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EX-32 - CEO & CFO SECTION 906 CERTIFICATION - PREMIER FINANCIAL BANCORP INCexhibit32.htm
EX-31.1 - CEO SECTION 302 CERTIFICATION - PREMIER FINANCIAL BANCORP INCexhibit31-1.htm
EX-31.2 - CFO SECTION 302 CERTIFICATION - PREMIER FINANCIAL BANCORP INCexhibit31-2.htm


UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-Q

þ
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 
For the quarterly period ended March 31, 2011

 
or

o
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 incorporation organization)
 
(I.R.S. Employer Identification No.)
     
2883 Fifth Avenue
Huntington, West Virginia
 
 
25702
(Address of principal executive offices)
 
(Zip Code)
     
Registrant’s telephone number    (304) 525-1600

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 þ     No o.

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes o     No o.

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See the definitions of “large accelerated filer,” “accelerated filer, ”and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one)

Large accelerated filer  o.
Accelerated filer  o.
   Non-accelerated filer  o
(Do not check if smaller reporting company)
Smaller reporting company  þ

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Securities Exchange Act).  Yeso     No þ.

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practical date.

Common stock, no par value, – 7,937,143 shares outstanding at May 1, 2011

 
 

 

PREMIER FINANCIAL BANCORP, INC.
MARCH 31, 2011
INDEX TO REPORT





 
 
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PREMIER FINANCIAL BANCORP, INC.
MARCH 31, 2011


PART I  - FINANCIAL INFORMATION


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.  Premier Financial Bancorp, Inc.’s (“Premier’s”) accounting and reporting policies are in accordance with accounting principles generally accepted in the United States of America.  Certain accounting principles used by Premier involve a significant amount of judgment about future events and require the use of estimates in their application.  The following policies are particularly sensitive in terms of judgments and the extent to which estimates are used: allowance for loan losses, the identification and evaluation of impaired loans, the impairment of goodwill, the realization of deferred tax assets and stock based compensation disclosures.  These estimates are based on assumptions that may involve significant uncertainty at the time of their use.  However, the policies, the estimates and the estimation process as well as the resulting disclosures are periodically reviewed by the Audit Committee of the Board of Directors and material estimates are subject to review as part of the external audit by the independent public accountants.

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 accounting principles generally accepted in the United States of America or those normally made in the registrant’s annual report on Form 10-K.  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, 2010 for further information in this regard.

Index to consolidated financial statements:










 
 
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CONSOLIDATED BALANCE SHEETS
MARCH 31, 2011 AND DECEMBER 31, 2010
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)


   
(UNAUDITED)
     
   
2011
   
2010
 
ASSETS
           
Cash and due from banks
  $ 23,327     $ 20,001  
Interest bearing bank balances
    75,769       78,649  
Federal funds sold
    17,826       23,598  
Cash and cash equivalents
    116,922       122,248  
Securities available for sale
    281,497       256,520  
Loans held for sale
    316       1,477  
Loans
    713,436       725,964  
Allowance for loan losses
    (10,282 )     (9,865 )
Net loans
    703,154       716,099  
Federal Home Loan Bank and Federal Reserve Bank stock
    7,037       7,096  
Premises and equipment, net
    16,334       16,566  
Real estate and other property acquired through foreclosure
    11,051       11,249  
Interest receivable
    3,639       3,742  
Goodwill
    29,875       29,875  
Other intangible assets
    3,975       4,185  
Prepaid FDIC insurance premiums
    1,839       2,068  
Deferred taxes
    10,019       10,743  
Other assets
    1,422       1,383  
Total assets
  $ 1,187,080     $ 1,183,251  
                 
LIABILITIES AND STOCKHOLDERS' EQUITY
               
Deposits
               
Non-interest bearing
  $ 226,654     $ 214,665  
Time deposits, $100,000 and over
    154,152       158,962  
Other interest bearing
    615,576       611,664  
Total deposits
    996,382       985,291  
Securities sold under agreements to repurchase
    22,475       29,637  
Federal Home Loan Bank advances
    10,393       12,896  
Other borrowed funds
    19,668       20,178  
Interest payable
    875       899  
Other liabilities
    3,365       2,953  
Total liabilities
    1,053,158       1,051,854  
                 
Stockholders' equity
               
Preferred stock, no par value; $22,808 liquidation preference,
               
5% cumulative, 1,000,000 shares authorized;
22,252 shares issued and outstanding
    21,868       21,841  
Common stock, no par value; 20,000,000 shares authorized;
               
7,937,143 shares issued and outstanding
    71,482       71,465  
Retained earnings
    40,892       39,526  
Accumulated other comprehensive income (loss)
    (320 )     (1,435 )
Total stockholders' equity
    133,922       131,397  
Total liabilities and stockholders' equity
  $ 1,187,080     $ 1,183,251  
                 



CONSOLIDATED STATEMENTS OF INCOME
THREE MONTHS ENDED MARCH 31, 2011 AND 2010
(UNAUDITED, DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
 
   
Three Months Ended
March 31,
 
   
2011
   
2010
 
Interest income
           
Loans, including fees
  $ 10,940     $ 11,552  
Securities available for sale
               
Taxable
    1,936       1,973  
Tax-exempt
    62       65  
Federal funds sold and other
    53       27  
Total interest income
    12,991       13,617  
                 
Interest expense
               
Deposits
    1,932       2,223  
Repurchase agreements and other
    47       43  
FHLB advances and other borrowings
    263       288  
Total interest expense
    2,242       2,554  
                 
Net interest income
    10,749       11,063  
Provision for loan losses
    520       571  
Net interest income after provision for loan losses
    10,229       10,492  
                 
Non-interest income
               
Service charges on deposit accounts
    888       922  
Electronic banking income
    449       340  
Secondary market mortgage income
    88       89  
Other
    186       166  
      1,611       1,517  
Non-interest expenses
               
Salaries and employee benefits
    4,031       4,071  
Occupancy and equipment expenses
    1,236       1,139  
Outside data processing
    1,207       1,009  
Professional fees
    260       225  
Taxes, other than payroll, property and income
    193       256  
Write-downs, expenses, sales of
other real estate owned, net
    84       155  
Amortization of intangibles
    210       143  
Conversion expenses
    379       -  
FDIC insurance
    508       455  
Other expenses
    1,199       1,057  
      9,307       8,510  
Income before income taxes
    2,533       3,499  
Provision for income taxes
    862       1,186  
                 
Net income
  $ 1,671     $ 2,313  
                 
Preferred stock dividends and accretion
    305       332  
Net income available to common stockholders
  $ 1,366     $ 1,981  
                 
Net income per share:
               
Basic
  $ 0.17     $ 0.25  
Diluted
    0.17       0.24  


CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
THREE MONTHS ENDED MARCH 31, 2011 AND 2010
(UNAUDITED, DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)


   
Three Months Ended
March 31,
 
   
2011
   
2010
 
Net income
  $ 1,671     $ 2,313  
                 
Other comprehensive income:
               
Unrealized gains arising during the period
    1,689       114  
Net change in unrealized gain (loss) on securities
    1,689       114  
Less tax impact
    574       39  
Other comprehensive income:
    1,115       75  
                 
Comprehensive income
  $ 2,786     $ 2,388  
                 


CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 2011 AND 2010
(UNAUDITED, DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)


   
2011
   
2010
 
Cash flows from operating activities
           
Net income
  $ 1,671     $ 2,313  
Adjustments to reconcile net income to net cash from operating activities
               
Depreciation
    376       365  
Provision for loan losses
    520       571  
Amortization (accretion), net
    (334 )     (836 )
OREO writedowns (gains on sales), net
    (16 )     (31 )
Stock compensation expense
    17       10  
Loans originated for sale
    (4,375 )     (3,901 )
Secondary market loans sold
    5,635       3,983  
Secondary market income
    (88 )     (89 )
Gain on sale of buildings
    -       (81 )
Changes in :
               
Interest receivable
    103       221  
Other assets
    329       1,265  
Interest payable
    (24 )     63  
Other liabilities
    134       1,305  
Net cash from operating activities
    3,948       5,158  
                 
Cash flows from investing activities
               
Purchases of securities available for sale
    (36,815 )     (67,895 )
Proceeds from maturities and calls of securities available for sale
    13,208       54,934  
Redemption of FRB and FHLB  stock, (net of purchases)
    59       (10 )
Net change in loans
    12,928       15,739  
Purchases of premises and equipment, net
    (144 )     374  
Proceeds from sales of other real estate acquired through foreclosure
    359       874  
Net cash from investing activities
    (10,405 )     4,016  
                 
Cash flows from financing activities
               
Net change in deposits
    11,244       (13,329 )
Common Stock dividends paid
    -       (874 )
Preferred Stock dividends paid
    -       (278 )
Net change in short-term Federal Home Loan Bank advances
    (2,400 )     -  
Repayment of Federal Home Loan Bank advances
    (41 )     (42 )
Repayment of other borrowed funds
    (510 )     (474 )
Net change in agreements to repurchase securities
    (7,162 )     (2,439 )
Net cash from financing activities
    1,131       (17,436 )
                 
Net change in cash and cash equivalents
    (5,326 )     (8,262 )
                 
Cash and cash equivalents at beginning of period
    122,248       84,596  
                 
Cash and cash equivalents at end of period
  $ 116,922     $ 76,334  


PREMIER FINANCIAL BANCORP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)
THREE MONTHS ENDED MARCH 31, 2011 AND 2010
(UNAUDITED, DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)


   
2011
   
2010
 
Supplemental disclosures of cash flow information:
           
Cash paid during period for interest
  $ 2,266     $ 2,491  
                 
Loans transferred to real estate acquired through foreclosure
    145       1,264  
                 




PREMIER FINANCIAL BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED, DOLLARS IN TABLES IN THOUSANDS, EXCEPT PER SHARE DATA)



The consolidated financial statements include the accounts of Premier Financial Bancorp, Inc. (the Company) and its wholly owned subsidiaries (the “Banks”):

             
March 31, 2011
 
   
Year
 
Total
   
Net Income
 
Subsidiary                               
Location                      
Acquired
 
Assets
   
Qtr
 
Citizens Deposit Bank & Trust
Vanceburg, Kentucky
1991
  $ 204,911     $ 533  
Farmers Deposit Bank
Eminence, Kentucky
1996
    60,836       18  
Ohio River Bank
Ironton, Ohio
1998
    97,187       236  
* First Central Bank, Inc.
Philippi, West Virginia
1998
    136,174       298  
* Boone County Bank, Inc.
Madison, West Virginia
1998
    181,015       392  
* Traders Bank, Inc.
Ravenswood, West Virginia
2008
    158,620       144  
* Adams National Bank
Washington, DC
2009
    271,059       382  
* Consolidated Bank & Trust
Richmond, Virginia
2009
    71,500       90  
Mt. Vernon Financial Holdings, Inc.
Huntington, West Virginia
1999
    242       -  
Parent and Intercompany Eliminations
        5,536       (422 )
  Consolidated Total
      $ 1,187,080     $ 1,671  

*  Merged to create Premier Bank, Inc. as of the close of business on April 8, 2011.

All significant intercompany transactions and balances have been eliminated.

Recently Issued Accounting Pronouncements

In April 2011, the FASB amended existing guidance for assisting a creditor in determining whether a restructuring is a troubled debt restructuring.  The amendments clarify the guidance for a creditor’s evaluation of whether it has granted a concession and whether a debtor is experiencing financial difficulties. With regard to determining whether a concession has been granted, the ASU clarifies that creditors are precluded from using the effective interest method to determine whether a concession has been granted. In the absence of using the effective interest method, a creditor must now focus on other considerations such as the value of the underlying collateral, evaluation of other collateral or guarantees, the debtor’s ability to access other funds at market rates, interest rate increases and whether the restructuring results in a delay in payment that is insignificant.   This guidance is effective for interim and annual reporting periods beginning after June 15, 2011, and should be applied retrospectively to the beginning of the annual period of adoption.  For purposes of measuring impairment on newly identified troubled debt restructurings, the amendments should be applied prospectively for the first interim or annual period beginning on or after June 15, 2011.  The adoption of this guidance is not expected to have a material effect on the Company’s results of operations or financial position.



.
 
- 9 -

 

PREMIER FINANCIAL BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED, DOLLARS IN TABLES IN THOUSANDS, EXCEPT PER SHARE DATA)



Amortized cost and fair value of investment securities, by category, at March 31, 2011 are summarized as follows:

   
Amortized Cost
   
Unrealized Gains
   
Unrealized Losses
   
Fair Value
 
Available for sale
                       
Mortgage-backed securities
                       
U. S. agency MBS - residential
  $ 33,424     $ 1,886     $ -     $ 35,310  
U. S. agency CMO’s - residential
    186,352       613       (3,884 )     183,081  
Total mortgage-backed securities of government sponsored agencies
    219,776       2,499       (3,884 )     218,391  
U. S. government sponsored agency securities
    46,906       58       (583 )     46,381  
Obligations of states and political subdivisions
    9,955       217       (30 )     10,142  
Other securities
    5,345       1,239       (1 )     6,583  
Total available for sale
  $ 281,982     $ 4,013     $ (4,498 )   $ 281,497  

Amortized cost and fair value of investment securities, by category, at December 31, 2010 are summarized as follows:

   
Amortized Cost
   
Unrealized Gains
   
Unrealized Losses
   
Fair Value
 
Available for sale
                       
Mortgage-backed securities
                       
U. S. agency MBS - residential
  $ 36,798     $ 1,922     $ -     $ 38,720  
U. S. agency CMO’s - residential
    153,502       670       (5,388 )     148,784  
Total mortgage-backed securities of government sponsored agencies
    190,300       2,592       (5,388 )     187,504  
U. S. government sponsored agency securities
    52,912       154       (639 )     52,427  
Obligations of states and political subdivisions
    10,152       196       (42 )     10,306  
Other securities
    5,330       954       (1 )     6,283  
Total available for sale
  $ 258,694     $ 3,896     $ (6,070 )   $ 256,520  


.
 
- 10 -

 

PREMIER FINANCIAL BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED, DOLLARS IN TABLES IN THOUSANDS, EXCEPT PER SHARE DATA)


NOTE  2–SECURITIES - continued

The amortized cost and fair value of securities at March 31, 2011 by contractual maturity are shown below.  Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

   
Amortized
Cost
   
Fair
Value
 
Available for sale
           
Due in one year or less
  $ 6,732     $ 6,752  
Due after one year through five years
    13,927       14,021  
Due after five years through ten years
    37,771       37,457  
Due after ten years
    2,684       3,430  
Corporate preferred securities
    1,092       1,446  
Mortgage-backed securities of government sponsored agencies
    219,776       218,391  
Total available for sale
  $ 281,982     $ 281,497  
                 

Securities with unrealized losses at March 31, 2011 aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position are as follows:

   
Less than 12 Months
   
12 Months or More
   
Total
 
Description of Securities
 
Fair Value
   
Unrealized Loss
   
Fair Value
   
Unrealized Loss
   
Fair Value
   
Unrealized Loss
 
                                     
U.S. government sponsored agency securities
  $ 22,280     $ (583 )   $ -     $ -     $ 22,280     $ (583 )
Obligations of states and political subdivisions
    2,241       (30 )     -       -       2,241       (30 )
U.S. government sponsored agency CMO-residential
    907       (13 )     -       -       907       (13 )
U.S. agency CMO-residential
    149,989       (3,871 )                     149,989       (3,871 )
Other securities
    443       (1 )     -       -       443       (1 )
                                                 
Total temporarily impaired
  $ 175,860     $ (4,498 )   $ -     $ -     $ 175,860     $ (4,498 )


.
 
- 11 -

 

PREMIER FINANCIAL BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED, DOLLARS IN TABLES IN THOUSANDS, EXCEPT PER SHARE DATA)


NOTE  2–SECURITIES - continued


Securities with unrealized losses at December 31, 2010 aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position are as follows:

   
Less than 12 Months
   
12 Months or More
   
Total
 
Description of Securities
 
Fair Value
   
Unrealized Loss
   
Fair Value
   
Unrealized Loss
   
Fair Value
   
Unrealized Loss
 
                                     
U.S. government sponsored agency securities
  $ 28,724     $ (639 )   $ -     $ -     $ 28,724     $ (639 )
Obligations of states and political subdivisions
    1,987       (42 )     -       -       1,987       (42 )
U.S. government sponsored agency CMO-residential
    1,012       (10 )                     1,012       (10 )
U.S. agency CMO-residential
    129,647       (5,378 )                     129,647       (5,378 )
Other securities
    443       (1 )     -       -       443       (1 )
                                                 
Total temporarily impaired
  $ 161,813     $ (6,070 )   $ -     $ -     $ 161,813     $ (6,070 )

The investment portfolio is predominately high quality interest-bearing debt securities with defined maturity dates backed by the U.S. Government or Government sponsored entities.  The unrealized losses at March 31, 2011 and December 31, 2010 are price changes resulting from changes in the interest rate environment and are not considered to be other than temporary declines in the value of the securities.  Their fair value is expected to recover as the bonds approach their maturity date and/or market conditions improve.


Major classifications of loans at March 31, 2011 and December 31, 2010 are summarized as follows:

   
2011
   
2010
 
Commercial, secured by real estate
  $ 326,364     $ 319,048  
Commercial, other
    77,788       82,591  
Real estate construction
    38,129       48,213  
Residential real estate, including home equity
    229,681       233,513  
Agricultural
    2,484       2,564  
Consumer
    31,682       32,926  
Other
    7,308       7,109  
    $ 713,436     $ 725,964  


.
 
- 12 -

 

PREMIER FINANCIAL BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED, DOLLARS IN TABLES IN THOUSANDS, EXCEPT PER SHARE DATA)


NOTE  3–LOANS - continued

Activity in the allowance for loan losses by portfolio segment for the three months ending March 31, 2011 was as follows:

Loan Class
 
Balance
Dec 31, 2010
   
Provision for
loan losses
   
Loans charged-off
   
Recoveries
   
Balance
March 31, 2011
 
                               
Residential real estate
  $ 2,666     $ 168     $ 80     $ 6     $ 2,760  
Multifamily real estate
    252       51       -       -       303  
Commercial real estate:
                                       
Owner occupied
    1,141       115       -       2       1,258  
Non owner occupied
    1,644       267       16       1       1,896  
Commercial and industrial
    2,421       (151 )     16       8       2,262  
Consumer
    366       23       28       25       386  
All other
    1,375       47       40       35       1,417  
Total
  $ 9,865     $ 520     $ 180     $ 77     $ 10,282  

Changes in the allowance for loan losses for the three months ended March 31, 2010 are as follows:
   
Three Months Ended
March 31, 2010
 
Balance, beginning of period
  $ 7,569  
Gross charge-offs
    (205 )
Recoveries
    133  
Provision for loan losses
    571  
Balance, end of period
  $ 8,068  


The following table sets forth information with respect to the Company’s nonperforming loans at March 31, 2011 and December 31, 2010.
   
2011
   
2010
 
Non-accrual loans
  $ 54,834     $ 47,131  
Accruing loans which are contractually past due 90 days or more
    324       414  
Restructured loans
    403       2,639  
Total
  $ 55,561     $ 50,184  


 
 
- 13 -

 

PREMIER FINANCIAL BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED, DOLLARS IN TABLES IN THOUSANDS, EXCEPT PER SHARE DATA)


NOTE  3–LOANS - continued

The following table presents the recorded investment in nonaccrual and loans past due over 90 days still on accrual by class of loans as of March 31, 2011 and December 31, 2010.  The recorded investment in non-accrual loans is less than the principal owed on non-accrual loans due to discounts applied to the carrying value of the loan at time of their acquisition and interest payments made by the borrower which have been used to reduce the recorded investment in the loan rather than recognized as interest income.

March 31, 2011
 
Principal Owed on Non-accrual Loans
   
Recorded Investment in Non-accrual Loans
   
Loans Past Due Over 90 Days, still accruing
 
                   
Residential  real estate
  $ 4,142     $ 3,890     $ 244  
Multifamily real estate
    9,538       8,594       0  
Commercial real estate
                       
Owner occupied
    12,176       10,883       0  
Non owner occupied
    10,563       9,900       0  
Commercial and industrial
    8,146       7,788       75  
Consumer
    43       42       5  
All other
    13,740       13,737       0  
Total
  $ 58,348     $ 54,834     $ 324  
                         

December 31, 2010
 
Principal Owed on Non-accrual Loans
   
Recorded Investment in Non-accrual Loans
   
Loans Past Due Over 90 Days, still accruing
 
                   
Residential  real estate
  $ 4,845     $ 3,764     $ 80  
Multifamily real estate
    6,764       4,742       -  
Commercial real estate
                       
Owner occupied
    12,680       10,493       -  
Non owner occupied
    14,624       12,081       -  
Commercial and industrial
    7,939       5,813       319  
Consumer
    15       15       15  
All other
    14,805       10,223       -  
Total
  $ 61,672     $ 47,131     $ 414  
                         

Nonaccrual loans and impaired loans are defined differently. Some loans may be included in both categories, and some may only be included in one category. Nonaccrual loans include both smaller balance homogeneous loans that are collectively evaluated for impairment and individually classified impaired loans.

.
 
- 14 -

 

 PREMIER FINANCIAL BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED, DOLLARS IN TABLES IN THOUSANDS, EXCEPT PER SHARE DATA)


NOTE  3–LOANS - continued

The following table presents the aging of the recorded investment in past due loans as of  March 31, 2011 by class of loans:
Loan Class
 
Total Loans
   
30-89 Days Past Due
   
Greater than 90 days past due
   
Total Past Due
   
Loans Not Past Due
 
                               
Residential real estate
  $ 229,681     $ 6,550     $ 2,492     $ 9,042     $ 220,639  
Multifamily real estate
    40,043       1,333       6,177       7,510       32,533  
Commercial real estate:
                                       
Owner occupied
    109,923       7,868       3,201       11,069       98,854  
Non owner occupied
    161,095       4,322       6,536       10,858       150,237  
Commercial and industrial
    77,788       293       7,176       7,469       70,319  
Consumer
    31,682       340       31       371       31,311  
All other
    63,224       927       12,953       13,880       49,344  
Total
  $ 713,436     $ 21,633     $ 38,566     $ 60,199     $ 653,237  

The following table presents the aging of the recorded investment in past due loans as of December 31, 2010 by class of loans:
Loan Class
 
Total Loans
   
30-89 Days Past Due
   
Greater than 90 days past due
   
Total Past Due
   
Loans Not Past Due
 
                               
Residential real estate
  $ 233,513     $ 5,902     $ 2,266     $ 8,168     $ 225,345  
Multifamily real estate
    41,037       4,471       2,140       6,611       34,426  
Commercial real estate:
                                       
Owner occupied
    106,924       5,638       5,797       11,435       95,489  
Non owner occupied
    155,839       1,141       6,907       8,048       147,791  
Commercial and industrial
    82,591       1,216       5,965       7,181       75,410  
Consumer
    32,926       395       29       424       32,502  
All other
    73,134       4,852       10,203       15,055       58,079  
Total
  $ 725,964     $ 23,615     $ 33,307     $ 56,922     $ 669,042  


 
 
- 15 -

 

PREMIER FINANCIAL BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED, DOLLARS IN TABLES IN THOUSANDS, EXCEPT PER SHARE DATA)


NOTE  3–LOANS - continued

The following tables present the balance in the allowance for loan losses and the recorded investment in loans by portfolio segment and based on impairment method as of March 31, 2011:

   
Allowance for Loan Losses
   
Loan Balances
 
Loan Class
 
Individually Evaluated for Impairment
   
Collectively Evaluated for Impairment
   
Total
   
Individually Evaluated for Impairment
   
Collectively Evaluated for Impairment
   
Total
 
                                     
Residential real estate
  $ 120     $ 2,640     $ 2,760     $ 318     $ 229,363     $ 229,681  
Multifamily real estate
    -       303       303       8,594       31,449       40,043  
Commercial real estate:
                                               
Owner occupied
    200       1,058       1,258       11,687       98,236       109,923  
Non-owner occupied
    538       1,358       1,896       10,192       150,903       161,095  
Commercial and industrial
    1,266       996       2,262       8,215       69,573       77,788  
Consumer
    19       367       386       38       31,644       31,682  
All other
    394       1,023       1,417       14,036       49,188       63,224  
Total
  $ 2,537     $ 7,745     $ 10,282     $ 53,080     $ 660,356     $ 713,436  

The following tables present the balance in the allowance for loan losses and the recorded investment in loans by portfolio segment and based on impairment method as of December 31, 2010:

   
Allowance for Loan Losses
   
Loan Balances
 
Loan Class
 
Individually Evaluated for Impairment
   
Collectively Evaluated for Impairment
   
Total
   
Individually Evaluated for Impairment
   
Collectively Evaluated for Impairment
   
Total
 
                                     
Residential real estate
  $ 48     $ 2,618     $ 2,666     $ 207     $ 233,306     $ 233,513  
Multifamily real estate
    -       252       252       4,742       36,295       41,037  
Commercial real estate:
                                               
Owner occupied
    280       861       1,141       11,892       95,032       106,924  
Non-owner occupied
    619       1,025       1,644       12,220       143,619       155,839  
Commercial and industrial
    1,389       1,032       2,421       8,544       74,047       82,591  
Consumer
    23       343       366       43       32,883       32,926  
All other
    163       1,212       1,375       11,452       61,682       73,134  
Total
  $ 2,522     $ 7,343     $ 9,865     $ 49,100     $ 676,864     $ 725,964  



 
 
- 16 -

 

PREMIER FINANCIAL BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED, DOLLARS IN TABLES IN THOUSANDS, EXCEPT PER SHARE DATA)


NOTE  3–LOANS - continued

The following table presents loans individually evaluated for impairment by class of loans as of March 31, 2011:

   
Unpaid Principal Balance
   
Recorded Investment
   
Allowance for Loan Losses Allocated
   
Average Recorded Investment
   
Interest Income Recognized
   
Cash Basis Interest Recognized
 
With no related allowance recorded:
                                   
Residential  real estate
  $ -     $ -     $ -     $ 5     $ -     $ -  
Multifamily real estate
    10,799       8,594       -       6,668       -       -  
Commercial real estate
                                               
Owner occupied
    10,453       8,621       -       8,671       -       -  
Non owner occupied
    10,592       8,347       -       6,726       3       4  
Commercial and industrial
    4,617       3,429       -       3,633       148       148  
All other
    14,058       9,278       -       9,283       -       -  
      50,519       38,269       -       34,986       151       152  
With an allowance recorded:
                                               
Residential  real estate
  $ 319     $ 318     $ 120     $ 258     $ 2     $ 2  
Commercial real estate
                                               
Owner occupied
    3,507       3,066       200       3,119       13       14  
Non owner occupied
    2,297       1,845       538       4,480       4       3  
Commercial and industrial
    5,976       4,786       1,266       4,746       25       26  
Consumer
    38       38       19       41       1       1  
All other
    4,760       4,758       394       3,460       6       9  
      16,897       14,811       2,537       16,104       51       55  
Total
  $ 67,416     $ 53,080     $ 2,537     $ 51,090     $ 202     $ 207  

The following table presents loans individually evaluated for impairment by class of loans as of December 31, 2010:

   
Unpaid Principal Balance
   
Recorded Investment
   
Allowance for Loan Losses Allocated
 
With no related allowance recorded:
                 
Residential real estate
  $ 207     $ 10     $ -  
Multifamily real estate
    6,764       4,742       -  
Commercial real estate
                       
Owner occupied
    10,437       8,720          
Non owner occupied
    6,338       5,105       -  
Commercial and industrial
    5,043       3,837       -  
All other
    13,868       9,289       -  
      42,657       31,703       -  
With an allowance recorded:
                       
Residential real estate
  $ 197     $ 197     $ 48  
Commercial real estate
                       
Owner occupied
    3,596       3,172       280  
Non owner occupied
    8,484       7,115       619  
Commercial and industrial
    5,891       4,707       1,389  
Consumer
    43       43       23  
All other
    2,165       2,163       163  
      20,376       17,397       2,522  
Total
  $ 63,033     $ 49,100     $ 2,522  

 
 
- 17 -

 

PREMIER FINANCIAL BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED, DOLLARS IN TABLES IN THOUSANDS, EXCEPT PER SHARE DATA)


NOTE  3–LOANS - continued

Credit Quality Indicators:

The Company categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt such as:  current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors.  The Company analyzes loans individually by classifying the loans as to credit risk.  This analysis includes non-homogeneous loans, such as commercial and commercial real estate loans.  This analysis is performed on a monthly basis.  The Company uses the following definitions for risk ratings:

Special Mention.  Loans classified as special mention have a potential weakness that deserves management's close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of the institution's credit position at some future date.

Substandard.  Loans classified as substandard are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected.

Doubtful.  Loans classified as doubtful have all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable.

Loans not meeting the criteria above that are analyzed individually as part of the above described process are considered to be pass rated loans.


 
 
- 18 -

 

PREMIER FINANCIAL BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED, DOLLARS IN TABLES IN THOUSANDS, EXCEPT PER SHARE DATA)


NOTE  3–LOANS - continued

As of March 31, 2011, and based on the most recent analysis performed, the risk category of loans by class of loans is as follows:

Loan Class
 
Pass
   
Special Mention
   
Substandard
   
Doubtful
   
Total Loans
 
                               
Residential real estate
  $ 206,226     $ 11,548     $ 11,589     $ 318     $ 229,681  
Multifamily real estate
    23,962       6,363       9,718       -       40,043  
Commercial real estate:
                                       
Owner occupied
    83,020       9,084       17,434       385       109,923  
Non-owner occupied
    143,494       2,917       14,684       -       161,095  
Commercial and industrial
    56,515       12,968       8,220       85       77,788  
Consumer
    31,233       299       112       38       31,682  
All other
    43,716       5,343       13,597       568       63,224  
Total
  $ 588,166     $ 48,522     $ 75,354     $ 1,394     $ 713,436  

As of December 31, 2010, and based on the most recent analysis performed, the risk category of loans by class of loans is as follows:

Loan Class
 
Pass
   
Special Mention
   
Substandard
   
Doubtful
   
Total Loans
 
                               
Residential real estate
  $ 210,519     $ 13,696     $ 9,091     $ 207     $ 233,513  
Multifamily real estate
    24,231       5,955       10,851       -       41,037  
Commercial real estate:
                                       
Owner occupied
    79,147       11,024       16,373       380       106,924  
Non-owner occupied
    136,019       3,086       16,734       -       155,839  
Commercial and industrial
    56,842       17,112       8,524       113       82,591  
Consumer
    32,537       233       113       43       32,926  
All other
    57,106       4,336       11,119       573       73,134  
Total
  $ 596,401     $ 55,442     $ 72,805     $ 1,316     $ 725,964  

 

 
 
- 19 -

 

 PREMIER FINANCIAL BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED, DOLLARS IN TABLES IN THOUSANDS, EXCEPT PER SHARE DATA)



The Banks own stock of the Federal Home Loan Bank (FHLB) of Cincinnati, Ohio, the FHLB of Pittsburgh, Pennsylvania, and the FHLB of Atlanta, Georgia. This stock allows the Banks to borrow advances from the FHLB.

Advances from the FHLB at March 31, 2011 and December 31, 2010 were as follows:

   
2011
   
2010
 
Payments due at maturity in March 2012, fixed rate at 1.81%
  $ 10,229     $ 10,291  
Payments due monthly with maturities from November 2011 to July 2012, fixed rates from 4.10% to 4.40%, averaging 4.26%
    164       205  
Overnight borrowed funds
    -       2,400