SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
PREMIER FINANCIAL BANCORP, INC.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person Filing Proxy Statement, if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(3) Filing Party:
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(4) Date filed:
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PREMIER FINANCIAL BANCORP, INC.
2883 5th Avenue
Huntington, West Virginia 25702
-----------------
NOTICE OF
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD
JUNE 22, 2005
-----------------
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of
Premier Financial Bancorp, Inc. will be held at the Radisson Hotel located at
1001 3rd Avenue, Huntington, West Virginia on Wednesday, June 22, 2005 at 10:30
a.m. (EDT) for the following purposes:
(1) To elect nine (9) directors to serve until the 2006 Annual
Meeting of Shareholders and until their successors are elected
and qualified;
(2) To ratify the appointment of Crowe Chizek and Company LLC as
the Company's independent accountants for the 2005 fiscal
year; and
(3) To transact such other business as may properly come before
the meeting.
The Board of Directors has set the close of business on May 11, 2005 as
the record date for the determination of shareholders entitled to notice of and
to vote at the Annual Meeting or any adjournment thereof. Only shareholders of
record at the close of business on the record date will be entitled to notice of
and to vote at the meeting.
EVEN IF YOU PLAN TO ATTEND THE ANNUAL MEETING, PLEASE COMPLETE, SIGN
AND DATE THE ENCLOSED PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED POSTAGE-PAID
ENVELOPE OR BY OTHER ACCEPTED MEANS OF EXECUTION (INTERNET, TELEPHONE, ETC).
SHAREHOLDERS ATTENDING THE MEETING IN PERSON MAY VOTE IN PERSON THOUGH YOU HAVE
PREVIOUSLY EXECUTED A PROXY.
By Order of the Board of Directors,
/s/ E. V. Holder, Jr.
-----------------------------------
E. V. Holder, Jr.
Secretary
Huntington, West Virginia
May 23, 2005
PREMIER FINANCIAL BANCORP, INC.
2883 5th Avenue
Huntington, West Virginia 25702
----------------
PROXY STATEMENT
FOR
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD
JUNE 22, 2005
----------------
INTRODUCTION
This Proxy Statement is being furnished to shareholders of Premier
Financial Bancorp, Inc., a Kentucky corporation (the "Company"), in connection
with the solicitation of proxies by the Board of Directors of the Company from
holders of record of the Company's outstanding shares of common stock, no par
value per share (the "Common Stock"), as of the close of business on May 11,
2005 for use at the Annual Meeting of Shareholders of the Company (the "Annual
Meeting") to be held on Wednesday, June 22, 2005 at 10:30 a.m. (eastern daylight
time) at the Radisson Hotel, 1001 3rd Avenue, Huntington West Virginia and at
any adjournment or postponement thereof. The approximate mailing date of this
Proxy Statement was May 23, 2005.
PURPOSES OF THE ANNUAL MEETING
At the Annual Meeting, holders of shares of Common Stock will be asked
to consider and vote upon the following matters:
(1) The election of nine directors of the Company who will serve
until the 2006 Annual Meeting and until their successors are
elected and qualified;
(2) The ratification of the appointment of Crowe Chizek and Company
LLC as the Company's independent accountants for the fiscal year
ending December 31, 2005; and
(3) The transaction of such other business as may properly come
before the Annual Meeting.
The Board of Directors has unanimously recommended that shareholders
vote "FOR" the election of the Board of Directors' nine nominees for election as
directors of the Company, and "FOR" the ratification of the Audit Committee of
the Board of Directors' appointment of Crowe Chizek and Company LLC as the
Company's independent accountants. As of the date of this Proxy Statement, the
Board of Directors knows of no other business to come before the Annual Meeting.
VOTING RIGHTS AND PROXY INFORMATION
Only holders of record of shares of Common Stock as of the close of
business on May 11, 2005 (the "Record Date") will be entitled to notice of and
to vote at the Annual Meeting or any adjournment or postponement thereof. Such
holders of shares of Common Stock are entitled to one vote per share on any
matter, other than the election of directors, that may properly come before the
Annual Meeting. In the election of directors, holders of Common Stock have
cumulative voting rights whereby each holder is entitled to vote the number of
shares of Common Stock held multiplied by nine (the number of directors to be
elected at the Annual Meeting), and each holder may cast the whole number of
votes for one candidate or distribute such votes among two or more candidates.
The presence, either in person or by properly executed proxy, of the holders of
a majority of the outstanding shares of Common Stock as of the record date is
necessary to constitute a quorum at the Annual Meeting. As of Record Date there
were 5,232,230 shares of Common Stock outstanding.
Those nominees for election to the Board of Directors receiving the
nine highest number of votes in the election of directors will be elected to the
Board. The appointment of Crowe Chizek and Company LLC as the Company's
independent accountants for 2005 will be ratified if the votes cast in favor of
ratification exceed the votes cast against ratification.
All shares of Common Stock that are represented at the Annual Meeting
by properly executed proxies received prior to or at the Annual Meeting and not
revoked will be voted at the Annual Meeting in accordance with the instructions
indicated in such proxies. If no instructions are indicated, such proxies will
be voted for the election of the Board of Directors' nine nominees as directors
of the Company (or, if deemed appropriate by the individuals appointed in the
proxies, cumulatively voted for less than all of the Board's nominees to ensure
the election of as many of the Board's nominees as possible) and for the
ratification of the appointment of Crowe Chizek and Company LLC as the Company's
independent accountants.
Any proxy given pursuant to this solicitation may be revoked by the
person giving it at any time before it is voted. Proxies may be revoked by (i)
filing with the Secretary of the Company, at or before the Annual Meeting, a
written notice of revocation bearing a later date than the proxy, (ii) duly
executing a subsequent proxy relating to the same shares of Common Stock and
delivering it to the Secretary of the Company at or before the Annual Meeting or
(iii) attending the Annual Meeting and voting in person (although attendance at
the Annual Meeting will not in and of itself constitute a revocation of a
proxy). Any written notice revoking a proxy should be sent to the Company, to
the attention of E.V. Holder, Jr., Secretary.
The Company will bear the cost of this solicitation. In addition to
solicitation by mail, the Company will request banks, brokers and other
custodian nominees and fiduciaries to supply proxy material to the beneficial
owners of Common Stock, and will reimburse them for their expenses in so doing.
Certain directors, officers and other employees of the Company, not specially
employed for this purpose, may solicit proxies, without additional remuneration
therefor, by personal meeting, mail, telephone, facsimile or other electronic
means.
ANNUAL REPORT
The Company's 2004 Annual Report, which includes audited consolidated
financial statements, accompanies this Proxy Statement. The Company will furnish
without cost to any shareholder, upon request, a copy of the Company's Annual
Report on Form 10-K filed with the Securities and Exchange Commission. Requests
should be in writing and directed to the Company, to the attention of Brien M.
Chase, Chief Financial Officer.
PRINCIPAL SHAREHOLDERS
As of March 31, 2005, the following individuals or entities reported
beneficial ownership of Common Stock in excess of 5% of the Company's
outstanding Common Stock:
NAME AND ADDRESS NUMBER OF SHARES PERCENTAGE OF
OF BENEFICIAL OWNER BENEFICIALLY OWNED(1) OUTSTANDING SHARES
Marshall T. Reynolds 559,990 10.7%
P.O. Box 4040
Huntington, West Virginia 25729
Tontine Financial Partners, L.P. 520,300 9.9%
55 Railroad Avenue, 3rd Floor
Greenwich, Connecticut 06830
Douglas V. Reynolds 378,713 7.2%
703 Fifth Avenue
Huntington, West Virginia 25701
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(1) The information contained in this column is based upon information
furnished to the Company by the named individuals and the shareholder
records of the Company. Except where otherwise indicated, this column
represents the number of shares beneficially owned, which includes
shares as to which a person has sole or shared voting and/or investment
power.
ELECTION OF DIRECTORS
(Item 1 on Proxy)
A board of nine directors of the Company is to be elected at the Annual
Meeting, each of whom is to serve, subject to the provisions of the Company's
bylaws, until the 2006 Annual Meeting of Shareholders and until his or her
successor is duly elected and qualified. The names of the nominees proposed for
election as directors, all of who are presently directors of the Company, are
set forth below and the following information is furnished with respect to each:
Common
Director of Stock Percentage
Company Beneficially Of
Principal Occupation Continuously Owned as Outstanding
Nominee or Employment(1) Age Since of 3/31/2005(2) Shares
------------------------- --------------------------- -------- ---------------- ----------------- ------------------
Toney K. Adkins President and Chief 55 7/12/91 6,180 *
Operating Officer, Champion
Industries, Inc.
(commercial printing and
office supplies) (3)
Hosmer A. Brown, III Attorney-at-Law 84 4/18/01 59,451 1.1%
Edsel R. Burns President, CJ Hughes 54 7/19/00 787 *
Construction, Inc.(4)
E.V. Holder, Jr. Attorney-at-law 72 7/12/91 16,720 *
Keith F. Molihan Retired Executive 62 9/14/99 5,826 *
Director,
Ironton/Lawrence County
Area Community Action
Organization
Marshall T. Reynolds Chairman and Chief 68 1/19/96 559,990 10.7%
Executive Officer,
Champion Industries, Inc.
(commercial printing and
office supplies)(5)
Neal W. Scaggs President, Logan Auto 69 9/8/98 9,345 *
Parts, Inc.
Robert W. Walker President and Chief 58 10/17/01 42,907 *
Executive Officer of the
Company(6)
Thomas W. Wright Owner and Chairman, 52 4/18/01 43,134 *
NexQuest, Inc. (management
company)
All directors and 745,606 14.3%
executive officers as
a group (12 in number
including the
above-named persons)
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* The percentage of outstanding shares beneficially owned is less than 1%.
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(1) Except where otherwise indicated, this principal occupation or
employment has continued during the past five years.
(2) The information contained in this column is based upon information
furnished to the Company by the named individuals and the shareholder
records of the Company. Except where otherwise indicated, this column
represents the number of shares beneficially owned, which includes
shares as to which a person has sole or shared voting and/or investment
power.
(3) Prior to becoming President and Chief Operating Officer of Champion
Industries on January 25, 2005, Mr. Adkins served as its Vice President
- Administration since 1996.
(4) Mr. Burns has served as President of C. J. Hughes Construction Company
since September, 2002. He served as Chief Financial Officer of Genesis
Health Systems from June 2001 until December 31, 2001. He served as
Chief Financial Officer of Central City Online from March 2000 to April
2001. From January 1999 to March 2000 he was on the audit staff of
Arnett and Foster, PLLC. Prior to that, he worked in various financial
positions with Banc One Corporation.
(5) Mr. Reynolds serves as the Company's Chairman of the Board. From 1985
to November 1993, Mr. Reynolds also served as Chairman of the Board of
Directors of Bank One West Virginia, N.A. (and its predecessor, Key
Centurion Bancshares, Inc.).
(6) Prior to becoming the President and Chief Executive Officer of the
Company, Mr. Walker was President of Boone County Bank, Inc. from
September 1998 to October 2001. Prior to that, Mr. Walker was a
regional president at Bank One West Virginia N.A.
The Company's Board of Directors recommends that shareholders vote
"FOR" the election of each of the Company's nominees for election as a director.
The Board of Directors does not contemplate that any of the nominees
will be unable to accept election as a director for any reason. However, in the
event that one or more of such nominees is unable or unwilling to serve, the
persons named in the proxies or their substitutes shall have authority,
according to their judgment, to vote or to refrain from voting for other
individuals as directors.
The Nominating Committee of the Board of Directors considers
nominations of candidates for election as directors. The Company's bylaws
establish an advance notice procedure for shareholders to make nominations of
candidates for election as directors (the "Shareholder Notice Procedure"). The
Shareholder Notice Procedure provides that only persons who are nominated by, or
at the direction of, the Board of Directors, or by a shareholder who has given
timely written notice to the Secretary of the Company prior to the meeting at
which directors are to be elected, will be eligible for election as directors of
the Company. Under the Shareholder Notice Procedure, to be timely, notice of
shareholder nominations to be made at an annual or special meeting must be
received by the Company not less than 14 days nor more than 50 days prior to the
scheduled date of the meeting (or, if less than 21 days notice of the date of
the meeting is given, the 7th day following the day such notice was given).
Under the Shareholder Notice Procedure, a shareholder's notice to the
Company proposing to nominate a person for election as a director must contain
certain information, including, without limitation, the identity and address of
the nominating shareholder, the number of shares of Common Stock that are owned
by such shareholder and the name and address of the proposed nominee. If the
Chairman of the Board or other officer presiding at a meeting determines that a
person was not nominated in accordance with the Shareholder Notice Procedure,
such person will not be eligible for election as a director.
By requiring advance notice of nominations by shareholders, the
Shareholder Notice Procedure affords the Nominating Committee of the Board of
Directors an opportunity to consider the qualifications of the proposed nominees
and, to the extent deemed necessary or desirable by the Nominating Committee, to
inform shareholders about such qualifications.
CERTAIN INFORMATION CONCERNING THE BOARD OF DIRECTORS
Board Meetings and Committees
During 2004, the Board of Directors met fifteen times, the Compliance
Committee met twelve times, the Compensation Committee met four times, the
Nominating Committee met once, and the Audit Committee met twelve times. Each
director attended seventy-five percent or more of all meetings of the Board of
Directors and committees of the Board on which he serves. The Company strongly
encourages all members of the Board of Directors to attend the annual meeting of
shareholders each year. At the prior year's annual shareholder meeting, all of
the ten directors were present.
The Board of Directors consists of a majority of "independent
directors" as such term is defined in the Nasdaq Stock Market Marketplace Rules.
The Board of Directors has determined that Hosmer A. Brown, III, Edsel R. Burns,
E.V. Holder, Jr., Keith F. Molihan, Neal W. Scaggs and Thomas W. Wright are
independent directors.
The Board of Directors has adopted a formal policy by which
shareholders may communicate with members of the Board of Directors by mail
addressed to an individual member of the Board, to the full Board, or to a
particular committee of the Board, at the following address: c/o Premier
Financial Bancorp, Inc., 2883 5th Avenue, Huntington, West Virginia 25702.
The Board of Directors has four standing committees: a Compensation
Committee, a Compliance Committee, a Nominating Committee and an Audit
Committee.
Compensation of the Board of Directors
Directors who are not full time employees of the Company or any
subsidiary receive fees of $500 a month for their services. Board members are
also reimbursed for expenses incurred in connection with their services as
directors. Directors receive no compensation for attending committee meetings.
Other Directorships
The Company's Chairman of the Board, Marshall T. Reynolds, serves as a
director of the following publicly held companies or banks whose shares are
registered under the Securities Exchange Act of 1934: Abigail Adams Bancorp,
Inc., Washington, D.C.; Champion Industries, Inc., Huntington, West Virginia;
First Guaranty Bank, Hammond, Louisiana; First State Financial Corporation,
Sarasota, Florida and Portec Rail Products, Inc., Pittsburgh, Pennsylvania.
Directors Neal W. Skaggs and Thomas W. Wright also serve as directors of First
State Financial Corporation and Portec Rail Products, Inc. In addition, director
Skaggs is also a director of Champion Industries, Inc.
Nominating Committee
The Nominating Committee nominates individuals to serve on the
Company's Board of Directors, to serve on other committees of the Board of
Directors, and to serve on the boards of directors of the Company's
subsidiaries. The Nominating Committee currently consists of Messrs. Burns,
Molihan and Scaggs, all of whom are independent directors as defined in the
Nasdaq Stock Market Marketplace Rules. A copy of the Nominating Committee
charter was attached to the Company's proxy statement dated May 17, 2004.
When considering a potential director candidate, the Nominating
Committee looks for personal and professional integrity, demonstrated ability
and judgment and business experience. The Nominating Committee will review and
consider director nominees recommended by shareholders. There are no differences
in the manner in which the Nominating Committee evaluates director nominees
based on whether the nominee is recommended by a shareholder.
Audit Committee
The Audit Committee meets with the Company's financial management and
independent auditors and reviews the accounting principles and the scope and
control of the Company's financial reporting practices, and makes reports and
recommendations to the Board with respect to audit matters. The Audit Committee
oversees the internal audit function, reviews the internal audit reports, and
provides direction for the resolution of internal audit findings and
recommendations. The Audit Committee also recommends to the Board the
appointment of the firm selected to be independent certified public accountants
for the Company and monitors the performance of such firm; reviews and approves
the scope of the annual audit and evaluates with the independent certified
public accountants the Company's annual audit and annual consolidated financial
statements; and reviews with management the status of internal accounting
controls and internal audit procedures and results. The Audit Committee at
December 31, 2004 consisted of Messrs. Scaggs, Wright and Molihan. The Audit
Committee is required to have and will continue to have at least three members,
all of whom must be "independent directors" as defined in the Marketplace Rules
of the Nasdaq Stock Market.
The Board determined that Messrs. Scaggs, Molihan, and Wright are
financially literate in the areas that are of concern to the Company, and are
able to read and understand fundamental financial statements. The Board has also
determined that Messrs. Scaggs, Molihan, and Wright each meet the independence
requirements set forth in the Marketplace Rules of the Nasdaq Stock Market.
The Securities and Exchange Commission ("SEC") has adopted rules to
implement certain requirements of the Sarbanes-Oxley Act of 2002 pertaining to
public company audit committees. One of the rules adopted by the SEC requires a
company to disclose whether it has an "audit committee financial expert" serving
on its audit committee.
Based on its review of the criteria of an audit committee financial
expert under the rule adopted by the SEC, the Board of Directors believes that
Edsel R. Burns qualifies as an audit committee financial expert. The Board has
also determined that Mr. Burns meets the independence requirements set forth in
the Marketplace Rules of the Nasdaq Stock Market. Effective May 1, 2005, the
Board of Directors appointed Mr. Burns to the Audit Committee..
The Company's Board of Directors has adopted a written charter for the
Audit Committee of the Board. Please review the Audit Committee Report below.
Audit Committee Report
It is the responsibility of management to prepare the financial
statements and the responsibility of Crowe Chizek and Company LLC, the Company's
independent auditors, to audit the financial statements in accordance with
generally accepted auditing standards.
In connection with its review of the Company's financial statements for
2004, the Audit Committee:
o Has reviewed and discussed the audited financial statements with
management;
o Has discussed with the independent auditors the matters required to be
discussed by Statements on Auditing Standards (SAS) 61 (Codification of
Statements on Auditing Standards, AU 380); and
o Has received the written disclosures and the letter from the
independent accountants required by Independence Standards Board
Standard No. 1 (Independence Standards Board Standard No. 1,
Independence Discussions with Audit Committees), and has discussed with
the independent accountant the independent accountant's independence.
The Audit Committee also discussed with management and the independent
auditors the quality and adequacy of the Company's internal controls and
considered the internal audit function's organization, responsibilities, budget
and staffing. The Committee reviewed with the independent auditors their audit
plans, audit scope and identification of audit risks.
Based on the review and discussions referred to above, the Audit
Committee recommended to the Board of Directors that the audited financial
statements be included in Premier Financial Bancorp's Annual Report on Form 10-K
for the year ended December 31, 2004.
Members of the Audit Committee:
/s/ Neal W. Scaggs, Chairman
/s/ Keith F. Molihan
/s/ Thomas W. Wright
Compliance Committee
The Compliance Committee of the Board of Directors consists of the
following non-employee directors: Toney K. Adkins, Chairman, Edsel R. Burns,
Keith F. Molihan, and E. V. Holder, Jr. emeritus. The Committee reviews and
recommends to the Board any written policies and procedures in place for the
holding company and/or subsidiaries to comply with regulatory agencies and
recommendations. The Committee was also formed to ensure the Company's
compliance with the January 29, 2003 Written Agreement with the Federal Reserve
Bank of Cleveland.
Compensation Committee
The Compensation Committee consists of Messrs. Wright, Burns and
Molihan, all of whom are independent directors as defined in the Nasdaq Stock
Market Marketplace Rules. The Committee reviews and determines salaries and
other benefits for executive and senior management of the Company and its
subsidiaries, reviews and determines the employees to whom stock options are to
be granted and the terms of such grants, and reviews the selection of officers
who participate in incentive and other compensation plans and arrangements. The
Committee establishes the management compensation policy and the general
compensation policies of the Company.
The objectives of the Company's management compensation policy are to
develop a policy that attracts and retains the best available executive
officers; to motivate them to achieve the goals set forth in the Company's
business plan; to link executive and stockholder interest through
incentive-based compensation; and to enhance the Company's performance, measured
by both short-term and long-term achievements.
Compensation Committee Report
Compensation Committee believes that the compensation program for
executive officers should consist of two key elements:
o a base salary, and
o a performance-based annual bonus.
The Compensation Committee believes the interests of the Company and
its shareholders are served by this two-part approach. Under this approach the
compensation of executive officers involves a part of their pay that is "at
risk"--namely, the annual bonus. The variable annual bonus permits individual
performance to be recognized on an annual basis, and is based, in significant
part, on the attainment of individually customized performance targets. The
Compensation Committee has declined to authorize performance bonuses in the past
three years.
The Compensation Committee believes that the compensation of the Chief
Executive Officer, Robert W. Walker, should be based largely on corporate
performance relative to the Company's business plan. In setting Mr. Walker's
salary and bonus, the Committee considered the role Mr. Walker has played in the
overall management of the Company since becoming Chief Executive Officer in
October, 2001.
Recommendations regarding the base salary of executive officers, other
than the Chief Executive Officer, are made to the Committee by the Chief
Executive Officer and either approved or modified by the Committee. The
recommendation as to the bonus paid to each executive officer is based on a
review by the Chief Executive Officer of the performance of the executive
officer in attaining his performance targets for the prior year.
Members of the Compensation Committee:
/s/ Edsel R. Burns, Chairman
/s/ Keith F. Molihan
/s/ Thomas W. Wright
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Based upon a review of filings with the SEC and representations that no
other reports were required, the Company believes that all of the Company's
directors and executive officers complied during fiscal 2004 with the reporting
requirements of Section 16(a) of the Securities Exchange Act.
EXECUTIVE OFFICERS OF THE COMPANY
The individuals named in the following table are the executive officers
of the Company under applicable SEC disclosure rules. Except as otherwise
indicated, each executive officer has held the position indicated for the last
five years.
Name Age Position
Marshall T. Reynolds 68 Chairman of the Board
Robert W. Walker 58 President and Chief Executive Officer
Brien M. Chase 40 Vice President and Chief Financial Officer
(Principal Accounting Officer)
Jeanne D. Hubbard 56 Director of Risk Management
Dennis Klingensmith 51 Vice President, Premier;
Chief Executive Officer, First Central Bank
Mr. Walker has held this position since October, 2001. From September,
1998 until October, 2001 Mr. Walker was President, Boone County Bank, Inc. Prior
to that time, Mr. Walker was a Regional Vice President at Bank One, West
Virginia, N.A. Mr. Walker also serves on the Company's asset/liability
management committee.
Mr. Chase began his duties as CFO of the Company in April, 2002. From
June 1994 to January 2001, Mr. Chase was corporate accounting manager for One
Valley Bancorp, Inc. He also served as controller for four of the One Valley
Bancorp subsidiaries. Prior to that time, Mr. Chase was the senior accountant
for One Valley Bancorp for six years.
Ms. Hubbard has held this position since November, 1999. Ms. Hubbard
has over 30 years of banking experience with the last 26 years in commercial
lending and risk management. Prior to joining the company, Ms. Hubbard was
Executive Vice President and senior lender at First Sentry Bank. Ms. Hubbard was
also interim CEO of Citizens' Deposit Bank & Trust from November 2001 through
May 2002.
Mr. Klingensmith has held this position since June, 1998 and has served
as CEO of First Central Bank since November 2001. Prior to that time, Mr.
Klingensmith was an area Chief Executive Officer for Bank One, West Virginia, N.
A. Mr. Klingensmith was also acting CEO of Citizens' Bank (Kentucky), Inc. from
November 2002 to February 2003 and acting CEO of Farmers Deposit Bank from June
2003 to October 2003. Mr. Klingensmith also serves on the Company's
asset/liability management committee.
For additional information about Mr. Reynolds and Mr. Walker, see
"ELECTION OF DIRECTORS."
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table summarizes compensation earned in 2004, 2003, and
2002 by the Company's Chief Executive Officer and certain of the Company's other
executive officers who earned a salary and/or bonus in 2004 that exceeded
$100,000. In accordance with rules of the Securities and Exchange Commission,
the compensation of the Company's other executive officers is not required to be
disclosed because none of these executive officers earned a salary and/or bonus
in 2004 that exceeded $100,000.
==================================================================================================================
| Annual Compensation | Long Term |
| | Compensation |
--------------------------------------|----------------------------------------|-----------------|
| Other | Securities |
| Annual | Underlying | All other
Name and principal position Year | Salary Bonus Compensation | Options | Compensation
| ($) ($) ($)(1) | (#) | ($)(2)
------------------------------------------------------------------------------------------------------------------
Robert W. Walker 2004 181,971 ----- 1,108 4,000 7,235
-------------------------------------------------------------------------------------
President and CEO 2003 179,375 ----- 1,023 3,750 7,109
-------------------------------------------------------------------------------------
2002 175,000 ----- 996 ----- 7,000
------------------------------------------------------------------------------------------------------------------
Dennis Klingensmith 2004 108,418 ----- 1,223 2,500 4,288
-------------------------------------------------------------------------------------
Vice President 2003 106,094 ----- 1,665 2,500 4,199
-------------------------------------------------------------------------------------
CEO First Central Bank(3) 2002 103,500 ----- 1,236 ----- 4,140
==================================================================================================================
------------------------
(1) Other annual compensation consists of employee use of Company vehicles.
(2) Employer contributions to the Company's 401(k)/Profit Sharing Plan.
(3) Salary and bonus amounts for all years were paid by the Company's
subsidiary, First Central Bank, for services rendered by Mr.
Klingensmith as Chief Executive Officer of that bank subsidiary.
Option Grants in Last Fiscal Year
============================== ============= ============== =========== ============= ==============================
Number of
Securities Potential Realizable Value
Underlying % of Total at Assumed Annual Rates of
Options Options Exercise Stock Price Appreciation for
Name Granted Granted to Price Expiration Option Term(2)
(#)(1) Employees ($/share) Date 5%($) 10%($)
------------------------------ ------------- -------------- ----------- ------------- ------------------------------
Robert W. Walker 4,000 14.2% $9.30 2/18/2014 $23,395 $59,287
------------------------------ ------------- -------------- ----------- ------------- ------------------------------
Dennis J. Klingensmith 2,500 8.9% $9.30 2/18/2014 $14,622 $37,055
============================== ============= ============== =========== ============= ==============================
------------------------
(1) These Incentive Stock Options were granted on February 18, 2004, and
vest in three equal annual installments beginning on February 18, 2005.
Options have a term of ten years and are exercisable at any time after
vesting during such ten years as to any or all options, conditioned
upon optionee's employment by Company at time of exercise (or exercise
within 90 days following termination of employment due to death,
disability or voluntary retirement).
(2) Potential gains are net of exercise price, but before taxes associated
with exercise. These amounts represent assumed annual rates of
appreciation, at 5% and 10%, for the 10 year option term, based on
Securities and Exchange Commission rules, and do not represent the
Company's estimate or projection of the price of the Company's Common
Stock in the future. Additionally, these values do not take into
account certain provisions of the options providing for termination of
the options following termination of employment. Actual gains, if any,
on stock option exercises depend upon the actual future performance of
the Company's Common Stock. Accordingly, the potential realizable
values set forth in this table may not be achieved.
EQUITY COMPENSATION PLAN INFORMATION
The following table gives information about the Company's common stock
that may be issued upon the exercise of options, warrants and rights under its
two equity compensation plans, the 1996 Stock Option Plan and the 2002 Stock
Option Plan, as of December 31, 2004.
=============================== =========================== ======================= ==================================
(A) (B) (C)
Number of Securities Remaining
Number of Securities to Weighted Average Available for Future Issuance
be Issued Upon Exercise Exercise Price of Under Equity Compensation Plans
of Outstanding Options, Outstanding Options, (Excluding Securities Reflected
Plan Category Warrants and Rights Warrants and Rights in Column (A))
------------------------------- --------------------------- ----------------------- ----------------------------------
1996 Stock Option Plan 32,000 $13.80 68,000
------------------------------- --------------------------- ----------------------- ----------------------------------
2002 Stock Option Plan 51,650 8.69 448,350
------------------------------- --------------------------- ----------------------- ----------------------------------
Total 83,650 $10.65 516,350
=============================== =========================== ======================= ==================================
------------------------
Aggregated Option Exercises in Last Fiscal Year
and Fiscal Year-End Option Values
======================== =========== ========== =============== ================
# of Value of
Securities Unexercised
Shares Underlying In-the-Money
Acquired Value Unexercised Underlying
on Exercise Realized Options Options at
Name (#) ($) FY-End (#)(1) FY-End($)(2)
------------------------- ----------- ---------- --------------- ---------------
Robert W. Walker (1) ----- ----- 9,250 28,663
------------------------- ----------- ---------- --------------- ---------------
Dennis J. Klingensmith(2) ----- ----- 6,500 18,600
========================= =========== ========== =============== ===============
------------------------
(1) 2,750 of these shares were exercisable at year-end 2004
(2) 2,334 of these shares were exercisable at year-end 2004
(3) The value of any unexercised in-the-money stock option is equal to the
difference between $12.350 (the closing price of the Common Stock on
December 31, 2004 and the exercise price of the stock option.
STOCK PERFORMANCE GRAPH
The following graph shows a comparison of cumulative total stockholder
return on the Common Stock since December 31, 1999 with the cumulative total
returns of both a broad equity market index and a published industry index. The
broad equity market index chosen was Standard & Poors 500 and the published
industry index chosen was the SNL ($500M-$1B) Bank Asset-Size Index. The graph
reflects historical performance only, which is not indicative of possible future
performance of the Common Stock.
Premier Financial Bancorp, Inc.
Total Return Performance
[GRAPHIC OMITTED]
Period Ending
----------------------------------------------------------
Index 12/31/99 12/31/00 12/31/01 12/31/02 12/31/03 12/31/04
--------------------------------- -------- -------- -------- -------- -------- --------
Premier Financial Bancorp, Inc. 100.00 57.99 93.91 87.12 96.06 139.74
S&P 500* 100.00 91.20 80.42 62.64 80.62 89.47
Russell 3000 100.00 92.54 81.94 64.29 84.25 94.32
SNL $500M-$1B Bank Index 100.00 95.72 124.18 158.54 228.61 259.07
* Used with permission.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company's subsidiaries have made, and expect to make in the future
to the extent permitted by applicable federal and state banking laws, bank loans
in the ordinary course of business to directors and officers of the Company and
its subsidiaries and their affiliates and associates on substantially the same
terms, including interest rates and collateral, as those prevailing at the time
for comparable transactions with other persons. In the opinion of the Company,
such loans do not involve more than a normal risk of collectibility or present
other unfavorable features. In addition, the Company's banking subsidiaries have
engaged, and in the future may engage, in transactions with such persons and
their affiliates and associates as a depositary of funds, transfer agent,
registrar, fiduciary and provider of other similar services.
During the years ended December 31, 2004, 2003, and 2002, the Company
or its subsidiaries have paid approximately $358,000, $272,000 and $373,000,
respectively, for commercial printing services and office supplies and furniture
from Champion Industries, Inc., Huntington, West Virginia, of which the
Company's Chairman of the Board, Marshall T. Reynolds, is its President and
Chief Executive Officer and a principal shareholder and the Company's director
Toney K. Adkins is President and Chief Operating Officer.
The Company or its subsidiaries have paid The Harrah and Reynolds
Corporation, a corporation controlled by Marshall T. Reynolds, approximately
$489,000, $892,000 and $1,200,000 in 2004, 2003, and 2002, respectively, to
permit employees of the Company and its subsidiaries to participate in a medical
benefit plan sponsored and administered by The Harrah and Reynolds Corporation.
The Company leases its headquarters facility at 2883 Fifth Avenue,
Huntington, West Virginia from River City Properties, LLC, an entity 12.5% owned
by Chairman of the Board of Directors Marshall T. Reynolds. The lease, for 5,900
square feet, has a 5 year term commencing in September 2002 with annual rent of
$8.50 per square foot the first year and thereafter inflation adjusted. The
Company believes that the terms of this lease, which were approved by the Board
of Directors, are no less favorable to the Company than those available from
unrelated third parties.
INDEPENDENT PUBLIC ACCOUNTANTS
(Item 2 on Proxy)
At its meeting held on April 20, 2005, the Audit Committee appointed
Crowe Chizek and Company LLC to serve as the Company's independent public
accountants and auditors for the fiscal year ending December 31, 2005. Crowe
Chizek and Company, LLC has served as the Company's independent public
accountants and auditors since the 1995 fiscal year.
Representatives of Crowe Chizek and Company LLC, are expected to be
present at the annual meeting and will be available to respond to appropriate
questions and will have the opportunity to make a statement if they desire to do
so.
Audit Fees
Audit fees and expenses billed to the Company by Crowe Chizek and
Company, LLC for the audit of the Company's financial statements for the fiscal
years ended December 31, 2004 and December 31, 2003, and for review of the
Company's financial statements included in the Company's quarterly reports on
Form 10-Q, are as follows:
Fiscal 2004 Fiscal 2003
$ 178,300 $ 248,250
Audit Related Fees
Audit related fees and expenses billed to the Company by Crowe Chizek
and Company, LLC for years 2004 and 2003 for services related to the performance
of the audit or review of the Company's financial statements that were not
included under the heading "Audit Fees", are as follows:
Fiscal 2004 Fiscal 2003
$ 8,500 $ 9,040
Tax Fees
Tax fees and expenses billed to the Company by Crowe Chizek and
Company, LLC for fiscal years 2004 and 2003 for services related to tax
compliance, tax advice and tax planning, consisting primarily of preparing the
Company's federal and state income tax returns for the previous fiscal periods
and inclusive of expenses are as follows
Fiscal 2004 Fiscal 2003
$ 52,530 $ 32,430
All Other Fees
Fees and expenses billed to the Company by Crowe Chizek and Company,
LLC for all other services provided during fiscal years 2004 and 2003 are as
follows:
Fiscal 2004 Fiscal 2003
$ 22,000 $ 0
In 2004, the Audit Committee established a policy whereby the
independent auditor is required to seek pre-approval by the Committee of all
audit and permitted non-audit services by providing a prior description of the
services to be performed and specific estimates for each such service.
The Audit Committee approved all of the services performed by Crowe
Chizek and Company LLC during fiscal 2004.
The Audit Committee of the Board of Directors has considered whether
the provision of non-audit services described above is compatible with
maintaining the independent accountant's independence.
The Company's Board of Directors recommends that shareholders vote
"FOR" ratification of the appointment of Crowe Chizek and Company LLC as the
Company's independent accountants for the 2005 fiscal year.
CODE OF ETHICS
The Board of Directors adopted a Code of Business Conduct and Ethics on
November 19, 2003 that applies to all of the Company's officers, directors and
employees and a Code of Ethics for the Chief Executive Officer, Chief Operating
Officer, Chief Financial Officer and Chief Accounting Officer which supplements
our Code of Business Conduct and Ethics (collectively the "Codes") which are
intended to promote honest and ethical conduct, full and accurate reporting and
compliance with laws. We have filed copies of the Codes with the SEC as an
exhibit to our December 31, 2003 annual report on Form 10-K.
SHAREHOLDER PROPOSALS
Any shareholder proposal intended to be presented at the 2006 Annual
Meeting of Shareholders must be received by the Company by January 23, 2006 in
order to be considered for inclusion in the Proxy Statement for the 2006 Annual
Meeting of Shareholders. In addition, the proxy solicited by the Board of
Directors for the next annual meeting of shareholders will confer discretionary
authority to vote on any shareholder proposal presented at the meeting, unless
the Company is provided with notice of such proposal no later than April 8,
2006. However, even if notice is timely received, the proxies may nevertheless
be entitled to exercise discretionary authority on the matter to the extent
permitted by Securities and Exchange Commission regulations.
OTHER MATTERS
The only matters to be considered at the meeting or any adjournment
thereof, so far as known to the Board of Directors, are those set forth in the
Notice of Annual Meeting of Shareholders and routine matters incident to the
conduct of the meeting. However, if any other matters should properly come
before the meeting or any adjournment thereof, the Board of Directors intends
that the persons named in the accompanying proxy form, or their substitutes,
will vote the shares represented by such proxy form in accordance with their
best judgment on such matters.
By Order of the Board of Directors,
/s/ E. V. Holder, Jr.
----------------------------------
E.V. Holder, JR.
Secretary
Huntington, West Virginia
May 23, 2005
PROXY
PREMIER FINANCIAL BANCORP, INC.
PROXY FOR 2005 ANNUAL MEETING OF SHAREHOLDERS
KNOW ALL MEN BY THESE PRESENTS, the undersigned shareholder of PREMIER FINANCIAL
BANCORP, INC. ("Company"), Huntington, West Virginia, does hereby nominate,
constitute and appoint
E.V. HOLDER, JR. and KEITH F. MOLIHAN
or any of them (with full power to act alone), my true and lawful attorney(s)
and proxy(ies) with full power of substitution, for me and in my name, place and
stead, to vote all of the Common Stock of the company standing in my name on its
books at the close of business on May 11, 2005, at the Annual Meeting of
Shareholders to be held at the Radisson Hotel, 1001 3rd Avenue, Huntington,
West Virginia, on June 22, 2005, at 10:30 a.m. (eastern daylight time), and at
any adjournment thereof, with all the powers the undersigned would possess if
personally present, as follows:
1. ELECTION OF DIRECTORS: To elect as directors the following nine (9)
nominees:
Toney K. Adkins Hosmer A. Brown, III Edsel R. Burns
E.V. Holder, Jr. Keith F. Molihan Marshall T. Reynolds
Neal W. Scaggs Thomas W. Wright Robert W. Walker
FOR |_| WITHHOLD |_| FOR ALL EXCEPT |_|
INSTRUCTION: To withhold authority to vote for any individual nominee,
mark "For All Except" and write that nominee's name in the space provided
below:
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2. RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS. To ratify the
appointment of Crowe Chizek and Company, LLC as the Company's independent
auditors for the fiscal year ending December 31, 2005.
FOR |_| AGAINST |_| ABSTAIN |_|
3. OTHER BUSINESS. To transact such other matters as may properly be brought
before the Annual Meeting or any adjournment thereof. (The Board of
Directors does not know of any such other matters.)
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ALL OF THE NOMINEES LISTED IN
ITEM 1 AND A VOTE "FOR" ITEM 2.
Information regarding the matters to be acted upon at the meeting is contained
in the Notice of Annual Meeting of Shareholders and the Proxy Statement
accompanying this proxy.
This proxy is solicited by the Board of Directors and will be voted as
specified and in accordance with the accompanying proxy statement. If no
instruction is indicated, then the above named proxies, or any one of them,
will vote the shares represented "for" all of the nominees listed in Item #1
and "for" Item #2 and in accordance with their discretion on any other
business that may properly come before the meeting.
Please be sure to sign and date this Proxy in the box below.
-----------------
Date
----------------------------- -----------------------------
Stockholder sign above Co-holder (if any) sign above
Detach above card, sign, date and mail in postage paid envelope provided.
PREMIER FINANCIAL BANCORP, INC.
HUNTINGTON, WEST VIRGINIA
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Please sign above exactly as your name(s) appear(s) on your stock
certificate(s). When signing as attorney, executor, administrator, trustee or
guardian, please give full title. If more than one trustee, all should sign.
All joint owners must sign.
An addressed, postage prepaid envelope is enclosed for your convenience in
promptly returning your proxy to the Company. The prompt return of your proxy
will help the Company avoid additional costs in soliciting proxies.
PLEASE ACT PROMPTLY
SIGN, DATE & MAIL YOUR PROXY CARD TODAY
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IF YOUR ADDRESS HAS CHANGED, PLEASE CORRECT THE ADDRESS IN THE SPACE PROVIDED
BELOW AND RETURN THIS PORTION WITH THE PROXY IN THE ENVELOPE PROVIDED.
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