As Filed with the Securities and Exchange Commission on August 4,September 17, 1997
Registration No. 333-___________333-32793

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------------------------

PRE-EFFECTIVE
AMENDMENT NO. 1
TO

FORM S-4
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
------------------------------------

PREMIER FINANCIAL BANCORP, INC.
(Exact name of registrant as specified in its charter)

Kentucky 61-1206757
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification Number)

6022
(Primary Standard Industrial
Classification Code Number)

120 N. Hamilton Street
Georgetown, Kentucky 40324
(502) 863-7500

(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)

J. Howell Kelly
President and Chief Executive Officer
Premier Financial Bancorp, Inc.
120 N. Hamilton Street
Georgetown, Kentucky 40324
(502) 863-7500
Fax: (502) 863-7503

(Name, address, including zip code, and telephone
number, including area code, of agent for service)

Copy to:
--------

David W. Harper, Esq.
2450 Meidinger Tower
Louisville, Kentucky 40202
(502) 583-3081
Fax: (502) 583-2418

Approximate date of commencement of proposed sale to public:

As soon as practicable after this Registration Statement becomes effective.

If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box [_].

___________________________________________________________________
CALCULATION OF REGISTRATION FEE

- -------------------------------------------------------------------------------------------------------------
Title of Each
Class of Proposed Maximum Proposed Maximum Amount of
Securities to be Amount to be Offering Price Aggregate Registration
Registered(1) Registered Per Unit(2) Offering Price(2) Fee(2)
- -------------------------------------------------------------------------------------------------------------

Common Shares
without par
value 476,300 $9.57799706 $4,572,000 $1,385.46
- -------------------------------------------------------------------------------------------------------------

(1) This Registration Statement relates to the securities of the
Registrant issuable to holders of Common Shares of The Sabina Bank, Sabina, Ohio
("Sabina Bank"), an Ohio corporation, in the proposed merger of Sabina Bank with
a wholly owned subsidiary of the Registrant.

(2) Pursuant to Rule 457(f)(2), the registration fee was computed on the
basis of the book value of Sabina Bank Common Shares at June 30, 1997. The
registration fee payable upon the filing of this Registration Statement is
$1,385.46.
________________________________________________________________________________

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE
SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.

CROSS REFERENCE SHEET

PURSUANT TO ITEM 501(b) OF REGULATION S-K
SHOWING THE LOCATION IN THE PROSPECTUS OF THE
INFORMATION REQUIRED BY PART I OF FORM S-4

FORM
S-4 ITEM HEADING PROSPECTUS LOCATION

A. INFORMATION ABOUT THE TRANSACTION

1. Forepart of Registration
Statement and Outside Front
Cover Page of Prospectus .... Forepart of Registration
Statement and Outside Front
Cover Page of Prospectus

2. Inside Front and Outside Back
Cover Pages of Prospectus ... Inside Front Page of
Prospectus

3. Risk Factors, Ratio of Earnings
to Fixed Charges and Other
Information ................. SUMMARY; SELECTED FINANCIAL DATA OF
PREMIER; SELECTED FINANCIAL DATA OF
SABINA BANK; COMPARATIVE STOCK PRICES
AND DIVIDENDS; COMPARATIVE PER SHARE
DATA; THE COMPANIES

4. Terms of the Transaction........ SUMMARY; THE MERGER;
THE MERGER AGREEMENT

5. Pro Forma Financial
Information ..................... Not Applicable

6. Material Contracts with the
Company Being Acquired .......... SUMMARY; THE MERGER;
THE MERGER AGREEMENT

7. Additional Information Required
for Reoffering by Persons and
Parties Deemed to be
Underwriters .................... Not Applicable

8. Interests of Named Experts and
Counsel ......................... Not Applicable

9. Disclosure of Commission
Position on Indemnification
for Securities Act
Liabilities ..................... Not Applicable

FORM
S-4 ITEM HEADING PROSPECTUS LOCATION

B. INFORMATION ABOUT THE REGISTRANT

10. Information with Respect to
S-3 Registrants ................. Not Applicable

11. Incorporation of Certain
Information by Reference ........ Not Applicable

12. Information with Respect to
S-2 or S-3 Registrants .......... AVAILABLE INFORMATION; INCORPORATION OF
CERTAIN DOCUMENTS BY REFERENCE; SUMMARY;
SELECTED FINANCIAL DATA OF PREMIER;
COMPARATIVE STOCK PRICES AND DIVIDENDS;
COMPARATIVE PER SHARE DATA; THE
COMPANIES - Premier Financial Bancorp,
Inc.; DESCRIPTION OF PREMIER CAPITAL
STOCK; EXPERTS; LEGAL MATTERS

13. Incorporation of Certain
Information by Reference ........ INCORPORATION OF CERTAIN DOCUMENTS BY
REFERENCE

14. Information with Respect to
Registrants other than S-3
or S-2 Registrants .............. Not Applicable

C. INFORMATION ABOUT THE COMPANY BEING ACQUIRED

15. Information with Respect to
S-3 companies ................... Not Applicable

16. Information with Respect to
S-2 or S-3 Companies ............ Not Applicable

17. Information with Respect to
Companies other than S-3 or
S-2 Companies ................... SUMMARY; SELECTED FINANCIAL DATA OF
SABINA BANK; COMPARATIVE STOCK PRICES
AND DIVIDEND; COMPARATIVE PER SHARE
DATA; THE COMPANIES -- Sabina Bank;
SABINA BANK MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL

FORM
S-4 ITEM HEADING PROSPECTUS LOCATION

CONDITION AND RESULTS OF OPERATIONS;
COMPARISON OF RIGHTS OF HOLDERS OF
PREMIER COMMON SHARES AND SABINA BANK
COMMON STOCK; EXPERTS; FINANCIAL
STATEMENTS OF SABINA BANK

D. VOTING AND MANAGEMENT INFORMATION

18. Information if Proxy,
Consents or Authorizations
are to be Solicited .............. SUMMARY; THE SPECIAL MEETING;
DISSENTERS' RIGHTS; THE MERGER -
Interests of Certain Persons in the
Merger; MANAGEMENT AND OPERATIONS AFTER
THE MERGER; PRINCIPAL HOLDERS OF SABINA
BANK COMMON STOCK AND OWNERSHIP OF
MANAGEMENT; INCORPORATION OF CERTAIN
DOCUMENTS BY REFERENCE
19. Information if Proxy,
Consents or Authorizations
are not to be Solicited in
an Exchange Offer ............... Not Applicable

THE SABINA BANK

PROXY STATEMENT

--------------------------

PREMIER FINANCIAL BANCORP, INC.

PROSPECTUS

This Proxy Statement/Prospectus is being furnished to shareholders of
The Sabina Bank, Sabina, Ohio ("Sabina Bank"), in connection with the
solicitation of proxies by the Board of Directors of Sabina Bank for use at
its Special Meeting of Shareholders (including any adjournments or
postponements thereof) to be held on September __,October 21, 1997 (the "Special
Meeting"). This Proxy Statement/Prospectus relates to the proposed merger of
PFBI Interim Bank ("Merger Sub"), a wholly owned subsidiary of Premier
Financial Bancorp, Inc. ("Premier") formed for the purpose of effecting such
proposed merger, with and into Sabina Bank (the "Merger") pursuant to the
Agreement and Plan of Merger dated as of May 28, 1997 among Premier, Merger
Sub and Sabina Bank (the "Merger Agreement"). Upon the effectiveness of the
Merger, Sabina Bank will be a wholly owned subsidiary of Premier and each
outstanding Common Share of Sabina Bank will be converted into the right to
receive 4.33 Common Shares of Premier.

This Proxy Statement/Prospectus also constitutes a prospectus of Premier
with respect to 476,300 Common Shares of Premier issuable to Sabina Bank
shareholders in the Merger.

This Proxy Statement/Prospectus and the form of proxy and other materials
accompanying this Proxy Statement/Prospectus are first being mailed to
shareholders of Sabina Bank on or about August __,September 19, 1997.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION
OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROXY STATEMENT/
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE

---------------------------------------------------

THE DATE OF THIS PROXY STATEMENT/PROSPECTUS IS AUGUST __,SEPTEMBER 18, 1997

TABLE OF CONTENTS

PAGE
----

Available Information. . . . . . . . . . . . . . . . . . . . . . . . . . 4

Incorporation of Certain Documents by Reference. . . . . . . . . . . . . 6

Summary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

Selected Consolidated Financial Data of Premier. . . . . . . . . . . . . 19

Selected Consolidated Financial Data of Sabina Bank.Bank . . . . . . . . . . . . . . . . . 21

Comparative Stock Prices and Dividends . . . . . . . . . . . . . . . . . 23

Comparative Per Share Data . . . . . . . . . . . . . . . . . . . . . . . 25

Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27

The Companies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27

The Special Meeting. . . . . . . . . . . . . . . . . . . . . . . . . . . 30

The Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32

Management and Operations After the Merger . . . . . . . . . . . . . . . 43

The Merger Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . 43

Description of Premier Capital Stock . . . . . . . . . . . . . . . . . . 50

Comparison of Rights of Holders of Premier Common Shares
and Sabina Bank Common Stock . . . . . . . . . . . . . . . . . . . . . 51

Sabina Bank Management's Discussion and Analysis of Financial
Condition and Results of Operations. . . . . . . . . . . . . . . . . . 55

Principal Holders of Sabina Bank Common Stock and Ownership of
Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78

Dissenters' Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . 79

Experts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83

Legal Matters. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83

Other Matters. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83

Financial Statements of Sabina Bank. . . . . . . . . . . . . . . . . . . F-1

ANNEXES

Annex I Agreement and Plan of Merger

Annex II Opinion of Professional Bank Services, Inc.

Annex III Excerpt from the Ohio General Corporation Law
Relating to DissentersDissenters' Rights

NO PERSONS HAVE BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROXY STATEMENT/PROSPECTUS
IN CONNECTION WITH THE SOLICITATION OF PROXIES OR OFFERING OF SECURITIES MADE
HEREBY AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED. THIS PROXY STATEMENT/PROSPECTUS DOES
NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY
SECURITIES, OR THE SOLICITATION OF A PROXY, IN ANY JURISDICTION IN WHICH, OR
TO OR FROM ANY PERSON TO WHOM, IT IS UNLAWFUL TO MAKE SUCH OFFER OR
SOLICITATION. NEITHER THE DELIVERY OF THIS PROXY STATEMENT/PROSPECTUS NOR
ANY DISTRIBUTION OF SECURITIES MADE HEREUNDER SHALL, IN ANY CIRCUMSTANCES,
CREATE AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF SABINA
BANK OR PREMIER SINCE THE DATE HEREOF OR THAT THE INFORMATION HEREIN IS
CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.

AVAILABLE INFORMATION

Premier is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information filed with the Commission can be inspected
and copied at the public reference facilities maintained by the Commission at
Room 1024, 450 Fifth Street, N.W., Judiciary Plaza, Washington, D.C. 20549
and at the following Regional Offices of the Commission: 7 World Trade
Center, Suite 1300, New York, New York 10048 and Citicorp Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of such material
can be obtained from the Public Reference Section of the Commission at 450
Fifth Street, N.W., Judiciary Plaza, Washington, D.C. 20549 at prescribed
rates. Premier files it reports, proxy statements and other information
electronically with the Commission and such material can be found at a Web
site maintained by the Commission (http://www.sec.gov.) The Premier Common
Shares are listed on the NASDAQ National Market System (trading symbol PFBI)
and such material relating to Premier may also be inspected at the offices of
the NASDAQ Stock Market, 1735 K. Street N.W., Washington, D.C. 20006.

Premier has filed with the Commission a registration statement on Form
S-4 (together with all amendments, exhibits and schedules thereto, the
"Registration Statement") under the Securities Act of 1933, as amended (the
"Securities Act"), relating to the Premier Common Shares that will be issued
to holders of Sabina Bank Common Stock in connection with the Merger. See
"The Merger -- Conversion of Sabina Bank Common Stock." This Proxy
Statement/Prospectus does not contain all of the information set forth in the
Registration Statement filed by Premier with the Commission, certain portions
of which are omitted in accordance with the rules and regulations of the
Commission. Such additional information is available for inspection and
copying at the offices of the Commission.

Statements contained in this Proxy Statement/Prospectus or in any document
incorporated into this Proxy Statement/Prospectus by reference as to the
contents of any contract or other document referred to herein or therein are
not necessarily complete, and in each instance reference is made to the copy
of such contract or other document filed as an exhibit to the Registration
Statement or such other document, each such statement being qualified in all
respects by such reference.

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

The following documents previously filed by Premier with the Commission
under the Exchange Act, or where indicated certain portions thereof, are
incorporated herein by reference:

1. Premier's Annual Report on Form 10-K for the year ended December
31, 1996 (the "Premier Form 10-K");

2. Premier's Quarterly Reports on Form 10-Q for the periods ended
March 31 and June 30, 1997 (the "Premier Form 10-Qs");

3. Premier's Current Report on Form 8-K dated June 13, 1997 (the
"Premier Form 8-K"; and

4. The information contained in Premier's Annual Report to
Shareholders for the 1996 fiscal year (the "1996 Annual Report") on pages 19
through 58 under the captions "Management's Discussion and Analysis,"
"Independent Auditor's Report" and "Audited Consolidated Financial
Statements."

5. The information contained in Premier's Proxy Statement for its
Annual Meeting of Shareholders held on March 6, 1997 (the "1997 Proxy
Statement") on pages 1 through 11 under the captions "INTRODUCTION --
Principal Shareholders"; "ELECTION OF DIRECTORS"; "CERTAIN INFORMATION
CONCERNING THE BOARD OF DIRECTORS"; "EXECUTIVE OFFICERS OF THE COMPANY";
"EXECUTIVE COMPENSATION"; and "CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS."

All documents filed by Premier pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act after the date of this Proxy Statement/Prospectus
and prior to the Special Meeting should be deemed to be incorporated by
reference into this Proxy Statement/Prospectus and to be part hereof from the
date of filing of such documents. See "Available Information."

Any statement contained in a document incorporated or deemed to be
incorporated by reference should be deemed to be modified or superseded for
purposes hereof to the extent that a statement contained herein (or in any
other subsequently filed document that is or is deemed to be incorporated by
reference herein) modifies or supersedes such previous statement. Any
statement so modified or superseded shall not be deemed to constitute a part
hereof except as so modified or superseded.

All information contained or incorporated by reference in this Proxy
Statement/Prospectus relating to Premier or Merger Sub has been supplied by
Premier, and all such information relating to Sabina Bank has been supplied
by Sabina Bank.

THIS PROXY STATEMENT/PROSPECTUS IS ACCOMPANIED BY PREMIER'S 1996 ANNUAL
REPORT, ITS 1997 PROXY STATEMENT AND ITS FORM 10-Q FOR

THE SIX-MONTH PERIODQUARTER ENDED JUNE 30, 1997. EXCEPT FOR THE INFORMATION
PROVIDED IN PREMIER'S 1996 ANNUAL REPORT AND 1997 PROXY STATEMENT UNDER THE
CAPTIONS SPECIFICALLY IDENTIFIED ABOVE, NO INFORMATION CONTAINED ELSEWHERE IN
EITHER THE 1996 ANNUAL REPORT OR THE 1997 PROXY STATEMENT IS INCORPORATED BY
REFERENCE IN, AND SUCH INFORMATION SHALL NOT CONSTITUTE A PART OF, THIS PROXY
STATEMENT/PROSPECTUS.

THIS PROXY STATEMENT/PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE THAT
ARE NOT PRESENTED HEREIN OR DELIVERED HEREWITH. THESE DOCUMENTS (OTHER THAN
EXHIBITS TO SUCH DOCUMENTS UNLESS SUCH EXHIBITS ARE SPECIFICALLY INCORPORATED
BY REFERENCE HEREIN) ARE AVAILABLE, WITHOUT CHARGE, UPON ORAL OR WRITTEN
REQUEST BY ANY PERSON TO WHOM THIS PROXY STATEMENT/PROSPECTUS HAS BEEN
DELIVERED FROM PREMIER FINANCIAL BANCORP, INC., 120 N. HAMILTON STREET,
GEORGETOWN, KENTUCKY 40324, ATTENTION: J. HOWELL KELLY; TELEPHONE NUMBER
(502) 863-7500. IN ORDER TO ENSURE TIMELY DELIVERY OF THE DOCUMENTS, ANY
SUCH REQUEST SHOULD BE MADE BY AUGUST __,OCTOBER 14, 1997.

SUMMARY

The following is a summary of certain information contained elsewhere in
this Proxy Statement/Prospectus. Reference is made to, and the summary is
qualified in its entirety by, the more detailed information contained or
incorporated by reference in this Proxy Statement/Prospectus and the Annexes
hereto. Shareholders are urged to read this Proxy Statement/Prospectus and
the Annexes hereto in their entirety.

THE SPECIAL MEETING

Meeting of Shareholders.......... A special meeting of the shareholders of The
Sabina Bank ("Sabina Bank") will be held at
the executive offices of Sabina Bank at 135
N. Howard Street, Sabina, Ohio on ________,
September __,Tuesday,
October 21, 1997, at __________,1:00 p.m., Eastern
Daylight Time.

Matters to be Considered
at the Special Meeting.......... At the Special Meeting, holders of Sabina
Bank Common Shares, par value $1 per share
("Sabina Bank Common Stock"), will consider
and vote upon (i) a proposal to adopt the
Agreement and Plan of Merger attached as
Annex I to this Proxy Statement/Prospectus
(the "Merger Agreement") providing for the
merger of PFBI Interim Bank ("Merger Sub"),
a wholly owned subsidiary of Premier
Financial Bancorp, Inc. ("Premier"), into
Sabina Bank (the "Merger"), with Sabina Bank
becoming a wholly owned subsidiary of
Premier, and the issuance to Sabina Bank
shareholders of 4.33 Premier Common Shares
for each share of Sabina Bank in connection
therewith, and (ii) any other matters that
may properly come before the Special Meeting.

Record Date..................... The record date for the Special Meeting is
August __,September 2, 1997 (the "Record Date").

Vote Required..................... The affirmative vote of the holders of
two-thirds of the outstanding shares of
Sabina Bank Common Stock entitled to vote
thereon is required to adopt the Merger
Agreement. Sabina Bank has 110,000 shares
of Sabina Bank Common Stock outstanding
and entitled to vote on the Merger
Agreement. The directors and executive
officers of Sabina Bank, who with their
affiliates may be deemed to beneficially
own approximately 39.4% of the outstanding
Sabina Bank Common Stock, have indicated
that they intend to vote their shares for
approval of the Merger Agreement.

Voting of Proxies; Revocation.. All shares of Sabina Bank Common Stock
represented at the Special Meeting by
properly executed proxies received prior to
or at the Special Meeting, and not revoked,
will be voted in accordance with the
instructions indicated on such proxies. If
no instructions are indicated, such proxies
will be voted FOR the adoption of the Merger
Agreement

Any proxy given may be revoked by the
person giving it at any time, without
affecting any vote previously taken, by
(i) giving notice to the Secretary of
Sabina Bank in writing or in open meeting
or (ii) duly executing a later dated proxy
relating to the same

shares and delivering it to the Secretary
of Sabina Bank before the taking of the
vote at the Special Meeting. Any written
notice of revocation or subsequent proxy
should be sent and delivered to The Sabina
Bank, 135 N. Howard Street, Sabina, Ohio
45169, Attention: Secretary, or hand
delivered to the Secretary of Sabina Bank
at or before the taking of the vote at the
Special Meeting.

Security Ownership of
Management.................... As of the Record Date, directors and
executive officers of Sabina Bank and their
affiliates may be deemed to be beneficial
owners of approximately 43,360 shares of
Sabina Bank Common Stock, or approximately
39.4% of the outstanding Sabina Bank Common
Stock.

THE COMPANIES

Premier Financial
Bancorp, Inc................. Premier, a Kentucky corporation, is a bank
holding company with five banking
subsidiaries (the "Banks"). At June 30,
1997, Premier had total assets of $460.4
million, total deposits of $251.6 million and
total shareholders' equity of $41.2 million.
The Banks are managed on a decentralized
basis that enables each Bank to offer local
and timely decision-making that provides
flexibility with respect to operating
procedures and credit policies, limited only
by a

framework of centralized risk controls
provided by Premier. Each Bank maintains its
community orientation by, among other things,
having selected members of its communities as
members of its board of directors.

The executive offices of Premier are located
at 120 N. Hamilton Street, Georgetown,
Kentucky 40324, and Premier's telephone
number is (502) 863-7500.

PFBI Interim Bank.............. Merger Sub is a wholly owned commercial bank
subsidiary formed by Premier under the laws
of the State of Ohio for the purpose of
engaging in the transactions contemplated by
the Merger Agreement. Merger Sub does not,
and will not prior to the Merger, engage in
any business activities or conduct any
operations other than in connection with the
transactions contemplated by the Merger
Agreement.

Sabina Bank.................... Sabina Bank is an Ohio banking corporation
established in 1875. Sabina Bank conducts a
full service commercial banking business,
including the origination of residential
mortgage, commercial, agricultural and
consumer loans, and the offering of checking,
savings and money market deposit accounts.
At December 31, 1996, Sabina Bank had assets
of $36.7$36.6 million, deposits of $31.7$31.6 million
and shareholders' equity of $4.6$4.5 million.

The executive offices of Sabina Bank are
located at 135 N. Howard Street, Sabina,
Ohio 45169,

and Sabina Bank's telephone number is
(937) 584-2491.

THE MERGER

Effect of Merger................ At the effective time of the Merger (the
"Effective Time"), subject to certain
exceptions as described herein with respect
to shares owned by Premier or its
subsidiaries, and shares owned by holders
properly exercising dissenters' rights
("Dissenting Shares"), each outstanding share
of Sabina Bank Common Stock will be
automatically converted (subject to certain
provisions described herein with respect to
fractional shares) into 4.33 Common Shares of
Premier and Sabina Bank will become a wholly
owned subsidiary of Premier.

Recommendation of the Board
of Directors of Sabina Bank
and Reasons for the Merger... The Board of Directors of
Sabina Bank believes that the terms of the
Merger are fair to and in the best
interests of the Sabina Bank shareholders,
and has unanimously approved the Merger
Agreement. THE SABINA BANK BOARD OF
DIRECTORS UNANIMOUSLY RECOMMENDS THAT ITS
SHAREHOLDERS APPROVE AND ADOPT THE MERGER AGREEMENT.
The Board of Directors of Sabina Bank
believes that the Merger, which will allow
Sabina Bank to affiliate with a publicly
held multi-bank holding company with a
community banking philosophy and greater
financial and managerial resources, will
result in Sabina Bank being more capable of
competing effectively in the rapidly
changing marketplace for banking and
financial services and will enable the
shareholders of Sabina Bank

to receive in a tax-free exchange Premier
Common Shares that trade in an established
trading market and, consequently, represent a
more liquid investment than shares of Sabina
Bank Common Stock.

Opinion of Financial Advisor
to Sabina Bank.............. Professional Bank Services, Inc. ("PBS") has
delivered its written opinion to the Board of
Directors of Sabina Bank that, as of May 28,
1997 and the date of this Proxy Statement/
Prospectus, the exchange ratio (the "Exchange
Ratio") of 4.33 Premier Common Shares for
each share of Sabina Bank Common Stock was
fair to the holders of Sabina Bank Common
Stock from a financial perspective.

For information on the assumptions made,
matters considered and limits of the review
by PBS, see "The Merger -- Opinion of
Financial Advisor to Sabina Bank."
Shareholdersare urged to read in its
entirety the fairness opinion of PBS dated
the date of this Proxy Statement/Prospectus,
attached as Annex II to this Proxy
Statement/Prospectus.

Conditions to the Merger;
Termination.................. The Merger is subject to various conditions,
including: requisite shareholder and
regulatory approval; the absence of any
materially burdensome requirement or
condition imposed in connection with any
regulatory approval; approval for listing
on the Nasdaq National Market, subject to
official notice of issuance, of the
Premier Common Shares to be issued
pursuant to the Merger; receipt of
opinions in

respect of certain federal income tax
consequences of the Merger andMerger; receipt of a
letterfromletter from Premier's independent accountants
to the effect that the Merger qualifies for
"pooling of interests" accounting treatment;
any
Dissenting Shares not constituting more
than 10% of the outstanding Sabina Bank
Common Stock; and the average closing price
of a Premier Common Share during a 20
consecutive trading day period ending five
business days before the Effective Time being
at least $14.

The Merger Agreement may be terminated at any
time prior to the Effective Time by mutual
consent of Premier and Sabina Bank, or by
either party if any regulatory agency (i)
shall have denied approval of the Merger or
if any other governmental authority shall
have prohibited consummation of the Merger,
(ii) the Merger shall not have been
consummated on or before December 31, 1997 or
(iii) the approval of the shareholders of
Sabina Bank required for consummation of the
Merger shall not have been obtained at the
Special Meeting (although upon any such
failure to obtain such shareholder approval,
Sabina Bank will become obligated to
reimburse Premier for its out-of-pocket
expenses in connection with the Merger
Agreement and the transactions contemplated
thereby, up to a maximum amount of $100,000).
Sabina Bank also has the right to terminate
the Merger Agreement if concurrent with such
termination it enters into a definitive
agreement providing for the imple-

mentation of another merger or other
transaction that the Sabina Bank Board of
Directors has determined is more favorable
to the shareholders of Sabina Bank than the
Merger contemplated by the Merger Agreement,
and in connection with such termination
Sabina Bank pays to Premier a fee of
$350,000.

NASDAQ Listing................. It is a condition to the Merger that the
Premier Common Shares to be issued in the
Merger be authorized for listing on the
Nasdaq National Market, subject to
official notice of issuance. The Common
Shares of Premier currently outstanding are
listed on the Nasdaq National Market
(trading symbol PFBI).

Post-Merger Dividend Policy.... It is the current intention of the Board of
Directors of Premier to declarecontinue the
declaration of dividends on the Premier
Common Shares following the Merger initially
in the amount of at least $0.125 per quarter
or $0.50 per year, in each case per share.
It should be noted that no such dividends
have been declared and that future dividends
will be determined by Premier's Board of
Directors in light of the earnings and
financial condition of Premier and its
subsidiaries and other factors, including
applicable governmental regulations
and policies.

Regulatory Approvals Required.. The Merger is subject to the prior approval
by the Federal Reserve Board, the Federal
Deposit Insurance Corporation and the banking
authorities of the Commonwealth of Kentucky
and the State of Ohio.

Dissenters' Rights............. Holders of Sabina Bank Common Stock have the
right to dissent from the Merger and to
receive payment of the fair cash value of
their shares upon full compliance with
Section 1701.85 of the Ohio General
Corporation Law ("OGCL"). A copy of Section
1701.85 of the OGCL is attached to this Proxy
Statement/Prospectus as Annex III.

Shareholders of Sabina Bank that desire to
exercise dissenters' rights must satisfy
fully and precisely certain procedural
requirements set forth in Annex III and
summarized in the "Dissenters' Rights"
section of this Proxy Statement/Prospectus,
including among other things not voting in
favor of the Merger Agreement, or else
dissenters' rights will be lost.

Certain Federal Income Tax
Consequences................. The Merger is intended to be a tax-free
reorganization so that no gain or loss would
be recognized by Premier, Merger Sub or
Sabina Bank, and no gain or loss would be
recognized by Sabina Bank shareholders,
except in respect of cash received for
fractional shares and except for holders
who receive cash payments upon properly
exercising dissenters' rights. Consummation
of the Merger is conditioned upon there being
delivered opinions dated as of the closing
date of the Merger of Eskew & Gresham,
P.S.C., Premier's independent accountants,
and Vorys, Sater, Seymour & Pease, Sabina
Bank's special counsel with respect to
to the Merger, to the effect that the
Merger will constitute a reorganization
within the meaning of Section 368(a) of the
Internal Revenue Code of 1986, as amended
(the "Code").

Anticipated Accounting

Treatment.................... The Merger is expected to qualify as a
"pooling of interests" for accounting and
financial reporting purposes. The receipt of
a letter of Eskew & Gresham, P.S.C., the
independent accountants of Premier,
confirming that the Merger will qualify for
pooling of interests accounting treatment, is
a condition to consummation of the Merger.

MANAGEMENTS AND OPERATIONS AFTER
THE MERGER................... Following the Merger, the respective
directors, officers and employees of Premier
and Sabina Bank serving immediately prior to
consummation of the Merger are expected to
continue in such positions. However, the
number of directors of Sabina Bank may be
increased to permit J. Howell Kelly,
Premier's president and chief executive
officer, or such other person as may be
designated by Premier, to serve as a director
of Sabina Bank.

The Merger is not expected to substantially
alter the operations of Sabina Bank. Sabina
Bank will retain its separate corporate
existence, charter and name. Premier has
informed Sabina Bank that following the
Merger it intends for Sabina Bank to retain
its commitment to local orientation and
direction, and to be managed on a
decentralized basis conducive to local and
timely decision-making and flexibility with
respect to operating procedures and
credit policies.

SELECTED CONSOLIDATED FINANCIAL DATA,
COMPARATIVE STOCK PRICES AND
COMPARATIVE PER SHARE DATA... Set forth on the following pages are certain
selected consolidated financial data for

Premier and Sabina Bank, comparative stock
prices, and comparative per share data for
Premier and Sabina Bank (including certain
pro forma data for Premier and pro
forma equivalent data for Sabina Bank).

SELECTED CONSOLIDATED FINANCIAL DATA OF PREMIER

(IN THOUSANDS EXCEPT PER SHARE AND RATIO DATA)

The following summary information regarding Premier should be read in
conjunction with the consolidated financial statements of Premier and the
notes thereto contained in its 1996 Annual Report accompanying this Proxy
Statement/Prospectus. See "Incorporation of Certain Documents by Reference."
Consolidated historical financial and other data regarding Premier at or for
the six months ended June 30, 1997 and 1996 have been prepared by Premier
without audit and may not be indicative of results on an annualized basis or
any other period. In the opinion of management, all adjustments (consisting
of normal recurring accruals) that are necessary for a fair presentation for
such periods or dates have been made. The selected consolidated financial
data presented below has been retroactively adjusted to reflect all prior
stock splits or share dividends.

AT OR FOR THE SIX
MONTHS ENDED
JUNE 30, AT OR FOR THE YEAR ENDED DECEMBER 31,
--------------------------------------------------------------------------
1997 1996 1996 1995 1994 1993 1992
--------- --------- --------- --------- --------- --------- ---------

EARNINGS
Net interest
income . . . . . . ,. $ 7,143 $ 3,981 $ 10,837 $ 6,023 $ 5,524 $ 4,938 $ 4,203

Provision for
possible loan losses . . .losses. . . . . 457 188 575 86 207 170 325

Non-interest income . 1,148 652 1,484 825 684 733 592

Non-interest expense 4,413 2,708 6,793 4,493 4,005 3,640 3,375
-------- -------- -------- -------- -------- -------- --------
Income taxes. . . . . 1,031 492 1,517 113 483 510 366
-------- -------- -------- -------- -------- -------- --------
Net income. . . . . $ 2,390 $ 1,245 $ 3,436 $ 2,156 $ 1,513 $ 1,351 $ 729
-------- -------- -------- -------- -------- -------- --------
-------- -------- -------- -------- -------- -------- --------
FINANCIAL POSITION

Total assets. . . . . $460,368 $179,802 $292,565 $155,475 $115,443 $108,774 $100,364

Loans, net of
unearned income . . 235,869 124,518 217,787 113,064 81,276 74,450 65,159

Allowance for loan
losses . . . . . . . 2,607 1,871 2,523 1,735 886 884 938

Goodwill. . . . . . . 5,311 256 5,490 248 - - -

Securities. . . . . . 192,185 40,935 44,363 24,929 19,688 21,864 18,965

Deposits. . . . . . . 251,627 138,607 235,574 136,246 102,839 98,846 91,704

Other borrowings. . . 135,792 1,179 14,976 1,502 - 119 230

Debt. . . . . . . . . 28,750 - - 5,000 1,500 - -

Stockholders' equity. 41,182 38,595 39,863 11,215 9,453 8,868 7,617

SHARE DATA

Net income. . . . . . 0.57 0.53 1.05 1.13 0.80 0.72 0.39

Book value. . . . . . 9.78 9.17 9.47 5.87 5.02 4.72 4.05

Cash dividend . . . . 0.25 0.25 0.50 0.45 0.36 0.28 0.20

AT OR FOR THE SIX
MONTHS ENDED
JUNE 30, AT OR FOR THE YEAR ENDED DECEMBER 31,
---------------------------------------------------------------------------
1997 1996 1996 1995 1994 1993 1992
--------- --------- --------- --------- --------- --------- ---------

RATIOS

Return on average
assets . . . . . . . . 1.52% 1.54% 1.53% 1.69% 1.36% 1.23% 0.88%

Return on average
equity . . . . . . . . 11.8% 14.7% 12.2% 20.5% 16.4% 15.4% 9.97%

Dividend payout . . . . 44.0% 61.4% 52.9% 39.8% 45.0% 38.9% 51.3%

Stockholders' equity
to total assets at
period-end . . . . . . 8.95% 21.47% 13.63% 7.21% 8.19% 8.15% 7.59%

Average stockholders'
equity to average
total assets . . . . . 12.86% 10.34% 12.52% 8.25% 8.27% 8.04% 8.80%

CAPITAL RATIOS

Equity to assets. . . . . 8.95% 21.47% 13.63% 7.21% 8.19% 8.15% 7.59%

Leverage ratio. . . . . . 10.72% 21.29% 12.04% 6.92% 8.42% 7.62% 7.46%

SELECTED CONSOLIDATED FINANCIAL DATA OF SABINA BANK

(IN THOUSANDS, EXCEPT PER SHARE AND RATIO DATA)

The following summary information regarding Sabina Bank should be read
in conjunction with the consolidated financial statements of Sabina Bank and the notes
thereto. See "Financial Statements of Sabina Bank." Consolidated
historicalHistorical financial
and other data regarding Sabina Bank at or for the six months ended June 30,
1997 and 1996 have been prepared by Sabina Bankmanagement without audit and may not be
indicative of results on an annualized basis or for any other period. In the
opinion of management, all adjustments (consisting of normal recurring
accruals) that are necessary for a fair presentation of financial condition
and results of operations for such periods or dates have been made. The selected consolidated financial data presented
below has been retroactively adjusted to reflect all prior stock splits or share
dividends.

EARNINGS

Net interest income . . $ 776 $ 781 $ 1,589 $ 1,674 $ 1,795 $ 2,036 $ 1,915

Provision for
possible loan losseslosses. . . . . . 23 28 185 110 128 219 174

Non-interest incomeOther income. . . . . . 105 106 237 193 186 203 158

Non-interestGeneral,
administrative and
other expense. . . . . 696 613 1,282 1,450 1,459 1,664 1,357
-------- -------- -------- -------- -------- -------- --------
Earnings before
income taxes . . . . . 162 246 359 307 394 356 542

Income taxes. . . . . . 30 60 71 33 84 72 135
-------- -------- -------- -------- -------- -------- --------
Net income. .earnings. . . . . $ 132 $ 186 $ 288 $ 274 $ 310 $ 284 $ 407
-------- -------- -------- -------- -------- -------- --------
-------- -------- -------- -------- -------- -------- --------

FINANCIAL POSITIONCONDITION

Total assets. . . . . . $36,562 $36,076 $36,603 $36,798 $39,210 $43,201 $44,906

Loans, net of
unearned income.before
loss allowance . . . . 24,668 25,001 25,038 24,486 25,155 23,071 26,809

Allowance for loan
losses . . . . . . . . 310 270 331 262 286 308 411

Goodwill. . . . . . . . 0 0 0 3 9 16 24

Securities. .Securities(a) . . . . . 8,774 8,016 8,297 8,990 10,931 13,718 12,359

Deposits. . . . . . . . 31,662 31,171 31,634 31,924 33,774 38,692 40,473

Other borrowings. . . . 230 261 230 261 1,090 317 342

Stockholders'Shareholders' equity. . 4,572 4,460 4,531 4,388 4,164 3,899 3,657

SHARE DATA

Net income. . . . . . . 1.28 1.82 2.82 2.70 3.10 2.84 4.07

Book value. . . . . . . 44.38 43.75 43.99 43.04 41.64 38.99 36.57

Cash dividend . . . . . 0.75 0.50 1.50 1.25 0.66 0.60 0.54

RATIOSRATIOS(b)

Return on average
assets . . . . . . . . 0.73% 1.02% 0.79% 0.75% 0.74% 0.64% 0.96%

Return on average
equity . . . . . . . . 5.8% 8.4% 6.4% 6.5% 7.6% 7.5% 11.7%

Dividend payout . . . . 62.5% 29.7% 57.4% 50.1% 23.4% 23.3% 20.5%

Stockholders'Shareholders' equity
to total assets at
period-end . . . . . . 12.50% 12.36% 12.38% 11.92% 10.62% 9.02% 8.14%

Average stockholders'shareholders'
equity to average
total assets . . . . . 12.52% 12.14% 12.39% 11.55% 9.72% 8.58% 8.20%

CAPITAL RATIOS

Equity to assets. . . . 12.50% 12.36% 12.38% 11.92% 10.62% 9.02% 8.14%

Leverage ratio. . . . . 12.42% 12.36% 12.38% 11.92% 10.60% 8.99% 8.10%

_________________
(a) Includes investment securities, Federal Reserve Bank stock and Federal
Home Loan Bank stock.

(b) Annualized where appropriate.

COMPARATIVE STOCK PRICES AND DIVIDENDS

Premier Common Shares are listed on the Nasdaq National Market under
the trading symbol "PFBI." Prior to an underwritten public offering and the
commencement of trading on the Nasdaq National Market in May 1996 pursuant
thereto (the "Premier IPO"), Premier Common Shares did not trade in any
established trading market and rarely traded. Shares of Sabina Bank Common
Stock do not trade in any established trading market and rarely trade. The
following table sets forth, for the periods indicated, the high and low
closing sales prices per Premier Common Share as reported on the Nasdaq
National Market following the Premier IPO, and the high and low sales prices
per Premier Common Share prior to the Premier IPO and per share of Sabina
Bank Common Stock in transactions of which management of Premier or Sabina
Bank, as applicable, is aware (there possibly being transactions in Premier
Common Shares or in Sabina Bank Common Stock of which management of Premier
or Sabina Bank, as applicable, is not aware). Prices per sharefor Premier Common
Shares have been retroactively adjusted to reflect all prior stock splits or
share dividends.

STOCK PRICES

Premier Common Shares Sabina Bank Common Stock
--------------------- ------------------------
High Low High Low
---- --- ---- ---

1995 First Quarter $10.20 $10.20 $37.00 $35.00

Second Quarter 12.20 11.60 38.00 36.50

Third Quarter 10.20 10.20 * *

Fourth Quarter 12.00 12.00 36.50 36.50

1996 First Quarter $12.50 $12.50 $ * $ *

Second Quarter 14.25 13.50 32.00 32.00

Third Quarter 14.00 12.25 35.00 30.00

Fourth Quarter 14.125 12.25 * *

1997 First Quarter $15.625 $13.50 $ * $ *

Second Quarter 18.25 14.25 * *

Third Quarter
(through July 21) 20.25September 16) 21.25 17.00 * *

- -----------------------
*no known trades

On May 27, 1997, the last trading day before the announcement of the
Merger Agreement, the last sales price of a Premier Common Share as reported
on the Nasdaq National Market was $16.25 per share. On August __,September 16, 1997, the
last sales price of a Premier

Common Share as reported on the Nasdaq National Market System was $_____$20.00 per
share.

The last sales price per share of Sabina Bank Common Stock in a
transaction known to management of Sabina Bank was $35.00 per share and
related to a sale of 10 shares of Sabina Bank Common Stock on August 16, 1996.

On JulyAugust 31, 1997, there were approximately 507 holders of record of
Premier Common Shares and approximately 89 holders of record of Sabina Bank
Common Stock.

DIVIDENDS

The following table sets forth the cash dividends declared per share on
Premier Common Shares and Sabina Bank Common Stock for the periods indicated.
Such information regarding Premier has been retroactively adjusted to reflect
all prior stock splits or share dividends.

Premier Common Shares Sabina Bank Common Stock
--------------------- ------------------------

1995 First Quarter $0.10 $ --

Second Quarter 0.10 0.30

Third Quarter 0.125 --

Fourth Quarter 0.125 0.95

1996 First Quarter $0.125 $ --

Second Quarter 0.125 0.50

Third Quarter 0.125 --

Fourth Quarter 0.125 1.00

1997 First Quarter $0.125 $0.75

Second Quarter 0.125 --

It is the current intention of the Board of Directors of Premier to declare
dividends on the Premier Common Shares following the Merger initially in the
amount of at least $0.125 per quarter or $0.50 per year, in each case per share.
It should noted that no such dividends have been declared and that future
dividends will be determined by Premier's Board of Directors in light of the
earnings and financial condition of Premier and its subsidiaries and other
factors, including applicable governmental regulations and policies.

COMPARATIVE PER SHARE DATA

(Unaudited)

The following table sets forth for Premier Common Shares and Sabina Bank
Common Stock certain historical, pro forma and pro forma equivalent per share
financial information for the six months ended June 30, 1997 and 1996 and for
each of the five consecutive years ended on or prior to December 31, 1996.
The information presented herein should be read in conjunction with the other
financial information for Premier and Sabina Bank appearing elsewhere in or
incorporated by reference in this Proxy Statement/Prospectus. See,
"Incorporation of Certain Documents by Reference"; "Selected Consolidated
Financial Data of Premier"; "Selected Consolidated Financial Data of Sabina
Bank"; "Financial Statements of Sabina Bank." The data presented below
regarding Premier has been retroactively adjusted to reflect all prior stock
splits or share dividends.

--------------------------------------------------------
At or for the Six
Months Ended
June 30, At or For the Year Ended December 31,
----------------- -------------------------------------
1997 1996 1996 1995 1994 1993 1992
---- ---- ---- ---- ---- ---- ----

PREMIER COMMON SHARES

Net income per share:

Historical. . . . . $0.57 $0.53 $1.05 $1.13 $0.80 $0.72 $0.39

Pro forma . forma(a). . . . 0.54 0.51 1.00 1.03 0.78 0.71 0.49

Dividends per share:

Historical. . . . . 0.25 0.25 0.50 0.45 0.36 0.28 0.20

Pro forma(a)forma(b). . . . 0.25 0.25 0.50 0.45 0.36 0.28 0.20

Book value per share
at period-end:

Historical. . . . . 9.78 9.17 9.47 5.87 5.02 4.72 4.05

Pro forma . . . . . 9.77 9.19 9.47 6.54 5.77 5.42 4.78

SABINA BANK COMMON STOCK

Net income per share:

Historical. . . . . 1.28 1.82 2.82 2.70 3.10 2.84 4.07

Pro forma
equivalent(b)equivalent(c) . . . 2.34 2.21 4.33 4.46 3.38 3.07 2.12

Dividends per share:

Historical. . . . . 0.75 0.50 1.50 1.25 0.66 0.60 0.54

Pro forma
equivalent(b)equivalent(c) . . . 1.08 1.08 2.17 1.95 1.56 1.21 0.87

Book Valuevalue per share
at period-end:

Historical(c)Historical(d) . . . 41.56 40.55 41.19 39.89 37.85 35.45 33.25

Pro forma
equivalent(b)equivalent(c) . . . 42.30 39.79 41.01 28.32 24.98 23.47 20.70

_______________
(a) Pro forma net income per share is based on pro forma consolidated combined
net income of Sabina Bank and Premier divided by 4,655,128 and 2,797,431
weighted average shares outstanding for the six months ended June 30, 1997
and 1996, and 3,729,143, 2,343,149, 2,314,818, 2,313,200 and 2,313,200 pro
forma weighted average shares outstanding for the years ended December 31,
1996, 1995, 1994, 1993 and 1992.

(b) The Premier pro forma dividends per share amounts represent historical
dividends per share.

(b)(c) The Sabina Bank pro forma equivalent per share amounts are calculated by
multiplying the Premier pro forma per share amounts by the exchange ratio
of 4.33.

(c)(d) Includes allpro forma combined issued and outstanding shares, including those owned by Sabina
Bank's ESOP.

INTRODUCTION

This Proxy Statement/Prospectus is being furnished to shareholders of
The Sabina Bank, Sabina, Ohio ("Sabina Bank") in connection with the
solicitation of proxies by The Sabina Bank Board of Directors for use at the
Special Meeting of Shareholders of Sabina Bank (the "Special Meeting") to be
held at the principal offices of Sabina Bank at 135 N. Howard Street, Sabina,
Ohio, on September __,October 21, 1997, at ______,1:00 p.m., Eastern Daylight Time, and at any
adjournment or postponement thereof. At the Special Meeting, the
shareholders of Sabina Bank will be asked to adopt the Agreement and Plan of
Merger dated as of May 28, 1997 (the "Merger Agreement") among Premier
Financial Bancorp, Inc. ("Premier"), PFBI Interim Bank, a wholly owned
subsidiary of Premier ("Merger Sub"), and Sabina Bank, a copy of which is
attached as Annex I hereto and more fully described herein. This Proxy
Statement/Prospectus and the form of proxy and other materials accompanying
this Proxy Statement/Prospectus are first being sent to shareholders of
Sabina Bank on or about August __,September 19, 1997.

THE COMPANIES

PREMIER FINANCIAL BANCORP, INC.

Premier, a Kentucky corporation, is a bank holding company headquartered in
Georgetown, Kentucky with five banking subsidiaries (the "Banks"). At June 30,
1997, Premier had total assets of $460.4 million (including net loans of $233.3
million and investment securities of $192.2 million), total deposits of $251.6
million, liabilities under agreements to repurchase securities of $120.3 million
and total shareholders' equity of $41.2 million. The Banks' deposits are
federally insured by the Federal Deposit Insurance Corporation ("FDIC") through
the Bank Insurance Fund ("BIF"). The principal business of Premier is to serve
as a holding company for its bank subsidiaries. See "Available Information";
"Incorporation of Certain Documents by Reference"; "Selected Consolidated
Financial Data of Premier."

Premier was incorporated in 1991. It was organized in connection with the
reorganization of Citizens Deposit Bank and Trust Company, Vanceburg, Kentucky
(the "Vanceburg Bank") into a holding company structure. The Vanceburg Bank is
a banking corporation organized under the laws of Kentucky, resulting from the
merger in 1930 of Deposit Bank, chartered in 1894, with Citizens Bank, chartered
in 1903. In 1992, Premier acquired Bank of Germantown, Germantown, Kentucky
(the "Germantown Bank"), a banking corporation organized under the laws of
Kentucky in 1900. Premier in March, 1995 acquired Georgetown Bancorp, Inc. and
its subsidiary, Georgetown Bank and Trust Company, Georgetown, Kentucky (the
"Georgetown Bank"), a banking corporation organized under the laws of Kentucky
in 1988, and in October, 1995, Citizens Bank, Sharpsburg, Kentucky (the
"Sharpsburg Bank"), a banking corporation organized under the laws of Kentucky
in 1903. On July 1, 1996,

Premier acquired Farmers Deposit Bank, Eminence, Kentucky (the "Eminence Bank"),
a banking corporation organized under the laws of Kentucky in 1867.

Premier focuses on providing quality community banking services to
individuals and small-to-medium sized businesses primarily in non-urban
areas. By seeking to provide such banking services in non-urban areas,
Premier believes that it can minimize the competitive effect of larger
financial institutions that typically are focused on large metropolitan
areas. Through its experience in acquiring the Banks, Premier has
successfully developed and implemented a strategy that allows community banks
to affiliate with it, while retaining their commitment to local orientation
and direction, and receive the benefit of Premier's capital base to promote
growth and staff assistance to promote safety, soundness and regulatory
compliance. The Banks are managed on a decentralized basis, offering
customers direct access to the Banks' presidents and other officers in an
environment conducive to friendly, informed and courteous service. This
decentralized approach also enables each Bank to offer local and timely
decision-making that provides flexibility with respect to operating
procedures and credit policies, limited only by a framework of centralized
risk controls provided by Premier to promote prudent banking practices. Each
Bank maintains its community orientation by, among other things, having
selected members of its community as members of its board of directors, who
assist in the introduction of prospective customers to the Bank and in the
development or modification of products and services to meet customer needs.
As a result of developing strong banking relationships with their customers,
through convenient and personalized service, the Banks have been successful
in funding loan demand through growth in core deposits.

The Banks provide community banking services through 12 locations in
Central Kentucky. The Banks offer a wide variety of consumer and commercial
lending and deposit services. The loans offered by the Banks include
commercial, real estate, agricultural and consumer loans. The Banks' range of
deposit services includes checking accounts, NOW accounts, savings accounts,
money market accounts, club accounts, individual retirement accounts,
certificates of deposit and overdraft protection. The Georgetown Bank, the
Eminence Bank and the Vanceburg Bank also offer limited trust services and act
as executor, administrator, trustee and in various other fiduciary capacities.
Through Premier Data Services, Inc., Premier's data processing subsidiary,
Premier currently provides centralized data processing services to three of the
Banks as well as two non-affiliated banks.

The executive offices of Premier are located at 120 N. Hamilton Street,
Georgetown, Kentucky 40324, and Premier's telephone number is (502) 863-7500.

PFBI INTERIM BANK

Merger Sub is a wholly owned commercial bank subsidiary formed by Premier
under the laws of the State of Ohio for the purpose of engaging in the
transactions contemplated by the Merger Agreement. Merger Sub does not, and will
not prior to the Merger, engage in any business activities or conduct any
operations other than in connection with the transactions contemplated by the
Merger Agreement.

THE SABINA BANK

Sabina Bank is located in Sabina, Clinton County, Ohio and was
established in 1875. Sabina Bank is a full service commercial bank whose
principal business is the origination of 1-4 family residential mortgage
loans, commercial and agricultural loans and consumer loans. In addition,
Sabina Bank engages in an array of traditional banking activities, including
the acceptance of savings and time deposit accounts, as well as checking and
money market accounts and safety deposit box rentals. Sabina Bank's lending
services include the making of secured real estate loans, home improvement
loans, agricultural loans, commercial real estate, commercial and industrial
loans, and consumer loans. Operating revenues are derived primarily from
interest and fees on lending activities, as well as interest on municipal
obligations and securities of the United States governmentGovernment and federal
agencies. See "Sabina Bank Management's Discussion and Analysis of Financial
Condition and Results of Operations."

Sabina Bank owns its main office located at 135 N. Howard Street,
Sabina, Ohio 45169 (telephone number: (937) 584-2491). It also operates two
ATM machines in Sabina. One is located at 416 East Washington Street,
Sabina, Ohio. The other ATM was opened in February 1997 at 149 West
Washington Street, Sabina, Ohio inside the Sabina Food Mart.

At December 31, 1996, Sabina Bank had assets of $36.7$36.6 million, deposits
of $31.7$31.6 million, and shareholders' equity of $4.6$4.5 million. See "Selected
Consolidated
Financial Data of Sabina Bank"; "Financial Statements of Sabina Bank."

At December 31, 1996, Sabina Bank had 20 full-time employees and 3 part
time employees. Management considers employee relations to be good.

Sabina Bank is a commercial bank chartered under the laws of the State
of Ohio, and is a member of the Federal Reserve System. Sabina Bank's
deposits are insured by the BIF of the FDIC. As such, Sabina Bank is subject
to extensive regulation by the Federal Reserve Board and the Ohio State
Banking Department, Division
of Financial Institutions. The lending, investment and other activities of
Sabina Bank are subject to federal and state

laws and the regulations and requirements of the Federal Reserve Board.
Sabina Bank is also required to maintain certain minimum capital levels. The
Federal Reserve Board regularly examines Sabina Bank for compliance, and
Sabina Bank must file reports on a regular basis with the Federal Reserve
Board providing financial and other operating data.

Sabina Bank is a party to various legal proceedings arising from its
operations. The management of Sabina Bank believes that the outcome of these
proceedings, individually and in the aggregate, will have no material adverse
effect on Sabina Bank's financial position or results of operations.

THE SPECIAL MEETING

MATTERS TO BE CONSIDERED AT THE SPECIAL MEETING

At the Special Meeting, holders of the Common Stock, par value $1 per
share, of Sabina Bank ("Sabina Bank Common Stock") will consider and vote
upon a proposal to adopt the Merger Agreement and such other matters as may
properly be brought before the Special Meeting. Management of Sabina Bank is
not aware of any other matters to be brought before the Special Meeting.

THE BOARD OF DIRECTORS OF SABINA BANK HAS UNANIMOUSLY APPROVED THE
MERGER AGREEMENT AND RECOMMENDS THE SHAREHOLDERS VOTE FOR ADOPTION OF THE
MERGER AGREEMENT. SEE "THE MERGER -- REASONS FOR THE MERGER; RECOMMENDATION
OF THE SABINA BANK BOARD OF DIRECTORS."

RECORD DATE; SHARES ENTITLED TO VOTE; QUORUM

Only shareholders of record of Sabina Bank at the close of business on
August __,September 2, 1997 (the "Record Date") will be entitled to receive notice of
the Special Meeting, and only holders of record of Sabina Bank Common Stock
at that time will be entitled to vote at the Special Meeting. At the Record
Date, Sabina Bank had outstanding 110,000 shares of Sabina Bank Common Stock.
A majority of the outstanding shares of Sabina Bank Common Stock must be
represented by person or by proxy at the Special Meeting in order for a
quorum to be present.

VOTE REQUIRED

The affirmative vote of the holders of two-thirds of the outstanding
shares of Sabina Bank Common Stock entitled to vote thereon is required to
adopt the Merger Agreement. Each share of Sabina Bank Common Stock is
entitled to one vote.

As of the Record Date, Sabina Bank's directors, executive officers and
their affiliates may be deemed to be beneficial owners of approximately 43,360
shares of Sabina Bank Common Stock, or

approximately 39.4% of the outstanding Sabina Bank Common Stock. The
directors and executive officers of Sabina Bank have indicated that they
intend to vote their shares for adoption of the Merger Agreement. The
directors and executive officers of Sabina Bank have indicated that they
intend to vote their shares for adoption of the Merger Agreement.

VOTING OF PROXIES

All shares of Sabina Bank Common Stock represented at the Special Meeting
by properly executed proxies received prior to or at the Special Meeting, and
not revoked, will be voted in accordance with the instructions indicated on such
proxies. If no instructions are indicated, such proxies will be voted FOR the
adoption of the Merger Agreement.

If any other matters are properly presented for consideration at the
Special Meeting, the persons named in the form of proxy and acting thereunder
will have discretion to vote on those matters in accordance with their best
judgment to the same extent as the person signing the proxy would be entitled to
vote.

REVOCABILITY OF PROXIES

Any proxy given pursuant to this solicitation may be revoked by the
person giving it at any time, without affecting any vote previously taken, by
(i) giving notice to the Secretary of Sabina Bank in writing or in open
meeting or (ii) duly executing a later dated proxy relating to the same
shares and delivering it to the Secretary of Sabina Bank before the taking of
the vote at the Special Meeting. Any written notice of revocation or
subsequent proxy should be sent and delivered to The Sabina Bank, 135 N.
Howard Street, Sabina, Ohio, 45169, Attention: Secretary; or hand delivered
to the Secretary of Sabina Bank at or before the taking of the vote at the
Special Meeting.

DISSENTERS' RIGHTS

Holders of Sabina Bank Common Stock have the right to dissent from the
Merger and to receive payment of the fair cash value of their shares upon full
compliance with Section 1701.85 of the Ohio General Corporation Law ("OGCL").
See "Dissenters' Rights." A copy of Section 1701.85 of the OGCL is attached
hereto as Annex III. If holders of more than 10% of the outstanding shares of

Sabina Bank Common Stock properly demand dissenters' rights, Premier has the
right to decline to consummate the Merger. See "The Merger Agreement --
Conditions to the Merger."

SOLICITATION OF PROXIES

All expenses of solicitation of proxies from Sabina Bank shareholders will
be borne by Sabina Bank. Sabina Bank will solicit proxies by mail, and Sabina
Bank's directors, officers and employees may also solicit proxies by telephone,
telegram, facsimile or personal interview. These persons will receive no
additional compensation for these services but may be reimbursed for reasonable
out-of-pocket expenses in connection with such solicitation. Continuing
arrangements also will be made with custodians, nominees and fiduciaries for the
forwarding of proxy solicitation materials to beneficial owners of shares held
of record by such custodians, nominees and fiduciaries, and Sabina Bank will
reimburse such custodians, nominees and fiduciaries for reasonable expenses
incurred in connection therewith.

HOLDERS OF SABINA BANK COMMON STOCK SHOULD NOT SEND ANY CERTIFICATES
REPRESENTING SHARES OF SABINA BANK COMMON STOCK WITH THE ENCLOSED PROXY CARD.
IF THE MERGER IS CONSUMMATED, A LETTER OF TRANSMITTAL WILL BE MAILED TO EACH
PERSON WHO WAS A HOLDER OF OUTSTANDING SHARES OF SABINA BANK COMMON STOCK
IMMEDIATELY PRIOR TO THE CONSUMMATION OF THE MERGER. SABINA BANK SHAREHOLDERS
SHOULD SEND CERTIFICATES REPRESENTING SABINA BANK COMMON STOCK TO THE EXCHANGE
AGENT ONLY AFTER THEY RECEIVE, AND IN ACCORDANCE WITH THE INSTRUCTIONS CONTAINED
IN, THE LETTER OF TRANSMITTAL.

THE MERGER

MERGER CONSIDERATION

Upon consummation of the Merger, each outstanding share of Sabina Bank
Common Stock will be automatically converted (subject to the provisions with
respect to fractional shares described under "Conversion of Sabina Bank Common
Stock" below) into 4.33 Premier Common Shares. The exchange ratio of 4.33
Premier Common Shares for each share of Sabina Bank Common Stock (the "Exchange
Ratio") was determined through negotiations between Premier and Sabina Bank,
with Sabina Bank being advised with respect to such negotiations by Professional
Bank Services, Inc. ("PBS"), its financial advisor. See "Opinion of Financial
Advisor to Sabina Bank."

Based upon the capitalization of Premier and Sabina Bank as of June 30,
1997, the shareholders of Sabina Bank will own Premier Common Shares
representing approximately 10.2% of the outstanding voting power of Premier
following consummation of the Merger.

BACKGROUND OF AND REASONS FOR THE MERGER

In December, 1996, Sabina Bank engaged PBS to assist the Board in the
preparation of a business plan that would enable Sabina Bank to remain
independent for the foreseeable future. As the planning process progressed,
it became increasingly apparent to the Board that achieving appropriate
levels of profitability and growth necessary for independence would be
extremely difficult in view of the significant competition and increasing
regulatory burdens affecting small banks. The Board recognized that
significant changes would be necessary to produce the returns that the Board
considered adequate for the shareholders of Sabina Bank. At the conclusion of
the strategic planning process, the Board decided to explore the benefits of
selling Sabina Bank.

The Board engaged IBS, which performed an analysis of Sabina Bank
relative to comparable financial institutions and prepared a comparable
merger transaction analysis to help the Board assess Sabina Bank's valuation
in an acquisition context. In conjunction with IBS, the Board identified 21
financial institutions as potential acquirors, and IBS contacted those 21
companies to determine their interest in a possible affiliation with Sabina
Bank. Fourteen of the 21 companies contacted indicated an interest in
discussing a possible affiliation and, upon signing a confidentiality
agreement, were provided with information regarding Sabina Bank to assist
them in evaluating a possible affiliation. The initial evaluation process
resulted in eight companies submitting non-binding indications of interest
outlining the general terms upon which they would consider an affiliation
with Sabina Bank.

On April 15, 1997, representatives of IBS met with the Sabina Bank board
to discuss the non-binding indications of interest. Three of the potential
acquirors proposed an exchange of their shares for the Sabina Bank shares, and
five of the potential acquirors proposed a cash purchase of the Sabina Bank
shares. The Board, with the assistance of IBS, evaluated the different
characteristics of each of the eight potential acquirors to determine their
suitability as merger partners. The Board considered a number of factors,
including, but not limited to, the amount and characteristics of the proposed
consideration, including the market performance of the stock of each of the
four companies proposing a stock exchange, the tax consequences of the
proposed consideration, the characteristics of the markets served by the
potential acquirors, the products and services offered by the potential
acquirors and the prospects for Sabina Bank's employees.

After considering and weighing various factors, the Board decided to
pursue further discussions with two of the eight companies which had
submitted written proposals. The Board met with representatives of the two
bank holding companies to further assess the merits of their respective
proposals. After these meetings had occurred, Premier, which had previously
declined to submit a written proposal, informed IBS that, upon further
consideration of its acquisition strategy and the specific characteristics of
Sabina Bank, it would like to submit a written proposal. The Board met with
representatives of Premier to evaluate Premier as a potential acquiror.
Premier and one of the other bank holding companies were then invited to
conduct a thorough due diligence review of Sabina Bank. Each of the two
potential acquirors affirmed their proposed acquisition terms at the
completion of the due diligence process. The Board met on May 15, 1997 to
consider the final proposals of Premier and the other bank holding company.

The Board favored Premier's proposal for several reasons. The Merger
presents an opportunity for the shareholders of Sabina Bank to exchange their
Sabina Bank shares in a non-taxable transaction for Premier's publicly traded
shares at a premium relative to Sabina Bank's book value per share. Based on
prevailing market values, the Premier offer had a higher aggregate value than
the other offer then under consideration, and the Board was favorably
impressed by Premier's record of profitability and growth. Since its initial
public offering price of $13 per share in May, 1996, Premier's stock had
achieved a market value of $16 per share on May 13, 1997. In conjunction with
IBS, the Board evaluated Premier's prospects for increased profitability and
growth.

In addition to the attractiveness of the offer value, Premier proposed
to keep the Sabina Bank as a separate subsidiary, whereas the other acquiror
would merge Sabina Bank into its lead bank and serve the Sabina market as a
branch of a bank located a considerable distance from Sabina. The Board
viewed the ability to continue to operate Sabina Bank as a separate bank as a
situation that would foster Sabina Bank's tradition of service to the
community and preserve opportunities for the employees of Sabina Bank.

Premier's outstanding shares, which will total more than 4.68 million
after the Merger, are listed on the Nasdaq National Market under the symbol
"PFBI" and are held by more thanover 2,000 beneficial owners. These
characteristics and historical trading volumes indicate a ready market for
Sabina Bank shareholders who want to sell all or part of their Premier Common
Shares after the Merger. Those shareholders who continue to hold their
shares, however, will realize at the Effective Time of the Merger a
significant return on their investment in Sabina Bank while deferring the tax
consequences of that gain.

The asset size of Premier was another important consideration to the
Board. Premier is large enough to support the staff and the technology
necessary to offer products and services that Sabina Bank does not offer.
While its size enables Premier to conduct these activities effectively and
profitably, Premier, like Sabina Bank, has served the financial service needs
of small communities, and there are many similarities between the business
philosophy and customer-service orientation of Sabina Bank and Premier.
Moreover, because of its size, Premier can offer Sabina Bank's employees more
diverse opportunities for career advancement.

The Board recognized that these features would provide the foundation
for a combination that would benefit Sabina Bank's shareholders, its
employees, its customers and the communities it serves. After carefully
considering the relevant factors, the Board concluded that Premier was the
most suitable acquiror and decided to proceed with the negotiation of a
definitive agreement with Premier. On May 28, 1997, at the conclusion of
arm's length negotiations between Sabina Bank and Premier, the Board of
Sabina Bank met to consider approval of the terms of the Merger Agreement. At
that meeting, representatives of PBS met with the Board to review the
financial components of the Merger and advised the Board that, in the opinion
of PBS, the financial consideration to be received by the Sabina Bank
shareholders in the merger was fair to the Sabina Bank shareholders from a
financial point of view.

Based on all of the foregoing, the directors of Sabina Bank concluded
that the terms of the Merger, as set forth in the Merger Agreement, were in
the best interests of Sabina Bank and its shareholders.

OPINION OF FINANCIAL ADVISOR TO SABINA BANK

PBS was engaged by Sabina Bank to advise Sabina Bank's Board of
Directors as to the fairness of the consideration, from a financial
perspective, to be paid by Premier to the Sabina Bank shareholders pursuant
to the Merger Agreement. IBS, a subsidiary of PBS, was retained by the Board
of Directors of Sabina Bank to evaluate and facilitate the possible sale of
Sabina Bank.

PBS is a bank consulting firm with offices in Louisville, Atlanta,
Chicago, Nashville and Washington, D.C. IBS is a registered broker/dealer.
As part of its investment banking business, PBS is regularly engaged in
reviewing the fairness of financial institution acquisition transactions from
a financial perspective and in valuing financial institutions and other
businesses and their securities in connection with mergers, acquisitions,
estate settlements and other matters. Neither PBS nor any of its affiliates
has a material financial interest in Sabina Bank or Premier. PBS and IBS were
selected to advise Sabina Bank's Board of Directors based upon their
familiarity with Ohio financial institutions and knowledge of the banking
industry as a whole.

PBS performed certain analyses described herein and presented the range of
values for Sabina Bank resulting from such analyses to the Board of Directors of
Sabina Bank in connection with its advice as to the fairness of the
consideration to be paid by Premier in the Merger.

A fairness opinion of PBS was delivered to the Board of Directors of
Sabina Bank on May 28, 1997, at a special meeting of the Board of Directors.
PBS has updated such fairness opinion to the Board of Directors of Sabina
Bank as of the date of this Proxy Statement/Prospectus. A copy of the
updated fairness opinion, which includes a summary of the assumptions made
and information analyzed in deriving the fairness opinion, is attached as
Appendix II to this Proxy Statement/Prospectus (the "Fairness Opinion") and
should be read in its entirety.

In arriving at its Fairness Opinion, PBS reviewed certain publicly
available business and financial information relating to Sabina Bank and
Premier. PBS considered certain financial and stock market data of Sabina
Bank and Premier, compared that data with similar data for certain other
publicly held banks and bank holding companies, and considered the financial
terms of certain other comparable bank transactions in the states of Ohio and
Indiana that had recently been effected. PBS also considered such other
information, financial studies, analyses and investigations, and financial,
economic and market criteria that it deemed relevant. In connection with its
review, PBS did not independently verify the foregoing information and relied
on such information as being complete and accurate in all material respects.
Financial forecasts prepared by PBS were based on assumptions believed by PBS
to be reasonable and to reflect currently available information. PBS did not
make an independent evaluation or appraisal of the assets of Sabina Bank or
Premier. PBS took into account the contacts made by IBS with other financial
institutions concerning their interest in a possible affiliation with Sabina
Bank, and reviewed all correspondence and information received from such
other financial institutions.

As part of preparing the Fairness Opinion, PBS performed a due diligence
review of Premier. As part of the due diligence, PBS reviewed the following
items: minutes of the Board of Directors meetings from January 19, 1996 through
December 10, 1996; reports filed with the Securities and Exchange Commission by
Premier on Forms 10-K, 10-Q and 8-K for the years ended December 31, 1994, 1995
and 1996 and during 1997; reports of independent auditors and management letters
and responses thereto for the year ended December 31, 1996; analysis and
calculations of allowance for loan and lease losses as of December 31, 1996;
internal loan review reports; investment portfolio activity reports; asset
quality reports; the Uniform Bank Holding Company Performance Report for Premier
as of December 31, 1996; Consolidated Reports of Condition and Income filed by
Premier's subsidiary banks for the year ended December 31, 1996; and discussion
of pending litigation and other issues with senior management of Premier.

PBS reviewed and analyzed the historical performance of Sabina Bank
contained in: Annual Reports and audited financial statements for the years
ended December, 1994, 1995 and 1996 as well as unaudited March 31, 1997
financial statements; March 31, 1996, June 30, 1996, September 30, 1996 and
December 31, 1996 Consolidated Reports of Condition and Income filed by
Sabina Bank with the Federal Reserve Board; December 31, 1996 Uniform Bank
Performance Report of Sabina Bank; historical common stock trading activity
of the Bank; and the premises and other fixed assets. PBS reviewed and
tabulated statistical data regarding the loan portfolio, securities portfolio
and other performance ratios and statistics. Financial projections were
prepared and analyzed as well as other financial studies, analyses and
investigations as deemed relevant for the purposes of

rendering the Fairness Opinion. In review of the aforementioned information,
PBS took into account its assessment of general market and financial
conditions, its experience in other similar transactions, and its knowledge
of the banking industry generally.

In connection with rendering the Fairness Opinion and preparing its
written and oral presentation to the Bank's Board of Directors, PBS performed
a variety of financial analyses, including those summarized herein. Such
summary does not purport to be a complete description of the analyses
performed by PBS in this regard. The preparation of a fairness opinion
involves various determinations as to the most appropriate and relevant
methods of financial analysis and the application of these methods to the
particular circumstances and, therefore, such an opinion is not readily
susceptible to summary description. Accordingly, notwithstanding the separate
factors summarized below, PBS believes that its analyses must be considered
as a whole and that selecting portions of its analyses or factors considered
by it, without considering all analyses and factors, could create an
incomplete view of the evaluation process underlying its Fairness Opinion. In
performing its analyses, PBS made numerous assumptions with respect to
industry performance, business and economic conditions and other matters,
many of which are beyond Sabina Bank's or Premier's control. The analyses
performed by PBS are not necessarily indicative of actual values or future
results, which may be significantly more or less favorable than suggested by
such analyses. In addition, analyses relating to the values of businesses do
not purport to be appraisals or to reflect the prices at which businesses
actually may be sold.

ACQUISITION COMPARISON ANALYSIS: In performing this analysis, PBS
reviewed all bank acquisition transactions in the states of Indiana and Ohio
(the "Regional Area") since 1990. There were 74 bank acquisition transactions
in the Regional Area announced since 1990 for which detailed financial
information was available. The purpose of this analysis was to obtain an
evaluation range based on these Regional Area bank acquisition transactions.
Median multiples of earnings and book value implied by the comparable
transactions were utilized in obtaining a range for the acquisition value of
Sabina Bank. In addition to reviewing recent Regional Area bank transactions,
PBS performed separate comparable analyses for acquisitions of banks which,
like Sabina Bank, were located in the state of Ohio, had an equity-to-asset
ratio between 10.00% and 14.00%, had a return on average equity ("ROAE")
between 6.00% and 10.00%, and had total deposits between $20.0 and $50.0
million. Median values for the 74 Regional Area acquisitions expressed as
multiples of both book value and earnings were 1.69 and 16.67, respectively.
The median multiples of book value and earnings for acquisitions of banks
located in the state of Ohio were 1.69 and 14.95, respectively. The median
multiples of book value and earnings for acquisitions of Regional Area banks
with equity-to-asset ratios between 10.00% and 14.00% were 1.58 and

18.34, respectively. For acquisitions of Regional Area banks with a ROAE
between 6.00% and 10.00%, the median multiples were 1.61 and 20.42,
respectively. The median multiples of book value and earnings for
acquisitions of banks with total deposits between $20.0 and $50.0 million
were 1.44 and 14.48, respectively.

In the proposed Merger, Sabina Bank shareholders will receive 4.33
Premier Common Shares for each share of Sabina Bank Common Stock outstanding.
On May 23, 1997, the average of the bid/asked price for a Premier Common
Share on the Nasdaq National Market was $16.50 per share. Using this average
price of $16.50 per Premier Common Share, the per share value to be received
by Sabina Bank shareholders would equal $71.45 per share or an aggregate
value of $7,858,950, which represents a multiple of Sabina Bank's March 31,
1997 book value and a multiple of its March 31, 1997 annualized earnings of
1.76 and 27.29 respectively.

The market value of the proposed Merger's percentile ranking was prepared
and analyzed with respect to the above Regional Area comparable group. Compared
to all Regional Area bank transactions, the acquisition value ranked in the 63rd
percentile as a multiple of book value and in the 89th percentile as a multiple
of earnings. For bank transactions in the State of Ohio, the acquisition value
ranked in the 59th percentile as a multiple of book value and in the 92nd
percentile as a multiple of earnings. Compared to Regional Area bank
transactions where the acquired institution had an equity-to-asset ratio between
10.00% and 14.00%, the acquisition value ranked in the 88th percentile as a
multiple of book value and the 83rd percentile as a multiple of earnings. For
Regional Area bank transactions where the acquired institution had a ROAE
between 6.00% and 10.00%, the acquisition value ranked in the 88th percentile as
a multiple of book value and the 93rd percentile as a multiple of earnings. For
Regional Area bank acquisitions where the acquired institution had between
$20.0 -and $50.0 million in deposits, the acquisition value ranked in the 83rd
percentile as a multiple of book value and in the 96th percentile as a multiple
of earnings.

ADJUSTED NET ASSET VALUE ANALYSIS: PBS reviewed Sabina Bank's balance sheet
data to determine the amount of material adjustments required to shareholders'
equity based on differences between the market value of Sabina Bank's assets and
their value reflected on Sabina Bank's financial statements. PBS determined that
two adjustments were warranted. Equity was increased $230,000 to reflect the
assumed retirement of Sabina Bank's ESOP debt. PBS also reflected a value for
non-interest bearing demand deposits of approximately $1,712,000. The aggregate
adjusted net asset value of Sabina Bank was determined to be $6,416,000 or
$58.33 per share of Sabina Bank Common Stock.

DISCOUNTED EARNINGS ANALYSIS: A dividend discount analysis was performed by
PBS pursuant to which a range of stand-alone values of

Sabina Bank was determined by adding (i) the present value of estimated
future dividend streams that Sabina Bank could generate over a five-year
period beginning in 1997 and ending in 2001, and (ii) the present value of
the "terminal value" of Sabina Bank's earnings at the end of the year 2001.
The "terminal value" of Sabina Bank's earnings at the end of the five-year
period was determined by applying a multiple of 16.67 times the projected
terminal year's earnings. The 16.67 multiple represents the median price paid
as a multiple of earnings for all Regional Area bank transactions since 1990.

Dividend streams and terminal values were discounted to present values
using a discount rate of 12%. This rate reflects assumptions regarding the
required rate of return of holders or buyers of Sabina Bank's Common Stock. The
aggregate value of Sabina Bank, determined by adding the present value of the
total cash flows, was $6,804,000 or $61.85 per share. In addition, using the
five-year projection as a base, a twenty-year projection was prepared assuming
that an annual growth rate of 6.0% and a consistent return on assets of 1.25%
would remain in effect for the entire period, beginning in year six. Dividends
also were assumed to be 70% of income for all years. This long-term projection
resulted in a aggregate value of $6,190,000 or $56.28 per share of Sabina Bank
Common Stock.

SPECIFIC ACQUISITION ANALYSIS: PBS valued Sabina Bank based on an
acquisition analysis assuming a "break-even" earnings scenario to an acquiror as
to price, current interest rates and amortization of the premium paid. Based on
this analysis, an acquiring institution would pay in the aggregate $5,707,000,
or $51.88 per share, assuming it was willing to accept no impact to its net
income in the initial year. This analysis was based on a funding cost of 6.5%
adjusted for taxes, amortization of the acquisition premium over 15 years and a
March 31, 1997 annualized earnings level adjusted for the termination of the
ESOP of $308,000. This analysis was repeated assuming a potential acquiror would
attain non-interest expense reductions of 10% in the transaction. Based on this
analysis, an acquiring institution would pay in the aggregate $6,525,000 or
$59.32 per share of Sabina Bank Common Stock.

The Fairness Opinion is directed only to the question of whether the
consideration to be received by Sabina Bank's shareholders under the Merger
Agreement is fair and equitable from a financial perspective, and it does not
constitute a recommendation to any Sabina Bank shareholder to vote in favor of
approval and adoption of the Merger Agreement. No limitations were imposed on
PBS or IBS regarding the scope of its investigation or otherwise by Sabina Bank.

Based on the results of the various analyses described above, PBS concluded
that the consideration to be received by Sabina Bank's shareholders under the
Merger Agreement was fair and

equitable from a financial perspective to the shareholders of Sabina Bank.

PBS and IBS will receive fees in the amount of $10,000 plus one percent of
the total transaction value for all services performed in connection with the
Merger and rendering the Fairness Opinion. In addition, Sabina Bank has agreed
to indemnify IBS, PBS and its directors, officers and employees from liability
in connection with the Merger, and to hold IBS and PBS harmless from any losses,
actions, claims, damages, expenses or liabilities related to any of IBS' or PBS'
acts or decisions made in good faith and in the best interests of Sabina Bank.

EFFECTIVE TIME

The Merger will become effective upon the filing of a certificate of merger
with the Secretary of State of the State of Ohio (the "Effective Time") or such
later time as is specified on such certificate. The filing with respect to the
Merger will occur on the first day that is five business days after satisfaction
or waiver of the latest to occur of the conditions to the Merger unless another
date is agreed to in writing by Premier and Sabina Bank.

The Merger Agreement may be terminated by either party if, among other
reasons, the Merger shall not have been consummated on or before December 31,
1997. See "The Merger Agreement -- Conditions to the Merger."

CONVERSION OF SABINA BANK COMMON STOCK; PROCEDURES FOR EXCHANGE OF
CERTIFICATES; FRACTIONAL SHARES

The conversion of Sabina Bank Common Stock (other than shares as to which
dissenters' rights are properly exercised ("Dissenting Shares")) into Premier
Common Shares will occur automatically at the Effective Time.

As soon as practicable after the Effective Time, Mid-America Bank of
Louisville and Trust Company, Louisville, Kentucky, or another bank or trust
company designated by Premier and reasonably acceptable to Sabina Bank, in its
capacity as exchange agent (the "Exchange Agent"), will send a letter of
transmittal to each Sabina Bank shareholder. The letter of transmittal will
contain instructions with respect to the surrender of certificates representing
Sabina Bank Common Stock to be exchanged for Premier Common Shares.

SABINA BANK SHAREHOLDERS SHOULD NOT FORWARD SABINA BANK STOCK CERTIFICATES
TO THE EXCHANGE AGENT UNTIL THEY HAVE RECEIVED A LETTER OF TRANSMITTAL. SABINA
BANK SHAREHOLDERS SHOULD NOT RETURN STOCK CERTIFICATES WITH THE ENCLOSED PROXY.

Until certificates representing Sabina Bank Common Stock are surrendered
for exchange after consummation of the Merger, holders thereof will not be
shareholders of Premier entitled to notice of or to vote on matters submitted to
the shareholders of Premier, and each outstanding certificate representing
Sabina Bank Common Stock shall represent after consummation of the Merger only
the right to receive, upon surrender of such certificate, the merger
consideration. Until the certificates representing Sabina Bank Common Stock are
surrendered for exchange after consummation of the Merger, holders of such
certificates will not be paid dividends on the Premier Common Shares into which
such shares have been converted, but any such unpaid dividends will be paid,
without interest, when such certificates are properly surrendered.

All Premier Common Shares issued upon conversion of shares of Sabina Bank
Common Stock shall be deemed to have been issued in full satisfaction of all
rights pertaining to such shares of Sabina Bank Common Stock, subject, however,
to Sabina Bank's obligation to pay any dividends or make any other distributions
with a record date prior to the Effective Time that may have been declared or
made by Sabina Bank on Sabina Bank Common Stock in accordance with the Merger
Agreement on or prior to the Effective Time and which remains unpaid at the
Effective Time.

No fractional Premier Common Shares will be issued to any Sabina Bank
shareholder upon consummation of the Merger. For each fractional share that
would otherwise be issued, Premier will pay by check an amount equal to the
product obtained by multiplying the fractional share interest to which such
holder would otherwise be entitled by the closing price for a Premier Common
Share on the Nasdaq National Market on the business day immediately preceding
the Effective Time.

NASDAQ NATIONAL MARKET LISTING

It is a condition to the Merger that the Premier Common Shares to be issued
in the Merger be authorized for listing on the Nasdaq National Market, subject
to official notice of issuance.

CONDUCT OF BUSINESS PENDING MERGER

Pursuant to the Merger Agreement, Sabina Bank has agreed to carry on its
business in the usual, regular and ordinary course and substantially in the
same manner as conducted prior to the execution of the Merger Agreement. See
"The Merger Agreement -- Certain Covenants."

CONDITIONS TO THE CONSUMMATION OF THE MERGER

The obligations of Premier and Sabina Bank to consummate the Merger are
subject to various conditions, including: obtaining requisite shareholder and
regulatory approvals; the absence of any

materially burdensome requirement or condition imposed in connection with the
obtaining of any such regulatory approvals; approval for listing on the
Nasdaq National Market, subject to official notice of issuance, of the
Premier Common Shares; receipt of opinions in respect of certain Federal
income tax consequences of the Merger and receipt of a letter from Premier's
independent accountants to the effect that the Merger qualifies for "pooling
of interests" accounting treatment; the average trading price for a Premier
Common Share during a 20 consecutive trading day period ending five business
days before the Effective Time being at least $14; and any Sabina Bank
shareholders properly exercising dissenters' rights not owning more than 10%
of the outstanding Sabina Bank Common Stock. See "The Merger Agreement --
Conditions to the Merger."

REGULATORY APPROVALS REQUIRED

The Merger is subject to the prior approval of the Federal Reserve Board,
the FDIC and the banking authorities of the Commonwealth of Kentucky and the
State of Ohio.

CERTAIN FEDERAL INCOME TAX CONSEQUENCES

Consummation of the Merger is conditionconditioned upon there being deliveredreceipt of opinions of
Eskew & Gresham, P.S.C., Premier's independent accountants, and Vorys, Sater,
Seymour and Pease, special counsel to Sabina Bank, that, for federal income
tax purposes, under current law, assuming that the Merger and related
transactions will take place as described in the Merger Agreement, the Merger
will constitute a reorganization within the meaning of Section 368(a) of the
Internal Revenue Code of 1986, as amended (the "Code"), and Premier, Merger
Sub and Sabina Bank will each be a party to the reorganization within the
meaning of Section 368(b) of the Code.

In that case, in the respective opinions of Eskew and Gresham, P.S.C., and
Vorys, Sater, Seymour and Pease, the following would be the material Federal
income tax consequences of the Merger:

(i) No gain or loss will be recognized by Sabina Bank, Premier or
Merger Sub in the Merger;

(ii) No gain or loss will be recognized by the shareholders of Sabina Bank
upon their receipt of Premier Common Shares in exchange for their Sabina Bank
Common Stock, except that shareholders who receive cash proceeds for fractional
interests in Premier Common Shares will recognize gain or loss equal to the
difference between such proceeds and the tax basis allocated to their fractional
share of interest, and such gain or loss will constitute capital gain or loss if
their Sabina Bank Common Stock is held as a capital asset at the Effective Time;

(iii) The tax basis of the Premier Common Shares (including fractional
share interests) received by the shareholders of Sabina Bank will be the same as
the tax basis of their Sabina Bank Common Stock exchanged therefor; and

(iv) The holding period of Premier Common Shares in the hands of Sabina
Bank shareholders will include the holding period of their Sabina Bank Common
Stock exchanged therefor, provided such Sabina Bank Common Stock is held as a
capital asset at the Effective Time.

Shareholders who receive cash proceeds upon the surrender of Sabina Bank
Common Stock to Sabina Bank pursuant to the exercise of dissenters' rights
will be treated as having effected a taxable sale or exchange of such shares,
and such shareholder will recognize gain or loss equal to the difference
between the amount received for such shares and the shareholder's tax basis
for such shares. Subject to the limitations imposed by Section 302 of the
Code, such gain or loss will constitute a capital gain or loss if such shares
are held as a capital asset at the Effective Time.

THE DISCUSSION SET FORTH ABOVE IS INCLUDED FOR GENERAL INFORMATION ONLY.
IT DOES NOT ADDRESS THE STATE, LOCAL OR FOREIGN TAX ASPECTS OF THE MERGER.
THE DISCUSSION IS BASED ON CURRENTLY EXISTING PROVISIONS OF THE CODE,
EXISTING TREASURY REGULATIONS THEREUNDER AND CURRENT ADMINISTRATIVE RULINGS
AND COURT DECISIONS. ALL OF THE FOREGOING ARE SUBJECT TO CHANGE AND ANY SUCH
CHANGE COULD AFFECT THE CONTINUING VALIDITY OF THIS DISCUSSION. EACH SABINA
BANK SHAREHOLDER SHOULD CONSULT HIS OR HER OWN TAX ADVISOR WITH RESPECT TO
THE SPECIFIC TAX CONSEQUENCES OF THE MERGER TO HIM OR HER, INCLUDING THE
APPLICATION AND EFFECT OF STATE, LOCAL AND FOREIGN TAX LAWS.

ANTICIPATED ACCOUNTING TREATMENT

The Merger is expected to qualify as a "pooling of interests" for
accounting and financial reporting purposes. Under this method of accounting,
the recorded assets and liabilities of Premier and Sabina Bank will be carried
forward to Premier at their recorded amounts; income of Premier will include
income of Premier and Sabina Bank for the entire fiscal year in which the Merger
occurs; and the reported income of the separate corporations for prior periods
will be combined and restated as income of Premier.

The Merger Agreement provides that a condition to the consummation of the
Merger is the receipt of a letter from the independent accountants of Premier to
the effect that the Merger qualifies as a "pooling of interests" for accounting
and financial reporting purposes. In the event such condition is not met, the
Merger would not be consummated unless the condition were waived and approval of
those shareholders entitled to vote on the Merger was resolicited.

EFFECT ON SABINA BANK'S ESOP; EMPLOYEE BENEFITS

The Merger Agreement provides that Sabina Bank will terminate the Sabina
Bank Employee Stock Ownership Plan (the "ESOP") as soon as practicable following
the Merger in a manner that is consistent with the Employee Retirement Income
Security Act ("ERISA") and the ESOP's governing documents and does not result in
any unnecessary federal income tax consequences to the ESOP. Sabina Bank has
agreed not to make any further contributions to the ESOP without Premier's
written consent. Following the Merger, in addition to other employee benefits
from time to time provided by Premier directly or through its subsidiaries,
Sabina Bank employees that are participants in the ESOP will be eligible as
employees of Premier to participate in the Premier 401(k) Retirement Plan.

After the Effective Time, the officers and employees of Sabina Bank will
be provided with such employee benefits as Premier, directly or through its
subsidiaries, generally provides to officers and employees. For purposes of
providing such benefits, Premier will credit such officers and employees for
years of service at Sabina Bank prior to the Effective Time for all purposes
for which such service was recognized by Sabina Bank.

INTERESTS OF CERTAIN PERSONS IN THE MERGER

From a period of three years from the Effective Time of the Merger, Premier
has agreed to indemnify each officer, director or employee of Sabina Bank
against losses, claims and liabilities arising out of acts or omissions
occurring prior to the Effective Time to the extent that Sabina Bank is
permitted under Ohio law and its articles of incorporation and code of
regulations to indemnify such person.

The security ownership of directors and officers of Sabina Bank is set
forth under "Principal Holders of Sabina Bank Common Stock and Ownership of
Management."

RESALE OF PREMIER COMMON SHARES

The Premier Common Shares issued pursuant to the Merger will be freely
transferable under the Securities Act except for shares issued to any Sabina
Bank shareholder who may be deemed to be an "affiliate" of Sabina Bank for
purposes of Rule 145 under the Securities Act. It is expected that each such
affiliate will enter into an agreement with Premier providing that such
affiliate will not transfer any such Premier Common Shares received in the
Merger except in compliance with the Securities Act and accounting series
releasesAccounting Series
Releases of the Commission relating to the "pooling of interests"
method of accounting. This Proxy Statement/Prospectus does not cover resales
of Premier Common Shares.

MANAGEMENT AND OPERATIONS AFTER THE MERGER

SABINA BANK

Following the Merger, the directors, officers and employees of Sabina Bank
serving immediately prior to consummation of the Merger will continue to serve
in such positions. However, the number of directors of Sabina Bank may be
increased to permit J. Howell Kelly, Premier's President and Chief Executive
Officer, or such other person as may be designated by Premier, to serve as a
director of Sabina Bank.

The Merger is not expected to substantially alter the operations of Sabina
Bank. Sabina Bank will retain its separate corporate existence, charter and
name, although it will be a wholly owned subsidiary of Premier. Premier has
informed the Board of Directors of Sabina Bank that its strategy following the
Merger is to allow Sabina Bank to retain its commitment to local orientation and
direction, while having the benefit of Premier's capital for growth and staff
assistance to promote safety, soundness and regulatory compliance. Premier has
further informed the Board of Directors of Sabina Bank that it intends for
Sabina Bank to be managed on a decentralized basis, allowing customers direct
access to Sabina Bank's officers in an environment conducive to friendly,
informed and courteous service, local and timely decision-making, and
flexibility with respect to operating procedures and credit policies limited
only by a framework of centralized risk controls provided by Premier to promote
prudent banking practices.

PREMIER

Following the Merger, the directors and executive officers of Premier
serving immediately prior to consummation of the Merger will continue to serve
in such positions. See "Incorporation of Certain Documents by Reference."

THE MERGER AGREEMENT

The following is a summary of certain provisions of the Merger Agreement, a
copy of which is Annex I to this Proxy Statement/Prospectus. The following
summary is qualified in its entirety by reference to the complete text of the
Merger Agreement, which is incorporated herein by reference.

THE MERGER

Pursuant to the Merger Agreement and on the terms and subject to the
conditions set forth in the Merger Agreement, Merger Sub will be merged into
Sabina Bank. Following the Merger, Sabina Bank will be a wholly owned
subsidiary of Premier. The closing of the Merger (the "Closing") will take
place on the first day that is

five business days after the satisfaction or waiver of the conditions to the
Merger unless another date is agreed to in writing by Premier and Sabina Bank
(the "Closing Date"). The Effective Time of the Merger will occur upon the
filing of a certificate of merger with the Secretary of State of the State of
Ohio on the Closing Date or at such later time as is specified on such
certificate.

CONVERSION OF SABINA BANK COMMON STOCK

At the Effective Time of the Merger, pursuant to the Merger Agreement, (i)
each issued and outstanding share of Sabina Bank Common Stock, other than shares
held directly or indirectly by Premier (excluding shares in trust accounts,
managed accounts and the like held by any subsidiary of Premier that are
beneficially owned by third parties) and shares with respect to which
dissenters' rights are properly exercised, will be converted into the right to
receive 4.33 Premier Common Shares, and upon such conversion all such
outstanding shares of Sabina Bank Common Stock will be canceled and retired and
will cease to exist and (ii) each issued and outstanding share of Merger Sub
held by Premier will be converted into 1,000 shares of common stock of Sabina
Bank, the surviving corporation in the Merger.

REPRESENTATIONS AND WARRANTIES

The Merger Agreement contains customary representations and warranties by
both Premier and Sabina Bank as to, among other things, (i) due organization,
good standing and absence of violations of constitutive documents, (ii)
ownership of subsidiaries and other investments, (iii) capital structure, (iv)
requisite corporate power and authority to enter into the Merger Agreement and
to consummate the transactions contemplated by the Merger Agreement, due
authorization, execution and delivery of the Merger Agreement, validity and
enforceability of the Merger Agreement and the compliance of the Merger with
constitutive documents, agreements and applicable laws, (v) required filings and
approvals, (vi) financial statements (in the case of Sabina Bank) and financial
and other disclosure contained in documents filed with the Commission (in the
case of Premier) and the absence of undisclosed liabilities, (vii) absence of
certain material changes or events, (viii) information to be supplied by each in
connection with the Registration Statement and this Proxy Statement/Prospectus
and (ix) corporate documents, books and records.

The Merger Agreement also contains representations and warranties by Sabina
Bank as to (i) its allowance for credit losses, (ii) environmental matters,
(iii) the absence of material violations or defaults under constitutive
documents, contracts, other agreements and judicial or administrative orders,
(iv) compliance with licenses, permits and applicable laws, (v) certain
litigation, (vi) tax matters, (vii) material contracts, (viii)

employee benefit plans, (ix) subsidiaries, (x) agreements with bank
regulators, (xi) title to properties, (xii) insurance and (xiii) potential
competing interests by any director, officer, key employee or 10% or more
shareholder of Sabina Bank.

CERTAIN COVENANTS

CONDUCT OF BUSINESS PENDING THE MERGER. Pursuant to the Merger Agreement,
Sabina Bank has agreed to operate according to its ordinary and usual course of
business consistent with past practice, to seek to preserve intact its current
business organization and keep available the services of its current directors,
officers and employees, and to preserve its relationships with customers,
suppliers and others having business dealings with it so as not to impair its
goodwill and ongoing business prior to the Effective Time. Sabina Bank has
agreed, among other things, not to (i) declare any dividends or make any other
distributions in respect of Sabina Bank Common Stock, except that if the
Effective Time has not occurred before the record date for the dividend on
Premier Common Shares for the calendar quarter ended December 31, 1997, Sabina
Bank may declare a special dividend on Sabina Bank Common Stock to holders of
record of such shares as of the record date established therefor, in an amount
per share equal to the product of 4.33 multiplied by the dividend declared on
each Premier Common Share for the calendar quarter ended December 31, 1997, (ii)
issue or sell any shares of Sabina Bank Common Stock, (iii) amend its articles
of incorporation or its code of regulations, (iv) sell or otherwise dispose of
its properties or assets other than in the ordinary course of a commercial
banking business consistent with past practice, (v) incur any indebtedness for
borrowed money or make any loans, advances or capital contributions to, or
investments in, any other person, other than in the ordinary course of a
commercial banking business consistent with past practice, (vi) increase the
compensation payable to its officers or employees, grant any severance or
termination pay to, or enter into any employment or severance arrangement with,
any director, officer or employee, or establish, adopt, enter into or amend in
any material respect or take action to accelerate any rights or benefits under
any employee benefit plan, or (vii) make any capital expenditures.

Pursuant to the Merger Agreement, Premier and Sabina Bank have each agreed
that it will not take any action that would, or that could reasonably be
expected to, result in (i) any representations and warranties of such party set
forth in the Merger Agreement that are qualified as to materiality becoming
untrue, (ii) any of such representations and warranties that are not so
qualified becoming untrue in any material respect or (iii) any of the conditions
to the Merger not being satisfied.

SOLICITATION OF ACQUISITIONS PROPOSALS. Pursuant to the Merger Agreement,
Sabina Bank has agreed that it will not, and that

it will direct and use its best efforts to cause its officers, directors,
employees and any investment banker, attorney or other advisor or
representative of it not to, (i) initiate, solicit or encourage the
submission of any Acquisition Proposal (as defined below), (ii) enter into
any agreement with respect to any Acquisition Proposal or (iii) engage in any
negotiations or discussions with or furnish any information or data to, any
third party relating to an Acquisition Proposal. Sabina Bank and the Sabina
Bank Board of Directors, however, may (a) furnish information to, and
participate in discussions or negotiations with, any person in connection
with an unsolicited bona fide written Acquisition Proposal to Sabina Bank or
its shareholders if and to the extent the Board of Directors determines in
good faith based on written advice of its outside legal counsel that such
action is necessary for the Board of Directors to comply with its fiduciary
duties to Sabina Bank shareholders under applicable law, and (b) comply with
Rule 14e-2 under the Exchange Act with respect to any Acquisition Proposal.
For purposes of the Merger Agreement, "Acquisition Proposal" means any
proposal or offer to Sabina Bank or its shareholders with respect to a
merger, acquisition, consolidation or similar transaction involving, or any
purchase of all or any significant portion of the assets or any equity
securities of, Sabina Bank.

OTHER ACTIONS. Pursuant to the Merger Agreement, each party has agreed to
use its best efforts to take, or cause to be taken, all actions, and to do, or
cause to be done, and to assist and cooperate with the other party in doing, all
things necessary, proper or advisable to consummate and make effective the
Merger and other transactions contemplated by the Merger Agreement.

INDEMNIFICATION. Pursuant to the Merger Agreement, Premier has agreed to
indemnify for a period of three years from the Effective Time each officer,
director and employee of Sabina Bank against losses, claims and liabilities
arising out of acts or omissions occurring prior to the Effective Time to the
fullest extent Sabina Bank is permitted under Ohio law and its articles of
incorporation and code of regulations to indemnify such person.

ACCESS TO INFORMATION. Pursuant to the Merger Agreement, each of Premier
and Sabina Bank has agreed to afford to the other and to its officers,
employees, accountants, counsel and other representatives reasonable access
during normal business hours prior to the Effective Time to all of its
respective properties, books, contracts, personnel and records. Except as
required by law, Premier and Sabina Bank have agreed to hold any non-public
information in confidence.

CERTAIN OTHER COVENANTS. The Merger Agreement also contains customary
covenants applicable to transactions like the Merger, including covenants
relating to (i) each party's obligation to pay its own fees and expenses, (ii)
execution and delivery of closing

documentation and (iii) use of reasonable efforts to cause the Merger to
qualify as a "reorganization" within the meaning of Section 368(a) of the
Code and to be recorded for accounting purposes as a "pooling of interests."

CONDITIONS TO THE MERGER

The obligations of Premier and Merger Sub, on the one hand, and Sabina
Bank, on the other hand, to consummate the Merger are subject to certain
conditions, including the following: (i) approval and adoption of the Merger
Agreement by the affirmative vote of a majority of the outstanding shares of
Sabina Bank Common Stock; (ii) the receipt of all authorizations, consents,
orders or approvals of any governmental or regulatory authorities that are
necessary for the consummation of the Merger; (iii) the Registration
Statement shall have become effective under the Securities Act and shall not
be the subject of any stop order or proceedings seeking a stop order; (iv)
the receipt by Parent, Merger Sub and Sabina Bank of a letter from Eskew &
Gresham, P.S.C., Premier's independent accountants, to the effect that the
Merger qualifies for "pooling of interests" accounting treatment; (v) the
absence of any temporary restraining order, preliminary or permanent
injunction or other order issued by any court of competent jurisdiction or
other legal restraint or prohibition preventing the consummation of the
Merger; (vi) the absence of any action taken, or any statute, rule,
regulation or order enacted, entered, enforced or deemed applicable to the
Merger by any governmental or regulatory authority that, in connection with
the grant of any governmental or regulatory approval, imposes any condition
or restriction upon Premier or its subsidiaries, or Sabina Bank, that
materially adversely impacts the economic or business benefits of the Merger
so as to render inadvisable the consummation of the Merger; and (vii) the
Premier Common Shares issuable pursuant to the Merger shall have been
approved for listing on the Nasdaq National Market subject to official notice
of issuance.

The obligations of Premier and Merger Sub to consummate the Merger are also
subject to certain additional conditions, including the following: (i) the
accuracy of the representations and warranties of Sabina Bank set forth in the
Merger Agreement; (ii) Sabina Bank having performed in all material respects all
obligations required to be performed by it under the Merger Agreement at or
prior to the Closing Date; (iii) the obtaining by Sabina Bank of the consent or
approval of each person whose consent or approval shall be required in order to
permit the succession by Sabina Bank, as the surviving corporation pursuant to
the Merger, to any obligation, right or interest of Sabina Bank under any
material contract, agreement or instrument; (iv) receipt by Premier of an
opinion of Eskew & Gresham, P.S.C., to the effect that the Merger will treated
for Federal income tax purposes as a reorganization within the meaning Section
368(a) of the Code;

(v) the receipt by Premier from each affiliate of Sabina Bank of an "affiliate's
letter"; and (vi) the shareholders of Sabina Bank who properly exercise
dissenters' rights in connection with the Merger, if any, owning not more than
10% of the outstanding shares of Sabina Bank Common Stock.

The obligation of Sabina Bank to consummate the Merger is also subject
to additional conditions, including the following: (i) the accuracy of the
representations and warranties of Premier and Merger Sub set forth in the
Merger Agreement; (ii) Premier and Merger Sub having performed in all
material respects all obligations required to be performed by them under the
Merger Agreement at or prior to the Closing Date; (iii) the obtaining by
Premier of the consent or approval of each person whose consent or approval
shall be required in connection with the Merger under any material contract,
agreement or instrument; (iv) receipt by Sabina Bank of an opinion of Vorys,
Sater, Seymour and Pease, to the effect that the Merger will be treated for
federal income tax purposes as a reorganization within the meaning Section
368(a) of the Code; (v) the receipt by Sabina Bank from each affiliate of
Premier of an "affiliate's letter;" and (vi) the average closing price per
Premier Common Share for the 20 consecutive trading days ending on the fifth
business day prior to the Effective Time of the Merger shall be at least $14.

TERMINATION OF THE MERGER AGREEMENT

The Merger Agreement may be terminated at any time prior to the Effective
Time of the Merger pursuant to the mutual written consent of Premier and Sabina
Bank and at the option of either Premier or Sabina Bank under certain
circumstances, including the following: (i) if at the Special Meeting the
Merger Agreement is not approved and adopted by the shareholders of Sabina Bank;
(ii) if the Merger shall not have been consummated on or before December 31,
1997, unless the failure to consummate the Merger is the result of a willful and
material breach of the Merger Agreement by the party seeking to terminate the
Merger Agreement; (iii) if any court or other governmental agency shall have
issued an order, decree or ruling or taken any other action permanently
enjoining, restraining or otherwise prohibiting the Merger; (iv) in the event of
a material breach by the other party to the Merger Agreement; or
(v) if (a) all the conditions to the Merger that are conditions to the
obligations of both Premier and Sabina Bank have been satisfied and (b) any of
the conditions to the obligations of the terminating party to consummate the
Merger cannot be satisfied on or before December 31, 1997.

In addition, the Merger Agreement may be terminated at the option of Sabina
Bank if the Sabina Bank Board of Directors determines that an Acquisition
Proposal is more favorable to the shareholders of Sabina Bank than the
transactions contemplated by the Merger Agreement and such Board of Directors
shall concurrently

approve, and Sabina Bank shall concurrently enter into, a definitive
agreement providing for the implementation of the transactions contemplated
by such Acquisition Proposal. In order to terminate the Merger Agreement
under this provision, Sabina Bank must give Premier at least five business
days' notice of its intention to terminate, and the Sabina Bank Board of
Directors is required to take into account the terms of any revised proposal
made by Premier during such five business-day period.

EFFECTS OF TERMINATION

If any person makes an Acquisition Proposal with respect to Sabina Bank
and thereafter (i) the Merger Agreement is terminated (a) for failure to
obtain the approval and adoption of the Merger Agreement by the shareholders
of Sabina Bank, (b) because the Closing shall not have occurred on or before
December 31, 1997 (if at the time of termination Sabina Bank is in material
breach of the Merger Agreement and such breach cannot be or has not been
cured within 30 days after Sabina Bank becomes aware of such breach or such
shorter period as may elapse between the date Sabina Bank becomes aware of
such breach and the time of termination, (c) because a court of competent
jurisdiction or other governmental agency shall have issued an order, decree
or ruling or taken any action permanently enjoining, restraining or otherwise
prohibiting the Merger (if at the time of termination Sabina Bank is in
material breach of the Merger Agreement and such breach cannot be or has not
been cured within 30 days after Sabina Bank becomes aware of such breach or
such shorter period that may elapse between the date Sabina Bank becomes
aware of such breach and the time of termination), (d) by Premier as a result
of the breach of the Merger Agreement by Sabina Bank, (e) by Premier because
any of the conditions to its obligations is not capable of being satisfied
prior to December 31, 1997 or (f) by Sabina Bank to permit Sabina Bank to
enter into a definitive agreement providing for the implementation of another
Acquisition Proposal, and (ii) a definitive agreement with respect to an
Acquisition Proposal is executed or an Acquisition Proposal is consummated at
or within 12 months after such termination, then Sabina Bank shall pay to
Premier a fee of $350,000 (reduced by any amount actually paid by Sabina Bank
pursuant to the next paragraph in connection with such termination).

If the Merger Agreement is terminated for the failure to obtain approval
of the Merger Agreement by the shareholders of Sabina Bank, then Sabina Bank
shall reimburse Premier for all its reasonable out-of-pocket expenses
actually incurred in connection with the Merger Agreement and the
transactions contemplated thereby, up to a maximum of $100,000.

In the event of termination of the Merger Agreement, the Merger Agreement
shall forthwith become void and have no effect, without any liability or
obligation on the part of Premier, Merger

Sub or Sabina Bank, other than (i) liability with respect to termination
payments and reimbursement of fees and expenses as described above, (ii) each
party's obligation to pay its own fees and expenses (except as set forth
above with respect to reimbursement of fees and expenses), (iii) certain
obligations of confidentiality and (iv) liability resulting from any willful
and material breach by any party to the Merger Agreement.

DESCRIPTION OF PREMIER CAPITAL STOCK

AUTHORIZED CAPITAL STOCK

The authorized capital stock of Premier consists of 11 million shares, of
which 10 million are Common Shares, without par value, and 1 million are
Preferred Shares, without par value. Premier has 4,209,090 Common Shares issued
and outstanding, 100,000 Common Shares reserved for issuance under the Premier
1996 Employee Stock Ownership Incentive Plan and 476,300 Common Shares reserved
for issuance in connection with the Merger. No Preferred Shares are outstanding
or reserved for issuance.

COMMON SHARES

Holders of Common Shares will be entitled to one vote for each share on all
matters voted on by shareholders, other than the election of directors, and,
except as required by law or provided in any resolution adopted by Premier's
Board of Directors with respect to any series of Preferred Shares, will
exclusively possess all voting power. In the election of directors, holders of
Common Shares have cumulative voting rights whereby each holder is entitled to
vote the number of shares held multiplied by the number of directors to be
elected, and each holder may cast the whole number of votes for one candidate or
distribute such votes among two or more candidates. Holders of Common Shares do
not have any conversion, redemption or preemptive rights. Subject to any
preferential rights of any outstanding series of Preferred Shares designated by
Premier's Board of Directors from time to time, the holders of Common Shares
will be entitled to such dividends as may be declared from time to time by the
Board of Directors from funds available therefor, and upon liquidation will be
entitled to receive pro rata all assets of Premier available for distribution to
such holders.

PREFERRED SHARES

The Board of Directors of Premier is authorized to provide for the issuance
of Preferred Shares, in one or more series, and to fix for each such series such
voting powers, designations, and relative, participating, optional and other
special rights, and such qualifications, limitations or restrictions, as are
stated in the resolution adopted by the Board of Directors providing for the

issuance of such series and as are permitted by the Kentucky Business
Corporation Act (the "KBCA").

SHARES AVAILABLE FOR FUTURE ISSUANCE

Following the Merger, Premier will have 5,214,610 authorized Common
Shares and all of its authorized Preferred Shares remaining available for
issuance as the need arises in connection with future acquisitions,
combinations, equity financings, share distributions and dividends, employee
benefit plans and other corporate purposes. The issuance of additional
Common Shares and the issuance of any Preferred Shares may occur without
further authorization by shareholders on such terms as Premier's Board of
Directors, subject to its fiduciary duties, may lawfully determine. The
effect of the issuance of additional Common Shares (other than on a pro rata
basis among holders of Common Shares) would be to dilute the present voting
power and, depending on the terms of issuance, possibly the book or market
value of the Common Shares from that prior to such issuance.

The ability to issue additional Common Shares or any Preferred Shares,
in addition to the other corporate purposes described above, could enable the
Premier Board of Directors to make more difficult the replacement of
incumbent directors or the accomplishment of certain business combinations or
takeover attempts opposed by the Board of Directors, even though any such
business combination or takeover attempt may be supported by holders of a
significant percentage of Premier's outstanding Common Shares.

Premier presently has no plan, understanding or arrangement to issue
additional Common Shares, other than in connection with the Merger or upon
the proper exercise of stock options granted pursuant to Premier's 1996
Employee Stock Ownership Incentive Plan. However, in view of Premier's
strategy to aggressively pursue acquisitions of bank holding companies, banks
(or their branches), thrift institutions (or their branches) or companies
conducting businesses deemed closely related to banking or managing or
controlling banks or thrift institutions, Premier believes that it is likely
that additional Common Shares and possibly Preferred Shares may be issued in
the future in connection with acquisitions that Premier may be able to make
in the future.

COMPARISON OF RIGHTS OF HOLDERS OF PREMIER COMMON SHARES
AND SABINA BANK COMMON STOCK

The rights of Sabina Bank shareholders are governed principally by the
OGCL, and the articles of incorporation and code of regulations of Sabina
Bank. The rights of shareholders of Premier are governed principally by the
KBCA and the articles of incorporation and bylaws of Premier. In many
instances, including dividend rights,

removal of directors, indemnification of directors and officers, rights of
appraisal, rights of inspection of corporate books and records and
liquidation rights, the rights of the holders of Sabina Bank Common Stock are
substantially the same as the rights of the holders of Common Shares of
Premier. The following summary compares certain rights of the holders of
Sabina Bank Common Stock to the rights of holders of Premier Common Shares in
areas where those rights are materially different.

CUMULATIVE VOTING IN ELECTION OF DIRECTORS

Under the OGCL, shareholders have cumulative voting rights in an
election of directors unless the corporation's articles of incorporation
provide otherwise (which the articles of incorporation of Sabina Bank do).
Consequently, shareholders of Sabina Bank are not entitled to cumulative
voting in an election of directors.

Under the KBCA and the Constitution of the Commonwealth of Kentucky,
shareholders of Kentucky corporations (as is Premier) are entitled to
cumulative voting rights in an election of directors. In an election of
directors, each shareholder has a number of votes equal to the product of (i)
the number of shares that such shareholder is entitled to vote in such
election, multiplied by (ii) the number of positions on the board of
directors to be filled in such election. The shareholder may divide such
votes among two or more nominees in such manner as he shall determine or he
may cumulate such votes and vote all of them for one nominee.

LIABILITY OF DIRECTORS

Under the OGCL, a director is liable in damages for any action he or she
takes or fails to take as a director only if it is proved by clear and
convincing evidence that such action or failure to act involved an act or
omission undertaken with either deliberate intent to cause injury to the
corporation or reckless disregard for the best interests of the corporation.
The limitation on liability will not apply to the improper payment of
dividends, distribution of assets, redemption or purchases of the
corporation's own shares, the making of certain loans or certain transactions
between the corporation and one or more interested directors. Moreover, the
statutory limitation on liability will not apply if at the time of the
relevant act or failure to act a corporation's articles of incorporation or
regulations specifically so provide. Neither the Sabina Bank articles of
incorporation nor its code of regulations contain a provision denying the
statutory limitation on liability.

The KBCA permits a corporation to include in its articles of incorporation
a provision eliminating the liability of its directors to such corporation or
its shareholders for monetary damages arising from a breach of fiduciary duty,
except for: (i) any transaction in which the director's personal financial
interest is in conflict with the financial interests of the corporation or its
shareholders, (ii) acts or omissions not in good faith or which involve
intentional misconduct or are known to the director to be a violation of law,
(iii) any vote for or assent to an unlawful distribution to shareholders as
prohibited under the KBCA, or (iv) any transaction from which the director
derives an improper personal benefit. The articles of incorporation of Premier
contain such a provision eliminating the liability of its directors to Premier
or its shareholders for monetary damages.

CALL OF SPECIAL MEETINGS

Under the OGCL, a special meeting of shareholders may be called by (i) the
holders of 25% of the outstanding shares of a corporation entitled to vote at
such meeting, unless the corporation's regulations specify another percentage,
which in no event may be greater than 50%; (ii) the directors by action at a
meeting or a majority of the directors acting without a meeting; or (iii) the
chairman of the board, the president or, in case of the

president's absence, death or disability, the vice president authorized to
exercise the authority of the president. The Sabina Bank code of regulations
provides that special meetings of Sabina Bank shareholders may be called by
the Chairman of the Board, the President and Chief Executive Officer, the
Sabina Bank Board or the holders of 25% of the outstanding Sabina Bank Common
Stock.

Under the KBCA, a special meeting of shareholders may be called by (i) the
holders of one-third of the outstanding shares of a corporation entitled to vote
at such meeting, unless the corporation's bylaws specify another percentage
(which the Premier bylaws do not); (ii) the directors; or (iii) the person or
persons authorized to do so by the articles of incorporation or bylaws of the
corporation. The Premier bylaws provide that special meetings of Premier
shareholders may be called by the chief executive officer, a majority of the
directors or the holders of one-third of the outstanding shares entitled to vote
at such meeting.

ACTION BY SHAREHOLDERS WITHOUT A MEETING

Under the OGCL, unless the articles of incorporation or the regulations
of the corporation provide otherwise, any action that may be authorized or
taken by shareholders at a meeting may be authorized or taken without a
meeting with the unanimous written consent of all shareholders who would be
entitled to notice of a meeting of shareholders held for such purpose.
Neither the articles of incorporation nor the code of regulations of Sabina
Bank eliminate the ability of shareholders of Sabina Bank to act by unanimous
written consent in lieu of a meeting.

Under the KBCA, unless the articles of incorporation or bylaws of the
corporation provide otherwise (neither the articles of incorporation or bylaws
of Premier provide otherwise), any action that may be authorized or taken by
shareholders at a meeting may be authorized or taken without a meeting with the
unanimous written consent of all shareholders who would be entitled to notice of
a meeting of shareholders held for such purpose. Further, where the articles of
incorporation so provide (and the articles of incorporation of Premier do so
provide), any action except the election of directors that may be authorized or
taken by shareholders at a meeting may be authorized or taken without a meeting
with the written consent of shareholders holding at least 80% of the voting
power of the corporation who would be entitled to notice of a meeting of
shareholders held for such purpose.

AMENDMENT TO ARTICLES OF INCORPORATION

To approve an amendment to the articles of incorporation proposed by the
Sabina Bank Board, the OGCL requires the approval of shareholders holding
two-thirds of the voting power of the corporation, unless the corporation's
articles of incorporation permits approval by the affirmative vote of

a greater or lesser proportion, but not less than a majority of such voting
power (which the articles of incorporation of Sabina Bank do not).

To approve a charter amendment proposed by the Premier Board, the KBCA
requires the approval of shareholders holding a majority of the voting power of
the corporation, unless the corporation's charter permits approval by the
affirmative vote of a greater proportion (which the articles of incorporation of
Premier do not).

AMENDMENT TO CODE OF REGULATIONS OR BYLAWS

The OGCL provides that only shareholders of a corporation have the
power, by the affirmative vote of the holders of a majority of the voting
power, by the written consent of the holders of two-thirds of the voting
power or by such greater or lower proportion of the voting power specified in
the articles of incorporation, but not less than a majority, to adopt or
amend that corporation's code of regulations. The Sabina Bank code of
regulations requires that such amendments be approved by the affirmative vote
of the holders of a majority of the voting power entitled to vote on such
matter at a meeting held for such purpose or by the written consent of the
holders of shares representing two-thirds of the voting power.

Under the KBCA, a corporation's board of directors may amend or repeal the
corporation's bylaws unless the corporation's articles of incorporation reserve
this power exclusively to the shareholders in whole or in part (the articles of
incorporation of Premier do not) or the shareholders in amending or repealing a
particular bylaw provide expressly that the board of directors may not amend or
repeal that bylaw. A corporation's shareholders may amend or repeal the
corporation's bylaws, even though the bylaws may also be amended or repealed by
the board of directors, by the affirmative vote of the holders of a majority of
the voting power exercised with respect to such proposal to amend or repeal the
bylaws, unless the articles of incorporation or bylaws require a greater
affirmative vote (which the articles of incorporation or bylaws of Premier do
not).

APPROVAL OF MERGERS, ASSET SALES AND CERTAIN OTHER TRANSACTIONS

In addition to Board approval, the OGCL requires approval of certain
mergers, consolidations, dissolutions, dispositions of all or substantially
all of a corporation's assets, majority share acquisitions and combinations
involving the issuance of shares with one-sixth or more of the voting power
of the corporation, by the affirmative vote of holders of two-thirds of the
voting power of the corporation, unless the articles of incorporation or the
regulations specify a different proportion (but not less than a majority).
Neither the articles of incorporation nor code of regulations of Sabina Bank
provide for a different proportion of voting power to approve any of such
matters.

In addition to Board approval, the KBCA requires approval of certain
mergers, consolidations, dissolutions, dispositions of all or substantially
all of a corporation's assets and share exchanges by the affirmative vote of
a majority of the voting power of the corporation, unless the articles of
incorporation specify a different proportion (which the articles of
incorporation of Premier do not). The KBCA does not require approval of
share acquisitions (majority or otherwise) or combinations involving the
issuance of shares with a certain percentage of the voting power of the
corporation.

AUTHORIZED CAPITAL STOCK

Sabina Bank has only one class of capital stock authorized in its
articles of incorporation, Sabina Bank Common Stock. All 110,000 shares of
Sabina Bank Common Stock so authorized are issued and outstanding and,
consequently, Sabina Bank is unable to issue any additional shares of capital
stock without an amendment to its articles of incorporation, which requires
shareholder approval.

Premier has two classes of capital stock authorized in its articles of
incorporation, Common Shares and Preferred Shares. Following the Merger,
Premier will have 5,214,610 authorized Common Shares and 1,000,000 authorized
Preferred Shares remaining available for issuance, any of which may be issued
without further authorization by shareholders on such terms as Premier's
Board of Directors, subject to its fiduciary duties, may lawfully determine.
The ability to issue such shares could enable the Premier Board of Directors
to make more difficult the replacement of incumbent directors or the
accomplishment of certain business combinations or takeover attempts opposed
by the Board of Directors. See "Description of Premier Capital Stock -
Shares Available for Future Issuance."

SABINA BANK MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

This discussion presents management's analysis of the primary factors
affecting the performance and financial condition of Sabina Bank. It should
be read in conjunction with the accompanying audited consolidated financial statements
beginning on page F-1 of this Proxy Statement/Prospectus. This discussion
contains forward-looking statements. For this purpose, any statements
contained herein that are not statements of historical fact may be deemed to
be forward-looking statements. There are a number of important factors that
could cause Sabina Bank's actual results to differ materially from those
contemplated by such forward-looking statements. These factors include,
without limitation, Sabina Bank's continued ability to originate quality
loans, fluctuation of interest rates, real estate market conditions in Sabina
Bank's lending areas, general and local economic conditions, Sabina Bank's
continued ability to attract and retain deposits, Sabina Bank's ability to
control costs, new accounting pronouncements, and changing regulatory
requirements.

RESULTS OF OPERATIONS

EARNINGS SUMMARY. Net income for the six months ended June 30, 1997 of $132,000
or $1.28 per share was 29.0% less than net income of $186,000 or $1.82 per share
for the six months ended June 30, 1996. This decrease was due primarily to a
$83,000 increase in non-interest expense and a $5,000 decrease in net interest
income. The

return on stockholders'shareholders' equity and return on average assets were 5.8% and
.73%, respectively, for the six months ended June 30, 1997, compared to 8.4%
and 1.02%, respectively, for the same period in 1996.

Sabina Bank's net income for 1996 was $288,000 or $2.82 per share, an
increase of 5.1% over the $274,000 for 1995. Net income for 1994 was $310,000 or
$36,000 higher than 1995. The increase in net income from 1995 to 1996 was
primarily due to a $168,000 decrease in non-interest expenses from $1,450,000 in
1995 to $1,282,000 in 1996 and a $44,000 increase in non-interest income
partially offset by an $85,000 decrease in net interest income and a $75,000
increase in the provision for loan losses. The net income in 1994 was higher
than both 1996 and 1995 primarily due to higher net interest income. The return
on shareholders' equity and return on average assets were 6.4% and 0.79%,
respectively, for the year ended December 31, 1996, compared to 6.5% and 0.75%,
respectively, for 1995 and 7.6% and 0.74%, respectively, for 1994.

NET INTEREST INCOME. Sabina Bank's primary source of revenue is its net
interest income, which is the difference between the interest received on its
earning assets and the interest paid on the funds acquired to support those
assets. Loans made to businesses and individuals are the primary interest
earning assets, followed by investment securities and federal funds sold in the
inter-bank market. Deposits are the primary interest bearing liabilities used to
support the interest earning assets. The level of net interest income is
affected by both the balances and mix of interest earning assets and interest
bearing liabilities, the changes in their corresponding yields and costs, the
volume of interest earning assets funded by noninterest bearing deposits, and
the level of capital. Sabina Bank's long term objective is to manage this income
to provide the largest possible amount of income while balancing interest rate,
credit and liquidity risks.

Nontaxable income from loans and investment securities is presented on a
tax-equivalent basis whereby income exempt from tax has been adjusted upward by
an amount equivalent to the prevailing federal income taxes that would have been
paid if the income had been fully taxable. The discussion of factors influencing
net interest income that follows is based on taxable equivalent data. In each of
the three years, this adjustment is based on an assumed federal income tax rate
of 34%.

The table below shows, for the periods indicated, the average distribution
of assets, liabilities and the interest earned or paid on those items, together
with the level of shareholders' equity, as well as Sabina Bank's net yield on
interest earning assets (net interest income divided by average earning assets).
The net interest margin for the first half of 1997 was 4.85% versus 4.94% for
the year ended December 31, 1996, and the interest rate spread declined to 3.65%
in 1997 from 3.73% for the year ended 1996. In

1996, tax equivalent net interest income decreased to $1,663,000 from
$1,751,000 in 1995, a decrease of $88,000 or 5%5.3%. This decrease was due to a
decrease in the rate earned on interest earnings assets of 58 basis points
while the decrease in the rate on interest bearing liabilities only decreased
26 basis points, which caused the net interest margin to decline from 5.26%
in 1995 to 4.94% in 1996.

Tax equivalent net interest income decreased $123,000 or 7.0% in 1995
from $1,874,000 in 1994 to $1,751,000 in 1995. Although the net interest
margin increased in 1995 from 4.92% in 1994 to 5.26% in 1995, this increase
was negated by a decrease in average earning assets from $38.1 million in
1994 to $33.3 million in 1995.

AVERAGE BALANCE SHEETS AND NET INTEREST ANALYSIS
(Dollars in thousands)

FOR THE SIX MONTHS ENDED
JUNE 30, 1997 1996
------------------------- ----

AVERAGE AVERAGE AVERAGE AVERAGE
BALANCE INTEREST RATE BALANCE INTEREST RATE

ASSETS:
Interest earning
assets:
U.S. Treasury and
federal agency
securities $5,827 $157 5.39 $5,736 $323 5.63
State and
municipal
obligations
(1)(2) 2,629 106 8.06 2,664 217 8.15
Other securities
(1) 156 5 6.41 143 10 7.00
------- ------ ------ ------- ------ -----
Total investment $8,612 $268 6.22 $8,543 $550 6.44
securities
Federal funds sold 460 13 5.65 499 27 5.41
Loans, net of unearned
income (2) (3) (4)
Commercial 4,871 248 10.18 4,998 518 10.36
Real estate mortgage 10,479 438 8.36 9,134 795 8.70
Installment 9,085 435 9.58 10,481 911 8.69
------- ------ ------ ------- ------ -----
Total loans $24,435 $1,121 9.18 $24,613 $2,224 9.04
Total interest-earning
assets $33,507 $1,402 8.37 $33,655 $2,801 8.32
Allowance for loan losses 297 263
Cash and due from banks 1,623 1,597
Premises and equipment 721 713
Other assets 778 820
------- -------
Total assets $36,332 $36,522

LIABILITIES:
Interest bearing deposits:
NOW and money market $3,444 $44 2.56 $4,093 $107 2.61
Savings 3,803 47 2.47 4,312 108 2.50
Certificates of deposit
and other time deposits 17,394 486 5.59 15,966 893 5.59
------- ------ ------ ------- ------ -----
Total interest-bearing $24,641 $577 4.68 $24,371 $1,108 4.55
deposits
Other borrowings 342 13 7.60 401 30 7.48

Total interest-bearing $24,983 $590 4.72 $24,772 $1,138 4.59
liabilities
Non-interest bearing $6,656 $6,915
demand deposits
Other liabilities 146 309
------- -------
Total liabilities $31,785 $31,996
SHAREHOLDERS' EQUITY: $4,547 $4,526
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $36,332 $36,522
NET INTEREST INCOME 812 1,663
NET INTEREST SPREAD (1) 3.65% 3.73%
NET INTEREST MARGIN (1) 4.85% 4.94%

1995 1994
---- ----
AVERAGE AVERAGE AVERAGE AVERAGE
BALANCE INTEREST RATE BALANCE INTEREST RATE

ASSETS:
Interest earning assets:
U.S. Treasury and federal 6,916 $399 5.77 $10,135 $504 4.97
agency securities
State and municipal 2,593 227 8.75 2,731 232 8.50
obligations (1)(2)
Other securities (1) 57 3 5.26 24 1 4.17
------ ------ ----- ------- ------- -----
Total investment $9,566 $629 6.57 $12,890 $737 5.72
securities
Federal funds sold 256 13 5.08 1,997 76 3.81
Loans, net of unearned
income (2) (3) (4)
Commercial 4,610 514 11.15 5,500 518 9.42
Real estate mortgage 7,689 794 10.33 6,943 717 10.33
Installment 11,186 1,014 9.06 10,777 911 8.45
------ ------ ----- ------- ------- -----
Total loans $23,485 $2,322 9.89 $23,220 $2,146 9.24
Total interest-earning $33,307 $2,964 8.90 $38,107 $2,959 7.76
assets
Allowance for loan losses 250 279
Cash and due from banks 1,671 2,392
Premises and equipment 652 703
Other assets 980 1,075
------- -------
Total assets $36,360 $41,998
LIABILITIES:
Interest bearing deposits:
NOW and money market $4,653 $129 2.77 $7,969 $207 2.60
Savings 4,293 113 2.63 4,653 107 2.30
Certificates of deposit
and other time deposits 15,446 924 5.98 17,143 748 4.36
------- ---- ---- ------- ------ ----
Total interest-bearing $24,392 $1,166 4.78 $29,765 $1,062 3.57
deposits
Other borrowings 594 47 7.91 342 23 6.73
Total interest-bearing $24,986 $ 1,213 4.85 $30,107 $1,085 3.60
liabilities
Non-interest bearing $6,776 $7,521
demand deposits
Other liabilities 398 286
------- -------
Total liabilites $32,160 $37,914
SHAREHOLDERS' EQUITY: $4,200 $4,084
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $36,360 $41,998
NET INTEREST INCOME 1,751 1,874
INTEREST RATE SPREAD (1) 4.05% 4.16%
NET INTEREST MARGIN (1) 5.26% 4.92%

(1) Taxable - equivalent yields are calculated assuming a 34%
federal income tax rate.
(2) Yields are calculated on historical cost.
(3) Includes loan fees, immaterial in amount, in both interest
income and the calculation of yield on loans.
(4) Includes loans on nonaccrual status.

The accompanying analysis of changes in net interest income in the
following table shows the relationship of the volume and rate portions of these
changes in 1996 and 1995.

ANALYSIS OF CHANGES IN NET
INTEREST INCOME
(Dollars in thousands on a taxable equivalent basis)

1996 VS. 1995 1995 VS. 1994
INCREASE (DECREASE) DUE INCREASE (DECREASE) DUE
TO CHANGE IN TO CHANGE IN
VOLUME RATE NET VOLUME RATE NET
CHANGE CHANGE

Interest Income:
Loans $108 $(206) $(98) $ 24 $152 $176
Investment securities (66) (13) (79) (208) 100 (108)
Federal funds sold 13 1 14 (82) 19 (63)
------- ------- ------- ------- ------- -------
Total interest income $55 $(218) $(163) $(266) $271 $5
Interest Expense:
Deposits -
NOW and money market $(14) $(8) $(22) $(91) $13 (78)
Savings 0 (5) (5) (8) 14 6
Certificates of deposit 31 (62) (31) (80) 256 176
and other time deposits
Other borrowings (14) (3) (17) 20 4 24
------- ------- ------- ------- ------- -------
Total interest $3 $(78) $(75) $(159) $287 $128
expense
Net interest income $52 $(140) $(88) $(107) $(16) $(123)

PROVISION AND ALLOWANCE FOR POSSIBLE LOAN LOSSES. Sabina Bank maintains its
allowance for loan losses (the "allowance") at a level that is considered
sufficient to absorb potential losses in the loan portfolio. The allowance is
increased by the provision for loan losses as well as recoveries of
previously charged-off loans, and is decreased by loan charge-offs. The
provision is the necessary charge to expense to provide for current loan
losses and to maintain the allowance at an adequate level commensurate with
management's evaluation of the risks inherent in the loan portfolio. Various
factors are taken into consideration when the Bank determines the amount of
the provision and the adequacy of the allowance. Some of the factors include:
past due and nonperforming assets; specific internal analyses of loans
requiring special attention; the current level of regulatory classified and
criticized assets and the associated risk factors with each; and examinations
of the loan portfolio by federal and state regulatory agencies.

The data collected from these sources is evaluated with regard to
current national and local economic trends, prior loss history, underlying
collateral values, credit concentrations, and industry risks. An estimate of
potential future loss on specific loans is developed in conjunction with an
overall risk evaluation of the total loan portfolio.

The following table is a summary of Sabina Bank's loan loss experience
for each of the past five years.

SUMMARY OF LOAN LOSS EXPERIENCE
(Dollars in Thousands)

SIX MONTHS YEARS ENDED DECEMBER 31,
ENDED -----------------------------------------------------
JUNE 30, 1996 1995 1994 1993 1992
------- ---- ---- ---- ---- ----
1997
----

Balance at beginning of period $331 $261 $286 $308 $411 $391
Amounts charged off:
Commercial 0 73 46 42 97 52
Real estate mortgage 17 0 0 0 26 0
Installment 49 105 136 165 241 126
------- ---- ---- ---- ---- ----
Total loans charged off $66 $178 $182 $207 $364 $178

Recoveries on amounts previously charged off:
Commercial $7 $11 $4 $5 $16 $0
Real estate mortgage 0 0 0 0 26 0
Installment 15 52 43 52 0 24
------- ---- ---- ---- ---- ----
Total recoveries $22 $63 $47 $57 $42 $24

Net charge-offs 44 115 135 150 322 154
Provision for loan losses 23 185 110 128 219 174
------- ---- ---- ---- ---- ----
Balance at end of period $310 $331 $261 $286 $308 $411

Total loans, net of unearned income:
Average 24,435 24,613 23,485 23,220 24,987 26,708
At period end 24,528 25,073 24,486 25,155 23,071 26,809

As a percentage of average loans:
Net charge-offs .18% .47% .57% .65% 1.29% .58%
Provision for possible loan losses .09% .75% .47% .55% .88% .65%
Allowance as a percentage of year-period-
end net loans 1.26% 1.32% 1.07% 1.14% 1.34% 1.53%
Allowance as a multiple of net
charge-offs 7x 3x 2x 2x 1x 3x

The provision for loan losses and net charge offs were $23,000 and
$44,000, respectively, for the first half of 1997, compared to $28,000 and
$19,000, respectively, for the first half of 1996. The allowance for possible
loan losses at June 30, 1997 was 1.26% of outstanding loans and management
believes it is adequate to absorb future loan losses. The provision for loan
losses was $185,000 in 1996 compared to $110,000 in 1995, an increase of
$75,000. In 1996, net charge offs were $115,000 compared to $135,000 in 1995.
The allowance at December 31, 1996 was $331,000 or 1.32% of outstanding
loans. The provision for loan losses was $128,000 and net charge offs were
$150,000 in 1994.

The following table sets forth an allocation for the allowance for possible loan
losses by category of loan and a percentage distribution of the allowance
allocation. In making the allocation, consideration was given to such factors
as management's evaluation of risk in each category, current economic
conditions and charge-off experience. An allocation for the allowance for possible
loan losses is an estimate of the portion of the allowance that will be used
to cover future charge-offs in each major loan category, but it does not
preclude any portion of the allowance allocated to one type of loan being
used to absorb losses of another loan type.

ALLOCATION OF ALLOWANCE FOR LOAN LOSSES
(Dollars in thousands)

At December 31,
At June 30, ----------------------------------------------------------------------
1997 1996 1995 1994 1993 1992
Amount % Amount % Amount % Amount % Amount % Amount %

Commercial $ 94 30.32 $ 90 27.19 $ 22 8.42 $ 23 8.05 $ 31 10.06 $ 40 9.76
Real estate 11 3.55 15 4.53 12 4.60 15 5.24 33 10.72 46 11.21
mortgage
Installment 150 48.39 162 48.94 177 67.82 193 67.48 184 59.74 245 59.76
Unallocated 55 17.74 64 19.34 50 19.16 55 19.23 60 19.48 79 19.27
----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- -----
Total $310 100% $331 100% $261 100% $286 100% $308 100% $410 100%

NON-INTEREST INCOME AND EXPENSE. Sabina Bank's non-interest income includes
deposit service charges, ATM fees, credit life insurance premiums, and fees
from other corporate and retail products. Non-interest income remained
stable, decreasing only $1,000 from $106,000 for the first six months of 1996
to $105,000 for the same period in 1997. Non-interest income increased 22% or
$43,000 from $193,000 in 1995 to $236,000 in 1996, due to a $40,000 increase
in deposit service charges resulting from both activity and fee increases.
Non-interest income increased $7,000 from $186,000 in 1994 to $193,000 in
1995.

Non-interest expense includes all personnel, occupancy, data processing,
and other ordinary operating expenses associated with financial institutions.
Non-interest expenses for the first six months of 1997 increased $83,000 or
13.5% as compared to the same period in 1996. This increase was primarily due
to increases in data processing fees resulting from increases in activity as
well as increases in legal and professional fees. Salaries and employee
benefits, the largest component of non-interest expenses increased $38,000 or
14.6% from $260,000 during the first half of 1996 to $298,000 in the same
period in 1997.

Non-interest expense decreased $168,000 or 11.6% in 1996 compared to 1995.
This decrease was due to decreases in salaries and employee benefits
($127,000) and FDIC insurance ($52,000). The decrease in salaries and
benefits was due to the reduction in full time equivalent employees and the
elimination of bonuses in 1996. The FDIC insurance decrease resulted from
changes in the FDIC insurance fund which substantially reduced insurance
premiums for well capitalized commercial banks. Compared to 1994, the
non-interest expenses in 1995 in total remained relatively stable with a
decrease of $9,000 or 1%.

The following table is a summary of non-interest income and expense for the
three year period indicated.

NON-INTEREST INCOME AND EXPENSE
(Dollars in thousands)

FOR THE SIX MONTHS ENDED FOR THE YEARS ENDED DECEMBER 31,
JUNE 30,
INCREASE INCREASE INCREASE
(DECREASE) (DECREASE) (DECREASE)
1997 VS. 1996 VS. 1995 VS.
1997 1996 1996 1996 1995 1995 1995 1994 1994
------------------------- ---------------------- --------------------

Non-Interest Income:
Service charges on deposit $89 $85 $4 $184 $144 $40 $144 $142 $2
accounts
Investment securities gain 0 0 0 0 0 0 0 (7) 7
(losses)
Other 16 21 (5) 52 49 3 49 51 (2)
-- -- --- -- -- - -- --- ---

Total non-interest income $105 $106 $(1) $236 $193 $43 $193 $186 $7
Non-Interest Expense:
Salaries and employee $298 $260 $38 $607 $734 $(127) $734 $669 $65
benefits
Net occupancy and equipment 65 71 (6) 128 132 (4) 132 160 (28)
FDIC insurance 1 1 0 2 54 (52) 54 91 (37)
Franchise taxes 28 30 (2) 60 64 (4) 64 60 4
Other 304 251 53 485 466 19 466 479 (13)
--- --- -- --- --- -- --- --- ----
Total non-interest expenses $696 $613 $83 $1,282 $1,450 $(168) $1,450 $1,459 $(9)
Net non-interest expenses as 3.25% 2.78% 2.86% 3.46% 3.46% 3.03%
a percent of average assets

INCOME TAXES. Income tax expense was $30,000 for the first half of 1997
compared to $60,000 for the same period in 1996. The decrease is entirely
due
primarily to the decrease in pre-tax income.

Sabina Bank recorded income tax expense for 1996 of $71,000, which represented
19.8% of pre-tax income, compared to $33,000 in 1995 or 10.7% of pre-tax
income. Income tax expense for 1994 was $84,000 or 21.3% of pre-tax income.

The following table reflects interest income on nonaccrual and restructured
loans for the periods indicated.

INTEREST INCOME ON NON-ACCRUAL AND RESTRUCTURED LOANS

(Dollars in thousands)

SIX
MONTHS
ENDED
JUNE 30,
YEARS ENDED DECEMBER 31
-----------------------------------------------------

1997 1996 1995 1994 1993 1992

Contractual interest $1,600 $8,700 $5,200 $6,400 $28,000 $18,000
Interest recognized 0 0 0 0 0 0

FINANCIAL CONDITION

LENDING ACTIVITIES. Loans are Sabina Bank's primary use of financial
resources and represent the largest component of earning assets. Sabina
Bank's loans are made predominantly within Sabina Bank's market area and the
portfolio is diversified. Credit risk is inherent in each financial
institution's loan and investment portfolio. In an effort to minimize credit
risk, Sabina Bank utilizes a credit administration network, including
specific lending authorities for each loan officer, a system of loan
committees to review and approve loans, and a loan review and credit quality
rating system. This network assists in the evaluation of the quality of new
loans and in the identification of problem or potential problem credits and
provides information to aid management in determining the adequacy of the
allowance for possible loan losses.

Total loans, net of unearned income, were $24.7 million at June 30, 1997
compared to $25.0 million at December 31, 1996, and averaged $24.4 million
for the first half of 1997.

Total loans, net of unearned income, averaged $24.6 million in 1996
compared with $23.5 million in 1995. At year end 1996, loans net of unearned
income totaled $25.0 million compared to $24.5 million at December 31, 1995,
an increase of 2%.

Commercial loans generally are made to small-to-medium size businesses
located within Sabina Bank's defined market area and typically are secured by
business assets and guarantees of the principal owners. Real estate mortgage
loans include residential properties and generally do not exceed 80% of the
value of the real property securing the loan, based on recent independent
appraisals. The Bank's real estate mortgage loan portfolio primarily consists
of fixed rate residential mortgage loans. Consumer loans generally are made
to individuals living in Sabina Bank's defined market area who are known to
Sabina Bank's staff. Consumer loans are made on a secured or unsecured basis.

The following table sets forth the maturity distribution and interest
sensitivity of selected loan categories at December 31, 1996. Maturities are
based upon contractual terms. Sabina Bank's

policy is to specifically review and approve any loan renewed; no loans are
automatically rolled over.

LOAN MATURITIES AND INTEREST SENSITIVITY
DECEMBER 31, 1996
(Dollars in thousands)Thousands)

One Year One Over Total
or Less Through Five Loans
Five Years
Years

Commercial, secured by real estate $184 $0 $0 $184
Commercial, other 1,238 247 0 1,485
Real estate construction 0 0 0 0
Agricultural 1,401 280 0 1,681
------- ---- -- ------
Total $2,823 $527 $0 $3,350
Fixed rate loans $757 $248 $0 $1,005
Floating rate loans 2,066 279 0 2,345
------- ---- -- ------
Total $2,823 $527 $0 $3,350

The following table presents a summary of Sabina Bank's loan portfolio
by category for the periods indicated. Other than the categories noted, there
is no concentration of loans in any industry greater than 5% in the
portfolio. Sabina Bank has no foreign loans or highly leveraged transactions
in its loan portfolio.

LOAN PORTFOLIO COMPOSITION

LOANS OUTSTANDING
(Dollars in thousands)

AT
JUNE 30, AT DECEMBER 31,
---------------------------------------------------------------------------

1997 % 1996 % 1995 % 1994 % 1993 % 1992 %

Commercial, secured by $180 .73% $184 .73% $211 .85% $452 1.75% $466 1.90% $698 2.42%
real estate
Commercial, other 1,294 5.27 1,485 5.91 1,813 7.33 2,068 8.00 2,183 8.90 5,715 19.78
Real estate construction 0 0.0 0 0.0 258 1.04 0 0.0 0 0.0 30 .10
Real estate mortgage 11,111 45.24 10,735 42.85 8,418 34.05 8,367 32.38 7,298 29.77 8,186 28.33
Agricultural 1,770 7.21 1,681 6.69 1,708 6.92 2,198 8.51 2,234 9.11 2,251 7.79
Installment 10,339 41.52 11,002 43.77 12,310 49.79 12,750 49.34 12,329 50.29 12,008 41.54
Other 8 .03 12 .05 6 .02 5 .02 7 .03 11 .04
-- --- -- --- - --- - --- - --- -- ---
Total loans $24,702 100% $25,099 100% $24,724 100% $25,840 100% $24,517 100% $28,899 100%
Less unearned income 34 61 238 685 1,446 2,090
-- -- --- --- ----- -----
Total loans net of
unearned income $24,668 $25,038 $24,486 $25,155 $23,071 $26,809

A summary of the components of nonperforming assets, including several
ratios using period-end data, is shown below:

NONPERFORMING ASSETS
(Dollars in thousands)

JUNE 30, DECEMBER 31,
-------- -----------------------------------------------
1997 1996 1995 1994 1993 1992
---- ---- ---- ---- ---- ----

Nonaccrual loans $61 $345 $101 $157 $279 $95
Accruing loans which are 91 60 24 42 136 179
contractually past due 90
days or more
Restructured loans 0 0 0 0 0 0
- - - - - -
Total nonperforming and $152 $405 $125 $199 $415 $274
restructured loans
Other real estate and in- 46 0 0 34 59 0
substance foreclosures -- - - -- -- -
Total nonperforming and
restructured loans and
other real estate $198 $405 $125 $233 $474 $274
Nonperforming and
restructured loans as a
percentage of net loans .62% 1.62% .51% .79% 1.80% 1.02%
Nonperforming and
restructured loans and
other real estate as a
percentage of total assets .54% 1.10% .34% .59% 1.10% .61%

Nonaccrual loans at June 30, 1997 were $61,000 compared to $345,000 at
December 31, 1996 and $101,000 at December 31, 1995. Total nonperforming
assets declined from 1.10% of total assets at December 31, 1996 to .54% at
June 30, 1997.

NONPERFORMING ASSETS. Nonperforming assets consist of loans on which
interest is no longer accrued, certain restructured loans where interest rate
or other terms have been renegotiated, accruing loans past due 90 days or
more and real estate acquired through foreclosure.

Sabina Bank discontinues the accrual of interest on loans that become 90
days past due as to principal or interest unless they are adequately secured
and in the process of collection. A loan remains in a nonaccrual status until
doubts concerning the collectibility no longer exist. A loan is classified as
a restructured loan when the interest rate is materially reduced or the term
is extended beyond the original maturity date because of the inability of the
borrower to service the loan under the original terms. Other real estate is
recorded at the lower of cost or fair value less estimated costs to sell.

INVESTMENT ACTIVITIES. The securities portfolio consists of debt and other
securities which provide the Bank with a long-term, relatively stable source of income. Additionally,
the investment portfolio provides a balance to interest rate and credit risks
in other categories of the balance sheet. The securities portfolio is also
used as a secondary source of liquidity by the Bank. Sabina Bank has
classified all securities as available for sale. Municipal securities within
the portfolio provide tax-free income and are within management's guidelines
with respect to credit risk and market risk. The U.S. Treasury and agency
securities within the portfolio are held as a source of stable, long-term
income which can be used as collateral to secure municipal deposits and
repurchase agreements. The securities portfolio does not contain significant
holdings in mortgage-backed securities, collateralized mortgage obligations
or other mortgage-related derivative products and/or structured notes.

Securities as a percentage of average interest-earning assets decreased
from 33.8% in 1994 to 28.7% in 1995 and 25.4% in 1996. At June 30, 1997,
investment securities represented 26.2% of interest-earning assets. This
reduction in securities since 1994 reflects management's emphasis on
originating higher yielding loans and placing less reliance on the securities
portfolio for sources of income.

The following tables present the carrying values and maturity
distribution of investment securities.

CARRYING VALUE OF SECURITIES
(Dollars in thousands)

JUNE 30, DECEMBER 31,
-------- -------------------------
1997 1996 1995 1994

U.S. Treasury and federal agencies:
Available for sale $5,907 $5,301 $6,010 $0
Held to maturity 0 0 0 8,060
State and municipal obligations:
Available for sale 2,710 2,843 2,864 0
Held to maturity 0 0 0 2,844
Other securities:
Available for salesecurities(a): 157 153 116 27
Held to maturity 0 0 0 0
Total securities:
Available for sale 8,774 8,297 8,990 27
Held to maturity 0 0 0 10,904
------- ------- ------- -------
Total $8,774 $8,297 $8,990 $10,931

__________________
(a) Consists of Federal Reserve Bank stock and Federal Home Loan Bank stock.

MATURITY DISTRIBUTION OF SECURITIES
June 30, 1997
(Dollars in thousands)

ONE FIVE
YEAR THROUGH THROUGH OVER
OR FIVE TEN TEN OTHER MARKET
LESS YEARS YEARS YEARS SECURITIES TOTAL VALUE

U.S. Treasury and federal agencies:
Available for sale $4,844 $1,092 $0 $0 $0 $5,936 $5,907
Held to maturity 0 0 0 0 0 0 0
State and municipal obligations:
Available for sale 250 1,243 1,036 99 0 2,628 2,710
Held to maturity 0 0 0 0 0 0 0
Other securities:
Available for sale 0 0 0 0 157 157 157
Held to maturity 0 0 0 0 0 0 0
Total securities:
Available for sale 5,094 2,335 1,036 99 157 8,721 8,774
Held to maturity 0 0 0 0 0 0 0
Total $5,094 $2,335 $1,036 $99 $157 $8,721 $8,774
Percent of total 58.41% 26.77% 11.88% 1.14% 1.80% 100.0% 100.61%
Weighted average yield* 5.67% 5.79% 5.41% 6.01% 6.41% 5.70% 5.67%

*The weighted average yields are calculated on historical cost on a non
tax-equivalent basis.

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 Sabina Bank
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. Liquidity is
maintained through Sabina Bank's ability to convert assets into cash, manage
the maturities of liabilities and generate funds through the attraction of
local deposits.

Sabina Bank prefers to manage its liquidity requirements primarily through
the matching of maturities of assets and liabilities. As a second source of
funds, Sabina Bank has access to overnight federal funds which can be
purchased from correspondent institutions.

The cash flow statements for the periods presented in the financial
statements of Sabina Bank included in this Proxy Statement/Prospectus provide
an indication of Sabina Bank's sources and uses of cash as well as an
indication of its ability to maintain an adequate level of liquidity. A
discussion of the cash flow statements for 1996, 1995 and 1994 follows.

Net cash provided from operating activities was $613,000, $642,000 and
$678,000 for the years ended December 31, 1996, 1995 and 1994, respectively.
The net cash provided from operating activities was primarily due to the net
income of Sabina Bank plus non cash expenses.

Cash provided by investing activities was $557,000, $1,294,000 and $678,000
for the years ended December 31, 1996, 1995 and 1994, respectively. The cash
provided by investing activities is primarily due to the excess cash received
from maturing securities.

Cash used in financing activities was $455,000, $2,788,000 and $4,190,000
for the years ended December 31, 1996, 1995 and 1994, respectively. In each
of the three years, the cash used in financing activities was primarily
attributable to decreases in deposits.

Liquidity risk is the possibility that Sabina Bank may not be able to meet
its cash requirements. Management of liquidity risk includes maintenance of
adequate cash and sources of cash to fund operations and meet the needs of
borrowers, depositors and creditors. Liquidity must be maintained at a level
which is adequate but not excessive. Excess liquidity has a negative impact
on earnings resulting from the lower yields on short-term assets.

In addition to cash, cash equivalents and Federal funds sold, the
securities portfolio provides an important source of liquidity. The total of
securities maturing within one year along with cash, due from banks and
Federal funds sold totaled $5,219,000 at December 31, 1996. Additionally,
securities available-for-sale with maturities greater than one year and other
securities totaled $5,548,000 at December 31, 1996. These securities are
available to meet liquidity needs on a continuing basis.

To maintain a desired level of liquidity, Sabina Bank has several sources
of funds available. One is the cash flow generated daily from its portfolio
in the form of principal and interest payments. Another source is its deposit
base. Sabina Bank maintains a relatively stable base of customer deposits.
Due to the nature of the market served by Sabina Bank, management believes
that the majority of certificates of deposit of $100,000 or more are no more
volatile than its core deposits. Certificates of deposits and other time
deposits of $100,000 or more represented approximately 20.6% and 17.6% of
total deposits for 1996 and 1995, respectively. A number of techniques are
used to measure the liquidity position, including the utilization of certain
ratios that are presented below. These ratios are calculated based on annual
averages for each year.

LIQUIDITY RATIOS

FOR THE
SIX
MONTHS
ENDED
JUNE 30, FOR THE YEARS ENDED DECEMBER 31,
--------- --------------------------------
1997 1996 1995 1994

Total loans/total deposits . . . . . . . . . . . . 78.07% 78.67% 75.35% 62.23%
Net short-term borrowings/total assets . . . . . . 0.31% 0.33% 0.88% 0.06%

This analysis shows that Sabina Bank's loan to deposit ratios increased in
1996 and 1995 compared to the prior year due to an increase in loan demand
that exceeded the increase in deposit generation and retention.

INTEREST RATE SENSITIVITY. The interest spread and liability funding
discussed above are directly related to changes in asset and liability mixes,
volumes, maturities and repricing opportunities of interest-earning assets
and interest-bearing liabilities. Interest-sensitive assets and liabilities
are those which are subject to being repriced in the near term, including
both floating or adjustable rate instruments and instruments approaching
maturity. The interest rate sensitivity gap is the difference between total
interest-sensitive assets and total interest-sensitive liabilities. Interest
rates on Sabina Bank's various asset and liability categories do not respond
uniformly to changing market conditions. Interest rate risk is the degree to
which interest rate fluctuations in the marketplace can affect net interest
income.

The need for interest rate sensitivity gap management is most critical in
times of a significant change in overall interest rates. Management generally
seeks to limit the exposure of Sabina Bank to interest rate fluctuations by
maintaining a relatively balanced mix of rate sensitive assets and
liabilities on a one-year time horizon. This mix is altered periodically
depending upon management's assessment of current business conditions and the
interest rate outlook.

One tool which is used to monitor interest rate risk is the interest
sensitivity analysis as shown in the table below. This analysis reflects the
repricing characteristics of assets and liabilities over various time
periods. The gap indicates the difference between the level of assets and
liabilities that are subject to repricing over a given time period.

As shown by the interest rate sensitivity analysis as of June 30, 1997, the
total amount of Sabina Bank's interest earning assets repricing during the
first year is less than the total amount of its interest bearing liabilities
repricing during this period. This position, which is normally termed a
negative interest rate sensitivity gap, generally allows for enhanced net
interest income during periods of decreasing interest rates. This negative
gap is

within Sabina Bank's internal policy guidelines and is not expected to impact
significantly Sabina Bank's net interest income during a period of rising
interest rates.

The following table provides an analysis of Sabina Bank's interest rate
sensitivity at June 30, 1997.

INTEREST RATE SENSITIVITY ANALYSIS
(Dollars in Thousands)

0 - 90 91 DAYS 1 - 5 OVER 5
-
DAYS 1 YEAR YEARS YEARS TOTAL

Assets
Loans, net of unearned
income $4,901 $4,366 $8,148 $7,253 $24,668
Investment securities 1,088 3,375 2,685 1,626 8,774
----- ----- ----- ----- -----
Total earning assets $5,989 $7,741 $10,833 $8,879 $33,442
Sources of Funds
NOW, money market and
savings $7,066 $0 $0 $0 $7,066
Time deposits 3,332 9,614 5,020 0 17,966
Other borrowings 0 30 120 80 230
------- ------ ------ ---- -------
Total interest bearing
liabilities $10,398 $9,644 $5,140 $80 $25,262
Interest Sensitivity Gap
For the period $(4,409) $(1,903) $5,693 $8,799 $8,180
Cumulative $(4,409) $(6,312) $(619) $8,180
Cumulative as a percent
of earning assets (13.18)% (18.87)% (1.85)% 24.46%

DEPOSIT ACTIVITIES. Managing the mix and repricing of deposit liabilities is
an important factor affecting Sabina Bank's ability to maximize its net
interest margin. The strategies used to manage interest-bearing deposit
liabilities are designed to adjust as the interest rate environment changes.
In this regard, management of Sabina Bank regularly assesses its funding
needs, deposit pricing, and interest rate outlooks.

For the six months ended June 30, 1997, total deposits averaged $31.3
million. Total deposits averaged $31.3 million in 1996 and $31.2 million in
1995. Non-interest bearing deposits averaged 21.3% of total deposits in the
first half of 1997 compared to 22.1% in 1996, 21.7% in 1995 and 20.2% in 1994.

Deposits totaled $31.7 million at June 30, 1997, compared to $31.6 million
at December 31, 1996 and $31.9 million at December 31, 1995.

The table below provides information on the maturities of time deposits of
$100,000 or more at June 30, 1997 and December 31, 1996.

MATURITY OF TIME
DEPOSITS OF $100,000 OR MORE

June 30, December 31
1997 1996
---- ----
(In thousands)

Maturing 3 months or less $1,637 $1,112

Maturing over 3 months through 12
months 3,077 4,150

Maturing over 12 months 1,188 1,228
------ ------
$5,902 $6,490

The following table sets forth the average amount of and average rate
paid on selected deposit categories during the six months ended June 30,
1997, and during the past three full years.

For the Six Months Ended
June 30, For the Year Ended December 31,
-------- -----------------------------------------------------------
1997 1996 1995 1994
Amount Rate (%) Amount Rate (%) Amount Rate (%) Amount Rate (%)
(Dollars in thousands)

Demand $ 6,656 0% $ 6,915 0% $ 6,776 0% $ 7,521 0%
NOW and money market accounts 3,444 2.56 4,093 2.61 4,653 2.77 7,969 2.60
Savings 3,803 2.47 4,312 2.50 4,293 2.63 4,653 2.30
Certificates of deposit
and other time deposits 17,394 5.59 15,966 5.59 15,446 5.98 17,143 4.36
------- ----- ------- ----- ------- ----- ------- -----
Total $31,297 3.69% $31,286 3.54% $31,168 3.74% $37,286 2.85%

SHORT-TERM BORROWINGS. Information regarding short-term borrowings for the
past three years is presented in the following table.

SHORT-TERM BORROWINGS
(Dollars in thousands)

FOR THE
SIX MONTHS
ENDED
JUNE 30, FOR THE YEAR ENDED DECEMBER 31,
-------- -------------------------------
1997 1996 1995 1994

Federal funds purchased:
Balance at year end 0 0 0 800
Weighted average rate at year end 0 0 0 6.0%
Average balance during the year 112 120 321 25
Weighted average rate during the year 5.60% 3.89% 6.22% 3.90%
Maximum month-end balance 200 200 800 800

CAPITAL. The various regulatory agencies having supervisory authority over
financial institutions have adopted risk-based capital guidelines which
define the adequacy of the capital levels of regulated institutions. These
risk-based capital guidelines require minimum levels of capital based upon
the risk rating of assets and certain off-balance-sheet items. Assets and
off-balance-sheet items are assigned regulatory-risk weights ranging from
0% to 100% depending on their level of credit risk. The guidelines classify
capital in two tiers, Tier I and Tier II, the sum of which is total
capital. Tier I capital is essentially common equity, less intangible
assets. Tier II capital is essentially qualifying long-term debt and a
portion of the allowance for possible loan losses. Sabina Bank's capital ratios
significantly exceed all regulatory minimums.

Sabina Bank's capital ratios were as follows:

SELECTED CAPITAL INFORMATION
(DOLLARS IN THOUSANDS)
June 30, 1997 December 31, 1996
Amount Ratio Amount Ratio

Total Capital (to risk weighted assets) $4,791 21.4% $4,783 21.0%
Tier I Capital (to risk weighted assets) 4,511 20.2% 4,462 19.6%
Tier I Leverage 4,511 12.4% 4,462 12.2%

RECENT ACCOUNTING PRONOUNCEMENTS

In February 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 129, "Disclosure of
Information about Capital Structure" ("SFAS 129") and Statement of Financial
Accounting Standards No. 128, "Earnings per Share" ("SFAS 128"). SFAS No. 129
establishes standards for disclosing information about an entity's capital
structure. SFAS 129 is effective for financial statements for the period
ending after December 15, 1997. Sabina Bank will adopt SFAS 129 in the year
ending December 31, 1997 and has not yet determined the effect of the
adoption.

SFAS 128 simplifies the standards for computing earnings per share
("EPS") previously found in APB No. 15, "Earnings per Share," and makes them
comparable to international EPS standards. It replaces the presentation of
primary EPS with a presentation of basic EPS. It also requires dual
presentation of basic and diluted EPS on the face of the financial statements
for all entities with complex capital structures. Basic EPS excludes dilution
and is computed by dividing income available to common shareholders by the
weighted average number of commmon shares outstanding for the period. Diluted
EPS is computed similarly to fully diluted EPS under APB Opinion No. 15. SFAS
128 is effective for Sabina Bank's year ending December 31, 1997 and is not
expected to have a material impact on the financial statements.

PRINCIPAL HOLDERS OF SABINA BANK COMMON STOCK AND
OWNERSHIP OF MANAGEMENT

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS

The following table sets forth as of the Record Date the persons known by
Sabina Bank to own beneficially (as determined in accordance with the rules
and regulations of the Commission) more than 5% of the outstanding Sabina
Bank Common Stock.

NAME AND ADDRESS OF BENEFICIAL SHARES BENEFICIALLY
OWNER(1) OWNED PERCENTAGE

Harold E. Hite
Betty Hite 22,175(2) 20.2%
1165 Greenfield/Sabina Road
Sabina, Ohio 45169

The Sabina Bank Employee Stock
Ownership Plan
135 N. Howard Street
Sabina, Ohio 45169 10,782 9.8%

Edwin E. Kuehn
Doris Kuehn 8,310(3) 7.6%
1531 Greenfield/Sabina Road
Sabina, Ohio 45169

Mary Sparks, Trustee 8,100 7.4%
186 N. Jackson Street
Sabina, Ohio 45169

David Allen 6,250 5.7%
3312 Urbana Road
Springfield, Ohio 45502

(1) Beneficial ownership as reported in the above table has been determined
in accordance with Rule 13d-3 under the Exchange Act. Unless otherwise
indicated, beneficial ownership includes both sole or shared voting power and
sole or shared investment power.

(2) Includes 11,175 shares held of record by Harold E. Hite and 11,000 shares
held of record by Betty Hite, husband and wife, and each may be deemed to
beneficially own the shares of the other, although such beneficial ownership is
disclaimed.

(3) Includes 2,635 shares held of record by Edwin E. Kuehn, 50 shares held by
Mr. Kuehn as trustee and 5,625 shares held of record by Doris Kuehn, Mr. Kuehn's
wife. Each of Mr. and Mrs. Kuehn may be deemed to beneficially own the shares
of the other, although such beneficial ownership is disclaimed.

SECURITY OWNERSHIP OF MANAGEMENT

SABINA BANK MANAGEMENT. The following table sets forth as of the Record
Date information concerning Sabina Bank Common Stock that the directors of
Sabina Bank (other than Harold E. Hite and Edwin E. Kuehn), and all current
directors and executive officers of Sabina Bank as a group, may be deemed to
beneficially own. Information about the beneficial ownership of Sabina Bank
Common

Stock by Mr. Hite and Mr. Kuehn is provided in the immediately preceding
table concerning persons beneficially owning more than 5% of the outstanding
Sabina Bank Common Stock.

SHARES BENEFICIALLY
NAME OWNED(1) PERCENTAGE

Marvin Bond 3,200(2) 2.9%
Billy V. Lieurance 1,200(3) 1.1%
Harold E. Losey 3,325(4) 3.0%
Garry W. Priest 1,100 1.0%
Paul Whittington 3,300(5) 3.0%
Jeffrey L. Wright 600 0.6%
All directors and executive
officers as a group (11 persons) 43,360 39.4%

(2) Includes 1,600 shares held of record by Mr. Bond and 1,600 shares held
of record by Junia Bond, his wife. Mr. Bond may be deemed to beneficially
own the shares of his wife, although such beneficial ownership is disclaimed.

(3) Includes 800 shares held of record by Mr. Lieurance and 400 shares held
of record by Juanita Lieurance, his wife. Mr. Lieurance may be deemed to
beneficially own the shares of his wife, although such beneficial ownership
is disclaimed.

(4) Includes 2,500 shares held of record by the Losey Family Trust and 825
shares held of record by Mr. Losey.

(5) Includes 2,500 shares held of record by Mr. Whittington and 800 shares
held of record by Betty Whittington, his wife. Mr. Whittington may be deemed
to beneficially own the shares of his wife, although such beneficial
ownership is disclaimed.

PREMIER MANAGEMENT. No current director or executive officer of Premier
beneficially owns any outstanding Sabina Bank Common Stock.

DISSENTERS' RIGHTS

Holders of Sabina Bank Common Stock have the right to dissent from the
Merger and to receive payment of the fair value of their shares upon full
compliance with Section 1701.85 of the OGCL. Sabina Bank shareholders
seeking to exercise dissenters' rights are referred to herein as "Dissenting
Shareholders."

The following is a summary of the principal steps a Sabina Bank
shareholder must take to perfect dissenters' rights under

Section 1701.85 of the OGCL. This summary does not purport to be complete
and is qualified in its entirety by reference to Section 1701.85, a copy of
which is attached hereto as Annex III. Any Sabina Bank shareholder
contemplating the exercise of dissenters' rights is urged to review carefully
such provisions and to consult an attorney, since dissenters' rights will be
lost if the procedural requirements under Section 1701.85 are not fully and
precisely satisfied. To perfect dissenters' rights with respect to any
shares of Sabina Bank Common Stock so that they become Dissenting Shares as
described in this Proxy Statement/Prospectus, a Dissenting Shareholder must
satisfy each of the following conditions:

NO VOTE IN FAVOR OF ADOPTION OF THE MERGER AGREEMENT. Sabina Bank
Common Stock held by the Dissenting Shareholder must not be voted at the
Special Meeting in favor of adoption of the Merger Agreement. This
requirement will be satisfied if a proxy is signed and returned with
instructions to vote against the Merger or to abstain from such vote, if no
proxy is returned and no vote is cast at the Special Meeting in favor of
adoption of the Merger Agreement, or if the Dissenting Shareholder revokes a
proxy and thereafter abstains from voting with respect to adoption of the
Merger Agreement or votes against adoption of the Merger Agreement at the
Special Meeting. A vote in favor of adoption of the Merger Agreement at the
Special Meeting constitutes a waiver of dissenters' rights. A proxy that is
returned signed but on which no voting instruction is indicated will be voted
in favor of adoption of the Merger Agreement and will constitute a waiver of
dissenters' rights. A Dissenting Shareholder may revoke his or her proxy at
any time prior to its exercise by complying with the procedures set forth
herein under "The Special Meeting -- Revocability of Proxies."

FILING WRITTEN DEMAND. Not later than 10 days after the taking of the
vote on the proposal to approve and adopt the Merger Agreement, a Dissenting
Shareholder must deliver to Sabina Bank a written demand (the "Demand") for
payment of the fair cash value of the shares of Sabina Bank Common Stock with
respect to which the Dissenting Shareholder seeks payment. Each Demand
should be delivered to Sabina Bank at 135 N. Howard Street, Sabina, Ohio
45169, Attention: Secretary. It is recommended, although not required, that
such Demand be sent by registered or certified mail, return receipt
requested. Voting against approval of the Merger Agreement will not itself
constitute a Demand. Sabina Bank will not send any further notice to Sabina
Bank shareholders as to the date on which such 10-day period expires.

A Demand must identify the name and address of the holder of record of
the shares of Sabina Bank Common Stock with respect to which payment is
sought, the number and class of such shares and the amount claimed by such
holder as the fair cash value thereof. A beneficial owner of shares must, in
all cases, have the record holder of such shares submit the Demand in respect
thereof. A Demand must be signed by the shareholder of record (or by the
duly authorized representative of such shareholder) exactly as the

shareholder's name appears on the shareholder records of Sabina Bank. A
Demand with respect to shares owned jointly by more than one person must
identify and be signed by all of the holders of record. Any person signing a
Demand on behalf of a partnership or corporation or in any other
representative capacity (such as an attorney-in-fact, executor,
administrator, trustee or guardian) must indicate the nature of the
representative capacity and, if requested, must furnish written proof of his
or her capacity and his or her authority to sign such Demand.

Because only holders of record of Sabina Bank Common Stock at the close
of business on the Record Date may exercise dissenters' rights, any person
who beneficially owns shares that are held of record by a broker, fiduciary,
nominee or other holder and who wishes to exercise dissenters' rights must
instruct the record holder of the shares to satisfy the conditions outlined
above. If a record holder does not satisfy, in a timely manner, all of the
conditions outlined in this section, the dissenters' rights for all of the
shares held by such record holder will be lost.

From the time the Demand is given until the termination of the rights
and obligations arising from such Demand or the purchase of the related
shares of Sabina Bank Common Stock by Sabina Bank, all rights accruing to the
holder thereof, including voting and dividend or distribution rights, will be
suspended. If any dividend or distribution is paid in money on Sabina Bank
Common Stock or Premier Common Shares during the suspension, an amount equal
to the dividend or distribution that would have been payable on such shares,
but for such suspension, will be paid to the holder of record thereof as a
credit against the fair cash value of such shares. If the right to receive
the fair cash value is terminated other than by the purchase of such shares
by Sabina Bank, all rights will be restored to the Dissenting Shareholder and
any distribution that would have been made to the holder of record of such
shares, but for the suspension, will be made to the holder of record at the
time of the termination.

If Sabina Bank sends to a Dissenting Shareholder, at the address
specified in the Demand, a request for the certificates representing the
related shares of Sabina Bank Common Stock, the Dissenting Shareholder,
within 15 days from the date of sending such request, is required to deliver
to Sabina Bank the certificates requested. Sabina Bank will then endorse the
certificates with a legend to the effect that a demand for the fair cash
value of the shares has been made, and promptly return such endorsed
certificates to the Dissenting Shareholder. Failure on the part of the
Dissenting Shareholder to deliver such certificates upon such request will
terminate his or her rights as a Dissenting Shareholder, at the option of
Sabina Bank, exercised by written notice to the Dissenting Shareholder within
20 days after the lapse of the 15-day period, unless a court, for good cause
shown, otherwise directs.

PETITION TO BE FILED IN COURT. Within three months after the service of
the Demand, if Sabina Bank and the Dissenting Shareholder do not reach an
agreement on the fair cash value of the

shares of Sabina Bank Common Stock subject to the Demand, the Dissenting
Shareholder or Sabina Bank may file a complaint in the Court of Common Pleas
in Clinton County, Ohio (the "Common Pleas Court"), or join or be joined in
an action similarly brought by another Dissenting Shareholder, for a judicial
determination of the fair cash value of the shares of Sabina Bank Common
Stock held by such Dissenting Shareholder(s). Sabina Bank does not intend to
file any complaint for a judicial determination of the fair cash value of any
shares of Sabina Bank Common Stock.

Upon the motion of the complainant, the Common Pleas Court will hold a
hearing to determine whether the Dissenting Shareholder is entitled to be
paid the fair cash value of his or her shares of Sabina Bank Common Stock.
If the Common Pleas Court finds that the Dissenting Shareholder is so
entitled, it may appoint one or more appraisers to receive evidence and to
recommend a decision on the amount of such fair cash value. The Common Pleas
Court is thereafter required to make a finding as to the fair cash value of
such shares and to render a judgment against Sabina Bank for the payment
thereof, with interest at such rate and from such date as the Common Pleas
Court considers equitable. Costs of the proceeding, including reasonable
compensation to the appraiser or appraisers, to be fixed by the Common Pleas
Court, are to be apportioned or assessed as the Common Pleas Court considers
equitable. Payment of the fair cash value of such shares is required to be
made within 30 days after the date of final determination of such value or
the Effective Time of the Merger, whichever is later, only upon surrender to
Sabina Bank of the certificates representing the shares of Sabina Bank Common
Stock for which payment is made.

Fair cash value is the amount that a willing seller, under no compulsion
to sell, would be willing to accept, and that a willing buyer, under no
compulsion to purchase, would be willing to pay, but in no event may the fair
cash value exceed the amount specified in the Demand. Because the Merger
requires the approval of the Sabina Bank shareholders, the fair cash value is
to be determined as of the day prior to the day of the Special Meeting. In
computing this value, any appreciation or depreciation in the market value of
the shares of Sabina Bank Common Stock held by the Dissenting Shareholder
resulting from the Merger is excluded.

The dissenters' rights of any Dissenting Shareholder will terminate if,
among other things, (i) he or she has not complied with Section 1701.85 of
the OGCL (unless the Sabina Bank Board of Directors waives compliance), (ii)
the Merger is abandoned or otherwise not carried out or such Dissenting
Shareholder withdraws his or her Demand with the consent of the Sabina Bank
Board of Directors or (iii) no agreement has been reached between Sabina Bank
and the Dissenting Shareholder as to the fair cash value for the shares and
neither the Dissenting Shareholder nor Sabina Bank shall have timely filed or
joined in a complaint in the Common Pleas Court. For a discussion of the tax
consequences to a shareholder exercising dissenters' rights, see "The
Merger -- Certain Federal Income Tax Consequences."

If holders of more than 10% of the outstanding shares of Sabina Bank
Common Stock properly demand dissenters' rights, Premier has the right to
decline to consummate the Merger. See "The Merger Agreement -- Conditions to
the Merger."

BECAUSE A PROXY CARD THAT DOES NOT CONTAIN VOTING INSTRUCTIONS WILL,
UNLESS REVOKED, BE VOTED IN FAVOR OF APPROVAL AND ADOPTION OF THE MERGER
AGREEMENT, A SABINA BANK SHAREHOLDER WHO WISHES TO EXERCISE DISSENTERS'
RIGHTS MUST EITHER NOT SIGN AND RETURN A PROXY CARD OR, IF HE OR SHE SIGNS
AND RETURNS A PROXY CARD, VOTE AGAINST OR ABSTAIN FROM VOTING ON THE PROPOSAL
TO ADOPT THE MERGER AGREEMENT.

EXPERTS

The consolidated financial statements of Premier as of December 31, 1996
and 1995, and for the years ended December 31, 1996 and 1995, incorporated
herein by reference to the Premier 1996 Annual Report accompanying this Proxy
Statement/Prospectus, have been examined by Eskew & Gresham, PSC, independent
certified public accountants, as stated in their report thereon, and have
been so incorporated in reliance on the report of Eskew & Gresham, PSC set
forth therein, given on the authority of said firm as experts in accounting
and auditing. The consolidated financial statements of Premier for the year
ended December 31, 1994, incorporated herein by reference to the 1996 Premier
Annual Report, have been examined by McNeal, Williamson & Co., independent
certified public accountants, as stated in their report thereon, and have
been so incorporated in reliance on the report of McNeal Williamson & Co. set
forth therein, given on the authority of such firm as experts in accounting
and auditing.

The financial statements of Sabina Bank as of December 31, 1996 and
1995, and for the years ended December 31, 1996, 1995 and 1994, included in
this Proxy Statement/Prospectus, have been examined by Grant Thornton LLP,
independent certified public accountants, as stated in their report thereon
appearing in this Proxy Statement/Prospectus, and have been included in
reliance upon such report, given on the authority of such firm as experts in
accounting and auditing.

LEGAL MATTERS

The legality of the Premier Common Shares being offered hereby will be
passed upon on for Premier by David W. Harper, Esq., Louisville, Kentucky.

OTHER MATTERS

The Sabina Bank Board of Directors is not aware of any business that
will be presented at the Special Meeting other than

as set forth herein and in the accompanying Notice of Special Meeting.
However, if any other matters are properly presented at the Special Meeting,
the persons designated in the proxies will have discretion to vote thereon.
It is anticipated that such persons will vote on any such matters in
accordance with the recommendation of the Sabina Bank Board of Directors.

FINANCIAL STATEMENTS AND
REPORT OF INDEPENDENT CERTIFIED
PUBLIC ACCOUNTANTS

THE SABINA BANK

DecemberDECEMBER 31, 1996 and 1995

F-1

CONTENTS

Page

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTSReport of Independent Certified Public Accountants . . . . . . . . . F-2

Financial Statements

Statements of Financial Condition . . . . . . . . . . . . . . . F-3

FINANCIAL STATEMENTS

STATEMENTS OF FINANCIAL CONDITIONStatements of Earnings. . . . . . . . . . . . . . . . . . . . . F-4

STATEMENTS OF EARNINGSStatements of Shareholders' Equity. . . . . . . . . . . . . . . F-5

STATEMENTS OF SHAREHOLDERS' EQUITYStatements of Cash Flows. . . . . . . . . . . . . . . . . . . . F-6

STATEMENTS OF CASH FLOWS F-7

NOTES TO FINANCIAL STATEMENTS F-9

F-2Notes to Financial Statements . . . . . . . . . . . . . . . . . F-8

JUNE 30, 1997 and 1996 (UNAUDITED)

Financial Statements

Balance Sheets. . . . . . . . . . . . . . . . . . . . . . . . .F-19

Statements of Income. . . . . . . . . . . . . . . . . . . . . .F-20

Statements of Cash Flows. . . . . . . . . . . . . . . . . . . .F-21

F-1

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

Board of Directors
The Sabina Bank

We have audited the accompanying statements of financial condition of The Sabina
Bank as of December 31, 1996 and 1995, and the related statements of earnings,
shareholders' equity and cash flows for the years then ended. These financial
statements are the responsibility of the Bank's management. Our responsibility
is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
The scope of our audits also encompassed the Minimum Directors' Examination
Requirements promulgated by the Ohio Department of Commerce, Division of
Financial Institutions. We believe that our audits provide a reasonable basis
for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of The Sabina Bank as of
December 31, 1996 and 1995, and the results of its operations and its cash flows
for the years then ended, in conformity with generally accepted accounting
principles.

/s/ Grant Thornton LLP
- -----------------------

Cincinnati, Ohio
March 14, 1997

F-3F-2

THE SABINA BANK

STATEMENTS OF FINANCIAL CONDITION

December 31,

ASSETS 1996 1995

Cash and due from banks $ 2,169,900 $ 1,455,044
Federal funds sold 300,000 1,100,000
Investment securities designated as available
for sale - at market 8,144,909 8,874,423
Loans receivable - net 24,707,068 24,224,665
Bank premises and equipment - net 719,484 683,495
Federal Home Loan Bank stock - at cost 125,800 89,200
Federal Reserve Bank stock - at cost 26,650 26,650
Accrued interest receivable 262,477 258,606
Goodwill - net - 3,189
Prepaid expenses and other assets 137,124 62,363
Prepaid federal income taxes 9,973 20,096
----------- -----------

Total assets $36,603,385 $36,797,731
----------- -----------
----------- -----------

LIABILITIES AND SHAREHOLDERS' EQUITY

Deposits $31,633,906 $31,923,755
Loan to Employee Stock Ownership Plan 230,305 260,919
Accrued interest payable 60,949 59,977
Other liabilities 44,487 44,757
Deferred federal income taxes 102,349 120,371
----------- -----------
Total liabilities 32,071,996 32,409,779

Commitments - -

Shareholders' equity
Common stock - authorized, issued and
outstanding, 110,000 shares of $1 par
value at December 31, 1996 and 1995 110,000 110,000
Additional paid-in capital 778,634 778,634
Retained earnings 3,824,143 3,701,502
Required contributions for shares acquired by
Employee Stock Ownership Plan (ESOP) (230,305) (260,919)
Unrealized gains on securities designated as
available for sale, net of related tax effects 48,917 58,735
----------- -----------
Total shareholders' equity 4,531,389 4,387,952
----------- -----------

Total liabilities and shareholders' equity $36,603,385 $36,797,731
----------- -----------
----------- -----------

The accompanying notes are an integral part of these statements.

F-4F-3

THE SABINA BANK

STATEMENTS OF EARNINGS

Year ended December 31,

1996 1995

Interest income
Interest on loans $2,224,471 $2,321,910
Interest and dividends on investments
U. S. Government and agency obligations 322,253 398,902
Obligations of state and political subdivisions 143,416 150,092
Interest-bearing deposits and other 36,941 16,155
---------- ----------
Total interest income 2,727,081 2,887,059

Interest expense
Deposits 1,108,046 1,165,906
Borrowings 29,906 46,778
---------- ----------
Total interest expense 1,137,952 1,212,684
---------- ----------

Net interest income 1,589,129 1,674,375
Provision for losses on loans 185,000 110,000
---------- ----------

Net interest income after provision
for losses on loans 1,404,129 1,564,375

Other income
Service fees, charges and other operating 236,585 192,904

General, administrative and other expense
Employee compensation and benefits 606,999 734,060
Occupancy and equipment 128,459 132,013
Federal deposit insurance premiums 17,158 54,468
Franchise taxes 60,046 64,282
Other operating 469,515 465,496
---------- ----------
Total general, administrative and
other expense 1,282,177 1,450,319
---------- ----------

Earnings before federal income taxes 358,537 306,960

Federal income taxes
Current 87,186 60,188
Deferred (16,290) (27,448)
---------- ----------
Total federal income taxes 70,896 32,740
---------- ----------

NET EARNINGS $ 287,641 $ 274,220
---------- ----------
---------- ----------

EARNINGS PER SHARE $2.82 $2.70
---------- ----------
---------- ----------

The accompanying notes are an integral part of these statements.

F-5F-4

THE SABINA BANK

STATEMENTS OF SHAREHOLDERS' EQUITY

Years ended December 31, 1996 and 1995

UNREALIZED
REQUIRED GAINS ON
CONTRIBUTIONS SECURITIES
ADDITIONAL FOR SHARES DESIGNATED
COMMON PAID-IN ACQUIRED BY AS AVAILABLE RETAINED
STOCK CAPITAL ESOP FOR SALE EARNINGS TOTAL

Balance at January 1, 1995 $110,000 $778,634 $(289,665) $ - $3,564,782 $4,163,751

Net earnings for the year - - - - 274,220 274,220

Cash dividends paid on common shares - - - - (137,500) (137,500)

Unrealized gains on securities designated as
available for sale, net of related
tax effects - - - 58,735 - 58,735

Principal payments on loan to ESOP - - 28,746 - - 28,746
-------- -------- --------- ------- ---------- ----------

Balance at December 31, 1995 110,000 778,634 (260,919) 58,735 3,701,502 4,387,952

Net earnings for the year - - - - 287,641 287,641

Cash dividends paid on common shares - - - - (165,000) (165,000)

Unrealized losses on securities designated
as available for sale, net of related
tax effects - - - (9,818) - (9,818)

Principal payments on loan to ESOP - - 30,614 - - 30,614
-------- -------- --------- ------- ---------- ----------

Balance at December 31, 1996 $110,000 $778,634 $(230,305) $48,917 $3,824,143 $4,531,389
-------- -------- --------- ------- ---------- ----------
-------- -------- --------- ------- ---------- ----------

The accompanying notes are an integral part of these statements.

F-6F-5

THE SABINA BANK

STATEMENTS OF CASH FLOWS

Year ended December 31,

1996 1995

Cash flows from operating activities:
Net earnings for the year $ 287,641 $ 274,220
Adjustments to reconcile net earnings to net cash
provided by (used in) operating activities:
Depreciation and amortization 56,811 55,594
Amortization of deferred loan origination costs 168,915 154,885
Amortization of premiums and discounts on
investment securities - net 5,761 2,704
Dividends on Federal Home Loan Bank stock (7,100) (700)
Provision for losses on loans 185,000 110,000
Increase (decrease) in cash due to changes in:
Prepaid expenses and other assets (74,761) 21,607
Accrued interest receivable (3,871) 18,392
Other liabilities (270) (3,530)
Accrued interest payable 972 56,779
Federal income taxes
Current 10,123 (20,565)
Deferred (16,290) (27,448)
------------ ------------
Net cash provided by operating activities 612,931 641,938

Cash flows provided by (used in) investing activities:
Net (increase) decrease in federal funds sold 800,000 (1,100,000)
Proceeds from maturity of investment securities 5,288,450 4,700,000
Purchase of investment securities (4,576,247) (2,596,678)
Principal repayments on loans 12,232,366 12,867,574
Loan disbursements (13,068,684) (12,487,882)
Purchase of Federal Home Loan Bank stock (29,500) (88,500)
Purchase of bank premises and equipment (89,611) (49,525)
Proceeds from sale of real estate acquired
through foreclosure - 49,052
------------ ------------
Net cash provided by investing activities 556,774 1,294,041

Cash flows provided by (used in) financing activities:
Net decrease in deposit accounts (289,849) (1,850,448)
Net decrease in federal funds purchased - (800,000)
Dividends paid on common stock (165,000) (137,500)
------------ ------------
Net cash used in financing activities (454,849) (2,787,948)
------------ ------------

Net increase (decrease) in cash and cash equivalents 714,856 (851,969)

Cash and cash equivalents at beginning of year 1,455,044 2,307,013
------------ ------------

Cash and cash equivalents at end of year $ 2,169,900 $ 1,455,044
------------ ------------
------------ ------------

F-7F-6

THE SABINA BANK

STATEMENTS OF CASH FLOWS

Year ended December 31,

1996 1995

Supplemental disclosure of cash flow information:
Cash paid during the year for:
Federal income taxes $ 72,063 $ 75,740
---------- ----------
---------- ----------

Interest on deposits and borrowings $1,136,980 $1,155,905
---------- ----------
---------- ----------

Supplemental disclosure of noncash
investing activities:
Transfer of securities to an available for sale
classification in accordance with SFAS No. 115 $ - $8,798,509
---------- ----------
---------- ----------

Unrealized gains (losses) on securities designated
as available for sale, net of related tax effects $ (9,818) $ 58,735
---------- ----------
---------- ----------

The accompanying notes are an integral part of these statements.

F-8F-7

THE SABINA BANK

NOTES TO FINANCIAL STATEMENTS

December 31, 1996 and 1995

NOTE A - SUMMARY OF ACCOUNTING POLICIES

The Sabina Bank (the "Bank") conducts a general commercial banking business in
central Ohio which consists of attracting deposits from the general public and
applying those funds to the origination of loans for commercial, consumer and
residential purposes. The Bank's profitability is significantly dependent on
its net interest income, which is the difference between interest income
generated from interest-earning assets (i.e. loans and investments) and the
interest expense paid on interest-bearing liabilities (i.e. customer deposits
and borrowed funds). Net interest income is affected by the relative amount
of interest-earning assets and interest-bearing liabilities and the interest
received or paid on these balances. The level of interest rates paid or
received by the Bank can be significantly influenced by a number of
environmental factors, such as governmental monetary policy, that are outside
of management's control.

The financial information presented herein has been prepared in accordance
with generally accepted accounting principles ("GAAP") and general accounting
practices within the financial services industry. In preparing financial
statements in accordance with GAAP, management is required to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
the disclosure of contingent assets and liabilities at the date of the
financial statements and revenues and expenses during the reporting period.
Actual results could differ from such estimates.

The following is a summary of significant accounting policies which have been
consistently applied in the preparation of the accompanying financial
statements:

1. INVESTMENT SECURITIES

The Bank accounts for investment securities in accordance with Statement of
Financial Accounting Standards ("SFAS") No. 115 "Accounting for Certain
Investments in Debt and Equity Securities." SFAS No. 115 requires that
investments be categorized as held to maturity, trading, or available for
sale. Securities classified as held to maturity are carried at cost only if
the Bank has the positive intent and ability to hold these securities to
maturity. Trading securities and securities available for sale are carried at
fair value with resulting unrealized gains or losses charged to operations or
shareholders' equity, respectively.

In November 1995, the Financial Accounting Standards Board (the "FASB") issued
a Special Report on Implementation of SFAS No. 115, which provided for the
reclassification of securities between the held-to-maturity, available for
sale and trading portfolios during a forty-five day period, without calling
into question management's prior intent with respect to such securities.
Management elected to restructure the Bank's securities portfolio pursuant to
the Special Report, and transferred approximately $8.8 million of investment
securities from the held-to-maturity portfolio to an available for sale
portfolio. As a result of the transfer, the Bank recorded an unrealized gain,
net of related tax effects, of approximately $59,000 to shareholders' equity.

Realized gains and losses on sales on securities are recognized using the
specific identification method.

F-9F-8

THE SABINA BANK

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

December 31, 1996 and 1995

NOTE A - SUMMARY OF ACCOUNTING POLICIES (continued)

2. LOANS RECEIVABLE

Loans held in portfolio are stated at the principal amount outstanding,
adjusted for deferred loan origination costs and the allowance for losses on
loans.

Interest is accrued as earned unless the collectibility of the loan is in
doubt. Uncollectible interest on loans that are contractually past due is
charged off, or an allowance is established based on management's periodic
evaluation. The allowance is established by a charge to interest income equal
to all interest previously accrued, and income is subsequently recognized only
to the extent that cash payments are received until, in management's judgment,
the borrower's ability to make periodic interest and principal payments has
returned to normal, in which case the loan is returned to accrual status.

3. LOAN ORIGINATION FEES

The Bank accounts for loan origination fees and costs in accordance with SFAS
No. 91, "Accounting for Nonrefundable Fees and Costs Associated with
Originating or Acquiring Loans and Initial Direct Costs of Leases". Pursuant
to the provisions of SFAS No. 91, all loan origination fees received, net of
certain direct origination costs, are deferred on a loan-by-loan basis and
amortized to interest income using the interest method, giving effect to
actual loan prepayments. Additionally, SFAS No. 91 generally limits the
definition of loan origination costs to the direct costs attributable to
originating a loan, i.e., principally actual personnel costs.

Fees received for loan commitments are deferred and amortized over the life of
the related loan using the interest method.

4. ALLOWANCE FOR LOSSES ON LOANS

It is the Bank's policy to provide valuation allowances for estimated losses
on loans based upon past loss experience, trends in the level of delinquent
and specific problem loans, adverse situations that may affect the borrower's
ability to repay, the estimated value of any underlying collateral and current
and anticipated economic conditions in the Bank's primary market area. When
the collection of a loan becomes doubtful, or otherwise troubled, the Bank
records a loan loss equal to the difference between the fair value of the
property securing the loan and the loan's carrying value. In providing
valuation allowances, costs of holding real estate, including the cost of
capital, are considered. Major loans and major lending areas are reviewed
periodically to determine potential problems at an early date. The allowance
for loan losses is increased by charges to earnings and decreased by charge-
offs (net of recoveries).

F-10F-9

THE SABINA BANK

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

December 31, 1996 and 1995

NOTE A - SUMMARY OF ACCOUNTING POLICIES (continued)

4. ALLOWANCE FOR LOSSES ON LOANS (continued)

In 1993, the Financial Accounting Standards Board issued SFAS No. 114,
"Accounting by Creditors for Impairment of a Loan". This Statement, which was
amended by SFAS No. 118 as to certain income recognition and financial
statement disclosure provisions, requires that impaired loans be measured
based upon the present value of expected future cash flows discounted at the
loan's effective interest rate or, as an alternative, at the loans observable
market price or fair value of the collateral. The Bank adopted SFAS No. 114
effective January 1, 1995, without material effect on financial condition or
results of operations.

A loan is defined under SFAS No. 114 as impaired when, based on current
information and events, it is probable that a creditor will be unable to
collect all amounts due according to the contractual terms of the loan
agreement. In applying the provisions of SFAS No. 114, the Bank considers its
investment in one-to-four family residential loans, consumer installment loans
and credit card loans to be homogeneous and therefore excluded from separate
identification for evaluation of impairment. With respect to the Bank's
investment in commercial loans, and its evaluation of impairment thereof, such
loans are collateral dependent and as a result are carried as a practical
expedient at the lower of cost or fair value.

It is the Bank's general policy to charge off unsecured credits that are more
than ninety days delinquent. Similarly, collateral dependent loans which are
more than ninety days delinquent are considered to constitute more than a
minimum delay in repayment and are evaluated for impairment under SFAS No. 114
at that time.

At December 31, 1996 and 1995, the Bank had no loans that would be defined as
impaired under SFAS No. 114.

5. BANK PREMISES AND EQUIPMENT

Bank premises and equipment are recorded at cost and include expenditures
which extend the useful lives of existing assets. Maintenance, repairs and
minor renewals are expensed as incurred.

For financial reporting, depreciation and amortization are provided
principally on the straight-line method over the useful lives of the assets,
estimated to be thirty-three to forty years for the building and improvements,
and three to ten years for furniture and equipment.

6. REAL ESTATE ACQUIRED THROUGH FORECLOSURE

Real estate acquired through foreclosure is carried at the lower of the loan's
unpaid principal balance (cost) or fair value less estimated selling expenses
at the date of acquisition. Real estate loss provisions are recorded if the
properties' fair value subsequently declines below the value determined at the
recording date. In determining the lower of cost or fair value at
acquisition, costs relating to development and improvement of property are
capitalized. Costs relating to holding real estate acquired through
foreclosure, net of rental income, are charged against earnings as incurred.

F-11F-10

THE SABINA BANK

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

December 31, 1996 and 1995

NOTE A - SUMMARY OF ACCOUNTING POLICIES (continued)

7. GOODWILL

Goodwill was amortized to operations over a ten-year period using the
straight-line method.

8. INCOME TAXES

The Bank accounts for federal income taxes in accordance with the provisions
of SFAS No. 109, "Accounting for Income Taxes." Pursuant to the provisions of
SFAS No. 109, a deferred tax liability or deferred tax asset is computed by
applying the current statutory tax rates to the temporary differences between
the tax basis of an asset or liability and its reported amount in the
financial statements that will result in taxable or deductible amounts in
future periods. Deferred tax assets are recorded only to the extent that the
amount of net deductible temporary differences or carryforward attributes may
be utilized against current period earnings, carried back against prior years'
earnings, offset against taxable temporary differences reversing in future
periods, or utilized to the extent of management's estimate of future taxable
income. A valuation allowance is provided for deferred tax assets to the
extent that the value of net deductible temporary differences and carryforward
attributes exceeds management's estimates of taxes payable on future taxable
income. Deferred tax liabilities are provided on the total amount of net
temporary differences taxable in the future.

The Bank's principal temporary differences result primarily from the different
methods of accounting for deferred loan origination fees and costs, preparing
tax returns on the cash basis of accounting while the financial statements are
prepared on the accrual basis of accounting, and temporary differences in the
amount of the allowance for loan losses. A temporary difference is also
recognized for depreciation expense computed using accelerated methods for
federal income tax purposes.

9. EMPLOYEE STOCK OWNERSHIP PLAN

The Bank has an Employee Stock Ownership Plan ("ESOP") which purchased 10,000
shares of newly issued common stock. The ESOP provides retirement benefits
for all employees who have completed one year of service. Contributions of
approximately $31,000 and $29,000 were made to the ESOP for the years ended
December 31, 1996 and 1995, respectively.

11. EARNINGS PER SHARE

Earnings per share is computed based 101,995 and 101,591 weighted-average
shares outstanding during the years ended December 31, 1996 and 1995,
respectively. Weighted-average shares outstanding gives effect to a reduction
for unallocated shares held in the Bank's ESOP.

F-12F-11

THE SABINA BANK

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

December 31, 1996 and 1995

NOTE A - SUMMARY OF ACCOUNTING POLICIES (continued)

12. CASH AND CASH EQUIVALENTS

For purposes of reporting cash flows, cash and cash equivalents are defined as
cash and due from banks.

13. RECLASSIFICATIONS

Certain prior year amounts have been reclassified to conform to the 1996
financial statement presentation.

NOTE B - INVESTMENT SECURITIES

The carrying values and approximate fair values of investment securities at
December 31 are summarized as follows:

1996 1995
AMORTIZED FAIR AMORTIZED FAIR
COST VALUE COST VALUE

AVAILABLE FOR SALE:
U.S. Government and
agency obligations $5,333,929 $5,301,311 $6,035,489 $6,009,718
Obligations of state and
political subdivisions 2,746,616 2,843,598 2,763,020 2,864,705
---------- ---------- ---------- ----------
Total investments $8,080,545 $8,144,909 $8,798,509 $8,874,423
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------

At December 31, 1996 and 1995, investment securities with an approximate book
value of $4.3 million and $4.9 million, respectively, were pledged as
collateral for public deposits.

At December 31, 1996, the market value appreciation on the Bank's investment
securities, totaling $64,364, was comprised of gross unrealized gains totaling
$114,479 and gross unrealized losses of $50,115.

At December 31, 1995, the market value appreciation on the Bank's investment
securities, totaling $75,914, was comprised of gross unrealized gains totaling
$126,166 and gross unrealized losses of $50,252.

F-13F-12

THE SABINA BANK

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

December 31, 1996 and 1995

NOTE B - INVESTMENT SECURITIES (continued)

The amortized cost of investment securities at December 31, 1996, by term to
maturity, are shown below:

U.S. GOVERNMENT STATE AND
AND AGENCY MUNICIPAL

Due within one year $2,498,904 $ 250,370
Due in one to three years 1,244,298 440,209
Due in three to five years 1,590,727 592,424
Due after five years - 1,463,613
---------- ----------

$5,333,929 $2,746,616
---------- ----------
---------- ----------

NOTE C - LOANS RECEIVABLE

The composition of the loan portfolio at December 31 is as follows:

1996 1995

Commercial $ 4,830,419 $ 4,720,523
Real estate mortgage (primarily residential) 10,476,728 8,161,261
Installment, net of unearned income of
$61,145 and $237,821 9,632,956 11,452,063
Consumer and other loans 133,006 152,378
----------- -----------
25,073,109 24,486,225
Less:
Unamortized yield adjustments 34,818 -
Less allowance for losses on loans 331,223 261,560
----------- -----------

$24,707,068 $24,224,665
----------- -----------
----------- -----------

The Bank's lending efforts have historically focused on residential real
estate loans and consumer installment loans which comprise approximately $20.1
million, or 81%, of the total loan portfolio at December 31, 1996, and
approximately $19.6 million, or 81%, of the total loan portfolio at December
31, 1995. Historically, such loans have been conservatively underwritten with
collateral and cash down payments sufficient to provide the Bank with adequate
coverage in the event of default. Nevertheless, the Bank, as with any lending
institution, is subject to the risk that real estate values or economic
conditions could deteriorate in its primary lending areas within Ohio, thereby
impairing collateral values. However, management is of the belief that real
estate values and economic conditions in the Bank's primary lending areas are
presently stable.

In the normal course of business, the Bank has made loans to its directors,
officers and employees, and their related business interests. In the opinion
of management, such loans are consistent with sound banking practices and are
within applicable regulatory lending limitations. The balance of such loans
outstanding at December 31, 1996 and 1995, totaled approximately $785,000 and
$539,000, respectively.

F-14F-13

THE SABINA BANK

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

December 31, 1996 and 1995

NOTE D - ALLOWANCE FOR LOSSES ON LOANS

Activity in the allowance for losses on loans for the year ended December 31
is as follows:

1996 1995

Balance at beginning of year $ 261,560 $ 285,529
Provision charged to operations 185,000 110,000
Less loans charged off, net of recoveries of
$63,229 and $47,212 (115,337) (133,969)
--------- ---------
Balance at end of year $ 331,223 $ 261,560
--------- ---------
--------- ---------

Nonperforming and nonaccrual loans totaled $407,000 and $125,000 at
December 31, 1996 and 1995. Interest which would have been recognized had
such loans performed pursuant to contractual terms totaled approximately
$8,700 and $5,200 for the years ended December 31, 1996 and 1995,
respectively.

NOTE E - BANK PREMISES AND EQUIPMENT

Bank premises and equipment at December 31 are summarized as follows:

1996 1995

Land and improvements $ 116,878 $ 116,878
Building and improvements 599,569 575,785
Furniture and equipment 1,008,994 943,168
---------- ----------
1,725,441 1,635,831

Less accumulated depreciation
and amortization 1,005,957 952,336
---------- ----------

$ 719,484 $ 683,495
---------- ----------
---------- ----------

F-15F-14

THE SABINA BANK

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

December 31, 1996 and 1995

NOTE F - DEPOSITS

At December 31 deposits are summarized as follows:

WEIGHTED-AVERAGE
RATE AT 1996 1995
DEPOSIT TYPE AND DECEMBER 31, PERCENT PERCENT
INTEREST RATE RANGE 1996 AMOUNT OF TOTAL AMOUNT OF TOTAL

Demand deposit accounts - $ 7,433,466 23.50% $ 7,424,111 23.26%
Money market accounts 2.70% 3,719,194 11.76% 3,951,694 12.38%
Savings accounts 2.50% 4,233,515 13.38% 4,260,113 13.34%
----------- ------ ----------- ------

Total transaction accounts 15,386,175 48.64% 15,635,918 48.98%

Certificates
2.00 - 4.99% 2,823,941 8.93% 1,635,293 5.12%
5.00 - 6.99% 13,423,790 42.43% 13,019,636 40.78%
7.00 - 8.99% - - 1,632,908 5.12%
----------- ------ ----------- ------

Total certificates of deposit 5.63% 16,247,731 51.36% 16,287,837 51.02%
----------- ------ ----------- ------

Total deposits $31,633,906 100.00% $31,923,755 100.00%
----------- ------ ----------- ------
----------- ------ ----------- ------

At December 31, 1996 and 1995, the Bank had certificates of deposit with
balances greater than $100,000 totaling $6.5 million and $5.6 million,
respectively.

F-16F-15

THE SABINA BANK

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

December 31, 1996 and 1995

NOTE F - DEPOSITS (continued)

Interest expense on deposits for the years ended December 31 is summarized as
follows:

1996 1995

Savings accounts $ 107,768 $ 113,443
Money market accounts 106,517 128,681
Certificates of deposit 893,761 923,782
---------- ----------

$1,108,046 $1,165,906
---------- ----------
---------- ----------

Maturities of outstanding certificates of deposit at December 31 are
summarized as follows:

1996 1995
(In thousands)

Less than one year $11,592 $12,343
One year to three years 4,656 3,945
------- -------

$16,248 $16,288
------- -------
------- -------

NOTE G - LOAN COMMITMENTS

The Bank is a party to financial instruments with off-balance-sheet risk in
the normal course of business to meet the financing needs of its customers
including commitments to extend credit. Such commitments involve, to varying
degrees, elements of credit and interest-rate risk in excess of the amount
recognized in the statement of financial condition. The contract or notional
amounts of the commitments reflect the extent of the Bank's involvement in
such financial instruments.

The Bank's exposure to credit loss in the event of nonperformance by the other
party to the financial instrument for commitments to extend credit is
represented by the contractual notional amount of those instruments. The Bank
uses the same credit policies in making commitments and conditional
obligations as those utilized for on-balance-sheet instruments.

At December 31, 1996, the Bank had no outstanding commitments to originate
loans. At that date, the Bank had unused lines of credit totaling
approximately $1.7 million. In the opinion of management all commitments will
be funded via cash flow from operations and existing excess liquidity.

F-17F-16

THE SABINA BANK

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

December 31, 1996 and 1995

NOTE H - FEDERAL INCOME TAXES

Federal income taxes differ from those computed at the statutory corporate tax
rate for the year ended December 31 as follows:

1996 1995
(In thousands)

Taxes at statutory rate $122 $104
Increase (decrease) resulting from:
Tax-exempt interest (55) (53)
Other 4 (18)
---- ----
Federal income taxes per
financial statements $ 71 $ 33
---- ----
---- ----

The composition of the Bank's net deferred tax liability at December 31 is as
follows:

1996 1995
(In thousands)
Deferred tax liabilities:
Deferred loan origination costs $ (34) $ (56)
Cash vs. accrual basis of accounting (81) (54)
Book/tax depreciation (70) (58)
Unrealized gain on securities designated as
available for sale (15) (17)
Federal Home Loan Bank stock dividends (2) (1)
----- -----
Total deferred tax liabilities (202) (186)
----- -----

Deferred tax assets:
Allowance for losses on loans 86 59
Other 14 7
----- -----
Total deferred tax assets 100 66
----- -----

Net deferred tax liability $(102) $(120)
----- -----
----- -----

NOTE I - REGULATORY CAPITAL REQUIREMENTS

The Bank is subject to the regulatory capital requirements of the Federal
Deposit Insurance Corporation (the "FDIC"). Failure to meet minimum capital
requirements can initiate certain mandatory -- and possibly additional
discretionary -- actions by regulators that, if undertaken, could have a
direct material effect on the Bank's financial statements. Under capital
adequacy guidelines and the regulatory framework for prompt corrective action,
the Bank must meet specific capital guidelines that involve quantitative
measures of the Bank's assets, liabilities, and certain off-balance-sheet
items as calculated under regulatory accounting practices. The Bank's capital
amounts and classification are also subject to qualitative judgments by the
regulators about components, risk weightings, and other factors.

F-18F-17

THE SABINA BANK

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

December 31, 1996 and 1995

NOTE I - REGULATORY CAPITAL REQUIREMENTS (continued)

The Federal Deposit Insurance Corporation (FDIC) has adopted risk-based
capital ratio guidelines to which the Bank is subject. The guidelines
establish a systematic analytical framework that makes regulatory capital
requirements more sensitive to differences in risk profiles among banking
organizations. Risk-based capital ratios are determined by allocating assets
and specified off-balance sheet commitments to four risk-weighting categories,
with higher levels of capital being required for the categories perceived as
representing greater risk.

These guidelines divide the capital into two tiers. The first tier ("Tier 1")
includes common equity, certain non-cumulative perpetual preferred stock
(excluding auction rate issues) and minority interests in equity accounts of
consolidated subsidiaries, less goodwill and certain other intangible assets
(except mortgage servicing rights and purchased credit card relationships,
subject to certain limitations). Supplementary ("Tier II") capital includes,
among other items, cumulative perpetual and long-term limited-life preferred
stock, mandatory convertible securities, certain hybrid capital instruments,
term subordinated debt and the allowance for loan losses, subject to certain
limitations, less required deductions. Banks are required to maintain a total
risk-based capital ratio of 8%, of which 4% must be Tier 1 capital. The FDIC
may, however, set higher capital requirements when particular circumstances
warrant. Banks experiencing or anticipating significant growth are expected
to maintain capital ratios, including tangible capital positions, well above
the minimum levels.

In addition, the FDIC established guidelines prescribing a minimum Tier 1
leverage ratio (Tier 1 capital to adjusted total assets as specified in the
guidelines). These guidelines provide for a minimum Tier 1 leverage ratio of
3% for banks that meet certain specified criteria, including that they have
the highest regulatory rating and are not experiencing or anticipating
significant growth. All other banks are required to maintain a Tier 1
leverage ratio of 3% plus an additional cushion of at least 100 to 200 basis
points.

As of December 31, 1996, management believes that the Bank met all capital
adequacy requirements to which the Bank was subject.

AS OF DECEMBER 31, 1996
TO BE "WELL-
CAPITALIZED" UNDER
FOR CAPITAL PROMPT CORRECTIVE
ACTUAL ADEQUACY PURPOSES ACTION PROVISIONS
---------------- -------------------------------------- ---------------------------------------
AMOUNT RATIO AMOUNT RATIO AMOUNT RATIO
(In thousands)

Total capital IS GREATER THAN IS GREATER THAN IS GREATER THAN IS GREATER THAN
(to risk-weighted assets) $4,783 21.0% OR EQUAL TO $1,819 OR EQUAL TO 8.0% OR EQUAL TO $2,274 OR EQUAL TO 10.0%

Tier I capital IS GREATER THAN IS GREATER THAN IS GREATER THAN IS GREATER THAN OR
(to risk-weighed assets) $4,462 19.6% OR EQUAL TO $ 910 OR EQUAL TO 4.0% OR EQUAL TO $1,364 EQUAL TO 6.0%

Tier I leverage IS GREATER THAN IS GREATER THAN IS GREATER THAN IS GREATER THAN
$4,462 12.2% OR EQUAL TO $1,461 OR EQUAL TO 4.0% OR EQUAL TO $1,827 OR EQUAL TO 5.0%

F-19F-18

THE SABINA BANK
BALANCE SHEETS
(IN THOUSANDS)
(UNAUDITED)

June 30
1997 1996
ASSETS
Cash and due from banks $ 1,990 $ 1,477
Federal funds sold 0 700
Investment securities:
Available for sale 8,774 8,016
Loans $24,702 $25,118
Less: Unearned interest 34 117
Allowance for loan losses 310 270
------- -------
Net loans $24,358 $24,731
Premises and equipment, net 705 702
Other assets 735 450
------- -------

TOTAL ASSETS $36,562 $36,076

LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
Non-interest bearing $ 6,630 $ 6,607
Time deposits, $100,000 and over 5,902 6,012
Other interest bearing 19,130 18,552
------- -------
Total deposits $31,662 $31,171
Loan to Employee Stock Ownership Plan (ESOP) 230 261
Other liabilities 98 184
------- -------
Total liabilities $31,990 $31,616

SHAREHOLDERS' EQUITY:
Common stock, $1 par value; 110,000 shares
authorized, issued and outstanding at
June 30, 1997 and 1996 $ 110 $ 110
Surplus 779 779
Retained earnings 3,873 3,833
Required contributions for shares acquired
by Employee Stock Ownership Plan (ESOP) (230) (261)
Net unrealized gains or losses on investment
securities available for sale 40 (1)
------- -------
Total shareholders' equity $ 4,572 $ 4,460

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $36,562 $36,076

F-20F-19

THE SABINA BANK
STATEMENTS OF INCOME
SIX MONTHS ENDED JUNE 30, 1997 AND 1996
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)

1997 1996
INTEREST INCOME:
Loans, including fees $1,121 $1,093
Investment securities -
Taxable 162 156
Tax-exempt 70 71
Federal funds sold and other 13 23
------ ------
Total interest income $1,366 $1,343

INTEREST EXPENSE:
Deposits $ 577 $ 550
Debt and other borrowings 13 12
------ ------
Total interest expense $ 590 $ 562

Net interest income $ 776 $ 781
Provision for loan losses 23 28
------ ------
Net interest income after provision for
loan losses $ 753 $ 753

NON-INTEREST INCOME:
Service charges $ 89 $ 85
Investment securities gains(losses) 0 0
Other 16 21
------ ------
$ 105 $ 106

NON-INTEREST EXPENSE
Salaries and employee benefits $ 298 $ 260
Occupancy and equipment expenses 65 71
FDIC insurance 1 1
Franchise tax 17 17
Other expenses 315 264
------ ------
$ 696 $ 613

Income before income taxes $ 162 $ 246

Provision for income taxes 30 60
------ ------

NET INCOME $ 132 $ 186

Primary earnings per share $ 1.28 $ 1.82

F-21F-20

THE SABINA BANK
STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED JUNE 30, 1997 AND 1996
(IN THOUSANDS)
(UNAUDITED)

1997 1996
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 132 $ 186
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 28 30
Provision for loan losses 23 28
Change in:
Other assets (325) (109)
Other liabilities (110) (67)
------- -------
Net cash provided by (used in) operating
activities $ (252) $ 68

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of securities available for sale $(2,085) $(1,685)
Proceeds from maturities of securities
available for sale 1,600 2,627
Net change in federal funds sold 300 400
Net change in loans 326 (534)
Purchases of bank premises and equipment, net (14) (46)
------- -------
Net cash provided by investing activities $ 127 $ 762

CASH FLOWS FROM FINANCING ACTIVITIES:
Net change in deposits $ 28 $ (753)
Dividends paid (83) (55)
------- -------
Net cash used in financing activities $ (55) $ (808)

Net increase (decrease) in cash and cash
equivalents $ (180) $ 22

Cash and cash equivalents at beginning of period 2,170 1,455
------- -------

CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 1,990 $ 1,477

F-22F-21

ANNEX I

AGREEMENT AND PLAN OF MERGER

AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as of May 28, 1997,
among PREMIER FINANCIAL BANCORP, INC., a Kentucky corporation ("Parent"),
PFBI INTERIM BANK, an Ohio banking corporation in organization and a wholly
owned subsidiary of Parent ("Merger Sub"), and THE SABINA BANK, an Ohio
banking corporation (the "Company").

R E C I T A L S:
- - - - - - - - -

A. The Boards of Directors of Parent, Merger Sub and the Company each
have determined that a business combination involving the merger of Merger
Sub into the Company and the Company becoming a wholly owned subsidiary of
Parent is in the best interests of their respective companies and
shareholders and presents an opportunity for Parent and the Company and their
respective shareholders to achieve long-term strategic and financial
benefits, and accordingly have agreed to effect the merger provided for
herein (the "Merger") upon the terms and subject to the conditions set forth
herein.

B. Parent, Merger Sub and the Company desire to make certain
representations, warranties, covenants and agreements in connection with the
Merger and to prescribe various conditions to the Merger.

C. For federal income tax purposes, it is intended that the Merger
qualify as a reorganization under the provisions of Section 368 of the
Internal Revenue Code of 1986, as amended (the "Code").

D. It is intended that the Merger shall be recorded for accounting
purposes as a pooling of interests.

A G R E E M E N T:
- - - - - - - - - -

NOW, THEREFORE, in consideration of the foregoing and the
representations, warranties, covenants and agreements contained herein, the
parties hereto agree as follows:

ARTICLE I

THE MERGER

1.1 EFFECTIVE TIME OF THE MERGER. Subject to the provisions of this
Agreement, a certificate of merger (the "Certificate of Merger") shall be
duly executed and acknowledged by Merger Sub and the Company and thereafter
delivered to the Secretary of State of the State of Ohio, for filing, as
provided in the General Corporation Law of the State of Ohio (the "OGCL"), as
soon as

practicable on or after the Closing Date (as defined in Section 1.2). The
Merger shall become effective upon the filing of the Certificate of Merger
with the Secretary of State of the State of Ohio or at such time thereafter
as is provided in the Certificate of Merger (the "Effective Time").

1.2 CLOSING. The closing of the Merger (the "Closing") will take place
at 10:00 a.m. on a date to be specified by the parties, which shall be the
first day which is five business days after satisfaction of the latest to
occur of the conditions set forth in Sections 6.1, 6.2(b) and 6.3(b) (other
than the delivery of the officers' certificates referred to in Sections
6.2(b) and 6.3(b)), provided that the other closing conditions set forth in
Article VI have been met or waived as provided in Article VI at or prior to
the Closing (the "Closing Date"), at the offices of Vorys, Sater, Seymour and
Pease, 221 East Fourth Street, Suite 2100, Cincinnati, Ohio, unless another
time, date or place is agreed to in writing by the parties hereto.

1.3 EFFECTS OF THE MERGER. At the Effective Time, (a) the separate
existence of Merger Sub shall cease and Merger Sub shall be merged with and
into the Company, (b) the articles of incorporation of the Company as in
effect immediately prior to the Effective Time shall be the articles of
incorporation of the Surviving Corporation until thereafter changed or
amended as provided therein or by applicable law and (c) the code of
regulations of the Company as in effect immediately prior to the Effective
Time shall be the code of regulations of the Surviving Corporation until
thereafter changed or amended as provided therein or by applicable law. As
used in this Agreement, "Surviving Corporation" shall mean the Company. At
and after the Effective Time, the Merger will have the effects set forth in
Section 1701.82 of the OGCL.

ARTICLE II

EFFECT OF THE MERGER ON THE STOCK OF THE COMPANY
AND MERGER SUB; EXCHANGE OF CERTIFICATES

2.1 EFFECT ON CAPITAL STOCK. At the Effective Time, by virtue of the
Merger and without any action on the part of the holder of any common stock,
$1.00 par value, of the Company ("Company Common Stock"):

(a) CANCELLATION OF PARENT- OR MERGER SUB-OWNED SHARES. All
Company Common Stock that is owned by Parent, Merger Sub or any other
Subsidiary (as defined in Section 3.1(a)) of Parent (other than shares in
trust accounts, managed accounts and the like that are beneficially owned by
third parties (any such shares, "trust account shares")) shall be cancelled
and shall cease to exist and no shares of common stock of Parent or other
consideration shall be delivered in exchange therefor.

(b) CONVERSION OF MERGER SUB COMMON STOCK. Each of the shares of
common stock of Merger Sub ("Merger Sub Common Stock") issued and outstanding
immediately prior to the Effective Time of the Merger shall be converted into
1,000 shares of common stock of the Surviving Corporation, $1.00 par value
per share.

(c) CONVERSION OF COMPANY COMMON STOCK. Each of the shares of
Company Common Stock issued and outstanding immediately prior to the
Effective Time of the Merger shall be converted into 4.33 (such number being
referred to as the "Conversion Number") fully paid and non-assessable shares
of common stock of Parent, without par value ("Parent Common Stock"), all in
accordance with Section 2.2.

(d) DISSENTING SHARES. Notwithstanding any other provisions of
this Agreement to the contrary, Company Common Stock that is outstanding
immediately prior to the Effective Time and which is held by shareholders who
shall not have voted in favor of the Merger or consented thereto in writing
and who shall have properly demanded in writing appraisal for such shares in
accordance with Section 1701.85 of the OGCL (collectively, the "Dissenting
Shares") shall not be converted into or represent the right to receive the
consideration provided in Section 2.1(c). Such shareholders ("Dissenting
Holders") shall be entitled to receive payment of the appraised value of such
Company Common Stock held by them in accordance with the provisions of
Section 1701.85 of the OGCL, except that all Dissenting Shares held by
shareholders who shall have failed to perfect or who effectively shall have
withdrawn or lost their rights to appraisal of such Company Common Stock
under such Section 1701.85 shall thereupon be deemed to have been converted
into and to have become exchangeable for, as of the Effective Time, the right
to receive the consideration provided in Section 2.1(c), without any interest
thereon, upon surrender of the certificate or certificates that formerly
evidenced such Company Common Stock in accordance with Section 2.2.

(e) ADJUSTMENT TO CONVERSION NUMBER. If, prior to the Effective
Time of the Merger, Parent shall pay a dividend in, subdivide, combine into a
smaller number of shares or issue by reclassification of its shares any
Parent Common Stock, the Conversion Number shall be multiplied by a fraction,
the numerator of which shall be the number of shares of Parent Common Stock
outstanding immediately after, and the denominator of which shall be the
number of such shares outstanding immediately before, the occurrence of such
event, and the product shall be the Conversion Number for purposes of Section
2.1(c).

2.2 EXCHANGE OF CERTIFICATES.

(a) EXCHANGE AGENT. Parent shall authorize a commercial bank (or
such other person or persons as shall be acceptable to Parent and the
Company) to act as exchange agent hereunder (the

"Exchange Agent"). As soon as practicable, but not later than three business
days after the Effective Time, Parent shall deposit with the Exchange Agent,
in trust for the holders of certificates which immediately prior to the
Effective Time represented Company Common Stock converted in the Merger (the
"Company Certificates"), certificates representing the shares of Parent
Common Stock (such shares of Parent Common Stock, together with any dividends
or distributions with respect thereto in accordance with Section 2.2(c),
being hereinafter referred to as the "Exchange Fund") issuable pursuant to
Section 2.1(c) in exchange for the outstanding Company Common Stock (the
"Parent Certificates").

(b) EXCHANGE PROCEDURES.

(i) As soon as practicable after the Effective Time, the
Exchange Agent shall mail to each recordholder of a Company Certificate a
letter of transmittal (which shall specify that delivery shall be effected,
and risk of loss and title to the Company Certificates shall pass, only upon
actual delivery thereof to the Exchange Agent and shall contain instructions
for use in effecting the surrender of the Company Certificates in exchange
for the consideration described in the next sentence). Upon surrender for
cancellation to the Exchange Agent of all Company Certificates held by any
recordholder of a Company Certificate, together with such letter of
transmittal duly executed, such holder shall be entitled to receive in
exchange therefor a Parent Certificate(s) representing the number of whole
shares of Parent Common Stock into which the Company Common Stock represented
by the surrendered Company Certificate(s) shall have been converted at the
Effective Time pursuant to this Article II, cash in lieu of any fractional
share of Parent Common Stock in accordance with Section 2.2(e) and certain
dividends and other distributions in accordance with Section 2.2(c), and the
Company Certificate(s) so surrendered shall forthwith be cancelled; PROVIDED,
HOWEVER, that Company Certificates surrendered for exchange by any person
constituting an "affiliate" of the Company for purposes of Rule 145(c) under
the Securities Act of 1933, as amended (the "Securities Act"), shall not be
exchanged for Parent Certificates until Parent has received a written
agreement from such person as provided in Section 5.6.

(ii) Until Company Certificates have been surrendered and
exchanged for Parent Certificates as herein provided, each outstanding
Company Certificate shall be deemed at any time after the Effective Time to
represent only the right to receive upon such surrender a Parent
Certificate(s) representing a whole number of shares of Parent Common Stock
and cash in lieu of any fractional share as contemplated by this Section 2.2.
No transfer taxes shall be payable in connection with any such exchange,
except that if any Parent Certificate (or any check representing cash in lieu
of a fractional share) is to be issued in the name other than that in which
the Company Certificate surrendered in exchange therefor is registered, it
shall be a condition of such exchange

that the person requesting such exchange shall pay to the Exchange Agent any
transfer or other taxes required by reason of the issuance of the Parent
Certificate (or check) in a name other than that of the registered holder of
the Company Certificate, or shall establish to the satisfaction of the
Exchange Agent that such tax has been paid or is not applicable. Parent or
the Exchange Agent shall be entitled to deduct and withhold from the
consideration otherwise payable pursuant to this Agreement to any holder of
Company Common Stock such amounts as Parent or the Exchange Agent are
required to deduct and withhold under the Code, or any provision of state,
local or foreign tax law, with respect to the making of such payment. To the
extent that amounts are so withheld by Parent or the Exchange Agent, such
withheld amounts shall be treated for all purposes of this Agreement as
having been paid to the holder of the Company Common Stock in respect of whom
such deduction and withholding was made by Parent or the Exchange Agent. If
outstanding Company Certificates are not surrendered prior to six years after
the Effective Time of the Merger (or, in any particular case, prior to such
earlier date on which dividends and other distributions, if any, described
above would otherwise escheat to or become the property of any governmental
unit or agency), the amount of dividends and other distributions, if any,
that have become payable and that thereafter become payable on Parent Common
Stock evidenced by such Company Certificates as provided herein shall, to the
extent permitted by applicable law, become the property of Parent (and, to
the extent not in its possession, shall be paid over to it), free and clear
of all claims or interest of any person previously entitled thereto.

(c) DISTRIBUTIONS WITH RESPECT TO UNEXCHANGED SHARES. No dividends
or other distributions declared or made after the Effective Time with respect to
Parent Common Stock with a record date after the Effective Time shall be paid to
the holder of any unsurrendered Company Certificate with respect to the Parent
Common Stock represented thereby, and no cash payment in lieu of fractional
shares shall be paid to any such holder pursuant to Section 2.2(e), until the
holder of such Company Certificate shall surrender it. Subject to the effect of
applicable laws, following surrender of any such Company Certificate, there
shall be paid to the holder of the Parent Certificate representing whole shares
of Parent Common Stock issued in exchange therefor, without interest, (i) at the
time of such surrender or promptly thereafter as is practicable, the amount of
any cash payable with respect to a fractional share of Parent Common Stock to
which such holder is entitled pursuant to Section 2.2(e) and the amount of
dividends or other distributions with a record date after the Effective Time
theretofore paid with respect to such whole number of shares of Parent Common
Stock and (ii) at the appropriate payment date, the amount of dividends or other
distributions with a record date after the Effective Time but prior to surrender
and a payment date subsequent to surrender payable with respect to such whole
number of shares of Parent Common Stock.

(d) NO FURTHER OWNERSHIP RIGHTS IN COMPANY COMMON STOCK. All
Parent Common Stock issued upon conversion of Company Common Stock in
accordance with the terms hereof (including any cash paid pursuant to Section
2.2(e)) shall be deemed to have been issued in full satisfaction of all
rights pertaining to such Company Common Stock, SUBJECT, HOWEVER, to the
Surviving Corporation's obligation to pay any dividends or make any other
distributions with a record date prior to the Effective Time that may have
been declared or made by the Company on Company Common Stock in accordance
with the terms of this Agreement on or prior to the Effective Time and which
remain unpaid at the Effective Time. At the Effective Time, the stock
transfer books of the Company shall be closed to holders of Company Common
Stock immediately prior to the Effective Time and no transfer of Company
Common Stock by any such holder shall thereafter be made or recognized. If,
after the Effective Time, Company Certificates are presented to the Surviving
Corporation for any reason, they shall be cancelled and exchanged as provided
in this Article II.

(e) NO FRACTIONAL SHARES.

(i) Notwithstanding any other provision hereof, no fractional
share of Parent Common Stock and no certificate or scrip therefor, or other
evidence of ownership thereof, will be issued, and no right to receive cash
in lieu thereof shall entitle the holder thereof to any voting or other
rights of a holder of shares or fractional share interests.

(ii) Each holder of Company Common Stock shall be paid an amount in
cash equal to the product obtained by multiplying the fractional share
interest to which such holder (after taking into account all shares of
Company Common Stock then held by such holder) would otherwise be entitled by
the midpoint between the highest "bid" and lowest "asked" price for a share
of Parent Common Stock in the over-the-counter market for the business day
immediately preceding the Closing Date.

(iii) As soon as practicable after the determination of the amount
of cash, if any, to be paid to holders of Company Common Stock with respect
to any fractional share interests, the Exchange Agent shall make available
such amounts to such holders of Company Common Stock subject to and in
accordance with the terms of Section 2.2(b).

(f) TERMINATION OF EXCHANGE FUND. Any portion of the Exchange
Fund which remains undistributed to the shareholders of the Company for six
months after the Effective Time shall be delivered to Parent, upon demand,
and any shareholders of the Company who have not theretofore complied with
this Article II shall thereafter look only to Parent for payment of their
claim for Parent Common Stock, any cash in lieu of fractional shares of

Parent Common Stock and any dividends or distributions with respect to Parent
Common Stock.

(g) NO LIABILITY. Neither Parent, Merger Sub, the Company nor the
Surviving Corporation shall be liable to any holder of Company Common Stock
for any amount paid or property delivered in good faith to a public official
pursuant to any applicable abandoned property, escheat or similar law.

ARTICLE III

REPRESENTATIONS AND WARRANTIES

3.1 REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company represents
and warrants to Parent and Merger Sub that:

(a) ORGANIZATION, STANDING AND POWER. The Company is a banking
corporation duly organized, validly existing and in good standing under the
laws of the State of Ohio. The Company is a bank duly organized under
Chapter 1113 of the Ohio Revised Code validly existing and in good standing
under the laws of the State of Ohio, and all of its deposits are insured by
the Bank Insurance Fund of the Federal Deposit Insurance Corporation ("FDIC")
to the maximum extent permitted by law. The Company has all requisite power
and authority to own, lease and operate its properties and to carry on its
business as now being conducted, and is duly qualified and in good standing
to do business in each jurisdiction in which the nature of its business or
the ownership or leasing of its properties makes such qualification
necessary, except where the failure to be so qualified would not reasonably
be expected to have, individually or in the aggregate, a Material Adverse
Effect on the Company. For purposes of this Agreement: (i) "Material
Adverse Change" or "Material Adverse Effect" means, when used with respect to
Parent, the Company or the Surviving Corporation, as the case may be, any
change or effect that is or would reasonably be expected (so far as can be
foreseen at the time) to be materially adverse to the business, properties,
assets, liabilities, condition (financial or otherwise) or results of the
operations of Parent and its Subsidiaries taken as a whole, the Company, or
the Surviving Corporation, as the case may be; provided, however, that no
Material Adverse Change or Material Adverse Effect shall be deemed to have
occurred by reason of a change or effect resulting from general economic
conditions, general industry conditions, changes in banking laws or
regulations of general applicability or interpretations thereof, or a general
deterioration in the financial markets; and (ii) "Subsidiary" means any
corporation, partnership, joint venture or other legal entity of which Parent
or the Company, as the case may be (either alone or through or together with
any other Subsidiary), owns, directly or indirectly, 50% or more of the
capital stock or other equity interest the holders of which are generally
entitled to vote for the election of

the board of directors or other governing body of such corporation,
partnership, joint venture or other legal entity.

(b) CAPITAL STRUCTURE.

(i) The authorized capital stock of the Company consists of
110,000 shares of Company Common Stock, all of which are outstanding.

(ii) No bonds, debentures, notes or other indebtedness having
the right to vote (or convertible into or exercisable for securities having
the right to vote) on any matters on which shareholders of the Company may
vote ("Voting Debt") are issued or outstanding. All outstanding shares of
Company Common Stock are, and any Company Common Stock that may be issued
pursuant to the exercise of any outstanding stock option will be, duly
authorized, validly issued, fully paid and nonassessable and not subject to
preemptive rights.

(iii) Except as set forth in the letter dated and delivered
to Parent on the date hereof (the "Company Letter"), which relates to this
Agreement and is designated therein as being the Company Letter, there is no
option, warrant, call, right (including any preemptive right), commitment or
any other agreement of any character that the Company is a party to, or may
be bound by, requiring it to issue, transfer, sell, purchase or redeem any
shares of capital stock, any Voting Debt, or any securities or rights
convertible into, exchangeable for, or evidencing the right to subscribe for
any shares of capital stock of the Company, or to provide funds to, or make
an investment, in the form of a loan, capital contribution or otherwise
(excepting loans made in the ordinary course of a commercial banking
business), in any other corporation, partnership, firm, individual, trust or
other legal entity (each, and any group of any two or more of the foregoing,
a "Person").

(iv) Except as set forth in the Company Letter, there is no
voting trust or other agreement or understanding to which the Company is a
party, or may be bound by, with respect to the voting of the capital stock of
the Company.

(v) Since December 31, 1994, except as set forth in the
Company Letter, the Company has not (A) issued or permitted to be issued any
shares of capital stock, or securities exercisable for or convertible into
shares of capital stock, of the Company; (B) repurchased, redeemed or
otherwise acquired any shares of capital stock of the Company (other than the
acquisition of trust account shares); or (C) declared, set aside, made or
paid to shareholders of the Company dividends or other distributions on the
outstanding shares of capital stock of the Company, other than regular
semi-annual cash dividends at a rate not in excess of the

regular semi-annual cash dividends most recently declared by the Company
prior to March 31, 1997.

(i) The Company has all requisite corporate power and
authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. This Agreement and the consummation by the
Company of the transactions contemplated hereby have been duly and validly
authorized by the Board of Directors of the Company and no other corporate
proceedings on the part of the Company are necessary to authorize this
Agreement or to consummate the transactions contemplated hereby (other than
the approval of this Agreement by the shareholders of the Company in
accordance with the OGCL and the Company's articles of incorporation). This
Agreement has been duly and validly executed and delivered by the Company
and, assuming this Agreement constitutes the valid and binding agreement of
Parent and Merger Sub, constitutes the valid and binding agreement of the
Company, enforceable in accordance with its terms, except that the
enforcement hereof may be limited by (A) bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect,
relating to creditors' rights generally, (B) general principles of equity
(regardless of whether enforceability is considered in a proceeding in equity
or at law) and (C) judicial discretion.

(ii) Except as set forth in the Company Letter, the execution
and delivery of this Agreement does not, and the consummation of the
transactions contemplated hereby (subject to approval by the shareholders of
the Company of this Agreement) will not, conflict with or result in any
violation of, or default (with or without notice or lapse of time, or both)
under, or give rise to a right of termination, amendment, cancellation,
acceleration or payment of any obligation or the loss of a material benefit
under, or the creation of a lien, pledge, security interest, charge or other
encumbrance on assets (any such conflict, violation, default, right of
termination, amendment, cancellation, acceleration or payment, loss or
creation, a "Violation") pursuant to, any provisions of the articles of
incorporation or code of regulations of the Company or, except as set forth
in the Company Letter, and subject to obtaining or making the consents,
approvals, orders, authorizations, registrations, declarations and filings
referred to in Subsection (iii) below, result in any Violation of any loan or
credit agreement, note, mortgage, indenture, lease, Benefit Plan (as defined
in Section 3.1(o)) or other agreement, obligation, instrument, permit,
concession, franchise, license, judgment, order, decree, statute, law,
ordinance, rule or regulation applicable to the Company or its properties or
assets.

(iii) No consent, approval, order or authorization of, or
registration, declaration or filing with, any federal or state court,
administrative agency or commission or other governmental authority or

instrumentality (a "Governmental Entity") is required by or with respect
to the Company in connection with the execution and delivery of this
Agreement, or the consummation by the Company of the transactions
contemplated hereby, the failure to obtain which would have a Material
Adverse Effect on the Company, except for (A) the filing by Parent of an
application with the Board of Governors of the Federal Reserve System (the
"Federal Reserve") under the Bank Holding Company Act of 1956, as amended
("BHC Act"), and approval of same, (B) the filing by Merger Sub and/or the
Company of an application with the Federal Reserve under the Bank Merger Act
and approval of same, (C) the filing by Parent of a Registration Statement on
Form S-4 ("S-4") with the Securities and Exchange Commission ("SEC"), and the
declaration by the SEC of its effectiveness, (D) the filing by the Company of
the Certificate of Merger with the Secretary of State of the State of Ohio,
and appropriate documents with the relevant authorities of other states in
which the Company is qualified to do business, (E) the filing of applications
by Parent and/or Merger Sub with the Ohio Superintendent of Financial
Institutions (the "Superintendent"), and approval thereof, (F) the filing of
an application by Parent with the Commissioner of the Department of Financial
Institutions of the Commonwealth of Kentucky ("KDFI"), and approval thereof,
(G) notices to or filings with the Small Business Administration ("SBA"), or
the Internal Revenue Service (the "IRS") or the Pension Benefit Guaranty
Corporation (the "PBGC") with respect to any Benefit Plans, and (H) such
filings and approvals as may be required under the "blue sky" laws of various
states.

(d) FINANCIAL STATEMENTS. The Company has made available to
Parent true and complete copies of the audited statements of financial
position and the related statements of operations, shareholders' equity and
cash flows (including the related notes thereto) of the Company for the years
ended December 31, 1996, 1995 and 1994, certified by Grant Thornton LLP,
independent certified public accountants (the "Company Audited Financial
Statements"). The Company also has made available to Parent true and
complete copies of the monthly and quarterly unaudited statements of
financial position and the related statements of operations, shareholders'
equity and cash flows of the Company for the monthly and quarterly periods
ended during the period of January 1, 1997 through April 30, 1997 (the
"Company Unaudited Financial Statements"). (The Company Audited Financial
Statements, the Company Unaudited Financial Statements and those audited and
unaudited financial statements that the Company hereafter shall deliver to
Parent pursuant to Section 5.5 are collectively referred to as the "Company
Financial Statements"). Except as set forth in the Company Letter, the
Company Financial Statements are or, as the context requires shall be, in
compliance as to form in all material respects with applicable accounting
requirements, have been (or shall be) prepared in accordance with generally
accepted accounting principles applied on a consistent basis during the
periods involved (except as otherwise noted therein) and fairly (or shall

fairly) present (subject, in the case of unaudited financial statements, to
normal year-end audit adjustments and any other adjustments described therein
which individually or in the aggregate will not be material in amount or
effect) the financial position of the Company as of their respective dates
and the results of its operations and cash flows for the periods presented
therein.

(e) ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as set forth in
the Company Letter, since December 31, 1996, the Company has not incurred any
material liability or obligation (indirect, direct or contingent), except in
the ordinary course of its business consistent with past practices, taken any
of the prohibited actions set forth in Section 4.1, or suffered any change,
or any event involving a prospective change, in its business, financial
condition or results of operations that has had, or is reasonably likely to
have, a Material Adverse Effect on the Company.

(f) ABSENCE OF UNDISCLOSED LIABILITIES. Except as set forth in
the Company Letter or reflected or reserved against in the Company Audited
Financial Statements for the 1996 year, the Company has no obligations or
liabilities (contingent or otherwise) that might reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect on the
Company. The Company has set forth in the Company Letter, as of the date
hereof, all interest rate and currency exchange agreements, and all trading
positions regarding any form or type of derivative financial product the
value of which is linked to, or derived from, the value of an underlying
asset, rate or index.

(g) ALLOWANCE FOR CREDIT LOSSES. Except as set forth in the
Company Letter, the allowance for credit losses (the "Allowance") shown on
the statements of financial position of the Company as of April 30, 1997
included in the Company Financial Statements was, and the Allowance shown on
each of the statements of condition of the Company as of a date subsequent to
the execution of this Agreement will be, in each case as of the dates
thereof, determined in accordance with safe and sound banking practices and
the guidelines and policies of the FDIC, and are (and will be) adequate, in
the reasonable judgment of management, to provide for losses relating to or
inherent in the loan and lease portfolios (including accrued interest
receivable) of the Company and other extensions of credit (including letters
of credit and commitments to make loans or extend credit) by the Company.

(h) ENVIRONMENTAL MATTERS. Except as set forth in the Company
Letter, to the knowledge of the Company, neither the Company nor any
properties presently or previously owned or operated by the Company has been
or is in violation of or liable under any Environmental Law (as hereinafter
defined). There are no actions, suits or proceedings, or demands, claims,
notices or, to the knowledge of the Company, investigations (including
notices,

demand letters or requests for information from any environmental agency),
instituted or pending, or to the knowledge of the Company, threatened,
relating to the liability of any properties owned or operated by the Company
under any Environmental Law. "Environmental Law" means any federal, state or
local law, statute, ordinance, rule, regulation, code, license, permit,
authorization, approval, consent, order, judgment, decree, injunction or
agreement between the Company and any Governmental Entity relating to (i) the
protection, preservation or restoration of the environment (including,
without limitation, air, water vapor, surface water, ground water, drinking
water supply, surface soil, subsurface soil, plant and animal life or any
other natural resource), and/or (ii) the use, storage, recycling, treatment,
generation, transportation, processing, handling, labeling, production,
release or disposal of any substance presently listed, defined, designated or
classified as hazardous, toxic, radioactive or dangerous, or otherwise
regulated, whether by type or by quantity, including any material containing
any such substance as a component; and includes, without limitation, the
Resource Conservation and Recovery Act, the Clean Air Act, the Federal Water
Pollution Control Act, the Toxic Substances Control Act and the Comprehensive
Environmental Response, Compensation and Liability Act.

(i) INFORMATION SUPPLIED. None of the information supplied or to
be supplied by the Company for inclusion in (i) the S-4 to be filed with the
SEC by Parent in connection with the issuance of Parent Common Stock in the
Merger will, at the time the S-4 is filed with the SEC and at the time it
becomes effective under the Securities Act, contain any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, and (ii) the proxy
statement of the Company contained within the S-4 (the "Proxy Statement")
will, at the date of mailing to shareholders of the Company and at the time
of the meeting of shareholders of the Company to be held in connection with
the Merger, contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary in order to make
the statements therein, in light of the circumstances under which they were
made, not misleading. The Proxy Statement (except for such portions thereof
that relate only to Parent and Merger Sub) will comply as to form in all
material respects with the provisions of the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), and the rules and regulations thereunder, to
the extent applicable. The information set forth in the Company Letter by
the Company for purposes of this Agreement is true and accurate in all
material respects.

(j) NO DEFAULT. Except as set forth in the Company Letter, no
Violation exists on the part of the Company with respect to any term, condition
or provision of (i) its articles of incorporation or bylaws, (ii) any note,
mortgage, indenture, other

evidence of indebtedness, guaranty, license, agreement or other contract,
instrument or contractual obligation to which the Company is now a party or
by which it or any of its properties or assets may be bound, or (iii) any
order, writ, injunction or decree applicable to the Company, except for
possible Violations that, individually or in the aggregate, do not, and,
insofar as reasonably can be foreseen, in the future will not, have a
Material Adverse Effect on the Company.

(k) COMPLIANCE WITH LICENSES, PERMITS AND APPLICABLE LAWS. The
Company has received such certificates, permits, licenses, franchises,
consents, approvals, orders, authorizations and clearances from appropriate
governmental entities (the "Company Permits") as are necessary to own or
lease and operate its properties and to conduct its business as currently
owned or leased and conducted, and all such Company Permits are valid and in
full force and effect. The Company is in compliance in all material respects
with its obligations under the Company Permits, with only such exceptions as,
individually or in the aggregate, would not reasonably be expected to have a
Material Adverse Effect on the Company, and no event has occurred that
allows, or after notice of lapse of time, or both, would allow, revocation or
termination of any material Company Permit. Except as set forth in the
Company Letter, the business of the Company is not being conducted in
violation of any law, ordinance or regulation of any Governmental Entity,
except for possible violations that individually or in the aggregate do not,
and in the future will not, have a Material Adverse Effect on the Company.
Except for routine examinations by Governmental Entities charged with the
supervision or regulation of banks or bank holding companies or the insurance
of bank deposits ("Bank Regulators"), as of the date of this Agreement, to
the knowledge of the Company, no investigation by any Governmental Entity
with respect to the Company is pending or threatened.

(l) ACTIONS AND PROCEEDINGS. Except as set forth in the Company
Letter, there are no outstanding orders, judgments, injunctions, awards or
decrees of any Governmental Entity against or affecting the Company, any of
its current or former directors, employees, consultants, agents or
shareholders, as such, any of its properties, assets or business or any
Company Benefit Plan (as defined in Section 3.1(o)). Except as set forth in
the Company Letter, there are no actions, suits or claims or legal,
administrative or arbitration proceedings or, to the knowledge of the
Company, investigations pending or threatened, against or affecting the
Company, any of its current or former directors, officers, employees,
consultants, agents or shareholders, as such, any of its properties, assets
or business or any Company Benefit Plan that if brought (if not now pending)
would reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect on the Company. There are no actions, suits or
claims or legal, administrative or arbitration proceedings or, to the
knowledge of the Company, investigations or labor disputes

pending or threatened, against or affecting the Company, any of its current
or former directors, officers, employees, consultants, agents or
shareholders, as such, any of its properties, assets or business or any
Company Benefit Plan relating to the transactions contemplated by this
Agreement.

(m) TAXES. To the Company's knowledge, the Company has filed all
tax returns required to be filed by it and has paid, or has set up an
adequate reserve for the payment of, all Taxes required to be paid as shown
on such returns, and the most recent Company Financial Statements reflect an
adequate reserve for all Taxes payable by the Company accrued through the
date of such financial statements. No material deficiencies for any Taxes
have been proposed, asserted or assessed against the Company that are not
adequately reserved for. Except with respect to claims for refund, the
federal income tax returns of the Company have been examined by and settled
with the IRS, or the statute of limitations with respect to such years has
expired (and no waiver extending the statute of limitations has been
requested or granted), for all years through 1993. For the purpose of this
Agreement, the term "Taxes" (including, with correlative meaning, the term
"tax") shall include, except where the context otherwise requires, all
federal, state, local and foreign income, profits, franchise, gross receipts,
payroll, sales, employment, unemployment (including unemployment insurance
premiums or contributions), use, property, withholding, excise, occupancy,
and other taxes, duties or assessments of any nature whatsoever, together
with all interest, penalties and additions imposed with respect to such
amounts.

(n) CERTAIN AGREEMENTS. Except as set forth in the Company
Letter, and except for this Agreement, as of the date of this Agreement, the
Company is not a party to any oral or written (i) employment or other
agreement, contract, commitment, program, policy or arrangement requiring the
Company to pay compensation (including any salary, bonus, deferred
compensation, incentive compensation, severance, vacation or sick pay, or any
other fringe benefit payment) or any other type of remuneration to any
Person, (ii) agreement or plan, including any stock option plan, any of the
benefits of which will be increased, or the vesting of the benefits of which
will be accelerated, by the occurrence of any of the transactions
contemplated by this Agreement, or the value of any of the benefits of which
will be calculated on the basis of any of the transactions contemplated by
this Agreement, (iii) contract or agreement not terminable on 30 days' or
less notice involving the payment of more than $5,000 in any 12 month period;
(iv) contract or agreement that materially limits the ability of Company to
compete in any line of business or with any Person or in any geographic area
or during any period of time, or (v) any other material contract the
disclosure and inclusion as an exhibit of which would be required by Item 601
of Regulation S-K of the SEC if the Company were a corporation making filings
with the SEC under

the periodic reporting requirements of Section 13 of the Exchange Act and the
rules and regulations of the SEC thereunder.

(o) BENEFIT PLANS.

(i) The Company has disclosed in the Company Letter each
employee benefit plan (including, without limitation, any "employee benefit
plan," as defined in Section 3(3) of the Employee Retirement Income Security
Act of 1974, as amended, ("ERISA")) (all the foregoing being herein called
"Benefit Plans"), maintained or contributed to by the Company (the "Company
Benefit Plans"). The Company will make available to Parent a true and
correct copy of (a) the most recent annual report (Form 5500) filed with the
IRS, (B) each such Company Benefit Plan, (C) each trust agreement relating to
such Company Benefit Plan, (D) the most recent summary plan description for
each Company Benefit Plan for which a summary plan description is required,
(E) the most recent actuarial report or valuation relating to a Company
Benefit Plan subject to Title IV of ERISA and (F) the most recent
determination letter issued by the IRS with respect to any Company Benefit
Plan qualified under Section 401(a) of the Code.

(ii) With respect to the Company Benefit Plans, individually
and in the aggregate, except as set forth in the Company Letter, no event has
occurred and, to the knowledge of the Company, there exists no condition or
set of circumstances, in connection with which the Company could be subject
to any liability (except liability for benefits, claims and funding
obligations payable in the ordinary course) under ERISA, the Code or any
other applicable law.

(p) SUBSIDIARIES. The Company has no Subsidiaries.

(q) AGREEMENTS WITH BANK REGULATORS. The Company is not a party
to any written agreement or memorandum of understanding with, or a party to
any commitment letter or similar undertaking to, or subject to any order or
directive by, nor is it a recipient of any extraordinary supervisory letter
from, any Bank Regulator which restricts materially the conduct of its
business, or in any manner relates to its capital adequacy, its credit
policies or its management, nor has the Company been advised by any Bank
Regulator that it is contemplating issuing or requesting (or is considering
the appropriateness of issuing or requesting) any such order, directive,
agreement, memorandum of understanding, extraordinary supervisory letter,
commitment letter or similar submission.

(r) VOTE REQUIRED. The affirmative vote of the holders of
two-thirds of the outstanding shares of Company Common Stock entitled to vote
thereon is the only vote of the holders of any class or series of Company
capital stock necessary to approve this Agreement and the transactions
contemplated hereby.

(s) PROPERTIES.

(i) Except as set forth in the Company Letter, the Company
(A) has good, valid and marketable title to all the properties and assets
reflected in the latest audited financial statements included in the Company
Financial Statements as being owned by the Company, or acquired after the
date thereof (except properties sold or otherwise disposed of since the date
thereof in the ordinary course of business), free and clear of all mortgages,
pledges, security interests, claims, liens, charges, options or other
encumbrances of any nature whatsoever (including, without limitation, in the
case of real property, easements and rights-of-way) (collectively, "Liens"),
except (x) statutory Liens securing payments not yet due, (y) Liens on assets
of the Company incurred in the ordinary course of a commercial banking
business and (z) such Liens and imperfections or irregularities of title that
do not materially affect the use of the properties or assets subject thereto
or affected thereby or otherwise materially impair business operations at
such properties, and (B) is the lessee of all leasehold estates reflected in
the latest audited financial statements included in the Company Financial
Statements or acquired after the date thereof (except for leases that have
expired by their terms since the date thereof) and is in possession of the
properties purported to be leased thereunder, and each such lease is valid
without default thereunder by the lessee or, to the Company's knowledge, the
lessor.

(ii) The Company has set forth in the Company Letter the
street address of all real property currently owned by the Company, including
properties held by the Company as a result of foreclosure or repossession or
carried on the Company's books as "other real estate owned" (the "Current
Real Properties"). Except as set forth in the Company Letter, the Current
Real Properties are in generally good condition and have been well maintained
in accordance with reasonable and prudent business practices applicable to
like facilities. Except as set forth in the Company Letter, there are no
proceedings, claims, disputes or conditions affecting any of the Current Real
Properties or leasehold interests of the Company that, insofar as reasonably
can be foreseen, may curtail or interfere with the use of such property.

(t) CORPORATE DOCUMENTS, BOOKS AND RECORDS. The Company has made
available to Parent true and complete copies of the articles of incorporation
and code of regulations of the Company. The minute books of the Company
contain complete and accurate records in all material respects of all
meetings and other corporate actions of its shareholders and Board of
Directors (including committees of the Board of Directors). The stock
transfer records of the Company are, to the knowledge of the Company,
complete and accurate in all material respects.

(u) INSURANCE. The Company maintains with financially sound and
reputable insurance companies insurance policies and bonds in force in such
amounts and against such liabilities and risks as companies engaged in a
similar business, in accordance with good business practice, customarily
would be insured. Except as set forth in the Company Letter, to the
Company's knowledge, the Company is not liable for any material, retroactive
premium adjustments. All such insurance policies and bonds are valid,
enforceable and in full force and effect and, except as set forth in the
Company Letter, the Company has not received any notice of premium increases
or cancellation and, to the Company's knowledge, no grounds for any
cancellation notice exists. Except as set forth in the Company Letter, since
December 31, 1994, the Company has not failed to make a timely claim with
respect to any matter giving rise to a claim or potential claim under any
such insurance policies and bonds where such failure to make a timely claim
would have a Material Adverse Effect on the Company.

(v) POTENTIAL COMPETING INTERESTS. Except as set forth in the
Company Letter, (i) no director, officer or key employee or, to the Company's
knowledge, any beneficial owner of 10% or more of any class of capital stock
(a "Ten Percent Owner") of the Company directly or indirectly beneficially
owns a 5% or more interest in any institution that is engaged in the business
of making loans and/or taking deposits, (ii) neither the Company, nor any
director, officer or key employee of the Company has any interest, direct or
indirect, in any contract or agreement with, commitment or obligation of or
to, or claim against, the Company (excluding contracts, agreements or
obligations with respect to monies borrowed from, or claims for deposits
maintained with, the Company in the ordinary course of a commercial banking
business consistent with safe and sound banking practices), and (iii) the
Company does not use any real or personal property in which any director,
officer or key employee or, to the Company's knowledge, Ten Percent Owner of
the Company directly or indirectly beneficially owns a 5% or more interest in
any such real or personal property.

(w) POOLING OF INTERESTS. To the Company's knowledge, the Company
has not taken or failed to take any action that would prevent the accounting
for the Merger as a pooling of interests in accordance with Accounting
Principles Board Opinion No. 16, the interpretive releases issued pursuant
thereto, and the pronouncements of the SEC.

3.2 REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER Sub. Each of
Parent and Merger Sub jointly and severally represent and warrant to the
Company as follows:

(a) ORGANIZATION, STANDING AND POWER. Parent is a corporation
duly organized, validly existing and in good standing under the laws of the
Commonwealth of Kentucky. Each of Parent's Subsidiaries is a corporation
duly organized, validly existing and

in good standing under the laws of its state of incorporation or
organization. Each of Parent and its Subsidiaries has all requisite power
and authority to own, lease and operate its properties and to carry on its
business as now being conducted, and is duly qualified and in good standing
to do business in each jurisdiction in which the nature of its business or
the ownership or leasing of its properties makes such qualification
necessary, except where the failure to be so qualified would not reasonably
be expected to have, individually or in the aggregate, a Material Adverse
Effect on Parent.

(b) CAPITAL STRUCTURE.

(i) The authorized capital stock of Parent consists of
10,000,000 shares of common stock, without par value ("Parent Common Stock"),
and 1,000,000 shares of preferred stock, without par value ("Parent Preferred
Stock"), of which 4,209,090 shares of Common Stock are outstanding, 100,000
shares of Common Stock are reserved for issuance under Parent's 1996 Employee
Stock Ownership Incentive Plan and no shares of Common Stock are held by
Parent in its treasury. There are no shares of Parent Preferred Stock
outstanding, reserved for issuance or held by Parent in its treasury.

(ii) No Voting Debt of Parent is issued or outstanding. All
outstanding shares of Parent Common Stock are duly authorized, validly
issued, fully paid and nonassessable and not subject to preemptive rights.

(iii) Except as set forth in the Parent SEC Documents (as
defined in Section 3.2(d)) or the letter dated and delivered to the Company
on the date hereof (the "Parent Letter"), which relates to this Agreement and
is designated therein as the Parent Letter, there is no option, warrant,
call, right (including any preemptive right), commitment or any other
agreement of any character that Parent or any Subsidiary is a party to, or
may be bound by, requiring it to issue, transfer, sell, purchase or redeem
any shares of capital stock, any Voting Debt, or any securities or rights
convertible into, exchangeable for, or evidencing the right to subscribe for
any shares of capital stock of Parent or any Subsidiary, or to provide funds
to, or make an investment (in the form of a loan, capital contribution or
otherwise) in, any of Parent's Subsidiaries or (excepting loans made in the
ordinary course of a commercial banking business) any other Person.

(iv) Except as set forth in the Parent SEC Documents or the
Parent Letter, and except for this Agreement, there is no voting trust or
other agreement or understanding to which Parent or any Subsidiary is a
party, or may be bound by, with respect to the voting of the capital stock of
Parent or any Subsidiary.

(v) Since December 31, 1994, except as set forth in the
Parent SEC Documents or the Parent Letter, Parent has not (A) issued or
permitted to be issued any shares of capital stock, or securities exercisable
for or convertible into shares of capital stock, of Parent or any Subsidiary;
(B) repurchased, redeemed or otherwise acquired, directly or indirectly
through any Subsidiary, any shares of capital stock of Parent or any
Subsidiary (other than the acquisition of trust account shares); or
(C) declared, set aside, made or paid to shareholders of Parent dividends or
other distributions on the outstanding shares of capital stock of Parent,
other than regular quarterly cash dividends.

(i) Each of Parent and Merger Sub has all requisite corporate
power and authority to execute and deliver this Agreement and to consummate
the transactions contemplated hereby. This Agreement and the consummation by
Parent and Merger Sub of the transactions contemplated hereby have been duly
and validly authorized by the Board of Directors of Parent and Merger Sub,
and by Parent as the shareholder of Merger Sub, and no other corporate
proceedings on the part of Parent or Merger Sub are necessary to authorize
this Agreement or to consummate the transactions contemplated hereby. This
Agreement has been duly and validly executed and delivered by Parent and
Merger Sub, and assuming this Agreement constitutes the valid and binding
agreement of the Company, constitutes the valid and binding agreement of
Parent and Merger Sub, enforceable in accordance with its terms, except that
the enforcement hereof may be limited by (A) bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect,
relating to creditors' rights generally, (B) general principles of equity
(regardless of whether enforceability is considered in a proceeding in equity
or at law) and (C) judicial discretion.

(ii) The execution and delivery of this Agreement does not,
and the consummation of the transactions contemplated hereby will not, create
any Violation under any provisions of the articles of incorporation or bylaws
of Parent or any Subsidiary or, except as set forth in the Parent Letter and
subject to obtaining or making the consents, approvals, orders,
authorizations, registrations, declarations and filings referred to in
Subsection (iii) below, result in any Violation of any loan or credit
agreement, note, mortgage, indenture, lease, Benefit Plan (as defined in
Section 3.1(o)) or other agreement, obligation, instrument, permit,
concession, franchise, license, judgment, order, decree, statute, law,
ordinance, rule or regulation applicable to Parent or any Subsidiary or their
respective properties or assets.

(iii) No consent, approval, order or authorization of, or
registration, declaration or filing with, any Governmental Entity is required
by or with respect to Parent or any Subsidiary in connection with the
execution and delivery of this Agreement, or

the consummation by Parent and Merger Sub of the transactions contemplated
hereby, the failure to obtain which would have a Material Adverse Effect on
Parent, except for (A) the filing by Parent of an application with the
Federal Reserve under the BHC Act, and approval of same, (B) the filing by
Merger Sub and/or the Company of an application with the Federal Reserve
under the Bank Merger Act and approval of same, (C) the filing by Parent of
the S-4 with the SEC, and the declaration by the SEC of its effectiveness,
(D) the filing by the Company of the Certificate of Merger with the Secretary
of State of the State of Ohio and appropriate documents with the relevant
authorities of other states in which the Company or any Subsidiary is
qualified to do business, (E) the filing of applications by Parent and/or
Merger Sub with the Superintendent, and the approval thereof, (F) the filing
of an application by Parent with the KDFI, and approval thereof, (G) notices
to or filings with the SBA, or the IRS or the PBGC with respect to any
Benefit Plans, and (H) such filings and approvals as may be required under
the "blue sky" laws of various states.

(d) SEC DOCUMENTS: FINANCIAL STATEMENTS. Parent has made
available to the Company each document filed by it since December 31, 1994
with the SEC under the Securities Act or the Exchange Act, including without
limitation, (i) Parent's Annual Report on Form 10-K for the year ended
December 31, 1996, (ii) Parent's Quarterly Report on Form 10-Q for the period
ended March 31, 1997, and (iii) Parent's definitive proxy statement for its
1997 Annual Meeting of Shareholders held May 6, 1997, each in the form
(including exhibits and any amendments) filed with the SEC (collectively, the
"Parent SEC Documents"). As of their respective dates, each of the Parent
SEC Documents did not, and each of the Parent SEC Documents filed with the
SEC subsequent to the date hereof will not, contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein
or necessary to make the statements made therein, in light of the
circumstances in which they were made, not misleading, provided, that Parent
makes no representation with respect to information supplied by the Company
for use in Parent SEC Documents after the date hereof. Each of the
consolidated balance sheets included in or incorporated by reference into the
Parent SEC Documents (including their related notes and schedules) fairly
presents the consolidated financial condition of Parent and its consolidated
Subsidiaries as of its date and each of the consolidated statements of income
and of changes in financial position included or incorporated by reference
into the Parent SEC Documents (including any related notes and schedules)
fairly presents the results of operations, retained earnings and changes in
financial position, as the case may be, of Parent and its consolidated
Subsidiaries for the periods set forth therein (subject, in the case of
unaudited statements to normal year-end adjustments and any other adjustments
described therein which individually or in the aggregate will not be material
in amount or effect), in each case in accordance with

generally accepted accounting principals consistently applied during the
periods involved, except as may be noted therein.

(e) ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as set forth in
the Parent Letter, since December 31, 1996, neither Parent nor any
Subsidiary has incurred any material liability or obligation (indirect,
direct or contingent), except in the ordinary course of its business
consistent with past practices, or suffered any change, or any event
involving a prospective change, in its business, financial condition or
results of operations that has had, or is reasonably likely to have, a
Material Adverse Effect on Parent.

(f) ABSENCE OF UNDISCLOSED LIABILITIES. Except as set forth in
the Parent Letter or disclosed in the Parent SEC Documents, neither Parent
nor any Subsidiary has any obligations or liabilities (contingent or
otherwise) that might reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect on Parent. Parent has set forth in the
Parent Letter, as of the date hereof, all interest rate and currency exchange
agreements, and all trading positions regarding any form or type of
derivative financial product the value of which is linked to, or derived
from, the value of an underlying asset, rate or index.

(g) INFORMATION SUPPLIED. None of the information supplied or to
be supplied by Parent for inclusion in (i) the S-4 to be filed with the SEC
by Parent in connection with the issuance of Parent Common Stock in the
Merger will, at the time the S-4 is filed with the SEC and at the time it
becomes effective under the Securities Act, contain any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, and (ii) the Proxy
Statement will, at the date of mailing to shareholders of the Company and at
the time of the meeting of shareholders of the Company to be held in
connection with the Merger, contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or necessary
in order to make the statements therein, in light of the circumstances under
which they were made, not misleading. The Proxy Statement (except for such
portions thereof that relate only to the Company) will comply as to form in
all material respects with the provisions of the Exchange Act and the rules
and regulations thereunder. The information set forth in the Parent Letter
by Parent for purposes of this Agreement is true and accurate in all material
respects.

(h) CORPORATE DOCUMENTS, BOOKS AND RECORDS. Parent has made
available to the Company true and complete copies of the articles of
incorporation and bylaws of Parent and each Subsidiary. The minute books of
Parent and each Subsidiary contain complete and accurate records in all
material respects of all meetings and other

corporate actions of its shareholders and Board of Directors (including
committees of the Board of Directors). The stock transfer records of Parent
and each Subsidiary are, to the knowledge of Parent, complete and accurate in
all material respects.

(i) POOLING OF INTERESTS. To Parent's knowledge, neither Parent
nor any Subsidiary has taken or failed to take any action that would prevent
the accounting for the Merger as a pooling of interests in accordance with
Accounting Principles Board Opinion No. 16, the interpretive releases issued
pursuant thereto, and the pronouncements of the SEC.

(j) INDEPENDENT OPERATION. It has been the practice of Parent
since its formation to maintain the separate charters of commercial banks
that become affiliated with, and Subsidiaries of, Parent. It has also been
the practice of Parent to continue the directorships of directors and the
employment of officers and employees of commercial banks that become
affiliated with, and Subsidiaries of, Parent following consummation of
transactions resulting in such affiliations with Parent.

ARTICLE IV

CONDUCT OF THE COMPANY PRIOR TO CLOSING

4.1 CONDUCT OF BUSINESS.

(a) Except as set forth in the Company Letter, the Company agrees
that during the period from the date of this Agreement to the Effective Time
(unless Parent shall otherwise agree in writing and except as otherwise
contemplated by this Agreement), the Company will conduct its operations
according to its ordinary and usual course of business consistent with past
practice and, to the extent consistent therewith, with no less diligence and
effort than would be applied in the absence of this Agreement, seek to
preserve intact its current business organization, keep available the service
of its current directors, officers and employees and preserve its
relationships with customers, suppliers and others having business dealings
with it to the end that goodwill and ongoing business shall not be impaired
in any material aspect at the Effective Time. Without limiting the
generality of the foregoing, and except as otherwise permitted in this
Agreement prior to the Effective Time or except as set forth in the Company
Letter, the Company will not, without the prior written consent of Parent:

(i) issue, sell, grant, dispose of, pledge or otherwise
encumber, or authorize or propose the issuance, sale, disposition or pledge
or other encumbrance of (A) any additional shares of capital stock of any
class (including shares of Company Common Stock), or any securities or rights
convertible into,

exchangeable for, or evidencing the right to subscribe for any shares of
capital stock, or any rights, warrants, options, calls, commitments or any
other agreements of any character to purchase or acquire any shares of
capital stock or any securities or rights convertible into, exchangeable for,
or evidencing the right to subscribe for, any shares of capital stock, or any
other ownership interest (including, without limitation, any phantom
interest), or (B) any other securities in respect of, in lieu of, or in
substitution for, shares of Company Common Stock outstanding on the date
hereof;

(ii) redeem, purchase or otherwise acquire, or propose to
redeem, purchase or otherwise acquire, any of its outstanding shares of
Company Common Stock (except for the acquisition of trust account shares);

(iii) split, combine, subdivide or reclassify any shares of
Company Common Stock or declare, set aside for payment or pay any dividend,
or make any other actual, constructive or deemed distribution, whether in
cash, stock, property or otherwise, in respect of any shares of Company
Common Stock or otherwise make any payments to shareholders in their capacity
as such; except that if the Effective Time has not occurred before the record
date for dividends on Parent Common Stock for the calendar quarter ended
December 31, 1997 the Company may declare a special dividend on Company
Common Stock to holders of record of such shares as of the record date
established therefor (which record date shall be prior to the date of the
Effective Time) with a payment date that is the same as the Closing Date, in
an amount per share equal to the product of (x) 4.33 multiplied by (y) the
dividend per share declared on Parent Common Stock by Parent for the calendar
quarter ended December 31, 1997;

(iv) adopt a plan of complete or partial liquidation,
dissolution, merger, consolidation, restructuring, recapitalization or other
reorganization of the Company (other than the Merger);

(v) adopt any amendments to its articles of incorporation or
code of regulations;

(vi) make any acquisition or disposition of assets or
securities, except in the ordinary course of business consistent with past
practices;

(vii) incur any indebtedness for borrowed money or guarantee
any such indebtedness or make any loans, advances or capital contributions
to, or investments in, any other Person, other than in the ordinary course of
a commercial banking business consistent with past practices, it being
understood and agreed that the incurrence of indebtedness in the ordinary
course of a commercial banking business shall include the creation of deposit

liabilities, purchases of federal funds, sales of certificates of deposit and
entering into repurchase agreements;

(viii) offer any new deposit or loan product or service or
change its lending, investment, liability management, loan loss provision,
loan loss charge-off or other material banking policies;

(ix) grant any increases in the compensation of any of its
directors, officers or employees, except in the ordinary course of business
and in accordance with past practice or as may be approved on a case by case
basis by Parent;

(x) pay or agree to pay any pension, retirement allowance,
severance or other employee benefit not required or contemplated by any of
the existing Company Benefit Plans or any agreements or arrangements as in
effect on the date hereof to any such director, officer or employee, whether
past or present;

(xi) enter into any new or amend any existing employment or
severance or termination agreement with any director, officer or employee;

(xii) except in the ordinary course of business consistent
with past practice or as may be required to comply with applicable law,
become obligated under any new Benefit Plan or amend any Company Benefit Plan
in existence on the date hereof if such amendment would have the effect of
materially enhancing any benefits thereunder;

(xiii) make any capital expenditures or commitments for any
capital expenditures, other than capital expenditures or commitments for any
capital expenditures set forth in the Company Letter;

(xiv) make any material changes in its customary methods of
marketing;

(xv) take, or agree to commit to take, any action that would
make any representation or warranty of the Company contained herein
inaccurate in any respect at, or as of any time prior to, the Effective Time;
or

(xvi) change its method of accounting in effect at December
31, 1996, except as required by changes in generally accepted accounting
principles as concurred in by each party's independent auditors, or change
its fiscal year;

(xvii) take any action that would, or reasonably might be
expected to, adversely affect the ability of the Company or Parent to obtain
any of the Requisite Regulatory Approvals (as

defined in Section 6.1(b)) without imposition of a condition or restriction
of the type referred to in Section 6.1(f);

(xviii) authorize, recommend, propose or announce an intention
to do any of the foregoing, or enter into any contract, agreement, commitment or
arrangement to do any of the foregoing.

4.2 ACQUISITION PROPOSALS.

(a) The Company shall not, and the Company shall direct and use its
best efforts to cause its officers, directors, employees, agents and
representatives (including without limitation any attorney, accountant,
investment banker or other advisor retained by it) not to, initiate, solicit
or encourage, directly or indirectly, any inquiries or the making or
implementation of any proposal or offer (including, without limitation, any
proposal or offer to its shareholders) with respect to a merger, acquisition,
consolidation or similar transaction involving, or any purchase of all or any
significant portion of the assets or any equity securities of, the Company
(any such proposal or offer being hereinafter referred to as an "Acquisition
Proposal") or engage in any negotiations or discussions with, or furnish any
information or data to, any third party relating to an Acquisition Proposal.
The Company and its officers, directors, employees, agents and
representatives shall immediately cease any existing discussions or
negotiations with any parties conducted heretofore with respect to any
Acquisition Proposal.

(b) Notwithstanding anything to the contrary contained in this
Section 4.2, the Company and the Board of Directors of the Company (A) may
furnish information to, and participate in discussions or negotiations with
any third party that after the date hereof submits an unsolicited bona fide
written Acquisition Proposal to the Company if the Company's Board of
Directors determines in good faith, based upon the written advice of outside
legal counsel, that the failure to furnish such information or participate in
such discussions or negotiations may reasonably constitute a breach of the
Board's fiduciary duties under applicable law, and (B) shall be permitted to
(y) take and disclose to the Company's shareholders a position with respect
to the Merger or an Acquisition Proposal, or amend or withdraw such position,
or (z) make disclosure to the Company's shareholders, in each case either
with respect to or as a result of an Acquisition Proposal, if the Company's
Board of Directors determines in good faith, based upon the written advice of
outside legal counsel, that the failure to take such action may reasonably
constitute a breach of the Board's fiduciary duties under applicable law;
PROVIDED, that the Company shall not enter into any acquisition agreement
with respect to any Acquisition Proposal except concurrently with the
termination of this Agreement in accordance with the provisions of Section
7.1(d) and shall not enter into any other agreements with respect to an

Acquisition Proposal except concurrently with such termination unless, and
only to the extent that, such other agreements would facilitate the process
of providing information to, or conducting discussions or negotiations with,
the parties submitting such an Acquisition Proposal, such as confidentiality
and standstill agreements.

ARTICLE V

ADDITIONAL AGREEMENTS

5.1 ACCESS TO INFORMATION. Upon reasonable notice, the Company and
Parent shall each (and Parent shall cause its Subsidiaries to) afford to the
officers, directors, employees, accountants, counsel and other authorized
representatives of the other ("Representatives") reasonable access, during
normal business hours throughout the period prior to the Effective Time, to
its books and records, properties, officers, directors, employees, counsel,
accountants and other representatives, and, during such period, shall (and
Parent shall cause its Subsidiaries to) make available to such
Representatives (i) a copy of each report, schedule, registration statement
and other document filed or received by it during such period pursuant to the
requirements of federal securities laws or federal or state banking laws
(other than reports or documents that such party is not permitted to disclose
under applicable law) and (ii) all other information concerning its business,
properties and personnel and all financial operating and other data as may
reasonably be requested. The parties will hold any such information that is
non-public in confidence and, without limitation on its obligations under the
preceding clause, Parent will hold any such information in confidence to the
extent required by, and in accordance with, the provisions of the
Confidentiality Agreement dated March 26, 1997 between Parent and the Company
(the "Confidentiality Agreement"), which is incorporated herein by reference.
No investigation by either Parent or Merger Sub, on the one hand, or the
Company on the other hand, shall affect the representations and warranties of
the other, except to the extent such representations and warranties are by
their terms qualified by information set forth in the Parent Letter (in the
case of Parent and Merger Sub) or the Company Letter (in the case of the
Company) to the other party.

5.2 PREPARATION OF S-4 AND THE PROXY STATEMENT. Parent shall prepare
and file with the SEC the S-4, in which the Proxy Statement will be included
as a prospectus. Parent shall use all reasonable efforts to have the S-4
declared effective under the Securities Act as promptly as practicable after
such filing. Parent shall also take any action (other than qualifying to do
business in any jurisdiction in which it is now not so qualified) required to
be taken under any applicable state securities laws in connection with the
issuance of Parent Common Stock in the Merger and the Company shall furnish
all information concerning the Company and the

holders of Company Common Stock as may be reasonably requested in connection
with any such action.

5.3 SHAREHOLDER MEETING. The Company shall duly call, give notice of,
convene and hold a meeting of its shareholders to be held for the purpose of
voting upon the approval of this Agreement and the transactions contemplated
hereby. Unless the Company has determined to recommend an Acquisition Proposal
in accordance with Section 4.2(ii), the Company will, through its Board of
Directors, unanimously recommend to its shareholders approval of this Agreement
and the transactions contemplated hereby, subject to its receipt of a fairness
opinion from its financial advisor to the effect that the consideration to be
received by the shareholders of the Company pursuant to Section 2.1 is fair from
a financial point of view and such opinion shall not have been withdrawn or
materially modified. The Company shall cooperate with Parent with respect to
the timing of such meeting and shall use its best efforts to hold such meeting
as soon as reasonably practicable after the date on which the S-4 becomes
effective.

5.4 REASONABLE EFFORTS. Each of the Company and Parent shall, and Parent
shall cause its Subsidiaries to, use all reasonable efforts to take, or cause to
be taken, all actions necessary, proper or advisable to comply promptly with all
legal requirements that may be imposed on such party or (in the case of Parent)
its Subsidiaries with respect to the Merger and to consummate and make effective
the transactions contemplated by this Agreement, subject to the appropriate vote
of shareholders of the Company described in Section 3.2(r), including using all
reasonable efforts (i) to obtain (and to cooperate with the other party to
obtain) any necessary or appropriate consent, authorization, order or approval
of, or any exemption by, any Governmental Entity and/or any other public or
private third party in connection with the Merger and the transactions
contemplated by this Agreement, (ii) to effect all necessary registrations,
filings and submissions and (iii) to lift any injunction or other legal bar to
the Merger (and, in such case, to proceed with the Merger as expeditiously as
possible), subject, however, to the requisite vote of the shareholders of the
Company.

5.5 POST-APRIL 30, 1997 COMPANY FINANCIAL STATEMENTS. The Company shall
make available to Parent true and complete copies of the following:

(a) UNAUDITED FINANCIAL STATEMENTS. Any monthly and quarterly
unaudited balance sheet and the related statements of income, changes in
shareholders' equity and statements of cash flows of the Company for any monthly
or quarterly period ended subsequent to April 30, 1997 and prior to the
Effective Time; and

(b) AUDITED FINANCIAL STATEMENTS. Any audited balance sheet and the
related statements of income, changes in

shareholders' equity and statements of cash flows of the Company for any year
ended after December 31, 1996 and prior to the Effective Time.

5.6 AFFILIATES.

(a) OF THE COMPANY. At least 30 days prior to the Closing Date,
the Company shall deliver to Parent a list of names and addresses of those
persons who were, in the Company's reasonable judgment, at the record date
for its meeting of shareholders to approve the Merger, "affiliates" (each
such person, an "Affiliate") of the Company within the meaning of Rule 145 of
the rules and regulations promulgated under the Securities Act. The Company
shall provide Parent such information and documents as Parent shall
reasonably request for purposes of reviewing such list. The Company shall
use all reasonable efforts to deliver or cause to be delivered to Parent and
the Company, prior to the Closing Date, from each of the Affiliates of the
Company identified in the foregoing list, an Affiliate Letter in the form
attached hereto as Exhibit 5.6(a). Parent shall be entitled to place legends
as specified in such Affiliate Letters on the certificates evidencing any
Parent Common Stock to be received by such Affiliates pursuant to the terms
of this Agreement, and to issue appropriate stop transfer instructions to the
transfer agent for Parent Common Stock, consistent with the terms of such
Affiliate Letters.

(b) OF PARENT. At least 30 days prior to the Closing Date, Parent
shall deliver to the Company a list of names and addresses of those persons
who were, in Parent's reasonable judgment, at the record date for the meeting
of shareholders of the Company to approve the Merger, Affiliates of Parent.
Parent shall provide the Company such information and documents as the
Company shall reasonably request for purposes of reviewing such list. Parent
shall use all reasonable efforts to deliver or cause to be delivered to
Parent, prior to the Closing Date, from each of the Affiliates of Parent
identified in the foregoing list, an Affiliate Letter in the form attached
hereto as Exhibit 5.6(b).

5.7 EXPENSES. Whether or not the Merger is consummated, all costs and
expenses incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such expense, except
as expressly provided herein and except that expenses incurred in connection
with printing and mailing the Proxy Statement shall be shared equally by
Parent and the Company.

5.8 BROKERS OR FINDERS. Except as set forth in the Company Letter or
the Parent Letter, each of Parent and the Company respectively represents, as
to itself, its Subsidiaries (in the case of Parent) and its affiliates, that
no agent, broker, investment banker, financial advisor or other firm or
person is or will be entitled to any broker's or finder's fee or any other

commission or similar fee in connection with any of the transactions
contemplated by this Agreement. Each party agrees to indemnify the other
party and hold the other party harmless from and against any and all claims,
liabilities or obligations with respect to any fees, commissions or expenses
asserted by any Person on the basis of any act or statement alleged to have
been made by such first party or its Subsidiary or affiliate.

5.9 ADDITIONAL AGREEMENTS. In case at any time after the Effective
Time any further action is necessary or desirable to carry out the purposes
of this Agreement or to vest the Surviving Corporation with full title to all
properties, assets, rights, approvals, immunities and franchises of either of
the Company or Merger Sub, the proper officers and directors of the Company
and Merger Sub shall take all such necessary action.

5.10 INDEMNIFICATION. For a period of three years from and after the
Effective Time, Parent shall indemnify, defend and hold harmless each person
who is now or who becomes prior to the Effective Time, an officer, director
or employee of the Company (each, an "Indemnified Party" and, collectively,
the "Indemnified Parties") against (i) all losses, claims, damages, costs,
expenses, liabilities or judgments or amounts that are paid in settlement
with the approval of Parent (which approval shall not be unreasonably
withheld) of or in connection with any claim, action, suit, proceeding or
investigation based in whole or in part on or arising in whole or in part out
of the fact that such person is or was a director, officer or employee of the
Company, whether pertaining to any matter existing or occurring at or prior
to the Effective Time and whether asserted or claimed prior to, or at or
after, the Effective Time ("Indemnified Liabilities") and (ii) all
Indemnified Liabilities based in whole or in part on, or arising in whole or
in part out of, or pertaining to this Agreement or the transactions
contemplated hereby, in each case to the full extent the Company would have
been permitted under Ohio law and its articles of incorporation and code of
regulations to indemnify such person (and Parent shall pay expenses in
advance of the final disposition of any such action or proceeding to each
Indemnified Party to the full extent permitted by law upon receipt of any
undertaking required by Section 1701.13(E)(5) of the OGCL). Without limiting
the foregoing, in the event any such claim, action, suit, proceeding or
investigation is brought against Indemnified Parties (whether arising before
or after the Effective Time), (i) any counsel retained by the Indemnified
Parties for any period after the Effective Time shall be reasonably
satisfactory to Parent; (ii) after the Effective Time, Parent shall pay all
reasonable fees and expenses of such counsel for the Indemnified Parties
promptly as statements therefor are received; and (iii) after the Effective
Time, Parent will use all reasonable efforts to assist in the vigorous
defense of any such matter, provided that Parent shall not be liable for any
settlement of any claim effected without its written consent, which consent,
however, shall not be unreasonably

withheld. Any Indemnified Party wishing to claim indemnification under this
Section 5.10, upon learning of any such claim, action, suit, proceeding or
investigation, shall promptly notify Parent (but the failure so to notify
Parent shall not relieve it from any liability which it may have under this
Section 5.10 except to the extent such failure materially prejudices Parent),
and shall deliver to Parent the undertaking, if any, required by Section
1701.13(E)(5) of the OGCL. The Indemnified Parties as a group may retain
only one law firm to represent them with respect to each such matter unless
there is, under applicable standards of professional conduct, a conflict on
any significant issue between the positions of any two or more Indemnified
Parties. In any case in which the approval by the Surviving Corporation is
required to effectuate any indemnification, Parent shall cause the Surviving
Corporation to direct, at the election of any Indemnified Party (or, if more
than one Indemnified Party, a majority of the Indemnified Parties), that the
determination of any such approval shall be made by independent counsel
mutually satisfactory to the Surviving Corporation and the Indemnified Party
(or, if applicable, a majority of the Indemnified Parties).

5.11 POOLING AND TAX-FREE REORGANIZATION TREATMENT. Neither Parent
nor the Company shall intentionally cause to be taken any action, whether
before or after the Effective Time, that would disqualify the Merger as a
"pooling of interests" for accounting purposes or as a "reorganization"
within the meaning of Section 368(a) of the Code.

5.12 THE COMPANY'S ESOP. After the Effective Time, the Company shall
maintain the Company's Employee Stock Ownership Plan ("ESOP") only for such
period of time and on such terms and conditions as are set forth in Exhibit
5.12.

ARTICLE VI

CONDITIONS PRECEDENT

6.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER. The
respective obligation of each party to effect the Merger shall be subject to
the satisfaction prior to the Closing Date of the following conditions:

(a) SHAREHOLDER APPROVAL. This Agreement shall have been
respectively approved and adopted by the affirmative vote of the holders of
the outstanding shares of Company Common Stock.

(b) OTHER APPROVALS. Other than the filing of the Certificate of
Merger provided for by Section 1.1, all authorizations, consents, orders or
approvals of, or declarations or filings with, and all expirations of waiting
periods imposed by, any Governmental Entity (all of the foregoing,
"Consents") that are necessary for the consummation of the Merger, other than
immaterial

Consents the failure to obtain which would not have a significant adverse
effect on the consummation of the Merger or on Parent and its Subsidiaries,
taken as a whole, after consummation of the Merger, shall have been filed,
occurred or been obtained (all such permits, approvals, filings and consents
and the lapse of all such waiting periods being referred to as the "Requisite
Regulatory Approvals") and all such Requisite Regulatory Approvals shall be
in full force and effect. Parent shall have received all state securities or
blue sky permits and other authorizations necessary to issue the Parent
Common Stock in exchange for Company Common Stock and to consummate the
Merger.

(c) S-4. The S-4 shall have become effective under the Securities
Act and shall not be the subject of any stop order or proceeding seeking a
stop order.

(d) POOLING. Parent, Merger Sub and the Company shall have
received a letter from Eskew & Gresham, P.S.C., Parent's independent
certified public accountants, to the effect that the Merger qualifies for
"pooling of interests" accounting treatment under Accounting Principles Board
Opinion No. 16, the interpretive releases issued pursuant thereto, and the
pronouncements of the SEC if consummated in accordance with this Agreement.

(e) NO INJUNCTIONS OR RESTRAINTS; ILLEGALITY. No temporary
restraining order, preliminary or permanent injunction or other order issued
by any court of competent jurisdiction or other legal restraint or
prohibition (an "Injunction") preventing the consummation of the Merger shall
be in effect, nor shall any proceeding by any Governmental Entity seeking any
of the foregoing be pending. There shall not be any action taken, or any
statute, rule, regulation or order enacted, entered, enforced or deemed
applicable to the Merger, which makes the consummation of the Merger illegal.

(f) BURDENSOME CONDITION. There shall not be any action taken, or
any statute, rule, regulation or order enacted, entered, enforced or deemed
applicable to the Merger, by any Governmental Entity which, in connection
with the grant of a Requisite Regulatory Approval, imposes any condition or
restriction upon Parent or its Subsidiaries, the Company or the Surviving
Corporation that would so materially adversely impact the economic or
business benefits of the transactions contemplated by this Agreement as to
render inadvisable the consummation of the Merger.

(g) NMS LISTING. The shares of Parent Common Stock issuable
pursuant to this Agreement shall have been approved for listing on the NASDAQ
National Market System, subject to official notice of issuance.

6.2 CONDITIONS TO OBLIGATIONS OF PARENT AND MERGER Sub. The obligations
of Parent and Merger Sub to effect the Merger are

subject to the satisfaction of the following conditions or waiver by Parent
on or prior to the Closing Date:

(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Company set forth in this Agreement that are qualified as
to materiality shall be true and correct, and the representations and
warranties of the Company set forth in this Agreement that are not so
qualified shall be true and correct in all material respects, in each case as
of the date of this Agreement, and as of the Closing Date as though made on
and as of the Closing Date, except to the extent such representation or
warranty expressly relates to an earlier date (in which case as of such
date), and Parent shall have received a certificate signed on behalf of the
Company by the Chief Executive Officer and the Chief Financial Officer of the
Company to such effect.

(b) PERFORMANCE OF OBLIGATIONS OF THE COMPANY. The Company shall
have performed in all material respects all obligations required to be
performed by it under this Agreement, at or prior to the Closing Date, and
Parent shall have received a certificate signed on behalf of the Company by
the Chief Executive Officer and the Chief Financial Officer of the Company to
such effect.

(c) CONSENTS UNDER AGREEMENTS. The Company shall have obtained the
consent or approval of each person (other than the Governmental Entities
referred to in Section 6.1(b)) whose consent or approval shall be required in
order to permit the succession by the Surviving Corporation pursuant to the
Merger to any obligation, right or interest of the Company under any loan or
credit agreement, note, mortgage, indenture, lease, license or other
agreement or instrument, except those for which failure to obtain such
consents and approvals would not, in the reasonable opinion of Parent,
individually or in the aggregate, have a Material Adverse Effect on the
Surviving Corporation or upon the consummation of the transactions
contemplated hereby.

(d) TAX OPINION. Parent shall have received an opinion of Eskew &
Gresham, P.S.C., dated the Closing Date, in form and substance satisfactory
to Parent, to the effect that the Merger will be treated for federal income
tax purposes as a reorganization within the meaning of Section 368(a) of the
Code.

(e) LETTERS FROM THE COMPANY AFFILIATES. Parent shall have
received from each person named in the letter referred to in Section 5.6(a)
an executed copy of an agreement in the form of Exhibit 5.6(a).

(f) APPRAISAL RIGHTS. The holders of not more than 10% of the
issued and outstanding shares of Company Common Stock shall have properly
demanded appraisal or dissenters rights pursuant to the OGCL.

6.3 CONDITIONS TO OBLIGATIONS OF THE COMPANY. The obligations of the
Company to effect the Merger are subject to the satisfaction or waiver by the
Company on or prior to the Closing Date of the following conditions:

(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Parent and Merger Sub set forth in this Agreement that are
qualified as to materiality shall be true and correct, and the
representations and warranties of Parent and Merger Sub set forth in this
Agreement that are not so qualified shall be true and correct in all material
respects, in each case as of the date of this Agreement and as of the Closing
Date as though made on and as of the Closing Date, except to the extent such
representation or warranty expressly relates to another date (in which case
as of such date), and the Company shall have received a certificate signed on
behalf of Parent and Merger Sub by the Chief Executive Officer and the Chief
Financial Officer of Parent and Merger Sub to such effect.

(b) PERFORMANCE OF OBLIGATIONS OF PARENT AND MERGER Sub. Parent
and Merger Sub shall have performed in all material respects all obligations
required to be performed by them under this Agreement at or prior to the
Closing Date, and the Company shall have received a certificate signed on
behalf of Parent and Merger Sub by the Chief Executive Officer and the Chief
Financial Officer of Parent and Merger Sub to such effect.

(c) CONSENTS UNDER AGREEMENTS. Parent and Merger Sub shall have
obtained the consent or approval of each person (other than the Governmental
Entities referred to in Section 6.1(b)) whose consent or approval shall be
required in connection with the transactions contemplated hereby under any
loan or credit agreement, note, mortgage, indenture, lease, license or other
agreement or instrument, except those for which failure to obtain such
consents and approvals would not, in the reasonable opinion of the Company,
individually or in the aggregate, have a Material Adverse Effect on Parent or
upon the consummation of the transactions contemplated hereby.

(d) TAX OPINION. The Company shall have received an opinion of
Vorys, Sater, Seymour and Pease dated the Closing Date, in form and substance
satisfactory to Parent and its counsel, to the effect that the Merger will be
treated for federal income tax purposes as a reorganization within the
meaning of Section 368(a) of the Code.

(e) LETTERS FROM PARENT AFFILIATES. The Company shall have
received from each person named in the letter referred to in Section 5.6(b)
an executed copy of an agreement substantially in the form of Exhibit 5.6(b).

(f) PRICE OF PARENT COMMON STOCK. The Average Closing Price of a
share of Parent Common Stock shall be $14 or more. For purposes of this
Agreement, the "Average Closing Price" of a share of Parent Common Stock
shall be the average of the high bid and low asked price of a share of Parent
Common Stock as furnished by Advest, Inc. for the 20 consecutive trading days
ending on the fifth business day prior the Effective Time of the Merger.

ARTICLE VII

TERMINATION; AMENDMENT; WAIVER

7.1 TERMINATION. This Agreement may be terminated at any time prior to
the Effective Time of the Merger, whether before or after the approval of
this Agreement by the shareholders of the Company:

(a) by mutual written consent of Parent and the Company;

(b) by either Parent or the Company:

(i) if, at a duly held shareholders meeting of the Company or
any adjournment thereof at which approval of this Agreement is voted upon,
the approval of the shareholders of the Company shall not have been obtained;

(ii) if the Merger shall not have been consummated on or before
December 31, 1997, unless the failure to consummate the Merger is the result
of a willful and material breach of this Agreement by the party seeking to
terminate this Agreement;

(iii) if any court of competent jurisdiction or other
Governmental Entity shall have issued an order, decree or ruling or taken any
other action permanently enjoining, restraining or otherwise prohibiting the
Merger and such order, decree, ruling or other action shall have become final
and non-appealable;

(iv) in the event of a breach by the other party of any
representation, warranty, covenant or other agreement contained in this
Agreement which (A) would give rise to the failure of a condition set forth
in Section 6.2(a) or 6.2(b) or Section 6.3(a) or 6.3(b), as applicable, and
(B) cannot be or has not been cured within 30 days after the giving of
written notice to the breaching party of such breach ("Material Breach")
(PROVIDED that the terminating party is not then in breach of any
representation, warranty, covenant or other agreement that would give rise to
a failure of a condition described in clause (A) above);

(c) by either Parent or the Company in the event that (i) all the
conditions to the obligation of such party to effect the Merger set forth in
Section 6.1 shall have been satisfied and (ii) any condition to the
obligation of such party to effect the

Merger set forth in Section 6.2 (in the case of Parent) or Section 6.3 ( in
the case of the Company) is not capable of being satisfied prior to the date
on which this Agreement may be terminated pursuant to Section 7.1(b)(ii); or

(d) by the Company, subject to Section 7.5(b), if the Board of
Directors of the Company shall concurrently approve, and the Company shall
concurrently enter into, a definitive agreement providing for the
implementation of the transactions contemplated by an Acquisition Proposal;
PROVIDED, HOWEVER, that (i) the Company is not then in breach of Section 4.2
or in breach of any other representation, warranty, covenant or agreement
that would give rise to a failure of a condition set forth in Section 6.2(a)
or 6.2(b); (ii) the Board of Directors of the Company shall have complied
with Section 7.5(b) in connection with such Acquisition Proposal and (iii) no
termination pursuant to this Section 7.1(d) shall be effective unless the
Company shall simultaneously make the payment required by Section 7.2(a).

7.2 EFFECT OF TERMINATION.

(a) In the event that any person shall make an Acquisition Proposal
with respect to the Company and thereafter (i) this Agreement is terminated
(A) pursuant to Section 7.1(b)(i), (B) pursuant to Section 7.1(b)(ii) (if at
the time of termination (x) the Company is in breach of any representation,
warranty, covenant or other agreement that would give rise to a failure of a
condition set forth in Section 6.2(a) or 6.2(b) and (y) such breach cannot be
or has not been cured within 30 days after the Company becomes aware of such
breach or such shorter period that may elapse between the date the Company
becomes aware of such breach and the time of termination), (C) pursuant to
Section 7.1(b)(iii) (if at the time of termination (x) the Company is in
breach of any representation, warranty, covenant or other agreement that
would give rise to a failure of a condition set forth in Section 6.2(a) or
6.2(b) and (y) such breach cannot be or has not been cured within 30 days
after the Company becomes aware of such breach or such shorter period that
may elapse between the date the Company becomes aware of such breach and the
time of termination), (D) by Parent pursuant to Section 7.1(b)(iv), (E) by
Parent pursuant to Section 7.1(c) or (F) by the Company pursuant to Section
7.1(d), and (ii) a definitive agreement with respect to an Acquisition
Proposal is executed, or an Acquisition Proposal is consummated, at or within
12 months after such termination, then Parent shall be paid a fee of $350,000
(reduced by any amount actually paid by the Company pursuant to Section
7.2(b) in connection with such termination), which amount shall be payable by
wire transfer of same day funds on the date such agreement is executed, or
such Acquisition Proposal is consummated, as applicable. The Company
acknowledges that the agreements contained in this Section 7.2(a) are an
integral part of the transactions contemplated by this Agreement, and that
without these agreements, Parent would not enter into this Agreement;

accordingly, if the Company fails to promptly pay the amount due pursuant to
this Section 7.2(a), and, in order to obtain such payment, Parent commences a
suit that results in a judgment against the Company for the fees set forth in
this Section 7.2(a), the Company shall also pay to Parent its costs and
expenses (including reasonable attorneys' fees) in connection with such suit.

(b) In the event of termination of this Agreement by either Parent
or the Company pursuant to Section 7.1(b)(i), then the Company shall
reimburse Parent for all its reasonable out-of-pocket expenses actually
incurred in connection with this Agreement and the transactions contemplated
hereby, up to a maximum of $100,000, which amount shall be payable by wire
transfer of same day funds within three business days of written demand,
accompanied by a reasonably detailed statement of such expenses and
appropriate supporting documentation therefor.

(c) In the event of termination of this Agreement by either Parent
or the Company as provided in Section 7.1, this Agreement shall forthwith
become void and have no effect, without any liability or obligation on the
part of Parent, Merger Sub or the Company, other than the provisions of
Section 5.1 (penultimate sentence), Section 5.7, this Section 7.2 and Article
VIII and except to the extent that such termination results from the willful
and material breach by a party of any its representations, warranties,
covenants or other agreements set forth in this Agreement.

7.3 AMENDMENT. This Agreement may be amended by the parties at any time
before or after the approval of this Agreement by the shareholders of the
Company; PROVIDED, HOWEVER, that after such approval by the shareholders of
the Company, there shall be made no amendment that pursuant to the OGCL
requires further approval by the shareholders of the Company without the
further approval of such shareholders. This Agreement may not be amended
except by an instrument in writing signed on behalf of each of the parties.

7.4 EXTENSION; WAIVER. At any time prior to the Effective Time of the
Merger, the parties may (i) extend the time for the performance of any of the
obligations or other acts of the other parties; (ii) waive any inaccuracies
in the representations and warranties contained in this Agreement or in any
document delivered pursuant to this Agreement; or (iii) subject to the
proviso of Section 7.3, waive compliance with any of the agreements or
conditions contained in this Agreement. Any agreement on the part of a party
to any such extension or waiver shall be valid only if set forth in an
instrument in writing signed on behalf of such party. The failure of any
party to this Agreement to assert any of its rights under this Agreement or
otherwise shall not constitute a waiver of such rights.

7.5 PROCEDURE FOR TERMINATION, AMENDMENT, EXTENSION OR WAIVER.

(a) A termination of this Agreement pursuant to Section 7.1, an
amendment of this Agreement pursuant to Section 7.3 or an extension or waiver
pursuant to Section 7.4 shall, in order to be effective, require, in the case
of Parent, Merger Sub or the Company, action by its Board of Directors or, in
the case of an extension or waiver pursuant to Section 7.4, the duly
authorized designee of its Board of Directors.

(b) The Company shall provide to Parent written notice prior to any
termination of this Agreement pursuant to Section 7.1(d) advising Parent (i)
that the Board of Directors of the Company in the exercise of its good faith
judgment as to its fiduciary duties to the shareholders of the Company under
applicable law, after receipt of written advice of outside legal counsel, has
determined (on the basis of such Acquisition Proposal and the terms of this
Agreement, as then in effect) that such termination is required in connection
with an Acquisition Proposal that is more favorable to the shareholders of
the Company than the transactions contemplated by this Agreement (taking into
account all terms of such Acquisition Proposal and this Agreement, including
all conditions) and (ii) as to the material terms of any such Acquisition
Proposal. At any time after five business days following receipt of such
notice, the Company may terminate this Agreement as provided in Section
7.1(d) only if the Board of Directors of the Company determines that such
Acquisition Proposal is more favorable to the shareholders of the Company
than the transactions contemplated by this Agreement (taking into account all
terms of such Acquisition Proposal and this Agreement, including all
conditions, and which determination shall be made in light of any revised
proposal made by Parent prior to the expiration of such five business day
period) and concurrently enters into a definitive agreement providing for the
implementatation of the transactions contemplated by such Acquisition
Proposal.

ARTICLE VIII

GENERAL PROVISIONS

8.1 NON-SURVIVAL OF REPRESENTATIONS AND WARRANTIES. None of the
representations and warranties in this Agreement or in any instrument
delivered pursuant to this Agreement shall survive the Effective Time of the
Merger. This Section 8.1 shall not limit any covenant or agreement of the
parties that by its terms contemplates performance after the Effective Time
of the Merger.

8.2 NOTICES. All notices and other communications required to be given
hereunder shall be in writing and shall be deemed given

upon (i) transmitter's confirmation of receipt of a facsimile transmission,
(ii) confirmed delivery by a standard overnight carrier or when delivered by
hand or (iii) the expiration of five business days after the day when mailed
by certified or registered mail, postage prepaid, addressed to the parties at
the following addresses (or at such other address for a party as shall be
specified by like notice):

(a) If to Parent or
Merger Sub, to: Premier Financial Bancorp, Inc.
120 N. Hamilton Street
Georgetown, Kentucky 40324
Attn: J. Howell Kelly,
President and
Chief Executive Officer

Telecopy No. (502) 863-7503

With a copy to: David W. Harper, Esq.
2450 Meidinger Tower
Louisville, Kentucky 40202

Telecopy No. (502) 583-2418
and

(b) If to Company, to: The Sabina Bank
135 N. Howard Street
Sabina, Ohio 45169
Attn: Garry W. Priest,
President and Chief Executive
Officer

Telecopy No. (937) 584-2494

With a copy to: Terri Reyering Abare, Esq.
Vorys, Sater, Seymour and Pease
221 E. Fourth, Suite 2100
Cincinnati, Ohio 45202

Telecopy No. (513) 723-4056

8.3 INTERPRETATION. Unless the context otherwise requires, words
describing the singular number shall include the plural and vice versa, and
words denoting any gender shall include all genders and words denoting
natural persons shall include corporations and other entities and vice versa.
The table of contents, index of terms and headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. When a reference is made in
this Agreement to any "Section" or "Exhibit," such reference shall be to

a section or exhibit to this Agreement unless otherwise indicated. Whenever
the words "include," "includes" or "including" are used in this Agreement,
they shall be deemed to be followed by the words "without limitation."
Whenever the words "or any Subsidiary", "or any Subsidiaries," "nor any
Subsidiary" or "nor any Subsidiaries" are used in this Agreement in
connection with a preceding reference to Parent, they shall be deemed to
refer to a Subsidiary or Subsidiaries Parent. The phrase "made available" in
this Agreement shall mean that the information referred to has been made
available if requested by the party to whom such information is to be made
available, and the correlative phrase "make available" shall mean that such
information shall be promptly made available if so requested. The phrases
"the date of this Agreement," "the date hereof" and terms of similar import,
unless the context otherwise requires, shall be deemed to refer to May 28,
1997.

8.4 ASSIGNMENT; BINDING EFFECT; BENEFIT. Neither this Agreement nor
any of the rights, interests or obligations hereunder shall be assigned by
any of the parties hereto (whether by operation of law or otherwise) without
the prior written consent of the other parties. Subject to the preceding
sentence, this Agreement shall be binding upon and shall inure to the benefit
of the parties hereto and their respective successors and assigns.
Notwithstanding anything contained in this Agreement to the contrary, except
for the provisions of Article II and Sections 5.10 and 5.12 (collectively,
the "Third Party Provisions"), nothing in this Agreement, express or implied,
is intended to confer on any person other than the parties hereto or their
respective heirs, successors, executors, administrators and assigns any
rights, remedies, obligations or liabilities under or by reason of this
Agreement. The Third Party Provisions may be enforced on behalf of the
Company or the other respective beneficiaries thereof by those individuals
who were the directors of the Company immediately prior to the Effective Time
and also by the holder of Company Common Stock converted in the Merger, the
Indemnified Party or the ESOP that such provisions respectively are intended
to benefit and their respective heirs and representatives. Parent shall pay
all expenses, including attorneys' fees, that may be incurred by such
directors or other persons in enforcing the Third Party Provisions.

8.5 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Ohio regardless of the laws that might
otherwise govern under applicable principles of conflicts of laws thereof.

8.6 COUNTERPARTS. This Agreement may be executed in separate
counterparts, each of which when so executed and delivered shall be an
original, but all of which shall together constitute one and the same
instrument. Each counterpart may consist of a number of copies hereof each
signed by less than all, but together signed by

all of the parties hereto. It shall not be necessary, in making proof of
this Agreement or any counterpart hereof, to produce or account for any of
the other counterparts.

8.7 SEVERABILITY. Any term or provision of this Agreement that is
invalid or unenforceable shall be ineffective to the extent of such
invalidity or unenforceability without rendering invalid or unenforceable the
remaining terms and provisions of this Agreement. If any provision of this
Agreement is so broad as to be unenforceable, the provision shall be
interpreted to be only so broad as is enforceable.

8.8 INCORPORATION OF DOCUMENTS. The Company Letter, Parent Letter, the
Confidentiality Agreement, and all Annexes, Exhibits and Schedules, if any,
attached hereto and referred to herein are hereby incorporated herein and
made a part hereof for all purposes as if fully set forth herein.

8.9 ENFORCEMENT. The parties agree that irreparable damage would occur
in the event that any of the provisions of this Agreement were not performed
in accordance with its specific terms or were otherwise breached. It is
accordingly agreed that the parties shall be entitled to seek an injunction
or injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and provisions of this Agreement in any court of the
United States located in the State of Ohio or in Ohio state court, this being
in addition to any other remedy to which they are entitled at law or in
equity.

8.10 WAIVERS. Except as provided in this Agreement or in any waiver
pursuant to Section 7.4, no action taken pursuant to this Agreement,
including any investigation by or on behalf of any party, shall be deemed to
constitute a waiver by the party taking such action of compliance with any
representations, warranties, covenants or agreements contained in this
Agreement. The waiver by any party hereto of a breach of any provision
hereunder shall not operate or be construed as a waiver of any prior or
subsequent breach of the same or any other provision hereunder.

8.11 ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
between the parties with respect to the subject matter hereof and supersedes
all prior agreements and understandings, both written and oral, among the
parties with respect to the subject matter hereof.

IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
signed on its behalf by its officers thereunto duly authorized, all as of the
day and year first above written.

PREMIER FINANCIAL BANCORP, INC.

By: /s/ J. Howell Kelly
------------------------------------
J. Howell Kelly, President and Chief
Executive Officer

PFBI INTERIM BANK

By: /s/ J. Howell Kelly
-------------------------------------
J. Howell Kelly, an Incorporator

THE SABINA BANK

By: /s/ Garry W. Priest
--------------------------------------
Garry W. Priest, President and
Chief Executive Officer

EXHIBIT 5.6(a)

___________, 1997

Premier Financial Bancorp, Inc.
120 North Hamilton Street
Georgetown, KY 40324

The Sabina Bank
135 N. Howard Street
Sabina, OH 45169

Gentlemen and Ladies:

I have been advised that as of the date hereof I may be deemed to be an
"affiliate" of The Sabina Bank (the "Company"), as the term "affiliate" is (i)
defined for purposes of paragraphs (c) and (d) of Rule 145 of the Rules and
Regulations (the "Rules and Regulations") of the Securities and Exchange
Commission (the "Commission") under the Securities Act of 1933, as amended (the
"Act"), and/or (ii) used in and for purposes of Accounting Series Releases 130
and 135, as amended, of the Commission. Pursuant to the terms of the Agreement
and Plan of Merger dated as of May 28, 1997 among Premier Financial Bancorp,
Inc. ("Premier"), PFBI Interim Bank ("Merger Sub") and the Company (the
"Agreement"), Merger Sub will be merged with and into the Company (the
"Merger").

As a result of the Merger, I may receive shares of Common Stock of Premier
("Premier Shares") in exchange for shares owned by me of Common Stock of the
Company ("Company Shares").

I represent, warrant and covenant to Premier that in the event I receive
any Premier Shares as a result of the Merger:

A. I shall not make any sale, transfer or other disposition of the
Premier Shares in violation of the Act or the Rules and
Regulations.

B. I have carefully read this letter and the Agreement and discussed
its requirements and other applicable limitations upon my ability
to sell, transfer or otherwise dispose of Premier Shares, to the
extent I felt necessary, with my counsel or counsel for the
Company.

C. I have been advised that the issuance of Premier Shares to me
pursuant to the Merger has been registered with the Commission
under the Act on a Regis-

Page 2

tration Statement on Form S-4. However, I have also been advised
that, because at the time the Merger was submitted for a vote of the
shareholders of the Company I may be deemed to have been an affiliate
of the Company, and the distribution by me of the Premier Shares has
not been registered under the Act, I may not sell, transfer or
otherwise dispose of Premier Shares issued to me in the Merger unless
(i) such sale, transfer or other disposition has been registered under
the Act, (ii) such sale, transfer or other disposition is made in
conformity with the volume and other limitations of Rule 145
promulgated by the Commission under the Act, or (iii) in the opinion
of counsel reasonably acceptable to Premier, such sale, transfer or
other disposition is otherwise exempt from registration under the Act.

D. I understand that Premier is under no obligation to register the
sale, transfer or other disposition of the Premier Shares by me
or on my behalf under the Act or to take any other action
necessary in order to make compliance with an exemption from such
registration available.

E. I also understand that stop transfer instructions will be given
to Premier's transfer agents with respect to the Premier Shares
and that there will be placed on the certificates for the Premier
Shares issued to me, or any substitutions therefor, a legend
stating in substance:

"The shares represented by this certificate were issued
in a transaction to which Rule 145 promulgated under
the Securities Act of 1933 applies. The shares
represented by this certificate may only be transferred
in accordance with the terms of an agreement dated
___________, 1997 between the registered holder hereof
and the Issuer, a copy of which agreement is on file at
the principal offices of the Issuer.

F. I also understand that unless the transfer by me of my Premier
Shares has been registered under the Act or is a sale made in
conformity with the provisions

Page 3

of Rule 145, Premier reserves the right to put the following legend on
the certificates issued to my transferee:

"The shares represented by this certificate have not
been registered under the Securities Act of 1933 and
were acquired from a person who received such shares in
a transaction to which Rule 145 promulgated under the
Securities Act of 1933 applies. The shares have been
acquired by the holder not with a view to, or for
resale in connection with, any distribution thereof
within the meaning of the Securities Act of 1933 and
may not be sold, pledged or otherwise transferred
except in accordance with an exemption from the
registration requirements of the Securities Act of
1933."

It is understood and agreed that the legends set forth in paragraphs E and
F above shall be removed by delivery of substitute certificates without such
legend if the undersigned shall have delivered to Premier a copy of a letter
from the staff of the Commission, or an opinion of counsel in form and substance
reasonably satisfactory to Premier, to the effect that such legend is not
required for purposes of the Act.

I further represent to and covenant with Premier and the Company that I
have not, within the 30 days prior to the Effective Time (as defined in the
Agreement), sold, transferred or otherwise disposed of any Company Shares or
Premier Shares held by me and that I will not sell, transfer or otherwise
dispose of any Premier Shares, whether received by me in the Merger or
otherwise, until after such time as results covering at least 30 days of
combined operations of the Company and Premier have been published by Premier,
in the form of a quarterly earnings report, an effective registration statement
filed with the Commission, a report to the Commission on Form 10-K, 10-Q or 8-K,
or any other public filing or announcement that includes such combined results
of operations.

Page 4

Execution of this letter should not be considered an admission on my part
that I am an "affiliate" of the Company as described in the first paragraph of
this letter, or as a waiver of any rights I may have to object to any claim that
I am such an affiliate on or after the date of this letter.

Very truly yours,

-----------------------------------
[Affiliate's Name]

Accepted this ____ day of
____________, 1997 by:

PREMIER FINANCIAL BANCORP, INC.

By:
----------------------------
J. Howell Kelly, President
and Chief Executive Officer

THE SABINA BANK

By:
----------------------------
Garry W. Priest, President
and Chief Executive Officer

EXHIBIT 5.6(b)

___________, 1997

Premier Financial Bancorp, Inc.
120 North Hamilton Street
Georgetown, KY 40324

Gentlemen and Ladies:

I have been advised that as of the date hereof I may be deemed to be an
"affiliate" of Premier Financial Bancorp, Inc. ("Premier), as the term
"affiliate" is (i) defined for purposes of paragraphs (c) and (d) of Rule 145 of
the Rules and Regulations (the "Rules and Regulations") of the Securities and
Exchange Commission (the "Commission") under the Securities Act of 1933, as
amended (the "Act"), and/or (ii) used in and for purposes of Accounting Series
Releases 130 and 135, as amended, of the Commission. Pursuant to the terms of
the Agreement and Plan of Merger (the "Agreement") dated as of May 28, 1997
among Premier, PFBI Interim Bank ("Merger Sub") and The Sabina Bank (the
"Company"), Merger Sub will be merged with and into the Company (the "Merger").

I hereby represent to and covenant with Premier that I have not, within the
30 days prior to the Effective Time (as defined in the Agreement), sold,
transferred or otherwise disposed of any shares of Common Stock of the Company
or shares of Common Stock of Premier ("Premier Shares") held by me and that I
will not sell, transfer or otherwise dispose of any Premier Shares, whether
received by me in the Merger or otherwise, until after such time as results
covering at least 30 days of combined operations of the Company and Premier have
been published by Premier, in the form of a quarterly earnings report, an
effective registration statement filed with the Commission, a report to the
Commission on Form 10-K, 10-Q or 8-K, or any other public filing or announcement
that includes such combined results of operations.

Execution of this letter should not be considered an admission on my part
that I am an "affiliate" of Premier as described in the first paragraph of this
letter, or as a waiver of any rights I may have to object to any claim that I am
such an affiliate on or after the date of this letter.

Very truly yours,

-----------------------------------
[Affiliate's Name]

Page 2

Accepted this ____ day of
____________, 1997 by:

PREMIER FINANCIAL BANCORP, INC.

By:
----------------------------
J. Howell Kelly, President
and Chief Executive Officer

EXHIBIT 5.12

The Company shall terminate the ESOP as soon as practicable following the
Merger in a manner that is consistent with ERISA and the ESOP's constitutive
documents and does not result in any unnecessary Federal income tax
consequences. From the date of the Agreement until such termination, the
Company shall not make any contributions to the ESOP without the written consent
of Parent.

ANNEX II

[Date of Proxy Statement/Prospectus]September 18, 1997

Board of Directors
The Sabina Bank
135 North Howard Street
Sabina, Ohio 45169

Dear Members of the Board:

You have requested our opinion as investment bankers as to the fairness, from a
financial perspective, to the common shareholders of The Sabina Bank, Sabina,
Ohio (the "Bank"), of the proposed merger of PFBI Interim Bank ("Merger Sub"), a
wholly owned subsidiary of Premier Financial Bancorp, Inc., Georgetown, Kentucky
("Premier"), into the Bank, with the Bank becoming a wholly owned subsidiary of
Premier. In the proposed merger, Bank shareholders will receive 4.33 Common
Shares of Premier for each Bank share outstanding as further defined in the
Agreement and Plan of Merger dated as of May 28, 1997 among Premier, Merger Sub
and the Bank (the "Agreement"). As of May 23, 1997, the proposed consideration
to be received represents an aggregate value of $7,858,950 or $71.445 per Bank
common share based on the average of the bid / ask price for Premier common
stock of $16.50 as quoted on the Nasdaq National Market.

Professional Bank Services, Inc. ("PBS") is a bank consulting firm and as part
of its investment banking business is continually engaged in reviewing the
fairness, from a financial perspective, of bank acquisition transactions and in
the valuation of banks and other businesses and their securities in connection
with mergers, acquisitions, estate settlements and other purposes. We are
independent with respect to the parties of the proposed transaction.

For purposes of this opinion, PBS performed a review and analysis of the
historic performance of the Bank contained in: (i) March 31, 1997, December 31,
1996, September 30, 1996, June 30, 1996 and March 31, 1996 Consolidated Reports
of Condition and Income as filed with the Federal Reserve; (ii) December 31,
1996, 1995, 1994 and 1993 audited annual reports of the Bank; and (iii) December
31, 1996 and 1995 Uniform Bank Performance Reports of the Bank. We have reviewed
and tabulated statistical data regarding the loan portfolio, securities
portfolio and other performance ratios and statistics. Financial projections
were prepared and analyzed as well as other financial studies, analyses and

Board of Directors
Page 2

investigations as deemed relevant for the purposes of this opinion. In review of
the aforementioned information, we have taken into account our assessment of
general market and financial conditions, our experience in other transactions,
and our knowledge of the banking industry generally.

We have not compiled, reviewed or audited the financial statements of the Bank
or Premier, nor have we independently verified any of the information reviewed;
we have relied upon such information as being complete and accurate in all
material respects. We have not made independent evaluation of the assets of the
Bank or Premier.

Based on the foregoing and all other factors deemed relevant, it is our opinion
as investment bankers that, as of the date hereof, the consideration proposed to
be received by the shareholders of the Bank under the Agreement is fair and
equitable from a financial perspective.

Very truly yours,

PROFESSIONAL BANK SERVICES, INC.

ANNEX III

SECTION 1701.85 OF THE OHIO GENERAL CORPORATION LAW

(A)(1) A shareholder of a domestic corporation is entitled to relief as
a dissenting shareholder in respect of the proposals described in sections
1701.74, 1701.76, and 1701.84 of the Revised Code, only in compliance with this
section.

(2) If the proposal must be submitted to the shareholders of the
corporation involved, the dissenting shareholder shall be a record holder of the
shares of the corporation as to which he seeks relief as of the date fixed for
the determination of shareholders entitled to notice of a meeting of the
shareholders at which the proposal is to be submitted, and such shares shall not
have been voted in favor of the proposal. Not later than ten days after the
date on which the vote on the proposal was taken at the meeting of the
shareholders, the dissenting shareholder shall deliver to the corporation a
written demand for payment to him of the fair cash value of the shares as to
which he seeks relief, which demand shall state his address, the number and
class of such shares, and the amount claimed by him as the fair cash value of
the shares.

(3) The dissenting shareholder entitled to relief under division (C)
of section 1701.84 of the Revised Code in the case of a merger pursuant to
section 1701.80 of the Revised Code and a dissenting shareholder entitled to
relief under division (E) of section 1701.84 of the Revised Code in the case of
a merger pursuant to section 1701.801 of the Revised Code shall be a record
holder of the shares of the corporation as to which he seeks relief as of the
date on which the agreement of merger was adopted by the directors of that
corporation. Within twenty days after he has been sent the notice provided in
section 1701.80 or 1701.801 of the Revised Code, the dissenting shareholder
shall deliver to the corporation a written demand for payment with the same
information as that provided for in division (A)(2) of this section.

(4) In the case of a merger or consolidation, a demand served on the
constituent corporation involved constitutes service on the surviving or the new
entity, whether the demand is served before, on, or after the effective date of
the merger or consolidation.

(5) If the corporation sends to the dissenting shareholder, at the
address specified in his demand, a request for the certificates representing the
shares as to which he seeks relief, the dissenting shareholder, within fifteen
days from the date of the sending of such request, shall deliver to the
corporation the certificates requested so that the corporation may forthwith
endorse on them a legend to the effect that demand for the fair cash value of
such shares has been made. The corporation promptly shall return such endorsed
certificates to the dissenting shareholder. A dissenting shareholder's failure
to deliver such

certificates terminates his rights as a dissenting shareholder, at the option of
the corporation, exercised by written notice sent to the dissenting shareholder
within twenty days after the lapse of the fifteen-day period, unless a court for
good cause shown otherwise directs. If shares represented by a certificate on
which such a legend has been endorsed are transferred, each new certificate
issued for them shall bear a similar legend, together with the name of the
original dissenting holder of such shares. Upon receiving a demand for payment
from a dissenting shareholder who is the record holder of uncertificated
securities, the corporation shall make an appropriate notation of the demand for
payment in its shareholder records. If uncertificated shares for which payment
has been demanded are to be transferred, any new certificate issued for the
shares shall bear the legend required for certificated securities as provided in
this paragraph. A transferee of the shares so endorsed, or of uncertificated
securities where such notation has been made, acquires only such rights in the
corporation as the original dissenting holder of such shares had immediately
after the service of a demand for payment of the fair cash value of the shares.
A request under this paragraph by the corporation is not an admission by the
corporation that the shareholder is entitled to relief under this section.

(B) Unless the corporation and the dissenting shareholder have come
to an agreement on the fair cash value per share of the shares as to which the
dissenting shareholder seeks relief, the dissenting shareholder or the
corporation, which in case of a merger or consolidation may be the surviving or
new entity, within three months after the service of the demand by the
dissenting shareholder, may file a complaint in the court of common pleas of
the county in which the principal office of the corporation that issued the
shares is located or was located when the proposal was adopted by the
shareholders of the corporation, or, if the proposal was not required to be
submitted to the shareholders, was approved by the directors. Other dissenting
shareholders, within that three-month period, may join as plaintiffs or may be
joined as defendants in any such proceeding, and any two or more such
proceedings may be consolidated. The complaint shall contain a brief statement
of the facts, including the vote and the facts entitling the dissenting
shareholder to the relief demanded. No answer to such a complaint is required.
Upon the filing of such a complaint, the court, on motion of the petitioner,
shall enter an order fixing a date for a hearing on the complaint and requiring
that a copy of the complaint and a notice of the filing and of the date for
hearing be given to the respondent or defendant in the manner in which summons
is required to be served or substituted service is required to be made in other
cases. On the day fixed for the hearing on the complaint or any adjournment of
it, the court shall determine from the complaint and from such evidence as is
submitted by either party whether the dissenting shareholder is entitled to be
paid the fair cash value of any shares and, if so, the number and class of such
shares. If

the court finds that the dissenting shareholder is so entitled, the court may
appoint one or more persons as appraisers to receive evidence and to recommend a
decision on the amount of the fair cash value. The appraisers have such power
and authority as is specified in the order of their appointment. The court
thereupon shall make a finding as to the fair cash value of a share and shall
render judgment against the corporation for the payment of it, with interest at
such rate and from such date as the court considers equitable. The costs of the
proceeding, including reasonable compensation to the appraisers to be fixed by
the court, shall be assessed or apportioned as the court considers equitable.
The proceeding is a special proceeding and final orders in it may be vacated,
modified, or reversed on appeal pursuant to the Rules of Appellate Procedure
and, to the extent not in conflict with those rules, Chapter 2505 of the Revised
Code. If, during the pendency of any proceeding is or has been instituted to
enjoin or otherwise to prevent the carrying out of the action as to which the
shareholder has dissented, the proceeding instituted under this section shall be
stayed until the final determination of the other suit or proceeding. Unless
any provision in division (D) of this section is applicable, the fair cash value
of the shares that is agreed upon by the parties or fixed under this section
shall be paid within thirty days after the date of final determination of such
value under this division, the effective date of the amendment to the articles,
or the consummation of the other action involved, whichever occurs last. Upon
the occurrence of the last such event, payment shall be made immediately to a
holder of uncertificated securities entitled to such payment. In the case of
holders of shares represented by certificates, payment shall be made only upon
and simultaneously with the surrender to the corporation of the certificates
representing the shares for which the payment is made.

(C) If the proposal was required to be submitted to the shareholders
of the corporation, fair cash value as to those shareholders shall be determined
as of the day prior to the day on which the vote by the shareholders was taken,
and, in the case of a merger pursuant to section 1701.80 or 1701.801 of the
Revised Code, fair cash value as to shareholders of a constituent subsidiary
corporation shall be determined as of the day before the adoption of the
agreement of merger by the directors of the particular subsidiary corporation.
The fair cash value of a share for the purposes of this section is the amount
that a willing seller who is under no compulsion to sell would be willing to
accept and that a willing buyer who is under no compulsion to purchase would be
willing to pay, but in no event shall the fair cash value of a share exceed the
amount specified in the demand of the particular shareholder. In computing such
fair cash value, any appreciation or depreciation in market value resulting from
the proposal submitted to the directors or to the shareholders shall be
excluded.

(D)(1) The right and obligation of a dissenting shareholder to receive
such fair cash value and to sell such shares as to which he seeks relief, and
the right and obligation of the corporation to purchase such shares and to pay
the fair cash value of them terminates if any of the following applies:

(a) The dissenting shareholder has not complied with this the
section, unless the corporation by its directors waives such failure;

(b) The corporation abandons the action involved or is finally
enjoined or prevented from carrying it out, or the shareholders
rescind their adoption, of the action involved;

(d) The corporation and the dissenting shareholder have not come
to an agreement as to the fair cash value per share, and neither the
shareholder nor the corporation filed or joined in a complaint under
division (B) of this section within the period provided in that
division.

(2) For purposes of division (D)(1) of this section, if the merger or
consolidation has become effective and the surviving or new entity is not a
corporation, action required to be taken by the directors of the corporation
shall be taken by the general partners of a surviving or new partnership or the
comparable representatives of any other surviving or new entity.

(E) From the time of the dissenting shareholder's giving of the
demand until either the termination of the rights and obligations arising from
it or the purchase of the shares by the corporation, all other rights accruing
from such shares, including voting and dividend or distribution rights, are
suspended. If during the suspension, any dividend or distribution is paid in
money upon any securities issued in extinguishment of or in substitution for
such shares, an amount equal to the dividend, distribution, or interest which,
except for the suspension, would have been payable upon such shares or
securities, shall be paid to the holder of record as a credit upon the fair cash
value of the shares. If the right to receive fair cash value is terminated
other than by the purchase of the shares by the corporation, all rights of the
holder shall be restored and all distributions which, except for the suspension,
would have been made shall be made to the holder of record of the shares at the
time of termination. (Last amended by S.B. 74, L.'94, eff. 7-1-94.)

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS

Section 271B.2-020(2)(d) of Kentucky Business Corporation Act (the "Act")
enables a Kentucky corporation to provide in its articles of incorporation, and
the Registrant has so provided in its Articles of Incorporation, for the
elimination or limitation of the personal liability of a director to the
corporation or its shareholders for monetary damages for breach of his fiduciary
duty as a director; provided, however, that a director's liability is not
eliminated or limited: (1) for any transaction in which the director's personal
financial interest is in conflict with the financial interests of the
corporation or its shareholders; (2) for acts or omissions not in good faith or
which involve intentional misconduct or are known to the director to be a
violation of law; (3) for any vote or assent to an unlawful distribution to
shareholders as prohibited under Section 271B.8-330 of the Act (which imposes
liability on directors for payments of dividends, purchases, redemptions or
other acquisitions of shares, and distributions of indebtedness that are
unlawful); or (4) for any transaction from which the director derived an
improper personal benefit.

Section 271B.8-510 of the Act permits the indemnification by a corporation
of any director who is made party to a threatened, pending or completed action,
suit or proceeding because he is or was a director of such corporation. To be
eligible for indemnification, such person must have conducted himself in good
faith and reasonably believed that his conduct, if undertaken in his official
capacity with the corporation, was in the corporation's best interests, and, if
not in his official capacity, was at least not opposed to the corporation's best
interests. In the case of a criminal proceeding, the director must also not have
reasonable cause to believe his conduct was unlawful. A director may not be
indemnified under the above-referenced section in connection with a proceeding
by or in the right of the corporation in which the director was adjudged liable
to the corporation or in connection with any other proceeding charging improper
personal benefit by him, whether or not involving action in his official
capacity, in which he was adjudged liable on the basis that personal benefit was
improperly received by him. Indemnification permitted under Section 271B.8-510
of the Act in connection with a proceeding by or in the right of the corporation
shall be limited to reasonable expenses incurred in connection with the
proceeding. Section 271B.8-560 of the Act provides that a Kentucky corporation
may indemnify its officers, employees and agents to the same extent as
directors. Mandatory indemnification against reasonable expenses incurred in
connection with a proceeding is provided for

II-1

by the Act, unless otherwise limited by the corporation's articles of
incorporation, where a director or officer has been wholly successful on the
merits or otherwise, in the defense of any proceeding to which he was a party
because he is or was a director or officer of the corporation. A court of
competent jurisdiction may also order indemnification if the director is fairly
and reasonably entitled thereto in view of all relevant circumstances, whether
or not he met the applicable standard of conduct or was adjudged liable to the
corporation.

The Act provides that indemnification pursuant to its provisions is not
exclusive of other rights of indemnification to which a person may be entitled
under any bylaw, agreement, vote of shareholders or disinterested directors, or
otherwise. Additionally, the Act provides that a corporation may purchase and
maintain insurance on behalf of directors, officers, employees and agents of the
corporation against liability asserted against or incurred by such party in
their respective capacity with the corporation.

Articles X and XI of the Registrant's Articles of Incorporation and Article VIII
of the Registrant's By-Laws require Registrant to indemnify its directors and
officers to the fullest extent permitted by the Act.

ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a) The Exhibit Index appearing on the page following the signature page
of this Registration Statement is hereby incorporated by reference.

(b) No financial statement schedules are required to be filed herewith
pursuant to Item 21(b) or (c) of this Form.

ITEM 22. UNDERTAKINGS

(a) The undersigned Registrant hereby undertakes:

(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement:

(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;

(ii) To reflect in the prospectus any facts or events arising after
the effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the Registration
Statement;

(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the Registration Statement or any
material change to such information

II-2

in the Registration Statement.

(2) That for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.

(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.

The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934, (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
Registration Statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.

The undersigned Registrant hereby undertakes to deliver or cause to be
delivered with the prospectus, to each person to whom the prospectus is sent or
given, the latest annual report to security holders that is incorporated by
reference in the prospectus and furnished pursuant to and meeting the
requirements of Rule 14a-3 or Rule 14c-3 under the Securities Exchange Act of
1934; and where interim financial information required to be presented by
Article 3 of Regulation S-X are not set forth in the prospectus, to deliver, or
cause to be delivered to each person to whom the prospectus is sent or given,
the latest quarterly report that is specifically incorporated by reference in
the prospectus to provide such interim financial information.

Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions or otherwise, the Registrant has
been advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses incurred
or paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in

II-3

the Act and will be governed by the final adjudication of such issue.

(b) The undersigned Registrant hereby undertakes to respond to requests
for information that is incorporated by reference into the prospectus pursuant
to Items 4, 10(b), 11, or 13 of this Form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the Registration Statement through the
date of responding to the request.

(c) The undersigned Registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the Registration Statement when it became effective.

II-4

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the
Registrant has duly caused this Amendment No. 1 to Registration Statement to
be signed on its behalf by the undersigned, thereunto duly authorized, in the
City of Georgetown, Commonwealth of Kentucky, on the 31st17th day of July,September,
1997.

PREMIER FINANCIAL BANCORP, INC.

By: /s/ J. Howell Kelly
--------------------------------
(J. Howell Kelly, President)

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints J. Howell Kelly his true and lawful
attorney-in-fact and agent, with full power of substitution and resubstitution,
for him and in his name, place and stead, in any and all capacities, to sign
any and all amendments, including post-effective amendments, to this
Registration Statement, and to file the same, with exhibits thereto and other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorney-in-fact and agent full power and authority to do and
perform each and every act and thing requisite and necessary to be done, as
fully to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that said attorney-in-fact and agent or his
substitute or substitutes may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act of 1933, this
Amendment No. 1 to Registration Statement has been signed by the following
persons in the capacities and on the dates indicated.

NAME CAPACITY DATE
---- -------- ----

/s/ Marshall T. ReynoldsReynolds*
- -------------------------
(Marshall T. Reynolds) Chairman and Director July 24,September 17, 1997

/s/ J. Howell Kelly
- -------------------------
(J. Howell Kelly) President (Principal Executive
Officer, Principal Financial
Officer and Principal Accounting
Officer) and Director July 24,September 17, 1997

/s/ Toney K. AdkinsAdkins*
- -------------------------
(Toney K. Adkins) Director July 24,September 17, 1997

/s/ Gardner E. DanielDaniel*
- -------------------------
(Gardner E. Daniel) Director July 24,September 17, 1997

/s/ E.V. Holder, Jr.*
- -------------------------
(E.V. Holder, Jr.) Director July 24,September 17, 1997

II-5

/s/ Wilbur M. JenkinsJenkins*
- --------------------------
(Wilbur M. Jenkins) Director July 24,September 17, 1997

/s/ Benjamin T. PughPugh*
- --------------------------
(Benjamin T. Pugh) Director July 24,September 17, 1997

* By J. Howell Kelly, Attorney in Fact

II-6

EXHIBIT INDEX

EXHIBIT DESCRIPTION OF DOCUMENT
- ------- -----------------------

22* Agreement and Plan of Merger dated as of May 28, 1997 among Premier
Financial Bancorp, Inc. ("Registrant"), PFBI Interim Bank and The
Sabina Bank (included as Annex I to the Proxy Statement/Prospectus
that is part of the Registration Statement to which this Exhibit Index
relates).

3.1 Form of Articles of Incorporation of Registrant (included as Exhibit
3.1 to Registrant's Registration Statement on Form S-1, Registration
No. 333-1702, filed on February 28, 1996 with the Commission and
incorporated herein by reference).

3.2 Form of Articles of Amendment to Articles of Incorporation effective
March 15, 1996 re: amendment to Article IV (included as Exhibit 3.2 to
Registrant's Amendment No. 1 to Registration Statement on Form S-1,
Registration No. 333-1702, filed on March 25, 1996 with the Commission
and incorporated herein by reference).

3.3 Bylaws of registrant (included as Exhibit 3.2 to Registrant's
Registration Statement on Form S-1, Registration No. 333-1702, filed
on February 28, 1996 with the Commission and incorporated herein by
reference).

55* Opinion of David W. Harper, Esq.

8.1*8.1 Opinion of Eskew & Gresham, P.S.C.

8.2*8.2 Opinion of Vorys, Sater, Seymour & Pease.

10.1 Form of Junior Subordinated Indenture dated as of June 6, 1997 between
Registrant and Bankers Trust Company (as Trustee (included as Exhibit
4.1 to Registrant's Registration Statement on Form S-1, Registration
No. 333-27943, filed on May 28, 1997 with the Commission and
incorporated herein by reference).

10.2 Form of 9.75% Junior Subordinated Deferrable Interest Debentures due
June 30, 2027 (included as Exhibit 4.2 to Registrant's Registration
Statement on Form S-1, Registration No. 333-27943, filed on May 28,
1997 with the Commission and incorporated herein by reference).

10.3 Form of Trust Agreement dated as of May 27, 1997 between Registrant
and Bankers Trust (Delaware) as Trustee (included as Exhibit 4.3 to
Registrant's Registration

EXHIBIT DESCRIPTION OF DOCUMENT
- ------- -----------------------

Statement on Form S-1, Registration No. 333-27943, filed on May 28,
1997 with the Commission and incorporated herein by reference).

10.4 Form of Amended and Restated Trust Agreement among Registrant, Bankers
Trust Company, as Property Trustee, Bankers Trust (Delaware), as
Delaware Trustee and various holders of Trust Securities dated as of
June 6, 1997 (included as Exhibit 4.4 to Registrant's Registration
Statement on Form S-1, Registration No. 333-27943, filed on May 28,
1997 with the Commission and incorporated herein by reference).

10.5 Form of Guarantee Agreement between Registrant, as Guarantor, and
Bankers Trust Company, as Trustee, dated as of June 6, 1997 (included
as Exhibit 4.6 to Registrant's Registration Statement on Form S-1,
Registration No. 333-27943, filed on May 28, 1997 with the Commission
and incorporated herein by reference).

10.6 Amended and Restated Preferred Stock Purchase Agreement dated as of
September 29, 1994 between First Guaranty Bank, Hammond, Louisiana,
and Registrant (included as Exhibit 10.3 to Registrant's Registration
Statement on Form S-1, Registration No. 333-1702, filed on February
28, 1996 with the Commission and incorporated herein by reference).

10.7 Employment Agreement dated March 16, 1992, between Georgetown Bank &
Trust Company and Gardner E. Daniel (included as Exhibit 10.4 to
Registrant's Registration Statement on Form S-1, Registration No.
333-1702, filed on February 28, 1996 with the Commission and
incorporated herein by reference).

10.8 Deferred Compensation Agreement dated December 17, 1992, between
Georgetown Bank and Trust Company and Gardner E. Daniel (included as
Exhibit 10.5 to Registrant's Registration Statement on Form S-1,
Registration No. 333-1702, filed on February 28, 1996 with the
Commission and incorporated herein by reference).

10.9 Premier Financial Bancorp, Inc. 1996 Employee Stock Ownership
Incentive Plan (included as Exhibit 10.6 to Registrant's Registration
Statement on Form S-1, Registration No. 333-1702, filed on February
28, 1996 with the Commission and incorporated herein by reference).

13.1 Annual Report to Shareholders for the year ended December 31, 1996
(included within Registrant's Annual Report on Form 10-K for the year
ended December 31, 1996, filed on

EXHIBIT DESCRIPTION OF DOCUMENT
- ------- -----------------------

March 31, 1997 with the Commission (Commission File No. 0-20908) and
incorporated herein by reference).

13.2 Quarterly Report on Form 10-Q for the six month period ended June 30,
1997 (filed on August __,14, 1997 with the Commission (Commission File
No. 0-20908) and incorporated herein by reference).

16 Letter of McNeal, Williamson & Co. regarding change in certifying
accountant (included as Exhibit 16 to Registrant's Amendment No. 1 to
Registration Statement on Form S-1, Registration No. 333-1702, filed
on March 25, 1996 with the Commission and incorporated herein by
reference).

21 Subsidiaries of Registrant (included as Exhibit 21 to Registrant's
Annual Report on Form 10-K for the year ended December 31, 1996, filed
on March 31, 1997 with the Commission (Commission File No. 0-20908)
and incorporated herein by reference).

22.122.1* Letter from President of The Sabina Bank to shareholders regarding
Special Meeting of Shareholders.

22.222.2* Notice of Special Meeting of Shareholders of The Sabina Bank.

22.322.3* Form of Proxy for Special Meeting of Shareholders.

22.4 Fairness Opinion of Professional Bank Services, Inc. (included as
Annex II to the Proxy Statement/Prospectus that is part of the
Registration Statement to which this Exhibit Index relates).

23.1 Consent of Eskew & Gresham, PSC as to financial statements of
Registrant.

23.2 Consent of McNeal, Williamson & Co. as to financial
statements of Registrant.

23.3*23.3 Consent of Grant Thornton LLP as to financial statements of The Sabina
Bank.

23.4 Consent of David W. Harper, Esq. (included in Exhibit 5).

23.523.5* Consent of Professional Bank Services, Inc.

23.6 Consent of Eskew & Gresham, PSC as to tax opinion (included in
Exhibit 8.1).

23.7 Consent of Vorys, Sater, Seymour & Pease as to tax opinion (included
in Exhibit 8.2).

EXHIBIT DESCRIPTION OF DOCUMENT
- ------- -----------------------

24 Power of Attorney (included in the Signature Pages to the Registration
Statement to which this Exhibit Index relates)Statement).

2727* Financial Data Schedules.

- ---------------

*To be filed by amendment.* Previously filed.