SCHEDULE
14A
(Rule
14a-101)
INFORMATION
REQUIRED IN PROXY STATEMENT
SCHEDULE
14A INFORMATION
Proxy
Statement Pursuant to Section 14(a) of
the
Securities Exchange Act of 1934 (Amendment No. )
Filed
by the Registrant þ
Filed
by a party other than the Registrant o
Check
the appropriate box:
o Preliminary
Proxy Statement
o Confidential,
for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
þ Definitive
Proxy Statement
o Definitive
Additional Materials
o Soliciting
Material Pursuant to Section 240.14a-12
PREMIER
FINANCIAL BANCORP, INC.
(Name
of Registrant as Specified in Its Charter)
________________________________________________________
(Name
of Person Filing Proxy Statement, if other than Registrant)
Payment
of Filing Fee (Check the appropriate box):
þ No
fee required
o Fee
computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11
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(1)
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Title
of each class of securities to which transaction applies:
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(2)
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Aggregate
number of securities to which transaction applies:
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(3)
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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)
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Proposed
maximum aggregate value of transaction:
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(5)
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Total
fee paid:
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o Fee
paid previously with preliminary materials.
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o
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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.
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(1)
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Amount
Previously Paid:
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(2)
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Form,
Schedule or Registration Statement No.:
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(3)
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Filing
Party:
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(4)
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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
21, 2006
________________
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 21, 2006 at 10:30
a.m.
(EDT) for the following purposes:
(1) To
elect nine (9) directors to serve until the 2007 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 2006 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 3, 2006 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
18,
2006
PREMIER
FINANCIAL BANCORP, INC.
2883
5th Avenue
Huntington,
West Virginia 25702
________________
PROXY
STATEMENT
FOR
ANNUAL
MEETING OF SHAREHOLDERS
TO
BE HELD
JUNE
21, 2006
________________
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 3, 2006 for use
at the
Annual Meeting of Shareholders of the Company (the "Annual Meeting")
to be held
on Wednesday, June 21, 2006 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 18,
2006.
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:
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(1)
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The
election of nine directors of the Company who will serve
until the 2007
Annual Meeting and until their successors are elected and
qualified;
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(2)
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The
ratification of the appointment of Crowe Chizek and Company
LLC as the
Company's independent accountants for the fiscal year ending
December 31, 2006; and
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(3)
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The
transaction of such other business as may properly come before
the Annual
Meeting.
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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
3, 2006 (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
5,236,899 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 2006 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.
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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 2005 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, 2006, the following individuals or entities reported beneficial
ownership of Common Stock in excess of 5% of the Company's outstanding
Common
Stock:
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NAME
AND ADDRESS
OF
BENEFICIAL OWNER
|
NUMBER OF SHARES
BENEFICIALLY OWNED(1)
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PERCENTAGE OF
OUTSTANDING SHARES
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Marshall
T.
Reynolds
P.O.
Box
4040
Huntington,
West Virginia 25729
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562,300
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10.7%
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Tontine
Financial Partners, L.P.
55
Railroad
Avenue, 3rd Floor
Greenwich,
Connecticut 06830
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520,300
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9.9%
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Marla
Braun
136
Miracle
Mile
Coral
Gables,
Florida 33134
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338,371
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6.5%
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Douglas
V.
Reynolds
703
Fifth
Avenue
Huntington,
West Virginia 25701
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278,713
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5.3%
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_______________
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(1)
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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.
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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
2007 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:
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Nominee
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Principal
Occupation
or
Employment (1)
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Age
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Director
of
Company
Continuously
Since
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Common
Stock
Beneficially
Owned
as
of
3/31/2006 (2)
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Percentage
Of
Out-standing
Shares
|
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Toney
K. Adkins
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President
and Chief Operating Officer, Champion Industries, Inc. (commercial
printing and office supplies) (3)
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56
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7/12/91
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6,180
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*
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Hosmer
A. Brown, III
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Attorney-at-Law
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85
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4/18/01
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59,451
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1.1%
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Edsel
R. Burns
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President,
CJ Hughes Construction, Inc. (4)
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55
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7/19/00
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787
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*
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E.V.
Holder, Jr.
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Attorney-at-law
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73
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7/12/91
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16,720
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*
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Keith
F. Molihan
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Retired
Executive Director, Ironton/Lawrence County Area Community
Action
Organization
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63
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9/14/99
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5,826
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*
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Marshall
T. Reynolds
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Chairman
and Chief Executive Officer, Champion Industries, Inc. (commercial
printing and office supplies) (5)
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69
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1/19/96
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562,300
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10.7%
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Neal
W. Scaggs
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President,
Logan Auto Parts, Inc.
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70
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9/8/98
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6,825
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*
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Robert
W. Walker
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President
and Chief Executive Officer of the Company (6)
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59
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10/17/01
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42,871
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*
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Thomas
W. Wright
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Owner
and Chairman,
NexQuest,
Inc. (management
company)
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53
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4/18/01
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43,134
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*
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All
directors and
executive
officers as
a
group (11 in number including the above-named persons)
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744,834
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14.2%
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*
The
percentage of outstanding shares beneficially owned is less than
1%.
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(1)
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Except
where otherwise indicated, this principal occupation or employment
has
continued during the past five
years.
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(2)
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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.
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(3)
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Prior
to becoming President and Chief Operating Officer of Champion
Industries
on January 25, 2005, Mr. Adkins served as its Vice President
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Administration since 1996.
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(4)
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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.
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(5)
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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.).
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(6)
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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.
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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
2005, the Board of Directors met fifteen times, the Compliance Committee
met
eleven times, the Compensation Committee met once, the Nominating Committee
met
twice, and the Audit Committee met fifteen times. In addition, the
Planning
Committee met once and the Information Technology Committee met five
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 directors except Mr. Adkins were in attendance.
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 independent directors met twice in executive session
during
2005.
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.
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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, 2005 consisted of Messrs. Burns, 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. Burns, 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. Burns, Scaggs, Molihan, and Wright each meet the independence
requirements set forth in the Marketplace Rules of the Nasdaq Stock
Market.
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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.
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 the
standards of
the Public Company Accounting Oversight Board (United States).
In
connection with its review of the Company’s financial statements for 2005, the
Audit Committee:
| · |
Has
reviewed and discussed the audited financial statements with
management;
|
| · |
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
|
| · |
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.
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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, 2005.
Members
of the Audit Committee:
/s/
Edsel R. Burns, Chairman
/s/
Neal W. Scaggs
/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. committee member 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.
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Compensation
Committee Report
Compensation
Committee believes that the compensation program for executive officers
should
consist of two key elements:
| · |
a
base salary, and
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| · |
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 authorized a bonus payment in February 2006.
The
Compensation Committee declined to authorize performance bonuses in
2004 and
2005.
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 2005 with the reporting requirements
of Section 16(a) of the Securities Exchange Act except that Company
president
Robert W. Walker filed one late report with respect to a gift of stock
to his
spouse and two late reports with respect to two involuntary redemptions
of the
Company’s trust preferred securities. These transactions were reported in full
on Form 4 filed on February 16, 2006.
-
10
-
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
|
69
|
Chairman
of the Board
|
|
Robert
W. Walker
|
59
|
President
and Chief Executive Officer
|
|
Brien
M. Chase
|
41
|
Vice
President and Chief Financial Officer
(Principal
Accounting Officer)
|
|
Dennis
Klingensmith
|
52
|
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.
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.”
-
11
-
EXECUTIVE
COMPENSATION
Summary
Compensation Table
The
following table summarizes compensation earned in 2005, 2004, and 2003
by the
Company's Chief Executive Officer and certain of the Company's other
executive
officers who earned a salary and/or bonus in 2005 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 2005 that exceeded $100,000.
|
Annual
Compensation
|
Long
Term Compensation
|
|||||
|
Name
and principal position
|
Year
|
Salary
($)
|
Bonus
($)
|
Other
Annual
Compensation
($)(1)
|
Securities
Underlying
Options
(#)
|
All
other
Compensation
($)(2)
|
|
Robert
W. Walker
|
2005
|
194,128
|
-----
|
1,219
|
5,000
|
7,765
|
|
President
and CEO
|
2004
|
181,971
|
-----
|
1,108
|
4,000
|
7,235
|
|
2003
|
179,375
|
-----
|
1,023
|
3,750
|
7,109
|
|
|
Dennis
Klingensmith
|
2005
|
112,705
|
-----
|
720
|
3,000
|
4,508
|
|
Vice
President
|
2004
|
108,418
|
-----
|
1,223
|
2,500
|
4,288
|
|
CEO
First Central Bank(3)
|
2003
|
106,094
|
-----
|
1,665
|
2,500
|
4,199
|
________________________
|
(1)
|
Other
annual compensation consists of employee use of Company
vehicles.
|
|
(2)
|
Employer
contributions to the Company's 401(k)/Profit Sharing
Plan.
|
|
(3)
|
Salary
and bonus amounts for all years were paid by the Company's
subsidiary,
First Central Bank, for services rendered by Mr. Klingensmith
as Chief
Executive Officer of that bank subsidiary.
|
Option
Grants in Last Fiscal Year
|
Name
|
Number
of Securities Underlying Options Granted
(#)
(1)
|
%
of Total Options Granted to Employees
|
Exercise
Price ($/share)
|
Expiration
Date
|
Potential
Realizable Value at Assumed Annual Rates of Stock Price Appreciation
for
Option Term(2)5%($)
10%($)
|
|
Robert
W. Walker
|
5,000
|
14.3%
|
$11.62
|
1/19/2015
|
$36,539 $92,596
|
|
Dennis
J. Klingensmith
|
3,000
|
8.6%
|
$11.62
|
1/19/2015
|
$21,923
$55,558
|
________________________
|
(1)
|
These
Incentive Stock Options were granted on January 19, 2005,
and vest in
three equal annual installments beginning on January 19,
2006. 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.
|
-
12
-
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, 2005.
|
Plan
Category
|
(A)
Number
of Securities to be Issued Upon Exercise of Outstanding Options,
Warrants
and Rights
|
(B)
Weighted
Average Exercise Price of Outstanding Options, Warrants and
Rights
|
(C)
Number
of Securities Remaining Available for Future Issuance Under
Equity
Compensation Plans (Excluding Securities Reflected in Column
(A))
|
|
1996
Stock Option Plan
|
32,000
|
$13.80
|
68,000
|
|
2002
Stock Option Plan
|
79,750
|
9.94
|
420,250
|
|
Total
|
111,750
|
$11.05
|
488,250
|
________________________
Aggregated
Option Exercises in Last Fiscal Year
and
Fiscal Year-End Option Values
|
Name
|
Number
of Shares Acquired on Exercise
|
Value
Realized
|
Number
of Securities Underlying Unexercised Options
FY-End
|
Value
of Unexercised In-the-Money Options at
FY-End(1)
|
||
|
Exercisable
|
Unexercisable
|
Exercisable
|
Unexercisable
|
|||
|
Robert
W. Walker
|
-----
|
-----
|
5,334
|
8,916
|
$28,961
|
$49,634
|
|
Dennis
J. Klingensmith
|
-----
|
-----
|
4,001
|
5,499
|
18,940
|
30,890
|
________________________
|
(1)
|
The
value of any unexercised in-the-money stock option is equal
to the
difference between $15.980 (the closing price of the Common
Stock on
December 31, 2005 and the exercise price of the stock
option.
|
-
13
-
STOCK
PERFORMANCE GRAPH
The
following graph shows a comparison of cumulative total stockholder
return on the
Common Stock since December 31, 2000 with the cumulative total returns
of both a
broad equity market index and a published industry index. The broad
equity
market index chosen was the Russell 3000 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.
|
Period
Ending
|
|||||||||||||||||||
|
Index
|
12/31/00
|
12/31/01
|
12/31/02
|
12/31/03
|
12/31/04
|
12/31/05
|
|||||||||||||
|
Premier
Financial Bancorp, Inc.
|
100.00
|
161.95
|
150.24
|
165.66
|
240.98
|
311.80
|
|||||||||||||
|
S&P
500*
|
100.00
|
88.11
|
68.64
|
88.33
|
97.94
|
102.74
|
|||||||||||||
|
Russell
3000
|
100.00
|
88.54
|
69.47
|
91.04
|
101.92
|
108.16
|
|||||||||||||
|
SNL
$500M-$1B
Bank Index
|
100.00
|
129.74
|
165.63
|
238.84
|
270.66
|
282.26
|
|||||||||||||
|
|
|||||||||||||||||||
|
*Source:
CRSP, Center for Research in Security Prices, Graduate
School of Business,
The University of Chicago 2005.
|
|||||||||||||||||||
|
Used
with
permission. All rights reserved.
crsp.com.
|
|||||||||||||||||||
-
14
-
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, 2005, 2004, and 2003, the Company or its
subsidiaries have paid approximately $191,000, $358,000 and $272,000,
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 $499,000,
$489,000
and $892,000 in 2005, 2004, and 2003, 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.
-
15
-
INDEPENDENT
PUBLIC ACCOUNTANTS
(Item
2 on Proxy)
At
its
meeting held on March 15, 2006, 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, 2006. 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, 2005 and December 31, 2004, and for review of the Company's financial
statements included in the Company's quarterly reports on Form 10-Q,
are as
follows:
Fiscal
2005 Fiscal
2004
$
180,000 $ 178,300
Audit
Related Fees
Audit
related fees and expenses billed to the Company by Crowe Chizek and
Company LLC
for years 2005 and 2004 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
2005 Fiscal
2004
$
13,180 $
8,500
Tax
Fees
Tax
fees and expenses billed to the Company by Crowe Chizek and Company
LLC for
fiscal years 2005 and 2004 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
2005 Fiscal
2004
$
40,040 $
52,530
All Other Fees
Fees
and expenses billed to the Company by Crowe Chizek and Company LLC
for all other
services provided during fiscal years 2005 and 2004 are as follows:
Fiscal
2005 Fiscal
2004
$
5,125 $
22,000
-
16
-
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 2005.
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 2006 fiscal year.
-
17
-
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 2007 Annual Meeting of Shareholders
must be received by the Company by January 19, 2007 in order to be
considered
for inclusion in the Proxy Statement for the 2007 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 3, 2007.
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
18,
2006
-
18
-
|
T
|
PLEASE
MARK VOTES
|
PROXY
|
With-
For All
For
hold
Except
|
||||
|
AS
IN THIS EXAMPLE
|
PREMIER
FINANCIAL BANCORP, INC.
|
||||||
|
PROXY
FOR 2006 ANNUAL MEETING
OF
SHAREHOLDERS
|
1. ELECTION
OF DIRECTORS:
To elect as directors the following nine (9)
nominees:
|
£ £ £
|
|||||
|
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 3,
2006, at the Annual
Meeting of Shareholders to be held at the Radisson
Hotel, 1001 3rd Avenue,
Huntington, West Virginia, on June 21, 2006, 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:
|
Toney
K. Adkins Hosmer
A. Brown,
III
Edsel
R.
Burns
E.V.
Holder,
Jr. Keith
F. Molihan Marshall
T. Reynolds
Neal
W.
Scaggs Robert
W.
Walker Thomas
W. Wright
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.
|
||||||
|
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,
2006.
|
Fo
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.
|
|||||||
|
Please
be sure to sign and date
this
Proxy in the box below.
|
Date
|
||||||
|
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.
|
|||||||
|
Stockholder
sign
above
Co-holder (if any) sign above
|
|||||||
|
Ã
Detach above card, sign, date and mail in postage paid
envelope provided.
Ã
|
|||||||
|
PREMIER
FINANCIAL BANCORP, INC.
HUNTINGTON,
WEST VIRGINIA
|
|||||||
|
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
|
|||||||
|
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.
|
|||||||
____________________________
____________________________
____________________________