EXHIBIT 99.1
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NEWS FOR IMMEDIATE RELEASE CONTACT: BRIEN M. CHASE, CFO
April 21, 2004 (304) 525-1600
PREMIER FINANCIAL BANCORP, INC.
ANNOUNCES 2003 ANNUAL FINANCIAL RESULTS
PREMIER FINANCIAL BANCORP, INC. (PREMIER), HUNTINGTON, WEST VIRGINIA
(NASDAQ/NMS-PFBI), a $622 million community bank holding company with seven
bank subsidiaries announced its annual financial results for the year ended
December 31, 2003.
As more fully explained in its Annual Report on Form 10-K filed with the
Securities and Exchange Commission and in Premier's upcoming annual report to
shareholders, Premier has restated its 2002 and 2001 financial results and has
adjusted previously reported 2003 quarterly financial results to reflect the
financial statement effect of loan charge-offs and additional provisions for
loan losses at its wholly-owned subsidiary Farmers Deposit Bank (the Bank) that
occurred in those periods but were improperly concealed by former subsidiary
management. Included at the end of the financial highlights section below is a
summary of the restatement's effects on the operating results of Premier.
In addition, on February 13, 2004, Premier announced that it had signed a
definitive agreement to sell its subsidiary Citizens Bank (Kentucky) Inc.
("Citizens Bank") in a cash transaction valued at approximately $14,500,000. In
accordance with Financial Accounting Standard 144, "Accounting for the
Impairment or Disposal of Long-lived Assets", the financial position and results
of operations of Citizens Bank have been removed from the detail line items in
Premier's financial statements and presented separately as "discontinued
operations." The following discussion and summary financial statements below
reflect the two situations described above.
Due to additional loan loss provisions at the Bank, Premier realized a net loss
from continuing operations of $596,000 or $0.11 per share for the quarter ending
December 31, 2003. As management continues to work through the past due and
problem loans identified at the Bank, Premier charged-off $546,000 of loans at
the Bank (net of $141,000 of recoveries) in the fourth quarter of 2003. The
resulting depletion of the allowance for loan losses, together with the current
analysis of additional risk in the loan portfolio, warranted an additional $2.12
million provision for loan losses at the Bank during the fourth quarter. In
contrast, the remaining six bank subsidiaries recorded a combined provision for
loan losses of $9,000 during the fourth quarter. Premier's annual results were
also negatively impacted by write-offs resulting from the Bank's investigation
findings. Consolidated annual results total a loss from continuing operations of
$9,617,000 or $1.84 per share.
Robert W. Walker, Premier's President and CEO, commented, "While a decline from
prior quarters, the fourth quarter provision for loan losses was necessary as we
continue to work our problem credits at Farmers Deposit Bank. The local Bank
board is engaged in weekly executive sessions to review the progress on these
problem credits as the Bank seeks collection or a strengthening of the credit
position of the loans. As a result, Premier's allowance for loan losses at
year-end was 4.31% of total loans compared to 2.60% of total loans at the end of
last year. We also hope to close the sale of our Citizens Bank affiliate late in
the second quarter or early in the third quarter of 2004."
Net interest income for the quarter ending December 31, 2003 totaled $4.480
million, a 4.1% decrease from the $4.671 million earned in the third quarter of
2003. The decrease was due in part to reversals of interest income related to
loans placed on non-accrual status at the Bank. The remaining decrease is
largely due to a lower volume of loans outstanding at Premier's other bank
subsidiaries and lower reinvestment yields on securities. The resulting decline
in interest income more than offset the lower interest costs resulting from the
decline in market interest rates over the past year and the repayment of certain
borrowed funds.
Net overhead for the quarter ending December 31, 2003 totaled $3.717 million.
This compares to $3.315 million in the third quarter of 2003 and $3.480 million
in the fourth quarter of 2002. The increase in the fourth quarter is primarily
related to increased professional fees associated with the Farmers investigation
and the writedown of an OREO property to net realizable value. For the year,
Premier has reduced its overhead expenses by reducing staff costs and other real
estate owned expenses while increasing revenue from deposit service charges.
Total assets as of December 31, 2003 of $622 million were 7.8% less than the
$675 million of total assets at the prior year-end, largely due to the impact of
the large provision for loan losses, the planned pay down of $17.4 million of
borrowed funds, the non-renewal of some high rate certificates of deposit and a
decline in other interest bearing deposit balances. Shareholders' equity of
$45.5 million equaled 7.3% of total assets at December 31, 2003. This compares
to shareholders' equity of $56.1 million or 8.3% of total assets at December 31,
2002. The decline in shareholders' equity is largely due to the losses incurred
at Farmers Deposit Bank.
Certain Statements contained in this news release, including without limitation
statements including the word "believes," "anticipates," "intends," "expects" or
words of similar import, constitute "forward-looking statements" within the
meaning of section 21E of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"). Such forward-looking statements involve known and unknown
risks, uncertainties and other factors that may cause the actual results,
performance or achievements of Premier to be materially different from any
future results, performance or achievements of Premier expressed or implied by
such forward-looking statements. Such factors include, among others, general
economic and business conditions, changes in business strategy or development
plans and other factors referenced in this press release. Given these
uncertainties, prospective investors are cautioned not to place undue reliance
on such forward-looking statements. Premier disclaims any obligation to update
any such factors or to publicly announce the results of any revisions to any of
the forward-looking statements contained herein to reflect future events or
developments.
Following is a summary of the financial highlights for Premier as of and for the
periods ending December 31, 2003.
PREMIER FINANCIAL BANCORP, INC.
Financial Highlights
Dollars in Thousands (except per share data)
For the
Year Ended
Dec 31 Dec 31
2003 2002
(Restated)
Interest Income 31,729 38,303
Interest Expense 12,547 17,465
Net Interest Income 19,182 20,838
Provision for Loan Losses 20,513 9,456
Net Interest Income after Provision (1,331) 11,385
Non-Interest Income 3,448 2,790
Securities Gains (Losses) 616 (73)
Non-Interest Expenses 17,632 17,831
(Loss) from Continuing
Operations Before Taxes (14,899) (3,729)
Income Taxes (Benefits) (5,282) (1,522)
(Loss) from Continuing Operations (9,617) (2,207)
Loss from Discontinued Operations (80) (1,130)
NET INCOME (LOSS) (9,697) (3,337)
EARNINGS PER SHARE (1.85) (0.64)
For the
Quarters Ended
Mar 31 June 30 Sept 30 Dec 31
2003 2003 2003 2003
(Restated) (Restated) (Restated)
Interest Income 8,606 8,178 7,665 7,280
Interest Expense 3,505 3,248 2,994 2,800
Net Interest Income 5,101 4,930 4,671 4,480
Provision for Loan Losses 2,267 11,778 4,343 2,125
Net Interest Income
after Provision 2,834 (6,848) 328 2,355
Non-Interest Income 710 798 899 951
Securities Gains (Losses) 189 15 2 410
Non-Interest Expenses 4,338 4,322 4,214 4,668
Loss from Continuing
Operations Before Taxes (605) (10,357) (2,985) (952)
Income Taxes (Benefits) (240) (3,578) (1,108) (356)
Loss from Continuing Operations (365) (6,779) (1,877) (596)
Income (Loss) from
Discontinued Operations (27) (76) 21 2
NET INCOME (LOSS) (393) (6,855) (1,856) (594)
EARNINGS PER SHARE (0.08) (1.31) (0.35) (0.11)
PREMIER FINANCIAL BANCORP, INC.
Financial Highlights (continued)
Dollars in Thousands (except per share data)
Balances as of
December 31 December 31
2003 2002
(Restated)
Cash/Due From Banks/Fed Funds 33,473 39,081
Investment Securities 147,646 144,698
Loans (net) 317,494 363,401
Other Real Estate Owned 3,187 3,505
Other Assets 25,613 24,368
Goodwill 15,816 15,816
Assets of Discontinued Operation 79,163 84,406
TOTAL ASSETS 622,392 675,275
LIABILITIES
Deposits 455,474 477,724
Other Debt 18,307 32,600
Junior Subordinated Debentures 26,546 29,639
Other Liabilities 5,129 2,662
Liabilities of Discontinued Operation 71,396 76,526
TOTAL LIABILITIES 576,332 618,262
Stockholders' Equity 45,540 56,124
TOTAL LIABILITIES &
STOCKHOLDERS' EQUITY 622,392 675,275
TOTAL BOOK VALUE PER SHARE 8.70 10.73
Summary of restatement effects on the operating results of Premier for the years
ended December 31, (in thousands except per share data):
2003 2002 2001
Increase Increase Increase
Operating statement caption (Decrease) (Decrease) (Decrease)
- --------------------------- ---------- ---------- ----------
Interest income, loans 108 (226) (139)
Provision for loan losses (4,804) 2,981 1,566
Net interest income after
provision for loan losses 4,912 (3,207) (1,705)
Income (loss) from continuing
operations before income taxes 4,912 (3,207) (1,705)
Provision (benefit) for income taxes 1,670 (1,090) (580)
Income (loss) from
continuing operations 3,242 (2,117) (1,125)
Net (loss) income 3,242 (2,117) (1,125)
Net (loss) income per share,
basic and diluted 0.62 (0.40) (0.22)