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, 2001
                                       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. [X]

The aggregate market value of voting stock held by non-affiliates of the
Registrant as of March 1, 2002 was $36,191,823. The number of shares outstanding
of the Registrant's Common Stock as of March 1, 2002 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 2002 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 16, 2002, operates sixteen banking
offices in Kentucky, four banking offices in Ohio, and six banking offices in
West Virginia. At December 31, 2001, Premier had total consolidated assets of
$711.8 million, total consolidated deposits of $570.5 million and total
consolidated shareholders' equity of $59.9 million. The banking subsidiaries
(the "Banks" or "Affiliate Banks") consist of Citizens Deposit Bank & Trust,
Vanceburg, Kentucky; Bank of Germantown, Germantown, Kentucky, Citizens Bank
(Kentucky), Inc., Georgetown, Kentucky; Farmers Deposit Bank, Eminence,
Kentucky; Ohio River Bank, Ironton, Ohio; First Central Bank, Inc., Philippi,
West Virginia; and Boone County Bank, Inc., Madison, West Virginia.

         In 2000 Premier suspended its acquisition strategy in order to focus on
improving operations, strengthening capital and management oversight and
improving profitability at the banks previously acquired. As part of this change
in strategy Premier elected to dispose of two of its subsidiary banks, the Bank
of Mt. Vernon and The Sabina Bank. These disposals were completed in 2001. While
Premier remains committed to its core strategy of rural banking with community
oriented and named institutions, the Company may dispose of additional corporate
assets that no longer meet Premier's geographic or operational performance
goals.

         During October 2001, the Company appointed Robert Walker to the
position of President and Chief Executive Officer to replace the retiring
Gardner Daniel. During February 2002, the Company's CFO left the Company. A
search is underway for a replacement.

         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 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,
<page>
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.

         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, 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 six 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.

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 which have
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 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.

         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 four Affiliate Banks chartered in Kentucky are supervised,
regulated and examined by the Kentucky Department of Financial Institutions, the
Affiliate Bank chartered in Ohio is 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 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, 2001, Premier met
both requirements, with Tier I and total capital equal to 13.4% and 16.6% 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, 2001, Premier's leverage ratio was 8.5%.

         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.

Regulatory Agreements - On September 29, 2000, the Company entered into an
agreement with the Federal Reserve that prohibits the company from paying
dividends or incurring any additional debt without the prior written approval of
the Federal Reserve. Additionally, the agreement requires the company to develop
and monitor compliance with certain operational policies designed to strengthen
Board of Director oversight including credit administration, liquidity, internal
audit and loan review.

         Two of the Banks, Citizens Deposit Bank & Trust and Bank of
Germantown, have entered into similar agreements with their respective primary
regulator which, among other things, prohibits the payment of dividends without
prior written approval and requires significant changes in their lending and
credit administration policies.

         These agreements, which require periodic reporting, will remain in
force until the regulators are satisfied that the company and the banks have
fully complied with the terms of the agreement.

Dividend Restrictions - Premier is dependent on dividends from its Affiliate
Banks for its revenues. Various federal and state regulatory provisions limit
the amount of dividends the Affiliate Banks can pay to Premier without
regulatory approval. At December 31, 2001, approximately $3.2 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 20 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 as 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, eliminating many of the remaining barriers to full
convergence of the banking, securities, and insurance industries. The major
provisions of the Act took effect 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. 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."

<page>
         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 acquisitions, 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 acquisition.

Number of Employees - The Company and its subsidiaries collectively had
approximately 274 full-time equivalent employees as of December 31, 2001. 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. Except as noted each of the Banks owns the real
property and improvements on which their banking activities are conducted.

         Citizens Deposit Bank & Trust, in addition to its main office at 400
Second Street in Vanceburg, Kentucky, has four 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 two branches located
in Bracken County, Kentucky. Citizens Bank (Kentucky), Inc., in addition to its
main office at 120 North Hamilton Street in Georgetown, Kentucky, has two
branches in Scott County, Kentucky, and two branches in Bath County, 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. 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. First
Central Bank, 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
three branches, one each located in Boone, Logan and Lincoln Counties, West
Virginia.

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 December 31, 2001, the Company had approximately 733 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.

<TABLE>
<CAPTION>

                                                          Cash                            Sales Price
                                                     Dividends Paid                   High            Low
                                                     --------------                   ----            ---
<S>                                                        <C>                        <C>              <C>
         2000:
           First Quarter                                $    0.15                     $10.25          $7.50
           Second Quarter                                       -                       8.38           6.00
           Third Quarter                                        -                       6.75           4.63
           Fourth Quarter                                       -                       6.50           5.06
                                                        ---------
                                                        $    0.15
                                                        =========
         2001:
           First Quarter                                $       -                      $7.38          $5.13
           Second Quarter                                       -                       7.90           6.30
           Third Quarter                                        -                       9.40           7.55
           Fourth Quarter                                       -                       8.95           8.10
                                                        ---------
                                                        $       -
                                                        =========
         2002:
           First Quarter (through March 11, 2002)       $       -                     $ 8.75         $ 8.11
</TABLE>


         The Board of Directors suspended the payment of dividends during the
second quarter of 2000. In September 2000 as a result of an agreement entered
into with the Federal Reserve, the Company agreed not to declare additional
dividends without the prior approval of the Federal Reserve. The Board of
Directors anticipates paying dividends at some future date when, in its
discretion, financial prudence allows and the Federal Reserve concurs in the
payment of such dividends. Even if the Company is able to resume the payment of
dividends, there can be no assurance that the amount of the dividends will be
what the Company paid before the payment of dividends was suspended.

         The payment of dividends by the Company depends 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,
2001, approximately $3.2 million was available for payment as dividends from the
Banks to the Company without the need for regulatory approval. 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. See "REGULATORY MATTERS - Capital Requirements" for discussion on capital
guidelines.



<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>
                                              2001           2000            1999            1998           1997
                                              ----           ----            ----            ----           ----
Earnings
   Net interest income                   $      25,274   $      28,676  $      28,665   $      20,107   $      17,458
   Provision for loan losses                     8,921           4,932          3,294           1,742           1,399
   Non-interest income                          13,336           4,012          3,776           4,673           4,562
   Non-interest expense                         23,985          26,105         22,630          15,337          12,232
   Income taxes                                  3,385             316          1,927           1,997           2,605
     Net income                          $       2,319   $       1,335  $       4,590   $       5,704   $       5,784

Financial Position
   Total assets                          $     771,850   $     889,932  $     852,468   $     657,744   $     464,890
   Loans, net of unearned
     income                                    458,741         595,576        570,106         395,620         312,102
   Allowance for loan losses                     8,946           7,821          6,812           4,363           3,479
   Goodwill and other intangibles               16,044          22,856         24,339          21,555           7,262
   Securities                                  155,566         194,400        170,420         177,192          73,409
   Deposits                                    570,531         728,412        692,843         523,193         358,605
   Other borrowings                             49,315          71,240         73,929          47,670          21,842
   Debt                                         28,750          28,750         28,750          28,750          28,750
   Stockholders' equity                         59,875          55,830         52,127          54,399          52,007

Share Data
   Net income - basic                     $      .44      $      .26     $      .88      $     1.09     $      1.11
   Net income - diluted                          .44             .26            .88            1.09            1.10
   Book value                                  11.44           10.67           9.96           10.40            9.94
   Cash dividend                                0.00            0.15           0.60            0.60            0.55

Ratios
   Return on average assets                      .30%            .15%           .57%            .97%           1.29%
   Return on average equity                     4.01%           2.53%          8.54%          10.80%          11.51%
   Dividend payout                                 0%          58.80%         68.41%          53.79%          41.60%
   Stockholders' equity to total
     assets at period-end                       8.41%           6.27%          6.11%           8.27%          11.19%
   Average stockholders' equity
     to average total assets                    7.47%           6.07%          6.72%           9.02%          11.21%

Capital Ratios
   Equity to assets                             8.4%            6.3%           6.1%            8.3%           11.2%
   Leverage ratio                               8.5%            6.1%           6.2%            8.1%           13.6%


</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 2001, Premier continued efforts to make stronger its network of independently
managed community banks by way of a more centralized corporate structure. In
doing so, Premier suspended its acquisition strategy in order to focus on
improving operations, strengthening capital and management oversight and
improving profitability at the banks previously acquired. As part of this change
in strategy Premier elected to dispose of two of its subsidiary banks, the Bank
of Mt. Vernon and The Sabina Bank. While Premier remains committed to its core
strategy of rural banking with community oriented and named institutions, the
Company may dispose of additional corporate assets that no longer meet Premier's
geographic or operational performance goals.

For 2001, net income was $2,319 compared to $1,335 for 2000; total assets
decreased to $711,850 from the $889,932 in 2000, and shareholders' equity
increased to $59,875 from $55,830 in 2000.

Quarterly unaudited financial information for the Company for the years ended
December 31, 2001 and 2000, is summarized as follows:






<PAGE>


<TABLE>
<CAPTION>

                         Quarterly Financial Information
                 (Dollars in thousands except per share amounts)
<S>                                                       <C>          <C>         <C>        <C>        <C>
                                                                                                           Full
                                                         First       Second       Third       Fourth       Year
                                                         -----       ------       -----       ------       ----
   2001
   ----
             Interest Income                              $15,796      $14,999     $14,243     $13,004      $58,042
             Interest Expense                               9,442        8,589       8,003       6,734       32,768
             Net Interest Income                            6,354        6,410       6,240       6,270       25,274
             Provision for Loan Losses                        632        3,015       1,793       3,481        8,921
             Securities Gains                                 180           60         195          81          516
             Gain on Sale Of Subsidiary
               Banking Operations                           3,418            -           -       5,295        8,713
             Net Overhead                                   5,121        4,599       4,638       5,520       19,878
             Income before Income Taxes                     4,199      (1,144)           4       2,645        5,704
             Net Income                                     1,224        (705)          46       1,754        2,319
             Basic Net Income per share                      0.23       (0.13)        0.01        0.33         0.44
             Diluted Net Income per share                    0.23       (0.13)        0.01        0.33         0.44
             Dividends Paid per share                           -            -           -           -            -
   2000
   ----
             Interest Income                              $16,611      $17,033     $17,605     $17,985      $69,234
             Interest Expense                               9,525        9,792      10,474      10,767       40,558
             Net Interest Income                            7,086        7,241       7,131       7,218       28,676
             Provision for Loan Losses                      1,385        1,505       1,125         917        4,932
             Securities Gains (Losses)                          1        (281)           1           -        (279)
             Net Overhead                                   5,135        5,136       5,564       5,979       21,814
             Income before Income Taxes                       567          319         443         322        1,651
             Net Income                                       447          262         371         255        1,335
             Basic Net Income per share                      0.09         0.05        0.07        0.05         0.26
             Diluted Net Income per share                    0.09         0.05        0.07        0.05         0.26
             Dividends Paid per share                        0.15            -           -           -         0.15
</TABLE>

BUSINESS COMBINATIONS
---------------------
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.

On January 26, 2001, the company disposed of all the deposits (approximately
$110 million), the majority of loans (approximately $92 million) and the
premises and equipment (approximately $1.6 million) of the Bank of Mt. Vernon
under the terms of a Purchase and Assumption Agreement. As a result of this
transaction, the banking charter of the Bank of Mt. Vernon was relinquished and
the Company agreed to not compete in the markets previously served by the Bank
of Mt. Vernon.

On December 10, 2001, the Company disposed of certain assets and liabilities of
The Sabina Bank. The sale included all the loans (approximately 31 million) and
all the deposits (approximately 41 million), as well as the premises and
equipment (approximately 1.2 million). Certain assets, of the bank, were
retained by Premier pending liquidation of the bank. The operating results of
both the Bank of Mount Vernon and The Sabina Bank were included in the Company's
operating results through the respective dates of the sale. The results relating
to the assets retained by the Company continue to be included in the Company's
operating results.


<PAGE>


RESULTS OF OPERATIONS
---------------------
Earnings Summary

Premier recorded net income for 2001 of $2,319, versus $1,335 and $4,590 for
2000 and 1999. Basic and diluted earnings per common share were $0.44 in 2001
compared to $0.26 in 2000 and $0.88 in 1999. The increase for 2001 versus 2000
was primarily attributable to net gains of $8,713 on the disposals of two
affiliate banking operations. These gains more than offset a $3,989 increase to
loan loss provision that the company experienced in 2001 as it worked to
strengthen credit risk identification and monitoring. Non interest income
improved from $4,012 in 2000 to $13,336 in 2001 due to these gains. Non interest
expense was down $2,120 at $23,985 for 2001 versus $26,105 in 2000. The net
improvements to income noted above were partially offset by added income taxes
which increased from $316 in 2000 to $3,385 in 2001.

Net income of $1,335 in 2000 represented a 70.9% decrease from the 1999 amount
of $4,590. This decrease in 2000 was primarily attributed to an increase in the
provision for loan losses from $3,294 in 1999 to $4,932 in 2000 and an increase
in noninterest expense of $3,475 from $22,630 in 1999 to $26,105 in 2000.
Partially offsetting these decreases to net income were an increase in
noninterest income from $3,776 in 1999 to $4,012 in 2000, an increase of $236 or
6.3%, and a decrease in provision for income taxes from $1,927 in 1999 to $316
in 2000, a decrease of $1,611 or 83.6%.

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%.
<TABLE>
<CAPTION>

                         Summary of Net Interest Income
              (Dollars in thousands on a taxable equivalent basis)
<S>                                                                      <C>              <C>             <C>
                                                                         2001             2000            1999
                                                                         ----             ----            ----
Interest income..........................................           $      58,042    $      69,234   $      62,872
Tax equivalent adjustment................................                     543              723             726
                                                                    -------------    -------------   -------------
    Interest income......................................                  58,585           69,957          63,598
Interest expense.........................................                  32,768           40,558          34,207
                                                                    -------------    -------------   -------------
    Net interest income..................................           $      25,817    $      29,399   $      29,391
                                                                    =============    =============   =============
</TABLE>


The following table shows, for the three year period ended December 31, 2001,
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 2001, tax equivalent
net income was $25,817, which reflected a decrease of $3,587 from $29,399 in
2000. The larger portion of the decrease related to $84,380 in lower average
earning assets and $94,853 in lower interest bearing liabilities. The primary
drivers of these lower volumes were of course the sale of the banking operations
that occurred during 2001. The lower volumes resulted in $3,582 of lower net
interest income. The yield on earning assets in 2001 of 8.21% was 56 basis
points lower than the 8.77% earned in 2000, and the cost of interest bearing
liabilities decreased 40 basis points to 5.08% in 2001 from 5.49% in 2000.
Consequently, Premier's net interest spread decreased from 3.28% in 2000 to
3.13% in 2001 and the net interest margin decreased from 3.68% in 2000 to 3.62%
in 2001. While a portion of the decrease in net interest spread was the result
of changes in the portfolio makeup from the sales of two subsidiary banking
operations, a lower overall interest rate environment in 2001 lead to shrinkage
in the pricing of interest earning assets that were added or repriced during
2001. While similar changes occurred on the liability side, the impact was
smaller and the net result was the margin shrinkage discussed above. In terms of
dollars the decrease in margin relating to lower rates in 2001 versus 2000 was
$931.

 In 2000, tax equivalent net interest income was $29,399, an amount essentially
unchanged from the $29,391 in 1999. The 2000 net interest income is the result
of an increase of $70,486 or 9.7% in average earning assets and an increase of
$66,317 or 9.9% in average interest bearing liabilities. The yield on earning
assets in 2000 of 8.77% was 3 basis points higher than the 8.74% earned in 1999,
and the cost of interest bearing liabilities increased 40 basis points to 5.49%
in 2000 from 5.09% in 1999. Consequently, Premier's net interest spread
decreased from 3.65% in 1999 to 3.28% in 2000 and the net interest margin
decreased from 4.04% in 1999 to 3.68% in 2000. The decrease in net interest
spread and net interest margin is primarily attributable to the 40 basis point
increase in the rising rate environment experienced in 2000 and the 22 basis
point decrease in yield on loans. The reduction in yield on loans can be
attributed to the liquidations of the higher yielding subprime real estate
portfolio, the increase in the average balance of nonaccrual loans, and the
increased level of competition experienced with the growth in the volume of
loans.
<page>
The following table presents average balances and interest rates for the
three-year period ended December 31, 2001.
<TABLE>
<CAPTION>

              Average Consolidated Balance Sheets and Net Interest
                                    Analysis
                             (Dollars in thousands)

                                                   2001                            2000                             1999
                                                   ----                            ----                             ----
 <S>                                   <C>         <C>        <C>        <C>       <C>         <C>        <c>       <c>      <c>

                                     Average               Average    Average               Average    Average               Average
                                     Balance    Interest     Rate     Balance   Interest     Rate      Balance   Interest     Rate
Assets:
  Interest earning assets
  U.S. Treasury and federal agency
     securities                     $ 122,058  $    7,323     6.00%  $ 152,479  $   9,674     6.34%   $ 152,454  $   9,213     6.04%
  States and municipal obligations(1)  20,277       1,589     7.84      24,156      1,885     7.80       23,906      1,920     8.03
  Other securities (1)                 12,760         709     5.56       7,215        688     9.54        6,839        577     8.44
                                    ---------  ----------  -------   ---------  ---------  -------    ---------  ---------  -------
     Total investment securities    $ 155,095  $    9,621     6.20   $ 183,850  $  12,247     6.66    $ 183,199  $  11,710     6.39
  Federal funds sold                   40,247       1,529     3.80      22,714      1,398     6.15       20,909      1,047     5.01
  Interest-bearing deposits with
      Banks                               504          20     3.97       1,052         67     6.37        3,273        192     5.87
  Loans, net of unearned income
   (3) (4)
    Commercial                        210,923      18,997     9.01     228,760     22,090     9.66      211,948     20,200     9.53
    Real estate mortgage              224,428      19,532     8.70     287,713     26,197     9.11      241,708     23,065     9.54
    Installment                        76,889       8,886    11.56      74,045      7,958    10.75       66,611      7,384    11.09
                                    ---------  ----------  -------   ---------  ---------  -------    ---------  ---------  -------
       Total loans                  $ 512,240  $   47,415     9.26   $ 590,518  $  56,245     9.52    $ 520,267  $  50,649     9.74

Total interest-earning assets       $ 713,754  $   58,585     8.21%  $ 798,134  $  69,957     8.77%   $ 727,648  $  63,598     8.74%
Allowance for loan losses              (8,744)                          (7,626)                          (6,084)
Cash and due from banks                20,938                           20,580                           21,794
Premises and equipment                 13,593                           15,143                           14,120
Other assets                           34,509                           42,386                           41,395
                                    ---------                        ---------                        ---------
   Total assets                     $ 774,050                        $ 868,617                        $ 798,873

Liabilities:
  Interest bearing deposits:
    NOW and money market            $ 178,501  $    5,723     3.21%  $ 175,166  $   7,272     4.15%   $ 150,165  $   5,475     3.65%
    Savings                            63,287       1,567     2.48      63,850      1,929     3.02       63,227      1,961     3.10
    Certificates of deposit and
      other time deposits             322,309      19,260     5.98     394,763     23,302     5.90      368,720     20,372     5.53
                                    ---------  ----------  -------   ---------  ---------  -------    ---------  ---------  -------
       Total interest-bearing
         deposits                   $ 564,097  $   26,550     4.71   $ 633,779  $  32,503     5.13    $ 582,112  $  27,808     4.78
    Other borrowings                   25,455       1,677     6.59      44,382      3,212     7.24       28,977      1,754     6.05
    FHLB advances                      26,827       1,687     6.29      32,071      1,991     6.21       32,826      1,793     5.46
    Debt                               28,750       2,854     9.93      28,750      2,852     9.92       28,750      2,852     9.92
                                    ---------  ----------  -------   ---------  ---------  -------    ---------  ---------  -------

   Total interest-bearing
     liabilities                    $ 645,129  $   32,768     5.08%  $ 738,982  $  40,558     5.49%   $ 672,665  $  34,207     5.09%


   Non-interest bearing demand
      deposits                         65,795                           72,392                           66,483
   Other liabilities                    5,797                            4,482                            6,005
                                    ---------                        ---------                        ---------
        Total liabilities           $ 716,721                        $ 815,856                        $ 745,153

Shareholders' Equity:                  57,853                           52,761                           53,720

Total liabilities and shareholders' ---------                        ---------
    equity                          $ 774,574                        $ 868,617                        $ 798,873

Net interest income (1)                            25,817                          29,399                           29,391

Net interest spread (1)                                       3.13%                           3.28%                            3.65%
Net interest margin (1)                                       3.62%                           3.68%                            4.04%
</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
2001 and 2000.
<TABLE>
<CAPTION>

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

                                                      2001 vs. 2000                              2000 vs. 1999
                                          Increase (decrease) due to change in       Increase (decrease) due to change in
<S>                                         <C>           <C>           <C>            <C>           <C>           <C>
                                                                        Net                                         Net
                                           Volume         Rate         Change         Volume         Rate         Change
Interest Income:
Loans                                   $    (7,283)  $    (1,547)   $    (8,830)  $     6,734   $    (1,138)  $     5,596
Investment securities                        (1,824)         (802)        (2,626)           42           495           537
Federal funds sold                              260          (129)           131            96           255           351
Deposits with banks                             (27)          (20)           (47)         (140)           15          (125)
                                        ------------  ------------   ------------  ------------  -----------   ------------
    Total interest income               $    (8,874)  $    (2,498)   $   (11,372)  $     6,732   $      (373)  $     6,359

Interest Expense:
Deposits -
  NOW and money market                  $        98   $    (1,647)   $    (1,549)  $       980   $       817   $     1,797
  Savings                                       (17)         (345)          (362)           19           (51)          (32)
  Certificates of deposit                    (4,333)          291         (4,042)        1,489         1,441         2,930
  Other borrowings                           (1,268)         (267)        (1,535)        1,066           392         1,458
  FHLB borrowings                              (330)           26           (304)          (42)          240           198
  Debt                                            -             2              2             -             -             -
                                        -----------   -----------    -----------   -----------   -----------   -----------
    Total interest expense              $    (5,850)  $    (1,940)   $    (7,790)  $     3,512   $     2,839   $     6,351

       Net interest income              $    (3,024)  $      (558)   $    (3,582)  $     3,220   $    (3,212)  $         8
</TABLE>

The change in interest income and expense due to both rate and volume has been
allocated to changes in average volume and changes in average rate in proportion
to the relationship of the absolute dollar amounts of change in each category.

PROVISION AND ALLOWANCE FOR LOAN LOSSES
---------------------------------------
The company maintains its allowance for loan losses (allowance) at a level that
is considered sufficient to absorb probable incurred credit losses existing in
the loan portfolio. The allowance is increased by the provision for probable
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:

*  Past due and nonperforming assets;
*  Specific internal analyses of loans requiring special attention;
*  The current level of regulatory classified and criticized assets and the
   associated risk factors with each;
*  Examinations and reviews by the Company's independent accountants, external
   and internal loan review personnel; and
*  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
<page>
future loss on specific loans is developed in conjunction with an overall risk
evaluation of the total loan portfolio.

The following table is a summary of the Company's loan loss experience for each
of the past five years.
<TABLE>
<CAPTION>
                         Summary of Loan Loss Experience
                             (Dollars in Thousands)


                                                                               Years Ended December 31,
                                                        -----------------------------------------------------------------------
<S>                                                         <C>             <C>         <C>            <C>             <C>
                                                            2001          2000          1999           1998           1997
                                                            ----          ----          ----           ----           ----
Balance at beginning of year                            $      7,821  $     6,812   $     4,363   $      3,479    $     3,127
Balance of allowance for loan losses of
   acquired or disposed subsidiaries at                         (266)           -         1,310            115              -
   acquisition date
Amounts charged off:
   Commercial                                                  4,766        3,298         1,380            500            532
   Real estate mortgage                                        1,267          125           381             60            139
   Consumer                                                    2,117          959           795            629            634
                                                        ------------  -----------   -----------   ------------    -----------
     Total loans charged off                            $      8,150  $     4,382   $     2,556   $      1,189    $     1,305

Recoveries on amounts previously charged off:
   Commercial                                                    203          257           158             45             48
   Real estate mortgage                                            9            4            12              1              -
   Consumer                                                      408          198           231            170            210
                                                        ------------   ----------   -----------   ------------    -----------
     Total recoveries                                            620          459           401            216            258

Net charge-offs                                                7,530        3,923         2,155            973          1,047
Provision for loan losses                                      8,921        4,932         3,294          1,742          1,399
                                                        ------------   ----------   -----------   ------------    -----------
Balance at end of year                                  $      8,946  $     7,821   $     6,812   $      4,363    $     3,479

Total loans, net of unearned income:
   Average                                                   512,240      590,518       520,267        340,089        285,208
   At December 31                                            458,741      595,576       570,106        395,620        312,102

As a percentage of average loans:
   Net charge-offs                                             1.47%          .66%          .41%          .29%            .37%
   Provision for loan losses                                   1.74%          .84%          .63%          .51%            .49%
Allowance as a percentage of year-end net loans                1.95%         1.31%         1.19%         1.10%           1.11%
Allowance as a multiple of net charge-offs                        1             2             3             4               3
</TABLE>

The provision for loan losses for 2001 was $8,921 compared to $4,932 in 2000, an
increase of $3,989. This increase can be mainly attributed to additional
charge-offs and an increase in nonperforming assets. In 2001, net charge-offs
were $7,530 compared to $3,923 in 2000, an increase of $3,607. The increase in
2001 net charge-offs is primarily attributed to the deterioration in the loan
portfolios in certain markets served by the subsidiary banks. At December 31,
2001, Premier's allowance for loan losses was 1.95% of period-end loans compared
to 1.31% at December 31, 2000.


<PAGE>



Net charge-offs to average loans were 1.47% for the year 2001 compared to .66%
for the year 2000. At December 31, 2001, Premier's allowance for loan losses
totaled $8,946, representing an increase of $1,125 over the amount for December
31, 2000. The allowance for loan losses was 57% of nonperforming loans on
December 31, 2001, compared to 73% at December 31, 2000. At year end 2001,
nonperforming loans represented 3.40% of total outstanding loans, up from 1.80%
on December 31, 2000.

The following table sets forth an allocation for the allowance for loan losses
by category of loan and a percentage of loans in that category. In making the
allocation, consideration was given primarily to management's best estimates as
to the current losses in the portfolio. The components considered in arriving at
these amounts included identified specific risks in the portfolio, along with
current trends in losses and non performing in the specific loan categories. An
allocation for the allowance for 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. The loan loss
reserve represents managements best estimate of the actual losses anticipated in
the portfolio that are reasonably likely and probable to occur.
<TABLE>
<CAPTION>

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


                                                                    At December 31,
                       -----------------------------------------------------------------------------------------------------------
                              2001                  2000                 1999                  1998                 1997
                              ----                  ----                 ----                  ----                 ----
<S>                      <C>        <C>        <C>        <C>       <C>        <C>         <c>       <c>       <c>        <c>
                        Amount       %        Amount       %       Amount       %        Amount        %       Amount         %
                        -----       ----      ------      ----     ------      ----      ------       ----     ------       ----
Commercial             $ 2,680      17.8%    $ 2,535      17.0%   $ 2,123      20.6%    $ 1,695       22.5%  $ 1,226        27.0%
Real estate mortgage     4,447      64.9       3,417      64.8      2,490      61.9       1,728       57.8       732        51.1
Consumer                 1,819      17.3       1,261      18.2        948      17.5         738       19.7       965        21.9
Unallocated                 --        --         608        --      1,251        --         202         --       556          --
                       -------      ----     -------      ----    -------      ----     -------       ----   -------        ----
  Total                $ 8,946     100.0%    $ 7,821     100.0%   $ 6,812     100.0%    $ 4,363      100.0%  $ 3,479       100.0%
</TABLE>



Any reallocation to the allowance is primarily indicative of changes in loan
portfolio mix, not changes in loan concentrations or terms. The Company does
consider 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 largely
attributable to deterioration in loan quality as well as the company's efforts
at improving risk identification and monitoring.

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 2001 decreased $184 or 4.3% to $4,107 from $4,291
in 2000. Service charges on deposit accounts decreased 2.0% or $44 to $2,191
from $2,235 in 2000. Insurance commissions decreased 38.1% and other income
increased 1.8%. The service charge and insurance commission decreases were in
large part due to the result of the sales of the subsidiary banking operations
during 2001.

Total fees and other income increased $532 or 14.2% in 2000 to $4,291 from
$3,759 in 1999. Service charges on deposit accounts increased 13.7% and all
other income increased 14.6%.

Gains on the sale of investment securities in 2001 were $516, an increase of
$795 from the losses of $(279) in investment securities in 2000. Investment
securities losses in 2000 were $(279) versus gains of $17 in 1999, a decrease of
$296.

Premier recognized gains of $8,713 in 2001 from the sale of two of its
subsidiary banking operations.

Premier recognized a gain of $289 during the second quarter of 2000 as the
result of the sale of an affiliate's Federal Home Loan Bank advance. This gain
was substantially offset by losses on securities of $281, which was also
recognized in the second quarter of 2000.

Noninterest expenses decreased $2,120 or 8.1% in 2001, from $26,105 in 2000 to
$23,985 in 2001, and increased $3,475 or 15.4% in 2000 from $22,630 in 1999. The
primary factor resulting in the 2001 decrease in expenses was the sale during
the year of two subsidiary banking operations.

Salaries and employee benefits, the largest component of noninterest expense,
decreased 11.6% in 2001 and increased 14.2% in 2000. The changes include salary
increases and reflect changes in the number of full time equivalent employees
from 351 at December 31, 1999 to 361 at December 31, 2000 and 274 at December
31, 2001. The decrease for 2001 reflects the sales of two subsidiary banking
operations during the year. The 2000 increase can be primarily attributed to the
addition of three banking locations, the expensing of severance costs and annual
salary increases.

Occupancy and equipment expense for 2001 of $2,941 was $246 or 7.7% lower than
the $3,187 for 2000. The increase in 2000 was $302, or 10.5%, more than the
$2,885 expensed in 1999. The 2001 decrease was the result of the sale of two
subsidiary banking operations during the year. The increase in 2000 is primarily
attributable to the expansion in the number of banking locations.

Other noninterest expense, which is the second largest category, decreased $532
or 8.1% in 2001 and increased $1,461 or 28.6% in 2000. The 2001 decrease was the
result of the sale of two subsidiary banking operations during the year. The
2000 increases are primarily attributed to write-downs of other real estate
owned of approximately $617 and increased costs associated with heightened
levels of risk identification and controls.

Amortization of intangibles decreased $242 or 15.4% to $1,329 for 2001 from the
2000 amount of $1,571. The 2000 amortization was a decrease of $54 from the 1999
amount of $1,625. The significant 2001 decrease was the result of the reduction
in intangibles related to the sale of the two subsidiary banking operations
during 2001.
<page>
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 2001, total net noninterest expenses (excluding
investment securities gains, gain on FHLB advance sale and gain on sales of
subsidiary banking operations) as a percent of average total assets were 2.69%,
compared to 2.54% in 2000 and 2.36% in 1999.

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

                         Non-Interest Income and Expense
                             (Dollars in thousands)
<S>                                                <C>            <C>          <C>          <C>           <C>           <C>
                                                                             Increase                                Increase
                                                                            (decrease)                              (decrease)
                                                                             2001 vs.                                2000 vs.
                                                     2001         2000         2000          2000         1999         1999
                                                  ------------ ------------ ------------ ------------- ------------ ------------
Non-Interest Income:
   Service charges on deposit accounts            $   2,191    $   2,235    $       (44) $   2,235     $   1,965    $       270
   Insurance income                                     274          443           (169)       443           565           (122)
   Other                                              1,642        1,324            318      1,324         1,229             95
                                                  ---------    ---------    -----------  ---------     ---------    -----------
      Total fees and other income                 $   4,107    $   4,002    $       105  $   4,002     $   3,759    $       243
   Investment securities gains(losses)                  516         (279)           795       (279)           17           (296)
   Gain on FHLB advance sale                              -          289            (28)       289             -            289
   Gain on sale of banking operations                 8,713            -              -          -             -              -
                                                  ---------    ---------    -----------  ---------     ---------    -----------
        Total non-interest income                 $  13,336    $   4,012    $       872  $   4,012     $   3,776    $       236

Non-Interest Expense:
   Salaries and employee benefits                    11,785       13,332         (1,547)    13,332        11,679          1,653
   Occupancy and equipment expense                    2,941        3,187           (246)     3,187         2,885            302
   Professional fees                                  1,065          705            360        705           547            158
   Taxes, other than payroll, property
      and income                                        836          749             87        749           794            (45)
   Amortization of intangibles                        1,329        1,571           (242)     1,571         1,625            (54)
   Other expenses                                     6,029        6,561           (532)     6,561         5,100          1,461
                                                  ---------    ---------    -----------  ---------     ---------    -----------
      Total non-interest expenses                 $  23,985    $  26,105    $    (2,120) $  26,105     $  22,630    $     3,475

Net non-interest expenses as a percent
   of average assets                                 1.44%        2.54%                     2.54%          2.36%
Net non-interest expenses as a percent
   of average assets (excluding investment
     securities gains, gain on
     FHLB advance sale and gain on sale of
     banking operations)                             2.69%        2.54%                     2.54%          2.36%

</TABLE>



<PAGE>


INCOME TAXES
------------
The Company's provision for income taxes was $3,385 in 2001, which represented
59.3% of pre-tax income versus $316 in 2000 or 19.1% and $1,927 or 29.6% of
pre-tax income in 1999. The increase in taxes as well as the increased tax
percentage for 2001 versus 2000 was due to the sale during 2001 of two
subsidiary banking operations and the taxability of the gains relating to those
sales.

An analysis of the difference between the effective tax rates and the statutory
U.S. federal income tax rate is contained in Note 13 to the consolidated
financial statements.

                               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 and the Board of Directors in determining
the adequacy of the allowance for possible loan losses. During 2001,the Company
continued its efforts to strengthen its procedures and policies relating to
credit risk identification and monitoring. Those efforts should enhance the
scope, breadth, and depth of the Company's credit risk identification processes.

Total loans, net of unearned income, averaged $512,240 in 2001 compared with
$590,518 in 2000. At year end 2001, loans net of unearned income totaled
$458,741 compared to $595,576 at December 31, 2000, a decrease of $136,835 or
23%. The decrease in loan balances was primarily the result of the sales of two
of the affiliate banking operations in 2001.

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.



<PAGE>

<TABLE>
<CAPTION>

                           LOAN PORTFOLIO COMPOSITION
                                Loans Outstanding
                             (Dollars in thousands)

                                                                       December 31
<S>                               <C>    <C>         <C>      <C>        <C>       <C>        <c>     <c>        <c>        <c>
                                  2001     %         2000       %         1999       %        1998      %         1997       %
                              --------   ----    --------    ----     --------    ----     --------  ----     --------    ----
Commercial, secured by real
  estate                      $117,692   25.6%   $149,733    25.1%    $135,078    23.7%    $ 86,010  21.6%    $ 71,818    22.8%
Commercial, other               70,315   15.3      86,069    14.5       98,543    17.3       73,982  18.6       48,309    15.4
Real estate construction        15,751    3.4      24,774     4.2       26,092     4.6       13,374   3.4        8,352     2.6
Real estate mortgage           164,810   35.9     211,662    35.5      192,088    33.6      131,212  33.0      103,664    33.0
Agricultural                     9,613    2.1      13,817     2.3       17,525     3.1       15,433   3.9       13,232     4.2
Consumer                        79,571   17.3     108,646    18.2      100,075    17.5       73,100  18.4       68,461    21.8
Other                            1,081    0.4       1,246     0.2        1,352     0.2        4,502   1.1          674     0.2
                              --------   ----    --------    ----     --------    ----     --------  ----     --------    ----
  Total loans                 $458,833   100.0%  $595,947    100.0%   $570,753    100.0%   $397,613  100.0%   $314,510    100.0%

  Less unearned income             (92)              (371)                (647)              (1,993)            (2,408)
                              --------           --------             --------             --------           --------

     Total loans net of
        unearned income       $458,741           $595,576             $570,106             $395,620           $312,102
</TABLE>

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 increasing over the past five years,
with net charge-offs being 1.47% of loans in 2001 and .66% in 2000. With respect
to consumer loans in particular, net charge-offs for the year ended December 31,
2001 were $1,709, or 2.15% of total consumer loans outstanding at December 31,
2001, and $761 in 2000, or .70% of total consumer loans outstanding at December
31, 2000.

The following table sets forth the maturity distribution and interest
sensitivity of selected loan categories at December 31, 2001. 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.



<PAGE>
<TABLE>
<CAPTION>

                    Loan Maturities and Interest Sensitivity
                                December 31, 2001
                             (Dollars in thousands)


                                                       One Year      One Through        Over           Total
                                                       or Less        Five Years     Five Years        Loans
                                                       --------      -----------     ----------        -----
<S>                                                      <C>              <C>           <C>              <C>
Commercial, secured by real estate                   $     63,314   $     51,184    $      3,194  $    117,692

Commercial, other                                          32,545         30,295           7,475        70,315

Real estate construction                                    3,605          4,279           7,867        15,751

Agricultural                                                4,633          4,237             743         9,613
                                                     ------------   ------------    ------------  ------------
    Total                                            $    104,097   $     89,995    $     19,279  $    213,371
                                                     ============   ============    ============  ============

Fixed rate loans                                     $     60,951   $     89,995    $     19,279  $    170,225

Floating rate loans                                        43,146              -               -        43,146
                                                     ------------   ------------    ------------  ------------
    Total                                            $    104,097   $     89,995    $     19,279  $    213,371
                                                     ============   ============    ============  ============

</TABLE>

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 discontinues the accrual of interest on loans 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. 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.



<PAGE>


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

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

                                                                              December 31
                                           ----------------------------------------------------------------------------------
<S>                                             <C>               <C>              <C>              <C>            <C>
                                                2001             2000             1999             1998            1997
                                                ----             ----             ----             ----            ----
Nonaccrual loans                           $     9,307       $    7,840      $     4,540        $   3,500      $      562
Accruing loans which are contractually
  past due 90 days or more                       5,948            2,196            1,721            1,322             522
Restructured loans                                 338              689              666              105             356
                                           -----------       ----------      -----------        ---------      ----------
  Total nonperforming and restructured
     loans                                 $    15,593       $   10,725      $     6,927        $   4,927      $    1,440
Other real estate acquired through
     foreclosures                                5,831            3,116            3,009              961             836
                                           ------------      ----------      -----------        ---------      ----------
   Total nonperforming and restructured
     loans and other real estate           $    21,424       $   13,841      $     9,936        $   5,888      $    2,276
Nonperforming and restructured loans
  as a percentage of net loans                    3.40%            1.80%            1.22%            1.25%            .46%
Nonperforming and restructured loans
  and other real estate as a percentage
  of total assets                                 4.67%            1.56%            1.17%             .90%            .49%
</TABLE>

Nonaccrual loans increased from $7,840 at December 31, 2000 to 9,307 at December
31, 2001. Total nonperforming assets increased from $13,841 at December 31, 2000
to $21,424 at December 31, 2001. The percentage of nonperforming loans to total
loans increased from 1.80% to 3.40%.

The increase in total nonperforming loans and other real estate owned of $7,583
is largely attributable to the deterioration in loan quality as well as a result
of the Company's efforts at improving risk identification and monitoring.

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

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, some 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.

<TABLE>
<CAPTION>
              Interest Income on Non-Accrual and Restructured Loans
                             Year ended December 31
                             (Dollars in thousands)
             <S>                                        <C>           <C>              <C>           <C>            <C>
                                                       2001           2000            1999           1998           1997
                                                       ----           ----            ----           ----           ----
         Contractual interest                           831            673             272            135             77
         Interest recognized                            190             89               6              6             62
</TABLE>
<page>

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. All of the company's securities at
December 31, 2001 were classified as available for sale.

Securities as a percentage of average interest-earning assets decreased to 21.7%
in 2001 versus 23.0% in 2000 and 25.2% in 1999. The 2000 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, 2000 and 1999, 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, 2000 and 1999. The dividend rate on the preferred stock is 2% in
excess of the prime rate as in effect from time to time. This stock was disposed
of in 2001.


<PAGE>


The following tables present the carrying values and maturity distribution of
investment securities.
<TABLE>
<CAPTION>
                          Carrying Value of Securities
                             (Dollars in thousands)

                                                                                 December 31
<S>                                                           <C>                   <C>                  <C>
                                                               2001                 2000                 1999
                                                               ----                 ----                 ----
U.S. Treasury and Federal agencies:
   Available for sale                                   $         118,092    $         157,245    $         128,101
   Held to maturity                                                     -                1,233                1,733
State and municipal obligations:
   Available for sale                                              19,225                7,132                7,354
   Held to maturity                                                     -               16,656               16,876
Equity securities:
   Available for sale                                                 802                2,798                2,775
   Held to maturity                                                     -                    -                    -
Corporate securities:
   Available for sale                                               9,196                    -                    -
   Held to maturity                                                     -                    -                    -
Mortgage-backed securities:
   Available for sale                                               8,251                9,319               13,557
   Held to maturity                                                     -                   17                   24
Total securities:
   Available for sale                                             155,566              176,494              151,787
   Held to maturity                                                     -               17,906               18,633
                                                        -----------------    -----------------    -----------------
Total                                                   $         155,566    $         194,400    $         170,420
</TABLE>
<TABLE>
<CAPTION>

                                             Maturity Distribution of Securities
                                                      December 31, 2001
                                                    (Dollars in thousands)

                                                          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                     $  31,980   $  75,209    $    5,929     $  4,974  $      -       $  118,092   $  118,092
    Held to maturity                               -           -             -            -         -                -            -
State and municipal obligations:
    Available for sale                         1,331       6,832         7,191        3,871         -           19,225       19,225
    Held to maturity                               -           -             -            -         -                -            -
Corporate securities:
    Available for sale                             -       9,196             -            -         -            9,196        9,196
    Held to maturity                               -           -             -            -         -                -            -
Other securities:
    Available for sale                             -           -             -            -     9,053            9,053        9,053
    Held to maturity                               -           -             -            -         -                -            -
Total securities:
    Available for sale                        33,311      91,237        13,120        8,845     9,053          155,566      155,566
    Held to maturity                               -           -             -            -         -                -            -
                                           ---------   ---------    ----------     --------  --------       ----------   ----------
Total                                      $  33,311   $  91,237     $   13,120     $ 8,845  $  9,053       $  155,566   $  155,566
                                           =========   =========     ==========     =======  ========       ==========   ==========
Percent of total                             21.41%        58.65%         8.43%       5.69%     5.82%          100.00%
Weighted average yield*                       4.29%         4.69%         5.93%       6.08%     5.77%            4.86%
</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 $629,892 in 2001, an 10.8% decrease from 2000. Total
deposits averaged $706,171 in 2000, an increase of $57,576 or 8.9% over 1999.
Noninterest bearing deposits averaged 10.4% of total deposits in 2001, compared
to 10.3% in 2000 and 10.3% in 1999.

At December 31, 2001, deposits totaled $570,531, compared to $728,412 at
December 31, 2000, a decrease of $157,881, or 21.7%. The primary driver of the
decrease in deposits was the sale of two affiliate banking operations during
2001.

The table below provides information on the maturities of time deposits of
$100,000 or more at December 31, 2001.
<TABLE>
<CAPTION>
                                Maturity of Time
                          Deposits of $100,000 or More
          <S>                                                                     <C>
                                                                            December 31, 2001
                                                                              (In thousands)

         Maturing 3 months or less                                           $         17,924
         Maturing over 3 months through 6 months                                       25,489
         Maturing over 6 months through 12 months                                      28,885
         Maturing over 12 months                                                       16,851
                                                                             ----------------
         Total                                                               $         89,149
                                                                             ================
</TABLE>

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)

                                         2001                          2000                          1999
<S>                             <C>            <C>              <C>           <C>            <C>            <C>
         Category               Amount        Rate (%)        Amount        Rate (%)        Amount        Rate (%)

Demand                       $    65,795            0%     $    72,392            0%     $    66,483            0%
NOW and money
  market accounts                178,501         3.21%         175,166         4.15%         150,165         3.65%
Savings                           63,287         2.48%          63,850         3.02%          63,227         3.10%
Certificates of deposit
  and other time                 322,309         5.98%         394,763         5.90%         368,720         5.53%
                             -----------    ---------      -----------    ---------      -----------    ---------
     Total                   $   629,892         4.22%     $   706,171         4.60%     $   648,595         4.29%
</TABLE>




<PAGE>


Capital

Stockholders' equity increased $4,045 in 2001 to $59.9 million or 8.4% of total
assets at December 31, 2001. This compares to $55.8 million, or 6.3% of total
assets at December 31, 2000. The primary reason for the 2001 increase in
stockholders' equity was the 2001 retained earnings of $2,319 as well as an
increase in unrealized gains on securities of $1,726 from ($869) on December 31,
2000, to $857 on December 31, 2001. This is a component of accumulated other
comprehensive income. Stockholders' equity increased $3,703 or 7.1% in 2000 from
$52.2 million at December 31, 1999 to $55.8 million for 2000. The primary reason
for the 2000 increase in stockholders' equity was the decrease in unrealized
loss on securities of $3,153 from ($4,022) on December 31, 1999, to ($869) on
December 31, 2000. The decrease was partially offset by the retention of net
earnings of $550 in 2000. 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. The adjustment resulted in an
increase of stockholders' equity of $857 at December 31, 2001 versus a reduction
of $869 at December 31, 2000. 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 requirements
and additional restrictions as more fully described in Note 20 to the
consolidated financial statements. During 2002, the Banks could, without prior
approval, declare dividends to the Company of approximately $3.2 million plus
any 2002 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.




<PAGE>

<TABLE>
<CAPTION>

                          Selected Capital Information
                             (Dollars in thousands)
                                                                          December 31
<S>                                                                 <C>               <C>                  <C>
                                                                   2001               2000               Change
                                                                   ----               ----               ------
Stockholders' Equity                                        $         59,875    $         55,830   $          4,045
   Qualifying capital securities of subsidiary
      trust                                                           19,646              18,872                774
   Disallowed amounts of goodwill and other
      intangibles                                                    (16,044)            (22,856)             6,812
   Unrealized loss (gains) on securities
     available for sale                                                 (857)                869             (1,726)
                                                            ----------------    ----------------   ----------------
Tier I capital                                              $         62,620    $         52,715   $          9,905


Tier II capital adjustments:
   Qualifying capital securities of subsidiary
      trust                                                            9,104               9,878
   Allowance for loan losses                                           5,830               7,298
                                                            ----------------    ----------------
Total capital                                               $         77,554    $         69,891

Total risk-weighted assets                                  $        466,409    $        583,259
Ratios
Tier I capital to risk-weighted assets                               13.4%                9.0%
Total capital to risk-weighted assets                                16.6%               12.0%
Leverage at year-end                                                  8.5%                6.1%
</TABLE>

The capital ratios were dramatically improved in 2001 over 2000 as a result of
the sales of two affiliated banking operations during 2001. These sales were the
primary reason for the large decrease in Goodwill (6.8 million).

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.


<PAGE>


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. 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.

The Company's principal source of funds to meet the cash requirements of the
holding company is dividends received from its subsidiaries and the cash flows
provided by intercompany tax payments. Additional funds have been provided in
prior years from the borrowings on the Company's credit facilities. The Company
expects the cash flows from its subsidiaries to be sufficient to meet its cash
requirements, however the Company has identified certain assets that could be
sold to generate additional funds as needed.

Cash, cash equivalents, Federal funds sold, and the securities portfolio
provides an important source of liquidity to the subsidiary banks. 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 $87.4 million as of December 31, 2001. 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 $122.2 million at December 31, 2001. These securities represent a
secondary source available to meet liquidity needs on a continuing basis.

To maintain a desired level of liquidity, the Banks have 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
15.6% and 14.5% of total deposits at December 31, 2001 and 2000. 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.



<PAGE>

<TABLE>
<CAPTION>
                                Liquidity Ratios
           <S>                                                            <C>               <C>            <C>
                                                                          2001            2000             1999
                                                                          ----            ----             ----
         Total loans/total deposits...............................        81.3%           83.6%            80.2%
         Total loans/total deposits less float....................        82.4%           84.8%            81.0%
</TABLE>

This analysis shows that the Company's loan to deposit ratio has increased in
both 1999 and 2000. The increases are primarily the result of funds moving from
lower yielding assets into higher yielding loans, principally in the West
Virginia markets. The change for 2001 was the result of the changes in loan and
deposit mix as a result of the disposal of two Affiliate Banks during 2001.



<PAGE>


Information regarding short-term borrowings for the past three years is
presented below.
<TABLE>
<CAPTION>
                              Short-Term Borrowings
                             (Dollars in thousands)
<S>                                                                          <C>             <C>            <C>
                                                                             2001            2000           1999
                                                                             ----            ----           ----
Repurchase Agreements:

   Balance at year end                                                   $     5,520    $    20,553     $    21,282

   Weighted average rate at year end                                            1.76%          6.67%           5.80%

   Average balance during the year                                       $     7,518    $    23,580     $     8,640

   Weighted average rate during the year                                        4.44%          6.40%           5.14%

   Maximum month-end balance                                             $    11,135    $    28,009     $    21,282

Other short-term borrowings:

   Balance at year end                                                   $    30,795    $    19,825     $    11,225

   Weighted average rate at year end                                            4.68%          6.62%           5.93%

   Average balance during the year                                       $    27,257    $    17,418     $    12,184

   Weighted average rate during the year                                        6.41%          6.58%           5.61%

   Maximum month-end balance                                             $    32,071    $    24,493     $    15,788

Total short-term borrowings:

   Balance at year end                                                   $    36,315    $    40,378     $    32,507

   Weighted average rate at year end                                            4.23%          6.65%           5.84%

   Average balance during the year                                       $    34,775    $    40,998     $    20,824

   Weighted average rate during the year                                        5.98%          6.48%           5.41%

   Maximum month-end balance                                             $    43,206    $    52,502     $    32,507
</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, 2001, the
cumulative amount of the Company's interest earning assets repricing during the
first year is lower than the total amount of its interest bearing liabilities
repricing during this period. This position, which is normally termed a negative
interest sensitivity gap, generally allows for enhanced net interest income
during periods of falling interest rates. This negative 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 rising interest rates.



<PAGE>


The following table provides an analysis of the Company's interest rate
sensitivity at December 31, 2001.
<TABLE>
<CAPTION>
                       Interest Rate Sensitivity Analysis
                             (Dollars in Thousands)

                                                 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              $     83,891  $   126,401   $    205,964   $    42,485    $    458,741
   Investment securities                            29,989       53,759         61,586        10,232         155,566
   Interest-earning balances                             -            -              -             -               -
   Federal funds sold                               33,517            -              -             -          33,517
                                              ------------  -----------   ------------   -----------    ------------
       Total earning assets                   $    147,397  $   180,160   $    267,550   $    52,717    $    647,824

Sources of Funds
   NOW, money market and
       savings                                $     63,891  $    50,768   $     75,378   $    34,349    $    224,386
   Time deposits                                    64,923      160,030         63,276             -         288,229
   Borrowings                                       15,027       14,456          7,309        12,523          49,315
                                              ------------  -----------   ------------   -----------    ------------
     Total interest bearing liabilities       $    143,841  $   225,254   $    145,963   $    46,872    $    561,930

Interest Sensitivity Gap
   For the period                             $      3,556  $   (45,094)  $    121,587   $     5,845    $     85,894
   Cumulative                                        3,556      (41,538)        80,049        85,894               -
   Cumulative as a percent of
     earning assets                                  0.55%       (6.41)%        12.36%         13.26%
</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 prepared by an independent third party 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 decrease by approximately
0.5% of stable rate net interest income if rates rise by 100 basis points over
the next year. It projects a decrease of 1.0% if the rates fall by 100 basis
points. Management believes this reflects a slight asset sensitive rate risk
position for the less than 90 day time frame. For the one-year horizon the rate
risk position evolves into one with a slight liability sensitivity.

Within the same time frame, but assuming a 200 basis point movement in rates,
the model forecasts that net interest income would drop below that earned in a
stable rate environment by 2.9% in a rising rate scenario and decrease by 2.4%
in a falling rate scenario. Under both the 100 and 200 basis point forecast, the
percentage changes in net interest income are within ALCO 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, 2001, a 200 basis point increase in rates is estimated to increase
EVR by 3.05%. Additionally, EVR is projected to decrease by 26.2% if rates fall
by 200 basis points. Although the 26.2% decrease is outside the stated ALCO
guidelines of + 20% the Board has approved this deviation and management
believes this deviation to be temporary.
<page>
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. 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
                                                                 2001        2000       Guidelines
                                                               --------    --------     ----------
<S>                                                              <C>          <C>           <C>
Projected 1-Year Net Interest Income
   -100 bp change vs. Base Rate                                 -1.0%        -3.8%         +/-10%
   +100 bp change vs. Base Rate                                 -0.5%         1.4%         +/-10%
Projected 1-Year Net Interest Income
   -200 bp change vs. Base Rate                                 -2.4%        -8.6%         +/-10%
   +200 bp change vs. Base Rate                                 -2.9%         1.7%         +/-10%
Economic Value Change
   -200 bp Change vs. Base Rate                                -26.2%       -10.0.%        +/-20%
   +200 bp Change vs. Base Rate                                  3.5%       -14.2%         +/-20%
</TABLE>


Interest Rate Risk Management

Premier's strategy of investing primarily in loans and securities is intended to
limit its exposure to interest rate and 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 and mortgage-backed securities 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. Other 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.

<page>
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. 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 flat to increasing during
2002 and believes that the current modest level of liability sensitivity is
appropriate when taken in conjunction with the unlikely event of a significant
rate decrease. Premier's interest sensitivity profile changed from 2000 to 2001
as a result primarily of asset/liability mix changes as a result of the sales of
two affiliate banking operations as well as normal maturities and repricing.

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.



<PAGE>


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:
         Consolidated Balance Sheets - December 31, 2001 and 2000
         Consolidated Statements of Income - Years Ended December 31, 2001, 2000
            and 1999
         Consolidated Statements of Comprehensive Income - Years Ended
            December 31, 2001, 2000 and 1999
         Consolidated Statements of Changes in Stockholders' Equity - Years
            ended December 31, 2001, 2000 and 1999
         Consolidated Statements of Cash Flows - Years ended December 31, 2001,
            2000 and 1999
         Notes to Consolidated Financial Statements






<PAGE>
















                         PREMIER FINANCIAL BANCORP, INC.


                        CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 2001, 2000 and 1999





<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, 2001 and 2000, 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, 2001. 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 auditing standards generally accepted
in the United States of America. 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, 2001 and 2000 and the results of its operations
and its cash flows for each of the three years in the period ended December 31,
2001 in conformity with accounting principles generally accepted in the United
States of America.

As disclosed in Note 1, during 2001 the Company adopted new accounting guidance
on derivatives.




                          Crowe, Chizek and Company LLP

Lexington, Kentucky
February 15, 2002

--------------------------------------------------------------------------------
                           See accompanying notes.
                                                                             42.

<PAGE>


                         PREMIER FINANCIAL BANCORP, INC.
                           CONSOLIDATED BALANCE SHEETS
                           December 31, 2001 and 2000
                      (In Thousands, Except Per Share Data)

--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                                                                      2001                 2000
                                                                                      ----                 ----
<S>                                                                                  <C>                    <C>
ASSETS
Cash and due from banks                                                           $     20,628         $     23,339
Interest-earning balances with banks                                                         -                  737
Federal funds sold                                                                      33,517               21,087
Investment securities
   Available for sale                                                                  155,566              176,494
   Held to maturity                                                                          -               17,906
Loans                                                                                  458,833              595,947
   Unearned income                                                                         (92)                (371)
   Allowance for loan losses                                                            (8,946)              (7,821)
                                                                                  ------------         ------------
     Net loans                                                                         449,795              587,755
Federal Home Loan Bank and Federal Reserve Bank stock                                    4,261                4,476
Premises and equipment, net                                                             12,035               15,474
Real estate and other property acquired through foreclosure                              5,831                3,116
Interest receivable                                                                      7,842               10,144
Goodwill and other intangibles                                                          16,044               22,856
Other assets                                                                             6,331                6,548
                                                                                  ------------         ------------

Total assets                                                                      $    711,850         $    889,932
                                                                                  ============         ============

LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits
   Non-interest bearing                                                           $     57,916         $     74,438
   Time deposits, $100,000 and over                                                     89,149              105,490
   Other interest bearing                                                              423,466              548,484
                                                                                  ------------         ------------
     Total deposits                                                                    570,531              728,412
Securities sold under agreements to repurchase                                           5,520               20,553
Federal Home Loan Bank advances                                                         30,795               30,687
Other borrowed funds                                                                    13,000               20,000
Interest payable                                                                         1,903                3,901
Other liabilities                                                                        1,476                1,799
                                                                                  ------------         ------------
   Total liabilities                                                                   623,225              805,352

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                                                                    14,470               12,151
   Accumulated other comprehensive income                                                  857                 (869)
                                                                                  ------------         ------------
     Total stockholders' equity                                                         59,875               55,830
                                                                                  ------------         ------------

Total liabilities and stockholders' equity                                        $    711,850         $    889,932
                                                                                  ============         ============
</TABLE>

--------------------------------------------------------------------------------
                            See accompanying notes.
                                                                             43.

<PAGE>


                         PREMIER FINANCIAL BANCORP, INC.
                        CONSOLIDATED STATEMENTS OF INCOME
                             Years Ended December 31
                      (In Thousands, Except Per Share Data)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                                                    2001               2000                1999
                                                                    ----               ----                ----
<S>                                                              <C>                   <C>                 <C>
Interest income
   Loans, including fees                                        $    47,413         $    56,245         $    50,649
   Investment securities -
     Taxable                                                          8,029              10,120               9,575
     Tax-exempt                                                       1,051               1,404               1,409
   Federal funds sold                                                 1,529               1,398               1,047
   Other interest income                                                 20                  67                 192
                                                                -----------         -----------         -----------
     Total interest income                                           58,042              69,234              62,872

Interest expense
   Deposits                                                          26,550              32,503              27,808
   Other borrowings                                                   3,366               5,203               3,547
   Debt                                                               2,852               2,852               2,852
                                                                -----------         -----------         -----------
     Total interest expense                                          32,768              40,558              34,207

Net interest income                                                  25,274              28,676              28,665
Provision for loan losses                                             8,921               4,932               3,294
                                                                -----------         -----------         -----------

Net interest income after provision for loan losses                  16,353              23,744              25,371

Non-interest income
   Service charges                                                    2,191               2,235               1,965
   Insurance commissions                                                274                 443                 565
   Investment securities gains (losses)                                 516                (279)                 17
   Gain on sale of subsidiaries' banking operations                   8,713                   -                   -
   Other income                                                       1,642               1,613               1,229
                                                                -----------         -----------         -----------
                                                                     13,336               4,012               3,776

Non-interest expenses
   Salaries and employee benefits                                    11,785              13,332              11,679
   Occupancy and equipment expenses                                   2,941               3,187               2,885
   Professional fees                                                  1,065                 705                 547
   Taxes, other than payroll, property and income                       836                 749                 794
   Amortization of intangibles                                        1,329               1,571               1,625
   Other expenses                                                     6,029               6,561               5,100
                                                                -----------         -----------         -----------
                                                                     23,985              26,105              22,630

Income before income taxes                                            5,704               1,651               6,517
Provision for income taxes                                            3,385                 316               1,927
                                                                -----------         -----------         -----------

Net income                                                      $     2,319         $     1,335         $     4,590
                                                                ===========         ===========         ===========

Weighted average common shares outstanding:
   Basic                                                              5,232               5,232               5,232
   Diluted                                                            5,232               5,232               5,232

Earnings per share:
   Basic                                                        $       .44         $       .26         $       .88
   Diluted                                                              .44                 .26                 .88
</TABLE>
--------------------------------------------------------------------------------
                            See accompanying notes.
                                                                             44.



<PAGE>

                         PREMIER FINANCIAL BANCORP, INC.
                 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
                             Years Ended December 31
                      (In Thousands, Except Per Share Data)

--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                                                    2001               2000                1999
                                                                    ----               ----                ----
<S>                                                                  <C>                 <C>                 <C>
Net income                                                      $     2,319         $     1,335         $     4,590

Other comprehensive income (loss), net of tax:
   Unrealized gains and (losses) arising during
     the period                                                       1,726               2,969              (3,711)
   Reclassification of realized amount                                 (341)                184                 (11)
                                                                -----------         -----------         -----------
     Net change in unrealized gain (loss) on
       securities                                                     1,385               3,153              (3,722)
                                                                -----------         -----------         -----------

Comprehensive income                                            $     3,704         $     4,488         $       868
                                                                ===========         ===========         ===========

</TABLE>













--------------------------------------------------------------------------------
                            See accompanying notes.
                                                                             45.





<PAGE>

                         PREMIER FINANCIAL BANCORP, INC.
           CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
                  Years Ended December 31, 2001, 2000 and 1999
                      (In Thousands, Except Per Share Data)

--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                                                                          Accumulated
                                                                                             Other
                                              Common                      Retained       Comprehensive
                                               Stock        Surplus       Earnings          Income          Total
                                               -----        -------       --------          ------          -----
<S>                                              <C>          <C>            <C>              <C>              <C>
Balances, January 1, 1999                   $  1,103      $  43,445      $  10,151       $     (300)     $   54,399

Net change in unrealized gains (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

Net change in unrealized gains (losses)
  on securities available for sale                 -              -              -            3,153           3,153

Net income                                         -              -          1,335                -           1,335

Dividends paid - $.15 per share                    -              -           (785)               -            (785)
                                            --------      ---------      ---------       ----------      ----------

Balances, December 31, 2000                 $  1,103      $  43,445      $  12,151       $     (869)     $   55,830

Net change in unrealized gains (losses)
  on securities available for sale                 -              -              -            1,726           1,726

Net income                                         -              -          2,319                -           2,319
                                            --------      ---------      ---------       ----------      ----------

Balances, December 31, 2001                 $  1,103      $  43,445      $  14,470       $      857      $   59,875
                                            ========      =========      =========       ==========      ==========

</TABLE>











--------------------------------------------------------------------------------
                            See accompanying notes.
                                                                             46.

<PAGE>

                         PREMIER FINANCIAL BANCORP, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                             Years Ended December 31
                                 (In Thousands)

--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                                                         2001               2000            1999
                                                                         ----               ----            ----
<S>                                                                     <C>                <C>               <C>
Cash flows from operating activities
   Net income                                                         $     2,319      $     1,335      $     4,590
   Adjustments to reconcile net income to
     net cash from operating activities
       Depreciation                                                          1,232           1,436            1,214
       Provision for loan losses                                             8,921           4,932            3,294
       Amortization, net                                                     1,034           1,228            1,750
       FHLB stock dividends                                                   (266)           (311)            (254)
       Write-downs of other real estate owned                                  258             617                1
       Investment securities (gains) losses, net                              (516)            279              (17)
       Gain on the sale of subsidiaries' banking operations                 (8,713)              -                -
       Changes in
         Interest receivable                                                   417            (330)            (409)
         Other assets                                                         (833)           (705)            (312)
         Interest payable                                                   (1,494)            636              256
         Other liabilities                                                    (321)            245              127
                                                                      ------------     -----------      -----------
           Net cash from operating activities                                2,038           9,362           10,240

Cash flows from investing activities
   Purchases of securities available for sale                             (197,441)        (61,664)         (82,373)
   Proceeds from sales of securities available for sale                     15,438          19,727           40,082
   Proceeds from maturities and calls of securities
     available for sale                                                    207,595          21,985           52,865
   Purchases of  securities held to maturity                                     -          (1,571)          (2,055)
   Proceeds from maturities and calls of securities
     held to maturity                                                            -           2,296            3,472
   Purchases of FHLB stock                                                    (208)            (42)             (61)
   Redemption of FHLB stock                                                    451               -                -
   Net change in interest-earning balances with banks                          737             897           (1,634)
   Net change in federal funds sold                                        (21,130)          4,110            6,933
   Net change in loans                                                      14,133         (30,692)         (82,882)
   Purchases of premises and equipment, net                                   (607)         (1,975)          (2,396)
   Proceeds from sale of other real estate acquired
     through foreclosure                                                     1,747             584              943
   Net cash received (paid) related to acquisitions                          3,255               -           (8,579)
                                                                      ------------     -----------      -----------
     Net cash from investing activities                                     23,970         (46,345)         (75,685)

Cash flows from financing activities
   Net change in deposits                                                   (7,595)         35,569           50,983
   Advances from Federal Home Loan Bank                                     60,361          62,783           16,345
   Repayment of Federal Home Loan Bank advances                            (60,252)        (64,743)         (15,596)
   Net change in other borrowed funds                                       (7,000)              -           12,000
   Net change in agreements to repurchase securities                       (14,233)           (729)          12,909
   Dividends paid                                                                -            (785)          (3,140)
                                                                      ------------     -----------      -----------
Net cash from financing activities                                          32,095          32,095           73,501
                                                                      ------------     -----------      -----------
     Net cash from financing activities                                    (28,719)         32,095           73,501
                                                                      ------------     -----------      -----------
</TABLE>
--------------------------------------------------------------------------------
                            See accompanying notes.
                                                                             47.



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

--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                                                           2001             2000            1999
                                                                           ----             ----            ----
<S>                                                                          <C>              <C>             <C>
Net change in cash and cash equivalents                               $     (2,711)    $    (4,888)     $     8,056

Cash and cash equivalents at beginning
   of year                                                                  23,339          28,227           20,171
                                                                      ------------     -----------      -----------

Cash and cash equivalents at end of year                              $     20,628     $    23,339      $    28,227
                                                                      ============     ===========      ===========

Supplemental disclosures of cash flow information:
     Cash paid during the year for -
       Interest                                                       $     34,261     $    39,922      $    33,951
       Income taxes                                                          4,279           1,115            2,050

     Loans transferred to real estate acquired
       through foreclosure                                            $      4,785     $     1,298      $     2,943

     Transfer of securities from held to maturity
       to available for sale                                          $     18,249     $         -      $         -

</TABLE>



--------------------------------------------------------------------------------
                            See accompanying notes.
                                                                             48.

<PAGE>

                         PREMIER FINANCIAL BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 2001, 2000 and 1999

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

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:
<TABLE>
<CAPTION>

                                                                                                December 31, 2001
                                                                                 Year                         Net
                                                                               Acquired       Assets        Income
                                                                               --------       ------        ------
                                                                                                  (In Thousands)
<S>                                             <C>                             <C>            <C>            <C>
Citizens Deposit Bank & Trust               Vanceburg, Kentucky                 1991         $  106,298    $    186
Bank of Germantown                          Germantown, Kentucky                1992             29,105        (217)
Citizens Bank (Kentucky), Inc.              Georgetown, Kentucky                1995            104,653        (380)
Farmers Deposit Bank                        Eminence, Kentucky                  1996            150,947       1,363
The Sabina Bank                             Sabina, Ohio                        1997              5,420       3,881
Ohio River Bank                             Ironton, Ohio                       1998             72,511         650
First Central Bank, Inc.                    Philippi, West Virginia             1998             81,525         436
Boone County Bank, Inc.                     Madison, West Virginia              1998            154,756       1,100
Mt. Vernon Financial Holdings, Inc.         Georgetown, Kentucky                1999             13,651      (1,054)
</TABLE>

The Company also has a data processing subsidiary, Premier Data Services, Inc.,
and PFBI Capital Trust subsidiary as discussed in Note 12. 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.

--------------------------------------------------------------------------------
                            (Continued)
                                                                             49.


<PAGE>
                         PREMIER FINANCIAL BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 2001, 2000 and 1999

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

NOTE  1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Estimates in the Financial Statements: The preparation of financial statements
in conformity with accounting principles generally accepted in the United States
of America 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 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 with an original maturity less than ninety days. 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. Other securities such as Federal Home Loan Bank
stock are carried at cost.

Interest income includes amortization of purchase premium or discount. Gains or
losses on dispositions are based on the net proceeds and adjusted carrying
amount of the securities sold using the specific identification method.
Securities are written down to fair value when a decline in fair value is not
temporary.

--------------------------------------------------------------------------------
                            (Continued)
                                                                             50.


<PAGE>
                         PREMIER FINANCIAL BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 2001, 2000 and 1999

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

NOTE  1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

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 a valuation allowance for probable incurred
credit losses increased by a provision for loan losses charged to expense. The
allowance is an amount that management believes will be adequate to absorb
incurred losses on existing loans 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.

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: Land is carried at cost. 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.

--------------------------------------------------------------------------------
                            (Continued)
                                                                             51.
<PAGE>
                         PREMIER FINANCIAL BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 2001, 2000 and 1999

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

NOTE  1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Long-term Assets: Premises and equipment and other long-term assets are reviewed
for impairment when events indicate that the carrying amount may not be
recoverable from future undiscounted cash flows. If impaired, the assets are
recorded at discounted amounts.

Repurchase  Agreements:   Substantially  all  repurchase  agreement  liabilities
represent amounts advanced by various customers. Securities are pledged to cover
these liabilities, which are not covered by federal deposit insurance.

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, 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.

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 required 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. Implementation of this
standard did not have a material effect on the consolidated financial
statements.


--------------------------------------------------------------------------------
                            (Continued)
                                                                             52.
<PAGE>
                         PREMIER FINANCIAL BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 2001, 2000 and 1999

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

NOTE  1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Another new accounting standard requires all business combinations to be
recorded using the purchase method of accounting for any transaction initiated
after June 30, 2001. Under the purchase method, all identifiable tangible and
intangible assets and liabilities of the acquired company must be recorded at
fair value at date of acquisition, and the excess of cost over fair value of net
assets acquired is recorded as goodwill. Identifiable intangible assets with
finite useful lives will be amortized under the new standard, whereas goodwill,
both amounts previously recorded and future amounts purchased, will cease being
amortized starting in 2002. Annual impairment testing will be required for
goodwill with impairment being recorded if the carrying amount of goodwill
exceeds its implied fair value. Adoption of this standard on January 1, 2002
will not have a material effect on the Company's financial statements.

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.

On January 26, 2001, the Company disposed of all the deposits (approximately
$110,000,000), the majority of loans (approximately $92,000,000) and the
premises and equipment (approximately $1,600,000) of the Bank of Mt. Vernon
under the terms of a Purchase and Assumption Agreement. The net cash paid by the
Company relating to this transaction was approximately $9,700,000. The Company
realized a gain of $3,418,000 on the sale. As part of the transaction, the
Company retained certain assets previously held by the Bank of Mt. Vernon, which
are held in a subsidiary called Mt. Vernon Financial Holdings, Inc.

On December 10, 2001, the Company disposed of the deposits (approximately
$49,000,000), the loans (approximately $40,000,000), and the premises and
equipment (approximately $1,300,000) of The Sabina Bank under the terms of a
Purchase and Assumption Agreement. The proceeds to the Company and the gain
realized from this transaction were $12,954,000 and $5,295,000, respectively.
Certain assets of the bank were retained by the Company pending liquidation of
the bank.


--------------------------------------------------------------------------------
                            (Continued)
                                                                             53.


<PAGE>
                         PREMIER FINANCIAL BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 2001, 2000 and 1999

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

NOTE  2 - BUSINESS COMBINATIONS (Continued)

The operating results of both the Bank of Mt. Vernon and The Sabina Bank were
included in the Company's operating results through the respective dates of the
sales. The results relating to the assets retained by the Company continue to be
included in the Company's operating results.

NOTE  3 - REGULATORY MATTERS

On September 29, 2000, the Company entered into an agreement with the Federal
Reserve Bank (FRB) that prohibits the Company from paying dividends or incurring
any additional debt without the prior written approval of the FRB. Additionally,
the agreement requires the Company to develop and monitor compliance with
certain operational policies designed to strengthen Board of Director oversight
including credit administration, liquidity, internal audit and loan review.

Two of the Company's subsidiaries, Citizens Deposit Bank & Trust and Bank of
Germantown have entered into similar agreements with their respective primary
regulators which, among other things, prohibit the payment of dividends without
prior written approval and requires significant changes in their credit
administration policies.

These agreements, which require periodic reporting, will remain in force until
the regulators are satisfied that the Company and the banks have fully complied
with the terms of the agreement.

NOTE 4 - 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, 2001 and 2000 was $2.5
million and $3.6 million.


--------------------------------------------------------------------------------
                            (Continued)
                                                                             54.

<PAGE>
                         PREMIER FINANCIAL BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 2001, 2000 and 1999

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

NOTE  5 - INVESTMENT SECURITIES

Amortized cost and fair value of investment securities, by category, at December
31 were as follows (in thousands):
<TABLE>
<CAPTION>

                                                   Amortized         Unrealized        Unrealized          Fair
                                                     Cost               Gains            Losses            Value
                                                   ---------         ----------        ----------          -----
Available for Sale
<S>                                                  <C>                <C>                 <C>              <C>
2001
----
   U. S. Treasury securities                     $     1,151         $     21         $       -         $     1,172
   U. S. agency securities                           115,954            1,029               (63)            116,920
   Obligations of states and political
     subdivisions                                     18,884              411               (70)             19,225
   Mortgage-backed securities                          8,223               37                (9)              8,251
   Corporate securities                                9,128               94               (26)              9,196
   Other securities                                      927                -              (125)                802
                                                 -----------         --------         ---------         -----------

     Total available for sale                    $   154,267         $  1,592         $    (293)        $   155,566
                                                 ===========         ========         =========         ===========


2000
----
   U. S. Treasury securities                     $     3,345         $     13         $      (1)        $     3,357
   U. S. agency securities                           155,045              232            (1,389)            153,888
   Obligations of states and political
     subdivisions                                      7,016              117                (1)              7,132
   Mortgage-backed securities                          9,478                -              (159)              9,319
   Preferred stock                                     2,000                -                 -               2,000
   Other securities                                      925                -              (127)                798
                                                 -----------         --------         ---------         -----------
     Total available for sale                    $   177,809         $    362         $  (1,677)        $   176,494
                                                 ===========         ========         =========         ===========


Held to Maturity

2000
----
   U. S. agency securities                       $     1,233         $      4         $      (7)        $     1,230
   Obligations of states and political
     subdivisions                                     16,656              378               (31)             17,003
   Mortgage-backed securities                             17                -                (1)                 16
                                                 -----------         --------         ---------         -----------

     Total held to maturity                      $    17,906         $    382         $     (39)        $    18,249
                                                 ===========         ========         =========         ===========
</TABLE>


--------------------------------------------------------------------------------
                            (Continued)
                                                                             55.

<PAGE>
                         PREMIER FINANCIAL BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 2001, 2000 and 1999

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

NOTE  5 - INVESTMENT SECURITIES (Continued)

Upon adoption of Financial Accounting Standards Board Statement 133 on January
1, 2001, all of the Company's securities classified as held to maturity were
reclassified as available for sale.

The amortized cost and fair value of investment securities at December 31, 2001,
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                                                        $    33,022           $    33,311
   Due after one year through five years                                               90,359                91,237
   Due after five years through ten years                                              12,937                13,120
   Due after ten years                                                                  8,799                 8,845
   Mortgage-backed securities                                                           8,223                 8,251
   Other securities                                                                       927                   802
                                                                                  -----------           -----------

     Total available for sale                                                     $   154,267           $   155,566
                                                                                  ===========           ===========
</TABLE>

Proceeds from sales of investment securities during 2001, 2000 and 1999 were
$15.4 million, $19.7 million and $40.1 million. Gross gains of $545,000, $7,000
and $44,000, and gross losses of $29,000, $286,000 and $27,000 were realized on
those sales.

Investment securities with an approximate carrying value of $87.5 million and
$134.1 million at December 31, 2001 and 2000 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)
                                                                             56.

<PAGE>
                         PREMIER FINANCIAL BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 2001, 2000 and 1999

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

NOTE  6 - LOANS

Loans at year-end were as follows (in thousands):
<TABLE>
<CAPTION>
                                                                                        2001               2000
                                                                                        ----               ----
<S>                                                                                     <C>                 <C>
Commercial, secured by real estate                                                  $    117,692       $    149,733
Commercial, other                                                                         70,315             86,069
Real estate construction                                                                  15,751             24,774
Residential real estate                                                                  164,810            211,662
Agricultural                                                                               9,613             13,817
Consumer and home equity                                                                  79,571            108,646
Other                                                                                      1,081              1,246
                                                                                    ------------       ------------

                                                                                    $    458,833       $    595,947
                                                                                    ============       ============
</TABLE>

Certain directors and executive officers of the Banks and companies, in which
they have beneficial ownership, were loan customers of the Banks during 2001 and
2000. Such loans were made in the ordinary course of business at the Banks'
normal credit terms and interest rates.

An analysis of the 2001 activity with respect to all director and executive
officer loans is as follows (in thousands):
<TABLE>
<CAPTION>
<S>                                                                   <C>
Balance, December 31, 2000                                        $     11,819
Additions, including loans now meeting disclosure
   requirements                                                          6,040
Amounts collected, including loans no longer meeting
   disclosure requirements                                              (6,174)
                                                                  ------------

Balance, December 31, 2001                                        $     11,685
                                                                  ============
</TABLE>

Activity in the allowance for loan losses was as follows (in thousands):
<TABLE>
<CAPTION>
                                                                         2001              2000             1999
                                                                         ----              ----             ----
<S>                                                                       <C>             <C>                <C>
Balance, beginning of year                                             $   7,821        $   6,812         $   4,363
Allowance related to acquired or disposed subsidiaries                      (266)               -             1,310
Loans charged off                                                         (8,150)          (4,382)           (2,556)
Recoveries                                                                   620              459               401
Provision for loan losses                                                  8,921            4,932             3,294
                                                                       ---------        ---------         ---------

Balance, end of year                                                   $   8,946        $   7,821         $   6,812
                                                                       =========        =========         =========
</TABLE>
--------------------------------------------------------------------------------
                            (Continued)
                                                                             57.

<PAGE>
                         PREMIER FINANCIAL BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 2001, 2000 and 1999

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

NOTE  6 - LOANS (Continued)

Impaired loans were as follows. There were no impaired loans for the periods
presented without an allowance allocation.
<TABLE>
<CAPTION>
                                                                         2001              2000             1999
                                                                         ----              ----             ----
                                                                                      (In Thousands)
<S>                                                                        <C>              <C>               <C>
Impaired loans at year end                                             $   4,661        $   2,717         $   2,562
Amount of the allowance for loan losses allocated                            742              543               659
Average of impaired loans during the year                                  3,993            3,810               905
Interest income recognized during impairment                                  55                -                 -
Cash-basis interest income recognized                                         34                6                 6

Nonperforming loans at year end were as follows:

  Loans past due over 90 days still on accrual                         $   5,948        $   2,196         $   1,721
  Nonaccrual loans                                                         9,307            7,840             4,540
</TABLE>

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

NOTE  7 - PREMISES AND EQUIPMENT

Year-end premises and equipment were as follows (in thousands):
<TABLE>
<CAPTION>
                                                                                           2001             2000
                                                                                           ----             ----
<S>                                                                                         <C>               <C>
Land                                                                                   $    2,402        $    2,257
Buildings and leasehold improvements                                                        8,494            11,283
Furniture and equipment                                                                     8,239             9,876
                                                                                       ----------        ----------
                                                                                           19,135            23,416
Less: accumulated depreciation                                                             (7,100)           (7,942)
                                                                                       ----------        ----------

                                                                                       $   12,035        $   15,474
                                                                                       ==========        ==========
</TABLE>
--------------------------------------------------------------------------------
                            (Continued)
                                                                             58.


<PAGE>
                         PREMIER FINANCIAL BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 2001, 2000 and 1999

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

NOTE 8 - DEPOSITS

At December 31, 2001, the scheduled maturities of time deposits are as follows
(in thousands):
<TABLE>
<CAPTION>
            <S>                                                                           <C>
           2002                                                                        $  221,751
           2003                                                                            48,244
           2004                                                                             8,901
           2005                                                                             3,885
           2006 and thereafter                                                              3,202
                                                                                       ----------

                                                                                       $  285,983
                                                                                       ==========
</TABLE>

Certain directors and executive officers of the Banks and companies, in which
they have beneficial ownership, were deposit customers of the Banks during 2001
and 2000. The balance of such deposits at December 31, 2001 and 2000 were
approximately $9,926,000 and $10,246,000.

NOTE 9 - 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 (in thousands):
<TABLE>
<CAPTION>

                                                                                        2001               2000
                                                                                        ----               ----
<S>                                                                                    <C>                <C>
Year-end balance                                                                      $   5,520         $    20,553

Average balance during the year                                                       $   7,518         $    23,580

Average interest rate during the year                                                     4.44%               6.40%

Maximum month-end balance during the year                                             $  11,135         $    28,009

</TABLE>

--------------------------------------------------------------------------------
                            (Continued)
                                                                             59.

<PAGE>
                         PREMIER FINANCIAL BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 2001, 2000 and 1999

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

NOTE 10 - 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.

All advances are paid either on a monthly basis or at maturity, over remaining
terms of one to fourteen years, with interest rates ranging from 1.90% 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, 2001 are as follows
(in thousands):
<TABLE>
<CAPTION>
           <S>                                                                             <C>
           2002                                                                        $   10,962
           2003                                                                             4,844
           2004                                                                               825
           2005                                                                               825
           2006 and thereafter                                                             13,339
                                                                                       ----------

                                                                                       $   30,795
                                                                                       ==========
</TABLE>

NOTE 11 - 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
June 2002, contains certain covenants and performance terms, all of which have
been complied with or waiver received thereon at December 31, 2001. Interest is
payable at term at LIBOR plus 2.00% and adjusts based on agreed terms. Common
stock of four of the Company's subsidiary Banks is pledged to secure the
agreement. There was $8 million and $20 million borrowed under this agreement at
December 31, 2001 and 2000.

In 2001, the Company entered into a promissory note with a commercial bank which
is secured by Boone County Bank common stock. The interest rate is prime rate,
and all accrued interest and principal are due at maturity on March 27, 2002.
The outstanding balance at December 31, 2001 was $5 million and the interest
rate was 4.75%.

--------------------------------------------------------------------------------
                            (Continued)
                                                                             60.

<PAGE>
                         PREMIER FINANCIAL BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 2001, 2000 and 1999

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

NOTE  12 - 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 are 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.

NOTE  13 - INCOME TAXES

The components of the provision for income taxes are as follows (in thousands):
<TABLE>
<CAPTION>
                                                                          2001             2000             1999
                                                                          ----             ----             ----
<S>                                                                       <C>              <C>               <C>
Current                                                                $   4,298        $     794         $   2,157
Deferred                                                                    (913)            (478)             (230)
                                                                       ---------        ---------         ---------
                                                                       $   3,385        $     316         $   1,927
                                                                       =========        =========         =========
</TABLE>


The Company's deferred tax assets and liabilities at December 31 are shown below
(in thousands). No valuation allowance for the realization of deferred tax
assets is considered necessary.
<TABLE>
<CAPTION>
                                                                                            2001             2000
                                                                                            ----             ----
<S>                                                                                         <C>               <C>
Deferred tax assets
   Allowance for loan losses                                                            $   3,132         $   2,288
   Unrealized loss on investment securities                                                     -               492
   Other                                                                                      417               276
                                                                                        ---------         ---------
     Total deferred tax assets                                                              3,549             3,056
</TABLE>
--------------------------------------------------------------------------------
                            (Continued)
                                                                             61.
<PAGE>
                         PREMIER FINANCIAL BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 2001, 2000 and 1999

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

NOTE  13 - INCOME TAXES (Continued)
<TABLE>
<CAPTION>
                                                                                            2001             2000
                                                                                            ----             ----
<S>                                                                                        <C>                <C>
Deferred tax liabilities
   Depreciation                                                                         $     391         $     491
   Federal Home Loan Bank dividends                                                           442               406
   Unrealized gain on investment securities                                                   442                 -
   Other                                                                                      319               183
                                                                                        ---------         ---------
       Total deferred tax liabilities                                                       1,594             1,080
                                                                                        ---------         ---------

Net deferred tax asset, included in other assets                                        $   1,955         $   1,976
                                                                                        =========         =========
</TABLE>

An analysis of the differences between the effective tax rates and the statutory
U.S. federal income tax rate is as follows (in thousands):
<TABLE>
<CAPTION>
                                                  2001                        2000                      1999
                                                  ----                        ----                      ----
<S>                                            <C>       <C>              <C>     <C>             <C>        <C>
U. S. federal income tax rate             $   1,939     34.0%        $    561     34.0%        $   2,216    34.0%

Changes from the statutory rate
   Tax-exempt investment income                (394)    (6.9)            (445)   (27.0)             (494)   (7.6)
   Non-deductible interest expense
     related to carrying tax-exempt
     investments                                 60      1.0               73      4.4                66     1.0
   Tax credits                                  (71)    (1.3)             (71)    (4.3)              (70)   (1.1)
   Goodwill amortization and
     disposal                                 1,758     30.8              206     12.5               202     3.1
   Other                                         93      1.7               (8)    (0.5)                7     0.1
                                          ---------     ----         --------     ----         ---------    ----

                                          $   3,385     59.3%        $    316     19.1%        $   1,927    29.5%
                                          =========     ====         ========     ====         =========    ====
</TABLE>

NOTE  14 - 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 $264,000, $276,000 and $251,000 in 2001, 2000
and 1999.

--------------------------------------------------------------------------------
                            (Continued)
                                                                             62.


<PAGE>
                         PREMIER FINANCIAL BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 2001, 2000 and 1999

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

NOTE  14 - EMPLOYEE BENEFIT PLANS (Continued)

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.

A summary of the Company's stock option activity is as follows:
<TABLE>
<CAPTION>

                                          ---------2001---------   ---------2000---------    ----------1999----------
                                                       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       62,000    $  13.71       62,000      $  13.71

Granted                                           -           -            -           -            -             -
                                            -------                  -------                  -------

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

Exercisable at year end                      62,000                   58,000                   49,800
Weighted average remaining life                 5.3                      6.3                      7.3
</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.


--------------------------------------------------------------------------------
                            (Continued)
                                                                             63.

<PAGE>
                         PREMIER FINANCIAL BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 2001, 2000 and 1999

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

NOTE  14 - EMPLOYEE BENEFIT PLANS (Continued)

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 effects on net income and earnings per share of
this statement are as follows (in thousands):
<TABLE>
<CAPTION>
                                                                     2001               2000               1999
                                                                     ----               ----               ----
<S>                                                                  <C>               <C>                  <C>
Net income
   As reported                                                  $     2,319         $     1,335         $     4,590
   Pro forma                                                          2,302               1,295               4,550

Basic earnings per share
   As reported                                                  $       .44         $       .26         $       .88
   Pro forma                                                            .44                 .25                 .87

Diluted earnings per share
   As reported                                                  $       .44         $       .26         $       .88
   Pro forma                                                            .44                 .25                 .87
</TABLE>

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

NOTE  15 - RELATED PARTY TRANSACTIONS

During 2001, 2000, and 1999, the Company paid approximately $437,000, $391,000,
and $432,000 for printing, supplies, furniture, and equipment to a company
affiliated by common ownership. The Company also paid this affiliate
approximately $1,199,000, $1,066,000, and $820,000 in 2001, 2000, and 1999 to
permit the Company's employees to participate in its employee medical benefit
plan.

The Company previously held 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 was 2% over the
prevailing prime rate. This stock was sold during 2001 resulting in a gain of
$60,000.


--------------------------------------------------------------------------------
                            (Continued)
                                                                             64.

<PAGE>
                         PREMIER FINANCIAL BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 2001, 2000 and 1999

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

NOTE  16 - 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 2001,
2000 and 1999 is presented below (in thousands, except per share data):
<TABLE>
<CAPTION>

                                                                          2001              2000            1999
                                                                          ----              ----            ----
<S>                                                                       <C>               <C>              <C>
Basic earnings per share
   Net income available to common
     stockholders                                                      $  2,319         $   1,335         $   4,590
   Weighted average common shares
     outstanding                                                          5,232             5,232             5,232
   Earnings per share                                                  $    .44         $     .26         $     .88

Diluted earnings per share
   Net income available to common
     stockholders                                                      $  2,319         $   1,335         $   4,590
   Weighted average common shares
     outstanding                                                          5,232             5,232             5,232
   Add dilutive effects of assumed exercise
     of stock options                                                         -                 -                 -
                                                                       --------         ---------         ---------

   Weighted average common and dilutive
     potential common shares outstanding                                  5,232             5,232             5,232
   Earnings per share assuming dilution                                $    .44         $     .26         $     .88
</TABLE>

Stock options for 62,000 shares of common stock were not included in the 2001,
2000 and 1999 computation of earnings per share assuming dilution because their
impact was anti-dilutive.


--------------------------------------------------------------------------------
                            (Continued)
                                                                             65.

<PAGE>
                         PREMIER FINANCIAL BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 2001, 2000 and 1999

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

NOTE  17 - DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS

The fair values of the Company's financial instruments at year-end are as
follows (in thousands):
<TABLE>
<CAPTION>

                                            --------------2001-------------         -------------2000--------------
                                               Carrying              Fair             Carrying             Fair
                                                Amount               Value             Amount              Value
<S>                                               <C>                 <C>              <C>                  <C>
Financial assets
  Cash and due from banks                   $    20,628         $    20,628         $    23,339         $    23,339
  Interest-earning balances                           -                   -                 737                 742
  Federal funds sold                             33,517              33,517              21,087              21,087
  Investment securities                         155,566             155,566             194,400             194,743
  Loans, net                                    449,795             453,897             587,755             585,037
  Federal Home Loan Bank and
    Federal Reserve Bank stock                    4,261               4,261               4,476               4,476
  Interest receivable                             7,842               7,842              10,144              10,144

Financial liabilities
  Deposits                                  $  (570,531)        $  (575,252)        $  (728,412)        $  (729,270)
  Securities sold under agreements
    to repurchase                                (5,520)             (6,005)            (20,553)            (20,605)
  Federal Home Loan Bank advances               (30,795)            (32,492)            (30,687)            (30,567)
  Other borrowed funds                          (13,000)            (13,000)            (20,000)            (20,019)
  Guaranteed preferred beneficial
    interests in Company's debentures           (28,750)            (40,487)            (28,750)            (24,006)
  Interest payable                               (1,903)             (1,903)             (3,901)             (3,901)
</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)
                                                                             66.

<PAGE>
                         PREMIER FINANCIAL BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 2001, 2000 and 1999

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

NOTE  18 - 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, 2001 and 2000, the Banks had the following financial instruments
whose approximate contract amounts represent credit risk (in thousands):
<TABLE>
<CAPTION>
                                                                                       2001                2000
                                                                                       ----                ----
<S>                                                                                  <C>                    <C>
Standby letters of credit                                                           $       890         $     1,497

Commitments to extend credit:
    Fixed                                                                           $    17,021         $    17,157
    Variable                                                                              7,038              22,265
</TABLE>

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 4% 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.


--------------------------------------------------------------------------------
                            (Continued)
                                                                             67.

<PAGE>
                         PREMIER FINANCIAL BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 2001, 2000 and 1999

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

NOTE  19 - 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, 2001, 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.

NOTE  20 - STOCKHOLDERS' EQUITY

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 and additional restrictions as discussed below. During 2002, the
Banks could, without prior approval, declare dividends of approximately $3.2
million plus any 2002 net profits retained to the date of the dividend
declaration.

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,
2001, the Company and the Banks meet all quantitative capital adequacy
requirements to which they are subject.


--------------------------------------------------------------------------------
                            (Continued)
                                                                             68.

<PAGE>
                         PREMIER FINANCIAL BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 2001, 2000 and 1999

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

NOTE  20 - STOCKHOLDERS' EQUITY (Continued)

The capital amounts and classifications are also subject to qualitative
judgments by the regulators. As a result of these qualitative judgments, the
Company and two of the Company's subsidiaries have entered into agreements with
the applicable regulatory authorities which provide for additional restrictions
on their respective capital levels and the payment of dividends. The Company
entered into an agreement with the Federal Reserve Bank (FRB) on September 29,
2000 restricting the Company from declaring or paying dividends without prior
approval from the FRB. An additional provision of this agreement requires prior
approval from the FRB before the Company increases its borrowings or incurs any
debt. This agreement is in effect until terminated by the FRB.

Citizens Deposit Bank (Citizens) entered into a Written Agreement with the FRB
on September 29, 2000 restricting Citizens from declaring or paying dividends
without prior approval. This agreement is in effect until terminated by the FRB.
Citizens Tier I capital to average assets was 9.9% at December 31, 2001.

Bank of Germantown (Germantown) entered into an agreement with the Kentucky
Department of Financial Institutions (KDFI) and the Federal Deposit Insurance
Corporation (FDIC) on June 13, 2000 restricting Germantown from declaring or
paying dividends, without prior approval, if its Tier I capital to average
assets falls below 8%. This agreement, in effect until terminated by the KDFI
and FDIC. Germantown's Tier I capital to average assets was 7.0% at December 31,
2001.

As of December 31, 2001, the most recent notification from the Federal Reserve
Bank categorized the Company and its subsidiary banks 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)
                                                                             69.

<PAGE>
                         PREMIER FINANCIAL BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 2001, 2000 and 1999

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

NOTE  20 - STOCKHOLDERS' EQUITY (Continued)

The Company's and the four largest subsidiary Banks' capital amounts and ratios
as of December 31, 2001 and 2000 are presented in the table below (in
thousands):
<TABLE>
<CAPTION>
                                                                                               To Be Well Capitalized
                                                                            For Capital        Under Prompt Corrective
                                                       Actual            Adequacy Purposes        Action Provisions
                    2001                          Amount      Ratio       Amount       Ratio      Amount       Ratio
                    ----
<S>                                                   <C>      <C>         <C>         <C>          <C>         <C>
Total Capital (to Risk-Weighted Assets):
   Consolidated                                  $  77,554     16.6%     $  37,313      8%       $  46,641     10%
   Boone County Bank                                14,463     16.5          7,021      8            8,776     10
   Farmers Deposit Bank                             16,751     15.5          8,655      8           10,819     10
   Citizens Deposit Bank                            11,809     15.4          6,118      8            7,648     10
   Citizens Bank (Kentucky), Inc.                    9,522     13.4          5,703      8            7,129     10

Tier I Capital (to Risk-Weighted Assets):
     Consolidated                                $  62,620     13.4%     $  18,656      4%       $  27,985      6%
   Boone County Bank                                13,485     15.4          3,510      4            5,266      6
   Farmers Deposit Bank                             15,577     14.4          4,327      4            6,491      6
   Citizens Deposit Bank                            10,845     14.2          3,059      4            4,589      6
   Citizens Bank (Kentucky), Inc.                    8,622     12.1          2,851      4            4,277      6

Tier I Capital (to Average Assets):
     Consolidated                                $  62,620      8.5%     $  18,656      4%       $  23,320      5%
   Boone County Bank                                13,485      9.0          5,999      4            7,499      5
   Farmers Deposit Bank                             15,577     10.9          5,703      4            7,129      5
   Citizens Deposit Bank                            10,845      9.9          4,395      4            5,494      5
   Citizens Bank (Kentucky), Inc.                    8,622      8.2          4,184      4            5,230      5

                    2000
                    ----
Total Capital (to Risk-Weighted Assets):
   Consolidated                                  $  69,891     12.0%     $  46,661      8%       $  58,326     10%
   Boone County Bank                                13,984     17.8          6,297      8            7,872     10
   Farmers Deposit Bank                             16,157     15.1          8,545      8           10,681     10
   Citizens Deposit Bank                            11,693     14.2          6,608      8            8,260     10
   The Bank of Mt. Vernon                           10,529     12.6          6,703      8            9,540     10

Tier I Capital (to Risk-Weighted Assets):
     Consolidated                                $  52,715      9.0%     $  23,330      4%       $  34,996      6%
   Boone County Bank                                13,055     16.6          3,149      4            4,723      6
   Farmers Deposit Bank                             14,840     13.9          4,272      4            6,409      6
   Citizens Deposit Bank                            10,656     12.9          3,304      4            4,956      6
   The Bank of Mt. Vernon                            9,481     11.3          3,352      4            5,724      6

Tier I Capital (to Average Assets):
     Consolidated                                $  52,715      6.1%     $  34,448      4%       $  43,060      5%
   Boone County Bank                                13,055      9.3          5,633      4            7,042      5
   Farmers Deposit Bank                             14,840     10.6          5,598      4            6,998      5
   Citizens Deposit Bank                            10,656      9.2          4,628      4            5,785      5
   Citizens Bank (Kentucky), Inc.                    9,481      8.5          4,446      4            5,785      5
</TABLE>
--------------------------------------------------------------------------------
                            (Continued)
                                                                             70.


<PAGE>
                         PREMIER FINANCIAL BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 2001, 2000 and 1999

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

NOTE  21 - PARENT COMPANY FINANCIAL STATEMENTS
<TABLE>
<CAPTION>

                            Condensed Balance Sheets
                                   December 31
                                                                                           2001            2000
                                                                                           ----            ----
                                                                                             (In Thousands)
<S>                                                                                        <C>               <C>
ASSETS
Cash                                                                                   $      711       $       817
Investment in subsidiaries                                                                 98,429           100,242
Investment securities available for sale                                                        5             2,005
Premises and equipment                                                                      1,080               976
Other real estate acquired through foreclosure                                                380               380
Other assets                                                                                1,348             1,487
                                                                                       ----------       -----------

Total assets                                                                           $  101,953       $   105,907
                                                                                       ==========       ===========

LIABILITIES AND STOCKHOLDERS' EQUITY
Other liabilities                                                                      $      328       $     1,327
Other borrowed funds                                                                       13,000            20,000
                                                                                      -----------       -----------
   Total liabilities                                                                       13,328            21,327

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                                                                       14,470            12,151
   Accumulated other comprehensive income                                                     857              (869)
                                                                                      -----------       -----------
       Total stockholders' equity                                                          59,875            55,830
                                                                                      -----------       -----------

Total liabilities and stockholders' equity                                            $   101,953       $   105,907
                                                                                      ===========       ===========
</TABLE>

--------------------------------------------------------------------------------
                            (Continued)
                                                                             71.


<PAGE>
                         PREMIER FINANCIAL BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 2001, 2000 and 1999

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

NOTE  21 - PARENT COMPANY FINANCIAL STATEMENTS (Continued)
<TABLE>
<CAPTION>
                         Condensed Statements of Income
                             Years Ended December 31

                                                                        2001              2000             1999
                                                                        ----              ----             ----
                                                                                     (In Thousands)
<S>                                                                       <C>             <C>                <C>
Income
   Dividends from subsidiaries                                       $    10,538      $     3,775       $     6,300
   Interest and dividend income                                               58              229               203
   Other income                                                               70               15                93
                                                                     -----------      -----------       -----------
     Total income                                                         10,666            4,019             6,596

Expenses
   Interest expense                                                        4,137            4,507             4,111
   Salaries and employee benefits                                            914            1,459               921
   Other expenses                                                            852              927               708
                                                                     -----------      -----------       -----------
     Total expenses                                                        5,903            6,893             5,740

Income (loss) before income taxes and equity
   in undistributed income of subsidiaries                                 4,763           (2,874)              856

Income tax expense (benefit)                                              (1,976)          (2,315)           (1,899)
                                                                     -----------      -----------       -----------

Income (loss) before equity in undistributed
   income of subsidiaries                                                  6,739             (559)            2,755

Equity in undistributed income of subsidiaries                            (4,420)           1,894             1,835
                                                                     -----------      -----------       -----------

Net income                                                           $     2,319      $     1,335       $     4,590
                                                                     ===========      ===========       ===========

</TABLE>

--------------------------------------------------------------------------------
                            (Continued)
                                                                             72.


<PAGE>
                         PREMIER FINANCIAL BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 2001, 2000 and 1999

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

NOTE  21 - PARENT COMPANY FINANCIAL STATEMENTS (Continued)
<TABLE>
<CAPTION>

                       Condensed Statements of Cash Flows
                             Years Ended December 31

                                                                        2001              2000             1999
                                                                        ----              ----             ----
                                                                                     (In Thousands)
<S>                                                                      <C>                <C>             <C>
Cash flows from operating activities
   Net income                                                        $     2,319      $     1,335     $       4,590
   Adjustments to reconcile net income to net
     cash from operating activities
       Depreciation                                                           83               76               169
       Write-down of other real estate owned                                   -              110                 -
       Investment securities gains                                           (60)               -                 -
       Equity in undistributed income of subsidiaries                      4,420           (1,894)           (1,835)
       Change in other assets                                                139               20               573
       Change in other liabilities                                          (999)             758               430
                                                                     -----------      -----------       -----------
         Net cash from operating activities                                5,902              405             3,927

Cash flows from investing activities
   Purchase of subsidiary banks                                                -                -           (13,677)
   Capital contributed to subsidiaries                                      (880)             (21)              (88)
   Purchase of securities available for sale                                   -                -                (5)
   Proceeds from sale of securities                                        2,060                -                 -
   Net change in loans                                                         -                -              (490)
   Purchase of premises and equipment                                       (284)             (80)             (269)
   Proceeds from sale of fixed assets                                         96              682             2,041
                                                                     -----------      -----------       -----------
     Net cash from investing activities                                      992              581           (12,488)
Cash flows from financing activities
   Dividends paid                                                              -             (785)           (3,140)
   Proceeds from (payments of) other borrowed funds                       (7,000)               -            12,000
                                                                     -----------      -----------       -----------
     Net cash from financing activities                                   (7,000)            (785)            8,860

Net change in cash and cash equivalents                                     (106)             201               299

Cash and cash equivalents at beginning of year                               817              616               317
                                                                     -----------      -----------       -----------

Cash and cash equivalents at end of year                             $       711      $       817       $       616
                                                                     ===========      ===========       ===========

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

--------------------------------------------------------------------------------
                            (Continued)
                                                                             73.

<PAGE>
                         PREMIER FINANCIAL BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 2001, 2000 and 1999

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

NOTE  22 - QUARTERLY FINANCIAL DATA (UNAUDITED)
<TABLE>
<CAPTION>

                                                                                        Earnings per Share
                                 Interest        Net Interest          Net              ------------------
                                  Income            Income           Income         Basic          Fully Diluted
                                 --------        ------------        ------         -----          -------------
<S>                                <C>                <C>                <C>          <C>               <C>
2001
----
    First Quarter               $    15,796     $    6,354        $    1,224      $   .23        $      .23
    Second Quarter                   14,999          6,410              (705)        (.13)             (.13)
    Third Quarter                    14,243          6,240                46          .01               .01
    Fourth Quarter                   13,004          6,270             1,754          .33               .33

2000
----
    First Quarter               $    16,611     $    7,086        $      447      $   .09        $      .09
    Second Quarter                   17,033          7,241               262          .05               .05
    Third Quarter                    17,605          7,131               371          .07               .07
    Fourth Quarter                   17,985          7,218               255          .05               .05

</TABLE>



--------------------------------------------------------------------------------
                            (Continued)
                                                                             74.

<PAGE>
                                    PART III


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.


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 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.

       2.  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.
<TABLE>
<CAPTION>
           Exhibit
           Number                Description of Document
           -------               -----------------------
            <S>                      <C>
              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).

              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).
</TABLE>

<page>
<TABLE>
<CAPTION>
             <S>                   <C>
              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               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).

              10.2               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
</TABLE>


 (b)   Reports on Form 8-K

       On December 26, 2001 an 8-K was filed relating to the disposition of
       certain assets and liabilities of the Company's Sabina Ohio subsidiary.

                                   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, 2002.

                                            PREMIER FINANCIAL BANCORP, INC.

                                            By:  /s/ Robert W. Walker, President
                                                 -------------------------------
                                                 Robert W. Walker, President


<PAGE>


       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.
<TABLE>
<CAPTION>
<S>                           <C>                      <C>
March 27, 2002        /s/ Robert W. Walker        Principal Executive and Director
                      ------------------------
                      Robert W. Walker


March 27, 2002        /s/ Edsel Burns             Principal Financial and Accounting
                      ------------------------    Officer and Director
                      Edsel Burns


March 27, 2002        /s/ Toney K. Adkins         Director
                      ------------------------
                      Toney K. Adkins


March 27, 2002        /s/ Hosmer A. Brown, III    Director
                      ------------------------
                      Hosmer A. Brown, III

March 27, 2002        /s/ Gardner E. Daniel       Director
                      ------------------------
                      Gardner E. Daniel


March 27, 2002       /s/ E. V. Holder, Jr.        Director
                     -------------------------
                     E. V. Holder, Jr.

March 27, 2002       /s/ Wilbur M. Jenkins        Director
                     -------------------------
                     Wilbur M. Jenkins


March 27, 2002       /s/ Keith F. Molihan         Director
                     -------------------------
                     Keith F. Molihan


March 27, 2002       /s/ Marshall T. Reynolds     Director
                     -------------------------
                     Marshall T. Reynolds



March 27, 2002       /s/ Neal Scaggs              Director
                     -------------------------
                     Neal Scaggs

March 27, 2002       /s/ Thomas W. Wright         Director
                     -------------------------
                     Thomas W. Wright

</TABLE>



<PAGE>


Exhibit 21
                         SUBSIDIARIES OF THE REGISTRANT


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

       Subsidiary                                                      State of Incorporation
<S>                                                                         <C>
Citizens Deposit Bank and Trust Company                                    Kentucky

Bank of Germantown                                                         Kentucky

Georgetown Bancorp, Inc.                                                   Kentucky

Citizens Bank (Kentucky), Inc. (a direct subsidiary
   of Georgetown Bancorp, Inc.)                                            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 Financial Holdings, Inc.                                        Kentucky

The Sabina Bank (in liquidation)                                           Ohio

Ohio River Bank                                                            Ohio

First Central Bank, Inc.                                                   West Virginia

Boone County Bank, Inc.                                                    West Virginia
</TABLE>


<PAGE>