Premier Financial Bancorp, Inc. Reports Second Quarter 2018 Earnings

HUNTINGTON, W.Va., Aug. 7, 2018 /PRNewswire/ -- PREMIER FINANCIAL BANCORP, INC. (PREMIER), (NASDAQ/GMS: PFBI), a $1.5 billion financial holding company with two community bank subsidiaries, announced its financial results for the second quarter of 2018.  Premier realized net income of $4,375,000 (32 cents per diluted share) during the quarter ended June 30, 2018, an 11.6% increase from the $3,919,000 of net income reported for the second quarter of 2017.  The increase in net income during the second quarter of 2018 is largely due to increases in investment income and non-interest income as well as a decrease in the provision for loan losses and income tax expense.  On a diluted per share basis, Premier earned $0.32 during the second quarter of 2018 compared to $0.29 per share earned during the second quarter of 2017, adjusted for a 5 for 4 stock split issued to shareholders on June 8, 2018.  As a result of the 5 for 4 stock split, all previous per share information has been restated to reflect the additional shares outstanding.  For the first half of 2018 Premier realized net income of $9,508,000 (71 cents per diluted share), a 25.4% increase over the $7,583,000 (57 cents per diluted share) earned during the first half of 2017.

President and CEO Robert W. Walker commented, "Our company has completed another quarter continuing its strong core earnings results.  Our net interest margin remained above 4.00% in the second quarter of 2018, at 4.08%, while our net overhead ratio dropped to 2.32% of average earning assets compared to 2.37% for the second quarter of 2017.  Funding for our earning assets improved, as average deposits increased from $1.285 billion in the second quarter of 2017 to $1.294 billion in the second quarter of 2018, with a $29.1 million increase coming from non-interest bearing deposits.  Our provison for loan losses decreased to $500,000 this quarter, largely due to decreases in impaired loans. Thanks to the lower corporate income tax rates enacted as part of the Tax Cuts and Jobs Act of 2017, more of our profitability is now reported as net income.  Comparisions to other quarters are somewhat clouded by additional income recognized in those quarters as a result of liquidating problem assets.  In the first quarter of 2018, we liquidated two large foreclosed properties ("OREO") which added $1.0 million to pretax income and propelled our first quarter 2018 results to a record level.  Similarly, in the second quarter of 2017, we recognized approximately $1,161,000 of loan interest income from deferred interest and discounts recognized on loans that paid off during that quarter compared to only $169,000 of loan interest income of this kind recognized during the second quarter of 2018. 

"In addition to the continued strong earnings performance, our board of directors took other actions during the second quarter of 2018 to improve shareholder value.  On June 8, Premier issued a 5 for 4 stock split to shareholders of record on June 4, 2018.  On May 16, 2018, the board increased the quarterly common stock dividend payable on June 29, 2018 to $0.15 per share compared to the $0.12 per share (adjusted for the 5 for 4 stock split) declared in previous quarters.  On April 19, 2018, we announced our definitive agreement to acquire First Bank of Charleston, a $182 million bank headquartered in the capital city of West Virginia.  We are excited about the opportunity to once again expand the Premier community bank franchise.  We look forward to completing this merger some time early in the fourth quarter of this year." 

Net interest income for the quarter ended June 30, 2018 totaled $14.419 million, down $843,000, or 5.5%, from the $15.262 million of net interest income earned in the second quarter of 2017.  Interest income in 2018 decreased by $620,000, or 3.8%, largely due to a $979,000, or 6.7%, decrease in interest income on loans.  Interest income on loans in the second quarter of 2017 (prior year) included approximately $1,161,000 of income recognized from deferred interest and discounts recognized on loans that paid off during the quarter compared to only $169,000 of interest income of this kind recognized during the second quarter of 2018 (current year).  Otherwise, interest income on loans was relatively consistent and increased by $13,000, or 0.1%, in the second quarter of 2018, largely due to a higher average yield on a slightly lower average balance of loans outstanding during the quarter when compared to the second quarter of 2017.  Interest income on investment securities in the second quarter of 2018 increased by $161,000, or 10.5%, largely due to higher average yields although on a lower average balance of investments outstanding during the second quarter of 2018.  Interest income from interest-bearing bank balances and federal funds sold increased by $198,000, or 109%, due to an increase in the yield on these balances in 2018 resulting from increases in the short-term interest rate policy of the Federal Reserve Board of Governors on a higher average balance outstanding during the second quarter of 2018.

Partially offsetting the increase in interest income from investments and interest-bearing bank balances in the second quarter of 2018 was a $223,000, or 20.1%, increase in interest expense.  Interest expense on deposits increased by $246,000, or 25.9%, in the second quarter of 2018, due to increases in the average rate paid on certificates of deposit, savings deposits and NOW and money market deposits during the quarter.  Average interest-bearing deposit balances were down $20.4 million, or 2.1%, compared to the second quarter of 2017, while the average interest rate paid on interest-bearing deposits was up 12 basis points in 2018, from 0.39% in the second quarter of 2017 to 0.51% in the second quarter of 2018.  Increases in short-term rates have increased competition for deposits and time deposits in particular. The related rates of interest paid on time deposits increased by 23 basis points, driving the overall increase in interest expense on deposits in the second quarter of 2018 when compared to the second quarter of 2017.  Partially offsetting the increase in interest expense on deposit accounts, interest expense on borrowings in the second quarter of 2018 decreased by $38,000, or 48.1%, largely due to a decrease in outstanding borrowings from scheduled and accelerated principal payments on long-term borrowings at the parent company.  Also adding to the overall increase in interest expense during the second quarter of 2018 was a $15,000, or 20.3%, increase in interest expense on Premier's subordinated debt due to an increase in the variable rate interest rate paid in 2018.  The variable interest rate is indexed to the short-term three-month LIBOR interest rate, which has increased over the past twelve months in conjunction with increases in short-term interest rate policy by the Federal Reserve Board of Governors.

During the quarter ended June 30, 2018, Premier recorded $500,000 of provision for loan losses compared to $776,000 of provision for loan losses recorded during the same quarter of 2017.  The decrease in the provision for loan losses recorded during the second quarter of 2018 was primarily in response to a decrease in loans individually evaluated for impairment and a corresponding decrease in the identified credit risk on impaired loans in Premier's commercial, multifamily real estate and construction loan portfolios.  The provision for loan losses recorded during the second quarter of 2017 was largely to provide for an increase in specific reserves on impaired loans.  Specific reserves on impaired loans increased from $497,000 at the end of the first quarter of 2017 to $1,203,000 at the end of the second quarter of 2017, largely due to specific reserves placed on a multifamily real estate loan and a real estate renovation loan.   The level of provision expense is determined under Premier's internal analyses of evaluating credit risk. 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 increased by $73,000 in the second quarter of 2018 when compared to the same quarter of 2017, while recoveries on loans previously charged-off decreased by $310,000 as a result of a large recovery recorded in the second quarter of 2017.  While loans individually evaluated for impairment decreased during the quarter ended June 30, 2018, non-accrual loans increased by $903,000 since March 31, 2018, and accruing loans over 90 days past due increased by approximately $3.0 million.

Net overhead costs (non-interest expenses less non-interest income) for the quarter ended June 30, 2018 totaled $8.227 million compared to $8.270 million in the second quarter of 2017.  Net overhead decreased by $43,000, or 0.5%, in the second quarter of 2018 when compared to the second quarter of 2017, as a $97,000, or 4.5%, increase in non-interest income was only partially offset by a $54,000, or 0.5%, increase in non-interest expense.  Total non-interest income increased by $97,000 in the second quarter of 2018 when compared to the second quarter of 2017, largely due to a $59,000, or 7.1%, increase in electronic banking income, a $42,000, or 108%, increase in secondary market mortgage income, and $25,000 of proportional revenue from an investment in a start-up insurance agency.  These increases were partially offset by a $23,000, or 2.1%, decrease in service charges on deposit accounts, and a $6,000 decrease in other non-interest income.  Non-interest expense increased by $54,000, or 0.5% in the second quarter of 2018 compared to the second quarter of 2017.  Increases in operating costs include a $122,000, or 44.0%, increase in professional fees, a $31,000, or 2.1% increase in occupancy and equipment expense, and a $70,000, or 1.4%, increase in salaries and employee benefit costs.  The unusually high increase in professional fees was primarily due to expenses related to the proposed acquisition of First Bank of Charleston announced on April 19, 2018.  These increases were substantially offset by a $78,000, or 5.8%, decrease in data processing costs, a $61,000, or 24.3%, decrease in the amortization of intangible assets, a $30,000, or 19.4%, decrease in FDIC insurance premiums, and a $28,000, or 5.1%, decrease in OREO expenses when compared to the second quarter of 2017.

Total assets as of June 30, 2018 were up $20.9 million, or 1.4%, to $1.514 billion from the $1.493 billion of total assets at year-end 2017.  Liquid assets, such as cash and due from banks, interest bearing bank balances and federal funds sold, increased by $28.9 million, largely due to an increase in funds from an increase in total deposits and net payoffs on loans during the first six months of 2018.  Cash and due from banks decreased by $18.1 million, due to a decrease in reserves required to be kept in non-interest bearing bank accounts under Federal Reserve Regulation D.  These funds were moved to interest-bearing bank balances, improving Premier's overall interest income from short-term investments.  Investment securities increased by $19.2 million, or 6.9%, since year-end 2017, as $57.5 million of new investment purchases from available funds were partially offset by principal paydowns and a $5.0 million decrease in the market value of the securities available for sale.  Total loans outstanding decreased by $21.4 million, or 2.0%, largely due to payoffs on loans in the first quarter of 2018, including expected sizable payoffs from completed construction projects, exceeding new loans generated during that quarter.  Otherwise, total loans decreased by $1.1 million, or 0.1%, during the second quarter of 2018.  Other real estate owned ("OREO") decreased by $5.8 million, or 28.9%, due to the first quarter 2018 sale of two of the three largest OREO properties held, which also generated nearly $1.07 million of profit upon liquidation.  Total deposits increased by $21.5 million, or 1.7%, since year-end 2017, including a $25.8 million, or 7.8%, increase in non-interest bearing deposits.  Interest bearing transaction and savings deposits have decreased by $799,000, or 0.1%, since year-end 2017 while time deposits decreased by $3.5 million, or 1.0%, since year-end 2017.  Customer repurchase agreements decreased by $1.4 million, or 6.2% since year-end 2017.  Other borrowings decreased by $1.2 million since year-end 2017 due to scheduled principal payments plus additional principal payments on Premier's existing borrowings.  Premier's subordinated debentures increased by $15,000 since year-end 2017 due to the accretion of purchase accounting fair value adjustments applied to the $6.186 million face value of the subordinated debentures. 

Stockholders' equity of $185.6 million equaled 12.3% of total assets at June 30, 2018, which compares to stockholders' equity of $183.4 million, also 12.3% of total assets, at December 31, 2017.  The increase in stockholders' equity was largely due to the $9.5 million of net income in the first half of 2018.  The increase in stockholders' equity from net income was substantially offset by a $3.9 million, net of tax, decrease in the market value of the investment portfolio available for sale and the $0.27 per share of common stock dividends declared and paid during the first six months of 2018.

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 periods ended June 30, 2018

PREMIER FINANCIAL BANCORP, INC.

Financial Highlights

Dollars in Thousands (except per share data)






For the
Quarter Ended


For the
Six Months Ended


June 30


June 30


June 30


June 30


2018


2017


2018


2017

Interest Income








   Loans, including fees

13,684


14,663


27,718


28,198

   Investments and other

2,069


1,710


3,834


3,284

      Total interest income

15,753


16,373


31,552


31,482

Interest Expense








   Deposits

1,197


951


2,228


1,900

   Borrowings and other

137


160


270


324

      Total interest expense

1,334


1,111


2,498


2,224

   Net interest income

14,419


15,262


29,054


29,258

Provision for loan losses

500


776


1,615


1,142

   Net interest income after provision

13,919


14,486


27,439


28,116

Non-interest Income








   Service charges on deposit accounts

1,066


1,089


2,160


2,065

   Electronic banking income

892


833


1,709


1,613

   Other non-interest income

273


212


428


473

      Total non-interest income

2,231


2,134


4,297


4,151

Non-Interest Expense








   Salaries and employee benefits

5,043


4,973


9,821


9,943

   Net occupancy and equipment

1,480


1,449


3,090


2,970

   Outside data processing

1,277


1,355


2,526


2,675

   OREO expenses and writedowns, net

525


553


(361)


793

   Amortization of intangibles

190


251


385


516

   Other non-interest expenses

1,943


1,823


3,986


3,505

      Total non-interest expense

10,458


10,404


19,447


20,402

   Income Before Taxes

5,692


6,216


12,289


11,865

Income Taxes

1,317


2,297


2,781


4,282

   NET INCOME

4,375


3,919


9,508


7,583









   EARNINGS PER SHARE *

0.33


0.29


0.71


0.57

   DILUTED EARNINGS PER SHARE *

0.32


0.29


0.71


0.57

   DIVIDENDS PER SHARE *

0.15


0.12


0.27


0.24









Charge-offs

430


357


894


766

Recoveries

72


382


158


483

   Net charge-offs (recoveries)

358


(25)


736


283









*  Previously presented per share information as been restated to reflect a 5 for 4 stock split issued on June 8, 2018 to shareholders of record on June 4, 2018.

 

 

PREMIER FINANCIAL BANCORP, INC.

Financial Highlights (continued)

Dollars in Thousands (except per share data)






Balances as of


June 30


December 31


2018


2017

ASSETS




Cash and Due From Banks

22,728


40,814

Interest Bearing Bank Balances

88,290


39,773

Federal Funds Sold

3,092


4,658

Securities Available for Sale

297,692


278,466

Loans (net)

1,014,671


1,036,948

Other Real Estate Owned

14,194


19,966

Other Assets

35,272


34,053

Goodwill and Other Intangible Assets

38,361


38,746

   TOTAL ASSETS

1,514,300


1,493,424





LIABILITIES & EQUITY




Deposits

1,294,156


1,272,675

Fed Funds/Repurchase Agreements

21,865


23,310

Other Borrowings

3,800


5,000

Subordinated Debentures

5,391


5,376

Other Liabilities

3,483


3,708

   TOTAL LIABILITIES

1,328,695


1,310,069

Common Stockholders' Equity

185,605


183,355

   TOTAL LIABILITIES &

      STOCKHOLDERS' EQUITY

1,514,300


1,493,424





TOTAL BOOK VALUE PER COMMON SHARE

13.89


13.74

Tangible Book Value per Common Share

11.02


10.84





Non-Accrual Loans

16,217


15,246

Loans 90 Days Past Due and Still Accruing

3,655


3,391

 

Cision View original content:http://www.prnewswire.com/news-releases/premier-financial-bancorp-inc-reports-second-quarter-2018-earnings-300692615.html

SOURCE Premier Financial Bancorp, Inc.

This article was written by cool news network.

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