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8-K - PREMIER FINANCIAL BANCORP, INC. FORM 8-K MAY 8, 2020 - PREMIER FINANCIAL BANCORP INC | pfbi8k050820.htm |
EXHIBIT 99.1
NEWS FOR IMMEDIATE RELEASE
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CONTACT:
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BRIEN M. CHASE, CFO
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MAY 8, 2020
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304-525-1600
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PREMIER FINANCIAL BANCORP, INC.
REPORTS FIRST QUARTER 2020 EARNINGS
PREMIER FINANCIAL BANCORP, INC. (PREMIER),
HUNTINGTON, WEST VIRGINIA (NASDAQ/GMS-PFBI), a $1.8 billion financial holding company with two community bank subsidiaries, announced its financial results for the first quarter of 2020. Premier realized net income of $5,368,000 during the
quarter ended March 31, 2020, a 13.1% decrease from the $6,176,000 of net income reported for the first quarter of 2019. On a diluted per share basis, Premier earned $0.36 during the first quarter of 2020 compared to $0.42 per share earned during
the first quarter of 2019. The decrease in net income in the first three months of 2020 is largely due to a $535,000 decrease in loan interest income and a $440,000 increase in the provision for loan losses. Interest income on loans in the first
quarter of 2019 included approximately $719,000 of income from deferred interest and discounts recognized on loans that paid off during the quarter while only approximately $75,000 of interest income of this kind was recognized during the first
quarter of 2020. Premier also added $514,000 to its quarterly provision expense in the first quarter of 2020 due to uncertainty related to future economic conditions resulting from government actions designed to curb the spread of the COVID-19
virus. Net operating costs increased by $71,000, or 0.8%, while interest expense increased by $73,000, or 3.3%. Both of the expense increases are largely attributable to the operations of the two newly acquired First National Bank of Jackson
branches, which were not included in the first quarter 2019 income statement results.
President and CEO Robert W. Walker commented, “We are pleased with our first quarter 2020 results as they compare to the first quarter of
2019, which was then a new record quarter. Most of the income statement items compare closely, with the exception of the high level of income from deferred interest and discounts recognized on loans that paid off during the first quarter of 2019 and
the additional provision for loan losses related to the COVID-19 virus. Our interest income from investments was higher and our interest expense on borrowings was lower in the first quarter of 2020 when compared to the first quarter of 2019. We are
certainly living in unprecedented times as governments worldwide take measures to curb the spread of the COVID-19 virus. I am proud to report that our management and staff team members have risen to the occasion. As an essential business, we haves taken steps to modify our normal business operations to include keeping branches open with appropriate ‘social distancing’ measures; utilizing permitted guidance provided
by federal and state banking supervisory regulators to assist borrowers to avoid defaulting on their loans; and robustly participating in the U.S. Treasury’s and Small Business Administration’s Payroll Protection Program (“PPP”). Through April 30,
2020, Premier has originated 667 PPP loans totaling over $80.6 million.”
EXHIBIT 99.1 - Continued
In addition to the $420,000 decrease in interest income, net interest income decreased as a result of a $73,000, or 3.3%, increase in
interest expense in the first quarter of 2020 when compared to the first quarter of 2019. Interest expense on deposits increased by $115,000, or 5.6%, in the first quarter of 2020, largely due to a higher average of interest-bearing deposit balances
outstanding in 2020 although on a slightly lower average rate paid on these deposits. Average interest-bearing deposit balances were up $68.0 million, or 6.5%, in the first quarter of 2020 compared to the first quarter of 2019, largely due to the
$69.7 million of deposits attributable to the two Jackson branches acquired in the fourth quarter of 2019. The average interest rate paid on interest-bearing deposits decreased by 2 basis points from 0.80% in the first quarter of 2019 to 0.78% in
the first quarter of 2020. Adding to the interest expense increase in 2020 was $15,000 of additional interest expense paid on short-term borrowings, primarily customer repurchase agreements. The additional interest expense was largely due to a 33
basis point increase in the average rate paid, partially offset by a 10.5% decrease in the average balance outstanding during the first quarter of 2020. Partially offsetting these increases in interest expense was a $25,000 decrease in interest
expense on the remaining Federal Home Loan Bank (“FHLB”) borrowings of First Bank of Charleston assumed by Premier as part of the 2018 acquisition. Premier has been repaying these FHLB borrowings as they mature and has reduced the average balance
outstanding in the first quarter of 2020 by 45.9% when compared to the first quarter of 2019. Also partially offsetting the increase in interest expense on deposits during the first quarter of 2020 was an $11,000, or 11.7%, decrease in interest
expense on Premier’s subordinated debt due to a decrease in the variable interest rate paid in 2020 compared to the first quarter of 2019. The variable interest rate is indexed to the short-term three-month LIBOR interest rate, which was lower in
the first quarter of 2020 in conjunction with decreases in short-term interest rate policy by the Federal Reserve Board of Governors. Lastly, interest expense on other borrowings also decreased in the first quarter of 2020 by $21,000 compared to the
first quarter of 2019, as the outstanding borrowings at the parent company were fully repaid by June 30, 2019.
EXHIBIT 99.1 - Continued
Net overhead costs (non-interest expenses less non-interest income) for the quarter ended March 31, 2020 totaled $8.488 million
compared to $8.417 million in the first quarter of 2019, an increase of $71,000, or 0.8%. Total non-interest income increased by $73,000 in the first quarter of 2020 when compared to the first quarter of 2019, largely due to a $42,000, or 175%,
increase in secondary market mortgage income. Service charges on deposit accounts increased by $12,000, or 1.1% in the first quarter of 2020, insurance agency commission income increased by $17,000, or 24.1%, while other non-interest income
increased by $6,000, or 3.6%, when compared to the first quarter of 2019. These increases were partially offset by a $4,000, or 0.5%, decrease in electronic banking income. Non-interest expense increased by $144,000, or 1.4% in the first quarter of
2020 compared to the first quarter of 2019, largely due to the operations of the two newly acquired First National Bank of Jackson locations which added approximately $261,000 of direct expenses. Increases in overall operating costs include a
$209,000, or 4.0%, increase in staff costs, a $61,000, or 3.7% increase in occupancy and equipment expense, a $147,000, or 10.6%, increase in outside data processing costs, a $37,000, or 15.5%, increase in taxes not on income and a $15,000, or 6.6%,
increase in the amortization of intangible assets. Other increases include a $30,000 increase in conversion related expenses and a $99,000 increase in other operating expenses. Decreases in non-interest expenses include a $181,000, or 72.7%,
decrease in OREO expenses, a $128,000, or 103.2%, decrease in FDIC insurance expense, a $121,000, or 33.2%, decrease in professional fees and a $14,000, or 10.9%, decrease in loan collection expenses. FDIC insurance expense decreased by $128,000 due
to the utilization of FDIC based community bank assessment credits used to fully offset the first quarter 2020 FDIC insurance premium.
EXHIBIT 99.1 - Continued
Stockholders’ equity of $248.9 million equaled 14.1% of total assets at March 31, 2020, which compares to stockholders’ equity of $240.2
million, or 13.5% of total assets, at December 31, 2019. The increase in stockholders’ equity was largely due to the $5.4 million of first quarter net income and a $5.4 million, net of tax, increase in the market value of the investment portfolio
available for sale. These increases in stockholders’ equity were partially offset by a $0.15 per share cash dividend declared and paid during the first quarter of 2020.
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. Furthermore, uncertainty related to future economic conditions resulting from government actions designed to curb the spread of the COVID-19 virus may affect Premier’s operations more or less than currently estimated.
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.
EXHIBIT 99.1 - Continued
PREMIER FINANCIAL BANCORP, INC.
Financial Highlights
Dollars in Thousands (except per share data)
For the
Quarter Ended
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March 31
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March 31
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2020
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2019
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Interest Income
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Loans, including fees
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15,754
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16,289
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Investments and other
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2,890
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2,775
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Total interest income
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18,644
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19,064
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Interest Expense
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Deposits
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2,165
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2,050
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Borrowings and other
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137
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179
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Total interest expense
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2,302
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2,229
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Net interest income
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16,342
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16,835
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Provision for loan losses
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1,000
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560
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Net interest income after provision
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15,342
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16,275
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Non-interest Income
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Service charges on deposit accounts
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1,106
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1,094
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Electronic banking income
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818
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822
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Other non-interest income
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325
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260
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Total non-interest income
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2,249
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2,176
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Non-Interest Expense
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Salaries and employee benefits
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5,408
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5,199
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Net occupancy and equipment
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1,725
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1,664
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Outside data processing
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1,531
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1,384
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OREO expenses and writedowns, net
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68
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249
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Amortization of intangibles
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242
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227
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Other non-interest expenses
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1,763
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1,870
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Total non-interest expense
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10,737
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10,593
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Income Before Taxes
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6,854
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7,858
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Income Taxes
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1,486
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1,682
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NET INCOME
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5,368
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6,176
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EARNINGS PER SHARE
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0.37
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0.42
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DILUTED EARNINGS PER SHARE
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0.36
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0.42
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DIVIDENDS PER SHARE
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0.15
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0.15
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Charge-offs
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826
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903
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Recoveries
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140
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84
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Net charge-offs (recoveries)
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686
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819
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EXHIBIT 99.1 - Continued
Financial Highlights (continued)
Dollars in Thousands (except per share data)
Balances as of
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March 31
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December 31
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2020
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2019
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ASSETS
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Cash and due from banks
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23,455
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23,091
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Interest-bearing bank balances
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38,492
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66,063
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Federal funds sold
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8,134
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5,902
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Securities available for sale
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404,478
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390,754
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Loans (net)
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1,171,187
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1,181,753
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Other real estate owned
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12,709
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12,242
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Other assets
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48,004
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48,189
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Goodwill and other intangible assets
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52,774
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53,016
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TOTAL ASSETS
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1,759,233
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1,781,010
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LIABILITIES & EQUITY
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Deposits
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1,462,380
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1,495,753
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Fed funds/repurchase agreements
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19,694
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20,428
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FHLB borrowings
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7,986
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6,375
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Subordinated debentures
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5,445
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5,436
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Other liabilities
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14,803
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12,777
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TOTAL LIABILITIES
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1,510,308
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1,540,769
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Common stockholders’ equity
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248,925
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240,241
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TOTAL LIABILITIES &
STOCKHOLDERS’ EQUITY
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1,759,233
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1,781,010
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TOTAL BOOK VALUE PER COMMON SHARE
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16.98
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16.39
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Tangible Book Value per Common Share
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13.38
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12.77
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Non-accrual loans
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14,509
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14,437
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Loans past due over 90 days and still accruing
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1,102
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2,228
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