SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended March 31, 2001
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from ___________ to ___________
Commission file number 0-20908
PREMIER FINANCIAL BANCORP, INC.
(Exact name of registrant as specified in its charter)
Kentucky 61-1206757
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
115 N. Hamilton Street
Georgetown, Kentucky 40324
(address of principal executive officer) (Zip Code)
Registrant's telephone number (502) 863-1955
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports) and (2) has been subject to filing
requirements for the past 90 days. Yes X No __
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practical date.
Common stock - 5,232,230 shares outstanding at May 11, 2001.
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
The accompanying information has not been audited by independent public
accountants; however, in the opinion of management such information reflects all
adjustments necessary for a fair presentation of the results for the interim
period. All such adjustments are of a normal and recurring nature.
The accompanying financial statements are presented in accordance with the
requirements of Form 10-Q and consequently do not include all of the disclosures
normally required by generally accepted accounting principles or those normally
made in the registrant's annual Form 10-K filing. Accordingly, the reader of the
Form 10-Q may wish to refer to the registrant's Form 10-K for the year ended
December 31, 2000 for further information in this regard.
Index to consolidated financial statements:
Consolidated Balance Sheets....................................... 3
Consolidated Statements of Income ................................ 4
Consolidated Statements of Comprehensive Income .................. 5
Consolidated Statements of Cash Flows............................. 6
Notes to Consolidated Financial Statements........................ 7
PREMIER FINANCIAL BANCORP, INC.
CONSOLIDATED BALANCE SHEETS
MARCH 31, 2001 AND DECEMBER 31, 2000
(DOLLARS IN THOUSANDS)
- --------------------------------------------------------------------------------
(UNAUDITED)
2001 2000
---- ----
ASSETS
Cash and due from banks $ 20,610 $ 23,339
Interest earning balances with banks 61 737
Federal funds sold 40,226 21,087
Investment securities
Available for sale 156,280 176,494
Held to maturity - 17,906
Loans 523,224 595,947
Unearned interest (274) (371)
Allowance for loan losses (7,953) (7,821)
------------- --------------
Net loans 514,997 587,755
Federal Home Loan Bank and Federal Reserve Bank stock 4,266 4,476
Premises and equipment, net 13,613 15,474
Real estate and other property acquired through foreclosure 2,734 3,116
Interest receivable 7,920 10,144
Goodwill and other intangibles 18,353 22,856
Other assets 6,739 6,548
------------- --------------
Total assets $ 785,799 $ 889,932
============= ==============
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits
Non-interest bearing $ 63,426 $ 74,438
Time deposits, $100 and over 90,265 105,490
Other interest bearing 474,792 548,484
------------- --------------
Total deposits 628,483 728,412
Securities sold under agreements to repurchase 11,135 20,553
Federal Home Loan Bank advances 30,923 30,687
Other borrowed funds 20,000 20,000
Interest payable 2,821 3,901
Other liabilities 5,164 1,799
------------- --------------
Total liabilities 698,526 805,352
Guaranteed preferred beneficial interests in Company's debentures 28,750 28,750
Stockholders' equity
Preferred stock, no par value; 1,000,000 shares authorized;
none issued or outstanding - -
Common stock, no par value; 10,000,000 shares authorized;
5,232,230 shares issued and outstanding 1,103 1,103
Surplus 43,445 43,445
Retained earnings 13,375 12,151
Accumulated other comprehensive income 600 (869)
------------- --------------
Total stockholders' equity 58,523 55,830
------------- --------------
Total liabilities and stockholders' equity $ 785,799 $ 889,932
============= ==============
- --------------------------------------------------------------------------------
See Accompanying Notes to Consolidated Financial Statements
3.
PREMIER FINANCIAL BANCORP, INC.
CONSOLIDATED STATEMENTS OF INCOME
THREE MONTHS ENDED MARCH 31, 2001 AND 2000
(IN THOUSANDS EXCEPT PER SHARE DATA)
(UNAUDITED)
- --------------------------------------------------------------------------------
2001 2000
---- ----
Interest income
Loans, including fees $ 12,580 $ 13,359
Investment securities
Taxable 2,442 2,416
Tax-exempt 302 357
Federal funds sold and other 472 479
----------- -----------
Total interest income 15,796 16,611
Interest expense
Deposits 7,645 7,663
Debt and other borrowings 1,797 1,862
----------- -----------
Total interest expense 9,442 9,525
Net interest income 6,354 7,086
Provision for possible loan losses 632 1,385
----------- -----------
Net interest income after provision for
possible loan losses 5,722 5,701
Non-interest income
Service charges 526 492
Insurance commissions 39 117
Investment securities gains 180 1
Gain on the sale of subsidiary's banking operations 3,418 -
Other 399 376
----------- -----------
4,562 986
Non-interest expenses
Salaries and employee benefits 3,032 3,283
Occupancy and equipment expenses 772 772
Amortization of intangibles 337 393
Other expenses 1,944 1,672
----------- -----------
6,085 6,120
----------- -----------
Income before income taxes 4,199 567
Provision for income taxes 2,975 120
----------- -----------
Net income $ 1,224 $ 447
=========== ===========
Earnings per share $ .23 $ .09
Earnings per share assuming dilution $ .23 $ .09
Weighted average shares outstanding 5,232 5,232
- --------------------------------------------------------------------------------
See Accompanying Notes to Consolidated Financial Statements
4.
PREMIER FINANCIAL BANCORP, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
THREE MONTHS ENDED MARCH 31, 2001 AND 2000
(IN THOUSANDS)
(UNAUDITED)
- --------------------------------------------------------------------------------
2001 2000
---- ----
Net Income $ 1,224 $ 447
Other comprehensive income (loss), net of tax:
Unrealized gains and (losses) arising during
the period $ 1,588 $ (216)
Reclassification of realized amount (119) (1)
----------- -----------
Net change in unrealized gain (loss) on
securities 1,469 (217)
----------- -----------
Comprehensive income $ 2,693 $ 230
=========== ===========
- --------------------------------------------------------------------------------
See Accompanying Notes to Consolidated Financial Statements
5.
PREMIER FINANCIAL BANCORP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 2001 AND 2000
(IN THOUSANDS)
(UNAUDITED)
- --------------------------------------------------------------------------------
2001 2000
---- ----
Cash flows from operating activities
Net income $ 1,224 $ 447
Adjustments to reconcile net income to net cash
from operating activities
Depreciation 342 329
Provision for loan losses 632 1,385
Amortization, net 214 304
FHLB stock dividends (69) (74)
Investment securities losses (gains), net (180) (1)
Gain on the sale of subsidiary's banking operations (3,418) -
Changes in
Interest Receivable 625 572
Other assets (1,031) (156)
Interest Payable (625) 105
Other liabilities 3,365 (18)
------------- -------------
Net cash from operating activities 1,079 2,893
Cash flows from investing activities
Purchases of securities available for sale (48,871) (19,137)
Proceeds from sales of securities available for sale 10,602 500
Proceeds from maturities and calls of securities available
for sale 66,356 8,230
Purchases of securities held to maturity - (958)
Proceeds from maturities and calls of securities held
to maturity - 505
Purchases of FHLB stock (172) (7)
Redemption of FHLB stock 451 -
Net change in federal funds sold (19,139) (1,616)
Net change in loans (7,150) (4,627)
Purchases of premises and equipment, net (115) (355)
Proceeds from sale of other real estate acquired
through foreclosure 530 258
Net cash received (paid) related to acquisitions (7,178) -
------------- -------------
Net cash from investing activities (4,686) (17,207)
Cash flows from financing activities
Net change in deposits 8,584 11,369
Advances from Federal Home Loan Bank 17,220 4,600
Repayment of Federal Home Loan Bank advances (16,984) (6,940)
Net change in agreements to repurchase securities (8,618) 508
Dividends paid - (784)
------------- -------------
Net cash from financing activities 202 8,753
------------- -------------
Net change in cash and cash equivalents (3,405) (5,561)
Cash and cash equivalents at beginning of period 24,076 29,861
------------- -------------
Cash and cash equivalents at end of period $ 20,671 $ 24,300
============= =============
- --------------------------------------------------------------------------------
See Accompanying Notes to Consolidated Financial Statements
6.
PREMIER FINANCIAL BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
- --------------------------------------------------------------------------------
NOTE 1 - BASIS OF PRESENTATION
The consolidated financial statements include the accounts of Premier Financial
Bancorp, Inc. (the Company) and its wholly owned subsidiaries:
Year March 31, 2001
Acquired Assets
-------- ------
(In Thousands)
Citizens Deposit Bank & Trust Vanceburg, Kentucky 1991 $ 120,088
Bank of Germantown Germantown, Kentucky 1992 29,646
Citizens Bank (Kentucky), Inc. Georgetown, Kentucky 1995 110,798
Farmers Deposit Bank Eminence, Kentucky 1996 144,299
The Sabina Bank Sabina, Ohio 1997 54,914
Ohio River Bank Ironton, Ohio 1998 70,985
The Bank of Philippi, Inc. Philippi, West Virginia 1998 79,778
Boone County Bank, Inc. Madison, West Virginia 1998 151,803
The Company also has a data processing subsidiary, Premier Data Services, Inc.,
the PFBI Capital Trust subsidiary as discussed in Note 7, and a loan servicing
subsidiary, Mt. Vernon Financial Holdings, Inc., the successor to Bank of Mt.
Vernon. All intercompany transactions and balances have been eliminated.
NOTE 2 - BUSINESS COMBINATIONS
On January 26, 2001, the Company disposed of all the deposits (approximately
$109 million), the majority of loans (approximately $79 million), approximately
$12.5 million of investment securities and the premises and equipment
(approximately $1.6 million) of the Bank of Mt. Vernon under the terms of a
Purchase and Assumption Agreement. As a result of this transaction, the banking
charter of the Bank of Mt. Vernon has been relinquished and the Company has
agreed to not compete in the markets previously served by the Bank of Mt.
Vernon.
NOTE 3 - REGULATORY MATTERS
On September 29, 2000, the Company entered into an agreement with the Federal
Reserve Bank (FRB) that prohibits the Company from paying dividends or incurring
any additional debt without the prior written approval of the FRB. Additionally,
the agreement requires the Company to develop and monitor compliance with
certain operational policies designed to strengthen Board of Director oversight
including credit administration, liquidity, internal audit and loan review.
- --------------------------------------------------------------------------------
CONTINUED
7.
PREMIER FINANCIAL BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
- --------------------------------------------------------------------------------
NOTE 3 - REGULATORY MATTERS (Continued)
Two of the Company's subsidiaries, Citizens Deposit Bank & Trust and Bank of
Germantown, have entered into similar agreements with their respective primary
regulators which, among other things, prohibit the payment of dividends without
prior written approval and requires significant changes in their credit
administration policies.
These agreements, which require periodic reporting, will remain in force until
the regulators are satisfied that the Company and the banks have fully complied
with the terms of the agreement.
NOTE 4 - SECURITIES
Amortized cost and fair value of investment securities, by category, at March
31, 2001 are summarized as follows:
(In Thousands)
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
---- ----- ------ -----
Available for sale
U. S. Treasury securities $ 2,300 $ 31 $ - $ 2,331
U. S. agency securities 121,367 537 (67) 121,837
Obligations of states and political
Subdivisions 20,163 562 (3) 20,722
Mortgage-backed securities 9,984 2 (32) 9,954
Other equity securities 1,555 2 (121) 1,436
-------------- -------------- -------------- ---------------
Total available for sale $ 155,369 $ 1,134 $ (223) $ 156,280
============== ============== ============== ===============
Upon adoption of Financial Accounting Standards Board Statement 133 on January
1, 2001, all of the Company's securities classified as held to maturity were
re-classified as available for sale.
Amortized cost and fair value of investment securities, by category, at December
31, 2000 are summarized as follows:
(In Thousands)
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
---- ----- ------ -----
Available for sale
U. S. Treasury securities $ 3,345 $ 13 $ (1) $ 3,357
U. S. agency securities 155,045 232 (1,389) 153,888
Obligations of states and political
Subdivisions 7,016 117 (1) 7,132
Mortgage-backed securities 9,478 - (159) 9,319
Preferred stock 2,000 - - 2,000
Other securities 925 - (127) 798
-------------- -------------- -------------- ---------------
Total available for sale $ 177,809 $ 362 $ (1,677) $ 176,494
============== ============== ============== ===============
- --------------------------------------------------------------------------------
CONTINUED
8.
PREMIER FINANCIAL BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
- --------------------------------------------------------------------------------
NOTE 4 - SECURITIES (Continued)
(In Thousands)
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
---- ----- ------ -----
Held to maturity
U. S. agency securities 1,233 4 (7) 1,230
Obligations of states and political
Subdivisions 16,656 378 (31) 17,003
Mortgage-backed securities 17 - (1) 16
-------------- -------------- --------------- ---------------
Total held to maturity $ 17,906 $ 382 $ (39) $ 18,249
============== ============== ============== ===============
NOTE 5 - LOANS
Major classifications of loans at March 31, 2001 and December 31, 2000 are
summarized as follows:
2001 2000
---- ----
(In Thousands)
Commercial, secured by real estate $ 111,807 $ 149,733
Commercial, other 83,645 86,069
Real estate construction 19,428 24,774
Residential real estate 195,705 211,662
Agricultural 11,304 13,817
Consumer and home equity 99,852 108,646
Other 1,483 1,246
------------ ------------
$ 523,224 $ 595,947
============ ============
NOTE 6 - ALLOWANCE FOR LOAN LOSSES
Changes in the allowance for loan losses for the three months ended March 31,
2001 and 2000 are as follows:
2001 2000
---- ----
Balance, beginning of period $ 7,821 $ 6,812
Net charge-offs (500) (571)
Provision for loan losses 632 1,385
------------ ------------
Balance, end of period $ 7,953 $ 7,626
============ ============
- --------------------------------------------------------------------------------
CONTINUED
9.
PREMIER FINANCIAL BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
- --------------------------------------------------------------------------------
NOTE 7 - GUARANTEED PREFERRED BENEFICIAL INTERESTS IN COMPANY'S
SUBORDINATED DEBENTURES
Guaranteed preferred beneficial interests in Company's debentures (Preferred
Securities) represent preferred beneficial interests in the assets of PFBI
Capital Trust (Trust). The Trust holds certain 9.75% junior subordinated
debentures due June 30, 2027 issued by the Company on June 9, 1997.
Distributions on the Preferred Securities is payable at an annual rate of 9.75%
of the stated liquidation amount of $25 per Capital Security, payable quarterly.
Cash distributions on the Preferred Securities are made to the extent interest
on the debentures is received by the Trust. In the event of certain changes or
amendments to regulatory requirements or federal tax rules, the Preferred
Securities are redeemable in whole. Otherwise, the Preferred Securities are
generally redeemable by the Company in whole or in part on or after June 30,
2002 at 100% of the liquidation amount. The Trust's obligations under the
Preferred Securities are fully and unconditionally guaranteed by the Company.
NOTE 8 - STOCKHOLDERS' EQUITY
The Company's principal source of funds for dividend payments is dividends
received from the subsidiary Banks. Banking regulations limit the amount of
dividends that may be paid without prior approval of regulatory agencies. Under
these regulations, the amount of dividends that may be paid in any calendar year
is limited to the current year's net profits, as defined, combined with the
retained net profits of the preceding two years, subject to the capital
requirements and additional restrictions as discussed below. During 2001, the
Banks could, without prior approval, declare dividends of approximately $2.3
million plus any 2001 net profits retained to the date of the dividend
declaration.
The Company and the subsidiary Banks are subject to various regulatory capital
requirements administered by the federal banking agencies. 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 Company's financial statements. Under capital
adequacy guidelines and the regulatory framework for prompt corrective action,
the Company and the Banks must meet specific guidelines that involve
quantitative measures of their assets, liabilities, and certain off-balance
sheet items as calculated under regulatory accounting practices.
These quantitative measures established by regulation to ensure capital adequacy
require the Company and Banks to maintain minimum amounts and ratios (set forth
in the following table) of Total and Tier I capital (as defined in the
regulations) to risk-weighted assets (as defined), and of Tier I capital (as
defined) to average assets (as defined). Management believes, as of March 31,
2001, the Company and the Banks meet all quantitative capital adequacy
requirements to which they are subject.
- --------------------------------------------------------------------------------
CONTINUED
10.
PREMIER FINANCIAL BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
- --------------------------------------------------------------------------------
NOTE 8 - STOCKHOLDERS' EQUITY (Continued)
Shown below is a summary of regulatory capital ratios for the Company:
Regulatory
March 31, December 31, Minimum
2001 2000 Requirements
---- ---- ------------
Tier I Capital (to Risk-Weighted Assets) 11.5% 9.0% 4.0%
Total Capital (to Risk-Weighted Assets) 14.8% 12.0% 8.0%
Tier I Capital (to Average Assets) 7.4% 6.1% 4.0%
The capital amounts and classifications are also subject to qualitative
judgments by the regulators. As a result of these qualitative judgments, the
Company and two of the Company's subsidiaries have entered into agreements with
the applicable regulatory authorities which provide for additional restrictions
on their respective capital levels and the payment of dividends. The Company
entered into an agreement with the Federal Reserve Bank (FRB) on September 29,
2000 restricting the Company from declaring or paying dividends without prior
approval from the FRB. An additional provision of this agreement requires prior
approval from the FRB before the Company increases its borrowings or incurs any
debt. This agreement is in effect until terminated by the FRB.
Citizens Deposit Bank (Citizens) entered into a Written Agreement with the FRB
on September 29, 2000 restricting Citizens from declaring or paying dividends
without prior approval. This agreement is in effect until terminated by the FRB.
Citizens Tier I capital to average assets was 9.1% at March 31, 2001.
Bank of Germantown (Germantown) entered into an agreement with the Kentucky
Department of Financial Institutions (KDFI) and the Federal Deposit Insurance
Corporation (FDIC) on June 13, 2000 restricting Germantown from declaring or
paying dividends, without prior approval, if its Tier I capital to average
assets falls below 8%. This agreement is in effect until terminated by the KDFI
and FDIC. Germantown's Tier I capital to average assets was 6.6% at March 31,
2001.
As of March 31, 2001, the most recent notification from the Federal Reserve Bank
categorized the Company and its subsidiary banks as well capitalized under the
regulatory framework for prompt corrective action. To be categorized as well
capitalized, the Company must maintain minimum Total risk-based, Tier I
risk-based and Tier I leverage ratios as set forth in the preceding table. There
are no conditions or events since that notification that management believes
have changed the Company's category.
- --------------------------------------------------------------------------------
11.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
- --------------------------------------------------------------------------------
A. Results of Operations
Net income for the three months ended March 31, 2001 was $1,224,000 or
$0.23 per share compared to net income of $447,000 or $0.09 per share for the
three months ended March 31, 2000. This $777,000 increase is primarily the
result of the $625,000 net gain (after tax) realized from the sale of Bank of
Mt. Vernon's banking operations. Excluding the net gain on the sale and the
operations of the Bank of Mt. Vernon, Premier's net income for the quarter
ending March 31, 2001 was $545,000, or $0.10 per share. This compares to
Premier's net income for the quarter ending March 31, 2000, net of the Bank of
Mt. Vernon's operations, of $323,000 or $0.06 cents per share.
Results for the quarter reflect charges for amortization of goodwill and
other intangibles associated with cash acquisitions totaling $255,000 (after
tax) as compared to $311,000 (after tax) in the same period for 2000. Not
including these charges and the net gain on the sale, net income for the first
quarter 2001 was $854,000 or $0.16 per share versus $758,000 or $0.14 per share
in 2000.
Net interest income decreased $732,000 to $6,354,000 for the three months
ended March 31, 2001 compared to $7,086,000 for the same period in 2000. This is
primarily due to the decrease in earning assets associated with the sale of Bank
of Mt. Vernon's banking operations. Net interest margin for the three months
ending March 31, 2001 was approximately 3.55% as compared to 3.73% for the same
period in 2000. This decrease in net interest margin is the result primarily
from an increase in shorter term assets which are at lower rates from the same
period last year due to the recent drop in market interest rates. The annualized
returns on stockholders' equity and on average assets were approximately 8.48%
and .61% for the three months ended March 31, 2001 compared to 3.45% and .21%
for the same period in 2000. Excluding the net gain (after tax) from the sale of
the operations of the Bank of Mt. Vernon, the annualized returns on stockholders
equity and on average assets were approximately 4.15% and .30% for the three
months ended March 31, 2001.
Non-interest income increased $3,576,000 to $4,562,000 for the first three
months of 2001 compared to $986,000 for the first three months of 2000.
Excluding the gain on sale of subsidiary's banking operations of $3,418,000,
non-interest income increased $158,000 or 16.0%, for the quarter ending March
31, 2001 compared to the same period for 2000.
Non-interest expenses for the first quarter of 2001 totaled $6,085,000 or
3.0% of average assets on an annualized basis compared to $6,120,000 or 2.9% of
average assets for the same period of 2000. Contributing to this decrease is the
exclusion of the Bank of Mt. Vernon's operations for a partial quarter in 2001
versus its inclusion for the full quarter for 2000. This decrease was partially
offset by increased costs associated with heightened levels of risk
identification and controls.
Income tax expense was $2,975,000 for the first quarter of 2001 compared to
$120,000 for the first quarter of 2000. The increase in income tax expense can
be primarily attributed to the $2,792,000 tax effect associated with the gain on
sale of subsidiary's banking operations. The annualized effective tax rate for
the period ended March 31, 2001 was 70.9%, compared to the 21.2% effective tax
rate for the same period in 2000. This is primarily due to the elimination of
12.
intangibles associated with the Company's acquisition of the Bank of Mt. Vernon.
The expensing of this intangible was a non-taxable event thereby raising the
annualized effective tax rate for the quarter ended March 31, 2001.
B. Financial Position
Total assets decreased $104.1 million or 11.7% to $785.8 million from the
$889.9 million on December 31, 2000. This decrease can be attributed to the
decrease in assets of approximately $110 million associated with the sale of
Bank of Mt. Vernon's banking operations. Exclusive of the assets involved in
this sale total assets increased approximately $5.5 million, or .7%, when
comparing March 31, 2001 to December 31, 2000.
Earning assets decreased to $723.8 on March 31, 2001 from $816.3 million on
December 31, 2000, a decrease of $92.5 million, or 11.3%. This decrease can be
attributed to the decrease in earning assets of approximately $92 million
associated with the sale of Bank of Mt. Vernon' s banking operations. Exclusive
of the earning assets involved in this sale, total earning assets were
essentially unchanged from December 31, 2000 to March 31, 2001.
Cash and cash equivalents at March 31, 2001 were $20.7 million or a $3.3
million decrease from $24.0 million on December 31, 2000. Fed funds sold
increased to $40.2 million from $21.1 million during the same period; an
increase of $19.1 million.
Total loans at March 31, 2001 were $522.9 million compared to $595.6
million at December 31, 2000, a decrease of $72.7 million. This decrease can be
attributed to the approximately $79 million of loans included in the sale of
Bank of Mt. Vernon's banking operations. Exclusive of the loans involved in this
sale, total loans increased approximately $6.8 million, or 1.4%, when comparing
March 31, 2001 to December 31, 2000.
Deposits totaled $628.5 million as of March 31, 2001, a decrease of $99.9
million, or 13.7%, from the December 31, 2000 amount of $728.4 million. This
decrease can be attributed to the decrease in deposits of approximately $109
million associated with the sale of Bank of Mt. Vernon's banking operations.
Exclusive of the deposits involved in this sale, total deposits increased $8.1
million, or 1.3%, when comparing March 31, 2001 to December 31, 2000.
13.
The following table sets forth information with respect to the Company's
nonperforming assets at March 31, 2001 and December 31, 2000.
(In Thousands)
2001 2000
---- ----
Non-accrual loans $ 8,871 $ 7,840
Accruing loans which are contractually
past due 90 days or more 3,009 2,196
Restructured 762 689
-------------- ------------
Total non-performing loans 12,642 10,725
Other real estate acquired through
Foreclosure 2,734 3,116
-------------- ------------
Total non-performing assets $ 15,376 $ 13,841
Non-performing loans as a percentage
of total loans 2.42% 1.80%
Non-performing assets as a percentage
of total assets 1.96% 1.56%
The provision for possible loan losses and net chargeoffs were $632,000 and
$500,000 for the first quarter of 2001 compared to $1,385,000 and $571,000,
respectively, for the first quarter of 2001. The decrease in the provision for
loan losses was prompted primarily by a reduction in overall loan growth. The
allowance for loan losses at March 31, 2001 was 1.52% of total loans as compared
to 1.31% at December 31, 2000. This increase in the percentage of allowance for
loan losses to total loans can be primarily attributed to the reduction in total
loans associated with the sale of Bank of Mt. Vernon's banking operations.
Nonperforming loans increased to $12.6 million as of March 31, 2001, when
compared to the $10.7 million on December 31, 2000. This increase in conjunction
with the decrease in total loans, resulted in the increase of the ratio of
nonperforming loans to total loans from 1.80% on December 31, 2000 to 2.42% on
March 31, 2001.
The Company retained approximately $20 million of loans that were
previously serviced and held by Bank of Mt. Vernon. These loans are now held in
the Company's subsidiary, Mt. Vernon Financial Holdings, Inc. Exclusive of the
nonperforming loans associated with Bank of Mt. Vernon or Mt. Vernon Financial
Holdings, Inc., total nonperforming loans decreased approximately 4.3% from
December 31, 2000 to March 31, 2001.
C. Liquidity
Liquidity objectives for the Company can be expressed in terms of
maintaining sufficient cash flows to meet both existing and unplanned
obligations in a cost effective manner. Adequate liquidity allows the Company to
meet the demands of both the borrower and the depositor on a timely basis, as
well as pursuing other business opportunities as they arise. Thus, liquidity
management embodies both an asset and liability aspect while attempting to
maximize profitability. In order to provide for funds on a current and long-term
basis, the Company's subsidiary banks rely primarily on the following sources:
14.
1. Core deposits consisting of both consumer and commercial
deposits and certificates of deposit of $100,000 or more.
Management believes that the majority of its $100,000 or more
certificates of deposit are no more volatile than its other
deposits. This is due to the nature of the markets in which the
subsidiaries operate.
2. Cash flow generated by repayment of loans and interest.
3. Arrangements with correspondent banks for purchase of unsecured
federal funds.
4. The sale of securities under repurchase agreements and borrowing
from the Federal Home Loan Bank.
5. Maintenance of an adequate available-for-sale security
portfolio. The Company owns $156.3 million of securities at
market value as of March 31, 2001.
The cash flow statements for the periods presented in the financial
statements provide an indication of the Company's sources and uses of cash as
well as an indication of the ability of the Company to maintain an adequate
level of liquidity.
D. Capital
At March 31, 2001, total shareholders' equity of $58.5 million was 7.4% of
total consolidated assets. This compares to total shareholders' equity of $55.8
million or 6.3% of total consolidated assets on December 31, 2000.
Tier I capital totaled $58.8 million at March 31, 2001, which represents a
Tier I leverage ratio of 7.4%.
Book value per share was $11.19 at March 31, 2001, and $10.67 at December
31, 2000. An increase in unrealized gain on securities available for sale was
primarily responsible for the increase in accumulated other comprehensive income
and corresponding increase in book value per share. Also, contributing to the
increase in book value per share, as well as total shareholders' equity, was the
retention of earnings in the amount of $1,224,000.
The Company declared a first quarter dividend of $0.15 per share, or
$784,835 during the quarter ended March 31, 2000. The Company did not declare a
first quarter 2001 dividend.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
- -------------------------------------------------------------------
The Company currently does not engage in any derivative or hedging
activity. Refer to the Company's 2000 10-K for analysis of the interest rate
sensitivity. The Company believes there have been no significant changes in the
interest rate sensitivity since previously reported on the Company's 2000 10-K.
15.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings None
Item 2. Changes in Securities None
Item 3. Defaults Upon Senior Securities None
Item 4. Submission of Matters to a vote of Security Holders None
Item 5. Other Information None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit No. Description of Document
27 Financial Data Schedules
(b) Reports on Form 8-K Form 8-K dated February 12, 2001,
reporting the consummation of a
Purchase and Assumption Agreement
involving the Company's
affiliate, Bank of Mt. Vernon.
16.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Corporation has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
PREMIER FINANCIAL BANCORP, INC.
Date: May 14, 2001 /s/ Marshall T. Reynolds
-------------------------------
Marshall T. Reynolds
Chairman of the Board
Date: May 14, 2001 /s/ Gardner E. Daniel
-------------------------------
Gardner E. Daniel
President & Chief Executive
Officer
Date: May 14, 2001 /s/ Edward Barnes
-------------------------------
Edward Barnes
Vice President & Chief
Financial Officer
17.
Exhibit No. 27
Financial Data Schedules
Article 9
MULTIPLIER 1000
PERIOD TYPE 3-mos
FISCAL-YEAR-END Dec-31-2001
PERIOD-START Jan-01-2001
PERIOD-END Mar-31-2001
CASH 20,610
INT-BEARING-DEPOSITS 61
FED-FUNDS-SOLD 40,226
TRADING ASSETS 0
INVESTMENTS-HELD-FOR-SALE 156,280
INVESTMENTS-CARRYING 0
INVESTMENTS-MARKET 0
LOANS 522,950
ALLOWANCE 7,953
TOTAL-ASSETS 785,799
DEPOSITS 628,483
SHORT-TERM 48,361
LIABILITIES-OTHER 7,985
LONG-TERM 42,447
PREFERRED-MANDATORY 0
PREFERRED 0
COMMON 1,103
OTHER-SE 57,420
TOTAL-LIABILTIES-AND-EQUITY 785,799
INTEREST-LOAN 12,580
INTEREST-INVEST 2,744
INTEREST-OTHER 472
INTEREST-TOTAL 15,796
INTEREST-DEPOSIT 7,645
INTEREST-EXPENSE 9,442
INTEREST-INCOME-NET 6,354
LOAN-LOSSES 632
SECURITIES-GAINS 180
EXPENSE-OTHER 6,085
INCOME-PRETAX 4,199
INCOME-PRE-EXTRAORDINARY 1,224
EXTRAORDINARY 0
CHANGES 0
NET-INCOME 1,224
EPS-BASIC .23
EPS-DILUTED .23
YIELD-ACTUAL 3.55 F1
LOANS-NON 8,871
LOANS-PAST 3,009
LOANS-TROUBLED 762
LOANS-PROBLEM 0
ALLOWANCE-OPEN 7,821
CHARGE-OFFS 658
RECOVERIES 158
ALLOWANCE-CLOSE 7,953
ALLOWANCE-DOMESTIC 7,953
ALLOWANCE-FOREIGN 0
ALLOWANCE-UNALLOCATED 618
F1 Computed as tax-equivalent basis