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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 September 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, – 10,668,589 shares outstanding at November 1, 2017



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


PREMIER FINANCIAL BANCORP, INC.
SEPTEMBER 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 and the impairment of goodwill.  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 registered public accounting firm.

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
SEPTEMBER 30, 2017 AND DECEMBER 31, 2016
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)


   
(UNAUDITED)
       
   
September 30,
   
December 31,
 
   
2017
   
2016
 
ASSETS
           
Cash and due from banks
 
$
41,831
   
$
41,443
 
Interest bearing bank balances
   
21,681
     
55,720
 
Federal funds sold
   
11,632
     
7,555
 
Cash and cash equivalents
   
75,144
     
104,718
 
Time deposits with other banks
   
2,582
     
2,332
 
Securities available for sale
   
289,203
     
288,607
 
Loans
   
1,055,324
     
1,024,823
 
Allowance for loan losses
   
(12,359
)
   
(10,836
)
Net loans
   
1,042,965
     
1,013,987
 
Federal Home Loan Bank stock, at cost
   
3,185
     
3,200
 
Premises and equipment, net
   
23,504
     
24,224
 
Real estate and other property acquired through foreclosure
   
11,458
     
12,665
 
Interest receivable
   
4,060
     
3,862
 
Goodwill
   
35,371
     
35,371
 
Other intangible assets
   
3,581
     
4,349
 
Other assets
   
1,622
     
2,878
 
Total assets
 
$
1,492,675
   
$
1,496,193
 
                 
LIABILITIES AND STOCKHOLDERS' EQUITY
               
Deposits
               
Non-interest bearing
 
$
327,965
   
$
319,618
 
Time deposits, $250,000 and over
   
64,919
     
66,378
 
Other interest bearing
   
876,500
     
893,390
 
Total deposits
   
1,269,384
     
1,279,386
 
Securities sold under agreements to repurchase
   
25,116
     
23,820
 
Other borrowed funds
   
6,000
     
8,859
 
Subordinated debt
   
5,368
     
5,343
 
Interest payable
   
358
     
364
 
Other liabilities
   
3,192
     
4,237
 
Total liabilities
   
1,309,418
     
1,322,009
 
                 
Stockholders' equity
               
Common stock, no par value; 20,000,000 shares authorized; 10,668,589 shares issued and outstanding at September 30, 2017, and 10,640,735 shares issued and outstanding at December 31, 2016
   
110,353
     
109,911
 
Retained earnings
   
72,449
     
66,195
 
Accumulated other comprehensive income (loss)
   
455
     
(1,922
)
Total stockholders' equity
   
183,257
     
174,184
 
Total liabilities and stockholders' equity
 
$
1,492,675
   
$
1,496,193
 
                 

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


   
Three Months Ended
September 30,
   
Nine Months Ended
September 30,
 
   
2017
   
2016
   
2017
   
2016
 
Interest income
                       
Loans, including fees
 
$
13,469
   
$
13,375
   
$
41,667
   
$
39,084
 
Securities available for sale
                               
Taxable
   
1,427
     
1,285
     
4,236
     
4,075
 
Tax-exempt
   
62
     
82
     
198
     
254
 
Federal funds sold and other
   
176
     
123
     
515
     
328
 
Total interest income
   
15,134
     
14,865
     
46,616
     
43,741
 
                                 
Interest expense
                               
Deposits
   
954
     
965
     
2,854
     
2,917
 
Repurchase agreements and other
   
7
     
10
     
21
     
28
 
FHLB advances
   
-
     
10
     
-
     
32
 
Other borrowings
   
68
     
101
     
234
     
321
 
Subordinated debt
   
74
     
63
     
218
     
181
 
Total interest expense
   
1,103
     
1,149
     
3,327
     
3,479
 
                                 
Net interest income
   
14,031
     
13,716
     
43,289
     
40,262
 
Provision for loan losses
   
891
     
312
     
2,033
     
1,436
 
Net interest income after provision for loan losses
   
13,140
     
13,404
     
41,256
     
38,826
 
                                 
Non-interest income
                               
Service charges on deposit accounts
   
1,136
     
1,031
     
3,201
     
2,975
 
Electronic banking income
   
811
     
791
     
2,424
     
2,355
 
Secondary market mortgage income
   
67
     
64
     
173
     
163
 
Other
   
163
     
176
     
530
     
571
 
     
2,177
     
2,062
     
6,328
     
6,064
 
Non-interest expenses
                               
Salaries and employee benefits
   
4,760
     
4,817
     
14,703
     
15,025
 
Occupancy and equipment expenses
   
1,511
     
1,635
     
4,481
     
4,697
 
Outside data processing
   
1,344
     
1,300
     
4,019
     
3,935
 
Professional fees
   
196
     
167
     
721
     
500
 
Taxes, other than payroll, property and income
   
189
     
156
     
589
     
473
 
Write-downs, expenses, sales of other real estate owned, net
   
346
     
765
     
1,139
     
1,402
 
Amortization of intangibles
   
252
     
278
     
768
     
862
 
FDIC insurance
   
159
     
278
     
506
     
752
 
Other expenses
   
1,168
     
1,212
     
3,401
     
3,674
 
     
9,925
     
10,608
     
30,327
     
31,320
 
Income before income taxes
   
5,392
     
4,858
     
17,257
     
13,570
 
Provision for income taxes
   
1,925
     
1,694
     
6,207
     
4,803
 
                                 
Net income
 
$
3,467
   
$
3,164
   
$
11,050
   
$
8,767
 
                                 
Net income per share:
                               
Basic
 
$
0.33
   
$
0.30
   
$
1.04
   
$
0.83
 
Diluted
   
0.32
     
0.30
     
1.03
     
0.83
 
PREMIER FINANCIAL BANCORP, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2017 AND 2016
(UNAUDITED, DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)


   
Three Months Ended
September 30,
   
Nine Months Ended
September 30,
 
   
2017
   
2016
   
2017
   
2016
 
Net income
 
$
3,467
   
$
3,164
   
$
11,050
   
$
8,767
 
                                 
Other comprehensive income (loss):
                               
Unrealized gains (losses) arising during the period
   
(68
)
   
15
     
3,658
     
4,504
 
Reclassification of realized amount
   
-
     
-
     
-
     
(4
)
Net change in unrealized gain on securities
   
(68
)
   
15
     
3,658
     
4,500
 
Less tax impact
   
24
     
(5
)
   
(1,281
)
   
(1,576
)
Other comprehensive income (loss)
   
(44
)
   
10
     
2,377
     
2,924
 
                                 
Comprehensive income
 
$
3,423
   
$
3,174
   
$
13,427
   
$
11,691
 



PREMIER FINANCIAL BANCORP, INC.
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY
NINE MONTHS ENDED SEPTEMBER 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
   
-
     
11,050
     
-
     
11,050
 
Other comprehensive income
   
-
     
-
     
2,377
     
2,377
 
Cash dividends paid ($0.45 per share)
   
-
     
(4,796
)
   
-
     
(4,796
)
Stock based compensation expense
   
194
     
-
     
-
     
194
 
Stock options exercised
   
248
     
-
     
-
     
248
 
Balances, September 30, 2017
 
$
110,353
   
$
72,449
   
$
455
   
$
183,257
 

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


   
2017
   
2016
 
Cash flows from operating activities
           
Net income
 
$
11,050
   
$
8,767
 
Adjustments to reconcile net income to net cash from operating activities
               
Depreciation
   
1,303
     
1,461
 
Provision for loan losses
   
2,033
     
1,436
 
Amortization (accretion), net
   
1,166
     
2,010
 
OREO writedowns, net
   
434
     
508
 
Stock compensation expense
   
194
     
160
 
Changes in :
               
Interest receivable
   
(198
)
   
(259
)
Other assets
   
(24
)
   
(140
)
Interest payable
   
(6
)
   
(76
)
Other liabilities
   
(1,045
)
   
(2,071
)
Net cash from operating activities
   
14,907
     
11,796
 
                 
Cash flows from investing activities
               
Net change in time deposits with other banks
   
(250
)
   
-
 
Purchases of securities available for sale
   
(49,210
)
   
(22,512
)
Proceeds from maturities and calls of securities available for sale
   
50,787
     
62,011
 
Redemption of FRB and FHLB stock
   
15
     
190
 
Net change in loans
   
(30,865
)
   
(51,417
)
Acquisition of subsidiary, net of cash received
   
-
     
16,385
 
Purchases of premises and equipment, net
   
(654
)
   
(413
)
Proceeds from sales of other real estate acquired through foreclosure
   
1,827
     
870
 
Net cash from (used in) investing activities
   
(28,350
)
   
5,114
 
                 
Cash flows from financing activities
               
Net change in deposits
   
(10,020
)
   
8,246
 
Net change in agreements to repurchase securities
   
1,296
     
3,282
 
Repayment of other borrowed funds
   
(2,859
)
   
(1,824
)
Proceeds from stock option exercises
   
248
     
645
 
Repayment of FHLB advances, net
   
-
     
(772
)
Common stock dividends paid
   
(4,796
)
   
(4,338
)
Net cash from (used in) financing activities
   
(16,131
)
   
5,239
 
                 
Net change in cash and cash equivalents
   
(29,574
)
   
22,149
 
                 
Cash and cash equivalents at beginning of period
   
104,718
     
72,539
 
                 
Cash and cash equivalents at end of period
 
$
75,144
   
$
94,688
 
PREMIER FINANCIAL BANCORP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)
NINE MONTHS ENDED SEPTEMBER 30, 2017 AND 2016
(UNAUDITED, DOLLARS IN THOUSANDS)


   
2017
   
2016
 
Supplemental disclosures of cash flow information:
           
Cash paid during period for interest
 
$
3,333
   
$
3,555
 
                 
Cash paid during period for income taxes
   
6,395
     
5,122
 
                 
Loans transferred to real estate acquired through foreclosure
   
983
     
631
 
                 
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”):
 
                September 30, 2017  
        Year   Total   Net Income  
Subsidiary 
 
Location 
 
Acquired
 
Assets
  Qtr   YTD  
Citizens Deposit Bank & Trust
 
Vanceburg, Kentucky
 
1991
 
$
425,115
   
$
1,209
   
$
3,509
 
Premier Bank, Inc.
 
Huntington, West Virginia
 
1998
   
1,060,991
     
2,734
     
9,007
 
Parent and Intercompany Eliminations
           
6,569
     
(476
)
   
(1,466
)
  Consolidated Total
          
$
1,492,675
   
$
3,467
   
$
11,050
 


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 in 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.  At September 30, 2017, the Company had $5,045,000 of future lease obligations excluding optional renewal periods.  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 September 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
 
$
199,483
   
$
1,028
   
$
(578
)
 
$
199,933
 
U. S. sponsored agency CMO’s - residential
   
56,330
     
553
     
(369
)
   
56,514
 
Total mortgage-backed securities of government sponsored agencies
   
255,813
     
1,581
     
(947
)
   
256,447
 
U. S. government sponsored agency securities
   
19,344
     
5
     
(74
)
   
19,275
 
Obligations of states and political subdivisions
   
13,346
     
140
     
(5
)
   
13,481
 
Total available for sale
 
$
288,503
   
$
1,726
   
$
(1,026
)
 
$
289,203
 

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 September 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
 
$
9,687
   
$
9,701
 
Due after one year through five years
   
17,073
     
17,070
 
Due after five years through ten years
   
5,375
     
5,430
 
Due after ten years
   
555
     
555
 
Mortgage-backed securities of government sponsored agencies
   
255,813
     
256,447
 
Total available for sale
 
$
288,503
   
$
289,203
 

Securities with unrealized losses at September 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
 
$
17,242
   
$
(74
)
 
$
-
   
$
-
   
$
17,242
   
$
(74
)
U.S government sponsored agency MBS – residential
   
56,820
     
(429
)
   
5,234
     
(149
)
   
62,054
     
(578
)
U.S government sponsored agency CMO’s – residential
   
11,256
     
(129
)
   
11,184
     
(240
)
   
22,440
     
(369
)
Obligations of states and political subdivisions
   
619
     
(4
)
   
775
     
(1
)
   
1,394
     
(5
)
Total temporarily impaired
 
$
85,937
   
$
(636
)
 
$
17,193
   
$
(390
)
 
$
103,130
   
$
(1,026
)

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 September 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 September 30, 2017 and December 31, 2016 are summarized as follows:

   
2017
   
2016
 
Residential real estate
 
$
337,502
   
$
342,294
 
Multifamily real estate
   
70,698
     
74,165
 
Commercial real estate:
               
Owner occupied
   
134,773
     
129,370
 
Non owner occupied
   
237,655
     
220,836
 
Commercial and industrial
   
82,332
     
76,736
 
Consumer
   
29,675
     
30,916
 
All other
   
162,689
     
150,506
 
   
$
1,055,324
   
$
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 nine months ended September 30, 2017 was as follows:

Loan Class
 
Balance
Dec 31, 2016
   
Provision (credit) for loan losses
   
Loans
charged-off
   
Recoveries
   
Balance
Sept 30, 2017
 
                               
Residential real estate
 
$
2,948
   
$
363
   
$
(362
)
 
$
52
   
$
3,001
 
Multifamily real estate
   
785
     
475
     
-
     
-
     
1,260
 
Commercial real estate:
                                       
Owner occupied
   
1,543
     
(161
)
   
(7
)
   
242
     
1,617
 
Non owner occupied
   
2,350
     
265
     
(8
)
   
-
     
2,607
 
Commercial and industrial
   
1,140
     
3
     
(138
)
   
95
     
1,100
 
Consumer
   
347
     
148
     
(214
)
   
86
     
367
 
All other
   
1,723
     
940
     
(373
)
   
117
     
2,407
 
Total
 
$
10,836
   
$
2,033
   
$
(1,102
)
 
$
592
   
$
12,359
 

Activity in the allowance for loan losses by portfolio segment for the nine months ending September 30, 2016 was as follows:

Loan Class
 
Balance
Dec 31, 2015
   
Provision (credit) for loan losses
   
Loans
charged-off
   
Recoveries
   
Balance
Sept 30, 2016
 
                               
Residential real estate
 
$
2,501
   
$
377
   
$
(107
)
 
$
19
   
$
2,790
 
Multifamily real estate
   
821
     
92
     
-
     
-
     
913
 
Commercial real estate:
                                       
Owner occupied
   
1,509
     
(140
)
   
-
     
2
     
1,371
 
Non owner occupied
   
2,070
     
645
     
-
     
-
     
2,715
 
Commercial and industrial
   
1,033
     
83
     
(29
)
   
42
     
1,129
 
Consumer
   
307
     
172
     
(232
)
   
71
     
318
 
All other
   
1,406
     
207
     
(207
)
   
221
     
1,627
 
Total
 
$
9,647
   
$
1,436
   
$
(575
)
 
$
355
   
$
10,863
 



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 September 30, 2017 was as follows:

Loan Class
 
Balance
June 30, 2017
   
Provision (credit) for loan losses
   
Loans
charged-off
   
Recoveries
   
Balance
Sept 30, 2017
 
                               
Residential real estate
 
$
2,973
   
$
170
   
$
(163
)
 
$
21
   
$
3,001
 
Multifamily real estate
   
1,337
     
(77
)
   
-
     
-
     
1,260
 
Commercial real estate:
                                       
Owner occupied
   
1,618
     
5
     
(7
)
   
1
     
1,617
 
Non owner occupied
   
2,334
     
276
     
(3
)
   
-
     
2,607
 
Commercial and industrial
   
1,093
     
(6
)
   
(4
)
   
17
     
1,100
 
Consumer
   
373
     
10
     
(49
)
   
33
     
367
 
All other
   
1,967
     
513
     
(110
)
   
37
     
2,407
 
Total
 
$
11,695
   
$
891
   
$
(336
)
 
$
109
   
$
12,359
 

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

Loan Class
 
Balance
June 30, 2016
   
Provision (credit) for loan losses
   
Loans
charged-off
   
Recoveries
   
Balance
Sept 30, 2016
 
                               
Residential real estate
 
$
2,747
   
$
91
   
$
(51
)
 
$
3
   
$
2,790
 
Multifamily real estate
   
822
     
91
     
-
     
-
     
913
 
Commercial real estate:
                                       
Owner occupied
   
1,442
     
(72
)
   
-
     
1
     
1,371
 
Non owner occupied
   
2,708
     
7
     
-
     
-
     
2,715
 
Commercial and industrial
   
1,111
     
43
     
(29
)
   
4
     
1,129
 
Consumer
   
306
     
139
     
(142
)
   
15
     
318
 
All other
   
1,668
     
13
     
(81
)
   
27
     
1,627
 
Total
 
$
10,804
   
$
312
   
$
(303
)
 
$
50
   
$
10,863
 

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 September 30, 2017 and December 31, 2016.

   
2017
   
2016
 
Residential real estate
 
$
1,515
   
$
1,619
 
Commercial real estate
               
Owner occupied
   
1,564
     
2,013
 
Non owner occupied
   
-
     
5,396
 
Commercial and industrial
   
214
     
232
 
All other
   
1,828
     
2,061
 
Total carrying amount
 
$
5,121
   
$
11,321
 
Contractual principal balance
 
$
7,116
   
$
14,784
 
                 
Carrying amount, net of allowance
 
$
5,071
   
$
11,311
 

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

   
2017
   
2016
 
Balance at January 1
 
$
1,208
   
$
185
 
New loans purchased
   
-
     
1,151
 
Accretion of income
   
(398
)
   
(64
)
Reclassification to non-accretable
   
-
     
-
 
Disposals
   
-
     
-
 
Balance at September 30
 
$
810
   
$
1,272
 


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 September 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.

September 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
 
$
3,248
   
$
2,846
   
$
585
 
Multifamily real estate
   
11,101
     
11,095
     
334
 
Commercial real estate
                       
Owner occupied
   
2,052
     
1,974
     
63
 
Non owner occupied
   
310
     
209
     
86
 
Commercial and industrial
   
2,062
     
1,054
     
648
 
Consumer
   
331
     
304
     
-
 
All other
   
6,984
     
6,863
     
-
 
Total
 
$
26,088
   
$
24,345
   
$
1,716
 

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 September 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
 
$
337,502
   
$
6,460
   
$
1,717
   
$
8,177
   
$
329,325
 
Multifamily real estate
   
70,698
     
-
     
11,429
     
11,429
     
59,269
 
Commercial real estate:
                                       
Owner occupied
   
134,773
     
172
     
1,979
     
2,151
     
132,622
 
Non owner occupied
   
237,655
     
374
     
227
     
601
     
237,054
 
Commercial and industrial
   
82,332
     
179
     
1,628
     
1,807
     
80,525
 
Consumer
   
29,675
     
365
     
121
     
486
     
29,189
 
All other
   
162,689
     
1,370
     
6,861
     
8,231
     
154,458
 
Total
 
$
1,055,324
   
$
8,920
   
$
23,962
   
$
32,882
   
$
1,022,442
 

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 September 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
 
$
-
   
$
3,001
   
$
-
   
$
3,001
   
$
320
   
$
335,667
   
$
1,515
   
$
337,502
 
Multifamily real estate
   
517
     
743
     
-
     
1,260
     
13,588
     
57,110
     
-
     
70,698
 
Commercial real estate:
                                                               
Owner occupied
   
301
     
1,316
     
-
     
1,617
     
3,725
     
129,484
     
1,564
     
134,773
 
Non-owner occupied
   
88
     
2,519
     
-
     
2,607
     
5,583
     
232,072
     
-
     
237,655
 
Commercial and industrial
   
105
     
945
     
50
     
1,100
     
1,129
     
80,989
     
214
     
82,332
 
Consumer
   
19
     
348
     
-
     
367
     
19
     
29,656
     
-
     
29,675
 
All other
   
518
     
1,889
     
-
     
2,407
     
7,177
     
153,684
     
1,828
     
162,689
 
Total
 
$
1,548
   
$
10,761
   
$
50
   
$
12,359
   
$
31,541
   
$
1,018,662
   
$
5,121
   
$
1,055,324
 

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 September 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
 
$
360
   
$
320
   
$
-
 
Multifamily real estate
   
2,492
     
2,492
     
-
 
Commercial real estate
                       
Owner occupied
   
2,916
     
2,855
     
-
 
Non owner occupied
   
3,604
     
3,512
     
-
 
Commercial and industrial
   
1,767
     
1,012
     
-
 
All other
   
3,186
     
3,066
     
-
 
     
14,325
     
13,257
     
-
 
With an allowance recorded:
                       
Multifamily real estate
 
$
11,102
   
$
11,095
   
$
517
 
Commercial real estate
                       
Owner occupied
   
888
     
870
     
301
 
Non owner occupied
   
2,072
     
2,072
     
88
 
Commercial and industrial
   
468
     
316
     
155
 
Consumer
   
19
     
19
     
19
 
All other
   
4,116
     
4,111
     
518
 
     
18,665
     
18,483
     
1,598
 
Total
 
$
32,990
   
$
31,740
   
$
1,598
 
                         


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 nine months ended September 30, 2017 and September 30, 2016.   The table includes loans acquired with deteriorated credit quality that are still individually evaluated for impairment.

   
Nine months ended Sept 30, 2017
   
Nine months ended Sept 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
 
$
339
   
$
1
   
$
1
   
$
612
   
$
16
   
$
14
 
Multifamily real estate
   
13,605
     
196
     
181
     
1,580
     
121
     
121
 
Commercial real estate:
                                               
Owner occupied
   
3,340
     
49
     
49
     
1,144
     
3
     
3
 
Non-owner occupied
   
2,955
     
124
     
124
     
5,066
     
275
     
273
 
Commercial and industrial
   
1,474
     
114
     
114
     
1,155
     
26
     
26
 
Consumer
   
5
     
-
     
-
     
-
     
-
     
-
 
All other
   
8,641
     
342
     
341
     
3,011
     
40
     
6
 
Total
 
$
30,359
   
$
826
   
$
810
   
$
12,568
   
$
481
   
$
443
 

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 September 30, 2017 and September 30, 2016  The table includes loans acquired with deteriorated credit quality that are still individually evaluated for impairment.

   
Three months ended Sept 30, 2017
   
Three months ended Sept 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
 
$
323
   
$
-
   
$
-
   
$
667
   
$
5
   
$
5
 
Multifamily real estate
   
13,590
     
66
     
60
     
2,594
     
63
     
63
 
Commercial real estate:
                                               
Owner occupied
   
3,910
     
27
     
27
     
1,847
     
3
     
3
 
Non-owner occupied
   
3,749
     
63
     
63
     
4,240
     
175
     
175
 
Commercial and industrial
   
1,390
     
13
     
13
     
1,809
     
10
     
10
 
Consumer
   
9
     
-
     
-
     
-
     
-
     
-
 
All other
   
7,183
     
53
     
53
     
5,243
     
33
     
-
 
Total
 
$
30,154
   
$
222
   
$
216
   
$
16,400
   
$
289
   
$
256
 
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 September 30, 2017 and December 31, 2016:

September 30, 2017
 
TDR’s on Non-accrual
   
Other TDR’s
   
Total TDR’s
 
                   
Residential  real estate
 
$
317
   
$
110
   
$
427