<PAGE>
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.
<PAGE>
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:
<TABLE>
<S> <C>
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
</TABLE>
<PAGE>
PREMIER FINANCIAL BANCORP, INC.
CONSOLIDATED BALANCE SHEETS
MARCH 31, 1999 AND DECEMBER 31, 1998
(IN THOUSANDS)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1999 1998
---- ----
<S> <C> <C>
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
------------- --------------
------------- --------------
</TABLE>
(Continued)
3.
<PAGE>
CONSOLIDATED STATEMENTS OF INCOME
THREE MONTHS ENDED MARCH 31, 1999 AND 1998
(IN THOUSANDS)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1999 1998
---- ----
<S> <C> <C>
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
</TABLE>
(Continued)
4.
<PAGE>
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
THREE MONTHS ENDED MARCH 31, 1999
(IN THOUSANDS)
<TABLE>
<CAPTION>
Accumulated
Other
Common Retained Comprehensive
Stock Surplus Earnings Income (Loss) Total
----- ------- -------- ------------- -----
<S> <C> <C> <C> <C> <C>
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
---------- ----------- ----------- ------------ ------------
---------- ----------- ----------- ------------ ------------
</TABLE>
(Continued)
5.
<PAGE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 1999 AND 1998
(IN THOUSANDS)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1999 1998
---- ----
<S> <C> <C>
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
------------- -------------
------------- -------------
</TABLE>
(Continued)
6.
<PAGE>
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.
<PAGE>
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:
<TABLE>
<CAPTION>
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
---- ----- ------ -----
<S> <C> <C> <C> <C>
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
-------------- -------------- -------------- ---------------
-------------- -------------- -------------- ---------------
</TABLE>
Amortized cost and fair value of investment securities, by category, at December
31, 1998 are summarized as follows:
<TABLE>
<CAPTION>
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
---- ----- ------ -----
<S> <C> <C> <C> <C>
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
-------------- -------------- -------------- ---------------
-------------- -------------- -------------- ---------------
</TABLE>
(Continued)
8.
<PAGE>
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:
<TABLE>
<CAPTION>
1999 1998
---- ----
(In Thousands)
<S> <C> <C>
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
------------ ------------
------------ ------------
</TABLE>
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:
<TABLE>
<CAPTION>
1999 1998
------- -------
<S> <C> <C>
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
------- -------
------- -------
</TABLE>
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.
<PAGE>
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.
<PAGE>
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.
<TABLE>
<CAPTION>
1999 1998
---- ----
(In Thousands)
<S> <C> <C>
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%
</TABLE>
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.
<PAGE>
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:
<TABLE>
<CAPTION>
REGULATORY
MARCH 31 DECEMBER 31 MINIMUM
1999 1998 REQUIREMENTS
- ------------------------------------------ ----------------- ---------------------------- ----------------------------
<S> <C> <C> <C>
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%
</TABLE>
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.
<PAGE>
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.
<PAGE>
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.
<PAGE>
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.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<CIK> 0000887919
<NAME> PREMIER FINANCIAL BANCORP
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<CASH> 18,625
<INT-BEARING-DEPOSITS> 4,529
<FED-FUNDS-SOLD> 21,584
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 172,000
<INVESTMENTS-CARRYING> 20,262
<INVESTMENTS-MARKET> 20,863
<LOANS> 509,460
<ALLOWANCE> 5,746
<TOTAL-ASSETS> 799,692
<DEPOSITS> 651,027
<SHORT-TERM> 28,237
<LIABILITIES-OTHER> 5,610
<LONG-TERM> 60,525
0
0
<COMMON> 1,103
<OTHER-SE> 53,190
<TOTAL-LIABILITIES-AND-EQUITY> 799,692
<INTEREST-LOAN> 11,565
<INTEREST-INVEST> 2,839
<INTEREST-OTHER> 381
<INTEREST-TOTAL> 14,785
<INTEREST-DEPOSIT> 6,560
<INTEREST-EXPENSE> 8,067
<INTEREST-INCOME-NET> 6,718
<LOAN-LOSSES> 474
<SECURITIES-GAINS> 31
<EXPENSE-OTHER> 5,520
<INCOME-PRETAX> 1,662
<INCOME-PRE-EXTRAORDINARY> 1,218
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,218
<EPS-PRIMARY> .23
<EPS-DILUTED> .23
<YIELD-ACTUAL> 3.88
<LOANS-NON> 4,872
<LOANS-PAST> 1,052
<LOANS-TROUBLED> 104
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 4,363
<CHARGE-OFFS> 491
<RECOVERIES> 90
<ALLOWANCE-CLOSE> 5,746<F1>
<ALLOWANCE-DOMESTIC> 5,746
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 264
<FN>
<F1>Includes Allowance through Acquisition
</FN>
</TABLE>
