Premier Financial Bancorp, Inc. Reports 63% Increase in Third Quarter 2013 Earnings

HUNTINGTON, W.Va., Nov. 4, 2013 /PRNewswire/ -- PREMIER FINANCIAL BANCORP, INC. (PREMIER), (NASDAQ/GMS: PFBI), a $1.1 billion bank holding company with two bank subsidiaries, announced its financial results for the third quarter of 2013.  Premier realized net income of $3,926,000 (44 cents per share) during the quarter ending September 30, 2013, a 62.8% increase from the $2,411,000 of net income reported for the third quarter of 2012.  The increase in income in 2013 is largely due to an increase in interest income on loans, a decrease in interest expense, a decrease in non-interest expense, and a decrease in the provision for loan losses.  On a diluted per share basis, Premier earned $0.44 during the third quarter of 2013 compared to $0.37 per share earned during the third quarter of 2012.  For the first nine months of 2013 Premier realized net income of $9,539,000 ($1.07 per diluted share) compared to $7,333,000 (90 cents per diluted share) earned during the first nine months of 2012.

President and CEO Robert W. Walker commented, "We have many in our organization to thank for our excellent earnings performance this quarter, from new loan production, to successful loan collections, to those who continue to meet the needs of our deposit customers in a friendly and informative manner.  Loan growth was the primary driver of earnings this quarter along with a reduced provision for loan losses as we continue to realize opportunities to liquidate troubled assets for reasonable values.  Lower expenses also contributed to our earnings performance, in the form of lower interest expense and lower operating expenditures.  Also, we recently announced our newest branch location in Chevy Chase, Maryland and we are pleased with the initial reaction of new customers to our Premier franchise."

Net interest income for the quarter ending September 30, 2013 totaled $12.027 million, compared to $11.017 million of net interest income earned during the third quarter of 2012.  When compared to the third quarter of 2012, net interest income increased by $1,010,000, or 9.2%, largely due to an $856,000 increase in interest income on loans and a $359,000 decrease in interest expense paid on deposits.  In the third quarter of 2013, interest income on loans included $1,157,000 from the recognition of deferred interest and purchase discounts on loans liquidated during the quarter.  This amount compares to $641,000 of deferred interest and purchase discounts on loans recognized on loans liquidated during the third quarter of 2012.  Excluding the recognition of these purchase discounts and deferred interest, interest income on loans increased by $340,000, or 3.2%, in the third quarter of 2013 largely due to a higher average balance of loans outstanding.  Conversely, interest income from investments decreased by $253,000, or 14.1%, in the third quarter of 2013 compared to the third quarter of 2012.  However this decrease in interest income was more than offset by $398,000 of interest expense savings during the third quarter of 2013.  When compared to the third quarter of 2012, interest expense on deposits decreased by $359,000, or 26.5%, during the third quarter of 2013, while interest expense on short- and long-term borrowings decreased by $39,000, or 18.6%, during the third quarter of 2013.

During the quarter ending September 30, 2013, Premier recorded a $50,000 provision for loan losses compared to a $1,260,000 provision for loan losses recorded during the same period of 2012.  The decrease in the provision expense in 2013 is largely due to a reduction in specific reserves on impaired loans, partially offset by an increase in the allowance for loan losses related to growth in the loan portfolio.  The higher provision expense in the third quarter of 2012 was largely due to an increase in the estimated credit risk in the loan portfolio resulting not only from specific reserve allocations on an increase in non-accrual loans during that quarter last year, but also for the increase in total loans outstanding during the third quarter of 2012.  The level of provision expense is determined under Premier's internal analyses of evaluating credit risk. The extended decline in economic conditions is still having an impact on borrowers' repayment abilities; however both non-accrual loans and accruing loans 90+ days past due have decreased since year-end 2012.  The amount of future provisions for loan losses will depend on any future improvement or further deterioration in the estimated credit risk in the loan portfolio as well as whether additional payments are received on loans previously identified as having significant credit risk.  Gross charge-offs of loans decreased by $502,000 in the third quarter of 2013 when compared to the same quarter of 2012, while recoveries of loans previously charged-off decreased by $211,000 during the same period comparison.

Net overhead costs (non-interest expenses less non-interest income) for the quarter ending September 30, 2013 totaled $5.893 million compared to $6.241 million in the third quarter of 2012.  The $348,000 decrease in net overhead when compared to the third quarter of 2012 is largely due reductions in expenses and losses related to other real estate owned, loan collection expenses, taxes not on income, and occupancy and equipment expenses.  Non-interest income increased by $23,000, or 1.4%, in the third quarter of 2013 when compared to the third quarter of 2012, largely due to a $12,000, or 2.4%, increase in electronic banking income, and an increase in the collection of late fees on loans which more than offset a $36,000, or 3.9%, decrease in service charges on deposit accounts.  Non-interest expenses decreased by $325,000, or 4.1%, in the third quarter of 2013 compared to the third quarter of 2012.  Decreases in non-interest expenses include a $75,000, or 39.7%, decrease in collection costs, a $212,000, or 57.0%, decrease in expenses related to other real estate owned, a $38,000, or 20.3% decrease in local non-income based taxes and a $73,000, or 6.4% decrease in occupancy and equipment expenses.  These expense decreases more than offset a $110,000 increase in FDIC insurance expense, a $31,000 increase in professional fees and a $21,000 increase in staff costs. 

Not included in net overhead costs, but certainly improving net income in 2012, Premier also realized a $273,000 gain on the early call of an investment security during the third quarter of 2012.  This gain compares to a $72,000 gain realized on the sale of investment securities in the third quarter of 2013.

Total assets as of September 30, 2013 were down $8.9 million, or 0.8%, from the $1.1 billion of total assets at year-end 2012.  The decrease in total assets since year-end is largely due to a $42.6 million, or 15.0%, decrease in investment securities, partially offset by a $27.4 million, or 3.9%, increase in total loans outstanding.  The proceeds from the net reduction in these earning assets were used to satisfy a $6.3 million, or 0.7%, decrease in total deposits, an $11.5 million reduction in customer repurchase agreements and to reduce other borrowings by $1.6 million, or 10.3%.  The overall decrease in deposits is due to a $16.9 million, or 8.0%, decrease in certificates of deposit and individual retirement accounts (IRA's) under $100,000 and a $3.0 million, or 1.5%, decrease in non-interest bearing deposit accounts.  These decreases were partially offset by a $5.7 million, or 3.5%, increase in interest bearing transaction accounts, a $7.0 million, or 3.3%, increase in savings and money market accounts and a $961,000, or 0.7% increase in certificates of deposit over $100,000.  To supplement short-term funding needs from the increase in loans, Premier borrowed $5.0 million from the Federal Home Loan Bank of Pittsburgh (FHLB) on a short-term basis rather than sell investment securities in an effort to maximize interest yields.  The average rate paid on the FHLB borrowing during the third quarter of 2013 was 0.12%, resulting in interest expense of approximately $1,000 during the quarter.  To also supplement short-term funding needs, Premier borrowed $2.2 million of federal funds purchased as of September 30, 2013.  These overnight funds are typically in response to short-term funding needs rather than incurring borrowings for a minimum monthly period from the FHLB.

Shareholders' equity of $147.1 million equaled 13.2% of total assets at September 30, 2013, which compares to shareholders' equity of $144.3 million, or 12.9% of total assets at December 31, 2012.  The increase in shareholders' equity was largely due to the $9.5 million of net income during the first nine months of 2013 partially offset by dividends declared on common stock and Premier's Series A Preferred Stock.  Also decreasing total shareholders' equity at September 30, 2013 was a $4.2 million, net of tax, decrease in the market value of the investment portfolio available for sale due to the rise in long-term interest rates during 2013.

Certain Statements contained in this news release, including, without limitation, statements including the word "believes," "anticipates," "intends," "expects" or words of similar import, constitute "forward-looking statements" within the meaning of section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of Premier to be materially different from any future results, performance or achievements of Premier expressed or implied by such forward-looking statements. Such factors include, among others, general economic and business conditions, changes in business strategy or development plans and other factors referenced in this press release. Given these uncertainties, prospective investors are cautioned not to place undue reliance on such forward-looking statements. Premier disclaims any obligation to update any such factors or to publicly announce the results of any revisions to any of the forward-looking statements contained herein to reflect future events or developments. 

Following is a summary of the financial highlights for Premier as of and for the period ending September 30, 2013

 

PREMIER FINANCIAL BANCORP, INC.

Financial Highlights

Dollars in Thousands (except per share data)






For the

Quarter Ended


For the

Nine-Months Ended


Sept 30


Sept 30


Sept 30


Sept 30


2013


2012


2013


2012

Interest Income

13,192


12,580


36,924


38,752

Interest Expense

1,165


1,563


3,664


5,009

   Net Interest Income

12,027


11,017


33,260


33,743

Provision for Loan Losses

50


1,260


550


2,960

   Net Interest Income after Provision

11,977


9,757


32,710


30,783

Non-Interest Income

1,686


1,663


4,764


4,812

Gain on Disposition of Securities

72


273


220


273

Non-Interest Expenses

7,579


7,904


22,775


24,564

   Income Before Taxes

6,156


3,789


14,919


11,304

Income Taxes

2,230


1,378


5,380


3,971

   NET INCOME

3,926


2,411


9,539


7,333

Discount on Redemption of Preferred Stock

-


904


-


904

Preferred Stock Dividends and Accretion

(165)


(297)


(495)


(908)

   Net Income Available to Common Shareholders

3,761


3,018


9,044


7,329









   EARNINGS PER SHARE

0.47


0.38


1.13


0.92

   DILUTED EARNINGS PER SHARE

0.44


0.37


1.07


0.90

   DIVIDENDS PER SHARE

0.11


0.11


0.33


0.11









Charge-offs

203


705


595


2,485

Recoveries

127


338


729


485

   Net charge-offs (recoveries)

76


367


(134)


2,000









 

PREMIER FINANCIAL BANCORP, INC.

Financial Highlights (continued)

Dollars in Thousands (except per share data)




Balances as of


September 30


December 31


2013


2012

ASSETS




Cash and Due From Banks

30,587


32,473

Interest Bearing Bank Balances

45,058


33,536

Federal Funds Sold

855


4,236

Securities Available for Sale

241,294


283,975

Loans (net)

719,869


693,137

Other Real Estate Owned

13,739


13,366

Other Assets

28,320


27,468

Goodwill and Other Intangible Assets

32,140


32,596

   TOTAL ASSETS

1,111,862


1,120,787





LIABILITIES & EQUITY




Deposits

924,304


930,583

Fed Funds/Repurchase Agreements

16,790


26,102

FHLB Advances

5,000


-

Other Borrowings

14,400


16,049

Other Liabilities

4,248


3,757

   TOTAL LIABILITIES

964,742


976,491

Preferred Stockholders' Equity

11,940


11,896

Common Stockholders' Equity

135,180


132,400

   TOTAL LIABILITIES &

      STOCKHOLDERS' EQUITY

1,111,862


1,120,787





TOTAL BOOK VALUE PER COMMON SHARE

16.85


16.63

Tangible Book Value per Common Share

12.85


12.53





Non-Accrual Loans

21,424


25,806

Loans 90 Days Past Due and Still Accruing

3,049


3,890

 

 

SOURCE Premier Financial Bancorp, Inc.



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