UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                                    FORM 10-K
(Mark One)

 X       ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
         EXCHANGE ACT OF 1934 [FEE REQUIRED]
-----

         For the fiscal year ended December 31, 1999

                                       OR

_____    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
         EXCHANGE ACT OF 1934 [NO FEE REQUIRED]

         For the transition period from              to
                         Commission file number 0-20908

                         PREMIER FINANCIAL BANCORP, INC.
             (Exact name of registrant as specified in its charter)

                  Kentucky                                       61-1206757
         (State or other jurisdiction of                      (I.R.S. Employer
           incorporation or organization)                    Identification No.)

                  115 N. Hamilton Street
                  Georgetown, Kentucky                              40324
         (Address of principal executive offices)                (Zip Code)

                  Registrants' telephone number:               (502) 863-1955

         Securities registered pursuant to Section 12 (b) of the Act:
                                                                       None
         Securities registered pursuant to Section 12 (g) of the Act:
                                                                  Common Stock
                                                                (Title of Class)

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed  by  Section  13 or 15 (d) of the  Securities  Exchange  Act of 1934
during the preceding 12 months (or for such shorter  period that the  registrant
was  required  to file  such  reports)  and  (2)  has  been  subject  to  filing
requirements for the past 90 days. Yes X No ____

Indicate by check mark if the disclosure of delinquent  filers  pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best  of  the  registrant's   knowledge,  in  definitive  proxy  or  information
statements  incorporated  by reference in Part III of this 10-K or any amendment
to this Form 10-K. [ ]

The  aggregate  market  value of  voting  stock  held by  non-affiliates  of the
Registrant  as  of  March  24,  2000  was  $43,492,912.  The  number  of  shares
outstanding of the Registrant's Common Stock as of March 24, 2000 was 5,232,230.

                       DOCUMENTS INCORPORATED BY REFERENCE

Portions of the following  documents are incorporated by reference into the Form
10-K part indicated:

         Document                                                Form 10-K

 (1)     Proxy statement for the 2000 annual meeting of          Part III
         shareholders


<PAGE>


                                     PART I

Item 1.  Description of Business

                                   THE COMPANY

         Premier  Financial  Bancorp,  Inc.  (the  "Company" or  "Premier") is a
multi-bank  holding company that, as of March 24, 2000,  operated twenty banking
offices in Kentucky,  six banking  offices in Ohio, and four banking  offices in
West Virginia through its ten bank  subsidiaries  (the "Affiliate  Banks"),  the
tenth of which was acquired on January 20, 1999.  At December 31, 1999,  Premier
had total consolidated assets of $852.5 million,  total consolidated deposits of
$692.8 million and total consolidated shareholders' equity of $52.1 million.

         Premier  began an  acquisition  program  in 1993 and has  acquired  six
commercial  banks and five branches of other  commercial  banks since that time.
Premier also owns nonbank  subsidiaries  that provide  consumer lending and data
processing services.

         Premier  continues to explore  opportunities to acquire banks,  savings
associations,  branches of either and nonbank companies as permitted by the Bank
Holding  Company  Act of 1956,  as amended  (the "BHC Act").  Premier  regularly
reviews,  analyzes  and engages in  discussions  regarding  possible  additional
acquisitions.  It is  not  presently  known  whether,  or on  what  terms,  such
discussions will result in further acquisitions,  if any. Premier generally does
not announce an acquisition until after the execution of a definitive agreement.

         Premier is a legal  entity  separate and  distinct  from its  Affiliate
Banks and nonbank subsidiaries.  Accordingly, the right of Premier, and thus the
right  of  Premier's   creditors  and   shareholders,   to  participate  in  any
distribution  of the assets or earnings of any of the Affiliate Banks or nonbank
subsidiaries  is  necessarily  subject to the prior  claims of creditors of such
subsidiaries,  except to the extent that claims of Premier, in its capacity as a
creditor,  may be  recognized.  The  principal  source of  Premier's  revenue is
dividends from its Affiliate  Banks and nonbank  subsidiaries.  See  "REGULATORY
MATTERS -- Dividend  Restrictions"  for  discussion of the  restrictions  on the
Affiliate Banks' ability to pay dividends to Premier.

         Premier  was  incorporated  as a Kentucky  corporation  in 1991 and has
functioned as a bank holding  company since its formation.  Premier's  principal
executive offices are located at 115 North Hamilton Street, Georgetown, Kentucky
40324, and its telephone number is (502) 863-1955.

                                    BUSINESS
General

         Through  the  Banks and its data  processing  subsidiary,  the  Company
focuses on providing  quality,  community  banking  services to individuals  and
small-to  medium sized  businesses  primarily in non-urban  areas. By seeking to
provide such banking  services in non-urban  areas, the Company believes that it
can  minimize  the  competitive  effect of larger  financial  institutions  that
typically are focused on large  metropolitan  areas.  Through its experiences in
acquiring its Banks,  the Company has  successfully  developed and implemented a
strategy of joining  together  community  banks that retain their  commitment to
local  orientation  and  direction,  while  having the benefit of the  Company's
capital  for  growth  and staff  assistance  to promote  safety,  soundness  and
regulatory compliance. Each Bank is managed on a decentralized basis that offers
customers  direct  access  to the  Bank's  president  and other  officers  in an
environment  conducive  to  friendly,   informed  and  courteous  service.  This
decentralized  approach  also  enables  each  Bank to  offer  local  and  timely
decision-making,  and flexible and  reasonable  operating  procedures and credit
policies  limited only by a framework of centralized  risk controls  provided by
the  Company to promote  prudent  banking  practices.  Each Bank  maintains  its
community  orientation by, among other things,  having  selected  members of its
community as members of its board of directors,  who assist in the  introduction
of prospective  customers to the Bank and in the  development or modification of
products and services to meet customer  needs. As a result of the development of
personal  banking  relationships  with its  customers  and the  convenience  and
service  offered by the Banks,  the Banks' lending and investing  activities are
funded primarily by core deposits.


<PAGE>


         When appropriate and economically advantageous, the Company centralizes
certain of the Banks' back office,  support and investment functions in order to
achieve  consistency  and  cost  efficiency  in the  delivery  of  products  and
services.  The Company  centrally  provides  services  such as data  processing,
operations support, accounting, loan review and compliance and internal auditing
to the Banks to enhance their ability to compete  effectively.  The Company also
provides  overall  direction in the areas of credit  policy and  administration,
strategic  planning,  marketing,   investment  portfolio  management  and  other
financial  and  administrative  services.  Each  Bank  participates  in  product
development by advising  management of new products and services needed by their
customers and desirable changes to existing products and services.

         Each of the  Banks  provides  a wide  range of  retail  and  commercial
banking services,  including commercial,  real estate, agricultural and consumer
lending;  depository  and funds  transfer  services;  collections;  safe deposit
boxes;  cash  management   services;   and  other  services  tailored  for  both
individuals and businesses.  Farmers  Deposit Bank in Eminence,  Kentucky,  also
offers limited trust services and acts as executor,  administrator,  trustee and
in various other fiduciary capacities.  Through Premier Data Services, Inc., the
Company's data processing subsidiary, the Company currently provides centralized
data  processing  services  to eight of the Banks as well as one  non-affiliated
bank.

         The Banks' residential mortgage lending activities consist primarily of
loans for  purchasing  personal  residences or loans for  commercial or consumer
purposes secured by residential  mortgages.  Consumer lending activities consist
of traditional forms of financing for automobile and personal loans.

         The Banks' range of deposit services  includes checking  accounts,  NOW
accounts,  savings accounts,  money market accounts,  club accounts,  individual
retirement accounts,  certificates of deposit and overdraft protection. Deposits
of the Banks are insured by the Bank Insurance Fund administered by the FDIC.

         County Finance,  Inc., a subsidiary of Citizens Deposit Bank & Trust in
Vanceburg,  Kentucky,  is a consumer  loan  company  that  provides  secured and
unsecured  loans to customers  who would  generally  not qualify,  due to credit
experience or other factors, for loans at that Bank.

Competition

         The  Banks  encounter  strong  competition  both in  making  loans  and
attracting deposits. The deregulation of the banking industry and the widespread
enactment of state laws that permit multi-bank  holding companies as well as the
availability of nationwide  interstate banking have created a highly competitive
environment  for  financial  services  providers.  In one or more aspects of its
business,  each Bank  competes  with other  commercial  banks,  savings and loan
associations,   credit  unions,  finance  companies,   mutual  funds,  insurance
companies,  brokerage  and  investment  banking  companies  and other  financial
intermediaries  operating  in  its  market  and  elsewhere,  many  of  whom  has
substantially  greater  financial  and  managerial   resources.   Being  smaller
financial  institutions,  each of the  Banks'  competitors  include  large  bank
holding  companies  having  substantially  greater  resources  and offer certain
services  that  Premier  Banks may not  currently  provide.  Each Bank  seeks to
minimize  the  competitive  effect of larger  financial  institutions  through a
community  banking approach that emphasizes direct customer access to the Bank's
president and other officers in an environment  conducive to friendly,  informed
and courteous service.

         Management  believes  that  each  Bank is well  positioned  to  compete
successfully in its respective  primary market area,  although no assurances can
be given.  Competition among financial institutions is based upon interest rates
offered on deposit  accounts,  interest  rates charged on loans and other credit
and  service  charges,  the  quality  and scope of the  services  rendered,  the
convenience  of the banking  facilities  and, in the case of loans to commercial
borrowers,  relative lending limits.  Management believes that the commitment of
its Banks to personal  service,  innovation and involvement in their  respective
communities  and primary  market areas,  as well as their  commitment to quality
community banking service, are factors that contribute to their competitiveness.


<PAGE>



Regulatory Matters

         The following  discussion sets forth certain elements of the regulatory
framework  applicable  to bank  holding  companies  and their  subsidiaries  and
provides  certain  specific  information  relevant to Premier.  This  regulatory
framework is intended primarily for the protection of depositors and the federal
deposit insurance funds and not for the protection of the holders of securities,
including  Premier Common Shares.  To the extent that the following  information
describes statutory or regulatory provisions, it is qualified in its entirety by
reference  to  those  provisions.  A  change  in the  statutes,  regulations  or
regulatory  policies  applicable  to  Premier  or its  subsidiaries  may  have a
material effect on the business of Premier.

General - As a bank holding company,  Premier is subject to regulation under the
Bank  Holding  Company  Act ("BHC  Act"),  and to  inspection,  examination  and
supervision by the Board of Governors of the Federal  Reserve  System  ("Federal
Reserve").  Under the BHC Act, bank holding companies  generally may not acquire
ownership or control of more than 5% of the voting shares or  substantially  all
the assets of any company, including a bank, without the Federal Reserve's prior
approval.  Similarly, bank holding companies generally may not acquire ownership
or control of a savings  association  without the prior  approval of the Federal
Reserve.   Further,   branching  by  the  Affiliate  Banks  is  subject  to  the
jurisdiction,  and requires  the  approval,  of each  Affiliate  Bank's  primary
federal banking regulator and, if the Affiliate Bank is a state-chartered  bank,
the appropriate  state banking  regulator.  In addition,  bank holding companies
generally  may engage,  directly or  indirectly,  only in banking and such other
activities  as are  determined by the Federal  Reserve to be closely  related to
banking.

         Under the BHC Act, the Federal  Reserve has the  authority to require a
bank holding  company to terminate  any  activity or  relinquish  control of the
nonbank  subsidiary (other than a nonbank subsidiary of a bank) upon the Federal
Reserve's  determination that such activity or control constitutes a risk to the
financial  soundness  and  stability of any bank  subsidiary of the bank holding
company. Premier and the Affiliate Banks are subject to the Federal Reserve Act,
which  limits  borrowings  by  Premier  and its  nonbank  subsidiaries  from the
Affiliate Banks and also limits various other  transactions  between Premier and
its nonbank subsidiaries with the Affiliate Banks.

         The six Affiliate Banks chartered in Kentucky are supervised, regulated
and  examined by the Kentucky  Department  of  Financial  Institutions,  the two
Affiliate Banks chartered in Ohio are supervised,  regulated and examined by the
Ohio Division of Financial  Institutions,  and the two Affiliate Banks chartered
in West  Virginia are  supervised,  regulated  and examined by the West Virginia
Division of Banking. In addition, those Affiliate Banks that are state banks and
members of the  Federal  Reserve  System are  supervised  and  regulated  by the
Federal  Reserve,  and those  state  banks that are not  members of the  Federal
Reserve  System are supervised  and regulated by the Federal  Deposit  Insurance
Corporation  ("FDIC").  Each  banking  regulator  has  the  authority  to  issue
cease-and-desist orders if it determines that the activities of a bank regularly
represent an unsafe and unsound banking practice or a violation of law.

         Both federal and state law extensively regulates various aspects of the
banking  business, such as reserve  and  capital  requirements,truth-in-lending
and truth-in-savings disclosure, equal credit opportunity, fair credit
reporting, trading in securities and other aspects of banking operations.
Premier,  the  Affiliate  Banks  and  Premier's  nonbank  subsidiaries  are also
affected by the fiscal and monetary  policies of the federal  government and the
Federal  Reserve  and  by  various  other  governmental  laws,  regulations  and
requirements.  Further, the earnings of Premier and Affiliate Banks are affected
by general economic  conditions and prevailing  interest rates.  Legislation and
administrative  actions affecting the banking industry are frequently considered
by the  United  States  Congress,  state  legislatures  and  various  regulatory
agencies.  It is not possible to predict with certainty whether such legislation
or  administrative  actions  will be enacted or the extent to which the  banking
industry,  in general, or Premier and the Affiliate Banks, in particular,  would
be affected.



<PAGE>



Liability for Bank Subsidiaries - The Federal Reserve has a policy to the effect
that a bank  holding  company is  expected to act as a source of  financial  and
managerial  strength to each of its subsidiary  banks and to maintain  resources
adequate to support each such  subsidiary  bank. This support may be required at
times when  Premier may not have the  resources to provide it. In the event of a
bank holding company's bankruptcy, any commitment by the bank holding company to
a federal bank  regulatory  agency to maintain the capital of a subsidiary  bank
would be assumed by the bankruptcy trustee and entitled to priority of payment.

         Any depository  institution  insured by the FDIC may be held liable for
any  loss  incurred,  or  reasonably  expected  to be  incurred,  by the FDIC in
connection with (i) the default of a commonly controlled FDIC-insured depository
institution,  or  (ii)  any  assistance  provided  by  the  FDIC  to a  commonly
controlled FDIC-insured  depository institution in danger of default.  "Default"
is defined  generally as the  appointment  of a conservator  or receiver and "in
danger of default" is defined  generally as the existence of certain  conditions
indicating  that a  "default"  is likely to occur in the  absence of  regulatory
assistance.  In the event that such a default  occurred  with respect to a bank,
any loans to the bank from its parent  holding  company will be  subordinate  in
right of payment to payment of the bank's  depositors  and  certain of its other
obligations.

Capital  Requirements - Premier is subject to capital ratios,  requirements  and
guidelines  imposed by the Federal Reserve,  which are substantially  similar to
the ratios,  requirements and guidelines  imposed by the Federal Reserve and the
FDIC  on  the  banks  within  their  respective  jurisdictions.   These  capital
requirements  establish  higher  capital  standards  for banks and bank  holding
companies  that assume  greater  credit  risks.  For this  purpose,  a bank's or
holding company's assets and certain specified off-balance sheet commitments are
assigned to four risk categories,  each weighted  differently based on the level
of credit  risk that is  ascribed  to such  assets or  commitments.  A bank's or
holding  company's  capital is divided into two tiers:  "Tier I" capital,  which
includes common shareholders'  equity,  noncumulative  perpetual preferred stock
and related  surplus  (excluding  auction rate  issues),  minority  interests in
equity   accounts  of   consolidated   subsidiaries,   less  goodwill,   certain
identifiable  intangible assets and certain other assets;  and "Tier 2" capital,
which  includes,  among other items,  perpetual  preferred stock not meeting the
Tier I  definition,  mandatory  convertible  securities,  subordinated  debt and
allowances  for loan and lease  losses,  subject  to certain  limitations,  less
certain required deductions.

         Bank holding  companies  currently  are required to maintain Tier I and
total capital (the sum of Tier 1 and Tier 2 capital) equal to at least 4% and 8%
of total risk-weighted assets,  respectively.  At December 31, 1999, Premier met
both requirements,  with Tier I and total capital equal to 8.9% and 11.9% of its
total risk-weighted assets, respectively.

         In addition to the risk-based capital  guidelines,  the Federal Reserve
requires bank holding  companies to maintain a minimum  "leverage ratio" (Tier I
capital to adjusted total assets) of 3%, if the holding  company has the highest
regulatory ratings for risk-based capital purposes and, accordingly, is required
to maintain a minimum  "leverage ratio" of 3%. All other bank holding  companies
are  required to maintain a leverage  ratio of 3% plus at least 100 to 200 basis
points. At December 31, 1999, Premier's leverage ratio was 6.2%.

         The  foregoing  capital  requirements  are  minimum  requirements.  The
Federal Reserve may set capital  requirements higher than the minimums described
above for holding companies whose circumstances warrant it. For example, holding
companies  experiencing  or anticipating  significant  growth may be expected to
maintain capital ratios,  including tangible capital  positions,  well above the
minimum levels.

         Additionally, the Federal Deposit Insurance Corporation Improvement Act
of 1991 ("FDICIA"),  among other things,  identifies five capital categories for
insured  depository  institutions  (well  capitalized,  adequately  capitalized,
undercapitalized,      significantly     undercapitalized     and     critically
undercapitalized)  and requires the respective  federal  regulatory  agencies to
implement  systems  for  "prompt   corrective  action"  for  insured  depository
institutions  that  do  not  meet  minimum  capital   requirements  within  such
categories.   FDICIA  imposes  progressively  more  restrictive  constraints  on
operations,  management and capital distributions,  depending on the category in
which an institution is classified. Failure to meet the capital guidelines could
also subject a banking institution to capital raising requirements.

<PAGE>

         An "undercapitalized"  bank must develop a capital restoration plan and
its parent holding  company must guarantee the bank's  compliance with the plan.
The liability of the parent holding  company under any such guarantee is limited
to  the   lesser   of  5%  of  the   Bank's   assets   at  the  time  it  became
"undercapitalized" or the amount needed to comply with the plan. Furthermore, in
the event of the bankruptcy of the parent holding company,  such guarantee would
take priority over the parent's general unsecured creditors. In addition, FDICIA
requires  the various  regulatory  agencies  to  prescribe  certain  non-capital
standards for safety and executive  compensation and permits  regulatory  action
against a financial institution that does not meet such standards.

Dividend Restrictions - Premier is dependent to a large extent on dividends from
its  Affiliate  Banks for its  revenues.  Various  federal and state  regulatory
provisions  limit the amount of dividends the Affiliate  Bank can pay to Premier
without regulatory approval. At December 31, 1999, approximately $8.0 million of
the total shareholders'  equity of the Affiliate Banks was available for payment
of dividends to Premier without approval by the applicable regulatory authority.

         In addition,  federal bank  regulatory  authorities  have  authority to
prohibit  Premier's  Affiliate  Banks  from  engaging  in an unsafe  or  unsound
practice in conducting their business. The payment of dividends,  depending upon
the financial  condition of the bank in question,  could be deemed to constitute
such an unsafe or unsound  practice.  The ability of the Affiliate  Banks to pay
dividends in the future is presently,  and could be further,  influenced by bank
regulatory  policies and capital  guidelines  as well as each  Affiliate  Bank's
earnings and financial  condition.  Additional  information  regarding  dividend
limitations  can be found in Note 19 of the  accompanying  audited  consolidated
financial statements.

Interstate  Banking - Under the  Riegle-Neal  Interstate  Banking and  Branching
Efficiency Act of 1994 (the "Riegle-Neal Act"), subject to certain concentration
limits,  (i) bank holding  companies,  such a Premier,  are permitted to acquire
banks and bank  holding  companies  located in any state of the  United  States,
subject to certain restrictions,  and (ii) banks are permitted to acquire branch
offices outside their home state by merging with out-of-state banks,  purchasing
branches in other states or establishing de novo branch offices in other states;
provided  that,  in the case of any  such  purchase  or  opening  of  individual
branches,  the host state has adopted  legislation  "opting in" to the  relevant
provisions of the Riegle-Neal Act; and provided further,  that, in the case of a
merger  with a bank  located in another  state,  the host state has not  adopted
legislation "opting out" of the relevant provisions of the Riegle-Neal Act.

Gramm-Leach-Bliley  Act - On November 12, 1999, the  Gramm-Leach-Bliley Act (the
"Act") was signed into law,  breaking down the last  remaining  barriers to full
convergence  of the banking,  securities,  and insurance  industries.  The major
provisions of the Act take effect on March 12, 2000.

     The Act enables a broad-scale consolidation among banks, securities,  firms
and  insurance  companies by creating a new type of financial  services  company
called a "financial  holding  company," a bank holding company with dramatically
expanded  powers.  Financial  holding  companies can offer virtually any type of
financial service, including banking,  securities underwriting,  insurance (both
agency and  underwriting),  and merchant  banking.  Activities  at U. S. banking
organizations are currently  permitted to conduct both domestically and overseas
can be conducted by financial  holding  companies  domestically  (they include a
broad range of financial  activities,  including  operating a travel agency). In
addition,  the Act permits the Federal  Reserve and the Treasury  Department  to
authorize  additional  activities for financial holding  companies,  but only if
they  jointly  determine  that such  activities  are  "financial  in  nature" or
"complementary to financial activities."

     The FRB serves as the primary  "umbrella"  regulator of  financial  holding
companies,  with jurisdiction over the parent company and more limited oversight
over its  subsidiaries.  The primary regulator of each subsidiary of a financial
holding  company  depends  on the  activities  conducted  by the  subsidiary.  A
financial holding company need not obtain FRB approval prior to engaging, either
de novo or through acquisition, in financial activities previously determined to
be  permissible  by the FRB.  Instead,  a financial  holding  company  need only
provide  notice to the FRB within 30 days after  commencing  the new activity or
consummating the acquistion.

     The  Company  is  currently  contemplating  whether  to become a  financial
holding company.

<PAGE>
Number of Employees

         The Company and its  subsidiaries  collectively had  approximately  351
full-time  equivalent  employees as of March 24, 2000. Its executive offices are
located at 115 North Hamilton  Street,  Georgetown,  Kentucky,  telephone number
(502) 863-1955 (facsimile number (502) 863-5604).


Item 2.  Properties

         The Company owns 115 North Hamilton Street in Georgetown,  Kentucky, at
which the  Company's  executive  offices  are  located.  The  Company  also owns
property located at 104 Jefferson Street, Brooksville, Kentucky, which serves as
a branch for Bank of Germantown.  In South Webster, Ohio, Premier owns 110 North
Jackson  Street,  which is the site  occupied  by a branch of Ohio  River  Bank.
Except as noted each of the Banks owns the real  property  and  improvements  on
where their banking activities are conducted.

         Citizens  Deposit  Bank & Trust,  in addition to its main office at 400
Second Street in Vanceburg,  Kentucky,  has five branch offices in Lewis County,
Kentucky,  including one leased facility. The Bank of Germantown,  with its main
office located on Highway 10 in Germantown,  Kentucky, has one branch located in
Bracken County,  Kentucky.  Georgetown Bank & Trust Co., in addition to its main
office at 120 North Hamilton Street in Georgetown, Kentucky, has two branches in
Scott  County,  Kentucky.  Citizens  Bank, in addition to its main office at 648
Main Street in Sharpsburg,  Kentucky, has one additional branch located in Bath,
Kentucky.  Farmers  Deposit  Bank,  in addition to its main office at 5230 South
Main Street in Eminence,  Kentucky, has two branches in Henry County,  Kentucky.
The Sabina Bank,  in addition to its main office at 135 North  Howard  Street in
Sabina,  Ohio,  has two  branches,  one each  located  in  Hardin  and  Auglaize
Counties,  Ohio. Ohio River Bank, in addition to its main office at 221 Railroad
Street in Ironton,  Ohio,  has two  branches,  one each  located in Lawrence and
Scioto Counties, Ohio. The Bank of Philippi, in addition to its main office at 2
South Main Street in Philippi,  West  Virginia,  has a branch  located in Upshur
County,  West Virginia,  and a loan production office located in Barbour County,
West  Virginia.  Boone County Bank,  in addition to its main office at 300 State
Street,  Madison,  West  Virginia,  has a branch  located in Boone County,  West
Virginia,  and a loan production office located in Logan County,  West Virginia.
The Bank of Mt.  Vernon,  in  addition  to its main  office at 112 Saint  George
Street in Richmond,  Kentucky, has two branches in Rockcastle County, one branch
in Pulaski County, and one loan production office in Madison County, Kentucky.

Item 3.  Legal Proceedings

         The Banks are  respectively  parties to legal actions that are ordinary
routine litigation  incidental to a commercial banking business. In management's
opinion,  the outcome of these matters,  individually or in the aggregate,  will
not have a material  adverse  impact on the results of  operations  or financial
position of the Company.

Item 4.  Submission of Matters to a Vote of Security Holders

         There were no matters submitted to a vote of security holders,  through
solicitation  of proxies or  otherwise  during the fourth  quarter of the fiscal
year covered by this report.


<PAGE>



                                     PART II

Item 5.  Market for Registrant's Common Equity and Related Stockholder Matters

         The  Company's  common  stock is listed on the NASDAQ  under the symbol
PFBI. At March 24, 2000, the Company had approximately 822 record holders of its
common shares.

         The following table sets forth on a quarterly basis cash dividends paid
and the range of high and low  sales  prices on a per  share  basis  during  the
quarters indicated. Cash dividends paid per share shown below have been adjusted
retroactively  to  reflect  prior  stock  splits  effected  in the form of share
dividends.


                                              Cash                Sales Price
                                         Dividends Paid         High       Low
 1998:
   First Quarter                             $ 0.15            $25.75     $21.56
   Second Quarter                              0.15             23.50      20.00
   Third Quarter                               0.15             22.50      18.81
   Fourth Quarter                              0.15             19.75      16.50
                                            ---------
                                             $ 0.60


 1999:
   First Quarter                             $ 0.15            $17.50     $14.00
   Second Quarter                              0.15             14.88      12.31
   Third Quarter                               0.15             14.44      11.00
   Fourth Quarter                              0.15             11.88       9.00
                                            ---------
                                             $ 0.60


 2000:
   First Quarter                             *$0.15            $10.00      $8.06


   *Dividend declared March 1, 2000 to shareholders of record as of
    March 20, 2000, payable March 31, 2000.

         The Company has paid  consecutive  quarterly cash  dividends  since its
organization.  The Company's  annual cash dividend has increased  from $0.12 per
share in 1991 to $0.60 per share in 1999. While the Company currently expects to
declare comparable cash dividends in the future,  there can be no assurance that
it will do so. The determination whether to pay cash dividends and the amount of
such dividends is at the discretion of the Company's Board of Directors.

         The  payment of  dividends  by the  Company  depends  largely  upon the
ability of the Banks to declare and pay  dividends  to the  Company  because the
principal  source of the Company's  revenue will be dividends paid by the Banks.
At December 31, 1999,  approximately  $8.0 million was  available for payment as
dividends  from the Banks to the Company  without the need for approval from the
FDIC or the state banking  regulators.  In considering the payment of dividends,
the Board of Directors will take into account the Company's financial condition,
results  of  operations,  tax  considerations,   costs  of  expansion,  industry
standards,  economic  conditions  and need for  funds,  as well as  governmental
policies and regulations applicable to the Company and the Banks.



<PAGE>


Item 6.  Selected Financial Data

The  following  table  presents  consolidated  selected  financial  data for the
Company,  it does not purport to be complete and is qualified in its entirety by
more  detailed  financial  information  and the audited  consolidated  financial
statements contained elsewhere in this annual report. The consolidated  selected
financial data presented  below has been  retroactively  adjusted to reflect all
prior stock dividends and splits effected in the form of share dividends and has
been restated to give the effect of  acquisitions  accounted for as a pooling of
interests.

<TABLE>
<CAPTION>


                                                            At or for the Year Ended December 31,
<S>                                           <C>            <C>             <C>             <C>            <C>
                                              1999           1998            1997            1996           1995
Earnings
   Net interest income                   $      28,665   $      20,107  $      17,458   $      13,454   $       8,021
   Provision for loan losses                     3,294           1,742          1,399             953             314
   Non-interest income                           3,776           4,673          4,562           1,835           1,042
   Non-interest expense                         22,630          15,337         12,232           9,230           6,865
   Income taxes                                  1,927           1,997          2,605           1,588             146
     Net income                          $       4,590   $       5,704  $       5,784   $       3,518   $       1,737

Financial Position
   Total assets                          $     852,468   $     657,744  $     464,890   $     363,739   $     208,502
   Loans, net of unearned
     income                                    570,106         395,620        312,102         265,453         147,321
   Allowance for loan losses                     6,812           4,363          3,479           3,127           2,114
   Goodwill and other intangibles               24,339          21,555          7,262           5,565             345
   Securities                                  170,420         177,192         73,409          58,253          34,924
   Deposits                                    692,843         523,193        358,605         297,116         179,792
   Other borrowings                             73,929          47,670         21,842          15,392           1,502
   Debt                                         28,750          28,750         28,750               0           5,000
   Stockholders' equity                         52,127          54,399         52,007          48,694          19,883

Share Data
   Net income - basic                     $      .88      $     1.09    $      1.11     $       .82     $      0.59
   Net income - diluted                          .88            1.09           1.10             .82            0.59
   Book value                                   9.96           10.40           9.94            9.30            6.78
   Cash dividend                                0.60            0.60           0.55            0.50            0.45

Ratios
   Return on average assets                      .57%            .97%          1.29%           1.22%           1.27%
   Return on average equity                     8.54%          10.80%         11.51%           9.54%          11.47%
   Dividend payout                             68.41%          53.79%         41.60%          51.66%          49.45%
   Stockholders' equity to total
     assets at period-end                       6.11%           8.27%         11.19%          13.39%           9.54%
   Average stockholders' equity
     to average total assets                    6.72%           9.02%         11.21%          12.79%          11.05%

Capital Ratios
   Equity to assets                             6.1%            8.3%          11.2%           13.4%            9.5%
   Leverage ratio                               6.2%            8.1%          13.6%           12.2%           10.0%


</TABLE>



<PAGE>


Item 7.  Management's Discussion and Analysis of Financial Condition and Results
         of Operations

This discussion presents  Management's analysis of the primary factors affecting
Premier Financial Bancorp,  Inc.'s (the "Company" or "Premier")  performance and
financial  condition.  It should be read in  conjunction  with the  accompanying
audited  consolidated  financial  statements  included  in this  report.  Unless
otherwise  noted,  all amounts and per share data have been restated to give the
effect of  acquisitions  accounted  for as a pooling  of  interests.  All dollar
amounts  (except per share data) are  presented  in thousands  unless  otherwise
noted.

FORWARD-LOOKING STATEMENTS

Management's  discussion and analysis contains  forward-looking  statements that
are provided to assist in the  understanding  of  anticipated  future  financial
performance.  However,  such performance  involves risks and uncertainties,  and
there are certain  important  factors  that may cause  actual  results to differ
materially from those anticipated.  These important factors include, but are not
limited to, economic  conditions  (both  generally and more  specifically in the
markets in which Premier  operates),  competition  for Premier's  customers from
other  providers of financial  services,  government  legislation and regulation
(which changes from time to time), changes in interest rates,  Premier's ability
to  originate  quality  loans and  attract  and retain  deposits,  the impact of
Premier's  growth,  Premier's  ability  to  control  costs,  and new  accounting
pronouncements,  all of which are  difficult  to  predict  and many of which are
beyond the control of Premier.

OVERVIEW

In 1999,  Premier  continued to pursue its strategic  plan to build a network of
independently  managed community banks into a well capitalized,  risk controlled
bank holding company with quality earnings and shareholder liquidity.  For 1999,
net income was $4,590  compared to $5,704 for 1998;  total  assets  increased to
$852,468  from the  $657,744 in 1998,  and  shareholders'  equity  decreased  to
$52,127 from $54,399 in 1998.

Quarterly  unaudited  financial  information for the Company for the years ended
December 31, 1999 and 1998, is summarized as follows:


<PAGE>


                         Quarterly Financial Information
                (Dollars in thousands except per share amounts)

<TABLE>
<CAPTION>


                                                                                                           Full
                                                         First       Second       Third       Fourth       Year
<S>                                                      <C>         <C>          <C>         <C>          <C>

   1999
             Interest Income                              $14,785      $15,672     $15,936     $16,479      $62,872
             Interest Expense                               8,067        8,427       8,541       9,172       34,207
             Net Interest Income                            6,718        7,245       7,395       7,307       28,665
             Provision for Loan Losses                        474          621       1,648         551        3,294
             Securities Gains                                  31         (26)           2          10           17
             Net Overhead                                   4,613        4,737       4,626       4,895       18,871
             Income before Income Taxes                     1,662        1,861       1,123       1,871        6,517
             Net Income                                     1,218        1,311         771       1,290        4,590
             Basic Net Income per share                      0.23         0.25        0.15        0.25         0.88
             Diluted Net Income per share                    0.23         0.25        0.15        0.25         0.88
             Dividends Paid per share                        0.15         0.15        0.15        0.15         0.60
   1998
             Interest Income                               $9,835      $10,605     $12,456     $12,454      $45,350
             Interest Expense                               5,279        5,887       7,183       6,894       25,243
             Net Interest Income                            4,556        4,718       5,273       5,560       20,107
             Provision for Loan Losses                        276          720         299         447        1,742
             Securities Gains                                   2          141           8          73          224
             Net Overhead                                   2,676        1,702       3,186       3,324       10,888
             Income before Income Taxes                     1,606        2,437       1,796       1,862        7,701
             Net Income                                     1,381        1,642       1,291       1,390        5,704
             Basic Net Income per share                      0.26         0.31        0.25        0.27         1.09
             Diluted Net Income per share                    0.26         0.31        0.25        0.27         1.09
             Dividends Paid per share                        0.15         0.15        0.15        0.15         0.60

</TABLE>

ACQUISITIONS

Premier's  acquisition  philosophy  is to  seek  community  bank  candidates  in
primarily  non-urban  areas that can become a part of Premier on a  non-dilutive
basis within a two-year  timeframe.  In  evaluating  acquisition  opportunities,
Premier  conducts a due  diligence  review to determine  both risks and earnings
potential.   Desirable   candidates  have  an  established   base  of  community
involvement,   strong  local  directors,  a  history  of  earnings  and  readily
identifiable asset risks. Acquisition transactions are structured to make a fair
return  on  investment  while  meeting  the needs of the  shareholders  of banks
joining Premier.

In 1999,  Premier  completed one  acquisition.  On January 20, 1999, the Company
acquired Mount Vernon  Bancshares and its wholly owned  subsidiary,  Bank of Mt.
Vernon, with offices in Somerset, Mt. Vernon, Berea and Richmond, Kentucky, in a
cash transaction that was accounted for as a purchase.

In 1998,  Premier  completed  acquisitions  of three  banks.  On March 20, 1998,
Premier acquired Ohio River Bank, located in Ironton,  Ohio, in a share exchange
accounted for as a pooling of interests. On June 26, 1998, the Company chartered
Boone County Bank,  Inc. in Madison,  West  Virginia,  and The Bank of Philippi,
Inc. in  Philippi,  West  Virginia,  for the purpose of  acquiring  three branch
offices of Banc One  Corporation  located in  Madison,  Van and  Philippi,  West
Virginia.


<PAGE>


In 1997,  Premier  completed one  acquisition and also acquired the deposits and
banking  facilities of two branches.  On November 13, 1997, Premier acquired The
Sabina Bank,  Sabina,  Ohio, in a share  exchange  accounted for as a pooling of
interests.  On December 11, 1997,  two branch offices of the Fifth Third Bank of
Western Ohio located in  Waynesfield  and Ada,  Ohio were  acquired for cash and
accounted for as a purchase.

The  significant  financial data relative to these  acquisitions is set forth in
Note 2 to the financial statements.

On June 9, 1997,  Premier  completed  its public  offering of $28.75  million of
mandatorily  redeemable  capital  securities  of  a  subsidiary  trust  (capital
securities).  These securities  qualify as Tier I capital up to an amount not to
exceed 25% of Tier I capital and the  portion  that  exceeds the 25%  limitation
qualifies as Tier 2 capital.

RESULTS OF OPERATIONS

Earnings Summary

Premier  recorded  net income for 1999 of $4,590,  versus  $5,704 and $5,784 for
1998 and 1997.  Basic  earnings per common share were $0.88 in 1999  compared to
$1.09 in 1998 and  $1.11 in 1997.  Primary  increases  can be  attributed  to an
increase  in net  interest  income from  $20,107 in 1998 to $28,665 in 1999,  an
increase of $8,558 or 42.6%,  and a decrease in provision  for income taxes from
$1,997 in 1998 to $1,927 in 1999, a difference of $70 or 3.5%.  Offsetting these
increases  was an increase in the  provision for loan losses from $1,742 in 1998
to $3,294 in 1999, an increase in noninterest  expense of $7,293 from $15,337 in
1998 to $22,630 in 1999, and a decrease in other income of $1,167 from $2,396 in
1998 to $1,229 in 1999.

Net income of $5,704 in 1998 represented a 1.4% decrease from the 1997 amount of
$5,784.  Net interest income  increased from $17,458 in 1997 to $20,107 in 1998,
an increase of $2,649 or 15.2%,  and the  provision  for income taxes  decreased
from $2,605 in 1997 to $1,997 in 1998, a difference of $608 or 23.3%. Offsetting
these  increases was an increase in the provision for loan losses from $1,399 in
1997 to $1,742 in 1998 and an  increase  in  noninterest  expense of $3,105,  or
25.4%, from $12,232 in 1997 to $15,337 in 1998.


NET INTEREST INCOME

Premier's  primary  source of revenue is its net interest  income,  which is the
difference  between the interest received on its earning assets and the interest
paid on the funds acquired to support those assets. Loans made to businesses and
individuals  are the primary  interest  earning  assets,  followed by investment
securities  and federal funds sold in the  inter-bank  market.  Deposits are the
primary  interest  bearing  liabilities  used to support  the  interest  earning
assets.

The level of net  interest  income is affected by both the  balances  and mix of
interest earning assets and interest bearing  liabilities,  the changes in their
corresponding  yields and costs, by the volume of interest earning assets funded
by non interest bearing deposits, and the level of capital.  Premier's long term
objective  is to manage this income to provide  the largest  possible  amount of
income while balancing interest rate, credit and liquidity risks.



<PAGE>


Nontaxable  income  from  loans and  investment  securities  is  presented  on a
tax-equivalent  basis whereby income exempt from tax has been adjusted upward by
an amount equivalent to the prevailing federal income taxes that would have been
paid if the income had been fully taxable. The discussion of factors influencing
net interest income that follows is based on taxable equivalent data. In each of
the three years,  this adjustment is based on an assumed federal income tax rate
of 34%.

                         Summary of Net Interest Income
              (Dollars in thousands on a taxable equivalent basis)
<TABLE>
<CAPTION>

                                                                         1999             1998            1997
<S>                                                                 <C>              <C>             <C>

Interest income..........................................           $      62,872    $      45,350   $      36,851
Tax equivalent adjustment................................                     726              608             516
                                                                    -------------    -------------   -------------
    Interest income......................................                  63,598           45,958          37,367
Interest expense.........................................                  34,207           25,243          19,393
                                                                    -------------    -------------   -------------
    Net interest income..................................           $      29,391    $      20,715   $      17,974
                                                                    =============    =============   =============
</TABLE>


The following  table shows,  for the three year period ended  December 31, 1999,
the average distribution of assets,  liabilities and the interest earned or paid
on those  items  together  with the  level of  shareholders'  equity  as well as
Premier's net interest spread and net interest margin on interest earning assets
(net interest income divided by average earning assets). In 1999, tax equivalent
net interest  income  increased to $29,391 from $20,715 in 1998,  an increase of
$8,676 or 41.9%.  This  increase  was due to an increase of $188,915 or 35.1% in
average earning assets and an increase of $197,897 or 41.7% in average  interest
bearing  liabilities.  The yield on earning assets in 1999 of 8.74% was 21 basis
points  higher than the 8.53% earned in 1998,  and the cost of interest  bearing
liabilities  decreased  23 basis  points  to 5.09% in 1999  from  5.32% in 1998.
Consequently,  Premier's  net interest  spread  increased  from 3.21% in 1998 to
3.65% in 1999 and the net interest margin  increased from 3.85% in 1998 to 4.04%
in 1999.  The  increase  in net  interest  spread  and net  interest  margin  is
primarily  attributable  to the placement of funds in higher  yielding loans and
the overall lowering of the cost of interest bearing liabilities.

In 1998, tax equivalent net interest income increased to $20,715 from $17,974 in
1997,  an increase of $2,741 or 15.2%.  This  increase was due to an increase of
$119,241 or 28.4% in average earning assets and an increase of $114,899 or 31.9%
in average interest bearing liabilities.  The yield on earning assets in 1998 of
8.53% was 38 basis points  lower than the 8.91% earned in 1997,  and the cost of
interest  bearing  liabilities  decreased  7 basis  points to 5.32% in 1998 from
5.39% in 1997.  Premier's net interest  spread  decreased  from 3.52% in 1997 to
3.21% in 1998 and the net interest margin  decreased from 4.28% in 1997 to 3.85%
in 1998.  The  decrease  in net  interest  spread  and net  interest  margin  is
primarily  attributable  to the  acquisition  of the deposit  liabilities of the
three West Virginia branches.  Proceeds from these branches were placed in lower
yielding assets until higher yielding assets could be generated.


<PAGE>


The  following  table  presents  average  balances  and  interest  rates for the
three-year period ended December 31, 1999.

              Average Consolidated Balance Sheets and Net Interest
                                    Analysis
                             (Dollars in thousands)
<TABLE>
<CAPTION>



                                                   1999                            1998                             1997
                                      Average               Average    Average               Average    Average              Average
                                      Balance    Interest     Rate     Balance   Interest     Rate      Balance   Interest     Rate
<S>                                  <C>        <C>            <C>    <C>        <C>           <C>     <C>        <C>          <C>
Assets:
  Interest earning assets
  U.S. Treasury and federal agency
    Securities                       $ 152,454  $    9,213     6.04%  $ 139,655  $   8,249     5.91%   $  92,530  $   5,679    6.14%
  States and municipal obligations(1)   23,906       1,920     8.03      19,223      1,556     8.09       18,027      1,455    8.07
  Other securities (1)                   6,839         577     8.44       5,953        565     9.49        5,155        507    9.84
                                     ---------  ----------  -------   ---------  ---------  -------    ---------  ---------  ------
     Total investment securities     $ 183,199  $   11,710     6.39   $ 164,831  $  10,370     6.29    $ 115,712  $   7,641    6.60
  Federal funds sold                    20,909       1,047     5.01      31,667      1,686     5.32       18,572      1,037    5.58
  Interest-bearing deposits with
      Banks                              3,273         192     5.87       2,146        115     5.36            0          0       0
  Loans, net of unearned income(3)(4)
    Commercial                         211,948      20,200     9.53     144,557     14,284     9.88      118,530     11,944   10.08
    Real estate mortgage               241,708      23,065     9.54     145,004     14,208     9.80      120,863     11,640    9.63
    Installment                         66,611       7,384    11.09      50,528      5,295    10.48       45,815      5,105   11.14
                                     ---------  ----------  -------   ---------  ---------  -------    ---------  ---------  ------
       Total loans                   $ 520,267  $   50,649     9.74   $ 340,089  $  33,787     9.93    $ 285,208  $  28,689   10.06

Total interest-earning assets        $ 727,648  $   63,598     8.74%  $ 538,733  $  45,958     8.53%   $ 419,492  $  37,367    8.91%
Allowance for loan losses               (6,084)                          (3,936)                          (3,256)
Cash and due from banks                 21,794                           17,657                           10,083
Premises and equipment                  14,120                            9,850                            7,034
Other assets                            41,395                           23,280                           14,734
                                     ---------                        ---------                        ---------
   Total assets                      $ 798,873                        $ 585,584                        $ 448,087

Liabilities:
  Interest bearing deposits:
    NOW and money market             $ 150,165  $    5,475     3.65%  $  93,741  $   3,268     3.49%   $  51,268  $   1,733    3.38%
    Savings                             63,227       1,961     3.10      51,818      1,525     2.94       32,671        968    2.96
    Certificates of deposit and other
      time deposits                    368,720      20,372     5.53     251,047     14,666     5.84      195,177     11,495    5.89
                                     ---------  ----------  -------   ---------  ---------  -------    ---------  ---------  ------
     Total interest-bearing deposits $ 582,112  $   27,808     4.78   $ 396,606  $  19,459     4.91    $ 279,116  $  14,196    5.09
    Other borrowings                    28,977       1,754     6.05      18,271      1,194     6.53       49,993      2,755    5.51
    FHLB advances                       32,826       1,793     5.46      31,141      1,738     5.58       14,301        810    5.66
    Debt                                28,750       2,852     9.91      28,750      2,852     9.91       16,460      1,632    9.91
                                     ---------  ----------  -------   ---------  ---------  -------    ---------  ---------  ------

  Total interest-bearing liabilities $ 672,665  $   34,207     5.09%  $ 474,768  $  25,243     5.32%   $ 359,870  $  19,393    5.39%

  Non-interest bearing demand deposits  66,483                           54,043                           34,462
  Other liabilities                      6,005                            3,949                            3,514
                                     ---------                        ---------                        ---------
        Total liabilities            $ 745,153                        $ 532,760                        $ 397,846

Shareholders' Equity:                   53,720                           52,824                           50,241

Total liabilities and shareholders'
   Equity                            $ 798,873                        $ 585,584                        $ 448,087

Net interest income (1)                             29,391                          20,715                           17,974

Net interest spread (1)                                        3.65%                           3.21%                           3.52%
Net interest margin (1)                                        4.04%                           3.85%                           4.28%
</TABLE>
(1) Taxable - equivalent yields are calculated assuming a 34% federal income
    tax rate.
(2) Yields are calculated on historical cost except for yields on marketable
    equity securities that are calculated using fair value.
(3) Includes loan fees, immaterial in amount, in both interest income and the
    calculation of yield on loans.
(4) Includes loans on nonaccrual status.


<PAGE>


The  accompanying  analysis of changes in net interest  income in the  following
table shows the relationship of the volume and rate portions of these changes in
1999 and 1998.

                           Analysis of Changes in Net
                                 Interest Income
              (Dollars in thousands on a taxable equivalent basis)

<TABLE>
<CAPTION>

                                                      1999 vs. 1998                              1998 vs. 1997
                                          Increase (decrease) due to change in       Increase (decrease) due to change in

                                                                          Net                                       Net
                                           Volume         Rate           Change       Volume         Rate          Change
<S>                                     <C>           <C>            <C>           <C>           <C>           <C>
Interest Income:
Loans                                   $    17,554   $      (692)   $    16,862   $     5,456   $      (358)  $     5,098
Investment securities                         1,172           169          1,341         3,105          (377)        2,728
Federal funds sold                             (544)          (95)          (639)          699           (50)          649
Deposits with banks                              65            12             77           115                         115
                                        -----------   -----------    -----------   -----------   -----------   -----------
    Total interest income               $    18,247   $      (606)   $    17,641   $     9,375   $      (785)  $     8,590

Interest Expense:
Deposits -
  NOW and money market                  $     2,051   $       156    $     2,207   $     1,479   $        56   $     1,535
  Savings                                       350            86            436           564            (7)          557
  Certificates of deposit                     6,540          (834)         5,706         3,265           (94)        3,171
  Other borrowings                              654           (94)           560        (1,999)          438        (1,561)
  FHLB borrowings                                93           (37)            56           939           (12)          927
  Debt                                            -             -              -         1,219             1         1,220
                                        -----------   -----------    -----------   -----------   -----------   -----------
    Total interest expense              $     9,688   $      (723)   $     8,965   $     5,467   $       382   $     5,849

       Net interest income              $     8,559   $       117    $     8,676   $     3,908   $    (1,167)  $     2,741
</TABLE>


PROVISION AND ALLOWANCE FOR POSSIBLE LOAN LOSSES

The company  maintains its allowance for possible loan losses  (allowance)  at a
level  that is  considered  sufficient  to absorb  potential  losses in the loan
portfolio.  The allowance is increased by the provision for possible loan losses
as well as recoveries of previously  charged-off loans, and is decreased by loan
charge-offs.  The  provision is the  necessary  charge to expense to provide for
current  loan  losses  and  to  maintain  the  allowance  at an  adequate  level
commensurate  with  management's  evaluation  of the risks  inherent in the loan
portfolio.  Various  factors  are  taken  into  consideration  when the  Company
determines the amount of the provision and the adequacy of the  allowance.  Some
of the factors include:

o Past due and nonperforming assets;
o Specific internal analyses of loans requiring special attention;
o The current level of regulatory  classified  and  criticized  assets and the
  associated  risk factors with each;
o Examinations and reviews by the Company's independent accountants and internal
  loan review personnel;  and
o Examinations of the loan portfolio by federal and state regulatory agencies.

The data  collected  from these  sources  is  evaluated  with  regard to current
national and local economic trends,  prior loss history,  underlying  collateral
values,  credit  concentrations,  and industry  risks.  An estimate of potential
future loss on specific loans is developed in  conjunction  with an overall risk
evaluation of the total loan portfolio.


<PAGE>


The following  table is a summary of the Company's loan loss experience for each
of the past five years.

                         Summary of Loan Loss Experience
                             (Dollars in Thousands)
<TABLE>
<CAPTION>


                                                                               Years Ended December 31,
                                                        -----------------------------------------------------------------------

                                                            1999          1998          1997           1996           1995
<S>                                                     <C>           <C>           <C>           <C>             <C>
Balance at beginning of year                            $     4,363   $     3,479   $     3,127   $      2,113    $      1,172
Balance of allowance for loan losses of
  Acquired subsidiaries at acquisition date                   1,310           115             -            812             803
Amounts charged off:
   Commercial                                                 1,380           500           532            252              74
   Real estate mortgage                                         381            60           139             68              19
   Consumer                                                     795           629           634            656             181
                                                        -----------   -----------   -----------   ------------    ------------
     Total loans charged off                            $     2,556   $     1,189   $     1,305   $        976    $        274

Recoveries on amounts previously charged off:
   Commercial                                                   158            45            48             91              32
   Real estate mortgage                                          12             1             -              4               2
   Consumer                                                     231           170           210            130              64
                                                        -----------   -----------   -----------   ------------    ------------
     Total recoveries                                           401           216           258            225              98

Net charge-offs                                               2,155           973         1,047            751             176
Provision for loan losses                                     3,294         1,742         1,399            953             314
                                                        -----------   -----------   -----------   ------------    ------------
Balance at end of year                                  $     6,812   $     4,363   $     3,479   $      3,127    $      2,113

Total loans, net of unearned income:
   Average                                                  520,267       340,089       285,208        207,006         117,947
   At December 31                                           570,106       395,620       312,102        265,453         147,321

As a percentage of average loans:
   Net charge-offs                                              .41%          .29%          .37%         .36%             .15%
   Provision for possible loan losses                           .63%          .51%          .49%         .46%             .27%
Allowance as a percentage of year-end net loans                1.19%         1.10%         1.11%        1.18%            1.43%
Allowance as a multiple of net charge-offs                        3             4             3             4              12
</TABLE>


The provision for possible loan losses for 1999 was $3,294 compared to $1,742 in
1998,  an increase of $1,552.  This  increase can be mainly  attributed  to loan
growth,  additional  charge-offs,  and  the  additional  provision  of  $950,000
recorded in the quarter ended September 30, 1999. This additional  provision was
deemed prudent after revision of loan loss reserve adequacy measurement methods.
In 1999, net  charge-offs  were $2,155  compared to $973 in 1998, an increase of
$1,182.  The increase in 1999 net  charge-offs  is primarily  attributed  to one
fraud loss and small  business  lending  losses in one of the Company's  markets
which experienced an economic  downturn.  Also contributing to the 1999 increase
were net charge-offs in connection with the Mt. Vernon purchase. At December 31,
1999, Premier's allowance for possible loan losses was 1.19% of period-end loans
compared to 1.10% at December 31, 1998.


<PAGE>



Net  charge-offs  to average  loans were .41% for the year 1999 compared to .29%
for the year 1998. At December 31, 1999,  Premier's  allowance for possible loan
losses totaled  $6,812,  representing  an increase of $2,449 over the amount for
December  31,  1998.   The  allowance  for  possible  loan  losses  was  98%  of
nonperforming  loans on December 31, 1999, compared to 89% at December 31, 1998.
At year end 1999,  nonperforming  loans  represented  1.22% of total outstanding
loans, down from 1.25% on December 31, 1998.

The following table sets forth an allocation for the allowance for possible loan
losses by category of loan and a percentage of loans in that category. In making
the  allocation,  consideration  was  given  to  such  factors  as  management's
evaluation of risk in each category,  current economic conditions and charge-off
experience.  An  allocation  for the  allowance  for possible  loan losses is an
estimate  of the  portion  of the  allowance  that will be used to cover  future
charge-offs in each major loan category, but it does not preclude any portion of
the  allowance  allocated  to one type of loan  being  used to absorb  losses of
another loan type.

                 Allocation of the Allowance for Loan Losses and
                         Percent of Loans to Total Loans
                             (Dollars in thousands)
<TABLE>
<CAPTION>



                                                                    At December 31,
                       -----------------------------------------------------------------------------------------------------------


                              1999                  1998                 1997                  1996                   1995
                        Amount       %        Amount       %       Amount       %        Amount       %          Amount       %
<S>                    <C>          <C>      <C>          <C>    <C>           <C>      <C>          <C>       <C>           <C>
Commercial             $ 2,123      20.6%    $ 1,695      22.5%   $ 1,226      27.0%    $ 1,066       18.5%    $    704        19.6%
Real estate mortgage     2,490      61.9       1,728      57.8        732      51.1       1,229       60.7          616        58.3
Consumer                   948      17.5         738      19.7        965      21.9         739       20.8          620        22.1
Unallocated              1,251        --         202        --        556        --          93         --          174          --
                       -------     -----     -------     -----    -------     -----     -------      -----     --------       -----
  Total                $ 6,812     100.0%    $ 4,363     100.0%   $ 3,479     100.0%    $ 3,127      100.0%    $  2,114       100.0%
</TABLE>



Any  reallocation  of the  allowance is primarily  indicative of changes in loan
portfolio  mix,  not  changes  in loan  concentrations  or  terms.  The  Company
considers  quality in regards to  specific  loans when  determining  an adequate
allowance  allocation.  The level of increase in nonperforming  loans,  which is
more specifically addressed in the nonperforming loan section, is believed to be
temporary and should not materially affect the allowance.

NONINTEREST INCOME AND EXPENSES

Noninterest income is a significant component of the Company's total income. The
Company  continues  to develop and enhance  existing  products and to create new
products  in order to  augment  fee income as trends in the  financial  services
industry and the economic  environment continue to put pressure on the Company's
ability to increase its net interest income. Noninterest income includes deposit
service  charges,  fees  from  data  processing  and  trust  services,  fees and
commissions  from many other  corporate and retail products and gains and losses
from the sale of investment securities.

<PAGE>

Total  fees and other  income  in 1999  increased  $641 or 20.6% to $3,759  from
$3,118 in 1998.  Service charges on deposit accounts  increased 24.0% or $380 to
$1,965  from $1,585 in 1998.  Insurance  commissions  increased  20.7% and other
income increased 15.4%.

Total  fees and other  income  increased  $759 or 32.2% in 1998 to  $3,118  from
$2,359 in 1997.  Service  charges on deposit  accounts  increased  25.7% and all
other income increased 73.2%.

Gains on the sale of investment  securities in 1999 were $17, a decrease of $207
from 1998.

Investment  securities gains in 1998 were $224 versus $2,203 in 1997. The amount
in 1997 was primarily due to the unwinding of an arbitrage  investment portfolio
established  to maximize  the  utilization  of the  proceeds  received  from the
issuance of capital securities.

Premier  recognized  a $1.3 million  finder's  fee during the second  quarter of
1998. Received in cash and without recourse, the fee is the Company's portion of
an agreement to assist  another  financial  institution  in connection  with the
acquisition  and subsequent  resale of several  branches of Banc One Corporation
located in West Virginia.  There was no similar  non-recurring fee recognized in
1999.

Noninterest  expenses increased $7,293 or 47.6% in 1999, from $15,337 in 1998 to
$22,630 in 1999, and increased $3,105 or 25.4% in 1998 from $12,232 in 1997.

Salaries and employee  benefits,  the largest component of noninterest  expense,
increased  53.0%  in 1999  and  23.4%  in 1998.  The  increases  include  salary
increases and reflect increases in the number of full time equivalent  employees
from 177 at December  31,  1997 to 273 at December  31, 1998 and 351 at December
31, 1999, due to acquisitions and expansion of the Company's  business activity.
1999  was the  first  full  year  of  salaries  and  employee  benefits  expense
associated with the mid year 1998 purchase of the West Virginia  branches.  Also
contributing  to the 1999 increase was the January 20, 1999  acquisition  of Mt.
Vernon Bancshares.

Occupancy and equipment expense for 1999 of $2,885 was $704 or 32.3% higher than
the $2,181 for 1998. The increase in 1998 was $547 or 33.5% from $1,634 in 1997.
The increase in 1998 and 1999 are primarily attributable to the expansion in the
number of banking  locations  from 23 at December  31, 1997 up to 30 at December
31, 1999.

Other  noninterest  expense,  which is the second  largest  category,  increased
$1,703 or 50.1% in 1999 and $801 or 30.9% in 1998.  This  increase  includes the
addition  of the  purchased  West  Virginia  branches  in June  1998  and  their
respective  operating  expenses as full service banks. Also included in the 1999
increases are the  respective  costs  acquired  with the Mt.  Vernon  Bancshares
purchase.

Premier incurred no acquisition-related expenses in 1999.

The Company  incurred  expenses  relating to the acquisitions of Ohio River Bank
and the West  Virginia  branches of $132 in 1998.  Acquisition  expenses of $482
were incurred in 1997.  Expenses  related to acquisitions are charged to expense
for  acquisitions  accounted for as pooling of interests while certain  expenses
related  to  acquisitions  accounted  for  as  purchases  are  capitalized  as a
component of the purchase price and  ultimately  increase the amount of goodwill
included with the purchase.


<PAGE>


Amortization of intangibles  increased $643 or 65.5% to $1,625 for 1999 from the
1998  amount of $982.  The 1998 amount is an increase of $596 from the amount of
$386 in 1997.  Both the 1999 and 1998  increases  are  primarily  attributed  to
goodwill  amortization of intangible cost regarding  branch  acquisitions  along
with the purchase of Mt. Vernon Bancshares.

The Company  continually  seeks to develop  fees and other  income for  services
provided  while holding  operating  expenses to the minimum  amount  required to
provide quality  service.  In 1999,  total net noninterest  expenses  (excluding
investment  securities gains, finders fee and acquisition expenses) as a percent
of average total assets were 2.36%, compared to 2.06% in 1998 and 2.10% in 1997.

The  following  table is a summary of  non-interest  income and  expense for the
three-year period indicated.

                                        Non-Interest Income and Expense
                                            (Dollars in thousands)
<TABLE>
<CAPTION>


                                                                             Increase                                Increase
                                                                            (decrease)                              (decrease)
                                                                             1999 vs.                                1998 vs.
                                                     1999         1998         1998          1998         1997         1997
                                                  ---------    ---------    -----------  ---------     ---------    -----------
<S>                                               <C>          <C>          <C>          <C>           <C>          <C>
Non-Interest Income:
   Service charges on deposit accounts            $   1,965    $   1,585    $       380  $   1,585     $   1,261    $       324
   Insurance income                                     565          468             97        468           483            (15)
   Other                                              1,229        1,065            164      1,065           615            450
                                                  ---------    ---------    -----------  ---------     ---------    -----------
      Total fees and other income                 $   3,759    $   3,118    $       641  $   3,118     $   2,359    $       759
   Investment securities gains                           17          224           (207)       224         2,203         (1,979)
   Finders Fee                                            -        1,331         (1,331)     1,331             0          1,331
                                                  ---------    ---------    ------------ ---------     ---------    -----------
        Total non-interest income                 $   3,776    $   4,673    $      (897) $   4,673     $   4,562    $       111

Non-Interest Expense:
   Salaries and employee benefits                    11,679        7,634          4,045      7,634         6,185          1,449
   Occupancy and equipment expense                    2,885        2,181            704      2,181         1,634            547
   Professional fees                                    547          452             95        452           504            (52)
   Taxes, other than payroll, property
      and income                                        794          559            235        559           445            114
   Acquisition related expenses                           -          132           (132)       132           482           (350)
   Amortization of intangibles                        1,625          982            643        982           386            596
   Other expenses                                     5,100        3,397          1,703      3,397         2,596            801
                                                  ---------    ---------    -----------  ---------     ---------    -----------
      Total non-interest expenses                 $  22,630    $  15,337    $     7,293  $  15,337     $  12,232    $     3,105

Net non-interest expenses as a percent
   of average assets                                  2.36%        1.82%                     1.82%         1.71%
Net non-interest expenses as a percent
   of average assets (excluding investment
    securities gains,  finders fee, and
    acquisition related expenses)                     2.36%        2.06%                     2.06%         2.10%


</TABLE>


<PAGE>


INCOME TAXES

The Company's  provision for income taxes was $1,927 in 1999, which  represented
29.6% of  pre-tax  income  versus  $1,997 in 1998.  The  decrease  is  primarily
attributed to the decrease in income before income taxes.

Premier's provision for income taxes was $1,997 in 1998, which represented 25.9%
of pre-tax income versus $2,605 or 31.1% of pre-tax income in 1997. The decrease
is primarily due to the higher  percentage  of tax-exempt  income in relation to
total pre-tax income and the elimination of the valuation  allowance of $235 for
deferred tax assets at Ohio River Bank.

                               FINANCIAL CONDITION
Lending Activities

Loans are the  Company's  primary use of financial  resources  and represent the
largest component of earning assets.  The Company's loans are made predominantly
within the Banks' market areas and the portfolio is diversified.  Credit risk is
inherent in each financial  institution's loan and investment  portfolio.  In an
effort to minimize  credit risk,  the Company  utilizes a credit  administration
network,  including specific lending authorities for each loan officer, a system
of loan  committees  to review and approve  loans,  and a loan review and credit
quality rating system.  This network assists in the evaluation of the quality of
new loans and in the  identification of problem or potential problem credits and
provides  information  to aid  management  in  determining  the  adequacy of the
allowance for possible loan losses.

Total loans,  net of unearned  income,  averaged  $520,267 in 1999 compared with
$340,089  in 1998.  At year end  1999,  loans  net of  unearned  income  totaled
$570,106  compared to $395,620 at December 31, 1998,  an increase of $174,486 or
44.1%.

The  following  table  presents a summary of the  Company's  loan  portfolio  by
category for each of the last five years. Other than the categories noted, there
is no  concentration  of loans in any industry greater than 5% in the portfolio.
The Company has no foreign loans or highly  leveraged  transactions  in its loan
portfolio.

                           LOAN PORTFOLIO COMPOSITION

                                Loans Outstanding
                             (Dollars in thousands)
<TABLE>
<CAPTION>


                                                                     December 31
                                  1999     %         1998        %        1997     %         1996        %       1995        %
<S>                           <C>        <C>     <C>         <C>      <C>         <C>      <C>         <C>     <C>         <C>
Commercial, secured by real
 estate                       $135,078   23.7%   $ 86,010    21.6%    $ 71,818    22.8%    $ 63,179    23.6%   $ 39,724    26.8%
Commercial, other               98,543   17.3      73,982    18.6       48,309    15.4       37,609    14.1      22,115    14.9
Real estate construction        26,092    4.6      13,374     3.4        8,352     2.7        4,523     1.7       2,495     1.7
Real estate mortgage           192,088   33.6     131,212    33.0      103,664    33.0       94,844    35.4      44,215    29.8
Agricultural                    17,525    3.1      15,433     3.9       13,232     4.2       11,751     4.4       6,924     4.7
Consumer                       100,075   17.5      73,100    18.4       68,461    21.8       54,160    20.2      32,362    21.8
Other                            1,352    0.2       4,502     1.1          674      .2        1,493      .6         435     0.3
                              --------   ----    --------    ----     --------    ----     --------    ----    --------   -----
  Total loans                 $570,753   100.0%  $397,613    100.0%   $314,510    100.0%   $267,559    100.0%  $148,270   100.0%

  Less unearned income            (647)            (1,993)              (2,408)              (2,106)               (949)
                              --------           --------             --------             --------            --------

     Total loans net of
        unearned income       $570,106           $395,620             $312,102             $265,453            $147,321
</TABLE>



<PAGE>



Commercial loans generally are made to  small-to-medium  size businesses located
within a Bank's defined market area and typically are secured by business assets
and  guarantees of the principal  owners.  Collateral  for real estate  mortgage
loans include  residential  properties and the loans generally do not exceed 80%
of the value of the real property securing the loan based on recent  independent
appraisals. The Company's real estate mortgage loan portfolio primarily consists
of adjustable rate residential mortgage loans. The origination of these mortgage
loans can be more difficult in a low interest rate environment  where there is a
significant  demand  for  fixed  rate  mortgages.  A  number  of  the  banks  do
participate in the origination of loans into the secondary  market and recognize
the  referral  fees into other  income.  Consumer  loans  generally  are made to
individuals  living in a Bank's  defined market area who are known to the Bank's
staff.  Consumer  loans are made for terms of up to seven  years on a secured or
unsecured  basis.  While  consumer  loans  generally  provide the  Company  with
increased interest income, consumer loans may involve a greater risk of default.
Loss experience in all categories has been at an acceptable  level over the past
five years,  with net charge-offs  being .41% of loans in 1999 and .29% in 1998.
With respect to consumer loans in particular, net charge-offs for the year ended
December 31, 1999 were $564,  or .56% of total  consumer  loans  outstanding  at
December 31, 1999, and $460 in 1998, or .63% of total consumer loans outstanding
at December 31, 1998.

The  following  table  sets  forth  the  maturity   distribution   and  interest
sensitivity  of selected loan  categories at December 31, 1999.  Maturities  are
based upon contractual terms. The Company's policy is to specifically review and
approve any loan renewed; no loans are automatically rolled over.


                    Loan Maturities and Interest Sensitivity
                                December 31, 1999
                             (Dollars in thousands)
<TABLE>
<CAPTION>



                                                       One Year      One Through        Over            Total
                                                       or Less        Five Years     Five Years         Loans
<S>                                                  <C>            <C>             <C>            <C>
Commercial, secured by real estate                   $     92,557   $     37,341    $      5,180   $    135,078

Commercial, other                                          78,267         16,816           3,460         98,543

Real estate construction                                   19,143          5,846           1,103         26,092

Agricultural                                               17,525              -               -         17,525
                                                     ------------   ------------    ------------   ------------

    Total                                            $    207,492   $     60,003    $      9,743   $    277,238
                                                     ============   ============    ============   ============


Fixed rate loans                                     $    157,528   $     60,003    $      9,743   $    227,274

Floating rate loans                                        49,964              -               -         49,964
                                                     ------------   ------------    ------------   ------------

    Total                                            $    207,492   $     60,003    $      9,743   $    277,238
                                                     ============   ============    ============   ============
</TABLE>

<PAGE>


Nonperforming assets

Nonperforming  assets consist of loans on which  interest is no longer  accrued,
certain  restructured  loans  where  interest  rate or  other  terms  have  been
renegotiated,  accruing loans past due 90 days or more and real estate  acquired
through  foreclosure.  All loans considered impaired under SFAS 114 are included
in nonperforming loans.

The Company generally  discontinues the accrual of interest on loans that become
90 days past due as to principal or interest unless they are adequately  secured
and in the process of  collection.  A loan remains in a nonaccrual  status until
doubts concerning the  collectibility no longer exist. A loan is classified as a
restructured  loan when the interest rate is  materially  reduced or the term is
extended  beyond the  original  maturity  date  because of the  inability of the
borrower  to service  the loan under the  original  terms.  Other real estate is
recorded at the lower of cost or fair value less estimated costs to sell.

A summary of the components of nonperforming  assets,  including  several ratios
using period-end data, is shown as follows:

                              Nonperforming Assets
                             (Dollars in thousands)
<TABLE>
<CAPTION>


                                                                              December 31
                                           ----------------------------------------------------------------------------------
                                                1999             1998             1997            1996            1995
<S>                                        <C>              <C>              <C>              <C>            <C>
Nonaccrual loans                           $         4,540  $         3,500  $           562  $          768 $          693
Accruing loans which are contractually
  past due 90 days or more                           1,721            1,322              522             594            480
Restructured loans                                     666              105              356               0              0
                                           ---------------  ---------------  ---------------  -------------- --------------
  Total nonperforming and restructured
    Loans                                  $         6,927  $         4,927  $         1,440  $        1,362 $        1,173
Other real estate acquired through
  Foreclosures                                       3,009              961              836             485            132
                                           ---------------  ---------------  ---------------  -------------- --------------
   Total nonperforming and restructured
     loans and other real estate           $         9,936  $         5,888  $         2,276  $        1,847 $        1,305
Nonperforming and restructured loans
  as a percentage of net loans                       1.22%            1.25%             .46%            .51%           .80%
Nonperforming and restructured loans
  and other real estate as a percentage
  of total assets                                    1.17%             .90%             .49%            .51%           .63%
</TABLE>


Nonaccrual  loans  increased  from  $3,500  at  December  31,  1998 to $4,540 at
December 31, 1999. Total nonperforming  assets increased from $5,888 at December
31, 1998 to $9,936 at December 31, 1999. The percentage of  nonperforming  loans
to total loans decreased from 1.25% to 1.22%

The increase in total  nonperforming loans and other real estate owned of $4,048
is largely  attributable  to loans at the Bank of Mt. Vernon acquired in January
1999. The $2,932 of nonperforming  loans and other real estate owned at the Bank
of Mt.  Vernon are  primarily  residential  real estate  development  and rental
properties which are expected to be liquidated in 2000.

The increase in other real estate owned of $2,048  represents the acquisition of
real estate with an  appraised  value of $3,000.  This  property was acquired at
year end 1999 and is currently leased with a purchase option.

Reserves allocated in connection with these assets are believed to be adequate.


<PAGE>



The Company  continues  to follow its  long-standing  policy of not  engaging in
international  lending  and  not  concentrating  lending  activity  in  any  one
industry.

Although loans may be classified as nonperforming, many continue to pay interest
irregularly  or at less than  original  contractual  rates.  A summary of actual
income  recognized on nonaccrual and restructured loans versus their full
contractual yields for each of the past five years is presented below.

              Interest Income on Non-Accrual and Restructured Loans

                             Year ended December 31
                             (Dollars in thousands)
<TABLE>
<CAPTION>


                               1999       1998       1997       1996       1995
<S>                             <C>        <C>         <C>        <C>        <C>
Contractual interest            272        135         77         73         32
Interest recognized               6          6         62          2         22

</TABLE>



Investment Activities

The securities  portfolio consists of debt and equity securities,  which provide
the  Company  with a  relatively  stable  source of  income.  Additionally,  the
investment  portfolio  provides a balance to interest  rate and credit  risks in
other  categories  of the balance  sheet.  The Company also uses the  securities
portfolio as a secondary  source of liquidity.  The Company has  classified  the
majority  of its  municipal  securities  and certain U. S.  Treasury  and agency
securities as held to maturity based on management's positive intent and ability
to hold such securities to maturity. These municipal securities provide tax-free
income and are within  management's  guidelines  with respect to credit risk and
market risk. The municipal  securities have been issued  principally by Kentucky
municipalities. The U. S. Treasury and agency securities are held as a source of
stable,  long-term  income,  which can be used as collateral to secure municipal
deposits  and  repurchase  agreements.   All  other  investment  securities  are
classified as available for sale.  The portfolio  does contain  holdings in GNMA
mortgage-backed   securities.   The   securities   portfolio  does  not  contain
significant   holdings  in   collateralized   mortgage   obligations   or  other
mortgage-related derivative products and/or structured notes.

Securities as a percentage of average interest-earning assets decreased to 25.2%
in 1999 versus 30.6% in 1998 and 27.6% in 1997.  The 1999 decrease in securities
reflects the movement of funds into higher yielding loan balances,  primarily in
regards to the acquisition of deposits held in the West Virginia branches.

At December 31, 1999 and 1998,  the Company had an investment  in  noncumulative
perpetual preferred stock of First Guaranty Bank, Hammond, Louisiana. The market
value of this investment  approximated its book value,  which totaled $2 million
at December 31, 1999 and 1998. The dividend rate on the preferred stock is 2% in
excess of the prime rate as in effect from time to time.


<PAGE>


The following  tables present the carrying  values and maturity  distribution of
investment securities.

                          Carrying Value of Securities
                             (Dollars in thousands)
<TABLE>
<CAPTION>


                                                          December 31


                                                1999          1998         1997
<S>                                        <C>           <C>          <C>
U.S. Treasury and Federal agencies:
   Available for sale                      $  128,101    $  132,106   $   43,088
   Held to maturity                             1,733         3,529        5,588
State and municipal obligations:
   Available for sale                           7,354         3,831        3,564
   Held to maturity                            16,876        16,474       14,625
Equity securities:
   Available for sale                           2,775         2,798        2,795
   Held to maturity                                 0             0            0
Other securities:
   Available for sale                          13,557        18,405        3,600
   Held to maturity                                24            49          149
Total securities:
   Available for sale                         151,787       157,140       53,047
   Held to maturity                            18,633        20,052       20,362
                                           ----------    ----------   ----------
Total                                      $  170,420    $  177,192   $   73,409

</TABLE>


                                             Maturity Distribution of Securities
                                                      December 31, 1999
                                                    (Dollars in thousands)
<TABLE>
<CAPTION>


                                                           One           Five
                                              Year       Through       Through      Over
                                               Or         Five           Ten         Ten         Other                      Market
                                              Less        Years         Years       Years     Securities       Total        Value
<S>                                        <C>         <C>          <C>            <C>         <C>          <C>          <C>
U.S. Treasury and Federal agencies:
    Available for sale                     $  12,889   $  68,687    $   38,325     $  8,200    $      -     $  128,101   $  128,101
    Held to maturity                             370       1,363             -            -           -          1,733        1,703
State and municipal obligations:
    Available for sale                           488       2,131         2,357        2,378           -          7,354        7,354
    Held to maturity                             810       5,555         8,928        1,583           -         16,876       16,858
Other securities:
    Available for sale                             -           -             -            -      16,332         16,332       16,332
    Held to maturity                               -           -             -            -          24             24           24
Total securities:
    Available for sale                        13,377      70,818        40,682       10,578      16,332        151,787      151,787
    Held to maturity                           1,180       6,918         8,928        1,583          24         18,633       18,585
                                           ---------   ---------    ----------     --------    --------     ----------   ----------
Total                                      $  14,557   $  77,736    $   49,610     $ 12,161    $ 16,356     $  170,420   $  170,372
                                           =========   =========    ==========     ========    ========     ==========   ==========
Percent of total                               8.54%      45.61%        29.11%        7.14%       9.60%        100.00%
Weighted average yield*                        5.25%       5.91%         6.23%        6.85%       7.37%          6.16%

</TABLE>


*The  weighted  average  yields  are  calculated  on  historical  cost  on a non
tax-equivalent basis.


<PAGE>



Deposit Activities

Managing the mix and repricing of deposit  liabilities is an important aspect of
the Company's  ability to maximize its net interest margin.  The strategies used
to manage  interest-bearing  deposit  liabilities  are designed to adjust as the
interest rate  environment  changes.  In this regard,  management of the Company
regularly  assesses  its funding  needs,  deposit  pricing,  and  interest  rate
outlooks.

Total  deposits  averaged  $648,595 in 1999, a 43.9%  increase over 1998.  Total
deposits  averaged $450,649 in 1998, an increase of $137,071 or 43.7% over 1997.
Noninterest  bearing deposits averaged 10.3% of total deposits in 1999, compared
to 12.0% in 1998 and 11.0% in 1997.

At  December  31,  1999,  deposits  totaled  $692,843,  compared  to $523,193 at
December  31,  1998,  an  increase  of  $169,650,  or 32.4%.  Of this  increase,
approximately  $115,000  is  attributable  to  the  acquisition  of  Mt.  Vernon
Bancshares.  Exclusive  of this  acquisition,  deposits  increased  $54,650 from
December 31, 1998 to December 31, 1999, representing a 10.4% increase.

The table below  provides  information  on the  maturities  of time  deposits of
$100,000 or more at December 31, 1999.

                                Maturity of Time
                          Deposits of $100,000 or More

                                                 December 31, 1999
                                                   (In thousands)

     Maturing 3 months or less                     $       24,044
     Maturing over 3 months through 6 months               16,153
     Maturing over 6 months through 12 months              30,532
     Maturing over 12 months                               28,563
                                                    -------------
     Total                                          $      99,292
                                                    =============

The  following  table sets forth the average  amount of and average rate paid on
selected deposit categories during the past three full years.
<TABLE>
<CAPTION>

                          Selected Deposit Categories
                             (Dollars in Thousands)

                                         1999                          1998                          1997
         Category               Amount        Rate (%)        Amount        Rate (%)        Amount        Rate (%)
<S>                          <C>                    <C>   <C>                     <C>    <C>                    <C>
Demand                       $    66,483            0%     $    54,043            0%     $    34,462            0%
NOW and money
  market accounts                150,165         3.65%          93,741         3.49%          51,268         3.38%
Savings                           63,227         3.10%          51,818         2.94%          32,671         2.96%
Certificates of deposit
  and other time                 368,720         5.53%         251,047         5.84%         195,177         5.89%
                             -----------    ---------      -----------    ---------      -----------    ---------
     Total                   $   648,595         4.29%     $   450,649         4.32%     $   313,578         4.53%

</TABLE>





<PAGE>


Capital

Stockholders'  equity decreased $2,272 in 1999 to $52.1 million or 6.1% of total
assets at December 31, 1999.  This compares to $54.4  million,  or 8.3% of total
assets at  December  31,  1998.  The  primary  reason for the 1999  decrease  in
stockholders' equity was the increase in unrealized loss on securities of $3,722
from ($300) on December  31, 1998,  to ($4,022) on December 31, 1999.  This is a
component of accumulated other comprehensive  income. The decrease was partially
offset by the retention of net earnings of $1,450 in 1999. The primary source of
growth in  stockholders'  equity in 1998 was the  retention  of net  earnings of
$2,636.  The consolidated  statements of changes in stockholders'  equity detail
the changes in equity for the last three years.

The fair  value  adjustment  of the  Company's  available  for  sale  securities
portfolio,  which is recorded as a component of stockholders' equity, may change
significantly as market  conditions  change.  At December 31, 1999 and 1998, the
adjustment  resulted in a reduction of stockholders'  equity of $4,022 and $300.
Further  volatility  in  stockholders'  equity may occur in the future as market
conditions change.

The Company's principal source of funds for dividend payments to stockholders is
dividends  received from the subsidiary  Banks.  Banking  regulations  limit the
amount of  dividends  that may be paid  without  prior  approval  of  regulatory
agencies.  Under these  regulations,  the amount of  dividends  that may be paid
without prior approval of regulatory agencies in any calendar year is limited to
the current  year's net  profits,  as defined,  combined  with the  retained net
profits of the preceding two years,  subject to regulatory  capital  requirement
limitations.  During 2000,  the Banks could,  without  prior  approval,  declare
dividends to the Company of approximately $8.0 million plus any 2000 net profits
retained to the date of the dividend declaration.

The various  regulatory  agencies  having  supervisory  authority over financial
institutions  have  adopted  risk-based  capital  guidelines,  which  define the
adequacy of the  capital  levels of  regulated  institutions.  These  risk-based
capital  guidelines require minimum levels of capital based upon the risk rating
of assets and  certain  off-balance-sheet  items.  Assets and  off-balance-sheet
items are assigned  regulatory-risk weights ranging from 0% to 100% depending on
their level of credit risk. The guidelines classify capital in two tiers, Tier I
and Tier 2, the sum of which is total  capital.  Tier I capital  is  essentially
common equity, less intangible assets. Tier 2 capital is essentially  qualifying
long-term debt and a portion of the allowance for possible loan losses.

During 1997,  the Company  completed  its public  offering of $28.75  million of
mandatorily   redeemable   capital  securities  of  a  subsidiary  trust.  These
securities qualify as Tier I capital up to an amount not to exceed 25% of Tier I
capital and the portion  that  exceeds the 25%  limitation  qualifies  as Tier 2
capital.


<PAGE>



                          Selected Capital Information
                             (Dollars in thousands)

<TABLE>
<CAPTION>

                                                           December 31

                                                   1999       1998       Change
<S>                                             <C>        <C>         <C>
Stockholders' Equity                            $ 52,127   $ 54,399    $ (2,272)
  Qualifying capital securities of subsidiary
    trust                                         18,683     18,213         470
  Disallowed amounts of goodwill and other
    intangibles                                  (24,339)   (21,555)     (2,784)
  Unrealized loss on securities available
    for sale                                       3,923        231       3,692
                                                --------   --------    --------
Tier I capital                                  $ 50,394   $ 51,288    $   (894)



Tier II capital adjustments:
  Qualifying capital securities of subsidiary
    trust                                         10,067     10,537
  Allowance for loan losses                        6,812      4,363
                                                --------   --------
Total capital                                   $ 67,273   $ 66,188

Total risk-weighted assets                      $566,632   $408,245
Ratios
Tier I capital to risk-weighted assets              8.9%      12.6%
Total capital to risk-weighted assets              11.9%      16.2%
Leverage at year-end                                6.2%       8.1%

</TABLE>


The Company believes that its capital,  together with existing credit facilities
and its ability to obtain future credit facilities, provides funds sufficient to
support the Company's current operations.

Liquidity

Liquidity for a financial  institution  can be expressed in terms of maintaining
sufficient  cash flows to meet both  existing  and  unplanned  obligations  in a
cost-effective manner. Adequate liquidity allows the Company to meet the demands
of both the borrower and the  depositor on a timely  basis,  as well as pursuing
other business  opportunities as they arise. Thus, liquidity management embodies
both an  asset  and  liability  aspect.  Liquidity  is  maintained  through  the
Company's  ability  to  convert  assets  into cash,  manage  the  maturities  of
liabilities and generate funds through the attraction of local deposits.

As part of its liquidity management, the Company maintains funding relationships
with the Federal Home Loan Bank and other  financial  institutions.  The Company
prefers to manage its liquidity  requirements  generally through the matching of
maturities of assets and liabilities.

<PAGE>

The  consolidated  statements  of cash flows for the  periods  presented  in the
financial  statements provide an indication of the Company's sources and uses of
cash as well as an  indication  of the  ability of the  Company to  maintain  an
adequate level of liquidity.

Liquidity risk is the  possibility  that the Company may not be able to meet its
cash requirements. Management of liquidity risk includes maintenance of adequate
cash and sources of cash to fund  operations  and meets the needs of  borrowers,
depositors  and  creditors.  Liquidity  must be maintained at a level,  which is
adequate but not excessive.  Excess  liquidity has a negative impact on earnings
resulting from the lower yields on short-term assets.

In addition to cash,  cash  equivalents  and Federal funds sold,  the securities
portfolio  provides an important  source of  liquidity.  The total of securities
maturing  within  one year along with  cash,  due from  banks,  interest-earning
balances  with banks  maturing  within one year,  and Federal funds sold totaled
$68.9   million   as   of   December   31,   1999.   Additionally,    securities
available-for-sale with maturities greater than one year, equity securities, and
interest-earning  balances  with banks with  maturities  greater  than one year,
totaled  $143.3  million at December  31,  1999.  These  securities  represent a
secondary source available to meet liquidity needs on a continuing basis.

To maintain a desired  level of  liquidity,  the Company has several  sources of
funds  available.  One is the cash flow generated  daily from the Banks' various
loan portfolios in the form of principal and interest  payments.  Another source
is its deposit base. The Company  maintains a relatively stable base of customer
deposits  which has  historically  exhibited  steady growth.  This growth,  when
combined with other  sources,  is expected to be adequate to meet its demand for
funds.  Due to the  nature of the  markets  served by the  Company's  subsidiary
banks,  management  believes  that the  majority of  certificates  of deposit of
$100,000 or more are no more volatile than its core  deposits.  Certificates  of
deposits and other time deposits of $100,000 or more  represented  approximately
14.3% and 11.7% of total  deposits  at December  31, 1999 and 1998.  A number of
techniques are used to measure the liquidity position, including the utilization
of ratios that are presented below.  These ratios are calculated based on annual
averages for each year.

                                Liquidity Ratios

                                                 1999        1998        1997

Total loans/total deposits..................     80.2%       75.5%       91.0%
Total loans/total deposits less float.......     81.0%       76.3%       91.8%


This analysis shows that the Company's  loan to deposit ratio  decreased in 1998
from the 1997 level. This is due to the acquisition of deposits held in the West
Virginia  branches.  The increase in 1999 is primarily the result of those funds
moving from lower yielding assets into higher yielding loans.



<PAGE>


Information regarding short-term borrowings for the past three years is
presented below.
                              Short-Term Borrowings
                             (Dollars in thousands)
<TABLE>
<CAPTION>

                                                1999         1998         1997
<S>                                        <C>           <C>          <C>
Repurchase Agreements:

   Balance at year end                     $   21,282    $   7,772    $   6,579

   Weighted average rate at year end             5.80%        4.47%        5.38%

   Average balance during the year         $    8,640    $  20,167    $  49,939

   Weighted average rate during the year         5.14%        4.58%        5.51%

   Maximum month-end balance               $   21,282    $  82,755    $ 120,257

Other short-term borrowings:

   Balance at year end                     $   11,225    $  18,225    $   4,082

   Weighted average rate at year end             5.93%        5.74%        6.17%

   Average balance during the year         $   12,184    $  14,867    $   6,914

   Weighted average rate during the year         5.61%        5.83%        6.04%

   Maximum month-end balance               $   15,788    $  19,800    $   9,396

Total short-term borrowings:

   Balance at year end                     $   32,507    $  25,997    $  10,661

   Weighted average rate at year end             5.84%        5.36%        5.68%

   Average balance during the year         $   20,824    $  35,034    $  56,853

   Weighted average rate during the year         5.41%        5.12%        5.49%

   Maximum month-end balance               $   32,507    $  92,719    $ 130,348

</TABLE>


Substantially  all federal funds purchased and repurchase  agreements  mature in
less than ninety days. Other short-term  borrowings  primarily represent Federal
Home Loan Bank (FHLB) advances to Bank Affiliates  (with varying maturity dates)
which are funding residential mortgage and commercial loans.

<PAGE>

Interest Rate Sensitivity

The interest spread and liability  funding  discussed above are directly related
to changes in asset and  liability  mixes,  volumes,  maturities  and  repricing
opportunities  of  interest-earning  assets  and  interest-bearing  liabilities.
Interest-sensitive  assets and liabilities are those, which are subject to being
repriced  in the  near  term,  including  either  floating  or  adjustable  rate
instruments and instruments  approaching maturity.  The interest sensitivity gap
is  the   difference   between   total   interest-sensitive   assets  and  total
interest-sensitive  liabilities.  Interest rates on the Company's  various asset
and liability categories do not respond uniformly to changing market conditions.
Interest  rate risk is the degree to which  interest  rate  fluctuations  in the
marketplace can affect net interest income.

The need for interest  sensitivity gap management is most critical in times of a
significant  change in overall  interest  rates.  Management  generally seeks to
limit the exposure of the Company to interest rate fluctuations by maintaining a
relatively  balanced mix of rate sensitive  assets and liabilities on a one-year
time  horizon.  This mix is altered  periodically  depending  upon  management's
assessment of current business conditions and the interest rate outlook.

One  tool,  which  is  used to  monitor  interest  rate  risk,  is the  interest
sensitivity  analysis as shown in the table below.  This  analysis  reflects the
repricing  characteristics  of assets and liabilities over various time periods.
The gap  indicates  the level of assets  and  liabilities  that are  subject  to
repricing over a given time period.

As shown by the interest rate sensitivity  analysis as of December 31, 1999, the
cumulative amount of the Company's  interest earning assets repricing during the
first year is higher than the total amount of its interest  bearing  liabilities
repricing during this period. This position, which is normally termed a positive
interest  sensitivity  gap,  generally  allows for enhanced net interest  income
during  periods  of rising  interest  rates.  This  positive  gap is within  the
Company's internal policy guidelines and is not expected to impact significantly
the Company's net interest income during a period of falling interest rates.



<PAGE>


The  following  table  provides  an  analysis  of the  Company's  interest  rate
sensitivity at December 31, 1999.

                       Interest Rate Sensitivity Analysis
                             (Dollars in Thousands)
<TABLE>
<CAPTION>

                                                 0 - 90      91 days -        1 - 5         Over 5
                                                  Days         1 Year         Years          Years          Total
<S>                                           <C>           <C>           <C>            <C>            <C>
Assets
   Loans, net of unearned income              $    222,417  $   168,232   $    137,617   $    41,840    $    570,106
   Investment securities                             6,518        8,039         77,736        82,250         174,543
   Interest-earning balances                           900            -            580           154           1,634
   Federal funds sold                               25,197            -              -             -          25,197
                                              ------------  -----------   ------------   -----------    ------------
       Total earning assets                   $    255,032  $   176,271   $    215,933   $   124,244    $    771,480

Sources of Funds
   NOW, money market and
      savings                                 $     40,737  $    58,031   $     48,078   $    86,389    $    233,235
   Time deposits                                    90,116      190,397        110,605             -         391,118
   Borrowings                                       25,559       12,832         35,538             -          73,929
                                              ------------  -----------   ------------   -----------    ------------
     Total interest bearing liabilities       $    156,412  $   261,260   $    194,221   $    86,389    $    698,282

Interest Sensitivity Gap
   For the period                             $     98,620  $   (84,989)  $     21,712   $    37,855    $     73,198
   Cumulative                                       98,620       13,631         35,343        73,198               -
   Cumulative as a percent of
     Earning assets                                 12.78%        1.77%          4.58%         9.49%

</TABLE>

<PAGE>


Item 7A.  Quantitative and Qualitative Disclosures About Market Risk

Asset/Liability Management and Market Risk

Market  risk is the  risk of gain or loss  from  changes  in the  fair  value of
financial  instruments  due to changes in  interest  rates,  exchange  rates and
equity  prices.  Premier's  market  risk is  composed  almost  exclusively  with
interest rate risk. This exposure is managed  primarily  through the strategy of
selecting the types and terms of interest  earning  assets and interest  bearing
liabilities  which  generate  favorable  earnings,  while limiting the potential
negative  effects of changes in market interest rates.  Since Premier's  primary
source of interest  bearing  liabilities  is customer  deposits,  the ability to
manage the types and terms of such deposits may be somewhat  limited by customer
preferences in the market areas in which it operates.  Borrowings, which include
Federal Home Loan Bank advances, short-term borrowings and long-term borrowings,
are generally  structured with specific terms,  which in management's  judgment,
when  aggregated  with the terms  for  outstanding  deposits  and  matched  with
interest earning assets, mitigate our exposure to interest rate risk.

The Company's Board of Directors is responsible for reviewing the interest rate
sensitivity of the Company and  establishing  policies to monitor and limit
exposure  to  interest  rate risk.  Interest  rate risk is  monitored through
the use of an earnings  simulation  model to analyze net interest income
sensitivity.

The earnings simulation model forecasts the effect of instantaneous movements in
interest  rates of both 100 and 200  basis  points.  The  most  recent  earnings
simulation  model projects net interest  income would increase by  approximately
3.0% of stable rate net  interest  income if rates rise by 100 basis points over
the next year.  It  projects  a decrease  of 3.2% if the rates fall by 100 basis
points.  Management  believes this reflects a slight asset  sensitive  rate risk
position for the one-year horizon.

Within the same time frame,  but  assuming a 200 basis point  movement in rates,
the model  forecasts that net interest  income would rise above that earned in a
stable rate  environment  by 5.3% in a rising rate scenario and decrease by 9.3%
in a falling rate scenario. Under both the 100 and 200 basis point forecast, the
percentage changes in net interest income are within Company guidelines.

This simulation model includes assumptions about how the balance sheet is likely
to evolve through time.  Loan  prepayments  are developed  from industry  median
estimates for prepayment speeds.  Noncontractual deposit pricing and sensitivity
are assumed to follow historical patterns.

The Economic  Value at Risk (EVR) of the balance  sheet,  at a point in time, is
defined as the discounted present value of asset cash flows minus the discounted
value of liability  cash flows.  The  resulting  percentage  change in EVR is an
indication of the longer term repricing  risk imbedded in the balance sheet.  At
December 31, 1999, a 200 basis point  increase in rates is estimated to increase
EVR by .5%. Additionally, EVR is projected to decrease by 16.2% if rates fall by
200 basis points.  The calculations of present value have certain  shortcomings.
The discount rates utilized are based on estimated  market  interest rate levels
for similar  loans and  securities  nationwide.

<PAGE>

The unique characteristics of Premier's loans and securities may not necessarily
parallel those assumed in this calculation,  and therefore,  would likely result
in different  discount rates,  prepayment  experiences  and present values.  The
discount  rates  utilized for deposits and  borrowings  are based upon available
alternative  types and sources of funds which are not necessarily  indicative of
the present value of deposits and FHLB advances since such deposits and advances
are unique to, and have certain price and customer relationship  advantages for,
depository  institutions.  A higher or lower interest rate environment will most
likely  result in  different  investment  and  borrowing  strategies  by Premier
designed to further  mitigate  the effect on the value of, and the net  earnings
generated from, the Company's net assets from any change in interest rates.

Summary  information about the simulation model's interest rate risk measures is
presented below:

<TABLE>
<CAPTION>


                                            Year-End    Year-End       ALCO
                                              1999        1998      Guidelines
<S>                                           <C>         <C>         <C>
Projected 1-Year Net Interest Income
   -100 bp change vs. Base Rate               -3.2%        3.5%       +/-10%
   +100 bp change vs. Base Rate                3.0%       -3.6%       +/-10%

Projected 1-Year Net Interest Income
   -200 bp change vs. Base Rate               -9.3%        7.1%       +/-10%
   +200 bp change vs. Base Rate                5.3%       -7.2%       +/-10%

Economic Value Change
   -200 bp change vs. Base Rate              -16.2%       15.6%       +/-10%
   +200 bp change vs. Base Rate                 .5%      -15.6%       +/-10%

</TABLE>



Interest Rate Risk Management

Premier's strategy of investing  primarily in loans and securities permits it to
limit its exposure to interest rate risk,  together  with credit risk,  while at
the same time  achieving a positive  interest  rate  spread from the  difference
between the income  earned on interest  earning  assets and the cost of interest
bearing  liabilities.  Managing this exposure involves  significant  assumptions
about the  relationship  of various  interest rate indices of certain  financial
instruments.  Prepayments on loans  generally  increase when long-term  interest
rates fall or are at  historically  low levels  relative to short-term  interest
rates making fixed rate loans more desirable.  Investment securities, other than
those with early call  provisions,  generally do not have  significant  imbedded
options and repay pursuant to specific terms until  maturity.  While savings and
checking deposits generally may be withdrawn upon the customer's request without
prior  notice,  a continuing  relationship  with  customers  resulting in future
deposits and withdrawals is generally  predictable resulting in a dependable and
uninterruptible  source of funds. Time deposits  generally have early withdrawal
penalties,  which discourage customer  withdrawal,  while term Federal Home Loan
Bank advances have prepayment  penalties,  which discourage  prepayment prior to
maturity.

Certain  shortcomings  are  inherent in the method of analysis  presented in the
foregoing table.  For example,  although certain assets and liabilities may have
similar maturities or periods to repricing,  they may react in different degrees
to changes in market interest  rates.

<PAGE>

Also,  the  interest  rates on  certain  types of  assets  and  liabilities  may
fluctuate in advance of changes in market interest  rates,  while interest rates
on other types may lag behind  changes in market  rates.  Additionally,  certain
assets,  such as  adjustable  rate mortgage  loans,  have features that restrict
changes in interest  rates on a short-term  basis and over the life of the loan.
Further,  in the  event of a change  in  interest  rates,  prepayment  and early
withdrawal levels could deviate  significantly from those assumed in calculating
the table.  Finally,  the ability of many  borrowers  to service  their debt may
decrease in the event of a significant interest rate increase.

The previous table does not necessarily  indicate the impact of general interest
rate movements on Premier's net interest income because the repricing of certain
categories  of assets  and  liabilities  are  subject to  competitive  and other
pressures  beyond our  control.  As a result,  certain  assets  and  liabilities
indicated as maturing or otherwise  repricing within a stated period may in fact
mature or reprice at different times and at different volumes.

Management expects interest rates to be biased toward increasing slightly during
2000 and  believes  that the  current  modest  level  of  asset  sensitivity  is
appropriate  when taken in conjunction  with the unlikely event of a significant
rate decrease.  Premier's interest sensitivity profile changed from 1998 to 1999
as a result of the increase in shorter term loan instruments.

Trade Risk Management

Premier  does not  maintain a trading  account,  which would  primarily  provide
investment  products and risk management services to its customers as well as to
take propriety risk positions.

Derivative Instruments

A derivative  financial  instrument  includes futures,  forwards,  interest rate
swaps,  options and other financial  instruments  with similar  characteristics.
Premier  currently  does not enter into  futures,  forwards,  swaps or  options.
However,  the Company is party to financial  instruments with off-balance  sheet
risk in the  normal  course  of  business  to meet  the  financing  needs of its
customers.  These financial  instruments  include  commitments to make loans and
standby letters of credit,  which involve to varying degrees  elements of credit
risk and  interest  rate risk in excess of  amounts  recognized  on the  balance
sheets.  Commitments  to make loans are agreements to lend to a customer as long
as there is no violation of any contract condition.  Commitments  generally have
fixed expiration dates and may require  collateral if deemed necessary.  Standby
letters of credit are conditional commitments issued by Premier to guarantee the
performance  of a customer to a third party up to a  stipulated  amount and with
specific terms and conditions.  Commitments to make loans and standby letters of
credit  are not  recorded  as an asset or  liability  by the  Company  until the
instrument is exercised.

Year 2000

Premier  undertook a project  (the "Year 2000 Plan") to identify  and assess the
readiness of its computer systems,  programs and other infrastructure that could
be  affected  by the Year  2000  issue and to remedy  any  problems  identified.
Premier's  Year 2000 Plan also included an assessment of the Year 2000 readiness
of key  third  parties  on whom  the  Company's  operations  depend,  as well as
customers  Premier  deemed to have  material  Year  2000  issues.

<PAGE>

Premier also  developed  contingency  plans  permitting  the company to continue
operations,  consistent  with the highest quality  standards,  in the event Year
2000  problems  arose.  Management  believes  that its Year 2000 Plan  proceeded
successfully  as all operating  systems  performed  well during the year change.
While  management does not expect future  problems  resulting from the Year 2000
issue,  it is  possible  that other  dates in the year 2000 may  further  affect
computer  software  or  systems,  or cause a Year 2000  problem  relating to the
Company's  own  systems  or to those of key  third  parties  with  whom  Premier
conducts business that could adversely affect its financial condition.

Premier has incurred costs of approximately  $200,000  attributable to Year 2000
remediation which has been expensed as incurred.  Management projects additional
Year 2000  expenses to be minimal,  however  Year 2000  expenses  are subject to
change and could  vary from  current  estimates  if the final  requirements  for
complete year 2000 readiness exceed management's expectations.

Monitoring of computer date sensitive  issues will continue at least through the
year  2000.  Corrective  action  will be  taken  if  management  encounters  any
previously  unidentified  Year 2000 problems  internally or in interfacing  with
third parties, and the Company's contingency plans remain available.  Management
has determined that if an unlikely business interruption as a result of computer
date-sensitive  issues  occurred,  such an  interruption  could be  material  to
Premier's overall financial performance.


Item 8.  Financial Statements and Supplementary Data


         The Company's Financial  Statements and related  Independent  Auditors'
Report are presented in the following pages.  The financial  statements filed in
this Item 8 are as follows:

         Independent Auditors' Report

         Financial Statements:
           Balance Sheets - December 31, 1999 and 1998
           Statements of Income - Years Ended December 31, 1999, 1998 and 1997
           Statements of Changes in Stockholders'  Equity - Years ended December
           31,  1999,  1998  and 1997  Statements  of Cash  Flows - Years  ended
           December 31, 1999, 1998 and 1997 Notes to Financial Statements

Item 9.  Changes In and Disagreements with Accountants on Accounting and
          Financial Disclosure

         There have been no  changes in or  disagreements  with  accountants  on
accounting or financial disclosure matters.




<PAGE>

























                         PREMIER FINANCIAL BANCORP, INC.

                        CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 1999, 1998 and 1997


<PAGE>









                         PREMIER FINANCIAL BANCORP, INC.

                        CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 1999, 1998 and 1997




                                    CONTENTS




REPORT OF INDEPENDENT AUDITORS........................................    1

FINANCIAL STATEMENTS
   Consolidated Balance Sheets........................................    2
   Consolidated Statements of Income and Comprehensive Income.........    3 - 4
   Consolidated Statements of Changes in Stockholders' Equity.........    5
   Consolidated Statements of Cash Flows..............................    6 - 7
   Notes to Consolidated Financial Statements.........................    8 - 30






<PAGE>











                         REPORT OF INDEPENDENT AUDITORS


Board of Directors
Premier Financial Bancorp, Inc.
Georgetown, Kentucky



We  have  audited  the  accompanying  consolidated  balance  sheets  of  Premier
Financial  Bancorp,  Inc.  as of  December  31,  1999 and 1998,  and the related
consolidated   statements  of  income  and  comprehensive  income,   changes  in
stockholders'  equity and cash  flows for each of the three  years in the period
ended December 31, 1999. These financial  statements are the  responsibility  of
the Company's  management.  Our responsibility is to express an opinion on these
financial statements based on our audits.

We  conducted  our  audits  in  accordance  with  generally   accepted  auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated  financial statements referred to above present
fairly, in all material  respects,  the financial  position of Premier Financial
Bancorp, Inc. as of December 31, 1999 and 1998 and the results of its operations
and its cash flows for each of the three years in the period ended  December 31,
1999 in conformity with generally accepted accounting principles.





                                           /s/ Crowe, Chizek and Company LLP

Lexington, Kentucky
February 18, 2000



<PAGE>


                         PREMIER FINANCIAL BANCORP, INC.
                           CONSOLIDATED BALANCE SHEETS
                           December 31, 1999 and 1998

--------------------------------------------------------------------------------
<TABLE>
<CAPTION>

                                                                                        1999                1998
                                                                                        ----                ----
                                                                                             (In Thousands)
<S>                                                                               <C>                  <C>
ASSETS
Cash and due from banks                                                           $     28,227         $     20,171
Interest earning balances with banks                                                     1,634                    -
                                                                                  ------------         ------------
    Cash and cash equivalents                                                           29,861               20,171
Federal funds sold                                                                      25,197               19,406
Investment securities
   Available for sale                                                                  151,787              157,140
   Held to maturity                                                                     18,633               20,052
Loans                                                                                  570,753              397,613
   Unearned income                                                                        (647)              (1,993)
   Allowance for loan losses                                                            (6,812)              (4,363)
                                                                                  ------------         ------------
     Net loans                                                                         563,294              391,257
Federal Home Loan Bank and Federal Reserve Bank stock                                    4,123                3,416
Premises and equipment, net                                                             14,935               11,764
Real estate and other property acquired through foreclosure                              3,019                  992
Interest receivable                                                                      9,814                8,053
Goodwill and other intangibles                                                          24,339               21,555
Other assets                                                                             7,466                3,938
                                                                                  ------------         ------------

Total assets                                                                      $    852,468         $    657,744
                                                                                  ============         ============

LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits
   Non-interest bearing                                                           $     68,490         $     62,813
   Time deposits, $100,000 and over                                                     99,292               61,190
   Other interest bearing                                                              525,061              399,190
                                                                                  ------------         ------------
     Total deposits                                                                    692,843              523,193
Securities sold under agreements to repurchase                                          21,282                7,772
Federal Home Loan Bank advances                                                         32,647               31,898
Other borrowed funds                                                                    20,000                8,000
Interest payable                                                                         3,265                2,384
Other liabilities                                                                        1,554                1,348
                                                                                  ------------         ------------
   Total liabilities                                                                   771,591              574,595

Guaranteed preferred beneficial interests in Company's debentures                       28,750               28,750

Stockholders' equity
   Preferred stock, no par value; 1,000,000 shares
     authorized; none issued or outstanding                                                  -                    -
   Common stock, no par value; 10,000,000 shares authorized;
     5,232,230 shares issued and outstanding                                             1,103                1,103
   Surplus                                                                              43,445               43,445
   Retained earnings                                                                    11,601               10,151
   Accumulated other comprehensive income                                               (4,022)                (300)
                                                                                  ------------         ------------
     Total stockholders' equity                                                         52,127               54,399
                                                                                  ------------         ------------

Total liabilities and stockholders' equity                                        $    852,468         $    657,744
                                                                                  ============         ============
</TABLE>







--------------------------------------------------------------------------------
                             See accompanying notes
                                                                              2.
<PAGE>
                         PREMIER FINANCIAL BANCORP, INC.
           CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
                             Years Ended December 31

--------------------------------------------------------------------------------
<TABLE>
<CAPTION>

                                                                    1999               1998                1997
                                                                    ----               ----                ----
                                                                                  (In Thousands)
<S>                                                             <C>                 <C>                 <C>
Interest income
   Loans, including fees                                        $    50,649         $    33,787         $    28,690
   Investment securities -
     Taxable                                                          9,575               8,582               5,802
     Tax-exempt                                                       1,409               1,180               1,158
   Federal funds sold                                                 1,047               1,686               1,036
   Other interest income                                                192                 115                 165
                                                                -----------         -----------         -----------
     Total interest income                                           62,872              45,350              36,851

Interest expense
   Deposits                                                          27,808              19,459              14,196
   Other borrowings                                                   3,547               2,932               3,566
   Debt                                                               2,852               2,852               1,631
                                                                -----------         -----------         -----------
     Total interest expense                                          34,207              25,243              19,393

Net interest income                                                  28,665              20,107              17,458
Provision for loan losses                                             3,294               1,742               1,399
                                                                -----------         -----------         -----------

Net interest income after provision for loan losses                  25,371              18,365              16,059

Non-interest income
   Service charges                                                    1,965               1,585               1,261
   Insurance commissions                                                565                 468                 483
   Investment securities gains                                           17                 224               2,203
   Other income                                                       1,229               2,396                 615
                                                                -----------         -----------         -----------
                                                                      3,776               4,673               4,562

Non-interest expenses
   Salaries and employee benefits                                    11,679               7,634               6,185
   Occupancy and equipment expenses                                   2,885               2,181               1,634
   Professional fees                                                    547                 452                 504
   Taxes, other than payroll, property and income                       794                 559                 445
   Acquisition related expenses                                           -                 132                 482
   Amortization of intangibles                                        1,625                 982                 386
   Other expenses                                                     5,100               3,397               2,596
                                                                -----------         -----------         -----------
                                                                     22,630              15,337              12,232

Income before income taxes                                            6,517               7,701               8,389
Provision for income taxes                                            1,927               1,997               2,605
                                                                -----------         -----------         -----------

Net income                                                      $     4,590         $     5,704         $     5,784
                                                                ===========         ===========         ===========

Weighed average common shares outstanding:
   Basic                                                              5,232               5,232               5,232
   Diluted                                                            5,232               5,247               5,245

Earnings per share:
   Basic                                                        $       .88         $      1.09         $      1.11
   Diluted                                                              .88                1.09                1.10

</TABLE>




--------------------------------------------------------------------------------

                                  (Continued)
                                                                              3.
<PAGE>

                         PREMIER FINANCIAL BANCORP, INC.
           CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
                             Years Ended December 31

--------------------------------------------------------------------------------
<TABLE>
<CAPTION>


                                                                    1999               1998                1997
                                                                    ----               ----                ----
                                                                                  (In Thousands)
<S>                                                             <C>                 <C>                 <C>
Other comprehensive income (loss), net of tax:
   Unrealized gains and (losses) arising during
     the period                                                 $    (3,711)        $       (95)        $     1,521
   Reclassification of realized amount                                  (11)               (149)             (1,454)
                                                                -----------         -----------         -----------
     Net change in unrealized gain (loss) on
       securities                                                    (3,722)               (244)                 67
                                                                -----------         -----------         -----------

Comprehensive income                                            $       868         $     5,460         $     5,851
                                                                ===========         ===========         ===========
</TABLE>

--------------------------------------------------------------------------------
                             See accompanying notes
                                                                              4.



<PAGE>

                        PREMIER FINANCIAL BANCORP, INC.
           CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
                  Years Ended December 31, 1999, 1998 and 1997

--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                                                                          Accumulated
                                                                                             Other
                                              Common                      Retained       Comprehensive
                                               Stock        Surplus       Earnings          Income          Total
                                               -----        -------       --------          ------          -----
                                                              (In Thousands, Except Per Share Data)
<S>                                         <C>           <C>            <C>             <C>             <C>
Balances, January 1, 1997                   $    985      $  38,795      $   8,988       $     (123)     $   48,645

Net change in unrealized losses on
  securities available for sale                    -              -              -               67              67

Net income                                         -              -          5,784                -           5,784

Dividends paid - $.55 per share                    -              -         (2,406)               -          (2,406)

Dividends paid - Sabina prior to pooling           -              -            (83)               -             (83)
                                            --------      ---------      ---------       ----------      ----------

Balances, December 31, 1997                      985         38,795         12,283              (56)         52,007

Net change in unrealized losses on
  securities available for sale                    -              -              -             (244)           (244)

Net income                                         -              -          5,704                -           5,704

Dividends paid - $.60 per share                    -              -         (3,068)               -          (3,068)

Stock dividend                                   118          4,650         (4,768)               -               -
                                            --------      ---------      ---------       ----------      ----------

Balances, December 31, 1998                    1,103         43,445         10,151             (300)         54,399

Net change in unrealized losses on
  securities available for sale                    -              -              -           (3,722)         (3,722)

Net income                                         -              -          4,590                -           4,590

Dividends paid - $.60 per share                    -              -         (3,140)               -          (3,140)
                                            --------      ---------      ---------       ----------      ----------

Balances, December 31, 1999                 $  1,103      $  43,445      $  11,601       $   (4,022)     $   52,127
                                            ========      =========      =========       ==========      ==========
</TABLE>





--------------------------------------------------------------------------------
                           See accompanying notes
                                                                              5.
<PAGE>
                        PREMIER FINANCIAL BANCORP, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                             Years Ended December 31

--------------------------------------------------------------------------------
<TABLE>
<CAPTION>

                                                                              1999            1998             1997
                                                                              ----            ----             ----
                                                                                         (In Thousands)
<S>                                                                   <C>              <C>             <C>
Cash flows from operating activities
   Net income                                                         $      4,590     $     5,704     $      5,784
   Adjustments to reconcile net income to
     net cash from operating activities
       Depreciation                                                          1,214             872              644
       Provision for loan losses                                             3,294           1,742            1,399
       Amortization, net                                                     1,750             591              378
       FHLB stock dividends                                                   (254)           (227)            (155)
       Investment securities gains, net                                        (17)           (224)          (2,203)
       Changes in
         Interest receivable                                                  (409)         (2,566)            (946)
         Other assets                                                         (311)           (161)          (1,795)
         Interest payable                                                      256             578              296
         Other liabilities                                                     127            (531)             908
                                                                      ------------     -----------      -----------
           Net cash from operating activities                               10,240           5,778            4,310

Cash flows from investing activities
   Purchases of securities available for sale                              (82,373)       (640,535)        (311,373)
   Proceeds from sales of securities available for sale                     40,082         222,750          277,135
   Proceeds from maturities and calls of  securities
     available for sale                                                     52,865         313,671           18,870
   Purchases of investment securities held to maturity                      (2,055)         (4,978)          (4,255)
   Proceeds from maturities and calls of securities
     held to maturity                                                        3,472           5,276            4,879
   Purchases of FHLB stock                                                     (61)           (155)          (1,073)
   Net change in federal funds sold                                          6,933          21,840          (27,348)
   Net change in loans                                                     (82,882)        (75,665)         (48,436)
   Purchases of premises and equipment, net                                 (2,396)         (2,129)          (2,232)
   Proceeds from sale of other real estate acquired
     through foreclosure                                                       943             399              368
   Net cash received (paid) related to acquisitions                         (8,579)        123,971           20,613
                                                                      ------------     -----------      -----------
     Net cash from investing activities                                    (74,051)        (35,555)         (72,852)

Cash flows from financing activities
   Net change in deposits                                                   50,983          14,137           38,170
   Advances from Federal Home Loan Bank                                     16,345          27,225           17,727
   Repayment of Federal Home Loan Bank advances                            (15,596)        (10,590)         (11,842)
   Proceeds from other borrowed funds                                       12,000           8,000                -
   Net change in agreements to repurchase securities                        12,909           1,193              565
   Proceeds from issuance of guaranteed preferred
     beneficial interests in Company's debentures                                -               -           28,750
   Dividends paid                                                           (3,140)         (3,068)          (2,489)
                                                                      ------------     -----------      -----------
     Net cash from financing activities                                     73,501          36,897           70,881
                                                                      ------------     -----------      -----------
</TABLE>



--------------------------------------------------------------------------------
                                 (Continued)
                                                                              6.
<PAGE>
                        PREMIER FINANCIAL BANCORP, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                             Years Ended December 31

--------------------------------------------------------------------------------
<TABLE>
<CAPTION>

                                                                         1999               1998             1997
                                                                         ----               ----             ----
                                                                                       (In Thousands)
<S>                                                                   <C>              <C>              <C>
Net change in cash and cash equivalents                               $      9,690     $     7,120      $     2,339

Cash and cash equivalents at beginning
   of year                                                                  20,171          13,051           10,712
                                                                      ------------     -----------      -----------

Cash and cash equivalents at end of year                              $     29,861     $    20,171      $    13,051
                                                                      ============     ===========      ===========

Supplemental disclosures of cash flow information:
     Cash paid during the year for -
       Interest                                                       $     33,951     $    24,665      $    19,097
       Income taxes                                                          2,050           2,550            2,462

     Loans transferred to real estate acquired
       through foreclosure                                            $      2,943     $       555      $       829

</TABLE>





--------------------------------------------------------------------------------
                             See accompanying notes
                                                                              7.
<PAGE>

                         PREMIER FINANCIAL BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 1999, 1998 and 1997

--------------------------------------------------------------------------------

NOTE  1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The consolidated  financial statements include the accounts of Premier Financial
Bancorp, Inc. (the Company) and its wholly owned subsidiaries:

                                                               December 31, 1999
                                                       Year                 Net
                                                     Acquired     Assets  Income
                                                     --------     ------  ------
                                                                 (In Thousands)

Citizens Deposit Bank & Trust Vanceburg, Kentucky      1991   $  129,261  $1,650
Bank of Germantown            Germantown, Kentucky     1992       27,006     200
Georgetown Bank & Trust Co.   Georgetown, Kentucky     1995       60,399     802
Citizens Bank                 Sharpsburg, Kentucky     1995       46,306     836
Farmers Deposit Bank          Eminence, Kentucky       1996      142,065   1,794
The Sabina Bank               Sabina, Ohio             1997       57,584     414
Ohio River Bank               Ironton, Ohio            1998       57,200     422
The Bank of Philippi, Inc.    Philippi, West Virginia  1998       59,506     169
Boone County Bank, Inc.       Madison, West Virginia   1998      137,991     649
The Bank of Mt. Vernon        Mt. Vernon, Kentucky     1999      130,979   1,068

The Company also has a data processing subsidiary,  Premier Data Services, Inc.,
and PFBI Capital  Trust  subsidiary  as  discussed in Note 11. All  intercompany
transactions and balances have been eliminated.

Prior period consolidated financial statements have been restated to include the
accounts  of  significant  acquisitions  accounted  for  using  the  pooling  of
interests method of accounting. Business combinations accounted for as purchases
are included in the consolidated  financial statements from the respective dates
of acquisition.  Assets and liabilities of financial  institutions accounted for
as purchases are adjusted to their fair values as of their dates of acquisition.
Certain  prior amounts have been  reclassified  to conform with the current year
presentation.

Nature of  Operations:  The Banks  operate under state bank charters and provide
traditional banking services,  including trust services,  to customers primarily
located in the  counties and  adjoining  counties in  Kentucky,  Ohio,  and West
Virginia in which the Banks  operate.  Chartered as state  banks,  the Banks are
subject to  regulation by their  respective  state  banking  regulators  and the
Federal  Deposit  Insurance  Corporation  (FDIC) or the Federal Reserve Bank for
member banks.  The Company is also subject to regulation by the Federal  Reserve
Bank.

Estimates in the Financial  Statements:  The preparation of financial statements
in conformity with generally accepted accounting  principles requires management
to make estimates and assumptions that affect the reported amounts of assets and
liabilities,  disclosure of contingent assets and liabilities at the date of the
financial  statements,  and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those

--------------------------------------------------------------------------------
                                  (Continued)
                                                                              8.

<PAGE>

                        PREMIER FINANCIAL BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                       December 31, 1999, 1998, and 1997
--------------------------------------------------------------------------------

NOTE  1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

estimates.   The  allowance  for  loan  losses  and  fair  values  of  financial
instruments are particularly subject to change.

Cash Flows:  For purposes of  reporting  cash flows,  cash and cash  equivalents
include cash on hand, amounts due from banks and interest-earning  balances with
banks. Net cash flows are reported for loans, federal funds sold, deposits,  and
other borrowing transactions.

Investment   Securities:   The  Company  classifies  its  investment  securities
portfolio  into three  categories:  trading,  securities  available for sale and
securities held to maturity.  Fair value  adjustments are made to the securities
based  on  their  classification  with the  exception  of the  held to  maturity
category. The Company has no investments classified as trading.

Investment securities available for sale are carried at fair value.  Adjustments
from amortized cost to fair value are recorded in stockholders'  equity,  net of
related income tax, under accumulated other  comprehensive  income on securities
available for sale. The  adjustment is computed on the  difference  between fair
value and cost adjusted for  amortization of premiums and accretion of discounts
which are recorded as  adjustments  to interest  income using the constant yield
method.

Investment  securities for which the Banks have the positive  intent and ability
to hold to maturity are stated at cost,  adjusted for  amortization  of premiums
and accretion of discounts, which are recorded as adjustments to interest income
using the constant yield method.

Gains or  losses on  dispositions  are based on the net  proceeds  and  adjusted
carrying amount of the securities sold using the specific identification method.

Loans:  Loans are stated at the amount of unpaid principal,  reduced by unearned
income and an allowance for loan losses.  Interest income on loans is recognized
on the accrual  basis except for those loans in a nonaccrual  of income  status.
The  accrual of  interest  on impaired  loans is  discontinued  when  management
believes, after consideration of economic and business conditions and collection
efforts,  that the  borrowers'  financial  condition is such that  collection of
interest is doubtful. When interest accrual is discontinued,  interest income is
subsequently recognized only to the extent cash payments are received.

The allowance for loan losses is established through a provision for loan losses
charged to expense.  The allowance is an amount that management believes will be
adequate to absorb losses on existing loans that may become  uncollectible based
on evaluations of the  collectibility  of loans and prior loan loss  experience.
The evaluations  take into  consideration  such factors as changes in the nature
and volume of the loan portfolio,  overall portfolio quality, review of specific
problem loans,  and current  economic  conditions that may affect the borrowers'
ability to pay.  Loans are charged  against the  allowance  for loan losses when
management believes that the collection of principal is unlikely.

--------------------------------------------------------------------------------
                                  (Continued)
                                                                              9.
<PAGE>
                        PREMIER FINANCIAL BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 1999, 1998 and 1997
--------------------------------------------------------------------------------

NOTE  1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

A loan is  impaired  when full  payment  under the loan  terms is not  expected.
Impairment  is evaluated in total for  smaller-balance  loans of similar  nature
such as  residential  mortgage,  consumer,  and  credit  card  loans,  and on an
individual loan basis for other loans.  If a loan is impaired,  a portion of the
allowance is allocated so that the loan is reported,  net, at the present  value
of  estimated  future cash flows using the loan's  existing  rate or at the fair
value of collateral if repayment is expected solely from the collateral.

Certain loan origination fees and direct  origination  costs are capitalized and
recognized as an adjustment of the yield on the related loan.

Premises  and  Equipment:  Premises  and  equipment  are  stated  at  cost  less
accumulated   depreciation.   Depreciation   is  recorded   principally  by  the
straight-line  method  over  the  estimated  useful  lives of the  premises  and
equipment.

Real  Estate  Acquired  Through   Foreclosure:   Real  estate  acquired  through
foreclosure  is carried at the lower of the recorded  investment in the property
or its fair value.  The value of the underlying loan is written down to the fair
value of the real estate to be acquired  by a charge to the  allowance  for loan
losses,  if  necessary.  Any  subsequent  write-downs  are charged to  operating
expenses.  Certain  parcels of real estate are being leased to third  parties to
offset  holding  period costs.  Operating  expenses of such  properties,  net of
related income,  and gains and losses on their disposition are included in other
expenses.

Goodwill  and Other  Intangibles:  The  unamortized  costs in excess of the fair
value of  acquired  net  tangible  assets are  included  in  goodwill  and other
intangibles. Identifiable intangibles, except for premiums on purchased deposits
which are amortized on a straight-line  method over 10 years, are amortized over
the estimated periods benefited. The remaining costs (goodwill) are amortized on
a straight-line basis over 15 to 25 years.

Income  Taxes:  The Company uses the  liability  method for  computing  deferred
income taxes. Under the liability method, deferred income taxes are based on the
change  during the year in the deferred tax liability or asset  established  for
the expected future tax  consequences of differences in the financial  reporting
and tax bases of assets and liabilities.  The differences  relate principally to
premises and  equipment,  unrealized  gains and losses on investment  securities
available for sale,  changes in tax methods of accounting,  FHLB stock,  and the
allowance for loan losses.

Earnings Per Common Share: Basic earnings per common share is net income divided
by the weighted average number of common shares  outstanding  during the period.
Diluted  earnings per common share  includes the dilutive  effect of  additional
potential common shares issuable under stock options. Earnings and dividends per
share are  restated  for all stock  splits  and  dividends  through  the date of
issuance of the financial statements.

--------------------------------------------------------------------------------
                                  (Continued)
                                                                             10.

<PAGE>

                        PREMIER FINANCIAL BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 1999, 1998 and 1997
--------------------------------------------------------------------------------

NOTE  1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Comprehensive  Income:  Comprehensive  income  consists  of net income and other
comprehensive  income.  Other comprehensive income includes unrealized gains and
losses on securities  available for sale which are also recognized as a separate
component of equity.

New  Accounting  Pronouncements:  Beginning  January 1, 2001,  a new  accounting
standard  will  require all  derivatives  to be  recorded at fair value.  Unless
designated  as hedges,  changes in these fair  values  will be  recorded  in the
income statement. Fair value changes involving hedges will generally be recorded
by offsetting  gains and losses on the hedge and on the hedged item, even if the
fair value of the hedged item is not  otherwise  recorded.  This standard is not
expected to have a material  effect,  but the effect  will depend on  derivative
holdings when it applies.

Industry Segments:  All of the Company's operations are considered by management
to be aggregated into one reportable operating segment.

NOTE  2 - BUSINESS COMBINATIONS

On January 20, 1999, the Company  acquired all of the outstanding  shares of Mt.
Vernon Bancshares, Inc., Mt. Vernon, Kentucky, a one-bank holding company owning
all of the shares of Bank of Mt. Vernon (Mt. Vernon) for cash. Mt. Vernon offers
full  service  banking in the  counties of  Rockcastle,  Pulaski,  and  Madison,
Kentucky.  The total  acquisition  cost  exceeded  the fair  value of net assets
acquired by approximately  $4.5 million.  The combination was accounted for as a
purchase  and the  results  of  operations  of Mt.  Vernon are  included  in the
consolidated financial statements from January 20, 1999. At date of acquisition,
Mt. Vernon had total assets of $129.5 million, total loans of $96.8 million, and
total deposits of $118.7 million.

On June 26, 1998, the Company chartered Boone County Bank, Inc. in Madison, West
Virginia,  and The Bank of Philippi,  Inc. in Philippi,  West Virginia,  for the
purpose of acquiring  three branch  offices of Banc One  Corporation  located in
Madison,  Philippi and Van,  West  Virginia.  Included in the purchase were $150
million  in  deposits  and $9 million in loans.  These  branches  were part of a
larger  group of branches  acquired in  cooperation  with  another  bank holding
company headquartered in Kentucky.  Certain individual branches within the group
were not retained by either  company.  The gain on disposition of these branches
was shared between the Company and the other bank holding company. The Company's
portion  of  the  gain,  $1.3  million,  is  included  in  other  income  in the
accompanying financial statements.

On March 20, 1998, the Company  acquired Ohio River Bank,  Ironton,  Ohio, (Ohio
River) whereby the Company  exchanged 297,840 shares of its common stock for all
the  issued  and  outstanding  shares of Ohio  River in a  business  combination
accounted  for as a pooling of interests.  Based on the date of the  acquisition
agreement, the market value of the shares

--------------------------------------------------------------------------------
                                  (Continued)
                                                                             11.

<PAGE>
                        PREMIER FINANCIAL BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 1999, 1998 and 1997
--------------------------------------------------------------------------------

NOTE  2 - BUSINESS COMBINATIONS (Continued)

exchanged was $7.7 million. The accompanying  consolidated  financial statements
for 1998 are based on the  assumption  that the companies  were combined for the
full year.  Prior  years  presented  have been  restated  to give  effect to the
combination.  At the date of acquisition,  Ohio River had $40.9 million in total
assets, $28.0 million in net loans, $35.2 million in deposits,  and $4.3 million
in stockholders' equity.

On November  13,  1997,  the Company  acquired  The Sabina  Bank,  Sabina,  Ohio
(Sabina), in a business combination accounted for as a pooling of interests. All
of the  outstanding  shares of Sabina were  exchanged for 476,300  shares of the
Company's  common stock.  Based on the date of the  acquisition  agreement,  the
market value of the shares  exchanged  was $7.6 million.  The 1997  consolidated
financial  statements  are  based  on the  assumption  that the  companies  were
combined for a full year. At the date of  acquisition,  Sabina had $23.8 million
in net loans, $36.6 million in total assets, $31.6 million in deposits, and $4.4
million in stockholders' equity.

On December 11, 1997, Sabina completed its purchase and assumption of two branch
offices of the Fifth Third Bank of Western,  Ohio.  Included in the purchase was
approximately  $23.3  million of  deposits  from the Ada and  Waynesfield,  Ohio
branches. The net deposits assumed exceeded the cash received by $2.1 million.

NOTE  3 - RESTRICTIONS ON CASH AND DUE FROM BANKS

Included in cash and due from banks are certain  non-interest  bearing  deposits
that are held at the Federal  Reserve or  maintained in vault cash in accordance
with average  balance  requirements  specified by the Federal  Reserve  Board of
Governors.  The  balance  requirement  at  December  31,  1999 and 1998 was $2.2
million and $1.1 million.

NOTE  4 - INVESTMENT SECURITIES

Amortized cost and fair value of investment securities, by category, at December
31, 1999 are as follows:

<TABLE>
<CAPTION>

                                                   Amortized         Unrealized        Unrealized          Fair
                                                     Cost               Gains            Losses            Value
                                                     ----               -----            ------            -----
                                                                           (In Thousands)
<S>                                              <C>                 <C>              <C>               <C>
Available for sale
   U. S. Treasury securities                     $     2,900         $      -         $      (6)        $     2,894
   U. S. agency securities                           130,254                -            (5,047)            125,207
   Obligations of states and political
     subdivisions                                      7,468                -              (114)              7,354
   Mortgage-backed securities                         14,333                -              (776)             13,557
   Preferred stock                                     2,000                -                 -               2,000
   Other securities                                      925                -              (150)                775
                                                 -----------         --------         ---------         -----------

     Total available for sale                    $   157,880         $      -         $  (6,093)        $   151,787
                                                 ===========         ========         =========         ===========
</TABLE>

--------------------------------------------------------------------------------
                                  (Continued)
                                                                             12.


<PAGE>
                        PREMIER FINANCIAL BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 1999, 1998 and 1997
--------------------------------------------------------------------------------

NOTE  4 - INVESTMENT SECURITIES (Continued)

<TABLE>
<CAPTION>


                                                   Amortized         Unrealized        Unrealized          Fair
                                                     Cost               Gains            Losses            Value
                                                     ----               -----            ------            -----
                                                                           (In Thousands)
<S>                                              <C>                 <C>              <C>               <C>
Held to maturity
   U. S. Treasury securities                     $       500         $      -         $      (1)        $       499
   U. S. agency securities                             1,233                -               (29)              1,204
   Obligations of states and political
     subdivisions                                     16,876              132              (150)             16,858
   Mortgage-backed securities                             24                -                 -                  24
                                                 -----------         --------         ---------         -----------

     Total held to maturity                      $    18,633         $    132         $    (180)        $    18,585
                                                 ===========         ========         =========         ===========
</TABLE>

Amortized cost and fair value of investment securities, by category, at December
31, 1998 are as follows:

<TABLE>
<CAPTION>

                                                   Amortized         Unrealized        Unrealized          Fair
                                                     Cost               Gains            Losses            Value
                                                     ----               -----            ------            -----
                                                                           (In Thousands)
<S>                                              <C>                 <C>              <C>               <C>
Available for sale
   U. S. Treasury securities                     $     7,185         $     44         $       -         $     7,229
   U. S. agency securities                           125,372               45              (540)            124,877
   Obligations of states and political
     subdivisions                                      3,691              142                (2)              3,831
   Mortgage-backed securities                         18,452               20               (67)             18,405
   Preferred stock                                     2,000                -                 -               2,000
   Other securities                                      900                -              (102)                798
                                                 -----------         --------         ---------         -----------

     Total available for sale                    $   157,600         $    251         $    (711)        $   157,140
                                                 ===========         ========         =========         ===========

Held to maturity
   U. S. Treasury securities                     $       899         $     16         $       -         $       915
   U. S. agency securities                             2,630                -               (73)              2,557
   Obligations of states and political
     subdivisions                                     16,474              770                (1)             17,243
   Mortgage-backed securities                             49                -                 -                  49
                                                 -----------         --------         ---------         -----------

     Total held to maturity                      $    20,052         $    786         $     (74)        $    20,764
                                                 ===========         ========         =========         ===========
</TABLE>

--------------------------------------------------------------------------------
                                  (Continued)
                                                                             13.

<PAGE>

                        PREMIER FINANCIAL BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 1999, 1998 and 1997
--------------------------------------------------------------------------------

NOTE  4 - INVESTMENT SECURITIES (Continued)

The amortized cost and fair value of investment securities at December 31, 1999,
by category and contractual  maturity are shown below.  Expected maturities will
differ from contractual  maturities because borrowers may have the right to call
or prepay obligations with or without call or prepayment penalties.

<TABLE>
<CAPTION>

                                                                       Amortized             Fair
                                                                         Cost                Value
                                                                         ----                -----
                                                                             (In Thousands)
<S>                                                                <C>                   <C>
Available for sale
   Due in one year or less                                         $    13,524           $    13,377
   Due after one year through five years                                72,661                70,818
   Due after five years through ten years                               42,966                40,682
   Due after ten years                                                  11,471                10,578
   Mortgage-backed securities                                           14,333                13,557
   Preferred stock                                                       2,000                 2,000
   Other securities                                                        925                   775
                                                                   -----------           -----------

     Total available for sale                                      $   157,880           $   151,787
                                                                   ===========           ===========

Held to maturity
   Due in one year or less                                         $     1,180           $     1,181
   Due after one year through five years                                 6,918                 6,973
   Due after five years through ten years                                8,928                 8,866
   Due after ten years                                                   1,583                 1,541
   Mortgage-backed securities                                               24                    24
                                                                   -----------           -----------

     Total held to maturity                                        $    18,633           $    18,585
                                                                   ===========           ===========
</TABLE>


Proceeds from sales of  investment  securities  during 1999,  1998 and 1997 were
$40.1  million,  $222.7  million  and $277.1  million.  Gross  gains of $44,000,
$232,000 and $2.2 million,  and gross losses of $27,000,  $8,000 and $1,000 were
realized on those sales.

Investment  securities  with an approximate  carrying value of $76.3 million and
$45.6  million at  December  31,  1999 and 1998 were  pledged  to secure  public
deposits,  trust funds,  securities sold under  agreements to repurchase and for
other purposes as required or permitted by law.


--------------------------------------------------------------------------------
                                  (Continued)
                                                                             14.

<PAGE>
                        PREMIER FINANCIAL BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 1999, 1998 and 1997
--------------------------------------------------------------------------------

NOTE  5 - LOANS

Major classifications of loans are summarized as follows:

<TABLE>
<CAPTION>


                                                 ----------December 31----------
                                                     1999               1998
                                                     ----               ----
                                                          (In Thousands)
<S>                                              <C>                <C>
Commercial, secured by real estate               $    135,078       $     86,010
Commercial, other                                      98,543             73,982
Real estate construction                               26,092             13,374
Residential real estate                               192,088            131,212
Agricultural                                           17,525             15,433
Consumer and home equity                              100,075             73,100
Other                                                   1,352              4,502
                                                 ------------       ------------

                                                 $    570,753       $    397,613
                                                 ============       ============
</TABLE>


Certain  directors and executive  officers of the Banks and companies,  in which
they have beneficial ownership, were loan customers of the Banks during 1999 and
1998.  Such loans were made in the  ordinary  course of  business  at the Banks'
normal  credit terms and interest  rates.  An analysis of the 1999 activity with
respect to all director and executive officer loans is as follows:

<TABLE>
<CAPTION>


                                                                  (In Thousands)
<S>                                                              <C>
Balance, December 31, 1998                                       $       11,574
Additions, including loans now meeting disclosure
   requirements                                                           3,700
Amounts collected, including loans no longer meeting
   disclosure requirements                                               (2,998)
                                                                  --------------

Balance, December 31, 1999                                        $       12,276
                                                                  ==============
</TABLE>

--------------------------------------------------------------------------------
                                   (Continued)
                                                                             15.

<PAGE>
                        PREMIER FINANCIAL BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 1999, 1998 and 1997
--------------------------------------------------------------------------------

NOTE  5 - LOANS (Continued)

Changes in the allowance for loan losses are as follows:

<TABLE>
<CAPTION>

                                                        1999              1998             1997
                                                        ----              ----             ----
                                                                     (In Thousands)
<S>                                                   <C>              <C>               <C>
Balance, beginning of year                            $   4,363        $   3,479         $   3,127
Allowance related to acquired subsidiaries                1,310              115                 -
Loans charged off                                        (2,556)          (1,189)           (1,305)
Recoveries                                                  401              216               258
Provision for loan losses                                 3,294            1,742             1,399
                                                      ---------        ---------         ---------

Balance, end of year                                  $   6,812        $   4,363         $   3,479
                                                      =========        =========         =========

</TABLE>


Information  about  impaired  loans is presented  below.  There were no impaired
loans for the periods presented without an allowance allocation.

<TABLE>
<CAPTION>

                                                                1999             1998              1997
                                                                ----             ----              ----
                                                                            (In Thousands)
<S>                                                         <C>              <C>               <C>
Impaired loans at year end                                  $   2,717        $   2,562         $   1,049
Amount of the allowance for loan losses allocated                 543              659               149
Average of impaired loans during the year                       3,810              905             1,262
Interest income recognized during impairment                        6                6                62

Nonperforming loans at year end were as follows:

  Loans past due over 90 days still on accrual              $   1,721        $   1,322         $     522
  Nonaccrual loans                                              4,540            3,500               562

</TABLE>

Nonperforming  loans  include  impaired  loans and smaller  balance  homogeneous
loans,  such as residential  mortgage and consumer loans,  that are collectively
evaluated for impairment.


--------------------------------------------------------------------------------
                                  (Continued)
                                                                             16.
<PAGE>
                        PREMIER FINANCIAL BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 1999, 1998 and 1997
--------------------------------------------------------------------------------

NOTE  6 - PREMISES AND EQUIPMENT

Premises and equipment are summarized as follows:

<TABLE>
<CAPTION>

                                                    ---------December 31-------
                                                        1999              1998
                                                        ----              ----
                                                            (In Thousands)
<S>                                                <C>               <C>
Land                                               $    2,275        $    1,683
Buildings and leasehold improvements                   10,543             8,174
Furniture and equipment                                 8,655             7,205
                                                   ----------        ----------
                                                       21,473            17,062
Less: accumulated depreciation                         (6,538)           (5,298)
                                                   ----------        ----------

                                                   $   14,935        $   11,764
                                                   ==========        ==========
</TABLE>


NOTE  7 - DEPOSITS

At December 31, 1999, the scheduled maturities of time deposits are as follows:

                                        (In Thousands)

           2000                           $  275,518
           2001                               78,223
           2002                               24,993
           2003                                5,917
           2004 and thereafter                 6,467
                                          ----------
                                          $  391,118
                                          ==========


NOTE  8 - SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE

Securities sold under  agreements to repurchase  generally  mature within one to
ninety days from the transaction date.  Information  concerning  securities sold
under agreements to repurchase is summarized as follows:

                                                      -------December 31-------
                                                        1999            1998
                                                        ----            ----
                                                       (Dollars In Thousands)

Year-end balance                                      $  21,282        $  7,772
Average balance during the year                           8,640          20,167
Average interest rate during the year                      5.14%           4.58%
Maximum month-end balance during the year             $  21,282        $ 82,755

--------------------------------------------------------------------------------
                                  (Continued)
                                                                             17.
<PAGE>
                        PREMIER FINANCIAL BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 1999, 1998 and 1997
--------------------------------------------------------------------------------

NOTE  9 - FEDERAL HOME LOAN BANK ADVANCES

The Banks own stock of the Federal  Home Loan Bank (FHLB) of  Cincinnati,  Ohio.
This stock allows the Banks to borrow advances from the FHLB.

At December 31, 1999 and 1998,  $32.6 million and $31.9 million  represented the
balance due on the above advances from the FHLB. All advances are paid either on
a monthly basis or at maturity,  over  remaining  terms of one to sixteen years,
with  interest  rates  ranging from 5.08% to 8.45%.  Advances are secured by the
FHLB stock and  substantially  all single  family  first  mortgage  loans of the
participating  Banks.  Scheduled  principal  payments due on advances during the
five years subsequent to December 31, 1999 are as follows:

                                           (In Thousands)

           2000                              $   13,853
           2001                                     620
           2002                                     396
           2003                                     143
           2004 and thereafter                   17,635
                                             ----------

                                             $   32,647

NOTE  10 - OTHER BORROWED FUNDS

The Company has a $20 million  line of credit with a financial  institution  for
general corporate purposes, including acquisitions. The line of credit, expiring
April 2001,  contains certain covenants and performance terms, all of which have
been  complied  with at December 31, 1999.  Interest is payable at term at LIBOR
plus  1.125% and adjusts  based on agreed  terms.  Common  stock of eight of the
Company's  subsidiary  Banks is pledged to secure the  agreement.  There was $20
million and $8 million  borrowed  under this  agreement at December 31, 1999 and
1998.

NOTE  11 - GUARANTEED PREFERRED BENEFICIAL INTERESTS IN COMPANY'S
               DEBENTURES

Guaranteed preferred  beneficial  interests in Company's  debentures  (Preferred
Securities)  represent  preferred  beneficial  interests  in the  assets of PFBI
Capital  Trust  (Trust).  The Trust  holds  certain  9.75%  junior  subordinated
debentures   due  June  30,  2027  issued  by  the  Company  on  June  9,  1997.
Distributions on the Preferred  Securities is payable at an annual rate of 9.75%
of the stated liquidation amount of $25 per Capital Security, payable quarterly.
Cash  distributions on the Preferred  Securities are made to the extent interest
on the debentures is received by the Trust.  In the event of certain  changes or
amendments  to  regulatory  requirements  or federal  tax rules,  the  Preferred
Securities  are  redeemable in whole.  Otherwise,  the Preferred  Securities are
generally  redeemable  by the  Company  in whole or in part on or after June 30,
2002 at 100% of the  liquidation  amount.  The  Trust's  obligations  under  the
Preferred Securities are fully and unconditionally guaranteed by the Company.

--------------------------------------------------------------------------------
                                  (Continued)
                                                                             18.
<PAGE>
                        PREMIER FINANCIAL BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 1999, 1998 and 1997
--------------------------------------------------------------------------------

NOTE  12 - INCOME TAXES

The components of the provision for income taxes are as follows:

<TABLE>
<CAPTION>
                                        1999             1998            1997
                                        ----             ----            ----
                                                    (In Thousands)
<S>                                 <C>              <C>             <C>
Current                             $  2,157         $  2,350        $  2,348
Deferred                                (230)            (118)            317
Change in valuation allowance              -             (235)            (60)
                                    --------         --------        --------

                                    $  1,927         $  1,997        $  2,605
                                    ========         ========        ========
</TABLE>

The Company's  deferred tax assets and liabilities at December 31, 1999 and 1998
are shown below.  No valuation  allowance  for the  realization  of deferred tax
assets is considered necessary at December 31, 1999.

<TABLE>
<CAPTION>

                                                       1999             1998
                                                       ----             ----
                                                           (In Thousands)
<S>                                                 <C>               <C>
Deferred tax assets
   Allowance for loan losses                        $   1,703         $     848
   NOL carryforwards                                        -                96
   Unrealized loss on investment securities             2,071               160
   Other                                                  184               182
                                                    ---------         ---------
     Total deferred tax assets                          3,958             1,286


Deferred tax liabilities
   Depreciation                                          (445)             (331)
   Change in accounting method                            (20)              (40)
   Federal Home Loan Bank dividends                      (300)             (182)
   Other                                                 (115)              (84)
                                                     --------         ---------
       Total deferred tax liabilities                    (880)             (637)

Net deferred tax asset, included in other assets     $  3,078          $    649
                                                     =========         =========
</TABLE>


At December 31,  1999,  the balances  presented  above  include net deferred tax
assets of $288,000  associated  with the January  20,  1999  acquisition  of Mt.
Vernon.

--------------------------------------------------------------------------------
                                  (Continued)
                                                                             19.
<PAGE>

                        PREMIER FINANCIAL BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 1999, 1998 and 1997
--------------------------------------------------------------------------------

NOTE  12 - INCOME TAXES (Continued)

An analysis of the differences between the effective tax rates and the statutory
U.S. federal income tax rate is as follows:

<TABLE>
<CAPTION>


                                                  1999                        1998                      1997
                                                  ----                        ----                      ----
                                                                     (Dollars In Thousands)
<S>                                       <C>           <C>          <C>          <C>          <C>          <C>
U. S. federal income tax rate             $   2,216     34.0%        $  2,618     34.0%        $   2,852    34.0%

Changes from the statutory rate
   Tax-exempt investment income                (494)    (7.6)            (425)    (5.5)             (408)   (5.0)
   Non-deductible interest expense
     related to carrying tax-exempt
     investments                                 66      1.0               57       .7                50      .6
   Tax credits                                  (70)    (1.1)            (149)    (1.9)              (70)   (0.8)
   Change in valuation allowance                  -      -               (235)    (3.1)              (60)   (0.6)
   Goodwill amortization                        202      3.1              137      1.8               131     1.6
   Other                                          7      0.1               (6)    (0.1)              110     1.3
                                          ---------      ---         --------      ---         ---------     ---

                                          $   1,927     29.5%        $  1,997     25.9%        $   2,605    31.1%
                                          =========     =====        ========     =====        =========    =====
</TABLE>

NOTE  13 - EMPLOYEE BENEFIT PLANS

The Company has  qualified  profit  sharing plans that cover  substantially  all
employees.  Contributions to the plans consist of a Company match and additional
amounts  are at the  discretion  of the  Company's  Board  of  Directors.  Total
contributions  to the plans were $251,000,  $180,000 and $191,000 in 1999,  1998
and 1997.

The Company also  maintains the Premier  Financial  Bancorp,  Inc. 1996 Employee
Stock  Ownership  Incentive Plan (the Plan),  whereby  certain  employees of the
Company are eligible to receive  incentive stock options.  The Plan is accounted
for in  accordance  with  Accounting  Principles  Board  Opinion  (APB) No.  25,
"Accounting for Stock Issued to Employees",  and related interpretations.  Under
the Plan,  a maximum  of 100,000  shares of the  Company's  common  stock may be
issued through the exercise of these incentive  stock options.  The option price
is the fair market value of the Company's  shares at the date of the grant.  The
options are exercisable ten years from the date of grant.

--------------------------------------------------------------------------------
                                  (Continued)
                                                                             20.
<PAGE>
                        PREMIER FINANCIAL BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 1999, 1998 and 1997
--------------------------------------------------------------------------------

NOTE  13 - EMPLOYEE BENEFIT PLANS (Continued)

A summary of the Company's stock option activity is as follows:

<TABLE>
<CAPTION>

                                          ---------1999---------   ---------1998---------    ----------1997----------
                                                       Weighted                 Weighted                   Weighted
                                                        Average                  Average                    Average
                                                       Exercise                 Exercise                   Exercise
                                            Options      Price       Options      Price       Options        Price
<S>                                        <C>          <C>         <C>         <C>          <C>           <C>
Outstanding at beginning of year             62,000     $ 13.71       42,000    $  12.38       42,000      $  12.38

Granted                                         -           -         20,000       16.50          -             -
                                           --------                 --------                 --------

Outstanding at year end                      62,000     $ 13.71       62,000    $  13.71       42,000      $  12.38
                                           ========                 ========                 ========

Exercisable at year end                      49,800                   41,600                   29,400
Weighted average remaining life                 7.3                      8.3                      8.5

</TABLE>

Although the Company has elected to follow APB No. 25, SFAS No. 123, "Accounting
for Stock Based  Compensation"  requires pro forma  disclosure of net income and
earnings  per share as if the  Company  had  accounted  for its  employee  stock
options under that Statement.  The fair value of each option grant was estimated
on the grant date using an option-pricing model.

Under  SFAS No.  123,  compensation  cost is  recognized  in the  amount  of the
estimated  fair value of the options and  amortized to expense over the options'
vesting  period.  The pro forma  effect on net income and  earnings per share of
this statement are as follows:

<TABLE>
<CAPTION>

                                                                      1999              1998              1997
                                                                      ----              ----              ----
                                                                               (Dollars In Thousands)
<S>                                                             <C>                 <C>                 <C>
Net income
   As reported                                                  $     4,590         $     5,704         $    5,784
   Pro forma                                                          4,550               5,649              5,731

Basic earnings per share
   As reported                                                  $       .88         $      1.09         $     1.11
   Pro forma                                                            .87                1.08               1.10

Diluted earnings per share
   As reported                                                  $       .88         $      1.09         $     1.10
   Pro forma                                                            .87                1.08               1.09

</TABLE>

--------------------------------------------------------------------------------
                                  (Continued)
                                                                             21.
<PAGE>
                        PREMIER FINANCIAL BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 1999, 1998 and 1997
--------------------------------------------------------------------------------

NOTE  13 - EMPLOYEE BENEFIT PLANS (Continued)

The weighted  average  assumptions  for options  granted during the year and the
resulting  estimated weighted average fair value per share used in computing pro
forma disclosures are as follows:

<TABLE>
<CAPTION>


                                                                      1999              1998              1997
                                                                      ----              ----              ----
                                                                               (Dollars In Thousands)
<S>                                                             <C>                 <C>                 <C>
Weighted averages
   Fair value of options granted                                $         -         $     4.66          $     5.77
   Risk free interest rate                                                -               5.50%               6.00%
   Expected life                                                          -            10 years            10 years
   Expected volatility                                                    -              17.88%              38.02%
   Expected dividend                                            $         -         $      .60          $      .60

</TABLE>

Future pro forma net  income  will be  negatively  impacted  should the  Company
choose to grant additional options.

NOTE  14 - RELATED PARTY TRANSACTIONS

During 1999, 1998 and 1997, the Company paid  approximately  $432,000,  $369,000
and $233,000 for printing,  supplies,  furniture,  and equipment  from a company
affiliated  by  common   ownership.   The  Company  also  paid  this   affiliate
approximately  $820,000,  $649,000 and $339,000 in 1999, 1998 and 1997 to permit
the Company's employees to participate in its employee medical benefit plan.

The Company has purchased and currently holds noncumulative  perpetual preferred
stock with a carrying  value of $2.0 million in a Louisiana  bank  controlled by
the Company's largest  stockholder.  The dividend rate on the preferred stock is
2% over the prevailing prime rate.


--------------------------------------------------------------------------------
                                  (Continued)
                                                                             22.
<PAGE>
                        PREMIER FINANCIAL BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 1999, 1998 and 1997
--------------------------------------------------------------------------------

NOTE  15 - EARNINGS PER SHARE

A  reconciliation  of the numerators and denominators of the earnings per common
share and earnings per common share  assuming  dilution  computations  for 1999,
1998 and 1997 is presented below:

<TABLE>
<CAPTION>

                                                             ------------------Year Ended----------------
                                                                1999              1998            1997
                                                                ----              ----            ----
                                                                 (In Thousands, Except Per Share Data)
<S>                                                          <C>              <C>              <C>
Basic earnings per share
   Net income available to common
     stockholders                                            $     4,590      $     5,704      $     5,784
   Weighted average common shares
     outstanding                                                   5,232            5,232            5,232
   Earnings per share                                        $       .88      $      1.09      $      1.11

Diluted earnings per share
   Net income available to common
     stockholders                                            $     4,590      $     5,704      $     5,784
   Weighted average common shares
     outstanding                                                   5,232            5,232            5,232
   Add dilutive effects of assumed exercise
     of stock options                                                  -               15               13
                                                               ---------        ---------        ---------

   Weighted average common and dilutive
     potential common shares outstanding                           5,232            5,247            5,245
   Earnings per share assuming dilution                      $       .88      $      1.09      $      1.10

</TABLE>

Stock  options for 62,000  shares of common  stock were not included in the 1999
computation  of earnings per share  assuming  dilution  because their impact was
anti-dilutive.

--------------------------------------------------------------------------------
                                  (Continued)
                                                                             23.
<PAGE>
                        PREMIER FINANCIAL BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 1999, 1998 and 1997
--------------------------------------------------------------------------------

NOTE  16 - DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS

The fair values of the Company's financial  instruments at December 31, 1999 and
1998 are as follows:

<TABLE>
<CAPTION>

                                            --------------1999-------------         -------------1998--------------
                                               Carrying              Fair             Carrying             Fair
                                                Amount               Value             Amount              Value
                                                                         (In Thousands)
<S>                                         <C>                 <C>                 <C>                 <C>
Financial assets
  Cash and due from banks                   $    28,227         $    28,227         $    20,171         $    20,171
  Interest-earning balances                       1,634               1,642                   -                   -
  Federal funds sold                             25,197              25,197              19,406              19,406
  Investment securities                         170,420             170,372             177,192             177,904
  Loans, net                                    563,294             563,324             391,257             393,047
  Federal Home Loan Bank and
    Federal Reserve Bank stock                    4,123               4,123               3,416               3,416
  Interest receivable                             9,814               9,814               8,053               8,053

Financial liabilities
  Deposits                                  $  (692,843)        $  (693,250)        $  (523,193)        $  (526,733)
  Securities sold under agreements
    to repurchase                               (21,282)            (21,282)             (7,772)             (7,772)
  Federal Home Loan Bank advances               (32,647)            (32,236)            (31,898)            (32,163)
  Other borrowed funds                          (20,000)            (20,000)             (8,000)             (8,000)
  Guaranteed preferred beneficial
    interests in Company's debentures           (28,750)            (28,063)            (28,750)            (28,750)
  Interest payable                               (3,265)             (3,265)             (2,384)             (2,384)

</TABLE>

Carrying  amount is the  estimated  fair  value  for cash and cash  equivalents,
short-term  borrowings,  Federal Home Loan Bank and Federal  Reserve Bank stock,
accrued interest receivable and payable,  demand deposits,  short-term debt, and
variable rate loans or deposits that reprice frequently and fully. Security fair
values are based on market prices or dealer quotes,  and if no such  information
is  available,  on the rate and term of the security and  information  about the
issuer. For fixed rate loans or deposits and for variable rate loans or deposits
with infrequent repricing or repricing limits, fair value is based on discounted
cash flows using current  market rates applied to the estimated  life and credit
risk.  Fair values for impaired loans are estimated  using  discounted cash flow
analysis or underlying collateral values. Fair value of debt is based on current
rates for similar financing.  The fair value of commitments to extend credit and
standby letters of credit is not considered material.

--------------------------------------------------------------------------------
                                  (Continued)
                                                                             24.
<PAGE>
                        PREMIER FINANCIAL BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 1999, 1998 and 1997
--------------------------------------------------------------------------------

NOTE  17 - FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK

The Banks are parties to financial  instruments with  off-balance  sheet risk in
the normal  course of business to meet the financing  needs of their  customers.
These financial instruments include standby letters of credit and commitments to
extend  credit in the form of  unused  lines of  credit.  The Banks use the same
credit policies in making commitments and conditional obligations as they do for
on-balance sheet instruments.

At December 31, 1999 and 1998, the Banks had the following financial instruments
whose approximate contract amounts represent credit risk:

                                                    1999                1998
                                                    ----                ----
                                                         (In Thousands)

Standby letters of credit                     $     2,219         $     1,010

Commitments to extend credit:
    Fixed                                     $    19,638         $    28,673
    Variable                                       31,623               5,581

Standby letters of credit represent conditional  commitments issued by the Banks
to  guarantee  the  performance  of a third party.  The credit risk  involved in
issuing these letters of credit is essentially  the same as the risk involved in
extending loans to customers. Collateral held varies but primarily includes real
estate and certificates of deposit. Some letters of credit are unsecured.

Commitments  to extend  credit are  agreements  to lend to a customer as long as
there is no violation of any condition established in the contract.  Outstanding
commitments  are at  current  market  rates.  Fixed rate loan  commitments  have
interest  rates  ranging  from  6% to  18%.  Commitments  generally  have  fixed
expiration dates or other termination  clauses and may require payment of a fee.
The Banks evaluate each  customer's  creditworthiness  on a case-by-case  basis.
Since some of the  commitments  are expected to expire without being drawn upon,
the  total  commitment   amounts  do  not  necessarily   represent  future  cash
requirements.  Collateral  held  varies  but may  include  accounts  receivable,
inventory, property and equipment, and income producing properties.

NOTE  18 - LEGAL PROCEEDINGS

Legal proceedings involving the Company and its subsidiaries  periodically arise
in the  ordinary  course of  business,  including  claims by  debtors  and their
related   interests  against  the  Company's   subsidiaries   following  initial
collection proceedings. These legal proceedings sometimes can involve claims for
substantial  damages.  At December 31, 1999,  management is unaware of any legal
proceedings,  of which the ultimate result would have a material  adverse effect
upon the consolidated financial statements of the Company.

--------------------------------------------------------------------------------
                                  (Continued)
                                                                             25.
<PAGE>
                        PREMIER FINANCIAL BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 1999, 1998 and 1997
--------------------------------------------------------------------------------

NOTE  19 - STOCKHOLDERS' EQUITY

Common  Stock - The Company paid a 5% stock  dividend on  September  30, 1998 to
stockholders of record on September 21, 1998. For comparability,  prior earnings
per share  information has been restated to reflect the 249,027 shares issued as
a result.

Dividend  Limitations  - The  Company's  principal  source of funds for dividend
payments is dividends  received from the subsidiary Banks.  Banking  regulations
limit  the  amount of  dividends  that may be paid  without  prior  approval  of
regulatory agencies.  Under these regulations,  the amount of dividends that may
be paid in any calendar  year is limited to the current  year's net profits,  as
defined,  combined  with the  retained net profits of the  preceding  two years,
subject to the capital  requirements as discussed below.  During 2000, the Banks
could,  without prior approval,  declare dividends of approximately $8.0 million
plus any 2000 net profits retained to the date of the dividend declaration.

Regulatory Matters - The Company and the subsidiary Banks are subject to various
regulatory  capital  requirements  administered by the federal banking agencies.
Failure to meet minimum capital  requirements can initiate certain mandatory and
possibly  additional  discretionary  actions by regulators  that, if undertaken,
could have a direct material effect on the Company's financial statements. Under
capital adequacy  guidelines and the regulatory  framework for prompt corrective
action,  the Company and the Banks must meet  specific  guidelines  that involve
quantitative  measures of their  assets,  liabilities,  and certain  off-balance
sheet items as calculated under regulatory accounting practices.

These quantitative measures established by regulation to ensure capital adequacy
require the Company and Banks to maintain  minimum amounts and ratios (set forth
in the  following  table)  of  Total  and  Tier I  capital  (as  defined  in the
regulations)  to  risk-weighted  assets (as defined),  and of Tier I capital (as
defined) to average assets (as defined). Management believes, as of December 31,
1999,  the  Company  and  the  Banks  meet  all  quantitative  capital  adequacy
requirements to which they are subject.

The  capital  amounts  and  classifications  are  also  subject  to  qualitative
judgments  by the  regulators.  As a  result  of  these  qualitative  judgments,
Citizens  Deposit Bank  (Citizens)  entered  into an agreement  with the Federal
Reserve Bank (FRB) on December 14, 1999  restricting  Citizens from declaring or
paying  dividends  if its Tier 1 capital to average  assets falls below 8%. This
agreement,  in effect until  terminated by the FRB, is more restrictive than the
quantitative measures governing a bank's ability to pay dividends. Citizens Tier
I capital to average assets was 9.2% at December 31, 1999.

As of December 31, 1999, the most recent  notification  from the Federal Reserve
Bank categorized the Company as well capitalized under the regulatory  framework
for prompt corrective action. To be categorized as well capitalized, the Company
must maintain  minimum Total  risk-based,  Tier I risk-based and Tier I leverage
ratios as set forth in the  following  table.  There are no conditions or events
since that  notification  that  management  believes  have changed the Company's
category.

--------------------------------------------------------------------------------
                                  (Continued)
                                                                             26.
<PAGE>
                        PREMIER FINANCIAL BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 1999, 1998 and 1997
--------------------------------------------------------------------------------

NOTE  19 - STOCKHOLDERS' EQUITY (Continued)

The Company's and the four and three largest  subsidiary  Banks' capital amounts
and ratios as of December 31, 1999 and 1998 are presented in the table below.

<TABLE>
<CAPTION>
                                                                                               To Be Well Capitalized
                                                                                                    Under Prompt
                                                                            For Capital              Corrective
                                                       Actual            Adequacy Purposes        Action Provisions
                    1999                          Amount      Ratio       Amount       Ratio      Amount       Ratio
                    ----
                                                                       (Dollars In Thousands)
<S>                                              <C>           <C>       <C>            <C>      <C>           <C>
Total Capital (to Risk-Weighted Assets):
   Consolidated                                  $  67,273     11.9%     $  45,331      8%       $  56,663     10%
   Farmers Deposit Bank                             14,759     14.4          8,181      8           10,227     10
   Boone County Bank                                12,800     18.3          5,603      8            7,004     10
   Citizens Deposit Bank                            12,608     13.5          7,468      8            9,335     10
   The Bank of Mt. Vernon                           11,400     11.9          7,652      8            9,565     10

Tier I Capital (to Risk-Weighted Assets):
   Consolidated                                  $  50,394      8.9%     $  22,665      4%       $  33,998      6%
   Farmers Deposit Bank                             13,481     13.2          4,091      4            6,136      6
   Boone County Bank                                12,005     17.1          2,802      4            4,202      6
   Citizens Deposit Bank                            11,468     12.3          3,734      4            5,601      6
   The Bank of Mt. Vernon                           10,422     10.9          3,826      4            5,739      6

Tier I Capital (to Average Assets):
   Consolidated                                  $  50,394      6.2%     $  32,372      4%       $  40,465      5%
   Farmers Deposit Bank                             13,481      9.8          5,505      4            6,881      5
   Boone County Bank                                12,005      9.6          5,018      4            6,272      5
   Citizens Deposit Bank1                           11,468      9.2          4,980      4            6,224      5
   The Bank of Mt. Vernon                           10,422      8.3          5,040      4            6,300      5

                    1998

Total Capital (to Risk-Weighted Assets):
   Consolidated                                  $  66,188     16.2%     $  32,660      8%       $  40,825     10%
   Farmers Deposit Bank                             15,297     15.6          7,833      8            9,792     10
   Boone County Bank                                10,975     17.3          5,068      8            6,336     10
   Citizens Deposit Bank                            11,730     13.5          6,948      8            8,685     10

Tier I Capital (to Risk-Weighted Assets):
   Consolidated                                  $  51,288     12.6%     $  16,330      4%       $  24,495      6%
   Farmers Deposit Bank                             14,075     14.4          3,917      4            5,875      6
   Boone County Bank                                10,817     17.1          2,534      4            3,801      6
   Citizens Deposit Bank                            10,800     12.4          3,474      4            5,211      6

Tier I Capital (to Average Assets):
   Consolidated                                  $  51,288      8.1%     $  25,483      4%       $  31,854      5%
   Farmers Deposit Bank                             14,075     10.5          5,350      4            6,687      5
   Boone County Bank                                10,817      9.3          4,649      4            5,812      5
   Citizens Deposit Bank                            10,800      9.0          4,775      4            5,969      5

</TABLE>
1Subject to additional limitations as discussed above.

--------------------------------------------------------------------------------
                                  (Continued)
                                                                             27.
<PAGE>
                        PREMIER FINANCIAL BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 1999, 1998 and 1997
--------------------------------------------------------------------------------

NOTE  20 - PARENT COMPANY FINANCIAL STATEMENTS

                            Condensed Balance Sheets
                                   December 31
<TABLE>
<CAPTION>
                                                           1999            1998
                                                           ----            ----
                                                              (In Thousands)
<S>                                                   <C>             <C>
ASSETS
Cash                                                  $     616       $     317
Investment in subsidiaries                               95,175          83,297
Investment securities available for sale                  2,005           2,000
Premises and equipment                                    1,653           3,594
Other real estate acquired through foreclosure              490               -
Other assets                                              1,507           2,080
                                                      ---------       ---------

Total assets                                          $ 101,446       $  91,288
                                                      =========       =========

LIABILITIES AND STOCKHOLDERS' EQUITY
Other liabilities                                     $     569       $     139
Other borrowed funds                                     20,000           8,000
                                                      ---------       ---------
   Total liabilities                                     20,569           8,139

Guaranteed preferred beneficial interests in Company's
   debentures                                            28,750          28,750

Stockholders' equity
   Preferred stock                                            -               -
   Common stock                                           1,103           1,103
   Surplus                                               43,445          43,445
   Retained earnings                                     11,601          10,151
   Accumulated other comprehensive income                (4,022)           (300)
                                                      ----------      ---------
       Total stockholders' equity                        52,127          54,399
                                                      ----------      ---------

Total liabilities and stockholders' equity            $  101,446      $  91,288
                                                      ==========      =========
</TABLE>

--------------------------------------------------------------------------------
                                  (Continued)
                                                                             28.
<PAGE>
                        PREMIER FINANCIAL BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 1999, 1998 and 1997
--------------------------------------------------------------------------------

NOTE  20 - PARENT COMPANY FINANCIAL STATEMENTS (Continued)

                         Condensed Statements of Income
                             Years Ended December 31
<TABLE>
<CAPTION>

                                                1999         1998         1997
                                                ----         ----         ----
                                                        (In Thousands)
<S>                                           <C>         <C>          <C>
Income
   Dividends from subsidiary banks            $ 6,300     $     -      $     -
   Interest and dividend income                   203       1,748        4,049
   Gain on sale of investment securities            -         136        2,183
   Other income                                    93       1,620           16
                                              -------     -------      -------
     Total income                               6,596       3,504        6,248

Expenses
   Interest expense                             4,111       3,593        4,037
   Salaries and employee benefits                 921         461          465
   Other expenses                                 708         684          804
                                              -------     -------      -------
     Total expenses                             5,740       4,738        5,306

Income (loss) before income taxes and equity
   in undistributed income of subsidiaries        856      (1,234)         942

Income tax expense (benefit)                   (1,899)       (516)         326
                                              -------     -------      -------

Income (loss) before equity in undistributed
   income of subsidiaries                       2,755        (718)         616

Equity in undistributed income of subsidiaries  1,835       6,422        5,168
                                              -------     -------      -------

Net income                                    $ 4,590     $ 5,704      $ 5,784
                                              =======     =======      =======
</TABLE>

--------------------------------------------------------------------------------
                                  (Continued)
                                                                             29.
<PAGE>
                        PREMIER FINANCIAL BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 1999, 1998 and 1997
--------------------------------------------------------------------------------

NOTE  20 - PARENT COMPANY FINANCIAL STATEMENTS (Continued)

                       Condensed Statements of Cash Flows
                             Years Ended December 31
<TABLE>
<CAPTION>

                                                                   1999              1998             1997
                                                                   ----              ----             ----
                                                                                (In Thousands)
<S>                                                             <C>               <C>              <C>
Cash flows from operating activities
   Net income                                                   $   4,590         $   5,704        $   5,784
   Adjustments to reconcile net income to net
     cash from operating activities
       Depreciation                                                   169               134               74
       Investment securities gains                                      -              (136)          (2,183)
       Equity in undistributed income of
         subsidiaries                                              (1,835)           (6,422)          (5,168)
       Change in other assets                                         573              (534)          (1,453)
       Change in other liabilities                                    430               (28)              41
                                                                ---------         ---------        ---------
         Net cash from operating activities                         3,927            (1,282)          (2,905)

Cash flows from investing activities
   Purchase of subsidiary banks                                   (13,677)          (15,168)               -
   Capital contributed to subsidiaries                                (88)          (14,908)          (2,100)
   Purchase of securities available for sale                           (5)          (87,687)        (273,500)
   Proceeds from sale of securities                                     -            87,823          275,683
   Net change in federal funds sold                                     -            16,340          (16,340)
   Net change in loans                                               (490)            5,621           (5,621)
   Purchase of premises and equipment                                (269)           (1,309)          (1,307)
   Proceeds from sale of fixed assets                               2,041                 -                -
                                                                ---------         ---------        ---------
     Net cash from investing activities                           (12,488)           (9,288)         (23,185)

Cash flows from financing activities
   Dividends paid                                                  (3,140)           (3,068)          (2,406)
   Proceeds from issuance of guaranteed preferred
     beneficial interests in Company's debentures                       -                 -           28,750
   Proceeds from other borrowed funds                              12,000             8,000                -
                                                                ---------         ---------        ---------
     Net cash from financing activities                             8,860             4,932           26,344

Net change in cash and cash equivalents                               299            (5,638)             254

Cash and cash equivalents at beginning of year                        317             5,955            5,701
                                                                ---------         ---------        ---------

Cash and cash equivalents at end of year                        $     616         $     317        $   5,955
                                                                =========         =========        =========

Supplemental disclosure of cash flow information:
Loans transferred to real estate acquired
    through foreclosure                                         $     490         $       -        $       -

</TABLE>

--------------------------------------------------------------------------------

                                                                             30.

<PAGE>



                                    PART III

Item 10, 11, 12 and 13.  Directors and Executive Officers of the Registrant;
         Executive Compensation; Security Ownership of Certain Beneficial Owners
         and Management; and Certain Relationships and Related Transactions

         The  information  required  by  these  Items  is  omitted  because  the
Corporation is filing a definitive  proxy  statement  pursuant to Regulation 14A
not later than 120 days after the end of the fiscal year  covered by this report
which includes the required  information.  The required information contained in
the Corporation's proxy statement is incorporated herein by reference.

                                     PART IV

Item 14.  Exhibits, Financial Statement Schedules and Reports on Form 8-K

(a)    The following documents are filed as part of this report:

       1.  Financial Statements:

           Independent Auditors Report
           Balance Sheets - December 31, 1999 and 1998
           Statement of Income - Years Ended December 31, 1999, 1998 and 1997
           Statements of Changes in Stockholders'  Equity - Years Ended December
             31,  1999,  1998  and 1997
           Statements of Cash Flows - Years Ended December 31, 1999, 1998
             and 1997
           Notes to Financial Statements

       2.  Financial Statement Schedules:

           No financial  statement  schedules have been included as part of this
           report  because  they are either not required or the  information  is
           otherwise included.

       3.  List of Exhibits:

           The  following  is a  list  of  exhibits  required  by  Item  601  of
           Regulation S-K and by paragraph (c) of this Item 14.

           Exhibit
           Number                Description of Document

           3.1 Form of Articles of  Incorporation  of registrant  (included as
               Exhibit 3.1 to registrant's  Registration  Statement on Form S-1,
               Registration No. 333-1702,  filed on February 28, 1996 with the
               Commission and  incorporated herein by reference).

           3.2 Form of Articles of Amendment to Articles of  Incorporation
               effective March 15, 1996 re: amendment to Article IV (included as
               Exhibit 3.2 to  registrant's  Amendment  No. 1 to  Registration
               Statement on Form S-1,  Registration  No.  333-1702,  filed on
               March 25, 1996 with the Commission and  incorporated herein by
               reference).


<PAGE>



           3.3 Bylaws of  registrant  (included as Exhibit 3.2 to  registrant's
               Registration  Statement on Form S-1, Registration No. 333-1702,
               filed on February 28, 1996 with the Commission and incorporated
               herein by reference).

           4.1 Form of Junior Subordinated  Indenture dated as of June 6, 1997
               between  Registrant and Bankers Trust  Company,  as  Trustee,
               with  respect to 9.75% Junior  Subordinated  Deferrable Interest
               Debentures due June 30, 2027  (incorporated  by reference  to
               Exhibit  4.1 to the  Registration Statement on Form S-1 of
               Registrant  filed May 28, 1997 with the Commission  (Registration
               No. 333-27943)).

           4.2 Form  of  9.75%  Junior  Subordinated  Deferrable  Interest
               Debenture  Certificate  (incorporated  by reference to Exhibit
               4.2 to the  Registration  Statement on Form S-1 of Registrant
               filed May 28, 1997 with the Commission (Registration No.
               333-27943)).

           4.3 Form of  Amended  and  Restated  Trust  Agreement  dated  as of
               June 6,  1997  among  Registrant,  as Depositor,  Bankers Trust
               Company,  as Property  Trustee,  and Bankers Trust  (Delaware),
               as Delaware Trustee  (incorporated  by  reference  to Exhibit
               4.4 to the  Registration  Statement  on Form S-1 of Registrant
               filed May 28, 1997 with the Commission (Registration No.
               333-27943)).

           4.4 Form of Guarantee  Agreement  dated as of June 6, 1997 between
               Registrant and Bankers  Trust Company (incorporated  by reference
               to Exhibit 4.6 to the  Registration  Statement on Form S-1 of
               Registrant filed May 28, 1997 with the Commission (Registration
               No. 333-27943)).

          10.1 Amended and Restated  Preferred Stock Purchase  Agreement dated
               as of September 29, 1994 between First Guaranty  Bank,  Hammond,
               Louisiana,  and  registrant  (included  as  Exhibit  10.3  to
               registrant's Registration  Statement on Form S-1,  Registration
               No.  333-1702,  filed on February 28, 1996 with the Commission
               and incorporated herein by reference).

          10.2 Employment Agreement dated March 16, 1992, between Georgetown
               Bank & Trust  Company  and Gardner E. Daniel(included as Exhibit
               10.4 to registrant's Registration Statement on Form S-1,
               Registration  No. 333-1702, filed on February 28, 1996 with the
               Commission and incorporated herein by reference).

          10.3 Deferred Compensation Agreement dated December 17, 1992, between
               Georgetown Bank & Trust Company and Gardner E.  Daniel  (included
               as Exhibit 10.5 to registrant's Registration Statement on Form
               S-1, Registration No. 333-1702, filed on February 28, 1996 with
               the Commission and incorporated herein by reference).

          10.4 Premier Financial Bancorp, Inc. 1996 Employee Stock Ownership
               Incentive Plan (included as Exhibit 10.6 to registrant's
               Registration Statement on Form S-1, Registration No. 333-1702,
               filed on February 28, 1996 with the Commission and incorporated
               herein by reference).

          21   Subsidiaries of registrant

          23.1 Consent of Crowe, Chizek and Company, LLP



<PAGE>


(b)    Reports on Form 8-K

       Form 8-K dated November 13, 1998 reporting  consummation of the Company's
acquisition  from Bank One West Virginia NA, three branches  located in Madison,
Van and Philippi, West Virginia.

       Form 8-K dated January 25, 1999 reporting  consummation of the Company's
acquisition of Mt. Vernon Bancshares,  Inc. located in Somerset, Kentucky.


                                   SIGNATURES

       Pursuant to the  requirements  of the  Securities  Exchange  Act of 1934,
registrant  has duly caused this Annual  Report on Form 10-K to be signed on its
behalf by the undersigned thereunto duly authorized,  in the City of Georgetown,
Commonwealth of Kentucky, on the 27th day of March, 2000.

                                               PREMIER FINANCIAL BANCORP, INC.


                                        By:  /s/ J. Howell Kelly, President
                                             ------------------------------
                                                 J. Howell Kelly, President

       Pursuant to the requirements of the Securities Exchange Act of 1934, this
Annual  Report on Form 10-K has been signed  below by the  following  persons on
behalf of the registrant in the capacities and on the dates indicated.


March 27, 2000           /s/ J. Howell Kelly       Principal Executive
                         --------------------      and Director
                         J. Howell Kelly


March 27, 2000           /s/ Toney K. Adkins       Director
                         --------------------
                         Toney K. Adkins


March 27, 2000           /s/ Gardner E. Daniel     Director
                         ---------------------
                         Gardner E. Daniel


March 27, 2000           /s/ E. V. Holder, Jr.     Director
                         ---------------------
                         E. V. Holder, Jr.


March 27, 2000           /s/ Jeanne D. Hubbard     Director
                         ---------------------
                         Jeanne D. Hubbard


March 27, 2000           /s/ Wilbur M. Jenkins     Director
                         ---------------------
                         Wilbur M. Jenkins


March 27, 2000           /s/ Keith F. Molihan      Director
                         --------------------
                         Keith F. Molihan
<PAGE>

March 27, 2000           /s/ Benjamin T. Pugh      Director
                         --------------------
                         Benjamin T. Pugh


March 27, 2000           /s/ Marshall T. Reynolds  Director
                         ------------------------
                         Marshall T. Reynolds


March 27, 2000           /s/ Neal Scaggs           Director
                         -----------------------
                         Neal Scaggs

Exhibit 21

                         SUBSIDIARIES OF THE REGISTRANT


       The following is a list of all subsidiaries of Premier Financial Bancorp,
Inc. and their state of incorporation.

       Subsidiary                                      State of Incorporation

Citizens Deposit Bank and Trust Company                    Kentucky

County Finance (a direct subsidiary of Citizens Deposit
   Bank and Trust Company)                                 Kentucky

Bank of Germantown                                         Kentucky

Georgetown Bancorp, Inc.                                   Kentucky

Georgetown Bank and Trust Company (a direct subsidiary
   of Georgetown Bancorp, Inc.)                            Kentucky

Citizens Bank                                              Kentucky

Premier Data Services, Inc.                                Kentucky

Farmers Deposit Bancorp, Inc.                              Kentucky

Farmers Deposit Bank (a direct subsidiary of Farmers
   Deposit Bancorp, Inc.)                                  Kentucky

Mt. Vernon Bancshares, Inc.                                Kentucky

The Bank of Mt. Vernon (a direct subsidiary of
   Mt. Vernon Bancshares, Inc.)                            Kentucky

The Sabina Bank                                            Ohio

Ohio River Bank                                            Ohio

The Bank of Philippi                                       West Virginia

Boone County Bank                                          West Virginia


<PAGE>


Exhibit 23.1








                       CONSENT OF INDEPENDENT ACCOUNTANTS


         We hereby  consent to the  inclusion of our report  dated  February 18,
2000 in the annual report on Form 10-K of Premier Financial Bancorp,  Inc. as of
December  31, 1999 and 1998 and for each of years in the three year period ended
December 31, 1999.



                                       /s/ Crowe, Chizek and Company, LLP
                                       Crowe, Chizek and Company, LLP


Lexington, Kentucky
March 27, 2000