4,872 1,052 104 0 4,363 491 90 5,746 5,746 0 264 Includes Allowance through Acquisition
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