Premier Financial Bancorp is a multi-bank holding company. Through the banks and its data processing subsidiary, the company focuses on providing quality, community banking services to individuals and small-to medium sized businesses primarily in non-urban areas. By seeking to provide such banking services in non-urban areas, the company believes that it can minimize the competitive effect of larger financial institutions that typically are focused on large metropolitan areas. Premier Financial Bancorp Inc. has a market cap of $37.8 million; its shares were traded at around $5.9 with a P/E ratio of 5.9 and P/S ratio of 0.9. The dividend yield of Premier Financial Bancorp Inc. stocks is 7.4%.
Highlight of Business Operations:Net income for the nine months ended September 30, 2009 was $4,086,000, or $0.64 per share, compared to net income of $5,634,000, or $0.96 per share for the nine months ended September 30, 2008. The decrease in income in 2009 is largely due to decreasing yields on earning assets, particularly federal funds sold, decreases in service charge revenue and increases in non-interest expenses such as the special FDIC assessment on all banks in the United States, as well as the existence of benefits to 2008 net income, such as negative provisions for loan losses, income received for extending the Company s ATM processing contract, securities transactions and reimbursed collection expenses, which did not reoccur in 2009. The annualized returns on average shareholders equity and average assets were approximately 5.94% and 0.74% for the nine months ended September 30, 2009 compared to 9.45% and 1.13% for the same period in 2008. For the quarter ending September 30, 2009, annualized returns on average shareholders equity and average assets were approximately 6.62% and 0.82% compared to 9.03% and 1.05% for the same quarter of 2008.
Net income for the three months ended September 30, 2009 was $1,502,000, or $0.23 per share, compared to net income of $1,930,000, or $0.30 per share for the three months ended September 30, 2008. Again, the decrease in income in 2009 is largely due to decreasing yields on earning assets, particularly loan yields, and increases in the provision for loan losses and non-interest expenses including higher FDIC assessments and expenses related to the acquisition of Abigail Adams National Bancorp, Inc. (“Abigail Adams”).
Net interest income for the nine months ending September 30, 2009 totaled $19.99 million, up $768,000 or 4.0% from the $19.22 million of net interest income earned in the first nine months of 2008, as the $1.848 million of additional net interest income of the combined Traders Bank more than offset the 5.6% decrease in net interest income of Premier s other five banks. The operations from the acquisitions of Citizens First Bank (“Citizens First) and Traders Bankshares, Inc. (“Traders”), (now merged together as Traders Bank), both of which occurred at the close of business on April 30, 2008 are included in the consolidated financial statements of Premier only from the date of acquisition and thus are not included in the first four months of the comparative first nine months of 2008 results. Interest income in the first nine months of 2009 decreased by $766,000 or 2.7%, including the benefit of the $2.65 million of interest income added by the operations of Traders Bank in the first four months of 2009. Without these additional operations of Traders Bank, interest income decreased by $3.41 million or 12.1% in 2009. For the first nine months of 2009, interest income on loans increased by $412,000, due to the $2.27 million of interest income on loans contributed by the operations of Traders Bank during the first four months of 2009. Otherwise, interest income on loans decreased by $1.86 million, due to lower loan yields even though on a higher average volume of loans outstanding. Interest earned on investments decreased $512,000 in the first nine months of 2009, including the additional $377,000 of investment income added by the operations of Traders Bank during the first four months of 2009, due to lower average yields on a lower average volume of investments of the remaining bank operations. Interest earned on federal funds sold decreased by $664,000 in the first nine months of 2009, largely due to lower yields earned resulting from the Federal Reserve Board of Governors policy to stimulate the economy by maintaining the federal funds sold rate near 0.25%.
Interest expense in the first nine months of 2009 decreased by $1.53 million or 17.2% despite the inclusion of the operations of Traders Bank. Excluding the $799,000 of interest expense from the first four months of Traders Bank operations in 2009, interest expense declined by $2.33 million or 26.2% in the first nine months of 2009 compared to the first nine months of 2008, partially offsetting the $3.41 million decrease in interest income described above. Interest expense on deposits decreased by $1.36 million in the first nine months of 2009, including the $799,000 of interest expense on the deposits of Traders Bank during the first four months of 2009. The decrease is due to lower rates paid although on a slightly higher average balance of interest bearing deposits outstanding of the remaining bank operations. Interest expense on repurchase agreements and federal funds purchased decreased $97,000 in 2009, largely due to lower rates paid on a lower average balance. Interest expense on FHLB advances and other borrowings decreased $80,000 in the first nine months of 2009 as interest savings from rate decreases on Premier s variable rate borrowings at the parent were only partially offset by interest on an increase in the average balance of borrowings from the new borrowing at the parent to fund the purchase of Traders.
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