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

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

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2017
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 000-20908

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      No .

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 (§230.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes    No .

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

Large accelerated filer  
 
Accelerated filer 
Non-accelerated filer 
(Do not check if smaller reporting company)
Smaller reporting company 
Emerging growth company 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.   

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Securities Exchange Act).  Yes     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, no par value, – 10,658,799 shares outstanding at July 28, 2017

PREMIER FINANCIAL BANCORP, INC.
JUNE 30, 2017
INDEX TO REPORT
 
 

PREMIER FINANCIAL BANCORP, INC.
JUNE 30, 2017
 

PART I - FINANCIAL INFORMATION

Item 1.  Financial Statements

The accompanying information has not been audited by an independent registered public accounting firm; 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, 2016 for further information in this regard.

Index to consolidated financial statements:
 




PREMIER FINANCIAL BANCORP, INC.
CONSOLIDATED BALANCE SHEETS
JUNE 30, 2017 AND DECEMBER 31, 2016
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)


   
(UNAUDITED)
       
   
June 30,
   
December 31,
 
   
2017
   
2016
 
ASSETS
           
Cash and due from banks
 
$
42,934
   
$
41,443
 
Interest bearing bank balances
   
37,538
     
55,720
 
Federal funds sold
   
2,396
     
7,555
 
Cash and cash equivalents
   
82,868
     
104,718
 
Time deposits with other banks
   
2,582
     
2,332
 
Securities available for sale
   
301,224
     
288,607
 
Loans
   
1,037,954
     
1,024,823
 
Allowance for loan losses
   
(11,695
)
   
(10,836
)
Net loans
   
1,026,259
     
1,013,987
 
Federal Home Loan Bank stock, at cost
   
3,185
     
3,200
 
Premises and equipment, net
   
23,579
     
24,224
 
Real estate and other property acquired through foreclosure
   
11,525
     
12,665
 
Interest receivable
   
3,637
     
3,862
 
Goodwill
   
35,371
     
35,371
 
Other intangible assets
   
3,833
     
4,349
 
Other assets
   
1,279
     
2,878
 
Total assets
 
$
1,495,342
   
$
1,496,193
 
                 
LIABILITIES AND STOCKHOLDERS' EQUITY
               
Deposits
               
Non-interest bearing
 
$
319,060
   
$
319,618
 
Time deposits, $250,000 and over
   
63,528
     
66,378
 
Other interest bearing
   
894,620
     
893,390
 
Total deposits
   
1,277,208
     
1,279,386
 
Securities sold under agreements to repurchase
   
20,478
     
23,820
 
Other borrowed funds
   
7,000
     
8,859
 
Subordinated debt
   
5,360
     
5,343
 
Interest payable
   
352
     
364
 
Other liabilities
   
3,646
     
4,237
 
Total liabilities
   
1,314,044
     
1,322,009
 
                 
Stockholders' equity
               
Common stock, no par value; 20,000,000 shares authorized; 10,658,799 shares issued and outstanding at June 30, 2017, and 10,640,735 shares issued and outstanding at December 31, 2016
   
110,218
     
109,911
 
Retained earnings
   
70,581
     
66,195
 
Accumulated other comprehensive income (loss)
   
499
     
(1,922
)
Total stockholders' equity
   
181,298
     
174,184
 
Total liabilities and stockholders' equity
 
$
1,495,342
   
$
1,496,193
 
                 

PREMIER FINANCIAL BANCORP, INC.
CONSOLIDATED STATEMENTS OF INCOME
THREE AND SIX MONTHS ENDED JUNE 30, 2017 AND 2016
(UNAUDITED, DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)


   
Three Months Ended
June 30,
   
Six Months Ended
June 30,
 
   
2017
   
2016
   
2017
   
2016
 
Interest income
                       
Loans, including fees
 
$
14,663
   
$
13,108
   
$
28,198
   
$
25,709
 
Securities available for sale
                               
Taxable
   
1,464
     
1,362
     
2,809
     
2,790
 
Tax-exempt
   
64
     
88
     
136
     
172
 
Federal funds sold and other
   
182
     
108
     
339
     
205
 
Total interest income
   
16,373
     
14,666
     
31,482
     
28,876
 
                                 
Interest expense
                               
Deposits
   
951
     
975
     
1,900
     
1,952
 
Repurchase agreements and other
   
7
     
11
     
14
     
18
 
FHLB advances
   
-
     
15
     
-
     
22
 
Other borrowings
   
79
     
107
     
166
     
220
 
Subordinated debt
   
74
     
67
     
144
     
118
 
Total interest expense
   
1,111
     
1,175
     
2,224
     
2,330
 
                                 
Net interest income
   
15,262
     
13,491
     
29,258
     
26,546
 
Provision for loan losses
   
776
     
812
     
1,142
     
1,124
 
Net interest income after provision for loan losses
   
14,486
     
12,679
     
28,116
     
25,422
 
                                 
Non-interest income
                               
Service charges on deposit accounts
   
1,089
     
983
     
2,065
     
1,944
 
Electronic banking income
   
833
     
802
     
1,613
     
1,564
 
Secondary market mortgage income
   
39
     
59
     
106
     
99
 
Other
   
173
     
221
     
367
     
395
 
     
2,134
     
2,065
     
4,151
     
4,002
 
Non-interest expenses
                               
Salaries and employee benefits
   
4,973
     
5,217
     
9,943
     
10,208
 
Occupancy and equipment expenses
   
1,449
     
1,550
     
2,970
     
3,062
 
Outside data processing
   
1,355
     
1,314
     
2,675
     
2,635
 
Professional fees
   
277
     
183
     
525
     
333
 
Taxes, other than payroll, property and income
   
211
     
159
     
400
     
317
 
Write-downs, expenses, sales of other real estate owned, net
   
553
     
398
     
793
     
637
 
Amortization of intangibles
   
251
     
317
     
516
     
584
 
FDIC insurance
   
154
     
214
     
347
     
474
 
Other expenses
   
1,181
     
1,285
     
2,233
     
2,462
 
     
10,404
     
10,637
     
20,402
     
20,712
 
Income before income taxes
   
6,216
     
4,107
     
11,865
     
8,712
 
Provision for income taxes
   
2,297
     
1,483
     
4,282
     
3,109
 
                                 
Net income
 
$
3,919
   
$
2,624
   
$
7,583
   
$
5,603
 
                                 
Net income per share:
                               
Basic
 
$
0.37
   
$
0.25
   
$
0.71
   
$
0.54
 
Diluted
   
0.36
     
0.25
     
0.71
     
0.53
 
PREMIER FINANCIAL BANCORP, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
THREE AND SIX MONTHS ENDED JUNE 30, 2017 AND 2016
(UNAUDITED, DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)


   
Three Months Ended
June 30,
   
Six Months Ended
June 30,
 
   
2017
   
2016
   
2017
   
2016
 
Net income
 
$
3,919
   
$
2,624
   
$
7,583
   
$
5,603
 
                                 
Other comprehensive income:
                               
Unrealized gains arising during the period
   
1,451
     
1,862
     
3,725
     
4,494
 
Reclassification of realized amount
   
-
     
-
     
-
     
(4
)
Net change in unrealized gain on securities
   
1,451
     
1,862
     
3,725
     
4,490
 
Less tax impact
   
(508
)
   
(665
)
   
(1,304
)
   
(1,576
)
Other comprehensive income
   
943
     
1,197
     
2,421
     
2,914
 
                                 
Comprehensive income
 
$
4,862
   
$
3,821
   
$
10,004
   
$
8,517
 



PREMIER FINANCIAL BANCORP, INC.
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
SIX MONTHS ENDED JUNE 30, 2017
(UNAUDITED, DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)



   
Common
Stock
   
Retained
Earnings
   
Accumulated
Other
Comprehensive
Income
   
Total
 
Balances, January 1, 2017
 
$
109,911
   
$
66,195
   
$
(1,922
)
 
$
174,184
 
Net income
   
-
     
7,583
     
-
     
7,583
 
Other comprehensive income
   
-
     
-
     
2,421
     
2,421
 
Cash dividends paid ($0.30 per share)
   
-
     
(3,197
)
   
-
     
(3,197
)
Stock options exercised
   
138
     
-
     
-
     
138
 
Stock based compensation expense
   
169
     
-
     
-
     
169
 
Balances, June 30, 2017
 
$
110,218
   
$
70,581
   
$
499
   
$
181,298
 

PREMIER FINANCIAL BANCORP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED JUNE 30, 2017 AND 2016
(UNAUDITED, DOLLARS IN THOUSANDS)


   
2017
   
2016
 
Cash flows from operating activities
           
Net income
 
$
7,583
   
$
5,603
 
Adjustments to reconcile net income to net cash from operating activities
               
Depreciation
   
879
     
976
 
Provision for loan losses
   
1,142
     
1,124
 
Amortization (accretion), net
   
616
     
1,189
 
OREO write-downs (gains on sales), net
   
349
     
(15
)
Stock compensation expense
   
169
     
142
 
Changes in :
               
Interest receivable
   
225
     
(50
)
Other assets
   
294
     
158
 
Interest payable
   
(12
)
   
(57
)
Other liabilities
   
(591
)
   
(2,798
)
Net cash from operating activities
   
10,654
     
6,272
 
                 
Cash flows from investing activities
               
Net change in time deposits with other banks
   
(250
)
   
-
 
Purchases of securities available for sale
   
(43,190
)
   
(12,010
)
Proceeds from maturities and calls of securities available for sale
   
33,291
     
37,616
 
Redemption of FHLB stock
   
15
     
190
 
Net change in loans
   
(13,077
)
   
(45,301
)
Acquisition of subsidiary, net of cash received
   
-
     
16,385
 
Purchases of premises and equipment, net
   
(305
)
   
(184
)
Proceeds from sales of other real estate acquired through foreclosure
   
1,462
     
553
 
Net cash from (used in) investing activities
   
(22,054
)
   
(2,751
)
                 
Cash flows from financing activities
               
Net change in deposits
   
(2,190
)
   
1,776
 
Net change in agreements to repurchase securities
   
(3,342
)
   
8,075
 
Repayment of other borrowed funds
   
(1,859
)
   
(1,217
)
Proceeds from stock option exercises
   
138
     
520
 
Advances from FHLB
   
-
     
5,000
 
Repayment of FHLB advances
   
-
     
(760
)
Common stock dividends paid
   
(3,197
)
   
(2,887
)
Net cash from (used in) financing activities
   
(10,450
)
   
10,507
 
                 
Net change in cash and cash equivalents
   
(21,850
)
   
14,028
 
                 
Cash and cash equivalents at beginning of period
   
104,718
     
72,539
 
                 
Cash and cash equivalents at end of period
 
$
82,868
   
$
86,567
 
PREMIER FINANCIAL BANCORP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)
SIX MONTHS ENDED JUNE 30, 2017 AND 2016
(UNAUDITED, DOLLARS IN THOUSANDS)


   
2017
   
2016
 
Supplemental disclosures of cash flow information:
           
Cash paid during period for interest
 
$
2,236
   
$
2,387
 
                 
Cash paid during period for income taxes
   
3,632
     
3,387
 
                 
Loans transferred to real estate acquired through foreclosure
   
600
     
524
 
                 
Stock issued to acquire subsidiary
   
-
     
22,041
 
                 
Premises transferred to other real estate owned
   
71
     
-
 

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


NOTE  1 - BASIS OF PRESENTATION

The consolidated financial statements include the accounts of Premier Financial Bancorp, Inc. (the Company) and its wholly owned subsidiaries (the "Banks"):
 
 
               
June 30, 2017
 
        Year   Total  
Net Income
 
Subsidiary 
 
Location 
 
Acquired
 
Assets
  Qtr   YTD  
Citizens Deposit Bank & Trust
 
Vanceburg, Kentucky
 
1991
 
$
419,236
   
$
1,103
   
$
2,300
 
Premier Bank, Inc.
 
Huntington, West Virginia
 
1998
   
1,069,784
     
3,188
     
6,273
 
Parent and Intercompany Eliminations
           
6,322
     
(372
)
   
(990
)
  Consolidated Total
          
$
1,495,342
   
$
3,919
   
$
7,583
 

All significant intercompany transactions and balances have been eliminated.

Recently Issued Accounting Pronouncements

In May 2014, FASB issued Accounting Standards Update 2014-09, Revenue from Contracts with Customers (Topic 606). The ASU creates a new topic, Topic 606, to provide guidance on revenue recognition for entities that enter into contracts with customers to transfer goods or services or enter into contracts for the transfer of nonfinancial assets. The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Additional disclosures are required to provide quantitative and qualitative information regarding the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The new guidance was originally effective for annual reporting periods, and interim reporting periods within those annual periods, beginning after December 15, 2016. However, in April 2015, the FASB voted to defer the effective date of ASU 2014-09 by one year, making the amendments effective for public entities for annual reporting periods beginning after December 15, 2017, including interim periods within those reporting periods.  Companies have the option to apply ASU 2014-09 as of the original effective date. Early adoption is not permitted. The Company plans to adopt the guidance during the first quarter of 2018.  Management continues to evaluate the impact ASU 2014-09 will have on the Company's consolidated financial statements as well as the most appropriate transition method of application.  Based on this evaluation to date, management has determined that the majority of the revenues earned by the Company are not within the scope of ASU 2014-09 because they are already governed by other accounting standards.  For those revenue streams management has determined to be within the scope of ASU 2014-09, namely elements of non-interest income such as service charges on deposit accounts that are governed by deposit account agreements with customers and the timing of revenue from the sale of real estate acquired through foreclosure, the guidance or any of its amendments is not anticipated to result in any material change the timing of when the revenue is recognized.  Management will continue to evaluate the impact the adoption of ASU 2014-09 will have on the consolidated financial statements as new interpretations and guidance are issued, such as the applicability of Topic 606 to interchange revenues included in the Company's electronic banking income, focusing on the new disclosures required by the adoption of ASU 2014-09.

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


NOTE  1 - BASIS OF PRESENTATION – continued

In January 2016, the FASB issued ASU No. 2016-01, Financial Instruments—Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities.  The ASU makes several modifications to Subtopic 825-10 including the elimination of the available-for-sale classification of equity investments, requiring equity investments with readily determinable fair values to be measured at fair value with changes in fair value recognized in net income, and using an exit price notion when measuring the fair value of financial instruments for disclosure purposes.  This ASU will become effective for the Company for interim and annual periods beginning after December 15, 2017. The adoption of ASU No. 2016-01 is not expected to have a material impact on the Company's financial statements.

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). This standard requires organizations to recognize lease assets and lease liabilities on the balance sheet and disclose key information about leasing requirements for leases that were historically classified as operating leases under previous generally accepted accounting principles. This ASU will become effective for the Company for interim and annual periods beginning after December 15, 2018.  The Company leases some of its branch locations.  Upon adoption of this standard, an asset will be recorded to recognize the right of the Company to use the leased facilities and a liability will be recorded representing the obligation to make all future lease payments on those facilities.  Management is currently evaluating the amounts to be recognized upon the adoption of this guidance in the Company's financial statements.

In March 2016, the FASB issued ASU No. 2016-09, Compensation—Stock Compensation: Improvements to Employee Share-Based Payment Accounting.  This ASU requires recognition of the income tax effects of share-based awards in the income statement when the awards vest or are settled (i.e., Additional Paid-in-Capital pools will be eliminated). The guidance in this ASU was adopted by the Company beginning January 1, 2017.  The adoption of ASU No. 2016-09 did not have a material impact on the Company's financial statements.

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments—Credit Losses: Measurement of Credit Losses on Financial Instruments.  This ASU replaces the measurement for credit losses from a probable incurred estimate with an expected future loss estimate, which is referred to as the "current expected credit loss" or "CECL".  The standard pertains to financial assets measured at amortized cost such as loans, debt securities classified as held-to-maturity, and certain other contracts.  The largest impact will be on the allowance for loan and lease losses.  This ASU will become effective for the Company for interim and annual periods beginning after December 15, 2019. Management has formed a steering committee that is evaluating the data gathering requirements, available economic forecasting and loss estimation models and potential software that would be employed by the Company to facilitate the adoption of this guidance and its required disclosures on the Company's financial statements.  Upon adoption, management anticipates an initial one-time increase in the allowance for loan losses  which will be offset by a corresponding decrease in capital as permitted by the standard.
PREMIER FINANCIAL BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED, DOLLARS IN TABLES IN THOUSANDS, EXCEPT PER SHARE DATA)


NOTE  2 –SECURITIES

Amortized cost and fair value of investment securities, by category, at June 30, 2017 are summarized as follows:

2017
 
Amortized Cost
   
Unrealized Gains
   
Unrealized Losses
   
Fair Value
 
Available for sale
                       
Mortgage-backed securities
                       
U. S. sponsored agency MBS - residential
 
$
203,134
   
$
1,042
   
$
(652
)
 
$
203,524
 
U. S. sponsored agency CMO's - residential
   
61,844
     
649
     
(375
)
   
62,118
 
Total mortgage-backed securities of government sponsored agencies
   
264,978
     
1,691
     
(1,027
)
   
265,642
 
U. S. government sponsored agency securities
   
21,374
     
9
     
(68
)
   
21,315
 
Obligations of states and political subdivisions
   
14,105
     
174
     
(12
)
   
14,267
 
Total available for sale
 
$
300,457
   
$
1,874
   
$
(1,107
)
 
$
301,224
 

Amortized cost and fair value of investment securities, by category, at December 31, 2016 are summarized as follows:

2016
 
Amortized Cost
   
Unrealized Gains
   
Unrealized Losses
   
Fair Value
 
Available for sale
                       
Mortgage-backed securities
                       
U. S. sponsored agency MBS - residential
 
$
177,105
   
$
245
   
$
(3,173
)
 
$
174,177
 
U. S. sponsored agency CMO's - residential
   
73,163
     
761
     
(657
)
   
73,267
 
Total mortgage-backed securities of government sponsored agencies
   
250,268
     
1,006
     
(3,830
)
   
247,444
 
U. S. government sponsored agency securities
   
24,652
     
23
     
(174
)
   
24,501
 
Obligations of states and political subdivisions
   
16,645
     
111
     
(94
)
   
16,662
 
Total available for sale
 
$
291,565
   
$
1,140
   
$
(4,098
)
 
$
288,607
 

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 June 30, 2017 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
 
$
10,606
   
$
10,632
 
Due after one year through five years
   
18,929
     
18,929
 
Due after five years through ten years
   
5,386
     
5,463
 
Due after ten years
   
558
     
558
 
Mortgage-backed securities of government sponsored agencies
   
264,978
     
265,642
 
Total available for sale
 
$
300,457
   
$
301,224
 
                 

Securities with unrealized losses at June 30, 2017 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
 
$
15,007
   
$
(68
)
 
$
-
   
$
-
   
$
15,007
   
$
(68
)
U.S government sponsored agency MBS – residential
   
75,722
     
(652
)
   
-
     
-
     
75,722
     
(652
)
U.S government sponsored agency CMO – residential
   
15,097
     
(183
)
   
7,860
     
(192
)
   
22,957
     
(375
)
Obligations of states and political subdivisions
   
2,028
     
(6
)
   
599
     
(6
)
   
2,627
     
(12
)
Total temporarily impaired
 
$
107,854
   
$
(909
)
 
$
8,459
   
$
(198
)
 
$
116,313
   
$
(1,107
)

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, 2016 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
 
$
17,207
   
$
(174
)
 
$
-
   
$
-
   
$
17,207
   
$
(174
)
U.S government sponsored agency MBS – residential
   
157,022
     
(3,173
)
   
-
     
-
     
157,022
     
(3,173
)
U.S government sponsored agency CMO's – residential
   
18,374
     
(373
)
   
8,750
     
(284
)
   
27,124
     
(657
)
Obligations of states and political subdivisions
   
7,961
     
(94
)
   
-
     
-
     
7,961
     
(94
)
Total temporarily impaired
 
$
200,564
   
$
(3,814
)
 
$
8,750
   
$
(284
)
 
$
209,314
   
$
(4,098
)

The investment portfolio is predominately high credit quality interest-bearing bonds with defined maturity dates backed by the U.S. Government or Government sponsored entities.  The unrealized losses at June 30, 2017 and December 31, 2016 are price changes resulting from changes in the interest rate environment and are considered to be temporary declines in the value of the securities.  Management does not intend to sell and it is likely that management will not be required to sell the securities prior to their anticipated recovery.  Their fair value is expected to recover as the bonds approach their maturity date and/or market conditions improve.


NOTE  3 - LOANS

Major classifications of loans at June 30, 2017 and December 31, 2016 are summarized as follows:

   
2017
   
2016
 
Residential real estate
 
$
340,288
   
$
342,294
 
Multifamily real estate
   
78,352
     
74,165
 
Commercial real estate:
               
Owner occupied
   
133,846
     
129,370
 
Non owner occupied
   
227,700
     
220,836
 
Commercial and industrial
   
77,900
     
76,736
 
Consumer
   
29,747
     
30,916
 
All other
   
150,121
     
150,506
 
   
$
1,037,954
   
$
1,024,823
 

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 six months ended June 30, 2017 was as follows:

Loan Class
 
Balance
Dec 31, 2016
   
Provision (credit) for loan losses
   
Loans charged-off
   
Recoveries
   
Balance
 June 30, 2017
 
                               
Residential real estate
 
$
2,948
   
$
193
   
$
(199
)
 
$
31
   
$
2,973
 
Multifamily real estate
   
785
     
552
     
-
     
-
     
1,337
 
Commercial real estate:
                                       
Owner occupied
   
1,543
     
(166
)
   
-
     
241
     
1,618
 
Non owner occupied
   
2,350
     
(12
)
   
(4
)
   
-
     
2,334
 
Commercial and industrial
   
1,140
     
9
     
(134
)
   
78
     
1,093
 
Consumer
   
347
     
138
     
(165
)
   
53
     
373
 
All other
   
1,723
     
428
     
(264
)
   
80
     
1,967
 
Total
 
$
10,836
   
$
1,142
   
$
(766
)
 
$
483
   
$
11,695
 
 

 
Activity in the allowance for loan losses by portfolio segment for the six months ended June 30, 2016 was as follows:

Loan Class
 
Balance
Dec 31, 2015
   
Provision (credit) for loan losses
   
Loans charged-off
   
Recoveries
   
Balance
June 30, 2016
 
                               
Residential real estate
 
$
2,501
   
$
286
   
$
(56
)
 
$
16
   
$
2,747
 
Multifamily real estate
   
821
     
1
     
-
     
-
     
822
 
Commercial real estate:
                                       
Owner occupied
   
1,509
     
(68
)
   
-
     
1
     
1,442
 
Non owner occupied
   
2,070
     
638
     
-
     
-
     
2,708
 
Commercial and industrial
   
1,033
     
40
     
-
     
38
     
1,111
 
Consumer
   
307
     
33
     
(90
)
   
56
     
306
 
All other
   
1,406
     
194
     
(126
)
   
194
     
1,668
 
Total
 
$
9,647
   
$
1,124
   
$
(272
)
 
$
305
   
$
10,804
 



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 ended June 30, 2017 was as follows:

Loan Class
 
Balance
March 31, 2017
   
Provision (credit) for loan losses
   
Loans charged-off
   
Recoveries
   
Balance
June 30, 2017
 
                               
Residential real estate
 
$
2,977
   
$
64
   
$
(94
)
 
$
26
   
$
2,973
 
Multifamily real estate
   
770
     
567
     
-
     
-
     
1,337
 
Commercial real estate:
                                       
Owner occupied
   
1,576
     
(198
)
   
-
     
240
     
1,618
 
Non owner occupied
   
2,422
     
(88
)
   
-
     
-
     
2,334
 
Commercial and industrial
   
1,129
     
43
     
(134
)
   
55
     
1,093
 
Consumer
   
370
     
22
     
(48
)
   
29
     
373
 
All other
   
1,650
     
366
     
(81
)
   
32
     
1,967
 
Total
 
$
10,894
   
$
776
   
$
(357
)
 
$
382
   
$
11,695
 
 

 
Activity in the allowance for loan losses by portfolio segment for the three months ended June 30, 2016 was as follows:

Loan Class
 
Balance
March 31, 2016
   
Provision (credit) for loan losses
   
Loans charged-off
   
Recoveries
   
Balance
June 30, 2016
 
                               
Residential real estate
 
$
2,539
   
$
208
   
$
(7
)
 
$
7
   
$
2,747
 
Multifamily real estate
   
745
     
77
     
-
     
-
     
822
 
Commercial real estate:
                                       
Owner occupied
   
1,531
     
(89
)
   
-
     
-
     
1,442
 
Non owner occupied
   
2,337
     
371
     
-
     
-
     
2,708
 
Commercial and industrial
   
933
     
176
     
-
     
2
     
1,111
 
Consumer
   
288
     
44
     
(46
)
   
20
     
306
 
All other
   
1,542
     
25
     
(66
)
   
167
     
1,668
 
Total
 
$
9,915
   
$
812
   
$
(119
)
 
$
196
   
$
10,804
 

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


NOTE  3–LOANS - continued

Purchased Impaired Loans

The Company holds purchased loans for which there was, at their acquisition date, evidence of deterioration of credit quality since their origination and it was probable, at acquisition, that all contractually required payments would not be collected.  The carrying amount of those loans is as follows at June 30, 2017 and December 31, 2016.

   
2017
   
2016
 
Residential real estate
 
$
1,537
   
$
1,619
 
Commercial real estate
               
Owner occupied
   
1,645
     
2,013
 
Non owner occupied
   
-
     
5,396
 
Commercial and industrial
   
216
     
232
 
All other
   
1,860
     
2,061
 
Total carrying amount
 
$
5,258
   
$
11,321
 
Contractual principal balance
 
$
7,234
   
$
14,784
 
                 
Carrying amount, net of allowance
 
$
5,208
   
$
11,311
 

For those purchased loans disclosed above, the Company increased the allowance for loan losses by $50,000 for the six-months ended June 30, 2017, but did not increase the allowance for loan losses for purchased impaired loans during the six-months ended June 30, 2016.

For those purchased loans disclosed above, where the Company can reasonably estimate the cash flows expected to be collected on the loans, a portion of the purchase discount is allocated to an accretable yield adjustment based upon the present value of the future estimated cash flows versus the current carrying value of the loan and the accretable yield portion is being recognized as interest income over the remaining life of the loan.

Where the Company cannot reasonably estimate the cash flows expected to be collected on the loans, it has continued to account for those loans using the cost recovery method of income recognition.  As such, no portion of a purchase discount adjustment has been determined to meet the definition of an accretable yield adjustment on those loans accounted for using the cost recovery method.  If, in the future, cash flows from the borrower(s) can be reasonably estimated, a portion of the purchase discount would be allocated to an accretable yield adjustment based upon the present value of the future estimated cash flows versus the current carrying value of the loan and the accretable yield portion would be recognized as interest income over the remaining life of the loan.  Until such accretable yield can be calculated, under the cost recovery method of income recognition, all payments will be used to reduce the carrying value of the loan and no income will be recognized on the loan until the carrying value is reduced to zero.  Any loan accounted for under the cost recovery method is also still included as a non-accrual loan in the amounts presented in the tables below.
PREMIER FINANCIAL BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED, DOLLARS IN TABLES IN THOUSANDS, EXCEPT PER SHARE DATA)


NOTE  3–LOANS - continued

The accretable yield, or income expected to be collected, on the purchased loans above is as follows at June 30, 2017 and June 30, 2016.

   
2017
   
2016
 
Balance at January 1
 
$
1,208
   
$
185
 
New loans purchased
   
-
     
1,115
 
Accretion of income
   
(403
)
   
(52
)
Reclassification to non-accretable
   
-
     
-
 
Disposals
   
-
     
-
 
Balance at June 30
 
$
805
   
$
1,248
 



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


NOTE  3–LOANS - continued

Past Due and Non-performing Loans

The following tables present the recorded investment in nonaccrual and loans past due over 90 days still on accrual by class of loans as of June 30, 2017 and December 31, 2016.  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.

June 30, 2017
 
Principal Owed on Non-accrual Loans
   
Recorded Investment in Non-accrual Loans
   
Loans Past Due Over 90 Days, still accruing
 
                   
Residential  real estate
 
$
3,767
   
$
3,190
   
$
693
 
Multifamily real estate
   
11,102
     
11,095
     
332
 
Commercial real estate
                       
Owner occupied
   
2,156
     
2,078
     
-
 
Non owner occupied
   
311
     
212
     
-
 
Commercial and industrial
   
1,833
     
830
     
1,134
 
Consumer
   
276
     
252
     
-
 
All other
   
2,913
     
2,791
     
-
 
Total
 
$
22,358
   
$
20,448
   
$
2,159
 

December 31, 2016
 
Principal Owed on Non-accrual Loans
   
Recorded Investment in Non-accrual Loans
   
Loans Past Due Over 90 Days, still accruing
 
                   
Residential  real estate
 
$
3,467
   
$
2,794
   
$
606
 
Multifamily real estate
   
11,157
     
11,106
     
334
 
Commercial real estate
                       
Owner occupied
   
1,769
     
1,704
     
15
 
Non owner occupied
   
294
     
196
     
36
 
Commercial and industrial
   
2,537
     
1,209
     
1,008
 
Consumer
   
366
     
347
     
-
 
All other
   
8,408
     
8,391
     
-
 
Total
 
$
27,998
   
$
25,747
   
$
1,999
 

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.
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 June 30, 2017 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
 
$
340,288
   
$
4,920
   
$
2,061
   
$
6,981
   
$
333,307
 
Multifamily real estate
   
78,352
     
108
     
11,427
     
11,535
     
66,817
 
Commercial real estate:
                                       
Owner occupied
   
133,846
     
364
     
2,015
     
2,379
     
131,467
 
Non owner occupied
   
227,700
     
154
     
124
     
278
     
227,422
 
Commercial and industrial
   
77,900
     
50
     
1,900
     
1,950
     
75,950
 
Consumer
   
29,747
     
295
     
93
     
388
     
29,359
 
All other
   
150,121
     
875
     
2,789
     
3,664
     
146,457
 
Total
 
$
1,037,954
   
$
6,766
   
$
20,409
   
$
27,175
   
$
1,010,779
 
 

 
The following table presents the aging of the recorded investment in past due loans as of December 31, 2016 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
 
$
342,294
   
$
6,113
   
$
1,596
   
$
7,709
   
$
334,585
 
Multifamily real estate
   
74,165
     
-
     
11,440
     
11,440
     
62,725
 
Commercial real estate:
                                       
Owner occupied
   
129,370
     
1,746
     
1,474
     
3,220
     
126,150
 
Non owner occupied
   
220,836
     
1,803
     
159
     
1,962
     
218,874
 
Commercial and industrial
   
76,736
     
330
     
2,120
     
2,450
     
74,286
 
Consumer
   
30,916
     
403
     
223
     
626
     
30,290
 
All other
   
150,506
     
577
     
8,187
     
8,764
     
141,742
 
Total
 
$
1,024,823
   
$
10,972
   
$
25,199
   
$
36,171
   
$
988,652
 


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 balance in the allowance for loan losses and the recorded investment in loans by portfolio segment and based on impairment method as of June 30, 2017:
 
   
Allowance for Loan Losses
   
Loan Balances
 
Loan Class
 
Individually Evaluated for Impairment
   
Collectively Evaluated for Impairment
   
Acquired with Deteriorated Credit Quality
   
Total
   
Individually Evaluated for Impairment
   
Collectively Evaluated for Impairment
   
Acquired with Deteriorated Credit Quality
   
Total
 
                                                 
Residential real estate
 
$
-
   
$
2,973
   
$
-
   
$
2,973
   
$
326
   
$
338,425
   
$
1,537
   
$
340,288
 
Multifamily real estate
   
517
     
820
     
-
     
1,337
     
13,593
     
64,759
     
-
     
78,352
 
Commercial real estate:
                                                               
Owner occupied
   
324
     
1,294
     
-
     
1,618
     
4,095
     
128,106
     
1,645
     
133,846
 
Non-owner occupied
   
-
     
2,334
     
-
     
2,334
     
1,914
     
225,786
     
-
     
227,700
 
Commercial and industrial
   
107
     
936
     
50
     
1,093
     
1,253
     
76,431
     
216
     
77,900
 
Consumer
   
-
     
373
     
-
     
373
     
-
     
29,747
     
-
     
29,747
 
All other
   
205
     
1,762
     
-
     
1,967
     
7,189
     
141,072
     
1,860
     
150,121
 
Total
 
$
1,153
   
$
10,492
   
$
50
   
$
11,695
   
$
28,370
   
$
1,004,326
   
$
5,258
   
$
1,037,954
 
 

 
The following table presents 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, 2016:
 
   
Allowance for Loan Losses
   
Loan Balances
 
Loan Class
 
Individually Evaluated for Impairment
   
Collectively Evaluated for Impairment
   
Acquired with Deteriorated Credit Quality
   
Total
   
Individually Evaluated for Impairment
   
Collectively Evaluated for Impairment
   
Acquired with Deteriorated Credit Quality
   
Total
 
                                                 
Residential real estate
 
$
-
   
$
2,948
   
$
-
   
$
2,948
   
$
379
   
$
340,296
   
$
1,619
   
$
342,294
 
Multifamily real estate
   
-
     
785
     
-
     
785
     
13,641
     
60,524
     
-
     
74,165
 
Commercial real estate:
                                                               
Owner occupied
   
244
     
1,299
     
-
     
1,543
     
2,801
     
124,556
     
2,013
     
129,370
 
Non-owner occupied
   
-
     
2,350
     
-
     
2,350
     
2,373
     
213,067
     
5,396
     
220,836
 
Commercial and industrial
   
266
     
864
     
10
     
1,140
     
1,418
     
75,086
     
232
     
76,736
 
Consumer
   
-
     
347
     
-
     
347
     
-
     
30,916
     
-
     
30,916
 
All other
   
86
     
1,637
     
-
     
1,723
     
12,976
     
135,469
     
2,061
     
150,506
 
Total
 
$
596
   
$
10,230
   
$
10
   
$
10,836
   
$
33,588
   
$
979,914
   
$
11,321
   
$
1,024,823
 
PREMIER FINANCIAL BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED, DOLLARS IN TABLES IN THOUSANDS, EXCEPT PER SHARE DATA)


NOTE  3–LOANS - continued

In the tables below, total individually evaluated impaired loans include certain purchased loans that were acquired with deteriorated credit quality that are still individually evaluated for impairment.

The following table presents loans individually evaluated for impairment by class of loans as of June 30, 2017.  The table includes $199,000 of loans acquired with deteriorated credit quality that the Company cannot reasonably estimate cash flows such that they are accounted for on the cost recovery method and are still individually evaluated for impairment.

   
Unpaid Principal Balance
   
Recorded Investment
   
Allowance for Loan Losses Allocated
 
With no related allowance recorded:
                 
Residential real estate
 
$
367
   
$
326
   
$
-
 
Multifamily real estate
   
2,498
     
2,498
     
-
 
Commercial real estate
                       
Owner occupied
   
3,129
     
3,079
     
-
 
Non owner occupied
   
2,006
     
1,914
     
-
 
Commercial and industrial
   
2,076
     
1,134
     
-
 
All other
   
3,191
     
3,071
     
-
 
     
13,267
     
12,022
     
-
 
With an allowance recorded:
                       
Multifamily real estate
 
$
11,102
   
$
11,095
   
$
517
 
Commercial real estate
                       
Owner occupied
   
1,044
     
1,016
     
324
 
Commercial and industrial
   
469
     
318
     
157
 
All other
   
4,123
     
4,118
     
205
 
     
16,738
     
16,547
     
1,203
 
Total
 
$
30,005
   
$
28,569
   
$
1,203
 


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 December 31, 2016.  The table includes $208,000 of loans acquired with deteriorated credit quality that the Company cannot reasonably estimate cash flows such that they are accounted for on the cost recovery method and are still individually evaluated for impairment.

   
Unpaid Principal Balance
   
Recorded Investment
   
Allowance for Loan Losses Allocated
 
With no related allowance recorded:
                 
Residential  real estate
 
$
743
   
$
379
   
$
-
 
Multifamily real estate
   
13,692
     
13,641
     
-
 
Commercial real estate
                       
Owner occupied
   
1,803
     
1,766
     
-
 
Non owner occupied
   
2,465
     
2,373
     
-
 
Commercial and industrial
   
2,429
     
1,338
     
-
 
All other
   
9,868
     
9,853
     
-
 
     
31,000
     
29,350
     
-
 
With an allowance recorded:
                       
Commercial real estate
                       
Owner occupied
 
$
1,055
   
$
1,035
   
$
244
 
Commercial and industrial
   
431
     
288
     
276
 
All other
   
3,124
     
3,123
     
86
 
     
4,610
     
4,446
     
606
 
Total
 
$
35,610
   
$
33,796
   
$
606
 


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 average balance of loans individually evaluated for impairment and interest income recognized on these loans for the six months ended June 30, 2017 and June 30, 2016.   The table includes loans acquired with deteriorated credit quality that are still individually evaluated for impairment.

   
Six months ended June 30, 2017
   
Six months ended June 30, 2016
 
Loan Class
 
Average Recorded Investment
   
Interest Income Recognized
   
Cash Basis Interest Recognized
   
Average Recorded Investment
   
Interest Income Recognized
   
Cash Basis Interest Recognized
 
                                                 
Residential real estate
 
$
345
   
$
1
   
$
1
   
$
638
   
$
11
   
$
9
 
Multifamily real estate
   
13,611
     
130
     
121
     
1,241
     
58
     
58
 
Commercial real estate:
                                               
Owner occupied
   
3,211
     
22
     
22
     
678
     
-
     
-
 
Non-owner occupied
   
2,079
     
61
     
61
     
5,706
     
100
     
97
 
Commercial and industrial
   
1,523
     
101
     
101
     
969
     
16
     
16
 
All other
   
9,129
     
289
     
286
     
802
     
7
     
6
 
Total
 
$
29,898
   
$
604
   
$
592
   
$
10,034
   
$
192
   
$
186
 
 

 
The following table presents the average balance of loans individually evaluated for impairment and interest income recognized on these loans for the three months ended June 30, 2017 and June 30, 2016.  The table includes loans acquired with deteriorated credit quality that are still individually evaluated for impairment.

   
Three months ended June 30, 2017
   
Three months ended June 30, 2016
 
Loan Class
 
Average Recorded Investment
   
Interest Income Recognized
   
Cash Basis Interest Recognized
   
Average Recorded Investment
   
Interest Income Recognized
   
Cash Basis Interest Recognized
 
                                                 
Residential real estate
 
$
328
   
$
-
   
$
-
   
$
669
   
$
5
   
$
5
 
Multifamily real estate
   
13,596
     
65
     
59
     
1,824
     
45
     
45
 
Commercial real estate:
                                               
Owner occupied
   
3,417
     
16
     
16
     
795
     
-
     
-
 
Non-owner occupied
   
1,932
     
29
     
29
     
5,308
     
51
     
51
 
Commercial and industrial
   
1,471
     
27
     
27
     
1,141
     
13
     
12
 
All other
   
7,205
     
57
     
55
     
850
     
7
     
6
 
Total
 
$
27,949
   
$
194
   
$
186
   
$
10,587
   
$
121
   
$
119
 
PREMIER FINANCIAL BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED, DOLLARS IN TABLES IN THOUSANDS, EXCEPT PER SHARE DATA)


NOTE  3–LOANS - continued

Troubled Debt Restructurings

A loan is classified as a troubled debt restructuring ("TDR") when loan terms are modified due to a borrower's financial difficulties and a concession is granted to a borrower that would not have otherwise been considered. Most of the Company's loan modifications involve a restructuring of loan terms prior to maturity to temporarily reduce the payment amount and/or to require only interest for a temporary period, usually up to six months.  These modifications generally do not meet the definition of a TDR because the modifications are considered to be an insignificant delay in payment.  The determination of an insignificant delay in payment is evaluated based on the facts and circumstances of the individual borrower(s).

The following table presents TDR's as of June 30, 2017 and December 31, 2016:

June 30, 2017
 
TDR's on Non-accrual
   
Other TDR's
   
Total TDR's
 
                         
Residential  real estate
 
$
324
   
$
133
   
$
457
 
Multifamily  real estate
   
-
     
2,166
     
2,166
 
Commercial real estate
                       
Owner occupied
   
601
     
1,771
     
2,372
 
Commercial and industrial